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FCA U.S. LLC v. Spitzer Autoworld Akron, LLC

United States Court of Appeals, Sixth Circuit

April 4, 2018

FCA US, LLC, fka Chrysler Group, LLC Plaintiff-Appellee,
v.
Spitzer Autoworld Akron, LLC Defendant-Appellant. Fred Martin Motor Company, Intervenor Plaintiff-Appellee,

          Argued: November 30, 2017

          Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:16-cv-11186-Sean F. Cox, District Judge.

         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.

          OPINION

          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 ...


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