GNYADA July 2015 Newsletter

DCA Grants GNYADA's Extension Request Recall Subpoena Deadline Delayed Until September 16th 11

The subpoenas followed the agency’s reinterpretation of existing “deceptive practice” rules that came without notice to dealers. GNYADA’s efforts have resulted in multiple extensions from DCA since the subpoenas were first issued, and the Association appreciates the Department’s cooper- ation and their continuing discussions in finding a workable solution. GNYADA has also engaged the NYC Council regarding proposed legisla- tion that would limit a dealer’s ability to sell used cars. This legislation is in-state competitor (i.e. another manufacturer) or otherwise had any different impact upon com- merce within Connecticut. As to the Contract Clause The Appeals Court affirmed the trial judge’s ruling that it was not unfore- seen that the state would step in and regulate warranty reimburse- ment, as the relationship between the manufacturers and dealers has been the subject of state regulation since 1982. As to the Due Process Clause Again, the Appeals Court agreed with the trial court’s ruling that the law was rational and could accomplish its intended benefit of increasing reimbursement to dealers, while benefitting citizens by preventing dealers from having to increase non-warranty repair costs to subsi- dize dealers’ cost to perform war- ranty work. How Does This Impact NY Dealers? Why does this matter to dealers in

still pending. GNYADA has success- fully given City Council members the full story on recalls and the sales of motor vehicles and will continue to advocate for dealers on this issue in the days ahead.

Last summer, the New York City Department of Consumer Affairs (DCA) issued subpoenas to more than 200 new and used car dealers request- ing documents pertaining to the sales of secondhand automobiles subject to open recalls. At GNYADA’s request, and to allow negotiations over the scope and the necessity of the investigations to con- tinue, the subpoena deadline has been extended several times. DCA recently informed GNYADA that the new deadline is now September 16, 2015. Last month, the United States Second Circuit Court of Appeals affirmed the trial court’s dismissal of the Alliance of Manufacturers’ complaint, which asserted the unconstitutionality of cer- tain Connecticut motor vehicle fran- chise laws. The Alliance attacked a provision put into law in 2009 requiring manufac- turers to reimburse dealers for war- ranty work at rates equivalent to retail rates; the provision also prohibits manufacturers from levying a sur- charge against dealers to recall the increased reimbursement amounts. The Alliance argued that the warranty reimbursement mandates violated three separate clauses in the U.S. Constitution – the Commerce Clause, the Contract Clause and the Due Process Clause. As to the Commerce Clause The Appeals Court affirmed the trial judge’s ruling that the Alliance failed to show that the warranty reim- bursement provisions favored an

12 Connecticut Franchise Law Attacked

New York? Because the claims brought by the Alliance attacking the Connecticut franchise laws could be brought against franchise laws in any other state. For example, the Alliance filed a similar lawsuit attacking sever- al Florida franchise laws, prior to the Connecticut lawsuit. The Alliance has been using these suits as scare tactics in attempts to block franchise protec- tions in other states. Several state dealer associations have witnessed firsthand the Alliance representatives threatening legislators with a similar lawsuit, if new franchise laws are passed. GNYADA will continue to be vigilant in improving franchise laws for members. Richard Sox and Jason Allen of Bass, Sox, Mercer, a motor vehicle franchise law firm, represented the Connecticut Automotive Retailers Association in the case. This information is provided for educational purposes only and is not to be construed or interpreted as legal advice. GNYADA thanks Richard Sox, Esq., of Bass, Sox, Mercer for this article.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2015

6