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DANVERS MOTOR COMPANY, INC. v. FORD MOTOR COMPANY

February 4, 2002

DANVERS MOTOR COMPANY, INC., BOB CHAMBERS FORD, CONCORD-FORD-LINCOLN-MERCURY, FETTE FORD, INC., AND SENATOR FORD, INC., PLAINTIFFS,
V.
FORD MOTOR COMPANY, DEFENDANT.



The opinion of the court was delivered by: Greenaway, Jr., U.S.D.J.

OPINION

This matter comes before the Court on Defendant Ford Motor Company's ("Ford" or "Defendant") motion to dismiss the complaint filed by Plaintiff Danvers Motor Company, Inc. ("Danvers") and several other Ford dealers (collectively, "Plaintiffs").*fn1 Plaintiffs' responsive motion seeks injunctive relief and expedited proceedings. For the reasons set forth below, this Court finds that Plaintiffs have failed to articulate an injury-in-fact so as to establish the standing necessary to bring this action in federal court. Accordingly, Defendant's motion to dismiss the complaint, pursuant to Federal Rule of Civil Procedure 12(b)(1), is granted.

BACKGROUND

Plaintiffs are Ford dealers from several retail markets in the northeast United States. (Compl. ¶¶ 19-23.) Defendant, an automobile manufacturer, sells and distributes its vehicles through franchise dealers, such as Plaintiffs. (Id. ¶ 37.) Plaintiffs have each signed a substantively identical Franchise Agreement with Defendant. (Id. ¶ 40.) The instant litigation arises from a recent price increase Ford imposed and a sales initiative called the "Blue Oval Certification" ("BOC"). Beginning with its 2001 models, Ford raised by 1% the prices of its vehicles for dealers. (Id. ¶ 1.) However, Ford did not raise the manufacturer's suggested retail price ("MSRP"). (Id. ¶¶ 1, 49.) In April 2000, Ford instituted the BOC as a nationwide customer service and satisfaction incentive program for all of its dealers. (Id. ¶ 44.)

Although the BOC program is voluntary, dealers who wish to participate must achieve certification. The certification process, created by Ford and endorsed by the National Ford Dealer Council,*fn2 involves a number of performance criteria, including leadership, concern resolution, sales, service, and facilities. (Id. ¶ 47; Ex. A.) Certification requirements for each dealer differ depending on whether they are classified as a "Select dealer," a dealer with low annual vehicle sales and/or a location in a rural area, or a "Contact dealer," a dealer with greater annual vehicle sales. (Id. ¶ 54.) Ford maintains the right to change the BOC standards for certification, and dealers must re-certify annually. (Id. ¶ 9.)

While there is no penalty provided in the description of the BOC program, Plaintiffs allege that Ford has stated publicly an intention to terminate dealers who fail to obtain certification. (Id. ¶ 8.) Ford dealers who do satisfy the criteria and achieve Blue Oval certification will receive a number of benefits. For example, BOC dealers receive retroactive cash bonuses of between 1 and 1.25% of the MSRP, while dealers without certification receive no cash bonuses. (Id. ¶¶ 50-51.) Plaintiffs describe this cash bonus system as "three-tier pricing."*fn4 (Id. ¶ 5.) Plaintiffs declare, upon information and belief, that Ford's principal motivation in instituting the BOC, is to cause, directly or indirectly, the failure and/or termination of a significant minority of its dealers. (Id. ¶ 3.)

In the complaint, Plaintiffs cite to an April 24, 2000 article from Automotivenews.com, entitled "Ford to Pay Top Dealers Only/Blue Oval Stores Get Invoice Refunds," which indicates that as many as 30% of Ford dealers may not initially qualify for Blue Oval Certification. (Id. ¶ 71.) Similarly, Plaintiffs allege that Ford was aware of the likelihood that several dealers would not qualify under the BOC Program. Plaintiffs refer to an August 28, 2000 article in Automotive News, entitled Ford Blue Oval Bonus Stays, in which Jim O'Conner ("O'Conner"), the President of Ford Division, declared, "If the dealer can't make certification in two years, I am not sure we want that dealer." (Id. ¶ 72.)

As a result, Plaintiffs maintain that dealers who do not or cannot conform to the standards necessary for Blue Oval Certification will suffer three harms: (1) the severe financial penalty in the higher cost of their vehicle orders; (2) the unavailability of certain ancillary benefits and promotional allowances made available to Ford dealers who maintain BOC; and (3) and the incalculable loss of reputation and good will as non-Blue Oval certified Ford dealers. (Id. ¶ 5.) Plaintiffs further allege that even the attempt of many dealers to conform to the BOC Program will exact a financial burden that may jeopardize the viability of their dealerships, and predict that the financial requirements of the BOC Program will result in the termination of a significant minority of dealers. (Id. ¶¶ 7, 53.)

ANALYSIS

A. Standard of Review on a motion to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(1)

According to the Third Circuit, a motion to dismiss under 12(b)(1) for lack of subject matter jurisdiction, "may be treated as either a facial or factual challenge to the court's subject matter jurisdiction." Gould Electronics, Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000) (citing Mortensen v. First Fed. Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). The Gould court instructed that "[i]n reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff."*fn5 Gould, 220 F.3d at 176 (citations omitted). A facial attack must not be confused with a factual challenge contending that the court in fact lacks subject matter jurisdiction, no matter what the complaint alleges, as factual challenges are subject to different standards. In reviewing a factual challenge, "a court may consider evidence outside the pleadings," and no presumptive truthfulness attaches to plaintiffs' allegations. Gould, 220 F.3d at 176 (citing Gotha v. United States, 115 F.3d 176, 178-79 (3d Cir. 1997)); Mortensen v. First Fed. Say. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977).

Therefore, a threshold issue for this Court is whether Ford intended to mount a facial or factual attack upon this Court's subject matter jurisdiction. At the August 22, 2001 oral argument on this motion, Defendant argued that its challenge to Plaintiffs' standing was limited to the "four corners of their complaint." (Tr. at 12.) In addition, in its moving papers, Defendant focused its standing argument on Plaintiffs' allegations as stated in the complaint. (Def.'s Mot. to Dismiss at 5-7.) Accordingly, this Court will address Ford's challenges to ...


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