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DC Automotive, Inc. v. Kia Motors America, Inc.

United States District Court, D. Colorado

September 3, 2019

DC AUTOMOTIVE, INC. d/b/a Arapahoe Kia, a Colorado corporation, and SLT GROUP VI, INC. d/b/a Peak Kia, a Colorado corporation, Plaintiffs,
v.
KIA MOTORS AMERICA, INC., a California corporation, Defendant.

          ORDER

          PHILIP A. BRIMMER CHIEF UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Defendant's Motion for Summary Judgment [Docket No. 21]. The Court has jurisdiction pursuant to 28 U.S.C. § 1332.

         I. BACKGROUND

         This case arises out of a dispute over the potential establishment of a new car dealership in Denver, Colorado.[1] Defendant Kia Motors America is the North American distributor of Kia vehicles. Docket No. 21 at 3, ¶ 1. In this role, defendant appoints entities as dealers, who sell Kia vehicles directly to customers. Plaintiff Peak Kia was appointed as a Kia dealer in 2003; plaintiff Arapahoe Kia was appointed as a Kia dealer in 2008. Id. at 4, ¶¶ 3-4. Both plaintiffs signed a standard “Kia Dealer Sales and Service Agreement” (the “dealer agreement”) at the time of their appointment. Id., ¶ 5. The dealer agreement “expressly reserves” for defendant “the unrestricted right . . . to grant others the right to sell Kia [p]roducts, ” notes that plaintiffs are “not being granted an exclusive right to sell Kia [p]roducts in any specified geographic area, ” and states that defendant “may add new dealers to, relocate dealers into or remove dealers from” the geographic area “[a]s permitted by applicable law.” Id., ¶¶ 7-9. On October 19, 2018, defendant sent letters to plaintiffs, notifying them that defendant intended to appoint a new dealer (the “proposed dealership”) at 1260 S. Colorado Boulevard in Denver, Colorado. Id., ¶ 10. Plaintiffs are located more than five miles away from the proposed dealership. Id. at 5, ¶ 11.

         On January 15, 2019, plaintiffs initiated this lawsuit in the District Court for the City and County of Denver, Colorado. Docket No. 1-2. Plaintiffs allege that defendant's plan to establish the proposed dealership violates Colo. Rev. Stat. § 44-20-125, a statute which creates a private right of action for “[a]n existing motor vehicle dealer adversely affected by” a distributor's plan to reopen, relocate, or establish a “same line-make motor vehicle dealer” to file suit to “prevent or enjoin” the establishment of the proposed motor vehicle dealer. Colo. Rev. Stat. § 44-20-125(5)(a). Plaintiffs bring three claims for relief: (1) injunctive relief for a violation of Colo. Rev. Stat. § 44-20-125, restraining defendant from establishing the proposed dealership; (2) damages for a violation of Colo. Rev. Stat. § 44-20-125; and (3) damages for breach of the implied covenant of good faith and fair dealing. Docket No. 1-2 at 7-10, ¶¶ 52-78. On February 6, 2019, defendant timely removed the case to this Court. Docket No. 1.

         II. LEGAL STANDARD

         Summary judgment is warranted under Federal Rule of Civil Procedure 56 when the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). A disputed fact is “material” if under the relevant substantive law it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). Only disputes over material facts can create a genuine issue for trial and preclude summary judgment. Faustin v. City & Cty. of Denver, 423 F.3d 1192, 1198 (10th Cir. 2005). An issue is “genuine” if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997).

         Where “the moving party does not bear the ultimate burden of persuasion at trial, it may satisfy its burden at the summary judgment stage by identifying a lack of evidence for the nonmovant on an essential element of the nonmovant's claim.” Bausman v. Interstate Brands Corp., 252 F.3d 1111, 1115 (10th Cir. 2001) (internal quotation marks omitted) (quoting Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998)). “Once the moving party meets this burden, the burden shifts to the nonmoving party to demonstrate a genuine issue for trial on a material matter.” Concrete Works of Colo., Inc. v. City & Cty. of Denver, 36 F.3d 1513, 1518 (10th Cir. 1994). The nonmoving party may not rest solely on the allegations in the pleadings, but instead must designate “specific facts showing that there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (internal quotation marks omitted). “To avoid summary judgment, the nonmovant must establish, at a minimum, an inference of the presence of each element essential to the case.” Bausman, 252 F.3d at 1115. When reviewing a motion for summary judgment, a court must view the evidence in the light most favorable to the non-moving party. Id.

         III. ANALYSIS

         Defendant moves for summary judgment on all three of plaintiffs' claims. Docket No. 21.

         A. Injunctive Relief Under Colo. Rev. Stat. § 44-20-125

         Defendant argues that plaintiffs lack “standing” to assert their claim for injunctive relief under Colo. Rev. Stat. § 44-20-125. Docket No. 21 at 7-15.

         1. The Statutory Scheme

         The Colorado Dealer Act (“CDA”), Colo. Rev. Stat. § 44-20-101 et seq., regulates the “sale and distribution of motor vehicles” in Colorado, including the relationship between manufacturers, distributors, and dealers of motor vehicles and the general public. Colo. Rev. Stat. § 44-20-101(a). As relevant here, the CDA requires any manufacturer seeking to “establish an additional motor vehicle dealer, reopen a previously existing motor vehicle dealer, or authorize an existing motor vehicle dealer to relocate” to provide at least sixty days notice to all of its existing dealers “within whose relevant market area the new, reopened, or relocated dealer would be located.” Colo. Rev. Stat. § 44-20-125(1). Within ninety days of receipt of notice from the manufacturer, an existing dealer who is “adversely affected” by the new dealer may file a legal action or administrative complaint to “prevent or enjoin” the new dealer. Id., § 44-20-125(5)(a). An existing dealer is adversely affected if it is “located within the relevant market area” of the new dealer. Id., § 44-20-125(5)(a)(I).

         Before August 9, 2017, the CDA defined “relevant market area” as the greater of “[t]he geographic area of responsibility defined in the franchise agreement of an existing dealer” and “[t]he geographic area within a radius of five miles of any existing dealer of the same line-make of vehicle that is located in a county with a population of more than [150, 000] or within a radius of ten miles . . . in a county with a population of [150, 000] or less.” Id. § 12-6-120.3(3)(b) (2016).[2] Effective August 9, 2017, the statute was amended to define the “relevant market area” as the greater of “[t]he geographic area of responsibility defined in the franchise agreement of an existing dealer” and “[t]he geographic area within a radius of ten miles of any existing dealer of the same line-make of vehicle as the proposed additional motor vehicle dealer.” Id., § 44-20-125(4)(b) (the “2017 amendment”). Defendant represents, and plaintiffs do not otherwise contend, that plaintiffs are located in counties which have a population in excess of 150, 000. See Docket No. 21 at 6. In the complaint, plaintiffs represent that they are located more than five miles but less than ten miles from the proposed dealership site. See Docket No. 1-2 at 6, ¶ 34. Thus, the effect of the 2017 amendment was to expand the “relevant market area” of both plaintiffs to include the proposed dealership site.

         2. Effect of ...


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