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JPM, Inc. v. John Deere Industrial Equipment Co.

August 19, 1996




Appeal from the United States District Court for the Western District of Wisconsin. No. 94-C-0803-C Barbara B. Crabb, Judge.

Before ESCHBACH, MANION, and EVANS, Circuit Judges.

EVANS, Circuit Judge.



John Mettler and his wife Margo are the sole shareholders of JPM, Inc. In 1990, JPM and the John Deere company entered into three separate agreements. The agreements, which created a dealership under the Wisconsin Fair Dealership Law, made JPM a "dealer" and John Deere a "grantor," as those terms are defined by the Wisconsin law. Wis. Stat. sec. 135.02(2) and (5). In the deal, JPM purchased the exclusive dealership rights to certain lines of John Deere equipment in a defined territory in northwest Wisconsin for $1 million. Four years later, JPM sold the dealership to Ison Equipment for roughly double that amount -- $2,062,705 -- plus a three-year employment contract at $104,000 a year for John Mettler.

After the sale was completed, JPM sued John Deere for damages, alleging that Deere constructively terminated the dealership in violation of the Wisconsin Fair Dealership Law. In support of its constructive termination claim, JPM alleged, among other things, that it had been told by John Deere that it must sell the dealerships within three months, that it must sell to Ison, and that it could not merge with Ison or solicit other bids.

John Deere moved for summary judgment, essentially arguing that a cause of action does not exist under the Wisconsin Fair Dealership Law for constructive termination. Deere's argument was quite simple: JPM lacked standing to sue under the Fair Dealership Law because the dealership was not terminated by John Deere, but by the dealer, JPM, when it decided to sell. JPM sold the business to Ison, the argument ran, so it could not claim the dealership was terminated or canceled by John Deere. The district court rejected Deere's interpretation of the relevant Wisconsin statute, which reads:

Cancellation and alteration of dealerships. No grantor, directly or through any officer, agent or employee, may terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership without good cause. The burden of proving good cause is on the grantor. Wis. Stat. sec. 135.03.

The district court denied John Deere's motion for summary judgment, saying, "Although I cannot say whether the plaintiff will be successful in establishing such a termination, the legal theory has merit." John Deere seems to have reconciled itself to the fact that constructive termination is a recognized legal theory under the Wisconsin Fair Dealership Law. See, e.g., Super Valu Stores, Inc. v. D-Mart Food Stores, Inc., 146 Wis. 2d 568, 576, 431 N.W.2d 721, 725 (Ct. App. 1988), review denied, 147 Wis. 2d 888, 436 N.W.2d 29 (1988); see also, Michael A. Bowen & Brian E. Butler, The Wisconsin Fair Dealership Law (2d ed. 1995) (agreeing that constructive termination claims are valid). This aspect of the district court's opinion was not challenged in a motion to reconsider Deere filed following the denial of its summary judgment motion.

In its motion to reconsider, Deere argued that the economic duress theory relied on by JPM to support its claim of constructive termination could not, in fact, support it. The district court, however, held that "economic duress or coercion can serve as the basis for a constructive termination claim," but that "plaintiffs making such claims must make an initial showing either that they pursued legal avenues available to remedy the alleged duress or that those remedies would not have been adequate to cure the problem." The motion to reconsider was stayed in order to give JPM an opportunity to make this initial showing. It was undisputed, however, that JPM had not pursued the injunctive relief available to it as a dealer under the Wisconsin Fair Dealership Law. JPM also failed to convince the district court that legal remedies under the Dealership Law would have been insufficient to afford it relief. The district court, therefore, granted John Deere's motion for reconsideration and entered summary judgment against JPM. JPM's appeal is now before us.

We review the district court's grant of summary judgment de novo. Jasper Cabinet Co. v. United Steelworkers of America, 77 F.3d 1025 (7th Cir. 1996). All reasonable inferences must be viewed in the light most favorable to the nonmoving party, in this case JPM, Bratton v. Roadway Package System, Inc., 77 F.3d 168 (7th Cir. 1996), and summary judgment is appropriate only where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Oliver v. Deen, 77 F.3d 156 (7th Cir. 1996).

We assume that constructive termination is a recognized cause of action under the Wisconsin Fair Dealership Law. On that assumption, we turn to the next step in our analysis -- whether economic duress may serve as the basis for a claim of constructive termination. The short answer to this question is yes. The Fair Dealership Law is to "be liberally . . . applied to promote its underlying purposes and policies." Wisconsin Statutes 135.025(1). One of the primary purposes of the law is to "protect dealers against unfair treatment by grantors, who inherently have superior economic power and superior bargaining power in the negotiation of dealerships[.]" Wis. Stat. sec. 135.025(2)(b). Economic duress is but one of many ways in which a grantor may seek to exercise its "inherently superior bargaining power" to the detriment of the dealer.

Having concluded that economic duress can be the basis for a constructive termination claim under the Wisconsin Fair Dealership Law, we next consider what a plaintiff must do under Wisconsin law to make a showing of economic duress. The elements of economic duress were set out by the Supreme Court of Wisconsin in Wurtz v. Fleischman, 97 Wis. 2d 100 (1980), where the court tells us that the basic elements of economic duress which the trial court should expressly consider . . . are . . . :

"1. The party alleging economic duress must show that he has been the victim of a wrongful or ...

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