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The Franchise Memorandum

Posts from July 2012 - Issue 157.
Posted in Damages

An appeals court in Ohio has set aside for now a large class action damages award that had been entered against an automobile manufacturer. In Westgate Ford Truck Sales, Inc. vs. Ford Motor Company, 2012 Ohio App. LEXIS 1707 (Ohio App. 8th Cir. May 3, 2012), the court reviewed the terms of a discount program provided by Ford Motor Company to the Plaintiff-Appellee, Westgate Ford Truck Sales, and other dealers. Ford’s Competitive Price Assistance Program (CPA) allowed dealers to petition Ford for discounts from the wholesale price of trucks in order to maintain a competitive edge in ...

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Posted in Terminations

The Sixth Circuit Court of Appeals recently affirmed a preliminary injunction precluding a wine manufacturer from terminating two distributors as part of a nationwide reorganization plan. In Tri-County Wholesale Distribs., Inc. v. The Wine Group, Inc., 2012 U.S. App. LEXIS 13415 (6th Cir. June 29, 2012), the court found that the plaintiff distributors were likely to prevail on the merits of their argument that The Wine Group did not have “just cause” to terminate them under the Ohio Franchise Act. The Act states that “just cause” requires more than “[a] unilateral ...

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Posted in Arbitration

In Mac Tools v. Diaz, U.S. Dist. LEXIS 56197 (S.D. Ohio Apr. 23, 2012), the U.S. District Court for the Southern District of Ohio enforced an arbitration provision against a distributor’s wife even though she did not sign the distribution agreement at issue. Although the wife did not sign the agreement, she did invest personal funds in her husband’s Mac Tools distributorship and participated in the acquisition and development of the business. When the distributorship failed, she brought suit against Mac Tools in state court, alleging that it had fraudulently induced her and her ...

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In R+C+G Station v. Urbieta Oil, Inc., 2012 U.S. Dist. LEXIS 79033 (S.D. Fla. June 7, 2012), a Florida federal court held that the plaintiff was not a franchisee under the Petroleum Marketing Practices Act (PMPA). R+C+G Station (RCG), former operator of a Valero gasoline service station and convenience store, executed a three-year agreement with Urbieta Oil, Inc. Without notice, Urbieta terminated the parties’ agreement and closed the location operated by RCG. RCG sued for violations of the PMPA, which limits the circumstances in which franchisors may terminate a ...

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Posted in Antitrust

Mary Kay sued a former national sales director (the next level up from a Mary Kay consultant) for enforcement of a contractual covenant against competition. The director, Amy Dunlap, in turn brought a counterclaim against Mary Kay. Dunlap alleged that Mary Kay had violated Texas’s Deceptive Trade Practices Act (DTPA) and further claimed that the noncompete agreement was an illegal restraint of trade under the Sherman Act. In Mary Kay, Inc. v. Amy Dunlap, 2012 U.S. Dist. LEXIS 86499 (N.D. Tex. June 21, 2012), the court addressed Mary Kay’s motion to dismiss Dunlap’s ...

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Posted in Antitrust

The United States District Court for the Eastern District of Virginia recently granted a manufacturer’s motion for summary judgment on a claim of monopolization brought against it by a competitor. In Kolon Industries, Inc. v. E.I. DuPont de Nemours & Co., Bus. Franchise Guide ¶ 77,857 (E.D. Va. Apr. 5, 2012), Kolon claimed that DuPont monopolized the United States para-aramid market, in which DuPont sold its Kevlar product, through the use of long-term, multi-year supply agreements with high volume para-aramid purchasers.

To prove its claim, Kolon had to show that DuPont ...

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Posted in Contracts

In Jaguar Land Rover North America, LLC v. Manhattan Imported Cars, Inc., 2012 U.S. App. LEXIS 8260 (4th. Cir. Apr. 23, 2012), the United States Court of Appeals for the Fourth Circuit affirmed a district court’s summary judgment ruling in favor of an automobile supplier, holding that the supplier was not required to make certain incentive payments to the dealership. The appeals court declined to enforce a contract integration clause that purported to cancel and supersede any agreements previously executed between the parties.

In connection with their agreement to add a Land ...

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Posted in Antitrust

Last month saw two state appellate courts issue similar but not identical opinions regarding the treatment of vertical resale price (RPM) agreements. The decisions reflect the continued lack of consistency regarding the treatment of RPM under federal antitrust law and under various state antitrust laws, as well as the compliance difficulties faced by businesses with national resale networks.

On May 4, 2012, the Kansas Supreme Court in O’Brien v. Leegin Creative Leather Products, Inc., 2012 Kan. LEXIS 246 (Kan. May 4, 2012), reversed a decision granting summary judgment to ...

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Posted in Damages

In Laethem Equipment Company, et al. v. Deere & Company, 2012 U.S. App. LEXIS 12135 (June 13, 2012), the U.S. Court of Appeals for the Sixth Circuit held that Michigan’s comparative-fault scheme did not require a reduction in the jury’s award of damages to the plaintiffs – two agricultural dealerships and their owners – and the Michigan Farm and Utility Equipment Act (“MFUEA”) did not require the dealerships to make an election of remedies between their breach of contract claims and their statutory claims.

Francis Laethem owned and operated two agricultural dealerships ...

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Posted in Terminations

The United States District Court for the Southern District of New York recently dismissed breach of contract and related claims brought against a manufacturer/supplier in connection with its termination of a long-time distributor because the parties had not signed a formal written distribution contract. In National Gear & Piston, Inc. v. Cummings Power Systems, LLC, 2012 U.S. Dist. LEXIS 72879 (S.D.N.Y. May 17, 2012), the defendant, a manufacturer and supplier of automotive components, had been selling products on a wholesale basis to the plaintiff-distributor since 1998 ...

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In John R. Atchely and Michael Gilroy v. Pepperidge Farm, Inc., 2012 U.S. Dist. LEXIS 30878 (E.D. Wash. March 8, 2012), the United States District Court for the Eastern District of Washington found that a genuine issue of material fact existed as to whether Pepperidge Farm charged plaintiffs a franchise fee under the Washington Franchise Investment Protection Act by deducting from commissions owed to plaintiffs a fee for services related to a pallet delivery program. Under the program, Pepperidge Farm delivered shrink-wrapped pallets of bakery products directly to large ...

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Posted in Internet

The Internet is undergoing a dramatic change that has significant implications for the use and protection of trademarks. June 13, 2012 marked “Reveal Day,” when the international corporation that controls domain names, Internet Corporation for Assigned Names and Numbers (ICANN), published identifying information about applications for 1,930 new Generic Top-Level Domains (gTLDs).

Until now, web addresses have, for the most part, ended in such familiar gTLD extensions as .com, .net, and .org. There are currently 22 such extensions. There are also 280 country code ...

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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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