Ford Dealers Assn. v. Department of Motor Vehicles

• Decision Date: 07 September 1982
• Court: California Supreme Court
• Parties: , 650 P.2d 328 FORD DEALERS ASSOCIATION et al., Plaintiffs and Appellants, v. DEPARTMENT OF MOTOR VEHICLES et al., Defendants and Appellants. L.A. 31471.

Page 453

185 Cal.Rptr. 453

32 Cal.3d 347, 650 P.2d 328

FORD DEALERS ASSOCIATION et al., Plaintiffs and Appellants, v. DEPARTMENT OF MOTOR VEHICLES et al., Defendants and Appellants.

L.A. 31471.

Supreme Court of California.

Sept. 7, 1982.

George Deukmejian, Atty. Gen., and John J. Crimmins, Deputy Atty. Gen., for defendants and appellants.

John K. Van de Kamp, Dist. Atty., Los Angeles, and Harry B. Sondheim, Deputy Dist. Atty., amici curiae for defendants and appellants.

Lawrence Silver, Beverly Hills, for plaintiffs and appellants.

BIRD, Chief Justice.

This case concerns a challenge to five regulations promulgated by appellants, the Department of Motor Vehicles and the director of the department (hereafter, the DMV). The DMV appeals from a trial court order declaring the regulations invalid and granting an injunction against their enforcement.

I.

Section 1651 of the Vehicle Code authorizes the director of the DMV to adopt rules and regulations "as may be necessary to carry out the provisions" of the Vehicle Code. In November of 1977, the DMV filed an order adopting approximately 24 new regulations, all relating to division 5 of the Vehicle Code, Occupational Licensing and Business Regulations. (See Veh.Code, §§ 11100-12104.) ¹

In December of 1977, Ford Dealers Association (hereafter, the Ford Dealers), an association of approximately 132 automobile dealers, brought an action for declaratory and injunctive relief, alleging that 7 of the new regulations were invalid because they were beyond the scope of the authorizing statutes and/or unconstitutional. ² (See former Gov.Code, § 11440, establishing a procedure for obtaining a judicial declaration as to the validity of an administrative regulation.) The trial court issued a temporary restraining order barring enforcement of the challenged regulations, and, in May of 1978, issued a preliminary injunction restraining the DMV from enforcing the regulations.

In July of 1979, after a two-day hearing, the trial court found the seven regulations invalid on various statutory and constitutional grounds and issued a permanent injunction against their enforcement. The court also awarded sanctions against the DMV for an alleged failure to respond adequately to a request for admissions. The DMV challenges the trial court rulings as to five of the contested regulations and as to the sanctions. The Ford Dealers appeal from a trial court evidentiary ruling.

II.

The court's role in reviewing administrative regulations adopted pursuant to the former Administrative Procedure Act is a limited one. ³ "First, our task is to inquire into the legality of the challenged regulation, not its wisdom. (Morris v. Williams (1967) 67 Cal.2d 733, 737, 433 P.2d 697.) Second, in reviewing the legality of a regulation adopted pursuant to a delegation of legislative power, the judicial function is limited to determining whether the regulation (1) is 'within the scope of [the] authority conferred' ( [former] Gov.Code, § 11373) and (2) is 'reasonably necessary to effectuate the purpose of the statute' ( [former] Gov.Code, § 11374). Moreover, 'these issues do not present a matter for the independent judgment of an appellate tribunal; rather, both come to this court freighted with the strong presumption of regularity accorded administrative rules and regulations.' (Ralphs Grocery Co. v. Reimel (1968) 69 Cal.2d 172, 175, 444 P.2d 79.) And in considering whether the regulation is 'reasonably necessary' under the foregoing standards, the court will defer to the agency's expertise and will not 'superimpose its own policy judgment upon the agency in the absence of an arbitrary and capricious decision.' (Pitts v. Perluss (1962) 58 Cal.2d 824, 832, 27 Cal.Rptr. 19, 377 P.2d 83.)" (Agricultural Labor Relations Bd. v. Superior Court (1976) 16 Cal.3d 392, 411, 128 Cal.Rptr. 183, 546 P.2d 687; see also Pacific Legal Foundation v. Unemployment Ins. Appeals Bd. (1981) 29 Cal.3d 101, 111, 172 Cal.Rptr. 194, 624 P.2d 244; International Business Machines v. State Bd. of Equalization (1980) 26 Cal.3d 923, 931, fn. 7, 163 Cal.Rptr. 782, 608 P.2d 1.)

As the court noted in Agricultural Labor Relations Bd. v. Superior Court, supra, 16 Cal.3d at p. 411, 128 Cal.Rptr. 183, 546 P.2d 687, "although these rules have been often restated, it would be well to remember that they are not merely empty rhetoric." Where the Legislature has delegated to an administrative agency the responsibility to implement a statutory scheme through rules and regulations, the courts will interfere only where the agency has clearly overstepped its statutory authority or violated a constitutional mandate.

The five regulations at issue here were adopted pursuant to a legislative delegation of authority found in section 1651. All five were designed to implement section 11713, subdivision (a), which bars the dissemination of false or misleading statements to the public. ⁴ This statute was passed as a remedial statute, designed to protect the public. "[T]he dominant concern of this statutory scheme is that of protecting the purchaser from the various harms which can be visited upon him by an irresponsible or unscrupulous dealer." (Merrill v. Department of Motor Vehicles (1969) 71 Cal.2d 907, 920, 80 Cal.Rptr. 89, 458 P.2d 33.) "Protection of unwary consumers from being duped by unscrupulous sellers is an exigency of the utmost priority in contemporary society." (Vasquez v. Superior Court (1971) 4 Cal.3d 800, 808, 94 Cal.Rptr. 796, 484 P.2d 964; see also Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 111, 101 Cal.Rptr. 745, 496 P.2d 817.) As a remedial statute, it must be liberally construed "to effectuate its object and purpose, and to suppress the mischief at which it is directed." (California State Restaurant Assn. v. Whitlow (1976) 58 Cal.App.3d 340, 347, 129 Cal.Rptr. 824.)

A. Regulation 402.00, Advertising Defined

Regulation 402.00 provides as follows: "402.00 'Advertising' Defined. (a) In the broad context of Vehicle Code Section 11713(a), any statement advertised refers to any statement, representation, act or announcement intentionally communicated to any member of the public by any means whatever, whether orally, in writing or otherwise.

"(b) As used elsewhere in the Vehicle Code and in this article, the terms 'advertising', 'advertisement', or 'advertise' refer to a statement, representation, act or announcement intentionally communicated to the public generally for the purpose of arousing a desire to buy or patronize." (Cal.Admin.Code, tit. 13, § 402.)

Prior to 1970, subdivision (a) of section 11713 provided that it was unlawful for a licensed automobile dealer to "intentionally publish or circulate any advertising which is misleading or inaccurate ...." In 1970, the present version of the section was enacted, providing that it is unlawful "[t]o make or disseminate ... before the public in this state, in any newspaper or other publication, or any advertising device, or by public outcry or proclamation, or in any other manner or means whatever, any statement which is untrue or misleading ...." (Stats.1970, ch. 522, § 2, p. 1017; see ante, p. 458, fn. 4 of 185 Cal.Rptr., p. 333 fn. 4 of 650 P.2d, for complete text of statute [typed opn. at pp. 4-5].)

The DMV argues that this revision of section 11713, subdivision (a) indicated a legislative intent to broaden the reach of the statute to include oral representations, as well as media advertising. This argument has merit. The deletion of the requirement that statements be "publish[ed] or circulate[d]" indicates that the Legislature intended to broaden the statutory prohibition. Indeed, the statute now makes it unlawful to disseminate untrue or misleading statements before the public by any manner or means whatever. Broader language would be difficult to find.

The Ford Dealers argue that the dual definition of "advertise" in regulation 402.00 is internally inconsistent and not justified by the language of the authorizing statutes. Although "advertise" is used frequently elsewhere in the Vehicle Code, it generally is used in a manner which clearly indicates that it refers only to media advertisements. For instance, section 11713, subdivision (c) requires a dealer "within 48 hours in writing to withdraw any advertisement of a vehicle that has been sold or withdrawn from sale." However, in subdivision (a), "advertised" is used only in the final clause; the body of the subdivision refers generally to statements made or disseminated to the public, a definition broad enough to include oral statements to individual members of the public. Thus, both the history of section 11713, subdivision (a) and its language provide support for the DMV's conclusion that "advertise" as used in that subdivision has a different definition than in the rest of the Vehicle Code.

The Legislature's choice of this particular language is significant. Section 11713, subdivision (a) closely parallels the language of Business and Professions Code section 17500. ⁵ Section 17500 repeatedly has been interpreted so as to include within its reach oral statements made to individual members of the public. Thus, in Chern v. Bank of America (1976) 15 Cal.3d 866, 127 Cal.Rptr. 110, 544 P.2d 1310, this court held that a member of the public had a cause of action under section 17500 when a bank employee made misleading statements to her over the telephone about the rate of interest on a loan. Similarly, in People v. Superior Court (Jayhill) (1973) 9 Cal.3d 283, 107 Cal.Rptr. 192, 507 P.2d 1400, this court found that a complaint charging that encyclopedia salespeople made misrepresentations to individual purchasers was sufficient to state a cause of action for a violation of section 17500. (See also People v. Bestline Products, Inc. (1976) 61 Cal.App.3d 879, 922-924, 132 Cal.Rptr. 767.) And in People v. Conway (1974) 42 Cal.App.3d 875, 117 Cal.Rptr. 251, the Court of Appeal upheld a criminal conviction...