On July 14, the DOJ announced that it has settled a lawsuit alleging that a California-based towing company violated the SCRA by illegally selling, auctioning, or otherwise disposing of as many as 148 vehicles owned by SCRA-protected servicemembers without court orders. As previously covered by InfoBytes, the DOJ filed the underlying complaint in the U.S. District Court for the Central District of California on March 25, alleging that the company towed the vehicles from a Marine Corps base pursuant to a towing contract and disposed of them without verifying the owners’ military status or obtaining court orders, in violation of Section 3958(a) of the SCRA. The DOJ alleged the company had no SCRA policies or training materials in place and that its conduct was intentional, willful, and taken in disregard of servicemembers’ rights. In settling, the company neither admitted nor denied the allegations.

Under the terms of the settlement, the company agreed to deposit $160,000 into an interest-bearing escrow account within 60 days to compensate servicemembers the DOJ determines may have been harmed by the violations. The agreement also requires the company to submit proposed SCRA policies and procedures to the DOJ, including verification of a vehicle owner’s military status through review of available records and searches of the Defense Department’s Defense Manpower Data Center database, and to provide annual SCRA compliance training to employees involved in the storage, sale or disposal of vehicles. The company also agreed to provide the DOJ with a searchable list of all vehicles it disposed of without a court order between April 15, 2025, and the settlement’s effective date, and to notify the DOJ of any SCRA-related complaints if it reenters the towing business. The settlement resolves only the SCRA claims identified in the agreement and will remain in effect for four years from its effective date.