NYSADA advises New York franchised motor vehicle dealers that they should be aware of the most recent United States Court of Appeals for the Second Circuit Decision (the "Second Circuit") in the case of Beck Chevrolet Co, Inc. v. General Motors LLC (the "Beck Case") (Decided December 29, 2016) concerning the reasonableness of General Motors' ("GM") sales performance rating system known as "RSI" or "Retail Sales Index" in New York State. In order to reach its Decision, the Second Circuit had previously asked the NYS Court of Appeals to interpret the New York Franchised Motor Vehicle Dealer Act (the "FMVDA") and the NYS Court of Appeals determined that (a) GM's RSI is "unreasonable" and "unfair" under the FMVDA because it fails to account for local brand popularity or import bias and (b) a change to a dealer's area of geographic sales responsibility may constitute a negative modification to the dealer's "franchise agreement" in violation of the FMVDA if such modification is unfair and substantially and adversely affects the dealer's rights, obligations, investment or return on investment.
As a result of the NYS Court of Appeals determination, the Second Circuit directed the lower federal Court (the U. S. District Court) to (a) enter judgment for Beck Chevrolet on its claim that GM violated the section of the FMVDA that makes it unlawful for a franchisor to "use an unreasonable, arbitrary or unfair sales or other performance standard in determining a franchised motor vehicle dealer's compliance with a franchise agreement." FMVDA Section 463(2) (gg) and (b) determine whether GM's revision to Beck Chevrolet's area of geographic sales responsibility was unfair or substantially and adversely affected Beck Chevrolet's rights, obligations, investment or return on its investment in violation of the FMVDA (Section 463(2)(ff).
We want to again praise the perseverance of the plaintiff dealer in this important case, Beck Chevrolet, which resulted in the setting of these vital "dealer rights" Court holdings. An additional factor that was instrumental in obtaining the positive results against GM was the retention of the law firm Bellavia Blatt & Crossett by NYSADA to submit a "friend of the court" legal brief in favor of the dealer in the "Beck" case.
Precisely because manufacturers were using statewide metrics to measure dealer performance that failed to account for local brand popularity or import bias, NYSADA had commissioned an Anderson Economics Group expert statewide analysis and study of different buyer preferences in multiple market areas. This information was made available to every NYSADA member so that dealers could be armed with data to rebut any false allegation that it was underperforming. Additionally, another important submission in the case were many years of the NYSADA sponsored NYS Auto Outlook Quarterly reports which clearly show brand preference in specific geographic areas. NYSADA and its legal counsel will continue to monitor developments on this topic and will report any further developments to member dealers as they occur. It should be noted that NYSADA has been advised that, while GM has indicated to dealers that it plans to revise its RSI system in light of the recent Court decisions, recent GM letters to dealers have shown that GM is still utilizing RSI and statewide market share averages in some capacity to assess or measure its dealers. As such, NYSADA GM dealer members that wish to formally object to GM's continued application of the flawed RSI methodology should contact NYSADA at (518) 463-1148 and speak with Ed Richardson (210) or Peter Marthy (206).