Court Opinion

ID: 9666828
Source: CourtListenerOpinion
Date Created: 2023-08-24 01:28:27.475562+00
Date Added: 2024-06-11T18:15:32.856020
License: Public Domain

AMUNDSON, Judge
(concurring specially).
The absence of a clear finding by the district court that the Minnesota Franchise Act governs the relationship between the parties permits me to concur in the result reached by the majority. I write, however, to emphasize the importance of franchise law when analyzing motions for injunctive relief.
To understand franchising, reference must be made to social and economic changes in history. In much earlier days, certain people such as tax collectors were empowered to perform functions within the domain of the sovereign. In return for their performance, these nascent “franchisees” kept a percentage of what was collected. This practice grew into a system of subdividing grants of power and is the progenitor to the present franchise system.
The modern franchise system was greatly assisted in its development by the legislative grant of franchise rights to utilities. Rapid growth in the United States expanded the use of the franchise system in many areas as a means of providing goods and services. Early on, the franchise system benefited most manufacturers, which often had insufficient capital for regional or national distribution. Franchising became one of the main methods by which business could accomplish expansion.
Following World War II, there was a massive growth in franchising. This economic phenomenon has continued through to the present. The unfettered growth in franchising has brought about many abuses in the system. Thus, regulatory supervision has been attempted at both the state and federal levels. As the majority opinion notes, Chapter 80C of the Minnesota Statutes was adopted in 1973 as remedial legislation designed to protect franchises within Minnesota from unfair contracts and other prevalent and unregulated abuses. See Clapp v. Peterson, 327 N.W.2d 585, 586 (Minn.1982).
Additionally, our state legislature has passed other laws regulating certain business relationships designed to protect businesses from abusive tactics by manufacturers or suppliers. See, e.g., the Minnesota Motor Vehicle Sale and Distribution Act, Minn.Stat. §§ 80E.01-.18 (1992); the Minnesota Beer Brewers and Wholesalers Act, Minn.Stat. §§ 325B.01-.17 (1992); the Minnesota Agricultural Equipment Dealerships Act, Minn. Stat. §§ 325E.05-.067 (1992).
In a manufacturer/distributor relationship, such as in the present case, the relationship between the parties often lacks parity. The manufacturer usually has far greater bargaining power and can often dictate terms. When the distribution agreement comes up for renewal, the distributor often cannot risk confrontation with the manufacturer.
The manufacturer can usually get some other party to distribute its products. The distributor, who has often spent years building up the business, has everything to lose. Although the manufacturer may not be acting in bad faith in asserting its interests, its superior bargaining position leaves the distributor with a Hobson’s choice of acquiescence or loss of its investment.
The Minnesota Franchise Act is an attempt to protect the franchisee from undue *920usurpation of the franchise relationship and to establish balance of bargaining power. Should the franchise act be construed to permit termination or nonrenewal whenever it is to the franchisor’s economic advantage, the act would be empty. Thus, I believe the Minnesota Franchise Act should be broadly construed to prevent the unfair results described above.
If the parties had agreed that Pacific was a franchisee, or had the district court definitively found that Pacific was a franchisee, then I believe the district court would have been compelled to grant a preliminary injunction enjoining Toro from terminating its distributorship with Pacific.
Pacific sought relief for alleged violations under Minn.Stat. § 80C.14, subds. 3, 4 (1992) of the Minnesota Franchise Act. Under Minn.Stat. § 80C.17, subds. 1, 4 (1992), Pacific cannot seek a claim for money damages for violations of section 80C.14.1 Thus Pacific’s sole remedy under the franchise act would be injunctive relief.2 Because injunctive relief would be the only remedy available, Pacific’s remedy would be largely meaningless if preliminary relief were denied. See Modem Computer Sys., Inc. v. Modern Banking Sys., Inc., 858 F.2d 1339, 1340 (8th Cir.1988), vacated, 871 F.2d 734 (8th Cir.1989) (decision was vacated upon finding that the Minnesota Franchise Act did not apply, not upon the merits of the franchise law analysis). Additionally, if the franchise act applied, irreparable harm would be “presumed.” See Minn. Stat. § 80C.14, subd. 1 (1992).
Even in the absence of a presumption of irreparable harm, it is likely that Pacific will in fact be irreparably harmed if a temporary injunction is not granted. Here, Pacific derived approximately 80% of its sales from Toro products. The loss of such a large portion of its sales will almost certainly put Pacific out of business. Common sense dictates that such an injury is irreparable. See Carlos v. Philips Bus. Sys., Inc., 556 F.Supp. 769, 774 (E.D.N.Y.1983) (where 90% of dis-
tributor’s business is comprised of sale of manufacturer’s products, distributor substantiated claim that manufacturer’s conduct threatened to cause irreparable harm), aff'd, 742 F.2d 1432 (2d Cir.1983).
The majority opinion states that any injury to Pacific cannot be said to be irreparable because Pacific has an adequate remedy at law. Although Pacific would certainly be entitled to money damages under its common law claims, can damages be truly adequate in a case such as this? See Al Bishop Agency, Inc. v. Lithonia-Division of Nat’l Serv. Indus., Inc., 474 F.Supp. 828, 835 (E.D.Wis.1979) (“reduction of business perhaps can be compensated by money, but the destruction of a business ⅜ * * cannot be compensated with money”). The franchise act was enacted because of the inadequacy of these alternatives in the unique circumstances of a franchise relationship. See Note, Regulation of Franchising, 59 Minn.L.Rev. 1027, 1028-36 (1975). Thus, if it were clear that Pacific was a franchisee, the purpose of the franchise act could only be fulfilled by the granting of injunctive relief.
Appellate courts rarely reverse the denial of injunctive relief. See, e.g., Independent Sch. Dist. No. 35 v. Engelstad, 274 Minn. 366, 370-71, 144 N.W.2d 245, 248 (1966). Although I believe this is a close ease for reversal, in the absence of an explicit finding that Pacific was a franchisee, I must concur with the majority opinion’s analysis that the district court did not abuse its discretion in denying Pacific’s request for a temporary injunction. See Colt Indus., Inc. v. Fidelco Pump & Compressor Corp., 700 F.Supp. 1330, 1332 (D.N.J.1987) (distributor not entitled to injunction under the New Jersey Franchise Act where it failed to prove it was a franchisee), aff'd, 844 F.2d 117 (3d Cir.1988).

. Minn.Stat. § 80C.17, subd. 1 was amended in 1993 to provide that a person who violates any provision of “this chapter” shall be liable for damages. See 1993 Minn.Laws ch. 372, § 1. As the majority opinion notes, however, the amendment is inapplicable to this case.

. Pacific would still have an action for monetary damages for claims outside the franchise act. See Minn.Stat. § 80C.17, subd. 4 (nothing in the franchise act limits liability which may exist hy virtue of other statutes or under common law).