Petition for Writ of Certiorari — Ford Motor Credit Co. v. United States District Court

|

87 =3 1 a TCE U.S.

NES oni Sut 2 B6T

In the Supreme Court

of the United States

OCTOBER TERM, 1986

FORD MOTOR CREDIT COMPANY, a corporation,

Petitioner,

Vv

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON,

Respondent,

and

JOHN STRIBLING FORD, INC., a corporation,

Real Party in Interest.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JAMES H. CLARKE JAMES H. CLARKE

JAMES E. BARTELS 800 Pacific Building

SPEARS, LUBERSKY, 520 S.W. Yamhill Street

CAMPBELL, BLEDSOE, Portland, Oregon 97204-1383

ANDERSON & YOUNG Telephone: (503) 226-6151

800 Pacific Building Counsel of Record

520 S.W. Yamhill Street For Petitioner

Portland, Oregon 97204-1383

Telephone: (503) 226-6151

Counsel for Petitioner

STEVENS-NESS LAW PUB.CO., PORTLAND, OR. 97204 877

QUESTION PRESENTED

Whether a district court has authority to remand

a properly removed case to state court on grounds not

authorized by statute — i.e., elimination of the federal

claim that formed the basis for removal — a question

that divides the circuits and is pending before the

Court in Carnegie-Mellon University v. Cohill, (No.

86-1021) cert. granted, 107 S. Ct. 1283, 94 L. Ed.2d

141 (1987).

ii

LIST OF PARTIES and RULE 28.1 LIST

This is a petition for a writ of certiorari to review

an order of the Court of Appeals denying an applica-

tion for a writ of mandamus. Parties to the proceeding

below were petitioner Ford Motor Credit Company,

respondent The United States District Court for the

District of Oregon, and the real party in interest,

John Stribling Ford, Inc. '

Pursuant to Rule 28.1, petitioner Ford Motor

Credit Company is a wholly owned subsidiary of Ford

Motor Company. Ford Motor Credit Company has no

subsidiaries whose stock is publicly traded. Ford

Motor Company’s affiliates are listed in Appendix G,

infra at A22.

1 The caption of the Court of Appeals’ Order denying the

application for writ of mandamus included John Stribling as

a real party in interest (Al). The real party in interest is the

corporation, John Stribling Ford, Inc.

ili

TABLE OF CONTENTS

Page

Question Presented - Rants cee ae

List of Parties and Rule 28. 1 List - nein li

Table of Authorities

EN ee 2

Jurisdiction... J RO NRE ee 2

De 3

Statement of the Case _ eR ies ate

1. Proceedings in the District Court. EE I 5

2. Proceedings in the Court of Appeals... 7

Reasons for Granting the Writ. =. t—‘<ité«SBS

1. The question presented for review —

whether a district court has authority to re-

mand a properly removed case on grounds

not authorized by statute — is pending be-

fore the Court in Carnegie-Mellon Univer-

sity v. Cohill, (No. 86-1021) cert. granted,

107 S. Ct. 12838, 94 L. Ed.2d°141 (1987)... 8

2. The question presented for review is an im-

portant question of federal jurisdiction that

this Court should decide, and which the

Court of Appeals decided in a way contrary

to a controlling decision of this Court ___ 9

3. The Court of Appeals’ decision allowing the

district court to remand a properly removed

case to state court on grounds not author-

ized by statute conflicts with decisions of

other circuits, and that conflict should be

resolved by this Court. ti«idO

i tC«sdR

ee |

iv

TABLE OF AUTHORITIES

CASES

Page

Browning v. Navarro, 743 F.2d 1069 (5th Cir.

I ice hticcaee cls hells dalieliiomintet conidia ictal 11

Carnegie-Mellon University v. Cohill, (No. 86-

1021) cert. granted, 107 S. Ct. 12838, 94 L.

Base 141: (ies) SLE Lea i, 8,9

Cook v. Weber, 698 F.2d 907 (7th Cir. 1983)... 11

Fox v. Custis, 712 F.2d 84 (4th Cir. 1983) ......_. 11

In re Greyhound Lines, Inc., 598 F.2d 883 _—

i I ii dcanetaiengn . , ._ i

Hofbauer v. Northwestern Nat. Bank of Roches-

ter, 700 F.2d 1197 (8th Cir. 1983) _-.....--.. 11

IMFC Professional, Etc. v. Latin Am. Home

Health, 676 F.2d 152 (5th Cir. 1982) -..... 11

Levy v. Weissman, 671 F.2d 766 (8rd Cir. 1982)... 11

In re Merrimack Mut. Fire Ins. Co., 587 F.2d

RN Oe Ne IIE seinen cctivececcctnececnenniyscnccenin 11

Naylor v. Case & McGrath, Inc., 585 F.2d 557

I I csc eteeeeenac os peas 11

In re Romulus Community Schools, 729 F.2d 431

I les cbainlisinagheinns 11, 12

Ryan v. State Bd. of Elections fe State ibis Ill,

661 F.2d 1130 (7th Cir. 1981) _- oe |

TABLE OF AUTHORITIES (Cont.)

CASES

Page

Salveson v. Western States Bankcard Ass’n., 525

F. Supp. 566 (N.D. Cal. 1981), aff'd. in part,

rev'd. in part, Salveson v. Western States

Bankcard Ass’n., 731 F.2d 1423 (9th Cir.

I wit ce tikeened eteeeee ea ainowas 10

Sheet Metal Workers Intern. Ass’n., AFL-CIO v.

Seay, 693 F.2d 1000 (10th Cir. 1982), modi-

fied on other grounds on reh’g., 696 F.2d

tow (ince Car, 1968) 11

Thermtron Products, Inc. v. Hermansdorfer, 423

Um ooe (3976)... OG 1, 22

United Mine Workers vy. Gibbs, 383 U.S. 715

(eee? ....<.... Mera 9S Slr AME et ah IND ._ 9,11

Wren v. Sletten Const. Co., 654 F.2d 529 -

Cir. 1981) _ EEE LE OT

STATUTES

i UAm oie oe. _.............. 5

Be Se De, 2

28 U.S.C. § 1831 TI em ers FLORES EO 5

28 U.S.C. § 1441 RAEN ANEE Rhee A REN 1 to a

DP OD ii. 5

Se ee eee nn 11

28 U.S.C. § 1442(a) (1) saan eae 11

tS nc o

MUSC £4).

ee

In the Supreme Cot

of the United States

OCTOBER TERM, 1986

FORD MOTOR CREDIT COMPANY, a corporation,

Petitioner,

v.

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON,

Respondent,

and

JOHN STRIBLING FORD, INC., a corporation,

Real Party in Interest.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioner Ford Motor Credit Company (Ford

Credit) réspectfully prays for a writ of certiorari to

review the Order of the United States Court of Ap-

peals for the Ninth Circuit entered April 3, 1987.

2

OPINIONS BELOW

The Court of Appeals’ Order of April 3, 1987

denying Ford Credit’s Application for Writ of Man-

damus has not been reported. A copy is attached as

Appendix A, infra at Al.

The district court’s Order of October 2, 1986

granting Stribling Ford’s “conditional” motion to re-

mand the underlying action to state court has not been

reported. A copy is attached as Appendix B, infra at

A2. The district court’s Opinion of October 17, 1986

stating its reasons for granting the motion has not

been reported. A copy is attached as Appendix C, infra

at A4.

The Judgment of the district court entered Octo-

ber 17, 1986 remanding the underlying action to state

court has not been reported. A copy is attached as Ap-

pendix D, infra at A19.

JURISDICTION

January 7, 1987 petitioner Ford Credit filed

an Application for Writ of Mandamus. A copy of

material parts of the application is attached as Ap-

pendix F, infra at A21. The Court of Appeals denied

the application on April 3, 1987 and Petitioner timely

filed a petition for rehearing, which was denied on

May 11, 1987. A copy of the order denying the petition

is attached as Appendix E, infra at A20. The juris-

diction of this Court is invoked under 28 U.S.C. §

1254(1).

{LAGOA ELIOT POET

3

STATUTES INVOLVED

The statutes involved are 28 U.S.C. § 1441 and

28 U.S.C. § 1447. 28 U.S.C. § 1441 provides:

§ 1441. Actions removable generally

(a) Except as otherwise expressly provided

_by Act of Congress, any civil action brought in a

State court of which the district courts of the

United States have original jurisdiction, may be

removed by the defendant or the defendants, to

the district court of the United States for the

district and division embracing the place where

such action is pending.

(b) Any civil action of which the district

courts have original jurisdiction founded on a

claim or right arising under the Constitution,

treaties or laws of the United States shall be re-

movable without regard to the citizenship or resi-

dence of the parties. Any other such action shall

be removable only if none of the parties in interest

properly joined and served as defendants is a

citizen of the State in which such action is brought.

(c) Whenever a separate and independent

claim or cause of action, which would be remov-

able if sued upon alone, is joined with one or more

otherwise non-removable claims or causes of

action, the entire case may be removed and the

district court may determine all issues therein,

or, in its discretion, may remand all matters not

otherwise within its original jurisdiction.

(d) Any civil action brought in a State court

against a foreign state as defined in section

4

1603(a) of this title may be removed by the

foreign state to the district court of the United

States for the district and division embracing the

place where such action is pending. Upon removal

the action shall be tried by the court without jury.

Where removal is based upon this subsection, the

time limitations of section 1446(b) of this chapter

may be enlarged at any time for cause shown.

(e) The court to which such civil action is

removed is not precluded from hearing and de-

termining any claim in such civil action because

the State court from which such civil action is

removed did not have jurisdiction over that claim.

28 U.S.C. § 1447 provides:

§ 1447. Procedure after removal generally

(a) In any case removed from a State court,

the district court may issue all necessary orders

and process to bring before it all proper parties

whether served by process issued by the State

court or otherwise.

(b) It may require the petitioner to file with

its clerk copies of all records and proceedings in

such State court or may cause the same to be

brought before it by writ of certiorari issued to

such State court.

(c) If at any time before final judgment it

appears that the case was removed improvidently

and without jurisdiction, the district court shall

remand the case, and may order the payment of

just costs. A certified copy of the order of remand

shall be mailed by its clerk to the clerk of the

eee. Se ee —- aie

5

State court. The State court may thereupon pro-

ceed with such case.

(d) An order remanding a case to the State

court from which it was removed is not reviewable

on appeal or otherwise, except that an order re-

manding a case to the State court from which it

was removed pursuant to section 1448 of this title

shall be reviewable by appeal or otherwise.

STATEMENT OF THE CASE

1. Proceedings in the District Court.

On September 5, 1984, John Stribling and the real

party in interest, John Stribling Ford, Inc. (Stribling

Ford), filed a complaint in the Klamath County Cir-

cuit Court for the State of Oregon against Ford Motor

Company (Ford Motor) and petitioner Ford Motor

Credit Company (Ford Credit), alleging violations of

the Automobile Dealers’ Day in Court Act (ADDCA),

15 U.S.C. §§ 1221 et seg.; Oregon securities laws; and

state common law claims for breach of contract, con-

version, and interference with a prospective business

advantage. Defendants removed the case to the Dis-

trict Court for Oregon (CR 1) based on the ADDCA

claims.* They invoked the jurisdiction of the district

court pursuant to 28 U.S.C. §§ 1831 and 1441(b)

(CR 1 at 2).

On July 28, 1986, after nearly two years of litiga-

tion, the district court granted defendants’ motions

2 References to CR identify the clerk’s record in the re-

moved action.

:

.

~ 5

}

for summary judgment on both plaintiffs’ claims

against Ford Motor, on Stribling’s claims against

Ford Credit, and on Stribling Ford’s securities law

claims against Ford Credit (CR 59, 61, 85).

Ford Credit then moved for summary judgment

on Stribling Ford’s remaining claims against it, which

consisted of the ADDCA claim and three state common

law claims (CR 90). Stribling Ford then filed a “con-

ditional’ motion to remand the case to the state court

if summary judgment were granted on the ADDCA

claim, since only state law claims would then remain

(CR 95). Ford Credit opposed the motion on the

ground that the district court could not remand a

properly removed case on grounds not authorized by

statute and applicable statutes do not authorize the

district court to r-mand a properly removed case to !

state court after the federal claim is disposed of (CR

91, 101; See A12; CR 112 at 8).

On October 2, 1986 the district court granted Ford

Credit’s motion for summary judgment on Stribling

Ford’s ADDCA claim, but denied it as to the remain-

ing state law claims, and granted Stribling Ford’s

conditional motion to remand the case to state court

(A2-3; CR 109).

In an Opinion dated October 17, 1986 the district

court identified the question before it as “whether or

not to exercise its discretion to retain a case that was

properly filed in state court and removed to federal

court by the defendant because a federal claim has

a renner en F

7

since been dismissed” (A13; CR 112 at 9). It dis-

cussed this Court’s decision in Thermtron Products,

Inc. v. Hermansdorfer, 423 U.S. 336 (1976) and noted

the conflict in decisions of the courts of appeals (A14-

15; CR 112 at 10-11). The court concluded that it had

discretion under Ninth Circuit decisions to remand the

case to state court, and that it should do so (A15-17;

CR 112 at 11-13). The Court remanded the case to

Klamath County Circuit Court (A19; CR 113).

2. Proceedings in the Court of Appeals.

On January 7, 1987 Ford Credit filed in the Court

of Appeals an Application for Writ of Mandamus

directing the district court to vacate its order remand-

ing the case to state court (A21).% On April 3, 1987

the Court of Appeals denied the application, on the

ground that Ford Credit had not demonstrated that

the district court “clearly erred in remanding pendent

state claims after the federal claims permitting re-

“moval were decided” (A1). :

Ford Credit timely filed a petition for rehearing,

which the court denied on May 11, 1987 (A20).

3 On November 17, 1986 petitioner appealed from the dis-

trict court’s order of remand (CR 117). The Court of Appeals

dismissed the appeal for lack of jurisdiction, holding that the

court’s order was reviewable only by mandamus.

Both plaintiffs have appealed from the judgment in favor

of Ford Motor (CR 116), and Stribling has appealed from the

judgment in favor of Ford Credit (CR 131). Those appeals

have been consolidated and are pending in the Court of Appeals.

8

REASONS FOR GRANTING THE WRIT

1. The question presented for review — whether a dis-

trict court has authority to remand a properly removed

case on grounds not authorized by statute — is pending

before the Court in Carnegie-Mellon University v. Cohill,

(No. 86-1021) cert. granted, 107 S. Ct. 1283, 94 L. Ed.2d

141 (1987).

On February 23, 1987 the Court granted certiorari

in Carnegie-Mellon Universiy v. Cohill, (No. 86-1021)

cert. granted, 107 S. Ct. 1283, 94 L. Ed.2d 141 (1987),

which presents the same question raised by this peti-

tion. The question presented in Cohill is:

Whether a district court has authority to re-

mand a properly removed case to state court for

a reason not set forth in 28 U.S.C. § 1447(c) —

i.e., elimination, by amendment of the complaint,

of the federal claim that had formed the basis for

removal — a question as to which the circuits are

split and as to which the appellate court below,

sitting in banc, was evenly divided.

Cohill Petition at i.

This case is indistinguishable from Cohill. In

Cohill, the plaintiffs alleged violations of state and

federal law in an action filed in state court. Defen-

dants removed the case to federal court based on the

federal claims. Plaintiffs then amended their com-

plaint to eliminate the federal claims and moved to

remand the case to state court. The district court al-

lowed the motion as an exercise of its discretion.

= ee

9 \

A panel of the Third Circuit concluded that the

district court lacked jurisdiction to remand the case

under Thermtron Products, Inc. v. Hermansdorfer,

supra, 423 U.S. 336, which precludes the remand of a

properly removed case except for reasons provided by

statute. The Cohill panel directed the district court to

vacate its order of remand; however, on rehearing en

bane the full court denied the writ by an equally

divided vote. This Court granted certiorari to review

that decision.

In this case the district court adjudicated the fed-

eral claim on which its jurisdiction was based and

then asserted discretionary authority to remand the

remaining state law claims over which it had pendent

jurisdiction. United Mine Workers v. Gibbs, 383 U.S.

715, 726 (1966). The two cases are indistinguishable,

and both deserve review in resolving the important

question before the Court. 4

2. The question presented for review is an important

question of federal jurisdiction that this Court should de-

cide, and which the Court of Appeals decided in a way

contrary to a controlling decision of this Court.

Whether a district court has authority to remand

an action to state court on grounds not authorized by

statute is an important and recurring question of fed-

4 In fact, this case is a stronger case for refusing to per-

mit a remand than Cohill in that plaintiffs could assert the

ADDCA claims in their pending appeals; but it is like Cohill

in that they may abandon those claims in their effort to re-

turn to state court.

10

eral jurisdiction that has troubled the lower courts.

See Salveson v. Western States Bankcard Ass’n., 525

F, Supp. 566, 580, 581 n. 17 (N.D. Cal. 1981), aff'd.

in part, rev’d. in part, Salveson v. Western States

Bankcard Ass’n., 731 F.2d 1423 (9th Cir. 1984).

It is also a question that this Court decided in Therm-

tron Products, Inc. v. Hermansdorfer, supra, 423 U.S.

336 in a way contrary to the Court of Appeals’ deci-

sion. In Thermtron, the district court asserted dis-

cretionary authority to remand an action because its

docket was overcrowded. This Court held in plain

terms that district courts have no discretion to remand

properly removed cases except on grounds provided

by statute; Congress did not intend

“to extend carte blanche authority to the dis-

trict courts to revise the federal statutes govern-

ing removal by remanding cases on grounds that

seem justifiable to them but which are not recog-

nized by the controlling statute.”

423 U.S. at 351.

The petition should be granted, because the Court

of Appeals has decided an important question in a way

contrary to this Court’s decision in 'Thermtron.

3. The Court of Appeals’ decision allowing the district

court to remand a properly removed case to state court

on grounds not authorized by statute conflicts with de-

cisions of other circuits, and that conflict should be resolved

by this Court. ;

There is no doubt that, despite Thermtron, the

Courts of Appeals remain sharply divided on the

question presented for review. Cases in the Third,

— SE

il

Fifth, Seventh and Tenth Circuits follow Thermtron

and hold that the remand of a properly removed case

is limited to grounds specified in 28 U.S.C. §§

1441(c) and 1447(c). Under those decisions, the dis-

trict court must dismiss the state claims if it exercises

its discretion under United Mine Workers v. Gibbs,

supra, not to retain pendent jurisdiction. See Brown-

ing v. Navarro, 743 F.2d 1069, 1076 n. 21 (5th Cir.

1984); Cook v. Weber, 698 F.2d 907, 909-910 (7th

Cir. 1983) ; Levy v. Weissman, 671 F.2d 766 (3d Cir.

1982) ; Sheet Metal Workers Intern. Ass’n., AFL-CIO

v. Seay, 693 F.2d 1000, 1002-1006 (10th Cir. 1982),

modified on other grounds on reh’g., 696 F.2d 780

(10th Cir. 1983); Ryan v. State Bd. of Elections of

State of Ill., 661 F.2d 1130, 1133 (7th Cir. 1981);

In re Greyhound Lines, Inc., 598 F.2d 883 (5th Cir.

1979) ; In re Merrimack Mut. Fire Ins. Co., 587 F.2d

642, 644 (5th Cir. 1978) ; cf. IMFC Professional, Etc.

v. Latin Am. Home Health, 676 F.2d 152, 159-160

(5th Cir. 1982) (discretion to remand based on an-

cillary jurisdiction under federal officer removal stat-

ute, 28 U.S.C. § 1442(a) (1)).

The Second, Fourth, Sixth, and Eighth Circuits

have held that properly removed cases may be re-

manded in the district court’s discretion for reasons

not prescribed by statute. See In re Romulus Com-

munity Schools, 729 F.2d 481 (6th Cir. 1984); Fox

v. Custis, 712 F.2d 84, 89-90 (4th Cir. 1983); Hof-

bauer v. Northwestern Nat. Bank of Rochester, 700

F.2d 1197 (8th Cir. 1983) ; Naylor v. Case & McGrath,

12

Ine., 585 F.2d 557 (2d Cir. 1978). The Ninth Circuit

has also held that a district court has discretion to

remand a case to state court when the federal claim

is eliminated. Wren v. Sletten Const. Co., 654 F.2d

529, 530 (9th Cir. 1981). Of these cases, only Romulus

considers Thermtron. 729 F.2d at 436.

This serious and persistent refusal by roughly

half of the courts of appeals to consider — much less

follow — Thermtron has created a deep conflict among

the circuit courts that this Court should resolve.

CONCLUSION

The petition should be granted.

Respectfully submitted,

JAMES H. CLARKE

Counsel of Record for Petitioner

June 30, 1987.

JAMES H. CLARKE

800 Pacific Building

520 S.W. Yamhill Street

Portland, Oregon 97204-1383

Telephone: (503) 226-6151

Counsel of Record =

For Petitioner

JAMES H. CLARKE

JAMES E. BARTELS

SPEARS, LUBERSKY,

CAMPBELL, BLEDSOE,

ANDERSON & YOUNG

800 Pacific Building

520 S.W. Yamhill Street

Portland, Oregon 97204-1383

Telephone: (503) 226-6151

Counsel for Petitioner

Al

APPENDIX A FILED

APR 3 1987

CATHY A. CATTERSON

Clerk, U.S. Court of Appeals

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

FORD MOTOR COMPANY, )

Petitioner, )

vs. )

) No. 87-7029

UNITED STATES )

DISTRICT COURT FOR THE ) DC # CYV-84-

DISTRICT OF OREGON, ) 1291-BE

Respondent, ) Oregon

and ) (Portland)

)

JOHN STRIBLING, ) ORDER

an individual, et al., )

)

Real Parties in Interest. )

Before: WALLACE, ALARCON and NELSON,

Circuit Judges

The petition for writ of mandamus is denied.

Petitioner has not demonstrated that the district

court clearly erred in remanding pendent state claims

after the federal claims permitting removal were de-

cided. Levin Metals Corp. v. Parr-Richmond ‘Terminal,

799 F.2d 1812 (9th Cir. 1986) ; Swett v. Schenk, 792

F.2d 1447 (9th Cir. 1986); Gallea v. United States,

779 F.2d 1403 (9th Cir. 1985).

MoCal 3/23/87

A2

APPENDIX B

FILED

OCT 2 12:28 PM ’86

Clerk, U.S. District Court

District of Oregon

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

JOHN STRIBLING, an individual,

and

JOHN STRIBLING FORD, INC.,

Civil No.

Plaintiffs, 84-1291-BE

VS.

FORD MOTOR COMPANY,

a corporation, and

FORD MOTOR

CREDIT COMPANY,

a corporation,

)

)

)

)

)

)

) ORDER

)

)

)

)

)

)

Defendants.

Defendant’s motion for summary judgment on

claim one, the Automobile Dealer’s Day in Court Act

(ADDCA) claim, is granted. Defendant’s motion for

summary judgment on the remaining claims, breach

of contract, conversion and interference with pros-

pective business relationships, is denied. Now, the

federal claim has been dismissed and only state claims

remain. Plaintiff’s conditional motion to remand to

state court is considered.

In determining the apprcvriate course of action,

— A3

I have considered the recent Third Circuit opinion,

Carnegie-Mellon University v. Cohill, No. 85-8619

(3rd Cir. 1986) and Thermtron Products, Inc. v. Her-

mansdorfer, 423 U.S. 336 (1976). However, where all

federal claims have been dismissed before trial, I find

the law in the Ninth Circuit directs me to remand

this case to state court. United Mine Workers v. Gibbs,

383 U.S. 715 (1966), Wren v. Sletten Construction

Co., 654 F.2d 529 (9th Cir. 1981). Plaintiff’s motion

to remand to state court is granted.

Defendant’s motion for summary judgment is

granted on the ADDCA claim and is denied on the

conversion, breach of contract and interference with

prospective business relationship claims. Plaintiff’s

motion to remand to state court is granted.

The clerk is directed to enter final judgment under

Fed. R. Civ. P. 54(b) on motions granted and denied

on July 23, 1986.

Defendant’s motion to compel answers to interro-

gatories is denied as moot.

A full opinion with reasoning will follows.

IT IS SO ORDERED.

DATED this 2 day of October, 1986.

/s/ ROBERT C. BELLONI

United States District Judge

A4

APPENDIX C

FILED

OCT 17 11:00 AM ’86

Clerk, U.S. District Court

District of Oregon

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

JOHN STRIBLING, an individual; )

and )

JOHN STRIBLING FORD, INC., )

a corporation, ) Civil No.

Plaintiffs, ) 84-1291-BE

Vs. )

) OPINION

FORD MOTOR COMPANY, )

a corporation; and )

FORD MOTOR )

CREDIT COMPANY, )

a corporation, )

Defendants. )

MICHAEL L. WILLIAMS

WILLIAMS & 'TROUTWINE

1100 S.W. 6th Avenue

Suite 1100

Portland, Oregon 97202

Attorneys for Plaintiffs

HERBERT H. ANDERSON

JAMES E. BARTELS

SPEARS, LUBERSKY, CAMPBELL,

BLEDSOE, ANDERSON & YOUNG

520 S.W. Yamhill Street

Suite 800

Portland, Oregon 97204

Attorneys for Defendants

A5

BELLONI, Judge.

Defendant Ford Motor Credit Company moves for

summary judgment on all four remaining counts

against John Stribling Ford, Inc. If the motion is

granted with respect to Count I, plaintiff moves to

remand to state court. Defendant moves to compel

answers to interrogatories.

John Stribling Ford, Ine. and John Stribling filed

this action against Ford Motor Company and Ford

Motor Credit Company (Ford Credit) in the Circuit

Court of the State of Oregon for Klamath County.

They alleged violation of the Automobile Dealers Day

in Court Act (““ADDCA”) 15 U.S.C. § 1221 (1982),

breach of an implied covenant of good faith and fair

dealing, conversion, intentional interference with a

business opportunity and violation of Oregon’s blue

sky laws. Defendants removed to the United States

District Court for the District of Oregon under 28

U.S.C. § 1441(b) (1982) alleging federal question

jurisdiction under 28 U.S.C. § 138381 (1982).

On October 2, 1986, I issued an order in which I

ruled on the motions discussed below. This opinion

explains my reasoning.

FACTS

John Stribling Ford, Ince. (Stribling Ford) was

established when the dealership entered into a Ford

Sales and Service Agreement to be an authorized

dealer on May 30, 1978. Stribling Ford refinanced

A6

through the Small Business Administration (SBA)

by pledging Stribling’s personal real estate and dealer-

ship assets. The inventory was financed through Ford

Credit. Ford Credit provided floor plan financing so

that the vehicles themselves secured the financing.

When a vehicle was sold, the dealership was to repay

the unpaid balance secured by that vehicle. Ford

Credit also retained a security interest in the dealer-

ship assets which had been created as security for the

capital loan.

After Stribling Ford refinanced, Ford Motor Com-

pany advised that the dealership was undercapitalized.

John Stribling and Stribling Ford were unable to bor-

row more money because all their assets were encum-

bered to provide security for the SBA loan and in-

ventory refinancing. Stribling Ford lost $405,000 in

1980, $115,000 in 1981, and $139,000 by August, 1982.

On September 7, 1982, Stribling Ford’s check for

a sold vehicle was returned unpaid to Ford Credit for

nonsufficient funds. On September 13, 1982, Ford

Credit received notice that a second check would be

returned unpaid. The two checks totaled $20,238.49.

Ford Credit terminated its inventory financing and

seized files and documents which were necessary for

Stribling Ford to continue in operation. Stribling Ford

closed on September 15, 1982 and John Stribling ar-

ranged to sell the dealership.

In order to transfer the franchise and assets to a

new dealer, the sales and service agreement required

aa aaa

ee

A7

Ford’s approval. Under the agreement, approval could

not be unreasonably withheld and it further provided

that Stribling Ford could demand that Ford purchase

the inventory of new undamaged parts in return for

a release from liability. Stribling executed the release

and assigned the parts return privilege to the purchas-

er, Harvest Ford. At Stribling’s request, Harvest Ford

later waived the parts return privilege in order to

facilitate Ford’s approval for the transfer of the fran-

chise and assets. Stribling needed the quick transfer

of the dealership to prevent greater financial loss.

John Stribling and Stribling Ford filed this law-

suit alleging violation of the federal Automobile Deal-

ers Day in Court Act (ADDCA), breach of an implied

covenant of good faith and fair dealing, conversion,

intentional interference with prospective business op-

portunity, and violation-of the Oregon blue sky laws.

Earlier, summary judgment was granted which re-

moved John Stribling from the lawsuit for lack of

standing, removed the blue sky claims and dismissed

all claims against Ford Motor Company.

SUMMARY JUDGMENT — ADDCA CLAIMS

Summary judgment is appropriate when the mov-

ing party meets the burden of presenting evidence

which demonstrates the nonexistence of any genuine

issue of material fact and that the movant is entitled

to judgment as a matter of law. Addickes v. S. H.

Kress, 398 U.S. 144 (1970).

A8

To be subject to the ADDCA, a defendant must be

an automobile manufacturer and a party to the fran-

chise agreement or, if not a party to the agreement,

an agent of the manufacturer. 15 U.S.C. § 1221

(1982). The Ninth Circuit has adopted a narrow view

of agency in this context and holds that a wholly

owned subsidiary credit agency of an automobile

manufacturer is not an agent for liability purposes

under the ADDCA. Marguis v. Chrysler Corp., 577

F.2d 624, 629 (9th Cir. 1978) ; Stansifer v. Chrysler

Motors Corporation, 487 F.2d 59, 65 (9th Cir. 1973).

Here, the parties agree that Ford Credit is not

an automobile manufacturer and not a party to the

franchise agreement. Stribling Ford concedes that the

Ninth Circuit view of agency, although narrower than

some circuits, applies and that Ford Credit is not an

agent under the ADDCA. Thus, defendant’s motion

for summary judgment as to the first claim is granted,

SUMMARY JUDGMENT — OTHER CLAIMS

Defendant moves for summary judgment on the

claims of conversion, breach of contract and interfer-

ence with prospective business advantage. Defendant

generally argues that plaintiff cannot make a prima

facie case on any of these claims and that with respect

to the conversion claim, Stribling Ford released it’s

claim.

CONVERSION

Conversion is “an intentional exercise of dominion

or control over a chattel which so seriously interferes

nN ©

A9

with the right of another to control it that the actor

may justly be required to pay the other the full value

of the chattel.” Mustola v. Toddy, 253 Or. 658, 456

P.2d 1004 (1969).

Here, Ford Credit argues that its actions in as-

serting its right to repossession of Stribling Ford’s

collateral do not amount to conversion. Ford Credit

argues that by sending nonsufficient fund checks,

plaintiff defaulted on loan obligations to Ford Credit

and thus, Ford Credit had the right to the manufactu-

rers’ statements of origin, the titles and the autos.

Alternatively, Ford Credit argues that Stribling Ford

released any claims of conversion when it signed the

release.

Plaintiff goes to great length in arguing that the

nonsufficient funds check was not a default under the

contract. And, if the check was a default, plaintiff

argues that Ford Credit had no right to a self help

remedy of repossession of the collateral and instead

only had the right to the files, paperwork, —,

and keys to the cars.

Here, there is a genuine issue of material fact

remaining. Inter alia, the parties dispute whether the

nonsufficient funds check was a default under the con-

tract and if it was, what type of self help remedy, if

any, Ford Credit could use. Defendant’s motion for

summary judgment as to the conversion claim is

denied.

A10

BREACH OF IMPLIED COVENANT

Ford Credit argues that its exercise of rights pur- .

suant to a written agreement cannot breach an implied

covenant of good faith. Specifically, Ford Credit ar-

gues that each activity that plaintiff claimed breached

the contract was expressly permitted under the terms

of the contract.

Plaintiffs again argue that there was not a default

under the terms of the contract. Thus, defendants

treated them unfairly and specifically breached the

implied covenant of good faith and fair dealing that

Oregon contract law provides in every contract.

Here, as in the conversion claim, there is a genuine

issue of material fact as to default. Defendant’s mo-

tion for summary judgment on the breach of implied

covenant is denied.

INTENTIONAL INTERFERENCE WITH BUSINESS

OPPORTUNITIES

In order to establish intentional interference with

a business opportunity, a plaintiff must “prove that

the defendants intentionally interfered with its eco-

nomic relationships, that they interfered for an im-

proper purpose or used improper means and that, as

a result, the petitioner was injured beyond the mere

fact of the interference itself.” Straube v. Larson, 287

Or. 357, 361, 600 P.2d 871 (1979).

Here, plaintiff alleges that Ford Credit interfered

with plaintiff’s prospective business relations when

All

Ford Credit repossessed its collateral, sent a notice of

private sale, cancelled it’s inventory financing agree-

ment, cancelled plaintiff’s sight draft privileges and

refused to release “capital reserve” funds and other

collateral.

Defendant argues that none of these acts, alone

or in combination were for an improper purpose nor

by improper means. In addition, defendant argues

that plaintiff defaulted and that it’s actions were in

accordance with the contract. Plaintiff, here too, ar-

gues that it did not default.

Here, questions of material fact remain. Again,

the parties dispute whether a default occurred and

thus do not agree on defendant’s motives after plain-

tiff tendered the nonsufficient funds check. Defend-

ant’s motion for summary judgment on the intentional

interference with business opportunity claim is denied.

MOTION TO REMAND

If defendant’s motion for summary judgment is

granted with respect to the single remaining federal

claim, plaintiff moves to remand to state court. Plain-

tiff argues that there is no continuing federal juris-

diction over the state claims that remain. However, if

the court finds that it has power to proceed to trial

over the state claims, plaintiff urges the court to ex-

ercise it’s discretion not to do so. Plaintiff argues that

the state claims remaining are best left to state courts

for resolution. Plaintiff cites United Mine Workers v.

A12

Gibbs, 383 U.S. 715 (1966) and Wren v. Sletten Con-

struction Co., 654 F.2d 529 (9th Cir. 1981).

Defendant argues that UMW v. Gibbs does not

require remand and cites Thermtron Products, Inc. v.

Hermansdorfer, 423 U.S. 336 (1976) for the proposi-

tion that the federal court is not able to remand to

state court except for statutorily stated reasons. De-

fendant argues that the recent case, Carnegie-Mellon

University v. Cohill, No. 85-3619 (3rd Cir. August 29,

1986), is on point and persuasive.

The doctrine of pendent jurisdiction was discussed

by the United States Supreme Court in UMW v. Gibbs.

Pendent jurisdiction, in the sense of judicial power,

exists when there is a substantial federal claim and

the relationship between it and the asserted state

claims permits the conclusion that the entire action

before the court comprises one “case”. UMW v. Gibbs,

383 U.S. at 725. The court stated that the doctrine is

one of discretion and is justified by judicial economy,

convenience and fairness to the litigants. Jd. at 726.

The court went on to say “(n)eedless decisions of

state law should be avoided, both as a matter of comity

and to promote justice between the parties, by procur-

ing for them a sure-footed reading of applicable law.”

Id. And even more specifically, the court said “‘(c) er-

tainly, if the federal claims are dismissed before trial,

even though not insubstantial in a jurisdictional sense,

the state claims should be dismissed as well.” 7d.

Here, a similar question of judicial discretion

A13

arises. The case at hand is analogous because the court

is deciding whether or not to exercise its discretion to

retain a case that was properly filed in state court

and removed to federal court by the defendant because

a federal claim has since been dismissed.

The Ninth Circuit has considered a similiar situa-

tion. Wren v. Sletten, 654 F.2d 529 (9th Cir. 1981).

In Wren, former employees brought an action in Mon-

tana state court against their former employer to re-

cover unpaid wages, overtime compensation and other

monies under the Fair Labor Standards Act of 1938

and the Montana Wage Claim Act. The case was re-

moved to federal district court. The federal claim was

dismissed due to plaintiff’s failure to exhaust arbitra-

tion and grievance procedures under the collective bar-

gaining agreement. On appeal, the Wren court noted

that the doctrine of pendent jurisdiction is one of dis-

cretion, not of power and is one which remains open

throughout litigation. 7d. at 536. The court did not

find the argument for retention of jurisdiction by the

district court persuasive and ordered the case remand-

ed to the district court with directions to remand the

state claims to the Montana state court. See Anderson

v. Allstate Ins. Co., 680 F.2d 677, 681 n. 3 (9th Cir.

1980) ; Cf. Swett v. Schenk, 792 F.2d 1447, 1450 (9th

Cir. 1986) (district court has discretion, once the

basis for 28 U.S.C. § 1442(a) (1) removal jurisdiction

is dropped, to hear the rest of the action or remand it

to the state court from which it was removed).

Al4

Defendant argues that the recent Third Circuit

opinion, Carnegie-Mellon University v. Cohill, No. 85-

8619 (August 29, 1986) is persuasive. In Cohull, the

Third Circuit held that where a case was properly re-

moved to federal district court, and the federal and

state claims arise out of the same facts, the court can-

not remand to state court after all the federal claims

are dismissed. Jd. Instead, if the trial] court chooses

not to exercise pendent jurisdiction, its only option

is to dismiss the pendent claims, because there is no

statutory basis for remand. Jd. slip op. at 8.

Cohill relies on Thermtron Products, Inc. v. Her-

mansdorfer, 423 U.S. 336 (1976) and an earlier

Third Circuit opinion. Levy v. Weissman, 671 F.2d

766 (3rd Cir. 1982). In Thermtron two residents and

citizens of Kentucky filed an action in a Kentucky

state court against an Indiana corporation and em-

ployee without office or place of business in Kentucky.

Plaintiffs were seeking recovery for damages arising

out of an automobile accident between plaintiff’s auto-

mobile and defendant’s employee’s automobile. The

Supreme Court held that the district court judge in

the diversity case erred in remanding a properly re-

moved case to state court because his docket was over-

crowded. Thermtron, 423 U.S. at 345. Specifically, the

Supreme Court held that the district court exceeded

its authority in remanding a case on grounds not per-

mitted by either 28 U.S.C. § 1441(c) or 28 U.S.C. §

1447(c). Id.

Al5

Cohill noted that the courts of appeals are divided

over interpretation of Thermtron. Cohill slip. op. at

19-20. The Seventh, Tenth and Fifth circuits seem to

interpret it as imposing a rigid rule that limits re-

mand to grounds specified in the statute. (citations

omitted) Jd. However, the Sixth, Second, Fourth and

Eighth Circuits have held that courts have discretion

to remand a properly removed action when the federal

causes of action have been removed from the com-

plaint. (citations omitted) Id.

I find that the Ninth Circuit follows the latter

interpretation and this court has discretion to remand

a properly removed action to state court once the fed-

eral causes of action have been eliminated from the

case. Wren, 654 F.2d at 536. In exercising discretion

the court must weigh the advantages and disadvan-

tages of remand by considering judicial economy, con-

venience and fairness to the litigants.

Defendant urges the court to retain the case under

it’s discretion for reason of judicial economy and fair-

ness. Specifically, defendant argues that the case has

been here since 1984, all claims had a common nucleus

of fact, plaintiff has benefited from using the liberal

discovery rules, time and effort have been expended

by the parties, the court is familiar with the case and

the pretrial order is lodged. Finally, defendant argues

that if the case is remanded to state court, the state

court could not set the case for trial for several

months.

A16

Plaintiff argues that this is an appropriate case

for remand because the federal claims have been dis-

missed before trial. According to plaintiffs, remand

is not unfair in terms of discovery benefits to plaintiff

because defendant chose to remove the case to federal

court. Further, the completed discovery will continue

to be a basis for the state action. Finally plaintiff

notes that defendant chose the timing of the motions

for summary judgment.

Here, only state claims remain. The state claims

are in no way related to federal policy. All the federal

claims have been dismissed prior to trial. As a matter

of comity, needless decisions of state law should be

avoided.

I find that any benefits plaintiff raight have re-

ceived from federal court discovery were a risk that

defendant chose to face when defendant removed the

action to federal court. Further, the discovery that has

been completed can be used in state court proceedings.

Next, this court’s familiarity with the case is in

preparation of the prior motions and the motions be-

fore me now. Any judge’s preparation for trial will

be essentially the same, no matter whether the case

is tried in federal court or state court.

The plaintiff chose to bring this action in Klamath

County. This is a privilege that is available to a plain-

tiff in any lawsuit. At the request of the defendant

the case was removed to federal court because of the

et enn ani aaa

A17

presence of federal claims. At the request of the de-

fendant the federal issues have all been resolved in

favor of defendant.

I find that defendant’s concern on scheduling delay

if the case is remanded to state court to be a signifi-

cant concern. However, in this court, a postponement

of trial is necessary because counsel for plaintiff has

a trial in state court that is scheduled to be held at

the same time as this trial and the state court has

denied a postponement. I cannot say that a trial in

this court could be held any earlier than it could be

held in Klamath County.

I have weighed the advantages and disadvantages

of remand to a state court in terms of judicial econ-

omy, convenience and fairness to the litigants. I find

the weight to be in favor of remanding to the state

court. This case is remanded to the Circuit Court of

the State of Oregon for Klamath County.

Motion to Compel Answer to Interrogatories and

Objections to the Pretrial Order

Defendant moves to compel plaintiff to answer

two of its interrogatories. Defendant makes two ob-

jections to the pretrial order. Defendant’s motion and

objections are denied as moot.

A18

CONCLUSION

By order on October 2, 1986, the following motions

were ruled on. Defendant’s motion for summary

judgment on Count I, the ADDCA claim, is granted.

Defendant’s motion for summary judgment on the

breach of contract claim, conversion claim and inten-

tional interference with prospective business oppor-

tunity claim is denied. Plaintiff’s motion to remand

to state court is granted. Defendant’s motion to com-

pel answers to interrogatories and objections to the

pretrial order are denied as moot.

DATED this 17 day of October, 1986.

/s/ ROBERT C. BELLONI

United States District Judge

kee Foal ha anc aaane Na

a e

A19

APPENDIX D

FILED

OCT 17 11:08 AM ’86

Clerk, U.S. District Court

District of Oregon

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

JOHN STRIBLING, an individual;

and

JOHN STRIBLING FORD, INC.,

a corporation, Civil No.

84-1291-BE

Plaintiffs,

Vs. JUDGMENT

FORD MOTOR COMPANY,

a corporation; and

FORD MOTOR

CREDIT COMPANY,

a corporation,

)

)

)

)

)

)

)

)

)

)

)

)

)

)

Defendants.

Based upon the order entered on October 2, 1986,

and Opinion filed herewith, this case is remanded to

the Circuit Court of the State of Oregon for Klamath

County.

IT IS SO ORDERED.

DATED this 17 day of October, 1986.

/s/ ROBERT C. BELLONI

United States District Judge

A20

APPENDIX E

FILED

MAY 11 1987

CATHY A. CATTERSON

Clerk, U.S. Court of Appeals

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

FORD MOTOR COMPANY,

JOHN STRIBLING,

an individual, et al.,

)

‘Petitioner, )

vs. )

) No. 87-7029

UNITED STATES ) DC # CV-84-

DISTRICT COURT FOR THE )_ = 1291-BE

DISTRICT OF OREGON, ) Oregon

Respondent, ) (Portland)

and )

) ORDER

)

)

)

)

Real Parties in Interest.

Before: WALLACE, ALARCON and NELSON,

Circuit Judges

The petition for rehearing is denied.

MoCal 3/23/87

A21

APPENDIX F

Material parts of Petitioner’s Application for Writ

of Mandamus, at 1:

“Pursuant to 28 USC § 1651 and Rule 21(a)

Fed R App P, petitioner Ford Motor Credit Com-

pany applies for a writ of mandamus or, in the

alternative, for a writ of prohibition, directed to

respondent United States District Court for the

District of Oregon.

a

“Statement of Relief Sought

“Petitioner requests that this Court direct the

district court to vacate its order of October 2,

1986 (Ex A) and judgment of October 17, 1986

(Ex B) remanding to state court the case entitled

John Stribling and John Stribling Ford, Ine. v.

Ford Motor Company and Ford Motor Credit

Company (docket number CV 84-1291-BE) or

prohibit such remand.” (Footnote omitted. )

A22

APPENDIX G

The following is a listing of subsidiaries (except

wholly owned subsidiaries) and affiliates of Ford

Motor Company which are or may be affilates of pe-

titioner Ford Motor Credit Company: *

Subsidiaries :

Anhanguera Leasing S.A. — Arrendamento

Mercantil

Bongotti S.A. Industria e Comercio de Radiadores

Consorcio Nacional Ford Ltda.

Distribuidora Ford de Titulos e Valores

Mobiliarios Ltda.

Eik & Hausken A/S

Escorts Tractors Limited

Eveleth Taconite Company

Excel Industries

lst Nationwide Network, Inc.

Ford Administracao e Consorcios Ltda.

Ford Brasil S.A.

Ford Credit A.B.

Ford Credit A/S

| Ford Credit B.V.

= * Ford Credit Bank Aktiengesellschaft

Ford Credit N.V.

Ford Credit S.A.

Ford Distribuidora de Produtos de Petroleo Ltda.

Ford Financiadora S.A. Credito,

Financiamento e Inv.

Ford Investitions-GmbH

Ford Investitions GmbH & Co. oHG

* Latest available listing, current as of April, 1987.

A23

Ford Lio Ho Motor Company Ltd.

Ford Motor Company Aktiebolag

Ford Motor Company A/S

Ford Motor Company (Austria) K.G.

Ford Motor Company (Belgium) N.V.

Ford Motor Company of Australia Limited

Ford Motor Company of Canada, Limited

Ford Motor Company of New Zealand Limited

Ford Motor Company Private Limited

Ford Motor Company (Switzerland) S.A.

Ford Motor Credit Company of New Zealand

Limited

Ford Motor Norge A/S

Ford Nederlands N.V.

Ford Overseas Finance N.V.

Ford Sales Company of Australia Limited

Ford Versicherungs-Vermittlungs GmbH

Ford Versorgungs und Unterstutzungseinrichtung

GmbH

Ford-Werke Aktiengesellschaft

Fords Vagnskadegaranti A.B.

Hokkai Ford Tractor Co., Ltd.

Humboldt Mining Company

Oy Ford Ab

Quimica Parker, S.A. de C.V.

Saar-Industrie GmhG

Sao Francisco Maquinas e Ferramentas Ltda.

Affiliates:

Agromak, S.A. de C.V. (FTA)

Allied Tractor Limited

American Network, Inc.

Amim Holdings Sdn. Bld.

Assembly Plant Material Services, Ine.

Canapro S.A.R.L.

A24

Carnegie Group Ince.

Carplastic, S.A.

Ceradyne Advanced Products, Inc.

Compania Financiera de Inversones y Credito S.A.

Conix Corporation

Double Eagie Steel Coating Company

Essex Manufacturing

Fabrica de Tractores Agricolas S.A.

Fairlane Woods Associates

FCP Finance Corporation

Foral Services Proprietary Ltd.

Ford Credit South Africa (Proprietary) Ltd.

Ford Vehicle Finance

General Electric Credit Auto Resale Service, Inc.

Halla Climate Control Corp.

Implementos Agricolas Mexicanos, S.A.

Iveco Ford Truck Limited

Kia

Mazda Motor Corporation

Metro Investment Service Corporation

Nascote Industries, Inc.

Nemak, S.A.

New Holland Japan Inc.

New River Casting Company

Otomobil Sanayii, A.S. (Otosan)

Oy - Ford Rahoitus Ab

Renaissance Center Partnership

Renaissance Center Venture

South African Motor Corporation (Proprietary)

Limited

Sukat Real Estate Holdings

Synthetic Vision Systems, Inc.

TG Ford Associates

Trans Canada Glass Ltd.

Thace

Vitro Flex, S.A.