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The Franchise Memorandum

Posts from April 2015 - Issue 192.
Posted in Encroachment

The Commonwealth Court of Pennsylvania recently reversed a decision by the State Board of Vehicle Manufacturers, Dealers and Salespersons that prohibited Arctic Cat from appointing a new dealer to sell ATVs within an existing dealer's market. Arctic Cat Sales, Inc. v. State Bd. of Vehicle Mfrs., Dealers, and Salespersons, 2015 Pa. Commw. LEXIS 78 (Pa. Commw. Ct. Feb. 23, 2015). The existing dealer, Nieman, filed a protest before the board alleging that the addition of a new ATV dealership in its market would result in a price war that would cause one or both dealers to withdraw from the ...

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Posted in Class Actions

A California state appellate court affirmed the denial of a motion for class certification for a group of independent Apple dealers (known as Specialists) in Siechert & Synn v. Apple, Inc., 2015 WL 513645 (Cal. Ct. App. Feb. 6, 2015). The plaintiffs failed to show that common questions predominated over individual issues or that a class action would be superior to individual suits. The court also found that facts related to the statute of limitations, causation, and alleged misrepresentation should all be determined on an individual basis.

All of the plaintiffs were in the business of ...

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In DeTemple v. Leica Geosystems Inc., Bus. Franchise Guide (CCH) ¶ 15,460 (N.D. Ga. Feb. 9, 2015), the United States District Court for the Northern District of Georgia determined that a genuine issue of material fact existed as to whether a manufacturer and its distributor shared a community of interest within the meaning of the Wisconsin Fair Dealership Law (WFDL). The dispute arose when Leica Geosystems, a manufacturer of surveying and construction products, terminated DeTemple d/b/a TPSG, one of its Wisconsin-based distributors, after TPSG failed to meet performance ...

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A federal court in Minnesota has found that the parties' exclusive distribution agreement did not meet the definition of a franchise under the Minnesota Franchise Act (MFA). Rogovsky Enter., Inc. v. MasterBrand Cabinets, Inc., 2015 U.S. Dist. LEXIS 24834 (D. Minn. Feb. 13, 2015). The agreement provided for Rogovsky (the franchisor of the "Kitchen and Home Interiors" system of kitchen and bath remodeling businesses) to source cabinetry products for its franchisees exclusively through MasterBrand. MasterBrand terminated the agreement approximately two years into its ...

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Posted in Antitrust

A federal court recently allowed a price discrimination claim against Nike to proceed to discovery. Games People Play, Inc. v. Nike, Inc., 2015 U.S. Dist. LEXIS 33217 (E.D. Tex. Feb. 12, 2015). Games People Play (GPP) is a golf retailer in Texas that had been selling Nike apparel and equipment since 1986. In 2010, GPP discovered what it considered to be a significant price disparity between what it was paying for specialty Nike golf clubs and what its competitors were paying for the same clubs. GPP alleged that in the two years after it complained to Nike about this price disparity, Nike ...

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Posted in Terminations

A Washington federal court granted Volvo's motion for partial summary judgment, finding that the implied covenant of good faith and fair dealing had no bearing on the exercise of Volvo's unrestricted contractual right to terminate a dealership agreement. Volvo Constr. Equip. N. Am., LLC v. Clyde/West., Inc., 2014 U.S. Dist. LEXIS 168264 (W.D. Wash. Dec. 3, 2014). Volvo terminated its dealership agreement with Clyde, a dealer of Volvo's heavy construction equipment, under a provision of the agreement that allowed either party to terminate the relationship for any reason after ...

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Posted in Antitrust

Following a nine-day jury trial in the United States District Court for the District of Minnesota, a manufacturer of fireplaces and related products won a jury verdict defeating all counts in a product distribution and antitrust case tried earlier this year. J&M Distrib., Inc. v. Hearth & Home Techs., Inc., No. 13- cv-00072-SRN-TNL (D. Minn. Jan. 23, 2015). The lawsuit, in which Gray Plant Mooty represented the manufacturer, Hearth & Home Technologies, followed the decision of Hearth & Home to terminate its wholesale, two-step distributor in Pennsylvania, Ohio, Maryland, and West ...

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Posted in Terminations

In Sleepy's LLC v. Select Comfort Wholesale Corp., the United States Court of Appeals for the Second Circuit reversed the dismissal of a distributor's breach of contract claims, holding that the terms of the parties' distribution agreement may have remained in place after its expiration date. 779 F.3d 191 (2d Cir. 2015). The distributor, Sleepy's, claimed that the manufacturer, Select Comfort, had breached the nondisparagement provision in the parties' distribution agreement. The trial court found that the distribution agreement ceased to operate after its stated expiration ...

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Posted in Antitrust

The United States District Court for the Western District of Wisconsin denied a motion to dismiss a lawsuit alleging violations of the Robinson-Patman Act based on the discriminatory offering of different product sizes to sellers for resale. Woodman's Food Mkt., Inc. v. Clorox Sales Co., 2015 U.S Dist. LEXIS 11656 (W.D. Wis. Feb. 2, 2015). After Clorox informed Woodman's that it would no longer offer Woodman's the large pack products that it offered to bulk retailers like Sam's Club and Costco, Woodman's brought suit against Clorox under the Robinson-Patman Act's price ...

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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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