The California Supreme Court has refused to review a decision that strips the state New Motor Vehicle Board of jurisdiction over fraud, tort and other nonfranchise claims between manufacturers and dealerships.
The May 21 action leaves intact a Court of Appeal ruling that the board's authority is restricted to such traditional franchisee-franchisor areas as termination, relocation and territory disputes.
'If you have a common law claim for damages, the board has no jurisdiction over those claims,' said Long Beach attorney Mark Field, who represents Honda franchisee Hardin Oldsmobile in a case alleging bribery, racketeering and breach-of-contract against American Honda Motor Co. Inc.
'For the factories, it means they are not accorded any privileged status. They're going to have to defend claims in court,' Field said. 'The factories certainly believed the board was a more favorable forum to them.'
Last Jan. 31, the California Court of Appeal for the Third District in Sacramento agreed with Hardin that the board has no power to resolve allegations that Honda officials took bribes and kickbacks for favorable allocation of new cars and for favorable decisions concerning location and ownership of new dealerships.
The California Supreme Court rejected Honda's request to review that ruling, an action that Los Angeles dealer attorney Norris Bishton said directly affects dozens of other dealership suits against Honda and other manufacturers.
'There are dozens of cases I'm aware of, a bunch of Honda cases, some against GMAC and Saturn,' said Bishton, who also is president of Noarus Auto Group. For example, a case he is handling against Honda is awaiting decision by a different Court of Appeal panel in Los Angeles.
Sam Jennings, the executive secretary to the nine-member appointed board, called the state Supreme Court's refusal to take the case 'a disappointment' because it fails to resolve conflicting decisions among lower courts.
The board handles about 300 dealership-factory disputes a year, a case load that rose 64 percent from the 1995-96 fiscal year to 1996-97. An estimated 10 to 15 percent of those cases include allegations of tort, fraud or breach of contract.
Field said the California Supreme Court action allows Hardin to participate in the multidistrict litigation against Honda pending in federal court in Maryland.
Honda spokesman Art Garner said he could not discuss the Hardin litigation, but observed, 'Now we know where the case is going to be heard.'