247 F.3d 303 (1st Cir. 2001), 00-1867, Perez v. Volvo Corp

Docket Nº:00-1867
Citation:247 F.3d 303
Party Name:ALMA I. PEREZ ET AL., Plaintiffs, Appellants, v. VOLVO CAR CORPORATION, Defendant, Appellee.
Case Date:May 02, 2001
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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247 F.3d 303 (1st Cir. 2001)

ALMA I. PEREZ ET AL., Plaintiffs, Appellants,


VOLVO CAR CORPORATION, Defendant, Appellee.

No. 00-1867

United States Court of Appeals, First Circuit

May 2, 2001

Heard March 8, 2001


[Hon. Jose Antonio Fuste, U.S. District Judge]

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Gordon T. Walker, with whom Marc E. Sorini, Laura McLane, and McDermott, Will & Emery were on brief, for appellants.

Gael Mahony, with whom Alexander W. Moore, Shannon McCarthy Jandorf, Joseph C. Lyons, Hill & Barlow, Ruben T. Nigaglioni, Veronica Ferraiuoli Hornedo, Joanne Habib Figueroa, and McConnell Valdes were on brief, for appellee.

Before Selya, Circuit Judge, Coffin, Senior Circuit Judge, and Acosta,[*] Senior District Judge.

SELYA, Circuit Judge.

In this case, purchasers of certain Volvo automobiles claim that they were tricked into overpaying for their cars. The district court, referring to our decision in Bonilla v. Volvo Car Corp., 150 F.3d 62 (1st Cir. 1998), declared that the doctrine of res judicata barred this suit and granted the manufacturer's motion for summary judgment. Although we disagree with the district court's rationale, we affirm the entry of summary judgment on an alternate ground.


The complaint in this case alleges that Volvo Car Corporation (a Swedish automobile manufacturer) acted in concert with Trebol Motors (its exclusive importer/distributor and principal dealer in Puerto Rico),1 and other affiliated individuals and firms, to violate the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962. The gravamen of the plaintiffs' complaint involves allegations that Volvo assisted in the commission of a series of fraudulent acts. This is essentially the same approach taken by the Bonilla plaintiffs in their earlier suit against Volvo, and the reader who desires more information about how the RICO statute operates in this context should consult that opinion. See Bonilla, 150 F.3d at 66-67.

In their third amended complaint, the Bonilla plaintiffs alleged five frauds. See id. at 67-75. This case is more narrowly focused. The particular fraud allegations that matter here are those that we previously characterized as involving double invoicing and disclosure labeling. Id. at 72-75. For present purposes, these merge into a single scheme, which we sometimes call "sticker fraud."

As Bonilla makes clear, id. at 72-74, this scheme had its genesis in the triangulation of the manufacturer-dealer relationship caused by the interposition of a Liechtenstein-based corporation, Auto und Motoren Aktiengesellschaft (AUM), into that relationship. AUM's ostensible role was as a guarantor of Trebol's debts to Volvo. The guarantee worked this way: when Trebol ordered motor vehicles, Volvo would ship them to Puerto Rico, sending duplicate invoices to both Trebol and AUM. AUM would pay Volvo. It also would re-invoice Trebol for the same vehicles, but at higher prices (ostensibly to

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cover AUM's "guarantee fee" and a smaller "processing fee").2

The instant case centers on the plaintiffs' allegation that the double invoicing permitted Trebol to misrepresent information on disclosure labels (commonly called "stickers") mandated by law. From 1972 to 1992, a Puerto Rico statute (Law 77) required automobile dealers to affix to each vehicle held for sale a label disclosing various kinds of data, including the name and address of the selling entity, the factory cost of the vehicle, and the "[r]etail price in Puerto Rico suggested by the seller." 23 P.R. Laws Ann. § 1023 (1987) (repealed 1992). A parallel federal law also required (and still requires) certain disclosures. See 15 U.S.C. §§ 1231-1233. The plaintiffs -- Myrna Font, Angel Munoz, Alma Perez, Venancio Rodr¡guez, Mar¡a Rodr¡guez, Francisco Ramos, Marina Resto, Francisco Cortez, Ada Moreno, Efra¡n Gonzalez, Migdalia Berdecia, Jose Colon, and Mirta Rivera3 -- are persons who purchased Volvo automobiles of the 700, 800, or 900 series in Puerto Rico on various dates ranging from 1985 to 1993. They maintain -- as did the Bonilla plaintiffs, 150 F.3d at 72-74 -- that AUM functioned primarily as a device to permit Trebol to boost the prices paid by consumers.

Consistent with this theme, the plaintiffs aver that Trebol's stickers reflected artificially high "factory costs" and "manufacturer's suggested retail prices" because Trebol based those calculations on the inflated figures contained in the AUM invoices. They further allege that Trebol, which had copies of the original Volvo-prepared invoices, knew the actual figures and, consequently, knew that the posted sticker prices were false and misleading. For their part, the plaintiffs were exposed to, and duped by, the bogus cost figures displayed on the stickers of the cars that they bought, and were damaged in that those fraudulent misrepresentations marked the starting point for negotiations as to price and caused them to pay more than they otherwise would have.

Since Trebol has gone bankrupt and is no longer involved in this case, the plaintiffs' guns are trained on Volvo. They allege that Volvo knew of, and helped facilitate, Trebol's nefarious activities by, among other things, allowing Trebol to misrepresent its costs and condoning Trebol's arrangement with AUM even though Volvo knew that the guarantees issued by AUM were worthless. Volvo adamantly denies these accusations.

The district court stayed proceedings in this case pending resolution of the Bonilla appeals. That was prudent because the Bonilla plaintiffs, comprising a class of persons who had purchased Volvo automobiles of the 200 series, had leveled virtually indistinguishable charges and, moreover, had prevailed at trial. Eventually, however, this court found, as a matter of law, that the Bonilla plaintiffs had offered insufficient evidence of Volvo's awareness of, or participation in, the ongoing fraud. See Bonilla, 150 F.3d at 72-76.4

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Volvo then moved for summary judgment in this case, alleging that here, as in Bonilla, the plaintiffs had failed to tie Volvo to the fraudulent scheme. The plaintiffs opposed the motion, but the district court granted it, adverting to our decision in Bonilla and invoking the doctrine of res judicata. The plaintiffs moved unsuccessfully for reconsideration and then filed this timely appeal.


This appeal stems from an order granting summary judgment. Since we have written at length about the jurisprudence associated with that procedural device, e.g., McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 314-15 (1st Cir. 1995) (collecting cases), an outline suffices here.

A district court may enter summary judgment only to the extent that "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). To determine whether these criteria have been met, a court must pierce the boilerplate of the pleadings and carefully review the parties' submissions to ascertain whether they reveal a trial worthy issue as to any material fact. Grant's Dairy-Me., LLC v. Comm'r of Me. Dep't of Agric., Food & Rural Res., 232 F.3d 8, 14 (1st Cir. 2000). In applying this screen, the court must construe the record and all reasonable inferences from it in favor of the nonmovant (i.e., the party opposing the summary judgment motion). Suarez v. Pueblo Int'l, Inc., 229 F.3d 49, 53 (1st Cir. 2000). In this formulation, an absence of evidence on a critical issue weighs against the party -- be it the movant or the nonmovant -- who would bear the burden of proof on that issue at trial. See Torres Vargas v. Santiago Cummings, 149 F.3d 29, 35-36 (1st Cir. 1998); Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990).

In appraising summary judgment orders, an appellate court applies essentially the same standards. See Werme v. Merrill, 84 F.3d 479, 482 (1st Cir. 1996). Withal, the appellate tribunal is not wed to the trial court's reasoning. Because appellate review is plenary, the court of appeals may, if the occasion arises, "reject the rationale employed by the lower court and still uphold its order for summary judgment." Houlton Citizens' Coalition v. Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999). In other words, we may affirm the entry of summary judgment on any ground made manifest by the record. See Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991).

Against this backdrop, we divide the discussion that follows into two parts. First, we examine the district court's stated rationale. Finding that rationale unpersuasive, we address Volvo's alternate line of defense.


As said, the district court decided this case on the basis of res judicata.

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Federal law determines the preclusive effect of a judgment previously entered by a federal court. See Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 37 (1st Cir. 1998). Under federal law, the doctrine of resjudicata dictates that "a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Allen v. McCurry, 449 U.S. 90, 94 (1980). Three conditions must be met in order to justify an application of the doctrine: "(1) a final judgment on the merits in an earlier suit, (2) sufficient...

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