Justices to Weigh Soured Car Deal

Local Dispute Has National Implication

Bradley Nigh's dispute with an Alexandria car dealership over the purchase of a Chevy Blazer will be argued before the Supreme Court tomorrow. (Michael Robinson-chavez -- The Washington Post)

Just about the only thing Bradley C. Nigh and Michael Field agree on is that what started out in February 2000 as an ordinary used-car deal went quickly -- and badly -- awry.

As Nigh tells it, the trouble began shortly after he drove a 1997 Chevy Blazer home from Koons Buick Pontiac GMC in Alexandria. The dealership, he says, promptly reneged on the deal, threatening him with the loss of his car or even criminal prosecution unless he coughed up a higher down payment.

To Field, who owns the dealership, it was a case of no good deed going unpunished. His sales team, he says, tried repeatedly to meet an inexperienced customer's credit needs, only to have him back out of the deal and file a lawsuit.

Tomorrow, this bitter local dispute will reach the Supreme Court, shining a light on the car business in the Washington area and, potentially, altering the balance of power nationwide between those who sell and those who buy autos.

At issue in the case, Koons v. Nigh, No. 03-377, is how much money consumers are entitled to when, as in Nigh's case, a jury finds that a dealer has violated the federal Truth in Lending Act (TILA). Car dealers are affected by the law because most of their sales are financed by loans. Nigh maintains that TILA authorizes damages up to double the finance charges -- in his case the $24,192.80 a jury awarded him. Koons says the law caps damages at $1,000.

The higher the damages, the more likely customers would be to take dealers to court -- and the more dealers would have to spend on liability insurance and legal fees.

Last year, a three-judge panel of the Richmond-based U.S. Court of Appeals for the 4th Circuit ruled 2 to 1 that TILA's section setting out civil penalties, which was amended in 1995, could be read only as Nigh said it should be. A clause in TILA that capped damages under "this subparagraph" at $1,000 referred only to disputes over consumer leases, not to auto purchases, the court ruled.

A Chicago-based federal appeals court reached the opposite conclusion in 1997, so the 4th Circuit ruling created a legal contradiction that the Supreme Court must sort out.

The 4th Circuit majority rejected the dealership's contention that the history of the 1995 amendments showed that Congress had no intention of lifting the cap on damages.

The "critical point of law -- and it is critical -- is that we do not know what Congress intended," Judge J. Michael Luttig wrote. "All that we have before us is the amended statute from which to determine intent. . . . It is the statute, not any inferential intent, that constitutes the law."

This approach, known as textualism, is strongly advocated by the Supreme Court's most conservative members, Justices Antonin Scalia and Clarence Thomas. The court's liberals generally favor examining legislative history and other non-textual factors to shed light on contested statutes.

The wrinkle in this case is that strict textualism is being invoked on behalf of expanded legal rights for consumers, which the liberals generally support, and the argument against an overly narrow reading of the law is being made by business, which often enjoys the sympathy of court conservatives.

In a joint friend-of-the-court brief, the National Association of Consumer Advocates, the National Consumer Law Center, Consumers for Auto Reliability and Safety, and the U.S. Public Interest Research Group told the justices that Nigh had been the victim of a scam so widespread it has a nickname, "the yo-yo deal."

To lawyers who represent consumers, Nigh's case typifies the yo-yo ploy: The dealership let him drive away in a car, giving him a sense of ownership, knowing that the sale would not be final until the customer's loan has been sold to a bank or other lender.