United States District Court, W.D. Virginia, Roanoke Division
VOLVO GROUP NORTH AMERICA, LLC d/b/a VOLVO TRUCKS NORTH AMERICA, et al., Plaintiff,
TRUCK ENTERPRISES, INC., et al., Defendants.
Elizabeth K. Dillon United States District Judge
By order dated April 13, 2016, the court granted in part and denied in part plaintiff Volvo Group North America, LLC’s motion for a preliminary injunction. It now provides the reasons for that decision.
This case arises from the proposed sale of a group of mid-Atlantic commercial-truck dealerships. Defendants Truck Enterprises, Inc., James E. Hartman, Truck Enterprises Roanoke, Inc., Truck Enterprises Lynchburg, Inc., and Truck Enterprises Hagerstown, Inc. (collectively, Dealers) own and operate seven commercial-truck dealerships across three states-Maryland, Virginia, and West Virginia. Four of the dealerships sell both Volvo and Kenworth trucks, and two of them sell both Kenworth and Isuzu trucks. The remaining dealership offers only Kenworth trucks. The dealerships that sell two brands are known as “dualed dealerships” in the commercial-truck business.
Dealers now wish to sell all of the dealerships to Transportation Equipment Company, Inc. (TEC) in a package deal. To that end, Dealers and TEC entered into a stock purchase agreement on December 18, 2015. The agreement does not provide a valuation of any one dealership or of any one dealership’s assets. Rather, it provides only the total purchase price for all of the outstanding shares of the dealerships. The sale is currently scheduled to close on June 1, 2016.
Volvo does not want the deal to go forward. Instead, if the price is right, Volvo desires to exercise its contractual and statutory rights of first refusal and purchase just the Volvo portions of the dualed dealerships. Dealers do not dispute that Volvo has rights of first refusal under the parties’ dealer agreements and Virginia law. Instead, Dealers insist that if Volvo decides to exercise those rights, then under Virginia law, it must stand in the shoes of TEC and buy all of the dealerships-not just the Volvo portions of the dualed dealerships-for at least the total purchase price set forth in the stock purchase agreement.
Volvo disagrees with Dealers’ assessment of Virginia law and therefore filed this suit against Dealers on January 26, 2016. In its verified complaint, Volvo claims that Dealers breached their dealer agreements and violated Virginia law by entering into the stock purchase agreement with TEC. Volvo alleges that the agreement impairs or frustrates its contractual and statutory rights of first refusal because it does not segregate the Volvo portions of the dualed dealerships from the other portions, and because it does not provide a separate valuation of the Volvo portions. Consequently, Volvo asserts, Dealers have placed it “in the untenable position of choosing between: (A) waiving its valuable contractual and statutory rights of refusal . . . and accepting TEC, the proposed buyer, as its Volvo dealer in place of [Dealers]; or (B) exercising the rights of first refusal on [Dealers’] terms whereby Volvo buys not just the Volvo business but also [Dealers’] Kenworth and Isuzu businesses[, ] which Volvo has no contractual or statutory authority to do.” (Compl. ¶ 75, Dkt. No. 1.)
Volvo seeks a declaration of its and Dealers’ rights and obligations under their dealer agreements and Virginia law, including that Volvo “is entitled to know the price that [it] is to pay for [Dealers’] Volvo business and what assets or interests that Volvo is to acquire” (id. ¶ A(4), at 23); that “Volvo has no contractual or statutory right of first refusal over [Dealers’] Kenworth and Isuzu businesses” (id. ¶ A(7), at 23); and that Dealers “cannot require, by contract or statute, that Volvo purchase or otherwise acquire rights to [Dealers’] Kenworth and Isuzu businesses” (id. ¶ A(8), at 23). Volvo also requests “[i]njunctive relief requiring [Dealers] to provide [it] with the terms of the sale that are specific to [their] Volvo business . . ., so [it] may receive proper notice . . . and have sufficiently clear information to determine whether to exercise its right[s] of first refusal.” (Id. ¶ C, at 24.)
Together with its complaint, Volvo filed this motion for a preliminary injunction, pursuant to Federal Rule of Civil Procedure 65. It asks the court to stop Dealers from going through with the proposed sale of the dealerships until the scope of Volvo’s rights of first refusal is determined and to require Dealers to provide Volvo with the terms of the sale that are specific to the Volvo portions of the dualed dealerships. The court held two hearings on the motion. The first occurred on February 2. At the conclusion of that hearing, the court took the motion under advisement, and Volvo and Dealers agreed to extend all contractual and statutory deadlines relating to Volvo’s rights of first refusal and to mediate their dispute concerning the proposed sale of the dealerships. After the mediation proved unsuccessful, the court held another hearing on March 30. Kenworth, which has intervened as a plaintiff, participated in that hearing along with Volvo and Dealers. Kenworth does not object to Dealers’ selling the dealerships to TEC. But Kenworth does object to Dealers’ selling the dealerships to Volvo, as Dealers propose in the alternative.
In accordance with Volvo and Dealers’ stipulation, the periods for Volvo to exercise its contractual and statutory rights of first refusal restarted on March 2. Volvo has 60 days to exercise its contractual right of first refusal, and 45 days to exercise its statutory right of first refusal. Given that these periods were set to expire in the coming days, the court expedited its ruling on Volvo’s motion for a preliminary injunction and entered an order on April 13, granting the motion in part and denying it in part. Specifically, the court granted the motion as to Volvo’s request to suspend the periods for Volvo to exercise its contractual and statutory rights of first refusal and to stay the proposed sale of the dealerships, but denied the motion as to Volvo’s request that Dealers provide the terms of sale that are specific to the Volvo portions of the dualed dealerships.
The court now explains its decision.
A. Preliminary Injunction Standard
“A preliminary injunction is an extraordinary remedy, to be granted only if the moving party clearly establishes entitlement to the relief sought.” Manning v. Hunt, 119 F.3d 254, 263 (4th Cir. 1997) (internal quotation marks and alteration omitted). The moving party must show (1) that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). All four of these requirements must be met for the movant to obtain preliminary injunctive relief. Real Truth About Obama, Inc. v. FEC, 575 F.3d 342, 345-46 (4th Cir. 2009), vacated on other grounds, 559 U.S. 1089 (2010).
Volvo requests both prohibitory and mandatory preliminary injunctive relief. In particular, it asks that Dealers be stopped from selling the dealerships until the scope of Volvo’s and Dealers’ rights and obligations are determined and that Dealers be required to provide Volvo with information regarding the value of just the ...