Audi of Am., Inc. v. Bronsberg & Hughes Pontiac, Inc.

321 F.Supp.3d 503

AUDI OF AMERICA, INC., Counterclaim–Defendant,

v.BRONSBERG & HUGHES PONTIAC, INC. d/b/a Wyoming Valley Audi, Counterclaim–Plaintiff

v.North American Automotive Services, Inc., et al., Counterclaim–Plaintiff

3:16–cv–2470

United States District Court, M.D. Pennsylvania.

Filed March 16, 2018

Brandon C. Prosansky, Owen H. Smith, Randall L. Oyler, James R. Vogler, Michael D. Educate, Steven J. Yatvin, Andrew M. Spangler, Jr, Caroline H. Sear, Michael S. Elvin, Barack Ferrazzano Kirschbaum & Nagelberg LLP, Chicago, IL, Thomas B. Schmidt, III, Justin G. Weber, Pepper Hamilton, LLP, Harrisburg, PA, Tucker R. Hull, The Law Office of Tucker R. Hull, LLC, Annville, PA, for Counterclaim–Defendant.

Dennis M. George, Jeffrey M. Scafaria, Arangio George, LLP, Philadelphia, PA, Charles O. Beckley, II, John George Milakovic, Beckley & Madden, Harrisburg, PA, David C. Gustman, Dylan D. Smith, Jill C. Anderson, Kirk Watkins, Tina C. Wills, Freeborn & Peters LLP, Chicago, IL, Nicholas D. George, Swartz Swidler LLC, Cherry Hill, NJ, for Counterclaim–Plaintiff.

MEMORANDUM & ORDER

John E. Jones III, U.S. District Judge

On February 16, 2018, we entered summary judgment in favor of Defendant Bronsberg & Hughes Pontiac, Inc., ("Wyoming Valley") on the claims asserted by Plaintiff Audi of America, Inc. ("AoA") (Doc. 479). On March 13 and 14, the parties engaged in a lengthy mediation facilitated by the undersigned. Despite good faith efforts by all, the mediation did not culminate in a settlement. Presently pending before the Court are two¹ motions for summary judgment. AoA moves for summary judgment on Wyoming Valley's two counterclaims (Doc. 394) and on the four remaining counterclaims asserted by Intervenors North American Automotive Services, Inc., and affiliated companies. ("Napleton"). (Doc. 386). These motions have been fully briefed and are therefore ripe for our review. (Docs. 397, 495 att. 1, 517, 395, 491 att. 1, 518).

I. BACKGROUND

The Court incorporates the factual and procedural background contained within our February 16, 2018 memorandum and order granting summary judgment to Wyoming Valley on AoA's affirmative claims. (Doc. 479). To the extent that additional background facts are necessary to analyze the pending motions, those facts will be discussed in the analysis section of this memorandum.

II. LEGAL STANDARD

Summary judgment is appropriate if the moving party establishes "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A dispute is "genuine" only if there is a sufficient evidentiary basis for a reasonable jury to find for the non-moving party, and a fact is "material" only if it might affect the outcome of the action under the governing law. See Sovereign Bank v. BJ's Wholesale Club, Inc. , 533 F.3d 162, 172 (3d Cir. 2008) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). A court should view the facts in the light most favorable to the non-moving party, drawing all reasonable inferences therefrom, and should not evaluate credibility or weigh the evidence. See Guidotti v. Legal Helpers Debt Resolution, L.L.C. , 716 F.3d 764, 772 (3d Cir. 2013) (citing Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ).

Initially, the moving party bears the burden of demonstrating the absence of a genuine dispute of material fact, and upon satisfaction of that burden, the non-movant must go beyond the pleadings, pointing to particular facts that evidence a genuine dispute for trial. See id. at 773 (citing Celotex Corp. v. Catrett , 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). In advancing their positions, the parties must support their factual assertions by citing to specific parts of the record or by "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." FED. R. CIV. P. 56(c)(1).

A court should not grant summary judgment when there is a disagreement about the facts or the proper inferences that a factfinder could draw from them. See Reedy v. Evanson , 615 F.3d 197, 210 (3d Cir. 2010) (citing Peterson v. Lehigh Valley Dist. Council , 676 F.2d 81, 84 (3d Cir. 1982) ). Still, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Layshock ex rel. Layshock v. Hermitage Sch. Dist. , 650 F.3d 205, 211 (3d Cir. 2011)(quoting Anderson , 477 U.S. at 247–48, 106 S.Ct. 2505 ) (internal quotation marks omitted).

III. DISCUSSION

We will begin with AoA's motion for summary judgment on Wyoming Valley's two counterclaims and then move on to AoA's motion for summary judgment on Napleton's four counterclaims.

A. Wyoming Valley's Counterclaims

Wyoming Valley asserts two counterclaims against AoA. (Doc. 186). Counterclaim Count I alleges a violation of the Automobile Dealers' Day in Court Act, 15 U.S.C. § 1221, et. seq. ("ADDCA"). Counterclaim Count II alleges breaches of the Dealership Agreement. Both counterclaims are premised on the allegation that AoA acted in bad faith when it refused to approve the APA and rescinded its consent for relocation.

1. Counterclaim Count I: ADDCA

"In order to sustain a claim under the ADDCA, a plaintiff must allege and prove a breach of the manufacturer's duty to act in ‘good faith,’ which is defined in terms of ‘coercion, intimidation, or threats of coercion or intimidation.’ " Cutrone v. Daimler–Chrysler Motors Co. , LLC, 160 Fed.Appx. 215, 218 (3d Cir. 2005) (quoting 15 U.S.C. §§ 1222, 1221(e) ) (internal citations omitted). "The type of coercion or intimidation rendered actionable by the ADDCA occurs only when the automobile manufacturer makes a wrongful demand which will result in sanctions if not complied with." Gen. Motors Corp. v. New A.C. Chevrolet, Inc. , 263 F.3d 296, 326 (3d Cir. 2001) (internal quotations omitted).

The Third Circuit has explained "that while a manufacturer does not make a wrongful demand if it merely insists that the dealer comply with a reasonable obligation imposed by the franchise agreement, a dealer can state a claim for relief under the ADDCA by alleging that the manufacturer's reliance on those objectively reasonable provisions is, in fact, motivated by a pretextual, bad-faith reason." Id. at 304. However, the Third Circuit also cautioned that "it is well established that the duty of ‘good faith’ dealing imposed by the Act must be given a narrow, rather than expansive, construction." Northview Motors, Inc. v. Chrysler Motors Corp. , 227 F.3d 78, 93 (3d Cir. 2000). "Crucial at this point is the understanding that the definition of ‘good faith’ contained in the ADDCA is specialized and narrow." Gen. Motors Corp. , 263 F.3d at 325.

Other circuits have similarly limited the scope of what constitutes bad faith under the ADDCA, holding that "good faith ... has a limited and restricted meaning. It is not to be construed liberally." Autohaus Brugger, Inc. v. Saab Motors, Inc. , 567 F.2d 901, 911 (9th Cir. 1978) ; see also Carroll Kenworth Truck Sales, Inc. v. Kenworth Truck Co. , 781 F.2d 1520, 1525 (11th Cir. 1986) ("Bad faith under [ADDCA] has been defined narrowly and construed strictly. It does not mean simply a lack of fairness but entails a showing of coercion."); Empire Volkswagen v. World–Wide Volkswagen , 814 F.2d 90, 95 (2d Cir. 1987) (bad faith has a "narrow, restricted meaning."). "Moreover, in order to lack good faith, the manufacturer's actions must be unfair and inequitable in addition to being for the purpose of coercion and intimidation." Bensco One, LLC v. Volkswagen of Am., Inc. , 2008 WL 907521, at *4 (E.D. La. Mar. 31, 2008).

Wyoming Valley alleges in Counterclaim I that AoA violated the ADDCA through the following actions:

"AoA's insistence that presentation of the APA as a ‘package’ transaction violated the Dealer Agreements and would not be considered for approval; AoA's litigation conduct in seeking injunctive relief barring the transfer of non-Volkswagen Group dealerships; and AoA's pre-textual, bad-faith decision to rescind its prior conditional approval of the Audi dealership relocation."

(Doc. 186, ¶ 65). Wyoming Valley does not appear to maintain its allegation that the second alleged breach, namely, "AoA's litigation conduct in seeking injunctive relief," constitutes a violation of the ADDCA. (Id. ). For the reasons elucidated in our order dismissing certain aspects of Napleton's counterclaims, such an allegation would be barred by the Noerr – Pennington doctrine regardless. (Doc. 321). A review of Wyoming Valley's countercomplaint and brief in opposition to AoA's motion for summary judgment makes clear that Wyoming Valley's ADDCA claim is premised on two actions: (1) AoA's insistence that Wyoming Valley must provide a price breakdown of the APA in order for AoA to evaluate its right of first refusal; and (2) AoA's rescission of the Relocation Agreement. (Doc. 491, att. 1, pp. 10, 20). We will analyze each action in turn.

First, AoA moves for summary judgment because Wyoming Valley has not adduced sufficient evidence from which a rational trier of fact could determine that AoA's demand of a price breakdown for the APA was made in bad faith. (Doc. 395, pp. 10–14). AoA argues that the evidence demonstrates that it demanded a price breakdown in furtherance of determining whether to enforce its statutory and contractual rights of first refusal. (Id. ). Wyoming Valley counters that AoA's insistence on receiving a price breakdown of the APA was not for the purpose of "evaluating its ROFR," but rather was a motivated by a pre-textual, ulterior motive—"Audi simply wanted to block Napleton from closing on the APA." (Doc. 491, att. 1, p. 10).

In support of this contention, Wyoming Valley points out that "Audi now admits that its demands on Wyoming...