Opinion
Civil No. 03-6263-AA.
August 16, 2004
William F. Buchanan, Josh Newton, Karnopp Peterson LLP, Bend, OR, Attorneys for plaintiff.
Michael G. Harting, Lindsay, Hart, Neil Weigler LLP, Portland, OR.
James M. Mulcahy, The Mulcahy Law Firm, Irvine, CA, Attorneys for defendants.
OPINION AND ORDER
Plaintiff filed suit against defendant American Suzuki Motor Corporation ("Suzuki"), alleging violations of the Robinson-Patman Act, 15 U.S.C. § 13, the Oregon Motor Vehicle Dealership Act, Or. Rev. Stat. § 650.120 et. seq., and common law breach of contract arising from Suzuki's termination of a Dealer Agreement between the parties. Plaintiff also alleged tortious interference with business relations against defendant Central Oregon Workensport.
There are two motions before the court. Suzuki moves to dismiss Count 1 of plaintiff's First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the ground that plaintiff failed to allege that Suzuki was engaged in interstate commerce or that injury to competition occurred as required by the Robinson-Patman Act. See 15 U.S.C. § 13. Plaintiff moves for partial summary judgment pursuant to Federal Rule of Civil Procedure 56©) on the ground that Suzuki violated the Oregon Motor Vehicle Dealership Act, as a matter of law, by terminating plaintiff's franchise before a court determined whether good cause existed for such termination. See Or. Rev. Stat. § 650.140.
On July 7, 2004, the court heard oral argument on the parties' motions. Based on the arguments presented in the parties' briefing and during argument, defendant's motion is denied and plaintiff's motion is granted.
I. FACTS
Plaintiff is an Oregon corporation with its principal place of business in Bend, Oregon. Suzuki is a California corporation authorized to do business in Oregon, with its principal place of business in Brea, California.
In 1995, plaintiff and Suzuki entered into a Products Dealer Agreement ("Dealer Agreement"), whereby Suzuki agreed to provide plaintiff with Suzuki brand products for sale by plaintiff.
On or about July 16, 2003, Suzuki sent plaintiff a notice terminating the Dealer Agreement effective as of September 24, 2003. Suzuki indicated that its termination of the agreement was based on plaintiff's failure to comply with the terms of the Dealer Agreement. Suzuki listed the following reasons for termination: 1) plaintiff failed to establish and maintain a commercial line of credit; 2) plaintiff failed to maintain an open account in a satisfactory manner; 3) plaintiff failed to maintain an adequate sales volume; 4) plaintiff failed to maintain a sufficient level of Suzuki inventory; and 5) plaintiff failed to submit financial information. See Affidavit of William R. Howard, Ex. 2. On September 12, 2003, plaintiff filed a complaint for common law breach of contract against defendant Suzuki.
On February 27, 2004, Suzuki sent plaintiff a letter advising that plaintiff's franchise was "terminated effective September 24, 2003" and stating that plaintiff was "no longer an authorized Suzuki dealer." Howard Affidavit, Ex. 3, p. 1. Further, the letter demanded that plaintiff "immediately cease and desist from . . . any and all . . . activities that suggests that Cascade [Motorsports] is authorized to operate as a Suzuki dealer." Id. at p. 2.
On March 29, 2004, plaintiff filed its First Amended Complaint, alleging breach of contract and violations of the Robinson-Patman Act and Oregon's Motor Vehicle Dealership Act against defendant Suzuki and tortious interference with business relations against Central Oregon Workensport.
On April 20, 2004, Suzuki sent plaintiff a "Second Cease and Desist Demand" letter. Howard Affidavit, Ex. 4.
On April 16, 2004, defendant Suzuki filed its motion to dismiss, and on May 6, 2004, plaintiff filed its motion for summary judgment.
II. STANDARDS
Under Federal Rule of Civil Procedure 12(b)(6), dismissal for failure to state a claim is proper only when it appears to be a certainty that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Morley v. Walker, 175 F.3d 756, 759 (9th Cir. 1999). For the purpose of a motion to dismiss, a complaint is liberally construed in favor of the plaintiff, and its allegations are taken as true. Lee v. County of Los Angeles, 240 F.3d 754, 764 (9th Cir. 2001).
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56©). The materiality of a fact is determined by the substantive law on the issue. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Assoc., 809 F.2d 626, 630 (9th Cir. 1987).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts that show a genuine issue for trial. Id. at 324.
Special rules of construction apply to evaluating summary judgment motions: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec. Serv., 809 F.2d at 630.
III. DISCUSSION
A. Defendant Suzuki's Motion to DismissSuzuki moves to dismiss Count 1 of plaintiff's First Amended Complaint for failure to state a claim under Rule 12(b)(6). In Count 1, plaintiff alleges that Suzuki violated the Robinson-Patman Act by failing to give plaintiff the "same discounts for plaintiff's cash purchases of Suzuki products that [Suzuki] provided to other dealers." Plaintiff's First Amended Complaint, ¶ 11. Suzuki argues that plaintiff fails to allege two necessary elements: 1) that Suzuki was engaged in interstate commerce, and 2) that Suzuki's alleged discounts caused competitive injury. Suzuki contends that both of these issues must be alleged in order to sustain a claim under the Robinson-Patman Act, 15 U.S.C. § 13, and therefore Count 1 should be dismissed with prejudice. Plaintiff responds that it sufficiently alleges both elements, or alternatively, that it should be allowed to amend its complaint if the court finds its allegations deficient.
1. Interstate Commerce
Suzuki asserts that under Robinson-Patman Act, the person from whom damages are sought must be engaged in interstate commerce.See Sears, Roebuck Co. v. Blade, 110 F. Supp. 96, 102 (S.D. Cal. 1953). Suzuki also contends that plaintiff must allege that the transactions complained of occurred in interstate commerce. Suzuki argues that because plaintiff fails to allege that Suzuki was engaged in interstate commerce and that the accused transactions occurred in interstate commerce, plaintiff has failed to state a claim upon which relief can be granted.
I agree that plaintiff must allege and prove that Suzuki is engaged in interstate commerce and that the transactions complained of occurred in interstate commerce. See Gulf Oil Corp. v. Copp Paving Co, Inc., 419 U.S. 186, 195-96, 198-200 (1974); Rotec Indus. Inc. v. Mitsubishi Corp., 348 F.3d 1116, 1120-21 (9th Cir. 2003). However, I find that plaintiff has alleged both factors sufficiently.
The Dealer Agreement, attached to plaintiff's Amended Complaint, provides that Suzuki is the exclusive distributor of Suzuki brand products in the continental United States. First Amended Complaint, Ex. A, p. 1; Fed.R.Civ.P. 10©) ("A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes."). Presumably, as the exclusive distributor of Suzuki products in the United States, Suzuki is engaged in shipping and receiving goods in interstate commerce.
Additionally, plaintiff alleged that Suzuki, a California corporation, and plaintiff, an Oregon corporation, entered into a franchise agreement in 1995 whereby Suzuki agreed to provide plaintiff with Suzuki brand products for resale by plaintiff. First Amended Complaint, ¶¶ 3, 4, 6. Plaintiff further alleged that since 1995, plaintiff has purchased — pursuant to the Dealer Agreement — Suzuki brand motorcycles, all terrain vehicles, and other products for resale to the general public. Id. ¶¶ 7, 11(b), (c). Thus, it can be inferred that plaintiff and Suzuki, by virtue of being diverse citizens and engaged in a commercial agreement involving multiple transactions across state lines, have conducted business in interstate commerce. Drawing all inferences in favor of plaintiff, it sufficiently alleges that Suzuki is engaged in interstate commerce and that the transactions complained of occurred in interstate commerce.
2. Injury to Competition
Suzuki next argues that plaintiff fails to allege that Suzuki's conduct resulted in competitive injury as required under the Robinson-Patman Act, because plaintiff fails to allege that Suzuki engaged in discriminatory discounting practices that resulted in competitive injury.
Suzuki is correct that "the Robinson-Patman Act condemns price discrimination only to the extent that it threatens to injure competition." Brooke Group Ltd. v. Brown Williamson Tobacco Corp., 509 U.S. 209, 220 (1993). Accordingly, in order to plead a violation of 15 U.S.C. § 13(a), plaintiff must allege that Suzuki's price discrimination caused injury to competition.Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1040-41 (9th Cir. 1988). However, harm to competition may be inferred from evidence of harm to individual competitors. Id.; see also FTC v. Morton Salt Co., 334 U.S. 37, 50-51 (1948). Furthermore, § 13(a) does not require that plaintiff allege and prove that an injury actually resulted, but rather that "the effect of the prohibited price discriminationsmay be substantially to lessen competition . . . or to injure, destroy or prevent competition." Morton Salt, 334 U.S. at 46 (emphasis added).
Plaintiff alleges that "Suzuki failed to give plaintiff the same discount for plaintiff's cash purchases of Suzuki products that Suzuki provided other dealers." First Amended Complaint, ¶ 11. Plaintiff also alleges that because it did not receive the same discounts as other dealers, "plaintiff has lost substantial business to other Suzuki dealers located throughout Oregon."Id. ¶ 12. Construing plaintiff's allegations as true, it can be inferred that competitive injury to plaintiff and injury to competition occurred. Therefore, I find that plaintiff's allegations in support of Count 1 sufficient to state a claim.
Suzuki contends, however, that not all "discounts" constitute unlawful price discrimination under the Robinson-Patman Act. For example, Suzuki argues that discounts for purchases based on quantity are permissible, so long as they do not tend to stifle competition or create monopoly, or do not discriminate between buyers within the same classification. Regardless, I find Suzuki's argument raises an affirmative defense and has no bearing on whether plaintiff has sufficiently alleged injury to competition. B. Plaintiff's Motion for Summary Judgment
Plaintiff moves for partial summary judgment pursuant to Federal Rule of Civil Procedure 56(c) on its claim that Suzuki violated Or. Rev. Stat. § 650.140, as a matter of law, by terminating plaintiff's franchise before the court determined whether good cause existed for the termination. Suzuki first argues that plaintiff's motion is procedurally defective because Rule 56(c) does not permit summary judgment on a portion of a single claim. I disagree.
Rule 56(c) expressly states that interlocutory summary judgments may be rendered on the issue of liability alone. Because the plain meaning of the rule is clear and plaintiff moves for summary judgment on the sole issue of liability, I find no procedural defects with plaintiff's motion and I will consider it.
Or. Rev. Stat. § 650.140(1) provides:
Notwithstanding the terms of any franchise or other agreement, it shall be unlawful for any manufacturer, distributor or importer to cancel, terminate or refuse to continue any franchise without showing good cause, provided the dealer protests such termination by filing a complaint in a court of competent jurisdiction within the time period specified in subsection (3) of this section.
Plaintiff argues that once a dealer has protested a franchise termination by filing a complaint, a franchisor may not terminate a franchise agreement unless the court determines that "good cause" exists to terminate the agreement. Therefore, because Suzuki terminated the Dealer Agreement before making the requisite showing of good cause before this court, plaintiff contends that Suzuki is liable under § 650.140(1) as a matter of law. Plaintiff maintains that its construction of § 650.140(a) is supported by the statute's plain meaning, the statutory context, and the relevant legislative history.
Suzuki responds that § 650.140(1) does not require it to establish good cause in a court proceeding prior to terminating the Dealer Agreement, and that good cause for the termination was shown by the letter sent to plaintiff on July 16, 2003. Moreover, Suzuki argues that plaintiff failed to timely "protest" the termination, because plaintiff did not seek injunctive relief but instead sought damages under a theory of common law breach of contract. If no timely protest was filed, the "good cause" requirement was not triggered and Suzuki cannot be held liable under § 650.140(1).
In interpreting a state statute, federal courts must regard the decisions of the state's highest court as authoritative. Jacobus v. State of Alaska, 338 F.3d 1095, 1106 (9th Cir. 2003). If no decision is available, then the court must "predict how the highest state court would decide the issue. . . ." Id. (internal citation omitted). Here, the parties cite no caselaw to support their interpretations of § 650.140(1), and the court is aware of none. Thus, the court's first task in construing the statute is to discern the intent of the legislature. See Portland General Elec. Co. v. Bureau of Labor Indus., 317 Or. 606, 610, 859 P.2d 1143, 1145-46 (1993). The text of the statute is the best evidence of legislative intent, followed by the statute's context. Id. at 610-11, 859 P.2d at 1146. If legislative intent is not clear from an examination of the text and context, the court will then consider legislative history. Id. at 611, 859 P.2d at 1146.
1. Timely Protest Requirement
Suzuki argues that plaintiff's original complaint seeking damages for breach of contract does not constitute a "protest" within the meaning of § 650.140(1). Suzuki relies on Or Rev. Stat. § 650.170 in asserting that a dealer must file suit for injunctive relief to enjoin the termination of a franchise agreement in order to protest the termination under § 650.140(1). Suzuki also suggests that plaintiff was required to seek injunctive relief under § 650.170 so as to put Suzuki on notice that plaintiff intended to allege a violation of the Oregon Motor Vehicle Dealership Act.
Section 650.170(1) provides: "Any dealer injured, or threatened with injury, by a manufacturer [or] distributor . . . as a result of a violation of ORS 650.120 to 650.170 may sue to enjoin such illegal, or threatened illegal conduct." The plain language of the § 650.170 thus allows but does not require a dealer to seek injunctive relief in order to challenge a violation of the Oregon Motor Vehicle Dealership Act. Rather, it provides dealers with the option of seeking injunctive relief, along with monetary damages, fees, and costs. See Or. Rev. Stat. § 650.170(1)-(3). The fact that the legislature chose to use permissive language belies any intent to require a dealer to seek injunctive relief.
Likewise, the plain language of § 650.140(1) does not prescribe a particular cause of action that must be filed to protest a franchise termination; it merely requires that the dealer file a complaint in the proper court. Or. Rev. Stat. § 650.140(1) (a dealer may "protest [the] termination by filing a complaint in a court of competent jurisdiction. . . ."). Therefore, I will not import such a requirement into § 650.140(1) when it is not supported by the plain language of the statute, particularly when the purpose of the legislation was to afford greater protection to motor vehicle dealers. See Affidavit of Josh Newton, Exhibit 1, p. 29 (Exhibit D, Senate Transportation, SB 930, May 23, 1979).
The remaining question is whether plaintiff's original complaint constitutes a timely protest of Suzuki's notice of termination. The original complaint was filed within 60 days of Suzuki's notice and alleged that Suzuki "has no grounds or basis under the Dealer Agreement to terminate or cancel the Dealer Agreement with plaintiff" and that plaintiff "continues to remain ready, willing, and able to perform under the Agreement." Complaint, ¶¶ 6-7. Accordingly, even though plaintiff's complaint did not seek to enjoin the termination, it clearly protested Suzuki's notice of termination within the meaning of § 650.140(1). 2. Good Cause Determination
Having found that plaintiff filed a timely protest, the court must next determine whether Suzuki terminated the Dealer Agreement "without good cause" as required by § 650.140(1).
While the text of the statute clearly indicates that good cause must be shown prior to terminating a franchise agreement, it does not prescribe by what means a franchisor must establish good cause. Plaintiff maintains that Suzuki was required to present evidence to this court that good cause existed to terminate the Dealer Agreement. Suzuki counters that it made a showing of good cause in its notice of termination. Thus, Suzuki contends that it was not required to make a showing of good cause to the satisfaction of this court prior to terminating the Dealer Agreement.
I find that the text and context of § 640.140(1) support plaintiff's interpretation. The "good cause" requirement is triggered when a dealer protests the termination of a franchise agreement by filing a complaint "in a court of competent jurisdiction." Or. Rev. Stat. § 650.140(1). Additionally, § 650.140(2) enumerates factors that "the court shall consider" when "determining if good cause exists," thus reflecting that it is the court's responsibility, not the franchisor's, to determine whether good cause exists to terminate a franchise agreement. This language would be rendered superfluous and the dealer's "protest" a nullity if the franchisor — rather than the court in which the protesting complaint was filed — was allowed to determine good cause. Read as a whole, I find that § 650.140 prohibits the termination of a franchise agreement when a franchisee has filed a complaint protesting the termination, unless the court in which the complaint was filed determines that good cause exists to terminate the agreement.
In further support of its interpretation, plaintiff compares § 650.140(1), enacted as part of the Oregon Motor Vehicle Dealership Act, with Or. Rev. Stat. § 650.310, enacted as part of the Oregon Recreational Vehicle Franchises Act. Section 650.310 does not require a court to determine whether action by a franchisor is supported by good cause. Or. Rev. Stat. § 650.310 ("When determining whether good cause exists, a person shall consider. . . ."). This comparison demonstrates that had the legislature intended to allow a motor vehicle franchisor to determine good cause, rather than the court, it would have done so.
Finally, plaintiff's interpretation of § 650.140 is supported by legislative history. In making amendments to versions of the relevant bill, the Oregon Senate added the provision that a showing of good cause to terminate a franchise agreement is required only upon timely protest by a dealer. Otherwise, the statute "would require a court hearing every time a franchise agreement is cancelled, terminated, or refused continuation," and therefore "[t]he language should not require a court hearing unless the dealer protests such cancellation." Affidavit of John Newton, Ex. 1, p. 30 (Exhibit D, Senate Transportation, SB 930, May 23, 1979).
In sum, I find that Suzuki was required to establish good cause before this court prior to terminating the Dealer Agreement, and that Suzuki's letter of July 16, 2003 does not constitute a determination of "good cause" within the meaning of § 650.140(1). Accordingly, Suzuki terminated the Dealer Agreement in violation of § 650.140(1).
IV. CONCLUSION
Defendant Suzuki's Motion to Dismiss Count 1 of Plaintiff's First Amended Complaint for failure to state a claim (doc. 34) is DENIED. Plaintiff's Motion for Partial Summary Judgment on the issue of liability under Or. Rev. Stat. § 650.140 (doc. 42) is GRANTED.
IT IS SO ORDERED.