Bill Text: PA HB346 | 2013-2014 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Further providing for definitions, for termination of dealer agreement, for death or incapacitation of dealer and for repurchase of unused specialized repair tools; repealing provisions relating to coercion; and providing for violations of act, for warranty, for remedies and enforcement and for waiver.

Spectrum: Slight Partisan Bill (Republican 14-6)

Status: (Introduced - Dead) 2013-01-24 - Referred to AGRICULTURE AND RURAL AFFAIRS [HB346 Detail]

Download: Pennsylvania-2013-HB346-Introduced.html

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PRINTER'S NO.  353

 

THE GENERAL ASSEMBLY OF PENNSYLVANIA

 

HOUSE BILL

No.

346

Session of 2013

 

 

 

INTRODUCED BY TALLMAN, HANNA, M. K. KELLER, BROOKS, CALTAGIRONE, COHEN, FLECK, GIBBONS, KAUFFMAN, KORTZ, LONGIETTI, MILLARD, MOUL, MURT, PICKETT, STERN AND SWANGER, JANUARY 24, 2013

 

 

REFERRED TO COMMITEE ON AGRICULTURE AND RURAL AFFAIRS, JANUARY 24, 2013

 

 

 

AN ACT

 

Amending the act of December 18, 1987 (P.L.412, No.86), entitled
"An act providing for the repurchase by the wholesaler,
manufacturer or distributor, from dealers or heirs of
dealers, of certain equipment, certain attachments and parts
held for sale upon termination of agreement whereby the
dealer agrees to maintain a stock of such implements,
attachments and parts, and for the repurchase of certain
tools," further providing for definitions, for termination of
dealer agreement, for death or incapacitation of dealer and
for repurchase of unused specialized repair tools; repealing
provisions relating to coercion; and providing for violations
of act, for warranty, for remedies and enforcement and for
waiver.

The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:

Section 1.  Section 2 of the act of December 18, 1987
(P.L.412, No.86), known as the Pennsylvania Fair Dealership Law, 
is amended to read:

Section 2.  Definitions.

The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:

"Construction equipment manufacturer."  A manufacturer of
construction, industrial, forestry, paving and mining equipment,
repair parts or specialized repair tools that does not
manufacture consumer or farming equipment either by itself or
through an affiliate.

"Consumer equipment."  Machinery designed and manufactured
primarily for household use.

"Current net price."  The price, applicable to an individual
dealer, listed in the printed price list or catalog or invoice
in use by the supplier on the date the dealer agreement is
terminated or canceled or has failed to be renewed.

"Dealer."  Any person, firm or corporation engaged primarily
in the business of retail sale or repair of equipment. The term
includes the heir or authorized representative of a person or
majority stockholder of a corporation operating as a dealer in
the event such person or stockholder dies or becomes
incapacitated. The term does not include a person, firm or 
corporation that complies with all of the following:

(1)  Has purchased new equipment from a single
construction equipment manufacturer, constituting no less
than 75% of the person's, firm's or corporation's new
equipment, calculated on the basis of net cost.

(2)  Has an annual average sales volume in excess of
$100,000,000 over the seven-calendar-year period immediately
preceding the applicable determination date; provided,
however, the $100,000,000 threshold shall be increased each
year by an amount equal to the then-current threshold
multiplied by the percentage increase in the index from
January of the immediately preceding calendar year to January
of the current year.

(3)  Directly employs over 250 persons.

(4)  Has a written agreement with a construction
equipment manufacturer that requires the construction
equipment manufacturer to compensate the person, firm or
corporation for warranty labor costs either as:

(i)  a discount in the pricing of the equipment to
the person, firm or corporation; or

(ii)  a lump sum payment to the person, firm or
corporation that is made within 90 days of the sale of
the construction equipment manufacturer's new equipment.

"Dealer agreement."  An oral or written contract, franchise
agreement or security agreement between a dealer and supplier
whereby the dealer agrees to acquire from the supplier and to
maintain an inventory of equipment, repair parts or specialized
repair tools.

"Equipment."  Machines, implements of husbandry, golf, turf 
and grounds maintenance machines, outdoor power equipment, 
utility vehicles and machine attachments, accessories, 
completing packages and bundles designed for or adapted and used
for agriculture, horticulture, floriculture, construction,
livestock raising, silviculture, landscaping and grounds
maintenance, even though incidentally operated or used upon the
highways, including, but not limited to, tractors, farm
implements, loaders, backhoes, lawn mowers, rototillers, etc.,
and any business signs purchased by requirement of the supplier
which are less than five years old. The term shall not include:

(1)  equipment manufactured solely for the purpose of
industrial construction; or

(2)  all-terrain vehicles as defined in 75 Pa.C.S. § 7702
(relating to definitions).

"Farming equipment."  Machinery designed and used for
agricultural operations, including farm tractors, choppers,
balers, reapers, mowers, pickers, threshers, combines, plows,
harrows, planters and any other vehicles or machines primarily
designed for use as implements of husbandry or multipurpose
agricultural vehicles.

"Index."  The producer price index prepared by the United
States Department of Labor, Bureau of Labor Statistics, as it
relates to construction, mining and forestry equipment.

"Mining equipment."  Machinery designed and used in the
production process at a mine site, including off-highway mining
trucks, large-wheel loaders, large track-type tractors, large-
wheel dozers, mining motor graders, open bowl scrapers and
underground mining trucks.

"Net cost."  The amount paid by the dealer to the supplier,
plus the cost of freight, if any, incurred by the dealer[.], as 
long as the manufacturer initiates the termination or 
nonrenewal. The term does not include the cost of freight if the 
dealer initiates the termination or nonrenewal.

"Nonservicing dealer."  A dealer that sells equipment but
does not provide parts and service.

"Paving equipment."  Machinery designed and used for asphalt
paving, including asphalt pavers, cold planers, asphalt
compactors, pneumatic compactors and rotary mixers.

"Repair parts."  All parts, component parts and superseded
parts related to a sale and related to repair of equipment. The
term includes bundled parts, which means several related parts,
components or accessories, bound together as one inclusive item
or priced as an inclusive item.

"Specialized repair tools."  Tools and equipment, including

diagnostic equipment, designed to be used or useful only in the
maintenance and repair of equipment.

"Supplier."  [A manufacturer of equipment or repair parts or
a wholesaler or distributor of equipment or repair parts who has
a valid existing contract with a manufacturer of equipment or
repair parts, including the successors or assigns of such
manufacturer, wholesaler or distributor.] A distributor, 
manufacturer or wholesaler of equipment, repair parts or 
specialized repair tools who enters into a dealer agreement with 
a dealer.

Section 2.  Section 3(a) and (f) of the act are amended and
the section is amended by adding a subsection to read:

Section 3.  Termination of dealer agreement.

(a)  General provisions.--

(1)  A dealer may terminate a dealer agreement with good 
cause. A dealer shall give the supplier at least 30 days' 
prior notice via registered letter mailed to the last known 
address of the supplier.

(2)  It shall be unlawful for a supplier to terminate,
cancel or fail to renew a dealer agreement or substantially 
change the competitive circumstances of a dealer agreement 
without good cause except as provided in subsection (b) or
(c).

* * *

(f)  Deficiencies may be cured.--Except for termination, 
cancellation or discontinuance for reasons set forth in 
subsection (b)(3) through (7), the supplier shall allow the 
dealer no less than [60] 90 days to cure the deficiencies set 
forth in the notice required under subsection (e). Any such time 
provided to the dealer to cure deficiencies shall be calculated 

from the date of receipt of notice.

(g)  Definition.--As used in this section, the term "good
cause" means the failure by a dealer to substantially comply
with the requirements imposed upon the dealer by the dealer
agreement, as long as the requirements are not different from
requirements imposed on other dealers of the same size,
geographic region and market demographics, either by their terms
or in the manner of their enforcement.

Section 3.  Sections 5 and 6 of the act are amended to read:

Section 5.  Death or incapacitation of dealer.

In the event of the death or incapacity of a dealer, the
supplier shall repurchase, at the option of the heir or
authorized representative of such person or stockholder, the
equipment, repair parts and specialized repair tools of the
dealer as if the supplier had terminated, canceled or failed to
renew the contract. The heir or authorized representative shall
have [120 days] one year from the date of the death of such
dealer or from the date such dealer is determined to be
incapacitated or becomes totally disabled, as applicable, to
exercise the option under this section. Nothing in this act
requires the repurchase of any equipment, repair parts and
specialized repair tools if the heir and supplier enter into a
new contract to operate the retail dealership.

Section 6.  Repurchase of [unused specialized repair tools]
specialized support products required by 
manufacturer.

(a)  General rule.--A supplier shall repurchase, upon the
written request of a dealer, any specialized repair tool
purchased by the dealer pursuant to the requirements of the
supplier which remains unused for more than a 12-month period

after the dealer receives the same. The repurchase price payable
to the dealer under this section shall be the original cost to
the dealer plus a handling charge equal to 10% of such original
cost. A supplier shall repurchase at fair market value any 
specific signage, data processing hardware, computer equipment, 
communications equipment or software the supplier required the 
dealer to acquire or purchase to satisfy the requirements of the 
supplier. Fair market value of property subject to repurchase 
pursuant to this section shall include the acquisition cost, 
including any installation, shipping, handling, and set-up fees, 
less straight line depreciation of such acquisition cost over 
five years.

(b)  Amount.--Specialized repair tools shall be repurchased 
at a sum equal to 75% of the last published net cost, including 
shipping, handling and set-up fees, of all specialized repair 
tools previously purchased pursuant to requirements of the 
supplier. The specialized repair tools must be complete and in 
working condition and must have been purchased within ten years 
prior to the date of notification of termination of the dealer 
agreement.

Section 4.  Section 9 of the act is repealed:

[Section 9.  No coercion.

It shall be a violation for any supplier to require, attempt
to require, coerce or attempt to coerce any dealer in this
Commonwealth to order or accept delivery of any equipment or
repair parts not required by law which shall not have been
voluntarily ordered by the dealer.]

Section 5.  The act is amended by adding sections to read:

Section 9.1.  Violations of act.

It shall be a violation for any supplier:

(1)  To mandate or coerce a dealer concerning the 
opportunity to represent, purchase or sell competitive 
equipment.

(2)  To mandate or coerce a dealer to order or accept 
delivery of equipment or repair parts not required by law 
which have not been voluntarily ordered by the dealer unless 
the equipment or repair parts are safety features required by 
the supplier.

(3)  To refuse a dealer the opportunity to participate in
the management or investment to acquire any other business.

(4)  To refuse to deliver in reasonable quantities and
within a reasonable time, after receipt of the dealer's
order, to a dealer having a dealer agreement for the retail
sale of new equipment sold or distributed by the supplier,
equipment covered by the dealer agreement specifically
advertised or represented by the supplier to be available for
immediate delivery. The failure to deliver the equipment
shall not be considered a violation of this act if the
failure is due to prudent and reasonable restrictions on
extension of credit by the supplier to the dealer, an act of
God, work stoppage or delay due to strike or labor
difficulty, a bona fide shortage of materials, freight
embargo or other cause over which the supplier has no
control.

(5)  To discriminate, directly or indirectly, in filling
an order placed by a dealer for retail sale or lease of new
equipment under a dealer agreement as between dealers of the
same product line.

(6)  To discriminate, directly or indirectly, in price
between different dealers with respect to purchases of

equipment or repair parts of like quality, if the effect of
the discrimination may be to substantially lessen
competition; to tend to create a monopoly in a line of
commerce; or to injure, destroy or prevent competition with a
dealer that either grants or knowingly receives the benefit
of the discrimination. However, different prices may be
charged if:

(i)  the differences are due to the cost of
manufacture, sale or delivery of the equipment or repair
parts;

(ii)  the supplier can show that its lower price was
made in good faith to meet an equally low price of a
competitor; or

(iii)  the supplier can show that the difference in
price is due to a volume-based incentive program or
volume-based discounts.

(7)  To require a dealer to assent to a release,
assignment, novation, waiver or estoppel which would relieve
any person from liability imposed by this act.

Section 9.2.  Warranty.

(a)  General rule.--Warranty obligations include product
improvement programs, product upgrade programs and recalls and
warranty work. Warranty compensation shall include compensation
for diagnostic time, repair service time, parts and a dealer's 
transportation costs of equipment to the dealership for needed 
warranty repairs and the return of the equipment to the 
customer. Transportation costs paid by the supplier must be 
based upon the distance to the nearest in-line dealer from the 
customer's location. Compensation and labor rate shall be at the
publicly posted shop labor rate.

(b)  Payment of warranty claim.--Whenever a supplier and a
dealer enter into an agreement providing the dealer's customer
warranties, the supplier shall pay any warranty claim made by
the dealer for warranty parts or service within 30 days after
its receipt and approval. The supplier shall approve or
disapprove a warranty claim within 30 days after its receipt. If
a claim is not specifically disapproved in writing within 30
days after its receipt, it is deemed to be approved and payment
 shall be made by the supplier within 30 days. The following
apply:

(1)  A dealer that performs warranty work as provided for
in this section shall be compensated for the dealer's labor
in an amount that is not less than the reasonable and
customary amount of time required to complete the work,
expressed in hours and fraction of hours, multiplied by the
dealer's posted hourly labor rate.

(2)  A dealer that performs warranty work as provided for 
in this section shall be compensated for parts used in 
fulfilling the warranty work in accordance with the 
manufacturer's stated warranty policy but in no case in an 
amount that is less than the dealer's costs for the parts 
plus 20%, plus all freight and handling charges applicable to 
such parts, to reimburse the dealer's reasonable costs of 
doing business and providing the warranty service on behalf 
of the supplier. If the warranty work is provided on behalf 
of the supplier on a product sold by a nonservicing dealer, 
the compensation for parts used in fulfilling the warranty 
work must be at an amount that is not less than the 
supplier's suggested list price or dealer's cost plus a 
minimum of 30%, whichever is greater, plus freight and 

handling charges applicable to the parts.

(c)  Indemnity.--If a supplier and a dealer enter into a
dealer agreement, the supplier shall indemnify and hold harmless
the dealer against any judgment for damages arising from breach
of warranty or rescission of the sale by the supplier as long as 
the dealer has no independent liability for misstatement or 
misrepresentation to the customer regarding the supplier's 
product or product warranty.

Section 9.3.  Remedies and enforcement.

The provisions of this act shall be supplemental to any 
dealer agreement between the dealer and the supplier which 
provides the dealer with greater protection. The dealer may 
elect to pursue its contract remedy or the remedy provided by 
State law, or both; and an election by the dealer to pursue such 
remedies shall not bar its right to exercise any other remedies 
that may be granted at law or in equity. If a supplier violates 
this act, a dealer may bring an action against the supplier in a 
court of competent jurisdiction for damages sustained by the 
dealer as a consequence of the supplier's violation, including 
consequential damages and incidental damages, court costs, 
attorney fees and costs of arbitrators. The dealer also may be 
granted injunctive relief against unlawful termination, 
cancellation, nonrenewal or substantial change of competitive 
circumstances. The remedies set forth in this section shall not 
be deemed exclusive and shall be in addition to any other 
remedies permitted by law.

Section 9.4.  Waiver.

(a)  Waiver of act void.--An attempted waiver of a provision
of this act shall be void. Any provision in a dealer agreement
that purports to elect the application of the law of a state

other than Pennsylvania shall be void. Any provision in a dealer
agreement that requires a dealer to pay attorney fees incurred
by a supplier shall be void.

(b)  Waiver of right to trial by jury.--No supplier may
require a dealer to waive the right to a trial by jury as a
remedy to a supplier and dealer contract or agreement dispute.

Section 6.  This act shall take effect immediately.