Official dealership sign of Mazda. Mazda Motor Corp. is a Japanese automaker.

A federal judge in Trenton has thrown out a lawsuit protesting an incentive plan giving some Mazda dealerships a discount on the cost of new cars.

The New Jersey Coalition of Automotive Retailers, which brought the suit on behalf of 16 Mazda dealerships statewide, claims the discounts violate state franchise law and are contrary to the public interest. But the coalition lacks associational standing to sue on behalf of its members because 11 of the state’s 16 Mazda dealers take full or partial advantage of the discounts, U.S. District Judge Brian Martinotti ruled.

The case presents a conflict between those dealers who receive the discounts and those who don’t, and a conflict between Mazda dealers and those for other brands, according to Martinotti. Because a majority of the Mazda dealers have an interest contrary to that taken by the coalition in the suit, the interests it seeks to protect are not germane to the organization’s purpose, Martinotti said. Therefore, the coalition fails a test for associational standing that was set by the U.S. Supreme Court in a 1977 case, Hunt v. Washington State Apple Advertising Commission, Martinotti said in granting Mazda’s motion to dismiss.

Under the incentive plan, a Mazda dealer gets up to 6.5% off the cost of vehicles, based on various factors. A facility that sells only Mazdas, has a general manager who is exclusive to Mazda, and meets various design factors gets 4.5% off. Dealers that don’t have a Mazda-only general manager but meet the other facility factors get a 2.8% incentive, though dealers that sell Mazdas and another brand forfeit the entire incentive. Dealers who comply with Mazda’s “customer experience” criteria get a 2% incentive off the price of all cars they sell.

Statewide, three Mazda dealers receive maximum incentives under the program, and eight others receive partial incentives. Five Mazda dealers in the state do not qualify for any incentives.

The suit claims that charging varying amounts to dealers for inventory and its less-favorable terms for dealers selling two or more brands of vehicles violate the state franchise law. And the incentive plan also violates the franchise law by requiring exclusive, “image-complaint” facilities without proving that costs of such improvements can be “financially justified,” the coalition said.

One Mazda dealership owner, Michael Ciasulli, submitted a certification to the court asserting that required retrofits of his dealership would cost $10 million to $12 million, which would place a hardship on his business and prevent him from achieving a reasonable return on his investment.

The coalition argued that the allegation that some of its members benefit under the incentive program should not bar the suit by the coalition because Mazda “should not be able to take advantage of a conflict of its own creation through the implementation of a program that violates [the New Jersey Franchise Practices Act] on its face.” But Martinotti called that argument “unpersuasive.” The coalition “provides no case law suggesting that there are ‘types’ of conflicts that may act to vitiate standing pursuant to the germaneness prong of the Hunt test whereas other conflicts do not.”

The incentive program went into effect in July 2018 and the suit was filed the following September.

Marvin Brauth of Wilentz, Goldman & Spitzer in Woodbridge, representing the New Jersey Coalition of Automotive Retailers, did not return a call about the case.

Brian Sullivan of Fox Rothschild in Roseland, representing Mazda, did not return a call.