BISMARCK - A trade group representing farm equipment manufacturers filed a federal lawsuit this week against a new law that it says may create "the most restrictive dealership law in the entire country."
The Association of Equipment Manufacturers, along with several big-name companies like Deere & Co. and Kubota Tractor Corp., filed the lawsuit Monday, July 24, in U.S. District Court in North Dakota. It names Doug Burgum and Wayne Stenehjem as defendants in their official roles of governor and attorney general, respectively.
At issue is Senate Bill 2289, which sailed through both chambers of the state Legislature this year with only five dissenting votes. AEM's complaint said the bill would "impose unprecedented restrictions" on farm equipment manufacturers' ability "to enforce new and existing contracts with dealers, to maintain their federally protected trademark rights, to enforce dealership appearance and performance standards and to monitor or prevent warranty and incentive payment fraud."
Provisions of Senate Bill 2289 are preempted by federal law, unconstitutional and "otherwise unenforceable," the Milwaukee-based association argued. Among other issues, the law would allow equipment dealers to "commingle the facilities, personnel and display space" used to sell and service a manufacturer's farm equipment with their competitor's products.
That would be "akin to a state law that would require McDonald's Corp. to permit franchisees to sell the Burger King Whopper from facilities licensed to display McDonald's federally registered trademark," the association said in its complaint.
The association asked for a preliminary injunction that would prevent the law's enforcement until the merits of the case are decided. The law is scheduled to become effective on Tuesday.
The North Dakota Implement Dealers Association, which supported the bill, called it the "farm equipment dealer bill of rights" and argued many of its concepts already exist in state law for auto dealers.
"The bill was developed as a response to a fundamental shift in the requirements that are placed upon farm equipment dealers by the manufacturers," a NDIDA legislative report said. "The bill enhances existing law and also addresses several manufacturer contract issues that would create numerous challenges for dealers."
The head of the NDIDA didn't return a message seeking comment Thursday afternoon, nor did the bill's primary sponsor, Sen. Kelly Armstrong, R-Dickinson.
The AEM suit comes less than a month after another group representing pharmacy benefit managers sued over two North Dakota laws that are also set to become effective Tuesday. A status conference for that case was held Thursday.