Liberty Lincoln-Mercury Inc. v. Ford Motor Co., Nos. 11-1258 and 11-1307; Third Circuit; opinion by Fisher, U.S.C.J.; filed April 9, 2012. Before Judges Fisher, Greenaway and Jones, District Judge, sitting by designation. On appeal from the District of New Jersey. [Sat below: Judge Sheridan.] DDS No. 11-8-5893 [23 pp.]
For each new vehicle Ford Motor Co. manufactures and sells through a nationwide network of independent franchise dealers it provides a manufacturer’s warranty that entitles the customer to have a Ford dealer repair or replace certain defective components. Ford reimburses the dealers at 140 percent of the cost of parts used in warranty services. However, under the New Jersey Franchise Protection Act (FPA), Ford must reimburse dealers for warranty parts at the “prevailing retail rate,” i.e., the rate dealers charge retail customers in connection with nonwarranty work. As a result, New Jersey dealers are reimbursed at higher rates than their out-of-state counterparts.
