Midas lawsuit over for $1.8M

The California attorney general's office and Modesto businessman Mike Glad have reached a settlement that prevents him from ever again owning or operating auto repair shops in the state.

The $1.8 million settlement stems from a lawsuit filed by the attorney general in June that alleged Glad ran a "massive bait-and-switch scheme" at his 22 Midas Auto Service franchises in the Central Valley and Bay Area.

"The primary focus of our case was on protecting California's consumers," wrote Evan Westrup, deputy press secretary for the attorney general's office in an e-mail interview about the case. "This settlement achieves that goal by ensuring Glad never owns or operates an auto repair shop."

The initial lawsuit from Attorney General Jerry Brown's office sought $222 million in civil penalties, costs and reimbursement to customers. The $1.8 million settlement was for damages, investigative costs and attorney fees.

Consumers involved in the undercover investigation and those who filed verifiable complaints with the Bureau of Automotive Repair were compensated by Glad before the settlement.

Glad is permanently prevented from "applying for or holding any license or registration issued by the California Bureau of Automotive Repair or any successor agency" and "engaging in any business that requires any type of license or registration issued by the California Bureau of Automotive Repair or any successor agency."

All Glad, the company that controlled Glad's 22 Midas franchises, was dissolved Monday. Because the judgment came from a stipulated settlement, Glad did not admit liability in the case.

"I'm grateful to have it over, honestly. I am ready to move on," Glad said when contacted Monday afternoon. "It's good to have it over and that is the truth. It's a good thing, not a bad thing."

Midas International Corp. is running all of Glad's shops, which will continue to operate without interruption. Midas spokesman Bob Troyer said the estimated 100 employees have been retained. The company has agreed to honor any and all guarantees or warranties previously made or given to customers.

Glad said he decided to settle for several reasons.

"It's really surreal that this happened, but the most important things to me were No. 1 my employees, No. 2 the customers and No. 3 the people I did business with. We tried to protect all those through this settlement," he said.

The 11 employees on All Glad's administrative staff have been let go or found other jobs.

The initial lawsuit came after a sting operation conducted by the Bureau of Automotive Repair at Glad's Midas franchises, including the shops at 338 and 3833 McHenry Ave. in Modesto and 2651 Geer Road in Turlock.

The four-year undercover investigation revealed that Glad regularly advertised $79 to $99 brake specials at his shops to draw in customers, then often charged $110 to $130 more for unnecessary brake-rotor resurfacing.

Undercover agents conducted about 30 sting operations, which found more than 35 incidents involving 105 violations. On average, the shops charged almost $300 in unnecessary work.

In 1989, the state attorney general sued Glad for similar violations, which resulted in an injunction prohibiting his shops from performing unnecessary repairs, charging for services not performed or using scare tactics to persuade customers to purchase unnecessary parts and services.

The new investigation was initiated to monitor Glad's compliance with the injunction.

Westrup said the attorney general chose to pursue civil lawsuit instead of criminal charges because "a civil case made greater damages and penalties available."

Neither Glad nor Westrup would comment on the negotiation details or the discrepancy between the $222 million claim in the lawsuit and eventual $1.8 million settlement. But Westrup said public protection was the office's priority.

"(Barring someone from future operations) is relatively atypical, but given the history and nature of the violations, this request was fully warranted," he said.

Glad, who was signing the final paperwork to dissolve his company Monday afternoon, said he plans to stay in the area and pursue his other interests -- photography and filmmaking.

In 2007, his short documentary "Recycled Life" was nominated for, but did not win, an Academy Award. He has held photo exhibits in town and has a show in San Francisco next month.

Bee staff writer Marijke Rowland can be reached at mrowland@modbee.com or 578-2284.

This story was originally published January 26, 2010 at 12:27 AM with the headline "Midas lawsuit over for $1.8M."