John Deere and other farm and heavy equipment manufacturers told the New Hampshire Supreme Court on Thursday that a new state law looping them into protections designed for automobile and truck dealers unconstitutionally interferes with their existing and future contracts with dealers.
Lawyers for John Deere and the state faced off over the so-called Auto Dealers Bill of Rights law, which lawmakers expanded to encompass manufacturers of tractors and yard and garden equipment.
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"It protects dealers and, I would argue, it hurts consumers," attorney Gordon MacDonald, representing John Deere, told the court. Because the law is retroactive, it affects every existing contract the company has with dealers, he said.
Assistant Attorney General Francis Fredericks argued that the new law is a merger of laws that previously dealt separately with automobile manufacturers and farm and tractor manufacturers. The new law bars manufacturers from terminating contracts with dealers without just cause and places the burden on the manufacturers to justify any terminations.
"It's about the regulation of a relationship," Fredericks told the justices.
"Termination is the overriding issue," said attorney Gregory Holmes, arguing in support of the law on behalf of Frost Farm Service of Greenville, an intervener in the case.
MacDonald argues that that undermines the essence of Deere's contracts with its dealers.
"We agree with the dealers to sell certain products, where they can sell them and who can sell them," MacDonald argued, saying provisions of the new law violate constitutional protections.
Attorney Brian Cullen, representing Kubota Tractor Corp., said the law amounts to "a hostile takeover" of the industry.
Thomas Collin, a lawyer representing Husqvarna Professional Products, said applying the law to his client is "arbitrary and irrational." He said Husqvarna sells products unconditionally to any dealers that want them.
"What happened here is that Husqvarna was taken hostage, essentially," Collin told justices. He said lawmakers had "no information whatsoever about the relationship between yard and garden manufacturers and their dealers."
In court documents, lawyers for Husqvarna claim the law "radically interferes" with the company's contractual rights and puts up roadblocks to establishing new dealerships.
"In populous areas of New Hampshire, where Husqvarna has the greatest incentive to establish additional dealerships, notice would need to be given to multiple dealers," attorney Michael Delaney wrote. "Each could initiate a protest and effectively veto or delay appointment of a new dealership."
The bill was signed into law in June 2013 but a judge barred it from taking effect after Deere and others filed suit. A lower court judge ruled in the state's favor last September, saying the law serves an important public purpose and does not substantially infringe on existing contracts. But the validity of the law remains in limbo until the Supreme Court issues its ruling.
The justices did not indicate when they would rule.