New York Court of Appeals Rejects Sales Effectiveness Metric
6 May 2016
On May 3, 2016, the New York Court of Appeals (New York's highest court) issued its decision in Beck Chevrolet Co., Inc. v. General Motors LLC.
The Court ruled that the “sales effectiveness” metric that General Motors LLC (“GM”) uses to evaluate its dealers’ sales performance violates the New York statute's ban on "unreasonable, arbitrary or unfair” sales performance standards. Because GM’s metric is similar to the metrics used by most motor vehicle OEMs, this ruling warrants serious attention by the entire industry. In addition, the Court addressed another recurring issue: Whether a change to a dealer’s assigned area of responsibility (“AOR”) constitutes a protestable franchise “modification” under state dealer law.