BMW of North America last week failed to dismiss a complaint alleging that it tied certification of body shops as “certified collision repair centers” (CCRCs) to the sale of BMW-branded paint. The Northern District of California (Judge Illston) analogized the claim brought by a competing paint distributor to a claim brought against a franchisor, and found that the plaintiff had adequately alleged (i) two separate products (the BMW paint might not be an “essential ingredient” of the CCRC branding and thus part and parcel of a single product) and (ii) an unlawful tie.
The tying of products to a franchise always requires careful analysis. This case again demonstrates the very real possibility that an outsider to the distribution system (an aggrieved, competing supplier of product precluded from selling to franchisees) may complain about a tie.
Nicolosi Distributing, Inc. v. BMW of North America, LLC, No. 3:10-cv-03256SI (N.D. Cal. Apr. 19, 2011).