SALES IN RELATION TO POTENTIALS AND OBJECTIVES
Plaintiff's sales in comparison to the sales objectives assigned to him by Ford and with other metropolitan dealers are not in dispute. In 1956, plaintiff sold 116 new cars which was 49.2% Of his total monthly sales objective of 236 cars; sales of all dealers in the zone to which he was assigned were 85.1% Of total objectives; sales of all dealers in the Pittsburgh district were 93% Of total objectives. In 1957, he sold 133 new cars which was 51.5% Of his total monthly sales objective of 258 new cars; sales of zone dealers were 90.4% And of all district dealers 95% Of total sales objectives. In the first six months of 1958, plaintiff sold 36 new cars which was 28.3% Of his total sales objective of 127 new cars; sales of zone dealers were 59.8% And of all district dealers 84.3% Of total objectives. Registrations of new Fords in the postal zones of Oakmont and Verona were 227 in 1956, 207 in 1957, and 70 in the first six months of 1958; no figures were available for Unity, originally included in calculating plaintiff's sales potential, but registrations there had previously averaged 18-20 new cars per year.
In 1957, as a result of a resurvey of the market in the Pittsburgh area, Ford decreased the sales potentials and sales objectives of 56% Of the 27 Ford dealers in Allegheny County, and increased those of 44% Of the dealers. Plaintiff's sales potential was increased from 228 cars in 1956 to 248 in 1957, and was 124 for the first six months of 1958. Defendant Kennedy, the closest Ford dealer to Milos, was located in Cheswick, about 4 miles from Milos, and customarily sold in the Oakmont area. When Milos' dealership was established, Ford reduced Kennedy's sales potential by the amount of the sales potential established for Milos, -- from 391 cars in 1955 to 163 in 1956, and increased it to 208 in 1957 and 1958.
Plaintiff agreed that his only claim for damages was for loss of the profits he would have made from the operation of the franchise from August 11, 1958, the date of termination, to September 30, 1962, the date upon which the agreement would expire according to its terms. His evidence consisted of monthly financial statements submitted to Ford during the operation of his dealership and income tax returns for the years 1956 through 1960.
Although the evidence presented, viewed in the light most favorable to the plaintiff, did establish a variation in market potentials assigned to other dealers in the area of his franchise, it fails to disclose that they were based upon any different standards than those applied to him. It further fails to disclose that any standards of performance other than those expressly adopted by the parties in Subparagraph 2(a)(i) of the Franchise Agreement (set forth at page 4 above) were applied in the establishing of his sales potential. This Court, therefore, is of the opinion that plaintiff's burden of proving a lack of good faith in the matter of allegedly discriminatory assignment of performance standards has not been met. Nor is there any evidence that Milos was coerced into accepting more inventory than his market could absorb. Indeed, his profit experience and the absence of any claim based on losses sustained in this respect compel an inference to the contrary. It is disclosed, however, by undisputed evidence, that Milos' sales performance in his thirty-one months as a Ford dealer was about 50% Below the average level of performance of other dealers in the area.
In connection with plaintiff's assertion of bad faith on the part of Ford in its insistence upon expansion of facilities by Milos, the evidence is free of any substantial dispute. Although recommendations as to an additional building of a size considered unreasonable by Milos were made by a representative of Ford, neither Milos nor Ford conveyed to the other any specific proposal as to improvements contemplated by Milos or minimum requirements on the part of Ford. On the contrary, in April, 1957, Milos refused by letter to consider any building program until at least 1958 in spite of his agreement to provide adequate facilities and his unequivocal admissions on several occasions that his facilities were inadequate. A conclusion that Ford acted in bad faith in assigning inadequate facilities as one of its reasons for termination of the franchise, considered in conjunction with Milos' record of performance is wholly unwarranted. It is also to be noted that Milos did not sustain any losses as a result of capital expenditures induced by Ford. In fact, no damages are claimed for expenditures or losses of any kind, except for anticipated profits from a continuance of the franchise. Milos agreed to stand or fall on this one element of damage, and his action resolved itself into the question of termination in bad faith rather than a course of conduct which coerced him into the sustaining of actual losses from the operation of his business.
The Automobile Dealers' Franchise Act is not a guarantee against termination of a dealer's franchise, but rather the granting of a right of action for damages as a guarantee against coercion and intimidation through conduct amounting to bad faith. As stated in the report of the Committee on the Judiciary of the House of Representatives, H.R.Rep. No. 2850, 84th Cong.2d Sess., 1956 U.S.Code, Cong. & Admin.News, Vol. 3, p. 4596 at p. 4603, 'The principal effect of the bill as amended by the committee is to give the dealer a right of action against the manufacturer, where the manufacturer fails to act in a fair and equitable manner so as to guarantee the dealer freedom from coercion, intimidation, or threats of coercion or intimidation. * * * The bill, however, does not prohibit the manufacturer from terminating or refusing to renew the franchise of a dealer who is not providing the manufacturer with adequate representation. Nor does the bill curtail the manufacturer's right to cancel or not to renew an inefficient or undesirable dealer's franchise.'
The Act is designed to correct the previously existing situation in which a dealer could be deprived of his franchise without recovery of losses of any kind. Prior to the Act, for instance, he was held to the letter of a written franchise, including the right of the manufacturer to terminate at will without regard for the losses a dealer may have sustained thereby, and whether or not he may have been induced to incur obligations and make expenditures in reliance on the franchise. Likewise, a dealer may have been coerced into accepting an unreasonably large inventory under the threat of termination of his franchise, resulting in loss to him whether or not the franchise was eventually terminated. The Act was intended to give such a dealer redress. No doubt, there are many more situations wherein a dealer may be said to sustain losses through inequitable conduct on the part of the manufacturer, and which are the target of the Act of Congress. But the history of the dealer in this case is not one of losses sustained but one of resistance and of refusal to yield to the recommendations of the manufacturer. Nor does the evidence permit an inference that losses would have been incurred had he seen fit to comply. The evidence was not sufficient to establish bad faith on the part of Ford, and the verdict in this case is a result which does not fall within the intent of the Act of Congress. The constitutional questions raised by the defendant are not reached.
An appropriate order granting defendant's motion for judgment in accordance with its motion for a directed verdict will be entered.
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