Chrysler Group LLC v. Fox Hills Motor Sales, Incorporated, et al

Filing 400

ORDER DENYING 362 Emergency MOTION to Amend/Correct Order on Motion for Partial Summary Judgment, DENYING 373 MOTION for Certificate of Appealability Pursuant to 28 U.S.C. 1292(b) and Rule 54(b) filed by Boucher Imports, Inc. d/b/a Frank Boucher Chrysler, DENYING 370 MOTION for Certificate of Appealability filed by Fox Hills Motor Sales Incorporated. Signed by District Judge Sean F. Cox. (JHer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Chrysler Group LLC,
Plaintiff,
v.

Case No. 10-12984

South Holland Dodge, Inc., et al.,

Honorable Sean F. Cox

Defendants;
Consolidated with
Livonia Chrysler Jeep, Inc., a Michigan
for profit corporation,
Plaintiff,
v.

Case No. 10-13290

Chrysler Group, LLC, et al.,

Honorable Sean F. Cox

Defendants;
Consolidated with
Chrysler Group LLC,
Plaintiff,
v.

Case No. 10-13908

Sowell Automotive, Inc., et al.,

Honorable Sean F. Cox

Defendants.
____________________________________/
ORDER DENYING
REQUESTS FOR CERTIFICATION OF INTERLOCUTORY APPEAL
This matter is currently before the Court on several motions asking the Court to either: 1)

1

amend its March 27, 2012 Opinion & Order, to include interlocutory appeal certification,
pursuant to 28 U.S.C. § 1292(b); or 2) to certify an interlocutory appeal under Fed. R. Civ. P.
54(b). The Court finds that the issues have been adequately presented in the parties’ briefs and
that oral argument would not significantly aid the decisional process. See Local Rule 7.1(f)(2),
U.S. District Court, Eastern District of Michigan. The Court therefore orders that the motions
will be decided upon the briefs. For the reasons that follow, the Court shall DENY these
requests.
BACKGROUND1
Following the 2009 bankruptcies of Chrysler LLC (“Old Chrysler”) and General Motors
Corporation (“Old GM”), and actions taken to consolidate their respective dealer networks,
Congress enacted Section 747 of the Consolidated Appropriations Act of 2010, Pub. L. No. 111117 (“Section 747”). That Act was passed to grant certain arbitration rights to dealerships that
were rejected or terminated in connection with the those bankruptcies. Several dealers who had
been rejected by Old Chrysler initiated, and prevailed in, Section 747 arbitrations with Chrysler
Group LLC (“New Chrysler”). Those arbitration determinations gave rise to this litigation
because the parties disagreed as to what happens next following those Section 747 arbitration
determinations.
In addition to New Chrysler, there are two different groups of dealers who are parties to
this action. First, there are 8 dealers whose franchise agreements were rejected by Old Chrysler

1

The full background of this action is provided in this Court’s March 27, 2012 Opinion &
Order (Docket Entry No. 361). The Court includes here only those facts necessary for purposes
of the pending motions.
2

and who prevailed in Section 747 arbitrations with New Chrysler that are currently2 parties in
these consolidated actions: 1) Livonia Chrysler Group LLC (“Livonia”); 2) Village Chrysler
Jeep, Inc. d/b/a Village Automotive Center (“Village”); 3) Fox Hills Motor Sales, Inc. d/b/a Fox
Hills Chrysler Jeep (“Fox Hills”); 4) Boucher Imports, Inc. d/b/a Frank Boucher Chrysler
(“Boucher”); 5) Jim Marsh American Corp. (“Jim Marsh”); 6) Spitzer Autoworld Akron, LLC
(“Spitzer”); 7) BGR, LLC d/b/a Deland Dodge (“BGR”); and 8) Sowell Automotive, Inc., d/b/a
Dodge City Chrysler Jeep (“Sowell”) (collectively, the “Rejected Dealers”). Second, there are a
number of existing dealers who are parties to this action because they oppose New Chrysler
establishing or relocating a dealer who prevailed in a Section 747 arbitration into their area
without following the provisions of state-law dealer acts (“Interested Dealers”). These Interested
Dealers include: 1) Crestwood Dodge, Inc. (“Crestwood”) (who opposes Livonia); 2) Fred
Martin Motor Co. (“Fred Martin”) (who opposes Spitzer); 3) Falls Motor City, Inc. (“Falls
Motor City”) (who opposes Spitzer); and 4) Hurley Chrysler Jeep, Inc. (“Hurley”) (who opposes
BGR).
In an Opinion & Order issued on March 27, 2012, this Court ruled on numerous motions
to dismiss and motions for summary judgment filed by the parties and declared that: 1) the sole
and exclusive remedy for a dealer rejected by Old Chrysler who prevails in a Section 747
arbitration with New Chrysler is a customary and usual letter of intent (“LOI”) to enter into a
sales and service agreement with New Chrysler; 2) Section 747 does not provide for
reinstatement of a dealer rejected by Old Chrysler who prevails in a Section 747 arbitration with

2

New Chrysler and a number of other dealers resolved their respective claims against
each other.
3

New Chrysler; 3) Section 747 does not authorize an award of monetary damages; 4) Section 747
does not provide for judicial confirmation or enforcement and neither the FAA nor the AAA’s
Commercial Rules govern these statutorily-mandated arbitrations or authorize a party to move to
confirm an arbitrator’s determination in a Section 747 arbitration; and 5) Section 747 does not
preempt the state-law dealer acts that govern the relationships between automobile
manufacturers and dealers in California (Cal. Vehicle Code § 3060 et seq.), Florida (Fla. Stat. §
320.01 et seq.), Michigan (Mich. Comp. Laws § 445.1561 et seq.), Nevada (Nev. Rev. Stat. §
482.36311 et seq.), Ohio (Ohio Rev. Code. § 4517.43), or Wisconsin (Wis. Stat § 218.0101 et
seq.).
This Court noted, however, that the above rulings to not dispose of all claims in these
consolidated actions:
The above rulings do not dispose of all claims in this action. Like the situation in
Eagle Auto Mall Corp., supra, several Rejected Dealers assert that New Chrysler
has not provided them the statutory customary and usual letter of intent to enter
into franchise agreements.
(March 27, 2012 Opinion & Order at 34). The Court noted that: 1) as to Sowell, Count Two of
New Chrysler’s July 14, 2001 Complaint for Declaratory Relief asks the Court to declare that the
LOIs provided by New Chrysler to Sowell is New Chrysler’s customary and usual LOI and is in
compliance with Section 747, and that Sowell was seeking a contrary ruling; 2) Livonia’s
complaint seeking declaratory relief also include a request that the Court declare that the LOI
New Chrysler provided to Livonia is not a customary and usual LOI in compliance with Section
747; and 3) Count II of New Chrysler’s February 9, 2011 Complaint for Declaratory Judgment
against Fox Hills, Village, and Jim Marsh asks the Court to declare that the LOIs New Chrysler
issues to Fox Hills, Village, and Jim Marsh are New Chrysler’s customary and usual LOIs and
4

comply with the Act. Thus, no judgment was issued by the Court and the Court scheduled a
status / scheduling conference with the parties to discuss the most efficient method of
adjudicating the remaining claims.
After this Court issued its March 27, 2012 Opinion & Order, parties began filing motions
asking this Court to amend that order to certify an interlocutory appeal pursuant to 28 U.S.C. §
1292(b) and/or Fed. R. Civ. P. 54(b), and premature notices of appeal.
On April 6, 2012, Livonia filed an “Emergency Motion to Amend This Court’s Opinion
& Order Dated March 27, 2012 To Allow For An Immediate Appeal.” (Docket Entry No. 362).
In that motion, Livonia asks the Court to amend its March 27, 2012 Opinion & Order to include
interlocutory appeal certification, pursuant to 28 U.S.C. § 1292(b).
Although no Judgment had been issued, and it had not requested that the Court certify an
interlocutory appeal, on April 11, 2012, Jim Marsh filed a Notice of Appeal. (Docket Entry No.
364).
On April 17, 2012, Fox Hills and Village filed “Motion Requesting Certification Of An
Interlocutory Appeal Under Rule 54(b) And/Or 28 U.S.C. § 1292(b) And Requesting A Stay
Under Rule 62(h)” (Docket Entry No. 370), along with a Notice of Joinder as to Livonia’s
Motion. (Docket Entry No. 371).
On April 18, 2012, Boucher filed its own “Motion for Certification Of Appeal Pursuant
To Rule 54(b) And/Or 28 U.S.C. 1292(b) And To Stay Enforcement Of Any Final Judgment
Pursuant To Rule 62(h).” (Docket Entry No. 373).
Although no Judgment has been issued, and this Court has not granted any requests for
certification of interlocutory appeal, Boucher filed a Notice of Appeal on April 23, 2012 (Docket

5

Entry No. 386); Fred Martin filed a Notice of Cross Appeal on April 24, 2012 (Docket Entry No.
379); Fox Hills and Village filed Notices of Appeal on April 24, 2012 (Docket Entry Nos. 381 &
382); and Jim Marsh filed an Amended Notice of Appeal on April 24, 2012 (Docket Entry No.
383).
On April 25, 2012, BGR filed a Counterclaim to New Chrysler’s Third Amended
Complaint, seeking a declaration that the LOI issued that New Chrysler issued to it is not New
Chrysler’s customary and usual LOI and does not comply with the Act. (Docket Entry No. 388).
ANALYSIS
I.

Requests For Certification Of Interlocutory Appeal Pursuant To 28 U.S.C. §
1292(b).
In the pending motions, several parties ask this Court to amend its March 27, 2012

Opinion & Order to include interlocutory appeal certification, pursuant to 28 U.S.C. § 1292(b).
Section 1292(b) provides:
When a district judge, in making in a civil action an order not otherwise
appealable under this section, shall be of the opinion that such order involves a
controlling question of law as to which there is substantial ground for difference
of opinion and that an immediate appeal from the order may materially advance
the ultimate termination of the litigation, he shall so state in writing in such order.
The Court of Appeals which would have jurisdiction of an appeal of such action
may thereupon, in its discretion, permit an appeal to be taken from such order, if
application is made to do it within ten days after the entry of the order: Provided,
however, That application for an appeal hereunder shall not stay proceedings in
the district court unless the district judge or the Court of Appeals or a judge
thereof shall so order.
28 U.S.C. § 1292(b) (emphasis in original). Thus, this Court has the discretion to certify an
order for interlocutory appeal if: 1) the order involves a controlling question of law; 2) a
substantial ground for difference of opinion exists regarding the correctness of the decision; and
6

3) an immediate appeal may materially advance the ultimate termination of the litigation. Id.; In
re City of Memphis v. City of Memphis, 293 F.3d 345, 350 (6th Cir. 2002); In re Baker & Getty
Fin. Svs., Inc. v. Nat’l Union Fire Ins. Co., 954 F.2d 1169, 1172 (6th Cir. 1992).
The Sixth Circuit has stated that “[r]eview under § 1292(b) is granted sparingly and only
in exceptional cases.” In re City of Memphis, 293 F.3d 350.
A.

This Court’s March 27, 2012 Involves Controlling Questions Of Law.

“A legal issue is controlling if it could materially affect the outcome of the case.” In re
City of Memphis, 293 F.3d 350.
There can be no serious dispute that this Court’s March 27, 2012 Opinion & Order
involves controlling questions of law, including the nature of the relief provided by Section 747
to a party who prevails in a Section 747 arbitration New Chrysler and whether Section 747
preempts state dealer acts. Indeed, because these very same threshold legal issues impact all
parties, this Court stayed all discovery until after it determined these controlling questions of
law. This Court’s determination of these legal issues materially affects the outcome of this
consolidated action because it resolved the majority of the claims between the parties. The only
claims that remain in the action following this Court’s March 27, 2012 Opinion & Order are the
claims between the parties as to whether the LOIs provided by New Chrysler to dealers who
prevailed in Section 747 arbitrations are New Chrysler’s customary and ususal LOIs and comply
with the Act. Thus, the first factor is satisfied.
B.

A Substantial Ground For Difference Of Opinion Does Not Exist Regarding
The Correctness Of The Decision.

“Under Sixth Circuit law, ‘substantial grounds for difference of opinion’ exist only when

7

there is conflicting authority on an issue.” Serrano v. Cintas Corp., 2010 WL 940164 (E.D.
Mich. 2010) (citing In re City of Memphis, 293 F.3d at 350-51)). This occurs where a given
issue: 1) is difficult and of first impression; 2) a difference of opinion exists within the
controlling circuit; or 3) the circuits are split on the issue. Serrano, supra (citing Gaylord Enter.
Co. v. Gilmore Enter. Group, 187 F.Supp.2d 926, 956 (M.D. Tenn. 2001)).
Here, the Rejected Dealers contend that a substantial ground for difference of opinion
exists as to the issues of whether: 1) Section 747 provides for reinstatement of a dealer rejected
by Old Chrysler who prevails in a Section 747 with New Chrysler; and 2) Section 747 preempts
state dealer acts.
As to the first issue, the Rejected Dealers have not identified a single decision, wherein
any court has accepted the Rejected Dealers’ proposed interpretation of Section 747. Rather, as
New Chrysler notes, “every court that has considered the issue has agreed that a ‘rejected’ Old
Chrysler dealer who received a favorable determination in a Section 747 arbitration is entitled to
receive only a ‘customary and usual letter of intent.” (New Chrysler’s Br., Docket Entry No.
391, at 4) (listing cases).
As to the second issue, whether Section 747 preempts state dealer acts, the parties have
not identified any cases wherein another court has decided that issue and this Court is not aware
of any such cases.
Accordingly, no difference of opinion therefore exists within the Sixth Circuit as to these
two issues. In addition, while other district courts have looked at the same or similar issues, no
circuit court has, as yet, reviewed these issues. Thus, there is not a circuit split on these issues.
Moreover, while these legal questions regarding Section 747 are issues of first

8

impression in the Sixth Circuit, they are not difficult issues. Indeed, this Court’s interpretation
of the Act was based on the plain language of the Act and the Rejected Dealers’ preemption
arguments were based on their rejected proposed interpretation of the Act. See, eg., Serrano,
supra (finding no substantial grounds for difference of opinion where, although issue was one of
first impression in the Sixth Circuit, it was not a difficult issue); City of Dearborn v. Comcast of
Michigan III, Inc., 2008 WL 5084203 (E.D. Mich. 2008) (finding no substantial grounds for
difference of opinion where, although the issue was one of first impression, based on the
language of the statute at issue, it was not a difficult issue).
C.

An Immediate Appeal Will Not Materially Advance The Ultimate
Termination Of The Litigation.

Pursuant to 28 U.S.C. § 1292(b), if a district court states that it is of the opinion that an
interlocutory appeal should be permitted, the Court of Appeals may, in its discretion, permit an
appeal to be taken. The statute further provides that proceedings in the district court are not
stayed unless the district judge or the Court of Appeals so orders. 28 U.S.C. § 1292(b).
This action has already been pending for several years. Following this Court’s March 27,
2012 Opinion & Order, the only issues that remain in this action concern whether New Chrysler
provided Rejected Dealers the “customary and usual” letter of intent to enter into franchise
agreements that is required by the Act. Given the limited nature of that issue, there is no reason
why this Court cannot issue an expedited scheduling order so that this action can be fully
concluded in short order.
Accordingly, the Court concludes that this is not the “exceptional” cases that should be
certified for an interlocutory appeal under § 1292(b). The Court therefore denies all requests for
it to certify the case pursuant to § 1292(b) and all requests asking to stay this matter pursuant to
9

§ 1292(b).
The Court also chooses not to exercise its discretion3 and certify its March 27, 2012
Opinion & Order as a final judgment pursuant to Fed. R. Civ. P. 54(b).
CONCLUSION & ORDER
For the reasons set forth above, IT IS ORDERED that all motions asking this Court to
certify its March 27, 2012 Opinion & Order for interlocutory appeal, pursuant to § 1292(b) or
Fed. R. Civ. P. 54(b), are DENIED.
IT IS FURTHER ORDERED that all requests asking the Court to stay further
proceedings in this matter are DENIED.
IT IS SO ORDERED.
S/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: May 24, 2012
I hereby certify that a copy of the foregoing document was served upon counsel of record on
May 24, 2012, by electronic and/or ordinary mail.
S/Jennifer Hernandez
Case Manager

3

The determination of whether to allow for an interlocutory appeal pursuant to Fed. R.
Civ. P. 54(b) is a matter left to the sound discretion of the district court. Akers v. Alvey, 338 F.3d
491, 496 (6th Cir. 2003).
10