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Jim Lupient Co. v. Nissan North America, Inc.

United States District Court, D. Minnesota

June 28, 2019

Jim Lupient Company d/b/a Lupient Infiniti of Golden Valley, Plaintiff,
v.
Nissan North America, Inc., Defendant.

          Jason T. Allen, Bass Sox Mercer, and Douglas R. Boettger, Stinson LLP, (for Plaintiff); and

          Steven J. Wells, Dorsey & Whitney LLP, (for Defendant).

          REPORT AND RECOMMENDATION

          Tony N. Leung United States Magistrate Judge

         This matter is before the Court, United States Magistrate Judge Tony N. Leung, on Plaintiff's Motion to Strike Defendant's Defenses. (ECF No. 26). This motion has been referred to the undersigned magistrate judge for a report and recommendation to the Honorable Michael J. Davis, United States District Judge for the District of Minnesota, pursuant to 28 U.S.C. § 636(b)(1) and Local Rule 72.1. (ECF No. 27). Based on all the files, records, and proceedings herein, and for the reasons set forth below, this Court recommends that Plaintiff's motion be DENIED.

         I. BACKGROUND

         Plaintiff Jim Lupient Company (“Lupient”) owns and operates an Infiniti motor vehicle dealership. (Compl., ¶ 2, ECF No. 1). Defendant Nissan North America, Inc. (“Nissan”) manufactures Infiniti automobiles and sells those vehicles through its franchised dealerships, including Lupient. (Compl. ¶¶ 3-4). Pursuant to the franchise agreement between the parties, Lupient is required to provide warranty service on all vehicles it is authorized to sell. (Compl. ¶ 9).

         On August 9, 2018, Lupient submitted a request to Nissan to set its warranty labor reimbursement rate at $163.63, pursuant to Minnesota Statutes section 80E.041, subdivision 4. (Compl. ¶ 19). Included in its request were certain documents that Minnesota law required Lupient to provide in order to justify its proposed rate. (Compl. ¶ 19). These documents included reports, certain repair orders, and other “analytical documentation.” (Compl. ¶ 19).

         Nissan rejected Lupient's request on August 29, 2018. (Compl. ¶ 20). It stated that Lupient's requested rate was unreasonable because it was well above the competitive market average of $132.00. (Compl. ¶ 20). Nissan proposed an alternate labor reimbursement rate of $139.00. (Compl. ¶ 20).

         The parties attempted to resolve their dispute through formal mediation. (Compl. ¶ 23). After that proved unsuccessful, Lupient filed suit, alleging that Nissan violated Minnesota Statutes section 80E.041 and seeking a declaratory judgment as to the value of the labor reimbursement rate. (Compl. ¶¶ 25-38). Lupient also seeks damages and attorney's fees.

         Nissan filed an amended answer to the complaint on March 4, 2019. (ECF No. 21). In its amended answer, Nissan continued to allege that Lupient's requested rate was unreasonable. (Amend. Ans. ¶¶ 42-43). Nissan also challenged Lupient's requested rate in two additional ways. First, Nissan alleged that Lupient failed to comply with Minnesota law because it included improper documentation in its request for a new retail reimbursement rate. (Amend. Ans. ¶ 40). Second, Nissan alleged that it retained the right to audit Lupient's submission under Minnesota law. (Amend. Ans. ¶¶ 20, 41).

         Lupient moved to strike Nissan's two new defenses, arguing that neither was permitted under Minnesota law. (ECF No. 26). Nissan filed a memorandum of law in response. (ECF No. 39). The Court took the matter under advisement following a May 20, 2019 hearing.

         II. MOTION TO STRIKE

         Under Rule 12(f) of the Federal Rules of Civil Procedure, the Court may “strike from a pleading an insufficient defense, or any redundant, immaterial, impertinent, or scandalous matter.” Though the Court has broad discretion to grant motions to strike, it must exercise that discretion with caution, because Rule 12(f) motions are highly disfavored and rarely granted. Stanbury Law Firm, P.A. v. Internal Revenue Serv., 221 F.3d 1059, 1063 (8th Cir. 2000). A motion to strike is appropriate when it will result in a less-complicated trial or “otherwise streamline the ultimate resolution of the action.” Daigle v. Ford Motor Co., 713 F.Supp.2d 822, 830 (D. Minn. 2010). “Any doubt as to the striking of matters in a pleading should be resolved in favor of the pleading.” Vernon J. Rockler & Co., Inc. v. Minneapolis Shareholders Co., 69 F.R.D. 1, 5 (D. Minn. 1975).

         Here, the parties' dispute relates to two provisions of Minnesota Statutes section 80E.041, which governs the relationship between an automobile manufacturer and a dealer. The first provision, contained in subdivision four of the statute, sets forth a system for determining the compensation a manufacturer pays a dealer for warranty labor. Minn. Stat. § 80E.041, subd. 4. It requires that, “[c]ompensation for warranty labor . . . equal the dealer's effective nonwarranty labor rate multiplied by the time allowances recognized by the manufacturer to compensate its dealers for warranty work.” Id., subd. 4(a). To determine the nonwarranty labor rate, the dealer must submit to the manufacturer the lesser of “100 sequential nonwarranty customer-paid service repair orders which contain warranty-like repairs” or “90 consecutive days of nonwarranty customer paid orders which contain warranty-like repairs.” Id., ...


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