Va. judge: DMV went too far in Volkswagen vehicle allocation case

The Virginia motor vehicles commissioner had no authority to order Volkswagen of America Inc. to revamp a former vehicle allocation program, a Richmond judge has ruled.

By law, the Virginia Department of Motor Vehicles could only determine whether a manufacturer or distributor violated the law and, at most, revoke its license, the judge said.

In 1997, Miller Auto Sales Inc. (VW-Honda-Isuzu-Mitsubishi) of Winchester complained that Volkswagen improperly tied the allocation of vehicles to its 'Create an Apostle Program,' or customer satisfaction index. As a result, Miller said, it didn't receive an equitable allocation of vehicles. State law requires monthly shipment of an equitable percentage of vehicles that each dealer orders.

The challenged allocation system has been changed, both sides said.

Volkswagen denied any impropriety, but after a hearing, the Department of Motor Vehicles found a violation and ordered the automaker to adopt a new allocation methodology.

Richmond Circuit Judge Melvin Hughes Jr. said there was sufficient evidence to uphold the violation. But, he said, the dealer law 'grants DMV the authority to declare a manufacturer in violation.'

'There is authority to revoke a manufacturer's license to do business here,' he said. 'Beyond that, the statutes are devoid of any express authority to issue the remedies provided here.'

The judge sent the case back to the Department of Motor Vehicles for further review.

The dealership's lawyer, Mike Charapp of Washington, said the decision vindicates Miller's position that the allocation program was unfair.

'My client was looking for a finding that the system was a violation,' he said.

Charapp noted that the Virginia law has been amended to allow the Department of Motor Vehicles to impose $1,000-a-day civil penalties.

Volkswagen's lawyer in the case, James Vogler of Chicago, said, 'We continue to believe VW's allocation systems are fair.' He said there was no evidence presented as to how many cars any dealer received under the former program and how many each dealer should have received.

Vogler said Volkswagen is appealing those portions of the judge's order that suggest a violation had occurred.

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