Rockville Harley-Davidson v. Harley-Davidson Motor

• Decision Date: 27 August 2002
• Docket Number: No. CIV. JFM-02-CV-1576.,CIV. JFM-02-CV-1576.
• Citation: 217 F.Supp.2d 673
• Parties: ROCKVILLE HARLEY-DAVIDSON, INC. v. HARLEY-DAVIDSON MOTOR CO., INC.
• Court: U.S. District Court — District of Maryland

217 F.Supp.2d 673

ROCKVILLE HARLEY-DAVIDSON, INC. v. HARLEY-DAVIDSON MOTOR CO., INC.

No. CIV. JFM-02-CV-1576.

United States District Court, D. Maryland.

August 27, 2002.

Miller John Poppleton, Poppleton Garrett and Polott PC, Rockville, MD, Brad D. Weiss, Charapp Deese Weiss LLP, Washington, DC, for Plaintiff.

Nicholas T. Christakos, Gregory Scott Kaufman, James J. Briody, Sutherland Asbill and Brennan LLP, Washington, DC, for Defendant.

MEMORANDUM

MOTZ, District Judge.

Plaintiff Rockville Harley-Davidson, Inc. ("Rockville Harley") has moved to remand this case to the Maryland Department of Transportation, Motor Vehicle Administration ("MVA"). It contends that removal by the defendant, Harley-Davidson Motor Co., Inc. ("Harley-Davidson"), was improper because the action was pending before a state agency that did not function as a state court. For the reasons set forth below, plaintiff's motion will be granted.¹

I.

This case involves a dispute between Harley-Davidson, the motorcycle manufacturer, and Rockville Harley, an authorized Harley-Davidson dealer, concerning the availability of new Harley-Davidson motorcycles for sale in Maryland. Both Rockville Harley and Harley-Davidson are licensed by the state pursuant to Md.Code Ann., Transp. II § 15-101 et seq., which provides a comprehensive licensing scheme concerning new vehicle sales in Maryland.

On February 25, 2002, Devin L. Battley, the president of Rockville Harley, wrote to Anne S. Ferro, the Motor Vehicle Administrator, complaining that Harley-Davidson had violated two provisions of that statutory scheme as it pertains to vehicle manufacturers. (See Def.'s Opp'n Ex. A at 1.) Battley first charged that Harley-Davidson violated Md.Code Ann., Transp. II § 15-208² by advertising motorcycles for immediate delivery in Maryland and then refusing to deliver motorcycles to Rockville Harley. (See id.) He provided Ferro with a copy of a January 2002 order he sent to Harley-Davidson, which the manufacturer said it was unable to fill because all 2002 model-year motorcycles already had been allocated to other dealers. (See Notice of Removal, Ltr. from Battley to Ferro, Feb. 25, 2002, Exs. 1, 8.)

Battley also alleged that Harley-Davidson had violated Md.Code Ann. Transp. II § 15-207, prohibiting coercion of dealers. (See Def.'s Opp'n Ex. A at 1-2.) This allegation related to Harley-Davidson's operation of a vehicle allocation program called "Bar & Shield." Battley charged that Bar & Shield is based on dealer performance, and thus is governed by Md. Code Ann. Transp. II § 15-207(e), which requires that such programs be fair and equitable.³ (See id. at 2.) According to Battley, Harley-Davidson inaccurately scored Rockville Harley under the program, and therefore failed to deliver enough motorcycles to it. (See id. at 2.) He also alleged that Bar & Shield had been improperly "used as leverage" by Harley-Davidson in an attempt to force Rockville Harley to move to a new facility, in violation of Md.Code Ann., Transp. II § 15-207(d).⁴

According to Battley, both alleged statutory violations affected Maryland consumers and Maryland Harley-Davidson dealers. He stated in his letter to Ferro that Harley-Davidson "uses the allocation system to deny motorcycles to Maryland consumers thru [sic] their existing dealers while advertising the availability of those vehicles. The allocation system is also used to coerce Maryland dealers to improperly comply with the whims of [Harley-Davidson]." (See id.) He urged the MVA to take "immediate action to compel [Harley-Davidson] to comply with Maryland law, and to have [Harley-Davidson] pay [Rockville Harley] damages for the financial losses suffered due to these violations." (See id. at 3.)

On March 29, 2002, the MVA sent Harley-Davidson a copy of the letter at Harley-Davidson's request. (See Def.'s Mem. Ex. C.) The manufacturer states that it received the letter on April 1, 2002. On May 1, 2002, it filed a Notice of Removal, basing jurisdiction on 28 U.S.C. § 1332. The parties are diverse, since Rockville Harley is a citizen of Maryland and Harley-Davidson is a citizen of Wisconsin. (See Notice of Removal ¶¶ 8,9.) Harley-Davidson also contends that the amount-in-controversy requirement is met because Battley stated in his complaint to Ferro that Rockville Harley had lost $250,000 in profits over three model years by being shortchanged twenty-three Harley-Davidson motorcycles per model year. (See id. ¶ 10; Def.'s Opp'n Ex. A at 2.)⁵

II.

A.

By its plain language, the removal statute speaks only of the removal of cases from "a State court ...." 28 U.S.C. § 1441(a). Whether removal can extend to proceedings before administrative agencies has generated substantial debate in the federal courts. Several circuits have applied a functional test, allowing removal in cases in which a state administrative agency functions as a court. See Floeter v. C.W. Transport, Inc., 597 F.2d 1100, 1102 (7th Cir.1979); Volkswagen de Puerto Rico, Inc. v. Puerto Rico Labor Relations Bd., 454 F.2d 38, 44 (1st Cir.1972); see also Tool & Die Makers Lodge No. 78 Int'l Ass'n of Machinists, AFL-CIO v. Gen. Elec. Co. X-Ray Dep't, 170 F.Supp. 945, 950 (E.D.Wis.1959) (deriving the functional approach from two Supreme Court cases, Upshur County v. Rich, 135 U.S. 467, 10 S.Ct. 651, 34 L.Ed. 196 (1890), and Prentis v. Atlantic Coast Line Co., 211 U.S. 210, 29 S.Ct. 67, 53 L.Ed. 150 (1908)). Other courts have found it impermissible to ever remove an action pending before a state agency "regardless of how court-like the proceedings may be." Oregon Bureau of Labor & Indus. ex rel. Richardson v. U.S. West Communications, Inc., 288 F.3d 414, 419 (9th Cir.2002); see also DeLallo v. Teamsters Local Union # 776, 1994 WL 423873, at *3 (E.D.Pa.1994) (concluding that the Third Circuit would reject the functional test and would never allow removal from a state administrative agency).

The Fourth Circuit has yet to decide whether cases may be removed from state administrative agencies pursuant to 28 U.S.C. § 1441, and if so, under what circumstances. However, because the Fourth Circuit has applied the functional test of Volkswagen in the context of the federal officer removal statute, 28 U.S.C. § 1442, I will apply it here. See Kolibash v. Comm. on Legal Ethics of the West Virginia Bar, 872 F.2d 571, 576 (4th Cir. 1989); see also Ginn v. North Carolina Dep't of Corr., Div. of Prisons, 829 F.Supp. 804, 806-07 (E.D.N.C.1993) (applying functional test in context of state administrative proceeding). However, as with all cases involving removal under 28 U.S.C. § 1441, the burden of establishing federal jurisdiction remains on the removing party, removal is to be "strictly construe[d]," and remand is necessary "[i]f federal jurisdiction is doubtful ...." Mulcahey v. Columbia Organic Chemicals, Co., Inc., 29 F.3d 148, 151 (4th Cir.1994).

B.

The functional test involves two steps. First, the court must evaluate "the functions, powers, and procedures of the state tribunal" in order to consider whether the entity functions as a court. Floeter, 597 F.2d at 1102. Second, the court must consider "the respective state and federal interests in the subject matter and in the provision of a forum." Id.; see also Volkswagen, 454 F.2d at 44 (noting same considerations). The federal court should assume jurisdiction only if the agency functions as a court and federal interests predominate over state interests. See, e.g., Ford Motor Co. v. McCullion, 1989 WL 267215, at *2 (S.D.Ohio 1989) (finding removal from administrative agencies appropriate only in "restrictive instances" where both elements of the test are met).

In this case, I conclude that while the MVA employs many of the same procedures as a court, it lacks traditional judicial powers and therefore is not the functional equivalent of a court. Additionally, the state's strong interest in enforcing its vehicle-distribution licensing scheme dwarfs any federal interest in the provision of a forum. For this reason, remand is required.

1.

Before the MVA may take action against a manufacturer for violating the licensing subtitle of the vehicle code, the MVA (or the Office of Administrative Hearings as its delegate) must conduct an administrative hearing. See Md.Code Ann., Transp. II §§ 12-104(e)(1), 15-110(b).⁶ This hearing has many of the trappings of a court proceeding. The licensee is given timely written notice of the hearing and any charge made, the opportunity to be heard in person, and the right to present documentary evidence and call witnesses, who may be subpoenaed by the MVA. See id. §§ 12-108(a), 12-202, 12-204(5), 12-204(6). The licensee may be represented by counsel. See id. §§ 12-204(8). Additionally, the hearing must be conducted in accordance with the state's Administrative Procedure Act, see id. § 12-206, which allows the licensee or its counsel to conduct discovery, file pre-hearing motions, cross-examine adverse witnesses, and present summation and argument. See Md.Code Ann., State Gov't §§ 10-213(f)(3), 10-213(f)(4); Md. Regs.Code tit. 28, §§ 28.02.01.10, 28.02.01.16(B)(1). Administrative law judges appointed by the OAH preside over the hearings that the MVA delegates to the OAH. See Md. Regs.Code tit. 11, § 11.11.02.07.

Despite the employment of these court-like procedures in licensing actions, however, the MVA is not the functional equivalent of a court because it does not exercise judicial power. Unlike a court, the MVA cannot enforce the subpoenas it issues through a contempt power. Rather, it must petition a state court for an order to compel the appearance of witnesses at its hearings or the production of documents it has requested. See Md.Code Ann., Transp. II § 12-108(b); see also Southaven Kawasaki-Yamaha v. Yamaha Motor Corp., U.S.A., 128 F.Supp.2d 975, 980 (S.D.Miss.2000) (observing that state motor vehicle commission's lack of contempt powers indicated it was not functionally a court). Further, the MVA's...