Amended in Senate September 4, 2015

Amended in Senate August 17, 2015

Amended in Senate July 16, 2015

Amended in Senate June 23, 2015

Amended in Assembly June 2, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1178

Introduced by Assembly Member Achadjian

February 27, 2015

An act to amend begin insert Section 11713.3 of, to amend, repeal, and add end insert Sections 3050, 3050.1, begin delete 3050.7, and 11713.3 end delete begin insert and 3050.7 end insert of, and to add begin insert and repeal end insert Article 6 (commencing with Section 3085) to Chapter 6 of Division 2 of, the Vehicle Code, relating to vehicles.

LEGISLATIVE COUNSEL’S DIGEST

AB 1178, as amended, Achadjian. Vehicles: manufacturers and distributors.

Existing law establishes the New Motor Vehicle Board in the Department of Motor Vehicles, and requires the board to hear and decide certain protests presented by a motor vehicle franchisee in regard to a dispute with the vehicle manufacturer.

This bill begin delete would end delete begin insert would, until January 1, 2019, end insert authorize the board to hear protests by an association challenging the legality of an export or sale-for-resale prohibition policy of a manufacturer, manufacturer branch, distributor, or distributor branch, and would establish procedures for hearing those protests, as specified.

Existing law generally requires a manufacturer, distributor, transporter, or dealer of vehicles to be licensed by the Department of Motor Vehicles. Under existing law, it is unlawful for a manufacturer, manufacturer branch, distributor, or distributor branch to engage in specified practices, including taking or threatening to take any adverse action against a dealer pursuant to an export or sale-for-resale prohibition because the dealer sold or leased a vehicle to a customer who either exported the vehicle to a foreign country or resold the vehicle in violation of the prohibition, unless the export or sale-for-resale prohibition policy was provided to the dealer in writing prior to the sale or lease, and the dealer knew or reasonably should have known of the customer’s intent to export or resell the vehicle in violation of the prohibition at the time of sale or lease. Existing law further provides that if the dealer causes the vehicle to be registered in this or any other state, and collects or causes to be collected any applicable sales or use tax due to this state, a rebuttable presumption is established that the dealer did not have reason to know of the customer’s intent to export or resell the vehicle. A violation of these provisions is a crime.

This bill would recast the provisions relating to export and sale-for-resale prohibitions described above to provide that it would be unlawful to take or threaten to take any adverse action against a dealer pursuant to an export or sale-for-resale prohibition because the dealer sold or leased a vehicle to a customer who either exported the vehicle to a foreign country or resold the vehicle in violation of the prohibition unless the export or sale-for-resale prohibition policy was provided to the dealer in writing at least 48 hours before the sale or lease of the vehicle and the dealer knew or reasonably should have known of the customer’s intent to export or resell the vehicle in violation of the prohibition. The bill would provide that a rebuttable presumption is established that the dealer did not have reason to know of the customer’s intent to export or resell the vehicle if the dealer causes the vehicle to be registered in this or any other state, and collects or causes to be collected any applicable sales or use tax due to this state. By expanding the scope of an existing crime, this bill would impose a state-mandated local program. The bill would, in any proceeding in which a challenge to an adverse action is at issue, require the burden of proof to be on the manufacturer, manufacturer branch, distributor, or distributor branch. This bill would make additional technical, nonsubstantive changes to those provisions and make related findings and declarations.

begin insert

This bill would incorporate additional changes to Sections 3050.7 and 11713.3 of the Vehicle Code made by this bill and AB 759 to take effect if both bills are chaptered and this bill is chaptered last.

end insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) The distribution, sale, and service of new motor vehicles in
the State of California vitally affects the general economy of this
state and the public welfare.

(b) The new motor vehicle franchise system, which operates
within a strictly defined and highly regulated statutory scheme,
assures the consuming public of a well-organized distribution
system for the availability and sale of new motor vehicles
throughout the state, provides a network of quality warranty, recall,
and repair facilities to maintain those vehicles, and creates a
cost-effective method for the state to police those systems through
the licensing and regulation of private sector franchisors and
franchisees.

(c) Franchisors sometimes establish strict export policies when
a paid sales incentive is subject to being charged back or new
vehicle allocation is reduced when a vehicle is exported or resold,
even when the dealership did not know, or in the exercise of
reasonable diligence should not have known, of the intended
exportation or resale. In response, California franchise laws were
recently updated to prohibit chargebacks and other adverse actions
in circumstances in which the dealer did not have knowledge of,
or reason to know of, the intended exportation or resale.

(d) Despite California’s franchise law acknowledging that the
dealer did not have knowledge or reason to know that a vehicle
would be exported or resold, at least one manufacturer is
disregarding this franchise law by imposing a strict liability export
and sale-for-resale policy against dealers. These actions impose
severe sanctions on dealers regardless of the fact that dealers are
collecting sales tax and registering these vehicles in California and
have no reasonable knowledge of the future fate of those vehicles.

(e) It is the intent of this act to ensure that new motor vehicle
dealers are treated fairly by their franchisors, to prohibit franchisors
from avoiding state franchise laws, and to ensure that dealers are
not subject to adverse action when the dealer did not know or have
reason to know vehicles are exported or resold.

SEC. 2.  

Section 3050 of the Vehicle Code is amended to read:

3050.  

The board shall do all of the following:

(a) Adopt rules and regulations in accordance with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code governing those matters that are
specifically committed to its jurisdiction.

(b) Hear and determine, within the limitations and in accordance
with the procedure provided, an appeal presented by an applicant
for, or holder of, a license as a new motor vehicle dealer,
manufacturer, manufacturer branch, distributor, distributor branch,
or representative when the applicant or licensee submits an appeal
provided for in this chapter from a decision arising out of the
department.

(c) Consider any matter concerning the activities or practices
of any person applying for or holding a license as a new motor
vehicle dealer, manufacturer, manufacturer branch, distributor,
distributor branch, or representative pursuant to Chapter 4
(commencing with Section 11700) of Division 5 submitted by any
person. A member of the board who is a new motor vehicle dealer
may not participate in, hear, comment, advise other members upon,
or begin delete decide end delete begin insert decide, end insert any matter considered by the board pursuant to
this subdivision that involves a dispute between a franchisee and
franchisor. After that consideration, the board may do any one or
any combination of the following:

(1) Direct the department to conduct investigation of matters
that the board deems reasonable, and make a written report on the
results of the investigation to the board within the time specified
by the board.

(2) Undertake to mediate, arbitrate, or otherwise resolve any
honest difference of opinion or viewpoint existing between any
member of the public and any new motor vehicle dealer,
manufacturer, manufacturer branch, distributor, distributor branch,
or representative.

(3) Order the department to exercise any and all authority or
power that the department may have with respect to the issuance,
renewal, refusal to renew, suspension, or revocation of the license
of any new motor vehicle dealer, manufacturer, manufacturer
branch, distributor, distributor branch, or representative as that
license is required under Chapter 4 (commencing with Section
11700) of Division 5.

(d) Hear and decide, within the limitations and in accordance
with the procedure provided, a protest presented by a franchisee
pursuant to Section 3060, 3062, 3064, 3065, 3065.1, 3070, 3072,
3074, 3075, or 3076. A member of the board who is a new motor
vehicle dealer may not participate in, hear, comment, advise other
members upon, or decide, any matter involving a protest filed
pursuant to Article 4 (commencing with Section 3060), unless all
parties to the protest stipulate otherwise.

(e) Hear and decide, within the limitations and in accordance
with the procedure provided, a protest presented by an association
challenging a policy of a manufacturer, manufacturer branch,
distributor or distributor branch pursuant to Section 3085. A
member of the board who is a new motor vehicle dealer may not
participate in, hear, comment, advise other members upon, or
decide, any matter involving a protest filed pursuant to Article 6
(commencing with Section 3085), unless all participants to the
protest stipulate otherwise.

(f) Notwithstanding subdivisions (c), (d), and (e), the courts
have jurisdiction over all common law and statutory claims
originally cognizable in the courts. For those claims, a party may
initiate an action directly in any court of competent jurisdiction.

begin insert

(g) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 3050 is added to the end insert begin insert Vehicle Code end insert begin insert , to read: end insert

begin insert

begin insert 3050. end insert   

The board shall do all of the following:

(a) Adopt rules and regulations in accordance with Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of
Title 2 of the Government Code governing those matters that are
specifically committed to its jurisdiction.

(b) Hear and determine, within the limitations and in accordance
with the procedure provided, an appeal presented by an applicant
for, or holder of, a license as a new motor vehicle dealer,
manufacturer, manufacturer branch, distributor, distributor
branch, or representative when the applicant or licensee submits
an appeal provided for in this chapter from a decision arising out
of the department.

(c) Consider any matter concerning the activities or practices
of any person applying for or holding a license as a new motor
vehicle dealer, manufacturer, manufacturer branch, distributor,
distributor branch, or representative pursuant to Chapter 4
(commencing with Section 11700) of Division 5 submitted by any
person. A member of the board who is a new motor vehicle dealer
may not participate in, hear, comment, advise other members upon,
or decide any matter considered by the board pursuant to this
subdivision that involves a dispute between a franchisee and
franchisor. After that consideration, the board may do any one or
any combination of the following:

(1) Direct the department to conduct investigation of matters
that the board deems reasonable, and make a written report on
the results of the investigation to the board within the time specified
by the board.

(2) Undertake to mediate, arbitrate, or otherwise resolve any
honest difference of opinion or viewpoint existing between any
member of the public and any new motor vehicle dealer,
manufacturer, manufacturer branch, distributor, distributor
branch, or representative.

(3) Order the department to exercise any and all authority or
power that the department may have with respect to the issuance,
renewal, refusal to renew, suspension, or revocation of the license
of any new motor vehicle dealer, manufacturer, manufacturer
branch, distributor, distributor branch, or representative as that
license is required under Chapter 4 (commencing with Section
11700) of Division 5.

(d) Hear and decide, within the limitations and in accordance
with the procedure provided, a protest presented by a franchisee
pursuant to Section 3060, 3062, 3064, 3065, 3065.1, 3070, 3072,
3074, 3075, or 3076. A member of the board who is a new motor
vehicle dealer may not participate in, hear, comment, advise other
members upon, or decide, any matter involving a protest filed
pursuant to Article 4 (commencing with Section 3060), unless all
parties to the protest stipulate otherwise.

(e) Notwithstanding subdivisions (c) and (d), the courts have
jurisdiction over all common law and statutory claims originally
cognizable in the courts. For those claims, a party may initiate an
action directly in any court of competent jurisdiction.

(f) This section shall become operative on January 1, 2019.

end insert

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Section 3050.1 of the Vehicle Code is amended to
read:

3050.1.  

(a) In a proceeding, hearing, or in the discharge of
duties imposed under this chapter, the board, its executive director,
or an administrative law judge designated by the board may
administer oaths, take depositions, certify to official acts, and issue
subpoenas to compel attendance of witnesses and the production
of books, records, papers, and other documents in any part of the
state.

(b) For purposes of discovery, the board or its executive director
may, if deemed appropriate and proper under the circumstances,
authorize the parties to engage in the civil action discovery
procedures in Title 4 (commencing with Section 2016.010) of Part
4 of the Code of Civil Procedure, excepting the provisions of
Chapter 13 (commencing with Section 2030.010) of that title.
Discovery shall be completed no later than 15 days prior to the
commencement of the proceeding or hearing before the board.
This subdivision shall apply only to those proceedings or hearings
involving a petition filed pursuant to subdivision (c), or protest
filed pursuant to subdivision (d) or (e) of Section 3050. The board,
its executive director, or an administrative law judge designated
by the board may issue subpoenas to compel attendance at
depositions of persons having knowledge of the acts, omissions,
or events that are the basis for the proceedings, as well as the
production of books, records, papers, and other documents.

begin insert

(c) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 3050.1 is added to the end insert begin insert Vehicle Code end insert begin insert , to read: end insert

begin insert

begin insert 3050.1. end insert   

(a) In a proceeding, hearing, or in the discharge of
duties imposed under this chapter, the board, its executive director,
or an administrative law judge designated by the board may
administer oaths, take depositions, certify to official acts, and issue
subpoenas to compel attendance of witnesses and the production
of books, records, papers, and other documents in any part of the
state.

(b) For purposes of discovery, the board or its executive director
may, if deemed appropriate and proper under the circumstances,
authorize the parties to engage in the civil action discovery
procedures in Title 4 (commencing with Section 2016.010) of Part
4 of the Code of Civil Procedure, excepting the provisions of
Chapter 13 (commencing with Section 2030.010) of that title.
Discovery shall be completed no later than 15 days prior to the
commencement of the proceeding or hearing before the board.
This subdivision shall apply only to those proceedings or hearings
involving a petition or protest filed pursuant to subdivision (c) or
(d) of Section 3050. The board, its executive director, or an
administrative law judge designated by the board may issue
subpoenas to compel attendance at depositions of persons having
knowledge of the acts, omissions, or events that are the basis for
the proceedings, as well as the production of books, records,
papers, and other documents.

(c) This section shall become operative on January 1, 2019.

end insert

begin delete SEC. 4. end delete
begin insert SEC. 6. end insert   

Section 3050.7 of the Vehicle Code is amended to
read:

3050.7.  

(a) The board may adopt stipulated decisions and
orders, without a hearing pursuant to Section 3066 or 3085.2, to
resolve one or more issues raised by a protest or petition filed with
the board. Whenever the parties to a protest or petition submit a
proposed stipulated decision and order of the board, a copy of the
proposed stipulated decision and order shall be transmitted by the
executive director of the board to each member of the board. The
proposed stipulated decision and order shall be deemed to be
adopted by the board unless a member of the board notifies the
executive director of the board of an objection thereto within 10
days after that board member has received a copy of the proposed
stipulated decision and order.

(b) If the board adopts a stipulated decision and order to resolve
a protest filed pursuant to Section 3060 or 3070 in which the parties
stipulate that good cause exists for the termination of the franchise
of the protestant, and the order provides for a conditional or
unconditional termination of the franchise of the protestant,
paragraph (2) of subdivision (a) of Section 3060 and paragraph
(2) of subdivision (a) of Section 3070, which require a hearing to
determine whether good cause exists for termination of the
franchise, is inapplicable to the proceedings. If the stipulated
decision and order provides for an unconditional termination of
the franchise, the franchise may be terminated without further
proceedings by the board. If the stipulated decision and order
provides for the termination of the franchise, conditioned upon the
failure of a party to comply with specified conditions, the franchise
may be terminated upon a determination, according to the terms
of the stipulated decision and order, that the conditions have not
been met. If the stipulated decision and order provides for the
termination of the franchise conditioned upon the occurrence of
specified conditions, the franchise may be terminated upon a
determination, according to the terms of the stipulated decision
and order, that the stipulated conditions have occurred.

begin insert

(c) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

end insert

begin insert

begin insert SEC. 6.1. end insert   

end insert

begin insert Section 3050.7 of the end insert begin insert Vehicle Code end insert begin insert is amended to
read: end insert

3050.7.  

(a) The board may adopt stipulated decisions and
orders, without a hearing pursuant to Section 3066, begin insert 3080, or
3085.2, end insert to resolve one or more issues raised by a protest or petition
filed with the board. Whenever the parties to a protest or petition
submit a proposed stipulated decision and order of the board, a
copy of the proposed stipulated decision and order shall be
transmitted by the executive director of the board to each member
of the board. The proposed stipulated decision and order shall be
deemed to be adopted by the board unless a member of the board
notifies the executive director of the board of an objection thereto
within 10 days after that board member has received a copy of the
proposed stipulated decision and order.

(b) If the board adopts a stipulated decision and order to resolve
a protest filed pursuant to Section 3060 or 3070 in which the parties
stipulate that good cause exists for the termination of the franchise
of the protestant, and the order provides for a conditional or
unconditional termination of the franchise of the protestant,
paragraph (2) of subdivision (a) of Section 3060 and paragraph
(2) of subdivision (a) of Section 3070, which require a hearing to
determine whether good cause exists for termination of the
franchise, is inapplicable to the proceedings. If the stipulated
decision and order provides for an unconditional termination of
the franchise, the franchise may be terminated without further
proceedings by the board. If the stipulated decision and order
provides for the termination of the franchise, conditioned upon the
failure of a party to comply with specified conditions, the franchise
may be terminated upon a determination, according to the terms
of the stipulated decision and order, that the conditions have not
been met. If the stipulated decision and order provides for the
termination of the franchise conditioned upon the occurrence of
specified conditions, the franchise may be terminated upon a
determination, according to the terms of the stipulated decision
and order, that the stipulated conditions have occurred.

begin insert

(c) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 3050.7 is added to the end insert begin insert Vehicle Code end insert begin insert , to read: end insert

begin insert

begin insert 3050.7. end insert   

(a) The board may adopt stipulated decisions and
orders, without a hearing pursuant to Section 3066, to resolve one
or more issues raised by a protest or petition filed with the board.
Whenever the parties to a protest or petition submit a proposed
stipulated decision and order of the board, a copy of the proposed
stipulated decision and order shall be transmitted by the executive
director of the board to each member of the board. The proposed
stipulated decision and order shall be deemed to be adopted by
the board unless a member of the board notifies the executive
director of the board of an objection thereto within 10 days after
that board member has received a copy of the proposed stipulated
decision and order.

(b) If the board adopts a stipulated decision and order to resolve
a protest filed pursuant to Section 3060 or 3070 in which the
parties stipulate that good cause exists for the termination of the
franchise of the protestant, and the order provides for a conditional
or unconditional termination of the franchise of the protestant,
paragraph (2) of subdivision (a) of Section 3060 and paragraph
(2) of subdivision (a) of Section 3070, which require a hearing to
determine whether good cause exists for termination of the
franchise, is inapplicable to the proceedings. If the stipulated
decision and order provides for an unconditional termination of
the franchise, the franchise may be terminated without further
proceedings by the board. If the stipulated decision and order
provides for the termination of the franchise, conditioned upon
the failure of a party to comply with specified conditions, the
franchise may be terminated upon a determination, according to
the terms of the stipulated decision and order, that the conditions
have not been met. If the stipulated decision and order provides
for the termination of the franchise conditioned upon the
occurrence of specified conditions, the franchise may be terminated
upon a determination, according to the terms of the stipulated
decision and order, that the stipulated conditions have occurred.

(c) This section shall become operative on January 1, 2019.

end insert

begin insert

begin insert SEC. 7.1. end insert   

end insert

begin insert Section 3050.7 is added to the end insert begin insert Vehicle Code end insert begin insert , to read: end insert

begin insert

begin insert 3050.7. end insert   

(a) The board may adopt stipulated decisions and
orders, without a hearing pursuant to Section 3066 or 3080, to
resolve one or more issues raised by a protest or petition filed with
the board. Whenever the parties to a protest or petition submit a
proposed stipulated decision and order of the board, a copy of the
proposed stipulated decision and order shall be transmitted by the
executive director of the board to each member of the board. The
proposed stipulated decision and order shall be deemed to be
adopted by the board unless a member of the board notifies the
executive director of the board of an objection thereto within 10
days after that board member has received a copy of the proposed
stipulated decision and order.

(b) If the board adopts a stipulated decision and order to resolve
a protest filed pursuant to Section 3060 or 3070 in which the
parties stipulate that good cause exists for the termination of the
franchise of the protestant, and the order provides for a conditional
or unconditional termination of the franchise of the protestant,
paragraph (2) of subdivision (a) of Section 3060 and paragraph
(2) of subdivision (a) of Section 3070, which require a hearing to
determine whether good cause exists for termination of the
franchise, is inapplicable to the proceedings. If the stipulated
decision and order provides for an unconditional termination of
the franchise, the franchise may be terminated without further
proceedings by the board. If the stipulated decision and order
provides for the termination of the franchise, conditioned upon
the failure of a party to comply with specified conditions, the
franchise may be terminated upon a determination, according to
the terms of the stipulated decision and order, that the conditions
have not been met. If the stipulated decision and order provides
for the termination of the franchise conditioned upon the
occurrence of specified conditions, the franchise may be terminated
upon a determination, according to the terms of the stipulated
decision and order, that the stipulated conditions have occurred.

(c) This section shall become operative on January 1, 2019.

end insert

begin delete SEC. 5. end delete
begin insert SEC. 8. end insert   

Article 6 (commencing with Section 3085) is added
to Chapter 6 of Division 2 of the Vehicle Code, to read:

 

Article 6.  Export and Sale-for-Resale Prohibition Hearings

 

3085.  

(a) An association may bring a protest challenging the
legality of an export or sale-for-resale prohibition policy of a
manufacturer, manufacturer branch, distributor, or distributor
branch at any time on behalf of two or more dealers subject to the
challenged policy pursuant to subdivision (y) of Section 11713.3.

(b) For the purpose of this article, an association is an
organization primarily owned by, or comprised of, new motor
vehicle dealers and that primarily represents the interests of dealers.

(c) Relief for a protest pursuant to this section is limited to a
declaration that an export or sale-for-resale prohibition policy of
a manufacturer, manufacturer branch, distributor, or distributor
branch violates the prohibitions of subdivision (y) of Section
11713.3. No monetary relief may be sought on behalf of the
association or any dealers represented by the association.

(d) In a protest pursuant to this section, the association shall
have the burden of proof to show that the challenged export or
sale-for-resale prohibition policy violates subdivision (y) of Section
11713.3.

3085.2.  

(a) Upon receiving a protest pursuant to Section 3085,
the board shall fix a time and place of hearing within 60 days, and
shall send by certified mail a copy of the order to the manufacturer,
manufacturer branch, distributor, distributor branch, the protesting
association, and all individuals and groups that have requested
notification by the board of protests and decisions of the board.
The board or an administrative law judge designated by the board
shall hear and consider the oral and documented evidence
introduced by the parties and other interested individuals and
groups, and the board shall make its decision solely on the record
so made. Chapter 4.5 (commencing with Section 11400) of Part
1 of Division 3 of Title 2 of the Government Code and Sections
11507.3, 11507.6, 11507.7, 11511, 11511.5, 11513, 11514, 11515,
and 11517 of the Government Code apply to these proceedings.

(b) In a hearing on a protest filed pursuant to Section 3085, the
association shall have the burden of proof to establish a violation
of the applicable section by the subject manufacturer, manufacturer
branch, distributor, or distributor branch.

(c) A member of the board who is a new motor vehicle dealer
may not participate in, hear, comment, or advise other members
upon, or decide, a matter involving a protest filed pursuant to this
article unless all parties to the protest stipulate otherwise.

3085.4.  

(a) The decision of the board shall be in writing and
shall contain findings of fact and a determination of the issues
presented. The decision shall sustain, conditionally sustain,
overrule, or conditionally overrule the protest. Conditions imposed
by the board shall be for the purpose of assuring performance of
binding contractual agreements between franchisees and franchisors
or otherwise serving the purposes of this article. The board shall
act within 30 days after the hearing, within 30 days after the board
receives a proposed decision when the case is heard before an
administrative law judge alone, or within a period necessitated by
Section 11517 of the Government Code, or as may be mutually
agreed upon by the parties. Copies of the board’s decision shall
be delivered to the parties personally or sent to them by certified
mail, as well as to all individuals and groups that have requested
notification by the board of protests and decisions by the board.
The board’s decision shall be final upon its delivery or mailing
and a reconsideration or rehearing is not permitted.

(b) Notwithstanding subdivision (c) of Section 11517 of the
Government Code, if a protest is heard by an administrative law
judge alone, 10 days after receipt by the board of the administrative
law judge’s proposed decision, a copy of the proposed decision
shall be filed by the board as a public record and a copy shall be
served by the board on each party and his or her attorney.

3085.6.  

Either party may seek judicial review of final decisions
of the board. An appeal shall be filed within 45 days from the date
on which the final order of the board is made public and is
delivered to the parties personally or is sent begin insert to end insert them by certified
mail.

3085.8.  

The provisions of this article shall be applicable to any
association which is primarily owned by or comprised of new
motor vehicle dealers and acts on behalf of its new motor vehicle
franchisees.

begin insert

begin insert 3085.10. end insert   

This article shall remain in effect only until January
1, 2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.

end insert

begin delete SEC. 6. end delete
begin insert SEC. 9. end insert   

Section 11713.3 of the Vehicle Code is amended to
read:

11713.3.  

It is unlawful and a violation of this code for a
manufacturer, manufacturer branch, distributor, or distributor
branch licensed pursuant to this code to do, directly or indirectly
through an affiliate, any of the following:

(a) To refuse or fail to deliver in reasonable quantities and within
a reasonable time after receipt of an order from a dealer having a
franchise for the retail sale of a new vehicle sold or distributed by
the manufacturer or distributor, a new vehicle or parts or
accessories to new vehicles as are covered by the franchise, if the
vehicle, parts, or accessories are publicly advertised as being
available for delivery or actually being delivered. This subdivision
is not violated, however, if the failure is caused by acts or causes
beyond the control of the manufacturer, manufacturer branch,
distributor, or distributor branch.

(b) To prevent or require, or attempt to prevent or require, by
contract or otherwise, a change in the capital structure of a
dealership or the means by or through which the dealer finances
the operation of the dealership, if the dealer at all times meets
reasonable capital standards agreed to by the dealer and the
manufacturer or distributor, and if a change in capital structure
does not cause a change in the principal management or have the
effect of a sale of the franchise without the consent of the
manufacturer or distributor.

(c) To prevent or require, or attempt to prevent or require, a
dealer to change the executive management of a dealership, other
than the principal dealership operator or operators, if the franchise
was granted to the dealer in reliance upon the personal
qualifications of that person.

(d) (1) Except as provided in subdivision (t), to prevent or
require, or attempt to prevent or require, by contract or otherwise,
a dealer, or an officer, partner, or stockholder of a dealership, the
sale or transfer of a part of the interest of any of them to another
person. A dealer, officer, partner, or stockholder shall not, however,
have the right to sell, transfer, or assign the franchise, or a right
thereunder, without the consent of the manufacturer or distributor
except that the consent shall not be unreasonably withheld.

(2) (A) For the transferring franchisee to fail, prior to the sale,
transfer, or assignment of a franchisee or the sale, assignment, or
transfer of all, or substantially all, of the assets of the franchised
business or a controlling interest in the franchised business to
another person, to notify the manufacturer or distributor of the
franchisee’s decision to sell, transfer, or assign the franchise. The
notice shall be in writing and shall include all of the following:

(i) The proposed transferee’s name and address.

(ii) A copy of all of the agreements relating to the sale,
assignment, or transfer of the franchised business or its assets.

(iii) The proposed transferee’s application for approval to
become the successor franchisee. The application shall include
forms and related information generally utilized by the
manufacturer or distributor in reviewing prospective franchisees,
if those forms are readily made available to existing franchisees.
As soon as practicable after receipt of the proposed transferee’s
application, the manufacturer or distributor shall notify the
franchisee and the proposed transferee of information needed to
make the application complete.

(B) For the manufacturer or distributor, to fail, on or before 60
days after the receipt of all of the information required pursuant
to subparagraph (A), or as extended by a written agreement
between the manufacturer or distributor and the franchisee, to
notify the franchisee of the approval or the disapproval of the sale,
transfer, or assignment of the franchise. The notice shall be in
writing and shall be personally served or sent by certified mail,
return receipt requested, or by guaranteed overnight delivery
service that provides verification of delivery and shall be directed
to the franchisee. A proposed sale, assignment, or transfer shall
be deemed approved, unless disapproved by the franchisor in the
manner provided by this subdivision. If the proposed sale,
assignment, or transfer is disapproved, the franchisor shall include
in the notice of disapproval a statement setting forth the reasons
for the disapproval.

(3) In an action in which the manufacturer’s or distributor’s
withholding of consent under this subdivision or subdivision (e)
is an issue, whether the withholding of consent was unreasonable
is a question of fact requiring consideration of all the existing
circumstances.

(e) To prevent, or attempt to prevent, a dealer from receiving
fair and reasonable compensation for the value of the franchised
business. There shall not be a transfer or assignment of the dealer’s
franchise without the consent of the manufacturer or distributor.
The manufacturer or distributor shall not unreasonably withhold
consent or condition consent upon the release, assignment,
novation, waiver, estoppel, or modification of a claim or defense
by the dealer.

(f) To obtain money, goods, services, or another benefit from
a person with whom the dealer does business, on account of, or in
relation to, the transaction between the dealer and that other person,
other than for compensation for services rendered, unless the
benefit is promptly accounted for, and transmitted to, the dealer.

(g) (1) Except as provided in paragraph (3), to obtain from a
dealer or enforce against a dealer an agreement, provision, release,
assignment, novation, waiver, or estoppel that does any of the
following:

(A) Modifies or disclaims a duty or obligation of a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative, or a right or privilege of a dealer, pursuant to
Chapter 4 (commencing with Section 11700) of Division 5 or
Chapter 6 (commencing with Section 3000) of Division 2.

(B) Limits or constrains the right of a dealer to file, pursue, or
submit evidence in connection with a protest before the board.

(C) Requires a dealer to terminate a franchise.

(D) Requires a controversy between a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative and a dealer to be referred to a person for a binding
determination. However, this subparagraph does not prohibit
arbitration before an independent arbitrator, provided that whenever
a motor vehicle franchise contract provides for the use of arbitration
to resolve a controversy arising out of, or relating to, that contract,
arbitration may be used to settle the controversy only if, after the
controversy arises, all parties to the controversy consent in writing
to use arbitration to settle the controversy. For the purpose of this
subparagraph, the terms “motor vehicle” and “motor vehicle
franchise contract” shall have the same meaning as defined in
Section 1226 of Title 15 of the United States Code. If arbitration
is elected to settle a dispute under a motor vehicle franchise
contract, the arbitrator shall provide the parties to the arbitration
with a written explanation of the factual and legal basis for the
award.

(2) An agreement, provision, release, assignment, novation,
waiver, or estoppel prohibited by this subdivision shall be
unenforceable and void.

(3) This subdivision does not do any of the following:

(A) Limit or restrict the terms upon which parties to a protest
before the board, civil action, or other proceeding can settle or
resolve, or stipulate to evidentiary or procedural matters during
the course of, a protest, civil action, or other proceeding.

(B) Affect the enforceability of any stipulated order or other
order entered by the board.

(C) Affect the enforceability of any provision in a contract if
the provision is not prohibited under this subdivision or any other
law.

(D) Affect the enforceability of a provision in any contract
entered into on or before December 31, 2011.

(E) Prohibit a dealer from waiving its right to file a protest
pursuant to Section 3065.1 if the waiver agreement is entered into
after a franchisor incentive program claim has been disapproved
by the franchisor and the waiver is voluntarily given as part of an
agreement to settle that claim.

(F) Prohibit a voluntary agreement supported by valuable
consideration, other than granting or renewing a franchise, that
does both of the following:

(i) Provides that a dealer establish or maintain exclusive
facilities, personnel, or display space or provides that a dealer
make a material alteration, expansion, or addition to a dealership
facility.

(ii) Contains no waiver or other provision prohibited by
subparagraph (A), (B), (C), or (D) of paragraph (1).

(G) Prohibit an agreement separate from the franchise agreement
that implements a dealer’s election to terminate the franchise if
the agreement is conditioned only on a specified time for
termination or payment of consideration to the dealer.

(H) (i) Prohibit a voluntary waiver agreement, supported by
valuable consideration, other than the consideration of renewing
a franchise, to waive the right of a dealer to file a protest under
Section 3062 for the proposed establishment or relocation of a
specific proposed dealership, if the waiver agreement provides all
of the following:

(I) The approximate address at which the proposed dealership
will be located.

(II) The planning potential used to establish the proposed
dealership’s facility, personnel, and capital requirements.

(III) An approximation of projected vehicle and parts sales, and
number of vehicles to be serviced at the proposed dealership.

(IV) Whether the franchisor or affiliate will hold an ownership
interest in the proposed dealership or real property of the proposed
dealership, and the approximate percentage of any franchisor or
affiliate ownership interest in the proposed dealership.

(V) The line-makes to be operated at the proposed dealership.

(VI) If known at the time the waiver agreement is executed, the
identity of the dealer who will operate the proposed dealership.

(VII) The date the waiver agreement is to expire, which may
not be more than 30 months after the date of execution of the
waiver agreement.

(ii) Notwithstanding the provisions of a waiver agreement
entered into pursuant to the provisions of this subparagraph, a
dealer may file a protest under Section 3062 if any of the
information provided pursuant to clause (i) has become materially
inaccurate since the waiver agreement was executed. Any
determination of the enforceability of a waiver agreement shall be
determined by the board and the franchisor shall have the burden
of proof.

(h) To increase prices of motor vehicles that the dealer had
ordered for private retail consumers prior to the dealer’s receipt
of the written official price increase notification. A sales contract
signed by a private retail consumer is evidence of the order. In the
event of manufacturer price reductions, the amount of the reduction
received by a dealer shall be passed on to the private retail
consumer by the dealer if the retail price was negotiated on the
basis of the previous higher price to the dealer. Price reductions
apply to all vehicles in the dealer’s inventory that were subject to
the price reduction. Price differences applicable to new model or
series motor vehicles at the time of the introduction of new models
or series shall not be considered a price increase or price decrease.
This subdivision does not apply to price changes caused by either
of the following:

(1) The addition to a motor vehicle of required or optional
equipment pursuant to state or federal law.

(2) Revaluation of the United States dollar in the case of a
foreign-make vehicle.

(i) To fail to pay to a dealer, within a reasonable time following
receipt of a valid claim by a dealer thereof, a payment agreed to
be made by the manufacturer or distributor to the dealer by reason
of the fact that a new vehicle of a prior year model is in the dealer’s
inventory at the time of introduction of new model vehicles.

(j) To deny the widow, widower, or heirs designated by a
deceased owner of a dealership the opportunity to participate in
the ownership of the dealership or successor dealership under a
valid franchise for a reasonable time after the death of the owner.

(k) To offer refunds or other types of inducements to a person
for the purchase of new motor vehicles of a certain line-make to
be sold to the state or a political subdivision of the state without
making the same offer to all other dealers in the same line-make
within the relevant market area.

(l) To modify, replace, enter into, relocate, terminate, or refuse
to renew a franchise in violation of Article 4 (commencing with
Section 3060) of Chapter 6 of Division 2.

(m) To employ a person as a representative who has not been
licensed pursuant to Article 3 (commencing with Section 11900)
of Chapter 4 of Division 5.

(n) To deny a dealer the right of free association with another
dealer for a lawful purpose.

(o) (1) To compete with a dealer in the same line-make
operating under an agreement or franchise from a manufacturer
or distributor in the relevant market area.

(2) A manufacturer, branch, or distributor, or an entity that
controls or is controlled by a manufacturer, branch, or distributor,
shall not, however, be deemed to be competing in the following
limited circumstances:

(A) Owning or operating a dealership for a temporary period,
not to exceed one year at the location of a former dealership of the
same line-make that has been out of operation for less than six
months. However, after a showing of good cause by a
manufacturer, branch, or distributor that it needs additional time
to operate a dealership in preparation for sale to a successor
independent franchisee, the board may extend the time period.

(B) Owning an interest in a dealer as part of a bona fide dealer
development program that satisfies all of the following
requirements:

(i) The sole purpose of the program is to make franchises
available to persons lacking capital, training, business experience,
or other qualities ordinarily required of prospective franchisees
and the dealer development candidate is an individual who is
unable to acquire the franchise without assistance of the program.

(ii) The dealer development candidate has made a significant
investment subject to loss in the franchised business of the dealer.

(iii) The program requires the dealer development candidate to
manage the day-to-day operations and business affairs of the dealer
and to acquire, within a reasonable time and on reasonable terms
and conditions, beneficial ownership and control of a majority
interest in the dealer and disassociation of any direct or indirect
ownership or control by the manufacturer, branch, or distributor.

(C) Owning a wholly owned subsidiary corporation of a
distributor that sells motor vehicles at retail, if, for at least three
years prior to January 1, 1973, the subsidiary corporation has been
a wholly owned subsidiary of the distributor and engaged in the
sale of vehicles at retail.

(3) (A) A manufacturer, branch, and distributor that owns or
operates a dealership in the manner described in subparagraph (A)
of paragraph (2) shall give written notice to the board, within 10
days, each time it commences or terminates operation of a
dealership and each time it acquires, changes, or divests itself of
an ownership interest.

(B) A manufacturer, branch, and distributor that owns an interest
in a dealer in the manner described in subparagraph (B) of
paragraph (2) shall give written notice to the board, annually, of
the name and location of each dealer in which it has an ownership
interest, the name of the bona fide dealer development owner or
owners, and the ownership interests of each owner expressed as a
percentage.

(p) To unfairly discriminate among its franchisees with respect
to warranty reimbursement or authority granted to its franchisees
to make warranty adjustments with retail customers.

(q) To sell vehicles to a person not licensed pursuant to this
chapter for resale.

(r) To fail to affix an identification number to a park trailer, as
described in Section 18009.3 of the Health and Safety Code, that
is manufactured on or after January 1, 1987, and that does not
clearly identify the unit as a park trailer to the department. The
configuration of the identification number shall be approved by
the department.

(s) To dishonor a warranty, rebate, or other incentive offered
to the public or a dealer in connection with the retail sale of a new
motor vehicle, based solely upon the fact that an autobroker
arranged or negotiated the sale. This subdivision shall not prohibit
the disallowance of that rebate or incentive if the purchaser or
dealer is ineligible to receive the rebate or incentive pursuant to
any other term or condition of a rebate or incentive program.

(t) To exercise a right of first refusal or other right requiring a
franchisee or an owner of the franchise to sell, transfer, or assign
to the franchisor, or to a nominee of the franchisor, all or a material
part of the franchised business or of the assets of the franchised
business unless all of the following requirements are met:

(1) The franchise authorizes the franchisor to exercise a right
of first refusal to acquire the franchised business or assets of the
franchised business in the event of a proposed sale, transfer, or
assignment.

(2) The franchisor gives written notice of its exercise of the
right of first refusal no later than 45 days after the franchisor
receives all of the information required pursuant to subparagraph
(A) of paragraph (2) of subdivision (d).

(3) The sale, transfer, or assignment being proposed relates to
not less than all or substantially all of the assets of the franchised
business or to a controlling interest in the franchised business.

(4) The proposed transferee is neither a family member of an
owner of the franchised business, nor a managerial employee of
the franchisee owning 15 percent or more of the franchised
business, nor a corporation, partnership, or other legal entity owned
by the existing owners of the franchised business. For purposes of
this paragraph, a “family member” means the spouse of an owner
of the franchised business, the child, grandchild, brother, sister,
or parent of an owner, or a spouse of one of those family members.
This paragraph does not limit the rights of the franchisor to
disapprove a proposed transferee as provided in subdivision (d).

(5) Upon the franchisor’s exercise of the right of first refusal,
the consideration paid by the franchisor to the franchisee and
owners of the franchised business shall equal or exceed all
consideration that each of them were to have received under the
terms of, or in connection with, the proposed sale, assignment, or
transfer, and the franchisor shall comply with all the terms and
conditions of the agreement or agreements to sell, transfer, or
assign the franchised business.

(6) The franchisor shall reimburse the proposed transferee for
expenses paid or incurred by the proposed transferee in evaluating,
investigating, and negotiating the proposed transfer to the extent
those expenses do not exceed the usual, customary, and reasonable
fees charged for similar work done in the area in which the
franchised business is located. These expenses include, but are not
limited to, legal and accounting expenses, and expenses incurred
for title reports and environmental or other investigations of real
property on which the franchisee’s operations are conducted. The
proposed transferee shall provide the franchisor a written
itemization of those expenses, and a copy of all nonprivileged
reports and studies for which expenses were incurred, if any, within
30 days of the proposed transferee’s receipt of a written request
from the franchisor for that accounting. The franchisor shall make
payment within 30 days of exercising the right of first refusal.

(u) (1) To unfairly discriminate in favor of a dealership owned
or controlled, in whole or in part, by a manufacturer or distributor
or an entity that controls or is controlled by the manufacturer or
distributor. Unfair discrimination includes, but is not limited to,
the following:

(A) The furnishing to a franchisee or dealer that is owned or
controlled, in whole or in part, by a manufacturer, branch, or
distributor of any of the following:

(i) A vehicle that is not made available to each franchisee
pursuant to a reasonable allocation formula that is applied
uniformly, and a part or accessory that is not made available to all
franchisees on an equal basis when there is no reasonable allocation
formula that is applied uniformly.

(ii) A vehicle, part, or accessory that is not made available to
each franchisee on comparable delivery terms, including the time
of delivery after the placement of an order. Differences in delivery
terms due to geographic distances or other factors beyond the
control of the manufacturer, branch, or distributor shall not
constitute unfair competition.

(iii) Information obtained from a franchisee by the manufacturer,
branch, or distributor concerning the business affairs or operations
of a franchisee in which the manufacturer, branch, or distributor
does not have an ownership interest. The information includes,
but is not limited to, information contained in financial statements
and operating reports, the name, address, or other personal
information or buying, leasing, or service behavior of a dealer
customer, and other information that, if provided to a franchisee
or dealer owned or controlled by a manufacturer or distributor,
would give that franchisee or dealer a competitive advantage. This
clause does not apply if the information is provided pursuant to a
subpoena or court order, or to aggregated information made
available to all franchisees.

(iv) Sales or service incentives, discounts, or promotional
programs that are not made available to all California franchises
of the same line-make on an equal basis.

(B) Referring a prospective purchaser or lessee to a dealer in
which a manufacturer, branch, or distributor has an ownership
interest, unless the prospective purchaser or lessee resides in the
area of responsibility assigned to that dealer or the prospective
purchaser or lessee requests to be referred to that dealer.

(2) This subdivision does not prohibit a franchisor from granting
a franchise to prospective franchisees or assisting those franchisees
during the course of the franchise relationship as part of a program
or programs to make franchises available to persons lacking capital,
training, business experience, or other qualifications ordinarily
required of prospective franchisees.

(v) (1) To access, modify, or extract information from a
confidential dealer computer record, as defined in Section
11713.25, without obtaining the prior written consent of the dealer
and without maintaining administrative, technical, and physical
safeguards to protect the security, confidentiality, and integrity of
the information.

(2) Paragraph (1) does not limit a duty that a dealer may have
to safeguard the security and privacy of records maintained by the
dealer.

(w) (1) To use electronic, contractual, or other means to prevent
or interfere with any of the following:

(A) The lawful efforts of a dealer to comply with federal and
state data security and privacy laws.

(B) The ability of a dealer to do either of the following:

(i) Ensure that specific data accessed from the dealer’s computer
system is within the scope of consent specified in subdivision (v).

(ii) Monitor specific data accessed from or written to the dealer’s
computer system.

(2) Paragraph (1) does not limit a duty that a dealer may have
to safeguard the security and privacy of records maintained by the
dealer.

(x) (1) To unfairly discriminate against a franchisee selling a
service contract, debt cancellation agreement, maintenance
agreement, or similar product not approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate. For purposes of this subdivision,
unfair discrimination includes, but is not limited to, any of the
following:

(A) Express or implied statements that the dealer is under an
obligation to exclusively sell or offer to sell service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(B) Express or implied statements that selling or offering to sell
service contracts, debt cancellation agreements, maintenance
agreements, or similar products not approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate, or the failure to sell or offer to
sell service contracts, debt cancellation agreements, maintenance
agreements, or similar products approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate will have any negative
consequences for the dealer.

(C) Measuring a dealer’s performance under a franchise
agreement based upon the sale of service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(D) Requiring a dealer to actively promote the sale of service
contracts, debt cancellation agreements, or similar products
approved, endorsed, sponsored, or offered by the manufacturer,
manufacturer branch, distributor, or distributor branch or affiliate.

(E) Conditioning access to vehicles or parts, or vehicle sales or
service incentives upon the sale of service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(2) Unfair discrimination does not include, and nothing shall
prohibit a manufacturer from, offering an incentive program to
vehicle dealers who voluntarily sell or offer to sell service
contracts, debt cancellation agreements, or similar products
approved, endorsed, sponsored, or offered by the manufacturer,
manufacturer branch, distributor, or distributor branch or affiliate,
if the program does not provide vehicle sales or service incentives.

(3) This subdivision does not prohibit a manufacturer,
manufacturer branch, distributor, or distributor branch from
requiring a franchisee that sells a used vehicle as “certified” under
a certified used vehicle program established by the manufacturer,
manufacturer branch, distributor, or distributor branch to provide
a service contract approved, endorsed, sponsored, or offered by
the manufacturer, manufacturer branch, distributor, or distributor
branch.

(4) Unfair discrimination does not include, and nothing shall
prohibit a franchisor from requiring a franchisee to provide, the
following notice prior to the sale of the service contract if the
service contract is not provided or backed by the franchisor and
the vehicle is of the franchised line-make:


“Service Contract Disclosure
The service contract you are purchasing is not provided or backed
by the manufacturer of the vehicle you are purchasing. The
manufacturer of the vehicle is not responsible for claims or repairs
under this service contract.
_____________________
Signature of Purchaser”

(y) (1) To take or threaten to take any adverse action against a
dealer pursuant to an export or sale-for-resale prohibition because
the dealer sold or leased a vehicle to a customer who either
exported the vehicle to a foreign country or resold the vehicle in
violation of the prohibition, unless the export or sale-for-resale
prohibition policy was provided to the dealer in writing at least 48
hours before the sale or lease of the vehicle, and the dealer knew
or reasonably should have known of the customer’s intent to export
or resell the vehicle in violation of the prohibition. If the dealer
causes the vehicle to be registered in this or any other state, and
collects or causes to be collected any applicable sales or use tax
due to this state, a rebuttable presumption is established that the
dealer did not have reason to know of the customer’s intent to
export or resell the vehicle. In a proceeding in which a challenge
to an adverse action is at issue, the manufacturer, manufacturer
branch, distributor, or distributor branch shall have the burden of
proof by begin delete clear and convincing end delete begin insert a preponderance of the end insert evidence to
show that the vehicle was exported or resold in violation of an
export or sale-for-resale prohibition policy, that the prohibition
policy was provided to the dealer in writing at least 48 hours prior
to the sale or lease, and that the dealer knew or reasonably should
have known of the customer’s intent to export the vehicle to a
foreign country at the time of the sale or lease.

(2) An export or sale-for-resale prohibition policy shall not
include a provision that expressly or implicitly requires a dealer
to make further inquiries into a customer’s intent, identity, or
financial ability to purchase or lease a vehicle based on any of the
customer’s characteristics listed or defined in Section 51 of the
Civil Code. A policy that is in violation of this paragraph is void
and unenforceable.

(3) An export or sale-for-resale prohibition policy shall expressly
include a provision stating the dealer’s rebuttable presumption if
the dealer causes the vehicle to be registered in this or any other
state and collects or causes to be collected any applicable sales or
use tax. A policy that is in violation of this paragraph is void and
unenforceable.

(z) As used in this section, “area of responsibility” means a
geographic area specified in a franchise that is used by the
franchisor for the purpose of evaluating the franchisee’s
performance of its sales and service obligations.

begin insert

begin insert SEC. 9.1. end insert   

end insert

begin insert Section 11713.3 of the end insert begin insert Vehicle Code end insert begin insert is amended to
read: end insert

11713.3.  

It is unlawful and a violation of this code for a
manufacturer, manufacturer branch, distributor, or distributor
branch licensed pursuant to this code to do, directly or indirectly
through an affiliate, any of the following:

(a) To refuse or fail to deliver in reasonable quantities and within
a reasonable time after receipt of an order from a dealer having a
franchise for the retail sale of a new vehicle sold or distributed by
the manufacturer or distributor, a new vehicle or parts or
accessories to new vehicles as are covered by the franchise, if the
vehicle, parts, or accessories are publicly advertised as being
available for delivery or actually being delivered. This subdivision
is not violated, however, if the failure is caused by acts or causes
beyond the control of the manufacturer, manufacturer branch,
distributor, or distributor branch.

(b) To prevent or require, or attempt to prevent or require, by
contract or otherwise, a change in the capital structure of a
dealership or the means by or through which the dealer finances
the operation of the dealership, if the dealer at all times meets
reasonable capital standards agreed to by the dealer and the
manufacturer or distributor, and if a change in capital structure
does not cause a change in the principal management or have the
effect of a sale of the franchise without the consent of the
manufacturer or distributor.

(c) To prevent or require, or attempt to prevent or require, a
dealer to change the executive management of a dealership, other
than the principal dealership operator or operators, if the franchise
was granted to the dealer in reliance upon the personal
qualifications of that person.

(d) (1) Except as provided in subdivision (t), to prevent or
require, or attempt to prevent or require, by contract or otherwise,
a dealer, or an officer, partner, or stockholder of a dealership, the
sale or transfer of a part of the interest of any of them to another
person. A dealer, officer, partner, or stockholder shall not, however,
have the right to sell, transfer, or assign the franchise, or a right
thereunder, without the consent of the manufacturer or distributor
except that the consent shall not be unreasonably withheld.

(2) (A) For the transferring franchisee to fail, prior to the sale,
transfer, or assignment of a franchisee or the sale, assignment, or
transfer of all, or substantially all, of the assets of the franchised
business or a controlling interest in the franchised business to
another person, to notify the manufacturer or distributor of the
franchisee’s decision to sell, transfer, or assign the franchise. The
notice shall be in writing and shall include all of the following:

(i) The proposed transferee’s name and address.

(ii) A copy of all of the agreements relating to the sale,
assignment, or transfer of the franchised business or its assets.

(iii) The proposed transferee’s application for approval to
become the successor franchisee. The application shall include
forms and related information generally utilized by the
manufacturer or distributor in reviewing prospective franchisees,
if those forms are readily made available to existing franchisees.
As soon as practicable after receipt of the proposed transferee’s
application, the manufacturer or distributor shall notify the
franchisee and the proposed transferee of information needed to
make the application complete.

(B) For the manufacturer or distributor, to fail, on or before 60
days after the receipt of all of the information required pursuant
to subparagraph (A), or as extended by a written agreement
between the manufacturer or distributor and the franchisee, to
notify the franchisee of the approval or the disapproval of the sale,
transfer, or assignment of the franchise. The notice shall be in
writing and shall be personally served or sent by certified mail,
return receipt requested, or by guaranteed overnight delivery
service that provides verification of delivery and shall be directed
to the franchisee. A proposed sale, assignment, or transfer shall
be deemed approved, unless disapproved by the franchisor in the
manner provided by this subdivision. If the proposed sale,
assignment, or transfer is disapproved, the franchisor shall include
in the notice of disapproval a statement setting forth the reasons
for the disapproval.

(3) In an action in which the manufacturer’s or distributor’s
withholding of consent under this subdivision or subdivision (e)
is an issue, whether the withholding of consent was unreasonable
is a question of fact requiring consideration of all the existing
circumstances.

(e) To prevent, or attempt to prevent, a dealer from receiving
fair and reasonable compensation for the value of the franchised
business. There shall not be a transfer or assignment of the dealer’s
franchise without the consent of the manufacturer or begin delete distributor,
which consent end delete begin insert distributor. The manufacturer or distributor end insert shall
not begin delete be end delete unreasonably begin delete withheld or conditioned end delete begin insert withhold consent or
condition consent end insert upon the release, assignment, novation, waiver,
estoppel, or modification of a claim or defense by the dealer.

(f) To obtain money, goods, services, or another benefit from
a person with whom the dealer does business, on account of, or in
relation to, the transaction between the dealer and that other person,
other than for compensation for services rendered, unless the
benefit is promptly accounted for, and transmitted to, the dealer.

(g) (1) Except as provided in paragraph (3), to obtain from a
dealer or enforce against a dealer an agreement, provision, release,
assignment, novation, waiver, or estoppel that does any of the
following:

(A) Modifies or disclaims a duty or obligation of a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative, or a right or privilege of a dealer, pursuant to
Chapter 4 (commencing with Section 11700) of Division 5 or
Chapter 6 (commencing with Section 3000) of Division 2.

(B) Limits or constrains the right of a dealer to file, pursue, or
submit evidence in connection with a protest before the board.

(C) Requires a dealer to terminate a franchise.

(D) Requires a controversy between a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative and a dealer to be referred to a person for a binding
determination. However, this subparagraph does not prohibit
arbitration before an independent arbitrator, provided that whenever
a motor vehicle franchise contract provides for the use of arbitration
to resolve a controversy arising out of, or relating to, that contract,
arbitration may be used to settle the controversy only if, after the
controversy arises, all parties to the controversy consent in writing
to use arbitration to settle the controversy. For the purpose of this
subparagraph, the terms “motor vehicle” and “motor vehicle
franchise contract” shall have the same meaning as defined in
Section 1226 of Title 15 of the United States Code. If arbitration
is elected to settle a dispute under a motor vehicle franchise
contract, the arbitrator shall provide the parties to the arbitration
with a written explanation of the factual and legal basis for the
award.

(2) An agreement, provision, release, assignment, novation,
waiver, or estoppel prohibited by this subdivision shall be
unenforceable and void.

(3) This subdivision does not do any of the following:

(A) Limit or restrict the terms upon which parties to a protest
before the board, civil action, or other proceeding can settle or
resolve, or stipulate to evidentiary or procedural matters during
the course of, a protest, civil action, or other proceeding.

(B) Affect the enforceability of any stipulated order or other
order entered by the board.

(C) Affect the enforceability of any provision in a contract if
the provision is not prohibited under this subdivision or any other
law.

(D) Affect the enforceability of a provision in any contract
entered into on or before December 31, 2011.

(E) Prohibit a dealer from waiving its right to file a protest
pursuant to Section 3065.1 if the waiver agreement is entered into
after a franchisor incentive program claim has been disapproved
by the franchisor and the waiver is voluntarily given as part of an
agreement to settle that claim.

(F) Prohibit a voluntary agreement supported by valuable
consideration, other than granting or renewing a franchise, that
does both of the following:

(i) Provides that a dealer establish or maintain exclusive
facilities, personnel, or display space or provides that a dealer
make a material alteration, expansion, or addition to a dealership
facility.

(ii) Contains no waiver or other provision prohibited by
subparagraph (A), (B), (C), or (D) of paragraph (1).

(G) Prohibit an agreement separate from the franchise agreement
that implements a dealer’s election to terminate the franchise if
the agreement is conditioned only on a specified time for
termination or payment of consideration to the dealer.

(H) (i) Prohibit a voluntary waiver agreement, supported by
valuable consideration, other than the consideration of renewing
a franchise, to waive the right of a dealer to file a protest under
Section 3062 for the proposed establishment or relocation of a
specific proposed dealership, if the waiver agreement provides all
of the following:

(I) The approximate address at which the proposed dealership
will be located.

(II) The planning potential used to establish the proposed
dealership’s facility, personnel, and capital requirements.

(III) An approximation of projected vehicle and parts sales, and
number of vehicles to be serviced at the proposed dealership.

(IV) Whether the franchisor or affiliate will hold an ownership
interest in the proposed dealership or real property of the proposed
dealership, and the approximate percentage of any franchisor or
affiliate ownership interest in the proposed dealership.

(V) The line-makes to be operated at the proposed dealership.

(VI) If known at the time the waiver agreement is executed, the
identity of the dealer who will operate the proposed dealership.

(VII) The date the waiver agreement is to expire, which may
not be more than 30 months after the date of execution of the
waiver agreement.

(ii) Notwithstanding the provisions of a waiver agreement
entered into pursuant to the provisions of this subparagraph, a
dealer may file a protest under Section 3062 if any of the
information provided pursuant to clause (i) has become materially
inaccurate since the waiver agreement was executed. Any
determination of the enforceability of a waiver agreement shall be
determined by the board and the franchisor shall have the burden
of proof.

(h) To increase prices of motor vehicles that the dealer had
ordered for private retail consumers prior to the dealer’s receipt
of the written official price increase notification. A sales contract
signed by a private retail consumer is evidence of the order. In the
event of manufacturer price reductions, the amount of the reduction
received by a dealer shall be passed on to the private retail
consumer by the dealer if the retail price was negotiated on the
basis of the previous higher price to the dealer. Price reductions
apply to all vehicles in the dealer’s inventory that were subject to
the price reduction. Price differences applicable to new model or
series motor vehicles at the time of the introduction of new models
or series shall not be considered a price increase or price decrease.
This subdivision does not apply to price changes caused by either
of the following:

(1) The addition to a motor vehicle of required or optional
equipment pursuant to state or federal law.

(2) Revaluation of the United States dollar in the case of a
foreign-make vehicle.

(i) To fail to pay to a dealer, within a reasonable time following
receipt of a valid claim by a dealer thereof, a payment agreed to
be made by the manufacturer or distributor to the dealer by reason
of the fact that a new vehicle of a prior year model is in the dealer’s
inventory at the time of introduction of new model vehicles.

(j) To deny the widow, widower, or heirs designated by a
deceased owner of a dealership the opportunity to participate in
the ownership of the dealership or successor dealership under a
valid franchise for a reasonable time after the death of the owner.

(k) To offer refunds or other types of inducements to a person
for the purchase of new motor vehicles of a certain line-make to
be sold to the state or a political subdivision of the state without
making the same offer to all other dealers in the same line-make
within the relevant market area.

(l) To modify, replace, enter into, relocate, terminate, or refuse
to renew a franchise in violation of Article 4 (commencing with
Section 3060) begin insert or Article 5 (commencing with Section 3070) end insert of
Chapter 6 of Division 2.

(m) To employ a person as a representative who has not been
licensed pursuant to Article 3 (commencing with Section 11900)
of Chapter 4 of Division 5.

(n) To deny a dealer the right of free association with another
dealer for a lawful purpose.

(o) (1) To compete with a dealer in the same line-make
operating under an agreement or franchise from a manufacturer
or distributor in the relevant market area.

(2) A manufacturer, branch, or begin delete distributor end delete begin insert distributor, end insert or an
entity that controls or is controlled begin delete by, end delete begin insert by end insert a manufacturer, branch,
or distributor, shall not, however, be deemed to be competing in
the following limited circumstances:

(A) Owning or operating a dealership for a temporary period,
not to exceed one year at the location of a former dealership of the
same line-make that has been out of operation for less than six
months. However, after a showing of good cause by a
manufacturer, branch, or distributor that it needs additional time
to operate a dealership in preparation for sale to a successor
independent franchisee, the board may extend the time period.

(B) Owning an interest in a dealer as part of a bona fide dealer
development program that satisfies all of the following
requirements:

(i) The sole purpose of the program is to make franchises
available to persons lacking capital, training, business experience,
or other qualities ordinarily required of prospective franchisees
and the dealer development candidate is an individual who is
unable to acquire the franchise without assistance of the program.

(ii) The dealer development candidate has made a significant
investment subject to loss in the franchised business of the dealer.

(iii) The program requires the dealer development candidate to
manage the day-to-day operations and business affairs of the dealer
and to acquire, within a reasonable time and on reasonable terms
and conditions, beneficial ownership and control of a majority
interest in the dealer and disassociation of any direct or indirect
ownership or control by the manufacturer, branch, or distributor.

(C) Owning a wholly owned subsidiary corporation of a
distributor that sells motor vehicles at retail, if, for at least three
years prior to January 1, 1973, the subsidiary corporation has been
a wholly owned subsidiary of the distributor and engaged in the
sale of vehicles at retail.

(3) (A) A manufacturer, branch, and distributor that owns or
operates a dealership in the manner described in subparagraph (A)
of paragraph (2) shall give written notice to the board, within 10
days, each time it commences or terminates operation of a
dealership and each time it acquires, changes, or divests itself of
an ownership interest.

(B) A manufacturer, branch, and distributor that owns an interest
in a dealer in the manner described in subparagraph (B) of
paragraph (2) shall give written notice to the board, annually, of
the name and location of each dealer in which it has an ownership
interest, the name of the bona fide dealer development owner or
owners, and the ownership interests of each owner expressed as a
percentage.

(p) To unfairly discriminate among its franchisees with respect
to warranty reimbursement or authority granted to its franchisees
to make warranty adjustments with retail customers.

(q) To sell vehicles to a person not licensed pursuant to this
chapter for resale.

(r) To fail to affix an identification number to a park trailer, as
described in Section 18009.3 of the Health and Safety Code, that
is manufactured on or after January 1, 1987, and that does not
clearly identify the unit as a park trailer to the department. The
configuration of the identification number shall be approved by
the department.

(s) To dishonor a warranty, rebate, or other incentive offered
to the public or a dealer in connection with the retail sale of a new
motor vehicle, based solely upon the fact that an autobroker
arranged or negotiated the sale. This subdivision shall not prohibit
the disallowance of that rebate or incentive if the purchaser or
dealer is ineligible to receive the rebate or incentive pursuant to
any other term or condition of a rebate or incentive program.

(t) To exercise a right of first refusal or other right requiring a
franchisee or an owner of the franchise to sell, transfer, or assign
to the franchisor, or to a nominee of the franchisor, all or a material
part of the franchised business or of the assets of the franchised
business unless all of the following requirements are met:

(1) The franchise authorizes the franchisor to exercise a right
of first refusal to acquire the franchised business or assets of the
franchised business in the event of a proposed sale, transfer, or
assignment.

(2) The franchisor gives written notice of its exercise of the
right of first refusal no later than 45 days after the franchisor
receives all of the information required pursuant to subparagraph
(A) of paragraph (2) of subdivision (d).

(3) The sale, transfer, or assignment being proposed relates to
not less than all or substantially all of the assets of the franchised
business or to a controlling interest in the franchised business.

(4) The proposed transferee is neither a family member of an
owner of the franchised business, nor a managerial employee of
the franchisee owning 15 percent or more of the franchised
business, nor a corporation, partnership, or other legal entity owned
by the existing owners of the franchised business. For purposes of
this paragraph, a “family member” means the spouse of an owner
of the franchised business, the child, grandchild, brother, sister,
or parent of an owner, or a spouse of one of those family members.
This paragraph does not limit the rights of the franchisor to
disapprove a proposed transferee as provided in subdivision (d).

(5) Upon the franchisor’s exercise of the right of first refusal,
the consideration paid by the franchisor to the franchisee and
owners of the franchised business shall equal or exceed all
consideration that each of them were to have received under the
terms of, or in connection with, the proposed sale, assignment, or
transfer, and the franchisor shall comply with all the terms and
conditions of the agreement or agreements to sell, transfer, or
assign the franchised business.

(6) The franchisor shall reimburse the proposed transferee for
expenses paid or incurred by the proposed transferee in evaluating,
investigating, and negotiating the proposed transfer to the extent
those expenses do not exceed the usual, customary, and reasonable
fees charged for similar work done in the area in which the
franchised business is located. These expenses include, but are not
limited to, legal and accounting expenses, and expenses incurred
for title reports and environmental or other investigations of real
property on which the franchisee’s operations are conducted. The
proposed transferee shall provide the franchisor a written
itemization of those expenses, and a copy of all nonprivileged
reports and studies for which expenses were incurred, if any, within
30 days of the proposed transferee’s receipt of a written request
from the franchisor for that accounting. The franchisor shall make
payment within 30 days of exercising the right of first refusal.

(u) (1) To unfairly discriminate in favor of a dealership owned
or controlled, in whole or in part, by a manufacturer or distributor
or an entity that controls or is controlled by the manufacturer or
distributor. Unfair discrimination includes, but is not limited to,
the following:

(A) The furnishing to a franchisee or dealer that is owned or
controlled, in whole or in part, by a manufacturer, branch, or
distributor of any of the following:

(i) A vehicle that is not made available to each franchisee
pursuant to a reasonable allocation formula that is applied
uniformly, and a part or accessory that is not made available to all
franchisees on an equal basis when there is no reasonable allocation
formula that is applied uniformly.

(ii) A vehicle, part, or accessory that is not made available to
each franchisee on comparable delivery terms, including the time
of delivery after the placement of an order. Differences in delivery
terms due to geographic distances or other factors beyond the
control of the manufacturer, branch, or distributor shall not
constitute unfair competition.

(iii) Information obtained from a franchisee by the manufacturer,
branch, or distributor concerning the business affairs or operations
of a franchisee in which the manufacturer, branch, or distributor
does not have an ownership interest. The information includes,
but is not limited to, information contained in financial statements
and operating reports, the name, address, or other personal
information or buying, leasing, or service behavior of a dealer
customer, and other information that, if provided to a franchisee
or dealer owned or controlled by a manufacturer or distributor,
would give that franchisee or dealer a competitive advantage. This
clause does not apply if the information is provided pursuant to a
subpoena or court order, or to aggregated information made
available to all franchisees.

(iv) Sales or service incentives, discounts, or promotional
programs that are not made available to all California franchises
of the same line-make on an equal basis.

(B) Referring a prospective purchaser or lessee to a dealer in
which a manufacturer, branch, or distributor has an ownership
interest, unless the prospective purchaser or lessee resides in the
area of responsibility assigned to that dealer or the prospective
purchaser or lessee requests to be referred to that dealer.

(2) This subdivision does not prohibit a franchisor from granting
a franchise to prospective franchisees or assisting those franchisees
during the course of the franchise relationship as part of a program
or programs to make franchises available to persons lacking capital,
training, business experience, or other qualifications ordinarily
required of prospective franchisees.

(v) (1) To access, modify, or extract information from a
confidential dealer computer record, as defined in Section
11713.25, without obtaining the prior written consent of the dealer
and without maintaining administrative, technical, and physical
safeguards to protect the security, confidentiality, and integrity of
the information.

(2) Paragraph (1) does not limit a duty that a dealer may have
to safeguard the security and privacy of records maintained by the
dealer.

(w) (1) To use electronic, contractual, or other means to prevent
or interfere with any of the following:

(A) The lawful efforts of a dealer to comply with federal and
state data security and privacy laws.

(B) The ability of a dealer to do either of the following:

(i) Ensure that specific data accessed from the dealer’s computer
system is within the scope of consent specified in subdivision (v).

(ii) Monitor specific data accessed from or written to the dealer’s
computer system.

(2) Paragraph (1) does not limit a duty that a dealer may have
to safeguard the security and privacy of records maintained by the
dealer.

(x) (1) To unfairly discriminate against a franchisee selling a
service contract, debt cancellation agreement, maintenance
agreement, or similar product not approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate. For purposes of this subdivision,
unfair discrimination includes, but is not limited to, any of the
following:

(A) Express or implied statements that the dealer is under an
obligation to exclusively sell or offer to sell service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(B) Express or implied statements that selling or offering to sell
service contracts, debt cancellation agreements, maintenance
agreements, or similar products not approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate, or the failure to sell or offer to
sell service contracts, debt cancellation agreements, maintenance
agreements, or similar products approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate will have any negative
consequences for the dealer.

(C) Measuring a dealer’s performance under a franchise
agreement based upon the sale of service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(D) Requiring a dealer to actively promote the sale of service
contracts, debt cancellation agreements, or similar products
approved, endorsed, sponsored, or offered by the manufacturer,
manufacturer branch, distributor, or distributor branch or affiliate.

(E) Conditioning access to vehicles or parts, or vehicle sales or
service incentives upon the sale of service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(2) Unfair discrimination does not include, and nothing shall
prohibit a manufacturer from, offering an incentive program to
vehicle dealers who voluntarily sell or offer to sell service
contracts, debt cancellation agreements, or similar products
approved, endorsed, sponsored, or offered by the manufacturer,
manufacturer branch, distributor, or distributor branch or affiliate,
if the program does not provide vehicle sales or service incentives.

(3) This subdivision does not prohibit a manufacturer,
manufacturer branch, distributor, or distributor branch from
requiring a franchisee that sells a used vehicle as “certified” under
a certified used vehicle program established by the manufacturer,
manufacturer branch, distributor, or distributor branch to provide
a service contract approved, endorsed, sponsored, or offered by
the manufacturer, manufacturer branch, distributor, or distributor
branch.

(4) Unfair discrimination does not include, and nothing shall
prohibit a franchisor from requiring a franchisee to provide, the
following notice prior to the sale of the service contract if the
service contract is not provided or backed by the franchisor and
the vehicle is of the franchised line-make:

“Service Contract Disclosure
The service contract you are purchasing is not provided or backed
by the manufacturer of the vehicle you are purchasing. The
manufacturer of the vehicle is not responsible for claims or repairs
under this service contract.

_____________________
Signature of Purchaser”

(y)  begin insert (1) end insert begin insert   end insert To take or threaten to take any adverse action against a
dealer pursuant to an export or sale-for-resale prohibition because
the dealer sold or leased a vehicle to a customer who either
exported the vehicle to a foreign country or resold the vehicle in
violation of the prohibition, unless the export or sale-for-resale
prohibition policy was provided to the dealer in writing begin delete prior to end delete
begin insert at least 48 hours before end insert the sale or begin delete lease, end delete begin insert lease of the vehicle, end insert and
the dealer knew or reasonably should have known of the customer’s
intent to export or resell the vehicle in violation of the begin delete prohibition
at the time of sale or lease. end delete begin insert prohibition. end insert If the dealer causes the
vehicle to be registered in this or any other state, and collects or
causes to be collected any applicable sales or use tax due to this
state, a rebuttable presumption is established that the dealer did
not have reason to know of the customer’s intent to export or resell
the vehicle. begin insert In a proceeding in which a challenge to an adverse
action is at issue, the manufacturer, manufacturer branch,
distributor, or distributor branch shall have the burden of proof
by a preponderance of the evidence to show that the vehicle was
exported or resold in violation of an export or sale-for-resale
prohibition policy, that the prohibition policy was provided to the
dealer in writing at least 48 hours prior to the sale or lease, and
that the dealer knew or reasonably should have known of the
customer’s intent to export the vehicle to a foreign country at the
time of the sale or lease. end insert

begin insert

(2) An export or sale-for-resale prohibition policy shall not
include a provision that expressly or implicitly requires a dealer
to make further inquiries into a customer’s intent, identity, or
financial ability to purchase or lease a vehicle based on any of the
customer’s characteristics listed or defined in Section 51 of the
Civil Code. A policy that is in violation of this paragraph is void
and unenforceable.

end insert begin insert

(3) An export or sale-for-resale prohibition policy shall
expressly include a provision stating the dealer’s rebuttable
presumption if the dealer causes the vehicle to be registered in
this or any other state and collects or causes to be collected any
applicable sales or use tax. A policy that is in violation of this
paragraph is void and unenforceable.

end insert

(z) As used in this section, “area of responsibility” begin delete is end delete begin insert means end insert a
geographic area specified in a franchise that is used by the
franchisor for the purpose of evaluating the franchisee’s
performance of its sales and service obligations.

begin insert

begin insert SEC. 10. end insert   

end insert begin insert

(a) Sections 6.1 and 7.1 of this bill incorporates
changes to Section 3050.7 of the Vehicle Code proposed by both
this bill and Assembly Bill 759. These sections shall only become
operative if (1) both bills are enacted and become effective on or
before January 1, 2016, (2) each bill amends or adds Section
3050.7 of the Vehicle Code, and (3) this bill is enacted after
Assembly Bill 759, in which case Sections 6 and 7 of this bill shall
not become operative.

end insert begin insert

(b) Section 9.1 of this bill incorporates amendments to Section
11713.3 of the Vehicle Code proposed by both this bill and
Assembly Bill 759. It shall only become operative if (1) both bills
are enacted and become effective on or before January 1, 2016,
(2) each bill amends Section 11713.3 of the Vehicle Code, and (3)
this bill is enacted after Assembly Bill 759, in which case Section
9 of this bill shall not become operative.

end insert

begin delete SEC. 7. end delete
begin insert SEC. 11. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.