Northgate Lincoln-Mercury, Inc. v. Ford Motor Company

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

NORTHGATE LINCOLN-

MERCURY INC.,

Plaintiff,

Case No. 1:19–cv–769

v. JUDGE DOUGLAS R. COLE

FORD MOTOR COMPANY,

Defendant.

OPINION AND ORDER

This cause comes before the Court on Ford Motor Company’s (“Ford”) Motion

for Summary Judgment (Doc. 18). For the reasons explained below, the Court

DENIES Ford’s Motion.

BACKGROUND

A. Ford Has Implemented A Ford Courtesy Transportation Program

That Provides Monetary Incentives To Ford Dealers Who Use Ford

Motor Vehicles As Loaner Or Rental Vehicles.

When a customer brings his Ford vehicle to a dealer to get it serviced, Ford

encourages the dealer to provide the customer with a temporary replacement vehicle

(2018 FCTP Manual, Doc. 17-2, at #124). Ford pitches this as a win-win: “Customers

get the convenience and experience of driving the latest Ford products while their

vehicle is being serviced. Dealerships get the flexibility to satisfy customers in a way

that demonstrates that they value their customers’ time and appreciate their

business.” (Id.).

Ford incentivizes its dealers to rent service cars to customers through its Ford

Courtesy Transportation Program (“FCTP”). This is a voluntary program in which

Ford provides monetary incentives to dealers who offer some of the vehicles on their

lots as courtesy vehicles for their customers. (Gwaltney Aff., Doc. 17-1 at ¶ 6, #118).

There are five separate incentives that a dealer may claim, only three of which are at

issue here: (1) the Base Allowance Incentive; (2) the In-Service 30-Day Incentive; and

(3) the In-Service 60-Day Incentive. (FCTP Manual, Doc. 17-2, at #129).

In order to claim FCTP incentives on a particular vehicle, the dealer first uses

a special code to record the “sale” of the vehicle to the dealership itself in the Ford

Motor Company sales software (called Vincent). (Id. at #131). When a dealer places a

vehicle into service in the FCTP, Ford provides the dealer the Base Allowance

Incentive. (Id.). The Base Allowance is an amount between $1000 and $3500,

depending on the particular model and year of the vehicle. (Id. at #130). After a

vehicle spends 30 days in service, it qualifies for the In-Service 30-Day Incentive (the

“30-Day Incentive”). (Id. at #129). And after another 30 days in service, it qualifies

for the In-Service 60-Day Incentive (the “60-Day Incentive”). (Id.). The 30-Day and

the 60-Day Incentives each allow the dealer to earn an additional $250. (Id. at #130).

For dealers to earn and retain these incentives, they must comply with the

program’s terms and conditions. (Id. at #127). The FCTP Manual (the “Contract”)

says that “[v]ehicles that do not meet the program requirements may be removed by

Ford Motor Company from the program at any time, and will result in a chargeback

for FCTP In-Service incentives.” (Id.) Questions regarding two program requirements

give rise to the dispute in this case. First, in order to be eligible for any incentives

(i.e., even the Base Allowance), vehicles must accrue at least 20 days and 2,000 miles

of service in the FCTP (i.e., being used for purposes that qualify under the FCTP).

Second, rental/loaner agreements with customers for vehicles in the FCTP are valid

for only 30 days; thus, “if a customer is in a FCTP vehicle beyond 30 days, a new

rental/loaner agreement must be signed.” (Id. at #127).

Ford reserves the right to audit its dealers who have cars in the FCTP to ensure

program compliance. (Id.). Ford also retains the right to “cancel, amend, revise and/or

revoke any program at any time,” and further claims that “[f]inal decisions in all

matters relative to the interpretation of any rule or phase of the FCTP rests [sic]

solely with Ford Motor Company.” (Id.).

B. Ford Audited Northgate Lincoln-Mercury And Determined Northgate

Could Not Substantiate The FCTP Incentives It Had Claimed.

The dispute in this case arose when Ford charged back one of its dealers,

Northgate Lincoln-Mercury (“Northgate”), the FCTP incentives that Northgate had

claimed on several vehicles. This occurred after Ford conducted an incentive-payment

audit in 2019 and allegedly noticed several irregularities with Northgate’s

paperwork. For purposes of this suit, the irregularities fall into two basic camps.

1. Ford Claims that Northgate Failed to Obtain a Second Rental

Agreement on Certain Vehicles.

First, Ford claims that Northgate failed to obtain a second 30-day rental

agreement on at least 11 cars that Northgate had rented for longer than 30 days, and

as to which Northgate had claimed a Base Allowance, and both 30-Day and 60-Day

Incentives. Ford charged back against Northgate all three incentives that Northgate

had claimed on those cars.

For its part, Northgate does not dispute that it failed to obtain a second rental

agreement. (Compl., Doc. 4, at ¶ 9, #4). Even so, Northgate argues, Ford had no right

to charge back all three incentives for those cars. Rather, the failure to obtain a second

lease meant, at most, that Northgate could not prove usage beyond thirty days. Thus,

at most, Ford should have charged back only the 60-Day Incentive. (Id.). That is,

Northgate claims there is no dispute that each car met the minimum time and

mileage rule (20 days and 2,000 miles), which qualified each car for the Base

Allowance Incentive. There is also no dispute that each car was in service for at least

30 days and that Northgate obtained an initial rental agreement for each car (valid

for those 30 days). Thus, Northgate claims that each car qualified for the 30-Day

Incentive, too.

2. On Other Vehicles, Ford Claims that Northgate Could Not Show

It Met the 20-day/2,000-mile Minimum Requirement.

In addition to those eleven cars, Ford also charged back all the incentives that

Northgate had claimed on four other cars. According to Ford, Northgate failed to

substantiate (through proper rental agreements) that those four cars had satisfied

even the 2000-mile minimum needed to qualify for the Base Allowance.

As to those cars, Northgate “concede[s] that it did not produce the appropriate

paperwork for” one of those vehicles. (Northgate Resp. Br., Doc. 24, at #202). But for

the other three, Northgate claims that it substantiated the mileage requirement

using the required rental agreements.

3. Northgate Sued Ford for Charging Back the Incentives on Those

Vehicles.

On July 17, 2019, Northgate filed a three-count Complaint against Ford in

state court, alleging breach of contract, a violation of O.R.C. § 4517.59, and a

declaratory judgment claim. As relevant here, the cited statute prohibits auto

franchisors from charging back sales or service incentives against dealers (barring

certain exceptions). By way of remedy, Northgate seeks damages and attorney’s fees

(the latter under the statute). Ford removed to this Court under diversity

jurisdiction,1 filed its Answer (Doc. 2), and eventually moved for summary judgment

on all counts (Doc. 18). That Motion is now ripe for this Court’s decision.

LEGAL STANDARD

Summary judgment is proper “if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(a). The burden is on the moving party to conclusively show

that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317,

323 (1986); Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994). Once the

movant presents evidence to meet its burden, the nonmoving party may not rest on

its pleadings, but must come forward with significant probative evidence to support

its claim. Celotex, 477 U.S. at 324; Lansing Dairy, 39 F.3d at 1347.

This Court is not obliged to sua sponte search the record for genuine issues of

material fact. Betkerur v. Aultman Hosp. Ass’n, 78 F.3d 1079, 1087 (6th Cir. 1996);

1 Diversity jurisdiction is met here because (1) the amount in controversy exceeds $75,000,

(2) Northgate is a citizen of Ohio, and (3) Ford is a citizen of Delaware and Michigan. (See

Notice of Removal, Doc. 1, at ¶¶ 3–4, #1).

Guarino v. Brookfield Twp. Trs., 980 F.2d 399, 404–06 (6th Cir. 1992). The burden

falls upon the nonmoving party to “designate specific facts or evidence in dispute.”

Jordan v. Kohl’s Dep’t Stores, Inc., 490 F. App’x 738, 741 (6th Cir. 2012) (quotation

omitted). If the nonmoving party fails to make the necessary showing for an element

upon which it has the burden of proof, then the moving party is entitled to summary

judgment. Celotex, 477 U.S. at 323.

Granting summary judgment depends upon “whether the evidence presents a

sufficient disagreement to require submission to a jury or whether it is so one-sided

that one party must prevail as a matter of law.” Amway Distribs. Benefits Ass’n v.

Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir. 2003) (quoting Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 251–52 (1986)). In sum, the nonmoving party, at this stage,

must present some “sufficient disagreement” that would necessitate submission to a

jury. See Moore v. Phillip Morris Cos., Inc., 8 F.3d 335, 340 (6th Cir. 1993) (quoting

Anderson, 477 U.S. at 251–52). In making that determination, though, this Court

must view the evidence in the light most favorable to the nonmoving party. See

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Cox v.

Ky. Dep’t of Transp., 53 F.3d 146, 150 (6th Cir. 1995) (“In arriving at a resolution, the

court must afford all reasonable inferences, and construe the evidence in the light

most favorable to the nonmoving party.”).

LAW AND ANALYSIS

A. The Court Denies Ford’s Motion For Summary Judgment On

Northgate’s Breach-Of-Contract Claim.

Northgate claims that Ford breached the FCTP Contract in two ways: First, by

charging back Northgate the Base Allowance Incentive, the 30-Day Incentive, and

the 60-Day Incentive for failing to obtain a second rental agreement on at least 11

that Northgate claims to have rented past 30 days. Northgate argues that, as to those

vehicles, at most, Ford should have only charged back the 60-Day Incentive. Second,

Northgate claims that Ford breached the Contract by charging back all the incentives

that Northgate claimed on three cars that Ford claims failed to satisfy the minimum

mileage requirement. Northgate argues that those cars did in fact satisfy the mileage

requirement, and that it provided Ford the proper rental agreements to show that.

Ford seeks summary judgment on both of Northgate’s theories, and the Court

addresses each in turn.

1. General Principles.

The parties agree that Ohio law controls this contract dispute. To succeed on a

breach-of-contract claim under Ohio law, Northgate must establish (1) the existence

of a binding contract or agreement, (2) that Northgate performed its contractual

obligations, (3) that Ford failed to fulfill its contractual obligations without legal

excuse, and (4) that Northgate suffered damages as a result of the breach. Carbone v.

Nueva Constr. Grp., L.L.C., 83 N.E.3d 375, 380 (Ohio Ct. App. 2017); accord Textron

Fin. Corp. v. Nationwide Mut. Ins. Co., 684 N.E.2d 1261, 1265 (Ohio Ct. App. 1996);

Garofalo v. Chicago Title Ins. Co., 661 N.E.2d 218, 226 (Ohio Ct. App. 1995).

“Under Ohio law, interpretation of written contract terms is a matter of law

for initial determination by the court.” Potti v. Duramed Pharm., Inc., 938 F.2d 641,

647 (6th Cir. 1991) (citing Uebelacker v. Cincom Sys., Inc., 549 N.E.2d 1210 (Ohio Ct.

App. 1988)). The “initial determination” calls for the Court to ascertain whether the

contract is ambiguous with regard to the dispute at issue. That determination is a

question of law. Id. (“[T]he determination [as to whether] a contract is ambiguous is

made as a matter of law by the court.”). If no ambiguity exists, then the Court merely

applies the language as written, and there is no need for a fact finder. But, if the

Court determines that the relevant contractual language is ambiguous, then the

finder of fact must resolve that ambiguity. For making that initial determination,

“[a]mbiguity exists only where a term cannot be determined from the four corners of

the agreement or where contract language is susceptible to two or more reasonable

interpretations.” Id.

2. Ford Does Not Have Exclusive Authority to Interpret the Contract

Before the Court determines whether the Contract is ambiguous, it first

addresses a somewhat peculiar argument that Ford makes in passing in its Motion

for Summary Judgment. There, Ford essentially claims that the Contract cannot be

ambiguous in a way that requires jury involvement because the Contract expressly

allows Ford itself to resolve any such ambiguity.

More specifically, while admitting that the FCTP Manual constitutes a binding

Contract between it and Northgate, (see Answer, R. 2, at ¶ 6, #42; Compl., Doc. 4, at

¶ 6, #52), in a footnote in its brief, Ford points to the language noted above that:

“Final decisions in all matters relative to the interpretation of any rule or phrase of

the FCTP rests [sic] solely with Ford Motor Company.” (FCTP Manual, Doc. 17-2, at

#127). Based on that language, Ford argues that “even if some interpretation of the

Manual is required, which Ford disputes, that interpretation is within Ford’s sole

discretion.” (Mot. for Summ. J., Doc. 18, at #155 n.2). In other words, Ford is claiming

that even if the Contract is ambiguous, there is no need for a fact finder. Rather, the

Contract purportedly authorizes Ford to resolve that ambiguity.

If this really were the slam-dunk argument Ford claims, Ford may have

wanted to dedicate more than two sentences to developing it, rather than relegating

it to a brief footnote. As the Sixth Circuit has explained, “issues adverted to in a

perfunctory manner, unaccompanied by some effort at developed argumentation, are

deemed waived. It is not sufficient for a party to mention a possible argument in the

most skeletal way, leaving the court to put flesh on its bones.” McPherson v. Kelsey,

125 F.3d 989, 995–96 (6th Cir. 1997) (cleaned up). “Skeletal” aptly describes Ford’s

argument on this issue, so the Court considers the argument waived.

The argument strikes the Court as potentially problematic in any event. To

start, “[a] contract is illusory when, by its terms, the promisor ‘retains an unlimited

right to determine the nature or extent of his performance; the unlimited right, in

effect, destroys his promise and thus makes it merely illusory.’” Thomas v. Am. Elec.

Power Co., No. 03AP-1192, 2005 WL 977057, at *8 (Ohio Ct. App. Apr. 28, 2005)

(quoting Century 21 Am. Landmark, Inc. v. McIntyre, 427 N.E.2d 534, 534 (Ohio Ct.

App. 1980)). “[C]ourts disfavor interpretations that render contracts illusory or

unenforceable, and prefer a meaning, which gives the contract vitality.” Id. (citing

Talbert v. Cont’l Cas. Co., 811 N.E.2d 1169 (Ohio Ct. App 2004)). Ford’s argument

here skirts perilously close to that prohibition. Perhaps Ford could argue that the

cited provision includes some tacit limitation on its claimed interpretive powers (e.g.,

“only reasonable interpretations,” or something of the sort). And thus construed, the

Contract may not be wholly illusory—which admittedly is a high bar. But that

argument would require implying a lot of words that are not currently present in the

Contract.

Then there is the separate problem of unconscionability. A contract that says,

“you have agreed to whatever we later determine you have agreed to,” if not illusory,

seems at least to raise both substantive and procedural fairness concerns. Indeed, the

provision is not unlike a provision that says, “any disputes under this agreement will

be resolved by an arbitrator who is a Ford executive vice president.” Surely an

arbitration provision that expressly called for a biased decisionmaker would raise

serious enforceability concerns. See, e.g., Hooters of America, Inc. v. Phillips, 173 F.3d

933 (4th Cir. 1999) (striking arbitration provision that gave employer unrestricted

ability to create biased three-arbitrator panel); Cheng-Canindin v. Renaissance Hotel

Assocs., 57 Cal. Rptr.2d 867 (Cal Ct. App. 1996) (striking arbitration provision that

called for employer’s management personnel to act as arbitrators). At root, though,

that is the right Ford is claiming here—the right to decide for itself the meaning of

the Contract, just as though it were an arbitrator or other finder of fact on a contract

dispute.

Ultimately, the Court need not wrestle with the difficult questions that such a

provision would present. It is enough to conclude that Ford has waived this argument.

And the substantive concerns that the Court raises above are not meant as

determinations on those issues. But should Ford seek to press this argument at some

later date in this case, Ford would be well advised to meet such issues head on.

3. The Contract is Ambiguous as to the Permissible Chargebacks for

Failing to Obtain a Second Rental Agreement.

Turning to the remaining language in the agreement, Ford argues that the

Contract unambiguously allows it to charge back Northgate all three incentives that

Northgate claimed for the cars that Northgate purports to have rented past 30 days,

but as to which Northgate did not obtain a second rental agreement. In other words,

Ford says it had the right to charge back not only the 60-Day Incentive, but also the

Base Allowance Incentive and the 30-Day Incentive, even if Northgate met the

requirements for those other two incentives.

Ford points to several provisions in the Contract to support this argument.

These provisions say that: (1) customers must complete a FCTP rental agreement for

each FCTP transaction; (2) FCTP rental agreements are valid for a maximum of 30

days; and (3) “[i]f a customer is in a FCTP vehicle beyond 30 days, a new rental/loaner

agreement must be signed.” (FCTP Manual, Doc. 17-2, #127). Having highlighted

these requirements, Ford then points to this language: “[v]ehicles that do not meet

the program requirements may be removed by Ford Motor Company from the

program at any time and will result in a chargeback for FCTP In-Service incentives.”

(Mot. for Summ. J., Doc. 18, #155 (quoting FCTP Manual, Doc. 17-2, #127)). According

to Ford, “a chargeback for FCTP In-Service incentives,” means a chargeback of all

such incentives, even incentives as to which the dealer has met the qualifications.

The Court disagrees with Ford that these provisions unambiguously provide

Ford the right to charge back Northgate all three incentives for failing to obtain a

second rental agreement. The cited language does not expressly identify which

incentives Ford may charge back for what kind of violations. Nor do the provisions

say that Ford may charge back “all incentives” for failing to obtain a second rental

agreement in violation of the Contract. The failure to include the word “all” in the

cited language contrasts with the contractual language that Ford drafted when

discussing the minimum mileage and time requirements. There, the Contract

specifically says that “[w]hen a vehicle is removed from service and the mileage and

day minimum has not been met, all incentives will be charged back.” (FCTP Manual,

Doc. 17-2, #129 (emphasis added)). But that is the only time that the Contract says

that “all incentives will be charged back” for violating a requirement. The contrast in

the language used at least suggests the possibility that Ford did not reserve the right

to charge back “all incentives” for other types of violations.2 Thus, based on the “four

2 The provision Ford relies on threatens a “chargeback for FCTP In-Service incentives.”

(FCTP Manual, Doc. 17-2, #127 (emphasis added)). Northgate argues that this chargeback

provision does not refer to the Base Allowance Incentive because the FCTP Manual indicates

that “In-Service” is not in the title of the Base Allowance Incentive, as it is for “the 30-day In-

Service Incentive and the 60-day In-Service Incentive.” (See Northgate Resp. Br., Doc. 24,

#195). The Court is not entirely convinced. The Contract refers to the Base Allowance

Incentive as an “in-service incentive” at least once. (See FCTP Manual, Doc. 17-2, #129 (“Each

quarter Ford Motor Company will provide an up-front FCTP Base Allowance in-service

incentive on select models.”)). Moreover, the Contract indicates that “in-service” refers to the

entire period of time that a car is enrolled in the FCTP program, which necessarily includes

the period of time that a car is eligible for the Base Allowance Incentive. (Id. at #122). In

fairness, though, the use of the capitalized “In-Service” when talking about the incentives to

corners of the agreement,” the Court cannot say that the Contract unambiguously

compels the reading that Ford proffers. Potti, 938 F.2d at 647.

Not only is Northgate’s preferred interpretation reasonable in light of the

Contract language regarding the chargebacks, but it also seems reasonable when

read in light of the FCTP’s stated purposes. Indeed, the Court could imagine common-

sense reasons why Ford may design the program not to include a chargeback of every

incentive based on a dealer violating only the second-rental-agreement requirement.

Ford does not dispute that the vehicles at issue satisfied all other conditions

necessary for Northgate to claim the other two incentives, standing alone. There is

no dispute, for example, that the vehicles satisfied the minimum mileage and time

requirements necessary to claim the Base Allowance Incentive. Nor is there any

dispute that each car was in service for at least 30 days and that Northgate obtained

an initial rental agreement (valid for those 30 days). Thus, it is undisputed that Ford

achieved, at least in part, the purposes that the parties specified in the FCTP—giving

customers the “experience of driving the latest Ford products.” (2018 FCTP Manual,

Doc. 17-2, at #124). And had Northgate only claimed the Base Allowance and 30-Day

Incentive, it is undisputed that Northgate would have been entitled to keep them. It

was only because Northgate claimed that it had rented the cars beyond the 30-day

which the chargebacks apply, as opposed to the lowercase description of the Base Allowance

as an “in-service incentive,” may suggest there is something to Northgate’s argument. At

bottom, perhaps this all just adds to the ambiguity of the Contract and further counsels

against granting Ford summary judgment on Northgate’s breach-of-contract claim. Either

way, the Court need not rely on Northgate’s incentive-label argument because, even without

considering it, the Court finds that the contract is sufficiently ambiguous to warrant denying

Ford summary judgment, and Northgate has not sought summary judgment based on its

argument.

period that Northgate needed to obtain a second rental agreement. So, it would

certainly be understandable that Ford would want to charge back the incentive

relating to that period of non-compliance: the 60-Day Incentive. But it is less clear

why Ford would also want to recoup the incentives relating to the period during which

the dealer was in compliance with all FCTP requirements: the Base Allowance

Incentive and the 30-day Incentive.

None of this is to meant to suggest that it is impossible to read the Contract as

adopting Ford’s approach. But, given the relevant contract language, read in the

context of the goals expressly stated in the FCTP Contract, the Court concludes that

the Contract is ambiguous on whether failure to meet one requirement gave Ford the

right to reclaim all incentives. Accordingly, the Court DENIES Ford summary

judgment on Northgate’s breach-of-contract claim relating to Northgate’s failure to

obtain a second rental agreement.

4. There Is a Genuine Dispute of Material Fact as to Whether

Northgate Substantiated the Minimum-Mileage Requirement for

Three Cars

Northgate also alleges a breach-of-contract claim based on Ford’s chargebacks

of all incentives that Northgate claimed on three cars, identified as: (1) VIN 5419, (2)

VIN 8414, and (3) VIN 1687. The parties dispute whether Northgate properly

substantiated the minimum-mileage requirement for each of these three cars.

Starting with VIN 5419, Ford claims that Northgate supplied “only one rental

agreement, with no mileage indicated.” (Jones Aff., Doc. 17-3, at ¶ 8, #149).

Northgate, by contrast, claims that it provided seven separate rental agreements

showing that the vehicle had 2,066 miles of rental use. (Reichert Decl., Doc. 23-1, at

¶ 4, #177).

For VIN 8414, Ford claims that Northgate provided only one rental document,

which was again missing mileage information. (Jones Aff., Doc. 17-3, at ¶ 9, #149).

Northgate, on the other hand, claims that it produced some fifteen separate rental

agreements for this vehicle and that, at the conclusion of those agreements, the

vehicle had 2,110 rental miles on it, thereby satisfying the 2,000-mile minimum.

(Reichert Decl., Doc. 23-1, at ¶ 5 #177).

Finally, for VIN 1687, Ford claims that Northgate provided only one rental

agreement that showed mileage from 46 to 100 miles. (Jones Aff., Doc. 17-3, at ¶ 10,

#149). But Northgate claims that it produced two separate rental agreements for this

vehicle, and the last rental agreement showed that this vehicle had been driven 2,077

rental miles. (Reichert Decl., Doc. 23-1, at ¶ 6, #177).

As is evident from this description, the parties’ representations are

contradictory, and they clearly concern a material issue of fact: whether Northgate

substantiated the 2000-mile minimum necessary to qualify for the FCTP. This seems

a paradigmatic example of the type of dispute in which a court should deny summary

judgment and leave it to the fact finder to select among the competing stories.

But there is one potential wrinkle. Although both parties submitted evidence

in support of their version of the events, Ford argues that Northgate’s evidence

doesn’t cut it. Ford submitted an affidavit from one of its dealer auditors, Bill Jones,

who conducted the audits at issue in this case. Northgate, on the other hand,

submitted a declaration by its general counsel, Robert C. Reichert. Reichert’s

declaration primarily points to certain documents, which are attached as exhibits to

the declaration, that purportedly came from Ford’s auditor. The reports appear to list

the rental history for each of the vehicles that were included in the auditor’s report,

along with the dates and miles that the customer drove the car. (See Audit Reports,

Docs. 23-2, 23-4, at #180–84). According to Reichert, each entry corresponds to a

rental agreement that Northgate provided Ford’s auditor during its incentive-

payment audit.

Ford challenges Northgate’s use of these documents in a few ways. First, Ford

argues that these lists “do not prove that the relevant rental agreements exist.” (Ford

Reply Br., Doc. 25, at #218). In other words, a list of agreements, even if allegedly

compiled by Ford’s auditor, is not the same as the agreements themselves. And,

according to Ford, Northgate needs the latter to prevail, but “notably failed to attach

them in response.” (Id.). Second, Ford not only challenges the evidentiary value of the

audit reports (and their included lists of agreements), but Ford also challenges their

admissibility. More specifically, Ford contends that the information in the documents

is hearsay and not admissible under Fed. R. Evid. 803(6).

The Court disagrees with Ford, both on the evidentiary value of Northgate’s

documents, and also on their admissibility. Start with the latter. Rule 803(6) provides

an exception to the general rule making hearsay inadmissible. That exception allows

a party to introduce “[a] record of an act, event, condition, opinion, or diagnosis if”

(A) the record was made at or near the time by—or from information

transmitted by—someone with knowledge;

(B) the record was kept in the course of a regularly conducted activity of

a business, organization, occupation, or calling, whether or not for profit;

(C) making the record was a regular practice of that activity;

(D) all these conditions are shown by the testimony of the custodian or

another qualified witness, or by a certification that complies with Rule

902(11) or (12) or with a statute permitting certification; and

(E) the opponent does not show that the source of information or the

method or circumstances of preparation indicate a lack of

trustworthiness

Fed. R. Evid. 803(6). The audit reports appear to qualify. They were made at or near

the time of the audit, by someone with knowledge (the Ford auditor). It appears that

at least Northgate (and perhaps Ford) kept copies to document a business activity.

Such audit reports seem to be a “regular practice,” and Reichert appears to qualify as

a custodian. Finally, there is nothing on the face of the documents that appears to

indicate “a lack of trustworthiness.”

Ford argues for a different result based largely on its view that the documents

cannot be “Northgate’s business records, as they were not prepared by Northgate, not

prepared by an employee of Northgate with knowledge [of] the matters asserted and

not kept in the ordinary course of Northgate’s business, and therefore, are not

admissible evidence as a business record.” (Ford Reply Br., Doc. 25, at #218). In other

words, Ford argues that the audit reports cannot be Northgate’s business records,

because, at bottom, they are Ford’s documents. For that reason, says Ford, “the

attachments to the Reichert affidavit did not and cannot negate Ford’s evidence, may

be disregarded under Rule 56(e)(2), and do not create a genuine issue of material

fact.” (Id. at #218–19).

There are two problems with that argument. First, Northgate need not

definitively show that the documents are admissible as business records in order to

survive summary judgment. The law is clear that the “nonmoving party’s evidence

need not be in an admissible form” at summary judgment. Saenz v. Kohl's Dep't

Stores, Inc., No. 20-1517, 2020 WL 6393335, at *1 (6th Cir. Nov. 2, 2020) (citing

Celotex, 477 U.S. at 324). Indeed, affidavits themselves are typically not admissible

at trial, but Rule 56 specifically provides that courts may consider them on summary

judgment. That is not to say that just anything will do—“the party opposing summary

judgment must show that she can make good on the promise of the pleadings by

laying out enough evidence that will be admissible at trial to demonstrate that a

genuine issue on a material fact exists, and that a trial is necessary.” Alexander v.

CareSource, 576 F.3d 551, 558 (6th Cir. 2009). In sum, the form in which the evidence

is provided at summary judgment need not be admissible, so long as the party

opposing summary judgment can show that it likely will be able to present the

evidence in an admissible form at trial.

Northgate made that showing here. As noted above, Reichert’s declaration

seems to show that he (or someone else) could testify at trial that: (1) these documents

were “made at or near the time by … someone with knowledge”—Ford’s auditor; (2)

“the record was kept in the course of regularly conducted activity of a business”—an

incentive-payment audit; (3) and that the creation of an audit report “was a regular

practice of that activity.” Thus, there is at least a strong likelihood that they will

qualify as business records.

And Ford is wrong to claim that the documents cannot be Northgate’s business

records because they “were not prepared by Northgate.” A party’s business records

are not strictly limited to documents that the party itself has prepared. The Fifth

Circuit’s decision in United States v. Ullrich, 580 F.2d 765 (5th Cir. 1978), illustrates

the point in another case tangentially involving Ford. There, the government was

seeking to introduce records it obtained from a Ford dealer in support of its case that

the defendant had stolen a vehicle. The defendant objected on the ground that Ford,

rather than the dealer, had prepared the documents at issue. The court made short

work of that argument:

Although these documents were furnished originally from other

sources, [the dealership manager] testified that they were kept in the

regular course of the dealership’s business. In effect, they were

integrated into the records of the dealership and were used by it. [The

court then explained how the dealership used the two kinds of

documents at issue in its business operations.]

We think it obvious that these documents are admissible as

business records under Fed.R.Evid. 803(6). They are records transmitted

by persons with knowledge and then confirmed and used in the regular

course of the dealership’s business. We also consider the documents to

have been authenticated properly under Fed.R.Evid. 901. They have all

the indicia of trustworthiness that the federal rules require for the

admission of hearsay evidence.

Ullrich, 580 F.2d at 771–772 (5th Cir. 1978) (emphasis added).

That same analysis applies here. As in Ullrich, the document was prepared by

“someone with knowledge.” And, while Ford baldly asserts, without evidence (or

developed argument), that the documents were not kept in the ordinary course of

Northgate’s business, Reichert’s declaration says otherwise. (See, e.g., Reichert Decl.,

Doc. 23-1, at ¶ 4, #177 (noting that the auditor’s report for VIN 5419 was “a business

record of Northgate”)). Moreover, the documents were used for the dealership’s

business purposes—to reconcile payments and credits received from Ford in

connection with the FCTP. For present purposes, the Court concludes that Northgate

has shown it will likely be able to provide this evidence in an admissible form at trial.

Moreover, to the extent there is any doubt on that front, the Court is also mindful

that “technical rulings on the admissibility of evidence have no place in a summary

judgment procedure” and “that any doubts regarding the admissibility of any

evidence should be resolved in favor of admissibility.” Huls v. Freightliner LLC, No.

1:05-CV-86, 2007 WL 2220492, at *2 (D. Vt. Aug. 1, 2007); accord United States v.

Coloplast Corp., 327 F. Supp. 3d 300, 304 n.3 (D. Mass. 2018); Walden v. City of

Providence, 495 F. Supp. 2d 245, 257 n.15 (D.R.I. 2007).

On a related front, even if the Court were to conclude that the proffered

documents are not Northgate’s business records, then presumably Ford’s copies of

those same documents would be Ford’s business records. If that is the case, Northgate

may well be able to authenticate these documents at trial through Ford witnesses.

Accordingly, the Court concludes that Northgate may rely on the audit reports in

opposing summary judgment.

Separately, Ford argues that, even if the Court considers the documents, they

fail to create a genuine issue of fact. Ford contends, for example, that the documents

“do not prove that the relevant rental agreements exist.” (Ford Reply Br., Doc. 25, at

#218). But it is not Northgate’s burden at this stage to prove anything. Rather,

Northgate must simply create a genuine issue of material fact. And that is what these

documents do—they are at least some evidence that Northgate provided Ford several

rental agreements for each car showing that the cars had met the minimum-mileage

requirement.

Nor does it help Ford to point out that other documents (from the same auditor)

contradict the information about rental agreements in the audit reports Northgate

proffered. In these other documents, the auditor indicates that Northgate is being

charged back the incentives Northgate claimed on the cars at issue because the

vehicles failed to meet the minimum mileage requirement. But it is hardly surprising

that some documents corroborate Ford’s reasons for charging back the payments.

Indeed, Northgate introduced these documents as evidence of Ford’s reasons for

charging back the payments in dispute in this case. (See Exhibit 1, Doc. 23-6, at #189–

90). The thrust of the audit reports is that they contradict, and thus cast doubt on,

Ford’s stated reasons for charging back some of the payments. The existence of

contradictory information tends to create genuine issues of fact, not resolve such

issues in favor of one side or another.

Finally, it is worth noting that Northgate may not even need to rely on the

reports to create a genuine issue of material fact over whether the cars at issue met

the minimum mileage requirement. Reichert’s declaration could be read as indicating

that Reichert himself can testify from his own personal knowledge that he provided

the Ford auditor several rental agreements for each of the cars, and that the mileage

reported on the agreements showed that each car met the 2000-mile requirement.

(See, e.g., Reichert Dec., Doc. 23-1, at ¶ 4, #178 (“As set forth in the auditor’s own

report … the auditor reviewed 7 separate rental contracts for this vehicle and this

vehicle was driven a total of 2,066 rental miles.”)). To be sure, the Reichert

Declaration is not the model of clarity on this point. But it at least suggests that

Reichert may have personal knowledge (perhaps from assisting with the audit). If

that is the case, then Northgate may have simply offered the reports as further

corroboration of Reichert’s own testimony. If so, then, with or without the reports, a

genuine issue exists as to whether the cars satisfied the minimum-mileage

requirement.

In sum, the Court DENIES summary judgment to Ford on Northgate’s breach-

of-contract claims for two reasons. First, the Court concludes that the Contract is

ambiguous as to whether Ford could charge back the Base Allowance, 30-Day

Incentive, and 60-Day Incentive simply because Northgate failed to obtain a second

rental agreement. Second, the Court concludes that genuine issues of material fact

exist as to whether Northgate provided rental agreements substantiating that VIN

5419, VIN 8414, and VIN 1687 satisfied the minimum-mileage requirement.

B. The Court Denies Ford’s Motion for Summary Judgment on

Northgate’s O.R.C. § 4517.59(A)(20) Claim.

Northgate’s sole remaining substantive claim asserts that Ford also violated

O.R.C. § 4517.59(A)(20)(a) by charging back Northgate the incentive payments at

issue. That provision states:

(A) Notwithstanding the terms, provisions, or conditions of any

agreement, franchise, or waiver, no franchisor shall:

…

(20) Reduce the amount to be paid to a new motor vehicle dealer, assess

any penalty, impose a charge back, or take any other adverse action

against a new motor vehicle dealer subsequent to and in relation to the

payment of any claim related to a warranty repair or recall

reimbursement, sales incentive or rebate, service incentive, or other

form of incentive compensation unless either of the following applies:

(a) The manufacturer shows that the claim lacks material documentation

or is false, fraudulent, or a misrepresentation. A franchisor may not

deny a claim based solely on a new motor vehicle dealer's incidental

failure to comply with a specific claim processing requirement, such as

a clerical error, that does not put into question the legitimacy of the

claim.

….

Id. (emphasis added)

As with its breach-of-contract count, Northgate separates its claims under

O.R.C. § 4517.59(A)(20)(a) into two buckets: (1) Ford’s chargebacks relating to

Northgate’s failure to obtain a second rental agreement for cars that it rented longer

than 30 days; and (2) Ford’s chargebacks relating to Northgate’s purported failure to

substantiate the mileage requirements for VIN 5419, VIN 8414, and VIN 1687. Ford

seeks summary judgment on both sets of claims, arguing that it was entitled to charge

back Northgate under the statute because Northgate “lack[ed] material

documentation” to support these payments. O.R.C. § 4517.59(A)(20)(a).

In assessing that argument, the Court takes its definition of “material” from

Sims Buick-GMC Truck, Inc. v. Gen. Motors LLC, 876 F.3d 182 (6th Cir. 2017), which

gave the term in O.R.C. § 4517.59(A)(20)(a) its meaning from “everyday English”:

“significant, important, [or] of consequence.” Id. at 188 (quoting Oxford English

Dictionary (3d ed. Online version 2017)). Begin with the chargebacks relating to

Northgate’s failure to provide a second-rental agreement. Ford argues that a second-

rental agreement is material because “[a]greements that last longer than 30 days

become lease agreements in some states, which in some states, create different

insurance requirements.” (Gwaltney Aff., Doc. 17-1, #118).

Northgate offers a couple of unavailing counterarguments in response. First,

Northgate notes that the Sixth Circuit held in Sims Buick that the documentation

requirement in that case was material because (1) it protected the integrity of the

incentive program at issue by helping to prevent abuse or fraud; and (2) it promoted

good relations with GM’s customers. It then argues that Ford failed to demonstrate

that the second-rental-agreement requirement accomplishes either of these goals.

But Northgate reads too much into Sims Buick. That case never said that a

documentation requirement could only be material if it served those two interests. It

simply listed those two interests as examples of what made the documents in that

case material. Sims Buick, 876 F.3d at 188.

Second, Northgate faults Ford for not tailoring its policy as applied to dealers

in Ohio based on Ohio’s specific insurance requirements. Indeed, it is unclear from

the parties’ briefs whether rental agreements in Ohio turn into lease agreements, or

if that is just the case in other states. Regardless, that argument, too, is unavailing.

Nothing in the statute says that a document requirement can only be material if it

has legal consequences under Ohio law. Nor does Northgate point the Court to any

authority holding as much. The statute just requires that the document requirement

be “material,” meaning: “significant, important, [or] of consequence.” And it seems

that a document requirement can be “significant, important, [or] of consequence,” if

it is a standard feature of a national program (like the FCTP) that helps ensure

compliance with at least some States’ laws implicated under the program. Otherwise

Ford potentially would need to come up with different FCTP rules and procedures for

every State in which it operated, a result that undoubtedly would be less efficient and

perhaps even cost prohibitive.

Northgate does, however, make a fair point in noting that Ford offered scant

evidence in support of its materiality argument. The only evidence Ford cited was a

lone paragraph in Gwaltney’s affidavit stating that “[a]greements that last longer

than 30 days become lease agreements in some states, which in some states, create

different insurance requirements.” (Gwaltney Aff., Doc. 17-1, at #118). As Northgate

notes, that tells the Court almost nothing about how these “different insurance

requirements … impact any insurance coverage offered by Ford.” (Northgate Resp.

Br., Doc. 24, #23).

Ultimately, however, the Court denies summary judgment to Ford on these

claims for largely the same reason it denies Ford summary judgment on Northgate’s

first breach-of-contract claim. Assume for the sake of argument that a second-rental

agreement is material documentation for the purpose of claiming the 60-day

incentive. Ford never explains how a second rental agreement is material for the

purpose of claiming the Base Allowance Incentive or the 30-Day Incentive. After all, it

appears there is no dispute that, for at least 11 cars, Northgate complied with all the

document requirements in seeking those two incentives under the FCTP. Yet Ford

nonetheless charged back Northgate those incentives simply for failing to obtain a

second rental agreement—a document that is required only after Northgate has met

the requirements necessary to become eligible for the Base Allowance and the 30-Day

Incentive. The Court needs a better understanding of why Ford considers the second

rental agreement to be material to those two incentives. The answer may turn simply

on (1) the argument that the documentation is material to the 60-Day Incentive,

coupled with (2) Ford’s argument—addressed above—that under the FCTP failure to

establish entitlement as to any claimed incentive for a given vehicle gives Ford the

right to reclaim all incentives for that vehicle. And, if Ford’s argument on the latter

point prevails, that two-step argument may mean Ford wins on the statutory claim.

But, as noted above, the Court finds there is a genuine dispute as to whether Ford’s

understanding of its rights under the FCTP is accurate. Accordingly, the Court denies

summary judgment to Ford on these statutory claims as to these vehicles, as well.

Separately, Northgate also presses an O.R.C. § 4517.59(A)(20)(a) claim based

on Ford’s chargebacks relating to VIN 5419, VIN 8414, and VIN 1687. For the

statutory claims on these vehicles, Northgate does not question that the relevant

rental agreements were material documentation necessary to substantiate the

minimum mileage requirement. It simply argues, as above, that it did in fact provide

such agreements to Ford. The genuine issue of material fact on that front prevents

the Court from granting summary judgment to Ford on this claim, just as on the

contract claim for these vehicles. The Court thus DENIES Ford’s Motion for

Summary Judgment on Northgate’s O.R.C. § 4517.59(A)(20)(a) claim.

CONCLUSION

For the foregoing reasons, the Court DENIES Ford’s Motion for Summary

Judgment on Northgate’s breach-of-contract and O.R.C. § 4517.59(A)(20)(a) claims.

SO ORDERED.

December 17, 2020

DATE DOUGLAS R. COLE

UNITED STATES DISTRICT JUDGE

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