Andy Mohr Truck Ctr., Inc. v. Volvo Trucks N. Am.

• Decision Date: 28 August 2017
• Docket Number: Nos. 16-2788,16-2839,s. 16-2788
• Parties: ANDY MOHR TRUCK CENTER, INC., Plaintiff–Appellee, Cross–Appellant, v. VOLVO TRUCKS NORTH AMERICA, a Division of Volvo Group North America, LLC., Defendant–Appellant, Cross–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

869 F.3d 598

ANDY MOHR TRUCK CENTER, INC., Plaintiff–Appellee, Cross–Appellant,

v.VOLVO TRUCKS NORTH AMERICA, a Division of Volvo Group North America, LLC., Defendant–Appellant, Cross–Appellee.

Nos. 16-2788

16-2839

United States Court of Appeals, Seventh Circuit.

Argued April 5, 2017

Decided August 28, 2017

Rehearing and Rehearing En Banc Denied October 3, 2017

Robert Dean MacGill, Counsel, Alexander Pape Orlowski, Attorney, BARNES & THORNBURG LLP, Indianapolis, IN, for Plaintiff–Appellee.

Billy Martin Donley, Attorney, Guenther Karl Fanter, Attorney, Thomas David Warren, Attorney, BAKER & HOSTETLER LLP, Cleveland, OH, David R. Jarrett, Attorney, BAKER & HOSTETLER LLP, Houston, TX, for Defendant–Appellant.

Before Wood, Chief Judge, and Flaum and Hamilton, Circuit Judges.

Wood, Chief Judge.

Volvo Trucks makes heavy-duty trucks, and Andy Mohr Truck Center was one of its dealers. The dealership agreement governing their business dealings was negotiated and concluded in early 2010. Relations between them, unfortunately, soured quickly. Before too long, Volvo and Mohr were suing one another in separate federal lawsuits, which were consolidated later in the district court. When all was said and done, Mohr won a verdict of $6.5 million, and it prevailed on Volvo's claim that it breached a commitment to build a new facility. Volvo staved off Mohr's claim against it based on Volvo's failure to award Mohr a Mack Truck franchise. We now have before us Volvo's appeal and Mohr's cross-appeal, but before we delve into the merits, we turn to some of the nuances of heavy-duty truck sales.

I

In the United States, federal agencies classify trucks with a gross weight of more than 33,001 pounds as class 8, heavy-duty trucks. See Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium– and Heavy–Duty Engines and Vehicles, 76 Fed. Reg. 57,106, 57,114 –15 (Sept. 15, 2011). The American heavy-duty truck sector "spans a wide range of vehicles" with "unique form[s] and function[s]," including the tractor-trailer semis familiar to many drivers. Id. at 57,114. Class 8 trucks are primarily used for freight transportation over long distances. Id. at 57,115.

Unlike passenger cars, most class 8 trucks are specially ordered based on customers' business requirements and specifications. When a customer wants to order a truck or a fleet of trucks, she generally approaches one or more dealers with her specifications to get a price quote. The dealer then communicates with the manufacturer in order to negotiate a price at which the manufacturer is willing to sell the truck(s) to the dealer. Based upon this price, the dealer is able to set the price at which it will offer to sell the truck(s) to the customer. In other words, for each sale, the dealer must negotiate two separate transactions—an upstream deal with the manufacturer and a downstream deal with the customer.

During the time at issue in this case, Volvo maintained list prices for various models of trucks with various options. But Volvo also offered all its dealers a standard concession (i.e. , a percentage discount off the net price), which varied slightly by truck model. On top of this, Volvo operated a program called Retail Sales Assistance (RSA), through which dealers could submit requests for additional concessions. To participate in the RSA program, dealers submitted two-page request forms detailing relevant information about each customer's potential order: the model, cab, engine, and transmission types; the quantity of trucks; and the competition (other offers or truck types a customer was considering). Volvo evaluated these requests on a case-by-case basis and awarded concessions based on a variety of factors, including the price offered by other manufacturers, the quantity of trucks requested, the truck specifications, Volvo's production capacity, and the customer's purchase history. According to Volvo, where two of its dealers were bidding for the same transaction (i.e. , the same customer, date, and specifications), Volvo offered each dealer the exact same concession. Based on the concession offered by Volvo to the dealer, the dealer could then negotiate a price quote with the customer.

Although Volvo and its dealers share a common interest in making the sale, their interests diverge—at least potentially—when it comes to the share of profit each one receives from a given sale. For any final price to the customer, one component represents Volvo's share, and the other the dealer's share. The lower the concession Volvo gives to the dealer, the greater its share of that final price (if we assume that the price to the final customer is driven by market supply and demand). The higher the concession—i.e. the more the dealer reaps for its services—the greater the dealer's profit from the sale, at Volvo's expense. These competing motivations can cause discord.

II

The legal rough patch between Mohr and Volvo began in April 2012, when Volvo sought a declaratory judgment that it was entitled to terminate Mohr's dealership agreement because Mohr had misrepresented a material fact in connection with its dealer application. During the course of the negotiations, Mohr supposedly had promised Volvo that it would build a new long-term facility for the dealership if Volvo awarded the contract to Mohr. After the agreement was final, however, Mohr failed to make good on that promise. We refer to this as the "new-facility claim." Mohr had its own beef: it complained that Volvo had violated the Indiana Franchise Disclosure Act, Ind. Code 23-2-2.5 (IFDA), and the Indiana Deceptive Franchise Practices Act (IDFPA), Ind. Code 23-2-2.7. This violation stemmed from a promise Volvo allegedly made to award Mohr a Mack Truck dealership franchise—something within Volvo's power because Mack Truck is part of the Volvo Group. See Mack Trucks, About Mack , https://www.macktrucks.com/about-mack/ (last visited Aug. 28, 2017). The Mack line would have justified Mohr's investment in the new facility, and this promise (Mohr said) induced it to enter into the Volvo dealer agreement. But Volvo gave the Mack franchise to another company. We refer to this as the "Mack claim." Finally, Mohr accused Volvo of providing more favorable concessions on truck pricing to other franchise dealerships through its RSA program than it gave to Mohr. Mohr contended that this violated a provision of the IDFPA that prohibits a franchisor from "[d]iscriminating unfairly among its franchisees ...." Ind. Code § 23-2-2.7-2(5).

The district court consolidated the two actions, and the case dragged on for over three years. During that time, the district court granted summary judgment for Mohr on Volvo's declaratory judgment claim, holding that the integration clause in the dealer agreement barred the new-facility claim. On the negative side for Mohr, the same integration clause doomed its Mack claim. The district court allowed Mohr's claim for unfair discrimination under the IDFPA to move forward. It held a trial in which the jury ruled for Mohr and awarded it $6.5 million. Volvo then moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(b), but the district court denied the motion. Mohr's appeal and Volvo's cross-appeal followed.

III

We turn first to Volvo's challenge to the district court's denial of its Rule 50(b) motion for judgment as a matter of law on Mohr's claim of discrimination under the IDFPA. We give de novo consideration to this decision, taking the evidence in the light most favorable to the non-moving party. Baugh v. Cuprum S.A. de C.V. , 845 F.3d 838, 848 (7th Cir. 2017). The jury concluded that Volvo had discriminated unfairly against Mohr, in violation of Indiana law. We will reverse only if no rational jury could have found in Mohr's favor. Id. at 848–49.

At trial, Mohr presented evidence of 13 transactions that formed the basis of the jury's finding that Volvo had discriminated against Mohr with respect to price concessions. One instance would be enough to sustain the finding of liability, though a greater number would affect damages. For each of the 13 transactions in question, Mohr compared the concession it received from Volvo with the concessions that Volvo awarded to other franchisee-dealers in various states, each of which had the same terms in their dealer agreements and the same access to the RSA process. The quotes in question were for the same model and year of truck, and for a quantity of more than ten trucks. Each of the concession quotes was limited to comparisons within a three-month window. Mohr prepared exhibits for the jury that showed that Mohr received less favorable quotes for concessions than at least some of the comparators did for each deal. Mohr's industry expert testified that he had reviewed all of the RSA data and comparator transactions, and that Volvo had no process to compare price concessions and made no effort to equalize them. Mohr's sales manager also testified about receiving less favorable price concessions on large fleet transactions. He asserted that Mohr would have made certain sales if it had been given more favorable concessions.

Volvo offers three reasons why no rational jury could have found that it discriminated unfairly against Mohr: first, that the evidence did not support an inference of unfair discrimination; second, that the evidence was insufficient to demonstrate causation; and third, that the limitation of remedies provision in the dealer agreement precluded Mohr's claim for damages. We agree with Volvo on its first point, and so we have no need to address causation or remedies.

Volvo supports its evidentiary challenge to the inference of discrimination with three sub-arguments: (1) that the comparators were not similarly situated in the relevant respects; (2) that the data that purported to show the discrimination was "cherry-picked"; and (3) that the IDFPA applies only within the state of Indiana, and only to discrimination among Indiana dealers....