Empire Volkswagen Inc. v. World-Wide Volkswagen Corp., WORLD-WIDE

• Citation: 814 F.2d 90
• Decision Date: 12 March 1987
• Docket Number: D,WORLD-WIDE,No. 464,464
• Parties: 1987-1 Trade Cases 67,480, 7 Fed.R.Serv.3d 138 EMPIRE VOLKSWAGEN INC., Empire Volkswagen Inc. d/b/a Empire Porsche/Audi Inc., Empire City Motors Inc., Donald Amerling and Susanne Properties Corp., Plaintiffs-Appellants, v.VOLKSWAGEN CORP., Defendant-Appellee. ocket 86-7645.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 90

814 F.2d 90

1987-1 Trade Cases 67,480, 7 Fed.R.Serv.3d 138

EMPIRE VOLKSWAGEN INC., Empire Volkswagen Inc. d/b/a Empire Porsche/Audi Inc., Empire City Motors Inc., Donald Amerling and Susanne Properties Corp. Plaintiffs-Appellants, v. WORLD-WIDE VOLKSWAGEN CORP., Defendant-Appellee.

No. 464, Docket 86-7645.

United States Court of Appeals Second Circuit.

Argued Dec. 1, 1986.

Decided March 12, 1987.

Lawrence M. Rosenstock, New York City (Allan J. Kirschner, Carl T. Peluso, Robinson, Perlman & Kirschner, P.C., New York City, of counsel), for plaintiffs-appellants.

Arthur S. Linker, New York City (Arnold I. Roth, Alan L. Doochin, Rosenman Colin Freund Lewis & Cohen, New York City, of counsel), for defendant-appellee.

Before FEINBERG, Chief Judge, NEWMAN and MINER, Circuit Judges.

MINER, Circuit Judge:

Plaintiffs-appellants Empire Volkswagen, Inc., Empire City Motors, Inc. and Susanne Properties, companies formerly associated with Volkswagen-Porsche-Audi and Ford dealerships in Poughkeepsie, New York, and Donald Amerling, principal owner of those companies, appeal from a judgment entered in the United States District Court for the Southern District of New York (Kram, J.) in favor of defendant-appellee World-Wide Volkswagen, Inc. ("World-Wide"). Appellants' complaint asserted federal Automobile Dealers' Day in Court Act ("Dealers' Act") claims, see 15 U.S.C. Sec. 1221 et seq. (1982), federal and state antitrust claims, and various pendent state law claims. World-Wide asserted various counterclaims.

In an amended order dated February 27, 1986, Judge Kram granted summary judgment dismissing appellants' federal and state antitrust claims. She held that only Empire Volkswagen had standing to assert a claim under the Dealers' Act but dismissed that claim insofar as it alleged that World-Wide's wrongful conduct was in response to Empire Volkswagen's efforts to sell Ford automobiles from a Volkswagen-Porsche-Audi showroom. Judge Kram denied World-Wide's summary judgment motion regarding Empire Volkswagen's other Dealers' Act claims, as well as the pendent state law claims and World-Wide's counterclaims. ¹

Appellants then moved, pursuant to Fed.R.Civ.P. 41(a)(2), for judgment dismissing all remaining claims against World-Wide and granting World-Wide's counterclaims. On appeal, they press their Dealers' Act and antitrust claims and seek to "revive" those claims voluntarily dismissed in the district court. We affirm.

I. BACKGROUND

Empire Volkswagen, principally owned by appellant Donald Amerling, operated Volkswagen and Porsche-Audi dealerships in Poughkeepsie, New York until the dealerships were terminated in 1981. Empire City Motors, an affiliated company also principally owned by Amerling, operated a Ford dealership at the same location and in the same facility as Empire Volkswagen, beginning in May 1977. Susanne Properties, another company wholly owned by Amerling, owned the land and buildings housing the Volkswagen-Porsche-Audi and Ford dealerships. World-Wide is the exclusive distributor of Volkswagens, Porsches and Audis in the New York, New Jersey and Connecticut area.

In June 1975, Amerling accepted the offer of Rainer Josenhanss, an executive vice president of World-Wide, to become World-Wide's Volkswagen and Porsche-Audi dealer for the Poughkeepsie area. Amerling contends that World-Wide agreed to allow Empire Volkswagen to operate both the Volkswagen dealership and the Porsche-Audi dealership from a single facility. However, as a formality, Amerling signed a letter, dated September 12, 1975, indicating his interest in the Porsche-Audi dealership and promising to relocate the Porsche-Audi dealership to a separate facility by December 31, 1976.

Empire Volkswagen and World-Wide ultimately signed two dealership agreements, one for the Volkswagen franchise and one for the Porsche-Audi franchise. Amerling signed the agreements in his capacity as president of Empire Volkswagen. The agreements recited, inter alia, that the franchises would terminate upon Amerling's death, that Amerling would act as general manager, that he was a 90% beneficial owner of the dealerships and that he was president and treasurer of the dealerships.

In the fall of 1975, Empire Volkswagen began operating its Volkswagen and Porsche-Audi dealerships in a single sales and service facility. In December 1976, Amerling applied for a Ford franchise and offered to use the assets and facilities of his existing dealerships in connection with the Ford franchise. This would constitute "dualing," i.e., housing multiple, competing dealerships in a single facility.

World-Wide adamantly opposed dualing franchise facilities. At dealer meetings, Josenhanss warned dealers against dualing, stating that dealers who dualed their franchises could expect to get fewer automobiles than single-line dealers. However, as appellants concede, World-Wide's definition of dualing was confined to housing two or more competing franchises in a single facility. World-Wide had no objection to dealers owning and operating multiple franchises so long as they maintained a separate showroom for World-Wide's products.

Amerling informed World-Wide of his plans to become a Ford dealer in February 1977, at which time Josenhanss indicated that such an arrangement was unacceptable. Nevertheless, Amerling decided to become a Ford dealer and organized Empire City to act as the corporate franchise holder for Ford. In May 1977, Empire City commenced operation as a Ford dealership, using the same showroom, service facility and parts department used by the Volkswagen-Porsche-Audi dealership. The combined dealership was known as Empire City Motors.

Although the Volkswagen and Porsche-Audi dealership agreements do not prohibit dualing per se, both agreements provide that

[Empire Volkswagen] will see to it that all of its Premises meet the applicable provisions of this Agreement, the Operating Standards for [Volkswagen and Porsche-Audi] Dealers and such standards as [World-Wide] may prescribe from time to time (particularly as they relate to buildings in the recommended [Volkswagen and Porsche-Audi] style, size, layout, installation, equipment, identification by [Volkswagen and Porsche-Audi] Signs and parking facilities)....

Joint App. at 2043 (Volkswagen Dealer Agreement); id. at 2088 (Porsche-Audi Dealer Agreement). "Premises" is defined in both agreements to include salesrooms. Id. at 2063, 2109. The agreements also state that World-Wide would provide a fair and equitable allocation of its products among its dealers.

In May 1977, Josenhanss sent Amerling a letter objecting strenuously to the addition of the Ford dealership, pointing out the deficiencies of the existing Amerling dealerships, and suggesting that Empire Volkswagen should voluntarily yield its franchises if the deficiencies were not corrected. Empire Volkswagen's allocation of cars from World-Wide was reduced following that letter, and continued to be reduced for the next three years. Additionally, Josenhanss sent Amerling a letter dated June 22, 1977, renewing World-Wide's demand for the construction of a separate Porsche-Audi facility, which Amerling, as president of Empire Volkswagen, had promised, in his September 12, 1975 letter, to provide.

In July 1977, appellants objected to the reduced allocation of automobiles. After a series of meetings, World-Wide and Empire Volkswagen agreed that World-Wide would provide an increased allocation of vehicles and that appellants would construct a separate Volkswagen-Porsche-Audi showroom adjacent to the existing facility. World-Wide also agreed to withdraw its demand for a separate Porsche-Audi facility. This agreement was memorialized in a letter dated January 25, 1978, signed by Amerling. The new showroom never was built, and the allocation of cars to Empire Volkswagen never was increased. World-Wide objected to proposals for the renovation of existing facilities and, according to Amerling, at one point suggested that if he resigned the Ford franchise, he would not need to build a new facility.

The parties agree that prior to dualing, Empire Volkswagen displayed ten or eleven Volkswagen, Porsche and Audi vehicles, and after dualing only five such vehicles were displayed, along with five Ford models. Amerling claims that five vehicles were more than sufficient to display the World-Wide line, and further alleges that the outdoor area provided added display potential for appellee's automobiles. World-Wide contends that Empire Volkswagen's post-dualing display of World-Wide products was wholly inadequate.

In May 1980, the dealership was destroyed by a fire, apparently set by arsonists. Appellants collected the insurance proceeds and desired to rebuild. World-Wide refused to deal with Amerling, asserting that his father was then in control of the dealership. The dealership never was rebuilt, and was closed by Amerling's father in February 1981.

In August 1981, appellants commenced this suit against World-Wide, asserting several Dealers' Act claims, federal antitrust claims, state law claims relating to termination of automobile franchise agreements, state antitrust claims, and state law claims for breach of contract and tortious interference with contractual relations. World-Wide asserted minor counterclaims relating to money due and owing. After extensive discovery, World-Wide moved for summary judgment.

In January 1986, Judge Kram granted in part and denied in part World-Wide's summary judgment motion. She granted the motion dismissing the Dealers' Act claims against all appellants save Empire Volkswagen, holding that the other appellants did not have standing to sue under the Act. Additionally, she determined that, in order to state a claim under the Dealers' Act, Empire Volkswagen must show that World-Wide had made a wrongful demand on it, enforced by threats of coercion or intimidation. Judge Kram then granted the summary judgment motion as to Empire...