Bill S.177

SENATE DOCKET, NO. 167 FILED ON: 1/14/2015

SENATE . . . . . . . . . . . . . . No. 177

By Mr. Pacheco, a petition (accompanied by bill, Senate, No. 177) of Marc R. Pacheco and Theodore C. Speliotis for legislation to further regulate business practices between motor vehicle dealers, manufacturers, and distributers. Consumer Protection and Professional Licensure.

[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE SENATE, NO. 129 OF 2013-2014.]

The Commonwealth of Massachusetts

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In the One Hundred and Eighty-Ninth General Court
(2015-2016)

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An Act further regulating business practices between motor vehicle dealers, manufacturers, and distributers.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Subsection (c) of section 4 of chapter 93B, as appearing in the 2014 Official Edition, is hereby amended by striking out paragraph (5) and inserting in place thereof the following paragraph:-

(5) to offer to sell or to sell any new motor vehicle to any person located in the commonwealth at a lower actual price therefor than the actual price offered contemporaneously to any other motor vehicle dealer located in the commonwealth for the same model vehicle similarly equipped or to utilize any device including, but not limited to, sales promotion plans or programs, facility compliance or any form of incentive program, which result in the lesser actual price unless available on equal terms to all dealers located in the commonwealth; provided, however, that, for the purposes of this paragraph, “equal terms” shall not include the opportunity to participate in any program that requires facility investment; provided further, that this paragraph shall not apply to sales to a motor vehicle dealer for resale to any unit of the federal government or any agency thereof or to the commonwealth or any of its political subdivisions; provided further, that this paragraph shall not apply to sales to a motor vehicle dealer of any motor vehicle ultimately sold, donated or used by the dealer in a driver education program. The preceding provisions of this paragraph shall not apply so long as a manufacturer, distributor or franchisor representative offers to sell or sells new motor vehicles to all motor vehicle dealers located in the commonwealth at an equal price. In connection with a sale of a motor vehicle or vehicles to a motor vehicle dealer for resale to any unit of the federal government or any agency thereof or to the commonwealth or to any political subdivision thereof, no manufacturer or distributor shall offer any discounts, refunds or any other similar type of inducement to any dealer without making the same offer available to all other of its dealers within the relevant market area, and if the inducements are made, the manufacturer or distributor shall give simultaneous notice thereof to all of its dealers within the relevant market area. In addition, a manufacturer, distributor, or franchisor representative shall not unreasonably withhold participation in any lead generation marketing programs or warranty policy adjustments and shall distribute leads from direct internet-based inquiries in an equitable manner to dealers based on geographic proximity and vehicle availability. In order to prove a violation of the price discrimination prohibitions in this paragraph, it shall be the dealer's burden to demonstrate a price, discount or incentive provided to at least one other dealer was not reasonably available to it.

SECTION 2. Paragraph (10) of said subsection (c) of said section 4 of said chapter 93B, as most recently amended by section 4 of chapter 152 of the acts of 2012, is hereby amended by inserting before the first full sentence the following sentence:- This blanket prohibition on manufacturer ownership applies notwithstanding whether a manufacturer or distributor has previously used independently owned or operated dealerships to distribute its vehicles.

SECTION 3. Said subsection (c) of said section 4 of said chapter 93B, as so appearing, is hereby further amended by inserting after paragraph (12) the following four paragraphs:-

(13) to require, coerce, or attempt to coerce any dealer by program, policy, standard, or otherwise to: (a) change location of the dealership; (b) construct, renovate, or make any substantial changes, alterations, or remodeling to a dealer’s sales or services facilities; or (c) add to or replace a dealer’s sales or services facilities; provided, however, that nothing herein shall prohibit a manufacturer or distributor from continuing a facility improvement program that is in effect as of the effective date of this paragraph with more than one dealer in the commonwealth or to renewing or modifying such program, or providing lump sum or regularly-scheduled payments to assist a dealer in making a facility improvement, including construction, alteration or remodeling, or installing signage or an image element of the manufacturer or distributor; provided further, that the provisions of the facility improvement program in which such dealer participates be contained in a written agreement voluntarily entered into by the dealer and must be made available, on substantially similar terms, to any of the manufacturer’s or distributor’s other same line-make dealers in the commonwealth with whom the manufacturer or distributor offers to enter into such an agreement; provided further, that, except as necessary to comply with a health or safety law or to comply with a technology requirement which is necessary to sell or service a motor vehicle that the motor vehicle dealer is authorized or licensed by the manufacturer or distributor, a manufacturer, distributor, or franchisor representative shall not require, coerce, or attempt to coerce a motor vehicle dealer, by program, policy, facility guide, standard or otherwise, to change the location of the dealership, replace, or construct a new dealer facility or substantially alter or remodel an existing dealer facility before the date that is seven years after the date the construction of the new dealer facility or substantial alteration or remodeling at that location was completed regardless of whether a successor dealer has been appointed provided that such construction, alteration or remodeling substantially complied with the manufacturer’s or distributor’s brand image standards or plans that the manufacturer or distributor provided at the time the construction, alteration, or remodeling was completed.

(14) to require a dealer to provide to the franchisor representative, manufacturer or distributor its customer lists, service files, or information about a retail customer unless necessary: (a) for the sale and delivery of a new motor vehicle to a retail buyer; (b) to validate and pay customer or dealer incentives; (c) for reasonable marketing purposes; (d) for warranty reimbursement substantiation under this chapter or; (e) to enable the manufacturer to fulfill safety, recall, or other legal obligations imposed by state or federal law. A manufacturer or distributor shall not share, sell, or transfer to other dealers or third parties customer information obtained from a dealer and not otherwise publically available unless otherwise agreed to by the originating dealer or unless the franchise has been terminated. Notwithstanding any consent, authorization, release, franchise agreement or other agreement or contract, a manufacturer or distributor, or any third party acting on behalf or through a manufacturer or distributor, having electronic access to consumer or customer data or other information in a computer system utilized by a dealer, or who has otherwise been provided consumer or customer data or information by the dealer, shall fully indemnify and hold harmless the dealer from whom it has acquired the consumer or customer data or other information from all claims, demands, damages, liabilities, costs, and expenses incurred by the dealer, arising out of any alleged or actual data security breaches or other unlawful use of said customer or consumer data or other information by said manufacturer, distributor or third party acting on behalf of same, including, but not limited to, judgments, settlements, fines, penalties, expenses related to the disclosure of security breaches to customers and consumers, and attorneys’ fees and expenses arising out of complaints, claims, demands, security breaches, civil or administrative actions, and, to the fullest extent allowable under the law, attorneys’ fees and expenses arising from governmental investigations and prosecutions relating to the access, storage, maintenance, use, sharing, disclosure, or retention of the dealer’s consumer or customer data or other information, or maintenance or services provided to any computer system utilized by the dealer, by the manufacturer, distributor or third party acting on behalf of or through the manufacturer or distributor.

(15) to arbitrarily or unreasonably alter the geographic area of responsibility within which it measures the dealer’s performance. A manufacturer or distributor shall give advance notice of any proposed alteration of a dealer’s so-called area of responsibility at least 60 days before the effective date of a proposed alteration. Notice shall include an explanation of the basis for the change, and, upon request by such motor vehicle dealer within 30 days of the manufacturer’s or distributor’s notice, the manufacturer or distributor immediately shall provide sufficient supporting documentation. At any time prior to the effective date of such alteration, and after completion of any internal appeal process provided by a manufacturer or distributor, a dealer may protest the proposed alteration pursuant to section 15. Filing of a protest shall mean no alteration is effective until an agreement is reached by the parties or a court makes a final determination. The court may affirm, deny, or modify the proposed alteration of the dealer’s area of responsibility, may enter any other orders necessary to ensure that an alteration of the dealer’s area of responsibility is reasonable in light of all the relevant circumstances, and may assess the attorneys’ fees and expenses among the parties to the protest as appropriate. A manufacturer or distributor shall not take any adverse action against a dealer as a result of a change to the dealer’s area or responsibility for at least 18 months after the effective date of the change.

(16) to require a dealer to purchase goods or services from a vendor selected, identified, or designated by a manufacturer or distributor by agreement, program, incentive provision, or otherwise in connection with a dealer expanding, constructing, or significantly modifying its dealership facility without allowing the dealer the option to obtain a good or service of substantially similar quality from a vendor chosen by the dealer and approved by the manufacturer, which approval may not be unreasonably withheld. For purposes of this subdivision, the term "goods" does not include moveable displays, brochures, and promotional materials containing material subject to intellectual property rights of, or parts to be used in repairs under warranty obligations of, a manufacturer or a distributor, or special tools and training as required by the manufacturer or distributor. Nothing under this paragraph shall be construed to (i) allow a dealer or vendor to eliminate or impair a manufacturer’s or distributor’s intellectual property rights, including trademarks, or (ii) permit a dealer to erect or maintain signs that do not conform to the intellectual property usage guidelines of the manufacturer.

SECTION 4. Said section 5 of said chapter 93B, as so appearing, is hereby further amended by inserting after subsection (m) the following subsection:-

(n) Where a termination or nonrenewal will result from use of any agreement to terminate or not renew that was executed by the dealer and obtained by a manufacturer, distributor or franchisor representative more than 90 days before the purported date of use, exercise of rights under such written agreement shall be void. In any case in which a manufacturer, distributor or franchisor representative fails to properly advise a dealer that it does not intend to renew a franchise or take any action to renew a franchise beyond its expiration date, the franchise in question shall continue in effect on the terms last agreed to by the parties.

SECTION 5. Section 8 of said chapter 93B, as so appearing, is hereby amended by striking out subsection (a) and inserting in place thereof the following subsection:

(a) Notwithstanding any terms or provisions of a franchise agreement to the contrary, a manufacturer or distributor shall indemnify its motor vehicle dealers and hold them harmless from and against all damages, liabilities, losses, and reasonable expenses of suit, including reasonable attorneys’ fees, arising out of or incurred in the defense of any claim brought by any person seeking compensation or other relief predicated upon the negligent or defective design or manufacture of a new motor vehicle, or any part or component thereof, manufactured or distributed by the manufacturer or distributor unless the basis for liability is finally determined by a court to be solely the result of negligence on the part of the motor vehicle dealer. The manufacturer or distributor, after having been notified promptly in writing by the motor vehicle dealer that a demand has been made or a formal claim has been asserted and is pending, shall promptly assume the defense thereof and resolve the same at its own expense.

SECTION 6. Subsection (b) of section 9 of said chapter 93B, as most recently amended by section 8 of chapter 152 of the acts of 2012, is hereby amended by inserting after paragraph (4) the following paragraph:-

(5)(i) A manufacturer or distributor shall not require, influence, or attempt to influence a motor vehicle dealer to implement or change the prices for which it sells parts or labor in retail customer repairs. A manufacturer or distributor shall not implement or continue a policy, procedure, or program with any of its dealers in this state for compensation under this section which is inconsistent with this section.

(ii) A manufacturer or distributor shall not otherwise recover its costs for reimbursing a dealer for parts and labor pursuant to this section; provided, however, that a manufacturer or distributor shall not be prohibited from increasing prices for vehicles or parts in the normal course of business.

SECTION 7. Said section 9 of said chapter 93B, as so appearing, is hereby further amended by inserting after subsection (j) the following subsection:-

(k) Notwithstanding any term of a franchise agreement, it shall be a violation of this chapter for a distributor or manufacturer to charge back or otherwise hold liable a franchised motor vehicle dealer for sales incentives or charges, deny vehicle allocation, withhold payments or other things of value for which the dealer is eligible, or take or threaten to take any other adverse actions against, in connection with or as a result of any new motor vehicle sold by the dealer and subsequently exported from the United States, provided such dealer can demonstrate that after exercising due diligence and acting in good faith he did not know nor reasonably should have known of the purchaser’s intention to export the motor vehicle. A franchised motor vehicle dealer which causes a new motor vehicle to be registered in the commonwealth or in a foreign state and causes to be collected the appropriate sales and use tax, or that reasonably relied on a franchisor to complete a sale shall be presumed to have exercised due diligence and acted in good faith. Prior to taking an adverse action against a dealer, including but not limited to a chargeback, as a result of an export, a manufacturer or distributor shall provide written notice to the franchised motor vehicle dealer of the adverse action, and, if a chargeback, the specific amount of the chargeback, and the vehicle or vehicles at issue. A dealer shall not be liable for the delivery of any vehicle sold through a franchisor’s fleet program where the sale or lease was not initiated or negotiated by the dealer and dealer’s function was solely to provide delivery on behalf of the manufacturer or distributor.

SECTION 8. Section 15 of said chapter 93B, as so appearing, is hereby amended by striking out subsection (a) and inserting in place thereof the following subsection:-

(a) Any manufacturer, distributor or motor vehicle dealer who alleges an unfair method of competition or an unfair or deceptive act or practice as defined by this chapter, any act prohibited or declared unlawful by this chapter, or any rule or regulation adopted under this chapter, may bring an action in the superior court, or if applicable in the federal district court for the district of Massachusetts, for damages and equitable relief, including injunctive relief, as described in the following sentence: The party filing suit may obtain equitable relief if it can demonstrate a substantial likelihood that the alleged conduct violates the provisions of this chapter.

Name:	District/Address:
Marc R. Pacheco	First Plymouth and Bristol
Theodore C. Speliotis	13th Essex
Michael O. Moore	Second Worcester
Stephen L. DiNatale	3rd Worcester
Michael F. Rush	Norfolk and Suffolk
Dennis A. Rosa	4th Worcester