S.C. car dealer bill over closing fees lawsuit moves closer to Senate

A hotly contested bill that would kill some 200 pending consumer class action lawsuits against car dealers was passed out of the Senate Judiciary Committee on Tuesday.

But a minority report to be filed by Sen. Brad Hutto, D-Orangeburg, who opposes the bill, makes it likely the bill, under Senate rules, will need a supermajority of 30 or 31 senators to get to the floor for debate and a vote.

Because of the expected fierce debate, senators on both sides of the issue said they hoped the parties involved would find a middle ground that would defuse at least some of the bill’s political and legal issues.

“There’s going to be quite a fight over this,” predicted Sen. Larry Martin, R-Pickens, Senate Judicary Committee chairman and a 37-year legislative veteran.

“A bill of this magnitude can’t pass with just a one- or two-vote majority. If we can’t work something out, it will be hard fought, one amendment after another, taking up a lot of floor time,” Martin said. “We’ll just have to see.”

On one side are 211 car dealers around the state. They have been hit with class action lawsuits over closing fees they charged customers. The lawsuits allege the fees were illegal and that the consumers should get refunds and be paid damages.

Until last year, the lawsuits had been on hold. But in November, the S.C. Supreme Court ruled 3-2 in one of the lawsuits that Hendrick Honda, a car dealer in Pickens County, had to pay $2.8 million in refunds and damages to some 5,300 people who bought vehicles there.

The other 211 lawsuits had been on hold for years while the Hendrick Honda case was decided.

Once the Supreme Court ruled, car dealers persuaded Martin to file a bill that would undo the court’s decision. For one thing, it would kill all the pending class action lawsuits against dealers and force consumers to file individual actions if they want to try to get back their closing fees.

Dozens of car dealers from across the state attended Tuesday’s Judiciary Committee hearing.

Although most of the state’s 281 auto dealers charge a closing fee, some charge none. Closing fees typically range from $99 to $600 or more. Until the wave of class action lawsuits hit, car dealers believed state law law didn’t require them to peg closing fees to specific costs.

But the Supreme Court’s opinion said car dealers’ closing fees must be based on actual expenses.

Lawyers for consumers claim closing fees were a way for dealers to pad their profits. Car dealers assert a 2000 law does not require them to justify their closing fees with actual expenses and that the Supreme Court majority got the law wrong.

At stake in the matter are potentially hundreds of millions of dollars in legal fees and damages for car dealers. A typical award for a plaintiff might range from $200 to more than $1,000.

Hutto, a 20-year Senate veteran, predicted that if parties don’t reach a middle ground, “There will be litigation on and on and on.”

This story was originally published January 20, 2016 at 8:27 AM with the headline "S.C. car dealer bill over closing fees lawsuit moves closer to Senate."