AUTOBAHN IMPORTS, L.P., Doing Business as Land Rover of Fort Worth, Plaintiff-Appellee,
JAGUAR LAND ROVER NORTH AMERICA, L.L.C., Defendant-Appellant.
from the United States District Court for the Northern
District of Texas
HIGGINBOTHAM, SMITH, and CLEMENT, Circuit Judges.
E. SMITH, Circuit Judge
a dispute between a U.S. car distributor, Jaguar Land Rover
North America ("Jaguar"), and a franchised
dealership, Autobahn Imports ("Autobahn"),
concerning chargebacks of around $300, 000 in incentive
payments the distributor had made to the dealer. The Board of
the Texas Department of Motor Vehicles (the
"Board") declared the chargebacks invalid, and
Jaguar exercised its statutory right of review in the state
appellate court. While that appeal was pending, Autobahn sued
for damages based on the Board's findings, claiming
violations of the Texas Deceptive Trade Practices Act
("DTPA") and breach of contract. Before the state
court of appeals had completed its review, the federal
district court granted summary judgment to Autobahn on its
various claims. Because Autobahn's antecedent failure to
exhaust divested the district court of power to decide the
claim when it did, summary judgment is vacated and remanded.
offers an incentive known as the "Business Builder
Program," which provides dealers a percentage of the
retail price of every vehicle sold if certain conditions are
met. The relevant terms are set out in the Business Builder
Program Manual ("Manual") and the Operations
Bulletin ("Rules"), collectively referred to as the
Business Builder Contracts. According to Jaguar, dealerships
are entitled to incentive payments if they (1) deliver each
new vehicle to the "end-user"; (2) submit the
end-user's name and address to Jaguar; and (3) maintain
the necessary documentation to support that address. The
Rules define an "end user" as "a
purchaser/lessee purchasing or leasing a vehicle from an
authorized Dealership for retail, commercial or business use,
with no intent to resell. An approved leasing company
purchasing to lease is considered an end user." The
Rules offer no definition of an "approved leasing
2010, a dispute arose regarding the procedures and policies
governing the 2011 Business Builder Program, and Autobahn
filed a complaint with the Texas Department of Motor
Vehicles. Before the Board acted, Jaguar and Autobahn entered
into the 2011 Settlement Agreement, which outlined certain
"Handover Policies" that Autobahn would follow.
That agreement required Autobahn to extend to "[e]very
retail purchaser . . . an invitation to visit Autobahn's
dealership personally" to receive the vehicle, or to
conduct the handover "at the residence/office of the
purchaser or end-user." The agreement stated that
"[a]ll deliveries . . . will be conducted by trained
parties dispute the reach of the agreement. Jaguar asserts
that the Handover Policies apply to all "end
users," while Autobahn insists that it applies only to
"individual retail purchasers, not leasing
dispute regarding the 2013 Business Builder Program forms the
principal basis for the current action. Jaguar conducted an
audit of Autobahn's sales from February 2013 through
January 2014. The auditor looked at 134 sales files,
"all of which involved sales to leasing companies,"
and claimed that in 90 cases, Autobahn was not entitled to an
incentive payment because "[d]elivery was not made to
the vehicle's end-user by an authorized Land Rover
retailer representative." Instead, the leasing agency
delivered the vehicle to the lessee. The auditor initiated 91
chargebacks for incentive payments.Autobahn appealed, and Jaguar
affirmed all but 5, resulting in $317, 204.80 in chargebacks.
2014, Autobahn filed a complaint with the Board, alleging
that the chargeback violated Section 2301.467(a)(1) of the
Texas Occupations Code, which prohibits a manufacturer,
distributor, or representative from "requir[ing]
adherence to unreasonable sales or service
standards." Autobahn sought "a declaration from
the Board that [Jaguar's] interpretation of
'end-user' to exclude a leasing company purchasing a
vehicle from Autobahn" violated that prohibition.
Board referred Autobahn's complaint to an administrative
law judge ("ALJ") at the State Office of
Administrative Hearings. In August 2015, the ALJ issued a
Proposal for Decision, concluding that the chargebacks
violated Section 2301.467(a)(1). The ALJ noted that the
dispute ultimately turned on the question "whether a
leasing company is an end-user under the terms of the
Business Builder documents." The ALJ thought yes. While
noting that neither the Manual nor the Rules define "an
approved leasing company," she still found that
"[s]ales to leasing companies are qualified sales under
Business Builder according to the Program documents."
She concluded that Jaguar's "charge-backs to
Autobahn for sales to leasing companies . . . [were] invalid
under . . . § 2301.467(a)(1) for requiring adherence to
unreasonable sales or service standards."
Board adopted the ALJ's findings of fact and conclusions
of law and issued a final order stating that Jaguar
"improperly charged back against [Autobahn] certain
incentive payments for sales to leasing companies and that
those chargebacks are invalid and rescinded."
November 2016, Jaguar appealed the Board's order to the
state court of appeals. During the pendency of that appeal,
Autobahn sued in state court,  claiming breach of contract and
violations of the DTPA, the latter of which would entitle it
to treble damages.
removed, and Autobahn sought summary judgment. It claimed (1)
Jaguar's "violation of Section 2301, as found by
the Board, establish[es] Autobahn's claim under the
[DTPA] as a matter of law" and (2) that "the Board
expressly found that the underlying agreements . . .
collectively constitute valid and enforceable contracts that
[Jaguar] breached by virtue of wrongful charge-backs."
Jaguar replied that (a) the action was premature because
Autobahn had not yet exhausted its administrative remedies
and that (b) even if the action were properly before the
court, Autobahn was not entitled to treble damages on summary
judgment because it had not established that Jaguar acted
"knowingly" as required by the DTPA.
federal district court rejected Jaguar's exhaustion
argument, reasoning that "the Board's final order is
final and enforceable." The court then granted summary
judgment on Autobahn's DTPA and breach-of-contract claims
but denied "double recovery" as to the latter.
Jaguar appealed, and, in the interim, the Texas Court of
Appeals affirmed the Board's order.
parties dispute the point at which the Board's order
became final for purposes of administrative exhaustion. We
agree with Jaguar that Autobahn filed too soon.
in diversity, we apply Texas substantive law on the
exhaustion question,  "look[ing] first [and foremost] to
the final decisions of the Texas Supreme
Court." Where that court has yet to speak
directly to the question, "we must make our best Erie
guess, " with the recognition that
"non-binding language from the [Texas] [S]upreme [C]ourt
is the second- or third-best predictive indicium of how [it]
analysis begins and ends with Subaru of America v. David
McDavid Nissan, 84 S.W.3d 212, 221 (Tex. 2002), which
offers the court's most thorough explication of
exhaustion and the Board's jurisdiction. A car dealership
had sued a manufacturer for several Code violations without
first having sought administrative relief. The court began
its analysis by explaining that Texas agencies enjoy two
forms of jurisdiction: "primary" and
"exclusive." Id. at 220. The
former is "prudential," the latter
"jurisdictional." Id. Hence, where the
agency possesses exclusive jurisdiction, "a party must
first exhaust administrative remedies before a trial court
has subject matter jurisdiction over a dispute."
Id. at 222. As for Code-based claims, the Texas
Motor Vehicle Commission Code "creates a hybrid
claims-resolution process" whereby "the Board has
exclusive jurisdiction . . . over claims and issues
the Code governs, [and] a party ...