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The Franchise Memorandum

Posts from December 2019 - Issue 248.
Posted in Encroachment

On the other hand, a federal court in Colorado has concluded that amendments to an encroachment protection in the Colorado Dealer Act do apply to dealer agreements in existence before the amendments were enacted. DC Auto., Inc. v. Kia Motors Am., Inc., 2019 WL 4192112 (D. Colo. Sept. 4, 2019). The parties’ dealer agreements, which were entered into in 2003 and 2008, stated that Kia had the right to add new dealers, relocate dealers, or remove dealers from the geographic area, to the extent permitted by applicable law. At the time the parties executed the agreements, the Colorado Dealer ...

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In a 2-1 decision, the Eighth Circuit affirmed entry of an order enjoining enforcement of amendments to a North Dakota law governing contracts between dealers and manufacturers, finding that the amendments violated the rarely invoked Contracts Clause of the U.S. Constitution. Ass’n of Equip. Mfrs. v. Burgum, 2019 WL 3520578 (8th Cir. Aug. 2, 2019). The statutory amendments at issue prohibited manufacturers from imposing various contractual obligations, regulating dealership transfers, and imposing new requirements with respect to reimbursements to dealers for warranty ...

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Posted in Arbitration

The Ninth Circuit has reversed an arbitration award because of the “evident partiality” of an arbitrator who failed to disclose an ownership interest in JAMS. Monster Energy Co. v. City Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019). Monster Energy and a former distributor, Olympic Eagle, commenced an arbitration to resolve a dispute regarding Monster’s termination of Olympic Eagle’s distribution agreement. The parties’ agreement specified that arbitration would be conducted before JAMS Orange County. The parties selected an arbitrator from a list of seven ...

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Posted in Trademarks

A storm shelter manufacturer’s “vast infringement campaign” against a dealer’s trademarks was an exceptional case that warranted the award of attorneys’ fees under the Lanham Act, the U.S. Court of Appeals for the Seventh Circuit recently held, reversing the district court’s denial and granting attorneys’ fees to the dealer. Inc. v. S. Ill. Storm Shelters, Inc., 939 F.3d 905 (7th Cir. 2019). This dispute arose from a dealership agreement between Southern Illinois Storm Shelters (“SISS”) and 4SEMO, which granted 4SEMO the exclusive territorial ...

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A federal court in Tennessee granted a manufacturer’s motion to transfer venue under a forum selection clause. C&S Outdoor Power Equip., Inc. v. ODES Indus. LLC, 2019 WL 4197608 (W.D. Tenn. Sept. 4, 2019). ODES manufactured vehicles and entered into an agreement with C&S Outdoor Power Equipment authorizing it as a dealer for ODES’s vehicles. The franchise agreement between ODES and C&S contained a forum selection clause which stated that any litigation relating to the agreement “shall exclusively be filed in a State or District court in (venue) Fort Worth, Texas, and each ...

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Posted in Arbitration

In the appeal of a case that appeared in Issue 236 of The GPMemorandum, the Third Circuit reversed a lower court and enforced an arbitration clause between a manufacturer and one of its distributors. In re Remicade (Direct Purchaser) Antitrust Litigation, 938 F.3d 515 (3d Cir. 2019). The distributor, Rochester Drug Cooperative (“RDC”), was a direct purchaser and wholesaler of a drug produced by manufacturer Johnson and Johnson (“J&J”) under a distributor agreement. For years, that drug was the only one of its type on the market, but that position was threatened when the FDA ...

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A federal court in the Western District of Wisconsin has granted partial summary judgment to a pizza distributor, holding that the Wisconsin Fair Dealership Law (“WFDL”) applies to its relationship with its former manufacturer. A&B Distrib., Inc. v. Heggie's Pizza, LLC, 2019 WL 6118718 (W.D. Wis. Nov. 18, 2019). Plaintiff A&B Distributing is a one-man company that, over the course of 13 ½ years, sold pizzas made by Heggie’s Pizza. Without ever entering into a written agreement, A&B would buy discounted pizzas from Heggie’s and sell them to retail customers in northwest ...

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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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