2017 -- H 5490 SUBSTITUTE B

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LC001433/SUB B

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO MOTOR AND OTHER VEHICLES -- REGULATIONS OF BUSINESS

PRACTICES AMONG MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND

DEALERS

     

     Introduced By: Representatives Morin, Phillips, Casey, Messier, and McNamara

     Date Introduced: February 15, 2017

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 31-5.1 of the General Laws entitled "Regulation of Business

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Practices Among Motor Vehicle Manufacturers, Distributors, and Dealers" is hereby amended by

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adding thereto the following section:

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     31-5.1-6.1. Obligations during recalls.

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     (a) A manufacturer shall compensate its new motor vehicle dealers for all labor and parts

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required by the manufacturer to perform recall repairs. Compensation for recall repairs shall be at

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the dealer retail rate in effect at the time the recall repair work is performed. The dealer retail rate

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for parts and labor shall be at the same rates as those provided for under §31-5.1-6. If parts or a

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remedy are not reasonably available to perform a recall service or repair on a used vehicle held

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for sale by the dealer authorized to sell new vehicles of the same line make within thirty (30) days

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of the manufacturer issuing the initial notice of recall and the manufacturer has issued a "Stop-

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Sale", or "Do-Not-Drive", order on the vehicle, the manufacturer shall compensate the dealer at a

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rate of at least one and one-half percent (1.5%) of the value of the vehicle per month, or portion

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of a month, while the recall or remedy parts are unavailable and the "Stop-Sale", or "Do-Not-

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Drive", order remains in effect. A "Stop-Sale" shall be defined as a notification issued by a

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vehicle manufacturer to its franchised dealerships stating that certain used vehicles in inventory

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shall not be sold or leased, at retail and/or wholesale, due to a federal safety recall for a defect or

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a noncompliance, or a federal or California emissions recall.

 

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     (b) The value of a used vehicle shall be the average trade-in value for used vehicles as

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indicated in an independent third-party guide for the year, make, model, and mileage of the

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recalled vehicle on the later of:

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     (1) The date the "Stop-Sale" or "Do-Not-Drive" order was issued; or

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     (2) The date the vehicle is taken in the used motor vehicle inventory.

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     (c) This section shall apply only to used vehicles subject to safety or emissions recalls

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pursuant to and recalled in accordance with federal law and regulations adopted thereunder and

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where a "Stop-Sale", or "Do-Not-Drive", order has been issued; provided, further, that this

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section shall apply only to new motor vehicle dealers holding used vehicles for sale that are a

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line-make that the dealer is franchised to sell or on which the dealer is authorized to perform

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recall repairs. This section further shall apply only to new motor vehicle dealers holding an

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affected used motor vehicle for sale that was:

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     (1) In inventory at the time the "Stop-Sale" or "Do-Not-Drive" order was issued;

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     (2) Taken in the used motor vehicle inventory of the new motor vehicle dealer as a

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consumer trade-in incident to the purchase of a new motor vehicle before or after the "Stop-Sale"

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or "Do-Not-Drive" order was issued; or

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     (3) Properly taken in the used motor vehicle inventory of the new motor vehicle dealer as

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a lease return vehicle returned to the new motor vehicle dealer before or after the "Stop-Sale" or

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"Do-Not-Drive" order was issued in accordance with the terms of the applicable contract.

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     (d) It shall be a violation of this section for a manufacturer to reduce the amount of

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compensation otherwise owed to a new motor vehicle dealer, whether through a chargeback,

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removal from an incentive program, reduction in amount owed under an incentive program, or

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any other means, because the new motor vehicle dealer has submitted a claim for reimbursement

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under this section, or was otherwise compensated for a vehicle subject to a recall where a "Stop-

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Sale", or "Do-Not-Drive", order has been issued.

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     (e) All reimbursement claims made by new motor vehicle dealers pursuant to this section

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for recall remedies or repairs, or for compensation where no part or repair is reasonably available

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and the vehicle is subject to a "Stop-Sale", or "Do-Not-Drive", order, shall be subject to the same

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limitations and requirements as a warranty reimbursement claim made under §31-5.1-6. Claims

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shall be either approved or disapproved within thirty (30) days after they are submitted to the

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manufacturer in the manner and on the forms the manufacturer reasonably prescribes. All claims

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shall be paid within thirty (30) days of approval of the claim by the manufacturer. Any claim not

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specifically disapproved in writing within thirty (30) days after the manufacturer receives a

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properly submitted claim shall be deemed to be approved. In the alternative, a manufacturer may

 

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compensate its franchised dealers under a national recall compensation program provided the

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compensation under the program is equal to or greater than that provided under subsection (a) of

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this section or the manufacturer and dealer otherwise agree.

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     (f) Nothing in this section shall require a manufacturer to provide total compensation to a

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new motor vehicle dealer which would exceed the total average trade-in value of the affected

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used motor vehicle as determined under §31-5.1-6.1(b).

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     (g) Any remedy provided to a dealer under this section is exclusive and may not be

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combined with any other state recall compensation remedy.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO MOTOR AND OTHER VEHICLES -- REGULATIONS OF BUSINESS

PRACTICES AMONG MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND

DEALERS

***

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     This act would require manufacturers of motor vehicles to compensate its new motor

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vehicle dealers for costs incurred while holding a vehicle for sale but are unable to sell it due to

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unavailability in parts, remedy or performance of a recall service or repair, when the

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manufacturer has issued a "Stop-Sale", or "Do-Not-Drive", order on the vehicle.

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     This act would take effect upon passage.

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