Cemar, Inc. v. Nissan Motor Corp. In USA, Civ. A. No. 87-165-CMW.

CourtUnited States District Courts. 3th Circuit. United States District Court (Delaware)
Writing for the CourtCALEB M. WRIGHT, Senior
Citation678 F. Supp. 1091
PartiesCEMAR, INC., t/a Rising Sun Motors, Plaintiff, v. NISSAN MOTOR CORPORATION IN U.S.A., Defendant. NISSAN MOTOR CORPORATION IN U.S.A., Counter-Plaintiff, v. CEMAR, INC., t/a Rising Sun Motors, and William T. Murray, Counter-Defendants.
Docket NumberCiv. A. No. 87-165-CMW.
Decision Date29 January 1988


Kenneth W. Lewis, of Daley & Lewis, Newark, Del., of counsel: David F. Albright, Franklin T. Caudill, and Paul J. Cohen, of Semmes, Bowen & Semmes, Baltimore, Md., for plaintiff and counter-defendants.

Robert K. Payson, of Potter, Anderson & Corroon, Wilmington, Del., of counsel: Reed E. Hundt, and Eric A. Stern, of Latham & Watkins, Washington, D.C., for defendant.


CALEB M. WRIGHT, Senior District Judge.

This action is a motion to dismiss arising out of a suit filed by an automobile dealer against its supplier. Cemar, Inc., the plaintiff, alleges that the defendant, Nissan Motor Corporation in U.S.A., engaged in a pattern of conduct to discriminate against it with respect to the processing, handling, and sale of motor vehicles and parts, and to eventually replace it with a more favored dealer. Cemar seeks damages under the Dealer's Day in Court Act, the Sherman Act, the Robinson-Patman Act, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Maryland Transportation Code, and common law theories of fraud, negligent misrepresentation and breach of contract. Nissan Motor Corporation in U.S.A., in turn, counterclaims against Cemar, Inc., and William T. Murray, the president and principal shareholder of Cemar, Inc.

The suit was originally filed in the District of Maryland on June 28, 1985. On September 20, 1985, the defendant filed a Motion to Dismiss the counts under the Sherman Act, the Robinson-Patman Act, and RICO. The case was transferred to this Court on April 1, 1987, with this motion pending. The parties have since updated their briefs and reargued the Motion before this Court.


Because this action is a motion to dismiss, the facts alleged by Cemar in its complaint will be taken as true for the purpose of deciding the motion. Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976). Plaintiff, Cemar, Inc., t/a Rising Sun Motors ("Cemar"), is a Delaware corporation which, at the time of the activities in question, operated an automobile dealership in Rising Sun, Maryland. Defendant, Nissan Motor Corporation in U.S.A. ("Nissan"), is a California corporation owned and controlled by Nissan Motor Corp., Ltd., a Japanese corporation. Cemar became an authorized dealer in August 1974, and it operated under "Datsun Dealer Sales and Service Agreements" until it sold its dealership on May 6, 1983. Cemar alleges that Nissan discriminated against it while it was a dealer and conspired with Aubrey J. Cox, Tillman B. Cox, Cox Enterprises, Inc., and Tim Cox Enterprises, Inc. ("the Coxes"), and possibly others, to replace Cemar with the Coxes as an authorized Nissan dealer.

Cemar alleges that Nissan discriminated against it with respect to the delivery and allocation of vehicles and parts by making them more readily available to other dealers and on more favorable terms. Nissan allegedly allotted Cemar a disproportionately large number of unpopular vehicles, which Cemar did not desire and which were difficult to sell for a profit, in comparison to what Nissan allotted to other similarly situated dealers. Nissan then coerced Cemar into buying the unpopular vehicles by refusing to sell Cemar popular vehicles without its also buying the unpopular ones. Under Nissan's "Equitable Distribution System", dealers' potential sales are supposed to be considered when allocating vehicles. Cemar alleges that Nissan ignored this system and instead allocated new vehicles to dealers based on past sales, the "travel rate". Cemar's sales were lower than other dealers due to its receiving a higher percentage of unpopular vehicles. This lower travel rate caused Cemar to continue to receive high proportions of unpopular vehicles. Nissan "compounded" this problem by delaying shipments to Cemar in order to further decrease Cemar's travel rate, and by knowingly using false Retail Delivery Reporting Cards submitted by other dealers in calculating their travel rates. With respect to the sale of parts, Cemar alleges discriminatory delivery and allocation practices. In addition, it claims that Nissan discriminated against it with respect to credit terms, requiring it to accept parts C.O.D. while allowing other dealers to maintain open accounts.

Cemar claims that the cause of the discrimination was that Nissan had personal antipathy towards it and had developed friendships with other dealers. It also alleges that other dealers used bribes, kickbacks, and other improper incentives in order to gain favorable treatment. Cemar refused to engage in such improper activities and, at the same time, sought a better location and fairer allocation. Consequently, Nissan treated it unfavorably.

Cemar alleges that Nissan's ultimate goal was to eliminate it as a dealer and replace it with the Coxes. Nissan carried this plan out with the consent and collaboration of the Coxes. Cemar desired to move to a potentially more lucrative location. Nissan led Cemar to believe that it approved of the move and would grant Cemar another franchise in perpetuity. However, after the deal was consummated and Cemar had moved from its old location and invested a substantial amount of money in the new location, Nissan informed Cemar that it would offer Cemar only a one-year franchise agreement, in breach of Cemar's understanding of the terms of its move. Cemar had no choice but to sign the agreement. The one-year agreement and Nissan's discriminatory practices created pressure for Cemar to sell its franchise. However, Nissan informed Cemar that the only dealer it would approve for that location was the Coxes, and it threatened not to renew the franchise agreement unless Cemar sold the dealership to the Coxes.

Cemar claims that Nissan engaged in several improper activities concerning the sale in additon to Nissan's discriminating against Cemar, conspiring with the Coxes, and using coercive methods. Nissan "transmitted" a false written notice to the Maryland Motor Vehicles Administration stating that Cemar was no longer a dealer and had already sold the franchise to the Coxes. This was done prior to the approval of the Coxes as a dealer and was allegedly designed to make it illegal for Cemar to sell vehicles in the future. Nissan made similar statements to other dealers. Nissan also gave confidential business information concerning Cemar to the Coxes that enabled them to obtain an advantage in negotiating with Cemar. The Coxes in turn disrupted employee relations at Cemar and bribed Cemar employees. Cemar finally sold the franchise to the Coxes and leased certain property to them with a purchase option on May 6, 1983. Cemar alleges that this sale and lease were at prices lower than what it could have obtained in a market free of improper behavior.


Rule 12(b)(6) states that a motion to dismiss can be granted for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). The Court can dismiss the complaint only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). To decide whether to grant Nissan's motion, the Court must take Cemar's allegations as true and draw any reasonable inferences in favor of Cemar.

Cemar is required only to plead "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R.Civ.P. 8(a)(2). A more liberal standard is often applied to antitrust pleadings. 5 C. Wright & A. Miller, Federal Practice and Procedure § 1228 (1969) hereinafter "Wright & Miller". Thus, "in antitrust cases, where `the proof is largely in the hands of the alleged conspirators,' ... dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly." Hospital Bldg. Co., 425 U.S. at 746, 96 S.Ct. at 1853 (citation omitted). Cemar is required to plead "enough data so that the elements of the claim for relief can be identified." 5 Wright & Miller, supra § 1228. The elements of each claim will be described in the discussion of each count.


In Count II, Cemar incorporates the facts described above and claims that "Defendant contracted, combined, and conspired with the Coxes, competitors of Plaintiff, to terminate the Plaintiff's franchise, and to perform numerous acts of discrimination and bad faith, coercion, and intimidation in order to accomplish said termination, all of which constitutes a concerted refusal to deal in per se violation of the Sherman Act, 15 U.S.C. § 1." Complaint ¶ 24 (emphasis added). Cemar then alleges that it suffered damages including lost profits and business opportunities "as a result of the acts complained of." Complaint ¶ 25. Nissan argues that its activities do not rise to the level of a per se violation and that Cemar cannot succeed under a rule of reason inquiry because it has not alleged "antitrust injury."

Section 1 of the Sherman Act prohibits "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." 15 U.S.C. § 1 (1982). However, "because almost all business agreements may be interpreted as restraining trade to some degree, § 1 of the Sherman Act has been construed for the most part to proscribe only those combinations that `unduly' restrain trade." Cernuto, Inc. v. United Cabinet Corp., 595 F.2d 164, 166 (3d Cir.1979). Therefore, courts usually apply a "rule of reason" and examine the anticompetitive effects of...

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