NY Dealer Act Amended to Create Adminstrative Tribunals

Effective February 11, 2008, New York’s Franchised Motor Vehicle Dealer Act was amended to institute a Department of Motor Vehicle administrative procedure for the resolution of disputes between dealers and factories arising under the Dealer Act. (Vehicle & Traffic Law 471-a). In doing so, New York joins many of its sister states in providing an administrative tribunal as an option short of full-scale litigation for dealers in their disputes with the factory. This law contemplates an initial short (i.e. 21 days) attempt at mediation but this does not appear to be a pre-requisite to commencing a DMV administrative proceeding.

In order to commence an administrative proceeding, a dealer must file DMV Form AA-71 Request for Adjudicatory Proceeding with the DMV. The Request must contain a short and plain statement of the facts and should also be accompanied by copies of relevant correspondence and other supporting documents. The filing fee is $2,000.00.

A hearing will then be scheduled. The factory has the right to submit a written response containing its own version of the facts and documents and correspondence that supports its position. The dealer, in turn, may submit a supplemental reply package. Where the facts are not at issue, either party can request that the administrative hearing officer proceed without a hearing. The decision whether to hold a formal hearing or proceed on the papers alone is in the administrative hearing officer’s discretion. The administrative hearing officer then has 90 days after the hearing (or after the grant of the request to proceed without a hearing) to issue a decision.

In contrast to a formal lawsuit in which damages and attorneys fees may be awarded to an aggrieved dealer, in the new administrative proceedings, each side pays their own litigation costs attorney’s fees and money damages may not be awarded. Therefore, the only remedy in an administrative proceeding would appear to be an injunction directing the cessation of any conduct by the factory found to be in violation of the Dealer Act.

The new DMV administrative proceedings are a complement to, rather than a replacement for, traditional court actions. The administrative tribunals appear to be most useful in less complex disputes involving less substantial money damages or where significant money damages have not yet accrued. Administrative proceedings would also probably tend to be less contentious than court actions and have a less negative impact on the overall factory-dealer relationship. Traditional court actions are probably still the best choice in complex disputes and where the money damages are significant.