PMT Machinery Sales Inc v. Yama Seiki USA Inc

Filing 44

ORDER signed by Judge J P Stadtmueller on 11/2/2018: DENYING as moot 41 Plaintiff's Motion to Strike; GRANTING 23 Defendant's Motion for Summary Judgment; and DISMISSING CASE with prejudice. (cc: all counsel) (jm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
PMT MACHINERY SALES, INC.,
Plaintiff,
v.

Case No. 17-CV-1731-JPS

YAMA SEIKI USA, INC.,
Defendant.

1.

INTRODUCTION
Yama Seiki USA, Inc. (“Yama Seiki”), the defendant, is a

manufacturer of machine tools and machining centers, and PMT Machinery
Sales, Inc. (“PMT”), the plaintiff, sells those products in eastern Wisconsin.
PMT filed this action in Milwaukee County Circuit Court alleging that
Yama Seiki violated the Wisconsin Fair Dealership Law (“WFDL”), Wis.
Stat. § 135.01 et seq., when it terminated PMT’s status as its exclusive dealer
in eastern Wisconsin. See (Docket #1-1).
Yama Seiki removed the action to this Court on the basis of the
Court’s diversity jurisdiction under 28 U.S.C. § 1332(a)(1). (Docket #1 at 2).
Yama Seiki subsequently moved for summary judgment, and that motion
is now fully briefed and ripe for adjudication. (Docket #23). For the reasons
explained below, the motion will be granted and this case will be dismissed.
2.

STANDARD OF REVIEW
Federal Rule of Civil Procedure 56 states that the “court shall grant

summary judgment if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(a); see Boss v. Castro, 816 F.3d 910, 916 (7th Cir. 2016).
“Material facts” are those facts which “might affect the outcome of the suit,”
and “summary judgment will not lie if the dispute about a material fact is
‘genuine,’ that is, if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). Thus, to demonstrate a genuine dispute about a material
fact, a party opposing summary judgment “must do more than simply
show that there is some metaphysical doubt as to the material facts.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
Rather, the non-moving party “must set forth specific facts showing that
there is a genuine issue for trial.” Fed. R. Civ. P. 56(e). The Court construes
all facts and reasonable inferences in a light most favorable to the nonmovant. Bridge v. New Holland Logansport, Inc., 815 F.3d 356, 360 (7th Cir.
2016). In assessing the parties’ proposed facts, the Court must not weigh the
evidence or determine witness credibility; the Seventh Circuit instructs that
“we leave those tasks to factfinders.” Berry v. Chicago Transit Auth., 618 F.3d
688, 691 (7th Cir. 2010).
3.

RELEVANT FACTS
Consistent with the standard of review, the following facts are taken

from the evidence when viewed in a light most favorable to PMT.
3.1

Incorporation of PMT

Yama Seiki is a California corporation that manufactures machine
tools and machining centers. PMT is a Wisconsin corporation located in
Franklin, Wisconsin. PMT’s principal, Kenneth Schertz (“Schertz”),
incorporated a company called Precision Automation, Inc. in or around
1997 as an independent machine tool repair and service business. Schertz

Page 2 of 22

changed the corporate name in 2001 to Precision Machine Tool Corporation
(“Precision”) and added machinery sales to its offerings.
The first product line Precision added was Yama Seiki. There was no
written agreement between Precision and Yama Seiki in 2001 to confirm
Precision’s sale of the Yama Seiki line; rather, it was simply a handshake
deal. Precision sold Yama Seiki machines on a profit-for-sale basis, meaning
that Precision would cultivate the customer, quote the machine to the
customer, pay a dealer price to Yama Seiki for the machine, and keep as its
profit the difference between the dealer price and the purchase price
negotiated with the customer. Precision lost the Yama Seiki product line in
2008 when Yama Seiki assigned its Wisconsin sales to a different company,
Progressive Machinery, Inc. (“Progressive”).
In late 2015, Progressive lost the Yama Seiki product line. David
Reesman (“Reesman”), who worked for Progressive, approached Schertz
about forming a company to sell Yama Seiki machines, and Schertz agreed.
In October 2015, Schertz incorporated PMT with a $20,000.00 start-up loan
from Precision; PMT was incorporated separately from Precision so as to
not put Precision at risk in the event selling Yama Seiki machines did not
work out. Reesman became an employee of PMT and dedicated 90% of his
time to the sale of Yama Seiki products.
3.2

Relationship Between PMT and Yama Seiki

Prior to the formation of PMT, Reesman discussed with Clive Wang
(“Wang”), the general manager of Yama Seiki’s Goodway division, the
possibility of a newly-formed PMT selling the Yama Seiki line. Reesman
then teamed up with Schertz to form PMT, and during that time Reesman’s
conversations with Wang continued.

Page 3 of 22

After PMT was formed, Reesman asked Wang to grant an exclusive
dealership to PMT. The parties disagree as to whether Wang verbally
committed to giving PMT exclusive status starting at that time, which was
around October or November 2015; Reesman and Schertz aver that Wang
so promised, but Wang avers that he made no promise of exclusivity prior
to December 2015. See (Docket #39 at 3).1
On December 30, 2015, Wang issued PMT an “exclusive letter of
dealership” which offered an exclusive territory in eastern Wisconsin for
the year 2016 to sell Yama Seiki-Goodway turning centers provided that
PMT satisfied the following terms enumerated in the letter:
1. Meet sales requirements minimum at $1,000,000.00 or
have sold 15 YS-Goodway units.
2. Dealer must not represent another competitor line that
coincides with YS-Goodway machine line.
3. Must stock at least one YS-Goodway machine on dealer’s
showroom floor.
4. Having a marketing plan in promoting YS-Goodway
machines.
5. Provide a weekly sales report to Yama Seiki.
(Docket #24-3).
PMT rejected the offer of exclusivity for Yama Seiki’s Goodway line.
It did not believe it could satisfy the conditions set forth in Yama Seiki’s
letter. Indeed, for the year 2016, PMT did not sell $1,000,000.00 of Yama

In its reply brief, Yama Seiki argues that PMT’s version of this fact is a
“sham” because PMT would not have continued to ask for exclusivity if Yama
Seiki had already promised it. (Docket #40 at 13–14). PMT subsequently filed a
motion to “strike [Yama Seiki’s] ‘sham affidavit’ argument.” (Docket #41). Leaving
aside the questionable propriety of such a motion, the Court need not
substantively address it because Yama Seiki agreed to withdraw its “sham
affidavit argument.” (Docket #42). PMT’s motion to strike will be denied as moot.
1

Page 4 of 22

Seiki products or 15 YS-Goodway units, it did not stock one YS-Goodway
machine on its showroom floor, and it did not develop a written marketing
plan. Despite rejecting the offer of exclusivity for the Goodway line, PMT
continued its sales efforts for both of Yama Seiki’s lines—Goodway and
Awea.
On February 8, 2016, Schertz advised Wang that he thought PMT
“may be in a position to take 2 machines for our stock if it were to help you
and [Yama Seiki] out.” (Docket #28 at 8). As to these machines, and the
prospect of a future agreement with Yama Seiki, Schertz said:
The reward, for PMT, is to come to a dealer agreement with
YSI which includes Goodway, Awea and parts in Wisconsin.
I believe, at this time, I would like to write into our P.O. (or
sub letter of interest) that final payment/transfer of ownership
would be contingent on reaching such agreement. This gets
the machines off your floor and gives us 6 months to reach
agreement. In the event we do not come to agreement, YSI
would take back machines and/or sell from PMT’[s] facility,
loaded on truck, FOB YSI.
(Docket #28 at 8). Two months later, on April 2, Schertz sent an email to
Yama Seiki conveying that PMT had no sales thus far. Id. In a letter attached
to the email, PMT further advised that “[w]e will have a [Yama Seiki]
machine tool order by May 31, 2016 or we will close down PMT sales” and
“[w]e will have an exclusive agreement with [Yama Seiki] by May 31, 2016
or we will close down PMT sales.” Id.
On July 11, 2016, PMT submitted to Yama Seiki an “application” for
exclusive dealership status in eastern Wisconsin for all Yama Seiki
products, including both its Goodway and Awea product lines. Schertz
asked “to meet with president and final decision maker of Yama Seiki, USA
to work out the details” and “[b]eing reasonable people, with a little give

Page 5 of 22

and take, I am confident that we can come to a mutual agreement beneficial
to [Yama Seiki], PMT and, most important to me, THE CUSTOMER.” Id.
Schertz concluded the application by stating that “[i]n the unfortunate, yet
realistic, circumstance that we do not come to an agreement, I feel it best for
me to dissolve PMT Machinery Sales and concentrate on my service
company.” Id.
On July 12, 2016, Wang from Yama Seiki responded:
Ken,
I am not sure if you are aware that you are in “exclusive”
status for the Goodway turning. So now you know who is
treating you guys better and believe in you guys more. We are
“hoping” and “expecting” PMT is doing the same to [Yama
Seiki]-Goodway in return. (by selling more turning centers to
keep this “exclusive” status.)
Id.; (Docket #24-8). This email from Wang was the first time PMT became
aware that Yama Seiki had been treating it as Yama Seiki’s exclusive dealer
in eastern Wisconsin. Schertz testified at his deposition that he believed, at
that point, PMT had an exclusivity agreement with Yama Seiki, the terms
of which
were open-ended. There was no performance quotas, there
was no billing preferences. There was just “I’m exclusive.”
And any other details, “Well, we’ll cross that bridge when it
comes to it.” Basically, I assumed it was just an agreement, the
letter that I wrote, which didn’t really specify anything. I
thought we were going to get together with Edward [Yama
Seiki decision maker] to get some specific terms, which quotas
may have come up. I didn’t have any quotas in mind. The
billing would have come up. We would have worked
something like that out. You know, anything else that would
have come up at the meeting.
Id. at 9; (Docket #24-1 at 35–36).

Page 6 of 22

More than a year went by, and on October 25, 2017, Reesman
emailed Wang questioning whether PMT remained exclusive because PMT
had learned that other sales representatives for Yama Seiki had been
contacting potential customers in eastern Wisconsin. Wang responded:
You are not exclusive distributor in 2017 based on the letter I
provided to you in 2015. In 2015 I provide a letter with certain
requirements to you. See attachments. We hope you will also
agree with the proposed letter to keep your exclusive but it
seems you did not agree to all the requirements in the past.
You know you have to meet those criteria to remain exclusive
distributorship for the year 2016.
1.

Meet sales requirements minimum at or have sold 15
YS-Goodway units.

3.

Must stock at least one YS-Goodway machine ondealer’s showroom floor.

Please understand that we cannot give “exclusive”
unconditionally forever. So here is the answer if you want the
clarification. You know we like to work with you and trust
you so this is the only reason your information is still showing
on our website. [A different dealer] did ask us several times
for the exclusive in entire Wisconsin but we did not agree.
(Docket #28 at 9–10; #24-9).
Reesman resigned from PMT employment on January 20, 2018. After
Reesman’s resignation, PMT engaged the services of Rick Rojek (“Rojek”)
as a sales representative for PMT to sell Yama Seiki products. Rojek works
on a commission basis. As of the time of the parties’ summary judgment
filings, PMT retained the ability to sell Yama Seiki products, albeit on a nonexclusive basis.
3.3.

PMT’s Investment in Yama Seiki Products

To secure a sale of a Yama Seiki product, PMT would obtain a dealer
price from Yama Seiki and then negotiate a purchase price with the

Page 7 of 22

customer. The customer would then place its order directly with Yama
Seiki, and the terms of sale would be all Yama Seiki’s terms, apart from the
purchase price that had been established between PMT and the customer.
PMT never received any polices or procedures from Yama Seiki that
governed PMT’s sale of Yama Seiki products. When PMT made a Yama
Seiki machine sale, PMT would be responsible for installation, training, and
warranty service for the machine. PMT would then subcontract that work
to Precision. PMT’s compensation for its promotion, sale, installation,
training, and warranty work for Yama Seiki machines was the difference
between dealer price and the price ultimately negotiated with the
customer.2
From January 1, 2015 through May 16, 2018, PMT’s total income by
customer from the sale of Yama Seiki products was $235,389.55, which is
about 55% of its overall income by customer for that period. PMT states that
it derived 74% of its gross profits in 2016 and 50% of its gross profits in 2017
from the sale of Yama Seiki products.3 PMT sold a total of twelve Yama
Seiki machine tools. PMT was one of three dealers in the United States to
receive Yama Seiki’s top performer award in 2017. PMT claims that it was
preparing to ramp up its sales efforts as a result of its 2017 performance; for
example, it was in the process of hiring another sales person.
From January 1, 2015 through May 16, 2018, PMT’s total advertising
and promotional expenses were $3,803.14. Of this, $1,200 was spent in
PMT says this compensation model is “similar” to the profit-for-sale
model by which Precision had been paid, but not the same. (Docket #28 at 3, 11–
12). Any distinction appears to be without a difference. See (Docket #24-1 at 15).
2

Exactly how much of PMT’s profits came from the sale of Yama Seiki sales
is not clear from the parties’ evidence; however, any ambiguity or dispute is not
material to the resolution of the instant motion.
3

Page 8 of 22

promotion of Yama Seiki; PMT made two installment payments of $600 for
a trade journal advertisement in collaboration with Yama Seiki.
In 2016, PMT attended a machine tool trade show in Chicago using
exhibitor passes paid for by Yama Seiki. Schertz and Reesman spent time in
the Yama Seiki booth developing leads for the sale of Yama Seiki products
in Wisconsin. PMT also attended the dealer’s dinner that Yama Seiki held
at the trade show as Yama Seiki’s Wisconsin dealer. PMT states that,
consistent with its efforts to ramp up Yama Seiki sales following its 2017
success, it reserved space at the next Wisconsin machine tool show for the
purpose of promoting Yama Seiki machine tools.
PMT paid monthly rent of $500 to Precision for approximately 600
square feet of second-floor space in a building that Precision leased. The
office space has its own address and utilities. PMT did not maintain an
inventory of Yama Seiki machine tools, and it did not maintain parts that
would be necessary for installation or warranty work on Yama Seiki
machines. Instead, Precision maintained an inventory of parts to support
Yama Seiki products through installation and warranty work.
PMT did not maintain its own website; it was listed only as a part of
the Precision website. The PMT sales portion of Precision’s website
indicates that it is a “full service distributor of CNC Machine Tools and
proudly offers a full line of machinery from the following builders: Yama
Seiki and Enshu Japan.” (Docket #28 at 10–11). Yama Seiki listed PMT as its
dealer on Yama Seiki’s website.
4.

ANALYSIS
On these facts, PMT alleges that Yama Seiki has violated PMT’s

rights under the Wisconsin Fair Dealership Law (“WFDL”). (Docket #1-1).
The WFDL governs “dealerships,” which are defined by the statute as
Page 9 of 22

“contract[s] or agreement[s]” entered into between “grantors” and
“dealers.” Wis. Stat. §§ 135.02–135.025. The WFDL imposes certain
obligations on grantors with respect to dealership relationships. For
instance, grantors are prohibited from “terminat[ing], cancel[ling], fail[ing]
to renew or substantially chang[ing] the competitive circumstances of a
dealership agreement without good cause,” id. § 135.03, and, generally
speaking, must provide “at least 90 days’ prior written notice of
termination, cancellation, nonrenewal or substantial change in competitive
circumstances.” Id. § 135.04.
PMT alleges that Yama Seiki made a substantial change to the
competitive circumstances of PMT’s dealership, in violation of Section
135.03, by allowing another dealer to sell Yama Seiki products in PMT’s
exclusive territory. Id. at 6–7. Further, PMT alleges that to the extent Yama
Seiki claims it acted with good cause, Yama Seiki failed to provide notice
and opportunity to cure in violation of Section 135.04. Id. at 7.
Yama Seiki moved for summary judgment based on a single theory:
the relationship between Yama Seiki and PMT is not a “dealership” for the
purposes of the WFDL. If this is true, PMT can raise no legal complaint
about Yama Seiki ending PMT’s status as the exclusive seller of its products
in eastern Wisconsin. See Frieburg Farm Equip., Inc. v. Van Dale, Inc., 978 F.2d
395, 398 (7th Cir. 1992) (business relationships other than dealerships not
protected by the WFDL).
Whether a business relationship constitutes a “dealership” under the
WFDL is “a recurring question for courts in Wisconsin . . . in part because
the definition of ‘dealership’ in the WFDL is ‘both extremely broad and
highly nuanced.’” Benson v. City of Madison, 897 N.W.2d 16, 27 (Wis. 2017)

Page 10 of 22

(citations omitted). There is “rarely an obvious answer” to the question of
whether a business relationship amounts to a dealership. Id.
Under the WFDL, “dealership” is defined as:
a contract or agreement, either express or implied, whether
oral or written, between 2 or more persons, by which a person
is granted the right to sell or distribute goods or services, or
use a trade name, trademark, service mark, logotype,
advertising or other commercial symbol, in which there is a
community of interest in the business of offering, selling or
distributing goods or services at wholesale, retail, by lease,
agreement or otherwise.
Wis. Stat. § 135.02(3). To determine whether this definition is satisfied,
Wisconsin courts typically address the statutory language in three parts: (1)
the existence of a contract or agreement between two or more persons; (2)
by which a person is granted one of the rights specified, namely a right to
sell or distribute goods or services or right to use a trademark or other
commercial symbol; and (3) in which there is the requisite “community of
interest.” Benson, 897 N.W.2d at 27.
Yama Seiki argues that none of these elements are present in this
case. As to the first, Yama Seiki argues that the parties did not have a
meeting of the minds as to the essential terms of their relationship
(primarily the exclusivity component), and therefore they could not have
had a valid agreement. As to the second element, Yama Seiki argues that
PMT did not have a right to sell or distribute Yama Seiki products or to use
Yama Seiki’s trademark in a way that connotes a “dealership.” As to the
third element, Yama Seiki argues that PMT did not have a community of
interest with Yama Seiki because, inter alia, it has not made a significant
financial investment to sell Yama Seiki products, the parties’ relationship
was relatively new, there were essentially no terms or quotas imposed by
Page 11 of 22

Yama Seiki on PMT, and PMT did not engage in cooperative and
coordinated sales efforts with Yama Seiki in a way that demonstrates
interdependence.
The Court agrees with Yama Seiki that the second element of the
“dealership” definition is not met in this case; that is, PMT did not, for
purposes of the WFDL, have the right to “sell or distribute goods or
services” of Yama Seiki or the right to “use a trade name, trademark, service
mark, logotype, advertising or other commercial symbol” of Yama Seiki.
Wis. Stat. § 135.02(3). Because failure to satisfy this element of the
dealership definition is fatal to PMT’s claims, the Court need not wade
unnecessarily into Wisconsin law to decide whether the other two elements
of a dealership are present here.
4.1

Right to Sell or Distribute the Grantor’s Products

PMT argues that it indeed has authority to sell or distribute Yama
Seiki products by soliciting customers and connecting them with Yama
Seiki to place their orders. Yama Seiki counters that PMT is not authorized
to sell Yama Seiki products directly or bind Yama Seiki to a sale. Yama Seiki
instead likens PMT to a manufacturer’s representative who is not entitled
to the protections of the WFDL.
Wisconsin courts have characterized “the right to sell or distribute”
under the WFDL “variously (but not necessarily exhaustively) as the
‘unqualified authorization to transfer the product at the point and moment
of the agreement to sell’ or the ‘authority to commit the grantor to a sale.’”
Benson, 897 N.W.2d at 29 (quoting Foerster, Inc. v. Atlas Metal Parts Co., 313
N.W.2d 60, 64 (Wis. 1981)); see also John Maye Co. v. Nordson Corp., 959 F.2d
1402, 1406 (7th Cir. 1992) (the “most important factor . . . is the dealer’s

Page 12 of 22

ability to transfer the product itself (or title to the product) or commit the
grantor to a transaction at the moment of the agreement to sell.”).
A manufacturer’s representative does not fit within this component
of the definition of a dealer. A manufacturer’s representative is “‘an
independent contractor who solicits orders for a manufacturer’s product
from potential customers and is paid a commission on resulting sales.’” John
Maye Co., 959 F.2d at 1408 (quoting M. Bowen & B. Butler, The Wisconsin Fair
Dealership Law, § 3.13, at 3–18 (1988)). Therefore, courts applying the WFDL
routinely exclude manufacturer’s representatives from its protections. See
John Maye Co., 959 F.2d at 1408 (citing cases).
The discussion of the right to sell in Foerster, Inc. illustrates this
distinction. Foerster, Inc. (“Foerster”) was a Wisconsin sales corporation
that promoted the sale of Atlas Metal Parts Company (“Atlas”) products in
exchange for a commission on the resulting sales. Foerster, Inc., 313 N.W.2d
at 61–62. Foerster did not have authority to transfer Atlas products or to
commit Atlas to a sale, but it was responsible for servicing a customer after
delivery. Id. Atlas furnished Foerster with advertising brochures, business
calling cards, and models of its products. Foerster expended no money for
advertising Atlas’ products, maintained no supply or inventory of Atlas’
products, paid no fee to Atlas, and made no investment in Atlas. Id. During
the relevant timeframe, Foerster also promoted the products for at least four
other companies. Id.
Based on these facts, the Wisconsin Supreme Court held that
Foerster was not entitled to the protections of the WFDL as a “dealer”
because, among other reasons, it did not have the right to sell Atlas’
products. Id. 66–67. The court contrasted Foerster with the kinds of dealers
the law was meant to protect:
Page 13 of 22

In the case of gasoline service stations or fast food
establishments, the right to sell consists of an unqualified
authorization to transfer the product at the point and moment
of the agreement to sell as contrasted to a more limited right
to sell in farm implement dealerships where the right
generally includes authority to commit the grantor to a sale
and differs from the facts in this case, as here there is no
authority to commit the grantor to a sale.
Id. at 64. In other words, the court acknowledged that a broad range of
entities may be considered dealers under the law (from gas stations to farm
implement sellers) and different types of dealers have varying degrees of
authority in terms of consummating a sale (immediately transferring title
versus binding the grantor to sale terms that the grantor would then
effectuate). But at minimum, in order to qualify for protection under the
WFDL, an alleged dealer itself must have authority to commit the grantor
to a sale.
The Seventh Circuit has since applied this rule from Foerster to cases
indistinguishable in all relevant respects from this case at bar. In John Maye
Co., for example, the plaintiff, John Maye Company (“Maye”) was a
Wisconsin corporation that sold packaging machinery, and the defendant,
Nordson Corporation (“Nordson”), was an Ohio corporation that
manufactured packaging machinery. 959 F.2d at 1404. The two companies
entered into a sales representation agreement which designated Maye as
Nordson’s “representative” and required it to “actively promote the sale
and acceptance” of Nordson products in its assigned, non-exclusive
territory. Id. Maye would transmit customer orders or inquiries to Nordson
for approval, and Nordson would determine how much to charge for its
products. Id. at 1404–05. Nordson had “sole discretion” to accept or reject
any order. Id. Once a contract was formed, Nordson shipped products
Page 14 of 22

directly to the customer, transferring title from itself to the buyer. Id. Maye
was compensated by commission on each sale it helped procure. Id.
Maye did not pay a fee to Nordson under their sales agreement and
did not pay to advertise Nordson products. Instead, Nordson supplied
Maye with literature, samples, and other material necessary for promoting
Nordson products. Id. Though not required to do so, Maye maintained an
inventory of spare parts for Nordson machines. Id. After a sale, Maye
performed both warranty and non-warranty work on Nordson machines,
doing the warranty work for free but at times charging for non-warranty
work. Id. It also trained customers in the upkeep of Nordson equipment. Id.
Three years after entering into the sales representation agreement
with Maye, Nordson terminated it in favor of using a direct sales force in
Maye’s sales territory. Id. Upon receiving notice of the impending
termination, Maye filed a lawsuit alleging a claim under the WFDL and
moved the court for a preliminary injunction. Id. The district court denied
Maye’s motion for a preliminary injunction, finding he did not have a
reasonable likelihood of success on the merits of his claim because he was
not a “dealer” for purposes of the WFDL. Id.
The Seventh Circuit agreed. It explained that the “single most
important factor” in determining whether an alleged dealer has a “right to
sell” under the WFDL is “the dealer’s ability to transfer the product itself
(or title to the product) or commit the grantor to a transaction at the moment
of the agreement to sell.” Id. at 1406. Maye had no such authority. Maye
urged the court to consider the totality of the circumstances, pointing out
that it occasionally modified prices, assumed credit risk for lesser sales,
installed and serviced equipment after delivery, and maintained an
inventory of spare parts. Id. The court rejected this argument, finding that
Page 15 of 22

a right to sell under the WFDL cannot exist if the alleged dealer is not
authorized to commit the grantor to a sale. Id. at 1407–08. Although Maye
had “a great deal of contact with customers in soliciting business for
Nordson, submitted orders for Nordson’s approval, and did warranty
work on Nordson products free of charge,” the court explained, “there is
no evidence that it had the ability to bind Nordson to a sale at the moment
a customer agreed to buy. Absent this crucial authority, Maye does not have
the right to sell under the WFDL.” Id. at 1408.
PMT’s relationship with Yama Seiki is similar to Maye’s relationship
with Nordson and Foerster’s relationship with Atlas; that is, PMT did not
directly sell Yama Seiki machines to end user customers, and PMT had no
authority to commit Yama Seiki to a sale. All customer orders were placed
with Yama Seiki directly, and Yama Seiki billed the customer directly.
Yama Seiki also shipped the product and transferred title of the machine to
the customer according to Yama Seiki’s terms of sale. PMT did not maintain
an inventory from which it sold Yama Seiki products.
Like Maye, PMT asks this court to consider the totality of
circumstances surrounding its relationship with Yama Seiki to find that it
is a dealer for purposes of the WFDL. PMT points out that it contributed
$1,000 toward a joint advertisement with Yama Seiki, used the Yama Seiki
logo on its website, received a weekly confidential pricing list from Yama
Seiki, and performed training, installation, and warranty work on Yama
Seiki products. Although these things demonstrate at least a limited
investment in the Yama Seiki line, they do not change the fact that PMT did
not have authority to sell Yama Seiki products directly. Id. at 1408 (“That
Maye did more than required by the contract is insufficient to demonstrate
a modification and a right to sell, as ‘the performance of additional servicePage 16 of 22

type functions by a manufacturer’s representative does not suffice to bring
one which neither sells nor distributes goods within the meaning of the
WFDL.’”) (quoting E.A. Dickinson & Assocs. v. Simpson Elec. Co., 509 F. Supp.
1241, 1245 (E.D. Wis. 1981)).
PMT makes much of the fact that it negotiated sales prices with
customers and Yama Seiki never changed a price that PMT negotiated. But
PMT does not claim to have any authority over the dealer price, meaning
that Yama Seiki had the sole authority to determine how much it would
receive for the sale of a given product. The price PMT negotiated above
Yama Seiki’s dealer price affected PMT’s compensation on the sale, but it
did not affect Yama Seiki’s income.
PMT also points out that when a potential customer did not want to
be subject to the terms of Yama Seiki’s sales contract, PMT’s sister company
would purchase the product from Yama Seiki at dealer price and resell it to
the customer. But Precision is not a plaintiff in this case. Further, leaving to
the side the fact that it was Precision, not PMT, who bore the risk in those
instances, PMT does not indicate how often this happened, and the Court
is left with the impression that it was the exception and not the rule.
Precision’s infrequent practice of taking on the risk of purchasing a machine
for immediate resale to an identified customer does not change the overall
nature of the relationship between PMT and Yama Seiki. Cf. Wilburn v. Jack
Cartwright, Inc., 719 F.2d 262, 265 (7th Cir. 1983) (“Where a dealer purchases
goods for resale, he makes the sort of substantial investment contemplated
by the WFDL; however, where a sales representative merely solicits orders
that are subject to the manufacturer’s approval, no such investment has
occurred.”).

Page 17 of 22

In sum, the Court agrees with Yama Seiki that because PMT was not
authorized to transfer products itself or commit Yama Seiki to a sale, it did
not have a “right to sell or distribute” Yama Seiki products for purposes of
the WFDL.
4.2

Right to Use the Grantor’s Commercial Symbol

PMT also claims to be a dealer because it is authorized to use Yama
Seiki’s trademark and trade name.4 Dealers must make “prominent use of
a grantor’s trademark to qualify under the WFDL, such use that the public
associates the dealer with the trademark.” John Maye Co., 959 F.2d at 1409.
The Wisconsin Supreme Court’s decision in Foerster again provides
a helpful starting point. In that case, Atlas provided Foerster with business
calling cards and advertising brochures. 313 N.W.2d at 66. Foerster used
the cards and brochures only to inform potential customers of its status as
Atlas’ representative. Id. Atlas did not authorize Foerster to use its
trademark in any other way and Foerster did not independently advertise
Atlas’ products. Id. Based on these facts, the court determined that Foerster
had no right to use Atlas’ trademark. In so finding, the court distinguished
Foerster’s “extremely limited use” of Atlas’ commercial symbols from a
dealer’s use of a grantor’s commercial symbol in a typical dealership
relationship:

PMT’s discussion of its authorization to use Yama Seiki’s commercial
symbols is essentially limited to one footnote. (Docket #27 at 1). For this reason
alone, the Court could find that PMT has not met its burden to stave off summary
judgment on this element of its claim. Springer v. Durflinger, 518 F.3d 479, 484 (7th
Cir. 2008) (“[S]ummary judgment is the put up or shut up moment in a lawsuit,
when a party must show what evidence it has that would convince a trier of fact
to accept its version of the events.”) (quotation and internal marks omitted); S.E.C.
v. Wealth Mgmt. LLC, 628 F.3d 323, 335 n.8 (7th Cir. 2010) (underdeveloped
arguments are waived).
4

Page 18 of 22

In the situation of the service station, fast food franchise,
machinery distribution or clothing retailer, the trademark of
the grantor or of the dealership is often prominently
displayed for several purposes, including as an implicit
guarantee of a certain quality of product and service,
frequently supported by the grantor’s national or statewide
advertising. While the product may be that of the grantor, the
dealer often uses the trademark to imply that his
establishment furnishes the type of quality service associated
with the grantor.
In contrast, Foerster, Inc., used the Atlas logo on business
cards only for the purpose of informing potential clients of his
status without any notation as to the nature of the
relationship. The fact that he was not allowed to adopt the
trademark or symbol as his own is demonstrated by the fact
that the card Atlas supplied to Foerster, Inc., identified
Foerster in bold type in the center of the card with Foerster's
phone number and at the bottom left hand corner in smaller
type identified Atlas with a separate phone number.
Foerster, Inc., 313 N.W.2d at 66. More than the mere use of a calling card
identifying a manufacturer’s representative is required for a finding that a
representative is a dealer. Id. at 67.
The John Maye Co. court further expounded on the difference
between de minimis use of a grantor’s trademark and prominent use that
qualifies the dealer for protection under the WFDL. Prominent use
includes, for example, owners of a Walgreen’s drugstore paying for
advertising using the Walgreen’s trademark, paying for a large Walgreen’s
sign in the front of its store, and paying for large Walgreen’s signs and
labels used within the store. John Maye Co., 959 F.2d at 1408–09 (citing Kealey
Pharmacy & Home Care Serv. v. Walgreen Co., 607 F. Supp. 155, 165-66 (W.D.
Wis. 1984), aff'd in part and vacated in part 761 F.2d 345 (7th Cir. 1985)). This

Page 19 of 22

sort of prominent use of a grantor’s trademark causes the public to associate
the dealer with the trademark. John Maye Co., 959 F.2d at 1409.
Conversely, a dealer’s minor investment in a grantor’s trademark “is
unlikely to place the grantor in such a superior bargaining position that it
could extract concessions from an unwilling dealer, and so the dealer does
not need the protection of the WFDL.” Id. An example of non-qualifying, de
minimis use of a grantor’s trademark includes using business cards and
pamphlets supplied by the grantor and bearing the grantor’s trademark,
but “not prominently display[ing] the logo as a[n] implicit guarantee of
quality” and “not spend[ing] money on advertising.” Moodie v. Sch. Book
Fairs, Inc., 889 F.2d 739, 743 (7th Cir. 1989); see also Van Groll v. Land O'Lakes,
Inc., 310 F.3d 566, 570 (7th Cir. 2002) (plaintiff found not to be a dealer where
grantor paid the cost of putting its logo on plaintiff’s truck and provided
plaintiff with a uniform bearing grantor’s logo, which plaintiff was required
to wear); Rakowski Distrib., Inc. v. Marigold Foods, Inc., 193 F.3d 504, 507 (7th
Cir. 1999) (plaintiff found not to be a dealer where he had the grantor’s logo
on his truck, for which he paid part of the installation cost, and handed out
the grantor’s business cards); Wilburn, 719 F.2d at 265 (plaintiff found not
to be a dealer where he ran only one advertisement for grantor’s goods and
placed a sticker with his name and address on grantor’s catalogs).
Simply put, defining “dealership” in terms of trademark use “is
meant to protect against situations in which a dealer spends money
advertising for or promoting a company, an investment that is lost when
the company terminates the relationship.” Van Groll, 310 F.3d at 570.
PMT’s use of Yama Seiki’s trade name and logo does not rise to this
level. Yama Seiki provided PMT with machine promotional brochures and
allowed PMT to use the Yama Seiki logo on the PMT page of the Precision
Page 20 of 22

website (where it also displayed the Enshu logo). PMT did contribute $1,200
toward one joint advertisement with Yama Seiki in a trade journal, but this
appears to be the only financial expenditure PMT made on advertising for
Yama Seiki. It is also a very small amount in comparison to the value of the
sales that were made or contemplated. PMT also attended a machine tool
trade show using Yama Seiki exhibitor passes, but there is no evidence that
PMT linked itself in any significant way to Yama Seiki at the trade show
beyond spending time in the booth that Yama Seiki maintained. Under the
controlling precedent described above, this use of Yama Seiki’s trade name
and logo does not satisfy the requirements of the WFDL.
5.

CONCLUSION
The single issue presented to the Court by Yama Seiki’s motion for

summary judgment is whether PMT qualifies as a “dealer” for purposes of
claiming protections under the WFDL. PMT has not raised a triable issue as
to whether it has either a right to sell or distribute Yama Seiki goods or a
right to use Yama Seiki’s commercial symbol in a manner contemplated by
the WFDL. PMT is therefore not a dealer under the WFDL and its claims
arising under that law must fail. Yama Seiki’s motion will be granted, and
this case will be dismissed.
Accordingly,
IT IS ORDERED that PMT Machinery Sales, Inc.’s motion to strike
(Docket #41) be and the same is hereby DENIED as moot;
IT IS FURTHER ORDERED that Yama Seiki USA, Inc.’s motion for
summary judgment (Docket #23) be and the same is hereby GRANTED;
and
IT IS FURTHER ORDERED that this action be and the same is
hereby DISMISSED with prejudice.
Page 21 of 22

The Clerk of the Court is directed to enter judgment accordingly.
Dated at Milwaukee, Wisconsin, this 2nd day of November, 2018.
BY THE COURT:

_____________________________
J. P. Stadtmueller
U.S. District Judge

Page 22 of 22