Practices

The relationship between a manufacturer and those in the chain of distribution is increasingly regulated and litigated. Sedgwick attorneys are adept at exploiting the nuances of distribution law. Our attorneys are experienced in handling transactional and litigation matters between franchisors, manufacturers, suppliers, and licensors, on the one hand, and franchisees, dealers, licensees, distributors, and sales representatives, on the other. Our clients include petroleum companies and manufacturers of automobiles, automotive hand tools, brand name prescription drugs, office furniture, medical prostheses, and restaurant chains.

The relationship between a manufacturer and those in the chain of distribution is increasingly regulated and litigated. Sedgwick attorneys are adept at exploiting the nuances of distribution law. Our attorneys are experienced in handling transactional and litigation matters between franchisors, manufacturers, suppliers, and licensors, on the one hand, and franchisees, dealers, licensees, distributors, and sales representatives, on the other. Our clients include petroleum companies and manufacturers of automobiles, automotive hand tools, brand name prescription drugs, office furniture, medical prostheses, and restaurant chains.

The following summaries describe some of the matters handled by Sedgwick attorneys in this area.

Transactional/Consulting Experience

• Sedgwick attorneys counseled a performance vehicle manufacturer in its advertising and marketing campaigns and agreements, branding enforcement, dealer agreements, dealer-principal matters, distribution agreements, trademark licensing, and technology/IT services agreements.
• Sedgwick counseled in negotiations with California’s New Motor Vehicle Board regarding the location of competitive dealerships.
• Our attorneys negotiated the relocation of an automobile dealership, including the details in the dealer agreement, surrender of lease, commercial lease, general security agreements and ancillary documents and agreements.
• In a multiparty, multibrand acquisition of automotive dealerships, Sedgwick attorneys handled asset purchase agreements, share purchase agreements, the master dealer agreement, dealer agreements, general security agreements, promissory notes, conveyances, priority agreements, escrow agreements, discharges and releases, coordinating registration of security interests, shareholders agreements, and ancillary transactional documents and agreements.
• Sedgwick currently represents an automobile manufacturer in all of its California real estate transactions.
• Counsel at Sedgwick has handled the acquisition, development and sale of a number of automobile dealerships and has represented lenders in loans to car dealers.
• Sedgwick lawyers have prepared franchise offering circulars in compliance with FTC rules and state law, and have negotiated and obtained government approval of the offering circulars.
• Sedgwick attorneys have counseled manufacturers in the automobile, furniture and watercraft industries on price discrimination issues governed by the Robinson-Patman Act with respect to discrepancies in pricing and incentives offered to dealers and distributors.
• Sedgwick advised in negotiations for the transfer of an automobile distributor’s contractual territorial rights to another distributor.
• Sedgwick advised a major manufacturer of hair care products regarding termination of regional distributorships.
• Our firm counseled – and averted litigation – concerning a modeling and beauty operations franchise dispute over territory rights.
• Sedgwick negotiated the resolution of disputes over supplements/nutrition and health system franchise royalties, franchise renewal and acquisition of additional franchise locations.
• Our attorneys have counseled in the sale and acquisition of franchises and franchise locations; we have prepared franchise agreements and have assisted in establishing a franchise network.
• Sedgwick has counseled a major real estate brokerage franchisor on a wide variety of franchise issues, including the exclusivity of franchise territories, a franchisee’s trade and service mark violations, and claims of failure of the franchisor to provide marketing and management support under the franchise agreement.

Litigation Experience

Sedgwick has extensive litigation experience concerning dealers, franchises, distributor and sales representatives. A sampling of our successes is included below.

• Sedgwick prevailed on claims brought against a Fortune 500 medical company in the amount of $77 million for the alleged breach of a distribution and licensing agreement covering a family of medical products. Sedgwick was able to show during a seven-week binding arbitration that the commercial value of certain products had been grossly reduced as a result of unanticipated regulatory restrictions and that other products showed no scientifically supportable basis for success.
• Sedgwick obtained a jury trial defense verdict for a major orthopedic implant/medical supply company in a lawsuit brought by an independent distributor alleging damages of $25 million.
• Our attorneys obtained summary judgment for our client, a franchisor, based on the defense of the statute of frauds and on the ground that the plaintiff unreasonably relied on oral statements as a matter of law. Plaintiff alleged the franchisor breached an oral modification to a written contract by failing to exercise an option to purchase a service station that was to be resold to the plaintiff. The plaintiff alleged he took over the station business operation relying on the franchisor’s promise to purchase the land and resell it to the plaintiff.
• Counsel at Sedgwick defended an automobile manufacturer in state and federal court multidistrict litigation regarding fraud, RICO, breach of contract and other claims based on allegations that the company took kickbacks to route the most desirable cars to certain dealers during a period when the quantity of those cars was limited.
• Sedgwick attorneys earned a dismissal of a fraud and breach of contract action against our client. A station operator alleged fraud and breach of contract in connection with the franchisor’s failure to sell land to the plaintiff, but the trial court found the plaintiff failed to show causation and/or that the claim was barred by the statute of frauds. Ultimately, Sedgwick obtained judgment as a matter of law against the plaintiff at the close of the plaintiff’s remaining claim for bad faith pricing.
• Sedgwick attorneys’ motion to dismiss on behalf of a franchisor was granted against a franchisee seeking indemnity and defense.
• Sedgwick prevailed in a bench trial for our client, an automobile manufacturer, in which a dealer’s creditor alleged our client was responsible for the dealer’s debts.
• Sedgwick obtained a favorable federal court jury verdict on behalf of an automobile manufacturer, with the jury finding that the licensee had violated our client’s trademark rights.
• Our attorneys favorably settled federal court litigation against our client, an automobile manufacturer, that resulted in a licensee agreeing to the entry of a permanent injunction and the return of cars produced under the agreement.
• Our attorneys successfully represented a franchisor in an action alleging our client violated the Petroleum Marketing Practices Act (PMPA). A dealer argued that the franchisor violated the PMPA by terminating the dealer’s franchise relationship and substituting it with a contract that was not protected by the PMPA. The trial court found the PMPA did not cover the contract at issue. The Court of Appeals then found that the plaintiff suffered no damages.
• Sedgwick successfully represented gas station dealers against distributors for alleged breaches of the PMPA in various courts across Northern California. Some cases involved real estate issues emanating from leases or loans related to the dealers’ real property, while others involved the full range of franchise issues generated under the PMPA.
• Our attorneys settled claims against an automobile manufacturer in a federal action in which the plaintiff alleged that the failure to provide promised working capital led to the demise of a business.
• Sedgwick, representing an automobile manufacturer, prevailed on all claims and counterclaims regarding floor plan financing.
• Our attorneys’ motion to dismiss for a franchisor was granted based on the grounds that the economic loss rule barred the fraud claim and that the plaintiff unreasonably relied on oral statements at variance with the written documents as a matter of law.
• Our attorneys successfully mediated on behalf of an automobile manufacturer to resolve litigation involving the failure of what had been the nation's largest dealership in a car line. The original dealer had died shortly after over-expanding; his son proved incapable of managing the enterprise and sued for insufficient support.
• Our attorneys settled state court litigation against an automobile manufacturer that resulted in the licensee agreeing to accept a new license with terms favorable to the manufacturer.
• We settled federal court litigation that resulted in an opposing party agreeing to be a dealer for our client, an automobile manufacturer.
• Our attorneys obtained a Court of Appeals affirmance of a trial court ruling that franchise agreements between a manufacturer and dealer did not show a community of pecuniary interest as required for the estate to establish joint enterprise between the dealer and manufacturer for purposes of imputing negligence to the manufacturer.
• We negotiated the resolution of an automobile dealer franchise termination case following a nonbinding arbitration and administrative hearing before the state motor vehicle board.
• Sedgwick's franchisor client was awarded substantial attorneys' fees after prevailing in a seven-week jury trial regarding claims by a franchisee in connection with the failure of his business, including negligence, breach of contract, fraud, international misrepresentation, violation of the California Franchise Investment Law and violation of California. Bus. & Prof. Code §17200.
• In a multistate franchise case on behalf of a national franchisor, counsel at Sedgwick won summary judgment on the franchisor's claims based on breach of contract claims, defeated the franchisee's claims for fraud, failure to disclose and defamation, and secured a judgment of more than $1 million.
• Sedgwick was brought in to represent an automobile manufacturer whose license to sell new cars in California was suspended by the Department of Motor Vehicles (DMV). Our attorneys reversed the DMV’s suspension, by order of the state Superior Court. The order was upheld on appeal.
• Sedgwick successfully resolved litigation between an automobile manufacturer and dealer regarding an alleged breach of contract to assign territorial rights, antitrust violations and violation of the Automotive Dealers Day in Court Act, 15 USC § 1221 et seq.
• Sedgwick successfully defended a national automotive tool manufacturing company in more than 50 cases involving claims brought by former dealers alleging violation of the Seller Assisted Marketing Plan Act and other claims.
• Sedgwick defended a distributor against claims brought by a sales agent under the Independent Wholesale Sales Representative Contractual Relations Act, which provides for treble damages and attorneys’ fees. Sedgwick obtained dismissal of the claims and obtained reimbursement of attorneys’ fees from the plaintiff.
• Our attorneys obtained summary judgment for a franchisor on fraud and breach of fiduciary duty for an alleged failure to disclose the environmental condition of land. The trial court also granted the franchisor’s motion to limit the scope of damages for trial based on a contract provision that excluded recovery for consequential damages.
• Sedgwick represented an accounts receivable secured lender in an action brought by a client.
• In an action by a distributor against an international furniture manufacturer, Sedgwick obtained the dismissal of certain claims before trial, severely curtailed the remaining damages claims during trial and then settled the remaining claims for a small fraction of their alleged value.
• The firm successfully defended a manufacturing client in federal court on Robinson-Patman Act claims of price discrimination brought by an authorized retailer.
• Our attorneys obtained summary judgments for our clients in several state lawsuits alleging that our clients, a division of a publishing company, violated franchise laws.
• We represented a major restaurant chain in a trademark infringement case in California state court in which the franchisee, after the termination of the franchise agreement, continued to use our client’s name.
• Sedgwick represented a children’s clothing company in several breach of franchise agreement cases in California state court.
• Sedgwick obtained a sizable attorneys’ fee award for our client, a master franchisor of a copy chain, while representing it against claims of franchise act violations, fraud, unfair competition, and Business and Professions Code section 17200 claims filed in California state court.
• Our attorneys obtained an arbitration victory in a pizza restaurant franchise termination case.

The relationship between a manufacturer and those in the chain of distribution is increasingly regulated and litigated. Sedgwick attorneys are adept at exploiting the nuances of distribution law. Our attorneys are experienced in handling transactional and litigation matters between franchisors, manufacturers, suppliers, and licensors, on the one hand, and franchisees, dealers, licensees, distributors, and sales representatives, on the other. Our clients include petroleum companies and manufacturers of automobiles, automotive hand tools, brand name prescription drugs, office furniture, medical prostheses, and restaurant chains.

The following summaries describe some of the matters handled by Sedgwick attorneys in this area.

Transactional/Consulting Experience

• Sedgwick attorneys counseled a performance vehicle manufacturer in its advertising and marketing campaigns and agreements, branding enforcement, dealer agreements, dealer-principal matters, distribution agreements, trademark licensing, and technology/IT services agreements.
• Sedgwick counseled in negotiations with California’s New Motor Vehicle Board regarding the location of competitive dealerships.
• Our attorneys negotiated the relocation of an automobile dealership, including the details in the dealer agreement, surrender of lease, commercial lease, general security agreements and ancillary documents and agreements.
• In a multiparty, multibrand acquisition of automotive dealerships, Sedgwick attorneys handled asset purchase agreements, share purchase agreements, the master dealer agreement, dealer agreements, general security agreements, promissory notes, conveyances, priority agreements, escrow agreements, discharges and releases, coordinating registration of security interests, shareholders agreements, and ancillary transactional documents and agreements.
• Sedgwick currently represents an automobile manufacturer in all of its California real estate transactions.
• Counsel at Sedgwick has handled the acquisition, development and sale of a number of automobile dealerships and has represented lenders in loans to car dealers.
• Sedgwick lawyers have prepared franchise offering circulars in compliance with FTC rules and state law, and have negotiated and obtained government approval of the offering circulars.
• Sedgwick attorneys have counseled manufacturers in the automobile, furniture and watercraft industries on price discrimination issues governed by the Robinson-Patman Act with respect to discrepancies in pricing and incentives offered to dealers and distributors.
• Sedgwick advised in negotiations for the transfer of an automobile distributor’s contractual territorial rights to another distributor.
• Sedgwick advised a major manufacturer of hair care products regarding termination of regional distributorships.
• Our firm counseled – and averted litigation – concerning a modeling and beauty operations franchise dispute over territory rights.
• Sedgwick negotiated the resolution of disputes over supplements/nutrition and health system franchise royalties, franchise renewal and acquisition of additional franchise locations.
• Our attorneys have counseled in the sale and acquisition of franchises and franchise locations; we have prepared franchise agreements and have assisted in establishing a franchise network.
• Sedgwick has counseled a major real estate brokerage franchisor on a wide variety of franchise issues, including the exclusivity of franchise territories, a franchisee’s trade and service mark violations, and claims of failure of the franchisor to provide marketing and management support under the franchise agreement.

Litigation Experience

Sedgwick has extensive litigation experience concerning dealers, franchises, distributor and sales representatives. A sampling of our successes is included below.

• Sedgwick prevailed on claims brought against a Fortune 500 medical company in the amount of $77 million for the alleged breach of a distribution and licensing agreement covering a family of medical products. Sedgwick was able to show during a seven-week binding arbitration that the commercial value of certain products had been grossly reduced as a result of unanticipated regulatory restrictions and that other products showed no scientifically supportable basis for success.
• Sedgwick obtained a jury trial defense verdict for a major orthopedic implant/medical supply company in a lawsuit brought by an independent distributor alleging damages of $25 million.
• Our attorneys obtained summary judgment for our client, a franchisor, based on the defense of the statute of frauds and on the ground that the plaintiff unreasonably relied on oral statements as a matter of law. Plaintiff alleged the franchisor breached an oral modification to a written contract by failing to exercise an option to purchase a service station that was to be resold to the plaintiff. The plaintiff alleged he took over the station business operation relying on the franchisor’s promise to purchase the land and resell it to the plaintiff.
• Counsel at Sedgwick defended an automobile manufacturer in state and federal court multidistrict litigation regarding fraud, RICO, breach of contract and other claims based on allegations that the company took kickbacks to route the most desirable cars to certain dealers during a period when the quantity of those cars was limited.
• Sedgwick attorneys earned a dismissal of a fraud and breach of contract action against our client. A station operator alleged fraud and breach of contract in connection with the franchisor’s failure to sell land to the plaintiff, but the trial court found the plaintiff failed to show causation and/or that the claim was barred by the statute of frauds. Ultimately, Sedgwick obtained judgment as a matter of law against the plaintiff at the close of the plaintiff’s remaining claim for bad faith pricing.
• Sedgwick attorneys’ motion to dismiss on behalf of a franchisor was granted against a franchisee seeking indemnity and defense.
• Sedgwick prevailed in a bench trial for our client, an automobile manufacturer, in which a dealer’s creditor alleged our client was responsible for the dealer’s debts.
• Sedgwick obtained a favorable federal court jury verdict on behalf of an automobile manufacturer, with the jury finding that the licensee had violated our client’s trademark rights.
• Our attorneys favorably settled federal court litigation against our client, an automobile manufacturer, that resulted in a licensee agreeing to the entry of a permanent injunction and the return of cars produced under the agreement.
• Our attorneys successfully represented a franchisor in an action alleging our client violated the Petroleum Marketing Practices Act (PMPA). A dealer argued that the franchisor violated the PMPA by terminating the dealer’s franchise relationship and substituting it with a contract that was not protected by the PMPA. The trial court found the PMPA did not cover the contract at issue. The Court of Appeals then found that the plaintiff suffered no damages.
• Sedgwick successfully represented gas station dealers against distributors for alleged breaches of the PMPA in various courts across Northern California. Some cases involved real estate issues emanating from leases or loans related to the dealers’ real property, while others involved the full range of franchise issues generated under the PMPA.
• Our attorneys settled claims against an automobile manufacturer in a federal action in which the plaintiff alleged that the failure to provide promised working capital led to the demise of a business.
• Sedgwick, representing an automobile manufacturer, prevailed on all claims and counterclaims regarding floor plan financing.
• Our attorneys’ motion to dismiss for a franchisor was granted based on the grounds that the economic loss rule barred the fraud claim and that the plaintiff unreasonably relied on oral statements at variance with the written documents as a matter of law.
• Our attorneys successfully mediated on behalf of an automobile manufacturer to resolve litigation involving the failure of what had been the nation's largest dealership in a car line. The original dealer had died shortly after over-expanding; his son proved incapable of managing the enterprise and sued for insufficient support.
• Our attorneys settled state court litigation against an automobile manufacturer that resulted in the licensee agreeing to accept a new license with terms favorable to the manufacturer.
• We settled federal court litigation that resulted in an opposing party agreeing to be a dealer for our client, an automobile manufacturer.
• Our attorneys obtained a Court of Appeals affirmance of a trial court ruling that franchise agreements between a manufacturer and dealer did not show a community of pecuniary interest as required for the estate to establish joint enterprise between the dealer and manufacturer for purposes of imputing negligence to the manufacturer.
• We negotiated the resolution of an automobile dealer franchise termination case following a nonbinding arbitration and administrative hearing before the state motor vehicle board.
• Sedgwick's franchisor client was awarded substantial attorneys' fees after prevailing in a seven-week jury trial regarding claims by a franchisee in connection with the failure of his business, including negligence, breach of contract, fraud, international misrepresentation, violation of the California Franchise Investment Law and violation of California. Bus. & Prof. Code §17200.
• In a multistate franchise case on behalf of a national franchisor, counsel at Sedgwick won summary judgment on the franchisor's claims based on breach of contract claims, defeated the franchisee's claims for fraud, failure to disclose and defamation, and secured a judgment of more than $1 million.
• Sedgwick was brought in to represent an automobile manufacturer whose license to sell new cars in California was suspended by the Department of Motor Vehicles (DMV). Our attorneys reversed the DMV’s suspension, by order of the state Superior Court. The order was upheld on appeal.
• Sedgwick successfully resolved litigation between an automobile manufacturer and dealer regarding an alleged breach of contract to assign territorial rights, antitrust violations and violation of the Automotive Dealers Day in Court Act, 15 USC § 1221 et seq.
• Sedgwick successfully defended a national automotive tool manufacturing company in more than 50 cases involving claims brought by former dealers alleging violation of the Seller Assisted Marketing Plan Act and other claims.
• Sedgwick defended a distributor against claims brought by a sales agent under the Independent Wholesale Sales Representative Contractual Relations Act, which provides for treble damages and attorneys’ fees. Sedgwick obtained dismissal of the claims and obtained reimbursement of attorneys’ fees from the plaintiff.
• Our attorneys obtained summary judgment for a franchisor on fraud and breach of fiduciary duty for an alleged failure to disclose the environmental condition of land. The trial court also granted the franchisor’s motion to limit the scope of damages for trial based on a contract provision that excluded recovery for consequential damages.
• Sedgwick represented an accounts receivable secured lender in an action brought by a client.
• In an action by a distributor against an international furniture manufacturer, Sedgwick obtained the dismissal of certain claims before trial, severely curtailed the remaining damages claims during trial and then settled the remaining claims for a small fraction of their alleged value.
• The firm successfully defended a manufacturing client in federal court on Robinson-Patman Act claims of price discrimination brought by an authorized retailer.
• Our attorneys obtained summary judgments for our clients in several state lawsuits alleging that our clients, a division of a publishing company, violated franchise laws.
• We represented a major restaurant chain in a trademark infringement case in California state court in which the franchisee, after the termination of the franchise agreement, continued to use our client’s name.
• Sedgwick represented a children’s clothing company in several breach of franchise agreement cases in California state court.
• Sedgwick obtained a sizable attorneys’ fee award for our client, a master franchisor of a copy chain, while representing it against claims of franchise act violations, fraud, unfair competition, and Business and Professions Code section 17200 claims filed in California state court.
• Our attorneys obtained an arbitration victory in a pizza restaurant franchise termination case.