Volvo Trademark Holding Aktiebolaget v. Clark Mach

• Decision Date: 20 December 2007
• Docket Number: No 06-2145.,No. 06-2091.,06-2091.,06-2145.
• Parties: VOLVO TRADEMARK HOLDING AKTIEBOLAGET, a Swedish corporation; Volvo Construction Equipment North America, a Delaware corporation; Champion Road Machinery Limited, a Canadian corporation, Plaintiffs-Appellees, v. CLARK MACHINERY COMPANY, an Arkansas corporation, Defendant-Appellant, and CLM Equipment Company, Incorporated, a Texas corporation; Future Equipment Company, Incorporated, a Texas corporation; AIS Construction Equipment Corporation, a Michigan corporation; Nueces Farm Center, Incorporated, d/b/a Nueces Power Equipment, a Delaware corporation, Defendants. Volvo Construction Equipment North America, a Delaware corporation; Champion Road Machinery Limited, a Canadian corporation, Plaintiffs-Appellants, and Volvo Trademark Holding Aktiebolaget, a Swedish corporation, Plaintiff, v. Clark Machinery Company, an Arkansas corporation, Defendant-Appellee, and CLM Equipment Company, Incorporated, a Texas corporation; Future Equipment Company, Incorporated, a Texas corporation; AIS Construction Equipment Corporation, a Michigan corporation; Nueces Farm Center, Incorporated, d/b/a Nueces Power Equipment, a Delaware corporation, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

510 F.3d 474

VOLVO TRADEMARK HOLDING AKTIEBOLAGET, a Swedish corporation; Volvo Construction Equipment North America, a Delaware corporation; Champion Road Machinery Limited, a Canadian corporation, Plaintiffs-Appellees, v. CLARK MACHINERY COMPANY, an Arkansas corporation, Defendant-Appellant, and CLM Equipment Company, Incorporated, a Texas corporation; Future Equipment Company, Incorporated, a Texas corporation; AIS Construction Equipment Corporation, a Michigan corporation; Nueces Farm Center, Incorporated, d/b/a Nueces Power Equipment, a Delaware corporation, Defendants.

Volvo Construction Equipment North America, a Delaware corporation; Champion Road Machinery Limited, a Canadian corporation, Plaintiffs-Appellants, and Volvo Trademark Holding Aktiebolaget, a Swedish corporation, Plaintiff, v. Clark Machinery Company, an Arkansas corporation, Defendant-Appellee, and CLM Equipment Company, Incorporated, a Texas corporation; Future Equipment Company, Incorporated, a Texas corporation; AIS Construction Equipment Corporation, a Michigan corporation; Nueces Farm Center, Incorporated, d/b/a Nueces Power Equipment, a Delaware corporation, Defendants.

No. 06-2091.

No 06-2145.

United States Court of Appeals, Fourth Circuit.

Argued: September 27, 2007.

Decided: December 20, 2007.

ARGUED: Scott E. Korzenowski, Dady & Garner, P.A., Minneapolis, Minnesota, for Appellant/Cross-Appellee. Michael J. Lockerby, Foley & Lardner, L.L.P., Washington, D.C., for Appellees/Cross-Appellants. ON BRIEF: J. Michael Dady, Ronald K. Gardner, Dady & Garner, P.A., Minneapolis, Minnesota; Edward L. Bleynat, Jr., Ferikes & Bleynat, P.L.L.C., Asheville, North Carolina, for Appellant/Cross-Appellee. Vineeta A. Bathia,

Foley & Lardner, L.L.P., Washington, D.C., for Appellees/Cross-Appellants.

Before TRAXLER and KING, Circuit Judges, and LEGG, Chief United States District Judge for the District of Maryland, sitting by designation.

Affirmed by published opinion. Judge KING wrote the opinion, in which Judge TRAXLER and Judge LEGG joined.

OPINION

KING, Circuit Judge:

This civil action was initiated more than seven years ago by three heavy equipment manufacturers (collectively, "Volvo")¹ against several equipment dealers, and has involved numerous claims, counter-claims, and defenses arising from a contract dispute between the parties. While originally pending in the Western District of North Carolina, the district court granted judgment on the pleadings against the defendants, including Clark Machinery Company, an Arkansas corporation ("Clark"). Clark and two other defendants (collectively, the "Dealers")² appealed from the judgment, and we affirmed the district court's decision in all aspects except one: its judgment for Volvo on Clark's claims under the Arkansas Franchise Practices Act (the "Arkansas Act") for termination of its franchise without good cause. See Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co., Inc., 386 F.3d 581, 611 (4th Cir.2004) (vacating judgment on Clark's claims under Arkansas Act and remanding for further proceedings).

On remand, the district court entered summary judgment against Volvo with respect to its liability to Clark under the Arkansas Act. During the ensuing trial on damages, the jury declined to make a damages award to Clark. The court subsequently denied Clark's requests for a new trial and for attorneys' fees. In its appeal, Clark seeks relief from the court's orders denying its motions for a new trial and for attorneys' fees. By its cross-appeal, Volvo challenges the district court's summary judgment decision. Because we conclude that the court did not err in the remand proceedings, we affirm.

I.

A.

The factual and procedural underpinnings of this matter were explained in detail in our prior decision. See Volvo Constr. Equip., 386 F.3d at 587-91. In short, the parties' dispute revolves around the termination of agreements (the "Dealer Agreements") under which Champion Road Machinery Limited ("Champion") had supplied large earth-moving motor graders ("Champion Motor Graders") to Clark and the other Dealers for resale. After purchasing Champion in 1997, Volvo decided that it could compete more effectively with other manufacturers if it marketed motor graders under a single brand name (i.e., Volvo) and through a single dealer network (i.e., that of Volvo). Volvo thus proceeded to "Volvoize" its products by reengineering and rebranding Champion Motor Graders for sale under the VOLVO trademark, and to implement a "Dealer Rationalization" plan by integrating the Volvo and Champion dealer networks. In 2000, the Dealers responded to the "Volvoization" and "Dealer Rationalization" efforts by demanding that Volvo continue to supply them with motor graders manufactured by Volvo at the former Champion factory. The Dealers, however, were not selected as authorized sellers of such motor graders, and were notified by Volvo that it would no longer supply them with Champion Motor Graders. More particularly, Volvo notified Clark on October 10, 2000, that its Dealer Agreement would be terminated on January 9, 2001.

Also on October 10, 2000, Volvo filed its complaint in the Western District of North Carolina (the "North Carolina Litigation"), seeking a declaration that, pursuant to the Dealer Agreements, it was not obliged to continue supplying Champion Motor Graders to Champion dealers. The complaint was later amended to name Clark as a defendant, along with (among others) the previously named Dealers. On March 20, 2001, the Dealers filed a separate action against Volvo in the Eastern District of Arkansas (the "Arkansas Litigation"). The Arkansas court subsequently transferred the Arkansas Litigation to the Western District of North Carolina, and the parties thereafter consented to consolidation of the Arkansas Litigation with the North Carolina Litigation in the North Carolina court. Notably, Clark and the other Dealers asserted twelve counterclaims in the North Carolina Litigation that mirrored their twelve claims in the Arkansas Litigation. Among them were Clark's claim and counterclaim based on Volvo's alleged violation of the Arkansas Act.

On December 13, 2002, the district court in North Carolina filed the opinion from which the original appeal and our prior decision emanated. See Volvo Trademark Holding Aktiebolaget v. CLM Equip. Co., Inc., 236 F.Supp.2d 536 (W.D.N.C.2002) (the "Opinion"). By its Opinion, the court granted Volvo partial judgment on the pleadings. The court determined, inter alia, that Volvo's refusal to supply the Dealers with Champion Motor Graders did not breach the Dealer Agreements because each agreement contained a "Without Cause Provision" authorizing termination of a dealership without cause. In addition, the court concluded that the Dealers were not protected by state dealer protection statutes (the "State Statutes") — including the Arkansas Act invoked by Clark — which, according to the Dealers, trumped the Without Cause Provision and precluded Volvo from terminating the Dealer Agreements without cause. Volvo subsequently dismissed its remaining claims, rendering the Opinion appealable.

B.

The Dealers appealed and, by our prior decision of October 8, 2004, we concluded — contrary to the contention of the Dealers — that the district court committed no error in exercising jurisdiction in the North Carolina Litigation. See Volvo Constr. Equip., 386 F.3d at 592-95. Next, we rejected the Dealers' assertion that the court erred in ruling that Volvo had not breached it contractual obligations by terminating the Dealer Agreements, id. at 595-99, as well as the Dealer's contention that Volvo was nevertheless estopped from breaching certain oral promises it had made after the Dealer Agreements were executed, id. at 599. Finally, we addressed the Dealers' position that, notwithstanding the Without Cause Provision in the Dealer Agreements, Volvo was prohibited by the State Statutes from terminating the Agreements without cause. Id. at 599-611. Ultimately, we deemed only Clark to be entitled to statutory protection, specifying that such protection arose under the Arkansas Act. Id. at 611.

Our discussion of the applicability of the Arkansas Act focused, in relevant part, on Volvo's contention that Clark could not rely on the Act because a "Choice-of-Law Provision" in its particular Dealer Agreement provided that "the rights, duties and obligations of the parties ... shall be determined according to the laws of ... South Carolina." Volvo Constr. Equip., 386 F.3d at 601 & n. 18. Clark had countered that the Choice-of-Law Provision was invalid, in that the law selected thereunder (i.e., that of South Carolina) contravened a fundamental policy of Clark's home state of Arkansas. Id. at 601. Before assessing whether the Arkansas Act constituted a fundamental policy of Arkansas and thus governed Clark's Dealer Agreement, we considered the issue of whether Clark was a protected party under the Act. Id. at 604. In so doing, we observed the following:

In the district court, Volvo maintained that Clark was not protected by the Arkansas Act ... because, pursuant to the Choice-of-Law Provision, Clark's . . . Dealer Agreement[][is] governed by South Carolina law. Volvo did not, however, assert that the statute[] in question, by [its] terms, fail[s] to apply to Clark's ... Dealer Agreement[]. Absent the Choice-of-Law Provision, Clark could state a claim under the Arkansas Act....

Id. at 606.

We then turned to an assessment of whether the Arkansas Act embodied a fundamental state policy, recognizing that "North Carolina will not honor a choice-of-law provision if the law of the chosen state is contrary to the fundamental policy of a state possessing a greater interest in the issue than the chosen state." Volvo Constr. Equip., 386 F.3d at 607.³ We concluded that the Arkansas Act indeed embodied a fundamental state policy, explaining that the Act "render[ed] the termination of a dealer agreement,...