to repleat palisades claim under subdivision g of the of the new york franchise motor vehicle dealer act the district court heard in three ways first it adopted the reasoning of the district court in beck chevrolet when it held the local consumer preferences do not need to be taken into account when setting sales objectives in the incentive program at issue the new york high court has since rejected that reasoning an answer to certify questions from this court and rejected the very metric upon which votes wagon sets it commentators have noted exhibits extreme discontinuity with the robinson papen act third the disc district court misconstrue the second department's holding an audio smithtown with respect to the issue of the safe harbor under the statute which is the price differences will w be acceptable if they are reasonably available to all dealers in the state on a proportionally equal basis those are the three broad areas with the district court heard with respect to local consumer preferences the new york high court expressly rejected the reasoning of the and beck chevrolet and by extension the reasoning of the district court in this case the new york court of appeals held that it was unfair unreasonable an arbitrary for general motors in the back chevrolet case to evaluate a dealer sales performance  soley on a state market share adjusted only for segment popularity and not taking into account any other local market conditions and consumer preferences most notably the court in that chevrolet mentioned brand preference the court held  first sales performance standard to pass muster it must take into account local consumer preferences and local market challenges including brand preference that alone is dispositive i believe of the district courts of appeal the very same metric at issue in that chevrolet is that issue here the only difference is volkswagen uses regional market share and general motors you state market share otherwise the metric is the same a metric that may be the same but the purpose of the s subsection is quite distinct because back then we're talking about taking away somebody's franchise and here we're talking about an incentive program and made pla they did that the courts don't want to get involved in micromanaging that one sentence but that's at the very next good sense for you but the very next sentence is a very good sense for me where it says that where it where the new york legislature has decided to regulate the courts will step in to regulate the court the new york legislature has regulated price differences not price discrimination we're going to use a shorthand but price differences a metric that the new york court of appeals has already found to be unfair unreasonable an arbitrary to evaluate sales performance suffers all the same legal infirmities but it's also used to set a sales objective and a program that affects right let's take this one hypothetically are you're saying that it was it was a reasonable not to take into account regional or local customer preferences as to whether to buy a german cars for example right but should they take into consideration whether  there's a bias against a cars from asia or korea as well should they consider vehicle size because some you know lines of cars are big and some small should they  cars or good local transportation it seems to me when you get into the area of customer preference it becomes almost impossible to to have address the registration knows the customer from the citrus purchase this car knows whether it's a high performance car knows whether it's a german or knows whether it's an asian when you drive the fact that in west chester the buyers seem not to like or enter and are only taking into account segment popularity you're missing a large portion of the of of what the consumer preference is out there and those are in the you know court of appeals was very specific and it said we turn to you as makers retirement arkansas or made in japan is considered a foreign brand name plate but all of this data is available so the idea that it can't be adjusted for simply not true that we could be just that from the things that i mentioned exactly or it can be adjusted for they are going to feel says you have to adjust for that's exactly what the new york think that would lead to a bit of litigation don't you think that would lead to enough litigation so that companies would basically say it doesn't make any sense for us to offer price incentives and that that hurts all the different brands have their own version of a price incentive program not all of them in fact most don't run afoul of the state laws like new york subdivision gee here this particular piece of a dead end and back says you know decisions about how best to improve the quality of dealerships and increase the sales involve business judgment rightly have to franchise stores and not the courts and the very next sentence says but where the court when the legislature has specifically regulated an area and given it to the courts to to pass judgment on that the courts will step in this subdivision she is just like subdivision g g they both are or areas where the new york legislature has expressly except at the  those of the new dealers and they were preferred they were preferred over everybody else regardless of how they performed or what they did but the the fact that new dealers because they didn't have incoming nice returns and they could not have a lease buyback off lease purchase requirement that was not the reason that the that the second department found the program illegal it was not simply that there had there was a different standard the had to be a different standard because new dealers don't have a portfolio of leases coming back and the reason why the program failed was because the it was much more difficult and more expensive for existing dealers to earn the money that is what the second department focused on and this goes to the very very poor what the plaintiffs dealers and how do you smithtown earn bonus they receive the money and the normally robinson peven that would be that would be fatal to the case that would be the functional availability test the fact that those plaintiff dealers earned the bonus got the money but it was still legal because they had to pay more to earn the bonus it was more difficult for them to earn the bonus shows that the test under the statute is a very narrow safe harbor it's not a broad safe harbor here there are two very important factors what we just spoke about where the brand preferences are or against without without a fully developed factual record we knew that the that the objectives for less were lower we knew that it had a small territory we don't know why volkswagen that we don't know the reasons behind it that's what your brief says it's because it has a vacant territory next to it but the reason have unassigned territory right next to it that gave it a specific an unfair advantage as opposed to dealers who didn't have it thank you  good morning routers my name is randy rather i'm here today on behalf of going to america i think we believe that there are two fundamental problems with the position that appellant palisades is taking this case the first one really goes back to the interpretation of the statute that they are giving this court and the second one deals with the pleading issues that are issue in the court i talk about each of those one is the statutory interpretation and the other one is dealing with the pleading issue as a matter of statutory interpretation the position that the appellant is taking in this case is that the statute the safe harbor in section four sixty three to g requires a manufacturer to set up incentive program such that it provides absolute equality of opportunity to every one of its dealers in other words their position is that in order for the safe harbor to apply it must be no safe harbor there must be no safe harbor because the only way they're saying any time any dealer must have to sweat harder than any other dealer has to sweat it then the safe harbor doesn't apply and i think is the jacobs as you pointed out during the the the earlier part of this argument that as a practical matter there is no way a manufacturer ever could know ahead of time what other factors might come into play that may be but it looks like i mean it looks like you're fooling between two stools because on one hand you have back which said you have to consider consumer preference for things like the very things that are an issue in this case and on the other hand you have the only case which which treats that kind of thing is applicable to two incentives and incentives where some dealers have a big advantage over others but i think address each of those cases because i do think you know by all means but treat them together because that's what your adversaries doing he says he's relying on two cases and if you put the put them together i mean i can try to put them together you have start let me start with back first and  do you smithtown the the fundamental point of beck was that the court could determine as a matter of law that the use of this market share standard was unlawful with respect to a particular new york statute for sixty three to g g makes it unlawful for a manufacturer to use an under reasonable performance standard when it is determining whether a dealer is complying with a deal or agree so what the new york court of appeal said was in the context of that particular statute when the question is whether the standard is being used to terminate a dealer's compliance with a deal or agreement whether that standard is reason or not we're not going to be a question of fact we're going to make it a question of law but then the wording does seem that it's not identical between g and g g but it's simply well i think one regulates the standard is the standard itself reasonable the other by the way regulates price discrimination and then creates a a creates a safe harbor and the safe harbor says if it's reasonably available on a proportionally equal basis the incentive program is entitled to the safe harbor sure which they have identified if they defined them stearns that they didn't but i think that the question with their this is where i think the the language in fact you're pointing out comes into play with respect to the safe harbor we believe it should be a question of fact is this incentive recently attainable by the dealer that when back has the language in its decision that says we're not to regulate what a manufacturer does how a french us trying tries or runs respites affairs i think what they are trying to say is that in the context of determining compliance with the dealer agreement we will apply a per se rule however in other contexts we are not going to tell the court to substitute a question of fact for a fact finder for a question of law as a per se matter this is a matter of fact for a fact finder because in that case you're headed for a jury trial i think if they can plead the case which i do not believe they have we can talk about in a moment but i think the question is whether is reasonably available is a question of fact and if you take a look at the language that this mccrory makes a lot of at the end of that quote that you read about the fact that the legislature has chosen to regulate in certain areas i believe the sentence there is  u can find the nevertheless legislature by its neck of the dealer act as a term and it is in the interest of the state to subject the franchise with performance standards to statutory limits or to prevent unfair business practices and is seen fit to place review franchise or standard squarely within the authority of the courts that is referring specifically to the language of four sixty three two g g for the legislature has set a performance standard for purposes of determining compliance is subject to a review of reasonableness and the court applied a per se standard under four sixty three two g the price discrimination statute the question is not a matter of law but the question is a matter of fact is the standard recently attainable by the deal i think if we then move on to the smithtown case which is the the other one that you referred to let me take a step back as i as i get into that i think the we make much in the briefs about how the promise of reasonable for the dealer to be able to attain it and second of all it has to be proportionally equal to the concept of proportionate what has the proportion the qualification eligibility criteria within the program needs to be proportionally proportionate to wow so as an example a well that's a very good question and i think the statute does not indicate what it needs to be proportionally equal to i think the question is is the statute made proportionally equal to something relevant and then that's where the robinson patent case law comes in very importantly because robinson patent focuses on size the purpose of price discrimination is to make sure by and discounts are not given to large dealers formula when you measure between dealers if you take a look at the situation in the smithtown case and there's a quote here that the smithtown case did not find that the problem with the audi program there was the fact that it was easier for one dealer to meet the o program to new automobile dealers is proportionally similar to the bonus offered to existing years in other words it wasn't one measurement applied between the dealers that got very because of sums from a formula that uniformly non descript was applied the issue was there were two different programs two different standards and what the smithtown case found was that when you wind up having an incentive program that has two different standards that apply there's no way  program can be proportionate it just cannot be so the question we believe that the statute does not stand for the proposition that the court should look at whether or not it's easier for one dealer than another to meet the standard and that's the criteria for  harbor but instead first of all is the standard adjusted be tween dealers if it's easier for one dealer to meet the standard than another because it sells more cars and that would seem to run afoul of what understand i think what's not proportionate would be in a center program that says if a dealer sells one hundred cars the dealer earns incentive and that applies to every dealer regardless of the dealer size there's no proportion the size of their territory yes let's just say yeah any dealer anywhere in the united states of america that sells one hundred cars during a given month earns the bonus that's not proportion there's no there's no factor that varies between dealers that's taken into account and no factors take into account and some sort of form of nondiscriminatory formulaic matter market share when you look at market share and you look at the fact that  norco from one dealer may be bigger and the market for another deal or maybe smaller and then you go ahead and modify the dealer sells objective based upon the size of the market based upon a uniformly nondiscriminatory formula what you do is you have a proportionate standard and that's i believe the r j reynolds case gets into that point that proportionality there's a there's a presumption of proportionality a presumption of proportionality when you have a measurement that varies between dealers that's taken into account and send a standard based upon a uniform formula how it's done we believe what the statute here says is this first of all in setting case an objective hundred sent a program the first question is whether or not the standard has been adjusted between dealers on a proportion of basis and second after it's been adjusted a proportion of basis is it reasonable for the dealer to be tane that standard so is it proportionate in some manner based on some some objective fact and second of all after so adjusted is reasonably attainable by the dealer i would say you're rewriting the statute because there are no definition yes what you're saying is plausible but it's you're writing a statute that would make perfect sense and i'm not altogether sure that's the statute we're looking at i think it makes sense plain language out of reason understood i think that when you take a look at the purpose of the robinson and act in the language on price discrimination itself i think that you see the purpose of statute is the same with respect to regulating price what i want to point out for you i think this is important in their brace and their opening brief appellants actually say that the new york dealer at the new york dealer act is comparable to section thirteen  referring to both thirteen d and e by either explicit statutory language explicit statutory language incorporate the functional availability of defense in almost similar identica then take a look at how function availability has been applied in practice it supports the interpretation of the statute that i think i spoke about a few moments ago thank you thank you  thank you i do agree with counsel i want to porton point was when he said that these are questions of fact this was a motion to dismiss and a denial of leave to repleat i agree that these are questions of fact and for that again that reason alone this this decision should be reversed in no uncertain terms those who can put their thumb on the scale in favor of lash and that is tests to make them equal or at least have an equal opportunity to achieve the benefit of the program and they normally are but not in this case it is the it is the unassigned territory the open point next to last that takes it out of that normalized scenario where you have an assigned territory next to a dealer that dealer is closer to the territory has a sales advantage to sell into that territory but no responsibility for that territory it doesn't increase their sales objectives but it does i think was very clear in that it said that the program at issue the c p o purchase bonus program did not satisfy the safe harbor for for a variety of reasons most of which is because it cost it was more difficult because it cost the existing dealers more to earn the money and there were other structural factors for example the the sales objective that the new dealers had provided a structural advantage because they could they could only buy the hot cars and  sales objective more easily than and than an existing dealer so it was most definitely about the comparative ease in which different dealers can earn the the money i'm not saying and country would counsel said i'm not saying they have to be exactly