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The Franchise Memorandum

Posts from February 2010 - Issue 128.
Posted in Contracts

In Mercedes-Benz USA v. Concours Motors, 2010 WL 55473 (E.D. Wis. Jan 4, 2010), a Wisconsin federal court denied Mercedes-Benz’s motion for partial summary judgment on its breach of contract claim against its dealer, Concours. At issue concerned the parties’ oral agreement to allow the dealer to construct a new facility.  Because of low sales at the dealership, MB and Concours agreed to relocate the dealership to another location. When Concours started constructing a few facility but then stopped, MB sued claiming promissory estoppel and breach of contract.  The court refused to ...

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Congress is considering overruling the United States Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007), in which the court overturned near century-old precedent and held that manufacturers could set minimum price standards for retailers if they encouraged competition.  By eliminating the threat of per se liability, some have believed that Leegin provided suppliers and franchisors with at least limited comfort in setting minimum resale prices for their dealers and franchisees.  But even this may be short-lived.  On January ...

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Posted in RICO

In re U.S. Foodservice Inc. Pricing Litigation, 2009 WL 5064468 (D. Conn. Dec. 15, 2009), the court denied U.S. Foodservice’s (“USF’s”) motion to dismiss a RICO claim filed by plaintiffs Frankie’s Franchise System and others. The plaintiffs alleged that USF had created a number of shell companies to procure products, which were then sold to USF at inflated prices. In turn, USF allegedly would pass the inflated prices to plaintiffs, thus receiving a higher profit margin than it would have otherwise received under the parties’ contracts.

USF contended that ...

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Posted in Contracts

In Luther v. Kia Motors Am., Inc., 2009 WL 4906878 (W.D. Pa. Dec. 18, 2009), the court granted summary judgment to Kia on a rejected applicant’s claim that he had been promised a dealership.  The applicant claimed that a Kia representative told him he had been approved at the regional level, and that in the past, those approved at that level were approved by the ultimate national-level decision makers.  That constituted an oral contract, according to the applicant.  The court disagreed, holding that the conversation did not amount to an oral contract, that the representative did not have ...

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Posted in Terminations

A Kentucky federal court has granted a motion for summary judgment on a dealer’s claims for breach of contract, unjust enrichment, and tortious interference in Western Kentucky Coca-Cola Bottling Co., Inc. v. Red Bull North Am., Inc., 2010 WL 65029 (W.D. Ky., Jan. 5, 2010).  Western alleged wrongful termination of its distributor agreement against Red Bull, contending that it did not receive an opportunity to cure prior to Red Bull terminating the agreement.  It also alleged that Royal Crown Bottling Company had tortiously interfered with its contract with Red Bull when Royal Crown ...

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Posted in Terminations

In Englert, Inc. v. LeafGuard USA, Inc., WL 5031309 (D.S.C. Dec. 14, 2009), a South Carolina federal court held that the parties’ license agreement for the distribution of LeafGuard brand “leaf rejecting” rain gutters did not constitute a franchise agreement.  The dispute arose when Englert, the licensor, terminated its license agreement with LeafGuard USA for nonpayment of royalties.  Englert then sued LeafGuard for the unpaid royalties and, subsequently, for an injunction seeking the return of a gutter-fabricating machine that the license agreement provided would be ...

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New Jersey recently expanded the scope of its Franchise Practices Act to include persons or entities who do not make a majority of their sales directly to consumers and who have “an office or warehouse from which franchisee personnel visit or call upon customers or from which the franchisor’s goods are delivered to customers.”  Before, a franchisee was entitled to the Act’s protections only if it maintained “a fixed geographical location at which the franchisee offers and displays for sale the franchisor’s goods or offers for sale and sells the franchisor’s ...

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Posted in Terminations

In a case that could have broad implications for franchisors, the United States Supreme Court heard oral argument on cross appeals involving two related questions arising under the Petroleum Marketing Practices Act (“PMPA”):  (1) whether a gas station franchisee who continues to operate its franchise using the franchisor’s marks may bring a valid claim for “constructive termination,” and (2) whether executing “under protest” a renewal franchise agreement precludes a claim for “constructive nonrenewal.”  The consolidated petitions, Mac’s Shell ...

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Posted in Antitrust

Feeser’s, Inc. v. Michael Foods, Inc., 2010 U.S. App. LEXIS (3d Cir. Jan 7, 2010) involved alleged price discrimination under the Robinson-Patman Act (the “RPA”).  Ruling against the plaintiff, the Third Circuit construed strictly the RPA’s requirement that, to be actionable, a seller must discriminate in price between “competing purchasers.”  As reported in Issue No. 121 of The GPMemorandum (July 2009), the price discrimination claim arose in the supply of food products to institutional food service providers, such as schools and hospitals.  The defendant, Michael ...

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Last week a federal district court judge in Wisconsin issued a comprehensive opinion that elucidates what a terminated distributor or dealer must show to survive summary judgment under the Wisconsin Fair Dealership Law. The case is Brio Corp. v. Meccano S.N., 2010 U.S. Dist. LEXIS 11711 (E.D. Wis. Feb. 10, 2010). In denying summary judgment to defendant Meccano, which is the maker of the “Erector” brand of toys, the court ultimately and simply determined that fact questions precluded summary judgment. But the length and detail of the court’s opinion could recommend it as a ...

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In Trakloc Midwest LLC v. Trakloc Int’l, LLC, 2009 WL 4878578 (Wis. App. Dec. 17, 2009), the Wisconsin Court of Appeals affirmed the dismissal for improper venue of a case brought by technology distributor, Trakloc Midwest, against manufacturer Pacific Rollforming. Midwest argued its relationship with Pacific was a franchise relationship and the forum-selection clauses in the contracts violated the Wisconsin Franchise Investment Law (WFIL). Alternatively, Midwest argued that using different forum selection clauses (Alaska and California) in two separate agreements ...

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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