The Franchise Memorandum

A New Jersey appellate court, reversing a summary judgment decision, recently held that the New Jersey Coalition of Automotive Retailers, Inc. (the Coalition) had associational standing to bring an action against Ford Motor Company for declaratory and injunctive relief. N.J. Coal. of Auto. Retailers, Inc. v. Ford Motor Co., 2024 WL 1461817 (N.J. Sup. Ct. App. Div. Apr. 4, 2024). The Coalition, an association of New Jersey car dealerships, brought suit alleging that Ford’s Lincoln Commitment Program (LCP) violated the New Jersey Franchise Practices Act (NJFPA). Ford’s LCP payments allegedly resulted in price differentials on comparably equipped new motor vehicles because not all Lincoln dealers in New Jersey received the same percentage of the Manufacturer's Suggested Retail Price as an LCP Payment. The district court granted Ford’s summary judgment motion on the grounds that Coalition lacked standing. The appellate court reversed, reasoning that New Jersey courts have taken a liberal approach to standing and the Coalition met the required elements for associational standing.

The appellate court applied the three associational standing elements: (1) the association's members would have standing to bring an action under the NJFPA in their own right; (2) the interests the association seeks to maintain are germane to the purposes of the organization; and (3) neither the claim asserted nor the relief requested requires individual participation by the association's members. First, the court found that the Coalition was not just seeking an “advisory opinion” but rather, there appeared to be a justiciable controversy so that individual Coalition members would have standing to bring an action under the NJFPA. Second, the court concluded that proper enforcement of the NJFPA is germane to the Coalition’s purpose, which includes advocating on behalf of its members and promoting public policies to ensure a competitive and fair marketplace. Finally, the court concluded the claim did not require participation of individual members because the Coalition was seeking declaratory and injunctive relief, not damages. The court rejected Ford’s argument that the NJFPA does not allow an association to bring an action on behalf of franchisees, reasoning that while not explicitly allowed, associational standing is not precluded under the statute. Finally, Ford argued that it should be able to assert complete defenses against each franchisee, individually, on the basis that the franchisee was in material breach of the franchise agreement. Because the record failed to show any allegation that there were material breaches of the agreements with any of the Coalition’s members, the court rejected this argument and remanded the matter.