United States Court of Appeals For the First Circuit

No. 23-1801

COLONY PLACE SOUTH, INC., d/b/a Volvo Cars Plymouth, and 25 FALMOUTH ROAD, INC., d/b/a Volvo Cars Cape Cod,

Plaintiffs, Appellants,

v.

VOLVO CAR USA, LLC; FIDELITY WARRANTY SERVICES, INC.; and VOLVO CAR FINANCIAL SERVICES U.S., LLC,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. George A. O'Toole, Jr., U.S. District Judge]

Before

Gelpí, Montecalvo, and Rikelman, Circuit Judges.

Jason T. Allen, with whom William Kirby Bissell and Bass Sox Mercer were on brief, for appellants.

Michael Rayfield, with whom Stephen Hansen and Shook, Hardy & Bacon were on brief, for appellees.

November 21, 2024 MONTECALVO, Circuit Judge. Plaintiffs-appellants Colony

Place South, Inc. and 25 Falmouth Road, Inc. (the "dealers") are

two Massachusetts-based Volvo dealers. They initiated this suit

against defendants-appellees Volvo Car USA, LLC ("Volvo USA");

Volvo Car Financial Services U.S., LLC ("Volvo Financial"); and

Fidelity Warranty Services, Inc. ("Fidelity") for allegedly

violating various provisions of Massachusetts General Laws Chapter

93B ("Chapter 93B"). The alleged violations relate to

Volvo-branded Prepaid Maintenance Program contracts ("PPMs") -- a

financial product allowing customers to pay up front at a

discounted rate for future, routine maintenance services like oil

changes at Volvo dealerships -- that Fidelity administers and

issues to Volvo dealers, who in turn sell the PPM contracts to

their customers. The parties cross-moved for summary judgment.

After hearing argument on the cross-motions, the district court

granted the defendants-appellees' motion and denied the

plaintiffs-appellants' motion, concluding that entities like

Fidelity are not regulated by Chapter 93B's relevant provisions.

The dealers appeal that decision. We affirm, for a different

reason: the dealers' sale and service of the Volvo PPM are not

franchise obligations under Chapter 93B.

- 2 - I. Background

A. Factual Background

1. The Parties

Defendant-appellee Volvo USA distributes and oversees

the sale of Volvo cars in the United States through franchise

agreements with dealerships. Volvo USA's franchise agreements set

forth standard terms that are the same for both dealers; the

dealers contend that these standard terms are uniform for Volvo

dealers throughout the United States.

Volvo USA's indirect corporate parent, Volvo Car

Corporation, is also the direct corporate parent of

defendant-appellee Volvo Financial. Volvo Financial offers

various finance and insurance products to Volvo dealers.

Defendant-appellee Fidelity, which is not a corporate

affiliate of Volvo USA or Volvo Financial, develops, offers, and

administers automotive financing and insurance products.1 Fidelity

sells its financing and insurance products through franchise

dealers, who operate as middlemen; it does not sell any of these

products directly to consumers. To design and sell such products,

Fidelity partners with many companies, including Volvo, Kia,

1 Fidelity is a wholly owned subsidiary of JM Family Enterprises, Inc., which is a corporate affiliate of Jim Moran & Associates, Inc. ("JM&A"). In this litigation, the parties use the names "Fidelity" and "JM&A" interchangeably. For the sake of consistency, we will refer to both entities as "Fidelity."

- 3 - Toyota, Polestar, and J.D. Power. Some of Fidelity's products are

sold to customers "branded" with the name of a vehicle manufacturer

(e.g., Volvo), which imparts upon customers the goodwill and value

in the brand name. Fidelity also sells non-branded products --

that is, products with Fidelity's name.

As noted, the dealers are two Massachusetts-based Volvo

dealerships that sell Volvos and Volvo products.

2. The Parties' Contractual Relationships

Several contracts govern the parties' various

relationships. Volvo USA and each of the dealers are parties to

identical Volvo Retailer Agreements. The Retailer Agreements set

forth the basic terms of the Volvo franchise and the dealers'

various obligations to customers and to Volvo USA. The Retailer

Agreements contain no express terms that reference the Volvo PPM.

Volvo Financial and Fidelity are parties to a Master

Services Agreement that governs Fidelity's development and

administration of several financing and insurance products,

including the Volvo PPM, which Volvo dealerships may sell to their

customers. Under the Master Services Agreement's terms, Fidelity

must offer Volvo dealers the option to enter into "Administrative

Agreements" which allow dealers to sell their customers various

Fidelity-designed financial product contracts. These products

include both Volvo-branded and non-branded PPMs, but also other

contracts such as "Volvo Service," "Volvo Ding Shield," and "Theft

- 4 - Deterrence." When a dealer sells a product under the

Administrative Agreement, Fidelity pays Volvo Financial certain

referral and incentive fees.

The dealers together executed an Administrative

Agreement with Fidelity. Under its terms, Fidelity agrees to

administer and offer to dealers its suite of financial and

insurance products, including the Volvo PPM, that dealers in turn

may sell to their customers. In exchange, the dealers pay a fee

to Fidelity for each contract sold, according to a pre-set fee

schedule. The Administrative Agreement contains an integration

clause providing that it comprises "the full and entire

understanding and agreement" between Fidelity and the dealers and

does not incorporate the Retailer Agreements or the Master Services

Agreement by reference. The initial term of the Administrative

Agreement was for one year, beginning on June 1, 2018. After that

term, the agreement was terminable at any time by any party with

thirty days' written notice. No party has exercised their right

to terminate the agreement.

3. The Volvo PPM

One such financial product that Fidelity offers is the

Volvo-branded PPM, which allows consumers to pre-pay for certain

car maintenance services. Generally, the dealers provide repair

and maintenance services that fall into two buckets. The first

bucket concerns services related to the manufacturing and

- 5 - essential functioning of a car, such as repairing a malfunctioning

engine, differential, or transfer case. The second bucket

comprises more routine and periodic maintenance services, such as

oil changes, tire rotations, and fluid adjustments. For new

Volvos, a three-year, standard-issue warranty covers the cost of

services that fall in either bucket. After the three-year warranty

period expires, a consumer can extend coverage for services under

the first bucket with a service contract. To extend coverage for

services in the second bucket, a consumer can buy a PPM.

On the consumer-facing side, the Volvo PPM allows

consumers to "lock in" discount prepaid rates for bundles of

anticipated routine maintenance tasks like oil changes and fluid

replacements in the post-warranty period. This means that even

after the initial three-year warranty expires, consumers who

purchase a Volvo PPM contract can take their Volvo to their Volvo

dealer for routine maintenance services that are covered under

their given PPM contract for no additional cost. The dealer

selling the PPM contract has complete control over the PPM contract

sale price, although Fidelity provides dealers recommended sale

prices to charge.

On the dealer-facing side, the Volvo PPM requires

Fidelity to reimburse the dealers a portion of their parts and

labor costs incurred to service PPM contracts according to pre-set

"Maintenance Services Reimbursement Tiers." Each "tier"

- 6 - effectively supplies a menu of reimbursement amounts for a given

bundle of PPM services. For example, as of August 2017, "Tier 36"

entitled dealers to $105 in reimbursements for changing a set of

wiper blades and $253 for changing front brake pads; "Tier 38"

entitled dealers to $108 and $271 in reimbursements for those

respective services; and "Tier 42," $120 and $343, respectively.

The higher the tier, the higher the reimbursement amounts to

dealers -- but also higher the fee that dealers must pay Fidelity

for each contract sold. Dealers choose the reimbursement tiers

they think are best tailored to their business needs and costs

when they sign the Administrative Agreement, although they can

also change their tiers later if needed.

Volvo USA advertises that the Volvo PPM will be "honored

at any authorized Volvo dealership." The amount that Fidelity

reimburses a PPM-servicing dealer depends, however, on the

reimbursement tier selected by the dealer that sold a given PPM

contract, not the reimbursement tier selected by the dealer

servicing that PPM contract. This can result in a dealer being

reimbursed at a lower rate than provided for in the dealer's

contract with Fidelity. For example, if a customer buys a Volvo

PPM contract from Dealer A, who is at Tier 39, then redeems that

same PPM contract with Dealer B, who is at Tier 41, Fidelity

reimburses Dealer B at Tier 39 rates even though Dealer B prices

and sells its own Volvo PPM contracts at higher prices based on

- 7 - its more profitable Tier 41 reimbursement rates. A similar problem

arises if a customer takes a Volvo PPM contract to one of the

nineteen Volvo dealers, nationwide, who do not offer the Volvo

PPM.

B. Procedural Background

In the operative complaint, the dealers assert six

claims under various provisions of Chapter 93B, commonly known as

the "Dealers' Bill of Rights." See Cadillac/Oldsmobile/Nissan

Ctr., Inc. v. Gen. Motors Corp.,

(1st Cir. 2004);

Mass. State Auto. Dealers Ass'n, Inc. v. Tesla Motors MA, Inc.,

(Mass. 2014). Altogether, the claims allege

that the defendants-appellees are unlawfully underpaying the

dealers for the parts and labor they expend to service the Volvo

PPM.

The parties cross-moved for summary judgment on Counts

I, II, III, V, and VI, which assert violations of Chapter 93B

Sections 9(b)(1), 9(b)(2)(vii), and 4(c)(12).2 After oral

argument, the district court issued a text order granting the

defendants-appellees' motion and denying the dealers' motion.

This appeal followed.

Count IV alleges a violation of Section 4(c)(9). 2 Only defendants-appellees moved, successfully, for summary judgment on this claim, and the dealers do not raise it on appeal. Accordingly, we do not address it here.

- 8 - II. Standard of Review

We review a district court's grant or denial of summary

judgment de novo. Mullane v. United States Dep't of Just.,

, 130 (1st Cir. 2024) (citing Carrozza v. CVS Pharmacy,

Inc.,

, 56 (1st Cir. 2021)). This remains true even when

considering cross-motions for summary judgment. Stephanie C. v.

Blue Cross Blue Shield of Mass. HMO Blue, Inc.,

(1st Cir. 2017) (citing Blackie v. Maine,

(1st Cir.

1996)). Summary judgment is appropriate "when the record reflects

no genuine issue as to any material fact and indicates that the

moving party is entitled to judgment as a matter of law." Penate

v. Sullivan,

, 17 (1st Cir. 2023) (quoting Morelli v.

Webster,

(1st Cir. 2009)).

"[I]n appraising summary judgments, as in other matters,

a court of appeals is not wedded to the district court's reasoning.

Rather, '[w]e are free, on appeal, to affirm a judgment on any

independently sufficient ground.'" Garside v. Osco Drug, Inc.,

(1st Cir. 1990) (second alteration in original)

(quoting Polyplastics, Inc. v. Transconex, Inc.,

(1st Cir. 1987)).

III. Discussion

The dealers raise two main arguments on appeal. First,

they challenge the level of detail in the district court's order

resolving the cross-motions for summary judgment. Second, they

- 9 - challenge the direct merits of the district court's ruling. We

address each in turn.

A. Sufficiency of District Court's Order

The dealers first contend that the district court erred

by disposing of the parties' cross-motions for summary judgment

too summarily. We disagree.

The district court did not issue a separate written

opinion setting forth its full analysis of the parties' motions

and arguments. Rather, it resolved them with the following

three-sentence text order entered into the docket:

After hearing and upon consideration of the parties' respective submissions, the defendants' motion for summary judgment is GRANTED as to all counts asserted in the plaintiffs' amended complaint, substantially for the reasons advanced by the defendants. The plaintiffs' cross-motion for summary judgment on counts I, II, III, V, and VI is correspondingly DENIED. The parties involved in making available to Volvo owners post-warranty maintenance and repair financing cannot plausibly be understood to be "manufacturers" or "distributors" of motor vehicles as those terms are used in Chapter 93B of the Massachusetts General Laws.

The dealers argue that this "deficient" discussion fails

to properly identify the grounds on which the district court

reached its decision. We disagree. The district court's order

satisfies the minimal requirements set forth by the Federal Rules

of Civil Procedure. Under Rule 56, a district court is simply

required to "state on the record the reasons for granting or

- 10 - denying the [summary judgment] motion." Fed. R. Civ. P. 56(a).

The first and last sentences of the order do just that. And while

the dealers also argue that the order fails to reconcile the

competing factual and legal arguments the parties raised, the

district court was not required to do so. See Fed. R. Civ. P.

52(a)(3) ("The court is not required to state findings or

conclusions when ruling on a motion under Rule . . . 56 . . . .");

see also Grossman v. Berman,

(1st Cir. 2001) ("[A]

trial court, on a motion for summary judgment, has no absolute

obligation either to make specific findings of fact or to elaborate

upon its view of the controlling legal principles.").

Even the dealers concede that "the Order on its face is

not necessarily deficient" and that it "meet[s] the letter of the

Federal Rules . . . ." That is enough.3 Accordingly, we will not

remand or reverse based on the brevity of the district court's

order.

3 While text orders are not prohibited, we nonetheless encourage district courts to elaborate more fully the reasons for ruling upon a dispositive motion, even if in brief form. See United States v. Zhong H. Chen,

(1st Cir. 2016) ("[D]istrict courts 'should take reasonable steps to ensure that the parties and the appellate courts will be able to glimpse the foundation on which their rulings rest,' [since] in some cases, 'such statements are a necessary precondition to intelligent appellate review.'" (quoting Grossman,

)).

- 11 - B. Chapter 93B

We now turn to the core issue of the case: whether

defendants-appellees violate Chapter 93B because the reimbursement

rates that Fidelity pays the dealers for servicing the Volvo PPM

are below what the statute requires.

Chapter 93B's relevant provision provides:

A manufacturer or distributor shall within a reasonable time fulfill its obligations under all express warranty agreements made by it with respect to a product manufactured, distributed or sold by it and shall adequately and fairly compensate any motor vehicle dealer who, under its franchise obligations, furnishes labor, parts and materials under the warranty or maintenance plan, extended warranty, certified preowned warranty or a service contract, issued by the manufacturer or distributor or its common entity, unless issued by a common entity that is not a manufacturer . . . .

Mass. Gen. Laws ch. 93B, § 9(b)(1).4 The statute benchmarks "fair

and adequate compensation" to retail rates and prices that dealers

customarily charge. Id. §§ 9(b)(1), (2)(i)-(ii).

4 The dealers also assert claims under two other provisions. Those provide in relevant part:

A manufacturer or distributor shall not implement or continue a policy, procedure or program to any of its dealers in the commonwealth for compensation which is inconsistent with this subsection.

Mass Gen. Laws ch. 93B § 9(b)(2)(vii).

- 12 - As a threshold matter, we must decide whether Chapter

93B regulates the Volvo PPM at all. By its express language,

Chapter 93B guarantees dealers "adequate[] and fair[]"

compensation for "labor, parts, and materials" furnished only if

dealers are required to do so under their "franchise obligations."

Id. § 9(b)(1). We thus examine whether the dealers sell and

service the Volvo PPM under their "franchise obligations." For

the following reasons, we conclude that they do not, and thus

Chapter 93B does not require Fidelity to reimburse dealers under

the Volvo PPM at the rates set by statute.

1. Definition of "Franchise Obligation"

Chapter 93B defines "franchise" as:

[A]n oral or written arrangement for a definite or indefinite period in which a manufacturer or distributor grants to a motor vehicle dealer a license to use a trade name,

It shall be deemed a violation of [Chapter 93B] for a manufacturer, distributor or franchisor representative . . . to act to accomplish, either directly or indirectly through any parent company, subsidiary, or agent, what would otherwise be prohibited under this chapter on the part of the manufacturer or distributor.

Id. § 4(c)(12). The dealers argue that both provisions prohibit Volvo USA from skirting around Section 9(b)(1) via an "attenuated arrangement" to administer the Volvo PPM through Volvo Financial and Fidelity. However, as we discuss below, we consider the gating question of whether selling and servicing the Volvo PPM is a franchise obligation at all, regardless of who administers it. Because we conclude no, we do not address the dealers' arguments asserted under these provisions.

- 13 - service mark, or related characteristic, and in which there is a community of interest in the marketing of new motor vehicles or services related thereto at wholesale, retail, leasing, or otherwise.

Id. § 1. Chapter 93B does not define "obligation." The parties

do not provide any authority interpreting the meaning of

"obligation" as used in Section 9(b)(1), nor can we find any. And

so, we look to the plain meaning of "obligation": "[a] legal or

moral duty to do or not do something." Obligation, Black's Law

Dictionary (12th ed. 2024). Putting the two definitions together,

"franchise obligations" therefore refers to duties to do or not do

certain things under an "arrangement" to market new Volvos or

services related to them.

We thus turn to the Retailer Agreement between the

dealers and Volvo USA to determine what franchise obligations, if

any, the dealers carry with respect to the Volvo PPM. The dealers

contend that it is a franchise obligation to both sell and service

the Volvo PPM. We disagree on both counts.

2. Selling the Volvo PPM

The Retailer Agreement requires dealers to sell "Volvo

Accessories," among other things. The dealers contend that "Volvo

Accessory" is a term that encompasses the Volvo PPM and that they

are therefore bound by the Retailer Agreement to sell them. We

disagree.

- 14 - First, the Retailer Agreement defines Volvo Accessory as

"[a]n accessory supplied by [Volvo USA] or by a Volvo Affiliate."

This itself is not a model of clarity, but the term's use in

context is instructive. "Volvo Accessory" and "accessory" appear

in provisions that:

• Require dealers to sell and "maintain sufficient

inventory of . . . Volvo Accessories to meet customer

demand and your sales objectives" (emphasis added);

• Prohibit dealers from "sell[ing] parts (including

software) or accessories that infringe [Volvo USA's]

intellectual property rights" (emphasis added); and

• Require Volvo USA to "invoice [dealers] for the full

price of the following Volvo Products on the following

date: . . . for each Genuine Volvo Part or Volvo

Accessory ordered by you, the date when it is shipped

from our distribution center" (emphasis added).

From this context, we cannot reasonably conclude that "Volvo

Accessory" includes something like the Volvo PPM -- a financial

contract that is intangible, not quantified with respect to an

inventory, and incapable of possessing attributes like a ship date

from a distribution center. This reading of "accessory" also

accords with its plain meaning: "an object or device that is not

essential in itself but adds to the beauty, convenience, or

- 15 - effectiveness of something else." Accessory, Merriam-Webster's

Collegiate Dictionary (11th ed. 2003) (emphases added).

Second, neither party disputes that at least nineteen

Volvo dealers, out of 281 total authorized Volvo dealerships

nationwide, do not sell the Volvo PPM. They do not do so despite

the Retailer Agreement incorporating "standard provisions" written

by Volvo USA which the dealers contend are identical for all Volvo

dealers nationwide. It then follows that these nineteen dealers

either are in breach of their franchise obligations under the

Retailer Agreement, or the Retailer Agreement does not obligate

dealers to sell the Volvo PPM. Neither side asserts, or offers

any evidence supporting, the first contention.

Third, the Volvo PPM is far from the only finance and

insurance product listed in the Administrative Agreement between

the dealers and Fidelity. And the dealers' designated corporate

representative, Joseph Laham, testified at deposition that it is

within the dealers' discretion whether to sell these other, non-PPM

finance and insurance products offered by Fidelity and, in turn,

that dealers affirmatively choose not to sell certain such

products. Yet the dealers fail to explain how these non-PPM

products differ meaningfully from the Volvo PPM such that one is

a Volvo Accessory, but the others are not. In other words, the

dealers impliedly concede that they have discretion to sell an

- 16 - entire category of finance and insurance products -- a category

that includes the Volvo PPM.

The dealers also make a more general argument that Volvo

USA and Volvo Financial consistently pressure dealers to sell the

Volvo PPM, essentially rendering the sale of the Volvo PPM

obligatory. In support, they point to (1) Volvo USA's

advertisements which categorically state, without firm contractual

basis, that "Prepaid Maintenance will be honored at any authorized

Volvo dealership"; (2) a provision in the Master Services Agreement

between Fidelity and Volvo Financial that requires Fidelity to

notify Volvo Financial of the names of any dealers who decline to

sell Volvo-branded contracts, after which Volvo Financial may

contact those dealers to "discuss" that decision; and (3) mandatory

monthly meetings between Volvo USA and Volvo Financial managers

and Volvo dealers, including the dealers here, where they review

and discuss "penetration reports" generated by Fidelity on the

regional sales of the Volvo PPM and other finance and insurance

products.

These facts, however, do not by themselves create a

franchise obligation under the Retailer Agreement. Rather, these

facts clarify what is already apparent from the thicket of

contractual relationships at issue in this case: Volvo has a

vested interest in its dealers selling as many Volvo PPM contracts

as possible, evidenced, in part, by the referral and incentive

- 17 - fees that trickle up to Volvo Financial with every Volvo PPM

contract sold. While the dealers may feel acute commercial

pressure from Volvo USA to sell the Volvo PPM, that alone does not

mean they have any contractual obligation to do so.

3. Servicing the Volvo PPM

The dealers also argue that it is a franchise obligation

to accept and service the Volvo PPM no matter which dealer

originally sold a given PPM contract. In support, they identify

contract provisions that:

• Permit Volvo USA to terminate the Retailer Agreement

if a dealer breaches a separate agreement with a Volvo

Affiliate; and

• Require the dealers to "give the highest priority to

resolving customer complaints and questions and

addressing any shortcomings in [dealers'] operations

highlighted in customer feedback" and relatedly,

permit Volvo USA to set "reasonable business

objectives for [dealers'] sales of Volvo Products and

how satisfied [dealers'] customers are" and provide

for sanctions if the objectives are not met.

We address each provision in turn.

The dealers argue that the first provision forces them

into a position of either accepting all Volvo PPM contracts they

encounter, or breaching their Administrative Agreement with

- 18 - Fidelity. Assuming, without deciding, that Fidelity is a Volvo

Affiliate as defined in the Retailer Agreement, the dealers fail

to show how refusing to service a given Volvo PPM contract

purchased from a different dealer results in a breach of their own

Administrative Agreement with Fidelity. To recap, the

Administrative Agreement is between the dealers and Fidelity. The

dealers are not in contractual privity with other dealers, and the

Administrative Agreement contains no express provisions requiring

the dealers to honor PPM contracts sold by other dealers. Even

assuming otherwise, if the dealers no longer wish to service the

Volvo PPM, they are free to unilaterally terminate their agreement

with Fidelity at any time after the initial one-year period (which

has long since passed) with thirty days' written notice.5

As for the second provision, it is true that customers,

unhappy with the dealers for declining to service Volvo PPM

contracts purchased from other dealers, could leave the dealers

bad reviews, which would interfere with the dealers' contractual

obligation to have satisfied customers. However, the possibility

of spurned PPM-holders leaving bad reviews and in turn causing a

breach of the Retailer Agreement is too attenuated a scenario to

5Bolstering this point is Laham's deposition testimony that, once he complained to Fidelity about the divergence between who chooses the reimbursement tier and who gets paid the reimbursement tier for a given Volvo PPM contract, Fidelity told him to stop selling and honoring the Volvo PPM.

- 19 - support the conclusion that servicing the Volvo PPM is a franchise

obligation.

For one, "bad reviews from unhappy customers" is not

included in the list of circumstances permitting the termination

of the franchise agreement. Rather, the Retailer Agreement's

termination protocol provides for a franchise's immediate

termination in serious circumstances such as a dealer's

insolvency, violation of antitrust laws, or providing materially

false statements to Volvo USA. Otherwise, the protocol enumerates

other, less egregious circumstances that will begin an extended,

ninety-day termination process, which includes a sixty-day

"correction period." The last enumerated circumstance is a

catch-all term covering the "breach [of] any other material term

of this agreement." The Retailer Agreement then lists nine

specific sections that are "material," which include sections on

the location of the dealership, what the dealership will sell, the

dealership's business plan, and Volvo's code of conduct. Absent

from that list of sections is the section requiring dealers to

have satisfied customers and "give the highest priority to

resolving customer complaints." Given this context, we cannot see

how the customer satisfaction provision would be considered

material, especially as the dealers have pointed to nothing

suggesting that the customer satisfaction provision constitutes a

material term of the Retailer Agreement.

- 20 - In sum, Section 9(b)(1) supplies a viable claim only if

servicing the Volvo PPM is a "franchise obligation[]." Mass. Gen.

Laws ch. 93B § 9(b)(1). The dealers may be motivated to service

the Volvo PPM to avoid possible negative customer reviews in order

to ensure perfect performance under the contract, but that does

not show that servicing the Volvo PPM is required by the Retailer

Agreement. The dealers therefore have failed to show that

servicing the Volvo PPM is part of their franchise obligations.

IV. Conclusion

For the foregoing reasons, we affirm the district

court's grant of summary judgment to defendants-appellees.

- 21 -