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The Franchise Memorandum

Posts from April 2014 - Issue 179.

The Illinois Court of Appeals recently held that the "Warranty Supplemental Cost Recovery" charge that Nissan imposed on its Illinois Infiniti dealers violated the Illinois Motor Vehicle Franchise Act. Nissan N. Am., Inc. v. Motor Vehicle Review Bd., 2014 III. App. LEXIS 93 (III. App. Ct. Feb. 20, 2014). Two dealers sued after Nissan sought to recover a portion of the warranty payments made to dealers by imposing a "Warranty Supplemental Cost Recovery" surcharge on each Infinity vehicle sold to each dealer.

Section 6 of the Act describes the process by which dealers may be reimbursed ...

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Posted in Contracts

In a decision from the Western District of New York, a magistrate judge relied on the plain language of a distribution agreement to determine its scope. Precimed Inc. v. ECA Medical Instruments, 2014 U.S. Dist. LEXIS 10349 (W.D.N.Y. Jan. 28, 2014). ECA, a manufacturer of both standard and custom surgical instruments, entered into a distribution agreement for Precimed to market and sell ECA's "Products." After a disagreement as to the scope of the term "Products," the parties filed opposing claims regarding whether the distribution agreement gave Precimed exclusive rights to ...

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Posted in Terminations

A federal court in Ohio recently denied a dealer's motion for a preliminary injunction that would have required a tire manufacturer to continue supplying the dealer with products pending adjudication of the dealer's claims for wrongful termination and violation of 42 U.S.C. § 1981. In B Sr S Tires, Inc. v. Bridgestone Americas Tire Operations, LLC, 2014 U.S. Dist. LEXIS 26119 (N.D. Ohio Feb. 27, 2014), the plaintiff dealer was a thirty-plus year distributor of Bridgestone and Firestone tires and a minority-owned business that frequently fulfilled supply contracts for the U.S ...

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Posted in Encroachment

In Aston Martin Lagonda of North America, Inc. v. Lotus Motorsports, Inc., 2014 U.S. Dist. LEXIS 35909 (D. Mass. Mar. 18, 2014), a Massachusetts federal court partially granted Aston Martin's motion to dismiss the defendant-dealer's counterclaims. Aston Martin had sought a declaratory judgment that the parties' dealer agreement did not prohibit it from locating a new dealer within 8.7 miles of Lotus's existing dealership, but outside of its territory. Lotus, which had served as the sole Aston Martin dealership in New England (except for one dealership) since 1996, claimed the ...

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Posted in Antitrust

The United States District Court for the District of Colorado granted summary judgment dismissing seven claims of federal and state antitrust violations brought by a distributor of DuPont's automobile paint coatings. ITS Choice Enters., Inc. v. E.I. DuPont De Nemours Sr Co., 2014 U.S. Dist. LEXIS 24332 (D. Colo. Feb. 26, 2014). DuPont provided various forms of assistance to its distributors and, in exchange, each distributor agreed not to solicit existing business from other distributors. Between 2008 and 2009, DuPont gave significant financial assistance and other support to ...

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In McPeak v. S-L Distribution Co., 2014 U.S. Dist. LEXIS 10794 (D.N.J. Jan. 29, 2014), a federal district court held that held that a distributor had pled sufficient facts to be considered a franchisee under the New Jersey Franchise Practices Act ("NJFPA"), even though the distribution agreement specifically disclaimed that the parties were in a franchise relationship. McPeak was a distributor for a large snack food manufacturer, and the agreement specifically prohibited McPeak from using S-L's trademarks and trade name without its prior written permission. In addition, the ...

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The Office of Federal Contract Compliance Programs recently announced final rules changing federal contractors' affirmative action requirements for individuals with disabilities under section 503 of the Rehabilitation Act and protected veterans under the Vietnam Era Veterans' Readjustment Assistance Act. The final rules became effective March 24, 2014. These new rules mandate various changes to the content and implementation of contractors' affirmative action plans for these protected classes. Compliance with some changes was required by March 24, while other changes ...

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A federal district court in Ohio dismissed claims brought by two beverage distributors alleging that a successor manufacturer's termination of their distribution agreements constituted an unlawful taking under the Ohio and U.S. Constitutions. In Tri County Wholesale Distributors, Inc. v. Labatt USA Operating Co., LLC, 2014 U.S. Dist. LEXIS 903 (S.D. Ohio Jan. 6, 2014), the distributors entered into written distribution agreements with Labatt that granted them exclusive rights to distribute specified brands of alcoholic beverages in designated territories. Later, a new ...

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Posted in Antitrust

A federal court in Arizona has rejected various antitrust claims brought by a servicer of aircraft power units against a manufacturer of those units. Aerotec Int'l, Inc. v. Honeywell Int'l, Inc., 2014 U.S. Dist. LEXIS 38651 (D. Ariz. Mar. 17, 2014). The court granted summary judgment in favor of Honeywell International, a company that manufactures aircraft power units that provide on-board electrical power in commercial aircraft. Honeywell is the largest servicer of its power units. Aerotec International is an independent service provider that performs maintenance, repair ...

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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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