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Honda Did Not Violate Rhode Island Dealer Law by Banning Certain Internet Sales

In Saccucci Auto Group, Inc. v. Am. Honda Motor Co., Inc., 2009 WL 2175762 (D.R.I. July 21, 2009), the court granted Honda’s motion for summary judgment, finding that Honda did not violate a Rhode Island dealer law by banning internet sales of Honda vehicle service contracts (“VSCs”). After dealers and customers complained about price differences between VSCs sold online and at dealerships, Honda enacted a policy temporarily banning dealers from selling VSCs over the internet. 

The plaintiff, a Honda dealer who had set up a web site of its own to sell VSCs, alleged that the policy violated the Rhode Island dealer law because it was coercive and predatory. The court found that the law was aimed specifically at adhesive agreements involving “little real choice.”  The dealer agreement was not a contract of adhesion, the court found. The contract did not require the dealer to sell VSCs and only obligated the dealer to offer VSCs upon a customer’s request. As a result, the dispute was not subject to the Rhode Island dealer law. 

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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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