The Franchise Memorandum

A federal court in the Western District of Wisconsin has concluded that an automobile manufacturer is not permitted to remove a dealer dispute from the Wisconsin Division of Hearings and Appeals (“DHA”) to federal court. Don Johnson’s Haywood Motors, Inc. v. General Motors LLC, 2019 WL 2141818 (W.D. Wis. May 16, 2019). Twelve Wisconsin-based licensed motor vehicle dealers filed an administrative complaint against GM with the DHA, alleging that a per-vehicle surcharge imposed by GM to offset increased statutory warranty reimbursements owed to dealers violated GM’s ...

A federal court in New Jersey has dismissed claims that an ambulance manufacturer violated the New Jersey Franchise Practices Act (“NJFPA”) and state and federal antitrust laws. First Priority Emergency Vehicles, Inc. v. REV Ambulance Grp. Orlando, Inc., 2019 WL 3423571 (July 30, 2019). First Priority became a party to two distributor agreements with the manufacturer, REV, that both required First Priority to use its “best efforts” to meet or exceed sales goals. On June 30, 2017, REV terminated the agreements based on First Priority’s failure to meet those sales goals ...

The U.S. District Court for the Western District of Louisiana has held that a wholesale distributor’s claims against R.J. Reynolds (“RJR”) under the Louisiana Unfair Trade Practices Act (“LUPTA”) were perempted and time-barred. Caldwell Wholesale Co., L.L.C. v. R.J. Reynolds Tobacco Co., WL 2209165 (W.D. La. May 11, 2018). The wholesaler, Caldwell, alleged that RJR violated the LUPTA by terminating in 2004 Caldwell’s status as a direct purchaser of RJR’s tobacco products (thereby depriving Caldwell of favorable pricing incentives) and denying Caldwell’s ...

The Mississippi Supreme Court has ruled that a terminated automobile dealership has until the effective date of termination to file a complaint challenging the termination, rejecting an argument that the Mississippi Motor Vehicle Commission law requires a dealer to file such a challenge within 60 days of receiving a notice of termination. Nissan N. Am., Inc. v. Tillman, 273 So. 3d 710, 711 (Miss. 2019). Nissan terminated plaintiff Ann C. Tillman’s Natchez, Mississippi car dealership, Great River, because of unsatisfactory sales. Great River’s agreement with Nissan ...

A federal court in New York has granted a distributor’s motion for summary judgment after concluding that the plaintiffs were independent contractors and therefore not entitled to the protections and rights of federal and state labor laws. Franze v. Bimbo Food Bakeries Distrib., LLC, 2019 WL 2866168 (S.D.N.Y. July 2, 2019). Nicholas Franze and George Schrufer signed distribution agreements with Bimbo Food Bakeries to deliver baked goods along designated routes. Franze and Schrufer both filed suit against Bimbo on the premise that Bimbo was their employer and had violated ...

The Seventh Circuit Court of Appeals has affirmed an award of lost profits against a dairy silo manufacturer that breached a promise of exclusivity made to its distributor, even though language in the contract barred such damages. Sanchelima Int'l, Inc. v. Walker Stainless Equip. Co., 920 F.3d 1141 (7th Cir. 2019). Defendant Walker entered into a distribution agreement that gave Sanchelima exclusive rights to distribute Walker’s silos in 13 Latin American countries, and Walker agreed it would not make its own direct sales of silos to customers in those countries. The ...

The Sixth Circuit Court of Appeals has affirmed dismissal of claims against FCA International Operations regarding the termination of a Chrysler distributor in Angola. Union Commercial Servs. Ltd. v. FCA Int’l Operations, LLC, 2019 WL 4011895 (6th Cir. Aug. 26, 2019). FCA as the successor in interest of Chrysler International Corporation, was the grantor of a 2006 nonexclusive distributor agreement with Union Commercial Services, an Angolan private business. In 2009, Chrysler began working with Union’s Angolan competitor, Auto-Star, a company controlled by ...