WEST PALM BEACH, Fla. (CN) - A Porsche distributer may have acted unfairly when it added a new dealership while refusing to increase its top dealer's inventory, a federal judge ruled.
Based in Broward County, Fla., Copans Motor Inc. dba Champion Porsche said in its complaint that it is the German automotive company's largest dealer and has sold more Porsches since 1988 than any other dealer in the country.
Rather than grant Champion's request for more inventory, Porsche Cars North America allegedly informed the dealership on Sept. 5, 2013, that it planned to add a new dealer in Broward.
When Champion attended a dealers meeting a few weeks later, it took pictures of new Porsche models from presentation slides.
The U.S.-based Porsche distributor saw those images on a third-party website and sued the dealership in November for misappropriation, announcing that it would terminate the franchise.
Champion countered with the federal complaint at issue, claiming that Porsche violated Florida Automobile Dealers Act when it added the new Penske dealership.
Although Porsche denied Champion's request to increase its inventory, it planned to provide the Penske dealership at least 900 new cars to sell, according to the complaint. Penske would thus allegedly take vehicles or customers from Champion, since the older dealer has insufficient inventory to serve its own customers.
Porsche argued that Champion did not protest Porsche's notice of the new dealer and therefore has no remedy of law.
U.S. District Judge Daniel Hurley dismissed several claims with prejudice Wednesday.
"Under Champion's argument, in any saturated market, despite business considerations such as expanding consumer access, any decision to distribute a car to one dealer and not to another is unfair, as every car one dealer sells is a car that the other dealer could have sold," the 15-page opinion states. "So, even if a manufacturer sought to distribute vehicles in equal amounts to two dealers, or in any other equitable distribution, such a distribution would be unfair, as each would sell a vehicle the other could have sold. For Champion, then, to be fair is to be unfair."
Hurley did, however, advance Champion's claim under the Florida Deceptive Unfair Trade Practices Act with regard to the millions Champion allegedly spent in dealership improvements. Likewise Champion may have a FDUTPA claim over Porsche's denial to increase its inventory while intending to add a new dealer.
But Champion misread its dealership agreement in thinking that it barred the creation of a new dealership since that development is detrimental to it.
"Even assuming Champion's reading, the franchise agreement permits Porsche to add dealerships, regardless of the detriment to Champion," Hurley wrote. "Therefore, the general provision prohibiting conduct detrimental to Porsche is superseded by the special provision permitting Porsche to add dealerships."
This analysis also neutralizes Champion's bad-faith claim, the court found. CORRECTION: The original version of this article incorrectly stated that Porsche terminated Champion's franchise agreement and that Champion is an ex-dealer. The court ruling that is the basis for this article shows only that Porsche "notified Champion it would terminate its franchise," with no showing that such termination occurred. Courthouse News regrets the error. Champion's attorney, A. Edward Quinton III with Quinton & Paretti, clarified in a June 18 email that "Champion Porsche is currently a Porsche franchised dealer and PCNA continues to acknowledge and conduct business with Champion pursuant to the franchise agreement and the parties continue their franchise relationship with Champion Porsche continuing to be the top new Porsche sales dealer in the country." Quinton noted that his client is legally "contesting PCNA's attempt to terminate Champion's franchise agreement and no rulings have been made by the court on these issues."