United States Court of Appeals
For the First Circuit
No. 93-1034
STEPHEN E. MCLANE, GENERAL PARTNER OF
AUTO ENGINEERING LIMITED PARTNERSHIP,
Plaintiff, Appellant,
v.
MERCEDES-BENZ OF NORTH AMERICA, INC.
Defendants, Appellees.
No. 93-1035
STEPHEN E. MCLANE, GENERAL PARTNER OF
AUTO ENGINEERING LIMITED PARTNERSHIP,
Plaintiff, Appellee,
v.
MERCEDES-BENZ OF NORTH AMERICA, INC.
Defendant, Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Cyr and Stahl, Circuit Judges,
and Fuste,* District Judge.
Alan Garber, with whom Clair A. Carlson, Jr., Paul D. Boynton,
and Mason & Martin, were on brief for Stephen E. McLane, General
Partner of Auto Engineering Limited Partnership.
Mark P. Szpak, with whom Daniel J. Klau and Ropes & Gray, were on
brief for Mercedes-Benz of North America, Inc.
William N. Berkowitz, with whom Claudia V. Geschwind and Bingham,
Dana & Gould, were on brief for BMW of North America, Inc.
September 7, 1993
*Of the District of Puerto Rico, sitting by designation.
STAHL, Circuit Judge. Appellant Stephen E. McLane,
General Partner of Auto Engineering Limited Partnership
("Auto Engineering"), challenges the district court's
decisions both to deny his motion for a preliminary
injunction against BMW of North America, Inc. ("BMW-NA") and
to grant his motion for the same for only ninety days against
Mercedes-Benz of North America, Inc. ("MB-NA"). Finding his
appeal moot, we dismiss and remand the case to the district
court for such further proceedings as may be appropriate.
I.
Background
In September 1987, a consortium of investors led by
McLane formed Auto Engineering for the purpose of acquiring
the assets of Auto Engineering, Inc. ("AEI"). Among those
assets were Mercedes-Benz and BMW franchises, a Lexington,
Massachusetts, automobile dealership facility out of which
AEI had run those franchises, and real property in
Burlington, Massachusetts, which was purchased as the future
location of the Mercedes-Benz dealership. Having acquired
AEI's assets, Auto Engineering, pursuant to its dealership
agreements with MB-NA, moved its Lexington-based Mercedes-
Benz dealership to the Burlington location. The BMW
dealership remained in Lexington until May 17, 1989, when
BMW-NA acceded to Auto Engineering's request to move the
dealership to the Burlington premises.
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Unfortunately for Auto Engineering, the move to
Burlington coincided with the general decline in the
Massachusetts and national economies. Decreased automobile
sales coupled with the high overhead costs of the Burlington
facility caused Auto Engineering to experience heavy
financial losses. According to Auto Engineering, it incurred
cumulative operating losses in excess of $4,000,000 between
the years of 1988 and 1992.
By the middle of 1991, after having unsuccessfully
applied to an MB-NA investment program for financial
restructuring assistance, Auto Engineering began exploring
the possibility of selling the Burlington location. In
November 1991, Auto Engineering, without seeking approval
from either franchisor, entered into a purchase and sale
agreement with Circuit City Stores, Inc. ("Circuit City") for
the Burlington premises. Shortly thereafter, Auto
Engineering advised MB-NA and BMW-NA that it was proceeding
with plans to sell the Burlington property and again sought
permission to return both dealerships to the Lexington
location. Each company refused this request.
In September 1992, Auto Engineering learned that
Circuit City, pursuant to the purchase and sale agreement,
would require it to vacate the Burlington premises by
November 2, 1992. Accordingly, on that date, and without
obtaining approval from either franchisor, Auto Engineering
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moved both dealerships back to Lexington. Considering this
relocation a breach of the express terms of the dealership
agreement, BMW-NA notified Auto Engineering by letter dated
November 3, 1992, that it was terminating the agreement
effective January 10, 1993. The following day, MB-NA sent
Auto Engineering a similar termination letter.1
In response to these termination letters, on or
about December 10, 1992, McLane commenced an action in state
court seeking to enjoin the termination of the franchises.
The complaint alleged, inter alia, that BMW-NA and MB-NA had
violated Mass. Gen. L. ch. 93B, 4(3)(e), by terminating
their respective dealer agreements "without good cause"2 and
sought injunctive relief, damages, and attorneys' fees.
On December 18, 1992, with MB-NA's assent, BMW-NA
removed the action to federal court. Shortly thereafter,
Auto Engineering moved for a preliminary injunction. On
1. Auto Engineering's dealer agreements with BMW-NA and MB-
NA contain clauses providing that the dealer must receive the
written approval of the manufacturers before relocating the
dealership to another site.
2. Mass. Gen. L. ch. 93B, 4(3)(e) provides in pertinent
part:
It shall be deemed a violation of
paragraph (a) of section three for a
manufacturer, . . . notwithstanding any
term or provision of a franchise or
selling agreement, to cancel or terminate
the franchise or selling agreement of a
motor vehicle dealer without good cause .
. . .
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January 7, 1993, after a two-day hearing on that motion, the
district court denied the motion as to BMW-NA but granted it
as to MB-NA for a period of ninety days, expiring on April
11, 1993.3 The court also denied Auto Engineering's oral
request to stay the terminations pending appeal. On January
8, 1993, Auto Engineering filed a notice of appeal and an
expedited motion requesting that we stay the terminations
pending appeal.4 On that date, we stayed the BMW-NA
termination for one week. Subsequently, on January 15, 1993,
we denied Auto Engineering's emergency request for a stay
pending appeal. Accordingly, by April 11, 1993, both BMW-
NA's and MB-NA's termination of Auto Engineering's dealer
agreements had become effective.
II.
Discussion
Both BMW-NA and MB-NA contend that, because the
events which Auto Engineering sought to enjoin have in fact
3. Because MB-NA had not filed its dealer agreement with the
Attorney General's office as required under Mass. Gen. L. ch.
93B, 8, the court granted Auto Engineering's motion for an
injunction against MB-NA for a period lasting ninety days
from January 7, 1993, the date of MB-NA's compliance with the
filing requirement.
4. MB-NA filed a cross-appeal and a motion with this court,
seeking relief from the portion of the district court's order
that delayed the effective time of the MB-NA termination for
ninety days. Given that the ninety days have now passed, MB-
NA concedes that its cross-appeal is moot.
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occurred, its appeal from the district court's order denying
injunctive relief is moot. We agree.
It is well settled that an appeal from the denial
of a motion for a preliminary injunction is rendered moot
when the act sought to be enjoined has occurred. See, e.g.,
Oakville Dev. Corp. v. FDIC, 986 F.2d 611, 613 (1st Cir.
1993) ("When, as will often happen, the act sought to be
enjoined actually transpires, the court may thereafter be
unable to fashion [] meaningful [relief]. In such straitened
circumstances, the appeal becomes moot."); Railway Labor
Executives Ass'n v. Chesapeake W. Ry., 915 F.2d 116, 118 (4th
Cir. 1990) (similar), cert. denied, 111 S. Ct. 1312 (1991);
Garza v. Westergren, 908 F.2d 27, 29 (5th Cir. 1990)
(similar); Gilpin v. American Fed'n of State, County, & Mun.
Employees, AFL-CIO, 875 F.2d 1310, 1313 (7th Cir.) (similar),
cert. denied, 493 U.S. 917 (1989); Seafarers Int'l Union of
N. Am. v. National Marine Servs., Inc., 820 F.2d 148, 151-52
(5th Cir.) (similar), cert. denied, 484 U.S. 953 (1987);
Marilyn T., Inc. v. Evans, 803 F.2d 1383, 1384-85 (5th Cir.
1986) (similar); In re Sewanee Land, Coal & Cattle, Inc., 735
F.2d 1294, 1295 (11th Cir. 1984) (similar).
Auto Engineering attempts to circumvent this rule
by reframing its request for relief as one for
"reinstatement" of the franchise agreements. This request is
not, however, properly before us. The district court has not
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yet ruled on the merits of Auto Engineering's claims, nor has
it considered such fact-intensive questions as whether
reinstatement would be appropriate, or even possible, under
the present circumstances. To the extent that the district
court has addressed the post-termination issue of
reinstatement at all, it has done so only in the context of
ruling on Auto Engineering's request for a preliminary
injunction. Because the district court has not yet resolved
ultimate issues of liability and permanent equitable relief,
we decline to address them prematurely in this interlocutory
appeal.5 Cf. Marilyn T., 803 F.2d at 1384-85 (finding
appeal moot and declining to order reinstatement of
appellant's commercial license where the question of
reinstatement would require the court to address issues as
yet unresolved by the district court).
The sole issue on appeal is the district court's
denial of Auto Engineering's request for an injunction
preventing BMW-NA and MB-NA from terminating the dealer
agreements. As both of those terminations have actually
occurred, the appeal is moot. Accordingly, we dismiss the
dismiss
5. Needless to say, on remand, the district court will take
such further action with respect to the reinstatement claim
as it deems appropriate.
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appeal and remand the case for any further appropriate
remand
proceedings.6
6. As a general rule, when a case becomes moot on appeal, we
vacate the district court's decision and remand with a
direction to dismiss. See, e.g., United States v.
Munsingwear, Inc., 340 U.S. 36, 39 (1950); National R.R.
Passenger Corp. v. International Ass'n of Machinists &
Aerospace Workers, 915 F.2d 43, 48 (1st Cir. 1990). In the
case of interlocutory appeals, however, "`the usual practice
is just to dismiss the appeal as moot and not vacate the
order appealed from.'" In re Tax Refund Litigation, 915 F.2d
58, 59 (2d Cir. 1990) (quoting Gjertsen v. Board of Election
Comm'rs, 751 F.2d 199, 202 (7th Cir. 1984)). See also
Marilyn T., 803 F.2d at 1385 (dismissing appeal and remanding
for further appropriate proceedings where district court's
order was "an interlocutory order that had lost its
effectiveness"); Gaylord Broadcasting Co. v. Cosmos
Broadcasting Corp., 746 F.2d 251, 254 (5th Cir. 1984)
(dismissing appeal and remanding case where appeal from
denial of preliminary injunction moot); 13A Wright, Miller, &
Cooper, Federal Practice and Procedure 3533.10 at 435-36
(1984) (recommending dismissal rather than vacatur where
appeal from interlocutory order is moot).
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