Darling's v. Ford Motor Co.

• Citation: 1998 ME 232,719 A.2d 111
• Parties: DARLING'S d/b/a Darling's Bangor Ford v. FORD MOTOR COMPANY.
• Decision Date: 27 October 1998
• Court: Supreme Judicial Court of Maine (US)

719 A.2d 111

1998 ME 232

DARLING'S d/b/a Darling's Bangor Ford v. FORD MOTOR COMPANY.

Supreme Judicial Court of Maine.

Argued October 5, 1998.

Decided October 27, 1998.

Warren M. Silver (orally), Karen D. Kemble, Silver & Perry, P.A., Bangor, for plaintiff.

Andrew M. Horton (orally), Verrill & Dana, LLP, Portland, and Michael R. Feagley, Mayer, Brown & Platt, Chicago, IL, for defendant.

Gerald F. Petrucelli, Bruce A. McGlauflin, Petrucelli & Martin, LLP, Portland, for American Ass'n of Automobile Manufacturers and Int'l Ass'n of Automobile Manufacturers.

Jason Caron, Bruse Gerrity, Preti, Flaherty, Beliveau & Pachios, LLC, Portland, for Maine Automobile Dealers Ass'n and Nat'l Automobile Dealers Ass'n.

Before WATHEN, C.J., and CLIFFORD, RUDMAN, ALEXANDER, and CALKINS, JJ.

ALEXANDER, Justice.

[¶ 1] The United States District Court for the District of Maine (Hornby, C.J.) acting pursuant to 4 M.R.S.A. § 57 (1989) and M.R.Civ.P. 76B,¹ has asked for instructions regarding the interpretation of the motor vehicle warranty reimbursement statute, 10 M.R.S.A. § 1176 (1997).² Specifically, the District Court certified the following questions to this Court:

A. (1) Does 10 M.R.S.A. § 1176 require a dealer/franchisee to make a "particularized claim"³ to a manufacturer in seeking reimbursement for warranty work?

(2) If yes, does a formal demand letter specifying (a) the original computerized claim number; (b) the retail amount claimed; (c) the amount the dealer received under the nationalized system; (d) the nature of the claim (parts or labor); and (e) the difference between the amount received and the retail price, meet the "particularized claim" requirement?

B. Does the term "labor rate"⁴ in the statute include pricing systems whereby the dealer/franchisee consults sources for the number of hours to assign and then multiplies that number by its hourly rate regardless of the amount of time actually spent and regardless of the amount of time the manufacturer/franchisor thinks is appropriate (so-called "flat rate" pricing)?

C. Under 10 M.R.S.A. § 1174(1), can a dealer/franchisee use a published table of labor times even though those times are greater than what the manufacturer/franchisor concludes are reasonable for the repair transaction?

D. If flat rate labor pricing is permitted under the statute and if a dealer/franchisee posts the notice set forth in 29-A M.R.S.A. § 1805, has the dealer/franchisee thereby met the posting requirement of 10 M.R.S.A. § 1176 sufficiently to be able to recover its flat rate price in a warranty claim?

E. (1) Does the language "retail rate customarily charged ... for the same parts" require a dealer/franchisee to provide a manufacturer with proof of a specific matching sale of the identical part?

(2) If yes, may a manufacturer demand that such a sale have taken place within the six months immediately prior to the making of the claim for reimbursement? If no, what proof can the manufacturer require?

F. Are repairs performed by dealers under a manufacturer's recall, sublet or owner notification program covered by 10 M.R.S.A. § 1176?

[¶ 2] We first note that our exercise of jurisdiction to answer the questions is proper. No dispute exists as to the material facts at issue, no clear controlling precedents exist, and it appears that our answer would, in one alternative, be determinative of this case. M.R.Civ.P. 76B(a); Maine Green Party v. Secretary of State, 1997 ME 175, ¶ 2, 698 A.2d 516, 517; Johnson v. Allstate Ins. Co., 1997 ME 3, ¶ 5, 687 A.2d 642, 643-44.

[¶ 3] The Amended Recapitulation of Previous Rulings and New Findings of Fact and Conclusions of Law accompanying the Certificate of Questions establishes the following facts. Ford uses a network of nationwide franchise dealers, like Darling's, to sell the cars and trucks that it manufactures. Ford uses a nationwide computerized system to reimburse Darling's for parts and labor utilized for warranty repairs. That system does not take into account the actual amount that a dealer charges to nonwarranty customers for labor or parts. In 1995, Darling's filed a complaint in Superior Court, which Ford removed to federal court, claiming that Ford's reimbursement policies did not meet the statutory requirements of 10 M.R.S.A. § 1176 (1997). After conducting a hearing and issuing findings, the District Court certified the questions addressed individually below.

A. (1) Does 10 M.R.S.A. § 1176 require a dealer/franchisee to make a "particularized claim" to a manufacturer in seeking reimbursement for warranty work?

(2) If yes, does a formal demand letter specifying (a) the original computerized claim number; (b) the retail amount claimed; (c) the amount the dealer received under the nationalized system; (d) the nature of the claim (parts or labor); and (e) the difference between the amount received and the retail price, meet the "particularized claim" requirement?

[¶ 4] Ford argues that the statute requires Darling's to submit a "particularized claim" to Ford to be reimbursed under the statute. Darling's responds that the statute does not explicitly require it to submit a "particularized" claim. Alternatively, Darling's argues that the claim that it submitted satisfies any such statutory requirement. Darling's claim is in the form of the formal demand letter described in A(2) above.

[¶ 5] When interpreting a statute, we seek to give effect to the intent of the Legislature by examining the plain meaning of the statutory language and considering the language in the context of the whole statutory scheme. Estate of Whittier, 681 A.2d 1, 2 (Me.1996); Thibeault v. Larson, 666 A.2d 112, 114 (Me.1995). We avoid statutory constructions that create absurd, illogical or inconsistent results. Town of Madison, Dep't of Elec. Works v. Public Utils. Comm'n, 682 A.2d 231, 234 (Me.1996).

[¶ 6] Section 1176 directs the manufacturer to: (i) approve or disapprove a claim for warranty reimbursement within thirty days of receiving a claim; (ii) notify a dealer of a disapproved claim within the thirty day period by a writing that details the reasons for the disapproval; and (iii) pay an approved claim within thirty days of the approval date. Accomplishing these objectives necessarily requires that a dealer submit a claim that is sufficiently individualized to enable a manufacturer to satisfy these obligations. See, e.g., Acadia Motors, Inc. v. Ford Motor Co., 844 F.Supp. 819, 828 (D.Me.1994),

aff'd in part and remanded, 44 F.3d 1050 (1st Cir. 1995) ("Ford is entitled to some notice informing it of the pertinent facts regarding the claim that would enable it to determine whether the claim should be approved or denied.").

[¶ 7] The District Court determined that Darling's fulfilled this requirement by submitting a claim that specified the original computerized claim number, the retail amount claimed, the amount the dealer received under the nationalized system, the nature of the claim, and the difference between the amount received and the retail price. This finding is sufficient to show that Darling's claim meets the statutory requirement for an individualized claim.

B. Does the term "labor rate" in the statute include pricing systems whereby the dealer/franchisee consults sources for the number of hours to assign and then multiplies that number by its hourly rate regardless of the amount of time actually spent and regardless of the amount of time the manufacturer/franchisor thinks is appropriate (so-called "flat rate" pricing)?

[¶ 8] Ford argues that section 1176 prohibits flat rate pricing⁵ and requires reimbursement based on the dealer's published hourly labor rate. Darling's contends that the statute requires reimbursement of the labor amount that a dealer would charge to a nonwarranty customer for the same job either at a flat rate or for actual time.

[¶ 9] Section 1176 provides in relevant part that a manufacturer reimburse a dealer at "the retail rate customarily charged by that franchisee for the same labor when not performed in satisfaction of a warranty; provided that the franchisee's rate for labor not performed in satisfaction of a warranty is routinely posted in a place conspicuous to its service customer." 10 M.R.S.A. § 1176 (1997). The statutory language provides little guidance in resolving whether "retail rate" excludes flat rate pricing, thus, we consider the statute's legislative history and underlying policy. Arsenault v. Crossman, 1997 ME 92, ¶ 7, 696 A.2d 418, 421.

[¶ 10] Nothing in the legislative history supports exclusion of flat rate pricing. The Legislature introduced the term "retail rate" in an amendment to the statute, P.L.1979, ch. 698, § 1. This amendment reflected the Legislature's concern that manufacturers were using their superior bargaining power to reimburse dealers at artificially low prices for warranty repairs, thereby causing dealers to charge nonwarranty customers inflated repair prices. Final Report of the Joint Standing Committee on Business Legislation pursuant to H.P. 1459 1, 4 (Jan. 25, 1980) [hereinafter "Final Report"]; L.D. 1879 Statement of Fact 4 (109th Legis.1979). Neither the Committee Report nor the Statement of Fact indicate that the Legislature limited its concern about labor charges to hourly rates.

[¶ 11] The legislation that enacted the "retail rate" language of section 1176 also included a provision requiring a dealer to notify consumers about its labor pricing practices. P.L.1979, ch. 698, § 4, codified as, 29 M.R.S.A. 2605, repealed by, P.L.1993, ch. 683, § A-1 (effective date January 1, 1995) and replaced by, P.L.1993, ch. 683, § A-2, codified as, 29-A M.R.S.A. § 1805. The Legislature enacted section 1805 "to ensure that the dealer's rate is bona fide." Final Report, at 4. Section 1805 requires dealers to post a notice that specifies the hourly charges.⁶ Subsection 2 of section 1805 directs dealers to notify consumers when flat rate pricing is used and indicate that information about...