Ass'n of Equip. Mfrs. v. Burgum

495 F.Supp.3d 803

ASSOCIATION OF EQUIPMENT MANUFACTURERS, AGCO Corporation, CNH Industrial America LLC, Deere & Company, and Kubota Tractor Corporation, Plaintiffs,

v.The Hon. Doug BURGUM, Governor of the State of North Dakota, in his official capacity, and The Hon. Wayne Stenehjem, Attorney General of the State of North Dakota, in his official capacity, Defendants,North Dakota Implement Dealers Association, Intervenor-Defendant.

Case No. 1:17-cv-151

United States District Court, D. North Dakota.

Signed October 19, 2020

Timothy Q. Purdon, Robins Kaplan LLP, Bismarck, ND, Benjamin R. Dryden, Pro Hac Vice, Jarren Ginsburg, Pro Hac Vice, Lauren Champaign, Pro Hac Vice, Michael J. Lockerby, Pro Hac Vice, Foley & Lardner LLP, Washington, DC, Connor A. Sabatino, Pro Hac Vice, Roberta F. Howell, Pro Hac Vice, Foley & Lardner LLP, Madison, WI, for Plaintiffs.

Joseph P. Bialke, Matthew A. Sagsveen, Attorney General's Office, Nathan James Svihovec, Zuger Kirmis & Smith, PLLP, Bismarck, ND, for Defendants.

Benjamin E. Thomas, Wold Johnson, Fargo, ND, Jason T. Allen, Pro Hac Vice, W. Kirby Bissell, Pro Hac Vice, Bass Sox Mercer, Tallahassee, FL, for Intervenor-Defendant.

ORDER ON MOTIONS

Daniel L. Hovland, District Judge Before the Court are six motions for summary judgment or partial summary judgment and a motion to strike. See Doc. Nos. 95, 107, 112, 115, 147, 150, and 152. Both the Plaintiffs and the Defendants have moved for summary judgment as to all issues. The motions have been fully briefed and are ripe for consideration. For the reasons set forth below, the partial motions for summary judgment (Doc Nos. 147, 150, and 152) and the Plaintiffs’ motion for summary judgment (Doc. No. 112) are granted in part and denied in part; the State's partial motions for summary judgment (Doc. Nos. 95 and 107) are granted; and the State's motion to strike (Doc. No. 115) is denied.

I. BACKGROUND

Plaintiff Association of Equipment Manufacturers ("AEM") is a not-for-profit corporation organized under the laws of Illinois, with a principal place of business in Milwaukee, Wisconsin. AEM is a trade association that represents and promotes the legal and business interests of AEM's 900-plus members and of the equipment manufacturing industry in general. Many of AEM's members enter into individualized contractual relationships with farm equipment dealers whom they have determined are qualified to market and service their machinery to consumers in specific markets. The relationship between the manufacturers and dealers are governed by dealership agreements which establish the respective rights and duties of each party, and regulated by the North Dakota Farm Equipment Dealership Statute.

Plaintiff AGCO Corporation ("AGCO") is a corporation organized under the laws of Delaware, with a principal place of business in Duluth, Georgia. AGCO is a manufacturer of farm equipment and farm implements, and its agreements with farm equipment dealers in North Dakota are subject to the North Dakota Farm Equipment Dealership Statute. AGCO is a member of AEM.

Plaintiff CNH Industrial America ("CNH") is a corporation organized under the laws of Delaware, with a principal place of business in Burr Ridge, Illinois. CNH is a manufacturer of farm equipment and farm implements, and its agreements with farm equipment dealers in North Dakota are subject to the North Dakota Farm Equipment Dealership Statute. CNH is a member of AEM.

Plaintiff Deere & Company ("John Deere") is a corporation organized under the laws of Delaware, with a principal place of business in Moline, Illinois. John Deere is a manufacturer of farm equipment and farm implements, and its agreements with farm equipment dealers in North Dakota are subject to the North Dakota Farm Equipment Dealership Statute. John Deere is a member of AEM.

Plaintiff Kubota Tractor Corporation ("Kubota") is a corporation organized under the laws of Delaware, with a principal place of business in Grapevine, Texas. Kubota is a manufacturer of farm equipment and farm implements, and its agreements with farm equipment dealers in North Dakota are subject to the North Dakota Farm Equipment Dealership Statute. Kubota is a member of AEM. The Plaintiffs will be referred to collectively as the "Manufacturers."

Defendant Doug Burgum is the Governor of the State of North Dakota. Defendant Wayne Stenehjem is the Attorney General of the State of North Dakota. Burgum and Stenehjem will be referred to collectively as the "State."

Defendant-Intervenor North Dakota Implement Dealers Association, ("NDIDA" or "Dealers") is a trade association for approximately 115 franchised North Dakota farm equipment dealers. The NDIDA members are subject to the North Dakota Farm Equipment Dealership Statute.

Senate Bill 2289 ("SB 2289") is entitled "AN ACT to amend and reenact sections 51-07-01.2, 51-07-02.2, and 51-26-06 of the North Dakota Century Code, relating to prohibited practices under farm equipment dealership contracts, dealership transfers, and reimbursement for warranty repair." See Doc. No. 1-3. The pre-existing provisions of the North Dakota Century Code that SB 2289 amends and reenacts are Sections 51-07-01.2, 51-07-02.2, and 51-26-06. These statutory provisions will be referred to collectively as the "North Dakota Farm Equipment Dealership Statute."

Section 51-07-01.2, which is entitled "Prohibited acts under farm equipment dealership contract," prohibits manufacturers from imposing certain contractual obligations on farm implement dealers. It provides as follows:

1. Notwithstanding the terms of any contract, a manufacturer, wholesaler, or distributor of farm implements, machinery, or repair parts who enters into a contract with any person engaged in the business of selling and retailing farm implements and repair parts for farm implements may not:

a. Require or attempt to require a farm equipment dealer to accept delivery of farm equipment, parts, or accessories that the farm equipment dealer has not voluntarily ordered or require the farm equipment dealer to maintain or stock a level of equipment, parts, or accessories except as provided in subdivision b.

b. Condition or attempt to condition the sale of farm equipment, parts, or accessories on a requirement that the farm equipment dealer also purchase other goods or services, or purchase a minimum quantity of farm equipment as a condition of filling an order for farm equipment, except a farm equipment manufacturer may require the dealer to purchase all parts reasonably necessary to maintain the quality of operation in the field of any farm equipment used in the trade area and telecommunication necessary to communicate with the farm equipment manufacturer.

c. Require or attempt to require a farm equipment dealer into a refusal to purchase farm equipment manufactured by another farm equipment manufacturer.

d. Require a farm equipment dealer to separate the line-makes operating within the dealer's facility by requiring the separation of personnel, inventory, service areas, display space, or otherwise dictate the method, manner, number of units, or the location of farm equipment displays at the dealer's facility. This subdivision does not prevent a farm equipment dealer and manufacturer from agreeing to those terms if the agreement was supported by separate and valuable consideration. The issuance, reissuance, or extension of a dealership contract alone is not separate and valuable consideration.

e. Require a farm equipment dealer to either establish or maintain exclusive facilities, personnel, or display space or to abandon an existing relationship with another manufacturer in order to continue, renew, reinstate, or enter a dealer agreement or to participate in any program discount, credit, rebate, or sales incentive. This subdivision does not prevent a farm equipment dealer and manufacturer from agreeing to establish or maintain exclusive facilities for separate and valuable consideration. The issuance, reissuance, or extension of a dealership contract alone is not separate and valuable consideration.

f. Discriminate in the prices charged for farm equipment of similar grade and quality sold by the farm equipment manufacturer to similarly situated farm equipment dealers. This subdivision does not prevent the use of differentials that make only due allowance for differences in the cost of manufacture, sale, or delivery or for the differing methods or quantities in which the farm equipment is sold or delivered by the farm equipment manufacturer. This subdivision does not diminish the manufacturer's, wholesaler's, or distributor's ability to provide volume discounts, bonuses, or special machine ordering programs commonly used in the industry.

g. Attempt or threaten to terminate, cancel, fail to renew, or substantially change the competitive circumstances of the dealership contract for any reason other than failure of the farm equipment dealer to substantially comply with the material terms of the written contract between the parties or if the attempt or threat is based on the results of a circumstance beyond the farm equipment dealer's control, including a sustained drought or other natural disaster in the dealership market area or a labor dispute. A substantial change in the competitive circumstances includes the removal of authorization to operate at a location from where the dealer is currently operating or the unreasonable removal of a product line or segment.

h. Require a farm equipment dealer to unreasonably remodel, renovate, or recondition the dealer's facilities, change the location of the facilities, or make unreasonable alterations to the dealership premises. A request for a dealer to remodel, renovate, or recondition the dealer's facilities, change the location of the facilities, or make alterations to the dealership premises must be considered in light of current and reasonably foreseeable projections of economic conditions, financial expectations, and the dealer's market for the sale of

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