Virginia Court of Appeals addresses warranty labor rates

Most states, including Virginia, require manufacturers to reimburse dealers for labor on warranty repairs at the dealer's "retail" rate. Many (if not most) manufacturers comply with this requirement by paying the dealer its "posted" hourly labor rate, or the rate that the dealer regularly quotes and charges to its retail customers. On August 14, 2012, however, the Virginia Court of Appeals issued a decision that appears to reject this standard industry practice. The Court ruled that, under the Virginia statute, the manufacturer and dealer should add up all "amounts" shown on the dealer’s repair orders, including fees and surcharges that the dealer passes along to its customers (such as waste disposal fees and computer-use fees), and then divide the total amount by the number of labor hours actually expended. Navistar, Inc. v. New Baltimore Garage, Inc., No. 2343-11-4 (Va. Ct. App. Aug. 14, 2012).

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