Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-06-02145/USCOURTS-ca4-06-02145-0/pdf.json

Parties Involved:
AIS Construction Equipment Corporation

CLM Equipment Company, Incorporated

Champion Road Machinery Limited
Appellant
Clark Machinery Company
Appellee
Future Equipment Company, Incorporated

Nueces Farm Center, Incorporated

Volvo Construction Equipment North America
Appellant
Volvo Trademark Holding Aktiebolaget

Document Text:

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

VOLVO TRADEMARK HOLDING 

AKTIEBOLAGET, a Swedish

corporation; VOLVO CONSTRUCTION

EQUIPMENT NORTH AMERICA, a

Delaware corporation; CHAMPION

ROAD MACHINERY LIMITED, a

Canadian corporation,

Plaintiffs-Appellees,

v.

CLARK MACHINERY COMPANY, an

Arkansas corporation,

Defendant-Appellant,  No. 06-2091

and

CLM EQUIPMENT COMPANY,

INCORPORATED, a Texas corporation;

FUTURE EQUIPMENT COMPANY,

INCORPORATED, a Texas corporation;

AIS CONSTRUCTION EQUIPMENT

CORPORATION, a Michigan

corporation; NUECES FARM CENTER,

INCORPORATED, d/b/a Nueces Power

Equipment, a Delaware corporation,

Defendants. 

Appeal: 06-2145 Doc: 56 Filed: 12/20/2007 Pg: 1 of 18
VOLVO CONSTRUCTION EQUIPMENT 

NORTH AMERICA, a Delaware

corporation; CHAMPION ROAD

MACHINERY LIMITED, a Canadian

corporation,

Plaintiffs-Appellants,

and

VOLVO TRADEMARK HOLDING

AKTIEBOLAGET, a Swedish

corporation,

Plaintiff,

v.

CLARK MACHINERY COMPANY, an  No. 06-2145

Arkansas corporation,

Defendant-Appellee,

and

CLM EQUIPMENT COMPANY,

INCORPORATED, a Texas corporation;

FUTURE EQUIPMENT COMPANY,

INCORPORATED, a Texas corporation;

AIS CONSTRUCTION EQUIPMENT

CORPORATION, a Michigan

corporation; NUECES FARM CENTER,

INCORPORATED, d/b/a Nueces Power

Equipment, a Delaware corporation,

Defendants. 

Appeals from the United States District Court

for the Western District of North Carolina, at Asheville.

Lacy H. Thornburg, District Judge.

(1:00-cv-00238)

Argued: September 27, 2007

Decided: December 20, 2007

2 VOLVO v. CLARK MACHINERY

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Before TRAXLER and KING, Circuit Judges, and

Benson E. LEGG, Chief United States District Judge for the

District of Maryland, sitting by designation.

Affirmed by published opinion. Judge King wrote the opinion, in

which Judge Traxler and Judge Legg joined. 

COUNSEL

ARGUED: Scott E. Korzenowski, DADY & GARNER, P.A., Minneapolis, Minnesota, for Appellant/Cross-Appellee. Michael J. Lockerby, FOLEY & LARDNER, L.L.P., Washington, D.C., for

Appellees/Cross-Appellants. ON BRIEF: J. Michael Dady, Ronald

K. Gardner, DADY & GARNER, P.A., Minneapolis, Minnesota;

Edward L. Bleynat, Jr., FERIKES & BLEYNAT, P.L.L.C., Asheville,

North Carolina, for Appellant/Cross-Appellee. Vineeta A. Bathia,

FOLEY & LARDNER, L.L.P., Washington, D.C., for

Appellees/Cross-Appellants. 

OPINION

KING, Circuit Judge: 

This civil action was initiated more than seven years ago by three

heavy equipment manufacturers (collectively, "Volvo")1 against several equipment dealers, and has involved numerous claims, counterclaims, and defenses arising from a contract dispute between the

parties. While originally pending in the Western District of North

1The parties generally referred to as "Volvo" are Volvo Construction

Equipment North America, Volvo Trademark Holding Aktiebolaget, and

Champion Road Machinery Limited. Because Volvo Construction

Equipment North America and Champion Road Machinery Limited are

the only appellants in the cross-appeal, our use of the term "Volvo" in

some circumstances is limited to them. 

VOLVO v. CLARK MACHINERY 3

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Carolina, the district court granted judgment on the pleadings against

the defendants, including Clark Machinery Company, an Arkansas

corporation ("Clark"). Clark and two other defendants (collectively,

the "Dealers")2 appealed from the judgment, and we affirmed the district court’s decision in all aspects except one: its judgment for Volvo

on Clark’s claims under the Arkansas Franchise Practices Act (the

"Arkansas Act") for termination of its franchise without good cause.

See Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co., Inc., 386

F.3d 581, 611 (4th Cir. 2004) (vacating judgment on Clark’s claims

under Arkansas Act and remanding for further proceedings). 

On remand, the district court entered summary judgment against

Volvo with respect to its liability to Clark under the Arkansas Act.

During the ensuing trial on damages, the jury declined to make a

damages award to Clark. The court subsequently denied Clark’s

requests for a new trial and for attorneys’ fees. In its appeal, Clark

seeks relief from the court’s orders denying its motions for a new trial

and for attorneys’ fees. By its cross-appeal, Volvo challenges the district court’s summary judgment decision. Because we conclude that

the court did not err in the remand proceedings, we affirm.

I.

A.

The factual and procedural underpinnings of this matter were

explained in detail in our prior decision. See Volvo Constr. Equip.,

386 F.3d at 587-91. In short, the parties’ dispute revolves around the

termination of agreements (the "Dealer Agreements") under which

Champion Road Machinery Limited ("Champion") had supplied large

earth-moving motor graders ("Champion Motor Graders") to Clark

and the other Dealers for resale. After purchasing Champion in 1997,

Volvo decided that it could compete more effectively with other manufacturers if it marketed motor graders under a single brand name

(i.e., Volvo) and through a single dealer network (i.e., that of Volvo).

Volvo thus proceeded to "Volvoize" its products by reengineering and

rebranding Champion Motor Graders for sale under the VOLVO

2The "Dealers" — in addition to Clark — are CLM Equipment Company, Incorporated, and Future Equipment Company, Incorporated. 

4 VOLVO v. CLARK MACHINERY

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trademark, and to implement a "Dealer Rationalization" plan by integrating the Volvo and Champion dealer networks. In 2000, the Dealers responded to the "Volvoization" and "Dealer Rationalization"

efforts by demanding that Volvo continue to supply them with motor

graders manufactured by Volvo at the former Champion factory. The

Dealers, however, were not selected as authorized sellers of such

motor graders, and were notified by Volvo that it would no longer

supply them with Champion Motor Graders. More particularly, Volvo

notified Clark on October 10, 2000, that its Dealer Agreement would

be terminated on January 9, 2001.

Also on October 10, 2000, Volvo filed its complaint in the Western

District of North Carolina (the "North Carolina Litigation"), seeking

a declaration that, pursuant to the Dealer Agreements, it was not

obliged to continue supplying Champion Motor Graders to Champion

dealers. The complaint was later amended to name Clark as a defendant, along with (among others) the previously named Dealers. On

March 20, 2001, the Dealers filed a separate action against Volvo in

the Eastern District of Arkansas (the "Arkansas Litigation"). The

Arkansas court subsequently transferred the Arkansas Litigation to

the Western District of North Carolina, and the parties thereafter consented to consolidation of the Arkansas Litigation with the North Carolina Litigation in the North Carolina court. Notably, Clark and the

other Dealers asserted twelve counterclaims in the North Carolina Litigation that mirrored their twelve claims in the Arkansas Litigation.

Among them were Clark’s claim and counterclaim based on Volvo’s

alleged violation of the Arkansas Act. 

On December 13, 2002, the district court in North Carolina filed

the opinion from which the original appeal and our prior decision

emanated. See Volvo Trademark Holding Aktiebolaget v. CLM Equip.

Co., Inc., 236 F. Supp. 2d 536 (W.D.N.C. 2002) (the "Opinion"). By

its Opinion, the court granted Volvo partial judgment on the pleadings. The court determined, inter alia, that Volvo’s refusal to supply

the Dealers with Champion Motor Graders did not breach the Dealer

Agreements because each agreement contained a "Without Cause

Provision" authorizing termination of a dealership without cause. In

addition, the court concluded that the Dealers were not protected by

state dealer protection statutes (the "State Statutes") — including the

Arkansas Act invoked by Clark — which, according to the Dealers,

VOLVO v. CLARK MACHINERY 5

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trumped the Without Cause Provision and precluded Volvo from terminating the Dealer Agreements without cause. Volvo subsequently

dismissed its remaining claims, rendering the Opinion appealable. 

B.

The Dealers appealed and, by our prior decision of October 8,

2004, we concluded — contrary to the contention of the Dealers —

that the district court committed no error in exercising jurisdiction in

the North Carolina Litigation. See Volvo Constr. Equip., 386 F.3d at

592-95. Next, we rejected the Dealers’ assertion that the court erred

in ruling that Volvo had not breached it contractual obligations by terminating the Dealer Agreements, id. at 595-99, as well as the Dealer’s

contention that Volvo was nevertheless estopped from breaching certain oral promises it had made after the Dealer Agreements were executed, id. at 599. Finally, we addressed the Dealers’ position that,

notwithstanding the Without Cause Provision in the Dealer Agreements, Volvo was prohibited by the State Statutes from terminating

the Agreements without cause. Id. at 599-611. Ultimately, we deemed

only Clark to be entitled to statutory protection, specifying that such

protection arose under the Arkansas Act. Id. at 611. 

Our discussion of the applicability of the Arkansas Act focused, in

relevant part, on Volvo’s contention that Clark could not rely on the

Act because a "Choice-of-Law Provision" in its particular Dealer

Agreement provided that "the rights, duties and obligations of the parties . . . shall be determined according to the laws of . . . South Carolina." Volvo Constr. Equip., 386 F.3d at 601 & n.18. Clark had

countered that the Choice-of-Law Provision was invalid, in that the

law selected thereunder (i.e., that of South Carolina) contravened a

fundamental policy of Clark’s home state of Arkansas. Id. at 601.

Before assessing whether the Arkansas Act constituted a fundamental

policy of Arkansas and thus governed Clark’s Dealer Agreement, we

considered the issue of whether Clark was a protected party under the

Act. Id. at 604. In so doing, we observed the following:

In the district court, Volvo maintained that Clark was not

protected by the Arkansas Act . . . because, pursuant to the

Choice-of-Law Provision, Clark’s . . . Dealer Agreement[ ]

[is] governed by South Carolina law. Volvo did not, how6 VOLVO v. CLARK MACHINERY

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ever, assert that the statute[ ] in question, by [its] terms,

fail[s] to apply to Clark’s . . . Dealer Agreement[ ]. Absent

the Choice-of-Law Provision, Clark could state a claim

under the Arkansas Act . . . . 

Id. at 606. 

We then turned to an assessment of whether the Arkansas Act

embodied a fundamental state policy, recognizing that "North Carolina will not honor a choice-of-law provision if the law of the chosen

state is contrary to the fundamental policy of a state possessing a

greater interest in the issue than the chosen state." Volvo Constr.

Equip., 386 F.3d at 607.3 We concluded that the Arkansas Act indeed

embodied a fundamental state policy, explaining that the Act "render-

[ed] the termination of a dealer agreement, absent good cause, a violation of the fundamental policy of Arkansas," and that Arkansas had

"a materially greater interest than South Carolina in determining

whether a dealer agreement between an Arkansas dealer and an outof-state manufacturer can be terminated without cause." Id. at 610.

Having so ruled, we addressed Volvo’s assertion that, even if Clark’s

Dealer Agreement was governed by the Arkansas Act, Volvo did not

violate the Act because the Agreement was terminated for good

cause. Id. We determined that "a genuine factual dispute exists as to

whether Volvo possessed good cause, under the Arkansas Act, to terminate Clark’s Dealer Agreement." Id. at 611. By our prior decision,

we therefore remanded "Clark’s statutory claim (in the Arkansas Litigation) and its statutory counterclaim (in the North Carolina Litigation) for the district court’s assessment of whether, pursuant to the

Arkansas Act, Volvo terminated Clark’s Dealer Agreement without

good cause." Id.

C.

3

In considering the contentions surrounding the State Statutes, we were

faced with the issue of whether to apply the substantive law (including

choice-of-law rules) of North Carolina or Arkansas. See Volvo Constr.

Equip., 386 F.3d at 599-601. We chose the law of North Carolina, as the

state in which the district court sits, because North Carolina law was sufficiently similar to Arkansas law "that the outcome of this dispute would

be the same under either set of rules." Id. at 600. 

VOLVO v. CLARK MACHINERY 7

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On February 16, 2006, during the remand proceedings, the district

court granted summary judgment to Clark on its claims under the

Arkansas Act, concluding, inter alia, that Volvo had terminated the

Dealer Agreement without good cause. See Volvo Trademark Holding

Aktiebolaget v. AIS Constr. Equip. Corp., 416 F. Supp. 2d 404

(W.D.N.C. 2006). The court then scheduled the issue of damages for

trial. On July 12, 2006, the jury returned a verdict finding that, despite

Volvo’s violation of the Arkansas Act, Clark had suffered no actual

damages. On July 14, 2006, the court entered judgment on the verdict,

specifying that Clark was not entitled to damages. 

On July 28, 2006, Clark filed a motion for a new trial based on several contentions of error, and, on August 2, 2006, it filed a motion,

pursuant to the Arkansas Act, for attorneys’ fees. On September 8,

2006, the district court denied Clark’s motion for a new trial. Thereafter, on October 2, 2006, the court rejected Clark’s motion for attorneys’ fees. Clark has timely appealed the court’s denial of its requests

for a new trial and for attorneys’ fees, and Volvo has cross-appealed

from the court’s summary judgment award in favor of Clark. We possess jurisdiction pursuant to 28 U.S.C. § 1291.

II.

Volvo’s contentions on cross-appeal concern the district court’s

award of summary judgment to Clark on its claims under the Arkansas Act. Because reversal of the summary judgment award would render moot the contentions made in Clark’s appeal, we first address

Volvo’s cross-appeal. Volvo makes two appellate contentions: (1) the

district court erred in concluding that Volvo was precluded from raising the issue of the applicability of the Arkansas Act on remand, and

(2) the court erred in concluding that Volvo terminated Clark’s Dealer

Agreement without good cause. We assess Volvo’s contentions in

turn.

A.

Volvo first contends that the district court erroneously applied the

"mandate rule" in deciding on remand that Volvo was precluded from

asserting that the Arkansas Act did not apply to Clark’s Dealer Agreement. We are obliged to review de novo a district court’s interpreta8 VOLVO v. CLARK MACHINERY

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tion of an appellate mandate. See S. Atl. Ltd. P’ship of Tenn., LP v.

Riese, 356 F.3d 576, 583 (4th Cir. 2004) (explaining that "[w]e

review de novo . . . whether a post-mandate judgment of a district

court contravenes the mandate rule, or whether the mandate has been

scrupulously and fully carried out" (internal quotation marks omitted)). 

On remand, Volvo asserted that the existence of a "franchise" is an

element of any claim for violation of the Arkansas Act, and that the

burden was on Clark to show that the Dealer Agreement granted it a

franchise under the Act. See Ark. Code Ann. § 4-72-203 (West 2007)

(specifying that "this subchapter applies only to a franchise"). Volvo

maintained that Clark had not satisfied this burden, and thus that the

Act did not apply to Clark’s Dealer Agreement. Without reaching the

merits of this contention, the district court concluded that Volvo was

precluded from pursuing it on remand. In so ruling, the district court

relied on the following language from our prior decision:

"In the district court, Volvo maintained that Clark was not

protected by the Arkansas Act . . . because, pursuant to the

Choice-of-Law Provision, Clark’s . . . Dealer Agreement[ ]

[is] governed by South Carolina law. Volvo did not, however, assert that the statute[ ] in question, by [its] terms,

fail[s] to apply to Clark’s . . . Dealer Agreement[ ]. Absent

the Choice-of-Law Provision, Clark could state a claim

under the Arkansas Act . . . ." 

Volvo Trademark, 416 F. Supp. 2d at 409 (quoting Volvo Constr.

Equip., 346 F.3d at 606). The district court then explained that "[t]he

Fourth Circuit would not have considered whether the Act constituted

fundamental policy unless and until it found that Clark was a ‘protected part[y] under [that] statute[ ].’" Id. (quoting Volvo Constr.

Equip., 346 F.3d at 604). Invoking the mandate rule, the district court

further explained that, by determining that the Arkansas Act constituted a fundamental state policy, this Court had foreclosed Volvo’s

argument that the Act does not offer protection to Clark. Id. Additionally, the district court observed that Volvo had not raised the franchise

element issue either before it or in this Court prior to the remand proceedings. Id.

VOLVO v. CLARK MACHINERY 9

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In its cross-appeal, Volvo contends that the district court erroneously applied the mandate rule in the remand proceedings and that our

prior decision did not absolve Clark of its burden of proving the franchise element of its claim under the Arkansas Act. The mandate rule

is a specific application of the law of the case doctrine. See United

States v. Bell, 5 F.3d 64, 66 (4th Cir. 1993). The rule "forecloses litigation of issues decided by the district court but foregone on appeal

or otherwise waived, for example because they were not raised in the

district court." Id. Significantly, as the district court recognized,

Volvo did not raise the franchise element issue in the earlier proceedings, either in the district court or in this Court. See Volvo Constr.

Equip., 386 F.3d at 606 ("Volvo did not . . . assert that the [Arkansas

Act], by [its] terms, fail[ed] to apply to Clark’s . . . Dealer Agreement[ ]."); Volvo Trademark, 416 F. Supp. 2d at 409 ("Volvo did not

raise the issue of non-application before this Court in the first proceeding . . . ."). As the district court also recognized, under the mandate rule a remand proceeding is not the occasion for raising new

arguments or legal theories. Consequently, it properly concluded that

Volvo had waived its contention on the franchise element and, as a

result, was not entitled to raise it on remand. 

Furthermore, absent exceptional circumstances, the mandate rule

"compels compliance on remand with the dictates of a superior court

and forecloses relitigation of issues expressly or impliedly decided by

the appellate court." Bell, 5 F.3d at 66. Our prior opinion expressly

provided that "[a]bsent the Choice-of-Law Provision, Clark could

state a claim under the Arkansas Act." Volvo Constr. Equip., 386 F.3d

at 606. By concluding that Clark could state a claim under the Arkansas Act, we necessarily recognized that Clark’s Dealer Agreement

granted it a franchise under the Arkansas Act.4

4Volvo also maintains on cross-appeal that it was not obliged to raise

the franchise issue by the time the Opinion was filed in the original district court proceedings, in that discovery had not concluded. The language of our prior decision plainly indicated that we viewed the

applicability of the Arkansas Act to have been conceded by Volvo, aside

from its contention on the Choice-of-Law Provision. If Volvo was of the

view that we had resolved this issue prematurely, it could have so

asserted in a petition for rehearing. See 4th Cir. Local Rule 40(a). 

10 VOLVO v. CLARK MACHINERY

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B.

Volvo next contends that the district court erred in granting summary judgment to Clark on the basis of its conclusion that Volvo had

terminated Clark’s Dealer Agreement without good cause. As a general proposition, we review de novo a district court’s award of summary judgment, viewing the facts in the light most favorable to the

non-moving party. See Lee v. York County Sch. Div., 484 F.3d 687,

693 (4th Cir. 2007). An award of summary judgment may be appropriately made only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and that

the moving party is entitled to summary judgment as a matter of law."

Fed. R. Civ. P. 56(c). 

The Arkansas Act includes a list of eight occurrences that constitute "good cause" for termination or cancellation of a franchise. See

Ark. Code Ann. § 4-72-202 (West 2007).5 The district court held,

5The Arkansas Act states that "[i]t shall be a violation of this subchapter for a franchisor to . . . terminate or cancel a franchise without good

cause." Ark. Code Ann. § 4-72-204 (West 2007). Under the Arkansas

Act, "good cause" is defined as one of the following occurrences: 

(A) Failure by a franchisee to comply substantially with the

requirements imposed upon him or her by the franchisor,

or sought to be imposed by the franchisor, which requirements are not discriminatory as compared with the requirements imposed on other similarly situated franchisees,

either by their terms or in the manner of their enforcement;

or 

(B) The failure by the franchisee to act in good faith and in a

commercially reasonable manner in carrying out the terms

of the franchise; or 

(C) Voluntary abandonment of the franchise; or 

(D) Conviction of the franchisee in a court of competent jurisdiction of an offense, punishable by a term of imprisonment in excess of one (1) year, substantially related to the

business conducted pursuant to the franchise; or 

(E) Any act by a franchisee which substantially impairs the

franchisor’s trademark or trade name; or 

VOLVO v. CLARK MACHINERY 11

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adopting Clark’s position, that this list constituted the exclusive

means by which a franchisor may terminate a franchise for good

cause under the Arkansas Act. Volvo acknowledges that it did not terminate Clark’s Dealer Agreement for any of the specific reasons provided for in the Arkansas Act, but contends that those eight

occurrences are not an exclusive list of what constitutes good cause

for termination of a franchise. Appurtenant to this contention, Volvo

maintains that its reasons for termination, i.e., "Volvoization" and

"Dealer Rationalization," also constitute good cause for a franchise

termination under the Arkansas Act. 

As the district court aptly recognized, Volvo’s contention presents

an issue of statutory construction, and a federal court sitting in diversity is obliged to apply state law principles to resolve such a question,

utilizing such principles as enunciated and applied by the state’s highest court. See Volvo Trademark, 416 F. Supp. 2d at 410 (citing Cooper Distrib. Co., Inc. v. Amana Refrigeration, Inc., 63 F.3d 262, 274

(3d Cir. 1995)). The Arkansas Supreme Court has not resolved the

statutory issue raised by Volvo, and we are therefore obliged to interpret the Arkansas Act by applying the principles of statutory construction that would guide an Arkansas court in making such a decision.

See CTI/DC, Inc. v. Selective Ins. Co. of Am., 392 F.3d 114, 118 (4th

Cir. 2004). 

The district court made a thorough explanation of its ruling on this

issue. According to the applicable Arkansas legal principles, if a statute is clear, it is to be given its plain meaning, and courts are not to

(F) The institution of insolvency or bankruptcy proceedings by

or against a franchisee, or any assignment or attempted

assignment by a franchisee of the franchise or the assets of

the franchise for the benefit of the creditors; or 

(G) Loss of the franchisor’s or franchisee’s right to occupy the

premises from which the franchise business is operated; or

(H) Failure of the franchisee to pay to the franchisor within ten

(10) days after receipt of notice of any sums past due the

franchisor and relating to the franchise. 

Id. § 4-72-202. 

12 VOLVO v. CLARK MACHINERY

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search for any legislative intent. See Volvo Trademark, 416 F. Supp.

2d at 411 (citing Hinchery v. Thomasson, 727 S.W.2d 836 (Ark.

1987)). Arkansas also subscribes to the legal principle of expressio

unius est exclusio alterius, meaning "‘that the express designation of

one thing may properly be construed to mean the exclusion of

another.’" Id. (quoting Gazaway v. Greene County Equalization Bd.,

864 S.W.2d 233, 236 (Ark. 1993)). 

Applying these controlling principles to the Arkansas Act, the district court concluded that good cause for termination of a franchise

under the Act is limited to the eight occurrences specifically enumerated therein. See Volvo Trademark, 416 F. Supp. 2d at 412. The court

deemed the Arkansas Act to be clear on its face, and determined that

the express designation of those eight occurrences precluded any

other circumstance from constituting good cause for a franchise termination. Id. at 411. As a result, the court concluded that the Arkansas Supreme Court would have held that the "circumstances

constituting ‘good cause’ for termination under the [Arkansas Act]

are limited to those expressly designated in" the Act and, because

Volvo’s actions did not fall under one of the enumerated occurrences,

it had terminated Clark’s Dealer Agreement in violation of the Arkansas Act. Id. at 412, 416-17. 

Volvo maintains that the district court’s interpretation of the

Arkansas Act on this point contravenes the dormant commerce clause.6

It further asserts that resolution of this issue is controlled by our deci6

In explaining the dormant commerce clause, we have recently spelled

out the following: 

The Commerce Clause grants Congress the power "[t]o regulate

Commerce . . . among the several States." U.S. Const. art. I, § 8,

cl. 3. Although the Clause speaks only of congressional power,

the Supreme Court since 1852 has construed the Commerce

Clause as incorporating an implicit restraint on state power in the

absence of congressional action — hence the notion of a "dormant" Commerce Clause. The dormant Commerce Clause thus

limits the power of the States to erect barriers against interstate

trade. 

Yamaha Motor Corp., U.S.A. v. Jim’s Motorcycle, Inc., 401 F.3d 560,

567 (4th Cir. 2005) (internal citations and quotation marks omitted). 

VOLVO v. CLARK MACHINERY 13

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sion in Central GMC, Inc. v. General Motors Corp., 946 F.2d 327

(4th Cir. 1991). Volvo contends that, in Central GMC, we established

as a matter of law that any "good cause" provision of a franchise statute that does not permit either market withdrawals or the franchisor’s

business interests to constitute good cause will contravene the dormant commerce clause. We agree with the district court, however,

that Volvo’s reliance on Central GMC is misplaced. 

The Central GMC decision involved a Maryland statute regulating

the termination of franchises. Central GMC was a GMC Truck

franchisee that sold and serviced light, medium, and heavy duty GMC

trucks in Maryland. See 946 F.2d at 329. In 1986, GMC decided to

discontinue its heavy duty truck line due to losses it had suffered

since the 1970s. Id. Rather than liquidating its heavy duty truck operations, however, GMC transferred its assets to a new corporation

formed with AB Volvo, a Swedish automobile manufacturer. Id. By

the end of 1987, GMC had discontinued the manufacturing and marketing of heavy duty trucks. Id. Subsequently, Central GMC brought

an action against GMC, alleging that Central GMC owned a franchise

for GMC heavy duty trucks and that this franchise had been terminated by GMC in contravention of the Maryland franchise statute. Id.

at 330. 

The main issue in Central GMC was whether a single franchise had

been granted by GMC to the franchisee (Central GMC) for the sale

of all of the GMC truck product lines, or whether, on the other hand,

the light, medium, and heavy duty GMC truck lines each constituted

a separate franchise. See 946 F.2d at 330. Central GMC contended

that it held separate franchises for each of these three lines and, thus,

that GMC’s discontinuance of its heavy duty truck line constituted a

termination of that franchise. Id. We concluded that Central GMC

held only a single franchise, however, and that the withdrawal of the

heavy duty truck line by GMC could not be treated as a franchise termination because, inter alia, "a reading of the Maryland statute equating the discontinuance of a product line with impermissibly

terminating a franchise would raise significant commerce clause concerns." Id. at 332. 

As this aspect of the Central GMC decision demonstrates, we

observed that commerce clause concerns would arise from a ruling

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that the discontinuation of a single product line that is part of an overall franchise constitutes the improper termination of a separate franchise. Significantly, we did not, in Central GMC, conclude that such

an event would violate the dormant commerce clause. Such a circumstance is readily distinguishable from this case, where Volvo terminated its entire Dealer Agreement with Clark, not just one product

line that was part of the overall larger Dealer Agreement. As a result,

Central GMC is not controlling.7

In these circumstances, the district court properly concluded that

the enumerated occurrences in the Arkansas Act are the exclusive

means by which a franchisor can terminate a franchise for "good

cause," and that this interpretation does not contravene the dormant

commerce clause. We therefore affirm the district court’s ruling on

this aspect of Volvo’s cross-appeal. 

III.

Clark raises two separate contentions in its appeal — specifically,

that the district court erred in failing to award a new trial because of

erroneous jury instructions, and that it also erred in denying Clark’s

motion for attorneys’ fees. We address these contentions in turn. 

A.

Clark sought a new trial in the district court, asserting that the court

had erred in refusing to instruct the jury that Volvo had violated the

Arkansas Act by terminating the Dealer Agreement without "good

cause," and because the court had erroneously instructed the jury on

the issue of mitigation of damages. We review a trial court’s jury

instructions for abuse of discretion, and it is well settled that a trial

7Volvo contends that, even if Central GMC is inapplicable in this case,

the district court’s interpretation of the Arkansas Act yet violates the dormant commerce clause. The district court concluded, however, that its

interpretation of the Act was not a per se violation of the commerce

clause, nor placed an excessive burden on interstate commerce under

Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970). See Volvo Trademark, 416 F. Supp. 2d at 414-17. We agree with the district court in this

respect. 

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court has broad discretion in framing its instructions to a jury. See

Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 526

n.11 (4th Cir. 2003). Thus, the jury instructions will not furnish a

basis for reversal of an adverse verdict so long as, taken as a whole,

they "adequately state the controlling law." Id. (internal quotation

marks omitted). We nevertheless review de novo claims that the jury

instructions failed to correctly state the law. United States v. Cherry,

330 F.3d 658, 665 (4th Cir. 2003). 

1.

Of importance here, the trial court’s instructions to the jury on the

franchise termination issue included the following:

It has been previously determined that the agreement was

terminated by Volvo in violation of the Arkansas Franchise

Practices Act.

Now, the question of whether the Dealership Agreement

was terminated, or whether such termination violated the

Franchise Practices Act, is not before you. That decision has

been made.

Your sole function in this trial is to determine what amount

of damages, if any, Clark is entitled to receive as a result of

that termination. 

J.A. 1579.8 Clark asserts on appeal that the court’s failure to instruct

on the specifics of Volvo’s unlawful acts resulted in the jury being

given an inaccurate statement of law and, consequently, that a new

trial is mandated. 

Although Clark contends that the instructions included an erroneous statement of the applicable legal principles, it has failed to demonstrate how the instructions were legally inaccurate. It asserts only

that the court should have explained in further detail that Volvo had

8Citations to "J.A. ____" refer to the Joint Appendix filed by the parties in this appeal. 

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violated the Arkansas Act by terminating the Clark Dealer Agreement

without "good cause" and that the instructions, as given, were impermissibly confusing. Clark fails to specify how the absence of further

details in the instructions constitutes an erroneous statement of law.

In these circumstances, we assess this challenge for abuse of discretion only. 

As spelled out above, problems in jury instructions will not warrant

reversal of a jury verdict so long as, taken as a whole, the instructions

adequately state the controlling legal principles. And, it is clear that

the instructions challenged by Clark met that test. The court explained

to the jury that Volvo had terminated the Dealer Agreement in violation of the Arkansas Act, and, as a result, the jury’s only obligation

was to determine the damages Clark was entitled to, if any. In this

context, the court did not abuse its discretion.

2.

Clark next asserts that the district court erred in instructing the jury

to consider Clark’s failure to mitigate its damages. Because the

instructions to the jury on damages were adequate, and the jury concluded that Clark was not entitled to recover any damages, the mitigation of damages instruction could be, at most, harmless error, in that

it was unnecessary for the jury to reach the mitigation issue. See S.

Atl. Ltd. P’ship of Tenn., LP v. Riese, 284 F.3d 518, 530 (4th Cir.

2002) (explaining that "[e]ven if instructions are flawed, there can be

no reversal unless the error seriously prejudiced the challenging

party’s case").

B.

Finally, Clark maintains that the district court erred in denying its

motion for attorneys’ fees. We review such a ruling for abuse of discretion. See Retail Servs. Inc. v. Freebies Publ’g, 364 F.3d 535, 550

(4th Cir. 2004) (citing People for the Ethical Treatment of Animals

v. Doughney, 263 F.3d 359, 370 (4th Cir. 2001)). 

The damages provision of the Arkansas Act controls the attorneys’

fees issue and states: "Any franchisee who is harmed by a violation

of any other section of this subchapter shall be entitled to recover

actual damages in a civil action and, where appropriate, obtain

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injunctive relief in addition to reasonable attorneys’ fees and costs of

litigation." Ark. Code Ann. § 4-72-208 (West 2007) (emphasis

added). In assessing this provision, the district court, in its Order of

October 2, 2006, concluded that the words "where appropriate" modified both "injunctive relief" and a potential award of attorneys’ fees,

committing such an award to the discretion of the court. See J.A.

1618. The district court concluded that a party could recover attorneys’ fees in the absence of a damages award, but that, based simply

on a violation of the Act, there was no automatic entitlement to such

an award. Id. at 1617. The court then concluded that a decision on

attorneys’ fees was in its discretion, but that Clark, in the circumstances of this case, was not entitled to recover such an award. Id.

On appeal, Clark contends that the term "harmed" is not synonymous with the words "suffered damages," and thus, even though the

jury found against it on damages, it is entitled to an award of attorneys’ fees. Furthermore, Clark asserts that, in interpreting the attorneys’ fees provision of the Act, the "and" that separates the phrase

"where appropriate, injunctive relief," from the phrase "reasonable

attorneys’ fees and costs of litigation," signals an intention that the

"where appropriate" language applies to injunctive relief only, and the

"shall be entitled to" terminology applies to the phrase "reasonable

attorneys’ fees and costs." On this reasoning, Clark asserts that the

Arkansas Act mandated the district court to grant its motion for attorneys’ fees. 

Clark’s argument on this point is unpersuasive. As explained by the

district court, the attorneys’ fees provision plainly reserves the issue

of whether to make an award of attorneys’ fees to the discretion of

the court. Id. at 1618. Exercising its discretion, the district court concluded that Clark had not satisfied its burden of showing how it had

been "harmed" by Volvo’s actions, and thus denied the motion for

attorneys’ fees. Id. at 1617. As a result, the court did not abuse its discretion in so ruling.

IV.

Pursuant to the foregoing, we affirm the district court’s summary

judgment award in favor of Clark, and we affirm as well the court’s

rulings in favor of Volvo on the new trial and attorneys’ fees issues.

AFFIRMED

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