A Bangor, Maine, dealership that lost hundreds of thousands of dollars when Ford Motor Co. discontinued its Blue Oval Certified incentive program in 2005 will have to wait a while longer to find out whether it will reap any damages.
Darling's Bangor Ford won $145,000 plus attorney fees at trial in March 2011, after a jury found that the Blue Oval program was part of the store's "franchise arrangement" under Maine dealer law and that Ford violated the law when it didn't provide the dealership written notice by certified mail that it was terminating the program.
Last month, the Maine Supreme Court upheld Ford's liability, affirming that automakers' incentive programs are part of the "franchise arrangement" and that changes to those programs are subject to mandatory advance notice under state dealer law.
But the court ordered a retrial on the damages because the lower-court judge had adopted the figure set by the Maine Motor Vehicle Franchise Board rather than let the jury decide that question.
The Supreme Court's interpretation of the franchise relationship has broad implications for stores in Maine, said Portland lawyers Bruce Gerrity and Michael Kaplan, who represented the Maine Automobile Dealers Association in the case after it intervened on the side of the dealership.
A Ford spokeswoman and the dealership's lawyer both said they couldn't comment on pending litigation.
The Blue Oval program, launched in 2000, provided dealerships a 1.25 percent cash bonus on the retail price of each vehicle they sold, according to the Supreme Court. In 2005, Ford replaced it with the Accelerated Sales Challenge program, which emphasized noncash incentives.
Darling's Ford received about $215,000 under the new program before it ended in 2007 but claimed it would have earned $678,943 if the Blue Oval program had remained in operation for the same period.
Ford announced the termination of Blue Oval on its internal Fordstar network and by e-mail but did not comply with the Maine dealer law requiring 90 days' written notice by certified mail for changes in a franchise agreement.
Darling's challenged Ford's action before the Maine Motor Vehicle Franchise Board. The board held that termination of the program was a franchise modification that "adversely affected" the store's return on investment and that it had required advance written notice. It awarded Darling's $145,223 in damages plus attorney fees and imposed a $10,000 civil penalty.
The jury upheld the board's factual findings, and the judge upheld the civil penalty and damages.
The Supreme Court, in a unanimous opinion by Justice Jon Levy, agreed that Ford had violated the dealer law, even though Darling's knew about the termination.
"Dealers receive many communications from manufacturers, often through informal means such as postings to websites or electronic communications," the court said. So it was "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 dealer's rights, obligations, investment or return on investment."
The court added: "Viewed holistically, the sales and service agreement and Blue Oval Certified program are part of the overall franchise arrangement that existed between Ford and Darling's."
The court rejected Darling's and the Maine Automobile Dealers Association's argument that the board has authority to award damages. Instead, it said the trial judge should not have adopted the board's figure and ordered a new trial to set the damages award.
The decision failed to resolve one key question raised by Darling's and the dealer association: Do potential damages continue to mount until Ford complies with the written notification requirement, something Gerrity and Kaplan said Ford hasn't done.
Gerrity said: "The damages are potentially significant."