Overview
Earlier this month, the First Circuit issued a decision resolving the confusion created by an intervening Rhode Island Supreme Court decision on the reach of that state’s dealer law. The First Circuit’s decision in Rhode Island Truck Center, LLC v. Daimler Trucks North America, LLC limited the reach of the Rhode Island dealer law, holding that it ran afoul of the Dormant Commerce Clause of the U.S. Constitution by giving Rhode Island dealers the right to receive notice and file protests of the establishment of nearby dealers across state lines. [1]
Case Overview
The dispute in Rhode Island Truck Center arose under the add-point provision of the Rhode Island dealer law. That statute requires a manufacturer to notify an existing dealer when it intends to establish a new dealership in the dealer’s “relevant market area.” [2] In turn, the “relevant market area” is defined as the greater of: (1) the area within a 20-mile radius around the existing dealer; or (2) the area of responsibility identified in its dealer agreement.[3] Given Rhode Island’s small size, a dealer’s “relevant market area” almost always extends beyond state lines.
When Daimler added a nearby dealership in Massachusetts, a protest was filed by an existing dealer, Rhode Island Truck Center, LLC (“RITC”). Though RITC is located in East Providence, Rhode Island, its contractual area of responsibility encompasses the Massachusetts county where the new dealership would be located. [4] The crux of RITC’s protest was that Daimler failed to provide statutory notice of the new dealership in RITC’s relevant market area. [5]
The Rhode Island Dealers’ Hearing Board dismissed the protest, holding that the extraterritorial application of the statute to a new point in another state would violate the Dormant Commerce Clause. [6] RITC sought review of the Board’s decision, and the dispute eventually worked its way through state and federal courts until it eventually reached the First Circuit.
Constitutional Analysis
Initially, the First Circuit sought to avoid the constitutional question. Rather than determine whether the statute violated the Dormant Commerce Clause, it certified to the Rhode Island Supreme Court the question of whether the “relevant market area” under the dealer law could extend beyond Rhode Island’s borders. [7] The Rhode Island Supreme Court answered in the affirmative, holding that the statute applied extraterritorially [8]—forcing the First Circuit, like other federal courts before it, to confront the Dormant Commerce Clause. [9]
While the case was pending before the First Circuit, the U.S. Supreme Court clarified the relationship between “extraterritoriality” and the Dormant Commerce Clause in National Pork Producers Council v. Ross. [10] In National Pork, the Supreme Court held that state laws that have the practical effect of controlling out-of-state commerce are not per se invalid under the Dormant Commerce Clause.
In assessing the Rhode Island statute, the First Circuit applied the test from its own precedent (IMS Health, Inc. v. Mills), which had upheld a state regulation with out-of-state effects because the regulation had a strong in-state connection and posed little risk of protectionism or conflicting regulatory obligations. [11] By applying, rather than displacing, the IMS Health framework, the First Circuit signaled that this fact-specific balancing test remains good law for evaluating the out-of-state effects of state dealer statutes, even after National Pork.
Nonetheless, the First Circuit agreed with the Board that the Rhode Island statute violated the Dormant Commerce Clause, affirming judgment for Daimler. In distinguishing National Pork, the First Circuit found that the Rhode Island statute did not merely have the “practical effect” of regulating out-of-state commerce—rather, it “directly” regulated a Massachusetts transaction: Daimler’s deal with its new Massachusetts dealer. [12]
In finding a Dormant Commerce Clause violation, the First Circuit focused on several key aspects of the Rhode Island statute: its economic protectionism of Rhode Island dealers; its impact on vehicle sales in another state; the weak ties between Rhode Island and the new Massachusetts dealer; and the risk of competing state regulatory obligations. [13]
Industry Implications
The First Circuit’s decision provides significant support for a principle that many take for granted: one state cannot directly regulate commerce in another. But will this principle stand the test of time, or will courts in a post-National Pork world take “practical effect” to the rather impractical place of forcing manufacturers to deal with competing state laws? It remains to be seen whether other courts addressing extraterritorial commercial regulations, whether in smaller states or metropolitan areas sitting along state borders, will follow the well-reasoned and practical decision in Rhode Island Truck Center.
That said, the decision is not a prohibition on any extraterritorial application of a state dealer statute. The First Circuit’s holding was informed by the specific relief RITC sought: removal of the Massachusetts dealership. The court viewed this remedy as directly regulating Daimler’s franchise relationship with its Massachusetts dealer, rather than addressing conduct within Rhode Island. Practitioners should therefore expect the outcome of similar disputes to turn on the specific remedy sought and its degree of interference with out-of-state conduct, not on a categorical rule that state dealer statutes stop at the state line.
DISCLAIMER: This article provides general information only and does not constitute legal advice.
[1] Rhode Island Truck Ctr., LLC v. Daimler Trucks N. Am., LLC, 2026 WL 1948541 (1st Cir. July 6, 2026).
[2] 31 R.I. Gen. Laws Ann. § 31-5.1-4.2.
[3] 31 R.I. Gen. Laws Ann. § 31-5.1-1(13).
[4] See Rhode Island Truck Ctr., 2026 WL 1948541 at *1–2.
[5] Id. at *2.
[6] Id. at *2–3.
[7] Rhode Island Truck Ctr., LLC v. Daimler Trucks N. Am., LLC, 92 F.4th 330, 353 (1st Cir. 2024).
[8] Rhode Island Truck Ctr., LLC v. Daimler Trucks N. Am., LLC, 338 A.3d 1056 (R.I. 2025).
[9] See, e.g. Leep Hyu, LLC v. Hyundai Motors Am., Case No. 3-11-cv-81-CRW-RAW, 2011 WL 13401798, at *4 (S.D. Iowa Dec. 30, 2011) (“It is a generally recognized principle that a statute of one state has no extraterritorial effect beyond its borders.”).
[10] National Pork Producers Council v. Ross, 598 U.S. 356 (2023).
[11] 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)).
[12] Rhode Island Truck Ctr., 2026 WL 1948541 at *6–7.
[13] Id. at *9–11.
