Texas 2023 - 88th Regular

Texas Senate Bill SB2099 Compare Versions

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1	1	88R12120 DIO-F
2	2	By: Kolkhorst S.B. No. 2099
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to motor vehicle franchised dealers and the reimbursement
8	8	of motor vehicle franchised dealers by manufacturers and
9	9	distributors for warranty, recall, and preparation and delivery
10	10	work.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 2301.003, Occupations Code, is amended
13	13	by adding Subsections (c) and (d) to read as follows:
14	14	(c) A manufacturer or distributor may not, if the result
15	15	would be injurious to a dealer or to the public:
16	16	(1) coerce or compel or attempt to coerce or compel by
17	17	threat or by other adverse consequence the dealer to agree to a
18	18	program or incentive provision, including a loss of an incentive or
19	19	benefit; or
20	20	(2) amend a franchise agreement.
21	21	(d) A manufacturer or distributor may not take an adverse
22	22	action or initiate an action or proceeding, in response to a dealer
23	23	initiating an action or proceeding, including an action or
24	24	proceeding to which the manufacturer or distributor is a party, to
25	25	enforce a right or remedy available to the dealer under law or by
26	26	agreement.
27	27	SECTION 2. Subchapter I, Chapter 2301, Occupations Code, is
28	28	amended to read as follows:
29	29	SUBCHAPTER I. WARRANTIES AND RECALLS: REIMBURSEMENT OF DEALER
30	30	Sec. 2301.4001. DEFINITIONS. In this subchapter:
31	31	(1) "Goodwill repair" means a repair made by a seller
32	32	for no charge that the seller is not obligated to make.
33	33	(2) "Part" includes any equipment, fixture, good, or
34	34	software that is provided by a manufacturer or distributor for a
35	35	motor home or towable recreational vehicle.
36	36	(3) "Routine maintenance" includes replacement of a
37	37	fluid, filter, battery, bulb, belt, nut, bolt, or fastener, unless
38	38	the fluid, filter, battery, bulb, belt, nut, bolt, or fastener is
39	39	provided by the manufacturer or distributor in the course of a
40	40	repair with an assigned part number.
41	41	Sec. 2301.401. WARRANTY, RECALL, PREPARATION, AND DELIVERY
42	42	REQUIREMENTS. (a) On request, a manufacturer or distributor shall
43	43	provide to the department a copy of the current requirements the
44	44	manufacturer or distributor imposes on its dealers with respect to
45	45	the dealer's:
46	46	(1) duties under the manufacturer's or distributor's
47	47	warranty and under a manufacturer's or distributor's recall; and
48	48	(2) vehicle preparation and delivery obligations.
49	49	(b) Warranty, recall, or preparation and delivery
50	50	requirements placed on a dealer by a manufacturer or distributor
51	51	are not enforceable unless the requirements are reasonable.
52	52	Sec. 2301.402. RATE OF COMPENSATION. (a) A manufacturer or
53	53	distributor shall fairly and adequately compensate its dealers for
54	54	warranty, recall, and preparation and delivery work.
55	55	(b) A manufacturer or distributor may not pay or reimburse a
56	56	dealer an amount of money for warranty or recall work that is less
57	57	than the amount the dealer charges a retail customer for similar
58	58	nonwarranty work.
59	59	(c) In computing the amount of money a dealer charges a
60	60	retail customer under Subsection (b) for labor, the manufacturer or
61	61	distributor shall use the formula, of the following formulas, that
62	62	produces the fewest number of repair orders [the greater of]:
63	63	(1) the average labor rate charged during the
64	64	preceding six months by the dealer on 100 sequential nonwarranty
65	65	repair orders paid by retail customers, exclusive of:
66	66	(A) routine maintenance;
67	67	(B) tire or wheel alignment;
68	68	(C) discounts to state agencies, insurers, or
69	69	warranty or service contract providers;
70	70	(D) state inspections;
71	71	(E) goodwill repairs;
72	72	(F) accessory installation; and
73	73	(G) a manufacturer's or distributor's promotion
74	74	or service campaign; or
75	75	(2) the average labor rate charged for 90 consecutive
76	76	days during the preceding six months by the dealer for nonwarranty
77	77	repairs paid by retail customers, exclusive of:
78	78	(A) routine maintenance;
79	79	(B) tire or wheel alignment;
80	80	(C) discounts to state agencies, insurers, or
81	81	warranty or service contract providers;
82	82	(D) state inspections;
83	83	(E) goodwill repairs;
84	84	(F) accessory installation; and
85	85	(G) a manufacturer's or distributor's promotion
86	86	or service campaign.
87	87	(d) The average labor rate under Subsection (c) is
88	88	determined by dividing the total charges for labor submitted by the
89	89	total number of hours charged for the repairs.
90	90	(e) In computing the amount of money a dealer charges a
91	91	retail customer under Subsection (b) for parts, the manufacturer or
92	92	distributor shall use the formula, of the following formulas, that
93	93	produces the fewest number of repair orders:
94	94	(1) the average parts markup charged during the
95	95	preceding six months by the dealer on 100 sequential nonwarranty
96	96	repair orders paid by retail customers, exclusive of:
97	97	(A) routine maintenance;
98	98	(B) tire or wheel alignment;
99	99	(C) discounts to state agencies, insurers, or
100	100	warranty or service contract providers;
101	101	(D) state inspections;
102	102	(E) goodwill repairs;
103	103	(F) accessory installation; and
104	104	(G) a manufacturer's or distributor's promotion
105	105	or service campaign; or
106	106	(2) the average parts markup charged for 90
107	107	consecutive days during the preceding six months by the dealer for
108	108	nonwarranty repairs paid by retail customers, exclusive of:
109	109	(A) routine maintenance;
110	110	(B) tire or wheel alignment;
111	111	(C) discounts to state agencies, insurers, or
112	112	warranty or service contract providers;
113	113	(D) state inspections;
114	114	(E) goodwill repairs;
115	115	(F) accessory installation; and
116	116	(G) a manufacturer's or distributor's promotion
117	117	or service campaign.
118	118	(f) The average parts markup for Subsection (e) is
119	119	determined by dividing the total charges for parts submitted by the
120	120	total cost of the parts for which charges are submitted.
121	121	(g) The submissions under Subsections (c) and (e) may
122	122	consist of:
123	123	(1) a single set of repair orders for calculating the
124	124	dealer's retail customer labor rate and the dealer's retail
125	125	customer parts rate; or
126	126	(2) one set of repair orders for calculating the
127	127	dealer's retail customer labor rate and a separate set for
128	128	calculating the dealer's retail customer parts rate.
129	129	(h) If a manufacturer or distributor supplies a part to a
130	130	dealer at no cost or at a reduced cost for use in a warranty or
131	131	recall repair, the manufacturer or distributor shall compensate the
132	132	dealer for the dealer's cost for the part, if any, plus an amount
133	133	equal to the dealer's prevailing retail parts markup, multiplied by
134	134	the fair wholesale value of the part.
135	135	(i) For purposes of Subsection (h), the fair wholesale value
136	136	of a part is the greater of:
137	137	(1) the amount the dealer paid for the part or a
138	138	substantially identical part if presently owned by the dealer;
139	139	(2) the cost of the part as shown in a current or
140	140	previously established price schedule of the manufacturer or
141	141	distributor; or
142	142	(3) the cost of a substantially identical part shown
143	143	in a current or previously established price schedule of the
144	144	manufacturer or distributor.
145	145	(j) If a dealer assists in an over-the-air or remote
146	146	installation, change, repair, update, or amendment to any part,
147	147	system, accessory, or function, the assistance is compensated in
148	148	accordance with this subchapter.
149	149	Sec. 2301.403. ADJUSTMENT OF RATE FOR WARRANTY WORK [LABOR
150	150	RATE]. (a) A dealer may request an adjustment in the dealer's
151	151	warranty work [labor] rate. The request must be sent to the
152	152	manufacturer or distributor electronically or by certified mail,
153	153	return receipt requested, and must state the requested labor or
154	154	parts rate and include information reasonably necessary to enable
155	155	the manufacturer or distributor to adequately evaluate the request
156	156	as provided by this subchapter.
157	157	(b) Not later than the 60th day after the date of receipt of
158	158	a request under this section, the manufacturer or distributor shall
159	159	provide written notice to the requesting dealer of the approval,
160	160	reduction, claimed material inaccuracy, or disapproval of the
161	161	request. If the manufacturer or distributor fails to respond
162	162	before the 60th day after the date the request is received, the
163	163	submitted rate shall take effect on the 60th day after the date the
164	164	manufacturer or distributor receives the request. If the request
165	165	is disapproved, reduced, or claimed to be materially inaccurate,
166	166	the manufacturer or distributor shall state the reasons for the
167	167	disapproval, reduction, or claimed material inaccuracy. The stated
168	168	reasons for disapproval, reduction, or claimed material inaccuracy
169	169	of the requested labor rate or parts markup must contain:
170	170	(1) an explanation of the reasons the request is
171	171	disapproved, reduced, or claimed to be materially inaccurate;
172	172	(2) evidence that substantiates each stated reason;
173	173	(3) if a material inaccuracy is alleged, a copy of the
174	174	calculations used by the manufacturer or distributor demonstrating
175	175	a material inaccuracy; and
176	176	(4) a proposed adjusted labor or parts rate, as
177	177	applicable.
178	178	(b-1) If the manufacturer or distributor disapproves or
179	179	reduces a dealer's request or claims a dealer's request is
180	180	materially inaccurate, the manufacturer or distributor may not add
181	181	to, expand, supplement, or otherwise modify the objection except on
182	182	the discovery of relevant information that could not have been
183	183	known at the time of issuing the rebuttal.
184	184	(c) A requesting dealer may file a protest with the board if
185	185	the manufacturer or distributor[:
186	186	[(1)] disapproves or reduces a dealer's request or
187	187	claims the request is materially inaccurate[; or
188	188	[(2) fails to respond within the time required by this
189	189	section].
190	190	(d) After a protest is filed, the board may uphold the
191	191	manufacturer's or distributor's decision only if the manufacturer
192	192	or distributor proves by a preponderance of the evidence that the
193	193	disapproval, reduction, or claimed material inaccuracy of the
194	194	request [or failure to respond] was reasonable.
195	195	(e) If the board does not determine that the disapproval,
196	196	reduction, or claimed material inaccuracy of the request [or
197	197	failure to respond] was reasonable, the board shall order the
198	198	requested rate into effect as of the 60th day after the receipt of
199	199	the request by the manufacturer or distributor.
200	200	(f) Except by agreement of the parties, a warranty labor
201	201	rate or warranty parts rate established under this subchapter may
202	202	not be adjusted more often than once a year.
203	203	Sec. 2301.404. TIME FOR PAYMENT. (a) A manufacturer or
204	204	distributor shall pay a dealer's claim for reimbursement for
205	205	warranty work, recall work, or dealer preparation and delivery work
206	206	not later than the 30th day after the date of approval of the claim.
207	207	(b) A claim that is not disapproved before the 31st day
208	208	after the date of receipt is considered approved.
209	209	(c) If a claim is disapproved, the manufacturer or
210	210	distributor shall provide the dealer written notice explaining [of]
211	211	the reasons for the disapproval.
212	212	(d) A controversy regarding the payment of a claim under
213	213	this subchapter or compliance with the provisions of this
214	214	subchapter shall be resolved in accordance with Subchapter O.
215	215	Sec. 2301.405. CHARGE BACK TO DEALER. (a) A manufacturer
216	216	or distributor may not charge back to a dealer money paid by the
217	217	manufacturer or distributor to satisfy a claim approved and paid
218	218	under this chapter [subchapter] unless the manufacturer or
219	219	distributor shows that:
220	220	(1) the claim was false or fraudulent;
221	221	(2) repair work was not properly performed or was
222	222	unnecessary to correct a defective condition; or
223	223	(3) the dealer who made the claim failed to
224	224	substantiate the claim as provided by the manufacturer's or
225	225	distributor's requirements that were enforceable under Section
226	226	2301.401 at the time the claim was filed.
227	227	(b) A manufacturer or distributor may not audit a claim
228	228	filed under this chapter [subchapter] after the first anniversary
229	229	of the date the claim is submitted unless the manufacturer or
230	230	distributor has reasonable grounds to suspect that the claim was
231	231	fraudulent.
232	232	Sec. 2301.406. PROHIBITED REQUIREMENTS FOR PAYMENT. (a) A
233	233	manufacturer or distributor may not require, as a prerequisite to
234	234	the payment of a claim for reimbursement, that a dealer file a
235	235	statement of actual time spent in performance of labor, unless
236	236	actual time is the basis for reimbursement.
237	237	(b) A manufacturer or distributor may not recover or attempt
238	238	to recover any portion of the compensation due to a dealer for
239	239	warranty, recall, or preparation and delivery work by reducing the
240	240	amount due by a separate charge, surcharge, like charge, other
241	241	charge, supplemental charge, or reduction in return reserve
242	242	allowance to the wholesale price paid by the dealer to the
243	243	manufacturer or distributor for any product, including motor
244	244	vehicles and parts.
245	245	(c) A manufacturer or distributor may not establish or
246	246	implement a special part number for a part used in warranty, recall,
247	247	or preparation and delivery work if the result is lower
248	248	compensation to the dealer than as calculated under Section
249	249	2301.402.
250	250	SECTION 3. The changes in law made by this Act apply only to
251	251	warranty, recall, or preparation and delivery work under Subchapter
252	252	I, Chapter 2301, Occupations Code, as amended by this Act,
253	253	commenced on or after the effective date of this Act. Warranty,
254	254	recall, or preparation and delivery work commenced before the
255	255	effective date of this Act is governed by the law in effect on the
256	256	date the work was commenced, and the former law is continued in
257	257	effect for that purpose.
258	258	SECTION 4. This Act takes effect September 1, 2023.