[J-108-2018]

IN THE SUPREME COURT OF PENNSYLVANIA

MIDDLE DISTRICT

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

GENERAL MOTORS, LLC

v.

BUREAU OF PROFESSIONAL AND 

OCCUPATIONAL AFFAIRS, STATE 

BOARD OF VEHICLE 

MANUFACTURERS, DEALERS AND 

SALESPERSONS

APPEAL OF: BUDD BAER, INC. D/B/A 

BUDD BAER BUICK GMC

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No. 24 MAP 2018

Appeal from the Order of the 

Commonwealth Court at No. 1075 CD 

2016 dated 8/16/17, reconsideration 

denied 10/12/17, reversing the decision 

of the State Board of Vehicle 

Manufacturers, Dealers and 

Salespersons at No. 1325-60-2014 

dated 6/10/16

ARGUED: December 6, 2018

OPINION

CHIEF JUSTICE SAYLOR DECIDED: July 17, 2019

In this appeal, we address a dispute between a motor vehicle and replacement 

parts manufacturer and independently owned and operated franchise dealers

concerning reimbursement for warranty repairs.

At the times relevant to this litigation, the appellants, Baer Buick GMC and Grata 

Chevrolet (“Dealers”), and the appellee, General Motors, LLC, were parties to dealer 

sales and service agreements, per which Dealers sold and serviced vehicles

manufactured by General Motors. Under the contractual terms, Dealers committed to 

performing repairs required by limited warranties extended by General Motors upon 

sales with no additional charge to customers (albeit that the projected cost of such 
[J-108-2018] - 2

repairs was factored into the purchase price for new vehicles).

1

 General Motors was 

then required to reimburse Dealers in accordance with a Service Policies and 

Procedures Manual (the “SPPM”). These commitments extended to qualified vehicles 

that had been sold by Dealers and to those purchased from other dealers. See

Stipulation at ¶¶10-11.

Through the SPPM, General Motors agreed to pay dealers at large for labor

during warranty work under either of two options, denominated “Option A (Retail Rate) 

and Option C (CPI-based).” Stipulation at ¶16. The terms were as follows:

Under Option A, a dealer may establish its “effective” labor 

rate based on an average of its retail rate, subject to certain 

verification requirements.

Under Option C, GM offers to enter into specific labor rate 

agreements with its dealers pursuant to which they agree on 

an initial labor rate for warranty repairs, with a guaranteed 

minimum annual adjustment of at least 2.5% over a three 

year period based on the Consumer Price Index.

Id. at ¶¶17-18. Option C, apparently, was the preferred option among dealers for labor 

reimbursement. See id. at ¶19 (“Many GM dealers choose Option C because its 

guaranteed annual increases allow[] them to budget for their warranty labor rates for 

warranty repairs.”). General Motors’ standard reimbursement policy for parts installed in 

connection with warranty repairs was to pay one hundred and forty percent of the 

dealers’ costs. See id. at ¶23.

 

1 Factual matters are drawn from a stipulation of facts filed by the parties before the 

State Board of Vehicle Manufacturers, Dealers and Salespersons, which has served as 

the factual predicate for all decisions in this case. See Stipulation of Facts dated Feb. 

19, 2016, in Baer Buick GMC v. General Motors LLC, No. 1325-60-2014 (Bd. of Veh. 

Mfrs., Dealers & Salespersons) [hereinafter “Stipulation at ___”]. The litigants agree 

that the questions that have been presented throughout the litigation are entirely ones of 

law.
[J-108-2018] - 3

Apparently, both labor reimbursement alternatives, Options A and C, were 

initially made available to all dealers regardless of whether they sought reimbursement 

for parts under the standard contractual methodology or invoked an alternative rate, 

presumably under a governing regulatory statute. In 2012, however, General Motors

instituted a policy effectively rendering any dealer pursuing an alternative 

reimbursement methodology for calculating warranty parts reimbursement ineligible for 

contractually-based Option C reimbursement for labor. See Stipulation at ¶¶20, 22 

(“Eligibility [for Option C] is contingent on [Dealer’s] continued compliance with GM 

standard parts reimbursement policy.” (quoting the 2014 version of the SPPM)). 

Instead, the SPPM made dealers selecting extra-contractual, retail-rate reimbursement 

for parts eligible for remuneration for the labor component of warranty repairs only 

under Option A.

The business relationship between vehicle manufacturers and dealers is also 

regulated, in Pennsylvania, by the Board of Vehicles Act.2 In 2012, when General 

Motors instituted the policy giving rise to this dispute, manufacturers were required to 

issue a schedule of compensation to extend “reasonable compensation” for warranty 

parts and labor. See 63 P.S. §818.9(b) (repealed). For labor, the statute specified that 

the hourly rate paid to a dealer “shall be no less than the rate charged by the dealer for 

like service to nonwarranty customers for nonwarranty service and repairs at a 

reasonable rate.” Id. Notably, the statute at the time did not equate a retail rate for 

parts reimbursement with the required “reasonable compensation.” 

 

2 Act of Dec. 22, 1983, P.L. 306, No. 84 (as amended 63 P.S. §§818.1-818.37) (the 

“Act”).

Effective October 24, 2019, the enactment has been renumbered and further amended. 

See 63 P.S. §§101-704 (effective Oct. 24, 2019).
[J-108-2018] - 4

The Act was amended in 2013, however, to do so. See 63 P.S. §818.9(a)(2) 

(“Compensation for parts . . . shall be at the dealer’s retail rate.”). The governing 

prescription for labor was also amended to track this language, see id. §818.9(a)(3) 

(“Compensation for labor used in warranty service shall be at the dealer’s retail rate.”), 

and the general expression of a reasonableness nexus was removed. Further, the 

amendments added discrete methods for calculating retail rates, respectively, for parts 

and labor. See id. §818.9(a)(2), (3).

Additionally, the General Assembly added Section 9(b.4) to regulate cost 

recovery by manufacturers, as follows:

(b.4) Recovery.--

(1)(i) A manufacturer or distributor may not recover its costs 

from a dealer within this Commonwealth that does not apply 

to the manufacturer or distributor for retail rate 

reimbursement for parts and labor, including an increase in 

the wholesale price of a vehicle or surcharge imposed on a 

dealer intended to recover the cost of reimbursing a dealer 

for parts and labor under this section.

(ii) A manufacturer or distributor may increase the price for a 

vehicle or part in the normal course of business.

(2) A dealer may elect to revert to the nonretail rate 

reimbursement for parts and labor once in a calendar year to 

avoid a manufacturer or distributor surcharge.

63 P.S. §818.9(b.4). Significantly, although the Act addresses payment of retail rates in 

mandatory terms, see id. §818.9(a)(2), (3), Section 9(b.4)(2) implies, if it does not 

explicate, that dealers are free to accede to payment of contractual rates rather than 

invoking the statutory ones.

In 2014, Dealers sought retail reimbursement for warranty parts pursuant to 

Section 9(a)(2) of the Act while intending to remain enrolled in the contractual, Option C 
[J-108-2018] - 5

reimbursement program for labor. See id. at ¶28. Per the SPPM, however, General 

Motors advised Dealers that it would change their reimbursement for warranty labor 

from Option C to Option A, against their wishes. See id. at ¶42. General Motors also 

conveyed to Dealers that the company intended to impose a discrete cost recovery fee, 

or surcharge, to new vehicle invoices, initially in the amount of $122 per vehicle. See id.

at ¶¶43-45.

Dealers, along with several other franchise dealers, lodged a protest with the 

State Board of Vehicle Manufacturers, Dealers and Salespersons (the “Board”), which is 

charged with administering and enforcing the Act. See 63 P.S. §§818.4(a), 818.8(d)(1). 

Relevantly, with respect to the labor rate, Dealers claimed that General Motors violated 

Section 9(a)(3) of the Act by contractually changing the manner in which it reimburses 

dealers for warranty labor, when Dealers had merely exercised their statutory rights 

concerning reimbursement for warranty parts. They also challenged General Motors’ 

ability to impose a surcharge on dealers that elect the statutory retail reimbursement 

rate for warranty parts but not labor. See id. §818.9(b.4)(1)(i) (providing that a 

manufacturer “may not recover its costs from a dealer . . . that does not apply to the 

manufacturer . . . for retail rate reimbursement for parts and labor. . . .” (emphasis 

added)). According to Dealers, the statute’s plain language did not permit 

manufacturers to impose surcharges when dealers elect statutory reimbursement for 

parts but not labor. See id. §818.9(b.4)(1)(i), (2).

In response, General Motors contended that nothing in the Act guarantees 

dealers the right to participate in Option C, which is purely a matter of contract. 

According to General Motors:

GM is not obligated under Pennsylvania law to offer Option 

C, as it often results in a higher reimbursement rate than the 

dealer’s own retail rate. GM voluntarily offers this program 
[J-108-2018] - 6

because it is administratively convenient for dealers and 

allows them to compete more aggressively for retail repair 

work by maintaining a lower retail labor rate without 

sacrificing the amount they receive for warranty labor 

reimbursement. In exchange for these benefits, however, 

dealers agree that their “[e]ligibility [for Option C] is 

contingent on [their] continued compliance with GM standard 

parts reimbursement policy.” If a dealer instead prefers to 

request retail parts reimbursement rather than accept GM’s 

standard 40% parts markup, it is no longer eligible for Option 

C and reverts to Option A.

Brief for General Motors dated Apr. 8, 2016, in Baer Buick GMC, No. 1325-60-2014, at 

2.

With respect to the surcharge, General Motors recognized that the Act forbids 

cost recovery from dealers that have not chosen to seek retail reimbursement for “parts 

and labor.” 63 P.S. §818.9(b.4)(1)(i). According to the company, however, Dealers did 

not qualify for such safe-harbor protection on account of their selection of the statutory, 

retail rate for parts. General Motors asserted that foreclosing manufacturers from 

recouping costs attendant to warranty repairs lacks economic sensibility. Moreover, 

according to the company, such an approach would contravene the surcharge’s 

reversionary provision. See id. §818.9(b.4)(2) (“A dealer may elect to revert to the 

nonretail rate reimbursement for parts and labor once in a calendar year to avoid a 

manufacturer or distributor surcharge.”). 

After mediation efforts failed to resolve the above issues among the litigants,

3

the 

Board issued a decision, on the stipulated facts, sustaining Dealers’ protest in all 

material respects. Initially, the Board observed that, upon the lodging of a protest, a 

vehicle manufacturer bears the burden to establish that it did not violate any provision of 

the Act. See 63 P.S. §818.8(d)(3). As to the labor-reimbursement rate, the Board 

 

3 Most of the protestant-dealers withdrew from the proceedings at this stage.
[J-108-2018] - 7

discerned no statutory authority that would permit the parties to waive or alter the terms 

of Section 9 of the Act. See Baer Buick GMC v. General Motors LLC, No. 1325-60-

2014, slip op. at 11 (Bd. Veh. Mfrs., Dealers & Salespersons Jun. 10, 2016).4 “[M]ore 

fundamentally,” the Board opined, it was beyond its own authority to adjudicate 

contractual disputes. Id. at 11-12.5 With respect to the surcharge issue, the Board 

concluded that, under Section 9(b.4)(1)(i) of the Act, “surcharge for parts and labor 

warranty reimbursement is permitted only where the dealer has sought both.” Id. at 15 

(footnote omitted).

On General Motors’ subsequent appeal, a divided panel of the Commonwealth 

Court reversed. See General Motors, LLC v. Bureau of Prof’l and Occupational Affairs, 

169 A.3d 681, 688 (Pa. Cmwlth. 2017). As to the labor-reimbursement issue, the 

majority found the Board’s ruling to have been “premised on the supposition that the 

parties may not agree to terms that are not expressly authorized by the Act.” Id. at 685. 

To the contrary, the majority reasoned, the Act does not restrict the ability of the parties 

to contract in such fashion. Rather, the majority explained:

[p]roperly understood, section 9 of the Act provides a 

safeguard for dealers that are dissatisfied with the warranty 

reimbursement available to them under contracts with 

manufacturers. Section 9 creates a statutory level of 

reimbursement that a dealer may rely upon. However, 

section 9 does not preclude manufacturers and dealers from 

contractual agreement to a different arrangement for 

warranty reimbursement.

 

4 The relevant passages of the Board’s opinion fail to reconcile this conclusion with the 

central fact that Dealers’ core claim is to a non-statutory rate of reimbursement for labor.

5 This justification is also tenuous, since a main purport of the Board’s decision is that 

Dealers were entitled to a non-statutory rate of reimbursement identified in Dealers’ 

agreements with General Motors, but which was nevertheless unavailable to Dealers 

under the specified terms of those agreements.
[J-108-2018] - 8

* * *

[The General Motors’ contract] offers Option C 

reimbursement for warranty labor only if a dealer agrees to 

standard reimbursement for warranty parts. Option C is not 

a creation of the Act; it is a creation of the contract, and the 

contract may define Option C eligibility. Section 9(a)(3) of 

the Act offers Protesting Dealers the safeguard of statutory 

retail rate reimbursement for labor if Protesting Dealers are 

dissatisfied with the reimbursement available pursuant to the 

agreement with GM. The Act does not protect Protesting 

Dealers’ access to Option C.

Id. Thus, the majority found that the Board misapprehended the basis for General 

Motors’ conversion of Dealers’ warranty-labor rate from Option C to Option A, see id.

(“GM’s action was grounded in the parties’ agreement, not the Act.”), and erred in 

determining that such conversion violated Section 9(a)(3) of the Act.

The majority turned to whether General Motors violated Section 9(b.4)(1)(i) of the 

Act by imposing surcharges, crediting General Motors’ argument that the statute’s

restriction on cost recovery effectively creates a safe harbor for dealers that do not seek 

any retail rate reimbursement under section 9(a). The majority recognized that the 

statute’s language providing that manufacturers cannot recover costs from dealers that

do not apply for retail rate reimbursement for “parts and labor” was “facially conjunctive.” 

General Motors, 169 A.3d at 687 (quoting 63 P.S. §818.9(b.4)(1)(i)). Nevertheless, the 

majority concluded that the phrase was “susceptible to more than one meaning,” and 

accordingly, it was appropriate to employ tools of statutory construction to discern the 

underlying legislative intent. Id. at 686-87 (reasoning that the material language could 

be read in the conjunctive or as creating a “safe harbor for dealers that do not invoke 

the statute for any retail reimbursement”). 

The majority also found it material that the same “parts and labor” terminology is 

employed in Section 9(b.4)(2) of the Act, which prescribes that “[a] dealer may elect to 
[J-108-2018] - 9

revert to the nonretail rate reimbursement for parts and labor once in a calendar year to 

avoid a manufacturer or distributor surcharge,” 63 P.S. §818.9(b.4)(2) (emphasis 

added). According to the majority:

The self-evident object of section 9(b.4) is to permit 

manufacturers to recover increased costs from a dealer that 

invokes section 9(a) to be reimbursed at a statutorily defined 

retail rate instead of at the rate the parties had agreed upon 

in their contract. This Court cannot identify any policy 

reason that would justify limiting the ability of manufacturers 

to recover under section 9(b.4) only to instances where 

dealers elect to invoke retail rate reimbursement for both 

parts and labor.

General Motors, 169 A.3d at 687. Based on this reasoning, it was the majority’s 

position that treating “parts and labor” in the conjunctive would be inconsistent with the 

object of the Act. As such, the majority presumed that the General Assembly did not 

intend such a result, which it found to be unreasonable. See 1 Pa.C.S. §1922(1). 

Judge Cosgrove authored a dissenting opinion, characterizing the Act as “an 

exercise of [the Commonwealth’s] police power” designed to “prevent frauds, 

impositions and other abuses upon its citizens and to protect and preserve the 

investments and properties of the citizens of this Commonwealth.” Baer Buick GMC, 

169 A.3d at 688 (Cosgrove, J., dissenting) (quoting, indirectly, 49 Pa. Code §19.1). 

Against this backdrop, the dissent reasoned:

[I]t is difficult to see how the Legislature could have intended 

statutory language, which may be subject to two reasonable 

interpretations, to be viewed in a way which favors 

multibillion dollar corporations based in other states (or 

countries) over the protective interests of local automobile 

dealers operating within the Commonwealth.

Id. Judge Cosgrove also criticized the majority for failing to accord deference to the 

Board’s interpretation of the Act, which he opined should be overturned only if clearly 
[J-108-2018] - 10

erroneous. See id. (citing Maggiano v. Pa. State Bd. of Vehicle Mfrs., Dealers, and 

Salespersons, 659 A.2d 1071, 1074 (Pa. Cmwlth. 1995)).

We allowed Dealers’ appeal to consider the two matters of statutory construction 

posed by the Board’s and the Commonwealth Court’s decisions, as well as Dealers’ 

contention that the Commonwealth Court failed to afford appropriate deference to the 

Board. See General Motors, LLC v. Bureau of Prof’l & Occupational Affairs, ___ Pa. 

___, 186 A.3d 937 (2018) (per curiam). 

I. Section 9(a) and Option C

Dealers contend that Section 9(a) of the Act prohibits manufacturers from 

conditioning access to a contractual reimbursement rate on the non-exercise of a 

statutory right, and the contractual ineligibility requirement associated with Option C 

should therefore be deemed invalid to the extent that it impinges on a dealer’s ability to 

exercise its statutory reimbursement options. They explain that the statutory 

compensation rates for parts and labor under the Act are subject to different 

reimbursement methodologies, see 63 P.S. §818.9(a)(2), (3), which they believe reveals

that the two compensation rates are independent options. From this, Dealers reason:

A statutory option is simply not available if a dealer loses 

something by accessing that option. And because the 

General Assembly mandated that the statutory 

reimbursement options be available to dealers, GM has 

violated the Act by conditioning access on the non-exercise 

of a statutory right. 

. . . [T]he contractual and statutory reimbursement options 

must be independent of one another and must each be 

available with no strings attached. By attaching a string to 

the statutory parts reimbursement option, GM violated the 

unambiguous words of the statute.

Brief for Appellants at 25; see also id. at 30-31.
[J-108-2018] - 11

In the event that Section 9(a) is deemed ambiguous in the relevant regards, 

Dealers invoke multiple factors articulated in the Statutory Construction Act, including 

assessment of the occasion and necessity for the statute, the object to be attained, the 

mischief to be remedied, and the consequences of a particular interpretation. See 1 

Pa.C.S. §1921(c)(1), (3), (4), (6). In these regards, Dealers stress the legislative 

purpose to protect dealers from unfair treatment by vehicle manufacturers. See Brief for 

Appellants at 29 (citing Honorable Robert Tomlinson, Senate Co-Sponsorship 

Memorandum for SB 732 (Mar. 4, 2013)); accord Van Wie Chevrolet, Inc. v. General 

Motors, LLC, 38 N.Y.S.3d 662, 666 (N.Y. App. Div. 2016) (discussing a New York 

statutory regime with attributes similar to the Act). According to Dealers, they lack 

equality in bargaining power with General Motors, since for example, “[r]ather than 

contractual reimbursement rates being established through schedules negotiated 

individually between GM and each dealer, they are established through a standard, 

copyrighted [SPPM] generated by GM.” Id. at 31. Dealers thus assert that their 

construction of the Act is supported by the fact that the General Assembly enacted the 

statutory retail rate options in Section 9(a) to afford dealers additional protections 

against abuses by manufacturers. They find the Commonwealth Court’s treatment to 

be contrary to this salutary aim. Dealers also cite Generette v. Donegal Mutual 

Insurance Company, 598 Pa. 505, 957 A.2d 1180 (2008), for the proposition that 

contracts against public policy cannot be enforced. See id. at 522, 957 A.2d at 1191.

Upon review, we credit the Commonwealth Court majority’s analysis and holding 

on the Option C issue on their terms. As General Motors persuasively argues, although 

the Act plainly modifies its contractual relationship with Dealers, nothing in the 

enactment precludes the company from enforcing a preexisting, contractual, incentivebased program, offering more favorable labor reimbursement rates than are available 
[J-108-2018] - 12

under the Act only to those dealers who will accept the company’s standard parts 

reimbursement protocol. And nothing in the contract, beyond a monetary incentive to 

voluntarily refrain from invoking the statutory reimbursement methodology, interferes 

with Dealers’ ability to access the full panoply of benefits made available under the Act. 

Accord Brief for Appellee at 44 (“[T]he Option C eligibility language presents no conflict 

with dealers’ ability to receive statutory reimbursement for warranty parts and labor.”).6

We realize that the Act embodies remedial legislation designed to protect 

Pennsylvania dealers from unfair practices on the part of vehicle manufacturers, amidst 

business relationships with perceived bargaining disparities. Accordingly, the principle 

of statutory construction favoring a broad construction of remedial legislation militates in 

Dealers’ favor. See 1 Pa.C.S. §1928(c). Yet, in the context of statutes altering 

contractual agreements between vehicle manufacturers and dealers, courts have been 

particularly circumspect and careful not to exceed the express prescriptions of the 

governing statute. See, e.g., General Motors Corp. v. Darling’s, 444 F.3d 98, 109 (1st

Cir. 2006) (“Absent a clear mandate from the legislature, we are disinclined to 

unnecessarily interfere with the bargains that have been struck between the 

manufacturers and their distributors.” (citation omitted)).7

 

6

In this regard, we respectfully differ with Justice Mundy’s position that Section 9(a)’s 

requirements for retail-rate reimbursement constitute statutory authority mandating 

General Motors to do something else (i.e., maintain the contractual Option C rate for 

labor reimbursement, despite Dealers’ non-observance of the contractual prerequisite). 

See Concurring and Dissenting Opinion. slip op. at 3. Responsively, we reiterate that 

Section 9(a) simply does not provide for Option C reimbursement.

7 The Darling’s court cited the principle that “statutes in derogation of a natural or 

common right, including statutes that ‘threaten [] to invade an existing property or 

contract right’ must be narrowly interpreted.” Id. (quoting NORMAN J. SINGER,

SUTHERLAND ON STATUTES AND STATUTORY CONSTRUCTION §61:6 (6th ed. 2000)). In 

Pennsylvania, however, the straightforward application of the analogous principle is 

constrained to statutes predating September 1, 1937. See 1 Pa.C.S. §1928(b)(8). 

(continued...)
[J-108-2018] - 13

In terms of judicial deference to the Board’s construction of the Act, Dealers cite 

Alpha Auto Sales, Inc. v. Dep’t of State, Bureau of Prof’l & Occupational Affairs, 537 Pa. 

353, 644 A.2d 153 (1994), for the proposition that “great deference” is due to the Board. 

Id. at 357, 644 A.2d at 155 (quoting Mormak v. UCBR, 135 Pa. Cmwlth. 232, 237, 579 

A.2d 1383, 1385-86 (1990)). This Court has also indicated, however, that the principle

of deference applies with greater force to longstanding agency interpretations, only 

when the language of a statute is ambiguous, and only within the range of agency 

authority and expertise. See, e.g., Nationwide Ins. Co. v. Schneider, 599 Pa. 131, 145, 

960 A.2d 442, 450 (2008) (citing Popowsky v. PUC, 594 Pa. 583, 606, 937 A.2d 1040, 

1054 (2007)); Estate of Loeb, 400 Pa. 368, 373, 162 A.2d 207, 211 (1960). In all 

events, this Court has maintained its role as the final arbiter in matters of statutory 

 

(...continued)

Nevertheless, at least if taken too far, an intrusion upon otherwise vested interests will 

implicate constitutional interests, and thus, it is clear that the Legislature would have 

proceeded with its own circumspection in balancing the important respective rights and 

interests involved in manufacturer-dealer business relationships. Accordingly, and in 

light of the fact that the Act purports only to establish an alternative scheme of 

remuneration available to dealers at their own discretion, we conclude that the principle 

that remedial statutes are to be liberally construed does not operate to effectively strip 

an otherwise discretionary, contract-based incentive program of the material condition 

on which it is premised.

Although, as Justice Mundy notes, Darling was a federal diversity case, the federal 

circuit court plainly expressed its own disinclination to unnecessarily interfere with 

commercial contracts in the absence of a clear legislative mandate. See Darling, 444

F.3d at 109. And certainly the decision would have no less persuasive force had this 

sentiment derived from the Supreme Judicial Court of Maine. As to the assertion, in the 

concurring and dissenting opinion, that Darling was based on legislative silence

whereas the present case involves requirements expressly articulated by the 

Pennsylvania General Assembly, see Concurring and Dissenting Opinion, slip op. at 3, 

we have repeatedly observed that such requirements simply do not pertain to the 

availability of contractual incentives above and beyond the statutorily-prescribed retail 

rates. In other words, both scenarios (Darling and the present case) involve legislative 

silence in the relevant respects.
[J-108-2018] - 14

construction. See, e.g., Colville v. Allegheny Cty. Ret. Bd., 592 Pa. 433, 443 n.4, 926 

A.2d 424, 430 n.4 (2007).8

Here, we agree with Dealers that the question presented ultimately devolves to 

whether the contractual condition attending a dealer’s eligibility for Option C 

reimbursement is void as against a public policy deriving from the Act. However, while 

certainly General Motors bears the burden, under the Act, “to prove it has not violated 

any provision of this act,” 63 P.S. §818.9, we conclude that this allocation does not 

extend to a public-policy-based challenge to enforcement of a contractual provision. 

Indeed, arguably at least, such a challenge would more appropriately have been 

presented in a declaratory judgment proceeding lodged in a court of law. See, e.g., 

Generette, 598 Pa. at 510, 957 A.2d at 1183. But, in any event, there is no evidence in 

the Board’s decision that it applied any particular expertise on the legal question 

presented, and moreover, aspects of its reasoning are infirm. See supra notes 4 & 5. 

Furthermore, the Board’s construction of the Act is not a longstanding one. In these, 

circumstances, and in light of our analysis above, whatever deference is due to the 

 

8 The concurring and dissenting opinion posits that this Court should broadly undertake 

here to resolve whether the conferral of deference to administrative tribunals “is still 

cogent in Pennsylvania.” Concurring and Dissenting Opinion, slip op. at 4. No party to 

this appeal, however, has suggested that we should engage in a wholesale 

reconsideration of the array of principles governing judicial deference in the 

administrative setting. Instead, General Motors’ argument favoring less deference is 

premised on the circumstances at hand -- “where the questions presented are purely 

legal ones, the case was presented on stipulated facts, and the Board possessed no 

specialized expertise superior to that of the Commonwealth Court in reading the plain 

language of a non-technical statute on issues of first impression.” Brief for Appellee at 

24. Our present treatment conforms to the arguments presented.
[J-108-2018] - 15

Board’s construction is surpassed by the weight of our independent legal analysis

pertaining to the Option C issue and Section 9(a) of the Act.

9

In summary, we agree with the Commonwealth Court and General Motors that 

the Act does not create a statutory right for Dealers to participate in the Option C 

program, either by virtue of its plain terms or by implication.

II. Section 9(b.4) and Surcharge

Relative to the interpretation of Section 9(b.4), Dealers criticize the 

Commonwealth Court for construing the conjunctive phrase "parts and labor" as 

disjunctive, i.e., "either parts or labor." According to Dealers, this approach undermines 

the Act's purpose to protect local Pennsylvania dealers. It is Dealers’ position that the 

“parts and labor” can also be read to mean just that in the reversionary clause of 

Section 9(b.4), without creating any material incongruity.

General Motors, on the other hand, maintains that the Legislature intended for 

manufacturers to be able to recoup their costs for warranty repairs, and that the 

Commonwealth Court properly construed the plain language of Section 9(b.4)(1)(i) to 

conclude that General Motors was entitled to recover its increased costs from dealers 

that opt out of the safe harbor by seeking statutory retail reimbursement for warranty 

parts. Reading this subsection in conjunction with the reversionary provision in 

subsection (b.4)(2), the company contends, its approach represents the only reasonable 

interpretation of the phrase "parts and labor."

 

9 General Motors notes as an aside that the Board is disproportionately composed of 

dealer representatives, and indeed, there is no representative of any manufacturer on 

the Board. See Brief for Appellee at 3 n.1 (citing 63 P.S. §818.3(a)). To the degree 

there is any appearance that members of the Board may have a direct or indirect 

financial interest in the outcome of a case, this circumstance obviously makes the 

affordance of deference less comfortable for a neutral judiciary.
[J-108-2018] - 16

As related by a prominent commentator, “[t]he terms ‘and’ and ‘or’ are often 

misused in statutes.” NORMAN SINGER, 1A SUTHERLAND STATUTORY CONSTRUCTION

§21:14 (7th ed. 2018). But, by this point in time at least, the Legislature should be no 

less aware of the problem than we are, and accordingly, in the absence of a result that 

is unreasonable, absurd, or incapable of execution, this Court has generally taken “and” 

to mean “and” and “or” to mean “or.” See, e.g., Garratt v. City of Phila., 387 Pa. 442, 

445-46, 127 A.2d 738, 740 (1956).10 See generally HON. ANTONIN SCALIA & BRYAN A.

GARNER, READING LAW 117 (2012) (explaining that, ordinarily, the conjunction “and” 

“entails an express or implied both before the first element.” (emphasis in original)). 

Thus, in the context of Section 9(b.4)(1)(i), we read the phrase “parts and labor” to 

mean both parts and labor, and we credit Dealers’ argument that a manufacturer cannot 

impose a surcharge on a dealer that does not apply for retail-rate reimbursement for 

both. See 63 P.S. §818.9(b.4)(1)(i).

In terms of Section 9(b.4)(2)’s reversionary clause, we also agree with Dealers 

that the treatment of “parts and labor” in that section to mean both parts and labor does 

not create a result that is absurd, unreasonable, or incapable of execution. From our

point of view, the Act appears to be somewhat of a blunt instrument in its protective 

provisions, since, for example, it does not require an inquiry into the impact of the 

statutory calculation of reimbursement rates and regulation cost recovery on 

manufacturers’ or dealers’ profit margins. The statute also does not require any 

 

10 For a contrary view reflecting a more flexible approach to the interchangeability of 

“and” and “or,” see, for example, R.A. Peacock v. Lubbock Compress Company, 252 

F.2d 892, 893-95 (5th Cir. 1958).
[J-108-2018] - 17

assessment of the impact of any vehicle pricing adjustments that may result from a 

manufacturer’s inability to impose surcharges on competitiveness or profitability.11

Nevertheless, in response to General Motors’ arguments about economic 

sensibility, we observe that “[t]he vast majority of states regulate the price of warranty 

reimbursement payments to automobile dealers, and over a dozen states have enacted 

. . . recoupment prohibitions.” Alliance of Auto. Mfrs., Inc. v. Currey, 984 F. Supp. 2d 

32, 56 (D. Conn. 2013). Furthermore, neither the Legislature nor the parties in their 

stipulation have probed the economics in any fashion beyond the employment of

abstract terms, and therefore, we have little means of making a concrete, independent 

assessment at this time.

12

 And, in such a landscape, we are unable to brand the 

General Assembly’s decision to tie both the availability of a surcharge and reversion to 

dealer choices relative to both parts and labor to be unreasonable, absurd, or incapable 

of execution.

The order of the Commonwealth Court is affirmed as it relates to Section 9(a) 

and reversed as concerns Section 9(b.4)(1)(i).13

 

11 Section 9(b.4)(1)(ii) allows that “[a] manufacturer or distributor may increase the price 

for a vehicle or part in the normal course of business.” 63 P.S. §818.9(b.4)(1)(ii).

12 Of course, the General Assembly very well may have considered information about 

profitability and competition in the legislative process giving rise to the 2013 

amendments to the Act.

13 By Order, dated November 15, 2018, Appellant Mel Grata Chevrolet, Inc. was 

dismissed from the present proceedings, and our present Order should be read 

accordingly.
[J-108-2018] - 18

Justices Todd, Donohue, Dougherty and Wecht join the opinion.

Justice Mundy files a concurring and dissenting opinion.

Justice Baer did not participate in the consideration or decision of this case.