RHODE ISLAND TRUCK CENTER, LLC, Plaintiff, Appellant, v. DAIMLER TRUCKS NORTH AMERICA, LLC, Defendant, Appellee.
No. 22-1913
United States Court of Appeals For the First Circuit
February 9, 2024
Before Barron, Chief Judge, Howard and Gelpi, Circuit Judges.
Edward J. Sackman, with whom Hilary Holmes Rheaume and Bernstein, Shur, Sawyer & Nelson, P.A. were on brief, for appellant.
Nathan D. Imfeld, with whom Roberta F. Howell and Foley & Lardner LLP were on brief, for appellee.
BARRON, Chief Judge. This appeal concerns a Rhode Island truck dealer‘s challenge to a grant of summary judgment to an out-of-state truck manufacturer on two of the dealer‘s claims. The claims allege that a Rhode Island state agency erred in ruling that it lacked jurisdiction to grant relief to the dealer for
We begin by addressing a question of first impression concerning our subject-matter jurisdiction. We then conclude that, to resolve the dealer‘s challenge to the summary-judgment ruling on one of the dealer‘s two claims that are on appeal, we must certify to the Rhode Island Supreme Court a question about the Rhode Island dealer law‘s extraterritorial application. However, we affirm the District Court‘s grant of summary judgment on the other claim.
I.
The Rhode Island truck dealer is Rhode Island Truck Center, LLC (“RITC“). The out-of-state manufacturer is Daimler Trucks North America, LLC (“Daimler“), which is based in Oregon. The state agency is the Rhode Island Motor Vehicle Dealers License and Hearing Board (“Board“). The underlying Rhode Island law is
This appeal concerns two of the claims in RITC‘s suit against Daimler. Those claims pertain to two portions of a “protest” that RITC brought to the Board in 2022 in which RITC alleged that Daimler had violated the Dealer Law.1 See
A.
RITC alleged in the first portion of the protest relevant to this appeal that Daimler violated the Dealer Law in connection with a franchise that RITC had with Daimler to sell Daimler‘s Freightliner line of trucks. For ease of reference, we shall refer to this portion of the protest (and the underlying allegations of Daimler‘s wrongdoing) as the “Freightliner Claim.”
The Freightliner Claim is premised in part on the provision in
RITC alleged in this part of the Freightliner Claim that, although Daimler had already given RITC a franchise to sell
RITC alleged in support of this latter allegation that ATG Raynham was operating in RITC‘s “relevant market area” even though ATG Raynham was doing business in Bristol County, Massachusetts -- and so beyond the borders of Rhode Island. That was so, RITC alleged, because ATG Raynham was operating inside RITC‘s “area of responsibility,” which RITC alleged “included Bristol County in the Commonwealth of Massachusetts.”
RITC also alleged in its Freightliner Claim that Daimler violated
RITC alleged that Daimler did not have the requisite “good cause” in part because RITC “meets or exceeds [Daimler‘s] standards for customer care, sales, service facilities, supply of parts and qualified service personnel” and “the market of Bristol County, Massachusetts does not and cannot support two (2) Freightliner dealerships, nor has [Daimler] ever represented to RITC that there was a need for a second Freightliner dealership within Bristol County, Massachusetts.” RITC further alleged that
Daimler lacked the requisite “good cause” because in establishing the dealership Daimler “was principally motivated by non-economic considerations when it appointed [ATG Raynham] as a Freightliner dealer within RITC‘s [‘area of responsibility’ and thus ‘relevant market area‘].”
RITC alleged in the second portion of the protest relevant to this appeal that Daimler violated the Dealer Law in connection with a franchise that RITC unsuccessfully sought from Daimler to sell Daimler‘s Western Star line of trucks. This portion of the protest alleged that Daimler violated
We shall refer to this portion of RITC‘s protest as its “Western Star Claim.”
In the Western Star Claim, RITC alleged that Daimler had “denied RITC‘s application for a Western Star franchise in bad faith because it already intended to grant [ATG Raynham] -- not RITC -- a Western Star franchise.” RITC further alleged in support of its allegation of Daimler‘s violation that Daimler had denied RITC‘s application for that franchise on the basis that “RITC allegedly did not have adequate service capacity . . . and . . . needed to move to a new . . . location before it would be granted a Western Star franchise,” that RITC then “started the process to move . . . to obtain a Western Star franchise,” and that Daimler later told RITC that it “intended to appoint a Western Star dealer in Bristol County, Massachusetts[,]” with ATG Raynham. For relief, RITC sought a “finding and ruling that [Daimler‘s] conduct has been arbitrary, in bad faith and unconscionable,” a “finding and ruling that [Daimler] unreasonably prevented RITC from obtaining a Western Star dealership,” and an award of civil damages, costs, and attorneys’ fees.
The Board dismissed both the Freightliner Claim and the Western Star Claim. The Board began its analysis by reasoning as follows:
The Commerce Clause of the United States Constitution precludes the application of a state statute to commerce that takes place wholly outside the State‘s borders, whether or not the commerce has effects within the State. Edgar v. MITE Corp., 457 U.S. 624, 642-643 (1982). A state statute that “may adversely affect interstate commerce by subjecting activities to inconsistent regulations” may be considered invalid under the Commerce Clause. Morley-Murphy Co. [v]. Zenith Elecs. Corp., 142 F.3d 373, 379 (7th Cir. 1998) (citing CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 88 (1987)). Any attempt to apply Rhode Island‘s dealership, distribution and franchise law in an extraterritorial manner would certainly run afoul of the Commerce Clause.
The Board then went on to address two federal court precedents concerning the Dealer Law, one of which was decided by our Court:
The issue has previously been addressed by the federal courts in two cases which are dispositive of the issue before the Board. In Fireside Nissan, Inc. v. Fanning, 30 F.3d 206 (1st Cir. 1994), a Massachusetts dealer (“Fireside“) sought to protest the establishment of a new dealership in Rhode Island, but was barred from doing so on the grounds that out-of-state dealers lacked standing to protest under the Dealer Law. Id. [a]t 209-10. The Massachusetts dealer sued the Rhode Island Department of Transportation (“DOT“) seeking a declaration that its exclusion from the protest hearings violated the law. Id. [a]t 210-11.
The United States District Court for the District of Rhode Island denied Fireside‘s requested relief and that ruling was affirmed by the First Circuit Court of Appeals. The First Circuit agreed with the District Court‘s findings that the Dealer Law “targeted only activities which occur within the state of Rhode Island performed by businesses seeking or holding Rhode Island dealership licenses.
* * * [T]he Rhode Island legislature did not intend for the statute to apply to, or for the benefit of, out-of-state dealers such as Fireside.” Id. [a]t 211. The First Circuit found that only Rhode Island dealers can be in a “relevant market area” for purposes of [the] dealer law. Id. [a]t 213 (emphasis added). The Court concluded that the DOT had properly applied the statute to exclude non-Rhode Island dealers from protest hearings. The First Circuit also found that the DOT‘S interpretation of the Dealer Law did not violate any constitutional rights of Fireside.
The factual scenario of Fireside can fairly be described as the inverse of the situation presently before the Board; an out-of-state dealer protesting the establishment of a new in-state dealership. Several years after Fireside, however, the District of Rhode Island was presented with an opportunity to apply Fireside‘s reasoning to facts which much more closely parallel the instant case, in County Motors, Inc. v. GMC, 2001 WL 34136693. In County Motors, a Massachusetts General Motors (“GM“) dealer sought and received approval from GM to relocate its dealership from one part of Attleboro, Massachusetts to another. The relocation placed the dealership closer to another GM dealership which was located in Rhode Island. The Rhode Island dealer filed a protest with the Board under
R.I.G.L. § 31-5.1-4.2 , claiming that the new location of the Massachusetts dealership was within its relevant market area as that term is defined in the statute. This Board dismissed the protest on the grounds that it lacked jurisdiction over the relocation of an automobile dealership in Massachusetts.Rather than appeal the Board‘s decision, the Rhode Island dealer sued GM in federal court in an effort to prevent the relocation. Relying heavily on Fireside, the County Motors court found
R.I.G.L. § 31-5.1-4.2 entirely “inapplicable” to the relocation of a Massachusetts dealership. Id. at 2. To allow
a Rhode Island dealer to protest the relocation of a Massachusetts dealership under that statute would have been clearly “inequitable and contrary to the reasoning of Fireside Nissan.” Id. [a]t 3. The Court went even further, holding that the Rhode Island dealer “would have no claim under any portion of
§ 31-5.1 ” in regards to the relocation of a Massachusetts dealership. Id.
The Board wound up its analysis as follows:
The Fireside Nissan and County Motors cases are controlling. This Board lacks the authority to apply the provisions of the Rhode Island dealer law in an extraterritorial manner and therefore cannot prohibit Respondent from establishing
or moving a dealership outside the boundaries of this state. After careful review of all the reliable, probative and substantial evidence presented by both parties to this complaint and based on the reasonable inferences derived from them, and for the reasons outlined above, it is hereby ORDERED that:
1. The protest filed by Rhode Island Truck Center is hereby dismissed due to lack of jurisdiction.
B.
RITC initially challenged the Board‘s ruling in Rhode Island Superior Court, naming Daimler (but not the Board) as the defendant. RITC did so pursuant to the
concerning the establishing or relocating of a new motor vehicle dealership or adding an additional location for an existing new motor vehicle dealership shall have a right to a review of the decision in a court of competent jurisdiction.“).
RITC‘s state-court complaint alleged that the “Board‘s dismissal of the Protest has prejudiced the substantial rights of RITC and was improper.” It alleged that this was so because:
a. The Protest did not require the Dealer Board to apply the provisions of the Rhode Island dealer law in an extraterritorial manner;
b. Assuming arguendo that the Protest required the Dealer Board to apply the provisions of the Rhode Island dealer law in an extraterritorial manner, the Dealer Board had jurisdiction to do so; and
c. The Dealer Board‘s dismissal was improper, even if it was correct on the issue of extraterritoriality, because there was no dispute that the Dealer Board had jurisdiction to adjudicate RITC‘s remaining claims: (i) [Daimler] failed to comply with the statutory notice provisions set forth in
§ 31-5.1-4.2(a) ; (ii) [Daimler] denied RITC‘s application for a Western Star franchise in bad faith; and/or (iii) [Daimler] acted in a manner that was arbitrary, in bad faith, and/or unconscionable. The Dealer Board‘s decision failed to provide any analysis in support of its dismissal of these claims.
The complaint went on to allege that the “Board‘s decision should be reversed because it is: a. in violation of constitutional or statutory provisions; b. made upon unlawful procedure; c. affected by other error of law; and/or d. arbitrary,
capricious or characterized by an abuse of discretion, or a clearly unwarranted exercise of discretion.” RITC requested that the Superior Court reverse the Board‘s decision, remand the matter to the Board “with instructions to adjudicate RITC‘s claims as set forth in the Protest,” award RITC its “costs, including reasonable attorneys’ fees, of prosecuting this appeal,” and award “such other relief as this Honorable Court deems just.”
C.
Daimler removed RITC‘s state-court case to the United States District Court for the District of Rhode Island. Daimler‘s notice of removal stated that removal was proper under
The District Court first concluded that “[a]djudicating this [d]ispute [w]ould [r]equire the [e]xtraterritorial [a]pplication of Rhode Island [l]aw” because the interactions at issue “directly affected out-of-state conduct (the sale of certain
truck brands in Bristol County, MA)” and “would have the effect of extraterritorially regulating conduct in Massachusetts.” Id. at 222 (emphasis in original). In the course of setting forth this conclusion, the District Court stated, however, that the Dealer Law‘s “protections only go as far as the state‘s geographic borders” and that “just because the statute‘s language is not limited to the state‘s geographic borders does not necessarily mean that it should be read expansively.” Id. It then relied on our decision in Fireside Nissan in asserting that the Dealer Law‘s “primary objectives are not accomplished through the regulation of the dealerships in Massachusetts.” Id.
The District Court did not confine its analysis, however, to the scope of the Dealer Law itself. It went on to address the federal constitutional limits imposed by the Dormant Commerce Clause on the extraterritorial application of the Dealer Law, noting that “even if the statute did explicitly cover conduct outside the state of Rhode Island, as RITC suggests, the statute would still be subject to the limits imposed by the Commerce Clause.” Id.
In that regard, the District Court concluded that the Board “[l]acks [a]uthority to [a]pply Rhode Island [l]aw [e]xtraterritorially,” id. at 223, on the ground that “the Commerce Clause dictates that no State may force an out-of-state merchant to seek regulatory approval in one State before undertaking a
transaction in another,” id. (quoting Healy v. Beer Inst., Inc., 491 U.S. 324, 337 (1989)), and that, “[u]nder RITC‘s position, Daimler would be required to answer to the Board (the equivalent of seeking regulatory approval from a Rhode Island regulator) for its decisions to grant or not grant franchises in Massachusetts,” id. Indeed, the District Court continued, “[e]very time Daimler wanted to interact with a dealer in Rhode Island, it would be required to consult and act in accordance with Rhode Island law, regardless of where the underlying conduct at issue would occur,” which, according to the District Court, would “violate[] states’ inherent sovereignty to regulate conduct within their borders.” Id.
Finally, the District Court concluded that “RITC [p]ossesses [n]o [r]emaining [c]laims that the [agency] [c]an [c]onstitutionally [a]djudicate.” Id. at 224. Having already concluded that RITC‘s claims to the Board failed on Dormant Commerce Clause grounds, the District Court explained that “there would not even be a proper occasion to rule on the merits of the statutory claims. Any statutory right that RITC might claim to have found in Rhode Island‘s laws would thus run afoul of the Commerce Clause.” Id. And, in response to RITC‘s argument that the Board “could award damages based on [Daimler‘s] violation of the [Dealer Law], which would have no bearing on the operations of the competing dealership in Massachusetts,” id. (alterations in
original), the District Court further concluded that the argument failed on Dormant Commerce Clause grounds, too, because “such an imposition of damages or a fine . . . would influence Daimler‘s conduct in Massachusetts” and would “have the effect of regulating
RITC timely appealed.
II.
We begin with a question that concerns our subject-matter jurisdiction. See One & Ken Valley Hous. Grp. v. Me. State Hous. Auth., 716 F.3d 218, 224 (1st Cir. 2013) (explaining that, “[a]lthough none of the parties raise the issue on appeal, we have an obligation to inquire into our subject-matter jurisdiction sua sponte“). It arises because of our decision in Armistead v. C & M Transport, Inc., 49 F.3d 43 (1st Cir. 1995).
Armistead held that there was no federal court subject-matter jurisdiction in that case because the claims at issue sought to enforce a state administrative agency‘s ruling pursuant to state law. Id. at 46. Even though there was complete diversity of the parties, the court explained, “federal district courts sitting in diversity jurisdiction do not have appellate
power, nor the right[,] to exercise supplementary equitable control over original proceedings in the state‘s administrative tribunals.” Id. Armistead further explained that the “limited supplementary and appellate authority exercised by the Maine courts over Commission proceedings finds no analog in federal diversity jurisdiction,” id., and that the requested appellate enforcement of state agency action was not “a civil action within the cognizance of the original jurisdiction of the federal court,” id. at 48 (emphasis added) (quoting 1A James Wm. Moore et al., Moore‘s Federal Practice para. 0.167[6] (2d ed. Supp. 1994)).
Because the claims that are at issue in this case are themselves brought pursuant to a state law and seek the review of a state administrative ruling, we asked the parties to provide supplemental briefing on the question of whether we lack subject-matter jurisdiction under Armistead. We conclude that the parties are right, however, that we do have jurisdiction, given the post-Armistead ruling by the Supreme Court of the United States in City of Chicago v. International College of Surgeons, 522 U.S. 156 (1997).
A.
City of Chicago, like Armistead, was a case that had been removed to federal court, involved claims that had been brought pursuant to a state law, and concerned a nonfederal administrative agency‘s ruling. See City of Chicago, 522 U.S. at
160-61; Armistead, 49 F.3d at 44-46. But, unlike Armistead, City of Chicago held that there was federal subject-matter jurisdiction over the claims.
The Court emphasized that, although some of the claims at issue sought review of the relevant agency ruling on purely state-law grounds, see Int‘l Coll. of Surgeons v. City of Chicago, Nos. 91-C-1587, 91-C-5564, 1995 WL 9243, at *2 (N.D. Ill. Jan. 9, 1995), others of the claims sought such review on the ground that the agency had erred both because (1) certain local ordinances on which the agency had relied for its ruling, “on their face and as applied,” violated various provisions of the U.S. Constitution; and (2) “the manner in which the [local administrative agency] conducted its administrative proceedings violated [the plaintiff‘s] rights to due process and equal protection[,]” City of Chicago, 522 U.S. at 160. The Court explained that the presence of those
right to relief under state law requires resolution of a substantial question of federal law.” City of Chicago, 522 U.S. at 164 (quoting Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 13 (1983)).
The Court went on to conclude, moreover, that because
Finally, the Court held that, because there was subject-matter jurisdiction over the federal claims, there also was subject-matter jurisdiction under
[I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental
jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.
B.
This review reveals that if at least one of the claims here is not materially different from the federal claims in City of Chicago, then we would have subject-matter jurisdiction over that claim under
determine whether at least one of RITC‘s two claims is materially the same -- for jurisdictional purposes -- as the federal claims in City of Chicago.
1.
RITC does not allege in its claim pertaining to the Board‘s dismissal of the Freightliner Claim that the Board violated federal law, constitutional or otherwise. RITC alleges instead that the Board made an erroneous determination of federal constitutional law in ruling as it did. Nonetheless, we conclude that, reviewing de novo, see Law Offs. of David Efron v. Matthews & Fullmer L. Firm, 782 F.3d 46, 51 (1st Cir. 2015), the claim not only arises under federal law within the meaning of
In setting forth our reasons for so concluding, we focus chiefly on the Supreme Court‘s post-City of Chicago decision in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005). There, the Court explained that a state-law claim gives rise to federal-question jurisdiction under
a.
Grable first requires RITC to show that the claim at issue “necessarily raise[s]” a federal issue. 545 U.S. at 314. RITC thus must show that it can prevail on the claim only if the stated federal issue -- in this case, the Dormant Commerce Clause issue -- is resolved. See Franchise Tax Bd. of Cal., 463 U.S. at 27-28 (describing embedded-federal-question jurisdiction in terms of whether “the plaintiff‘s right to relief necessarily depends on resolution of a substantial question of federal law” (emphasis added)); Gunn v. Minton, 568 U.S. 251, 259 (2013) (“To prevail on his legal malpractice claim, [the plaintiff] must show that he would have prevailed in his federal patent infringement case . . . . That will necessarily require application of patent law to the facts of [the plaintiff‘s] case.” (emphasis added)); Rhode Island v. Shell Oil Prods. Co., LLC, 35 F.4th 44, 57 (1st Cir. 2022) (“[T]he Energy Companies pinpoint no specific federal issue that must necessarily be decided for Rhode Island[, the plaintiff,] to win its case . . . .” (emphasis added)).
The Board concluded based on the Dormant Commerce Clause that it “lack[ed] the authority to apply provisions of the Rhode Island dealer law in an extraterritorial manner and therefore cannot prohibit [Daimler] from establishing or moving a dealership outside the boundaries of this state.” To overturn that ruling, RITC seeks to show that the Board‘s Dormant Commerce Clause analysis was mistaken. Thus, “it is not logically possible for [RITC] to prevail on [its] cause of action without affirmatively answering the embedded question of . . . federal law,” R.I. Fishermen‘s All., Inc. v. R.I. Dep‘t of Env‘t Mgmt., 585 F.3d 42, 49 (1st Cir. 2009), which in this case concerns a question about the restrictions that the Dormant Commerce Clause imposes. Accordingly, the stated federal issue is “necessarily raise[d].” Grable, 545 U.S. at 314.5
Grable‘s “actually disputed” requirement, id., is also met. RITC‘s claim that the Board erred in concluding that it lacked jurisdiction over the Freightliner Claim is dependent on its assertion about how the Dormant Commerce Clause issue must be resolved, and Daimler disputes RITC‘s position about the proper resolution of that issue. Thus, the federal-law issue in play is actually disputed.
c.
The third Grable requirement -- that the federal law issue must be “substantial,” id. -- is met as well. “Substantiality demands that an embedded federal question be ‘important to the federal system,’ not just to the parties.” AMTAX Holdings 227, LLC v. Tenants’ Dev. II Corp., 15 F.4th 551, 558 (1st Cir. 2021) (quoting Municipality of Mayagüez v. Corporación Para el Desarrollo del Oeste, Inc., 726 F.3d 8, 14 (1st Cir. 2013)). The substantiality prong is satisfied, therefore, when “the outcome of the claim could turn on a new interpretation of a federal statute or regulation which will govern a large number of cases.” Municipality of Mayagüez, 726 F.3d at 14. Moreover, “a case is more likely to be important to the federal system as a whole if it presents ‘a nearly “pure issue of law . . . that could be settled once and for all“’ rather than an issue that is ‘fact-bound and situation-specific’ and whose holding will more likely be limited to the facts of the case.” Id. (quoting Empire HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 700-01 (2006)).
We have explained -- albeit outside the Grable context -- that there is a “federal interest in enforcing the [D]ormant Commerce Clause” and that the “Supreme Court has recently reiterated that the [D]ormant Commerce Clause ‘reflect[s] a “central concern of the Framers that was an immediate reason for calling the Constitutional Convention[.]“‘” Am. Trucking Ass‘ns v. Alviti, 14 F.4th 76, 88 (1st Cir. 2021) (quoting Tenn. Wine & Spirits Retailers Ass‘n v. Thomas, 139 S. Ct. 2449, 2461 (2019)). Grable itself explained, moreover, that “constitutional questions may be the more likely ones to reach the level of substantiality that can justify federal jurisdiction.” 545 U.S. at 320 n.7 (citing Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804, 814 n.12 (1986)). In addition, the stated federal issue presents a “nearly pure issue of law” that “could be settled once and for all,” Tyngsboro Sports II Solar, LLC v. Nat‘l Grid USA Serv. Co., 88 F.4th 58, 68 (1st Cir. 2023) (quotations omitted): Would the Dormant Commerce Clause be violated if, by enforcing the Dealer Law here, the Board were to “prohibit [a party] from establishing or moving a dealership outside the boundaries of” Rhode Island?
That is not to say the record makes plain that cases governed by our ruling on the constitutional issue here would “arise frequently.” Gunn, 568 U.S. at 262. But that feature of the record does not necessarily preclude a finding that Grable‘s “substantiality” prong is satisfied. See R.I. Fishermen‘s All., Inc., 585 F.3d at 51 (finding the “substantiality” prong of Grable to be satisfied in a claim about the interpretation of federal law, notwithstanding that this Court did not address how many cases would be governed by a ruling on that issue). And we are persuaded by RITC‘s contention that the stated federal issue here does not arise in a case in which “the result would be limited to the parties . . . that had been before the state [agency].” Gunn, 568 U.S. at 263; cf. Tyngsboro, 88 F.4th at 68 (“[W]e fail to see how its
At the very least, courts nationwide may be informed by the resolution of that issue in this case because, as RITC argues, such resolution could “apply by analogy to all cases where a franchisor appoints a new franchise within a franchisee‘s territory that lies in another state.” Daimler also has pointed to a variety of cases around the nation in which the extraterritorial application of dealer-protection statutes has been at issue. See, e.g., Carolina Trucks & Equip., Inc. v. Volvo Trucks of N. Am., Inc., 492 F.3d 484 (4th Cir. 2007); BMW Stores, Inc. v. Peugeot Motors of Am., Inc., 860 F.2d 212 (6th Cir. 1988); Morley-Murphy Co., 142 F.3d 373. We therefore conclude that Grable‘s substantiality requirement is met. See R.I. Fishermen‘s All., Inc., 585 F.3d at 51 (finding the “substantiality” prong of Grable to be satisfied because “[t]here is a significant federal interest in making certain that states comply with federally sanctioned interstate compacts” even though the claim involved one specific compact).
d.
The fourth Grable requirement is satisfied if we may “entertain [the issue] without disturbing any congressionally approved balance of federal and state judicial responsibilities.” 545 U.S. at 314. We conclude that this requirement also is met.
As we have explained, City of Chicago establishes that, if the federal issue arises here in a claim that is not materially distinguishable from the federal claims in City of Chicago, then the issue arises here pursuant to a claim that was properly removed under
We do note, however, that the precise basis for the Court‘s
We need not resolve the mystery here, however. As we have explained, the first
In that regard, RITC‘s claim challenging the Board‘s dismissal of the Freightliner Claim does not take issue with any fact-finding by the Board. Rather, it alleges that the Board made an error of federal constitutional law when the Board concluded that the out-of-state application of the Dealer Law would categorically violate the Dormant Commerce Clause seemingly for reasons independent of any disputed fact.
To be sure, the Board necessarily applied its conclusions of constitutional law, even if cursorily, to the fact that ATG Raynham was located in Massachusetts. But in City of Chicago itself the Court took as a given the state of the facts found by the state agency, at least as to the federal claims that the Court held were within the Court‘s subject-matter jurisdiction. See id. at 164-66. We thus conclude that the RITC claim in question meets Grable‘s fourth requirement.
2.
In sum, City of Chicago held that there was subject-matter jurisdiction under
3.
In light of our conclusion that there is subject-matter jurisdiction over RITC‘s claim challenging the Board‘s ruling dismissing the Freightliner Claim, we also conclude -- reviewing de novo, see Law Offs. of David Efron, 782 F.3d at 51 -- that there is subject-matter jurisdiction pursuant to
This conclusion follows from the fact that
True, both RITC‘S claim challenging the Board‘s dismissal of the Western Star Claim and RITC‘s claim challenging the Board‘s dismissal of the Freightliner Claim “[must] ‘derive from a common nucleus of operative fact‘” for there to be supplemental jurisdiction over RITC‘S
In City of Chicago, the Court concluded that the requirements for supplemental jurisdiction were met because the state and federal claims that the plaintiff presented to the Court all derived from the plaintiff‘s “unsuccessful efforts to obtain demolition permits from the [state agency].” Id. Here, RITC‘s claim challenging the Board‘s dismissal of the Freightliner Claim and RITC‘s claim challenging the Board‘s dismissal of the Western Star Claim are, similarly, derived from RITC‘s unsuccessful effort to obtain from the Board an adjudication on the merits of the claims that RITC presented to the Board. Indeed, the Board‘s dismissal ruling pertained to the entirety of RITC‘s protest concerning Daimler‘s alleged violations of the Dealer Law, which were all brought in the same Board proceeding. Thus, we are satisfied that there is supplemental jurisdiction over RITC‘S claim challenging the Board‘s dismissal of the Western Star Claim, regardless of whether there is also another basis for a federal court to have subject-matter jurisdiction over that claim.7
III.
At last, then, we reach the merits of RITC‘s challenge to the District Court‘s summary-judgment ruling. We review the District Court‘s “grant of summary judgment [to Daimler] de novo. In conducting this review, we assess the facts in the light most flattering to the nonmovant and draw all reasonable inferences on its behalf.” Phila. Indem. Ins. Co. v. BAS Holding Corp., 78 F.4th 53, 58 (1st Cir. 2023) (citations omitted). A “party is entitled to summary judgment only when the record reveals no genuine issue as to any material fact and it is clear that judgment is proper as a matter of law.” Id. (citation omitted). We begin with the claim in which RITC seeks to overturn the Board‘s dismissal of the Freightliner Claim.
A.
Despite the fact that RITC can prevail on the claim only if the Dormant Commerce Clause issue is resolved, “prior to reaching any constitutional questions, federal courts must consider nonconstitutional grounds for decision.” Buchanan v. Maine, 469 F.3d 158, 172 (1st Cir. 2006) (quoting Gulf Oil Co. v. Bernard, 452 U.S. 89, 99 (1981)). And, as both the Board‘s and the District Court‘s decisions make clear, the constitutional issues pertaining to the Dormant Commerce Clause and the state statutory issues pertaining to the Dealer Law‘s application to Daimler‘s out-of-state establishment of ATG Raynham are not easily disentangled. Indeed, both the Board and the District Court appeared to rule against RITC not only on constitutional grounds but also on state statutory ones.
Neither party disputes that there is potentially an issue of state statutory construction antecedent to the questions concerning the Dormant Commerce Clause on
Thus, before addressing the merits of the District Court‘s determination that the Board did not err in ruling on the Dormant Commerce Clause issue, we first need to address how the antecedent state-law question about the scope of the “relevant market area” in the Dealer Law bears on the way that we should exercise our subject-matter jurisdiction.8 We turn, then, to that issue, which raises some complicated questions of its own about the role of a federal court in adjudicating a dispute of this sort.
1.
For starters, RITC argues that, under Burford v. Sun Oil Co., 319 U.S. 315 (1943), we should abstain from deciding the antecedent state-law question that we have identified, at least insofar as we would resolve it by ruling against RITC on the ground that the Dealer Law “only applies within Rhode Island.” RITC contends that abstention in that circumstance would be proper to avoid “needless friction with state policies,” given that such a ruling would limit the reach of the Dealer Law as a matter of state statutory construction. We do not agree.
We have previously explained that there is no reason for us to abstain under Burford if the “plaintiffs do not seek individualized review of fact- (or cost-) specific regulatory decision making.” Bath Mem‘l Hosp. v. Me. Health Care Fin. Comm‘n, 853 F.2d 1007, 1014 (1st Cir. 1988); see also Forty Six Hundred LLC v. Cadence Educ., LLC, 15 F.4th 70, 75 (1st Cir. 2021) (”Burford abstention applies only in ‘unusual circumstances,’ where the federal court risks usurping the state‘s role as the ‘regulatory decision-making center.‘” (quoting Vaquería Tres Monjitas, Inc. v. Irizarry, 587 F.3d 464, 474 (1st Cir. 2009))). And here, the review that RITC seeks is not of that kind that merits Burford
2.
Burford abstention aside, there remains a question as to whether we should resolve the state-law question in play by ourselves or instead certify it to the Rhode Island Supreme Court. Cf. Turner v. City of Boston, 760 F. Supp. 2d 208, 214 (D. Mass. 2011) (“[C]ertification is now more appropriate than abstention, which would require institution of a new action in the state courts.“); Arizonans for Off. Eng. v. Arizona, 520 U.S. 43, 79 (1997) (describing certification as a cheaper, faster, and simpler alternative to abstention); Rogers v. Okin, 738 F.2d 1, 5 (1st Cir. 1984) (“In general, certification serves as a substitute for, not a complement to, abstention.“); Phillips v. Equity Residential Mgmt., LLC, 844 F.3d 1, 7 (1st Cir. 2016) (noting that certification in a case involving “interpretation of a state statute governing an area of traditional state authority . . . ‘promotes “strong federalism interests“‘” (quoting Easthampton Sav. Bank v. City of Springfield, 736 F.3d 46, 53 (1st Cir. 2013))). We conclude that certification is the proper course, notwithstanding the rulings below by the District Court and the Board appearing to hold that, as a matter of state law, the “relevant market area” does not encompass any area that is outside of Rhode Island.
a.
Article I, Rule 6(a) of the Rhode Island Supreme Court Rules of Appellate Procedure provides that the Rhode Island Supreme Court may “answer questions of law certified to it by . . . a Court of Appeals of the United States . . . when requested by the certifying court.” Two conditions, however, must be met.
The first condition is that the certified question “may be determinative of the cause then pending in the certifying court.”
For reasons that we have already explained, the state-law issue may be determinative here. Thus, the first condition is met. In addition, as the parties appear to agree, there is no Rhode Island Supreme Court precedent on this issue. So, the second condition is met as well.
We do have our own limits, however, on when we may certify a question of state law. Specifically, because of our own obligations to exercise the jurisdiction that we have, we will not certify a question of state law to a state‘s highest court if the answer to that question is “sufficiently clear to allow us to predict [the Rhode Island Supreme Court‘s] course.” Hosp. San Antonio, Inc. v. Oquendo-Lorenzo, 47 F.4th 1, 6 (1st Cir. 2022) (quoting Pagán-Colón v. Walgreens of San Patricio, Inc., 697 F.3d 1, 18 (1st Cir. 2012)). We thus must decide if that limit bars certification here, which we will next address.
b.
RITC argues that it is perfectly clear that, as a matter of state law, “relevant market area” must be construed to require
In addition, RITC asserts -- correctly -- that there is no precedent from any Rhode Island state court or our Court reading “relevant market area” to contain an implicit Rhode-Island-only limitation. RITC acknowledges in so contending that we have previously addressed the extraterritorial reach of Rhode Island‘s Dealer Law in Fireside Nissan, 30 F.3d 206. But RITC is right that Fireside Nissan does not hold that the relevant provisions of the Dealer Law -- for present purposes -- have no application beyond Rhode Island as a matter of state law.
Fireside Nissan held that the Dealer Law did not permit an out-of-state dealership to protest to the Board based on a dealership having been established in Rhode Island. See 30 F.3d at 209-13; see also BMW Stores, 860 F.2d at 215 (holding that Kentucky‘s dealer-protection statute did not permit an Ohio dealer to protest the establishment of a Kentucky dealership). The question here, though, is whether an in-state dealership may protest to the Board about a violation of the Dealer Law based on
a dealership having been established outside of Rhode Island. Fireside Nissan had no occasion to address that question.
RITC also is right that County Motors, Inc. v. General Motors Corp., No. 00-108T, 2001 WL 34136693 (D.R.I. Jan. 29, 2001), does not require us to reject RITC‘s broad reading of “relevant market area.” There, an in-state dealership had brought a protest to the Board under the Dealer Law about the relocation of a dealership from one out-of-state-location to another, and the Board had dismissed the protest on the ground that it lacked jurisdiction over the relocation of an automobile dealership that had occurred out of state. See id. at *1. The in-state dealership then brought a separate civil suit in federal court -- rather than an appeal of the Board‘s decision -- in which it sought to enforce the Dealer Law against the manufacturer based on its having made the out-of-state relocation of the out-of-state dealership. Id. The U.S. District Court for Rhode Island dismissed the claim, in part on the ground that “[t]o allow [the in-state dealership] to protest the relocation of [the out-of-state dealership] under this same statute would clearly be inequitable and contrary to the reasoning of Fireside Nissan.” Id. at *3.
In addition to the fact that we are not bound by a district court ruling, RITC correctly points out that, as we have explained, Fireside Nissan simply did not decide whether an in-state dealership may enforce the relevant requirements of the Dealer Law based on a dealership having been established out of state. Thus, County Motors, aside from lacking controlling force, fails to provide a persuasive ground for holding that the “relevant market area” referred to in the Dealer Law does not, as a matter of state law, encompass any out-of-state area.
That said, because “the highest court [of Rhode Island] has not spoken directly on the question [of state law] at issue,” we still must “predict ‘how that court likely would decide the issue.‘” Barton v. Clancy, 632 F.3d 9, 17 (1st Cir. 2011) (quoting Gonzalez Figueroa v. J.C. Penney P.R., Inc., 568 F.3d 313, 318-19 (1st Cir. 2009)). And, we conclude that, notwithstanding the reasons that RITC gives for concluding
c.
Fireside Nissan based its holding that an out-of-state dealer could not bring a protest to the Board under the Dealer Law in part on the fact that, even though the Dealer Law makes express that it applies to out-of-state manufacturers, it contains no similarly express language that it applies to out-of-state dealerships. See Fireside Nissan, 30 F.3d at 213-14 (“Unlike the definition of ‘new motor vehicle dealer’ which includes generally ‘any person’ . . . the definition of ‘manufacturer’ specifically includes any person, ‘resident or nonresident[.]’ . . . Thus, the Rhode Island legislature has clearly expressed an intent to regulate out-of-state manufacturers . . . . No such expression exists with regard to out-of-state dealers . . . .“). That textual distinction provides some support, in our view, for reading “relevant market area” not to reach the out-of-state franchise at issue in the Freightliner Claim.
Indeed, while “relevant market area” is defined seemingly without regard to state borders,
We note, too, that other circuits have construed statutes like the Dealer Law not to apply in the extraterritorial manner that RITC needs for it to apply to succeed on its Freightliner Claim. For example, in Carolina Trucks & Equipment, Inc. v. Volvo Trucks of N. Am., Inc., 492 F.3d 484, 488 (4th Cir. 2007), the Fourth Circuit addressed the scope of South Carolina‘s version of the Dealer Law, which prohibited “a manufacturer or franchisor” from “sell[ing], . . . directly or indirectly, a motor vehicle to a consumer in this State, except through a new motor vehicle dealer holding a franchise for the line make that includes the motor vehicle,”
The Seventh Circuit has taken a similar approach in construing the extraterritorial scope of a general dealer-protection statute in Wisconsin. See Morley-Murphy Co. v. Zenith Elecs. Corp., 142 F.3d 373, 380 (7th Cir. 1998). There, the statutory provision at issue stipulated that “[n]o grantor . . . may terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership agreement without good cause,” and the appeal had concerned a manufacturer‘s choice not to renew a distributorship agreement with a Wisconsin-incorporated distributor that had dealerships in Wisconsin as well as in other states. Id. at 374-75. The court, in addressing whether the distributor could be awarded damages for “lost profits arising out of the [manufacturer‘s] termination of [the distributor‘s] out-of-state dealerships” in violation of the statute, concluded that the statute did not “reach[] beyond Wisconsin‘s borders . . . to . . . sales of . . . products in Minnesota and Iowa.” Id. at 380.
In so concluding, the court noted that the statute was “silent on the question of its extraterritorial reach.” Id. at 378. And the court then predicted that, given this silence, the Wisconsin Supreme Court would apply a presumption against extraterritoriality
That is not to say these authorities demonstrate with clarity what the Rhode Island Supreme Court would do. The language of the measures in question in those cases is not identical to the relevant language of the Dealer Law and is arguably less susceptible of a narrowing construction. We also are not aware of a Rhode Island Supreme Court decision applying a presumption against extraterritoriality, such as the Fourth and Seventh Circuits applied in the precedents described above.
But, in addition to the reasons to be uncertain that the Rhode Island Supreme Court would construe “relevant market area” to encompass an area beyond Rhode Island‘s borders that we have set forth above, we note that the Rhode Island Supreme Court does recognize a canon of constitutional avoidance. See Hometown Props., Inc. v. Fleming, 680 A.2d 56, 60 (R.I. 1996) (invoking the canon of constitutional avoidance when a federal constitutional-law issue was raised); see also Pontbriand v. Sundlun, 699 A.2d 856, 866 (R.I. 1997) (explaining that the Rhode Island Supreme Court “shall favor that [interpretation] which presents no potential constitutional difficulties” (emphasis added)). Thus, that canon may provide a basis for construing the measure here narrowly to not reach the out-of-state conduct at issue, even if a presumption against extraterritoriality would not.
At the same time, while the District Court appeared to conclude that the Dormant Commerce Clause issues were clear-cut, and thus supported a reading of the Dealer Law here that would not reach beyond Rhode Island‘s borders, we are less confident the Rhode Island Supreme Court would conclude the same. That is in part because of the mix of in-state and out-of-state conduct that is the subject of the ruling by the Board that is the claim‘s focus. But it is also in part because of the nature of the relief being sought, which includes not only equitable relief seeking “remov[al]” of the dealership Daimler established in Massachusetts but also (less ambitiously) merely damages for Daimler‘s failure to notify RITC of that dealership‘s establishment. Compare Healy, 491 U.S. at 337 (“[T]he Commerce Clause dictates that no State may force an out-of-state merchant to seek regulatory approval in one State before undertaking a transaction in another.“), with IMS Health Inc. v. Mills, 616 F.3d 7, 30 (1st Cir. 2010) (citing CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 88-89 (1987)) (discussing import of an out-of-state entity‘s “strong in-state nexus” to the Dormant Commerce Clause inquiry), abrogated on other grounds by Sorrell v. IMS Health Inc., 564 U.S. 552 (2011). And, finally, it is in part because of our uncertainty about whether the Rhode Island Supreme Court would perceive there to be an ambiguity in the relevant state statutory provision at all, given that the definition of “relevant market area” on its face contains no bar to the “area” extending outside Rhode Island.11
- Can a “relevant market area” in
Rhode Island General Laws section 31-5.1-4.2(a) extend beyond Rhode Island‘s borders?
B.
There remains to address RITC‘s challenge to the District Court‘s grant of summary judgment on the claim in which RITC seeks review of the Board‘s ruling dismissing the Western Star Claim. If we were to affirm the District Court‘s grant of summary judgment on RITC‘s claim challenging the Board‘s dismissal of the Freightliner Claim (for whatever reason), then we might not need to address the merits of RITC‘s claim challenging the Board‘s dismissal of the Western Star Claim. See
RITC does assert on appeal that the District Court misunderstood the claim because
The District Court made no such mistaken assumption, however. In affirming the Board‘s dismissal ruling, the District Court explained that RITC‘s Western Star Claim to the Board concerned a miscommunication between RITC and Daimler -- two “entities to which the Dealer Law applies.” R.I. Truck Ctr., 642 F. Supp. 3d at 222. The District Court then stated, “If there were no other facts, this case would be straightforward. The Board can clearly adjudicate the in-state conduct of entities that the Dealer Law covers.” Id. Thus, the District Court did acknowledge that the conduct that RITC claimed was in violation of the Dealer Law was “in-state conduct.” Id. The District Court nevertheless pointed out what it understood to be a problem: “[T]hese interactions directly related to conduct that took place outside the state” and “directly affected out-of-state conduct[.]” Id. And the District Court concluded that RITC‘s requested relief as to its Western Star Claim to the Board would “have the effect of extraterritorially regulating conduct in Massachusetts” in a way that violated the Dormant Commerce Clause. Id. (emphasis in original).
In other words, the District Court concluded that, even if the conduct at issue violated the Dealer Law, the Board‘s enforcement of the Western Star Claim would nevertheless violate the Dormant Commerce Clause. At no point, however, does RITC attempt to rebut the District Court‘s predicate determination that Daimler‘s denial of the Western Star franchise to RITC “directly related to conduct that took place outside the state” and “directly affected out-of-state conduct,” id., even though the activity that RITC alleged was in violation of the Dealer Law was itself wholly in-state conduct. And it was that predicate determination on which the District Court rested its conclusion that the relief requested from the Board as to the Western Star Claim would violate the Dormant Commerce Clause. Thus, we see no basis for deeming the District Court to have erred in granting summary judgment to Daimler on its claim seeking review of the Board‘s dismissal of the Western Star Claim.12
The District Court‘s ruling as to RITC‘s claim challenging the Board‘s dismissal of the Western Star Claim is affirmed. As to RITC‘s claim challenging the Board‘s dismissal of the Freightliner Claim, we direct the clerk of this Court to forward to the Rhode Island Supreme Court, under official seal, this decision, a copy of the certified question, a copy of the parties’ briefs and appendix, and a copy of the notice of removal and attachments thereto.
We retain jurisdiction and wait until we receive guidance from the Rhode Island Supreme Court before we proceed further with RITC‘s claim challenging the Board‘s dismissal of the Freightliner Claim. No costs shall be awarded at this time.
Notes
- “Whether the new motor vehicle dealers of the same line or make in that relevant market area are providing adequate consumer care for the motor vehicles of the line or make in the market area which shall include the adequacy of motor vehicle sales and service facilities, equipment, supply of motor vehicle parts, and qualified service personnel[.]”
R.I. Gen. Laws § 31-5.1-4.2(b)(2) . - “Whether there is reasonable evidence that after the granting of the new motor vehicle dealership, that the market would support all of the dealerships of that line or make in the relevant market area[.]”
Id. § 31-5.1-4.2(b)(3) . - “Whether the manufacturer is motivated principally by good faith to establish an additional or new motor vehicle dealer and not by non-economic considerations[.]”
Id. § 31-5.1-4.2(b)(6) .