Court Opinion

ID: 2671252
Source: CourtListenerOpinion
Date Created: 2014-04-24 20:26:46.310778+00
Date Added: 2024-06-11T13:08:20.380046
License: Public Domain

NOT FOR PUBLICATION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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