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The Franchise Memorandum

Posts from December 2010 - Issue 137.
Posted in Terminations

In The Country Vintner of North Carolina v. Gallo Winery, Inc., 2010 U.S. Dist. Lexis 110615 (E.D.N.C. Oct. 18, 2010), a wine retailer sued for wrongful termination under the North Carolina Wine Distribution Agreements Act. The plaintiff, Country Vintner, had previously been a wholesaler of the Alamos brand of Argentinean wine for the entire state of North Carolina. In 2009, the manufacturer of Alamos replaced its original U.S. distributor (Billington) with a new distributor, Gallo. Gallo, upon taking over U.S. distribution of Alamos wine, began supplying its own wholesalers ...

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A federal magistrate judge in Oklahoma recently upheld a forum selection clause found in a dealer agreement in Sundowner Trailers, Inc. v. Snyder Serv., Inc., 2010 U.S. Dist. LEXIS 105183 (E.D. Okla. Sept. 30, 2010). The dispute arose when Synder, a horse trailer dealership, ceased operation and requested that Sundowner, the manufacturer, repurchase all of its unsold equipment and parts at 90-100% of net cost. A Tennessee law requires suppliers to repurchase inventory, at the retailer’s option, in certain situations when the retailer’s contract is terminated. Sundowner ...

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In Engines, Inc. v. MAN Engines & Components, Inc., 2010 U.S. Dist. LEXIS 76541 (D.N.J., July 29, 2010), a New Jersey federal court granted a preliminary injunction prohibiting MAN Engines & Components, Inc. from terminating its dealer agreement with Engines, Inc. because the relationship is likely a franchise under the New Jersey Franchise Practices Act (NJFPA). Engines was an authorized provider of repair, conditioning, and replacement services for MAN for many years. During that time, Engines made certain investments in its business in connection with its activities under ...

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Posted in Terminations

In September, an Ohio federal court granted the motion for preliminary injunction brought by a group of alcohol beverage distributors, enjoining their supplier from enforcing the terminations of their distributorships. The case is Tri-County Whole Distrib., Inc. v. The Wine Group, Inc., 2010 U.S. Dist. LEXIS 92598 (D. Ohio Sep. 2, 2010). In granting the motion, the court held that the supplier did not demonstrate that it had “just cause” to terminate the distributorships under the Ohio Alcoholic Beverages Franchise Act because the distributors had not breached their ...

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Posted in Contracts

In Landreth, Inc. v. Mazda Motors of Am., Inc., 2010 U.S. Dist. LEXIS 108080 (S.D. Ind. Oct. 7, 2010), the plaintiff Mazda dealer sued Mazda Motors of America alleging that the manufacturer had broken its promise to award plaintiff an additional dealership. The plaintiff admitted that Mazda had not entered into a written agreement to grant it  an additional dealership, but contended that Mazda’s representatives had told the plaintiff that it would receive a new dealership when the opportunity arose. Mazda moved for summary judgment on that claim, arguing that no contract could ...

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Posted in Terminations

An Illinois federal court recently issued two decisions in a case rejecting a dealer’s claims that it was improperly terminated. In Scholl’s 4 Seasons Sports, Inc. v. Arctic Cat Sales, Inc., 2010 U.S. Dist. LEXIS 110360 (N.D. Ill. Oct. 18, 2010), the court denied the plaintiff’s motion for leave to amend its complaint to allege a violation of the Illinois Equipment Fair Dealership Law (IEFDL). The court found that dealers like the plaintiff who sold only ATVs and snowmobiles were not covered by the law. Although the IEFDL was amended in July 2010 to specifically include ATV ...

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In Utility Trailer Sales of Kansas City, Inc. v. MAC Trailer Mfg., Inc., et al., 2010 LEXIS 83142 (D. Ka. Aug. 16, 2010), a Kansas federal court held that the “wrongful means” element needed to defeat the competitor privilege on a tortious interference claim is a higher standard than “malice.” The case arose out of a 2000 dealer agreement that granted Utility Trailer (UT) a nonexclusive license to sell trailers manufactured by MAC Trailer Manufacturing. Within a specified territory, however, UT was to be the sole authorized dealer. Importantly, the dealer agreement did not ...

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Posted in Antitrust

In one of the first post-Leegin appellate decisions in the vertical pricing context, the Eleventh Circuit this month rejected on the pleadings the antitrust claims brought by consumers against a manufacturer in Jacobs v. Tempur-Pedic North Am., Inc., 2010 U.S. App. LEXIS 24638 (11th Cir. Dec. 2, 2010). The complaint alleged, and was taken as true, that the manufacturer and its distributors agreed as to minimum resale prices for the manufacturer’s mattresses. The appeals court agreed with the trial court that the pleading of “visco-elastic foam mattresses” as a relevant ...

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Posted in Antitrust

In affirming the dismissal of the plaintiff’s second amended complaint, the Fifth Circuit appears to have put an end to the parties’ long-running legal battle in a case that resulted in the United States Supreme Court’s 2007 reversal of the century-old per se ban on minimum resale price agreements. PSKS, Inc. v. Leegin Creative Leather Prod., Inc., No. 09-40506 (5th Cir. Aug. 17, 2010). Plaintiff PSKS had been a retailer of the high-end Brighton® brand of women’s accessories manufactured by Leegin. Leegin had instituted a minimum resale price maintenance policy through ...

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Posted in Internet

In Saccucci Auto Group v. American Honda Motor Co., 617 F.3d 14 (1st Cir. Aug. 4, 2010), the court held that a car manufacturer’s decision to suspend temporarily the sale by its dealers of extended warranty plans over the Internet did not violate the Rhode Island “Dealer Act.” Although Honda had allowed its dealers to sell extended warranties online since 1997, the practice had come under criticism by some dealers, including its Dealer Advisory Board, which complained that the lower prices offered for the plans over the Internet damaged goodwill with customers who were sold ...

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A Minnesota federal court in Coyne’s & Co. v. Enesco, LLC, 2010 U.S. Dist. LEXIS 83630 (D. Minn. Aug, 16, 2010), issued a lengthy opinion addressing cross motions for summary judgment filed by a Minnesota distributor and the assignee of its original supplier, Enesco, LLC. While the court addressed several issues, most notably it held that Enesco could not succeed on its motion for summary judgment on the plaintiff’s claim under the Minnesota Franchise Act (MFA), finding that both sides had put forth viable arguments as to whether their relationship included an indirect franchise ...

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The Wisconsin Court of Appeals has rejected Seventh Circuit jurisprudence concerning the “community of interest” test as applied to the Wisconsin Fair Dealership Law (WFDL). In The Water Quality Store v. Dynasts Spas, Inc., 2010 Wisc. App. Lexis 550 (Wisc. Ct. App. Jul. 15 2010), a Wisconsin retailer had been selling the defendant manufacturer’s line of spa and spa equipment, on a nearly exclusive basis, for approximately seven years. The manufacturer terminated the relationship without good cause and without observing the notice and opportunity to cure requirements of ...

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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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