LRB-1444/1
EVM:wlj:md
2011 - 2012 LEGISLATURE
May 19, 2011 - Introduced by Senators Leibham, Carpenter, Cowles, T. Cullen,
Erpenbach, Hansen, Olsen, Schultz, Wanggaard, Kapanke and Wirch,
cosponsored by Representatives
Ballweg, Barca, Bernier, Brooks, Clark,
Endsley, Kestell, Klenke, T. Larson, Mursau, A. Ott, Petersen, Petryk, Ripp,
Spanbauer, Steinbrink, Vruwink, Weininger, Williams, Zepnick and Murtha.
Referred to Committee on Transportation and Elections.
SB96,1,12
1An Act to renumber 218.0133 (2) (d);
to renumber and amend 218.0101 (22)
2and 218.0125 (1);
to amend 218.0116 (1) (km), 218.0116 (1) (rm), 218.0116 (10),
3218.0125 (2), 218.0125 (5), 218.0133 (title), 218.0133 (2) (a), 218.0133 (2) (b) 1.
4b., 218.0133 (2) (b) 1. c., 218.0133 (2) (b) 2., 218.0133 (4) (a), 218.0133 (5) (a) 2.,
5218.0133 (5) (d), 218.0133 (6) (b), 218.0163 (1) (a), 425.202 (2), 429.104 (19) and
6779.85 (3);
to repeal and recreate 218.0125 (3) and 218.0125 (4); and
to
7create 218.0101 (3s), 218.0101 (22) (b), 218.0116 (1) (um), 218.0116 (1) (vm),
8218.0116 (1) (wm), 218.0116 (1) (xm), 218.0116 (1) (y), 218.0116 (1) (ym),
9218.0116 (1) (ys), 218.0125 (1) (b), 218.0128, 218.0133 (2) (d) 2., 218.0133 (2) (d)
103., 218.0133 (2) (f), 218.0133 (4) (e), 218.0133 (4) (f), 218.0133 (5) (a) 4d.,
11218.0133 (5) (a) 4h., 218.0133 (5) (a) 4p., 218.0133 (5) (a) 4t. and 218.0133 (7)
12of the statutes;
relating to: motor vehicle dealers.
Analysis by the Legislative Reference Bureau
Under current law, each manufacturer, importer, distributor, and dealer of
motor vehicles that wishes to sell motor vehicles in this state must be licensed by the
Department of Transportation (DOT). The manufacturer, importer, or distributor
may have its license revoked and may be liable for pecuniary losses and attorney fees
incurred by the dealer, if the manufacturer, importer, or distributor takes certain
actions with respect to a dealer that have been enumerated as violations.
This bill enumerates several additional actions of a manufacturer, importer, or
distributor with respect to a dealer as violations. These newly designated violations
are: 1) conditioning certain agreements or approvals on the dealer's entry into a
contract that allows the manufacturer, importer, or distributor to control the
disposition or use of the dealer's dealership facilities; 2) unreasonably conditioning
certain agreements or approvals on the dealer's improvement of the dealer's
dealership facilities at a substantial cost to the dealer; 3) unreasonably requiring a
dealer to maintain exclusive facilities for a particular line make of motor vehicles;
4) taking certain adverse actions against a dealer for charging a lawful service fee
to a retail customer; 5) taking certain adverse actions against a dealer because,
without the dealer's knowledge that the purchaser intended to export the motor
vehicle, a motor vehicle purchaser exported a motor vehicle; 6) with certain
exceptions, requiring a dealer to provide the manufacturer, importer, or distributor
with information regarding the dealer's retail customers; 7) transferring nonpublic
customer information obtained from a dealer to another dealer or otherwise using
nonpublic customer information obtained from a dealer for a nonpermitted use; and
8) failing to properly indemnify a dealer.
Under current law, a manufacturer, importer, or distributor must reasonably
compensate a dealer that performs certain motor vehicle service work for the
manufacturer, importer, or distributor. Covered service work is work to rectify
product defects or other defects covered by the warranty provided by the
manufacturer, importer, or distributor, certain motor vehicle delivery or preparation
obligations, and any other work approved by the manufacturer, importer, or
distributor. The manufacturer, importer, or distributor must compensate the dealer,
for service, at the effective labor rate charged to all customers and, for parts,
generally at not less than the amount the dealer charges other retail service
customers for the parts. To be eligible for compensation, a dealer must notify the
manufacturer, importer, or distributor of the amount that the dealer charges other
retail service customers for parts. The manufacturer, importer, or distributor may
require the dealer to provide documentary substantiation of the claimed amount the
dealer charges for parts.
This bill requires a manufacturer, importer, or distributor to compensate a
dealer based on the dealer's "effective nonwarranty labor rate" and "average
percentage markup over dealer cost for parts." To be eligible for compensation, a
dealer must provide the manufacturer, importer, or dealer with 100 sequential repair
orders for qualifying nonwarranty repairs or all repair orders for qualifying
nonwarranty repairs performed in a 90-day period. Qualifying nonwarranty repairs
are repairs that are not covered by a warranty, but would be covered by the warranty
of a manufacturer, importer, or distributor if the repaired vehicle was covered by the
warranty. The effective nonwarranty labor rate is determined by dividing the total
customer labor charges for qualifying nonwarranty repairs by the total number of
hours that would be allowed for the repairs if the repairs were made under the
manufacturer's, importer's, or distributors time allowances. The dealer's average
percentage markup over dealer cost for parts is determined by dividing total charges
for parts for qualifying nonwarranty repairs by the total dealer cost for the parts.
Within 30 days of receiving the substantiating repair orders, the manufacturer,
importer, or distributor must begin compensating the dealer based on the rates
calculated from the orders. If there is a conflict between the rates calculated by the
manufacturer, importer, or distributor and the dealer, the manufacturer, importer,
or distributor must provide a written notice and explanation of the dispute to the
dealer.
Under current law, with certain exceptions, when a manufacturer on direct
dealership, a distributor on indirect dealership, or an importer on direct dealership
(grantor) has entered into an agreement with a motor vehicle dealer and the grantor
or dealer terminates, cancels, or does not renew the agreement, the grantor must pay
to the dealer specified termination benefits. Among these benefits, the grantor must
repurchase from the dealer unsold motor vehicles, parts, and accessories that meet
certain criteria and pay the dealer a certain amount for the dealership facilities, but
then the grantor is entitled to the possession and use of the dealership facilities.
Among the exceptions that allow a termination without payment of benefits are the
termination, cancellation, or nonrenewal of an agreement following a determination
that the dealer engaged in fraud or theft against the grantor and the termination or
cancellation of an agreement by a dealer without adequate notice.
This bill requires payment of termination benefits upon the termination,
cancellation, or nonrenewal of a franchise that may constitute less than the entire
agreement between the grantor and dealer. This bill also requires a grantor to
provide several additional items of termination benefits, including removing signs
from the dealership facility and reimbursing the dealer for certain computer
material and service contractual expenses and certain facility renovation expenses.
In addition, if the cancellation or nonrenewal of a franchise is due to a
manufacturer's, importer's, or distributor's termination, cancellation, or
discontinuation of a motor vehicle line make, the grantor must compensate the
dealer in an amount not less than the fair market value of the terminated or
nonrenewed franchise on the date immediately preceding the date the grantor
announced the termination, cancellation, or discontinuation of the line make. This
bill also provides several additional exceptions that allow termination, cancellation,
or nonrenewal of a franchise without the payment of termination benefits. These are
termination, cancellation, or nonrenewal: 1) after revocation of a necessary dealer
license; 2) based on the dealer's failure to remain open during customary business
hours for seven consecutive days; 3) based on the dealer's conviction of certain
crimes; and 4) based on the dealer being subject to a bankruptcy or receivership
filing.
This bill also requires a manufacturer, importer, or distributor to indemnify a
dealer against certain claims alleging defective or negligent manufacture or design
of the vehicle or its parts or accessories. Failure to adequately indemnify a dealer
may result in the revocation of the manufacturer's, importer's, or distributor's
license or liability for the dealer's pecuniary losses and attorney fees.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB96, s. 1
1Section
1. 218.0101 (3s) of the statutes is created to read:
SB96,4,42
218.0101
(3s) "Coerce" means, with respect to a manufacturer, importer, or
3distributor, for a manufacturer, importer, or distributor to compel by acting or
4refusing to act, or by threatening to act or refuse to act, if all of the following apply:
SB96,4,75
(a) The action or refusal to act will deprive the coerced dealer of a benefit
6generally available to other dealers of the same line make of motor vehicles or will
7otherwise materially harm the coerced dealer.
SB96,4,118
(b) The action or refusal to act is in response to, or intended to prevent, the
9coerced dealer's exercise of a right granted or retained under an agreement, this
10section, ss. 218.0111 to 218.0163, or rules promulgated by the department of
11transportation under this section or ss. 218.0111 to 218.0163.
SB96, s. 2
12Section
2. 218.0101 (22) of the statutes is renumbered 218.0101 (22) (intro.)
13and amended to read:
SB96,4,1414
218.0101
(22) (intro.) "Motor vehicle" means any
of the following:
SB96,4,16
15(a) Any motor-driven vehicle required to be registered under ch. 341 except
16mopeds.
SB96, s. 3
17Section
3. 218.0101 (22) (b) of the statutes is created to read:
SB96,4,2018
218.0101
(22) (b) Any engine, transmission, or rear axle manufactured for
19installation on a motor vehicle that is designed to transport persons or property on
20a highway and that has a gross vehicle weight rating of greater than 16,000 pounds.
SB96, s. 4
1Section
4. 218.0116 (1) (km) of the statutes is amended to read:
SB96,5,32
218.0116
(1) (km) Being a manufacturer, importer
, or distributor who violates
3s. 218.0121, 218.0122, 218.0123, 218.0124
or, 218.0125
, or 218.0128.
SB96, s. 5
4Section
5. 218.0116 (1) (rm) of the statutes is amended to read:
SB96,5,75
218.0116
(1) (rm) Being a grantor, as defined in s. 218.0133 (1) (b), who fails
6to pay a motor vehicle dealer
agreement franchise termination benefits under s.
7218.0133.
SB96, s. 6
8Section
6. 218.0116 (1) (um) of the statutes is created to read:
SB96,5,139
218.0116
(1) (um) 1. In this paragraph, "site control contract" means a contract
10that grants authority to a manufacturer, importer, or distributor or an affiliate of a
11manufacturer, importer, or distributor, during the term of an agreement or after the
12termination, cancellation, or nonrenewal of an agreement, to control the disposition
13or use of or to lease the dealer's dealership facilities.
SB96,5,2114
2. Being a manufacturer, importer, or distributor who conditions entry into an
15agreement or renewal of an agreement or approval of the addition of a line make of
16motor vehicles, franchise relocation, ownership or management change, or transfer
17of dealership assets on the entry by the dealer or prospective dealer into a site control
18contract or who coerces or attempts to coerce a dealer or prospective dealer to enter
19into a site control contract. This subdivision does not prohibit a site control contract
20for which the dealer or prospective dealer receives a separate and valuable
21consideration.
SB96, s. 7
22Section
7. 218.0116 (1) (vm) of the statutes is created to read:
SB96,6,1323
218.0116
(1) (vm) Unless the technology of a motor vehicle reasonably requires
24improvement of dealership facilities to accommodate the adequate sale and service
25of the motor vehicle or the reasonable business considerations of the manufacturer
1and dealer justify improvement of dealership facilities, being a manufacturer,
2importer, or distributor who conditions entry into an agreement or renewal of an
3agreement or approval of the addition of a line make of motor vehicles, franchise
4relocation, ownership or management change, or transfer of dealership assets on the
5improvement of dealership facilities at a substantial cost to the dealer or prospective
6dealer or who coerces or attempts to coerce a dealer or prospective dealer to improve
7dealership facilities at a substantial cost to the dealer or prospective dealer. This
8paragraph does not prohibit improvement of dealership facilities at a substantial
9cost to the dealer or prospective dealer if the dealer or prospective dealer has agreed
10to undertake the improvement and received a separate and valuable consideration
11for the improvement. The burden of proof to demonstrate the technological necessity
12or business justification of the facilities improvement is on the manufacturer,
13importer, or distributor.
SB96, s. 8
14Section
8. 218.0116 (1) (wm) of the statutes is created to read:
SB96,6,2315
218.0116
(1) (wm) Being a manufacturer, importer, or distributor who
16unreasonably requires or coerces or attempts to coerce a dealer to provide or
17maintain exclusive facilities for a particular line make of motor vehicles or
18unreasonably refuses to permit or approve the addition of another line make to the
19dealership facilities of a dealer taking into consideration the reasonable business
20considerations of the manufacturer, importer, or distributor and the dealer. The
21burden of proof to demonstrate the reasonableness of the provision or maintenance
22of exclusive facilities or the refusal to permit or approve the addition of another line
23make is on the manufacturer, importer, or distributor.
SB96, s. 9
24Section
9
. 218.0116 (1) (xm) of the statutes is created to read:
SB96,7,5
1218.0116
(1) (xm) Being a manufacturer, importer, or distributor who charges
2back, withholds payment, denies vehicle allocation, or takes other adverse action
3against a dealer for charging a service fee to a retail customer in any amount that
4is not prohibited under ss. 218.0101 to 218.0163 or rules promulgated by the
5department of transportation under ss. 218.0101 to 218.0163.
SB96, s. 10
6Section
10. 218.0116 (1) (y) of the statutes is created to read:
SB96,7,177
218.0116
(1) (y) Being a manufacturer, importer, or distributor who charges
8back, withholds payment, denies vehicle allocation, or takes other adverse action
9against a dealer because a motor vehicle sold by the dealer has been exported to a
10foreign country unless the dealer knew or reasonably should have known that the
11purchaser intended to export the vehicle or resell the vehicle for export. If the motor
12vehicle is titled or registered in any state in this country, it is presumed that the
13dealer had no knowledge that the purchaser intended to export the vehicle or resell
14the vehicle for export. The manufacturer, importer, or distributor may rebut the
15presumption. The burden of proof to demonstrate that the dealer knew or reasonably
16should have known that the purchaser intended to export the vehicle or resell the
17vehicle for export is on the manufacturer, importer, or distributor.
SB96, s. 11
18Section
11. 218.0116 (1) (ym) of the statutes is created to read:
SB96,7,2519
218.0116
(1) (ym) Being a manufacturer, importer, or distributor who requires
20or coerces, or attempts to require or coerce, a dealer to provide the manufacturer,
21importer, or distributor with information regarding the retail customers of the dealer
22unless the information is necessary for the sale and delivery of a new motor vehicle
23to a retail buyer, to validate and pay customer or dealer incentives, for warranty
24reimbursement substantiation under s. 218.0125, or to enable the manufacturer,
25importer, or distributor to fulfill safety, recall, or other legal obligations.
SB96, s. 12
1Section
12. 218.0116 (1) (ys) of the statutes is created to read:
SB96,8,82
218.0116
(1) (ys) Being a manufacturer, importer, or distributor who transfers
3nonpublic customer information that was obtained from a dealer to another
4franchised dealer while the dealer from which the information was obtained remains
5a franchised dealer unless the dealer from which the information was obtained
6agrees to the transfer, or who uses any nonpublic personal information, as defined
7in
16 CFR 313.3 (n), obtained from a dealer unless the use falls within an exception
8under
16 CFR 313.14 or
313.15.
SB96, s. 13
9Section
13. 218.0116 (10) of the statutes is amended to read:
SB96,8,1710
218.0116
(10) In addition to the licensor's authority to deny, suspend
, or revoke
11a license under ss. 218.0101 to 218.0163, the division of banking, after public
12hearing, may issue a special order enjoining any licensee from engaging in any act
13or practice which is determined by the division of banking to be in violation of any
14provision of sub. (1), and the division of hearings and appeals may be petitioned to
15and, after notice and hearing, may issue
such a special order
after notice and hearing
16thereon enjoining a licensee from engaging in any act or practice which the division
17of hearing and appeals determines to be in violation of any provision of sub. (1).
SB96, s. 14
18Section
14. 218.0125 (1) of the statutes is renumbered 218.0125 (1) (intro.) and
19amended to read:
SB96,8,2020
218.0125
(1) (intro.) In this section
, "dealer:
SB96,8,23
21(a) "Dealer cost" means the wholesale cost for a part as listed in the
22manufacturer's, importer's or distributor's current price schedules or, if the part is
23not so listed, the dealer's original invoice cost for the part.
SB96, s. 15
24Section
15. 218.0125 (1) (b) of the statutes is created to read: