# NEW JERSEY COALITION OF AUTOMOTIVE RETAILERS, INC. v. MAZDA MOTOR OF AMERICA, INC.

> District Court, D. New Jersey · July 30, 2019

URL: https://www.frixlaw.com/law-library/cases/10266512

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** July 30, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10266512

## How later opinions describe it (automated extraction)

- holding that dismissal under Rule 12(b)(1) would be “unusual” when the facts necessary to succeed on the merits are at least in part the same as must be alleged or proven to withstand jurisdictional attacks

## Opinion text

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

____________________________________
:
NEW JERSEY COALITION OF :
AUTOMOTIVE RETAILERS, :
INC., a non-profit New Jersey Corporation, :
:
Plaintiff, :
v. : Civil Action No. 3:18-cv-14563-BRM-DEA
:
:
MAZDA MOTOR OF AMERICA, INC., :
: OPINION
Defendant. :
____________________________________:
MARTINOTTI, DISTRICT JUDGE
Before this Court is a Motion to Dismiss filed by Defendant Mazda Motor of America, Inc.
(“Mazda” or “Defendant”) seeking to dismiss Plaintiff New Jersey Coalition of Automotive
Retailers, Inc.’s (“NJ CAR” or “Plaintiff”) Complaint pursuant to Federal Rule of Civil Procedure
12(b)(1). (ECF No. 7.) NJ CAR filed an Opposition to Mazda’s Motion to Dismiss (ECF
No. 12) and Mazda filed a Reply Brief to NJ CAR’s Opposition to its Motion to Dismiss (ECF
No. 17). Also before this Court is NJ CAR’s Motion for Summary Judgment. (ECF No. 16.) Mazda
filed an Opposition to NJCAR’s Motion for Summary Judgment (ECF No. 25) and NJCAR filed
a Reply Brief to Mazda’s Opposition to its Summary Judgment Motion (ECF No. 26). Having
reviewed the submissions filed in connection with the motions and having declined to hold oral
argument pursuant to Federal Rule of Civil Procedure 78(b), for the reasons set forth below and
for good cause appearing, Mazda’s Motion to Dismiss is GRANTED and NJCAR’s Motion for
Summary Judgment is DENIED AS MOOT.
I. BACKGROUND
A. Factual Background
For the purposes of this Motion to Dismiss, the Court accepts the factual allegations in the
Amended Complaint as true and draws all inferences in the light most favorable to the plaintiff.
See Phillips v. Cty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008). Furthermore, the Court also

considers any “document integral to or explicitly relied upon in the complaint.” In re Burlington
Coat Factory Secs. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (quoting Shaw v. Dig. Equip. Corp.,
82 F.3d 1194, 1220 (1st Cir. 1996)).
NJ CAR is a trade association, the members of which are franchised new motor vehicle
dealers in New Jersey. (ECF No. 1 ¶ 1.) Among the services NJ CAR provides to its members are
education, training, and advocacy before the Legislative and Executive Branches of the New Jersey
state government. (Id. ¶ 2.) Occasionally, NJ CAR participates as an amicus curiae or as a party
in litigation concerning the interests of its members. (Id. ¶ 3.) Mazda is a California corporation
with its principal place of business in Irvine, California which has franchised 16 Mazda dealerships

in New Jersey that are members of NJ CAR. (Id. ¶¶ 4-5.)
Mazda creates price differentials between dealer-franchisees by “using incentive programs
which purport to reward dealers for achieving specified goals.” (Id. ¶ 12.) Dealers who achieve the
goals receive a payment for each vehicle the dealer sells, which in turn “reduces the cost of the
vehicle to the dealer in comparison to dealers who are unable to achieve the goal.” (Id.) NJCAR
alleges price differentials “adversely affect dealers who do not benefit from them,” as the “higher
per vehicle costs incurred by such dealerships put them at a disadvantage when competing for
customers over price.” (Id. ¶ 13.) This competitive disadvantage “affects a dealer’s sales, ability
to make a profit and viability.” (Id.) Price differentials therefore enable franchisors “to create
winners and losers,” force conduct by dealers that does not make financial sense, and ultimately
cause certain dealers to go out of business. (Id.) NJ CAR alleges the competitive advantage that
price differentials create for some of a franchisor’s dealers is “not based on the market efficiency
of the preferred dealers but on the cost advantage provided by the franchisors.” (Id. ¶ 14.)1 NJ
CAR contends that these price differential abuses prompted the New Jersey State Legislature to

ratify and amend the NJFPA. (Id. ¶¶ 15-20.)
In 2018, Mazda announced the introduction of the Mazda Brand Experience Program 2.0
(the “MBEP”). (Id. ¶ 21.) The MBEP went into effect on July 3, 2018. (Id.) Pursuant to the MBEP,
Mazda dealers can earn incentives – in the form of discounts or bonuses – for each vehicle a Mazda
dealer sells based on the dealer’s compliance with Mazda’s MBEP requirements. (Id. ¶ 22.) The
incentives can be as high as 6.5% of the Manufacturer’s Suggested Retail Price (“MSRP”) of a
vehicle depending on “the degree to which a dealer complies with Mazda’s MBEP requirements.”
(Id. ¶ 23.) Up to 4.5% of the incentive is based on “facilities and other requirements,” whereas up
to 2% of the incentive is based on Mazda’s calculation of “customer experience at the dealership.”

(Id.)
To qualify for the 4.5% facilities portion of the incentive, a dealer must have an exclusive

1 NJ CAR further alleges that:

It has been recognized on both the state and national levels that
artificial price advantages so created are contrary to the public
interest as they serve to reduce competition, adversely affect
competitors and ultimately result in higher prices for goods and
services. Additionally, any reduction in the number of motor vehicle
dealers resulting from the effects of price differentials has the further
effect of reducing consumer access to local, convenient access to
warranty and safety recall repairs contrary to the public interest.

(ECF No. 1 ¶ 14.)
Mazda facility which incorporates all Mazda required image elements, satisfies other “base
elements” required by Mazda, and employs a “dedicated, exclusive Mazda General Manager.” (Id.
¶ 25.) A dealer who satisfies all of the foregoing requirements but does not retain a “dedicated,
exclusive Mazda General Manager” forfeits 1.7% of the incentive. (Id. ¶ 26.) Dealers with
exclusive facilities that lack all Mazda image elements forfeit another 1.8% of the incentive and

“dualled dealers” – facilities that include another brand – forfeit the entire 4.5%. (Id.) The 2%
incentive for “Customer Experience” is an “all or nothing incentive” whereby some dealers receive
a 2% incentive – in the form of a discount or a bonus – per vehicle sold based on their compliance
with the “Customer Experience” criteria whereas other do not. (Id. ¶ 27.)2
NJ CAR contends the MBEP violates the terms of the NJFPA on its face as: (1) it results
in vehicle price differentials among dealers through incentives in different amounts paid for each
vehicle, in violation of N.J.S.A. 56:10-7.4(h); (2) it denies a per-vehicle incentive benefit to dealers
with dualled facilities, in violation of N.J.S.A. 56:10-7.4(j); and (3) it denies a per-vehicle
incentive to dealers who do not provide Mazda with exclusive, image compliant facilities despite

the fact that Mazda has presented its dealers with no evidence that the cost of such facilities can
be financially justified, in violation of N.J.S.A. 56:10-7.4(l). (ECF No. 1 ¶ 28.) The Complaint
asserts two causes of action pursuant to the alleged violations of the NJFPA, seeking a declaratory
judgment and injunctive relief, respectively. (Id. at 11-12.)

2 In sum, Mazda dealers have the potential to earn the following incentives: “Retail Evolution”
dealers may earn up to a 6.5% of MSRP per vehicle sold; Mazda exclusive dealers may earn up to
4.8% of MSRP per vehicle sold; exclusive showroom dealers may earn up to 3.0% of MSRP per
vehicle sold; and dual dealers may earn up to 2.0% of MSRP per vehicle sold. (ECF No. 1 ¶ 20;
ECF No. 1, Ex. B.)
B. Procedural History
On October 2, 2018, NJ CAR filed the Complaint against Mazda seeking a declaratory
judgment and injunctive relief asserting causes of action for violations of the NJFPA. (ECF No.
1.) On November 8, 2018, Mazda filed a Motion to Dismiss the Complaint for lack of standing
pursuant to Federal Rule of Civil Procedure 12(b)(1). (ECF No. 7.) On December 3, 2018, NJ CAR

filed an Opposition to Mazda’s Motion to Dismiss (ECF No. 12) and on December 17, 2018,
Mazda filed a Reply Brief to NJ CAR’s Opposition to its Motion to Dismiss (ECF No. 17).
On December 14, 2018, NJ CAR filed a Motion for Summary Judgment seeking a
declaratory judgment in its favor and enjoining Mazda from implementing the MBEP in New
Jersey. (ECF No. 16.) On January 22, 2019, Mazda filed an Opposition to NJ CAR’s Motion for
Summary Judgment (ECF No. 25) and on February 11, 2019, NJ CAR filed a Reply Brief to
Mazda’s Opposition to its Summary Judgment Motion (ECF No. 26).
II. LEGAL STANDARD
A. Rule 12(b)(1) Standard

“A challenge to subject matter jurisdiction under Rule 12(b)(1) may be either a facial or a
factual attack.” Davis, 824 F.3d at 346. A facial attack “challenges the subject matter jurisdiction
without disputing the facts alleged in the complaint, and it requires the court to ‘consider the
allegations of the complaint as true.’” Id. (citing Petruska v. Gannon Univ., 462 F.3d 294, 302 n.3
(3d Cir. 2006)). A factual attack, on the other hand, “attacks the factual allegations underlying the
complaint’s assertion of jurisdiction, either through the filing of an answer or ‘otherwise
present[ing] competing facts.’” Id. (quoting Constitution Party of Pa. v. Aichele, 757 F.3d 347,
358 (3d Cir. 2014)). A “factual challenge allows a court [to] weigh and consider evidence outside
the pleadings.” Id. (citation omitted). Thus, when a factual challenge is made, “no presumptive
truthfulness attaches to [the] plaintiff’s allegations . . . .” Id. (citing Mortensen v. First Fed. Sav.
& Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977)). Rather, “the plaintiff will have the burden of
proof that jurisdiction does in fact exist,” and the court “is free to weigh the evidence and satisfy
itself as to the existence of its power to hear the case.” Id.
The Third Circuit has “repeatedly cautioned against allowing a Rule 12(b)(1) motion to

dismiss for lack of subject matter jurisdiction to be turned into an attack on the merits.” Davis, 824
F.3d at 348-49 (collecting cases). “[D]ismissal for lack of jurisdiction is not appropriate merely
because the legal theory alleged is probably false, but only because the right claimed is ‘so
insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely
devoid of merit as not to involve a federal controversy.’” Id. at 350 (quoting Kulick v. Pocono
Downs Racing Ass’n, Inc., 816 F.2d 895, 899 (3d Cir. 1987)). “In this vein, when a case raises a
disputed factual issue that goes both to the merits and jurisdiction, district courts must ‘demand
less in the way of jurisdictional proof than would be appropriate at a trial stage.’” Id. (citing
Mortensen, 549 F.2d at 892 (holding that dismissal under Rule 12(b)(1) would be “unusual” when

the facts necessary to succeed on the merits are at least in part the same as must be alleged or
proven to withstand jurisdictional attacks)). These cases make clear that “dismissal via a Rule
12(b)(1) factual challenge to standing should be granted sparingly.” Id.
III. DECISION
Mazda contends NJ CAR cannot satisfy the three-prong test established by the Supreme
Court for associational standing in Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343
(1977), and as such, this Court must dismiss the Complaint. (ECF No. 8 at 9-21.) Specifically,
Mazda argues there is no allegation of harm to an identified member of NJ CAR, there is an
inherent conflict of interest between the Mazda dealers in NJ CAR’s membership who are eligible
for MBEP payments and those who are not, and the claims asserted in the Complaint require
individual participation thereby vitiating associational standing. (Id.) NJ CAR argues that it
possesses standing to maintain this suit as, inter alia, NJ CAR members have standing to sue in
their own right and the interests NJ CAR seeks to protect are germane to the organization’s
purpose. (ECF No. 12 at 18-29.)

A trade association has standing to sue on behalf of its members when: “(a) its members
would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are
germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested
requires the participation of individual members in the lawsuit.” Hunt, 432 U.S. at 343.
Furthermore, “whether an association has standing to invoke the court’s remedial powers on behalf
of its members depends in substantial measure on the nature of the relief sought.” Id. (quoting
Warth v. Seldin, 422 U.S. 490, 515 (1975)). In every case in which the Supreme Court has
recognized associational standing, the relief sough has been “a declaration, injunction, or some
other form of prospective relief.” Id. This Court addresses each prong of the Hunt test in turn.

A. Members’ Standing to Sue (First Hunt Factor)
Mazda argues NJ CAR individual members lack standing to sue as the Complaint makes
no specific allegation of harm suffered by any member of NJ CAR as a result of the MBEP. (ECF
No. 7 at 10-11.) NJ CAR contends its individual members have standing to sue as, among other
reasons, the “violation of NJ CAR’s members’ rights under the [NJFPA] is unquestionably directly
traceable to Mazda’s implementation of the MBEP and was not caused by the action” of some
third party not before the Court. (ECF No. 12 at 19-23.)
The first Hunt factor requires an association to show that at least one of its members would
have standing to sue on its own. The requirements for standing for an individual plaintiff in federal
court is well-settled:
Over the years, our cases have established that the irreducible
constitutional minimum of standing contains three elements. First,
the plaintiff must have suffered an “injury in fact” – an invasion of
a legally protected interest which is (a) concrete and particularized
and (b) actual or imminent, not conjectural or hypothetical. Second,
there must be a causal connection between the injury and the
conduct complained of – the injury has to be fairly . . . traceable to
the challenged action of the defendant, and not . . . the result of the
independent action of some third party not before the court. Third,
it must be likely, as opposed to merely speculative, that the injury
will be redressed by a favorable decision.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (citations omitted).
While a plaintiff must prove each prong of the Lujan inquiry, the Third Circuit has stressed
that the “injury-in-fact element is often determinative.” Toll Bros. v. Twp. of Readington, 555 F.3d
131, 138 (3d Cir. 2009). To satisfy the injury-in-fact requirement at the pleading stage, an
association must make “specific allegations establishing that at least one identified member has
suffered or would suffer harm” resulting from the challenged action. Pennsylvania Prison Soc’y
v. Cortes, 622 F.3d 215, 228 (3d Cir. 2010) (quoting Summers v. Earth Island Inst., 555 U.S. 488,
498 (2009)).
The second and third prongs for individual standing are not at issue in this matter. Rather,
Mazda contends only “apart from a general allegation that NJ CAR’s membership includes Mazda
dealers, the Complaint does not identify any individual members of NJ CAR.” (ECF No. 7 at 11.)
Mazda argues that such deficiency constitutes a basis to dismiss NJ CAR’s claims in and of itself.
(Id.) However, in Forum for Acad. & Institutional Rights, Inc. v. Rumsfeld, 291 F. Supp. 2d 269,
275-86 (D.N.J. 2003), the District of New Jersey held that disclosing members’ identities is not a
necessary prerequisite to associational standing in all cases.3 The Court reasoned that the Solomon
Amendment would “plainly affect[] law schools” and that as such, the association “need not reveal
its membership list at the pleading stage in order to bring suit on its members’ behalf.” Id. at 286.
In so holding, this District stressed that associational standing does not follow a “blanket rule that
associations seeking to bring suit on behalf of their members must identify their membership,” but

rather “whether the factual allegations in a given context sufficiently demonstrate that an
association indeed has members that have suffered an injury-in-fact.” Id. at 289.
Here, NJ CAR has alleged in the Complaint that its membership includes sixteen franchised
Mazda dealerships. (ECF No. 1 ¶ 5; Appleton Decl. (ECF No. 12-3) ¶ 6.) Additionally, NJ CAR
has identified all sixteen of its Mazda dealer members (ECF No. 12-3, Ex. B), and such list is also
readily available to the public via NJ CAR’s website directory. (ECF No. 12 at 22). Furthermore,
NJ CAR also provided declarations from two of its Mazda dealer members identifying and
describing the harm that has befallen each, and will continue, as a result of the MBEP.4

3 In Rumsfeld, an association of law schools filed a lawsuit on behalf of unidentified law school
members seeking a declaration that the Solomon Amendment was unconstitutional. 291 F. Supp.
2d at 274. The Solomon Amendment was a statute conferring authority on the United States
Secretary of Defense to deny federal funding to institutions of higher education that prohibit or
effectively prevent on-campus military recruiting. Id. Plaintiffs, which included organizations of
law school professors and interest groups, among others, filed suit contending the Solomon
Amendment was unconstitutional as, inter alia, it conferred or denied benefits on the grounds of
freedom of expression. Id.

4 These declarations include: one from Shelley Irwin Locascio (“Locascio”), the President of SIL,
LLC d/b/a Irwin Mazda (“Irwin Mazda”) asserting, inter alia, that all of the modifications and
renovations that Mazda directed Irwin Mazda to perform would “render extensive renovations and
construction that Irwin [Mazda] had performed for several years . . . completely obsolete” and
even if Irwin Mazda could comply with all of the MBEP requirements, it would not make a
reasonable return on such an investment because the bonuses would not offset the renovation costs
(ECF No. 12-1 ¶¶ 8, 11); and one from Michael J. Ciasulli (“Ciasulli”), a Mazda franchisee and
owner of Maxon Mazda, asserting, inter alia, that Maxon Mazda would need to spend
approximately $10 to $12 million to retrofit its facilities to be eligible for the MBEP bonuses, and
Accordingly, Mazda’s contention that NJ CAR has not identified any of its individual members is
erroneous. Moreover, in light of this District’s holding in Rumsfeld, 291 F. Supp. 2d at 286, NJ
CAR need not even reveal its membership at the pleading stage to establish standing as the
allegations in the Complaint sufficiently allege an injury-in-fact.
This Court is not persuaded by Mazda’s argument that Kessler Inst. For Rehabilitation v.

Mayor & Council of Essex Fells, 876 F. Supp. 641, 656 (D.N.J. 1995) provides support to its
position. In Kessler, the plaintiff “clearly lacked standing” as it did not allege any concrete harm
to any of its members, but only “an ideological interest” in the litigation. Id. Furthermore, the
plaintiffs “failed to identify a single individual member [of the organization],” and as a result, the
court determined it could not conclude any of plaintiff’s members had suffered an injury to confer
standing. Id. Here, by contrast, each of the Mazda members of NJ CAR has been identified, and
NJ CAR provided declarations specifically outlining the alleged harm to each member caused by
the continued implementation of the MBEP. (ECF No. 12-1 ¶¶ 8, 11; ECF No. 12-2 ¶¶ 9-10.)
Therefore, NJ CAR’s members have standing to sue in their own right and as a result, the first

Hunt factor is satisfied.
B. Germaneness (Second Hunt Factor)
Mazda argues NJ CAR does not satisfy the Hunt test’s second prong – germaneness – as
there is a serious conflict of interest between NJ CAR’s Mazda dealer members who are eligible
for the MBEP payments and those who are not. (ECF No. 7 at 11-14.) Mazda contends there is
also a conflict of interest between NJ CAR’s Mazda dealer members who receive MBEP payments
and NJ CAR’s non-Mazda dealer members who compete with those Mazda dealers for new vehicle

that such expenditure would place an extreme hardship on Maxon Mazda and would not create a
reasonable return on investment. (ECF No. 12-2 ¶¶ 9-10.)
sales. (Id.) NJ CAR argues that the interests it seeks to protect in the litigation, fair competition, is
germane to its purpose, and no conflict of interest exists because its position in the litigation is
consistent with the interests of a majority of its members and it followed its own internal rules
before filing the Complaint. (ECF No. 12 at 23-25.)
“Although an association may rely on the standing of its members to assert standing for

itself by showing that only one of its members has the type of redressable injury that would give
it standing to sue individually,” Polaroid Corp. v. Disney, 862 F.3d 987, 999 (3d Cir. 1988) (citing
Warth, 422 U.S. at 511), courts have “never” granted associational standing where there are
“serious conflicts of interest either among the members of an association or between an association
and its members.” Id. However, a conflict of interest precluding associational standing does not
exist if an association’s position in the litigation is “not contrary to the interests of a majority of
[its] members” and if the association follows “their own internal rules before joining [the]
litigation.” Contractors Ass’n of E. Pa. v. City of Philadelphia, 945 F.2d 1260, 1266 (3d Cir. 1991).
Pursuant to the MBEP, Mazda dealers are eligible to receive: an incentive of up to 6.5% of

the MSRP of a vehicle based on compliance with MBEP requirements; an incentive of up to 4.5%
per vehicle for incorporating an exclusive Mazda facility which incorporates all Mazda required
image elements, satisfies other “base elements” required by Mazda, and employs a “dedicated,
exclusive Mazda General Manager;” and an “all or nothing” incentive of 2% for “Customer
Experience.” (ECF No. 1 ¶¶ 23-27; ECF No. 1, Ex. A.)5 The lawsuit presents a conflict of interest
between the NJ CAR Mazda dealer members who have undertaken renovations and made other
efforts to become eligible for the various incentives and the NJ CAR Mazda dealer members who

5 More exact incentive amounts, and the specific requirements for obtaining such incentives, are
laid out in MBEP, which is attached as Exhibit A to the Complaint. (ECF No. 1, Ex. A at 4-9.)
have not. As the Complaint alleges and as the Locascio and Ciasulli declarations demonstrate, the
costs to dealers of modifying their facilities to obtain the MBEP incentives can be exorbitant, and
a dealer often will only incorporate such changes if they are assured of some possibility to recover
the costs. (ECF No. 12-1 ¶¶ 8-12; ECF No. 12-1 ¶¶ 9-10; ECF No. 1 ¶ 16.)
The lawsuit also presents a conflict of interest between NJ CAR’s Mazda dealer members

who are eligible to receive the MBEP payments and NJ CAR’s non-Mazda dealer members. NJ
CAR members who deal vehicles other than Mazda brand vehicles compete with NJ CAR Mazda
dealer members for new car sales. The Complaint alleges a 6.5% incentive on a $30,000 – which
comes to $1,950 – creates a “significant competitive differential between dealers who receive and
who do not receive the incentive,” thereby enhancing the Mazda dealer’s “ability to engage in
intra-brand and inter-brand competition.” (ECF No. 1 ¶ 24.) Thus, it is in the interests of the Mazda
dealers who receive the MBEP incentives to continue receiving such incentives to enhance their
competitive standing in relation to non-Mazda dealers, whereas it is in the interest of the non-
Mazda dealers to block the MBEP incentives and minimize the competitive advantage of the

Mazda dealers with whom they compete for sales.
NJ CAR does not dispute that conflicts of interest exist between its members, instead
arguing that such conflicts should not vitiate associational standing pursuant to the second prong
of the Hunt inquiry because “there is no evidence that a majority of the Mazda dealers or of NJ
CAR’s membership as a whole oppose enforcing New Jersey’s law.” (ECF No. 12 at 25.) NJ CAR
contends the Third Circuit’s holding in Contractors Ass’n, 945 F.2d at 1266 – that a conflict of
interest does not preclude associational standing if the association’s position is not contrary to the
interests of a majority of its members and if the association follows their own internal rules before
joining the litigation – necessitates a finding that it has standing to maintain this suit.
Although NJ CAR provided a declaration from its President, James B. Appleton, attesting
that NJ CAR adhered to its by-laws before filing the lawsuit (Appleton Decl. (ECF No. 12-3) ¶¶
28-30)6, the Complaint itself and the relevant, extrinsic evidence indicates that NJ CAR’s position
in the litigation is not consistent with the interests of the majority of its affected members. Indeed,
a majority of the NJ CAR Mazda dealer members have made investments towards obtaining

incentives pursuant to the MBEP such that they expect returns on these investments and would
suffer a detriment should NJ CAR proceed in this litigation. (Kaczmarek Decl. (ECF No. 7-1) ¶¶
9-13.) There are sixteen Mazda dealer members of NJ CAR. (Id.; ECF No. 7-3; ECF No. 7 at 13;
ECF No. 12 at 24-25.) Three Mazda dealer members are currently operating out of certified Retail
Evolution facilities, thereby deeming them eligible to receive the highest tier of MBEP incentives,
and another eight Mazda dealer members have signed agreements enrolling in Mazda’s Retail
Evolution Program. (ECF No. 7-1 ¶¶ 9-10.) As a prerequisite for enrollment in the Retail Evolution
Program, the eight Mazda dealer members have agreed to “construct [] facilit[ies] that meet[]
Mazda’s brand standards and incorporates certain Mazda brand imaging,” as well as to “a timeline

for constructing a certified Retail Evolution facility with certain milestones.” (ECF No. 7-1 ¶¶ 7-
8.) In exchange, Mazda has agreed to hold in escrow the incentives each dealer would have
received as certified Retail Evolution dealers, releasing the funds incrementally as certain
construction milestones are achieved. (Id. ¶ 13.) Therefore, at least eleven of the sixteen Mazda
dealer members of NJ CAR have made some investment towards obtaining MBEP incentives. As
such, prosecuting litigation to enjoin the MBEP is contrary to their interests.

6 Appleton attested that the by-laws of NJ CAR grant authority to him, as the President, to decide
to file lawsuits on NJ CAR’s behalf “or in a representative capacity on behalf of its members,” and
that he met with NJ CAR’s Executive Committee Chairman who “defer[red]” to him “as to
whether NJ CAR should institute litigation against Mazda for implementing the MBEP.” (ECF
No. 12-3 ¶¶ 28-29.)
NJ CAR argues Mazda “concedes that five Mazda dealer-members of NJ CAR do not
qualify for any of the facilities portion of the MBEP, that eight do not fully qualify, so that eleven
in total will certainly get loss of the total discount or bonus.” (ECF No. 12 at 24.) However, none
of the applicable Third Circuit case law suggests that an association member must receive a “full”
or even equal benefit to be considered not to have an interest in the litigation, only that such entity

“benefit from the offer.” Contractors Ass’n, 945 F.2d at 1265. The eight Mazda dealer members
enrolled in the Retail Evolution Program have a tangible interest in the preservation of the MBEP.
Should the MBEP be discontinued, the eight Mazda dealer members enrolled in the Retail
Evolution Program would not only be deprived of the reasonably-expected incentives held for
them in escrow, but would also have spent a significant amount of money on Retail Evolution
facility construction for naught. As such, it is evident that a majority of the Mazda dealer members
have a legitimate interest in the continuation of the MBEP, which runs contrary to its position in
this litigation.7
Next, NJ CAR contends there is no “certainty” that the eight Mazda dealer members

enrolled in the Retail Evolution Program will “always or even ever get the Customer Experience
portion of the discount.” (ECF No. 12 at 25.) This point is immaterial. Each of the dealers enrolled
in the Retail Evolution Program have expended resources towards obtaining MBEP incentives
such that they have a legitimate and cognizable interest in the continuation of the MBEP.
Furthermore, NJ CAR bears the burden of demonstrating it possesses standing to maintain this

7 Although not raised as an argument in NJ CAR’s briefs, this Court notes that, in calculating the
total membership of NJ CAR for the purpose of determining whether the litigation runs contrary
to the interests of the majority, it will consider the total relevant membership to include only Mazda
dealer members. Accordingly, NJ CAR members that do not sell Mazda vehicles are not included
in the calculation. This approach is pragmatic as NJ CAR has repeatedly claimed that it has brought
this lawsuit “on behalf of its Mazda dealer members,” (ECF No. 12 at 1, 6, 8), and because only
such members have standing to maintain this suit pursuant to N.J.S.A. 56:10-10
lawsuit. Davis, 824 F.3d at 346; Mortensen, 549 F.2d at 891. Notably, NJ CAR has not provided
any declarations or other evidence rebutting the Kaczmarek Declaration – which attested to the
incremental incentives towards which the Mazda member dealers are currently working (ECF No.
7-1 ¶¶ 7-13) – or indicating that any of NJ CAR’s eleven Mazda dealer members who are enrolled
in the MBEP in some capacity have any interest or potential material gain from NJ CAR’s success

in this litigation.
Finally, NJ CAR argues the “allegation that some NJ CAR members will benefit under the
MBEP is not the type of ‘conflict’ that should” bar suit by NJ CAR pursuant to the second Hunt
factor because Mazda “should not be able to take advantage of a conflict of its own creation
through the implementation of a program that violates the [NJFPA] on its face.” (ECF No. 12 at
25.) This argument is unpersuasive. NJ CAR provides no case law suggesting that there are “types”
of conflicts that may act to vitiate standing pursuant to the germaneness prong of the Hunt test
whereas other conflicts do not.8 Furthermore, NJ CAR’s assertion that the implementation of the
MBEP “violates the [NJFPA] on its face” is premature and entirely conclusory.

As there is a conflict of interest in which a majority of NJ CAR’s Mazda dealer members
have an interest directly contrary to that of NJ CAR in this lawsuit, the interests NJ CAR seeks to
protect are not germane to its purpose and the second Hunt factor is not satisfied.
C. Participation by Individual Members (Third Hunt Factor)
As this Court has found that NJ CAR has not satisfied the second prong of the Hunt inquiry

8 The Third Circuit has not provided guidance concerning what types of conflicts may preclude a
finding of associational standing pursuant to the Hunt test, but has noted it is not appropriate to
find standing where the conflict “will affect the adequacy of representation or present a likelihood
of a collusive suit that would deprive the court of vigorous advocacy on all sides of [a] dispute.”
Contractors Ass’n, 945 F.2d at 1265. Given that more that a majority of NJ CAR’s Mazda dealer
members have a significant monetary interest in the continuation of the MBEP, such concerns are
present in this litigation should NJ CAR be determined to have standing.
for demonstrating associational standing, it need not consider the third prong of the inquiry as each
prong must necessarily be fulfilled for a determination of standing. Hunt, 432 U.S. at 343; Warth,
422 U.S. at 515.
IV. CONCLUSION
For the reasons set forth above, Mazda’s Motion to Dismiss the Complaint (ECF No. 7) is

GRANTED and the Complaint is DISMISSED WITHOUT PREJUDICE. NJ CAR’s Motion
for Summary Judgment (ECF No. 12) is DENIED AS MOOT.

Date: July 30, 2019 /s/ Brian R. Martinotti___________
HON. BRIAN R. MARTINOTTI
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10266512. Public record. Not legal advice.