COM. OF PA., STATE BD. OF VEHICLE v. GMC

The opinion of the court was delivered by: Rambo, District Judge.

MEMORANDUM

PROCEDURAL HISTORY

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.

DISCUSSION

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. at 596.

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 decision emphasized 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 was improper.*fn1

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: