Monday, July 09, 2007

Fourth Circuit holds that the South Carolina Regulation of Manufacturers, Distributors and Dealers Act does not extend to sales consummated in another state

In CAROLINA TRUCKS v. VOLVO TRUCKS, the Fourth Circuit considered a South Carolina statute providing that a vehicle manufacturer generally "may not sell, directly or indirectly, a motor vehicle to a consumer in this State," except through its authorized franchises. A South Carolina dealer argued that the statute forbade sales to South Carolina consumers by an out-of-state manufacturer that were consummated in Georgia. The Fourth circuit rejected an interpretation of the statute that would prohibit a South Carolinian from traveling to Georgia and purchasing a vehicle.

South Carolina rules of construction provide that statutes must not be read to operate outside the state’s borders. The South Carolina Supreme Court has written repeatedly that South Carolina statutes"have no extraterritorial effect."

The Court further held that just because a Georgia dealer might advertise in South Carolina does not mean that part of the "sale" actually occurred in South Carolina. Accordingly, the panel reversed a half million dollar jury verdict in favor of Carolina Trucks.

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