Key Points

  • Under Neb. Rev. Stat. § 60-1420(1)(a), good cause to terminate a motor vehicle franchise is assessed as of the time the termination decision is made, so evidence of a dealer's performance after the termination application is relevant.
  • Section 60-1433 calls for a qualitative consideration of the existing circumstances, not a tally or weighing of its enumerated considerations.
  • The Nebraska Motor Vehicle Industry Licensing Board acts only as a neutral factfinding body in franchise termination proceedings and therefore is not a proper party of record on judicial review under § 84-917(2)(a)(i).
  • A six-member board without a factory representative could act because, absent a contrary statute, a majority of a quorum may act for the body; GM's due process rights were not violated.
  • The court did not decide whether § 60-1420(1)(b) requires evidence that a replacement dealer is ready, because the good cause ruling was dispositive.

The Nebraska Supreme Court on Friday barred General Motors from ending its Chevrolet and GMC franchises with a dealership in Seward, Nebraska, holding that a carmaker's good cause to terminate a dealer is measured when the state licensing board decides the case, not when the manufacturer first files for termination.

Judge Bergevin, writing for the court, affirmed a Lancaster County District Court judgment that upheld the Nebraska Motor Vehicle Industry Licensing Board's refusal to let GM end its agreements with Meyer Automotive Inc. The dealer's sales rose while GM's October 2019 application waited four years for a hearing. "The delay between the termination notice and the termination hearing certainly benefited Meyer Automotive," Judge Bergevin wrote.

The decision means a manufacturer seeking to end a franchise under the state's Motor Vehicle Industry Regulation Act must prove good cause on the record as it stands at the hearing, including any improvement the dealer makes after receiving notice. The court also held that the board, which acted only as a neutral referee between GM and the dealer, cannot be a party when its ruling is challenged in court, and that a six-member board lacking its statutory factory representative could still decide the case.

Robert Meyer's company acquired its GM franchises in 2006 by purchasing Rolfsmeier Motors, according to the opinion. GM's 2009 bankruptcy brought a wind-down letter, and although Meyer Automotive kept the dealership through arbitration made possible by congressional action, it received no GM inventory for months. The court wrote that "for all intents and purposes, Meyer Automotive began establishing its General Motors dealership in 2011."

By the opinion's account, the dealer performed poorly for years. GM measured sales through a retail sales index, a score comparing a dealer's sales with the opportunities in its assigned territory, on which 100 was satisfactory. During the six-month cure period GM gave after its 2019 notice, Meyer Automotive scored 26.09 for Chevrolet and 17.86 for Buick and GMC. Meyer Automotive surrendered its Buick franchise but contested the termination of the other two.

Although the statute calls for a hearing within 90 days of an application, subject to continuances, the board did not hear the case until October 2023. GM's regional manager testified that the company "couldn't let this continue to go on. There had to be a stopping point." By 2021 the dealer's index scores had risen to 42.3 for Chevrolet and 40.7 for Buick and GMC, and Meyer testified that GM sales grew 263 percent from 2017 to 2022. One board member told a GM expert at the hearing, "I see a dealer that got woke up with a termination letter and turned the corner with improvement."

In March 2024 the board found that GM's evidence was "pretextual in nature" and that the "root cause" of the dealer's poor showing was GM's "failure to allocate and deliver new vehicles." The district court affirmed, finding that Meyer Automotive had "turned a corner" after 2019.

On appeal, GM argued that the dealer's sales record was "so egregiously poor that this factor alone warrants termination." The Supreme Court rejected the premise that the clock stopped at the filing. "The inquiry is not whether good cause existed at the time a franchisor filed its application for termination," Judge Bergevin wrote. The question instead "is whether good cause exists to terminate the franchise at the time the decision regarding termination is made," and competent evidence supported the finding that the dealer's improvement was enough.

The court also rejected GM's argument that the district court had to say whether each statutory consideration favored or disfavored termination. Adopting the Iowa Supreme Court's reading of identical language, the court said the statute "calls for a qualitative rather than quantitative analysis" and "does not require a balancing or weighing of factors." It upheld the finding that the dealer had substantially complied with the agreements' customer-satisfaction terms, noting that the agreements set no objective standard for customer satisfaction.

Before reaching the merits, the court dismissed the board and two officials who had signed its decision. GM and the state, represented by the attorney general's office, both argued that the board had done more than find facts. The court disagreed, writing that "there is nothing inherently adversarial in applying a statutory framework." Responding to the state's argument that the board acted as an enforcement agency in termination cases, the court wrote, "we fail to see what it is enforcing."

GM also argued that its due process rights were violated because the statute requires a 10-member board including "[o]ne factory representative," but only six members, none from a manufacturer, heard its case. The court applied the longstanding rule that a majority of a quorum may act for a body absent a contrary statute. Six members form a quorum of the 10-member board, and the six present ruled unanimously.

The court left unresolved GM's challenge to the district court's view that the statute requires "more than a general desire by the manufacturer to open another franchise at some undefined point in the future" before a franchise can end. GM had relied on a 1997 Iowa decision holding that a manufacturer need not have a replacement dealer standing by during a pending case. Because the good cause ruling disposed of the appeal, the court wrote, it "need not determine" whether the trial judge erred on that point.

General Motors was represented by Mark T. Clouatre of Nelson Mullins Riley & Scarborough, L.L.P. The board and its officials were represented by Nebraska Attorney General Michael T. Hilgers.

The affirmance leaves in place the board's denial of GM's application, and Meyer Automotive retains its Chevrolet and GMC franchises. Chief Justice Funke did not participate in the decision, and no member of the court wrote separately.