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How to Fix the U.S. Auto Industry: A Dealership Perspective
It is widely acknowledged that the financial bailout of the U.S. automobile industry will not be sufficient to return the industry to solid financial condition. Estimates are that manufacturing and distribution capacity is about 30% above likely demand for the foreseeable future, so a broad restructuring and downsizing is probably needed. FBLA asked legal experts what they would do to change laws affecting the relationships of auto manufacturers and auto dealers to accommodate the necessary restructuring.
W. Michael Garner,
Dady & Garner, P.A. (Minneapolis)
Dady & Garner, P.A., which represents only franchisees, dealers, and distributors in their disputes with franchisors and manufacturers, believes that one of the very biggest challenges facing automobile dealers in this country is the proposed “downsizing” of dealer networks. Downsizing has been on automakers' agendas for some time, and, with the current recession, is going to accelerate.
Currently, as we saw with General Motors' discontinuance of the Oldsmobile line, the task of ensuring that dealers get fair and equitable compensation for a discontinued line or for elimination of a dealer point, is cumbersome, expensive, and unnecessarily time-consuming. The legal tools presently available are mostly state laws that require “good cause” for termination; these laws vary by state, and for the most part were not drafted to address market withdrawal.
Accordingly, we believe that federal legislation providing for compensation to automobile dealers for market withdrawal or downsizing by manufacturers is the most important and most pressing current need. Such legislation would provide adequate notice for dealers about to be terminated, a streamlined and equitable means for valuing their dealerships, provisions for them to make a transition to becoming dealers in other lines, if possible, and compensation not only for the value of their business, but for the years they have invested in developing the brand. Fortunately, in the automobile industry, there are well-established guidelines and benchmarks for valuing dealerships as well as good case law for putting a price tag on a particular line. The wisdom of a legislative solution is demonstrated by the difficulty that courts have had in dealing with market withdrawal situations. On the other hand, legislative precedents for market withdrawal, such as the Petroleum Marketing Practices Act, show that fair and speedy solutions to market withdrawal are achievable.
Leonard A. Bellavia, Bellavia Gentile & Associates, LLP (Mineola, NY)
Warranty reimbursement. Some states do not obligate manufacturers to reimburse dealers at retail rates for warranty parts and labor. Dealers would greatly benefit from a statute that requires reimbursement at retail rates. In most instances dealers are reimbursed at an approximate rate of cost plus 40%. In reality, the actual retail rate is approximately cost plus 70%. A change in the law would greatly increase a dealer's profit margin.
Legal fee shifting. In order to level the playing field between dealers and manufacturers, several state legislatures enacted statutes that allow the successful litigant in a dealer/manufacturer dispute to recoup legal fees from the other side. The original intent of these statutes was to compensate the successful dealer litigant only. In recent years manufacturers have argued that the shift can be applied to any successful litigant and have used that threat to coerce dealers into settling cases or from filing a claim altogether. The statutes must be revised to clearly show the legislative intent to level the playing field and shift the burden back to the manufacturers. Without a revision, the current statutes will continue to have a chilling effect on dealers who wish to enforce their rights.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.