Skyrunner, LLC v. La. Motor Vehicle Comm'n, CIVIL ACTION NO. 19-cv-049

495 F.Supp.3d 420

SKYRUNNER, LLC

v.LOUISIANA MOTOR VEHICLE COMMISSION

CIVIL ACTION NO. 19-cv-049

United States District Court, W.D. Louisiana, Shreveport Division.

Signed October 15, 2020

Lee H. Ayres, Ryan Paul Telep, Ayres Shelton et al., Shreveport, LA, for SkyRunner LLC.

Adrian F. LaPeyronnie, III, Greenberg & LaPeyronnie, Gretna, LA, for Louisiana Motor Vehicle Commission.

MEMORANDUM RULING

ELIZABETH ERNY FOOTE, UNITED STATES DISTRICT JUDGE

Now before the Court is a Motion to Dismiss for Lack of Personal Jurisdiction pursuant to Federal Rule of Civil Procedure Rule 12(b)(2), filed by Defendants Lessie House ("House") and Ing-Ya Cattle ("Cattle"). [Record Document 32]. Plaintiff SkyRunner, LLC ("SkyRunner") has filed an opposition. [Record Document 35]. For the reasons discussed below, the motion is DENIED . SkyRunner is granted leave to amend its complaint by Friday, November 6, 2020.

I. BACKGROUND

This case arises out of the Louisiana Motor Vehicle Commission's ("LMVC") attempts to regulate SkyRunner. According to its second amended complaint, SkyRunner is a Louisiana business that manufactures and distributes aircrafts that are certified by the Federal Aviation Administration ("FAA"). Record Document 15, ¶s 6 & 12. SkyRunner makes a product called the MK 3.2, which it describes as an FAA certified special light-sport aircraft. Id. at ¶ 13. SkyRunner states that the MK 3.2 is "designed to become airborne to traverse peaks, rivers, lakes, canyons, trees and cliffs, while being capable of traversing sand, dirt, snow, and asphalt." Id.

In July of 2018, the LMVC informed SkyRunner that it needed to register with the LMVC and that it needed to obtain a recreational manufacturer and dealer's license. Id. at ¶s 14 & 15. SkyRunner explained that it was already regulated by the FAA and that being regulated by both entities could result in inconsistency and overlapping regulations. Id. at ¶s 16 & 17. The LMVC responded that it "will regulate the portion of the aircraft that turns into an ATV."¹ Id. at ¶ 18. On November 29, 2018, the LMVC threatened to impose penalties and/or other sanctions on SkyRunner if SkyRunner did not comply with the LMVC's attempts at regulation. Id. at ¶ 19. This suit followed.

Initially, SkyRunner sued the LMVC seeking declaratory relief, but this Court barred the claims because of Eleventh Amendment sovereign immunity after finding the LMVC to be an arm of the State. Record Document 12, pp. 12–13. SkyRunner amended its complaint to name individual employees of the LMVC in their official capacities in accordance with the Ex parte Young exception to Eleventh Amendment immunity. Record Document 15, ¶ 7. SkyRunner added seventeen LMVC officials—fifteen Commissioners, Executive Director House, and Assistant Executive Director Cattle—to the suit. Id. The motion to dismiss pending before the Court was filed only by House and Cattle, and thus this ruling pertains solely to these two Defendants. Record Document 32.

According to SkyRunner, the LMVC has no constitutional authority to regulate the MK 3.2 because the LMVC's legal authority only allows the Commission to regulate motor vehicles and recreational products and not aircrafts such as the MK 3.2. Record Document 15, ¶s 20–26. Specifically, SkyRunner contends that the MK 3.2 does not fall within the legal definition of an ATV set forth in Louisiana Revised Statute § 32:1251. Id. at ¶s 20–23. SkyRunner claims that the FAA is the only entity authorized to regulate aircrafts and that, as a result, the LMVC is federally preempted from attempting to regulate SkyRunner. Id. at ¶ 30.

SkyRunner ultimately seeks a judgment declaring that (1) the FAA is the only entity authorized to regulate SkyRunner and the MK 3.2; (2) Louisiana Revised Statutes § 32:1251, et seq. ("LMVC laws") are preempted by federal law; (3) any attempts by the LMVC and its staff to regulate SkyRunner and/or the MK 3.2 are preempted or not authorized by existing legislation; and (4) any attempts by the LMVC and its staff to impose fines, penalties, and/or other sanctions against SkyRunner are preempted or not authorized by existing legislation. Id. at 11–12. SkyRunner also requests that the LMVC be required to pay "all costs associated with these proceedings." Id. at 13.

II. LEGAL STANDARD

A. Motion to Dismiss

House and Cattle frame their motion as a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2). Record Document 32, p. 1. However, House and Cattle are claiming sovereign immunity. Record Document 36, p. 6. The Fifth Circuit generally regards a dismissal based on state sovereign immunity as a dismissal based on a lack of subject matter jurisdiction. Cantu Servs., Inc. v. Roberie , 535 F. App'x 342, 346 n.3 (5th Cir. 2013). Further, previously in this matter, this Court construed a motion to dismiss based on sovereign immunity as a dismissal pursuant to Rule 12(b)(1). Record Document 12, p. 4. Accordingly, the Court will construe the instant motion as a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Motions filed under Rule 12(b)(1) allow a defendant to challenge the subject matter jurisdiction of the court to hear a case. Ramming v. United States , 281 F.3d 158, 161 (5th Cir. 2001). "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case." Home Builders Ass'n of Miss., Inc. v. City of Madison, Miss. , 143 F.3d 1006, 1010 (5th Cir. 1998) (quoting Nowak v. Ironworkers Local 6 Pension Fund , 81 F.3d 1182, 1187 (2d Cir. 1996) ). As the party asserting jurisdiction, the plaintiff bears the burden of proving that jurisdiction exists. Ramming , 281 F.3d at 161. Under Rule 12(b)(1), a court may dismiss an action for lack of subject matter jurisdiction "on any one of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Spotts v. United States , 613 F.3d 559, 565–66 (5th Cir. 2010).

B. Eleventh Amendment Immunity and Ex parte Young Exception

Federal court jurisdiction is limited by the Eleventh Amendment to the Constitution, which bars suits in federal court brought by a citizen against a state, unless the state consents to suit or Congress has abrogated the Eleventh Amendment immunity by statute. U.S. Const. amend. XI ; Freimanis v. Sea-Land Serv., Inc. , 654 F.2d 1155, 1157 (5th Cir. Unit A 1981) ; Vogt v. Bd. of Comm'rs of the Orleans Levee Dist. , 294 F.3d 684, 688 (5th Cir. 2002). Even when a state is not named as a defendant in a federal lawsuit, "[t]he State's Eleventh Amendment immunity will extend to any state agency or other political entity that is deemed the ‘alter ego’ or an ‘arm’ of the State." Vogt , 294 F.3d at 688–89 (citing Regents of the Univ. of California v. Doe , 519 U.S. 425, 429, 117 S.Ct. 900, 137 L.Ed.2d 55 (1997) ). As an arm of the State, the LMVC is entitled to the protections of the Eleventh Amendment.²

Sovereign immunity additionally bars "suits against state officials or agencies that are effectively suits against a state." City of Austin v. Paxton , 943 F.3d 993, 997 (5th Cir. 2019) (internal citations omitted). However, the Supreme Court has found a narrow exception to Eleventh Amendment immunity under Ex parte Young , 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). The Ex parte Young exception "is a legal fiction that allows private parties to bring suits for injunctive or declaratory relief against individual state officials acting in violation of federal law." City of Austin , 943 F.3d at 997 (internal quotation marks and citation omitted). The Supreme Court's jurisprudence directs the Court to conduct two inquires. Id. at 998. First, the Court must conduct a "straightforward inquiry into whether the complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective." Id. at 998 (quoting Verizon Md., Inc. v. Pub. Serv. Comm'n , 535 U.S. 635, 645, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002) ). Next, the Court must determine if "the official in question has a sufficient connection to the enforcement of the challenged act." Id. (citing Ex parte Young , 209 U.S. at 157, 28 S.Ct. 441 ).

III. ANALYSIS

House is the Executive Director of the LMVC, and Cattle is the Assistant Executive Director of the LMVC. Record Document 32, p. 2. Neither is a Commissioner. Id. House and Cattle argue that they are not proper parties to the suit because the Commissioners are the "state officials by virtue of their office" and thus the only proper parties under Ex parte Young as it relates to enforcing the LMVC laws. Record Document 36, pp. 2–3. House and Cattle further claim that they are merely employees of the LMVC and that the Commissioners have final authority over enforcement of the LMVC laws. Id. at 4–6. SkyRunner, however, contends that the Executive Director and Assistant Executive Director do have legal authority to enforce the regulations of the LMVC and that the law only requires "a scintilla of enforcement" power for a party to be subject to the Ex parte Young exception. Record Document 35, pp. 5–8. Finally, SkyRunner alternatively requests leave of court to amend its complaint to allege sufficient facts against House and Cattle, if this Court finds its second amended complaint to be insufficient. Id. at 8.

A. Whether the Ex parte Young Exception Applies to House and Cattle

As discussed above, the Court must undertake a two-part analysis in deciding if the exception applies to the state official in question. Initially, the Court briefly considers "whether the complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective." City of Austin , 943 F.3d at 998 (quoting Verizon , 535 U.S. at 645, 122 S.Ct. 1753 ). This is known as the Verizon standard. Here,...