United States Court of Appeals

For the First Circuit

No. 04-1450

THE CADILLAC/OLDSMOBILE/NISSAN CENTER, INC., DOING BUSINESS AS

JOHN SANTILLI'S CENTER FOR AUTOMOBILES,

Plaintiff, Appellant,

v.

GENERAL MOTORS CORPORATION,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. George A. O'Toole, Jr., U.S. District Judge]

Before

 Selya, Circuit Judge,

Campbell and Leval,* Senior Circuit Judges.

Richard N. Sox, Jr., with whom Daniel E. Myers, Benjamin B.

Bush, Myers & Fuller, P.A., Michael P. Connolly, and Murtha,

Cullina were on brief, for appellant.

James C. McGrath, with whom Daniel L. Goldberg, Serena D.

Madar, Bingham McCutchen LLP, and Lawrence S. Buonomo were on

brief, for appellee.

December 8, 2004

__________

*Of the Second Circuit, sitting by designation.
1The legislature amended chapter 93B in 2002. See 2002 Mass.

Legis. Serv. ch. 222 (West). The relevant events in this case

occurred before the effective date of the amendment, so the preamendment version of the statute controls. Throughout this

opinion, we cite to that version.

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SELYA, Circuit Judge. Like most states, Massachusetts

regulates the relationship between motor vehicle manufacturers and

motor vehicle dealers in considerable detail. See Mass. Gen. Laws

ch. 93B, §§ 1-15.

1 Relying on these rules, a multi-brand dealer

doing business as John Santilli's Center for Automobiles (Santilli)

brought suit against a manufacturer, General Motors Corporation

(GM), alleging that the manufacturer had engaged in a number of

unfair practices. GM denied the material allegations of the

complaint. Without resolving whether the manufacturer had violated

the statute, the district court entered summary judgment in its

favor on the ground that Santilli had not shown any actionable harm

flowing from the challenged conduct. Discerning no error in the

district court's thoughtful disposition, we affirm.

I. THE STATUTORY SCHEME

We begin by limning the purpose, text, and structure of

the statute. Chapter 93B, familiarly known as the "Dealers' Bill

of Rights," has two central purposes. One is to curb "the

potentially oppressive power of automobile manufacturers and

distributors in relation to their affiliated dealers." Beard

Motors, Inc. v. Toyota Motor Distribs., Inc., 480 N.E.2d 303, 306

(Mass. 1985). The other is to regulate competition in the retail
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automobile industry for the benefit of the public at large. Am.

Honda Motor Co. v. Bernardi's, Inc., 735 N.E.2d 348, 354 (Mass.

2000).

To effectuate these dual objectives, the statute places

off limits certain "[u]nfair methods of competition and unfair or

deceptive acts or practices." Mass. Gen. Laws ch. 93B, § 3. These

methods, acts, and practices are delineated in section 4. That

section generally proscribes conduct that is "arbitrary, in bad

faith, or unconscionable." Id. § 4(1). It then describes, and

specifically prohibits, twenty-one discrete acts and practices.

Id. § 4(2)-(4).

The statutory scheme maps two remedial avenues. One

involves public enforcement: the Attorney General may enforce the

law. Id. § 12. The other involves private enforcement: the

statute creates private rights of action for injunctive relief and

damages. Id. § 12A.

This case turns on the meaning and operation of section

12A. In pertinent part, that section authorizes "[a]ny franchisee

or motor vehicle dealer who suffers any loss of money or property

. . . as a result of [a violation of the statute by a

manufacturer]" to bring a civil action for equitable relief or

damages. A dealer who has not suffered a loss of money or property

as a result of an unfair act or practice may still bring an action

for equitable relief — but not for damages — if "it can be shown
2GM argues that Santilli failed to produce competent evidence

that Norwood is in Santilli's RMA and urges us to affirm the entry

of summary judgment on this alternative ground. See, e.g., Houlton

Citizens' Coalition, 175 F.3d at 184 (explaining that the court of

appeals may affirm an order for summary judgment "on any ground

revealed by the record"). Given the view that we take of the case,

see text infra, we need not resolve this issue.

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that the . . . unfair act or practice may have the effect of

causing such [a] loss of money or property" in the future. Id.

II. THE FACTS

Consistent with the summary judgment standard, we

rehearse the facts in the light most favorable to Santilli. See

Houlton Citizens' Coalition v. Town of Houlton, 175 F.3d 178, 184

(1st Cir. 1999).

For many years, Santilli has operated an independent

automobile dealership in Brockton, Massachusetts. It is, inter

alia, licensed to sell the Cadillac line of vehicles (Cadillac is

a GM brand and all licensed Cadillac dealers are, therefore, GM

franchisees). During the same time frame, Norwood Cadillac has

operated a Cadillac dealership in Norwood, Massachusetts. By 1998,

the two dealerships had been in competition for several years. For

purposes of this appeal, we assume — but do not decide — that

Norwood Cadillac is within Santilli's relevant market area (RMA),

as that term is defined in Mass. Gen. Laws ch. 93B, § 4(3)(k).2

In the late 1990s, GM inaugurated the multi-site project

(MSP), a program designed to increase GM's presence in certain

geographic markets. Under the aegis of the MSP, GM aspired to
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create joint ventures with successful independent dealers so that

the latter could own multiple dealerships (thus achieving economies

of scale and, not coincidentally, improving sales of GM vehicles in

the targeted markets).

In November of 1998, the MSP came to the greater Boston

area when a wholly-owned subsidiary of GM partnered with Joseph

Laham, the owner of Norwood Cadillac, to form Mass Bay Automotive,

LLC (MassBay). The original plan contemplated that MassBay, under

Laham's hegemony, would own and operate both Norwood Cadillac and

North Shore Buick-Pontiac-GMC Truck (a dealership that GM

previously had acquired). GM contributed approximately $13,000,000

in working capital and the assets of the North Shore dealership to

MassBay in exchange for a 90% ownership interest. Laham

contributed the fixed assets and leasehold improvements of Norwood

Cadillac, valued in excess of $1,400,000, in exchange for a 10%

ownership interest. He then sold the Norwood dealership, including

its goodwill and inventories of used cars and parts, to MassBay for

approximately $6,300,000.

MassBay proved to be a flop, and Laham sold his ownership

interest to GM in January of 2000. At that point, GM was, in

effect, the sole owner of Norwood Cadillac. It then began seeking

a purchaser for the dealership, hoping to find a buyer who would

operate Norwood as part of another MSP arrangement. When this

gambit failed, GM began pursuing a more traditional sale. To this
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end, it solicited bids for the dealership in mid-2001. Santilli

was among the bidders, but GM accepted a better offer from a third

party. The sale closed, and GM's de facto ownership of Norwood

Cadillac ceased, on October 30, 2001.

III. THE LAWSUIT

Invoking diversity jurisdiction, 28 U.S.C. § 1332(a),

Santilli sued GM in the United States District Court for the

District of Massachusetts. Its complaint contained four statements

of claim. We describe them briefly.

Count 1 emanates from a provision of the Dealers' Bill of

Rights that renders it unlawful for an automobile manufacturer

to own and operate . . . a motor vehicle

dealership within the relevant market area of

a motor vehicle dealer of the same line make;

provided, however, that a manufacturer . . .

shall not be deemed to be in violation of this

paragraph when operating a dealership either

temporarily for a reasonable period in any

case not to exceed one year or in a bona fide

relationship [with] an independent person . .

. .

Mass. Gen. Laws ch. 93B, § 4(3)(k). Santilli alleges that GM

violated this prohibition from and after November of 1999 (one year

after MassBay had assumed ownership of Norwood Cadillac). In its

view, Laham's relatively small equity interest in MassBay, combined

with the restrictive provisions of the MassBay operating agreement,

precluded MassBay from coming within the statutory safe harbor for

"bona fide relationship[s]" between manufacturers and independent

persons. See id. As a fallback, Santilli alleges that GM violated
3Santilli alleged, for example, that GM allowed Norwood

Cadillac and North Shore to share administrative personnel (a

practice that GM normally forbids) and that Norwood Cadillac

received financing rates from General Motors Acceptance Corporation

that were unavailable to independent dealers.

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the statutory prohibition from and after January of 2001 (one year

after it had assumed full ownership of MassBay and, by extension,

of Norwood Cadillac).

Santilli premised count 2 on the catchall provision of

the Dealers' Bill of Rights. That provision proscribes actions

that are "arbitrary, in bad faith, or unconscionable." Id. § 4(1).

In support of this claim, Santilli alleged that GM's ownership and

operation of Norwood Cadillac after the one-year statutory grace

period and its favorable treatment of Norwood Cadillac during the

ensuing period3 constituted arbitrary and unconscionable conduct.

Count 3 alleges that GM acted arbitrarily in its

allocation of new vehicles, thus unfairly benefitting Norwood

Cadillac. Inasmuch as Santilli quickly abandoned this claim, we

eschew any further comment on it.

Count 4 alleges that GM violated a statutory provision

that generally prohibits "[u]nfair methods of competition and

unfair or deceptive acts or practices." Id. 3(a). This count

essentially replicates the substantive claims set out in the

previous three counts.

At the close of discovery, Santilli moved for partial

summary judgment on the three counts then remaining, namely, counts
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1, 2, and 4. GM cross-moved for summary judgment. It advanced two

grounds: (i) that Santilli had failed to introduce competent

evidence that Norwood Cadillac is in Santilli's RMA, see supra note

2; and (ii) that even if GM had violated the statute, Santilli

nonetheless had failed to adduce any evidence that the violation(s)

had caused it a loss of money or property as required by section

12A as a precondition of a suit for damages.

Santilli's proof concentrated heavily on GM's overlong

ownership and operation of Norwood Cadillac. In an effort to

satisfy the injury requirement with respect to that violation,

Santilli proffered expert evidence estimating the additional sales

that it would have garnered but for the continued presence of the

Norwood dealership during the wrongful interval. Santilli argued

that the statute forbade GM from owning and operating Norwood

Cadillac during that interval and, therefore, that GM should have

closed the doors once the one-year statutory grace period had

expired. Based on this premise, Santilli claimed that it was

entitled to damages equivalent to the profits it would have

realized through increased sales had Norwood Cadillac ceased

operations.

The district court rejected this theory of damages and

granted GM's summary judgment motion on the ground that Santilli

had failed to demonstrate that it had sustained any loss of money

or property as a result of this putative violation. Citing section
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12A of chapter 93B, the court reasoned that a plaintiff must show

that the violation itself caused the plaintiff harm. Applying that

principle, the proper measure of damages under section 4(3)(k) is

the increase in profits that the aggrieved dealer would have

realized had it been competing, during the wrongful interval,

against an independently owned dealership instead of a

manufacturer-owned dealership. Since Santilli failed to introduce

any evidence that would support a finding of injury on this basis,

the court rebuffed count 1 of its complaint.

The court simultaneously granted summary judgment in GM's

favor on counts 2 and 4. As to each of those counts, the court

noted that Santilli's proof sufficed only to show overlong

ownership. It concluded that Santilli could not recover in a

chapter 93B suit under a generic proscription when a more specific

provision, in this case section 4(3)(k), applies directly to the

challenged conduct. This timely appeal followed.

IV. ANALYSIS

Our review of an order granting summary judgment is

plenary. Houlton Citizens' Coalition, 175 F.3d at 184. The

primary question presented in this appeal is whether the district

court correctly apprehended the measure of damages under section

4(3)(k). To frame that question, we assume, for argument's sake,

that GM was in violation of section 4(3)(k), at least from January
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3, 2001 forward (i.e., one year after it acquired full ownership of

Norwood Cadillac).

In our view, the language of section 12A makes pellucid

that a plaintiff seeking damages under chapter 93B must show more

than that a defendant violated some substantive provision of the

statute. Rather, the plaintiff must show both that a violation

occurred and that the violation harmed the plaintiff. Martha's

Vineyard Auto Vill., Inc. v. Newman, 569 N.E.2d 401, 405 (Mass.

App. Ct. 1991). A necessary corollary of this injury requirement

is that a non-injurious violation may occur and, if that is the

case, the plaintiff will not be able to recover damages. See Coady

Corp. v. Toyota Motor Distribs., Inc., 361 F.3d 50, 59 (1st Cir.

2004) (upholding the district court's denial of relief under

chapter 93B when the evidence may have established a statutory

breach but the plaintiff failed to demonstrate any injury flowing

therefrom).

This brings us to the task of defining the injury needed

to justify recovery of damages under section 4(3)(k). We must make

this determination with reference to the purposes of the statute.

See Am. Honda, 735 N.E.2d at 354 (interpreting chapter 93B with

reference to statutory purpose). The main object of section

4(3)(k) is to forfend against unfair competition, that is, to

protect independent dealers from having to compete on unequal terms

with dealerships owned and operated by manufacturers. The statute
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does not attempt to safeguard dealers from competition with other

dealers on a level playing field. See id. (noting that chapter 93B

strives to strike a balance by controlling unfair trade practices

without "shielding dealers from all competition"). Accordingly, a

section 4(3)(k) plaintiff must show that it has suffered harm by

being forced into unfair competition with a manufacturer-owned

dealership.

Santilli's evidence, taken in the light most favorable to

it, establishes only that the continued existence of Norwood

Cadillac hampered its sales. However, Santilli presented no

evidence that GM's unlawful ownership and operation of Norwood

Cadillac made Norwood a more formidable competitor, thereby causing

Santilli to lose sales or profits. This is a fatal deficiency

because section 4(3)(k) did not require GM to close Norwood

Cadillac at the expiration of the one-year statutory grace period.

GM had other lawful alternatives to a complete shut-down of Norwood

Cadillac, most notably, selling the dealership to an independent

operator.

Placed in perspective, Santilli's proposed measure of

damages does not flow from GM's violation of the statute, but from

GM's failure to take one possible route to statutory compliance.

In effect, then, Santilli urges us to hold that it is entitled to

damages because it was denied a windfall that it would have enjoyed

had GM shuttered the Norwood dealership while seeking a buyer. The
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only thing illegal about the existence of the Norwood dealership

was that it was owned and operated by GM. If Santilli cannot show

that he suffered any loss of money or property as a result of that

illegal ownership and operation, it is not authorized by section

12A to bring suit for damages. Santilli's approach ignores the

injury requirement limned in section 12A and, in the bargain,

converts section 4(3)(k), by judicial fiat, into a strict liability

statute. Nor is this unfortunate result accompanied by any

corresponding gain; Santilli's approach would not further the

statute's purpose and, indeed, would run counter to the statutory

goal of benefitting consumers.

Santilli loudly protests that we will eviscerate section

4(3)(k) if we require plaintiffs to demonstrate that they have

suffered special injury from compelled competition with

manufacturer-owned dealerships. Santilli complains that, as a

practical matter, it will be impossible to prove that such a

disadvantage caused harm and, therefore, that the statutory remedy

— an action for damages — will prove to be fool's gold. This

animadversion is misplaced for two reasons.

First, we see nothing insurmountable (or even

particularly difficult) in the requirement that a section 4(3)(k)

plaintiff show injury flowing from a manufacturer's unlawful

ownership and operation of a competing dealership. The

Massachusetts cases are clear that damages under unfair competition
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statutes need not be proved with mathematical certainty. See,

e.g., Datacomm Interface, Inc. v. Computerworld, Inc., 489 N.E.2d

185, 196 (Mass. 1986); Nat'l Merch. Corp. v. Leyden, 348 N.E.2d

771, 774 (Mass. 1976); Ricky Smith Pontiac, Inc. v. Subaru of New

Engl., Inc., 440 N.E.2d 29, 48 (Mass. App. Ct. 1982); cf. Veranda

Beach Club Ltd. P'ship v. W. Sur. Co., 936 F.2d 1364, 1385 (1st

Cir. 1991) (noting that "translating legal damage into money

damages is, virtually by definition, an imprecise affair"). Should

unfair acts or practices occur in, say, the allocation of vehicles

or the setting of credit terms, there is no earthly reason why the

effect of such favoritism cannot be satisfactorily quantified. The

case law under the counterpart federal statute, the Automobile

Dealers' Day in Court Act, 15 U.S.C. §§ 1221-1225, attests to the

validity of this conclusion. See, e.g., Bob Willow Motors, Inc. v.

Gen. Motors Corp., 872 F.2d 788, 798-99 (7th Cir. 1989) (approving

estimation of damages resulting from discriminatory vehicle

allocation); Randy's Studebaker Sales, Inc. v. Nissan Motor Corp.,

533 F.2d 510, 517-18 (10th Cir. 1976) (endorsing damages

approximation based on sales at other area dealers unaffected by

the manufacturer's discriminatory practices).

Second, Santilli's argument totally overlooks the

availability of injunctive relief. Under the statute as written,

a dealer who fears unfair competition from a manufacturer's

overlong ownership and operation of a competing dealership can seek
4This remedial avenue was open to Santilli, but Santilli chose

not to explore it.

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injunctive relief without having to show actual damages (or even

threatened irreparable harm, as is normally required for an

injunction). See Mass. Gen. Laws ch. 93B, § 12A. Rather, the

plaintiff may obtain relief upon a showing that the defendant's

violation may cause the plaintiff injury.4 Id. We are unable to

think of any sound reason why, in a situation such as this, the

legislature would not have considered that an adequate remedy — and

one that was preferable to providing a means for opportunistic

dealers to make windfall gains without any showing that they were

actually disadvantaged by a section 4(3)(k) transgression.

In a last-ditch effort to blunt the force of this

reasoning, Santilli points us to the decision of the Massachusetts

Appeals Court in Ricky Smith Pontiac. That case concerned a

provision of chapter 93B that prohibits a manufacturer from

"arbitrarily . . . grant[ing] . . . a franchise . . . to . . . an

additional franchisee who intends . . . to conduct its dealership

operations from a place of business situated within the relevant

market area of an existing franchisee." Mass. Gen. Laws ch. 93B,

§ 4(3)(l). The defendant had granted a franchise in violation of

this provision, and the court determined that the plaintiff's

damages should be measured by calculating the profits lost due to

the unlawful location of the competing franchise within its market
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area. 440 N.E.2d at 47. Santilli attempts to draw a parallel,

asseverating that just as Ricky Smith Pontiac was damaged by the

unlawful insertion of competition into its market area, so Santilli

has been damaged by the unlawful operation of Norwood Cadillac.

The parallel is inexact and, ultimately, unconvincing.

The crucial distinction involves the divergence in the purposes of

the two statutory provisions. Section 4(3)(l) is aimed at

geographic protection, shielding dealers from the arbitrary

interposition of any additional same-brand competition within their

market areas. Am. Honda, 735 N.E.2d at 354. Had that statute not

been breached, the offending dealership in Ricky Smith Pontiac

would not have existed at all. Thus, the Ricky Smith measure of

damages was appropriate because it put the plaintiff in as good a

position as the plaintiff would have occupied had the transgression

not occurred.

By contrast, section 4(3)(k) is aimed only at protecting

dealers from unfair competition, specifically, the kind of unfair

competition that vertical integration can bring about when

manufacturers own and operate dealerships. Applying the Ricky

Smith measure of damages to claims brought under section 4(3)(k)

would mix apples with oranges, and result in granting plaintiffs

more protection than the legislature prescribed. At least in this

instance, this patchwork would put the complaining dealer in a

better position that it would have occupied had the manufacturer
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eschewed any involvement with the competing dealer. Ricky Smith

Pontiac is, therefore, inapposite.

To sum up, we hold that a plaintiff seeking to recover

damages for a violation of section 4(3)(k) must show not only a

violation of the statute but also harm resulting from that

violation. The latter showing requires competent proof that the

plaintiff sustained a loss of money or property attributable to the

manufacturer's unlawful ownership and operation of the competing

dealership. That measure of harm is consistent with the statute's

purpose to shield dealers from the "overweening economic power

wielded by manufacturers." Tober Foreign Motors, Inc. v. Reiter

Olds., Inc., 381 N.E.2d 908, 912 (Mass. 1978).

Santilli's claims against GM under sections 3 and 4(1) of

chapter 93B (counts 2 and 4) need not detain us. As said, the

lower court granted GM summary judgment on these counts, reasoning

that when a specific provision of chapter 93B applies, a plaintiff

may not also bring claims under the statute's generic provisions

based on the same facts.

As to the section 3 claim, that reasoning is flawless.

The statute makes it transparently clear that section 3 is only

actionable insofar as there has been a violation of some subsection

of section 4. See Mass. Gen. Laws ch. 93B, § 3(a) (prohibiting

unfair methods of competition as defined in section 4).
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Unlike the section 3 claim, the section 4(1) claim is not

obviously vulnerable. Here, however, there is no need for us to

test the district court's rationale. See Houlton Citizens'

Coalition, 175 F.3d at 184 (explaining that the court of appeals

may affirm an order for summary judgment "on any ground revealed by

the record"). Even if Santilli could state an undisplaced claim

for damages under section 4(1), any such claim would be subject, on

these facts, to the injury requirement of section 12A.

Accordingly, it would be doomed by the same lack of evidence of

violation-induced harm that condemned count 1 (the claim under

section 4(3)(k)) to an early demise.

V. CONCLUSION

We need go no further. Insofar as money damages are

concerned, the Massachusetts legislature has incorporated into the

Dealers' Bill of Rights a principle of "no harm, no foul." It thus

became Santilli's burden to demonstrate actual harm flowing from

GM's ostensible violation of the statute. The district court

correctly concluded that Santilli failed to carry this burden. It

follows inexorably, as night follows day, that GM was entitled to

summary judgment on counts 1, 2, and 4 of the complaint.

Affirmed.