W. Va. Auto. & Truck Dealers Ass'n v. Ford Motor Co.

• Decision Date: 30 May 2014
• Docket Number: CIVIL ACTION NO. 1:14CV32
• Court: U.S. District Court — Northern District of West Virginia
• Parties: WEST VIRGINIA AUTOMOBILE AND TRUCK DEALERS ASSOCIATION, Plaintiff, v. FORD MOTOR COMPANY, Defendant.

WEST VIRGINIA AUTOMOBILE AND TRUCK DEALERS ASSOCIATION, Plaintiff, v. FORD MOTOR COMPANY, Defendant.

CIVIL ACTION NO. 1:14CV32

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

DATED: May 30, 2014

(Judge Keeley)

MEMORANDUM OPINION AND ORDER

GRANTING DEFENDANT'S MOTION FOR JUDGMENT ON THE

PLEADINGS [DKT. NO. 21] AND DISMISSING CASE WITH PREJUDICE

Pending before the Court is the motion of the defendant, Ford Motor Company ("Ford"), for judgment on the pleadings (dkt. no. 21), pursuant to Fed. R. Civ. P. 12(c). For the following reasons, the Court GRANTS the motion and DISMISSES the amended complaint WITH PREJUDICE.

I. BACKGROUND

Ford is an American automobile manufacturer based in Dearborn, Michigan, with dealerships worldwide. To reward loyalty to the company and to generate sales, Ford allows its dealers to participate in several discount programs known as the AXZD-Plans. Two Ford dealerships in West Virginia, Corwin Ford Sales, Inc. ("Corwin") and Bert Wolfe, Inc. d/b/a Bert Wolfe Ford ("Wolfe"), participate in the AXZD-Plans, but have become disgruntled with several of the plan terms, or Program Rules. On February 25, 2014,the West Virginia Automobile and Truck Dealers Association ("WVATDA") sued Ford on behalf of Corwin and Wolfe, seeking a declaratory judgment.

A. The AXZD-Plans

The AXZD-Plans are discount programs for Ford employees and partners. Discounts on new Ford and Lincoln vehicles are given to Ford employees under the A-Plan, retired Ford employees or their surviving spouses under the Z-Plan, Ford dealership employees under the D-Plan, and business partner (e.g., suppliers) employees and retirees under the X-Plan. According to the Program Rules, "dealerships are encouraged, but not obligated, to participate" in the AXZD-Plans. (Dkt. No. 10-3 at 8). However, "[p]articipating dealerships agree to comply with all of the terms outlined" in the Program Rules. Id.

The Program Rules cap the document fees¹ ("doc fees") that dealers may charge at $75 for every sale under the A- or Z-Plans, and $100 for every sale under the X- or D-Plans. But because some states permit dealers to charge doc fees in excess of those amounts, the Program Rules further provide:

In states that permit[] more than $75 or $100 and also require[] that all customers be charged the same amount, dealers may charge the A/Z-Plan customer $75 and X-Plan or D-Plan customer $100 and indicate any additional fees have been paid by Ford Motor Company as part of the AXZD-Plan Program dealer reimbursement on the buyer's order.

(Dkt. No. 10-3 at 9).

B. Audit Violations

Notwithstanding the Program Rules, Corwin and Wolfe charged AXZD customers $175 in doc fees - the maximum amount allowable under West Virginia law and the same amount charged to non-AXZD customers. After reviewing a self-audit by Corwin and a self-assessment by Wolfe, Ford advised the dealerships to comply with the Program Rules and refund to AXZD customers the amounts paid in excess of the maximum allowable $75 and $100 doc fees.²

Corwin and Wolfe challenged the violations through Ford's internal dispute resolution panel, the Ford Dealer Policy Board (the "FDPB"). They argued that the maximum doc fees in the Program Rules violated the West Virginia Consumer Credit Protection Act ("WVCCPA") by requiring the dealerships to charge different doc feeamounts to different customers. They further contended that informing AXZD customers that Ford had covered the difference between the $75 or $100 doc fee and the typical $175 doc fee would amount to fraudulent misrepresentation. Finally, they argued that, under West Virginia law, they could not be required to lower the doc fee amount to $75 for all customers because doing so would result in their financial detriment.

The FDPB affirmed the violations. It disagreed with the dealerships' interpretation of the WVCCPA, and articulated the statute's function as "ensur[ing] that customers who obtain a line of credit, loan or lease receive the same treatment as customers who pay with cash." (Dkt. No. 10-4 at 4). It also explained that the difference in doc fee amounts for those who are eligible to purchase vehicles under the AXZD-Plans and those who are not is not discriminatory. Finally, the FDPB told Corwin and Wolfe that, because their participation in the AXZD-Plans is voluntary, Ford does not "require" them to charge a $75 doc fee to all customers, and, even if it did, it offered them a lawful alternative by indicating to AXZD customers that the overage amount had been paid by Ford.

C. Litigation

Pursuant to 28 U.S.C. § 2201(a), the amended complaint of the WVATDA seeks declaratory judgment under three theories. First, the WVATDA alleges that Ford has attempted to compel Corwin and Wolfe to act "in violation of the laws and public policy of the State of West Virginia." Second, according to the amended complaint, Ford's actions interfere with the dealers' right to charge a $175 doc fee under W. Va. Code § 17A-6-1b(d), and requires dealers to violate the WVCCPA, § 46A-3-109(a)(6). Third, the WVATDA alleges that Ford's conduct violates § 17A-6A-10(d) by requiring Corwin and Wolfe to enter into a prejudicial agreement or face threats of audits or termination of their businesses. By mandating these unlawful policies, Ford allegedly will cause Corwin and Wolfe to suffer "harm and repercussions, including damages in excess of $75,000, potential law suits from consumers, loss of reputation, penalties from the State of West Virginia . . . , and potential loss of license."

As relief, the WVATDA asks the Court to enter a judgment declaring as follows:

1. That Ford's policies and practices of refusing to permit the dealer to charge the $175 doc fee to individuals participating under the [AXZD-Plans]violate the public policy and laws of the State of West Virginia[;]

2. That Ford's policies and practices of refusing to permit the dealer to charge the $175 doc fee to individuals participating under the [AXZD-Plans] violate the [WVCCPA][;]

3. That Ford's policies and practices of refusing to permit the dealer to charge the $175 doc fee to individuals participating under the [AXZD-Plans] constitute a prohibited practice under W. Va. Code § 17A-6A-1, et seq.[;]

4. That [the WVATDA] be awarded the costs of [its] prosecution of this declaratory judgment action to include attorney fees pursuant to W. Va. Code § 17A-6A-16; and,

5. That [the WVATDA] be granted such other and further relief as may be determined just and proper.³

(Dkt. No. 10 at 10-11).

After filing an answer to the amended complaint, Ford filed a motion for judgment on the pleadings on April 14, 2014. In its motion, Ford argues that declaratory relief is not warranted because the AXZD-Plans are voluntary, and thus Ford has not engagedin prohibited conduct. Ford also argues that the WVCCPA does not apply, or, alternatively, that participation in the AXZD-Plans does not require Corwin and Wolfe to charge different doc fee amounts to different customers. Finally, Ford argues that the WVATDA lacks standing to assert violations of either the WVCCPA or Chapter 17A, Article 6 of the West Virginia Code.

On April 24, 2014, the WVATDA countered Ford's motion by arguing that dealership participation in the AXZD-Plans is not voluntary, and that Ford's interpretation of the relevant laws is incorrect. It also maintained that the Program Rules require Corwin and Wolfe to violate West Virginia law. On April 28, 2014, the WVATDA filed a supplemental response, arguing that, because it attached the Ford Sales & Service Agreement (the "SSA") to its initial response, it converted Ford's motion for judgment on the pleadings into a motion for summary judgment.⁴

II. STANDARD OF REVIEW

Rule 12(c) provides that, "[a]fter the pleadings are closed -- but early enough not to delay trial -- a party may move for judgment on the pleadings." The standard of review for Rule 12(c) motions is the same standard applied to Rule 12(b)(6) motions to dismiss. See Independence News, Inc. v. City of Charlotte, 568 F.3d 148, 154 (2009). The only difference between a Rule 12(c) motion and a Rule 12(b)(6) motion is timing. See Burbach Broad. Co. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir. 2002) ("Because Elkins' answer had been filed, the pleadings were closed at the time of the motion. Thus, we construe the motion as one for judgment on the pleadings. However, the distinction is one without a difference, as we . . . apply[] the same standard for Rule 12(c) motions as for motions made pursuant to Rule 12(b)(6).").

"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943,952 (4th Cir. 1992). In reviewing the sufficiency of a complaint, a district court "'must accept as true all of the factual allegations contained in the complaint.'" Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007) (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007)). However, while a complaint does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Indeed, courts "are not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).

III. DISCUSSION

The issues in this case are two-fold. First, does the dealerships' compliance with the Program Rules necessarily involve unlawful conduct on their part? Second, if so, is the...