Sage Automotive Group and its owners settled with the Federal Trade Commission last week on charges the group’s stores used deceptive and unfair sales and financing practices, deceptive advertising and deceptive online reviews to draw in customers. But their attorney says his clients have run their business lawfully and settled to avoid the cost of extensive litigation.
The settlement totals $ 3.6 million, but attorney Aaron Jacoby, a partner at Arent Fox in Los Angeles, said each dealership has agreed to pay $ 276,000.
Sage said in a statement last week that to bypass the overwhelming cost of prolonged litigation, it “agreed to settle the action with an agreement to stand by the company’s commitment to follow the law and to pay, to consumers and not to the government, approximately $ 276,000 per named entity.” The payout applies to 13 of the 14 defendants: nine Los Angeles-area dealerships, Michael Sage, Joseph Sage, Sage Holding Company Inc. and Sage Management Company Inc.
“If the cost for getting to your day in court outweighs a settlement, often people choose a settlement even if they don’t believe the other side has proven anything,” Jacoby told Automotive News.
He added that he does not expect the settlement to affect Sage Automotive’s business.
Lack of allegations
In a February motion to dismiss the complaint, Sage’s attorneys said the FTC failed to say when and how the dealerships behaved unlawfully. The FTC did not include specific dates that potentially deceptive advertisement ran, where they ran or if they were ever circulated, the motion said.
The FTC, according to the motion, also neglected to point to illegal conduct among six of the named defendants: Sage Holding Company, Sage Management Co., Sage Pre-Owned, Joseph Sage, Leonard Sage and Michael Sage. “These six Defendants are lumped into the caption and identified among the fourteen Defendants, but the Complaint does not contain a single allegation amounting to misrepresentation or omission whatsoever against these Defendants,” the motion said. “This silence is deafening, particularly in light of the fact that the FTC has been investigating Defendants’ alleged conduct for almost three years.”
The dealership group said in the statement it “believes that it has always met its regulatory responsibilities and looks forward to continuing to provide outstanding sales and service to its customers.”
Sage Automotive Group cooperated with the FTC for many years as the regulator reviewed thousands of pages of advertisements and other documents, the statement said. The dealership group considers the FTC’s claims to be “without merit and overreaching,” the statement said.