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Omaha Car Dealerships Lose Bid To Escape Iowa Lawsuits

December 3, 1990

WASHINGTON (AP) _ Four Omaha, Neb., automobile dealerships seeking to escape lawsuits charging them with violating Iowa’s consumer fraud laws lost a Supreme Court appeal today.

The justices, without comment, left intact an Iowa Supreme Court ruling that forces the dealerships to defend themselves in Iowa courts.

The dealerships had argued that Iowa’s courts have no authority over them.

Iowa’s highest court said such authority stems from the dealerships’ placing newspaper advertisements in the Omaha World-Herald, which is circulated in Iowa.

The state court noted that the dealerships also placed ads in a telephone directory for Council Bluffs, Iowa, which is located just across the Missouri River from Omaha.

The lawsuits, filed in 1987 by Iowa Attorney General Thomas J. Miller, allege that the ads placed by the dealerships - Baxter Chrysler Plymouth, Markel Ford, John Kraft Chevrolet-Isuzu and Olsen Auto World - were false and misleading.

The suits seek a halt to such advertising practices, and restitution for any Iowa residents who lost money because of the challenged ads.

A fifth suit had been filed against Dean Rawson Nisson of Omaha, but that dealership entered into a consent agreement with Iowa officials.

The Constitution’s due-process protections, as interpreted in a series of past rulings by the nation’s highest court, bar a state court from hearing any lawsuit filed against non-residents unless they have ″certain minimum contacts″ with that state.

The Iowa Supreme Court ruled last May that the car dealerships’ advertising efforts ″are sufficient to render them amenable to suit here in an action which seeks to halt that advertising on the ground that it is unlawful.″

The state court added that the ads also make the dealerships vulnerable to those portions of the lawsuits seeking other sanctions.

In the appeal acted on today, lawyers for the dealerships argued that the May ruling went far beyond established boundaries of state court authority.

″This case is an attempt by the Iowa attorney general to impose Iowa law against Nebraska retailers who advertise their product in a Nebraska newspaper, which ads comply with both Nebraska and federal law,″ the appeal contended.

The case is Baxter Chrysler Plymouth vs. Iowa, 90-583.

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