Abuse of the Unfair Business Practices Law is at Center of Lawsuit Filed Against State Agency.

Business Editors & Automotive/Legal Writers

IRVINE, Calif.--(BUSINESS WIRE)--Jan. 23, 2003

Bureau of Automotive Repair's Enforcement of Outdated Regulations

Allows ``Unscrupulous Lawyers to Sue Good Businesses''

In a lawsuit filed in the Los Angeles Superior Court yesterday, Caliber Collision Centers, a highly regarded California collision repair company with headquarters in Irvine, asked the court to compel the Bureau of Automotive Repair ("the bureau") to stop engaging in a regulatory practice that is "unlawful" and denies Caliber and other businesses their constitutional rights to due process.

According to the lawsuit, the bureau has routinely issued citations for purported violations of the Automotive Repair Act without the legal authority to do so.

Although the citations were typically issued for technical or administrative violations of the bureau's regulations or for mistakes that were attributable to bona fide human error, they were posted on the bureau's Web site as "confirmed violations" of the act.

These postings were made despite the fact that Caliber and other automotive repair dealers were never given an opportunity to contest them.

As a result of the bureau's practice, and as stated in Caliber's lawsuit, "Caliber has been forced to defend itself from frivolous and extortionate lawsuits filed under Business & Professions Code ss.17200, which have been brought solely because the bureau has posted the unchallenged allegations contained in the citations on its Web site and has illegally characterized them as `confirmed violations' of the act."

At the heart of Caliber's lawsuit is a complaint that the company's due process rights have been violated and its reputation has been damaged as a result of receiving citations that are based on nothing more than "technical violations" but that are characterized as something far worse on the bureau's Web site.

Caliber Chairman and CEO Matthew Ohrnstein stated: "The real problem is not just that the citations were issued unlawfully but that the regulations fail to make important distinctions between minor technical violations or reporting mistakes and more serious violations that really hurt consumers. As a result, automobile repair companies doing business in California are being treated unfairly. This lawsuit points out the need for genuine regulatory reform in the industry."

"The bureau's allegations are made worse by the fact that good businesses like Caliber are not given the chance to contest those accusations in any way," said Michael Camunez of O'Melveney & Myers LLP, the law firm representing Caliber.

"Instead, the bureau takes its claims public and posts them on its Web site as `confirmed violations,'" Camunez said. "This puts small businesses that are trying to grow and do business in California in an untenable situation of having to defend against not only unwarranted bad publicity but also frivolous ss.17200 lawsuits filed as a result of the bureau's postings."

Caliber, which has one of the highest consumer satisfaction ratings in the industry, employs more than 1,000 people in California and has dramatically professionalized the collision repair industry through substantial capital investments in advanced repair equipment, training and technology.

"The irony here is that we have one of the most comprehensive training, compliance and auditing programs in the industry -- yet we find ourselves targeted with these unfounded lawsuits and accusations," said Bill Lawrence, Caliber's president and chief operating officer.

The lawsuit states: "The extortionate behavior of the attorneys who have brought ss.17200 lawsuits against automotive repair and collision shops has been widely documented and criticized. It has also resulted in widespread calls for reform, including public expressions of concern from the legislature itself.

"In addition, Attorney General Lockyer has opened a formal investigation of the attorneys who have brought these suits, and the California State Bar is exploring whether disciplinary proceedings should be instituted."

But Caliber's Ohrnstein said reform of more than just the ss.17200 statute is needed: "The current regulations that the bureau is enforcing are in desperate need of reform. They were designed for mom-and-pop mechanic shops in the 1970s, but they really don't fit or make allowance for 21st century collision repair businesses like Caliber that use state-of-the-art technology to interface with customers, suppliers and auto insurance companies.

"These antiquated regulations are hurting Caliber and other businesses in California -- at just the time when the California economy badly needs new jobs and tax revenue."

According to Marty Keller, executive director of the Automotive Repair Coalition (ARC), a nonprofit organization representing more than 10,000 registered automotive service providers in California, "The issues that Caliber is asserting in its writ of mandate are the same issues experienced by automotive service providers throughout the state.

"The bureau's illegally issued citations and the lack of due process threaten the entire automotive repair industry in California. The ARC supports Caliber's efforts and will work closely with the legislature to effect meaningful regulatory reform."

Caliber's petition asks the superior court to issue a "writ of mandate," which is a court order to the bureau to follow the requirements of the agency's authorizing legislation to establish an appropriate regulatory regime for enforcing the statute and to quash or rescind all citations that have been illegally issued. Caliber has expressed its strong desire to cooperate with the Bureau of Automotive Repair to achieve the regulatory reform that is needed.

Since its first acquisitions in January 1997, Caliber Collision Centers has become the largest collision repair provider in California and Texas, and the largest independently operated collision repair organization in the United States. Based in Irvine, Caliber Collision Centers operates 38 high-quality collision repair facilities in California and 30 facilities in Texas.

In 2002, for the second consecutive year, Caliber was included in Inc magazine's list of the Top 500 Fastest-Growing Private Companies in America. Caliber plans to continue acquiring, developing and integrating high-volume collision repair centers while providing innovative collision repair solutions and automobile physical damage claims support.