JPM, Inc. v. John Deere Indus. Equipment Co.

• Decision Date: 19 August 1996
• Docket Number: No. 95-3776,95-3776
• Citation: 94 F.3d 270
• Parties: JPM, INC., John P. Mettler, and Margo Mettler, Plaintiffs-Appellants, v. JOHN DEERE INDUSTRIAL EQUIPMENT COMPANY and Deere & Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 270

94 F.3d 270

JPM, INC., John P. Mettler, and Margo Mettler, Plaintiffs-Appellants, v. JOHN DEERE INDUSTRIAL EQUIPMENT COMPANY and Deere & Company Defendants-Appellees.

No. 95-3776.

United States Court of Appeals, Seventh Circuit.

Argued April 16, 1996.

Decided Aug. 19, 1996.

Carol S. Dittmar, argued, Garvey, Anderson, Johnson, Gabler & Geraci, Eau Claire, WI, for Plaintiffs-Appellants.

James Michal Brennan, David R. Cross, argued, Quarles & Brady, Milwaukee, WI, for Defendants-Appellees.

Gary L. Antoniewicz, Christopher J. Dodge, Tomlinson, Gilman & Rikkers, Madison, WI, for amicus curiae Midwest Equipment Dealers Ass'n, Inc.

Before ESCHBACH, MANION, and EVANS, Circuit Judges.

TERENCE T. EVANS, Circuit Judge.

John Mettler and his wife Margo are the sole shareholders of JPM, Inc. In 1990, JPM and the John Deere company entered into three separate agreements. The agreements, which created a dealership under the Wisconsin Fair Dealership Law, made JPM a "dealer" and John Deere a "grantor," as those terms are defined by the Wisconsin law. Wis.Stat. § 135.02(2) and (5). In the deal, JPM purchased the exclusive dealership rights to certain lines of John Deere equipment in a defined territory in northwest Wisconsin for $1 million. Four years later, JPM sold the dealership to Ison Equipment for roughly double that amount--$2,062,705--plus a three-year employment contract at $104,000 a year for John Mettler.

After the sale was completed, JPM sued John Deere for damages, alleging that Deere constructively terminated the dealership in violation of the Wisconsin Fair Dealership Law. In support of its constructive termination claim, JPM alleged, among other things, that it had been told by John Deere that it must sell the dealerships within three months, that it must sell to Ison, and that it could not merge with Ison or solicit other bids.

John Deere moved for summary judgment, essentially arguing that a cause of action does not exist under the Wisconsin Fair Dealership Law for constructive termination. Deere's argument was quite simple: JPM lacked standing to sue under the Fair Dealership Law because the dealership was not terminated by John Deere, but by the dealer, JPM, when it decided to sell. JPM sold the business to Ison, the argument ran, so it could not claim the dealership was terminated or canceled by John Deere. The district court rejected Deere's interpretation of the relevant Wisconsin statute, which reads:

Cancellation and alteration of dealerships. No grantor, directly or through any officer, agent or employee, may terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership without good cause. The burden of proving good cause is on the grantor.

Wis.Stat. § 135.03.

The district court denied John Deere's motion for summary judgment, saying, "Although I cannot say whether the plaintiff will be successful in establishing such a termination, the legal theory has merit." John Deere seems to have reconciled itself to the fact that constructive termination is a recognized legal theory under the Wisconsin Fair Dealership Law. See, e.g., Super Valu Stores, Inc. v. D-Mart Food Stores, Inc., 146 Wis.2d 568, 576, 431 N.W.2d 721, 725 (Ct.App.1988), review denied, 147 Wis.2d 888, 436 N.W.2d 29 (1988); see also, Michael A. Bowen & Brian E. Butler, The Wisconsin Fair Dealership Law (2d ed. 1995) (agreeing that constructive termination claims are valid). This aspect of the district court's opinion was not challenged in a motion to reconsider Deere filed following the denial of its summary judgment motion.

In its motion to reconsider, Deere argued that the economic duress theory relied on by JPM to support its claim of constructive termination could not, in fact, support it. The district court, however, held that "economic duress or coercion can serve as the basis for a constructive termination claim," but that "plaintiffs making such claims must make an initial showing either that they pursued legal avenues available to remedy the alleged duress or that those remedies would not have been adequate to cure the problem." The motion to reconsider was stayed in order to give JPM an opportunity to make this initial showing. It was undisputed, however, that JPM had not pursued the injunctive relief available to it as a dealer under the Wisconsin Fair Dealership Law. JPM also failed to convince the district court that legal remedies under the Dealership Law would have been insufficient to afford it relief. The district court, therefore, granted John Deere's motion for reconsideration and entered summary judgment against JPM. JPM's appeal is now before us.

We review the district court's grant of summary judgment de novo. Jasper Cabinet Co. v. United Steelworkers of America, 77 F.3d 1025 (7th Cir.1996). All reasonable inferences must be viewed in the light most favorable to the nonmoving party, in this case JPM, Bratton v. Roadway Package System, Inc., 77 F.3d 168 (7th Cir.1996), and summary judgment is appropriate only where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Oliver v. Deen, 77 F.3d 156 (7th Cir.1996).

We assume that constructive termination is a recognized cause of action under the Wisconsin Fair Dealership Law. On that assumption, we turn to the next step in our analysis--whether economic duress may serve as the basis for a claim of constructive termination. The short answer to this question is yes. The Fair Dealership Law is to "be liberally ... applied to promote its underlying purposes and policies." Wisconsin Statutes 135.025(1). One of the primary purposes of the law is to "protect dealers against unfair treatment by grantors, who inherently have superior economic power and superior bargaining power in the negotiation of dealerships[.]" Wis.Stat. § 135.025(2)(b). Economic duress is but one of many ways in which a grantor may seek to exercise its "inherently superior bargaining power" to the detriment of the dealer.

Having concluded that economic duress can be the basis for a constructive termination claim under the Wisconsin Fair Dealership Law, we next consider what a plaintiff must do under Wisconsin law to make a showing of economic duress. The elements of economic duress were set out by the Supreme Court of Wisconsin in Wurtz v. Fleischman, 97 Wis.2d 100, 293 N.W.2d 155 (1980), where the court tells us that

the basic elements of economic duress which the trial court should expressly consider ... are ...:

"1. The party alleging economic duress must show that he has been the victim of a wrongful or unlawful act or threat, and

"2. Such act or threat must be one which deprives the victim of his unfettered free will.

"As a direct result of these elements, the party threatened must be compelled to make a disproportionate exchange of values or to give up something for nothing. If the payment or exchange is made with the hope of obtaining a gain, there is not duress; it must be made solely for the purpose of protecting the victim's business or property interests. Finally, the party threatened must have no adequate legal remedy."

Wurtz at 109-110, 293 N.W.2d 155 (quoting 13 Williston on Contracts, § 1617 at 704 (3d ed. 1970)). Where a case alleging economic distress goes to trial, these elements, all of them of course, must be proved by clear and convincing evidence. Wurtz at 111, 293 N.W.2d 155. So to avoid summary judgment in this case, JPM had to present evidence upon which a reasonable finder of fact could conclude that the elements of economic duress were present. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ("In ruling on a motion for summary judgment, the judge must view the evidence presented through the prism of the substantive evidentiary burden."). We examine each of these elements in turn.

The first element of economic duress is a wrongful act or threat. JPM alleges that Deere threatened to withhold shipments and run down the dealership if its unlawful demands were not met. Deere vigorously disputes this allegation. The question of whether these threats were...