Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Dealer claims Nissan’s sales requirements violate Minnesota vehicle distribution statutes, (Jan 7, 2014)

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

Nissan North American, Inc. violated the Minnesota motor vehicle sales and distribution statutes by assigning Wayzata Nissan an inflated primary market area, giving the dealer unreasonable sales goals, providing other Nissan dealers with discriminatory pricing incentives, refusing to give credit for sales of factory program vehicles, replacing dealer performance standards on a retroactive basis, pressuring dealers to increase market share overnight, and subjecting the dealership to termination based on improper sales goals and metrics, according to a complaint filed in Minnesota state court (Wayzata Nissan, LLC v. Nissan North America, Inc., December 31, 2013).

Wayzata Nissan brought the action for legal and equitable relief from actions, demands, and programs of Nissan North America that, on their face, violate Minnesota motor vehicle sales and distribution laws and breach implied promises to deal fairly and commercially reasonably with the dealer, the complaint said.

Much of the lawsuit stems from Nissan North America’s alleged plan to rapidly increase its market share in the U.S. by imposing “increasingly aggressive new-vehicle sales performance standards that differed from dealer to dealer and were largely dependent on each dealer’s primary market area (PMA).” On April 4, 2013, Nissan allegedly threatened to terminate Wayzata Nissan’s franchise agreement if the dealer did not meet new-vehicle sales requirements over a six month period, from April 1, 2013 through September 30, 2013.

Prior to this, Nissan North America had assigned the dealership an “inflated PMA,” which was further extended to include areas physically separated from the dealership by natural barriers, such as Lake Minnetonka, and were too far from Wayzata to make car-shopping at the dealership feasible, the dealer claimed. When Wayzata Nissan met the sales standards, Nissan North America allegedly introduced “superseding new-vehicle sales requirements” that again increased the level of new vehicle sales demanded of the dealer. The “ratcheting of dealership performance standards” and “ramped-up discriminatory pricing programs” assured that dealers would be subject to termination “at the whim of Nissan N.A. unless they are willing to sell new NISSAN vehicles for net losses,” the dealership charged.

The complaint claimed that Nissan North America’s conduct (1) violated the Minnesota Motor Vehicle Sale and Distribution Act by applying unfair, unreasonable, and discriminatory performance requirements; (2) violated the Minnesota Motor Vehicle Sale and Distribution Act by assigning an unfair and inequitable sales effectiveness standard; (3) violated the Minnesota Motor Vehicle Sale and Distribution Act by imposing an unreasonable stair-step sales program; and (4) breached the implied covenant of good faith and fair dealing in the exercise of rights under the franchise agreement.

Wayzata Nissan requested an award of money damages exceeding $50,000; declaratory judgments that Nissan North America’s sales performance metrics and sales growth program violate the Minnesota Motor Vehicle Sale and Distribution Act; injunctions against the application of such metrics and programs to the dealership; and attorney fees and costs as appropriate.

The case is No. 0:13-cv-03651-DSD-FLN.

Attorneys: Christopher W. Madel and Aaron R. Thom (Robins, Kaplan, Miller & Ciresi L.L.P.) for Wayzata Nissan, LLC.

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

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