GPI AL, Inc. v. Nissan North America, Inc.

          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 (11^th 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 (11^th 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 (11^th 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 (11^th Cir. 1984) (citation omitted); see also Wermager v. Cormorant Tp. Bd., 716 F.2d 1211, 1214 (8^th 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 ...