Manufacturers Challenge Massachusetts Law Requiring Changes to Vehicle Telematics Systems

With the effective date looming for changes to Massachusetts law that will require automobile manufacturers to make significant changes to telematics systems, a trade association representing OEMs on Tuesday, December 1, sought a preliminary injunction to stop those changes from taking effect. The Alliance for Automotive Innovation, referring to these statutory amendments as the “Data Law,” argues in its complaint that “[u]nder the guise of providing access to data necessary to perform vehicle maintenance, the Data Law sweeps broadly to allow third-party access to nearly all data generated by vehicles—with negative consequences for consumer privacy, public safety, and manufacturers’ federally protected property rights.”

Voters last month approved the Data Law through a ballot initiative requiring that vehicles sold in Massachusetts beginning with model year 2022 be equipped with “an inter-operable, standardized and open access platform” that permits owners, independent repair shops, and others to access vehicle telematics data. The Data Law imposes harsh penalties on manufacturers who fail to comply, including a private right of action by any owner or independent repair shop denied access to telematics data allowing them to recover the greater of treble damages or $10,000.

The Alliance argues that the Data Law is unworkable. No vehicles are presently equipped with such a platform, it would take years to develop and install the technology required, and manufacturers begin their model year many months before the calendar year commences; some OEMs will begin selling model year 2022 vehicles as early as January 2021. In July 2020, the National Highway Traffic and Safety Administration submitted written testimony to the Massachusetts Legislature warning that the Data Law “requires vehicle manufacturers to redesign their vehicles in a manner that necessarily introduces cybersecurity risks, and to do so in a timeframe that makes design, proof, and implementation of any meaningful countermeasure effectively impossible." According to the Alliance, the Data Law is preempted by federal law, including the National Traffic and Motor Vehicle Safety Act, the Clean Air Act, the Copyright Act, and the Defend Trade Secrets Act, and also is an unconstitutional taking of OEM intellectual property.

The uncertainty caused by the Data Law threatens to disrupt the distribution of new cars in Massachusetts. After Massachusetts voters in 2012 approved a similar “Right to Repair” ballot initiative requiring OEMs to make changes to vehicle diagnostic technology on an impossible timetable, the state Legislature repealed that law and adopted a statute imposing a more moderate implementation schedule. It took over a year to negotiate for OEMs, repair shop advocates, and legislators to negotiate these changes to Massachusetts law, while in this case, some OEMs will begin selling model year 2022 vehicles in only a month. Manufacturers may be able to avoid violating the Data Law by refusing to sell model year 2022 vehicles to dealers in Massachusetts, although the Alliance alleges in its complaint that the Data Law sweeps so broadly that it might apply to vehicles sold by OEMs to dealers in other states and then sold into Massachusetts by those dealers.

The Alliance and the Massachusetts Attorney General could enter into an agreement that the state will not enforce the Data Law until the federal court resolves the dispute. Dealership management systems (DMS) providers challenging changes to Arizona law requiring them to provide open access to their platforms negotiated an agreement with state officials to delay enforcement of those changes until a federal court decided a preliminary injunction motion. A similar agreement in Massachusetts could buy time for OEMs and advocates of the Data Law to work with legislators on a compromise solution, but unlike the Massachusetts law, the Arizona statute had no private right of action. The case has been assigned to Judge Douglas Woodlock, who has set a scheduling conference to be held on the morning of Thursday, December 3. Unless the court enters a temporary restraining order enjoining enforcement of the Data Law while the preliminary injunction motion is pending, OEMs may still be exposed to potential claims by vehicle owners and independent repair shops in Massachusetts because they were unable to access telematics data in model year 2022 vehicles.