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The Franchise Memorandum

Posts from August 2018 - Issue 232.

A federal court in the Eastern District of New York has granted a franchisor’s request for a preliminary injunction against a franchisee who continued to use the franchisor’s trademarks after moving to an unauthorized location. Mitsubishi Motors N. Am. Inc. v. Grand Automotive, Inc., 2018 WL 2012875 (E.D.N.Y. Apr. 30, 2018). The parties entered into a dealer sales and service agreement in which Mitsubishi granted Grand Automotive the right to use the Mitsubishi trademarks to sell new cars at an authorized location. The dispute arose when Grand failed to renew its lease and ...

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The U.S. District Court for the Middle District of Pennsylvania granted in part a motion filed by an independent distributor to stop the termination of its distribution agreements. Pella Products, Inc. v. Pella Corp., 2018 WL 2734820 (M.D. Pa. June 7, 2018). The distributor was a party to several agreements granting it the right to distribute Pella windows and doors to general contractors and businesses (i.e., the trade/commercial business), and to homeowners (i.e., the retail business). Based upon evidence of sexual misconduct by the distributor’s president, the ...

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Posted in Procedure

A federal court in California granted a supplier’s motion to dismiss a distributor’s lawsuit pursuant to the first-to-file rule. W. Pac. Signal, LLC v. Trafficware Grp., Inc., 2018 WL 3109809 (N.D. Cal. June 25, 2018). Trafficware, a supplier of traffic control devices, terminated its distributor agreement with WPS due to WPS’s failure to pay invoices, and filed suit in the Southern District of Texas. WPS responded and asserted counterclaims in Texas. WPS also filed a second lawsuit in California, asserting claims similar to the counterclaims. In response to the California ...

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Posted in Procedure

The United States Court of Appeals for the Fifth Circuit has held that a franchisee seeking relief for violations of the Texas Motor Vehicle Commission Code (the “Code”) had to exhaust all available administrative remedies before proceeding in state court. Autobahn Imports, L.P. v. Jaguar Land Rover N. Am., LLC, 2018 WL 3406933 (5th Cir. July 13, 2018). A dispute arose between franchisor Jaguar Land Rover North America and franchisee Autobahn Imports when Jaguar requested roughly $300,000 of chargebacks in incentive payments from Autobahn. Autobahn filed a complaint with the ...

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Posted in Contracts

The Supreme Court of Nebraska affirmed the decision of a state district court that a contract permitted a fuel retailer to rebrand several of its gas stations and sell competitor-branded fuel. Ray Anderson, Inc. v. Buck’s, Inc., 300 Neb. 434 (July 6, 2018). Ray Anderson, Inc., the operator of retail gas stations in Omaha, Nebraska, and Buck’s, Inc., a distributor and “jobber” of BPbranded fuel, entered into a fuel supply contract, through which Anderson sold BP-branded fuel at its stations. A rider entitled the Electronic Dealer Delivery Plan (EDDP) was incorporated into ...

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A federal court in New Jersey has granted a motion to dismiss a challenge to the “immediate” termination of a distribution agreement because the distributor failed to plead adequately that the agreement contemplated its maintenance of a New Jersey place of business, as required for the New Jersey Franchise Practices Act (NJFPA) to apply. Lawmen Supply Co. of N.J., Inc. v. Glock, Inc., 2018 WL 3201790 (D.N.J. June 29, 2018). The parties had entered into a distribution agreement for Lawmen Supply to distribute “Glock Only” pistols to the law enforcement market. Glock ...

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Posted in Antitrust

The Ninth Circuit affirmed dismissal of Hip Hop Beverage Corporation’s claim that its competitor, Monster Energy, unlawfully restricted competition through exclusive dealing agreements. Hip Hop Beverage Corp. v. Monster Energy Co., 2018 WL 2093508 (9th Cir. May 7, 2018). The suit stemmed from Hip Hop Beverage’s attempt to sell to the U.S. Defense Commissary Agency. In compliance with DECA’s vending requirements, Hip Hop Beverage hired a broker, Mid Valley Products, but Mid Valley terminated the contract “due to conflicts at the broker level with regards to competing ...

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Posted in Arbitration

The United States District Court for the Western District of North Carolina granted a motion to compel arbitration in a dispute arising out of a voluntarily terminated dealer agreement. High Country Dealerships, Inc. v. Polaris Sales, Inc., 2018 WL 3620494 (W.D.N.D. July 30, 2018). (Gray Plant Mooty represents defendantsupplier Polaris Sales in this case.) The agreement contained a broadly worded arbitration clause requiring the plaintiff (the terminated dealer) to submit all disputes with Polaris to binding arbitration in Minneapolis, Minnesota. Instead of pursuing ...

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The U.S. District Court for the Southern District of Texas granted in part and denied in part a defendant retailer’s motion for partial summary judgment on several Lanham Act and false advertising claims brought by its former manufacturers. Tempur-Pedic N. Am., LLC v. Mattress Firm, Inc., 2018 WL 3483082 (S.D. Tex. July 19, 2018). After nearly twenty years of working together, the plaintiffs (collectively, “Tempur-Sealy”) and Mattress Firm entered into a letter agreement in which the parties agreed to continue their relationship through a specified date. When Mattress ...

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An Arkansas state appellate court upheld a motion for default judgment against a wholesale distributor for failing to adhere to the Arkansas Farm Equipment Retailer Franchise Protection Act. R.W. Distributors, Inc. v. Texarkana Tractor Co., 2018 Ark. App. 345 (June 6, 2018). R.W. supplied riding lawnmowers that Texarkana Tractor sold in stores. Texarkana was unable to sell the tractors and demanded that R.W. take them back and repay Texarkana in accordance with the statute. After originally defaulting, R.W. unsuccessfully opposed the claim and then appealed.

The appellate ...

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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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