United States District Court, S.D. Alabama, Southern Division
ORDER
WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE.
This
matter comes before the Court on the Motion for Summary
Judgment (doc. 110) filed by plaintiff, GPI AL-N, Inc., and
the Motion for Partial Summary Judgment (doc. 111) filed by
defendant, Nissan North America, Inc. Both Motions have been
extensively briefed and are now ripe for disposition.
I.
Nature of the Case.
Plaintiff,
GPI AL-N, Inc. d/b/a Nissan of Mobile (“Nissan of
Mobile”), is an independently owned motor vehicle
dealer that operates an authorized Nissan dealership in
Mobile, Alabama. Nissan of Mobile brought this action against
defendant, Nissan North America, Inc. (“NNA”), a
manufacturer/distributor of new Nissan motor vehicles, after
NNA announced its intention to create a so-called “open
point” to establish a new Nissan dealership in west
Mobile, Alabama. According to Nissan of Mobile, NNA's
actions violate both the terms of the Dealer Agreement
governing the parties' relationship and the statutory
provisions of the Alabama Motor Vehicle Franchise Act, Ala.
Code §§ 8-20-1 et seq. (the
“MVFA”).
In its
Amended and Restated Complaint (doc. 46), Nissan of Mobile
asserts a half-dozen state-law causes of action against NNA,
including four claims for alleged violations of the MVFA and
two claims for breach of contract.[1] Specifically, Count One
alleges a violation of § 8-20-4(3)(l) because
NNA's decision to establish an additional dealership in
Mobile was unreasonable under the circumstances, thereby
entitling Nissan of Mobile to an injunction barring NNA from
entering into the proposed franchise. Count Two is also an
MVFA claim, in which Nissan of Mobile alleges that NNA
violated § 8-20-4(1)(h) by coercing plaintiff to adhere
to sales performance standards that are not fair, reasonable
or equitable, such that Nissan of Mobile is entitled to an
injunction barring NNA from violating the MVFA. In Count
Three, plaintiff invokes § 8-20-4(2), alleging that NNA
engaged in arbitrary, unconscionable, unreasonable or
bad-faith action by failing to follow the Dealer Agreement in
creating a new dealership, failing to allow Nissan of Mobile
to object to the market study, failing to consider those
objections, considering factors other than the Mobile
market's need for an additional Nissan dealer, and
evaluating Nissan of Mobile's performance using a
standard that fails to take into account relevant factors. On
that basis, Nissan of Mobile seeks an injunction in Count
Three prohibiting NNA from creating an open point or
appointing any new dealer in Mobile. Count Four, the final
MVFA claim, alleges that NNA violated the duty imposed by
§ 8-20-4.1 to act in good faith and deal fairly by
failing to abide by the terms of the Dealer Agreement,
failing to follow its own internal procedures in evaluating
whether to add another dealer, failing to follow internal
procedures regarding the integrity of the market study,
rejecting the “monitored market” recommendation
of its consultant, and basing its decision to add another
dealer upon irrelevant factors. Plaintiff seeks an injunction
in Count Four prohibiting NNA from creating an open point or
appointing any new dealer in Mobile.
Counts
Five and Six of the Amended Complaint sound in theories of
breach of contract. In Count Five, plaintiff maintains that
NNA breached the Dealer Agreement by deciding to add another
dealer to the Mobile market before notifying Nissan of Mobile
of the results of the market study, failing to provide Nissan
of Mobile with an opportunity to object to the study, and
giving no consideration to Nissan of Mobile's objections,
for which plaintiff seeks an injunction prohibiting NNA from
creating an open point or appointing a new dealer in west
Mobile. Meanwhile, in Count Six, plaintiff alleges that NNA
breached the Dealer Agreement by failing to endeavor to
discern if there were reasonable criteria that should be
taken into account in analyzing Nissan of Mobile's sales
performance, and that Nissan of Mobile is therefore entitled
to an injunction prohibiting NNA from evaluating Nissan of
Mobile's sales performance using metrics that fail to
take into account “reasonable criteria directly
affecting Nissan of Mobile's sales opportunity and
performance.” (PageID.280.)
The
parties have filed and briefed multipronged, overlapping
cross-motions for summary judgment. Plaintiff contends that
it is entitled to judgment as a matter of law on each of the
six causes of action joined in the Amended Complaint. For its
part, defendant seeks entry of summary judgment in its favor
on Counts Two through Six, while representing that genuine
issues of material fact remain as to Count One.
II.
Relevant Background Facts.[2]
A.
The Dealer Agreement.
Nissan
of Mobile and NNA entered into a Dealer Sales & Service
Agreement (the “Agreement”) on November 28, 2011.
(PageID.1304.) The parties subsequently amended and extended
that Agreement on December 20, 2016. (PageID.1306-07.)
Incorporated into the terms of that Agreement is a document
styled “Nissan Dealer Sales and Service Agreement
Standard Provisions” (the “Standard
Provisions”). (PageID.1586.) Section 3.B. of the
Standard Provisions states that “Dealer's
performance of its sales responsibility for Nissan Cars and
Nissan Trucks will be evaluated by Seller on the basis of
such reasonable criteria as Seller may develop from time to
time, ” and provides certain examples of such
“reasonable criteria.” (PageID.1310.) Among those
enumerated types of “reasonable criteria” for
evaluating dealer sales performance recited in the Standard
Provisions is Section 3.B.3, which allows for “[a]
comparison of Dealer's sales and/or registrations to
sales and/or registrations of all other Authorized Nissan
Dealers combined in Seller's Sales Region and District in
which Dealer is located.” (Id.) Section 3.D.
of the Standard Provisions states that “[w]here
appropriate in evaluating Dealer's sales performance,
Seller will take into account such reasonable criteria as
Seller may determine from time to time, including, for
example, ” things like dealership location, general
shopping habits of the public in that market area, any
special local market conditions that would affect the
dealer's sales performance differently than other
dealers, and the like. (PageID.1310-11.)
Section
4 of the Standard Provisions addresses issues concerning
market studies, NNA's authority to establish an
“open point” (i.e., to create a new
dealership in a particular market), and Nissan of
Mobile's rights to be notified and to object in certain
circumstances under certain conditions. In particular,
Section 4.A. provides, in pertinent part, that “Seller
may, from time to time and in its sole discretion, conduct
studies of various geographic areas to evaluate market
conditions. … Such studies will make recommendations
concerning the market, the Dealership Facilities, and the
Dealership Location.” (PageID.1311.) Section 4.B.1.
establishes the following procedures regarding creation of an
open point:
“If any study conducted pursuant to Section 4.A
recommends that an open point be established at a location
that is within ten (10) miles driving distance … of
Dealer's main Dealership Location, Seller will so notify
Dealer. Dealer will have thirty (30) days from Dealer's
receipt of notice of the recommendations of the study in
which to object to them. Upon Dealer's request, Seller
will review the results of the study with Dealer ….
Seller will consider all objections to the recommended open
point timely made by Dealer.”
(PageID.1312.) And Section 17.A. of the Standard Provisions
provides as follows: “All notices or notifications
required or permitted to be given by this Agreement to either
party shall be sufficient only if given in writing and
delivered personally or by mail to the Dealer at the address
set forth on the Dealership Facilities Addendum … and
to Seller at its national headquarters.”
(PageID.1313.)
B.
The 2015-2016 Market Study.
On
October 2, 2015, NNA transmitted a letter to Nissan of Mobile
to notify it that, pursuant to § 4.A. of the Standard
Provisions, NNA “will conduct a market study in the
Gulf Coast area.” (PageID.1621.) The October 2 letter
invited Nissan of Mobile to submit any information it wished
to bring to NNA's attention within 30 days, and indicated
that NNA would consider such information prior to finalizing
a recommendation. (Id.) Nissan of Mobile elected not
to avail itself of this opportunity. (PageID.1625-26, 1632.)
NNA
retained a company called Urban Science Applications, Inc.
(“USAI”) to prepare the Mobile market study. USAI
delivered its completed report for the Mobile market to NNA
on January 4, 2016. (PageID.1344-45.) The initial result of
that study was that USAI recommended a “monitored
market, ” meaning that NNA would monitor the Mobile
market going forward to continue evaluating whether
establishing an open point at some future time would be
appropriate. (PageID.1372.)[3] Although various NNA officials
and departments signed off on that recommendation, Andy
Delbrueck, who was NNA's Senior Manager of Market
Studies, harbored lingering concerns with the
“monitored market” recommendation and halted the
approval process to conduct further investigation.
(PageID.1359-60.)[4] It was Delbrueck's role in the company
to suspend the approval process when issues arose.
(PageID.1372.) Delbrueck's concerns were shared by Billy
Hayes, who was NNA's Regional Vice President for the
Southeast Region. (PageID.1363, 1366-67.) As a result of
NNA's decision to table the market study and conduct
further investigation, no presentation of the USAI study or
its “monitored market” recommendation was made to
Nissan of Mobile in early 2016.
C.
The Decision to Create a West Mobile Open
Point.
In
furtherance of the information-gathering process, Delbrueck
traveled to Mobile in late 2016 for the purpose of
“tak[ing] a look at the Mobile market … as a
result of Urban Science presenting the study to [NNA].”
(PageID.1481.) At that time, he “drove the Mobile
market” over the course of “more than a couple of
hours, ” including driving the “existing auto row
in Mobile” where Nissan of Mobile is located, as well
as the auto row in West Mobile. (PageID.1481, 1483.) In
canvassing the West Mobile area, Delbrueck drove “past
each one of the dealerships that were established there,
” drove “north and south of the auto row,
… back into some areas where there [were] new houses
being constructed, ” traveled “past the big box
retailers just to gauge an indication of who was there,
” and “drove around each one of the dealerships
that was there; the Ford, the Chevy, the Toyota, and the
Hyundai.” (PageID.1484.) In driving the market,
Delbrueck was looking for indications of the kind of retail
in the area, whether the area was growing or declining,
whether there was investment in new facilities (either inside
or outside the automotive industry), and the like.
(PageID.1485.)
Ultimately,
in February 2017, “there was a change made in the
recommendation for the open point because we did not agree
with Urban Science on their initial assessment.”
(PageID.1493.) NNA's evidence is “that's not an
unusual occurrence. We don't always agree with Urban
Science on their findings.” (PageID.1494.) As one NNA
official explained, “In the case of this particular
situation, our existing dealer was not covering that part of
the market … to what we consider to be an adequate
level, and that was why the decision was made to then change
it to an open point. … So that's really the
difference between open point and monitored market. If
we're not covering the area and capturing the opportunity
that's there, then obviously that has an impact on the
final decision on whether or not we declare an open
point.” (Id.) After the recommendation of the
market study was changed to establishment of an open point,
various NNA officials and departments signed off on the new
recommendation in short order. According to NNA, the
“final decision from Nissan to move forward with
creating an open point in Mobile West” was made before
NNA presented the market study results to Nissan of Mobile.
(PageID.1495.)[5]
A
“Dealer Presentation” was prepared and dated
February 2017. It essentially retained all or most of the
data and analysis from the original market analysis report
prepared by USAI in January 2016, but modified the final
conclusion to recommend an open point in the West Mobile
market. (PageID.1497-1522.)[6]
On
March 15, 2017, NNA's Dealer Operations Manager, Ryan
Knight, met with Michael Neves, Nissan of Mobile's
General Manager, in person to review the market study.
(PageID.1526.) At that time, Knight informed Neves that
“it has been decided that another store will be added
in West Mobile, ideally within a relative location to
Palmer's Toyota and Palmer's Hyundai.”
(Id.) For his part, “Neves acknowledged the
findings and did not have any further comment on the
topic.” (Id.) On the same date, Knight
presented this information to David Fesmire, who was listed
as the “dealer” on the Dealer Agreement, via
telephone. In response, Fesmire “voiced his concern
about the number of new stores going in around the gulf area
in general, but understands Nissan's drive to match
Toyota's locations and to get ahead of potential
growth.” Id. On March 30, 2017, NNA sent a
letter to Fesmire formally notifying Nissan of Mobile of the
results of the market study, indicating that the study
yielded a “recommendation” of establishing an
open point in West Mobile, and concluding, “Thank you
again for the opportunity to meet with you to review the
study results.” (PageID.1685.) On April 18, 2017,
Nissan of Mobile met with NNA officials and stated their
position that (i) “the market was still properly served
with the 1 location, ” (ii) designating the open point
was premature, (iii) the data supporting the market study was
of questionable relevance because it dated back to October
2015 “and may not reflect the current market
conditions, ” and (iv) Nissan of Mobile's parent
company “might be interested in establishing a service
location in this area.” (PageID.1406.) At the
conclusion of the meeting, NNA advised Nissan of Mobile that
“Nissan would be moving forward with the Open
Point.” (Id.) This litigation followed.
III.
Summary Judgment Standard.
Summary
judgment should be granted only “if the movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Rule 56(a), Fed.R.Civ.P. The party seeking summary judgment
bears “the initial burden to show the district court,
by reference to materials on file, that there are no genuine
issues of material fact that should be decided at
trial.” Clark v. Coats & Clark, Inc., 929
F.2d 604, 608 (11th Cir. 1991). Once the moving
party has satisfied its responsibility, the burden shifts to
the non-movant to show the existence of a genuine issue of
material fact. Id. “If the nonmoving party
fails to make 'a sufficient showing on an essential
element of her case with respect to which she has the burden
of proof,' the moving party is entitled to summary
judgment.” Id. (quoting Celotex Corp. v.
Catrett, 477 U.S. 317 (1986)) (footnote omitted).
“In reviewing whether the nonmoving party has met its
burden, the court must stop short of weighing the evidence
and making credibility determinations of the truth of the
matter. Instead, the evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in
his favor.” Tipton v. Bergrohr GMBH-Siegen,
965 F.2d 994, 999 (11th Cir. 1992) (internal
citations and quotations omitted). “Summary judgment is
justified only for those cases devoid of any need for factual
determinations.” Offshore Aviation v. Transcon
Lines, Inc., 831 F.2d 1013, 1016 (11th Cir.
1987) (citation omitted).
Here,
both sides have moved for summary judgment on the claims
asserted in this action. It is well-settled that “[t]he
applicable Rule 56 standard is not affected by the filing of
cross-motions for summary judgment.” Page v.
Winn-Dixie Montgomery, Inc., 702 F.Supp.2d 1334, 1345
(S.D. Ala. 2010) (citations omitted); see also Murray v.
Holiday Isle, LLC, 620 F.Supp.2d 1302, 1307 (S.D. Ala.
2009) (same). The Eleventh Circuit has explained that
“[c]ross-motions for summary judgment will not, in
themselves, warrant the court in granting summary judgment
unless one of the parties is entitled to judgment as a matter
of law on facts that are not genuinely disputed.”
United States v. Oakley, 744 F.2d 1553, 1555
(11th Cir. 1984) (citation omitted); see also
Wermager v. Cormorant Tp. Bd., 716 F.2d 1211, 1214
(8th Cir. 1983) (“the filing of cross
motions for summary judgment does not necessarily indicate
that there is no dispute as to a material fact, or have the
effect of submitting the cause to a plenary determination on
the merits”). Nonetheless, “cross-motions may be
probative of the absence of a factual dispute where they
reflect general agreement by the parties as to the
dispositive legal theories and material facts.”
Page, 702 F.Supp.2d at 1345 (citations omitted);
see also Murray, 620 F.Supp.2d at 1307.
IV.
Analysis.
As
noted, the parties have filed and briefed cross-motions for
summary judgment. In its Rule 56 Motion, Nissan of Mobile
seeks entry of judgment in its favor as to all six causes of
action asserted in the Amended Complaint. By contrast,
NNA's Motion for Summary Judgment seeks dismissal of only
Counts Two through Six, without requesting entry of judgment
as a matter of law as to Count One of the Amended Complaint.
The parties' respective arguments on each cause of action
will be addressed sequentially.
A.
Violation of Alabama Code § 8-20-4(3)(1) (Count
One).
As
noted, only plaintiff has moved for summary judgment on Count
One, which is a statutory claim arising under Alabama's
Motor Vehicle Franchise Act. Count One alleges that NNA
violated the subsection of the MVFA prohibiting a
manufacturer from “unreasonably and without notice to
existing motor vehicle dealers … enter[ing] into a
franchise with an additional motor vehicle dealer who intends
to conduct its dealership operations from a place of business
situated within the relevant market area of an existing motor
vehicle dealer … representing the same line
make.” Ala. Code § 8-20-4(3)(l).
Reasonableness is the touchstone of the inquiry under §
8-20-4(3)(l). In a legal proceeding to determine
whether such a proposed appointment is reasonable, the
manufacturer “shall have the burden of proof that such
action is not unreasonable.” Id. “In
determining whether such a proposed appointment is
unreasonable, the court shall consider all pertinent
circumstances.” Id.[7]
To meet
its burden of showing that its decision to create an open
point for the West Mobile market was not unreasonable, NNA
relies heavily on the expert opinions of Sharif Farhat, Vice
President of Expert Analytical Services for USAI, whom NNA
retained to perform a market analysis after Nissan of Mobile
filed suit.[8] Among the conclusions of Farhat's
report were the following: (i) the Mobile West Primary Market
Area (“PMA”)[9] has experienced subpar Nissan brand
performance (measured by registration effectiveness) since at
least 2012, whereas the PMA served by Nissan of Mobile
essentially met or slightly exceeded the standard in 2017 and
2018; (ii) using various standards and metrics of comparison,
the data consistently shows that the Mobile West PMA
“is not being adequately represented by the current
Nissan dealer network;” (iii) Nissan of Mobile's
sales performance in the Mobile Metro (as measured by a
metric called State Sales Effectiveness Represented, or SSER)
was below average during the analyzed period, but stood to
increase to above average if a dealer were appointed in West
Mobile, thereby shrinking Nissan of Mobile's PMA; (iv)
the growth of Nissan vehicles available within the market in
West Mobile was consistently falling short of that in the
east side serviced by Nissan of Mobile; (v) population,
median income and employed population were all growing in the
Mobile West PMA and were projected to continue growing; (vi)
based on competitive dealer counts, Nissan needed additional
dealer representation in the Mobile Metro area to reach its
benchmark standard; and (vii) other brands offered superior
levels of customer convenience in the Mobile West PMA as
compared to the existing Nissan dealer network.
(PageID.1977-80.) Based on these and other factors, data
points and analyses, Farhat concluded that “the primary
cause of the deficient market penetration (e.g.,
inadequate representation) of the Nissan brand is that there
are too few Nissan sales and service facilities available in
the Mobile Metro …, which has resulted in too few
registrations in relation to the opportunity available. This
can be solved by adding another Nissan dealer in the Mobile
Metro.” (PageID.1980.)
On its
face, Farhat's expert report is sufficient to create
genuine issues of material fact as to whether NNA can meet at
its burden under § 8-20-4(3)(l) to show that
its decision to establish an open point in the Mobile West
PMA was not unreasonable. Plaintiff does not argue otherwise;
rather, plaintiff's position is that Farhat's expert
opinions should be excluded in their entirety under
Daubert reliability principles. If NNA's expert
in automotive dealer market analysis were excluded, Nissan of
Mobile reasons, NNA could not meet its statutory burden of
showing reasonableness, and plaintiff would therefore be
entitled to summary judgment on Count One. Indeed, Nissan of
Mobile candidly acknowledges that “summary judgment as
to Count One rests on the admissibility of Farhat's
opinions.” (PageID.2428.)[10] By separate Order entered
on this date, however, the undersigned has denied
plaintiff's Motion to Exclude Expert Testimony of Sharif
Farhat (doc. 96). Because the Court has deemed Farhat's
expert opinions admissible at trial, plaintiff's motion
for summary judgment as to Count One (which was grounded
solely in the notion that Farhat's opinions were
inadmissible under Daubert) is properly
denied.
B.
Violation of Alabama Code § 8-20-4(1)(h) (Count
Two).
Both
sides move for summary judgment on Count Two. In that claim,
Nissan of Mobile maintains that NNA violated the MVFA
provision prohibiting it from “coerc[ing] or
attempt[ing] to coerce any motor vehicle dealer to …
adhere to performance standards that are not fair,
reasonable, and equitable or that are not applied uniformly
to other similarly situated dealers.” Ala. Code §
8-20-4(1)(h). That subsection further requires that any such
performance standard “that may have a material effect
on a dealer” must be fair, reasonable, and equitable.
Id. Plaintiff's position is that NNA's use
of a performance metric called “State Sales
Effectiveness Represented, ” or “SSER” for
short, violates § 8-20-4(1)(h) because it fails to
account for local market conditions, such as the presence or
absence of competing dealers or the presence or absence of
Nissan facilities and employees.[11] Plaintiff's evidence
is that NNA utilizes SSER as “measurement of a
dealer's opportunity for growth relative to other dealers
within that state.” (PageID.1320.)
As a
threshold matter, NNA argues that Count Two fails as a matter
of law because Nissan of Mobile lacks standing to bring a
claim under § 8-20-4(1)(h). The MVFA creates a private
right of action for “any person who is
injured in his business or property by a
violation of this chapter by the commission of any unfair and
deceptive trade practices, or because he refuses to accede to
a proposal for an arrangement which, if consummated, would be
in violation of this chapter.” Ala. Code § 8-20-11
(emphasis added); see also DaimlerChrysler Motors Corp.
v. Susan Schein Chrysler, Plymouth, Dodge, Inc., 853
So.2d 925, 927 (Ala. 2003) (confirming that relief is
available under § 8-20-11 only for a person “who
is injured in his business or property by a violation of this
chapter” and that a plaintiff may not recover for
“a future injury that never materialized”).
NNA's point, quite simply, is that the record is devoid
of evidence that Nissan of Mobile has been injured in its
business or property by NNA's use of the SSER performance
metric (i.e., the alleged unfair and deceptive trade
practice at the heart of Count Two). Defendant's evidence
is that the SSER was one of myriad forms of data considered
in NNA's decision to establish an open point in West
Mobile, and that it was neither the only nor even the primary
metric in that calculation.[12] Defendant also points out that
Nissan of Mobile has disclaimed any intent to bring ...