*2 Bеfore BAUER, Chief Judge, and FLAUM and RIPPLE, Circuit Judges. FLAUM, Circuit Judge.
This case arises out of defendant Ricoh Corporation’s (“Ricoh”) refusal to renew its national distributorship agreement with plaintiff Wright-Moore Corporation (“Wright-Moore”) after the expiration of year one its term. On a motion for summa- ry judgment, court, district applying held that Ricoh had good cause not to renew Wright-Moore’s fran- chise and did so without bad faith or discrimination, in compliance with the Indiana franchise statutes. See Ind. 23-2-2.5-1, seq., §§ et 23-2-2.7-1, et Code seq. The court further held that Ricoh did not breach its contract with Wright-Moore and did not engage in fraud misrepre- sentation with to the contract. Fi- nally, the court refused to estop Ricoh from not renewing Wright-Moore based on representations oral prior made to the for- mation of the contract. ap- peals grant of summary judgment and Ricoh cross-appeals claiming that, event we hold for Wright-Moore, venue improper. We affirm in part, reverse in part, and remand proceed- further ings consistent with opinion.
I.
Wright-Moore is an corporation having principal its place of business in Wayne, Fort Indiana. It is independent an copiers, distributor of parts, related and supplies. Wright-Moore developed nеtwork of independent, authorized dealers purchase products and resell its which it supports by providing service training for products they handle and offering the Philip Whistler, A. Cory Brundage, independent Fred dealers favorable credit terms Biesecker, Ice, R. Miller, Ryan, Donadío & and minimal inventory requirements. Ri- Indianapolis, Ind., Backs, Vincent Beers, J. coh is a corporation New York with its Mailers, Backs, Larmore, Salín & Fort principal place of business in West Cald- provided also letter copi- manufactures Jersey. well, New protection” “price distrib- supplies, parts ers, related allowed change price aof event dis- independent through both them utes copiers more purchase *3 Wright-Moore) as (such tributors 1,200 ma- the as terms credit same the dealers. retail of network own agreement. letter for provided chines a into entered parties 1984, the early In to Ricoh’s up performed Wright-Moore Wright- whereby agreement year one At term. contract during the expectations Ser- 3000 Ricoh distribute to agreed Moore re- however, Ricoh term, of the end the en- parties the July, In copiers. ies distributorship and the renew to fused one superceding) (and second a into tered Ricoh against suit this filed Wright-Moore Wright- which under agreement year Indiana. of District Northern the in distributor national a appointed was Moore Act and Sherman the of violations claimed 4000 the Series and 3000 Series the both of of statutes, breach the agreement, the Under copiers. Ricoh es- and misrepresentation fraud, contract, purchase to required was Wright-Moore puni- and compensatory sought and toppel contract year one during the copiers 2,850 that claimed Wright-Moore damages. tive providing of costs the bear to and term its rela- that by Ricoh assured been it had the for courses training Ricoh-prescribed and long term be Ricoh would with tionship whom to dealer each of personnel service Wright-Moore’s policy, Ricoh under that machine. a Series sold Wright-Moore renewed distributorship would national Wright-Moore, requirement, meet To obli- financial its satisfied it long as as Ricoh’s to employees cost, sent own its pur- minimum met its and Ricoh to gations em- these and training for headquarters con- Wright-Moore agreements. chase person- service the turn, trained ployees, its success continued the that tended also agreement The dealer. each nel net- own in Ricoh’s dealers caused deаlers ex- an maintain to Wright-Moore required pric- aggressive its that complain to work parts. copier inventory of tensive re- aAs profits. their into cut policy ing re- sole con- the dealers agreement, the authorized to According its sult, and Ricoh that Ricoh’s culminating was parties it, against between lationship spired Wright-Moore’s under obligations perform distributor. and refusal supplier Ricoh continental (specifically, as agreement defined was territory letter it give per- was and did terms Wright-Moore States, credit changed and United to renew retailers and refusal wholesaler a protection) price as sell mitted contemplated as Wright-Moore agreement distributorship Ricoh. with affiliated trade- any Ricoh using parties. by the from forbidden was with evidence connection defense, offered mark Ricoh aAs that state aon permitted based was was but renew name refusal that Ricoh certain early to distribute strategy. marketing was authorized change in that provided vice-president agreement new The Ricoh’s Ivy, products. 1985,James exclu- re- would marketing, undertook Manhattan the courts and sales for controversy aris- de- any system over distribution jurisdiction Ricoh’s sive view New and distribution existing agreement ing out whether termine disputes. effective govern appropriate York network integration At copiers. an contained also of Ricoh’s marketing three with agreements together prior all nullifying Wright-Moore, time, clause na- dealers, served understandings. independent other distributors styled tional agreement, second, related A were machines These copier. Series simulta- completed agreement,” “letter distribu- regional through marketed also distributorship agree- with neously net- dealer own through Ricoh’s tors letter agreed ment. be- responsibility overlap work. 1,200 immediately purchase distributor- regional national tween requirement. 2,850 towards machines ships along with resulting competition The court also found no fraud or misrep- prevented the development of strong re- resentation because Ricoh had made state- gional distributors which Ivy believed could ments only to its future ac- best market products. Ivy, therefore, tions and Indiana law expressly prohibits decided and the other fraud or misrepresentation claims based on national distributorship agreements should representations of future actions. The not be renewed. In January court held that the same was true for the meeting was held between Ricoh and Indiana franchise statute’s provision. fraud Wright-Moore at was Finally, the court held that Ricoh is not informed that Ricoh was considering re- estopped from not renewing the contract *4 moving the 3000 and 4000 copiers Series because Wright-Moore could not reason- from national distribution. Ricoh dis- ably rely on Ricoh’s oral representations cussed with several alterna- .prior made to formation of the contract. tives, including regional distributorships of court, therefore, granted Ricoh sum- the 3000 and 4000 Series copiers or a na- mary judgment. The court expressly re- tional distributorship for two other copier frained from reaching the forum selection models, but no was reached. clause of the distributorship agreement. Based on evidence, Ricoh moved for Wright-Moore appeals claiming that summary judgment. The district court de- there were material issues of fact with termined that there was no evidence of- a respect franchise, contract, fraud conspiracy in violation of the Sherman Act. and misrepresentation claims. addition, In respect With to the Indiana franchise stat- Wright-Moore maintains that the district utes, the court held that the choice of law court made errors of law. Speсifically, clause the contract was contrary to claims (1) that: under public Indiana policy as stated in the fran- economic self-inter- and, chise statutes ap- would good est is not cause for nonrenewal ply Indiana law rather than New York law. contract; (2) the court misinterpreted the It further held that there was a material letter agreement by reading it in conjunc- issue fact with respect to Wright- tion with the distributorship agreement; qualification Moore’s as an Indiana fran- (3) the court’s reading of the agree- found, however, chise. that the evidence ment inwas violation of Indiana franchise established that Ricoh was motivated law. has abandoned the economic self-interest and did not act in Sherman Act counts on appeal. Ricoh bad faith or with discriminatory purpose. cross-appeals, arguing that, in the event self-interest, Economic held, the court that we hold Wright-Moore, the forum sufficient to good satisfy require- cause selection requires clause a change in venue. ment the Indiana franchise statutes.
With respect the breach of contract claims, the court that, II. determined on its face, the letter agreement’s credit terms A. Indiana Franchise Law Claims for future orders cоpiers might been breached but that properly interpret- appeal raises several ed in conjunction significant with the distributorship issues under the Indiana fran- agreement, fact, it was, in chise laws. breached 23-2-2.5-1, §§ et Ind.Code because the distributorship agreement seq., 23-2-2.7-1, al- et seq. Wright-Moore ar- lowed Ricoh to unilaterally change gues that terms of the district court erred as a mat- credit. The court further determined ter of law in holding that non-renewal for the price protection clause of the letter economic purposes of the franchisor agreement had not been breached because consitutes good cause under it only provided price protection if Ricoh 23-2-2.7-1(7). addition, § Wright- were to offer a lower price to another Moore claims that summary judgment was distributor, a condition precedent improper because there were material is- had not occurred. sues of fact respect with Ricoh’s formalities, capacity, include substantial and with during termination faith illegality, validity, and but set issues sup- of discrimination. the claim contractually chosen is which cannot be holding court’s but ar-
ports the district
d.
law.
comment
determined
local
Id.
that the contractual-
gues in the alternative
not have
If the issue is one which could
applies
law
rather
York
ly chosen New
contract,
explicitly
by the
resolved
been
addition,
and, in
law
than
provisions of the
will
choice of law
contract
not a franchise.
Wright-Moore was
no
state has
apply
still
unless
“chosen
litigation
substantial
interest”
Law
1. Choice of
state
“application of the
of the chosen
ques-
of law
begin
the choice
We
policy
contrary to a fundamental
would be
Wright-Moore claims Indiana fran-
tion.
greater
materially
a state which
despite the choice of New
applies,
chise law
state in the deter
interest than the chosen
ground
agreement,
law in
York
which,
particular
of the
issue and
mination
prohibit
statutes
Indiana franchise
that the
be the state
under the rule of
prohibit “lim-
protections and
of its
waiver
in the absence of an effec
applicable
brought for
iting litigation
breach
*5
by
parties.”
the
Id.
tive choice of law
any
in
manner what-
agreement
[franchise]
187(2).
§
23-2-2.7-1(10). Ri-
soever.”
§
Ind.Code
agree with the district court
We
express
choice of law
argues that
coh
provi
of law
that enforcement of the choice
govern.
contract
of the
should
provision
distributorship agreemеnt
would
sion in
has
court held that Indiana
The district
poli
contrary
express public
to Indiana’s
be
against
strong public policy
articulated
to
Indiana
made it unlawful
enter
cy.
has
pro-
of the
parties to contract out
allowing
agreement “requiring
into a franchise
and that this
of its franchise law
tections
to
re
prospectively
to
assent
franchisee
the choice of law
policy overrides
public
purports
... which
lease ...
waiver
[or]
agreement.
in
for
provided
liability
im
person from
to be
any
relieve
the “most
long
adhered to
Indiana
an
by
chapter” or to enter into
posed
this
for
of law.
contacts” test
choice
intimate
“limiting litigation brought for
570, 63
Hughes,
v.
223 Ind.
W.H. Barber
any
in
manner
breach
approach has since
(1945).
417
This
N.E.2d
23-2-2.7-1(10).
whatsoever.”
§
(Sec
in the Restatement
elaborated
been
judge’s
to the district
We owe deference
(the
ond)
188
“Restate
of Laws
Conflict
§
in
state
interpretation of the law of the
Corp.
ment”).
Utopia
v.
Coach
See
sits, see,
judge
e.g.,
Moore
321, 325,
Weatherwax,
Ind.App.
379
177
(7th
Corp.,
F.2d
823
Cir.
Tandy
(the
(1978)
Restatement
N.E.2d
1987),
judge here found
the district
law).
ap
this
Indiana
Under
approximates
strong
provisions articulated
that these
consider all acts of
“the court will
proach,
against allowing contractual
policy
state
touching
in rela
parties
the transaction
ap
provisions
control the
choice of law
and will
states involved
provisions
tion to
several
these
to Indiana
plicability of
public policy,
governing
the transaction
franchises. The
articulated
apply as the
provisions of
facts
the statute
which the
the nonwaiver
of that state with
the law
franchisor, through
superior
its
is clear: a
Bar
intimate contact.” W.H.
are in most
power,
permitted
not be
bargaining
should
approach
ber,
423. This
also
N.E.2d at
legisla
to force the franchisee waive
may expressly
parties
recognizes that
provided protections, whether direct
tively
through a con
applicable
choose
indirectly
through
provisions or
ly
waiver
chosen
law of the state
tract. “The
public policy is
through choice of law. This
rights
their contractual
govern
parties
opt
out
to render the choice
sufficient
applied
particular
if the
will be
and duties
one that cannot be
Indiana’s franchise law
parties
have
which the
could
issue is one
by agreement.
made
provision in their
explicit
an
resolved
law,
Re
following
to that
issue.”
the Restate
agreement directed
however,
ment,
public policy
187(1). Typical
permits
state
issues
statement §
law the contractual choice
explicit agreement
to override
cannot be determined
only if the state has a materially greater
case,
Sixth Circuit
Tele-Save Merchandis
interest
the litigation than
ing
the contractu-
Co. v. Consumers
Co.,
Distribution
ally
Thus,
chosen state.
See substantially with the must associated (1987). N.W.2d 139 Wis.2d trademark; (3) the fran franchisor’s this decision on the belief bases Wisconsin a franchise fee.3 Ind.Code pay chisee must powerful are more franchisors that most 23-2-2.5-1(a). court held The district § franchisees, to have and for the law than issues of materi that there were sufficient impact, must not be able to any parties See protections. Wis. preclude of its contract out under these elements al fact fol- 135.025(3). now Minnesota has Stat. § ful summary judgment Wright-Moore’s amending its by explicitly lowed Wisconsin requirements. these fillment of articulated a has also statute. vigorously contests this conclu- Ricoh contrac- policy strong public Wright- argues Primarily, it sion. under its franchise of actions tual waiver intuitively re- type made it unlawful match the law. Indiana has Moore does not agree- enter into an quire franchisee to legislature entity the Indiana envisioned brought “limiting litigation ment Invoking writing the when statute. any manner breach of franchisee, image pop” of a “mom and 23-2-2.7-1(10) whatsoever.” maintains added). has also made (emphasis wholesale distributor of instead national “re- for a franchise unlawful to Ricoh and there- equal bargaining power prospectively as- quire] the franchisee of a of the “hallmarks” fore bears none release, waiver, estoppel ... sent argument this has some franchisee. While person from to relieve purports legislature to appeal, up it is to the Indiana Id. chapter.” liability imposed to be *7 what the “hallmarks” a fran- decide 1(5). these statements We believe that through its it has done so chisee are and policy against waiver legislative evince a through choice of ar- statutory requirements. Ricoh’s Indiana three and, therefore, not we are provisions re- guments addressed to these are best Computer applies that Modern convinced quirements and we address each element to Indiana.2 turn. Qualifications as a With right dispense to Wright-Moore’s to the 2. Franchisee argues is no that there evi- goods, Ricoh Wright-Moore was that constrained dence Wright-Moore is that argues In Master Abrasives and, marketing plan. a by Indiana not a franchisee squarely day when it is more Application to con- sue for another of Indiana franchise law 2. may presented. copiers other states trol who sells present commerce clause. difficulties under the 23-2-2.5-l(a) provides a Specifically 3. — -, Inc., Institute, U.S. Healy Beer See v. by which: means a contract "‘franchise’ 2491, 2497, (1989) 105 L.Ed.2d 109 S.Ct. (1) granted right engage a to franchisee is ("the appli- precludes the ‘Commerce Clause ... goods dispensing or servic- in es, business takes a to commerce that cation of state statute system marketing plan pre- or under a borders, place wholly of the State’s outside franchisor; by part a scribed in substantial within or the commerce has effects whether (2) operation business of the franchisee's omitted). (citations may ”) be the the State.’ substantially pursuant plan to a is associ- such incorporation case the principal place trademark, franchisor’s service ated with the mark, give in Indiana of business name, advertising, logotype, or trade products to connection all sufficient Indiana designating symbol other commercial apply by Wright-Moore its own law. to sold affiliate; and ap- franchisor or its import clause on the of the commerce The plication (3) granted right engage law, however, person to con- was not required pay a franchise fully is this business was not sidered the district court and Consequently, fee.” we reserve this is- briefed here. Williams, date, 469 N.E.2d is Corp. published To there no (Ind.App.1984), Ap- the Indiana Court of case that considers indirect franchise fees marketing plan peals held existed given and the term is little definition in the where allowed the fran- simply statute. The statute indicates that prescribe sales territories and chisor purchases at fide prices bona wholesale quotas, approve personnel, sales sales not indirect fees. Since Indiana’s franchise training. mandatory establish Our review legislative law has no history, interpret there record indicates that is evi- Indiana’s law reference to similar laws present dence that these elements are here: in other states and the purposes behind quota copiers had a those laws. sell; national; territory and Ricoh required personnel go through mandato- general policy behind franchise laws ry training allowing them to sell before particularly helpful delineating copiers. This is sufficient under Master scope requirement. of the franchise fee marketing plan. Abrasives establish purpose of most franchise laws Ricoh also contends that protect unequal franchisees who have bar substantially was not associated with its gaining power they once have firm- made a primarily points Arti- trademark. Ricoh specific investment in the franchisor. See 6(b) distributorship agreement cle Note, Constitutional Obstacles to State prohibited Wright-Moore using from “Good Cause” Restrictions on Franchise Ricoh’s name or trademark in manner. Terminations, 74 Colum.L.Rev. distributorship The same clause of (1974). example, For the Wisconsin statute however, agreement, permits Wright- expressly purpose states that its pro is to writing Moore to state in it is an against tect dealers “unfair treatment” authorized distributor for certain Ricoh “inherently from franchisors who have su Moreover, products. Wright-Mоore was perior power superior economic provided advertising materials with bar Abrasives, Ricoh’s trademark. Master gaining power.” 135.025(2). Wis.Stat. § prod- held that court “distribution policy. Our cases reflect this “[W]e ucts services covered fran- [the history deduced from the structure and trademark” was sufficient to sat- chisor’s] statute a central function: [Wisconsin] isfy require- the substantial association preventing suppliers behaving oppor from Wright-Moore clearly ment. Id. at 1199. tunistically once franchisees or other deal meets this standard. ers have sunk substantial resources into Finally, Wright- Ricoh contends that around, tailoring pro their business pay Moore franchise fee. Indiana did moting, Liquor a brand.” Kenosha v.Co. *8 defines a franchise fee as: Heublein, Inc., 418, (7th 895 F.2d 419 Cir. required any fee that a franchisee is 1990) (citations omitted). “The franchisor directly indirectly, right pay, or for the to (supplier) may change be able to the terms sell, resell, conduct a business to or dis- (dealer) after for the worse the franchisee goods, tribute services or franchises un- capital firm-spe has invested much of its agreement including, der a contract but design, promotion, training, cific and other to, any payment limited such for features. Once the dealеr is locked into goods or services. supplier, supplier may seek to ex 2—2.5—1(i).The statute ex § 23— Ind.Code quasi- an call a tract what economist would pressly states that franchise fees do not Supply rent.” Fleet Wholesale v. Rem purchase pur “the or include (7th Co., 1095, 846 F.2d 1097 ington Arms at a bona fide goods chase wholesale Cir.1988). The reason for the franchise fee 1(i)(3). price.” ad Id. requirement, light, in this is to insure that pay it did not a direct franchise mits that only those that have made a firm- entities fee, paid that it indirect fees but maintains protected under the specific investment are by way payments training, payments of for laws; is no invest franchise where there inventory, and ordinary to maintain excess ment, inequality of bar- expenses. there is no fear of business 136 Wright-Moore’s alleged Wright-Moore’s al- third franchise Id.
gaining power. must, ordinary show evidence leged simply expenses. fees fee is business in the Ricoh investment of unrecoverable We noted in Mainte Communications distributorship. Motorola, Inc., nance, Inc. v. 761 F.2d Cir.1985), 1202, n. 1206 3 business alleged first fee was given by expenses the form a discount ad inventory. Courts and of excess cost or it is goods ex the franchisee on services that have considered ministrative bodies held inventory requirements required to tender to the franchisor would cess inventory can required excess costs an indirect franchise fee. constitute fee, agree. and we a franchise constitute Nevertheless, expenses unless the result statute, example, the Illinois franchise For an unrecoverable investment fran to Indiana’s stat almost identical which is chisor, normally they con should ute, interpreting the regulations contains a The bona fide wholesale sidered fee. franchise fees. 121V2 definition of Illinois addition, price exception this. confirms 1703(14). regula These § Ill.Rev.Stat. language the statute indicates that inventory, explicitly include excess tions ordinary expenses may not be in business ... “an indirect franchise fee stating that The defines a fran direct fees. statute fide present despite the bona wholesale right fee to do paid chise fee as a for buyer is price exceptions if the or retail business, paid during not as fees the course goods a so quantity of required purchase (i); 23—2—2.5—1see business. § goods may that such unreasonably large Marketing v. also RJM Sales & Banfi time.” not be resold within reasonable F.Supp. Corp., Products Ill.Adm.Code, II 200.108. Minne Ch. (D.Minn.1982)(ordinary expenses business with Illinois excess agree sota courts fees). not franchise a franchise fee. inventory constitute can T System, Inc. v. T & American Parts See alleged The on each of these evidence Automotive, Inc., Bus. Franchise point litigation. is unclear at this fees ¶ 8262 (CCH) (Minn.App.1984); see Guide conflicting example, For there is evidence Corp., 737 F.2d also Schultz Onan the amount about whether Cir.1984). (3rd purpose 346-47 required purchase was excessive. that, depend indicates requirement fee also Similarly, conflicting there is evidence case, particular ing on facts invest training the nature and extent about inventory may constitute ments in excess program nothing almost know If, example, for indirect franchise fee. an expenses. ordinary business about liquid inventory were not the excess very specific Each of these matters is fact pre franchisor could that the were such judgment and calls based on individ- (perhaps pre being liquid vent from ual of each case. We con- circumstances claiming it is an venting the franchise from clude, court, that summa- as did the district dealer), then the excess invento authorized ry appropriate on the judgment was not fee. A ry might be a franchise normal was a fran- issue whether however, enough cre is not quota, sales chisee. fide fee because of the bona ate price exception. quantity wholesale *9 unreasonably large that goods must be so Distributorship Nonrenewal 3. illiquid.
it is
Agreement
training, Wright-
in
Costs incurred
23-2-2.7-1(7)
(8)
§§
Ind.Code
fee,
alleged
may, for the
Moore’s second
any provision in a fran
declare unlawful
reasons,
in
also result
an indirect
same
permits the fran
chise
Training
highly
can
firm-
franchise
be
fee.
be terminated or not renewed
chisee to
Ri-
specific. Technicians trained
service
faith.” The
good cause or in bad
“without
copiers may not be able
service other
coh
Wright-Moore did
district court found that
training
during
copiers.
incurred
Costs
to show
unrecoverable,
put forth sufficient evidence
may
substantial
be
in
bad faith.
into
franchisor.
nonrenewal
locking the franchise
court
found instead that
come
conclusion;
to its
were a jury to
nonrenewal
based
economicreasons
conclude that Ricoh terminated Wright-
Ricoh,
internal
which the
court held was
faith,
Moore in bad
the district court would
good
compliance
cause
with Ind.Code
compelled
grant
a directed verdict.
23-2-2.7-1(7). The district court
§
also
court,
The district
after an extensive re-
Wright-Moore
found that
was not discrimi-
evidence,
view of the
concluded that Ricoh
against
nated
violation of terminated
to implement
23-2-2.7-2(5) because none of
§
Ricoh’s na-
thought
what it
was a more effective mar-
tional distributors were renewed and conse- keting plan,
agree.
and we
quently Wright-Moore cannot show treat- Wright-Moore also argues that the dis-
ment different from similarly situated fran-
trict court erred in holding that termination
chises.
contests these con-
for the franchisor’s own economic reasons
clusions.
good
constitutes
cause. The statute de-
Wright-Moore argues put
it has
good
fines
cause to
any material
“include[ ]
forth sufficient evidence of a vendetta be- violation of the
agreement.”
franchise
Ind.
tween executives of Ricoh and Jack
23-2-2.7-1(7).
There is no
evidence
Code
Wright,
president
of Wright-Moore, for
that Wright-Moore breached the franchise
jury
to conclude that
faith
bad
motivated
agreement, so Ricoh’s actions did not fall
its nonrenewal.
Specifically, Wright-
plain
within the
terms of the statute. Good
Moore
largely
relies
aon
claim that Ed-
cause, however
is defined to include
Kane,
ward
the eastern zone manager for
breach of the
agreement.
Ricoh,
(albeit
testified
under a
ob-
hearsay
language of the statute does not indicate
jection) that Ricoh’s
manag-
national sales
that it is limited to
question
breach. The
er,
Johnson,
Bill
had a personal
dislike
good
whether
cause also includes termi-
Wright.
Jack
We believe that this evidence nation for the
benefit
franchisor’s
is insufficient to
survive motion for sum- balance sheet.
mary judgment.
inquiry
Our
under Rule
Indiana courts
yet
considered
56 is
inquiry
“the threshold
of determining
believe,
however,
issue. We
that the
whether there is the need for a trial—
language and structure of
the Indiana
whether,
words,
in other
there are
along
guidance
provided
by inter-
genuine factual issues
properly
can be
pretation of franchise
states,
laws in other
only by
resolved
finder
fact because
compel a conclusion that the internal eco-
they
reasonably
may
be resolved
favor
nomic reasons of the
not,
franchisor
are
party.”
either
Liberty
Anderson v.
themselves, good cause for termination or
Inc.,
Lobby,
242,
477 U.S.
106 S.Ct.
of a
nonrenewal
Primarily,
franchise.
Ri-
(1986).
138 are of the violations material business plausible a claim always virtually termination. for legal cause a smok- sole Without the for termination. reason in- good cause impos- says that difficult, simply if not be statute ing gun, it agree- par- a of the that prove violations to material franchisee sible, a cludes for inter- type of business the example of not is an But as action ticular ment. suggested mind, Ricoh's this had franchisor. legislature the of the ests that cause therefore, franchisors allow would, limited to may reading the statute that indicates very franchisees, the from rents of to extract performance the with problems other pre- designed are the statutes behavior internal reasons Economic franchisee. the vent. pattern; fit this do not franchisor the the deci the do with supported nothing to reasoning is have they generally This Phar Kealey In courts. franchisee. the of several of sions performance Services, Inc. v. Wal Car macy & Home inter- been statutes franchise Other Cir.1985), we (7th F.2d 345 Co., 761 green Distrib- In Solman manner. in this preted all its termination Walgreen’s that held Corp., 888 v. Brown-Forman Inc. utors with replacement and franchises Wisconsin Cir- Cir.1989), the First (1st 170, 172 F.2d supported not stores Walgreen-owned fran- of the reasons that business held cuit busi had valid Walgreеn by good cause. the under good cause not were chisor Never change. make ness reasons exam- The court statute. franchise Maine Walgreen that because theless, held franchising Maine the structure the ined estab good the will appropriate intended to franchisor’s the that to determine statute be franchisees, Walgreen’s by the lished termi- for cause not needs ec business and opportunistic havior Remus, F.2d 794 Similarly, in suffi not were nation. alone justifications onomic the Co., structure of 1240, Oil we examined v. Amoco Remus also cient. See good Cir.1986) (good that to find (7th Wisconsin 1241 cause good F.2d 794 fran omissions with the errors to faults limited limited is is cause cause Sys., Business the statute Philips v. held that chisee); We Carlos the franchisee. aff'd, (E.D.N.Y.1983), 776 “tenure” where F.Supp. a kind dealers gave (restructuring Cir.1983) (2nd omis- F.2d 1432 only errors “refers cause good it place as market “address designed to dealer.” Id. sions under cause good not today” is exists on American relied court The district act); Mo General Jersey franchise New Sons, & Seagram E. Joseph Corp. v. Mart Sales, 711 Truck GMC Corp. v. Gallo tors Cir.1987) (per 733, 734 Inc., F.2d (“It is a violation (D.N.J.1989) F.Supp. 810 In American holding. curiam) its for Act, Jersey [] franchise] of the [New Sea- that held Circuit Mart, the Ninth other reason a franchise cancel mar- new, nationwide a adoption of gram’s breach substantial franchisee’s than its termination keting plan justified ...”). that on the basis franchises Nevada of the addition, the structure compelling were warranted terminations refers good cause indicates statute a and constituted considerations business performance problems only Mart American judgment. business valid 23-2-2.7-1(7) and Sections franchisee. cases, as majority of contrary to the is with- or nonrenewal termination (8)prohibit any rea- provide not above, and does cited violations list material cause good out extent holding. To soning for its example as an franchise it holding, we find contrary to our is the stat- language of cause. good unpersuasive.4 say does inclusive; the statute is ute fran- where special situation Foods, with the deals Country Pride & Medina 4. In Medina the market. from completely withdraws chisor Cir.1988), (1st case LTD., F.2d 817 is small unique there because court, This situation the district party either cited acting opportunis- franchisor that the Court, chance certified Supreme Puerto Rican withdrawing from completely tically when Circuit, held the First question from require statutes franchise Since market. not vio- did the market from withdrawal faith carry little dealing withdrаwals market fair Medina act. Rican Puerto late *11 sum, parate that the structure of among we believe treatment similarly situated statute, policies and the behind individuals or entities.” Id. law, are sufficient to determine that The evidence does support Wright- not under Indiana economic reasons inter- Moore’s claim. Most of the evidence relied nal to the franchisor are not sufficient by Wright-Moore is the same evidence good requirement. meet cause argued supported that it its claim of bad pro- is to purpose of franchise statute above, faith termination. As we noted franchisee, suggested and Ricoh’s tect evidence was insufficient to create a mate- reading contrary is to this statute rial issue respect of fact with to bad faith. nullify purpose effectively importantly, More Wright-Moore admits statute. The structure of the statute fur- only that it true national distribu- supports recognize ther this result. We tor; all the other so-called national distribu- Ricoh’s concern that this decision makes only operated regions tors in smaller to terminate not the business decision is, country. therefore, There no similarly a franchise that not renew breached situated Finally, distributor. if even all the expen- the franchise much more so-called national distributors are con- sive, but this concern is addressed to best situated, similarly sidered none of them legislature. the Indiana were renewed. strong This is evidence there was no discrimination. While Finally, with to the Indiana one of the national distributors became a laws, Wright-Moore claims that regional distributor, this is not sufficient unfairly against it was discriminated in vio against Wright- evidence of discrimination 23-2-2.7-2(5) lation of Ind.Code § Moore; it shows grant that failure to re- prohibits “discriminating unfairly among franchisees_” gional distributorships was the rule rather It claims that there ... exception. than the We conclude that were four national distributors and while there is no issue of material fact re- with terminated; all were at least one was of- spect to discrimination and Ricoh was enti- regional distributorship a after its fered summary tled to judgment on this count. as a national distributor. This termination evidence, however, support does not B. Contract Claims of discrimination. “Discrimination claim among franchisees means that between raises two contract franchisees, claims, involving agreement. and under two or more similar both the letter conditions, marketing argues financial and First it similar Ricoh breached- the engaged in a franchisor less favorable terms of the letter when it uni- laterally changed towards the discriminatee than treatment terms of credit. Sec- ond, argues provide towards other franchisees.”5 it failed to Canada Co., “price protection” by F.2d Dry Beverage preserving v. Nehi (7th Cir.1983). “Thus, proof margin of discrim- discount over oth- requires arbitrary showing ination dis- er The district court held that distributors. dealing, requirement chance of unfair courts have con- 5. It should be cautioned that the good similarly party carry market constitute situated does not over to sidered withdrawals to Remus, prohib- position cause. This is reflected in all areas of law where discrimination is 1240-41, example, minority employee where we the Wiscon- ited. who is F.2d held that For only minority statute allows termination based on terminated because of status is dis- sin yet specifical- against behavior of the franchisee and criminated even when there is no sim- ly question ilarly person. pro- discrimination reserved the of whether market situated statute, however, Medina, good cause. is vision in this makes it withdrawal unlaw- unfairly directly relevant to the issue before us. Ri- ful the franchisor to "discriminat[e] market; among coh did not withdraw from the it sim- franchisees ...” facts, 23-2-2.7-2(5). language ply changed systems. distribution On its This indicates the Kealеy, necessity similarly our case closer to 761 F.2d at of a situated franchisee. The minority employee Walgreen attempted replace analogous where its fran- to a lone situation stores, Walgreen-owned single for an chisee with than it is to is where a franchise is terminated and this situation falls under Medina. Market withdrawal is not before us unlawful reason requirement. and we leave this issue for another case. cause *12 Co., change unilaterally (Ind.App.1984). power to N.E.2d Ricoh had the togeth- under the distributor- The documents here should be read of credit the terms cursory con- er agreement, which determined under Goeke and because the ship agree- protection” in “price of the letter use of the term the interpretation trols the agreement re- ment, protection did not letter indicates that its defini- price that Wright-Moore’s preserve parties’ tion is contained elsewhere the quire Ricoh required agreements. case, only Ricoh various this Article margin, rather but 2(b) selling copiers anyone provides price protection merely else that refrain from price. that no one else receives a lower insures at a lower price, Wright-Moore’s margin not that the unilaterаl With protected. the had parties If desired to terms, not change credit we need in the protect margin, Wright-Moore’s it would agree issue of whether the letter reach the Instead, simple say have been so. noth- controlled clause ment is ing gives any agreement in the letter indi- permitting uni distributorship agreement distributorship of this intent and the cation modification, of which was basis lateral agreement specified protection price, of not holding. fran the district court’s margin. Wright-Moore put has not forth it unlawful for a makes contract chise law any party evidence that was offered low- modification of to allow “substantial price, summary judgment appro- er so agreement by the franchisor priate. writing of the fran without the consent Wright-Moore’s only argument against 23-2-2.7-1(3). dis chisee” practices past this of lawfully conclusion that not tributorship agreement could parties indicate a different intent. changes in the allow contract. substantial face, When the clear on its that the modification was Ricoh contends parties, reach is, however, need not the intent mixed This not substantial. case, any past practices but in do not and law and there is no question of fact Wright-Moore reveal a different intent. in the record on this issue. Sum evidence claims that Ricoh once offered other dis- judgment, appro was not mary price tributors a in the form of a break this respect to contract claim.6 priate with whereby they pur- “baker’s dozen” could Wright-Moore’s second contract price chase thirteen machines summary judgment. not survive claim does Wright-Moore twelve. was also offered agreement simply provides that letter deal, though this had even the deal provide [Wright-Moore] with Ricoh “will price that lowered the below offered to 1,200 protection” purchase on the price and, therefore, would not is not defined in copiers. protection Price price protection have caused the clause to agreement, but it is defined the letter operate. preserve While action did distributorship agree accompanying margin, there is evi- no 2(b) distributorship ment. Article required by that dence this action was or Ricoh agreement provides that lowers “[i]f triggered by price protection clause. product days within 60 price no There is also this was the evidence an order from distributor acceptance exception. practice usual rather than an price shall product, such lower for that summary judgment We conclude that apply previously accepted order.” to that appropriate price protection on the claim. Indiana, noted, As the district court writings executed at the same “[w]hen Estoppel C. and Fraud same time and relate to the transaction matter, they must to claims that subject be construed renewing determining estopped ...” must be from not gether in contract representations Trust contract based on its Merchants Nat’l Bank & Goeke v. agreed analyze remaining applies law 6. We this or the assume that Indiana do purposes appeal. claims under New York for the these claims alleges applies and Ricoh would be renewed absent operation. their We recently noted *13 poor performance by Wright-Moore. Spe- that Indiana courts have abrogated never cifically, Wright-Moore alleges that Ri- agreement written based on prom- an oral representatives coh’s informed it on numer- ise prior made to the written agreement, plaintiff's ous occasions “that distributor- Henry Vickers v. County Savings & Loan ship long plaintiff would be renewed as as Ass’n, 228, (7th Cir.1987), 827 F.2d 233 and purchase met requirements its minimum none of the casеs by Wright-Moore cited and obligations fulfilled financial to Ri- support doing our so now. There is no coh, and that defendant terminated dealer evidence contradict these facts and con- or only poor per- distributor contracts sequently, summary judgment appro- was formance.” maintains that priately granted on the estoppel count. promises representa- it “relied on those and tions and that therefore the defendant Wright-Moore also raises two fraud equitably estopped must be deny claims, one based on Indiana common law binding promises nature of its repre- and the other based on the Indiana fran sentations.” chise statutes. Wright-Moore claims that Ricoh misrepresented its intent to renew Under Indiana following “the ele agreement when it made statements ments must equitable exist to constitute agreement that the would be renewed estoppel: there ab representa must be a false poor performance. sent respect tion or With concealment of material facts made claim, the common knowledge facts; Supreme represen Court tation must of Indiana has have been made with the inten stated that “actionable tion that it should fraud upon; party predicated be acted cannot be upon promise representation to whom the thing future, was made to do a although there knowledge must have been may without or the be no fulfilling intention of prom knowledge means of the real Blewett, 151, [to ise.” obtain] Sachs 206 Ind. 185 facts; party and that must have relied on 856, (1933). N.E. 858 We have noted that representation prejudice.” to its War “it long been the law Indiana that an Bank, ner v. Riddell Nat’l 482 N.E.2d action upon for fraud cannot prom based (Ind.App.1985). inquiry “The real performed ises to be in the future.” instances, then, most is whether the com Vaughn v. General Corp., Foods 797 F.2d plaining party acted reasonably when he 1403, Cir.1986)(citations omitted). relied on estop those he now seeks to rath It is clear that Wright-Moore’s claim of employing er than some other means to common law fraud cannot survive because obtain the information.” Azar’s v. United alleges promise it to act. Serv., Postal 777 F.2d States (7th Cir.1985). statutory fraud claim fairs no better. Indiana has defined Wright- The district court held that fraud to any misrepresentation “include[] reasonably relying Moore did not act when any fact, manner of a material any statements, [or] alleged on Ricoh’s and we promise representation prediction оr as agree. agreement was specifically for to the honestly good future not made inor year; one had Ricoh longer intended a term provision faith....” While the state fraud agreement, it provided could have been for. actions, Moreover, does cover statements about future contained an inte- and while there is evidence in the gration provided clause record which that Ricoh prediction, was did make a false “intended to be the full and prediction there complete obligations statement of the is no evidence that the was parties relating not in faith at time subject to the matter” it was made. “supercede[d] previous agreements, all This is an essential element of the claim on understandings, negotiations proposals has failed to submit agreement.” Moreover, as to evidence. noted above claim, not a novice the business estoppel world and was with to the there or should have been familiar with contracts was no reasonable reliance on this state- interpreta- judicial any significant Ri- on reliance reasonable Without ment. must courts. from cannot tion statements, Wright-Moore coh’s analytical tools Summary turn therefore damaged. it was shоw pieces bits and on statutory precise far less appropriate —reliance
judgment analogous case language, statutory claim. fraud pro- jurisdictions, other from III. district States of United nouncements *14 Indiana. of State sitting in the proceedings for judges is remanded The case opinion.7 this with consistent tools legitimate these devices All of dealing task of the with faced jurist the of dissenting. Judge, RIPPLE, Circuit ambi- legislative of hole black the with in undertakes court the task that The only the Indeed, they are often guity. At one. difficult a most is indeed case this However, they do available. tools Indiana the litigation are of this heart the of re- perils infirmities. their distinct been that has legislation franchise laws— statutory lan- pieces of and on bits lying by interpretation relevant little to subject moorings in the their from cut adrift guage scheme statutory This courts. Indiana the little elab- need and known are well statute It Indiana. of the to State important is the analogy to Reasoning here. oration affirmative- choices policy crucial embodies is jurisdictions in other developed case law to effort in an legislature by the ly made know not whether dowe because perilous the in sense makes way that balance, ain policy same the made jurisdictions those Indiana, the life of social commercial Indiana.1 as did choices the contracts into enter to freedom signifi- give to certainly appropriate It fran- the of practices the regulate to need colleagues of our views weight to the cant of task undertaking the In industry. chise PPG See in Indiana. bench district on the de- resolves court appeal, the deciding this 820, 823 Russell, 887 F.2d Indus., v. Inc. statutory interpre- issues of finitively two remember, how- must Cir.1989). We (7th the Indiana (1) whether tation: to amounts practice this ever, times of law choice the recognize laws For reasons leading the blind. blind the “good contract; (2) whether in the clause not has me, Indiana to entirely clear only not refers statutory scheme cause” the within courts district federal given of the performance the with problems of questions certify power the state ques- to both respect With franchisee. and, conse- courts the Indiana state have, never itas does tions, court the do must those courts of judges the law, quently, the with it deals when assistance.2 such they can without the best does Nor history. legislative of assistance way states the other as same policy matters change of cross-appeal’s not reaсh do 7. We pur- Congress for by the grouped together by the court considered was not claim. venue be We must administering federal law. pose for considered appropriately is not below on analo- dependence addition, permit our light of not to careful appeal. on time the first a "law interpretation to result Wright-Moore's gous sources remand, reach do not we our of state respect a matter with circuit” damage of the claim. punitive Telecasting Corp., Chang Michiana v. See law. reasoning matter, process of practical 1. As certify Cir.1990) (“We (7th 1085, 1087 900 F.2d overdependence is flawed by analogy often apply is we 'the law ensure questions to within jurisdictions of other court’s a federal and not state genuinely quite natural overdependence This circuit. ”) ought hold.' judges state what perception of familiar judges are more circuit because Inc., 860 F.2d Carey Canada (quoting Covalt their within states the other the law supplied Cir.1988)) (emphasis that, acknowledge However, must circuit. court). Covalt Supreme the Illinois Schaefer Justice us, "[tjhere ele- is no pointedly reminded Court (providing stat- § 33-2-4-1 Ann. 2. See judicial cir- sovereignty a federal ment of Court Supreme utory authorization Conflicts, 69 Schaefer, Reducing Circuit cuit.” questions from certified to answer 1983). simply an It is (April J. A.B.A. States, any United United of the Supreme Court judi- federal subdivision administrative court of appeals, court circuit States see need circuit ciary. A state within gives majority appears recognize independent the haz- us responsibility for the pronouncements depending ards of on the adjudication properly of cases within our judges under these circumstanc- of district diversity jurisdiction. Moreover, we must because, relying es while on such a method- respectful of the workload of our col- respect ology with to the choice law leagues in Nevertheless, the state courts. question (despite uncertainty as to how despite considerations, these we must bal- judges all the district who have ruled on ance these against concerns the manifest the matter would decide the issue before concern of Indiana that it be allowed to us),3 majority pointedly declines to fol- develop jurisprudence. its own good A interpretation low the district court’s starting point in striking that balance statute with cause ter- identify would be to those areas of state argument. mination jurisprudence where particular there is a If the court used all thе had tools at its need or manifest state interest control- that, disposal, might one have to conclude ling development of the law. We also *15 calls, while issues indeed close ought attempt identify those areas court had done all that it could very where the litigation nature of the However, materials hand. unlike our makes it evident that a number of the colleagues court, in the district we can do cases brought will be in the federal courts Indeed, very signs more. there are clear where, unless certification is used to Indiana, and, legislature issues, major courts, resolve the federal passage their of a constitutional amend- simply by forum, virtue of the choice of ment, Indiana, people like us monopoly will have a virtual over the devel- By separate provisions to do more. two of opment of the law that field.6 When very Indiana has made it clear that it present, these two concerns are there is an ambiguities much cares that in the law of especially good case for certification. regular the state be clarified on a basis supreme legis- court of the state. The Such a situation present exists permits lature has enacted a statute that dealing case. Wе are not here with some certify controlling question court to esoteric, nonrecurring question of common Supreme of state law to the Court Rather, law. dealing we are with the inter- recently, Indiana.4 More the constitution pretation statutory of a scheme enacted of the state has been amended to ensure legislature impor- the state to deal with an Supreme Court Indiana has tant area of commerce that has been the per- own sufficient control of its docket to scene in modern of times of much abuse spend clarify mit it to the time needed to the need where for a careful balance important points litiga- of state law civil govern- between freedom of contract and tion.5 regulation particularly mental acute. course, very is also an area where the nature of Of we cannot—and indeed should every litigation involving certify issue on which there is national —often not— all, ambiguity. sig- After the constitution some franchisors and local franchisees and Columbia, appeals omitting appellate jurisdiction Supreme of the District of but of the Court of any reference to the United States district Indiana extended to criminal cases in which a courts); greаter imposed; Appellate years Indiana Rule of Procedure sentence of than ten 15(0) scope (incorporating statutory the section as amended reduces the authoriza- tion). appellate jurisdiction in which a to cases sen- greater fifty years imposed. tence of than 133, p. supra, cases cited 3. See note 1. To Inc., Carey Covalt v. Canada 860 F.2d 6.Cf. differing degree these cases exhibit views 1988) (issue concerning Cir. the inter Indiana, among judges the district the case “discovery play between a rule" of limitations stronger. for certification is indeed for disease based tort actions and Indiana’s ten year repose to the statute of was certified supra 4. 2. See note Supreme Court in a situation where the litigation in Indiana had been law of asbestos (West diversity Supp.1989) developed exclusively through Ind. art. federal 5. See Const. section, (before cases). the 1988 amendment to this diversi- money amounts nificant —makes these Under probable. quite jurisdiction ty control- circumstances, certification view, appro- is, my of law ling points respectfully I Accordingly, course.
priate dissent. WESTERN NORTH &
CHICAGO COMPANY, TRANSPORTATION Cross-Appellant, Plaintiff-Appellee, AS- EXECUTIVES’ LABOR RAILWAY Defendants-Appel- al., SOCIATION, et Cross-Appellees. lants, 89-3265, 89-3436.
Nos. *16 Appeals, Court States United Circuit. Seventh 12, 1990. Argued June July 1990. Decided Denied En Banc Rehearing Rehearing and Aug. 1990.