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The Franchise Memorandum

Posts from December 2017 - Issue 224.

The Supreme Court of Missouri recently reversed an award of lost profits as damages for an improper notice of termination of a distributorship under the Missouri Franchise Act. Sun Aviation, Inc. v. L-3 Commc’ns Avionics, 2017 WL 4930870 (Mo. Oct. 31, 2017). Sun Aviation, a former distributor of L-3’s aircraft instrument products, sued L-3 on the grounds that L-3 had failed to provide 90 days’ written notice of termination as required by the Missouri Franchise Act when it terminated Sun’s distributorship. The trial court found L-3 liable and awarded Sun eighteen years of ...

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The United States District Court for the Southern District of Texas has granted supplier Thermo King Corporation’s motion for summary judgment, finding that Thermo King did not violate Texas’ Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act by denying a dealer’s request to transfer its dealership to Doggett Company, LLC. Doggett Co., LLC v. Thermo King Corp., 2017 WL 3267796 (S.D. Tex. Aug. 1, 2017). Thermo King’s basis for denying the transfer was that Doggett was affiliated with another trucking company. Doggett alleged that this ...

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Posted in Terminations

Meanwhile, a federal court in Nevada granted summary judgment in favor of a franchisor on franchisees’ claims for, among others, wrongful termination in violation of the Petroleum Marketing Practices Act (“PMPA”), breach of contract, and breach of the implied covenant of good faith and fair dealing. Nev. W. Petroleum, LLC v. BP W. Coast Prods., LLC, 2017 WL 4172269 (D. Nev. Sept. 20, 2017). The franchisees’ claims arose when BP allegedly took various actions to force them out of their businesses, which they claimed amounted to a constructive termination of their franchise ...

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A federal district court in South Dakota recently held that a truck trailer manufacturer violated the South Dakota motor vehicle dealer law by terminating and failing to renew its dealer without providing the requisite notice and opportunity to cure. Black Hills Truck & Trailer, Inc. v. MAC Trailer Mfg., Inc., 2017 WL 4236546 (D.S.D. Sept. 22, 2017). Black Hills claimed it was wrongfully terminated when, less than a year after entering into a written distributor agreement, MAC sought to amend the agreement and refused to accept any orders until Black Hills signed an amended dealer ...

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Posted in Antitrust

A price discrimination suit against the maker of 5-hour Energy is heading to trial after a federal court in California denied cross-motions for summary judgment. In ABC Distributing, Inc. v. Living Essentials, LLC, 2017 WL 3838443 (N.D. Cal. Sept. 1, 2017), several Los Angeles area wholesalers brought suit against Living Essentials for allegedly offering 5-hour Energy drinks to Costco at lower prices than it did to the plaintiffs, in violation of the Robinson-Patman Act and California's unfair competition laws. Because a price discrimination claim requires competitive injury ...

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Posted in Terminations

A magistrate judge for the United States District Court for the Southern District of Texas recently denied a distributor’s motion for summary judgment on a counterclaim arising from the distributor’s alleged competitive activities. PPD Enters., LLC v. Stryker Corp., 2017 WL 4950065 (S.D. Tex. Nov. 1, 2017). The defendants, MAKO/Stryker, make orthopedic implants. They entered into an exclusive sales representative agreement with the plaintiff, PPD, for the sale and distribution of those implants. But a little more than a year after the agreement commenced, MAKO/Stryker ...

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Posted in Damages

The United States Court of Appeals for the Third Circuit has affirmed a district court’s grant of summary judgment in favor of Terex, a manufacturer of heavy equipment and parts. TL of Fla., Inc. v. Terex Corp, 2017 WL 3722718 (3d Cir. Aug. 29, 2017). TL, a nonexclusive distributor of Terex parts, alleged that Terex fraudulently induced it into entering into the parties’ distribution agreement by failing to disclose, among other things, that TL’s territory in Florida was surrounded by other authorized sellers of Terex parts called “CPEX Accounts.” TL claimed that these ...

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A Wisconsin federal court declined to reach a distributor’s claims that it had entered into an accidental franchisor-franchisee relationship with a manufacturer, instead dismissing the case by applying the limitations period dictated by the parties’ contract. Faxon Sales, Inc. v. U-Line Corp., 2017 WL 4990617 (E.D. Wis. Oct. 31, 2017). The case arose when manufacturer U-Line unilaterally terminated its contract with distributor Faxon, ending a twenty-five-year relationship. The contract disavowed the formation of a franchise, permitted termination without cause ...

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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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