FCA US, LLC v. Spitzer Autoworld Akron, LLC

887 F.3d 278

FCA US, LLC, fka Chrysler Group, LLC, Plaintiff-Appellee,

Fred Martin Motor Company, Intervenor Plaintiff-Appellee,

v.SPITZER AUTOWORLD AKRON, LLC, Defendant-Appellant.

No. 17-1161

United States Court of Appeals, Sixth Circuit.

Argued: November 30, 2017

Decided and Filed: April 4, 2018

ARGUED: David M. Zack, BLEVINS SANBORN JEZDIMIR ZACK, PLC, Detroit, Michigan, for Appellant. Jay F. McKirahan, MAC MURRAY & SHUSTER, LLP, New Albany, Ohio, for Appellee Martin Motor Company. Hugh Q. Gottschalk, WHEELER TRIGG O'DONNELL LLP, Denver, Colorado, for Appellee FCA. ON BRIEF: David M. Zack, BLEVINS SANBORN JEZDIMIR ZACK, PLC, Detroit, Michigan, for Appellant. Jay F. McKirahan, Patrick W. Skilliter, MAC MURRAY & SHUSTER, LLP, New Albany, Ohio, for Appellee Martin Motor Company. John E. Berg, Cynthia M. Filipovich, CLARK HILL PLC, Detroit, Michigan, for Appellee FCA.

Before: NORRIS, ROGERS, and BUSH, Circuit Judges.

ROGERS, Circuit Judge.

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, 123 Stat. 3034, 3219–22, to be reinstated to Chrysler's dealer network. In the consolidated action, the district court held that Section 747 did not preempt the dealer protest laws of each of the six states, which grant existing dealerships certain rights to protest the installation of competing dealerships in the same vicinity. Four rejected dealers, three from Michigan and one from Nevada, appealed the district court's preemption decision; Spitzer Autoworld Akron LLC, a party to the consolidated action seeking reinstatement to Chrysler's Ohio dealer network, did not. In Chrysler Group LLC v. Fox Hills Sales, Inc. , we reversed the district court's judgment in the consolidated action in part, and held that Section 747 did not preempt the state dealer laws of Michigan and Nevada, but we explicitly did "not consider the preemption argument with respect to Ohio state dealer protest laws." 776 F.3d 411, 424 n.7, 430 (6th Cir. 2015) ( Fox Hills ).

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 , 401 U.S. 37 (1971), and its progeny. Because all the elements for collateral estoppel are met and no exceptions apply here, the district court properly determined that Spitzer is barred from raising the preemption issue before the state dealer board. Moreover, Younger abstention is not applicable because the Ohio dealer protest proceeding is unlike any of the three types of cases to which Younger applies.

I. The Consolidated Action

The background to these suits is set forth more fully in Fox Hills , see 776 F.3d at 414–21, and only a shorter version is warranted here. In the throes of the financial crisis, Chrysler filed for Chapter 11 bankruptcy in April 2009. See In re Chrysler LLC , 405 B.R. 84, 87–88 (Bankr. S.D.N.Y. 2009). The bankruptcy restructuring plan transferred almost all the business from "Old Chrysler" to "New Chrysler."¹ When Old Chrysler transferred its assets to the new entity, the restructuring plan included procedures designed to consolidate and streamline Old Chrysler's business operations, including terminating sales and service agreements with 789 dealers. The bankruptcy court overseeing the Chrysler restructuring authorized the dealership rejections. See id. at 88 ; In re Old Carco LLC , 406 B.R. 180, 186–87 (Bankr. S.D.N.Y. 2009).

Passed to protect the interests of the rejected dealers, Section 747 of the Consolidated Appropriations Act of 2010, Pub. L. No. 111-1117, 123 Stat. 3034, 3219-22, was intended to "establish [ ] a disclosure and arbitration process to determine whether dealers that had their franchise agreements terminated or not assumed by a successor company should be added to dealer networks of automobile manufacturers partially owned by the Federal Government." H.R. Rep. No. 111-355, at 942 (2009), 2009 U.S.C.C.A.N. 11-5, 1251 (Conf. Rep.). Many rejected dealers sought arbitration against New Chrysler under Section 747. Out of the over 400 rejected dealers who elected to arbitrate, Chrysler prevailed in 76 arbitrations, the dealers prevailed in 32 arbitrations, and the remaining disputes were settled through other means. Chrysler Grp. LLC v. S. Holland Dodge, Inc. , 862 F.Supp.2d 661, 670 n. 3 (E.D. Mich. 2012).

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 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 , 862 F.Supp.2d at 684 (emphasis added).

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 , 776 F.3d at 422. Spitzer, however, did not appeal the district court's preemption ruling, but it did appear on appeal to defend Section 747's constitutionality and to claim that Fred Martin lacked standing to raise a constitutional challenge to the Act. Id.

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, 776 F.3d at 430. However, we explicitly stated that we were not considering whether Section 747 preempts Ohio's state dealer protest laws:

Fox Hills, Village, Jim Marsh and Livonia all argue in favor of preemption. Because these dealerships are located in Nevada and Michigan, w

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