A recent Law 360 story, “9^th Circ. Hands CarMax Fee Dispute to Lower Court,” reports that the Ninth Circuit said that the district court should decide on whether a consumer deserves attorneys' fees for having claims revived against CarMax Auto Superstores over its use of allegedly misleading inspection certificates, saying it is unclear if he is the prevailing party in the case.

The Ninth Circuit in October found that the reports used by CarMax Auto Superstores LLC are not adequate to label a used vehicle “certified,” resurrecting Unfair Competition Law (UCL) and California Consumer Legal Remedies Act (CLRA) claims by vehicle buyer Travis Gonzales.

In its published opinion, a three-judge panel determined that the Central District of California must determine in the first instance if Gonzales is entitled to nearly $240,000 in attorneys’ fees he requested because even though he “achieved his litigation objectives,” the appeals court did not yet order a remedy in his favor.  As a result, the Ninth Circuit instructed the district court to rule on the attorneys’ fees motion by determining if Gonzales is a prevailing plaintiff after “fashioning a remedy in conformity with [its] opinion.”

The fee dispute stems from a legal battle commenced in July 2013 in California state court.  According to the complaint, Travis Gonzales purchased a vehicle from a CarMax dealership, relying on the company’s claims that his purchase was checked with a rigorous certification inspection.

Gonzales said he experienced certain difficulties with the vehicle soon after purchase, including brake pads that needed replacing and malfunctioning windows.  His complaint alleged violations of the state Consumer Legal Remedies Act, Unfair Competition Law and Song-Beverly Consumer Warranty Act, as well as fraud.

The lawsuit also named Santander Consumer USA Inc. as the assignee of the purchase agreement and Safeco Insurance Co. of America as the bondholder for CarMax.  CarMax removed the case to California federal court in September 2013.

According to court documents, the district court dismissed all but the CLRA and UCL claims in December 2013 but granted summary judgment in favor of CarMax on those claims after discovery.  Gonzales appealed both the dismissal and the summary judgment in November 2014.

The Ninth Circuit disagreed with the district court, saying CarMax inspection reports are insufficient to serve as “completed inspection reports” to certify used cars as laid out under California’s vehicle code.

Gonzales’ counsel, Hallen D. Rosner of Rosner Barry & Babbitt LLP, asked for $238,938 in attorneys’ fees in November, saying CarMax dragged the case out unnecessarily and deserved to pay such a high price.  He also argued that the fee was reasonable, in part because Gonzales was paying him and his firm on a contingency basis.

CarMax shot back, calling the award amount “excessive and unreasonable.”  The company also said Gonzales could not ask for fees because they offered him a correction under the CLRA just weeks after the filing of the complaint, meaning that their offer, whether accepted or not, barred any collection on attorneys’ fees.

But in its ruling, the Ninth Circuit said the only controlling authority on this matter deals with damages as relief under the CLRA, not injunctive remedies.  The appeals court found that Gonzales is not barred from recovering attorneys' fees against CarMax but that it would be up to the district court to determine whether he is entitled to them or if the request is reasonable.

The case is Travis Gonzales v. CarMax Auto Superstores LLC et al., case number 14-56842, in the U.S. Court of Appeals for the Ninth Circuit.