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Arent Fox Wins Two New York DMV Decisions for Auto Dealers

Earlier this month, Arent Fox secured two important wins that have major implications for auto dealers.

Bayside Decision

On July 2, the New York Department of Motor Vehicles directed BMW of North America to approve a relocation request by BMW of Bayside. In its decision, the DMV recognized that New York law prohibits franchisors from “unreasonably preventing or refusing” the relocation to another site within a dealer’s relevant market area. BMW tried to prevent Bayside from moving to an objectively superior location that would better serve customers and allow Bayside to meet BMW’s own facility standards. After a trial, the DMV found that BMW’s refusal to approve the relocation was “unreasonable” and “did not demonstrate good-faith and honesty.” A copy of the decision can be found here.

“BMW attempted to block our client’s move to an outstanding location on Long Island’s Gold Coast. Fortunately, the DMV is requiring that BMW approve the move for several reasons, including so that Bayside could meet BMW’s own facility design demands. This decision is an important precedent for New York dealers.”

– Russell P. McRory, Partner

AF Team

The Arent Fox team representing Bayside included Russell P. McRoryTaniel E. AndersonDaisy Sexton, and David Yearwood.

Larchmont Decision

In a second decision, the DMV Appeals Board affirmed an earlier trial decision finding that FCA’s Minimum Sales Responsibility (MSR) sales performance standard violated New York law. The case was based mainly on the decision secured by Arent Fox in Beck Chevrolet v. General Motors LLC in 2016, where New York’s highest court found a similar metric, GM’s Retail Sales Index or RSI, also violated the state Dealer Act. A link to the decision is here.

The DMV Appeals Board affirmed that the MSR did not consider the effect of local sales conditions, which were severely disrupted by brokering. The Appeals Board found that certain favored dealers benefitted from favorably drawn market territory, favorable adjustments to their objectives, and unevenly applied price discounts.

“This decision should put the final nail in sales effectiveness’s coffin, both as a performance metric and an input in bonus program objectives that affect the price dealers pay for their inventory. FCA improperly put its thumb on the scale for favored dealers in the form of better pricing and access to incentive payments, while turning a blind eye to the impact of brokering activity in the New York metropolitan market.

– Russell P. McRory, Partner

The Arent Fox team representing Larchmont included Russell P. McRory, Michael P. McMahanCharles GallaerDavid Yearwood, and Daisy Sexton.

About Arent Fox
Founded in 1942, Arent Fox is internationally recognized in core practice areas where business and the law intersect. With more than 430 lawyers and professionals, the firm provides strategic legal counsel and multidisciplinary solutions to a global roster of corporations, governments, and trade associations.

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