Is the LMVC the Exclusive Jurisdiction to Hear Dealer Complaints with Their OEM's?
As Federal jurisprudence currently stands, licensed franchisees (dealers) cannot sue manufacturers in Federal District Court for alleged violations of the Louisiana Motor Vehicle Franchise Act (“LMVFA”) (La. R.S. 32:1251, et seq.). The Louisiana Motor Vehicle Commission (the “Commission”) has, according to these cases, exclusive jurisdiction over these dealer claims. However, La. R.S. 32:1261A(1)(v) and (vi) provides:
It shall be a violation of this Chapter:
(1) For a manufacturer, a distributor …
* * *
(v) … to require any controversy between a dealer and a manufacturer to be referred to any person or entity other than the commission, or duly constituted courts of this state or the United States…
(vi) To waive the right to a jury trial.
Given these very clear statutory prohibitions against manufacturers, including preserving a dealer’s right to seek relief in the duly constituted courts of this state or the United States, and to have a jury trial in either one of those courts, it is incredible that the decision of Crescent City M Dealership d/b/a Crescent City Mazda v. Mazda Motor of America, Inc., issued on September 22, 2000, and then affirmed by the Fifth Circuit in 2001, determined that dealers do not have a private right of action under the LMVFA to assert claims in court against manufacturers. The court contrasted the LMVFA with the Louisiana Unfair Trade Practices Act (“LUTPA”) that specifically authorizes a private right of action under that Act. Before this decision, it was generally understood that the Commission and courts of appropriate jurisdiction had concurrent jurisdiction. Often, courts would voluntarily stay their proceedings pending the exhaustion of remedies before the Commission. The above case changed that, and since then, dealers’ suits against Honda, Volvo Trucks, Volkswagen, Nissan, GM and Hyundai have all been dismissed by federal district courts.
If one looks at La. R.S. 32:1259 and 1260, there is a delineation of the powers of the Commission. It can fine licensees who have violated the rules and regulations, and it can ask a district court for injunctive relief, stopping some allegedly improper activity. There is no provision in the LMVFA that a dealer or manufacturer can seek damages for violations of the Act before the Commission, and courts have routinely recognized that the Commission is without jurisdiction to award damages.
The opinions issued in the Crescent City Mazda line of cases offer a little more insight than did the original Mazda opinion. A dealer does have a private right of action against a manufacturer if the dealer’s claim arises from alleged violations of the LMVFA, and the complaint is filed at the Commission. Further, if the dealer’s grievance against a manufacturer is based on other causes of action, i.e., breach of contract, detrimental reliance, negligence, unjust enrichment, a LUTPA violation, or a violation of federal dealer protection laws, a federal court will exercise its jurisdiction to hear those claims, while at the same time, dismiss the included LMVFA claims for lack of standing. When these distinct causes of action seek monetary damages, certain courts have cited, as another reason to exercise jurisdiction, the fact that the plaintiffs are seeking a remedy (damages) that the Commission cannot provide. Finally, if a claim is couched as something other than a LMVFA claim, but is indistinguishable from or directly related to a LMVFA claim, a court may dismiss it and direct the dealer back to the Commission.
The question remains as to whether a federal court will deny standing to a dealer who sues for damages based on a ruling by the Commission that found a manufacturer in violation of LMVFA laws. Because the Commission lacks the authority to award damages, it would be unconscionable for a court to deny standing to a dealer in this situation. As of now, this scenario has yet to be tested. Neither has a court spoken on the applicability of the Crescent City Mazda holding to suits filed by consumers against dealers based on alleged violations of the LMVFA. There is also no case law discussing suits by manufacturers against dealers alleging violations of the LMVFA. If the Act does not provide a private right of action for dealers to sue thereunder in a federal court, presumably, there is no private right of action in favor of manufacturers and consumers to sue either.
Remarkably, the above-quoted provisions of the LMVFA, that prohibit a manufacturer from preventing a dealer from filing suit in a court of law or from requesting a jury trial, have not been cited in these opinions as arguments by dealers to avoid dismissal of its suit. Clearly, these statutes envision the dealer’s right to file suit in court and to get a jury trial, or in other words, have a private right of action under the LMVFA. The Crescent City Mazda opinion has created an absolute bar to dealer access to courts, when the statutory scheme of the Act never intended one.