Opinion ID: 1357706
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Heading: Regulation 402.00, Advertising Defined

Text: (3a) Regulation 402.00 provides as follows: 402.00 `Advertising' Defined. (a) In the broad context of Vehicle Code Section 11713(a), any statement advertised refers to any statement, representation, act or announcement intentionally communicated to any member of the public by any means whatever, whether orally, in writing or otherwise. (b) As used elsewhere in the Vehicle Code and in this article, the terms `advertising', `advertisement', or `advertise' refer to a statement, representation, act or announcement intentionally communicated to the public generally for the purpose of arousing a desire to buy or patronize. (Cal. Admin. Code, tit. 13, § 402.) (4a) Prior to 1970, subdivision (a) of section 11713 provided that it was unlawful for a licensed automobile dealer to intentionally publish or circulate any advertising which is misleading or inaccurate.... In 1970, the present version of the section was enacted, providing that it is unlawful [t]o make or disseminate ... before the public in this state, in any newspaper or other publication, or any advertising device, or by public outcry or proclamation, or in any other manner or means whatever, any statement which is untrue or misleading.... (Stats. 1970, ch. 522, § 2, p. 1017; see ante, p. 356, fn. 4, for complete text of statute.) The DMV argues that this revision of section 11713, subdivision (a) indicated a legislative intent to broaden the reach of the statute to include oral representations, as well as media advertising. This argument has merit. The deletion of the requirement that statements be publish[ed] or circulate[d] indicates that the Legislature intended to broaden the statutory prohibition. Indeed, the statute now makes it unlawful to disseminate untrue or misleading statements before the public by any manner or means whatever. Broader language would be difficult to find. (3b) The Ford Dealers argue that the dual definition of advertise in regulation 402.00 is internally inconsistent and not justified by the language of the authorizing statutes. Although advertise is used frequently elsewhere in the Vehicle Code, it generally is used in a manner which clearly indicates that it refers only to media advertisements. For instance, section 11713, subdivision (c) requires a dealer within 48 hours in writing to withdraw any advertisement of a vehicle that has been sold or withdrawn from sale. However, in subdivision (a), advertised is used only in the final clause; the body of the subdivision refers generally to statements made or disseminated to the public, a definition broad enough to include oral statements to individual members of the public. Thus, both the history of section 11713, subdivision (a) and its language provide support for the DMV's conclusion that advertise as used in that subdivision has a different definition than in the rest of the Vehicle Code. (4b) The Legislature's choice of this particular language is significant. Section 11713, subdivision (a) closely parallels the language of Business and Professions Code section 17500. [5] Section 17500 repeatedly has been interpreted so as to include within its reach oral statements made to individual members of the public. Thus, in Chern v. Bank of America (1976) 15 Cal.3d 866 [127 Cal. Rptr. 110, 544 P.2d 1310], this court held that a member of the public had a cause of action under section 17500 when a bank employee made misleading statements to her over the telephone about the rate of interest on a loan. Similarly, in People v. Superior Court ( Jayhill ) (1973) 9 Cal.3d 283 [107 Cal. Rptr. 192, 507 P.2d 1400, 55 A.L.R.3d 191], this court found that a complaint charging that encyclopedia salespeople made misrepresentations to individual purchasers was sufficient to state a cause of action for a violation of section 17500. (See also People v. Bestline Products, Inc. (1976) 61 Cal. App.3d 879, 922-924 [132 Cal. Rptr. 767].) And in People v. Conway (1974) 42 Cal. App.3d 875 [117 Cal. Rptr. 251], the Court of Appeal upheld a criminal conviction for a violation of section 17500 based on the finding that representatives of an automobile dealership had made false or misleading statements to individual customers. [6] These judicial interpretations of similar language in a code section covering the same problem  false and misleading statements to the public  are persuasive in this case. (5) Words with an accepted judicial interpretation should be given the same interpretation in statutes dealing with the same subject matter. ( Kuntz v. Kern County Employees' Retirement Assn. (1976) 64 Cal. App.3d 414, 422 [134 Cal. Rptr. 501].) (4c) Here, the Legislature has chosen to use the same broad language in two similar statutes. Prior interpretations of Business and Professions Code section 17500 should be followed both because they are of precedential value and because they present a reasonable and persuasive interpretation of the disputed language. The one published Court of Appeal decision considering this aspect of section 11713, Feather River Trailer Sales, Inc. v. Sillas (1979) 96 Cal. App.3d 234, 248-249 [158 Cal. Rptr. 26], came to the same conclusion. Noting that [t]he issue need not be belabored, the court held that one-to-one statements fall within the reach of the statute. The term `advertised' as it is used in the Vehicle Code sections before us, is nowhere specifically defined in that code. Historically, however, the terms advertising and `advertisement' have been held to be broad enough to include oral representations made on a one-to-one basis.... [¶] We hold, therefore, that the trial court erred in concluding that the one-on-one discussions between plaintiffs and the [customers] could not come within the statutory meaning of the term `advertising.' ( Ibid. ) (6) The Ford Dealers argue that this interpretation of section 11713, subdivision (a) brings it into conflict with section 11705, subdivision (a)(14), which authorizes suspension of a dealer's license when the licensee has caused any person to suffer as a result of fraudulent representations. They label this section a specific provision covering misrepresentations made to individuals, and assert that it prevails over the general provisions of section 11713, subdivision (a). However, the Ford Dealers ignore the crucial distinctions between the two statutes. While the statute barring fraudulent representations requires actual reliance on the misrepresentations, section 11713, subdivision (a) penalizes the making or dissemination of the statements, regardless of how they are received by the customer. It has been recognized in recent years that the evils of deceptive advertising cannot be reached effectively if legislation to that end is interpreted to require proof of actual reliance upon a false statement knowingly made.... ( Webster v. Board of Dental Examiners (1941) 17 Cal.2d 534, 541 [110 P.2d 992].) Section 11713, subdivision (a) is far broader than the statute relied on by the Ford Dealers. There is no conflict between the statutes, and no basis for concluding that either one supersedes the other. (3c) The Ford Dealers' contention that section 11713, subdivision (a) does not authorize the DMV to penalize licensed dealers for the statements of their employees must also be rejected. The courts have repeatedly held that licensees are responsible for the acts of their employees. `The licensee, if he elects to operate his business through employees must be responsible to the licensing authority for their conduct in the exercise of his license....' By virtue of the ownership of a ... license such owner has a responsibility to see to it that the license is not used in violation of law. ( Cornell v. Reilly (1954) 127 Cal. App.2d 178, 186-187 [273 P.2d 572]; Camacho v. Youde (1979) 95 Cal. App.3d 161 [157 Cal. Rptr. 26]; Kirby v. Alcoholic Bev. etc. Appeals Bd. (1973) 33 Cal. App.3d 732, 737 [109 Cal. Rptr. 291].) The settled rule that licensees can be held liable for the acts of their employees comports with the general law governing principal-agent liability. An agent represents his principal for all purposes within the scope of his actual or ostensible authority.... (Civ. Code, § 2330.) When a licensed dealer places salespeople in the position to work with customers, the dealer is responsible for the actions of those employees. In Feather River Trailer Sales, Inc. v. Sillas, supra, 96 Cal. App.3d 234, the Court of Appeal interpreted section 11713, subdivision (a) as incorporating the standard concept of principal-agent liability. In that case, a corporation was held liable for the misleading oral statements of a salesperson. In support of this interpretation of the statute, the DMV notes that a violation of section 11713, subdivision (a) is grounds for the revocation of a salesperson's license. (See § 11806, subd. (d).) In addition, the DMV notes that many licensed automobile dealerships are corporate entities. To hold section 11713, subdivision (a) applicable only to the statements of licensed dealers would gut the statute of much of its force. [7] In a similar fashion, cases construing Business and Professions Code section 17500 have consistently held business managements liable for the acts of their agents. The bank in Chern v. Bank of America, supra, 15 Cal.3d 866 was held liable for the statements of its employees. The corporation in People v. Superior Court ( Jayhill ), supra, 9 Cal.3d 283 was held liable for the acts of its salespeople. And in People v. Conway, supra, 42 Cal. App.3d 875, the Court of Appeal upheld the criminal conviction of the president of an automobile dealership, based in part on the false and misleading statements of his employees. The court found the evidence sufficient to show that appellant, as president of Pasadena Motors, was in a position to control the activities of the dealership and thus could be held criminally liable for false advertising. ( Id., at p. 886, italics in original. See also Goodman v. Federal Trade Commission (9th Cir.1957) 244 F.2d 584, 590-593 [corporation liable for acts of salespeople under statute barring unfair or deceptive acts or practices in commerce].) [8] The Ford Dealers argue that cases construing Business and Professions Code section 17500 are not on point because that section specifically applies to all persons making misleading statements. However, the Ford Dealers misunderstand the DMV's citation to these cases. The decisions in Chern, Jayhill and Conway all held employers liable for the statements of their employees. The fact that under the statute the employees might have been held liable as individuals was not necessary to the conclusion that liability should be imputed to their employers. Thus, cases finding that Business and Professions Code section 17500 incorporates the concept of principal-agent liability are relevant to the interpretation of section 11713, subdivision (a). The facts of People v. Conway, supra, 42 Cal. App.3d 875, demonstrate the importance of principal-agent liability. There, the district attorney had received over 500 complaints about defendant's business transactions. Defendant himself did not personally make many of the statements on which liability was based. However, the court found him liable for the numerous illegal acts of his employees. Only through imposing liability on the licensee can such conduct be effectively controlled. The DMV properly construed section 11713, subdivision (a) to apply to the one-to-one statements of salespeople, as well as those of the dealers themselves. Therefore, the trial court erred in finding regulation 402.00 invalid.