The United States District Court for the District of New Jersey rejected the petroleum franchisor’s request to dismiss on summary judgment the gasoline dealer franchisee’s case for wrongful termination because, according to the Court, the defendant bears the burden of proof in actions under the PMPA, and the bulk of defendant’s evidence was testimonial and thus subject to credibility determinations; material disputes existed regarding the following facts, going to the franchisor’s good faith in demanding changes to the renewal agreement: (1) the existence of a formula for calculating increases in rent at Defendant’s franchises — although Defendant contended such a policy exists, it cited oral deposition, in-court testimony, or affidavits, uncorroborated by any written policy; (2) whether the petroleum franchisor’s employees, Deakin and McGee, in fact warned plaintiff that rental values would increase when they initially met; (3) whether the franchisor’s employees, Deakin and McGee, suggested, during that initial meeting, that plaintiff franchisee could operate a truck stop at the property; (4) whether defendant failed to provide the franchisee dealer with training; whether the franchisee’s need for training was apparent; and whether the franchisor had a training program that was available; (5) whether the franchisor placed franchisee dealer’s account on COD status in retaliation for her request to operate the station as a commission; (6) whether the franchisor defendant had a motive not to renew the agreement, as shown by the strained relationship between Sathu, Deakin, and McGee; (7) defendant franchisor received an offer from Tim Horton’s to open a franchise at the location; and (8) the substantial increase in rent, which […]

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Tyler, the Franchisee Dealer, alleged a violation of the Automobile Dealers’ Day in Court Act; breach of contract; and tortious interference with existing contractual relations; all arising out of the Pierce defendants’ allegedly unlawful and fraudulent conduct toward Tyler concerning the marketing, sale, and service of fire and rescue trucks and related goods and equipment in the States of New York and Pennsylvania; the Court, however, dismissed the Franchisee Dealer’s claims because the Automobile Dealers’ Day in Court Act does not cover fire trucks; a contract terminable at will cannot be the basis of a tortious interference claim; and “in the absence of explicit contractual language stating that a party may not unreasonably withhold consent, parties may withhold consent for any reason or no reason, and that no implied obligation to act in good faith exists to limit that choice.” Tyler Fire Equip., LLC v. Oshkosk Corp., No. 14-CV-6513-CJS, 2019 U.S. Dist. LEXIS 104539 (W.D.N.Y. June 21, 2019) Click On Link Below to Read Full Decision Tyler Fire Equip._ LLC v. Oshkosk Corp._ 2019 U.S. Dist

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Plaintiff Nurse Next Door Home Healthcare Services (USA), Inc.’s Motion for Default Judgment against Defendant Four Gloves, Inc., the franchisee, is GRANTED in part and DENIED in part, such that Plaintiff is entitled to damages of unpaid fees of $55,000 and royalties of $81,250, totaling $136,250, based primarily on the Court’s conclusion that Nurse Next Door is entitled to that amount which “to the extent possible, put[s] the injured party in as good a position as that party would have been in had the contract been performed,” specifically royalty payments for the five-year term, but specifically not those other fees (7% and a monthly technology fee), since under the Franchise Agreement the latter fees assumed the use by the franchisee of the Nurse Next Dorr’s Care Services Center, which, due to the termination, had never been made by the franchisee. Nurse Next Door Home Healthcare Servs. (USA) v. Four Gloves, Inc., Civil Action No. 8:18-cv-02101-PX, 2019 U.S. Dist. LEXIS 106612 (D. Md. June 26, 2019) CLICK on Link to Read Nurse Next Door Home Healthcare Servs. (USA) v. Four Gl Full Decision

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Federal Court ruled in favor of franchisor GNC in setting aside a default entered against it where the franchisor asserted that the failure to timely respond fell short of constituting culpability because it was attributable to a mere miscommunication between GNC’s litigation counsel and GNC’s in-house legal department, and where GNC further contended that the existence of meritorious defenses to Plaintiffs’ claims and corresponding lack of prejudice to Plaintiffs warranted setting aside the clerk’s entry of default; and where Plaintiffs opposed GNC’s Motion on the basis that GNC’s explanation for its untimely participation in this matter evinced a deliberate, strategic choice rather than a negligent oversight. Kyllonen v. GNC Franchising, LLC, No. 2:18-cv-01526-GMN-BNW, 2019 U.S. Dist. LEXIS 99822 (D. Nev. June 13, 2019) Please click on the link below to read this court decision. LINK to PDF

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In a distribution case, a bone cement recipe owner’s action against a manufacturer of bone cement for the owner’s competitor, alleging theft of a trade secret, misappropriations that were discovered or by the exercise of reasonable diligence should have been discovered more than three years before the suit was filed were time-barred under the Pennsylvania Misappropriations Act (PUTSA), but the owner of the trade secret was permitted to sue for misappropriations that occurred within the three-year period before filing of the Complaint because Pennsylvania applied the rule of separate accrual to trade secret misappropriations of a continuing nature based on the text of the PUTSA and Pennsylvania’s common law rule of separate accrual of the cause of action. Heraeus Med. GmbH v. Esschem, Inc., No. 18-1368, 2019 U.S. App. LEXIS 18636 (3d Cir. June 21, 2019) Please click on the link below to read this court decision. LINK to PDF

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AUTOBAHN IMPORTS, L.P., Doing Business as Land Rover of Fort Worth v. JAGUAR LAND ROVER NORTH AMERICA, L.L.C., 896 F.3d 340 (United States Court of Appeals, Fifth Circuit) (July 13, 2018) Auto Manufacturer’s incentive and chargeback programs were shown to be an unenforceable and unreasonable sales standard that failed to legally justify the chargeback of the car franchisee by the franchisor of $317,000 of auto manufacturer’s holdbacks. After franchisee, a car dealer, successfully complained to Board of Texas Department of Motor Vehicles, asserting that franchisor’s charges of $317,000 back to franchisee for violation of rules of sales incentive program was an unreasonable sales standard, and during pendency of franchisor’s appeal of the Board’s order to the Texas Court of Appeals, franchisee brought action in state court against franchisor, seeking damages based on Board’s ruling, and claiming breach of contract and violations of the Texas Deceptive Trade Practices Act (DTPA). Franchisor removed to federal court, and the United States District Court for the Northern District of Texas, John McBryde, District Judge, 2017 WL 2684055, granted franchisee’s summary judgment motion. Franchisor appealed, and in the interim the Texas Court of Appeals affirmed the Board’s order. The genesis of the lengthy dispute, spanning across many years, courts, and court systems, hinged on incentive programs offered by Jaguar. First, Jaguar offered an incentive known as the “Business Builder Program,” which provides dealers a percentage of the retail price of every vehicle sold if certain conditions are met. The relevant terms are set out in […]

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Crux of Court’s Decision (Not including any subsequent appeals): Tim Hortons prevailed on its preliminary injunction motion terminating its restaurant franchisees. The franchisor was entitled to a preliminary injunction terminating the franchisees because the franchisees refused to pay fees owed to the franchisor. June 17, 2019 Name of Court: United States District Court for the Southern District of Florida Short Case Name: Tim Hortons v. Tims Milner Short Factual Background and Parties: Plaintiff is the franchisor of the Tim Hortons brand and franchises restaurants throughout the United States. In 2016, Defendants and Plaintiff and its affiliate Tim Donuts U.S. Limited, Inc. (hereafter, “Plaintiff’s Affiliate”) entered into Franchise Agreements and Lease Agreements (together, the “Agreements”) that provided for Defendants’ ownership and operation of franchised Tim Hortons restaurants at seven locations in Michigan (the “Restaurants”). Each of the Franchise Agreements grants Defendants the right to operate one Tim Hortons restaurant in a specific location and to use the Tim Hortons trademarks. Defendants, however, maintain that they reached a verbal agreement with two employees of Plaintiff prior to execution of the Agreements, that they are only required to pay rent based on a flat percentage of gross sales, and are not required to pay as additional rent all real estate taxes and assessments, sales taxes, common area maintenance charges and assessments, certain utilities, and personal property taxes (together, the “Additional Rent Amounts”) On or about June 19, 2018, Defendants entered into an Asset Purchase Agreement with Kava, for the sale of the Restaurants […]

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Crux of Court’s Decision (Not including any subsequent appeals): Dealer claimed that the Teamsters converted the Dealer’s Territory. The United States District Court for the District of Kansas refused to dismiss the Plaintiff Dealer’s claims that the Teamsters converted the dealer’s territory. The Court held that the Plaintiff sufficiently alleged in its Complaint that with full knowledge of his exclusive distribution rights, the Teamsters conspired with BIMBO, the franchisor/distributor, to have union drivers take over and abruptly terminate plaintiff’s routes. Facts as Alleged Underlying Court’s Decision (Not including any subsequent appeals): Bimbo Foods, Bimbo Bakeries and their predecessors (collectively, “BIMBO”) sold individuals and small businesses the exclusive right to sell and distribute certain bakery products throughout the United States, including the Greater Kansas City Area. Specifically, BIMBO’s business model for product distribution involved the formation and operation of an “Independent Operator (IO) Distribution Network” in which BIMBO sold independent distributors the exclusive right to purchase, resell and distribute its bakery products. Under the agreement, plaintiff’s exclusive distribution rights were to continue until such time as plaintiff voluntarily sold or transferred such rights. In 2011, BIMBO’s parent company, Mexico-based “Grupo Bimbo, S.A.B. de C.V.,” purchased Sara Lee Corporation’s North American fresh bakery business, which resulted in overlapping distribution routes with BIMBO’s existing IO distribution network. The Sara Lee distribution model relied on union employee drivers. In 2017, BIMBO negotiated for the drivers of Teamsters to take over the routes owned by plaintiff and other independent route owners in the Kansas City […]

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Domino’s Franchise Agreement Supports Employee’s Antitrust Conspiracy Claim Crux of Court’s Decision (Not including any subsequent appeals): Domino’s Franchise Agreement Supports Employee’s Antitrust Conspiracy Claim. The Court rejected Domino’s motion to dismiss concluding that a ‘no-hire’ provision in Domino’s franchise agreements supported the allegation that the franchisor had formed and participated in an antitrust conspiracy. In so concluding, the Court ruled that Blanton, the plaintiff employee of a Domino’s franchisee, had adequately pled that Domino’s used the franchise agreements to orchestrate a conspiracy among their franchisees to not compete for labor; Blanton says that the no-hire provision is evidence of that conspiracy and violates the Sherman Antitrust Act because it unreasonably restrains competition for Domino’s franchise employees and depresses employee wages, lessens employee benefits, and stifles employee mobility Name of Court: United States District Court for the Eastern District of Michigan, Southern Division Short Case Name: Blanton v. Domino’s Crux of Dispute: Blanton says Defendants violated the Sherman Antitrust Act by orchestrating an employee no-hire agreement among their nationwide network of franchisees. Under the no-hire provision at issue—included in every Domino’s franchise agreement from at least January 2013 to April 2018—Domino’s franchisees agreed not to solicit or hire current employees of other Domino’s franchisees and affiliated entities. Blanton worked for a Domino’s franchise in Port Orange, Florida, from January 2017 until April or May of that year; he says he quit because his hours were repeatedly cut back. The Domino’s franchise that Blanton worked for is one of many in […]

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Auto Franchise Dealer Termination Claim Permitted to Proceed By: Jeffrey M. Goldstein Judicial Update — Nissan N. Am., Inc. v. Tillman, No. 2018-CC-00462-SCT, 2019 Miss. LEXIS 220 (June 6, 2019) In a recent case, the Supreme Court of Mississippi ruled that in an auto franchise dealer termination dispute between an automobile dealer and an automobile manufacturer the dealership had timely filed a complaint under the Mississippi Dealership Act after the auto franchisee received the auto manufacturer’s letter providing notice that the dealership was being terminated. The MDA has two provisions applicable to the dispute: first, the MDA statute requires an auto manufacturer seeking to terminate a dealer agreement to provide a notice of termination to is vehicle dealer at least sixty days before the effective date of the termination; and, second, another statutory provision provides a dealer an opportunity to challenge a notice of termination by filing a verified complaint with the Mississippi Motor Vehicle Commission “within the sixty-day notice period.” In this case, because the parties’ franchise agreement required ninety days’ notice before a termination, the franchisor Nissan served the 90-day notice on November 23, 2016. In turn, the franchisee car dealership filed its complaint on February 17, 2017; although the dealership’s filing was within the 90 days period it was not within the initial 60 days period following service of the notice. The Motor Vehicles Board, in dismissing the franchisee’s complaint as untimely, framed the issue as: “does the statutory language ‘within the sixty-day notice period’ refer to the […]

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