STIHL, Inc. v. State

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THE SUPREME COURT OF NEW HAMPSHIRE

___________________________

Merrimack
No. 2014-0619

STIHL, Inc.

v.

THE STATE OF NEW HAMPSHIRE

Argued: May 13, 2015
Opinion Issued: October 27, 2015

Wadleigh, Starr & Peters, P.L.L.C., of Manchester (James C. Wheat and
Pierre A. Chabot on the brief, and Mr. Wheat orally), and McGuire Woods LLP,
of Richmond, Virginia (James H. Walsh and Bethany Gayle Lukitsch on the
brief), for the plaintiff.

Joseph A. Foster, attorney general (Francis C. Fredericks, assistant
attorney general, on the brief and orally), for the State.

LYNN, J. In this declaratory judgment action, the defendant, the State of
New Hampshire, appeals an order of the Superior Court (Smukler, J.) granting
summary judgment to the plaintiff, STIHL Incorporated, individually and doing
business as Northeast STIHL (STIHL). The State argues that the trial court
erred in finding that STIHL is not subject to RSA chapter 357-C, which
regulates business practices between motor vehicle manufacturers,
distributors, and dealers. See RSA ch. 357-C (2009 & Supp. 2014). We affirm.
 The trial court’s order relies upon the following facts. STIHL is a
corporation that manufactures, distributes, and sells an array of handheld
power and non-power tools such as chain saws, leaf blowers, hedge trimmers,
axes, pruners, and mauls. Although many of its products have engines, none
has wheels, engine and transmission, or is capable of transporting a person
from one location to another. Except for a limited number of national account
customers, STIHL does not sell its products directly to consumers. Instead, it
authorizes certain retailers to sell STIHL brand tools. In New Hampshire,
STIHL has approximately seventy-eight authorized retailers, along with six
national account customers.

In 1981, the legislature enacted RSA chapter 357-C, the so-called “dealer
bill of rights,” to regulate, among others, automotive manufacturers and
dealers. See Laws 1981, ch. 477. That statute provided certain protections for
motor vehicle dealers from the actions of manufacturers, see generally Laws
1981, 477:2, and, over time, the legislature increased the level of regulation it
imposed, see, e.g., Laws 1996, 263:8 (creating the New Hampshire Motor
Vehicle Industry Board to enforce the statute); Laws 2002, 215:4, :6 (expanding
the definition of motor vehicle). As the legislature expanded RSA chapter 357-
C, it also enacted RSA chapter 347-A, a similar but less comprehensive
regulatory scheme providing protections to equipment dealers. See Laws 1995,
ch. 210. In 2013, through Senate Bill (SB) 126, the legislature repealed RSA
chapter 347-A, and brought certain equipment manufacturers and dealers
under the aegis of RSA chapter 357-C. See Laws 2013, ch. 130. In so doing,
the legislature modified the definition of “motor vehicle” in RSA chapter 357-C
to “include equipment if sold by a motor vehicle dealer primarily engaged in the
business of retail sales of equipment,” and defined “equipment” to include,
among other things, “forestry equipment” and “yard and garden equipment.”
Laws 2013, 130:1.

After the enactment of SB 126, STIHL sought a declaratory judgment
that RSA chapter 357-C, as amended, did not apply to it. The State countered
that, as a “forestry” and “yard and garden” equipment manufacturer, STIHL
was subject to regulation under RSA chapter 357-C. Both parties moved for
summary judgment. The trial court found that RSA chapter 347-A, before it
was repealed, regulated STIHL’s agreements with its dealers because, under
that statutory scheme, the legislature chose to broadly define the term
“equipment.”1 Nevertheless, the court concluded that because STIHL produces
only handheld, not ground-supported or wheeled, equipment, it falls outside of
the purview of amended RSA chapter 357-C. This appeal followed.

1 STIHL does not agree that it was subject to regulation under former RSA chapter 347-A, and the
record contains no evidence as to whether STIHL was ever actually regulated under this statute.
As this issue is not before us, we express no opinion on the matter.

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 The only issue on appeal is whether the provisions of RSA chapter 357-C
apply to STIHL. The State contends that the plain language of the statute
supports its position that RSA chapter 357-C applies to STIHL. As a threshold
matter, the State argues that the terms “forestry equipment” and “yard and
garden equipment” unambiguously include products made by STIHL.
Moreover, the State argues that, under the statute’s plain language, whether a
manufacturer is subject to RSA chapter 357-C ultimately depends upon the
character of the manufacturer-dealer relationship. The State contends that
STIHL’s relationship with its dealers is materially similar to the relationships
between tractor and automobile manufacturers and their dealers, entities
which are covered by RSA chapter 357-C. Finally, the State argues that
because definitional language from RSA chapter 347-A was incorporated into
RSA chapter 357-C, the legislature intended that RSA chapter 347-A
substantively “live on” in amended RSA chapter 357-C.

STIHL counters that reading the term “equipment” within the definition
of the term “motor vehicle,” and within the broader context of the motor vehicle
statute as a whole, shows that handheld tools are not included within the plain
meaning of equipment. STIHL also argues that the “now-obsolete” RSA chapter
347-A is irrelevant to properly construing RSA chapter 357-C, which is “far
more onerous, complex and comprehensive than anything contemplated by
RSA 347-A.” Finally, STIHL contends that the applicability of RSA chapter
357-C cannot turn upon a fact-based, case-by-case inquiry into each
manufacturer-dealer relationship because, as a threshold matter, there “first
has to be a ‘motor vehicle’ and a ‘motor vehicle dealer.’”

To resolve this issue, we must engage in statutory interpretation. “The
interpretation of a statute is a question of law, which we review de novo.”
Favazza v. Braley, 160 N.H. 349, 351 (2010) (quotation omitted). “In matters of
statutory interpretation, we are the final arbiters of the legislature’s intent as
expressed in the words of the statute considered as a whole.” Id. “When
construing its meaning, we first examine the language found in the statute,
and where possible, we ascribe the plain and ordinary meanings to the words
used.” Id. “When statutory language is ambiguous, however, we will consider
legislative history and examine the statute’s overall objective and presume that
the legislature would not pass an act that would lead to an absurd or illogical
result.” Id. (citation omitted). “We interpret statutory provisions in the context
of the overall statutory scheme.” Id.

A manufacturer is subject to RSA chapter 357-C if it “engages directly or
indirectly in purposeful contacts within this state in connection with the
offering or advertising for sale of, or has business dealings with respect to, a
motor vehicle within the state.” RSA 357-C:2 (2009) (emphasis added). As
amended by SB 126, the statute’s definitional section provides, in pertinent
part, that:

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 I. “Motor vehicle” means every self-propelled vehicle
manufactured and designed primarily for use and operation on the
public highways and required to be registered and titled under the
laws of New Hampshire. Motor vehicle shall include equipment if
sold by a motor vehicle dealer primarily engaged in the business of
retail sales of equipment. . . . “Equipment” means farm and utility
tractors, forestry equipment, industrial equipment, construction
equipment, farm implements, farm machinery, yard and garden
equipment, attachments, accessories, and repair parts.

....

VIII. (a) “Motor vehicle dealer” means any person engaged in the
business of selling, offering to sell, soliciting or advertising the sale
of new or used motor vehicles or possessing motor vehicles for the
purpose of resale . . . .

RSA 357-C:1 (Supp. 2014). Based upon the statutory language, “motor
vehicle” can include “equipment” in certain circumstances. While “equipment”
is defined broadly, the type of equipment that subjects manufacturers to
regulation under the statute is limited to that which is “sold by a motor vehicle
dealer primarily engaged in the business of retail sales of equipment.” RSA
357-C:1, I (emphasis added). Whether items qualify as “motor vehicles,”
therefore, depends not only upon the definition of “equipment,” but also upon
the definition of “motor vehicle dealer.” See id. “Equipment” is a “motor
vehicle” only if it is “sold by a motor vehicle dealer primarily engaged in the
business of retail sales of equipment.” Id. (emphasis added). The definition of
a “motor vehicle dealer,” in turn, incorporates RSA 357-C:1, I, in that a dealer,
in part, is someone who sells “motor vehicles.” RSA 357-C:1, VIII(a).
Consequently, when the two definitions are read together, a “motor vehicle
dealer” becomes, in relevant part, “any person engaged in the business of
selling, offering to sell, soliciting or advertising the sale of new or used
[equipment if sold by a motor vehicle dealer].” Id.

This largely circular definition provides little clarity as to which
manufacturers or sellers of equipment fall within the purview of the statute.
What does seem clear, however, is that if the legislature had intended that the
statute apply to any items of “equipment” that meet the criteria specified in the
fourth sentence of RSA 357-C:1, I, and which are “sold by a . . . dealer
primarily engaged in the business of retail sales” thereof, there would have
been no reason for the second sentence of that section to include the term
“motor vehicle dealer.” That it did include such term indicates that the
legislature intended the statute to have a more restrictive scope with respect to
the “equipment” that falls within its reach. See State Employees Assoc. of N.H.
v. N.H. Div. of Personnel, 158 N.H. 338, 345 (2009) (noting the “elementary
principle of statutory construction that all of the words of a statute must be

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given effect and that the legislature is presumed not to have used superfluous
or redundant words” (quotation omitted)). Given the definitional circularity,
even assuming without deciding that STIHL sells “equipment,” we cannot
determine from the statute’s plain language whether RSA chapter 357-C
applies to STIHL. Nor can we agree with the State that the plain meaning of
the definitions — specifically, the way in which “equipment” is incorporated
within the definition of “motor vehicle” — shows that the law’s applicability
turns upon the nature of the specific manufacturer-dealer relationship
involved.

Because we conclude that the definitions of “motor vehicle” and “motor
vehicle dealer” are ambiguous, we turn to the legislative history for guidance.
See Favazza, 160 N.H. at 351. Early in the drafting process, the legislature
used broad language to define when “equipment” is a “motor vehicle,” but
ultimately it settled upon more restrictive language. Compare N.H.S. Jour. ___
(March 21, 2013) (“‘Motor vehicle’ . . . shall include equipment”), with Laws
2013, 130:1 (“Motor vehicle shall include equipment if sold by a motor vehicle
dealer primarily engaged in the business of retail sales of equipment.”). Had
the legislature intended the statute to apply to all equipment, it would not have
exchanged the initial broad definition of that term for one with such restrictive,
qualifying language.

The legislative hearings also show that the term “equipment” is meant to
be understood within the context of the motor vehicle code. See generally RSA
title XXI (2014 & Supp. 2014). During a senate hearing on SB 126, Senator
Sanborn, the prime sponsor, introduced and discussed the bill. In describing
the law’s applicability, he stated that, “if it’s got wheels, tires, and an engine,”
whether it be a car or a tractor, the same type of provisions can exist. Relative
to Business Practices Between Motor Vehicle Manufacturers, Distributors and
Dealers, SB 126, 2013 Sess. (N.H. 2013), http://www.gencourt.state.nh.us/
bill_Status/BillStatus_Media.aspx?lsr=766&sy=2013&sortoption=billnumber&t
xtsessionyear=2013&txtbillnumber=sb126. The subsequent testimony focused
upon automobiles (and automobile accessories) and analogous equipment (and
equipment accessories), with auto dealership owners and representatives from
the New Hampshire Automobile Dealers Association (NHADA), Chrysler, Mazda,
General Motors, the Alliance of Automobile Manufacturers, John Deere, and
Caterpillar, among others, testifying for and against the bill. Id. A member of
the NHADA testified that RSA chapter 357-C “is a motor vehicle statute” that
covers cars, trucks, heavy duty trucks, motorcycles, all-terrain vehicles (ATVs),
off-highway recreational vehicles (OHRVs), side by sides, and snowmobiles, see
id., all of which have engines, wheels, and transmissions and are capable of
transporting persons.

The type of equipment mentioned during the house and senate hearings
on the bill included tractors, skidders, truck plows, and balers. A former
owner of a local business stated, “our equipment may look a little different, but

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they all have engines, wheels, [and] transmissions” and, in reference to size,
said, “remember[,] the equipment we sell doesn’t fit in the back of a pick-up,
they are huge pieces.” Id. Notably, handheld equipment, like the equipment
manufactured by STIHL, was not discussed. Moreover, the equipment that was
discussed, i.e., large pieces of machinery and accessories, more closely
resembles equipment with “wheels, engines, [and] transmissions” than do
STIHL’s chain saws, blowers, axes, pruners, and mauls.

Despite this focus, the State argues that the legislative history as a whole
supports its argument that the applicability of the statute depends upon the
character of the relationship between the manufacturer and the dealer.
Specifically, it argues that the statute applies to STIHL because its
relationships with its dealers are “materially similar” to those between
automobile manufacturers and dealers, to which the statute clearly applies.
According to the State, “if any ambiguity exists in the statutory definition of
equipment, it is the presence of a franchisor-franchisee relationship that is
determinative” of the statute’s applicability. Although relationships between
manufacturers and dealers were generally discussed during the hearings, we
find no support for the State’s contention that the applicability of the statute
hinges upon the type of relationship between each individual manufacturer
and dealer. That fact, coupled with the focus upon automobiles, tractors and
other items with “wheels, engines, [and] transmissions,” the type of equipment
discussed, and the complete absence of any discussion regarding handheld
equipment, supports our conclusion that the legislature did not intend to
extend the meaning of “motor vehicle” to the handheld products manufactured
by STIHL.

Furthermore, applying the statute based upon the nature of the
manufacturer-dealer relationship involved would lead to an absurd result: it
would create a regulatory scheme requiring a fact-based, individualized
assessment to determine whether a manufacturer’s relationship with its
dealers is comparable to the relationships of automotive manufacturers and
dealers. Absent litigation, many equipment manufacturers would not know
whether they are “similar enough” to automotive or tractor manufacturers to
require compliance with the statute. Under the State’s reading, a
manufacturer that negotiates individual contracts may have to litigate each
contract to determine which ones are similar enough to automotive dealer
contracts — and are therefore subject to RSA chapter 357-C — and which ones
are not. We will not read such uncertainty into the statute.

In addition, given the definition of equipment, this type of case-by-case
litigation to determine the statute’s applicability could extend to manufacturers
of such things as garden hoses (“yard and garden equipment”), work boots
(“construction equipment”), and axes (“forestry equipment”) sold in hardware
stores (dealers “primarily engaged in the business of retail sales of equipment”).
RSA 357-C:1, I. Reading the statute as a whole, we find it implausible that if

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the legislature had intended to extend the reach of a statute designed primarily
to regulate manufacturer-dealer relations in the motor vehicle industry into
areas such as garden hoses, work boots, and axes, it would not have included
more specific language expressing such intent. Therefore, even if we were to
agree with the State that the statute emphasizes the attributes of the
manufacturer-dealer relationship, we ultimately agree with STIHL that, in order
to avoid absurd results, the types of equipment that are “motor vehicles” under
the statute must be limited to motor vehicle-like products or attachments,
accessories, or repair parts for motor vehicle-like products. See State v. Breest, 167 N.H. 210, 212-13 (2014) (“[W]e will not interpret statutory language in a
literal manner when such a reading would lead to an absurd result.” (quotation
omitted)).2 The products manufactured by STIHL do not satisfy these criteria.

Finally, although the State agrees that the legislative history is silent on
the specific issue of handheld tools, it contends that silence alone cannot show
that the legislature intended to deregulate companies like STIHL after
regulating them for eighteen years under the now-repealed RSA chapter 347-A.
The State points out that the legislature, before repealing RSA chapter 347-A,
incorporated the definition of equipment found in RSA 347-A:1 into RSA 357-
C:1, I. Compare RSA 347-A:1, I (2009) (repealed 2013) (“Dealer means a
person, corporation, or partnership primarily engaged in the business of retail
sales of farm and utility tractors, forestry equipment, light industrial
equipment, farm implements, farm machinery, yard and garden equipment,
attachments, accessories, and repair parts” (quotation omitted)), with RSA 357-
C:1, I (“Motor vehicle shall include equipment if sold by a motor vehicle dealer
primarily engaged in the business of retail sales of equipment. . . . Equipment
means farm and utility tractors, forestry equipment, industrial equipment,
construction equipment, farm implements, farm machinery, yard and garden
equipment, attachments, accessories, and repair parts” (quotation omitted)).
According to the State, “[t]his relocation indicates that the legislature intended
that chapter 347-A live on through its integration with chapter 357-C.” We
disagree.

As the State recognized at oral argument, RSA chapter 357-C constitutes
a significantly more comprehensive regulatory scheme than existed under RSA

2 The State argues that the legislative history lends support to its argument that it is the kind of
relationship that determines who is regulated under the statute. The State is correct that the
legislative history reflects discussion that relationships between equipment manufacturers and
dealers are similar to the relationships between automotive manufacturers and dealers. See
N.H.H.R. Jour. 765 (May 22, 2013) (“The relationship between equipment dealers and
manufacturers is identical to that of car/truck dealers: nearly duplicate one-sided, non-negotiable
contracts and an autocratic relationship. Equipment dealers also have business operations that
are nearly identical in all respects to car/truck/motorcycle etc. dealers.”). The State is incorrect,
however, when it infers from such discussion that the legislature intended to hinge the statute’s
applicability on a case-by-case relationship analysis with respect to the marketing systems for
particular types of equipment.

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chapter 347-A. Applying RSA chapter 357-C to companies like STIHL, given
that statute’s significantly more intensive level of regulation, would produce
untoward outcomes. For example, under the State’s construction of the
statute, a small company that makes only handheld equipment such as
hammers, rakes, or garden hoses, and sells those products through dealers
such as hardware stores, would be regulated by the New Hampshire Motor
Vehicle Industry Board (Board). See RSA 357-C:12, I (2009). Before being able
to sell its products to a new hardware store, the company would be required to
notify the Board and any other dealers in such equipment located in “the
relevant market area.” See RSA 357-C:9, I (Supp. 2014). If another dealer
objected, the Board could approve sales at the new location only after
evaluating, among other things, “[w]hether the new [equipment] dealers of the
same line make in that relevant market area are providing adequate
competition and convenient consumer care for the [equipment] of the line make
in the market area” and the “[g]rowth or decline in population and new
[equipment] registration in the relevant market area.” RSA 357-C:9, II (Supp.
2014). We cannot imagine that the legislature intended for the Board to make
this type of evaluation concerning handheld equipment such as hammers,
rakes, and garden hoses.

In contrast, STIHL argues that its interpretation of RSA chapter 357-C
takes the whole statute into consideration and avoids such outcomes: when the
legislature moved RSA chapter 347-A into a motor vehicle provision, it intended
to regulate only those manufacturers that produce equipment, and related
accessories, that are analogous to automobiles, in that they have engines,
wheels, and transmissions. We agree that this interpretation furthers the
purpose of the statute while avoiding absurd results, and is supported by the
legislative history. Of course, if the legislature disagrees with our
interpretation, it is free to amend the statute as it sees fit. State v. McKeown, 159 N.H. 434, 438 (2009).

For the reasons stated above, we do not believe that the legislature
intended RSA chapter 357-C to regulate the handheld tools that STIHL
manufactures and sells. Accordingly, we hold that the trial court did not err in
concluding that STIHL is not subject to regulation under RSA chapter 357-C.

Affirmed.

DALIANIS, C.J., and HICKS, CONBOY, and BASSETT, JJ., concurred.

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