Joe Westbrook, Inc. v. Chrysler Corp.

• Decision Date: 28 June 1976
• Docket Number: Civ. A. No. 18417.
• Citation: 419 F. Supp. 824
• Parties: JOE WESTBROOK, INC., a corporation, d/b/a Westbrook Chrysler-Plymouth, and Joe Westbrook v. CHRYSLER CORPORATION et al.
• Court: U.S. District Court — Northern District of Georgia

419 F. Supp. 824

JOE WESTBROOK, INC., a corporation, d/b/a Westbrook Chrysler-Plymouth, and Joe Westbrook v. CHRYSLER CORPORATION et al.

Civ. A. No. 18417.

United States District Court, N. D. Georgia, Atlanta Division.

June 28, 1976.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Hugh M. Dorsey, Jr., F. T. Davis, Jr., Gary W. Hatch, and Kent E. Mast, Hansell, Post, Brandon & Dorsey, Atlanta, Ga., for plaintiffs.

Michael A. Doyle and Oscar N. Persons with Alston, Miller & Gaines, Atlanta, Ga., for defendants.

ORDER OF COURT

MOYE, District Judge.

This is an antitrust action brought by plaintiffs Joe Westbrook, Inc., and Joe Westbrook hereinafter collectively referred to as plaintiffs or Westbrook to enjoin Chrysler Motors Corporation hereinafter Chrysler Motors from terminating a Plymouth Direct Dealer Agreement and seeking damages from the Chrysler Corporation, Chrysler Realty Corporation, and Chrysler Motors hereinafter collectively referred to as defendants or Chrysler for violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2 and under the Automobile Dealers Day in Court Act ADDCA, 15 U.S.C. § 1221, et seq. The case is presently before the Court on the defendants' motion for partial summary judgment.

Chrysler Corporation is a Delaware corporation with its principal place of business in the State of Michigan. It engages in the manufacture and assembly of motor vehicles bearing its brand name. At the time that the Complaint was filed, Chrysler Motors was a Delaware corporation with its principal place of business in the State of Michigan. Chrysler Motors was a wholly-owned subsidiary of Chrysler Corporation and was engaged in the sale and distribution, through Chrysler dealers, of motor vehicles bearing its brand names. Effective December 31, 1975, Chrysler Motors was merged with Chrysler Corporation. Chrysler Realty is a Delaware corporation with its principal place of business in the State of Michigan. Chrysler Realty is a wholly-owned subsidiary of Chrysler Corporation and engages in the financing, development, and management of real property, and some of the property and facilities developed or managed by Chrysler Realty are leased or subleased by Chrysler Realty to Chrysler dealers.

Joe Westbrook, Inc., is a Georgia corporation with its principal place of business in Georgia. Joe Westbrook, individually, owns the majority of the stock of Joe Westbrook, Inc. Pursuant to Direct Dealer Agreements executed with Chrysler Motors, Westbrook operated an automobile dealership engaged in the selling and servicing of Chrysler brand automobiles distributed by Chrysler Motors from May 1957¹ until September 1973 when all relationships with Chrysler Motors were terminated. See Orders entered July 25, 1973, and August 9, 1973.

In 1963 and 1964 Westbrook and defendants began efforts to relocate Westbrook Motors in order to obtain better facilities. Plaintiffs were interested in relocating in the Greenbriar area of Atlanta and, to that end, located four possible sites which Westbrook believed conformed to Chrysler Realty and Chrysler Motors' specifications. Westbrook obtained options on what it considered the best of the four locations and offered the options at no extra cost to Chrysler Motors and Chrysler Realty. Westbrook's idea was that the defendants would buy the property and lease it to him or that Joe Westbrook would buy the property and defendants would become lessees and Westbrook, Inc., a sublessee. Defendants did not accept Westbrook's offer and, before the options expired, Westbrook and another investor purchased the property hereinafter the Campbellton Road property.

Thereafter, defendants located property within close proximity to the Campbellton Road property and suggested that Westbrook relocate on that property. Westbrook contends that the Campbellton Road property was superior in all respects to the location offered by defendants. Plaintiff was required by his franchise agreement to obtain defendants' approval for any relocation. Chrysler Realty then purchased other property on Campbellton Road and offered it to plaintiff. Plaintiff rejected this location as the rent was prohibitive. Plaintiff subsequently submitted to defendants two more relocation sites, neither of which were owned or leased by defendants, which were both ultimately rejected by Chrysler.

Plaintiffs contend that throughout this period of time, commencing in 1966, Chrysler Motors was exerting pressure upon plaintiff to relocate by setting unreasonably high Minimum Sales Responsibility levels MSR for Westbrook and by demanding that Westbrook meet its MSR by moving to more suitable facilities. Defendants, on the other hand, contend that Westbrook had been operating for at least seven years at substandard performance and that Westbrook failed to cooperate with attempts by defendants to improve Westbrook's MSR performance.

On February 18, 1971, Westbrook and Chrysler Motors entered into a two-year Term Sales Agreement for the sale and service of new Chrysler Motor vehicles, renewal of which was conditioned upon Westbrook's acquiring new facilities acceptable to Chrysler Motors. Chrysler Motors allowed the Term Sales Agreement to expire by its own terms on the grounds that Westbrook had failed to acquire acceptable facilities and had failed to meet its MSR.

On April 30, 1973, Westbrook received a 90-day termination notice on its Plymouth franchise from Chrysler Motors. Westbrook was terminated for inadequate sales performance, inadequate facilities and the location of its facilities.

Plaintiffs claim that defendants have violated the Automobile Dealers Day in Court Act by their failure to act in good faith in terminating plaintiffs' dealership agreement. Plaintiffs also allege that defendants have violated Sections 1 and 2 of the Sherman Act by imposing a tying arrangement upon plaintiffs, unlawfully obligating plaintiffs to lease realty and dealership facilities from Chrysler Realty as a condition for relocating the Westbrook dealership; by combining and conspiring to restrain trade in Chrysler automobiles and property and facilities for Chrysler dealerships; and by attempting and conspiring to monopolize interstate trade in Chrysler automobiles and property and facilities for Chrysler dealerships.

I. Automobile Dealers' Day in Court Act

Plaintiffs contend that the defendants have failed to act in good faith in terminating plaintiffs' franchise agreement in violation of the ADDCA. Plaintiffs' cause of action under the ADDCA is governed by 15 U.S.C. § 1222, which provides as follows:

"An automobile dealer may bring suit against any automobile manufacturer engaged in commerce, and shall recover the damages by him sustained and the cost of suit by reason of the failure of said automobile manufacturer . . . to act in good faith in performing or complying with any of the terms or provisions of the franchise, or in terminating, cancelling, or not renewing the franchise with said dealer . . ."

By its terms, § 1222 limits jurisdiction to suits against an "automobile manufacturer." The term "automobile manufacturer" has a special meaning in the ADDCA and is defined at 15 U.S.C. § 1221(a) as follows:

"The term `automobile manufacturer' shall mean any person . . . engaged in the manufacturing or assembling of passenger cars, trucks or station wagons, including any person . . . which acts for and is under the control of such manufacturer or assembler in connection with the distribution of said automotive vehicles."

It is clear that the ADDCA does not apply until a manufacturer-dealer relationship has been created.

The term "franchise" is defined at section 1221(b) as follows:

"the written agreement or contract between any automobile manufacturer engaged in commerce and any automobile dealer which purports to fix the legal rights and liabilities of the parties to such agreement or contract."

Without a written franchise agreement there can be no claim under the ADDCA. Stansifer v. Chrysler Motors Corp., 487 F.2d 59, 63 (9th Cir. 1973); see, e. g., Reliable Volkswagen v. World-Wide Auto, 216 F.Supp. 141 (D.N.J.1963); Lawrence Chrysler Plymouth, Inc. v. Chrysler Corp., 461 F.2d 608, 613 (7th Cir. 1972); York Chrysler-Plymouth, Inc. v. Chrysler Credit Corp., 447 F.2d 786, 791 (5th Cir. 1971).

Defendants contend that the claim against Chrysler Realty under the ADDCA should be dismissed inasmuch as Chrysler Realty is not a party to any franchise agreement with plaintiff.²

Plaintiffs contend that there are two separate causes of action against an automobile manufacturer under the ADDCA. The first is the failure to act in good faith in performing or complying with the franchise agreement, and the second is the failure to act in good faith in terminating, cancelling or not renewing the franchise. Plaintiff claims that the privity requirement applies only to the former cause of action and that the instant action falls under the latter cause of action.

However, although plaintiffs' contention that section 1222 provides the dealer with two basic causes of action against an automobile manufacturer is true, see American Motor Sales Corp. v. Semke, 384 F.2d 192, 194 (10th Cir. 1967), there is no authority for plaintiff's proposition that the privity requirement is applicable to only one of those causes of action. The two causes of action established by section 1222 refer to the franchise agreement, and must be read in a consistent manner. An action under the ADDCA must be predicated upon a written franchise agreement. An entity which is not a party to such an agreement, even if the entity is otherwise considered an "automobile manufacturer," is not within the Court's jurisdiction as established in section 1222.

Plaintiffs also suggest that Chrysler Realty acted as an agent of the Chrysler Corporation and, therefore, should not be permitted to escape the provisions of the ...