Fred Martin Motor Co. v. Spitzer Autoworld Akron, LLC

Case Type:
Case Status:
Fred Martin Motor Co. v. Spitzer Autoworld Akron, LLC, Case No. 17-1161 (6th Circuit, Apr 04,2018) Published
The Court of Appeals affirmed the District Court's decision, holding that collateral estoppel precludes Spitzer from challenging the original no-preclusion decision that it had intentionally failed to appeal as to Ohio laws in the earlier action between the same parties.
Procedural context:
With the Ohio Protest at a standstill, Chrysler brought this action for injunctive relief to prevent Spitzer from challenging the original no-preemption decision as to Ohio laws. Fred Martin intervened. The District Court held that collateral estoppel precludes Spitzer from challenging Ohio's dealer protest laws.
"Old Chrysler" rejected the dealership agreements of 789 dealerships located, among other states, in Michigan, Nevada, and Ohio. The bankruptcy court overseeing Old Chysler's bankruptcy approved the rejections. In re Old Carco LLC, 406 B.R. 180, 186-87 (Bankr. S.D.N.Y. 2009). To protect the interests of the rejected dealers, Congress passed Section 747 of the Consolidated Appropriations Act of 2010 , giving dealers an arbitration process to determine whether certain rejected dealers should be added to New Chrysler's dealer networks. Over 400 dealers arbitrated pursuant to Section 747, in which Chrysler prevailed 76 times, and dealers prevailed 32 times. In a consolidated federal action ("No Preemption #1"), the arbitration-prevailing dealers, including Spitzer Autoworld, argued that Section 747 preempted state dealer protest laws, while New Chrysler and like-line (new) dealers established pursuant to state dealer protest laws, including Fred Martin, argued that Section 747 did not preempt the state laws. The District Court in No Preemption #1 held that Section 747 does not preempt the state laws of California, Florida, Michigan, Nevada, Ohio, or Wisconsin. Holland Dodge, 862 F. Supp. 661, 684 (E.D. Mich. 2012). The arbitration-winning dealers from Michigan and Nevada appealed the no-preemption decision in No Preemption #1, but Spitzer did not. Instead, Spitzer relied on the validity of the no-preemption decision in an effort to challenge Fred Martin's standing. The Court of Appeals reversed the no-preemption decision with respect to Michigan's and Nevada's dealer protest laws, but explicitly refused to reach the preemption issue as to Ohio's laws because Spitzer did not challenge the Ohio laws. Meanwhile, Fred Martin had brought a separate protest proceeding in Ohio (the "Ohio Protest") to stop New Chrysler from adding Spitzer as a dealer in Ohio. The Ohio Protest was staying pending the federal decision in No Preemption #1. After No Preemption #1 was reversed by the Court of Appeals as to Michigan and Nevado laws but not as to Ohio laws (the "Partial Preemption Decision"), Spitzer attempted to use the Partial Preemption Decision in the Ohio Protest, arguing for the first time that Section 747 does preempt Ohio's dealer protect law. Fred Martin argued that Spitzer's reliance upon the no-preemption decision in the No Preemption #1 appeal precluded it from relitigating the preemption issue before the Ohio dealer board.
NORRIS, ROGERS, and BUSH (opinion of Court by ROGERS)

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