Plaintiff, Racine Car Dealer, LLC, (“Racine” or “RCD”) a former Hyundai and Genesis motor vehicle dealer, claimed that Defendant, Hyundai Motor America(“HMA”) deceived it, withheld information, and altered the rules and policies of Hyundai’s dealer incentive program without notice. This alleged conduct compelled the Plaintiff to terminate the Genesis side of its dealership before completing the sale of its franchise to a third party. The Plaintiff proceeded to trial, asserting claims under the Wisconsin Motor Vehicle Dealer Law, the Automobile Dealers’ Day in Court Act, and Wisconsin contract law.
Racine attempted to hold HMA accountable for its failure to meet the explicit “exclusive facility” requirement outlined in HMA’s Hyundai Accelerate Incentive Program. Due to this non-compliance, Racine did not qualify for incentive payments under the program. Racine asserted that this failure to qualify for Accelerate Incentive Program payments “coerced” the dealership into terminating its Genesis franchise, which was necessary to finalize the sale of the dealership to a third party, Zeigler Auto Group. Racine claims that the failure to qualify for incentives resulted in a $2 million reduction in the purchase price during the sale to Zeigler. Racine asserted that, as part of the Hyundai Accelerate Incentive Program, HMA “indirectly” violated Wisconsin Motor Vehicle Dealer Law § 218.0116(1)(i) by canceling Racine’s Genesis franchise.
Defendants had disclosed an expert, Sharif Farhat, who issued a “dealer network analysis” report on October 24, 2023. In his report, Farhat opined that (1) it was reasonable for Defendants to support dealer efforts in improving brand representation through programs like Accelerate Incentive Program; (2) RCD’s claims alleged that the Accelerate Program disadvantaged small market Hyundai dealers were unsupported, speculative, and internally inconsistent; and (3) RCD’s claim suggested that HMA through their Accelerate Incentive Program “coerced” dealers into terminating their Genesis franchise was misleading and incorrect.
Plaintiff asserted that Farhat’s opinions would not aid the jury in understanding the evidence or determining relevant facts. Additionally, the Plaintiff argued that these opinions were not based on sufficient facts or data and were not derived from reliable principles or methods. The opinion was sought to be excluded for three primary reasons. First, it was deemed irrelevant to any issues related to the Plaintiff’s claims. Second, even if relevant, determining the reasonableness of Defendants’ support for dealer efforts did not necessitate expert testimony. Third, the Plaintiff contended that Farhat’s report lacked any reasoning or methodology supporting the testimony, rendering it scientifically unreliable.
Defendant Hyundai Motor America formally requested motions in limine, seeking to prevent Plaintiff Racine Car Dealer, LLC from making references, through argument, testimony, questioning, statements, documents, or any other means, to other lawsuits allegedly involving HMA. Additionally, HMA sought a motion precluding Racine from introducing as evidence or referring to a November 4, 2020, letter authored by the New York State Automobile Dealers Association (“NYSADA”). Furthermore, HMA requested a motion in limine to block Racine from presenting any evidence, argument, or testimony related to or referencing hearsay news articles concerning HMA.
Automotive Industry Expert Witness
Sharif Farhat is the Vice President of Expert Analytical Services at Urban Science Applications, Inc. He received his Bachelor of Science degree in Computer Science with minors in Mathematics and Business Administration from Michigan State University and then obtained his Masters degree in Business Administration from the University of Detroit. His specialities include analytical techniques to evaluate programs, policies, and metrics to assess dealer performance for the automotive industry.
Discussions by the Court
The Plaintiff argued that the testimony and the October 24, 2023, report of the defense expert, Sharif Farhat, should be excluded for two main reasons: (1) they would not assist the jury in understanding the evidence or determining a fact in issue, and (2) the opinions were not based on sufficient facts, data, the product, or reliable principles or methods. The admissibility of expert opinion was guided by Rule 702, interpreted by the Supreme Court to allow expert testimony that is both reliable and relevant (Daubert v. Merrell Dow Pharmaceuticals, Inc.; Fed. R. Evid. 702). The Seventh Circuit condensed the requirements of Rule 702 into a three-part test, compelling district Courts to evaluate the proffered expert’s qualifications, the reliability of the expert’s methodology, and the relevance of the expert’s testimony (Gopalratnam v. Hewlett-Packard Company, 877 F.3d 771, 779 (7th Cir. 2017)).
Initially, no expert reports were admitted at trial due to being largely considered classic hearsay. However, certain portions, such as demonstrative charts and graphs, 1006 summaries, and other documents, were allowed to be presented to the jury, if not separately admitted into the record under the Federal Rules of Evidence. Furthermore, the Plaintiff did not challenge Farhat’s qualifications but contested the relevance and reliability of his opinions. Farhat, an expert in the automotive dealership industry, asserted in his report that (1) it was reasonable for the Defendant to support dealer efforts to enhance brand representation through the Accelerate Incentive Program; (2) the Plaintiff’s previously rejected claim of the program disadvantaging small market Hyundai dealers was contrary to market data; and (3) the Plaintiff’s claim that the Defendant, via the Accelerate Incentive Program, coerced dealers to terminate their Genesis franchises was incorrect. The Defendant countered by stating that Farhat had never been excluded as an expert in any matter, followed an eight-step methodology in forming his opinions, and relied on various sources, including deposition transcripts, exhibits, summary judgment briefing, program documents, communications to the dealer network, sales and dealership data, automotive registration data, and information on program payments and accruals to Wisconsin dealers.
The Defendant stated that it would not present the second opinion of the expert, rendering the Plaintiff’s motion regarding that opinion granted as unopposed. Consequently, only opinions 1 and 3 remained, their relevance depending on the requirements for proving Plaintiff’s exclusive facilities claim under the Wisconsin Motor Vehicle Dealer Law. The Court was unconvinced that the first and third opinions were reasonably in dispute, and if contested, both could be considered legal questions for the Court. Particularly regarding the third opinion, the parties’ factual positions continue to be two ships passing in the night. Legally, the Defendant asserted that the Plaintiff must prove that the Defendant unreasonably required or coerced the provision of exclusive facilities, while the Plaintiff argued it only needed to prove that the Defendant “coerced” or “attempted to coerce,” with the burden shifting to the Defendant to demonstrate reasonableness. Due to these disputes and lack of clarity, which were likely to impact jury instructions and the verdict form, the Court reserved judgment on the remaining portion of the motion regarding the relevance of Farhat’s first and third opinions for further discussion with the parties at the final pretrial conference.
The Plaintiff contended that an email, sent by Karen Mendez to “All Hyundai Dealers” on January 10, 2020, announcing the Accelerate Incentive Program and its terms and conditions, should be excluded as irrelevant unless credible evidence demonstrated its receipt by Racine Car’s general manager, James Bozich, or any other personnel at Racine Car. Alternatively, the Plaintiff argued that the Defendant should be barred from referencing or implying that the email was distributed to all dealers because: (1) there was no group email address linked to “All_Hyundai_Dealers@hmausa.com;” and (2) the original email containing the actual dealer emails in the blind copy recipient field had been deleted.
Initially, the email was considered relevant to the factual dispute between the parties regarding whether James Bozich or any other Racine Car personnel were adequately informed about the Defendant’s Accelerate Incentive Program and the overall reasonableness or coerciveness of HMA’s conduct. Despite Bozich maintaining that he never saw the email due to it being sent to his old “homerunautogroup.com” email instead of his “sbcglobal.net” email, the Court noted in its summary judgment opinion that the Defendant had presented evidence indicating Bozich was on the email distribution list. The Plaintiff emphasized the inability to confirm the recipients of the email, but the Defendant referred to Karen Mendez’s testimony, stating that she habitually blind copied all-dealer emails to specific dealer emails in a “regional dealer directory” produced during discovery. Mendez mentioned that Bozich’s email would have been included if it was in that directory. Despite the uncertainty, Defendant argued that Bozich’s “homerunautogroup.com” email was on the “Current Dealer Email List as of 9.2020.” Defendant also produced an “Email Distribution List” dated January 6, 2020, including Bozich’s “sbcglobal.net” email. The Defendant further claimed that Mendez sent another email about the program 21 days later to the same “All Hyundai Dealers” group, including Bozich and Basich as recipients, specifically to Bozich’s preferred “sbcglobal.net” email address. Additionally, the Defendant anticipated that Racine Car’s then-acting general manager, Adrian Basich, would testify that he was aware of the January 10, 2020, email and its requirements, and that Bozich regularly used the “homerunautogroup.com” email during his tenure at Racine Car.
Therefore, the Plaintiff’s motion was based on a disputed material fact. The argument that the email could be “highly prejudicial” highlighted the contentious nature of whether Bozich or others at Racine received the email. The Court determined that these issues, including the credibility of the parties’ evidence, were matters for the jury to decide. Consequently, the Plaintiff’s motion to exclude the email or limit testimony concerning it was denied.
Defendant argued that the Plaintiff should be barred from presenting evidence and arguments related to other lawsuits against Hyundai Motor America, asserting that such evidence would be irrelevant and excessively prejudicial. The Court granted this motion as it remained unopposed by the Plaintiff.
Defendant argued that the Plaintiff should be prevented from presenting or referencing a November 4, 2020, letter from the New York State Automobile Dealers Association criticizing the Accelerate Incentive Program. The Defendant contended that the letter was inadmissible hearsay, irrelevant, and unduly prejudicial. The Court granted this motion as it went unopposed by the Plaintiff.
Defendant asserted that the Plaintiff should be barred from presenting evidence or arguments related to news articles about Hyundai Motor America, citing their irrelevance and inadmissibility as hearsay. The Court granted this motion as it remained unopposed by the Plaintiff.
Held
1) Plaintiff’s motion in limine to exclude the opinions and report of Defendant’s expert Sharif Farhat was granted in part. Farhat’s second opinion was granted as it was unopposed. The Court reserved the ruling on Plaintiff’s motion in limine in part, Farhat’s first and third opinions were reserved for further discussion with the parties at the final pretrial conference. However, Plaintiff’s motion in limine to exclude the January 10, 2020, email or limit references regarding the email was denied.
2) Defendant’s motion in limine to exclude reference to or evidence of other lawsuits was granted as unopposed. Defendant’s motion in limine to exclude New York Lobbying Group’s letter criticizing Defendant’s Accelerate Incentive Program was granted as unopposed. Defendant’s motion in limine to exclude hearsay news articles was granted as unopposed.
3) The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways
In the legal proceedings between Racine Car Dealer, LLC (Racine) and Hyundai Motor America (HMA), expert testimony played a crucial role in shaping the narrative of the case. Racine sought to hold HMA accountable for alleged deceptive practices, withholding information, and changes to the dealer incentive program. The defense expert, Sharif Farhat, issued a “dealer network analysis” report opining on various aspects, including the reasonableness of HMA’s support for dealer efforts and disputing Racine’s claims of program disadvantages and coercion. Racine challenged the admissibility of Farhat’s opinions, arguing they lacked relevance and reliability. The Court acknowledged the dispute over exclusive facilities claims, and the relevance of Farhat’s opinions became a focal point during the trial, likely to affect the jury instructions and verdict form.
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