| Point Should Mandatory Arbitration Be Allowed by After working together as a team for several years to develop an inexpensive and fair RV industry dispute resolution program, RVDA has recently reversed its position. Moreover, RVDA has informed RVIA and the state RV associations that it is withdrawing its previous request to the National Automobile Dealers Association (NADA) that the RV industry be exempted from the NADA bill currently before Congress that, if passed, will make it illegal for vehicle manufacturers to require binding arbitration of disputes. The purpose of the following paper is to set forth clearly why RVIA continues to favor such an RV industry exemption from the NADA bill. Since taking its unfortunate position, RVDA recently sent out a number of mailings to dealers and state associations attempting to explain why it has reversed its request for an exemption from the NADA bill. The main concern raised by RVDA is whether binding arbitration should be mandatory. RVDA believes that if the manufacturers have such power, some of them might abuse it. This argument ignores the fact that RV manufacturers have always had the ability to incorporate an unfair arbitration program into their dealer agreements and, to my knowledge, this has never occurred. Moreover, this is not likely to occur because of the competitive nature of the RV industry. RVIA strongly believes that it is in the best interest of the RV industry, and particularly the dealers, to allow and encourage manufacturers to offer mandatory binding arbitration in their dealer agreements. The RV manufacturers have entered into mandatory binding arbitration agreements with virtually all chassis manufacturers. RV manufacturers felt it was essential that such agreements be mandatory so the chassis manufacturers could not elect to force them into long, drawn-out and expensive litigation. If the only way to hold a binding arbitration is for both parties to reach a case-by-case agreement, what do you think will happen? It is simple human nature that each side will only agree to arbitrate when it is in their best interest. This could even create more friction between the parties. In other words, arbitration must be mandatory, binding, and must be agreed to prior to a dispute. In other industries or business situations, most of the opposition to the mandatory feature of arbitration has involved circumstances where the method of arbitration was not negotiated by the parties, and was grossly unfair to one party. NADA claims that some automobile manufacturers have forced unfair processes on them. In order to avoid such problems, RVIA worked closely with RVDA, RVDA's attorney, Brock Landry, and many state RV associations to develop a balanced approach to resolving manufacturer/dealer disputes. The goal was to develop a process that was fair and acceptable to all concerned. Critical factors such as how arbitrators are selected, where hearings will take place, what the cost will be, and what law will apply were thoroughly debated. The resulting joint program is a model for other industries to follow. In fact, the boating industry is doing just that. If the arbitration program is fair, and no one has claimed otherwise, why would anyone be concerned about it being mandatory? RVDA has offered four reasons: 1. "Not enough manufacturers have included the negotiated agreement [in their franchise agreements], and some have altered it to their advantage" RVIA surveyed its members and found that most of the larger manufacturers were already using the program and many other companies intend to use it in the near future. RVIA believes that the way to increase usage of the agreement is not to make such agreements illegal, but rather to bring about changes through market place pressure. When several manufacturers that had modified the program were informed of the dealers' concerns, they eliminated the changes and adopted the program without modification. 2. "Not enough improvement has been made in dealer agreements" RVIA has done several extensive reviews of dealer agreements of its members, and each time the results have shown a great deal of improvement. How will this process be helped if mandatory, binding arbitration is made illegal? How much improvement is "enough"? If a dealer agreement is weak, the dealer is more likely to reach an acceptable settlement of a dispute under the program than through litigation. 3. "The RVDA Board of Directors is concerned about trust" The RVDA Board has indicated that the dealers' "lack of trust" of manufacturers is a serious problem. What happens if a manufacturer has a change in personnel at the top? Will that new person insist on a different process that is not fair? How would dealers be affected by that? I assume that dealers would not sign an agreement that contained an unfair dispute resolution program and that the new factory person would be forced by competition to offer a fair process. It hardly seems that the solution to this far-fetched theory is to take this benefit away from the entire industry 4. Perhaps the most intriguing reason is that the RVDA Board simply could not imagine appearing before Congress alongside the automotive manufacturers and in opposition to NADA. The problem with this argument is that no one asked RVDA to oppose NADA's bill. The position both RVIA and RVDA had formally taken was that because the RV business is very different from the automobile business, an amendment to the bill should be made for the RV industry. Neither RVIA nor RVDA ever opposed NADA's bill. Where does all this leave the RV industry?
Counter Point Important Information for RV Dealers -- From an RV Dealer to YOU by Fellow dealers: It's good that RVIA President Dave Humphreys included dealers in his recent memo to the industry about RVIA's disagreement with RVDA. I encourage you to read it; we believe that all dealers should be informed. Please also read this and then decide what's best for you! * Good dealer agreements are more important than RVIA acknowledges. Would you, as a dealer, want an arbitrator or a judge to make a ruling based on the sales agreements you currently hold? Without a quality agreement, one with dealer protections for the four T's (Territory, Transfer of ownership, Termination after due process, and warranty), it is unlikely that there will be a fair solution. RVDA has reviewed many agreements. Although some manufacturers, such as Winnebago, have made great improvements in their agreements and others have improved somewhat, most agreements still do not adequately protect dealers. Why should dealers agree to mandatory arbitration to resolve disputes over weak agreements? * Did Your Manufacturers Include the Industry Arbitration Program In their Agreements? In our review of agreements, only one manufacturer had adopted the program as negotiated. Several others had included a modified program or one with important exceptions that favored the manufacturer. RVIA says other manufacturers are now including the program without modification. What do your dealer agreements say? Have they changed? Do they now include the RV Industry program without modification? RVDA will help you review them just ask. * The issue is not arbitration -the Issue is mandatory or voluntary? Combined with a good agreement, arbitration (such as the program jointly developed by RVIA and RVDA) can be an excellent and cost-effective way to resolve disputes. The RVDA position is that dealers should have the option to arbitrate. Mandatory binding arbitration removes the dealers right to appeal and prohibits a written record of the ruling thereby making it very difficult for arbitrators to treat similar situations in a similar way. The proposed NADA legislation does not prevent the use of arbitration. The proposed law does prohibit manufacturers from imposing mandatory arbitration as the only way to resolve disputes. * The "Trust" Factor - Who do you trust? We assume that you trust the manufacturers with whom you work. We find that dealers have more trust in those manufacturers who listen to their dealers and are working to improve their dealer agreements. However, some manufacturers are unresponsive, or very slow to respond, to dealer concerns. Only you, a dealer, can properly evaluate your trust level. If arbitration is voluntary, trust becomes even more important because dealers and manufacturers will have to trust each other to choose arbitration when appropriate. * Mandatory arbitration can hurt dealers in states that protect RV dealer "franchises?" More than 23 states include RV dealers in their auto franchise laws in some way. Dealers in most of those states are quite happy with those protections. Mandatory binding arbitration could be used to circumvent the protections afforded by those state laws. Is that good? What does your state provide for your protection? We hope this simple summary of the dealers' position is helpful -- do you see our point? RVN
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