Manufacturers face challenging legal issues in getting their products to end users—whether through rental and leasing arrangements, dealers or direct sales. Shook represents many of the largest and most sophisticated manufacturers in the world, including manufacturers of automobiles, motorcycles, construction, and farm and industrial equipment.
Our team’s representation of motor vehicle manufacturers in litigation and counseling has involved letters of intent, franchise terminations, warranty and incentive fraud, the implementation of new standard forms of dealer agreements, the introduction of new brands or distribution networks, add-points, relocations, allocation issues, post-termination matters, dealer bankruptcies and the interpretation of state franchise statutes. Our team has also represented automobile manufacturers in actions involving the Racketeer Influenced and Corrupt Organizations Act (RICO) allegations arising from dealership fraud.
Shook’s attorneys are well-positioned to assist with the varied issues that arise in product distribution, including risk management and mitigation; the development and modification of dealership and distributorship programs, rental and leasing arrangements; and manufacturing and supply agreements. We have depth of knowledge in state and federal regulatory framework and franchise laws impacting our clients, and have successfully resolved issues on their behalf.
Representative Matters
- Served as lead trial counsel in a four-week federal jury trial on behalf of a motor vehicle manufacturer in which a dealer sought damages in excess of $30 million alleging violations of numerous state and federal antitrust and unfair business practice statutes. The jury awarded the dealer $1, but also awarded client substantial damages on its counterclaims.
- Prevailed in an international arbitration relating to the termination of a motor vehicle distributor in which the distributor sought more than $50 million in damages. The distributor was awarded no damages, and client was awarded all of its attorney’s fees. The arbitration award was later affirmed by the Sixth Circuit Court of Appeals.
- Argued and won an appeal before the Eleventh Circuit Court of Appeals and, on referral, before the Georgia Supreme Court upholding a federal district court decision that a release obtained by a motor vehicle manufacturer from one of its dealers did not violate the anti-waiver provisions of the state motor vehicle franchise statutes.
- Argued and won an appeal before the Fifth Circuit Court of Appeals reversing a federal district court order granting summary judgment in favor of a motor vehicle dealer in Texas related to an incentive charge-back.
- Obtained dismissal of an incentive protest before the California New Motor Vehicle Board. A member of our team also successfully handled and argued the appeal of that dismissal filed by the dealer.
- Prevailed on a petition for judicial review before a Tennessee Chancery Court in which the court held that the Tennessee Motor Vehicle Commission does not have jurisdiction to hear motor vehicle termination disputes.
- Won an appeal of an order denying summary judgment in Georgia where consumers sought to hold a manufacturer responsible for dealer misconduct.
- Won denial of dealer’s motion for a preliminary injunction in Colorado federal court, preventing termination.
- Won summary judgment in New Jersey federal court terminating dealer based on dealer’s breach of obligation to establish exclusive showrooms. The decision was later upheld by the Third Circuit Court of Appeals.
- Counseled a second-stage manufacturer of specialty motor vehicles on its rights and obligations under its nationwide distribution program, and defended the same manufacturer from a threatened litigation regarding an allegedly improper termination that resulted in a negotiated, limited buyback of inventory.
- Counseled specialty motor vehicle manufacturers on updated terms and conditions for their nationwide distribution programs and agreements and assisted in coordinated nationwide rollouts of the new agreements.
- Handled multiple cases as national counsel involving disputes between various marketing groups of U-Haul and a local dealer network composed of both independent dealers and corporate-owned rental centers, self-storage locations and propane filling stations across the U.S. and Canada. Issues included dealer indemnity, agency, insurance coverage, employment and other typical dealer-distributor issues in the context of third-party litigation.
- Served as national coordinating counsel in defense of more than 100 suits brought by Snap-on distributors raising breach of contract claims concerning territory, exclusivity, financing and other issues. Developed with client a franchise system and implemented a mandatory arbitration program, which largely put an end to these types of disputes.
- Advised operating companies on contracting issues related to state dealers’ laws and assisted in terminations of underperforming dealers, including updates to network-wide dealer contracts and guidance to assist in terminations and other performance issues.
- Represented companies on various pre-litigation disputes relating to terminations, contract performance and state-law-required motor vehicle and equipment buybacks.
