49er Chevrolet, Inc. v. General Motors Corp.

• Decision Date: 05 November 1986
• Docket Number: No. 85-5966,85-5966
• Citation: 803 F.2d 1463
• Parties: , 1986-2 Trade Cases 67,342 49ER CHEVROLET, INC., et al., Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION, etc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1463

803 F.2d 1463

55 USLW 2313, 1986-2 Trade Cases 67,342

49ER CHEVROLET, INC., et al., Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION, etc., et al., Defendants-Appellees.

No. 85-5966.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 6, 1986.

Decided Nov. 5, 1986.

Robert C. Fellmeth, Clark & Gumpel San Diego, Cal., for plaintiffs-appellants.

Girard E. Boudreau, Jr., Jones, Day, Reavis & Pogue Los Angeles, Cal., John G. Lyons, Vaughan, Paul & Lyons, Ann Fingarette Hass, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Southern District of California.

Before TANG and BRUNETTI, Circuit Judges, and B. THOMPSON, ^* District Judge.

TANG, Circuit Judge:

Three former automobile dealers ("the dealers") appeal the district court's grant of summary judgment in favor of General Motors Corporation ("GM") and several other defendants. The dealers challenge: (1) GM's arrangements for paying dealers for repairing vehicles damaged in transit; and (2) GM's arrangements for compensating dealers for repairs performed under GM's warranty to retail customers. We affirm.

BACKGROUND

This lawsuit was initiated by three former automobile dealers who had franchise agreements with GM. The dealers sued GM, Insured Transporters, Inc., Pacific Motor Transport, and E.F. MacDonald Company. The defendants were charged with: (1) engaging in horizontal and vertical price fixing, and illegal tying arrangements, in violation of the federal antitrust laws; (2) violating federal anti-racketeering laws; and (3) violating various state laws relating to unfair trade practices.

According to the undisputed facts, the automobile and truck divisions of GM enter into written agreements with individual persons or entities that sell and service motor vehicles. Each Dealer Agreement establishes an authorized dealer for a particular GM Division, sets the location from which the dealer will operate, identifies the dealer's individual owners and managers, and otherwise governs the relations of the parties. Under the Dealer Agreements, GM is obligated to deliver vehicles to the dealers in an undamaged and merchantable condition. GM contracts for delivery of the vehicles with various independent carriers including defendants Insured Transporters and Pacific Motor Transport.

Vehicles occasionally sustain damage while in possession of a carrier en route to a GM dealer. The Dealer Agreements provide that the dealers shall repair vehicles damaged in transit and shall submit to GM their claims for payment for repair work. Dealers may not make any claims directly against the carriers. GM explains the procedures for submission of damage claims in its Service Policies and Procedure Manuals. GM determines the amounts it pays dealers for labor, parts, and necessary accessories in accordance with the provisions of the applicable manual. GM prepares these manuals and changes or amends them from time to time, based on what GM believes to be pertinent business conditions. The dealers contend that GM's price schedules for in-transit damage sometimes require them to perform noncompensatory repair work.

The Dealer Agreements obligate dealers not only to repair vehicles damaged in transit, but also to perform repairs needed to satisfy GM's limited express warranties to its retail customers. ¹ GM alone determines the extent of the warranty on its parts and vehicles. The Dealer Agreements provide that GM will pay the dealers for repairs arising from GM's warranties in accordance with the Service Policies and Procedures Manual. Dealers shall not impose any charge for such service on retail customers. GM bases the amount it pays for warranty repairs on such factors as the amount of labor required to perform the repair, the dealers' customer labor rate for non-warranty service, the dealers' cost for labor and parts, and an allowance for the dealers' overhead. In performing warranty repairs, GM dealers may use parts manufactured by others than GM; however, if non-GM parts are used, GM does not warrant such parts and dealers are required to explain this to their retail customers. The dealers contend that these procedures force them to accept compensation for work performed to fulfill the manufacturer's warranty at a lower price than they would The original complaint in this action alleged five federal and state claims. After the complaint was amended, the district court granted the defendants' motion to dismiss the federal racketeering claim and denied their motion as to the remaining claims. After a stipulated program of limited discovery, oral argument, and supplementary briefing, the district court entered summary judgment for the defendants on all the remaining federal counts and dismissed the pendent state claims. The dealers timely appealed.

normally charge in a competitive environment.

On appeal, the dealers have abandoned their racketeering claim and, relying on federal antitrust laws and California state laws, continue to challenge: (1) GM's system of payments to dealers for repairing vehicles damaged in transit, and (2) GM's system for compensating dealers for repairs performed under the manufacturer's warranty.

DISCUSSION

I Standard Of Review

This court reviews the grant of summary judgment de novo. Ralph C. Wilson Industries, Inc. v. Chronicle Broadcasting Co., 794 F.2d 1359, 1362 (9th Cir.1986) (citing Lojek v. Thomas, 716 F.2d 675, 677 (9th Cir.1983)). Our role is to determine, viewing the evidence in the light most favorable to the non-moving party, whether there exists any genuine issue of material fact and whether the substantive law was correctly applied. Id.; Golden Gate Acceptance Corp. v. General Motors Corp., 597 F.2d 676, 677-78 (9th Cir.1979); Fed.R.Civ.P. 56(c). Where there are no disputed facts, we must determine only whether the substantive law was correctly applied. Amaro v. Continental Can Co., 724 F.2d 747, 749 (9th Cir.1984). Although summary disposition is disfavored in antitrust suits where motive and intent are at issue, see Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962), it is available in appropriate cases. See Ralph C. Wilson Industries, 794 F.2d at 1362; Ron Tonkin Gran Turismo v. Fiat Distributors, 637 F.2d 1376, 1381 (9th Cir.), cert. denied, 454 U.S. 831, 102 S.Ct. 128, 70 L.Ed.2d 109 (1981).

II Dealer Compensation For Transit Damage Repairs

The dealers contend that the prices they received for making repairs to damaged vehicles were unlawfully fixed in two different ways: (1) horizontally between GM and the transit companies; and (2) vertically when these fixed prices were imposed on them. The dealers argue that these alleged agreements to fix prices were illegal per se under the Sherman Act, Section 1. We agree that the district court properly rejected these contentions.

A. Horizontal Price-Fixing

The Sherman Act, Section 1 proscribes "Every contract, combination ... or conspiracy, in restraint of trade." 15 U.S.C. Sec. 1. It is well established that a combination formed for the purposes of fixing prices is illegal per se under the Sherman Act. See Arizona v. Maricopa County Medical Society, 457 U.S. 332, 342-56, 102 S.Ct. 2466, 2472-79, 73 L.Ed.2d 48 (1982). However, the Supreme Court has deemed it of considerable importance that independent action by a single entity be distinguished from a concerted effort by more than one entity to fix prices or otherwise restrain trade. Fisher v. City of Berkeley, --- U.S. ----, 106 S.Ct. 1045, 1049, 89 L.Ed.2d 206 (1986). The Court has stated: "Even where a single firm's restraints directly affect prices and have the same economic effect as concerted action might have, there can be no liability under Sec. 1 in the absence of agreement." Id.; see also Quality Auto Body, Inc. v. Allstate Insurance Co., 660 F.2d 1195, 1200 (7th Cir.1981) ("no liability can be predicated on Section 1 in the absence of some type of concerted action"), cert. denied, 455 U.S. 1020, 102 S.Ct. 1717, 72 L.Ed.2d 138 (1982); Edward J. Sweeney & Sons, Inc. v. Texaco, 637 F.2d 105, 110 (3d Cir.1980) ("Unilateral action, no matter what its motivation, cannot violate Sec. 1."), cert. denied, 451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 300 (1981).

The dealers contend that GM has combined with Insured Transporters and Pacific Motor Transport to set a low and artificial maximum price which will be paid to the dealers for transportation damage claims. This charge is unconvincing. To prevail, the dealers must prove that GM and the carriers had a conscious commitment to a common scheme designed to achieve an unlawful objective. See Ralph C. Wilson Industries, 794 F.2d at 1365 (citing Edward J. Sweeney & Sons, 637 F.2d at 111). Furthermore, the dealers must come forward with specific factual support for their allegations. See id. (citing Program Engineering v. Triangle Publications, 634 F.2d 1188, 1195 (9th Cir.1980)).

The evidence presented to the district court simply does not support the dealers' contention that there was a horizontal price-fixing conspiracy between GM and the transportation companies. An expert for GM submitted to the district court the following sworn statement: "The carriers do not participate in any way or have any role whatsoever in establishing or determining General Motors' agreements and arrangements with its dealers." In addition, the stipulated facts support GM's contention that there is no conspiracy between it and any carrier to fix prices for transportation damage claims. Under the Dealer Agreements, the procedures for compensating dealers for repairs to damaged vehicles are set forth in the applicable Service Policies and Procedure Manuals and, according to the stipulated facts, "[t]hese manuals are prepared solely by General Motors."

The dealers' response is that the contractual arrangements between GM and the carriers for shipping vehicles to the...