Deere & Co. v. State

• Decision Date: 29 December 2015
• Docket Number: Nos. 2014–0315 2014–0441 2014–0575,s. 2014–0315 2014–0441 2014–0575
• Citation: 130 A.3d 1197,168 N.H. 460
• Parties: DEERE & COMPANY & a. v. The STATE of New Hampshire Kubota Tractor Corporation v. The State of New Hampshire Husqvarna Professional Products, Inc. v. The State of New Hampshire
• Court: New Hampshire Supreme Court

168 N.H. 460

130 A.3d 1197

DEERE & COMPANY & a.

v.The STATE of New Hampshire

Kubota Tractor Corporation

v.The State of New Hampshire

Husqvarna Professional Products, Inc.

v.The State of New Hampshire

Nos. 2014–0315 2014–0441 2014–0575

Supreme Court of New Hampshire.

Argued: September 10, 2015

Opinion Issued: December 29, 2015

Nixon Peabody LLP, of Manchester (Kevin M. Fitzgerald, Gordon J. MacDonald, and Anthony J. Galdieri on the brief, and Mr. MacDonald orally), for petitioners Deere & Company, CNH America LLC, and AGCO Corporation.

CullenCollimore, pllc, of Nashua (Brian J.S. Cullen and Shelagh C.N. Michaud on the brief, and Mr. Cullen orally), for petitioner Kubota Tractor Corporation.

McLane Middleton, Professional Association, of Manchester (Michael A. Delaney on the brief), and Thompson Hine LLP, of Cleveland, Ohio (Thomas J. Collin and Jennifer S. Roach on the brief, and Mr. Collin orally), for petitioner Husqvarna Professional Products, Inc.

Joseph A. Foster, attorney general (Francis C. Fredericks, assistant attorney general, on the brief and orally), for the respondent, the State of New Hampshire.

Holmes Law Offices PLLC, of Concord (Gregory A. Holmes on the brief and orally), for the intervenor, Frost Farm Service, Inc. Douglas, Leonard & Garvey, P.C., of Concord (Jason R.L. Major and Charles G. Douglas, III on the brief), for Association of Equipment Manufacturers, as amicus curiae.

Upton & Hatfield, LLP, of Portsmouth (Russell F. Hilliard on the brief), for Northeast Equipment Dealers Association, and Peter J. McNamara, of Concord, by brief, for New Hampshire Automobile Dealers Association, as amici curiae.

Kelly Law PLLC, of Nashua (James D. Kelly on the brief), and Kelley Drye and Warren, of Washington, D.C. (William Guerry and Shaun Gehan on the brief), for Outdoor Power Equipment Institute, as amicus curiae.

DALIANIS, C.J.

In these consolidated appeals, the petitioners, Deere & Company (Deere), CNH America LLC (CNH), AGCO Corporation (AGCO), Kubota Tractor Corporation (Kubota), and Husqvarna Professional Products, Inc. (Husqvarna), appeal orders of the Superior Court (Smukler, J.) granting summary judgment to the respondent, the State of New Hampshire, on the petitioners' constitutional challenges to Senate Bill (SB) 126. We affirm in part, vacate in part, and remand.

I. Brief Factual Summary

The pertinent facts follow. SB 126, enacted in 2013, amended RSA chapter 357–C to define "motor vehicle" as including "equipment," which "means farm and utility tractors, forestry equipment, industrial equipment, construction equipment, farm implements, farm machinery, yard and garden equipment, attachments, accessories, and repair parts." Laws 2013, 130:1 (quotations omitted); see RSA 357–C:1, I (Supp.2015); see also STIHL, Inc. v. State of N.H., 168 N.H. ––––, 126 A.3d 1192 (2015) (concluding that the statutory definition of motor vehicle, as amended by SB 126, pertains to equipment that is analogous to automobiles, that is, equipment with an engine, wheels, and a transmission). Because of this amendment, manufacturers, distributors, and dealers of such equipment are, for the first time, subject to the New Hampshire Motor Vehicle Franchise Act, RSA chapter 357–C. See STIHL, Inc., 168 N.H. at ––––, 126 A.3d 1192; see also RSA ch. 357–C (2009 & Supp.2015).

Like its federal counterpart and similar state statutes, RSA chapter 357–C, "the so-called ‘dealer bill of rights,’ " STIHL, Inc., 168 N.H. at ––––, 126 A.3d 1192, was enacted "to protect retail car dealers from perceived abusive and oppressive acts by the manufacturers." New Motor Vehicle Bd. of Cal. v. Orrin W. Fox Co., 439 U.S. 96, 101, 99 S.Ct. 403, 58 L.Ed.2d 361 (1978) (discussing such laws in general), see id. at 100–01, 99 S.Ct. 403 n.4 (quoting Congressional report that gave rise to the federal legislation); see also Roberts v. General Motors Corp., 138 N.H. 532, 536, 643 A.2d 956 (1994). As first enacted in 1981, RSA chapter 357–C provided motor vehicle dealers certain protections from the actions of manufacturers. See Laws 1981, ch. 477; see also STIHL, Inc., 168 N.H. at ––––, 126 A.3d 1192. Over time, the legislature increased the level of regulation by, for instance, creating the New Hampshire Motor Vehicle Industry Board (Board) to enforce the statute, see Laws 1996, 263:8, and expanding the definition of motor vehicle to include off highway recreational vehicles, see Laws 2002, 215:4, and snowmobiles, see Laws 2007, 372:3. See STIHL, Inc., 168 N.H. at ––––, 126 A.3d 1192.

RSA chapter 357–C regulates, among other things, a manufacturer's delivery and warranty obligations and termination of dealership agreements. See RSA 357–C:4 (2009), :5, :7 (Supp.2015). RSA chapter 357–C also defines unfair methods of competition and deceptive practices. See RSA 357–C:3 (Supp.2015). Violation of any provision of RSA chapter 357–C constitutes a misdemeanor. See RSA 357–C:15 (2009).

Among other safeguards, RSA chapter 357–C "protects the equities of existing dealers by prohibiting" motor vehicle "manufacturers from adding dealerships to the market areas of its existing franchisees where the effect of such intrabrand competition would be injurious to the existing franchisees and to the public interest." New Motor Vehicle Bd. of Cal., 439 U.S. at 101, 99 S.Ct. 403 (describing California Automobile Franchise Act, a law similar to RSA chapter 357–C); see RSA 357–C:9 (Supp.2015). To enforce this prohibition, RSA chapter 357–C requires a motor vehicle manufacturer that seeks to establish a new motor vehicle dealership or relocate an existing new motor vehicle dealership "within a relevant market area where the same line make is then represented," to give written notice of such intention to the Board and to "each new motor vehicle dealer of such line make in the relevant market area." RSA 357–C:9, I; see New Motor Vehicle Bd. of Cal., 439 U.S. at 103, 99 S.Ct. 403 (describing California Automobile Franchise Act). RSA chapter 357–C defines the "[r]elevant market area" as "any area within the town or city where the motor vehicle dealer maintains his place of business or the area, if any, set forth in a franchise or agreement, whichever is larger." RSA 357–C:1, XXI (2009). If a new motor vehicle dealership protests to the Board within a statutorily-defined period of time, the Board then holds a hearing to determine whether there is "good cause," as statutorily-defined, for "not permitting such new motor vehicle dealership." RSA 357–C:9, I; see RSA 357–C:9, II, III. Among the factors to consider when determining whether "good cause" exists are: (1) "[a]ny effect on the retail new motor vehicle business and the consuming public in the relevant market area," RSA 357–C:9, II(b); (2) whether establishing an additional new dealership "is injurious or beneficial to the public welfare," RSA 357–C:9, II(c); and (3) whether establishing an additional dealership "would increase competition, and therefore be in the public interest," RSA 357–C:9, II(e).

As the legislature expanded RSA chapter 357–C, it also enacted RSA chapter 347–A, a similar but less comprehensive regulatory scheme providing protections to equipment dealers. STIHL, Inc., 168 N.H. at ––––,126 A.3d 1192 ; see Laws 1995, ch. 210. RSA chapter 347–A regulated: (1) the termination of dealer agreements; (2) a supplier's duty upon termination of such an agreement; (3) the terms for repurchasing inventory upon termination of such an agreement and exceptions thereto; (4) a dealer's right to transfer its business; (5) warranty obligations; and (6) the obligation of a successor in interest. See RSA 347–A:2 – :6, :8, :11 (2009) (repealed 2013). Unlike RSA chapter 357–C, RSA chapter 347–A did not include an administrative enforcement mechanism, provide for criminal penalties, impose statutory limits upon the ability of a manufacturer to establish or relocate a dealership, or specify the methods of competition and practices that were deemed unfair and deceptive. See RSA ch. 347–A (2009) (repealed 2013).

When the legislature, through SB 126, amended the definition of "motor vehicle" in RSA chapter 357–C to bring certain equipment manufacturers and dealers within the aegis of that chapter, it also repealed RSA chapter 347–A. STIHL, Inc., 168 N.H. at ––––, 126 A.3d 1192; see Laws 2013, ch. 130. SB 126 became effective in September 2013. Laws 2013, 130:19.

In August 2013, Deere, CNH, and AGCO, collectively referred to as the Deere petitioners, sued the State for declaratory and injunctive relief related to SB 126. The Deere petitioners manufacture agricultural, construction, forestry, industrial, lawn, and garden equipment, including commercial mowers, wheel loaders, backhoes, and agricultural tractors. Their complaint alleges that: (1) retroactive application of SB 126 substantially impairs their existing dealership agreements in violation of the State and Federal Contract Clauses; and (2) SB 126 violates the Supremacy Clause of the Federal Constitution because it voids or otherwise renders unenforceable mandatory binding arbitration clauses in existing dealership agreements, thereby conflicting with the Federal Arbitration Act (FAA). Thereafter, the Deere petitioners obtained a court order that preliminarily enjoined the State "from including farm and equipment manufacturers within the definition of motor vehicles" in RSA chapter 357–C "as provided for under SB 126." In October 2013, the trial court granted intervenor status to Frost Farm Service, Inc., an equipment dealer and franchisee of AGCO.

The Deere petitioners and the State subsequently filed cross-motions for summary judgment. In April 2014, the trial court granted the State's motion and denied the Deere petitioners' motion, concluding that the Deere petitioners had "not sustained their burden of showing that SB 126 unconstitutionally impairs existing contracts." The court observed that the Deere petitioners had identified "ten substantial SB 126 impairments," but that "[n]...