**First Circuit Strikes Down Rhode Island Dealer Law**
The First Circuit ruled that Rhode Island cannot force Daimler Trucks to keep selling through a local dealer when most of the dealership’s customers and operations cross state lines. The decision blocks enforcement of a state statute that would have required Daimler to maintain its relationship with Rhode Island Truck Center.
The fight started when Daimler tried to end its dealer agreement with RITC. Rhode Island’s dealer-protection law requires manufacturers to show “good cause” before terminating a franchise, and it bars out-of-state sales that bypass local dealers. RITC sued, claiming the termination violated the statute. Daimler argued the law violated the Dormant Commerce Clause by regulating commerce that occurs mostly outside Rhode Island.
The appeals court agreed. It held that RITC’s business is overwhelmingly interstate—most trucks are sold to out-of-state buyers and the dealership competes with dealers in neighboring states. Applying Rhode Island’s statute here would give the state control over transactions and competition happening elsewhere, creating the kind of burden the Constitution forbids. The court distinguished this case from laws with a clear in-state focus.
The ruling means manufacturers can more easily restructure dealer networks when sales cross borders. It also warns other states that dealer-protection statutes must be tightly tied to local activity or risk being struck down.
**Bottom Line:** Rhode Island cannot regulate truck sales that happen mostly out of state.
https://www.courtlistener.com/opinion/10932495/rhode-island-truck-ctr-llc-v-daimler-trucks-north-america-llc/
How do you think this decision will affect dealer agreements in your state?