432 Mass. 425 | Mass. | 2000
Lead Opinion
In two separate actions commenced, and later consolidated, in the United States District Court for the District
A Federal District Court judge concluded that under G. L. c. 93B, § 4 (3) (Z), fifth par., the “relevant market area” of a motor vehicle dealer “is a circle, with the dealer at the center, circumscribing the geographical area comprising either two-thirds of the dealer’s new vehicle sales or two-thirds of its service sales, whichever is smaller.” Based on this conclusion, the dealers stipulated that they lacked standing to protest the proposed new dealership, and the judge entered judgment in favor of Honda on its petitions for declaratory judgment, and entered judgment against the dealers on count I of their counterclaims. The judge also dismissed count II of the dealers’ counterclaims with prejudice, having concluded that § 4 (3) (Z) “is the sole provision within c. 93B under which an aggrieved dealer may seek relief from an alleged arbitrary prospective dealership placement.” The dealers appealed from the judgment.
The United States Court of Appeals for the First Circuit, after determining that there was no controlling Massachusetts precedent pertinent to the issues of this case, certified, pursuant to SJ.C. Rule 1:03, as appearing in 382 Mass. 700 (1981), the following two questions to this court:
*427 “1. How should the relevant market area of a motor vehicle dealer be defined under Mass. Gen. Laws Ann. ch. 93B, § 4(3)(0?
“2. Is Mass. Gen. Laws Ann. ch. 93B, § 4(3)(Z) the sole provision within chapter 93B under which a motor vehicle dealer may seek relief from a prospective additional dealership which will sell the same motor vehicles as sold by the established motor vehicle dealer?”
In its certification order, the Court of Appeals welcomed our “discussion of any relevant Massachusetts law.” We conclude that a dealer’s “relevant market area,” as defined under G. L. c. 93B, § 4 (3) (Z), fifth par., although not a perfect circle, is a geographic area circular in shape,
1. Defining the relevant market area. General Laws c. 93B, § 3 (a), declares unlawful specific “[u]nfair methods of competition and unfair or deceptive acts or practices” which occur in the automotive industry primarily among motor vehicle manufacturers, distributors, and dealers,
The wording of the 1977 revision of § 4 (3) (Z) has been said to “perplex even the most percipient logician.” Ricky Smith Pontiac, Inc. v. Subaru of New England, Inc., 14 Mass. App. Ct. 396, 412 (1982). There the court examined, in particular, the definition of “relevant market area” as that term appeared in the 1977 statute, noting that its revised definition established a “bright line test” for determining a dealer’s relevant market area. Id. at 414.
The statute defines the shape of a dealer’s relevant market area as “the more narrowly defined and circumscribed geographical area immediately surrounding its existing dealer location.” The dealers suggest that the plain meaning of this language requires a court to plat two irregular shaped areas, or polygons,
We agree with the dealers that the term “circumscribe” does not necessarily require the drawing of a circle. The word “circumscribe” means “to be drawn around (as a geometrical figure) so as to touch at as many points as possible ... a curve circumscribing a polygon ... to draw (as a line) around something [such as] a circle around a triangle.” Webster’s Third New Int’l Dictionary 410 (1993). Depending on the object, geographic area, or geometric figure circumscribed, the shape of the circumscription may or may not constitute a circle. Accordingly, the word “circumscribed” as it appears in the statute cannot be read in isolation; it must be construed in the context of what is being circumscribed. Here, the object or “something” being circumscribed is the “geographical area immediately surrounding [the] existing dealer.” It is this geographic area so defined from which the shape of the relevant market area is derived.
The plain meaning of the word “surround” establishes the relevant market area’s shape. “Surround” means “to form a ring around: extend around or about the edge of: constitute a curving or circular boundary for: lie adjacent to all around or in most directions: ENCIRCLE” (emphasis supplied). Webster’s Third New Int’l Dictionary 2302 (1993). We thus conclude that the shape of a dealer’s relevant market area is circular.
The dissent takes issue with the fact that our construction of the definition of a dealer’s “relevant market area” does not result in a shape that constitutes a perfect circle. We note that while the District Court judge concluded that the terms “circumscribed” and “immediately surrounding” import a circle, he did not examine the plain meaning of those terms in his decision. Further, we agree with the dealers that, had the Legislature intended the relevant market area to comprise a perfect circle, it would have employed the term “radius,” which it employed elsewhere in the statute,
We recognize that our interpretation of the shape and location of a dealer’s “relevant market area” may preclude a sizable portion of a dealer’s actual market from being contained within its “relevant market area.” This result apparently was considered by the Legislature, and is fully consistent with the statute. By its terms the statute provides a definition for a dealer’s “relevant market area,” and that definition controls “regardless of whether ... by custom or usage, a specific area of responsibility has been established [by the existing dealer].” G. L. c. 93B, § 4 (3) (Z), fifth par. See Tober Foreign Motors, Inc. v. Reiter Oldsmobile, Inc., 376 Mass. 313, 331-332 (1978) (“The 1977 revision sets out a quite sharp definition [of relevant market area] which may somewhat sacrifice theoretical correctness to ease of practical application”). To interpret the statute’s definition of “relevant market area” as do the dealers, would improperly ignore this language. See International Org. of Masters, Mates & Pilots v. Woods Hole, Martha’s Vineyard & Nantucket S.S. Auth., 392 Mass. 811, 813 (1984) (“Wherever possible, we give meaning to each word in the legislation; no word in a statute should be considered superfluous”).
Our interpretation of a dealer’s “relevant market area” is consistent with the purpose of c. 93B. There is no question that “c. 93B was enacted in recognition of the potentially oppressive power of automobile manufacturers and distributors in relation to their affiliated dealers.” Beard Motors, Inc. v. Toyota Motor Distribs., Inc., 395 Mass. 428, 432 (1985). “Section 4 (3) (Z) is one of a set of provisions evidently directed to the time-honored State purpose of preserving a sound competitive market free of the domination of oligopolists at the top of a vertical chain of manufacture, distribution, and sale.” Tober Foreign Motors, Inc. v. Reiter Oldsmobile, Inc., supra at 322-323. See Heritage Jeep-Eagle, Inc. v. Chrysler Corp., supra at 259, quoting ABA Antitrust Section: Monograph No. 17, Franchise Protection: Laws Against Termination and the Establishment of Additional Franchises at 90 (1990) (intent of G. L. c. 93B, § 4 [3] [Z], is “to protect the franchisees from destructive intrabrand competition and the unequal economic
In challenging the District Court judge’s conclusion concerning the shape of a dealer’s relevant market area, the dealers advance a method to plat the statistical data used to determine the two-thirds of new vehicle sales and service sales. Specifically, they assert that “the proper method ... is to list, in descending order of frequency, the towns or zip codes in which the [existing] dealer sells or services the most new cars [within the applicable statutory time frame] until two-thirds of those sales or service transactions are reached. ... If the zip code including the proposed dealership is on this list, the dealer has standing; if not, the dealer does not.” The dealers concede that this methodology “creates an irregularly shaped [relevant market area] that accurately reflects the towns into which the dealers make the most retail sales or service sales.”
While we note that the methodology advanced by the dealers does not comport with our interpretation of the definition of a dealer’s “relevant market area,” we decline to enunciate a
2. Dealer's avenue to challenge the establishment of a prospective new dealership. We next consider whether G. L. c. 93B, § 4 (3) (/), is the sole provision within c. 93B under which a dealer may seek relief from the establishment of a prospective new dealership that will sell vehicles of the same line make as the existing dealer. Subsumed within this question, on review of the record, is whether a dealer may maintain an action under G. L. c. 93B, § 4 (1), to challenge a distributor’s decision to establish a new dealership as retaliatory against the dealers.
Section 3 (a) of G. L. c. 93B declares “[u]nfair methods of competition and unfair or deceptive acts or practices, as defined in section four,” unlawful. Section 4 specifies, in subsections 2 through 4, particular “acts or practices” that shall be “deemed” violations of § 3 (a). Among those deemed violations is, in § 4 (3) (Z), first par., the improper grant of a new dealership “within the relevant market area of an existing [dealer].” The grant of a new dealership is improper if done “arbitrarily and without notice to existing [dealers].” Id. The statute establishes a specific procedure whereby a manufacturer, or distributor, must notify certain existing dealers of its intent to establish a new dealership, see § 4 (3) (Z), third par.,
In contrast § 4 (1) does not proscribe a particular act or practice, but rather is more general in scope. Section 4 (1) provides: “It shall be deemed a violation of paragraph (a) of section three for any manufacturer [or] distributor ... to engage in any action which is arbitrary, in bad faith, or unconscionable and which causes damage to any of said parties [including dealers] or to the public.” To permit a dealer to challenge a proposed new dealership under this general provision would undermine and essentially nullify the statute, and more particularly, its standing requirement (§ 4 [3] [/], fourth par.), and specific procedures (§ 4 [3] [l], third & fourth pars.), which are aimed at providing an expedient mechanism for manufacturers, distributors, and dealers “to test, before capital is expended or damage done, the question whether a proposed new dealership unfairly poaches on an existing dealer’s territory.” Richard Lundgren, Inc. v. American Honda Motor Co., 45 Mass. App. Ct. 410, 415 (1998). We are bound to “construe the statute to avoid any part of the legislation being meaningless or duplicative.” Id.
Our conclusion is not inconsistent with the following language in Tober Foreign Motors, Inc. v. Reiter Oldsmobile, Inc., 376 Mass. 313, 320 (1978), to which the dealers cite, and which the dealers state describes retaliation: “Yet another technique with potentialities of unfairness is the granting of new franchises near established ones: having invested in his dealership, a dealer who has displeased the manufacturer, or who simply appears to be dispensable, finds his business turned into a losing venture overnight by the award of a new franchise around the comer, and, it may be, without any practical benefit
Last, the fact that § 4 (3) (Z) happens to have a standing requirement does not, contrary to the dealers’ assertions, condone “deliberate retaliatory conduct” by a manufacturer (or distributor), or result in a “loophole.” Rather, the standing requirement reflects a legislative determination that only dealers of the same line and make, and in certain proximity to the prospective new dealership (based on a dealer’s “relevant market area”), may challenge and potentially prevent new competition. Chapter 93B was not intended to provide all dealers with a statutory right to seek protection from potential competition.
The Reporter of Decisions is to furnish attested copies of this opinion to the clerk of this court. The clerk in turn will transmit one copy, under the seal of this court, to the Clerk of the United States Court of Appeals for the First Circuit, as answers to the questions certified, and will also transmit a copy to each party.
Honda had previously notified the dealers, in compliance with G. L. c. 93B, § 4 (3) (Z), of its intent to establish a new dealership in Westborough.
General Laws c. 93, § 4 (3), inserted by St. 1970, c. 814, § 1, was revised in 1977, St. 1977, c. 717, § 3, and has remained unchanged. It is this 1977 version that is before us.
A “circular” shape may differ from the shape of a perfect “circle.” A “circle” is “a closed plane curve every point of which is equidistant from a fixed point within the curve.” Webster’s Third New Int’l Dictionary 408 (1993). The area within a circle can be measured by the distance of the circle’s radius, which is “a line segment extending from the center of a circle or sphere to the curve or surface.” Id. at 1874. A “circular” shape has “the exact or approximate form or outline of a circle: ROUND.” Id. at 409.
The terms “[m]anufacturer,” “[distributor,” and “[m]otor vehicle dealer” are defined in G. L. c. 93B, § 1 (b), (g), and (h). ft is undisputed that both Bemardi’s and Lundgren are “[mjotor vehicle dealer[s]” as defined in G. L. c. 93B, § 1 (h), and that Honda is a “[distributor” as defined in G. L. c. 93B,. § 1 (h).
The term “[franchise” is defined in G. L. c. 93B, § 1 (z), as “an oral or written arrangement for a definite or indefinite period in which a manufacturer,
The term “[f]ranchisee” is defined in G. L. c. 93B, § 1 (/<), as “a motor vehicle dealer to whom a franchise is offered or granted.”
The court in Ricky Smith Pontiac, Inc. v. Subaru of New England, Inc., 14 Mass. App. Ct. 396, 406-409 (1982), considered whether the trial judge properly determined the “relevant market area” as defined by the 1970 version of G. L. c. 93B, § 4 (3) (Z), by looking to the amended definition- of that term as appearing in St. 1977, c. 717, § 3. Contrary to the definition of
A “polygon” is defined as “a closed figure consisting of straight lines joined end to end,” and a “polygonal” area is characterized as an area “having many sides.” Webster’s Third New Int’l Dictionary 1758 (1993).
See note 4, supra.
For example, G. L. c. 93B, § 4 (3) (Z), third par., requires a manufacturer or distributor that plans to enter into an additional franchise agreement to give written notice of such “to each motor vehicle dealer with a franchise or selling agreement covering the same line make within a twenty mile radius of the location where the business of the proposed franchise will be located” (emphasis supplied). See G. L. c. 93B, § 4 (3) (Z), second par.
Many States with legislation concerning the establishment or relocation of a motor vehicle dealership define a dealer’s relevant market area in terms of a geographic area within a certain mile radius of the existing dealership. See, e.g., Conn. Gen. Stat. Ann. § 42-133r(14) (West 1992); Del. Code Ann. tit. 6, § 4902(10) (1999); Minn. Stat. Ann. § 80E.14(1) (West 1999).
In this case, the dealers alleged that Honda proposed the new dealership to retaliate against them for their involvement in other litigation against Honda.
Section 4 (3) (/), third par., requires a manufacturer to notify, in writing, dealers within a twenty-mile radius of the proposed dealership location of its intention to establish a new dealership. This notice must be given “at least sixty days” prior to the granting of the dealership. Id.
Dissenting Opinion
(dissenting, with whom Abrams, 1, joins). I respectfully dissent and would adopt the well-reasoned opinion of the United States District Court that concludes that the “relevant market area” is a circle, with the dealer at the center, which circumscribes the geographical area comprising either two-thirds of the dealer’s new vehicle sales or two-thirds of the dealer’s service sales, whichever is smaller.
Prior to the 1977 revision of the statute, the court was required to determine relevant market area by resort to “equitable principles.” At that time, “a judge, confronted with a case like this, would likely consider a multiplicity of factors including conditions in the industry, pertinent anti-trust principles, the statute’s purposes, the circumstances of the parties and the terms of their contract, to evolve, by way of a rule of fairness, the objecting dealer’s relevant market area.” Ricky Smith Pontiac, Inc., supra at 414-415. This court has characterized the process by referring to “the numerous (and sometimes amorphous) circumstances involved in determining an automobile dealership’s relevant market area ‘exclusively by equitable principles.’ ” Id. at 411 n.17. Clearly, the Legislature chose to move away from this by adopting a simpler test which is objectively applicable, eschewing the earlier more subjective employment of “equitable principles.” The court’s opinion today moves back in a direction of uncertainty abandoned by the Legislature twenty-three years ago.