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Videon Chevrolet Inc. v. General Motors Corp.

argued: February 23, 1993.



Before: Hutchinson, Nygaard and Seitz, Circuit Judges.

Author: Nygaard


NYGAARD, Circuit Judge.

Plaintiff Videon Chevrolet, Inc. appeals from an order of the district court granting summary judgment in favor of defendant General Motors Corporation. We believe there is a genuine issue of material fact and will reverse and remand for trial.


Videon is a Chevrolet dealer under a franchise agreement with GM whereby both parties bear joint responsibility to promote Chevrolets. Videon is also a member of the Five-Star Dealers Association, an organization of regional dealers organized to collectively promote Chevrolets.

In 1988, GM became concerned about its dwindling "share of the voice" in local dealer advertising, particularly when compared to the marketing efforts of Ford dealers. To correct this problem, which GM believed was partly responsible for Chevrolet's slightly declining market share, GM implemented a program known as the Chevrolet Dealer Association Marketing Initiative. Under this program, which began with the 1989 model year, GM added one percent to the dealer cost of each Chevrolet not intended for sale to an employee or fleet customer.*fn1 This mandatory surcharge appeared separately on dealers' invoices under the caption "GM Marketing Adjustment."

GM spent all funds raised by the Marketing Initiative on local advertising. If the dealer belonged to an association, GM rebated the monies to the dealer association. If it did not belong to an association, GM spent the funds directly on that dealer's behalf. Dealers were also eligible to receive twenty-five percent of the "adjustment" back, if they spent it on approved advertising.

Videon was not satisfied with this arrangement, believing it could build market share more effectively on its own. The Videon Chevrolet dealership is located in Newtown Square, Pennsylvania, a small community in Delaware County bordering the Philadelphia metropolitan area. It typically advertises in local newspapers, such as the News of Delaware County and The County Proceeds. Videon felt that because the advertising planned by the association was targeted at the entire Philadelphia tri-state region, it would be of no help to Videon's strictly localized dealership.*fn2

In December 1989, Videon filed an administrative complaint with the Pennsylvania Board of Vehicle Manufacturers, Dealers and Salespersons ("Board"), alleging that the Marketing Initiative constituted forced dealer participation in an advertising campaign and therefore violated the Pennsylvania Board of Vehicles Act ("the Act"), 63 Pa. Cons. Stat. Ann. § 818.1 et seq. (Purdon Supp. 1992). In July 1990, the Board ordered GM to show cause why the Marketing Initiative did not violate the statute. In these proceedings, Frank Videon, Jr., the President of Videon Chevrolet, Inc., gave deposition testimony about his views of the Marketing Initiative. GM and the Board settled this administrative case by an agreement under which GM would continue to collect the one percent surcharge, but would cease itemizing it separately on the dealer invoice.

During the administrative proceedings before the Board, Videon filed a diversity suit in the district court, asserting a private right of action under the Act. Videon's three-count complaint sought to enjoin GM from collecting the Marketing Adjustment and requested actual and punitive damages. GM answered the complaint, then moved for summary judgment. The district court granted GM's motion and dismissed the complaint with prejudice. Videon Chevrolet, Inc. v. General Motors Corp., 798 F. Supp. 253 (E.D. Pa. 1992). Videon timely appealed. We have jurisdiction under 28 U.S.C. § 1291 and exercise plenary review of the summary judgment. E.g., Colburn v. Upper Darby Township, 946 F.2d 1017, 1020 (3d Cir. 1991). Affirmance is possible here only if we conclude that, after viewing the material evidence in the light most favorable to Videon, no jury could decide in its favor. Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987).



The district court's task was to predict whether the Supreme Court of Pennsylvania would hold that the Marketing Initiative could violate the Act. See, e.g., Nationwide Insurance Co. v. Resseguie, 980 F.2d 226, 229-30 (3d Cir. 1992); McMillan v. State Mutual Life Assurance Co., 922 F.2d 1073, 1077 (3d Cir. 1990); Pennsylvania Glass Sand Corp. v. Caterpillar Tractor Co., 652 F.2d 1165, 1167 (3d Cir. 1981). Its prediction, like the summary judgment decision itself, is a question of law subject to plenary review. Resseguie, 980 F.2d at 229-30; Ragen Corp. v. Kearney & Trecker Corp., 912 F.2d 619, 623 (3d Cir. 1990).

Hence, the first issue to consider is whether the GM Marketing Adjustment, being in form a price increase to the dealer, could constitute forced participation in an advertising campaign within the meaning of the Act. The district court held as a matter of law that it did not. We disagree. Section 818.9(a) provides, in pertinent part:

It shall be a violation for any manufacturer . . . licensed under this act to require, attempt to require, coerce or attempt to coerce any new vehicle dealer in this Commonwealth to:

(3) Participate monetarily in an advertising campaign or contest or to purchase any promotional materials, training materials, showroom or other display decorations or materials at the expense of the new vehicle dealer.

Unfortunately, there have been no reported decisions from any court construing section 818.9(a)(3), nor is there any legislative history.*fn3 Faced with this dearth of assistance in the proper construction of the Act, the ...

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