Court Rejects Provision in Virginia Dealer Law

A three-judge panel of the 4th U.S. Circuit Court of Appeals ruled last week that a provision in the Virginia motorcycle dealer franchise law offers an unconstitutional amount of protection for existing powersports dealers and unduly burdens interstate commerce.
The appeals court ruled in favor of Yamaha Motor Corp. USA in a lawsuit it filed against the commissioner of the Virginia Department of Motor Vehicles (DMV) and Jim’s Motorcycle Inc., of Bristol, Va.
The provision in question was a second paragraph in the Virginia dealer franchise law that requires a manufacturer or distributor to give dealers notice prior to the creation of an additional franchise in the state. Then, any dealer retailing the same brand in the state is entitled to file an objection with the Virginia DMV and allowed a hearing if it can be proven the proposed dealership would severely affect the existing dealership’s business. Jim’s filed a protest with the DMV, and the DMV commissioner ruled the retailer was entitled to an evidentiary hearing.
In a lawsuit filed July 25, 2001, Yamaha charged that the second paragraph within the law discriminates against interstate commerce and sought an injunction prohibiting the paragraph’s enforcement.
A district court’s July 2003 judgment upheld the provision within the law, but the federal appellate court’s recent decision reversed it and ruled in favor of Yamaha.
Read the April 25 issue of Powersports Business for a complete report.

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