Opposition Brief — Lanham Ford, Inc. v. Ford Motor Co.

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SEP 23 2004

No. 04-247

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IN THE

Supreme Court of the Anited States

LANHAM FORD, INC., PETITIONER

FORD MOTOR COMPANY, RESPONDENT

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

KENT L. JONES

Counsel of Record

NICHOLAS T. CHRISTAKOS

KAREN M. HAQUE

DAVID A. LAST

SUTHERLAND ASBILL &

BRENNAN LLP

1275 Pennsylvania Ave., N.W.

Washington, D.C. 20004

(202) 383-0100

Counsel for Respondent

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001

QUESTION PRESENTED

Whether the motion to remand this case to state court was

properly denied.

CORPORATE DISCLOSURE STATEMENT

Ford Motor Company (“Ford”) is a_ publicly-held

corporation. Ford has no parent corporation, and there is no

other publicly-held corporation owning 10% or more of

Ford’s stock.

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TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES......... | ERNE Ae a ER i\

BRIEF FOR THE RESPONDENT IN OPPOSITION. ............ I

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TABLE OF AUTHORITIES

Cases Page

Black v. Cutter Laboratories, 351 U.S. 292 (1956).............00.. 7

Burns v. Windsor Insurance Co., 31 F.3d 1092 (1 1"" Cir.

ION -ssispeaicussieeh ads chp Aicakebciideahnamadainndicavetetuachansha uaedtaitaanoasaubeds 8

Lewis v. Continental Bank Corp., 494 U.S. 472 (1990) .......... 8

Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291 (2d Cir.

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Rice v. Sioux City Mem. Park Cemetery, Inc., 349 U.S. 70

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Samuel-Bassett v. Kia Motors America, Inc., 357 F.3d 392

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Smith v. American General Life and Accident Ins. Co., 337

Fe i is sescccnttinn estieicscrprenncaaasaiocesinns 5

St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283

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Statutes and Rules

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IN THE

Supreme Court of the United States

No. 04-247

LANHAM FORD, INC., PETITIONER

FORD MOTOR COMPANY, RESPONDENT

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-6a) is

reported at 101 Fed.Appx. 381. The opinion of the district

court (Pet. App. 7a-15a) is reported at 273 F.Supp. 2d 691.

JURISDICTION

The judgment of the court of appeals was entered on June

8, 2004. Pet. App. la. The petition for a writ of certiorari

was filed on August 24, 2004. The jurisdiction of this court is

invoked under 28 U.S.C. § 1254(1).

STATEMENT

1. This case arose from the decision made by Ford Motor

Company (“Ford”) in February 2002 to terminate its Sales

and Service Agreement (“Agreement”) with petitioner,

Lanham Ford, Inc., due to the long history of poor

performance by that dealership. After receiving notice of

termination, petitioner appealed the termination decision to

Ford’s Dealer Policy Board, an informal dispute resolution

body within Ford. Proceedings before the Dealer Policy

Board are binding on Ford if the dealer prevails, but are not

binding on the dealer if Ford prevails. Pet. App. 13a.

On May 1, 2002, while the Dealer Policy Board was still

considering the matter, petitioner protested the termination to

the Maryland Motor Vehicle Administration (“MVA”)

pursuant to Md. Code Ann., Transp. § 15-209. The MVA

stayed its proceedings on that protest pending the outcome of

the Ford Dealer Policy Board process. On November 8,

2002, the Dealer Policy Board affirmed Ford’s proposed

termination, rendering petitioner’s protest before the MVA

ripe for hearing. Pet. App. 8a.

Instead of proceeding before the MVA, however, petitioner

filed the present action with the Circuit Court for Prince

George’s County, Maryland, on November 21, 2002, seeking

injunctive and declaratory relief against Ford, and asserting

claims under the Agreement, the Maryland dealer statute, and

the Maryland Uniform Arbitration Act. Petitioner sought to

compel the Dealer Policy Board to rehear petitioner’s appeal

under a new and different set of procedures, and to enjoin

termination of the dealership pending the outcome of that

rehearing. Pet. App. 3a.

2. Ford removed the action to the United States District

Court for the District of Maryland on December 19, 2002, and

ate

simultaneously moved to dismiss the complaint pursuant to

Fed. R. Civ. P. 12(b)(6). Petitioner filed a timely motion to

remand the case back to Maryland state court. On February

24, 2003, the district court authorized Ford to conduct limited

discovery with respect to the value of the Lanham Ford

dealership in order to establish the requisite amount in

controversy for federal diversity jurisdiction.

On June 23, 2003, the district court denied the motion for

remand and granted Ford’s motion to dismiss the complaint

with prejudice. On the motion for remand, the district court

concluded that the object of the litigation was preservation of

the dealership and that the value of the dealership exceeded

the $75,000 jurisdictional amount. Pet. App. 8a-11a. On the

motion to dismiss, the district court found that Ford had fully

complied with the procedures established in the Agreement

and Dealer Policy Board handbook for matters coming before

the Dealer Policy Board. Jd. at 12a. Since Ford had

“complied with all procedures agreed upon by the parties,”

and Ford was not required “to do more,” the court granted the

motion to dismiss. /d. at 14a.

3. The court of appeals affirmed. Pet. App. la-6a. The

court of appeals agreed that the motion for remand was

properly denied, but the court concluded that the district court

had “erred in its conclusion that the object of the litigation

was the dealership itself.” /d. at 4a. The court of appeals

reasoned that the object of the litigation was “narrower,” for it

was focused on petitioner’s request for a new hearing before

the Dealer Policy Board, “with rights of full discovery, and an

injunction against termination of the franchise pending

completion of this new hearing.” Jbid. The court of appeals

concluded that the value of these remedial objectives is

readily determined as the sum of (i) the value to Lanham Ford

of the right to operate its Ford Dealership until completion of

a new hearing and (ii) the value to Lanham Ford of the

hearing itself, which the court defined as “roughly

equivalent” to petitioner’s chance of success at retaining its

dealership as a result of this hearing multiplied by the value

of petitioner’s dealership as a going business concern. /d. ai

5a. The court noted that the record assembied on the remand

motion clearly established that Lanham Ford is a “sizeable

dealership, with total sales in 2002 in excess of $56 million

and gross profits for that year in excess of $7 million.” Jbid.

The court noted that it “would take several months” for the

new hearing requested by petitioner to occur, and that it was

“certain[]” that the value of the injunction against any

termination of the franchise during that period, along with

“the value of the chance to retain its franchise through pursuit

of a new hearing,” was “in excess of the $75,000 required.”

Ibid. The court therefore affirmed the denial of the motion to

remand. /bid.

For the reasons stated in the decision below, the court of

appeals also upheld the dismissal of the complaint on the

merits. Pet. App. 6a. Petitioner does not challenge that ruling

on the merits in its petition for a writ of certiorari. Instead,

petitioner seeks review only of the denial of the motion to

remand the case to state court. Pet. 1, 10.

ARGUMENT

Certiorari is not warranted in this case because the asserted

conflict between decisions is illusory and the question

presented is important “merely to the litigants” and does not

“present an issue of immediate public significance.” Rice v.

Sioux City Mem. Park Cemetery, Inc., 349 U.S. 70, 79 (1955).

1. A determination of federal subject matter jurisdiction is

unique among disputed issues in that, regardless of who has

the burden, what constitutes the burden, and whether a party

even places the issue of jurisdiction in dispute, the court

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ultimately has an independent obligation to satisfy itself that

federal subject matter jurisdiction exists.' As a result, few, if

any, cases turn on the precise articulation of the defendant’s

burden to establish federal court jurisdiction. Moreover, to

the extent that some courts have endeavored to articulate a

special burden of proof for removing defendants, they have

generally done so in the context of damage actions in which

the plaintiffs allegation of damages was below the

jurisdictional minimum for diversity jurisdiction. See page 8,

infra. The present case involves injunctive relief, rather than

damages, and the fact-specific determination of the amount in

' Every federal court “has an independent obligation to

satisfy itself that federal subject matter jurisdiction exists

before proceeding to the merits in any case,” regardless of

whether the parties or even the district court “has questioned

the existence of such jurisdiction.” Smith v. American

General Life and Accident Ins. Co., Inc., 337 F.3d 888, 892

(7 Cir. 2003) (citing, inter alia, St. Paul Mercury Indem.

Co., v. Red Cab Co., 303 U.S. 283, 287 n.10 (1938)).

Although “[a]s a technical matter, it is [the removing

defendant’s] burden to show that [the plaintiff's] complaint

states a claim for more than [the jurisdictional amount],” it is

equally clear that courts do not limit themselves to the

arguments made by the removing defendant. Smith, 337 F.3d

at 893. The analysis conducted by federal courts involves

examining first, and foremost, the complaint to determine the

damages requested, or other relief sought, so that the value of

the claim can be assessed. Mehlenbacher v. Akzo Nobel Salt,

Inc., 216 F.3rd 291, 296 (2d Cir. 2000); Samuel—Bassett v.

Kia Motors America, Inc., 357 F.3d 392, 398-399 (3d Cir.

2004). The next step is typically to examine the defendant’s

petition for removal. Mehlenbacher, 216 F.3d at 296. If

more is needed to assist the courts in their determinations,

they typically ask for more. See Smith, 337 F.3d at 892;

Samuel—Basset, 357 at F.3d at 395.

x =

controversy in this equitable proceeding does not warrant this

Court’s review.

a. Whatever burden of proof is assigned to Ford as the

removing party, and regardless of the particular formula

employed to measure the value of the injunctive relief

requested by petitioner, the record amply supports the

conclusion of the court of appeals that the amount in

controversy in this case exceeds the $75,000 diversity

jurisdiction threshold.

As the court of appeals explained, during the year in which

the complaint was filed, petitioner had sales of $56 million

and more than $7 million in gross profits. Pet. App. 5a; see

J.A. Vol. Il, at 2; J.A. 134 (Hancheruk Dep. at 26). During

that year, petitioner sold 1,741 new vehicles and 942 used

vehicles. J.A. Vol. II, at 2. As of December 2002, the month

in which removal occurred, petitioner had total assets of

$16,482,315. J.A. Vol. II, 1; J.A. 134 (Hancheruk Dep. at

26). During that single month, a number of departments of

Lanham Ford showed a substantial operating profit —

including a $151,798 profit in the parts department, a

$712,692 profit in the service department, and over $76,000

in profit from the body shop. J.A. Vol. II, 2; J.A. 140-141

(Hancheruk Dep. at 57-58).

The district court concluded that the object of the litigation

was to preserve the dealership, and that the value of the

dealership was the appropriate measure for purposes of

determining whether federal diversity jurisdiction existed.

The court of appeals took a different view, and concluded that

the value of the relief sought by petitioner was the sum of (i)

the value to Lanham Ford of the right to operate its Ford

franchise until completion of a new hearing, and (ii) the value

to Lanham Ford of the new hearing itself, which was deemed

roughly equivalent to Lanham’s chance of success in the

o Pe

hearing multiplied by the dealership’s value as a going

concern. Pet. App. 5a. It is not disputed that, under either of

these standards, the jurisdictional minimum of $75,000 was

clearly satisfied.2 As the court of appeals correctly

concluded, the value of the injunctive relief requested by

petitioner “certainly” exceeded the jurisdictional requirement.

Ibid.

b. There is no basis for petitioner to contend that this

conclusion would be different under any plausible articulation

of the burden of proof. As the Third Circuit emphasized in

Samuel-Bassett, 357 F.3d at 397, upon reviewing the same

allegedly conflicting burdens of proof identified by petitioner,

“[m]any of the variations are purely semantical and we have

found no case where the results would have been different

had one of the variations described been used.”

Because the specific burden of proof was not addressed by

the court below and certainly has no bearing on the correct

disposition of this case, review of the decision below is

unwarranted. As this Court has frequently emphasized, this

Court “reviews judgments, not statements in opinions” (Black

v. Cutter Laboratories, 351 U.S. 292, 297 (1956)) and it does

not “decide questions that cannot affect the rights of litigants

in the case before them.” Lewis v. Continental Bank C orp.,

494 U.S. 472, 477 (1990) (internal quotations omitted).

° Petitioner errs in asserting (Pet. 18) that the court of appeals

ignored the principle that the amount in controversy is

determined as of the time of removal. As the above

discussion of the record reflects, the court of appeals

appropriately focused on the ample evidence that related to

the value of the business operations of Lanham Ford in the

year 2002 as a whole and also during the month of December

2002, when removal occurred.

2. The courts that petitioner claims have articulated the

“most difficult” standard for the burden of proof in removal

cases (Pet. 12) have done so in damage actions in which the

complaint expressly alleged damages /ess than the minimum

jurisdictional amount for diversity jurisdiction. In Burns v.

Windsor Insurance Co., 31 F.3d 1092, 1094-95 (11" Cir.

1994), the Eleventh Circuit stated that the defendant must

prove to a legal certainty that the plaintiff's claim exceeds the

jurisdictional minimum amount. The court did so, however,

in the context of a complaint that, on its face, requested an

amount in damages below the minimum threshold for federal

court jurisdiction. Because no jurisdiction existed on the face

of the plaintiff's claim in that case, the court “believe[d]” the

defendant’s burden of proof must be a heavy one. /d. at 1095.

By contrast, in the present case, petitioner sought equitable

relief that was not valued on the face of the complaint. The

burden of proof applicable to the determination of the value

of such equitable claims is not addressed in Burns or in the

other cases on which petitioner relies. Moreover, the three-

page per curiam decision entered by the court in the present

case does not address or even describe the burden of proof

that applies to this removal determination. Petitioner’s

assertion that the decision below conflicts with the decision of

any other appellate court is therefore manifestly insubstantial.

3. It is, in any event, neither feasible nor desirable to

articulate a single standard or test for measuring the amount

in controversy in removal cases that seek a wide and diverse

range of injunctive relief. Petitioner decries the absence of a

“universal test” for this purpose and maintains that it “was

subjected to a valuation of its claim for relief that was entirely

ad hoc in this case.” Pet. 16. It is obvious, however, that

there is no single, “universal test” to apply in valuing the

multitude of injunctive remedies that plaintiffs may seek.

Instead, as the facts of this case make clear, a determination

_ >

of the value of any specific request for injunctive relief

necessarily involves particularized inquiries — and

methodologies. The fact-specific determination of the value

of such relief in a particular case does not warrant review by

this Court.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.