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Darling's v. Ford Motor, part 2.
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?

	[¶13]  The statute does impose implicit limits on the rates that a
dealer may charge.  Section 1174(1) (1997) prohibits conduct which is
"arbitrary, in bad faith or unconscionable."  Since the statute does not define
these terms, we examine the terms in the context of the statutory scheme
of which it is a part to implement legislative intent.  Wheaton Van Lines, Inc.
v. Gahagan, 669 A.2d 745, 748 (Me. 1996).  Although the Legislature wanted
to prevent nonwarranty customers from paying inflated prices, it limited its
concern to inflated prices resulting from manufacturers reimbursing dealers
at artificially low rates and chose to allow competition in the market to
establish the rate charged.  L.D. 1879, Statement of Fact 4 (109th Legis.);
Final Report, at 4-5.  	
	[¶14]  In the absence of evidence to the contrary, we conclude that
the Legislature intended the generally accepted meanings of the terms to
apply.  In  Schott Motorcycle Supply, Inc. v. American Honda Motor Co., Inc.,
976 F.2d 58, 63 (1st Cir. 1992), "arbitrary, in bad faith, or unconscionable"
was defined as follows:
"arbitrary" has been defined as "selected at random and without
reason," and "unconscionable" as "shockingly unfair or unjust." 
Webster's New Collegiate Dictionary.  And although the Maine
statute does not define "bad faith," it does provide a definition of
"good faith":  "honesty in fact and the observation of reasonable
commercial standards of fair dealing in the trade" as defined
and interpreted in § 2-103(1)(b) of the U.C.C.  A party
presumably acts in bad faith when one of these two elements is
missing.

	[¶15]  The District Court found that the Motor Times Manual that
Darling's uses for pricing is not "arbitrary, in bad faith or unconscionable"
according to the generally accepted meanings of these terms.  This finding
does not mean that Darling's may use the Motor Times Manual, unless the
District Court also finds that the manual identifies the "retail rates
customarily charged," as required by 10 M.R.S.A. § 1176 (1997).  The term
"customarily" means identifying the pricing practices that dealers generally
use, which are consistent with "reasonable commercial standards of fair
dealing in the trade."  Schott, 976 F.2d at 63; see also, e.g.,  11 M.R.S.A.
1­p;205(3) (1995) ("A usage of trade is any practice or method of dealing
having such regularity of observance in a place, vocation or trade as to justify
an expectation that it will be observed with respect to the transaction in
question.").
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?

	[¶16]  Section 1176 requires a manufacturer to reimburse a dealer for
warranty labor at retail rates only if the dealer's nonwarranty rate for labor is
"routinely posted in a place conspicuous to its service customer."  The
District Court found that to comply with this requirement, Darling's posted
the notice set forth in 29-A M.R.S.A. § 1805 (1997) and placed flat rate
pricing information on a shelf below the statutorily mandated notice.  The
section 1805 notice requires a dealer to notify consumers that it uses flat
rates, that they should ask the service manager to explain what a flat rate is,
and that they should inquire when the dealer uses flat rates.  29-A M.R.S.A.
§ 1805 (1997).  Ford argues that Darling's actions do not satisfy section
1176, because, Ford asserts,  section 1176 requires Darling's to post on the
wall every flat rate that it uses.  
	[¶17]  Construing the definition of "post" as narrowly as Ford
advocates would lead to an illogical result.  Fullerton v. Knox County
Comm'rs, 672 A.2d 592, 594 (Me. 1996).  A dealer may have so many flat
rates that posting them on the wall would be cumbersome and confusing to
consumers.  Presuming that the District Court concludes that the underlying
flat rates that Darling's uses comply with the statute, the District Court's
findings about Darling's labor rate posting practices are sufficient to
conclude that these practices satisfy the posting requirement of  section
1176.
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?

	[¶18]  Ford argues that the statute allows it to require Darling's to
provide proof of an actual sale of the same part at the claimed retail rate
within the last six months before it reimburses Darling's.   Section 1176
requires that a manufacturer "reimburse the franchisor for any parts so
provided at the retail rate customarily charged by that franchisor for the
same parts when not provided in satisfaction of a warranty."   The statutory
language does not require that a dealer prove it has made an actual sale of a
specifically matching part, which might be impossible to prove with new
vehicle parts.  Instead, section 1176 requires a determination of the rate
that a dealer would "customarily" charge a nonwarranty customer for a part. 
That determination can be accomplished without requiring proof of a
nonwarranty sale, for example, by showing a practice of uniform markup or
other pricing mechanism for all parts or for a similar part.  If dealers have
set similar prices for a part, those prices constitute the "retail rate
customarily charged" for that part, even if it has not been sold yet.
(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?

	[¶19]  The statute does not prohibit the manufacturer from imposing
reasonable verification requirements on dealers or from imposing a time
limit on submitting claims for reimbursement.  Allowing manufacturers to
impose reasonable verification requirements is consistent with the statute's
legislative purpose to protect consumers, because it provides a mechanism
to ensure that dealers submit claims for reimbursement at bona fide rates. 
The District Court found that Ford's six month time limit for claim
submissions is a reasonable requirement.  Section 1176, therefore, does not
prohibit Ford from imposing this verification requirement.
F.Are repairs performed by dealers under a manufacturer's recall, sublet
or owner notification program covered by 10 M.R.S.A. § 1176?

	[¶20]  Darling's argues that section 1176 covers sublet warranty
repairs.  Sublet repairs occur when the dealer must make a repair, but
cannot provide the specialized labor or materials required to make the
repair.  In these situations, the dealers hires a subcontractor to make the
repair.  Darling's charges a twenty-five percent markup over its cost for the
sublet work to its nonwarranty customers and wants Ford to reimburse it at
this markup for subcontracted warranty work.  Ford argues that the statute
does not apply to sublet repairs.  
	[¶21]  We determine that section 1176 includes reimbursement for
sublet repairs.  The statute governs reimbursement of all repairs in which a
manufacturer "requires or permits a motor vehicle franchisee to perform
labor or provide parts in satisfaction of a warranty . . . ."  10 M.R.S.A. § 1176
(1997).  Since section 1176 applies to all warranty repairs, it applies to
warranty repairs accepted by dealers who lack the ability to make all repairs
on their premises, as well as to dealers who have the ability to make all
repairs on their premises.  
	[¶22]  Darling's also argues that the statute requires Ford to reimburse
it for service that it provides in connection with vehicle recalls.  Ford
requires Darling's to make vehicle recall repairs.  The statute requires
reimbursement for parts and labor provided "in satisfaction of a warranty
created by the franchisor."  10 M.R.S.A. § 1176 (1997).  The statute covers
vehicle recalls because they arise from an implied warranty of
merchantability that Ford creates by selling the vehicles and then requiring
Darling's to provide parts and labor in connection with that implied
warranty.
	[¶23]  Finally, Darling's argues that the statute requires Ford to
reimburse it for service that it provides in connection with Ford's owner
notification program.  The statute requires reimbursement for parts and
labor provided "in satisfaction of a warranty created by the franchisor."  10
M.R.S.A. § 1176.  The statute covers repairs made in connection with owner
notification programs because Ford extends its warranty to correct vehicle
defects through owner notification programs and then requires Darling's to
make the repairs covered by them.
	The entry is:
We answer the certified questions as
indicated in this opinion.

Attorneys for plaintiff: Warren M. Silver, Esq., (orally) Karen D. Kemble, Esq. Silver & Perry, P.A. P O Box 844 Bangor, ME 04402-0844 Attorneys for defendant: Andrew M. Horton, Esq., (orally) Verrill & Dana, LLP P O Box 586 Portland, ME 04112-0586 Michael R. Feagley, Esq. Mayer, Brown & Platt 190 South LaSalle Chicago, IL 60604 Attorneys for amici curiae: Gerald F. Petrucelli, Esq. Bruce A. McGlauflin, Esq. Petrucelli & Martin, LLP 50 Monument Square Portland, Me 04104-5033 (for American Ass'n of Automobile Manufacturers and Int'l Ass'n of Automobile Manufacturers) Jason Caron, Esq. Preti, Flaherty, Beliveau & Pachios, LLC P O Box 9546 Portland, ME 04112-9546 (for Maine Automobile Dealers Ass'n and Nat'l Automobile Dealers Ass'n)
FOOTNOTES******************************** {1} 4 M.R.S.A. § 57 (1989) provides in relevant part: When it shall appear to the Supreme Court of the United States, or to any court of appeals or district court of the United States, that there are involved in any proceeding before it one or more questions of law of this State, which may be determinative of the cause, and there are no clear controlling precedents in the decisions of the Supreme Judicial Court, such federal court may certify any such questions of law of this State to the Supreme Judicial Court for instructions concerning such questions of state law, which certificate the Supreme Judicial Court, sitting as the Law Court, may by written opinion, answer. M.R. Civ. P. 76B provides the procedural requirements for certifying questions. {2} 10 M.R.S.A. § 1176 (1997) provides in relevant part: If a motor vehicle franchisor requires or permits a motor vehicle franchisee to perform labor or provide parts in satisfaction of a warranty created by the franchisor, the franchisor shall properly and promptly fulfill its warranty obligations, in the case of motor vehicles over 10,000 pounds gross vehicle weight rating, shall adequately and fairly compensate the franchisee for any parts so provided, and in the case of all other motor vehicles, shall reimburse the franchisee for any parts so provided at the retail rate customarily charged by that franchisee for the same parts when not performed in satisfaction of a warranty. Further, the franchisor shall reimburse the franchisee for any labor so performed 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 warranty is routinely posted in a place conspicuous to its service customer. A franchisor is not required to pay the price charged by the dealer to retail customers for parts of system, appliances, furnishings, accessories and fixtures of a motor home as defined in Title 29-A, section 101, subsection 40 that are designed, used and maintained primarily for nonvehicular residential purposes. Any claim made by a franchisee for compensation for parts provided or for reimbursement for labor performed in satisfaction of a warranty must be paid within 30 days of its approval. All the claims must be either approved or disapproved within 30 days of their receipt. When any such claim is disapproved, the franchisee that submitted it must be notified in writing of its disapproval within that period, together with the specific reasons for its disapproval. No franchisor may, by agreement, by restriction upon reimbursement, or otherwise, restrict the nature or extent of labor performed or parts provided so that such restriction impairs the franchisee's ability to satisfy a warranty created by the franchisor by performing labor in a professional manner or by providing parts required in accordance with generally accepted standards. In any claim that is disapproved by the manufacturer, and the dealer brings legal action to collect the disapproved claim and is successful in the action, the court shall award the dealer the cost of the action together with reasonable attorney fees. Reasonable attorney fees shall be determined by the value of the time reasonably expended by the attorney and not by the amount of the recovery on behalf of the dealer. [Paragraph 3 is omitted because it is not relevant to the certified questions as presented to the Law Court.] {3} This Court observes that the term "particularized claim" does not appear in section 1176; it is the term used by the parties and the District Court in this litigation. {4} This Court observes that the term "labor rate" does not appear in section 1176; it is the term used by the parties and the District Court in this litigation. The statute uses the language "retail rate customarily charged . . . for the same labor when not performed in satisfaction of a warranty." 10 M.R.S.A. § 1176 (1997). {5} "Flat rate" pricing, as used here, refers to when a dealer 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 thinks is appropriate. {6} 29-A M.R.S.A. § 1805 (1996 & Supp. 1997) provides: 1. Form of notice. A repair facility must post the following notice in a place where it is reasonably likely to be seen by customers. The notice must be completed with information on charges and printed so that it is conspicuous and can be read by the average person. The following form must be used: "NOTICE TO OUR CUSTOMERS REQUIRED UNDER STATE LAW" Before we begin making repairs, you have a right to put in writing the total amount you agree to pay for repairs. You will not have to pay anything over that amount unless you agree to it when we contact you later. Before you pay your bill, you have a right to inspect any replaced parts. You have a right to take with you any replaced parts, unless we are required to return the parts to our distributor or manufacturer. We can not install any used or rebuilt parts unless you specifically agree in advance. You cannot be charged any fee for exercising these rights. WE CHARGE $ PER HOUR FOR LABOR. (We round off the time to the nearest .)" 2. Flat rate. The notice must also contain the following if it applies: "We also charge a flat rate for some repairs. Our service manager will explain what a flat rate is and show you how much it may cost you. A flat-rate charge may not match the time actually spent repairing your vehicle. PLEASE ASK US WHETHER WE WILL CHARGE YOU BY THE HOUR OR BY A FLAT RATE." 3. Availability of guide. The notice must also contain the following: "The current edition of the National Automobile Dealer's Association Official Used Car Guide New England Edition is available for your review upon request."
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