Los Feliz Ford, Inc. v. Chrysler Group, LLC

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT APR 24 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
LOS FELIZ FORD, INC., DBA Star No. 12-56082
Chrysler Jeep,
D.C. No. 2:10-CV-06077-GAF-
Plaintiff - Appellant, MAN
v.
MEMORANDUM*
CHRYSLER GROUP, LLC,
Defendant - Appellee,
and
UNITED STATES OF AMERICA,
Intervenor.
Appeal from the United States District Court
for the Central District of California
Gary A. Feess, District Judge, Presiding
Argued and Submitted February 11, 2014
Pasadena, California
Before: D.W. NELSON, PAEZ, and NGUYEN, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Loz Feliz Ford d/b/a Star Chrysler Jeep (“Star”) appeals from the district
court’s grant of summary judgment to Chrysler Group, LLC (“Chrysler”). We
have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm, in part, reverse, in part,
vacate, in part, and remand.
1. The district court did not err by granting judgment to Chrysler on Star’s
claim for reinstatement, and we affirm as to this issue. Even if reinstatement is
available as a remedy under Section 747 of the Consolidated Appropriations Act of
2010, 123 Stat. 3034, at 3219 (2009) (“§ 747”), the arbitrator in this case ordered,
“[Star] shall be added to [] Chrysler’s dealer network . . . .” She did not order
reinstatement.1 Moreover, Star only challenges the operational prerequisites
required by Chrysler, but not the terms of a final sales and service agreement.
Section 747(e) contemplates “customary and usual” operational prerequisites
without regard to the relief ordered by the arbitrator. Because operational
prerequisites may be required when an arbitrator orders reinstatement or addition,
whether the arbitrator ordered addition or reinstatement does not bear on Star’s
challenge to the Letter of Intent (“LOI”).
1
Because Star was not awarded reinstatement, we do not reach
Chrysler’s argument that a reinstatement remedy violates the Constitution.
2
2. The district court erred by granting judgment to Chrysler on Star’s claim
that its LOI failed to satisfy § 747(e)’s “customary and usual” requirement, and we
reverse. Chrysler showed through John Tangeman’s declaration that Star’s LOI
contained many terms commonly asked of new dealers at the start of negotiations.
Star responded with the opinion of its expert John Altstadt, who stated that the
terms in Star’s LOI were so onerous that no dealership would actually agree to
them. Altstadt also stated that a customary and usual LOI containing terms similar
to those in Star’s letter normally contains incentives to mitigate the dealer’s
burden.
First, we are not persuaded that Chrysler met its initial burden as the moving
party by producing the Tangeman declaration. The relevant inquiry in analyzing
§ 747(e)’s “customary and usual” requirement is the terms of franchise agreements
that new Chrysler dealers actually agreed to. Any other reading would render
§ 747(e)’s “customary and usual” requirement meaningless by allowing a covered
manufacturer to nullify an arbitrator’s order by offering onerous terms in initial
LOIs and then selectively negotiating more advantageous terms only with dealers it
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chooses.2 Thus, Chrysler failed to meet its burden because it presented no
evidence that any dealer added after Chrysler’s bankruptcy actually accepted terms
similar to those offered to Star after an arms-length negotiation. Nor did Chrysler
present any other evidence or argument showing that the terms of the unexecuted
letters are probative of the terms of executed franchise agreements.3
Moreover, even if the initial LOIs on their own are probative of executed
agreements, Altstadt’s opinion created a triable issue of fact. The Tangeman
declaration only analyzed the prerequisites required of Star, but made no mention
of whether letters issued to other dealers contained incentives. Thus, Altstadt
created a material dispute as to whether Star’s LOI is unusual because it lacks
incentives.
Chrysler’s argument that Star failed to meet its burden as the nonmoving
party because it did not produce LOIs executed by other dealers is without merit.
“[A] party seeking summary judgment always bears the initial responsibility of
informing the district court of the basis for its motion, and identifying those
2
We offer this hypothetical to explain our interpretation of § 747, but
in no way do we mean to imply that any covered manufacturer actually engaged in
such conduct.
3
Nothing in our disposition precludes Chrysler from showing such a
link on remand or otherwise using the unexecuted LOIs as evidence should the
district court find them to be admissible.
4
portions of the pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, which it believes demonstrate the
absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986) (internal quotation marks omitted). Chrysler identified the
Tangeman declaration as the portion of the record that supported summary
judgment. Star showed that material disputes existed concerning the subject matter
of the declaration, and we find nothing in our precedent or the language of Rule 56
that required Star to do more as the nonmoving party. See Nissan Fire & Marine
Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1103 (9th Cir. 2000) (explaining that the
nonmoving party’s burden on summary judgment is only “to produce enough
evidence to create a genuine issue of material fact”); Fed. R. Civ. P. 56(c).
3. The district court did not analyze Star’s Unfair Competition Law
(“UCL”), California Business and Professions Code § 17200, et seq., claim to the
extent that it was premised on an alleged violation of § 747, and we vacate the
grant of judgment to Chrysler on this claim. Star’s alternative argument that
Chrysler independently violated the “unfair” prong of the UCL by granting Jack
Ellis Dodge new Chrysler and Jeep dealerships, however, is without merit.
Chrysler was following through on a plan examined and approved by the
bankruptcy court, and state law cannot be used to circumvent the bankruptcy
5
court’s order. 40235 Wash. St. Corp. v. Lusardi, 329 F.3d 1076, 1084–85 (9th Cir.
2003) (finding state law preempted where simultaneous compliance with state law
and bankruptcy stay was impossible); see also In re Old Carco LLC, 470 B.R. 688,
704 (S.D.N.Y. 2012) (addressing preemption of state laws that conflict with the
bankruptcy court’s order terminating dealership franchises during Chrysler’s
bankruptcy).
4. The district court did not err by granting judgment to Chrysler on Star’s
claim under California Vehicle Code § 11713.3, and we affirm as to this issue.
Protest waivers like the one included in Star’s LOI were valid and enforceable in
California during the relevant times. DaimlerChrysler Motors Co. v. Lew
Williams, Inc., 48 Cal. Rptr. 3d 233, 239–40 (Ct. App. 2006).4 Because such
waivers were consistent with the scheme contained in California Vehicle Code
§§ 3060–3069.1, requiring such a waiver did not constitute a violation of those
sections. Thus, California Vehicle Code § 11713.3(l), which only applies when
§§ 3060–3069.1 are violated, is inapplicable. We note, however, that even though
the protest waiver was valid and enforceable, whether such waivers are “customary
4
Amendments to § 11713.3 went into effect on January 1, 2012,
January 1, 2013, and January 1, 2014.
6
and usual” terms in LOIs for § 747 purposes remains unresolved on the record
before us.
Each party shall bear its own costs.
AFFIRMED, in part, REVERSED, in part, VACATED, in part, and
REMANDED.
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