Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—MDFla: Florida Car Dealer Agreed to Arbitrate Its Claims Against Franchisor, (Feb 20, 2013)

By Peter Reap, J.D., LLM

A Florida car dealer, Crown Auto Dealerships, Inc., agreed to arbitrate its claims against a franchisor, Nissan North America, Inc., for violation of the Florida motor vehicle dealer law in connection with the franchisor’s refusal to provide the dealer with financial assistance under its Nissan Retail Environmental Design Initiative (“NREDI”) program, the federal district court in Tampa has decided (Crown Auto Dealerships, Inc. v. Nissan North America, Inc., February 15, 2013, Kovachevich, E.).

The parties entered into an agreement relating to the franchisor’s dealer facilities upgrade program—The Facility Program - Dealer Participation Agreement (“DPA”)—that contained a mandatory arbitration provision. The franchisor moved for an order compelling the four claims asserted by the dealer. Nissan argued that each count arose from and was based on the dealer’s participation in the NREDI program and the franchisor’s alleged failure to pay the financial assistance specified in the DPA.

Crown contended that Counts 1 and 2 of its complaint did not arise under the DPA and were not arbitrable. In Count 1, Crown alleged that Nissan’s “refusal to provide financial assistance to Plaintiff under the NREDI program constitutes a violation of section 320.64(10)(c)” of the Florida motor vehicle dealer law. In Count 2, Crown sought an injunction requiring Nissan to comply with its obligations to provide to Crown the $300,000 in financial assistance that has been provided to other Nissan dealers who have participated in the NREDI program at the major remodel level.

The parties' DPA explicitly provides that “it is inconsistent with the parties' relationship to use either courts or governmental agencies to resolve claims or controversies that might arise between them,” the court noted. The parties agreed to submit those claims or controversies to mediation, and if not resolved, to binding arbitration: “The Parties hereby agree that any such dispute which might arise among one or more of the Parties will be submitted to and resolved through binding arbitration, which shall be the exclusive mechanism for resolving any dispute, controversy or claim among the Parties.”

The agreement to arbitrate did not include the phrase “any dispute arising from or relating to” the Agreement, but the explicit provision for “no courts or governmental agencies,” “mediation or arbitration of any dispute that might arise,” and “exclusive means” reflected the intent of the parties that the scope of the agreement to arbitrate was broad, not narrow, the court determined.

Based on the allegation that Nissan’s refusal to provide financial assistance was a statutory violation, Crown’s claim arose during the term of the Agreement, according to the court. Moreover, in general, a court should enforce an arbitration agreement according to its terms, and no exception existed for causes of action founded on statutory rights.

The parties could have agreed to limit the scope of the agreement to arbitrate to non-statutory claims, but did not do so. There was no authority that explicitly prohibited the arbitration of disputes brought under the dealer law, the court observed.

Further, the Agreement provided that the Arbitrator has the authority to award all appropriate relief, including specific performance and injunctive relief. The Arbitrator therefore had the authority to award the relief sought by Crown in Count I, treble damages. Crown did not assert any defense available under state contract law for revocation of the arbitration agreement, such as fraud, duress, or unconscionability.

Thus, based on the broad scope of the agreement to arbitrate, and the allegations of a contractual nexus between the alleged statutory violation and the Agreement, arbitration of Count I was appropriate, the court held. For the same reasons, arbitration of Count 2 was appropriate.

The case is No. 8:12-CV-1367-T-17TGW.

Attorneys: Alex Kurkin (Kurkin Forehand Brandes, LLP) for Crown Auto Dealerships, Inc. James Andrew Bertron , Jr. (Nelson, Mullins, Riley & Scarborough, LLP) for Nissan North America, Inc.

Companies: Crown Auto Dealerships, Inc.; Nissan North America, Inc.

Cases: FranchisingDistribution FloridaNews