AEM MEMBERS GRANTED INJUNCTION, HALTS APPLICATION OF NEW HAMPSHIRE DEALER LAW
Sep. 24, 2013
Association of Equipment Manufacturers (AEM) reports:
On September 19, 2013, the New Hampshire Superior Court issued a preliminary injunction requested by several farm and construction equipment manufacturers and halted the enforcement of S.B. 126 as it would apply to the plaintiffs' existing contracts with their New Hampshire dealers. (Deere & Company, CNH America LLC, and AGCO Corporation vs. The State of New Hampshire). S.B. 126 was scheduled to go into effect on September 23, 2013.
Below is a summary prepared by AEM Legal Counsel George Keeley on the New Hampshire Superior Court preliminary injunction:
A preliminary injunction is a temporary court ruling and is not a final decision. The Court will now conduct a full trial and later will render its final decision. The preliminary injunction is intended to maintain the status quo pending the Court's final ruling.
The preliminary injunction states in part, "As to existing contracts between plaintiffs and its dealers, defendant State of New Hampshire is preliminarily enjoined from including farm and equipment manufacturers within the definition of motor vehicles of RSA 357-C as provided for under S.B. 126." The plaintiffs must also agree to continue to be governed by their existing contractual relationships with their New Hampshire dealers.
It is unclear to what extent the preliminary injunction can be relied upon by a non-party equipment manufacturer. This will depend in part on the content of the manufacturer's existing contracts with its New Hampshire dealers and the degree to which S.B. 126 would impair those contracts. Consultation with your legal advisors is recommended.
In issuing the preliminary injunction against the State, the Court found that: (1) the plaintiffs are likely to succeed on the merits of their legal claim, (2) there is an immediate danger of irreparable harm, (3) the plaintiffs have no adequate remedy at law, and (4) the public interest would be served by granting the injunction.
The Court found that the plaintiffs' existing dealership agreements would likely be substantially impaired by the retroactive application of S.B. 126 to such contracts, in violation of the Contract Clause in the U.S. and New Hampshire Constitutions. The Court found ten specific terms in the plaintiffs' existing dealership agreement were likely to suffer unconstitutional "impairment" by S.B. 126:
1. Plaintiffs are not permitted to change a dealer's dealership area without good cause,
2. Plaintiffs are not permitted to compete with a dealer or to authorize others to compete with the dealer or to add or relocate dealerships in an existing dealership area without good cause,
3. Plaintiffs have no discretion to require dealers to maintain a certain level of equity or capital in the dealership,
4. Plaintiffs have no discretion to reject fulfilling orders for certain reasons,
5. Plaintiffs may not immediately terminate, cancel or non-renew a dealership agreement in certain circumstances, or terminate for good cause unless the New Hampshire Motor Vehicle Industry Board first declares that good cause exists,
6. Arbitration as the agreed method for dispute resolution under some plaintiffs' dealership agreements is prohibited,
7. Plaintiffs have no discretion to determine warranty service reimbursement amounts,
8. Plaintiffs have no discretion to limit within its line/make the types of equipment a dealer may purchase,
9. Plaintiffs have no discretion to limit a dealer's sale of competing lines of equipment, and
10. Plaintiffs' ability to own a dealership is restricted.
The case will now proceed to trial and the Court is expected to issue a final ruling by year-end. An appeal of that decision to the New Hampshire Supreme Court is a possibility.