Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—Minn. Sup. Ct.: Nissan dealership entitled to notice, hearing over competitor’s relocation, (Feb 23, 2016)

By Greg Hammond, J.D.

The existing-dealer exception to the Minnesota Motor Vehicle Sale and Distribution Act’s (MVSDA) requirement that a motor vehicle manufacturer notify an existing dealer of the intention to establish or relocate a dealership within 10 miles of the existing dealer’s dealership is not applicable where the relocated dealership would be operated by a new dealer, the Minnesota Supreme Court has held. A state appellate court decision, affirming the denial of a Nissan dealership’s motion for a temporary restraining order and a good cause hearing pursuant to the MVSDA, was consequently reversed and remanded (Wayzata Nissan, LLC v. Nissan North America, Inc., February 17, 2016, Wright, W.).

Wayzata Nissan, LLC filed suit against Nissan North America, Inc. and an individual that purchased an existing dealership (Feldmann) that would be relocated within 10 miles of Wayzata. Wayzata sought a temporary restraining order pursuant to the MVSDA, which requires a motor vehicle manufacturer to notify an existing dealer of the intention to establish or relocate a dealership to a location within 10 miles of the existing dealer’s dealership and to have good cause for the proposed establishment or relocation. The district court denied the motion for a temporary restraining order, concluding that Nissan and the new dealer were exempt from the statute’s notice and good-cause requirements because Nissan intended to relocate an existing dealership. The appellate court affirmed.

Existing-dealer exception. The court first interpreted the notice requirement of the MVSDA, holding that notice is required on the date that a manufacturer develops the intention to authorize the establishment or relocation of a dealership, not on the date of the physical relocation of a dealership. In addition, the court held that the existing-dealer exception applies only to the “relocation of an existing dealer,” and that an “existing dealer” is the person or entity operating the dealership at the time that the manufacturer develops the requisite intention.

The existing-dealer exception did not apply to the relocation of the Feldmann dealership, the court concluded. It reasoned that Nissan provided Wayzata with notice on May 8 that Nissan intended to allow Feldmann’s successor in interest to relocate to a location within 10 miles of Wayzata. However, the relocated dealership was not going to be operated by Feldmann—the existing dealership—but would be operated by a new dealer. Because the exception did not apply to new dealers, Wayzata was entitled to notice and a good-cause hearing. The appellate court’s decision on the merits was therefore reversed and remanded.

The case is No. A14-1652.

Attorneys: Christopher W. Madel (Robins Kaplan LLP) for Wayzata Nissan, LLC. John Rock (Rock Law LLC) and William N. Berkowitz (Seyfarth Shaw LLP) for Nissan North America, Inc. Timothy J. Grande (DeWitt Mackall Crounse & Moore S.C.) for Stephen J. McDaniels.

Companies: Wayzata Nissan, LLC; Nissan North America, Inc.

Cases: FranchisingDistribution MinnesotaNews