1 SB52
2 215615-4
3 By Senator Chesteen
4 RFD: Governmental Affairs
5 First Read: 11-JAN-22
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1 SB52
2
3
4 ENROLLED, An Act,
5 Relating to motor vehicle dealers; to amend Section
6 8-20-7 of the Code of Alabama 1975, relating to warranty
7 obligations to dealers, to further specify the determination
8 of reasonable compensation by motor vehicle manufacturers or
9 similar entities for pre-delivery and warranty service by
10 motor vehicle dealers; and to authorize a motor vehicle dealer
11 to file a civil action if the dealer and the manufacturer or
12 similar entity cannot agree on the reasonable compensation for
13 the warranty service.
14 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
15 Section 1. Section 8-20-7 of the Code of Alabama
16 1975, is amended to read as follows:
17 "ยง8-20-7.
18 "(a) For purposes of this section, the following
19 words have the following meanings:
20 "(1) PRE-DELIVERY SERVICE. All work and services,
21 except warranty work, performed on a new motor vehicles by a
22 motor vehicle dealer at the direction of the warrantor prior
23 to the delivery of the vehicle to the first retail consumer.
24 "(2) REPAIR ORDER. An invoice, paid by a retail
25 customer, and closed as of the time of submission,
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1 encompassing one or more repairs to a motor vehicle, and
2 reflecting, in the case of a parts markup submission, the cost
3 of each part and the sale price thereof, and in the case of a
4 labor rate submission, the total charges for labor and the
5 total number of hours that produced the charges, which invoice
6 may be submitted in electronic form.
7 "(3) QUALIFIED REPAIR. A repair to a motor vehicle
8 paid by a retail customer, which would have come within the
9 warrantor's new motor vehicle warranty, but for the motor
10 vehicle having exceeded the chronological or mileage limit of
11 such warranty, and which does not constitute any of the work
12 encompassed by subsection (f)(5).
13 "(4) QUALIFIED REPAIR ORDER. A repair order which
14 encompasses, in whole or in part, a qualified repair or
15 repairs.
16 "(5) WARRANTOR. A manufacturer, distributor, or
17 wholesaler, factory branch, factory representative,
18 distributor branch, or distributor representative.
19 "(6) WARRANTY WORK. All labor, including that of a
20 diagnostic character, performed, and all parts, including
21 original or replacement parts, and components, including
22 engine, transmission, and other parts assemblies, installed by
23 motor vehicle dealers on motor vehicles which are reasonably
24 incurred by motor vehicle dealers, other than the incidental
25 expenses incurred in performing labor and installing parts on
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1 motor vehicles, in fulfilling a warrantor's obligations under
2 a new motor vehicle warranty, a recall, or a certified
3 pre-owned warranty, to consumers, including, but not limited
4 to, the expense of shipping or returning defective parts to
5 the warrantor, when required by the warrantor.
6 "(a) (b) Every manufacturer, distributor, or
7 wholesaler, factory branch, factory representative,
8 distributor branch, or distributor representative warrantor
9 shall specify in writing to each of its motor vehicle dealers
10 the dealer's obligation for pre-delivery service and warranty
11 service on its products, shall compensate the motor vehicle
12 dealer for warranty the service required of the dealer by the
13 manufacturer, distributor, or wholesaler, factory branch,
14 factory representative, distributor branch, or distributor
15 representative warrantor and shall provide the dealer the
16 schedule of compensation to be paid such dealer for parts,
17 work, and service in connection with warranty the services,
18 and the time allowance for the performance of such work and
19 service.
20 "(b) (c) In no event shall such schedule of
21 compensation fail to include reasonable compensation for
22 diagnostic work, service, labor, and parts. Time allowances
23 for the diagnosis and performance of warranty work and service
24 shall be reasonable and adequate for the work to be performed.
25 In the determination of what constitutes reasonable
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1 compensation under this section, the principal factors to be
2 given consideration shall be the prevailing wage rates being
3 paid by the dealer, in the community in which the dealer is
4 doing business, and in In no event shall such compensation of
5 a dealer for warranty services including labor and parts, be
6 less than the rates or prices charged by such dealer for like
7 service to retail customers for nonwarranty service, repairs,
8 and parts, provided that such prices and rates are not
9 unreasonable. This subsection does not apply to compensation
10 for parts, systems, fixtures, appliances, furnishings,
11 accessories, and features of a motor home that are designed,
12 used, and maintained primarily for non-vehicular residential
13 purposes, or parts related to motorcycle repairs.
14 "(c) (d) It is a violation of this section for any
15 manufacturer, distributor, or wholesaler, factory branch,
16 factory representative, distributor branch, or distributor
17 representative warrantor to fail to perform any warranty
18 obligations under the motor vehicle manufacturer's warranty,
19 or to fail to include in written notices of factory recalls to
20 dealers the expected date by which necessary parts and
21 equipment will be available to dealers for the correction of
22 such defects, or to fail to compensate any of the motor
23 vehicle dealers for repairs effected by such recall.
24 "(d) (e) All claims made by new motor vehicle
25 dealers pursuant to this section for such labor and parts
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1 shall be paid within 30 days following their approval;
2 provided, however, that the manufacturer warrantor retains the
3 right to audit such claims and to charge back the dealer for
4 any fraudulent claims for a period not to exceed 12 months
5 from the date the claim was paid. All such claims shall be
6 either approved or disapproved within 30 days after their
7 receipt on forms and in the manner specified by the
8 manufacturer warrantor, and any claim not specifically
9 disapproved in writing within 30 days after the receipt shall
10 be construed to be approved and payment must follow within 30
11 days. A manufacturer warrantor shall not disapprove claims for
12 which the dealer has received preauthorization from the
13 manufacturer warrantor or its representative nor shall the
14 manufacturer warrantor unreasonably disapprove a claim solely
15 based on the dealer's incidental failure to comply with a
16 specific claim processing requirement that results only in a
17 clerical error or administrative error; rather a claim denial
18 must be based upon a material defect and deviation from the
19 reasonable written claim submission requirements of the
20 manufacturer. In the event of neglect, oversight, or mistake
21 by the dealer, a dealer may submit an amended claim, or may
22 submit a claim not submitted within the time required by the
23 manufacturer warrantor, for labor and parts up to 120 days
24 from the date on which such claim was first submitted or could
25 have been submitted.
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1 "(f)(1) For the purposes of this section, reasonable
2 compensation shall be determined as provided in this
3 subsection.
4 "(2) The markup customarily charged by the dealer
5 for parts or its labor rate may be established at the election
6 of the dealer by the dealer submitting to the warrantor,
7 either by electronic transmission or tangible delivery, all
8 consecutive repair orders that include 100 sequential repair
9 orders reflecting qualified repairs, or all repair orders
10 closed during any period of 90 consecutive days, whichever
11 produces the fewer number of repair orders, covering repairs
12 made no more than 180 days before the submission and declaring
13 the parts markup or labor rate.
14 "(3) The dealer shall calculate its labor rate by
15 determining the total charges for labor from the qualified
16 repairs submitted and dividing that amount by the total number
17 of hours that produced the charges. The dealer shall calculate
18 its parts markup by determining the total charges for parts
19 from the qualified repairs submitted, dividing that amount by
20 its total cost of the purchase of the parts, subtracting one
21 from that amount, and multiplying by 100 to produce a
22 percentage.
23 "(4) A motor vehicle dealer seeking to establish or
24 modify its warranty reimbursement labor rate, parts markup, or
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1 both, not more frequently than once per 12-month period, shall
2 submit to the warrantor one of the following:
3 "a. A single set of repair orders for purposes of
4 calculating both its labor rate and parts markup.
5 "b. A set of repair orders for purposes of
6 calculating only its labor rate or for purposes of calculating
7 only its parts markup.
8 "(5) In calculating the rate customarily charged by
9 the dealer for parts and labor for purposes of this
10 subsection, the following shall not be included in the
11 calculation of the rate:
12 "a. Repairs which are the subject of manufacturer or
13 distributor discounts, such as special events, specials,
14 promotions, coupons, or service campaigns.
15 "b. Repairs of motor vehicles owned by the dealer.
16 "c. Routine maintenance, including, but not limited
17 to, replacements of fluids, filters, batteries, bulbs, belts,
18 nuts, bolts, or fasteners, unless provided in the course of,
19 and related to, an otherwise qualified repair.
20 "d. Installations of accessories.
21 "e. Replacements of or work on tires, wheels,
22 including alignments, wheel or tire rotations, or replacements
23 of brake drums, rotors, shoes, or pads.
24 "f. Vehicle reconditioning.
25 "g. Safety or emission inspections required by law.
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1 "h. Repairs for which volume discounts have been
2 negotiated with government agencies.
3 "i. Body shop repairs, including repairs covered by
4 insurance, for conditions caused by collision, road hazard,
5 the force of the elements, vandalism, theft, or the negligence
6 or deliberate act of the owner, operator, or a third party.
7 "j. Parts that do not have individual part numbers.
8 "k. Warrantor approved and reimbursed goodwill
9 repairs or reimbursements.
10 "l. Window replacement, window etching, window tint,
11 protective film, or other masking products.
12 "(6) a. The submitted parts markup or labor rate
13 shall go into effect 45 days after the warrantor's receipt of
14 its submission, unless, within that period, the warrantor
15 reasonably substantiates that the submission is materially
16 incomplete, materially inaccurate, or is materially
17 unreasonable and provides a full explanation of any reasons
18 that the submitted markup or rate is materially incomplete,
19 materially inaccurate, or materially unreasonable, evidence
20 validating each reason, a copy of all calculations used by it
21 demonstrating any material inaccuracy, and a proposed adjusted
22 markup or rate provided that the dealer's submission is
23 materially accurate based upon the qualified repair orders
24 submitted by the dealer. In that event, the warrantor may
25 submit only one rebuttal to the dealer, and may not thereafter
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1 add to, expand, supplement, or otherwise modify any element
2 thereof, including, but not limited to, its grounds for
3 contesting the parts markup or labor rate, unless the
4 warrantor did not possess the information at the time of its
5 rebuttal, or if the information is used for the purpose of
6 rebutting the dealer's response to the warrantor's rebuttal.
7 "b. If a warrantor determines from any set of repair
8 orders submitted under this subsection that the labor rate or
9 parts markup calculated under this subsection is substantially
10 higher or lower than the rate currently on record with the
11 warrantor for labor or parts, or both, the warrantor, in
12 accordance with this subsection, may request additional repair
13 orders for a period of 60 days prior to or 60 days subsequent
14 to the time period for which the repair orders were submitted
15 for purposes of an alteration, and shall have 45 days from
16 receiving the additional repair orders to rebut the
17 presumption that the dealer's proposed markup and labor rates
18 are reasonable.
19 "(7) If the dealer and the warrantor do not agree on
20 the parts markup or labor rate, then the dealer may file an
21 action in a court having jurisdiction in this state within 120
22 days of receiving the warrantor's written rejection of the
23 dealer's proposed parts markup or labor rate. In that action,
24 the warrantor shall have the burden of proving by a
25 preponderance of the evidence that the dealer's submitted
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1 parts markup or labor rate, or both, was materially
2 incomplete, materially inaccurate, or was materially
3 unreasonable. Upon a court decision in favor of the dealer
4 finding that the labor or parts rate shall be more than
5 proposed by the warrantor, any increase in the dealer's parts
6 markup or labor rate arising from the proceeding shall be
7 effective retroactively to the date 45 days following the
8 warrantor's receipt of the original submission to the dealer
9 or to the warrantor.
10 "(8) In the determination of what constitutes
11 materially unreasonable compensation under this section,
12 relevant factors include, but are not limited to, the
13 prevailing wage rates paid by similarly situated dealers in
14 the state."
15 Section 2. This act shall become effective on the
16 first day of the third month following its passage and
17 approval by the Governor, or its otherwise becoming law.
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1
2
3
4
President and Presiding Officer of the Senate
5
6 Speaker of the House of Representatives
SB527
8 Senate 01-FEB-22
9 I hereby certify that the within Act originated in and passed
10 the Senate.
11
12 Patrick Harris,
13 Secretary.
14
15
16
17 House of Representatives
18 Passed: 24-FEB-22
19
20
21 By: Senator Chesteen
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