Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—W.D. Ky.: Court trims some claims in termination tussle between equipment distributor and manufacturer, (Sep 25, 2025)

By Donielle Tigay Stutland, J.D.

The court dismissed some counts finding no private right of action under the Kentucky statutes (KRS 365.832), which prohibits supplier coercion.

The federal district court in Louisville trimmed some counts in a suit brought by a distributor against an equipment manufacturer under the Kentucky equipment dealer law. Rudd Equipment Company, Inc., a distributor of equipment manufactured by Hitachi Construction Machinery Americas Inc., brought suit when the agreements between the parties went south. The court dismissed some counts after determining that a Kentucky law that prohibits supplier coercion has no private right of action. The court denied the manufacturer’s request to dismiss the count requesting an injunction to stop the termination of the agreements, indicating that court has jurisdiction to decide whether the agreements have been terminated. The court also denied the motion to dismiss claims requesting equitable relief as premature at this stage of litigation (Rudd Equipment Co., Inc. v. Hitachi Construction Machinery Americas Inc., No. 3:25-cv-00005-GNS-CHL (W.D. Ky. Sept. 17, 2025)).

Background. Rudd is a distributor of equipment produced by Hitachi. Rudd and a former business entity for which Hitachi is the successor in interest are parties to two distribution agreements, under which Rudd is the exclusive distributor of Hitachi’s “hydraulic excavators and shovels, and implements, parts, and accessories” in seven states.

The distributor alleged that the equipment manufacturer sought to renegotiate its contract and implement a mandatory sales provision requiring a six percent market share for Hitachi products. The manufacturer asked an arbitration panel to determine that the distribution agreements were non-exclusive and that there was good cause for termination, which the panel denied. The manufacturer gave the distributor written notice that it had breached the agreements, and the manufacturer asserted that the agreements terminated by operation of law on March 17, 2025.

The distributor brought suit alleging the manufacturer violated a provision of Kentucky law by improperly attempting to terminate the agreements, and by breaching the agreements. The manufacturer moved to dismiss the complaint.

Private right of action. The court began its analysis by reviewing the manufacturers claims that the distributor's Counts I and II should be dismissed because there is no private right of action for KRS 365.832, the statute on which both counts are based. The manufacturer also argued that its correspondence with the distributor cannot be considered a prohibited coercion under the statute. The distributor asserted that there is an implied right of action, and that declaratory judgment is available through Kentucky’s Declaratory Judgment Act.

The court rejected the distributor’s argument that there was an implied right of action. The court indicated that because the distributor may assert a breach of contract claim based upon the manufacturer’s alleged insistence upon contract terms which are illegal under Kentucky law. KRS 365.832; KRS 365.834. Accordingly, there is no implied private right of action for KRS 365.832 In the alternative, the distributor argued that it may obtain judgment based on Kentucky’s Declaratory Judgment Act, KRS 418.045. The court first noted that as the grant of declaratory relief is procedural, federal—not state—law governs, and it will look at the federal Declaratory Judgment Act. The court however rejected the distributor’s argument, indicating that as there is no private cause of action for KRS 365.832, therefore relief is not available under the federal Declaratory Judgment Act.

Mootness. The manufacturer next argued that Counts II and VI should be dismissed as moot, because the agreements have already terminated. In response, the distributor argued that the agreements are still in effect, and the complaint specifically alleges that “Hitachi has repeatedly threatened and attempted to terminate the Agreements without good cause to do so....” In Count II, the distributor requested that the manufacturer be “enjoined from demanding purchases beyond customer demand, terminating the Agreements, and preventing purchases from Volvo.” In Count VI, the distributor seeks an injunction preventing termination of the agreements, requiring compliance with the Kentucky Dealer Protection Act, and reinstating the status quo of the parties. The court stressed that a breach of contract claim is not rendered moot by virtue of termination of the contract when that termination is disputed.

Accordingly, the court denied the manufacturer’s motion to dismiss Count VI indicated that the court has jurisdiction to decide whether the agreements have been terminated. The court indicated that Count II was already dismissed because there was no private right of action.

Equitable relief. The court finally turned to the manufacturer’s argument that Counts V and VI should be dismissed because the distributor has an adequate remedy at law.

The distributor argued that damages cannot provide adequate relief for the manufacturer’s breach, which resulted in impairment of goodwill and exclusive distribution rights. While the court highlighted that, “As a general rule, equity will not decree specific performance of a contract for a sale of personal property because ordinarily there is an adequate remedy at law,” the court also pointed out that the court “retains discretion to order a remedy in equity if justice so requires, so dismissal at this stage is premature.” Moreover, “because the loss of customer goodwill is often difficult to calculate, such loss may constitute irreparable injury.”

The court indicated that it was premature to consider the distributor’s valuation of its goodwill at this time. The court found the allegations could warrant equitable relief, and it denied the manufacturers motion to dismiss the counts requesting equitable relief.

The Case is No. 3:25-cv-00005-GNS-CHL.

Judge: Stivers, G.

Attorneys: Aaron T. Brogdon (Frost Brown Todd LLC) for Rudd Equipment Co., Inc. Burt Anthony Stinson (Kaplan Johnson Abate & Bird LLP) for Hitachi Construction Machinery Americas Inc.

Companies: Rudd Equipment Co., Inc.; Hitachi Construction Machinery Americas Inc.

Cases: FranchisingDistribution KentuckyNews