Blue Water Importers, Inc. v. Thomas Stickrath

• Court: Court of Appeals for the Sixth Circuit
• Decided: September 30, 2022
• Docket: 21-3798
• Status: Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 22a0390n.06

No. 21-3798

UNITED STATES COURT OF APPEALS FILED Sep 30, 2022 FOR THE SIXTH CIRCUIT DEBORAH S. HUNT, Clerk ) BLUE WATER IMPORTERS, INC., ) Plaintiff-Appellant, ) ) v. ON APPEAL FROM THE UNITED ) STATES DISTRICT COURT FOR ) THOMAS J. STICKRATH, Director of the ) THE SOUTHERN DISTRICT OF Ohio Department of Public Safety; CHARLES ) OHIO L. NORMAN, Registrar of the Ohio Bureau of ) Motor Vehicles, ) OPINION Defendants-Appellees. ) )

Before: BOGGS, LARSEN, and DAVIS, Circuit Judges.

BOGGS, Circuit Judge. In 2015, the state of Ohio saw a dramatic increase in imports of

cars from Canada—including by appellant Blue Water Importers. The clerks of the Ohio courts of

common pleas, who issue vehicle titles to owners, requested guidance from the Ohio Bureau of

Motor Vehicles (BMV) on how to comply with state and federal laws. The BMV correctly outlined

the procedures for importers to apply for federal certification from the Department of Transporta-

tion and pay a bond while certification is pending. But the BMV was mistaken in telling the clerks

that, in order to obtain title, importers were required to furnish an original bond-release letter from

the National Highway Traffic Safety Administration (NHTSA). In actuality, federal regulations

do not require that letter in order to title an imported vehicle if NHTSA fails to reach a decision

within thirty days of an application for certification—and letters are rarely issued within that

timeframe. The BMV’s requirement remained in place for a year, with clerks of court informing

importers during that time that the bond-release letters were a titling requirement. No. 21-3798, Blue Water Importers, Inc. v. Stickrath, et al.

Blue Water then sued a group of Ohio officials under 42 U.S.C. § 1983, claiming that the

BMV had violated the Commerce Clause and requesting declaratory and injunctive relief. Perhaps

realizing that its titling rules exceeded federal requirements, the BMV rescinded the bond-release-

letter requirement less than two months after the lawsuit was filed. Four years later, at summary

judgment (and with the requirement still rescinded), the district court dismissed the claim as moot.

Blue Water now appeals that decision, and we affirm.

BACKGROUND

Federal law governs the importation of motor vehicles from foreign countries. If, in the

judgment of the Secretary of Transportation, a foreign-manufactured vehicle that is not in

compliance with domestic safety standards can be brought into compliance, then the vehicle may

be imported. 49 U.S.C. § 30141(a)(1). Congress has delegated to the Secretary the authority to

enact regulations ensuring that vehicles meet this standard, 49 U.S.C. § 30141(b)(1), and the

Secretary, through NHTSA, has done so, 49 C.F.R. §§ 592.1–.9. The relevant NHTSA regulations

impose a host of requirements for importers to obtain certification of compliance, including that

importers “furnish . . . a bond in an amount equal to 150 percent of the dutiable value of the

vehicle” while they conform the imported vehicle to NHTSA’s standards. 49 C.F.R. § 592.6(a).

Until the bond is released, a vehicle ordinarily cannot be titled or sold. 49 C.F.R.

§ 592.6(e)(2), (e)(4). To remove these restrictions, an importer submits an application for

certification of compliance with domestic safety standards to NHTSA and, if NHTSA believes

further inspection or verification is required, it must provide notice to the importer within thirty

days. 49 C.F.R. §§ 592.6(d), 592.8(b)–(d). The “bond . . . shall not be released unless [NHTSA]

is satisfied with the certification,” but—importantly—if NHTSA takes no action within the thirty

days, the bond’s restrictions no longer apply, and the vehicle may be “titled, licensed, or registered

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for use on the public roads” and sold. 49 C.F.R. § 592.8(d)–(e). If certification is eventually

accepted, NHTSA must provide a bond-release letter (and release the bond). 49 C.F.R. § 592.8(f).

Crucially, then, nothing in the regulations requires an importer to be in possession of a bond-release

letter before it may title and sell a vehicle, provided thirty days have passed since the certification

application was submitted to NHTSA.

Titling itself—which indicates legal ownership of a vehicle—is governed by each state’s

motor-vehicle agency. E.g., Ohio Rev. Code § 4505.03 (“No person . . . shall sell or otherwise

dispose of a motor vehicle without delivering . . . a certificate of title . . . .”). In Ohio, the BMV is

responsible for regulating the titling system, though state law provides that the clerks of the various

courts of common pleas are the ones who process applications and issue certificates of title. Ohio

Rev. Code §§ 4505.02, .06(A)(1). The BMV distributes information (“title broadcasts,” in BMV

nomenclature) providing the clerks with guidance on handling applications, including what

documents are required.

In May 2015, in response to an increase in the importation of motor vehicles from Canada

into Ohio, the BMV issued guidance on Canadian vehicles for the first time since 2002. The

document listed the required elements of a titling application, but did not mention bond-release

letters. Five months later, in October 2015, the BMV issued the relevant guidance in this case,

Title Broadcast 15-1016, which required that applications for title in Ohio for presumptively

importable Canadian vehicles provide “an Original Bond Release Letter from [NHTSA] to verify

that Federal Motor Vehicle Safety Standards have been, or will be, met.” Ohio Dep’t Pub. Safety,

Bureau of Motor Vehicles, Title Broadcast 15-1016: Vehicles Imported from Canada and Other

Foreign Countries 1 (Oct. 16, 2015) (emphasis in original). According to the administrator of the

BMV’s Office of Vehicle Services, the impetus for this change was a confusion on the part of the

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clerks of the courts of common pleas, who required “additional guidance” on “what else is needed”

in applications for titling pre-owned Canadian vehicles.1

However, under its interpretation of the federal requirements for importing foreign

vehicles, the BMV imposed a bond-release-letter requirement. As noted above, under the relevant

regulations NHTSA may not always issue bond-release letters and, in many cases, does not do so

before a vehicle is eligible to be “titled, licensed, or registered for use on the public roads.” 49

C.F.R. § 592.8(e). Instead, the bond’s titling and sale restrictions are automatically lifted after

thirty days have elapsed, absent affirmative notice by NHTSA. So importers often do not possess

a bond-release letter even when they have met the federal importation requirements. Nevertheless,

Title Broadcast 15-1016 remained in effect for a year until Blue Water, a Michigan importer of

Canadian vehicles frustrated with Ohio’s regulations, filed suit.

Blue Water and two Canadian dealers sued (1) the Director of the Ohio Department of

Public Safety, (2) the Registrar of the BMV, and (3) various clerks of the courts of common pleas

in federal district court. They alleged violations of 42 U.S.C. § 1983, claiming that the BMV’s

policy of requiring bond-release letters, as well as an additional policy mandating that imported

vehicles be inspected in Ohio rather than other states, violated the Commerce Clause. 2 The

Canadian dealers were dismissed as parties during the pendency of litigation, as were the clerks of

court. In December 2016, roughly two months after Blue Water filed suit, the BMV issued a

superseding title broadcast rescinding the bond-release-letter requirement and acknowledging the

thirty-day exception in the text of 49 C.F.R. § 592.8(e). The rescission has remained in place.

1 The requirement at issue in this case applies only to so-called “Box 3” vehicles, referring to the section of the form that is checked when importing pre-owned vehicles from Canada. 2 The requirement that out-of-state vehicles be inspected in-state is not at issue in this appeal.

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On cross-motions for summary judgment four years later, the BMV argued that its

rescission of the bond-release-letter requirement rendered Blue Water’s claim on this issue moot,

and that both of Blue Water’s Commerce Clause claims failed on the merits. The district court

agreed, dismissing the bond-release-letter claim as moot and granting summary judgment to the

BMV on Blue Water’s in-state-titling claim. Blue Water does not appeal the latter decision, and

the BMV does not challenge the partial dismissal for mootness of its own summary-judgment

motion. The only question on appeal, therefore, is whether Blue Water’s bond-release-letter

challenge is moot. We hold that it is and affirm the judgment of the district court.

ANALYSIS

Jurisdiction does not lie for the federal courts to decide a case “when the issues presented

are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome”—the doctrine

of mootness. Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013) (quoting Murphy v. Hunt, 455

U.S. 478, 481 (1982) (per curiam)). A moot matter, after all, is “no longer a ‘Case’ or ‘Controversy’

for purposes of Article III.” Ibid. Mootness may rear its head “when a case at first presents a

question concretely affecting the rights of the parties, but—as a result of events during the

pendency of the litigation—the court’s decision would lack any practical effect.” Resurrection

Sch. v. Hertel, 35 F.4th 524, 528 (6th Cir. 2022) (en banc) (quoting Ohio v. EPA, 969 F.3d 306, 308

(6th Cir. 2020)). In this case, the BMV rescinded the challenged policy two months after the start

of litigation, and the district court held that this rendered Blue Water’s claim moot. We review

determinations of mootness de novo. Universal Life Church Monastery Storehouse v. Nabors, 35

F.4th 1021, 1031 (6th Cir. 2022).

Blue Water challenges the district court’s holding of mootness on only one ground: that a

defendant’s “voluntary cessation” of a policy does not moot a case unless “there clearly is ‘no

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reasonable expectation that the alleged violation will recur.’” Resurrection Sch., 35 F.4th at 528

(quoting Speech First, Inc. v. Schlissel, 939 F.3d 756, 767 (6th Cir. 2019)). Although government

action is “treated with more solicitude by the courts than similar action by private parties,” it is

legislative cessation that receives the most deference of all, whereas if “a change is merely

regulatory, the degree of solicitude the voluntary cessation enjoys is based on whether the

regulatory processes leading to the change involved legislative-like procedures.” Speech First,

939 F.3d at 767–68. Quasi-legislative actions merit deference, but if the regulatory change was

“ad hoc, discretionary, [or] easily reversible,” especially “[i]f the discretion to effect the change

lies with one agency or individual,” then “significantly more than the bare solicitude itself is

necessary to show that the voluntary cessation moots the claim.” Id. at 768.

As this court recently noted en banc, voluntary cessation of the discretionary regulatory

variety is more likely to moot a case when (1) the cessation is remote in time from the filing of the

lawsuit, (2) the government entity provided alternative justifications for its changed conduct,

(3) the state official or officials responsible for the policy are politically accountable, (4) “relevant

circumstances have changed dramatically,” and (5) reimposition of a similar policy in the future

“likely would not present substantially the same legal controversy.” Resurrection Sch., 35 F.4th at

529. Wrapped up together, these considerations determine “whether there is a fair prospect that

the challenged conduct will recur in the foreseeable future.” Id. at 530 (cleaned up).

Here, authority to change the challenged policy lies solely with the Registrar of the BMV,

who is empowered by statute to promulgate rules for titling motor vehicles. Ohio Rev. Code

§ 4505.02. (“The Registrar of the BMV has the exclusive authority to approve Broadcasts to Ohio

Clerks of Court. These Broadcasts set forth the BMV’s policies and procedures regarding the

titling of vehicles in Ohio.”). The Registrar is appointed by the Ohio Director of Public Safety,

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who is in turn appointed by the Governor. Ohio Rev. Code § 4501.02(A). There is therefore

considerable discretion, and only some (indirect) political accountability, in the BMV’s issuing

new guidance. This is reinforced by the form of the guidance: a one- or two-page broadcast free

from citations and capable of being superseded in a matter of days. The challenged title broadcast

is therefore the kind of discretionary regulatory policy that is entitled to the lowest level of outright

deference when it comes to voluntary cessation.

Turning to the considerations articulated in Resurrection School, however, several weigh

in the BMV’s favor. The circumstances under which Title Broadcast 15-1016 was promulgated

are especially relevant. Ohio was seeing a sudden surge in importation of Canadian vehicles, and

the BMV had rushed to issue guidance to the clerks of court in May 2015. But clerks over the

succeeding months indicated that they still did not understand exactly what was required for titling

and needed “additional guidance.” So, in October 2015, after a brief (but apparently insufficient)

review of the relevant NHTSA regulations, the Registrar promulgated Title Broadcast 15-1016.

Later, in March 2016, a conversation between BMV and NHTSA officials about the bond-release-

letter requirement revealed that the letter was not and never had been required in all cases in order

to obtain title—instead, the regulations contain a significant potential exception. Separately, as a

BMV official testified, the Bureau was informed in May 2016 that the volume of certification

applications submitted to NHTSA made it impossible for the federal agency to issue letters within

thirty days. By all indications in the record, then, a period of confusion following an increase in

imported Canadian vehicles into Ohio led the BMV to issue hasty guidance, but it later determined

through multiple channels that the guidance should have been significantly revised.

Perhaps the BMV’s failure to understand the thirty-day exception written into 49 C.F.R.

§ 592.8(e) should not have required an extensive dialogue with NHTSA; perhaps it should have

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been obvious that the requirements listed in the title broadcast were inconsistent with federal

regulations. But the fact that the BMV appears to have received guidance from NHTSA and

corrected its policy accordingly indicates that it is unlikely to make the same mistake twice.3 And

it reveals alternative justifications (apart from avoiding adjudication of the merits of the case) for

the BMV to have rescinded the challenged title broadcast. Finally, the nationwide increase in

certification applications to NHTSA reveals the kind of change in relevant circumstances that

would justify a change in BMV policy.

To be sure, not all of the considerations articulated in Resurrection School lean in the

BMV’s favor. Unlike the eight months that elapsed in that case between the filing of the lawsuit

and the agency’s rescinding its policy, here, the BMV retracted the bond-release-letter requirement

a mere fifty-six days after it was sued. And as discussed, the Registrar of the BMV is vested with

considerable discretion to rescind or reinstate titling policies. But ultimately, Resurrection School

directs an analysis of “whether there is a fair prospect that the challenged conduct will recur in the

foreseeable future,” not simply a judgment of how easily the challenged conduct could

theoretically be reimposed. See Resurrection Sch., 35 F.4th at 530 (cleaned up). Dealing, as we

are, with probabilities, the likelihood that the BMV will choose to again require bond-release

letters is lowered substantially by its past and current understanding (based on NHTSA guidance)

that those letters are not always a prerequisite to titling. Because Blue Water has failed to show a

fair prospect of reimposition of the requirement, its claim is moot.

3 The BMV has disputed this characterization, arguing at times that the bond-release-letter require- ment was not in conflict with federal law because the regulations provide only that once NHTSA’s requirements are met, a vehicle may (but not must) be “titled”—and therefore that each state may then impose its own titling requirements, such as the furnishing of a bond-release letter. We do not, however, address that argument here, where the only issue is mootness and the record indicates that it was NHTSA’s guidance that caused the BMV to reverse course.

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It is true, as Blue Water states, that mootness is a “heavy burden” for a regulatory agency

to carry. But in the case at issue here, a regulatory agency felt compelled to take quick action when

confronted by substantial confusion on the part of the clerks of court in eighty-eight counties—

and it ultimately issued new guidance once corrected in its understanding by the federal agency

that issued the relevant rules. Given that, we see no “fair prospect” that the challenged conduct

will recur in the foreseeable future, and hold that the district court was correct that Blue Water’s

challenge is moot. Resurrection Sch., 35 F.4th at 530 (quoting Ohio, 969 F.3d at 310).

CONCLUSION

For the reasons above, the judgment of the district court is AFFIRMED.

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