S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  11601

                          I N  A S S E M B L Y

                              June 30, 2010
                               ___________

Introduced  by  COMMITTEE  ON RULES -- (at request of M. of A. Gantt) --
  read once and referred to the Committee on Transportation

AN ACT to amend the vehicle and traffic law, in relation  to  warranties
  and sales incentives and certain technical provisions therein

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 465 of the vehicle and traffic law, as  amended  by
chapter 490 of the laws of 2008, is amended to read as follows:
  S 465. Procedures  relating to warranties and sales incentives. 1. (A)
Every franchisor shall properly fulfill any  warranty  agreement  and/or
franchisor's  service  contract  and  shall compensate each of its fran-
chised motor vehicle dealers for warranty parts  and  labor  in  amounts
which  reflect  fair  and  reasonable  compensation  for  such work. All
warranty claims and/or claims under a franchisor's service contract made
by franchised motor vehicle dealers shall be  paid  within  thirty  days
following  their  approval.  FOR  THE PURPOSES OF THIS SECTION, WARRANTY
CLAIMS SHALL INCLUDE VOLUNTARY RECALLS ESTABLISHED  BY  THE  FRANCHISOR,
AND  ANY  RECALLS  PURSUANT TO 49 U.S.C. 301. For parts reimbursement[,]
(other than  components,  systems,  fixtures,  appliances,  furnishings,
accessories  and  features  of a house coach that are designed, used and
maintained primarily for nonvehicular residential purposes[,])  and  for
labor  reimbursement, fair and reasonable compensation shall not be less
than the price and rate charged by the franchised motor  vehicle  dealer
for  like  PARTS OR services to non-warranty and/or non-service contract
customers.
  (B) For purposes of this section, [the price and rate charged  by  the
franchised  motor vehicle dealer for parts may be established] THE FRAN-
CHISED MOTOR VEHICLE DEALER MAY  ESTABLISH  ITS  WARRANTY  REIMBURSEMENT
PRICE  AND  RATE  by submitting to the franchisor one hundred sequential
nonwarranty customer-paid service repair orders or the number of sequen-
tial nonwarranty customer-paid service repair orders  written  within  a
ninety  day  period,  whichever is less, covering repairs, REGARDLESS OF
THE REASON FOR THE REPAIRS, made no more than one  hundred  eighty  days
before the submission, and declaring the price and rate, including aver-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD17556-01-0

A. 11601                            2

age  markup  [for]  USED  BY  the franchised motor vehicle dealer as its
reimbursement rate.
  (C) WITH REGARD TO ANY SUBMISSION BY A FRANCHISED MOTOR VEHICLE DEALER
UNDER  THIS SECTION, THE FOLLOWING PROVISIONS SHALL APPLY: (I) THE FRAN-
CHISED MOTOR VEHICLE DEALER SHALL DETERMINE  THE  INDIVIDUAL  MARKUP  OF
EACH  QUALIFYING  PART  LISTED  IN THE FRANCHISED MOTOR VEHICLE DEALER'S
SUBMISSION, WHICH INDIVIDUAL MARKUPS THE FRANCHISED MOTOR VEHICLE DEALER
SHALL THEN AVERAGE, WHICH AVERAGE OF THE INDIVIDUAL MARKUPS SHALL DETER-
MINED THE "AVERAGE" MARKUP TO BE  USED  AS  THE  DEALER'S  REIMBURSEMENT
RATE;  (II)  THE  DEALER MAY AUTHORIZE ANY EMPLOYEE OR REPRESENTATIVE OF
THE DEALERSHIP TO SIGN THE DEALER'S DECLARATION OF A RATE AND TO  SUBMIT
THE  REQUEST  FOR REIMBURSEMENT BY A MANUFACTURER AT THAT RATE; (III) IT
SHALL BE WITHIN THE DEALER'S SOLE DISCRETION AS TO THE  MEANS  BY  WHICH
THE  NECESSARY  INFORMATION IS PROVIDED TO THE FRANCHISOR TO SUPPORT THE
AVERAGE PARTS MARKUP CALCULATION; (IV) ALL MANUFACTURERS SHALL DESIGNATE
AN ADDRESS TO WHICH ITS FRANCHISED DEALERS OR REPRESENTATIVES MAY SUBMIT
A REQUEST UNDER THIS SECTION, PROOF  OF  MAILING  OR  DELIVERY  TO  SUCH
ADDRESS  SHALL  BE  SUFFICIENT  EVIDENCE RAISING A PRESUMPTION THAT SUCH
REQUEST WAS DELIVERED  TO  THE  MANUFACTURER;  AND  (V)  NOTWITHSTANDING
ANYTHING  CONTAINED IN THIS SECTION, THE FRANCHISED MOTOR VEHICLE DEALER
SHALL INCLUDE IN ITS CALCULATION THOSE  NON-WARRANTY  CUSTOMER  PAID-FOR
PARTS OTHERWISE COVERED BY THE FRANCHISOR'S WARRANTY PROGRAM, REGARDLESS
OF THE REASON THEY WERE SUPPLIED TO THE NON-WARRANTY CUSTOMER, INCLUDING
PARTS  ROUTINELY  REPLACED  AS PART OF REGULAR MAINTENANCE ON A VEHICLE,
INCLUDING, BUT NOT LIMITED TO BELTS, BRAKES, BATTERIES, KEYS,  TRANSMIT-
TERS  AND  TRANSMITTER  BATTERIES,  WINDSHIELD  WIPERS, BELTS, SEALANTS,
BULBS, HEADLIGHT AND TAILLIGHT LENSES, FLUIDS, PUMPS, FILTERS AND  SIMI-
LAR  PARTS  PROVIDED, HOWEVER, THE FRANCHISED MOTOR VEHICLE DEALER SHALL
NOT BE REQUIRED IN ITS SUBMISSION TO PERFORM ANY OF THE FOLLOWING:
  (1) LIST ON ANY FORM, SPREADSHEET, OR OTHER COMPILATION  THOSE  REPAIR
ORDERS  WHICH DO NOT CONTAIN PARTS THAT THE DEALER IS RELYING ON FOR THE
CALCULATION OF THE AVERAGE MARKUP;
  (2) INCLUDE IN ANY CALCULATION OF ITS AVERAGE  MARKUP  TIRES,  WHEELS,
ANY  PARTS  OR ITEMS IT ACTUALLY USED OR PROVIDED IN THE REPAIR OF PHYS-
ICAL DAMAGE TO THE BODY OR CHASSIS OF  A  VEHICLE,  INCLUDING,  BUT  NOT
LIMITED TO, BODY PANELS, WINDOWS (GLASS OR OTHER MATERIAL), DOORS, BUMP-
ERS,  FENDERS, OR SIMILAR ITEMS, OR THE PAINT OR OTHER FINISHING MATERI-
ALS FOR SUCH ITEMS;
  (3) INCLUDE IN ANY CALCULATION OF ITS  AVERAGE  MARKUP  ANY  PARTS  OR
ITEMS ACTUALLY USED OR PROVIDED IN THE COURSE OF STANDARD VEHICLE PREPA-
RATION FOR SALE TO A CUSTOMER;
  (4) INCLUDE IN ANY CALCULATION OF ITS AVERAGE MARKUP ANY PARTS ACTUAL-
LY  PROVIDED  INTERNALLY  TO  VARIOUS  DEPARTMENTS WITHIN THE FRANCHISED
MOTOR VEHICLE DEALERSHIP'S BUSINESS; AND
  (5) INCLUDE IN ANY CALCULATION OF ITS AVERAGE MARKUP ANY TYPE OF PARTS
PROVIDED BY THE FRANCHISOR ONLY AS A MATTER OF "GOODWILL" RATHER THAN IN
THE COURSE OF REGULAR WARRANTY SERVICE.
  (D) FOR PURPOSES OF THIS SECTION, THE PRICE AND RATE  CHARGED  BY  THE
FRANCHISED  MOTOR VEHICLE DEALER FOR LABOR MAY BE ESTABLISHED BY SUBMIT-
TING ONE HUNDRED SEQUENTIAL  NONWARRANTY  CUSTOMER-PAID  SERVICE  REPAIR
ORDERS,  OR  THE  NUMBER OF SEQUENTIAL NONWARRANTY CUSTOMER-PAID SERVICE
REPAIR ORDERS, WRITTEN IN THE MONTH PRECEDING THE SUBMISSION,  WHICHEVER
IS LESS, COVERING REPAIRS, REGARDLESS OF THE REASON FOR THE REPAIRS, AND
DIVIDING THE AMOUNT OF THE DEALER'S TOTAL LABOR SALES FOR RETAIL CUSTOM-
ER  REPAIRS  BY  THE  NUMBER  OF  TOTAL LABOR HOURS THAT GENERATED THOSE
SALES, AND DECLARING THE RESULTING AVERAGE LABOR RATE FOR THE FRANCHISED

A. 11601                            3

MOTOR VEHICLE DEALER AS ITS REIMBURSEMENT  RATE.  THE  FRANCHISED  MOTOR
VEHICLE  DEALER  SHALL  NOT USE IN ANY CALCULATION OF ITS LABOR RATE ANY
LABOR CONDUCTED IN THE COURSE OF STANDARD VEHICLE PREPARATION  FOR  SALE
TO  A CUSTOMER, OR IN THE COURSE OF INTERNAL SERVICE PERFORMED FOR VARI-
OUS DEPARTMENTS WITHIN THE FRANCHISED MOTOR VEHICLE  DEALERSHIP'S  BUSI-
NESS.
  (E)  The  reimbursement  rate  so declared shall go into effect thirty
days following the declaration [and]. THE DECLARATION shall be  presumed
to be [fair and reasonable, however a franchisor may rebut such presump-
tion by showing that such rate so established is unfair and unreasonable
in  light of the practices of all other franchised motor vehicle dealers
in the vicinity offering the same line make.] ACCURATE WHEN SUBMITTED AS
SET FORTH UNDER THIS SECTION PROVIDING  A  DETAILED,  COMPLETE,  WRITTEN
EXPLANATION OF ANY PART OR ITEM INCLUDED OR OMITTED FROM THE DECLARATION
CALCULATION  THAT  IS NOT CONSISTENT WITH THE PROVISIONS OF THIS SECTION
TO THE FRANCHISED MOTOR VEHICLE DEALER, WITHIN FIFTEEN DAYS  OF  RECEIPT
BY  THE  FRANCHISOR  OF THE SUBMISSION OR ANY MATERIAL AMENDMENT THERETO
ALONG WITH THE RETURN OF THE REPAIR ORDERS UPON WHICH  THE  MANUFACTURER
IS  RELYING  FOR  ITS OBJECTION OR OBJECTIONS. THE FRANCHISOR WAIVES ANY
RIGHT TO REBUT THE SUBMISSION IF THE FRANCHISOR  FAILS  TO  PROVIDE  THE
WRITTEN  EXPLANATION  DESCRIBED IN THIS PARAGRAPH WITHIN THE FIFTEEN DAY
PERIOD FOLLOWING THE MOTOR VEHICLE DEALER'S SUBMISSION.  THE  FRANCHISED
MOTOR VEHICLE DEALER MAY CHOOSE TO CORRECT ITS SUBMISSION BASED UPON THE
FRANCHISOR'S WRITTEN REBUTTAL WITHOUT BEING REQUIRED TO MAKE A COMPLETE-
LY  NEW  SUBMISSION,  IF  DONE  SO  WITHIN  THIRTY DAYS OF RECEIVING THE
FRANCHISOR'S  WRITTEN  REBUTTAL.  ANY  SUCH  AMENDMENT  TO  THE  INITIAL
SUBMISSION  WILL  RELATE  BACK TO THE DATE OF THE INITIAL SUBMISSION AND
ANY RESULTING PRICE OR RATE SHALL BE PAID BY THE FRANCHISOR RETROACTIVE-
LY, WITHOUT PENALTY, ON ALL CLAIMS SUBMITTED  BY  THE  FRANCHISED  MOTOR
VEHICLE  DEALER  THIRTY DAYS FROM THE DATE OF THE INITIAL SUBMISSION. IF
THE FRANCHISED MOTOR VEHICLE DEALER DOES NOT AGREE WITH THE FRANCHISOR'S
REBUTTAL, THE PRICE OR RATE SO DECLARED SHALL BECOME EFFECTIVE ACCORDING
TO THIS SECTION UNLESS THE FRANCHISOR INSTITUTES AN ACTION  PURSUANT  TO
THIS  ARTICLE,  CLAIMING  THAT  THE  FRANCHISED MOTOR VEHICLE DEALER HAS
VIOLATED THE PROVISIONS OF THIS SECTION, WITHIN  THIRTY  DAYS  FROM  THE
DATE  OF  THE  FRANCHISEE'S  RESPONSE  TO THE FRANCHISOR'S REBUTTAL. THE
BURDEN OF PROOF IN ANY SUCH ACTION SHALL BE ON THE FRANCHISOR.
  (F) The franchised motor vehicle dealer shall not request a change  in
the reimbursement rate more often than twice in each calendar year.
  (G)  A  FRANCHISOR  WHO  FAILS  TO REIMBURSE WARRANTY AND LABOR CLAIMS
ESTABLISHED PURSUANT TO THIS SECTION SHALL BE LIABLE TO  THE  FRANCHISED
MOTOR VEHICLE DEALER FOR ALL SUCH CLAIMS AT THE PRICE AND RATE SUBMITTED
BY  THE FRANCHISEE FROM THE TIME SUCH SUBMISSION WAS MADE.  IN ADDITION,
ANY FRANCHISOR WHO FAILS TO SO REIMBURSE SUCH CLAIMS SHALL BE SUBJECT TO
A PENALTY OF FIVE HUNDRED DOLLARS PER CLAIM PAYABLE  TO  THE  FRANCHISED
MOTOR  VEHICLE DEALER. AN ADDITIONAL PENALTY OF ONE THOUSAND DOLLARS PER
CLAIM SHALL BE PAYABLE TO THE FRANCHISED MOTOR VEHICLE DEALER  FOR  EACH
SUCCESSIVE  TEN  DAY  PERIOD  THEREAFTER IN WHICH THE CLAIM IS NOT REIM-
BURSED AS REQUIRED BY THIS SECTION. IN ORDER TO ENSURE TIMELY PAYMENT OF
CLAIMS SUBMITTED UNDER THIS SECTION, A FRANCHISED MOTOR  VEHICLE  DEALER
MAY,  BEGINNING UPON THE EXPIRATION OF THE THIRTY DAY PERIOD ESTABLISHED
BY THIS SECTION, WITHHOLD ANY PAYMENTS OWED TO A FRANCHISOR EQUAL TO THE
CLAIMS MADE BY THE FRANCHISED MOTOR VEHICLE DEALER,  PLUS  THE  PENALTY,
UNTIL  THE FRANCHISOR MAKES WARRANTY AND LABOR REIMBURSEMENT PURSUANT TO
THIS SECTION. ANY DEALER WHO EXERCISES SUCH RIGHT SHALL NOT BE DEEMED IN
DEFAULT OF ANY OBLIGATIONS UNDER THE FRANCHISE OR  ANY  OTHER  AGREEMENT

A. 11601                            4

WITH  THE MANUFACTURER OR ANY SUBSIDIARY OR AFFILIATE OF THE MANUFACTUR-
ER.
  (H) In establishing the PARTS REIMBURSEMENT OR THE labor reimbursement
rate, the franchisor shall not require a franchised motor vehicle dealer
to  establish  said  rate by a methodology, or by requiring information,
that is unduly burdensome or time consuming to provide[, including,  but
not limited to, a transaction by transaction calculation].
  (I) IN NO EVENT MAY A FRANCHISOR REQUIRE A DEALER TO ACCEPT REIMBURSE-
MENT  FOR  PARTS BASED ON THE FRANCHISOR'S SUGGESTED LIST PRICE (WHETHER
CALLED MSRP OR KNOWN BY ANY OTHER DESIGNATION) IN  LIEU  OF  DETERMINING
AND REIMBURSING A DEALER AT THE DEALER'S AVERAGE MARKUP PURSUANT TO THIS
SECTION.
  (J)  IN NO EVENT SHALL ANY FRANCHISOR RETALIATE OR THREATEN TO RETALI-
ATE AGAINST A DEALER FOR EXERCISING ITS RIGHTS  UNDER  THIS  SECTION  OR
UNDER  ANY OTHER SECTION OF THIS ARTICLE. RETALIATION SHALL INCLUDE, BUT
NOT BE LIMITED TO, THREATENING TO CONDUCT, OR CONDUCTING,  AN  AUDIT  OF
DEALERSHIP  RECORDS,  THREATENING TO WITHHOLD, OR WITHHOLDING, PRODUCTS,
ALLOCATIONS, OR BENEFITS FROM ANY DEALER, OR IMPOSING  ADDITIONAL  COSTS
OR  PENALTIES  ON  ANY  DEALER  THAT THE MANUFACTURER DOES NOT IMPOSE ON
EVERY DEALER EITHER WITHIN OR WITHOUT THE STATE.
  (K) A FRANCHISOR MAY NOT OTHERWISE RECOVER  FROM  A  FRANCHISED  MOTOR
VEHICLE DEALER THE FRANCHISOR'S COSTS FOR REIMBURSING A FRANCHISED MOTOR
VEHICLE DEALER FOR WARRANTY PARTS AND LABOR CLAIMS.
  2. All warranty or sales incentive claims shall be either approved AND
PAID  or  disapproved  [within],  WITHIN  A REASONABLE AMOUNT OF TIME. A
REASONABLE AMOUNT OF TIME SHALL BE:
  (A) NO LESS THAN thirty days after [their]  receipt[.  When  any  such
claim  is disapproved the franchised motor vehicle dealer shall be noti-
fied in writing of its disapproval within said period. Each such  notice
shall  state  the  specific grounds upon which the disapproval is based.
Failure to disapprove  a  claim  within  thirty  days  shall  be  deemed
approval] BY THE FRANCHISOR OF A WARRANTY CLAIM; AND
  (B) NO LESS THAN FIVE BUSINESS DAYS FROM THE DATE UPON WHICH THE FRAN-
CHISED MOTOR VEHICLE DEALER PROVIDES NOTICE TO THE FRANCHISOR CERTIFYING
THE  COMPLETION  OF  A  SALE  WHICH  QUALIFIES  UNDER  A SALES INCENTIVE
PROGRAM. A SALE SHALL BE CONSIDERED COMPLETED UPON DELIVERY OF THE VEHI-
CLE TO THE CUSTOMER.
  3. No franchisor shall conduct an audit or charge back any warranty or
sales incentive payment or otherwise hold  a  franchised  motor  vehicle
dealer  liable for charges more than one year, or five years in the case
of fraud, after the date the franchisor made such payment to the dealer.
  4. A franchisor shall not charge  a  dealer  back  subsequent  to  the
payment  of  a warranty or sales incentive claim unless a representative
of the franchisor has met in person at the dealership, or by  telephone,
with  an  officer or employee of the dealer designated by the dealer and
explained in detail the basis for each of the proposed charge backs  and
thereafter given the dealer's representative a reasonable opportunity at
the meeting, or during the telephone call, to explain the dealer's posi-
tion  relating  to  each  of the proposed charge backs. In the event the
dealer was selected for audit or review on the basis that some or all of
the dealer's claims were viewed as excessive in comparison  to  average,
mean  or aggregate data accumulated by the franchisor, or in relation to
claims submitted by a group of other franchisees, the franchisor  shall,
at or prior to the meeting or telephone call with the dealer's represen-
tative, provide the dealer with a written statement containing the basis
or methodology upon which the dealer was selected for audit or review.

A. 11601                            5

  5.  A  franchisor shall not deny or charge back a payment for warranty
work claimed by the dealer unless the franchisor satisfies its burden of
proof that the dealer did not make a good faith effort  to  comply  with
the  reasonable  written procedures of the franchisor or that the dealer
did not actually perform the work.
  6.  A  franchisor  shall  not  deny  or  charge back a sales incentive
payment made to a dealer unless the claim was materially false or  frau-
dulent  or  that  the dealer failed to reasonably substantiate the claim
either in accordance with the manufacturer's reasonable procedures.
  7. After all internal dispute resolution  processes  provided  through
the  franchisor  have been resolved, the franchisor shall give notice to
the dealer of the final amount of a proposed warranty or sales incentive
charge back. If the dealer institutes an action pursuant to this article
within thirty days of receipt of such notice, the proposed  charge  back
shall  be  stayed,  without bond, during the pendency of such action and
until the final judgment has been rendered in an adjudicatory proceeding
or action as provided in section four hundred sixty-nine of  this  arti-
cle.
  S 2. This act shall take effect immediately.