USCA1 Opinion
February 3, 1995 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 94-1335
ACADIA MOTORS, INC., ET AL.,
Plaintiffs - Appellees,
v.
FORD MOTOR COMPANY,
Defendant - Appellant.
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No. 94-1450
ACADIA MOTORS, INC., ET AL.,
Plaintiffs - Appellants,
v.
FORD MOTOR COMPANY,
Defendant - Appellee.
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ERRATA SHEET
The opinion of this Court issued on January 24, 1995, is
amended as follows:
Page 12, first full paragraph, line 4, change "differ" to
differs";
Page 19, line 5, delete "to" after "ordered".
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 94-1335
ACADIA MOTORS, INC., ET AL.,
Plaintiffs - Appellees,
v.
FORD MOTOR COMPANY,
Defendant - Appellant.
____________________
No. 94-1450
ACADIA MOTORS, INC., ET AL.,
Plaintiffs - Appellants,
v.
FORD MOTOR COMPANY,
Defendant - Appellee.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge]
___________________
____________________
Before
Torruella, Chief Judge,
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Boudin and Stahl, Circuit Judges.
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_____________________
Jay Kelly Wright, with whom Hilde E. Kahn, William M.
_________________ ______________ ___________
Quinn, Jr., Arnold & Porter, Andrew M. Horton, Carl E. Kandutsch
__________ ________________ ________________ _________________
and Verrill & Dana were on brief for Ford Motor Company.
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Bruce C. Gerrity, with whom Michael Kaplan, Preti, Flaherty,
________________ ______________ ________________
Beliveau & Pachios, Peter L. Murray and Law Offices of Peter
___________________ ________________ _____________________
Murray were on brief for Acadia Motors, Inc., et al.
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____________________
January 24, 1995
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TORRUELLA, Chief Judge. This appeal involves a dispute
TORRUELLA, Chief Judge.
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between thirty-two Maine automobile dealers (the "Dealers") and
Ford Motor Company ("Ford") over Ford's compliance with the Maine
warranty reimbursement statute, 10 M.R.S.A. 1176 (Me. Rev.
Stat. Ann., tit. 10 1176 (West 1994)). On cross-motions for
summary judgment, the district court ruled that in order to
comply with the Maine statute, Ford must revise the window
stickers on its cars sold in Maine to reflect the surcharge Ford
had instituted to recover its costs of complying with 1176.
The district court refused, however, to award damages or
restitution to the Dealers on their claims that Ford had violated
the statute. In addition, the district court dismissed the
Dealers' remaining claims under the Robinson-Patman Act, 15
U.S.C. 13(a) (1988), and 10 M.R.S.A. 1174(1) and 1182 (Me.
Rev. Stat. Ann., tit. 10 1174(1), 1182 (West 1994)). For the
reasons set forth below, we affirm in part and reverse in part
the decision of the district court.
BACKGROUND
BACKGROUND
A. The Manufacturer-Dealer Relationship
A. The Manufacturer-Dealer Relationship
____________________________________
Ford manufactures automobiles and sells them through a
nationwide network of franchise dealers. The franchise
agreement, called the Sales and Service Agreement (the
"Agreement"), defines the manufacturer-dealer relationship. Ford
offers a warranty with all new cars. Under the warranty, certain
repairs, replacements, or adjustments are made free of charge to
the consumer. The Dealers are required under their Agreements
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with Ford to perform labor and to provide parts in satisfaction
of the warranties. Ford is obligated both under the Agreements
and under Maine statute to reimburse the Dealers for parts used
and warranty work performed.
Historically, and until 1993, Ford reimbursed the
Dealers for parts under a uniform national reimbursement formula.
Under this nationwide formula, each dealer is eligible to be
reimbursed at wholesale cost, plus 30-40 percent above cost,
depending on the vehicle model year.
B. State Legislation
B. State Legislation
_________________
The State of Maine regulates the manufacturer-dealer
relationship by statute, see 10 M.R.S.A. 1171 et seq.,
___ __ ____
including warranty reimbursement levels. Originally, Maine's
warranty reimbursement statute required car manufacturers,
including Ford, to "adequately and fairly compensate the
franchisee for any parts provided in satisfaction of a warranty
created by the franchisor." 10 M.R.S.A. 1176 (1980). In 1991,
however, 1176 was amended to require manufacturers to reimburse
dealers at retail-equivalent rates. It currently provides in
pertinent part:
If a motor vehicle franchisor requires or
permits a motor vehicle franchisee to
perform labor or provide parts in
satisfaction of a warranty created by the
franchisor, the franchisor shall properly
and promptly fulfill its warranty
obligations, in the case of motor
vehicles over 10,000 pounds gross vehicle
weight rating, shall adequately and
fairly compensate the franchisee for any
parts so provided and, in the case of all
other motor vehicles, shall reimburse the
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franchisee for any parts so provided at
_________________________________________
the retail rate customarily charged by
_________________________________________
that franchisee for the same parts when
_________________________________________
not provided in satisfaction of a
_________________________________________
warranty.
________
10 M.R.S.A. 1176 (1991) (Me. Rev. Stat. Ann., tit. 10 1176
(West 1994)) (emphasis added).
Notably, the amended statute requires warranty parts
reimbursement "at the retail rate customarily charged for the
same parts when not provided in satisfaction of a warranty." 10
__________
M.R.S.A. 1176 (emphasis added). The statute requires a match
between the warranty part and the part actually sold by that
particular dealer to a non-warranty customer. For example, a
particular dealer's profit margin on the retail sale of a
headlight cannot be used to determine the appropriate
reimbursement percentage when the dealer, or another dealer,
replaces a water pump under warranty.
C. Events Leading to this Lawsuit
C. Events Leading to this Lawsuit
______________________________
Following the 1991 amendment to 1176, several Maine
dealers notified Ford that the new law entitled them to higher
warranty reimbursement. In 1992, one Maine dealer filed claims
in small claims court for reimbursement. The small claims court
dismissed those claims because the dealer had not submitted an
adequate claim for reimbursement to Ford, which it found to be a
prerequisite under the statute to reimbursement recovery.
Darling's Bangor Ford/VW/Audi v. Ford Motor Co., No. BAN 92-sc-
_____________________________ ______________
229 (Me. Dist. Ct. 3, S. Pen., Oct. 20, 1992).
In response to this dealer's challenge, however, Ford
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revised its reimbursement policy in Maine, and announced to its
Maine dealers on April 1, 1993 that the "cost-plus" mark-up for
parts reimbursement would be raised for all Maine dealers to 63
percent. This percentage corresponds to the percentage over cost
used to determine the manufacturer's suggested retail price of
parts.1 With this announcement, however, Ford also stated that
in order to recover this increase in its costs of doing business
in Maine, it would also increase the wholesale price of each new
vehicle sold, through assessment of a surcharge of approximately
$160 per vehicle. The surcharge, called the "warranty parity
surcharge," would appear on each dealer's monthly parts invoice
in the month following the sale. The surcharge was imposed based
on the number of cars sold, without regard to whether the dealer
actually performed warranty work in that month.2
The Dealers filed this lawsuit in the United States
District Court for the District of Maine, alleging that the
surcharge was unlawful, requesting that the court enjoin the
surcharge and order Ford to "disgorge" the surcharge monies
already recovered. The Dealers argued that 1176 not only
____________________
1 Ford states that a dealer could obtain a higher reimbursement
mark-up on a particular part merely by submitting the necessary
documentation to Ford, in accordance with 1176 and Ford's
established reimbursement procedures.
2 The Dealers submitted the affidavits of two dealers attesting
that they paid more in surcharges than they received in increased
reimbursement under the new policy. Ford points out, however,
that while some dealers pay more in a given month under the new
policy, others pay less and receive more. The surcharge, Ford
stated during oral argument before this court, was calculated to
recoup Ford's increased costs of doing business over time,
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spreading those costs evenly among the dealers.
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required higher warranty reimbursement levels, but also
prohibited Ford from raising wholesale prices to recover the
costs of paying those higher reimbursement levels. They argued
that the surcharge effectively negated the higher reimbursement
levels required by 1176, in contravention of the legislative
purpose of the amended statute. The Dealers also alleged that
Ford's surcharge violated the Automobile Dealers Day in Court Act
and the Robinson-Patman Act, and made claims under other Maine
statutes.
Ford moved to dismiss under Fed. R. Civ. P. 12(b)(6) or
alternatively for summary judgment under Fed. R. Civ. P. 56 on
the grounds that, as a matter of law, the warranty reimbursement
level and the surcharge were lawful.3 The Dealers also moved
for partial summary judgment, seeking a final injunction against
the price increase, and requesting damages and other relief.
They argued that any price increase to recover the reimbursement
rate required by 1176 was itself a violation of the statute.
They contended that the Maine legislature, in amending 1176,
had intended that the cost of Ford's warranty be borne by Ford,
and not by the Dealers, and that the surcharge improperly shifted
the financial burden back to the Dealers. According to the
Dealers, 1176 was about "dealers' rights," and thus any
___
____________________
3 Ford also raised challenges to the statute on various federal
statutory and constitutional grounds. The district court
rejected these challenges, and Ford has not raised them in this
appeal.
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wholesale price increase was unlawful.4
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4 The Dealers also argued that, in the alternative, the only
lawful way for Ford to recoup its increased costs was to
institute a wholesale price increase nationwide. The district
court rejected this suggestion, and the Dealers do not raise it
on appeal.
-8-
D. The District Court's Orders
D. The District Court's Orders
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1. The February Order
1. The February Order
The district court ruled on the parties' motions on
February 15, 1994, treating both motions as ones for summary
judgment. The parties offer vastly different interpretations of
the February Order. We acknowledge that the court's conclusions
are not crystal-clear. We do not think, however, that the
court's decision is fairly subject to such disparate readings as
given by the parties.
First, the district court denied the Dealers' request
for damages based on Ford's alleged past failures to reimburse
the Dealers according to the amended 1176. The court ruled
that the Dealers did not make an adequately particularized claim
to Ford prior to bringing suit.
The court then addressed the Dealers' objections to
Ford's reimbursement policy and warranty parity surcharge.
Regarding the Dealers' arguments that the 63 percent
reimbursement rate was not sufficient under 1176, the court
stated:
The plain language of 1176 requires
that Ford reimburse its dealers "at the
retail rate customarily charged by that
___________ ____
franchisee for the same parts when not
__________
provided in satisfaction of a warranty."
10 M.R.S.A. 1176 (Supp. 1993) (emphasis
added). Literally this requires Ford to
pay a dealer the same rate that that
particular dealer would have charged for
that particular part if the dealer had
provided it to a nonwarranty customer.
Ford's policy of reimbursing dealers at
the suggested list price may or may not
satisfy 1176 depending on whether the
-9-
individual dealer customarily charges
more or less than Ford's suggested list
price. . . . As discussed above, the
___
Dealers have not submitted a sufficiently
_________________________________________
particularized claim to Ford in order to
_________________________________________
recover for Ford's past alleged
_________________________________________
underpayments. Moreover, the Dealers
_____________
have failed to submit enough factual
___________________________________
material from which the Court can
_________________________________________
determine whether Ford's practice of
_________
reimbursing dealers at 63% above dealer
cost violates 1176.
On these grounds, the court denied the Dealers' motion for
partial summary judgment, declining to find Ford liable for
damages, declare Ford's current reimbursement rate illegal, or
issue an injunction requiring that Ford reimburse the Dealers at
a higher rate.
The court then addressed the Dealers' arguments that
the warranty parity surcharge violates 1176. The court first
rejected the Dealers' claim that Ford has no right to recover its
increased costs of compliance with the Maine statute. The court
went on, however, to state that Ford may not recover its cost "in
such a way as to thwart the purpose of the legislation," and
found that the $160 warranty surcharge did just that. The court
stated that the surcharge contravened the "legislative intent"
behind 1176 and was thus "inappropriate."
In reaching this conclusion, the court relied by
analogy upon the New York "Lemon Law" cases.5 The court stated:
Similarly, if Ford had simply increased
the wholesale price of its vehicle and
___
reflected this increased price in its
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5 See discussion infra regarding the district court's use of the
___ _____
New York Lemon Law cases.
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suggested retail price for automobiles
sold in Maine, the Court would likely
________________________
have reached a different conclusion.
________________________________________
Ford, however, increased its warranty
parts reimbursement to dealers only to
recoup these costs directly from dealers
on the same parts statement. Ford's
actions fly in the face of 1176. . . .
Ford may increase its wholesale
___
automobile prices in Maine without a
corresponding increase elsewhere in the
country. If Ford chooses to increase its
________________________________
wholesale prices in Maine, however, it
_________________________________________
must revise its so-called Monroney
_________________________________________
stickers for automobiles sold in Maine so
_________________________________________
that the increased price of automobiles
_________________________________________
is not shouldered only by the dealer. . .
____________________________________
. This Court finds that Ford's warranty
parity surcharge, as it is currently
_____________________
structured, is illegal and enjoins Ford
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from continuing with this practice.
(Footnotes omitted) (emphasis added). The court therefore ruled
that Ford may pass on the increased costs of compliance, but may
do so only if it also instituted a corresponding increase in each
car's "sticker" price.6 This sticker price issue had never been
briefed by the parties, although it was discussed during the
summary judgment hearing.
2. The March Order
2. The March Order
Both parties moved to modify the February Order. The
Dealers requested that the district court issue a declaratory
judgment declaring the warranty parity surcharge illegal and
order Ford to refund the warranty surcharges already paid. Ford
requested that the court modify its order to allow Ford to
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6 15 U.S.C. 1232 requires that auto manufacturers affix a
label, the so-called "Monroney sticker," on each new automobile,
disclosing information such as the suggested retail price, the
price for each accessory or optional equipment, and
transportation charges.
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implement its price increase by including an additional amount on
the dealer invoice, rather than by increasing the Monroney
sticker price.7 In an order issued March 30, 1994, the district
court denied Ford's request, stating that Ford was effectively
seeking a "prospective advisory opinion" on an issue not ripe for
disposition. The court then denied the Dealers' request for a
refund of the already-paid surcharges, explaining that its
February Order was only to apply prospectively. The March Order
did little to clarify the court's original ruling, but merely
reiterated that "Ford's warranty parity surcharge, as it is
currently structured, is illegal." The court also dismissed the
remaining counts of the Dealers' Complaint. Both parties
appealed.
DISCUSSION
DISCUSSION
A. Standard of Review
A. Standard of Review
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We review a district court's grant of summary judgment
de novo and read the record in a light most favorable to the non-
__ ____
moving party, drawing all inferences in the non-moving party's
favor. LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841 (1st Cir.
_______ __________________
1993), cert. denied, __ U.S. __, 114 S. Ct. 1398, 128 L. Ed. 2d 72
_____ ______
(1994). We likewise afford de novo review to a district court's
__ ____
dismissal of a claim under Fed. R. Civ. P. 12(b)(6). Vartanian
_________
v. Monsanto Co., 14 F.3d 697, 700 (1st Cir. 1994) (citations
____________
omitted). We must accept the allegations of the complaint as
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7 The dealer invoice, unlike the Monroney sticker, shows the
price actually paid to Ford by the dealer.
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true, and if, under any theory, the allegations are sufficient to
state a cause of action in accordance with the law, we must deny
the motion to dismiss. Id.
__
B. The Parties' Presention of the Issues
B. The Parties' Presention of the Issues
_____________________________________
As stated above, the parties offer disparate
interpretations of the district court's ruling. Because of their
different versions, their framing of the issues relevant to this
appeal differs broadly. The Dealers insist that the "central
issue" in this action is whether Ford's $160 surcharge violates
1176, as they repeatedly contend the district court found, and
"what relief should flow to the Dealers." Ford, on the other
hand, argues that the district court ruled that Ford may
___
institute a wholesale price increase, but only if it also
____
increases the Monroney sticker price. Ford's primary argument on
appeal, accordingly, is that this sticker price increase is not
required by 1176, and indeed, brings 1176 into conflict with
federal law.
Fortunately, our analysis of the issues raised on
appeal does not require that we accept one party's "version" over
the other.8 Because we are able here to analyze each of the
____________________
8 We do not believe, however, that the Dealers are correct in
their contention that the district court found the surcharge
"illegal" in and of itself. In offering this interpretation, the
Dealers take the court's use of the word "illegal" out of the
sentence and out of its context. The district court did not
state that the surcharge was per se illegal, but rather that it
___ __
was illegal "as it is currently structured" and allowed a
wholesale price increase only on the condition that it be
____
accompanied by a sticker price increase. Indeed, the court
stated that if Ford had instituted an accompanying sticker price
increase, the court may have ruled differently.
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parties' arguments without addressing the dispute over the
district court's ruling, the ambiguities in the court's opinion
are rendered irrelevant.
C. The "Sticker Price" Increase Requirement
C. The "Sticker Price" Increase Requirement
________________________________________
We first address Ford's argument that the district
court erred by interpreting 1176 to require that a wholesale
price increase must be matched by a corresponding increase to the
suggested retail, or "sticker" price. Ford contends that there
is absolutely nothing in the language of 1176 to even suggest
this requirement, and that it likewise cannot be justified by
some vague reference to "legislative intent."
Because this issue involves the interpretation of a
Maine state statute, we are bound to apply the principles set
forth by Maine's Supreme Judicial Court. That court has
repeatedly held that courts must look to the language of a
statute to find its meaning. State Farm Mut. Auto Ins. Co. v.
______________________________
Universal Underwriters Ins. Co., 513 A.2d 283, 286, (Me. 1986).
________________________________
When interpreting that language, courts must give the unambiguous
wording of a statute its plain and ordinary meaning. Stanley v.
_______
Tilcon Maine, Inc., 541 A.2d 951, 952 (Me. 1988). Only when the
___________________
language of the statute is ambiguous should courts look beyond
the words of the statute to its history, policy or other
extrinsic aids to ascertain statutory intent. Central Maine
______________
Power Co. v. Maine Pub. Utils. Comm'n, 436 A.2d 880, 885 (Me.
_________ _________________________
1981).
Our analysis of this issue has two components. First,
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we must address whether, as an initial matter, the district court
correctly rejected the Dealers' arguments that Ford had no right
to pass on its increased costs of doing business resulting from
compliance with 1176. Then we examine whether the court's
order requiring Ford to institute a sticker price increase was
supported by the statute.
Nothing in the language of 1176 prohibits a
manufacturer from increasing vehicle prices in order to recover
its increased compliance costs. The statute says nothing about
wholesale or retail prices, and apparently leaves the
manufacturer free to increase wholesale prices, and the dealer to
increase retail prices. The legislative history of the amended
statute also does not indicate that the Maine legislature
intended to set price controls or to force manufacturers to
wholly bear the costs of compliance. Moreover, as Ford points
out, it is quite commonplace for manufacturers and other
regulated entities to pass on to retailers and consumers their
costs of complying with regulatory statutes. This is so even
when the costs are passed on to the "beneficiaries" of the
regulations. See, e.g., Motor & Equip. Mfrs. Ass'n v. E.P.A.,
___ ____ ____________________________ ______
627 F.2d 1095, 1118 (D.C. Cir. 1979) (environmental regulations
will increase cost of new cars for consumers), cert. denied, 446
_____ ______
U.S. 952 (1980); Motor Vehicle Mfrs. Ass'n v. Abrams, 684 F.
__________________________ ______
Supp. 804, 806 (S.D.N.Y. 1988) (charges for manufacturers'
compliance with New York's "Lemon Law" may be passed on to auto
consumers). Therefore, we hold that the district court properly
-15-
ruled that 1176 does not prohibit Ford or other manufacturers
from recovering their costs of compliance.
Just as the statute contains no language restricting
cost recovery, it also contains no language conditioning cost
____________
recovery. The statute deals solely with warranty reimbursement
transactions between manufacturer and dealer, and no mention is
made of any other contingencies. The Dealers have not pointed to
one word contained in 1176, nor can we find one, that suggests
that the statute contemplates anything other than the limited
subject of warranty reimbursement.
The legislative history to 1176 also lacks any
indication that the Maine legislature intended to condition a
manufacturer's recovery of its compliance costs. As we noted
above, Maine law initially required only that manufacturers
"adequately and fairly compensate each of its motor vehicle
dealers for labor and parts." When the Maine legislature amended
1176 in 1980 to provide that reimbursement for labor be at the
_____
customary retail rate, the legislature explained in its Statement
of Fact:
With their superior bargaining position,
automakers have in the past forced
dealers to accept reimbursement at a rate
substantially lower than the dealers'
usual retail rate. The net effect has
been that, through an inflated labor
_____
rate, non-warranty customers have
_________
subsidized automakers who were unwilling
to pay the fair and full price for
repairs made necessary when their
automobiles failed to meet warranty
standards. This section prevents
_________________________
recurrence of this problem . . . .
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Me. L.D. 1878, 109th Leg., 2d Sess. (1980) (Statement of Fact)
(emphasis added). In 1991, when the legislature amended 1176
to require that dealers be compensated for parts at the customary
_____
retail rate, it stated only that the purpose of the amendment was
to make compensation for parts the same as compensation for
labor. Me. L.D. 1235, 115th Leg., 1st Sess. (March 21, 1991)
(Statement of Fact).
Quite simply, this sparse legislative history fails to
suggest any statutory purpose or legislative intent to prevent or
condition manufacturers' cost recovery.9 It certainly does not
indicate, either expressly or implicitly, that warranty
reimbursement costs cannot be passed on by manufacturers to
dealers, and then from dealers to consumers. It simply and
solely regulates the rates at which manufacturers must reimburse
dealers for warranty labor and parts. We therefore cannot find,
nor can we reasonably or fairly infer, that the legislature
intended to prohibit or condition manufacturer cost recovery. In
light of this complete dearth of statutory or historical evidence
supporting the district court's order that Ford revise its
Monroney stickers, we must find that the district court's order
____________________
9 In fact, if anything, the legislative history belies the
Dealers' contention that the statute was amended to "protect"
dealers. We think that an objective reading of the legislative
history indicates the legislature decided that warranty
reimbursement levels would be at retail rates, in order to
prevent non-warranty customers from being charged prices much
higher than the customary retail rates. Therefore, if anything,
the statute was arguably meant to protect non-warranty consumers
____________ _________
from inflated prices charged by dealers who are attempting to
maintain their average profit margins in the face of a
manufacturer's below-retail reimbursement rates.
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is completely unsupported by the state law, and therefore
erroneous.
In making its determination, the district court relied
by analogy on the New York "Lemon Law" cases. This reliance is
misplaced. In State of New York v. Ford Motor Co., the New York
__________________ ______________
Court of Appeals held that Ford's written warranty, which stated
that the retail purchaser of a vehicle would be required to pay
the first $100 of any warranty repair charge, violated the New
York state "Lemon Law," N.Y. Gen. Bus. Law 198-a (McKinney's
1983). State of New York v. Ford Motor Co., 548 N.E.2d 906, 908-
_________________ ______________
909 (N.Y. 1989). The court's ruling rested entirely on the plain
language of the statute, which provided that when a new motor
vehicle does not conform to all express warranties for the
earlier of its first two years or 18,000 miles, "the manufacturer
. . . shall correct said nonconformity . . . at no charge to the
____________________
consumer." (emphasis added). As the court recognized, "[i]t is
________
difficult to imagine the disputed $100 deductible being more
easily resolved" than by the plain, unequivocal language of the
statute. State of New York, 548 N.E.2d at 909.
_________________
In response to the New York court's ruling on the $100
deductible, Ford discontinued the deductible, but, along with
other manufacturers, instituted a Lemon Law-related surcharge
assessed on all vehicles sold in New York. Ford, at its own
___________
initiative, placed this surcharge on its Monroney sticker,
__________
describing it as "N.Y. Mandatory Repair Coverage Option." Motor
_____
Vehicle Mfrs. Ass'n, 684 F. Supp. at 805. When the New York
____________________
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legislature passed a law prohibiting manufacturers from placing
this item on the Monroney sticker, the district court struck down
the law as an unconstitutional restraint on lawful commercial
speech. Id. at 808. In so doing, the court noted that "it is
__
entirely lawful for an automobile manufacturer to impose on its
customers a charge resulting from the costs of compliance with
the Lemon Law." Id. at 806.
__
The Lemon Law cases offer little support for the
district court's order here. First, the plain language of the
Lemon Law specifically prohibited the deductible at issue before
the state court, whereas the Maine statute involved here does not
either expressly or implicitly require the district court's
result. More importantly, although the New York district court
recognized that Ford could recover its costs of compliance with
the Lemon Law, the court did not require a corresponding sticker
price increase; rather, Ford instituted such an increase in that
situation voluntarily, as a result of its own business decisions.
Its sticker price increase was not mandated or suggested by the
Lemon Law itself, nor by the state court's opinions. In the case
at bar, the district court's reliance on the Lemon Law cases to
support its own ruling that Ford must increase its Monroney
____
sticker price is entirely unfounded.
Finally, the district court's order cannot be salvaged
by its references to some unspecified and vague notion of
"legislative intent." It is not appropriate for a federal
district court, however well-intentioned, to set forth a rule
-19-
unsupported by a state statute. As we have repeatedly warned,
federal courts must take great caution "when blazing new state-
law trails." Pearson v. John Hancock Mut. Life Ins. Co., 979
_______ _________________________________
F.2d 254, 259 (1st Cir. 1992). Because nothing in 1176 or its
history conditions cost recovery by a manufacturer, the district
court was not authorized to impose such a condition on the basis
of some inferred legislative policy. The court therefore
overstepped the bounds of its authority and entered territory
properly left to the Maine legislature when it ordered Ford to
revise its Monroney stickers on cars sold in Maine.10
Accordingly, we reverse the portion of the district court's order
requiring Ford to institute a Monroney sticker price increase.
D. The Dealers' Claims for "Disgorgement"
D. The Dealers' Claims for "Disgorgement"
______________________________________
The Dealers argue that the district court erred in
refusing to order Ford to repay to the Dealers all funds
collected through the "illegal" warranty parity surcharge. The
Dealers explain that in requesting the return of the surcharges,
they were seeking the equitable remedy of restitution, the
disgorgement of funds obtained under an unlawful policy.11 The
____________________
10 Because we find the district court's order erroneous, we need
not address Ford's arguments that the order brings 1176 into
conflict with federal law.
11 The Dealers rely on Porter v. Warner Holding Co., 328 U.S.
______ ___________________
395, 402 (1946) and Tull v. United States, 481 U.S. 412, 424
____ ______________
(1987) in support of their contentions. However, as revealed by
our analysis, these cases do not control here. The central issue
in Porter v. Warner Holding Co. was whether the Emergency Price
______ ___________________
Control Act of 1942, establishing national rent controls, limited
the power of federal courts to order restitution of excessive
rents collected in violation of the Act. Porter, 328 U.S. at
______
396. The improper profits at issue in the Porter case were rents
______
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district court denied the Dealers' request for "disgorgement" on
the grounds that the Dealers may have actually passed on the cost
of the surcharge to their customers, and therefore, presumably,
the Dealers sustained no actual injury.
In support of their contention, the Dealers explain in
their brief that the Maine legislature "intended and required
that Ford pay more" than it had previously been paying.
____
(Emphasis in original). The Dealers argue that in amending
1176, the legislature "intended that the financial burden of
supplying Ford's warranty be borne by Ford, not by the Dealers,"
and that 1176 is a "cost-shifting" statute. Because the
warranty parity surcharge recovered the very funds that Ford was
paying under the amended 1176, Ford was "illegally" paying to
the Dealers less than was statutorily required.
This argument rests on the unfounded premise that
1176 prevents Ford from recovering its compliance costs. It is
clear that in amending 1176, the Maine legislature intended
____________________
collected in direct violation of a statute specifically
establishing price controls. As we discussed above, 1176 does
not establish price controls, nor mandate that manufacturers
solely bear the burden of compliance. To the contrary, 1176
merely sets forth warranty reimbursement levels, and leaves
unregulated the methods by which affected parties may bear or
pass on the costs of compliance.
The Tull case is also inapposite. The "quotation" offered by
____
the Dealers in their brief was pulled out of the most tangential
dictum from that case, during which the Court was merely
discussing (and rejecting) the government's analogy between civil
penalties under the Clean Water Act and equitable actions of
disgorgement. Moreover, not only is the Dealers' proffered
"quotation" from that case taken out of context, but manipulated
so as to acquire a meaning nothing like the original. We do not
appreciate such fast-and-loose use of case law.
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that the manufacturers "pay more" in warranty reimbursements. It
is not at all clear, however, that the legislature intended that
manufacturers simply absorb those costs, and could not pass them
on by means of a wholesale cost increase, a dealer surcharge, or
a retail cost increase. There is no support for the Dealers'
contention that 1176 is a "cost-shifting" statute, and as we
explained, we will not infer such legislative intent without any
evidence whatsoever. The Dealers' position that 1176 prevents
Ford from recovering its costs is therefore incorrect. It
follows that their contention that the surcharges -- Ford's
chosen mechanism for cost recovery -- were unlawfully collected,
is also incorrect. Because the surcharges were not unlawful,
then, Ford was not unjustly enriched.
In any case, after carefully reviewing the entire
record, we agree with the district court that the Dealers have
not shown that they actually absorbed the cost of the surcharges
and did not pass them on to their customers in the form of higher
prices. If the Dealers have passed on their costs, then awarding
restitution of the surcharges would result in a windfall double
recovery by the Dealers.
In sum, neither the language or purpose of the statute,
nor the facts on record, support the Dealers' claim for
restitution of surcharges already collected by Ford. We
therefore affirm the district court's rejection of this claim.
E. The Dealers' Other Claims
E. The Dealers' Other Claims
_________________________
1. Robinson-Patman Act Claims
1. Robinson-Patman Act Claims
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The Dealers argued before the district court that Ford
dealers in neighboring states, such as New Hampshire, are in the
same geographical marketing area as the Maine Dealers. By
imposing additional costs in Maine but not in those other states,
the Dealers contended that Ford violated the Robinson-Patman Act,
15 U.S.C. 13(a). The Dealers argue on appeal that, assuming
the district court properly denied disgorgement of the
surcharges, the court's dismissal of their claims for price
discrimination under relevant portions of the Robinson-Patman Act
was erroneous, and that these claims should have been left open
for a trial on the merits.
Our standard for reviewing a Fed. R. Civ. P. 12(b)(6)
dismissal is clear: a complaint is to be construed in the light
most favorable to the plaintiffs, here the Dealers. Finnern v.
_______
Sunday River Skiway Corp., 984 F.2d 530, 534 (1st Cir. 1993)
___________________________
(citations omitted). Dismissal is appropriate only if it appears
beyond doubt that the plaintiffs can prove no set of facts in
support of their claim which would entitle them to relief.
Finnern, 984 F.2d at 534.
_______
The pertinent portion of the Robinson-Patman Act
provides:
It shall be unlawful for any person
engaged in commerce, in the course of
such commerce, either directly or
indirectly, to discriminate in price
between purchasers of commodities of like
grade and quality, . . . where the effect
of such discrimination may be
substantially to lessen competition or
tend to create a monopoly in any line of
commerce, or to injure, destroy, or
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prevent competition with any person who
either grants or knowingly receives the
benefit of such discrimination, or with
customers of either of them . . . .
15 U.S.C. 13(a) (1988). The Act, however, also creates a "safe
harbor" based on reasonable price differentials "which make only
due allowance for differences in the cost of manufacture, sale or
delivery resulting from the differing methods or quantities in
which such commodities are to such purchasers sold or
delivered. . . ." Id. The district court ruled that Ford would
__
not be in violation of the Act if it could establish that its
cost of selling vehicles in Maine were reasonably related to its
differences in costs -- in other words, that it fell within the
"safe harbor." The Supreme Court has explained that the
Robinson-Patman Act was enacted to "curb and prohibit all devices
by which large buyers gained discriminatory preferences over
smaller ones by virtue of their greater purchasing power."
Federal Trade Comm'n v. Henry Broch & Co., 363 U.S. 166, 168
____________________ ___________________
(1960). The Act was an amendment to the antitrust laws,
specifically the Clayton Antitrust Act. Id. at 167-168.
__
Our reading of the Dealers' allegations, viewed in the
light most favorable to them, does not support a claim that
Ford's increase in its vehicle prices was a price differential of
the type prohibited by the Robinson-Patman Act. Any differences
in vehicle prices resulting from the higher warranty
reimbursement levels would fall squarely within the safe harbor
allowed by the Act, and therefore be lawful. Because the Dealers
have not alleged facts sufficient to sustain their Robinson-
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Patman claims, we cannot agree that these "issues" remain open
for trial. We therefore find that the district court properly
dismissed the Dealers' Robinson-Patman claims, and we affirm this
dismissal.
2. Claims under 10 M.R.S.A. 1174(1)
2. Claims under 10 M.R.S.A. 1174(1)
The Dealers contend that the district court erroneously
dismissed their claims that Ford had engaged in unfair methods of
competition and unfair and deceptive practices, in violation of
10 M.R.S.A. 1174(1). They argue that those claims should be
tried on their merits.
The Dealers' 1174(1) claims, however, rest upon their
allegations that Ford's warranty surcharge was illegal. As we
held above, the surcharge did not violate 1176. Thus, in light
of the fact that Ford committed no unlawful acts in instituting
its warranty surcharge, the Dealers' 1174(1) claims necessarily
collapse. We therefore hold that these claims were properly
dismissed, and we affirm the dismissal.
3. Claims under 10 M.R.S.A. 1182
3. Claims under 10 M.R.S.A. 1182
Finally, the Dealers assert that the district court
erred in dismissing their claims that Ford's warranty surcharge
violated public policy within the meaning of 10 M.R.S.A. 1182.
Section 1182 authorizes courts to grant declaratory and
injunctive relief for practices in violation of certain Maine
statutes, including 1176. Because, as we have explained, we
find that Ford did not violate 1176, the Dealers' claims under
1182 are moot.
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CONCLUSION
CONCLUSION
For the foregoing reasons, the district court's opinion
is affirmed in part and reversed in part. Remanded for actions
________________ ________________ ________
consistent with this opinion. No costs to either party.
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