The Assn. of Equipment Manufacturers along with AGCO Corp., CNH Industrial, Deere & Co. and Kubota Tractor Corp. have filed suit to block a North Dakota dealer protection law that was scheduled to take effect on Aug. 1.
Last March, North Dakota signed into law the Farm Equipment Dealer Bill of Rights legislation (SB 2289) that addressed several manufacturer contract issues that was sponsored and supported by the North Dakota Implement Dealers Assn. Areas covered included the prohibition of mandatory equipment and parts purchases, minimum order requirements, and “purity” requirements stipulating the separation of facilities/personnel/display space/etc. It also addressed the requirement that manufacturers reimburse dealers for warranty parts, labor and transportation at the respective dealer’s non-warranty customer pay rate.
Other issues addressed by SB 2289 include prohibitions regarding dealership terminations, transparent and reasonable performance requirements, limitations regarding warranty and incentive payment chargebacks, and the establishment of a fair process through which dealers may transfer or sell their dealership.
In its suit the manufacturers say, “Senate Bill 2289 creates arguably the most restrictive dealership law in the entire country. Both individually and in combination, the provisions of Senate Bill 2289 impose unprecedented restrictions on the ability of farm equipment manufacturers to enforce new and existing contracts with dealers, to maintain their federally protected trademark rights, to enforce dealership appearance and performance standards, and to monitor or prevent warranty and incentive payment fraud.”
In a note to NDIDA dealer members, association president and CEO Matthew Larsgaard, said, “This type of manufacturer initiated lawsuit is not a new concept. We have seen both automobile and farm equipment manufacturers sue several states on the East Coast with similar arguments regarding the ‘constitutionality’ of state dealer franchise laws. In every case, the courts ruled in favor of the dealers.”