1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-22-1998

Liberty v. Ford Mtr Co

Precedential or Non-Precedential:

Docket 96-5762

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Recommended Citation

"Liberty v. Ford Mtr Co" (1998). 1998 Decisions. Paper 20.

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Filed January 22, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

Nos. 96-5762, 97-5189 and 97-5190 

LIBERTY LINCOLN-MERCURY 

v. 

FORD MOTOR COMPANY, 

 Appellant in No. 96-5762 

LIBERTY LINCOLN-MERCURY, INC. 

v. 

FORD MOTOR COMPANY, 

 Appellant in No. 97-5189 

LIBERTY LINCOLN-MERCURY, INC., 

 Appellant in No. 97-5190 

v. 

FORD MOTOR COMPANY 

On Appeal from the United States District Court 

for the District of New Jersey 

(D.C. Civ. No. 95-3121) 

Argued December 11, 1997 

BEFORE: GREENBERG, ROTH, and SEITZ, 

Circuit Judges. 

(Filed: January 22, 1998) 
 Dennis R. LaFiura (argued) 

 Pitney, Hardin, Kipp & Szuch 

 P.O. Box 1945 

 Morristown, NJ 07932-0950 

 Michael R. Feagley 

 Mayer, Brown & Platt 

 190 S. LaSalle Street 

 Chicago, IL 60603-3441 

 John J. Sullivan 

 Robert L. Bronston 

 Mayer, Brown & Platt 

 2000 Pennsylvania Avenue, N.W. 

 Washington, D.C. 20006-1882 

 Attorneys for Appellant and Cross 

 Appellee Ford Motor Company 

 Norman I. Klein 

 Goldman, Carlett 

 Garrison & Klein 

 1135 Clifton Ave., 

 Clifton, NJ 07013 

 Eric L. Chase (argued) 

 Genevieve K. LaRobardier 

 Bressler, Amery & Ross, P.C. 

 P.O. Box 1980 

 Morristown, NJ 07962 

 Attorneys for Appellee and Cross 

 Appellant Liberty Lincoln-Mercury, 

 Inc. 

OPINION OF THE COURT 

GREENBERG, Circuit Judge. 

I. INTRODUCTION 

Defendant Ford Motor Company ("Ford") appeals from an 

order of the district court dated March 13, 1996, entered 

March 15, 1996, granting partial summary judgment in 

 2 
favor of plaintiff Liberty Lincoln-Mercury, Inc. ("Liberty") on 

the grounds that Ford's assessment of a dealer-parity 

surcharge ("DPS") violated the New Jersey Franchise

Practices Act, N.J. Stat. Ann. S 56:10-15(a) (West Supp. 

1997). Ford also appeals from the district court's order of 

September 19, 1996, entered September 23, 1996, 

amending the March 13 order nunc pro tunc to preclude 

Ford from altering certain practices that were in effect as of 

the date of the March order. Liberty cross appeals from the 

district court's March 13, 1996 dismissal of its claim 

alleging illegal price discrimination under the RobinsonPatman Act, 15 U.S.C. S 13(a), and from the portions of the 

district court's February 26, 1997 final order entered 

February 27, 1997, rejecting Liberty's claim for damages 

incurred before December 1991, denying recovery of certain 

fees, and awarding prejudgment interest at the rates set 

forth in New Jersey Court Rule 4:42-11. 

The district court had jurisdiction over Liberty's state law 

claim pursuant to 28 U.S.C. S 1332 based on diversity of 

citizenship and the requisite amount in controversy, and 

over Liberty's federal law claim under 28 U.S.C. S 1331. 

This court's jurisdiction rests on 28 U.S.C. S 1291 based on 

the district court's entry of the final order dated February 

26, 1997, and entered February 27, 1997.1 For the reasons 

that follow, we will reverse the district court's September 

19, 1996 order, and will vacate the district court's order 

awarding attorneys' fees and remand that issue for 

reconsideration. We otherwise will affirm. 

_________________________________________________________________ 

1. Ford initially filed an interlocutory appeal from the district court's 

September 19, 1996 order pursuant to 28 U.S.C. S 1292(a)(1), which 

provides that "the courts of appeals shall have jurisdiction of appeals 

from . . . [i]nterlocutory orders of the district courts . . . granting . 

. . 

injunctions . . . ." By order of this court the interlocutory appeal, 

which 

was docketed as number 96-5762, was consolidated with Ford's appeal 

in number 97-5189 and Liberty's cross appeal in number 97-5190 from 

the district court's final order. The district court on April 25, 1997, 

entered a supplemental final order dated April 22, 1997, which is not at 

issue in this appeal. 

 3 
II. FACTUAL AND PROCEDURAL HISTORY 

On March 11, 1976, Ford and Liberty entered into a 

franchise agreement by executing Ford's standard "Lincoln 

and Mercury Sales and Service Agreements." Pursuant to 

the agreement, Ford, a motor vehicle manufacturer and 

franchisor, sells vehicles at wholesale prices to Liberty, 

which in turn sells them to consumers at retail prices. The 

retail vehicle sales are accompanied by a warranty issued 

by Ford to the consumer, guaranteeing that Ford will 

replace certain systems or parts in the vehicle free of 

charge. See app. at 38; 173. 

Under the standard franchise agreement, a franchiseedealer such as Liberty must perform warranty repairs on 

any vehicle brought to its dealership regardless of where 

the owner purchased the vehicle. Ford then must 

reimburse the dealer for the parts and labor associated 

with the warranty repairs. From 1976 until 1991, Ford 

reimbursed Liberty for parts used in warranty repairs 

pursuant to a standard nationwide reimbursement formula. 

Under the relevant version of that formula, Ford 

reimbursed dealers at 30-40% above their cost for parts 

depending on the model of the vehicle repaired. See id. at 

115. 

On December 12, 1991, Liberty wrote to Ford, asking to 

be reimbursed for warranty parts at its retail rate of 77% 

above its cost pursuant to the New Jersey Franchise

Practices Act ("NJFPA"), which provides that a motor vehicle 

franchisor "shall reimburse" its franchisee for parts used in 

warranty repairs at the franchisee's "prevailing retail price," 

provided that the retail price is "not unreasonable." N.J. 

Stat. Ann. S 56:10-15(a). See app. at 286. Ford responded 

on January 17, 1992, that it intended "to offset[any] parts 

mark-up above 30%." Ford explained that it would 

"estimate the incremental cost to [Ford] of the higher markup" Liberty had demanded and would provide Liberty "a 

menu of items" on Liberty's account from which the costs 

could be recovered. Ford informed Liberty that it would 

adjust the amount of its recovery charges "periodically . . . 

to ensure that only incremental costs are recovered." Id. at 

295. 

 4 
On July 7, 1992, after several months of correspondence, 

Ford agreed to reimburse Liberty at Liberty's claimed rate of 

77% above cost although Ford "continue[d] to believe that 

a retail markup of 77% is unreasonably high." App. at 308. 

On October 1, 1992, Ford reminded Liberty "that there 

would be cost recovery," and informed Liberty that it was 

"reviewing the nature of the recoveries that will be 

implemented." Id. at 319. Ford then wrote to Liberty on 

November 5, 1992, confirming its agreement to reimburse 

Liberty at a 77% markup retroactive to December 12, 1991, 

the date Liberty first demanded retail-rate reimbursement, 

and announcing that Ford would recover the cost of paying 

the incremental reimbursement through a "dealer parity 

surcharge." Id. at 321. 

Ford explained, 

 [a]s you know, parity between dealers, and parity in 

 the overall economic relationship between Ford and its 

 dealers, is essential. It is necessary for Ford to 

 maintain dealer parity, notwithstanding Ford's 

 acceptance of your request to be reimbursed for 

 warranty parts at a markup exceeding the mark-up 

 which Ford extends uniformly to all dealers nationally. 

 To maintain that parity, and to ensure fairness to the 

 overwhelming majority of dealers who are satisfied with 

 . . . a uniform warranty parts reimbursement mark-up, 

 and to recover our increased costs . . . . [c]osts 

 incurred through today will be divided by the total 

 number of vehicles in your dealership's inventory and 

 . . . `in-transit' to your dealership . . . . The quotient 

 will constitute a dealer parity surcharge to your 

 wholesale price for each such vehicle. 

Id. Ford informed Liberty that after this initial cost 

recovery, "[i]ncremental costs incurred during each period 

. . . will be divided by the total number of vehicles invoiced 

. . . . The quotient will constitute the surcharge to your 

wholesale vehicle price for each such vehicle." Id. Ford 

assured Liberty that, [i]n the event the total monthly 

surcharge differs from the incremental [reimbursement] 

costs incurred by Ford, the aggregate amount of any excess 

or shortfall to the surcharge . . . will be netted against the 

 5 
Costs used to determine the surcharge for the immediately 

subsequent Billing Period." Id. at 322. 

In correspondence dated December 21, 1992, Liberty 

requested additional reimbursements to supplement the 

below-retail reimbursements it had received for warranty 

parts it installed between 1986 and December 12, 1991. 

See id. at 326. Ford rejected that claim. See id. at 346. 

On October 5, 1992, Liberty filed a class action in federal 

district court for the District of New Jersey on behalf of 38 

New Jersey Lincoln-Mercury dealers, alleging that Ford's 

warranty reimbursement practices violated the NJFPA. On 

May 14, 1993, the district court, finding that the dealers' 

claims required a "part-by-part, sale-by-sale" analysis of 

each dealer's retail rate, denied the motion for class 

certification for lack of the requisite commonality among 

the dealers' claims. Liberty Lincoln Mercury, Inc. v. Ford 

Mktg. Corp., 149 F.R.D. 65, 76 (D.N.J. 1993) ("Liberty I"). 

The court later dismissed Liberty I without prejudice by 

consent of the parties. 

Liberty then filed this action on June 30, 1995. In its 

complaint and amended complaint Liberty alleged that 

Ford's imposition of the DPS violated the NJFPA's mandate 

that Ford reimburse Liberty for warranty parts at Liberty's 

prevailing retail price. Liberty also alleged that by imposing 

the DPS on Liberty but not on its competitors, Ford had 

engaged in unlawful price discrimination in violation of the 

Robinson-Patman Act, 15 U.S.C. S 13(a).2 

Liberty moved for summary judgment as to liability on 

both claims and Ford moved to dismiss Liberty's price 

discrimination claim. By order dated March 13, 1996, the 

district court granted Liberty's motion for summary

judgment as to its NJFPA claim and granted Ford's motion 

to dismiss Liberty's price discrimination claim. The district 

court found that Ford was "engaged in a shell game, the 

purpose of which is to avoid, altogether, the costs of 

complying with the NJFPA." Slip op. at 9. Finding that the 

DPS, by effectively reducing Liberty's reimbursements from 

_________________________________________________________________ 

2. Liberty consented to the dismissal of several other claims which are 

not at issue in this appeal. 

 6 
Liberty's retail rate to Ford's standard rate, "essentially 

nullified [Ford's] compliance and created an end-run 

around the Act," the district court concluded that it "would 

be formalistic, in the extreme," to find that Ford had paid 

Liberty the requisite reimbursement "when [Ford] charges 

back the very benefits which the Act intends to confer." Id. 

at 8-9. The court thus held that the DPS violated the "clear 

language of the NJFPA" by denying Liberty reimbursement 

at its retail rate. Id. at 11. The court concluded, however, 

that because the DPS placed Liberty in the same economic 

position as competitors who received only standard 

reimbursements at 30-40% above cost, it did not give rise 

to a price discrimination claim under the Robinson-Patman 

Act. See id. at 12-13. 

Thereafter Ford discontinued the DPS, and on April 29, 

1996, wrote to all New Jersey dealers announcing new 

policies for processing retail-rate reimbursement claims. 

The policies required dealers to document their claimed 

retail prices as to each warranty part by attaching retail 

customer repair orders for the same part installed in 

similar vehicles within the preceding six months. See app. 

at 513, 516. Ford also informed the dealers that "payment 

of warranty parts reimbursement at levels higher than 

[standard] reimbursement levels will be recovered . . . as 

with other regulatory compliance costs." Id. at 514. 

On May 15, 1996, Liberty submitted a request for retailrate reimbursement for warranty parts installed during 

April and May 1996. Ford rejected the request for failure to 

satisfy Ford's new documentation requirements. See app. at 

736-42. On June 20, 1996, Liberty filed a "Motion to 

Enforce the Order of March 13, 1996" challenging Ford's 

new policies as imposing insurmountable burdens designed 

to prevent Liberty from receiving retail-rate reimbursement, 

in violation of the NJFPA and the district court's March 

order. Liberty sought sanctions and an order enjoining Ford 

from implementing the new requirements. 

Ford responded that the issues raised in Liberty's Motion 

to Enforce were beyond the scope of the complaint and the 

March order, which had addressed only the legality of the 

DPS and were silent as to the proper methods for 

establishing a dealer's retail rate. Ford contended that its 

 7 
new policies were appropriate in light of Liberty I's 

pronouncement favoring a "part-by-part, sale-by-sale" 

analysis of each dealer's retail rate, 149 F.R.D. at 76, and 

sought discovery and the opportunity to develop a factual 

record regarding the nature of the new policies and the 

burdens they entailed. See app. at 729-30. 

The district court, without allowing discovery or holding 

an evidentiary hearing, held on September 19, 1996, that in 

adopting its new reimbursement policies Ford had "ignored 

or evaded" the "clear thrust" of the March opinion. Slip op. 

at 1. The court found that the new procedure "appears to 

be onerous in the extreme and designed to frustrate any 

attempt to obtain statutory reimbursement . . . at the 

dealer's prevailing retail rate." Finding, however, that the 

terms of the March order were not "explicit," the court 

denied Liberty's Motion to Enforce, but amended the March 

order nunc pro tunc to forbid Ford from altering its prior 

reimbursement procedure absent Liberty's consent or leave 

of the court. The court also enjoined Ford from"any further 

or other financial imposition on . . . Liberty . .. as a 

recoupment" of Ford's NJFPA compliance costs. Slip op. at 

2-3. 

Liberty also moved for summary judgment as to the 

issues of damages, interest, costs and fees. In afinal order 

dated February 26, 1997, and supplemental final order 

dated April 22, 1997, the district court granted Liberty's 

motion in part, awarding Liberty a total of approximately 

$800,000 in damages, attorneys' fees, costs and 

prejudgment interest. This appeal and cross appeal 

followed. 

III. DISCUSSION 

A. The New Jersey Franchise Practices Act 

1. Statutory Language 

The New Jersey Franchise Practices Act provides that: 

 [i]f any motor vehicle franchise shall require or permit 

 motor vehicle franchisees to . . . provide parts in 

 8 
 satisfaction of a warranty issued by the motor vehicle 

 franchisor . . . [t]he motor vehicle franchisor shall 

 reimburse each motor vehicle franchisee . . . for such 

 parts as are supplied, in an amount equal to the 

 prevailing retail price charged by such motor vehicle 

 franchisee for such . . . parts in circumstances where 

 . . . such parts [are] supplied other than pursuant to 

 the warranty; provided that such motor vehicle 

 franchisee's prevailing retail price is not unreasonable 

 when compared with that of [other franchisees] from 

 the same motor vehicle franchisor for identical 

 merchandise . . . in the geographic area in which the 

 motor vehicle franchisee is engaged in business . . . . 

N.J. Stat. Ann. S 56:10-15(a). We must decide whether the 

district court erred in entering summary judgment in favor 

of Liberty on the grounds that Ford's "surcharge regime 

violates the clear language of the NJFPA." Slip op. at 11. 

We review both the district court's interpretation of the 

NJFPA and its entry of summary judgment de novo, 

construing the NJFPA as we believe that the New Jersey 

Supreme Court would construe it and viewing the record in 

the light most favorable to Ford. See Pittston Co. Ultramar 

Am. Ltd. v. Allianz Ins. Co., 124 F.3d 508, 516 (3d Cir. 

1997). 

While the New Jersey courts have not interpreted the 

relevant statutory language dictating that a "franchisor 

shall reimburse" its franchisee for warranty parts at "the 

prevailing retail price," under New Jersey law"[i]t is a 

cardinal rule of statutory construction that the language of 

the statute should be given its ordinary meaning and 

construed in a common sense manner to accomplish the 

legislative purpose." N.E.R.I. Corp. v. New Jersey Highway 

Auth., 686 A.2d 328, 335 (N.J. 1996) (citations and internal 

quotations omitted). Applying an ordinary and common 

sense definition of the relevant statutory language requiring 

Ford to reimburse Liberty at retail rates, we conclude that 

Ford's assessment of the DPS, which automatically reduced 

the reimbursements Liberty received to below retail levels, 

violated the plain language of the NJFPA. 

According to Ford, because the NJFPA regulates "a 

narrow aspect of the franchisor-franchisee relationship," 

 9 
dictating only the rate of reimbursement for warranty parts, 

and "is silent regarding wholesale prices," the DPS which 

Ford added to Liberty's wholesale vehicle prices falls 

outside the purview of the NJFPA. Br. at 14-15. Ford 

contends that the district court, in finding that the DPS 

violated the NJFPA, "read into the statutory scheme a 

remarkably intrusive and completely unstated requirement 

that Ford silently bear the full cost of compliance," 

depriving Ford of "the freedom to control its wholesale 

pricing structure without . . . support in the language of 

the statute." Id. at 20. 

We disagree. The district court did not forbid Ford from 

adopting policies to recover the costs of complying with the 

NJFPA; nor did it forbid methods of cost recovery involving 

wholesale prices. The court simply held that while some 

"methods of cost-recovery are permissible . . . .[Ford's] 

method certainly is not." Slip op. at 9. Even though the 

court, in reaching this conclusion, did not delineate the 

distinctions between the DPS and permissible cost-recovery 

systems, those distinctions are apparent from the record 

before us. 

As Ford explained to Liberty in setting forth its method 

for calculating the DPS, "incremental [warranty 

reimbursement] costs incurred [by Ford] during each period 

. . . will be divided by the total number of vehicles invoiced 

. . . that month." App. at 321. Accordingly, the DPS bore no 

economic relationship to Liberty's wholesale vehicle 

purchases, but rather was exacted as an automatic result 

of, and in direct proportion to, Liberty's incremental 

warranty reimbursement claims. Although Ford described 

the DPS as a vehicle price surcharge and attributed a 

portion of it to each vehicle on Liberty's invoice, the total 

amount of the surcharge neither would increase if Liberty 

purchased more vehicles nor would decrease if Liberty 

purchased fewer. See id. at 308, 321. Thus, looking to the 

practical operation of the DPS rather than to the 

nomenclature Ford used to describe it, we conclude that 

the DPS, the amount of which depended solely and directly 

on Liberty's warranty reimbursement claims, functioned not 

as a wholesale vehicle price term carried out through 

unregulated vehicle sales transactions, but rather as a 

 10 
warranty reimbursement policy that automatically 

eliminated any reimbursement beyond Ford's standard rate 

resulting, as Liberty argues, in "no payment at retail." Br. 

at 23. 

Because the DPS was assessed as an inevitable 

consequence of incremental reimbursement claims and not 

through separate, unregulated transactions, Ford's reliance 

on Acadia Motors, Inc. v. Ford Motor Co., 44 F.3d 1050 (1st 

Cir. 1995), is misplaced. Acadia held that a Maine retail 

reimbursement statute similar to the NJFPA did not 

preclude Ford from imposing a wholesale vehicle price 

surcharge to recover the costs of reimbursing Maine dealers 

at retail rates rather than at Ford's standard rate. 3 The 

Acadia court found that "[n]othing in the[statutory] 

language . . . prohibits a manufacturer from increasing 

vehicle prices in order to recover its increased compliance 

costs. The statute says nothing about wholesale or retail 

prices, and apparently leaves the manufacturer free to 

increase wholesale prices." Id. at 1056. Thus, the Acadia 

court concluded, a restriction against wholesale price 

increases would improperly establish "a rule unsupported 

by state statute." Id. at 1057.4 

We agree with Acadia's holding that the statutes at issue 

do not preclude cost-recovery systems effected through 

wholesale vehicle price increases, but reject Ford's 

_________________________________________________________________ 

3. The Maine statute at issue in Acadia provides that: 

 [i]f a motor vehicle franchisor requires or permits a motor vehicle 

 franchisee to . . . provide parts in satisfaction of a warranty 

created 

 by the franchisor, the franchisor . . . shall reimburse the 

franchisee 

 for any parts so provided at the retail rate customarily charged by 

 that franchisee for the same parts when not provided in 

satisfaction 

 of a warranty. 

10 Me. Rev. Stat. Ann. tit. 10, S 1176 (West 1994).

4. In holding that the district court had fashioned a rule unsupported by 

the statutory language, Acadia admonished that "federal courts must 

take great caution when blazing new state-law trails." 44 F.3d at 1057 

(citations and internal quotations omitted). This principle, which we 

recognize as well, see Leo v. Kerr-McKee Chem. Corp., 37 F.3d 96, 101 

(3d Cir. 1994), is not implicated in this case where the district court 

properly applied the plain statutory language. 

 11 
contention that the DPS constitutes such a system. 5 In 

Acadia, Ford reimbursed all Maine dealers at retail rates 

and assessed a "warranty parity surcharge" ("WPS") that 

added $160 to the price of every vehicle sold to Maine 

dealers "to recover [the] increase in its costs of doing 

business in Maine." 44 F.3d at 1052. The total amount of 

the surcharge imposed on each dealer was "based on the 

number of cars sold, without regard to whether the dealer 

actually performed warranty work in that month." Id. at 

1053. 

Thus, in contrast to the DPS, Ford did not impose 

the WPS as a consequence of a dealer's warranty 

reimbursement claims, but instead assessed it as a result 

of a separate vehicle purchase transaction. Because the 

total amount of charges a dealer would incur under the 

WPS scheme depended on the "number of cars sold" and 

not on the dealer's reimbursement amounts, the WPS 

operated as a bona fide wholesale price term that resulted 

from and accrued in proportion to unregulated vehicle sales 

transactions rather than regulated warranty reimbursement 

transactions. 

Contrary to Ford's assertion that "this factual difference 

. . . is completely irrelevant," reply br. at 11, we find the 

distinction to be critical. When a dealer incursfinancial 

burdens upon making a retail-rate warranty reimbursement 

claim, the dealer, in effect, is compensated for the warranty 

transaction at a below-retail rate, which the NJFPA forbids. 

When, however, the dealer incurs financial burdens as a 

result of other transactions, those burdens may reduce the 

return the dealer receives on those transactions, but the 

terms of those transactions are unregulated. Therefore the 

decreased compensation associated with those transactions 

_________________________________________________________________ 

5. Where, as here, a New Jersey court has not construed the relevant 

statutory language, New Jersey courts seek guidance from cases 

construing similar statutes in other jurisdictions. See Neptune T.V. & 

Appliances Serv., Inc. v. Litton Microwave Cooking Prods. Div., 462 A.2d 

595, 599 (N.J. Super. Ct. App. Div. 1983). Acadia, 44 F.3d 1050, is the 

only such case of which we are aware. 

 12 
does not violate the statute as does as a below-retail rate of 

compensation for installing warranty parts.6 

In light of these differences between the WPS at issue in 

Acadia and the DPS at issue in this case, Acadia's approval 

of the "chosen mechanism for cost recovery" in that case, 

44 F.3d at 1058, has little bearing on our examination of 

the decidedly different cost-recovery mechanism in this 

case. Because the DPS, unlike the WPS, did not function as 

a wholesale price increase effected through vehicle sales 

transactions beyond the regulatory reach of the NJFPA, we 

find Acadia inapposite and reject Ford's contention that 

Acadia compels us to find the cost-recovery method before 

us permissible under the NJFPA. Based upon the 

uncontroverted facts regarding the structure and operation 

of the DPS, we find that Ford's assessment of the DPS, by 

automatically reducing Liberty's reimbursements to belowretail rates, violates the NJFPA's clear mandate that the 

franchisor "shall reimburse" the franchisee for warranty 

_________________________________________________________________ 

6. The distinction holds practical as well as statutory significance. 

Since 

a dealer, under the standard franchise agreement, must perform all 

warranty repairs brought to its dealership and cannot charge customers 

for those repairs but instead must accept the franchisor's standard 

reimbursement, the dealer cannot control the volume, timing or 

profitability of those repairs. Thus dealers cannot mitigate losses they 

may incur in performing warranty repairs by controlling the terms of 

those transactions as they can in their other operations. Because losses 

incurred in the context of warranty transactions impose these unique 

hardships on dealers, so do cost-recovery systems that assess charges as 

a result of and in proportion to those transactions. 

While Ford attempts to obscure this reality by arguing that a dealer 

can redistribute warranty transaction losses through its other 

operations, see reply br. at 11 & n.2, this argument ignores the fact that 

a dealer neither can predict nor can control the proportion of its 

operations it will be required to devote to performing mandatory 

warranty repairs, and thus could recover fluctuating warranty losses 

only by constantly readjusting retail prices, which would be economically 

infeasible. Thus, a rule protecting dealers fromfinancial burdens 

incurred through warranty transactions but not through other 

transactions not only comports with the statutory scheme dictating the 

terms only of the former, but also recognizes the unique hardships 

associated with warranty losses due to the dealer's lack of control over 

the terms of warranty transactions. 

 13 
parts "in an amount equal to the prevailing retail price." 

N.J. Stat. Ann. S 56:10-15(a).7 

In arguing that its DPS scheme comports with the 

NJFPA, Ford essentially argues that to achieve compliance 

with the retail reimbursement mandate, a franchisor only 

need record a nominal retail-rate credit to the dealer, even 

if an offsetting debit ensures that the dealer never receives 

any reimbursement at the retail rate. Ford's definition of 

statutory compliance would require us to view its initial 

retail-rate reimbursement in isolation from the surcharge 

that inevitably offsets that reimbursement, contrary to the 

undisputed evidence that the offset followed ineluctably 

from the incremental reimbursement and relegated Liberty 

to the same position as if it initially had received only the 

standard reimbursement.8 

Ford's strained construction of the NJFPA, which the 

district court properly rejected as "formalistic, in the 

extreme," slip op. at 9, would ascribe paramount 

importance to illusory transactions recorded on a dealer's 

invoice while ignoring the reality of whether the franchisor 

actually reimbursed its franchisee "in an amount equal to 

the prevailing retail price" as the statute requires. Because 

a statute permitting illusory transactions with no economic 

effect would serve no legislative purpose, we find no 

indication that the New Jersey Supreme Court would adopt 

Ford's construction of the NJFPA contrary to that court's 

pronouncement that statutes be construed in "a common 

_________________________________________________________________ 

7. Because the surcharge in this case resulted automatically from 

Liberty's incremental reimbursement claims and because the total 

amount of the surcharge depended directly on the amount of those 

claims, we need not decide the legality under the NJFPA of cost-recovery 

methods that depend on a dealer's reimbursement transactions in some 

less direct manner. 

8. Indeed, in maintaining that the surcharge achieved "parity" between 

Liberty and competitors who received only standard reimbursements, 

Ford effectively recognizes that the DPS consigned Liberty to the same 

position as dealers who were reimbursed at Ford's rates which were 

statutorily deficient as to Liberty. See app. at 321 ("[P]arity between 

dealers . . . is essential. . . . To maintain that parity . . . and to 

recover 

our increased costs . . . the Costs will be recovered [through] a dealer 

parity surcharge."). 

 14 
sense manner to accomplish the legislative purpose." 

N.E.R.I Corp., 686 A.2d at 335. In fact, we are quite 

confident that that court would reject Ford's NJFPA

argument. 

Construing the statutory terms according to their plain 

and ordinary meaning as is required under New Jersey law, 

see Service Armament Co. v. Hyland, 362 A.2d 13, 16 (N.J. 

1976); Cutler v. Borough of Westwood, 685 A.2d 44, 47 

(N.J. Super. Ct. App. Div. 1996), certif. denied, 693 A.2d 

112 (N.J. 1997), we conclude that the term "reimburse," 

which is defined as "[t]o pay back, to make restoration, to 

repay that expended; to indemnify, or make whole," BLACK'S 

LAW DICTIONARY 1287 (6th ed. 1990), is not satisfied by 

transactions that fail to result in actual payment or 

restoration of the requisite sums. Accordingly we, like the 

district court, hold that in reducing Liberty to"the same 

position as if it were reimbursed the standard thirty to forty 

percent above cost," slip op. at 10, the DPS scheme violated 

"the clear language of the NJFPA" by denying Liberty 

reimbursement at its prevailing retail rate. Id. at 11. 

2. Legislative Purpose 

Because the district court properly construed the NJFPA 

"as it is written [and] . . . not according to some

unexpressed intention," Unsatisfied Claim & Judgment 

Fund Bd. v. New Jersey Mfrs. Ins. Co., 637 A.2d 191, 193 

(N.J. Super. Ct. App. Div.), aff'd, 649 A.2d 1243 (N.J. 

1994), we find no merit in Ford's contention that the 

district court erred by relying on legislative history to 

expand the NJFPA beyond the scope of its plain statutory 

language. See br. at 16. The legislative history, however, 

clearly does support a statutory interpretation that 

prohibits spurious transactions which ultimately fail to 

result in reimbursement at the dealer's retail rate. 

The New Jersey courts have held that the NJFPA is a

remedial statute intended to equalize the disparity of 

bargaining power in franchisor-franchisee relations. See 

Kubis & Perszyk Assocs., Inc. v. Sun Microsystems, Inc., 680 

A.2d 618, 626 (N.J. 1996) (recognizing NJFPA's "basic 

legislative objectives of protecting franchisees from the 

 15 
superior bargaining power of franschisors"); Tynan v. 

General Motors Corp., 604 A.2d 99, 100 (N.J. 1992) 

(adopting reasoning of dissent below stating that"[t]he 

Franchise Practices Act is remedial in purpose [and] 

focuses on the need to protect franchisees from inequitable 

treatment by economically more powerful franchisors") 

(citing Tynan v. General Motors Corp., 591 A.2d 1024, 1035 

(N.J. Super. Ct. App. Div. 1991) (Cohen, J., dissenting in 

part)); Westfield Ctr. Serv., Inc. v. Cities Serv. Oil Co., 432 

A.2d 48, 52-54 (N.J. 1981) (discussing "disparity in . . . 

bargaining power" addressed in NJFPA).9 Under New Jersey 

law, remedial statutes must be construed broadly to give 

effect to their legislative purpose. See Lemelledo v. 

Beneficial Management Corp., 674 A.2d 582, 585 (N.J. 

Super. Ct. App. Div. 1996), aff'd, 696 A.2d 546 (N.J. 1997); 

Sabella v. Lacey Township, 497 A.2d 896, 898 (N.J. Super. 

Ct. App. Div. 1985). 

The motor vehicle franchise provisions at issue, which 

the legislature added to the NJFPA in 1977, were "designed 

to remove the franchisor's present opportunity to isolate 

himself from the warranty he issues." Legislative Statement, 

L. 1977, c. 84, S 3, Assembly No. 1956 (May 24, 1976) 

("Legis. Statement"). In enacting the retail reimbursement 

requirement, the New Jersey legislature expressed its intent 

to "offer[ ] protection to the competent retailer against 

arbitrary actions by manufacturers who too often hold a 

life-and-death power over his business and his ability to 

serve his customers." Id. In light of these statements 

indicating an intent to shift responsibility toward

franchisors who issue warranties and to protect dealers in 

their transactions with franchisors, we agree with the 

district court that a construction of the NJFPA permitting 

machinations which ultimately fail to afford the dealer 

reimbursement for warranty parts at its retail rate would 

"fly in the face of the intent of the New Jersey legislature 

_________________________________________________________________ 

9. In a 1989 amendment to the NJFPA adopted after the 1977 provision 

at issue, the New Jersey legislature explicitly codified its concern over 

the "inequality of bargaining power . . . between motor vehicle 

franchisors and motor vehicle franchisees." See N.J. Stat. Ann. S 56:10- 

7.2(b). 

 16 
. . . and would undermine the purpose of the Act." Slip op. 

at 11. 

Ford attempts to diminish the significance of the 

 851<!>legislative history by arguing that the New Jersey 

legislature identified several consumer protection concerns 

before expressing its intent to protect dealers. See reply br. 

at 6 (citing Legis. Statement). The legislature, however, did 

not indicate the relative importance of these concerns. We 

therefore find no relevance in the order in which the 

legislature articulated them. In any event, the stated 

consumer protection concerns of ensuring that warranty 

customers receive the same service as retail customers and 

that warranty work be performed according to generally 

acceptable standards, see Legis. Statement, are aligned 

closely with the intent to protect dealers from arbitrary 

actions by franchisors. Dealers who receive below-retail 

compensation for installing warranty parts are discouraged 

from devoting the same resources to installing those parts 

as they devote to installing those for retail customers.10 

Thus, the consumer protection concerns behind the NJFPA 

further support a statutory interpretation which focuses on 

the compensation rate the dealer effectively receives in 

connection with its warranty transactions and not on 

whether the franchisor recorded a nominal transaction 

crediting the dealer at the requisite rate. 

Ford also argues that the district court erred in 

concluding that, "[a]lthough the Act is silent regarding 

whether and how franchisor-manufacturers may distribute 

compliance costs, it cannot be the case that the franchiseedealers--the class of intended beneficiaries--bear the entire 

burden." Slip op. at 11. According to Ford, the district court 

erred in reaching this conclusion as to the intended effect 

of the NJFPA, since regulated entities frequently pass 

statutory compliance costs along to retailers who do not 

then "bear the entire burden" of those costs, but rather 

pass those costs on to consumers. See br. at 18-19; 20-21. 

_________________________________________________________________ 

10. Because the reimbursement rate for the labor associated with 

warranty repairs is not at issue, we assume equal rates for the labor 

used in warranty and non-warranty repairs. 

 17 
We are unpersuaded by this argument, which ignores the 

fact that the purported "compliance costs" which Ford 

shifted to Liberty were not incidental to compliance with an 

independent regulatory mandate, such as a vehicle safety 

standard or an environmental regulation, but rather were 

the very subject of the substantive regulation at issue, 

which explicitly mandates that "the motor vehicle franchisor 

shall reimburse" its franchisee at the "prevailing retail 

price." N.J. Stat. Ann. S 56:10-15(a) (emphasis added). 

In contending that it may shift to Liberty the cost of 

complying with that mandate, Ford essentially insists that 

it can achieve statutory compliance by requiring Liberty to 

reimburse itself.11 This shifting of the retail cost of warranty 

parts not only violates the clear mandate that Ford as the 

franchisor pay Liberty the retail price for warranty parts, 

but also frustrates the purpose behind a statute that was 

intended to deny the franchisor the "opportunity to isolate 

himself from the warranty he issues," to protect dealers 

against "arbitrary actions by manufacturers," and to ensure 

that warranty repairs are of the same quality as retail 

repairs. Legis. Statement. Accordingly, we agree with the 

district court's conclusion that Ford's imposition of the DPS 

contravened the legislative purpose as well as the clear 

statutory language of the NJFPA. We, therefore, will affirm 

the March 13, 1996 order granting Liberty's motion for 

summary judgment on its NJFPA claim. 

B. The September 19, 1996 Order 

After the district court entered its March 13, 1996 order 

holding that the DPS violated the NJFPA, Ford ceased 

imposing the DPS, but adopted a new policy requiring 

_________________________________________________________________ 

11. Since the DPS deprived Liberty of the reimbursement which Ford 

statutorily was obligated to pay, the issue of whether Liberty, as Ford 

argues, effectively could recover the losses resulting from this 

deprivation 

through other transactions becomes immaterial. See br. at 18-21. We 

note, however, that in light of the difficulties inherent in 

redistributing 

warranty losses through retail transactions, see supra note 6, the 

district 

court appears to have been correct in finding that dealers ultimately 

would bear a significant portion of the costs shifted to them through the 

DPS. See slip op. at 8. 

 18 
dealers to document claimed retail rates by submitting 

proof of the prices the dealer charged actual retail 

customers for the same part during the prior six months. 

See app. at 513-17. After Ford rejected Liberty's 

reimbursement claims for failure to comply with this 

requirement, Liberty objected to the requirement in a 

Motion to Enforce the district court's March order, which 

alleged that Ford's new policy imposed insurmountable 

burdens designed to preclude dealers from receiving retailrate reimbursements. See id. at 498-500. Ford responded 

that it adopted its policy in a good faith attempt to comply 

with the "part-by-part, sale-by-sale" retail rate analysis set 

forth in Liberty I, 149 F.R.D. at 76, and sought discovery as 

to how burdensome other dealers found the policy and as 

to the methods other franchisors used to determine their 

dealers' retail rates, in order to refute Liberty's allegations 

that Ford's policies were excessively burdensome. See app. 

at 729-30. 

Although the district court denied Liberty's Motion to 

Enforce "given the non-specific language of the March 13, 

1996 order," slip op. at 1, it entered an order"nunc pro tunc 

to March 13, 1996" requiring Ford to adhere to the 

"procedure the parties followed . . . until . . . April 1996, 

i.e., reimbursement . . . at [Liberty's] retail rate, calculated 

. . . at 77% over [Liberty's] cost." Id. at 2-3. The court 

ordered Ford to continue processing Liberty's 

reimbursement claims based on a 77% markup "unless and 

until the parties agree that a retail rate, calculated at a 

later date, is more accurate, another mutually acceptable 

computation of the retail rate is agreed upon, or, as long as 

this court retains jurisdiction, on a showing by[Ford] that 

the procedure should be changed." Id.12 

_________________________________________________________________ 

12. The impact of this order is significant. Ford disputed whether 

Liberty's claimed 77% markup was reasonable, see app. at 321, but had 

no reason to pursue the issue in light of the DPS, which reduced 

Liberty's reimbursements to Ford's standard 30-40% markup, rendering 

the claimed retail rate irrelevant. However, after the court invalidated 

the 

DPS the retail rate became determinative of the required reimbursement 

amount. Yet the court, in its September order, bound Ford to the 77% 

rate Ford had accepted under protest and precluded Ford from adopting 

any method for questioning or substantiating that rate. 

 19 
Ford contends that the district court erred in restricting 

Ford's new reimbursement policy, the legality of which 

neither was challenged in Liberty's complaint nor was 

addressed in the district court's prior order, without 

providing Ford an adequate opportunity to address the 

factual and legal issues surrounding the policy. We agree, 

and therefore will reverse the September 19, 1996 order. 

The district court did not explain the procedural grounds 

upon which it proceeded to award relief restricting Ford's 

policy, after denying the only motion contesting that policy.13 

While it is unclear whether the district court intended the 

order as a sanction for what it perceived as an "end run 

around the clear intention of" the March order, slip op. at 

1-2, or as an entry of judgment on Liberty's allegation that 

Ford's newly adopted policy violated the NJFPA, we 

conclude that we cannot sustain the order on either basis. 

We cannot sustain the September order as a sanction for 

noncompliance with the court's March order because the 

policy which the court restricted in the September order did 

not violate any clear mandate set forth in the March order. 

The district court in fact denied Liberty's Motion to Enforce 

the March order "given the non-specific language" thereof, 

and thus recognized that the March order, in invalidating 

the DPS as an offset against a dealer's claimed retail rate, 

did not preclude Ford from requiring a dealer to 

substantiate its claimed retail rate. Slip op. at 1. 14 This 

_________________________________________________________________ 

13. Liberty's complaint, which challenged the imposition of the DPS to 

offset its retail rate, is silent as to the proper method for establishing 

the 

retail rate. While the complaint sought an injunction against any 

"financial imposition . . . as a recoupment . . . for reimbursements paid 

or to be paid," it did not seek any relief dictating Liberty's retail rate 

or 

the procedure used to establish it. See app. at 19-20. The district 

court's 

March order is equally silent regarding the proper calculation of 

Liberty's 

retail rate. 

14. In discussing the scope of its March order, the district court 

explained, 

 the specific declarations as to liability which[Liberty] sought in 

 Count One, while implicit in [the March] order granting summary 

 judgment as to Count One, were not explicit, presumably the reason 

 why the spirit if not the letter of that order -- and certain 

specific 
 20 
court repeatedly has refused to uphold orders entered as 

sanctions based on conduct that did not violate a clear, 

specific mandate. See, e.g., Harris v. City of Philadelphia, 

47 F.3d 1342, 1352 (3d Cir. 1995) (reversing imposition of 

sanctions where decree sought to be enforced lacked"an 

unambiguous provision" prohibiting the conduct at issue); 

Louis W. Epstein Family Partnership v. Kmart Corp., 13 F.3d 

762, 771 (3d Cir. 1994) (holding that "[b]road, non-specific 

language" in an order does not give a party "fair notice of 

what conduct will risk contempt" and thus cannot support 

imposition of sanctions); Eavenson, Auchmuty & Greenwald 

v. Holtzman, 775 F.2d 535, 544 (3d Cir. 1985) (holding that 

where party had "reasonable grounds to believe" conduct 

"was in compliance with the district court's order," 

"imposition of sanctions was not warranted and constituted 

an abuse of discretion"); Inmates of Allegheny County Jail v. 

Wecht, 754 F.2d 120, 129 (3d Cir. 1985) ("Persons may not 

be placed at risk of contempt unless they have been given 

specific notice of the norm to which they must pattern their 

conduct."). Because the March order did not contain a 

clear, specific mandate precluding Ford from adopting 

policies for verifying a dealer's retail rate or requiring Ford 

to apply a particular retail rate, we cannot sustain the 

September order as a sanction against Ford's purported 

"end run around the clear intention of" the March order. 

Slip op. at 2. 

Nor can we sustain the September order as an entry of 

judgment on Liberty's claim, first raised in its Motion to 

Enforce, that Ford's new policy violated the NJFPA. A court 

_________________________________________________________________ 

 language in and the clear thrust of the opinion-- have since been 

 ignored or evaded by [Ford]. 

Slip op. at 1. The district court did not and this court cannot identify 

any "specific language" in the March opinion that was "ignored or 

evaded" by Ford's new reimbursement policy. Even if the declarations of 

liability Liberty sought in Count I had been "explicit" in the March 

order, 

those declarations dealt exclusively with surcharges that offset retail 

rates and not with procedures for establishing retail rates. See app. at 

18-19. Nothing in the March order explicitly or implicitly required Ford 

to accept Liberty's claimed retail rate of 77% or prohibited Ford from 

adopting policies for substantiating dealers' retail rates. 

 21 
may enter summary judgment in favor of a party only when 

the pleadings and the factual record before the court 

demonstrate that there "is no genuine issue as to any 

material fact" and the party is "entitled to a judgment as a 

matter of law." Fed. R. Civ. P. 56(c). In applying these 

standards, the court must construe the facts in the light 

most favorable to the party against whom judgment is 

sought. See Lawrence v. National Westminster Bank New 

Jersey, 98 F.3d 61, 65 (3d Cir. 1996). Moreover, before 

entering summary judgment against a party, the court 

must afford that party "adequate notice and time to present 

to the district court material relevant to [its] claim in order 

to demonstrate that there is a genuine issue of material fact 

that renders summary disposition . . . inappropriate." 

Hilfirty v. Shipman, 91 F.3d 573, 578 (3d Cir. 1996). The 

court also must provide an adequate opportunity for

discovery of the material facts. See Kachmar v. Sungard 

Data Sys., Inc., 109 F.3d 173, 183 (3d Cir. 1997). 

In this case the district court entered a judgment 

awarding relief against Ford without granting it an

opportunity to obtain discovery or present evidence

regarding the material issues as to the nature of the new 

reimbursement procedure, the burdens associated 

therewith, and the intent underlying its adoption. While the 

district court made no explicit factual findings and 

disavowed any attempt to resolve these factual issues, 

stating that it "need not . . . and will not address the 

procedure imposed by Ford . . . following this court's 

[March] decision," slip op. at 3 n.2, the court, nonetheless, 

clearly based the September order on implicit factual 

determinations regarding the newly adopted procedure. 

The court described that procedure as "onerous in the 

extreme and designed to frustrate any attempt to obtain 

statutory reimbursement." Id. Moreover, the court's final 

order described the circumstances of the September order 

as follows: 

 Liberty filed a motion to enforce the March[order] 

 arguing that [Ford's] new procedure acted as an 

 unlawful barrier to Ford's statutory compliance . . . 

 [through] an impracticable or impossible procedure 

 22 
 that violates the NJFPA and this court's previous 

 Opinion and Order. 

 This court agreed. The new procedure . . . imposed a 

 literally impossible burden . . . . 

February 26, 1997 slip op. at 4. The court's final order thus 

confirms that the September order rested on implicit 

findings that Ford's new policy imposed "impossible" and 

unlawful burdens, id. at 4, that were intended "as nothing 

more and nothing less than an end-run around" the March 

order. Id. at 12. Because the court made these findings 

regarding Ford's newly adopted policy and awarded Liberty 

relief based upon those findings without allowing Ford to 

obtain discovery or demonstrate the existence of genuine 

issues of material fact as to the lawfulness of the policy, we 

must vacate the September order. See Kachmar, 109 F.3d 

at 183; Hilfirty, 91 F.3d at 578.15 

The September 19 order awarded only declaratory and

injunctive relief. Accordingly, as Ford concedes, see br. at 

34, our reversing that order has no effect on the award of 

damages in the district court's final order. It, however, may 

affect the district court's assessment of the "result 

_________________________________________________________________ 

15. While our holding rests on the grounds discussed above, we also 

note that Liberty was awarded judgment on a claim not raised in the 

complaint. See Morris v. Philadelphia Hous. Auth., 1996 WL 167615 at 

* 4 (E.D. Pa.) ("plaintiff may not move for summary judgment on claims 

not raised in the complaint"), aff'd, 106 F.3d 386 (3d Cir. 1996) (table); 

Landano v. United States Dep't of Justice, 873 F. Supp. 884, 891 (D.N.J. 

1994) ("Plaintiff did not allege [the] claim in its complaint and cannot 

raise [it] on a . . . motion for summary judgment."). The September order 

awarded declaratory and injunctive relief other than that discussed 

above. However, absent a properly supported determination that Ford 

had violated the NJFPA or an order of the court since the entry of the 

March order, we cannot sustain any of the relief awarded in the 

September order. 

In reversing the September order on procedural grounds, we express 

no opinion on the merits of the issues implicitly resolved therein. We 

note only that the existence of colorable authority for requiring dealers 

to establish retail rates on a part-by-part basis, see Acadia, 44 F.3d at 

1052; Liberty I, 149 F.R.D. at 76, further accentuates the need to assess 

the lawfulness of Ford's documentation policy based on a properly 

developed record. 

 23 
obtained" by Liberty in this litigation, which the court 

considered in calculating the award of attorneys' fees in its 

final order. See February 26, 1997 slip op. at 10. 

Accordingly, we will vacate the fee award and will remand 

that portion of the district court's February 26, 1997 final 

order for consideration of the effect, if any, of this opinion 

on the amount of fees Liberty is entitled to recover. 

C. Robinson-Patman Act 

The Robinson-Patman Act, a 1936 amendment to the 

Clayton Act, provides in relevant part that: 

 [i]t shall be unlawful for any person engaged in 

 commerce, in the course of such commerce . . . to 

 discriminate in price between different purchasers of 

 commodities of like grade and quality, . . . where the 

 effect of such discrimination may be substantially to 

 lessen competition or tend to create a monopoly . . . or 

 to injure, destroy, or prevent competition . . . . 

15 U.S.C. S 13(a).16 To state a claim under the RobinsonPatman Act, a plaintiff must allege facts demonstrating the 

existence of price discrimination, which the Supreme Court 

has defined as "merely a price difference." Texaco Inc. v. 

Hasbrouck, 496 U.S. 543, 558, 110 S.Ct. 2535, 2544 

(1990); Federal Trade Comm'n v. Anheuser-Busch, Inc., 363 

U.S. 536, 549, 80 S.Ct. 1267, 1274 (1960).17 

_________________________________________________________________ 

16. The Act contains a proviso exempting "price differentials which make 

only due allowance for differences in the cost of manufacture, sale or 

delivery resulting from the differing methods or quantities in which such 

commodities are . . . sold or delivered." 15 U.S.C. S 13(a). Because we 

conclude that Ford did not engage in price discrimination or inflict 

competitive injury within the meaning of the Act, we need not consider 

the applicability of the proviso. 

17. Anheuser-Busch was a primary line injury case addressing injury to 

the discriminating seller's competitors, in contrast to this secondary 

line 

injury case, which alleges injury in competition among the 

discriminating seller's customers. See Barr Labs., Inc. v. Abbott Labs., 

978 F.2d 98, 106 n.16 (3d Cir. 1992) (discussing distinction between 

primary and secondary line injury cases). While Anheuser-Busch's broad 

definition of price discrimination generally is applicable in secondary 

line 

 24 
The district court dismissed Liberty's claim on the

grounds that its allegations challenging the DPS as a form 

of unlawful price discrimination "fail[ ] to demonstrate the 

existence of a price difference." Slip op. at 12. The court 

explained that: 

 while it is true that no other . . . dealer was or is 

 subject to a surcharge, this is because no other dealer 

 attempted to enforce the NJFPA. [Liberty] is being 

 reimbursed for warranty parts at seventy-seven percent 

 above cost at the same time that [its] competitors are 

 being reimbursed the standard thirty to forty percent 

 above cost. The surcharge was merely a device to 

 recoup the extra costs [Ford] incurred by reimbursing 

 [Liberty] at the retail rate. 

 Thus, the surcharge eliminated any price difference 

 that existed by virtue of [Liberty's] enforcement of the 

 NJFPA . . . . [Liberty] was placed in the same position 

 as its competitors: all dealers were effectively 

 reimbursed at the standard rate, albeit in violation of 

 the NJFPA. Thus, there was no price difference. 

Id. at 12-13. Exercising plenary review over the district 

court's dismissal for failure to state a claim and accepting 

Liberty's factual allegations as true, see Graves v. Lowery, 

117 F.3d 723, 726 (3d Cir. 1997), we agree with the district 

court's conclusion that Liberty's complaint fails to allege 

actionable price discrimination.18 

_________________________________________________________________ 

injury cases, see Stelwagon Mfg. Co. v. Tarmac Roofing Sys., Inc., 63 

F.3d 1267, 1271 (3d Cir. 1995), cert. denied, 116 S.Ct. 1264 (1996), this 

court has warned "against elevating this isolated passage to an allinclusive definition" particularly in secondary line injury cases. Edward 

J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 120 (3d Cir. 

1980). 

18. Because the district court disposed of Liberty's Robinson-Patman Act 

claim on Ford's motion to dismiss, we confine our analysis to Liberty's 

allegations and do not consider matters outside the pleadings. We note, 

however, that the evidentiary record regarding the operation of the DPS, 

as discussed above in our analysis of the NJFPA issues resolved on a 

motion for summary judgment, lends further support to our conclusion 

that the DPS did not result in actionable price discrimination. 

 25 
According to Liberty's own factual allegations, 

 Ford would . . . recoup the increase in reimbursement 

 [beyond Ford's standard rate] by assessing against 

 Liberty . . . a `dealer parity' . . . surcharge to the 

 wholesale price of each vehicle . . . equal to the 

 incremental credit for parts; that is, Ford would 

 effectively cancel out the additional reimbursement . . . . 

 [and] effectually continues to underreimburse Liberty 

 . . . for warranty work . . . . 

App. at 17-18 (emphasis added). Thus, the facts alleged in 

the complaint demonstrate that Ford used wholesale 

vehicle prices as a method for implementing the DPS policy, 

the intent and effect of which was to reduce Liberty's 

reimbursements, not to alter vehicle prices.19 Because the 

complaint fails to allege any facts demonstrating an actual 

increase in vehicle prices, we agree with the district court's 

conclusion that, "[a]lthough these actions violate the 

NJFPA, they do not create a price difference among[Liberty] 

and its competitors which violates . . . the RobinsonPatman Act." Id. at 13. We therefore will affirm the 

dismissal of Liberty's claim for failure to allege facts 

demonstrating that Ford engaged in price discrimination.20 

_________________________________________________________________ 

19. Similarly, Liberty states in its brief to this court, "Ford applied 

the 

surcharge to the wholesale price of each vehicle [and] thus canceled out 

the incremental reimbursement. . . . Once this shell-game maneuver was 

complete, Liberty did not receive retail reimbursement . . . ." Br. at 15- 

16; see also id. at 23 ("the `parity surcharge' meant no [warranty parts] 

payment at retail"); id. at 38 ("[t]he price differential . . . is 

expressly a 

recoupment of the incremental warranty reimbursement"). 

20. Assuming arguendo that the surcharge could be viewed as a term 

affecting vehicle costs rather than reimbursement rates, a "uniform 

pricing formula applicable to all customers is not a price discrimination 

under the [Robinson-Patman] act." Edward J. Sweeney & Sons, Inc. v. 

Texaco, Inc., 637 F.2d 105, 120 (3d Cir. 1980); accord, FLM Collision 

Parts, Inc. v. Ford Motor Co., 543 F.2d 1019, 1026 (2d Cir. 1976) (finding 

"no violation . . . in pricing plans which, though varying prices 

according 

to different terms of sale, were administered equally to all purchasers"). 

Ford's policy was to recoup through the DPS any reimbursement 

exceeding Ford's standard rate. The fact that Liberty, as the only dealer 

to claim incremental reimbursements, was the only dealer to incur 

charges under this uniform policy does not give rise to a price 

discrimination claim. 

 26 
Even if the DPS resulted in a vehicle price difference, we 

would be compelled to affirm the dismissal on the grounds 

that Liberty's allegations do not demonstrate the existence 

of the competitive injury required to sustain a RobinsonPatman Act claim. As this court has explained, "price 

discriminations are not illegal per se. . . . [I]n order for a 

price difference to be illegal . . . [it] must have the 

proscribed anti-competitive effect." J.F. Feeser, Inc. v. Serva-Portion, Inc., 909 F.2d 1524, 1532 (3d Cir. 1990) (citing 

Anheuser-Busch, 363 U.S. at 533, 80 S.Ct. at 1276).

Liberty's complaint did not allege competitive injury 

resulting from the imposition of the DPS. See app. at 24. 

While Liberty alleged "economic loss . . . as a consequence 

of . . . underreimbursement," it did not allege that this loss 

placed it at a disadvantage relative to its competitors who 

were subjected to the same underreimbursement. Id. at 18. 

In arguing to this court that the DPS inflicted competitive 

injury because it was "exacted from Liberty and none of its 

competitors," br. at 38, Liberty ignores the fact that, 

according to its complaint, the DPS was calibrated to "equal 

. . . the incremental credit" that Liberty received while its 

competitors did not. App. at 18.21 Because any 

disadvantage arising from the DPS merely offset an 

advantage conferred uniquely on Liberty, the DPS did not 

have the anticompetitive effect required to state a claim 

under the Robinson-Patman Act. See J.F. Feeser, 909 F.2d 

at 1532. 

_________________________________________________________________ 

21. Liberty suggests, in passing, that the surcharge "could exceed the 

warranty parts reimbursement at any given time." Reply br. at 6. The 

district court properly rejected any attempt to base a price 

discrimination claim on discrepancies between the amount of the 

incremental reimbursement and the amount of the surcharge, as these 

discrepancies related only "to particular surcharges" and not to "the 

structure of the surcharge system," slip op. at 13 n.2, which by Liberty's 

own admission assessed charges that equaled the total incremental 

reimbursements. See app. at 18. Thus any difference in Liberty's 

economic position relative to its competitors was temporary and 

incidental and therefore not actionable under the Robinson-Patman Act. 

See Craig v. Sun Oil Co., 515 F.2d 221, 224 (10th Cir. 1975) (rejecting 

price discrimination claim "based upon . . . billing errors . . . which 

were 

corrected"). 

 27 
D. Parts Installed Before December 1991 

In its motion for summary judgment on the issue of 

 704<!>damages, Liberty sought to recover not only the 

incremental reimbursements it was denied as a result of 

the surcharge, but also additional reimbursements for 

warranty parts installed before December 12, 1991, the 

effective date of Ford's agreement to credit Liberty at retail 

rates subject to the surcharge. Citing Ford's warranty 

manual, which permits dealers to submit reimbursement 

claims for up to one year after a warranty part is installed, 

Liberty argued that because it demanded retail-rate

reimbursements on December 12, 1991, it was entitled to 

additional reimbursements to supplement the standard 

reimbursements it had received for parts installed during 

the year preceding December 12, 1991. See February 26, 

1997 slip op. at 6. 

The district court held that, "[t]his legal issue was never 

addressed during the liability phase of this case because 

Liberty explicitly waived all claims other than its claim for 

illegal surcharge since December 12, 1991." Id. at 7. The 

district court cited Liberty's brief regarding liability, in 

which Liberty expressly stated that it "claim[ed] liability 

only on the reimbursement amounts recovered by Ford by 

illegal surcharge since December 1991." Thus, the court 

concluded, "[b]ecause the court did not grant summary 

judgment as to liability on this issue, it cannot now award 

damages." Id. 

Liberty's briefs to this court do not challenge the waiver 

determination that the district court found dispositive, but 

rather address only the merits of Liberty's entitlement to 

additional reimbursements for parts installed before 

December 12, 1991.22 The district court's order entering 

_________________________________________________________________ 

22. Liberty addresses the waiver issue only by stating that "Ford's 

liability for retail payment on claims submitted since December 12, 1991 

was never waived. It is recognized in the Court's Orders and decisions, 

with the exception of the final ruling on . . . damages." Reply br. at 12 

(emphasis added). The district court's orders did not "recognize" any 

liability as to warranty parts installed before December 12, 1991. In the 

portion of Liberty's brief asserting that it preserved the issue in the 

district court, Liberty states only that it raised the issue "as to 

damages" 

and does not cite any part of the record where it sought to establish 

Ford's liability for the reimbursements at issue. See br. at xiv. 

 28 
judgment as to Ford's liability under the NJFPA explicitly 

stated, "[f]or the reasons stated herein, the court grants 

[Liberty's] motion for summary judgment as to liability, 

since December, 1991 only." Slip op. at 14. We therefore 

conclude that the district court properly refused to award 

damages on this claim which Liberty failed to raise at the 

liability stage of the proceedings. 

Even if Liberty had not waived the issue, undisputed 

evidence demonstrates that Ford is not liable for any 

additional reimbursements for parts installed before 

December 1991. Liberty claims that it is entitled to 

additional reimbursements for parts installed between 

December 12, 1990, and December 12, 1991, because the 

relevant warranty agreement permitted dealers to submit 

reimbursement claims within one year from the date of 

repair. See app. at 139 ("After 1 year from date of repair . . . 

[w]arranty . . . claims will not be accepted."). Liberty 

contends that, because Ford first agreed to reimburse 

Liberty at retail as of December 12, 1991, Ford is obligated 

to pay Liberty the incremental reimbursement for all 

warranty parts Liberty installed after December 12, 1990, 

to supplement the below-retail reimbursements Liberty 

received for installing those parts. Br. at 40-41. 

However, contrary to Liberty's assertion that it 

"submitted incremental reimbursement claims" on 

December 12, 1991, id., the letter of that date merely 

requested an increase in Liberty's reimbursement rate and 

did not submit any specific reimbursement claims or make 

reference to any parts already installed and reimbursed at 

a lower rate. See app. at 286 ("I hereby apply for an 

increase in warranty parts markup . . . to my retail 

markup."). Liberty first made specific retail-rate 

reimbursement claims "for the period of December 12, 1991 

to June 30, 1992," in a letter dated September 23, 1992, 

again making no reference to parts installed before

December 12, 1991. App. at 316-17. It was not until

December 21, 1992, that Liberty first submitted a request 

for retail-rate reimbursement for parts installed before 

December 12, 1991. This request included parts installed 

during "the years 1986 through 1991 inclusive." App. at 

326. 

 29 
Thus, Liberty did not seek the additional reimbursements 

at issue until December 21, 1992. As Ford accurately 

contends, pursuant to the warranty manual Liberty's

claims "were time-barred on the date they were made" as 

they pertained to repairs performed before December 21, 

1991. Reply br. at 30.23 Because Liberty failed to seek the 

reimbursements at issue within one year of the repair date, 

it is immaterial that Liberty sought a higher reimbursement 

rate on December 12, 1991, in a request that did not 

present any specific reimbursement claims.24 Similarly, it is 

immaterial that "[a]s of December 12, 1991, all of Liberty's 

claims back one year from [the] date of repair were eligible 

for the incremental warranty payment," reply br. at 13, 

since Liberty failed to submit those claims before that 

eligibility expired on December 12, 1992. Accordingly, even 

if Liberty had not waived its claim to recover additional 

reimbursements for parts installed before December 12, 

1991, we would affirm the district court's rejection of that 

claim. 

E. Prejudgment Interest Rate 

In its February 26, 1997 final order the district court, 

applying the principles of state law that govern awards of 

prejudgment interest in federal diversity actions, see 

Zippertubing Co. v. Teleflex, Inc., 757 F.2d 1401, 1414 (3d 

Cir. 1985); W.A. Wright, Inc. v. KDI Sylvan Pools, Inc., 746 

F.2d 215, 219 (3d Cir. 1984), awarded Liberty prejudgment 

interest on its NJFPA damages at the rates set forth in New 

Jersey Court Rule 4:42-11. Slip op. at 8-9. Under New 

Jersey law, a court may award prejudgment interest in its 

discretion in accordance with equitable principles, and the 

court's exercise of its discretion should not be disturbed on 

_________________________________________________________________ 

23. Liberty did not distinguish the 1991 claims from the even more 

untimely claims dating back to 1986. 

24. While Liberty argues that "for the most part" the claims at issue were 

"already submitted and approved" at Ford's standard rate, reply br. at 

13, Liberty makes no argument to support its apparent suggestion that 

claims for additional reimbursements are exempt from the one-year 

limitation period that on its face applies to all warranty reimbursement 

claims. See app. at 139. 

 30 
appeal unless it represents "a manifest denial of justice." In 

re Petition of County of Essex, 691 A.2d 846, 858 (N.J. 

Super. Ct. App. Div.), certif. denied, 700 A.2d 876 (N.J. 

1997); accord Coastal Group, Inc. v. Dryvit Sys., Inc., 643 

A.2d 649, 654 (N.J. Super. Ct. App. Div. 1994). 

The district court found that, "because Ford has had the 

use, and Liberty has not, of the funds retained by Ford by 

way of illegal surcharges," Liberty was entitled to interest 

on the surcharges from December 1991 through March 

1996. The court concluded that New Jersey Court Rule 

4:42-11, which sets forth postjudgment interest rates and 

prejudgment interest rates in tort suits, "reflect[ed] an 

equitable rate of return" under the circumstances of the 

case. See slip op. at 8-9 (citing Zippertubing Co., 757 F.2d 

at 1414; W.A. Wright, Inc., 746 F.2d at 219). Liberty 

contends that the district court abused its discretion in 

applying the New Jersey Court Rules instead of adopting 

the involuntary loan theory recognized in A-S Dev., Inc. v. 

W.R. Grace Land Corp., 537 F. Supp. 549 (D.N.J. 1982), 

aff'd, 707 F.2d 1388 (3d Cir. 1983) (table). Liberty argues 

that under this theory, the district court should have 

applied the interest rate Ford would have charged Liberty 

for late payments or loans during the same period. See br. 

at 41. 

In arguing that the involuntary loan theory is 

"particularly appropriate" since Liberty "partially

underwrote Ford's coverage of its manufacturing defects," 

id. at 41, 43, Liberty ignores the fact that A-S Development 

applied the involuntary loan theory as an element of 

damages and not as a measure of prejudgment interest. See 

A-S Dev., 537 F. Supp. at 559 (holding that"plaintiff is 

entitled to damages in an amount to be calculated on the 

involuntary loan theory"). Liberty points to nothing 

requiring the district court, in its discretionary weighing of 

equitable considerations, to adopt this theory and nothing 

indicating that the interest rates set forth in the New Jersey 

Court Rules were inequitable under the circumstances of 

the case.25 

_________________________________________________________________ 

25. Liberty emphasizes that the award of prejudgment interest must be 

determined by "equitable principles," reply br. at 14-15, but raises no 

arguments and cites no authority indicating that the district court 

misapplied these principles. 

 31 
Liberty also challenges the district court's conclusion that 

"[b]ecause Liberty has asserted its claim under N.J.S.A. 

56:10-10 and 56:10-15, it is not entitled to prejudgment 

interest at 12% under N.J.S.A. 56:10-13.5, which applies 

only to claims under that section." Slip op. at 9 n.3. Liberty 

argues that "this Court could properly apply" N.J. Stat. 

Ann. S 56:10-13.5, br. at 42, which provides that, 

 [i]f a motor vehicle franchisor fails to make any 

 payment required by this 1991 amendatory and

 supplementary act within the time specified for 

 payment, interest shall be added to that payment at 

 the rate of 12% per annum from the date payment was 

 due. 

This provision, by its terms, applies only to payments 

required by the 1991 amendatory and supplementary act. 

It does not apply to Liberty's claim to recover a payment 

required by N.J. Stat. Ann. S 56:10-15(a), which was 

codified in 1977 and is not part of the 1991 amendatory 

and supplementary act. Although section 56:10-15 was 

amended by the 1991 act, payments required by that 

section are not payments required by the 1991 act, but are 

payments required by the 1977 act.26 Liberty has not 

identified, and this court cannot discern, any abuse of 

discretion in the district court's determination that the 

interest rates provided for in New Jersey Court Rule 4:42- 

11 were equitable under the circumstances of this case. 

Accordingly, we will affirm the district court's award of 

prejudgment interest. 

_________________________________________________________________ 

26. Liberty argues that the N.J. Stat. Ann. S 56:10-13.5 interest 

provision 

was "enacted at the same time the Legislature amended the warranty 

reimbursement provision" and is found in the"same statute which 

amended the NJFPA Warranty Reimbursement Act." Br. at 42; reply br. 

at 16. However, the 1991 amendments to N.J. Stat. Ann. S 56:10-15 did 

not affect section 56:10-15(a) but simply added section 56:10-15(c) 

which is not implicated in this case. Liberty's arguments do not alter the 

fact that Liberty sought payments required by a preexisting provision, 

N.J. Stat. Ann. S 56:10-15(a), and not by the 1991 amendatory and 

supplementary act. 

 32 
F. Costs Associated With The Retail Rate Analysis 

The district court awarded Liberty counsel fees and costs 

associated with this litigation, but rejected Liberty's claim 

for fees and costs associated with Liberty I because Liberty 

was not a prevailing party in that case, which culminated 

in a denial of class certification and a stipulation of 

dismissal. See slip op. at 10-11. Liberty contends that the 

district court erroneously excluded, as a cost associated 

with Liberty I, the $26,185.15 in fees Liberty incurred in 

compiling a part-by-part analysis of its retail rate over six 

years. Liberty contends that, because it compiled the 

analysis after the dismissal in Liberty I,"in contemplation 

of and in preparation for" the instant case, and because its 

counsel "reviewed the analysis as part of its litigation 

strategy" and "briefed and argued" the results thereof in 

this litigation, the district court should have included the 

fees associated with the analysis in its fee award instead of 

excluding them along with the fees arising from Liberty I. 

Reply br. at 17-18; br. at 44. 

While the district court did not articulate a separate 

rationale for excluding the disputed fees along with the 

Liberty I fees, it is readily apparent that the fees at issue 

are not recoverable in this litigation. Liberty prevailed in 

this litigation on the issue of whether Ford could assess the 

dealer-parity surcharge to offset a retail-rate 

reimbursement, an issue that did not require any 

verification of Liberty's claimed retail rate. 27 Therefore the 

fees incurred in compiling the retail rate analysis were not 

"reasonably expended" in pursuit of the "result obtained" in 

this litigation, and thus properly were excluded from the fee 

award even if they were not incurred in connection with 

Liberty I. Slip op. at 10-11 (citing Hensley v. Eckerhart, 461 

U.S. 424, 433, 103 S.Ct. 1933, 1939 (1983)). We, 

_________________________________________________________________ 

27. Liberty arguably raised the issue of its retail rate in its Motion to 

Enforce the district court's March order. In that motion, however, Liberty 

contended that Ford was not entitled to demand documentation of 

Liberty's part-by-part retail rates over the past six months. Thus 

Liberty's 

motion in no way required a detailed analysis documenting those rates 

over the past six years. In any event, because Liberty was not entitled to 

the relief awarded in the September 19, 1996 order, Liberty has obtained 

no relief on any claim implicating the validity of its retail rates. 

 33 
accordingly, will affirm the district court's exclusion of fees 

associated with Liberty's retail rate analysis from its fee 

award. 

IV. CONCLUSION 

For the foregoing reasons, we will reverse the district 

court's September 19, 1996 order and will vacate and 

remand for reconsideration in light of this opinion the 

award of attorneys' fees in the district court's February 26, 

1997 final order. We, however, will affirm in all other 

respects. The parties will bear their own costs on this 

appeal. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 34