Opinion ID: 1643072
Heading Depth: 2
Heading Rank: 6

Heading: Legal Findings and Damages Awards

Text: The panel concluded that the plaintiffs' dealerships were franchises, that the News had wrongfully and intentionally terminated and converted each of them, and that the News had breached fiduciary duties it owed to the plaintiffs as franchisees. The panel found further that the agreements were ambiguous concerning automatic renewal; by resorting to the News's past practices the panel determined that the agreements were to be automatically renewed unless terminated by either party for good cause. The panel found that the News had terminated the plaintiffs' agreements without good cause, primarily as a result of the wrongful management practices on the part of Pearson and Keeble. The panel also held that the News's conduct toward the plaintiffs was so dramatically inconsistent with its practices during the preceding 40 years that the News should be equitably estopped from implementing and invoking the termination provisions it sought to apply to the plaintiffs, referencing two cases: Miskimen v. Kansas City Star Co., 684 S.W.2d 394 (Mo.Ct. App.1984), and Straup v. Times Herald, 283 Pa.Super. 58, 423 A.2d 713 (1980). Additionally, the panel concluded that the News had defrauded the plaintiffs by intentionally and falsely representing to them that their dealership franchises would be renewed so long as they performed their work satisfactorily. The panel held that the News's actions were wrongful and intentional; that the plaintiffs were entitled to recover damages for the loss of their investments, for the loss of their income streams, and for their mental anguish; and that there was clear and convincing evidence that the News's actions had been oppressive and malicious, warranting an award of punitive damages. The provisions in paragraph 10 of the agreements purporting to limit the scope of compensation that could be recovered were held by the panel to be invalid as contrary to public policy, on the basis of five cases cited by the panel. [5] The panel determined that an appropriate punitive-damages award for each plaintiff was an amount 2.5 times the amount of compensatory damages due that plaintiff. In discussing its award of compensatory damages, the panel stated: In arriving at the amounts for each plaintiff's loss of franchise value and loss of future profits, the Panel relied upon the testimony of business valuation expert, James Williams, and the exhibits prepared by him. While everyone generally agreed that a voluntary sale of these dealerships in an open market produced a purchase price of 3 times gross earnings, the Panel adopted the more conservative multiple of 2.5 times gross revenues (excluding route allowances) in establishing franchise value. The panel noted an exception to that approach in Hyde's case, where it applied a multiple of two times gross annual revenues in establishing franchise value. [6] The panel was of the opinion that each plaintiff had had a viable business that was reasonably expected to produce income and profits for a period of at least 20 years, with the exception of Horn, who, because of her age (she was 55 years old when her agreement was terminated), had a business interest that would be expected to continue for only 10 years. The panel held: The loss of future profits is a separate and distinct element of compensatory damages, particularly in light of the fact that the Panel is without the power to order these dealerships returned to the plaintiffs. Having found in favor of each plaintiff on his or her claims of breach of contract, breach of fiduciary duty, conversion, and fraud, and deeming the damages due under each of those claims to be the same, the panel made one award for each plaintiff for all of those claims. In that regard, the panel stated: The Panel acknowledges that the multiple claims of plaintiffs may have duplicative damages. The Panel certifies that in its consolidation of an award of damages that it has not allowed any duplicative recovery. The panel awarded Glass $285,000 for loss of franchise value; $848,603, representing the present value of the loss of future profits for 20 years; $200,000 for mental anguish; and $3,334,007.50 in punitive damages, for a total award of $4,667,610.50. The panel; awarded the McLendons $285,000 for loss of franchise value; $975,955, representing the present value of the loss of future profits for 20 years; $200,000 each for mental anguish; and $4,152,387 in punitive damages, for a total award of $5,813,342. The panel awarded Horn $200,000 for loss of franchise value; $305,170, representing the present value of the loss of future profits for 10 years; $300,000 for mental anguish; and $2,012,925 in punitive damages, for a total award of $2,818,095. The panel awarded Stewart $175,000 for loss of franchise value; $533,580, representing the present value of the loss of his future profits for 20 years; $200,000 for mental anguish; and $2,271,450 in punitive damages, for a total award of $3,180,030. The panel awarded Hyde $160,000 for loss of franchise value; $496,912, representing the present value of the loss of his future profits for 20 years; $200,000 for mental anguish; and $2,142,280 in punitive damages, for a total award of $2,999,192. Arbitrator White concurred in the panel's factual findings, including those findings that the News had engaged in oppressive and intentionally wrongful conduct, and agreed that the News should be held liable on the plaintiffs' claims of breach of contract and conversion. He dissented as to the finding of liability on the fraud claims, on the ground that the plaintiffs had not presented sufficient evidence that the News had had a present intent to deceive them when it represented that the dealer agreements would be automatically renewed absent deficient performance on their parts. White agreed with the panel's determination that an award of compensatory damages, including those for mental anguish, and an award of punitive damages were warranted. However, he would have made the following awards: $90,000 for loss of franchise and $180,000 in punitive damages and mental anguish to Glass, for a total award of $270,000; $285,000 for loss of franchise and $570,000 in punitive damages and mental anguish to the McLendons, for a total award of $855,000; $200,000 for loss of franchise and $400,000 in punitive damages and mental anguish to Horn, for a total award of $600,000; $170,000 for loss of franchise and $350,000 in punitive damages and mental anguish to Stewart, for a total award of $520,000; and $160,000 for loss of franchise and $320,000 in punitive damages and mental anguish to Hyde, for a total award of $480,000.