Arent Fox Keeps Dealership in Business Following Performance Dispute

New York — Earlier this month, Arent Fox LLP won a decision from New York’s Department of Motor Vehicles when an administrative law judge ruled that a statewide sales benchmark is unreasonable and was unfairly applied in a car company’s attempt to terminate its Yonkers, NY Chevrolet franchise.

During the dispute, Beck Chevrolet was represented by Automotive partner Russell P. McRory and Complex Litigation attorney James M. Westerlind.

“At a time when many auto dealers face a barrage of increasing pressures from manufacturers,” said Mr. McRory, “Beck Chevrolet’s success should help reduce the leverage that manufacturers have against dealers by virtue of unfair and unreasonable sales performance standards that are selectively and arbitrarily applied.”

In 2013, Beck, which has sold Chevrolet vehicles since 1966, was informed that it failed to reach the company’s sales performance standard for New York State and, as a result, would lose its franchise. Arent Fox argued that many other Chevrolet dealers in New York — particularly in the New York City metropolitan area — also failed to meet the company’s sales obligations but were not facing termination. DMV Administrative Law Judge Walter Zulkoski agreed, concluding that the statewide sales performance standard “is unreasonable as it does not realistically reflect the Chevrolet sales challenges that Beck and other New York metropolitan dealers face.”

The judge also held that the statewide RSI standard “is not reasonably applied.” Specifically, the judge stated that the company “is not applying the [statewide standard] uniformly to all dealers in New York.” Accordingly, the judge found a lack of “cause to terminate Beck’s franchise” and enjoined the termination of Beck. In addition, the judge cited New York’s Franchised Motor Vehicle Dealer Act, which supersedes any agreement between a manufacturer and a dealer.

Mr. McRory joined Arent Fox in August as part of the national expansion of its Automotive practice. He represents automobile dealerships in all aspects of litigation, tax, and general corporate matters. Notably, he successfully litigated the first case in New York based on the New York Franchised Motor Vehicle Dealer Act’s prohibition against price discrimination.

Mr. Westerlind also represents dealerships in litigation matters and has tried numerous cases to judgment or verdict in state and federal courts across the country.

Arent Fox’s Automotive practice — recognized as a national leader by Chambers USA — provides the roadmap that clients need to navigate an industry in flux. Noted as a firm that is “thinking outside the box,” Arent Fox lawyers vigorously prosecute litigation that cannot be avoided, engage in every form of transaction, and guide companies through the industry’s complex framework. 

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