Court Opinion

ID: 199399
Source: CourtListenerOpinion
Date Created: 2011-02-07 04:30:00+00
Date Added: 2024-06-11T17:27:00.305196
License: Public Domain

248 F.3d 46 (1st Cir. 2001)
ROCHESTER LINCOLN-MERCURY, INC., Plaintiff, Appellant,v.FORD MOTOR COMPANY, Defendant, Appellee.
No. 00-2052
United States Court of Appeals For the First Circuit
Heard April 4, 2001Decided May 7, 2001

Daniel A. Laufer for appellant.
Bryan M. Haynes with whom Nicholas T. Christakos and Sutherland Asbill & Brennan, LLP were on brief for appellee.
Before  Selya, Boudin and Lynch, Circuit Judges.
BOUDIN, Circuit Judge.

1
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.

2
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.

3
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  appealed to higher-level Ford officials.  His appeal was  unsuccessful.

4
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.

5
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."

6
Section 357-C:12(II) ("Enforcement") provides the cause  of action for unlawful acts.  It states that

7
any person who is injured in his business or  property by a violation of this chapter . .  . 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.

8
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.

9
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.

10
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  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.

11
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).

12
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,  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.

13
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).

14
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  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.

15
Affirmed.