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PMT Machinery Sales, Inc. v. Yama Seiki USA, Inc.

United States Court of Appeals, Seventh Circuit

October 28, 2019

PMT Machinery Sales, Inc., Plaintiff-Appellant,
Yama Seiki USA, Inc., Defendant-Appellee.

          Argued September 18, 2019

          Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:17-cv-1731 - J.P. Stadtmueller, Judge.

          Before Kanne, Hamilton, and Barrett, Circuit Judges.


         A company that enters a dealership agreement with a manufacturer takes a risk. Investing in the sale of the manufacturer's products may generate significant profits. But if a manufacturer pulls out, a dealer who has made that investment may be left high and dry. To give dealers some protection, the Wisconsin Fair Dealership Law makes it difficult for manufacturers to simply walk away. If a manufacturer terminates, substantially changes, or fails to renew a dealership agreement without good cause, the statute entitles the dealer to relief.

         PMT Machinery Sales sued Yama Seiki for violating this statute. According to PMT, it had an exclusive-dealership arrangement with Yama Seiki, which the latter breached by using other companies to promote the sale of its machines. Yet PMT has failed to show that it had any dealership agreement with Yama Seiki, much less an exclusive one. To qualify as a dealership under the statute, PMT must have either possessed the right to sell or distribute Yama Seiki's products or made more than de minimis use of Yama Seiki's corporate symbols. But PMT never stocked any of Yama Seiki's products, collected money for their sale, or made more than de minimis use of Yama Seiki's logos. Because no reasonable jury could render a verdict in PMT's favor, we affirm the district court's grant of summary judgment in favor of Yama Seiki.


         Yama Seiki is a California manufacturer of machine tools. PMT, a Wisconsin corporation, sought to become the exclusive dealer for Yama Seiki turning machines in eastern Wisconsin. To that end, it negotiated with Clive Wang, the operations manager of the division that makes the machines. The parties disagree about whether Wang orally granted exclusive-dealer status to PMT in the course of these discussions, but they agree that Wang issued an exclusive letter of dealership to PMT in December 2015. This letter conditioned exclusive-dealer status on terms that included meeting sales requirements of $1, 000, 000 or 15 machines in a year, stocking one machine on PMT's showroom floor, and developing a marketing plan for the machines.

         PMT rejected the letter because it did not believe it could reach the sales requirements. But two months later, PMT offered to take stock of two machines in exchange for an exclusive-dealer agreement. PMT followed this offer with an application for dealership status and a proposal to negotiate further. Wang did not address the offer; instead, he responded that he was "not sure if you are aware that you are in 'exclusive' status" to sell Yama Seiki turning machines. PMT believed that this communication amounted to an exclusivity agreement with open-ended terms.

         PMT never took stock of any machines, but it did facilitate their sale by soliciting customers, negotiating sales prices, and connecting the customers with Yama Seiki. The customers then paid Yama Seiki, after consenting to its usual sales terms. PMT was then responsible for installation and warranty work, which it subcontracted to its sister company. When a sale was completed, Yama Seiki paid PMT the difference between the negotiated sales price and the dealer price. The parties disagree about whether Yama Seiki was required to fulfill every order facilitated by PMT, but they agree that Yama Seiki never in fact rejected a PMT order.

         Between the start of 2015 and May 2018, PMT derived 55% of its income and 74% of its profits from Yama Seiki sales, the remainder apparently coming from sales of other machine tools and accessories. PMT spent $3, 803.14 on advertising during the alleged exclusive-dealership period, though only $1, 200 of this is identified as specifically related to Yama Seiki products. PMT did not operate its own website but was instead included as part of its sister company's site. The section of the site related to machine sales used the Yama Seiki logo and advertised Yama Seiki products alongside tools and accessories from other manufacturers.

         More than a year after Wang told PMT that it was in "exclusive status/' PMT discovered that others were selling Yama Seiki turning machines in eastern Wisconsin. PMT approached Wang, who stated that PMT was "not [an] exclusive distributor/' citing its rejection of the letter outlining the sales requirements. PMT then sued Yama Seiki, alleging that it had violated Wisconsin's Fair Dealership Law, Wis.Stat. §§ 135.03-135.04, by breaching an exclusive-dealership agreement. Yama Seiki moved for summary judgment on the ground that PMT was not a dealership under the statute. The district court determined that PMT had not raised a triable issue on the dealer-status question and granted the motion.


         The Wisconsin Fair Dealership Law provides that "grantors" may not "terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership agreement without good cause." Wis.Stat. § 135.03. The statute's protections, however, extend only to ...

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