Dealer Agreement Termination

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7^th Circuit Court of Appeals

Case Name: Texas Ujoints LLC v. Dana Holding Corp., et al.

Case No.: 16-2239

Officials: POSNER, EASTERBROOK, and SYKES, Circuit Judges

Focus: Dealer Agreement Termination

In this diversity suit, governed by Texas law, the plaintiff, Texas UJoints (to simplify, we’ll call it just UJoints), argues that it was a dealer in products of Dana Holding Corporation (a supplier of drive shafts, which typically are devices for transmitting power from an engine to the wheels of a vehicle, and other industrial equipment), in particular Dana’s GWB and Spicer products, and that Dana terminated the dealership of GWB products in violation of a Texas statute. (Dana is the principal defendant; we can ignore the others.) The statute provides that “a supplier may not terminate a dealer agreement without good cause,” Vernon’s Texas Statutes and Codes Annotated, Business and Commerce Code § 57.153, “dealer agreement” being defined as “an oral or written agreement or arrangement, of definite or indefinite duration, between a dealer and a supplier that provides for the rights and obligations of the parties with respect to the purchase or sale of equipment or repair parts.” § 57.002(4). But “good cause for termination of a dealer agreement exists … if there has been a sale or other closeout of a substantial part of the dealer’s assets related to the business.” § 57.154(a)(4)

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.