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Darling's v. Ford Motor Co
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 1998 ME 232
Docket: Fed-98-179
Argued: October 5, 1998
Decided: October 27, 1998
Panel: WATHEN, C.J., and CLIFFORD, RUDMAN, ALEXANDER, and CALKINS, JJ.
DARLING'S d/b/a
DARLING'S BANGOR FORD
v.
FORD MOTOR COMPANY
ALEXANDER, J.
[¶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 pricing{5} 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 charge.{6}
Subsection 2 of section 1805 directs dealers to notify consumers when flat
rate pricing is used and indicate that information about flat rate pricing is
available upon request.
[¶12] Section 1805 supports the conclusion that "retail rate" does
not exclude flat rate pricing, because it allows dealers to use flat rates, as
long as they comply with its notification requirements. Subsequent
amendments to section 1805 further support this conclusion. L.D. 1044,
Statement of Fact (114th Legis. 1989), 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 bill ensures that automobile repair customers understand all repair
charges, including whether they are being charged an hourly labor rate or a
flat rate."); P.L. 1997, ch. 221, § 1 (118th Legis. 1997) (requiring dealer to
include the statement "please ask us whether we will charge you by the hour
or by a flat rate" in its posted notice).
On to part 2 of this opinion
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