Federal Court Denies Manufacturer’s Motion to Dismiss WFDL Claim
A federal district court in Wisconsin recently denied a manufacturer’s motion to dismiss a dealer’s claims for violations of the Wisconsin Fair Dealership Law. The case offers insights into how the WFDL can apply to their actions as well as inactions.
Background
In Sunrise Marine, LLC v. Aqua Traction Marine, LLC, Sunrise Marine, an authorized dealer of custom marine flooring products, alleged that its supplier Aqua Traction failed to protect its exclusive sales territory from repeated incursions by another dealer. Although the dealership agreement expressly required Aqua Traction to protect each dealer’s territory, Aqua Traction allegedly took little action after learning that another dealer was doing business inside Sunrise Marine’s assigned area. Sunrise Marine asserted claims under the WFDL, as well as for breach of contract and breach of the implied duty of good faith and fair dealing.
The Court Denied Manufacturer’s Motion to Dismiss
Aqua Traction moved to dismiss, arguing, among other things, that the claims were time‑barred and that the WFDL requires a grantor’s affirmative act—rather than inaction—to constitute a violation. The court rejected both arguments.
On the statute of limitations issue, the Court held that it was plausible the WFDL claim did not accrue until the manufacturer effectively disavowed responsibility for policing territorial violations, making dismissal at the pleading stage inappropriate.
The Court further concluded that a violation of the WFDL does not necessarily require an affirmative act by the manufacturer or the “grantor” as described under the statute. The WDFL provides that no grantor may “terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership agreement without good cause.” Wis. Stat. § 135.03. Based on the language, structure, and history of the statute, the Court reasoned that a grantor’s inaction, in addition to an affirmative act, may “substantially change the competitive circumstances of a dealership agreement.” Accordingly, the Court denied Aqua Traction’s motion to dismiss Sunrise Marine’s WFDL claim of failure to protect its sales territory.
The Court lastly also allowed Sunrise Marine’s breach of contract and good‑faith claims to proceed, emphasizing that contractual obligations to “protect” a dealer’s territory may require reasonable enforcement efforts, not merely the avoidance of formally overlapping territories.
Key Takeaway
This case demonstrates that grantors in dealership agreements may face liability under the WDFL based on their inaction, not just their affirmative acts.
