Chrysler Group, LLC v. Dunlap

I'

. .---..

FCA US LLC v. Matthew Dunlap in his capacity as Secretary of State

of the State of Maine, & Darling's

BCD-AP-15-03

FCA US LLC William Vickerson

183 Middle St., Fourth Floor

Portland, ME 04112

Matthew Dunlap, Secretary James Haddow, Esq.

of State & Darling's 2 Monument Square, Suite 900

Portland, ME 04221

STATE OF MAINE BUSINESS AND CONSUi'vfER COURT

CUNIBERLAND, ss Location: Po1iland

Docket No.: BCD-AP-15-03 J

)

FCA US LLC, :u'k/a Cf-IR YSLER )

GROUP, LLC, )

) ORDER ON PETJTIONER'S

Petitioner, ) M.R. Civ. P. 80C APPEAL

)

V. )

)

MATTHEW DUNLAP, in his capacity as )

Secretary of State of the State of Maine, & )

DARLING's, )

)

Respondents.

FCA US LLC, fo1merly known as Chrysler Group and hereinafter referred to as

"Cruysler," appeals from the decision of the Maine Motor Vehicle Franchise Board (the

"Board") dated April 4, 2014 (the "Decision") as to Counts I, II, and III of the Complaint filed

by Respondent Darling's. 1 Counts I and II of the Complaint allege that Chrysler violated 1O

M.R.S. § 1176 of the Dealers Act by failing to timely pay Darling's average percentage markup

on its reimbursement for warranty repairs performed after October 27, 2012. Count III alleges

that Clu·ysler violated Section 1176 of the Business Practices Between Mot01: Vehicle

Manufacturers, Distributors and Dealers Act ("Dealers Act") by failing to pay Darling's its

average percentage markup on "exchange pai1s" used in warranty repairs since January 30, 2009.

Count III also seeks a declaration that Section 1176 requires Chrysler to continue to pay that

markup on those parts. For the reasons discussed below the Court grants in part and denies in

part Cruysler' s appeal.

1

Although the Chrysler Group formally changed its name to FCA US LLC, the Court refers to FCA US

LLC as "Chrysler" in order to muintain consistency with the terminology utilized before the Board.

I. Background and Procedural History

Darling's sells new and used motor vehicles and is a franchisee of Chrysler operating

under Sales and Service Agreements with Cht.ysler (the "Dealer Agreements"). (See R. 2721­

2828 .) Chrysler is a manufacturer of new motor vehicles and is a franchisor of Darling's. (See

id.) As a Chrysler dealer, Darling's performs repairs on Chrysler vehicles pursuant to Chrysler

wananties and its franchise with Chrysler. (R. 1600, 2780, 2797, 2814.) Because the repairs are

covered by Chrysler warranties, the customer does not pay for the repairs. (See, e.g., R. 2914.)

Instead, Chrysler is required to reimburse Darling's for the warranty repairs it performs on

Cluysler' s behalf. (Id.) Th.is includes reimbursement for both the labor associated with the

repair and the pmis used in the repair. (Id.)

On January 30, 2013, Darling's filed its four count Complaint against Chrysler with the

Board. (R. 1-15.) Following hearings and argument submitted by the parties, the Board issued

the Decision on April 4, 2014. On that same date, the Board issued an Order on Darling's

request for attorney fees and costs. (R. 2714-2717.) Thereafter, both Chrysler and Darling's

appealed portions of the Decision to the Superior Court. After briefing, the Court heard oral

argument on the parties' respective appeals on July 17, 2015. On that date, the Court was

informed that Darling's Auto ivfall v. General ivlotors, LLC, PEN-15-82 was pending before the

Law Court. The Comt reviewed the briefing in that matter and determined that it was likely to

be dispositive of the issues raised in Darling's appeal and potentially instructive as to Chrysler's

appeal regarding exchange pmis under Count III. As a result, the Court determined that it would

await the Law Court's decision in Darling's Aulo ivlcrll before issuing a decision on the merits in

the present case.

2

On March 31, 2016, the Lavv Court issued Darling s Auto 1via!I v. Glvi LLC, 2016 ME 48,

1

_A.Jct_. On April 6, 2016, Darling's withdrew its appeal in light of that decision. On May 3,

2016, the Court held oral argument in this matter and another matter involving the same pmiies,

FCA US LLC v. Darling s, BCD-AP-16-03. At oral argument, the parties confirmed that they

1

did not wish to submit supplemental briefing in light of Darling's Auto jl,;Jall and that the present

matter was ready for adjudication.2

II. Standard of Review

When reviewing final agency action pursuant to M.R. Civ. P. 80C, the Court reviews that

d ecision for abuse of discretion, errors of law or findings not supported by the evidence.

Centamore v. Dep't of Human Services, 664 A.2d 369, 370 (Me. 1995). "An administrative

d ecision will be sustained if, on the basis of the entire record before it, the agency could have

fairly and reasonably found the facts as it did." Seider v. Bd. ofExaminer's ofPsychologists,

2000 lvIE 206, ~ 9, 762 A.2d 551. The Court's review is limited to "determining whether the

agency's conclusions are unreasonable, unjust or unlawful in light of the record." lmagineering v.

Sup't ofInsurance, 593 A.2d 1050, 1053 (Me. 1991). The focus on appeal is not whether the

cou1i would have reached the same conclusion as the agency, but whether the record contains

c ompetent and substantial evidence that supports the result reached by the agency. See id.

Furthermore, when the claimed error involves the interpretation of a statute, the Court

reviews the Board's interpretation de.novo. See Ford lvfotor Co. v. Darling s, 2014 ME 7, ~ 15,

1

86 A.Jd 35. However, "[w]hen the dispute involves an agency's interpretation of a statute

a dministered by it, the agency's interpretation, although not conclusive, is entitled to great

d eference and will be upheld unless the statute plainly compels a contrary result." Wood v.

2

The Cou1i agrees with the parties' that further briefing was not necessary. The Court has read

Darling's Auto ivfalt v. Givf LLC, 2016 ME 48, _ A.3d _ and agrees with the paiiies' implicit

representation that this case does not impact the questions at issue in the present matter.

".)

Superintendent ofIns., 63 8 A.2d 67, 70 (Me. 1994) (quotation omitted). If the statute is

ambiguous, the Corni reviews whether the agency's construction is reasonable. Guilford Tran.sp.

Indus. v. Pub. Utils. Comm 'n, 2000ME31, ~ 11, 746 A.2d 910 (citation omitted).

III. The Average Percentage Mnrkup Dispute, Counts I and II

A. Underlying Facts

Prior to October 27, 2012, Chrysler reimbursed Darling's for parts used in warranty work

at cost plus an 85% markup. (R 2707, ~ 2.) On September 27, 2012, Darling's submitted two

average percentage parts markup declarations to Chrysler. (R. 2708, ~ 4.) The submissions

declared Darling's average percentage parts markup as 131 % for its Ellsworth location and

113% for Augusta. (Id.) The Board found that Darling's submissions identified 398 consecutive

repair orders for its Ellsworth location and 628 for Augusta. (Id. at~ 5.) Darling's entered the

repair orders individually onto a spreadsheet and then identified the "100 sequential nonwarranty

customer-paid service repair orders" (the '1 100 sequential orders") within each group that it used

to establish its average percentage markups. (Id.) Darling's then sent copies of the 100

sequential orders selected to Chrysler. (Id.) Each set of 100 sequential orders included orders

containing state inspections, routine maintenance, and accessories, but these repair orders were

not used in calculating the average percentage markups. (Id at ~ 6; 3241-3 622; 1821.)

Chrysler notified Darling's that it did not consider its submissions sufficient under

Section 1176 on October 17, 2012 "because of the lack of sequential repair orders." (R. 2709, ~

7.) Chrysler asked Darling's to submit copies of all the repair orders that it had not supplied, but

listed on the spreadsheet. (Id.) Darling's refused to do so. (Id.) "When other Maine dealers had

established markups with Chrysler after 2003, they had supplied copies of all the repair orders

referenced in their submissions." (Id.)

4

On November 29, 2012, Chrysler changed its position to the one sought by Darling's and

began paying a markup of 131 % for Darling's Ellsworth and Augusta dealerships. (Id. at~ 10.)

Chtysler also paid the 131 % markup on patis Darling's purchased for warranty repairs between

October 27, 2012 and November 28, 2012. (Id.) Chrysler further paid the amount claimed due

by Darling's in Count II for Ellswo1ih warranty repairs it had not reimbursed at the 131 %

markup. (Id. at~ 11.) Darling's reached its average percentage parts markup by calculating the

average markup on each pa1i and then averaging the averages. (Id. at~ 12.) Chrysler argued that

this computation was not consistent with Section 1176, but did not seek to lower Darling's

markup in the underlying Board action. (Id.)

B. The Board's Decision

The Board determined that Section 1176 does not require the submission of 100

sequential nonwarranty customer-paid service repair orders to be "consecutive" because "such

repair orders are simply not generated by a dealer consecutively." (R. 2710, ~ 23.) The Board

also explained that Section 1176 does not require the dealer to submit each one of the larger

groups of consecutive repair orders from which it drew the 100 sequential orders. (Id.)

Fmihermore, the Board detennined that out of the 100 sequential orders, those containing

state inspections, routine maintenance, and accessories could not be counted towards the average

percentage parts markup under Section 1176. (R. 2708, ~ 6.) As a result, the Board concluded

that the submissions included 59 so-called "qualifying repair orders" for the Ellsworth

dealership, and 68 for Augusta. (Id.)

The Board also determined that Darling's method of computing its average percentage

markup was appropriate under Section 1 176 because the section did not set out a particular

method of calculation. (R. 2711, ~ 25 .) As a result, the Board concluded that Darlings submitted

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its repair orders "according to the law" and properly established its average percentage markup.

(Id. at~ 26; R. 2712, ~ 35.)

Based on the above findings of fact and conclusions of law, the Board dete1mined that

Chrysler violated Section 1176 by failing to timely pay Darling's the increase in its average

percentage markup from 85% to 131 %. (R. 2712, ~ 35.) As a result, the Board imposed the

maximum civil penalty permitted under Section 1171-B(3) of$10,000. (Id.)

C. Discussion

Chrysler contends that Dmling' s declaration of its average percentage pa1is markup rate

failed to m'eet section l l 76's requirement of establishing the rate "by submitting to the franchisor

100 sequential nonwananty customer-paid service repair orders .... covering repairs made no

more than 180 days before the submission and declaring the average percentage markup." 10

M.R.S. § 1176. This is because Darling's 100 nonwarranty customer paid-service repair orders

were not in sequential order, did not include the larger subset from which the 100 repair orders

were culled, and included non-qualifyi.t1g orders involving state inspections, routine

maintenance, and accessories. Chrysler also argues that Darling's manner of calculating its

average percentage markup is mathematically flawed and unfairly inflates Darling's average

percentage markup. Chrysler argues that the "average percentage markup" must be calculated by

adding the cost of all of the parts and dividing this sum by the selling price of all the parts, not by

calculating the percentage markup of each and every part identified in the repair orders, adding

these percentages together, and then dividing that sum by the total number of repair orders.

Darling's responds that by Chrysler's logic, Darling's must perform 100 nonwaITanty

customer-paid service rep8ir orders consecutively and ignore all other vehicles brought into its

repair shop until those l 00 repai.t·s are completed. Darling's further responds that Section 1176

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does not require repair orders involving state inspections, routine maintenance and accessories to

be excluded all together from the l 00 sequential orders. Instead, Section 1176 only excludes

those particular repairs from factoring into the calculation of the markup. Darling's contends that

Chrysler's alternate interpretation is only possible if the word "qualifying" is inserted into the

statute. Finally, Darling's argues that the Board did not err in finding Darling's computation of

the average percentage markups satisfied Section 1176 because the statute does not set out a

required method of calculation.

Section 1176 provides, in pertinent part:

For purposes of this section, the retail rate customarily charged by the

franchisee for parts may be established by submitting to the franchisor 100

sequential nonwarranty customer~paid service repair orders or 60 days of

nonwarranty customer~paid service repair orders, whichever is less in

terms of total cost ... and declaring the average percentage markup .... Only

retail sales not involving wan'anty repairs, not involving state inspection,

not involving routine maintenance such as changing the oil and oil filter

and not involving accessories may be considered in calculating the

average percentage markup. A franchisor may not require a franchisee to

establish the average percentage markup by an unduly burdensome or

time-consuming method or by requiring information that is unduly

burdensome or time-consuming to provide, including, but not limited to,

part-by-part or transaction-by-transaction calculations.

10 M.R.S.A. § 1176 (2015).

In Darling's Bangor Ford v. Ford 1vfotor Co., the Superior Court (Penobscot County,

Hjelm, J) addressed issues that are virtually identical to those in the present dispute. 2006 Me.

Super. LEXIS 110 (May 25, 2006). First, Darling's Bangor Ford determined that the plain

language of Section 1176 was clear that franchisees were not required to submit any repair

orders beyond the 100 sequential nonwarranty customer-paid service repairs described in the

statute. Id at *5. By specifically identifying the records a franchisee may submit to establish the

retnil rate, Darling's Bangor Ford explained that the Statute implicitly precluded any need to

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submit additional records. See id. at *5-6. Furthermore, an alternate construction could run

afoul of Section 117 6' s prohibition against requiring a franchisee to engage in an unduly

burdensome process of providing records relevant to the process of determining the retail rate.

Id. at *6. Darling's Bangor Ford noted that this was supported by the record before it since the

production of additional repair orders would nearly triple the number of orders required by

Section 1176. Id

Second, Darling's Bangor Ford determined that the l 00 sequential orders did include

records for state inspections, routine maintenance, and accessories even though these repair

orders were not considered in calculating the average retail rate. Id. at *7-9. In reaching this

conclusion, Darling's Bangor Ford first explained that "wan-anty repairs" are not included in the

100 sequential nonwal1'anty customer-paid service repair orders by the plain language of the

statute. Id. at *7. Regarding state inspections, routine maintenance, and accessories, Darling's

Bangor Ford explained that Section 1176 provided separate processes for: 1) identifying repair

orders that a franchisee may submit to the franchisor as part of the 100 sequential orders; and 2)

calculating the average retail rate from within the 100 sequential orders. Id. at *7-8. Darling's

Bangor Ford found that "[i]ts clear that the Legislature has characterized state inspections,

routine maintenance ... and accessories as forms of work that involve parts, because the statute

refers to this work in the context of identifying which types of repairs can be included in the

retail rate computation." Id. at *8. As a result, the Legislature would have included exclusionary

language if it did not intend these types of repair orders to make up the set of 100 sequential

orders. Id. Darling's Bangor Ford also noted that even though the 100 sequential orders may

end up including many records that cannot be used to determine the retail rate for parts and that

8

the basis for the calculation may be too limited to allow a proper result, this "is a legislative

judgment" and not for the courts to second guess. Id. at * 8-9.

Third, Darling's Bangor Ford determined that "the District Court correctly construed the

relevant provisions of section 1176" when it concluded that the "average dollar value markup"

for parts used in qualifying nonwarranty repairs should be utilized to arrive at the average

percentage markup. Id. at *9-10, 12. Under this approach, the markup is arrived at by

calculating the cumulative difference between the dealer cost and the retail sales price for all

such paiis divided by the number of paiis. Id. at* 10. When that figure is divided (and then

multiplied by 100) by the average dealer cost for those same parts, the average percentage

markup is established. Id. In arriving at this decision, Darling's Bangor Ford noted that Section

1176 "also acconunodates Darling's construction, which first identifies the percentage by which

Darling's marks up a part from the dealer cost and then calls for an average of those percentages

among the pa1is included in the 100 [qualifying] repair orders." Id. at *10. The approach

advocated by Darling's, however, created a less accurate picture because "[a] franchisee's price

struchire is simply better reflected in an analysis where the magnitude of its price markups is tied

to the relative value of the part itself." Id at *l 1~12.

"In interpreting a statute, [the Court's] single goal is to give effect to the Legislature's

intent in enacting the statute." Dickau v. Vt. j'vfut. Ins. Co., 2014 NIB 158, ~ 19, 107 A.3d 621

(citation omitted). Initially, the Court seeks to accomplish this goal by "examining the plain

meaning of the statutory language and considering the language in the context of the whole

statutory scheme." Darling's v. Ford 1'vlotor Co. 1998 ME 232, ~ 5, 719 A.2d 111 (citations

omitted). " A plain language interpretation should not be confused witb a literal interpretation,

however." Dickau, 2014 NIB 158, ~ 20, 107 A.3d 621 (citations omitted). "Rather, courts are

9

guided by a host of principles intended to assist in determining the meaning and intent of a

provision even within the confines of a plain language analysis." Id. (citation omitted). One of

these principles is to take "into account the subject matter and purposes of the statute, and the

consequences of a pm1icular interpretation." Id ~ 21 (citation omitted). "In determining a

statute's 'practical operation and potential consequences,' [the court] may reject any construction

that is 'inimical to the public interest' or creates absurd, illogical, unreasonable, inconsistent or

anomalous results if an alternative interpretation avoids such results." Id. (quotation omitted);

see also Darling's v. Ford lvfotor Co., 1998 tvfE 232, ~ 5, 719 A.2d 111 (the Court avoids

"statuto1y constructions that create absurd, illogical or inconsistent results") (citation omitted).

If a statute is ambiguous, the court may look beyond the plain language of the statute and

the context of the statutory scheme "to indicia of legislative intent such as the statute's h.isto1y

and its underlying policy." Fuhrmann v. Staples, 2012 ME 135, ~ 23, 58 A.3d 1083 (quotation

omitted). "A statute is ambiguous if it is reasonably susceptible to different interpretations." Id.

(quotation omitted).

Here, the Board did not err in determining that Section 1176 does not require the

submission of 100 sequential nonwarranty customer~paid service repair orders to be

"consecutive." This is because a contra1y interpretation would bring about the absurd result of

requiring franchisee's to cany out 100 nonwarranty customer-paid service repair orders in a row,

to the exch1sion of other business. Additionally, the Board did not e1T in determining that

Darling's need not submit the larger group of repair orders from which the 100 sequential orders

were culled. This is because the plain language of Section 1176 is clear that the franchisee need

10

3

only submit the 100 sequential orders. Furthe1more, a contrary interpretation would nm counter

to Section I l 76's prohibition against requiring a franchisee to engage in an unduly burdensome

or time-consuming method. See Darling's Bangor Ford, 2006 Me. Super. LEXIS 110, *5-6; see

also (R. 2708, ~ 5) (the two sets of 100 sequential orders were culled from 398 and 629

consecutive repair orders, respectively, and would thus impose a much more burdensome

requirement on Darling's).

The Board did, however, err in its dete1mination that all J00 of the sequential orders need

not "qualify" for calculation towards the average percentage markup. This is because the clear

intent of Section 1176 was to designate a sufficient sample size from which to draw an average

4

percentage markup without overburdening the franchisee. If non-qualifying orders, such as

state inspections, were included in the 100 sequential orders, the sample size from which the

average percentage markup is drawn would vary from submission to submission. This variation

would undermine the goal of establishing a representative sample. Furthermore, permitting non­

qualifying orders to constitute prui of the 100 sequential orders could lead to the absurd result of

an average percentage markup being drawn from a very small, non-representative sample size. 5

3

The plain language referenced provides that "the retail rate customarily charged by the franchisee for

pa1ts may be established by submitting to the franchisor 100 sequential non warranty customer-paid

servicerepairorders .... " !OM.R.S.A. § 1176.

4

Section 1176 provides that the sample size could either be 100 sequential orders or 60 days of

nonwarranty customer-paid service repair orders, whichever is less in terms of total cost. IO M.R.S.A. §

1176. However, "[o]nly retail sales not involving warranty repairs, not involving state inspection, not

involving routine maintenance such as changing the oil and oil filter and not involving accessories may be

considered in calculating the average percentage markup." Id.

5

The Court ftaiher notes that under the plain language of Section 1176, even if Darling's submitted a

non-warranty repair order that involved a state inspection, routine maintenance, or accessories as well as

another sale that would otherwise be eligible towards the calculation of the average percentage markup,

the entire repair order cannot be counted towards the I00 sequential orders. While it is arguably a

reasonable approach to count a repair order that involves qualifying and non-qualifying sales-such as a

state inspection-towards the 100 sequential repairs so long as the non-qualifying repairs are excluded

from the average percentage markup calculation, the Legislature did not choose this route. Instead, the

Legislature broadly provided that only retail sales not involving warranty repairs, state (nspection, routine

maintenance and accessories may be considered in calculating the average percentage markup.

11

To the extent the intent and language of Section 1176 is reasonably susceptible to an alternate

interpretation in which "non-qualifying" orders are included in the l 00 sequential orders, the

statute's legislative history indicates that the present fo1mula was designed to lend certainty to

the reimbursement process. An Act to Amend the Motor Vehicle Franchise Law: Regarding L.D.

1294 Before the Comm. on Business, Research and Economic Development, 121st Legis. (May

19, 2003) (testimony of Carol Kontos explaining findings of Commission appointed by the

Business, Research and Economic Development Committee and recommending the

establishment of "a statutory formula to determine retail price for parts" in order to "lend

certainty to the reimbursement process"). Pennitting the sample size upon which the formula is

applied to vary from submission to submission would unde1mine this goal.

\Vhile Darling's Bangor Ford argues that the inclusion of this potentially absurd result

was the Legislature's judgment and should not be second guessed by the courts, that case was

decided without the benefit of the Law Comi's reiteration that "[i]n interpreting a statute, our

single goal is to give effect to the Legislature's intent in enacting the statute" and that coutis may

go "beyond the literal language of a statute if reliance on that language would defeat the plain

purpose of the statute .... " Dickczu, 2014 ?vIE 158, ~ 19, 107 A.3d 621 (quotation omitted).

Furthermore, the Court disagrees with the manner in which Darlin¥ 's Bangor Ford's parsed the

statutory sentence describing how the average percentage markup must be calculated. 6 In

pmiicular, Darling's Bangor Ford separated its analysis of "sales involving warranty repairs"

from the other repairs excluded from the average percentage markup calculation, i.e. state

inspections, routine maintenance and accessories. When read as a whole, the sentence suppo1is

the interpretation that the 100 sequential orders must all be "qualifying" orders because there

6

The sentence provides, "Only retail sales not involving warranty repairs, not involving state inspection,

not involving routine maintenance such as changing the oil and oil filter and not involving accessories

may be considered in calculating the average percentage markup." 10 M. R.S .A. § 1176.

12

would otherwise be no need to carve out retail sales involving wananty repairs from the 100, as

wananty repairs are by definition not included in the "100 seql1ential nonwarranty customer-paid

service repair orders." 10 M.R.S.A. § 1176 (emphasis added). Accordingly, the Court reverses

the Board's determination that Darling's successfully submitted 100 sequential nonwarranty

customer-paid service repair orders to Chrysler for the purpose of establishing its average

percentage markups.

Finally, the Board did not err in determining that the method utilized by Darling's to

calculate its average percentage markups was appropriate under Section 1176 because that

section does not set out a required method. 7 Instead, the statute prohibits franchisors from

imposing unduly burdensome and time-consuming methods to calculate the average percentage

markup, but otherwise permits a franchisee to "declar(e] the average percentage markup"

without further guidance. 8 Chrysler's assetiions to the contrary, Darling's Bangor Ford did not

hold otherwise. While Darling's Bangor Ford pointed out shortcomings in the method proposed

by Darling's in that case-and utilized by Darling's in the present case-it clearly stated that

Section 1176 "also accommodates Darling's construction .... " 2006 Me. Super. LEXIS 110, *10­

11. This remains the case even though Darling's Bangor Ford determined that Darling's

approach created a less accurate picture because "[a] franchisee's price structure is simply better

7

Section 1176 provides, in pertinent part, that "the retail rate customarily charged by the franchisee for

pa11s may be established by submitting to 'the franchisor" a number of qualifying repair orders "and

declaring the average percentage markup." lO M.R.S.A. § 1176. The statute fu11her provides that only

certain sales "may be considered in calculating the average percentage markup" and that "[a] franchisor

may not require a franchisee to establish the average percentage markup by an unduly burdensome or

time-consuming method .... " Id.

8

Fu11hermore, the Court notes that the Legislature amended Section l 176 in 2003 to the present language

in lieu of more specific language regarding the method for calculating reimbursement rates. See I 0

M.R.S.A. § 1 l 76 (2002) ("A dealer may establish a l'etail rate, for purposes of warranty reimbmsernent,

by calculating the markup ratio of all parts sold at retail for that franchise for the most recently completed

calendar month and multiplying that markup ratio by the amount paid for each part at wholesale. The

calculation must be a ratio, the numerator of wb..ich is the total price paid by the franchisee for those sum

parts and the denominator of which is the total price of all parts provided at retail for that franchisee.")

13

reflected in an analysis where the magnitude of its price markups is tied to the relative value of

the part itself." Id. at *11-12.

IV. The Exchange Part Dispute, Count III

A. Underlying Facts

Chrysler provides certain dealers, including Darling's, a small number of "exchange

components" or "exchange parts" for wananty work at no cost. (R. 2709, ~ 15.) Chrysler has

never paid Darling's its average percentage markup on those pmis. (Id.) Exchange parts are

typically audio and electronic components that are not regularly stocked by dealers. (R. 2710, ~

16.) Dealers do not regularly store these components because they tend to be vehicle-specific,

high-cost electronic components. (Id.) However, the class of exchange pa1is is growing because

more parts are becoming electric, as opposed to mechanical. (See id.) When Darling's installs

the equivalent nonwarranty exchange parts in a repair, it charges nonwarranty customers its

average percentage markup. (Id. at~ 17.) Chrysler's exchange paii system has been in place for

decades and Darling's has utilized the system since at least 1994. (See R. 1755-1756.) Darling's

did not, however, request a markup on any of the exchange parts used in its warranty repairs

until December 21, 2011. (See R. 2711, ~ 27.)

B. The Board's Decision

The Board determined that Chrysler was required to ''reimburse" Darling's for "exchange

pruis" at Darling's "retail rate," which was established by its average percentage markup. (R.

2712, ~ 33.) This dete1mination was informed heavily by the Legislature's intent when passing

Section 1176. (R. 2711, ~ 28.) Specifically, the Legislature was concerned about manufacturers

using their superior bargaining power to reimburse dealers at artificially low prices for warranty

repairs, thereby causing dealers to charge non warranty customers inflated repair prices. (Id.)

14

With this intent in mind and a focus on rules of interpretation that focus on the "practical

operation and potential consequences" of a particular construction, the Board explained that

Chrysler's "narrow construction" of the term "reimburse" would "thwart the purpose of§ 1176:

to enable ... dealers to compete in the market place - to cover their overhead and realize a profit ­

without Maine consumers having to pay dealers more for nonwananty repairs to their vehicles,

than new car manufacturers pay dealers for warranty repairs." (R. 2712, ~~ 32, 33.)

Furthermore, the Board pointed to Darling's v. Ford, 1998 i'vffi 232, 719 A.2d 111 as an

analogous situation in which the Law Court refused to strictly constrne the language of Section

1176 when it determined that the average percentage markup applied to sublet warranty repairs,

even though they were not performed by the dealer.

The Board then explained that that it did not have the power to issue injunctions and thus

denied Darling's request to make Chrysler continue to pay Darling's its average percentage

markup on exchange parts. (R. 2713, ~ 37.) However, the Board explained that pursuant to

Section 1188(2) and its interpretation of Section 1176, Ch1ysler was required to pay Darling's

established average percentage markup on exchange pruis. (Id. at~ 39.) Finally, the Board

imposed "the minimum Civil Penalty of $1,000.00 for each of the thiiieen 60-day periods that

Chrysler violated Section 1176 by not paying the average percentage markup on exchange pmts.

(Id. at~ 36.)

C. Discussion

1. Whether the Board Erred in DeteJ'mining that Exchange Pal'ts lv!ust be

Reimbursed at Darling's Retail Rate Customarily Chal'ged

Chrysler contends that the Board eITed by requiring it to reimburse Darling's for any

exchange parts provided at the "retail rate" customarily charged by Darling's. This is because

the plain language of Section 1176 is inapplicable to "no cost" exchange parts since there is no

15

cost for Chrysler to "reimburse." Chrysler suppo1is this argument by pointing to dictionary

definitions of the term "reimburse" and statutes in other jurisdictions that, unlike Section 1176,

explicitly provide for the reimbursement of pmis provided at no cost for use in warranty repairs. 9

Chrysler further contends that the Board's Decision yields an illogical result insofar as there is

no cost basis upon which to calculate a markup when the dealer pays nothing for the pari.

Ch1ysler also argues that the Board erred because the record indicates Chrysler, not Darling's,

bears the overhead costs associated with exchange pmis and case law has rejected the argument

that Section 1176 requires a manufacturer to reimburse a dealer for overhead costs stemming

from pmis purchased by a manufacturer and sold to retail customers. See General Atfotors C01p.

v. Darling's, 324 F. Supp. 2d 257,271 (D. Me. 2004), aff'cl 444 FJd 98 (1st Cir. 2006).

Darling's responds that the Board properly saw Chrysler's decision to provide parts at

"no cost" as an impennissible attempt to work around the obligation imposed under Section 1176

to reimburse dealers for parts at their average percentage markup. Darling's further argues that

"reimburse" means to pay back for a loss incurred, which Darling's incurs every tin1e Ch1ysler

fails to provide Darling's its statutorily required markup. Darling's explains that it detennines the

retail price to charge nonwaiTanty customers by considering: 1) the price Darling's paid Chrysler

to obtain the paii; 2) an amount to cover Darling's overhead; and 3) an amount to allow a profit.

(See R. 1622-1623.) With respect to exchange pmis, Darling's contends that the first factor is

inapplicable, but the second two apply and constitute a loss that must be reimbursed. Darling's

also argues that the statute's relied upon by Chrysler are not persuasive because Section 1176

9

Specifically, Chrysler points to: Fla. Stat.§ 320.696(3)(c), "If a licensee furnishes a part or component

to a [dealer] at no cost to use in performing repairs under a ... warranty repair, the Iicensee shall

compensate the dealer for the part or component in the same manner as warranty parts compensation

Linder this subsection, less the dealer cost for the part"; and Ya. Code. Ann. § 46.2-1571 (5), "If a

manufacturer... furnishes a part to a dealer at no cost for use by the dealer in performing work for which

the manufactmer ... is required to compensate the dealer under this section, the manufacturer ... shall

compensate the dealer for the pati in the same manner as warranty parts compensation."

16

contains broad language that serves to accomplish the same purpose as those statutes. In

addition, Darling's responds that the exchange pmis have a readily determinable cost based on

their nonwarranty price. Finally, Darling's argues that there is ample evidence demonstrating

that there is no need to treat exchange parts differently from other pmis used in repairs and that

the "relatively small sub-group" of exchange pa1is is growing as technology advances and the

complexity of electronics evolves.

Section 1176 provides, in pertinent part, that:

If a motor vehicle franchisor requires or permits a motor vehicle franchisee to

perform labor or provide parts in satisfaction of a warranty created by the

franchisor, the franchisor shall properly and promptly fulfill its warranty

obligations ... and ... shall reimburse the franchisee for any parts so provided at the

retail rate customarily charged by that franchisee for the san1e parts when not

provided in satisfaction of a warranty.

10 M.R.S. § 1176.

As stated supra section III(C), "[i]n interpreting a stahlte, [the Court's] single goal is to

give effect to the Legislature's intent in enacting the stahlte." Dickau v. Vt. lvfut Ins. Co., 2014

ME 158, ~ 19, l 07 A.Jd 62 l (citation omitted). The Court seeks to accomplish this goal by

"examining the plain meaning of the statutory language and considering the language in the

context of the whole statutory scheme." Darling's v. Ford Jvfotor Co. 1998 l'vffi 232, ~ 5, 719

A.2d 111 ( citations omitted). When carrying out this analysis, the Cami takes "into account the

subject matter and purposes of the statute., and the consequences of a particular interpretation."

Dickau, 2014 ME 158, ~ 21, 107 A.Jd 621 (citation omitted). ''In determining a stahlte's

'practical operation and potential consequences,' [the court] may reject any construction that is

'inimical to the public interest' or creates absurd, illogical, unreasonable, inconsistent or

anomalous results if an alternative interpretation avoids such results." id (quotation omitted);

see also Darling's v. Ford jvfotor Co., 1998 ME 232, ~ 5, 719 A.2d 111 (the Com1 avoids

17

"statutory constructions that create absurd, illogical or inconsistent results") (citation omitted). If

a statute is ambiguous, the court may look beyond the plain language of the statute and the

context of the statutory scheme "to indicia of legislative intent such as the statute's history and

its underlying policy." Fuhrmann v. Staples, 2012 ivffi 135, ~ 23, 58 A.3d 1083 (quotation

omitted). "A statute is ambiguous if it is reasonably susceptible to different interpretations." Id.

(quotation omitted).

Here, the Board did not err in determining that Cluysler was required to reimburse

Darling's at its ''retail rate" for exchange paris. (R. 2712, ~ 33.) This is because the plain

language of Section 1176 was intended to guarantee that franchisors reimburse franchisees for

parts used in wananty repairs "at the retail rate customarily charged by [the] franchisee for the

same parts when not provided in satisfaction of a warranty." 10 M.R.S.A. § 1176. Contraiy to

Ch1ysler' s assertions, the term "reimburse" is clearly tied to the retail rate that the franchisee

customarily charges for parts when used in nonwananty repairs. There is no indication that the

amount "reimbursed" is the amount the franchisor charges the franchisee for the paii when used

in a warranty repair.

Fmihermore, this interpretation is consistent with the Law Couii's determination in

Darling's v. Ford ivfotor Co. that Section 1176 applies to warranty repairs sublet by a dealer who

cannot provide the specialized labor or materials required for the repair. 1998 ME 232, ~~ 20~21,

219 A.2d 111. In that case, the Law Court explained that Section 1176 applied because the

statute "governs reimbursement of all repairs in which a manufach1rer requires or permits a

motor vehicle franchisee to perform labor or provide pmis in satisfaction of a wmranty ," and

"[s]ince Section 1176 applies to all warranty repairs, it applies to warranty repairs accepted by

dealers who lack the ability to make all repairs on their premises, as well as to dealers who have

18

the ability to make all repairs on their premises." Id. ~ 21 (quotation omitted). The Law Court's

emphasis on Section 1176 applying to all warranty repairs is consistent with the Board's

determination that Section 1176 applies to exchange patis.

In addition, even if the term "reimburse" created sufficient ambiguity for the Court to

resort to indicia of legislative intent beyond the plain terms of the statute, the legislative history

behind Section 1176 supports the Board's interpretation. This is because Section 1176 was

enacted in recognition of "[t]he disparity in bargaining power between automobile manufacturers

and their dealers" and designed to "protect dealers from actions by manufacturers that were

perceived as abusive and oppressive." Acadia Motors, Inc. v. Ford i'vfotor Co., 844 F. Supp. 819,

827-28 (D. Me. 1994); aff'd in part, rev 'din part on other grounds, 44 F.3d 1050 (1st Cir. 1995)

(citing Me. L.D. 1878, I 09th Leg., 2d Sess. (Statement of Fact).) In pa1iicular, the Legislature

wanted to prevent manufacturers, "'unwilling to pay the fair and full price for repairs made

necessary when their automobiles failed to meet wananty standards,' to force dealers to shift

costs of performing watTanty work to nonwarranty customers." Id. (quoting Me. L.D. 1878,

109th Leg., 2d Sess. (Statement of Fact)); see also Darling's v. Ford 1vlotor Co., 1998 wIB 232, ~

10, 719 A.2d 111 (noting that Legislature amended Section 1176 in 1979 to introduce the te1m

"retail rate" in recognition of "the Legislature's concern that manufacturers were using their

superior bargaining power to reimburse dealers at a1iificially low prices for warranty repairs,

thereby causing dealers to charge nonwarranty customers inflated repair prices. "). While the

statute was initially focused on ensuring franchisees received their retail rate for labor, it was

amended in 1991 to "require that dealers be compensated for paiis in the same manner as labor

when work is perfo1med under a manufacturer warranty ." fvle. L.D . 1235, 115th Leg., 1st Sess.

(Statement of Fact). Accordingly, the Board's interpretation of Section 1176 is consistent with

19

the statute's intended purpose in that it refuses to recognize an exception to Section 1176 that

could ultimately prove harmful to Maine consumers. (See R. 2720, ~ 16) (noting testimony that

the class of exchange parts is growing because certain patis are now considered electrical rather

than mechanical).

Chrysler's arguments to the contrary are not persuasive. While the Legislature could

have made an explicit statement that parts provided at no cost are subject to markup like the

Florida and Virginia statutes, the fact that the Maine Legislature chose to address this issue using

the broader language discussed above does not negate the import of that plain language or the

clear legislative intent behind the statute. Fmihermore, Chrysler's argument that the Board's

conclusion is illogical because you can't markup a prui that costs nothing ignores the fact that

Chrysler provided a non-zero cost for each exchange paii through its so-called dealer net price.

(See R. 1668-1670; 1674; 4350-4315; see also R. 4337-4439.) Similarly, Chrysler's argument

that the Board's Decision should be reversed because there was no evidence that Darling's

incun-ed overhead expenses due to exchange parts is factually incorrect (see R. 1619; 1667;

1753-1755; 1826), and, in any event, not a factor in the Court's interpretation of Section 1176. 10

11. Whether the Board Erred in Determining when Imposing Penalties etc.

Chrysler contends that even if exchange paiis are subject to reimbursement under Section

1176, the Board erred in assessing $13,000 in civil penalties under l OM.R.S.A. § l I 71-B(3)

because the Board improperly based the penalty on a continuing violation that lasted over

thi1ieen 60-day periods between December 21, 2011 and January 7, 2014. Section 1171-B(J),

however, imposes penalties based on transactions within a 60-day period, under which multiple

transactions are deemed a single violation. Chrysler argues that, at most, the civil penalty

10

Assuming without specifically deciding that Section 1176 was not drafted to ensure that dealers have

their overhead costs covered and realize a profit, this does not alter the Court's determination as to the

proper interpretation of Section 1176 as set forth above.

20

imposed by the Board should be $4,000 because the violations occurred with.in four sixty-day

11

periods, at $1,000 a piece.

Darling's responds the Board did not e1T because the penalty was properly based on its

finding that Chrysler had adopted a systemic policy that constituted a violation of each of the

successive 60-day periods following Darling's initial claim in December of 2011. Darling's

further argues that even if the Board erred, it cannot reduce the penalty to $4,000 as requested by

Chrysler. Instead, the Court must remand the matter to the Board for a new determination of

civil penalties consistent with Section 1 l 71-B(3).

10 M.R.S. § l 171-B(3) provides that:

If the board determines after a proceeding conducted in accordance with this

chapter that a manufacturer or distributor is violating or has violated any

provision of this chapter or any rule or order of the board issued pursuant to this

chapter, the board shall levy a civil penalty of not less than$ 1,000 nor more than

$ 10,000 for each violation. If the violation involves multiple transactions within a

60-day period, these multiple transactions are deemed a single violation.

In determining the amount of a civil penalty levied under this chapter, the board

shall consider:

A. The seriousness of the violation, including but not limited to the

nature, circumstances, extent and gravity of the prohibited acts and

the harm or potential harm created to the safety of the public;

B. The economic damage to the public caused by the violation;

C. Any previous violations;

D. The amount necessary to deter future violations;

E. Efforts made to correct the violation; and

F. Any other matters that justice may require.

10 M.R.S. § 1171-B(J) (2015).

Here, the Board erred by imposing penalties on Chrysler based on a continuing violation

of Section 1176 through thi1teen 60-day periods. This is because when Section l 17 l-8(3) is

11

Darling's claims were made on the following dates and could be grouped into sixty-day periods as

follows:Firstsixty-dayperiod: 12/21/11, 1/11/12, l/17/l2;Secondsixty-dayperiod: 11/2/12, 12/20/12;

Third sixty-day period: 1/14/13, 2/13/13, 2/18/13, 3/7/13; Fourth sixty-day period: 4/10/13, 4/18/13,

4/19/13, 4/26/13, 5/1/13, and 5/14/13.

21

read in context with Section 1176, it is clear that the mandatory civil penalty is triggered by

actual claims filed by franchisees, not the amount of time following a claim as to which a

franchisor persists in holding an erroneous position . Section 1171-B(3) provides that the Board

"shall levy a civil penalty ... for each violation" of the Dealers Act. The statute then provides that

multiple transactions occu1Ting within a 60-day period are deemed a single violation for purposes

of Section 1 l 71-B(3). This language triggers the mandatory civil penalty based on a particular

violation of the Dealers Act. While the statute limits the triggering of the mandatory civil

penalty to individual violations that occur with.in separate 60-day periods, it does not indicate

that an erroneous interpretation of the Dealers Act, devoid of concrete action, triggers a

mandatory penalty for every 60-day period the interpretation is held. Stated another way,

Section l 17 l-B(3) contemplates the mandatory civil penalty being triggered by a clain1ed

violation, not a continuing pattern of behavior. This interpretation is further supported by

Section 1176, which requires a franchisee to asse1i a claim for reimbursement in order to initiate

the process for adjudication set out therein. 12 Clearly, Section 1176 and Section 1 l 7 l-B(3)

contemplate imposing the mandatory civil penalty based on particular claims that demonstrate a

violation of Section 1176, not on enoneous interpretations that are held, but not acted upon.

While a franchisor's insistence upon an erroneous interpretation does not trigger the mandatory

civil penalty absent a specific act, this does not mean the Board cannot take this behavior into

account. Indeed, Section 117l~B(3) requires the Board to consider previous violations, the

12

See 10 M.R.S.A. § l l 76 ("Any claim made by a franchisee for compensation for pa11s provided or for

reimbursement for labor performed in satisfaction of a warranty must be paid within 60 days of its

approval. All the claims must be either approved or disapproved within 60 days of their receipt. A claim

may be submitted within 90 days after the performance of services .... When a claim is disapproved, the

franchisee that submitted the claim must be notified in writing of the claim's disapproval within that

period, together with the specific reasons for its disapproval .... In any claim that is disapproved by the

manufacturer, and the dealer brings legal action to collect the disapproved claim and is successful in the

acti on, the court shal I award the dealer the cost of the action together with reasonab le attorney fees .. .").

22

amount necessary to deter fuh1re violations, efforts made to correct the violation and any other

matters thatjustice may require when determining the amount of the penalty. See 10 M.R.S.A. §

1 l 71-B(3 )(C), (D), (E), & (F). Accordingly, the Court remands the determination of what

penalty to impose on Chrysler under Section l 171-B(3) to the Board for further proceedings

consistent with this Order.

V. The Award of Attorney Fees and Costs to Darling's

A. The Board's Decision

The Board submitted its Order on Darling's motion for attorney fees on April 4, 2014.

(R. 2714-2717.) The Board ordered Chrysler to pay Darling's $179,388.95 in attorney fees and

$8,013.60 in costs. (R. 2714.) The Board rejected Chrysler's argument that the law does not

entitle Darling's to fees or costs explaining that Darling's prevailed in its action under section

1171-B(3) and, as a result, is entitled to recover its attorney fees under 10 M.R.S.A. § 1173. (R.

2714-2715.) The Board also rejected Chrysler's argument that Darling's should not recover fees

in connection with its unsuccessful motion for summary judgment because it ignores the Law

Court's statement that "[t]he result is what matters." (R. 2715) (quoting Advanced Const. Corp.

v. Pilecki, 2006 ME 84, ~ 32, 90 l A.2d 189).) In light of the fact that Darling's prevailed on

three of the four issues raised in its motion for summary judgment and the close relation between

the "exchange" and "core" claims, the Board found that Darling's was entitled to all of the

$19,864.87 in fees that Chrysler attributes to the summary judgment motion, minus $3,973 for

time devoted to Count IV. (Id.)

The Bomd also awarded Darling's $8,013.60 in costs pursuant to 14 M.R.S.A. §§ 1502­

B, 1502-C, 1502-D, Arsenau/1 v. Crossman, 1997 ME 92, 696 A.2d 418, Darling 's v. Ford

1\tfolor Co., Pen. Super. CV-01-14, and Poussard v. Commercial Crec/;r Plan, inc. ofLewiston,

23

479 A.2d 881 (Me. 1984). This award excluded $242.00 in costs for a July 31, 2013 deposition

and $516.25 for a transcript from January 7, 2014. (R. 2716.)

B. Discussion

Chrysler argues that the Board erred in awarding Darling's attorney fees and costs

because Darling's only prevailed under section 1171-B, which does not provide for the award of

said fees or costs. Chrysler contends that sections 1173 and 1176 of title l Oare not implicated in

the present case because the Board denied Darling's request for an injunction and the Board does

not have the authority to award damages. Chrysler :further argues that even if Darling's was

entitled to attorney fees, the Board erred by awarding Darling's $19,864.87 in attorneys fees for

prosecuting an unsuccessful motion for summary judgment. Ch1ysler also argues that the Board

erred by awarding $3,927.64 in costs associated with the trial and deliberation transcript,

postage, and mileage to places other than the trial location because these costs are not authorized

for recovery by any statute or rule.

Darling's responds that it is entitled to its attorney fees and costs because Chrysler

violated Section 1176, and Section 1171-B provides dealers with a remedy for the violation of

another section of the Dealers Act, such as Section 1176. Darling's further responds that the

award of attorney fees related to its motion for summary judgment was appropriate because the

Board determined that Darling's prevailed on tlu·ee of the four counts and the award of attorney

.fees should "focus on the overall relief awarded to the prevailing party." Advanced Constr.

Corp. v. Pilecki, 2006 ME 84, ~ 32,901 A.2d 189. Finally, Darling's replies that the Bomd

correctly awarded Darling's its costs incurred in litigating this matter because the costs at issue

are properly considered as a necessary element of legal services that an attorney provides to a

client and within the Board's broad discretion over the award of costs to dealers.

24

Section 1188(4) provides that the Board "shall award costs and attorney's fees pursuant

to section 1173." 10 M.R.S. § 1188( 4). Section 1173 provides, in pe1tinent part:

Any franchisee or motor vehicle dealer who ... has been othe1wise adversely

affected as a result of. .. any practice declared unlawful by this chapter may bring

an action for damages and equitable relief, including injunctive relief. When the

franchisee or dealer prevails, the court shall award attorney's fees to the

franchisee or dealer, regardless of the amount in controversy, and assess costs

against the opposing party. For the purpose of the award of attorney's fees and

costs, whenever the franchisee or dealer is seeking injunctive or other relief, the

franchisee or dealer may be considered to have prevailed 'vvhen a judgment or

other final order providing equitable relief is entered in its favor ....

10 M.R.S. § 1173 (2015.) Furthermore 10 M.R.S.A. § 1176 provides that "any claim that is

disapproved by the manufacturer, and the dealer brings legal action to collect the disapproved

claim and is successful in the action, the court shall award the dealer the cost of the action

together with reasonable attorney fees." 10 M.R.S.A. § 1176. While the Board lacks jurisdiction

over actions seeking damages pursuant to the Dealers Act, it is empowered to "review

complaints, issue written decisions and orders, levy civil penalties, and attorney fees and

costs .... " Ford ivlotor Co. v. Darling's, 2014 ME 7, ~43, 86 A.3d 35.

Here, the Board awarded attorney fees and costs based on its determination that Darling's

prevailed on Counts I, II and III of its Complaint. As discussed supra section III(C), the Board

erred by ruling in favor of Darling's on Counts I and II of its Complaint. Accordingly, the Court

remands to the Board the determination of the amount of attorney fees and costs Darling's is

entitled to for prevailing on Count III of its Complaint. That determination must be made in light

of this Order's adjudication ofChiysler's objections to the Board's award of attorney fees and

costs.

First, the Court concludes that the Board did not err in determining that Darling's was

entitled to its attorney fees and costs generated by the Counts on which it prevailed. This is

25

because the Board's Decision concluded, in pertinent part, that Darling's prevailed on Count III

of its Complaint because Chrysler violated Section 1176 by not reimbursing Darling's in

accordance therewith for exchange parts used in warranty repairs. The Decision also determined

that it was required to impose civil penalties on Chrysler under Section 1171-B due to this

violation of Section 1176. Since Section 1173 requires the award of attorney fees and costs

when a dealer prevails in an action based on a violation of the Dealers Act, such as Section 1176,

and the Board found that Darling's did exactly that in Count III, the Board did not err in

detennining that Darling's was entitled to the attorney fees and costs generated by Count III.

The fact that the Board cannot award damages to Darling's under Section 1173 does not change

the fact that Section 1188(4) explicitly requires the Board to award costs and attorney fees

pmsuant to Section 1173. 10 M.R.S.A. § 1188(3); see also Ford ,v!otor Co. v. Darling's, 2014

ME 7, ~43, 86 A.3d 35.

Second, the Board did not err or abuse its discretion by awarding Darling's attorney fees

for its work on an unsuccessful motion for summary judgment because Darling's ultimately

prevailed on three of the four issues raised in the motion. This is because Section 1173 broadly

provides for the award of attorney fees and costs "[w]hen the franchisee or dealer prevails," and

nowhere limits the award to fees strictly generated in support of action that directly brings about

a successful result. 10 M.R.S.A. § 1173.

This construction is supp01ied by Advanced Constr. Corp. v. Pilecki, in which the Law

Court explained-in the context of distinguishing between claims authorizing attorney fees and

those under which said fees were not available-that "it [s appropriate for the trial court to focus

on the overall relief awarded to the prevailing party." 2006 ME 84, ~ 32,901 A.2d 189. In

support of this asse1iion, Pi/ecki quoted from an opinion of the United States Supreme Court

26

providing that "[i]n these circumstances the fee award should not be reduced simply because the

plaintiff failed to prevail on every contention raised in the lawsuit. Litigants in good faith may

raise alternative legal grounds for a desired outcome, and the court's rejection of or a failure to

reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters."

Id. (quoting Hensley v. Eckerhart, 461 U.S. 424,435 (1983)); see also Coulter v. State ofTenn.,

805 F.2d 146, 151-152 (6th Cir. 1986) (holding that attorney fees were warranted for work on

unsuccessful summary judgment motion because it narrowed the issues and helped the party

prevail at trial); Luessenhop v. Clinton County, 558 F. Supp. 2d 247, 256-257 (N.D.N.Y. 2008)

(prevailing party not limited to recovery on successful motions alone, but may recover for

unsuccessful motions as long as they are not frivolous); Frevach v. lvlultnomah County, 2001

U.S. Dist. LEX1S 22255, *17-18 (D. Or. Dec. 18, 2001) (attorney fees may be appropriately

awarded for time spent on unsuccessful motions if the party is later successful on a claim

addressed in the motion); but see Dinan v. Alpha Networks, Inc., 2015 U.S. Dist. LEXTS 50093,

*17, *3 0 (detemuning that attorney not entitled to fees or charges related to unsuccessful motion

because the unsuccessful work could be demarcated from successful work). Accordingly, it was

not e1Tor for the Board to award attorney fees in light of its determination that Darling's

subsequently prevailed on three of the four issues raised in the unsuccessful motion. 13

Turning to the Board's award of costs to Darling's, the Court emphasizes that it reviews

the Board's decision for errors of law or an abuse of discretion. See Poland v. Webb, 1998 ME

l 04, ~ 12, 711 A.2d 1278. ln its motion for attorney fees and costs, Darling's requested

$8,771.85 in costs. (R. 2716, ~ 8; R. 2657.) Of the $8,771.85 in costs requested, the Board

awarded Darling's $8,013.60. (R. 2716, ~ 8.) Th.is excluded $242.00 for a July 31, 2013

u As noted, the Board must revisit this issue in light of the Cou11's determination that the Board erred by

ruling in favor of Darling's on Counts I and II of its Complaint.

27

deposition and $516.25 for a Janua1y 7, 2014 deliberation transcript. (Id.) Of the $8,013.60

awarded for costs, Chrysler challenges the award of $3,174.00 for the trial transcript. 1~ Chrysler

also challenges the award, as attorney fees, of $173 .13 for postage and $64.26 for mileage to

places other than the place of trial.

Section 1173 provides that the "court shall award attorney's fees" to the prevailing

franchisee or dealer, "regardless of the amount in controversy, and assess costs against the

opposing party." 10 M.R.S.A. § 1173. Because Section 1173 does not define what costs are

assessable, the Court look to additional rules and statutes to inform its interpretation.

Specifically, M.R. Civ. P. 54(f) and 14 M.R.S.A. §§ 1502-B, 1502-C, and 1502-D inform what

costs are available for assessment.

Here, the Board abused its discretion in awarding Darling's $3,174.00 in costs for

preparation of the trial transcript because this cost is not included in or authorized by any of the

aforementioned authorities. See Poland v. Webb, 1998 ME l 04, ~ 16, 711 A.2d 1278 (finding

abuse of discretion for award of costs of lodging because said costs "are not recoverable pursuant

to any rule or statute"). The Board did not, however, abuse its discretion in awarding Darling's

$173 .13 for postage and $64.26 for mileage to places other than the place of trial because it

could have reasonably found that these expenses were a necessaiy element of legal services

Darling's attorney provided to it. See Darling's v. Ford Motor Co., PENSC-CV-01-14 at 2 )Me.

Super. Ct., Pen. Cty., Apr. 11, 2005).

VI. Conclusion

For the reasons discussed above, it is hereby ORDERED AND ADJUDGED AS

FOLLOWS:

1

~Chrysler also argued the Board erred by awarding costs for preparation of the deliberation transcript,

but the record is clear that the Board did not award these costs. (R. 2716, V8).

28

Counts I and II of Darling's Complaint

The Board did not err in determining:

• Section 1176 does not require the submission of 100 sequential

nonwa1Tanty customer-paid service repair orders to be "consecutive" in

the sense that the dealer may not perform anything but 100 sequential

nonwal1'anty customer-paid service repair orders in a row;

• Section 1176 does not require the submission of the larger group of repair

orders from which the I 00 sequential non warranty customer-paid service

repair orders are drawn;

Darling's method for calculating its average percentage markup was

appropriate under Section 1176.

The Board erred as a matter of law in its determination that all 100 of the sequential

nonwarranty customer-paid service repair orders required to calculate an average percentage

markup under Section 1176 need not qualify to be used towards the calculation of the average

percentage markup. To the contrary, all 100 sequential nonwarranty customer-paid service

repair orders must be utilized in calculating the average percentage markup. This means that

retail sales involving warranty repairs, state inspection, routine maintenance such as changing the

oil and oil filter, and sales involving accessories do not constitute part of the 100 sequential

nonwananty customer-paid service repair orders under Section 1176. Accordingly, the Court

reverses the Board's determination that Darling's prevailed on Counts I and 11 of its Complaint.

Count III of Darling s Complaint

The Board did not en in determining that exchange parts Chrysler provides to Darling's

for wnrranty repairs must be reimbursed at the retail rnte customarily by Darling's.

The Board did err, however, by imposing $13,000 in civil penalties under 10 M.R.S .A. §

1171-B(3) against Chrysler because the penalty is based on specific claims filed by franchisees,

not a continuing violation based on successive 60-day periods during which the franchisor

29

•

,!

maintains the same erroneous position. Accordingly, the Court remands the determination of

what penalty to impose against Cluysler under Section 117 l-B(3) for further proceedings

consistent with this Order.

The Board's Award of Attorney Fees and Costs to Darlings

The Board's award of attorney fees to Darling's is remanded for fmiher proceedings

consistent with this Order in light of the Court's ruling as to Counts I and II of Darling's

Complaint. Specifically, the Board is instructed to determine the amount of attorney fees

Darling's is entitled to for prevailing under Count III of its Complaint with the following rulings

in mind:

• Darling's is entitled to attorney fees for prevailing on Count III of its

Complaint;

• The Board did not e1T in awarding Darling's attorney fees for portions of

work it perfom1ed on an unsuccessful motion for summary judgment;

• The Board did not err or abuse its discretion by awarding Darling's

attorney fees that included $173 .13 for postage and $64.26 for mileage to

places other than the place of trial; and

• The Board abused its discretion by awarding $3,174.00 in costs for the

preparation of the trial transcript because this cost is not authorized by any

rule or statute.

Pursuant to M.R. Civ. P. 79(a), the Clerk is hereby directed to incorporate this Order by

reference in the docket.

~,.__JL

Dated: June 27, 2016

Micnaela Murphy

Justice, Business & Consumer omi

--J 1

Entered on the Docket:JP- ~! (p

Copies sent via Mail_Electronically_,£

30