General Motors Corp. v. Darling's

United States Court of Appeals
For the First Circuit

Nos. 04-2281, 04-2282

GENERAL MOTORS CORPORATION,

Plaintiff, Appellant/Cross-Appellee,

v.

DARLING'S, d/b/a DARLING'S AUTO MALL,

Defendant, Appellee/Cross-Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. George Z. Singal, U.S. District Judge]

Before

Boudin, Chief Judge,

Cyr, Senior Circuit Judge,

and Howard, Circuit Judge.

James C. McGrath, with whom Daniel L. Goldberg, Bingham
McCutchen LLP, Frederick J. Badger, Jr., Richardson, Whitman,
Large & Badger, Lawrence S. Buonomo and General Motors
Corporation, were on brief for appellant.
Judy A.S. Metcalf, with whom Laura Lee Klein and Eaton
Peabody were on brief, for appellee.
Bruce C. Gerrity, Jeanne B. McHale and Preti, Flaherty,
Beliveau, Pachios & Haley, LLC, on brief for amicus curiae Maine
Auto Dealers Association, Inc.

April 14, 2006
 HOWARD, Circuit Judge. These cross-appeals are the

latest episode in a thirty-year conflict between national motor

vehicle manufacturers and their Maine-based dealers concerning the

manufacturers' obligation to reimburse the dealers for repairs made

to vehicles under warranty. See Alliance of Auto. Mfrs. v.

Gwadosky, 304 F. Supp. 2d 104, 106 (D. Me. 2004) (summarizing this

"long, complex, and litigious history"). General Motors ("GM")

brought this diversity lawsuit seeking a declaration of certain of

its rights and obligations under the Maine warranty reimbursement

statute, see Me. Rev. Stat. Ann. tit. 10, § 1176,1 and Darling's,

GM's authorized distributor in Maine, responded with several

related counterclaims.

I. BACKGROUND

A. The Statutory Context

At the urging of Maine's motor vehicle dealers, the Maine

legislature began regulating the manufacturer-dealer relationship

in 1975. See Me. Rev. Stat. Ann. tit. 10, § 1171 et seq. (the

"Dealer Act"); Alliance of Auto. Mfrs. v. Gwadosky, 430 F.3d 30, 33

(1st Cir. 2005). The original version of the warranty

reimbursement provision required a motor vehicle manufacturer to

“adequately and fairly compensate each of its motor vehicle dealers

1
We recently upheld the constitutionality of § 1176 against
Commerce and Contracts Clause challenges brought by an association
of manufacturers. See Alliance of Auto. Mfrs. v. Gwadosky, 430
F.3d 30 (1st Cir. 2005).

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for parts and labor.” Me. Rev. Stat. Ann. tit. 10, § 1176 (1975).

Following amendments in 1980 and 1991, the statute more

specifically required manufacturers to reimburse for parts and

labor “at the retail rate customarily charged” by each dealer for

the same parts and labor provided to non-warranty customers. Me.

Rev. Stat. Ann. tit. 10, § 1176 (1997).2 Although the statute did

not specify how a dealer's customary retail rate for parts should

be established, it stated that a dealer's retail rates for labor

are established by posting its labor rates in a conspicuous

location within view of the dealer's service customers. See id.

2
At the time this litigation was initiated in 2001, § 1176
provided in relevant part:

If a motor vehicle [manufacturer] requires or permits a
motor vehicle [dealer] to perform labor or provide parts
in satisfaction of a warranty created by the
[manufacturer], the [manufacturer] shall properly and
promptly fulfill its warranty obligations . . . and . .
. shall reimburse the [dealer] for any parts so provided
at the retail rate customarily charged by that [dealer]
for the same parts when not provided in satisfaction of
a warranty. Further, the [manufacturer] shall reimburse
the [dealer] for any labor so performed at the retail
rate customarily charged by that [dealer] for the same
labor when not performed in satisfaction of a warranty;
provided that the [dealer's] rate for labor not performed
in satisfaction of a warranty is routinely posted in a
place conspicuous to its service customer. . . . Any
claim made by a [dealer] for compensation for parts
provided or for reimbursement for labor performed in
satisfaction of a warranty must be paid within 30 days of
its approval. All the claims must be either approved or
disapproved within 30 days of their receipt. When any
such claim is disapproved, the [dealer] that submitted it
must be notified in writing of its disapproval within
that period, together with the specific reasons for its
disapproval.

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Following another amendment in 2003, a dealer may now establish its

customary retail rate for parts by submitting to the manufacturer

either 100 sequential or 60 days of non-warranty customer-paid

service repair orders. See Me. Rev. Stat. Ann. tit. 10, § 1176

(2004). The average parts markup percentage for those repairs

establishes the dealer's customary retail markup for parts. See

id. The 2003 amendment also extends the period of time for a

manufacturer to approve or disapprove a claim, from 30 days to 60

days after submission, extends the time a manufacturer has to pay

a claim, from 30 days to 60 days after approval, limits the

manufacturers' reimbursement obligation to only those claims

submitted within 90 days of the performance of the warranty repair,

and bars manufacturers from recovering the costs of reimbursing

their Maine dealers at retail rates. See id.

B. GM's Nationwide Uniform Warranty Reimbursement
System

GM distributes its automobiles through a nationwide

network of authorized dealers. Darling's has been a Maine-based

authorized GM dealer since 1994, selling three lines of GM vehicles

(Buick, Pontiac and GMC) under successive versions of the Dealer

Sales and Service Agreement (“Dealer Agreement”), the most recent

of which was executed in 2000. Pursuant to the Dealer Agreement,

Darling's must perform warranty repairs on qualified vehicles and

GM must reimburse Darling's for parts and labor in accordance with

-4-
the Service Policies and Procedures Manual (“Service Manual”).3 GM

reimburses its North American dealers based on a uniform

methodology that uses a fixed markup for the cost of parts (usually

40 percent), and the dealers' established hourly rates for labor,

multiplied by GM's labor time guidelines, which provide the number

of labor hours allotted for a specific repair.

GM processes warranty reimbursement clams through a

nationwide computer system called the Warranty Information System

(“WINS”). WINS, which allows dealers to submit claims

electronically, was developed in the mid-1990s to standardize GM's

warranty claims processing across all of its lines. Before WINS,

a dealer which sold three different lines of GM vehicles, like

Darling's, was required to submit separate reimbursement claims

through three distinct processing systems. All of GM's dealers in

the United States, Canada, Mexico and the Caribbean now use WINS.

Annually, GM uses the system to pay approximately 48 million claims

(including some non-warranty claims) worth over four billion

dollars.

WINS requires each warranty reimbursement claim to

include the dealer's repair order number, the date of service, the

vehicle identification number ("VIN"), the applicable labor

operation number, the failed part number, and the parts

3
We refer to the Dealer Agreement and the Service Manual
collectively as the "GM-Darling's Agreement."

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reimbursement amount. Within five days of submission, WINS

automatically reviews the claim to determine whether it is within

certain basic parameters based on the information provided in the

claim and any existing electronic records for the vehicle

corresponding to the entered VIN.4 If WINS finds an error in the

claim, the dealer is notified electronically. If the claim passes

the initial check, GM reimburses the dealer based on a uniform

methodology. WINS calculates the maximum labor reimbursement by

multiplying GM's time guidelines for the repair by the dealer's

approved labor rate, which is usually an average of the rates a

dealer has charged for all manner of repairs. It calculates the

maximum parts reimbursement by multiplying the cost of the parts by

the established parts markup rate for that dealer, which is usually

40 percent. As long as the total amount requested by the dealer

does not exceed these ceilings, WINS automatically approves the

claim and credits the dealer through an open account held jointly

by GM and the dealer. Approximately 90 percent of all WINS claims

are approved in this way and are paid within seven to ten days of

the initial claim submission.

4
Among other things, WINS checks that the vehicle is within
warranty coverage, that the vehicle's characteristics match the
reported repairs, and that the claim was submitted within 180 days
after the repair date.

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 C. GM's Reimbursement of Warranty Claims in Maine

Because Maine's warranty reimbursement statute requires

manufacturers to reimburse for parts and labor “at the retail rate

customarily charged” by each dealer, Maine dealers may request

warranty reimbursement for parts and labor using their own internal

formulas, and not those specified by the manufacturers. But, being

an automated system, WINS has certain limitations that prevent it

from processing claims that include variables that it was not

programmed to handle. For example, WINS cannot handle multiple

parts markup rates for a single dealer. Nor can it substitute GM's

time guidelines with dealer-specific labor times. Consequently,

when a Maine dealer submits a claim that exceeds GM's uniform

nationwide rate and includes such variables, WINS is unable to

fully reimburse the dealer. To accommodate Maine's dealers without

completely abandoning WINS, GM devised a two-tiered reimbursement

system whereby Maine dealers first submit a claim through WINS for

reimbursement at GM's uniform rate, and then submit a supplemental

claim to collect the difference between the WINS rate and the

dealer's retail rate.

To verify the accuracy of supplemental claims, and to

allow GM to cross-reference the supplemental claims with the

initial WINS claims, GM requires that supplemental claims include

the VIN and date of repair. In addition, to verify the dealer's

retail rate, GM requires information in the supplemental claim that

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is not provided in the WINS submission: the dealer's various parts

markup percentages, the retail labor hours charged by the dealer,

and the method by which the labor time was calculated. This

information allows GM to assess the basis of the dealer's claimed

retail rate and to verify its accuracy by reviewing the dealer's

actual non-warranty service records.

Maine dealers typically submit supplemental claims by e-

mail or fax to the GM Area Service Manager ("ASM") assigned to each

dealer's region. The ASM reviews the supplemental claim, verifies

that the individual claims associated with the supplemental claim

were previously submitted and paid by WINS, and determines whether

the amount sought appears reasonable based on the information

provided. Because GM prefers to manage its dealer reimbursements

through WINS, if the supplemental claim is approved, the ASM

directs the dealer to submit an "H-route" request -- a specially

coded electronic claim -- for payment through WINS. Thus, dealers

submitting supplemental claims receive two payments from WINS:

first from the initial WINS submission, and second from the H-route

request.

Each ASM's computer contains WINS data going back four

months. Therefore, if a supplemental claim is filed within four

months of its initial approval through WINS, the ASM will have

direct access to the WINS information and will only need the

dealer's repair order number to access it. But for supplemental

-8-
claims submitted more than four months later (GM has agreed to pay

initial and supplemental warranty claims submitted up to 180 days

after the repair date), the ASM must contact the regional office to

obtain the WINS data and can only access it by using the VIN of the

subject vehicle. Without the VIN, it is difficult, if not

impossible, for the ASM to access the initial WINS claim

information.5

D. Genesis of the Present Disputes

1. Disputes concerning Darling's supplemental
claims

Darling's customary retail rates for parts and labor,

which include a wide variety of pricing mechanisms, exceed GM's

uniform nationwide reimbursement rates. Depending on the

particular part, Darling's may determine the parts price markup

according to a "matrix" (providing a different percentage markup

depending on the cost of the part), a "menu" (providing a flat rate

for parts and labor for certain repairs), or a "retail list"

(providing a list of suggested retail prices by the manufacturer).

Although Darling's most often calculates its labor time by using

5
The VIN is a unique identifying number assigned to each new
vehicle by the manufacturer. Because each VIN corresponds to only
one particular vehicle, it provides a tool for organizing and
indexing a vehicle's historical records. While other numbers are
assigned to a repair (e.g., the dealer's repair order number), none
of these other numbers, which are not unique to a particular
vehicle, is as effective as the combination of the VIN and date of
service for pinpointing a particular repair to a particular
vehicle.

-9-
the "Motors Manual" -- one of a number of trade manuals used by

repair shops to determine the amount of time appropriate for a

given repair -- it has used at least seven different methods to

determine the repair time. Moreover, Darling's has charged

different labor rates depending on the repairs made, and Maine's

warranty reimbursement statute permits Darling's to change its

various labor rates at any time so long as it posts the new rates

within the view of its service customers. As explained above, WINS

is not capable of accounting for these variables.

As a result, Darling's began submitting supplemental

warranty reimbursement requests in June 2000. Although Darling's

initially included with its claims most of the information required

by GM, it did not provide either the date of service or the VIN.

GM therefore had difficulty linking the supplemental claims with

the corresponding WINS claims and confirming that the claims were

submitted within 180 days of the repair. As it turned out, many of

Darling's claims were untimely and, because the claims lacked the

VINs, GM often had to request additional information from Darling's

warranty administrator, Larry Rolnick.

Less than a month after Darling's first round of

supplemental submissions, Joyce Nolan, GM's Director of Warranty

Operations, wrote to John Darling, president of Darling's, to

request the date of service and the VIN for each supplemental

claim. Nolan advised Darling that, as soon as GM received this

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information, GM would supply Darling's with "procedural information

on receiving payment through" WINS. Darling replied by letter,

asserting that "[b]ecause the [warranty reimbursement] statute does

not require this information and because it is readily available to

GM as part of the initial claim submission, we have chosen not to

include it as part of our supplemental retail warranty claim

sheet." Nolan responded that it would be unduly burdensome for GM

to locate the initial claim submissions without the VINs. But, as

a "good will gesture," Nolan agreed to approve Darling's first two

supplemental submissions and to provide procedural information

about H-routing those claims, so long as Darling's would provide

the applicable VINs by August 15, 2000. Nolan also stated that

future supplemental claim submissions would not be approved if

submitted without VINs. Darling's persisted in its refusal to

provide VINs, failed to submit an H-route request for the first two

sets of supplemental claims, and therefore never received

reimbursement on those claims.

After further correspondence failed to resolve the

impasse, GM's Market Area Manager assigned to Darling's, Barry

Alick, arranged to meet with Darling at one of his dealerships in

September 2000. Alick again explained that it was difficult for GM

to access the claims history of a particular vehicle without the

VIN and date of service. Nevertheless, Alick offered to pay all

then-pending claims, even though many were untimely, if Darling's

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would agree to provide the VINs on all future claims and to H-route

approved claims for payment via WINS. Darling's agreed and

subsequently H-routed over $75,000 in supplemental claims, which GM

paid.

Although Darling's began to include VINs with its

supplemental claims, it continued to submit them late. In a

February 2001 letter, Nolan reminded Darling of the 180-day filing

deadline, but again agreed to pay the pending claims in an effort

to "work with you cooperatively." Nolan emphasized, however, that

"going forward, GM will not approve either initial or supplemental

claims for warranty reimbursement unless the claim in question is

received within 180 days of the repair order date." Darling's

thereafter continued to submit untimely claims, and GM denied them.

In May 2001, Darling's responded by reducing the amount

of information included in its supplemental claims. Darling

instructed Rolnick to design a "short form" supplemental claim that

included only the repair order number, the parts and labor

reimbursement that WINS had paid at the uniform rate, a summary of

Darling's retail rate for parts and labor, and the difference

between the uniform reimbursement and Darling's retail rate.

Darling's short form not only omitted the VIN and date of service

for each repair, but also the other information it had previously

provided explaining the basis for its customary retail rate. The

omissions made it difficult for GM to access the underlying WINS

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data and left GM without a basis for assessing the reasonableness

of the claims. Rolnick testified that changing to a short claim

form actually increased his workload because it required first

preparing an internal worksheet setting forth all the information

previously provided to GM, and then preparing a short form omitting

certain information.

2. The charge back dispute

Underlying the dispute about the information required in

a supplemental claim was GM's concern that Darling's was over-

charging it for warranty repairs. Because, as a practical matter,

GM does not receive any of the actual repair invoices associated

with a dealer's warranty claims, it monitors warranty claims by

exception. In other words, GM pays warranty claims without

verification that the dealer actually performed the work or

performed the work in compliance with the dealer agreement.6

In order to detect excessive warranty claims, GM analyzes

the claims through its Automated Warranty Administrative Review

Expert ("AWARE") system. When AWARE identifies a dealer with

elevated warranty levels, GM notifies the dealer and provides it

with materials to conduct a "dealer self-review." These self-

reviews allow the dealer to audit itself and identify any instances

6
GM likens its warranty reimbursement process to the IRS's
system for processing income tax returns. Like the IRS, GM credits
most incoming claims so long as they are internally consistent, but
reserves the right to audit claims that appear suspicious.

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in which it has over-charged GM or otherwise departed from the

Dealer Agreement or Service Manual. If a dealer continues to

exhibit apparently excessive warranty costs, GM may issue

additional self-reviews and, eventually, may conduct its own

"claims expense review" of selected records at the dealership.

Darling's had one of the highest "cost per vehicle

serviced" and lowest customer satisfaction ratings of all the GM

dealers located in the zone covering northern New England. During

1999 and 2000, its warranty claim submissions indicated elevated

levels of warranty costs compared with other dealers. After

Darling's performed three self-reviews, GM conducted a claims

expense review in August 2000. The claims expense review revealed

a number of improper warranty practices by Darling's: (1) seeking

reimbursement for "goodwill" repairs made to cars covered by

Darling's extended service contracts,7 (2) charging labor hours in

excess of those provided under GM's time guidelines, and (3)

failing to retain parts replaced in connection with warranty

repairs. As a result, GM debited $4,245 from Darling's account.

After correspondence between the parties, GM agreed to re-credit

7
To maintain customer "goodwill," the Service Manual empowers
Darling's, in certain limited circumstances, to make repairs at no
charge to the customer, and seek warranty reimbursement from GM,
even though the manufacturer's warranty for the vehicle has
technically expired (e.g., when the warranty only recently expired
or the repairs are extensive). The Service Manual does not,
however, permit Darling's to seek a goodwill reimbursement when the
vehicle's repair is covered by Darling's extended service contract.

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Darling's all amounts except for $1,279, the amount paid to

Darling's for warranty repairs for which Darling's did not retain

parts as required by the Service Manual.

3. The labor rate dispute

As set forth above, WINS evaluates the labor

reimbursement portion of a warranty claim based on each dealer's

pre-approved warranty labor rate multiplied by the GM labor time

guideline for the particular repair. In situations where a dealer,

like Darling's, charges a different retail labor rate depending on

the type of repair, WINS uses a single rate based on the weighted

average of the dealer's actual customer-pay experience. To make

this calculation, GM requests that the dealership submit 100

sequential repair orders that reflect the labor rates actually

charged to customers. The average of these charges becomes

Darling's effective labor rate for purposes of the initial WINS

reimbursement.

In September 2000, Darling's requested GM to increase its

effective labor rate from $48.95 to $52.00 per hour to match its

posted retail rate. Several months later, Darling's submitted a

warranty labor rate adjustment application together with supporting

documentation (i.e., a form detailing 100 sequential repair

orders). This documentation revealed that the average rate

Darling's actually charged customers was only $51.58. It was lower

than the posted rate because Darling's provides discounts on

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certain repairs. As a result, GM denied Darling's request for a

labor rate increase. After Darling's protested the outright

denial, GM advised that it would increase Darling's effective labor

rate to $51.58 upon receipt of a revised warranty labor rate

adjustment application. GM did not require Darling's to resubmit

the supporting documentation. Darling's refused to submit a

revised application, so its WINS labor rate remained at $48.95.

Nonetheless, under GM's reimbursement scheme, Darling's continued

to receive the difference between the WINS rate and its posted

retail labor rate in response to supplemental claims.

E. Proceedings Below

The present lawsuit was initiated in 2001 when GM filed

a complaint in federal district court seeking a declaration that

Maine's warranty reimbursement statute does not prohibit GM from

(1) requiring Darling's to submit its warranty reimbursement claims

within 180 days of the repair date, (2) requiring Darling's to

submit supplemental information (i.e., VINs and dates of service)

to receive reimbursement at the retail rate, and (3) enforcing its

contractual right to audit and charge back previously paid warranty

claims. Darling's responded with several counterclaims.

Counterclaim counts I and II sought damages for the supplemental

claims that GM had denied because they either did not provide

sufficient information (i.e., the "short form" claims) or because

they were submitted late (i.e., more than 180 days after the repair

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date). Count III sought damages for GM's refusal to increase

Darling's initial WINS labor rate to $52.00 per hour, while Count

V sought an injunction to compel GM to fully reimburse Darling's in

a single step. Count IV sought damages and injunctive relief to

prevent GM from auditing and debiting claims that it had previously

approved. And Count VI sought damages alleging that GM had engaged

in unfair and deceptive trade practices. See Me. Rev. Stat. Ann.

tit. 10, § 1174.

Judgment on the pleadings was entered in favor of GM on

whether GM could require Darling's to submit its warranty

reimbursement claims within 180 days of the repair date. Following

a bench trial, the court ruled in favor of GM on all the remaining

claims, holding that (1) GM's multi-step reimbursement system is

permissible under the statute, (2) GM's refusal to increase

Darling's initial reimbursement labor rate to $52.00 did not

violate the statute, (3) GM's requirement that Darling's provide

the VIN and date of service with each claim does not violate the

statute, (4) GM has a contractual right, which does not violate the

statute, to audit and charge back amounts paid for warranty repair

reimbursement, during the statutory approval period, and (5) GM's

actions did not constitute unfair or deceptive trade practices

under § 1174. See Gen. Motors Corp. v. Darling's, 324 F. Supp. 2d

257 (D. Me. 2004) ("GM-Darling's I"). Although the court initially

expressed no opinion as to whether GM could exercise its charge

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back rights outside the statutory approval period, it subsequently

amended its judgment, holding that the statute prohibited GM from

charging back Darling's warranty claims after the statutory period

had elapsed. See Gen. Motors Corp. v. Darling's, 330 F. Supp. 2d

9 (D. Me. 2004) ("GM-Darling's II"). GM appeals from the court's

amended judgment, and Darling's cross-appeals from the court's

other rulings.8

II. DISCUSSION

A. Standard of Review

Statutory interpretation typically raises questions of

law engendering de novo review. United States v. Zenon-

Encarnacíon, 387 F.3d 60, 63 (1st Cir. 2004). Similarly, the

district court's interpretation of the GM-Darling's Agreement is

reviewed de novo. Servicios Comerciales Andinos, S.A. v. Gen.

Elec. Del Caribe, Inc., 145 F.3d 463, 469 (1st Cir. 1998). But the

lower court's factual findings will remain undisturbed absent clear

error. Gallo Motor Ctr., Inc. v. Mazda Motor of Am., Inc., 347

F.3d 20, 24 (1st Cir. 2003).9

8
The Maine Auto Dealers Association filed an amicus curiae
brief in support of Darling's.
9
Because Darling's is the party asserting the affirmative of
the controlling issues in the case, i.e., statutory violations by
GM, the district court held that Darling's bore the burden of
proof. Darling's does not contest that ruling on appeal.

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 B. GM's Right to Audit and Charge Back

As set forth above, GM sought a declaration that the

Maine warranty reimbursement statute "does not prohibit GM from

exercising its contractual right to audit paid warranty claims and

charge back improperly paid amounts." In the district court, GM

argued that, pursuant to the GM-Darling's Agreement, it has the

right to audit warranty reimbursement claims, and that § 1176 does

not limit that right. Darling's countered that GM has no such

contractual right, and that GM's charge back of $1,279 violated the

statute.

In its initial ruling, the district court considered only

whether GM could charge back amounts improperly paid during the

statutory approval period. The court first examined the parties'

contractual relationship and concluded that the plain language of

the Service Manual gave GM the right to debit claims previously

paid to Darling's, if Darling's failed to retain parts removed in

the course of warranty repairs for 15 days following GM's

reimbursement for such repairs. Turning to the statute, the court

found "no basis on which to conclude that a debit during the

statutory time frame for approving or disapproving a claim violates

section 1176." GM-Darling's I, 324 F. Supp. 2d at 276.

The court subsequently granted GM's motion to amend its

judgment to clarify whether GM could audit and charge back

improperly paid warranty claims after the statutory period for

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approval. The court first determined that "charge-backs after the

expiration of the statutory period in fact operate as disapprovals

of the claim, since the dealer is deprived of some or all of the

amount that it was previously awarded as reimbursement for

performing warranty repairs." GM-Darling's II, 330 F. Supp. 2d at

11. It then concluded that the plain language of § 1176 "makes no

provision for future disapprovals" after the statutory period. Id.

The court rejected GM's contentions that it is not feasible to

conclusively verify all warranty claims within the statutory

period; that, as a result, manufacturers would be forced to bear

increased costs with respect to warranty reimbursement; and that

those increased costs would ultimately be passed on to consumers.

Id. at 11-12. Based on the evidence before it, the court concluded

that "GM will be able to effectively implement reasonable

verification procedures within the confines of the sixty-day

requirements." Id. at 12. Moreover, the court noted that GM is

still permitted to audit its dealers outside the statutory period,

and, although it cannot charge back such claims, it has "other

contractual rights which it can attempt to exercise to manage

recalcitrant dealers." Id.

Darling's challenges the district court's initial

judgment. While conceding that the Dealer Agreement affords GM

general audit rights, Darling's argues that the right to "audit"

does not encompass the right to charge back a claim that has

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already been approved and paid. Darling's contends that this is so

because no provision of the GM-Darling's Agreement can fairly be

interpreted as giving GM the right to charge back claims. We

disagree for the reasons set forth by the district court, see GM-

Darling's I, 324 F. Supp. 2d at 274-76, and see no need to restate

its persuasive reasoning. See Lawton v. State Mut. Life Assurance

Co. of Am., 101 F.3d 218, 220 (1st Cir. 1996) ("[W]hen a lower

court produces a comprehensive, well-reasoned decision, an

appellate court should refrain from writing at length to no other

end than to hear its own words resonate."). We therefore conclude

that GM has a contractual right to debit previously paid claims

where Darling's has failed to retain parts in accordance with GM's

parts retention policy.10

Darling's next argues that the approval period provision

of § 1176 limits GM's contractual right to audit and charge back

improperly paid warranty claims. It provides that all warranty

reimbursement claims "must be either approved or disapproved within

60 days of their receipt." Darling's argues that this language is

unambiguous and absolute -- once "approved," a claim is final.

Darling's contends that the statute does not specifically provide

manufacturers with a right of "look back" or "re-approval."

10
We note that this case presents only the issue of GM's
contractual right to charge back for violations of the parts
retention policy. We express no opinion as to whether GM has a
right to debit claims for any other reason.

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According to Darling's, this statutory silence supersedes GM's

contractual right to audit and charge back claims once they have

been approved. Alternatively, Darling's argues that GM must, at a

minimum, respect the approval deadline set forth by the statute.

Darling's embraces the reasoning of the district court's amended

judgment -- that allowing a manufacturer to "tentatively" approve

and pay a claim during the 60-day statutory period, only to

subsequently disapprove and debit the claim after the statutory

period has expired, would "render the statutory language virtually

meaningless." GM-Darling's II, 330 F. Supp. 2d at 11.

In analyzing this argument we "examin[e] the plain

meaning of the statutory language and consider[] the language in

the context of the whole statutory scheme." Darling's v. Ford

Motor Co., 825 A.2d 344, 346 (Me. 2003) ("Darling's-Ford III"). In

so doing, we "avoid statutory constructions that create absurd,

illogical or inconsistent results," and will only look behind the

plain language to the legislative history, "if we find the statute

ambiguous." Id.; Acadia Motors, Inc. v. Ford Motor Co., 44 F.3d

1050, 1055 (1st Cir. 1995) ("Acadia I") ("Only when the language of

the statute is ambiguous should courts look beyond the words of the

statute to its history, policy or other extrinsic aids to ascertain

statutory intent."). A statute is ambiguous only if it admits of

more than one reasonable interpretation. In re Thinking Machs.

Corp., 67 F.3d 1021, 1025 (1st Cir. 1995).

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 Darling's argument proceeds from the erroneous assumption

that a manufacturer needs statutory authorization to audit and

charge back improperly paid warranty claims. As Darling's

recognizes, there is no basis in the statute for imposing such a

requirement. And the statute's silence means precisely the

opposite of what Darling's says that it means. Cf. Acadia I, 44

F.3d at 1056-57 (holding that, where § 1176 did not explicitly

prohibit manufacturers from assessing a surcharge to defray the

cost of complying with the statute, such a prohibition should not

be read into the statute by the courts); Acadia Motors, Inc. v.

Ford Motor Co., 799 A.2d 1228, 1231 (Me. 2002) ("Acadia II")

(agreeing with the First Circuit that § 1176 does not prohibit a

manufacturer from imposing a surcharge given the statute's silence

with regard to cost recovery); Darling's v. Ford Motor Co., 719

A.2d 111, 115 (Me. 1998) ("Darling's-Ford II") (holding that

Darling's was entitled to reimbursement at its "flat rate" prices

where neither the plain language nor the legislative history of §

1176 explicitly prohibited a dealer from setting its retail rate in

such a manner). Absent a clear mandate from the legislature, we

are disinclined to unnecessarily interfere with the bargains that

have been struck between the manufacturers and their distributors.

See Acadia I, 44 F.3d at 1057 (cautioning that federal courts

should interpret state statutes narrowly, careful not to impose

prohibitions not supported in the statute); 2 Norman J. Singer,

-23-
Sutherland on Statutes and Statutory Construction § 61:6 (6th ed.

2000) (stating that statutes in derogation of a natural or common

right, including statutes that "threaten[] to invade an existing

property or contract right," must be narrowly interpreted). We

therefore reject Darling's contention that an improperly approved

claim cannot be audited and debited within the statutory period for

approval.

The closer question is (or rather was, see infra) whether

the charge back of a claim is effectively a "disapproval" of the

claim, which must occur within the statutory approval period. GM-

Darling's II, 330 F. Supp. 2d at 11. Darling's defends the

district court's reasoning, contending that "approved" cannot be

construed to mean "preliminarily" or "tentatively approved." GM

counters that the provision was designed solely to ensure that

dealers are promptly paid for performing warranty repairs, and has

no bearing on whether a manufacturer may impose verification and

recovery procedures after approval.

Whatever merit there might have been to GM's position,

Maine's Supreme Judicial Court recently decided the issue against

it and consistent with the district court's ruling. See Darling's

v. Ford Motor Co., 892 A.2d 461, 464-65 (Me. 2006) (holding that a

manufacturer must issue final decisions on warranty claims within

the statutory period). As a federal court sitting in diversity, we

are obliged to give effect to the SJC's authoritative construction

-24-
of the Maine statute. Accordingly, we reject GM's appeal and

affirm the district court's conclusion that any charge backs must

take place within § 1176's statutory approval period.

C. Darling's Counterclaims

1. The validity of GM's reimbursement process

Darling's argued at the bench trial that § 1176 does not

permit a manufacturer to reimburse its dealer in a multi-step

process whereby the dealer initially receives only partial

reimbursement. The district court rejected this argument, finding

nothing in the statute requiring a manufacturer to reimburse its

dealers at the retail rate in one lump-sum payment. GM-Darling's

I, 324 F. Supp. 2d at 270. The court also found, as a factual

matter, that GM's multi-step reimbursement process is not "so

complicated and costly that it circumvents the purposes of the

statute by preventing or unreasonably interfering with

reimbursement at the retail rate." Id. The court found that the

administrative costs to Darling's of complying with GM's two-step

process are reasonable, and that it would be overly burdensome to

GM to modify WINS or to convert to a manual processing system so

that GM could reimburse Darling's in one step. See id. at 270-71.

Darling's argues on appeal that the plain language of §

1176 mandates that GM fully reimburse Darling's at the retail rate

in one payment. Darling's contends that each time GM makes a

payment at the uniform WINS rate, it violates the statute by

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reimbursing Darling's below its customary retail rate. Darling's

maintains that its interpretation of the statutory text is

consistent with the legislature's intent to treat manufacturers the

same as any other service customer. Because ordinary non-warranty

customers are not entitled to pay repair bills in incremental

steps, Darling's argues, neither should GM. Finally, Darling's

contests the court's factual findings that it would be

prohibitively difficult for GM to modify WINS to allow full

reimbursement at the retail rate in one step, and that it would be

overly burdensome for GM to review Darling's claims manually in the

first instance.

As with Darling's audit and charge back argument, this

argument fails because it attempts to extract more restrictions

from the statute than the plain language supports. The pertinent

language from the statute states:

[T]he [manufacturer] shall properly and
promptly fulfill its warranty obligations . .
. and . . . shall reimburse the [dealer] for
any parts . . . provided at the retail rate
customarily charged by that [dealer] . . .
[and] shall reimburse the [dealer] for any
labor . . . performed at the retail rate
customarily charged by that [dealer] . . . .

Me. Rev. Stat. Ann. tit. 10, § 1176 (emphasis added). The

"properly and promptly" language sets forth two goals.

Manufacturers must act promptly to reimburse their dealers, but

they must also take care that their calculations are proper. As

noted above, the statute specifically provides that manufacturers

-26-
have 60 days (previously 30 days) to approve or disapprove a

warranty reimbursement claim, and have an additional 60 days

(previously 30 days) after approval to pay an approved claim. Id.

The proper reimbursement rate is, of course, the dealer's customary

retail rate. Id. We agree with the district court's conclusion

that GM properly and promptly fulfills its warranty obligations by

reimbursing Darling's at its customary retail rate within 60 days

of approval. It is of no consequence that GM pays its

reimbursements in increments, so long as the full retail rate is

paid within the statutory time-frame.

Although the statute sets forth the basic parameters for

processing warranty claims, we see no indication, either on the

face of the statute or in its legislative history, prescribing how

GM must structure its claims processing system. That the

legislature sought to equalize the cost of warranty and non-

warranty repairs does not mean, as Darling's argues, that it

intended that manufacturers would pay for repairs in the same way

as non-warranty customers. Moreover, GM's multi-step reimbursement

system appears to strike a reasonable balance of the statutory

goals: prompt yet accurate reimbursement. The initial step allows

dealers to collect a significant portion of their reimbursement in

short order. Despite the fact that the statute gives GM 120 days

to approve and pay warranty reimbursement claims, 90 percent of all

initial WINS claims are approved and paid, albeit at GM's uniform

-27-
nationwide rate, within ten days of submission. To ensure that the

claimed retail rates are bona fide, however, GM manually reviews

each supplemental claim seeking reimbursement in excess of GM's

uniform nationwide rate. Although GM takes more time to process

the supplemental claims, approved claims are paid within the

statutory deadlines.

We also reject Darling's contention that GM's

reimbursement process places administrative burdens on Darling's

that effectively defeat the statute's purpose of equalizing the

costs of warranty and non-warranty repairs. The district court

found that, given the amount of supplemental claims paid by GM to

Darling's -- over $200,000 in one 20-month period -- compared to

the minimal administrative costs associated with submitting those

claims -- approximately $6,500 during that same period -- GM's two-

step warranty reimbursement process is not unreasonably burdensome.

GM-Darling's I, 324 F. Supp. 2d at 270. We agree that when these

administrative costs are compared to the returns, they "are not so

out-of-line . . . as to raise concerns about whether Darling's is

truly being reimbursed at its retail rate." Id. at 271.

Because we affirm the district court's rulings that §

1176 does not prohibit GM's claims processing system, and that the

administrative costs associated with filing supplemental claims are

so insignificant that they do not defeat the purpose of the

statute, we need not consider whether GM could modify WINS to allow

-28-
one-step reimbursement, or whether GM could manually review all

warranty reimbursement claims in the first instance.

2. Darling's effective labor rate

Darling's argued below that GM violated § 1176 by

refusing to increase Darling's approved warranty reimbursement

labor rate used by WINS in the initial step of the reimbursement

process. As explained above, the labor rate used by WINS is

calculated by averaging the labor rates charged in 100 sequential

non-warranty repairs. GM calls it the "effective labor rate."

Darling's submitted an application requesting an increase in its

effective labor rate from $48.95 to $52.00 per hour to reflect its

posted labor rate, but the paperwork submitted by Darling's only

supported an increase to $51.58. GM indicated to Darling's that it

would increase Darling's labor rate to $51.58 upon submission of a

revised warranty labor rate application, but Darling's never filed

a revision.

The district court upheld GM's refusal to increase

Darling's labor rate to $52.00. The court noted that since GM's

multi-step reimbursement system is permissible under § 1176, "the

issue of GM's 'refusal' to increase Darling's labor rate in the

initial reimbursement stage is probative only as to whether GM has

complicated the reimbursement process to the extent that dealers

are discouraged from making supplemental claims." GM-Darling's I,

324 F. Supp. 2d at 272. Because Darling's did not allege that GM

-29-
failed to reimburse Darling's at its full labor rate following

submission of its supplemental claims, the court concluded that the

evidence did not support such a conclusion. The court also noted

that GM had expressed a willingness to increase Darling's labor

rate following its submission of a revised application, and the

court found that the administrative burden of submitting such a

revised application would be "virtually nonexistent." Id.

On appeal, Darling's focuses on GM's practice of

calculating the initial WINS reimbursement based on Darling's

"effective" or average rate. Essentially repeating its argument

that GM must reimburse its Maine dealers in a single step,

Darling's contends that the statute does not contemplate payments

at the effective rate, but rather, requires that its labor costs be

reimbursed at the customary retail rate only. Because it has

established its customary retail labor rate by posting its labor

rates in a place conspicuous to its service customers, see Me. Rev.

Stat. Ann. tit. 10, § 1176; id. tit. 29-A, § 1805, Darling's argues

that GM must reimburse at that rate. Darling's further argues that

GM's initial use of an effective rate amounts to arbitrary and

capricious behavior because the evidence establishes that WINS is

capable of assigning a unique labor rate to each dealer. Darling's

contends that WINS could reimburse Darling's at its actual retail

labor rate -- i.e., its posted labor rate -- in the first instance

-30-
without requiring the submission of unnecessary warranty labor rate

applications.

As the district court properly concluded, Darling's

statutory argument cannot stand in light of our holding that GM's

multi-step reimbursement system is lawful. That Darling's receives

less than its full retail reimbursement rate in the initial step is

not a violation of the statute so long as GM pays Darling's its

full retail rate within the statutory period for approval and

payment. And Darling's does not dispute that GM has paid it the

difference between its retail rate and its effective rate in

response to its supplemental reimbursement requests.

Darling's fares no better in its alternative argument --

that, because WINS has the capability of fully reimbursing

Darling's in one step, requiring the submission of unnecessary

documentation to establish an effective rate, and thus

unnecessarily dragging out the reimbursement process, is arbitrary

and capricious behavior in violation of the statute. Darling's

argument fails because of its stipulation that it charges different

retail labor rates depending on the type of repair. Although WINS

has the capability of programming one unique labor rate for each

dealer, the court supportably found that it is not capable of

accounting for multiple labor rates for each dealer. Therefore, it

is not unreasonable for GM to reimburse Darling's based on an

average labor rate in the first instance, and then for the

-31-
difference between that average rate and the actual retail rate in

response to a supplemental claim.

3. The VIN and date of service requirement and
the 180-day submission deadline

As noted above, after nearly a year of negotiating with

Darling's concerning the information required for a supplemental

claim, and after repeatedly reminding Darling's of the 180-day

submission deadline provided in the Service Manual, GM denied

several of Darling's supplemental claims as untimely. When

Darling's retaliated by submitting "short form" claims omitting the

VIN and date of service, GM denied those as well. GM's amended

complaint sought declarations that § 1176 does not bar GM from

requiring Darling's to include the VIN and date of service with

each supplemental claim, and that GM is not obligated to pay any

warranty reimbursement claim that is not submitted within 180 days

of the repair. Darling's countered that its "short form" claims

provided all the information required by Maine law. Darling's also

argued that the only deadline for the submission of a warranty

reimbursement claim is set forth in the statute of limitations

provision of the Dealer Act. See Me. Rev. Stat. Ann. tit. 10, §

1183 (setting a four-year limitation period for "[a]ctions arising

out of any provision of" the Dealer Act). Thus, Darling's sought

damages for the over $122,000 in warranty claims denied by GM.

With regard to 180-day submission deadline, the district

court granted GM's motion for judgment on the pleadings, holding

-32-
that the 180-day limit set forth in the Service Manual is binding

on the parties as to both initial warranty claims and supplemental

claims. In so doing, the court rejected Darling's argument that

the Dealer Act's limitation period sets the time period for

submitting a claim for reimbursement. Cf. Darling's-Ford II, 719

A.2d at 117 (answering certified questions posed by the federal

district court in Darling's-Ford I, and holding that because § 1176

does not bar a manufacturer from imposing a reasonable time limit

for warranty submissions, the district court was correct in

concluding that Ford's 180-day limit was permissible under the

statute).11 Following the bench trial, the court also upheld GM's

contractual right to require the VIN and date of service "as part

of a 'sufficiently individualized' claim." GM-Darling's I, 324 F.

Supp. 2d at 274. The court found that GM had a reasonable basis

for requiring the VIN and date of service, and that Darling's

refusal to provide such "readily available" information was

unreasonable. Id. at 273.

On appeal, Darling's abandons its argument that the

statute's limitations period sets the claims submission deadline.

Instead, it presents a new argument that attempts to distinguish

the present case from Darling's-Ford I and Darling's-Ford II by

arguing that its late claim submissions were justified by GM's

11
After the court's judgment on the pleadings was entered, the
2003 amendment to § 1176 specifically incorporated a 90-day
deadline for the submission of warranty reimbursement claims.

-33-
delay in creating a supplemental claims procedure. Darling's

contends that, because GM did not provide it with a "mechanism

within which to bring its ongoing and past due warranty

reimbursement rights to the attention of GM," we should not enforce

GM's 180-day submission deadline. As this argument was not raised

below, we do not consider it now. See B & T Masonry Constr. Co. v.

Pub. Serv. Mut. Ins. Co., 382 F.3d 36, 40 (1st Cir. 2004) (holding

that in the absence of extraordinary circumstances, "legal theories

not raised squarely in the lower court cannot be broached for the

first time on appeal") (quotation omitted)).12

With respect to the VIN and date of service dispute,

Darling's hinges its argument on a faulty interpretation of the

SJC's opinion in Darling's-Ford II. Darling's contends that the

SJC set forth a definitive statement of what information the

statute requires a dealer to include in its claims for

reimbursement: (1) the original computerized claim number, (2) the

retail amount claimed, (3) the amount the dealer received under the

uniform nationwide system, (4) the nature of the claim (i.e., parts

or labor), and (5) the difference between the amount received and

12
Even were we to give Darling's the benefit of plain error
review, there would be no basis for reversal in this case. The
onus of filing a claim for warranty reimbursement resides with the
dealer. See, e.g., Darling's-Ford II, 719 A.2d at 114 (holding
that the statute requires the dealers to submit claims that are
sufficiently individualized to enable the manufacturers to satisfy
their obligations). Nothing in the statute obligates GM to
initiate the development of reimbursement claims forms.

-34-
the retail price. See 719 A.2d at 114-15.13 Because the SJC did

not include the VIN and date of service in this list, Darling's

argues, the statute does not require such information to accompany

its supplemental claims.

Darling's argument is again premised on the faulty

assumption that GM can only exercise rights vis-á-vis its dealers

that are expressly provided for in the statute. This is not so.

We agree with the district court's interpretation of Darling's-Ford

II. The SJC's opinion does not suggest that the five items

considered in that case were the only items that a manufacturer

could require a dealer to provide in its warranty reimbursement

claims. See GM-Darling's I, 324 F. Supp. 2d at 273 n.14;

Darling's-Ford II, 719 A.2d at 114-15. Again, where the statute

does not expressly regulate a particular issue, we will not

interpret it to control an area that is governed by the terms of a

dealer-manufacturer agreement. See supra at 24-25.

13
The district court, acting pursuant to Me. Rev. Stat. Ann.
tit. 4, § 57 and Me. R. Civ. P. 76B, requested instructions from
the SJC regarding interpretation of § 1176. Inter alia, it asked
whether § 1176 requires a dealer "to make a 'particularized claim'
to a manufacturer in seeking reimbursement for warranty work?"
Darling's-Ford II, 719 A.2d at 114. If so, the district court
asked whether the Darling's claims, which contained the five items
listed above, "meet the 'particularized claim' requirement?" Id.
The SJC answered both questions in the affirmative. First, the SJC
stated that accomplishing the objectives of § 1176 "necessarily
requires that a dealer submit a claim that is sufficiently
individualized to enable a manufacturer to satisfy [its warranty
reimbursement] obligations." Id. Second, the SJC found that the
Darling's claims were "sufficient to show that Darling's meets the
statutory requirement for an individualized claim." Id. at 115.

-35-
 The district court supportably found that, under the

Dealer Agreement, GM has a right to "such information and

assistance as may reasonably be requested by [GM] to facilitate

compliance with applicable laws, regulations, investigations and

orders relating to products." GM-Darling's I, 324 F. Supp. 2d at

266, 274 (quoting the Dealer Agreement). The Dealer Agreement

further provides that the refusal to provide such information

constitutes a breach. See id. Thus, although the statute may not

require Darling's to submit the VIN and date of service with its

supplemental claims, the GM-Darling's Agreement does require it so

long as the request is reasonable.

We conclude that the court's finding -- that inclusion of

the VIN and date of service on supplemental claims greatly

facilitates the claims administration process while imposing only

a marginal burden on Darling's -- was not clearly erroneous. See

id. at 273. The evidence establishes that the most efficient way

for GM to pinpoint a particular repair is through use of the VIN

and date of service. Moreover, Darling's warranty administrator

acknowledged that it is actually less burdensome for Darling's to

provide the VIN and date of service data because omission of that

data requires the extra step of creating a "short form" claim.

Given the added administrative efficiencies, and the lack of any

burden imposed on Darling's, we hold that GM may reasonably require

Darling's to furnish the VIN and date of service with each

-36-
supplemental claim, and that, pursuant to the GM-Darling's

Agreement, Darling's is not entitled to reimbursement where such

information is withheld.

4. Unfair and deceptive trade practices

Finally, Darling's argues that GM's failure to honor the

deadlines of § 1176, its refusal to reimburse Darling's claims that

were submitted without the VINs and dates of service, its refusal

to approve Darling's application for a labor rate increase, and its

insistence on the right to debit previously approved and paid

warranty reimbursement claims constitute arbitrary and

unconscionable conduct in violation of Me. Rev. Stat. Ann. tit. 10,

§ 1174 (providing, in relevant part, that "[i]t shall be unlawful

for any . . . [m]anufacturer . . . to engage in any action which is

arbitrary, in bad faith or unconscionable and which causes damage

to any of said parties or to the public"). In light of our

holdings above, finding no violations of § 1176 and no other

indication that GM's conduct was arbitrary or in bad faith, we

affirm the district court's ruling rejecting this claim.14

III. Conclusion

For the foregoing reasons, we affirm the district court's

judgment in all respects.

So ordered.

14
We also deny Darling's request for attorney's fees.

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