Danvers Motor Co., Inc. v. Ford Motor Co.

• Decision Date: 04 February 2002
• Docket Number: No. CIV.A. 00-5480(JAG).,CIV.A. 00-5480(JAG).
• Citation: 186 F.Supp.2d 530
• Parties: DANVERS MOTOR COMPANY, INC., Bob Chambers Ford, Concord-Ford-Lincoln-Mercury, Fette Ford, Inc., and Senator Ford, Inc., Plaintiffs, v. FORD MOTOR COMPANY, Defendant.
• Court: U.S. District Court — District of New Jersey

186 F.Supp.2d 530

DANVERS MOTOR COMPANY, INC., Bob Chambers Ford, Concord-Ford-Lincoln-Mercury, Fette Ford, Inc., and Senator Ford, Inc., Plaintiffs, v. FORD MOTOR COMPANY, Defendant.

No. CIV.A. 00-5480(JAG).

United States District Court, D. New Jersey.

February 4, 2002.

Eric Lewis Chase, Esq., Bressler, Amery & Ross, Florham Park, NJ, Barry S Goodman, Esq., Greenbaum, Rowe, Smith, Ravin, Davis & Himmel, LLP, Woodbridge, NJ, Counsel for Plaintiffs.

James S. Dobis, Esq., Dobis & Reilly, P.A., Livingston, NJ, James F. Hibey, Esq., William R. Sherman, Howrey Simon Arnold & White, Washington, D.C., Counsel for Defendant.

OPINION

GREENAWAY, District Judge.

This matter comes before the Court on Defendant Ford Motor Company's ("Ford" or "Defendant") motion to dismiss the complaint filed by Plaintiff Danvers Motor Company, Inc. ("Danvers") and several other Ford dealers (collectively, "Plaintiffs").¹ Plaintiffs' responsive motion seeks injunctive relief and expedited proceedings. For the reasons set forth below, this Court finds that Plaintiffs have failed to articulate an injury-in-fact so as to establish the standing necessary to bring this action in federal court. Accordingly, Defendant's motion to dismiss the complaint, pursuant to Federal Rule of Civil Procedure 12(b)(1), is granted.

BACKGROUND

Plaintiffs are Ford dealers from several retail markets in the northeast United States. (Compl. ¶¶ 19-23.) Defendant, an automobile manufacturer, sells and distributes its vehicles through franchise dealers, such as Plaintiffs. (Id. ¶ 37.) Plaintiffs have each signed a substantively identical Franchise Agreement with Defendant. (Id. ¶ 40.) The instant litigation arises from a recent price increase Ford imposed and a sales initiative called the "Blue Oval Certification" ("BOC"). Beginning with its 2001 models, Ford raised by 1% the prices of its vehicles for dealers. (Id. ¶ 1.) However, Ford did not raise the manufacturer's suggested retail price ("MSRP"). (Id. ¶¶ 1, 49.) In April 2000, Ford instituted the BOC as a nationwide customer service and satisfaction incentive program for all of its dealers. (Id. ¶ 44.)

Although the BOC program is voluntary, dealers who wish to participate must achieve certification. The certification process, created by Ford and endorsed by the National Ford Dealer Council,² involves a number of performance criteria, including leadership, concern resolution, sales, service, and facilities. (Id. ¶ 47; Ex. A.) Certification requirements for each dealer differ depending on whether they are classified as a "Select dealer," a dealer with low annual vehicle sales and/or a location in a rural area, or a "Contact dealer," a dealer with greater annual vehicle sales. (Id. ¶ 54.) Ford maintains the right to change the BOC standards for certification, and dealers must re-certify annually. (Id. ¶ 9.)

Plaintiffs, in particular, take issue with the "VOC Index" and "facilities" requirements. The "VOC Index" refers to the National Voice-of-the-Consumer Target, an index which is based on the survey responses of four equally weighted questions.³ (Id. ¶ 55.) There are different VOC index requirements for Select and Contact dealers. (Id. ¶¶ 57-61.) Plaintiffs allege that the program's "facilities" criteria encompass all the ordinary routine aspects of running a dealership which are normally within the responsibilities and concerns of the dealer, safe from the intrusion of Ford or its agents. (Id. ¶ 62.) Moreover, Plaintiffs aver that the facilities criteria-a subjective standard to be determined by J.D. Power and Associates ("J.D.Power") -is "arbitrary, subject to manipulations, and to annual unilateral change." (Id. ¶ 66.)

While there is no penalty provided in the description of the BOC program, Plaintiffs allege that Ford has stated publicly an intention to terminate dealers who fail to obtain certification. (Id. ¶ 8.) Ford dealers who do satisfy the criteria and achieve Blue Oval certification will receive a number of benefits. For example, BOC dealers receive retroactive cash bonuses of between 1 and 1.25 % of the MSRP, while dealers without certification receive no cash bonuses. (Id. ¶¶ 50-51.) Plaintiffs describe this cash bonus system as "three-tier pricing."⁴ (Id. ¶ 5.) Plaintiffs declare, upon information and belief, that Ford's principal motivation in instituting the BOC, is to cause, directly or indirectly, the failure and/or termination of a significant minority of its dealers. (Id. ¶ 3.)

In the complaint, Plaintiffs cite to an April 24, 2000 article from Automotive-news.com, entitled "Ford to Pay Top Dealers Only/Blue Oval Stores Get Invoice Refunds," which indicates that as many as 30% of Ford dealers may not initially qualify for Blue Oval Certification. (Id. ¶ 71.) Similarly, Plaintiffs allege that Ford was aware of the likelihood that several dealers would not qualify under the BOC Program. Plaintiffs refer to an August 28, 2000 article in Automotive News, entitled Ford Blue Oval Bonus Stays, in which Jim O'Conner ("O'Conner"), the President of Ford Division, declared, "If the dealer can't make certification in two years, I am not sure we want that dealer." (Id. ¶ 72.)

As a result, Plaintiffs maintain that dealers who do not or cannot conform to the standards necessary for Blue Oval Certification will suffer three harms: (1) the severe financial penalty in the higher cost of their vehicle orders; (2) the unavailability of certain ancillary benefits and promotional allowances made available to Ford dealers who maintain BOC; and (3) and the incalculable loss of reputation and good will as non-Blue Oval certified Ford dealers. (Id. ¶ 5.) Plaintiffs further allege that even the attempt of many dealers to conform to the BOC Program will exact a financial burden that may jeopardize the viability of their dealerships, and predict that the financial requirements of the BOC Program will result in the termination of a significant minority of dealers. (Id. ¶¶ 7, 53.)

Based on these perceived injuries, Plaintiffs filed a complaint with this Court on November 8, 2000, alleging nine counts: (1) violation of § 13(d) of the Robinson-Patman Act; (2) violation of § 13(e) of the Robinson-Patman Act; (3) in the alternative violation of § 13(a) of the Robinson-Patman Act; (4) violation of the Automobile Dealer's Day in Court Act, 15 U.S.C. §§ 1221-1225; (5) and (6) violation of the state franchise protection statutes; (7) breach of the Sales and Service Agreement; (8) breach of contract (wrongful attempt to unilaterally amend the Sales and Service Agreement); and (9) breach of the implied covenant of good faith and fair dealing. (Compl. ¶¶ 82-168.) On April 6, 2001, Plaintiffs filed an application for injunctive relief to be advanced and consolidated at trial, and for the Court's entry of a scheduling order setting forth the time frame for expedited discovery, consideration for class certification, and a trial date, pursuant to FED. R. CIV. P. 65(a)(2). That same day, Defendant Ford filed a motion to dismiss the complaint in its entirety for lack of subject matter jurisdiction, pursuant to FED. R. Civ. P. 12(b)(1) and for failure to state a claim, pursuant to FED. R. CIV. P. 12(b)(6).

ANALYSIS

A. Standard of Review on a motion to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(1)

According to the Third Circuit, a motion to dismiss under 12(b)(1) for lack of subject matter jurisdiction, "may be treated as either a facial or factual challenge to the court's subject matter jurisdiction." Gould Electronics, Inc. v. United States, 220 F.3d 169, 176 (3d Cir.2000) (citing Mortensen v. First Fed. Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977)). The Gould court instructed that "[i]n reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff."⁵ Gould, 220 F.3d at 176 (citations omitted). A facial attack must not be confused with a factual challenge contending that the court in fact lacks subject matter jurisdiction, no matter what the complaint alleges, as factual challenges are subject to different standards. In reviewing a factual challenge, "a court may consider evidence outside the pleadings," and no presumptive truthfulness attaches to plaintiffs' allegations. Gould, 220 F.3d at 176 (citing Gotha v. United States, 115 F.3d 176, 178-79 (3d Cir.1997)); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977).

Therefore, a threshold issue for this Court is whether Ford intended to mount a facial or factual attack upon this Court's subject matter jurisdiction. At the August 22, 2001 oral argument on this motion, Defendant argued that its challenge to Plaintiffs' standing was limited to the "four corners of their complaint." (Tr. at 12.) In addition, in its moving papers, Defendant focused its standing argument on Plaintiffs' allegations as stated in the complaint. (Def.'s Mot. to Dismiss at 5-7.) Accordingly, this Court will address Ford's challenges to Plaintiffs' standing as a facial attack on the complaint, and will limit its review to the complaint and those documents referenced therein.⁶

B. Preliminary Requirements for Federal Subject Matter Jurisdiction

The existence of a "case and controversy" is a prerequisite to all federal causes of action. U.S. Const. Art. III § 2; Philadelphia Federation of Teachers, Am. Federation of Teachers, Local 3, AFL-CIO v. Ridge, 150 F.3d 319, 322 (3d Cir.1998). Indeed, the Supreme Court has observed that "[c]oncerns of justiciability go to the power of the federal courts to entertain disputes, and to the wisdom of their doing so." Renne v. Geary, 501 U.S. 312, 316, 111 S.Ct. 2331, 115 L.Ed.2d 288 (1991) (internal quotations and citations omitted). Typically, district courts should presume that they lack jurisdiction unless the contrary appears affirmatively on the record. Id.

Included in Article III...