USA: Federal Statute Precluding Enforcement of Arbitration Clauses in Motor Vehicle Franchise Contracts Inapplicable to Snowmobile, ATV Dealer Agreements

Mandatory arbitration clauses are common in franchise agreements, including motor vehicle franchise agreements. Whether a manufacturer can enforce such a provision requires an analysis of competing state and federal statutes and a determination of whether the vehicles sold fall within the statutory definition of a “motor vehicle.” In an opinion addressing the various statutory regimes, a federal district court in New York held the Motor Vehicle Franchise Contract Arbitration Fairness Act, 15 U.S.C. 1226 did not limit a franchisor’s effort to arbitrate a dispute concerning dealer agreements for snowmobiles and all-terrain vehicles (ATVs). At the same time, the court held that the Fairness Act did serve to block arbitration of claims regarding the same dealer’s motorcycle franchise.

Champion Auto Sales, LLC v. Polaris Sales Inc., 2013 U.S. Dist. Lexis 65219 (E.D.N.Y. Mar. 27, 2013). 

Full casenote on Day Pinkney LLP's website here. 

USA: No cure opportunity has to be given if dealer's breach cannot be cured

Many state motor vehicle dealer statutes require that dealers have a chance to cure contractual breaches before being terminated. Does a statutorily-mandated cure provision require a motor vehicle franchisor to provide a dealer with an opportunity to cure a breach that, absent the statute, would be incurable? The New York Franchised Motor Vehicle Act requires that a franchisor provide a dealer with a "reasonable time" to cure a material breach of contract that forms the basis for a termination. It does not, however, expressly address the interplay of the statutory cure period with common law principles applicable to incurable breaches. In Giuffre, the court concluded that the Dealer Act does not require a motor vehicle franchisor to provide a dealer with an opportunity to cure breaches that were incurable under New York common law.

Giuffre Hyundai, LTD v. Hyundai Motor America, No. 13-cv-0520, 2013 U.S. Dist. LEXIS 67795 (May 10, 2013)

Read the full casenote on Day Pitney's website, here.