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| PRIOR PRINTER'S NO. 1877 | PRINTER'S NO. 3707 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY HANNA, CALTAGIRONE, CONKLIN, FABRIZIO, HORNAMAN, HOUGHTON, JOSEPHS, MOUL, PHILLIPS, READSHAW, SOLOBAY, SWANGER, YOUNGBLOOD, STERN, BAKER, TALLMAN, EVERETT, REICHLEY, MARSHALL AND LONGIETTI, MAY 26, 2009 |
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| AS REPORTED FROM COMMITTEE ON COMMERCE, HOUSE OF REPRESENTATIVES, AS AMENDED, MAY 4, 2010 |
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| AN ACT |
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1 | Amending the act of December 18, 1987 (P.L.412, No.86), entitled |
2 | "An act providing for the repurchase by the wholesaler, |
3 | manufacturer or distributor, from dealers or heirs of |
4 | dealers, of certain equipment, certain attachments and parts |
5 | held for sale upon termination of agreement whereby the |
6 | dealer agrees to maintain a stock of such implements, |
7 | attachments and parts, and for the repurchase of certain |
8 | tools," further providing for definitions, for termination of |
9 | dealer agreement, for death or incapacitation of dealer and |
10 | for repurchase of unused specialized repair tools; repealing |
11 | provisions relating to coercion; and providing for violations |
12 | of act, for warranty, for remedies and enforcement and for |
13 | waiver. |
14 | The General Assembly of the Commonwealth of Pennsylvania |
15 | hereby enacts as follows: |
16 | Section 1. Sections 2, 3(a) and (f), 5 and 6 Section 2 of | <-- |
17 | the act of December 18, 1987 (P.L.412, No.86), known as the |
18 | Pennsylvania Fair Dealership Law, are is amended to read: | <-- |
19 | Section 2. Definitions. |
20 | The following words and phrases when used in this act shall |
21 | have the meanings given to them in this section unless the |
22 | context clearly indicates otherwise: |
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1 | "Construction equipment manufacturer." A manufacturer of | <-- |
2 | construction, industrial, forestry, paving and mining equipment, |
3 | repair parts or specialized repair tools that does not |
4 | manufacture consumer or farming equipment either by itself or |
5 | through an affiliate. |
6 | "Consumer equipment." Machinery designed and manufactured |
7 | primarily for household use. |
8 | "Current net price." The price, applicable to an individual |
9 | dealer, listed in the printed price list or catalog or invoice |
10 | in use by the supplier on the date the dealer agreement is |
11 | terminated or canceled or has failed to be renewed. |
12 | "Dealer." Any person, firm or corporation engaged primarily |
13 | in the business of retail sale or repair of equipment. The term |
14 | includes the heir or authorized representative of a person or |
15 | majority stockholder of a corporation operating as a dealer in |
16 | the event such person or stockholder dies or becomes |
17 | incapacitated. The term does not include a person, firm or | <-- |
18 | corporation that: |
19 | (1) Has purchased new equipment from a single |
20 | construction equipment manufacturer, constituting no less |
21 | than 75% of the person's, firm's or corporation's new |
22 | equipment, calculated on the basis of net cost. |
23 | (2) Has an annual average sales volume in excess of |
24 | $100,000,000 over the seven-calendar-year period immediately |
25 | preceding the applicable determination date; provided, |
26 | however, the $100,000,000 threshold shall be increased each |
27 | year by an amount equal to the then-current threshold |
28 | multiplied by the percentage increase in the index from |
29 | January of the immediately preceding calendar year to January |
30 | of the current year. |
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1 | (3) Directly employs over 250 persons. |
2 | (4) Has a written agreement with a construction |
3 | equipment manufacturer that requires the construction |
4 | equipment manufacturer to compensate the person, firm or |
5 | corporation for warranty labor costs either as: |
6 | (i) a discount in the pricing of the equipment to |
7 | the person, firm or corporation; or |
8 | (ii) a lump sum payment to the person, firm or |
9 | corporation that is made within 90 days of the sale of |
10 | the construction equipment manufacturer's new equipment. |
11 | "Dealer agreement." An oral or written contract, franchise |
12 | agreement or security agreement between a dealer and supplier |
13 | whereby the dealer agrees to acquire from the supplier and to |
14 | maintain an inventory of equipment, repair parts or specialized |
15 | repair tools. |
16 | "Equipment." Machines, implements of husbandry, all-terrain |
17 | vehicles, golf, turf and grounds maintenance machines, outdoor |
18 | power equipment, power sports machines and utility vehicles and |
19 | machine attachments, accessories, completing packages and |
20 | bundles designed for or adapted and used for agriculture, |
21 | horticulture, floriculture, light construction, livestock | <-- |
22 | raising, silviculture, landscaping and grounds maintenance, even |
23 | though incidentally operated or used upon the highways, |
24 | including, but not limited to, tractors, farm implements, |
25 | loaders, backhoes, lawn mowers, rototillers, etc., and any |
26 | business signs purchased by requirement of the supplier which |
27 | are less than five years old. [The term shall not include[: | <-- |
28 | (1)] equipment manufactured solely for the purpose of | <-- |
29 | industrial construction[; or | <-- |
30 | (2) all-terrain vehicles as defined in 75 Pa.C.S. § 7702 |
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1 | (relating to definitions)]..] | <-- |
2 | "Farming equipment." Machinery designed and used for |
3 | agricultural operations, including farm tractors, choppers, |
4 | balers, reapers, mowers, pickers, threshers, combines, plows, |
5 | harrows, planters and any other vehicles or machines primarily |
6 | designed for use as implements of husbandry or multipurpose |
7 | agricultural vehicles. |
8 | "Index." The producer price index prepared by the United |
9 | States Department of Labor, Bureau of Labor Statistics, as it |
10 | relates to construction, mining and forestry equipment. |
11 | "Mining equipment." Machinery designed and used in the |
12 | production process at a mine site, including off-highway mining |
13 | trucks, large-wheel loaders, large track-type tractors, large- |
14 | wheel dozers, mining motor graders, open bowl scrapers and |
15 | underground mining trucks. |
16 | "Net cost." The amount paid by the dealer to the supplier, |
17 | plus the cost of freight, if any, incurred by the dealer[.], as | <-- |
18 | long as the manufacturer initiates the termination or |
19 | nonrenewal. The term does not include the cost of freight if the |
20 | dealer initiates the termination or nonrenewal. |
21 | "Nonservicing dealer." A dealer that sells equipment but |
22 | does not provide parts and service. |
23 | "Paving equipment." Machinery designed and used for asphalt |
24 | paving, including asphalt pavers, cold planers, asphalt |
25 | compactors, pneumatic compactors and rotary mixers. |
26 | "Repair parts." All parts, component parts and superseded |
27 | parts related to a sale and related to repair of equipment. The |
28 | term includes bundled parts, which means several related parts, |
29 | components or accessories, bound together as one inclusive item |
30 | or priced as an inclusive item. |
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1 | "Specialized repair tools." Tools and equipment, including |
2 | diagnostic equipment, designed to be used or useful only in the |
3 | maintenance and repair of equipment. |
4 | "Supplier." [A manufacturer of equipment or repair parts or |
5 | a wholesaler or distributor of equipment or repair parts who has |
6 | a valid existing contract with a manufacturer of equipment or |
7 | repair parts, including the successors or assigns of such |
8 | manufacturer, wholesaler or distributor.] A distributor, |
9 | manufacturer or wholesaler of equipment, repair parts or |
10 | specialized repair tools who enters into a dealer agreement with |
11 | a dealer. |
12 | Section 2. Section 3(a) and (f) of the act are amended and | <-- |
13 | the section is amended by adding a subsection to read: |
14 | Section 3. Termination of dealer agreement. |
15 | (a) General provisions.-- |
16 | (1) A dealer may terminate a dealer agreement with good |
17 | cause. A dealer must give the supplier at least 30 days prior |
18 | notice via registered letter mailed to the last known address |
19 | of the supplier. |
20 | (2) It shall be unlawful for a supplier to terminate, |
21 | cancel or fail to renew a dealer agreement or substantially | <-- |
22 | change the competitive circumstances of a dealer agreement |
23 | without good cause except as provided in subsection (b) or |
24 | (c). For the purposes of this act, good cause means the | <-- |
25 | failure by a dealer to substantially comply with the |
26 | requirements imposed upon the dealer by the dealer agreement, |
27 | provided such requirements are not different from |
28 | requirements imposed on other similarly situated dealers |
29 | either by their terms or in the manner of their enforcement. |
30 | * * * |
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1 | (f) Deficiencies may be cured.--Except for termination, |
2 | cancellation or discontinuance for reasons set forth in |
3 | subsection (b)(3) through (7), the supplier shall allow the |
4 | dealer no less than [60] 90 days to cure the deficiencies set |
5 | forth in the notice required under subsection (e). Any such time |
6 | provided to the dealer to cure deficiencies shall be calculated |
7 | from the date of receipt of notice. |
8 | (g) Definition.--As used in this section, the term "good | <-- |
9 | cause" means the failure by a dealer to substantially comply |
10 | with the requirements imposed upon the dealer by the dealer |
11 | agreement, as long as the requirements are not different from |
12 | requirements imposed on other dealers of the same size, |
13 | geographic region and market demographics, either by their terms |
14 | or in the manner of their enforcement. |
15 | Section 3. Sections 5 and 6 of the act are amended to read: |
16 | Section 5. Death or incapacitation of dealer. |
17 | In the event of the death or incapacity of a dealer, the |
18 | supplier shall repurchase, at the option of the heir or |
19 | authorized representative of such person or stockholder, the |
20 | equipment, repair parts and specialized repair tools of the |
21 | dealer as if the supplier had terminated, canceled or failed to |
22 | renew the contract. The heir or authorized representative shall |
23 | have [120 days] one year from the date of the death of such |
24 | dealer or from the date such dealer is determined to be |
25 | incapacitated or becomes totally disabled, as applicable, to |
26 | exercise the option under this section. Nothing in this act |
27 | requires the repurchase of any equipment, repair parts and |
28 | specialized repair tools if the heir and supplier enter into a |
29 | new contract to operate the retail dealership. |
30 | Section 6. Repurchase of [unused specialized repair tools] |
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1 | specialized support products required by |
2 | manufacturer. |
3 | (a) General rule.--A supplier shall repurchase[, upon the |
4 | written request of a dealer, any specialized repair tool |
5 | purchased by the dealer pursuant to the requirements of the |
6 | supplier which remains unused for more than a 12-month period |
7 | after the dealer receives the same. The repurchase price payable |
8 | to the dealer under this section shall be the original cost to |
9 | the dealer plus a handling charge equal to 10% of such original |
10 | cost] at fair market value any specific signage, data processing |
11 | hardware, computer equipment, communications equipment or |
12 | software the supplier required the dealer to acquire or purchase |
13 | to satisfy the requirements of the supplier. Fair market value |
14 | of property subject to repurchase pursuant to this section shall |
15 | include the acquisition cost, including any installation, |
16 | shipping, handling, and set-up fees, less straight line |
17 | depreciation of such acquisition cost over five years. |
18 | (b) Amount.--Specialized repair tools shall be repurchased |
19 | at a sum equal to 75% of the last published net cost, including |
20 | shipping, handling and set-up fees, of all specialized repair |
21 | tools previously purchased pursuant to requirements of the |
22 | supplier. The specialized repair tools must be complete and in |
23 | working condition and must have been purchased within 15 years | <-- |
24 | prior to the date of notification of termination of the dealer |
25 | agreement. |
26 | Section 2 4. Section 9 of the act is repealed: | <-- |
27 | [Section 9. No coercion. |
28 | It shall be a violation for any supplier to require, attempt |
29 | to require, coerce or attempt to coerce any dealer in this |
30 | Commonwealth to order or accept delivery of any equipment or |
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1 | repair parts not required by law which shall not have been |
2 | voluntarily ordered by the dealer.] |
3 | Section 3 5. The act is amended by adding sections to read: | <-- |
4 | Section 9.1. Violations of act. |
5 | It shall be a violation for any supplier: |
6 | (1) To refuse a dealer the opportunity to represent, | <-- |
7 | purchase or sell competitive equipment. |
8 | (2) To require, mandate, coerce or attempt to coerce |
9 | verbally or otherwise a dealer to order or accept delivery of |
10 | any equipment or repair parts not required by law which shall |
11 | not have been voluntarily ordered by the dealer. |
12 | (3) To refuse a dealer from participating in the |
13 | management or investment to acquire any other business. |
14 | (4) To refuse to deliver in reasonable quantities and |
15 | within a reasonable time, after receipt of the dealer's |
16 | order, to any dealer having a dealer agreement for the retail |
17 | sale of new equipment sold or distributed by such supplier, |
18 | equipment covered by such dealer agreement specifically |
19 | advertised or represented by such supplier to be available |
20 | for immediate delivery. The failure to deliver any such |
21 | equipment shall not be considered a violation of this act if |
22 | the failure is due to prudent and reasonable restrictions on |
23 | extension of credit by the supplier to the dealer, an act of |
24 | God, work stoppage or delay due to strike or labor |
25 | difficulty, a bona fide shortage of materials, freight |
26 | embargo or other cause over which the supplier has no |
27 | control. |
28 | (5) To discriminate, directly or indirectly, in filling |
29 | an order placed by a dealer for retail sale or lease of new |
30 | equipment under a dealer agreement as between dealers of the |
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1 | same product line. |
2 | (6) To discriminate, directly or indirectly, in price |
3 | between different dealers with respect to purchases of |
4 | equipment or repair parts of like quality, where the effect |
5 | of the discrimination may be to substantially lessen |
6 | competition, tend to create a monopoly in any line of |
7 | commerce or injure, destroy or prevent competition with any |
8 | dealer who either grants or knowingly receives the benefit of |
9 | the discrimination. However, different prices may be charged |
10 | if: |
11 | (i) the differences are due to the cost of |
12 | manufacture, sale or delivery of the equipment or repair |
13 | parts; or |
14 | (ii) the supplier can show that its lower price was |
15 | made in good faith to meet an equally low price of a |
16 | competitor. |
17 | (7) To require a dealer to assent to a release, |
18 | assignment, novation, waiver or estoppel which would relieve |
19 | any person from liability imposed by this act. |
20 | (1) To mandate, coerce or attempt to coerce a dealer | <-- |
21 | concerning the opportunity to represent, purchase or sell |
22 | competitive equipment. |
23 | (2) To mandate, coerce or attempt to coerce a dealer to |
24 | order or accept delivery of equipment or repair parts not |
25 | required by law which have not been voluntarily ordered by |
26 | the dealer unless the equipment or repair parts are safety |
27 | features required by the supplier. |
28 | (3) To refuse a dealer the opportunity to participate in |
29 | the management or investment to acquire any other business. |
30 | (4) To refuse to deliver in reasonable quantities and |
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1 | within a reasonable time, after receipt of the dealer's |
2 | order, to a dealer having a dealer agreement for the retail |
3 | sale of new equipment sold or distributed by the supplier, |
4 | equipment covered by the dealer agreement specifically |
5 | advertised or represented by the supplier to be available for |
6 | immediate delivery. The failure to deliver the equipment |
7 | shall not be considered a violation of this act if the |
8 | failure is due to prudent and reasonable restrictions on |
9 | extension of credit by the supplier to the dealer, an act of |
10 | God, work stoppage or delay due to strike or labor |
11 | difficulty, a bona fide shortage of materials, freight |
12 | embargo or other cause over which the supplier has no |
13 | control. |
14 | (5) To discriminate, directly or indirectly, in filling |
15 | an order placed by a dealer for retail sale or lease of new |
16 | equipment under a dealer agreement as between dealers of the |
17 | same product line. |
18 | (6) To discriminate, directly or indirectly, in price |
19 | between different dealers with respect to purchases of |
20 | equipment or repair parts of like quality, if the effect of |
21 | the discrimination may be to substantially lessen |
22 | competition; to tend to create a monopoly in a line of |
23 | commerce; or to injure, destroy or prevent competition with a |
24 | dealer that either grants or knowingly receives the benefit |
25 | of the discrimination. However, different prices may be |
26 | charged if: |
27 | (i) the differences are due to the cost of |
28 | manufacture, sale or delivery of the equipment or repair |
29 | parts; |
30 | (ii) the supplier can show that its lower price was |
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1 | made in good faith to meet an equally low price of a |
2 | competitor; or |
3 | (iii) the supplier can show that the difference in |
4 | price is due to a volume-based incentive program or |
5 | volume-based discounts. |
6 | (7) To require a dealer to assent to a release, |
7 | assignment, novation, waiver or estoppel which would relieve |
8 | any person from liability imposed by this act. |
9 | Section 9.2. Warranty. |
10 | (a) General rule.--Warranty obligations include product |
11 | improvement programs, product upgrade programs, recalls and |
12 | warranty work. Warranty compensation shall include compensation |
13 | for diagnostic time, repair service time, parts and a dealer's |
14 | transportation costs of equipment to the dealership for needed |
15 | warranty repairs and the return of the equipment to the |
16 | customer. Transportation costs paid by the supplier must be | <-- |
17 | based upon the distance to the nearest in-line dealer from the |
18 | customer's location. Compensation and labor rate shall be at the |
19 | publicly posted shop labor rate. |
20 | (b) Payment of warranty claim.--Whenever a supplier and a |
21 | dealer enter into an agreement providing the dealer's customer |
22 | warranties, the supplier shall pay any warranty claim made by |
23 | the dealer for warranty parts or service within 30 days after |
24 | its receipt and approval. The supplier shall approve or |
25 | disapprove a warranty claim within 30 days after its receipt. If |
26 | a claim is not specifically disapproved in writing within 30 |
27 | days after its receipt, it is deemed to be approved and payment |
28 | must be made by the supplier within 30 days. The following |
29 | apply: |
30 | (1) A dealer that performs warranty work as provided for |
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1 | in this section must be compensated for the dealer's labor in |
2 | an amount that is not less than the reasonable and customary |
3 | amount of time required to complete the work, expressed in |
4 | hours and fraction of hours, multiplied by the dealer's |
5 | posted hourly labor rate. |
6 | (2) A dealer that performs warranty work as provided for | <-- |
7 | in this section must be compensated for parts used in |
8 | fulfilling the warranty work in an amount that is not less |
9 | than the dealer's costs for such parts plus 20%, including |
10 | all freight and handling charges applicable to such parts, to |
11 | reimburse the dealer's reasonable costs of doing business and |
12 | providing the warranty service on behalf of the supplier. If |
13 | the warranty work is provided on behalf of the supplier on a |
14 | product sold by a nonservicing dealer, the compensation for |
15 | parts used in fulfilling the warranty work must be at an |
16 | amount that is not less than the supplier's suggested list |
17 | price or dealer's cost plus a minimum of 30%, whichever is |
18 | greater, plus freight and handling charges applicable to such |
19 | parts. |
20 | (2) A dealer that performs warranty work as provided for | <-- |
21 | in this section must be compensated for parts used in |
22 | fulfilling the warranty work in accordance with the |
23 | manufacturer's stated warranty policy but in no case in an |
24 | amount that is less than the dealer's costs for the parts |
25 | plus 20%, plus all freight and handling charges applicable to |
26 | such parts, to reimburse the dealer's reasonable costs of |
27 | doing business and providing the warranty service on behalf |
28 | of the supplier. If the warranty work is provided on behalf |
29 | of the supplier on a product sold by a nonservicing dealer, |
30 | the compensation for parts used in fulfilling the warranty |
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1 | work must be at an amount that is not less than the |
2 | supplier's suggested list price or dealer's cost plus a |
3 | minimum of 30%, whichever is greater, plus freight and |
4 | handling charges applicable to the parts. |
5 | (c) Indemnity.--Whenever If a supplier and a dealer enter | <-- |
6 | into a dealer agreement, the supplier shall indemnify and hold |
7 | harmless the dealer against any judgment for damages arising |
8 | from breach of warranty or rescission of the sale by the |
9 | supplier. | <-- |
10 | Section 9.3. Remedies and enforcement. |
11 | The dealer may elect to pursue a contract remedy or the |
12 | remedy provided by State law in the enforcement of this act. If |
13 | a supplier violates any provision of this act, a dealer may |
14 | bring an action against the supplier in a court of competent |
15 | jurisdiction for damages sustained by the dealer as a |
16 | consequence of the supplier's violation, including, but not |
17 | limited to, consequential damages and damages for lost profits, |
18 | together with the actual cost of the action, including the |
19 | dealer's attorney, paralegal and expert witness fees and costs |
20 | of arbitrators, and the dealer also may be granted injunctive |
21 | relief against unlawful termination, cancellation, nonrenewal or |
22 | substantial change of competitive circumstances. The remedies |
23 | set forth in this section shall be deemed exclusive and shall be |
24 | in addition to any other remedies permitted by law. |
25 | as long as the dealer has no independent liability for | <-- |
26 | misstatement or misrepresentation to the customer regarding the |
27 | supplier's product or product warranty. |
28 | Section 9.3. Remedies and enforcement. |
29 | The provisions of this act shall be supplemental to any |
30 | dealer agreement between the dealer and the supplier which |
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1 | provides the dealer with greater protection. The dealer can |
2 | elect to pursue its contract remedy or the remedy provided by |
3 | State law, or both; and an election by the dealer to pursue such |
4 | remedies shall not bar its right to exercise any other remedies |
5 | that may be granted at law or in equity. If a supplier violates |
6 | this act, a dealer may bring an action against the supplier in a |
7 | court of competent jurisdiction for damages sustained by the |
8 | dealer as a consequence of the supplier's violation, including |
9 | consequential damages and incidental damages, court costs, |
10 | attorney fees and costs of arbitrators. The dealer also may be |
11 | granted injunctive relief against unlawful termination, |
12 | cancellation, nonrenewal or substantial change of competitive |
13 | circumstances. The remedies set forth in this section shall not |
14 | be deemed exclusive and shall be in addition to any other |
15 | remedies permitted by law. |
16 | Section 9.4. Waiver. |
17 | (a) Waiver of act void.--An attempted waiver of a provision |
18 | of this act shall be void. Any provision in a dealer agreement |
19 | that purports to elect the application of the law of a state |
20 | other than Pennsylvania shall be void. Any provision in a dealer |
21 | agreement that requires a dealer to pay attorney fees incurred |
22 | by a supplier shall be void. |
23 | (b) Waiver of right to trial by jury.--No supplier may |
24 | require a dealer to waive the right to a trial by jury as a |
25 | remedy to a supplier and dealer contract or agreement dispute. |
26 | Section 4 6. This act shall take effect immediately. | <-- |
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