Massachusetts Auto Dealer Magazine August 2019 by Massachusetts State Automobile Dealers Association, Inc

MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109

auto M a s s a c h u s e t t s

The official publication of the Massachusetts State Automobile Dealers Association, Inc

FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216

August 2019 • Vol. 31 No. 8

Ma s s a c h u s e t t s

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S ta f f D i r e c t o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to MSADA by e-mail: jfabrizio@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.

Ad Directory BlumShapiro, 21 Ethos, 2 Nancy Phillips, 21 O’Connor & Drew, 32 Southern Auto Auction, 22 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400

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The official publication of the Massachusetts State Automobile Dealers Association, Inc

Table of Contents

4 5 6 10 11 12

From the President: A Second Round of Honors ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: Compliance Update: Sleepy’s; Paid Leave; Doc Prep Fees LEGISLATIVE SCORECARD TROUBLESHOOTING: ADA Shakedown Targets Website Accessibility AUTO OUTLOOK

16 Cover Story: 2019 MSADA Hall of Fame Class

20 23 24 26 28 29

NEWS From Around the Horn LEGAL: Employers Cannot Retaliate Against Employees for Filing Lawsuits Against Them BUSINESS: Would You Be Ready If These Proposed FTC Safeguards Rule Changes Become Law? nada Market Beat TRUCK CORNER: Make Your Voices Heard During the Summer Congressional Recess nada update: Heading to the Hill

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Massachusetts Auto Dealer

AUGUST 2019

a t n ”

From the President

MSADA

A Second Round of Honors

Join Us for the Second Annual Massachusetts Auto Dealer Hall of Fame Induction Ceremony

By Chris Connolly, MSADA President

Msada Board Barnstable County

Building on a successful launch last year, MSADA continues to honor the legacy of our forebears with an event meant to inspire both reflection and action. I hope you will join me October 2-4 at the Chatham Bars Inn on Cape Cod for our second annual induction ceremony of the Massachusetts Auto Dealers Hall of Fame. Each year from here on out, we will continue to honor inductees whose contributions come from squarely within the advent of the automobile and the franchised dealership retail system. The efforts these dealers undertook to continue to innovate in a world where the automobile was taken for granted set them apart. Indeed they laid the groundwork for the industry we continue to cherish today. As you might be able to guess from the hundreds of families within this industry in the Commonwealth alone, decisions about whom to include are going to become more difficult each year. We have a broad range of experience among this year’s honorees, and I hope you will join me in congratulating those whom our MSADA Board selected for 2019. You will find brief introductions to this year’s class in this month’s cover story. Unless people stop wanting to chase the feeling of freedom an automobile provides, we at MSADA will always make the case that it takes someone who understands that feeling to sell these vehicles. Sharing these stories is important. MSADA hopes you will take this opportunity in October to gather among friends and colleagues to celebrate and honor our inductees on Cape Cod. Should you have any questions about accommodations or scheduling, please contact Executive Vice President Robert O’Koniewski at rokoniewski@msada.org.

Christine Alicandro, Marty’s Buick GMC Isuzu

NADA Washington Conference Approaches

Robert Boch, Expressway Toyota

As MSADA prepares for our big October event, we should remind you as often as we can that NADA will be hosting its annual Washington Conference on Capitol Hill September 15-17. We speak often on the importance of dealers participating in grassroots action, and this is a time built into every year when we can converge on our Congress as a large group from across the nation. You also know that we are always stressing that our representatives may not agree with us all the time, but that the surest way to lose out is to not show up. Our lobbying event is one of the largest the Capitol sees each year, and the importance of that physical presence cannot be discounted. But it is also your specific story that matters. They need to hear from the Main Street in their district to know that these possibly obscure (to them) tax issues or tariff issues have impacts right at their doorstep. We need your presence to make that happen. If you have not ever taken part in ths event, it is a truly rewarding experience. I encourage you to ask me, Robert O’Koniewski, or NADA Director Scott Dube about the logistics. More general information is available at https://www.nada.org/WashConf/. t AUGUST 2019

Massachusetts Auto Dealer www.msada.org

Brad Tracy, Tracy Volkswagen

Berkshire County

Brian Bedard, Bedard Brothers Auto Sales

Bristol County

Richard Mastria, Mastria Auto Group

Essex County

William DeLuca III, Woodworth Motors Don Sudbay, Sudbay Motors

Franklin County

Jay Dillon, Dillon Chevrolet

Hampden County

Jeb Balise, Balise Auto Group

Hampshire County

Bryan Burke, Burke Chevrolet

Middlesex County

Chris Connolly, Jr., Herb Connolly Motors Frank Hanenberger, MetroWest Subaru

Norfolk County

Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree

Plymouth County Suffolk County

Worcester County

Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto

Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]

Immediate Past President [Open]

NADA Director

Scott Dube, Bill Dube Hyundai

Officers

President, Chris Connolly, Jr. Vice President, Charles Tufankjian Treasurer, Jack Madden, Jr. Clerk, Steve Sewell

Associate Members MSADA A ssociate M ember D irectory ACV Auctions Will Morris (860) 670-7867 ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 AutoAlert Jessica Gates (816) 506-0515 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Automotive Search Group Howard Weisberg (508) 620-6300 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bernstein Shur PA Ned Sackman (603) 623-8700 Blum Shapiro John D. Spatcher (860) 561-4000 BMO Harris Bank Steve Gagnon (813) 447-1723 Boston Magazine Noreen Murray (617) 275-2012 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Daniel Garces (703) 394-1313 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dave Cantin Group Woody Woodward (800) 722-8621 Dealer Creative Jeff Hayes 919-719-1333 Dealerdocx Brad Bass (978) 766-9000 Downey & Company Paul McGovern (781) 849-3100 DP Sales Distributors Andrew Prussack {631) 842-7549 Eastern Bank David Sawyer (617) 897-1125

Eastern Insurance Group William Gross (508) 620-3349 EasyCare New England Greg Gomer (617) 967-0303 Enterprise Rent-A-Car Timothy Allard (602) 818-3607 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gatehouse Auto Jay Pelland (508) 626-4334 Gulf State Financial Services Tom Foster (832) 628-1916 GW Marketing Services Gordon Wisbach (857) 404-0226 Hireology Kevin Baumgart (773) 220-6035 Hub International Insurance Brokerage Jim Walsh (603) 494-9016 Huntington National Bank John J. Marchand (781) 326-0823 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 JP Morgan Chase Bank Alex Khademi (404) 375-4504 Key Bank Mark Flibotte (617) 385-6232 KPA Tim Whelan (303) 802-3019 Leader Auto Resources, Inc. Curt Murray (978) 201-4797 Chuck August (518) 364-8723 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 McWalter Volunteer Benefits Group Shawn Allen (617) 483-0359 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000

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Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 NEAD Insurance Trust Charles Muise (781) 706-6944 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Dale Ducasse (508) 393-1400 Piper Consulting Jim Piper (207) 754-0789 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Mike O’Connor (860) 462-7958 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Rockland Trust Co. Manny Silva (781) 982-6806 Samet & Company John J. Czyzewski (617) 731-1222 Santander Bank Richard Anderson (401) 432-0749 Chris Peck (508) 314-1283 Schlossberg & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Service Credit Union Dave Pasternak (603) 812-8967 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Southern Auto Auction Joe Derohanian (860) 292-7500 Sprague Energy Robert Savary (603) 430-7254 SunPower Christie McCarthy (408) 457-2357 Kristin Hodges (707) 694-7759 SunTrust Bank Michael Walsh (617) 345-6567 TD Auto Finance Marc Gerhart (781) 697-1525 TradeRev Amy Davis (617) 512-7033 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Josh Tobin (508) 951-8334 Windwalker Group Herby Duverne (617) 797-9316 Zurich American Insurance Company Steven Megee (774) 210-0092

Massachusetts Auto Dealer

AUGUST 2019

The Roundup

Compliance Update: Sleepy’s; Paid Leave; Doc Prep Fees By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers

Sleepy’s Aftermath Continues – What Have You Done? By the time we hit the end of August, it will be 115 days since the Massachusetts Supreme Judicial Court (SJC) issued its disruptive decision in Sullivan v. Sleepy’s LLC, overturning almost twenty years of state regulatory guidance on the payment of overtime wages owed to 100% commission paid salespeople. During that time, what have you done moving forward to make sure your dealership is in compliance with the new Sleepy’s rules? As a refresher to what we previously have written, the SJC, our state’s highest court, issued its Sleepy’s decision on May 8 in which the court concluded: • Draws and commissions cannot be retroactively allocated as hourly and overtime wages and Sunday pay, even if these draws and commissions equaled or exceeded the minimum wage for the employees’ first forty hours of work and one and one-half times the minimum wage for all hours worked over forty hours or on Sunday. • Employees are entitled to separate and additional payments of one and one-half times the minimum wage for every hour the employees worked over forty hours or on Sunday. Last month, your association briefed Governor Charlie Baker, Speaker Robert DeLeo, and Senate President Karen Spilka on the issue and what it means to our members’ dealerships. Other affected industries have done similarly. There has been a legislative proposal presented to legislaAUGUST 2019

Massachusetts Auto Dealer www.msada.org

tive leaders to address the problem. If a legislative solution were to come about, these three leaders would be instrumental in effecting the fix. Further, your Association has been supportive of the legal activities of ongoing litigation that pre-dated Sleepy’s but which involved many of the same issues addressed in that decision. Arguments proffered to the court in this dealership litigation directly attack the conclusions the SJC put forth in Sleepy’s. Regardless of how these arguments are resolved in the dealership litigation, this will all end up in the SJC’s lap again as the losing side will be sure to challenge the lower courts’ decisions. In the meantime, we have advised dealers to act immediately to review their operations and make the necessary adjustments. • As of now, it is imperative going forward that dealerships pay any 100% commission-paid employees $18 per hour, separate and apart from their commissions, for any time worked over 40 hours in a workweek or on Sundays. If you are paying a recoverable draw each week, make sure that draw covers at least the number of hours worked (up to 40) multiplied by the current minimum wage of $12 per hour. Do not use a draw to cover OT hours or Sunday pay. That said, the more conservative course, at this point, would be simply to pay, separate and apart from commissions, minimum wage for all hours up to 40 each week, issue a separate and additional check to cover payments of one and one-half times the minimum wage for every

MSADA hour the employees worked over forty hours or on Sunday, assessing its effect on employee compensation and adjusting commission structures as necessary. (The Sunday pay issue is complicated by legislative error in last year’s Grand Bargain; without wasting time and space here explaining it, pay any Sunday hours worked at time and one-half.) • Dealerships need to do a complete review of their pay plans with competent counsel and beef up their in-house recordkeeping to avoid wage-hour liability moving forward: (1) require the keeping of accurate time cards at your stores; always require employees to record their hours worked; (2) monitor overtime hours worked and consider implementing an overtime approval process; and (3) always pay employees for all hours worked. Write clear, specific, detailed pay plans for each job position. Focus with clarity on the terms used in those plans (hourly rate, regular rate of pay, etc.). • We have also recommended that dealers should consider looking at what OT they paid to 100% commission paid salespeople since May 8 to the date when the pay plan was fixed using commissions and a recoverable draw and provide those salespeople a separate check for those OT hours, as dictated by the Sleepy’s ruling. In this manner, a dealership could potentially eliminate any liability associated with the new Sleepy’s rule issued post-May8. As the days get yanked off the calendar, the lawsuits continue to pile up. Prior to the Sleepy’s decision there were seven dealership-related cases in state court regarding the compensation of 100% commission-paid employees. Since that decision, as a direct result of plaintiffs’ attorneys soliciting dealership employees, including posting such solicitations throughout all social media sites, as of this writing there are approximately 60 dealership-related cases filed and eight others involving furniture retailers. This list will continue to grow unabated as the plaintiffs’ attorneys troll the ranks of cur-

rent and former dealership employees to feed at the litigation trough. We cannot say this enough – If dealers do anything this month, review your pay plans, make the necessary adjustments, and keep a closer eye on all hours worked so that prospective liabilities can be eliminated.

State Paid Family and Medical Leave Program Contributions Start October 1 As part of last year’s “Grand Bargain” law signed by Governor Charlie Baker, the state is implementing a paid family and medical leave (PFML) program funded with employer and employee contributions (as first detailed in MSADA Bulletin #31/2018). Beginning in 2021, PFML will provide temporary income replacement to eligible workers who are welcoming a new child into their family, dealing with a serious illness or injury, caring for an ailing relative, or dealing with complications resulting from the military deployment of a family member. The program is funded by payroll-based contributions from employers, employees, and certain contract workers. This year, based on requests of the business community to delay the start of the contributions because neither the state nor the business community were properly prepared for the program’s implementation, Governor Baker on June 14 signed into law legislation that delayed the employer contribution provision of the law by three months to October 1, 2019. Well, that day will soon be upon us. Please read below to see how this delay will affect you and your responsibilities under the law. Required Withholding Now Starts on October 1, 2019: The start date for required PFML contributions is now October 1, 2019. On that date, employers must begin withholding PFML contributions from employee qualifying earnings. Employers will be responsible for remitting employee and (if applicable) employer contributions for the October 1 to Decemwww.msada.org

ber 31 quarter through MassTaxConnect by January 31, 2020. Contribution Rate Change: The PFML law requires that the Department adjust the contribution rate to offset the shorter period for collections that will result from the three month delay. As a result, the total contribution rate has been adjusted from 0.63% to 0.75% of employee qualifying earnings. This adjustment will ensure that full funding will be in place for the commencement of benefit payments in January 2021. Timeline Extended for Required Employee Notices: Employers now have until September 30, 2019, to notify all covered individuals of their rights and obligations under PFML. Check the Department website at mass.gov/pfml in the coming days for updated notices to provide to your workforce. Timeline Extended for Exemption Applications: Employers that offer paid leave benefits that are at least as generous as those required under the PFML law may apply to the Department for an exemption from making contributions. Employers will now have until December 20, 2019, to apply for an exemption that will excuse them from the obligation to remit contributions for the full period commencing with the October 1 start date. PFML Regulations Will Be Final And Effective on July 1, 2019: The final regulations were posted on the Department website at mass.gov/pfml on Monday, June 17, 2019. The regulations were formally published under the title 458 CMR 2.00 DEPARTMENT OF FAMILY AND MEDICAL LEAVE. To learn more about PFML, including information about how this new program impacts your organization, more background on exemptions, and details on contribution levels, please visit mass.gov/ pfml.

Doc Prep Fees Governor Baker loves to do radio programs and answer callers’ questions. Recently the governor fielded a call regardMassachusetts Auto Dealer

AUGUST 2019

The Roundup ing the doc prep fee a dealer charged this particular caller; the caller was upset as to the amount, which he seemed to think was excessive. The governor promised to look into the issue – not a good thing to now have to worry about in this age of extreme government intrusion. As you all well know, one aspect of your business that is consistently under the microscope of consumer advocates is the documentary preparation (“doc prep”) fee charged by dealers. Every couple of years the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR) conducts a survey of the doc fee charged by franchised new and used automobile dealerships in Massachusetts. The results of these surveys are always reported by the press. And as sure as the press writes about it, legislators will propose a new law to cap the fee at some unrealistic amount. Over the last several sessions we have defeated bills that would cap the doc prep fee at $75 and $100. As part of your Association’s compliance program, we issue bulletins and other similar writings as a reminder as to what the documentary preparation fee is all about. In addition to the scrutiny the doc prep fee receives from legislators, regulators, and the media, consumers and your own sales people generate confusion and questions about the fee. For example, over the course of the year how often have your salespeople heard the following: “Why are you charging me a documentary preparation fee, and why is it $(fill in the blank)?” More importantly, what does your sales team tell your customers? That can be the really scary part of the story. Every Motor Vehicle Purchase Contract (the “Purchase and Sale Agreement”, socalled) we’ve seen has a line earmarked for “Documentary Preparation Fee.” A “doc prep” fee is charged by dealers to offset the costs incurred by a dealer in processing various paperwork associated with a sale. In Massachusetts, the fee is not to be used to provide additional profit to the dealership on the sale of the vehicle. Although this is one item that really AUGUST 2019

has not yet received much scrutiny from Massachusetts legal authorities, various state legislatures across the country have gone so far as to statutorily set a cap on the fee. Also elsewhere, attorneys general and plaintiff attorneys have commenced legal action under their states’ consumer protection laws in response to absurdly high “doc fees” being unfair and deceptive business practices. In 2015, the South Carolina Supreme Court upheld a $3.6 million trial court award against a franchise dealership in a class action lawsuit regarding the dealership’s $299 “procurement fee” (aka doc prep fee). The Court found that, although the dealership can charge the fee as a means of reimbursing the dealer for overhead costs such as document preparation and retrieval incurred during the transaction, the dealership could not justify the $299 fee amount that it charged consumers. While this case is not binding in Massachusetts, the allegations and award should be enough to get the attention of Massachusetts dealers as well as dealers in other states that do not have a fee set in statute or regulation. Dealers need to practice restraint and discretion when setting the fee so as to avoid prosecution or lawsuits under the Massachusetts Consumer Protection Act (MGL Chapter 93A). The fee is allowed for cost recovery; it is not intended to be a “profit-making” component of the vehicle purchase. The “Documentary Preparation Fee” can be passed on to the consumer but only if it is (1) part of the total purchase price advertised to the customer, and (2) a fee associated with legitimate costs that you incur. There is no maximum amount set in law that a dealer can charge for “doc fees.” However, you must make sure that any doc fee charged to a customer has some reasonable relationship to the actual costs you incur in preparing the necessary documents for the customers, except for titling and preparation of finance-related documents, as explained below. Cost recovery consists of passing on to the customer the costs incurred in doing

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the following: for example, preparing a P&S, an appraisal document, odometer statements, insurance verifications, etc.; storing or archiving documents; and personnel and computer costs associated with these tasks. Two items that may never be included in the “doc prep” fee: (1) preparation of the Retail Installment Sales Contract cannot be part of the fee’s calculation as you would then need to wrap it into the APR calculation; and (2) if you are on the EVR system, you cannot include the EVR fee in the “doc prep” fee. “Doc fees” charged to customers should be uniform in amount. If you are aggregating your costs and apportioning these costs to each of your customers on a pro rata basis, excluding a customer will throw the formula off and strengthen a customer’s argument that the fee is arbitrary. Be sure you can justify the fee’s total amount that you are charging a customer on the P&S. (You are not, however, required to put an itemization on the P&S. It is sufficient to have an explanation available if you are asked by a customer to justify the “doc fee.”) Dealers must also NEVER represent to customers that any portion of the “doc prep” fee is required by or remitted to the RMV or any other state agency. Furthermore, dealers must note that the “doc prep” fee cannot have anything to do with the Title Preparation Fee. The Title Preparation Fee (which is on a separate line on the P&S) has been capped by the Legislature at $5. You cannot charge a titling fee higher than $5, nor can you roll your costs above the $5 into the doc prep fee. Any cost you incur in preparing or procuring title above the $5 amount CANNOT be passed on to the consumer other than through the gross profit earned on the vehicle. Finally, beginning in January 2014 as a result of a ruling from the Massachusetts Department of Revenue, the doc prep fee is part of the taxable amount of the vehicle sale transaction. In short, if you are charging a “doc fee,” be sure you can justify the amount and

MSADA charge every customer the same amount. Do NOT charge anyone a title preparation fee higher than $5. Be sure the fee is part of the transaction’s sales taxable amount. Finally, in order to assist you in explaining the need for the “doc prep” fee to your customers, your Association has developed a brochure you can provide to them. A sample brochure can be obtained at the MSADA website [www.msada.org] with your member log-in. Once you login, go to “Members Only”, and then go to “Compliance Resources”, where you will find the link for the brochure. If you want to use this as a template and print these for yourself, customized for your dealership, DO NOT CHANGE the content.

MSADA Dealers Hall of Fame, October 2-4, Chatham Bars Inn Your Association cordially invites you to attend the second annual induction of our honorees for the Massachusetts Auto Dealers Hall of Fame, October 2-4, 2019, at the Chatham Bars Inn on Cape Cod. The MSADA Board of Directors, based on nominations made by you – our member dealers – elected the following five individuals to represent our 2019 class in the Hall: William DeLuca III James Hurrell Rick Mastria, Jr. Ira Rosenberg John S. Sarat Over the 79-year existence of our Association, thousands of individuals and their families have contributed to build what our industry is here today in the Commonwealth – economic activity at franchised dealerships represents almost 20% of the retail economy in our state, while employing over 25,000 men and women at your stores from the Berkshires to the outer tip of Cape Cod, on up to the Merrimack Valley. A successful, substantial industry just does not pop up overnight. It takes commitment, imagination, dedication, and a certain amount of luck and pluck. At the same time, dealers across this great country have been known to be the most giving benefactors to charitable

causes of all stripes – from the local Little Leagues and soup kitchens and food pantries, on up to building orphanages and hospital wings. To celebrate the success of our industry in Massachusetts, your Association is excited to announce the unveiling of the second class of the Massachusetts Auto Dealers Hall of Fame. To help celebrate this ceremony with our honorees and their families, we invite you to attend the events at the Chatham Bars Inn. Please use the registration materials we have sent you. Your Association will pick up the cost of our member dealers’ hotel room during their stay. Your Association is humbled to honor these five individuals who played a vital role in building and strengthening our industry in Massachusetts. We are looking forward to celebrating their induction with their families and you – our member dealers who helped create the honorees list. Should you require additional information, please do not hesitate to contact me.

Right to Repair Redux The RTR proponents are up their old tricks again, filing another initiative petition to alter the RTR landscape set in law in 2013. This time around the RTR coalition, consisting of big box and local independent repair shops and the aftermarket parts industry, want to repeal the exemption given to the factories’ telematics technologies in the 2013 law and have direct access to proprietary communications flowing between the vehicle, the car owner, the factory, and the dealer. (The initiative petition is on top of 14 RTR bills that are filed for the current legislative session.) The process began earlier this month with the filing of the petition with the state Attorney General for her review and certification. Your Association and the factories filed comments arguing that the petition should not be certified based on the parameters within the state constitution and recent state court rulings. We will have more on this issue in next month’s magazine as the process unfolds. Needless to say, this will be yet another www.msada.org

disruption the RTR community is attempting to throw into our franchised dealer model, which will be fought vigorously by your Association and the factories.

NADA Washington Conference – September 15-17 Each year NADA organizes its fly-in of dealers and state association executives from around the country in order to lobby Members of Congress on issues important to the franchised auto retail industry. Your Association brings a hardy group of dealers to press the flesh and advocate for dealership issues with our nine House members and two Senators. This year’s event will occur on September 1517. NADA and your Association pick up the travel expenses of our member dealers to attend. If you are interested in being a part of our traveling delegation and seeing first-hand how Congress works (or does not work – that whole “We the People…” thing seems to be have been set aside down there), please email me at rokoniewski@msada.org and we will get you registered. Also feel free to contact me should have any questions. We look forward to hosting you for this event.

Mass. TIME Dealer of the Year, Ray Ciccolo MSADA proudly announces that Ray Ciccolo of the Village Auto Group in Boston has been selected as the Massachusetts 2020 TIME Dealer of the Year Award winner. The TIME DOY award recognizes new vehicle dealers across the country for exceptional performance in their dealerships, combined with distinguished community service. Ray will represent Massachusetts in the National competition, which will take place at the upcoming NADA Convention in Las Vegas, February 14-17, 2020. It is the highest honor bestowed on a dealer each year at the NADA Convention. Your Association also honored Ray last year as part of the inaugural class of the MSADA Auto Dealers Hall of Fame. Congratulations to Ray, and good luck on the national stage next year! t Massachusetts Auto Dealer

AUGUST 2019

LEGAL

MSADA

By Joseph W. Ambash and Jeffrey A. Fritz

Employers Cannot Retaliate Against Employees for Filing Lawsuits Against Them

Massachusetts auto dealers and other sales-based employers are being sued at a feverish pace in light of the Supreme Judicial Court’s ruling in Sullivan v. Sleepy’s LLC. This decision upended almost twenty years of administrative guidance from the Department of Labor Standards, upon which employers relied in drafting their employees’ pay plans. Accordingly, these lawsuits — seeking additional overtime going back three years, automatic treble damages, and attorneys’ fees and costs — are completely unfair and, assuming Sleepy’s is determined to apply retroactively, clearly would lead to inequitable results, injustice, and undue hardship for Massachusetts employers. Lawsuits are often brought by former employees looking to get back at their employer for any number of reasons, including just lining their own pockets (and those of their attorneys). Sometimes, however, these lawsuits are brought by current employees. While an employer may view this (or any other) lawsuit as the unfair, unjust, and expensive proceeding it clearly is, and (understandably) may view the person perpetrating the lawsuit as being the cause of this unfair, unjust, and expensive proceeding (which s/he, in part, is), it is very important to resist any urge to retaliate against the employee in any way. While the employee’s actions, especially under these circumstances, may seem like a betrayal, retaliating against him or her for filing the lawsuit can only compound the problem. The filing of a lawsuit, even one as inequitable as one based on the Sleepy’s decision, is “protected activity,” which means it is activity the law protects from retaliation. Accordingly, if an employer retaliates against an employer for engaging in protected activity, even assuming the employee ultimately loses the lawsuit, that is a separate wrong and, under the Massachusetts Wage Act, will expose the employer to lost wages, automatic treble damages, and attorneys’ fees and costs. Retaliation is not limited to termination, AUGUST 2019

but includes all “adverse employment actions.” In the retaliation context, an adverse employment action can be any action that would deter or dissuade a reasonable worker from engaging in protected activity. This may include, of course, terminating an employee’s employment, denying an employee a promotion, and refusing to hire an applicant. It also may include threats, unjustified negative evaluations, and increased surveillance. Petty slights and annoyances or stray negative comments, however, usually do not rise to the level of actionable “adverse actions.” That said, regardless of the nuances of the legal definition, managers never should take any action against an employee because s/he engaged in protected activity, nor make any negative comments about such protected activity. To prevail on a retaliation claim, employees ultimately must prove causation - that is, that they experienced an adverse employment action because they engaged in protected activity. Employees generally attempt to prove causation by two methods: (1) direct evidence (i.e., comments by managers demonstrating causation) and (2) circumstantial evidence. The most common type of circumstantial evidence used to support retaliation claims is that of timing. The more strong the temporal connection, the more strong the retaliation claim. Does this mean employees who file lawsuits are untouchable? Absolutely not. Just as their protected activity should not form the basis of any adverse action, it need not form the basis of foregoing adverse action when the circumstances warrant (obviously, for reasons having nothing to do with the lawsuit). That said, you need to ensure that any adverse action be independently warranted (and well-documented). In other words, you need to ensure any adverse employment action is taken only for legitimate, demonstrably non-retaliatory reasons. Understandably, it may be impossible to forget about who filed the lawsuit, and likely very difficult not to think about the

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lawsuit when thinking about the employee. That said, an employer would be wellserved to divorce the two as completely as possible, and go about the business of employing that individual as if the lawsuit did not exist. Do not terminate an employee’s employment because s/he filed a lawsuit. Do not change an employee’s schedule because s/ he filed a lawsuit. Do not do anything to make an employee’s job more difficult because s/he filed a lawsuit. Do not treat the employee differently in any way because s/he filed a lawsuit. From an employment law standpoint, do not do anything because the employee filed a lawsuit. Do continue to discipline employees for legitimate, non-retaliatory reasons, but make sure any such decision is completely independent of the lawsuit, such that you would have made it had the lawsuit never been filed, and that it is well-documented and consistent with past practice. Before disciplining an employee who has engaged in protected activity, it is best to consult competent counsel for guidance. And make sure neither you nor your managers make any negative comments to the employee about the lawsuit. Such comments invariably would be used to try to create the illusion of retaliation in the event of legitimate discipline. t

Joe Ambash is the Managing Partner and Jeff Fritz is a partner at Fisher Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They can be reached at (617) 722-0044.

Troubleshooting

MSADA

ADA Shakedown Targets Website Accessibility By Peter Brennan, Esq. MSADA

Staff Attorney A new legal shakedown aimed at businesses is gaining popularity among unscrupulous members of the plaintiffs’ bar throughout the country, and dealerships have not been spared. Typically, the con begins like this: The dealer receives a demand letter from a group called “Legal Justice Advocates” or something similar. The letter claims that the dealership’s website is not compliant with the Americans with Disabilities Act (ADA) due to alleged “screen reading software” capability discrepancies with the dealer’s website. The letter includes a threat that the dealer will be sued for several violations of the ADA because the client was unable to use “ChromeVox” screen reading software or a similar program when accessing the dealer’s website. The letter offers to settle the claims for a large payment and a promise to fix the website issues. While some activists claim that the lawsuits are improving life for the disabled, anyone on the receiving end of one of these demand letters might think it feels like legal extortion. Website accessibility lawsuits filed in federal court increased exponentially between 2017 and 2018. Under the ADA, either an individual or an advocacy organization can file a lawsuit against a business for violations of the Act. The plaintiff in such a case is limited to seeking injunctive relief and attorney fees, but the Department of Justice can bring an enforcement action and seek compensatory damages for victims and civil penalties. The attorneys pushing this scam typically find one “victim” and use that person’s legitimate disability to coerce businesses

into paying thousands of dollars in legal fees, often sending hundreds of the same letters (or hundreds of the same lawsuit) in the disabled person’s name. Under the statute, the plaintiff cannot be awarded damages in these private actions, but the lawyers can and do profit from the statutory award of attorney fees. Title III of the ADA prohibits discrimination on the basis of disability in the activities of places of public accommodations and requires newly constructed or altered places of public accommodation—as well as commercial facilities (privately owned, nonresidential facilities such as factories, warehouses, or office buildings)—to comply with the ADA Standards. [42 U.S.C. § 12182(a)]. While Title III is complex, the rules are known to all and can be easily incorporated into the design of a business’s physical location. In contrast, the application of ADA

Without specific guidelines, it is nearly impossible for a dealership to know what features to include to make a website accessible access standards to websites is not explicitly stated in any federal law, rule, or regulation. Consequently, it has thus far fallen to the courts to decide what constitutes ADA compliance when dealing with website design. Without specific guidelines, it is nearly impossible for a dealership or even a website developer to know what features to include to make a website accessible. Frequently, the demand letters will quote the web accessibility standards contained in the Web Content Accessibility Guidelines (“WCAG”) established by the World Wide Web Consortium (“W3C”) – a group of volunteers that develop internet guidelines for accessibility. WCAG 2.1, the most recent guideline, was published on June 5, www.msada.org

2018. These guidelines are not issued by any federal regulatory authority and carry no actual legal weight. Even if a business can illustrate compliance with the WCAG, these guidelines are unenforceable and will not provide the business with a safe harbor. Unscrupulous members of the plaintiffs’ bar have entered the fray in recent years to exploit this legal grey area. In the absence of clear federal guidance, courts have issued scattershot rulings; in some cases different district courts within the same federal circuit have issued contradictory rulings on the subject. In one case that is frequently cited by these “disability advocates”, Gil v. Winn-Dixie, a federal court in the Eleventh Circuit held that the supermarket chain violated the ADA because sight-impaired customers could not adequately access the site and held that the website must comply to the standards of WCAG 2.0. A petition for writ of certiorari has been filed to the Supreme Court in a similar case, Domino’s v. Robles, presenting the question: “Whether Title III of the ADA requires a website or mobile phone application that offers goods or services to the public to satisfy discrete accessibility requirements with respect to individuals with disabilities?” NADA has been in contact with the U.S. Department of Justice on this issue and has suggested that dealerships discuss accessibility with their website vendors, OEMs, and legal counsel to better understand if investments in website accessibility will lead to increased business opportunities and/or reduce the potential for legal liability, legal costs, and/or negative publicity. If you receive a demand letter like the one described above, contact the MSADA legal office for guidance. t If you have a question on this or any other legal topic, please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@msada.org, or Peter Brennan, MSADA Staff Attorney, pbrennan@msada.org, or by phone at (617) 4511051. Massachusetts Auto Dealer

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AUTO OUTLOOK

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AUTO OUTLOOK

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RACE TO THE FINISH COVER STORY

MSADA Hall of Fame 2019 Class

By Jeff Breeze

With Babe Ruth, Ty Cobb, Christy Mathewson, Walter Johnson, and Honus Wagner leading the way, everyone remembers the first class of the Baseball Hall of Fame. They are icons whose names still resonate in stadiums more than 100 years after they were playing baseball. However, it is the second class in 1937 that really showed what the Hall was for as they inducted executives and innovators in addition to a few players. While Morgan Bulkeley and Ban Johnson established the National League and American League, respectively, their names wouldnâ&#x20AC;&#x2122;t be recalled so readily without an institution like this to celebrate their achievements. Similarly the names that made the inaugural class of the MSADA Hall of Fame were the heavy hitters, names that transcended the automotive dealership business and were ubiquitous in their impact across the state. Balise, Boch, Ciccolo, Connolly, and Fuller provided a bedrock for car dealers everywhere, and now they are the foundation upon which the Hall of Fame is built. This yearâ&#x20AC;&#x2122;s class brings another batch of people into the Hall who have spent their lives working to further the cause of car dealers across the Commonwealth, even including a non-dealer who played a major role in strengthening the industry and the Association for over four decades. All of the class have contributed directly to MSADA in addition to their work within their local communities. Please join us in celebrating the class of 2019 at the Chatham Bars Inn from October 2-4.

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MSADA John S. Sarat Sarat Ford Lincoln

In March 1929, John Sarat established a partnership with Everett Jasmin for the sale of automobiles, and they opened their new enterprise at 274 Springfield Street in Agawam. The Great Depression hit months later. When the car market slumped and capital was short, he bought out his partner and assumed full ownership. He manned the gas pumps, and attended to mechanical and business details, making Sarat one of Agawam’s first successful automobile pioneers. Born in Ludlow, he and his family moved to a farm in Southwick. His father died while he was young so Sarat had to help support the family. His son Jack Sarat, Jr. said, “Farm work was too hard with too little reward, so he took up with a local mechanic and learned the ins and out of cars before he started his own shop.” “When the war came, he closed up the business. He figured that there were no cars to sell, and there wasn’t even gas to fill cars with,” Sarat, Jr. added. Instead, he enlisted in the Army, but near-

ing 40, he never saw combat, only making it as far as California where he attained the rank of staff sergeant with the 548th Ordnance Group. When he returned to Agawam he reopened the business and began making larger strides. Sarat stopped getting cars from local dealerships when on February 3, 1955, he was awarded a direct franchise by Ford Motor Company. “At the time, they called it ‘the four-letter franchise,’” Sarat, Jr. laughed. “He built what was then a state-of-theart, and now considered antique, facility with a showroom and service areas and offices.” In 1972, he handed the day-to-day operations over to his son. Sarat continued to work at the dealership until he had a stroke at 87 and would continue to be a presence up until his death in 1996. Today it is his son Jack Sarat, Jr. along with his three grandchildren Jeff, Chris, and Scott Sarat who are in charge of the legacy, a legacy which now includes not only two state-of-the-art facilities in Agawam with Sarat Ford Lincoln, but also Ford of Northampton located in Northampton, Mass., and another soon-to-be state-of-the-art facility at Family Ford of Enfield located in Enfield, Connecticut.

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AUGUST 2019

RACEHall TO THE FINISH 2019 of Fame Ira Rosenberg Ira Motor Group

Defining a legacy that extended over two different dealership enterprises is never an easy thing to do. However, when asked what Ira Rosenberg would like to be remembered for, his son Brian Rosenberg, Director of Marketing at Prime Motor Group, was quick on the draw. “I can tell you exactly because as a tribute to my dad we placed a memoriam in Automotive News. It said, ‘Love Your Customer, Love Your Work Family, and Give Back to the Community that Made You Successful in the first place,’ which was his mantra. My dad always wanted to make sure that he was making a difference and impacted people’s lives. That’s what he wanted to do so we also wrote in that ad, ‘Thank you for the positive impact you’ve had on so many lives’ because I don’t think he realized just to what extent he affected so many people.” Ira Rosenberg died this past March and was the consummate car dealer to the end. He created the Ira Motor Group, and, af-

ter retiring and selling that business, he got back into the game with a series of dealerships in Maine that he merged with his son David Rosenberg’s Clair Auto Group to form Prime Motors. Only after 60 years in the business did he finally retire for good in October of 2017. Rosenberg grew up in Malden, Massachusetts, and began his career in 1960 changing tires in a used-car lot at job at Porter Chevrolet in Cambridge. He soon saw the automotive industry as his ticket to success, graduating to the showroom floor where he sold his first car at Sea Crest Cadillac Pontiac in Lynn in 1970. Soon he opened up a used car lot in Salem “with two borrowed used cars and my last paycheck of $140.” In 1975, he bought his first Toyota dealership, and he would go on to buy several dealerships, acquiring seven in Danvers, all within a half-mile of each other. By the 1980s, he had created the Ira Motor Group.

William DeLuca III

Bill DeLuca’s Woodworth Chevrolet Cadillac Bill DeLuca is part of an automotive legacy, working at his father’s store from the age of 12. When he graduated from the University of New Hampshire, his father moved out of the office, and DeLuca has been at Woodworth Chevrolet Cadillac ever since. He served as two terms as the MSADA President and was the state’s 2011 TIME Dealer of the Year award winner. “When I graduated from college, my dad asked me, ‘what did I want to do?’” DeLuca didn’t need to think twice. “I said, ‘I want your job.’ He said, ‘fine,’ and cleaned out his desk at the dealership and gave me keys to the company.” DeLuca’s father started in the used car business but eventually became a new car dealer, initially for Dodge, then for Chevrolet and Cadillac. Today, it is DeLuca’s oldest son Bill who runs the family’s three Haverhill-based dealerships. DeLuca is also president of Auto Auction of New England, in Londonderry, NH, and chairman of the Bank of New England, in Salem, NH, which he co-founded with his father in 1995. DeLuca has made a great impact in the area of community service across the Greater Lawrence and Southern New Hampshire region. Known for serving as President of Cobbetts Pond AUGUST 2019

Improvement Association, a football coach for over 20 years, and as a Kiwanis Club member, it is his work with the Greater Lawrence Boys and Girls club since 1978 where he made his biggest impact. “My family’s most meaningful achievement is having headed up the capital campaign for a state-of-the-art Boys and Girls Club in Lawrence,” says DeLuca. “We kicked off the campaign with a donation of $1,000,000 to get the campaign rolling.” A freak accident during Hurricane Sandy when a tree fell on a vehicle while he was in the passenger seat changed things for DeLuca, but he’s still deeply involved while his children are actively managing his stores. “Unfortunately, I’m not able to be as hands on as I’d like to be, but with today’s technology I’ve got cameras and emails and phones, so I’m there 100%.” DeLuca is proud of his career and still operates with a simple set of guiding principles: “Humble. Hard Working. Family.”

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MSADA James Hurrell

Legislative Agent-Consultant The presumption was that the MSADA Hall of Fame would fill its ranks with dealers who have made an impact on the market and their communities. With the naming of Jim Hurrell in this second class, the doors are shown to be wide open to different contributors to the industry and the Association. Hurrell never sold cars and never worked in a dealership, but the impact that he helped make improved the standing for all dealers across the Commonwealth. Hurrell has been a lobbyist on Beacon Hill and worked on behalf of MSADA for 42 years. When he began his lobbying/ consulting business, he had already worked for the Senate president, served several terms as the state representative from North Andover and Lawrence, and had established connections with many of the state”s most active and powerful legislators. “I’ve always worked very diligently on behalf of the dealers and the entire industry on Beacon Hill. I was involved in government affairs work for 42 years. For the most part it was just

myself and the dealers, and then recently they have put more people on,” Hurrell said. Adding that while he may have been the most common face in the corridors of the State House, he was working with and for all dealers. “Nobody can do the whole thing; it has to be a big team effort. I got a lot of credit when the bills went through, but the bottom line was it was a team effort all of the way. We never had any real negative publicity or statutory problems, which I’m rather proud of, as well.” While Hurrell has retired from lobbying, he is staying busy with four companies that he is running these days. Surprised to find himself inducted in this year’s class, he’s genuinely proud of the work that he’s done and glad to have made an impact on the industry in the right way. “I am very grateful and humbled by the recognition I am receiving from the dealers. During my years, the most important part was I provided good, solid representation for the dealers,” Hurrell said. “I don’t think you can pick a single issue: is the sales tax more important than something else? I gave them good, full-time representation. We always reacted when it was necessary, and we were always prepared for debates.”

Rick Mastria, Jr. Mastria Auto Group

Rick Mastria was a new member of the MSADA board when the Association started making a real impact. He bounced around from chair to chair over the years, eventually becoming the President, and was named TIME Magazine’s 2010 Dealer of the Year in Massachusetts. Now with 25 years under his belt working with MSADA for the betterment of all the dealerships across the Commonwealth, he’s the youngest member of the Hall of Fame. “I’m very humbled by it. I’m lucky enough to have won a lot of awards and be recognized by franchises, for one thing or the other whether it is years of service or being on dealer councils,” Mastria said. “It’s a completely different thing when you are nominated by your peers. It seems to me that this holds a different place. This is more to the character and the fellow dealer that you’ve been with folks you compete with and help within the state.” Mastria is President of the Mastria Auto Group. He’s the third generation of automobile dealers in his family. After learning from his father, he became a Buick dealer at age 25. Today he has Nissan, Cadillac, Buick, Mazda, Volkswagen, and

Subaru under his roof, and his primary responsibility is directing the future business planning for the auto group. He prides himself on a management style that gives each manager as much autonomy as they need so that they, too, can grow and learn the business. He did not expect this honor, especially not at this point already, while he is still working full time, but he’s very proud to join the ranks of some of the best automobile dealers the state has ever seen. “The first class was some real legends who helped make Massachusetts what it is for the dealer organization,” Mastria said. “But I think as it goes forward, it will be more about the people and what they contributed to the Association.” As someone who has contributed to both the local community in Raynham and to the greater welfare of dealerships across the state, Mastria now finds himself in company right where he belongs.

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AUGUST 2019

NEWS NEWS the NEWSfrom from Around Around the Horn Horn from Around

NEWS the Horn MSADA

MSADA

DEDHAM

Prime Sues GPB For Ponzi Practices In a complaint filed in Norfolk Superior Court on July 25, David Rosenberg, chief executive of Prime Automotive Group, accused the New York investment firm GPB Capital Holdings of running a Ponzi-like scheme, in which it used money from investors to prop up the performance of auto dealerships it owns, as well as to finance payments to other investors. The lawsuit alleged that GPB executives and attorneys “were engaged in extensive efforts to cover up the misconduct in order to lull the investors in the GPB funds into thinking that their investments were safe and that any losses were due to legitimate business events rather than their own misconduct.” The case was triggered, the lawsuit said, when GPB Capital failed to pay Rosenberg $5.9 million on July 1 as part of its buyout of Rosenberg’s stake in a fund that is behind the purchase of dozens of dealerships. Rosenberg said GPB Capital withheld the payment in retaliation for his allegations of misconduct in the company’s financial operations. Rosenberg’s suit said he passed on those allegations to the Securities and Exchange Commission and the FBI. Automotive News reported that the FBI and officials from a New York City agency searched GPB Capital’s offices in February. A representative for GPB claimed that the suit was a “simple contractual issue between Mr. Rosenberg and the defendants” over the remaining payments owed to Rosenberg for his stake in the dealership fund. “The remaining allegations are inflammatory and not relevant to the action, and the company intends to defend the lawsuit on the merits.” Since 2006, Rosenberg ran Prime Motors, with 30 dealerships in Maine and Massachusetts, along with his father, Ira. The elder Rosenberg retired in October 2017 and died in March. In 2017, David Rosenberg sold a majority stake in Prime Motors to GPB Capital for $235 million. The subsidiary set up for the dealerships, GPB Prime, is the 11th-largest dealership group in the country and began investing in auto dealerships in 2013 and by 2017. After purchasing a majority stake in Rosenberg’s dealerships, GPB Capital asked Rosenberg to run GPB Prime Automotive Group. But Rosenberg said the heads of the investment firm earlier this year tried to push him out after he alleged that the investment group was making moves to inflate dealership values and profits beyond what they really were. He also accused GPB with creating fake contracts and adopting deals that benefited the heads of the investment fund rather than investors. A year ago, the suit said, an accounting firm hired to audit the investment firm’s books resigned and said it was withdrawing its opinions that had given the firm a clean bill of financial health for 2015 and 2016. The suit said the accounting firm withdrew because it had found “numerous undisclosed and inappropriate” transactions to benefit top GPB Capital executives. Rosenberg alleges that GPB Capital officials lied to brokers about the reasons AUGUST 2019

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for the accounting firm’s resignation. At a meeting in June of the top managers of GPB Prime, the entity that ran the dealerships, Rosenberg said that carmakers and lenders might end their relationships with the dealerships over the allegations. He further warned that dealerships had breached the rules on their loans and were at risk of losing funding because GPB Capital had not completed its audit, the suit said. SPRINGFIELD

Cosenzi Drives Past $1 Million for Jimmy Fund On August 19, at both Twin Hills Country Club and Elmcrest Country Club, the Tom Cosenzi Driving for the Cure 11th Annual Charity Golf Tournament crossed the $1 million level in support of Dana-Farber Cancer Institute. The annual Tournament, co-founded by Carla and Tommy Cosenzi, honors the legacy of their father, Tom Cosenzi, who passed away from a glioblastoma in 2009. Players enjoyed 18 holes of golf at one of the area’s top premiere private golf courses, a delicious lunch, exciting on-course activities, an evening cocktail reception with live entertainment from Noah Lis, a gourmet dinner, amazing raffle prizes, and silent and live auctions. This year, JM&A Group joined as the Presenting Sponsor for the event. “We are delighted to have the support of such a terrific corporation so deeply committed to positively impacting the lives of patients at Dana-Farber Cancer Institute,” stated Carla Cosenzi. Jose Ruiz, New England Region Manager for JM&A, stated, “We are extremely pleased and excited to be part of such a worthwhile event. Not only is it worthwhile, it’s a blast.” Now one of the largest organized golf programs in the U.S., all of the earnings from the tournament have gone to the Jimmy Fund. Specifically, all proceeds support Dr. Patrick Wen and his team of researchers in the Neuro-Oncology Department at Dana Farber Cancer Institute. BROCKTON

Champion Hangs Up the Gloves After more than 30 years in business, Champion Lincoln-Mazda has shuttered its doors. The car dealership ceased operations effective July 12. It’s unclear why the business, owned by Robert Horgan, closed. General Manager Tim Horgan said that he and the family were declining to comment. Calling the business’s phone number brings callers to a pre-re-

NEWS from Around the Horn corded message announcing the closure. “You have reached Champion Lincoln Mazda,” the message says. “I would like to thank all of our loyal customers for their business over the last 31 years and let you know that after a lot of thought, we have decided that this was the right time to sell the business.” The message goes on to explain that Herb Chambers Lincoln in Norwood is now the local dealer for Lincoln customers and Mastria Mazda in Raynham is now the local dealer for Mazda customers. The business also announced the closure on their Facebook: “After 30 years in business we have closed our doors,” the post read. “We have loved being part of your lives.” Last December, the business was honored with an official citation from Brockton City Council for 30 years in business. WESTBOROUGH

“Cars & Coffee” Benefits The Jimmy Fund On August 11, The Herb Chambers Companies, New England’s largest automotive dealership group, hosted its second “Cars & Coffee” event of the 2019 season at its Herb Chambers Ford of Westborough dealership located on Route 9. At the event, more than one thousand car enthusiasts gathered to showcase their pride and joys while admiring the prized hardware of other automotive and motorcycle devotees, exchanging stories about their cars and special experiences along the way. In addition, this was a special “Cars & Coffee” to commemorate August as Jimmy Fund month. As a result, the Herb Chambers team, along with members of the Jimmy Fund team, accepted donations at the event to benefit the Dana-Farber Cancer Institute and The Jimmy Fund. The Herb Chambers Companies is in its 4th year as an official partner of the Jimmy Fund and Dana-Farber Cancer Institute. The next Herb Chambers’ “Cars & Coffee” event is scheduled for Sunday, September 15, at Herb Chambers Lexus of Hingham.

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AUGUST 2019

NEWS from Around the Horn

MSADA

LEOMINSTER

Nancy Phillips Unites Baker and Durand The partnership of Joel Baker, owner of Baker Cadillac in Leominster, and Rick Durand, owner of Durand Chevrolet in Hudson, was announced by Nancy Phillips on August 15. The two dealers have formed a partnership for which Durand is the majority shareholder, and purchased Chapdelaine Buick GMC from Mark and Mike Chapdelaine, to create the new Durand Buick GMC Cadillac dealership in Leominster. General Motors was instrumental in realigning the market area, which will now be supported by a fully brand-compliant facility for each of the franchises. The move represents great forward momentum for all parties. Mark and Mike Chapdelaine will continue to operate their Hino dealership in Lunenburg. Joel Baker has enhanced his top-selling Cadillac franchise with the addition of Buick and GMC. Rick Durand has increased the value of his GM stake in the West Central market area. Every detail of this multi-tiered dealership transaction was orchestrated exclusively by Nancy Phillips of Nancy Phillips Associates. t

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(Left to Right): Bob Macdonald of Bernstein Shur, Attorney for the Transaction; Rick Durand; Nancy Phillips; Joel Baker; Mark Chapdelaine; Mike Chapdelaine; and Jeffrey Wormald, New England Zone Manager for General Motors Buick GMC Division.

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LEGAL

MSADA

By Joseph W. Ambash and Jeffrey A. Fritz

Employers Cannot Retaliate Against Employees for Filing Lawsuits Against Them Massachusetts auto dealers and other sales-based employers are being sued at a feverish pace in light of the Supreme Judicial Court’s ruling in Sullivan v. Sleepy’s LLC. This decision upended almost twenty years of administrative guidance from the Department of Labor Standards, upon which employers relied in drafting their employees’ pay plans. Accordingly, these lawsuits — seeking additional overtime going back three years, automatic treble damages, and attorneys’ fees and costs — are completely unfair and, assuming Sleepy’s is determined to apply retroactively, clearly would lead to inequitable results, injustice, and undue hardship for Massachusetts employers. Lawsuits are often brought by former employees looking to get back at their employer for any number of reasons, including just lining their own pockets (and those of their attorneys). Sometimes, however, these lawsuits are brought by current employees. While an employer may view this (or any other) lawsuit as the unfair, unjust, and expensive proceeding it clearly is, and (understandably) may view the person perpetrating the lawsuit as being the cause of this unfair, unjust, and expensive proceeding (which s/he, in part, is), it is very important to resist any urge to retaliate against the employee in any way. While the employee’s actions, especially under these circumstances, may seem like a betrayal, retaliating against him or her for filing the lawsuit can only compound the problem. The filing of a lawsuit, even one as inequitable as one based on the Sleepy’s decision, is “protected activity,” which means it is activity the law protects from retaliation. Accordingly, if an employer retaliates against an employer for engaging in protected activity, even assuming the employee ultimately loses the lawsuit, that is a separate wrong and, under the Massachusetts Wage Act, will expose the employer to lost wages, automatic treble damages, and attorneys’ fees and costs. Retaliation is not limited to termination,

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AUGUST 2019

BUSINESS

Would You Be Ready If These Proposed FTC Safeguards Rule Changes Become Law? Michael W. Hammond

Principal, O’Connor & Drew

A proposed amendment to the 2003 Safeguards Rule adds more specificity in what is required of financial institutions, including auto dealers. These rules are nothing new to banks, but auto dealers will likely find them burdensome and certainly outside of the core business. These proposed rules, detailed on the Federal Register site (https://www.federalregister.gov/documents/2019/04/04/201904981/standards-for-safeguarding-customer-information) delve into what may be required. Expect a significant cost to be compliant with these, should they pass. Smaller dealerships can expect between $75,000-$125,000 in fees and larger groups may need to budget $250,000-$300,000+. Another major component of the rule will be the effective implementation date. Eight of the fourteen proposed rules will have a delayed effective date as noted below. The remaining proposed areas will be immediately effective. We have summarized each component below and provided OCD Tech commentary containing explanations, advice, and recommendations for each section. 1. Revising the requirement to designate an “employee or employees to coordinate [the] information security program” to require designation of a single individual, referred to as a Chief Information Security Officer (“CISO”), as responsible for overseeing and implementing the program. OCD Tech Comment: This function, if outsourced, could be performed by a company acting in a “Virtual CISO (vCISO)” capacity. Expect to incur significant costs during the initial stages as the time spent by the vCISO will be extended while the program is put in place. If using a full-time employee, this person must have a background in Information Security. Six-month delayed effective date. 2. Adding requirements to institutions risk assessments, inAUGUST 2019

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cluding that the assessments must be written, describe how the information security program will address the identified risks, and be performed periodically. OCD Tech Comment: The risk assessment program must address all the requirements of the Safeguards Program, including the methodology used to determine the risk, the impact to the business, and remediation plans to address any gaps identified. Six-month delayed effective date. 3. Requiring institutions to implement access controls on information systems, as well as restricting access to physical locations containing customer information to authorized individuals. OCD Tech Comment: Based on the assessment to identify the location of consumer financial information, this will require an initial identification of persons who need access and rolling out a program of least privilege. Once implemented, periodic validation through recertification of access will be required. 4. Requiring customer information to be encrypted, both in transit and at rest. At this point, hopefully all laptops and mobile devices are encrypted. The main concern will be desktop machines. The desktop hard drives are not encrypted, and older machines and operating systems may not support full-disk encryption. OCD Tech Comment: This may require an asset management refresh. It should be a consideration to implement this line item over a number of years. Once the data is identified and systems are encrypted, they will not need to be re-encrypted unless they are replaced. 5. Requiring implementation of multi-factor authentication for any individual accessing customer information. OCD Tech Comment: If the customer information has resided solely in the DMS, the DMS provider would have to support multi-factor authentication. Unfortunately, the financial information is often copied out of the DMS and stored locally within the dealership. The next best option is to require multi-factor authentication on each desktop. Hardware and software tokens are available but require setup and maintenance when new employees onboard and old employees leave. Expect to pay between $45-$60 for each physical device per employee that requires 2FA. 6. Requiring information systems to include audit trails designed to detect and respond to security events. OCD Tech Comment: System event monitoring software, such

MSADA as Splunk/LogRhythm/ArcSight can be installed locally, or logs can be sent to an outsourced Security / Network Operations Center (SOC/NOC) for detection and response. 7. Requiring institutions to implement policies and procedures “to monitor the activity of authorized users and detect unauthorized access or use of, or tampering with, customer information by such users.” OCD Tech Comment: System event monitoring software, such as Splunk/LogRhythm/ ArcSight can be installed locally, or logs can be sent to an outsourced Security / Network Operations Center (SOC/ NOC) for detection and response. 8. Requiring institutions to develop procedures for the secure disposal of customer information in any format that is no longer necessary for their business operations or other legitimate business purposes. OCD Tech Comment: Once the procedure is established, third-party providers can come onsite and securely dispose of hard drives from computers that previously contained consumer financial information. If the hard drive is to stay with the computer, free software to securely wipe the drive can be implemented. An audit trail of either method must be created and maintained. 9. Requiring institutions to develop procedures for change management. OCD Tech Comment: Smaller dealers may not have custom applications. Changes to the environment could be as simple as updating the inventory documents or as complex as implementing a software development lifecycle program; including acceptance testing and segregation of duties for software deployment. 10. Requiring regular testing and continuous monitoring of relevant key controls, systems and procedures. OCD Tech Comment: The proposed language requires annual penetration testing and biannual vulnerability scans or when there is a significant change(s) to the control environment. Sixmonth delayed effective date. 11. Requiring that institutions implement appropriate training and education, including verifying that key security personnel take steps to maintain current cybersecurity knowledge, and utilize qualified security personnel. OCD Tech Comment: Annual security awareness training for employees, and periodic “phishing” testing throughout the year

to enforce the training. Six-month delayed effective date. 12. Expanding the requirement to oversee service providers to require institutions to periodically assess such service providers based on the information security risk they present. OCD Tech Comment: Inventory third-party providers to determine which have access to, or could have access to, consumer financial information. Request SOC2 reports as applicable. For third-party providers without SOC2 reports, or SOC2 reports without sufficient controls in place based on the information security risk present, define and execute compensating controls. Six-month delayed effective date. 13. Requiring that institutions establish incident response plans. OCD Tech Comment: This can be performed in-house, with individuals familiar with incident response planning. Otherwise, this would be performed by third-party consultants. Six-month delayed effective date. 14. Requiring that the institution’s CISO report at least annually to the institution’s board of directors on issues related to the information security program. OCD Tech Comment: This can be performed in-house with the new CISO. If the CISO function is outsourced, it would require billable time of the CISO. Six-month delayed effective date. OCD Tech will be presenting more information on this topic at the annual O’Connor & Drew, P.C. Auto Dealer Symposium on October 22. In the meantime, please feel free to reach out if you have any questions about these proposed rules and the impact they may have to your business. t

“The risk assessment program must address all the requirements of the Safeguards Program, including the methodology used”

Michael W. Hammond Principal, CISA, CRISC, CISSP, CEH , joined the firm in 2012. Michael is Principal, IT Audit & Security Services. Michael has twenty years of extensive Information Technology expertise in various disciplines, including operations, control design and testing. Previously, Michael was Vice President and Senior IT Audit Manager at State Street Corporation and is a veteran of the United States Air Force. More information about the IT Audit & Security Services Division can be found at ocd-tech.com To contact, please email:MHAMMOND@OCD.COM www.msada.org

Massachusetts Auto Dealer

AUGUST 2019

26 JULY 2019

Patrick Manzi

NADA Senior Economist

Boyi Xu

Economist

AUGUST 2019

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MSADA

NADA MARKET BEAT

JANUARY 2016

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TRUCK CORNER

MSADA MSADA

Make Your Voices Heard During the Summer Congressional Recess By Jodie Teuton Chairwoman, American Truck Dealers ATD Chairwoman Jodie Teuton is vice president of Kenworth of Louisiana and Southland Truck Leasing in Gray, Louisiana.

AUGUST 2019

During this critical time in our industry, our elected officials need to understand the significance of our business more than ever to-day operations. Each year, ATD and NADA host dealer visits to Visits with legislators take about an hour and can Capitol Hill during the ATD Legislative Fly-in and be arranged around your busy schedule. We must the NADA Washington Conference. Both events are take advantage of our opportunities to educate our attended by hundreds of dealers, including the assoelected officials on our own home turfs and on our ciation’s most politically active members, national key policy issues especially as Congress will soon board members, and state association leadership. consider an infrastructure bill. It is a chance to tell Both events highlight the top legislative issues them more about the retail trucking industry and facing dealers today and feature meetings with how we contribute to the nation’s economy and our congressional representatives. But you do not have community’s workforce. to be on the steps of Capitol Hill to make your voicBest of all, this is your chance to walk them es heard—you can meet with your elected officials around your dealership, when they are home for demonstrate the newest the summer congressio“I urge fellow truck and safest truck technolnal recess that extends ogies, and give them the through September 5 dealers across the opportunity to meet and or any other time when country to meet speak with your employthey are home listening with your members ees. to their constituents. On behalf of ATD, I How well does your of congress at their urge fellow truck dealmember of Congress unlocal office or at ers across the country derstand your business? your dealership” to meet with your memDuring this critical bers of Congress at their time in our industry, our local office or at your dealership this summer. elected officials need to understand the signifiNADA/ATD staff can help arrange an appointcance of our business more than ever and how their ment; please contact Patrick Calpin, NADA/ATD policies can impact our employees, customers, and director of grassroots advocacy, at pcalpin@nada. communities. The summer congressional recess is org. a great time to invite a legislator to your dealerAnd if you were not able to attend our June Conship or meet with them at their local office. There gressional Fly-In event, please consider attending is not a better time to talk about our fight to repeal the Washington Conference on September 15-17. the federal excise tax (H.R.2381/S.1839) and our It may still be summer, but there is no time to campaign to address the auto and diesel technician rest for the hard-working and passionate dealers of shortage. the truck industry. Let us make this year the most This summer gives us an opportunity to build a productive one yet! line of communication with the people who create the legislation that, like it or not, dictate our dayt

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NADA Update

By Scott Dube

Heading to the Hill Scott Dube, President of Bill Dube Hyundai and MSADA Immediate Past President, represents NADA’s Massachusetts members on the NADA Board of Directors. He can be reached at scott@dubecars.com. I hope the waning days of Summer are treating you well. Here at your Association and NADA we are making final preparations for the coming NADA Washington Conference. It is not too late to plan your attendance -- please reach out to either me or Executive Vice President Robert O’Koniewski at rokoniewski@msada.org. See you on the Hill!

NADA Show 2020 Booths Sold Out Exhibitor booth space at NADA Show 2020 in Las Vegas has sold out and wait-list applications are now being accepted for both new and returning exhibitors. More than 500 companies have been confirmed in more than 700,000 square feet of exhibit space at the Las Vegas Convention Center for the event, which runs from Friday, February 14, to Monday, February 17. A new First-Time Exhibitors Showroom has been added to the show experience to offer attendees a convenient and strategic way to shop and explore new first-time companies exhibiting at the show. For companies interested in being added to the exhibitor wait list for the Automotive Industry Event of the Year, go to nadashow.org/exhibitors and apply today. NADA member dealers and their management teams are encouraged to register today and book hotel rooms. The popular hotels are selling out. Early-bird registration, which includes a $100 discount from the onsite registration rate, ends September 13.

Use “OSHA Safe + Sound Week” to Check Your Dealership Workplace safety is a vital cornerstone of any organization. In light of Occupational Safety and Health Administration’s (OSHA) Safe + Sound Week in August, it is a prime time to evaluate and prioritize workplace safety and health. Safety and health initiatives can prevent workplace injuries and illnesses. In fact, studies have shown that effective

safety and health initiatives can save $4 to $6 for every dollar invested. Making a commitment to workplace safety and health offers other benefits. Often when dealers adopt a collaborative approach to safety where employees and leadership are equally responsible, dealerships can experience: • Improvements in product, process, and service quality; • Enhanced employee morale; • Improved employee recruitment and retention; and • A more favorable image and reputation among dealership customers, suppliers, and the local community. Creating a culture that embraces workplace safety and health can involve small, cost-effective steps. Take a look at the following examples: • Offer access to personal protective equipment: John Whitby of Kent County Motor Sales Company in Dover, Delaware: “We place a box of safety glasses by the door before you enter the service and body shop. That way, all staff, whether it is a service or a sales team member, know they need to put them on before they walk through the door.” • Implement monthly safety inspections: Whitby adds, “We perform monthly safety inspections with a walk through of the dealership—it takes less than an hour and it helps to keep safety on the mind of staff and managers.” • Restrict access to potentially hazard area: Isaac Willis of Chevrolet Buick in Smyrna, Delaware: “We have thought through how staff and customers move through our dealership. Customers are not allowed into the service department. We also include discussions of safety in our monthly Service Team meetings.”

5 Reasons Service Tech Jobs are a Good Fit for Generation Z America’s auto dealerships have a looming workforce shortage in the service department. Just to keep pace with retirements and new jobs in the sector, the industry needs to replace approximately 76,000 technicians each year. Yet, America’s technical colleges and training programs graduate about 37,000 new technicians each year —leaving an annual shortage of approximately 39,000 trained technicians. But a recent survey released by Cox Automotive suggests that there is hope for a new generation of technicians: Generation Z. Cox’s “2019 Dealership Staffing Study” found that 32% of Generation Z workers – those born between the mid-1990s to early 2000s — said they were very interested in working at a dealership. In addition, 36% of younger millennials indicated

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NADA Update they were intrigued by dealership jobs as well. The interest among these two emerging labor groups is nearly 10 percentage points higher than interest shown by older millennials in their late 30s (21%) and Gen Xers in their 40s and 50s (19%). So what do Generation Z workers value and what can managers do to attract and retain these new workers? 1) They are comfortable with the latest technology. Sure, Generation Z is definitely tech savvy. Consider that the iPhone was introduced in 2007. Generation Z has never lived in a world without technology right at their fingertips. Which means a Gen Z worker will feel right at home in today’s technologically advanced showrooms and service bays. From computerized inventory management systems to sales completed on an iPad, today’s dealerships serve an entirely different purpose for an entirely different customer. The emphasis is on technology, service, and a customer-centric approach that drives customer loyalty. 2) But technology cannot replace one-on-one interactions. While they might be the generation most comfortable with technology, Generation Z places a high value on face-toface interactions and they want daily interactions with their bosses. One survey found that more than 90% of Gen Z “prefer to have a human element to their teams, either working solely with innovative co-workers or with co-workers and new technologies paired together.” That human element was a big draw for Gen Z service tech Lance La Croix who started in the auto industry three years ago. “I am fortunate enough to work with very understanding and helpful techs who are willing to answer questions, point me in the right direction, and check my work,” La Croix said. “This allows me to increase my knowledge and advance in my career.” The opportunity to interact with the boss was just one reason 25-year-old Jonathan Biggom, a service tech at Motorcars Toyota in Cleveland, Ohio loves his job. “We see our owner every day,” Biggom said. “That means a lot for us. Just working for the company itself, that is what definitely keeps me around.” 3) They value security (and salary). Remember the Great Recession? Generation Z sure does. They grew up in the middle of it and watched as the generations above them first struggled to find jobs right out of college and then took low-paying jobs while saddled with a lifetime of student loans. “Gen Z is deeply driven by security. More pragmatic than millennials, Gen Z express concerns about money and benefits,” according to a Monster survey, which found that 70% consider salary their top motivator. An equal percent said their top “must-have” is health insurance. They are also willing to put in the time: 58% said they would be willing to work nights and weekends for higher pay. “I had heard from a few different people that there is plenty of money to be made as a technician, as long as I had a good AUGUST 2019

MSADA work ethic,” said La Croix. “I did go to college for one year, made it on the Dean’s List, worked full time, and did not accrue any debt. Even so, college did not seem like the place for me. I am grateful to my hometown dealership for giving me the opportunity to prove myself and for giving me hands-on training as well as providing ASE assistance (National Institute for Automotive Service Excellence).” 4) They are open to alternative types of education and training. Whether it is because they do not want to be saddled with debt or because they want to be in control of their own career paths, Generation Z does not think a traditional college environment is the only way to get ahead, with many opting for alternative learning environments and on-the-job training. According to new research from LinkedIn Learning, 43% of Generation Z learners prefer a fully self-directed and independent approach to learning. While La Croix originally went to college, he knew it was not for him. “I had always thought about being a tech, but I did not think it was a reasonable idea. I did not think it would pay very well, and I knew tools and school would be pricey,” said La Croix. “My plans were changed for the better, however, when my dealership announced that they were looking for new service technicians. My ears perked up when I heard them say, ‘No experience necessary. Will train.’ I quickly jumped at this opportunity and began working in the shop.” The automotive industry offers many education and dealer training programs with guaranteed job placements, said Dave Kocsis with Jack Carroll’s Skagit Hyundai. “At my auto shop, a representative for the GM ASEP/Shoreline Community College came to one of our shop nights along with a tech from a local GM dealer. I was told about the GM ASEP (Automotive Service Educational Program) and what I could be/do with my career, so I decided to pursue this career path; 14-plus years later, here I am.” 5) They take ownership of their own career. According to the Monster survey, 76% describe themselves as responsible for driving their own careers. “Generation Z employees will look for more independence in their career than Gen X and millennials,” said Tiffany Servatius, a member of Forbes Human Resource Council. “These individuals will be seeking opportunities that allow them to take ownership of their positions and be their own boss.” La Croix, who has a financial coaching business in addition to his job as a service tech at Walser Honda, says his job “is what you make it. You will get out what you put in…I regularly eat a very quick lunch at my bench instead of taking a half-hour lunch break. I frequently stay late to finish a project or start another. However, that is my choice. I have decided to push myself so that I can advance faster than most. The reward is a bigger check right now and more advancement opportunities in the future.” t

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