General Motors, LLC v. St Brd/Vehicle Manufacturer (majority)Annotate this Case
At the times relevant to this litigation, the appellants, Baer Buick GMC and Grata Chevrolet (“Dealers”), and the appellee, General Motors, LLC, were parties to dealer sales and service agreements, per which Dealers sold and serviced vehicles manufactured by General Motors. Under the contractual terms, Dealers committed to performing repairs required by limited warranties extended by General Motors upon sales with no additional charge to customers (albeit that the projected cost of such repairs was factored into the purchase price for new vehicles). General Motors was then required to reimburse Dealers in accordance with a Service Policies and Procedures Manual (the “SPPM”). Through the SPPM, General Motors agreed to pay dealers at large for labor during warranty work under either of two options, denominated “Option A (Retail Rate) and Option C (CPI-based).” Option C, apparently, was the preferred option among dealers for labor reimbursement. General Motors’ standard reimbursement policy for parts installed in connection with warranty repairs was to pay one hundred and forty percent of the dealers’ costs. Apparently, both labor reimbursement alternatives, Options A and C, were initially made available to all dealers regardless of whether they sought reimbursement for parts under the standard contractual methodology or invoked an alternative rate, presumably under a governing regulatory statute. In 2012, however, General Motors instituted a policy effectively rendering any dealer pursuing an alternative reimbursement methodology for calculating warranty parts reimbursement ineligible for contractually-based Option C reimbursement for labor. Dealers, along with several other franchise dealers, lodged a protest with the State Board of Vehicle Manufacturers, Dealers and Salespersons (the “Board”), claiming that General Motors violated Section 9(a)(3) of the Board of Vehicles Act by contractually changing the manner in which it reimbursed dealers for warranty labor, when Dealers had merely exercised their statutory rights concerning reimbursement for warranty parts. They also challenged General Motors’ ability to impose a surcharge on dealers that elect the statutory retail reimbursement rate for warranty parts but not labor. In response, General Motors contended that nothing in the Act guaranteed dealers the right to participate in Option C, which was purely a matter of contract. After review, the Pennsylvania Supreme Court affirmed the order of the Commonwealth Court as it related to Section 9(a), and reversed as concerned Section 9(b.4)(1)(i).