BILL REQ. #:  S-1364.1 

Read first time 02/11/2003.   Referred to Committee on Commerce & Trade.

     AN ACT Relating to relevant market area of motorcycle dealers; amending RCW 46.94.010; and adding new sections to chapter 46.94 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 46.94.010 and 1985 c 472 s 3 are each amended to read as follows:
     As used in this chapter:
     (1) "Department" means the department of licensing.
     (2) "Designated family member" means (a) an heir as defined in RCW 11.02.005(6) if the motorcycle dealer dies intestate or (b) a legatee or devisee as used in Title 11 RCW if the deceased motorcycle dealer leaves a will. A motorcycle dealer also may name in a notarized statement any person as the designated family member for the purposes of receiving an interest in the motorcycle dealership. Title 11 RCW applies to this chapter. However, in cases of conflict, the notarized inter vivos designation prevails over testamentary and intestate succession. Notarized inter vivos designations under this subsection are not codicils to wills.
     (3) "Distributor" means a person, whether a resident or nonresident, other than a manufacturer, who sells, leases, or distributes motorcycles to motorcycle dealers, or controls any other person, other than a manufacturer, who sells, leases, or distributes motorcycles to motorcycle dealers.
     (4) "Distributor branch" means a branch office maintained by the distributor or wholesaler.
     (5) "Distributor representative" means a representative employed by a distributor or wholesaler for the purpose of selling or promoting the sale or lease of the distributor's or wholesaler's motorcycles to motorcycle dealers, or for the purpose of supervising or contacting dealers.
     (6) "Factory branch" means a branch office maintained by a manufacturer in order to direct and supervise the representatives of the manufacturer.
     (7) "Factory representative" means a person employed by a manufacturer for the purpose of making or promoting the sale or lease of the manufacturer's motorcycles to dealers, distributors, or prospective motorcycle dealers.
     (8) "Franchise" means an oral or written contract, to include a dealer agreement, either expressed or implied, between a franchisor and a motorcycle dealer which purports to fix the legal rights and liabilities between the parties and under which (a) the dealer is granted the right to purchase and resell motorcycles manufactured, distributed, or imported by the franchisor; (b) the dealer's business is associated with the trademark, trade name, commercial symbol, or advertisement designating the franchisor or the products distributed by the franchisor; and (c) the dealer's business relies on the franchisor for a continued supply of motorcycles, parts, and accessories.
     (9) "Franchisor" means any person who enters into a franchise with a motorcycle dealer.
     (10) "Manufacturer" means any person, firm, association, corporation, or trust that manufactures or provides assemblies for motorcycles.
     (11) "Motorcycle" means any motor vehicle which has an unladen weight of less than fifteen hundred pounds, including any parts, accessories, equipment, or special tools designated or intended for use on or with those motor vehicles, and (a) which is self-propelled and capable of use and operation on the public highways and streets; or (b) which is a self-propelled, off-road vehicle, tired or nontired, capable of transporting individuals on or off public highways and streets. "Motorcycle" excludes farm tractors, golf carts, firefighting equipment, any motor vehicle designed solely for industrial purposes, and lawnmowers.
     (12) "Motorcycle dealer" or "dealer" means a person operating under a dealer agreement or franchise with a franchisor who is engaged regularly in the business of buying, selling, exchanging, offering, brokering, or leasing with an option to purchase new or used motorcycles in the state, with a place of business in the state.
     (13) "New motorcycle" means a motorcycle that has been sold or transferred to a motorcycle dealer and that has not been used for other than demonstration purposes, and on which the original title has not been issued from the motorcycle dealer. The term includes motorcycles not of the current model year comprising part of the dealer's inventory.
     (14) "Person" means any natural person, partnership, stock company, corporation, trust, agency, or other legal entity, as well as any individual officers, directors, or other persons in active control of the activities of the entity.
     (15) "Place of business" means a permanent, enclosed commercial building, situated within the state, and the real property on which it is located, at which the business of a motorcycle dealer, including the display and repair of motorcycles, may be lawfully conducted in accordance with the terms of all applicable laws and in the building the public may contact the motorcycle dealer or his or her employees at all reasonable times.
     (16) "Relevant market area" ((means a ten-mile radius around a proposed place of business)) is defined as follows:
     (a) If the population in the county in which the proposed new or relocated dealership is to be located is four hundred thousand or more, the relevant market area is the geographic area within a radius of eight miles around the proposed site;
     (b) If the population in the county in which the proposed new or relocated dealership is to be located is two hundred thousand or more and less than four hundred thousand, the relevant market area is the geographic area within a radius of twelve miles around the proposed site;
     (c) If the population in the county in which the proposed new or relocated dealership is to be located is less than two hundred thousand, the relevant market area is the geographic area within a radius of sixteen miles around the proposed site.
In determining population for this definition, the most recent census by the United States Bureau of Census or the most recent population update, either from the National Planning Data Corporation or other similar recognized source, will be accumulated for all census tracts either wholly or partially within the relevant market area.

NEW SECTION.  Sec. 2   A new section is added to chapter 46.94 RCW to read as follows:
     Notwithstanding the terms of a franchise and notwithstanding the terms of a waiver, if a manufacturer intends or proposes to enter into a franchise to establish an additional new motorcycle dealer or to relocate an existing new motorcycle dealer within or into a relevant market area in which the same line make of motorcycle is then represented, the manufacturer shall provide at least sixty days advance written notice to the department and to each new motorcycle dealer of the same line make in the relevant market area, of the manufacturer's intention to establish an additional new motorcycle dealer or to relocate an existing new motorcycle dealer within or into the relevant market area. The notice must be sent by certified mail to each such party and must include the following information:
     (1) The specific location at which the additional or relocated motorcycle dealer will be established;
     (2) The date on or after which the additional or relocated motorcycle dealer intends to commence business at the proposed location;
     (3) The identity of all motorcycle dealers who are franchised to sell the same line make motorcycles as the proposed dealer and who have licensed locations within the relevant market area;
     (4) The names and addresses, if available, of the owners of and principal investors in the proposed additional or relocated motorcycle dealership; and
     (5) The specific grounds or reasons for the proposed establishment of an additional motorcycle dealer or relocation of an existing dealer.

NEW SECTION.  Sec. 3   A new section is added to chapter 46.94 RCW to read as follows:
     (1) Within thirty days after receipt of the notice under section 2 of this act, or within thirty days after the end of an appeal procedure provided by the manufacturer, whichever is greater, a new motorcycle dealer so notified or entitled to notice may file a petition with the department protesting the proposed establishment or relocation. The petition must contain a short statement setting forth the reasons for the dealer's objection to the proposed establishment or relocation. Upon the filing of a protest and the receipt of the filing fee, the department shall promptly notify the manufacturer that a timely protest has been filed and shall request the appointment of an administrative law judge under chapter 34.12 RCW to conduct a hearing. The manufacturer shall not establish or relocate the new motorcycle dealer until the administrative law judge has held a hearing and has determined that there is good cause for permitting the proposed establishment or relocation. When more than one protest is filed against the establishment or relocation of the same dealer, the administrative law judge shall consolidate the hearings to expedite disposition of the matter.
     (2) If a manufacturer provides in the franchise agreement or by written statement distributed and provided to its dealers for arbitration under the Washington Arbitration Act, chapter 7.04 RCW, as a mechanism for resolving disputes relating to the establishment of an additional new motorcycle dealer or the relocation of a new motorcycle dealer, then the provisions of this section and RCW 46.96.170 relating to hearings by an administrative law judge do not apply, and a dispute regarding the establishment of an additional new motorcycle dealer or the relocation of an existing new motorcycle dealer must be determined in an arbitration proceeding conducted in accordance with the Washington Arbitration Act, chapter 7.04 RCW. The thirty-day period for filing a protest under this section still applies except that the protesting dealer shall file the protest with the manufacturer within thirty days after receipt of the notice under section 2 of this act.
     (3) The dispute will be referred for arbitration to such arbitrator as may be agreed upon by the parties to the dispute. If the parties cannot agree upon a single arbitrator within thirty days from the date the protest is filed, the protesting dealer will select an arbitrator, the manufacturer will select an arbitrator, and the two arbitrators will then select a third. If a third arbitrator is not agreed upon within thirty days, any party may apply to the superior court, and the judge of the superior court having jurisdiction will appoint the third arbitrator. The protesting dealer will pay the arbitrator selected by him or her, and the manufacturer will pay the arbitrator it selected. The expense of the third arbitrator and all other expenses of arbitration will be shared equally by the parties. Attorneys' fees and fees paid to expert witnesses are not expenses of arbitration and will be paid by the person incurring them.
     (4) Notwithstanding the terms of a franchise or written statement of the manufacturer and notwithstanding the terms of a waiver, the arbitration will take place in the state of Washington in the county where the protesting dealer has his or her principal place of business. Section 4 of this act applies to a determination made by the arbitrator or arbitrators in determining whether good cause exists for permitting the proposed establishment or relocation of a new motorcycle dealer, and the manufacturer has the burden of proof to establish that good cause exists for permitting the proposed establishment or relocation. After a hearing has been held, the arbitrator or arbitrators shall render a decision as expeditiously as possible, but in any event not later than one hundred twenty days from the date the arbitrator or arbitrators are selected or appointed. The manufacturer shall not establish or relocate the new motorcycle dealer until the arbitration hearing has been held and the arbitrator or arbitrators have determined that there is good cause for permitting the proposed establishment or relocation. The written decision of the arbitrator is binding upon the parties unless modified, corrected, or vacated under the Washington Arbitration Act. Any party may appeal the decision of the arbitrator under the Washington Arbitration Act, chapter 7.04 RCW.
     (5) If the franchise agreement or the manufacturer's written statement distributed and provided to its dealers does not provide for arbitration under the Washington Arbitration Act as a mechanism for resolving disputes relating to the establishment of an additional new motorcycle dealer or the relocation of a new motorcycle dealer, then the hearing provisions of this section and section 5 of this act apply. Nothing in this section is intended to preclude a new motorcycle dealer from electing to use any other dispute resolution mechanism offered by a manufacturer.

NEW SECTION.  Sec. 4   A new section is added to chapter 46.94 RCW to read as follows:
     In determining whether good cause exists for permitting the proposed establishment or relocation of a new motorcycle dealer of the same line make, the administrative law judge shall take into consideration the existing circumstances, including, but not limited to:
     (1) The extent, nature, and permanency of the investment of both the existing motorcycle dealers of the same line make in the relevant market area and the proposed additional or relocating new motorcycle dealer, including obligations reasonably incurred by the existing dealers to perform their obligations under their respective franchises;
     (2) The growth or decline in population and new motorcycle registrations during the past five years in the relevant market area;
     (3) The effect on the consuming public in the relevant market area;
     (4) The effect on the existing new motorcycle dealers in the relevant market area, including any adverse financial impact;
     (5) The reasonably expected or anticipated motorcycle market for the relevant market area, including demographic factors such as age of population, income, education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers in the relevant market area;
     (6) Whether it is injurious or beneficial to the public welfare for an additional new motorcycle dealer to be established;
     (7) Whether the new motorcycle dealers of the same line make in the relevant market area are providing adequate competition and convenient customer care for the motorcycles of the same line make in the relevant market area, including the adequacy of motorcycle sales and service facilities, equipment, supply of parts, and qualified service personnel;
     (8) Whether the establishment of an additional new motorcycle dealer would increase competition and be in the public interest;
     (9) Whether the manufacturer is motivated principally by good faith to establish an additional or new motorcycle dealer and not by noneconomic considerations;
     (10) Whether the manufacturer has denied its existing new motorcycle dealers of the same line make the opportunity for reasonable growth, market expansion, establishment of a subagency, or relocation;
     (11) Whether the protesting dealer or dealers are in substantial compliance with their dealer agreements or franchises; and
     (12) Whether the manufacturer has complied with the requirements of sections 2 and 3 of this act.
     In considering the factors set forth in this section, the administrative law judge shall give the factors equal weight, and in making a determination as to whether good cause exists for permitting the proposed establishment or relocation of a new motorcycle dealer of the same line make, the administrative law judge must find that at least nine of the factors set forth in this section weigh in favor of the manufacturer and in favor of the proposed establishment or relocation of a new motorcycle dealer.

NEW SECTION.  Sec. 5   A new section is added to chapter 46.94 RCW to read as follows:
     (1) The manufacturer has the burden of proof to establish that good cause exists for permitting the proposed establishment or relocation.
     (2) The administrative law judge shall conduct any hearing as provided in RCW 46.96.050(2), and all hearing costs will be borne as provided in that subsection. The administrative law judge shall render the final decision as expeditiously as possible, but in any event not later than one hundred twenty days after a protest is filed. If more than one protest is filed, the one hundred twenty days commences to run from the date the last protest is filed. A party to such a hearing aggrieved by the final order of the administrative law judge may appeal as provided and allowed in RCW 46.96.050(3).

NEW SECTION.  Sec. 6   A new section is added to chapter 46.94 RCW to read as follows:
     Sections 2 through 5 of this act do not apply:
     (1) To the sale or transfer of the ownership or assets of an existing new motorcycle dealer where the transferee proposes to engage in business representing the same line make at the same location or within two miles of that location;
     (2) To the relocation of an existing new motorcycle dealer within the dealer's relevant market area if the relocation is not at a site within eight miles of any new motorcycle dealer of the same line make;
     (3) If the proposed new motorcycle dealer is to be established at or within two miles of a location at which a former new motorcycle dealer of the same line make had ceased operating within the previous twenty-four months;
     (4) Where the proposed relocation is two miles or less from the existing location of the relocating new motorcycle dealer; or
     (5) Where the proposed relocation is to be further away from all other existing new motorcycle dealers of the same line make in the relevant market area.