United States Court of Appeals

For the First Circuit

No. 00-2052

ROCHESTER LINCOLN-MERCURY, INC.,

Plaintiff, Appellant,

v.

FORD MOTOR COMPANY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Steven J. McAuliffe, U.S. District Judge]

Before

 Selya, Boudin and Lynch,

Circuit Judges.

Daniel A. Laufer for appellant.

Bryan M. Haynes with whom Nicholas T. Christakos and

Sutherland Asbill & Brennan, LLP were on brief for appellee.

May 7, 2001
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BOUDIN, Circuit Judge. The question on this appeal is

whether a New Hampshire statute, regulating, inter alia,

business practices as between motor vehicle manufacturers and

dealers, should be read to protect an existing franchisee

alleging that the car maker unfairly denied it an additional

franchise. The district court denied relief based on state

precedent, Roberts v. Gen. Motors. Corp., 643 A.2d 956 (N.H.

1994). We affirm.

Since 1974, Edward Casaccio has owned and operated

Rochester Lincoln-Mercury, Inc. ("Rochester"), a dealership in

Rochester, New Hampshire, with a franchise from Ford Motor

Company ("Ford") to sell and service Lincoln and Mercury cars.

In August 1995, Casaccio applied for a franchise to sell Fords

in Rochester as "Rochester Ford." The incumbent franchisee had

died and Casaccio had contracted with the heirs to purchase the

Ford business, conditional on Ford's approval of Casaccio's

application.

Ford’s regional sales manager rejected Casaccio's

application. To explain his decision, the sales manager pointed

to Rochester's "historically unsatisfactory sales and market

share performance." Claiming that his sales record was unfairly

compared to dealerships in more affluent areas, Casaccio
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appealed to higher-level Ford officials. His appeal was

unsuccessful.

In November 1999, Rochester filed a diversity suit in

federal district court, 28 U.S.C. § 1332 (Supp. II 1996),

alleging that Ford’s "arbitrary and/or . . . bad faith" denial

of Casaccio’s application violated New Hampshire's motor vehicle

franchise statute. N.H. Rev. Stat. Ann. § 357-C:3(I) (1995 &

Supp. 2000). Rochester claimed economic damages of $5 million.

Citing Roberts, the district court granted Ford's motion to

dismiss the complaint for lack of standing to sue under the

state statute. Rochester now appeals.

The New Hampshire statute regulates "business practices

between motor vehicle manufacturers, distributors, and dealers."

N.H. Rev. Stat. Ann. § 357-C. Section 357-C:3 ("Prohibited

Conduct") lists unlawful acts; and subsection I, invoked by

Rochester, states: "It shall be deemed an unfair method of

competition and unfair and deceptive practice for any . . .

[m]anufacturer . . . to engage in any action which is arbitrary,

in bad faith, or unconscionable and which causes damage to any

["motor vehicle dealer"] or to the public."

Section 357-C:12(II) ("Enforcement") provides the cause

of action for unlawful acts. It states that

any person who is injured in his business or

property by a violation of this chapter . .
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. may bring a civil action in the superior

court to enjoin further violations and to

recover the actual damages sustained by him

together with the costs of the suit,

including a reasonable attorney's fee.

N.H. Rev. Stat. Ann. § 357-C:12(II) (1995), currently codified

at § 357-C:12(IX) (Supp. 2000). In Roberts, the New Hampshire

state court looked to section 357-C:12(II) and held that an

unsuccessful new applicant for a franchise lacked standing under

"this chapter" (i.e., 357-C) because he had not been "injured in

business or property." 643 A.2d at 958-59.

In cases like this one, there is obviously standing in

the Article III sense: Rochester can prove, or at least might be

able to prove, that it is economically worse off as a direct

consequence of Ford's refusal to approve the franchise

application. However, in Roberts, the New Hampshire Supreme

Court read subsection I as designed, so far as dealers were

concerned, to protect existing dealer franchises and not

applicants who were merely seeking franchises. 643 A.2d at 959.

In turn, the district court here found that Rochester, so far as

it was a new applicant, was not intended to be protected.

Rochester seeks to distinguish Roberts on the ground

that Rochester is an existing franchisee and the applicant in

Roberts was not. But, as we read Roberts, the statute's

protection is for the existing franchise of the franchisee and
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not some new and different franchise sought by that person. The

usual argument for protecting existing franchisees by statute is

their investment in the existing franchise, Roberts, 643 A.2d at

960; but while Rochester invested in its franchise to sell

Lincolns and Mercuries, it had no investment in a franchise to

sell Fords.

The New Hampshire court in Roberts stressed the

statutory language that extends protection only to the "business

or property" of the dealer. 643 A.2d at 958-59. Another court

might have said that such language is vague and instead stressed

likely legislative policy--for it is highly unusual for statutes

to impose some general obligation on businesses to begin new

relationships and much more common to protect existing ones. If

we were construing the statute afresh, we would agree with the

Roberts court, but our agreement is beside the point. Reading

Roberts as we do, that case is binding on the federal courts as

a definitive construction of New Hampshire law by the state's

highest court. Smiley v. Kansas, 196 U.S. 447, 455 (1905).

Counterpart decisions in other jurisdictions have

denied claims by current dealers against their car makers who

refused to grant or approve transfer requests for new

franchises. E.g., Key v. Chrysler Motors Corp., 918 P.2d 350,

359-60 (N.M. 1996); Pung v. Gen. Motors Corp., 573 N.W.2d 80,
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81-82 (Mich. Ct. App. 1998). Rochester relies on Bertera

Chrysler Plymouth, Inc. v. Chrysler Corp., 992 F. Supp. 64, 69-

70 (D. Mass. 1998), as support for standing in such a case; but

while the district court there found "standing" (under a

Massachusetts statute), it concluded that "the harm alleged . .

. does not fall within the ambit of [the statute's] protection."

Id. at 68. This is Roberts' result, differently phrased.

In this court (although not in its complaint),

Rochester refers briefly to language, in subsection III(n) of

the statute, providing that the car maker shall not

unreasonably require dealer "compliance with subjective

standards." N.H. Rv. Stat. Ann. § 357-C:3(III)(n). Rochester

apparently seeks thus to describe the unfavorable judgment by

Ford's regional manager of Rochester's past performance.

Failure to plead this violation in the complaint aside, the

argument is scarcely developed in Rochester's brief and could be

rejected on this account alone. Mass. Sch. of Law at Andover,

Inc. v. Am. Bar Ass'n, 142 F.3d 26, 43 (1st Cir. 1998).

In any event, subsection III(n) appears to be directed

in all its provisions to the relationship between the car maker

and the dealer vis-a-vis the dealer's existing franchise.

Nothing in the provision suggests that the legislature aimed to

regulate the decisions of the car maker, whether based on
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subjective standards or otherwise, in awarding or refusing to

award a franchise to an applicant who did not already hold it.

It is hard to imagine that this statutory language would have

changed the mind or result of the Roberts court.

Affirmed.