United States District Court, E.D. Michigan, Southern Division
OPINION & ORDER
F. Cox United States District Court Judge
case is a companion case to this Court's Consolidated
Dealer Action (Case No. 10-12984). The Consolidated Dealer
Action involved a number of Chrysler dealers and legal
issues. Defendant Spitzer was a dealer who was rejected by
Chrysler during its bankruptcy, who then prevailed at its
Section 747 Arbitration and wants to rejoin the dealer
network in Ohio. Fred Martin is an existing Chrysler dealer
in Ohio who opposes (because of increased competition)
Spitzer rejoining the network. In the Consolidated Dealer
Action, this Court declared that Section 747 did not preempt
the state-law dealer acts of six different states.
located in Michigan and Nevada appealed the preemption ruling
and won. Spitzer decided not to appeal any of this
Court's rulings, deciding to go ahead with the state-law
protest proceeding in Ohio. But after the Sixth Circuit
reversed this Court's preemption ruling as to Michigan
and Nevada's state-law dealer acts, Spitzer regretted its
decision not to appeal the preemption ruling as to Ohio's
act. Spitzer now refuses to participate in the Ohio Protest
Proceeding, arguing that Section 747 preempts Ohio's
dealer act, and that administrative proceeding is now at a
standstill. Chrysler filed this action, seeking a declaration
that the Ohio dealer act remains in full force and effect as
to Spitzer and the Ohio Protest Proceeding, and an injunction
barring Spitzer from relitigating the preemption issue.
explained below, the Court rejects Spitzer's threshold
challenges as to personal jurisdiction, venue, and standing.
the merits, the Court concludes that it must grant the relief
requested by Chrysler in this action - a declaratory ruling
that the Ohio Dealer Act remains in full force and effect
with respect to Spitzer and the Ohio Protest Proceeding. That
is because this Court concludes that res judicata, more
specifically issue preclusion, applies here such that the
issue of whether Section 747 preempts the Ohio Dealer Act is
“forever settled” as to Chrysler, Spitzer, and
Fred Martin. The Court also concludes that an order enjoining
Spitzer from relitigating this Court's preemption ruling
in the Ohio Protest proceeding is not barred by the
Anti-Injunction Act and shall issue the requested injunction.
current action is a companion case to this Court's
previous Case Number 10-12984 (“the Consolidated Dealer
Action”), which consisted of three separate cases that
were consolidated by this Court. The Consolidated Dealer
Action (“CDA”) has a lengthy procedural history.
The Court includes here a broad overview of that case and
information relevant to the issues in the present case.
747 of the Consolidated Appropriations Act of 2010 created an
arbitration procedure for automobile dealerships to seek
continuation or reinstatement of franchise agreements that
had been terminated by Old Chrysler during its bankruptcy
proceedings, with the approval of the bankruptcy court.
Several dealers who had been rejected by Old Chrysler
initiated, and prevailed in, Section 747 arbitrations with
the newly-formed Chrysler Group LLC.Those arbitration
determinations gave rise to litigation in this Court because
parties impacted by those determinations disagreed as to what
happens next following those Section 747 arbitration
different cases were filed, Case No. 10-12984, Case No.
10-13290, and Case No. 10-13908. Those three cases were
consolidated by this Court, for all purposes, including
trial, into Case Number 10-12984. (D.E. No. 92). In addition
to Chrysler, it involved two different types of dealers: 1)
“Rejected Dealers, ” (ie., a number of dealers
who had been rejected during the bankruptcy proceedings but
prevailed in Section 747 arbitrations with Chrysler); and 2)
“Interested Like-Line Dealers” who became parties
because they oppose Chrysler establishing or relocating a
dealer who prevailed in a Section 747 arbitration into their
area without following the provisions of state-law dealer
state-law dealer acts provide certain protections for
existing dealers and allow them to challenge a
manufacturer's establishment or relocation of a
dealership within a relevant market area where the same line
make is already represented.
state-law dealer acts of six different states (Michigan,
California, Florida, Nevada, Ohio, and Wisconsin) were at
issue in the CDA.
only parties in this case are: 1) Chrysler; 2) Spitzer, a
Rejected Dealer who prevailed in its Section 747 and wants to
rejoin the dealer network and operate a Chrysler dealership
in Ohio; and 3) Fred Martin, an Interested Like-Line Dealer,
who currently operates a Chrysler dealership in Ohio and
opposes Spitzer rejoining the network.
- while the CDA was proceeding - Fred Martin filed a protest
with the Ohio Motor Vehicle Dealer Board (“the Ohio
Board”) under case number 10-12-MVDB-366-JT, pursuant
to the state dealership laws of Ohio, seeking to enjoin
Spitzer's addition to Chrysler's dealer network
(hereinafter the “Ohio Protest Proceeding”).
Necessary Parties Became Part Of The CDA And The Court
Addressed Threshold Issues Of Personal Jurisdiction, Venue
Opinion & Order issued on May 10, 2011 (D.E. No. 195),
the Court addressed Motions to Dismiss that involved personal
jurisdiction, venue, and standing. All necessary parties
ultimately were included in the CDA.
Court Ultimately Declared That Section 747 Does Not Preempt
The State Dealer Laws Of Six States, Including Ohio.
discovery, the parties filed numerous summary judgment
motions, raising the same issues. The Court notes three
relevant motions here:
Docket Entry No. 231: wherein Spitzer asked this
Court to declare that Section 747 preempts the Ohio Dealer
Act, and rule that New Chrysler and other dealers waived
their right to challenge Spitzer' reinstatement;
Docket Entry No. 228: wherein Chrysler asked the
Court to grant summary judgment in its favor and against
Spitzer on Count One of its Second Amended Complaint and
declare that Section 747 does not preempt the Ohio Dealer Act
or permit Chrysler to ignore its obligations under state law;
Docket Entry No. 215: wherein Fred Martin asked the
Court to declare that Section 747 is unconstitutional or, in
the alternative, that Section 747 does not preempt the Ohio
Opinion & Order issued on March 27, 2012, this Court
ruled on the entire series of dispositive motions, declaring
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 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 New Chrysler.
3) Section 747 does not authorize an award of monetary
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.
5) Section 747 does not preempt the state 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.).
(D.E. No. 361 at Pg ID 16481) (emphasis added). That Opinion
& Order further provided:
IT IS FURTHER ORDERED that New Chrysler's motions for
summary judgment, seeking summary judgment as to its July 14,
2011 Complaint for Declaratory Judgment against
Spitzer, BGR and Boucher (D.E. Nos. 228, 243 &
229) are GRANTED. The cross-motions for summary judgment
filed by Spitzer, BGR, and Boucher
(D.E. Nos. 231, 234, & 220) are DENIED.
(Id. at Pg ID 16482) (emphasis added).
Court's Ruling Following The Bench Trial, That Relates To
Rejected Dealers Not At Issue Here.
9, 2013, this Court held a bench trial to determine whether
Chrysler supplied the Rejected Dealers who prevailed in their
Section 747 arbitrations with a “customary and usual
letter of intent, ” as required by the statute. By that
time, many of the Rejected Dealers in the consolidated action
had reached settlements with Chrysler, and the only Rejected
Dealers left were Fox Hill, Village, Jim Marsh, and Livonia.
Spitzer was not involved in the bench trial.
event, after the bench trial, this Court ruled that those
dealers had received the customary and usual LOIs that were
required under the statute. The Court then issued a final
judgment on August 8, 2013, thereby closing the CDA.
Parties - But Not Spitzer - Appealed To The Sixth
parties filed three different appeals in the United States
Court of Appeals for the Sixth Circuit.
case 13-2117 was filed by three of the four Rejected Dealers
who proceeded to the bench trial (Fox Hills, Village, and Jim
the third Rejected Dealer who had proceeded to the bench
trial, filed its own appeal.
Spitzer did not appeal any of this Court's rulings. But
Fred Martin (an Interested Like-Line Dealer in Spitzer's
area in Ohio) filed its own appeal, arguing that the district
court erred by not considering its constitutional challenge
to Section 747. In response to Fred Martin's appeal,
Spitzer appeared and “defended § 747's
constitutionality and claimed that Fred Martin lacked
standing to raise a constitutional challenge to the act.
Unlike the other prevailing dealers, Spitzer d[id] not
challenge the state dealer protest laws.” Chrysler
Group LLC v. Fox Hills Motor Sales, Inc., 776
F.3d 411, 422 (6th Cir. 2015).
Sixth Circuit consolidated all three of the appellate cases
and heard oral argument on August 8, 2014. During oral
argument, Counsel for Spitzer had the following colloquy with
THE COURT: So I understand your position, you don't have
a problem with saying the remedy is the LOI?
MR. GIARDINI: I am conflicted, you Honor, but since we
didn't appeal Judge Cox's decision, that is our
official position. Believe me, my heart is with Livonia and
Fox Hills, but I'm sitting with Chrysler.
THE COURT: But your client is willing to deal with just
having an LOI as long as the LOI is --
MR GIARDINI: It is. We feel we have such a strong
position with respect to that LOI, that we just want to get
on with it. We have been stayed now for three years from
even dealing with the protest that Fred Martin filed. I
can't move forward until this matter is decided. So
we just took the position, look, we'll deal with the
protest laws of Ohio.
Our laws are the same as Michigan. We are going to be
arbitrating basically the same criteria. In the protest
we're going to be dealing with the same criteria. I guess
my feeling is we won once, we'll win twice.
That's really why when Mr. KcKirahan says, I don't
understand why any of us are here, honestly, I don't
understand why Fred Martin is here. Because Fred Martin
didn't lose anything. It had a Chrysler Dodge Jeep
dealership before the bankruptcy. It had one after the
bankruptcy. It had one before 747 was passed. It has one
after 747 is passed. Even if I win my process, it will still
have its dealership.
THE COURT: It just doesn't want your competition?
MR. GIARDINI: It just doesn't - which it had for 30 years
prior to the Chrysler bankruptcy. Which is another - It's
not really relevant to this case.
THE COURT: It's not like he doesn't have standing?
MR. GIARDINI: Your Honor, I don't think he has
standing at all. Now I'll qualify that. If this court
were to determine that Ohio's Dealer Act was preempted by
747, then I would argue that he had some standing
because now he has a financial interest involved and he
doesn't have any opportunity as a party to deal with it.
He has that opportunity. So if this court decides that
Judge Cox was right and that 747 didn't preempt
Ohio's law, then --
THE COURT: You mean Michigan's law, right?
MR. GIARDINI: We have Ohio law, your Honor. Since we
didn't appeal that issue, it isn't really before
you. We're dealing 4517.50 of the Ohio Vice [sic]
Code in our case.
Fred Martin does not have standing to challenge the
constitutionality of this act with Judge Cox's decision
and that's what Judge Cox said. Even if you looked at
Fred Martin's pleadings, they clearly indicate that the
only reason they're here is because of the possibility
that there would be preemption. With that possibility
gone with Judge Cox's decision, they were done.
They're out of this thing in terms of being harmed in any
THE COURT: Thank you, Counsel.
(D.E. No. 21-3 at Pg ID 318) (emphasis added).
Sixth Circuit Reversed And Remanded As To Preemption - But
Only With Respect To The State-Law Dealer Acts Of Michigan
And Nevada - Not Ohio.
Sixth Circuit affirmed most of this Court's rulings. For
example, it held that “[t]he district court correctly
held that § 747 does not constitute an unconstitutional
legislative reversal of a federal court judgment, and that
the only relief provided to successful dealers under §
747 is the issuance of a ‘customary and usual'
letter of intent.” Id. at 415. It also
affirmed other rulings that are not relevant to this action.
It reversed as to just two aspects.
the Sixth Circuit ruled that the district court
“properly found that the letters of intent at issue in
this case were ‘customary and usual, ' with the
exception of one contractual provision that requires
reversal” as to just one dealer. Id. at 415.
It found that, as to Livonia alone, remand was appropriate so
that the district court could consider whether a
site-approval provision rendered its particular LOI illusory.
Id. at 432-33.
the Sixth Circuit disagreed as to preemption and held that
Section 747 “preempts the operation of Michigan and
Nevada dealer protest laws.” Id. at 430. That
is, it concluded that “application of the state dealer
acts of the two states in question (Michigan and
Nevada) is preempted by” Section 747. Id.
at 415. (emphasis added).
no one - including Spitzer - had appealed this Court's
preemption rulings regarding the state-law dealer acts of
Ohio, California, Florida, or Wisconsin, the Sixth Circuit
did not discuss any of those acts or make any rulings
regarding those acts. The Sixth Circuit expressly noted that
it was not ...