Federal appeals court favors farm equipment makers in challenge to 2017 ND law

John Hageman
Forum News Service

BISMARCK — A federal appeals court sided with a group of farm equipment makers that challenged a 2017 North Dakota law regulating the relationship between manufacturers and dealers on Aug. 2.

In a split decision, the Eighth Circuit U.S. Court of Appeals upheld a lower court’s decision to issue a preliminary injunction preventing the law’s enforcement while the case proceeded. The judges said the state of North Dakota has not shown a “significant and legitimate public purpose underlying” the law.

The Association of Equipment Manufacturers and several major tractor makers brought the legal challenge two years ago, arguing provisions of the law were unconstitutional and may create “the most restrictive dealership law in the entire country.” They said it would “impose unprecedented restrictions” on farm equipment manufacturers’ ability to enforce new and existing contracts with dealers and maintain their federally protected trademark rights, among other issues.

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, the plaintiffs said.

In a dissenting opinion, Judge Bobby Shepherd said the appellate court shouldn’t “second-guess” the Legislature.

“Ensuring that North Dakota’s agriculture industry, a large component of its economy, is stable and beneficial for all of its participants is squarely within the province of the North Dakota Legislature,” he wrote.

The North Dakota Implement Dealers Association, which supported the 2017 bill, has called it the “farm equipment dealer bill of rights” and said it was developed in response to a “fundamental shift” in requirements placed on dealers by manufacturers.

Attorney General Wayne Stenehjem’s office is reviewing the decision, a spokesperson said.