Liberty Lincoln-Mercury, Inc. v. Ford Motor Co.
| Decision Date | 09 April 2012 |
| Docket Number | 11–1307.,Nos. 11–1258,s. 11–1258 |
| Citation | 676 F.3d 318,82 Fed.R.Serv.3d 207 |
| Parties | LIBERTY LINCOLN–MERCURY, INC.; Fette Ford, Inc.; Causeway Ford Lincoln–Mercury, Inc.; All American Ford; Burlington Lincoln Mercury Suzuki; Chas S. Winner d/b/a Winner Ford; Country Ford Mercury Jeep; D'Amico Lincoln Mercury, Inc.; Dayton Ford, Inc.; Downs Ford, Inc.; Ford of Englewood, Inc.; Freehold Ford, Inc.; George Wall Lincoln–Mercury, Inc.; Hillside Auto Mall, Inc.; Irwin Lincoln–Mercury; Jack Trebour Ford; Ken Smith Motors, Inc.; Larson Ford, Inc.; Liccardi Ford, Inc.; Liccardi Lincoln Mercury; Lilliston Ford, Inc.; Margarino Ford–Mercury and Daewoo, L.L.C.; Mahwah Sales & Service, Inc.; Malouf Ford, Inc.; Malouf Lincoln–Mercury, Inc.; Maplecrest Ford of Menham; Maplecrest Lincoln–Mercury, Inc.; Medford Ford; Montclair Bloomfield Motors, Inc.; Mullane Ford, Inc.; Oasis Ford; Palisade Motors, Inc. d/b/a C & C Ford, Inc.; Park Avenue Ford; Pistilli Ford, Inc.; Point Pleasant Ford; Quality Lincoln Mercury Hyundai, Inc.; Rickles Lincoln–Mercury, L.L.C.; Ridgewoods Village Ford, Inc.; Rittenhouse–Kerr Ford, Inc.; Route 23 Automall; South Shore Ford, Inc.; Stadium Ford, L.L.C.; Straub Lincoln–Mercury; Tom's Ford; Town and Country Motors, Inc.; Town Motors; Valley Ford; Warnock Ford; Wayne Auto Sales; Wayne Motors, Inc.; Weisleder, Inc.; Woodbridge Lincoln–Mercury; Wyckoff Ford, Inc.; Wyman Ford, Inc., all New Jersey corporations; and Capital City Ford, Inc.; Ed Carney Ford, Inc.; Rittenhouse–Kerr Lincoln–Mercury, Inc.; and Riverview Ford of Pennsville, Inc., Delaware corporations, v. FORD MOTOR COMPANY, Appellant No. 11–1258All American Ford; Burlington Lincoln Mercury Suzak; Causeway Ford Lincoln–Mercury, Inc.; Cford, L.L.C.; Country Ford Mercury Jeep; D'Amico Lincoln Mercury, Inc.; Dayton Ford, Inc.; DFFLM, L.L.C.; Downs Ford, Inc.; Ed Carney Ford; Elite Ford, Inc.; Fette Ford, Inc.; Ford of Englewood, Inc.; Ford World, L.L.C.; Freehold Ford, Inc.; George Wall Lincoln–Mercury, Inc.; Hillside Auto Mall, Inc.; Irwin Lincoln–Mercury; Jack Trebour Ford; Ken Smith Motors, Inc.; Larson Ford, Inc.; Liberty Lincoln–Mercury, Inc.; Liccardi Ford, Inc.; Liccardi Lincoln Mercury, Inc.; Lilliston Ford, Inc.; Margarino Ford–Mercury and Daewoo, L.L.C.; Mahwah Sales & Service, Inc.; Malouf Ford, Inc.; Malouf Lincoln Mercury, Inc.; Maplecrest Ford of Mendham; Maplecrest Lincoln–Mercury, Inc.; Medford Ford; Montclair–Bloomfield Motors, Inc.; Mullane Ford, Inc.; Oasis Ford; Palisade Motors, Inc.; Park Avenue Ford; Parkway Ford, Inc.; Pistilli Ford, Inc.; PNCLM, L.L.C.; Point Pleasant Ford; Quality Lincoln Mercury Hyundai, Inc.; Rickles Lincoln–Mercury, L.L.C.; Ridgewood Village Ford, Inc.; Rittenhouse–Kerr Ford, Inc.; Rittenhouse–Kerr Lincoln Mercury, Inc.; Riverview Ford of Pennsville, Inc.; Route 23 Auto Mall; South Shore Ford, Inc.; Stadium Ford; Stateline Ford, Inc.; Straub Lincoln–Mercury; Tom's Ford; Town & Country Motors, Inc.; Town Motors; Valley Ford; Warnock Ford; Wayne Auto Sales; Wayne Motors, Inc.; Weisleder, Inc.; Chas S. Winner; Woodbridge Lincoln–Mercury; Wyckoff Ford, Inc.; Wyman Ford, Inc., Appellants No. 11–1307. |
| Court | U.S. Court of Appeals — Third Circuit |
OPINION TEXT STARTS HERE
Paul J. Halasz, Esq., Dennis LaFiura, Esq., Day Pitney, Parsippany, NJ, Christopher T. Handman, Esq. (Argued), Hogan Lovells US, Washington, DC, for Ford Motor Company.
Ronald J. Campione, Esq., Eric L. Chase, Esq. (Argued), Stephen R. Knox, Esq., Genevieve K. LaRobardier, Esq., Bressler, Amery & Ross, Florham Park, NJ, for Liberty Lincoln Mercury, Inc.
Before: FISHER and GREENAWAY, JR., Circuit Judges, and JONES, * District Judge.
Ford Motor Co. (“Ford”) appeals the District Court's grant of summary judgment in favor of Liberty Lincoln–Mercury, Inc., Lilliston Ford, Oasis Ford, and Warnock Ford (collectively, “Dealers” or “Franchisees”) on the ground that Ford's New Jersey Cost Surcharge (“NJCS”) violates the New Jersey Franchise Protection Act (“NJFPA”). The Franchisees cross-appeal the District Court's denial of their motion for summary judgment on the issue of damages and denial of their application for a 12% pre-judgment interest rate. They also cross-appeal the District Court's denial of their motion for summary judgment and grant of Ford's motion for summary judgment on certain engine and transmission reimbursement claims. For the reasons discussed below, we will affirm in part and reverse in part the District Court's orders.
Ford manufactures vehicles and sells them through a nationwide network of independent franchise dealers. The dealers purchase vehicles from Ford at wholesale prices and resell them at retail prices. With each new vehicle sold, Ford provides a basic manufacturer's warranty that entitles the customer to have Ford repair or replace certain defective vehicle components. Customers can bring their vehicles to any Ford dealer, regardless of where they purchased the vehicles, and obtain warranty service free of charge. Ford then reimburses the dealers for their labor and parts used. Since 1994, Ford has provided dealers a mark-up of 40% over cost for most parts used in warranty services—this means that Ford pays the dealer, in total, 140% of the cost of those parts. However, under the New Jersey Franchise Protection Act (“NJFPA”), Ford must reimburse dealers for warranty parts at the “prevailing retail rate,” which is the rate dealers charge retail customers in connection with non-warranty work. N.J. Stat. Ann. § 56:10–15(a). As a result, New Jersey dealers are reimbursed at higher rates than their counterparts in other states.
In 1991, Ford implemented a Dealer Parity Surcharge (“DPS”) in order to recoup the increased cost of reimbursing New Jersey dealers under the NJFPA. Under the DPS, Ford calculated, for each New Jersey dealer, the cost of increased warranty reimbursements due to the higher retail reimbursement rate, and then divided that total by the number of wholesale vehicles purchased by that same dealer. That amount constituted the surcharge added to the wholesale price of every vehicle purchased by that specific dealer. Consequently, the wholesale vehicle surcharge a dealer faced would increase in direct proportion to the amount of warranty claims the dealer submitted.
In 1992 and 1995, Liberty Lincoln–Mercury, Inc. and other franchise dealers filed suit against Ford, contending that the DPS was unlawful. The United States District Court for the District of New Jersey dismissed the 1992 lawsuit without prejudice but granted summary judgment for the dealers in the 1995 lawsuit on the grounds that the DPS violated the NJFPA. Liberty Lincoln–Mercury, Inc. v. Ford Motor Co. (Liberty I), 923 F.Supp. 665, 667–70 (D.N.J.1996). In affirming the district court's order, we recognized that the NJFPA did “not preclude cost-recovery systems effected through wholesale vehicle price increases, but reject[ed] Ford's contention that the DPS constitute[d] such a system.” Liberty Lincoln–Mercury, Inc. v. Ford Motor Co. (Liberty II), 134 F.3d 557, 564 (3d Cir.1998). The DPS, which accrued in direct proportion to the amount of warranty reimbursement submitted by each New Jersey dealer, “did not function as a wholesale price increase effected through vehicle sales transactions[.]” Id. at 565. Instead, it “automatically reduc[ed the franchisees'] reimbursements to below-retail rates, violat[ing] the NJFPA's clear mandate that the franchisor ‘shall reimburse’ the franchisee for warranty parts ‘in an amount equal to the prevailing retail price.’ ” Id. (citing N.J. Stat. Ann. § 56:10–15(a)).
Subsequently, Ford ceased assessing the DPS and devised a new cost-recovery system, termed the New Jersey Cost Surcharge (“NJCS”). Under the NJCS, Ford calculated its total cost of complying with the NJFPA across all New Jersey dealers and divided that cost by the total number of wholesale vehicles sold in the State. This resulted in a flat surcharge for every wholesale vehicle sold in the State, rather than a surcharge that varied across dealers. Thus, a dealer's total NJCS increased in proportion to the number of vehicles the dealer purchased, regardless of how many warranty repairs the dealer submitted to Ford.
In 2002, shortly after the NJCS took effect, a group of New Jersey Dealers filed a complaint alleging that the NJCS violated, among other laws, the NJFPA. The District Court granted summary judgment in favor of the Dealers on the issue of liability. Liberty Lincoln–Mercury, Inc. v. Ford Motor Co. (Liberty III), No. 02–4146(WGB), 2006 WL 1098178, at *4–5 (D.N.J. Mar. 31, 2006).1 However, the District Court rejected the Dealers' argument that they were entitled, as a matter of law, to full reimbursement of the surcharge without proving actual damages. Accordingly, it denied the Dealers' motion for summary judgment on the issue of damages as well as their application for a 12% prejudgment interest rate under N.J. Stat. Ann. § 56:10–13.5. The District Court also denied the Dealers' motion for summary judgment and granted Ford's motion for summary judgment on certain engine and transmission assembly reimbursement claims.
Because the District Court established that the Dealers must prove actual damages for the NJFPA violation, four of the sixty-five plaintiffs proceeded to a jury trial. The jury awarded the full amount of damages requested by each of the Dealers. Ford filed a timely appeal on the issue of liability under the NJFPA. The Dealers filed a timely cross-appeal on the issue of damages and application for a 12% pre-judgment interest rate, as well as the engine and transmission assembly reimbursement claims.
The District Court had jurisdiction under 28 U.S.C. §§ 1331, 1337, and 1367. We have appellate jurisdiction over the District Court's final judgment under 28 U.S.C. § 1291.
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