FCA US, LLC v. Spitzer Autoworld Akron, LLC
Opinion
In a previous case involving these same parties, we held that certain provisions of Michigan and Nevada law were preempted by a federal statute, but we upheld-as unchallenged on appeal-the district court's decision in that case that similar provisions of Ohio law were not so preempted. Spitzer Autoworld Akron, a party to the previous case, as a party on the appeal in the previous case, explicitly declined to argue preemption of the Ohio statute, but now asserts on appeal from a decision in a subsequent, independent proceeding that the Ohio statute is preempted, based on our analysis of Michigan and Nevada law in the previous case. While this procedural situation is somewhat unusual, it should come as no surprise that Spitzer cannot now make the argument that it so clearly gave up in earlier litigation with the same parties regarding the same facts. The district court accordingly was correct to rule that principles of collateral estoppel foreclose Spitzer's argument.
The previous case was a consolidated action involving automobile dealerships from Michigan, Nevada, Ohio, Florida, California, and Wisconsin, whose franchise agreements were rejected during Chrysler's bankruptcy, but who had arbitrated successfully under Section 747 of the Consolidated Appropriations Act of 2010, Pub. L. No. 111-1117,
*282
Now Chrysler, Spitzer, and Fred Martin Motor Company are engaged in a protest proceeding pending before the Ohio Motor Vehicles Dealer Board, and Chrysler filed the current action to enjoin Spitzer from relitigating the preemption issue before the Ohio dealer board. The court below held that collateral estoppel precludes Spitzer from raising the preemption issue, and the court accordingly granted Chrysler's request for injunctive relief barring Spitzer from relitigating the issue before the dealer board. On appeal, Spitzer contends that collateral estoppel is not applicable, and that the district court's judgment violates
Younger v. Harris
,
I. The Consolidated Action
The background to these suits is set forth more fully in
Fox Hills
,
see
Passed to protect the interests of the rejected dealers, Section 747 of the Consolidated Appropriations Act of 2010, Pub. L. No. 111-1117,
Disagreement about what the Section 747 arbitration orders entailed led to multiple lawsuits, which the district court consolidated into one consolidated action. In the consolidated action, Chrysler sought, among other things, a declaration that Section 747 did not preempt the provisions of state dealer laws governing the establishment of additional like-line dealers. Several existing like-line dealers, including Fred Martin, were also parties to the consolidated action and similarly sought a declaration *283 that Section 747 did not preempt the state dealer protest laws of their respective states. Fred Martin also claimed that Section 747 was unconstitutional. On the other hand, the rejected dealers who had successfully won the right to a Letter of Intent through arbitration under Section 747, including Spitzer, sought a declaration that Section 747 did preempt the dealer protest laws of their respective states.
The parties cross-filed numerous motions for summary judgment, and the district court ruled on all the parties' dispositive motions. On the preemption issue, the district court held that:
Section 747 does not preempt the state-law dealer acts that govern the relationships between automobile manufacturers and dealers in California (Cal. Vehicle Code § 3060 et seq. ), Florida (Fla. Stat. § 320.01 et seq. ), Michigan (Mich. Comp. Laws § 445.1561 et seq. ), Nevada (Nev. Rev. Stat. § 482.36311 et seq. ), Ohio ( Ohio Rev. Code. § 4517.43 ), or Wisconsin ( Wis. Stat § 218.0101 et seq. ).... IT IS FURTHER ORDERED that New Chrysler's motions for summary judgment, seeking summary judgment as to its July 14, 2011 Complaint for Declaratory Judgment against Spitzer , BGR and Boucher ... are GRANTED.
S. Holland Dodge
,
Four rejected dealers in the consolidated action from Michigan and Nevada who had successfully arbitrated under Section 747 appealed the district court's no-preemption decision, and Fred Martin cross-appealed, arguing that the district court erred by not considering Fred Martin's constitutional challenge to Section 747.
Fox Hills
,
Spitzer's arguments before the Sixth Circuit relied on the premise that the district court's no-preemption decision regarding Ohio's dealer protest laws was valid, and at oral argument in Fox Hills Spitzer acknowledged that its position on appeal with respect to preemption was contrary to that of the other dealers. Spitzer argued that Fred Martin could not show the risk of harm necessary for Article III standing because the only reason Fred Martin had filed a cross-appeal was the "possibility that there would be preemption [of Ohio's dealer protest laws][,]" and "that possibility [was] gone with [the district court's] decision" because Spitzer did not appeal the preemption issue with respect to Ohio's dealer laws. Moreover, Spitzer acknowledged at oral argument in Fox Hills that it had chosen not to appeal the district court's preemption decision because it felt it had "such a strong position with respect to [the] [Letter of Intent], that [it] just want[ed] to get on with it," so it "just took the position, look, we'll deal with the protest laws of Ohio."
In
Fox Hills
we reversed the district court's preemption decision with respect to Michigan's and Nevada's dealer laws and held that Section 747 preempts the operation of Michigan and Nevada dealer protest laws.
Fox Hills,
Fox Hills, Village, Jim Marsh and Livonia all argue in favor of preemption. Because these dealerships are located in Nevada and Michigan, we consider their preemption arguments under the laws of those states. Spitzer, on the other hand, does not challenge the state dealer protest laws in its home state of Ohio, a *284 point conceded by its attorney at oral argument. Accordingly, we do not consider the preemption argument with respect to Ohio state dealer protest laws.
II. The Current Action
Prior to the initiation of the consolidated action, Fred Martin had filed a protest proceeding with the Ohio Motor Vehicles Dealer Board pursuant to Ohio's dealer laws, Ohio Rev. Code § 4517.01 et seq. , to stop Chrysler from adding Spitzer as a dealer in Ohio. In the protest proceeding, Spitzer argued that Section 747 preempted the dealer protest law under which the proceeding was initiated, but the consolidated action commenced before the Ohio dealer board could rule on the issue. The Ohio protest proceeding was placed on hold while the consolidated action was underway, and Spitzer agreed that the consolidated action would decide certain issues, one of which was whether Section 747 preempts Ohio's dealer protest laws.
However, after the district court closed the consolidated action when it issued its final judgment on remand after Fox Hills , counsel for Spitzer sent a letter to the Chief Administrator of the Ohio Motor Vehicles Dealer Board advising him that Spitzer believed that our decision in Fox Hills required that Spitzer's protest proceeding involving Fred Martin and Chrysler be dismissed. Fred Martin responded to Spitzer's letter with a letter of its own, stating that "[t]he Sixth Circuit never determined the issue of pre-emption related to Ohio laws," and therefore "the Michigan District Court's ruling that state dealer laws are not pre-empted stands as to Ohio law." Fred Martin concluded that Spitzer was "barred by the doctrine of res judicata " from relitigating the preemption issue before the state dealer board.
The Ohio protest proceeding remained at a standstill, and on April 1, 2016, Chrysler initiated the current action by filing a complaint for declaratory judgment and injunctive relief, seeking: a declaration that the laws of the Ohio Dealer Act remain in full force and effect with respect to Spitzer and the Ohio protest proceeding; an injunction preventing Spitzer from challenging or relitigating the district court's judgment that Section 747 does not preempt the Ohio Dealer Act; and any and all further relief that the Court deemed just and reasonable. Fred Martin was permitted to intervene.
All three parties agreed that the case would be resolved by motions. Chrysler filed a Motion for Judgment on the Pleadings, Spitzer filed a Motion to Dismiss/Motion for Summary Judgment, and Fred Martin filed its own Motion for Summary Judgment. The motions were fully briefed, and all three motions were heard by the court on February 2, 2017. Prior to the February hearing, the district court by order provided specific questions that it intended to ask at the hearing, including whether res judicata -an issue not raised in any of the parties' motions-applied. The court allowed the parties to file supplemental briefs on res judicata , and both Chrysler and Spitzer filed supplemental briefs.
In a single order, the district court ruled on the parties' dispositive motions. First, the court rejected Spitzer's threshold challenges to personal jurisdiction, venue, and
*285
standing.
2
Next, the district court determined that Chrysler was entitled to declaratory relief, concluding that issue preclusion applies here, such that the issue of whether Section 747 preempts the Ohio Dealer Act is "forever settled" as to Chrysler, Spitzer, and Fred Martin. The district court also held that
Federated Dep't Stores, Inc. v. Moitie
,
III. Collateral Estoppel
Notwithstanding Spitzer's arguments on appeal, Spitzer is collaterally estopped from relitigating whether Section 747 preempts the dealer protest laws of Ohio. All four requirements for collateral estoppel articulated in
Cobbins v. Tenn. Dep't of Transp.
,
Spitzer counters that
Fox Hills
represents a significant change in the legal climate with respect to Section 747's preemption of state dealer protest laws, and therefore issue preclusion is not applicable here.
Montana v. United States
recognized that in some circumstances a significant change in the legal climate can warrant an exception to issue preclusion.
See
In
Fox Hills
we explicitly limited our analysis and holding to the dealer protest laws of Michigan and Nevada.
Moreover, the change-in-law exception to collateral estoppel generally applies where the "change in law" is being applied to new facts, even though those new facts are indistinguishable from the earlier action. Thus, in
CIR v. Sunnen
, the Supreme Court dealt with collateral estoppel in the context of taxes for succeeding tax years.
See
[W]here two cases involve income taxes in different taxable years, collateral estoppel must be used with its limitations carefully in mind so as to avoid injustice. It must be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules remain unchanged.
Spitzer argues that it would be inequitable to apply collateral estoppel against it. But it was Spitzer that agreed to stay the Ohio protest proceeding to allow the consolidated action to determine whether Section 747 preempted Ohio's state dealer laws, and it was Spitzer that made the free, calculated, and deliberate choice not to challenge, in an appeal to which it was a party, the district court's unfavorable preemption decision with respect to Ohio's dealer protest laws. At oral argument in this action, counsel for Spitzer conceded that had Spitzer attempted to re-raise the preemption issue on remand in the consolidated action it would have been precluded from doing so because of its failure to raise the issue on appeal. Thus, it is perfectly fair to disallow Spitzer from relitigating whether Section 747 preempts Ohio's dealer laws now before the Ohio dealer board, when Spitzer acknowledges that in the very case in which it agreed to have the preemption issue decided it strategically abandoned the argument.
Spitzer's equitable arguments are further undercut by the Supreme Court's decision in
Federated Dep't Stores, Inc. v. Moitie
. In
Moitie
, seven plaintiffs separately brought claims against the owners of various department stores alleging price fixing in violation of Section 1 of the Sherman Act,
While Moitie and Brown's appeal was pending, the Supreme Court decided
Reiter v. Sonotone Corp.
,
The Supreme Court observed that there is "no general equitable doctrine ... which countenances an exception to the finality of a party's failure to appeal merely because his rights are 'closely interwoven' with those of another party."
Spitzer claims that
Moitie
is distinguishable because it considered claim preclusion rather than collateral estoppel, but both doctrines are founded on common underlying equitable principles. It is "[a] fundamental precept of common-law adjudication, embodied in the related doctrines of collateral estoppel and res judicata, [ ] that a 'right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction ... cannot be disputed in a subsequent suit between the same parties or their privies....' "
Montana,
Spitzer's argument that collateral estoppel is not applicable because the preemption issue is a pure question of law also fails. While the Supreme Court has recognized an "exception to the applicability of the principles of collateral estoppel for 'unmixed questions of law,' " that exception only applies to " 'successive actions involving
unrelated
subject matter.' "
United States v. Stauffer Chemical Co.
,
Spitzer's final argument for finding collateral estoppel inapplicable-that
Fox Hills
' reversal with respect to Michigan's and Nevada's dealer laws had the effect of also vacating the district court's judgment with respect to Ohio's dealer laws-is without merit, because a partial reversal of a judgment generally does not vacate or void the entire judgment. As previously discussed,
Fox Hills
explicitly did not consider Ohio's dealer laws, and we carefully crafted our disposition to only affect the district court's preemption decision with respect to Michigan's and Nevada's dealer laws. Moreover, it is well established that "[i]f an appeal is taken from only part of the judgment, the remaining part is
res judicata
, and the vacation of the portion appealed from and remand of the case for further proceedings does not revive the trial court jurisdiction of the unappealed portion of the judgment."
Foster Wheeler Energy
,
Spitzer, however, claims that
Erebia v. Chrysler Plastic Prods. Corp.
announced a contrary rule when we held that "[w]here the prior judgment, or any part thereof, relied upon by a subsequent court has been reversed, the defense of collateral estoppel evaporates."
IV. Younger Abstention
Finally, the district court's injunction does not violate
Younger v. Harris
and its progeny, because the Ohio administrative proceeding between Chrysler, Fred Martin, and Spitzer does not fall within any of the "exceptional" circumstances that warrant
Younger
abstention in civil cases. "
Younger
abstention derives from a desire to prevent federal courts from interfering with the functions of state criminal prosecutions and to preserve equity and comity."
Doe v. Univ. of Ky.
,
[F]irst, Younger permits abstention when there is an ongoing state criminal prosecution. Next, Younger precludes federal involvement in certain civil enforcement proceedings ... that 'are akin to criminal prosecutions.' Finally, Younger pertains to 'civil proceedings involving certain orders that are uniquely in furtherance of the state courts' ability to perform their judicial functions,' such as contempt orders.
None of these exceptional circumstances is present here. First, the Ohio administrative proceeding is clearly not a state prosecution. Next, the Ohio administrative proceeding is not a civil enforcement proceeding, and, even if it was, it is certainly not "akin to a criminal prosecution." Finally, the Ohio administrative proceeding is not a state civil proceeding involving an order that is uniquely in furtherance of a state's ability to perform its judicial function. The Ohio administrative proceeding has no relation to civil contempt orders, state rules for posting bond pending appeal, or any other orders that are uniquely in furtherance of the judicial function of the Ohio courts.
See
Sprint Commc'ns, Inc.
,
V.
The judgment of the district court is affirmed.
Previous courts have distinguished between "Old Chrysler" (aka Chrysler LLC), which existed before its bankruptcy, and "New Chrysler" (aka Chrysler Group LLC), which was formed after Old Chrysler's insolvency and assumed nearly all the prior company's ongoing business. In 2014, Chrysler Group LLC was renamed FCA US LLC.
The district court also rejected Chrysler's and Fred Martin's arguments for declaratory relief founded on judicial admission, waiver, and law-of-the-case. The district court reasoned that Spitzer's statements at oral argument in
Fox Hills
did not qualify as a judicial admission because "judicial admissions generally arise only from deliberate voluntarily waivers that expressly concede an alleged fact," but Chrysler asked the court to hold that Spitzer "made a 'judicial admission that the Ohio state dealer law remains in effect as to Fred Martin's protest'-which is a legal conclusion" and "legal conclusions are rarely considered to be binding judicial admissions."
FCA US, LLC v. Spitzer Autoworld Akron, LLC
, No. 16-11186,
Reference
- Full Case Name
- FCA US, LLC, Fka Chrysler Group, LLC, Plaintiff-Appellee, Fred Martin Motor Company, Intervenor Plaintiff-Appellee, v. SPITZER AUTOWORLD AKRON, LLC, Defendant-Appellant.
- Cited By
- 14 cases
- Status
- Published