Ralph Gentile, Inc. v. State Division of Hearings & Appeals
2011 WI App 98
Wis. Ct. App.2011Background
- Gentile Nissan, owned by Ralph Gentile, Inc., d/b/a Gentile Nissan, faced termination of its Wisconsin Nissan dealership by Nissan North America, which alleged unsatisfactory sales performance and customer satisfaction under a 2002 term dealership agreement still in effect.
- Division of Hearings and Appeals upheld Nissan North America’s termination; Gentile challenged the Division’s interpretation of the governing statutes and contract terms.
- Key statutes include Wis. Stat. § 218.0114(7)(d) (burden on manufacturer to prove fair cancellation with just provocation and due regard to equities) and Wis. Stat. § 218.0116(l)(i)2 (license may be denied or revoked for unfair cancellations).
- Section 3 of the dealership agreement imposed active and effective promotion of Nissan vehicles in Gentile’s Primary Market Area, with Section 3B detailing sales-performance criteria, and Section 3D recognizing factors beyond dealer control.
- Nissan evaluated Gentile’s performance using a regional “sales effectiveness” metric, counting actual sales regardless of registration location, which showed persistent underperformance from 2003–2007.
- Gentile argued that the 2006 amendment introducing a “best efforts” clause to Article Twelfth (e) was a binding condition for a future offer of a standard dealership agreement; the court rejected the argument and treated the clause as a condition related to offers, not ongoing performance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gentile materially breached Section 3 and thus just provocation existed. | Gentile contends Section 3A measures only advertising; Section 3B criteria do not reflect Section 3A obligations. | Division reasonably applied 3B criteria to evaluate 3A obligations and found material breach. | Yes; material breach supported and just provocation established. |
| Whether the “best efforts” amendment affected ongoing obligations or was merely a precondition to a future offer. | The amendment demonstrates Gentile’s duty to use best efforts to achieve regional average sales. | Best efforts clause was a condition to potential renewal/offer of a standard agreement, not a perpetual obligation. | Best efforts clause is a condition to offers, not ongoing duty; no impact on termination. |
| Whether the Division properly applied the “due regard to the equities” and limited “similarly situated dealers” to Wisconsin dealers. | Out-of-state dealers should be considered similarly situated; Wisconsin-only scope is discriminatory. | Restriction to Wisconsin dealers is reasonable to avoid extraterritorial commerce concerns. | Reasonable interpretation; not discriminatory under the statute. |
| Whether the sales-effectiveness metric is a proper measure of Gentile’s compliance with Section 3. | Sales within the Primary Market Area should be measured by registrations (not overall sales). | Division correctly used regional sales effectiveness combining local and non-local sales as industry practice. | Acceptable interpretation; supported by substantial evidence and deference. |
| Whether the termination implicates Commerce Clause considerations and extraterritorial reach. | Wisconsin law should apply uniformly to all dealers, including out-of-state ones. | Division’s interpretation avoids unconstitutional extraterritorial impact; court does not decide this issue. | Court declines to decide Commerce Clause issue; court finds interpretation reasonable. |
Key Cases Cited
- Volvo Trucks North America v. State of Wisconsin Dep't of Transportation, 323 Wis.2d 294 (Wis. 2010) (deference to agency factual findings; review of statutory interpretation under substantial evidence and due weight)
- Healy v. Beer Institute, Inc., 491 U.S. 324 (U.S. 1989) (commerce clause limits extraterritorial regulation)
- Forest Home Dodge, Inc. v. Karns, 29 Wis.2d 78 (Wis. 1965) (state dealership regulations and commerce considerations)
- Vesely v. Security First National Bank of Sheboygan Trust Dep't, 128 Wis.2d 246 (Wis. 1985) (interpretation of ‘similarly situated dealers’ in Wisconsin context)