Editor's note: Legal reporter Dan Margolies has been inundated with calls and emails today from consumers who read his column in The Star's Business Weekly about documentation fees charged by car dealers for vehicle purchases. In case you missed it, here's the column.
Outrage over paperwork feeHundreds of Missouri car dealers have been told to cough up the names and addresses of every customer who bought vehicles from them since Dec. 11, 2003.
U.S. District Judge Ortrie Smith issued the order last week in a class-action lawsuit challenging the dealers’ right to charge customers for document preparation fees.
The suit, originally filed last December in Sullivan County Circuit Court and transferred to federal court in Kansas City in April, alleges that the document preparation process constitutes the unlawful practice of law.
The case is one of many filed in Missouri after the Missouri Supreme Court ruled last year that a bank that had charged document preparation fees for completing mortgage documents had engaged in the unlawful practice of law.
Just a month after the dealer case was filed in Sullivan County, the court certified the suit as a class action and defined the defendant class as all Missouri dealerships that had sold motor vehicles and charged fees for document processing.
After one of the car dealers, Car Credit City, removed the case to federal court, Smith directed the dealers to produce a listing of every purchaser and their addresses since Dec. 11, 2003 — or five years before the lawsuit was filed. (Five years is the applicable statute of limitations period.)Dan double-checked the change from two to five. He did so because he needed to determine whether at least a third of the dealers’ sales were made outside of Missouri, a threshold requirement of the federal Class Action Fairness Act, the basis for federal jurisdiction in the case.
The dealers objected, protesting that the information was sensitive and proprietary, and asked Smith to enter a protective order limiting the use of the information by the plaintiffs’lawyers.
In his one-paragraph order last week, Smith denied the dealers’ motion without explanation.
Attorneys for the car dealers declined to comment on the order or on the case in general.
Smith’s order appears to affect more than traditional car dealers. After the Sullivan County court certified the defendant class, notice of the certification was sent to every entity registered in Missouri as a car dealer — even those that didn’t charge the document preparation fees at issue. One attorney estimated that some 7,000 individuals and businesses have received the notice.
The cases in Missouri are among a raft of similar suits nationwide by disgruntled consumers. Some courts have bought the argument that salespeople who fill in legal forms are acting as unlicensed lawyers when they charge a fee. Other courts have not.
Earlier this year, a federal court in Colorado ruled that a dealership’s completion of legal documents did not require any skill beyond that possessed by an ordinary layman. The court granted summary judgment to the dealership.
This was tried on a Saturn I bought last year. I questioned the dealer about this. They said it was required. I told them this seemed odd since I was charged this on a mortgage years ago. After some back and forth, they decided to remove it as a "courtesy." It just goes to show, you can't trust anyone.