FCA US LLC v. Secretary of State
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STATE OF MAINE CUMBERLAND, ss BUSINESS AND CONSUMER COURT Locntion: Portland / Docket No.: BCD-AP-16-03 ) FCA US LLC, ) ) Petitioner, ) ) v. ORDER ON FCA US LLC's M.R. Ch•. P. BOC APPEAL ) ) MATTHEW DUNLAP, in his capacity as Secreta1y of State of the Slate of Maine, & DARLING'S, Respondents. ) ) ) ) ) Petitioner FCA US LLC ("FCA") appeals from the Maine Motor Vehicle Franchise Board's Orde1· on Cross Motions for Judgment on the Pleadings (the "Order") and the Finni Order that incorporates the Order (the "Pinal Ord el'") . At the llearl of the parties' dispute is the meaning of, and proof required to demonstrnte, the "1·etail rate custonrnr!ly charged" for labor that Darling's perfonns on no1H- arnmty repairs. Darling's argues that the Board did not el'l' v when it determined that the retail rate customarily charged for non-wmri:mty labor is established by the dealer/franchisee posting its rate in a place conspici1m1s to its retail customers. FCA contends lhnt this interpretation conflicts ,vith the plain language of l OM.R.S.A. § 1176 ("Section I 176"), misintel'prets relevnnt case law, and produces absurd res,1lts by permitting dealers to recei ve reimbursement for \vnrrnnty labor at the posted rnte even if that rnte was never charged to non-warranty customers. I. Bnckgronud Darling 's is a duly m1thorized fnmchisee of PCA. (R. 116, 151 .) Pmsuant to its obligations as a FCA franchisee, Darling's performs wmrnnty repairs, including the provision of parts and the perfornrnnce of labor 011 qwilified FCA vehicles. (R 116, 152.) Darling's and other Maine automobile dealers are entitled to reimbursement for such war1·anly repairs by nrnnufocturers as required by Maine lnw. With respect to reimbursement for labor on warranty repairs, Maine lnw provides, in pertinent part, that: [T]he franchisor shall reimburse the frnnchisee for re(nil rnle customarily charged by that franchisee performed in satisfaction of a wmrnnty; as long as not performed in satisfoclion or a wat·1·nnly is conspicuous to i Is service customer. iiny lnbor so performed ot the fo1· the sc1me labor when not the franchisee's rate for labor routinely posted in a place IO M.R.S.A. § 1176 (2015). On or nbout November 1, 2013, Darling's alleges that it posted new hourly labor rates for repnirs performed for its non-,vi:irnmty retai I customers at its Augusta location and provided FCA proof of its posting. (R. 120-121.) After November 1, 2013, Dm'lit1g's submitted "Supplemental Clnims" to FCA demanding the difference between the hourly labol' rate paid by FCA and Darling's posted hourly labor rate al the Augusta location.' (R. 122.) Similarly, Darling's adopted the ADP Se1·ving Pricing Guides in determining its "flat n1te 1' labor times fo1· its Ellsw01ih location on or about November l, 2013. (R 124.) Darling's asserts that its adoption of the ADP Service Pricing Guides did not require any nlterntion to the posting at its Ellswol'th location becm1se the existing post already advised of alternative flat rntes for labol' operations. (R. 124-125.) After November I, 2013, Darling's submitted supplemental claims for its Ellsworth locEJtion to FCA seeking lhe difference between the warranty rate 1rnid by FCA and Darling's flat rate pricing. (R. 125.) FCA reciuested additional information regarding each repnir for which a Supplemcntnl Claim was si1bmi!(cd at both locntions, but Darling's declined to provide the information. (R. 122, 125-126.) FCA rejected each of the Ellsworth Emel Aiigusta I fn the alternative, Dcirling's clemandect the difference between the wananty rate poid by PCA and Darling's flat rate pricing using the ADP Service Pricing Guides for wnrrnnty repairs. (R. 122.) 2 Supplementnl Claims and refused to pay Dm-ling's posted labor rate 011 warranty claims from both locntions from November l 1 2013 through September 7, 2014. (R. 123 1 J 25-126.) On or about September 8, 2014, Darling's again posted increased retail labor rates for its Augusta and Ellsworth locations. (R. I27-I28 1 13 1-132, 441.) FCA refused to pay the new rntes Darling's requested and continued to reimbmse Dal'ling's nt the rates established up to November J, 2013. (R. I 30, 133, 442.) A. Procedmal History On M11rch 3I,2014, FCA filed a complaint in tbe United States District Comt for tile District of Maine. (R. 2, 8-16.) Pursuant to 10 M.R.S .A. § 1190-A, Darling's commenced the Board action at issue in the present appeal nnd l'ilect a motion to stay the action commenced by FCA in the U.S. District Cornt. (R. 39-81, 439.) The U.S. District Cou1t granted Darling's motion to stay nnd remanded the matter to the Board for adj,1dlcation. (R. 84-106, 439.) On November 25, 2014, Darling's filed its Second Amended Complaint. (R. I 16-136.) Thereafter, botll FCA and Darling's filed motions for judgmcn! on the pleadings regarding the warranty rflte FCA must reimburse Darling's at for labor. (R. ! 81-256, 260-283.) B. The Boc'lrd's Determinations On June I 6, 2015, the Board determined tlrn!, in contrnst to es(flblishing a reimbursement rate for parts, Section I 176 only requires "that a frrmchisee's 1101Hvana11ty labor rate be rnutinc[y post[ed] ... in l'I place conspicuous to its service customers." (R. 440.) In suppo1·t oftl1is determination, the Board discussed the Amended Recapitulation q{Previous Rulings and New Findings of Fact a11d Co11c/11sio11s (?{ Lm,, (!he "Amended Recapitulation") that accompanied !he United Stntes District Comt for the District of Maine's Certificate of Questions of State Law to 3 the Law Court. (R. 442.)2 The Board focused on the Amended Recapitulathm's discussion of the legislative history of Section 1176 concluding that the statute \VflS concerned with "autonrnkers' superior bargaining power" enabling them to "coerce dealers into accepting reimbmsemenl af a mte significnntly below what dealers routinely charge ordinary retail customers .... " (Id.) (quoting Darling's dlbla Darling's Bangor Ford v. Ford Motor Co., Docket No. 950398-B-I·J (D, Me. Apr. 1, 1998), Amended Recapit11/a1ion at 16- 17) (quoting Final Report o!' the Joint Standing Committee on Business Legislntion, on its stmly pursuant to Joinl Order H.P. 1459 ("Final Report"), at 4-5 (fon. 25, 1980)) (emphasis from Amended RecapU11/ation omitted). The Board noted that the Joint Stm1ding Committee on Business Legislation concluded, in pertinent part, thnt: The legislative concern was labor charges in general; there wns no suggestion that the concern was limited lo hourly rates , .. [and that] the only equitnble method of express warnmty reimbursement is reimbursement at the regular refail !'(ties .... We propose very simply that an automaker be required to reimbmse a dealer for labor at the rerail rate customarily charged by the dealer for nonwnrrnnly repairs ... There is only one condition that needs to be imposed to ensme that the dealer's rnte is boua fide-it should be routiuely posted in a conspict1ous place." (R. 442) (A mended Recapitulation nt 16-17) (quoting Final Report at 4-5). After briefly discussing the Law Court's response to the Certified Question of the Maine Pedernl District Court, the Bonrd explained tlrnt <(Darling's central contcntion, that conspicuous posting of labor rates to its service customers with notice to FCA, establishes those rates under§ l 776, has long been established ns a matter of Mni.ne lnw." (R. 443.)3 2 The District of Maine's Certificate of Questions wns answered by the Law Court in Darling's v. Ford Motor Co., l998 NIB 232, 719 A.2d I l 1. 3 The Board explained that it would address, inn later dctennit.rntion, the following issues: whether Darling's November 2013 and September 2014 notices to FCA of its hourly nnd flat rates were sufficient under section l 776; if the notices were sufficient, whether PCA was requil'ed to begin reimbursing Darling's at tllose rates; whether section 1176 allowed Darling's to change its cuslonrnry retnil rnte twice within a cnlcndnr ycc1r; whether section 1176 RI lowed ~CA 4 On November 20, 2015, the Board granted Darling's motion for the entry of the Final Order inco1vorating the Order in Darling's fovor, imposing civil penalties of $2,000 on FCA, anc\ ordering a determination as to Darling's attorney fees and costs following the final resolution of any appeal. (R. 490-491.) The Board nlso approved the parties' stipulation of dismissal as to any remaining claims by D,uling's that had not been resolved by the Final Order. (R. 490.) FCA filed a timely Notice of Appenl and Petition for Review with this Court on December 17, 2015. (R. 492·493.) II. Sfnnclnrcl of Review Board decisions appealed to the Supe1fol' Coutt pursunnt to 10 M.R .S.A. § I J 89-B( l) are reviewed for errors of law. When the claimed error involves the interpretation of a stntute, the Court reviews the Bom·d 's interpretation de novo. See Ford .1.vfotor Co. v. Darling's, 2014 ME 7, ~ 15, 86 A.3d 35. "When tlle dispute involves au agency's interpretation of a statute administered by it> the agency's interpretation, although not conclusive, is entitled to great deference and will be upheld w1less (he st11tute plainly compels fl contrnry result." Wood v. Superintendent of Ins., 638 A.2d 67, 70 (Me. 1994) (quotation omitted) . Ir the statute is ambiguous, the Court reviews whether the agency's constrnction is reasonable. Guilford Transp. lndus. v. Pub. Uti/.s·. Comm'n, 2000 ME 31, ~ 11, 746 A.2d 910 (citation omitted). Here, the Bo11rd administers Section 1176 and its interpretation thereof is entitled to deference unless the statl.ite compels a contrary result. See 10 M.R.S.A. § 1188(1), (2) (the Board shall "review written complaints filed with the [B]oard by persons complaining of conduct to require Darling ' s to submit supplemental clnims since November 2013 and, il'so, what supplemental information Darling's had. to submit; and whether Darling's is entitled lo costs and attorney's Ices. (R. 443-444.) 5 governed by this clrnpter" ,md the Bocird slrnll "issue written decisions and may issue orders lo n frnnchisee or franchisor in violation of this chapter»). III. Discussion The disputed slnlulory section, 10 M.R.S.A. § I176 provides, in pertinent pnrt: [T]he franchisor shnll reimbllrse the frnnchisee for retail rate custonrnrily charged by that frnnchisee performed in satisfaction of n warranty; as long ns not performed in satisfaction of a warranty is conspicuous to its service customer. any Jnbor so performed at the for the same labor when not the franchisee's rntc for labor routinely posted in ft plc1ce l O M.R.S.A. § 1176. FCA argues that the Bomd erred by interpreting Section 1176 as only requiring a franchisee to post its non-warrauty labor rnte in a place conspicuous to its service customer in order lo eslnblish its retail rnte ctistomarily charged for wananty reimbul'sement. Jn support, FCA contends that the Boai·d's interpretation effectively reads the phrase "customal'ily chnrged" out of the statute, renders the statutory language "retail rate cuslomnrily charged" mere smplusage by equating the "posted rate" with the "retail rate custotmll'ily clrnrged, and leads to the absurd result of requiring a manufacturer to reimburse a dealer for whatever rnlc it "posts," no matter how h.igh the rnte and regardless of whether that rate was ever charged to a custome1·. PCA further c1sserts thal the Bonrd's interpretation is not supported by Darling's v. Ford Motor Co., 1998 ME 232, 719 A.2d l l l ("Darling's f'), and that the Board erroneously relied on legislative history without first concluding tlrnt Section 1176 was ambiguot1s. Darling's responds that the plain lnnguagc of Seel ion 1176 compels and suppo1·ts the Board's interpretntion. "When interpreting a stntute, [the Comt] seeks[s] to give effect to the intent of the Legislature by examining the plain meaning of the statutory lringungc nncl considering the 6 lm1guagc in the context of' the whole statutory scheme." Darling's I, 1998 ME 232, ~ 5, 719 A.2d 111 (citntions omitted). Only when n statute is ambigu<rns should the Court look beyond the plain language of the statute and the context of the stntutory scheme "to indicia of legislc1tive intent such as the stc1tute's history nud its underlying policy." Fuhrmann v. Staples, 2012 ME l 35, ,r 23, 58 A.3d 1083 (quotnllon omitted). "A statute is mnbiguous if it is' reasonRbly susceptible to different interpretations." Id. (quotation omitted). "When a statute administered by un ngency is ambiguoi1s, [the Court] review[ sJ whether the agency's interpretation of the sti=1ll.1tc is rei1sonable and uphold[s] its interpretntion unless tile statute plainly compels a contrary result." Id. (quotation omitted). The Court avoids "stat1.1to1y constructions that create absurd, illogical or inconsistent results." Darling's!, 1998 ME 232, ~ 5, 719 A.2d 111 (citation omitted). Here, Section 1176 is ambiguous as to whether the fnmchisee's act of publicly posting its rate for non-warrnnty labor in and of itself establishes the franchisee's retail rate customarily charged. On the one hand, Section 1176 could be reasonably read as directly linldng the posting of the frn11chisee's rate for non-warranty labor with the establishment of its retail rnte custonrnl'ily charged. On the other hand, given that Section 1176 refers to a "retail rate customarily charged," the stat1.1te could also be read to provide the franchisor an opportunity to verify, through reasonable means, that the franchisee's posted rnle is in line with the retail rate it customarily charges. Becm1se Section 1176 contains ambiguity as to this point, the Court looks to indicia of legislative intent. As the Board's Order made clenr, the Pinal Report of the Joint Standing Committee proposed thn! the franchisee's retail rate ct1stonrnrily charged for non-wi1rra11ty labor be estnblished through the act of posting said rate in a conspicuous place. The Final Report explained, in pertinent part, that "[f]or many years ... the m1tomnkers' superior bargaining power 7 h«s enabled them to coerce dealers into accepting reimbursement al a rnte significantly below what dealers routinely charge ordinnry reta!l customers for non-warrauty repairs." Finnl Report at 4. While the Commiltee notes that intervention is normally not advised or justified, the Committee believes tlrnt @der the present circumstances "the only equitnble method of express warrnnty reimbursement is reimbursement at regular l'etail rates." id. The Committees proposed : "very simply that an mitomnker be required to reimbmse a dealer for labor at the retail rate customm·ily charged by the dealer for non-warranty repairs. Our only coilcern need be that the rate is legitimate. There is only one condition that needs to be imposed lo ensure the dealer's 1·a1e is bona .fide - it should be rolilinely posted in a conspic11011s place. 171e rate itself should be determined through co111peNfio11 in the marketplace." Id. at 4-5 (emphasis added). This language makes clear that the Joint Standing Committee on Business Legislntion recommended, and the Legisfotme subsequently adopted, a statute under which the check on ensuring the dealer's retail rate customal'ily charged for no1Hw11·1·rmty repairs was accurnte wns that the rnte "be routinely posted in a conspicuous space." Competition, the Final Report recommended, would determine tile posted rate and keep dealers honest. Accordingly, the Bonrcl's Order did not err in determining that the only peerequisite Section I 176 requires ln order to establish the "retail rate customarily charged" is the posting of said rate in a place conspicuous Lo its service customers." A. 'Nhether Section 1176 Permits Verification Beyond the "Posting" Requirement FCA contends lhat the Board's Ordet' was overly broad and unjustifiably prevented FCA from exercising its contractual right to inspect Dnrling's books and records to ensure that lts "posted rnte" wns the same as ils "retail rate custonrnrily charged." Darling's responds thot this "Given the clear legislative history behind this portion of Section 1176, the Court notes tlrnt it would !'each the same result l'Cgnrdless of whether it reviewed the Board's Order de nova or nfforcted the Board's interpretation of Section 1176 deference. 8 argument is waived because FCA did not rmse it in the underlying proceedings, tlrnt the contractual agreements at issue are not in the Record, that the alleged right to inspect only pertains lo warrnnty claims, rmd tlrnt the alleged contracti.rnl right is void and unenforceable pmsuanl to l O M.R.S.A. § 1182. Here, PCA at least raised the question of whethel' Section 1176, while not regui1'ing verification, permits a fra11chisor to impose-tlu·ough agreement-reasonable verification of a fhmchisee's retail rnte customol'ily charged before the Board. It is not clear, however, whether the Board's Order considered this argument. This is because the Board's Order determined: 1) the act of posting labor rntes to service customers, with notice to the franchisor, establishes the retail rate customarily charged under Sectiou 1176; aud 2) Section 1176 "does uot require [Darling's] lo furnish internal records or otherwise verify to FCA its wananty reimburse rnte." (R. 443.) The Board's Order did not explicitly address whether Section 1176, while not requiring, nevertheless permits franchisors and franchisees to contrnctucilly agree to additional verification measmes beyond the posting requirement imposed by Section 1176. Because it is not clear whether the Board considered th.is iss\le, the Comt remands the matter Cot· the Board's determination and/or clarification thereon. IV. Conclusion For the reRsons discussed above, the Com! afftnns that the Board did not err in determining t!rnt the only prerequisite 10 M.R.S.A. § l 176 requires in order to establish the "retail rnte custonrnri ly charged" is the posting of said rate in a place conspicuous lo its service C\lStomers. The Court, however, remands for the Board's considen1tion mid/or clad fication, the question of ,:vhethe1· Section 1176, while nol l'equiring, nevertheless pel'mits franchisors rind 9 frnnchisees to ngrce to additio1rnl verification mef!sures of tbe franchisee's "retail rate customarily clrnrgcd" beyond the 11 posting" requirement in Section 1176. Pursuan! to M.R. Civ. P. 79(a), the Clerk is hereby directed to incorporate this Order by reference in the docket. :J.~~ Dated: June 6, 2016 Ji1sticc, Business & Consumer Entered on the Docket: 0. /"//lo Copirm sent via Mail._Electronfcally >/ 10
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