FIRST PRIORITY EMERGENCY VEHICLES, INC. v. REV AMBULANCE GROUP ORLANDO, INC.
3:18-cv-09805
D.N.J.Jul 30, 2019Background
- First Priority Emergency Vehicles (NJ dealer) sold and serviced ambulances, including REV-owned brands (Road Rescue, McCoy Miller, Marque); REV (Florida) owns multiple ambulance brands and allegedly controls >50% of U.S. new-ambulance market.
- First Priority alleged chronic quality, delivery, and warranty problems with REV vehicles and complained to REV; REV responded with limited support and later announced a shift toward factory-owned or REV-exclusive dealers.
- REV terminated First Priority in a June 30, 2017 letter citing failure to meet sales quotas; First Priority alleges no mutually agreed sales goals and claims REV had orally agreed to provide notice and a reasonable cure period before termination.
- First Priority sued asserting claims under the New Jersey Franchise Practices Act (NJFPA), breach of contract and implied covenant, multiple federal and state antitrust causes (Sherman Act §§1,2; Clayton Act), and promissory estoppel; REV moved to dismiss under Rule 12(b)(6).
- The court dismissed the NJFPA, antitrust, and promissory estoppel claims without prejudice, denied dismissal of the breach of contract and implied covenant claims, and granted First Priority leave to amend the antitrust claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dealer relationship qualifies as a "franchise" under NJFPA | First Priority: used REV marks, listed as authorized dealer, displayed marks at headquarters and in materials — enough to show a license/community of interest | REV: written agreements prohibit using REV marks without prior written approval; no proprietary license was granted | Court: Dismissed NJFPA claim — no sufficient allegation of a NJFPA-style trademark license; dismissed without prejudice |
| Whether antitrust claims plead a valid relevant market | First Priority: market is "manufacture of ambulances," ambulances are unique and not interchangeable with other vehicles | REV: market definition excludes readily interchangeable substitutes (esp. used ambulances); fails the reasonable-interchangeability requirement | Court: Dismissed antitrust claims for failure to define a relevant market; granted leave to amend |
| Whether breach of contract / implied covenant claim survives given written termination clauses | First Priority: alleged oral modifications/course of dealing — (promise of notice and reasonable cure) that altered contract enforcement | REV: termination complied with written contract quotas and termination provisions; oral modifications invalid or insufficient | Court: Denied dismissal — plaintiff sufficiently alleged oral modification by course of dealing; claim survives dismissal stage |
| Whether promissory estoppel is available when express contract covers subject matter | First Priority: promissory estoppel pleaded as independent harm from REV's promise of cure and reliance | REV: promissory estoppel is a quasi-contract remedy unavailable where contract remedies exist | Court: Dismissed promissory estoppel without prejudice — unavailable given contractual remedies |
Key Cases Cited
- Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.) (pleading/factual-inference standard on Rule 12(b)(6))
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (Sup. Ct.) (pleading must state plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct.) (plausibility standard and conclusions vs. facts)
- Queen City Pizza v. Domino’s Pizza, 124 F.3d 430 (3d Cir.) (plaintiff bears burden to define relevant market; reasonable interchangeability rule)
- Brown Shoe Co. v. United States, 370 U.S. 294 (Sup. Ct.) (product market boundaries via reasonable interchangeability/cross-elasticity)
- Instructional Sys., Inc. v. Computer Curriculum Corp., 614 A.2d 124 (N.J.) (definition of "license" under NJFPA requires proprietary/consumer-perceived connection)
- Colt Industries, Inc. v. Fidelco Pump & Compressor Corp., 844 F.2d 117 (3d Cir.) (no franchise/license where use of trade name is limited)
- Sees v. Bank One, Ind., N.A., 839 N.E.2d 154 (Ind.) (contract modifications can be implied by conduct)
- Larson v. Hill’s & Refrigeration of Bemidji, Inc., 400 N.W.2d 777 (Minn. Ct. App.) (same regarding course of dealing implied modification)