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NEW MOTOR VEHICLE BOARD. ATTORNEY ROUNDTABLE January 10, 2014. Protests, Petitions, and Appeals. The Board is empowered to hear and resolve three (3) classes of disputes. These are protests, petitions, and appeals. . Petitions.

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new motor vehicle board

NEW MOTOR VEHICLE BOARD

ATTORNEY ROUNDTABLEJanuary 10, 2014

protests petitions and appeals
Protests, Petitions, and Appeals
  • The Board is empowered to hear and resolve three (3) classes of disputes.
  • These areprotests, petitions, and appeals.
petitions
Petitions
  • The Board also has jurisdiction to consider any matter concerning the activities or practices of any person licensed as a new motor vehicle dealer, manufacturer, distributor or representative submitted by any person alleging violations of the Vehicle Code. These matters are referred to as petitions.
the relief sought by a petition could be
The relief sought by a petition could be:
  • An investigative report by the Department of Motor Vehicle [Veh. Code § 3050 (c)(1)];
  • A hearing to adjudicate the dispute [Veh. Code § 3050 (c)(2)] and/or,
  • An order by the Board to the Department of Motor Vehicle to exercise its authority or power with regards to the issuance, renewal, refusal to renew, suspension, or revocation of the license of any new motor vehicle dealer, manufacturer, distributor or representative [Veh. Code § 3050 (c)(3)].
car buyers protection act
Car Buyers Protection Act
  • The Consumers for Auto Reliability and Safety (“CARS”) has a ballot initiative entitled the “Car Buyers Protection Act” that proposes to eliminate dealers’ and manufacturers’ right to appeal to the Board DMV’s enforcement decisions that fine, penalize, or otherwise discipline a licensee (new motor vehicle dealer, manufacturer, manufacturer branch, distributor, distributor branch, or representative) for violations of any statute or regulation intended to protect car buyers, lessees, or the public. The licensees would only be allowed to seek review of these disciplinary decisions in a court of competent jurisdiction.
appeals
Appeals
  • An applicant for, or holder of, a license as a new motor vehicle dealer, manufacturer, distributor or representative can file an appeal with the Board after any final decision of the Director of the Department of Motor Vehicles (“DMV”) that adversely affects the occupational license of the appellant, such as the suspension or revocation of the license.
protests
Protests
  • A franchisee who is a new motor vehicle dealer or recreational vehicle dealer may file a protest if the franchisor (manufacturer or distributor) intends to:

1. Terminate the franchise (Veh. Code, §§ 3060(a) or 3070(a));

2. Modify or replace the terms of the franchise if the modification or replacement would substantially affect the franchisee’s sales or service obligations or investment (Veh. Code, §§ 3060(b) or 3070(b));

3. Establish a new, or relocate an existing, dealer (or allow an off-site sale) of the “same line-make” if the current franchisee is within a 10 mile radius of the proposed location (Veh. Code, §§ 3062 or 3072);

4. Take other actions involving warranty reimbursement or payment under a franchisor incentive program (Veh. Code, §§ 3065, 3065.1, 3075 or 3076).

licensees within the board s jurisdiction
Licensees within the Board’s Jurisdiction
  • The Board could have jurisdiction over dealers, manufacturers, or distributors of the following products:
    • Motor vehicle
    • On-road motorcycle and motor driven cycle
    • Off-highway motorcycles subject to identification
    • All-terrain vehicles
    • Recreational Vehicles (excluding truck campers and park trailers)
    • Low-speed vehicle
    • Buses
    • Ambulances, hearses, limousines
    • Refuse trucks
statutorily required notices
Statutorily Required Notices
  • Other Notices:
    • Delivery and Preparation Obligations/Schedule of Compensation (Veh. Code §§3064 and 3074). Pre-delivery inspection and pre-delivery reimbursement schedules are commonly called PDI.
      • The statute requires that every franchisor shall file a copy of their delivery and preparation obligations [first requirement], as well as a schedule of compensation [second requirement], with the New Motor Vehicle Board.
other notices
Other Notices:
  • Warranty Reimbursement Schedule or Formula (Veh. Code §§ 3065 and 3075)
  • Each franchisor shall file a copy of its warranty reimbursement schedule or formula with the Board.
other notices1
Other Notices:
  • Factory Ownership of Dealership within Relevant Market Area of Same Line-Make Dealerships (Veh. Code § 11713.3(o)(3)(A))
  • Every manufacturer, branch and distributor that temporarily owns or operates a dealership within the relevant market area of an independent, franchised dealer of the same line-make is required to give written notice to the Board, within 10 days, each time it commences or terminates operation of a dealership and each time it acquires of divests itself of an ownership interest.
other notices2
Other Notices:
  • Annual Notice Regarding Dealer Development Stores (Veh. Code § 11713.3(o)(3)(B)
    • The Vehicle Code requires that every manufacturer, branch, and distributor that owns an interest in dealer as part of a bona fide dealer development program give written notice to the Board, annually of the name and location of each dealer in which it has an ownership interest, the name of the bona fide dealer development owner or owners, and the ownership interests of each owner expressed as a percentage.
sample notice of termination
Sample Notice of Termination

60-Day Notice of Termination or Refusal to Continue (Veh. Code §§ 3060(a) or 3070(a))

NOTICE TO DEALER: You have the right to file a protest with the NEW MOTOR VEHICLE BOARD in Sacramento and have a hearing in which you may protest the termination of your franchise under provisions of the California Vehicle Code. You must file your protest with the board within 30 calendar days after receiving this notice or within 30 days after the end of any appeal procedure provided by the franchisor or your protest right will be waived.

notices
Notices
  • The purpose of the notice is to start the statutory time period in which an aggrieved franchisee has to protest its franchisor’s intended action. The time period to file a protest is very short, anywhere from 10, 20, or 30 days, depending on the type of notice.
  • The requirements are that the notice be “received” and that it be “received” by the “franchisee” as well as the Board. In the above example, the time to file the protest is 30 days from the dealer’s and Board’s receipt of the notice.
  • “Received” is not the same as “sent” or “given”.
problems with notices
Problems with notices:
  • Statutory language does not comply – use the website or consult Board legal staff for procedural assistance.  
  • A 15-day notice of termination is issued when the statutory grounds for issuing a shorter notice do not apply.
  • Not enclosing copies of the notices to the dealer(s) with the cover letter to the Board.
  • Notices that combine separate franchises.
    • A separate notice shall be issued to each franchisee.
    • A separate notice shall be issued for each line-make represented by a franchisee.
    • Notices shall not be combined to include more than one franchisee nor combined to include more than one line-make.
    • 13 CCR § 593.1 operative 3-17-11
overview and role of the board staff
Overview and Role of The Board Staff

BOARD MEMBERS

Ramon Alvarez C. (Dealer)

Anthony A. Batarse, Jr. (Dealer)

Ryan Brooks (Public)

Kathryn E. Doi (Public)

Rahim Hassanally (Dealer)

David Lizárraga (Public)

Bismarck Obando (Public)

Victoria Rusnak (Dealer)

Glenn Stevens (Public)

NEW MOTOR VEHICLE BOARD

EXECUTIVE

Executive Director

William Brennan

Legal Division

Senior Staff Counsel Robin Parker

Staff Counsel Dana Winterrowd

Administrative Hearing Division

Hearing Officers

(Administrative Law Judges)

Anthony Skrocki (Law and Motion)

Diana Hagle (Settlement and Merits)

Merilyn Wong (Settlement)

Kymberly Pipkin (Settlement and Merits)

Lonnie Carlson (Settlement and Merits)

Victor Ryerson (Settlement and Merits)

  • Administrative Services Division
  • Staff Services Manager I

Dawn Kindel

Administrative Support

Administrative Assistant

Suzanne Luke

Legal Support

Legal Analyst (training) Nicole Angulo

Legal Assistant Eugene Ohta

Consumer Mediation Program

Staff Services Analyst Jacquelyn Grassinger

Staff Services Analyst Kathleen Tomono

board composition
Board Composition
  • The Board is comprised of nine (9) appointed members all of whom serve four (4) year terms. Their appointments are staggered to allow for continuity. Four (4) are dealer members and five (5) are public members.
slide19

R O S T E R

NEW MOTOR VEHICLE BOARD

1507 - 21st Street, Suite 330

Sacramento, California 95811

NAMEAPPOINTING AUTHORITYSTATUS

Ramon Alvarez C.

Term expires 1-15-14 Governor’s Office Dealer Member

Anthony A. Batarse, Jr.

Term expires 1-15-15 Governor’s Office Dealer Member

Ryan L. Brooks

Term expires 1-15-18 Senate Rules Committee Public Member

Kathryn Ellen Doi

Term expires 1-15-17 Governor’s Office Public Member

Rahim Hassanally

Term expires 1-15-17 Governor’s Office Dealer Member

David C. Lizárraga

Term expires 1-15-15 Speaker of the Assembly Public Member

Bismarck Obando

Term expires 1-15-14 Governor’s Office Public Member

Victoria Rusnak

Term expires 1-15-15 Governor’s Office Dealer Member

Glenn E. Stevens

Term expires 1-15-15 Governor’s Office Public Member

dealer board member participation motor vehicle protests
Dealer Board Member Participation –Motor Vehicle Protests
  • Dealer Board Member participation in case management is limited by statute. (Veh. Code §§ 3050(d) and 3066(d))
  • Dealer Members cannot participate in the consideration of a proposed decision, ruling or order pertaining to the protest of a motor vehicle dealer unless the parties stipulate to allow dealer members to do so.
dealer board member participation recreational vehicle protests
Dealer Board Member Participation – Recreational Vehicle Protests
  • Dealer members of the Board will participate in, hear, comment, or advise other members upon, or decide protests between RV dealers and franchisors, unless a Dealer Member also has an interest in an RV dealership in which case the dealer member will recuse himself or herself from participation in the matter, unless the parties stipulate to such participation.
new motor vehicle board mission and vision statement
New Motor Vehicle BoardMission and Vision Statement

MISSION

  • It is the mission of the New Motor Vehicle Board to enhance relations between dealers and manufacturers throughout the state by resolving disputes in the new motor vehicle industry in an efficient, fair and cost-effective manner.

VISION

  • Safeguard for the Board’s constituency, a fair, expeditious and efficient forum for resolving new motor vehicle industry disputes, which ultimately improves industry relations and reduces the need for costly litigation, and thereby further reducing the burden on California taxpayers.  Assist consumers in mediating concerns with dealers, manufacturers, and distributors licensed by the California Department of Motor Vehicles. 
  • Develop methods that further improve the delivery of Board services in a timely and cost-effective manner.  Educate Board members concerning industry matters, which further improve the Board’s ability to equitably resolve industry disputes.
discussion concerning the trends in case management
Discussion Concerning the Trends In Case Management
  • Discussion concerning trends in case management including:
    • Types and number of notices of termination being filed;
    • Types of protests being filed;
    • Number of cases going to a merits hearing; and
    • The number being resolved prior to hearing.
what are the types and number of notices of termination being filed
What are the types and number of notices of termination being filed?

Notices of Termination 2007-2013

what are the types of protests being filed
What are the types of protests being filed?

The following summarizes the number and type of protests filed from 2006 through 2013:

T – Termination

M – Modification

E – Establishment

R – Relocation

*Scooter protest was erroneously filed under Vehicle Code section 3070.

** A 3060 termination protest was filed for an RV protest against Winnebago; it should have been a 3070

overview of notices of termination and protests by vehicle type
Overview of Notices of Termination and Protests by Vehicle Type

Overview of Notices of Termination and Protests by Vehicle Type

Cars include heavy duty trucks and buses

Motorcycles include scooters and ATVs

Trailers and commercial vehicles (other than heavy duty trucks) are not reflected

* In 2010, there were 77 notices of termination for the discontinuation of the Mercury line that are not reflected.

the number of protests being resolved prior to a merits hearing
The number of protests being resolved prior to a merits hearing?
  • The Board resolves approximately 90% of all cases without the need of a merits hearing. This saves the litigants the cost of proceeding through a merits hearing, eliminates any costs in the court system, and maintains relations in this vital industry.
slide29

Topic 2:Warranty Reimbursement and Franchisor Incentive Program Protests in light of Senate Bill 155 (Chaptered October 3, 2013) Robin Parker, Senior Staff Counsel, New Motor Vehicle Board

  • Warranty Reimbursement Protests (Veh. Code § 3065)
        • Type of New Protests.
        • Written Notice to the Dealer and Board.
        • Time to File Protest.
        • Burden of Proof.
      • Franchisor Incentive Program Compensation Protests (Veh. Code § 3065.1)
        • Type of New Protests.
        • Written Notice to the Dealer and Board.
        • Time to File Protest.
        • Burden of Proof.
      • Recreational Vehicle Protests (Veh. Code §§ 3075 and 3076)
non substantive amendments
Non-substantive amendments

Non-Substantive Amendments: Senate Bill 155

pre repair reasonableness of warranty reimbursement schedule or formula sections 3065 a and b
PRE-REPAIRReasonableness of Warranty Reimbursement Schedule or Formula(Sections 3065(a) and (b))
  • Franchisor Filing Requirement with the Board:
    • Every franchisor is required to properly fulfill every warranty agreement made by it and adequately and fairly compensate each of its franchisees for labor and parts used to fulfill that warranty when the franchisee has fulfilled warranty obligations of diagnostics, repair and servicing and shall file a copy of its warranty reimbursement schedule or formula with the board. (Veh. Code § 3065(a))
pre repair reasonableness of warranty reimbursement schedule or formula sections 3065 a and b1
PRE-REPAIRReasonableness of Warranty Reimbursement Schedule or Formula(Sections 3065(a) and (b))
  • Franchisor Filing Requirement with the Board:
    • The warranty reimbursement schedule or formula shall be reasonable with respect to the time and compensation allowed the franchisee for the warranty diagnostics, repair and servicing and all other conditions of the obligation. (Veh. Code § 3065(a))
    • The reasonableness of the warranty reimbursement schedule or formula shall be determined by the board if a franchisee files a protest with the board. (Veh. Code § 3065(a))
    • In determining the adequacy and fairness of the compensation, the franchisee’s effective labor rate charged to its various retail customers is to be considered together with other relevant criteria. (Veh. Code § 3065(b))
reasonableness of warranty reimbursement schedule or formula sections 3065 a and b
Reasonableness of Warranty Reimbursement Schedule or Formula(Sections 3065(a) and (b))

Franchisee Protest Right:

  • A franchisee still has the right to file a protest concerning the reasonableness of the warranty reimbursement schedule or formula.
    • The time period to file the protest is not contained in the statute.
    • The burden is on the franchisee pursuant to Section 3066(a).
reasonableness of warranty reimbursement schedule or formula sections 3065 a and b1
Reasonableness of Warranty Reimbursement Schedule or Formula(Sections 3065(a) and (b))

Franchisee Protest Right:

  • If a protest concerning the reasonableness of the warranty reimbursement schedule or formula is filed and the Board determines that:
    • The warranty reimbursement schedule or formula fails to provide adequate and fair compensation or fails to conform with the other requirements of Section 3065, within 30 days after receipt of the Board’s order, the franchisor is required to:
      • Correct the failure by amending or replacing the warranty reimbursement schedule or formula, AND
      • Implement the correction as to all California franchisees
reduction in time and compensation applicable to specific parts or labor operations section 3065 a
Reduction in Time and Compensation Applicable to Specific Parts or Labor Operations(Section 3065(a))

New Limitations on Franchisors and Notice Requirement:

  • Franchisors are prohibited from replacing, modifying, or supplementing the warranty reimbursement schedule to impose a fixed percentage or other reduction in the time and compensation allowed to the franchisee for warranty repairs not attributable to a specific repair.
  • A franchisor may reduce the allowed time and compensation applicable to a specific warranty repaironly upon 15 days’ prior written notice to the franchisee.
franchisee protest right reduction in time and compensation specific parts or labor operation
Franchisee Protest Right – Reduction in Time and Compensation (Specific Parts or Labor Operation):
  • A new type of 3065 protest is permissible to challenge the reduction in time and compensation applicable to specific parts or labor operations.
  • The protest needs to be filed within 6 months “following the franchisee’s receipt of the notice of the reduction.”
  • The burden is placed on the franchisor of “establishing the reasonableness of the reduction and adequacy and fairness of the resulting compensation.”
franchisee protest right reduction in time and compensation specific parts or labor operation1
Franchisee Protest Right – Reduction in Time and Compensation (Specific Parts or Labor Operation):
  • If a protest concerning the reduction in time and compensation is filed and the Board determines that:
  • The warranty reimbursement schedule or formula fails to provide adequate and fair compensation or fails to conform with the other requirements of Section 3065, within 30 days after receipt of the Board’s order, the franchisor is required to:
    • Correct the failure by amending or replacing the warranty reimbursement schedule or formula, AND
    • Implement the correction as to all California franchisees
vehicle code section 3065 c
Vehicle Code section 3065(c):
  • Subdivision (c) remains unchanged and provides that if any franchisor disallows a franchisee’s claim for a defective part, alleging that the part, in fact, is not defective, the franchisor shall return the part alleged not to be defective to the franchisee at the expense of the franchisor, or the franchisee shall be reimbursed for the franchisee’s cost of the part, at the franchisor’s option.
post repair franchisor s duty to approve or disapprove warranty claims section 3065 d 1
POST-REPAIRFranchisor’s Duty to Approve or Disapprove Warranty Claims (Section 3065(d)(1))
  • Warranty claims are to be approved or disapproved within 30 days after their receipt by the franchisor.
  • Any claims not specifically disapproved in writing within 30 days from receipt by the franchisor are deemed approved on the 30th day.
  • Franchisee claims for labor and parts under Sections 3064 and 3065 shall be paid within 30 days after approval.
franchisor disapproval of a warranty claim section 3065 d 2
Franchisor Disapproval of a Warranty Claim (Section 3065(d)(2)):
  • A franchisor shall not disapprove a warranty claim unless:
    • The claim is false or fraudulent;
    • Repairs were not properly made;
    • Repairs were inappropriate to correct a nonconformity with the written warranty due to an improper act or omission of the franchisee; or
    • Material noncompliance with reasonable and nondiscriminatory documentation and administrative claims submission requirements.
franchisee protest right warranty claim disapproval section 3065 d 3
Franchisee Protest Right - Warranty Claim Disapproval (Section 3065(d)(3)):
  • A franchisor who disapproves a claim is required to notify the franchisee in writing of the disapproval 30 days after receipt by the franchisor and each notice shall state the specific grounds upon which the disapproval is based; this requirement remains unchanged.
  • Franchisee can file a warranty claim disapproval protest within 6 months after receipt of the written notice.
  • The franchisor has the burden of proof (Section 3065(d)(6))
franchisor provided reasonable appeal process section 3065 d 3
Franchisor Provided “Reasonable” Appeal Process (Section 3065(d)(3)):
  • Allow the franchisee at least 30 days after receipt of the written disapproval notice to provide additional supporting documentation or information rebutting the disapproval.
    • If disapproval is based upon noncompliance with documentation or administrative claims submission requirements, the franchisor shall allow the franchisee at least 30 days from the date of receipt of the notice to cure any material noncompliance.
    • If the disapproval is rebutted and material noncompliance is cured before the applicable deadline, the franchisor shall approve the claim.
franchisor notice requirement final denial of warranty claim section 3065 d 4
Franchisor Notice Requirement – Final Denial of Warranty Claim (Section 3065(d)(4)):
  • If the franchisee provides additional supporting documentation or information purporting to rebut the disapproval, attempts to cure noncompliance relating to the claim, or otherwise appeals denial of the claim and the franchisor continues to deny the claim, the franchisor shall provide the franchisee with a written notification of the final denial within 30 days of completion of the appeal process, which shall conspicuously state “Final Denial” on the first page.
slide44
Franchisee Protest Right – Final Denial of Warranty Claim following Franchisor’s Appeal Process (Section 3065(d)(4)):
  • Franchisee can file a protest for the final denial of a warranty claim following a franchisor’s appeal process within 6 months after receipt of the written notice.
  • The franchisor has the burden of proof (Section 3065(d)(6))
vehicle code section 3065 d 5
Vehicle Code section 3065(d)(5)
  • Subdivision (d)(5) has been renumbered and moved from Section 3065(d). It provides that failure to approve or pay within the above specified time limits, in individual instances for reasons beyond the reasonable control of the franchisor, shall not constitute a violation of this article.
audits of franchisee warranty records section 3065 e
AUDITS OF FRANCHISEE WARRANTY RECORDS (Section 3065(e)

Franchisor’s Ability to Conduct an Audit of Warranty Records (Section 3065(e)(1)):

  • The time period a franchisor has to conduct an audit of franchisee warranty records is reduced from 12 to 9 months after a claim is paid or credit issued.
    • A franchisor shall not select a franchisee for an audit, or perform an audit, in a punitive, retaliatory, or unfairly discriminatory manner.
    • A franchisor may conduct no more than one random audit of a franchisee in a nine-month period.
    • The franchisor’s notification to the franchisee of any additional audit within a nine-month period shall be accompanied by written disclosure of the basis for that additional audit.
slide47
Franchisor Disapproval or Charge back of a Previously Approved Warranty Claim Following an Audit (Section 3065(e)(2)):
  • Following an audit, previously approved claims shall not be disapproved or charged back to the franchisee unless:
    • The claim is false or fraudulent,
    • Repairs were not properly made,
    • Repairs were inappropriate to correct a nonconformity with the written warranty due to an improper act or omission of the franchisee, or
    • For material noncompliance with reasonable and nondiscriminatory documentation and administrative claims submission requirements.
  • A franchisor shall not disapprove or chargeback a claim based upon an extrapolation from a sample of claims, unless the sample of claims is selected randomly and the extrapolation is performed in a reasonable and statistically valid manner.
slide48
Franchisor Written Disapproval Notice of a Previously Approved Warranty Claim Following an Audit (Section 3065(e)(3)):
  • If the franchisor disapproves of a previously approved claim following an audit, within 30 days after the audit, the franchisor shall provide to the franchisee a written disapproval notice stating the specific grounds upon which the claim is disapproved.
franchisor provided reasonable appeal process section 3065 e 3
Franchisor Provided “Reasonable” Appeal Process (Section 3065(e)(3)):
  • Allow the franchisee a reasonable period not less than 30 days after receipt of the written disapproval notice to respond to any disapproval with additional supporting documentation or information rebutting the disapproval and to cure noncompliance, with the period commensurate with the volume of claims under consideration.
    • If the franchisee rebuts any disapproval and cures any material noncompliance relating to a claim before the applicable deadline, the franchisor shall not chargeback the franchisee for that claim.
slide50
Franchisee Protest Right - Warranty Claim Disapproval of a Previously Approved Claim Following an Audit (Section 3065(e)(3)):
  • A franchisor who disapproves of a previously approved claim following an audit is required to notify the franchisee in writing of the disapproval within 30 days after the audit; the notice shall state the specific grounds upon which the claim is disapproved.
  • Franchisee can file a warranty claim disapproval of a previously approved claim following an audit protest within 6 months after receipt of the written notice.
  • The franchisor has the burden of proof (Section 3065(e)(6))
franchisor notice requirement final denial of warranty claim section 3065 e 4
Franchisor Notice Requirement – Final Denial of Warranty Claim (Section 3065(e)(4)):
  • If the franchisee provides additional supporting documentation or information purporting to rebut the disapproval, attempts to cure noncompliance relating to the claim, or otherwise appeals denial of the claim and the franchisor continues to deny the claim, the franchisor shall provide the franchisee with a written notification of the final denial within 30 days of completion of the appeal process, which shall conspicuously state “Final Denial” on the first page.
slide52

Franchisee Protest Right – Final Denial of Warranty Claim Following an Audit Following a Franchisor’s Appeal Process (Section 3065(e)(4)):

  • Franchisee can file a protest for the final denial of a warranty claim following an audit following a franchisor’s appeal process within 6 months after receipt of the written notice.
  • The franchisor has the burden of proof (Section 3065(e)(6))
franchisor chargeback for warranty claims section 3065 e 5
Franchisor Chargeback for Warranty Claims (Section 3065(e)(5)):
  • The franchisor shall not chargeback the franchisee until 45 days after receipt of the written notice described in paragraph (3) [Disapproval of a Previously Approved Claim Following an Audit] or (4) [Final Denial of Warranty Claim Following an Audit Following a Franchisor’s Appeal Process], whichever is later.
  • Any chargeback to a franchisee for warranty parts or service compensation shall be made within 90 days of receipt of that written notice.
  • If the franchisee files a protest pursuant to this subdivision prior to the franchisor’s chargeback for denied claims, the franchisor shall not offset or otherwise undertake to collect the chargeback until the Board issues a final order on the protest.
  • If the Board sustains the chargeback or the protest is dismissed, the franchisor shall have 90 days following issuance of the final order or the dismissal to make the chargeback, unless otherwise provided in a settlement agreement.
vehicle code section 3065 f
Vehicle Code section 3065(f)
  • Subdivision (f) has been renumbered and moved from Section 3065(e). It provides if a false claim was submitted by a franchisee with intent to defraud the franchisor, a longer period for audit and any resulting chargeback may be permitted if the franchisor obtains an order from the board.
warranty claims protests
Warranty Claims Protests

Warranty Claims Protests

franchisor incentive program claims and audits section 3065 1
Franchisor Incentive Program Claims and Audits(Section 3065.1)

Franchisor’s Duty to Approve or Disapprove Franchisor Incentive Claims (Section 3065.1(a))

  • Franchisor incentive program claims are to be approved or disapproved within 30 days after receipt by the franchisor.
  • When any claim is disapproved, the franchisor shall notify the franchisee in writing within 30 days after receipt and the notice shall state the specific grounds upon which the disapproval is based.
  • Any claims not specifically disapproved in writing within 30 days from receipt by the franchisor are deemed approved on the 30th day.
franchisor incentive program claims and audits section 3065 11
Franchisor Incentive Program Claims and Audits(Section 3065.1)

Franchisor Disapproval of a Franchisor Incentive Program Claim (Section 3065.1(b)):

  • A franchisor shall not disapprove a claim unless:
    • The claim is false or fraudulent;
    • The claim is ineligible under the terms of the incentive program as previously communicated to the franchisee; or
    • For material noncompliance with reasonable and nondiscriminatory documentation and administrative claims submission requirements.
franchisor incentive program claims and audits section 3065 12
Franchisor Incentive Program Claims and Audits(Section 3065.1)
  • Franchisee Protest Right – Franchisor Incentive Program Claim Disapproval (Section 3065.1(a)):
    • A franchisor who disapproves a claim is required to notify the franchisee in writing of the disapproval 30 days after receipt by the franchisor and each notice shall state the specific grounds upon which the disapproval is based; this requirement remains unchanged.
    • Franchisee can file a franchisor incentive program claim disapproval protest 6 months from receipt of the written notice.
    • The franchisor has the burden of proof (Section 3065.1(e))
franchisor incentive program claims and audits section 3065 13
Franchisor Incentive Program Claims and Audits(Section 3065.1)

Franchisor Provided “Reasonable” Appeal Process (Section 3065.1(c)):

  • Allow the franchisee at least 30 days after receipt of the written disapproval notice to respond to any disapproval with supporting documentation or information rebutting the disapproval.
    • If disapproval is based upon noncompliance with documentation or administrative claims submission requirements, the franchisor shall allow the franchisee at least30 days from the date of receipt of the notice to cure any material noncompliance.
    • If the disapproval is rebutted and material noncompliance is cured before the applicable deadline, the franchisor shall approve the claim.
    • There are two 30 day time periods: (1) reasonable appeal; and (2) opportunity to cure.
franchisor incentive program claims and audits section 3065 14
Franchisor Incentive Program Claims and Audits(Section 3065.1)

Franchisor Notice Requirement – Final Denial of Franchisor Incentive Program Claim (Section 3065.1(d)):

If the franchisee provides additional supporting documentation or information purporting to rebut the disapproval, attempts to cure noncompliance relating to the claim, or otherwise appeals denial of the claim, and the franchisor continues to deny the claim, the franchisor shall provide the franchisee with a written notification of the final denial within 30 days of completion of the appeal process, which shall conspicuously state “Final Denial” on the first page.

franchisor incentive program claims and audits section 3065 15
Franchisor Incentive Program Claims and Audits(Section 3065.1)

Franchisee Protest Right – Final Denial of Franchisor Incentive Program Claim following Franchisor’s Appeal Process (Section 3065.1(d)):

  • Franchisee can file a protest for the final denial of a franchisor incentive claim following a franchisor’s appeal process 6 months from receipt of the written notice.
  • The franchisor has the burden of proof (Section 3065.1(e))
vehicle code section 3065 1 f
Vehicle Code section 3065.1(f)
  • Subdivision (f) has been renumbered and moved from Section 3065.1(a).
  • All franchisor incentive program claims shall be paid within 30 days following approval.
  • Failure to approve or pay within the above specified time limits, in individual instances for reasons beyond the reasonable control of the franchisor, do not constitute a violation of this article.
audits of franchisee incentive records section 3065 1 g
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisor’s Ability to Conduct an Audit of Incentive Records (Section 3065.1(g)(1)):

  • The time period a franchisor has to conduct an audit of franchisee incentive records is reduced from 18 to 9 months after a claim is paid or credit issued.
    • A franchisor shall not select a franchisee for an audit, or perform an audit, in a punitive, retaliatory, or unfairly discriminatory manner.
    • A franchisor may conduct no more than one random audit of a franchisee in a nine-month period.
    • The franchisor’s notification to the franchisee of any additional audit within a nine-month period shall be accompanied by written disclosure of the basis for that additional audit.
audits of franchisee incentive records section 3065 1 g1
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisor Disapproval or Charge back of a Previously Approved Incentive Program Claim Following an Audit (Section 3065.1(g)(2)):

  • Following an audit, previously approved claims shall not be disapproved or charged back unless:
    • The claim is false or fraudulent;
    • The claim is ineligible under the terms of the incentive program as previously communicated to the franchisee; or
    • For material noncompliance with reasonable and nondiscriminatory documentation and administrative claims submission requirements.
  • A franchisor shall not disapprove or chargeback a claim based upon an extrapolation from a sample of claims, unless the sample of claims is selected randomly and the extrapolation is performed in a reasonable and statistically valid manner.
audits of franchisee incentive records section 3065 1 g2
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisor Written Disapproval Notice of a Previously Approved Incentive Claim Following an Audit (Section 3065.1(g)(3)):

  • If the franchisor disapproves of a previously approved claim following an audit, within 30 days after the audit, the franchisor shall provide to the franchisee a written disapproval notice stating the specific grounds upon which the claim is disapproved.
audits of franchisee incentive records section 3065 1 g3
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisor Provided “Reasonable” Appeal Process (Section 3065.1(g)(3)):

  • Allow the franchisee a reasonable period of not less than 30 days after receipt of the written disapproval notice to respond to any disapproval with additional supporting documentation or information rebutting the disapproval and to cure any material noncompliance, with the period commensurate with the volume of claims under consideration.
    • If the franchisee rebuts any disapproval and cures any material noncompliance relating to a claim before the applicable deadline, the franchisor shall not chargeback the franchisee for that claim.
audits of franchisee incentive records section 3065 1 g4
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisee Protest Right – Incentive Program Claim Disapproval of a Previously Approved Claim Following an Audit (Section 3065.1(g)(3)):

  • A franchisor who disapproves of a previously approved claim following an audit is required to notify the franchisee in writing of the disapproval within 30 days after the audit; the notice shall state the specific grounds upon which the claim is disapproved.
  • Franchisee can file an incentive program claim disapproval of a previously approved claim following an audit protest 6 months from receipt of the written notice.
  • The franchisor has the burden of proof (Section 3065.1(g)(6))
audits of franchisee incentive records section 3065 1 g5
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisor Notice Requirement – Final Denial of Incentive Claim (Section 3065.1(g)(4)):

  • If the franchisee provides additional supporting documentation or information purporting to rebut the disapproval, attempts to cure noncompliance relating to the claim, or otherwise appeals denial of the claim and the franchisor continues to deny the claim, the franchisor shall provide the franchisee with a written notification of the final denial within 30 days of completion of the appeal process, which shall conspicuously state “Final Denial” on the first page.
audits of franchisee incentive records section 3065 1 g6
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisee Protest Right – Final Denial of Incentive Claim Following an Audit Following a Franchisor’s Appeal Process (Section 3065.1(g)(4)):

  • Franchisee can file a protest for the final denial of a warranty claim following an audit following a franchisor’s appeal process 6 months after receipt of the written notice.
  • The franchisor has the burden of proof (Section 3065(e)(6))
audits of franchisee incentive records section 3065 1 g7
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisor Chargeback against the Franchisee (Section 3065.1(g)(5):

  • The franchisor shall not chargeback the franchisee until 45 days after receipt of the written notice described in paragraph (3) [Disapproval of a Previously Approved Claim Following an Audit] (No protest filed) or (4) [Final Denial of Incentive Claim Following an Audit Following a Franchisor’s Appeal Process], whichever is later.
  • If the franchisee cures any material noncompliance relating to a claim, the franchisor shall not chargeback the dealer for that claim.
  • Any chargeback to a franchisee for warranty parts or service compensation shall be made within 90 days of receipt of that written notice.
audits of franchisee incentive records section 3065 1 g8
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Franchisor Chargeback against the Franchisee (Section 3065.1(g)(5):

  • If the Board sustains the chargeback or the protest is dismissed, the franchisor shall have 90 days following issuance of the final order or the dismissal to make the chargeback, unless otherwise provided in a settlement agreement. (Protest filed)
audits of franchisee incentive records section 3065 1 g9
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))
  • Subdivision (g)(6) provides that within 6 months after either receipt of the written notice described in paragraph (3) [disapprove of a previously approved claim following an audit] or (4) [final denial notification], a franchisee may file a protest with the board for determination of whether the franchisor complied with this subdivision. If the franchisee files a protest pursuant to this subdivision prior to the franchisor’s chargeback for denied claims, the franchisor shall not offset or otherwise undertake to collect the chargeback until the board issues a final order on the protest. In any protest pursuant to this subdivision, the franchisor has the burden of proof.
audits of franchisee incentive records section 3065 1 g10
AUDITS OF FRANCHISEE INCENTIVE RECORDS (Section 3065.1(g))

Vehicle Code section 3065.1(h)

  • Subdivision (h) has been renumbered and moved from Section 3065.1(b).
  • If a false claim was submitted by a franchisee with the intent to defraud the franchisor, a longer period for audit and any resulting chargeback may be permitted if the franchisor obtains an order from the board.
franchisor incentive program protests
Franchisor Incentive Program Protests

Franchisor Incentive Program Protests

burden of proof hearings on protests
Burden of Proof: Hearings on Protests

Vehicle Code section 3066(c):

  • Due to amendments to Sections 3065 and 3065.1 on which party has the burden, Section 3066(c) was amended to reflect that “except as otherwise provided in this chapter…” in delivery and preparation obligations, warranty reimbursement, and franchisor incentive program protests the burden of proof is on the franchisee.
substantive amendments vehicle code section 11700 et seq
Substantive Amendments(Vehicle Code section 11700, et seq.)

Vehicle Code section 11713.3(y):

  • Adds new subdivision (y) to Section 11713.3 and re-numbers the existing subdivision (y) to (z). Subdivision (y) provides that it is unlawful and a violation of this code for a licensed manufacturer or distributor to take or threaten to take any adverse action against a dealer pursuant to an export or sale-for-resale prohibition because the dealer sold or leased a vehicle to a customer who either:
    • Exported the vehicle to a foreign country; or
    • Resold the vehicle in violation of the prohibition
    • Unless:
      • The export or sale-for-resale prohibition policy was provided to the dealer in writing prior to the sale or lease and
      • The dealer knew or reasonably should have known of the customer’s intent to export or resell the vehicle in violation of the prohibition at the time of sale or lease.
vehicle code section 11713 3 y continued
Vehicle Code section 11713.3(y) - continued-
  • If the dealer causes the vehicle to be registered in this or any other state, and collects or causes to be collected any applicable sales or use tax due to this state, a rebuttable presumption is established that the dealer did not have reason to know of the customer’s intent to export or resell the vehicle.
vehicle code section 11713 13 b and c
Vehicle Code section 11713.13(b) and (c)
  • Amends subdivision (b) and (c) of Section 11713.13 which provides that it is unlawful and a violation of this code for any licensed manufacturer or distributor to:
    • Require a dealer to establish or maintain exclusive facilities, personnel, or display space if the imposition of the requirement would be unreasonable in light of all existing circumstances, including economic conditions. In anyproceeding in which the reasonableness of a facility or capital requirement is an issue, the manufacturer or distributor shall have the burden of proof. (Section 11713.13(b)) [Actions under this section are no longer limited to subdivision (a) or (b).]
    • Require, by contract or otherwise, a dealer to make a material alteration, expansion, or addition to any dealership facility, unless the required alteration, expansion, or addition is reasonable in light of all existing circumstances, including economic conditions and advancements in vehicular technology. This subdivision does not limit the obligation of a dealer to comply with any applicable health or safety laws. (Section 11713.13(c))
vehicle code section 11713 13 b and c continued
Vehicle Code section 11713.13 (b) and (c)- continued-
  • A required facility alteration, expansion, or addition shall not be deemed reasonable if it requires that the dealer purchase goods or services from a specific vendor when goods or services of substantially similar kind, quality, and general design concept are available from another vendor.
    • Notwithstanding the prohibitions in this paragraph, a manufacturer, manufacturer branch, distributor, or distributor branch may require the dealer to request approval for the use of alternative goods or services in writing.
    • Approval for these requests shall not be unreasonably withheld, and the request shall be deemed approved if not specifically denied in writing within 20 business days of receipt of the dealer’s written request.  
vehicle code section 11713 13 b and c continued1
Vehicle Code section 11713.13 (b) and (c)- continued-
  • This paragraph does not authorize a dealer to impair or eliminate the intellectual property or trademark rights of the manufacturer, manufacturer branch, distributor, or distributor branch, or to permit a dealer to erect or maintain signs that do not conform to the intellectual property usage guidelines of the manufacturer, manufacturer branch, distributor, or distributor branch.
  • This paragraph shall not apply to a specific good or service if the manufacturer, manufacturer branch, distributor, or distributor branch provides the dealer with a lump-sum payment or series of payments of a substantial portion of the cost of that good or service, if the payment is intended solely to reimburse the dealer for the purchase of the specified good or service. (Section 11713.13(c)(1))
burden of proof
Burden of Proof
  • In any proceeding in which a required facility alteration, expansion, or addition is an issue, the manufacturer or distributor has the burden of proof. This includes protest hearings. The manufacturer would have the burden to show the requirements are reasonable and the dealer is not in compliance.
vehicle code section 11713 13 g
Vehicle Code section 11713.13(g)
  • Adds subdivision (g) to Section 11713.13 which provides that it is unlawful and a violation of this code for any licensed manufacturer or distributor to:
    • Establish or maintain a performance standard, sales objective, or program for measuring a dealer’s sales, service, or customer service performance that may materially affect the dealer, including, but not limited to, the dealer’s right to payment under any incentive or reimbursement program or establishment of working capital requirements, unless both of the following requirements are satisfied:
vehicle code section 11713 13 g1
Vehicle Code section 11713.13(g)
  • The performance standard, sales objective, or program for measuring dealership sales, service, or customer service performance is reasonable in light of all existing circumstances, including, but not limited to, the following:
    • Demographics in the dealer’s area of responsibility.
    • Geographical and market characteristics in the dealer’s area of responsibility.
    • The availability and allocation of vehicles and parts inventory.
    • Local and statewide economic circumstances.
    • Historical sales, service, and customer service performance of the line-make within the dealer’s area of responsibility, including vehicle brand preferences of consumers in the dealer’s area of responsibility.
vehicle code section 11713 13 g2
Vehicle Code section 11713.13(g)
  • Within 30 days after a request by the dealer, the manufacturer or distributor provides a written summary of the methodology and data used in establishing the performance standard, sales objective, or program for measuring dealership sales or service performance. The summary shall be in detail sufficient to permit the dealer to determine how the standard was established and applied to the dealer.
  • In any proceeding (includes Protests, Section 11726 action, DMV, civil court) in which the reasonableness of a performance standard, sales objective, or program for measuring dealership sales, service, or customer service performance is an issue, the manufacturer or distributor has the burden of proof.
attorney roundtable
ATTORNEY ROUNDTABLE

LUNCH

Please return in 1 hour

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Topic 3:Panel Discussion Concerning Manufacturer/Distributor Pressure to Upgrade Dealership Facilities
  • Michael J. Flanagan, Esq., Owner, Law Offices of Michael J. Flanagan
  • Ryan S. Mauck, Esq., Litigation Partner, Jeffer, Mangels, Butler & Mitchell LLP
  • Colm A. Moran, Esq., Partner, Hogan Lovells US LLP
  • Halbert B. Rasmussen, Esq., Partner, Manning, Leaver, Bruder & Berberich
panel discussion concerning manufacturer distributor pressure to upgrade dealership facilities
Panel Discussion Concerning Manufacturer/Distributor Pressure to Upgrade Dealership Facilities
  • In light of the economic climate, what are manufacturers and distributors requiring in terms of facility upgrades and new facilities?
  • What financial incentives, if any, are being provided?
  • Anticipated impact, if any, from recently amended Vehicle Code section 11713.13(c) (effective January 1, 2014)?
      • What is a “reasonable” facility alteration, expansion or addition?
      • Burden of proof.
  • Questions and answers.
attorney roundtable1
ATTORNEY ROUNDTABLE

BREAK

Please return in 15 minutes

slide89

Topic 4:Discussion Concerning Proposed Changes to the Board’s Case Management OperationsRobin Parker, Senior Staff Counsel, New Motor Vehicle Board

  • Proposedregulatory changes:
      • Definitions (13 CCR § 550);
      • Subpoenas; Motion to Quash (13 CCR § 551.2);
      • Notice of Assignment of Administrative Law Judges; Peremptory Challenges (13 CCR § 551.12);
      • Sanctions - Bad Faith Actions (13 CCR § 551.21); and
      • Adoption and Objection to Proposed Stipulated Decision and Order (13 CCR § 551.22).
  • What gaps, if any, are there in the Board’s statutes and regulations?
  • Should “permanency of investment” be defined in a regulation?
  • Should the definition of “relevant market area” be revised?
  • What procedural changes (changes which do not require legislation or rulemaking) would be of benefit to those practicing before the Board?
stipulated decisions and orders
Stipulated Decisions and Orders

Definitions (13 CCR § 550)

(u) “Proposed stipulated decision and order” is a paper submitted by the parties pursuant to Vehicle Code section 3050.7 seeking to resolve one or more issues in a protest or petition pending before the board.

… (z) “Stipulated decision and order of the board” means a proposed stipulated decision and order that has been adopted by the board pursuant to Vehicle Code section 3050.7.

stipulated decisions and orders1
Stipulated Decisions and Orders

§ 551.22. Adoption and Objection to Proposed Stipulated Decision and Order.

(a) Upon the filing of a proposed stipulated decision and order with the board, a copy of the proposed stipulated decision and order shall be transmitted by the executive director to each member of the board.

(b) The proposed stipulated decision and order shall be deemed to be adopted by the board unless a member of the board notifies the executive director of the board of an objection thereto within 10 days after that board member has received a copy of the proposed stipulated decision and order.

(c) If any member of the board gives notice of objection within 10 days of receipt of a copy of the proposed stipulated decision and order, the proposed stipulated decision and order shall be considered by the board at its next meeting to determine whether to adopt or reject it.

(d) Upon receipt by the executive director of a notice of objection, the executive director shall notify the parties named in the petition or protest that there has been an objection and that the matter will be considered by the board at its next meeting. The parties shall also be given a minimum of 10 days prior notice of the time, date, and location of the board meeting at which the proposed stipulated decision and order will be considered.

subpoenas motion to quash
Subpoenas - Motion to Quash

§ 551.2. Subpoenas; Motion to Quash.

(a) Upon the written request of any party that has been properly served on the opposing party or parties, the executive director or an administrative law judge designated by the board or its executive director may, and at the direction of the board the executive director shall, issue a subpoena for the attendance of any person before the board, for the attendance and testimony of a deponent, or a subpoena duces tecum for the production of papers, records, books, and electronically stored information by a witness or a deponent.

(d) Following service of the original subpoena upon the witness or deponent, a copy of the subpoena and an original executed proof of service shall be filed with the board.

peremptory challenges
Peremptory Challenges

§ 551.12. Notice of Assignment of Administrative Law Judges; Peremptory Challenges.

(a) The name of the administrative law judge assigned to a protest or petition proceeding will be noted on the order of time and place of hearing. An amended order or notice will be issued if a different administrative law judge is subsequently assigned to the proceeding.

(b) In any proceeding other than those relating to applications for temporary relief or interim orders, each party is entitled to only one peremptory challenge of the assigned administrative law judgeEach party is entitled to one peremptory challenge of the ALJ assigned to preside over a hearing on the merits of a petition as required by Vehicle Code section 3050(c) or the ALJ assigned to preside over a hearing on the merits of a protest as required by Vehicle Code section 3050(d), based solely upon satisfying all of the following requirements:

peremptory challenges1
Peremptory Challenges

(1) The peremptory challenge shallAny such peremptory challenge must be filed with the board no later than either 20 days from the date of the order of time and place of hearing identifying the merits administrative law judge or 20 days prior to the date scheduled for commencement of the merits hearing, whichever is earlier.

(f) Unless required for the convenience of the board or good cause is shown, a continuance of the hearing shall not be granted by reason of a peremptory challenge. If a continuance is granted, the matter shall be continued to the first convenient day for the board and shall be reassigned or transferred for hearing as promptly as possible. Nothing in this regulation shall affect or limit the provisions of Vehicle Code section 3066(a).

sanctions bad faith actions
Sanctions - Bad Faith Actions

§ 551.21. Sanctions - Bad Faith Actions.

(a) The board may order, or an ALJ designated by the board may recommend ordering a party, a party's representative or both, to pay reasonable sanctions, including attorney's fees and costs, incurred by another party as a result of bad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.

(1) "Actions or tactics" include, but are not limited to, the making or opposing of motions or the failure to comply with a lawful order or ruling of the board.

(2) "Frivolous" means:

(A) Totally without merit; or

(B) For the sole purpose of harassing an opposing party.

(b) The board shall not order sanctions, or an ALJ designated by the board shall not recommend an award of sanctions, without providing notice and an opportunity to be heard.…

open forum discussion concerning proposed changes to the board s case management operations
Open Forum Discussion Concerning Proposed Changes To the Board’s Case Management Operations
  • What gaps, if any, are there in the Board’s statutes and regulations?
    • Should “permanency of investment” be defined in a regulation?
    • Should the definition of “relevant market area” be revised?
    • What procedural changes (changes which do not require legislation or rulemaking) would be of benefit to those practicing before the Board?
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Topic 5:Discussion Concerning Pre-Hearing and Post-Hearing Motions and Briefs Robin Parker, Senior Staff Counsel, New Motor Vehicle Board
  • Pre-hearing briefs and motions.
  • Telephonic Pre-Hearing Conference with the assigned ALJ, the numbering of exhibits, court reporters, and transcript fees and costs.
  • Protective orders issued prior to and after the merits hearing, sealing the record (transcripts and exhibits), and exclusion of witnesses/dealer principal during the hearing.
  • Post-hearing briefs including guidelines for proposed findings of fact and post-hearing motions.
  • The timing of issuance of the Proposed Decision and consideration by the Board.
pre hearing briefs and motions
Pre-hearing briefs and motions
  • Typically, motions are due 7-10 days prior to the merits hearing, oppositions are due a couple days thereafter, and the telephonic hearing is set a couple of days prior to the merits hearing.
  • These pleadings are typically filed via e-mail and regular mail.
  • Unless the motion is potentially dispositive, there is no court reporter present.
  • Most ALJs require pre-hearing briefs. These are typically due about a week prior to the hearing.
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Telephonic Pre-Hearing Conference with the assigned ALJ, the numbering of exhibits, court reporters, and transcript fees and costs

Exhibits:

  • Pre-Marked Binders
  • Numbering of Exhibits
  • At least five (5) copies of each exhibit should be brought to the hearing.
  • All documents identified and admitted into evidence are public records and subject to disclosure under the California Public Records Act (Gov. Code § 6250 et seq.)
  • The court reporter stamps all exhibits and maintains the official Board copy during the hearing.
court reporters and transcript fees and costs
Court reporters and transcript fees and costs

[1]  “Dispositive motions” are those that result in a final determination of the protest or petition before the Board. 

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Protective orders issued prior to and after the merits hearing, sealing the record (transcripts and exhibits), and exclusion of witnesses/dealer principal during the hearing

  • Section 551.20 of the Board’s regulations pertains to the conduct of a hearing and protective orders consistent with Government Code section 11425.20 and Rule 2.550 and 2.551 of the California Rules of Court.  
  • A motion seeking an order for closure or other protective order for all or part of a hearing, including a motion to seal designated portions of the record shall be made before the ALJ presiding at the hearing to which the order will apply.
  • Moving party must make a formal motion on the record, either orally or in writing including:
    • The materials to be protected;
    • The parts of the record to be sealed;
    • The hearing to be closed to the public.
protective orders
Protective Orders
  • Moving party must set forth the factual basis, circumstances, and legal authority by one or both of the following:
      • Affidavits that support the findings required to grant the motion;
      • Other evidence that supports the findings required to grant the motion.
  • An opposing party shall be allowed an opportunity to oppose the motion orally on the record and/or in writing.
protective orders1
Protective Orders
  • It may be made at the commencement of or during the course of the hearing but must be made as early as is practicable.
  • In any case, the provisions of Government Code section 11425.20 shall be applicable.
  • The ALJ shall set forth on the record the facts, legal basis, and findings that support any protective order, order to seal parts of the record, or order to close all or part of the hearing to the public.
post hearing briefs including guidelines for proposed findings of fact and post hearing motions
Post-hearing briefs including guidelines for proposed findings of fact and post-hearing motions

Post-Hearing Briefing Schedule

  • A typical schedule provides:
    • 30 days for simultaneous opening briefs along with findings of fact that are cited to the record. This commences upon receipt of the transcripts.
    • 15 days for simultaneous reply briefs with citations to the record.
    • The matter is deemed submitted upon receipt of the reply briefs.
guidelines for submission of proposed findings of fact
Guidelines for submission of Proposed Findings of Fact
  • Briefs should be separately filed and contain the parties’ arguments.
  • Proposed findings of fact should be separately filed and in the form of a proposed decision with:  
    • (1) Procedural Background including a Statement of the Case, the Parties and Counsel, and a brief Summary of the Witnesses’ Testimony and Exhibits Introduced;
    • (2) Issues Presented;
    • (3) Protestant’s Contentions;
    • (4) Respondent’s Contentions;
    • (5) Findings of Fact with citations to the record including preliminary findings and any joint stipulations of fact, and findings relating to each of the good cause factors in Vehicle Code section 3061 and any existing circumstances;
    • (6) Conclusions or Analysis of the Good Cause Factors and any existing circumstances;
    • (7) Determination of Issues; and
    • (8) Proposed Decision.
post hearing m otions
Post-Hearing Motions
  • Post-hearing motions are handled on a case-by-case basis. At the discretion of the merits ALJ, they may be handled by ALJ Skrocki, the Board’s designated Law and Motion ALJ.
the timing of issuance of the proposed decision and consideration by the board
The timing of issuance of the Proposed Decision and consideration by the Board
  • By statute, the Proposed Decision needs to be signed and finalized 30 days after the matter is submitted.
  • Within 10 days after signing, the Proposed Decision is sent to the parties. In reality, it is typically sent the same day it is signed by the merits ALJ.
  • Within 30 days from the date of the signed Proposed Decision, the Board considers it at a noticed meeting.
  • 10-days prior to a Board meeting, counsel for the parties will receive via certified mail, a copy of the agenda in which the Proposed Decision is being considered.
  • Oral comments are presented in open session at the meeting.
the timing of issuance of the proposed decision and consideration by the board continued
The timing of issuance of the Proposed Decision and consideration by the Board-continued-
  • Counsel for the parties present oral comments in support of or opposition to the Proposed Decision (15 minutes; 5 minutes can be reserved for rebuttal). The party with the burden typically goes first.
  • No additional evidence can be presented at the Board meeting.
  • The deliberations occur in closed Executive Session and the Board Typically announces its decision during the meeting.
  • The Board can adopt, amend, remand, or reject the Proposed Decision.
cle credits
CLE Credits

In order to received CLE credits, you must complete the evaluation form and sign out