United States Court of Appeals
For the First Circuit
No. 00-2052
ROCHESTER LINCOLN-MERCURY, INC.,
Plaintiff, Appellant,
v.
FORD MOTOR COMPANY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Steven J. McAuliffe, U.S. District Judge]
Before
Selya, Boudin and Lynch,
Circuit Judges.
Daniel A. Laufer for appellant.
Bryan M. Haynes with whom Nicholas T. Christakos and
Sutherland Asbill & Brennan, LLP were on brief for appellee.
May 7, 2001
BOUDIN, Circuit Judge. The question on this appeal is
whether a New Hampshire statute, regulating, inter alia,
business practices as between motor vehicle manufacturers and
dealers, should be read to protect an existing franchisee
alleging that the car maker unfairly denied it an additional
franchise. The district court denied relief based on state
precedent, Roberts v. Gen. Motors. Corp., 643 A.2d 956 (N.H.
1994). We affirm.
Since 1974, Edward Casaccio has owned and operated
Rochester Lincoln-Mercury, Inc. ("Rochester"), a dealership in
Rochester, New Hampshire, with a franchise from Ford Motor
Company ("Ford") to sell and service Lincoln and Mercury cars.
In August 1995, Casaccio applied for a franchise to sell Fords
in Rochester as "Rochester Ford." The incumbent franchisee had
died and Casaccio had contracted with the heirs to purchase the
Ford business, conditional on Ford's approval of Casaccio's
application.
Ford’s regional sales manager rejected Casaccio's
application. To explain his decision, the sales manager pointed
to Rochester's "historically unsatisfactory sales and market
share performance." Claiming that his sales record was unfairly
compared to dealerships in more affluent areas, Casaccio
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appealed to higher-level Ford officials. His appeal was
unsuccessful.
In November 1999, Rochester filed a diversity suit in
federal district court, 28 U.S.C. § 1332 (Supp. II 1996),
alleging that Ford’s "arbitrary and/or . . . bad faith" denial
of Casaccio’s application violated New Hampshire's motor vehicle
franchise statute. N.H. Rev. Stat. Ann. § 357-C:3(I) (1995 &
Supp. 2000). Rochester claimed economic damages of $5 million.
Citing Roberts, the district court granted Ford's motion to
dismiss the complaint for lack of standing to sue under the
state statute. Rochester now appeals.
The New Hampshire statute regulates "business practices
between motor vehicle manufacturers, distributors, and dealers."
N.H. Rev. Stat. Ann. § 357-C. Section 357-C:3 ("Prohibited
Conduct") lists unlawful acts; and subsection I, invoked by
Rochester, states: "It shall be deemed an unfair method of
competition and unfair and deceptive practice for any . . .
[m]anufacturer . . . to engage in any action which is arbitrary,
in bad faith, or unconscionable and which causes damage to any
["motor vehicle dealer"] or to the public."
Section 357-C:12(II) ("Enforcement") provides the cause
of action for unlawful acts. It states that
any person who is injured in his business or
property by a violation of this chapter . .
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. may bring a civil action in the superior
court to enjoin further violations and to
recover the actual damages sustained by him
together with the costs of the suit,
including a reasonable attorney's fee.
N.H. Rev. Stat. Ann. § 357-C:12(II) (1995), currently codified
at § 357-C:12(IX) (Supp. 2000). In Roberts, the New Hampshire
state court looked to section 357-C:12(II) and held that an
unsuccessful new applicant for a franchise lacked standing under
"this chapter" ( i.e., 357-C) because he had not been "injured in
business or property." 643 A.2d at 958-59.
In cases like this one, there is obviously standing in
the Article III sense: Rochester can prove, or at least might be
able to prove, that it is economically worse off as a direct
consequence of Ford's refusal to approve the franchise
application. However, in Roberts, the New Hampshire Supreme
Court read subsection I as designed, so far as dealers were
concerned, to protect existing dealer franchises and not
applicants who were merely seeking franchises. 643 A.2d at 959.
In turn, the district court here found that Rochester, so far as
it was a new applicant, was not intended to be protected.
Rochester seeks to distinguish Roberts on the ground
that Rochester is an existing franchisee and the applicant in
Roberts was not. But, as we read Roberts, the statute's
protection is for the existing franchise of the franchisee and
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not some new and different franchise sought by that person. The
usual argument for protecting existing franchisees by statute is
their investment in the existing franchise, Roberts, 643 A.2d at
960; but while Rochester invested in its franchise to sell
Lincolns and Mercuries, it had no investment in a franchise to
sell Fords.
The New Hampshire court in Roberts stressed the
statutory language that extends protection only to the "business
or property" of the dealer. 643 A.2d at 958-59. Another court
might have said that such language is vague and instead stressed
likely legislative policy--for it is highly unusual for statutes
to impose some general obligation on businesses to begin new
relationships and much more common to protect existing ones. If
we were construing the statute afresh, we would agree with the
Roberts court, but our agreement is beside the point. Reading
Roberts as we do, that case is binding on the federal courts as
a definitive construction of New Hampshire law by the state's
highest court. Smiley v. Kansas, 196 U.S. 447, 455 (1905).
Counterpart decisions in other jurisdictions have
denied claims by current dealers against their car makers who
refused to grant or approve transfer requests for new
franchises. E.g., Key v. Chrysler Motors Corp., 918 P.2d 350,
359-60 (N.M. 1996); Pung v. Gen. Motors Corp., 573 N.W.2d 80,
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81-82 (Mich. Ct. App. 1998). Rochester relies on Bertera
Chrysler Plymouth, Inc. v. Chrysler Corp., 992 F. Supp. 64, 69-
70 (D. Mass. 1998), as support for standing in such a case; but
while the district court there found "standing" (under a
Massachusetts statute), it concluded that "the harm alleged . .
. does not fall within the ambit of [the statute's] protection."
Id. at 68. This is Roberts' result, differently phrased.
In this court (although not in its complaint),
Rochester refers briefly to language, in subsection III(n) of
the statute, providing that the car maker shall not
unreasonably require dealer "compliance with subjective
standards." N.H. Rv. Stat. Ann. § 357-C:3(III)(n). Rochester
apparently seeks thus to describe the unfavorable judgment by
Ford's regional manager of Rochester's past performance.
Failure to plead this violation in the complaint aside, the
argument is scarcely developed in Rochester's brief and could be
rejected on this account alone. Mass. Sch. of Law at Andover,
Inc. v. Am. Bar Ass'n, 142 F.3d 26, 43 (1st Cir. 1998).
In any event, subsection III(n) appears to be directed
in all its provisions to the relationship between the car maker
and the dealer vis-a-vis the dealer's existing franchise.
Nothing in the provision suggests that the legislature aimed to
regulate the decisions of the car maker, whether based on
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subjective standards or otherwise, in awarding or refusing to
award a franchise to an applicant who did not already hold it.
It is hard to imagine that this statutory language would have
changed the mind or result of the Roberts court.
Affirmed.
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