Sales in question.The allegations against Laidlaw’s emerged from a corporate audit of the dealership for model years 2009 to 2011. That audit was undertaken in March 2011, court documents stated, after Dealer Advisory Council member Ray Malzo of Orange County Harley-Davidson in Irvine, Calif., alerted the OEM to potential violations of the NSRP by Laidlaw's Harley-Davidson.
Harley-Davidson claimed the audit uncovered 42 violations of its non-retail policy dating back to Dec. 27, 2008. The Motor Co. alleged the dealer was selling to resellers and providing false customer information on sales and warranty registration (SWR) forms, including incorrect addresses and incomplete forms.
“A number of motorcycles were models for which recalls were in process. Due to the false SWR information, Harley-Davidson was unable to provide recall notices to the end users,” the termination letter claimed.
The audit discovered that motorcycles were sold to buyers in Cambodia, Vietnam, Thailand and Jordan; dealers from Thailand and Jordan later submitted affidavits in support of Harley-Davidson’s policy. The audit also found that 17 units had been sold to rental companies “that were not sourced from the Rentals Fleet Pool and/or did not have authorization from Riders Services for conversion from pleasure allocation to rentals/fleet allocation.” Also, many of the bikes were not set up at the dealership in accordance with Harley’s “pre-delivery inspection” (PDI) policy, Harley claimed.
The termination letter, signed by Harley-Davidson vice president of North American sales Mike Kennedy, concludes that the alleged violations were against the welfare of the public, and that “to ship outside of California motorcycles that were specifically built to meet California’s special pollution laws…increases the likelihood of customer dissatisfaction, increases safety risks, and increases risk of noncompliance with state, federal and foreign laws, among other things.”
At the time the letter was delivered, Harley-Davidson announced its intention to terminate the dealer and to charge back all factory incentives and allowances on sales it deemed non-retail, which amounted to about $16,000 at the time.
In their protest, attorneys for Laidlaw’s argued that the NRSP is a separate policy from the dealer agreement, so the franchise should not be at risk.
