FORD MOTOR COMPANY v. DARLING‘S et al.
No. BCD-12-583.
Supreme Judicial Court of Maine.
Decided: Jan. 21, 2014.
2014 ME 7
Argued: Sept. 11, 2013.
Michael Kaplan, Esq. (orally), Preti, Flaherty, Beliveau & Pachios, LLP, Portland, on the briefs, for appellant Maine Automobile Dealers Association.
Daniel L. Rosenthal, Esq. (orally), and Lee H. Bals, Esq., Marcus, Clegg & Mistretta, P.A., Portland, on the briefs, for appellee/cross-appellant Ford Motor Company.
Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, MEAD, GORMAN, and JABAR, JJ.
LEVY, J.
[¶1] This appeal concerns the respective rights of automobile manufacturers and dealers pursuant to the Business Practices Between Motor Vehicle Manufacturers, Distributors and Dealers Act (Dealers Act),
[¶2] Ford Motor Company, an automobile manufacturer and franchisor, appeals from a judgment entered in the Business and Consumer Docket (Nivison, J.) rendering final the court‘s affirmance of certain decisions and orders of the Maine Motor Vehicle Franchise Board (“the Board“). The Board concluded that Ford violated
[¶3] Ford contends that the Board and the court erred in concluding that (1) the incentive program was part of Ford and Darling‘s “franchise” as that term is defined by the Dealers Act; (2) Darling‘s did not receive adequate notice of the program‘s termination; and (3) Ford was not entitled to a de novo jury trial on the factual issues decided by the Board. Darling‘s and the Maine Automobile Dealers Association (MADA)2 cross-appeal, assert
I. BACKGROUND
A. Darling‘s and Ford‘s Franchise Relationship
[¶4] Darling‘s is a Ford dealer and franchisee located in Bangor. The franchise relationship between Ford and Darling‘s is governed by a written Ford Service and Sales Agreement (“SSA“) that Ford and Darling‘s entered into in 1989. The SSA recognized Darling‘s as an authorized Ford products dealer and granted Darling‘s the right to sell those products that “from time to time are offered for sale by [Ford].” The SSA also provided that Ford may issue “guides” establishing “reasonable standards” for dealership facilities and operations, and that it may publish bulletins “from time to time” to establish “prices, charges, discounts and other terms of sale.”
B. The Blue Oval Certified Incentive Program
[¶5] In 2000, Ford introduced the Blue Oval Certified (“BOC“) program, a customer-satisfaction incentive program that offered Ford dealers a 1.25% cash bonus on the retail price of each vehicle the dealer sold. The BOC program was described in “reference guides” issued between 2001 and 2004. The guides identified certification requirements for each year of the program, but did not describe any requirements beyond March 31, 2005. Dealers could qualify for BOC status by meeting customer approval standards set by Ford. Darling‘s was certified as a BOC dealer in 2001, and by 2002 it became aware that Ford was considering changes to the program. In August 2004, Ford made a broadcast on its internal Fordstar television network announcing to dealers that the BOC program would conclude by March 2005 and be replaced by a program emphasizing non-cash incentives. Ford issued an electronic communication to its dealers a few days later confirming the BOC program‘s termination as of March 31, 2005. It is unclear from the record whether Darling‘s management actually watched the Fordstar broadcast, though they were notified of it, or saw the electronic communication. Regardless, the record establishes that by 2004 Darling‘s management knew that Ford was considering discontinuing the cash bonus program. The BOC program was discontinued as scheduled on April 1, 2005, and was followed by an “Accelerated Sales Challenge,” which lasted from 2005 to 2007, and a series of quarterly sales drives throughout 2007.
[¶6] Had the BOC program remained in effect, Darling‘s would have earned $678,942.96 in cash bonuses for vehicles it sold between April 1, 2005, and November 30, 2007. During the same period, Darling‘s received $142,975 in payments from Ford under the Accelerated Sales Challenge and $74,200 under the 2007 quarterly sales drives.
C. Administrative Proceedings Before the Maine Motor Vehicle Franchise Board
[¶7] In December 2006, Darling‘s filed a twelve-count complaint before the Board
D. Superior Court Proceedings
[¶8] In July 2008, Ford and Darling‘s filed in the Superior Court, pursuant to M.R. Civ. P. 80C,
[¶9] In July 2009, the court ordered a jury trial pursuant to section 1189-B for further fact-finding regarding whether the BOC program was within the scope of Darling‘s and Ford‘s “franchise.” With
[¶10] At the conclusion of the trial, the jury returned a verdict affirming the Board‘s factual findings.6 In February 2012, the court entered an order affirming the Board‘s award of one civil penalty in the amount of $10,000 pursuant to section 1171-B(3). In June 2012, the court entered an order affirming the Board‘s damages award as a factual determination supported by the record. Ford, Darling‘s, and MADA timely appealed.7
II. STATUTORY FRAMEWORK AND ISSUES ON APPEAL
[¶11] The Dealers Act regulates the franchise relationship between automobile manufacturers/franchisors like Ford and dealers/franchisees like Darling‘s. See
“Franchise” means an oral or written arrangement for a definite or indefinite period in which a manufacturer, distributor or wholesaler grants to a motor vehicle dealer a license to use a trade name, service mark or related characteristic, and in which there is a community of interest in the marketing of motor vehicle or services related thereto at wholesale, retail, leasing or otherwise.
[¶12] As part of its regulation of the franchise relationship, the Dealers Act prohibits manufacturers/franchisors from engaging in “unfair methods of competition and unfair and deceptive practices.”
modify a franchise during the term of the franchise or upon its renewal, if the modification substantially and adversely affects the motor vehicle dealer‘s rights, obligations, investment or return on investment, without giving 90 days’ writ
ten notice by certified mail of the proposed modification to the motor vehicle dealer, unless the modification is required by law or board order.
[¶13] Due to the unique administrative process fashioned by the Dealers Act, this appeal requires us to review an assemblage of legal and factual determinations by the Board, the jury‘s decision to uphold the Board‘s factual findings, and legal conclusions reached by the Business and Consumer Docket. The threshold legal question presented is whether, as Ford argues, the Board erred in concluding that the parties’ franchise encompassed the BOC program. If the program was not encompassed by the franchise, then Ford was not required to give notice of the program‘s termination pursuant to section 1174(3)(B) and Darling‘s was not entitled to any relief pursuant to the Dealers Act. Ford contends that, even if the BOC program were part of the franchise, the notice it gave Darling‘s substantially complied with section 1174(3)(B) and should therefore be deemed sufficient. Ford also asserts that its right to a jury trial pursuant to article I, section 20 of the Maine Constitution was infringed by section 1189-B(2)‘s presumption that the Board‘s factual findings are correct unless rebutted by clear and convincing evidence.
[¶14] Darling‘s and MADA cross-appeal on the grounds that the Board committed legal error in calculating Darling‘s damages pursuant to section 1173 by limiting those damages to a 270-day period and reducing them by the amounts Darling‘s earned through alternative incentive programs. Darling‘s and MADA also argue that the Board erred in levying only a single $10,000 penalty against Ford pursuant to section 1171-B(3).
A. Standard of Review
[¶15] When the Business and Consumer Docket acts in an intermediate appellate capacity to review an administrative agency‘s decision pursuant to M.R. Civ. P. 80C, we directly review the agency‘s decision for errors of law. See Dyer v. Superintendent of Ins., 2013 ME 61, ¶ 11, 69 A.3d 416; Carrier v. Sec‘y of State, 2012 ME 142, ¶ 12, 60 A.3d 1241. We review matters of statutory and constitutional interpretation, including the Board‘s interpretation of “franchise” pursuant to section 1171(6) and the court‘s determination that section 1189-B does not deprive Ford of its constitutional right to a jury trial, de novo. See McGee v. Sec‘y of State, 2006 ME 50, ¶ 5, 896 A.2d 933.
B. Administrative and Adjudicative Authority Pursuant to the Dealers Act
[¶16] The Dealers Act vests specific administrative authority in the Board, appellate authority to review the Board‘s decisions in the Superior Court, and original jurisdiction for actions seeking damages or injunctive relief in the Superior Court.8
1. The Board‘s Administrative Authority
[¶17] As previously discussed, section 1174(3)(B) deems it an unfair and deceptive practice for a manufacturer to modify a franchise during the term of the franchise or upon its renewal if the modification substantially and adversely affects the dealer‘s rights, obligations, investment, or return on investment, without giving 90 days’ written notice by certified mail of the proposed modification, unless the modification is otherwise required by law or an order of the Board. Section 1174(3)(B) further provides that, within the 90-day notice period, the dealer may file with the Board a protest requesting a determination of whether there exists good cause for the proposed modification. Once a protest is filed, the Board must promptly schedule a hearing and decide the matter within 180 days. Id. The manufacturer has the burden of proving good cause, and the proposed modification may not take effect while the Board‘s determination of the matter is pending. Id.
[¶18] The Board‘s duties are set out in more detail in section 1188. That section authorizes the Board to review complaints filed pursuant to the Dealers Act, issue written decisions and orders to franchisees or franchisors found to be in violation of the Act, levy civil penalties against manufacturers found to be in violation of the Act pursuant to section 1171-B(3), and award costs and attorney fees to prevailing franchisees pursuant to section 1173.
2. The Superior Court‘s Appellate Jurisdiction
[¶19] The Dealers Act provides that parties may appeal from the Board‘s legal and factual determinations to the Superior Court.
3. The Superior Court‘s Original Jurisdiction
[¶20] The Board is not the only avenue for franchisees to pursue claims pursuant to the Dealers Act. The statute‘s legislative history reflects that “[t]he board is not the exclusive venue for initially bringing a complaint.” L.D. 1294, Summary (121st Legis. 2003). Sections 1173, 1190, and 1190-A recognize that a franchisee or dealer may bring a civil action in the Superior Court for alleged violations of the Dealers Act, independent of the administrative procedures available before the Board. Section 1173(1) provides, in relevant part:
1. Civil remedies. Any franchisee or motor vehicle dealer who suffers financial loss of money or property, real or personal, or who has been otherwise adversely affected as a result of the use
or employment by a franchisor of an unfair method of competition or an un-fair or deceptive act or any practice declared unlawful by this chapter may bring an action for damages and equita-ble relief, including injunctive relief. When the franchisee or dealer prevails, the court shall award attorney‘s fees to the franchisee or dealer, regardless of the amount in controversy, and assess costs against the opposing party.
[¶21] Sections 1190 and 1190-A address the interaction between civil actions in the Superior Court and administrative actions pursuant to the Dealers Act. “If a complaint is filed with the board by a person otherwise entitled to bring a complaint in the courts of the State, then the applicable statute of limitations is tolled and a civil action in a court of competent jurisdiction is barred pending the outcome of proceedings before the board.”
[¶22] Having reviewed the Dealers Act‘s delegation of authority to the Board and the Superior Court, we turn to the issues presented by this appeal.
III. DISCUSSION
A. The Meaning of “Franchise” Pursuant to 10 M.R.S. §§ 1171(6) and 1174(3)(B)
[¶23] Ford first argues that the Board erred in concluding that Ford modified Darling‘s franchise pursuant to section 1174(3)(B) when it terminated the BOC program, because the BOC program was not part of Darling‘s and Ford‘s “franchise” as that term is defined by section 1171(6). We begin by looking to the plain meaning of “franchise” as the Dealers Act defines the term. See N.A. Burkitt, Inc. v. Champion Road Mach. Ltd., 2000 ME 209, ¶¶ 5-6, 763 A.2d 106 (examining the plain meaning of “motor vehicle” in order to define that term pursuant to the Dealers Act). Section 1171(6) defines a “franchise” as
an oral or written arrangement for a definite or indefinite period in which a manufacturer, distributor or wholesaler grants to a motor vehicle dealer a license to use a trade name, service mark or related characteristic, and in which there is a community of interest in the marketing of motor vehicles or services related thereto at wholesale, retail, leasing or otherwise.
[¶24] A franchise is, therefore, an oral or written arrangement. Id. However, the statute offers little guidance as to what constitutes an “arrangement.” Ford argues that “arrangement” should be interpreted narrowly to mean only the written SSA between Ford and Darling‘s that created the franchise, and not subsequent incentive programs such as the BOC program. This position finds some support in the statute‘s definition of a franchise as an arrangement in which a manufacturer grants a license, which arguably implies a one-time event (the “granting“) that would not include the later BOC program. Id. However, in contrast with other states’ definitions of “franchise,” the Dealers Act does not define the term as a singular contract. Cf.
[¶25] In interpreting statutes, we “consider the whole statutory scheme for which the section at issue forms a part so that a harmonious result, presumably the intent of the Legislature, may be achieved.” Hallissey v. Sch. Admin. Dist. No. 77, 2000 ME 143, ¶ 14, 755 A.2d 1068 (quotation marks omitted). The Dealers Act‘s use of “franchise” in other contexts weighs against the construction proposed by Ford. Some sections of the Dealers Act refer to the “franchise relationship,” and deem it an unfair and deceptive trade practice for a manufacturer to cancel, terminate, or fail to renew that “franchise relationship” under certain circumstances. See
[¶26] This construction of “franchise” also finds support in the framework of the SSA at issue in this case. The SSA expressly contemplated the inclusion of various future obligations between the parties. The SSA‘s definitions of “vehicle terms of sale bulletin,” “parts and accessories terms of sale bulletin,” “customer service bulletin,” “dealer‘s locality,” “car planning volume and truck planning volume,” “UIO (units in operation),” and “guides” all dictate that Ford could unilaterally issue new terms and conditions after the SSA was entered into. These conditions make clear that Ford retained the discretion to change which vehicles and parts Darling‘s could sell; where Darling‘s could conduct its sales and service; the standards for Darling‘s facilities, equipment, and service; and prices, charges, discounts, allowances, rebates, refunds, and other terms of sale. In light of these forward-looking provisions, the BOC program is best viewed as a future provision contemplated by the SSA rather than a new and independent contract as Ford contends.
[¶27] Viewed holistically, the SSA and the BOC program are part of the overall franchise “arrangement” that existed between Ford and Darling‘s. Accordingly, because the jury found that Ford‘s termination of the BOC program was an attempt to “modify a franchise during the term of the franchise” pursuant to section 1174(3)(B), Ford‘s termination of the program triggered the notice requirement of section 1174(3)(B). This conclusion requires us to confront whether Ford complied with section 1174(3)(B)‘s notice requirement.
B. The Notice Requirement of 10 M.R.S. § 1174(3)(B)
[¶28] Pursuant to section 1174(3)(B), a manufacturer must give 90 days’ written notice by certified mail to a dealer before modifying a franchise, if such modification “substantially and adversely affects the motor vehicle dealer‘s rights, obligations, investment or return on investment.” Although Ford does not dispute that it failed to provide Darling‘s with written notice by certified mail before discontinuing the BOC program, it urges us to treat the failure as inconsequential because Darling‘s had actual notice that the program would end.
[¶30] In the context of the Dealers Act, providing written notice by certified mail is “of the very essence of giving notice.” The record demonstrates that automobile dealers receive many communications from manufacturers, often through informal means such as postings to websites or electronic communications. It is therefore understandable that the Legislature would impose a strict, though certainly not burdensome, notice requirement on manufacturers whenever they make a modification to a franchise that “substantially and adversely affects the motor vehicle dealer‘s rights, obligations, investment or return on investment.”
[¶31] For these reasons, we affirm the Board‘s conclusion that compliance with section 1174(3)(B)‘s notice requirement is mandatory, and that Ford violated the statute by failing to provide Darling‘s with 90 days’ written notice by certified mail before it terminated the BOC program. Accordingly, Ford‘s alternative efforts to notify its franchisees that the BOC program would end, and Darling‘s actual knowledge of the termination of the BOC
C. The Presumption Established by 10 M.R.S. § 1189-B(2) and Ford‘s Right to a Jury Trial Pursuant to Article I, Section 20 of the Maine Constitution
[¶32] Next, Ford contends that section 1189-B(2) is unconstitutional because it requires a party challenging a finding by the Board to prove by clear and convincing evidence that the finding was erroneous, thereby infringing on the party‘s right to a jury trial as provided by article I, section 20 of the Maine Constitution. Ford argues that it was entitled to de novo fact-finding by the jury on all issues presented to the Board.
[¶33] We review alleged constitutional violations de novo. Sparks v. Sparks, 2013 ME 41, ¶ 19, 65 A.3d 1223. In challenging the constitutionality of section 1189-B(2), Ford bears the “heavy burden” of overcoming the presumption that the statute is constitutionally valid. Irish v. Gimbel, 1997 ME 50, ¶ 6, 691 A.2d 664. To meet its burden, Ford must demonstrate “by strong and convincing reasons” that the statute conflicts with the Maine Constitution. State v. McGillicuddy, 646 A.2d 354, 355 (Me.1994); id. All reasonable doubts must be resolved in favor of the constitutionality of the statute, and if the statute is susceptible to more than one interpretation “we must adopt an interpretation, if one there be, which will render it constitutional.” Portland Pipe Line Corp. v. Envtl. Improvement Comm‘n, 307 A.2d 1, 11 (Me. 1973).
[¶34] Turning to the Maine Constitution, article I, section 20 provides:
In all civil suits, and in all controversies concerning property, the parties shall have a right to a trial by jury, except in cases where it has heretofore been otherwise practiced; the party claiming the right may be heard by himself or herself and with counsel, or either, at the election of the party.
[¶35] The challenged provision of the Dealers Act provides:
2. Appeal involving factual matters. A party to a decision by the board may appeal to the Superior Court for a hearing on the merits of the dispute. In any such hearing before the Superior Court, all findings of fact of the board are presumed to be correct unless rebutted by clear and convincing evidence.
[¶36] In Irish, 1997 ME 50, 691 A.2d 664, we addressed whether a mandatory prelitigation screening process for medical negligence claims was inconsistent with the constitutional right to a jury trial. Id. ¶¶ 6-14. In that case, as required by statute, a screening panel made factual findings that were then presented to the jury “without explanation” of how the panel operated, thereby preventing the plaintiff from commenting on or challenging the findings. Id. ¶¶ 5-7, 10-11. We held that the right to a jury trial was violated because providing non jury factual findings to a jury without explaining the context for those findings “withholds information that is essential to the jury‘s fact-finding role” and “invite[s] unprincipled evaluation and can only result in juror confusion.” Id. ¶ 11; see also Smith, 2006 ME 19, ¶¶ 22-24, 892 A.2d 433 (concluding that the right to a jury trial was violated by “asymmetrical” admission of the screening panel‘s findings that benefitted only one party).
[¶37] In contrast, the right to a jury trial is not infringed by shifting burdens of proof or imposing rules of evidence. For example, admitting a report that establishes a rebuttable presumption of a material fact is constitutionally permissible as a rule of evidence, provided that “[i]t cuts off no defense, interposes no obstacle to a full contestation of all the issues, and takes no question of fact from either court or jury.” Irish, 1997 ME 50, ¶ 9, 691 A.2d 664 (quoting Meeker v. Lehigh Valley R.R. Co., 236 U.S. 412, 430, 35 S.Ct. 328, 59 L.Ed. 644 (1915), which held that a federal statute making a commission‘s report prima facie evidence in a jury trial merely established a “rebuttable presumption” and did not infringe the right to a trial by jury). As the United States Supreme Court has held in the context of the Federal Constitution‘s right to trial by jury, “[t]he [Seventh] Amendment, indeed, does not attempt to regulate matters of pleading or practice, or to determine in what way issues shall be framed by which questions of fact are to be submitted to a jury.... So long as this substance of right is preserved, the procedure by which this result shall be reached is wholly within the discretion of the legislature....” Walker v. N.M. & S. Pac. R.R. Co., 165 U.S. 593, 596, 17 S.Ct. 421, 41 L.Ed. 837 (1897).
[¶38] Here, the statutory presumption that the Board‘s findings are correct unless rebutted by clear and convincing evidence does not deprive litigants of the constitutional right to a jury trial because the presumption acts only as a burden of proof and preserves the jury‘s role in determining material factual issues. See Smith, 2006 ME 19, ¶¶ 20-25, 892 A.2d 433; Irish, 1997 ME 50, ¶¶ 9-13, 691 A.2d 664.
[¶39] Additionally, proof by clear and convincing evidence is required in a wide variety of civil cases where public policy concerns demand a higher degree of certainty in factual findings. Taylor v. Comm‘r of Mental Health and Mental Retardation, 481 A.2d 139, 149 (Me.1984) (citing 9 Wigmore, Evidence § 2498 at 424-31 (Chadbourn rev. 1981)). As applied here, the Dealers Act reflects a legislative judgment that the factual determinations of an administrative board—one with expertise in the specialized area of motor vehicle franchise relationships—are sufficiently reliable as to require a heightened standard of proof before they are disregarded. See
[¶40] For these reasons, we conclude that section 1189-B(2)‘s presumption in favor of the Board‘s factual findings is consistent with, and does not unduly burden, the right to trial by jury guaranteed by article I, section 20 of the Maine Constitution.12
D. Damages Awards Pursuant to the Dealers Act
[¶41] Having established that Ford‘s termination of the BOC program without notice by certified mail to Darling‘s constituted a violation of section
[¶42] Administrative agencies like the Board are by their nature “limited in their operations within the framework established for them by the Legislature.” Clark v. State Emps. Appeals Bd., 363 A.2d 735, 736 (Me.1976). As an administrative tribunal, the Board possesses only such “jurisdiction, powers and authority as are conferred upon it by express legislative grant or such as arise therefrom by implication as necessary and incidental to the full and complete exercise of the powers granted.” Conners’ Case, 121 Me. 37, 40, 115 A. 520 (1921). Here, the Board‘s authority to hear and decide cases is governed by section 1188, and is qualified by sections 1173, 1189-B, 1190, and 1190-A. We therefore look to these sections to ascertain whether the Board has jurisdiction over actions seeking damages pursuant to the Dealers Act. See Clark, 363 A.2d at 736; Conners’ Case, 121 Me. at 39-40; see also Town of Eagle Lake v. Comm‘r, Dep‘t of Educ., 2003 ME 37, ¶ 7, 818 A.2d 1034 (“To determine the intent of the Legislature, we look first to the statute‘s plain meaning....” (quotation marks omitted)).
[¶43] Section 1188, which establishes the Board‘s duties, does not authorize the Board to award damages to plaintiffs who prevail under the Dealers Act. Section 1188 empowers the Board to review complaints, issue written decisions and orders, levy civil penalties, and award attorney fees and costs, but it does not on its face authorize the Board to award damages.
[¶44] Instead, the right to damages pursuant to the Dealers Act is governed by section 1173(1), which, as discussed above, provides in part:
1. Civil remedies. Any franchisee or motor vehicle dealer who suffers financial loss of money or property, real or personal, or who has been otherwise adversely affected as a result of the use or employment by a franchisor of an unfair method of competition or an un-fair or deceptive act or any practice declared unlawful by this chapter may bring an action for damages and equita-ble relief, including injunctive relief.
Further, section 1189-B(2), which governs appeals from the Board to the Superior Court, provides that an appeal for a hearing on the merits of the dispute before the Superior Court “is subject to the provisions of section 1173.” Thus, once a proceeding before the Board is completed and an appeal is taken on the merits pursuant to section 1189-B(2), a franchisee may then bring its action for damages pursuant to section 1173 as part of the hearing before the Superior Court. An action for damages brought pursuant to section 1173 is therefore separate from an administrative complaint filed with the Board pursuant to section 1188(1).
[¶45] Additionally, sections 1190 and 1190-A explicitly recognize that a franchisee may bring an original civil action in the Superior Court for alleged violations of the Dealers Act, independent of the administrative complaint process before the Board. See also L.D. 1294, Summary (121st Legis. 2003) (“The board is not the exclusive venue for initially bringing a complaint....“). Such actions in the Superior Court must be stayed, though, “if, within 60 days after the date of filing of the complaint, or service of process, whichever date is later, a party to the action files a complaint with the board.”
[¶46] The Dealers Act thus sets forth a process by which plaintiffs claiming damages may seek them either (1) in an original action, or (2) in an appeal for a hearing on the merits filed with the Superior Court. As made clear by the plain language and structure of the statute, it is the court, and not the Board, that may ulti
[¶47] As a final matter, because the Board was not authorized to award damages, its damages determination is not to be treated as a factual finding subject to the presumption of correctness established by section 1189-B(2). See
[¶48] For these reasons, the portion of the judgment awarding damages in the amount of $145,223.08 to Darling‘s is vacated. The case is remanded to the Business and Consumer Docket for a determination of damages, with the burden on Darling‘s to prove its damages by a preponderance of the evidence.
E. The Board‘s Award of One Civil Penalty Pursuant to 10 M.R.S. § 1171-B(3)
[¶49] Finally, Darling‘s contends that the Board erred in levying only one civil penalty against Ford pursuant to section 1171-B(3) for Ford‘s violation of section 1174(3)(B). Section 1171-B(3) provides:
3. Civil penalty. If the board determines after a proceeding conducted in accordance with this chapter that a manufacturer or distributor is violating or has violated any provision of this chapter or any rule or order of the board issued pursuant to this chapter, the board shall levy a civil penalty of not less than $1,000 nor more than $10,000 for each violation. If the violation involves multiple transactions within a 60-day period, these multiple transactions are deemed a single violation.
Darling‘s argues that the Board should have levied multiple penalties against Ford under the reasoning that every BOC program payment that Ford withheld constituted a new violation of the Dealers Act. Under the terms of the BOC program, Ford paid Darling‘s a 1.25% cash bonus on the manufacturer‘s suggested retail price of each vehicle that Darling‘s sold. Thus, Darling‘s asserts that Ford violated the Dealers Act every time Darling‘s sold a Ford vehicle but did not receive a 1.25% cash bonus.
[¶50] We are not persuaded by Darling‘s characterization of what constitutes a “violation” of the Dealers Act. Under the plain language of section 1174(3)(B), Ford‘s “violation” was its use of an unfair or deceptive practice (i.e., substantially and adversely modifying the franchise without providing the required notice), not its failure to make each of its contractual payments. Because Ford only modified the franchise without providing notice once (at least for purposes of this dispute), it violated section 1174(3)(B) once, and it was properly subject to one civil penalty pursuant to section 1171-B(3).
The portion of the judgment awarding money damages in the amount of $145,223.08 to Darling‘s is vacated. Remanded to the Superior Court for a determination of damages. The judgment is affirmed in all other respects.
LEVY, J.