CA1 (12.17.04)

One early opinion today.  It seems that in New England, car dealers are suing manufacturers and distributors quite a bit.  If you like these cases, and want more, see my earlier post here for another suit.  The one today involves Subaru.  The earlier one involves GM.

Update: Subaru of New England gloats here and here.

  In Lussier v. Subaru, No. 03-2715, a number of Subaru dealers asserted that Subaru of New England “controlled the vehicle allocation process to coerce them into purchasing unwanted accessories.”  They proceeded under the Federal Automobile Dealers' Day in Court Act ("ADDCA") 15 U.S.C. § 1222, state dealer statutes, state contract law, the Sherman and Clayton Antitrust Acts, and RICO.  They lost.  The First affirmed.

Apparently, the regional distributor of Subaru maintained a “reserve” of cars that they would only release to dealers if they bought cars that were laden with accessories.

The ADDCA seems to be an statutorily implied covenant of good faith and lack of coercion in the relationships between franchisees and franchiser.  15 U.S.C. § 1222.    The court concluded that “We simply fail to see how [Subaru]’s practice of conditioning access to, or accessorizing, discretionary [cars]... constitutes coercion.”

[Mr. Frank politely suggests, below, that the ADDCA is not a statutorily-implied term in dealer contracts, but rather creates its own cause of action.   There is some disagreement on this issue.  I would not be remiss in saying that Mr. Frank does not like this post.  If you, like Mr. Frank, do not like this post, this link may provide you with some relief.]

As to the state claims dealer statute claims, the court found that “coercion” means the same thing under the ADDCA as it does under state law.

Since the system that the dealers agreed to for allocation of cars was defined in the contracts and “had its plusses and minuses” it was not a breach of contract under state law.   

The RICO claims failed because, quite predictably, “Here, dealers fail to establish a "direct relation between the injury asserted and the injurious conduct alleged."

And finally, a blog devoted to body modification cited AL&P. 

Comments

[Ted]

So I notified your readers that you made several mistakes in your description of this case, and now I see these comments have been deleted--without so much as a correction of the underlying mistakes.

Are you still disputing that it's absolutely clear that the ADDCA creates a cause of action?

[Ted]

Reprint of the original comment:

Specific examples why I find it stunningly hypocritical that this blog accuses others of sloppiness:

(1) The ADDCA does not "imply" a covenant of good faith, it creates a cause of action for failing to act in good faith, as defined by the statute; nor does it "imply" a lack of coercion, but, rather specifically defines coercion as contrary to acting in good faith under the statute.

(2) In terms of the analysis of the decision, S.Cotus misses the crux of the opinion, which is that the plaintiffs' case was based on their failure to obtain cars that they admit they had no contractual right to receive, and this defeated their case under Fourth and Eleventh Circuit precedent.

(3) S.Cotus also underdescribes the theory of plaintiffs' RICO claim to the point that his "quite predictably" conclusion with respect to the First Circuit's standing analysis was a non sequitur--I had to read the opinion to find out that the First Circuit was referring to a part of the RICO claim that S.Cotus does not address, and got rid of the part of the RICO claim that S.Cotus does address on the grounds that the alleged "coercion" did not rise to the level of Hobbs Act extortion.

(4) Why mention the antitrust causes of action at all, when they were so transparently meritless that the summary judgment of them wasn't even appealed? Strange, especially since the partial class certification, which is relevant, wasn't mentioned: we're told only that a "number of dealers" sued.

(5) Because the anonymous S.Cotus regularly criticizes David Behar for typoes, it's worth noting that:

(a) there's no such thing as "Subrau" (misspelled four times) or "regonional";

(b) "Apparantly" is not only apparently missing an "e" but should actually read "Allegedly," given the posture of the case; and

(c) while there may be such a thing as a "convent of good faith," one is more likely to find it in a nunnery than in a contract.