Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H331 Compare Versions

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

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1	1	1 of 1
2	2	HOUSE DOCKET, NO. 1869 FILED ON: 1/18/2023
3	3	HOUSE . . . . . . . . . . . . . . . No. 331
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Daniel J. Hunt
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act further regulating business practices between motor vehicle dealers, manufacturers, and
13	13	distributors.
14	14	_______________
15	15	PETITION OF:
16	16	NAME:DISTRICT/ADDRESS :DATE ADDED:Daniel J. Hunt13th Suffolk1/17/2023 1 of 9
17	17	HOUSE DOCKET, NO. 1869 FILED ON: 1/18/2023
18	18	HOUSE . . . . . . . . . . . . . . . No. 331
19	19	By Representative Hunt of Boston, a petition (accompanied by bill, House, No. 331) of Daniel J.
20	20	Hunt for legislation to further regulate the business practices between motor vehicle dealers,
21	21	manufacturers, and distributors. Consumer Protection and Professional Licensure.
22	22	The Commonwealth of Massachusetts
23	23	_______________
24	24	In the One Hundred and Ninety-Third General Court
25	25	(2023-2024)
26	26	_______________
27	27	An Act further regulating business practices between motor vehicle dealers, manufacturers, and
28	28	distributors.
29	29	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
30	30	of the same, as follows:
31	31	1 SECTION 1. Subsection (c) of said section 4 of said chapter 93B, as appearing in the
32	32	22022 Official Edition, is hereby amended by inserting after paragraph (12) the following six
33	33	3paragraphs:-
34	34	4 (13) to require, coerce, or attempt to coerce any dealer by program, policy, standard, or
35	35	5otherwise to: (a) change location of the dealership; (b) construct, renovate, or make any
36	36	6substantial changes, alterations, or remodeling to a dealer’s sales or services facilities; or (c) add
37	37	7to or replace a dealer’s sales or services facilities; provided, however, that nothing herein shall
38	38	8prohibit a manufacturer or distributor from continuing a facility improvement program that is in
39	39	9effect as of the effective date of this paragraph with more than one dealer in the commonwealth
40	40	10or to renewing or modifying such program, or providing lump sum or regularly-scheduled
41	41	11payments to assist a dealer in making a facility improvement, including construction, alteration
42	42	12or remodeling, or installing signage or an image element of the manufacturer or distributor; 2 of 9
43	43	13provided further, that the provisions of the facility improvement program in which such dealer
44	44	14participates be contained in a written agreement voluntarily entered into by the dealer and must
45	45	15be made available, on substantially similar terms, to any of the manufacturer’s or distributor’s
46	46	16other same line-make dealers in the commonwealth with whom the manufacturer or distributor
47	47	17offers to enter into such an agreement; provided further, that, except as necessary to comply with
48	48	18a health or safety law or to comply with a technology requirement which is necessary to sell or
49	49	19service a motor vehicle that the motor vehicle dealer is authorized or licensed by the
50	50	20manufacturer or distributor to sell or service, a manufacturer, distributor, or franchisor
51	51	21representative shall not require, coerce, or attempt to coerce a motor vehicle dealer, by program,
52	52	22policy, facility guide, standard or otherwise, to change the location of the dealership, replace, or
53	53	23construct a new dealer facility or substantially alter or remodel an existing dealer facility before
54	54	24the date that is ten years after the date the construction of the new dealer facility or substantial
55	55	25alteration or remodeling at that location was completed regardless of whether a successor dealer
56	56	26has been appointed; provided further, that such construction, alteration or remodeling
57	57	27substantially complied with the manufacturer’s or distributor’s brand image standards or plans
58	58	28that the manufacturer or distributor provided at the time the construction, alteration, or
59	59	29remodeling was completed.
60	60	30 (14) to require a dealer to provide to the franchisor representative, manufacturer or
61	61	31distributor its customer lists, service files, or information about a retail customer unless
62	62	32necessary: (a) for the sale and delivery of a new motor vehicle to a retail buyer; (b) to validate
63	63	33and pay customer or dealer incentives; (c) for reasonable marketing purposes; (d) for warranty
64	64	34reimbursement substantiation under this chapter; or (e) to enable the manufacturer to fulfill
65	65	35safety, recall, or other legal obligations imposed by state or federal law. A manufacturer or 3 of 9
66	66	36distributor shall not share, sell, or transfer to other dealers or third parties customer information
67	67	37obtained from a dealer and not otherwise publicly available unless otherwise agreed to by the
68	68	38originating dealer or unless the franchise has been terminated. Notwithstanding any consent,
69	69	39authorization, release, franchise agreement or other agreement or contract, a manufacturer or
70	70	40distributor, or any third party acting on behalf or through a manufacturer or distributor, having
71	71	41electronic access to consumer or customer data or other information in a computer system
72	72	42utilized by a dealer, or who has otherwise been provided consumer or customer data or
73	73	43information by the dealer, shall fully indemnify and hold harmless the dealer from whom it has
74	74	44acquired the consumer or customer data or other information from all claims, demands, damages,
75	75	45liabilities, costs, and expenses incurred by the dealer, arising out of any alleged or actual data
76	76	46security breaches or other unlawful use of said customer or consumer data or other information
77	77	47by said manufacturer, distributor or third party acting on behalf of same, including, but not
78	78	48limited to, judgments, settlements, fines, penalties, expenses related to the disclosure of security
79	79	49breaches to customers and consumers, and attorneys’ fees and expenses arising out of
80	80	50complaints, claims, demands, security breaches, civil or administrative actions, and, to the fullest
81	81	51extent allowable under the law, attorneys’ fees and expenses arising from governmental
82	82	52investigations and prosecutions relating to the access, storage, maintenance, use, sharing,
83	83	53disclosure, or retention of the dealer’s consumer or customer data or other information, or
84	84	54maintenance or services provided to any computer system utilized by the dealer, by the
85	85	55manufacturer, distributor or third party acting on behalf of or through the manufacturer or
86	86	56distributor.
87	87	57 (15) to arbitrarily or unreasonably alter the geographic area of responsibility within which
88	88	58it measures the dealer’s performance. A manufacturer or distributor shall give advance notice of 4 of 9
89	89	59any proposed alteration of a dealer’s so-called area of responsibility at least 60 days before the
90	90	60effective date of a proposed alteration. Notice shall include an explanation of the basis for the
91	91	61change, and, upon request by such motor vehicle dealer within 30 days of the manufacturer’s or
92	92	62distributor’s notice, the manufacturer or distributor immediately shall provide sufficient
93	93	63supporting documentation. At any time prior to the effective date of such alteration, and after
94	94	64completion of any internal appeal process provided by a manufacturer or distributor, a dealer
95	95	65may protest the proposed alteration pursuant to section 15. Filing of a protest shall mean no
96	96	66alteration is effective until an agreement is reached by the parties or a court makes a final
97	97	67determination. The court may affirm, deny, or modify the proposed alteration of the dealer’s area
98	98	68of responsibility, may enter any other orders necessary to ensure that an alteration of the dealer’s
99	99	69area of responsibility is reasonable in light of all the relevant circumstances, and may assess the
100	100	70attorneys’ fees and expenses among the parties to the protest as appropriate. A manufacturer or
101	101	71distributor shall not take any adverse action against a dealer as a result of a change to the dealer’s
102	102	72area of responsibility for at least 18 months after the effective date of the change.
103	103	73 (16) to require a dealer to purchase goods or services from a vendor selected, identified,
104	104	74or designated by a manufacturer or distributor by agreement, program, incentive provision, or
105	105	75otherwise in connection with a dealer expanding, constructing, or significantly modifying its
106	106	76dealership facility without allowing the dealer the option to obtain a good or service of
107	107	77substantially similar quality from a vendor chosen by the dealer and approved by the
108	108	78manufacturer, which approval may not be unreasonably withheld. For purposes of this
109	109	79subdivision, the term "goods" does not include moveable displays, brochures, and promotional
110	110	80materials containing material subject to intellectual property rights of, or parts to be used in
111	111	81repairs under warranty obligations of, a manufacturer or a distributor, or special tools and 5 of 9
112	112	82training as required by the manufacturer or distributor. Nothing under this paragraph shall be
113	113	83construed to (i) allow a dealer or vendor to eliminate or impair a manufacturer’s or distributor’s
114	114	84intellectual property rights, including trademarks, or (ii) permit a dealer to erect or maintain signs
115	115	85that do not conform to the intellectual property usage guidelines of the manufacturer.
116	116	86 (17) to offer, directly or indirectly, vehicles for lease or subscription in the
117	117	87commonwealth of the same line make as any of the vehicles manufactured, assembled or
118	118	88distributed by the manufacturer, distributor or franchise representative in the commonwealth and
119	119	89sold or leased in the commonwealth by a dealer affiliated with such manufacturer, distributor or
120	120	90franchisor representative, unless such lease or subscription is offered through, or in partnership
121	121	91with, a dealer of the same line make affiliated with said manufacturer, distributor or franchisor
122	122	92representative. For purposes of this paragraph, “subscription” means a contract or arrangement
123	123	93whereby a person, for a recurring fee, secures the exclusive use of a specific vehicle of the same
124	124	94line make for a term exceeding thirty days. This paragraph shall not apply to a rental company or
125	125	95rental agreement regulated pursuant to Section 32E ½ of chapter 90 of the General Laws.
126	126	96 (18) to require, attempt to require, coerce, or attempt to coerce a motor vehicle dealer to
127	127	97sell exclusively an extended service contract, extended maintenance plan or similar products,
128	128	98including, but not limited to, guaranteed automobile protection or guaranteed asset protection
129	129	99products, offered, endorsed or sponsored by the motor vehicle manufacturer, distributor or
130	130	100franchisor representative by any of the following means: (i) a statement made by the motor
131	131	101vehicle manufacturer, distributor or franchisor representative that failure to sell exclusively an
132	132	102extended service contract, extended maintenance plan or similar products will substantially and
133	133	103adversely impact the dealer; (ii) a provision in a franchise agreement that the dealer sell
134	134	104exclusively an extended service contract, extended maintenance plan or similar product offered, 6 of 9
135	135	105endorsed or sponsored by the motor vehicle manufacturer, distributor or franchisor
136	136	106representative; (iii) measuring the dealer’s performance under the franchise based on the sale of
137	137	107extended service contracts, extended maintenance plans or similar products offered, endorsed or
138	138	108sponsored by the motor vehicle manufacturer, distributor or franchisor representative; or (iv)
139	139	109requiring the dealer to exclusively promote the sale of extended service contracts, extended
140	140	110maintenance plans or similar products offered, endorsed or sponsored by the motor vehicle
141	141	111manufacturer, distributor or franchisor representative; provided, however, that nothing in this
142	142	112paragraph shall prohibit a motor vehicle manufacturer, distributor or franchisor representative
143	143	113from providing incentives to a dealer that encourages a voluntary decision to sell exclusively an
144	144	114extended service contract, extended maintenance plan or similar product, including, but not
145	145	115limited to, guaranteed automobile protection or guaranteed asset protection products offered,
146	146	116endorsed or sponsored by the manufacturer, distributor or franchisor; provided, further, that
147	147	117nothing in this paragraph shall require or prohibit a motor vehicle manufacturer, distributor, or
148	148	118franchisor representative from enforcing a requirement that a dealer provide the following notice
149	149	119prior to the sale of the service contract if the service contract is not provided or backed by the
150	150	120motor vehicle manufacturer and the vehicle is of the franchised line-make: “The service contract
151	151	121you are purchasing is not provided or backed by the manufacturer of the vehicle you are
152	152	122purchasing. The manufacturer of this vehicle is not responsible for claims or repairs under this
153	153	123service contract.”
154	154	124 SECTION 2. Subsection (b) of section 9 of said chapter 93B, as so appearing, is hereby
155	155	125amended by inserting after paragraph (4) the following paragraph:-
156	156	126 (5)(i) A manufacturer or distributor shall not require, influence, or attempt to influence a
157	157	127motor vehicle dealer to implement or change the prices for which it sells parts or labor in retail 7 of 9
158	158	128customer repairs. A manufacturer or distributor shall not implement or continue a policy,
159	159	129procedure, or program with any of its dealers in this state for compensation under this section
160	160	130which is inconsistent with this section.
161	161	131 (ii) A manufacturer or distributor shall not, pursuant to a surcharge or other assessment
162	162	132stated on the vehicle invoice provided to the dealer or through such other charge or means,
163	163	133otherwise recover its costs for reimbursing a dealer for parts and labor pursuant to this section;
164	164	134provided, however, that a manufacturer or distributor shall not be prohibited from increasing
165	165	135prices for vehicles or parts in the normal course of business.
166	166	136 SECTION 3. Said section 9 of said chapter 93B, as so appearing, is hereby further
167	167	137amended by inserting after subsection (j) the following subsections (k) and (l):-
168	168	138 (k) (1) Notwithstanding any provision of a franchise agreement, it shall be a violation of
169	169	139this chapter for a manufacturer, distributor, or franchisor representative, when providing a new
170	170	140motor vehicle to a dealer for offer or sale to the public, to fail to provide to such dealer a written
171	171	141disclosure that may be provided to a potential buyer of the new motor vehicle of each accessory
172	172	142or function of the vehicle that may be initiated, updated, changed, or maintained by the
173	173	143manufacturer, distributor, or franchisor representative through over the air or remote means, and
174	174	144the charge to the customer at the time of sale for such initiation, update, change or maintenance;
175	175	145provided, however, that the manufacturer, distributor, or franchisor representative may comply
176	176	146with this subsection by notifying the dealer that any such information is available on a website or
177	177	147by other digital means.
178	178	148 (2) Notwithstanding any provision of a franchise agreement, it shall be a violation of this
179	179	149chapter for a manufacturer, distributor, or franchisor representative to fail to provide reasonable 8 of 9
180	180	150compensation to a dealer for assistance requested by a customer whose vehicle was subjected to
181	181	151an over the air or remote change, repair, or update to any part, system, accessory, or function by
182	182	152the manufacturer, distributor, or franchisor representative and performed at the dealer’s
183	183	153dealership in order to satisfy the customer.
184	184	154 (l) Notwithstanding any provision of a franchise agreement, it shall be a violation of this
185	185	155chapter for a manufacturer, distributor, or franchisor representative to charge back or otherwise
186	186	156hold liable a franchised motor vehicle dealer for sales incentives or charges, deny vehicle
187	187	157allocation, withhold payments or other things of value for which the dealer is eligible, or take or
188	188	158threaten to take any other adverse action against the dealer, in connection with or as a result of
189	189	159any new motor vehicle sold by the dealer and subsequently exported from the United States;
190	190	160provided, however, that such dealer can demonstrate that after exercising due diligence and
191	191	161acting in good faith such dealer did not know nor reasonably should have known of the
192	192	162purchaser’s intention to export the motor vehicle. A franchised motor vehicle dealer which
193	193	163causes a new motor vehicle to be registered in the commonwealth or in a foreign state and causes
194	194	164to be collected the appropriate sales and use tax, or that reasonably relied on a franchisor to
195	195	165complete a sale shall be presumed to have exercised due diligence and acted in good faith. Prior
196	196	166to taking an adverse action against a dealer, including, but not limited to, a chargeback, as a
197	197	167result of an export, a manufacturer or distributor shall provide written notice to the franchised
198	198	168motor vehicle dealer of the adverse action, and, if a chargeback, the specific amount of the
199	199	169chargeback, and the vehicle or vehicles at issue. A dealer shall not be liable under this subsection
200	200	170for the delivery of any vehicle sold through a franchisor’s fleet program where the sale or lease
201	201	171was not initiated or negotiated by the dealer and dealer’s function was solely to provide delivery
202	202	172on behalf of the manufacturer or distributor. 9 of 9
203	203	173 SECTION 4. Section 15 of said chapter 93B, as so appearing, is hereby amended by
204	204	174striking out subsection (a) and inserting in place thereof the following subsection:-
205	205	175 (a) Any manufacturer, distributor or motor vehicle dealer who alleges an unfair method
206	206	176of competition or an unfair or deceptive act or practice as defined by this chapter, any act
207	207	177prohibited or declared unlawful by this chapter, or any rule or regulation adopted under this
208	208	178chapter, may bring an action in the superior court, or if applicable in the federal district court for
209	209	179the district of Massachusetts, for damages and equitable relief, including injunctive relief, as
210	210	180described in the following sentence: The party filing suit may obtain such equitable relief if it
211	211	181can demonstrate a substantial likelihood that the alleged conduct violates the provisions of this
212	212	182chapter.