The Franchise Memorandum

A federal court in Florida recently denied in part a distributor’s motion for summary judgment in a suit brought against it by a dealer. Gulf Coast Turf & Tractor LLC v. Kubota Tractor Corp., 2019 WL 1227776 (M.D. Fla. Mar. 15, 2019). Kubota Tractor distributes agricultural, construction, and outdoor power equipment through a network of dealers throughout the United States. Gulf Coast Turf and Tractor is one of Kubota’s authorized dealers in Florida. In the Kubota system, dealers earn commissions from sales to private customers within their assigned territories. However, when large, national customers purchase their equipment directly from Kubota, Kubota has the discretion to designate a “delivering dealer” for each such sale to receive the commission. Gulf Coast sought to become the delivering dealer for all Florida sales to one such customer, Hertz Equipment Rental Corporation. However, Gulf Coast was unable to do so and claimed Kubota unfairly prevented it from cultivating a delivery dealer relationship with Hertz. Gulf Coast sued Kubota asserting a handful of claims, including claims under Florida statutes outlawing unfair methods of competition and unfair or deceptive acts or practices in the conduct of the distribution of equipment.

Kubota moved for summary judgement on the claims, arguing that the statutory violations were not actionable because they occurred prior to the effective date of the legislation. However, the court ruled that an identical version of the statute existed and applied to the conduct during the relevant time period. Kubota also contended that it had the right to designate a delivering dealer for national customers in its sole discretion. However, the court ruled that, even so, a claim may nonetheless exist if Kubota exercised that discretion unfairly. In addition, Kubota argued that even if the statutory claims could proceed, Gulf Coast could not recover any anticipated future lost profits related to Hertz because those types of damages are not available under the statute. The court agreed and granted Kubota summary judgment on that discrete issue. Finally, the court denied Kubota’s motion for summary judgment on a common law tortious interference claim.