United States District Court, Middle District of Pennsylvania
March 19, 1991
COMMONWEALTH OF PENNSYLVANIA, STATE BOARD OF VEHICLE MANUFACTURERS, DEALERS AND SALESPERSONS, PLAINTIFF,
GENERAL MOTORS CORPORATION, CHEVROLET DIVISION, DEFENDANT.
The opinion of the court was delivered by: Rambo, District Judge.
Before the court is the petition of plaintiff, the
Commonwealth of Pennsylvania, State Board of Vehicle
Manufacturers, Dealers and Salespersons, (the Board) to remand
this action for proceedings before the Board. The action arose
out of a Rule to Show Cause issued to General Motors
Corporation, Chevrolet Division, (General Motors) by the Board
in response to a complaint filed with the Board by one of
General Motors' dealers, which alleged that one of General
Motors' marketing initiatives required the dealer to contribute
financially to an advertising campaign, in violation of The
Board of Vehicles Act, 63 P.S. § 818.1 et seq. (Purdon Supp.
1990) (hereinafter the Act).
Pursuant to its duties under the Act, the Board initially
investigated the complaint and issued the Rule to Show Cause,
which directed General Motors to come forward and show cause
why the Board should not take disciplinary action, as provided
under Section 4 of the Act. Rather than respond to the Board's
Rule, General Motors removed the action to this court, pursuant
to the federal removal statute, 28 U.S.C. § 1441(a), on the
basis of diversity of citizenship and amount in controversy.
Subsequently, the Board filed a petition to remand, which is
presently before the court.
General Motors relies primarily upon this court's decision in
Corwin Jeep Sales & Service Inc. v. American Motors Sales
Corp., 670 F. Supp. 591 (M.D.Pa. 1986) to argue that removal of
the action to this court is proper. In Corwin, the court was
presented with a franchise contract dispute between an
automobile dealer and a manufacturer. The dealer initiated an
action before the Board, alleging that the manufacturer had
terminated its franchise agreement wrongfully. Corwin, 670
F. Supp. at 594. The manufacturer removed the action to this
court on the basis of diversity of citizenship and the dealer
filed a motion to remand, arguing that the Board was not a
court under § 1441(a) of the federal removal statute but was,
rather, an administrative agency. In the alternative, the
dealer argued that the manufacturer had failed to satisfy the
amount in controversy requirement for diversity jurisdiction.
Id. at 592.
This court denied the motion to remand in the Corwin decision
based upon the "functional test," which is applied to determine
when a statutorily created body should be treated as a court
for purposes of the federal removal statute. Id. at 593-94. The
functional test allows the court to look beyond the name by
which a tribunal is designated to the procedures and functions
under which it operates to determine whether it is acting as a
court in a given situation. Id. at 593 (quoting Tool and Die
Makers Lodge No. 78 v. General Electric Co., 170 F. Supp. 945
(E.D.Wisc. 1959). In addition to the procedures and functions
of the tribunal, the examining court must consider the
respective state and federal interests in the matter in
controversy. Floeter v. C.W. Transport, Inc., 597 F.2d 1100
(7th Cir. 1979).
In Corwin, this court denied the petition for remand. The
decision was based upon the fact that, by attempting to resolve
the contract dispute between the two parties through civil
hearing procedures closely related to those that would be
employed in a court of law, the Board was exercising a
traditional judicial function rather acting in its regulatory
or administrative capacity. Corwin, 670 F. Supp. at 594.
Moreover, the court believed that it had as much interest as
the Board in resolving the specific dispute between the two
parties at hand. Id. at 595 & n. 3. The court also determined
that the amount in controversy was satisfied since the court
could not find to a legal certainty that the parties respective
rights under the contract would be worth less than the amount
required to establish diversity jurisdiction at that time. Id.
The Corwin decision does not dictate the same result for the
present controversy. The reasons for this conclusion can be
gleaned directly from the Corwin decision itself. First, the
that the first inquiry in addressing a petition for remand is
whether the case was properly removed, with any doubts resolved
in favor of remand. Corwin Jeep Sales, 670 F. Supp. at 592.
Central to that inquiry is the question of whether the district
court would have had original jurisdiction over the matter. Id.
There, the action consisted of a contract dispute between two
parties and was not limited to a question of whether the Act
itself was violated. Thus, it was the sort of dispute that
Section 20(a) of the Act specifically allows to be litigated in
a court of competent jurisdiction without resorting to
administrative remedies first. See id. at 594-95.
In the present controversy, the action consists of a Rule to
Show Cause issued by the Board itself pursuant to its
regulatory and disciplinary duties, as specifically permitted
under Section 4 of the Act. It is irrefutable that General
Motors, as a manufacturer of automobiles, cannot distribute
automobiles in Pennsylvania without first acquiring a license
from the Board, as required by Section 5(a) of the Act. It is
also unquestioned that General Motors must comply with the
limitations on manufacturer activities set forth in the Act and
the regulations promulgated by the Board pursuant to its
authority under the Act. Finally, it is irrefutable that the
Board is vested with the power to investigate its licensees,
either unilaterally or at the behest of private complainants,
and may dispense such disciplinary measures as fines and
suspension of licenses. See Section 4(3) and 4(4) of the Act.
Thus, the Rule issued against General Motors amounts to a
summons to a licensee to come before the Board so that the
Board can continue its investigation into the complaint against
the licensee. This court has no parallel authority to issue
licenses, investigate, or summon an automobile manufacturer
before it to answer questions about its activities within the
Commonwealth. In short, this court would not have had original
jurisdiction over the matter at hand and, therefore, removal
Thus, without even applying the functional test, the court
finds it must grant the petition to remand. For the sake of
completeness, however, the court notes that the factors
supporting the finding that it would not have had original
jurisdiction over this matter also compel a finding that, under
the functional test, the Board is acting in its regulatory and
administrative capacity rather than as a court in this
instance. In Corwin, the court acknowledged that the fact that
an agency functions as a court in one set of circumstances does
not render all its actions those of a court. Referring to the
Floeter decision, this court wrote:
However, the [Floeter] court cautioned that it
based its decision only on the facts of the case
before it, and that "[o]ther actions brought before
the agency may involve different state and federal
interests, or a different agency role, and a
weighing of the competing interests in those cases
might well result in a determination that those
cases [could] not be properly removed."
Corwin, 670 F. Supp. at 594 (quoting Floeter, 597 F.2d at 1102.
Thus, the Corwin decision forewarned that its holding was
narrowly tailored to the facts before it and should be strictly
construed. There, the court was presented with a dispute over
termination of a contract between the manufacturer and dealer,
which would require interpretation of the contract and the
application of contract law. Here, the Board is investigating
whether the manufacturer violated prohibitions of the Act and
should be subjected to discipline. On these facts, the Board is
acting in its regulatory and administrative capacity. Moreover,
on these facts, the court can not say that it has an equal or
greater interest in asserting the disciplinary authority vested
in the Board over
automobile manufacturers and distributors.*fn2
Finally, the court believes that the result in this case
defers not only to the principles underlying removal
jurisdiction but also to the doctrine of primary jurisdiction,
which is concerned with the fostering of proper coordination
between regulatory agencies and the courts. Cheyney State
College Faculty v. Hufstedler, 703 F.2d 732, 736 (3d Cir.
1983). The doctrine is implicated when both courts and
regulatory agencies share decision-making responsibility over
an area of law. As such, it calls for abstention on the part of
the court when "protection of the integrity of a regulatory
scheme dictates preliminary resort to the agency which
administers the scheme." Id. (quoting United States v.
Philadelphia Nat'l Bank, 374 U.S. 321, 353, 83 S.Ct. 1715,
1736, 10 L.Ed.2d 915 (1963)). Thus, when the court is presented
with issues that have been placed within the special competence
of an administrative body pursuant to a regulatory scheme, the
judicial process should be suspended pending initial resolution
by the administrative body. See Delta Traffic Service v.
Occidental Chem. Corp., 846 F.2d 911, 913 n. 3 (3d Cir. 1988).
There is no doubt that the court must remand the action. In
view of the court's remand, defendant's motion for summary
judgment in this action is a nullity.