Acadia Motors, Inc. v. Ford Motor Co.

• Citation: 44 F.3d 1050
• Decision Date: 06 October 1994
• Docket Number: 94-1450,Nos. 94-1335,s. 94-1335
• Parties: 1995-1 Trade Cases P 70,879 ACADIA MOTORS, INC., et al., Plaintiffs-Appellees, v. FORD MOTOR COMPANY, Defendant-Appellant. ACADIA MOTORS, INC., et al., Plaintiffs-Appellants, v. FORD MOTOR COMPANY, Defendant-Appellee. . Heard
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 1050

44 F.3d 1050

1995-1 Trade Cases P 70,879

ACADIA MOTORS, INC., et al., Plaintiffs-Appellees, v. FORD MOTOR COMPANY, Defendant-Appellant.

ACADIA MOTORS, INC., et al., Plaintiffs-Appellants, v. FORD MOTOR COMPANY, Defendant-Appellee.

Nos. 94-1335, 94-1450.

United States Court of Appeals, First Circuit.

Heard Oct. 6, 1994.

Decided Jan. 24, 1995.

Jay Kelly Wright, with whom Hilde E. Kahn, William M. Quinn, Jr., Arnold & Porter, Washington, DC, Andrew M. Horton, Carl E. Kandutsch and Verrill & Dana, Portland, ME, were on brief, for Ford Motor Co.

Bruce C. Gerrity, with whom Michael Kaplan, Preti, Flaherty, Beliveau & Pachios, Augusta, ME, Peter L. Murray and Law Offices of Peter Murray, Portland, ME, were on brief, for Acadia Motors, Inc., et al.

Before TORRUELLA, Chief Judge, and BOUDIN and STAHL, Circuit Judges.

TORRUELLA, Chief Judge.

This appeal involves a dispute between thirty-two Maine automobile dealers (the "Dealers") and Ford Motor Company ("Ford") over Ford's compliance with the Maine warranty reimbursement statute, 10 M.R.S.A. Sec. 1176 (Me.Rev.Stat.Ann., tit. 10 Sec. 1176 (West 1994)). On cross-motions for summary judgment, the district court ruled that in order to comply with the Maine statute, Ford must revise the window stickers on its cars sold in Maine to reflect the surcharge Ford had instituted to recover its costs of complying with Sec. 1176. The district court refused, however, to award damages or restitution to the Dealers on their claims that Ford had violated the statute. In addition, the district court dismissed the Dealers' remaining claims under the Robinson-Patman Act, 15 U.S.C. Sec. 13(a) (1988), and 10 M.R.S.A. Secs. 1174(1) and 1182 (Me.Rev.Stat.Ann., tit. 10 Secs. 1174(1), 1182 (West 1994)). For the reasons set forth below, we affirm in part and reverse in part the decision of the district court.

BACKGROUND

A. The Manufacturer-Dealer Relationship

Ford manufactures automobiles and sells them through a nationwide network of franchise dealers. The franchise agreement, called the Sales and Service Agreement (the "Agreement"), defines the manufacturer-dealer relationship. Ford offers a warranty Historically, and until 1993, Ford reimbursed the Dealers for parts under a uniform national reimbursement formula. Under this nationwide formula, each dealer is eligible to be reimbursed at wholesale cost, plus 30-40 percent above cost, depending on the vehicle model year.

with all new cars. Under the warranty, certain repairs, replacements, or adjustments are made free of charge to the consumer. The Dealers are required under their Agreements with Ford to perform labor and to provide parts in satisfaction of the warranties. Ford is obligated both under the Agreements and under Maine statute to reimburse the Dealers for parts used and warranty work performed.

B. State Legislation

The State of Maine regulates the manufacturer-dealer relationship by statute, see 10 M.R.S.A. Sec. 1171 et seq., including warranty reimbursement levels. Originally, Maine's warranty reimbursement statute required car manufacturers, including Ford, to "adequately and fairly compensate the franchisee for any parts provided in satisfaction of a warranty created by the franchisor." 10 M.R.S.A. Sec. 1176 (1980). In 1991, however, Sec. 1176 was amended to require manufacturers to reimburse dealers at retail-equivalent rates. It currently provides in pertinent part:

If a motor vehicle franchisor requires or permits a motor vehicle franchisee to perform labor or provide parts in satisfaction of a warranty created by the franchisor, the franchisor shall properly and promptly fulfill its warranty obligations, in the case of motor vehicles over 10,000 pounds gross vehicle weight rating, shall adequately and fairly compensate the franchisee for any parts so provided and, in the case of all other motor vehicles, shall reimburse the franchisee for any parts so provided at the retail rate customarily charged by that franchisee for the same parts when not provided in satisfaction of a warranty.

10 M.R.S.A. Sec. 1176 (1991) (Me.Rev.Stat.Ann., tit. 10 Sec. 1176 (West 1994)) (emphasis added).

Notably, the amended statute requires warranty parts reimbursement "at the retail rate customarily charged for the same parts when not provided in satisfaction of a warranty." 10 M.R.S.A. Sec. 1176 (emphasis added). The statute requires a match between the warranty part and the part actually sold by that particular dealer to a non-warranty customer. For example, a particular dealer's profit margin on the retail sale of a headlight cannot be used to determine the appropriate reimbursement percentage when the dealer, or another dealer, replaces a water pump under warranty.

C. Events Leading to this Lawsuit

Following the 1991 amendment to Sec. 1176, several Maine dealers notified Ford that the new law entitled them to higher warranty reimbursement. In 1992, one Maine dealer filed claims in small claims court for reimbursement. The small claims court dismissed those claims because the dealer had not submitted an adequate claim for reimbursement to Ford, which it found to be a prerequisite under the statute to reimbursement recovery. Darling's Bangor Ford/VW/Audi v. Ford Motor Co., No. BAN 92-sc-229 (Me.Dist.Ct. 3, S.Pen., Oct. 20, 1992).

In response to this dealer's challenge, however, Ford revised its reimbursement policy in Maine, and announced to its Maine dealers on April 1, 1993 that the "cost-plus" mark-up for parts reimbursement would be raised for all Maine dealers to 63 percent. This percentage corresponds to the percentage over cost used to determine the manufacturer's suggested retail price of parts. ¹ With this announcement, however, Ford also stated that in order to recover this increase in its costs of doing business in Maine, it would also increase the wholesale price of each new vehicle sold, through assessment of a surcharge of approximately $160 per vehicle. The surcharge, called the "warranty parity surcharge," would appear on each dealer's The Dealers filed this lawsuit in the United States District Court for the District of Maine, alleging that the surcharge was unlawful, requesting that the court enjoin the surcharge and order Ford to "disgorge" the surcharge monies already recovered. The Dealers argued that Sec. 1176 not only required higher warranty reimbursement levels, but also prohibited Ford from raising wholesale prices to recover the costs of paying those higher reimbursement levels. They argued that the surcharge effectively negated the higher reimbursement levels required by Sec. 1176, in contravention of the legislative purpose of the amended statute. The Dealers also alleged that Ford's surcharge violated the Automobile Dealers Day in Court Act and the Robinson-Patman Act, and made claims under other Maine statutes.

monthly parts invoice in the month following the sale. The surcharge was imposed based on the number of cars sold, without regard to whether the dealer actually performed warranty work in that month. ²

Ford moved to dismiss under Fed.R.Civ.P. 12(b)(6) or alternatively for summary judgment under Fed.R.Civ.P. 56 on the grounds that, as a matter of law, the warranty reimbursement level and the surcharge were lawful. ³ The Dealers also moved for partial summary judgment, seeking a final injunction against the price increase, and requesting damages and other relief. They argued that any price increase to recover the reimbursement rate required by Sec. 1176 was itself a violation of the statute. They contended that the Maine legislature, in amending Sec. 1176, had intended that the cost of Ford's warranty be borne by Ford, and not by the Dealers, and that the surcharge improperly shifted the financial burden back to the Dealers. According to the Dealers, Sec. 1176 was about "dealers' rights," and thus any wholesale price increase was unlawful. ⁴

D. The District Court's Orders

1. The February Order

The district court ruled on the parties' motions on February 15, 1994, treating both motions as ones for summary judgment, 844 F.Supp. 819. The parties offer vastly different interpretations of the February Order. We acknowledge that the court's conclusions are not crystal-clear. We do not think, however, that the court's decision is fairly subject to such disparate readings as given by the parties.

First, the district court denied the Dealers' request for damages based on Ford's alleged past failures to reimburse the Dealers according to the amended Sec. 1176. The court ruled that the Dealers did not make an adequately particularized claim to Ford prior to bringing suit.

The court then addressed the Dealers' objections to Ford's reimbursement policy and warranty parity surcharge. Regarding the Dealers' arguments that the 63 percent reimbursement rate was not sufficient under Sec. 1176, the court stated:

The plain language of Sec. 1176 requires that Ford reimburse its dealers "at the retail rate customarily charged by that franchisee for the same parts when not provided in satisfaction of a warranty." 10 M.R.S.A. Sec. 1176 (Supp.1993) (emphasis added). Literally this requires Ford to pay a dealer the same rate that that particular dealer would have charged for that particular part if the dealer had provided it to a nonwarranty customer. Ford's policy of reimbursing dealers at the suggested list price may or may not satisfy Sec. 1176 depending On these grounds, the court denied the Dealers' motion for partial summary judgment, declining to find Ford liable for damages, declare Ford's current reimbursement rate illegal, or issue an injunction requiring that Ford reimburse the Dealers at a higher rate.

                on whether the individual dealer customarily charges more or less than Ford's suggested list price....  As discussed above, the Dealers have not submitted a sufficiently particularized claim to Ford in order to recover for Ford's past alleged underpayments.   Moreover, the Dealers

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