22-282-cv RSD Leasing, Inc. v. Navistar Int’l Corp.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

August Term, 2022

Argued: June 28, 2023 Question Certified: August 30, 2023 Certified Question Answered: June 7, 2024 Decided: July 2, 2024

Docket No. 22-282-cv

RSD LEASING, INC.,

Plaintiff-Appellant,

— v. —

NAVISTAR INTERNATIONAL CORP., NAVISTAR, INC.,

Defendants-Appellees.

Before:

LYNCH, LOHIER, and BIANCO, Circuit Judges.

Plaintiff-Appellant RSD Leasing Inc. (“RSD”), a company that leases and, eventually, resells trucks to other commercial entities, appeals from a decision by the District Court for the District of Vermont (Crawford, Ch. J.) granting in relevant part summary judgment to Defendants-Appellees Navistar International Corp. and Navistar, Inc., the manufacturer of several allegedly substandard trucks in RSD’s fleet. The sole question we are asked to resolve on appeal is whether, for purposes of its purchase of those trucks, RSD qualifies as a “consumer” under the Vermont Consumer Protection Act (the “VCPA” or the “Act”) and therefore is eligible to invoke the Act’s protections. Given the dearth of on-point Vermont caselaw, we certified the following question to the Vermont Supreme Court: Does a business that purchases goods intending first to lease those goods to end users and then to resell them at the termination of the lease term qualify as a “consumer” under the VCPA? The Vermont Supreme Court having answered the certified question in the negative, we hold that RSD is not a “consumer” under the VCPA and AFFIRM the district court’s judgment accordingly.

MICHAEL F. HANLEY (Paul J. Perkins, on the brief), Plante & Hanley, P.C., White River Junction, VT, for Plaintiff- Appellant.

JEFFREY S. PATTERSON, Hartline Barger LLP, Dallas, TX (Angela S. Gordon, Jacob L. Ramsey, Luke C. Spencer, Hartline Barger LLP, Dallas, TX; Richard J. Windish, Doreen F. Connor, Primmer Piper Eggleston & Cramer PC, Woodstock, VT; on the brief), for Defendants-Appellees.

PER CURIAM:

This case returns to us following our receipt from the Vermont Supreme

Court of an answer to a certified question. In September 2015, Plaintiff-Appellant

2 RSD Leasing Inc. (“RSD”), a company that leases trucks to other commercial

entities intending to resell them at the end of the lease term, sued Defendants-

Appellees Navistar International Corp. and Navistar, Inc. (together, “Navistar”),

the manufacturer of 40 trucks (the “Subject Trucks”) that RSD purchased for its

fleet from a non-party dealer. The dispute between the parties centers on RSD’s

dissatisfaction with the proprietary exhaust gas recirculation technology installed

in the Subject Trucks, which RSD claims did not perform as promised. RSD

originally asserted six claims, including a violation of the Vermont Consumer

Protection Act (the “VCPA” or the “Act”), and Navistar eventually moved for

partial summary judgment which, in relevant part, sought dismissal of the VCPA

claim.

In December 2021, the United States District Court for the District of

Vermont (Geoffrey W. Crawford, Ch. J.) granted summary judgment to Navistar

on the VCPA claim, concluding that RSD was not a “consumer” under the VCPA

in its purchase of trucks to lease to customers and then eventually resale. RSD

Leasing, Inc. v. Navistar Int’l Corp., No. 5:15-CV-205,

, at *2–3 (D.

Vt. Dec. 8, 2021). Although RSD had initially brought several claims, RSD

3 dismissed all claims except for the VCPA claim so that it could immediately seek

review of the district court’s ruling.

As explained more fully in our prior opinion, see RSD Leasing, Inc. v.

Navistar Int’l Corp.,

(2d Cir. 2023) (“RSD Leasing I”), familiarity with

which we assume, this case requires us to determine only whether RSD qualifies

as a “consumer” under the VCPA. The VCPA protects individuals and businesses

so long as they are “consumer[s],” and defines a “consumer” in relevant part as

“a person who purchases . . . goods or services not for resale in the ordinary

course of the person’s trade or business but for the use or benefit of the person’s

business or in connection with the operation of the person’s business.” 9 V.S.A.

§ 2451a(1). After extensive briefing and oral argument, we concluded that this

appeal raised a significant and unresolved issue of Vermont law that is

determinative of this appeal: Does a business that purchases goods intending

first to lease those goods to end users and then to resell them at the termination

of the lease term qualify as a “consumer” under the VCPA?

Given the lack of on-point Vermont authority, we certified this question to

the Vermont Supreme Court. RSD Leasing I,

. The Vermont Supreme

Court accepted certification, and on June 7, 2024, answered the question in the

4 negative. RSD Leasing, Inc. v. Navistar Int’l Corp., --- A.3d ----- ,

(Vt. June 7, 2024). Specifically, the court held that even assuming that “the lease

of purchased goods may constitute use, benefit, or operation within the meaning

of the statute[,]...... the facts here demonstrate that [RSD] purchased the goods for

resale in the ordinary course of its business and is therefore excluded from the

definition of consumer” under the VCPA. Id. at *3 (¶ 11). The court elaborated

that whether the “resale exclusionary clause” of the “consumer” definition

applies in any case “will depend on several factors, including the business’s

intent upon purchase, the certainty that resale will occur at a given time, and

whether the resale of the specific goods is central to the purchaser’s business

model.” Id. at *4 (¶ 15). Because RSD’s intent at the time of purchase was to lease

the trucks for “four-to-six-year terms and then resell them,” “[r]esale was not a

mere possibility; it was a central feature of plaintiff’s business model that the

trucks would be resold upon termination of the lease.” Id. at *3 (¶ 13). Therefore,

the Vermont Supreme Court concluded that RSD is not a “consumer” under the

VCPA and thus cannot recover damages through a private action under the Act.

See id. at *4 (¶ 15).

5 We thank the Vermont Supreme Court for its assistance in resolving this

unsettled question of Vermont law. Because the answer to the certified question

is determinative of this appeal, we AFFIRM the district court’s judgment.

6