Court Opinion

ID: 9464032
Source: CourtListenerOpinion
Date Created: 2023-08-04 23:23:39.729536+00
Date Added: 2024-06-11T17:38:25.667566
License: Public Domain

GIBBONS, Circuit Judge,
dissenting.
I
I would reverse the judgment of the district court and direct the entry of judgment for the defendant. I think the prior decision of this court, Rea v. Ford Motor Co., 497 F.2d 577 (3d Cir.), cert. denied, 419 U.S. 868, 95 S.Ct. 126, 42 L.Ed.2d 106 (1974), was incorrectly decided, and that judgment should have been entered in defendant’s favor on plaintiff’s Dealers’ Day in Court Act claim. Neither Rea Oldsmobile, Inc., nor Edward C. Rea, in my view, had causes of action under that statute. Edward C. Rea, Inc., the only entity protected by the statute at the time of the termination of the Oldsmobile franchise, was not injured.
The prior opinion misconstrues an important federal regulatory statute. Only an “automobile dealer” has a cause of action under the Act. 15 U.S.C. § 1222. The prior opinion treats Edward C. Rea, an officer and employee of a dealer, as if he were an “automobile dealer.” That, however, is a defined term:
The term “automobile dealer” shall mean any person, partnership, corporation, association, or other form of business enterprise . . . operating under the terms of a franchise and engaged in the distribution of passenger cars, trucks or station wagons. 15 U.S.C. § 1221(c).
An officer or employee of a dealer does not fit within that definition. Moreover the dealers’ § 1222 cause of action is for “damages by him sustained ... by reason of the failure of said automobile manufacturer ... to act in good faith in performing or complying with any of the terms or conditions of the franchise, or in terminating, cancelling or not renewing the franchise with said dealer.” 15 U.S.C. § 1222. I do not believe these words can be fairly construed to afford to an officer or employee of the automobile dealer a cause of action for the cancellation of an entirely different franchise held by a separate corporation from a different manufacturer.
The prior opinion justifies that result by reference to the provision in the Edward C. Rea, Inc., contract, in which that corporation represented to Ford Motor Co. that Edward C. Rea would be in charge of its management. I would not hold, as the majority has done, that the dealer’s representations as to its overall management, or the management of any of its departments, can be relied upon to confer on the managers a statutory cause of action belonging solely to the automobile dealer. As the Second Circuit said in Vincel v. White Motor Corp., 521 F.2d 1113, 1120 (2d Cir. 1975):
[wjhen, as here, a dealership is doing business in corporate form, the statute contains no hint that it intends a departure from the established principle that *560the locus of the right of action is the corporation.
The prior panel opinion is, of course, law of the case and binding on this panel unless the court en banc reconsiders it. I would do so, and reverse.
II
Many of the difficulties with respect to measure of damages arise out of an attempt to award damages under the Dealers’ Day in Court Act to a party not within the scope of the Act. Thus, no effort to straighten out this rather hopeless muddle is likely to be satisfactory. But even accepting the notion that plaintiff has a cause of action, I respectfully dissent from this court’s recalculation of damages. We now increase a judgment of $136,635.00 to $297,069.00. In part this is accomplished by awarding to Edward C. Rea the salary and bonuses he would have earned in the terminated Oldsmobile franchise. Entirely aside from the fact that the Dealers’ Day in Court Act makes no provision for compensation to officers and employees of terminated dealerships, and aside from the further fact, alluded to in Point I above, that the cause of action against Ford, if there was any, belonged to Edward C. Rea, Inc., that computation results in Rea being compensated both for the salary he “lost” when Rea Olds surrendered its Oldsmobile franchise, and for the salary and bonus he was paid by the very same corporation when it changed its name to Edward C. Rea, Inc. He was, after all, functioning in virtually the same capacity before and after, except that the corporation was now selling Fords instead of Oldsmobiles. The record does not support a finding, nor did the district court find, that Rea had unlimited capacity, mental and physical, to perform as manager of both dealerships. If we are measuring injury to the corporation which held the Oldsmobile franchise, we must deduct, in calculating lost profits, from its projected gross income the anticipated cost of management, since it could not operate without incurring such cost. Pitchford v. Pepi, Inc., 531 F.2d 92, 108 (3d Cir.) (Adams, J.), cert. denied, 426 U.S. 935, 96 S.Ct. 2649, 49 L.Ed.2d 387 (1976). But that does not mean that its manager, who takes an identical job in another franchise, should be paid twice because he happens also to be a stockholder. Certainly Ford is right that the salary and bonus projections should not have been included in the damage calculation, just as Rea is wrong in contending that taxes should have been excluded from that calculation.
Point II of the majority opinion rejects Ford’s contention that the court erred in excluding evidence that Rea Olds, Inc., which changed its name to Edward C. Rea, Inc., was insufficiently capitalized to carry on two automobile dealerships at the same time. The majority opinion reasons:
Causation is an element of liability. Our remand left open only the amount of damages, not the fact of damage.
This does not do justice to Ford’s argument. Ford urges that assuming the termination was, as the first jury verdict held, attributable to Ford, the fact remains that the very same corporation immediately put all its assets in a new automobile dealership, where those assets were utilized to the maximum. Ford offered testimony to prove that no new capital was available to that corporation, and that since it could, and did, operate a profitable business with its old capital it suffered no injury in fact, even if Ford did cause termination of the Oldsmobile franchise. Point II of the majority opinion is no answer to this argument. The court did err in excluding the proffered evidence. At the very least a new trial is required.
As to the remaining damage contentions, on the premise on which the majority proceeds I cannot disagree with its treatment of them. But the entire calculation is based on the fundamentally false premise that the Dealers’ Day in Court Act gives to an employee of an automobile dealership a cause of action for injury to his interest in a different dealership holding a franchise from a different manufacturer. I would reverse. . At a minimum there should be another trial on damages.