WASHINGTON – The Supreme Court declined to hear an appeal Monday from a Maryland car dealership that is fighting Ford for the right to continue selling the automaker’s vehicles.
Lanham Ford said its battle with the automaker should have been allowed to play out in state court, not the federal courts. But the high court, without comment, let stand lower court rulings that first accepted the case in the federal system, then ruled for Ford.
The case began in February 2002 when Ford decided to terminate its sales agreement with Lanham Ford after a “long history of poor performance by that dealership.”
The dealership — which has continued to sell Fords while its case was pending — first appealed the decision to Ford’s Dealer Policy Board, an internal board that handles disputes between dealers and the company. But that board sided with Ford.
In November 2002, the dealer filed suit in Prince George’s County Circuit Court, claiming among other things that Ford had failed to provide documents it needed to defend itself before the dealer policy board.
But Ford asked to move the case to federal court, saying U.S. law grants jurisdiction to federal courts in disputes of $75,000 or more between citizens of different states. Ford also asked the federal court to dismiss Lanham Ford’s claim.
In June 2003, the U.S. District Court for Maryland said it had jurisdiction, reasoning that the value of Lanham Ford as a business was well above $75,000. It then granted Ford’s motion to dismiss.
A three-judge panel of the 4th U.S. Circuit Court of Appeals said in June 2004 that the lower court erroneously based the disputed amount on the value of the dealership, instead of the potential loss to the dealership if its franchise was revoked. Even under the new formula, however, the appellate court said it was “confident” that the value would be in excess of $75,000, and it upheld the district court’s decision.
On appeal to the Supreme Court, Lanham Ford argued that the $75,000 threshold was not met.
“Our issue was one of enforcement of rights under a contract, which doesn’t have a dollar amount associated with it,” said Michael Charapp, an attorney for the dealer.
Because of that, Charapp said, the case “shouldn’t have been there in the first place,” but in state court where “it probably wouldn’t have been dismissed.”
Charapp also noted that because different circuit courts have set different methods for determining when the requirement is met, “that’s a basis for Supreme Court review.”
“We think this whole issue of how that amount is determined in a diversity jurisdiction case is something that the court should speak to,” he said.
In its brief, Ford argued that the record “amply supports” the lower court’s decision that the $75,000 threshold had been reached, “regardless of the particular formula employed.”
An attorney for Ford said the question of value comes up often. But the attorney, Nick Christakos, called Lanham Ford’s case “unusual” because it sought to stay the internal decision by the dealer policy board.
“I don’t know that Lanham Ford has any other option now,” Christakos said Monday, except to press ahead with a separate appeal to the Maryland Motor Vehicle Administration.
Charapp could not be reached Monday to comment on the high court’s decision. But he noted Friday that even a favorable decision high court would not necessarily have resolved the issue.
Were the court to reverse the 4th Circuit decision, the case would probably go back to state court, Charapp said. The dealer did not appeal the dismissal, so the issue before the court is a purely jurisdictional one.
“The real basis for this is our concern that Ford basically breached the dealer agreement in the way it considered Lanham Ford’s internal appeal,” Charapp said. “Their position basically is that dealers have no rights under the agreement.”
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