Ford Motor Company v. Darling's

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2014 ME 7
Docket: BCD-12-583
Argued: September 11, 2013
Decided: January 21, 2014
Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, MEAD, GORMAN, and JABAR, JJ.
FORD MOTOR COMPANY
v.
DARLING’S et al.
LEVY, J.
[¶1] This appeal concerns the respective rights of automobile manufacturers
and dealers pursuant to the Business Practices Between Motor Vehicle
Manufacturers, Distributors and Dealers Act (Dealers Act), 10 M.R.S. §§ 1171 to
1190-A (2013).1 The Dealers Act regulates the franchise relationship between
automobile manufacturers/franchisors and dealers/franchisees. We have
previously addressed sections of the Dealers Act related to reimbursement for
warranty repairs and parts. See, e.g., Darling’s v. Ford Motor Co., 2006 ME 22,
892 A.2d 461. This appeal presents the more fundamental questions of what
constitutes a “franchise” for purposes of the Dealers Act and what authority is
1
All citations to the Dealers Act are made to the statute currently in effect, 10 M.R.S. §§ 1171 to
1190-A (2013). The Dealers Act has been amended since this case was initiated in 2006, though not in
any way that affects this appeal. See, e.g., P.L. 2009, ch. 432, § 2 (effective June 17, 2009) (codified at
10 M.R.S. § 1174(3-A) (2009)).
2
delegated to the Maine Motor Vehicle Franchise Board to enforce the Act’s
provisions.
[¶2] Ford Motor Company, an automobile manufacturer and franchisor,
appeals from a judgment entered in the Business and Consumer Docket
(Nivison, J.) rendering final the court’s affirmance of certain decisions and orders
of the Maine Motor Vehicle Franchise Board (“the Board”). The Board concluded
that Ford violated 10 M.R.S. § 1174(3)(B) by terminating an incentive program
without providing Darling’s, an automobile dealer and franchisee, with written
notice by certified mail. As a result, the Board awarded Darling’s damages and
imposed a civil penalty and attorney fees against Ford pursuant to 10 M.R.S.
§§ 1171-B(3) and 1173.
[¶3] Ford contends that the Board and the court erred in concluding that
(1) the incentive program was part of Ford and Darling’s “franchise” as that term is
defined by the Dealers Act; (2) Darling’s did not receive adequate notice of the
program’s termination; and (3) Ford was not entitled to a de novo jury trial on the
factual issues decided by the Board. Darling’s and the Maine Automobile Dealers
Association (MADA)2 cross-appeal, asserting that the Board’s damages calculation
and award of only one civil penalty against Ford were in error. We affirm the
2
In July 2010, MADA moved to intervene in the proceedings before the Business and Consumer
Docket. The court apparently granted MADA intervenor status, although the record contains only
MADA’s unsigned motion to intervene on July 30, 2010, without any court order granting that motion.
Nonetheless, subsequent docket entries identified MADA as an intervenor.
3
judgments of the Board and the Business and Consumer Docket in all respects but
one. Because we conclude that the Dealers Act does not authorize the Board to
award monetary damages, we vacate that aspect of the judgment and remand the
case to the Business and Consumer Docket for a determination of damages by a
jury.
I. BACKGROUND
A. Darling’s and Ford’s Franchise Relationship
[¶4] Darling’s is a Ford dealer and franchisee located in Bangor. The
franchise relationship between Ford and Darling’s is governed by a written Ford
Service and Sales Agreement (“SSA”) that Ford and Darling’s entered into in
1989. The SSA recognized Darling’s as an authorized Ford products dealer and
granted Darling’s the right to sell those products that “from time to time are
offered for sale by [Ford].” The SSA also provided that Ford may issue “guides”
establishing “reasonable standards” for dealership facilities and operations, and
that it may publish bulletins “from time to time” to establish “prices, charges,
discounts and other terms of sale.”
B. The Blue Oval Certified Incentive Program
[¶5] In 2000, Ford introduced the Blue Oval Certified (“BOC”) program, a
customer-satisfaction incentive program that offered Ford dealers a 1.25% cash
bonus on the retail price of each vehicle the dealer sold. The BOC program was
4
described in “reference guides” issued between 2001 and 2004. The guides
identified certification requirements for each year of the program, but did not
describe any requirements beyond March 31, 2005. Dealers could qualify for BOC
status by meeting customer approval standards set by Ford. Darling’s was certified
as a BOC dealer in 2001, and by 2002 it became aware that Ford was considering
changes to the program. In August 2004, Ford made a broadcast on its internal
Fordstar television network announcing to dealers that the BOC program would
conclude by March 2005 and be replaced by a program emphasizing non-cash
incentives. Ford issued an electronic communication to its dealers a few days later
confirming the BOC program’s termination as of March 31, 2005. It is unclear
from the record whether Darling’s management actually watched the Fordstar
broadcast, though they were notified of it, or saw the electronic communication.
Regardless, the record establishes that by 2004 Darling’s management knew that
Ford was considering discontinuing the cash bonus program. The BOC program
was discontinued as scheduled on April 1, 2005, and was followed by an
“Accelerated Sales Challenge,” which lasted from 2005 to 2007, and a series of
quarterly sales drives throughout 2007.
[¶6] Had the BOC program remained in effect, Darling’s would have earned
$678,942.96 in cash bonuses for vehicles it sold between April 1, 2005, and
November 30, 2007. During the same period, Darling’s received $142,975 in
5
payments from Ford under the Accelerated Sales Challenge and $74,200 under the
2007 quarterly sales drives.
C. Administrative Proceedings Before the Maine Motor Vehicle Franchise
Board
[¶7] In December 2006, Darling’s filed a twelve-count complaint before the
Board alleging Ford’s violations of the Dealers Act. Count X, the only count at
issue in this appeal, alleged that Ford’s termination of the BOC program in March
2005 constituted a modification of the SSA that substantially and adversely
affected Darling’s rights, obligations, investment, or return on investment, and that
Ford violated section 1174(3)(B) by not providing Darling’s with 90 days’ written
notice by certified mail. In May 2008, the Board ruled that Ford’s termination of
the BOC program constituted a modification of Darling’s “franchise” (as defined
by section 1171(6)) that substantially and adversely affected Darling’s return on
investment and therefore triggered the requirement of section 1174(3)(B) that Ford
give 90 days’ written notice to Darling’s. Accordingly, because the Board
concluded that Ford knowingly violated section 1174(3)(B) and never corrected
the violation, the Board levied a single civil penalty of $10,000, the maximum
amount permitted by section 1171-B(3). The Board also found that Darling’s had
sustained 270 days’ worth of damages, in the amount of $214,723.08, accruing
from the BOC program’s termination on April 1, 2005. The Board arrived at the
6
270-day period by adding the 90-day notice period within which a dealer may
object to a proposed franchise modification to the subsequent 180-day period
within which the Board must determine whether the manufacturer has good cause
to implement the proposed modification. See 10 M.R.S. § 1174(3)(B). The Board
then reduced its damages award by the $68,875 that Darling’s earned through other
promotional programs during the 270-day period. Accordingly, the Board awarded
Darling’s $145,223.08 plus attorney fees pursuant to section 1173.3
D. Superior Court Proceedings
[¶8] In July 2008, Ford and Darling’s filed in the Superior Court, pursuant
to M.R. Civ. P. 80C, 10 M.R.S. § 1189-B, and 5 M.R.S. §§ 11001-11008 (2012),
separate petitions for review of the Board’s administrative action.4 Ford sought
modification and reversal of the Board’s decision as well as a declaratory judgment
that section 1189-B violates Ford’s right to a jury trial pursuant to article I, section
20 of the Maine Constitution by imposing a presumption that the Board’s factual
findings are correct unless rebutted by clear and convincing evidence. In contrast,
3
On June 23, 2008, the Board reduced its damages award from $150,848.08 to $145,223.08 based on
a clerical error in the Board’s May 2008 order. We note that this calculation is slightly in error because
$68,875 from $214,723.08 is $145,848.08, not $145,223.08. Additionally, the Board’s order purported to
award damages to Darling’s “pursuant to § 1171-B(3) of the Franchise Law.” Because section 1173, not
section 1171-B(3), governs damages, this appears to be a clerical error.
4
In their respective petitions for review of an administrative action filed in the Superior Court, Ford
and Darling’s named the Secretary of State as a party because the Secretary is responsible for operating
and administering the Board. See 10 M.R.S. § 1187(7) (establishing the Board’s affiliation with the
Department of Secretary of State, Bureau of Motor Vehicles). The Secretary of State did not participate
in the present appeal.
7
Darling’s argued that the Board erred in awarding damages only for the 270-day
period and in offsetting those damages by the amounts Darling’s earned through
the other incentive programs. Darling’s also contested the Board’s assessment of
only one civil penalty against Ford. Darling’s and Ford’s petitions were ultimately
consolidated and transferred to the Business and Consumer Docket.
[¶9] In July 2009, the court ordered a jury trial pursuant to section 1189-B
for further fact-finding regarding whether the BOC program was within the scope
of Darling’s and Ford’s “franchise.” With respect to Ford’s claim that section
1189-B violated Ford’s constitutional right to a jury trial, the court determined that
Ford’s right could be preserved by detailed jury instructions informing the jury of
the Board’s factual findings and instructing it that, to prevail at trial, Ford must
prove by clear and convincing evidence that the Board’s factual findings were
incorrect, pursuant to section 1189-B(2). The court held a jury trial in March 2011
on the factual issues of (1) whether termination of the BOC program constituted a
modification of the franchise, and (2) if so, whether that modification had a
substantial and adverse effect on Darling’s investment or return on investment.5
5
By Ford and Darling’s agreement, the court did not present the issues of damages or the civil
penalty to the jury, deeming those to be legal questions that Ford and Darling’s had preserved for appeal
upon completion of the jury trial. The court also concluded that actual notice did not satisfy section
1174(3)(B)’s notice requirement because the plain language of the statute requires written notice by
certified mail. The court thus precluded Ford from presenting to the jury the issue of whether actual
notice satisfies section 1174(3)(B).
8
[¶10] At the conclusion of the trial, the jury returned a verdict affirming the
Board’s factual findings.6 In February 2012, the court entered an order affirming
the Board’s award of one civil penalty in the amount of $10,000 pursuant to
section 1171-B(3). In June 2012, the court entered an order affirming the Board’s
damages award as a factual determination supported by the record. Ford,
Darling’s, and MADA timely appealed.7
II. STATORY FRAMEWORK AND ISSUES ON APPEAL
[¶11] The Dealers Act regulates the franchise relationship between
automobile manufacturers/franchisors like Ford and dealers/franchisees like
Darling’s. See 10 M.R.S. §§ 1171 to 1190-A. The Dealers Act defines a
“franchise” as follows:
“Franchise” means an oral or written arrangement for a definite or
indefinite period in which a manufacturer, distributor or wholesaler
grants to a motor vehicle dealer a license to use a trade name, service
mark or related characteristic, and in which there is a community of
interest in the marketing of motor vehicles or services related thereto
at wholesale, retail, leasing or otherwise.
10 M.R.S. § 1171(6).
6
After the jury verdict was returned, Ford filed a motion for judgment as a matter of law requesting
that the court vacate the verdict. Ford argued that the Board, in determining whether Ford’s modification
of the franchise affected Darling’s “return on investment,” incorrectly defined that term. Accordingly,
Ford contended that the issue was not appropriate for the jury because the Board committed legal error.
The court denied Ford’s motion.
7
In their respective notices of appeal, Ford, Darling’s, and MADA appealed from a decision of the
court entered on November 21, 2012, which served as a final judgment with respect to the court’s prior
decisions regarding Count X of Darling’s complaint.
9
[¶12] As part of its regulation of the franchise relationship, the Dealers Act
prohibits manufacturers/franchisors from engaging in “unfair methods of
competition and unfair and deceptive practices.” 10 M.R.S. § 1174. The alleged
violations of the Dealers Act in this case arise pursuant to section 1174(3)(B),
which deems it an unfair and deceptive practice to
modify a franchise during the term of the franchise or upon its
renewal, if the modification substantially and adversely affects the
motor vehicle dealer’s rights, obligations, investment or return on
investment, without giving 90 days’ written notice by certified mail of
the proposed modification to the motor vehicle dealer, unless the
modification is required by law or board order.
[¶13] Due to the unique administrative process fashioned by the Dealers
Act, this appeal requires us to review an assemblage of legal and factual
determinations by the Board, the jury’s decision to uphold the Board’s factual
findings, and legal conclusions reached by the Business and Consumer Docket.
The threshold legal question presented is whether, as Ford argues, the Board erred
in concluding that the parties’ franchise encompassed the BOC program. If the
program was not encompassed by the franchise, then Ford was not required to give
notice of the program’s termination pursuant to section 1174(3)(B) and Darling’s
was not entitled to any relief pursuant to the Dealers Act. Ford contends that, even
if the BOC program were part of the franchise, the notice it gave Darling’s
substantially complied with section 1174(3)(B) and should therefore be deemed
10
sufficient. Ford also asserts that its right to a jury trial pursuant to article I, section
20 of the Maine Constitution was infringed by section 1189-B(2)’s presumption
that the Board’s factual findings are correct unless rebutted by clear and
convincing evidence.
[¶14] Darling’s and MADA cross-appeal on the grounds that the Board
committed legal error in calculating Darling’s damages pursuant to section 1173 by
limiting those damages to a 270-day period and reducing them by the amounts
Darling’s earned through alternative incentive programs. Darling’s and MADA
also argue that the Board erred in levying only a single $10,000 penalty against
Ford pursuant to section 1171-B(3).
A. Standard of Review
[¶15] When the Business and Consumer Docket acts in an intermediate
appellate capacity to review an administrative agency’s decision pursuant to M.R.
Civ. P. 80C, we directly review the agency’s decision for errors of law. See Dyer
v. Superintendent of Ins., 2013 ME 61, ¶ 11, 69 A.3d 416; Carrier v. Sec’y of State,
2012 ME 142, ¶ 12, 60 A.3d 1241. We review matters of statutory and
constitutional interpretation, including the Board’s interpretation of “franchise”
pursuant to section 1171(6) and the court’s determination that section 1189-B does
not deprive Ford of its constitutional right to a jury trial, de novo. See McGee v.
Sec’y of State, 2006 ME 50, ¶ 5, 896 A.2d 933.
11
B. Administrative and Adjudicative Authority Pursuant to the Dealers Act
[¶16] The Dealers Act vests specific administrative authority in the Board,
appellate authority to review the Board’s decisions in the Superior Court, and
original jurisdiction for actions seeking damages or injunctive relief in the Superior
Court.8 Recognizing these different sources of authority is essential to resolving the
issues raised on appeal, and we identify each as a prelude to our analysis.
1. The Board’s Administrative Authority
[¶17] As previously discussed, section 1174(3)(B) deems it an unfair and
deceptive practice for a manufacturer to modify a franchise during the term of the
franchise or upon its renewal if the modification substantially and adversely affects
the dealer’s rights, obligations, investment, or return on investment, without giving
90 days’ written notice by certified mail of the proposed modification, unless the
modification is otherwise required by law or an order of the Board.
Section 1174(3)(B) further provides that, within the 90-day notice period, the dealer
may file with the Board a protest requesting a determination of whether there exists
8
Sections 1190 and 1190-A recognize that a franchisee may bring a civil action in “the courts of the
State” or “in a court of competent jurisdiction,” respectively, for alleged violations of the Dealers Act.
Because the present case was appealed from the Board to the Superior Court pursuant to section 1189-B,
we do not address the extent to which the District Court has concurrent jurisdiction over original actions
brought pursuant to the Dealers Act that seek damages but not equitable relief. See 4 M.R.S. § 152(2)
(2013) (establishing the District Court’s original jurisdiction as being concurrent with that of the Superior
Court over “all civil actions when no equitable relief is demanded, except those actions for which
exclusive jurisdiction is vested in the Superior Court by statute”); see also 10 M.R.S. § 1173(1)
(providing that any franchisee or dealer aggrieved pursuant to the Dealers Act “may bring an action for
damages and equitable relief, including injunctive relief”). For the sake of simplicity, this opinion refers
only to the Superior Court.
12
good cause for the proposed modification. Once a protest is filed, the Board must
promptly schedule a hearing and decide the matter within 180 days. Id. The
manufacturer has the burden of proving good cause, and the proposed modification
may not take effect while the Board’s determination of the matter is pending. Id.
[¶18] The Board’s duties are set out in more detail in section 1188. That
section authorizes the Board to review complaints filed pursuant to the Dealers
Act, issue written decisions and orders to franchisees or franchisors found to be in
violation of the Act, levy civil penalties against manufacturers found to be in
violation of the Act pursuant to section 1171-B(3), and award costs and attorney
fees to prevailing franchisees pursuant to section 1173. 10 M.R.S. § 1188(1)-(4).
2. The Superior Court’s Appellate Jurisdiction
[¶19] The Dealers Act provides that parties may appeal from the Board’s
legal and factual determinations to the Superior Court. 10 M.R.S. § 1189-B. If the
appeal only alleges that the Board made an error of law, “[a]dditional evidence
may not be heard or taken by the Superior Court.” Id. § 1189-B(1). A party may
also “appeal to the Superior Court for a hearing on the merits of the dispute,” in
which case “all findings of fact of the board are presumed to be correct unless
rebutted by clear and convincing evidence.” Id. § 1189-B(2). Section 1189-B(2)
further states that “[a]n appeal for hearing is subject to the provisions of section
1173,” which authorizes franchisees and dealers who suffer loss as the result of an
13
unfair trade practice to bring actions for damages and equitable relief. Finally,
section 1189-B(2) provides that in any appeal for hearing the Board’s decision
must be admitted in evidence, and that “[t]here is a right to trial by jury in any
action brought in Superior Court under this section.”
3. The Superior Court’s Original Jurisdiction
[¶20] The Board is not the only avenue for franchisees to pursue claims
pursuant to the Dealers Act. The statute’s legislative history reflects that “[t]he
board is not the exclusive venue for initially bringing a complaint.” L.D. 1294,
Summary (121st Legis. 2003). Sections 1173, 1190, and 1190-A recognize that a
franchisee or dealer may bring a civil action in the Superior Court for alleged
violations of the Dealers Act, independent of the administrative procedures
available before the Board. Section 1173(1) provides, in relevant part:
1. Civil remedies. Any franchisee or motor vehicle dealer who
suffers financial loss of money or property, real or personal, or who
has been otherwise adversely affected as a result of the use or
employment by a franchisor of an unfair method of competition or an
unfair or deceptive act or 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.
[¶21] Sections 1190 and 1190-A address the interaction between civil
actions in the Superior Court and administrative actions pursuant to the Dealers
14
Act. “If a complaint is filed with the board by a person otherwise entitled to bring
a complaint in the courts of the State, then the applicable statute of limitations is
tolled and a civil action in a court of competent jurisdiction is barred pending the
outcome of proceedings before the board.” 10 M.R.S. § 1190. Further, a civil
action filed in the Superior Court must be stayed “if, within 60 days after the date
of filing of the complaint, or service of process, whichever date is later, a party to
the action files a complaint with the board asserting the claims or defense under
[the Dealers Act].” 10 M.R.S. § 1190-A. Also, as previously noted, an “appeal for
hearing” from a decision of the Board to the Superior Court is subject to section
1173, which governs actions seeking damages or equitable relief to remedy unfair
trade practices. 10 M.R.S. § 1189-B(2).
[¶22] Having reviewed the Dealers Act’s delegation of authority to the
Board and the Superior Court, we turn to the issues presented by this appeal.
III. DISCUSSION
A. The Meaning of “Franchise” Pursuant to 10 M.R.S. §§ 1171(6) and
1174(3)(B)
[¶23] Ford first argues that the Board erred in concluding that Ford
modified Darling’s franchise pursuant to section 1174(3)(B) when it terminated the
BOC program, because the BOC program was not part of Darling’s and Ford’s
“franchise” as that term is defined by section 1171(6). We begin by looking to the
15
plain meaning of “franchise” as the Dealers Act defines the term. See N.A. Burkitt,
Inc. v. Champion Road Mach. Ltd., 2000 ME 209, ¶¶ 5-6, 763 A.2d 106
(examining the plain meaning of “motor vehicle” in order to define that term
pursuant to the Dealers Act). Section 1171(6) defines a “franchise” as
an oral or written arrangement for a definite or indefinite period in
which a manufacturer, distributor or wholesaler grants to a motor
vehicle dealer a license to use a trade name, service mark or related
characteristic, and in which there is a community of interest in the
marketing of motor vehicles or services related thereto at wholesale,
retail, leasing or otherwise.
[¶24] A franchise is, therefore, an oral or written arrangement. Id.
However, the statute offers little guidance as to what constitutes an “arrangement.”
Ford argues that “arrangement” should be interpreted narrowly to mean only the
written SSA between Ford and Darling’s that created the franchise, and not
subsequent incentive programs such as the BOC program. This position finds
some support in the statute’s definition of a franchise as an arrangement in which a
manufacturer grants a license, which arguably implies a one-time event (the
“granting”) that would not include the later BOC program. Id. However, in
contrast with other states’ definitions of “franchise,” the Dealers Act does not
define the term as a singular contract. Cf. Neb. Rev. Stat. § 60-1401.19 (2010)
(defining “franchise” as a “contract”); Va. Code. Ann. § 46.2-1500 (West 2010)
(“written contract or agreement”); Tex. Occ. Code Ann. § 2301.002(15) (West
16
2013) (“one or more contracts”). Instead, the statute employs the term
“arrangement,” which implies a broader course of dealing than the one-time
occurrence of Ford and Darling’s entering into the SSA.
[¶25] In interpreting statutes, we “consider the whole statutory scheme for
which the section at issue forms a part so that a harmonious result, presumably the
intent of the Legislature, may be achieved.” Hallissey v. Sch. Admin. Dist. No.
77, 2000 ME 143, ¶ 14, 755 A.2d 1068 (quotation marks omitted). The Dealers
Act’s use of “franchise” in other contexts weighs against the construction proposed
by Ford. Some sections of the Dealers Act refer to the “franchise relationship,”
and deem it an unfair and deceptive trade practice for a manufacturer to cancel,
terminate, or fail to renew that “franchise relationship” under certain
circumstances. See 10 M.R.S. § 1174(3)(O)-(S). Other sections prohibit
interference with the franchise “agreement.” See id. § 1174(3)(A), (N)-(R), (U).
The statute’s use of “franchise” in connection with an “arrangement,” an
“agreement,” and a “relationship” supports construing the term to encompass the
broader course of dealing between Ford and Darling’s so as to include the BOC
program. See 10 M.R.S. §§ 1171(6), 1174(3)(A), (N)-(S), (U).
[¶26] This construction of “franchise” also finds support in the framework
of the SSA at issue in this case. The SSA expressly contemplated the inclusion of
various future obligations between the parties. The SSA’s definitions of “vehicle
17
terms of sale bulletin,” “parts and accessories terms of sale bulletin,” “customer
service bulletin,” “dealer’s locality,” “car planning volume and truck planning
volume,” “UIO (units in operation),” and “guides” all dictate that Ford could
unilaterally issue new terms and conditions after the SSA was entered into. These
conditions make clear that Ford retained the discretion to change which vehicles
and parts Darling’s could sell; where Darling’s could conduct its sales and service;
the standards for Darling’s facilities, equipment, and service; and prices, charges,
discounts, allowances, rebates, refunds, and other terms of sale. In light of these
forward-looking provisions, the BOC program is best viewed as a future provision
contemplated by the SSA rather than a new and independent contract as Ford
contends.
[¶27] Viewed holistically, the SSA and the BOC program are part of the
overall franchise “arrangement” that existed between Ford and Darling’s.
Accordingly, because the jury found that Ford’s termination of the BOC program
was an attempt to “modify a franchise during the term of the franchise” pursuant to
section 1174(3)(B), Ford’s termination of the program triggered the notice
requirement of section 1174(3)(B). This conclusion requires us to confront
whether Ford complied with section 1174(3)(B)’s notice requirement.
18
B. The Notice Requirement of 10 M.R.S. § 1174(3)(B)
[¶28] Pursuant to section 1174(3)(B), a manufacturer must give 90 days’
written notice by certified mail to a dealer before modifying a franchise, if such
modification “substantially and adversely affects the motor vehicle dealer’s rights,
obligations, investment or return on investment.” Although Ford does not dispute
that it failed to provide Darling’s with written notice by certified mail before
discontinuing the BOC program, it urges us to treat the failure as inconsequential
because Darling’s had actual notice that the program would end.
[¶29] Ford points to our decisions holding that strict compliance with
statutory notice requirements is not always necessary. For example, in Givertz v.
Maine Medical Center, 459 A.2d 548 (Me. 1983), we interpreted the Maine Health
Security Act, 24 M.R.S.A. §§ 2501-2905 (Supp. 1982-83), to require that a notice
of claim before suit be served within the applicable statute of limitations, but we
recognized that a defective notice might suffice in certain circumstances. 459 A.2d
at 554. We reasoned that even when a statutory notice requirement uses the
mandatory word “shall,” certain requirements regarding the details of the notice
(such as its verification and service) could be regarded as merely “directory” if
such details are not “of the very essence of giving notice” and if the failure to
strictly comply with them would not prejudice the rights of interested parties. Id.;
19
see also Seider v. Bd. of Exam’rs of Psychologists, 1998 ME 78, ¶¶ 4-7, 710 A.2d
890.
[¶30] In the context of the Dealers Act, providing written notice by certified
mail is “of the very essence of giving notice.” The record demonstrates that
automobile dealers receive many communications from manufacturers, often
through informal means such as postings to websites or electronic
communications. It is therefore understandable that the Legislature would impose
a strict, though certainly not burdensome, notice requirement on manufacturers
whenever they make a modification to a franchise that “substantially and adversely
affects the motor vehicle dealer’s rights, obligations, investment or return on
investment.” 10 M.R.S. § 1174(3)(B). Additionally, Ford’s failure to give written
notice by certified mail prejudiced Darling’s by depriving it of the opportunity
provided by section 1174(3)(B) to file a protest and request a determination by the
Board as to whether Ford had good cause for the modification. Because the
statutory scheme here intends to ensure that the Board has the opportunity to
review claims of unfair trade practices within an expedited schedule, requiring the
manufacturer to give a specific form of notice to “start the clock running” is
20
essential.9 Accordingly, we construe section 1174(3)(B)’s notice requirement to be
mandatory. See Givertz, 459 A.2d at 554.
[¶31] For these reasons, we affirm the Board’s conclusion that compliance
with section 1174(3)(B)’s notice requirement is mandatory, and that Ford violated
the statute by failing to provide Darling’s with 90 days’ written notice by certified
mail before it terminated the BOC program. Accordingly, Ford’s alternative
efforts to notify its franchisees that the BOC program would end, and Darling’s
actual knowledge of the termination of the BOC program, are insufficient to satisfy
the requirement of section 1174(3)(B).
C. The Presumption Established by 10 M.R.S. § 1189-B(2) and Ford’s Right to
a Jury Trial Pursuant to Article I, Section 20 of the Maine Constitution
[¶32] Next, Ford contends that section 1189-B(2) is unconstitutional
because it requires a party challenging a finding by the Board to prove by clear and
convincing evidence that the finding was erroneous, thereby infringing on the
party’s right to a jury trial as provided by article I, section 20 of the Maine
9
Although this Court has shown some flexibility in interpreting statutory notice requirements, we
have usually done so in the context of construing a notice provision that affects a statute of limitations.
See, e.g., Frame v. Millinocket Reg’l Hosp., 2013 ME 104, ¶¶ 14-27, --- A.3d --- (holding that, for
purposes of amendment, a properly sworn notice of claim may relate back to a defective unsworn notice
of claim filed before the expiration of the statute of limitations); Michaud v. N. Me. Med. Ctr., 436 A.2d
398, 402 (Me. 1981) (holding that a defective notice of claim, served in advance of filing of complaint
and expiration of statute of limitations, did not warrant dismissal). Specific notice requirements are
otherwise applied as they are written. See Seider v. Bd. of Exam’rs of Psychologists, 1998 ME 78, ¶¶ 4-6,
710 A.2d 890 (interpreting the Administrative Procedure Act and holding that “[w]e decline to interpret
section 9061 so as to strike ‘written’ from that section’s ‘written notice’ requirement as if it were a mere
technicality”); see also Bell v. Walton, 2004 ME 146, ¶¶ 7-12, 861 A.2d 687 (interpreting the Maine
Limited Liability Company Act and holding that strict compliance with the statutory notice requirement is
necessary to effectuate a member’s voluntary withdrawal from a limited liability company).
21
Constitution. Ford argues that it was entitled to de novo fact-finding by the jury on
all issues presented to the Board.
[¶33] We review alleged constitutional violations de novo. Sparks v.
Sparks, 2013 ME 41, ¶ 19, 65 A.3d 1223. In challenging the constitutionality of
section 1189-B(2), Ford bears the “heavy burden” of overcoming the presumption
that the statute is constitutionally valid. Irish v. Gimbel, 1997 ME 50, ¶ 6, 691
A.2d 664. To meet its burden, Ford must demonstrate “by strong and convincing
reasons” that the statute conflicts with the Maine Constitution. State v.
McGillicuddy, 646 A.2d 354, 355 (Me. 1994) (quotation marks omitted); id. All
reasonable doubts must be resolved in favor of the constitutionality of the statute,
and if the statute is susceptible to more than one interpretation “we must adopt an
interpretation, if one there be, which will render it constitutional.” Portland Pipe
Line Corp. v. Envtl. Improvement Comm’n, 307 A.2d 1, 11 (Me. 1973).
[¶34] Turning to the Maine Constitution, article 1, section 20 provides:
In all civil suits, and in all controversies concerning property, the
parties shall have a right to a trial by jury, except in cases where it has
heretofore been otherwise practiced; the party claiming the right may
be heard by himself or herself and with counsel, or either, at the
election of the party.
22
Me. Const. art. I, § 20.10 The right to a trial by jury is “the right to have a
determination made by the jury on material questions of fact.” 11 Smith v.
Hawthorne, 2006 ME 19, ¶ 20, 892 A.2d 433 (quotation marks omitted).
[¶35] The challenged provision of the Dealers Act provides:
2. Appeal involving factual matters. A party to a decision by
the board may appeal to the Superior Court for a hearing on the merits
of the dispute. In any such hearing before the Superior Court, all
findings of fact of the board are presumed to be correct unless
rebutted by clear and convincing evidence.
10 M.R.S. § 1189-B(2). Ford contends that section 1189-B(2)’s presumption in
favor of the Board’s factual findings deprived Ford of its constitutional right to a
trial by jury. We have not previously considered the constitutionality of a statute
or rule that restricts a jury’s fact-finding function to a determination by clear and
convincing evidence as to whether an administrative body’s factual findings are
erroneous. However, our prior decisions offer some guidance that the right to a
10
The United States Constitution is not implicated here because the Seventh Amendment, which
provides, “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right
of trial by jury shall be preserved, and no fact tried by a jury shall be otherwise re-examined in any Court
of the United States, than according to the rules of the common law,” U.S. Const. amend. VII, generally
does not apply to the states. See Minneapolis & St. Louis R.R. Co. v. Bombolis, 241 U.S. 211, 217
(1916); Thermos Co. v. Spence, 1999 ME 129, ¶ 7 n.2, 735 A.2d 484.
11
Darling’s and MADA do not contend that a historical exception to article 1, section 20 of the
Maine Constitution applies in this case. Accordingly, we presume that the “broad constitutional
guarantee to the right to a jury trial” applies to Darling’s claims. See State v. One 1981 Chevrolet Monte
Carlo, 1999 ME 69, ¶ 6, 728 A.2d 1259 (“We will presume there is a right to a jury in a civil case unless
it is affirmatively shown that a jury trial was unavailable in such a case in 1820.”) (quotation marks
omitted).
23
jury trial is not an absolute bar to fact-finding by an administrative body with
specialized experience.
[¶36] In Irish, 1997 ME 50, 691 A.2d 664, we addressed whether a
mandatory prelitigation screening process for medical negligence claims was
inconsistent with the constitutional right to a jury trial. Id. ¶¶ 6-14. In that case, as
required by statute, a screening panel made factual findings that were then
presented to the jury “without explanation” of how the panel operated, thereby
preventing the plaintiff from commenting on or challenging the findings.
Id. ¶¶ 5-7, 10-11. We held that the right to a jury trial was violated because
providing non-jury factual findings to a jury without explaining the context for
those findings “withholds information that is essential to the jury’s fact-finding
role” and “invite[s] unprincipled evaluation and can only result in juror confusion.”
Id. ¶ 11; see also Smith, 2006 ME 19, ¶¶ 22-24, 892 A.2d 433 (concluding that the
right to a jury trial was violated by “asymmetrical” admission of the screening
panel’s findings that benefitted only one party).
[¶37] In contrast, the right to a jury trial is not infringed by shifting burdens
of proof or imposing rules of evidence. For example, admitting a report that
establishes a rebuttable presumption of a material fact is constitutionally
permissible as a rule of evidence, provided that “‘[i]t cuts off no defense,
interposes no obstacle to a full contestation of all the issues, and takes no question
24
of fact from either court or jury.’” Irish, 1997 ME 50, ¶ 9, 691 A.2d 664 (quoting
Meeker v. Lehigh Valley R.R. Co., 236 U.S. 412, 430 (1915), which held that a
federal statute making a commission’s report prima facie evidence in a jury trial
merely established a “rebuttable presumption” and did not infringe the right to a
trial by jury). As the United States Supreme Court has held in the context of the
Federal Constitution’s right to trial by jury, “[t]he [Seventh] Amendment, indeed,
does not attempt to regulate matters of pleading or practice, or to determine in what
way issues shall be framed by which questions of fact are to be submitted to a jury.
. . . So long as this substance of right is preserved, the procedure by which this
result shall be reached is wholly within the discretion of the legislature . . . .”
Walker v. N.M. & S. Pac. R.R. Co., 165 U.S. 593, 596 (1897).
[¶38] Here, the statutory presumption that the Board’s findings are correct
unless rebutted by clear and convincing evidence does not deprive litigants of the
constitutional right to a jury trial because the presumption acts only as a burden of
proof and preserves the jury’s role in determining material factual issues. See
Smith, 2006 ME 19, ¶¶ 20-25, 892 A.2d 433; Irish, 1997 ME 50, ¶¶ 9-13, 691 A.2d
664. Section 1189-B(2) does not restrict the jury’s ability to consider the full
context of the Board’s determination (the principal concern in Irish), nor does it
limit the parties’ ability to introduce the Board’s findings in evidence. Indeed, the
statute requires the admission of the Board’s decision. 10 M.R.S. § 1189-B(2).
25
Accordingly, section 1189-B(2) does not interfere with the “substance” of the right
to trial by jury. See Walker, 165 U.S. at 596.
[¶39] Additionally, proof by clear and convincing evidence is required in a
wide variety of civil cases where public policy concerns demand a higher degree of
certainty in factual findings. Taylor v. Comm’r of Mental Health and Mental
Retardation, 481 A.2d 139, 149 (Me. 1984) (citing 9 Wigmore, Evidence § 2498 at
424-31 (Chadbourn rev. 1981)). As applied here, the Dealers Act reflects a
legislative judgment that the factual determinations of an administrative board—
one with expertise in the specialized area of motor vehicle franchise
relationships—are sufficiently reliable as to require a heightened standard of proof
before they are disregarded. See 10 M.R.S. § 1187(1) (establishing the
membership of the Maine Motor Vehicle Franchise Board to include individuals
with experience as franchisees and franchisors); L.D. 1294, Summary (121st Legis.
2003) (establishing the Board as a forum “with specific expertise in the motor
vehicle industry” in order to promptly resolve “complex and time-consuming
litigation”).
[¶40] For these reasons, we conclude that section 1189-B(2)’s presumption
in favor of the Board’s factual findings is consistent with, and does not unduly
26
burden, the right to trial by jury guaranteed by article I, section 20 of the Maine
Constitution.12
D. Damages Awards Pursuant to the Dealers Act
[¶41] Having established that Ford’s termination of the BOC program
without notice by certified mail to Darling’s constituted a violation of section
1174(3)(B) and that the jury’s review of the Board’s findings was proper, we turn
to the Board’s award of monetary damages to Darling’s. We first address Ford’s
assertion that the Board’s award should be vacated because section 1188 of the
Dealers Act, which establishes the Board’s duties, does not authorize the Board to
award damages. Ford advanced this argument for the first time before this Court,
and as such did not preserve it for appeal. “Generally, a party in an administrative
proceeding must raise any objections it has before the agency for the issue to
be preserved for appeal.” Berry v. Bd. of Trs., Me. State Ret. Sys., 663 A.2d 14, 18
(Me. 1995) (citing New England Whitewater Ctr., Inc. v. Dep’t of Inland Fisheries
& Wildlife, 550 A.2d 56, 58 (Me. 1988)). Nonetheless, the issue of jurisdiction
may be raised at any time in a proceeding, including sua sponte by this Court. See
In re Walter R., 2004 ME 151, ¶ 3, 863 A.2d 276; Pederson v. Cole, 501 A.2d 23,
25 n.2 (Me. 1985). Because we conclude that the Board lacks jurisdiction over
12
Because we conclude that the jury’s review of the Board’s factual findings was proper, we need
not address Ford’s contention that the Board erred in finding that Ford’s termination of the BOC program
substantially and adversely affected Darling’s return on investment. The Board’s findings were subjected
to a review by the jury that comported with the Maine Constitution.
27
actions seeking damages pursuant to the Dealers Act, we vacate the judgment’s
award of monetary damages.
[¶42] Administrative agencies like the Board are by their nature “limited in
their operations within the framework established for them by the Legislature.”
Clark v. State Emps. Appeals Bd., 363 A.2d 735, 736 (Me. 1976). As an
administrative tribunal, the Board possesses only such “jurisdiction, powers and
authority as are conferred upon it by express legislative grant or such as arise
therefrom by implication as necessary and incidental to the full and complete
exercise of the powers granted.” Conners’ Case, 121 Me. 37, 40, 115 A. 520
(1921). Here, the Board’s authority to hear and decide cases is governed by
section 1188, and is qualified by sections 1173, 1189-B, 1190, and 1190-A. We
therefore look to these sections to ascertain whether the Board has jurisdiction over
actions seeking damages pursuant to the Dealers Act. See Clark, 363 A.2d at 736;
Conners’ Case, 121 Me. at 39, 40, 115 A. 520; see also Town of Eagle Lake v.
Comm’r, Dep’t of Educ., 2003 ME 37, ¶ 7, 818 A.2d 1034 (“To determine the
intent of the Legislature, we look first to the statute’s plain meaning . . . .”
(quotation marks omitted)).
[¶43] Section 1188, which establishes the Board’s duties, does not authorize
the Board to award damages to plaintiffs who prevail under the Dealers Act.
Section 1188 empowers the Board to review complaints, issue written decisions
28
and orders, levy civil penalties, and award attorney fees and costs, but it does not
on its face authorize the Board to award damages. 10 M.R.S. § 1188(1)-(4).
Because “[w]e will not read additional language into a statute,” Blue Yonder, LLC
v. State Tax Assessor, 2011 ME 49, ¶ 10, 17 A.3d 667, we presume that if the
Legislature had intended for the Board to make damages decisions it would have
said so, see Pease v. Foulkes, 128 Me. 293, 298, 147 A. 212 (1929) (favoring the
interpretation of statutes “without resorting to subtle and forced constructions for
the purpose of either limiting or extending their operation”).
[¶44] Instead,
the right to damages pursuant to the Dealers Act is governed
by section 1173(1), which, as discussed above, provides in part:
1. Civil Remedies. Any franchisee or motor vehicle dealer
who suffers financial loss of money or property, real or personal, or
who has been otherwise adversely affected as a result of the use or
employment by a franchisor of an unfair method of competition or an
unfair or deceptive act or any practice declared unlawful by this
chapter may bring an action for damages and equitable relief,
including injunctive relief.
Further, section 1189-B(2), which governs appeals from the Board to the Superior
Court, provides that an appeal for a hearing on the merits of the dispute before the
Superior Court “is subject to the provisions of section 1173.” Thus, once a
proceeding before the Board is completed and an appeal is taken on the merits
pursuant to section 1189-B(2), a franchisee may then bring its action for damages
pursuant to section 1173 as part of the hearing before the Superior Court. An
29
action for damages brought pursuant to section 1173 is therefore separate from an
administrative complaint filed with the Board pursuant to section 1188(1).
[¶45] Additionally, sections 1190 and 1190-A explicitly recognize that a
franchisee may bring an original civil action in the Superior Court for alleged
violations of the Dealers Act, independent of the administrative complaint process
before the Board. See also L.D. 1294, Summary (121st Legis. 2003) (“The board
is not the exclusive venue for initially bringing a complaint . . . .”). Such actions in
the Superior Court must be stayed, though, “if, within 60 days after the date of
filing of the complaint, or service of process, whichever date is later, a party to the
action files a complaint with the board.” 10 M.R.S. § 1190-A.
[¶46] The Dealers Act thus sets forth a process by which plaintiffs claiming
damages may seek them either (1) in an original action, or (2) in an appeal for a
hearing on the merits filed with the Superior Court. As made clear by the plain
language and structure of the statute, it is the court, and not the Board, that may
ultimately award damages. Because the Board lacks jurisdiction over actions
seeking damages pursuant to the Dealers Act, its award of damages to Darling’s
must be vacated. See Clark, 363 A.2d at 736-39; Conners’ Case, 121 Me. at 37,
40-43, 115 A. 520.
[¶47] As a final matter, because the Board was not authorized to award
damages, its damages determination is not to be treated as a factual finding subject
30
to the presumption of correctness established by section 1189-B(2). See 10 M.R.S.
§ 1189-B(2) (“In any such hearing [on appeal] before the Superior Court, all
findings of fact of the board are presumed to be correct unless rebutted by clear
and convincing evidence.”). Instead, a plaintiff seeking damages bears the
traditional burden of proof by a preponderance of the evidence. See Trans Coastal
Corp. v. Curtis, 622 A.2d 1186, 1189 (Me. 1993) (holding that plaintiff failed to
meet its burden of establishing damages by a preponderance of the evidence); Foss
v. Ingeneri, 561 A.2d 498, 498-99 (Me. 1989) (holding that plaintiff retains the
burden of proving damages by a preponderance of the evidence following entry of
default judgment); Dairy Farm Leasing Co., Inc. v. Hartley, 395 A.2d 1135, 1138
(Me. 1978) (“It is fundamental in our law that the plaintiff has the burden of
proving his damages.”).
[¶48] For these reasons, the portion of the judgment awarding damages in
the amount of $145,223.08 to Darling’s is vacated. The case is remanded to the
Business and Consumer Docket for a determination of damages, with the burden
on Darling’s to prove its damages by a preponderance of the evidence.
E. The Board’s Award of One Civil Penalty Pursuant to 10 M.R.S. § 1171-B(3)
[¶49] Finally, Darling’s contends that the Board erred in levying only one
civil penalty against Ford pursuant to section 1171-B(3) for Ford’s violation of
section 1174(3)(B). Section 1171-B(3) provides:
31
3. Civil penalty. 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.
Darling’s argues that the Board should have levied multiple penalties against Ford
under the reasoning that every BOC program payment that Ford withheld
constituted a new violation of the Dealers Act. Under the terms of the BOC
program, Ford paid Darling’s a 1.25% cash bonus on the manufacturer’s suggested
retail price of each vehicle that Darling’s sold. Thus, Darling’s asserts that Ford
violated the Dealers Act every time Darling’s sold a Ford vehicle but did not
receive a 1.25% cash bonus.
[¶50] We are not persuaded by Darling’s characterization of what
constitutes a “violation” of the Dealers Act. Under the plain language of section
1174(3)(B), Ford’s “violation” was its use of an unfair or deceptive practice (i.e.,
substantially and adversely modifying the franchise without providing the required
notice), not its failure to make each of its contractual payments. Because Ford
only modified the franchise without providing notice once (at least for purposes of
this dispute), it violated section 1174(3)(B) once, and it was properly subject to one
civil penalty pursuant to section 1171-B(3).
32
The entry is:
The portion of the judgment awarding money damages in
the amount of $145,223.08 to Darling’s is vacated.
Remanded to the Superior Court for a determination of
damages. The judgment is affirmed in all other respects.
On the briefs:
Judy A.S. Metcalf, Esq., and Noreen A. Patient, Esq., Eaton Peabody,
Brunswick, for appellant Darling’s
Michael Kaplan, Esq., Preti, Flaherty, Beliveau & Pachios, LLP, Portland,
for appellant Maine Automobile Dealers Association
Daniel L. Rosenthal, Esq., and Lee H. Bals, Esq., Marcus, Clegg &
Mistretta, P.A., Portland, for appellee/cross-appellant Ford Motor Company
At oral argument:
Judy A.S. Metcalf, Esq., for appellant Darling’s
Michael Kaplan, Esq., for appellant Maine Automobile Dealers Association
Daniel Rosenthal, Esq., for appellee/cross-appellant Ford Motor Company
Business and Consumer Docket docket numbers AP-08-1; AP-08-2; AP-10-5
FOR CLERK REFERENCE ONLY