Pub. 16 2017-2018 Issue 4

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 1 , 2 0 1 8 26 new jersey auto retailer and dealers should stay mindful of this reality. Many states (in- cluding New Jersey) have consumer fraud statutes that call for treble damages against businesses found liable for prohibited practices, PLUS attorneys’ fees. Of course, there are situations where the dealer should take a stand. In those cases, dealers should fully document all the facts, make sure that (a) it’s worth the cost of a legal contest, and (2) all the facts line up favorably. At the federal level, for several years now, the Consumer Financial Protection Bureau (CFPB), was the 500-pound gorilla of consum- erism. Now, the bloom is off the rose. Again and again, under former Director Richard Cordray, the CFPB repeatedly tried to cast businesses and banks as villains out to cheat or discriminate against various classes of consumers. The CFPB has been defanged under the Trump Administration, but that’s not a disservice to consumers. Rather, it suggests there will be fairness and reasonableness in how the federal government approaches consumer-based issues. The CFPB had unlawfully tried to grab legally-prohibited jurisdiction over dealers through the “back-door” when dealers make loan applications available to consumers. On a number of fronts, dealers in 2018 will see some relaxation of the unfair onslaught by consumer groups and state and federal regulators. 17. Encroachment and Franchise Modification There may be fewer encroachment and modification cases in 2018, but they will be important nonetheless. The establishment or relocation of a competing same-line store near an existing location may potentially cause grievous harm to the original store’s ability to remain profitable, retain their staff, and even their growth viability. With “modifications” of franchise agreements, a bevy of state laws now allow dealers to protest unilateral changes. Auto franchisors usually visit protest-eligible dealers to try to coax them not to protest the establishment or relocation of a nearby competitive store. Now, they do the same if a modification law is in place. A factory representative will tell the existing dealer that the proposal is either good for, or indifferent to, their livelihood, but those representations are, generally, not true. If you receive a notice from the factory stating the intention to put a competing dealer near you, or to change your dealer agreement in an important way, call your lawyer to explore your options. And do so right away, because statutory time limits for filing a protest are usually very short. 18. Natural Disasters, Terrorism and Unrest Hurricanes Harvey, Irma andMaria andmajor California wildfires stand as recent horrific reminders to America’s auto dealers that calamities far beyond their control can have a profound impact on them, their businesses, their employees, as well as their communi- ties, friends and neighbors. Of course, human beings cannot control natural disasters. But they can, and should, take precautions to try to lessen the repercussions on themselves, their employees and customers, and to recover in the aftermath. Every employee manual should contain a section devoted to what steps should be taken in the event of a serious emergency, including natural disasters. Also, dealers are prudent to consider business interruption insurance, and other applicable types of coverage. 19. Warranty Reimbursement About 30 states now prohibit auto franchisors from surcharging dealers to recoup high warranty parts expense. A small number of states have amended their laws to stop the carmakers’ practice of charging dealers for “add-on” warranty work and parts. This issue won’t go away for a while, despite a series of dealer victories in court. 20. Factory Audits Dealer fears of (and suspicions about) factory audits are often overblown. In nearly all instances, such audits are legitimate, and, in any event, auto franchisors have the right to audit deal- ers for compliance with basic contractual requirements. Most audits relate to oversight of work done and/or sales made and dealer claims for factory money including bonuses, incentive payments, warranty work, etc. To be sure, they must abide by state law and dealer agreement timing, but, unless there is a truly objectionable overreach, dealers must simply cooperate with auditors. Of course, the results of an audit, including charge- backs, are often reasonably disputable. In those instances, deal- ers can and should challenge questionable chargebacks. Eric L. Chase is an attorney and a member of Bressler, Amery & Ross, P.C. He devotes a significant part of his practice to the representation of franchised automotive dealers and he has been lead counsel in numerous landmark decisions. Eric can be reached at 973.514.1200 or, via email, at echase@bressler.com . LEGAL TRENDS  continued from page 25