Volkswagen Group of America, Inc. And Audi of America, Inc. v. John Walker III, in His Official Capacity as Chairman of the Texas Department of Motor Vehicles Board The Honorable Michael J. O'Malley, the Honorable Penny A. Wilkov, in Their Official Capacities as Administrative Law Judges for the State Office ( 2015 )

ACCEPTED
03-15-00285-CV
5816065
THIRD COURT OF APPEALS
AUSTIN, TEXAS
6/25/2015 8:52:53 AM
JEFFREY D. KYLE
CLERK
NO. 03-15-00285-CV
FILED IN
IN THE THIRD COURT OF APPEALS 3rd COURT OF APPEALS
AUSTIN, TEXAS AUSTIN, TEXAS
6/25/2015 8:52:53 AM
JEFFREY D. KYLE
Clerk
VOLKSWAGEN GROUP OF AMERICA, INC.
AND AUDI OF AMERICA, INC.
Appellants
v.
JOHN WALKER III, IN HIS OFFICIAL CAPACITY AS CHAIRMAN OF
THE TEXAS DEPARTMENT OF MOTOR VEHICLES BOARD, AND THE
HONORABLE MICHAEL J. O’MALLEY AND THE HONORABLE
PENNY A. WILKOV, IN THEIR OFFICIAL CAPACITIES AS
ADMINISTRATIVE LAW JUDGES FOR THE STATE OFFICE OF
ADMINISTRATIVE HEARINGS
Appellees
On Appeal from the 201st Judicial District Court, Travis County, Texas
Trial Court Cause No. D-1-GN-15-001186
Honorable Amy Clark Meachum, Presiding Judge
APPELLANTS VOLKSWAGEN GROUP OF AMERICA, INC. AND AUDI
OF AMERICA, INC.’S SUPPLEMENT TO THEIR VERIFIED MOTION
FOR TEMPORARY RELIEF TO PROTECT THE COURT’S
JURISDICTION
__________________________________________________________________
Appellants file this Supplement to Their Motion for Temporary Order to
Protect the Court’s Jurisdiction and show:
A. INTRODUCTION
1. Appellants are automobile manufacturers Volkswagen Group of
America, Inc. and Audi of America, Inc. (collectively “Audi”).
2. Appellees are three individuals who are sued in their official
capacities, John Walker III, Michael J. O’Malley and Penny A. Wilkov. Walker is
Chair of the Texas Department of Motor Vehicles Board. O’Malley and Wilkov
are Administrative Law Judges for the State Office of Administrative Hearing
(SOAH)1.
3. In this appeal, Audi seeks to overturn the 201st Judicial District
Court’s erroneous grant of Defendants/Appellees’ Pleas to the Jurisdiction and the
resulting dismissal of Audi’s district court lawsuit.
4. Audi has previously filed a motion requesting temporary relief to
protect this Court’s jurisdiction over this appeal and to prevent the issues presented
in this appeal from becoming moot. This supplement brings new information to
the Court which demonstrates that temporary relief is needed to prevent this appeal
from being mooted by actions taken in the underlying contested administrative
case.
B. BACKGROUND
5. As this Court may recall, Audi filed suit in a Travis County district
court to enjoin Appellees from conducting ultra vires acts and remand proceedings
1
The Texas Supreme Court held in City of El Paso v. Heinrich, 284 S.W.3d 366, 368 (Tex. 2009),
that an action to “determine or protect a private party’s rights against a state official who has acted
without legal or statutory authority is not a suit against the State that sovereign immunity bars,” and,
therefore must be brought against the state actor in his or her official capacity since the state and its
subdivisions remain immune. Id. at 373; Southwestern Bell Tel., L.P. v. Emmett, ___ S.W.3d ____, 58
Tex. Sup. Ct. J. 567; 2015 WL 1285326 (Tex. 2015).
2
in an underlying contested administrative case (Contested Case)2 that is pending in
the Texas Department of Motor Vehicles, Motor Vehicle Division (the Board) in
which Budget Leasing Inc. d/b/a Audi North Austin and Audi South Austin
(Budget) and others, protested the manufacturer’s rejection of Budget’s proposed
transfer of two Audi dealerships to a group of investors. CR 117-148 and exhibits
thereto; 367-369. CR.
6. After a full trial before two SOAH Administrative Law Judges,
Appellees O’Malley and Wilkov (the ALJs), the Board dismissed the protest
because Budget had not strictly complied with the protest application provision of
the Texas Occupations Code, therefore, the Board did not enter a decision based on
the PFD proposed by the ALJs. CR 503-505.
7. After the dismissal, Budget and the Intervenors (some of the
prospective transferees)3 filed a motion for rehearing with the Board. The Board
granted rehearing and voted to remand the Contested Case back to SOAH, over
Audi’s objections that, among other things, Chairman Walker did not have the
2
The administrative Contested Case is styled Budget Leasing, Inc. d/b/a Audi North Austin and
Audi South Austin v. Weitz, et. al. v. Volkswagen Group of America, Inc., et. al., MVD Docket No. 13-
0008-LIC, SOAH Docket No. XXX-XX-XXXX.LIC, before the Texas Department of Motor Vehicles, Motor
Vehicle Division (the “Contested Case”).
3
Under the Occupations Code, proposed transferees do not have standing to bring a protest
action—only the existing dealer has standing to protest a manufacturer’s refusal to approve a proper
transfer. Tex. Occ. Code § 2301.360(a) (“A dealer whose application is rejected under Section 2301.359
may file a protest with the board.”); Butnaru v. Ford Motor Company, 84 S.W.3d 198, 206 (Tex. 2002)
(“The Code’s definition of ‘dealer’ includes licensed dealers but not prospective transferees.”)
3
statutory authority to order the remand4 and that the ALJs did not have the
statutory power to conduct the remand or reopen evidence after the issuance of a
PFD.5 The Contested Case was remanded to the ALJs for further proceedings on
an expedited basis.6 Upon receipt of the remand, the ALJs created and
implemented an expedited schedule for the remand. CR 133; CR 152-53; 169; CR
506-526; 152-153.
8. Audi filed this action and requested injunctive relief to, among other
things, prevent Appellees from conducting the ultra vires: 1) remand of the
Contested Case; 2) reopening of evidence after issuance of the PFD; 3) issuance of
a new PFD by the ALJs; and, 4) issuance of a new final decision. See e.g.,
Heinrich, 284 S.W.3d at 369. Dendants/Appellees responded to the suit with Pleas
4
Appellees do not have inherent powers. Instead, as state agency actors, they only have the
powers specifically given to them by the legislature. See e.g., Sexton v. Mount Olivet Cemetery Assn, 720
S.W.2d, 137 (Tex. App.—Austin 1986, writ ref’d n.r.e.). Chairman Walker was not authorized to issue a
remand because remand is not a power listed in § 2001.058(e) of the Administrative Procedure Act.
Further, there are other ultra vires acts that are a part of this appeal. The remand order materially differs
from a board member’s motion, making the order itself ultra vires. CR 7-8, 1898, 1905-06, 1908.
Moreover, the remand is designed to consider “evidence” that was not timely filed despite the fact that the
Code only permits the board members and ALJs to consider “materials that are submitted timely.” Tex.
Occ. Code § 2301.709(a); 2301.154. This “evidence” was not presented for the Board’s consideration
until October 15, 2014 despite the fact that the evidence had closed on May 28, 2014, the ALJs issued a
PFD on July 16, 2014 and the Board issued a Final Order on September 12, 2014. CR 502, 505. In fact,
this “evidence” was not even mentioned in Budget’s operating Motion for Rehearing. See e.g., CR 139.
5
The ALJs are outside their authority because SOAH Rule 155.153 only allows an ALJ to reopen
evidence “if the judge has not issued a dismissal, proposal for decision, or final decision.” Here, the
remand attempts to reopen evidence long after the ALJs issued a PFD. See e.g., CR 140.
6
Not only did the Board’s order request that the ALJs expedite their remand proceedings, but
Chairman Walker also assured counsel for Budget that “as soon as we get this back . . . we will expedite
and move the process along as quickly as possible. You have my word on that.” Ritsema Affidavit
(previously filed in support of Audi’s Motion for Temporary Relief) at ¶ 13.
4
to the Jurisdiction in which they asserted governmental immunity from suit and the
exhaustion of remedies doctrine. CR 821-843.
9. The court below erroneously granted the Defendants/Appellees’ Pleas
to the Jurisdiction allowing Appellees’ ultra vires acts and the remand of the
Contested Case to go forward. CR 2030-31. Audi then filed this appeal and
sought temporary relief to protect this Court’s jurisdiction to decide this dispute.
Since filing its request for temporary relief, an additional action has taken place in
the contested administrative case that increases the need for temporary relief.
C. NEW DEVELOPMENT
10. As mentioned above, the ALJs are using a compressed schedule for
the remand of the Contested Case. In fact, the ALJs conducted the remand
hearing on April 16, 2015 and required post-hearing briefing by May 28, 2015.
CR 133;152-53; 169.
11. In a new development, occurring just days after Audi filed its motion
for temporary relief with this Court, the ALJs closed the evidence in the contested
case on June 16, 2015. Donley Affidavit attached hereto and incorporated herein.
The ALJs’ closure of the evidence makes Audi’s request for temporary relief even
more necessary because, under the Administrative Procedure Act, the ALJs must
issue a PFD within 60 days of the closing of evidence in a hearing. Tex. Gov’t
Code § 2001.143. Since the evidence was closed on June 16, 2015, the ALJs could
5
issue a second, ultra vires, PFD at any time prior to August 15, 2015. As a result,
the Board could enter a Final Decision based on that PFD before this Court can
reach the merits of this appeal, since this Court does not hear arguments during the
Summer and is unlikely to be able to issue an opinion on the merits of this appeal
before Fall. Ritsema Affidavit (previously filed in support of Audi’s Motion for
Temporary Relief) at ¶ 13. T
12. As such, this Court should exercise its power to prevent Appellees
from taking further steps in the administrative remand which would render Audi’s
appeal moot and deprive this Court of jurisdiction over it. See, e.g., Tex. R. App.
P. 29.3; Tex. R. App. P. 43.6; Cobb v. Thurmond, 899 S.W.2d 18, 19 (Tex. App.—
San Antonio 1995, writ denied); Lamar Builders, Inc. v. Guardian Savings & Loan
Association, 786 S.W.2d 789, 790 (Tex. App.—Houston [1st Dist.] 1990, no
writ)7.
WHEREFORE, PREMISES CONSIDERED, Appellants Volkswagen
Group of America, Inc. and Audi of America, Inc. respectfully request that this
Court grant temporary relief preventing Appellees from conducting further remand
7
See also Holloway v. Fifth Court of Appeals, 767 S.W.2d 680, 682-83 (Tex. 1989) (noting that a
superior appellate court has power to issue a writ against an inferior tribunal to prohibit it from interfering
with a pending appeal or enforcement of the appellate court’s orders); In re Lewis, 223 S.W.3d 756, 761
(Tex. App.—Texarkana 2007, orig. proceeding) (“[An order] may issue to . . .prevent interference with
higher courts in deciding a pending appeal . . . .”) (citing Tex. Capital Bank–Westwood v. Johnson, 864
S.W.2d 186, 187 (Tex. App.—Texarkana 1993, orig. proceeding); McClelland v. Partida, 818 S.W.2d
453, 456 (Tex. App.—Corpus Christi 1991, orig. proceeding)); In re Shields, 190 S.W.3d 717, 719 (Tex.
App.—Dallas 2005, no pet.) (citing Dallas Morning News v. Fifth Court of Appeals, 842 S.W.2d 655, 657
(Tex. 1992)) (“A court of appeals may issue such a writ to prevent an appeal from becoming moot.”)
6
proceedings in the Contested Case, from issuing a PFD based on the remand, and
from entertaining, issuing, signing or entering a Final Decision based on the
remand until this Court rules on the merits of Audi’s appeal. Audi also requests
such other and further relief, both general and specific, at law and in equity, to
which it may be entitled.
Respectfully submitted,
KING & SPALDING LLP
By: /s/ S. Shawn Stephens
S. Shawn Stephens
Texas Bar No. 19160060
sstephens@kslaw.com
James P. Sullivan
Texas Bar No. 24070702
jsullivan@kslaw.com
1100 Louisiana, Suite 4000
Houston, Texas 77002
Telephone: (713) 751-3200
Facsimile: (713) 751-3290
Billy M. Donley
Texas Bar No. 05977085
Mark E. Smith
Texas Bar No. 24070639
BAKER & HOSTETLER LLP
811 Main Street, Suite 1100
Houston, Texas 77002
Telephone: (713) 751-1600
Facsimile: (713) 751-1717
Attorneys for Appellants
Volkswagen Group of America, Inc.
and Audi of America, Inc.
7
CERTIFICATE OF CONFERENCE
As required by TEX. R. APP. P. 10.1, I conferred counsel for Appellees on
the merits of Appellants’ Supplement to Their Verified Motion for Temporary
Relief to Protect the Court’s Jurisdiction. Dennis McKinney, counsel for Appellee
John Walker III, is now opposed. Kimberly Fuchs, Counsel for Appellees Michael
J. O’Malley and Penn A. Wilkov, is opposed. Dent M. Morton, counsel for
Appellees Ricardo M. Weitz; Hi Tech Imports North, LLC; Hi Tech Imports,
South, LLC; and Hi Tech Imports, LLC, is opposed. Therefore, I assume that they
are all opposed to this supplement to the motion.
/s/ S. Shawn Stephens
S. Shawn Stephens
CERTIFICATE OF SERVICE
I certify that on June 25, 2015, I used the Court’s electronic case filing
system to file this Motion for Temporary Order to Protect the Court’s Jurisdiction
and to serve this document on counsel for appellees as follows:
William R. Crocker Kimberly Fuchs
crockerlaw@earthlink.net kimberly.fuchs@texasattorneygeneral.gov
807 Brazos, Ste. 1014 Assistant Attorney General
Austin, Texas 78701 Texas Attorney General’s Office
P.O. Box 12548
Counsel for Appellees Ricardo M. Austin, Texas 78711-2548
Weitz; Hi Tech Imports North, LLC;
Hi Tech Imports, South, LLC; and Counsel for Appellees Michael J. O’Malley
Hi Tech Imports, LLC and Penny A. Wilkov
8
J. Bruce Bennett Dennis McKinney
jbb.chblaw@sbcglobal.net dennis.mckinney@texasattorneygeneral.gov
Cardwell, Hart & Bennett, LLP Assistant Attorney General
807 Brazos, Suite 1001 Texas Attorney General’s Office
Austin, Texas 78701 P.O. Box 12548
Austin, Texas 78711-2548
Counsel for Appellees Ricardo M.
Weitz; Hi Tech Imports North, LLC; Counsel for Appellee John Walker III
Hi Tech Imports, South, LLC; and
Hi Tech Imports, LLC
Joseph W. Letzer
jletzer@burr.com
Dent M. Morton
dmorton@burr.com
Burr & Forman, LLP
420 20th Street N., Suite 3400
Birmingham, AL 35203
Counsel for Appellees Ricardo M.
Weitz; Hi Tech Imports North, LLC;
Hi Tech Imports, South, LLC; and
Hi Tech Imports, LLC
/s/ S. Shawn Stephens
S. Shawn Stephens
9
NO. 03-15-00285-CV
IN THE THIRD COURT OF APPEALS
AUSTIN, TEXAS
VOLKSWAGEN GROUP OF AMERICA, INC.
AND AUDI OF AMERICA, INC.
Appellants
vs.
JOHN WALKER III, IN HIS OFFICIAL CAPA CITY AS CHAIRMAN OF
THE TEXAS DEPARTMENT OF MOTOR VEHICLES BOARD, AND THE
HONORABLE MICHAEL J. O'MALLEY AND THE HONORABLE
PENNY A. WILKOV, IN THEIR OFFICIAL CAPACITIES AS
ADMINISTRATIVE LAW JUDGES FOR THE STATE OFFICE OF
ADMINISTRATIVE HEARINGS
Appellees
On Appeal from the 20lst Judicial District Court, Travis County, Texas
Trial Court Cause No. D-1-GN-15-001186
Honorable Amy Clark Meachum, Presiding Judge
AFFIDAVIT OF BILLY M. DONLEY
STATE OF TEXAS §
§
COUNTY OF HARRIS §
1. On this date, Billy M. Donley personally appeared before me, the
undersigned Notary Public, and after being duly sworn stated the following under
oath:
2. My name is Billy M. Donley. I am CUITently over the age of twenty-
one (21 ). I have never been convicted of a felony or a crime of moral turpitude. I
DMSLJBRARYOI :25801724.1
am under no legal disability and I am fully competent to make this Affidavit. I am
lead counsel for Appellants Volkswagen Group of America, Inc. and Audi of
America, Inc. 's (collectively "Audi"). I have personal knowledge of the facts
stated in this affidavit, and they are true and correct.
3. On June 15, 2015, Protestant and Intervenors m the underlying
contested case submitted their reply to Audi's June 10, 2015 letter brief, in which
they stated: "[i]n the interest of expediting this matter and in hopes of getting this
case placed on the Board's agenda for its August meeting, Protestant and
Intervenors respectfully request that your Honors consider the record to be closed
as of the date of this letter so that the PFD rendition and exceptions process may
begin as soon as practicable."
4. Attached hereto as Exhibit "l" is a true and correct copy of Remand
Order No. 15 Closing the Record, entered by Administrative Law Judges Michael
J. O'Malley and Penny A. Wilkov with the State Office of Administrative Hearings
on June 16, 2015 in the underlying contested case styled Budget Leasing, Inc. d/b/a
Audi North Austin and Audi South Austin v. Weitz, et. al. v. Volkswagen Group of
America, Inc., et. al., MVD Docket No. 13-0008-LIC, SOAH Docket No. 608-13-
4599.LIC pending before the Texas Department of Motor Vehicles, Motor Vehicle
Division.
606828207.1 2
~
Signed thi~ day of June, 2015.
SUBSCRIBED and SWORN t efore me on this tJ/*'-day of June, 2015,
to certify which witness my hand and official seal.
Notary Public in and for the
State of Texas
606828207.1 3