Ford Motor Company v. Darling's

2014 ME 7, 86 A.3d 35, 2014 WL 223548, 2014 Me. LEXIS 7
CourtSupreme Judicial Court of Maine
DecidedJanuary 21, 2014
DocketBCD-12-583
StatusPublished
Cited by24 cases

This text of 2014 ME 7 (Ford Motor Company v. Darling's) is published on Counsel Stack Legal Research, covering Supreme Judicial Court of Maine primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ford Motor Company v. Darling's, 2014 ME 7, 86 A.3d 35, 2014 WL 223548, 2014 Me. LEXIS 7 (Me. 2014).

Opinion

LEVY, J.

[¶ 1] This appeal concerns the respective rights of automobile manufacturers and dealers pursuant to the Business Practices Between Motor Vehicle Manufacturers, Distributors and Dealers Act (Dealers Act), 10 M.R.S. §§ 1171 to 1190-A (2013). 1 The Dealers Act regulates the franchise relationship between automobile manufacturers/franchisors and dealers/franchisees. We have previously addressed sections of the Dealers Act related to reimbursement for warranty repairs and parts. See, e.g., Darling’s v. Ford Motor Co., 2006 ME 22, 892 A.2d 461. This appeal presents the more fundamental questions of what constitutes a “franchise” for purposes of the Dealers Act and what authority is delegated to the Maine Motor Vehicle Franchise Board to enforce the Act’s provisions.

[¶ 2] Ford Motor Company, an automobile manufacturer and franchisor, appeals from a judgment entered in the Business and Consumer Docket (Nivison, J.) rendering final the court’s affirmance of certain decisions and orders of the Maine Motor Vehicle Franchise Board (“the Board”). The Board concluded that Ford violated 10 M.R.S. § 1174(3)(B) by terminating an incentive program without providing Darling’s, an automobile dealer and franchisee, with written notice by certified mail. As a result, the Board awarded Darling’s damages and imposed a civil penalty and attorney fees against Ford pursuant to 10 M.R.S. §§ 1171-B(3) and 1173.

[¶ 3] Ford contends that the Board and the court erred in concluding that (1) the incentive program was part of Ford and Darling’s “franchise” as that term is defined by the Dealers Act; (2) Darling’s did not receive adequate notice of the program’s termination; and (3) Ford was not entitled to a de novo jury trial on the factual issues decided by the Board. Darling’s and the Maine Automobile Dealers Association (MADA) 2 cross-appeal, assert *39 ing that the Board’s damages calculation and award of only one civil penalty against Ford were in error. We affirm the judgments of the Board and the Business and Consumer Docket in all respects but one. Because we conclude that the Dealers Act does not authorize the Board to award monetary damages, we vacate that aspect of the judgment and remand the case to the Business and Consumer Docket for a determination of damages by a jury.

I. BACKGROUND

A. Darling’s and Ford’s Franchise Relationship

[¶4] Darling’s is a Ford dealer and franchisee located in Bangor. The franchise relationship between Ford and Darling’s is governed by a written Ford Service and Sales Agreement (“SSA”) that Ford and Darling’s entered into in 1989. The SSA recognized Darling’s as an authorized Ford products dealer and granted Darling’s the right to sell those products that “from time to time are offered for sale by [Ford].” The SSA also provided that Ford may issue “guides” establishing “reasonable standards” for dealership facilities and operations, and that it may publish bulletins “from time to time” to establish “prices, charges, discounts and other terms of sale.”

B. The Blue Oval Certified Incentive Program

[¶ 5] In 2000, Ford introduced the Blue Oval Certified (“BOC”) program, a customer-satisfaction incentive program that offered Ford dealers a 1.25% cash bonus on the retail price of each vehicle the dealer sold. The BOC program was described in “reference guides” issued between 2001 and 2004. The guides identified certification requirements for each year of the program, but did not describe any requirements beyond March 31, 2005. Dealers could qualify for BOC status by meeting customer approval standards set by Ford. Darling’s was certified as a BOC dealer in 2001, and by 2002 it became aware that Ford was considering changes to the program. In August 2004, Ford made a broadcast on its internal Fordstar television network announcing to dealers that the BOC program would conclude by March 2005 and be replaced by a program emphasizing non-cash incentives. Ford issued an electronic communication to its dealers a few days later confirming the BOC program’s termination as of March 31, 2005. It is unclear from the record whether Darling’s management actually watched the Fordstar broadcast, though they were notified of it, or saw the electronic communication. Regardless, the record establishes that by 2004 Darling’s management knew that Ford was considering discontinuing the cash bonus program. The BOC program was discontinued as scheduled on April 1, 2005, and was followed by an “Accelerated Sales Challenge,” which lasted from 2005 to 2007, and a series of quarterly sales drives throughout 2007.

[¶ 6] Had the BOC program remained in effect, Darling’s would have earned $678,942.96 in cash bonuses for vehicles it sold between April 1, 2005, and November 30, 2007. During the same period, Darling’s received $142,975 in payments from Ford under the Accelerated Sales Challenge and $74,200 under the 2007 quarterly sales drives.

C.Administrative Proceedings Before the Maine Motor Vehicle Franchise Board

[¶ 7] In December 2006, Darling’s filed a twelve-count complaint before the Board *40 alleging Ford’s violations of the Dealers Act. Count X, the only count at issue in this appeal, alleged that Ford’s termination of the BOC program in March 2005 constituted a modification of the SSA that substantially and adversely affected Darling’s rights, obligations, investment, or return on investment, and that Ford violated section 1174(3)(B) by not providing Darling’s with 90 days’ written notice by certified mail. In May 2008, the Board ruled that Ford’s termination of the BOC program constituted a modification of Darling’s “franchise” (as defined by section 1171(6)) that substantially and adversely affected Darling’s return on investment and therefore triggered the requirement of section 1174(3)(B) that Ford give 90 days’ written notice to Darling’s. Accordingly, because the Board concluded that Ford knowingly violated section 1174(3)(B) and never corrected the violation, the Board levied a single civil penalty of $10,000, the maximum amount permitted by section 1171-B(3). The Board also found that Darling’s had sustained 270 days’ worth of damages, in the amount of $214,723.08, accruing from the BOC program’s termination on April 1, 2005. The Board arrived at the 270-day period by adding the 90-day notice period within which a dealer may object to a proposed franchise modification to the subsequent 180-day period within which the Board must determine whether the manufacturer has good cause to implement the proposed modification. See 10 M.R.S. § 1174(3)(B). The Board then reduced its damages award by the $68,875 that Darling’s earned through other promotional programs during the 270-day period. Accordingly, the Board awarded Darling’s $145,223.08 plus attorney fees pursuant to section 1173. 3

D. Superior Court Proceedings

[¶ 8] In July 2008, Ford and Darling’s filed in the Superior Court, pursuant to M.R. Civ. P. 80C, 10 M.R.S. § 1189-B, and 5 M.R.S. §§ 11001-11008 (2012), separate petitions for review of the Board’s administrative action. 4

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Bluebook (online)
2014 ME 7, 86 A.3d 35, 2014 WL 223548, 2014 Me. LEXIS 7, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ford-motor-company-v-darlings-me-2014.