The law of North Carolina requires a disclosure by an automobile manufacturer when a repurchased vehicle (a lemon) is re-sold. Failing to do so constitutes "lemon laundering." Plaintiffs claimed that the manufacturer was responsible for policing its dealers to make sure that they made the required disclosures when the dealers sold a car that they knew had been repurchased. The Court found that so long as the manufacturer disclosed the fact of the repurchase to its dealers, it had no liability under the statute if the dealers then failed to make the required disclosure.
Nor was there any claim against the manufacturer for negligence or for unfair and deceptive practices. There was no statutory action against the dealers for then failing to disclose to the purchasing consumer, because the statute expressly stated that it did not create an action against dealers. Plaintiffs were, however, entitled to proceed against the dealers for unfair and deceptive practices.