Pub. 18 2019-2020 Issue 2

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 . 3 , 2 0 1 9 6 new jersey auto retailer Chairman’s MESSAGE | BY ROBERT SICKEL For over a century, NJ CAR has served as a steadfast defender of dealer rights when it comes to a slew of legal and regulatory challenges. The Coalition has always provided unique value when it comes to confronting the legal issues related to manufacturer overreach because many dealers are reluctant or unable to take on their automakers. Dealers are forced to weigh the impact of questionable manufacturer demands against the fear of retribution if they push back. NJ CAR’s standing to file lawsuits against a manufacturer on behalf of its member dealers in such instances was never questioned. However, due to a court ruling made earlier this year, NJ CAR’s standing to bring such lawsuits is now subject to challenge. On October 2, 2018, NJ CAR filed a lawsuit against Mazda claiming that its Mazda Brand Experience Program (MBEP) violates New Jersey’s Franchise Practices Act because the two-tier pricing scheme provides varying incentive payments based on several requirements, something that is explicitly illegal under State franchise law. To spare individual Mazda dealers the fear of automaker retribution, NJ CAR was the sole plaintiff in this suit. Mazda challenged NJ CAR’s standing to bring the suit on behalf of its members and sought to dismiss the lawsuit on that basis, arguing that there is a conflict of interest between Mazda dealers who are eligible for MBEP payments and those Mazda dealers who are ineligible. NJ CAR opposed Mazda’s motion to dismiss by arguing that all of its members are primarily interest- ed in the enforcement of New Jersey law in bringing the suit. On July 30, 2019, the United States District Court for the Dis- trict of New Jersey issued a decision granting Mazda’s motion to dismiss on the basis of the conflict of interest argued by Mazda. The decision dealt a blow to NJ CAR’s ability to defend the rights of all its dealer members because it lent too much weight to potential disagreements among dealers over their willingness to abide by illegal manufacturer demands. In effect, the Court substituted its own judgment for that of NJ CAR’s Executive Committee, which followed the Association’s By-Laws and Con- stitution when it decided to authorize suit to declare Mazda’s conduct unlawful on behalf of all its members. As I said at the beginning of this column, many dealers are un- derstandably reluctant to take individual legal action to enforce their rights for legitimate business reasons, which is why they rely on their trade association to challenge manufacturer over- reach on their behalf. Unfortunately, all future Coalition chal- lenges against other illegal manufacturer incentive programs will likely face the same resistance, with automakers pointing to this decision as precedent to challenge NJ CAR’s standing to sue in those cases as well. NJ CAR has appealed the Court’s decision to preserve its ability to serve this critical role on behalf of its dealer members. Given the importance of this issue for all automotive trade associations, NADA has moved to join in our appeal as a friend of the court, and hired an nationally reknowned litigator, Donald B. Verrilli, Jr., Esq., who was the U.S. Solicitor General in the Obama Ad- ministration, to represent NADA in the matter. The Coalition expects the lower court’s decision to be reversed, but in the meantime, individual dealers may need to pick up the fight in defense of their hard-earned rights when a manufactur- er blatantly ignores State franchise law. NJ CAR has been the dealers’ defender for more than 100 years, and they will continue to do so, but dealers may need to step-up, play a bigger role and work with NJ CAR more closely when it’s time to address manu- facturer overreach. Defending Dealers’ Rights Is A Team Effort