Opinion ID: 3052386
Heading Depth: 2
Heading Rank: 3

Heading: Interpreting the Odometer Act

Text: [3] The text and purpose of the Odometer Act lead us to believe that the Seventh Circuit has the better of the two positions. To survive a Rule 12(b)(6) motion to dismiss, a plaintiff suing under 49 U.S.C. § 32710 must allege that the defendant violated the Odometer Act with intent to defraud as to mileage. Bodine’s textual argument mirrors the thinking of the Owens court: Because “with intent to defraud” is not immediately preceded or followed by any explicit language limiting the provision to odometer fraud, the only natural reading, Bodine argues, is that no such limit exists. When there is “no statutory definition or definitive clue,” a phrase’s meaning “has to turn on the language as we normally speak it.” Watson v. United States, 128 S. Ct. 579, 583 9204 BODINE v. GRACO, INC. (2007). In ordinary language, “with intent to defraud” is not intrinsically limited, especially not to odometer fraud. When § 32710 is studied in isolation, then, Bodine’s reading is not obviously wrong. It is, however, “our duty to construe statutes, not isolated provisions.” Gustafson v. Alloyd Co., 513 U.S. 561, 568 (1995). “[T]he meaning of statutory language, plain or not, depends on context.” Holloway v. United States, 526 U.S. 1, 7 (1999) (internal quotation marks omitted). [4] With the Odometer Act, we have a “source of a reasonable inference about what Congress understood when writing” § 32710. Watson, 128 S. Ct. at 583. Helpfully, Congress made clear its purposes: to prohibit odometer tampering and to protect consumers against the sale of vehicles “with altered or reset odometers.” 49 U.S.C. § 32701(b). Every part of the statutory scheme speaks specifically of odometer fraud; there is not a single statutory phrase that suggests Congress wished to reach additional types of fraud. See id. § 32703 (targeting physical odometer tampering); id. § 32704 (providing specific procedures for repairing and replacing odometers); id. § 32705 (requiring disclosure only of transferred vehicle’s cumulative mileage). The effect of all of these express references to odometer fraud is to limit the meaning of “with intent to defraud.” See Gutierrez v. Ada, 528 U.S. 250, 254-55 (2000) (understanding the statutory phrase “any election” to mean “an election for Governor and Lieutenant Governor” because of numerous other references to Governor and Lieutenant Governor). Even though § 32710(a) does not contain any mention of odometer fraud, it incorporates the conduct-regulating provisions of the Act by referring to “this chapter or a regulation prescribed or order issued under this chapter.” In Ioffe, the court usefully replaced this shorthand with the language of 49 C.F.R. § 580.5(c): “ ‘A person that [does not BODINE v. GRACO, INC. 9205 disclose the mileage to the transferee in writing on the title], with intent to defraud, is liable.’ ” 414 F.3d at 712 (alteration in original). Reviewing this language, the court reasoned: The use of “with” in “with intent to defraud” indi- cates a link between the violative conduct and the intent requirement. The conduct and the fraudulent intent are not two independent elements such that any contemporaneous fraud will do. Rather, there is a prohibited act—not disclosing the mileage to the transferee in writing on the title—which is modified by the adverbial phrase “with intent to defraud.” Thus, the private right of action covers prohibited acts that are committed with fraudulent intent and excludes cases where some fraudulent act happens to coincide with a violation of a regulation but the violative act is done for reasons other than to perpetrate a fraud. Id. This reasoning is sound. Although in other statutes “with intent to defraud” might be read capaciously, in § 32710(a) it is limited by the statutorily-defined purposes of the Odometer Act. See Reves v. Ernst & Young, 494 U.S. 56, 63 (1990) (“[T]he [statutory] phrase ‘any note’ should not be interpreted to mean literally ‘any note,’ but must be understood against the backdrop of what Congress was attempting to accomplish in enacting the Securities Acts.”). The substantive provisions of the Act are confined to odometer fraud, even though we can safely assume that Congress does not condone other types of fraud in vehicle transfers. In creating a private right of action, Congress added a further limitation: only violators who act with intent to defraud will be subject to special damages provisions. Bodine offers no cogent reason why Congress would fastidiously restrict the substantive reach of the Act to odometer fraud,7 while making § 32710(a) liability turn on intent to commit any type of fraud. 7 For example, § 32705(a)(2) states: “A person transferring ownership of a motor vehicle may not violate a regulation prescribed under this section 9206 BODINE v. GRACO, INC. A broader reading of “with intent to defraud” might lead to results inconsistent with the Act’s purposes. Because a “term should be construed, if possible, to give it a consistent meaning throughout the [statute],” Gustafson, 513 U.S. at 568, the “with intent to defraud” language of § 32710(a) would presumptively control the interpretation of the same language in § 32703(3). As mentioned earlier, that section states that a “person may not . . . with intent to defraud, operate a motor vehicle . . . if the person knows that the odometer of the vehicle is disconnected or not operating.” On Bodine’s reading, an individual would be liable under the Odometer Act if he fraudulently sold merchandise while happening to drive a vehicle with a broken odometer. Even though “[n]o language limits the meaning of the clause ‘with intent to defraud,’ ” Owens, 425 F.3d at 1321, Congress surely did not intend that § 32703(3) be read this way. [5] Bodine argues that a vehicle’s restored salvage status provides a “direct nexus” with its odometer reading. Because rebuilders use different parts from different vehicles when restoring a salvaged vehicle, they face choices about how to disclose the rebuilt vehicle’s mileage. If a major part is replaced, the rebuilder must decide whether to list the mileage as it read prior to the replacement, or to link it instead to the mileage of the replacement part. These situations allow opportunistic rebuilders to tamper with an odometer reading to the detriment of a future consumer. or give a false statement to the transferee in making the disclosure required by such a regulation.” (Emphasis added.) Because the only disclosures required by the section pertain to a transferred vehicle’s cumulative mileage, the statute only proscribes false statements made about mileage. Had Congress wanted to err on the side of protecting consumers beyond simple odometer fraud, it could have prohibited “a false statement to the transferee with respect to the transferred vehicle.” Consistent with the Act’s narrow purposes, however, the prohibition is limited to false statements pertaining to mileage disclosures, even though this excludes from federal regulation countless other types of fraud. BODINE v. GRACO, INC. 9207 If this is correct, then Bodine can satisfy the pleading requirements of the Odometer Act by alleging that Graco withheld the title of the restored salvage truck with the intent to defraud her as to the truck’s mileage. If Bodine could prove that the mileage was unlawfully altered in the rebuilding process, and that Graco withheld the title in an effort to conceal this fact, then Bodine would, we assume, have a valid Odometer Act claim. But Bodine has alleged none of this in her complaint, so there is no reason for this court to consider a nexus that might be present in other cases involving restored salvage vehicles. See Ioffe, 414 F.3d at 714-15 (rejecting same nexus argument). [6] In support of its holding, the Owens court noted that its reading of § 32710(a) was “also consistent with the general principle that the Odometer Act is remedial legislation that should be broadly construed to effectuate its purpose.” 425 F.3d at 1322 (internal quotation marks omitted). The court stressed the importance of the title and disclosure requirements, which were intended “to provide consumers with transparent information about a vehicle’s background, to ease investigation and prosecution of violators, and to prevent would-be violators from taking advantage of titling and registration loopholes to perpetrate odometer fraud.” Id. at 1322-23. Reviewing the various requirements of the Act, Owens explained that the success of the complex remedial scheme Con- gress has created depends on compliance with a multitude of interdependent and seemingly “technical” provisions . . . . Violations of these “technical” regulations can defeat the entire remedial scheme—even if they are not committed with the intent to defraud with respect to the vehicle’s mileage—by creating gaps in the vehicle’s “paper trail” that: (1) thwart investigation of future violations; and (2) make it difficult for future purchasers of a vehicle to spot 9208 BODINE v. GRACO, INC. odometer fraud by preventing them from accurately assessing the vehicle’s ownership history. Id. at 1324. These observations may be accurate, but the analysis proves too much. Emphasizing the importance of the title in no way sheds light on the culpability requirement in § 32710(a). There is no dispute that the title disclosure rule of § 580.5(c) is an important means of combating odometer fraud. As a corollary, it follows that any violation of that section threatens the remedial scheme, whether done with or without an intent to commit any type of fraud. Nonetheless, § 32710(a) only covers violations committed “with intent to defraud.” Clearly, Congress did not want vehicle transferors to be liable under § 32710(a) when they acted without the requisite intent, even if their violations threatened the Act’s remedial scheme. Therefore, we should not construe § 32710(a) so as to create as much liability as possible. Rather, we must faithfully apply the section’s limit on liability, even if it undermines the statute’s remedial purposes. If the statute’s design was in fact critically weakened by our interpretation of § 32710(a), there might be reason to think Congress meant “with intent to defraud” in the broadest sense. As Ioffe noted, though, the Act “creates a comprehensive enforcement scheme of which private civil liability is only one part.” 414 F.3d at 714. Violators are strictly liable for civil penalties up to $2,000 per violation, and the Attorney General or a state can seek an injunction for violations committed without any intent. 49 U.S.C. § 32709(a), (c), (d). There are also criminal penalties for “knowingly and willfully” violating the Act or its regulations. Id. § 32709(b). The Owens court believed that under-enforcement of the public remedies necessitated a broader reading of the private cause of action. 425 F.3d at 1324-25. Congress was aware of the under-enforcement problem, but it did not respond by BODINE v. GRACO, INC. 9209 amending the private right of action. Instead, Congress acted on the recommendation of the National Highway Traffic Safety Administration, which suggested that “the most effective way to combat [odometer] fraud is to increase the maximum sentence to three years, converting odometer tampering into a felony. This would make violations much more likely to be prosecuted and would be more threatening to violators.” S. Rep. No. 99-47, at 3 (1985). Accordingly, in a 1986 amendment to the Odometer Act, Congress increased the civil and criminal penalties, but did not alter the private right of action. See Truth in Mileage Act of 1986, Pub. L. No. 99-579, § 3, 100 Stat. 3309, 3311.8 There is a plausible reason why Congress would want to keep the Odometer Act narrow: the availability of state-law remedies. The Act’s legislative history explains that states’ efforts to regulate odometer tampering were often frustrated because of a lack of interstate uniformity in regulation.9 The 8 Bodine cites the 1986 amendment, observing that it closed loopholes in the Odometer Act by enhancing the role of the vehicle title. See Truth in Mileage Act of 1986, § 2, 100 Stat. at 3309-10. Bodine is correct that “[t]he central purpose of [the amendment] had been to make the title document the sole vehicle for odometer disclosure.” Odometer Disclosure Requirements, 56 Fed. Reg. 47681, 46784 (Sept. 20, 1991). But the statutory changes do not support Bodine’s reading of “with intent to defraud.” “Although these amendments elevate the importance of the certificate of title in the mileage disclosure process, they do not purport to alter the scope of the private right of action created by § 32710.” Ioffe, 414 F.3d at 714. Instead, as noted above, “Congress enhanced the civil and criminal penalties that may be imposed by the federal government, but did not amend the section governing private claims.” Id. 9 See, e.g., S. Rep. No. 99-47, at 1-2 (1985) (“Despite the positive efforts to combat odometer fraud in the majority of States, it remains very easy for a person to mail a certificate of title with high mileage to another person in one of the States not requiring the odometer mileage to be shown on titles and to obtain in return a new title without any odometer information.”); S. Rep. No. 92-413 (1971), as reprinted in 1972 U.S.C.C.A.N. 3960, 3962 (“Odometers are turned back in States without odometer laws and then cars are marketed at inflated values in States with such laws. Thus, State odometer laws are easily circumvented and people in a State with such a law suffer because of this practice.”). 9210 BODINE v. GRACO, INC. Act addressed this singular problem with specific measures that exclusively target odometer tampering. When the Act was first passed in 1972, Congress was likely aware of other types of fraud in the vehicle market, including collisionhistory fraud. Presumably, Congress left those areas of fraud unregulated because it believed that state regulation and statelaw remedies were adequate. Cf. 49 U.S.C. § 32711 (indicating that state law is preempted only if it is “inconsistent” with the Act; otherwise, the Act does not “exempt a person from complying with that law”). It is not this court’s role to second guess that judgment, and we cannot expand § 32710(a) to cover other forms of fraud, no matter how pernicious. At the end of the day, we find the Seventh Circuit’s reasoning more consistent with the language and purpose of what is, after all, commonly referred to as the Odometer Act. If Congress had intended the Act to cover a wide range of activities related to the transfer of vehicle titles, it could have easily said so. We do not for a moment condone activities such as those Bodine alleges here. The doors of the Arizona courts are open to pursue her claims.10 See, e.g., Ariz. Rev. Stat. § 441522; Madisons Chevrolet, Inc. v. Donald, 505 P.2d 1039, 1041-43 (Ariz. 1973) (holding that defendant car dealer was liable for both fraudulent concealment and fraudulent misrepresentation when it represented that car was “new” when it had actually been in a prior accident, and upholding punitive damages award because defendant’s failure “to inform the plaintiff that the automobile had been previously wrecked was a ‘reckless indifference’ to the rights and safety of” the plaintiff). Our doors are open only as wide as Congress permits and they are open here only wide enough for claims that directly relate to odometer fraud. AFFIRMED. 10 We assume that the statutes of limitations on Bodine’s state-law claims are tolled during the pendency of this matter. See 28 U.S.C. § 1367(d).