## Facts

- A Louisiana used-car dealer sold vehicles after altering (“rolling back”) odometers to show substantially lower mileage than actual mileage.
- At purchase, consumers received mileage disclosures and related paperwork that misstated mileage and misrepresented vehicle condition and use.
- Each plaintiff bought a vehicle whose odometer had been altered while the vehicle was in the dealer’s possession.
- Plaintiffs executed retail installment/consumer credit contracts and related financing documents in connection with their purchases.
- The dealer assigned the consumer credit contracts to an indirect finance company, which became the holder/creditor under the contracts.
- A federal grand jury indicted dealer-associated individuals for multiple counts arising from the odometer-rollback scheme.
- In the civil action, the dealer’s owner filed an amended answer admitting the complaint’s allegations about the fraudulent scheme.
- Plaintiffs sought summary judgment against multiple defendants, including the finance-company assignee/holder.

## Issues

1. Whether the dealer and its owner were liable under the federal Odometer Act for intentionally misrepresenting vehicle mileage.
2. Whether an assignee/holder of the consumer credit contracts could be held liable for the dealer’s odometer fraud under the FTC Holder Rule notice in the contracts, and what limits applied to such liability.
3. Whether summary judgment was appropriate as to the assignee/holder, including the scope of recoverable damages.

## Decision

- The court granted summary judgment on liability against the dealer and its owner for violating the federal Odometer Act through intentional mileage misrepresentations.
- As to the assignee/holder finance company, the court granted summary judgment in part and denied it in part:
  - It held the assignee/holder was subject to the consumers’ claims and defenses against the seller by virtue of the FTC Holder Rule notice in the contracts.
  - It limited any recovery from the assignee/holder to the amounts the consumers paid under the contracts.
  - It left remaining issues for further proceedings to the extent plaintiffs sought relief beyond the Holder Rule cap or on theories not resolved on the summary-judgment record.

## Legal Principles

- Under the federal Odometer Act, civil liability attaches when a defendant, with intent to defraud, alters an odometer or makes false statements or disclosures concerning vehicle mileage.
- Admissions in pleadings and undisputed evidence of systematic odometer rollback and false mileage disclosures can establish Odometer Act liability as a matter of law at summary judgment.
- When a consumer credit contract contains the FTC Holder Rule notice, any holder/assignee is subject to all claims and defenses the consumer could assert against the seller arising from the sale financed by the contract.
- The FTC Holder Rule limits a consumer’s affirmative recovery against a holder/assignee to the amounts paid by the consumer under the contract.

## Conclusion

The court entered summary judgment establishing the dealer’s and owner’s liability for intentional odometer fraud under federal law, and it held that the contract holder/assignee could face the consumers’ seller-based claims under the FTC Holder Rule, but only up to the amount the consumers paid under their contracts, with other issues reserved for later proceedings.


Simpson v. Anthony Auto Sales, Inc., 32 F. Supp. 2d 405 (W.D. La. 1998)