Action Nissan, Inc. d/b/a Universal Nissan v. Hyundai Motor America Corporation et al

Filing 222

ORDER denying 195 Plaintiff's Amended Motion for Equitable Relief and Sanctions. Signed by Judge Wendy W. Berger on 9/25/2024. (MDJ)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
ACTION NISSAN, INC.,
Plaintiff,
v.

Case No.: 6:21-cv-2152-WWB-EJK

HYUNDAI MOTOR AMERICA
CORPORATION,
Defendant.

/
ORDER

THIS CAUSE is before the Court on Plaintiff’s Amended Motion for Equitable Relief
and Sanctions (Doc. 195) and Defendant’s Amended Opposition (Doc. 199) thereto. For
the reasons set forth below, the Motion will be denied.
I.

BACKGROUND
Plaintiff, Action Nissan, Inc. (“Universal”) is an authorized dealer of Hyundai and

Genesis brand vehicles in Orlando, Florida, pursuant to franchise agreements with
Defendant Hyundai Motor America Corporation (“HMA”). (Doc. 1, ¶¶ 1, 4). Universal has
historically been one of the highest volume sellers of Hyundai vehicles in the United
States. (Id. ¶¶ 20–22). However, Universal alleges that its sales volume has decreased
significantly since 2019 due to HMA’s failure to allocate vehicles to Universal for sale at
the same rate they are allocating vehicles to other dealers. (Id. ¶¶ 27–38). During this
period, there has been a general shortage of new motor vehicles in the United States.
(Doc. 1-3 at 2–3). Nonetheless, Universal alleges that HMA’s failure to allocate adequate
inventory is in retaliation for Universal’s filing and prosecution of a lawsuit (the “Genesis

Litigation”) against HMA. (Doc. 1, ¶¶ 51–56). As a result, Universal has brought a five
count Complaint alleging claims for violations of Florida’s Dealer Protection Act, section
320.64, Florida Statutes, breach of contract, and breach of the implied covenant of good
faith and fair dealing. (Id. ¶¶ 57–134).
II.

LEGAL STANDARD
A federal court has the inherent authority to sanction a party or attorney where the

court finds that the party or attorney acted in bad faith, vexatiously, wantonly, or for
oppressive reasons. Chambers v. NASCO, Inc., 501 U.S. 32, 45 (1991); Spolter v.
Suntrust Bank, 403 F. App’x 387, 390 (11th Cir. 2010). “The key to unlocking a court’s
inherent power is a finding of bad faith.” Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir.
1998). “A finding of bad faith is warranted where an attorney knowingly or recklessly
raises a frivolous argument, or argues a meritorious claim for the purpose of harassing
an opponent.” Id. (quotation omitted).
In addition to the Court’s inherent sanction power, Federal Rule of Civil Procedure
26(g)(3) authorizes the court to impose sanctions for disclosure and discovery violations
where an attorney “certification violates [Rule 26] without substantial justification.” Rule
37(b)(2)(A) provides that “[i]f a party . . . fails to obey an order to provide or permit
discovery, including an order under Rule 26(f), 35, or 37(a), the court where the action is
pending may issue further just orders” including “rendering a default judgment against the
disobedient party.” Under Rule 37, “[a] default judgment sanction requires a willful or bad
faith failure to obey a discovery order.” Holland v. Westside Sportsbar & Lounge, Inc.,
No. 6:19-cv-945-Orl, 2020 WL 7390723, at *3 (M.D. Fla. Aug. 11, 2020) (quotation

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omitted), report and recommendation adopted, 2020 WL 7390581 (M.D. Fla. Sept. 3,
2020).
III.

DISCUSSION
A.

Burden Shifting under Fla. Stat. § 320.64(18)

Universal first argues that HMA has not maintained records of its allocations
methods as required by section 320.64(18), Florida Statutes, and therefore, the Court is
required to shift the burden of proof to HMA “to preserve the fairness of these
proceedings.” (Doc. 195 at 14–16). Section 320.64(18) does not specify a remedy when
a licensee, such as HMA, fails to maintain required records. However, Universal points
to burden-shifting related to record keeping in the context of the FLSA, actions for
accounting, and in medical malpractice as models for its proposed remedy.

See

Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687–88 (1946) (holding that in an
FLSA case, “an employee has carried out his burden if he proves that he has in fact
performed work for which he was improperly compensated . . . [t]he burden then shifts to
the employer to come forward with evidence of the precise amount of work performed”);
Pub. Health Tr. of Dade Cnty v. Valcin, 507 So. 2d 596, 599–600 (Fla. 1987) (shifting the
burden of evidence in a medical malpractice case when a plaintiff first can “establish to
the satisfaction of the court that the absence of the records hinders his ability to establish
a prima facie case”); Cassedy v. Alland Invs. Corp., 128 So. 3d 976, 978 (Fla. 1st DCA
2014) (“Once the right to an accounting is established, the other party has the burden to
prove, by competent, substantial evidence, that the money was properly handled . . . if
the trustee fails to keep clear, distinct, and accurate accounts, all presumptions are
against him[.]” (quotation omitted)).

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Universal’s request for burden shifting will be denied. First, Universal asks that
even if “the Court finds that Universal did not prove a prima facie case, it should shift the
burden of proof to HMA to preserve the fairness of these proceedings.” (Doc. 195 at 16).
This request runs contrary to the plain language of section 320.697, Florida Statutes,
which provides for burden shifting only after a plaintiff has proven a prima facie case. See
Fla. Stat. § 320.697 (“Upon a prima facie showing by the person bringing the action that
such a violation by the licensee has occurred, the burden of proof shall then be upon the
licensee to prove that such violation or unfair practice did not occur.”). On this ground
alone, the Court could deny Universal’s request.
Second, Universal does not specify to which claims the requested shift should
apply. The Complaint raises five claims, two relating to alleged breach of contract and
three for alleged violation of three separate provisions of section 320.64, Florida Statutes.
Yet, Universal fails entirely to explain how HMA’s recordkeeping—or lack thereof—relates
to any particular claim, why the records are necessary to proving any claim, or why the
alleged lack of records necessitates a burden shift on any claim. Instead, Universal offers
only a conclusory assertion that the shift is necessary to “preserve the fairness of these
proceedings” because the statute at issue is remedial in nature.

This sort of

underdeveloped argument is insufficient. See U.S. Steel Corp. v. Astrue, 495 F.3d 1272,
1287 n.13 (11th Cir. 2007) (noting the court need not consider “perfunctory and
underdeveloped” arguments and that such arguments are waived).
Third, each of Universal’s cited comparators is inapposite. In the context of the
FLSA, a plaintiff must first prove “that he has in fact performed work for which he was
improperly compensated” before the burden shifts to the employer. Anderson, 328 U.S.

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at 687. Similarly, in an action for an accounting, a defendant only bears the burden
“[o]nce the right to an accounting is established.” Cassedy, 128 So. 3d at 978. These
authorities cannot support Universal’s requested relief, which, as noted above, would shift
the burden even if Universal fails to prove a prima facie case.

Finally, in medical

malpractice, the burden of evidence shifts after the plaintiff “first establish[es] to the
satisfaction of the court that the absence of the records hinders his ability to establish a
prima facie case.” Valcin, 507 So. 2d at 599–600. Because Universal has not identified
on which claims it seeks to shift the burden, it cannot show how HMA’s alleged failure to
keep records has hindered its ability to prove its case. Indeed, Universal has not even
attempted to do so. Accordingly, the Court will deny Universal’s request for burdenshifting.
B.

Judicial Estoppel

Second, Universal asks that HMA be judicially estopped from asserting positions
inconsistent to those it asserted in previous litigation. Before this action was filed, HMA
brought suit against a different Hyundai Dealer in West Palm Beach, Florida, styled
Hyundai Motor Am. Corp. v. EFN W. Palm Motor Sales, LLC, No. 20-cv-82102 (S.D. Fla.
2020) (“WPB Litigation”). Universal contends that during the WPB Litigation, HMA
admitted on the record that it withheld vehicles from Universal due to the Genesis
Litigation; that HMA has always considered litigation in making allocation decisions; and
that HMA only considered three factors in guiding discretionary allocation. Universal
seeks to bar HMA from arguing positions to the contrary. (Doc. 195 at 21).
The doctrine of judicial estoppel “prevents parties from making a mockery of justice
by inconsistent pleadings . . . and playing fast and loose with the courts.” Blumberg v.

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USAA Cas. Ins. Co., 790 So. 2d 1061, 1066 (Fla. 2001) (quotations omitted). A federal
court sitting in diversity applies the doctrine of judicial estoppel according to the law of the
state where it sits. Searcy v. R.J. Reynolds Tobacco Co., 902 F.3d 1342, 1358 n.7 (11th
Cir. 2018). Under Florida law, a “claim or position successfully maintained in a former
action or judicial proceeding bars a party from making a completely inconsistent claim or
taking a clearly conflicting position in a subsequent action or judicial proceeding, to the
prejudice of the adverse party, where the parties are the same in both actions, subject to
the ‘special interest and policy considerations’ exception to the mutuality of parties
requirement.” Grau v. Provident Life & Acc. Ins. Co., 899 So. 2d 396, 400 (Fla. 4th DCA
2005) (footnote omitted).
Judicial estoppel is inapplicable here because Universal cannot establish that HMA
has taken inconsistent positions between the WPB Litigation and the instant case.
Universal first asserts that during the WPB Litigation, HMA stated “it could withhold
allocation due to litigation to force compliance by dealers,” but is now trying to argue it
never considered litigation in making vehicles allocations. (Doc. 195 at 17). However,
the transcript Universal cites shows HMA’s counsel discussing that HMA had chosen to
withhold allocations from only the defendant dealer, who was alleged to have breached
its contract with HMA by committing warranty fraud. (See Doc. 195-5 at 57:4–59:16 (“We
could have sued for [breach of contract], we didn’t. We chose instead to take a different
tactic, which is, if you are not going to comply with the contract, I am not going to give you
additional vehicles that I can give to a dealer who is complying with the contract.”)).
Clearly, this statement does not show HMA taking the position that it could, at large,
withhold allocation due to litigation.

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Universal further argues that one of HMA’s employees testified that “vehicles were
withheld from Universal due to litigation and furthermore, the vehicles were withheld due
to the litigation where Universal received a favorable verdict.” (Doc. 195 at 18). Again,
however, Universal mischaracterizes the record. The cited trial transcript shows:
[Opposing Counsel]: Another dealer that didn’t get discretionary allocation
was Universal Hyundai, right?
[HMA Employee]: I don’t recall them getting any.
[Opposing Counsel]: That is because they were in litigation with Hyundai,
right?
[HMA Employee]: One of the factors of whether we would or wouldn’t is
definitely whether the dealer is in litigation with our company.
[Opposing Counsel]: And Universal also was not told it was not getting
discretionary allocation, right?
[HMA Employee]: Correct.
[Opposing Counsel]: Universal Hyundai sued Hyundai and got a multimillion
dollar judgment against Hyundai, right?
[HMA Employee]: I don’t know if – I don’t know.
[Opposing Counsel]: Let’s go to the transcript, 113 to 119. “Question: Now,
Universal Hyundai was a dealer that had been in litigation with Hyundai,
correct? Answer: Yes. Question: Did Universal Hyundai actually receive a
money judgment against Hyundai
....
Answer: I don’t ever – I didn’t – I never see like the final outcome, but it was
my understanding that there was some type of financial award, but I don’t
know if it ever really happened or not. I don’t know.” Do you recall that
testimony?
[HMA Employee]: Yes.
(Doc. 195-4 at 9:20–10:24). Contrary to Universal’s insistence, this testimony does not
show that Universal’s judgment in the Genesis Litigation caused HMA to withhold

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allocation from Universal. Instead, HMA’s employee testified only that: (1) Universal did
not receive discretionary allocation; (2) that HMA considers litigation in making
discretionary allocation decisions; and (3) Universal won a money judgment against HMA.
The causal link between these facts is missing. Although it may be reasonable for a jury
to infer that link, this testimony simply does not show the sort of “completely inconsistent
claim” necessary to warrant judicial estoppel. Grau, 899 So. 2d at 400. Just as in the
WPB Litigation, HMA asserts in this case that ongoing litigation with a dealer is a factor
in discretionary allocation.
Finally, Universal argues that HMA should not be permitted to argue it considered
factors in discretionary allocation beyond those mentioned in the WPB Litigation. In
support, Universal states that in the WPB Litigation, HMA adopted and identified three
factors considered in discretionary allocation decisions: “whether the dealer has
participated in Hyundai programs . . . , invested in the brand . . . , and whether the dealer
is involved in litigation with HMA[.]” (Doc. 194-16 at 17). However, this quotation is
incomplete. In the WPB Litigation, HMA stated that its discretionary allocation was guided
by “a number of factors, including, but not limited to” those just listed. (Id. (emphasis
added)). Therefore, although HMA now contends there are at least ten factors which
guide discretionary allocations, that position is simply not inconsistent with its prior
position. Because Universal has not established that HMA has taken any inconsistent
position, judicial estoppel is inappropriate.
C.

Sanctions

Finally, Universal contends that several of HMA’s discovery responses violate
Federal Rule of Civil Procedure 26(g), which provides for sanctions where a party has

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improperly certified that its discovery responses are complete and correct at the time of
disclosure. Fed. R. Civ. P. 26(g)(1)(A), (g)(3). Universal accordingly seeks sanctions
against HMA in the form of a default judgment, pursuant to the Court’s inherent power
and Rule 37(b)(2)(A).
The Court will deny this request because Universal fails to demonstrate HMA’s bad
faith. For sanctions to issue pursuant to the Court’s inherent power or Rule 37, Universal
must establish that HMA’s discovery responses amount to willful or bad faith failure to
comply with a discovery order.

See Holland, 2020 WL 7390723, at *3 (“A default

judgment sanction [under Rule 37] requires a willful or bad faith failure to obey a discovery
order.”); see also Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298,
1306 (11th Cir. 2009) (“The key to unlocking a court’s inherent power is a finding of bad
faith . . . A party demonstrates bad faith by, inter alia, delaying or disrupting the litigation
or hampering enforcement of a court order.” (quotation omitted)).
Universal contends that a default judgment is warranted due to HMA’s “numerous
contradictory responses to written discovery,” failures to timely supplement discovery,
and contradictions between HMA’s discovery responses and testimony by HMA’s
witnesses. (Doc. 195 at 23–24). This purported misconduct falls well short of bad faith.
First, any failure to supplement discovery responses in violation of Rule 26(e) is not
subject to sanction by default judgment absent a court order that HMA has disobeyed
willfully or in bad faith. Holland, 2020 WL 7390723, at *3. Although Universal notes that
the Court did order HMA to supplement discovery, (Doc. 79 at 2), HMA appears to have
complied with that Order, (see generally Doc. 87-1). Universal makes no argument to the
contrary. Nor does Universal argue that HMA has acted in bad faith by practicing fraud

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upon the Court. See Hornady v. Outokumpu Stainless USA, 572 F. Supp. 3d 1162, 1186
(“Bad faith exists when the court finds that a fraud has been practiced upon it, or that the
very temple of justice has been defiled, or where a party or attorney knowingly or
recklessly raises a frivolous argument.” (quotations omitted)). This is also true with
respect to purported contradictions between HMA’s discovery responses and the
testimony of several HMA witnesses. (See Doc. 195 at 24). Even accepting Universal’s
contention that these contradictions exist, Universal has made no argument that HMA
has acted in bad faith or willfully disobeyed an order of this Court. Default judgment is
therefore inappropriate.
IV.

CONCLUSION
For the reasons stated herein, it is ORDERED and ADJUDGED that Plaintiff’s

Amended Motion for Equitable Relief and Sanctions (Doc. 195) is DENIED.
DONE AND ORDERED in Orlando, Florida on September 25, 2024.

Copies furnished to:
Counsel of Record

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