Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—DMass: Injunction Barring Establishment of Additional Automobile Dealership Denied, (Jun 7, 2013)

By John W. Arden, J.D., LL.M.

The federal district court in Boston has refused to enjoin an automobile franchisor from opening an additional franchise in New England until litigation with an existing dealer has been concluded (Aston Martin Lagonda of North America v. Lotus Motorsports, Inc., June 6, 2013, Casper, D.). The court denied the injunction based on the dealer’s failure to show it would suffer irreparable harm absent the injunction.

Aston Martin Lagonda of North America, Inc. brought suit against its dealer, Lotus Motorsports, Inc., seeking a declaratory judgment that Aston Martin had the right to establish an additional authorized dealership outside of Lotus’s relevant market area and that such action did not violate the dealer’s contractual, statutory, or other rights. Lotus brought six counterclaims, alleging a violation of the federal Automobile Dealers Day in Court Act, breach of fiduciary duty, promissory estoppel, breach of contract as to the implied covenant of good faith and fair dealing, violation of the Massachusetts “little FTC Act,” and breach of contract as to an arbitration provision of the dealership agreement.

Lotus moved for a preliminary injunction, barring Aston Martin from opening a competing franchise in New England (except for southern Connecticut) until the litigation has concluded.

In deciding to grant a preliminary injunction, a court must evaluate (1) the movant’s likelihood of success on the merits, (2) the potential for irreparable harm absent the injunction, (3) whether issuing the injunction would burden the opposer less than denying the injunction would burden the movant, and (4) the effect, if any, on the public interest.

The district court focused on the potential for irreparable harm in its decision to deny Lotus’s request for an injunction. There was nothing in the record to suggest that Aston Martin actually intended to proceed with its plan to open a new dealership prior to the resolution of the dispute, according to the court. It represented in its complaint that it did not intend to do so.

Until there is some indication that a court order is actually required to stop Aston Martin from opening a competing franchise, Lotus is not entitled to preliminary injunctive relief, according to the court. On this record, it was unclear whether Lotus would be able to show irreparable harm as opposed to harm that has an adequate remedy at law through an award of money damages, the court observed. The failure to show irreparable harm was sufficient to deny the motion for a preliminary injunction.

The case is Civil Action No. 13-11213-DJC.

Attorneys: William H. Kettlewell (Collora LLP) for Aston Martin Lagonda of North America. Robert S. Sinsheimer (Sinsheimer & Associates) for Lotus Motorsports, Inc.

Companies: Aston Martin Lagonda of North America; Lotus Motorsports, Inc.

Cases: FranchisingDistribution MassachusettsNews