The opinion of the court was delivered by: COOLAHAN
This is an action brought under the Automobile Dealers' Day in Court Act, 15 U.S.C. § 1221 et seq. Plaintiff R.A.C. Motors, Inc., (hereinafter "R.A.C.") is a New Jersey corporation doing business as a retail automobile dealer in West New York, New Jersey.
Defendant World-Wide Volkswagen Corp. (hereinafter "World-Wide") is the authorized wholesale distributor for Volkswagen automobiles in New Jersey. Beginning in 1960 and annually thereafter until 1967, R.A.C. held yearly Dealer Franchise Agreements with World-Wide for the sale of Volkswagens. In 1968 World-Wide notified R.A.C. that it would not renew R.A.C.'s Volkswagen franchise; R.A.C. then initiated this suit seeking damages allegedly sustained because its dealership was not renewed.
The plaintiffs applied for a preliminary injunction shortly after the commencement of this action. They sought to have the defendants enjoined from ceasing to supply R.A.C. with Volkswagens and Volkswagen parts. This application was denied after a two day trial at which a full evidentiary hearing was held. Subsequently, a motion by World-Wide to enjoin R.A.C. from displaying signs bearing the name, trademark or logo of Volkswagen, or to otherwise hold itself out as an authorized Volkswagen dealer, was granted. This matter is again before this court on defendants' motions for summary judgment.
An abundance of evidence has been presented to this court by way of affidavits and depositions, and also by testimony produced during the two day trial on plaintiffs' application for a preliminary injunction. This evidence paints a picture far different from the one described by plaintiffs in their complaint. Plaintiffs claim that World-Wide engaged in "fault finding" over "picayune matters." One such matter involved the submission by R.A.C. of untrue sales reports. The evidence indicates that during the period from May through August, 1967, R.A.C. submitted to World-Wide forty-four reports of vehicle sales allegedly made by R.A.C. Subsequent investigation disclosed that the names and addresses of Volkswagen purchasers on forty-one of these reports were fictitious and that the signatures of these purchasers were forged. On three other reports the real name and address of the customer of the vehicle was given but the customer's signature was forged. In none of these forty-four cases were the vehicles sold by R.A.C. as the reports represented, but rather by other unauthorized Volkswagen automobile dealers.
The evidence also shows that R.A.C. submitted reports to World-Wide stating that it had performed a 300 mile free inspection on each of the forty-four vehicles referred to above. World-Wide reimbursed R.A.C. $5.85 for each of the forty-four inspections. Thus, R.A.C. received $257.40 for inspections which it now admits that it never performed.
The Automobile Dealers' Day in Court Act grants a dealer the right to sue in a federal district court for damages by reason of an automobile manufacturer's failure to act in "good faith" in terminating or not renewing a franchise.
The statute does not provide a new remedy for breach of contract but creates a new cause of action. An indispensable element of the statutory cause of action is not the lack of good faith in the ordinary sense but a lack of good faith in which "coercion, intimidation or threats" thereof are at least implicit. Globe Motors, Inc. v. Studebaker-Packard Corporation, 328 F.2d 645, 646 (3rd Cir. 1964).
The dealer has the burden of showing that it was a wrongful termination or non-renewal of the franchise. Milos v. Ford Motor Co., 317 F.2d 712, 718 (3rd Cir. 1963). The purpose of the Act is not to afford a guaranty against termination, much less failure to renew, but only to protect a dealer against coercion and intimidation amounting to a lack of good faith as defined by the Act. Absent coercion, dealers are not protected against "arbitrary" refusals to renew. If the manufacturer simply does not renew after a failure to communicate in any way with the dealer but after properly fulfilling its part of the agreement, it cannot be liable for failing to act in good faith. Berry Brothers Buick, Inc. v. General Motors Corp., 257 F. Supp. 542, 546 (E.D. Pa. 1966). Of course, the manufacturer has no obligation to continue the franchise of an inefficient or undesirable dealer. Garvin v. American Motor Sales Corp., 318 F.2d 518 (3rd Cir. 1963).
Therefore, even if this court disregarded R.A.C.'s own conduct, World-Wide's refusal to renew the franchise could only be considered "arbitrary" but lacking the elements of coercion or intimidation which give plaintiffs a cause of action under 15 U.S.C. § 1221 et seq. But World-Wide's refusal to renew certainly cannot be considered arbitrary in this case. R.A.C.'s conduct clearly violated the franchise agreement and R.A.C. admits not having made the forty-four vehicle inspections for which it was reimbursed $257.40. If arbitrary non-renewal per se does not give a dealer a right of action under the Automobile Dealers' Day in Court Act, then certainly no right of action arises when the refusal to renew is justified. Summary judgment must be granted in favor of World-Wide on plaintiffs' complaint and judgment in favor of World-Wide for $257.40 must be granted on World-Wide's counterclaim.
Volkswagenwerk Aktiengesellschaft is the German corporation which manufactures the Volkswagens. Volkswagen of America, Inc., is a New Jersey corporation which imports to the U.S. the Volkswagens and then sells them to various distributors throughout the country including defendant World-Wide. Neither Volkswagenwerk Aktiengesellschaft or Volkswagen of America have any direct dealings with the plaintiffs. Summary judgment must also be granted in favor of these defendants. Plaintiffs have produced no evidence which even remotely connects these defendants to this controversy. Plaintiffs contend that further proceedings in this case may reveal facts linking these defendants with the non-renewal of R.A.C.'s franchise. On summary judgment a plaintiff cannot rest on an ignorance of the facts but must obtain from discovery or otherwise information which it should seek to amplify or test by further discovery. Berry Brothers Buick, Inc. v. General Motors Corp., 257 F. Supp. 542 (E.D. Pa. 1966). On a motion for summary judgment all inferences must be drawn in favor of the non-movant. However, the non-movant cannot withhold evidence until the date of trial and, unless it is shown by some admissible evidence that there is a genuine issue as to a material fact, summary judgment must be granted as it must be in this case.
Let appropriate orders be ...