Opinion ID: 537190
Heading Depth: 3
Heading Rank: 2

Heading: Other Requirements

Text: 39 GM claims that it is inconceivable that the FTC intended to permit state regulation of issues covered by the Consent Order in light of its having negotiated a detailed agreement, having gone through a lengthy comment process, and having resolved debated issues about the decree. We draw the opposite inference. 40 When Congress legislates in a field traditionally occupied by the states, we start with the assumption that the historic police powers of the States were not to be superseded by [federal law and agency action] unless that was the clear and manifest purpose of Congress. Pacific Gas & Electric Co. v. Energy Resources Comm'n, 461 U.S. 190, 206, 103 S.Ct. 1713, 1723, 75 L.Ed.2d 752 (1983) (quoting Rice v. Sante Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947). Preemption is not lightly to be presumed. California Federal Savings, 479 U.S. at 272, 107 S.Ct. at 685. Because consumer protection law is a field traditionally regulated by the states, compelling evidence of an intention to preempt is required in this area. See Envtl. Encapsulating Corp. v. City of New York, 855 F.2d 48, 58 (2d Cir.1988); Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. Abrams, 697 F.Supp. 726, 730 (S.D.N.Y.1988). As the Supreme Court has cautioned: 41 To infer pre-emption whenever an agency deals with a problem comprehensively is virtually tantamount to saying that whenever a federal agency decides to step into a field, its regulations will be exclusive. Such a rule, of course, would be inconsistent with the federal-state balance embodied in our Supremacy Clause jurisprudence. 42 Hillsborough County, 471 U.S. at 717, 105 S.Ct. at 2377. This concern is reinforced by the imbalance that a finding of preemption would create among car manufacturers. If we read the Consent Order to preclude all state regulation of the GM-BBB arbitration program, GM would gain an immunity from state law while manufacturers who establish voluntary dispute resolution mechanisms would have to comply with the Lemon Law. 8 Although we are mindful that the GM-BBB program was intended to be experimental, we are unable to infer that the FTC Order also intended to grant GM such special insulation. 43 Moreover, the references to state law found in the documents incorporated into the Consent Order indicate that the FTC did not intend the Order to occupy the field of consumer warranty law and arbitration between GM and its disgruntled consumers. Conceivably, the boilerplate reference to state law found in Section 3 of the BBB rules may encompass only choice of procedural laws governing arbitration. GM's claim, however, that Section 27B of the BBB Rules which provides that an arbitrator may make any fair and equitable decision provided state law does not prohibit all or part of that decision only refers to substantive law outside the context of the arbitration process seems strained: 44 This provision means that no decision can require any party to perform an action that would put the party in jeopardy under any other law. For example, if an arbitrator decides a vehicle would achieve better fuel economy if the catalytic converter were removed, he may not award the removal of the catalytic converter in contravention of state law. Similarly, an arbitrator could not order seat belts removed as part of a remedy, where cars were required to have them. Again, however, this provision does not and is not intended to substitute state substantive law for the sense of fairness judgment of the arbitrator as to what remedy, if any is appropriate. Affidavit of Dean W. Determan. 9 45 Determan's first and last statements are contradicted by the examples on which he relies. While his scenarios may be correct, we fail to discern in Section 27B a distinction between state law which establishes a manufacturer's obligations with respect to the safety features (personal or environmental) of a car and state law which establishes a manufacturer's duties with respect to remedying defects. In our view, for example, it should follow logically from these illustrations that an arbitrator should not be allowed to award the fair value of a defective transmission on the fifth attempt at repair--an arguably equitable award--where state law requires a full refund or replacement of the lemon vehicle after the fourth attempt. 46 Nor do we find compliance with both the decisional criteria under the Lemon Law and the FTC Consent Order impossible. Under the FTC Order, arbitrators are free to make common sense adjudications based on their own sense of fairness. Certainly in some circumstances an untrained arbitrator in the manufacturer's program which sets no guidelines might arrive at an award other than that prescribed under the Lemon Law. A mere difference in results, however, does not render the two schemes incompatible. In addition, we note that the Lemon Law supplies specific statutory standards and relief only in the limited area of lemons. While establishing what constitutes a reasonable number of repair attempts and prescribing the terms of automatic redress (i.e., refund or replacement), the Statute, like the FTC order, otherwise defers to the discretion of the arbitrator in fashioning appropriate relief. 47 It follows from our analysis that the Lemon Law requirements of training and additional recordkeeping are not preempted. The New York Statute merely requires that arbitrators be trained in arbitration and familiar with the Law's provisions. There is no requirement that they be formal or professional arbitrators in conflict with the Consent Order. The recordkeeping requirements of section 198-a(m)(3) are not in conflict with the extensive reporting requirements under the Consent Order. 48 Ostensibly, the purpose of the FTC Consent Order is to assure consumers fair and equitable treatment when submitting complaints about a vehicle's performance to GM's arbitration program. GM does not argue that application of the Lemon Law standards of liability and redress necessarily would be unfair or inequitable. Instead, GM argues that the state legislation is preempted because it disrupts the goal of nationwide uniformity engendered in the Order and violates the specific compromise that was struck in the bargaining process. We reject each of these arguments for similar reasons. 49 While the Order calls for a nationwide program, it does not mention the word uniform. Because the goal of consumer protection can be achieved without resort to nationwide uniformity, we decline to equate the two by inferring the latter. Similarly, we do not accept GM's argument that the Lemon Law is inconsistent with the FTC Consent Order because the Order struck a specific compromise--standardless resolution binding only on GM--in lieu of a broad sweeping program of automatic redress designed to aid consumers. While the compromise that was struck did not include federal uniform standards of fairness and equity, there is no evidence that it precluded further regulation by the states. 50 Before concluding, we pause to give further consideration to the objections of our colleague. According to Judge Winter, GM's establishment of an arbitration program appears to be mandatory.... [which] appears to be the result of sheer happenstance in legislative drafting.... This view is clearly contrary to the record and to the all-inclusive language of section 198-a(g). Indeed, GM chose to enter into a consent order with the FTC, mandating the implementation of a nationwide third-party arbitration program, to avoid unpleasant litigation arising out of the FTC's 1980 complaint. Neither intentionally nor inadvertently has New York singled out GM for disparate treatment. Any manufacturer that places itself in a similar situation would be subject to the same requirements. 51 The dissenting opinion also argues that the issue before us is not the traditional preemption question of whether a federal policy or procedure invalidates a state policy or procedure.... [but] whether New York is unnecessarily interfering with a federal remedial procedure. We fail to discern anything novel or untraditional in this restatement of the law. Moreover, dual state and federal regulation in a given area may assume various forms; e.g., the state regulation may operate in tandem with or independent of the federal law. The instant FTC Consent Order does not indicate any intent to insulate GM's program from supplementation by state regulation. Since the Lemon Law primarily supplies standards for what is fair and equitable, application of its standards and remedies (which leave wide discretion to the arbitrator) by arbitrators in the GM program does not unnecessarily interfere with the open-ended federal remedial measures. 52 Finally, we emphasize our belief that the result we reach is principled and fair--not mischie[vous], as the dissenter unwisely characterizes it. Companies will not be dissuaded from entering into consent decrees involving BBB arbitration because of our decision. Rather, they will be mindful of the need to bargain for preemption in the specific compromises they reach.