§ 32:1262 — Warranty; compensation; audits of dealer records

Louisiana § 32:1262

• Jurisdiction: Louisiana
• Title 32: Levees

Text

§1262. Warranty; compensation; audits of dealer records
A.(1) For the purpose of this Section, the following terms have the meanings
ascribed to them:
(a) "Manufacturer, distributor, wholesaler, factory branch, or distributor branch's
warranty" means and includes a new motor vehicle warranty, a recall, or a certified pre-owned warranty of a manufacturer, distributor, wholesaler, factory branch, or distributor
branch to repair or replace a defect in a vehicle or part.
(b) "Parts" means parts and components of a motor vehicle, including engine,
transmission, other parts assemblies, and manufacturer replacement parts.
(c) "Qualifying repair" means a repair to a vehicle included within the manufacturer,
distributor, wholesaler, factory branch, or distributor branch's original new motor vehicle
warranty, except that the vehicle on which the repair was performed exceeds the
chronological or mileage limit of the warranty, and the repair does not otherwise constitute
warranty work and does not include any of the work described in Paragraph (8) of this
Subsection.
(d) "Qualifying repair order" means a repair order that encompasses, in whole or in
part, a qualifying repair or repairs.
(e) "Repair order" means an invoice paid by a retail customer and closed at the time
of submission, which encompasses one or more repairs to or other work on a vehicle, and
reflecting, in the case of a parts mark-up submission, the cost of each part and its sale price,
and in the case of a labor rate submission, the labor hours charged to each job and the sale
price of such labor.
(f) "Warranty work" means work, including diagnostic labor, performed by a dealer
in order to fulfill the obligations of a manufacturer, distributor, wholesaler, factory branch,
or distributor branch warranty. "Warranty work" shall also include work arranged to be
performed by a dealer if such work is authorized by the manufacturer, distributor, wholesaler,
factory branch, or distributor branch in order to fulfill the obligations of a manufacturer,
distributor, wholesaler, factory branch, or distributor branch warranty.
(2) It shall be a violation of this Chapter for a manufacturer, a distributor, a
wholesaler, distributor branch, or factory branch to fail to adequately and fairly compensate
its dealers for labor, parts, and other expenses incurred by such dealer to perform warranty
work and the delivery and preparation obligations imposed on the dealer by a manufacturer,
distributor, wholesaler, factory branch, or distributor branch.
(3) In no event shall any manufacturer, distributor, wholesaler, factory branch, or
distributor branch pay a dealer for warranty work less than the rates charged by the dealer to
the retail customer of the dealer for non-warranty qualifying repairs. Time allowances for
the performance of warranty work shall be reasonable and adequate in relation to the nature
and scope of the work for a qualified technician of ordinary skill to perform the work.
(4)(a) Subject to the provisions of Subparagraph (b) of this Paragraph, the parts
mark-up or labor rate customarily charged by the dealer may be established or modified at
the election of the dealer by formally submitting in writing, to the representative or
pre-designated representative of the manufacturer, distributor, wholesaler, factory branch,
or distributor branch, by electronic transmission or tangible delivery, either of the following:
(i) All consecutive repair orders that include one hundred sequential qualifying repair
orders.
(ii) All repair orders closed during any period of ninety consecutive days.
(b) A dealer submitting repair orders pursuant to Subparagraph (a) of this Paragraph
shall submit the option that produces the fewer number of repair orders, which includes
repairs made no more than one hundred eighty days before the submission.
(5) The dealer shall calculate the labor rate by determining the total charges for labor
from the qualifying repairs submitted and dividing that amount by the total number of hours
that produced the total charges. The dealer shall calculate the parts mark-up by determining
the total charges for parts from the qualifying repairs submitted, dividing that amount by the
total cost of the purchase of such parts, subtracting one from that amount, and multiplying
by one hundred to produce a percentage.
(6) A dealer seeking to establish or modify the warranty labor rate or parts mark-up
shall submit to the manufacturer, distributor, wholesaler, factory branch, or distributor branch
either of the following:
(a) A single set of repair orders for the purpose of calculating both the labor rate and
parts mark-up.
(b) A single set of repair orders for the purpose of calculating only the labor rate or
parts mark-up.
(7) A dealer may not submit to establish or modify its parts mark-up, labor rate, or
both, more than once in a twelve-month period.
(8) In calculating the labor rate or parts mark-up, the following shall not be included:
(a) Repairs subject to manufacturer, distributor, wholesaler, factory branch, or
distributor branch's discounts, such as special events, special promotions, coupons, or service
campaigns.
(b) Parts sold at wholesale.
(c) Repairs of vehicles owned by the dealer or an employee.
(d) Routine maintenance, including but not limited to replacements of fluids, filters,
batteries, bulbs, belts, nuts, bolts, or fasteners.
(e) Installations of accessories.
(f) Replacement of or work on tires or wheels, including alignments, wheel or tire
rotations, or replacements of brake drums, rotors, shoes, or pads.
(g) Vehicle reconditioning.
(h) Safety or emission inspections required by law.
(i) Repairs for which volume discounts have been negotiated with government
agencies, insurers, or service contract providers.
(j) Parts that do not have individual part numbers.
(k) Manufacturer, distributor, wholesaler, factory branch, or distributor branch's
approved and reimbursed goodwill repairs or reimbursements.
(l) Windshield replacements, window etchings, window tints, protective films, or
other masking products.
(m) Body shop repairs of conditions caused by collision, road hazard, the force of
the elements, vandalism, theft, or owner, operator, or third-party negligence or deliberate act.
(9)(a) The submitted parts mark-up or labor rate shall be presumed accurate, and
shall go into effect forty-five days after the manufacturer, distributor, wholesaler, factory
branch, or distributor branch receives the submission unless, within the forty-five-day period,
the manufacturer, distributor, wholesaler, factory branch, or distributor branch rebuts the
presumption.
(b) If the manufacturer, distributor, wholesaler, factory branch, or distributor branch
determines from any set of qualifying repair orders submitted by the dealer that the parts
mark-up, labor rate, or both, calculated in accordance with the provisions of this Subsection,
is substantially higher or lower than the rate currently on record with the manufacturer,
distributor, wholesaler, factory branch, or distributor branch for labor, parts, or if applicable,
both, the manufacturer, distributor, wholesaler, factory branch, or distributor branch may
request in writing, within forty-five days of receipt of the submitted parts mark-up or labor
rate, additional repair orders for a period of either thirty days prior to or thirty days
subsequent to the time for which the repair orders were submitted for purposes of
establishing or modifying a rate. The manufacturer, distributor, wholesaler, factory branch,
or distributor branch shall have forty-five days from receiving the additional repair orders to
rebut the presumption in accordance with the provisions of this Paragraph, provided that any
rebuttal utilizing the additional repair orders shall conform to the requirements of Paragraphs
(4), (5), and (8) of this Subsection.
(c) The manufacturer, distributor, wholesaler, factory branch, or distributor branch
may rebut the presumption by doing all of the following:
(i) Reasonably substantiating that the submission is materially inaccurate and by
providing a full explanation of any and all reasons.
(ii) Producing evidence validating each reason.
(iii) Producing a copy of all calculations used to demonstrate any material
inaccuracies.
(iv) Producing a proposed adjusted parts mark-up, labor rate, or if applicable, both,
based upon the qualified repair orders submitted by the dealer.
(10) Subject to the provisions of Paragraph (9) of this Subsection, the manufacturer,
distributor, wholesaler, factory branch, or distributor branch shall not submit more than one
rebuttal to the dealer and shall not add to, expand, supplement, or otherwise modify any
element, including but not limited to any grounds for contesting the parts mark-up or labor
rate, except upon the discovery of relevant information that was not known or could not have
been known at the time of issuing the rebuttal.
(11) If the dealer and the manufacturer, distributor, wholesaler, factory branch, or
distributor branch do not agree on the parts mark-up or labor rate, the dealer may file a
protest with the Louisiana Motor Vehicle Commission within sixty days of receiving the
manufacturer's rejection and proposal. The commission shall notify the manufacturer,
distributor, wholesaler, factory branch, or distributor branch and schedule a hearing. The
manufacturer, distributor, wholesaler, factory branch, or distributor branch shall have the
burden of proving by a preponderance of the evidence that the dealer's submitted parts mark-up or labor rate was materially inaccurate as described in Paragraph (9) of this Subsection.
If the Louisiana Motor Vehicle Commission decides in favor of the dealer, any increase in
the dealer's parts mark-up or labor rate shall be effective, retroactively, forty-five days
following the manufacturer, distributor, wholesaler, factory branch, or distributor branch's
receipt of the original submission.
(12) If a manufacturer, distributor, wholesaler, factory branch, or distributor branch
furnishes a part to a dealer, at either no cost or a reduced cost, to use in performing warranty
work, the manufacturer, distributor, wholesaler, factory branch, or distributor branch shall
compensate the dealer for the part in the same manner as warranty parts compensation under
this Section by compensating the dealer on the basis of the dealer's mark-up on the cost for
the part as listed in the manufacturer, distributor, wholesaler, factory branch, or distributor
branch's price schedule, minus the cost for the part.
(13) A manufacturer, distributor, wholesaler, factory branch, or distributor branch
may not require a dealer to establish the parts mark-up or labor rate customarily charged by
the dealer for parts or labor by an unduly burdensome or time-consuming method or by
requiring information that is unduly burdensome or time-consuming to provide, including
but not limited to part-by-part or transaction-by-transaction calculations.
(14) All claims made by the dealer for compensation under this Subsection shall be
paid within thirty days after approval and shall be approved or disapproved within thirty days
after receipt. When any claim is disapproved, the dealer shall be notified in writing of the
grounds for disapproval.
(15) The obligations in this Subsection as they relate to recreational products may
be modified by contract.
B.(1) Notwithstanding the terms of any franchise agreement, warranty, and sales
incentive, audits of dealer records may be conducted by the manufacturer, distributor,
distributor branch, or factory branch. Any audit for warranty parts or service compensation
shall be for the twelve-month period immediately following the date of the payment of the
claim by the manufacturer or distributor. However, a dealer shall not be held liable by virtue
of an audit for failure to retain parts for a period in excess of six months. Any audit for sales
incentives, service incentives, rebates, or other forms of incentive compensation shall only
be for the twelve-month period immediately following the date of the final payment to the
dealer under a promotion, event, program, or activity. In no event shall the manufacturer,
distributor, distributor branch, or factory branch fail to allow the dealer to make corrections
to the sales data in less than one hundred twenty days from the program period.
Additionally, no penalty other than amounts advanced on a vehicle reported incorrectly shall
be due in connection with the audit. With respect to vehicles sold during the time period
subject to the audit, but submitted incorrectly to the manufacturer, distributor, or wholesale
distributor branch or factory branch, the dealer shall be charged back for the amount reported
incorrectly and credited with the amount due, if anything, on the actual sale date.
(2) No claim which has been approved and paid may be charged back to the dealer
unless it can be shown that one or all of the following applies:
(a) The claim was false or fraudulent.
(b) The repairs were not properly made.
(c) The repairs were unnecessary to correct the defective condition under generally
accepted standards of workmanship.
(d) The dealer failed to reasonably substantiate the repair in accordance with
reasonable written requirements of the manufacturer or distributor, if the dealer was notified
of the requirements prior to the time the claim arose and if the requirements were in effect
at the time the claim arose.
(3) A manufacturer or distributor shall not deny a claim solely based on a dealer's
incidental failure to comply with a specific claim processing requirement, or a clerical error,
or other administrative technicality.
(4)(a) A dealer shall not be charged back on a claim when a dealer performs a repair
covered by the manufacturer's or distributor's warranty, and the dealer reasonably
demonstrates that the repair resolved the condition which the customer presented for
resolution, and the dealer documents what has been repaired and the process utilized to
accomplish the repair.
(b) The provisions of Subparagraph (a) of this Paragraph shall not apply to
recreational products dealers.
(5) Limitations on warranty parts or service compensation, sales incentive audits,
rebates, or other forms of incentive compensation, chargebacks for warranty parts or service
compensation, and service incentives and chargebacks for sales compensation only shall not
be effective in the case of intentionally false or fraudulent claims.
(6) It shall be deemed an unfair act pursuant to this Chapter to audit a dealer more
frequently than two sales-related and two service-related audits in a twelve-month period.
Nothing in this Subsection shall limit a manufacturer's or distributor's ability to perform
routine claim reviews in the normal course of business.
(7) No claim may be rejected as late if it has been submitted within sixty days of the
date the repair order was written.
(8) The dealer shall not be charged back for any rebate paid to a consumer pursuant
to a manufacturer's rebate program, provided the dealer acted in good faith when relying on
the consumer's qualifying information and otherwise complied with the program guidelines
and documentation requirements. A manufacturer's rebate program shall include but not be
limited to a rebate program that targets college graduates, military personnel, first-time
buyers, owner loyalty, family relationships, and any other similar program.
C. The provisions of this Section shall not apply to a dealer, manufacturer,
distributor, wholesaler, distributor branch, or factory branch of marine products, motorcycles
or all-terrain vehicles, or recreational vehicles, or any officer, agent, or other representative
thereof.

Legislative History

Acts 2005, No. 500, §1, eff. July 12, 2005; Acts 2008, No. 233, §1; Acts 2009, No. 403, §1, eff. July 7, 2009; Acts 2010, No. 1036, §1; Acts 2011, No. 89, §1; Acts 2012, No. 326, §1; Acts 2013, No. 61, §1; Acts 2021, No. 76, §1.