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50-year Avis franchisee continues battle with Cendant conglomerate


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When Robert C. Halcro signed his first franchise contract in 1956 to run his Alaska Rent-A-Car business in Valdez under the Avis brand, he most likely thought his biggest challenge would be the rugged terrain, blizzards and a few dangerous grizzlies. But in looking back over his 50-year-old franchise operation, he no doubt feels that his biggest foe has been the multi-billion dollar conglomerate of Cendant Corporation. Now Halcro is preparing for more courtroom drama with the corporation and its attorneys, as two new trials are scheduled in state and federal courts. But as he looks back at his franchise litigation-riddled past, he more than likely knows he is also battling against time. Robert Halcro is fast approaching his 90th birthday. 

 

Janet Sparks is the former publisher of Continental Franchise Review, an
industry newsletter that covered the franchise community for more than 30 years before being acquired by Franchise Times Corporation.
Janet can be reached at 303-799-7398 or at jsparks@franchisetimes.com

Some close to Halcro say they aren't surprised that he is continuing the costly litigation, that he is no ordinary franchisee. Alaska Rent-A-Car is a family-operated franchise, with approximately 12 car rental agencies around the state. Halcro has remained active not only in its operation but also in the litigation. His children have followed in his leadership footsteps, taking on executive positions with the company. 

Litigation History

In 1973, Halcro first encountered a few legal bumps with his car rental agency when Avis decided to open a competing location in his territory. He immediately filed a lawsuit against Cendant, Avis' parent company, to block the effort, and in 1976 the parties settled the suit. The franchisor then executed an Amendatory Agreement to Halcro's 1965 Avis license agreement, which allowed him specific locations in Alaska. 

When the Avis system acquired Agency Rent A Car in 1995, Avis licensees from 10 states sued on the grounds that the acquisition violated their exclusive license agreements. In 1997, after the consolidation of lawsuits and transfer of the case to New York, a settlement was reached and Halcro was invited to join the Agency Settlement Agreement. But after entering that settlement, Halcro's biggest legal battle erupted in November 2002, out of another Cendant purchase.

Halcro filed his complaint in the U.S. District Court of Alaska over Cendant's acquisition and continued operation of Budget Rent A Car, which he claimed violated all three of his franchise company's agreements. In the lawsuit, he asserted 12 causes of action: 1) Breach of License Agreement; 2) Breach of Agency Settlement; 3) Breach of covenant of good faith and fair dealing; 4) Breach of covenant not to hinder or prevent performance; 5) Piercing the
corporate veil; 6) Violations of Alaska Unfair Trade Practices Act; 7) Violation of Alaska Uniform Trade Secret Act; 8) Permanent injunctive relief; 9) Breach of a Master License and Motor Operating agreements as third-party beneficiary; 10) Anti-Trust violations, under federal and Alaska laws; 11) Fraud; and 12) Interference with prospective economic advantage.

Seven Motions for Summary Judgment were before the court: six filed by Alaska Rent-A-Car and one by Cendant and its subsidiaries. After U.S. District Judge Timothy M. Burgess issued his decision last July granting in part and denying in part those motions, he issued hisÊorder, resolving most of the claims in favor of Cendant, but not entirely. He did not dismiss Court II of his Summary Judgment, stating that Cendant Rent A Car Group is unequivocally in breach of the Agency Settlement Agreement, and that Alaska Rent-A-Car is entitled "to whatever damages it actually incurred as a result of the breach of the Agency Settlement—no more, no less."

According to William Falsey, Feldman Orlansky & Sanders, the Anchorage firm representing Alaska Rent-A-Car, Judge Burgess ruled that after wading through all the legal theories, there was evidence that no reasonable juror could fail to conclude that Cendant breached that agreement. His ruling also explained the provisions Cendant was required to follow in purchasing an additional company, saying it agreed that it would dedicate its best efforts to franchisees. Avis has agreed that the sales, marketing and reservation activities, operations and personnel of Avis was to function and be maintained separate and apart from those additional parties.

In an effort to bring the litigation to a close, the parties then asked for an extension of time to mediate the case, which was granted. The Judge requested that the parties report on their progress in a joint status report on November 30, 2007.  But on that date they reported that their attempt to mediate failed, and then moved to go to trial.  According to the pretrial schedule, the federal trial will take place on March 16, 2009.

The lead counsel for Cendant Corporation defendants, John Dienelt, DLA Piper, confirmed the trial date, but stated he could not comment on pending litigation.

State litigation erupts during federal case

In the midst of the federal litigation late in 2005, during contentious discovery disputes, Halcro and company officials started receiving menacing letters from Cendant. According to Falsey, the letters stated that in order to avoid breach of contract of its license agreement, Alaska Rent-A-Car would have to open additional branch offices in remote areas of the state. He said some of the locations were far flung, including villages that had unconnected road
systems, and others were towns that no longer exist.

Falsey said Halcro filed a complaint in the Superior Court of Alaska to preserve their license agreement. And, he said they have already had summary judgment briefing and they have had oral argument on the summary judgment. Although it may be a while before they receive a ruling in the state case, he said they were confident that Alaska Rent-A-Car had no obligation to open branches in these communities. At this time, the trial is set for the week of May 27, 2008.

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