Acadia Motors, Inc. v. Ford Motor Co.

44 F.3d 1050, 1995 WL 19066
CourtCourt of Appeals for the First Circuit
DecidedJanuary 24, 1995
Docket94-1335, 94-1450
StatusPublished
Cited by44 cases

This text of 44 F.3d 1050 (Acadia Motors, Inc. v. Ford Motor Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Acadia Motors, Inc. v. Ford Motor Co., 44 F.3d 1050, 1995 WL 19066 (1st Cir. 1995).

Opinion

TORRUELLA, Chief Judge.

This appeal involves a dispute between thirty-two Maine automobile dealers (the “Dealers”) and Ford Motor Company (“Ford”) over Ford’s compliance with the Maine warranty reimbursement statute, 10 M.R.S.A. § 1176 (Me.Rev.Stat.Ann., tit. 10 § 1176 (West 1994)). On cross-motions for summary judgment, the district court ruled that in order to comply with the Maine statute, Ford must revise the window stickers on its cars sold in Maine to reflect the surcharge Ford had instituted to recover its costs of complying with § 1176. The district court refused, however, to award damages or restitution to the Dealers on their claims that Ford had violated the statute. In addition, the district court dismissed the Dealers’ remaining claims under the Robinson-Patman Act, 15 U.S.C. § 13(a) (1988), and 10 M.R.S.A. §§ 1174(1) and 1182 (Me.Rev.Stat. Ann., tit. 10 §§ 1174(1), 1182 (West 1994)). For the reasons set forth below, we affirm in part and reverse in part the decision of the district court.

BACKGROUND

A. The Manufacturer-Dealer Relationship

Ford manufactures automobiles and sells them through a nationwide network of franchise dealers. The franchise agreement, called the Sales and Service Agreement (the “Agreement”), defines the manufacturer-dealer relationship. Ford offers a warranty *1052 with all new cars. Under the warranty, certain repairs, replacements, or adjustments are made free of charge to the consumer. The Dealers are required under their Agreements with Ford to perform labor and to provide parts in satisfaction of the warranties. Ford is obligated both under the Agreements and under Maine statute to reimburse the Dealers for parts used and warranty work performed.

Historically, and until 1993, Ford reimbursed the Dealers for parts under a uniform national reimbursement formula. Under this nationwide formula, each dealer is eligible to be reimbursed at wholesale cost, plus 8(M0 percent above cost, depending on the vehicle model year.

B. State Legislation

The State of Maine regulates the manufacturer-dealer relationship by statute, see 10 M.R.S.A. § 1171 et seq., including warranty reimbursement levels. Originally, Maine’s warranty reimbursement statute required car manufacturers, including Ford, to “adequately and fairly compensate the franchisee for any parts provided in satisfaction of a warranty created by the franchisor.” 10 M.R.S.A. § 1176 (1980). In 1991, however, § 1176 was amended to require manufacturers to reimburse dealers at retail-equivalent rates. It currently provides in pertinent part:

If a motor vehicle franchisor requires or permits a motor vehicle franchisee to perform labor or provide parts in satisfaction of a warranty created by the franchisor, the franchisor shall properly and promptly fulfill its warranty obligations, in the case of motor vehicles over 10,000 pounds gross vehicle weight rating, shall adequately and fairly compensate the franchisee for any parts so provided and, in the case of all other motor vehicles, shall reimburse the franchisee for any parts so provided at the retail rate customarily charged by that franchisee for the same parts .when not provided in satisfaction of a warranty.

lo M.R.S.A. § 1176 (1991) (Me.Rev.Stat. Ann., tit. 10 § 1176 (West 1994)) (emphasis added).

Notably, the amended statute requires warranty parts reimbursement “at the retail ■rate customarily charged for the same parts when not provided in satisfaction of a warranty.” 10 M.R.S.A. § 1176 (emphasis added). The statute requires a match between the warranty part and the part actually sold by that particular dealer to a non-warranty customer. For example, a particular dealer’s profit margin on the retail sale of a headlight cannot be used to determine the appropriate reimbursement percentage when the dealer, or another dealer, replaces a water pump under warranty.

C. Events Leading to this Lawsuit

Following the 1991 amendment to § 1176, several Maine dealers notified Ford that the new law entitled them to higher warranty reimbursement. In 1992, one Maine dealer filed claims in small claims court for reimbursement. The small claims court dismissed those claims because the dealer had not submitted an adequate claim for reimbursement to Ford, which it found to be a prerequisite under the statute to reimbursement recovery. Darling’s Bangor Ford/ VW/Audi v. Ford Motor Co., No. BAN 92-sc-229 (Me.Dist.Ct. 3, S.Pen., Oct. 20, 1992).

In response to this dealer’s challenge, however, Ford revised its reimbursement policy in Maine, and announced to its Maine dealers on April 1, 1993 that the “cost-plus” mark-up for parts reimbursement would be raised for all Maine dealers to 63 percent. This percentage corresponds to the percentage over cost used to determine the manufacturer’s suggested retail price of parts. 1 With this announcement, however, Ford also stated that in order to recover this increase in its costs of doing business in Maine, it would also increase the wholesale price of each new vehicle sold, through assessment of a surcharge of approximately $160 per vehicle. The surcharge, called the “warranty parity surcharge,” would appear on each dealer’s *1053 monthly parts invoice in the month following the sale. The surcharge was imposed based on the number of ears sold, without regard to whether the dealer actually performed warranty work in that month. 2

The Dealers filed this lawsuit in the United States District Court for the District of Maine, alleging that the surcharge was unlawful, requesting that the court enjoin the surcharge and order Ford to “disgorge” the surcharge monies already recovered. The Dealers argued that § 1176 not only required higher warranty reimbursement levels, but also prohibited Ford from raising wholesale prices to recover the costs of paying those higher reimbursement levels. They argued that the surcharge effectively negated the higher reimbursement levels required by § 1176, in contravention of the legislative purpose of the amended statute. The Dealers also alleged that Ford’s surcharge violated the Automobile Dealers Day in Court Act and the Robinson-Patman Act, and made claims under other Maine statutes.

Ford moved to dismiss under Fed.R.Civ.P. 12(b)(6) or alternatively for summary judgment under Fed.R.Civ.P. '56 on the grounds that, as a matter of law, the warranty reimbursement level and the surcharge were lawful. 3 The Dealers also moved for partial summary judgment, seeking a final injunction against the price increase, and requesting damages and other relief. They argued that any price increase to recover the reimbursement rate required by § 1176 was itself a violation of the statute.

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Bluebook (online)
44 F.3d 1050, 1995 WL 19066, Counsel Stack Legal Research, https://law.counselstack.com/opinion/acadia-motors-inc-v-ford-motor-co-ca1-1995.