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Auto Equity Loans of Delaware, LLC v. Shapiro

United States District Court, D. Delaware

September 3, 2019

JOSH SHAPIRO, in His Official Capacity as Attorney General of the Commonwealth of Pennsylvania, Defendant.

          Douglas D. Herrmann, Pepper Hamilton LLP, Wilmington, DE; Richard J. Zack, Alexander L. Harris, Brian M. Nichilo, Pepper Hamilton LLP, Philadelphia, PA - Attorneys for Plaintiff

          Jessica S. Davis, Senior Deputy Attorney General, Keli M. Neary, Chief Deputy Attorney General, Office of Attorney General, Harrisburg, PA - Attorneys for Defendant September 3, 2019 Wilmington, Delaware



         Before the Court is the Motion for Dismissal Pursuant to Fed.R.Civ.P. 12(b)(2), 12(b)(3), and 12(b)(6) or for a Transfer Pursuant to 28 U.S.C. § 1404(a) filed by Defendant Josh Shapiro, in His Official Capacity as Attorney General of the Commonwealth of Pennsylvania (“Defendant”). (D.I. 10). Defendant seeks dismissal under Rule 12(b)(2) of the Federal Rules of Civil Procedure, challenging this Court's ability to exercise personal jurisdiction over him. (D.I. 11 at 5). In the alternative, Defendant seeks dismissal under Rule 12(b)(1) of the Federal Rules of Civil Procedure, asserting that this case is not yet ripe.[1] (Id. at 11-12; see also D.I. 14 at 7). In the event that the Court has jurisdiction over the case and Defendant, Defendant seeks to transfer this case to the United States District Court for the Middle District of Pennsylvania pursuant to 28 U.S.C. § 1404(a). (D.I. 11 at 15). Plaintiff Auto Equity Loans of Delaware, LLC (“Plaintiff) opposes Defendant's motion. (D.I. 13). For the reasons set forth below, the Court grants-in-part and denies-in-part Defendant's motion.[2]

         I. BACKGROUND

         Plaintiff initiated this action on September 24, 2018, seeking declaratory and injunctive relief. (D.I. 1; see also D.I. 9). Plaintiff is a limited liability company organized under Delaware law. (D.I. 9 ¶ 12). Plaintiff “provides financing to borrowers secured by motor vehicle titles.” (Id.). Plaintiff's “loan transactions are completed at [its] offices, the majority of which are located in Delaware.” (Id.) Plaintiff has no offices in Pennsylvania and allegedly “does not operate in Pennsylvania.” (Id. ¶ 3). Plaintiff alleges that “[i]ts limited contacts with Pennsylvania occur for reasons that are entirely outside of [Plaintiff's] control . . . or that are incidental to [Plaintiff's] general marketing efforts or to loan agreements that were executed outside Pennsylvania and governed by the law of Delaware . . . .” (Id.). Defendant is the Attorney General of Pennsylvania and is the state's chief legal and law enforcement officer. (Id. ¶ 13). As Pennsylvania's Attorney General, Defendant “is responsible for and administers laws and regulations established pursuant to Pennsylvania legislation.” (Id.).

         In June of 2018, Plaintiff alleges that an agent from Defendant's office contacted it, noting that Defendant's office had received a complaint from a Pennsylvania resident “regarding the interest rate set forth in the [resident's] loan agreement with [Plaintiff].” (Id. ¶ 31). Through its counsel, Plaintiff responded to Defendant's office and explained that “the entire transaction with the borrower had taken place in an [] office [of Plaintiff's] in Delaware, and the loan agreement entered into between that borrower and [Plaintiff] was governed by and in compliance with Delaware law.” (Id. ¶ 32). On August 7, 2018, Plaintiff received a letter from Defendant's office, in which Defendant explained “that Pennsylvania's limits on interest rates apply to vehicle title loans extended to Pennsylvania residents, even if the loan is originated by a lender outside the Commonwealth of Pennsylvania.” (Id. ¶ 5 (quoting id., Ex. A) (quotation marks omitted)). On August 15, 2018, Defendant's office sent Plaintiff a request for documents, “asking for more than two years' worth of records addressing thirteen categories of information as part of its investigation into [Plaintiff's] operations.” (Id. ¶ 6 (citing id., Ex. B)).

         In light of Defendant's request for documents and the initiation of an investigation against Plaintiff, Plaintiff now seeks declaratory and injunctive relief, alleging that Defendant's “threatened extraterritorial imposition of Pennsylvania laws on [Plaintiff] violates the Commerce Clause and Due Process Clause.” (Id. ¶ 10). Plaintiff alleges that the Commerce Clause bars Defendant “from applying, or attempting to apply, ” Pennsylvania laws “to entities, like [Plaintiff] that operate ‘wholly outside' of Pennsylvania.” (Id. ¶ 42). Moreover, Plaintiff alleges that “the Due Process Clause prevents [Defendant] from enforcing” various Pennsylvania laws “against entities, like [Plaintiff] that do not have sufficient ‘minimum contacts' with Pennsylvania.” (Id. ¶ 43). Plaintiff contends that an injunction is warranted here because it is “suffering irreparable harm in light of [Defendant's] actions and the costs incurred because of such actions” and it will continue to suffer harm “because of the impairment of its business during [Defendant's] unconstitutional attempt to investigate purported violations of Pennsylvania law.” (Id. ¶ 45). Plaintiff also seeks a declaratory judgment that Defendant “has no authority to enforce” any laws or regulations that Defendant “is empowered to administer and enforce, because exterritorial enforcement of those laws on [Plaintiff] would violate the Commerce Clause and Due Process Clause.” (Id. ¶ 47).


         A. Motion to Dismiss Pursuant to Rule 12(b)(1)

         A court must grant a motion to dismiss pursuant to Rule 12(b)(1) if it lacks subject matter jurisdiction to hear a claim. In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012). A court's jurisdiction “extends only to claims that are ripe for resolution.” Wayne, 894 F.3d at 522. In considering whether an action is ripe for adjudication, courts consider three elements: “(1) the adversity of the parties' interests; (2) the probable conclusiveness of a judgment; and (3) the practical utility of judgment to the parties.” Evanston Ins. Co. v. Layne Thomas Builders, Inc., 635 F.Supp.2d 348, 352-53 (D. Del. 2009) (citing Step-Saver Data Sys., Inc. v. Wyse Tech., 912 F.2d 643, 647 (3d Cir. 1990)). All three elements must be satisfied for an action to be considered ripe. Travelers Ins. Co. v. Obusek, 72 F.3d 1148, 1154 (3d Cir. 1995).

         To establish adversity of interest, “[a]lthough the party seeking review need not have suffered a ‘completed harm' . . ., it is necessary that there be a substantial threat of real harm and that the threat ‘must remain real and immediate throughout the course of the litigation.'” Presbytery of N.J. of Orthodox Presbyterian Church v. Florio, 40 F.3d 1454, 1463 (3d Cir. 1994) (internal quotation marks and citations omitted). In reviewing the conclusiveness factor, courts consider “whether a declaratory judgment definitively would decide the parties' rights.” NE Hub Partners, L.P. v. CNG Transmission Corp., 239 F.3d 333, 344 (3d Cir. 2001). Courts may also consider “the extent to which further factual development of the case would facilitate decision, so as to avoid issuing advisory opinions, or whether the question presented is predominately legal.” Id. In evaluating the final factor, the utility of a judgment, courts consider “whether the parties' plans of actions are likely to be affected by a declaratory judgment . . . and consider[] the hardship to the parties of withholding judgment.” Id. at 344-45 (internal quotation marks and citations omitted).

         “Courts have considered a challenge to the ripeness of a claim to be a facial challenge to subject matter jurisdiction.”[3] Evanston Ins., 635 F.Supp.2d at 352 (citing Thompson v. Borough of Munhall, 44 Fed.Appx. 582, 583 (3d Cir. 2002) and Corporate Aviation Concepts Inc. v. MultiService Aviation Corp., No. 03-3020, 2005 WL 1693931, at *2 n.6 (E.D. Pa. July 19, 2005)). A court, in reviewing a facial challenge under Rule 12(b)(1), considers the pleadings as it would under Rule 12(b)(6). Id. “In this regard, the Court must accept all factual allegations in the complaint as true and [] all reasonable inference[s] must be drawn in favor of the plaintiff.” Id. (citing NE Hub, 239 F.3d at 341). Thus, “[t]he Court's inquiry under Rule 12(b)(1) is limited to the allegations in the complaint, the documents referenced in or attached to the complaint, and matters of the public record.” Id. (citing Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000)).

         B. Motion to Transfer Pursuant to 28 U.S.C. § 1404(a)

         District courts have the authority to transfer venue “[f]or the convenience of parties and witnesses, in the interests of justice, . . . to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a). However, “[a] plaintiff, as the injured party, generally ha[s] been ‘accorded [the] privilege of bringing an action where he chooses, ” Helicos Biosciences Corp. v. Illumina, Inc., 858 F.Supp.2d 367, 371 (D. Del. 2012) (quoting Norwood v. Kirkpatrick, 349 U.S. 29, 31 (1955)), and this choice “should not be lightly disturbed, ” Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).

         The Third Circuit has recognized that:

[i]n ruling on § 1404(a) motions, courts have not limited their consideration to the three enumerated factors in § 1404(a) (convenience of parties, convenience of witnesses, or interests of justice), and, indeed, commentators have called on the courts to “consider all relevant factors to determine whether on balance the litigation would more conveniently proceed and the interests of justice be better served by transfer to a different forum.”

Jumara, 55 F.3d at 879 (citation omitted). The Jumara court went on to describe twelve (12) “private and public interests protected by the language of § 1404(a).” Id. The private interests include:

plaintiff's forum preference as manifested in the original choice; the defendant's preference; whether the claim arose elsewhere; the convenience of the parties as indicated by their relative physical and financial condition; the convenience of the witnesses - but only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).
Id. at 879 (citations omitted). The public interests include:
the enforceability of the judgment; practical considerations that could make the trial easy, expeditious, or inexpensive; the relative administrative difficulty in the two fora resulting from court congestion; the local interest in deciding local controversies at home; the public policies of the fora; and the familiarity of the trial judge with the applicable state law in diversity cases.

Id. at 879-80.

         The party seeking transfer bears the burden “to establish that a balancing of proper interests weigh[s] in favor of transfer.” Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970). Moreover, though courts have “broad discretion to determine, on an individualized, case-by-case basis, whether convenience and fairness considerations weigh in favor of transfer, ” Jumara, 55 F.3d at 883, the Third Circuit has held that “unless the balance of convenience of the parties is strongly in favor of [the] defendant, the plaintiff's choice of forum should prevail.” Shutte, 431 F.2d at 25.

         III. ...

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