Judge Upholds Portion of Dealer Protection Law

During the 2017 North Dakota legislative session, the Pioneer Equipment Dealers Association (formerly the North Dakota Implement Dealers Association) supported the introduction of SB 2289, a comprehensive and impactful farm equipment dealer protection bill.

The legislation was passed with overwhelming support from lawmakers and signed by Gov. Doug Burgum in 2017.

Four months later, the Association of Equipment Manufacturers filed a federal lawsuit seeking to block the bill in its entirety. The lawsuit consisted of a 63-page complaint and a motion for a preliminary injunction. The judge granted the manufacturers’ motion for an injunction, which effectively put a stay on the law until the judge could make a decision regarding the merits of the manufacturers’ complaint.

Earlier this month, the judge ruled in favor of the dealers on the remaining claims (relating to trademark law, federal pricing statutes, and constitutional issues) and the new law will apply to all dealer agreements signed after August 1, 2017.

SB 2289 was supported by dealers in response to a fundamental shift in the requirements that are placed upon dealers by several tractor manufacturers. The bill addresses manufacturer contract issues that would create numerous challenges for dealers.

The legislation also enhances existing law in other areas including 1) the prohibition of mandatory equipment and parts purchases, minimum order requirements, and purity requirements stipulating the separation of facilities/personnel/display space/etc., and 2) the requirement that manufacturers reimburse dealers for warranty parts, labor, and transportation at the respective dealer’s non-warranty customer pay rate.

The new law also limits the warranty or incentive audit and chargeback period to one year. This warranty reimbursement language also applies to manufacturer issued product improvement programs, factory maintenance plans, extended warranties, service contracts, etc.

Other issues addressed by SB 2289 include prohibitions regarding dealership terminations, transparent and reasonable performance requirements, limitations regarding warranty and incentive payment chargebacks, and the establishment of a fair process through which dealers may transfer or sell their dealership.

SB 2289’s passage was vigorously promoted by Pioneer EDA members during the session, and supported by several North Dakota ag organizations including the Farm Bureau, Farmer’s Union, Ag Association, Grain Growers Association, and the Stockmen’s Association. In the end, dealer and producer concerns resonated with legislators, who passed SB 2289 with a vote of 46-0 in the Senate, and 86-5 in the House, before sending it to the governor for his signature.

Pioneer EDA, which released this news, said it believes that equitable contract terms should be negotiated outside of the legislative arena whenever possible.

“It is our continual goal to work with manufacturers at that level with legislation only as a last resort,” the association said. “At the end of the day, dealers and manufacturers are partners in serving our farm customers—we need to work together.”

You can see SB 2289 at FarmEquip.org/SB2289. Review key points at FarmEquip.org/SB2289keypoints.

Source: Pioneer EDA