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Sioux Falls Kenworth, Inc. v. Isuzu Commercial Truck of America, Inc.

United States District Court, D. South Dakota, Southern Division

August 18, 2017




         Sioux Falls Kenworth Inc., doing business as Isuzu Trucks of Sioux Falls (SFK), sued Isuzu Commercial Truck of America Inc. (Isuzu) asserting various statutory, contractual, and quasi-contractual claims relating to Isuzu's termination of SFK's Isuzu dealership and Isuzu's handling of SFK's claims for payment for warranty-covered service work. After a mixed jury verdict awarding SFK $ 1, 676, 000 in damages, Isuzu moved for remittitur, Doc. 148, judgment as a matter of law, Doc. 150, and a new trial, Doc. 154. SFK moved for an award of attorney's fees. Doc. 156. For the reasons explained below, this Court denies Isuzu's motion for a new trial on the condition that SFK accept a partial remittitur of the damages, denies Isuzu's motion for judgment as a matter of law, and grants SFK's motion for attorney's fees.

         I. Facts

         SFK is a truck dealership located in Sioux Falls, South Dakota. It sells Kenworth, Volvo, and Hino trucks, as well as several trailer lines. Doc. 138-1 at 33. SFK is owned by North American Truck and Trailer (NATT), a holding company that owns seventeen dealerships in four different states. Doc. 138-1 at 32-33, 129-32. William Rush is the president of NATT, and he and his family own the company in its entirety. Doc. 138-1 at 31, 33.

         SFK's management includes Rush, [1] his son Michael Rush, Dan Mills, and Doug Wersal. Doc. 138-1 at 35. Rush's son Michael is the vice president of sales, responsible for managing SFK's sales force and vehicle inventory. Doc. 138-1 at 36. Mills is SFK's fleet service manager, a position that gives him authority to implement policies and procedures for all of NATT's service departments. Doc. 138-1 at 37; Doc. 138-2 at 77. Mills works from an office in his home in Geddes, South Dakota, where he also farms. Doc. 138-2 at 98-100. Wersal oversees SFK's parts department. Doc. 138-1 at 40, 154; Doc. 138-3 at 39.

         In January 2010, SFK entered into a franchise agreement with Isuzu to sell and service Isuzu products. Doc. 138-1 at 42; PL's Ex. 4. SFK did not pay Isuzu anything for the franchise agreement, but did purchase its own Isuzu parts, tools, inventory, and signage. Doc. 138-1 at 135. Article V.A.3. of the franchise agreement provided that if Isuzu desired to terminate the agreement for a failure of performance, Isuzu would "endeavor to review" the failures with SFK and would determine, based on a plan proposed by SFK, whether SFK could remedy its failures, and if so, then allow SFK a reasonable amount of time in which to remedy any failure. Doc. 47-6 at 47; PL's Ex. 4. If, however, Isuzu terminated the franchise agreement for one of the reasons listed in Article V.A.2., including SFK's submission of a ''false or fraudulent" warranty reimbursement claim, then the review procedure described in Article V.A.3. of the agreement did not apply. Doc. 47-6 at 46-47; PL's Ex. 4. In 2011, NATT's dealership in Rapid City-Black Hills Truck and Trailer-also obtained an Isuzu franchise, which it still has today. Doc. 138-1 at 43, 133-34.

         SFK's customer base for Isuzu trucks was mainly local. Doc. 138-1 at 41-42. National companies with a presence in Sioux Falls like Schwan's Company and Fed Ex Corporation would purchase "mega-fleets" of Isuzu trucks elsewhere, so SFK could not easily penetrate the mega-fleet market. Doc. 138-1 at 41-42. Accordingly, SFK only sold six new Isuzu trucks during its approximately five years as an Isuzu dealer. Doc. 138-1 at 50; PL's Ex. 2. SFK's primary activity as an Isuzu dealer was the sale of parts for and service on Isuzu mega-fleets that were purchased elsewhere but used in the Sioux Falls area. Doc. 138-1 at 47, 50-51.

         Dawn Cunningham, a district parts and service manager for Isuzu who oversaw Isuzu's franchise relationship with SFK and multiple other dealerships, testified that Isuzu deemed SFK a "telecontact" dealer, a designation that Isuzu assigned to vehicle dealers in smaller markets. Doc. 138-5 at 12. SFK's status as a telecontact dealer meant that Isuzu would communicate with SFK through email and telephone rather than traveling to Sioux Falls. Doc. 138-4 at 132-33; Doc. 138-5 at 12. Cunningham explained that she would visit a telecontact dealer if asked, but that SFK never made such a request. Doc. 138-4 at 133.

         As an Isuzu franchise holder, SFK would do warranty repairs on Isuzu vehicles and then seek reimbursement from Isuzu for such repairs. Vehicle dealers like SFK use a computerized communication system called ICS to submit their claims for warranty work to Isuzu. Doc. 138-2 at 115-16; Doc. 138-4 at 136, 141. Isuzu has a guide that lists the standard repair times allotted for dealers to fix particular issues covered by warranty. Doc. 138-1 at 90; Doc. 138-2 at 106-07; Doc. 138-4 at 136; Doc. 138-5 at 41, 51, 146-47. If the dealer is unable to fix the problem within the standard repair time, it can request payment for these "other labor hours" (OLH) from Isuzu. Doc. 138-4 at 136; see also Doc. 138-1 at 90, 157; Doc. 138-5 at 150-51. Isuzu had informed SFK and other dealers that they must explain their requests for OLH. Def's Ex. 124; Doc. 138-4 at 139."

         By September 2013, Isuzu and SFK were having issues over the warranty claims SFK submitted. On September 11, 2013, Cunningham emailed Mills about some warranty claims Mills had submitted that were beyond the usual 90-day period for claims submission. Def.'s Ex.130; Doc. 138-4 at 145-150. Cunningham also asked Mills for the repair orders and other documentation on some of the claims he submitted so that she could determine whether the OLH Mills requested was justified. Def.'s Ex. 130; Doc. 138-4 at 148. Mills apologized that the claims were late and said that it would not happen again because he had restructured the service department. Def.'s Ex. 130; Doc. 138-2 at 189. This restructuring included Mills assuming responsibility for submitting warranty claims to Isuzu for work performed by SFK's service department. Doc. 138-1 at 37; Doc. 138-2 at 74, 99-100, 164-66, 189. Before Mills took over, Sarah Lee and then Verlyn Wiertzema submitted warranty claims to Isuzu, and there appeared to be few issues with SFK's warranty work or Isuzu's payment thereof when Lee and Wiertzema were submitting warranty claims. Doc. 138-2 at 164-65.

         On September 14, 2013, Cunningham emailed Mills to tell him that she was returning four of the warranty claims discussed in the September 11, 2013 email because Mills had yet to send the repair orders and other documents she had requested. Def.'s Ex. 130; Doc. 138-4 at 150. Mills did not send the requested repair orders and other documents until October 3, 2013. Doc. 138-4 at 150-51; Def.'s Exs. 131-134. Cunningham emailed Mills on October 4 asking for a repair order on a particular claim. Doc. 138-4 at 152; Def.'s Ex. 137. When Mills did not respond, Cunningham emailed him again on October 8 asking him to send the repair order "ASAP." Def.'s Ex. 137. Nearly two months passed before Mills sent the repair order on December. 4, 2013. Doe. 138-4 at 153-54; Def.'s Ex. 140. Cunningham emailed Mills the following day saying that she was returning two claims to Mills because they lacked an adequate explanation for OLH. Def.'s Ex. 142; Doe. 138-4 at 155-56. Cunningham reiterated to Mills that claims for OLH required detailed explanations. Def.'s Ex. 142.

         On December 17, 2013, Mills emailed Cunningham asking her to increase the rate Isuzu paid for parts SFK used in Isuzu warranty repairs. Def.'s Ex. 210; Doc. 138-2 at 14. Under South Dakota law, the reimbursement a manufacturer pays a vehicle dealer for parts the dealer uses in warranty repairs "may not be less than the current retail rate customarily charged by the vehicle dealer for such parts." South Dakota Codified Laws (SDCL) § 32-6B-61. Section 32-6B-61 states that when establishing a compensation schedule for warranty work, manufacturers "shall rely on the vehicle dealer's written schedule of hourly labor rates and parts and may not obligate any vehicle dealer to engage in unduly burdensome documentation thereof, including, " without limitation, obligating vehicle dealers to engage in transaction by transaction calculations." Id. Mills told Cunningham in one of his December 2013 emails that "other manufacturers" were paying a 72% parts markup on warranty repairs. Def.'s Ex. 210; Doc. 138-2 at 14.

         In late December 2013, Isuzu granted SFK's requester an increase in the hourly rate Isuzu paid SFK for labor on warranty repairs. Def.'s Ex. 267; Doc. 138-4 at 214. Around that same time, Mills emailed Cunningham expressing frustration that Isuzu had not paid a particular warranty claim even though he had submitted a repair order explaining the claim over two weeks earlier. Def.'s Ex. 148. He asked Cunningham if she would be in the office the following day, and Cunningham replied that she would. Def.'s Ex. 148. Cunningham wrote in an email that she was happy to discuss any claims Mills wanted, but Mills never called her. Def.'s Ex. 148; Doc. 138-4 at 158-59.

         In early January 2014, Mills emailed Cunningham that SFK's markup rate on Isuzu parts was 66%. Def.'s Exs. 153, 213; Doc. 138-2 at 15-16. He attached four identical invoices as proof of a 66% retail markup rate charged by SFK. Doc. 138-4 at 198-200; Def.'s Ex. 216. Later that month, Cunningham asked Mills for fifty consecutive repair orders to establish the retail rate SFK customarily charged. Def.'s Ex. 217; Doc. 138-4 at 201. Mills neither provided the fifty consecutive repair orders nor called Cunningham to talk about her request. Doc. 138-4 at 201-02. Instead, Mills sent Cunningham a follow-up email on February 25, 2014, stating that although he knew Cunningham had requested more information, he "did not have any" and, in any event, "in our state all we need to do is display what our system is set at." Def.'s Ex. 219. Mills reiterated in the email that he would be satisfied with a 66% markup rate on Isuzu parts. Def.'s Ex. 219.

         In the spring of 2014, Isuzu requested a meeting with SFK to discuss SFK's sales and warranty claims. Doc. 138-1 at 150-51; Doc. 138-4 at 164-65. Isuzu arranged for Cunningham, Isuzu's central region director Mike Donaldson, and Isuzu's life-cycle business manager Patrick Becker to travel to Sioux Falls to meet with SFK on May 12, 2014. Def.'s Ex. 113; Doc. 138-1 at 153-54; Doc. 138-4 at 169; Doc 138-5 at 62; Doc. 138-5 at 117-18. Although Michael Rush knew of the planned meeting and Cunningham had sent Mills an email telling him about it, neither man attended. Doc. 138-1 at 151; Doc. 138-2 at 147; Doc. 138-3 at 29-30; Doc. 138-4 at 165; Def.'s Ex. 114: Cunningham, Donaldson, and Beckermet with William Rush in his office for approximately an hour and a half. Doc. 138-5 at 68, While discussing the parts markup rate SFK was requesting, Rush told Isuzu that SDCL § 32-6B-61 did not require SFK to provide Isuzu with repair orders to establish its markup rate. Doc. 138-1 at 79-82, 85; Doc. 138-5 at 74, 77; PL's Ex. 9. Rush and the Isuzu representatives also discussed the training of SFK's parts personnel and its service technicians. Doc. 138-1 at 67-69, 119, 160.

         After the meeting concluded, Wersal gave the Isuzu representatives a document listing four different markup rates that Black Hills Truck and Trailer used for Isuzu parts. Doc. 13 8-1 at 154; Doc. 138.-3 at 43, 50-51; Doc. 138-4 at 202; Doc. 138-5 at 74, 120; Def.'s Ex.. 222. Wersal later emailed Cunningham that SFK's standard markup rate for Isuzu parts was 58%. Def.'s Ex. 223; Doc. 138-3 at 44. Wersal attached a document listing four different markup rates that SFK used for Isuzu Parts. Doc. 138-3 at 49-51; Def.'s Ex. 223. Cunningham replied that she Would forward the information to Isuzu's corporate office and would contact Wersal if she had any questions. Def.'s Ex. 115; Doc. 138-4 at 203.

         The day after the meeting with Isuzu representatives, Rush sent Mills a memo saying that the rejected warranty claims should be resubmitted with an explanation of the requested OLH. PL's Ex. 8; Doc. 138-2 at 193. That same day, Donaldson emailed Rush requesting the South Dakota statute saying that said SFK did not have to provide repair orders to establish its parts markup rate. Def.'s Ex. 9; Doc. 138-1 at 85. Rush emailed the text of SDCL § 32-6B-61 to Donaldson, who then forwarded Rush's email to Paul Hirose, an in-house attorney for Isuzu. PL's Ex. 9; Doc. 138-5 at 77-78. On May 15, 2014, Donaldson forwarded Rush an email from Hirose saying that Isuzu was requesting one hundred consecutive repair orders to calculate SFK's parts markup rate. PL's Ex. 9; Doc. 138-1 at 86-87. Hirose asserted that providing 100 repair orders was not "unduly burdensome" under SDCL § 32-6B-61 because the repair orders already existed and should not be difficult to print or download. Def.'s Ex. 9; Doc. 138-1 at 86- 87. Rush did not respond to Donaldson about the forwarded email from Hirose. Doc. 138-5 at 80.

         Later in May 2014, Cunningham sent a mass email to SFK and other vehicle dealers advising that Isuzu had added more training classes and that the dealers' franchise agreements required them to have two fully-trained Isuzu technicians. PL's Ex. 20; Doc. 10.

         In mid-June 2014, Donaldson sent Rush an email listing the warranty claims Isuzu had yet to pay and stating that the main problem with these claims was a failure to adequately explain the requests for OLH. PL's Ex 10; Doc. 138-5 at 80. Rush did not respond to Donaldson's email. Doc. 138-5 at 82.

         On July 10, 2014, Cunningham emailed Mills about SFK's warranty claim for a transmission replacement SFK had done on a Fed Ex truck back in April. Doc. 138-4 at 174-76; Def.'s Ex. 176; PL's Ex. 61. Cunningham asked Mills to reduce the amount of OLH he was requesting for the transmission replacement, but Mills replied that he did not agree with the proposed reduction. Def.'s Ex. 176; Doc. 138-4 at 174. Cunningham and Mills also exchanged emails in July concerning the training of SFK's technicians. Def.'s Ex. 247; Doc. 138-4 at 226-27. Mills questioned the wisdom of requiring SFK to have two technicians certified on Isuzu vehicles when SFK did not have enough business from Isuzu to keep even one certified technician busy. Def.'s Ex. 247. Cunningham explained that she wanted SFK to have two fully-certified technicians so that there would be no gaps in service if an Isuzu-trained technician went on vacation or left the dealership. Def.'s Ex. 247. At trial, however, Cunningham testified that there was a time in 2014 when none of the twenty to twenty-five Isuzu dealers she supervised had two fully-trained Isuzu technicians. Doc. 138-4 at 241-244; PL's Ex. 36. She also admitted that she did not know how many fully-trained technicians the franchise agreement required SFK to have. Doc. 138-3 at 99; Doc. 138-5 at 10.

         On July 29, 2014, Mills submitted a warranty claim to Isuzu that requested 53.1 hours of OLH. Doc. 138-2 at 120-21, 182, 197; Doc. 138-4 at 183-84, 233; Def.'s Ex. 206. Isuzu responded on ICS that the claim was excessive, but did not specifically mention that Mills's claim was requesting 53.1 hours of OLH. Def.'s Ex. 206; Doc. 138-2 at 121, 197. Around that same time, Mills emailed Cunningham asking her why SFK's parts markup rate had not been changed to 58%. Def 's Ex. 227. Cunningham forwarded Mills the email from Hirose asking for 100 consecutive repair orders and told Mills that Isuzu had yet to receive the requested documentation. Def.'s Ex. 227; Doc. 138-4 at 206.

         Mills and Cunningham continued to exchange emails concerning the April 2014 Fed Ex warranty claim until August 8, 2014, when Cunningham wrote the following message to Mills in ICS: "YOU HAVE FAILED TO SUPPORT DOCUMENTATION FOR EXCESSIVE OLH. CLAIM DENIED. RESUBMIT FOR REASONABLE OLH."[2] PL's Ex. 61; Doc. 138-4 at 177; Doc. 138-5 at 23. Rush testified at trial that because of other communications Isuzu had sent SFK, he believed that a denied claim could not be resubmitted. Doc. 138-1 at 96.

         On August 11, 2014, Michael Rossetti, the director of field operations for Isuzu, sent Rush a letter expressing concern about the warranty claims Mills had been submitting. Doc. 138-1 at 89; PL's Ex. 11. Rossetti provided Rush with examples of his concerns, including Mills's failure to submit 100 consecutive repair orders to support SFK's claim for a 58% markup rate on Isuzu parts, his July 29, 2014 warranty claim for 53.1 hours of OLH for a job with a standard repair time of 1.1 hours, and his claim for OLH on the April 2014 Fed Ex truck transmission replacement. PL's Ex. 11. Rossetti wrote that although Isuzu was denying the claim for OLH on the Fed Ex transmission because it was incorrect and unsupported by an explanation, Isuzu would reimburse SFK for a reduced amount of OLH if Mills supplied the appropriate information. PL's Ex. 11. Rush forwarded Rossetti's letter to Mills rather than responding himself. Doc. 138-1 at 93; Doc. 138-2 at 42-43; Doc. 138-5 at 177.

         By September 3, 2014, Mills had corrected the July 29, 2014 warranty claim so that it now requested 5.3 hours of OLH rather than 53.1. PL's Ex. 60; Doc. 138-4 at 236-38. SFK's entry of 53.1 hours resulted from SFK trying to enter 5.31 hours into Isuzu's ICS system when that system accepted only one digit after the decimal and auto-corrected the 5.31 entry to 53.1. Doc. 138-1 at 109-112; Doc, 138-2 at 120, 182. In a September 9, 2014 email to Donaldson, Cunningham wrote that she didn't think the OLH request of 5.3 hours for this warranty claim "[was] too bad." PL's Ex. 40; Doc. 138-4 at 238-40.

         Isuzu expected SFK to bill repairs covered by Isuzu warranty to Isuzu and not to the customer. SFK followed this practice, although its customer agreements contained language entitling SFK to bill the customer. Doc. 138-1 at 99, 102. In mid-September 2014, after Isuzu had not paid SFK for its April 2014 warranty claim on replacing a Fed Ex transmission, SFK sent a bill for $11, 714.87 to Fed Ex stating that Fed Ex's warranty, claim had been denied. Def.'s Exs. 181, 202; Doc. 138-2 at 52-53. Fed Ex is one of the largest customers of Isuzu trucks in the United States. Doc. 138-6 at 135. Fed Ex reported to Isuzu being billed directly for the transmission replacement. Def.'s Ex. 181. Rush explained at trial that Isuzu's refusal to pay the warranty claim prompted SFK to bill Fed Ex directly for unpaid or underpaid warranty work under SFK's customer agreement with Fed Ex. Doc. 138-1 at 99, 102. Rossetti sent Rush an email on October 8, 2014, stating that SFK had neither responded to his August 11 letter nor resubmitted the warranty claims discussed in that letter. PL's Ex. 14. Rossetti further asserted that SFK had violated the franchise agreement by billing Fed Ex for the transmission replacement and that Isuzu had declined to pay for this work because SFK had refused to document its request for OLH. PL's Ex. 14. Rossetti concluded the email by stating "As these matters are urgent and serious, would you please let me know when you will be available this week for a telephone call?" PL's Ex. 14. Rush never responded to Rossetti. Doc. 138-2 at 46-47; Doc. 138-5 at 178-79.

         In the meantime, Mills emailed Cunningham saying that South Dakota law did not require SFK to submit 100 consecutive repair orders to establish its parts markup rate. PL's Ex. 15. Mills also wrote that he would resubmit a particular warranty claim but that the claim would become the customer's responsibility if Isuzu did not pay. PL's Ex. 15. Cunningham forwarded Mills's email to Rossetti, who emailed Mills and Rush on October 10, 2014. PL's Ex. 15. Rossetti wrote that the franchise agreement required SFK to perform warranty work for Isuzu -customers free of charge to the customers, and that SFK had failed to properly document its warranty claims. PL's Ex. 15. He also wrote that until "Mr. Rush and Isuzu discuss these violations of your Isuzu dealer agreement and your mistreatment of Isuzu customers, all future communications must be with Mr. Rush." Pi's Ex. 15. Rush did not respond to this email. Doc. 138-2 at 51-52; Doc. 138-5 at 180.

         On October 16, 2014, Edwin Robinson, manager of dealer development for Isuzu, sent Cunningham and Donaldson an email asking them to read a draft of a termination letter Isuzu planned on sending SFK and then tell him whether they had any issues or concerns with it. PL's Ex. 75; Doc. 138-4 at 240-41. Cunningham replied that the draft letter was "[n]ice" and that her only concern was that the letter mistakenly referred to Mills as SFK's service manager. PL's Ex. 75; Doc. 138-4 at 241.

         On October 17, 2014, Isuzu sent Rush a letter stating that it intended to terminate the franchise agreement effective January 23, 2015, claiming that SFK had violated the agreement as well as SDCL § 32-6B-45. Doc. 138-1 at 100; PL's Ex. 16. Under § 32-6B-45, a franchisor cannot terminate a franchise agreement "without good cause." SDCL § 32-6B-45. Good cause is defined as "failure by a vehicle dealer to substantially comply with essential and reasonable requirements imposed upon the vehicle dealer by the vehicle dealership agreement, if the requirements are not different from those requirements imposed on other similarly situated vehicle dealers by their terms." Id. Section 32-6B-45 provides that good cause for termination also exists if a dealer engages in the conduct enumerated in subsections (1) through (8) of the statute. Id. When a franchisor terminates a franchise agreement, it must comply with § 32-6B-45's notice and cure provision, which requires the franchisor to "provide a vehicle dealer at least ninety days prior written notice of termination." Id. This notice must "state all reasons constituting good cause for the action and shall provide that the dealer has sixty days in which to cure any claimed deficiency. If the deficiency is rectified within sixty days, the notice is void." Id. The notice and cure provision does not apply if the vehicle dealer is terminated for any of the reasons listed in subsections (1) through (7) of § 32-6B-45. Id. Isuzu's letter did not satisfy the notice and cure provision of § 32-6B-45.

         Isuzu claimed in the October 2014 termination letter that SFK violated § 32-6B-45(7), ' which states that good cause for termination exists if the vehicle "dealer has engaged in conduct which is injurious or detrimental to the dealer's customers or to the public welfare." SDCL § 32-6B-45(7); PL's Ex. 16. Isuzu stated that SFK had violated § 32-6B-45(7) by submitting "hyper- inflated warranty reimbursement requests, " including Mills's request for "more than 50 times the standard labor hours"[3] for a particular repair; billing Isuzu customers for warranty repairs; failing to "actively and effectively" promote the sale of Isuzu trucks; failing to have an adequate inventory of Isuzu trucks; not having any fully trained Isuzu service technicians; and not having any staff fully trained in Isuzu parts. PL's Ex. 16. Isuzu asserted that these actions also violated the franchise agreement.[4] PL's Ex. 16. Isuzu concluded the letter by stating "[w]hile you have indicated no interest in resolving this matter or complying with the Agreement, should you now desire to do so, please contact Mr. Edwin Robinson." PL's Ex. 16. Isuzu's letter, however, did not follow the procedure set forth in Article V.A.3. of the franchise agreement for termination for a failure of performance. Doc. 47-6 at 47; PL's Ex. 4. The letter did not give SFK sixty days to cure any claimed deficiency and did not mention the review process described in Article V.A.3. af all. Shaun Skinner, Isuzu's vice president and general manager, signed the letter. PL's Ex. 16.

         At trial, Skinner testified that he signed the termination letter after Robinson drafted it. Doc. 138-6 at 133, 138. He explained that the key factors causing Isuzu to send the termination letter were SFK billing Fed Ex for warranty work and its refusal to communicate with Isuzu. Doc. 138-6 at. 133-34, 143-44. Robinson testified that despite drafting the letter, he had never investigated whether SFK had enough work to keep one technician busy working on Isuzu products, never investigated the circumstances surrounding SFK's claim for 53.1 hours in OLH on one repair (which had been corrected to 5.3 hours of OLH by the time of the termination letter), and never asked how many years of experience SFK's parts managers had working with Isuzu parts. Doc. 138-3 at 71, 75-76. When asked during his deposition whether the October 2014 termination letter provided SFK with a sixty-day cure period, Robinson testified that the cure period had started with Rossetti's August 2014 letter. Doc. 138-3 at. 77-78. At trial, however, Robinson testified that Isuzu had determined that a cure period was unnecessary under SDCL § 32-6B-45 and the franchise agreement. Doc. 138-5 at 216, 235, 238. Robinson said that he had reviewed South Dakota law to ensure that the termination was proper. Doc. 138-6 at 30.

         Many of the reasons Isuzu gave for terminating SFK came as a surprise to Rush. He testified that SFK generally scored highly on customer satisfaction surveys Isuzu sent out to SFK's customers. Doc. 138-1 at 59-60. He also explained that Isuzu rarely complained about SFK's performance under the franchise agreement. Doc. 138-1 at 61-66. Indeed, Rush said that the termination letter was the first time Isuzu complained to him that SFK's truck sales or truck inventory was inadequate, and that the May 2014 meeting was the first time Isuzu raised the training of SFK's personnel. Doc. 138-1 at 65-66, 104, 126. According to Rush, Cunningham discussed the training for SFK's technicians at the May 2014 meeting, and while Isuzu wanted SFK to have two fully trained technicians, Rush and the Isuzu representatives agreed for SFK to have one. Doc. 138-1 at 67-68, 119, 160. Rush had issued an internal, memo recording his understanding to that effect. Doc. 138-1 at 68-69. Rush testified that eight of SFK's technicians had completed at least some of Isuzu's online training modules. Doc. 138-6 at 179-80.

         Rush did not respond to the October 2014 termination letter, choosing to sue Isuzu instead. Doc. 138-2 at 54; Doc. 138-5 at 217; Doc. 138-5 at 226. SFK filed an amended complaint against Isuzii in November 2014 asserting eight causes of action. Doc. 47-6. The first cause of action alleged that Isuzu violated SDCL § 32-6B-45 by terminating the franchise agreement without good cause; the second and third causes of action sought declaratory judgments that Isuzu violated SDCL §§ 32-6B-58 and 32-6B-61 by underpaying SFK for warranty parts and warranty service work; the fourth cause of action alleged that Isuzu breached the duty of good faith and fair dealing; the fifth cause of action alleged that Isuzu intentionally interfered with SFK's business relationships; the sixth cause of action alleged that Isuzu defamed SFK; the seventh cause of action sought a preliminary injunction to maintain the status quo; and the eighth cause of action alleged that Isuzu breached the franchise agreement in how it terminated the agreement. Doc. 47-6.

         On January 12, 2015, after service of the amended complaint on Isuzu, Robinson sent Rush a letter concerning the October 2014 termination letter. PI.' s Ex. 18. Robinson maintained that the termination letter had provided SFK with ninety days' notice of the termination, a cure period in excess of sixty days, and "an invitation to contact [Isuzu] if you had any interest in resolving the bases for termination." PL's Ex. 18. Robinson's letter stated that South Dakota law did not require Isuzu to provide SFK with an opportunity to cure given the reasons for the termination, but that Isuzu was nevertheless "willing to consider providing" SFK with an, additional period to cure the breaches listed in the October 2014 termination letter. PL's Ex. 18. "If you have any interest in an additional opportunity to cure, " Robinson wrote, "please notify me in writing by the end of the day on Wednesday, January 14, 2015." PL's Ex. 18. Rush did not respond to the letter. Doc. 138-2 at 55; Doc. 138-5 at 238-39. SFK continued to perform some service work on Isuzu vehicles around this time, including replacing an engine in an Isuzu truck belonging to Fed Ex around January 2015. Doc. 138-1 at 116-17. Despite submitting a warranty claim for the Fed Ex engine replacement to Isuzu, SFK never received any payment for the engine or labor. Doc. 138-1 at 117.

         Some of the claims in SFK's amended complaint did not make it to trial. The parties stipulated to dismissal of SFK's defamation claim, Doc. 36, SFK abandoned its request for a preliminary injunction, Doc. 74 at 107, and this Court granted Isuzu summary judgment on SFK's claim that Isuzu intentionally interfered with SFK's business relationships, Doc 73; Doc. 74 at 107. This left five claims, some of which were pleaded in a somewhat unclear manner. Although SFK asked for declaratory judgments that Isuzu violated §§ 32-6B-58 and 32-6B-61 by underpaying SFK for warranty work and parts, it also asked for damages "in an amount to be determined at trial" for these alleged violations. Doc. 47-6 at 15-17. SFK's next claim, which was for breach of the implied covenant of good faith and fair dealing, alleged that Isuzu had breached the implied covenant "by its actions as set forth in detail herein." Doc. 47-6 at 17. Ultimately, this Court determined that the best reading of SFK's amended complaint was that the claim for breach of the implied covenant of good faith and fair dealing encompassed SFK's claims that Isuzu had damaged it by underpaying SFK for warranty service work and parts. Doc. 138-4 at 119, 126-27; Doc. 138-6 at 14, 210-11. The parties plainly understood that the alleged underpayment by Isuzu of SFK's warranty claims was a claim framed by the amended complaint.

         At trial, SFK sought damages in the form of lost net profits from no longer being an Isuzu dealer, costs of Isuzu parts and inventory, signage expense, not collecting a 58% markup rate on Isuzu parts used for warranty work, not receiving payment for adequate time spent on warranty service work, and not getting paid at all for certain warranty work. Rush was SFK's witness on damages. Rush has an extensive business background, including working as a certified public accountant and operating a business for decades that owns multiple vehicle dealerships in multiple states. Doc. 138-1 at 31-33. He began his damages testimony by calculating that in 2014, SFK made $159, 626.14 in net income from its operation of the Sioux Falls Isuzu franchise based on new truck sales, parts sales, service, and shop supplies. Doc. 138-4 at 4-32. From there, Rush testified about three potential methods for projecting the damages SFK suffered by losing the Isuzu franchise.

         First, Rush explained that in some circumstances, the appropriate value of a business can be calculated by taking the business's annual net income times a multiplier of four to six. Doc. 138-4 at 31-32. Rush testified that applying a multiplier of four to SFK's $159, 626.14 in net income resulted in a figure of $638, 504.56, while applying multiplier of six resulted in a figure of $957, 756.84. Doc. 138-4 at 32. Rush believed, however, that although this multiplier method was a proper way to evaluate SFK's loss of the Isuzu franchise, it should not be used in this case because it failed to take into account the growth rate SFK had been able to achieve. Doc. 138-4 at 32-33.

         Next, Rush testified that another potentially valid method for calculating SFK's damages was to multiply the net income in 2014 by an annual growth rate equal to the inflation rate of 3% over a ten-year period. Doc. 138-4 at 35-36, Rush said that Isuzu was SFK's "top performing" product line "in terms of growth rate percentage" and opined that SFK's profits on Isuzu business would have at least matched a 3% inflation rate over the next ten years. Doc. 138-4 at 35. He projected SFK's damages- for loss of the Isuzu franchise under this method as $1, 596, 261. Doc. 138-4 at 36. But Rush believed that this second method was also deficient because the 3% growth rate was too low and the ten-year period was too short. Doc. 138-4 at 37. Thus, he proposed a third method for calculating SFK's damages.

         Under this third method, Rush projected SFK's damages using a fifteen-year period and various growth rates. Doc. 138-4 at 37-52. Rush testified that a fifteen-year period was appropriate because Isuzu has 81% of the market in North America for cab-over utility vehicles and therefore left SFK no alternative for that market but to sell an Isuzu line; Isuzu has "held the number one position" in America for over 29 years; and Isuzu is a "very solid company." Doc. 138-4 at 37. As for the projected growth rate on sales of Isuzu parts, Rush said that he applied a 17% rate during the first five years, a 10% rate during the next five years, and a 6% rate during the last five years. Doc. 138-4 at 43-47, 88. In support of these figures, Rush testified that SFK had experienced a 17% compound growth rate in Isuzu parts purchases between 2010 and 2014. Doc. 138-4 at 43; see also Doc. 138-1 at 46-47. He also discussed an email from Isuzu, introduced as Plaintiff s Exhibit 3, stating that SFK had purchased $101, 187 in parts in 2013, and that they should strive to purchase $132, 758 in parts in 2014. Doc. 138-4 at 41-42. In regard to the growth rate for SFK's Isuzu truck sales, Rush said that he applied a 9.5% growth rate for the first five years but eventually dropped this rate to 4.2% in the fifteenth year. Doc. 138-4 at 44, 96-97. According to Rush, this third method for calculating SFK's damages put SFK's lost future profits from termination of the Isuzu franchise at $3, 050, 231. Doc. 138-4 at 51.[5] He testified that to arrive at this amount, he had made certain deductions for costs and had applied a discount rate to reduce the amount to present value. Doc. 138-4 at 49-50. Finally, Rush testified on rebuttal that SFK had 15 unpaid claims for warranty work on Isuzu trucks, and that the "undisputed" amount Isuzu owed for these claims was $76, 000. Doc. 138-6 at 178.

         David Hall, Isuzu's expert, testified that Rush's damages calculations were flawed and excessive. He opined that the growth rates and profit margins Rush used were too high, while the discount rate was too low. Doc. 138-6 at 65-94. Hall also said that the fifteen-year period Rush used to calculate SFK's damages was unreasonable given Rush's testimony about the market for Isuzu trucks in Sioux Falls being flat, the contentious nature of the parties' relationship, and the fact that the franchise agreement allowed either party to terminate the agreement. Doc. 138-6 at 95-97.

         This Court submitted four claims to the jury: the statutory wrongful termination claim (claim I), the breach of contract claim for wrongful termination (claim II), the claim that Isuzu breached the duty of good faith and fair dealing by refusing to pay SFK a 58% markup on parts and failing to pay for adequate hours on warranty work, in violation of §§ 32-6B-58 and 32-6B-61 (claim III), and a claim that Isuzu breached the duty of good faith and fair dealing by withholding payments for warranty service work that was allegedly undisputed (claim IV). Doc. 135. This Court did not submit the declaratory judgment claims to the jury, [6] choosing instead to decide those claims itself after the jury's verdict. Doc. 13 8-6 at 211.

         The jury returned a mixed verdict. It found in SFK's favor on the statutory wrongful termination claim and awarded SFK $1, 600, 000 in damages. Doc. 135. The jury also found in SFK's favor on its claim that Isuzu breached the implied covenant of good faith and fair dealing by withholding payments for warranty service work that was undisputed, awarding SFK $76, 000 in damages on this claim. Doc. 135. But the jury found in Isuzu's favor on the breach of contract claim, concluding that SFK had committed a failure of performance under the franchise agreement, and that while Isuzu had breached the agreement by failing to follow the termination procedure, SFK would not have remedied its breach of the agreement within a reasonable time. Doc. 135. The jury found partially in SFK's favor and partially in Isuzu's favor on SFK's claim that Isuzu breached the covenant of good faith and fair dealing by violating §§ 32-6B-58 and 32-6B-61. Doc. 135. The jury concluded that SFK did not actually have a 58% markup rate on Isuzu parts as SFK had claimed, but that Isuzu had failed to pay SFK for time that was adequate for warranty service work and that Isuzu's failure, to do so had prevented SFK from receiving the reasonably expected benefits of the franchise agreement. Doc. 135. Nevertheless, the jury did not award SFK any money under the paragraph of the verdict form asking what damages SFK suffered as a result of Isuzu's failure to pay adequate time for warranty work. Doc. 135. The jury's award of $76, 000 to SFK on unpaid warranty work evidently included the service time that was at issue in SFK's §§ 32-6B-58 and 32-6B-61 good faith claim. Doc. 138-7 at 81-83. This Court addressed this obvious rationale explaining the jury's treatment of the warranty damages claims. SFK's counsel agreed with the Court, saying that he did not think the verdict was inconsistent, but Isuzu's counsel was cagier in responding "I don't think I could say one way or another." Doc. 138-7 at 82.

         Thereafter, this Court entered an interim judgment on the jury's verdict. Doc. 137. As to SFK's declaratory judgment claims, this Court concluded that Isuzu did not violate §§ 32-6B-58 and 32-6B-61 by failing to pay a 58% markup rate and that any further ruling on the declaratory judgment claims was rendered moot by the jury's verdict on the claim for breach of the implied covenant of good faith and fair dealing. Doc. 137.

         II. Motion for New Trial

         The standard for granting a new trial under Rule 59 is different from the standard for granting judgment as a matter of law. White v. Pence, 961 F.2d 776, 779-82 (8th Cir. 1992).

         The governing question under Rule 59 is whether a new trial is required to avoid a miscarriage of justice. Greaser v. Mo. Dep't of Corr., 145 F.3d 979, 983 (8th Cir. 1998). Grounds for granting a new trial include a verdict that is against the weight of the evidence, an excessive damage award, and erroneous jury instructions or evidentiary rulings. Children's Broad. Corp. v. Walt Disney Co., 245 F.3d 1008, 1017 (8th Cir. 2001). "In determining whether a verdict is against the weight of the evidence, the trial court can rely on its own reading of the evidence-it can 'weigh the evidence, disbelieve witnesses, and grant a new trial even where there is substantial evidence to sustain the verdict."' White, 961 F.2d at 780 (quoting Ryan v. McDonough Power Equip,, 734 F.2d 385, 387 (8th Cir. 1984)). However, district courts may not "reweigh the evidence and set aside the jury verdict merely because the jury could have drawn different inferences or conclusions or because judges feel that other results are more reasonable." Id. (quoting Fireman's Fund Ins. Co. v. Aalco Wrecking Co., 466 F.2d 179, 186 (8th Cir. 1972)). Erroneous evidentiary rulings do not justify a new trial "unless [the wrongful admission or exclusion of] the evidence was so prejudicial that a new trial would likely produce a different result." Diesel Mach.. Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 833 (8th Cir. 2005) (quoting Harrison v. Purdy Bros. Trucking Co., 312 F.3d 346, 351 (8th Cir. 2002)). Similarly, courts will not grant a new trial based on erroneous jury instructions "unless the alleged error was prejudicial." Hallmark Cards. Inc. v. Murley, 703 F.3d 456, 460 (8th Cir. 2013). A new trial is warranted "only 'if the error misled the jury or had a probable effect on its verdict.'" Bamford. Inc. v. Regent Ins. Co,, 822 F.3d 403, 410 (8th Cir. 2016) (quoting Acuity v. Johnson, 776 F.3d 588, 596 (8th Cir. 2015)).

         Isuzu argues that it is entitled to a new trial based on the failure to assign the burden of proof to SFK on its § 32-6B-45 claim; erroneous evidentiary rulings; SFK being allowed to maintain its declaratory judgment claims; the submission to the jury of claims for breach of the implied covenant of good faith and fair dealing; confusing jury instructions and verdict form; inconsistencies in the verdict; and Rush being allowed to testify about damages.

         A. Burden of Proof Issue on § 32-6B-45 Claim

         Isuzu argues that a new trial is necessary because this Court failed to instruct the jury that SFK bore the burden of proving[7] that Isuzu lacked good cause to terminate SFK under § 32-6B-45. In the past, § 32-6B-45 required the franchisor to establish cause for termination in a hearing before a South Dakota agency. See SDCL § 32-6B-45 (pre March 2010 version) ("No franchisor may terminate or refuse to continue any franchise unless the franchisor has first established in a hearing held under the provisions of chapter 1-26, that: (1) the franchisor has cause for termination or noncontinuance . . . ."); see also In re Groseth Int'l. Inc., 442 N.W.2d 229, 232 (S.D. 1989) (applying Chapter 32-6A, which was later repealed and replaced by Chapter 32-6B, and stating that "[a] franchisor seeking to terminate a franchise under the provisions of SDCL ch. 32-6A must show that it has good cause for termination"). In 2010, the South Dakota Legislature amended § 32-6B-45 to its current form by, among other things, removing the language that required the franchisor to establish good cause for termination before a South Dakota agency, but leaving in the requirement that a franchisor cannot terminate a franchise agreement "without good cause." See SDCL § 32-6B-45. The current version of § 32-6B-45 is silent on whether the franchisor bears the burden of proving "good cause" for termination or whether the franchisee bears the burden of proving an absence of good cause,, and there are no South Dakota cases discussing the burden under the current version. Before and during trial, Isuzu argued that SFK should bear the burden under § 32-6B-45 given the 201G amendments to the statute and the general rule that plaintiffs bear the risk of failing to prove their claims. SFK disagreed, arguing that Minnesota Supply Co. v. Raymond Corp,, 472 F.3d 524 (8th Cir. 2006)-a case where the Eighth Circuit considered but did not analyze the language of a Minnesota statute similar to § 32-6B-45-made clear that Isuzu should bear the burden of proving that it had good cause to terminate the franchise agreement.

         This Court recognized when settling final instructions that there was no clear answer as to who bears the burden of proof under § 32-6B-45. Doc. 138-6 at 8-9, 223-27. Rather than instructing on the burden of proof under § 32-6B-45 and risking retrial of a long and costly case, this Court decided to instruct the jury in a way where everyone would know whether the burden of proof affected the jury's decision. Doc. 138-6 at 8-9, 224-27. If the jury indicated that the burden of proof would affect its analysis, this Court would decide the issue and instruct the jury accordingly. Doc. 138-6 at 8-9.

         South Dakota's pattern instruction on the burden of proof and the preponderance of the evidence, which this Court gave the jury, explains how the burden of proof should factor into the jury's analysis: "In the event that the evidence is evenly balanced so that you are unable to say that the evidence on either side of an issue has the greater convincing force, then your finding upon the issue must be against the party who has the burden of proving it." Doc. 134 at 9; S.D. Civ. Pattern Jury Instrs. § 1-60-10. This instruction is consistent with case law explaining that the principal significance of the burden of proof is that it acts as a tie-breaker when the evidence is in equipoise.[8] Blodgett v. Comm'r of Internal Revenue., 394 F.3d 1030, 1039 (8th Cir. 2005); Jones v. United States, 207 F, 3d 508, 510 (8th Cir. 2000); Cigaran v. Heston, 159 F.3d 355, 357 (8th Cir. 1998); Bristow v. Drake St. Inc., 41 F.3d 345, 353 (7th Cir. 1994); Gordan v. St. Mary's Healthcare Ctr., 617 N.W.2d 151, 157-58 (S.D. 2000). When the evidence is not evenly balanced, i.e., the greater convincing force of the evidence favors one party over the other, the burden of proof plays no role in the trier of fact's decision. Blodgett, 394 F.3d at 1039 ("In a situation in which both parties have satisfied their burden of production by offering some evidence, then the party supported by the weight of the evidence will prevail regardless of which party bore the burden of persuasion, proof or preponderance. Therefore, a shift in the burden of preponderance has real significance only in the rare event of an evidentiary tie." (internal citation omitted)); Jones, 207 F.3d at 510 ("[T]he burden of proof in a civil case serves to determine who prevails only if the evidence is in equipoise. The rule simply decides, in other words, who wins if there is a tie."); Cigaran, 159 F.3d at 357 ("The shifting of an evidentiary burden of preponderance is of practical consequence only in the rare event of an evidentiary tie: If the evidence that the parties present balances out perfectly, the party bearing the burden loses."); Bristow, 41 F.3d at 353 ("Burdens of persuasion affect the outcomes only of cases in which the trier of fact thinks the plaintiffs and the defendant's positions equiprobable. Burdens of persuasion are, in other words, tie-breakers. If the trier of fact, having heard all the evidence, comes to a definite conclusion, he has no occasion to invoke a burden of persuasion.").

         To determine whether the jury found that the evidence was equally balanced, and thus whether the burden of proof would make a difference in the jury's decision, this Court submitted the following verdict form on SFK's statutory wrongful termination claim:

1. Did Sioux Falls Kenworth engage in conduct that was injurious or detrimental to Sioux Falls Kenworth's customers or the public welfare? (check one box)
[] No
[] Evidence is in balance at exactly 50%-50%
If your answer to this question is "yes, " your verdict on the wrongful termination claim must be for Isuzu. If your answer is "no, " or you are unable to agree on a verdict as to Question No. 1, proceed to Questions No. 2 and 3. You are to use the preponderance of the evidence standard, also known as the greater weight of the evidence standard, in answering these questions. If you find that the evidence is in balance, such that the weight of the evidence is exactly 50%-50%, then so indicate on the verdict form and this Court will provide you further instructions. Rarely is evidence exactly 50%-50%, so you should endeavor to decide this question using the preponderance of the evidence standard.
2. Did Sioux Falls Kenworth fail to substantially comply with the essential and reasonable requirements imposed upon Sioux Falls Kenworth by the franchise agreement, if the requirements are not different from those requirements imposed on other ...

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