SKV Secures Key Victory for Automotive Franchise


Be careful what you wish for—a rehearing sought by Hyundai Motor America resulted in a complete victory for SKV’s client World Car Hyundai.  On November 3, 2016 the Board of the Texas Department of Motor Vehicles had voted to reverse an Administrative Law Judge’s decision that Hyundai Motor America had not discriminated unreasonably against World Car Hyundai in allocating cars to the dealerships or in setting sales efficiency standards.   On August 17, 2017, upon rehearing sought by Hyundai, after further oral arguments, the Board explicitly found and held that Hyundai violated Texas Occupations Code Section 2301.468(2) by engaging in unreasonable discrimination against World Car in discretionary vehicle allocations, violated Section 2301.467(a)(1) by requiring adherence to unreasonable sales or service standards, and further held that these activities violated the statutory duty of good faith and fair dealing under Section 2301.478(b).  

The dealer, which maintains a family of auto dealerships in San Antonio, was the victim of discretionary allocations by Hyundai Motor America over a 3-year period that resulted in the nearest Hyundai competitors receiving thousands more cars to sell, during a period in which Hyundai vehicles were “hot” and in high demand.  Allocation is a particularly sensitive issue in the manufacturer-dealer relationship and the manufacturer’s discretion is almost universally unchallenged in legal proceedings.  After a five-day trial in which the differential treatment was unquestioned, but various excuses offered, the Administrative Law Judge denied relief in March of 2016, finding that Hyundai Motor America had not violated Texas law.  After extensive oral argument, the Board has reversed the ALJ on three grounds.  Over the last 6 years the Board has reversed Administrative Law Judge decisions just 3 times, and SKV has won 2 of those reversals.  SKV Partners Lee Kaplan and Jarod Stewart represented World Car Hyundai in the trial and the oral arguments before the Board.



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