Assembly Bill A4066B

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4066
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 9, 2023
                                ___________
 
 Introduced by M. of A. BURGOS -- read once and referred to the Committee
   on Transportation
 
 AN  ACT  to  amend the vehicle and traffic law, in relation to requiring
   motor vehicle dealer franchisors to fully compensate franchised  motor
   vehicle dealers for warranty service agreements

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivision 1 of section 465 of  the  vehicle  and  traffic
 law, as amended by chapter 26 of the laws of 2014, is amended to read as
 follows:
   1.  Every  franchisor  shall  properly  fulfill any warranty agreement
 and/or franchisor's service contract, INCLUDING BUT NOT LIMITED  TO  ALL
 WARRANTY  AND  FACTORY COMPENSATED REPAIRS, RECALLS, AND OTHER VOLUNTARY
 STOP-SELL REPAIRS, and shall compensate each  of  its  franchised  motor
 vehicle  dealers  for  warranty  parts  and labor AND DIAGNOSTIC WORK in
 amounts which reflect reasonable compensation for such work. IN NO EVENT
 SHALL SUCH COMPENSATION FAIL TO INCLUDE FULL COMPENSATION FOR DIAGNOSTIC
 WORK, AS WELL AS REPAIR SERVICE, LABOR, AND PARTS.   ADDITIONALLY, IF  A
 TECHNICIAN  IS  REQUIRED  TO  COMMUNICATE  WITH  A  TECHNICAL ASSISTANCE
 CENTER, ENGINEERING OR SOME EXTERNAL MANUFACTURER  SOURCE  IN  ORDER  TO
 PROVIDE  A WARRANTY REPAIR, THE MANUFACTURER SHALL PAY FOR THE TIME FROM
 START OF COMMUNICATIONS (INCLUDING HOLD TIME) UNTIL THE COMMUNICATION IS
 COMPLETE. 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  DIAGNOSIS  WORK,  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, reasonable compensation shall not
 be  less than the price and rate charged by the franchised motor vehicle
 dealer for like services to  non-warranty  and/or  non-service  contract
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02112-01-3
              

 A. 4066                             2
 
 customers.    WHERE  A TIME GUIDE IS USED FOR WARRANTY REPAIRS, ANY TIME
 GUIDE PREVIOUSLY AGREED TO BY THE FRANCHISOR AND  THE  FRANCHISED  MOTOR
 VEHICLE  DEALERS  FOR  EXTENDED  WARRANTY REPAIRS MAY BE USED IN LIEU OF
 ACTUAL TIME EXPENDED. IN THE EVENT THAT A TIME GUIDE HAS NOT BEEN AGREED
 TO  FOR WARRANTY REPAIRS, OR SAID TIME GUIDE DOES NOT DEFINE TIME FOR AN
 APPLICABLE WARRANTY REPAIR, THE FRANCHISOR'S TIME GUIDE SHALL  BE  USED,
 MULTIPLIED  BY ONE AND ONE-HALF. For purposes of this section, the price
 and rate charged by the franchised motor vehicle dealer for parts may be
 established 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 made no more than
 one hundred eighty days before the submission, and declaring  the  price
 and  rate,  including  average  markup  for the franchised motor vehicle
 dealer as its reimbursement rate. The  reimbursement  rate  so  declared
 shall  go into effect thirty days following the declaration and shall be
 presumed to be reasonable, however a franchisor may rebut such  presump-
 tion  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. The franchised motor vehicle deal-
 er  shall not request a change in the reimbursement rate more often than
 once in each calendar year.  In  establishing  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. 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.  NO DEBIT  REDUCTION  OR
 CHARGE  BACK OF ANY ITEM ON A WARRANTY REPAIR ORDER SHALL BE MADE ABSENT
 A FINDING OF FRAUD OR ILLEGAL ACTIONS BY  THE  DEALER.    NO  FRANCHISOR
 SHALL  IMPOSE  ANY  FORM  OF  COST RECOVERY FEES OR SURCHARGES AGAINST A
 FRANCHISED MOTOR VEHICLE DEALER FOR PAYMENTS  MADE  IN  ACCORDANCE  WITH
 THIS  SUBDIVISION.  THERE  SHALL  BE NO REDUCTION IN PAYMENTS UNDER THIS
 SUBDIVISION DUE TO  PREESTABLISHED  MARKET  NORMS  OR  MARKET  AVERAGES.
 FRANCHISORS ARE PROHIBITED FROM ESTABLISHING RESTRICTIONS OR LIMITATIONS
 OF  CUSTOMER  REPAIR  FREQUENCY  DUE TO FAILURE RATE INDEXES OR NATIONAL
 A. 4066                             3
 
 FAILURE AVERAGES. A WARRANTY CLAIM  TIMELY  MADE  SHALL  NOT  BE  DEEMED
 INVALID  SOLELY BECAUSE UNAVAILABLE PARTS CAUSE ADDITIONAL USE AND MILE-
 AGE ON THE VEHICLE.  IF A FRANCHISOR IMPOSES A RECALL OR  STOP  SALE  ON
 ANY  NEW  VEHICLE  IN A FRANCHISED MOTOR VEHICLE DEALER'S INVENTORY THAT
 PREVENTS THE SALE OF THE VEHICLE, THE FRANCHISOR  SHALL  COMPENSATE  THE
 MOTOR  VEHICLE  DEALER FOR ANY INTEREST AND STORAGE UNTIL THE VEHICLE IS
 REPAIRED AND MADE READY FOR SALE.
   § 2. This act shall take effect immediately.

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  4066--A
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 9, 2023
                                ___________
 
 Introduced  by  M.  of A. BURGOS, SILLITTI, GALLAGHER, FAHY, BRAUNSTEIN,
   CLARK,  FALL,  SEPTIMO,  MAMDANI,  RIVERA,  DURSO,  MILLER,  LUNSFORD,
   DARLING,  SANTABARBARA,  DeSTEFANO,  J. A. GIGLIO,  SMITH, K. BROWN --
   read once and referred to the Committee on Transportation -- committee
   discharged, bill amended, ordered reprinted as amended and recommitted
   to said committee
 
 AN ACT to amend the vehicle and traffic law, in  relation  to  requiring
   motor  vehicle dealer franchisors to fully compensate franchised motor
   vehicle dealers for warranty service agreements
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subdivision  1  of section 465 of the vehicle and traffic
 law, as amended by chapter 26 of the laws of 2014, is amended to read as
 follows:
   1. Every franchisor shall  properly  fulfill  any  warranty  agreement
 and/or  franchisor's  service contract, INCLUDING BUT NOT LIMITED TO ALL
 WARRANTY  REPAIRS,  EXTENDED  WARRANTY  REPAIRS,   FACTORY   COMPENSATED
 REPAIRS,  RECALLS,  DIAGNOSTICS,  PARTS  AND  OTHER  VOLUNTARY STOP-SELL
 REPAIRS, and shall compensate each of its franchised motor vehicle deal-
 ers for ALL warranty [parts and labor], RECALL, DIAGNOSTIC  LABOR  OPER-
 ATIONS  AND  PARTS WHERE APPLICABLE in amounts [which reflect reasonable
 compensation for such work] EQUAL TO THE  APPLICABLE  LABOR  TIME  GUIDE
 UTILIZED FOR RETAIL CUSTOMER PAID LABOR OPERATIONS BY A FRANCHISED MOTOR
 VEHICLE DEALER. IN NO EVENT SHALL SUCH COMPENSATION FAIL TO INCLUDE FULL
 COMPENSATION  FOR DIAGNOSTIC WORK, AS WELL AS REPAIR SERVICE, LABOR, AND
 PARTS.  ADDITIONALLY, IF A TECHNICIAN IS REQUIRED TO COMMUNICATE WITH  A
 TECHNICAL  ASSISTANCE  CENTER, ENGINEERING OR SOME EXTERNAL MANUFACTURER
 SOURCE IN ORDER TO PROVIDE A WARRANTY REPAIR, THE MANUFACTURER SHALL PAY
 FOR THE TIME FROM START OF COMMUNICATIONS (INCLUDING  HOLD  TIME)  UNTIL
 THE COMMUNICATION IS COMPLETE. All warranty claims and/or claims under a
 franchisor's  service  contract made by franchised motor vehicle dealers
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02112-03-3
              

 A. 4066--A                          2
 
 shall be paid within thirty days following their approval. For DIAGNOSIS
 WORK, 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, reasonable compensation shall not
 be  less than the price and rate charged by the franchised motor vehicle
 dealer for like services to  non-warranty  and/or  non-service  contract
 customers.  IN  THE  EVENT  THAT A TIME GUIDE HAS NOT BEEN AGREED TO FOR
 WARRANTY REPAIRS, OR SAID TIME GUIDE DOES NOT DEFINE TIME FOR AN  APPLI-
 CABLE WARRANTY REPAIR, THE FRANCHISOR'S TIME GUIDE SHALL BE USED, MULTI-
 PLIED  BY  ONE AND ONE-HALF. For purposes of this section, the price and
 rate charged by the franchised motor vehicle dealer  for  parts  may  be
 established  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 made no more than
 one  hundred  eighty days before the submission, and declaring the price
 and rate, including average markup  for  the  franchised  motor  vehicle
 dealer  as  its  reimbursement  rate. The reimbursement rate so declared
 shall go into effect thirty days following the declaration and shall  be
 presumed  to be reasonable, however a franchisor may rebut such presump-
 tion 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. The franchised motor vehicle deal-
 er shall not request a change in the reimbursement rate more often  than
 once  in  each  calendar  year.  In establishing 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.  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.  NO DEBIT REDUCTION OR
 CHARGE BACK OF ANY ITEM ON A WARRANTY REPAIR ORDER SHALL BE MADE  ABSENT
 A  FINDING  OF  FRAUD  OR  ILLEGAL ACTIONS BY THE DEALER.  NO FRANCHISOR
 SHALL IMPOSE ANY FORM OF COST RECOVERY  FEES  OR  SURCHARGES  AGAINST  A
 FRANCHISED  MOTOR  VEHICLE  DEALER  FOR PAYMENTS MADE IN ACCORDANCE WITH
 A. 4066--A                          3
 
 THIS SUBDIVISION. THERE SHALL BE NO REDUCTION  IN  PAYMENTS  UNDER  THIS
 SUBDIVISION  DUE  TO  PREESTABLISHED  MARKET  NORMS  OR MARKET AVERAGES.
 FRANCHISORS ARE PROHIBITED FROM ESTABLISHING RESTRICTIONS OR LIMITATIONS
 OF  CUSTOMER  REPAIR  FREQUENCY  DUE TO FAILURE RATE INDEXES OR NATIONAL
 FAILURE AVERAGES. A WARRANTY CLAIM  TIMELY  MADE  SHALL  NOT  BE  DEEMED
 INVALID  SOLELY BECAUSE UNAVAILABLE PARTS CAUSE ADDITIONAL USE AND MILE-
 AGE ON THE VEHICLE.  IF A FRANCHISOR IMPOSES A RECALL OR  STOP  SALE  ON
 ANY  NEW  VEHICLE  IN A FRANCHISED MOTOR VEHICLE DEALER'S INVENTORY THAT
 PREVENTS THE SALE OF THE VEHICLE, THE FRANCHISOR  SHALL  COMPENSATE  THE
 MOTOR  VEHICLE  DEALER FOR ANY INTEREST AND STORAGE UNTIL THE VEHICLE IS
 REPAIRED AND MADE READY FOR SALE.
   § 2. This act shall take effect immediately.