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Automobile Dealer Lacked Standing to Challenge Relocation of New Neighboring Dealer

In Raines Imports, Inc. v. American Honda Motor Co., Inc., 2009 WL 230644 (W. Va. Jan. 30, 2009), Raines Imports sought relief pursuant to a state statute requiring manufacturers and distributors to give written notice to motor vehicle dealers located within 15 miles of a location at which the manufacturer or distributor intends to establish or relocate a new dealer. Upon receipt of  the notice, the affected dealer may bring a declaratory judgment action to determine whether good cause exists for establishing or relocating the proposed new motor vehicle dealer. 

The West Virginia Supreme Court of Appeals found that Raines lacked standing to bring its action. Notice is only required if the new or relocated dealer will be within the pre-existing dealer’s relevant market area. The letter from American Honda that had provoked this case did not implicate the notice and challenge provisions because the letter stated only that American Honda was considering locating a new dealer in the area and did not specify a location within the dealer’s “relevant market area,” as defined in the statute.   

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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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