However, as cars grow “smarter,” the right to repair them is under siege.
As legalscholars, we find that the question of whether you and your local mechanic can tap into your car’s data to diagnose and repair spans issues of property rights, trade secrets, cybersecurity, data privacy and consumer rights. Policymakers are forced to navigate this complex legal landscape and ideally are aiming for a balanced approach that upholds the right to repair, while also ensuring the safety and privacy of consumers.
Understanding telematics and right to repair
Until recently, repairing a car involved connecting to its standard on-board diagnostics port to retrieve diagnostic data. The ability for independent repair shops – not just those authorized by the manufacturer – to access this information was protected by a state law in Massachusetts, approved by voters on Nov. 6, 2012, and by a nationwide memorandum of understanding between major car manufacturers and the repair industry signed on Jan. 15, 2014.
However, with the rise of telematics systems, which combine computing with telecommunications, these dynamics are shifting. Unlike the standardized onboard diagnostics ports, telematics systems vary across car manufacturers. These systems are often protected by digital locks, and circumventing these locks could be considered a violation of copyright law. The telematics systems also encrypt the diagnostic data before transmitting it to the manufacturer.
This reduces the accessibility of telematics information, potentially locking out independent repair shops and jeopardizing consumer choice – a lack of choice that can lead to increased costs for consumers.
Also, these telematics systems fall outside the scope of the original Massachusetts legislation and the nationwide memorandum of understanding. Recognizing the pivotal role diagnostic data plays in vehicle maintenance and repair, 75% of Massachusetts voters approved a ballot initiative on Nov. 3, 2020, to amend the state’s repair legislation. The amendment aims to ensure that the switch to telematics does not curtail an effective right to repair vehicles.
Specifically, the new law requires manufacturers selling telematics-equipped vehicles from the 2022 model year onward to provide car owners and their chosen repair shops access to the vehicle’s mechanical data through an interoperable, standardized and open-access telematics platform. Access should also encompass the ability to relay commands to components of the vehicle, if necessary, for maintenance, diagnostics and repair. Voters in Maine overwhelmingly approved a similar measure on Nov. 7, 2023.
However, the Massachusetts law was the subject of a lawsuit in federal court shortly after voters approved it in 2020, and it was suspended until June 1, 2023.
Safety and privacy concerns
While the amendment makes significant strides toward creating a level playing field in vehicle maintenance and repair, the National Highway Traffic Safety Administration and car manufacturers have raised concerns about the legislation.
The National Highway Traffic Safety Administration’s main concern revolves around cybersecurity vulnerabilities with potential ramifications for vehicle safety, particularly the amendment’s provision for two-way access. A hacker could potentially take control of a car’s critical systems like accelerator, brakes and steering. Consequently, the agency recommended that car manufacturers not adhere to the law.
A related argument is that Massachusetts law is preempted by federal law. This forms the basis of a lawsuit filed in November 2020 by the Alliance for Automotive Innovation against Massachusetts’ attorney general.
Critics also emphasize the privacy concerns associated with open access to telematics systems. Granting third-party access could expose personal details, especially real-time location data. Advocacy groups warn that this information might be used as a tracking tool by potential abusers and others aiming to exploit people.
The National Highway Traffic Safety Administration and Massachusetts’ attorney general appear to have reached a consensus on alterations to the law, and the administration has dropped its recommendation that manufacturers disregard the law.
The primary adjustment would mean a telematics platform would be in compliance with the right to repair law if it were accessible within close proximity to the vehicle – for example, via Bluetooth. The National Highway Traffic Safety Administration confirmed that this would be safer and align with federal law.
However, repair advocates have criticized this change as unduly restrictive. They argue that it gives authorized car dealers an unfair advantage over independent repair shops because the manufacturers allow the dealers to access the data remotely.
A new federal bill, the REPAIR Act, was recently introduced in the House, seeking to require vehicle manufacturers to provide access to in-vehicle diagnostic data, including telematics. This bill’s first hearing occurred on Sept. 27, 2023, and the bill passed out of subcommittee on Nov. 2.
Who owns your car’s data?
One issue left unresolved by the legislation is the ownership of vehicle data. A vehicle generates all sorts of data as it operates, including location, diagnostic, driving behavior, and even usage patterns of in-car systems – for example, which apps you use and for how long.
In recent years, the question of data ownership has gained prominence. In 2015, Congress legislated that the data stored in event data recorders belongs to the vehicle owner. This was a significant step in acknowledging the vehicle owner’s right over specific datasets. However, the broader issue of data ownership in today’s connected cars remains unresolved.
Whether data should be subject to property rights is a matter of debate. If deemed property, it seems logical to award these rights to the vehicle owner because the vehicle creates the data while used by the owner. However, through contractual terms and digital locks, manufacturers effectively secure control over the data.
The question of ownership aside, the crux of the matter for right to repair is guaranteed access for vehicle owners to their vehicles’ data.
A way forward
While concerns surrounding the Massachusetts legislation have merit, we believe they should not overshadow the need to preserve a competitive space in the auto repair sector and preserve the right to repair. This matters not only for safeguarding consumers’ autonomy and ensuring competitive pricing, but also for minimizing environmental waste from prematurely discarded vehicles and parts.
The hope is that policymakers and the industry can strike a balance: upholding the right to repair without compromising safety and privacy. One possibility is developing tools that segregate sensitive personal information from mechanical data.
Ultimately, a successful implementation of the new law in Massachusetts may pave the way for a renewed nationwide memorandum of understanding, capturing the essence of the original memorandum of understanding and preserving the right to repair cars in the face of rapidly advancing technologies.
it’s an opportunity to ensure these ‘artificial persons’ follow the law
by Daniel Gervais, Vanderbilt University and John Nay, Stanford University
Only “persons” can engage with the legal system – for example, by signing contracts or filing lawsuits. There are two main categories of persons: humans, termed “natural persons,” and creations of the law, termed “artificial persons.” These include corporations, nonprofit organizations and limited liability companies (LLCs).
Up to now, artificial persons have served the purpose of helping humans achieve certain goals. For example, people can pool assets in a corporation and limit their liability vis-à-vis customers or other persons who interact with the corporation. But a new type of artificial person is poised to enter the scene – artificial intelligence systems, and they won’t necessarily serve human interests.
As scholarswho study AI and law, we believe that this moment presents a significant challenge to the legal system: how to regulate AI within existing legal frameworks to reduce undesirable behaviors, and how to assign legal responsibility for autonomous actions of AIs.
This is far from a philosophical question. The laws governing LLCs in several U.S. states do not require that humans oversee the operations of an LLC. In fact, in some states, it is possible to have an LLC with no human owner, or “member” – for example, in cases where all of the partners have died. Though legislators probably weren’t thinking of AI when they crafted the LLC laws, the possibility for zero-member LLCs opens the door to creating LLCs operated by AIs.
Many functions inside small and large companies have already been delegated to AI in part, including financial operations, human resources and network management, to name just three. AIs can now perform many tasks as well as humans do. For example, AIs can read medical X-rays and do other medical tasks, and carry out tasks that require legal reasoning. This process is likely to accelerate due to innovation and economic interests.
A different kind of person
Humans have occasionally included nonhuman entities like animals, lakes, and rivers, as well as corporations, as legal subjects. Though in some cases these entities can be held liable for their actions, the law only allows humans to fully participate in the legal system.
One major barrier to full access to the legal system by nonhuman entities has been the role of language as a uniquely human invention and a vital element in the legal system. Language enables humans to understand norms and institutions that constitute the legal framework. But humans are no longer the only entities using human language.
An LLC established in a jurisdiction that allows it to operate without human members could trade in digital currencies settled on blockchains, allowing the AI running the LLC to operate autonomously and in a decentralized manner that makes it challenging to regulate. Under a legal principle known as the internal affairs doctrine, even if only one U.S. state allowed AI-operated LLCs, that entity could operate nationwide – and possibly worldwide. This is because courts look to the law of the state of incorporation for rules governing the internal affairs of a corporate entity.
We believe the best path forward, therefore, is aligning AI with existing laws, instead of creating a separate set of rules for AI. Additional law can be layered on top for artificial agents, but AI should be subject to at least all the laws a human is subject to.
In addition to embedding law into AI agents, researchers can develop AI compliance agents – AIs designed to help an organization automatically follow the law. These specialized AI systems would provide third-party legal guardrails.
Researchers can develop better AI legal compliance by fine-tuning large language models with supervised learning on labeled legal task completions. Another approach is reinforcement learning, which uses feedback to tell an AI if it’s doing a good or bad job – in this case, attorneys interacting with language models. And legal experts could design prompting schemes – ways of interacting with a language model – to elicit better responses from language models that are more consistent with legal standards.
Law-abiding (artificial) business owners
If an LLC were operated by an AI, it would have to obey the law like any other LLC, and courts could order it to pay damages, or stop doing something by issuing an injunction. An AI tasked with operating the LLC and, among other things, maintaining proper business insurance would have an incentive to understand applicable laws and comply. Having minimum business liability insurance policies is a standard requirement that most businesses impose on one another to engage in commercial relationships.
The incentives to establish AI-operated LLCs are there. Fortunately, we believe it is possible and desirable to do the work to embed the law – what has until now been human law – into AI, and AI-powered automated compliance guardrails.
As a sociologist, I wanted to understand why this is. So I spent more than 10 years interviewing over 200 Black workers in a variety of roles – from the gig economy to the C-suite. I found that many of the problems they face come down to organizational culture. Too often, companies elevate diversity as a concept but overlook the internal processes that disadvantage Black workers.
Take “Constance,” for example – not her real name – who is a Black female chemical engineering professor at a major research university. Her university proclaims its commitment to diversity and inclusion, with several offices and initiatives dedicated to this goal.
Yet she told me that most leaders at her school are uncomfortable trying to achieve racial diversity. They’d rather be “colorblind” – that is, they’d rather not acknowledge or address racial disparities or the institutional rules and norms that perpetuate them. So their attempts to pursue diversity translate into attempts to hire more women faculty but not more Black faculty.
“Kevin” offers another instructive example. He’s a Black man who works at an education nonprofit that aims to help kids – a laudable goal. His workplace touts its culture of collaboration and says that it demonstrates its commitment to diversity by supporting children from all backgrounds.
But in practice, Kevin found that the organization often shunned and patronized Black parents, treating them disrespectfully. And despite his employer’s stated support for diversity, Kevin says his efforts to highlight these problems usually went ignored.
And then there’s “Brian.” A film producer with extensive Hollywood experience, Brian was excited about taking a job with a major studio. He thought it would give him an opportunity to bring more films about the variety of Black experience to audiences. And since studio leaders talked a big game about innovation, creativity and original thinking, this seemed like a reasonable assumption.
But once he started in this role, Brian learned that the studio was dominated by a market-driven culture, which leaders used to justify not investing in films by and about Black people. Importantly, the same logic around Black filmmakers rarely seemed to apply to white ones, Brian said – those who directed flops were still given multiple chances to keep working. Pointing out this hypocrisy failed to change minds or practices, Brian found.
When a DEI statement isn’t enough
What do these three people, working in very different industries, have in common? They all work for employers that have a stated commitment to diversity – and an organizational culture that belies and even undermines it.
When these companies commit to diversity but fail to tackle racial diversity specifically, it becomes easy for workers like Constance, Kevin and Brian to find that the issues they experience get overlooked and that there’s no effective way to bring them forward. They get stuck in the gray areas.
Israel and the United States will find themselves on the wrong side of history because of the atrocities being committed in the Gaza Strip. As this is being written, the death toll in Gaza surpassed 5,700, and 2,300 of those were children, this number doesn't include those still buried under the rubble of buildings destroyed by missiles.
First, let me state that I am not anti-Semitic! Anyone who disagrees with anything that Israel does is labeled as such. I have long admired Jewish success or dominance in certain industries such as banking, entertainment, law, and science among others despite Jews being less than 1% (.2%) of the world's population. One of my favorite books is "The Secret War Against the Jews". I can't say for sure, but I believe it was that book that explained how Jewish males were required to read to Torah. The Jewish people had a literacy head start of about two thousand years, one of the reasons for their success.
Before going any further, it is important to understand the history of Palestine and Israel. Prior to WWII, the land now occupied by Israel was Palestine. The land was under British control and they allowed the UN to decide how to divide Palestinian land and give a majority of it to Israel. Below is a video that provides a brief history of the Israel-Palestine conflict.
Imagine the United States decides to allow some refugees to come to America and then comes to your home and divides a portion of your home for refugees and a smaller portion for you and your family. Then let's say the refugees decide they need more space and take an even larger portion of your home by force, preventing you from moving about freely, and deciding when and what you can bring home. That's what happened in Palestine.
I hadn't planned on commenting on this topic until I saw that the City of St. Louis was considering a proclamation of solidarity with Israel which in my opinion a proclamation approving Apartheid and Genocide!
It was bad enough that President Bidden pledged U.S. solidarity and weapons support to Israel after it had committed war crimes by targeting civilians, but the fact that St. Louis was blindly jumping on the bandwagon was the final straw.
Last year, Amnesty International called Israel's Apartheid, "a cruel system of domination and a crime against humanity". Two years ago, Human Rights Watch, commented about Israel's crimes of Apartheid and persecution. The United Nations recently expressed concerns about Israel committing the crimes of ethnic cleansing and genocide.
During a 2013 speech in Jerusalem, President Obama counseled Israelis to "look at the world through" the eyes of Palestinians and recognize that "Neither occupation nor expulsion is the answer – just as Israelis built a state in their homeland, Palestinians have a right to be a free people in their own. Obama's speech below is set to start at 31 minutes and 40 seconds of the video where he talks about Palestine, however, feel free to watch the entire video.
The Palestinian oppression issue is so clear that hundreds of Jewish protestors in D.C. wearing T-shirts with the slogan, "not in our name", demanded that Congress pass a cease-fire resolution in the Israel-Gaza war amid an intensifying humanitarian crisis. They stated they didn't want to see atrocities committed against Palestinians in their name. Award-winning Israeli journalist and author Gideon Levy, whose recent column for Haaretz states the obvious in the headline “Israel Can’t Imprison Two Million Gazans Without Paying a Cruel Price.”
I don't condone Hamas' surprise attack on October 7th. Peaceful resolutions are always preferred, but as I have stated, "It's foolish to let your oppressor tell you that you should forget about the oppression that they inflicted upon you". It's equally foolish for your oppressor to dictate how you should respond to that oppression.
Remember that Nelson Mandela and the African National Congress (ANC) were considered terrorists. Mandela was not removed from the U.S. Terror Watch List until 2008. The oppressor sees a terrorist when the oppressed see a freedom fighter!
"A freedom fighter learns the hard way that it is the oppressor who defines the nature of the struggle, and the oppressed is often left no recourse but to use methods that mirror those of the oppressor. At a point, one can only fight fire with fire." – From Mandela's book, "Long Walk to Freedom"
As the conflicts between Israel and Palestine and Russia and Ukraine continue, remember, "War is a Racket", there is no greater profit generator than war. Remember what President Eisenhower said before leaving office, "Beware of the Military Industrial Complex". Those who make weapons and profit off conflict don't want peace, they want to sell more guns, bombs, ammo, planes, tanks, and other machinery of war.
The month before Kim Gardner was sworn in, I published an article that made the following prediction: "Make no mistake, if Ms. Gardner proves to be a fair prosecutor, there will certainly be those that will attempt to distort her statements, vilify her actions and generally discredit her. There is a private prison system that stands to lose millions of dollars under a non-oppressive system."
The oppression of African-Americans is big business. Police officers often earn six figures annually, judges, prison food service, prison guards, probation officers, tech companies that supply ankle monitoring systems, and a multitude of others make their living and profits because of the continuing oppression of others. Take away the oppression and their income is taken away. Oppression and racism are big business, and always have been!
Article by Jeremy Kohler
After the 2014 fatal police shooting of Michael Brown in Ferguson, Missouri, and the months of protests that followed, the city of St. Louis was forced to reckon with its Black residents’ longstanding distrust of its police and courts.
Kim Gardner emerged as a voice for change. A lifelong resident of St. Louis, she had diverse professional experiences, having worked as a funeral director, a nurse, a lawyer, and a state legislator. When campaigning for circuit attorney, the city’s top prosecutor, she focused on the disproportionate frequency of arrests and police officers using force against St. Louis’ Black community.
“We need to change decades of old practices that left many in our community distrustful of the criminal justice system as a whole,” she told The St. Louis American, the city’s Black newspaper, just days before her decisive primary victory in August 2016 that all but sealed her general election win.
In the last decade, prosecutors in other major American cities also campaigned on promises of systemic reform: Kim Foxx in Chicago, Larry Krasner in Philadelphia, and Chesa Boudin in San Francisco.
Yet, much like Gardner, these prosecutors have faced resistance from the police and the unions that represent rank-and-file officers. They’ve been accused of being soft on crime and have even been met with political maneuvers aimed at derailing their initiatives. Several have been targeted by efforts to remove them from office or pare away their powers.
Boudin lost a recall vote and was removed in June 2022. And Krasner, criticized for his reduced emphasis on prosecuting minor crimes, was impeached by the state legislature in November, although a state court threw out the result.
In Florida, Gov. Ron DeSantis has removed elected prosecutors in Tampa and Orlando. He suspended Hillsborough County State Attorney Andrew Warren over Warren’s refusal to prosecute offenses related to abortion and gender-related health care. He suspended the state attorney for Orange and Osceola counties, Monique Worrell, because he said she wasn’t tough enough on some serious offenses.
Georgia recently became the first state to establish a commission with the authority to discipline and even remove local elected prosecutors. Republican Gov. Brian Kemp framed the law as a way to check “far-left prosecutors.”
Gardner, who was reelected in 2020, stepped down in May of 2023 while facing both a lawsuit from the state attorney general that sought her removal and a separate attempt by the Republican-led legislature to curtail her authority. Gardner’s mismanagement of her office played a significant role in her downfall. Reform-minded lawyers who she personally hired had departed. And while judges fumed about prosecutors failing to show up for court, Gardner was moonlighting as a nursing student.
“For every progressive prosecutor who’s managed to stick it out, there’s one who’s either been recalled or driven out,” said Lara Bazelon, a University of San Francisco law school professor who volunteered on Boudin’s campaign and serves as chair of the commission he created to review inmates’ claims of innocence. “So it’s a real mix of success and cautionary tales.”
She added: “If the police are against you, or literally out to get you, you’re probably not going to be able to last in that job.”
Foxx, elected in 2016 and reelected in 2020, announced in April that she will not seek a third term next year, though she said it was not because of resistance from the police. In an interview, Foxx said that even before she took office, the Chicago police union felt threatened by her assertion that Black lives matter and that the criminal justice system could be more fair, particularly to communities of color.
It was a signal, she said, “that I was not one of them.”
“The reality is we were offering something very different to what was traditionally viewed as the law-and-order approach to prosecution,” Foxx said. “I think it was surprising to folks that prosecutors could be elected addressing these issues.”
R. Michael Cassidy, a law professor at Boston College and an expert in prosecutorial ethics, said the Ferguson unrest emphasized the need for change in how police and prosecutors work. He said some prosecutors have failed to manage their relationships with police; prosecutors depend on the officers to bring them cases and to testify in court, but they must conduct oversight of the police as well.
Foxx pushed back against any assertion that she didn’t manage her relationship with police. She pointed to a popular Chicago police blog that often refers to her as “Crimesha” — “a play on the word ‘crime’ and what I believe to be a racist insinuation about me being Black with the name ‘-esha.’” The blog has also sexualized her last name by adding a third X and has insinuated that members of her family are connected to gangs.
“From the moment we came into office, we reached out to our partners in law enforcement, and what we saw was there was a segment of them who were never going to be satisfied with me in this role because I said ‘Black lives matter,’ because I said ‘We need police accountability,’ because I said that we had a criminal justice system that overly relied on incarceration that targeted Black and brown communities,” she said.
She said that she, Gardner, and other prosecutors “have been faced with an unprecedented level of hate and vitriol” from the police.
“That,” she said, “is the story.”
Chicago Fraternal Order of Police President John Catanzara and other union officials did not respond to requests for comment. But Catanzara told the Chicago Sun-Times in 2020 that the union’s complaints about Foxx were based on her job performance. He said she was a “social activist in an elected law enforcement position” who was unwilling to “faithfully do her job.”
But as property crime rates climbed in San Francisco, Boudin came under increased scrutiny.
Cassidy said Boudin and other like-minded prosecutors have been scapegoated for isolated incidents or temporary spikes in crime statistics, as if they alone are responsible. In some cities, that has swung public opinion against them.
Boudin said the claims were unfair and largely the product of police resistance to his reforms.
“We’ve seen, on body-worn camera footage, police officers telling victims there’s nothing they can do and, ‘Don’t forget to vote in the upcoming recall election,’” Boudin said in an interview.
Boudin said he and other local prosecutors have found “there is absolutely zero accountability for these officers who engage in explicitly political acts of sabotage or dereliction of duty.”
A spokesperson for the San Francisco police union declined to comment.
Some prosecutors have held onto their positions despite challenges to their power. In November, veteran public defender Mary Moriarty was elected county attorney for the jurisdiction that includes Minneapolis in the first election since the death there of George Floyd. The same night, Dallas District Attorney John Creuzot was reelected by a nearly 20-point margin in spite of calls by a police union for his ouster over his plan not to prosecute certain low-level offenses.
In August 2022, Sarah George, the incumbent state’s attorney in Vermont’s Chittenden County, which includes Burlington, secured her seat with a 20-point victory in the Democratic primary over Ted Kenney, a challenger backed by the police.
George had introduced a variety of reforms, including eliminating cash bail and declining to prosecute cases where evidence was obtained during noncriminal traffic stops, like those for broken taillights. The Burlington police union called her actions “disastrous” and Kenney argued that the approach made streets less safe.
George, too, has seen police body camera video of officers blaming her for crime. In one video, which she provided to ProPublica, the Riverfront Times and NPR, an officer from a suburban police department tells a couple that officers can’t do anything about a crack house in their neighborhood. He then implores them to vote for Kenney because of George’s “super-progressive, soft-on-crime approach where we arrest the same people daily and they get out the same day.”
George said that, with some crime investigations, the police are “not really doing the work that we need to do on the case, and then blaming us for the case not being filed.”
The Burlington police union declined to comment. The chiefs of police in Burlington and Winooski, the suburb where the video was taken, did not respond to messages seeking comment.
Gardner, too, often faced criticism from police for her reluctance to prosecute cases based on arrests alone. In one notable instance in 2019, she dropped child-endangerment charges against two daycare workers who were captured on video as they appeared to encourage toddlers to box using toy Incredible Hulk fists.
The police union called for her ouster, writing on Facebook: “The first rule of toddler fight club is … that you prosecute the sadistic promoters of toddler fight club.”
In comments made before her resignation, Gardner noted that she had been careful not to file criminal charges in cases where she did not feel there was enough evidence. “What they want me to do is make it look like this job is easy,” she said. “We can’t make things fit and people don’t like that. That’s not what justice is about.”
Richard Rosenfeld, a professor emeritus of criminology at the University of Missouri, St. Louis, was one of several researchers who pooled data from 65 major cities and found “no evidence to support the claim that progressive prosecutors were responsible for the increase in homicide during the pandemic or before it.”
Indeed, Chicago’s murder rate fell during Foxx’s first years in office, rose during the first years of the pandemic and has been falling this year, city crime statistics show. Philadelphia’s murder rate was in steep decline this year after a precipitous rise that started in 2020. And most categories of crime were in retreat in St. Louis at the time Gardner resigned, while violent crime was up in San Francisco a year after Boudin’s exit, according to statistics.
Acknowledging that the St. Louis police commonly blamed Gardner for crime trends, Rosenfeld, a veteran observer of policing in St. Louis, said, “Case not proved, is what I would argue there.”
Republished with permission from Propublica under license.
My friend "G" helped her daughter purchase a used vehicle from Pappas Toyota in St. Peters, MO, but now suspects the dealer committed fraud. Although "G" gave me permission to tell her story as a teachable moment; I'm not using "G's" name or her daughter's because "G" is a law enforcement officer.
These teachable moments are offered to provide our readers with real-life case situations that provide facts and analysis and possible remedies for common legal situations.
Facts and Background
On Monday, February 20, 2023, "G" sent her 19-year-old daughter, "T", to Pappas Toyota to test drive a 2013 Nissan Pathfinder that "G" saw online. "G" was unable to go with her daughter because "G" was working an extreme amount of overtime at that point. "G," asked me to accompany her daughter because "T" was nervous to go by herself.
After the test drive, "T" and I sat down with the salesperson to discuss preliminaries, and after several phone calls back and forth to "G", "G" took over negotiations with the salesperson over the phone. "G" was assured over the phone by the salesperson that the Pathfinder had no known issues, had gone through an extensive vehicle inspection process, had been state inspected, was a solid vehicle, and should provide reliable and trouble-free transportation for some time. In fact, the dealer stayed fairly firm on the price because the vehicle was in exceptional condition. The Pathfinder was purchased on February 24th.
On or about March 27th, Pappas was called because the Pathfinder's engine light came on and the vehicle was shaking when driving 40 mph or higher. An appointment was set for April 4th, Pappas performed a diagnostic test and replaced the "Plenum Gasket, Ignition Coil, and spark plugs". Pappas assured "G" and "T" that this would solve the problem and they spent $726 for that service. A few days later, the engine light came back on and when "T" called Pappas to report it, the service department told her there was no problem and that the engine light just needed to be reset. Pappas told "T" to look in the owner's manual for instructions on how to reset the light.
On July 12th, the Pathfinder stalled on Halls Ferry near Lindbergh and had to be towed about two blocks to Ronsick Auto Care. They performed a diagnosis on July 13th and determined that the entire Catalytic Converter System had failed. They further explained that the system includes three Catalytic converters and that it takes a substantial amount of time for the entire system to fail. Since the system includes three catalytic converters, the estimate to replace including labor was over $5,000. When "G" explained that they had just purchased the vehicle in February, Ronsick's professional opinion was that the vehicle was sold with a bad catalytic converter system.
On Thursday, July 13th, "T", phoned the salesperson at Pappas Toyota who sold the vehicle and explained the situation, and asked if Pappas would fix or allow the Pathfinder to be exchanged for another vehicle but was told Pappas couldn't do anything since she hadn't purchased an extended warranty.
On Friday, July 14th, a letter was faxed to Pappas, detailing the information above and that "G" and "T" believed the Pathfinder's conditions were preexisting prior to their purchase. Fraud was suspected because as automotive experts, Pappas knew or should have known the actual condition of the Pathfinder but did not disclose and maybe even illegally reset the engine check light to conceal the defects.
G & T chose to purchase from Pappas because they believe it to be a reputable and honest business and they were trying to avoid running into this sort of situation from a disreputable used car dealer. They demanded that Pappas make them whole and repair the Pathfinder at no cost per the Missouri Merchandizing Practices Act RSMo 407.020 et al. The following was stated in the letter to Pappas:
"This is a good faith attempt to resolve this issue, however, If we do not hear from Pappas by 2 pm today, Friday, July 14th, we will take the following actions.
My daughter, several of her friends, and family members are preparing an informational picket to take place on the public areas outside of Pappas Toyota.
A copy of this letter and a short press release will be sent to local media outlets.
If those activities produce no results, we will file a small claims complaint with St. Charles Circuit Court and let a judge decide if Pappas should have known about the defects prior to the sale."
Pappas Toyota Non-Responsive
G received no response from Pappas Toyota, since they didn't attempt to contact her, she filed complaints with the Missouri Attorney General's Office and several consumer complaint sites Friday evening. Because of the weather forecast, T canceled a planned information picket for Saturday, July 15th, however, she may reschedule later.
G is now researching and organizing documents and plans to file a small claims suit against Pappas Toyota. This page will be updated when additional information about the outcome is available.
Fraud and Lawsuit Analysis
In Missouri courts, small claims are limited to $5,000, see Missouri Rules for Small Claims Court and the Missouri Small Claims Court Handbook (PDF). According to the fee schedule for St. Charles Circuit Court, the filing fee will be $20.50. Because their claim is potentially greater than $5,000, G & T are also considering filing a standard civil lawsuit. RSMO 402.025 allows for possible reimbursement of attorney fees and punitive damages. If a civil vs small claims suit is filled, G & T will seek to recover the $729 spent in April for repairs, the cost to replace the catalytic converter system, lost time from work, car rental reimbursement, any other fees and cost associated with the action including attorney fees and punitive damages.
Missouri Revised Statute 400.2-314 provides an implied warranty of merchantability and the Missouri Supreme Court ruled in Herbert v. Harl, 757 SW 2d 585 that the statute applies to car dealers. A “warranty of merchantability” means the dealer promises the car will do what it's supposed to do: it will run. However, there are exclusions under RSMO 400.2-316, if the sales contract contains the term "as-is" the warranty of merchantability does not apply.
Pappas Toyota will most likely deny liability by stating that the vehicle was sold "as-is", however, that argument does not exempt them from liability under Missouri Merchandizing Practices Act RSMo 407.020 et al.
The Federal Trade Commission’s (FTC) Used Car Rule requires dealers to display a Buyers Guide in every used car they offer for sale and to give it to buyers after the sale. Pappas Toyota did not display a Buyers Guide when T and I test-drove the vehicle, however, they did have her sign one at the time of sale. Before and immediately after the test drive, I took several photos of the entire vehicle to record the condition and show to G, after reviewing those photos, I noticed there was no buyer's guide.
In the photo above, there is a sign in the building's window advertising Pappas Premium, which is a peace of mind pledge. The following statement appears on the PappasToyota.com Pappas Premium page, "A pre-owned vehicle from Pappas Toyota isn’t an ordinary used car. After passing a rigorous inspection and reconditioning process, it’s added to our lot with Pappas Premium, a nationwide 2-Year/100,000-Mile Limited Powertrain Warranty, with 24-Hour Roadside Assistance, One Year of Tire Hazard Protection, and more!" There is no disclaimer stating that some vehicles are excluded. Any reasonable person reading this statement would assume that this applies to all used vehicles sold at Pappas.
This assurance is one of the reasons G sent her daughter to Pappas. At the time of publication, T's 2013 Nissan Pathfinder according to CarFax has a retail value of $10,220, a private party value of $7,700, and a trade-in value of $4,400. Let's assume Pappas purchased the Pathfinder for around $4,700. The reason a customer would then respond to Pappas' advertised selling price of $10,700 is that it is expected that Pappas inspected and reconditioned the vehicle as stated in the Pappas Premium pledge. Otherwise, customers could simply purchase the vehicle from a private seller and save thousands of dollars.
Under the Missouri Merchandising Practices Act, false pretense, false promise, misrepresentation, unfair practice, or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce is an unlawful act. Pappas' salesperson mentioned how their used vehicles undergo an extensive inspection which matches with the Pappas Premium statement of a "rigorous inspection and reconditioning". A dealer has an affirmative duty to tell you certain “material facts” about a vehicle, whether or not you ask for them. This includes disclosing if a vehicle was a “lemon law” buyback, a prior rental, a prior salvage, or in an accident requiring major repair work such as frame or suspension damage.
Pappas Toyota is the expert here. It is reasonable to expect that if the vehicle needed to have the "Plenum Gasket, Ignition Coil, and spark plugs replaced, the "rigorous inspection" should have identified those issues prior to the sale. It is also reasonable that Pappas should have known that the catalytic converter system was bad. How many of the three catalytic converters have to fail before the engine light comes on?
According to Automotive Diagnostic Repair Help: "As a rule, when converter efficiency drops below 90 to 95 percent, it will set off a catalyst efficiency code. A vehicle with an illuminated Check Engine Light and ANY trouble codes will NOT pass an emissions check. A fouled converter may or may not cause an increase in backpressure, but eventually, it might if carbon starts to build in the honeycomb restricting the passageways. The important point to remember here is that converters don't just foul or plug up for no good reason. There is always an underlying cause which must be diagnosed and corrected before the problem can be eliminated. Identifying a plugged or fouled catalytic converter is only half the fix. Why? Because replacing a bad converter will only solve the current problem temporarily. If the underlying cause of the converter failure is not also diagnosed and repaired, sooner or later the new converter will likely suffer the same fate."
According to RepairSmith.com and several other sites, a vehicle normally can be driven indefinitely with a bad catalytic converter. A clogged catalytic converter can only prohibit you from driving your automobile in the most severe circumstances. According to PerformanceMuffler.net, "A failing car’s catalytic converter will create a significant backpressure that lowers your car’s engine performance. Whenever this happens, you will notice your car shaking frequently".
On February 15th, the date that Pappas Toyota performed the emissions inspection, the vehicle mileage was 143,287. On April 4th when Pappas performed the repairs, the mileage was 145,283. The mileage recorded by Ronsick on July 12 was 149,069. The Pathfinder was driven less than four thousand miles since Pappas supposedly took care of the vehicle’s issues.
When a small claims lawsuit is filed, the plaintiff (the person suing), bears the burden of proof and must convince a judge. This requires the plaintiff to put forth evidence in the form of witness testimony, documents, or objects. There are four elements that need to be proven to win a Missouri Merchandizing Practices Act suit.
(1) the plaintiff purchased, or attempted to purchase, merchandise (which includes services) from a defendant in the state of Missouri;
(2) the plaintiff’s purchase of, or attempt to purchase, merchandise (or services) was for personal, family, or household purposes;
(3) the plaintiff suffered an ascertainable loss of money or property; and
(4) the plaintiff’s ascertainable loss was a result of an action by a defendant that has been declared unlawful by § 407.020 RSMo.
In all likelihood, the condition of the plenum gasket, ignition coil, and spark plugs would have resulted in a check engine light prior to the sale. Additionally, since the catalytic converter was so bad that it failed just three months later indicates there were issues for a while even before G& T purchased it. Remember, even the mechanic that the car was towed to agrees that this was a preexisting condition, so why didn't Pappas catch this, was it fraud or negligence? Either way, it's a material fact that Pappas should have known that wasn't disclosed. However, a vehicle with a catalytic converter so bad that it causes the car to stall shouldn't have passed inspection in the first place which increases the likelihood fraud was involved. It's highly probable a judge will agree.
If you are a former or current employee of Pappas Toyota, a customer, or someone who has helpful information concerning this case contact us.
G contacted the St. Charles Circuit Court about filing the small claims suit against Pappas Toyota and was told that she must first send a certified demand letter to the registered agent. She visited the Missouri Secretary of State's office and search their records of business listings and discovered that Pappas Toyota is owned by North Motors Inc. and that Michael Pappas become the registered agent in March 2023, his father Thomas Pappas (the former registered agent), passed away the previous month. G sent her demand letter on Friday, July 21st.
On Monday, July 24th, G received an email from the Attorney General which included Pappas Toyota's response prepared by their attorney including three attached documents; "Retail buyer's order, buyer's guide, and a document declining extended service contract. Pappas' attorney as expected cited the sale as-is but also asserted the parties agreed to arbitration. Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
The irony here is that Section (a) of the attached Pappas arbitration clause states; "The Federal Arbitration Act, not state law, shall govern the arbitration process and the question of whether a claim is subject to arbitration. The customer, however, retains the right to take any claim, controversy or dispute that qualifies to small claims court rather than arbitration." The Pappas Toyota arbitration clause itself allows for issues to be taken to small claims court instead of arbitration. The important lesson is to carefully read any document provided by the opposition or their attorney.
An arbitration clause in a contract is usually binding, however, the Missouri Supreme Court has ruled that such clauses cannot waive the protection provided by the Missouri Merchandising Practices Act (MMP). See Shaffer v. Royal Gate Dodge where the dealer tried to compel arbitration but the court ruled the arbitration clause unenforceable.
"the public policy involved in Chapter 407 is so strong that parties will not be allowed to waive its benefits."
In short, Chapter 407[, the MPA,] is designed to regulate the marketplace to the advantage of those traditionally thought to have unequal bargaining power as well as those who may fall victim to unfair business practices. Having enacted paternalistic legislation designed to protect those that could not otherwise protect themselves, the Missouri legislature would not want the protections of Chapter 407 to be waived by those deemed in need of protection. Furthermore, the very fact that this legislation is paternalistic in nature indicates that it is fundamental policy: "a fundamental policy may be embodied in a statute which … is designed to protect a person against the oppressive use of superior bargaining power."
Likewise, in Whitney v. Alltel Communications, Inc., a contract provision requiring arbitration was found to be unconscionable because giving it effect would deny protections afforded by the merchandising practices act. 173 S.W.3d 300, 314 (Mo. App.2005). The court held that to allow companies to avoid the consumer protections established in the act "would effectively strip consumers of the protections afforded to them under the Merchandising Practices Act and unfairly allow companies… to insulate themselves from the consumer protection laws of this State." Id. "This result would be unconscionable and in direct conflict with the legislature's declared public policy as evidenced by the Merchandising Practices Act and similar statutes."
Car dealers are required by the FTC to post a Buyers Guide before they display a vehicle for sale or let a customer inspect it for the purpose of buying it, even if the car is not fully prepared for delivery. The Buyers Guide must be displayed prominently and conspicuously on or in a vehicle when a car is available for sale. This means it must be in plain view and both sides must be visible. You can hang the Guide from the rear-view mirror inside the car or on a side-view mirror outside the car. You also can place it under a windshield wiper. The Guide also can be attached to a side window. A Guide in a glove compartment, trunk, or under the seat is not conspicuous because it is not in plain sight. Since the vehicle did not have a visible buyer's guide when T and I test-drove the vehicle, that violation could also be considered an omission per the MMP.
G & T are both listed as purchasers, however, T was the only signer to the contract which contains the arbitration clause. G & T financed the vehicle at a bank that only G had an account with at the time. Even if the arbitration clause was valid, and was not barred from being invoked in cases involving the MMP, it could be argued that the clause does not apply to G since she never signed it but does have a protectable interest.
President North Motors Inc.
D.B.A. Pappas Toyota
10011 Spenser Road
St. Peters, MO 63376
Dear Mr. Pappas,
This letter serves as a formal demand for payment of $5000, the partial cost to repair the prior damage that Pappas Toyota, knew or should have known existed before our purchase. Our claim is based upon the Missouri Merchandizing Practices Act, RSMo 407.020 et al, which applies even when merchandise is sold as-is.
I helped my 19-year-old daughter T purchase a 2013 Nissan Pathfinder from Pappas Toyota on February 24, 2023. We live in Florissant, however, the primary reason for choosing your business was the Pappas Premium pledge on your website; https://www.pappastoyota.com/pappas-premium/.
Unfortunately, a month later, we were forced to pay Pappas $729 for repairs which included the Plenum Gasket, Ignition Coil, and spark plugs. Those items should have been detected from the "rigorous inspection" you claim to perform on all used vehicles before being added to your lot.
A few days later, the engine light came back on and when Taylor called Pappas to report it, the service department told her there was no problem and that the engine light just needed to be reset. Pappas told Taylor to look in the owner's manual for instructions on how to reset the light.
Three months later, the entire catalytic converter system failed and the estimated cost to replace is $5,285, I have included a copy of the repair estimate with this letter. A second mechanic we consulted said it was nearly impossible that an inspection wouldn't have caught those issues. Both mechanics concluded the conditions existed before our purchase.
For more complete information about this claim, see the self-help legal blog that picked up our story: http://court.rchp.com/is-pappas-toyota-engaging-in-unethical-car-dealer-practices/
We have previously tried to resolve this matter, my daughter T contacted your salesperson D on Thursday, July 13th, I sent a fax to your manager, A on Friday, July 14th at 636-xxx-xxxx, and I sent an email to you on Monday, July 17th at, email@example.com. We lodged a complaint with the Missouri Attorney General, the Better Business Bureau, and others, however, as of the date of this letter, we have not received any response.
If we do not receive a full payment of $5,000 by August 4, 2023, we will have no choice but to file a claim in St. Charles small claims court. In lieu of payment, if arrangements are made by July 27th, we will allow Pappas the option to replace the catalytic converter system at their cost and provide us with the full Pappas Premium coverage as we no longer feel confident about the vehicle's condition when sold.
Since our total claim exceeds $5,000:
$5,285 – estimated catalytic converter system replacement and related work
+ $729 – cost of prior repair April 4th
+ $112 – daughter lost wages
We reserve the right to file a standard civil case where we would seek full restitution including filing fees, attorney fees, tow charges, additional lost wages all other associated cost, and punitive damages.
This letter fulfills the St. Charles Circuit Court requirement of sending a certified letter to the registered agent of the business prior to filing suit. You have 10 days to respond after receipt of this letter to respond.
Pappas Toyota responded to the Missouri Attorney General's office, but no one has reached out directly to G about her complaints. G contacted the Toyota Corporation to alert them about the questionable practices of their franchisee. In reply to Pappas Toyota's attorney's response to the Missouri Attorney General about her complaint, G sent the following:
Re: Complaint No. CC-2023-07-00xxx
Dear Ms. W:
After careful review of the Pappas response and exhibits, I'd like to point out the flaws and oversight. I've been a Deputy Juvenile Officer (DJO) in the City of St. Louis since 1996 and my deceased husband, M, was an attorney so I have some familiarity with the law.
Mr. K mistakenly stated our claims need to be arbitrated. Section 8(a) of Pappas Exhibit 1, states; "The Federal Arbitration Act, not state law, shall govern the arbitration process and the question of whether a claim is subject to arbitration. The customer, however, retains the right to take any claim, controversy or dispute that qualifies to small claims court rather than arbitration." Pappas' arbitration clause itself provides the authority to bypass arbitration and go to small claims court. However, the Missouri Supreme Court has ruled that such clauses cannot waive the protection provided by the Missouri Merchandising Practices Act (MMAP); see Shaffer v. Royal Gate Dodge, Inc., 300 SW 3d 556, where the dealer tried to compel arbitration but the court ruled the arbitration clause unenforceable.
Additionally, please note that both my name and my daughters' name appear as purchaser on Pappas Exhibit 1, however, only my daughter signed the agreement with the arbitration clause, therefore, I cannot be forced into arbitration. I would have preferred to accompany my daughter, however, I was working over 80 hours of overtime per pay period during that time leaving only a small window where we could both be present on February 24th. D, our Pappas salesperson, wasn't available during that window and informed me that I didn't need to be there to finalize the sale, but I was never informed about the arbitration clause or that the vehicle was sold as-is and not covered by the Pappas Premium pledge, Exhibit A. My negotiations with D were over the phone and by text and I didn't visit their location until after the deal was completed. The online advertisement for the Pathfinder did not mention it was as-is.
Car dealers are required by the FTC to post a Buyers Guide before they display a vehicle for sale or let a customer inspect it for the purpose of buying it, even if the car is not fully prepared for delivery. I was sent photos, Exhibit B, of the vehicle before and after the test drive which clearly shows there was no Buyers Guide. Please note that Pappas Exhibit 2 may have been signed by my 19 year old daughter if they presented it, but the Buyer's Guide certainly does not contain my signature.
The MMPA is designed to regulate the market place to the advantage of those traditionally thought to have unequal bargaining power, as well as those who may fall victim to unfair business practices. The Missouri legislature enacted paternalistic legislation to protect those consumers that could not otherwise protect themselves, signifying it would not want the protection of chapter 407 to be waived by those deemed in need of protection. This very fact indicates that it is a fundamental policy embodied in a statute which is designed to protect persons against the “oppressive use of superior bargaining power.” Huch v. Charter Communications. Inc., 290 S.W.3d 721, 726 (Mo.banc 2009). Therefore, the fact that my daughter signed the Buyer Guide does not exempt Pappas Toyota from their pledge.
We raised fraud issues in our complaint, so the Pappas attorney's correspondence does not fully resolve this matter. We hope that the AG's office may provide assistance, however, we are fully prepared to file suit in St. Charles Circuit Court if it cannot. The secondary nature of our AG complaint was to notify this office of possible fraud and to prevent Pappas from making false statements on their website concerning the Pappas Premium and "rigorous inspections" and then using the "As-Is" sale, arbitration, and declining to purchase an extended service contract to bypass and insulate themselves from the consumer protection laws of this State.
I am attaching a copy of the Pappas Premium Pre-Owned Peace of Mind pledge from their website. Please note there is no disclaimer stating that some vehicles are not covered. This pledge would mislead any reasonable consumer into thinking all used vehicles sold by Pappas are covered. Several mechanics have explained that the vehicle we purchased shouldn't have passed a basic state inspection and that any sort of "rigorous inspection" certainly should have identified the issues we faced in March and then July.
The 2013 Nissan Pathfinder we purchased was advertised for $10,700 on the Pappas Toyota website. The price was negotiated down to $10,000, however, I refused to pay a $499 administrative fee. That fee was then subtracted from the sales price to equal the original $10,000 agreed upon. We were charged $759 in March for repairs, Exhibit C, and now face another $5,285 for the catalytic converter system, Exhibit D. The total of these repairs is more than 60 percent of the purchase price for a vehicle according to the, Pappas Pledge "is like no other used car". It is illegal for a car dealer to sell a vehicle with a failing emissions system.
As part of my investigation and research, I pulled the Pathfinder's CarFax Report, Exhibit E. Please note that spark plugs and the ignition system was serviced on 11-06-2019 and the Plenum gasket was replaced on 09-21-2021. Keep in mind that the Plenum gasket, ignition coil, and spark plugs were replaced in April 2023 by Pappas Toyota. The CarFax report states that Pappas performed an emission inspection on 2-8-2023, however, the actual inspection certificate is dated 2-15-2023, Exhibit F. Did the Pathfinder fail inspection on the 8th? Further indication the Pappas emission certificate might be fraudulent. The Pappas Toyota website states they are a 2022 CarFax Top-Rated Dealer. It's reasonable to expect they would use the CarFax report as a guide to look for possible issues.
According to WheelsJoint.com, the Nissan Pathfinder ignition coils are responsible for amplifying the relatively low battery voltage from 12V to a high voltage of tens of thousands of volts for the spark plugs. Driving a Pathfinder with bad ignition coils can damage the engine or the catalytic converter.
According to RepairPal.com, the Plenum Gasket, also known as the intake manifold gasket on a Nissan Pathfinder is designed to last the life of the vehicle, but often it will be replaced when doing related engine repairs in order to prevent problems with it down the road. YourMechanic.com states, " The principal concern with a leaking intake manifold gasket is potential damage to the engine, depending on where the leak is. …. If the leak involves coolant, it could lead to engine overheating damage or the coolant could contaminate the engine oil, which can damage the engine bearings. If there is an air leak to the cylinders, it can cause lean operation which could overheat the catalytic converter."
On 1-10-2023, Pappas Toyota performed recommended maintenance including changing tires and an oil change. They performed an emissions inspection on Feb. 8th or 15th, however, no other inspections are mentioned. A condition of our purchase was the touch ups of noticeable paint chips and scratches which is most likely the service that was performed on 2-21-2023.
Sections 407.020 and 407.025 provide four elements to a MMPA claim: (1) the use or employment of a “deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression or omission of any material fact,” (2) the unlawful act must occur in connection with the sale or advertisement of merchandise, (3) the unlawful act must result in an ascertainable loss of money or real or personal property, and (4) the loss must occur to a person who purchases or leases merchandise primarily for personal, family or household purposes.
The Pappas Premium pledge in our case is an obvious false promise, then the fact there was no Buyer's Guide which was a concealment, suppression, or omission of a material fact, a major repair one month after purchase and then the complete failure of the catalytic converter system three months later in consideration of the facts above by any reasonable standard satisfies an action under MMAP.
A quick scan of Pappas Toyota's BBB file tells me we're not their first victim, but hopefully, we'll be their last. Proof of intent can be shown by circumstantial evidence. See Rice v. Lammers, 65 S.W.2d 151 (Mo. App. 1933). And silence or concealment is actionable on a showing of the seller’s superior knowledge or the seller giving partial information. In Hess v. Chase Manhattan Bank, USA, NA, 220 SW 3d 758 the Court held that the admission or concealment of material facts under the MMPA required less proof than what was required to prove comparable elements of common law fraud.
As a DJO, sadly, I must enforce the law on children as young as 10 years old, sometimes for minor offenses as low as $10, often motivated by great need. Hopefully, your office will hold grown men to account for thousands of dollars stolen by fraud and motivated by great greed!
Attached are the following:
Printout of the Pappas Premium Pledge from their website
experts on banking, public spending and education policy look at the impact of Biden’s plan
The U.S. Department of Education says a simple federal student loan forgiveness application will be available by early October. There will be more details announced in the coming weeks. To be notified when the process has officially opened, sign up at the Department of Education subscription page. Borrowers must complete that application before Nov. 15 to receive relief before the latest payment pause extension ends on Dec. 31, 2022.
If borrowers don't apply for forgiveness by Nov. 15, 2022, they will have more than a year to still apply until Dec. 31, 2023. But their loans will enter repayment before they are forgiven if they wait beyond the Nov. 15 deadline.
How do I know if I am eligible for debt cancellation?
To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt cancellation.
If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt cancellation.
by Terri Friedline, University of Michigan; Dominique Baker, Southern Methodist University, and John W. Diamond, Rice University
President Joe Biden announced a program to provide student debt relief to millions of borrowers of federal loans. The plan would offer up to US$10,000 in forgiveness for people who earn less than $125,000 – $250,000 for couples – and up to $20,000 for Pell Grant recipients. Biden also extended the pause on repaying federal student loan debt through Dec. 31, 2022, and has proposed a cap on income that can be used to calculate how much borrowers repay through income-driven repayment.
We asked three experts to explain the decision and its impact.
Relief makes real difference but ignores structural issues
Terri Friedline, Associate Professor of Social Work, University of Michigan
Despite this considerable impact, the plan is still limited. I hope it’s just the beginning in much-needed policy conversations about debt and education in the United States.
For one thing, Biden’s plan cuts less than 20% of America’s $1.75 trillion student debt tab.
In addition, the income cap of $125,000 focuses on borrowers’ socioeconomic class while ignoring the roles structural racism and sexism play in terms of who borrows and how much. For example, Black women borrow about $38,000 on average to finance their education, compared with $30,000 for white men. And because interest on student loans quickly accumulates, most Black female borrowers still owe their original balance 20 years after enrolling in school. By comparison, most white borrowers have paid off their loans completely within that time period.
The Biden administration will have to do more if it aims to adequately address these and the many other remaining structural problems with debt and education.
Plan extends much-needed relief to Black borrowers
Dominique Baker, Assistant Professor of Education Policy, Southern Methodist University
When approximately 10,000 student loan borrowers had their private student loans randomly canceled from 2010 to 2017, researchers found that it ultimately enabled them to more easily move, change jobs and earn more money. The borrowers were also 11% less likely to default on credit cards or other loans.
From the standpoint of racial justice, I believe this additional relief for Black borrowers is necessary because of centuries ofsystemic inequities. Such inequities include accumulating education debt through “predatory inclusion,” a practice in which Black people are offered access to things like college or buying a house but on exploitative financial terms that have long-term negative effects.
Black student loan borrowers are also often the mostburdenedbystudentloandebt. As one example, Black bachelor’s degree earners are more likely to default on their student loans than white students who earn a bachelor’s degree – 21% versus 4%, respectively. Even more startling, Black bachelor’s degree recipients default at a higher rate than white students who leave college with no degree – 21% versus 18%, respectively.
The Biden administration also has proposed changes to the income-driven repayment plan, which should help future undergraduate borrowers by reducing the monthly percentage of discretionary income borrowers would pay from 10% to 5% and increasing what counts as nondiscretionary income. That means borrowers will have more money that will not be used to calculate the percentage they owe each month.
I’d argue there is still work to be done to create an affordable college education. But today was an excellent start.
Loan forgiveness could fuel inflation
John W. Diamond, Director of the Baker Institute’s Center for Public Finance, Rice University
The upward pressure on inflation will result from increased spending by those who see their student debts reduced, as well as from the continuing moratorium on federal loan repayments. This higher demand for consumer goods – relative to a world without debt relief or a repayment moratorium – has the effect of driving up prices for current goods and services.
The Committee for a Responsible Federal Budget found that a similar though more modest version of debt forgiveness would lead to a measurable increase in spending on personal consumption, which would have the effect of driving up prices for all consumers. That was based on a plan to spend roughly $230 billion on debt forgiveness – at least $70 billion less than Biden’s plan.
Some research has pointed to positive economic outcomes for those who receive debt relief, such as less future indebtedness, greater job mobility, and higher salaries. But these effects are based on a full discharge of student debt and not an incremental reduction like the one Biden announced.
Ultimately, loan forgiveness – whatever its merits – will likely lead to larger federal deficits and higher inflation. While it benefits those with student loan debt, those benefits should be weighed against the costs it imposes on others and the economy.
Back then, over a half-century ago, the wholesale racial integration required by the 1964 Civil Rights Act was just beginning to chip away at discrimination in education, jobs, and public facilities. Black voters had only obtained legal protections two years earlier, and the 1968 Fair Housing Act was about to become law.
African-Americans were only beginning to move into neighborhoods, colleges, and careers once reserved for whites only.
I’m too young to remember those days. But hearing my parents talk about the late 1960s, it sounds in some ways like another world. Numerous African-Americans now hold positions of power, from mayor to governor to corporate chief executive – and, yes, once upon a time, president. The U.S. is a very different place than it was in 1968.
Or is it? As a scholar of minority politics, I know that while some things have improved markedly for Black Americans in the past 50-odd years, today we are still fighting many of the same battles as Dr. King did in his day.
A year before his death, Dr. King and others began organizing a Poor People’s Campaign to “dramatize the plight of America’s poor of all races and make very clear that they are sick and tired of waiting for a better life.”
Ralph Abernathy, an African-American minister, led the way in his fallen friend’s place.
“We come with an appeal to open the doors of America to the almost 50 million Americans who have not been given a fair share of America’s wealth and opportunity,” Abernathy said, “and we will stay until we get it.”
This is now
So, how far have Black people progressed since 1968? Have we gotten our fair share yet? Those questions have been on my mind a lot this month.
Financial security, too, still differs dramatically by race. In 2018 black households earned $57.30 for every $100 in income earned by white families. And for every $100 in white family wealth, black families held just $5.04.
Another troubling aspect about black social progress – or the lack thereof – is how many black families are headed by single women. In the 1960s, unmarried women were the main breadwinners for 20% of households. In recent years, the percentage has risen as high as 72%.
Depending on who you ask, then, Black people aren’t much better off than in 1968 because either there’s not enough government help or there’s too much.
What would MLK do?
I don’t have to wonder what Dr. King would recommend. He believed in institutional racism.
In 1968, King and the Southern Christian Leadership Council sought to tackle inequality with the Economic Bill of Rights. This was not a legislative proposal, per se, but a moral vision of a just America where all citizens had educational opportunities, a home, “access to land,” “a meaningful job at a living wage” and “a secure and adequate income.”
To achieve that, King wrote, the U.S. government should create an initiative to “abolish unemployment,” by developing incentives to increase the number of jobs for black Americans. He also recommended, “another program to supplement the income of those whose earnings are below the poverty level.”
Those ideas were revolutionary in 1968. Today, they seem prescient. King’s notion that all citizens need a living wage portends the universal basic income concept now gaining traction worldwide.
King’s rhetoric and ideology are also obvious influences on Sen. Bernie Sanders, who in the 2016 and 2020 presidential primaries has advocated equality for all people, economic incentives for working families, improved schools, greater access to higher education, and for anti-poverty initiatives.
Progress has been made. Just not as much as many of us would like.
To put it in Dr. King’s words, “Lord, we ain’t what we oughta be. We ain’t what we want to be. We ain’t what we gonna be. But, thank God, we ain’t what we was.”
A recent Cracker Barrel experience is being used as a teachable moment, which will include legal analysis to help determine if the restaurant's actions were illegal. This site provides free self-help legal information.
I visited Cracker Barrel located at 10915 New Halls Ferry Road, Ferguson, MO 63136, on Monday to help celebrate my son's birthday. I ordered meatloaf listed in the "Weekday Lunch Features" section for $5.99. Since my 92-year-old father was unable to attend, I placed a to-go order of the meatloaf for him.
When I received my bill, the meatloaf orders were listed for $6.99 each instead of the $5.99 menu price. I pointed out the mistake to the server who mentioned that the price had changed but that it wasn't reflected on the menu. The server had mentioned earlier that it was his first time working as a server. We left a tip on the table and I decided to get the bill corrected when I checked out.
When I presented the bill to the cashier, I explained that my bill was incorrect. A copy of Cracker Barrel's menu was sitting on a podium in the checkout area and I was able to show her the $5.99 price on the menu. The cashier also explained that some prices had gone up, but that they were not reflected on the menu and she called for the manager.
After waiting for the manager for about 10 or 15 minutes, he also acknowledged that some of the prices on the menu were incorrect and that they were waiting for the company to send updated copies. I asked, how do we fix this? The manager replied that $6.99 was the price. I pointed to the menu setting on the podium and stated this is the price, the $5.99 listed on the menu. The manager stated he had no way to honor the $5.99 menu price.
I mentioned under Missouri's truth in advertising statute, state law requires them to honor the menu price. I further explained that it was a simple matter to place a sticker with the new price over the old price. The manager held firm on the $6.99 price. Rather than escalate the issue, I explained that I no longer wanted the to-go meal, and only paid the $6.99 price plus tax for the meal I consumed. I told the manager to tell Cracker Barrel's corporate office I would be filing a complaint with the Missouri Attorney General's office.
I don't regularly patronize Cracker Barrel and the location was chosen by someone else. I've visited Cracker Barrel maybe four or five times, usually to meet with others celebrating a special occasion. Before ever visiting a Cracker Barrel restaurant, I saw news reports about racial bias. That information helped to form my impression of Cracker Barrel. I prefer to spend my money with businesses that appreciate my patronage. In 2004 the U.S. Department of Justice settled a complaint that alleged Cracker Barrel:
allowed white servers to refuse to wait on African-American customers;
segregated customer seating by race;
seated white customers before African-American customers who arrived earlier;
provided inferior service to African-American customers after they were seated; and
treated African-Americans who complained about the quality of Cracker Barrel's food or service less favorably than white customers who lodged similar complaints.
When an offer is made and accepted a contract is created. Once I placed my order, a contract existed between Cracker Barrel and myself. Here's where it can get a little tricky; the menu is not an offer. Menus are considered invitations to make an offer. When I placed my order, I was making an offer to purchase the menu item (accepting their invitation). By taking the order the server is accepting the offer, thereby forming the contract. The consideration is made by my acceptance to pay for the $5.99 menu price in exchange for the food or beverage.
The essential elements of a contract in Missouri are: “(1) competency of the parties to contract; (2) subject matter; (3) legal consideration; (4) mutuality of agreement; and (5) mutuality of obligation.”
Since Cracker Barrel failed to honor the contracted price, they breached the contract and exposed themselves to the possibility for legal action simply because they wouldn't honor their menu price.
Truth in Advertising
The Missouri Merchandising Practices Act (MMPA), Chapter 407 of Missouri Revised Statutes, is the state’s primary truth-in-advertising law.
RSMO 407.010, defines the term advertisement fairly broadly which would include restaurant menus. An advertisement or solicitation that creates a false impression in the mind of a reasonable consumer and that was made with the intent of influencing a purchasing decision is unlawful false advertising in Missouri. The regulations specifically provide that reliance is not an element of deception or misrepresentation. 15 CSR §§ 60-9.020, -9.070.
RSMO 407.020 defines misrepresentation, suppression, or omission of any material fact among other things as an unlawful practice. Under the MMPA, “omission of a material fact is any failure by a person to disclose material facts known to him/her, or upon reasonable inquiry would be known to him/her.” The server, cashier, and manager all knew about the price change but failed to tell the customer.
RSMO 407.025 provides for damages and allows punitive damages and attorney fees.
To succeed in a false advertising claim under the MMPA, a plaintiff must prove the following four things:
There was a purchase, advertisement, or active solicitation of goods or services
The advertisement in question was primarily targeted for consumer purposes, not for business-to-business purposes
The advertisement or solicitation was, in some manner, unlawfully deceptive
The plaintiff suffered actual financial harm as a result of the false advertising
Truth in Advertising is not the same as Truth-in-Menu also known as “Accuracy-in-Menus” and “Truth-in-Dining” terms used to describe regulations governing restaurant menus. Many locations require that menu descriptions be honest and selling prices and service charges be accurate. Examples of information that should be carefully described include preparation style, ingredients, item size, and health claims.
It's unwise for a business to expect customers to pay for their mistakes. Until Cracker Barrel refused to correct its pricing error, I had an enjoyable experience. The meatloaf was decent and everyone else seemed to enjoy their meal. I relied on the accuracy of the menu. I don't know if I would have placed the same order if the $6.99 price was listed. I was actually considering a couple of more expensive options when I noticed the $5.99 menu. I might have ordered the chicken for $9.99 instead. Regardless, I would have still placed an order for my father. It wasn't that I couldn't afford the extra dollar, it was the total lack of regard and respect shown when they refused to honor their menu price!
Cracker Barrel ruined what would have been a positive experience and turned it into a negative one. If not but for the pricing error, I would have left very satisfied and my father would have been too. When I explained what happened, my father said you made the right decision to leave that other meal. Then I prepared his lunch myself.
Imagine you are at a store to make a purchase and a stranger snatches two dollars out of your hand. What would you do; keep quiet, say something, or do something? When Cracker Barrel wouldn't honor the menu price, I felt as if they were attempting to steal my money.
There are two separate causes of action to file a lawsuit against Cracker Barrel; "breach of contract" and "Missouri Merchandise Practices Act".
The breach of contract damages is only one dollar per meal. However, sometimes it's not about the money as much as the principle of the thing. If this was a deliberate tactic to increase profits, Cracker Barrel would know most people would never consider going to court for such a small amount. How many hundreds or even thousands of customers were overcharged? Everyone has to decide how much principle is worth to them. I've certainly spent more than two dollars in time and effort researching and writing this article which for me was worth it. I'm not planning to file suit.
Since the MMPA includes the possibility of punitive damages, that might prompt someone to file a lawsuit or even a class action. If someone were to file a lawsuit, Cracker Barrel would have to pay an attorney to represent them which could cost tens of thousands of dollars depending on the number of motions and hearings. A judge could decide to teach Cracker Barrel a lesson and award thousands in punitive damages.
The solutions were simple; use labels to show the new price, verbally tell customers about the price changes or make the adjustment when a customer complains. The reality is many customers might not notice or might be too embarrassed to mention the price difference. My research revealed the Ferguson Cracker Barrel's online menu (PDF) included the $6.99 pricing on September 13th. The manager could have simply printed copies for temporary use until the corrected menus arrived.
Cracker Barrel violated the law. Every member of our party thought it was wrong for them not to correct their mistake. Hopefully, Cracker Barrel will learn from this and treat its customers more fairly in future situations.
And if the American people don't benefit from these endless losing wars, why do we keep fighting them?
War is an economy. Anybody who tells you otherwise is either in on it or stupid" – War Dogs, the movie
by Miles Mogulescu, entertainment attorney/business affairs executive, producer, political activist, and writer.
The United States emerged from its victory in World War II as the world's preeminent superpower. Its annual military budget—about three-quarters of a trillion dollars a year—exceeds the aggregate of the next ten countries in the world.
Yet despite America's apparent global military supremacy, of the approximately dozen wars the U.S. has fought since 1945 (depending on how you're counting) the U.S. has lost every real war it has fought. (Its only "victories" have been minor military incursions to overthrow unfriendly governments in Grenada, population approximately 120,000, and Panama, population approximately 4.2 million.)
After millions of deaths of Americans and foreigners and trillions of dollars lost in places like Vietnam, Afghanistan, and the Middle East, is the U.S. any safer and secure because it fought these losing wars in far-off lands? No.
Have the American people benefited from these wars? No. Hundreds of thousands of soldiers have been killed or wounded and trillions of dollars have been spent.
So if the American people don't benefit from these endless losing wars, why do we keep fighting them? The short answer is that there are powerful forces in America that get rich from endless wars: The military-industrial complex and its political and economic servants and enablers.
As CodePink tweeted last week:
In 2021, OVER HALF of our entire $741 billion Pentagon budget will go directly to private military contractors that profit from war.
President (and former General) Dwight D. Eisenhower warned in his 1961 Farewell Address to the nation, "We must never let the weight of this [the military-industrial complex] endanger our liberties or democratic processes. […] Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals."
Drive around the wealthy suburbs around the nation's capitol and look at the multi-million dollar McMansions owned by corporate executives and lobbyists who are the real beneficiaries of America’s forever wars. During the Afghanistan War, the stocks of the five largest defense contractors outperformed the S&P 500 by 58%. Fortunes end up in the pockets of corporate executives. They and their companies spend tens of millions of dollars lobbying Congress and contributing to Republican and Democratic politicians alike to buy their support for forever war and defense budgets totaling 60% of the Federal government's discretionary spending.
That's why, even as the Afghanistan War is ending, much of the corporate elite and the corporate media is ginning up a new cold war with China, to justify continued overspending on the military.
The main danger to U.S. security is not a military invasion by a heavily. armed superpower enemy. Bigger national security threats today are climate change, cybersecurity, and global pandemics. These will not be addressed by spending more on the traditional military and fighting more losing forever wars. They require popular resistance to the military-industrial complex, the defeat of politicians on their payroll, and the transformation of American priorities from preparing for and fighting useless wars to addressing the climate, economic inequality, and equal justice.
As Warren Gunnels, staff director of the Senate Budget Committee, put it, "The only thing that we 'accomplished' by going into Vietnam, Iraq, and Afghanistan was to put trillions of dollars into the military-industrial complex and destroy millions of lives—period, full stop. It's time to stop repeating the same mistakes over and over again."