GNYADA February 2020 Newsletter

NY Franchise Bill Protects Downstate Dealer

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goals. In that case, Beck Chevrolet Co., Inc. v. General Motors LLC , the court found that GM used an arbitrary sales standard that also ignored local market factors. The Beck case was also handled by Mr. McRory. Both of these decisions serve as the foundation for future legal arguments that factory sales standards and incentive program objectives cannot ignore the severely disruptive force of brokering activity. GNYADA has been working with other stakeholders on new legislative efforts to protect consumers from unscrupulous brokers and to protect franchise dealers’ businesses. See cover story for more information on what DMV is doing regulate brokers.

Score a victory for New York Franchise Law! A downstate dealer recently won a franchise law case that could have major implications on how automobile brokering affects manufacturers’ performance metrics. The case challenged the legality of FCA’s Minimum Sales Responsibility (MSR) sales performance standard primarily on key Franchise Law protections GNYADA lobbied for in the State Legislature in 2008. The case was tried by attorneys Russell McRory and Michael McMahan of Arent Fox, GNYADAAllied Members. The case was brought before a DMV administrative law judge who found that the MSR did not take into account the impact of local sales conditions, which were severely disrupted by brokering, and that the

factory unfairly distributed incentive payments as a result of those sales. The judge also made another, extraordinary finding: that the manufacturer failed to act in “good faith” by facilitating car sales through automobile brokers, a practice that is clearly prohibited by New York’s Franchise Law. The main charges against the manufacturer – that its performance standard was unreasonable and that it acted in bad faith – were based on dealer rights GNYADA lobbied hard to add to the Franchised Motor Vehicle Dealer Act eleven years ago. In 2016, another GNYADA dealer sued its manufacturer for threatening to not renew its franchise agreement for failure to meet unreasonable sales

6 New Broker Bill Starting to Move DEALER ADVOCACY NEEDED IN ALBANY

A new Broker Bill will be introduced in the State Legislature in the coming weeks. This new Broker Bill has been GNYADA’s number one legislative agenda item for several years. The bill will set new standards for the auto brokering industry, restoring fairness in a market that has been inundated by hundreds of brokers that operate illegally, unregistered, and in the shadows without any Government oversight. Last year, working with UAW Local 259 and Teamsters Local 202, GNYADA was able to secure over 80 legislative sponsors for a bill. While that legislation saw some movement in the Senate, neither the Assembly nor Senate brought the bill to the floor for a full vote. While GNYADA has been successful in passing several bills to ensure brokers advertise clearly and fairly, requiring them to register with the State, and to post a bond, very few broker businesses have followed these basic requirements.

Dealer Lobby Day – March 24th in Albany

Join GNYADA for Dealer Lobby Day in Albany and speak directly to legislators about passing the Broker Bill and many other important franchise law issues. See the enclosed flyer. To register for Dealer Day contact Kelsey at 718.746.5900 or Kelsey@gnyada.com .

GNYADA appreciates the cooperative work of stakeholders and Assemblyman Bob Carroll for their efforts in crafting this new bill.

Greater New York Automobile Dealers Association • www.gnyada.com The Newsletter • February 2020 3