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Thursday, June 13, 2024 | Back issues
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Third Circuit Allows|Ford Parts Surcharge

(CN) - The 3rd Circuit reversed an injunction preventing Ford Motor Co. from adding surcharges on parts to contracted affiliates, finding harm to franchisees merely monetary and not "irreparable."

The court chided Ford for seeking an "accelerated pathway" to review a decision against it, in circumvention of the principle that appeals can be made only on a final judgment.

The 1971 New Jersey Franchise Practices Act regulates franchise agreements and requires a franchisor to reimburse for parts contracted affiliates used in warranty repairs.

After dealerships began jacking up their parts reimbursement, Ford began tacking on a surcharge.

The Philadelphia-based federal appeals court had found in the past that such fees violate the statute. This time, it examined an injunction preventing implementation of the fees until pending litigation has been resolved.

Ford argued that the circuit was required to reconsider the lower court's second negation of its fee program in the course of reviewing the fee injunction, even though that order was not final.

Not so, Judge Nygaard determined. The court's jurisdiction on injunctive relief actions is extremely narrow in such cases, preventing it from reviewing any other element of the decision, Judge Nygaard wrote for the panel.

"We strongly disfavor any attempt to willfully circumvent" the final judgment rule, Nygaard wrote, adding that this case demonstrates the rule's purpose to avoid "piecemeal litigation."

Even so, the circuit reversed the lower court's injunction against the fee program, finding that the New Jersey federal court had not fulfilled an "irreparable harm" standard because the loss was only monetary.

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