Opinion ID: 202158
Heading Depth: 3
Heading Rank: 2

Heading: Darling's effective labor rate

Text: 45 Darling's argued below that GM violated § 1176 by refusing to increase Darling's approved warranty reimbursement labor rate used by WINS in the initial step of the reimbursement process. As explained above, the labor rate used by WINS is calculated by averaging the labor rates charged in 100 sequential non-warranty repairs. GM calls it the effective labor rate. Darling's submitted an application requesting an increase in its effective labor rate from $48.95 to $52.00 per hour to reflect its posted labor rate, but the paperwork submitted by Darling's only supported an increase to $51.58. GM indicated to Darling's that it would increase Darling's labor rate to $51.58 upon submission of a revised warranty labor rate application, but Darling's never filed a revision. 46 The district court upheld GM's refusal to increase Darling's labor rate to $52.00. The court noted that since GM's multi-step reimbursement system is permissible under § 1176, the issue of GM's `refusal' to increase Darling's labor rate in the initial reimbursement stage is probative only as to whether GM has complicated the reimbursement process to the extent that dealers are discouraged from making supplemental claims. GM-Darling's I, 324 F.Supp.2d at 272. Because Darling's did not allege that GM failed to reimburse Darling's at its full labor rate following submission of its supplemental claims, the court concluded that the evidence did not support such a conclusion. The court also noted that GM had expressed a willingness to increase Darling's labor rate following its submission of a revised application, and the court found that the administrative burden of submitting such a revised application would be virtually nonexistent. Id. 47 On appeal, Darling's focuses on GM's practice of calculating the initial WINS reimbursement based on Darling's effective or average rate. Essentially repeating its argument that GM must reimburse its Maine dealers in a single step, Darling's contends that the statute does not contemplate payments at the effective rate, but rather, requires that its labor costs be reimbursed at the customary retail rate only. Because it has established its customary retail labor rate by posting its labor rates in a place conspicuous to its service customers, see Me.Rev.Stat. Ann. tit. 10, § 1176; id. tit. 29-A, § 1805, Darling's argues that GM must reimburse at that rate. Darling's further argues that GM's initial use of an effective rate amounts to arbitrary and capricious behavior because the evidence establishes that WINS is capable of assigning a unique labor rate to each dealer. Darling's contends that WINS could reimburse Darling's at its actual retail labor rate — i.e., its posted labor rate — in the first instance without requiring the submission of unnecessary warranty labor rate applications. 48 As the district court properly concluded, Darling's statutory argument cannot stand in light of our holding that GM's multi-step reimbursement system is lawful. That Darling's receives less than its full retail reimbursement rate in the initial step is not a violation of the statute so long as GM pays Darling's its full retail rate within the statutory period for approval and payment. And Darling's does not dispute that GM has paid it the difference between its retail rate and its effective rate in response to its supplemental reimbursement requests. 49 Darling's fares no better in its alternative argument — that, because WINS has the capability of fully reimbursing Darling's in one step, requiring the submission of unnecessary documentation to establish an effective rate, and thus unnecessarily dragging out the reimbursement process, is arbitrary and capricious behavior in violation of the statute. Darling's argument fails because of its stipulation that it charges different retail labor rates depending on the type of repair. Although WINS has the capability of programming one unique labor rate for each dealer, the court supportably found that it is not capable of accounting for multiple labor rates for each dealer. Therefore, it is not unreasonable for GM to reimburse Darling's based on an average labor rate in the first instance, and then for the difference between that average rate and the actual retail rate in response to a supplemental claim. 50