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The Franchise Memorandum

Posts from December 2014 - Issue 188.
Posted in Antitrust

A federal court in New Jersey recently dismissed a claim for inducing price discrimination between competing distributors, but granted the plaintiff leave to file an amended complaint with additional factual allegations. Marjam Supply Co. v. Firestone Bldg. Prods. Co., 2014 U.S. Dist. LEXIS 158217 (D.N.J. Nov. 7, 2014). Marjam, a distributor of Firestone products, filed suit against the manufacturer of roofing systems and products, as well as against various competing Firestone distributors, for price discrimination violations under the Robinson-Patman Act. Firestone ...

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The Supreme Court of New York recently denied a manufacturer's motion to dismiss a dealer's cause of action for breach of the covenant of good faith and fair dealing on the grounds that the manufacturer may have acted improperly in placing a competing dealer in the midst of the dealer's core market segment. JJM Sunrise Auto., LLC v. Volkswagen Grp. of Am., Inc., 2014 N.Y. Misc. LEXIS 4793 (N.Y. Sup. Ct. Nov. 6, 2014). The parties had entered into a dealer agreement pursuant to which JJM became an authorized Audi dealer and operated its own dealership. JJM alleged that Audi breached the ...

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Posted in Terminations

The United States District Court for the District of Puerto Rico recently denied summary judgment motions brought by both parties in Casco, Inc. v. John Deere Construction Co. Sr Forestry Co., 2014 U.S. Dist. LEXIS 120472 (D.P.R. Aug. 26, 2014). Casco alleged that John Deere had violated the Puerto Rico Dealers Act (Law 75) when it unilaterally cancelled a purchase order for an excavator that Casco had sold to a customer. Casco asserted that the cancellation negatively impacted its cash flow and resulted in constructive termination of the distributor agreement. The core issue on the ...

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The United States District Court for the District of New Jersey recently denied a Nestle distributor's request for preliminary injunctive relief under the New Jersey Franchise Practices Act because the distributor failed to demonstrate that it maintained a "place of business" in New Jersey, within the meaning of the Act. Watchung Spring Water Co., Inc. v. Nestle Waters N. Am., Inc., 2014 U.S. Dist. LEXIS 151178 (D.N.J. Oct. 23, 2014). The court defined "place of business" to mean a location where selling is the predominant activity and where there is a substantial level of marketing ...

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The federal district court in South Dakota recently denied a defendant's motion to reconsider an order invalidating a forum-selection clause because it violated the public policy of the forum state. Black Hills Truck & Trailer, Inc. v. MAC Trailer Mfg., Inc., 2014 U.S. Dist. LEXIS 157968 (D.S.D. Nov. 6, 2014). MAC moved the court to transfer the litigation to the Northern District of Ohio based on a mandatory forum-selection clause in a distribution agreement between the parties. The court held that South Dakota's strong public policy rendered the forum-selection clause ...

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The federal court in Connecticut recently granted summary judgment in favor of a manufacturer on its motion to dismiss a distributor's claim under the Connecticut Franchise Act ("CFA"). Kinsley Group, Inc. v. MWM Energy Sys., Bus. Fran. Guide 91 15,389 (D. Conn., Sept. 23, 2014). Kinsley had been a distributor and authorized servicer of power generators manufactured by MWM since 2010. The relationship was not exclusive, however, and Kinsley derived the majority of its revenue from sales of a different manufacturer's products, in a noncompetitive sector. In 2012, MWM was acquired ...

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Posted in Transfers

Although they still lost on other grounds, parties who attempted to purchase a Mercedes Benz dealership may have made important law last month in their tortious interference lawsuit against the car company. Fresno Motors, LLC v. Mercedes Benz USA, LLC, 2014 U.S. App. LEXIS 21127 (9th Cir. Nov. 5, 2014). The plaintiffs maintained that Mercedes Benz did not provide timely notice it was exercising its right of first refusal to buy the dealership, and that the company's exercise of that right constituted interference with the plaintiff's contract to purchase the business from the ...

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Posted in Terminations

The United States Court of Appeals for the Second Circuit affirmed a district court's denial of a franchisee's request for preliminary injunctive relief under the Petroleum Marketing Practice Act (PMPA), finding that the franchisor's termination based on the franchisee's failure to timely pay fees was proper under the PMPA. Yonker Cent. Ave. Snack Mart, Inc. v. NY Fuel Distribs., LLC, Case No. 13-3841-cv (2nd Cir. Oct. 31, 2014). Under the PMPA, a franchisee is entitled to a preliminary injunction if it shows: (1) the franchise has been terminated; (2) serious questions going to the ...

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A court has denied a manufacturer's motions for judgment as a matter of law and for a new trial after a jury awarded one of its dealers nearly half a million dollars on his claim that his distribution agreement was constructively terminated, resulting in a breach of the implied covenant of good faith and fair dealing. Tilstra v. Bou-Matic, LLC, 2014 U.S. Dist. LEXIS 131531 (W.D. Wis. Sept. 19, 2014). Although the parties' agreement expressly allowed the manufacturer, Bou-Matic, to alter the territory of its dealer, Tilstra, in its sole discretion, it also required good cause for ...

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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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