United States Court of Appeals
For the First Circuit
No. 22-1913
RHODE ISLAND TRUCK CENTER, LLC,
Plaintiff, Appellant,
v.
DAIMLER TRUCKS NORTH AMERICA, LLC,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. John J. McConnell, Jr., U.S. District Judge]
Before
Barron, Chief Judge,
Howard and Gelpí, Circuit Judges.
Edward J. Sackman, with whom Hilary Holmes Rheaume,
Bernstein, Shur, Sawyer & Nelson, P.A., Samira Omerovic, and
Omerovic Legal, PLLC were on brief, for appellant.
Nathan D. Imfeld, with whom Roberta F. Howell and Foley &
Lardner LLP were on brief, for appellee.
July 6, 2026
BARRON, Chief Judge. Like many states, Rhode Island
limits a motor vehicle manufacturer's ability to establish a new
dealership near one of its existing in-state dealerships even if
its franchise agreement with that existing dealership does not
impose such a limitation. See R.I. Gen. Laws § 31-5.1-4.2(a)-(b).
We are not aware of any state other than Rhode Island, however,
that extends this limitation to new dealerships outside the state.
In this appeal, we must decide whether Rhode Island's enforcement
of this unusual aspect of its dealer protection law would violate
the "dormant" component of the Commerce Clause of the U.S.
Constitution -- or, as it is often called, the "Dormant Commerce
Clause." We conclude that it would and so affirm the judgment
below.
I.
A.
The Rhode Island law in question, which we shall refer
to as the "Dealer Law,"1 requires, among other things, that a motor
vehicle manufacturer "notify" each one of its franchisees that
qualifies as a "new motor vehicle dealer" that the manufacturer
intends to establish in that dealer's "relevant market area" an
additional "new motor vehicle dealer" for the same "line or make"
1The Dealer Law is located at R.I. Gen. Laws §§ 31-5.1-1 to
31-5.1-21.
- 2 -of vehicle.2 Id. § 31-5.1-4.2(a). The Dealer Law defines
"relevant market area" as the greater of: (1) "the area within a
radius of twenty (20) miles around an existing dealer" or (2) "the
area of responsibility defined in the franchise." Id.
§ 31-5.1-1(13) (emphasis added). It defines "dealer" to include
only entities with "an established place of business . . . in
[Rhode Island]," id. § 31-1-19(b), while its definition of "new
motor vehicle dealer" is not so limited, see id. § 31-5.1-1(11).3
In February 2022, Rhode Island Truck Center, LLC
("RITC") filed a protest pursuant to the Dealer Law with the Rhode
Island Dealers' Hearing Board (the "Board")4 against Daimler Trucks
North America, LLC ("Daimler"). RITC alleged that Daimler had
violated the Dealer Law's notification requirement.
The filings in the protest allege the following facts,
which the parties agree we may accept as true for purposes of this
Specifically, the statute states that a "manufacturer shall
2
in writing by certified mail first notify the department and each
new motor vehicle dealer in the same line or make in the relevant
market area of the intention to establish an additional
dealership[,] to add an additional location for an existing new
motor vehicle dealership, or to relocate an existing dealership
within or into that market area." Id. § 31-5.1-4.2(a).
"New motor vehicle dealer" is defined to include "any
3
person" that has a franchise with the manufacturer "for the retail
sale of [its] new motor vehicles." Id. § 31-5.1-1(11).
The Board has been assigned by regulation to adjudicate
4
protest actions under the Dealer Law on behalf of Rhode Island's
Department of Revenue. See id. §§ 31-5.1-4.2(a), 31-5-1(a); 280
R.I.C.R. 30-20-1.3 (LexisNexis 2026).
- 3 -appeal. RITC is a new motor vehicle dealer with its principal
place of business in East Providence, Rhode Island, near the border
with Massachusetts. Daimler is a motor vehicle manufacturer
incorporated in Delaware with a principal place of business in
Oregon.
Daimler manufactures the Freightliner brand of trucks.
In 2016, it granted RITC a franchise to sell Freightliner trucks
in a non-exclusive "Area of Responsibility" ("AOR") that includes
various Rhode Island counties and Bristol County, Massachusetts.
Around 2021, Daimler similarly granted a Freightliner franchise to
another dealer, Advantage Truck Raynham, LLC ("ATG Raynham"), in
Bristol County, Massachusetts. Daimler, however, "never notified
RITC in writing, or otherwise, that it intended to establish a
Freightliner dealership within RITC's AOR."5
In its protest based on Daimler's alleged violation of
the notification requirement, RITC sought: (1) "[a] finding and
ruling that [Daimler] violated [the notification requirement] by
adding a Freightliner franchisee to RITC's relevant market area
without providing the requisite statutory notice and allowing RITC
5 RITC further alleged that Daimler "d[id] not have good cause
to establish" such a dealership because "RITC meets or exceeds
[Daimler's] standards for customer care[ and] sales" and because
"the market of Bristol County, Massachusetts[,] does not and cannot support two . . . Freightliner dealerships." See R.I. Gen. Laws
§31-5.1-4.2(b)(1)-(12) (listing factors for determining whether
"good cause" exists for a manufacturer to establish or relocate a
dealership within an existing dealer's AOR).
- 4 -to protest"; (2) a "finding and ruling that [Daimler's] violation
of [the notification provision] must be remedied by [Daimler]
removing the new and unauthorized Freightliner franchise within
RITC's relevant market area"; and (3) civil damages, costs, and
attorneys' fees.
With the parties' assent, the Board addressed RITC's
protest on the pleadings. The Board did not question its authority
to redress a protest that alleges a violation of the notification
requirement by ordering a manufacturer that has already
established a new dealership to terminate its franchise agreement
with that new dealership. It explained, however, that it lacked
jurisdiction over RITC's protest nonetheless.
That conclusion rested on two grounds. First, the Board
concluded that, under our decision in Fireside Nissan, Inc. v.
Fanning, 30 F.3d 206 (1st Cir. 1994), and a decision based on that
ruling by the U.S. District Court for the District of Rhode Island,6
Rhode Island's Dealer Law does not apply to out-of-state conduct
as a matter of state law. It thus concluded that it "lacks the
authority to apply" the Dealer Law "in an extraterritorial manner
and therefore cannot prohibit [Daimler] from establishing or
moving a dealership outside the boundaries of th[e] state."
6That case was County Motors, Inc. v. General Motors Corp.,
No. CIV.A. 00-108T, 2001 WL 34136693 (D.R.I. Jan. 29, 2001).
- 5 -Second, the Board determined that such enforcement of
the Dealer Law would violate the Dormant Commerce Clause.
Specifically, the Board reasoned:
The Commerce Clause of the United States
Constitution precludes the application of a
state statute to commerce that takes place
wholly outside the State's borders, whether or
not the commerce has effects within the State.
Edgar v. MITE Corp., 457 U.S. 624, 642-643
(1982). A state statute that "may adversely
affect interstate commerce by subjecting
activities to inconsistent regulations" may be
considered invalid under the Commerce Clause.
Morley-Murphy Co. [v.] Zenith Elecs. Corp.,
142 F.3d 373, 379 (7th Cir. 1998) (citing CTS
Corp. v. Dynamics Corp. of America, 481 U.S.
69, 88 (1987)). Any attempt to apply Rhode
Island's dealership, distribution and
franchise law in an extraterritorial manner
would certainly run afoul of the Commerce
Clause.
Based on these reasons, the Board dismissed RITC's
protest for want of jurisdiction.
B.
RITC sought review of the Board's decision in a complaint
that it filed in the Rhode Island Superior Court pursuant to R.I.
Gen. Laws §§ 31-5.1-16 and 42-35-15(b). Those provisions set forth
the procedures under Rhode Island law for seeking judicial review
of a final order of the Board.
Daimler removed RITC's action to the U.S. District Court
for the District of Rhode Island based on diversity jurisdiction.
Daimler thereafter filed a motion to dismiss RITC's complaint.
- 6 -With the parties' assent, the District Court elected to
treat the parties' filings as cross motions for summary judgment.
It then granted Daimler's motion for summary judgment, denied
RITC's motion for the same, and entered judgment in Daimler's
favor.
The District Court first rejected RITC's argument that
the Board could adjudicate RITC's protest without applying Rhode
Island's Dealer Law extraterritorially, concluding that applying
the statute to Daimler's conduct "would have the effect of
extraterritorially regulating conduct in Massachusetts." (Citing
Healy v. Beer Inst., Inc., 491 U.S. 324, 336 (1989).) In reaching
that conclusion, the District Court first reasoned that, under
Fireside Nissan, the Dealer Law's provisions do not apply beyond
Rhode Island's borders as a matter of state law. But even if they
did, the District Court explained that "the statute would still be
subject to the limits imposed by the Commerce Clause." In that
regard, the District Court distinguished the Dealer Law from the
statute that we upheld against a Dormant Commerce Clause challenge
in IMS Health Inc. v. Mills, 616 F.3d 7 (1st Cir. 2010), vacated
on other grounds sub nom., IMS Health, Inc. v. Schneider, 564 U.S.
1051 (2011). It reasoned that here, "unlike in [IMS Health], the
harm did not occur exclusively within the state of Rhode Island"
since "there would be no claim in Rhode Island were it not for the
underlying conduct that took place in Massachusetts."
- 7 -"Accordingly," the District Court concluded, "there was enough
out-of-state activity in this case to merit scrutiny of Rhode
Island's ability to regulate these parties' interactions."
The District Court then concluded that, insofar as the
Board would be required in adjudicating RITC's protest to
"regulat[e] . . . out-of-state firms," it lacked authority to do
so. It explained that, under the Dormant Commerce Clause, "no
State may force an out-of-state merchant to seek regulatory
approval in one State before undertaking a transaction in another"
(quoting Healy, 491 U.S. at 337), and the Dealer Law in effect did
just that by requiring Daimler "to answer to the [Rhode Island]
Board . . . for its decisions to grant or not grant a franchise in
Massachusetts."7
C.
RITC timely appealed. In our prior opinion addressing
the appeal, we concluded that we had subject matter jurisdiction
under 28 U.S.C. §§ 1331 and 1441(a) over RITC's action challenging
the Board's jurisdictional ruling. R.I. Truck Ctr., LLC v. Daimler
Trucks N. Am., LLC ("RITC I"), 92 F.4th 330, 345 (1st Cir. 2024).
That action, we explained, raised a federal question because RITC
7RITC also argued that the Board should have adjudicated its
"remaining claims" -- that is, those that did not require
extraterritorial application of the Dealer Law. The District Court
rejected that argument, reasoning that all of the rights RITC
asserted in its protest "r[a]n afoul of the Commerce Clause."
- 8 -could not successfully challenge the Board's jurisdictional ruling
without showing that the Dormant Commerce Clause permitted the
Dealer Law to be enforced to redress Daimler's establishment of
the Massachusetts dealership. Id. at 342. In addition, based on
our supplemental jurisdiction over state law claims under 28 U.S.C.
§ 1367(a), we affirmed the District Court's grant of summary
judgment to Daimler on another of RITC's claims under the Dealer
Law. Id. at 345-46, 354.
We held in abeyance, however, RITC's appeal of the
District Court's grant of summary judgment to Daimler on RITC's
challenge to the Board's Dormant Commerce Clause-based ruling
concerning the Dealer Law's notification provision. Id. at 353.
We did so because we certified to the Rhode Island Supreme Court
an "issue of state statutory construction" concerning the scope of
the Dealer Law that was "antecedent to the questions concerning
the Dormant Commerce Clause on which the parties chiefly focus."
Id. at 346-47.
If the term "relevant market area" in the Dealer Law
does not "encompass an area beyond Rhode Island's borders," we
explained, then the Dealer Law would provide RITC with no basis to
challenge Daimler's failure to notify it of Daimler's intent to
grant a Freightliner franchise to ATG Raynham in Massachusetts.
Id. at 347. And "in that case," we explained, there "would be no
need for us to reach the question of whether the Dormant Commerce
- 9 -Clause would bar" RITC from seeking relief on that basis. Id.
Accordingly, we certified the following question to the Rhode
Island Supreme Court:
1. Can a "relevant market area" in Rhode
Island General Laws section 31-5.1-4.2(a)
extend beyond Rhode Island's borders?
Id. at 353.8
The Rhode Island Supreme Court has now answered that
question as follows: "[T]he definition of 'relevant market area'
contained in § 31-5.1-1(13), and as used in § 31-5.1-4.2(a), can
extend beyond Rhode Island's borders." R.I. Truck Ctr., LLC v.
Daimler Trucks N. Am., LLC ("RITC II"), 338 A.3d 1056, 1064 (R.I.
2025). And, in doing so, the Rhode Island Supreme Court has
explained that the Dealer Law is unambiguous in defining "relevant
market area" to extend beyond the state's borders, thereby
foreclosing any narrower, in-state-only construction based on
principles of constitutional avoidance. See id. at 1063. As a
result, we must now address the Dormant Commerce Clause issue that
we have held in abeyance.
8 We also rejected Daimler's contention that we should defer
to the Board's interpretation of the scope of the Dealer Law, as
we were not confident that "the Rhode Island Supreme Court would
agree that this specific construction by the Board would be
entitled to deference." RITC I, 92 F.4th at 352 n.11.
- 10 -II.
"We review the District Court's grant of summary
judgment to Daimler de novo." RITC I, 92 F.4th at 346 (citation
modified). "A party is entitled to summary judgment only when the
record reveals no genuine issue as to any material fact and it is
clear that judgment is proper as a matter of law." Phila. Indem.
Ins. v. BAS Holding Corp., 78 F.4th 53, 58 (1st Cir. 2023). In
conducting our review, "[w]e are not wedded to the [D]istrict
[C]ourt's rationale but, rather, may affirm . . . on any ground
supported by the record." Burt v. Bd. of Trs. of Univ. of R.I.,
84 F.4th 42, 54 (1st Cir. 2023).
As a threshold matter, Daimler argues that we must defer
to the Board's assessment of whether its enforcement of the Dealer
Law would run afoul of the U.S. Constitution, regardless of how we
might rule on the Dormant Commerce Clause issue on our own. But
we know of no Rhode Island law or precedent that requires a
reviewing court to defer to a Rhode Island state agency's
determination that it lacks jurisdiction to enforce an otherwise
clearly applicable state statute on the ground that it violates
the U.S. Constitution. Nor does Daimler identify any such
authority. We therefore proceed to consider de novo whether the
Board's enforcement of the Dealer Law would violate the Dormant
Commerce Clause, given the parties' agreement that the Board lacks
jurisdiction to undertake enforcement that would do so. As we
- 11 -will explain, we conclude, based on our controlling precedent,
that enforcement of the Dealer Law here would result in such a
violation.
A.
The U.S. Constitution provides that "Congress shall have
Power . . . [t]o regulate Commerce . . . among the several
States." U.S. Const. art. I, § 8, cl. 3. "Although the [Commerce]
Clause is framed as a positive grant of power to Congress," the
Supreme Court of the United States "ha[s] consistently held this
language to contain a further, negative command, known as the
[D]ormant Commerce Clause, prohibiting certain state [regulations]
even when Congress has failed to legislate on the subject."
Comptroller of Treasury of Md. v. Wynne, 575 U.S. 542, 548-49
(2015) (quoting Okla. Tax Comm'n v. Jefferson Lines, Inc., 514
U.S. 175, 179, (1995)); see Tenn. Wine & Spirits Retailers Ass'n
v. Thomas, 588 U.S. 504, 514 (2019).
The Supreme Court's "[m]odern" Dormant Commerce Clause
precedents "rest upon two primary principles." South Dakota v.
Wayfair, Inc., 585 U.S. 162, 173 (2018). "First, state regulations
may not discriminate against interstate commerce," id., either "in
purpose or effect," Wine & Spirits Retailers, Inc. v. Rhode Island,
481 F.3d 1, 10 (1st Cir. 2007). If a state law discriminates
against interstate commerce, it is subjected to "a virtually per
se rule of invalidity." Wayfair, 585 U.S. at 173 (quoting Granholm
- 12 -v. Heald, 544 U.S. 460, 476 (2005)). "Under this rigorous form of
review, a statute [will be held] invalid unless it furthers a
legitimate local objective that cannot be served by reasonable
non-discriminatory means." Wine & Spirits Retailers, 481 F.3d at
10-11. Second, even a facially neutral state law may be struck
down if the "burden" it imposes on interstate commerce "is clearly
excessive in relation to [its] putative local benefits." Pike v.
Bruce Church, Inc., 397 U.S. 137, 142 (1970).
Here, however, in rejecting RITC's challenge to the
Board's jurisdictional ruling, the District Court -- like the Board
itself -- appeared to rely on an arguably distinct principle, which
we have referred to in IMS Health as being rooted in "the
extraterritoriality branch of the [D]ormant Commerce Clause." 616
F.3d at 25. Daimler asks us to affirm the District Court's ruling
on that basis. We thus start and, for reasons that we will explain,
end our analysis by considering that request.
B.
In its most recent decision about the Dormant Commerce
Clause, which was issued during the pendency of this appeal, the
Supreme Court of the United States expressly addressed this
"extraterritoriality" branch of Dormant Commerce Clause doctrine.
The Court did so in rejecting the Dormant Commerce Clause challenge
in National Pork Producers Council v. Ross ("Pork Producers"), 598
U.S. 356, 371 (2023), which concerned a California law that
- 13 -required all pork sold in that state to be sourced from pigs that
were not "confined in a cruel manner" or born to breeding pigs so
confined, id. at 365-66.
Following oral arguments in our Court in this case, we
allowed the parties to provide supplemental briefing to address
Pork Producers's discussion of the extraterritoriality issue.
Having reviewed that briefing, we agree with RITC that Pork
Producers calls into question some of the reasoning in the District
Court's decision rejecting the challenge to the Board's
jurisdictional determination.
Specifically, the Supreme Court made clear in Pork
Producers that its precedents in Healy v. Beer Institute, Inc.,
491 U.S. 324 (1989), Brown-Forman Distillers Corp. v. New York
State Liquor Authority, 476 U.S. 573 (1986), and Baldwin v. G.A.F.
Seelig, Inc., 294 U.S. 511 (1935), do not support a rule that state
laws that affect out-of-state conduct are per se invalid under the
Dormant Commerce Clause. Pork Producers, 598 U.S. at 371. The
Court explained that those cases instead involved the Dormant
Commerce Clause's "familiar concern with preventing purposeful
discrimination against out-of-state economic interests." Id.
Thus, the District Court's reliance on Healy,
Brown-Forman, and Baldwin in finding a Dormant Commerce Clause
violation here is problematic. After all, the District Court did
not find that the Dealer Law manifested the kind of discriminatory
- 14 -purpose that, after Pork Producers, we must understand those cases
to have identified.
In addition, Pork Producers rejected any notion that its
prior precedents could support the conclusion that the Dormant
Commerce Clause per se forbids "enforcement of state laws that
have the practical effect of controlling commerce outside the
State." 598 U.S. at 371 (emphasis added) (internal quotations
omitted); see also id. at 374 ("[M]any (maybe most) state laws
have the 'practical effect of controlling' extraterritorial
behavior."). Thus, to the extent that the District Court could be
understood to have relied on such a principle -- such as when it
emphasized that enforcing the Dealer Law here "would have the
effect of extraterritorially regulating conduct in
Massachusetts" -- we cannot agree that there is any such broad-form
principle.
We do not understand the District Court, however, to
have rested its Dormant Commerce Clause ruling merely on the
"practical effects" that enforcement of the Dealer Law would have
on an out-of-state transaction. We understand the District Court
to have concluded that enforcement of the Dealer Law here would
directly regulate an out-of-state transaction -- namely, Daimler's
transaction with its new Massachusetts franchise operating within
RITC's relevant market area -- by requiring Daimler "to seek
regulatory approval" in Rhode Island regarding its decision to
- 15 -establish such a franchise in Massachusetts. (Quoting Healy, 491
U.S. at 337.)
Notably, RITC does not dispute that the Dealer Law,
unlike the measure in Pork Producers itself, does "directly
regulate[] out-of-state transactions," 598 U.S. at 376 n.1, when
enforced as RITC seeks to have it enforced here with respect to
Daimler's termination of its franchise agreement with ATG Raynham.9
And we can see why, given the Court's decision in Edgar v. MITE
Corp., 457 U.S. 624, and Pork Producers's discussion of that
precedent, see 598 U.S. at 376 n.1.
The state law in Edgar was an Illinois corporate takeover
statute that required registration of certain tender offers, even
if those offers were made between entities outside the state. See
457 U.S. at 626-27. In concluding that the statute "directly
regulate[d]" out-of-state transactions, the plurality in that case
explained that the Illinois law purported to bar an offeror from
9 In its supplemental brief, RITC does suggest that its
request for damages due to Daimler's alleged violation of the
notification provision would only amount to an indirect regulation
of Daimler's conduct. However, the Board appeared to presume that
its jurisdiction over RITC's protest action as a whole turned on
whether the Board had authority to enjoin Daimler to act (or not
act) outside Rhode Island. On appeal, RITC does not argue that
that presumption was in error. Nor does it develop an argument
that we should partially vacate and remand with respect to some of
the forms of relief it sought, even if we disagree with the
District Court's Dormant Commerce Clause ruling as to others.
Thus, any argument to that effect is deemed waived. See United
States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).
- 16 -executing even out-of-state transactions unless the offeror had
first complied with the statute's terms. See id. at 641-42
(plurality opinion). By contrast, the plurality explained, the
"blue-sky" laws that the Court had previously upheld against
Dormant Commerce Clause challenges required filing information
regarding securities issued outside the state only when there was
a disposition of such securities "within the State," and in that
sense, those laws "only regulated transactions occurring within
the regulating States." Id. at 641 (quoting Hall v. Geiger-Jones
Co., 242 U.S. 539, 557-58 (1917)).
Like the Illinois takeover statute in Edgar, the
requested enforcement of the Dealer Law would, "unless complied
with," seek to "prevent" a franchisor-manufacturer with an
in-state dealer-franchisee from "concluding interstate
transactions not only" within that state, "but also with those
living in other States and having no connection with [that state]."
Id. at 642. To be sure, the Dealer Law's notification provision
applies only once a manufacturer has entered into a franchise
agreement with a Rhode Island dealer. See R.I. Gen. Laws
§§ 31-5.1-4.2(a), 31-5.1-1(13). That provision, though, is not,
like the blue-sky laws discussed in Edgar, triggered only in
response to in-state transactions. Cf. 457 U.S. at 641.
Of course, Pork Producers does not hold that a state law
that directly regulates an out-of-state transaction is, for that
- 17 -reason alone, invalid under the Dormant Commerce Clause. The Court
explained there that, although the plurality in Edgar concluded
that the law at issue there was per se invalid on Dormant Commerce
Clause grounds, that law not only "directly regulated out-of-state
transactions" but also did so as to "transactions by those with no
connection to" the regulating state. Pork Producers, 598 U.S. at
376 n.1. The Court then reserved the question as to whether a
state law of that kind was per se invalid under the Dormant
Commerce Clause, see id., as the Court's majority opinion in Edgar
ultimately invalidated the state law only under the balancing test
set forth in Pike v. Bruce Church, Inc., 397 U.S. at 142, and not
on the ground that it was per se invalid because of its
extraterritorial reach, see Edgar, 457 U.S. at 643 (majority
opinion).
It is not entirely clear what Pork Producers means by
its reference to "those with no connection to" the regulating state
(there, Illinois) in describing the out-of-state transactions that
the law in Edgar directly regulated. Pork Producers, 598 U.S. at
376 n.1. All of the out-of-state transactions regulated by that
law concerned shares in a company that itself had some ties to
Illinois.10 But, regardless, we do not understand Pork Producers
10 The
Act regulated tender offers made for shares of a "target
company," which was defined as any corporation (1) with ten
percent of the securities subject to the offer owned by
- 18 -to resolve how we must address a Dormant Commerce Clause challenge
to the enforcement of a law that, like the enforcement of the
Dealer Law at issue here, directly regulates out-of-state
transactions. Cf. Styczinski v. Arnold, 727 F. Supp. 3d 821, 825
(D. Minn. 2024) (distinguishing Pork Producers on this ground),
cert. denied, 146 S.Ct. 1452 (2026) (mem.). And that is
significant because, as the District Court and the parties
recognize, we did address such a challenge in IMS Health. See 616
F.3d at 23-32. We thus see no reason not to apply our analysis
there to this case.11
shareholders in Illinois or (2) which satisfied two of three
conditions: had its principal executive office in Illinois, was
incorporated in Illinois, or had ten percent or more of its stated
capital and paid-in surplus represented in the state. Edgar, 457
U.S. at 627 (majority opinion).
11In Pork Producers, the majority observed in a footnote that
some commentators had suggested that the law at issue in Edgar did
not test the limits of the Dormant Commerce Clause so much as "the
territorial limits of state authority under the Constitution's
horizontal separation of powers." Pork Producers, 598 U.S. at
376 n.1. But cf. Edgar, 457 U.S. at 643 (plurality opinion)
(observing that, for Dormant Commerce Clause purposes, "any
attempt directly to assert extraterritorial jurisdiction over
persons or property would offend sister States and exceed the
inherent limits of the State's power" (citation modified)); H.P.
Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 535 (1949) (stating
that the Court, through its Dormant Commerce Clause jurisprudence,
"has advanced the solidarity and prosperity of this Nation"). But
the majority in Pork Producers explained that, either way, the law
before it there was distinguishable because it did not "directly
regulate[] out-of-state transactions by those with no connection
to the State." Pork Producers, 598 U.S. at 376 n.1. Here, of
course, the law does directly regulate an out-of-state transaction
but, because the parties address only the Dormant Commerce Clause,
- 19 -C.
In IMS Health, we considered a Dormant Commerce Clause
challenge to a Maine statute that prohibited the sale of certain
data -- namely, data regarding the prescribing practices of Maine
health care providers who opted into the law's
protections -- irrespective of whether such sales took place within
Maine.12 Id. at 12-13. Despite expressly acknowledging that the
Maine law in that case regulated "out-of-state transactions," id.
at 14, we held that the law "d[id] not raise constitutional
concerns under the [D]ormant Commerce Clause," id. at 25. We
explained:
The Supreme Court's current [D]ormant Commerce
Clause jurisprudence is concerned with
preventing economic protectionism and
inconsistent regulation, not with enforcing
geographical limits on states' exercise of
their police power that necessarily regulate
commerce. Even under the extraterritoriality
branch of the [D]ormant Commerce Clause, the
Supreme Court has not barred states from
regulating any commercial transactions beyond
we have no occasion to consider whether it raises independent
concerns regarding the horizontal separation of powers.
12 Specifically, the statute provided that prescribers of
pharmaceutical drugs in Maine may opt out of the sale of
identifying data regarding their prescribing practices if the sale
of their data would be for "any marketing purpose." IMS Health,
616 F.3d at 12-13 (quoting Me. Rev. Stat. Ann. tit. 22,
§ 1711-E(2-A)). The law provided the Maine Attorney General with
authority to enjoin violations of the law and to impose civil
penalties of up to $10,000 per violation. Id. at 18.
- 20 -their borders that involve their own citizens
and create in-state harms.
Id. As to that "extraterritoriality branch," we explained, state
laws "that 'force an out-of-state merchant to seek regulatory
approval in one State before undertaking a transaction in another'"
"are not invariably struck down." Id. at 30 (quoting Healy, 491
U.S. at 337). We identified as support for that conclusion a law
"with a strong in-state nexus" that the Court, after Edgar, had
upheld against a Dormant Commerce Clause challenge. See id.
(citing CTS Corp., 481 U.S. at 88-89); see also id. at 30 n.29
(stating that "States' interests may justify extraterritorial
regulation").
We also identified various features of the Maine law
that spared it from invalidation under the Dormant Commerce Clause,
even though it directly regulated out-of-state transactions.
Those features were the following.
First, we explained (repeatedly) that there was no basis
for concluding that the Maine law raised concerns about economic
protectionism. See id. at 25, 27-28, 30 & n.30. Indeed, we
pointed out that the Maine law prevented the sale of Maine
prescriber data by any business if that data would be used "for a
marketing purpose." Id. at 12. It therefore did not protect any
business (let alone any business in Maine) against competition
from any other business. See id. at 27-28.
- 21 -We further explained that Maine's law "dealt with harms
caused exclusively inside the regulating state." Id. at 30. That
was so, we reasoned, because the law was "concerned only with
prescribers in the health care system of Maine," id. at 25
(citation modified), and sought to remedy "specific
harms . . . occurring in Maine," including "invasions of
prescribers' privacy, increased health care costs, and harms to
public health," id.
In addition, we explained that the Maine law was "limited
to regulating transactions with a significant inherent connection
to the regulating state, and involving its own professional
licensees." Id. at 30. As we noted, the law "targets a series of
underlying transactions that . . . start and end in Maine," as
"Maine prescribers' prescriptions are primarily, if not
exclusively, filled at Maine pharmacies," with the data from those
prescriptions ultimately intended to be used in marketing
practices "that target[] Maine prescribers in Maine." Id. at
25-26. Moreover, we explained, because the law was "limited to
transactions involving" "Maine prescribers [who] affirmatively
indicate that they want Maine to protect the confidentiality of
their identifying information," "[e]very intermediate step" of the
transaction involved Maine prescribers' identifying data. Id. at
26.
- 22 -In identifying those features of the Maine law, we
emphasized that, together, they distinguished Maine's statute from
laws like the one struck down in Edgar. See id. at 30-31; see
also id. at 31 ("Those differences, and not the mere fact that
those statutes directly regulated out-of-state transactions,
explain why the Supreme Court deemed th[e] statutes [in Healy,
Brown-Forman, and Edgar] wholly extraterritorial."); id. at
31 n.31 (describing Edgar as "reach[ing] conduct in which Illinois
had no conceivable interest"). And, we explained, those last two
features of the Maine law, together, made it more like the Indiana
takeover statute that the Supreme Court upheld against a Dormant
Commerce Clause challenge in CTS Corp. v. Dynamics Corp. of
America, 481 U.S. 69. IMS Health, 616 F.3d at 31. Unlike the
takeover law at issue in Edgar, we emphasized, the one at issue in
CTS Corp. was upheld because of its "clear in-state nexus and
impact." Id.
Finally, we explained that the Maine statute was like
the measure in CTS Corp. in still one additional respect: It was
not "likely to subject entities engaged in interstate commerce to
incompatible cross-state regulatory regimes." Id. at 28; see also
CTS Corp., 481 U.S. at 88 (distinguishing the statute there from
laws that, like the one in Edgar, risked "subjecting activities to
inconsistent regulations"). We explained that the reason that the
Maine statute did "not risk imposing regulatory obligations
- 23 -inconsistent with those of other states" was that "[n]o other
states have erected competing regulations, much less opposing
regulations requiring the transfer of Maine prescribers' data."
IMS Health, 616 F.3d at 28.
RITC argues that IMS Health affirmatively "compel[s]
reversal here" because it cannot be distinguished from this case.
RITC asserts that "the Dealer Law does not purposefully
discriminate against out-of-state interests" because "it applies
evenhandedly to both in-state and out-of-state manufacturers" and
therefore "does not advantage in-state businesses or disadvantage
out-of-state rivals." RITC further contends that the Dealer Law
is like the Maine statute in IMS Health because the Dealer Law,
too, "was designed to protect against harms occurring in-state and
written to ensure that it only appl[y] to matters with a strong
[in-state] connection." Finally, RITC contends that the Dealer
Law is like the Maine law in that it "does not risk imposing
regulatory obligations inconsistent with those of other states,"
IMS Health, 616 F.3d at 28, because Daimler could have "provided
[RITC with] notice and the opportunity to protest . . . without
violating Massachusetts law because Massachusetts law does not
prohibit notice."
We cannot agree. Instead, we agree with Daimler that
the Dealer Law, if it were enforced to order Daimler to terminate
its franchise agreement with ATG Raynham in Massachusetts, would
- 24 -exhibit each of the characteristics that we explained the Maine
law in IMS Health did not.
First, although the Dealer Law treats in-state and
out-of-state manufacturers the same, see R.I. Gen. Laws
§ 31-5.1-1(8), it differs from the Maine law in that it operates
to restrict competition, as demonstrated by RITC's efforts here to
prevent its direct competitor from doing business in the same
county as RITC. See RITC II, 338 A.3d at 1061 (stating that the
Dealer Law's "broad sweep establishes the legislature's intent to
provide dealers with a minimum area of protection against
manufacturer competition"). Moreover, as Daimler also points out,
in advancing that interest, the Dealer Law treats out-of-state
dealers disparately from in-state dealers because it "gives Rhode
Island dealers the ability to block the appointment of a competing
dealer in another state while denying that same out-of-state dealer
an equivalent right in Rhode Island." Contrast Fireside Nissan,
30 F.3d at 209 (affirming constitutionality of excluding an
out-of-state dealership from protest proceedings regarding an
in-state dealership), with RITC II, 338 A.3d at 1064 (holding that
the "relevant market area" protected under § 31-5.1-4.2(a) can
extend beyond the state's borders). Thus, the Dealer Law raises
the specter of economic protectionism in a way that the Maine law
did not. Cf. United Haulers Ass'n v. Oneida-Herkimer Solid Waste
Mgmt. Auth., 550 U.S. 330, 338 (2007) ("In [the Dormant Commerce
- 25 -Clause] context, discrimination simply means differential
treatment of in-state and out-of-state economic interests that
benefits the former and burdens the latter." (citation modified));
Fireside Nissan, 30 F.3d at 214 (concluding that Rhode Island's
Dealer Law, which was there presumed not to apply outside the
state, did not have a discriminatory purpose in part because it
was "not designed to promote local dealers at the expense of
out-of-state dealers").
The Dealer Law also differs from the Maine law because
it does not regulate exclusively in-state harms, at least if
enforced against Daimler to block it from establishing a dealership
in Massachusetts. In IMS Health, we explained that the Maine law
prevented advertising "that targets Maine prescribers in Maine,"
616 F.3d at 26, in order to prevent "invasions of [those]
prescribers' privacy, increased health care costs, and harms to
public health . . . in Maine," id. at 25. Here, in contrast,
RITC's requested enforcement of the Dealer Law to bar Daimler's
out-of-state dealership would directly prevent vehicle sales
across the border, in Massachusetts. By defining a dealer's
"relevant market area" to extend beyond the state's borders, in
other words, the Dealer Law purports to protect against harmful
invasions of that area of protection even where those invasions
would occur outside the state. See RITC II, 338 A.3d at 1062
- 26 -(describing the "relevant market area" defined in the dealer law
as providing a "protective circle").
Of course, we recognize that, as a Rhode Island dealer,
RITC would experience whatever harms flow from such out-of-state
sales within Rhode Island. But we explained in Fireside Nissan
that the Dealer Law was "designed to protect existing dealers and
consumers from the detrimental effects of aggressive franchising
practices by . . . automobile manufacturers" that "are considered
to be potentially 'injurious to the public welfare' if not properly
regulated." 30 F.3d at 211 (emphasis added) (quoting R.I. Gen.
Laws § 31-5.1-4.2(b)(4)). Similarly, the Dealer Law's
implementing regulations state that their purpose is "to protect
the interest of the public when dealing with motor vehicle dealers
in Rhode Island." 280 R.I.C.R. 30-20-1.2(A) (LexisNexis 2026)
(emphasis added). Thus, while the Dealer Law protects in-state
dealers like RITC from the in-state harms resulting from certain
business practices by their franchisors, that protection is
provided at least in part to prevent harms to consumers in the
market for new motor vehicle dealers. For that reason, unlike in
IMS Health, the harms sought to be prevented are not harms
occurring only within Rhode Island's borders. Indeed, the state's
own definition of "relevant market area" appears to recognize that
the harms that arise in that market do not stop at state lines.
See RITC II, 338 A.3d at 1061; see also New Motor Vehicle Bd. of
- 27 -Cal. v. Orrin W. Fox Co., 439 U.S. 96, 102 (1978) (explaining that
state dealer laws "protect[] the equities of existing dealers by
prohibiting automobile manufacturers from adding dealerships to
the market areas of its existing franchisees where the effect
of . . . intrabrand competition would be injurious to existing
franchisees and to the public interest" (emphasis added)).
Moreover, the Dealer Law, as enforced against Daimler
here, would not directly regulate only those out-of-state
transactions that have "a significant inherent connection" to
Rhode Island. IMS Health, 616 F.3d at 30. As we explained above,
in IMS Health, Maine's statute targeted only transactions that
"start and end in Maine." Id. at 25. And we further observed
that "[e]very intermediate step" regulated by Maine's law was
"limited to transactions involving" the data of its in-state
prescribers. Id. at 26. Here, in contrast, RITC asked the Board
to order Daimler to terminate its franchise with a Massachusetts
dealer that no party has asserted is licensed in Rhode Island and
which sells vehicles outside Rhode Island, including to non-Rhode
Island consumers. Those transactions do not in any sense "start
and end" in Rhode Island. Nor is it the case that every such
transaction has an intimate connection with in-state entities in
the way that the sales of Maine's prescriber data did in IMS
Health. Cf. id. at 29 (stating that the Maine statute regulates
sales of prescriber data that "affect[] only Maine prescribers").
- 28 -Finally, unlike in IMS Health, there is a "risk" here of
"imposing regulatory obligations inconsistent with those of other
states." Id. at 28. In that regard, RITC concedes that "it may
be true that [Daimler] would be subject to a potential claim from
the Massachusetts dealer if it terminated its dealership" in that
state. (Referencing Mass. Gen. Laws ch. 93B, § 5.) We thus must
proceed on the understanding that Daimler could be found in
violation of Massachusetts law if it terminated its franchise
agreement with ATG Raynham. Under these circumstances, then, it
is plain that an order from the Board forcing Daimler to do just
that would "subject[ Daimler's] activities to inconsistent
regulations." CTS Corp., 481 U.S. at 88; see also Healy, 491 U.S.
at 336-37 ("[T]he practical effect of the statute must be
evaluated . . . by considering how the challenged statute may
interact with the legitimate regulatory regimes of other
States . . . .").
RITC responds that "it is not conflicting regulatory
regimes that create the alleged catch-22" that Daimler faces. It
contends that this consequence results from Daimler's "own
actions" in granting a franchise to ATG Raynham within RITC's AOR
without first providing RITC an opportunity to protest. But we
rejected a similar argument in Hyde Park Partners, L.P. v.
Connolly, which concerned a Dormant Commerce Clause challenge to
- 29 -a Massachusetts corporate takeover law. See 839 F.2d 837, 840
(1st Cir. 1988).
The law at issue in Hyde Park Partners (1) required
prospective takeover bid offerors to make certain disclosures and
(2) if they failed to do so, barred them from "mak[ing] a takeover
bid for th[e] target [company] until one year after the failure to
disclose." Id. There, the parties defending the law argued that
the second requirement was not unduly burdensome because "one who
fails to comply with" the first, "minimally burdensome disclosure
requirement has little basis on which to complain of the penalty
for noncompliance." Id. at 847. In rejecting that argument, we
explained that a state is not at liberty to fashion a deterrent
that places undue burdens on interstate commerce merely because a
regulated party may avoid those burdens by complying with an
antecedent provision. See id. at 847-48.
Thus, unlike the statute we upheld against Dormant
Commerce Clause challenge in IMS Health, the statute here does
"raise[] independent concerns about protectionism," 616 F.3d at
30, and does "risk imposing regulatory obligations inconsistent
with those of other states," id. at 28. In addition, unlike the
statute in IMS Health, the Dealer Law neither "deal[s] with harms
caused exclusively inside the regulating state," nor is "limited
to regulating transactions with a significant inherent connection
- 30 -to the regulating state, and involving its own professional
licensees." Id. at 30.
For these reasons, by directly regulating Daimler's
out-of-state transactions absent a sufficiently "strong in-state
nexus" like that which we found sufficient in IMS Health, id., we
conclude that enforcing the Dealer Law under the facts of this
case would violate the Dormant Commerce Clause. That is not to
say that a state law will survive constitutional scrutiny only
when an out-of-state transaction's connections to the regulating
state are identical to those in IMS Health. But the connections
here are not sufficient under that precedent, given how they differ
from the connections in that case and the risks of both economic
protectionism and inconsistent regulation that enforcement of the
Dealer Law in this case would pose. Accordingly, we reject RITC's
challenge to the District Court's ruling granting summary judgment
to Daimler.13
We note that, in the typical Dormant Commerce Clause case,
13
the state is often the party that endeavors to justify the
constitutionality of the challenged law. See, e.g., Hunt v. Wash.
State Apple Advert. Comm'n, 432 U.S. 333, 353 (1977). Here,
however, the Rhode Island Office of Attorney General opted not to
intervene in this appeal after our Court certified to that office
the fact that the constitutionality of the Board's enforcement of
Rhode Island's Dealer Law had been drawn into question under the
facts of this case. See 28 U.S.C. § 2403(b) ("In any action, suit,
or proceeding in a court of the United States to which a State or
any agency, officer, or employee thereof is not a party, wherein
the constitutionality of any statute of that State affecting the
public interest is drawn in question, the court shall certify such
- 31 -III.
We therefore affirm the District Court's order granting
summary judgment to Daimler.
fact to the attorney general of the State, and shall permit the
State to intervene . . . ."). Thus, RITC's burden was only to
show that the District Court erred in concluding that the Board
could not constitutionally apply the Dealer Law to Daimler's
conduct under the facts here, and we therefore do not address
whether Rhode Island in another case could meet the burden that
RITC failed to meet in this one.
- 32 -