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Forrester Lincoln Mercury, Inc v. Ford Motor Company

May 10, 2012


The opinion of the court was delivered by: (Judge Conner)


In 2010, defendant Ford Motor Company discontinued its line of Mercury-brand vehicles. This discontinuance caused plaintiff Forrester Lincoln Mercury, Inc., to lose its Mercury franchise, which it had held for over four decades. Prompted by this loss, Forrester filed the complaint in the instant action on June 15, 2011. (Doc. 1.) The complaint, as amended on August 16, 2011, sets forth six claims under the Pennsylvania Board of Vehicles Act, 63 PA. STAT. §§ 818.1 to 818.37. (Doc. 26.) Two weeks later, Ford moved to dismiss Counts I, II, IV, and VI of the amended complaint under FED. R. CIV. P. 12(b)(6). (Doc. 29.)

Upon referral of Ford's motion to dismiss, Magistrate Judge Methvin issued a Report and Recommendation (R&R) (Doc. 43) recommending that the motion be granted as to Counts I, II, and IV and denied as to Count VI. Objections to the R&R's conclusions regarding Counts I, II, and IV, and responses thereto, have been filed. (Docs. 44, 48, 49, 52.) For the reasons set forth below, the court will adopt the R&R in part and reject it in part.*fn1

I. Background*fn2

The facts as set forth herein are recounted only to the extent necessary for resolution of the objections to the R&R.

For the past forty-five years, two generations of Forresters have operated an auto dealership at the same location in Chambersburg, Pennsylvania. (Doc. 26, ¶¶ 1, 7.) The dealership operated under a franchise agreement with Ford,*fn3 which is a "manufacturer" under section 818.2 of the Board of Vehicles Act, for the sale and service of Mercury and Lincoln Vehicles. (Id. ¶¶ 2, 5.)

On June 2, 2010, Ford notified Forrester that it would terminate the Mercury franchise agreement following Ford's decision to discontinue the Mercury brand and focus on its other brands, Ford and Lincoln. (Id. ¶¶ 13, 14.) As required by the provisions of the franchise agreement, Forrester appealed the franchise termination to the Ford Policy Board. (Id. ¶¶ 15--16; see also Doc. 26-1, at 28 ¶ 18(b) (requiring appeals to the Board).)*fn4 The Board, however, concluded that it lacked jurisdiction to reverse the termination or to consider related state-law claims. (Doc. 26, ¶ 16.)

Following the Board's decision, Forrester initiated the instant action under the Board of Vehicles Act, alleging that Ford violated several provisions governing the relationship between vehicle manufacturers and dealers. (See generally id. ¶¶ 36--70 (setting forth the six counts of the complaint).)

II. Applicable Standards of Review

A. For a Magistrate Judge's Report and Recommendation

Parties' objections to a magistrate judge's report and recommendation impel the court to perform a de novo review of the contested portions of the report. Sample v. Diecks, 885 F.2d 1099, 1106 n.3 (3d Cir. 1989) (citing FED. R. CIV. P. 72(b); 28 U.S.C. § 636(b)(1)(c)). Federal and local rules require such a review of a report and recommendation only when a party files "written objections [that] specifically identify the portions" of the findings or recommendations "to which objection is made and the basis for such objections." L.R. 72.3; see FED. R. CIV. P. 72(b)(3). When the parties have registered either no objections or only "general" objections, "the district court need only review the record for plain error or manifest injustice." Cruz v. Chater, 990 F. Supp. 375, 377 (M.D. Pa. 1998) (citing Garcia v. I.N.S., 733 F. Supp. 1544, 1555 (M.D. Pa. 1990)).

B. For a motion to dismiss under FED.R.CIV.P.12(b)(6)

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of complaints that fail to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). When ruling on a motion to dismiss under Rule 12(b)(6), the court must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009) (quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)); see also Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 2007) (quoting Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir. 2005)). Although the court is generally limited in its review to the facts contained in the complaint, it "may also consider matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).

Federal notice and pleading rules require the complaint to provide "the defendant notice of what the . . . claim is and the grounds upon which it rests." Phillips, 515 F.3d at 232 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To test the sufficiency of the complaint in the face of a Rule 12(b)(6) motion, the court must conduct a three-step inquiry. See Santiago v. Warminster Twp., 629 F.3d 121, 130-31 (3d Cir. 2010). In the first step, "the court must 'tak[e] note of the elements a plaintiff must plead to state a claim.'" Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1947 (2009)). Next, the factual and legal elements of a claim should be separated; well-pleaded facts must be accepted as true, while mere legal conclusions may be disregarded. Id.; see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210--11 (3d Cir. 2009). Once the well-pleaded factual allegations have been isolated, the court must determine whether they are sufficient to show a "plausible claim for relief." Ashcroft v. Iqbal, 556U.S. 662, 129 S. Ct. at 1950 (citing Twombly, 550 U.S. at 556); Twombly, 550 U.S. at 555 (requiring plaintiffs to allege facts sufficient to "raise a right to relief above the speculative level"). A claim "has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. 662, 129 S. Ct. at 1949. When the complaint fails to present a prima facie case of liability, however, courts should generally grant leave to amend before dismissing a complaint. See Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002); Shane v. Fauver, 213 F.3d 113, 116--17 (3d Cir. 2000).

III. Discussion*fn5

Forrester presents three objections to Magistrate Judge Methvin's R&R. First, Forrester objects to the R&R's conclusion that section 818.13 of the Act excludes line-make terminations that would fall under section 818.14. Second, Forrester contends that section 818.14 does not bar its claim under section 818.18. Finally, Forrester objects to the R&R's conclusion that the factual allegations in the complaint fail to render Forrest's section 818.14 claim plausible.

Before addressing these objections seriatim, it is worth noting that neither party contends that any portion of the Board of Vehicles Act relevant to the instant dispute is ambiguous. The parties also agree that Ford's discontinuance of its Mercury brand constitutes a line-make termination. The parties' disagreement lies in the plain meaning of the statutory terms and how they apply to the facts as alleged in the complaint.

A. Whether 63 PA.STAT.ยง 818.13 excludes line-make terminations that would ...

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