NJ Kars4Kid wins in court, won't have to pay millions to Texas charity

LAKEWOOD — Kars4Kids, the township-based charity known as much for its radio jingle as its fundraising efforts, won a significant court victory against a Texas outfit with a similar name that had sought to bar Kars4Kids from fundraising there.

A federal appeals court ruled in favor of Kars4Kids on Tuesday, dismissing a lower court judgment that had favored the Texas outlet, American Can Car and its charity, Cars For Kids.

“The courts have essentially confirmed what the everyday consumer in any part of the country knows: Kars4Kids, with our iconic jingle, is the brand,” Kars4Kids’ COO Esti Landau said in a statement. “While we respect the Cars for Kids in Texas for its charitable work, we are thrilled the court recognized that we can continue to use all the goodwill and brand recognition we have built up in our name in Texas, just as we do in every other state.”

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The ruling also vacates a previous $7.8 million judgment for damages issued by a federal judge against Kars4Kids and to be paid to American Can Car, Cars for Kids.

Cars For Kids CEO Colin Weatherwax declined to comment on the case and said the charity had not decided if it would seek further legal remedies.

“We are still in the process of reviewing the decision in the courts,” he said by phone. “After we finish that process with our attorneys we will then have a comment.”

The dispute dates back to 2014 when Kars4Kids fired the first shot by suing Texas-based American Can Cars for Kids in federal court in New Jersey, claiming trademark infringement, unfair competition and trademark dilution, according to attorneys.

The initial lawsuit contended that Cars for Kids is “confusingly similar” to Kars4Kids, which has made its name with the recognizable radio ad and related promotions.

A year later, American Can Cars for Kids filed its own suit against Kar4Kids in a Texas federal court claiming trademark infringement and unfair competition in Texas.

“We spent a lot of time and money developing our Cars for Kids trademark in Texas and we get donations from many other states,” Chainey Singleton, general counsel for American Can Cars For Kids, said last fall. “It has caused a lot of confusion with consumers. That happens a lot.”

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Both outlets are 501©3 charitable organizations that accept donated vehicles and other items, auction them off, and give the proceeds to children’s charities.

Federal tax records indicate American Can Cars for Kids received $12.1 million in donations in 2022, while Kars4Kids took in more than $101 million.

American Can Cars for Kids launched in 1992 and provides funding to a variety of charities, including “a unique network of 14 charter schools across Texas in Austin, Dallas, Fort Worth, Houston and San Antonio that serve students who have struggled in a traditional high school setting,” the organization said in a statement.

Kars4Kids, in existence since 1994, focuses primarily on Jewish-related charities and has come under attack with claims that it is not open about how it uses its donations and potentially misleads donors.

In 2017, the Minnesota attorney general issued a report that Kars4Kids had raised $3 million from Minnesota donors but only spent $11,600 between 2012 and 2014 for local charities there.

That same year, the nonprofit Charity Watch criticized Kars4Kids, stating the organization deceives potential donors “by failing to inform them that donated cars will benefit a Jewish organization and kids of Jewish faith.”

Kars4Kids spokesperson Wendy Kerwin dismissed such complaints, noting the attorney general brought no formal charges or other specific criminal claims. She also said Kars4Kids does not promise to donate equal amounts to states based on the donations provided.

“It was an intensive investigation and they came up with very little to complain about,” Kerwin said at the time.

Both lawsuits were eventually consolidated in 2016 into one case in federal court in New Jersey, with a trial held in 2019.

The federal court jury ruled in May 2019 in favor of American Can Cars for Kids. A year later, a federal judge awarded $11 million in damages to American Can Cars for Kids.

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That award was later reduced to $10.6 million, attorneys said.

Kars4Kids appealed the verdict to the Third Circuit Court of Appeals in Philadelphia in 2021, which remanded it back to federal court in New Jersey with a directive to review the damage amount.

The New Jersey Federal Court reduced the damages to $7.8 million, which Kars4Kids appealed again to the Third District in May 2023.

A hearing was held before the appeals court on Dec. 12, 2023.

The appeals court decision issued Wednesday dismissed the case and vacated the previous rulings and awards. Kars4Kids will pay nothing.

“Our focus has always been on the charitable work our donation program supports,” Kars4Kids President Robert Moskovits said in a statement. “With the legal victory behind us, we can get back to what we do best – getting our charity programs the most we can out of every car donated.”

Joe Strupp is an award-winning journalist with 30 years’ experience who covers education and several local communities for APP.com and the Asbury Park Press. He is also the author of three books, including Killing Journalism on the state of the news media, and an adjunct media professor at Rutgers University and Fairleigh Dickinson University. Reach him at jstrupp@gannettnj.com and at 732-413-3840. Follow him on Twitter at @joestrupp

This article originally appeared on Asbury Park Press: Kars4Kds wins appeal, court vacates multi-million dollar judgment