The U.S. District Court judge abstained from hearing the case, holding that the dispute was a matter of state law interpretation that should properly be heard by the Illinois Motor Vehicle Review Board to decide. After the dispute was remanded to the board, the matter was litigated, and the hearing officer’s finalized decision provides Illinois dealers with another resounding success. The hearing officer found that the seller’s dealer agreement with Mercedes-Benz that contained Mercedes’ purported ROFR — enabling Mercedes to assume the buyer’s rights and obligations under a proposed buy/sell agreement — had expired at the end of 2012, nine years before the proposed sale. As discussed below, the seller alleged that Mercedes’ refusal to make a final decision about whether to exercise its ROFR until the seller provided an apportionment of the selling price that was attributable to the Mercedes franchise violated multiple provisions of the Illinois Motor Vehicle Franchise Act (Act). For its part, Mercedes asserted that the seller’s refusal to provide an apportionment violated the Mercedes dealer agreement and the Act. The hearing officer’s decision found that Mercedes was not entitled to condition its approval of the sale on receipt of an apportionment for several reasons: • First, the Act does not create a statutory right of first refusal. The Act merely regulates the enforcement of independently created contractual rights of first refusal and prohibits “unreasonable restrictions” on dealership sales. • Second, JP’s written dealer agreement expired at the end of 2012, meaning that Mercedes and the seller were operating under an unwritten agreement. An expired dealer agreement could not create a contractual ROFR, or any other contractual rights, for either party. MercedesBenz failed to provide evidence that the unwritten “arrangement” between Mercedes and the seller included a ROFR. • Third, if the expired written dealer agreement had still been in effect, that agreement did not include a provision that would have required the dealer to apportion its Mercedes franchise in the event of a sale. Without express apportionment right in the dealer agreement, the hearing officer refused to infer one. • Fourth, the Act does not expressly mention a right to an apportionment in any Section of the Act. The absence of an apportionment right in the Act, on its own, defeats Mercedes’ contention that the seller’s refusal to provide an apportionment is a violation of the Act. • Fifth, the Act does not imply a manufacturer right to apportionment and, as a matter of fact, Section 4(e)(14)(B) of the Act requires a manufacturer exercising a ROFR to pay the selling dealer consideration at least equal to “all or substantially all of the dealership assets, stock or other ownership interest, including the purchase or lease of all real property, leasehold or improvements 13 Illinois Automobile Dealer News
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