The composition of the Maine Motor Vehicle Franchise Board, on which three of the seven members are franchised dealers, doesn't violate the due-process rights of manufacturers, a federal judge has ruled.
U.S. District Judge John Woodcock Jr. rejected the argument that manufacturers can't receive fair and impartial hearings in franchisor-franchisee disputes.
"Solely because three members are dealers does not necessarily render the board composition unconstitutional," Woodcock said in dismissing the suit by the Alliance of Automobile Manufacturers. "Industry representation on regulatory boards is a common and accepted practice."
At issue is a 2003 law that created the board to oversee compliance with laws that regulate the relationship between dealers and manufacturers. In addition to three dealers, one seat is reserved for a franchisor representative, two for public members and one for a lawyer employed by the Maine secretary of state.
The board's duties include reviewing complaints about establishing, terminating and relocating dealerships; reimbursement for warranty claims; sales and service agreements; product liability claims; and the right of relatives to succeed to franchise ownership. It can hold hearings and impose civil penalties of up to $10,000 per violation.
"To say the Alliance does not like the new law is an understatement," the judge observed. The Alliance sued two state officials in a bid to overturn the law, and the Maine Auto Dealers Association filed a friend-of-the-court brief supporting the law.
The judge noted that Maine has a procedure to disqualify board members from participating in cases in which they have a conflict of interest.
Woodcock also ruled that the law doesn't violate U.S. constitutional provisions regarding contractual rights or interstate commerce.
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