Opinion ID: 1357706
Heading Depth: 3
Heading Rank: 3

Heading: Regulation 403.02, subdivision (b), Rental Vehicles

Text: (9a) The Ford Dealers next challenge subdivision (b) of regulation 403.02, which requires a seller to clearly identif[y] a vehicle as a rental vehicle if the seller knows that it previously was so used. [9] The trial court found that the DMV had the authority to issue a regulation requiring disclosure of the history of a used car, but held that there was insufficient evidence in the administrative record to demonstrate the necessity for disclosure of the rental history. The Ford Dealers renew their claim that the DMV was not authorized to require the affirmative disclosure of a vehicle's history. However, the omission of crucial information can be as misleading as a direct misstatement of fact. Where, in the absence of an affirmative disclosure, consumers are likely to assume something which is not in fact true, the failure to disclose the true state of affairs can be misleading. (Cf. Encyclopaedia Britannica, Inc. v. F.T.C. (7th Cir.1979) 605 F.2d 964, 971-973 [F.T.C. can order affirmative disclosures in order to avoid deception].) Section 11713, subdivision (a) does not require proof of actual deception, only the probability or likelihood of deception. (Cf. Chern v. Bank of America, supra, 15 Cal.3d at p. 876; Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d at p. 451.) The DMV could reasonably conclude that consumers are likely to be deceived if they are not informed that the automobile they are purchasing was formerly used in certain specified ways. The trial court concluded, however, that there was no evidence in the record to support the decision to require disclosure of rental history. The Ford Dealers argue that rental cars are better serviced and maintained than privately owned cars, and that it is thus arbitrary and capricious to require disclosure of rental history. It is well to remember that it is not this court's role to reweigh the evidence before the administrative agency to determine whether this regulation was warranted. The provisions of the Administrative Procedure Act in effect at the time these regulations were adopted required only that the agency provide interested parties an opportunity to present their views to the agency, with or without an opportunity for oral argument. (See former Gov. Code, § 11425.) (10) (See fn. 10.) Judicial review of the record was limited to a determination of whether the challenged regulation was `entirely lacking in evidentiary support.' ( Pitts v. Perluss, supra, 58 Cal.2d at p. 833.) [10] (9b) The trial court erred in holding that the administrative record contained no evidence to support this regulation. The record contains testimony indicating that consumers are interested in knowing whether they are buying a rental vehicle. Although the automobile dealers did present evidence indicating that at least some rental vehicles are in better condition than privately owned automobiles, the agency was not bound to conclude that this obviated the need for the regulation. As one consumer advocate testified, the information could be useful to assist the buyer in understanding the vehicle's mechanical condition. In addition, he testified that it was important to a consumer's confidence and psychological peace of mind that the consumer know if a vehicle had previously been used for rental, regardless of whether or not that history affected its value. Thus, there was evidence in the record to support the conclusion that it is misleading to sell a rental vehicle without informing the purchaser of the vehicle's history. (11) (See fn. 11.) Based on this evidence, the DMV could reasonably decide that the refusal to disclose such information would violate section 11713, subdivision (a). [11]