Blog Banner Image

The Franchise Memorandum

District Court Dismisses Discrimination Claims Asserted by Dealer Against Automobile Manufacturer
Posted in Antitrust

The United States District Court in Minnesota late last month dismissed state statutory and federal antitrust claims brought by a Kia automobile dealership against manufacturer Kia Motors. Barnett Chrysler Plymouth Co. v. Kia Motors America, Inc., 2008 U.S. Dist. LEXIS 87216 (D. Minn. Oct. 27, 2008).

Barnett Kia has sold vehicles made by Kia since 1998. In 2006, Barnett discovered that the manufacturer offered discretionary advertising allowances to other Minnesota Kia dealers through the Regional Marketing Fund (“RMF”) program, through which Kia subsidizes fifty percent of a dealership’s advertising costs up to a fixed dollar amount. Even though Barnett had received discretionary advertising allowances, designated as RMF, on three prior occasions, Barnett did not know that the RMF advertising funds were available on a regular basis through the program. Luther Kia and Duluth Kia, which Barnett alleged are its direct competitors, also received RMF advertising dollars. Barnett alleged that the RMF allowances permitted its competitors to more effectively advertise within common market areas and that those competitors could offer automobiles to the public at a more competitive price as a result.

The district court dismissed each of Barnett Kia’s claims, holding that: (1) the Minnesota Act Against Unfair Discrimination and Competition does not extend to advertising allowances; (2) the Minnesota Motor Vehicle Sale and Distribution Act only applies to the relationship between motor vehicle dealers and manufacturers, whereas the RMF seeks to increase retail sales between the dealership and consumers; and (3) Barnett Kia’s allegation that Duluth Kia is a direct competitor for Robinson-Patman Act purposes is the type of speculative pleading that the United States Supreme Court sought to curtail in the recent case Bell Atlantic Corp. v. Twombly.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

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. 

To subscribe to monthly emails for The Franchise Memorandum, please click here


















Blog Authors