Maine's strict regulation of reimbursement rates for dealerships that perform warranty repairs is constitutional, a unanimous federal appeals panel has ruled.
In what it called "the latest chapter in an epic struggle between motor vehicle manufacturers and their dealers," the First U.S. Circuit Court of Appeals upheld Maine's power to ban so-called warranty parity surcharges such as one that Ford Motor Co. added to the wholesale price of new vehicles it sold in the state.
The three-judge panel also rejected arguments from the Alliance of Automobile Manufacturers that the ban trespasses on manufacturers' franchise agreements.
Thomas Brown Jr., the executive vice president of the Maine Automobile Dealers Association, said, "We're pleased the court upheld the ability of the state legislature to prohibit surcharges." He told Automotive News that he was unaware of whether any other company had planned to follow Ford's lead if the court had ruled the other way.
The Alliance of Automobile Manufacturers has asked the appeals court for reconsideration, spokesman Charles Territo said in an interview. Regulation of warranty reimbursement rates has not been a major issue in other states, he said. But the alliance is concerned that other states could follow Maine's approach if it is deemed constitutional.