American Honda Motor Co. v. Bernard's, Inc.

735 N.E.2d 348, 432 Mass. 425, 2000 Mass. LEXIS 531
Massachusetts Supreme Judicial Court·Decided September 1, 2000·Published·Cited by 17 cases

Opinions

Ireland, J.

In two separate actions commenced, and later consolidated, in the United States District Court for the District [426] of Massachusetts, American Honda Motor Co., Inc. (Honda), a distributor of Honda motor vehicles, sought a declaration that Bemardi’s, Inc. (Bemardi’s), and Richard Lundgren Incorporated (Lundgren), both dealers authorized to sell and service Honda motor vehicles (dealers), lacked standing to protest the proposed establishment of a new Honda dealership2 in Westbor-ough because the new dealership’s location was not within either dealer’s “relevant market area” as defined in G. L. c. 93B, § 4 (3) (Z), fifth par.3 The dealers counterclaimed, alleging in count I of their counterclaims that the proposed new dealership fell within their respective market areas and was, thus, an arbitrary, unfair, and deceptive act or practice in violation of G. L. c. 93B, § 4 (3) (Z), which should be enjoined. They also alleged, in count II of their counterclaims, that Honda’s proposal to establish the Westborough dealership was an act of retaliation, in violation of G. L. c. 93B, § 4, against them for their involvement in other litigation against Honda.

A Federal District Court judge concluded that under G. L. c. 93B, § 4 (3) (Z), fifth par., the “relevant market area” of a motor vehicle dealer “is a circle, with the dealer at the center, circumscribing the geographical area comprising either two-thirds of the dealer’s new vehicle sales or two-thirds of its service sales, whichever is smaller.” Based on this conclusion, the dealers stipulated that they lacked standing to protest the proposed new dealership, and the judge entered judgment in favor of Honda on its petitions for declaratory judgment, and entered judgment against the dealers on count I of their counterclaims. The judge also dismissed count II of the dealers’ counterclaims with prejudice, having concluded that § 4 (3) (Z) “is the sole provision within c. 93B under which an aggrieved dealer may seek relief from an alleged arbitrary prospective dealership placement.” The dealers appealed from the judgment.

The United States Court of Appeals for the First Circuit, after determining that there was no controlling Massachusetts precedent pertinent to the issues of this case, certified, pursuant to SJ.C. Rule 1:03, as appearing in 382 Mass. 700 (1981), the following two questions to this court:

[427] “1. How should the relevant market area of a motor vehicle dealer be defined under Mass. Gen. Laws Ann. ch. 93B, § 4(3)(0?
“2. Is Mass. Gen. Laws Ann. ch. 93B, § 4(3)(Z) the sole provision within chapter 93B under which a motor vehicle dealer may seek relief from a prospective additional dealership which will sell the same motor vehicles as sold by the established motor vehicle dealer?”

In its certification order, the Court of Appeals welcomed our “discussion of any relevant Massachusetts law.” We conclude that a dealer’s “relevant market area,” as defined under G. L. c. 93B, § 4 (3) (Z), fifth par., although not a perfect circle, is a geographic area circular in shape,4 and contiguous to the existing dealer’s location; and that § 4 (3) (Z) is the sole provision within c. 93B under which a motor vehicle dealer may seek relief from a prospective additional dealership that will sell the same motor vehicles as sold by the existing motor vehicle dealer.

1. Defining the relevant market area. General Laws c. 93B, § 3 (a), declares unlawful specific “[u]nfair methods of competition and unfair or deceptive acts or practices” which occur in the automotive industry primarily among motor vehicle manufacturers, distributors, and dealers,5 and which ultimately affect consumers. See id. at § 4; Tober Foreign Motors, Inc. v. Reiter Oldsmobile, Inc., 376 Mass. 313, 319 (1978). Among the acts or practices proscribed, as far as relevant here, is the improper granting of “a franchise[6] or selling agreement to or [428] with an additional franchisee[7] who intends or would be required by such franchise or selling agreement to conduct its dealership operations from a place of business situated within the relevant market area of an existing franchisee or franchisees representing the same line make.” G. L. c. 93B, § 4 (3) (Z). Pursuant to the procedures set forth in § 4 (3) (Z), an existing dealer may protest the addition of a new dealership as improper, but may only do so if the proposed new dealership is within its “relevant market area.” The statute defines “relevant market area” as “the more narrowly defined and circumscribed geographical area immediately surrounding its existing dealer location within which it obtained, during the period of time the dealership business has been operated from said location or the three-year period immediately preceding the date of said notice of intent to grant or enter into an additional franchise or selling agreement, whichever is the lesser, at least two-thirds of (i) its retail sales of new motor vehicles of said fine make or (ii) its retail service sales, regardless of whether its franchise or selling agreement delineates or establishes a specific area of responsibility or whether, by custom or usage, a specific area of responsibility has been established or another motor vehicle dealer with a franchise or selling agreement covering the same line makes has a place of business in such market area.”

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American Honda Motor Co. v. Bernard's, Inc., 735 N.E.2d 348, 432 Mass. 425, 2000 Mass. LEXIS 531 (Mass. 2000).

735 N.E.2d 348 (American Honda Motor Co. v. Bernard's, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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