United States District Court, E.D. Wisconsin
Stadtmueller U.S. District Judge
Faxon Sales Inc. (“Faxon”) was formerly a
distributor of refrigerators and ice makers manufactured by
Defendant U-Line Corporation (“U-Line”). In
mid-2016, U-Line elected to terminate the parties'
relationship as provided in the terms of their distributor
agreement. Faxon claims that this termination, made without
good cause, amounted to a violation of the franchisee
protection laws of several northeastern States. Faxon's
theory in this case is that despite express disavowals in the
contract of a franchiser-franchisee relationship, the parties
entered into such a relationship accidentally. It is this
accidental franchise relationship which forms the basis for
has filed a motion to dismiss, arguing that the claims are
without merit and that the suit is untimely pursuant to the
contract, which provides a one-year statute of limitations
for actions arising from it. For the reasons stated below,
the Court agrees with U-Line that Faxon's action is
time-barred in this Court.
Rule of Civil Procedure 12(b)(6) provides for dismissal of
complaints which fail to state a viable claim for relief.
Fed.R.Civ.P. 12(b)(6). In reviewing the complaint, the Court
is required to “accept as true all of the well-pleaded
facts in the complaint and draw all reasonable inferences in
favor of the plaintiff.” Kubiak v. City of
Chicago, 810 F.3d 476, 480 (7th Cir. 2016) (citation
omitted). The statute of limitations, an affirmative defense,
cannot be resolved via a motion to dismiss unless the
allegations themselves demonstrate that the claim is
time-barred. See U.S. Gypsum Co. v. Ind. Gas Co.,
Inc., 350 F.3d 623, 626 (7th Cir. 2003); Walker v.
Thompson, 288 F.3d 1005, 1009 (7th Cir. 2002).
is a Connecticut corporation that operates in the
northeastern United States. U-Line is based in Milwaukee. The
two companies first encountered each other in the early
1990s, when Faxon took over as a distributor of U-Line
refrigerators and ice makers from its predecessor, Appliance
Distributors of Ct, Inc. (“ADC”).
brothers of the O'Brien family owned ADC, which has been
dissolved, and they continue to own and operate Faxon. Faxon
had two major divisions, one supplying plumbing products and
the other distributing appliances, including U-Line's
products. By the end of the parties' relationship in
2016, eighty percent of Faxon's appliance-distribution
sales were generated from selling U-Line products.
and U-Line entered into a distributor contract granting Faxon
an exclusive right to distribute U-Line products in several
areas in the northeastern United States. The most recent
iteration of this agreement was executed in 2014.  In the
contract, the parties agreed that either could terminate the
relationship without cause on thirty days' notice.
(Docket #20-1 ¶¶ 5-6). They further agreed that any
disputes “arising out of or relating to this Agreement,
or any other aspect of the parties' relationship, shall
be commenced no later than one (1) year following the date
any such claim arises.” Id. ¶ 7(d).
Finally, the parties agreed that “[n]o franchise
relationship is created by the entering into or performance
of this Agreement, ” nor would the parties be
“joint ventures or partners, ” nor would one act
as “the agent, employee or fiduciary of the
other.” Id. ¶ 20(e).
parties coexisted amicably for many decades, but things
changed suddenly in 2016. U-Line notified Faxon by letter
dated May 30, 2016 that it elected to terminate its
relationship with Faxon effective June 25, 2016. In the
letter, U-Line stated that “any and all relationships
between [U-Line] and [Faxon] shall terminate” as of
June 25, 2016, including the relationship “as set forth
in their Distributor Agreements.” (Docket #20-2 at 1).
The letter gave no reason for the termination, and U-Line has
never contended that the termination was for cause. The
termination went forward as indicated in the letter, and the
loss of U-Line products has devastated Faxon's
appliance-distribution division. Furthermore, on June 7,
2016, Faxon learned in response to an email it sent to U-Line
that U-Line would not repurchase any of its inventory from
Faxon. (Docket #20-3).
filed this action on June 22, 2017, which is more than a year
from the date of the termination letter and June 7, 2016
email, but within a year of the effective date of the
termination. In the amended complaint, Faxon does not assert
any breach of the parties' contract. Rather, it asserts
that U-Line violated the following laws by its without-cause
termination and its refusal to repurchase inventory: (1) the
Connecticut Franchise Act (“CFA”), Conn. Gen.
Stat. § 42-133 et seq.; (2) the Connecticut
Unfair Trade Practices Act (“CUPTA”), Conn. Gen.
Stat. § 42-110a et seq.; (3) the Rhode Island
Fair Dealership Act (“RIFDA”), 6 R.I. Gen. Laws
§ 60-50-1 et seq.; (4) the New York Unfair
Trade Practices Act (“NYUTPA”), N.Y. G.B.L.
§ 349; (5) the Massachusetts Consumer Protection Act
(“MCPA”), Mass. Gen. Laws ch. 93A, § 1
et seq.; and (6) the New Hampshire Consumer
Protection Act (“NHCPA”), N.H. Rev. Stat §
358-A:1 et seq.
other requirements, the CFA and RIFDA prohibit a franchiser
from terminating a franchise relationship without good cause
and impose notice and inventory repurchasing obligations on
any attempted termination. Conn. Gen. Stat. § 42-133f; 6
R.I. Gen. Laws § 6-50-4(a). The CUPTA prohibits unfair
or deceptive business practices, and a claim under this
statute can be premised on an underlying CFA violation. Conn.
Gen. Stat. § 42-110b; Bentley v. Greensky Trade
Credit, LLC, 156 F.Supp.3d 274, 288-89 (D. Conn. 2015).
Similarly, the NYUTPA, MCPA, and NHCPA broadly proscribe
deceptive and unfair trade practices. N.Y. G.B.L. § 349;
Mass. Gen. Laws ch. 93A, § 2(a); N.H. Rev. Stat. §
Wisconsin's Borrowing Statute
Court finds that this action is untimely. To reach that
conclusion, the Court must answer a series of questions. The
first and easiest question is: whose law should apply to the
statute-of-limitations analysis? The Supreme Court has
directed district courts exercising diversity jurisdiction-as
this Court does in this case-to apply the choice-of-law rules
of the states in which they sit. Klaxon Co. v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Thus, this
Court must apply Wisconsin's choice-of-law rules to
decide whose statute of limitations applies. McMahon v.
Pa. Life Ins. Co., 891 F.2d 1251, 1257 (7th Cir. 1989).
like many states, has enacted a special choice-of-law rule
for potential conflicts between state statutes of limitation.
It is called a “borrowing statute, ” and it is
found at Wis.Stat. § 893.07. The statute provides:
(1) If an action is brought in this state on a foreign cause
of action and the foreign period of limitation which applies
has expired, no ...