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Liberty Lincoln-Mercury, Inc. v. Ford Motor Co.

March 17, 2009

*LIBERTY LINCOLN-MERCURY, INC.; FETTE FORD INC; CAUSEWAY FORD LINCOLN-MERCURY, INC.; ALL AMERICAN FORD; BURLINGTON LINCOLN MERCURY SUZUKI; CHAS S. WINNER, D/B/A WINNER FORD; COUNTRY FORD MERCURY JEEP; D'AMICO LINCOLN MERCURY, INC.; DAYTON FORD, INC.; DOWNS FORD, INC.; FORD OF ENGLEWOOD; FREEHOLD FORD, INC.; GEORGE WALL LINCOLNMERCURY, INC.; HILLSIDE AUTO MALL, INC.; IRWIN LINCOLN-MERCURY; JACK TREBOUR FORD; KEN SMITH MOTORS, INC.; LARSON FORD, INC.; LICCARDI FORD INC.; LICCARDI LINCOLN MERCURY; LILLISTON FORD, INC.; MAGARINO FORD-MERCURY AND DAEWOOD, LLC; MAHWAH SALES & SERVICE, INC.; MALOUF FORD, INC.; MALOUF LINCOLN-MERCURY, INC.; MAPLECREST FORD OF MENDHAM; MAPLECREST LINCOLNMERCURY, INC.; MEDFORD FORD; MONTCLAIRBLOOMFIELD MOTORS, INC.; MULLANE FORD, INC.; OASIS FORD; PALISADE MOTORS, INC. D/B/A C&C FORD, INC.; PARK AVENUE FORD; PISTILLI FORD, INC.; POINT PLEASANT FORD; QUALITY LINCOLN-MERCURY HYUNDAI, INC.; RICKLES LINCOLN-MERCURY LLC; RIDGEWOODS VILLAGE FORD, INC.; RITTENHOUSE-KERR FORD, INC.; ROUTE 23 AUTOMALL, SOUTH SHORE FORD INC.; STADIUM FORD, L.L.C.; STRAUB LINCOLN-MERCURY; TOM'S FORD; TOWN & COUNTRY MOTORS INC.; TOWN MOTORS; VALLEY FORD; WARNOCK FORD; WAYNE AUTO SALES; WAYNE MOTORS, INC.; WEISLEDER, INC.; WOODBRIDGE LINCOLN-MERCURY; WYCKOFF FORD, INC.; WYMAN FORD, INC., ALL NEW JERSEY CORPORATIONS; CAPTIAL CITY FORD, INC.; ED CARNEY FORD, INC.; RITTENHOUSE-KERR INCOLNMERCURY, INC. RIVERVIEW FORD OF PENNSVILLE, INC., DELAWARE CORPORATIONS;
v.
FORD MOTOR COMPANY, APPELLANT
*(AMENDED IN ACCORDANCE WITH CLERK'S ORDER DATED 09/06/06)



On Appeal from the United States District Court for the District of New Jersey (D.C. No. 02-cv-04146) District Judge: The Honorable William G. Bassler.

The opinion of the court was delivered by: Nygaard, Circuit Judge

PRECEDENTIAL

ARGUED OCTOBER 31, 2008

BEFORE: McKEE, NYGAARD, and SILER,*fn1 Circuit Judges.

OPINION OF THE COURT

Ford appeals the District Court's order granting a preliminary injunction in favor of a group of New Jersey franchise dealerships. The order prohibited Ford from assessing a surcharge to its New Jersey franchisees to recoup costs arising from a New Jersey statute that allowed franchisees to request a higher rate of reimbursement from Ford for warranty work.

Ford also appeals the District Court's underlying partial summary judgment. For the reasons that follow, we will reverse the District Court's preliminary injunction order and remand for further proceedings consistent with this opinion. The partial summary judgment is neither a final nor appealable order and we will not review it.

I.

As part of their agreement with Ford, franchised dealers are required to perform repair work on Ford brand vehicles, regardless of whether the franchisee sold the vehicle. Ford reimburses the dealers for work performed under both limited and extended service warranty plans, and for work that must be performed on recalled Ford vehicles. Under some circumstances where Ford determines that it is necessary to maintain customer satisfaction, Ford pays part of the cost of non-warranty repair work.

The New Jersey Franchise Practices Act provides that a "motor vehicle franchisor shall reimburse" its franchisee for parts used in warranty repairs at the franchisee's "prevailing retail price," provided that the retail price is not unreasonable. N.J.S.A. §56:10-15(a). The prevailing reimbursement rate prior to the statute was approximately 40% above the dealer cost. The dispute began in 1991 when one dealer, Liberty Lincoln-Mercury, Inc. asked Ford for a warranty part reimbursement at its retail rate, which was 77% above costs. Ford paid the higher rate, but it also began to add a fee to the wholesale price of cars that it delivered to Liberty. The fee varied month to month, depending on the reimbursement amounts claimed by Liberty.

Liberty filed suit challenging the fee, and we affirmed the decision of the District Court that Ford's surcharge violated the warranty reimbursement statute. Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 134 F.3d 557 (3d Cir. 1998).

In 2002, Ford imposed a restructured surcharge program to recoup increased costs incurred from its compliance with the warranty reimbursement statute. The second fee program applied to the wholesale price of all vehicles delivered to Ford franchisees in New Jersey. Liberty, along with other Ford franchisees in New Jersey, sued Ford asserting that the second surcharge program also violated the warranty reimbursement statute. Ford countered that it designed the second program to be a wholesale vehicle price term, a type of fee that we expressly stated in the first lawsuit was outside of the scope of the New Jersey statute. Regardless, in a partial summary judgment, the District Court ruled that Ford's reconstituted fee program violated the New Jersey statute.

The District Court also issued a preliminary injunction, prohibiting Ford from imposing the surcharge while the remaining issues are litigated. In granting the preliminary injunction the District Court noted that the partial summary judgment in favor of the franchisees resolved whether they were likely to succeed on the merits. The District Court did not make any other specific findings, ...


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