Fixed Ops Journal - October 2019 - F35

FIXED OPS JOURNAL

LEGAL LANE
Pa. dealers, OEMs can bargain
on warranty labor rates
Dealerships in Pennsylvania that do warranty work can contractually negotiate with
automakers to get more favorable labor reimbursement rates than those required by state
law, the Pennsylvania Supreme Court ruled.
But the court invalidated a "cost recovery"
surcharge of $122 per vehicle that General
Motors had added to all its new-vehicle invoices in Pennsylvania. The surcharge was intended to help manufacturers recoup their
costs for warranty repairs, the decision said.
GM had offered its dealerships two options
for labor reimbursement rates, but changed
its policy in 2012 so that stores that chose to be
reimbursed at the state rate for warranty parts
would receive lower labor reimbursements.
Budd Baer Buick-GMC in Washington, Pa.,
and Grata Chevrolet in Hermitage, Pa., filed a
protest with the state dealer board and later
went to court on the issue.
In its majority opinion, the Supreme Court
said GM has the contractual right to offer
more favorable labor reimbursement rates exclusively to dealers who are willing to accept
the company's "standard parts reimbursement protocol."
Although the high court struck down GM's
surcharge on new vehicles, it did not prohibit
surcharges altogether. Instead, it left the door
open for manufacturers and dealers to write
warranty cost recovery into their future sales
and service agreements.
Chad Marsar, vice president for legal and
regulatory affairs at the Pennsylvania Automobile Association, said Nissan Motor Co.
eliminated its surcharges on dealerships in
the state after the court ruling. Nissan was the
only other automaker to impose such surcharges in the state.
A GM spokesman declined to comment on
the court ruling.

Service on airbag that
did not deploy ruled proper
The Indiana Court of Appeals rejected allegations that an Indianapolis Honda dealership failed to properly service a 2004 CR-V's
airbag after a recall.
In January 2015, Joan Tutino brought her
CR-V to Bob Rohrman Indy Honda after
American Honda Motor Co. issued a recall
notice and service bulletin about Takata airbags installed as replacement parts, the court
decision said. A master technician at the deal-

The "recall work ... did
not involve anything
that would impact
whether the airbag
should have deployed."
ership removed the driver-side airbag and
checked the serial number in Honda's database, which showed it wasn't subject to the
recall. The tech then reinstalled the airbag.
Tutino was seriously injured when she was
rear-ended in a four-vehicle crash in July 2015 and
the airbag didn't deploy.
Her suit accused the dealership of negligently
performing the service.
The store denied liability. Its expert witness
testified that the damage was "not consistent
with damage that would be expected from a
crash that would deploy frontal airbags" and
was "consistent with low speed bumper impact
tests of similar Honda CR-Vs." He added: "The
Takata recalls do not affect whether airbags
should or should not deploy during a crash."
A lower-court judge dismissed the suit without a trial. The appeals court refused to reinstate the case, saying that Bob Rohrman Indy
Honda "was tasked with performing recall
work that was intended to address issues that
could occur when an airbag deployed but did
not involve anything that would impact
whether the airbag should have deployed."
The three-judge appeals panel also rejected
Tutino's claim that the dealership was liable
for not notifying her before the accident about
an updated service bulletin from Honda.

Fla. dealership held
not liable for loaner crash
A Florida dealership that gave a loaner car to
a service customer who also worked for the
store isn't liable for a crash he caused, the
Florida Court of Appeal ruled.
Richard La Mantia's personal vehicle was
being serviced in April 2017 at what was then
McGuire Chevrolet - now Dyer Chevrolet -
in Lake Wales, Fla.
He had been hired as a service adviser and
was working in inventory control as a lot porter at the time of the crash, said dealership
lawyer Hinda Klein. While he was driving the
loaner, La Mantia seriously injured motorcy-

clist Timothy Collins, who sued the dealership.
The store denied responsibility, arguing that
the crash was unrelated to La Mantia's job and
saying that it provided the loaner - a 2017
Malibu - as a "short-term courtesy ... in his
capacity as a customer." A federal law protects
car rental companies from vicarious liability
for injuries caused by customers unless the
company is negligent or contributed to those
injuries.
A lower court judge dismissed the case
without trial. The Court of Appeal upheld that
decision, saying the evidence shows that La
Mantia "was not acting within the course and
scope of his employment, and he was treated
like any other customer who received the use
of a rental car while the customer's vehicle
was in the repair shop."
Collins hasn't decided whether to appeal
further, said his lawyer, Philip Burlington.

Tribunal rejects customer
claim of faulty service
The British Columbia Civil Resolution Tribunal rejected a customer's claim that a Toyota
dealership charged him for unnecessary service and parts and misdiagnosed a problem.
The customer, Paul Atterton, sought a refund of what he paid Comax Valley Toyota in
Courtenay, British Columbia, for diagnostic
and repair work and for reimbursement of the
cost of repairs at two independent shops. In
April 2018, Atterton brought his 2006 Toyota
Sienna to the dealership for replacement of
spark plugs and repair of a tire "wobble," the
court decision said.
Atterton also asked the shop to investigate
warning lights on his dashboard. A service technician found no problem with the lights, but Atterton said they went back on later. He returned
to the shop and ultimately approved replacement of a stop lamp switch, but the warning
lights went on again after the work was done,
according to the decision. The problem disappeared after he replaced his aftermarket LED
brake lights with incandescent ones.
The customer alleged that the dealership
lacked "the technology or expertise to deal with
his vehicle's problem and that the store engaged in deceptive practices," the tribunal's vice
chair, Andrea Ritchie, wrote in her decision. But
Ritchie ruled that Atterton failed to show that
the store's service was faulty or that it had "engaged in any unfair or deceptive practices."
- Eric Freedman
foj@autonews.com

OCTOBER 2019

PAGE 35

Fixed Ops Journal - October 2019

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