their compliance costs from franchisee-dealers, an assumption that may not be correct, certainly defendant is correct when it states that the NJFPA does not dictate the manner in which franchisor-manufacturers may recover these costs, and the Act is silent regarding wholesale prices. Def.'s Mot. to Dismiss Reply, at 5-7. This does not mean, however, that all methods of cost-recovery are permissible. Defendant's method certainly is not. Defendant is engaged in a shell game, the purpose of which is to avoid, altogether, the costs of complying with the NJFPA. The Act does not contemplate, nor does it permit, a franchisor to knowingly violate the NJFPA and, once a franchisee pursues its statutory rights, vitiate the Act's purpose through the imposition of a surcharge.
The warranty reimbursement provision of the Act is, in part, a burden-shifting provision which is intended to require the franchisor to bear the expenses associated with fulfillment of the warranty. Legislative Statement, Assembly No. 1956 (May 24, 1976). The legislative history states that the NJFPA "is designed to remove the franchisor's present opportunity to isolate himself from the warranty he issues." Id. Plaintiff currently must bear some of this burden when it is required by the Agreements to provide parts for warranty-covered vehicles at a cost below that which it could charge to non-warranty customers, and below that which defendant, itself, recommends to be the retail price.
It would be formalistic, in the extreme, to find that defendant is in compliance with the NJFPA when it charges-back the very benefits which the Act intends to confer upon franchisees such as plaintiff. This is not a case in which the costs of regulation are being spread over several parties, with some of the burden happening to fall on the shoulders of the beneficiaries of the legislation. This is not even a case in which all New Jersey Lincoln-Mercury dealers are subject to the same surcharge regime as a result of the NJFPA. Compare Acadia Motors, 44 F.3d at 1052 (all Maine Ford dealers receive retail mark-up of 63% above cost, and all are subject to surcharge) Rather, defendant has chosen to disobey the Act and is targeting the only dealer who has forced compliance to bear the financial burdens associated with the Act.
Moreover, unlike the Maine Act at issue in Acadia Motors, which the court found was intended to protect non-warranty consumers rather than dealers,
the NJFPA "offers protection to the competent retailer against arbitrary actions by manufacturers who too often hold a life-and-death power over his business and his ability to serve his customers." Legislative Statement. Under the Agreements, plaintiff is required to perform warranty repairs on Lincoln and Mercury vehicles at no cost to the customer. With plaintiff's high proportion of warranty repairs in relation to retail work,
the surcharge regime -- which puts plaintiff in the same position as if it were reimbursed the standard thirty to forty percent above cost -- causes a running net loss to the dealership. Supp. Certif. of Kurt R. Olcheski, P 7, Ex. D. Thus, plaintiff is in the position of either breaching its contract with defendant or fulfilling its contractual obligations and losing money as a direct result of this obligation. In contrast, were defendant to pay plaintiff its retail rate for warranty parts in compliance with the NJFPA, the result would be a moderate net gain for plaintiff's parts and services operation. Id. at P 9, Ex. E.
In short, defendant's surcharge regime violates the clear language of the NJFPA. Moreover, although the Act is silent regarding whether and how franchisor-manufacturers may distribute compliance costs, it cannot be the case that the franchisee-dealers -- the class of intended beneficiaries -- bear the entire burden. Were this so, the dealers' only statutory benefit, increased warranty reimbursement, would be a nullity, and dealers would cease being beneficiaries of the NJFPA. This would fly in the face of the intent of the New Jersey legislature as expressed in the amendment's legislative history, and would undermine the purpose of the Act. Legislative Statement.
B. Section 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a)
The Fourth Count of the Complaint alleges a violation of section 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a). The Robinson-Patman Act, a 1936 amendment to the Clayton Act, provides,
It shall be unlawful for any person engaged in commerce, in the course of such commerce . . . to discriminate in price between different purchasers of commodities of like grade and quality, . . . where such commodities are sold for use, consumption, or resale within the United States . . ., and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly.
15 U.S.C. § 13(a). As part of its prima facie case, plaintiff must establish the existence of price discrimination. For purposes of the Robinson-Patman Act, a discrimination in price is "merely a price difference." Texaco v. Hasbrouck, 496 U.S. 543, 558, 110 S. Ct. 2535, 2544, 110 L. Ed. 2d 492 (1990); F.T.C. v. Anheuser-Busch Inc., 363 U.S. 536, 549, 4 L. Ed. 2d 1385, 80 S. Ct. 1267 (1960); J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531-32 (3d Cir. 1990).
Plaintiff's evidence fails to demonstrate the existence of a price difference. Plaintiff argues that the surcharge increased the price it paid for vehicles above the wholesale price its competitors enjoyed. Pl.'s Br., at 31. While it is true that no other New Jersey Lincoln or Mercury dealer was or is subject to a surcharge, this is because no other dealer attempted to enforce the NJFPA. Plaintiff is being reimbursed for warranty parts at the rate of seventy-seven percent above cost at the same time that plaintiff's competitors are being reimbursed the standard thirty to forty percent above cost. The surcharge was merely a device to recoup the extra costs defendant incurred by reimbursing plaintiff at the retail rate.
Thus, the surcharge eliminated any price difference that existed by virtue of plaintiff's enforcement of the NJFPA. Stated somewhat differently, through the imposition of a surcharge, plaintiff was placed in the same position as its competitors: all dealers were effectively reimbursed at the standard rate, albeit in violation of the NJFPA. Thus, there was no price difference.
Plaintiff also states that the surcharge forced it to sell vehicles at prices too high for it to compete with other dealers in the market. Pl.'s Br., at 33. This statement is contradicted by plaintiff's repeated contention that it was unable to pass-through the surcharge of its customers. Supplemental Certif. of Robert X. Robertazzi ("Robertazzi Supp. Certif."), P 28, Ex. D; Pl.'s Br., at 27, 33, 41. If plaintiff could not increase the wholesale cost of its vehicles, it alone bore the burden of the surcharge. The result was that plaintiff did not receive any benefit from the increased reimbursement; it was, for all intents and purposes, in the same financial position as other dealers with respect to warranty parts reimbursement and vehicle sales.
In short, the surcharge was nothing more than defendant's attempt to impose on plaintiff the costs of complying with the NJFPA. Although these actions violate the NJFPA, they do not create a price difference among plaintiff and its competitors which violates section 2(a) of the Robinson-Patman Act.
For the reasons stated herein, the court grants plaintiff's motion for summary judgment as to liability, since December, 1991 only, on Count One of the Complaint and grants defendant's motion to dismiss the pre-December, 1991 claims alleged in Count One and to dismiss Count Four. With the consent of plaintiff, the remaining counts will be dismissed and this court, therefore, need not reach the pending motions addressed to those counts. An appropriate order will issue.
MARYANNE TRUMP BARRY
Dated: March 13, 1996
This matter comes before the court on the motion of defendant Ford Motor Company for dismissal of Counts One (in part), Two, Three, Four, Seven, Nine, and Ten, and for partial summary judgment as to Counts One (in part), Five, Six, and Eight, and the motion of plaintiff Liberty Lincoln-Mercury, Inc. for partial summary judgment as to liability only; and
for the reasons expressed in this court's opinion of even date,
IT IS on this 13th day of March, 1996,
ORDERED that plaintiff's motion for summary judgment as to liability since December 1991 on Count One is hereby granted; and it is further
ORDERED that defendant's motion to dismiss the pre-December, 1991 claims alleged in Count One and to dismiss Count Four is hereby granted; and it is further
ORDERED that, with the consent of plaintiff, the remaining counts are dismissed and the pending motions addressed to those counts need not be reached.
MARYANNE TRUMP BARRY