The Franchise Memorandum

Meanwhile, the United States District Court for the Northern District of Ohio denied a car distributor’s motion to dismiss a claim under the RPA. Bedford Nissan, Inc. v. Nissan N. Am., Inc., 2016 WL 6395799 (N.D. Ohio Oct. 28, 2016). After discovering that Nissan North America had given Bernie Moreno, a dealer, cash and sales incentives not offered to all dealers in the area, four other Nissan dealers in the same market sued Nissan, claiming, among other things, that the incentive payments allowed Moreno to purchase and sell Nissan vehicles at substantially lower prices than the plaintiffs.

The court held that the plaintiffs had sufficiently alleged the elements of a claim under the RPA. To succeed on the claim, a plaintiff must show that 1) the sales were made in interstate commerce, 2) the products sold were of like grade and quality, 3) the seller discriminated in price between the purchasers, and 4) the effect of the discrimination may be to injure competition. The court found there was no question that the first two requirements were met and rejected Nissan’s argument that the third requirement was lacking because it did not sell vehicles to Moreno and the plaintiffs at different prices. The court explained that price discrimination can be shown indirectly when one buyer receives something of value (in this case, incentive payments) not offered to other buyers. Finally, the court found that the fourth element was satisfied because an inference could be drawn that a competitor receiving incentive payments over a substantial period of time would cause intra-brand competitive injury.