Contributors

Christian Scali

Founder and Managing Shareholder

Halbert B. Rasmussen

Shareholder

Jennifer Woo Burns

Of Counsel

Jasmin B. Bhandari

Principal

Los Angeles County just issued its Order banning the operation of non-essential retail and other businesses, similar to those that have been sweeping across the state and country. It is similar to the “shelter in place” orders issued in the Bay Area, however, the L.A. County Order designates as one of the Essential Services: “…auto-supply, auto repair, car dealerships and related facilities.” This means that car dealership operations can continue in full, and there is no need to close vehicle sales operations. However, dealerships must remember that this is not “business as usual” as they must adhere to other measures under the Order, including the following infection control practices:

• social distancing of at least 6 feet where possible,

• access to handwashing facilities or hand sanitizer,

• posting signs in conspicuous places at public entry points containing a warning for individuals to not enter if they are experiencing symptoms of respiratory illness, including fever or cough, and

• adhering to communicable disease control recommendations issued by the L.A. Department of Public Health.

The signage for compliance with the above bullet point can be on 8 ½” by 11” paper and can read in large, bolded font:

The City of Los Angeles issued its Order banning the operation of non-essential retail and other businesses, which designates as one of the Essential Services: “gas service stations, auto supply, mobile auto repair operations, auto repair shops (including, without limitation, auto repair shops that operate adjacent to or otherwise in connection with an [sic] used or retail auto dealership), bicycle repair shops and related facilities).” This is similar to the Northern California County orders and appears to allow only service and parts operations to continue to operate, along with professional services, such as legal, and payroll and accounting, when necessary to assist in compliance with legally mandated activities. But it does not permit sales activity. This law is not going into effect until midnight on Friday night to give people time to return to work on Friday to retrieve their personal belongings.

Finally, Governor Newsom and the California State Public Health Officer issued Executive Order N-33-20, requiring all individuals living in California to stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors, as outlined under federal law and additional sectors as he sees fit to designate as critical to protect the health and well-being of all Californians. One critical sector identified by federal law is “Transportation and Logistics,” which includes in relevant part, “automotive repair and maintenance facilities,” but does not mention automotive retail or wholesale sales. This order is effective immediately.

Confused? Several questions remain unanswered.

For example, does the Executive Order preempt the local orders? Do “transportation and logistics” essential services exclude automotive sales? But it’s not looking good. The Governor’s website states that his Executive Order applies statewide and that it was issued in light of the differing county and local orders. The CNCDA is meeting with the Governor to obtain better clarity. The best we can say right now is:

• If you are a car dealership operating outside of Los Angeles County, you can reasonably assume that you are prohibited from operating your sales department, but may continue to conduct service and parts operations, along with essential professional services to assist in compliance with legally mandated activities, provided you adhere to the infection control practices referenced above and referenced here and here:

• If you are a car dealership in Los Angeles County, but outside of the City of Los Angeles, you run the risk of non-compliance with the Executive Order by continuing your vehicle sales operation. You may continue to conduct service and parts operations, along with essential professional services to assist in compliance with legally mandated activities, provided you adhere to the infection control practices referenced above and referenced here and here:

• If you are a car dealership operating inside the City of Los Angeles, you can reasonably assume that you are prohibited from operating your sales department, but may continue to conduct service and parts operations, along with essential professional services to assist in compliance with legally mandated activities, provided you adhere to the infection control practices referenced above and referenced here and here.

The CNCDA will be issuing an alert this evening or tomorrow morning. We will update you to the extent they have any new information after their discussion with Governor Newsom’s office. Please contact us if you need further information or guidance.