Jaguar Cars v. Cottrell
| Decision Date | 04 August 1995 |
| Docket Number | Civ. A. No. 94-78. |
| Citation | 896 F. Supp. 691 |
| Parties | JAGUAR CARS, Plaintiff, v. Ray COTTRELL, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Kentucky |
Barbara B. Edelman, Janet M. Graham, Wyatt, Tarrant & Combs, Lexington, KY, Carl J. Chiappa, Townley & Updike, New York City, for plaintiff.
Greg E. Mitchell, Shannon Upton Johnson, Frost & Jacobs, Lexington, KY, Dandridge F. Walton, David H. Vance, Day, Smith, Walton & Durham, Frankfort, KY, for defendants.
Richard A. Getty, Gregory A. Keyser, Bowles, Rice, McDavid, Graff, Love & Getty, Lexington, KY, for intervenor defendant.
This matter is before the Court upon motion by the plaintiff, Jaguar Cars, Jaguar for preliminary injunction, Record No. 2 and for leave to supplement the record with newly discovered evidence, Record No. 36, and by the defendants, referred to herein as the Commission, to dismiss. Record No. 9. Being fully briefed, this matter is ripe for decision.
As the Court did not consider the instant information submitted by Jaguar in rendering its order dated July 19, 1995, the Court must re-visit this matter once again. Having carefully reviewed the entire record, including the information regarding the Commission's acting counsel, Dandridge F. Walton Walton and David Vance Vance, the Court must address both Jaguar's motion for preliminary injunction as well as the Commission's motion to dismiss premised upon the mandatory abstention doctrine established in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971).
On April 17, 1995, the Court heard the parties' arguments on Jaguar's motion for preliminary injunction. The Court agreed that the "make-up" of the Commission rendered it biased for the purposes of hearing disputes between car dealers and manufacturers. Thus, the Court ordered that Jaguar move the Commission to recuse its new car dealer-members. Before Jaguar could make such a motion, the Commission voluntarily recused these members. Jaguar objected to the act, requesting in essence, that it be given an opportunity to move for the recusal of other Commission members it considered biased. The Court granted Jaguar that opportunity.
During this time Jaguar obtained newly discovered information regarding the used car dealer members, as well as the Commission's attorneys. This information was considered in as much as it was given in Jaguar's notice of the disposition of its motion for recusal before the Commission. The entirety of the information was not brought to the Court's attention, however, until a complete review of the record reveled the substance of Jaguar's motion to supplement the record.
The Court does not intend to flush out each of the parties' arguments. The law is clear on the matter so that an in depth discussion of the parties' interpretation of the term "bias" is not necessary.
Before an injunction may be issued, the Court must ask: 1) whether the likelihood of success on the merits is substantial, 2) whether irreparable injury will be incurred in the absence of an injunction, 3) whether an injunction will not cause harm to others, and 4) whether an injunction will serve public interest. G & V Lounge v. Michigan Liquor Control Comm'n, 23 F.3d 1071, 1076 (6th Cir.1994). These considerations "are factors to be balanced, not pre-requisites that must be met." In re DeLorean Motor Co., 755 F.2d 1223, 1228 (6th Cir. 1985). Moreover, where a movant can establish irreparable injury which decidedly outweighs the potential harm to the non-movant, an injunction may issue "if the merits present a sufficiently serious question to justify further investigation." Id. at 1230.
The issue before the Court is whether the Commission's interest in staying a termination of a new car franchise instituted by a manufacturer, renders it biased so that it cannot act as an impartial tribunal. It is well established that "a fair trial in a fair tribunal is a basic requirement of due process.'" Withrow v. Larkin, 421 U.S. 35, 46, 95 S.Ct. 1456, 1464, 43 L.Ed.2d 712 (1975) (quoting In re Murchison, 349 U.S. 133, 136, 75 S.Ct. 623, 625, 99 L.Ed. 942 (1955)). This due process requirement applies to administrative agencies acting in an adjudicative capacity. Gibson v. Berryhill, 411 U.S. 564, 579, 93 S.Ct. 1689, 1698, 36 L.Ed.2d 488 (1973).
The Supreme Court has further defined "a fair tribunal" as a "neutrality requirement" that "has been jealously guarded by the Court." See Mathews v. Eldridge, 424 U.S. 319, 344, 96 S.Ct. 893, 907, 47 L.Ed.2d 18 (1976) and Marshall v. Jerrico, Inc., 446 U.S. 238, 241, 100 S.Ct. 1610, 1612, 64 L.Ed.2d 182 (1980). Accordingly, a "biased decisionmaker is constitutionally unacceptable." Withrow v. Larkin, 421 U.S. 35, 46, 95 S.Ct. 1456, 1464, 43 L.Ed.2d 712 (1975).
In the event the adjudicator in a case, civil or criminal, has a pecuniary interest in the outcome, "experience teaches that the probability of actual bias ... is too high to be constitutionally tolerable." Id. at 46, 95 S.Ct. at 1464; see also, Gibson, 411 U.S. at 579, 93 S.Ct. at 1698; Ward v. Village of Monroeville, 409 U.S. 57, 93 S.Ct. 80, 34 L.Ed.2d 267 (1972); and Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749 (1927). Thus, the Supreme Court has consistently reasoned that a pecuniary stake or interest renders the adjudicator unconstitutionally biased.
It is undisputed that the Commission's new car dealer members have a pecuniary stake in the instant matter as they would clearly benefit from the ability to stay any termination of a new car franchise at will. In the event they are stripped of this authority, they too would be susceptible to termination, directly affecting their very livelihoods. As they have been recused, further discussion regarding these members is unnecessary. Moreover, used car dealer members Anderson and Madon recused themselves from hearing the instant matter on July 26, and July 27, 1995, respectively. Accordingly, their presence on the Commission need not be considered.
The other two used car dealer members arguably have pecuniary interests in the outcome of this matter. Obviously, used car dealers frequently deal with new car dealers in obtaining their inventory. Moreover, in many instances used car dealerships have agreements with new car dealers for service on their vehicles. Moreover, and notably, these two dealers are conspicuously "standing alone" against the six car dealer members who have a direct interest in maintaining stability among the new car dealer community.
The remaining members of the Commission, whose partiality has not been directly challenged, include a wholesale dealer member, a consumer member, and the Commissioner of the Department of Vehicle Regulation. However, wholesale dealers generally operate either by purchasing vehicles from fleet companies (Avis, Hertz, etc.) and reselling those to new and/or used car dealers, or by purchasing vehicles from new car sales dealers who have an overstock of used cars. Thus, as the very existence of the wholesale car sales industry is inextricably interwoven into the health and vitality of the new car sales industry, it may readily be said that the wholesale dealer member has a direct interest in the Commission's ability to keep new car dealerships alive and well.
Thus, upon recusing those who may be said to have a direct pecuniary interest, the Commission would lack a quorum to authorize any action it may decide to take. However, a brief note of the Commission's previous actions in this matter, as well as its attorneys' involvement in the handling of disputes, is merited.
When Jaguar issued notice of its intention to terminate Blackhorse, the Commission issued a stay in the termination pending a hearing on the matter. When Jaguar was notified that the Commission intended to stay the termination, Jaguar requested that it be provided with the statutory provision conferring such authority upon the Commission. The Commission was unable to provide either Jaguar or the Court with any express statutory authority for such an action.
It is clear that K.R.S. 190.045 allows a manufacturer to terminate a franchise agreement pursuant to the numerous statutory provisions enacted to protect a dealer from wrongful termination, including provisions which provide for monetary compensation by the manufacturer to the dealer whose franchise is being terminated. K.R.S. 190.045(1), (4), (5), (6) and (7). In the event a manufacturer satisfies each of the statutory prerequisites, the termination will be effective. The statute clearly provides for a hearing in the event a dealer believes that his franchise has been wrongfully terminated or in the event the manufacturer has not complied with the provisions under K.R.S. 190.045. The statute does not, however, allow the Commission to prohibit an attempted termination. Absent such authority, it is clear that the Commission took it upon themselves to protect the franchisee.
Moreover, Walton's and Vance's positions with the Kentucky Automobile Dealers Association, KADA and their active participation in the cases before the Commission, further calls the Commission's neutrality into question. Walton and Vance both serve as legal counsel for the KADA, and Walton is a registered lobbyist for that organization.
Walton and Vance serve in various capacities in aiding the Commission. Jaguar contends that among other things, the attorneys review the Commission's findings of fact and conclusions of law and at least on one occasion "edited" the facts and conclusions to provide the necessary factual basis for the Commission's conclusions. Moreover, there is evidence that both Walton and Vance have actively participated in the deliberations of various disputes before the Commission. Although Walton and Vance do not possess the power to vote,...
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