American Honda Motor Co., Inc. v. Bernardi's, Inc

In American Honda Motor Co., Inc. v. Bernardi's, Inc., 432 Mass 425, 735 NE2d 348 (2000), Massachusetts' highest court held that a challenge to a proposed new dealership was governed exclusively by the specific statute covering motor vehicle franchises. The statute limited protests to those where the proposed new dealership would fall within an existing dealer's "relevant market area." Specifically, American Honda involved two Massachusetts statutes. Former Mass Gen Laws ch 93B, 4 (3) (l) proscribed the improper granting of "a franchise . . . with an additional franchisee who intends or would be required by such franchise or selling agreement to conduct its dealership operations from a place of business situated within the relevant market area of an existing franchisee or franchisees representing the same line make." Pursuant to the procedures set forth in former Mass Gen Laws ch 93B, 4 (3) (l), an existing dealer may protest the addition of a new dealership as improper, but may only do so if the proposed new dealership is within its "relevant market area." The other statute implicated in American Honda, which was the basis of the dealer's counterclaim, was former Mass Gen Laws ch 93B, 4 (1). That statutory guideline provides that it "shall be deemed a violation . . . 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." (Id.) The Supreme Judicial Court of Massachusetts held that the sole statutory provision under which dealers could seek relief from the establishment of a prospective new dealership selling vehicles of same line make was the specific provision dealing with the establishment of a new dealership within that dealer's relevant market area. In reaching this conclusion, the court reasoned as follows: "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.' 'Section 4 (3) (l) 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.' What cannot be lost when examining the statute's purpose, however, is the fact that in addition to governing 'the relations among manufacturers, distributors, and dealers,' c. 93B also applies to certain 'transactions between dealers and the public,' and thus, also serves to protect the public. 'While the public and existing dealers share common interests in making sure that the existing dealers are not put out of business by unfair competition and that a stable group of dealers is able to provide sales and service on a continuing basis, the existing dealers' interests and the public's interests are frequently at odds. Public interest will favor increased competition in most circumstances, where the existing dealers' interests may be opposite.' General Laws c. 93B, 4 (3) (l), strikes a balance between those competing interests by affording existing dealers some protection from competition (within a dealer's 'relevant market area' if the proposed new dealership is found to be 'arbitrary' under G.L. c. 93B, 4 3 l), and by likely yielding choices for consumers . . . as a result of not shielding dealers from all competition. . . . "Dealer's avenue to challenge the establishment of a prospective new dealership. We next consider whether G.L. c. 93B, 4 (3) (l), 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. In that case, the dealers alleged that Honda proposed the new dealership to retaliate against them for their involvement in other litigation against Honda.