in Moorehead, Inc., and controlled none of the seats on the board of directors. Nothing, therefore, prevented Moorehead, Inc. from asserting its own cause of action against GMC, and nothing prevented Kirsch and Marino (the sole stockholders at the time the franchise was terminated) from bringing a derivative action on behalf of the corporation in the event that its directors unaccountably failed to act. Thus, the rationale for Kavanaugh 's broad view of standing under the Act is inapplicable here.
The Fifth Circuit relied on Kavanaugh in York Chrysler-Plymouth, Inc. v. Chrysler Credit Corp., 447 F.2d 786 (5th Cir. 1971), and recognized standing in two named owner-operators of a franchised dealership. The court noted that these individuals did not have standing to sue simply because they were the sole stockholders, the sole officers, and the sole directors of the corporate dealership. 447 F.2d at 790. The court held that they did have standing, however, by virtue of the franchise agreement that required their personal and substantial participation in both the ownership and operation of the dealership. Under the court's reading of Kavanaugh, this "personal" franchise agreement sufficed to confer standing upon the (individuals) named therein.
Although the franchise agreement in this case is undeniably just as "personal" (with respect to Martin Moorehead) as was the agreement in York, I do not read Kavanaugh as holding that such an agreement, without more, confers standing on the named owner or operator. The Kavanaugh holding rests on an essential premise that, as noted earlier, is missing in this case: if the corporation is effectively prevented from asserting its own cause of action, then the remedial purposes of the Act require a broader recognition of individual standing than is appropriate in the typical case. See Rodrigue v. Chrysler Corp., 421 F. Supp. 903, 907 (E.D. La. 1976) (criticizing the decision in York). Kavanaugh should not be extended to situations in which no necessity exists for taking a broader view of standing under the Act.
One other decision lends some support to plaintiff's argument on the question of standing. In Rea v. Ford Motor Co., 497 F.2d 577 (3d Cir.), cert. denied, 419 U.S. 868, 42 L. Ed. 2d 106, 95 S. Ct. 126 (1974), Edward C. Rea sought to recover damages sustained by him in his capacity as president and principal stockholder of an Oldsmobile dealership (Rea Oldsmobile, Inc.). In 1964, Rea had obtained a Ford franchise by representing that he would liquidate the assets of Rea Olds, and invest the proceeds in the Ford franchise to be granted to him. After the Ford dealership (Edward C. Rea, Inc.) began operations, however, Rea changed his mind and informed Ford of his intention to leave his invested capital in Rea Olds. Rea later testified that Ford's district manager then threatened to stop shipping automobiles to Rea's Ford dealership unless Rea Olds gave up its Oldsmobile franchise and Rea transferred its capital to the Ford dealership. Rea complied with these demands, although Rea Olds retained some of its assets and was still a going concern. Subsequently, Rea Olds changed its name to 22 Ford, Inc., and took over operation of the Ford dealership. Several months later, Edward C. Rea, Inc., acting with the approval of Ford, assigned its franchise to 22 Ford, Inc. Both Rea and 22 Ford, Inc. later sued Ford, and the jury awarded damages to 22 Ford, Inc., representing profits "that Rea Olds would have made if it had continued to operate the Oldsmobile franchise." 497 F.2d at 583.
Ford contended on appeal that the Automobile Dealers' Day in Court Act gave 22 Ford, Inc. a cause of action only for damages sustained "in its capacity as a Ford dealership" by reason of Ford's violation of the Act. 497 F.2d at 583. Since no evidence of such damages was introduced, Ford argued, the jury's verdict was without foundation. The Third Circuit apparently accepted this argument, but it held that, in any event, Rea as an individual had standing to sue for the lost profits of the Oldsmobile dealership. The court therefore sustained the jury's verdict, although it remanded for a new trial on the issue of damages.
Of crucial importance here are the court's reasoning and the precise holding in Rea. As to the former, the court emphasized the "personal" franchise agreement between Ford and Edward C. Rea, Inc., under which Rea was required to participate actively and substantially in the ownership and operation of the Ford dealership. The court then went on to say:
"Rea, therefore, had a cause of action under the Automobile Dealers' Act against Ford for any bad faith in coercing him, as President and principal stockholder of Rea Olds, to surrender the Oldsmobile franchise and to recover damages suffered by Rea Olds as a result of such surrender." 497 F.2d at 584. (Citation omitted, emphasis supplied.)
Plaintiff would rely on Rea for the broad proposition that an individual named in a "personal" franchise agreement invariably has standing to sue the automobile manufacturer. Because Moorehead was designated as Owner and Operator in the GMC franchise agreement, the argument runs, he can sue GMC under the Act. In Rea, however, the Third Circuit invoked two considerations in reaching its conclusion. One was the substantial relationship between the plaintiff and the defendant manufacturer, evidenced by the "personal" franchise agreement. The other consideration was the relationship between Rea and the corporate dealership. As shown by the underlined language in the quotation set out above, the Third Circuit relied on Rea's status as president and principal stockholder of Rea Olds in determining that Rea had standing to sue to recover damages resulting from the coerced termination of the Oldsmobile franchise. Plaintiff seeks to extend Rea to this case, despite the fact that at the time GMC terminated Moorehead, Inc.'s franchise, plaintiff had resigned as president of Moorehead, Inc. and had transferred his entire stock interest in the corporation. Although the "personal" franchise agreement still named Moorehead as Owner and Operator of the dealership, his only other tie with Moorehead, Inc. was his employment by the corporation as general manager of the dealership. In short, the second consideration supporting the Rea holding is wholly lacking here.
The rationale underlying this second requirement for individual standing is apparent. If the only requirement for individual standing were the existence of a "personal" franchise agreement, then virtually every case under the Act would become an exception to the general rule that the corporation, rather than an individual shareholder or employee, has standing to enforce the antitrust laws. E.g., Kauffman v. Dreyfus Fund, Inc., 434 F.2d 727 (3d Cir. 1970), cert. denied, 401 U.S. 974, 28 L. Ed. 2d 323, 91 S. Ct. 1190 (1971); Ash v. International Business Machines, Inc., 353 F.2d 491 (3d Cir. 1965); Wobb v. Ford Motor Co., 1977-1 Trade Cases (CCH) P 61,268 (W.D. Pa. 1975), aff'd per curiam, 546 F.2d 421 (3d Cir. 1976), cert. dismissed, 430 U.S. 923, 97 S. Ct. 1344, 51 L. Ed. 2d 603 (1977). No court has yet held that Congress, in enacting the Automobile Dealers' Day in Court Act, sought to overturn this rule in all cases involving the automobile industry. See also Vincel v. White Motor Corp., 521 F.2d 1113, 1120 (2d Cir. 1975). Nor is any such intent apparent from the legislative history of the Act. See H.R. Rep. No. 2850, 84th Cong., 2d Sess., reprinted in  U.S. Code Cong. & Admin. News 4596. Accordingly, individual standing should ordinarily be recognized only where, as in Rea, the plaintiff has extensive control over the corporation's activities as well as the dominant financial interest in the corporation. This requirement, of course, is imposed in addition to the requirement of a very substantial relationship with the manufacturer, such as that evidenced by a "personal" franchise agreement.
Further support for this restrictive interpretation of Rea can be drawn from an examination of the peculiar facts of that case. Rea, like Kavanaugh, presented a situation in which only the individual plaintiff could assert the dealership's rights under the Act and, for this reason, the court may have taken a somewhat broader view of individual standing than is usually appropriate. A brief consideration of the three corporate entities involved in Rea suggests strongly that none of them had standing to recover damages suffered by the Oldsmobile dealership. To begin with, Rea Olds itself lacked standing because the Act creates a cause of action only "where a manufacturer is guilty of coercion and intimidation in its dealings with its franchise holders," and Rea Olds obviously did not hold a Ford franchise. Hanley v. Chrysler Motors Corp., 433 F.2d 708, 710-11 (10th Cir. 1970) (emphasis supplied). "Unquestionably, the Act does not apply until a manufacturer-dealer relationship has been created." Lewis v. Chrysler Motors Corp., 456 F.2d 605, 606-07 (8th Cir. 1972). Second, Edward C. Rea, Inc., which held the Ford franchise operated by Rea throughout the relevant time period, was in no way injured by the coerced termination of Rea Olds' franchise, and therefore had no cause of action against Ford. Rea v. Ford Motor Co., 560 F.2d 554, 558 (majority opinion), 559 (Gibbons, J., dissenting) (3d Cir.), cert. denied, 434 U.S. 923, 98 S. Ct. 401, 54 L. Ed. 2d 281, 46 U.S.L.W. 3293 (1977). Finally, 22 Ford, Inc., as successor to Rea Olds, arguably acquired whatever cause of action the latter had against Ford. For the reason given previously, however, Rea Olds had no cause of action against Ford, and therefore none could have been acquired by 22 Ford, Inc. The Rea court apparently accepted this last argument, for it shifted a jury verdict in favor of 22 Ford, Inc. over to Rea in his individual capacity. 497 F.2d at 584; Rea v. Ford Motor Co., 560 F.2d 554, 557 (3d Cir.), cert. denied, 434 U.S. 923, 98 S. Ct. 401, 54 L. Ed. 2d 281, 46 U.S.L.W. 3293 (1977). Thus, Rea may be viewed as an exceptional case -- not unlike Kavanaugh -- in which only the individual plaintiff was in a position to assert the dealership's statutory rights. As I noted earlier in connection with Kavanaugh, this case does not present that exceptional situation, and the plaintiff therefore cannot rely on Rea to confer standing upon him.
For the reasons set out above, the plaintiff lacks standing to sue under the Automobile Dealers' Day in Court Act. GMC's motion for summary judgment will therefore be granted as to the first cause of action.
The three remaining causes of action stated in the complaint are based on Pennsylvania law. Had the federal statutory claim survived these summary judgment motions and been tried on the merits, the remaining three claims might properly have been heard under the doctrine of pendent jurisdiction. See generally Hagans v. Lavine, 415 U.S. 528, 545-48, 39 L. Ed. 2d 577, 94 S. Ct. 1372 (1974); United Mine Workers v. Gibbs, 383 U.S. 715, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966). One issue that would have arisen in deciding that question is the propriety of federal jurisdiction over pendent nonfederal parties, as all three state law claims run against such parties. See generally Aldinger v. Howard, 427 U.S. 1, 15-16, 49 L. Ed. 2d 276, 96 S. Ct. 2413 (1976). These issues are no longer material, however, as the federal claim has been dismissed. In United Mine Workers v. Gibbs, 383 U.S. 715, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966), the leading case on pendent jurisdiction, the Supreme Court stated:
"Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well."