Regular Session 2015-2016 House Bill 1553 P.N. 2466

PRINTER'S NO. 2466

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1553

Session of

2015

INTRODUCED BY TALLMAN, HARHART, GIBBONS, LONGIETTI, DUSH,

ZIMMERMAN, MURT, BAKER, MALONEY, COHEN, TOBASH, DIAMOND,

PICKETT AND WARD, OCTOBER 28, 2015

REFERRED TO COMMITTEE ON COMMERCE, OCTOBER 28, 2015

AN ACT

Amending the act of December 18, 1987 (P.L.412, No.86), entitled

"An act providing for the repurchase by the wholesaler,

manufacturer or distributor, from dealers or heirs of

dealers, of certain equipment, certain attachments and parts

held for sale upon termination of agreement whereby the

dealer agrees to maintain a stock of such implements,

attachments and parts, and for the repurchase of certain

tools," further providing for the definitions of "dealer" and

"equipment," for termination of dealer agreement, for death

or incapacitation of dealer and for repurchase of unused

specialized repair tools; repealing provisions relating to

coercion; and providing for violations of act, for warranty,

for remedies and enforcement and for waiver.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The title of the act of December 18, 1987

(P.L.412, No.86), known as the Pennsylvania Fair Dealership Law,

is amended to read:

AN ACT

Providing for the repurchase by the [wholesaler, manufacturer or

distributor] supplier, from dealers or heirs of dealers, of

certain equipment, certain attachments and parts held for

sale upon termination of agreement whereby the dealer agrees

to maintain a stock of such implements, attachments and

parts, and for the repurchase of certain tools.

Section 2. The definitions of "dealer" and "equipment" in

section 2 of the act are amended to read:

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Dealer." Any person, firm or corporation engaged primarily

in the business of retail sale [or] and repair of equipment. The

term includes the heir or authorized representative of a person

or majority stockholder of a corporation operating as a dealer

in the event such person or stockholder dies or becomes

incapacitated.

* * *

"Equipment." Machines designed primarily for or adapted and

used primarily for agriculture, horticulture, floriculture,

livestock raising[, silviculture,] and landscaping and grounds

maintenance, even though incidentally operated or used upon the

highways, [including, but not limited to, tractors, farm

implements, loaders, backhoes, lawn mowers, rototillers, etc.,]

and any business signs purchased by requirement of the supplier

which are less than five years old. The term shall not include:

(1) equipment manufactured solely for the purpose of

industrial construction; or

(2) all-terrain vehicles as defined in 75 Pa.C.S. § 7702

(relating to definitions).

* * *

Section 3. Section 3(a), (b), (c) and (f) of the act are

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amended and the section is amended by adding a subsection to

read:

Section 3. Termination of dealer agreement.

(a) General provisions.--

(1) A dealer may terminate a dealer agreement with good

cause. A dealer shall give the supplier at least 90 days'

notice via registered letter mailed to the last known address

of the supplier.

(2) It shall be unlawful for a supplier to terminate,

cancel or fail to renew a dealer agreement or substantially

change the competitive circumstances of a dealer agreement

without good cause except as provided in subsection (b)[ or

(c)].

(b) Exceptions.--A supplier may terminate, cancel or fail to

renew a dealer agreement if a dealer:

(1) Fails to consistently comply with essential and

reasonable requirements imposed by the supplier.

(2) Has transferred ownership interest in the dealership

without the [manufacturer's or distributor's] supplier's

consent.

(3) Has filed a voluntary petition in bankruptcy or has

had an involuntary petition in bankruptcy filed against it

which has not been discharged within 30 days after the

filing.

(4) Has pleaded guilty or has been convicted of a crime,

or has been determined to be engaged in an unfair business

practice, as defined in other laws of this Commonwealth, the

effect of which would be detrimental to the [manufacturer,

distributor] supplier or dealership.

(5) Has failed to operate in a normal course of business

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for ten consecutive business days or has terminated or

voluntarily abandoned said business.

(6) Has relocated the dealer's place of business without

the [manufacturer's or distributor's] supplier's consent.

(7) Has defaulted under any chattel mortgage or other

security agreement between the dealer and the supplier, or

there has been a revocation or discontinuance of any

guarantee of the dealer's present or future financial

obligations to the supplier.

provisions of this subsection, a supplier may terminate, cancel

or fail to renew a dealer agreement under such conditions as may

be provided for in the dealer agreement.] When a dealer

agreement is terminated or canceled or has failed to be renewed

[by the supplier under a condition provided for in the dealer

agreement, other than] for a condition set forth in subsection

(b), the supplier, upon written request of the dealer, shall pay

to the dealer, or credit to the dealer's account [if the dealer

has outstanding any sums owing] any outstanding sums owed to the

supplier:

(1) A sum equal to 100% of the net cost of all equipment

that the dealer purchased from the supplier and not

previously sold and put into regular use or service preceding

notification by either party of intent to cancel, terminate

or fail to renew the dealer agreement.

(2) A sum equal to 100% of the current net price of

repair parts, including superseded repair parts, previously

purchased from the supplier and 75% of the current net price

of specialized repair tools previously purchased pursuant to

the requirements of the supplier and held by the dealer on

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the date of termination, cancellation or failure to renew the

dealer agreement. In addition, the supplier shall pay the

dealer, or credit to the dealer's account if the dealer has

outstanding any sums owing the supplier, a sum equal to 5% of

the current net price of all repair parts, excluding incoming

freight cost, and specialized repair tools returned to the

supplier to compensate the dealer for the inventory, packing

and loading of the same to the supplier, provided that the

supplier may perform such inventory, packing and loading in

lieu of paying 5% to the dealer. Upon the payment or

allowance of credit to the dealer's account, as applicable,

in the sum required by this section, all of the dealer's

title and interest in and to the equipment, repair parts and

specialized repair tools shall pass to the supplier, and the

supplier shall be entitled to the possession of the same.

Payments or allowance of credit to the dealer, as applicable,

required by this section shall be made no later than 90 days

after such termination, cancellation or discontinuance or 60

days after the supplier's receipt of the equipment, repair

parts or specialized repair tools.

(3) In the event a dealer terminates a dealer agreement,

the [obligation of the supplier to repurchase equipment,

repair parts and specialized repair tools shall be governed

by the terms and conditions then in effect in the dealer

agreement between the supplier and the dealer and not by the

provisions of this act.] supplier shall not be obligated to

pay the dealer, or credit to the dealer's account if the

dealer has outstanding sums owed to the supplier, a sum equal

to 5% of the current net price of all repair parts, excluding

incoming freight cost, to compensate the dealer for the

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packing, loading and shipping of inventory to the supplier.

* * *

(f) Deficiencies may be cured.--Except for termination,

cancellation or discontinuance for reasons set forth in

subsection (b)(3) through (7), the supplier shall allow the

dealer no less than [60] 90 days to cure the deficiencies set

forth in the notice required under subsection (e). Any such time

provided to the dealer to cure deficiencies shall be calculated

from the date of receipt of notice.

(g) Definition.--As used in this section, the term "good

cause" means the failure by a dealer to substantially comply

with the requirements imposed upon the dealer by the dealer

agreement, as long as the requirements are not different from

the requirements imposed on other dealers of comparable size,

geographic region and market demographics, either by their terms

or in the manner of their enforcement.

Section 4. Sections 5 and 6 of the act are amended to read:

Section 5. Death or incapacitation of dealer.

In the event of the death or incapacity of a dealer, the

supplier shall repurchase, at the option of the heir or

authorized representative of such person or stockholder, the

equipment, repair parts and specialized repair tools of the

dealer as if the supplier had terminated, canceled or failed to

renew the contract. The heir or authorized representative shall

have [120 days] one year from the date of the death of such

dealer or from the date such dealer is determined to be

incapacitated or becomes totally disabled, as applicable, to

exercise the option under this section. Nothing in this act

requires the repurchase of any equipment, repair parts and

specialized repair tools if the heir and supplier enter into a

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new contract to operate the retail dealership.

Section 6. Repurchase of [unused specialized repair tools]

specialized support products required by supplier.

(a) General rule.--A supplier shall repurchase, upon the

written request of a dealer, any specialized repair tool

purchased by the dealer pursuant to the requirements of the

supplier which remains unused for more than a 12-month period

after the dealer receives the same. The repurchase price payable

to the dealer under this section shall be the original cost to

the dealer plus a handling charge equal to 10% of such original

cost. A supplier shall repurchase at fair market value any

specific signage, data processing hardware, computer equipment,

communications equipment or software the supplier required the

dealer to acquire or purchase to satisfy the requirements of the

supplier. Fair market value of property subject to repurchase

under this section shall include the acquisition cost, including

any installation, shipping, handling and setup fees, less

straight line depreciation of such acquisition cost over five

years.

(b) Amount.--Specialized repair tools shall be repurchased

at a sum equal to 75% of the last published net cost, including

shipping, handling and setup fees of all specialized repair

tools previously purchased pursuant to requirements of the

supplier. The specialized repair tools must be complete and in

working condition and must have been purchased within ten years

prior to the date of notification of termination of the dealer

agreement.

Section 5. Section 9 of the act is repealed:

[Section 9. No coercion.

It shall be a violation for any supplier to require, attempt

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to require, coerce or attempt to coerce any dealer in this

Commonwealth to order or accept delivery of any equipment or

repair parts not required by law which shall not have been

voluntarily ordered by the dealer.]

Section 6. The act is amended by adding sections to read:

Section 9.1. Violations of act.

It shall be a violation for any supplier:

(1) To mandate, coerce or attempt to coerce a dealer

concerning the opportunity to own, invest in or participate

in the management of another business or a dealership

contract for the sale of another line-make of equipment, or

otherwise prevent a dealer from establishing another line-

make of equipment in the same dealership facilities as those

of the supplier, if the dealer maintains a reasonable line of

credit for each line-make of equipment.

(2) To mandate, coerce or attempt to coerce, a dealer to

order or accept delivery of equipment or repair parts not

required by law which have not been voluntarily ordered by

the dealer unless the equipment or repair parts are safety

features required by the supplier.

(3) To refuse a dealer the opportunity to participate in

the management, investment or the acquisition of any other

business.

(4) To refuse to deliver in reasonable quantities and

within a reasonable time, after receipt of the dealer's

order, to a dealer having a dealer agreement for the retail

sale of new equipment sold or distributed by the supplier,

equipment covered by the dealer agreement specifically

advertised or represented by the supplier to be available for

immediate delivery. The failure to deliver the equipment

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shall not be considered a violation of this act if the

failure is due to:

(i) prudent and reasonable restrictions on extension

of credit by the supplier to the dealer;

(ii) an act of God;

(iii) work stoppage or delay due to strike or labor

difficulty;

(iv) a bona fide shortage of materials;

(v) freight embargo; or

(vi) other cause over which the supplier has no

control.

(5) To discriminate, directly or indirectly, in filling

an order placed by a dealer for retail sale or lease of new

equipment under a dealer agreement between dealers of the

same product line.

(6) To discriminate, directly or indirectly, in price

between different dealers with respect to purchases of

equipment or repair parts of like quality, if the effect of

the discrimination may be to substantially lessen

competition, create a monopoly in a line of commerce or to

injure, destroy or prevent competition with a dealer that

either grants or knowingly receives the benefit of the

discrimination. Different prices may be charged if:

(i) the differences are due to the cost of

manufacture, sale or delivery of the equipment or repair

parts;

(ii) the supplier can show that its lower price was

made in good faith to meet an equally low price of a

competitor; or

(iii) the supplier can show that the difference in

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price is due to a volume-based incentive program or

volume-based discounts.

(7) To require a dealer to assent to a release,

assignment, novation, waiver or estoppel which would relieve

any person from liability imposed by this act.

(8) To recover supplier cost of reimbursement paid to a

dealer for equipment, repair parts or labor for which the

dealer has been reimbursed by the supplier.

(9) To impose, directly or indirectly, unreasonable

restrictions on the dealer relative to transfer, renewal,

termination, location or site control.

Section 9.2. Warranty.

(a) General rule.--Warranty obligations include product

improvement programs, product upgrade programs and recalls and

warranty work. Warranty compensation shall include compensation

for diagnostic time, repair service time, and repair parts

needed for warranty repairs. Compensation labor rate shall be at

the publicly posted shop labor rate.

(b) Payment of warranty claim.--Whenever a supplier and a

dealer enter into an agreement providing the dealer's customer

warranties, the supplier shall pay any warranty claim made by

the dealer for warranty parts or service within 30 days after

its receipt and approval. The supplier shall approve or

disapprove a warranty claim within 30 days after its receipt. If

a claim is not specifically disapproved in writing within 30

days after its receipt, it is deemed to be approved and payment

shall be made by the supplier within 30 days. The following

apply:

(1) A dealer that performs warranty repairs as provided

for under this section shall be compensated for the dealer's

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labor in an amount that is not less than the reasonable and

customary amount of time required to complete the work,

expressed in hours and fraction of hours, multiplied by the

dealer's posted hourly labor rate.

(2) A dealer that performs warranty work as provided for

under this section shall be compensated for repair parts used

in fulfilling the warranty work in accordance with the

supplier's stated warranty policy, but in no case in an

amount that is less than the dealer's net cost for the repair

parts plus 20%, to reimburse the dealer's reasonable costs of

doing business and providing the warranty service on behalf

of the supplier. If the warranty work is provided on behalf

of the supplier on a product sold by a nonservicing dealer,

the compensation for repair parts used in fulfilling the

warranty work must be at an amount that is not less than the

supplier's suggested list price or dealer's net cost plus a

minimum of 30%, whichever is greater, plus freight and

handling charges applicable to the repair parts.

dealer agreement, the supplier shall indemnify and hold harmless

the dealer against any judgment for damages arising from breach

of warranty or rescission of the sale by the supplier as long as

the dealer has no independent liability for misstatement or

misrepresentation to the customer regarding the supplier's

product or product warranty.

Section 9.3. Remedies and enforcement.

The provisions of this act shall be supplemental to any

dealer agreement between the dealer and the supplier which

provides the dealer with greater protection. The dealer may

elect to pursue its contract remedy or the remedy provided by

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State law, or both. An election by the dealer to pursue such

remedies shall not bar its right to exercise any other remedies

that may be granted by law or in equity. If a supplier violates

this act, a dealer may bring an action against the supplier in a

court of competent jurisdiction for damages sustained by the

dealer as a consequence of the supplier's violation, including

consequential damages and incidental damages, court costs,

attorney fees and costs of arbitrators. A dealer may seek

injunctive relief against unlawful termination, cancellation,

nonrenewal or substantial change of competitive circumstances.

The remedies set forth under this section shall not be deemed

exclusive and shall be in addition to any other remedies

permitted by law.

Section 9.4. Waiver.

(a) Waiver of act void.--The following are void:

(1) An attempted waiver of a provision of this act.

(2) Any provision in a dealer agreement that purports to

elect the application of the law of a state other than this

Commonwealth.

(3) Any provision in a dealer agreement that requires a

dealer to pay attorney fees incurred by a supplier.

(b) Waiver of right to trial by jury.--No supplier may

require a dealer to waive the right to a trial by jury as a

remedy to a supplier and dealer contract or agreement dispute.

Section 7. This act shall take effect immediately.

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