Blue Water Importers, Inc. v. Stickrath

Decision Date03 August 2021
Docket NumberCase No. 2:20-cv-1893
Citation552 F.Supp.3d 762
Parties BLUE WATER IMPORTERS, INC., et al., Plaintiffs, v. Thomas J. STICKRATH, Director of the Ohio Department of Public Safety, et al., Defendant.
CourtU.S. District Court — Southern District of Ohio

Erica L. Eversman, Akron, OH, Peter D. Traska, Raymond V. Vasvari, Jr, The Law Offices of Vasvari & Zimmerman, Cleveland, OH, K. Ann Zimmerman, Vasvari & Zimmerman, Shaker Heights, OH, for Plaintiffs.

Brian Robert Honen, Hilary R. Damaser, Michelle D. Pfefferle, Office of the Attorney General - Executive Agencies State of Ohio, Columbus, OH, for Defendant.

OPINION AND ORDER

EDMUND A. SARGUS, JR., UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendants Thomas J. Stickrath and Charles L. Norman's Motion for Summary Judgment (ECF No. 98), and Plaintiff Blue Water Importers, Inc.’s Motion for Summary Judgment (ECF No. 99). For the following reasons, the Court GRANTS IN PART DefendantsMotion for Summary Judgment, DENIES IN PART Plaintiff's Motion for Summary Judgment, and DENIES AS MOOT IN PART both motions.

I. Background

This case involves challenges to the State of Ohio's requirements for titling pre-owned automobiles imported from Canada under 42 U.S.C. § 1983 and the Commerce Clause of the U.S. Constitution. (See generally Am. Compl., ECF No. 13.)

A. The parties

Plaintiff Blue Water Importers, Inc. ("Blue Water") is a Michigan corporation in the business of importing and conforming pre-owned Canadian automobiles to meet federal motor vehicle safety and emissions standards, and "assisting its customers [in the United States] to obtain Certificates of Title for the imported Canadian motor vehicles." (Id. ¶ 13.) Blue Water is a "Registered Importer certified and approved by the National Highway Traffic Safety Administration ("NHTSA") to conform vehicles manufactured for countries other than the United States to the federal motor vehicle safety standards and federal bumper standards." (Deposition of William Dempsey, Ex. C., ECF No. 98-4.)

Defendant Thomas J. Stickrath is the Director of the Ohio Department of Public Safety. (Am Compl. ¶¶ 14–15; Notice of Substitution of Parties, ECF No. 62.) Defendant Charles L. Norman is the Registrar of the Ohio Bureau of Motor Vehicles ("BMV"), a division of the Ohio Department of Public Safety. (Id. ) Defendants are responsible for administering Ohio's motor vehicle title laws. See Ohio Rev. Code § 4505, et seq. Blue Water seeks declaratory and injunctive relief against Defendants in their official capacities. (Am. Compl. ¶ 20.)

B. Federal regulatory framework for importing used Canadian automobiles

Blue Water's claims concern the interplay between the federal regulations governing the importation of Canadian vehicles and Ohio's requirements for obtaining certificates of title for those vehicles following importation. (See generally Am. Compl.)

Congress delegated authority to the Secretary of Transportation to promulgate regulations governing the import of motor vehicles from outside the United States. 49 U.S.C. § 30141(b). Generally, a motor vehicle from outside the United States may be imported if the vehicle is "capable of being brought into compliance with" federal motor vehicle safety standards. Id. ; 49 C.F.R. § 593.5. Most pre-owned Canadian passenger vehicles are pre-approved for import into the United States. Appendix A to 49 C.F.R. § 593. Canadian-certified vehicles can be imported by an importer registered with the NHTSA—a "Registered Importer"—or by a person who has a contract with a Registered Importer. (Dempsey Dep., Ex. C.) The Registered Importer will "modify the vehicle so that it complies with all applicable Federal motor vehicle safety standards following importation." (Dempsey Dep., Ex. C.)

A Registered Importer must complete several steps to import a vehicle from Canada for sale in the United States. The importer must "furnish to the Secretary of Homeland Security at the time of importation a bond in an amount equal to 150 percent of the dutiable value of the vehicle." 49 C.F.R. § 592.6(a). The importer must also file a declaration with U.S. Customs and Border Protection ("CBP") that the vehicle "does not conform with all applicable Federal motor vehicle safety and bumper standards (but does conform with all applicable Federal theft prevention standards)," but the importer is nonetheless eligible to import the vehicle because the importer: (1) "furnished a bond in an amount equal to 150% of the dutiable value of the vehicle"; (2) the importer is registered with NHTSA to conform the vehicle to federal safety and bumper standards; and (3) the vehicle is not salvaged or reconstructed. Id. § 591.5(f).

After CBP approves the vehicle's eligibility for import, the Registered Importer has 120 days to certify that the vehicle has been brought into conformity "with all applicable Federal motor vehicle safety and the bumper standards." Id. § 592.6(d). The Registered Importer is deemed the "manufacturer" of any motor vehicle it "brings into compliance" after importation. 49 U.S.C. § 30147. Vehicles imported from Canada pursuant to this process are referred to in the industry as "Box 3" vehicles due to their designation under Box 3 on the CBP form. (Dempsey Dep., Ex. C.) After a Registered Importer brings a Box 3 vehicle into compliance, it submits to NHTSA a "conformity package[.]" (Dempsey Dep., Ex. C.) The conformity package must include a declaration of conformity, the make, model, model year, odometer reading, and VIN, the "location of the facility where the vehicle was conformed," a copy of the bond furnished at the time of import, and photographs demonstrating conformity. 49 C.F.R. § 592.6(d).

After NHTSA receives the importer's certification, NHTSA has 30 days to notify the Registered Importer whether an inspection is required to verify certification. Id. § 592.8(c). Thus, Federal regulations prohibit the importer from obtaining "title, licensing, or registration of the motor vehicle for use on the public roads" for 30 days after NHTSA receives its certification. Id. § 592.8(a), (d). If NHTSA accepts a certification without requiring an inspection, the administration "shall" provide the Registered Importer, within 25 days, a letter accepting certification and releasing the bond posted during importation (a "bond release letter"). Id. § 592.8(f). But if the "Registered Importer has received no written notice" within 30 days, the importer "may release the vehicle from custody, sell or offer it for sale, or have it titled, licensed, or registered for use on the public roads." Id. § 592.8(e).

C. Relevant Ohio requirements for titling imported Canadian used automobiles

Ohio law requires sellers of motor vehicles within the state to transfer to the buyer a certificate of title; it also prohibits buyers from "otherwise acquir[ing] a motor vehicle without obtaining a certificate of title. Ohio Rev. Code § 4505.03. The state vests authority to issue certificates of title in the clerks of the county courts of common pleas. Id. §§ 4505.02, 4505.06(A)(1). The Ohio legislature delegates to the Registrar of the BMV the responsibility to "issue rules as the registrar determines necessary to ensure uniform and orderly operation of [the motor vehicle title laws] and to ensure that the identification of each applicant for a certificate of title is reasonably accurate." Id. § 4505.02. The county clerks of court must "conform" to the rules issued by the Registrar. Id. The clerks must also provide the forms for obtaining a certificate of title as prescribed by the Registrar. Id.

The BMV issues guidance to county clerks on procedure for issuing certificates of title through "Title Broadcasts." (Deposition of Sarah Stedtefeld 24:17–20, ECF No. 98-2.) Clerks are expected to adhere to the requirements for titling vehicles that the BMV sets out in the Title Broadcasts. (Deposition of Kathleen Corrigan 79:6–10, ECF No. 98-1.)

Two different procedures the BMV established through Title Broadcasts in October of 2015 are at issue in this case.

1. "Bond release letter requirement" of Title Broadcast 15-1016

On October 16, 2015, the BMV issued Title Broadcast 15-1016 to all county clerks offices regarding "Vehicles Imported from Canada and Other Foreign Countries." (Stedtefeld Dep., Ex. 8.) The Title Broadcast informed clerks that title applications for "imported vehicles coming into Ohio from Canada and other foreign countries should include" several different documents. (Id. ) Important for this case, the Title Broadcast stated that, if the vehicle was a "Box 3" vehicle (a pre-owned import from Canada), "an Original Bond Release Letter from" NHTSA was required for verification that the "Federal Motor Vehicle Safety Standards have been, or will be, met." (Id. ) The Court will refer to this policy as the "bond release letter requirement."

Title Broadcast 15-1016 explains what is required, but it does not explain why. In early 2015, county clerks reported to the BMV a major increase in volume of title applications for vehicles imported to Ohio from Canada. (Corrigan Dep. 108:11–15.) The clerks requested guidance on what was required to issue title for such vehicles; at the time, the last guidance issued from the BMV on the titling of Canadian imports was issued in 2002. (Stedtefeld Dep. 70:22–71.) The BMV researched the federal regulations and issued its first Title Broadcast regarding Canadian vehicles on May 1, 2015. (Id. at 70:14–71:15.) It issued another Title Broadcast on May 8, 2015. (Id. , Ex. 4.) But it was not until October 2015 that the BMV told the county clerks that applicants must produce the original bond release letter from NHTSA as part of a title application. (Stedtefeld Dep., Exs. 3–4.)

So why in October of 2015 did the BMV decide to require applicants to produce the original bond release letter from NHSTA? According to Kathleen Corrigan, the BMV's Administrator of the Office of Vehicle Services, county clerks had...

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