S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    61
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 4, 2017
                                ___________
 
 Introduced  by 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,  subdivisions 1, 3, 4, 6 and 7 as
 amended by chapter 26 of the  laws  of  2014,  is  amended  to  read  as
 follows:
   § 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 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 compo-
 nents,  systems,  fixtures,  appliances,  furnishings,  accessories  and
 features of a house coach that are designed, used and maintained  prima-
 rily  for nonvehicular residential purposes[,]) and for labor reimburse-
 ment, 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD01057-01-7

 A. 61                               2
 
 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-
 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-
 MINE 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 AVER-
 AGE  PARTS MARKUP CALCULATION; (IV) ALL MANUFACTURERS SHALL DESIGNATE AN
 ADDRESS TO WHICH THEIR 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,  SEALANTS,  BULBS,
 HEADLIGHT AND TAILLIGHT LENSES, FLUIDS, PUMPS, FILTERS AND SIMILAR 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

 A. 61                               3

 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
 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  [reasonable,  however a franchisor may rebut such presumption by
 showing that such rate so established is 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 EXPLANA-
 TION 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  COMPLETELY  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  RETROACTIVELY,  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 once 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

 A. 61                               4
 
 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
 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.  For  the purposes of this section, the following parts or types of
 repairs shall be excluded from the parts and/or labor  calculations  and
 the  franchisor's  reimbursement  requirements  under  this section: (a)
 parts sold at wholesale; (b) tires; (c) routine maintenance not  covered
 under any retail customer warranty such as fluids, filters and belts not
 provided  in  the course of repairs; (d) vehicle reconditioning; and (e)
 batteries replaced as part of a routine maintenance  operation.  If  the
 franchisor  rejects the declaration or attempts to rebut the declaration
 because of an error in the dealer's  submission,  the  franchisor  shall
 identify  with  specificity  the  reason  for rejection and identify the
 error or errors within the  submission.  In  the  event  the  franchisor
 rejects  or  rebuts  the  dealer's initial declaration, the dealer shall
 have the opportunity,  within  sixty  days  to  resubmit  the  full  and
 corrected  declaration addressing the alleged error or errors identified
 by the franchisor. The franchisor shall respond within sixty  days.  The
 one hundred eighty day requirement for the repair orders shall be stayed
 from  the  date  of initial submission. In any action or proceeding held
 pursuant to this subdivision, the franchisor shall have  the  burden  of
 proving  that  the  rate  declared  by  the  dealer  was unreasonable as
 described in this subdivision and that the proposed  adjustment  of  the
 average  percentage  markup or rejection of the submission is reasonable
 pursuant to the provisions of this subdivision.
   [2] 3.   All warranty  or  sales  incentive  claims  shall  be  either
 approved  or  disapproved, within A REASONABLE AMOUNT OF TIME. A REASON-
 ABLE AMOUNT OF TIME SHALL BE: NO LESS THAN  thirty  days  after  [their]
 receipt.  [When any such claim is disapproved the franchised motor vehi-
 cle dealer shall be notified in writing of its disapproval  within  said
 period. Each such notice shall state the specific grounds upon which the

 A. 61                               5

 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] 4.   No franchisor shall conduct  an  audit  or  charge  back  any
 warranty  payment,  or  any  sales,  advertising  or marketing incentive
 payment ("incentive payments") 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,  without  providing  a notice to a franchised motor vehicle
 dealer of, or a mechanism that makes available  to  a  franchised  motor
 vehicle  dealer,  information  regarding errors or issues regarding such
 dealer's warranty, sales, advertising or marketing incentive claims that
 are the subject of the audit or  chargeback.  Nothing  in  this  section
 shall  be  deemed to grant a dealer the right to access any file held by
 the manufacturer evaluating such dealer. In connection with a claim  for
 warranty  reimbursements,  the dealer's failure to document properly one
 part of a warranty repair that contains more than one part shall not  be
 the  sole  basis  to charge back the entire repair. A manufacturer shall
 not deny a claim submitted under this section based solely on a dealer's
 incidental failure to comply with a specific claim  processing  require-
 ment,  a  clerical error, or other administrative technicality, provided
 that the failure does not call into question the legitimacy of the claim
 and that the dealer corrects the claim according  to  franchisor  guide-
 lines.
   [4]  5.  A franchisor shall not charge a dealer back subsequent to the
 payment of a warranty, sales, advertising or marketing  incentive  claim
 unless a representative of the franchisor has met in person at the deal-
 ership,  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 represen-
 tative a reasonable opportunity at the meeting, or during the  telephone
 call,  to explain the dealer's position 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 representative, provide the dealer with
 a  written  statement containing the basis or methodology upon which the
 dealer was selected for audit or review.
   [5] 6.   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] 7.  A franchisor shall not deny or charge back a sales,  advertis-
 ing or marketing incentive payment made to a dealer unless the claim was
 materially  false  or  fraudulent  or  the  dealer  failed to reasonably
 substantiate the claim in accordance with the manufacturer's  reasonable
 procedures.
   [7]  8.    After  all  internal  dispute resolution processes provided
 through the franchisor have been resolved,  the  franchisor  shall  give

 A. 61                               6
 
 notice  to the dealer of the final amount of a proposed warranty, sales,
 advertising or marketing 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 article. The franchisor shall not impose
 the chargeback, debit the dealer's account, or otherwise seek to  obtain
 all or any part of the chargeback funds from the dealer during the thir-
 ty-day  period in which the dealer has the opportunity to file an action
 as set forth above.
   § 2. This act shall take effect immediately.