In Beard Motors, Inc. v. Toyota Motor Distribs., Inc., 395 Mass. 428 (1985) (Beard Motors), this court held that a Massachusetts motor vehicle dealer did not have standing to maintain an action for an alleged violation of G. L. c. 93B, § 12A, against a motor vehicle distributor with which it was not affiliated. In the case before us, the principal question is whether amendments to the statute in 2002 broadened the scope of standing under c. 93B, such that Massachusetts motor vehicle dealers now have standing to maintain an action for an alleged violation of the statute against unaffiliated motor vehicle manufacturers or distributors. We hold that the 2002 amendments did not have this effect. Chapter 93B is aimed primarily at protecting motor vehicle dealers from injury caused by the unfair business practices of manufacturers and distributors with which they are associated, generally in a franchise relationship. We therefore affirm the judgment of the Superior Court dismissing the plaintiffs' action on the basis of lack of standing.
Procedural background. The plaintiff Massachusetts State Automobile Dealers Association, Inc. (MSADA), is a Statewide organization that represents the interests of new automobile and truck franchised dealerships in Massachusetts; two of the other plaintiffs, Connolly Buick Co., Inc., doing business as Herb Connolly Chevrolet, and Jake Kaplan's Inc., doing business as Fisker Norwood, are Massachusetts motor vehicle dealers. The plaintiffs commenced this action against Tesla Motors, Inc., an automobile manufacturer, and its Massachusetts subsidiary, Tesla Motors MA, Inc., alleging that the defendants were operating "an automobile dealership showroom in the Natick Mall without a license and in violation of law which prohibits a manufacturer from owning a dealership."
The defendants moved to dismiss the complaint both for lack of standing and for failure to state a claim on which relief could be granted. See Mass. R. Civ. P. 12 (b) (1) and (6), 365 Mass. 754 (1974). They argued, among other things, that the plaintiffs lacked standing to claim a violation of G. L. c. 93B and conspiracy to violate c. 93B because they were not "affiliated dealers" of Tesla or Tesla MA. After a hearing, a judge in the Superior Court denied the plaintiffs' request for a temporary restraining order and preliminary injunction, ruling that the plaintiffs lacked standing to maintain the action. He subsequently denied the plaintiffs' motion for reconsideration and dismissed the complaint for lack of standing.
Facts.
At the time the complaint was filed, the defendants were not licensed to sell motor vehicles in Massachusetts. However, Tesla MA had filed with the board of selectmen of Natick (board) an application for a class 1 license pursuant to G. L. c. 140, §§ 58 and 59.
General Laws c. 93B, as enacted in 1970, remained in effect and in the same general form through 2002. Before the 2002 amendments, c. 93B, § 3 (a), declared unlawful the use of "unfair methods of competition and unfair or deceptive acts or practices, as defined in [c. 93B, §] 4." See G. L. c. 93B, § 3 (a), inserted by St. 1970, c. 814, § 1. Section 4 (3), in turn, itemized "a considerable array of oppressive practices," Tober, 376 Mass. at 320, by manufacturers and distributors that were deemed to be violations of § 3 (a). See G. L. c. 93B, § 4 (3) (a)-(m), inserted by St. 1970, c. 814, § 1, and as amended through St. 1977, c. 717, § 3. When originally enacted, this itemized list was described by one author as the "The Dealers' `Bill of Rights' Provision," and was intended to protect franchised dealerships from specific types of abuses by their manufacturers. Brown, supra at 799-806. Chapter 93B also had a section authorizing the Attorney General, at the request of a dealer, manufacturer, or distributor, to enforce compliance with the chapter in accordance with G. L. c. 93A, §§ 4-8, inclusive, see c. 93B, § 12, as amended by St. 1977, c. 717, § 5, as well as a provision conferring a private right of action on motor vehicle dealers damaged by one or more of the proscribed acts or practices. See G. L. c. 93B, § 12A, as amended by St. 1985, c. 689, § 2.
The 2002 statutes repealed in its entirety the then-existing c. 93B and replaced it with a new c. 93B. See St. 2002, c. 222, § 3. However, many of the core provisions and the general structure of the previous statute have remained essentially the same. Specifically,
Of particular concern in this case are new § 4 (c) (10) and new § 15 (a). Under § 4 (c) (10), it is unlawful for a manufacturer, distributor, or franchisor representative "to own or operate, either directly or indirectly through any subsidiary, parent company or firm, a motor vehicle dealership located in the commonwealth of the same line make as any of the vehicles manufactured, assembled or distributed by the manufacturer or distributor." G. L. c. 93B, § 4 (c) (10), inserted by St. 2002, c. 222, § 3. Under the cognate provision of the version of the statute that existed just before its 2002 amendments, it was unlawful for a manufacturer, distributor, or wholesaler "to own and operate, either directly or indirectly through any subsidiary, parent or affiliated company or firm, a motor vehicle dealership within the relevant market area of a motor vehicle dealer of the same line make." See G. L. c. 93B, § 4 (3) (k), as amended through St. 1977, c. 717, § 3. Section 15 (a) creates a private right of action for dealers injured by statutory violations — a right that formerly was set out in c. 93B, § 12A — and adds a private right of action for manufacturers and distributors who may suffer injury on account of statutory violations by dealers.
First, although the parties do not address this point, it is not entirely clear that the plain language of § 4 (c) (10) applies to the defendants' conduct and renders it unlawful, as the plaintiffs contend. They maintain that § 4 (c) (10) prohibits a manufacturer such as Tesla, directly or through a subsidiary such as Tesla MA, from owning or operating in the Commonwealth "a motor vehicle dealership" selling its own line make of automobiles. "Motor vehicle dealership" is a term defined in c. 93B as:
G. L. c. 93B, § 1, inserted by St. 2002, c. 222, § 3. Because neither Tesla nor Tesla MA is engaged in the business of selling new Tesla motor vehicles in Massachusetts "pursuant to a franchise agreement," there appears to be a question whether Tesla's business model involves the operation of a "motor vehicle dealership" within the meaning of c. 93B, § 4 (c) (10), and therefore whether, by its literal terms, the proscription of § 4 (c) (10) applies to the defendants at all.
Second, and more significantly, the plaintiffs take too narrow an approach to the task of interpreting the statutory provisions at issue. Although the specific language of a statute is obviously key, "[t]he general and familiar rule is that a statute must be interpreted according to the intent of the Legislature ascertained from
Beard Motors, 395 Mass. at 431-432.
The plaintiffs here attempt to distinguish the holding of Beard Motors by focusing on its particular facts, arguing that the court looked to the history and purpose of the statute to avoid reaching an illogical result in the case. We disagree. Beard Motors and the cases cited in that case stand for the well-settled proposition that, in matters of standing to maintain actions for statutory violations, courts must look to the history and purpose of the statute to determine its intended "area of concern." The objective is not merely to avoid illogical results, but to respect the Legislature's intent by recognizing standing only for those whom the statute is
The plaintiffs also maintain that, even if one were to take into account the history and purpose of the statute, they have standing to pursue their claim because theirs is a type of injury that the Legislature intended to be remedied by c. 93B. Their claimed injury is that they will be at a disadvantage competing with the defendants, who will be selling Tesla brand vehicles through company-owned stores and not through franchised dealerships. They allege that "[u]nless the defendants are enjoined, they will be allowed to compete unfairly with the dealers as their model of manufacturer owned dealerships with remote service centers will allow Tesla and Tesla MA financial savings which would not be available to Massachusetts dealers who must spend considerably to conform to Massachusetts law. This could cause inequitable pricing which also [could] cause consumer confusion and the inability to fairly consider the various automobiles offered." Contrary to the plaintiffs' assertion, however, the type of competitive injury they describe between unaffiliated entities is not within the statute's area of concern. See American Honda Motor Co. v. Bernardi's, Inc., 432 Mass. 425, 436 (2000) (discussing "relevant market area" requirement of statute then in effect; "Chapter 93B was not intended to provide all dealers with a statutory right to seek protection from potential competition"); Tober, 376 Mass. at 322-323 (discussing statute's purpose as "preserving a sound competitive market free of the domination of oligopolists at the top of a vertical chain of manufacturer, distribution and sale.... But if the statute works sometimes to protect established dealers from new competition, this may be seen not as the object of the legislation, but as an incident in the pursuit of an ultimately procompetitive goal").
As previously discussed, the purpose of c. 93B historically was to protect motor vehicle dealers from a host of unfair acts and
As the defendants suggest, the language of that subsection can more easily and naturally be understood as eliminating the "relevant market area" restriction that existed in c. 93B, § 4 (3) (k), as amended by St. 1977, c. 717, § 3, the antecedent version of § 4 (c) (10) that was in effect prior to the 2002 amendments. Under § 4 (3) (k), a manufacturer was precluded (with limited exceptions not relevant here) from owning and operating "a motor vehicle dealership within the relevant market area of a motor vehicle dealer of the same line make." Dealers were thus protected from having to compete with their affiliated manufacturers for sales within a defined geographical area.
The legislative history relating specifically to the enactment of § 4 (c) (10) in 2002 supports our reading of this section. The sole item of legislative history relied on by the plaintiffs is a "position paper" written by MSADA and presented to the Legislature's Joint Committee on Commerce and Labor in May, 2001, at the time the committee was considering an earlier version of amendments to c. 93B, 2001 Senate Doc. No. 87. The MSADA paper explained the key provisions of that bill and expressed the association's support for it. The paper stated that 2001 Senate Doc. No. 87 would eliminate two "loopholes" under c. 93B as then in effect,
However, 2001 Senate Doc. No. 87 was not the bill that ultimately was enacted. Rather, the bill that, a year later, the Legislature enacted and the then Acting Governor Jane Swift signed into law as St. 2002, c. 222, was 2002 Senate Doc. No. 2412.
Moreover, two other documents in Acting Governor Swift's papers concerning the passage of St. 2002, c. 222, indicate that the language in the proposed § 4 (c) (10) precluding a manufacturer from owning or operating a motor vehicle dealership was intended and understood to apply only to manufacturers owning
The second relevant paper in the acting Governor's file is a memorandum to her from her deputy chief legal counsel in August, 2002, when 2002 Senate Doc. No. 2412 was before her for signature. The memorandum states that "[t]he purpose of this law is apparently to protect dealers in their relationships with manufacturers, given the imbalance of bargaining power between the two." Further, in an apparent reference to § 4 (c) (10), the memorandum states that "dealers wanted to clarify that manufacturers should not be able to operate as dealers too (and thereby compete with their own franchisees)" (emphasis added); the memorandum also indicates that the bill's language was in response to dealers' complaints "that manufacturers can compete unfairly with their own franchisees by owning their own dealerships" (emphasis added). Finally, the memorandum assures the acting Governor that the amendments to G. L. c. 93B included in the proposed legislation were negotiated at length to the satisfaction of all concerned — manufacturers, dealers, and consumer interests.
We take from these additional materials in the acting Governor's file that St. 2002, c. 222, was intended and understood only to prohibit manufacturer-owned dealerships when, unlike Tesla, the manufacturer already had an affiliated dealer or dealers in Massachusetts.
So ordered.
Tesla and Tesla MA argue, as an alternative basis for upholding the judgment of dismissal in this case, that the plaintiffs are barred by principles of res judicata from relitigating the issue of standing. Given the result we reach, we need not resolve that contention.
G. L. c. 93B, § 15, inserted by St. 2002, c. 222, § 3.
The court examined the language, history, and purposes of the statute. Despite the seemingly broad language of § 12A, which, like the present § 15 (a), on its face conferred standing on any motor vehicle dealer to maintain an action against a distributor alleging an unfair act or practice in violation of the statute, Beard did not have standing because its alleged injury was not within the statute's intended area of concern. Id. at 431-433.