The Franchise Memorandum

In New England Surfaces v. E.I. DuPont de Nemours and Co., 2008 WL 4307112 (1st Cir. Sept. 23, 2008), DuPont terminated a dealer of its Corian line of products for failure to meet sales goals. In a decision largely devoted to an analysis (or rejection) of the dealer’s lost profits damages claim, the United States Court of Appeals for the First Circuit vacated a district court’s grant of DuPont’s summary judgment motion on the dealer’s claim for wrongful termination under the Connecticut Franchise Act.

DuPont argued (and the district court below had found) that the Connecticut statute, by its terms, applies only to contracts “the performance of which contemplates or requires the franchisee to establish or maintain a place of business in [Connecticut],” whereas the agreement in question did not explicitly require a place of business in Connecticut. The appeals panel, however, found that under the circumstances of the case (including DuPont’s knowledge that the dealer had taken over the business of a Connecticut-based dealer) a jury could believe that DuPont “knew” that the dealer’s predecessor maintained a Connecticut place of business and that the dealer might need to maintain a Connecticut place of business in order to service customers in its territory.  In the court’s opinion, this potential finding by a jury would be enough to satisfy the requirement of the act that the agreement “contemplate” a place of business in Connecticut. Summary judgment was therefore deemed inappropriate.