Chrysler Corp. v. New Motor Vehicle Bd.

• Decision Date: 01 March 1979
• Citation: 89 Cal.App.3d 1034,153 Cal.Rptr. 135
• Parties: CHRYSLER CORPORATION, a Delaware Corporation, Plaintiff and Respondent, v. NEW MOTOR VEHICLE BOARD of the State of California, Defendant and Appellant. Civ. 15893.
• Court: California Court of Appeals Court of Appeals

Page 135

153 Cal.Rptr. 135

89 Cal.App.3d 1034

CHRYSLER CORPORATION, a Delaware Corporation, Plaintiff and Respondent, v. NEW MOTOR VEHICLE BOARD of the State of California, Defendant and Appellant.

Civ. 15893.

Court of Appeal, Third District, California.

March 1, 1979.

Hearing Denied April 26, 1979.

McCutchen, Black, Verleger & Shea, Franklin H. Wilson, Los Angeles, for plaintiff and respondent

Evelle J. Younger, Atty. Gen., Stephen J. Egan, Deputy Atty. Gen., for defendant and appellant.

Crow, Lytle, Gilwee, Donaghue, Adler & Weninger, Sacramento, James R. McCall, San Francisco, amici curiae on behalf of appellants.

PARAS, Associate Justice.

This litigation is concerned with certain legislation regarding automobile dealers and dealerships (Veh. Code, §§ 3000-3069) ¹ which became operative on July 1, 1974. In pertinent part, it provides that any existing automobile dealer may prevent the establishment or relocation of additional dealerships in the "same line-make" within 10 miles of his dealership (§§ 3062, 507), initially by protesting, and thereafter by proving to the New Motor Vehicle Board (Board) that there is "good cause not to enter into a franchise establishing or relocating an additional motor vehicle dealership" (§ 3066).

On December 23, 1975, as required by section 3062, Chrysler Corporation notified the Board and Vandenberg Motors of its intention to franchise a new Chrysler-Plymouth dealership in Sacramento County, to be operated by Lew Williams and Frank Hurling at 2329 Fulton Avenue, within 10 miles of Vandenberg's existing Chrysler-Plymouth dealership.

On December 29, within the 15 days permitted by section 3062, Vandenberg Motors filed a protest with the Board. ² As required by section 3062, the Board on December 30 notified Chrysler not to establish the new dealership until the Board held a "good cause" hearing.

On January 13, 1976, Chrysler filed suit in the Sacramento County Superior Court seeking to enjoin the Board from interfering with its establishment of the new dealership. On March 26, the court granted Chrysler a preliminary injunction, stating that there was "a strong likelihood that the pertinent statutes are unconstitutional . . .." Shortly thereafter, the prospective dealership (Lew Williams Chrysler-Plymouth) was licensed by the Department of Motor Vehicles and began operations.

The Board appeals from the order granting the preliminary injunction.

After the briefs were filed herein, we held in American Motor Sales Corp. v. New Motor Vehicle Bd. (1977) 69 Cal.App.3d 983, 138 Cal.Rptr. 594, that the mandated presence of four dealers on the Board rendered it an unconstitutionally biased tribunal for the adjudication of disputes between dealers and manufacturers. The Legislature reacted to our holding by amending sections 3010, 3050, and 3066, subdivision (d), effective July 8, 1977, to provide that "(n)o member of the board who is a new motor vehicle dealer may participate in, deliberate on, hear or consider, or decide, any matter involving a protest . . .."

Thereafter on September 14, 1977, a three-judge Los Angeles Federal District Court, in Orrin W. Fox Co. v. New Motor Veh. Bd. etc. (C.D.Cal.1977) 440 F.Supp. 436, held that the ability of a dealer "by the simple means of filing a protest" (Id., at p. 438) to prevent a new competitor from becoming established until a hearing is held, is a "gross violation of the Due Process Clause of the Fourteenth Amendment." (Id. at p. 440.) The court enjoined the Board from enforcing the protest provisions of the legislation. However, on December 5, 1978, the United States Supreme Court reversed the District Court (New Motor Vehicle Board v. Orrin W. Fox Co. (1978) --- U.S. ----, 99 S.Ct. 403, 58 L.Ed.2d 361).

We requested and received supplemental briefs, and after perusing them requested and received a second set of supplemental briefs, directed to whether the legislation violates the Sherman Antitrust Act (15 U.S.C., §§ 1, 2) or the Commerce Clause of the United States Constitution (art. I, § 8, cl. 3).

I REVERSAL FOR MOOTNESS

Amici Curiae ³ argue that the Legislature's removal of dealer-members from protest hearings has mooted the major ground upon which the superior court granted the preliminary injunction (i. e., that the Board was a biased tribunal), and therefore the injunction should be reversed summarily. We disagree. It is well settled that decisions of trial courts must be affirmed if legally correct, regardless of their stated reason. (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 18-19, 112 Cal.Rptr. 786, 520 P.2d 10; Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329, 48 P. 117.)

II EXHAUSTION OF ADMINISTRATIVE REMEDIES

The Board argues in its supplemental brief that the trial court had no jurisdiction to grant Chrysler relief because Chrysler failed to exhaust its administrative remedies.

However, the administrative procedures which the Board claims Chrysler should have exhausted were not Chrysler's remedy; they are the very source of the asserted injury for [89 Cal.App.3d 1039] which Chrysler sought a remedy. Thus Chrysler comes within a well-recognized exception to the exhaustion rule, where the administrative remedy is inadequate (Glendale City Employees' Assn., Inc. v. City of Glendale (1975) 15 Cal.3d 328, 342-343, 124 Cal.Rptr. 513, 540 P.2d 609; Gibson v. Berryhill (1973) 411 U.S. 564, 574-575, 93 S.Ct. 1689, 36 L.Ed.2d 488), or the challenge is to the constitutionality of the administrative agency itself or the agency's procedure (State of California v. Superior Court (1974) 12 Cal.3d 237, 251, 115 Cal.Rptr. 497, 524 P.2d 1281).

III BIASED TRIBUNAL

Chrysler observes that "The Board's new motor vehicle dealer members do continue to sit on hearings on petitions by dealers to review dealer licensing decisions of the DMV. Whether the veil drawn between the Board's public members and its new motor vehicle dealer members sitting in different types of proceedings will pass constitutional muster remains an open question. It is sufficient for the purposes of this case that Chrysler did not, in fact, have available to it a constitutionally required impartial tribunal at the time it sought and obtained a preliminary injunction."

The contention is technically sound, for the validity of an order or judgment should normally be determined as of the time it is issued. Yet considerations of judicial economy, procedural efficiency, and fundamental justice dictate that at least in certain cases, of which this is one, an appellate court should rule and dispose "in accordance with the law existing at the time of its own decision, even though it lead to the reversal of a judgment which was proper at the time of its rendition (fn. omitted), or the affirmance of one wherein there was error which has since been obviated by a change in the law." (5B C.J.S. Appeal & Error § 1841, pp. 246-248; see also authorities there cited.)

IV DUE PROCESS

In its original brief, as well as in its supplemental brief, Chrysler challenges the requirement of section 3062 that upon receipt of a protest the Board must prohibit the proposed dealership until after a hearing and determination of good cause. Chrysler asserts that due process requires a Prior notice and hearing before the prospective dealer's right to engage in a lawful business can be infringed.

Similar arguments were adopted by the district court, and later rejected by the United States Supreme Court, in the Orrin W. Fox Co. case. The issue is thus no longer viable. No useful purpose would be served by any further detailed discussion of the subject in this opinion.

Chrysler's briefs repeatedly emphasize the adverse effects of the Board's "leisurely" hearing schedule, stressing that delay has the practical effect of denial since financial and other commitments cannot be maintained over long periods of time. We are not unsympathetic to the plaint, for the time periods, both limited and unlimited, do not exactly prophesy alacrity. Yet neither are they facially unreasonable, even though they may be a proper subject for further legislative attention. We see no valid distinction between these delays and those inherent in gaining approval of various governmental agencies and boards to use property for such as an industrial plant, a shopping center, and the like. As delay becomes an expectable part of the process, it can be anticipated in financial preparations and thus minimized.

Chrysler suggests that even if its due process rights under the federal Constitution have not been infringed, we ought to construe the California Constitution so as to find such infringement. In support of its argument it states that "California decisions have recognized that 'every individual Edwards involved a doctor whose Existing hospital use privileges had been curtailed, and was concerned solely with determining statute of limitation issues. Purdy & Fitzpatrick held that a rule prohibiting resident aliens from employment on public works violates equal protection, not due process. They do not apply here, for the statutes do not prohibit the pursuit of a business; they regulate it. Chrysler does not contend that the State has no right to license automobile dealers or to impose zoning and other regulations upon the sale and manufacture of automobiles. Indeed, its supplemental brief emphasizes the myriad of applicable regulations. Its argument appears to be that having complied with all such regulations, its efforts should not ". . . be indefinitely rendered naught at the whim of a competing dealer. It is at that point that due process breaks down."

possesses as a form of property the right to pursue any lawful calling, business or profession he may choose.' " Edwards v. Fresno Community Hosp., 38 Cal.App.3d 702, 705, 113 Cal.Rptr. 579, 581 (1974). There is also no doubt that this right is one of constitutional dimension. California Constitution, Article I, § 7(a) (1974). In Purdy...