ALEJANDRO N. MAYORKAS
United States Attorney

CONSUELO S. WOODHEAD
Assistant U.S. Attorney
California Bar No.: 69653
U.S. District Courthouse
Room 7516, Federal Building
300 North Los Angeles Street
Los Angeles, CA 90012
(213) 894-3987 (office)
(213) 894-2380 (fax)

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, Plaintiff,

v.

MAZDA MOTOR OF AMERICA, INC., a corporation, Defendant.

Civil Action No.

COMPLAINT FOR CIVIL PENALTIES, INJUNCTIVE AND OTHER RELIEF

INTRODUCTION

Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("FTC"), for its complaint alleges that:

1. Plaintiff brings this action under Sections 5(l), 9, 13(b), and 16(a) of the FTC Act, 15 U.S.C.  45(l), 49, 53(b), and 56(a), as amended, Section 108(c) of the Truth In Lending Act, 15 U.S.C.  1607(c), as amended, the Consumer Leasing Act, 15 U.S.C. 1667-1667f, as amended, and its implementing Regulation M, 12 C.F.R.  213, as amended, to obtain monetary civil penalties, and injunctive and other relief for defendant's violations of a final cease and desist order issued by the FTC.

JURISDICTION AND VENUE

2. This Court has jurisdiction over this matter under 28 U.S.C.  1331, 1337(a), 1345, and 1355 and under 15 U.S.C.  45(l), 49, 53(b), 56(a), and 1607(c).

3. Venue in the Central District of California is proper under 15 U.S.C.  53(b) and under 28 U.S.C.  1391(b-c) and 1395(a).

DEFENDANT

4. Defendant Mazda Motor of America, Inc., is a California corporation with its office and principal place of business located within the Central District of California at 7755 Irvine Center Drive, Irvine, California. Mazda Motor of America, Inc., transacts business in the Central District of California.

DEFENDANT'S COURSE OF CONDUCT

5. At all times material herein, defendant has maintained a course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C.  44, by disseminating or by causing the dissemination of advertisements to the public that promote consumer leases, as the terms "advertisement" and "consumer lease" are defined in Section 213.2 of Regulation M, 12 C.F.R.  213.2, as amended.

PRIOR FTC PROCEEDING

6. In an FTC proceeding bearing Docket No. C-3714, the FTC's Complaint charged, in pertinent part, that defendant disseminated or caused to be disseminated consumer lease advertisements for Mazda vehicles that failed to disclose adequately terms for leasing the advertised vehicles.

7. The FTC charged that the practices described in Paragraph 6 constituted a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a), and violated Section 184 of the Consumer Leasing Act, 15 U.S.C.  1667c, as amended, and Section 213.5(c) of Regulation M, 12 C.F.R.  213.5(c), as amended.

8. On February 6, 1997, the FTC issued a Decision and Order ("FTC's Order") against defendant, its successors and assigns, its officers, agents, representatives, and employees, to cease and desist certain enumerated business practices in connection with any advertisement to aid, promote, or assist, directly or indirectly, any consumer lease in or affecting commerce. A copy of the FTC's Order is attached to this Complaint as Exhibit A.

9. The FTC's Order was served upon defendant on February 11, 1997, became final and enforceable by operation of law on that date, and has remained in full force and effect ever since that date.

10. In pertinent part, Part I of the FTC's Order states as follows:

IT IS ORDERED that respondent, directly or through any corporation, subsidiary, division, or any other device, in connection with any advertisement to aid, promote, or assist, directly or indirectly any consumer lease in or affecting commerce, as "advertisement" and "consumer lease" are defined in Section 213.2 of revised Regulation M, 61 Fed. Reg. 52,246, 52,258 (Oct. 7, 1996)(to be codified at 12 C.F.R.  213.2) ("revised Regulation M"), as amended, shall not, in any manner, expressly or by implication:

* * *

C. State the amount of any payment or that any or no initial payment is required at lease inception unless all of the following items are disclosed clearly and conspicuously, as applicable:

1. that the transaction advertised is a lease;

2. the total amount due at lease inception;

3. that a security deposit is required;

4. the number, amount, and timing of scheduled payments; and

5. that an extra charge may be imposed at the end of the lease term in a lease in which the liability of the consumer at the end of the lease term is based on the anticipated residual value of the vehicle.

11. In pertinent part, Definition 1 of the FTC's Order states as follows:

"Clearly and conspicuously" as used herein shall mean: 1) video or written disclosures must be made in a manner that is readable and understandable to a reasonable consumer and 2) audio or oral disclosures must be made in a manner that is audible and understandable to a reasonable consumer.

CAUSE OF ACTION

12. Since about February 11, 1997, defendant disseminated or caused the dissemination of advertisements to aid, promote, and assist, directly or indirectly, consumer leases for Mazda vehicles, as "advertisement" and "consumer lease" are defined in Section 213.2 of Regulation M, 12 C.F.R.  213.2, as amended, including but not limited to the television advertisements attached as Exhibits B through E.

13. In numerous instances, the advertisements for Mazda vehicles described in Paragraph 12 stated the amount of a monthly payment, but failed to state the disclosures required by Part I(C) of the FTC's Order "clearly and conspicuously," as that term is defined in Definition 1 of the FTC's Order. These lease disclosures, including but not limited to the total amount due at lease inception, were not stated "clearly and conspicuously" because, among other deficiencies, they appeared in small type, for a short duration, or were accompanied by distracting or obscuring sounds or images.

14. By failing to make the required disclosures "clearly and conspicuously," as that term is defined in Definition 1 of the FTC's Order, defendant violated Part I(C) of the FTC's Order.

CIVIL PENALTIES AND INJUNCTION

15. Each failure by defendant to make required disclosures "clearly and conspicuously," as that term is defined in Definition 1 of the FTC's Order, as set forth in Paragraph 13 above, constitutes a separate violation of the FTC's Order for which plaintiff seeks monetary civil penalties.

16. Section 5(l) of the FTC Act, 15 U.S.C.  45(l), as modified by Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C.  2461, and Section 1.98(c) of the FTC's Rules of Practice, 16 C.F.R.  1.98(c), authorizes this Court to award monetary civil penalties of not more than $11,000 for each such violation of the FTC's Order.

17. Under Sections 5(l) and 13(b) of the FTC Act, 15 U.S.C.  45(l) and 53(b), this Court is authorized to issue a permanent injunction against defendant's violating the FTC Act and the FTC's Order, and to grant ancillary relief.

PRAYER

WHEREFORE, plaintiff requests this Court, pursuant to 15 U.S.C.  45(l), 49, and 53(b), and to this Court's own equity powers:

(1) Enter judgment against defendant and in favor of plaintiff for each violation alleged in this complaint;

(2) Award plaintiff monetary civil penalties from defendant for each violation of the FTC's Order alleged in this complaint;

(3) Enjoin defendant from further violating the FTC's Order; and

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(4) Award plaintiff such additional relief as this Court may deem just and proper.

DATED:

Of Counsel:

ELAINE D. KOLISH
Associate Director
for Enforcement

DAVID MEDINE
Associate Director
for Financial Practices

LAWRENCE HODAPP
Assistant Director
for Enforcement

LOUISE R. JUNG
JOCK K. CHUNG
SALLY FORMAN PITOFSKY
Attorneys
Bureau of Consumer Protection
Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, D.C. 20580

FOR THE UNITED STATES OF AMERICA:

DAVID W. OGDEN
Acting Assistant Attorney General
Civil Division
U.S. Department of Justice

ALEJANDRO N. MAYORKAS
United States Attorney
Central District of California

_________________________________
Assistant United States Attorney
California Bar No.:
U.S. District Courthouse
Room 7516, Federal Building
300 North Los Angeles Street
Los Angeles, CA 90012
(213) 894-2434 (office)

EUGENE M. THIROLF
Director
Office of Consumer Litigation

ELIZABETH STEIN
Attorney
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
Washington, D.C. 20530
(202) 307-0486