The Wisconsin Fair Dealership Law (WFDL), Wis. Stats. § 135.01 et seq., is triggered only when a grantor takes or plans to take an action that has considerable impact on the relationship with its dealer. Whether that action is termination, cancellation, non-renewal, or substantially changing the competitive circumstances of the relationship, needless to say, the stakes are generally very high for the dealer. It is thus no surprise that the statute affords protected dealers significant remedies to redress the harm that would follow from a grantor’s unlawful conduct.
Damages and Injunctive Relief
Under the Wisconsin Fair Dealership Law, a dealer may pursue damages, injunctive relief, or both. Wis. Stat. § 135.06. Typically, a dealer will seek preliminary injunctive relief at the outset of litigation, before electing whether to seek damages as a remedy for the grantor’s unlawful conduct. The WFDL expressly contemplates this scenario, and the statute instructs courts to presume at the preliminary-injunction stage that any injury the dealer would suffer is irreparable and cannot be remedied at law. See Wis. Stat. § 135.065.
In those cases where dealers opt to pursue damages, they often peg their damages request to lost profits (as opposed to lost business value), and one of the primary tasks is demonstrating how far into the future the dealer can legitimately claim lost profits. By contrast, in cases focused on injunctive relief, dealers generally ask the court to order the grantor to refrain from its threatened action or order the reinstatement of the dealer on the same terms that existed prior to the unlawful action taken by the grantor.
Where a grantor has unlawfully terminated a dealership, the dealer has the choice under the statute of requiring the grantor to repurchase at fair wholesale market value all remaining inventory the grantor sold to the dealer for resale under the dealership agreement. Wis. Stat. § 135.045. The “fair wholesale market value” is usually the price that a dealer would pay for the product in its present condition had the relationship not been terminated. This obligation applies only to merchandise bearing a name, trademark, label, or other mark identifying the grantor. Id. Both termination and the existence of a dealership are necessary preconditions to activate the grantor’s obligation to repurchase.
If a dealer successfully proves that its grantor has violated the Wisconsin Fair Dealership Law, the court may award the dealer the actual costs of the action, including its actual attorney’s fees (to a reasonable degree). Wis. Stat. § 135.06. The purpose of this provision is to encourage dealers to exercise their rights under the WFDL. There is some uncertainty regarding whether the award of fees to the successful dealer is automatic if requested, and, if so, when a dealer has achieved sufficient success to move for recovery of its fees. The amount of fees ultimately awarded generally turns on a lodestar analysis, rather than a contingency or a flat-fee approach.
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Overall, the Wisconsin Fair Dealership Law is a powerful tool for dealers—and, in certain circumstances, for potential grantors who want judicial clarity that they are not actually within the scope of the statute. One aspect of the WFDL’s power is the flexibility it provides dealers with respect to remedies, and the ways that those remedies exceed the relief available under traditional principles of contract law. A dealer considering a WFDL claim (or a potential grantor seeking to avoid being a WFDL defendant) should think creatively about what it wants to achieve and how the Dealership Law can best help it reach those outcomes.
The post The Wisconsin Fair Dealership Law Enters Its 50th Year: Remedies first appeared on Stafford Rosenbaum LLP.