Franklin Park Lincoln-Mercury, Inc. v. Ford Motor Co.

530 F. App'x 542
CourtCourt of Appeals for the Sixth Circuit
DecidedJuly 24, 2013
Docket11-4375
StatusUnpublished
Cited by5 cases

This text of 530 F. App'x 542 (Franklin Park Lincoln-Mercury, Inc. v. Ford Motor Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Franklin Park Lincoln-Mercury, Inc. v. Ford Motor Co., 530 F. App'x 542 (6th Cir. 2013).

Opinion

OPINION

ALAN E. NORRIS, Circuit Judge.

Plaintiff Franklin Park Lineoln-Mercu-ry, Inc. (“Franklin Park”) is a dealership in Toledo, Ohio that sells automobiles manufactured by defendant Ford Motor Company (“Ford”). It filed suit against Ford after the latter permitted another Lincoln-Mercury dealer in the Toledo area to merge with an existing Ford dealership. According to the complaint, Ford not only permitted the merger, it facilitated the transaction despite knowing that it would harm Franklin Park because the Toledo area could only support one Lincoln-Mercury dealership. Franklin Park alleged that Ford’s actions violated the Ohio Motor Vehicle Dealers Act (“Ohio Dealers Act”), Ohio Rev.Code § 4517.01 et seq., the federal Automobile Dealers’ Day in Court Act, 15 U.S.C. § 1221 et seq., and constituted a breach of Ford’s common law fiduciary duties. In a series of opinions, the district court dismissed certain of plain *544 tiffs counts for failure to state a claim and granted summary judgment to Ford with respect to the remaining claims. Only the state-law claims are before us on appeal.

I.

Franklin Park has been selling cars manufactured by Ford since 1977. Their relationship is governed by two sales and service agreements (“SSA”): one pertaining to Lincoln vehicles; the other to Mercury vehicles. 2 Before 2008, there was a second Lincoln-Mercury dealership, Rouen Lincoln-Mercury (“Rouen”), in nearby Maumee, Ohio. Another dealership affiliated with Ford, Brondes Ford Mau-mee, Ltd. (“Brondes Ford”), was located near Rouen.

Since at least 2002, Franklin Park President Robert Fleisher has repeatedly told Ford that the Toledo market was too small to support two Lincoln-Mercury dealerships. According to Franklin Park, this assessment was supported by the deposition testimony of Ford representative Kurt Brinkman. In 2005, a market study commissioned by Ford showed one dealership was optimal, albeit with a caveat that two dealerships might better serve the convenience of its customers. (Page ID 4043.) In fact, by 2006 Ford had begun a market contraction program. As Brinkman put it, “In 2006, we started our consolidation efforts to reduce our dealer count for the purpose of driving more throughput and having healthier dealers and improving] the franchise value of both Ford and Lincoln Mercury.” (Page ID 4026.) This theme continued and, in its 2008 annual report, Ford stated, “At our current and expected future market share ... we have too many dealers, particularly in U.S. metropolitan areas, which makes it increasingly difficult to sustain a healthy and profitable dealer base.” (Page ID 4157.) The same report said that Ford would fund dealer consolidations “in the future to reduce further our dealer network to match our sales and dealer sales objectives.” Id.

Within this economic context, Ford helped to fund a merger between Rouen and Brondes Ford. In its first memorandum opinion, the district court summed up the consolidation, and Franklin Park’s response to it, in these terms:

Sometime in late 2007 or early 2008, Rouen and Brondes Ford entered contract negotiations for Brondes Ford to purchase the Rouen Lincoln-Mercury dealership. Plaintiff alleges that Defendant participated in these negotiations and kept them secret from him.
Under the negotiated sale agreement between Rouen and Brondes Ford, Brondes Ford agreed to operate the Lincoln-Mercury dealership at the Rouen location for however long it would take for Brondes to relocate the dealership to the Brondes Ford location. Brondes Ford operated the Rouen dealership at the Rouen location for one day before moving it to the Brondes Ford location. After Rouen and Brondes Ford finalized the sale agreement, Defendant notified Plaintiff of the Rouen/ Brondes Ford ownership change.
After receiving notice of the ownership change, Plaintiff filed a notice of protest with the Ohio Motor Vehicle Dealers Board (“Board”). The Board’s Hearing Examiner stated that “[t]he statutory language of Revised Code 4517.50 is determinative of the issues raised herein.” (Doc. 21, Ex. 9, at 4). He concluded that [Djefendant was not required to provide Plaintiff notice of the ownership change under the Ohio Dealer Act because: 1) the Rouen/ *545 Brondes transaction did not create an additional new motor vehicle dealer in the relevant market area and thus § 4517.50(A) [the notice requirement] did not apply; and 2) the relocation of the Rouen dealership to the Brondes location was a move of less than one mile, and thus fell within an exception to the notice requirement, § 4517.50(C)(1). He determined the protest should be dismissed because notice was not required, and thus no right to protest arose....

(Page ID 1693-94) (footnote omitted). The hearing examiner’s decision was affirmed first by the Ohio Motor Vehicle Board, then by the Court of Common Pleas, and finally by the Ohio Court of Appeals, Tenth District. The Ohio Supreme Court denied review.

While these state-court actions were proceeding, Franklin Park filed the instant suit in federal court. As mentioned earlier, the First Amended Complaint includes three counts: 1) breach of the Ohio Motor Vehicle Dealers Act; 2) breach of the federal Automobile Dealers’ Day in Court Act; and 3) common law breach of fiduciary duty.

Ford filed a motion to dismiss, which was granted in part by the district court. While the court concluded that certain actions were not precluded based upon collateral estoppel, it held that “Plaintiff is precluded from asserting claims under the Ohio Motor Vehicle Dealers Act that it was entitled to notice of and an opportunity to protest the Rouen/Brondes transaction and that it was entitled to a good cause hearing, and is precluded from relitigating certain factual issues.” (Page ID 1705.)

Ford later filed another motion to dismiss. The district court granted that motion in part on July 2, 2010. The court determined that Franklin Park had stated a claim for breach of fiduciary duty under common law and for a predatory practice of discrimination under the Ohio Dealers Act, Ohio Rev.Code § 4517.59(A)(15) (formerly § 4517.59(M)). However, it dismissed claims brought under the federal Automobile Dealers’ Day in Court Act and under the good faith provision of the Ohio Dealers Act.

Ford filed a motion for summary judgment with respect to these remaining claims, which the district court granted on October 31, 2011.

Turning first to the fiduciary duty claim, the court began by defining its parameters: “To establish a breach of fiduciary duty under Ohio law, a plaintiff must show: (1) the existence of a duty arising from a fiduciary relationship; (2) a failure to observe the duty; and (3) a resulting injury.” (Page ID 4197) (citing Camp St. Mary’s Ass’n. of W. Ohio Conference of the United Methodist Church v. Otterbein Homes,

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530 F. App'x 542, Counsel Stack Legal Research, https://law.counselstack.com/opinion/franklin-park-lincoln-mercury-inc-v-ford-motor-co-ca6-2013.