DaimlerChrysler Vans v . Freightliner CV-03-304-B 01/08/04
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
DaimlerChrysler Vans LLC
v. Civil N o . 03-304-B Opinion N o . 2004 DNH 010 Freightliner of New Hampshire, Inc.
MEMORANDUM AND ORDER
DaimlerChrysler Vans (“DC Vans”) seeks a preliminary
injunction compelling Freightliner of New Hampshire, Inc.
(“Freightliner”) to arbitrate a dispute that is currently pending
before the New Hampshire Motor Vehicle Industry Board. I deny DC
Vans’ request for an injunction because federal law protects
Freightliner from having to abide by the arbitration clauses in
its dealer contracts.
I.
A. The Dealer Agreements
On October 3 1 , 2001, and November 1 4 , 2001, DC Vans entered
into agreements authorizing Freightliner to sell “Sprinter”
-1- utility vans from dealerships in Londonderry and Lebanon, New
Hampshire (the “Dealer Agreements”). The Dealer Agreements
contain clauses that obligate the parties to arbitrate “all
controversies, disputes, or claims . . . arising from or relating
to [the agreements] . . . .” (Alosa Aff. Ex. 12 Art. 18(3).)
B. The Target Agreements
The Dealer Agreements require the parties to attempt to
reach “Target Agreements” for each year that the Dealer
Agreements are in effect. One of the items that the parties must
attempt to agree on in each Target Agreement is a “Sales Volume
Objective” for the upcoming year. If the parties are unable to
agree on a Sales Volume Objective, the Dealer Agreements describe
a process by which DC Vans is authorized to establish the
objective unilaterally. Freightliner’s performances of its sales
responsibility will be evaluated in part based on its achievement
of the Sales Volume Objective. Additionally, DC Vans uses the
Sales Volume Objective in determining Freightliner’s eligibility
for certain bonuses.
DC Vans sent Freightliner proposed Target Agreements for the
Londonderry and Lebanon dealerships in March 2003.
Freightliner’s president, Joseph Alosa, signed both agreements on
-2- March 2 7 , 2003 but did not immediately return them to DC Vans.
Instead, he signed identical copies on April 7 , 2003 and sent DC
Vans the newly signed agreements. The Londonderry Target
Agreement specifies a purchase target of 60 vans and a minimum
retail sales target of 52 vans. The Derry Target Agreement
specifies a purchase target of 7 vans and a retail sales target
of 4 vans.
C. The Current Litigation
DC Vans sent Freightliner a notice on July 1 9 , 2002 stating
that: (1) it planned to introduce a new Dodge-branded Sprinter
van in 2006; (2) the new van would be sold exclusively through
Dodge dealers; and (3) until the new van was released, Sprinter
vans would be sold by both Freightliner and Dodge dealers.
On February 2 5 , 2003, Freightliner filed an administrative
protest with the New Hampshire Motor Vehicle Industry Board
challenging the changes that DC Vans proposed to make in its
Sprinter van distribution program. DC Vans responded on March
2 8 , 2003 with a demand that Freightliner submit its dispute to
arbitration. DC Vans commenced the present action after
Freightliner refused to arbitrate.
-3- II. 1
DC Vans argues that the arbitration clauses in the Dealer
Agreements require Freightliner to arbitrate the current dispute
because the dispute “aris[es] from or relat[es] to” the Dealer
Agreements. Freightliner responds by claiming that the
arbitration clauses are unenforceable under 15 U.S.C. §
1226(a)(2). Section 1226(a)(2) bars a party to a motor vehicle
1 Freightliner contends that I lack subject matter jurisdiction because state law confers exclusive jurisdiction on the Motor Vehicle Industry Board to resolve the current dispute. I disagree. The court plainly has diversity of citizenship jurisdiction to consider what essentially is a contract dispute between the parties. Because the court would have jurisdiction to address the underlying contract dispute, it has jurisdiction to consider DC Vans’ demand for arbitration. See Moses H . Cone Mem’l Hosp. v . Mercury Const. Corp., 460 U.S. 1 , 25 n.32 (1983). New Hampshire cannot adopt a law that deprives a federal court of jurisdiction to consider disputes that Congress has given it jurisdiction to address. See Begay v . Kerr-McGee Corp., 682 F.2d 1311, 1315-16 (9th Cir. 1982). Freightliner also argues that the court lacks jurisdiction based on 15 U.S.C. § 1226(a)(2). It argues that § 1226(a)(2) deprives the court of subject matter jurisdiction because it prevents the court from enforcing the arbitration clauses. Freightliner’s argument, however, concerns the merits of DC Vans’ claim rather than the court’s subject matter jurisdiction. I was initially concerned that the court may be without jurisdiction based on the Rooker-Feldman doctrine. The Supreme Court, however, has determined that the Rooker-Feldman doctrine has “no application to judicial review of executive action, including determinations made by a state administrative agency.” Verizon Md., Inc. v . Pub. Serv. Comm’n of Md., 535 U.S. 635, 644 n.3 (2002). This decision resolves my jurisdictional concern.
-4- franchise contract from enforcing an arbitration clause in the
contract unless all parties to the contract consent to
arbitration. The law applies, however, only to arbitration
agreements that are “entered into, amended, altered, modified,
renewed, or extended after November 2 , 2002.” 15 U.S.C. §
1226(b). Because the Dealer Agreements were executed prior to
November 2 , 2002, Freightliner’s argument has merit only if the
2003 Target Agreements “amended, altered or modified” the Dealer
Agreements.
DC Vans offers two arguments to support its contention that
the Target Agreements are inconsequential. First, it asserts
that the agreements merely implement the Dealer Agreements.2 I
disagree. The Target Agreements establish sales objectives for
both dealerships. These objectives were not fixed by the Dealer
2 DC Vans buttresses its argument by contending that the constitution prevents Congress from applying § 1226(a)(2) to a preexisting dealer agreement unless the “dealership agreement is modified sufficiently in substance that it can be assumed that the parties understood that one of the rights being relinquished was the right to compel arbitration of disputes.” (Pl.’s Mem. in Opp. to Mot. to Dismiss at 6.) This assertion misstates the applicable constitutional standard. A claim that a federal statute improperly alters existing contract rights is governed by the due process clause rather than the contract clause and thus is subject to a less exacting standard of review. See Pension Ben. Guar. Corp. v . R.H. Gray & Co., 467 U.S. 7 1 7 , 732-33 (1984).
-5- Agreements but instead were proposed by DC Vans and agreed to by
Freightliner. The sales objectives are significant to both
parties because they will be used to determine Freightliner’s
eligibility for bonuses.
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DaimlerChrysler Vans v . Freightliner CV-03-304-B 01/08/04
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
DaimlerChrysler Vans LLC
v. Civil N o . 03-304-B Opinion N o . 2004 DNH 010 Freightliner of New Hampshire, Inc.
MEMORANDUM AND ORDER
DaimlerChrysler Vans (“DC Vans”) seeks a preliminary
injunction compelling Freightliner of New Hampshire, Inc.
(“Freightliner”) to arbitrate a dispute that is currently pending
before the New Hampshire Motor Vehicle Industry Board. I deny DC
Vans’ request for an injunction because federal law protects
Freightliner from having to abide by the arbitration clauses in
its dealer contracts.
I.
A. The Dealer Agreements
On October 3 1 , 2001, and November 1 4 , 2001, DC Vans entered
into agreements authorizing Freightliner to sell “Sprinter”
-1- utility vans from dealerships in Londonderry and Lebanon, New
Hampshire (the “Dealer Agreements”). The Dealer Agreements
contain clauses that obligate the parties to arbitrate “all
controversies, disputes, or claims . . . arising from or relating
to [the agreements] . . . .” (Alosa Aff. Ex. 12 Art. 18(3).)
B. The Target Agreements
The Dealer Agreements require the parties to attempt to
reach “Target Agreements” for each year that the Dealer
Agreements are in effect. One of the items that the parties must
attempt to agree on in each Target Agreement is a “Sales Volume
Objective” for the upcoming year. If the parties are unable to
agree on a Sales Volume Objective, the Dealer Agreements describe
a process by which DC Vans is authorized to establish the
objective unilaterally. Freightliner’s performances of its sales
responsibility will be evaluated in part based on its achievement
of the Sales Volume Objective. Additionally, DC Vans uses the
Sales Volume Objective in determining Freightliner’s eligibility
for certain bonuses.
DC Vans sent Freightliner proposed Target Agreements for the
Londonderry and Lebanon dealerships in March 2003.
Freightliner’s president, Joseph Alosa, signed both agreements on
-2- March 2 7 , 2003 but did not immediately return them to DC Vans.
Instead, he signed identical copies on April 7 , 2003 and sent DC
Vans the newly signed agreements. The Londonderry Target
Agreement specifies a purchase target of 60 vans and a minimum
retail sales target of 52 vans. The Derry Target Agreement
specifies a purchase target of 7 vans and a retail sales target
of 4 vans.
C. The Current Litigation
DC Vans sent Freightliner a notice on July 1 9 , 2002 stating
that: (1) it planned to introduce a new Dodge-branded Sprinter
van in 2006; (2) the new van would be sold exclusively through
Dodge dealers; and (3) until the new van was released, Sprinter
vans would be sold by both Freightliner and Dodge dealers.
On February 2 5 , 2003, Freightliner filed an administrative
protest with the New Hampshire Motor Vehicle Industry Board
challenging the changes that DC Vans proposed to make in its
Sprinter van distribution program. DC Vans responded on March
2 8 , 2003 with a demand that Freightliner submit its dispute to
arbitration. DC Vans commenced the present action after
Freightliner refused to arbitrate.
-3- II. 1
DC Vans argues that the arbitration clauses in the Dealer
Agreements require Freightliner to arbitrate the current dispute
because the dispute “aris[es] from or relat[es] to” the Dealer
Agreements. Freightliner responds by claiming that the
arbitration clauses are unenforceable under 15 U.S.C. §
1226(a)(2). Section 1226(a)(2) bars a party to a motor vehicle
1 Freightliner contends that I lack subject matter jurisdiction because state law confers exclusive jurisdiction on the Motor Vehicle Industry Board to resolve the current dispute. I disagree. The court plainly has diversity of citizenship jurisdiction to consider what essentially is a contract dispute between the parties. Because the court would have jurisdiction to address the underlying contract dispute, it has jurisdiction to consider DC Vans’ demand for arbitration. See Moses H . Cone Mem’l Hosp. v . Mercury Const. Corp., 460 U.S. 1 , 25 n.32 (1983). New Hampshire cannot adopt a law that deprives a federal court of jurisdiction to consider disputes that Congress has given it jurisdiction to address. See Begay v . Kerr-McGee Corp., 682 F.2d 1311, 1315-16 (9th Cir. 1982). Freightliner also argues that the court lacks jurisdiction based on 15 U.S.C. § 1226(a)(2). It argues that § 1226(a)(2) deprives the court of subject matter jurisdiction because it prevents the court from enforcing the arbitration clauses. Freightliner’s argument, however, concerns the merits of DC Vans’ claim rather than the court’s subject matter jurisdiction. I was initially concerned that the court may be without jurisdiction based on the Rooker-Feldman doctrine. The Supreme Court, however, has determined that the Rooker-Feldman doctrine has “no application to judicial review of executive action, including determinations made by a state administrative agency.” Verizon Md., Inc. v . Pub. Serv. Comm’n of Md., 535 U.S. 635, 644 n.3 (2002). This decision resolves my jurisdictional concern.
-4- franchise contract from enforcing an arbitration clause in the
contract unless all parties to the contract consent to
arbitration. The law applies, however, only to arbitration
agreements that are “entered into, amended, altered, modified,
renewed, or extended after November 2 , 2002.” 15 U.S.C. §
1226(b). Because the Dealer Agreements were executed prior to
November 2 , 2002, Freightliner’s argument has merit only if the
2003 Target Agreements “amended, altered or modified” the Dealer
Agreements.
DC Vans offers two arguments to support its contention that
the Target Agreements are inconsequential. First, it asserts
that the agreements merely implement the Dealer Agreements.2 I
disagree. The Target Agreements establish sales objectives for
both dealerships. These objectives were not fixed by the Dealer
2 DC Vans buttresses its argument by contending that the constitution prevents Congress from applying § 1226(a)(2) to a preexisting dealer agreement unless the “dealership agreement is modified sufficiently in substance that it can be assumed that the parties understood that one of the rights being relinquished was the right to compel arbitration of disputes.” (Pl.’s Mem. in Opp. to Mot. to Dismiss at 6.) This assertion misstates the applicable constitutional standard. A claim that a federal statute improperly alters existing contract rights is governed by the due process clause rather than the contract clause and thus is subject to a less exacting standard of review. See Pension Ben. Guar. Corp. v . R.H. Gray & Co., 467 U.S. 7 1 7 , 732-33 (1984).
-5- Agreements but instead were proposed by DC Vans and agreed to by
Freightliner. The sales objectives are significant to both
parties because they will be used to determine Freightliner’s
eligibility for bonuses. The Target Agreements thus make
changes to the Dealer Agreements that are sufficiently
consequential to qualify as amendments to the Dealer Agreements.
DC Vans’ second argument is that the Target Agreements are
irrelevant because they did not become effective until after it
made its demand for arbitration on March 2 8 , 2003. Because DC
Vans has failed to develop this argument, I decline to discuss
it in detail. Instead, I merely note that § 1226(a)(2) applies
to agreements that are amended at any point after November 2 ,
2002. The law does not exempt amendments that occur after a
demand for arbitration is made. Accordingly, I need not resolve
the parties’ dispute as to whether the Target Agreements became
effective in March, when they were first signed, or in April,
when duplicate copies were signed and delivered to DC Vans.
III.
For the reasons set forth in this Memorandum and Order, I
determine that DC Vans is not likely to succeed on the merits of
its request for arbitration. Accordingly, it is not entitled to
-6- a preliminary injunction. See SEC v . Fife, 311 F.3d 1 (1st Cir.
2002) (likelihood of success is a prerequisite to the issuance
of a preliminary injunction). DC Vans’ motion for preliminary
injunction (doc. n o . 4 ) is denied. I propose to grant summary
judgment to Freightliner unless, on or before January 3 0 , 2004,
DC Vans is able to demonstrate that facts material to the
resolution of this case remain in genuine dispute.
SO ORDERED.
Paul Barbadoro Chief Judge
January 8 , 2004
cc: Gregory A . Holmes, Esq. Mary E . Tenn, Esq. Richard V . Wiebusch, Esq.
-7-