SHERMAN -- The North American Jaguar distributor believes a Plano dealership has operated under a plan of "controlled greed" since 2002 to defraud the distributor from more than $20 million and gaining all-expenses paid trips to San Francisco and Napa, a Mediterranean cruise to Spain and a trip to Buenos Aires.
Jaguar Land Rover North America LLC filed suit against Millennium Jaguar of Texas Inc. doing business as Millennium Motor Cars, David L. Stephens, David R. Muir, Amious Vaughn, John Shinsky, David Woodard, Jermaine Sapp, Ryan Kersh and Wallace Barnett on Aug. 25 in the Sherman Division of the Eastern District of Texas.
The plaintiff states that Millennium Motor Cars, an authorized Jaguar dealership since 1999, has engaged in a systematic and pervasive fraud scheme that involved the sales, services and parts departments and has gone to great lengths to conceal their deception.
Causes of action filed against the defendants include violations of the racketeering influence and corrupt organizations (RICO)act through the use of interstate wires and mail, common law fraud for allegedly committing warranty fraud, incentive fraud and customer satisfaction index fraud.
The plaintiff is seeking more than $12 million for two counts of racketeering.
In addition, Jaguar is asking for more than $2 million in compensatory damages and punitive damages not less than $6 million.
The plaintiff states that the defendants' most widespread abuse was the submission of fraudulent warranty claims.
According to the complaint, a new Jaguar is under a new car limited warranty for four years or 50,000 miles, whichever comes first, and the warranty covers the cost of all labor and parts necessary to repair defects in materials and workmanship. The Jaguar's owner can only obtain repairs under the warranty from an authorized Jaguar dealership.
When a Jaguar is brought to an authorized dealership for repairs, the customer is interviewed to record any problems and then technicians examine the vehicle. A repair order is produced describing any repair work preformed, the number of hours required to perform repairs, identity of technicians and the quantity and type of parts required.
Jaguar Land Rover North America states "because of the trust and confidence Jaguar necessarily places in the integrity, honesty and expertise of its authorized dealers, and because of the need to promptly process warranty claims, Jaguar typically pays such dealers for warranty claims submitted by them without independent verification of their accuracy."
Jaguar states that the Plano dealership submitted warranty claims that they knew were unnecessary, improperly and incompletely performed, or never performed at all. The plaintiff alleges that the dealership went to great lengths to conceal its deceit, including hiring an outside consultant to monitor the dealership's warranty statistics.
As one example, the complaint states that some technicians submitted claims for repairs requiring road testing, even though the alleged test vehicles clocked no mileage while in the dealer's possession.
Demonstrating inflated time reports and fraudulent charges for labor, the lawsuit alleges that the defendant's records indicate that the technicians did not take lunch, seldom or never took breaks and did not log out at night as a means to make it more difficult for the distributor to determine if the technicians were actually on site long enough to perform claimed repairs.
Jaguar also argues that the dealership placed unrealistically high objectives on the service department and put incessant pressure on the technicians to "make the numbers" they had set.
Technicians were told to "get every dollar" they could out of the repaired vehicles and to insure that they did not "get caught," according to the lawsuit. The plaintiff alleges the management threatened the employees that any charge backs imposed by Jaguar would be taken out of that employee's salaries.
The lawsuit also accuses the management of fraudulently participating in the program known as "drive the dream." The program pays the dealerships for each customer who comes in and test-drives a Jaguar. The plaintiff claims the dealership falsified a log of prospective customers and usage of vehicles.
Further, Jaguar states that the Plano dealership falsified customer satisfaction surveys to artificially inflate its scores to qualify for an award, which would provide the dealership owner with luxurious, expense-paid trips.
The dealership won the award three years running and the owner received nearly $70,000 in vacation trips. In some cases, the plaintiff states that the defendant had the false surveys filled in by the dealership employees whose performances were supposedly under review.
Houston attorney Thad T. Dameris of the law firm Hogan and Hartson LLP is representing the plaintiff.
U.S. District Judge Richard A. Schell will preside over the litigation.
Case No 4:09cv00421