A nearly four-year legal dispute over warranty repair rates in Florida is moving closer to trial.
The Alliance of Automobile Manufacturers filed a legal challenge in a Florida circuit court in 2008 to a dealer-backed law that took effect in May of that year. The state law requires automakers to pay dealerships the same rates for warranty parts and labor that the stores charge retail customers, according to a December 2008 Automotive News report.
The legal action was later moved to U.S. District Court in Tallahassee, Fla. Chief U.S. District Judge M. Casey Rodgers issued a decision Thursday saying automakers’ claims regarding warranty reimbursement have merits and that the case should move forward in court, Gloria Bergquist , an alliance spokeswoman, wrote in an e-mail.
The alliance represents 12 automakers, including Toyota, Volkswagen and the Detroit 3.
“Automakers filed this legal challenge because we believed that Florida dealers had grievously over-reached when they began dictating the costs that automakers must reimburse them for warranty work. We were in a situation where dealers could impose any warranty cost they wanted on customers, and send the bill to automakers,” the alliance said in a statement. “With today’s decision stating our claims have merit, we have passed an important legal milestone.”
The alliance claims that the parts and labor reimbursement provisions violate the due process clause of the Florida Constitution and the contracts clauses of the U.S. and Florida constitutions, Rodgers wrote in the order.
But the Florida Automobile Dealers Association argues that the parts and labor provisions address the “disparity in bargaining power” between automakers and dealers.
In its 2008 lawsuit, the alliance contended that the law’s provisions “generated an onslaught of requests from Florida dealers for additional reimbursement.”
Automakers, not dealers, should set wholesale prices for vehicles and parts, the alliance asserted.
The suit contends that the law enables dealers to charge inflated prices for warranty work. That could harm consumers because the cost of warranty reimbursement is factored into new-vehicle prices, Automotive News reported at the time.