Nissan Motor Acceptance Corp. & Servicemembers Civil Relief Act: Settlement, Study notes of Business

Download Nissan Motor Acceptance Corp. & Servicemembers Civil Relief Act: Settlement and more Study notes Business in PDF only on Docsity! United States v. Nissan Motor Acceptance Corp., N.A., L.L.C (M.D. Tenn.), filed August 1, 2019 SETTLEMENT AGREEMENT BETWEEN THE UNITED STATES OF AMERICA AND NISSAN MOTOR ACCEPTANCE CORPORATION I. INTRODUCTION 1. This Settlement Agreement (“Agreement”) is entered into between Plaintiff, the United States of America (“the United States”), through the Department of Justice, and Defendant Nissan Motor Acceptance Corporation (“NMAC”), through its authorized representatives. The United States and NMAC are referred to herein as the “Parties.” II. RECITALS 2. This Agreement resolves the allegations contained in the United States’ complaint in United States v. Nissan Motor Acceptance Corp., filed in the United States District Court for the Middle District of Tennessee on August 1, 2019 (hereinafter “Civil Action”). 3. The Civil Action alleges that NMAC violated the Servicemembers Civil Relief Act (“SCRA”), 50 U.S.C. §§ 3901-4043, by repossessing motor -1- vehicles from “SCRA-protected servicemembers”1 without court orders. 4. This Agreement covers all repossessions occurring from January 1, 2008 through the effective date of this Agreement in connection with loans or deficiency balances originated, acquired, and/or serviced by NMAC, or any subsidiaries, predecessors, acquired companies, or successor entities. 5. The Civil Action also alleges that NMAC violated the SCRA by failing to refund, on a pro rata basis, lease amounts paid in advance – in the form of capitalized cost reduction (“CCR”) – by servicemembers who lawfully terminated their motor vehicle leases upon receipt of qualifying military orders. Specifically, the United States alleges that NMAC did not refund any portion of CCR amounts to servicemembers who lawfully terminated their leases. 1 For purposes of this Settlement Agreement, the term “SCRA-protected servicemember” includes servicemembers as defined in 50 U.S.C. § 3911(1) and (2) who made a deposit or at least one installment payment before entering military service. See 50 U.S.C. § 3952(a). The SCRA grants additional periods of protection for reservists ordered to report for military service and persons ordered to report for induction. 50 U.S.C. § 3917. Therefore, for purposes of this Settlement Agreement, these “early alert” periods shall be included in the periods of protection for servicemembers at the time of repossession. However, since such periods are not included in the definition of “military service” in 50 U.S.C. § 3911, they are not considered military service at the time of payment of a deposit on the motor vehicle or installment on the loan. -2- 46. The parties agree and acknowledge that this consideration is adequate and sufficient. IV. TERMS AND CONDITIONS A. COMPLIANCE WITH THE SCRA AND SCRA POLICIES AND PROCEDURES 13. Within thirty (30) calendar days of the effective date of this Agreement, NMAC shall review its SCRA Policies and Procedures for Motor Vehicle Repossessions to ensure their compliance with Section 3952(a) of the SCRA, 50 U.S.C. § 3952(a). NMAC will confirm that these policies and procedures – which must apply to NMAC and NMAC’s agents – include the following provisions (and to the extent they do not, make appropriate modifications): a. To determine whether the borrower2 is an SCRA-protected servicemember, NMAC shall check the Defense Department’s Defense Manpower Data Center (DMDC) database, located at https://scra.dmdc.osd.mil , at the following times: (i) no more than two (2) business days before it refers a motor vehicle loan for repossession; 2 For purposes of this Agreement, the term “borrower” includes co-borrowers. -5- (ii) no more than two (2) business days after it (or its agents, including contractors and vendors) obtains possession of the motor vehicle; and b. (iii) no more than (2) business days before it (or its agents, including contractors and vendors) disposes of the motor vehicle. If NMAC is informed via military service information received from a borrower, or via the periodic electronic check of the DMDC described above, that the borrower is an SCRA- protected servicemember, it shall neither refer the loan for repossession nor conduct the repossession itself without first obtaining a court order or a valid SCRA waiver pursuant to subparagraph (e). c. If NMAC discovers, from a check of the DMDC database or otherwise, after obtaining possession but before disposing of a motor vehicle, that the borrower is an SCRA-protected servicemember, it shall attempt to contact the borrower and offer to arrange to return the vehicle within twenty-four (24) hours and shall reverse on the borrower’s account all of the charges resulting from the repossession. NMAC shall also update any tradeline information furnished to any consumer -6- reporting agency to remove repossession-related information. If NMAC cannot make contact with the borrower within twenty-four (24) hours, NMAC shall hold the vehicle at a storage location regularly used by NMAC (e.g., auction site storage) closest to the location where the vehicle was picked up until contact is made with the customer. NMAC shall make additional attempts to reach the borrower based upon contact information in its files, and shall return the vehicle within twenty-four (24) hours of a borrower’s request for return, without charging any repossession-related fees. NMAC shall not sell or otherwise dispose of the vehicle until it has made all the contact attempts referenced in this subparagraph and has obtained a court order or valid SCRA waiver pursuant to subparagraph (e). d. If NMAC files a complaint for repossession in court and the borrower does not make an appearance in the case, NMAC will file an affidavit of military service with the court as required by Section 3931(b)(1) of the SCRA, 50 U.S.C. § 3931(b)(1). Before seeking entry of default, NMAC will search the DMDC database and review information in its possession or control to -7- orders extending the period of military service to a period of not less than 180 days), see 50 U.S.C. § 3955(b)(2)(A); ii. the lessee, while in military service, executes a lease and thereafter receives military orders for a permanent change of station from a location in the continental United States to a location outside the continental United States or from a location in a state outside the continental United States to any location outside that state, see 50 U.S.C. § 3955(b)(2)(B)(i); or iii. the lessee, while in military service, executes a lease and thereafter receives military orders to deploy with a military unit, or as an individual in support of a military operation, for a period of not less than 180 days, see 50 U.S.C. § 3955(b)(2)(B)(ii); b. accepting terminations of leases by delivery to NMAC or NMAC’s agent of written notice of termination and a copy of military orders (to include any notification, certification, or verification from the servicemember’s commanding officer), or other document prepared exclusively by a branch of the military or the Department of Defense demonstrating that the lessee is -10- eligible for lease termination under 50 U.S.C. § 3955(b)(2), including by hand delivery, private business carrier, U.S. Mail, or e-mail, and return of the motor vehicle to NMAC or NMAC’s agent; c. permitting eligible servicemembers to terminate their motor vehicle leases at any time after their entry into military service under the circumstances set forth in subparagraph (a)(i), or the date of their qualifying military orders as set forth in subparagraph (a)(ii) and (a)(iii), see 50 U.S.C. § 3955(a)(1); d. setting the effective date of the lease termination as the date on which the servicemember has completed both delivery of the notice of termination and return of the vehicle to NMAC or NMAC’s agent, see 50 U.S.C. § 3955(d)(2); e. limiting any charges that must be paid upon termination to those permitted by Section 3955(e)(2) of the SCRA; f. refunding, within 30 days after the effective date of termination, all lease amounts paid in advance (including those applied as CCR) for a period after the effective date of termination, see 50 U.S.C. § 3955(f); and -11- g. designating customer service representatives who have been specifically trained on the protections of the SCRA with respect to motor vehicle leases and who are responsible for the intake of and response to servicemembers’ inquiries regarding the SCRA. NMAC shall ensure that it has a telephone number, and link to a secure electronic communications channel, at which servicemembers may reach a designated SCRA customer service representative, or leave a message for such representative, who will address questions or concerns regarding the SCRA. NMAC shall also include a page on its website detailing eligibility for, and relief provided by, the SCRA, and providing the telephone number and designated electronic mail address to obtain SCRA relief or raise questions or concerns regarding such relief. 15. No later than thirty (30) calendar days after the effective date of this Agreement, NMAC shall provide a copy of the proposed SCRA Policies and Procedures required under Paragraphs 13 and 14 to counsel -12- approved by the United States pursuant to Paragraph 17. NMAC shall provide to each covered employee: (a) training on the terms of the SCRA with respect to motor vehicle repossessions and motor vehicle lease terminations; (b) training on NMAC’s SCRA Policies and Procedures (both those required pursuant to Paragraphs 13 and 14 and all others adopted by NMAC); and (c) the contact information for the SCRA customer service representatives described in Paragraph 14(g). NMAC shall also follow these training procedures for any employee who subsequently becomes a covered employee within thirty (30) calendar days of his or her hiring, promotion, or transfer. 19. During the term of this Agreement, NMAC shall provide annual SCRA training, with the same content as described in Paragraph 18, to covered employees with respect to their responsibilities and obligations under the SCRA and the SCRA Policies and Procedures. 20. The covered employees may undergo the training required by Paragraphs 18 and 19 via live training, computer-based training, web- based training, or via interactive digital media. If the training is conducted in any format other than live training, NMAC shall ensure that covered employees have the opportunity to have their questions answered by a company contact that NMAC identifies as having -15- sufficient SCRA knowledge to promptly address such questions within five (5) business days of the training. Any expenses associated with the training program required by Paragraphs 18 and 19 shall be borne by NMAC. 21. NMAC shall ensure that it obtains each covered employee’s signature on an attendance sheet (which shall be in the form of Exhibit B attached hereto) at the training required by Paragraphs 18 and 19 acknowledging that he or she has received, read, and understands the SCRA Policies and Procedures, has had the opportunity to have his or her questions about these documents answered, and agrees to abide by them. For the duration of this Agreement, copies of those signed statements shall be provided to the United States upon request. NMAC shall also certify in writing to counsel for the United States that the covered employees have successfully completed the training required by Paragraphs 18 and 19. C. MONETARY COMPENSATION 22. Within fourteen (14) days of the effective date of this Agreement, NMAC shall deposit $2,937,971 into an interest-bearing escrow account for the purpose of providing compensation for the alleged violations of the Servicemembers Civil Relief Act described herein. -16- Repossessions NMAC shall provide written verification of the deposit to the United States within three (3) business days of depositing the funds described in this Paragraph. Any taxes, costs, or other fees incurred on the escrow funds shall be paid by NMAC. 23. Within ninety (90) days of the effective date of this Agreement, the United States shall make a determination of the aggrieved persons who shall receive compensation pursuant to this Agreement and the amount that shall be paid to each of them. In no event shall the total compensation exceed $2,937,971. NMAC shall promptly provide any additional information requested by the United States to assist the United States in making its determination. 24. The United States has determined that NMAC conducted 113 motor vehicle repossessions between January 1, 2008 and March 28, 2019 that violated the SCRA. The United States has previously provided the list of these repossessions to NMAC. 25. For non-SCRA compliant repossessions identified pursuant to Paragraph 24, NMAC shall notify each identified servicemember by letter (the form of which is to be approved in advance by DOJ) within sixty (60) calendar days of the United States’ determination of -17- General Provisions 32. For any and all servicemembers and co-lessees currently residing in Oregon, NMAC shall send the servicemember and co-lessee a Release in the form attached as Exhibit C within forty-five (45) days of the United States’ determination pursuant to Paragraph 23. Within thirty (30) days of receiving a properly executed copy of the Release at Exhibit C, NMAC shall issue and mail a compensation check to the servicemember or co-lessee in the amount determined by the United States pursuant to Paragraph 23. Servicemembers and co-lessees in Oregon shall have two (2) years from the date of notification to provide the Release. 33. NMAC shall promptly skip trace and redeliver or reissue any payment or notification that is returned as undeliverable, or that is not deposited, cashed, or returned within three (3) months of the date the initial payment is sent pursuant to Paragraphs 27, 30, and 32. 34. Servicemembers, co-lessees, and co-borrowers shall have six (6) months after issuance to cash or deposit their compensation checks. During the term of this Agreement, NMAC shall, upon the request of a servicemember, co-lessee, or co-borrower entitled to compensation, reissue any checks that are not cashed or deposited prior to their -20- expiration, provided, however, that the compensation checks issued pursuant to the United States’ determination under Paragraph 23 shall expire no later than three years after the effective date of this Agreement. 35. The United States may, at its discretion, re-allocate any funds remaining in the escrow account three years after the effective date of this Agreement, and this re-allocation may include additional payments to aggrieved persons who have already received compensation checks. Aggrieved persons who are awarded compensation through this re- allocation shall be entitled to collect their compensation (and NMAC shall re-issue checks upon request) until the expiration of this Agreement. 36. Every 6 months during the term of this Agreement, NMAC shall provide the DOJ with an accounting of all declarations and releases received, checks issued, checks cashed or deposited (including check copies), credit entries updated, and notifications without responses or that were returned as undeliverable. NMAC shall report any uncashed checks in accordance with state unclaimed property laws. 37. NMAC shall bear all costs and expenses of distributing the compensation payments under this Agreement. -21- 38. Any amounts remaining in the escrow account that have not been distributed to aggrieved persons within four (4) years of the date of this Agreement shall be paid to the United States Treasury in the form of an electronic funds transfer pursuant to written instructions to be provided by the United States. 39. No individual may obtain review by the Parties of the identifications made, and payments disbursed (including the amounts thereof), pursuant to Paragraphs 22-38. D. OTHER RELIEF 40. Within sixty (60) days of the effective date of this Agreement, NMAC must request that all credit bureaus to which it reports remove all tradelines for any servicemember and any co-borrower(s) related to the vehicle that was wrongfully repossessed. Upon the request of any servicemember entitled to compensation pursuant to Paragraph 31, NMAC shall request that all credit bureaus to which it reports remove all tradelines for any servicemember and any co-borrower(s) related to the vehicle. The United States acknowledges that NMAC can only request that the credit modification be made to a credit report by a credit bureau. Further, NMAC shall not pursue, must indemnify the servicemember and his or her co-borrower(s) against any third party’s -22- lease terminations occurring during the period from January 1, 2008 through the effective date of this Agreement. 45. In the event that NMAC is acquired by or merges with another entity, NMAC shall, as a condition of such acquisition or merger, obtain the written agreement of the acquiring or surviving entity to be bound by any obligations remaining under this Agreement for the remaining term of this Agreement. 46. This Agreement releases only the claims for violations of Sections 3952(a) and 3955(f) of the SCRA addressed in the Complaint or identified in this Agreement. This Agreement does not release any other claims that may be held or are currently under investigation by any federal agency against NMAC or any of its affiliated entities. 47. Nothing in this Agreement will excuse NMAC’s noncompliance with any currently or subsequently effective provision of law or order of a regulator with authority over NMAC that imposes additional obligations on it. VI. IMPLEMENTATION AND ENFORCEMENT 48. The United States may review compliance with this Agreement at any time. NMAC agrees to cooperate with the United States in any reasonable review of compliance with this Agreement. Upon -25- reasonable notice, NMAC shall permit counsel for the United States to inspect and copy all non-privileged records pertinent to this Agreement. 49. Within fourteen (14) days after the deposit of escrow funds as set forth in Paragraph 22 or the payment to the United States as set forth in Paragraph 41, whichever is later, the Parties shall jointly move the Court for dismissal of the underlying Civil Action, subject to reinstatement as set forth in Paragraph 50. 50. The Parties agree that upon any claim of breach made by the United States, the United States may move to restore the Civil Action to the active docket of this Court for purposes of resolving such claim. In the event such a claim of breach is made by the United States, NMAC consents to and agrees not to contest the United States’ motion to restore the Civil Action to the Court's active docket. Alternatively, the United States may bring a civil action for breach of this Agreement, or any provision thereof, in the United States District Court for the Middle District of Tennessee. The United States may in such action seek to have the Court impose any remedy authorized at law or equity. The Middle District of Tennessee shall serve as the exclusive jurisdiction and venue for any dispute concerning this Agreement. NMAC consents to and agrees not to contest the exercise of personal jurisdiction over it -26- by the United States District Court for the Middle District of Tennessee. The Parties further acknowledge that venue in the Middle District of Tennessee is appropriate and agree not to raise any challenge on this basis. 51. If the United States believes that there has been a failure by NMAC to perform in a timely manner any act required by this Agreement, or otherwise to act in conformance with any provision thereof, whether intentionally or not, the United States shall, before taking the steps outlined in Paragraph 50, notify NMAC in writing of its concerns, and the Parties will attempt to resolve those concerns in good faith. NMAC shall have fifteen (15) days from the date the United States provides notification of any breach of this Agreement to cure the breach or to request a meet and confer to resolve any disagreement between the Parties as to the validity of the claimed failure. 52. The Parties shall endeavor in good faith to resolve informally any differences regarding interpretation of, or compliance with, this Agreement prior to initiating any court action. 53. In the event the United States reinstates the Civil Action as contemplated by Paragraph 50, above, or any other civil action is commenced to remedy breach of this Agreement, the United States may -27- 60. Each Party and signatory to this Agreement represents that it freely and voluntarily enters into this Agreement without any degree of duress or compulsion. The Parties agree that each Party and its representatives have acted consistent with the duty of good faith and fair dealing. 61. The undersigned represent and warrant that they are fully authorized to execute this Agreement on behalf of the persons and entities indicated below. 62. For purposes of construing this Agreement, this Agreement shall be deemed to have been drafted by all Parties to this Agreement and shall not, therefore, be construed against any Party for that reason in any subsequent dispute. 63. Except where this Agreement expressly conditions or predicates performance of a duty or obligation upon the performance of a duty or obligation by another party, the performance of one party’s duties or obligations under this Agreement shall not be discharged or excused by the actual or alleged breach of the duties and obligations by another party. 64. Should any provision of this Agreement be declared or determined by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or -30- invalid part, term or provision shall be deemed not to be a part of this Agreement. 65. The Parties agree that they will not, individually or in combination with another, seek to have any court declare or determine that any provision of this Agreement is illegal or invalid. 66. This Agreement may be modified only with the written consent of the parties. Any modifications must be in writing and signed by the parties through their authorized representatives. 67. This Agreement is a public document. Both Parties consent to the United States' disclosure of this Agreement, and information about this Agreement, to the public. 68. This agreement is binding on the Parties and their transferees, heirs, and assigns. 69. This Agreement is governed by and shall be interpreted under the laws of the United States. For the United States of America: Dated: o/l/lf DONALD Q. COCHRAN United States Attorney ERIC S. DREIBAND Assistant Attorney General Civil Rights Division -31- ~~ SARAH K. BOGNI Assistant U.S. Attorney United States Attomef s Office Middle District of Tennessee 110 9th Avenue South) Suite A-961 Nashville, Tennessee 3 7203 Email: sarah.bogni@usdoj.gov Telephone: 615-736-5151 For Nissan Motor Acceptance Corporation: Dated: <; f ( / :l-0 I Cf L. JEAN NOONAN A. JAMES CHAREQ Hudson Cook, LLP 1909 K Street, NW Fourth Floor Washington, D.C. 20006 Email: jnoonan@hudco.com Telephone: 202-327-9700 JMn~ SAMEENA SHINA MAJEED Chief ELIZABETH A; SINGER Director, U.S. Attorneys' Fair Housing Program ALAN A. MARTINSON Trial Attorney U.S. Department of Justice Civil Rights Division Housing and Civil Enforcement Section 950 Pennsylvania Ave. NW - NWB Washington, D.C. 20530 Email: alan.martinson@usdoj.gov Telephone: 202-616-2191 Fax: 202-514-1116 -32-                         _____________________      EXHIBIT B EMPLOYEE TRAINING ATTENDANCE SHEET I acknowledge that on [INSERT DATE], I attended training regarding SCRA compliance and NMAC’s SCRA Policies and Procedures. I have read and understand these documents and have had my questions about these documents and the SCRA answered. I understand my legal responsibilities and shall comply with those responsibilities. Print Name Signature  Job Title Print Name Signature  Job Title       -35- EXHIBIT C RELEASE In consideration for the parties’ agreement to the terms of the Settlement Agreement resolving the United States’ allegations in United States v. Nissan Motor Acceptance Corp., filed August 1, 2019 (M.D. Tenn.), and NMAC’s payment to me of $ [AMOUNT], I, [BORROWER’S NAME], hereby release and forever discharge all claims, arising prior to the date of this Release, related to the facts at issue in the litigation referenced above and related to the alleged violation of [Section 3955(f) OR Section 3952(a)] of the Servicemembers Civil Relief Act, that I may have against NMAC and all related entities, parents, predecessors, successors, subsidiaries, and affiliates and all of its past and present directors, officers, agents, managers, supervisors, shareholders, and employees and its heirs, executors, administrators, successors or assigns. Executed this ______ day of ______________________, 20__. SIGNATURE: __________________________ PRINT NAME: __________________________ -36- __________________________________________________________________ EXHIBIT D DECLARATION I, [INSERT NAME], do hereby declare and state as follows: 1. I owned a vehicle obtained through a loan with Nissan Motor Acceptance Corporation, Loan Number [LOAN NUMBER] that was repossessed. 2. I obtained the loan on or about [LOAN FUNDING DATE]. 3. On or about [REPOSSESSION DATE], I WAS either: i. on a covered period of military service; OR ii. a member of a reserve component (Reserves or National Guard) and had received orders to report for a covered period of military service. 4. Please consider the following additional information in support of this Declaration: __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ ____________________________________________________________ I confirm that the foregoing is true and correct. Executed this ______ day of ______________________, 20__. SIGNATURE: _ PRINT NAME: _________________________ __________________________ -37-