PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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N o

. 1 9

- 2 9 6 1

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N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E

R E T A I L E R S

, I N C

. , A p p e l l a n t

v

.

M A Z D A M O T O R O F A M E R I C A

, I N C

.

___________

___

On Appeal f

rom the United States District Co urt
for the District of N e w J e r s e y (D.C . C i v . No. 3

- 1 8

- c v

- 1 4 5 6 3 ) District Judge: Honorable B r i a n R

. M a r t i n o t t i

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A r g u e d M a r c h 2 4

, 2 0 2 0

BEFORE: J O R D A

N

, R E S T R E P O and GREE N BERG,

Circuit J udges

.

( O pinion Filed: April 2 8 , 2020 )

_____ _________2 D a n i e l J

. K l u s k a (A r g u e d )

P e t e r L

. S c h e n k e
W i l e n z G o l d m a n & S p i t z e r 9 0 W o o d b r i d g e C e n t e r D r i v e S u i t e 9 0 0

, B o x 1 0

W o o d b r i d g e , N

. J

. 0 7 0 9 5

Counsel f o r A p p e l l a n t

D o n a l d B

. V e r r i l l i

, J r

. A d e l e E l

- K

h o u r i ( A r g u e d )

M u n g e r T o l l e s & O l s o n 1 1 5 5 F S t r e e t

, N

. W

. , 7 t h F l o o r W a s h i n g t o n , D C 2 0 0 0 4

Counsel f o r A m i c u s

- C

u r i a e N a t i o n a l A u t o m o b i l e
D e a l e r s A s s o c i a t i o n

J e s s i c a L

. E l l s w o r t h ( A rgued )

M a t t h e w J

. H i g g i n s
H o g a n L o v e l l s U S

5 5 5 T h i r t e e n t h S t r e e t

, N

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. C o l u m b i a S q u a r e
W a s h i n g t o n , D C 2 0 0 0 4

Counsel f o r A p p e l l e e

_____ _________

OPINION

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GREENBERG, C ircuit Judge

.3 I. INTRODUCTION

This matte r comes on b efore t h i s C o u r t on the appeal of

Plaintiff

- Appellant New Jersey Coali tion of Au tom otive

Retaile rs ( “ th e C oa lition ” ) , see king review of the Dis trict

Court ’ s dismissal of its case under the New Jersey Fran c h i se
Pra cti ces Act ( “ NJFPA ” ) against De fendant

- Appellee M az da

Motor o f America for l ack of standing i n a n o r d e r e n t e r e d o n J u l y 3 0

, 2 0 1 9

. For the reasons s ta t ed below, we find t h a t the

District Cou rt construed the c omplaint too narrowly in concluding that the Coalition lacked assoc iatio n stand ing , so we will reve rse the Co urt ’ s o r d e r o f J u l y 3 0

, 2 0 1 9

, and rema nd the

c a s e t o t h e D i s t r i c t C o u r t f o r f u r t h e r p r o c e e d i n g s

.

II. BACKGROUND

For the pu rposes of this opinion, we construe all facts alleged in the c omplai n t a s true, and in the light most favor able

to the Coalitio n

. S e e N

. Jersey Br ain & Spine C tr. v. A etna

, I n c

. , 8 01 F.3d 369, 371 (3d Cir. 2015). The Co a li tio n i s a trade

ass ociation who se membe r s consist of franc hised new car dealerships in New Jersey , among w h o m sixteen members are
Maz da dealers. A ccording to the c o m pl aint, M az da initiated an i ncentive program fo r its franchised de a lers called the Maz da

B ran d E xperie nce Progra m 2

. 0 ( “ MBEP ” ), which pr ovides incentives, in the form of per

- vehicle discount s or r e bat e s o n t h e d e a l e r s ’ p u r c h a s e s o f veh icle s f r o m M a z d a , to dealers w

ho ma ke certain capital investment s in the ir physical facilities that hig hlight t hei r s ale of Ma zda vehi cles, or in som e instances

, dedicate the i r de aler sh ips exc lusively to the sale of Mazd a

v ehicles.4 The inc entives come i n dif ferent tiers, with t he highest

t ier available to dealers who have e x clusi ve Ma zda facilities and

a de dicate d

, e x clusi ve Maz da general manager

. M a z d a g i v e s l o w e r inc entives to dea lers who d o not employ a n exclusive

M a z d a general manager and/or dealers who s e dedicated

faciliti es do not conform to all appeara nce requirements as de fined by Maz da

. B u t M a z d a d e a l e r s a l s o e a r n i n c e n t i v e s i f

t h e y m e e t c u s t o m e r e x p e r i e n c e m e t r i c s

. Mazda dealers who do

not h ave a d edicated facilit y, i.e.

, those dealers who sell o ther

bra nds of vehicles a s w e l l a s Mazda s , s o

- c a l l e d “ du al ” de ale rs, do not receive any inc enti ves f or b rand c om m i tment.

Although t h e c omplaint d i d n o t s e t f o r t h t h e s e

a l l e g a t i o n s , the District Co urt also relie d on certain fact s contained in declaration s the parties m a d e in support and in opposition t o th e mot i on to dismi ss. According to the Cour t, at
the time o f t h e f

i l i n g o f the c omplaint only three of the sixt ee n
Maz da de alers in the Co alition qu alif ied for the high est t ier of

incent ives t h a t w e d escribe above , although e i g h t o t h e r s qual if ied fo r so me ti e r of incent ives. N.J. Coal. of Auto.

Retailers v. M azd a Mo t or of Am.

, No. 18

- 14563, 2019 WL 3423572, at * 7 (D.N.J. July 30, 2019) ( “ NJCO A ” )

. The

c omplaint alleges that the MBEP cr eates unfair comp etitive advantage s for dealers who qualif y for inc en ti ves un der the

M BEP a t the expens e of thos e dealers who do n ot

, a nd even

a m ong incentivized dealers through di fferent tiers of incent ives,

in v iolation of the NJ F PA. The Co alition seeks to enjoin the implementation of the MBEP a n d t o o b t a i n d e c l a r a t o r y r e l i e f

.

III. DISCUSSION5 Th e District Cour t h ad jurisd iction purs ua nt to 28 U.S. C. § 1332 , and we have appellate jurisdiction purs uan t to 28 U.S.C. § 1291. We review the District Court ’s dismissal ba sed on lack of standing de novo

. A etna , 801 F.3d at 371

.

In di smissing the case , the Distric t Cou r t r elied on the

thre e

- pr on g test t h a t the Supre me Court s e t f o r t h in H unt v. Wash. State Appl e Advert i s i n g Co mm ’ n , 432 U. S. 333

, 343 , 97

S.Ct. 2434, 2441 ( 1977), to find that the Co alition lacked association standing to br ing its lawsuit on behalf of its

memb e rs

. S e e NJCOA

, 20 19 W L 3423572

, at * 3

- 8

. “ [A] n association has s tanding to bring suit on behalf of its member s when: (a) its members would oth erwise have standin g to sue in their own right; (b) the interests it seeks to protect are germane to the organiza tion ’ s purpose; a nd ( c ) neither the cl aim ass erted

nor the relief requested requires the participation of indi vidual

members in the lawsuit. ” Hunt

, 432 U.S. at 3 43 , 97 S.Ct. at

2441 . The Court held that the Co al i tion ’ s c o m p l a i n t satisfied

the firs t pro ng bu t fa iled the s ec on d prong o f t h e H u n t c r i t e r i a , thus t h e C o u r t did not r each the thir d prong. NJ C OA

, 2019 WL

3423572

, at * 5

- 8

.

With regard to the first prong, the Distric t C ourt held

, and we agree, that it is obvious on the fac e of the c omplaint at
least s o me of the M a zd a d ealers in th e Co al it ion suffer competiti ve harm due t o implementation of the MB EP

— the

pr ogr am itself expressly discriminates a m o n g Mazda dea lers.

See Wa rth v. S eldin , 422 U.S. 490, 511

, 95 S.Ct. 2197, 2211

- 12 (19 75 ) ; ( n o t i n g t h a t a n a s s o c i a t i o n “ m u s t a l l e g e t h a t i t s

m e m b e r s , o r a n y o n e o f t h e m , ” a r e h a r m e d ) ; Hosp

. Co uncil of

W. P a. v, City of Pittsburgh

, 9 49 F. 2d 83 , 87 (3d Cir. 1991).

W h e n a d d r e s s i n g the second prong, the C ourt he ld that because

ele ven of the sixteen Ma zda dealers would lose the in c en ti v es6 they c urrent ly e njoy under the MBEP , the Co alition ’ s lawsuit,

which seek s t o enjo in implementation of th e MBEP

, is in

conf lict with t he i nteres ts of those dealers, wh o make up th e majority o f the Maz da dealers that the Co alition r epre sents

. S e e
N J C O A

, 2 0 1 9 W L 3 4 2 3 5 7 2

, a t * 6

. Under the Cou rt ’ s r ationale, given that only five out of the sixteen Ma zda dealers wou l d

benefit f ro m the law suit, the Coali tion cannot possibly be protectin g the inte rest s of its members. S e e C o n t r a c t o r s A s s ’ n

o f E

. P e n n s y l v a n i a , I n c

. v

. C i t y o f P h i l a d e l p h i a , 9 4 5 F

. 2 d 1 2 6 0

, 1 2 6 6 ( 3 d C i r

. 1 9 9 1 ) ( s t a t i n g t h a t a n a s s o c i a t i o n d o e s n o t h a v e

s t a n d i n g t o b r i n g a l a w s u i t t h a t i s “ c o n t r a r y t o t h e i n t e r e s t s o f a

m a j o r i t y o f [ i t s ] m e m b e r s ” )

.

We disagree. T he D ist rict Court impermissibl y l im i ted

the Coal ition ’ s lawsuit t o a single theory of harm , one that arguably t h e c o m p l a i n t d o e s not even r ai se

. Esse nti ally, in t he

Court ’ s vi ew, this ca se is about the haves versus the have nots.

Because some of the Mazda de alers have been shut out o f t he

M BEP altog eth er, this lawsuit is about v i ndicating their rights and bring ing comp e titi ve balance back b et ween them and the

othe r dealers who do bene fit f rom the MBEP. T h o u g h w e

u n d e r s t a n d w h y t h e C o u r t v i e w e d t h e c o m p l a i n t a s i t d i d

, w e a r e

s a t i s f i e d t h a t i t s r e a d i n g w a s too narrow

. “ [ W ] hen standing is challenged on the basi s of the pleadings . . . we m us t

. . .

cons true the compl aint in f a vor of the complaining party. ”

H o s p

. C o u n c i l

, 9 4 9 F

. 2 d a t 8 6 ( i n t e r n a l q u o t a t i o n m a r k s a n d

c i t a t i o n omitted )

. 1

1 We point out that the in formation on which the District Court

r elied in d ismiss in g the compla in t rega rding th e three dealers in the highest t i er an d t he e le ven MBEP p articipants, came d i rectly

from Maz da in a declaration by one of its own re gional

managers. See App. 52.7 A c co r ding to the District Court, only three of the Ma z da

de alers enjoy the high est tier of incentive s. W e s e e n o r e a s o n t o d i s m i s s t h e p o s s i b i l i t y that the e i ght dealer s who enjoy lower

tier s of incentives w ould for ego suc h incentives in ord er to
prevent t h e creati on of three “ s uper ” dealers who clearly hav e a

comp etiti ve advantage over all other M azda dealer s

. In f a c t

, t he

ve ry d ecla rations o n w h i c h the Court relied in g r a n t ing the

mo ti on to dismiss s u g g e s t t h i s v i e w o f t h e c o m p l a i n t

. I n d e e d

, one of th e M az da d eal er s declared that it qualifie s for a lower

tier of in centives unde r the MBEP, but nevertheless s up p ort s th e lawsui t. See App. 89.

W e t h i n k it is a l s o plaus ible that many of the Mazda

dealers regard the capi tal i nves tm ent required to participa t e ful ly

in th e MBEP as fin ancia lly un justifi ed, but nevertheless feel pressured to parti cipate due to the co m pet itive disa d v antage s artificially cr eated by th e MBEP for no n

- participati on or partial participati on

. S ee c o mpl. ¶ 16 (A pp. 32)

. A s Maz da poin t s o ut
in it s brief, on e of the dealers supporting th e lawsuit had done just that after the D i s t r i c t Court di s mis sed t he case. Appell ee ’ s Br. 8 n.1

. Although Mazda hig hlights five de alers who ha d

submitted declarat ions in opposit ion t o this lawsuit, five d oes

not co ns titute a m ajority of t h e sixteen M a z d a d e a l e r s

. Construing the c omplaint most favora bl y t o t he Co alition, w e

see lit tl e support fo r the Court ’ s con clus ion that t h e C o a l i t i o n is acting in conf

lict to the inte r ests of its members. See Bell A tl

. Cor p. v. Twombly , 550 U.S. 5 44, 556

, 1 2 7 S

. C t

. 1 9 5 5

, 1 9 6 5 (2007 ) ( “ Asking for plausible grounds to i n fe r [a claim] does not impo se a probabili ty requirem e nt at the pleading stage

. . . . [A] well

- pleaded com pl aint may proceed even if it strikes a

sa vv y judge that ac tual proof of those facts is improba b le , and

that a recovery is very remote and unlikely. ” ) ( cit ation and internal qu otation m a r k s omitt ed )

.8 At ora l argument b e f

o r e u s , M a z d a argued that the

conflict of interest is sue is a factual dispute, a nd the District Court made its ruling because t h e C o a l i t i o n did not rebut

M a z d a ’s evidence that e l e v e n of the s i x t e e n Mazda dealers enjoy some form of benefit fro m the MBEP . That argument turns the analysis at the pleading stage on its h ead. We construe
th e com plaint in the light most favorable to t h e C o a l i t i o n , and it

is M a z d a ’s burden to present facts to attack the basis of jurisdiction pled in the complaint, w hich M a z d a failed to do.

See Davis v

. Wells Fargo , 824 F.3d 333, 349 (3d Cir. 2016) (“Rule 12 (b ) (1) allows a defendant to attack the allegations in

t he complaint and submit contrary evidence in its effort to show that the court lacks jurisdiction.”). Ins tead, it s ubmitted affidavits from only five dealers clearly showing opposition to

the lawsuit

, w hile asking the District Court to infer, from those

a ffidavits, that six other dealers would have opposed the lawsuit as well, which the District Court unf ortu nately did . That is not construing the complaint in the light most f avorable to the complaina nt

. 2

2 In analyzing the conflict of interest issue, the District Court

held that “ i n cal culating the total membership of NJ CAR for the p urpose of determining whether the litigation runs contrary to the interests of the majority, it will consider the tota l releva nt membership to include only Mazda dealer members. Accordingly, NJ CAR me m bers that do not sell Mazda vehicles

are not included in the calculation.” NJCOA, 2019 WL 3423572, at *7 n.7. We question the validity of that holding. After all, even i f fifteen out of the sixteen Mazda dealers might

oppose a lawsuit of this kind du e t o the signifi cant investment they have already made as MBEP participants , there can be no question that the last remaining Mazda dealer holding out would9 I n v i e w o f o u r a n a l y s i s , we will rever se t he Cou rt ’ s Jul y 3 0 , 2019 o r der di sm is sing th e case, and r emand the c a s e t o t h a t

Court for further proceedings. 3

have standing to b ring a law suit a gainst Mazda on its own, and

the success of that lawsuit would ha rm the o ther fif teen dealers regardless of their oppositi on. The germaneness prong of the

Hunt test, therefore, is primarily concerned with the association’s ability to zealo usly advoc ate the cla ims of that one dealer. 432 U.S. at 343, 97 S.Ct. at 2441 ( “ [ W ] heth er an

asso ciation has standing to invoke the cour t’s remedial powers on behalf of its members depends in substantial measure on

. . . [whether] the remedy, if granted, w ill inure to th e benefit of those members of the association actually injured .” ( q uotin g Warth , 4 22 U.S. at 515, 95 S.Ct. at 2213)). If the other non

Mazda members, numbered in the hundreds, have an exceedingly strong interest in the success of such a law suit

becau se, f or example, they wish to prevent other manufacturers from impl emen t ing s imilar coe rcive programs against them,

there sh ould be little concern over the Coalition’s capacity to be a zealous advocate of that one member’s claims, even if the

non

- Mazda mem bers may not have standing to bring a lawsuit

on their own. In tha t sc e nario , the oppo sition of the fifteen

Mazda dealers w ould be immaterial, as they would constitute a tiny minority of the membership. However, we need not squarely address the District Court’s ho lding here, as it erred even if we accept its holding as corr e ct.

3 We stre s s that in so rulin g , w e express no op i nion as to the

mer its of th is case. We limit o ur hol ding to the concl usion that

the Co alition has associ ation sta nding t o bring th is case. In fact

, our opi nion should not be understoo d a s implying th a t the10 c ompl aint suf

ficiently has s tate d a valid claim under the NJFPA.

On re mand, the District Court is free to consider any other arguments for dismissal that Mazda advances

.