Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—E.D. Mo.: Prevailing party denied attorney’s fees in franchise termination case, (Dec 6, 2013)

By Linda O’Brien, J.D., LL.M.

A lift truck manufacturer was not entitled, under the Missouri Power Equipment Act, to attorney’s fees as the prevailing party in a franchise termination suit filed by a former franchisee fork lift dealer as the dealer’s claims were not frivolous, unreasonable, or groundless, a federal district court in St. Louis has held (Lift Truck Lease and Service, Inc.,d/b/a A.D. Lift Truck v.Nissan Forklift Corporation, North America, December 3, 2013, Shaw, C.).

Nissan Forklift Corporation is a manufacturer of lift truck and industrial transportation equipment that is resold through a nationwide network of dealers. Lift Truck Lease and Service, Inc. (ADL) sells new and used lift trucks and supporting parts and services in various counties in Missouri and Illinois. In January 2010, Nissan and ADL entered into three agreements: (1) a Nissan Forklift Dealer Agreement of indefinite term (Standard Agreement) which appointed ADL as the exclusive authorized dealer of Nissan forklift products in Missouri and Illinois; (2) a Nissan Forklift Dealer Term Sales and Service Agreement (Term Agreement) which expired as of February 2012; and (3) a Dealer Sales Agreement of indefinite term (Barrett Agreement) for the sale of Barrett Industrial Trucks products. The agreements imposed certain performance and sales goals on ADL.

In January 2012, Nissan notified ADL of its intent not to renew the Term Agreement and to allow it to expire in February 2012 due to ADL’s default of certain obligations. Nissan also notified ADL of its intent to terminate the Barrett Agreement for ADL’s failure to provide adequate sales coverage. The notifications gave a 90-day notice of non-renewal and termination of both agreements and stated that ADL would no longer be a Nissan or Barrett dealer as of April 2012. If ADL cured the default by achieving specific target goals within 60 days of the date of the notification, the non-renewal and termination would not go into effect, and Nissan would offer ADL a new 12-month term agreement.

ADL filed suit asserting claims against Nissan under the Missouri Franchise Act (MFA) and Missouri Power Equipment Act (MPEA) for failure to provide at least 90 days advance notice of the termination and non-renewal of the franchise agreement between the parties. The suit proceeded to trial and the jury returned a verdict in favor of Nissan and against ADL. The court entered judgment accordingly. Nissan filed its motion for attorney’s fees as a prevailing defendant under the MFA and MPEA.

Nissan argued that the MPEA provided an award of attorney’s fees unless “special circumstances” rendered it unjust.

Agreeing with ADL’s contention that an award of attorney’s fees was discretionary, the court determined that Nissan’s claim for attorney’s fees was statutory and based on the attorney fee provision of the MPEA. Under that provision, costs and reasonable attorney fees could be awarded upon a finding that the plaintiff’s action was frivolous, unreasonable, and groundless, according to the court. The court noted that ADL’s claims survived Nissan’s motions to dismiss, for summary judgment, and to exclude expert witness testimony to be tried by a jury. Additionally, Nissan’s motion for attorney’s fees reiterated many of the same arguments that were made in its prior motions contending that ADL’s claims were baseless. The court also noted that it conducted the trial and heard all of the parties’ evidence. From that vantage point, the court concluded that ADL’s claims, although ultimately unsuccessful, were not frivolous, unreasonable, or groundless.

The case is No. 4:12:-CV-153 CAS.

Attorneys: Adam D. Hirtz (Lowenbaum Partnership, LLC) for Lift Truck Lease and Service, Inc. Adrienne N. Russell (Hartline and Dacus) for Nissan Forklift Corporation, North America.

Companies: Lift Truck Lease and Service, Inc.; Nissan Forklift Corporation, North America

Cases: FranchisingDistribution MissouriNews