Nissan North America, Inc. v. The Motor Vehicle Review Board
7 N.E.3d 25
Ill. App. Ct.2014Background
- Nissan, as Infiniti manufacturer, imposed a Warranty Supplemental Cost Recovery surcharge on Illinois dealers; Board found it violated section 6 of the Motor Vehicle Franchise Act.
- Section 6 requires reimbursement of dealers for warranty labor and parts at the prevailing retail price, with 6(g) allowing a uniform, reduced reimbursement if a majority of dealers sign a written agreement.
- Nissan did not have a written agreement with a majority of its Illinois Infiniti dealers, and paid prevailing retail prices for warranty costs.
- Nissan imposed the surcharge without a majority-dealer agreement and as an across-the-board line item on wholesale invoices, not included in vehicle MSRPs.
- Fields and Yampa protested; the Board and trial court affirmed the Board’s decision that the surcharge violated section 6.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether surcharge violates section 6(b) by bypassing cost-recovery mechanics | Nissan relies on 6(b) and its dealer agreement to justify separate surcharge | Fields/Yampa argue 6(b) requires reimbursement per 6(b) and 6(g) controls recovery | Surcharge violates 6; must follow 6(g) |
| Whether 6(g) can be applied retroactively | Nissan contends 6(g) has no effect since no prior written agreement | Board and Illinois courts reject retroactive voiding of 6(g) application | Retroactivity not violated; 6(g) applies; no vested right to surcharge |
| Whether 6(g)(4) negates applying 6(g) where no agreement exists | Nissan argues 6(g)(4) defeats application of 6(g) | Without a majority agreement, 6(g) has no effect; surcharge improper | 6(g) applies only with a majority agreement; 6(g)(4) confirms no effect otherwise |
| Whether the Act, as applied, violates contracts or dormant commerce clauses | Costs recovery via surcharge violates contracts clause and dormant commerce clause | Act serves public interest; does not violate contracts or commerce clause | Constitutional challenges rejected; statute valid and applied correctly |
Key Cases Cited
- Acadia Motors, Inc. v. Ford Motor Co., 44 F.3d 1050 (1st Cir. 1995) (warranty surcharge upheld where statute silent on cost recovery)
- Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 676 F.3d 318 (3d Cir. 2012) (cost recovery surcharge upheld; state statute did not limit cost recovery)
- General Motors Corp. v. Romein, 503 U.S. 181 (Sup. Ct. 1992) (contracts clause analysis; public interest in regulation)