NEW HAMPSHIRE AUTO. DEALERS v. General Motors Corp., Civil No. 84-336-D.

• Decision Date: 17 October 1985
• Docket Number: Civil No. 84-336-D.
• Parties: NEW HAMPSHIRE AUTOMOBILE DEALERS ASSOCIATION, INC.; New Hampshire Auto, Inc.; Merrimack Street Garage, Inc.; Dreher Holloway Buick-Pontiac, Inc.; Tulley Buick-Pontiac Company, Inc.; Banks Chevrolet-Cadillac, Inc.; Coast Pontiac-Cadillac, Inc.; McGreevy Buick-Cadillac, Inc.; Taccetta Chevrolet, Inc.; Bournival, Inc.; Garfield Oldsmobile-Cadillac, Inc.; Fairfield Motors, Inc.; Woodward's Sales and Service, Inc. v. GENERAL MOTORS CORPORATION.
• Court: U.S. District Court — District of New Hampshire

620 F. Supp. 1150

NEW HAMPSHIRE AUTOMOBILE DEALERS ASSOCIATION, INC.; New Hampshire Auto, Inc.; Merrimack Street Garage, Inc.; Dreher Holloway Buick-Pontiac, Inc.; Tulley Buick-Pontiac Company, Inc.; Banks Chevrolet-Cadillac, Inc.; Coast Pontiac-Cadillac, Inc.; McGreevy Buick-Cadillac, Inc.; Taccetta Chevrolet, Inc.; Bournival, Inc.; Garfield Oldsmobile-Cadillac, Inc.; Fairfield Motors, Inc.; Woodward's Sales and Service, Inc. v. GENERAL MOTORS CORPORATION.

Civil No. 84-336-D.

United States District Court, D. New Hampshire.

October 17, 1985.

McLane, Graf, Raulerson & Middleton by James R. Muirhead, Wiggin & Nourie by Sterling Schoen, Manchester, N.H., for plaintiffs.

Myers & Laufer by Howard B. Myers, Concord, N.H., for defendant.

MEMORANDUM OPINION

DEVINE, Chief Judge.

This litigation challenges the differing methods by which motor vehicles are marketed. Specifically, the case focuses on the manner in which such vehicles are allocated for sales as between retail and "fleet" purchasers.¹ The claims advanced are that such allocations are violative of certain statutes enacted by the New Hampshire Legislature.²

At this stage of the proceedings, the Court addresses the issues raised by a motion for summary judgment filed by the defendant, General Motors Corporation ("GM"). The plaintiffs are the New Hampshire Automobile Dealers Association, Inc. ("NHADA"), a nonprofit corporation, and twelve franchised GM dealers whose places of business are in New Hampshire.³

An order of summary judgment is appropriate only when the pleadings and other submissions show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Rule 56, Fed.R.Civ.P.; Cia. Petrolera Caribe, Inc. v. Arco Caribbean, Inc., 754 F.2d 404, 411 (1st Cir.1985). The manner in which the record must be reviewed requires that all inferences be drawn in the light most favorable to the party opposing the motion. Metropolitan Life Insurance Company v. Ditmore, 729 F.2d 1, 4 (1st Cir.1984). But the mere fact that issues are complex and that they involve state of mind, intent, or motivation does not automatically preclude summary judgment. Stepanischen v. Merchants Despatch Transportation Corporation, 722 F.2d 922, 929 (1st Cir.1983). Moreover, a "court is not obliged to find that a genuine issue of material fact exists where the only evidence of such an issue is a series of conclusory statements unsupported by specific factual allegations." Velazquez v. Chardon, 736 F.2d 831, 833-34 (1st Cir.1984) (citation omitted).

1. The Factual Background

The varied divisions of GM (such as Oldsmobile, Pontiac, Buick, Chevrolet) annually decide what proportion of vehicle production is to be allocated between retail and fleet sales. P Res, App 4, pp. 63, 103-05;⁴ GM Ex A, p. 20.⁵ Historically, not over 27.2 percent of national production is allocated to fleet sales, the balance being allocated to sales at retail. P Res, App 2, pp. 67-68; GM Ex A, pp. 19, 20, 22.

Divisional retail allocations are apportioned among geographic areas, or "Zones", which are based on prior sales records of dealers situate in each such Zone. GM Ex A, p. 20. Fleet allocations are subdivided between local and national sales, and local allocations are apportioned to Zones based on prior sales records. Id. National fleet allocations are set aside for dealer orders for large fleets (such as Hertz, Avis, and National rental car companies) that operate nationally, and the allocation is therefore not apportioned to any Zone. Id.

Whether marketed retail or fleet, all new GM vehicles are sold only through franchised GM dealers. GM Ex B, p. 2. Each such dealer enters into a written "Dealer Sales and Service Agreement", which grants to the dealer the sole right of the use of GM trademarks, trade names, and related identification. Id.

GM dealers submit their orders for new vehicles to geographically dispersed GM factories, none of which are located in New Hampshire. GM Ex B, p. 3. Orders are accepted by GM when scheduled for production, and the vehicles are delivered to the dealers when assembled. Id. The dealers then pay GM, and in turn resell the vehicles to their retail or fleet customers. Id.

GM dealers compete with the dealers of other manufacturers (such as Ford or Chrysler), not only for retail, but also for fleet sales. GM Ex A, pp. 5, 6. GM accordingly provides sales incentives to its dealers for each of said types of sales. GM Ex B, pp. 3, 4.

Commencing in 1981, GM offered certain fleet sale incentives, which were available to any dealer who desired to compete for such sales. GM Ex A, pp. 5-7. Such packages of incentives might include items in the nature of free air conditioners or radios or price protection for a certain period of time. Id. These incentives would be developed through the medium of contacts between GM's fleet representatives and the representatives of large fleet purchasers. Id.; P Res App 1, pp. 71-73, 76-80; App 29. When approved by GM's executive committee, the incentive package for a given model unit would be made available to all GM dealers who were interested in competing in the market for the sales of such units. Id.; GM Ex B, pp. 4, 5.

The national car rental companies purchase vehicles in large volume through a small network of dealers who actively compete for such sales. GM Ex B, p. 5. Such "fleet oriented" dealers compete with one another as well as with the dealers of other manufacturers. Id. at 5, 6.

Certain of the fleet sales incentive programs were designed to meet production needs of either GM or the fleet operators. P Res, App 1, p. 133. A specific example occurred in June 1983 when GM discovered it had insufficient dealer orders for the base (or less expensive) models of its Chevrolet Camaro and Pontiac Firebird. P Res, App 1, pp. 94-96; App 24, pp. 700389-700391; GM Ex A, pp. 4, 5. Accordingly, free air conditioning was offered on any such vehicle sold for immediate delivery on condition that a minimum of one thousand vehicles were sold to a fleet operator within a set calendar period of time. Id. This program was available to any GM dealer who was interested in such a large volume sale. GM Ex A, p. 5.

Prior to the spring of 1984, GM dealers who purchased vehicles for their own rental or leasing fleets were required to maintain on file a valid lease agreement for a minimum term of six months and to maintain rental vehicles in use for four months or a minimum of one thousand miles. P Res, App 1, pp. 124-25; GM Ex A, p. 14, n. 6. By contrast, fleets not operated by dealers were merely required to retain vehicles in their possession for a minimum of three months. Id. The rationale for the stricter requirements imposed upon GM dealers was the perception of GM that such requirements were necessary to prevent its dealers from moving vehicles back and forth between their retail and fleet inventories. Id.; P Res, App 1, pp. 124-25; App 4, pp. 76-77.

The genesis of this litigation is the complaint of the plaintiffs of competition arising from the action of Merchants Rent-A-Car ("Merchants"), a New Hampshire corporation headquartered in Hooksett, New Hampshire. At times relevant to this litigation, Merchants was one of the larger licensees of the National Rent-A-Car System ("National") and operated substantial lease and rental fleets. P Res, App 25. The majority of the GM vehicles procured by Merchants were the result of its transactions with GM dealers located in states other than New Hampshire. P Res, App 2, pp. 122-27; App 4, pp. F16, G4, N9, 012, L11, J16, C15, B2, App 14; App 15; App 22; App 25.

In 1983, GM received complaints that Merchants was abusing its fleet privileges in that it was selling new fleet vehicles at retail. P Res, App 1, pp. 167-69; App 2, pp. 45-49. When its investigation verified these complaints, GM canceled the fleet privileges of Merchants, together with its right to receive drop shipments of GM vehicles and to provide warranty service to vehicles designed for use in its own fleet. P Res, App 1, p. 148; App 2, pp. 45-47; App 3, pp. 15-19; App 4, pp. 16-20; GM App H, pp. 15-20; App M; App Q.

In 1984, after a year of preliminary discussions, GM instituted a new "fleet abuse" program. P Res, App 1, pp. 45-53; GM Ex N. All fleet users were required to execute an "Enrollment Form for Fleet Users", GM Exs I, K, and all fleet users, whether dealer controlled or otherwise, were required to hold fleet vehicles for a minimum period of six months. Id. Violations of fleet guidelines would result in a "charge back" to the selling dealer in an amount equal to the cost of any fleet incentive and might also result in disqualification from further participation in fleet programs. Id.

2. The Allegations of Discriminatory Pricing

The plaintiffs herein claim that the various fleet incentives provided by GM resulted in a two-tier pricing system which discriminates against GM dealers.⁶ They argue that a nonfranchised dealer⁷ associated with a large fleet purchaser (as is here the case with the connection between Merchants and National) is able to procure vehicles⁸ for its fleet at a lower actual price than is available to the GM dealer.⁹ Plaintiffs contend that the existence of fleet incentives, taken together with GM's failure to police abuses of its fleet guidelines, are violative of the provisions of RSA 357-C:3 III(e) and (f). Complaint ¶¶ 28-31.

The Court here notes that in enacting RSA 357-C the New Hampshire Legislature clearly acknowledged the distinction between retail sales and those intended for fleet use. The existence of such knowledge is initially to be found in the (hereinafter emphasized) language of a provision of the statute which plaintiffs here claim to be violated. That provision of the statute makes it an unfair method of competition and unfair and deceptive practice for any manufacturer in the position of GM to

offer to sell or to sell any new motor vehicle at

...