December 16, 2024
Recently, two Massachusetts-based Volvo dealerships sued Volvo Car USA for underpaying them for services under prepaid maintenance contracts, claiming entitlement to statutory reimbursement rates. The 1st U.S. Circuit Court of Appeals ruled against the plaintiffs, affirming that servicing the prepaid maintenance contracts was not a "franchise obligation" under Chapter 93B, thus not subject to statutory reimbursement rates.
Boston commercial litigator James Radke weighed in on the case, noting that the decision is a disappointing one for dealers.
“Dealers face real pressure from Volvo and also from their customers to sell and service these prepaid maintenance plans. The dealers were arguing that they were under pressure to do this. But as the 1st Circuit dug into that, they concluded that the commercial pressure the dealers may be feeling from Volvo or from their customers doesn’t make it an actual contractual obligation.”
He also highlighted a key point that stood out in the court's decision:
“At the end of the day, Chapter 93B governs a franchise relationship between the motor vehicle manufacturers, distributors and dealers. The fact that the dealers’ participation in both the selling and servicing of these maintenance contracts was ultimately voluntary was enough to take it outside the protections of the statute.”
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Jamie is an experienced commercial litigator and trial lawyer who represents diverse clients, including auto dealers, manufacturers, franchisors, commercial landlords, general contractors, assisted living facilities and many other businesses in connection with contractual disputes, employment discrimination and wage issues, franchise and distributor issues, landlord/tenant matters, collection actions, tort and product liability matters, noncompetition cases and others. Jamie is also a member of the Massachusetts State Auto Dealers Association.
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