Opinion ID: 2762418
Heading Depth: 2
Heading Rank: 3

Heading: The Statutory History of Section 4517.52

Text: The statutory history of § 4517.52 provides supports for Chrysler’s position. As the district court points out, when § 4517.52 was amended in 1987, key language specifying that reimbursement for warranty labor and parts take into account labor times was omitted. The original version of the statute, enacted in 1979, provided as follows: A) Each [manufacturer] shall adequately and fairly compensate each of its [dealers] for labor and parts used to fulfill warranty and recall obligations of repair and servicing. Each [manufacturer] shall file a copy of its warranty and recall reimbursement schedules or formulas with the motor vehicle dealer board. The schedules or formulas shall be reasonable for the warranty and recall work, reimbursement procedures and all other conditions of such obligations. The reasonableness of the schedules or formulas shall be subject to the determination of the board, when a [dealer] or dealer organization files a notice of protest with the board. B) In determining the adequacy and fairness of a [manufacturer’s] warranty and recall reimbursement schedules or formulas, the principal factors to be considered by the board shall be the prevailing wage rates being paid by the franchisee in the community in which the franchisee is doing business; except that the compensation of a franchisee for warranty and recall service and parts shall not be at less than the rates charged by the franchisee to its retail customers for like service and parts for nonwarranty work. The schedules or formulas shall include a reasonable allowance of time for the diagnosis and performance of repairs by a technician of ordinary skill. Ohio Rev. Code Ann. § 4517.52 (1979) (current version at Ohio Rev. Stat. Ann. § 4517.52(B) (2010)). In contrast, the pertinent section of the current statute was amended in 1987 and 2010, in the latter instance adding language that precedes and succeeds the language at issue in this appeal. The full 2010 version provides: A) Each [manufacturer] shall fulfill warranty and recall obligations of repairing and servicing motor vehicles, including all parts and components manufactured for installation in any motor vehicle. B) Each [manufacturer] shall compensate each of its [dealers] for labor and parts used to fulfill warranty and recall obligations of repair and servicing at rates not less than the rates charged by the [dealer] to its retail customers for like service and parts for nonwarranty work. C) Division A of this section shall not apply to [manufacturers] or [dealers] who deal in recreational vehicles. -12- No. 14-3119, Kings Dodge, Inc. v. Chrysler Group, LLC Ohio Rev. Code Ann. § 4517.52. As Chrysler points out, the earlier version of the statute made a distinction between “wage rates” and a reasonable “allowance of time” to perform a given repair; the 1987 amendments omitted these references. Moreover, the same legislature retained similar language in the succeeding section, addressing the delivery of new vehicles. That provision calls for a compensation schedule that “shall be reasonable with respect to the time and compensation allowed,” with the presumption that a schedule is unreasonable if it does not compensate the dealer at its “customary retail labor rate for the actual time required by a technician of ordinary skill to perform” the necessary work. Ohio Rev. Code Ann. § 4517.53. An interpreting court should avoid reading deleted language back into the statute, and should “presume that the amendments were made to change the effect and operation of the law.” Kings Dodge, Inc., 2013 U.S. Dist. LEXIS 168756, at  (citing Lynch v. Gallia Cnty. Bd. of Commrs., 680 N.E.2d 1222, 1224 (Ohio 1997)). A legislature will be considered to “act intentionally and purposely when it includes particular language in one section of a statute but omits it in another.” NACCO Indus., Inc. v. Tracy, 681 N.E.2d 900, 902 (Ohio 1997). Tenets of statutory construction suggest that Chrysler’s reading of the statute is appropriate. It should be noted, however, that there is legislative history that is favorable to Kings Dodge, and more in keeping with the remedial purpose of this and similar statutes. See New Motor Vehicle Bd. Of California v. Orrin W. Fox Co., 439 U.S. 96, 101-02 (1978) (observing that the “disparity in bargaining power between manufacturers and their dealer prompted Congress and some [twenty five] states to protect retail car dealers from perceived abusive and oppressive acts by the manufacturers”); Liberty Lincoln-Mercury v. Ford Motor Co., 134 F.3d 557, 565 n.6 (3rd Cir. 1998) (holding that an analogous New Jersey statute protected dealers and that the resulting rule “recognizes the unique hardships associated with warranty -13- No. 14-3119, Kings Dodge, Inc. v. Chrysler Group, LLC losses due to the dealer’s lack of control over the terms of warranty transactions”); Jim White Agency Co., 126 F.3d at 836 (describing § 4517.52 as legislation “promoting public welfare by counteracting the economic power of the automobile manufacturers, and purportedly past abuses”); Acadia Motors, Inc. v. Ford Motor Co., 44 F.3d 1050, 1056 (1st Cir. 1995) (observing that the legislature explained that such statutes address the situation in which “non-warranty customers have subsidized automakers who were unwilling to pay the fair and full price for repairs made necessary when their automobiles failed to meet warranty standards”); Earl Evans Chevrolet, Inc. v. Gen. Motors Corp., 598 N.E.2d 1187, 1193 (Ohio Ct. App. 1991) (describing § 4517.52 as “remedial and … therefore to be liberally construed to promote” remedies and means dealers who have been mistreated by manufacturers). These cases present strong policy arguments favoring the position of Kings Dodge. Even so, such concerns are for legislative determination, and the evidence of the amendments made by the legislature in 1987 supports Chrysler’s position. The rules of statutory construction lead us to hold that Chrysler’s warranty reimbursement policy does not violate § 4517.52 as it is currently written. D. Kings Dodge’s Particularized Claims for Reimbursement Finding no violation of § 4517.52(B), we do not reach Kings Dodge’s claim regarding the sufficiency of its actions to obtain relief under § 4517.52 for Chrysler’s refusal to reimburse Kings Dodge for the total hours it allotted for warranty repair work. Under the terms of the Dealer Agreements and Dealer Policy Manual, Chrysler has the right to determine the length of time allotted for warranty repair reimbursements. However, because the statute governs Chrysler’s reimbursement for warranty parts, we will address Kings Dodge’s argument that its August 30, 2011 letter placed Chrysler on notice of its request for an increase in the reimbursement rate for parts. -14- No. 14-3119, Kings Dodge, Inc. v. Chrysler Group, LLC The Motor Vehicle Dealer Act, of which § 4517.52 is a part, has been interpreted in the Sixth Circuit as “requiring the dealer to present the appropriate claim to the manufacturer, and then requiring that the manufacturer pay the presented claim.” Jim White Agency Co., 126 F.3d at 836. With regard to requests for increased reimbursement rates for parts used in warranty repairs, the district court for the Northern District of Ohio has held that a plaintiff must prove, by a preponderance of the evidence, that: (1) Defendant reimbursed Plaintiff for parts used in warranty repairs at a rate that is less than Plaintiff’s retail rate for parts used in nonwarranty repairs; (2) Plaintiff informed Defendant that it believed that Defendant was not reimbursing it for parts used in warranty repairs at its retail rate for like parts; and (3) Plaintiff provided reasonable verification of its claimed retail rate for like parts to Defendant before filing a legal action claiming that Defendant violated Section 4517.54 R&R, Inc. v. Volvo Trucks N. Am., Inc., No. 4:06cv287, 2007 U.S. Dist. LEXIS 13583, at  (N.D. Ohio Feb. 28, 2007). We find that in the Fall of 2011 Kings Dodge did not present Chrysler with an “appropriate claim” regarding parts reimbursement practices that was sufficient to justify retroactive payment of the parts reimbursement rate agreed to in the Spring of 2013. Jim White Agency Co., 126 F.3d at 836. In Mr. Reichert’s letter of August 30, 2011, Kings Dodge noted that it wished to be paid at retail rates for all warranty repairs and that it charged “retail price for replacement parts.” However, when Kings Dodge submitted its materials to Chrysler in September, 2011, the accompanying letter made no reference to reimbursement rates for parts and only requested a warranty labor rate increase to $84.78 per hour. Mr. Reichert’s email of November 18, 2011 also fails to address the issue of reimbursement for parts used in warranty work. Only in the Spring of 2013, during the pendency of this litigation, did Kings Dodge follow the procedures in Chrysler’s Dealer Policy Manual—analogous to those for obtaining a -15- No. 14-3119, Kings Dodge, Inc. v. Chrysler Group, LLC warranty labor reimbursement increase—and submit another set of repair orders to specifically request an increase in the reimbursement rate for parts. At that point, Chrysler increased its reimbursement rate to dealer cost plus 59.13%, effective July 14, 2013. Although Kings Dodge has demonstrated that Chrysler’s reimbursement rate was below the retail rate for parts used in nonwarranty repairs, Kings Dodge has not submitted evidence proving, by a preponderance, that it presented a particularized claim to Chrysler requesting an increase in its warranty parts reimbursements, or that it provided Chrysler with “reasonable verification” of its claimed retail rate prior to its submissions in the Spring of 2013. R&R, Inc., 2007 U.S. Dist. LEXIS 13583, at . The claim of Kings Dodge for retroactive reimbursement fails.