232 F. Supp. 3d 813
E.D. Va.2017Background
- Len Stoler, Inc. (Stoler) was an Audi franchisee in Maryland from 1982 until May 2, 2016; Audi of America (AoA) is the distributor. The parties’ 1997 Dealer Agreement incorporated AoA’s Standard Provisions and Retail Capacity Guide.
- AoA ran a statewide Standards Bonus incentive program with tiered payments (Universal, Brand Dedicated, Exclusive) conditioned on meeting facility and performance criteria; the Exclusive tier required an exclusive Audi facility when a dealer’s Market Opportunity Guide (MOG) exceeded 400 units.
- By 2014 AoA’s MOGs for Maryland dealers exceeded 400, triggering the Exclusive facility requirement; AoA issued Grandfather/Cure policies that temporarily preserved bonus eligibility if dealers committed to build exclusive facilities.
- Stoler never built an exclusive facility; after failing to commence construction by Dec. 31, 2015 AoA ceased paying the Brand Dedicated bonus effective Jan. 1, 2016. Stoler sold its franchise in May 2016.
- Stoler sued under Maryland Transportation Code § 15-207 (claims: offer, require, benefit, price-reduction, coercion). Parties filed cross motions for summary judgment; the court resolved some claims as a matter of law and left others for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AoA violated §15-207(h)(1)(i) by offering higher bonuses only to dealers with exclusive facilities (Offer Claim) | AoA implemented a two-tiered bonus that effectively offered better incentives only to dealers with exclusive facilities | Standards Bonus was offered to all dealers under the same terms; eligibility depended on meeting objective conditions | Summary judgment for AoA — no §15-207(h)(1)(i) violation; the program was an offer available to all dealers |
| Whether AoA “required” Stoler to alter/replace its facility in violation of §15-207(h)(2)(i) (Require Claim) | AoA’s imposition of an exclusive-facility requirement amounted to a prohibited requirement to alter facilities | Dealer had previously agreed (Dealer Agreement permitting standards changes) and AoA’s MOG-based decision was a uniform business decision applied to all Maryland dealers | Summary judgment for AoA — no violation; obligation previously agreed and uniformly applied |
| Whether AoA denied a “benefit generally available to all dealers” under §15-207(h)(2)(ii) (Benefit Claim) | Stoler: Standards Bonus is a broadly-available benefit and denying it for failure to build is prohibited | Standards Bonus is an incentive with conditions, not a benefit “generally available” simply by being a dealer | Summary judgment for AoA — no §15-207(h)(2)(ii) violation; the Bonus is an incentive, not a generally available benefit |
| Whether AoA reduced vehicle price or provided different financing in exchange for agreement to maintain/build exclusive facilities, §15-207(h)(3) (Price Reduction Claim) | Conditioning bonuses on agreement to build/maintain facilities effectively reduced vehicle price or changed financing terms | AoA contends bonuses did not reduce vehicle price and are not tracked on a vehicle-by-vehicle basis | Genuine disputes of material fact remain — summary judgment denied to both parties |
| Whether AoA coerced Stoler to sign the Facility Agreement in violation of §15-207(b) (Coercion Claim) | Stoler: AoA threatened loss of Standards Bonuses and closure, compelling Stoler to sign (contract may be adhesion) | AoA: threatened denial of incentive payments (not a prohibited coercive act) and Stoler suffered no damages from signing | Genuine disputes of material fact remain — summary judgment denied to AoA on coercion |
| Whether AoA may enforce a Facility Agreement covenant not to sue regarding Standards Bonus claims | AoA relies on the contractual covenant as a defense and counterclaim | Stoler argues the covenant cannot bar statutory claims; AoA seeks damages | Covenant defense is moot (court awarded AoA summary judgment on Benefit Claim); counterclaim fails for lack of recoverable damages — summary judgment for Stoler on counterclaim |
| Whether AoA’s affirmative defenses of unclean hands and in pari delicto bar Stoler’s claims | AoA: Stoler knowingly entered and made representations in the Facility Agreement, so equitable defenses apply | Stoler: unequal bargaining power, class protected by statute, and contract statements do not defeat statutory claims | Genuine disputes of material fact about coercion and bargaining power — summary judgment denied to both parties on these defenses |
Key Cases Cited
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (summary judgment standard and genuine-dispute principle)
- Celotex Corp. v. Catrett, 477 U.S. 317 (party seeking summary judgment bears initial burden)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing — injury in fact, traceability, redressability)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (standing requires concrete injury)
- Lockshin v. Semsker, 412 Md. 257 (Maryland statutory interpretation—ascertain legislative intent)
- Dep’t of Assessments & Taxation v. Md.-Nat’l Capital Park & Planning Comm’n, 348 Md. 2 (consult dictionary for ordinary meaning)
- Stoddard v. State, 395 Md. 653 (statutory construction must not be unreasonable or illogical)
- Breitenbach v. N.B. Handy Co., 366 Md. 467 (use legislative history and purpose when statutory language is ambiguous)
- Kumar v. Dhanda, 198 Md. App. 337 (damages required for breach of contract counterclaim)