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FOR IMMEDIATE RELEASE - August, 15, 1998 Meineke Case Reversed! August 20. In a decision that directly undermines the interests of franchise owners throughout the country, the landmark $600 million dollar judgment in Brussard v. Meineke was vacated and the decision reversed and remanded for a new trial by the Fourth Circuit of the U.S. Court of Appeals. The Court rejected the certification of the plaintiff class action (although the Court suggested that class certification could be effected if conflicts among class members could be resolved). The Court further rejected that claim that the franchisor owed fiduciary duties to the dealers even under circumstances in which advertising funds were represented to be held in trust. The American Association of Franchisees & Dealers, a national trade association that represents the interests of franchise owners, released a statement criticizing the decision for its failure to respect the rights of franchise owners to collectively address common issues. The AAFD was further disappointed in the failure of the Court to address abusive trade practices within the franchising industry. The crux of the Court's opinion was that the $600 million dollars in damages awarded by a North Carolina jury (the largest award ever in a franchising case) was overwhelmingly excessive in a case involving $17 million dollars of funds which had allegedly been diverted from Meineke's advertising fund. The Court blamed the trial court for making errors of law which led to a runaway jury verdict. Said AAFD Chairman, Robert Purvin, "In one sense, we can understand the Court's thinking, because Meineke's conduct was business as usual for many franchisors. On the other hand, the Court failed to realize that this North Carolina jury was extremely angered by business as usual in franchising and sent a clear message that Meineke's conduct toward its franchisees should not be tolerated." Wayne Mack, attorney for the plaintiff Meineke Dealers was clearly angered by the decision, "The opinion fails to pay due respect to the considered judgment of 10 jurors and an experienced trial judge who actually saw the witnesses and weighed the evidence first hand. Apparently, the voices of small businessmen are not heard as loudly in Richmond as are large multi-national corporations. We intend to request that the entire Court of Appeals and the U.S. Supreme take action so that justice prevails for the thousands of Meineke dealers across the country whose confidence in the integrity of the judicial system has been severely shaken by this very erroneous opinion.
The American Association of Franchisees and Dealers, based in San Diego, is the oldest and largest
non-profit trade association representing the interests of franchisees and independent dealer networks
throughout the United States. Stressing market solutions and franchisee empowerment through independent
franchisee associations, the AAFD has grown to represent more than 12,000 franchised businesses nationwide.
The American Association of Franchisees and Dealers is the oldest and largest direct member non-profit trade association representing the interests of franchisees and independent dealer networks throughout the United States. Stressing market solutions and franchisee empowerment through independent franchisee associations, the AAFD has grown to represent more than 12,000 franchised businesses nationwide. For more information, contact the AAFD at 800-733-9858, or visit our website. |