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The Franchise Memorandum

Posts from April 2019 - Issue 240.

A federal court in Minnesota denied a motion to dismiss a lawsuit alleging wrongful termination of a sales representative agreement. Hedding v. Pneu Fast Co., 2019 WL 79006 (D. Minn. Jan. 2, 2019). Minnesota resident Curt Hedding was a sales representative for nail and staple manufacturer Pneu Fast. Under the parties’ 2006 agreement, Hedding represented Pneu Fast in selling and distributing products across nine states, including Minnesota and Ohio. In 2018, Pneu Fast terminated the agreement without explanation or an opportunity to cure. Hedding filed suit, alleging the ...

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A federal court in Florida recently denied in part a distributor’s motion for summary judgment in a suit brought against it by a dealer. Gulf Coast Turf & Tractor LLC v. Kubota Tractor Corp., 2019 WL 1227776 (M.D. Fla. Mar. 15, 2019). Kubota Tractor distributes agricultural, construction, and outdoor power equipment through a network of dealers throughout the United States. Gulf Coast Turf and Tractor is one of Kubota’s authorized dealers in Florida. In the Kubota system, dealers earn commissions from sales to private customers within their assigned territories. However, when ...

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Posted in Antitrust

A federal court in Nevada recently dismissed antitrust claims brought by a retailer that claimed it was harmed by a furniture manufacturer’s online sales through Wayfair, but allowed contract claims against the manufacturer to proceed to discovery. Furniture Royal, Inc. v. Schnadig Int’l  Corp., 2018 WL 6574779 (D. Nev. Dec. 13, 2018). Furniture Royal, the retailer, had sold furniture manufactured by Schnadig since 2010. In 2017, while maintaining the relationship with Furniture Royal, Schnadig also began selling its furniture directly to consumers through the Wayfair ...

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The Supreme Court of Idaho has upheld a decision in favor of an authorized distributor of business forms who complained of losses related to protected accounts. Thurston Enters. v. Safeguard Bus. Sys., 2019 WL 667966 (Idaho Feb. 19, 2019). Safeguard Business Systems, a supplier of business forms and products, had entered into a distributor agreement granting Thurston Enterprises the exclusive right to commissions on sales within a protected area. If another distributor sold Safeguard Systems products to a customer that had previously purchased products from Thurston ...

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Posted in Discrimination

In another decision, the Sixth Circuit again affirmed summary judgment in favor of a manufacturer, this time on a dealer’s claims that the manufacturer improperly terminated its distribution agreement. B & S Transp., Inc. v. Bridgestone Ams. Tire Operation, LLC, 2019 WL 581565 (6th Cir. Feb. 13, 2019). The claims arose after Bridgestone terminated its dealership agreement with B & S Transportation, an African-American owned and operated dealer of Firestone tires. The dealership agreement allowed B & S to pursue minority set-aside businesses and, as a result, had unique terms ...

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The U.S. Court of Appeals for the Sixth Circuit recently affirmed summary judgment for a medical device manufacturer, Wright Medical Technology, on claims brought by a distributor, Beijing Fito Medical, alleging that Wright breached the distribution agreement between the parties. Beijing Fito Med. Co. v. Wright Med. Tech., Inc., 2019 WL 480410 (6th Cir. Feb. 7, 2019). Wright and Fito entered into an agreement that gave Fito the right to serve as Wright’s exclusive distributor of hip, knee, foot, ankle, and biologics products in China. The agreement permitted Wright to remove ...

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Posted in Arbitration

The Supreme Court has resolved a split in the federal circuit courts of appeals, holding that the Federal Arbitration Act does not allow a federal court to deny a motion to compel arbitration on the basis that the claim of arbitrability is “wholly groundless.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019). Archer and White, a dental equipment distributor, sued an equipment manufacturer and Henry Schein, Inc. for various remedies including injunctive relief. Archer and White’s distribution agreement provided that “[a]ny dispute arising under or ...

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A Wisconsin federal court recently upheld the termination of two dealer agreements, finding that the agreements were not subject to California and Washington state franchise laws, both of which require good cause for termination of an agreement. PW Stoelting, L.L.C. v. Levine, 2018 WL 6603874 (E.D. Wis. Dec. 17, 2018). This dispute arose after PW Stoelting, a manufacturer of food service and cleaning equipment, terminated, without cause, its agreements with two related dealers based in California and Washington. Although the agreements 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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