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7th Circuit rules on long-running dispute between Volvo, Andy Mohr

August 28, 2017

The 7th Circuit Court of Appeals has reversed the denial of judgment as a matter of law to Volvo Trucks North America in a dispute with an Indiana franchisee Andy Mohr Truck Center, finding Andy Mohr failed to prove Volvo treated it disparately and unfairly compared with other franchisees. However, the court affirmed judgments in favor of both parties on other claims raised in the 5-year-old complaint.

After negotiating a dealership agreement in 2010, Volvo and Andy Mohr Truck Center began a legal battle in 2012, when Volvo sought a declaratory judgment that it was entitled to terminate its agreement with Andy Mohr because Andy Mohr had misrepresented a material fact when it applied to be a Volvo dealer. Specifically, Volvo alleged Andy Mohr had promised to build a new long-term dealership facility if Volvo awarded the contract, yet failed to follow through.

For its part, Andy Mohr claimed Volvo violated the Indiana Franchise Disclosure Act and the Indiana Deception Franchise Practices Act when it failed to award Andy Mohr a Mack Truck dealership franchise, a promise Andy Mohr said had induced it to enter into the dealership agreement. Andy Mohr also accused Volvo of providing more favorable concessions on truck pricing to other franchise dealerships than it did to Andy Mohr, raising an unfair discrimination claim under the IDFPA.

The U.S. District Court for the Southern District of Indiana found the integration clause of the dealer agreement barred the “new-facility claim” and, thus, granted summary judgment to Andy Mohr on that claim. However, the same clause was used to defeat Andy Mohr’s Mack Truck claim. A jury then ruled for Andy Mohr on its unfair discrimination claim and awarded it $6.5 million, while Volvo’s motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b) was denied.

Andy Mohr appealed and Volvo filed a cross-appeal in Andy Mohr Truck Center, Inc. v. Volvo Trucks North America, a division of Volvo Group North America, 16-2788 and -2839. In a Monday opinion, the 7th Circuit Court of Appeals reversed the denial of Volvo’s motion for judgment as a matter of law, with Chief Judge Diane Wood writing the evidence did not support an inference of unfair discrimination.

Specifically, Wood said Volvo’s franchise agreement gave dealers access to its Retail Sales Assistance Program, through which they could apply for concessions, but also gave Volvo discretion to grant different concessions for each transaction. Because some variation between similar transactions is natural in a normal bidding process, not every unexplained variation in treatment can be classified as unfair disparate treatment, Wood wrote. Thus, even though Andy Mohr offered evidence of transactions in which it was given less favorable concessions than other franchisees, it could not prove discrimination in those transactions, the appellate court held.

“This is not to say that a franchisee operating under similar terms could never make a showing of discrimination under the statute,” Wood wrote. “…But what Mohr offered to the jury did not suffice to permit a finding of unfair discrimination.”

However, the 7th Circuit affirmed the grant of summary judgment to Andy Mohr on Volvo’s “new-facility” claim, finding that under the integration clause, Andy Mohr’s promise to move to a new facility should have been spelled out in the dealership agreement if it were material to the agreement. The appellate court used the same principles under the integration clause to affirm judgment in Volvo’s favor on Andy Mohr’s Mack Truck claim.

 

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