## Facts

- Semmes Motors, Inc. operated as an authorized Ford dealer in Scarsdale, New York, since 1949; its president was active in dealer advocacy and helped form Ford Dealers Alliance, Inc.
- Ford used a warranty reimbursement system under which dealers performed repairs and submitted warranty refund claims for parts and labor at set rates.
- Ford notified Semmes it would conduct an intensive audit of Semmes’ warranty work, including inspecting vehicles and contacting customers about claimed repairs.
- Semmes and the Alliance filed an initial suit in New Jersey federal court seeking to stop Ford from contacting customers; a temporary restraining order was denied and Ford proceeded with the audit.
- Ford’s audit reportedly found major discrepancies, including a high percentage of inspected vehicles allegedly not repaired as claimed; Ford characterized the conduct as fraudulent warranty claims.
- Semmes and the Alliance then filed a similar action in the Southern District of New York seeking to restrain Ford’s customer contacts; the next day Ford counterclaimed in the New Jersey action for reimbursement and terminated Semmes’ dealership.
- Plaintiffs amended the New York complaint to add a wrongful termination claim under the Automobile Dealers’ Day in Court Act.
- The district court granted a temporary injunction maintaining the dealership relationship pending trial and denied Ford’s request to stay or dismiss the New York action in favor of the earlier New Jersey case.

## Issues

1. Whether the district court abused its discretion in granting a preliminary injunction preventing Ford from terminating Semmes’ dealership pending adjudication.
2. Whether the later-filed New York federal action should be stayed in deference to the first-filed New Jersey federal action involving overlapping parties and disputes.

## Decision

- The court of appeals affirmed the preliminary injunction (with modification) as within the district court’s equitable discretion.
- The court held that termination of a long-standing dealership could constitute irreparable injury not adequately remedied by damages, warranting interim relief to preserve the status quo.
- The court concluded the dealer raised sufficiently serious questions on the merits, including whether termination complied with statutory “good faith” obligations and whether it was retaliatory.
- The court ordered that further proceedings in the New York action be stayed pending resolution of the first-filed New Jersey litigation to avoid duplicative litigation and inconsistent outcomes.

## Legal Principles

- A preliminary injunction may issue when the movant shows sufficiently serious questions on the merits and that the balance of hardships tips decidedly in its favor.
- Loss of a long-established franchise/dealership and associated goodwill can constitute irreparable harm, making damages an inadequate remedy in appropriate cases.
- In parallel federal actions between substantially the same parties involving overlapping controversies, the later-filed court may stay its case in favor of the first-filed action to advance orderly judicial administration and conserve judicial resources.
- Injunctive relief should be tailored to preserve necessary status quo protections without restraining legitimate business actions beyond what equity requires.

## Conclusion

The court permitted temporary injunctive protection against termination because the dealer faced irreparable harm and presented serious merits questions, but required the later-filed forum to pause merits litigation in favor of the first-filed action to prevent duplicative federal proceedings.


Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197 (2d Cir. 1970)