13-4890-cv

Alliance of Auto. Mfrs. v. Currey

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A

SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED

BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. 

WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY

MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE

NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY

OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 

At a stated Term of the United States Court of Appeals for the Second Circuit, held at the

Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the

7th day of April, two thousand fifteen.

Present: ROSEMARY S. POOLER,

SUSAN L. CARNEY,

Circuit Judges,

 JOHN GLEESON,1

District Judge.

_____________________________________________________

ALLIANCE OF AUTOMOBILE MANUFACTURERS, INC.,

Plaintiff-Appellant,

v. 13-4890-cv

MELODY A. CURREY, in her official capacity as the 

Commissioner of the Department of Motor Vehicles of the State 

of Connecticut, 

Defendant-Appellee,

CONNECTICUT AUTOMOTIVE RETAILERS ASSOCIATION,

Intervenor-Appellee.

_____________________________________________________

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 The Honorable John Gleeson, United States District Court for the Eastern District of

New York, sitting by designation.
Appearing for Appellant: Daniel L. Goldberg (William N. Berkowitz, James C. McGrath,

Michael C. D’Agostino, Samuel R. Rowley, on the brief), Morgan,

Lewis & Bockius LLP, Boston, MA.

Appearing for Appellees: Michael K. Skold, Assistant Attorney General (George Jepsen,

Attorney General, on the brief), Office of the Attorney General,

Hartford, CT, for Defendant-Appellee Melody A. Currey.

Jason T. Allen, Bass Sox Mercer, Tallahassee, FL (Thomas J.

Murphy, James J. Healy, Cowdery & Murphy, LLC, Hartford, CT;

Richard N. Sox, Jr., Bass Sox Mercer, Tallahassee, FL, on the

brief), for Intervenor-Appellee Connecticut Automotive Retailers

Association.

Appeal from the United States District Court for the District of Connecticut (Hall, C.J.).

ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment and ruling of said District Court be and hereby are

AFFIRMED. 

 Plaintiff-appellant Alliance of Automobile Manufacturers, Inc. (the “Alliance”) appeals

from the December 2, 2013 judgment of the United States District Court for the District of

Connecticut (Hall, C.J.) dismissing its suit against Melody A. Currey (the “Commissioner)

challenging the facial constitutionality of the 2009 amendments (the “Reimbursement Provision”

and “Recoupment Bar” or collectively the “2009 Amendments”) to the Connecticut Franchise

Act (“CFA”), Conn. Gen. Stat. § 42–133s (2009), and the May 28, 2014 ruling of the district

court denying the Alliance’s motion to reopen. We assume the parties’ familiarity with the

underlying facts, procedural history, and specification of issues for review.

The Commissioner submits that the district court erred in concluding that the Alliance’s

claims are constitutionally ripe. We review the issue of ripeness de novo and perceive no error in

the district court’s ruling. See Murphy v. New Milford Zoning Comm’n, 402 F.3d 342, 347 (2d

Cir. 2005). As we have previously noted, “[i]n most cases, that a plaintiff has Article III standing

is enough to render its claim constitutionally ripe.” In re Methyl Tertiary Butyl Ether (MTBE)

Products Liab. Litig., 725 F.3d 65, 110 (2d Cir. 2013) (citation omitted). We do not regard this

case as an exception. The Alliance has alleged present harm in the form of increased costs for its

members doing business in Connecticut as a result of the challenged legislation. Accordingly,

the district court properly concluded that the Alliance’s claims present “a real, substantial

controversy, not a mere hypothetical question.” AMSAT Cable Ltd. v. Cablevision of Conn. Ltd.

P’ship, 6 F.3d 867, 872 (2d Cir. 1993) (internal quotation marks omitted).

We review de novo the dismissal of a complaint under Federal Rule of Civil Procedure

12(b)(6), construing the complaint liberally, accepting all factual allegations in the complaint as

true, and drawing all reasonable inferences in the plaintiff’s favor. Sherman v. Town of Chester,

752 F.3d 554, 560 (2d Cir. 2014). To survive a Rule 12(b)(6) motion, a plaintiff must allege

sufficient facts “to state a claim to relief that is plausible on its face,” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007), and “allow[ ] the court to draw the reasonable inference that the

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defendant is liable for the misconduct alleged,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(citation omitted).

The Alliance first contends that the 2009 Amendments violate the dormant Commerce

Clause, which “limits the ability of States and localities to regulate or otherwise burden the flow

of interstate commerce.” McBurney v. Young, 133 S. Ct. 1709, 1719 (2013) (internal quotation

marks omitted). We disagree. 

State legislation runs afoul of the negative command of the Commerce Clause only where

it: “(1) clearly discriminates against interstate commerce in favor of intrastate commerce, (2)

imposes a burden on interstate commerce incommensurate with the local benefits secured, or (3)

has the practical effect of extraterritorial control of commerce occurring entirely outside the

boundaries of the state in question.” Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 90 (2d Cir.

2009) (internal quotation marks omitted). As the Supreme Court has explained: “Our dormant

Commerce Clause jurisprudence . . . is driven by a concern about economic protectionism—that

is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state

competitors.” McBurney, 133 S. Ct. at 1719 (internal quotation marks omitted).

The Alliance’s complaint fails to state a plausible claim under the dormant Commerce

Clause. First, the Alliance does not allege facts that suggest the 2009 Amendments discriminate

against interstate commerce. The complaint fails to allege that Alliance members, whose

principal places of business and manufacturing facilities are all located outside of Connecticut,

compete with any in-state entity in a single market. See Selevan, 584 F.3d at 95 (“Both an instate interest and an out-of-state competitor are necessary because laws that draw distinctions

between entities that are not competitors do not ‘discriminate’ for purposes of the dormant

Commerce Clause.”) (other internal quotation marks omitted). Nor can the Alliance state an

undue burden claim under Pike v. Bruce Church,, Inc., 397 U.S. 137 (1970), as the 2009

Amendments do not “impose a burden on interstate commerce that is qualitatively or

quantitatively different from that imposed on intrastate commerce.” Nat’l Elec. Mfrs. Ass’n v.

Sorrell, 272 F.3d 104, 109 (2d Cir. 2001). Finally, that sales of some vehicles to Connecticut

automobile dealers may occur outside of the state is insufficient to state a claim that the 2009

Amendments, on their face, exert unconstitutional extraterritorial control over out-of-state

commerce. See United States v. Decastro, 682 F.3d 160, 168 (2d Cir. 2012) (party undertaking

facial challenge must show that “no set of circumstances exists under which the statute would be

valid, i.e., that the law is unconstitutional in all of its applications, or at least that it lacks a

plainly legitimate sweep” (internal quotation marks and brackets omitted)). Indeed, the Supreme

Court has cautioned that “[i]n determining whether a law is facially invalid, [courts] must be

careful not to go beyond the statute’s facial requirements and speculate about ‘hypothetical’ or

‘imaginary’ cases.” Wash. State Grange v. Wash. State Republican Party, 552 U.S. 442, 449–50

(2008). Accordingly, the district court did not err in dismissing the Alliance’s dormant

Commerce Clause claim.

We next address the Alliance’s contention that the 2009 Amendments are

unconstitutional under the Contracts Clause, which provides that “No State shall . . . pass any . . .

Law impairing the Obligation of Contracts.” U.S. Const. art. I, § 10. The Alliance argues that the

Connecticut legislature substantially impaired its members’ existing contracts with Connecticut

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automobile dealers by amending the warranty reimbursement provisions in the CFA and

enacting a bar on the recoupment of such costs. 

To state a claim for violation of the Contracts Clause, a complaint must allege sufficient

facts to demonstrate that a state law has “operated as a substantial impairment of a contractual

relationship.” Gen. Motors Corp. v. Romein, 503 U.S. 181, 186 (1992) (internal quotation marks

omitted). In determining whether an impairment is substantial we look primarily to “the extent to

which reasonable expectations under the contract have been disrupted.” Sanitation & Recycling

Indus., Inc. v. City of N.Y., 107 F.3d 985, 993 (2d Cir. 1997). Where a “plaintiff could anticipate,

expect, or foresee the governmental action at the time of contract execution, the plaintiff will

ordinarily not be able to prevail.” Sal Tinnerello & Sons, Inc. v. Town of Stonington, 141 F.3d

46, 53 (2d Cir. 1998).

We agree with the district court that the facts alleged in the Alliance’s complaint fail to

suggest that the 2009 Amendments were unforeseeable to its members. The relationship between

automobile manufacturers and Connecticut dealers has long been the subject of close state

regulation, including of warranty reimbursement rates. See Conn. Pub Act 82–445, §§ 2(a) & (b)

(effective June 8, 1982). Although the Recoupment Bar was a new feature of the CFA, it was

eminently foreseeable that the legislature could seek to close a loophole in its regulatory scheme.

Cf. Alliance of Auto. Mfrs. v. Gwadosky, 430 F.3d 30, 42 (1st Cir. 2005) (finding Maine’s

recoupment bar “a necessary means to effectuate the State’s warranty reimbursement policy” and

therefore, as a matter of law, “a foreseeable addition to that regulatory regime”). Because the

Alliance’s complaint does not plausibly allege substantial impairment, the district court properly

dismissed its Contracts Clause claim.

Next, the Alliance argues that the Reimbursement Provision violates due process by

arbitrarily interfering with its members’ right to negotiate reimbursement rates and bears no

rational relation to any public purpose.

“Substantive due process requires only that economic legislation be supported by a

legitimate legislative purpose furthered by a rational means.” In re Chateaugay Corp., 53 F.3d

478, 486–87 (2d Cir. 1995) (internal quotation marks omitted). Indeed, legislation that does not

infringe fundamental rights or target suspect classifications enjoys a “strong presumption of

rationality.” Beatie v. City of N.Y., 123 F.3d 707, 712 (2d Cir. 1997). Thus to survive a Rule

12(b)(6) motion, a substantive due process claim must allege that the “legislature has acted in an

arbitrary and irrational way.” Pension Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 729

(1984) (internal quotation marks omitted).

The Alliance’s complaint acknowledges that the legislature enacted the CFA to, among

other reasons, “promote fair competition.” That the Reimbursement Provision “may not succeed

in bringing about the result [the legislature] seeks to accomplish” or that “no empirical evidence

supports the assumptions underlying the legislative choice,” are not bases on which a court may

find challenged legislation violates substantive due process. Beatie, 123 F.3d at 712. The

Alliance’s complaint fails plausibly to allege that the facts relied on by the legislature “could not

reasonably be conceived to be true by the governmental decisionmaker.” Id. (internal quotation

marks omitted). Accordingly, the district court did not err in concluding that the Alliance’s

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complaint did not allege facts from which a factfinder could reasonably infer arbitrary or

irrational governmental action.

Since the district court properly dismissed the Alliance’s constitutional claims, it was not

improper for the court to decline to exercise its supplemental jurisdiction. 28 U.S.C. § 1367(c)(3)

(A district court “may decline to exercise supplemental jurisdiction over [pendent state law

claims] if . . . the district court has dismissed all claims over which it has original jurisdiction.”).

Finally, the Alliance submits that the district court erred in finding that leave to amend

would be futile and thereby denying its motion to reopen. 

We review de novo the denial of leave to amend when “based on . . . a determination that

amendment would be futile.” Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir. 2014) (internal quotation

marks omitted). While “leave to amend should be freely granted when ‘justice so requires,’”

Pangburn v. Culbertson, 200 F.3d 65, 70 (2d Cir. 1999) (quoting Fed. R. Civ. P. 15(a)), we

detect no error in the district court’s determination that the proposed amended complaint failed

to allege facts sufficient to state a plausible claim for relief. As such, the district court did not

abuse its discretion in denying the Alliance’s motion to reopen.

We have considered the remainder of the Alliance’s arguments and find them to be

without merit. Accordingly, the judgment and ruling of the district court hereby are

AFFIRMED.

FOR THE COURT:

Catherine O’Hagan Wolfe, Clerk

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