Pub. 1 2012 Issue 1

Chairman’s Letter 24 San Diego Dealer R ecently, an investigator from the Department of Motor Vehicles (DMV) went unannounced to a dealership in Orange County and demanded to review the dealership’s deal files. California lawdoes not permit unwarranted general searches of dealership business records. This was established in a 1987 case, Terry York Imports, Inc. v. Department of Motor Vehicles 197 Cal. App. 3d 307. A dealership’s deal files are sensitive business records that are protected from unauthorized, random searches. Any arbitrary attempt by a DMV investigator to review your records without a subpoena or warrant is not permitted and you should contact legal counsel immediately. Though businesses are protected to some degree from unreasonable searches and seizures by the Fourth Amendment of the United States Constitution, peace officers are allowed to conduct limited warrantless searches to investigate vehicle theft. (Id. at 313-314; Cal. Veh. Code § 2805.) This affects a wide variety of businesses including new and used car dealerships. However, this power does not give DMV investigators or peace officers the ability to conduct general searches of business premises. Please note that the DMV is allowed to review certain records without a subpoena or warrant, such as a dealership’s report of sale book (which is considered DMV property), registration or title documents, smog certificates, odometer statements, certificates of compliance or anything else furnished by or filed with the department. Additionally, the DMV can inspect vehicles and parts (during reasonable business hours) in its investigation of stolen vehicles. In theYork case, the DMV investigator demanded to see the dealership’s report of sale books. After reviewing the books, the investigator told the dealer that he would need unspecified access to the dealership’s business records. The dealer consulted with legal counsel who then contacted the investigator to determine what specifically he was interested in reviewing. The investigator never responded so the dealership refused to make the records available. Consequently, the DMV filed an Administrative Accusation against the dealership seeking to revoke or suspend its occupational license on the basis that it violated California Vehicle code sections 320 (now section 1670), 11705, 11713 as well as California Administrative Code section 410.00, title 13. The dealership voluntarily surrendered its license but an administrative hearing was still held and the license was revoked. The dealership appealed the decision to the Court of Appeal. Inmaking its decision, the Court of Appeal wrote: “It is well established that an occupational license involves a vested fundamental right. As was explained in Bixby v. Pierno (1971) 4 Cal. 3d 130, 143when an administrative tribunal renders a decision affecting such a right, ‘the courts of California have undertaken to protect such right, and particularly the right to practice one’s trade or profession, fromuntoward intrusions by themassive apparatus of government.’” (York v. Department of Motor Vehicles, supra 197 Cal. App. 3d at 312). Keeping in mind that an automotive dealer’s occupation license is to be protected from “untoward intrusions by the massive apparatus of government,” the Court interpreted California law to only give the DMV limited search power to address specific problems (such as locating stolen vehicles). It does not give the DMV the “general authority to conduct warrantless searches in the field of the business records of retail car dealerships.” (Id. at 313; emphasis added.) Dealership Rights Against DMV Searches By Shane McCal lan, Assoc i ate At torney Cal lahan Thompson Sherman & Caud i l l L LP