Alabama 2022 Regular Session

Alabama House Bill HB90 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1 HB90
2	2	2 215615-3
3	3	3 By Representative Ingram
4	4	4 RFD: Commerce and Small Business
5	5	5 First Read: 11-JAN-22
6	6
7	7	Page 0 1 215615-3:n:01/03/2022:FC/ma LSA2021-2336R2
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10	10	4
11	11	5
12	12	6
13	13	7
14	14	8 SYNOPSIS: This bill would provide for the
15	15	9 determination of reasonable compensation by motor
16	16	10 vehicle manufacturers or similar entities for
17	17	11 pre-delivery and warranty service by motor vehicle
18	18	12 dealers. This bill would also authorize a motor
19	19	13 vehicle dealer to file a civil action if the dealer
20	20	14 and the manufacturer or similar entity cannot agree
21	21	15 on the reasonable compensation for the warranty
22	22	16 service.
23	23	17
24	24	18 A BILL
25	25	19 TO BE ENTITLED
26	26	20 AN ACT
27	27	21
28	28	22 Relating to motor vehicle dealers; to amend Section
29	29	23 8-20-7 of the Code of Alabama 1975, relating to warranty
30	30	24 obligations to dealers, to further specify the determination
31	31	25 of reasonable compensation by motor vehicle manufacturers or
32	32	26 similar entities for pre-delivery and warranty service by
33	33	27 motor vehicle dealers; and to authorize a motor vehicle dealer
34	34	Page 1 1 to file a civil action if the dealer and the manufacturer or
35	35	2 similar entity cannot agree on the reasonable compensation for
36	36	3 the warranty service.
37	37	4 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
38	38	5 Section 1. Section 8-20-7 of the Code of Alabama
39	39	6 1975, is amended to read as follows:
40	40	7 "§8-20-7.
41	41	8 "(a) For purposes of this section, the following
42	42	9 words have the following meanings:
43	43	10 "(1) PRE-DELIVERY SERVICE. All work and services,
44	44	11 except warranty work, performed on a new motor vehicles by a
45	45	12 motor vehicle dealer at the direction of the warrantor prior
46	46	13 to the delivery of the vehicle to the first retail consumer.
47	47	14 "(2) REPAIR ORDER. An invoice, paid by a retail
48	48	15 customer, and closed as of the time of submission,
49	49	16 encompassing one or more repairs to a motor vehicle, and
50	50	17 reflecting, in the case of a parts markup submission, the cost
51	51	18 of each part and the sale price thereof, and in the case of a
52	52	19 labor rate submission, the total charges for labor and the
53	53	20 total number of hours that produced the charges, which invoice
54	54	21 may be submitted in electronic form.
55	55	22 "(3) QUALIFIED REPAIR. A repair to a motor vehicle
56	56	23 paid by a retail customer, which would have come within the
57	57	24 warrantor's new motor vehicle warranty, but for the motor
58	58	25 vehicle having exceeded the chronological or mileage limit of
59	59	26 such warranty, and which does not constitute any of the work
60	60	27 encompassed by subsection (f)(5).
61	61	Page 2 1 "(4) QUALIFIED REPAIR ORDER. A repair order which
62	62	2 encompasses, in whole or in part, a qualified repair or
63	63	3 repairs.
64	64	4 "(5) WARRANTOR. A manufacturer, distributor, or
65	65	5 wholesaler, factory branch, factory representative,
66	66	6 distributor branch, or distributor representative.
67	67	7 "(6) WARRANTY WORK. All labor, including that of a
68	68	8 diagnostic character, performed, and all parts, including
69	69	9 original or replacement parts, and components, including
70	70	10 engine, transmission, and other parts assemblies, installed by
71	71	11 motor vehicle dealers on motor vehicles which are reasonably
72	72	12 incurred by motor vehicle dealers, other than the incidental
73	73	13 expenses incurred in performing labor and installing parts on
74	74	14 motor vehicles, in fulfilling a warrantor's obligations under
75	75	15 a new motor vehicle warranty, a recall, or a certified
76	76	16 pre-owned warranty, to consumers, including, but not limited
77	77	17 to, the expense of shipping or returning defective parts to
78	78	18 the warrantor, when required by the warrantor.
79	79	19 "(a) (b) Every manufacturer, distributor, or
80	80	20 wholesaler, factory branch, factory representative,
81	81	21 distributor branch, or distributor representative warrantor
82	82	22 shall specify in writing to each of its motor vehicle dealers
83	83	23 the dealer's obligation for pre-delivery service and warranty
84	84	24 service on its products, shall compensate the motor vehicle
85	85	25 dealer for warranty the service required of the dealer by the
86	86	26 manufacturer, distributor, or wholesaler, factory branch,
87	87	27 factory representative, distributor branch, or distributor
88	88	Page 3 1 representative warrantor and shall provide the dealer the
89	89	2 schedule of compensation to be paid such dealer for parts,
90	90	3 work, and service in connection with warranty the services,
91	91	4 and the time allowance for the performance of such work and
92	92	5 service.
93	93	6 "(b) (c) In no event shall such schedule of
94	94	7 compensation fail to include reasonable compensation for
95	95	8 diagnostic work, service, labor, and parts. Time allowances
96	96	9 for the diagnosis and performance of warranty work and service
97	97	10 shall be reasonable and adequate for the work to be performed.
98	98	11 In the determination of what constitutes reasonable
99	99	12 compensation under this section, the principal factors to be
100	100	13 given consideration shall be the prevailing wage rates being
101	101	14 paid by the dealer, in the community in which the dealer is
102	102	15 doing business, and in In no event shall such compensation of
103	103	16 a dealer for warranty services including labor and parts, be
104	104	17 less than the rates or prices charged by such dealer for like
105	105	18 service to retail customers for nonwarranty service, repairs,
106	106	19 and parts, provided that such prices and rates are not
107	107	20 unreasonable. This subsection does not apply to compensation
108	108	21 for parts, systems, fixtures, appliances, furnishings,
109	109	22 accessories, and features of a motor home that are designed,
110	110	23 used, and maintained primarily for non-vehicular residential
111	111	24 purposes, or parts related to motorcycle repairs.
112	112	25 "(c) (d) It is a violation of this section for any
113	113	26 manufacturer, distributor, or wholesaler, factory branch,
114	114	27 factory representative, distributor branch, or distributor
115	115	Page 4 1 representative warrantor to fail to perform any warranty
116	116	2 obligations under the motor vehicle manufacturer's warranty,
117	117	3 or to fail to include in written notices of factory recalls to
118	118	4 dealers the expected date by which necessary parts and
119	119	5 equipment will be available to dealers for the correction of
120	120	6 such defects, or to fail to compensate any of the motor
121	121	7 vehicle dealers for repairs effected by such recall.
122	122	8 "(d) (e) All claims made by new motor vehicle
123	123	9 dealers pursuant to this section for such labor and parts
124	124	10 shall be paid within 30 days following their approval;
125	125	11 provided, however, that the manufacturer warrantor retains the
126	126	12 right to audit such claims and to charge back the dealer for
127	127	13 any fraudulent claims for a period not to exceed 12 months
128	128	14 from the date the claim was paid. All such claims shall be
129	129	15 either approved or disapproved within 30 days after their
130	130	16 receipt on forms and in the manner specified by the
131	131	17 manufacturer warrantor, and any claim not specifically
132	132	18 disapproved in writing within 30 days after the receipt shall
133	133	19 be construed to be approved and payment must follow within 30
134	134	20 days. A manufacturer warrantor shall not disapprove claims for
135	135	21 which the dealer has received preauthorization from the
136	136	22 manufacturer warrantor or its representative nor shall the
137	137	23 manufacturer warrantor unreasonably disapprove a claim solely
138	138	24 based on the dealer's incidental failure to comply with a
139	139	25 specific claim processing requirement that results only in a
140	140	26 clerical error or administrative error; rather a claim denial
141	141	27 must be based upon a material defect and deviation from the
142	142	Page 5 1 reasonable written claim submission requirements of the
143	143	2 manufacturer. In the event of neglect, oversight, or mistake
144	144	3 by the dealer, a dealer may submit an amended claim, or may
145	145	4 submit a claim not submitted within the time required by the
146	146	5 manufacturer warrantor, for labor and parts up to 120 days
147	147	6 from the date on which such claim was first submitted or could
148	148	7 have been submitted.
149	149	8 "(f)(1) For the purposes of this section, reasonable
150	150	9 compensation shall be determined as provided in this
151	151	10 subsection.
152	152	11 "(2) The markup customarily charged by the dealer
153	153	12 for parts or its labor rate may be established at the election
154	154	13 of the dealer by the dealer submitting to the warrantor,
155	155	14 either by electronic transmission or tangible delivery, all
156	156	15 consecutive repair orders that include 100 sequential repair
157	157	16 orders reflecting qualified repairs, or all repair orders
158	158	17 closed during any period of 90 consecutive days, whichever
159	159	18 produces the fewer number of repair orders, covering repairs
160	160	19 made no more than 180 days before the submission and declaring
161	161	20 the parts markup or labor rate.
162	162	21 "(3) The dealer shall calculate its labor rate by
163	163	22 determining the total charges for labor from the qualified
164	164	23 repairs submitted and dividing that amount by the total number
165	165	24 of hours that produced the charges. The dealer shall calculate
166	166	25 its parts markup by determining the total charges for parts
167	167	26 from the qualified repairs submitted, dividing that amount by
168	168	27 its total cost of the purchase of the parts, subtracting one
169	169	Page 6 1 from that amount, and multiplying by 100 to produce a
170	170	2 percentage.
171	171	3 "(4) A motor vehicle dealer seeking to establish or
172	172	4 modify its warranty reimbursement labor rate, parts markup, or
173	173	5 both, not more frequently than once per 12-month period, shall
174	174	6 submit to the warrantor one of the following:
175	175	7 "a. A single set of repair orders for purposes of
176	176	8 calculating both its labor rate and parts markup.
177	177	9 "b. A set of repair orders for purposes of
178	178	10 calculating only its labor rate or for purposes of calculating
179	179	11 only its parts markup.
180	180	12 "(5) In calculating the rate customarily charged by
181	181	13 the dealer for parts and labor for purposes of this
182	182	14 subsection, the following shall not be included in the
183	183	15 calculation of the rate:
184	184	16 "a. Repairs which are the subject of manufacturer or
185	185	17 distributor discounts, such as special events, specials,
186	186	18 promotions, coupons, or service campaigns.
187	187	19 "b. Repairs of motor vehicles owned by the dealer.
188	188	20 "c. Routine maintenance, including, but not limited
189	189	21 to, replacements of fluids, filters, batteries, bulbs, belts,
190	190	22 nuts, bolts, or fasteners, unless provided in the course of,
191	191	23 and related to, an otherwise qualified repair.
192	192	24 "d. Installations of accessories.
193	193	25 "e. Replacements of or work on tires, wheels,
194	194	26 including alignments, wheel or tire rotations, or replacements
195	195	27 of brake drums, rotors, shoes, or pads.
196	196	Page 7 1 "f. Vehicle reconditioning.
197	197	2 "g. Safety or emission inspections required by law.
198	198	3 "h. Repairs for which volume discounts have been
199	199	4 negotiated with government agencies.
200	200	5 "i. Body shop repairs, including repairs covered by
201	201	6 insurance, for conditions caused by collision, road hazard,
202	202	7 the force of the elements, vandalism, theft, or the negligence
203	203	8 or deliberate act of the owner, operator, or a third party.
204	204	9 "j. Parts that do not have individual part numbers.
205	205	10 "k. Warrantor approved and reimbursed goodwill
206	206	11 repairs or reimbursements.
207	207	12 "l. Window replacement, window etching, window tint,
208	208	13 protective film, or other masking products.
209	209	14 "(6) a. The submitted parts markup or labor rate
210	210	15 shall go into effect 45 days after the warrantor's receipt of
211	211	16 its submission, unless, within that period, the warrantor
212	212	17 reasonably substantiates that the submission is materially
213	213	18 incomplete, materially inaccurate, or is materially
214	214	19 unreasonable and provides a full explanation of any reasons
215	215	20 that the submitted markup or rate is materially incomplete,
216	216	21 materially inaccurate, or materially unreasonable, evidence
217	217	22 validating each reason, a copy of all calculations used by it
218	218	23 demonstrating any material inaccuracy, and a proposed adjusted
219	219	24 markup or rate provided that the dealer's submission is
220	220	25 materially accurate based upon the qualified repair orders
221	221	26 submitted by the dealer. In that event, the warrantor may
222	222	27 submit only one rebuttal to the dealer, and may not thereafter
223	223	Page 8 1 add to, expand, supplement, or otherwise modify any element
224	224	2 thereof, including, but not limited to, its grounds for
225	225	3 contesting the parts markup or labor rate, unless the
226	226	4 warrantor did not possess the information at the time of its
227	227	5 rebuttal, or if the information is used for the purpose of
228	228	6 rebutting the dealer's response to the warrantor's rebuttal.
229	229	7 "b. If a warrantor determines from any set of repair
230	230	8 orders submitted under this subsection that the labor rate or
231	231	9 parts markup calculated under this subsection is substantially
232	232	10 higher or lower than the rate currently on record with the
233	233	11 warrantor for labor or parts, or both, the warrantor, in
234	234	12 accordance with this subsection, may request additional repair
235	235	13 orders for a period of 60 days prior to or 60 days subsequent
236	236	14 to the time period for which the repair orders were submitted
237	237	15 for purposes of an alteration, and shall have 45 days from
238	238	16 receiving the additional repair orders to rebut the
239	239	17 presumption that the dealer's proposed markup and labor rates
240	240	18 are reasonable.
241	241	19 "(7) If the dealer and the warrantor do not agree on
242	242	20 the parts markup or labor rate, then the dealer may file an
243	243	21 action in a court having jurisdiction in this state within 120
244	244	22 days of receiving the warrantor's written rejection of the
245	245	23 dealer's proposed parts markup or labor rate. In that action,
246	246	24 the warrantor shall have the burden of proving by a
247	247	25 preponderance of the evidence that the dealer's submitted
248	248	26 parts markup or labor rate, or both, was materially
249	249	27 incomplete, materially inaccurate, or was materially
250	250	Page 9 1 unreasonable. Upon a court decision in favor of the dealer
251	251	2 finding that the labor or parts rate shall be more than
252	252	3 proposed by the warrantor, any increase in the dealer's parts
253	253	4 markup or labor rate arising from the proceeding shall be
254	254	5 effective retroactively to the date 45 days following the
255	255	6 warrantor's receipt of the original submission to the dealer
256	256	7 or to the warrantor.
257	257	8 "(8) In the determination of what constitutes
258	258	9 materially unreasonable compensation under this section,
259	259	10 relevant factors include, but are not limited to, the
260	260	11 prevailing wage rates paid by similarly situated dealers in
261	261	12 the state."
262	262	13 Section 2. This act shall become effective on the
263	263	14 first day of the third month following its passage and
264	264	15 approval by the Governor, or its otherwise becoming law.
265	265	Page 10