Ford Motor Co. v. Texas Department of Transportation

264 F.3d 493, 2001 U.S. App. LEXIS 19185, 2001 WL 984676
CourtCourt of Appeals for the Fifth Circuit
DecidedAugust 27, 2001
Docket00-50750
StatusPublished
Cited by241 cases

This text of 264 F.3d 493 (Ford Motor Co. v. Texas Department of Transportation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ford Motor Co. v. Texas Department of Transportation, 264 F.3d 493, 2001 U.S. App. LEXIS 19185, 2001 WL 984676 (5th Cir. 2001).

Opinions

BENAVIDES, Circuit Judge:

This case involves Ford Motor Company’s (“Ford”) attempt to market preowned vehicles in Texas via their internet site known as The Showroom. On November 2, 1999, the Texas Motor Vehicle Division (“the State”) filed an administrative complaint against Ford with the Texas Motor Vehicle Board. In the complaint, the State alleged that Ford violated the Texas Motor Vehicle Commission Code (“the Code”), Tex.Rev.Civ. Stat. art. 4413(36), §§ 4.01, .06(a)(3), (6) & 6.02C(c), as well as Tex. Transp. Code § 503.021, by selling used vehicles to Texas consumers without a dealer’s license. Section 4.01(a) of the Code makes it unlawful to “engage in business as, serve in the capacity of, or act as a[n] [automobile] dealer ... without first obtaining a license.”1 Ford is ineligible under Texas law to receive a license because § 5.02C(c) provides that:

(c) Except as provided by this section, a manufacturer or distributor may not directly or indirectly:
(1) own an interest in a dealer or dealership;
(2) operate or control a dealer or dealership; or
(3) act in the capacity of a dealer.

In response to the State’s administrative complaint, Ford filed suit in federal court alleging that § 5.020(c) violates Ford’s rights under the United States Constitution. Specifically, (1) that § 5.02C(c) facially, or in practical effect, violates the dormant Commerce Clause;2 (2) that § 5.02C(c), as applied to the Showroom, violates Ford’s First Amendment right to free speech; (3) that § 5.02C(c) is unconstitutionally vague; (4) that the State’s enforcement of § 5.02C(c) denied Ford equal protection under the law; and (5) that Ford was denied due process in the Enforcement Action brought pursuant to § 5.02C(c). The parties filed cross-motions for summary judgment. The district court granted the State’s motion for summary judgment as to all of Ford’s claims. Ford filed a timely appeal with this Court.

We review grants of summary judgment de novo, guided by the same Rule 56 standard as the district court. Fed.R.Civ.P. 56(c); Stults v. Conoco, Inc., 76 F.3d 651, 654 (5th Cir.1996). Pursuant to Rule 56, a party may obtain summary judgment when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). On cross-motions for summary judgment, we review each party’s motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party. Taylor v. Gregg, 36 F.3d 453, 455 (5th Cir.1994). Applying this standard, we find summary judgment appropriate against all of Ford’s constitutional claims. Accordingly, the judgment of the district court is AFFIRMED.

Facts

Through the Showroom, located at vmw.fordpreovmed.com., customers in [499]*499Houston, Atlanta, Boston, Washington D.C., New York, and Newark are able to view an on-line selection of preowned Ford vehicles. The vehicles available through Ford’s website were originally leased by a Ford dealer to a consumer, sold or leased by Ford to national car rental companies, or used as company service vehicles by Ford employees. Ford does not otherwise obtain used vehicles in order to re-sell them. .Rather, the Showroom is Ford’s attempt to create the most profitable market to re-sell these vehicles. Interested customers, after placing a $300 refundable deposit, may arrange to have a designated vehicle sent to a local dealer in order that they may test-drive it. Following their test-drive, the customer may then accept or decline to purchase the vehicle at the “no-haggle” price determined by Ford and listed on the website. Upon payment or financing approval, Ford transfers title to the dealer, who, in turn, transfers title to the customer.

Twenty-two dealers in the Houston metropolitan area joined the program by signing Dealer Participation Agreements. The Agreement prohibits dealers from selling the selected vehicle at any price other than that set by Ford or charging the customer any handling or documentary fees. The Agreement also prohibits the dealer from attempting to interest the customer in any of the dealer’s inventory until after the customer has declined to .purchase the Ford internet vehicle. These dealers were advised through a letter sent by Carol Kent, the Director of the Texas Department of Transportation, Enforcement Section, of Ford’s alleged violation and that their participation in the program constituted aiding and abetting a violation of the Code. They were notified of potential administrative enforcement action if they did not discontinue their participation.

Discussion

Ford argues that § 5.02C(c) of the Code violates the dormant Commerce Clause because it discriminates against of out-of-state interests. Alternatively, Ford contends that § 5.02C(c) unconstitutionally burdens the flow of interstate commerce. The Commerce Clause provides that “[t]he Congress shall have Power ... [t]o regulate Commerce ... among the several States.” Art. I, § 8, cl. 3. The Constitution thus specifically grants Congress power to regulate interstate commerce. If state regulation conflicts with federal law governing commerce, the Supremacy Clause mandates that the state law be invalidated. In matters not governed by federal legislation, “the Clause has long been understood to have a ‘negative’ aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce.” Oregon Waste Systems, Inc. v. Department of Environmental Quality, 511 U.S. 93, 98, 114 S.Ct. 1345, 1349, 128 L.Ed.2d 13 (1994).

In reviewing state regulations on interstate commerce under the dormant Commerce Clause, “the first step is to determine whether it ‘regulates evenhandedly with only “incidental” effects on interstate commerce, or discriminates against interstate commerce.’ ” Id. at 99, 114 S.Ct. 1345 (quoting Hughes v. Oklahoma, 441 U.S. 322, 325-26, 99 S.Ct. 1727, 1731, 60 L.Ed.2d 250 (1979)). A statute discriminates against interstate commerce when it provides for “differential treatment of instate and out-of-state economic interests that benefits the former and burdens the latter.” Id. “If a restriction on commerce is discriminatory, it is virtually per se invalid.” Oregon Waste Sys., 511 U.S. at 99, 114 S.Ct. 1345. On the other hand, nondiscriminatory regulations are analyzed under the balancing test established in [500]*500Pike v. Bruce Church, Inc., whereby the regulation is valid unless “the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970). Because of the wide variation in scrutiny under the respective tests, this initial inquiry is often dispositive of the underlying issue.

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Bluebook (online)
264 F.3d 493, 2001 U.S. App. LEXIS 19185, 2001 WL 984676, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ford-motor-co-v-texas-department-of-transportation-ca5-2001.