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The Franchise Memorandum

Posts from April 2013 - Issue 166.

In Strassle v. Bimbo Foods Bakeries Distribution, Inc., 2013 U.S. Dist. LEXIS 34560 (D.N.J. Mar. 13, 2013), a federal court in New Jersey declined to dismiss a claim under the New Jersey Franchise Practices Act (NJFPA) brought by a group of distributors against Bimbo, a manufacturer of bakery goods. The distributors filed a class action complaint alleging that Bimbo breached their contracts and violated the NJFPA by refusing to allow them to buy and resell various types of bread products in their designated territories.

Bimbo moved to dismiss the NJFPA claim and the distributors’ ...

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Posted in Choice of Law

The United States District Court for the District of Minnesota recently held that the selection of Minnesota law in a sales representative agreement did not have the effect of incorporating the Minnesota Termination of Sales Representative Act (MTSRA), where the facts of the case did not otherwise result in its application. North Coast Tech. Sales, Inc. v. Pentair Tech. Prods., Inc., 2013 U.S. Dist. LEXIS 28368 (D. Minn. Mar. 13, 2013). Gray Plant Mooty represented the defendant manufacturer in this case. The dispute arose when Pentair sent a notice advising the sales ...

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A federal district court in Maryland recently determined that a manufacturer did not timely exercise its right of first refusal to purchase a truck dealership from one of its dealers. Paccar Inc. d/b/a Peterbilt Motors Co. v. Elliot Wilson Capitol Trucks LLC, 2013 U.S. Dist. LEXIS 21004, (D. Md. Feb. 8, 2013). In granting the dealer’s cross motion for summary judgment, the court focused on the requirement that the dealer give notice in order to trigger the thirty-day option period set forth in the dealership agreement. Dealer Elliot Wilson claimed that the option had expired because ...

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Posted in Damages

In FECO, Ltd. v. Highway Equipment Co., 2013 Iowa App. LEXIS 94 (Iowa Ct. App. Jan. 9, 2013), the Iowa Court of Appeals affirmed a trial court’s denial of damages and attorneys’ fees to a prevailing plaintiff in a dealership termination suit. FECO had served as an agricultural equipment dealer for Highway Equipment before the latter terminated the parties’ agreement in 2002. Highway Equipment admitted that it did not have good cause for termination and that it did not provide the necessary notice of termination, as required by the Iowa dealership statute. When considering ...

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The Minnesota Court of Appeals recently affirmed rulings against a dealership which alleged violations of Minnesota distribution and dealership laws. North Star Int’l Trucks, Inc. v. Navistar, Inc., 2013 Minn. App. Unpub. LEXIS 294 (Minn. Ct. App. Apr. 8, 2013). In this case, a franchised truck dealership, North Star, alleged that truck manufacturer Navistar violated the dealership agreements between the parties as well as Minnesota’s laws against unfair practices by manufacturers, changing the competitive circumstances of a dealership agreement without good cause ...

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Posted in Antitrust

Late last month, the Supreme Court of Nebraska affirmed a jury verdict in favor of credit reporting agency Experian Information Solutions, in a lawsuit brought against it by mortgage credit report reseller, Credit Bureau Services, alleging violations of Nebraska’s unusual antitrust act. Credit Bureau Servs., Inc. v. Experian Info. Solutions, Inc., 2013 Neb. LEXIS 47 (Neb. Mar. 22, 2013). Evidence was adduced at trial that as part of its “Project Green,” Experian increased, over the course of several years, the minimum monthly purchase requirement for mortgage-related ...

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An agreement by which an automobile manufacturer and its dealer resolved a termination dispute violated New Hampshire’s dealer protection statute, the state’s highest court held this month. Strike Four, LLC v. Nissan North America, Inc., 2013 N.H. LEXIS 37 (N.H. April 12, 2013). After Nissan originally sent a notice of termination, which its dealer protested, the parties reached a settlement by which the dealer would be given a new two-year contract but would be required to sell or lose its dealership without protest if any future defaults or breaches occurred, including the ...

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An Oklahoma appellate court rejected a trial court’s decision that had found Ford Motor Company vicariously liable to disgruntled customers of a now-defunct dealership. Thornton v. Ford Motor Co., Bus. Franchise Guide (CCH) ¶ 15,020 (Okla. Civ. App. Feb. 7, 2013). The case involved an Oklahoma dealer that closed its business only seven months after Ford approved its purchase of the dealership. During the seven months of operation, the dealer’s employees executed bogus checks and failed to deliver vehicles, title certificates, or to pay balances on trade-in vehicles. The ...

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Posted in Arbitration

A previously vacated award of $1.4 million to a former Thomas Kinkade artwork dealer was not revived on appeal this month due to the same irregularities in the arbitration process that had caused a federal district court to reject the award in 2010. Thomas Kinkade Co. v. White, 2013 U.S. App. LEXIS 6537 (6th Cir. Apr. 2, 2013). As reported in Issue 129 of The GPMemorandum, the district court had found that a dealer and his appointed arbitrator’s business dealings with the supposedly “neutral” third arbitrator caused bias that ruined the arbitration. “Evident partiality or ...

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The Court of Appeals of Texas has reversed a trial court ruling and held that terminated distributors could not assert claims against their supplier under the Texas Deceptive Trade Practices Act (DTPA). AdvoCare Int’l, L.P. v. Ford, 2013 Tex. App. LEXIS 1162 (Tex. Ct. App. Feb. 5, 2013). After AdvoCare (a supplier of Ephedra® and certain other products) terminated their distributorships, several of the distributors filed suit alleging various claims including violations of the DTPA. At trial, a jury awarded them damages and attorneys’ fees under that claim. The court of ...

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In Mailing and Shipping Systems, Inc. v. Neopost USA, Inc., 2013 U.S. Dist. LEXIS 44909 (W.D. Tex. Mar. 28, 2013), the United States District Court for the Western District of Texas refused to require a distributor to protect a dealer from territorial encroachment by rival dealers based solely on the duty of good faith and fair dealing set forth in Section 1.034 of the Texas Business and Commerce Code. The plaintiff, a postage meter and mailing machine dealership with territories in Texas and New Mexico, alleged that Neopost, a distributor, breached its dealership agreement and the ...

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Posted in Antitrust

A federal district court in California this month dismissed claims by a smaller hardware store chain against Home Depot and two manufacturers of power tools. Orchard Supply Hardware LLC v. Home Depot USA, Inc., et al., Case No. 12-cv-06361-JST (N.D. Cal. April 12, 2013). The claim, which was dismissed without prejudice, was that Home Depot had demanded exclusive supply contracts with the two manufacturers, both of which then stopped supplying the plaintiff. Those allegations alone were not enough to state a viable antitrust action, the court held.

The decision rejected each of the ...

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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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