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NATURE OF SUIT
ACTIONS UNDER STATUTES
AGRICULTURE [1 422 APPEAL OTHER FOOD & 28 USC 158 DRUG ([423 WITHDRAWAL DRUG RELATED 28 USC 157 SEIZURE OF PROPERTY 21 USC 881 PROPERTY RIGHTS LIQUOR LAWS RR & TRUCK [1 820 COPYRIGHTS AIRLINE REGS [1830 PATENT OCCUPATIONAL [1 840 TRADEMARK SAFETY/HEALTH OTHER
SOCIAL SECURITY
[[861 HIA (1395ff) 862 BLACK LUNG (923)
FAIR LABOR (3863 DIWC/DIWW (405(g)) STANDARDS ACT [1864 SSID TITLE XVI LABOR/MGMT [[865 RSI (405(g)) RELATIONS LABOR/MGMT REPORTING & FEDERAL TAX SUITS DISCLOSURE ACT RAILWAY LABOR ACT [[870 TAXES (U.S. Plaintiff or OTHER LABOR Defendant) LITIGATION [[871 IRS-THIRD PARTY EMPL RET INC 26 USC 7609 SECURITY ACT
OTHER STATUTES
[[400 STATE REAPPORTIONMENT
[[410 ANTITRUST [[430 RANKS S RANKING [[400 COMMERCE [[460 DEPORTA1ION [[470 RACKETEER INFLU-
ENCED & CORRUPT ORGANIZATION ACT (RICO)
[[480 CONSUMER CREDIT [1490 CABLE/SATELLITE TV ([810 SELECTIVE SERVICE [1 850 SECURITIES/
COMMODITIES/ EXCHANGE
1875 CUSTOMER CHALLENGE 12 USC 3410
)XI 890 OTHER STATUTORY ACTIONS
11891 AGRICULTURAL ACTS [[892 ECONOMIC
STABILIZATION ACT [[893 ENVIRONMENTAL
MATTERS [[894 ENERGY
ALLOCATION ACT [[895 FREEDOM OF
INFORMATION ACT [[900 APPEAL OF FEE
DETERMINATION UNDER EQUAL ACCESS TO JUSTICE
[3 950 CONSTITUTIONALITY OF STATE STATUTES
PERSONAL INJURY FORFEITURE/PENALTY BANKRUPTCY
[[362 PERSONAL INJURY- [[610 MED MALPRACTICE [[620
[[365 PERSONAL INJURY PRODUCT LIABILITY [[626
I 3511 ASbL5IOSPERSONAL INJURY PRODUCT LIABILITY
[[630 PERSONAL PROPERTY [[640
[[650 11370 OTHER FRAUD [1 660 [[371 TRUTH IN LENDING [[360 OTHER PERSONAL [1 690
PROPERTY DAMAGE [3385 PROPERTY DAMAGE
PRODUCT LIABILITY LABOR
[[710
[[720 PRISONER PETITIONS
[1730 [[510 MOTIONS TO
VACATE SENTENCE 28 USC 2255 [[740
[[530 HABEAS CORPUS [[700 [1535 DEATH PENALTY []540 MANDAMUS & OTHER [1791
PRISONER CIVIL RIGHTS
[1 550 CIVIL RIGHTS 11555 PRISON CONDITION
IMMIGRATION
1462 NATURALIZATION APPLICATION
[[463 HABEAS CORPUS-ALIEN DETAINEE
[[465 OTHER IMMIGRATION ACTIONS
CIVIL COVER SHEET1 JS 44C/SDNY ’h REV. 2/2014 The JS-44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for use of the Clerk of Court for the purpose of initiating the civil docket sheet.
PLAlNTIFSi DEFENDANTS
MOHEGAN LAKE MOTORS, INC. d/b/a MOHEGAN LAKE AUDI AUDI OF AMERICA, INC.
ATTORNEYS (FIRM NAME, ADDRESS, AND TELEPHONE NUMBER ATTORNEYS (IF KNOWN)
Axinn, Veltrop & Harkrider LLP 114 West 47th Street, 22nd Floor, New York, NY 10036 212-728-2200
CAUSE OF ACTION (CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND WRITE A BRIEF STATEMENT OF CAUSE) (DO NOT CITE JURISDICTIONAL STATUTES UNLESS DIVERSITY)
NY Veh. & Traf. Law 460 et seq.; 15 U.S.C. 1221 et seq.; 15 U.S.C. 13 et seq.; 28 U.S.C. 2201 (Unfair vehicle franchise practices)
Has this action, case, or proceeding, or one essentially the same been previously filed in SDNY at any time? NoElvesUJudge Previously Assigned
It yes, was this case Vol. LI Invol. LIiI Dismissed. No Yes fl If yes, give date & Case No.
Is THIS AN INTERNATIONAL ARBITRATION CASE? No N Yes L (PLACE AN [x] IN ONE BOX ONLY)
TORTS
CONTRACT PERSONAL INJURY
11 110 INSURANCE 11 310 AIRPLANE 11120 MARINE 11315 AIRPLANE PRODUCT 11130 MILLER ACT LIABILITY 1)140 NEGOTIABLE [1 320 ADI3AULI, LIBEL &
INSTRUMENT SLANDER 11 150 RECOVERY OF [1 330 FEDERAL
OVERPAYMENT & EMPLOYERS’ ENFORCEMENT LIABILITY OFJUDGMENT [1340 MARINE
[3151 MEDICAREACT [[345 MARINE PRODUCT [3152 RECOVERY OF LIABILITY
DEFAULTED (1 350 MOTOR VEHICLE STUDENT LOANS [[355 MOTOR VEHICLE (EXCL VETERANS) PRODUCT LIABILITY
[[153 RECOVERY OF [1 360 OTHER PERSONAL OVERPAYMENT INJURY OF VETERAN’S BENEFITS
[1160 STOCKHOLDERS SUITS
11190 OTHER CONTRACT
[1195 CONTRACT PRODUCT ACTIONS UNDER STATUTES LIABILITY
(1 196 FRANCHISE CIVIL RIGHTS
[[441 VOTING [[442 EMPLOYMENT
REAL PROPERTY [[443 HOUSING/ ACCOMMODATIONS
11 210 LAND [[444 WELFARE CONDEMNATION [[445 AMERICANS WITH
[[220 FORECLOSURE DISABILITIES - [[230 RENT LEASE & EMPLOYMENT
EJECTMENT ([446 AMERICANS WITH [1 240 TORTS TO LAND DISABILITIES -OTHER []245 TORT PRODUCT [3440 OTHER CIVIL RIGHTS
LIABILITY (Non-Prisoner) [[290 ALL OTHER
REAL PROPERTY
Check if demanded in Complaint:
L..r_CHECK IF THIS IS CLASS ACTION 1 UNDER F.R.C.P. 23
DO YOU CLAIM THIS CASE IS RELATED TO A CIVIL CASE NOW PENDING IN S.D.N.Y.? IF SO, STATE:
DEMAND $__________ OTHER JUDGE
DOCKET NUMBER_____________
Check YES only if demanded in complaint JURY DEMAND: Ei YES E NO NOTE: You must also Submit at the time of filing the Statement of Relatedness form (Form IH-32).
Case 7:14-cv-01688-KMK Document 2 Filed 03/12/14 Page 1 of 2
(PLACE AN x IN ONE BOX ONLY) ORIGIN
F1 1 Original 0 2 Removed from El 3 Remanded LI 4 Reinstated or IiiI 5 Transferred from 0 6 Multidistrlct LI 7 Appeal to District
Proceeding State Court from Reopened (Specify District) Litigation Judge from
Appellate Magistrate Judge
a. all parties represented
Judgment Court
b. At least one party is pro so.
(PLACEAN x IN ONE BOX ONLY) BASIS OF JURISDICTION IF DIVERSITY, INDICATE
El I U.S. PLAINTIFF El 2 U.S. DEFENDANT 1 3 FEDERAL QUESTION E14 DIVERSITY CITIZENSHIP BELOW. (U.S. NOT A PARTY) (28 USC 1332, 1441)
CITIZENSHIP OF PRINCIPAL PARTIES (FOR DIVERSITY CASES ONLY)
(Place an [X] in one box for Plaintiff and one box for Defendant)
PTF DEF PTF DEF PTF DEF
CITIZEN OF THIS STATE [ ] I I ] 1 CITIZEN OR SUBJECT OF A [ ] 3 1] 3 INCORPORATED and PRINCIPAL PLACE I ] 5 1] 5
FOREIGN COUNTRY OF BUSINESS IN ANOTHER STATE
CITIZEN OF ANOTHER STATE I ] 2 1] 2 INCORPORATED or PRINCIPAL PLACE E ] 4 1] 4 FOREIGN NATION [ ] 6 [1 6 OF BUSINESS IN THIS STATE
PLAINTIFF(S) ADDRESS(ES) AND COUNTY(IES)
1791 East Main Street, Mohegan Lake, New York 10547 Westchester County, New York
DEFENDANT(S) ADDRESS(ES) AND COUNTY(IES)
2200 Ferdinand Porsche Dr., Herndon, Virginia 20171 Fairfax County, Virginia
DEFENDANT(S) ADDRESS UNKNOWN REPRESENTATION IS HEREBY MADE THAT, AT THIS TIME, I HAVE BEEN UNABLE, WITH REASONABLE DILIGENCE, TO ASCERTAIN THE
RESIDENCE ADDRESSES OF THE FOLLOWING DEFENDANTS:
Checkone: THIS ACTION SHOULD BE ASSIGNED TO: !Ii WHITE PLAINS LII MANHATTAN (DO NOT cIc.ither box if this a PRISONER PETITION/PRISONER CIVIL RIGHTS COMPLAINT.)
DATE 03/11/20 U E 0 OR EY OF RECORD ADMITTED TO PRACTICE IN THIS DISTRICT NO
L1 YES (DATE ADMITTED Mo. April Yr. 1964
RECEIPT # Attorney Bar Code # SA 7445
Magistrate Judge is to be de inatçd by the Clerk of the Court.
Magistrate Judge is so Designated.
Ruby J. KrajiCk, Clerk of Court by Deputy Clerk, DATED
UNITED STATES DISTRICT COURT (NEW YORK SOUTHERN)
Case 7:14-cv-01688-KMK Document 2 Filed 03/12/14 Page 2 of 2
\\\
IN THE UNITED STATES DISTRICT CO SOUTHERN DISTRICT OF NEW YOR\\
MOHEGAN LAKE MOTORS, INC. dibla MOHEGAN LAKE AUDI, I -
Plaintiff, Civil ActioJo. JC L L U
V.
AUDI OF AMERICA, INC., COMPLAINT AND JURY DEMAND
Defendant.
Plaintiff Mohegan Lake Motors, Inc. dlbla Mohegan Lake Audi ("Mohegan"), by
its attorneys, for its Complaint against Defendant Audi of America, Inc. ("Audi"), alleges
upon knowledge with respect to its own acts, and upon information and belief as to
other matters, as follows:
INTRODUCTION
1. Defendant Audi, a global automobile manufacturer, is seeking to destroy
Plaintiff Mohegan, one of its best dealerships, by using its enormous power over
Mohegan to force it to expend many millions of dollars to build an enormous,
unreasonable and unnecessary new facility that Audi itself cannot demonstrate could
ever be profitable. Audi has unilaterally decided that Mohegan must totally reconstruct
its existing facility and build a new 34,000 square foot, two-story showroom at a cost
estimated as high as $10 million despite the fact that such a building would violate the
existing zoning requirements and is unjustified by the market conditions in the area in
which Mohegan operates. In fact, despite repeated requests from Mohegan, Audi has
continually refused to support its demands with market or financial analyses indicating
that Mohegan could ever earn a profit in the facility that Audi has demanded.
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 1 of 27
2. Over the course of the last year, Audi required Mohegan to accede to
these impossible renovation demands by threatening to claw back critical bonus
payments, known as "Standards Monies," that Mohegan previously earned from the
sale of new Audis and which it desperately needs to survive. As Audi knows, Standards
Monies are essential to the success of any Audi dealer, including Mohegan.
3. Aware that federal and New York law prohibited Audi from using threats of
the suspension of critical funds to pressure Mohegan to agree to an unnecessary
renovation, Audi presented Mohegan with a letter of intent" in which Mohegan
purportedly waived critical legal rights and in which it purportedly agreed to waive
present and future Standards Monies payments if it was unable to comply with Audi’s
demands. Audi knew that no dealer, including Mohegan, would ever voluntarily agree
to the terms and conditions set forth in this letter, so Audi peremptorily notified Mohegan
that if it refused to sign the letter, its eligibility to receive Standards Monies would be
immediately terminated.
4. With its financial future hanging in the balance, and with no meaningful
alternative, Mohegan signed the letter of intent. When, despite its good faith efforts to
comply with Audi’s outrageous renovation demands, Mohegan was unable to satisfy
them through no fault of its own, Audi suspended Mohegan’s Standards Monies
payments. It also informed Mohegan that it is withholding over $612,000 from Mohegan
in order to repay itself for the Standard Monies Mohegan had legitimately earned in the
past.
5. Without prior notice, on December 7, 2013, Audi unilaterally stopped
payment of all future Standards Monies to Mohegan and on February 20, 2014, Audi
2
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 2 of 27
charged the first installment of $102,000 against Mohegan’s Parts Account line of credit
in an attempt to recover the previously paid Standards Monies.
6. In addition, Audi has notified Mohegan that it will no longer provide
Mohegan with Standards Monies in the future.
7. Audi knew that Mohegan could not continue in business under these
conditions and fully intended that result.
8. The truth is beginning to emerge as to why after a long and successful
relationship with Mohegan, Audi has taken these unlawful steps. As Mohegan recently
discovered, Audi has been negotiating to establish a new franchised dealer within the
marketing area assigned to Mohegan and Audi now is seeking to squeeze Mohegan out
of the market. Even though Mohegan and its employees have been part of the local
Audi family for nearly forty years, Audi is now determined to eliminate any chance that
Mohegan has of remaining a successful Audi franchise.
9. The coercion and bad faith employed by Audi blatantly violate numerous
state and federal laws that are designed to prevent franchised car dealerships like
Mohegan from abuses of power by automobile franchisors.
PARTIES
10. Plaintiff Mohegan is a New York corporation with a principal place of
business at 1791 East Main Street, Mohegan Lake, New York 10547, within this judicial
district. It is a duly licensed motor vehicle dealer selling Audi vehicles in one location in
Mohegan Lake. It has over 40 full-time employees dedicated to selling and servicing
these vehicles. Mohegan is also an authorized Volkswagen dealer. Its Volkswagen
showroom is located in a separate facility.
3
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 3 of 27
11 . Upon information and belief, Defendant Audi is a division of Volkswagen
Group of America, Inc., a New Jersey corporation, with a principal place of business at
2200 Ferdinand Porsche Dr., Herndon, Virginia 20171. Audi is the exclusive U.S.
distributor for Audi vehicles and distributes motor vehicles through a network of
authorized franchisees, including Mohegan. Audi is engaged in the sale of motor
vehicles in interstate commerce.
JURISDICTION AND VENUE
12.This action arises under New York’s Franchised Motor Vehicle Dealer Act
(Vehicle & Traffic Law §§ 460 et seq.), the Automobile Dealers’ Day in Court Act (15
U.S.C. §§ 1221 etseq.), the United States antitrust laws (15 U.S.C. §§ 13 et seq.), the
Declaratory Judgment Act (28 U.S.C. § 2201), and various state laws. This Court has
subject matter jurisdiction over the action pursuant to 28 U.S.C. §§ 1331, 1332, and
1367, and principles of pendent jurisdiction. The amount in controversy exceeds
$75,000, exclusive of interest and costs.
13.This Court has personal jurisdiction over Audi because Audi conducts
significant business in this district and Audi maintains substantial contacts with this
district by virtue of its business activities, and because Audi has committed wrongful
acts that are directed at and cause harm to Mohegan within this district.
14.Venue is proper in this district pursuant to 28 U.S.C. § 1391(b) and (c).
Although Audi coerced Mohegan into signing a letter of intent that purported to specify
the courts in Fairfax County, Virginia as a venue for disputes, that entire document is
void and without legal effect because it violates, among other things, New York’s
Vehicle & Traffic Law § 463 and because it was procured by duress and coercion.
18
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 4 of 27
FACTUAL ALLEGATIONS COMMON TO ALL CAUSES OF ACTION
History of the Relationship Between Moheqan and Audi
15.Audi distributes its vehicles to United States customers through a large
network of franchised dealers, including Mohegan.
16. Mohegan opened its doors as a franchised Audi dealership in 1997, but its
relationship with Audi stretches back much further. The President of Mohegan, Barry
Rost, started his career as an Audi employee in 1972 and worked for Audi in many
capacities for many years before purchasing his own dealership. In all, Mr. Rost has
dedicated more than 40 years to selling and servicing Audi vehicles.
17. Since opening in 1997, Mohegan has been a loyal, successful and
cooperative Audi franchisee in Westchester County, New York. It has met and
exceeded Audi’s expectations for sales and service. As an example, Mohegan earned
the coveted Audi Magna Society Award in 2009 and 2010, which is awarded to only a
small select group of Audi franchisees and is designed to recognize dealer excellence in
both customer sales and service. Mohegan’s customer loyalty and satisfaction exceed
the top of the range measured by Audi. It sold over 400 new Audi automobiles to
customers in 2013.
18. Like most other dealerships representing major motor vehicle brands,
Mohegan has spent millions of dollars acquiring and renovating commercial property
(including its sales and service facilities), acquiring specialized equipment and parts
inventories, employing and training a large number of qualified employees to sell and
service Audi vehicles to its customers’ satisfaction, and developing a reputation for
quality and service with customers in its marketing area through frequent and costly
advertising, contributions to local charities and community involvement and service.
5
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 5 of 27
Audi’s "Standards Monies" Program
19. Mohegan’s historic financial success - and its ability to remain competitive
with other Audi and other luxury car dealers - has depended on receiving the regular
bonus payments made by Audi to the other Audi dealerships with which Mohegan must
compete. Through its "Margin and Bonus Program," Audi offers its franchised dealers
various types of bonus payments that they can earn based on the volume of vehicle
sales that they make. Mohegan has been entitled to Standards Monies, which is equal
to a significant percentage of the sale price of an Audi vehicle. These payments
amount to as much as a 16 percent rebate on the sales price of new high-end Audi
vehicles. In addition, for the past two years, Mohegan has earned an additional bonus
based on its status as a "Top Performing Dealer," which Audi defines as a dealer that
sells in excess of 400 new Audi vehicles per year.
20. Mohegan has been earning Standards Monies since the program was
established. In 2013, Mohegan earned over $600,000 in Standards Monies.
21. As Audi is well aware, no dealership, including Mohegan, can compete
effectively or meet its financial obligations if it must pay substantially more than its
competitors for new vehicles because it is deprived of these bonus payments.
22. In practice, the amount of bonuses paid under Audi’s Margin and Bonus
Program to a particular dealer is extremely important. The difference between making a
profit and sustaining a loss is miniscule in the franchised car dealership business, such
that any dealer not receiving Standards Monies is at a significant competitive
disadvantage to other dealers who are receiving Standards Monies. Dealers who do
not receive bonuses to which they are otherwise entitled based on their performance,
face substantially higher wholesale costs, substantially higher floorplan finance charges,
6
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 6 of 27
and become subject to lenders’ demands for additional working capital and cash
collateral deposits, among other things.
Audi Threatens To Stop Making Standards Monies Payments to Mohegan Unless Mohegan Undertakes A Massive and Back-Breaking Renovation of Its Facilities
23. Although Mohegan has always been a top-performing Audi dealer,
beginning in 2011 Audi representatives began making demands on Mohegan that it
renovate its facilities because, as they explained, the Audi management in Germany
had unilaterally decided to require American Audi dealers to build new facilities that
would meet what Audi Germany anticipated would be the demand for Audi vehicles
beginning in the year 2020. One of these demands was that the Audi facility had to be
exclusive and not shared with any other new car dealership. For many years,
Mohegan’s facility at 1791 East Main Street in Mohegan Lake, New York was both an
Audi and a Volkswagen new car dealership. In light of Audi’s demands, Mohegan, at its
own expense, purchased land and built a new Volkswagen showroom facility so that its
existing building could become an exclusive Audi facility.
24. Once the new Volkswagen facility was opened, Mohegan undertook an
extensive renovation project on its existing facility in order to create an attractive
exclusive Audi sales floor.
25. However, Audi was not satisfied and in early 2013, Audi demanded that
Mohegan undertake a dramatic and extraordinarily expensive expansion and rebuilding
of its dealership facility on a compressed timeline. The renovation that Audi insisted on
would have required Mohegan to construct a 34,000 square foot, two-story building to
Audi’s plans and specifications, with a minimum, exclusive, nine-car showroom, twenty
service bays and an "exclusive" sales area for Audi vehicles (at the time, Mohegan was
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 7 of 27
selling Volkswagen and Audi vehicles out of the same location). Estimates in
Mohegan’s possession indicate that these extensive renovations would cost Mohegan
at least $8 million and more likely closer to $10 million, exclusive of land costs.
26. Given these extreme costs (and the short time frame in which Audi
demanded that they be incurred), Mohegan asked Audi to provide a market analysis or
pro-forms financial analysis that would support the expenditures Audi was demanding.
Despite repeated requests and in defiance of Section 463 of the N.Y. Vehicle & Traffic
Law’s requirements, Audi has consistently refused to provide any support whatsoever
for its claim that it was reasonable and necessary for Mohegan to totally renovate its
facilities.
27. To coerce Mohegan into doing the renovation - and in direct violation of
state and federal laws that prohibit such coercion - Audi threatened to stop making
Standards Monies payments to Mohegan if Mohegan did not immediately agree to the
renovation. Fred Stolle, an Audi representative, told Mohegan’s President, Mr. Rost,
that Mohegan would forever lose its Standards Monies and would not be eligible for its
Top Performance bonus unless it could dramatically renovate its dealership in a short
period of time and unless it quickly signed a "letter of intent" that purported to release
Audi from any legal liability with respect to its renovation demand. Audi insisted that the
letter be signed almost immediately. If Mohegan did not sign, Audi threatened to
immediately withhold all Standards Monies payments.
28. When Mr. Rost protested that the letter was unfair and that it would be
impossible to comply with its terms, Audi representatives Jeff Tolerico and Jessica
Schwab stated that Audi had never demanded that a dealer repay to Audi the
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 8 of 27
Standards Monies payments previously earned by the dealer, and had no intention of
doing so. They also told Mr. Rost that Audi’s corporate ownership was insisting on the
language in the letter of intent. These statements were deliberately made to overcome
Mohegan’s objections and to coerce Mr. Rost to sign the letter of intent.
29. Given that Mohegan cannot perform as a profitable business without
Standards Monies, and in reliance on Audi’s representations, Mohegan signed the letter
of intent on February 7, 2013. A copy of this letter, dated February 4, 2013, is attached
as Exhibit A.
30. In the letter of intent, Audi acknowledged that as of the date of the letter,
Mohegan was eligible for Standards Monies as a "brand dedicated dealer" in connection
with Audi’s Margin and Bonus Program. The letter stated, however, that if Mohegan did
not obtain all necessary approvals and building permits for the renovation and did not
begin construction of the new exclusive Audi facility by December 31, 2013, and
complete the renovation within twelve months from the commencement of construction,
Mohegan would immediately forfeit its eligibility for such Standards Monies and would
be liable for the return of all Standards Monies payments made from the date of the
letter.
31. In an attempt to shield itself from the legal liability it knew it would incur by
coercing Mohegan into signing the letter of intent, Audi inserted language that purported
to release Audi from any such liability. And in what is perhaps the clearest recognition
of the illegality of its actions, Audi inserted a clause stating that if its actions violated the
law of Virginia (Audi’s home state), the letter would be deemed "modified to the
minimum extent necessary to comply with such law."
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 9 of 27
Audi Cuts Mohegan Off from Standards Monies After Mohegan - Through No Fault of Its Own - Fails To Meet Audi’s Unreasonable Renovation Demands
32. After signing the letter of intent, Mohegan poured significant financial
resources and time into a hurried effort to meet the construction deadlines imposed by
Audi. In the autumn of 2013, Mohegan relocated its Volkswagen showroom to new
premises so that its main facilities could be an exclusive Audi showroom. To
accomplish this, Mohegan expended more than $2 million. It also retained counsel and
architects to attempt to acquire the necessary additional land that would be required to
build the new facility demanded by Audi and to negotiate with the local municipality for a
variance to permit construction to commence. In addition, Mohegan began remodeling
its existing showroom to create an inviting new facility in which to exclusively offer Audi
vehicles.
33. Mohegan has not been able to meet Audi’s deadlines, however, due to
circumstances beyond Mohegan’s control. Mohegan has already spent over $100,000
in legal and architectural fees in an attempt to obtain the necessary building permits.
However, a neighboring property owner, whose property would have to be acquired to
meet Audi’s demands for the new building, refused to sell Mohegan its land at less than
an enormously inflated price. In addition, officials of the Town of Yorktown in
Westchester County have refused to countenance the very large, two-story structure
that Audi was demanding be built. Mohegan promptly made Audi aware of these
obstacles and urged that Audi reduce the size of the new structure. Audi has continued
to insist on compliance with its plans and specifications for the new building.
34. In February 2014, after more than a year spent trying to live up to Audi’s
demands and without notice, Mohegan received from Audi an invoice dated February
10
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 10 of 27
20, 2014 indicating that Audi was "charging back" over $102,000 in Standards Monies
previously paid, as the first installment on Audi’s effort to charge Mohegan a total of
$612,000 over a six month period which was the amount of the Standards Monies paid
by Audi to Mohegan during the year 2013 covering the period subsequent to February
3, 2013. In addition, Audi notified Mohegan that, effective December 7, 2013, Mohegan
would no longer receive Standard Monies or Top Performer Bonus payments regardless
of how many cars it sold. Thus, Audi has now executed on its threat to destroy
Mohegan by taking back the bonus payments that Mohegan had rightfully earned in
2013 with full knowledge that these steps would result in Mohegan’s being unable to
carry on its business.
35. Audi has made its intentions clear. It has now informed Mohegan that
only if Mohegan sells its Audi franchise to a purchaser acceptable to Audi will it consider
cancelling whatever balance of the $612,000 has not already been refunded to Audi.
36-Audi also recently told Mohegan that it had decided to establish a new
dealership in a location in Westchester County and that Audi was going to reduce the
area in which Mohegan would be authorized to market its vehicles.
Audi’s Revocation of Mohegan’s Standards Monies Injures Competition
37. Upon information and belief, Audi has singled Mohegan out for this unfair
treatment, while it continues to make Standards Monies payments to several of
Mohegan’s competitors. Those competitors include, but are not limited to, New Country
Audi (Greenwich, Connecticut), Palisades Audi (West Nyack, New York), Danbury Audi
(Danbury, Connecticut), and Jack Daniels Audi (Upper Saddle River, New Jersey).
Mohegan actively competes with all of these Audi dealerships in the New York
metropolitan market. There are no geographical, climatic, or travel impediments that
11
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 11 of 27
inhibit a prospective Audi customer from shopping at any and all Audi dealerships in
and around the tn-state metropolitan market.
38. Competition is adversely affected by this discrimination because Mohegan
is no longer able to meet or beat the prices offered by either other Audi dealers or
dealers in comparable automobiles offered by other manufacturers in the tn-state area.
The loss of these bonus payments will inevitably result in the closing of Mohegan since
it is not possible to sell new Audis under these conditions. Unless preliminarily and
permanently restrained by this Court, Audi will continue to offer Mohegan’s competitors
a continuing, distinct and substantial economic advantage over Mohegan by offering
crucial Standards Monies payments to those competitors while arbitrarily withholding
them from Mohegan. These activities constitute price discrimination, because Audi is
effectively and realistically reducing the price of its vehicles for Mohegan’s competitors
who receive Standards Monies payments, while not reducing the price of the same
vehicles for Mohegan. As a result of this disparate treatment, Mohegan cannot meet
the prices offered by its competitors without sustaining further economic loss. Audi
knows and is charged with knowledge that its price discrimination threatens the very
survival of Mohegan.
39. The competing dealerships to which Audi continues to offer Standards
Monies provide no service or savings to Audi that are not provided identically by
Mohegan. Mohegan and its competitors purchase Audi vehicles of like make and model
and attempt to sell and service those vehicles in accordance with franchise obligations.
12
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 12 of 27
40. The relevant product market is the market for motor vehicles
manufactured and sold by Audi to its franchised dealers and, in turn, sold by such
dealers to customers.
41. With respect to Mohegan as a purchaser of new vehicles from Audi, the
relevant geographic market is the respective region that Audi has established for the
sale of motor vehicles to its dealer body in which Mohegan resides, namely, the tn-state
area of New York, New Jersey and Connecticut which is accessible by customers of
Mohegan.
42. With respect to Mohegan as a seller to customers of motor vehicles
manufactured by Audi, the relevant geographic market is the area in, around and
surrounding the tn-state metropolitan market in which Mohegan competes.
43. Audi’s price discrimination constitutes a prohibited effect on the conduct of
commerce and eliminates any possibility that Audi’s substantial price discounts will be
functionally available to Mohegan.
44.As a direct result of Audi’s actions, Mohegan has been irreparably
damaged and has suffered a real and actual injury-in-fact. Mohegan has lost and will
continue to lose sales, profits, income, working capital, customers and good will as a
result of Audi’s refusal to issue Standards Monies to Mohegan, and Mohegan cannot
meet the prices offered by its competitors as a result.
Irreparable Harm
45. Mohegan has already been, and will continue to be, irreparably injured by
Audi’s suspension of Standards Monies payments and by Audi’s charge-back of more
than $612,000 in Standards Monies rightfully earned by Mohegan in 2013.
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46. Since it opened in 1997, Mohegan has made substantial investments into
becoming one of the premier Audi dealership in Westchester County and the tn-state
area. Specifically, Mohegan has invested millions of dollars in marketing, inventory,
hiring and maintaining the best employees, renovating its facilities, and selling and
servicing Audi vehicles. These investments are being depleted, and will continue to be
depleted, by Audi’s suspension of Standards Monies.
47. Without the bonuses, Mohegan cannot earn a profit, cannot continue
paying all of its employees, cannot keep its facilities and services up to required
standards, and cannot compete with other local Audi dealerships that receive Standards
Monies for sales of like Audi vehicles. Without injunctive relief, Mohegan will lose sales
and will lose customers to Mohegan’s competitors, who benefit from receiving the
Standards Monies payments from which Mohegan has been arbitrarily and illegally
excluded. Mohegan will also suffer a loss of goodwill and reputational harm by not
being able to provide customers with the products and services that Mohegan was able
to provide when it was receiving Standards Monies. Simply put, Mohegan cannot
continue as a going concern unless Audi is restrained from continuing the above course
of conduct.
48. Money damages are inadequate to redress Mohegan’s irreparable injuries
because those injuries threaten the very existence of Mohegan. Money damages will
not sufficiently compensate Mohegan for the loss of its business, the loss of its
employees, the loss of its customers, and the loss of its ability to compete with other
Audi dealerships.
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FIRST CAUSE OF ACTION (VIOLATION OF NEW YORK’S FRANCHISED MOTOR VEHICLE DEALER ACT)
49. Mohegan incorporates each of the preceding paragraphs as if the same
were fully set forth herein.
50. Mohegan is a "franchised motor vehicle dealer" as defined in Section 462
of New York’s Franchised Motor Vehicle Dealer Act.
51 .Audi is a "franchisor" and "manufacturer" as defined in Section 462 of New
York’s Franchised Motor Vehicle Dealer Act.
52. Section 463(2)(b) of New York’s Franchised Motor Vehicle Dealer Act
makes it unlawful for a franchisor like Audi, notwithstanding the terms of any franchise
contract, to:
directly or indirectly coerce or attempt to coerce any franchised motor vehicle dealer to enter into any agreement with such franchisor or officer, agent or other representative thereof, or to do any other act prejudicial to the monetary interests or property rights of said dealer by threatening to cancel any unexpired contractual agreement existing between such franchisor and said dealer.
53. Audi violated Section 463(2)(b) of New York’s Franchised Motor Vehicle
Dealer Act by directly coercing Mohegan into signing a letter of intent that purportedly
required Mohegan to undertake an economically unfeasible renovation, purported to
eliminate Mohegan’s eligibility for Standards Monies, purported to release Audi of
liability for its unlawful acts, and purported to fix the venue for legal proceedings in
violation of further sections of the Franchised Motor Vehicle Dealer Act.
54. This coercion took the form of threatening to terminate the bonus
payments to which Mohegan was contractually entitled, which is for practical purposes
the equivalent of terminating the Audi franchise agreement.
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55. Section 463(2)(c) of New York’s Franchised Motor Vehicle Dealer Act
makes it unlawful for a franchisor like Audi, notwithstanding the terms of any franchise
contract, to:
condition the renewal or extension of a franchise on a franchised motor vehicle dealer’s substantial renovation of the dealer’s place of business or on the construction, purchase, acquisition or rental of a new place of business by the franchised motor vehicle dealer unless the franchisor has advised the franchised motor vehicle dealer in writing of its intent to impose such a condition within a reasonable time prior to the effective date of the proposed date of renewal or extension (but in no case less than one hundred eighty days) and provided the franchisor demonstrates the need for such change in the place of business and the reasonableness of such demand in view of the need to service the public and the economic conditions existing in the automobile industry at the time such action would be required of the franchised motor vehicle dealer. As part of any such condition the franchisor shall agree, in writing, to supply the dealer with a reasonable quantity and mix of additional new motor vehicles which, as determined by a reasonable analysis of market conditions, are projected to meet the sales levels necessary to support the increased overhead incurred by the franchised motor vehicle dealer by reason of such renovation, construction, purchase, acquisition or rental of a new place of business.
56. Audi violated Section 463(2)(c) of New York’s Franchised Motor Vehicle
Dealer Act by forcing Mohegan to undertake a substantial renovation of its place of
business without ever demonstrating the need for such renovations and the
reasonableness of the demand in view of the need to service the public and in view of
the existing economic conditions. In fact, even though Mohegan asked for a market
analysis to support such a need," Audi never provided one. Nor did Audi ever agree in
writing to provide enough motor vehicles to meet the sales levels necessary to support
the increased overhead incurred as a result of the proposed renovation.
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57. Section 463(2)(g) of New York’s Franchised Motor Vehicle Dealer Act
makes it unlawful for a franchisor like Audi, notwithstanding the terms of any franchise
contract, to:
sell or offer to sell any new motor vehicle to any franchised motor vehicle dealer at a lower actual price therefor than the actual price offered to any other franchised motor vehicle dealer for the same model vehicle similarly equipped or to utilize any device including, but not limited to, sales promotion plans or programs which result in such lesser actual price. . . . This paragraph shall not be construed to prevent the offering of incentive programs or other discounts provided such incentives or discounts are reasonably available to all franchised motor vehicle dealers in this state on a proportionately equal basis.
58. Audi violated Section 463(2)(g) of New York’s Franchised Motor Vehicle
Dealer Act by administering its Standards Monies program in a way that has the
purpose and effect of providing lower actual prices for vehicles sold to Mohegan’s
competitors than the actual price those same vehicles are sold to Mohegan. The
Standards Monies are not reasonably available to Mohegan on a proportionately equal
basis, for the reasons set forth herein.
59. Section 463(2)(I) of New York’s Franchised Motor Vehicle Dealer Act
makes it unlawful for a franchisor like Audi, notwithstanding the terms of any franchise
contract, to:
require a franchised motor vehicle dealer to assent to a release, assignment, novation, waiver or estoppel which would relieve any person from liability imposed under this article, provided that this paragraph shall not be construed to prevent a franchised motor vehicle dealer from entering into a valid release or settlement agreement with a franchisor.
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60. Audi violated Section 463(2)(I) of New York’s Franchised Motor Vehicle
Dealer Act by requiring Mohegan to sign a letter of intent that purportedly released Audi
from any liability arising from Audi’s illegal renovation demand.
61. Section 463(2)(x)(2) of New York’s Franchised Motor Vehicle Dealer Act
makes it unlawful for a franchisor like Audi, notwithstanding the terms of any franchise
contract, to:
require a franchised motor vehicle dealer to agree to a term or condition in a franchise, or as a condition to the offer, grant or renewal of the franchise, lease or agreement, which: . . . unless preempted by federal law, specifies the jurisdiction, venues or tribunals in which disputes arising with respect to the franchise , lease or agreement shall or shall not be submitted for resolution or otherwise prohibits a franchised motor vehicle dealer from bringing an action in a particular forum otherwise available.
62. Audi violated Section 463(2)(x)(2) of New York’s Franchised Motor Vehicle
Dealer Act by requiring Mohegan to sign a letter of intent that purported to specify the
courts having jurisdiction over Fairfax County, Virginia as the venue for any legal
proceedings.
63. Mohegan has been irreparably damaged by Audi’s actions and has
suffered monetary damages in an amount to be determined at trial.
SECOND CAUSE OF ACTION (VIOLATION OF AUTOMOBILE DEALERS’ DAY IN COURT ACT)
64. Mohegan incorporates each of the preceding paragraphs as if the same
were fully set forth herein.
65. The Automobile Dealers’ Day in Court Act makes it unlawful for a
franchisor to act in bad faith during its relationship with a franchisee.
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66. Audi has violated the Automobile Dealers’ Day in Court Act by the acts
described herein, which include but are not limited to: coercing Mohegan into signing a
letter of intent that purportedly required Mohegan to undertake an economically
unfeasible renovation, purported to eliminate Mohegan’s eligibility for Standards
Monies, purported to release Audi of liability for its unlawful acts, and purported to fix
the venue for legal proceedings in violation of further sections of the Franchised Motor
Vehicle Dealer Act; canceling future Standards Monies and demanding the repayment
of past Standards Monies when Mohegan could not meet the unreasonable deadlines
imposed by Audi; and effectively offering its vehicles to Mohegan’s competitors at prices
lower than the prices offered to Mohegan.
67. Mohegan has been irreparably damaged by Audi’s actions and has
suffered damages in an amount to be determined at trial.
THIRD CAUSE OF ACTION (VIOLATION OF THE ROBINSON PATMAN ACT)
68. Mohegan incorporates each of the preceding paragraphs as if the same
were fully set forth herein.
69.15 U.S.C. § 13(a) makes it unlawful for:
any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States . . . and where the effect of such discrimination may be substantially to lessen competition ... or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them.
70. Audi is a car manufacturer engaged in commerce in the United States.
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71 . In the course of such commerce, Audi has discriminated in price between
different purchasers of Audi vehicles of like grade and quality. Audi has done so by
refusing to make bonus payments to Mohegan for sales of Audi vehicles while
simultaneously making bonus payments to other franchised Audi dealerships for sales
of like Audi vehicles.
72. The effect of Audi’s discriminatory bonus practices is to prevent Mohegan
from effectively competing with other franchised Audi dealerships who are receiving the
bonus payments. Audi has refused to make any more bonus payments to Mohegan
and has demanded that Mohegan repay over $612,000 in bonus payments that
Mohegan lawfully earned from Audi. Without the bonus payments, Mohegan cannot
compete with those dealerships and in fact cannot continue to run a profitable business.
73. Mohegan has been irreparably damaged by Audi’s actions and has
suffered damages in an amount to be determined at trial.
FOURTH CAUSE OF ACTION (DECLARATORY JUDGMENT OF UNENFORCEABILITY)
74. Mohegan incorporates each of the preceding paragraphs as if the same
were fully set forth herein.
75. The dispute over the meaning and effect of the February 2013 letter of
intent is an actual, continuing and justiciable controversy between the parties.
76. The February 2013 letter of intent is void and unenforceable, and should
be rescinded, because it was procured by duress and coercion and was and is in
violation of state and federal laws, including the state and federal laws cited in this
Complaint.
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77. Mohegan is therefore entitled to a declaratory judgment stating that the
letter of intent is void and unenforceable.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff Mohegan respectfully requests that this Court enter
judgment in its favor and against Defendant Audi, and grant the following relief:
A. Damages, including but not limited to treble damages for Audi’s violations
of the United States antitrust laws;
B. Reasonable attorney’s fees;
C. Punitive damages;
D. An injunction barring Audi from suspending the payment of Standards
Monies to Mohegan that Mohegan earns under Audi’s Margin and Bonus
Program;
E. An injunction barring Audi from making any effort whatsoever to charge
back over $612,000 in Standards Monies payments that Mohegan earned
in 2013 (or to charge back any Standards Monies payments that Mohegan
has earned);
F. Repayment to Mohegan of any part or all of the $612,000 in Standards
Monies previously earned by Mohegan and paid back to Audi;
G. A declaration that the letter of intent signed by Mohegan in February 2013
is void and unenforceable; and
H. Such other and further relief as the Court may deem just and proper.
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In accordance with Fed. R. Civ. P. 38 and 39, Plaintiff Mohegan demands a trial
by jury on all issues that may be so tried.
Dated: March 11, 2014
Res fEllysubmt
Stephen M. Axinn Thomas G. Rohback Aaron J. Feigenbaum AXINN, VELTROP & HARKRIDER LLP 114 West 47th Street New York, New York 10036 Phone: (212) 728-2200 Fax: (212) 728-2201 Email: [email protected] Email: [email protected] Email: [email protected]
Attorneys for Plaintiff
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Audi of ArneHca, Inc Audi
’ebruar 4 2013 AudI ofArnerica, Inc. 2200 Ferdinand Porsche Dr. Heredon, VA 20171 +1 703 364 7000
Barry. E. Rost, President www.audiusa.com Mohegan Lake Motors, Inc., d/b!a Mohegan Lake Audi 1791 E. Main Street Mohegan Lake, NY 10547
Audi Exclusive Faclflty. Construction Agreement
Dear Mr. Rest:
,,1nh6rin I teA hAotorm Inn ellhin Mnheticin Lake Audi (’fl ir"i currently onerates from a facility located IW4JlISh4lI I_ItW - -
at 1781 B. Main Street, Mohegan Lake, NY 10547 (the Dealership Premises"). Dealer has proposed to construct an Exclusive Audi facility located at the Dealership Premises. In furtherance of Dealer’s proposal, Dealer andAudi of America, Inc., an operating unit of Volkswagen Group of America, Inc. ("AoA"), enter into this Audi Exclusive Facility Construction Agreement (the "Agreement"), and agree to the following:
1. Facility Commitment; Construction, Dealer will complete construction of an Exclusive Audi facility, in accordance with all of the architectural details, corporate Identity elements, colors, furniture, finishes, fixtures, materials, signage, operating capacities, and key design elements prescribed by AcA as per Its Dealer Operating Standards requirements of Exclusive facilities (the "Facility") at the Dealership Promises. Dealer will adhere to the timetable set forth below for construction of the Facility at the Dealership Premises:
a. Qgnstruction Drawl.g, By November 30, 2013, Dealer will complete and submit to A0A for its review, final Construction Drawings and a finish schedule for the Facility. Prior to the final submission of Construction Drawings, Dealer will submit to the A0A appointed architect Construction Drawings for review and approval at 30%, 60%, and 90% complete Intervals. The revIews and associated comments will follow AoA Design Standards and will define the facility design elements, site Improvements and construction commitments. Dealer shall he charged $20,000 for reviews, together with reasonable actual cut-of-pocket expenses associated with the performance of site visits conducted during construction phase.
b. Start. By December 31, 2013, Dealer will have obtained all of the necessary approvals and building permits and will begin construction of the Facility at the Dealership Premises
o. Oonstruction Completion. Within twelve (12) months of satisfying its obligation outlined in Paragraph 1(b), Dealer will complete construction of the Facility at the Dealership Premises and have it ready for use, In a Manner fully approved by MA and in accordance with the Construction Drawings or revised Construction Drawings approved by AoA By this date Dealer will occupy the Facility.
Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 24 of 27
2. Standards Bonus Eligibility - Design. As of the data of this Agreement, Dealer Is eligible for Brand Dedicated Standards Bonus Payments in connection with AoA’s Margin and Bonus Program. Dealer shall continue to be eligible for Brand Dedicated Standards Bonus until its satisfaction of its obligation outlined in Paragraph 1(b), tot December 31, 2013, whIchever is sooner. Dealer’s Brand Dedicated Standards Bonus eligibility is contingent upon Dealer’s continued adherence to a .minimum of 85% of all Dealer Operating Standards, It Dealer has not satisfied Its obligation outlined in Paragraph 1(b) by December 31, 2013, Dealer shall Immediately forfeit any Standards Bonus eligibility until such time as It has achieved all provisions of Paragraph 1(b).
3. Standards Bonus ElIgibility - Construction. At such time that Dealer has satisfied Its obligation outlined in Paragraph 1(b), it shall be eligible for Exclusive Standards Bonus for a period not to exceed twelve (12) calendar months, beginning In the month in which Construction Start occurs. Dealer’s Exclusive Standards Bonus eligibility is contingent upon construction continuing in an uninterrupted manner from the time of Construction Start until .the Facility Is completed pursuant to Paragraph 1(6). DurIng construction, Dealers Exclusive Standards Bonus eligibility is further contingent upon Dealer’s continued adherence to a minimum of 85% of all non-facility related Dealer Operating Standards, as defined by AoA, If Dealer’s obligation specified in Paragraph 1(c) is not satisfied within twelve (12) calendar months of Construction Start, Dealer shall immediately forfeit any Standards Bonus eligibility until such time as it has completed the Facility at the Dealership Premises.
4. Repayment and Covenant Not To Sue. Should Dealer for any reason fall to perform any of Its obligations as set forth above, Dealer will lose the right to receive any Standards Bonus and must immediately repay to A0A any Standards Bonus monies paid under this Agreement Further, Dealer agrees not to dispute, either in a court of law, arbitration, or before a motor vehicle board, the decision by A0A regarding repayment of Standards Bonus monies. Dealer, by signing this Agreement, agrees and covenants not to sue AoA with respect to any alleged damages Dealer may suffer as a result of Dealer’s loss of the right to receive any. Standards Bonus or requirement to repay A0A any Standards Bonus monies arising I out of Dealer’s failure to perform its obligations under this Agreement, provided that AcA Is In substantial compliance with its obligations as outlined in this Agreement.
6. MIscellaneous,
a. Time is of the _Essenc, Time Is of the essence for all matters set forth In this Agreement. This Is a material term of this Agreement.
b..ssignment. Dealer’s rights and liabilities under this Agreement may not be assigned without the prior written consent of AoA, which may be withhold in AoA’s sole discretion.
c.Non-Waiver. The waiver by either party of any breach or violation of or default under any provision of this Agreement will not operate as a waiver of such provision or of any subsequent breach or violation thereof or default thereunder. The failure or refusal of AOA to exercise any right or remedy shall not be deemed to be a waiver or abandonment of any such right or remedy.
ci. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. No representations or statements other than those expressly set forth or referred to in this Agreement were made or relied upon in entering into this Agreement.
e. Governing Law, This Agreement will be construed in accordance with the laws of the state wherein Dealer Is physically located. Venue for any legal proceedings shall be In the state or federal courts having Jurisdiction in and over Fairfax County Commonwealth of Virginia Should the performance of any obligation under this Agreement violate any law of that Jurisdiction, then this Agreement shall be deemed modified to the minimum extent necessary to comply with such law.
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Case 7:14-cv-01688-KMK Document 1 Filed 03/12/14 Page 25 of 27
f. Mutual Agreement. Both partis have negotiated regarding the terms of this Agreement, and both have participated in the drafting and editing of This Agreemont in the case of ambiguities there will be no presumption against the purported drafter. Further, both parties have offered and have received consideration for their respective rights and remedies under this Ajreement.
g. Mcv of Market. Dealer and its legal counsel have reviewed the laws applying to dealerlmanufacturor relations. Dealer agrees that the Facility requirements as expressed in this Agreement are reasonable and necessary in view of the need to service the public and further that the economic conditions in the industry and specifically in Dealer’s relevant market area support this action,
Ii. Legal Counsbl. Both parties have had legal counsel of their choice review. this Agreement and are fully advised as to the legal and binding nature of this Agreement.
1. jgceMajli:e. A party is not liable for failure to perform the party’s obligations under this Agreement if such failure Is as a result of Acts of God (Including fire, flood, earthquake, storm, hurricane or other natural disaster e’ Ise of eminent domain, labor dispute, strike, lockout or Interruption or failure of public utilities, collectively, "Force Majeure." if the condition of Force Majeure continues or a total period of 120 consecutive calendar days for any single event or series of events, a party shall he entitled to terminate this Agreement upon delivery of written notice to the other party. Stated deadlines in this Agreement will he extended (day for day) as the Force Majeure Is in effect. If a party asserts Force Majeure as an excuse for failure to perform the party’s obligation, then the nonperforming party must demonstrate that the party took reasonable steps to minimize delay or damages caused by foreseeable eventO, that the party substantially fuifliled all non-excused obligations, and that the other party was timely notified of the Ilkeiihood or actual occurrence of a Force Majeure event. / Further, the parties recognize that project delays may occur due to delays in governmental review and approval of plansf If such delays beconie excessive, and not due to Dealer’s actions or Inactions, then the Parties wIl meet In good faith to discuss reasonable extensions of the timetables in this A9reoment./
Please acknowledge your understanding and approval of the terms of this Agreement by signing it below and returning it to AoA at this office no later than February 8, 2013, on which date, if not received, the offer rep esentod by our execution of this Agreement will expire without any further action.
Sincerely yours,
AUDI of AMERICA, iNC,
ark Del Rosso Date EVP, Chief Opating Officer
By: TrefIenVVhite Date General Manager, Network Development
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