Antitrust Law Daily Wrap Up, FRANCHISING AND DISTRIBUTION NEWS: GM’s sales performance metric unlawful, dealership claims, (Sep 23, 2015)

By Greg Hammond, J.D.

General Motors, LLC (GM) has unlawfully terminated a Florida dealership using an unlawful sales performance metric, in violation of the Florida motor vehicle dealer law, according to a complaint filed in the federal district court in Orlando (Lane Buick-GMC, Inc. v. General Motors, LLC, September 18, 2015).

Lane Buick-GMC, Inc. is a franchised motor vehicle dealer that sells and services Buick and GMC products pursuant to a franchise agreement with GM. After operating for 30 years, Lane received a notice of default in May 2014 and notice of termination in June 2015.

Lane filed suit, claiming that GM is unlawfully terminating the franchise agreement, in violation of the Florida motor vehicle dealer law. First, Lane claims that the proposed termination is unlawful because GM’s performance measurement metric, or Retail Sales Index (RSI), fails to take into account the unique market circumstances that exist in Lane’s market. In addition, Lane claims that GM does not apply the RSI uniformly because it does not notify every dealer under100 percent that it is in material breach of their dealer agreement, or terminate every dealer that fails to meet 100 percent RSI.

The complaint brings additional claims, including that (1) GM’s Essential Brand Elements (EBE) program requires Lane to make substantial changes, alterations, and/or remodel its facility, but the program is not reasonable and justifiable in light of current and reasonably foreseeable projections of economic conditions, financial expectations, and the motor vehicle dealer’s market for GM’s vehicles; (2) Lane has been in compliance with the EBE criteria unrelated to the facility image program and is therefore entitled to 80 percent of the EBE incentive payment, but GM has only offered to pay 20 percent of the EBE incentives; (3) GM established an unfair, inequitable, and unreasonably discriminatory motor vehicle distribution system through the payment of incentive funds that effectively reduce the cost of vehicles for dealers that receive EBE funds; (4) GM failed to provide a supply of Buick and GMC vehicles in reasonable quantities, despite Lane’s requests; and (5) GM has breached the franchise agreement by not making vehicles available in a mix of models and series in quantities adequate to allow Lane to fulfill its RSI obligations.

Lane seeks injunctive relief, prohibiting GM from terminating the franchise agreement unless and until a final determination has been made that GM is permitted to do so under Florida law. In addition, Lane requests an immediate stay of the termination; a judgment against GM that the proposed termination is unlawful under the Florida motor vehicle dealer law; a judgment prohibiting GM from terminating the franchise; as well as damages, trebled damages, attorney fees, and costs.

The number is No. 6:15-cv-1569-Orl-31GJK.

Attorneys: Nicholas A. Bader (Bass Sox Mercer) for Lane Buick-GMC, Inc.

Companies: Lane Buick-GMC, Inc.; General Motors, LLC

News: FranchisingDistribution