The Franchise Memorandum

In another decision, the Sixth Circuit again affirmed summary judgment in favor of a manufacturer, this time on a dealer’s claims that the manufacturer improperly terminated its distribution agreement. B & S Transp., Inc. v. Bridgestone Ams. Tire Operation, LLC, 2019 WL 581565 (6th Cir. Feb. 13, 2019). The claims arose after Bridgestone terminated its dealership agreement with B & S Transportation, an African-American owned and operated dealer of Firestone tires. The dealership agreement allowed B & S to pursue minority set-aside businesses and, as a result, had unique terms that other dealership agreements did not. For example, B & S was not required to maintain a retail location or provide any service or warranty work, such as repair, retreading, or other vehicle services. Bridgestone terminated the dealership agreement in 2013 because it had changed its “distribution and go to market solutions strategies” to emphasize a service-based model and B & S declined to make those changes. B & S sued and claimed that the termination was unlawful race discrimination under federal law, and that the purported basis for termination was pretextual. The district court granted Bridgestone’s motion for summary judgment because it demonstrated a legitimate, nondiscriminatory reason for termination. B & S appealed.

The Sixth Circuit affirmed, citing testimony by Bridgestone that it was important for dealerships to provide a full line of tire and other services in light of increased competition and the availability of tires on the internet. Bridgestone provided internal documents as well as public reports demonstrating the shift in Bridgestone’s strategy toward full tire service. Additionally, Bridgestone showed that it attempted to work with B & S to change its dealership in order to comport with Bridgestone’s new strategy, but B & S was not interested. Finally, Bridgestone showed that it terminated other dealers for failing to fit within Bridgestone’s market strategy. Because B & S failed to demonstrate a racial pretext for termination or disprove Bridgestone’s legitimate basis, the Sixth Circuit affirmed dismissal of its discrimination claim.