Pa. dealers, OEMs can bargain on warranty labor rates

Dealerships in Pennsylvania that do warranty work can contractually negotiate with automakers to get more favorable labor reimbursement rates than those required by state law, the Pennsylvania Supreme Court ruled.

But the court invalidated a "cost recovery" surcharge of $122 per vehicle that General Motors had added to all its new-vehicle invoices in Pennsylvania. The surcharge was intended to help manufacturers recoup their costs for warranty repairs, the decision said.

GM had offered its dealerships two options for labor reimbursement rates, but changed its policy in 2012 so that stores that chose to be reimbursed at the state rate for warranty parts would receive lower labor reimbursements. Budd Baer Buick-GMC in Washington, Pa., and Grata Chevrolet in Hermitage, Pa., filed a protest with the state dealer board and later went to court on the issue.

In its majority opinion, the Supreme Court said GM has the contractual right to offer more favorable labor reimbursement rates exclusively to dealers who are willing to accept the company's "standard parts reimbursement protocol."

Although the high court struck down GM's surcharge on new vehicles, it did not prohibit surcharges altogether. Instead, it left the door open for manufacturers and dealers to write warranty cost recovery into their future sales and service agreements.

Chad Marsar, vice president for legal and regulatory affairs at the Pennsylvania Automobile Association, said Nissan Motor Co. eliminated its surcharges on dealerships in the state after the court ruling. Nissan was the only other automaker to impose such surcharges in the state.

A GM spokesman declined to comment on the court ruling.

The Indiana Court of Appeals rejected allegations that an Indianapolis Honda dealership failed to properly service a 2004 CR-V's airbag after a recall.

In January 2015, Joan Tutino brought her CR-V to Bob Rohrman Indy Honda after American Honda Motor Co. issued a recall notice and service bulletin about Takata airbags installed as replacement parts, the court decision said. A master technician at the dealership removed the driver-side airbag and checked the serial number in Honda's database, which showed it wasn't subject to the recall. The tech then reinstalled the airbag.

Tutino was seriously injured when she was rear-ended in a four-vehicle crash in July 2015 and the airbag didn't deploy.

Her suit accused the dealership of negligently performing the service.

The store denied liability. Its expert witness testified that the damage was "not consistent with damage that would be expected from a crash that would deploy frontal airbags" and was "consistent with low speed bumper impact tests of similar Honda CR-Vs." He added: "The Takata recalls do not affect whether airbags should or should not deploy during a crash."

A lower-court judge dismissed the suit without a trial. The appeals court refused to reinstate the case, saying that Bob Rohrman Indy Honda "was tasked with performing recall work that was intended to address issues that could occur when an airbag deployed but did not involve anything that would impact whether the airbag should have deployed."

The three-judge appeals panel also rejected Tutino's claim that the dealership was liable for not notifying her before the accident about an updated service bulletin from Honda.

A Florida dealership that gave a loaner car to a service customer who also worked for the store isn't liable for a crash he caused, the Florida Court of Appeal ruled.

Richard La Mantia's personal vehicle was being serviced in April 2017 at what was then McGuire Chevrolet — now Dyer Chevrolet — in Lake Wales, Fla.

He had been hired as a service adviser and was working in inventory control as a lot porter at the time of the crash, said dealership lawyer Hinda Klein. While he was driving the loaner, La Mantia seriously injured motorcyclist Timothy Collins, who sued the dealership.

The store denied responsibility, arguing that the crash was unrelated to La Mantia's job and saying that it provided the loaner — a 2017 Malibu — as a "short-term courtesy … in his capacity as a customer." A federal law protects car rental companies from vicarious liability for injuries caused by customers unless the company is negligent or contributed to those injuries.

A lower court judge dismissed the case without trial. The Court of Appeal upheld that decision, saying the evidence shows that La Mantia "was not acting within the course and scope of his employment, and he was treated like any other customer who received the use of a rental car while the customer's vehicle was in the repair shop."

Collins hasn't decided whether to appeal further, said his lawyer, Philip Burlington.

The British Columbia Civil Resolution Tribunal rejected a customer's claim that a Toyota dealership charged him for unnecessary service and parts and misdiagnosed a problem.

The customer, Paul Atterton, sought a refund of what he paid Comax Valley Toyota in Courtenay, British Columbia, for diagnostic and repair work and for reimbursement of the cost of repairs at two independent shops. In April 2018, Atterton brought his 2006 Toyota Sienna to the dealership for replacement of spark plugs and repair of a tire "wobble," the court decision said.

Atterton also asked the shop to investigate warning lights on his dashboard. A service technician found no problem with the lights, but Atterton said they went back on later. He returned to the shop and ultimately approved replacement of a stop lamp switch, but the warning lights went on again after the work was done, according to the decision. The problem disappeared after he replaced his aftermarket LED brake lights with incandescent ones.

The customer alleged that the dealership lacked "the technology or expertise to deal with his vehicle's problem and that the store engaged in deceptive practices," the tribunal's vice chair, Andrea Ritchie, wrote in her decision. But Ritchie ruled that Atterton failed to show that the store's service was faulty or that it had "engaged in any unfair or deceptive practices."