David R. McGeorge Car Co. v. Leyland Motor Sales, Inc.
United States Court of Appeals for the Fourth Circuit
504 F.2d 52 (1975)
- Written by Rich Walter, JD
Facts
David R. McGeorge Car Company, Inc. (McGeorge) (plaintiff) was a franchised retailer of Triumph and Mercedes automobiles. The franchisor was Leyland Motor Sales, Inc. (Leyland) (defendant), which distributed both Triumphs and Rover vehicles in America. The Mercedes and Rover brands were in competition with each other. Triumphs were more popular than Rovers and in chronically short supply. To allocate that supply, and to boost Rover sales, Leyland reduced the number of Triumphs it supplied to Triumph franchisees unless they also signed Rover franchise agreements. McGeorge refused to do so on the grounds that Rover would drive down McGeorge’s Mercedes sales. Leyland responded by slashing the number of Triumphs it made available to McGeorge. When McGeorge continued to spurn a Rover franchise, Leyland let McGeorge’s Triumph franchise expire. McGeorge sued Leyland for coercion and failure to deal with it in good faith, both of which were prohibited by the federal Dealers Day in Court Act (DDICA). The district court ruled that Leyland’s action in cutting McGeorge’s Triumph supply showed bad-faith coercion, but that letting McGeorge’s Triumph franchise expire did not. McGeorge appealed to the Fourth Circuit.
Rule of Law
Issue
Holding and Reasoning (Field, J.)
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