Interpretation ID: aiam4221
Esquire
Senior Attorney
Office of the General Counsel
Ford Motor Company
The American Road
Dearborn
MI 48121;
Dear Mr. Epstein: This responds to your request for an interpretation of a portion of th National Highway Traffic Safety Administration's (NHTSA) response to the petitions for reconsideration of the final rule establishing the Federal motor vehicle theft prevention standard (51 FR 8831, at 8835, March 14, 1986).; Specifically, you were concerned about the following language: >>>A manufacturer is free under this standard and the Theft Act to us a transparent paint mask and to specify in its contracts with its dealers that the dealer must remove the mask before selling vehicles or parts. However, if the dealer does not remove the mask, both the manufacturer and the dealer could be liable for violating section 607(a) of the Cost Saving (sic) Act. The manufacturer and dealer might both be liable for selling a vehicle not in compliance with the theft prevention standard (prohibited by section 607(a)(1)) and the manufacturer might be liable for falsely certifying that the vehicle complies with the theft prevention standard (prohibited by section 607(a)(4)(B)). The manufacturer must assume its portion of this risk if it wishes to use a transparent integral paint mask that must be removed by its dealers.<<<; You stated in your letter that this discussion could be read a imposing vicarious liability on the manufacturers for a dealer's failure to remove a paint mask after the dealer had painted over the mask. You then asked whether NHTSA's opinion would be affected if the manufacturer provided the dealer in writing, either by letter or service bulletin, instructions on how to protect the labels during dealer preparation and advice that Federal law required dealers to remove the paint mask after performing the dealer preparation operations. Such a step would affect the agency's opinion as to the manufacturer's liability for the non-removal of a paint mask as explained below.; The language you quoted from the preamble was intended to alert vehicl and parts manufacturers to their statutory obligations under section 607(a) of the Motor Vehicle Information and Cost Savings Act (15 U.S.C. 2027(a)). When dealers must take further actions to bring a vehicle into compliance with the theft prevention standard, sections 607 of the Cost Savings Act requires the vehicle manufacturer to exercise *due care* to ensure that the dealers will, in fact, perform such further actions. See sections 607(a)(4)(B) and 607(b) of the Cost Savings Act (15 U.S.C. 2027(a)(4)(B) and 2027(b)). The language quoted above from the agency response to the petitions for reconsideration implicitly acknowledged this due care defense by stating that manufacturers 'could' and 'might' be liable for violations of section 607(a) if paint masks were not removed by dealers.; It is not possible for us to give a hard and fast rule of wha constitutes due care in all circumstances. For example, a manufacturer that learns that its dealers generally are not removing the paint masks must do more to establish that it exercised due care than it did before it learned of such failures by its dealers. As a general proposition, however, NHTSA believes that a manufacturer using transparent paint masks to protect its labels has exercised due care, and therefore is not liable for violations of section 607(a), when it takes the following steps:; >>>1. The manufacturer includes a provision in its contracts with eac of its dealers obligating the dealer to remove the transparent paint masks,; 2. The manufacturer issues a service bulletin to all of its dealer providing instructions on how to protect the label during painting, rustproofing, etc., and on how and when to remove the transparent paint masks, and; 3. The manufacturer reminds the dealers, either in the service bulleti or in a separate letter, of their contractual and statutory obligations to remove transparent paint masks after performing dealer preparation operations, if the label is then obscured by the paint mask.; <<