Court Upholds DCRA Crackdown on Used Car Dealers–Should Small Businesses Worry?
A couple of years ago, fueled by neighborhood complaints, the Fenty administration went on a jihad against used car lots all around the city. A city investigation had found that many were not selling cars at all: Rather, about half of the 106 dealerships investigated were being used as storage facilities hile the cars were marketed outside the District, and even abroad. Those that actually did sell cars were typically cited as out of compliance with one city regulation or another.
But the city didn't stop at shutting down 23 car lots and yanking the licenses of hundreds more. The Department of Consumer and Regulatory Affairs also passed a raft of new regulations, forbidding more than four cars to be stored outside in commercially-zoned lots, requiring all dealerships storing more than five cars outside to post a $50,000 bond and obtain another $1,000 business license, plus a ton of nitpicky things about minimum lot size, landscaping, curbs, paving, etc.
Ten of those dealerships–especially those that felt they were operating on the up and up–weren't going to take that lying down. They retained Anthony Rachal (who's represented such feel-good figures as BP Amoco Oil and Exxon) to sue the city, and then appeal when Superior Court ruled against the dealerships.
All for naught, it turns out. Yesterday, the Appeals Court batted the businesses down again, saying that the conditions DCRA had found at all those nasty used car lots fully justified the new regs. But the rules don't apply to new car lots or to rental parking lots. The court reasoned:
A new car dealer is subject to the standards of the manufacturer for which the dealer has a franchise, and a new car is less likely than a used one to be in disrepair or to attract pests. A rental car company is also likely to be affiliated with a national chain that imposes standards for vehicle upkeep....The Director could reasonably conclude that these and similar businesses pose less of a danger to the public health and safety than do establishments licensed as used car dealers.
The demonstrated undesirability of many used car lots aside, this has got to be the kind of thing that drives small businesses insane. In ruling against the independent used car dealers but exempting new car dealers and rental lots explicitly because they are part of larger companies that have standards for upkeep, the judge essentially throws out the rights of those responsible independent dealers that weren't part of the problem in the first place.
A manager at plaintiff Capital Auto Sales on Brentwood Road NE, who declined to give his name because he wasn't the owner, says the car dealerships are feeling hunted.
"They are harassing all the dealers because the mayor is trying to get rid of small businesses and make room for large corporations," he said, when reached by phone. "How could a business survive selling four cars?"