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Going once.... Going twice.....

In 2001, Jose Gonzales was killed in an accident in his 1993 Ford Explorer equipped with Firestone ATX tires. The Explorer was auctioned in 2000 by Big H Auto Action, who then sold it to Progreso Motors, who sold it Jose Gonzales. Gonzales's widow and children sued the manufacturers of the vehicle and tires, as well as all upstream sellers of the used vehicle, including Big H, alleging that the auction house is liable for strict products liability or negligence in auctioning the vehicle without replacing recalled tires. In writing an amicus brief on behalf of PLF to file in the Texas Supreme Court in this case, I learned all about the wide and wonderful world of remarketing, including used car dealers, pawn shops, and various forms of "thrift" or second-hand stores.

According to Manheim Consulting , more than 23 million used vehicles were wholesaled in the United States in 2005, with nearly 10 million remarketed through auctions, which accounted for 42% of all vehicles wholesaled. Governments conduct public auctions all the time to move seized and abandoned vehicles. Seller liability should not attach to auction houses, which simply provide a service to sellers. Rarely would a vehicle be on the block for more than a minute or two. And because the vast majority of auctions � including Big H � are dealer-to-dealer, there are sophisticated parties on both sides of the transaction, rather than potentially naive consumers. In fact, consumers are the ultimate beneficiaries of free-flowing goods and services, easily available and affordable even to low-income purchasers. Expanding "seller" liability to auctions undermines the public policy that favors greater choice and availability of goods to consumers, particularly poorer consumers who are the primary purchasers of second-hand merchandise.



Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.