RSD Leasing, Inc. v. Navistar Int'l Corp.

81 F.4th 153

RSD LEASING, INC., Plaintiff-Appellant, v. NAVISTAR INTERNATIONAL CORP., Navistar, Inc., Defendants-Appellees.

Docket No. 22-282-cv

August Term, 2022

United States Court of Appeals, Second Circuit

Argued: June 28, 2023

Decided: August 30, 2023

Appeal from a decision by the District Court for the District of Vermont (Crawford, Ch. J.)

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.

Before: Lynch, Lohier, and Bianco, Circuit Judges.

Gerard E. Lynch, Circuit Judge:

Plaintiff-Appellant RSD Leasing Inc. ("RSD"), a company that leases trucks to other commercial entities intending to resell them at the end of the lease term, appeals from a judgment of the District Court for the District of Vermont (Geoffrey W. Crawford, Ch. J.) granting summary judgment to Defendants-Appellees Navistar International Corp. and Navistar, Inc. (together, "Navistar"), the manufacturer of 40 trucks that RSD purchased for its fleet from a non-party dealer. Although RSD initially pled several claims, the parties have narrowed their dispute on appeal to a single claim under the Vermont Consumer Protection Act (the "VCPA" or the "Act").

In fact, only one aspect of that claim is before us: whether RSD qualifies as a "consumer" under the VCPA. The VCPA, which protects individuals and businesses alike so long as they satisfy the definition of "consumer," defines that key term 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). As an initial matter, several terms featured in that definition are not defined in the statute and are subject to multiple plausible and divergent interpretations. Likewise, the text of the statute does not illuminate whether a company that purchases a good intending both to, say, "use" it and to resell it immediately after that "use" qualifies as a "consumer." And crucially, what little guidance there is from Vermont courts to help us determine which of several plausible, contrary statutory readings we should adopt does not directly address the interpretation of the statutory terms in sufficiently analogous contexts to clarify the issues before us. As a result, we are unable to confidently predict how the Vermont Supreme Court would resolve this dispute, and we therefore reserve decision and CERTIFY to that court the question set forth later in this opinion.

BACKGROUND

I. Factual Background

A. The Underlying Dispute

RSD leases, and eventually endeavors to sell, trucks to commercial operators. It is a subsidiary of RSD Transportation, Inc., a New Hampshire corporation based in Vermont. Navistar, a Delaware corporation based in Illinois, "designs, manufactures, distributes and sells commercial trucks" globally. App'x 10. Between 2008 and 2014, RSD purchased 40 Navistar-manufactured trucks (the "Subject Trucks") from a non-party dealer. Those trucks represented a significant share of RSD's fleet; as of June 2021, RSD owned around 50 trucks, which were predominantly, though not exclusively, manufactured by Navistar.¹

At the heart of this dispute is RSD's dissatisfaction with the proprietary exhaust gas recirculation technology installed in each of the Subject Trucks. According to RSD President Peter Daniels, Navistar "promised" that those trucks "would provide lower operating costs, less down time, optimal performance, increased power, improved combustion, premium reliability, cleanliness and energy-efficiency and higher residual value" than other trucks. Id. at 222. Instead, the exhaust gas recirculation technology caused the Subject Trucks to "lose power . . . , break down, overheat and damage other engine components." Id. at 224. But although that grievance is why this lawsuit exists, its merits are largely irrelevant for our purposes.

B. RSD's Leasing and Resale Practices

Rather, this appeal centers on what precisely RSD intended to do with the trucks. It is undisputed that, as was its usual practice, RSD leased the Subject Trucks out to other entities (primarily "trucking companies") for lease terms ranging from four to six years. App'x 128-29. Throughout the lease terms, RSD maintained some contact with each of the Subject Trucks: (1) it paid the loan for each truck; (2) it periodically renewed each truck's registration; (3) it paid for inspections; (4) it paid taxes, and claimed depreciation tax credits, on each truck; (5) it replaced broken-down trucks; (6) it retained responsibility for truck maintenance; and (7) it did not transfer title to the customer.

Each lease agreement included an option for the lessee to buy the truck at the end of the term. But only around half of the Subject Trucks were so conveyed. As for the other half, two remain in RSD's rental fleet "for occasional short-term, day-to-day or week at a time possibly, rental," id. at 142, and "the rest . . . are stored on [RSD's] premises and will be sold for parts or hauled to a junkyard," id. at 225. The company would have preferred to repurpose more of the remaining Subject Trucks into its rental fleet, but many proved "too unreliable." Id.

It is undisputed that RSD's intent at the time it purchased the Subject Trucks was - consistent with its usual practice - to lease them out and, after each lease expired, to offer them for resale. In his deposition on behalf of RSD, Daniels confirmed that the company typically looks to sell its trucks after each lease:

Q . . . . [A]t the end of the lease term does RSD re-lease the trucks or does it sell the trucks?

A. Well our goal is to sell. If we have a truck that comes in at reasonable mileage, we may put it in our rental fleet for a year or so to accumulate mileage.

Q. Okay. Let me understand that. . . . [I]f a truck comes in under the mileage, this 300,000 for medium duty, 500,000 for heavy duty, you keep it in the fleet as a rental vehicle; is that correct?

A. That would be an option. The goal would be to sell.

Id. at 136-37. Nothing in the record suggests that RSD's plans for the Subject Trucks differed from this account of its typical practice.

Finally, it is undisputed that RSD "does not purchase trucks to transport goods or people for itself or for other client[s]," id. at 230, and that RSD is a registered dealer of vehicles in Vermont, although RSD underscores that it is a registered dealer of "used vehicles only," id. at 229 (emphasis in original).

II. Procedural Background

RSD filed this lawsuit in September 2015 in the District of Vermont, originally asserting six claims: (1) breach of express warranty; (2) breach of implied warranties; (3) detrimental reliance; (4) negligent misrepresentation; (5) fraudulent concealment; and (6) violation of the VCPA. Following a long series of events irrelevant to this appeal,² Navistar moved for partial summary judgment in July 2021, seeking dismissal of Counts 4, 5, and 6 (the negligent misrepresentation, fraudulent concealment, and VCPA claims).

That December, the district court denied the motion with respect to the negligent misrepresentation and fraudulent concealment claims, but granted summary judgment to Navistar on RSD's VCPA claim. RSD Leasing, Inc. v. Navistar Int'l Corp., No. 5:15-CV-205, 2021 WL 6802994, at *3-4 (D. Vt. Dec. 8, 2021). In its VCPA discussion, the district court relied primarily on passages from the legislative history of the portion of the statute that it deemed determinative - the Act's definition of a "consumer" - concluding that "[w]ith this history in mind, it is clear that RSD's purchase of trucks to lease to customers cannot be considered consumer transactions." Id. at *3. And because RSD therefore was not a "consumer" for purposes of those transactions, it was not entitled to benefit from the VCPA's protections. Id.

In January 2022, the parties agreed to dismiss all remaining claims so that RSD could immediately seek this Court's review of that ruling. The district court entered final judgment the next day, and this appeal, addressing the VCPA claim alone, followed.

DISCUSSION

Not only is that single claim the only matter before us on appeal, but because the district court dismissed RSD's claim based solely on the VCPA's definition of a "consumer," we are asked to consider only that narrow aspect of the Act.

I. Legal Standards

A. Standard of Review

We review a district court's grant of summary judgment de novo, resolving all inferences in favor of the nonmoving party and affirming only where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Garcia v. Hartford Police Dep't, 706 F.3d 120, 126-27 (2d Cir. 2013) (internal quotation marks omitted).

B. The VCPA, Generally

The VCPA³ prohibits "[u]nfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce." Greene v. Stevens Gas Serv., 177 Vt. 90, 97, 858 A.2d 238 (2004), quoting 9 V.S.A. § 2453(a). It was conceived to "protect the public against unfair or deceptive acts or practices and to encourage fair and honest competition," and, in light of that "remedial" purpose, the Vermont Supreme Court has declared that it "must be construed liberally so as to furnish all the remedy and all the purposes intended." Elkins v. Microsoft Corp., 174 Vt. 328, 331, 817 A.2d 9 (2002) (internal quotation marks omitted). In the same breath, however, that court has also cautioned that, "[o]f course, liberal construction does not allow us to stretch the language beyond legislative intent." Id.

To state a claim under the VCPA, a plaintiff must...