Friday, October 26, 2012

Maine Franchisee Could Not Bring “Little FTC Act” Claim

This posting was written by Pete Reap, Editor of CCH Business Franchise Guide.

A commercial franchisee governed by the Maine Franchise Act was not entitled to bring a claim against a franchisor under the private remedies section of the Maine "little FTC Act", the federal district court in Portland, Maine, has ruled. Thus, a heavy machinery business franchisor’s motion for judgment on the pleadings on a franchisee’s claim under the Maine "little FTC Act" was granted.

In 1993, Maine’s Legislature made significant changes to the MFA, including the enactment of a penalty provision which stated: "Violation of this chapter constitutes an unfair trade practice under the Maine Unfair Trade Practices Act, Title 5, chapter 10" (the MFA penalty section). Under the private remedies section of the "little FTC Act", a person who purchased goods, services, or property primarily for personal, family, or household use was afforded a private right of action.

The franchisee contended that the addition of the MFA penalty section signaled the legislature’s intent to open the "little FTC Act’s" private remedies to franchisees. However, the plain meaning of MFA’s Penalty Section makes a violation of the MFA a violation of "little FTC Act", but the section was silent as to whether the MFA was meant to incorporate all of "little FTC Act’s" provisions. Moreover, the statutory history accompanying the 1993 MFA amendments contained no suggestion that the MFA was meant to alter the "little FTC Act’s" clear limitation to goods purchased "primarily for personal, family or household purposes" in the case of franchisees.

When it enacted the MFA’s penalty section, the legislature was presumed to have been aware that the private remedies section of the "little FTC Act" was limited to consumer actions, yet it made no changes to that statutory section to accommodate "little FTC Act" suits by commercial franchisees.

In the face of that failure, the court was constrained to assume that the "little FTC Act" continued by its plain terms to apply only to consumers. This conclusion was reinforced by other general canons of statutory construction, the court explained.

The decision is Oliver Stores v. JCB, Inc., CCH Business Franchise Guide ¶14,913.

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