S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4066
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 9, 2023
                                ___________
 
 Introduced by M. of A. BURGOS -- read once and referred to the Committee
   on Transportation
 
 AN  ACT  to  amend the vehicle and traffic law, in relation to requiring
   motor vehicle dealer franchisors to fully compensate franchised  motor
   vehicle dealers for warranty service agreements

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivision 1 of section 465 of  the  vehicle  and  traffic
 law, as amended by chapter 26 of the laws of 2014, is amended to read as
 follows:
   1.  Every  franchisor  shall  properly  fulfill any warranty agreement
 and/or franchisor's service contract, INCLUDING BUT NOT LIMITED  TO  ALL
 WARRANTY  AND  FACTORY COMPENSATED REPAIRS, RECALLS, AND OTHER VOLUNTARY
 STOP-SELL REPAIRS, and shall compensate each  of  its  franchised  motor
 vehicle  dealers  for  warranty  parts  and labor AND DIAGNOSTIC WORK in
 amounts which reflect reasonable compensation for such work. IN NO EVENT
 SHALL SUCH COMPENSATION FAIL TO INCLUDE FULL COMPENSATION FOR DIAGNOSTIC
 WORK, AS WELL AS REPAIR SERVICE, LABOR, AND PARTS.   ADDITIONALLY, IF  A
 TECHNICIAN  IS  REQUIRED  TO  COMMUNICATE  WITH  A  TECHNICAL ASSISTANCE
 CENTER, ENGINEERING OR SOME EXTERNAL MANUFACTURER  SOURCE  IN  ORDER  TO
 PROVIDE  A WARRANTY REPAIR, THE MANUFACTURER SHALL PAY FOR THE TIME FROM
 START OF COMMUNICATIONS (INCLUDING HOLD TIME) UNTIL THE COMMUNICATION IS
 COMPLETE. All warranty claims and/or claims under a franchisor's service
 contract made by franchised motor vehicle dealers shall be  paid  within
 thirty   days  following  their  approval.  For  DIAGNOSIS  WORK,  parts
 reimbursement, other than  components,  systems,  fixtures,  appliances,
 furnishings,  accessories  and  features  of  a  house  coach  that  are
 designed, used and maintained  primarily  for  nonvehicular  residential
 purposes, and for labor reimbursement, reasonable compensation shall not
 be  less than the price and rate charged by the franchised motor vehicle
 dealer for like services to  non-warranty  and/or  non-service  contract
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02112-01-3
              

 A. 4066                             2
 
 customers.    WHERE  A TIME GUIDE IS USED FOR WARRANTY REPAIRS, ANY TIME
 GUIDE PREVIOUSLY AGREED TO BY THE FRANCHISOR AND  THE  FRANCHISED  MOTOR
 VEHICLE  DEALERS  FOR  EXTENDED  WARRANTY REPAIRS MAY BE USED IN LIEU OF
 ACTUAL TIME EXPENDED. IN THE EVENT THAT A TIME GUIDE HAS NOT BEEN AGREED
 TO  FOR WARRANTY REPAIRS, OR SAID TIME GUIDE DOES NOT DEFINE TIME FOR AN
 APPLICABLE WARRANTY REPAIR, THE FRANCHISOR'S TIME GUIDE SHALL  BE  USED,
 MULTIPLIED  BY ONE AND ONE-HALF. For purposes of this section, the price
 and rate charged by the franchised motor vehicle dealer for parts may be
 established by submitting  to  the  franchisor  one  hundred  sequential
 nonwarranty customer-paid service repair orders or the number of sequen-
 tial  nonwarranty  customer-paid  service repair orders written within a
 ninety day period, whichever is less, covering repairs made no more than
 one hundred eighty days before the submission, and declaring  the  price
 and  rate,  including  average  markup  for the franchised motor vehicle
 dealer as its reimbursement rate. The  reimbursement  rate  so  declared
 shall  go into effect thirty days following the declaration and shall be
 presumed to be reasonable, however a franchisor may rebut such  presump-
 tion  by  showing that such rate so established is unreasonable in light
 of the practices of all other franchised motor vehicle  dealers  in  the
 vicinity offering the same line make. The franchised motor vehicle deal-
 er  shall not request a change in the reimbursement rate more often than
 once in each calendar year.  In  establishing  the  labor  reimbursement
 rate, the franchisor shall not require a franchised motor vehicle dealer
 to  establish  said  rate by a methodology, or by requiring information,
 that is unduly burdensome or time consuming to provide,  including,  but
 not  limited  to,  a  transaction  by  transaction  calculation. For the
 purposes of this section, the following parts or types of repairs  shall
 be   excluded   from   the  parts  and/or  labor  calculations  and  the
 franchisor's reimbursement requirements under this  section:  (a)  parts
 sold  at wholesale; (b) tires; (c) routine maintenance not covered under
 any retail customer warranty such  as  fluids,  filters  and  belts  not
 provided  in  the course of repairs; (d) vehicle reconditioning; and (e)
 batteries replaced as part of a routine maintenance  operation.  If  the
 franchisor  rejects the declaration or attempts to rebut the declaration
 because of an error in the dealer's  submission,  the  franchisor  shall
 identify  with  specificity  the  reason  for rejection and identify the
 error or errors within the  submission.  In  the  event  the  franchisor
 rejects  or  rebuts  the  dealer's initial declaration, the dealer shall
 have the opportunity,  within  sixty  days  to  resubmit  the  full  and
 corrected  declaration addressing the alleged error or errors identified
 by the franchisor. The franchisor shall respond within sixty  days.  The
 one hundred eighty day requirement for the repair orders shall be stayed
 from  the  date  of initial submission. In any action or proceeding held
 pursuant to this subdivision, the franchisor shall have  the  burden  of
 proving  that  the  rate  declared  by  the  dealer  was unreasonable as
 described in this subdivision and that the proposed  adjustment  of  the
 average  percentage  markup or rejection of the submission is reasonable
 pursuant to the provisions of this subdivision.  NO DEBIT  REDUCTION  OR
 CHARGE  BACK OF ANY ITEM ON A WARRANTY REPAIR ORDER SHALL BE MADE ABSENT
 A FINDING OF FRAUD OR ILLEGAL ACTIONS BY  THE  DEALER.    NO  FRANCHISOR
 SHALL  IMPOSE  ANY  FORM  OF  COST RECOVERY FEES OR SURCHARGES AGAINST A
 FRANCHISED MOTOR VEHICLE DEALER FOR PAYMENTS  MADE  IN  ACCORDANCE  WITH
 THIS  SUBDIVISION.  THERE  SHALL  BE NO REDUCTION IN PAYMENTS UNDER THIS
 SUBDIVISION DUE TO  PREESTABLISHED  MARKET  NORMS  OR  MARKET  AVERAGES.
 FRANCHISORS ARE PROHIBITED FROM ESTABLISHING RESTRICTIONS OR LIMITATIONS
 OF  CUSTOMER  REPAIR  FREQUENCY  DUE TO FAILURE RATE INDEXES OR NATIONAL
 A. 4066                             3
 
 FAILURE AVERAGES. A WARRANTY CLAIM  TIMELY  MADE  SHALL  NOT  BE  DEEMED
 INVALID  SOLELY BECAUSE UNAVAILABLE PARTS CAUSE ADDITIONAL USE AND MILE-
 AGE ON THE VEHICLE.  IF A FRANCHISOR IMPOSES A RECALL OR  STOP  SALE  ON
 ANY  NEW  VEHICLE  IN A FRANCHISED MOTOR VEHICLE DEALER'S INVENTORY THAT
 PREVENTS THE SALE OF THE VEHICLE, THE FRANCHISOR  SHALL  COMPENSATE  THE
 MOTOR  VEHICLE  DEALER FOR ANY INTEREST AND STORAGE UNTIL THE VEHICLE IS
 REPAIRED AND MADE READY FOR SALE.
   § 2. This act shall take effect immediately.

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  4066--B
                                                         Cal. No. 112
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 9, 2023
                                ___________
 
 Introduced  by  M.  of A. BURGOS, SILLITTI, GALLAGHER, FAHY, BRAUNSTEIN,
   CLARK,  FALL,  SEPTIMO,  MAMDANI,  RIVERA,  DURSO,  MILLER,  LUNSFORD,
   DARLING,   SANTABARBARA,  DeSTEFANO,  J. A. GIGLIO,  SMITH,  K. BROWN,
   RAMOS,  LAVINE,  McMAHON,  JACOBSON,  SHIMSKY,  CUNNINGHAM,  SHRESTHA,
   L. ROSENTHAL,   THIELE,  DE LOS SANTOS,  MEEKS,  McDONOUGH,  WILLIAMS,
   COLTON, DINOWITZ, HEVESI, GUNTHER, BURKE, TAPIA, COOK, STERN,  WALKER,
   WEPRIN,  BENEDETTO,  SIMONE,  JEAN-PIERRE,  NORRIS,  JENSEN,  BEEPHAN,
   EPSTEIN, SLATER, GRAY, CONRAD, McDONALD,  SEAWRIGHT,  BURDICK,  BORES,
   BRABENEC,  HYNDMAN,  ZACCARO,  AUBRY,  STIRPE, REILLY, DILAN, SOLAGES,
   SAYEGH, CRUZ, CARROLL,  TAGUE,  ALVAREZ,  LUPARDO,  LEVENBERG,  FLOOD,
   GONZALEZ-ROJAS,  MORINELLO,  BRONSON,  WOERNER,  ZEBROWSKI,  E. BROWN,
   REYES, ARDILA, GALLAHAN, SIMPSON, GANDOLFO, BENDETT,  MCGOWAN,  STECK,
   WALLACE, MAHER, WALSH, RAGA, LEE, PHEFFER AMATO, KELLES -- Multi-Spon-
   sored  by -- M. of A. SIMON -- read once and referred to the Committee
   on Transportation  --  committee  discharged,  bill  amended,  ordered
   reprinted as amended and recommitted to said committee -- ordered to a
   third  reading,  amended and ordered reprinted, retaining its place on
   the order of third reading
 
 AN ACT to amend the vehicle and traffic law, in  relation  to  requiring
   motor  vehicle dealer franchisors to fully compensate franchised motor
   vehicle dealers for warranty service agreements
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subdivision  1  of section 465 of the vehicle and traffic
 law, as amended by chapter 26 of the laws of 2014, is amended to read as
 follows:
   1. Every franchisor shall  properly  fulfill  any  warranty  agreement
 and/or  franchisor's  service contract, INCLUDING BUT NOT LIMITED TO ALL
 WARRANTY  REPAIRS,  EXTENDED  WARRANTY  REPAIRS,   FACTORY   COMPENSATED
 REPAIRS,  RECALLS,  DIAGNOSTICS,  PARTS  AND  OTHER  VOLUNTARY STOP-SELL
 REPAIRS, and shall compensate each of its franchised motor vehicle deal-
 ers for ALL warranty [parts and labor], RECALL, DIAGNOSTIC  LABOR  OPER-
 ATIONS  AND  PARTS  WHERE APPLICABLE in amounts which reflect reasonable
 compensation for such work. FOR PURPOSES  OF  THIS  SECTION,  REASONABLE
              

 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02112-08-4
 A. 4066--B                          2
 
 COMPENSATION  SHALL  BE  THE REASONABLE LABOR TIME ALLOWANCES DEFINED BY
 THE RETAIL LABOR TIME GUIDE REASONABLY UTILIZED BY  A  FRANCHISED  MOTOR
 VEHICLE  DEALER  FOR  NON-WARRANTY  CUSTOMER  PAID LABOR OPERATIONS. All
 warranty claims and/or claims under a franchisor's service contract made
 by  franchised  motor  vehicle  dealers shall be paid within thirty days
 following their approval. For DIAGNOSIS WORK, parts reimbursement, other
 than components, systems, fixtures, appliances, furnishings, accessories
 and features of a house coach that are  designed,  used  and  maintained
 primarily   for   nonvehicular   residential  purposes,  and  for  labor
 reimbursement, reasonable compensation shall not be less than the  price
 and  rate  charged  by  the  franchised  motor  vehicle  dealer for like
 services to non-warranty and/or non-service  contract  customers.    For
 purposes  of  this section, the price and rate charged by the franchised
 motor vehicle dealer for parts may be established by submitting  to  the
 franchisor  one  hundred  sequential  nonwarranty  customer-paid service
 repair orders or the  number  of  sequential  nonwarranty  customer-paid
 service  repair  orders written within a ninety day period, whichever is
 less, covering repairs made no more than one hundred eighty days  before
 the  submission,  and  declaring  the  price and rate, including average
 markup for the franchised motor  vehicle  dealer  as  its  reimbursement
 rate.  The  reimbursement  rate  so declared shall go into effect thirty
 days following the declaration and shall be presumed to  be  reasonable,
 however  a  franchisor  may  rebut such presumption by showing that such
 rate so established is unreasonable in light of  the  practices  of  all
 other franchised motor vehicle dealers in the vicinity offering the same
 line  make.  The  franchised  motor  vehicle  dealer shall not request a
 change in the reimbursement rate more often than once in  each  calendar
 year. In establishing the labor reimbursement rate, the franchisor shall
 not  require a franchised motor vehicle dealer to establish said rate by
 a methodology, or by requiring information, that is unduly burdensome or
 time consuming to provide, including, but not limited to, a  transaction
 by  transaction  calculation.  For  the  purposes  of  this section, the
 following parts or types of repairs shall be  excluded  from  the  parts
 and/or  labor  calculations  and the franchisor's reimbursement require-
 ments under this section: (a) parts sold at wholesale;  (b)  tires;  (c)
 routine  maintenance not covered under any retail customer warranty such
 as fluids, filters and belts not provided in the course of repairs;  (d)
 vehicle  reconditioning; and (e) batteries replaced as part of a routine
 maintenance operation. If the  franchisor  rejects  the  declaration  or
 attempts  to  rebut  the declaration because of an error in the dealer's
 submission, the franchisor shall identify with  specificity  the  reason
 for rejection and identify the error or errors within the submission. In
 the event the franchisor rejects or rebuts the dealer's initial declara-
 tion, the dealer shall have the opportunity, within sixty days to resub-
 mit  the  full and corrected declaration addressing the alleged error or
 errors identified by the franchisor. The franchisor shall respond within
 sixty days. The one hundred eighty day requirement for the repair orders
 shall be stayed from the date of initial submission. In  any  action  or
 proceeding  held pursuant to this subdivision, the franchisor shall have
 the burden of proving that the rate declared by the dealer was unreason-
 able as described in this subdivision and that the  proposed  adjustment
 of  the  average  percentage  markup  or  rejection of the submission is
 reasonable pursuant to the provisions of this subdivision.   A  WARRANTY
 CLAIM TIMELY MADE SHALL NOT BE DEEMED INVALID SOLELY BECAUSE UNAVAILABLE
 PARTS CAUSE ADDITIONAL USE AND MILEAGE ON THE VEHICLE.
   § 2. This act shall take effect immediately.