United States District Court, W.D. Wisconsin
DON JOHNSON'S HAYWOOD MOTORS, INC., GROSS MOTORS, INC., GROSS CHEVROLET-BUICK-GMC, INC., BROADWAY AUTOMOTIVE - GREEN BAY, INC., SLEEPY HOLLOW CHEVROLET BUICK MGC INC., MIKE SHANNON AUTOMOTIVE INC., HERITAGE CHEVROLET, INC., A-F MOTORS, INC., KOCOREK CHEVROLET, INC., KLEIN CHEVROLET BUICK, INC., TOYCEN OF LADYSMITH, INC., and NEUVILLE MOTORS, INC., Plaintiffs,
GENERAL MOTORS LLC, Defendant.
OPINION AND ORDER
D. PETERSON, DISTRICT JUDGE
Wisconsin-based licensed motor vehicle dealers-filed an
administrative complaint against General Motors (GM) with the
State of Wisconsin Division of Hearings and Appeals (DHA).
See Dkt. 1-1. The complaint alleged that GM had
violated Wis.Stat. § 218.0116(8) by modifying the terms
of the plaintiffs' motor vehicle dealer
agreements-specifically by seeking to impose a surcharge to
recoup costs associated with Wisconsin's warranty
reimbursement statute. Before administrative proceedings in
the DHA got underway, GM removed the case to this court under
28 U.S.C. §§ 1332 and 1441, invoking the
court's diversity jurisdiction. Dkt. 1. GM moved to
dismiss plaintiffs' claims in full. Dkt. 2. Plaintiffs
moved to remand the case to the DHA. Dkt. 10. Those motions
are now ready for review.
court concludes that the DHA action is not removable to
federal court. To remove an action from an administrative
agency under 28 U.S.C. § 1441, the removing party must
show that the agency is functionally similar to a court, and
that the federal interests implicated in the dispute
predominate over state interests. See Floeter v. C.W.
Transp., Inc., 597 F.2d 1100, 1102 (7th Cir. 1979).
Here, even assuming that the DHA is sufficiently court-like,
the court is not persuaded that the federal interests in
hearing the dispute in this forum predominate over the
state's interests in providing administrative oversight
of motor vehicle dealer agreements. The court will grant
plaintiffs' motion to remand. GM's motion to dismiss
is denied as moot.
court draws the basic facts from plaintiffs'
administrative complaint, Dkt. 1-1, as well as from their
prior related litigation against GM in the Eastern District
of Wisconsin. See Don Johnson Hayward Motors, Inc. v.
Gen. Motors LLC, No. 16-cv-1350, 2018 WL 4568822 (E.D.
Wis. Sept. 24, 2018) (granting summary judgment in favor of
GM on two counts).
are a group of Wisconsin motor vehicle dealerships that sell
and lease vehicles manufactured by GM. As part of their motor
vehicle dealer agreements with GM, plaintiffs are required to
perform warranty repairs on qualifying GM vehicles, at no
cost to the owner and regardless where the owner bought the
vehicle. Plaintiffs can be reimbursed by GM in one of two
ways. The dealer agreements provide that GM will reimburse
dealers for performing warranty repairs according to a
reimbursement rate determined by GM. Alternatively, dealers
may opt to receive reimbursements at a rate determined using
the warranty-reimbursement provision in Chapter 218 of the
Wisconsin Statutes. See Wis Stat. § 218.0125.
The statute requires motor vehicle manufacturers and
distributors to “reasonably compensate” dealers
who perform those warranty repairs. In 2011, the legislature
amended the act to add a statutory formula to determine the
rate of reasonable compensation. See Wis. Stat.
§ 218.0125(3m)(a). The court need not delve into the
intricacies of that formula; the important point is that the
statutory formula yields more generous reimbursement for
plaintiffs than the rates set by GM. So each of the
plaintiffs has requested the statutory warranty compensation.
September 26, 2016, GM notified the plaintiffs that it would
add a cost recovery surcharge to invoices on any new vehicles
they purchased. This surcharge was intended to recover the
increased costs associated with reimbursing plaintiffs and
other Wisconsin dealers the enhanced amounts afforded under
§ 218.0125. A few weeks later, plaintiffs filed a
federal case in the United States District Court for the
Eastern District of Wisconsin, asserting that the surcharge
violated GM's obligation to reasonably compensate dealers
for warranty work under § 218.0125 and seeking
injunctive relief to prevent GM from imposing the surcharge.
See Don Johnson Hayward Motors, Inc. v. Gen. Motors
LLC, No. 16-cv-1350 (E.D. Wis., filed Oct. 7, 2016). GM
voluntarily held off on the surcharge until the court
resolved the parties' cross-motions for summary judgment.
On September 24, 2018, Judge Pamela Pepper granted summary
judgment in favor of GM on two of plaintiffs' four
counts, holding that GM's plan to impose the surcharge
did not violate the guarantee of reasonable compensation
under § 218.0125. On October 8, 2018, GM notified plaintiffs
that it intended to implement the surcharge.
October 22, 2018, plaintiffs filed an administrative
complaint against GM with the DHA, alleging that the
per-vehicle surcharge violated another provision of Chapter
218: section 218.0116(8). See Dkt. 1-1 (DHA
complaint). That section provides that vehicle manufacturers
may not “modify a motor vehicle dealer agreement during
the term of the agreement or upon its renewal if the
modification substantially and adversely affects the motor
vehicle dealer's rights, obligations, investment or
return on investment without giving 60 days written notice of
the proposed modification to the motor vehicle dealer”
except in certain circumstances not present here. Wis.Stat.
§ 218.0116(8)(a). The statute provides that, within the
60-day notice period, a motor vehicle dealer may “file
with the department of transportation and the division of
hearings and appeals and serve upon the respondent a
complaint for a determination whether there is good cause for
permitting the proposed modification.” Id. The
DHA must then “promptly schedule a hearing and decide
the matter, ” taking into consideration “any
relevant factor, ” including:
1. The reason for the proposed modification.
2. Whether the proposed modification is applied to or affects
all motor vehicle dealers in a nondiscriminating manner.
3. The degree to which the proposed modification will have a
substantial and adverse effect upon the motor vehicle
dealer's rights, investment, or return on investment.
4. Whether the proposed modification is in the public
5. The degree to which the proposed modification is necessary
to the orderly and profitable distribution of product by the
6. Whether the proposed modification is offset by other
modifications beneficial to the ...