In re Automobile Antitrust Cases I and II

Filed 7/5/2016
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
A134913
In re AUTOMOBILE ANTITRUST
CASES I and II. (City & County of San Francisco
Judicial Council Coordination
Proceeding Nos. 4298, 4303)
In this coordinated proceeding, certain purchasers of new automobiles in
California (plaintiffs) brought state law claims against a number of automobile
manufacturers and dealer associations under the Cartwright Act (Bus. & Prof. Code,
§§ 167201–6728) and the Unfair Competition Law (Bus. & Prof. Code, §§ 17200–
17210). Specifically, the plaintiffs allege that the defendant manufacturers and
associations conspired to keep lower-priced, yet virtually identical, new cars from
being exported from Canada to the United States, thereby keeping new vehicle prices
in California higher than they would have been in a properly competitive market.
After years of litigation, the trial court granted summary judgment in favor of the two
remaining defendants in the case—Ford Motor Company (Ford U.S.) and its
subsidiary, Ford Motor Company of Canada, Ltd. (Ford Canada) (collectively,
Ford)—concluding that the plaintiffs had failed to produce sufficient evidence of an
actual agreement among Ford and the other manufacturers to restrict the export of
new vehicles from Canada to the United States.
1
On appeal, the plaintiffs challenge the trial court‘s grant of summary judgment
in favor of Ford, arguing that the evidence presented in this case was more than
sufficient to raise a triable issue of material fact as to the existence of an illegal
agreement to curb exports. In addition, they claim that the trial court improperly
excluded certain direct evidence of the alleged conspiracy. Based on our de novo
review of this matter, we conclude that summary judgment was appropriately granted
to Ford U.S. However, we agree with the plaintiffs that the admissible evidence
presented was sufficient to demonstrate the existence of a material fact as to whether
Ford Canada participated in an illegal agreement to restrict the export of automobiles
from Canada to the United States in violation of the Cartwright Act.1 We therefore
reverse the trial court‘s grant of summary judgment in favor of Ford Canada.
I. BACKGROUND
A. Preliminary Matters
This litigation began over a decade ago when, in early 2003, more than a
dozen different lawsuits were filed in California against various automobile
manufacturers and trade associations, each alleging state law causes of action for
antitrust conspiracy and unfair business practices and each filed as a class action on
behalf of individuals who purchased or leased new vehicles in California that were
manufactured or distributed within a certain period of time by one of the named
defendants. The lawsuits were eventually coordinated into this proceeding. (In re
Automobile Antitrust Cases I and II (2005) 135 Cal. App. 4th 100, 106 (Automobile
Antitrust Cases).) Thereafter, in October 2003, the plaintiffs filed their consolidated
1 The trial court concluded below that the plaintiffs‘ unfair competition claim was
founded upon the alleged violation of the Cartwright Act, and was thus derivative of the
complaint‘s antitrust allegations. (See Aguilar v. Atlantic Richfield Co. (2001) 25 Cal. 4th
826, 866–867 (Aguilar); Eddins v. Redstone (2005) 134 Cal. App. 4th 290, 344. The
plaintiffs have not challenged this determination on appeal. Since the two causes of
action stand or fall together, we will not separately discuss the plaintiffs‘ unfair
competition claim.
2
amended class action complaint, the operative pleading in this matter. 2 In addition to
Ford, the class action complaint named numerous other automobile manufacturers as
defendants.3 Also designated as defendants were the Canadian Automobile Dealers
Association (CADA)—a trade organization that represents, promotes, and protects
the interests of franchised automobile dealers in Canada—and the National
Automobile Dealers Association (NADA), CADA‘s United States counterpart. (See
ibid.) All told, the manufacturer defendants accounted for approximately 88 percent
of automobile sales in the U.S. and Canada from 2001 to 2003. Sales by Ford,
General Motors, and Chrysler—sometimes referred to as the ―Big 3‖—constituted
approximately 67 percent of that market.
As indicated above, the complaint alleges that the defendant automobile
manufacturers and dealer associations violated state antitrust and unfair competition
laws by conspiring to restrict the movement of lower-priced Canadian vehicles into
the U.S. market, thereby avoiding downward pressure on new vehicle prices in the
United States. According to the plaintiffs, during the timeframe relevant to this
2 The plaintiffs—the majority of whom eventually became class representatives in this
litigation—are George Bell, Wei Cheng, Laurance de Vries, Joshua Chen, Jason
Gabelsberg, Ross Lee, Jeffrey M. Lohman, Christine Nichols, Local 588 of the United
Food & Commercial Workers Union, Estelle Weyl, Michael Wilsker, and W. Scott
Young. Each plaintiff alleges an injury caused by one or more of the defendants.
3The named manufacturer defendants include: General Motors Corporation (GM) and
General Motors of Canada, Ltd. (GM Canada) (collectively, General Motors);
Volkswagen AG, Volkswagen of America, Inc., and Volkswagen Canada, Inc.
(Volkswagen Canada); Toyota Motor Corporation, Toyota Motor Sales, U.S.A., Inc., and
Toyota Canada, Inc. (Toyota Canada) (collectively, Toyota); Honda Motor Company,
Ltd. (Honda Japan); American Honda Motor Co., Inc., and Honda Canada, Inc. (Honda
Canada) (collectively, Honda); DaimlerChrysler Aktiengesellschaft (DaimlerChrysler
AG); DaimlerChrysler Corporation (DaimlerChrysler U.S.), DaimlerChrysler Motors
Co., LLC, and DaimlerChrysler Canada, Inc. (Chrysler Canada) (collectively, Chrysler);
Nissan Motor Company, Ltd. (Nissan Japan), Nissan North America, Inc. (Nissan USA),
and Nissan Canada, Inc. (Nissan Canada); Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), BMW of North America, LLC, and BMW Canada, Inc. (BMW Canada);
and various subsidiaries of these entities.
3
litigation, the defendant automobile manufacturers typically charged their California
dealers between 10 and 30 percent more than they charged their Canadian dealers for
the same make and model vehicle. Ford Canada, for example, estimated that a 2000
Model F350 Crewcab 4x4 DRW Lariat could be imported from Canada and sold at a
price $8,265 less than its United States counterpart ($29,569 as opposed to $37,834).
Maintenance of this two-tiered pricing system required the continued segregation of
the Canadian and U.S. automobile markets.
Beginning in the 1990‘s, however, trade policy between the United States and
Canada made exporting simpler and less expensive. Moreover, after the safety and
environmental regulations governing new vehicles sold in the United States and
Canada were harmonized between 1998 and 2000, the vehicles sold in the two
countries became virtually identical.4 Then, from at least 2001 through 2003, the
currency exchange rate differential between the strong United States dollar and the
cheaper Canadian dollar made export sales increasingly attractive. (See In re New
Motor Vehicles Can. Export Anti. Lit. (1st Cir. 2008) 522 F.3d 6, 9–10.) Faced with
this particularly advantageous arbitrage opportunity,5 exporters began buying more
and more Canadian vehicles and selling them in the United States to franchised
dealers, dealers of another brand, independent dealers, and used car dealers. This
created a discount distribution channel, or ―gray market‖ for Canadian vehicles in the
United States.6
4Specifically, according to the plaintiffs, the only changes typically required for
Canadian vehicles exported to the United States were replacement of
odometers/speedometers (Canadian automobiles record kilometers, while United States
automobiles record miles) and certain headlight adjustments. (Automobile Antitrust
Cases, supra, 135 Cal.App.4th at pp. 105–106 & fn. 2.)
5 ―Arbitrage describes the practice of simultaneously buying and selling identical
securities, currency, or other assets in different markets, ‗with the hope of profiting from
the price difference in those markets.‘ ‖ (In re New Motor Vehicles Can. Export Anti.
Lit., supra, 522 F.3d at pp. 9–10 & fn. 2.)
6 ―A gray market is one ‗in which the seller uses legal but sometimes unethical methods
to avoid a manufacturer‘s distribution chain and thereby sell goods (esp. imported goods)
4
The plaintiffs claim that, in the face of this mounting activity by exporters, the
manufacturer defendants illegally agreed that they would all hold firm, each doing
their part to stamp out Canadian exports, rather than taking the profits available by
permitting their Canadian dealers to sell Canadian cars freely into the U.S. market.
According to the plaintiffs, this alleged conspiracy was created and implemented
through a series of meetings and conference calls among the defendant
manufacturers. These contacts were facilitated by a number of trade associations,
including: CADA; the Canadian Vehicle Manufacturers‘ Association (CVMA),
which represented the ―key or leading‖ automobile manufacturers in Canada,
including Ford Canada, Chrysler Canada, and GM Canada; and the Association of
International Automobile Manufacturers of Canada (AIAMC), which represented
international manufacturers such as Honda Canada, Toyota Canada, Nissan Canada,
BMW Canada, and Volkswagen Canada.
The plaintiffs further contend that the manufacturers used a variety of different
tools to discourage the export of new Canadian vehicles to the United States, thereby
furthering the goals of their conspiracy. By the late 1980‘s, for example, Ford had
modified its Canadian dealer franchise agreements (generally Franchise Agreements)
to forbid export sales. The Franchise Agreements of other manufacturers contained
similar provisions. In addition, manufacturers created and frequently updated
―blacklists‖ of entities known to export vehicles for resale so that their Canadian
dealers could consult the lists and refrain from selling to those entities. Additionally,
the manufacturers began tracking every vehicle‘s unique Vehicle Identification
Number (VIN) to determine which new vehicles made for sale in Canada had
actually been exported to the United States. Once an exported vehicle was traced
back to the particular dealer who made the export sale, many Franchise Agreements
allowed for the imposition of ―chargebacks,‖ substantial fines (often in the thousands
at prices lower than those envisioned by the manufacturer.‘ ‖ (In re New Motor Vehicles
Can. Export Anti. Lit., supra, 522 F.3d at pp. 9–10 & fn. 3.)
5
of dollars) paid by the dealer to the manufacturer. The manufacturers also imposed
vehicle allocation restrictions on exporting Canadian dealers, and, at times, pursued
termination of dealers engaged in the export trade. Ford, for example, initiated
successful termination proceedings against a dealer that had a high incidence of
export sales in 1999 and 2000.
Some manufacturers also required their Canadian dealers to include ―no
export‖ clauses in their sales agreements, under which buyers, themselves, could be
required to pay a penalty if the purchased vehicle was transferred to the United States
within a designated period of time. Moreover, Canadian dealers were required to
conduct a ―due diligence‖ investigation of every buyer to identify potential exporters.
If a Canadian car arrived in the United States despite the erection of these substantial
barriers to export, manufacturers voided warranties for the repair of new vehicles
exported from Canada, declined to provide information regarding recalls, and
withheld certificates of origin from exporters. Distribution controls were also placed
on the parts used to convert odometers from kilometers to miles.
Although the cross-border sale of used vehicles began to skyrocket in 1999
and 2000 and continued at very high levels throughout the alleged conspiracy period,
plaintiffs presented evidence that the manufacturers‘ multi-faceted attempt to restrict
the export of new vehicles from Canada to the United States proved effective. In
fact, export sales of new vehicles actually decreased during the alleged conspiracy
period, despite circumstances amounting to a ―perfect storm‖ for cross-border
arbitrage. (Cf. In re New Motor Vehicles Can. Export Anti. Lit., supra, 522 F.3d at
p. 10.) The plaintiffs maintain that cutting off this discount distribution channel
allowed the defendant automobile manufacturers to sell or lease new cars in
California, and indeed throughout the United States, at artificially inflated prices.
Thus, according to the plaintiffs, class members paid more to buy or lease new
vehicles during the conspiracy period than they would have in the absence of
defendants‘ illegal agreement to restrict exports. The plaintiffs‘ expert estimates
total class damages at $1.073 billion.
6
During 2004 and into 2005, the trial court considered a number of preliminary
motions filed by the defendants, including motions contesting personal jurisdiction
and demurrers to the consolidated complaint. For example, the trial court concluded
that it lacked personal jurisdiction over four of the nonresident defendants—Honda
Japan, Volkswagen AG, Nissan Japan, and CADA—and thus granted their motions
to quash service of summons. (In re Automobile Antitrust Cases, supra, 135
Cal.App.4th at p. 105.) We subsequently affirmed this determination on appeal.
(Ibid.)
In addition, a similar lawsuit had been filed in federal court against many of
the same defendants, alleging violation of federal antitrust laws. (See In re New
Motor Vehicles Canadian Export (D. Me. 2004) 307 F. Supp. 2d 136, 137–138 (the
federal multidistrict litigation or MDL).) Parallel cases were also pending in a
number of other state courts. In June 2004, the trial court issued an order, after
consultation with Judge Hornby—the judge in the federal MDL—coordinating
discovery among this action, the federal action, and other state actions.
The plaintiffs filed their motion for class certification in the instant matter in
the Spring of 2005. Proceedings were stayed, however, while the parties conducted
extensive coordinated discovery and litigated their class certification motion in the
federal MDL.7 Ultimately, in May 2009, the trial court granted plaintiffs‘ motion for
class certification in this proceeding. The court defined the class generally as: ―All
persons and entities residing in California on the date notice is first published, who
7Although Judge Hornby certified a nationwide injunctive class and exemplar state
damage classes (including a California class) in 2006, the First Circuit subsequently
vacated his certification orders in 2008. (In re New Motor Vehicles Can. Export Anti.
Lit., supra, 522 F.3d 6; In re New Motor Vehicles Canadian Export Antitrust (D. Me
2006) 235 F.R.D. 127 [certifying exemplar state damage classes]; In re New Motor
Vehicles Canadian Export Antitrust Litigation (D. Me 2006) 2006 U.S. Dist. LEXIS
10240 [certifying nationwide injunctive class].) The plaintiffs later elected not to pursue
California class certification in the federal action and Judge Hornby dismissed the
California claims. (In re New Motor Vehicles Canadian Export Litig. (D. Me 2009) 632
F. Supp. 2d 42, 63.)
7
purchased or leased a new motor vehicle manufactured or distributed by a defendant,
from an authorized dealer located in California, during the period January 1, 2001
through April 30, 2003, for their own use.‖ We later denied defendant‘s petition for
writ of mandate seeking review of the class certification order. (General Motors of
Canada, Ltd. v. Superior Court (Aug. 13, 2009, A125424) [nonpub. order].)
In the interim, Judge Hornby issued an opinion on July 2, 2009, in the federal
MDL action, addressing the viability of the remaining state law damage claims. (In
re New Motor Vehicles Canadian Export Litig., supra, 632 F.Supp.2d at pp. 42, 44–
45.) Before the federal court were summary judgment motions from each of the
remaining manufacturer defendants challenging the existence of a conspiracy and a
joint summary judgment motion arguing lack of evidence of antitrust impact. (Id. at
p. 45.) With respect to the conspiracy issue, Judge Hornby concluded that there ―is
probably enough evidence to reach a jury on whether the manufacturers had an
illegal horizontal agreement.‖ (Id. at p. 47.) Of particular interest here, the judge
opined that this conclusion ―is easiest for Ford and Chrysler; it is somewhat closer
for GM because of disclaimer statements it made; it is closest of all for the Honda
and Nissan entities because for them the evidence is almost entirely circumstantial.‖
(Ibid., fns. omitted.) In the end, however, Judge Hornby did not finally decide the
issue, because he concluded that the manufacturers were entitled to summary
judgment on the issue of antitrust impact. 8 (Id. at p. 45.)
While this litigation progressed in both state and federal courts, Toyota
reportedly agreed to settle. Additionally, in 2009, both GM and DaimlerChrysler
declared bankruptcy, effectively removing them from the case. Following these
8 The parties disagree as to the import of Judge Hornby‘s conspiracy discussion. While
certainly relevant, we do not view Judge Hornby‘s analysis as binding on us in any way,
especially since he appears to have considered much more of the plaintiffs‘ evidence than
our own trial court did. (In re New Motor Vehicles Canadian Export Antitrust Litigation,
supra, 632 F.Supp.2d at pp. 47–50.)
8
settlements and bankruptcies, the remaining defendants litigating this action were
Ford, GM Canada, Nissan USA, and Honda.
B. Ford’s Summary Judgment Motion and Plaintiffs’ Response
In January 2010, Ford filed a motion for summary judgment, arguing that the
plaintiffs could not prove on the evidence presented that Ford‘s conduct in
restraining exports during the identified conspiracy period was more likely than not
the result of an unlawful agreement rather than independent action.9 Specifically,
Ford advanced evidence that it had been independently combating the problem of
what it termed ―gray market exports‖ for decades prior to the designated conspiracy
period and continued to do so during that period for the same legitimate business
reason—that is, to preserve the integrity of its dealer distribution system. Given this
non-conspiratorial explanation for its enforcement of export restraints, Ford argued
that its conduct was as consistent with permissible competition as it was with
unlawful conspiracy. Thus, summary judgment in its favor was appropriate. In
addition, although Ford conceded that it had attended a number of meetings with
other manufacturers during the conspiracy period at which possible joint action to
combat the export problem was discussed, it asserted that no such joint action was
ever taken as a result of those meetings. Indeed, Ford claimed that its actions to stop
exports after these industry meetings clearly differed from the methods used by its
competitors to combat exports, making it ―impossible‖ for the plaintiffs to establish
any kind of conspiracy among the defendants.
In opposition to Ford‘s summary judgment motion, the plaintiffs contended
that they had produced documentary and testimonial evidence showing that the
defendants made a conscious commitment to a common scheme—the restraint of
9 The other manufacturers filed similar summary judgment motions on the conspiracy
issue, which are not included in the record before us. In addition, all of the remaining
defendants filed a joint motion for summary judgment on the issue of antitrust impact as
well as a motion to exclude the opinions and testimony of plaintiffs‘ expert witness,
Robert E. Hall, Ph.D. Although fully briefed, these two joint motions have not been
argued or decided by the trial court.
9
Canadian new vehicle exports to the United States—and thus summary judgment
was inappropriate. Further, the plaintiffs suggested that the manufacturers‘ claimed
―legitimate business reason‖ for their export restraints was likely pretextual given the
economic realities of the situation. Specifically, according to plaintiffs‘ expert,
absent an agreement among the manufacturers to block exports, all defendant
manufacturers facing competition from Canadian exports would have maximized
profits by lowering list prices in the United States rather than losing U.S. sales to
competitors‘ Canadian exports. Finally, the plaintiffs‘ argued that it was irrelevant
that the manufacturers did not impose the exact same export restrictions during the
alleged conspiracy period. Rather, evidence that all of the manufacturers imposed
some form of restraint during the relevant timeframe and that none chose to abandon
their export controls in favor of quick profits was sufficient evidence of parallel
conduct.
C. The Summary Judgment Hearings and Decisions
The trial court ultimately held a number of hearings on the four summary
judgment motions before it which argued lack of an actionable conspiracy. After
hearing on January 18, 2011, the trial court granted summary judgment motions in
favor of Nissan USA and Honda. In particular, the trial court concluded that the
evidence produced by the two manufacturers—including evidence of a legitimate
business purpose for the challenged conduct, denials of wrongful behavior, and
evidence of refusal to participate in meetings that might possibly have been viewed
as conspiratorial—was sufficient to shift the burden to the plaintiffs to produce
evidence of an issue of material fact regarding the existence of the alleged
conspiracy. Although the trial court acknowledged that such a conspiracy was ―in
the economic self-interest of each of the defendants, perhaps,‖ it did not find this fact
probative of the existence of an impermissible agreement among the parties, which it
deemed ―the heart‖ of any Cartwright Act claim. Nor did it find evidence of shared
warranty policies or of the ―stepping up‖ of anti-export activities after the date of the
alleged conspiracy particularly relevant to the existence of an actionable agreement.
10
In sum, since the evidence submitted by the plaintiffs was ―not sufficient to raise a
plausible inference that either Honda or Nissan USA entered into an agreement with
any competitor to restrict export sales from Canada,‖ the trial court granted both
parties‘ summary judgment motions.
The trial court next turned to the summary judgment motions of Ford and GM
Canada. At a hearing on January 24, 2011, the court discussed its tentative decision
to deny the summary judgment motions of both manufacturers. As with Honda and
Nissan USA, the trial court concluded that the evidence produced by Ford and GM
Canada—including evidence of a legitimate business purpose behind the conduct at
issue, denials of any wrongful behavior, and refusals to participate in certain joint
export activities—was sufficient to shift the burden to the plaintiffs to establish an
issue of material fact regarding the existence of the alleged conspiracy. In the case of
Ford and GM Canada, however, the trial court initially believed that the plaintiffs
had satisfied their burden, creating a material issue of fact with respect to the
existence of an unlawful agreement to restrict exports in violation of the Cartwright
Act. As the court framed the issue, the crucial question was whether the
manufacturers acted independently to restrict exports or whether they agreed ―to take
steps in concert to reduce the flow of cars.‖
In response, Ford first maintained that there was no evidence that Ford U.S.
―conspired with anyone in Canada to do anything.‖ Ford further asserted that, with
respect to Ford Canada, the evidence established, at most, that the manufacturer
attended meetings and conference calls at which possible solutions to the export
problem were discussed. But, according to Ford, no agreement with respect to any
particular joint course of action was ever reached. Rather, Ford strenuously claimed,
the evidence established that it had been taking unilateral action to curb exports for
15 years, and there was no evidence that its actions changed in any way during the
period of the alleged conspiracy. GM Canada made similar arguments, stressing its
repeated refusals, when asked, to engage in meetings or any kind of joint activity.
11
After argument, the trial court directed the plaintiffs to submit a summary of their
conspiracy evidence.
While these summary judgment proceedings were pending, however, GM
Canada agreed to settle its four remaining state court actions, including this
California proceeding. This left Ford U.S. and Ford Canada as the sole remaining
defendants in the case. At the continued hearing on May 10, 2011, the plaintiffs
reviewed the evidence they believed supported the existence of an unlawful
agreement to restrain exports. Ford then challenged the plaintiffs‘ evidence and
conclusions. In the end, the trial court authorized certain additional filings and
indicated that it would take the matter under submission as of July 8, 2011.
Thereafter, by order dated November 4, 2011, the trial court granted the
summary judgments motions of both Ford U.S. and Ford Canada.10 Specifically, the
trial court found that the evidence produced by the two manufacturers was sufficient
under Aguilar, supra, 25 Cal. 4th 826, to shift the burden to the plaintiffs to produce
evidence of an issue of material fact regarding the existence of the alleged
conspiracy. However, contrary to its earlier tentative ruling, the trial court now
determined that the plaintiffs had failed to satisfy this burden.
In particular, the trial court concluded that while Ford ―met at different times
with other alleged co-conspirators and discussed their common problem of the
importation of cars from Canada to the United States, . . . such discussion of a
common problem by itself is not a violation of the Cartwright Act.‖ Further, the trial
court opined that, where there was insufficient evidence of an agreement, evidence
that information was exchanged among alleged co-conspirators, or that some alleged
co-conspirators ―stepped up‖ their efforts to restrict exports after the start of the
alleged conspiracy period, was not enough to carry plaintiffs‘ burden. Finally, the
10In conjunction with its order granting summary judgment, the trial court issued
separate orders ruling on the plaintiffs‘ objections to Ford‘s evidence, Ford U.S.‘s
evidentiary objections, and the objections to the plaintiffs‘ evidence filed by Ford
Canada.
12
trial court stated that the evidence presented by the plaintiffs regarding the alleged
co-conspirators‘ motive and economic interest to conspire was insufficient, standing
alone, to satisfy the plaintiffs‘ burden of production. In sum, under Aguilar, ―[t]here
was no evidence to support a conclusion that it was more likely than not that [Ford
U.S.] and/or Ford Canada entered into an agreement with any other alleged co-
conspirator.‖
Final judgment was entered with respect to Ford U.S. on January 9, 2012, and
with respect to Ford Canada on January 13, 2012. The plaintiffs‘ timely notice of
appeal again brought the matter before this court.
II. EVIDENTIARY ISSUES
We first address the plaintiffs‘ challenge to two evidentiary rulings made by
the trial court in connection with the summary judgment motion here at issue.
Specifically, the plaintiffs contend that, in making its summary judgment
determination, the trial court erred in refusing to consider on hearsay grounds certain
deposition testimony of Pierre Millette, general counsel for Toyota Canada,
regarding a May 15, 2001, CADA meeting, as well as the minutes of that meeting
that were prepared by a CADA employee. The hearsay rule is easily articulated:
Hearsay evidence is ―evidence of a statement that was made other than by a witness
while testifying at the hearing and that is offered to prove the truth of the matter
stated.‖ (Evid. Code, § 1200, subd. (a).) It is generally inadmissible, absent a
recognized exception to the rule. (Id., § 1200, subd. (b); see also People v. Seumanu
(2015) 61 Cal. 4th 1293, 1307 (Seumanu) [― ‗[h]earsay is generally excluded because
the out-of-court declarant is not under oath and cannot be cross-examined to test
perception, memory, clarity of expression, and veracity, and because the jury (or
other trier of fact) is unable to observe the declarant‘s demeanor‘ ‖].)
Of course, when dealing with the hearsay rule, the devil is in the details of its
application to the facts of a particular case. As we review the trial court‘s treatment
of the alleged hearsay in this matter, we note that there is some dispute regarding our
standard of review for such determinations. ―[T]he weight of authority holds that an
13
appellate court reviews a court‘s final rulings on evidentiary objections by applying
an abuse of discretion standard.‖ (Carnes v. Superior Court (2005) 126 Cal. App. 4th
688, 694 (Carnes); see also Serri v. Santa Clara University (2014) 226 Cal. App. 4th
830, 852.) However, in Reid v. Google, Inc. (2010) 50 Cal. 4th 512 (Reid), our high
court acknowledged the argument that a different rule should apply when evidentiary
rulings are made in the context of a summary judgment motion: ― ‗Because
summary judgment is decided entirely on the papers, and presents only a question of
law, it affords very few occasions, if any, for truly discretionary rulings on questions
of evidence. Nor is the trial court often, if ever, in a better position than a reviewing
court to weigh the discretionary factors.‘ ‖ (Id. at p. 535, quoting the appellate court
opinion). Ultimately, the Reid Court concluded that it ―need not decide generally
whether a trial court‘s rulings on evidentiary objections based on papers alone in
summary judgment proceedings are reviewed for abuse of discretion or reviewed de
novo.‖ (Ibid.; see also Nazir v. United Airlines, Inc. (2009) 178 Cal. App. 4th 243,
255, fn. 4 (Nazir) [observing that the standard of review is unsettled].)
Similarly, we will not here resolve this outstanding issue, as our conclusions
are sound under either theory. (See In re R.T. (2015) 232 Cal. App. 4th 1284, 1301 [a
court abuses its discretion when it applies an incorrect legal standard]; Shaw v.
County of Santa Cruz (2008) 170 Cal. App. 4th 229, 281 [an evidentiary ruling that
― ‗ ―transgresses the confines of the applicable principles of law‖ ‘ ‖ is an abuse of
discretion].) With respect to the consequences of our evidentiary review, however,
we will follow the tenet—correctly pointed out by both parties—that the erroneous
exclusion of evidence by the trial court is not grounds for reversal unless we also
determine that the error was prejudicial. (Evid. Code, § 354, subd. (a) [judgment
shall not be reversed due to the erroneous exclusion of evidence unless the error
resulted in a miscarriage of justice]; see also Cal. Const., art. VI, § 13 [same];
Carnes, supra, 126 Cal.App.4th at p. 694 [citing the constitutional provision].) Thus,
the plaintiffs must demonstrate that, absent the error, ―a different result would have
been probable.‖ (Pannu v. Land Rover North America, Inc. (2011) 191 Cal. App. 4th
14
1298, 1317 (Pannu).) With these standards in mind, we turn to the particular
evidence excluded by the trial court in this case.
A. The Millette Deposition Testimony
During his March 2007 deposition, Pierre Millette of Toyota Canada was
questioned about the May 15, 2001, CADA meeting which he attended along with
representatives of Ford Canada, AIAMC, CVMA, GM Canada, Chrysler Canada,
CADA, and various local dealer associations. Both Ford and Ford Canada objected
on hearsay grounds to the following colloquy between counsel for the plaintiffs and
Millette: ―Q. Did CADA indicate that they would not support dealers who were
involved in regular exporting of vehicles from Canada to the United States? [¶]
[Objection.] [¶] A. I can remember comments being made that everyone supported
the concept of trying to keep the vehicles in Canada, but who said what, on a general
basis, I can‘t help you there. [¶] [Answer read back.] [¶] And that was your
understanding that there was a general consensus that the vehicles would be kept in
Canada, not be exported from Canada to the United States? [¶] [Objection.] [¶] A.
There was general support for the approach.‖
Later in the deposition, counsel for Ford elicited this additional testimony
from Millette, which it now also claims is inadmissible hearsay: ―Q. Okay. Was
there any agreement, at that meeting or any time, to work together to keep vehicles in
Canada? [¶] A. I think that would be characterizing it as a little more than what it
was. It wasn‘t an agreement. It was simply a concept that there was some consensus
on from everyone at the meeting.‖ As Ford correctly notes, this discussion was
immediately followed by an additional exchange to which no objection has been
lodged. Specifically Ford‘s attorney queried: ―Just to be clear in my question, did
the participants in the meeting ever agree to work together to keep vehicles in
Canada?‖ Millette responded: ―No, absolutely not.‖
At the summary judgment hearing on January 24, 2011, after reference by GM
Canada to Millette‘s statements, the trial court responded: ―I intentionally left out
references to Mr. Millette. I still haven‘t sorted out in my mind to what extent,
15
assuming Mr. Millette didn‘t testify at trial, anything that Mr. Millette said is
admissible for any purpose.‖ However, when discussing the Millette testimony at the
continued hearing on May 10, 2011, in response to Ford‘s hearsay objection, the trial
court stated: ―I don‘t know if any of this is hearsay. It‘s all his understanding of what
happened. No out-of-court statement offered for the truth. It‘s just what his
understanding was.‖
Later in the hearing, plaintiffs‘ counsel and the trial court had an extended
discussion regarding the admissibility of the Millette testimony. According to
counsel for the plaintiffs, the hearsay rule was not implicated by the deposition
testimony because ―there are no other out-of-court statements here with the exception
of Mr. Millette‘s testimony itself. There‘s no other—he is a percipient witness at a
meeting. He perceives what happens at the meeting. He takes away an
understanding of that. He is competent to testify about what he perceived at the
meeting, that where before there wasn‘t a consensus and now there was, there was a
consensus to keep the cars in Canada, to paraphrase Mr. Millette. He‘s not reporting
about anything anyone else said.‖ Again, the trial court seemed to agree, stating:
―Well, that‘s what I think—my present view of that is that he is giving his
understanding of what happened and that this is not hearsay.‖ Nevertheless, when
the trial court issued its written ruling on Ford‘s evidentiary objections in connection
with its grant of summary judgment, the court sustained Ford‘s hearsay objections to
both of the Millette deposition excerpts.
Initially, in considering the potential hearsay nature of the Millette statements,
we note that Ford is not arguing that the challenged testimony is inadmissible
hearsay because it is out-of-court deposition testimony. And, indeed, pursuant to
section 2025.620 of the Code of Civil Procedure (section 2025.620), ―[a]t the trial or
any other hearing in the action, any part or all of a deposition may be used against
any party who was present or represented at the taking of the deposition . . . so far as
admissible under the rules of evidence applied as though the deponent were then
present and testifying as a witness . . . .‖ (See id., subd. (c)(1) [deposition testimony
16
may be used ―for any purpose‖ where deponent resides more than 150 miles from the
place of the trial]; see also Code Civ. Proc., § 437c, subd. (b)(1) [listing depositions
among the documentation appropriate for use in support of a summary judgment
motion].) Moreover, in accordance with section 1291 of the Evidence Code (section
1291), ―former testimony is not made inadmissible by the hearsay rule if the
declarant is unavailable as a witness and: [¶] . . . [¶] [t]he party against whom the
former testimony is offered was a party to the action or proceeding in which the
testimony was given and had the right and opportunity to cross-examine the declarant
with an interest and motive similar to that which he has at the hearing.‖ (Evid. Code,
§ 1291, subd. (a)(2).) As with section 2025.620 testimony, however, the
admissibility of former testimony under section 1291 is generally ―subject to the
same limitations and objections as though the declarant were testifying at the
hearing.‖ (Evid. Code, § 1291, subd. (b).) Thus, the question before us is whether
Millette‘s testimony would constitute inadmissible hearsay if he were testifying as a
witness in court.
Ford argues that the Millette statements at issue are indeed inadmissible on
this basis because they ―conveyed‖ hearsay. Specifically, according to Ford, when
the testimony is read in context, it is ―clear Millette was describing statements made
by the other participants in the meeting.‖ Ford contends that these out-of-court
statements of other declarants are hearsay, and no exception to the hearsay rule has
been offered justifying their admission. We disagree. None of the challenged
testimony purported to recount ―a statement,‖ let alone to prove what was ―stated.‖ 11
Millette was not reporting particular statements made by particular participants.
Rather, he was simply recounting generally his impressions and conclusions based on
11 On appeal, plaintiffs do not challenge the trial court‘s exclusion of Millette‘s first
statement—that he remembered ―comments being made that everyone supported the
concept of trying to keep the vehicles in Canada.‖ We therefore focus our review on the
admissibility of his two subsequent statements and do not consider the first statement in
our summary judgment analysis.
17
his participation in the meeting. This is not hearsay, and the trial court erred in
concluding that it was.12
The more difficult question, however, is whether the trial court‘s evidentiary
error was prejudicial such that it provides grounds for reversal of the court‘s grant of
summary judgment in favor of Ford. (See Evid. Code, § 354, subd. (a); see also
Carnes, supra, 126 Cal.App.4th at p. 694.) As stated above, to make a finding
regarding prejudice we must determine whether, absent the error, ― ‗a different result
would have been probable.‘ ‖ (Pannu, supra, 191 Cal.App.4th at p. 1317.) In our
view, this determination rests on two separate lines of inquiry. First, we must
consider whether the Millette statements—improperly excluded on hearsay
grounds—are otherwise admissible. Next, if they are admissible, we must resolve
whether it is reasonably probable that their admission would have changed the
outcome.
With respect to the admissibility of Millette‘s statements, the plaintiffs argue
that the testimony is admissible nonhearsay because it was based on his ―personal
knowledge, which he gained from having participated in the May 15, 2001 meeting
(and other conspiratorial meetings) on behalf of Toyota, alongside executives from
Ford, GM, Chrysler and CADA.‖ While this makes him competent to testify as to
12 Although not necessary to our resolution of this matter, we note that if statements
attributable to all of the other participants at the May 15 meeting were the basis for
Millette‘s conclusion that a consensus had been reached to keep Canadian automobiles in
Canada, then any such statements would likely themselves be admissible as admissions
of co-conspirators, because they would have then been made while participating in a
conspiracy and in furtherance of the objective of that conspiracy. (Evid. Code, § 1223.)
Indeed, such statements could also be understood as operative facts, evincing the
conspiratorial agreement itself, and therefore be deemed admissible as nonhearsay. (See
1 Witkin, California Evidence (5th ed. 2012) Hearsay, §§ 32-36, pp. 825-830.) Of
course, logically, it is difficult if not impossible to reach any ultimate conclusion
regarding how these alleged ―statements‖ should be characterized as there is absolutely
no evidence of who actually said what, a circumstance which underscores the inherent
unworkability of Ford‘s ―conveyed‖ hearsay theory.
18
facts he personally observed, it does not necessarily make admissible his inferences
drawn from those facts. Rather, ―[t]he opinion rule, which often rejects testimony of
a competent witness because of the form in which the testimony is given, is distinct
from the knowledge rule, which lays down a requirement of competency of witnesses.
A witness is not competent to testify on a matter—either as to facts or opinions—if
the witness lacks personal knowledge of it.‖ (1 Witkin, Cal. Evidence (5th ed. 2012)
Opinion Evidence, § 1, p. 608.) Thus, plaintiffs‘ argument does not go far enough,
on its own, to justify the admission of the Millette statements.
Instead, we believe that the challenged deposition testimony is best understood
as an opinion of a lay witness, admissible in accordance with section 800 of the
Evidence Code (section 800).13 That statute provides: ―If a witness is not testifying
as an expert, his testimony in the form of an opinion is limited to such an opinion as
is permitted by law, including but not limited to an opinion that is: [¶] (a) Rationally
based on the perception of the witness; and [¶] (b) Helpful to a clear understanding of
13 In November 2015, the parties were given the opportunity to file supplemental letter
briefs addressing this theory of admissibility, along with certain others. Both did so, and
we have considered their submissions in rendering our decision. In Ford‘s supplemental
briefing, the automobile manufacturer argues that the plaintiffs‘ failure to specifically
reference section 800—either in the trial court or on appeal—precludes any reliance on it.
As described in detail above, however, Ford claimed in the trial court that the statements
at issue are hearsay and the plaintiffs have argued strongly, both below and before this
court, that they are not. We believe that this was more than sufficient to preserve the
issue. Having agreed with the plaintiffs that the testimony is nonhearsay and was
erroneously excluded, we consider section 800 only as part of our prejudice analysis.
Indeed, even if further specificity were required to preserve the argument in this limited
context, the plaintiffs claimed in their appellate briefing that ―Mr. Millette used his senses
to observe behavior at the meeting and form an understanding of what happened. He
conveyed his understanding through his testimony.‖ (Italics added.) And, before the
trial court, plaintiffs similarly argued: ―He perceives what happens at the meeting. He
takes away an understanding of that. He is competent to testify about what he perceived
at the meeting, that where before there wasn‘t a consensus [] now there was.‖ (Italics
added.) The trial court seemed to agree, stating: ―My present view of that is that he is
giving his understanding of what happened and that this is not hearsay.‖ (Italics added.)
Thus, plaintiffs have adequately raised the question of whether Mr. Millette could
properly testify as to his understanding or opinion regarding the events at issue.
19
his testimony.‖ (Evid. Code, § 800.) A trial court has broad discretion to admit lay
opinion testimony, especially where adequate cross-examination has been allowed.
(Osborn v. Mission Ready Mix (1990) 224 Cal. App. 3d 104, 112 (Osborn).)
Our Supreme Court has recently summarized the law regarding lay opinions
under section 800 as follows: ― ‗A lay witness may express an opinion based on his
or her perception, but only where helpful to a clear understanding of the witness‘s
testimony (Evid. Code, § 800, subd. (b)), ―i.e., where the concrete observations on
which the opinion is based cannot otherwise be conveyed.‖ [Citation.]‘ [Citation.]
Such a situation may arise when a witness‘s impression of what he or she observes
regarding the appearance and demeanor of another rests on ‗subtle or complex
interactions‘ between them [citation] or when it is impossible to otherwise
adequately convey to the jury the witness‘s concrete observations. [Citations.] A lay
witness generally may not give an opinion about another person‘s state of mind, but
may testify about objective behavior and describe behavior as being consistent with a
state of mind. [Citation.]‖ (People v. DeHoyos (2013) 57 Cal. 4th 79, 130–131
(DeHoyos).)
Put another way, the opinion rule for nonexperts ― ‗merely requires that
witnesses express themselves at the lowest possible level of abstraction. [Citation.]
Whenever feasible ―concluding‖ should be left to the jury; however, when the details
observed, even though recalled, are ―too complex or too subtle‖ for concrete
description by the witness, he may state his general impression.‘ ‖ (Angelus
Chevrolet v. State of California (1981) 115 Cal. App. 3d 995, 1001 (Angelus
Chevrolet).) Thus, for example, ―a lay witness may express an opinion that a person
was ‗drunk‘ [citation], or that people engaged in a discussion were ‗angry‘ [citation],
or that an impact was strong enough to jar a passenger from a seat [citation], or that
someone appeared to be ‗trying to break up a fight.‘ [Citation.]‖ (Osborn, supra,
224 Cal.App.3d at p. 113.) Where a lay opinion is otherwise admissible, the
witness‘s experience may affect the weight of the testimony. (See People v. McAplin
(1991) 53 Cal. 3d 1289, 1307.)
20
We find Justice Werdegar‘s recent opinion in Seumanu, supra, 61 Cal. 4th
1293, particularly useful. In that case, a murder defendant (Ropati) presented
testimony at trial from his brother (Tautai) claiming that he—Tautai—was the one
who killed the victim rather than Ropati. (Id. at pp. 1303, 1306.) To counteract this
testimony, the prosecution presented evidence from a third crime partner, Iuli, who
had pleaded guilty to reduced charges and agreed to testify for the prosecution. (Id.
at pp. 1304, 1309–1310.) In particular, Iuli described a pretrial encounter he had
when he, Tautai, and Ropati were together in a holding cell. Iuli testified that Ropati
―asked him and Tautai to ‗take the blame off of him and that he would be out there
taking care of us‘ by sending them money in prison.‖ (Id. at p. 1309.) Iuli rejected
the proposal, but stated that Tautai ―remained silent and did not appear angry.‖
(Ibid.) Follow-up questions indicating that Iuli thought Tautai looked like he was
going to take the blame were objected to as improperly calling for an opinion. (Id. at
p. 1310.) However, under these circumstances, the Seumanu Court concluded that
―Iuli‘s testimony regarding his perceptions was not improper opinion evidence from
a lay witness.‖ (Ibid.) Rather, ―Iuli was a percipient witness to the encounter in the
holding cell and he thus spoke from personal knowledge gleaned from his own
participation in, and observation of, the event in question.‖ (Id. at p. 1311.)
Similarly, in this case, Millette was a percipient witness to the May 15, 2001,
meeting, and his opinion was based on personal knowledge gleaned from his own
participation in, and observation of, that interaction, as well as his numerous previous
contacts with the alleged co-conspirators. (Cf. Seumanu, supra, 61 Cal.4th at
pp. 1309–1311.) Further, it is quite likely that his conclusions were based, at least in
part, on observations regarding the appearance and demeanor of other meeting
participants and rested on the ― ‗subtle or complex interactions‘ ‖ among them.
(DeHoyos, supra, 57 Cal.4th at pp. 130–131; see also People v. Hinton (2006) 37
Cal. 4th 839, 889 [lay opinion by third party that a defendant was directing another
individual in a drug transaction may be proper where it is ―certainly possible‖ that
the third party‘s impression ―rested on subtle or complex interactions . . . that were
21
difficult to put in words‖]; Angelus Chevrolet, supra, 115 Cal.App.3d at p. 1001.)
Moreover, there is no indication in the record that Millette was able to recall any
particular statements or actions by any of the meeting participants. Thus, his
comments were useful to understanding what transpired at this all-important meeting
because the concrete observations on which his opinion was based likely could not
otherwise be conveyed. (See DeHoyos, supra, 57 Cal.4th at pp. 130–131.) Under
such circumstances, he was testifying at the ― ‗lowest possible level of abstraction.‘ ‖
(Angelus Chevrolet, supra, 115 Cal.App.3d at p. 1001.) In sum, although Millette
could not properly testify as to the actual state of mind of any of the other meeting
participants, he was allowed to express his opinion that they behaved in a way
consistent with reaching a consensus to restrict exports. (See DeHoyos, supra, 57
Cal.4th at pp. 130–131.) His challenged testimony is therefore properly admissible
in accordance with section 800. 14
Having determined that the testimony at issue is admissible, we next consider
the second prong of our prejudice analysis: whether consideration of that evidence,
in conjunction with the other admissible evidence presented by the plaintiffs, would
likely have led to a different outcome. We believe that, with respect to Ford
Canada‘s summary judgment motion, it is probable that it would have. We discuss
this conclusion in detail below, in the context of our review of the plaintiffs‘
conspiracy evidence as it relates to Ford Canada. In sum, plaintiffs‘ entire case
stands or falls on whether they have presented sufficient admissible evidence of an
illegal agreement to restrict Canadian exports. Unsurprisingly, there is no
unambiguous evidence of such an agreement in the record before us. However, Mr.
Millette‘s statements are important evidence suggesting conspiracy and could clearly
14 Ford repeatedly urges us to defer to the trial court‘s exercise of discretion in this case.
However, because the trial court made a legal error—characterizing nonhearsay as
hearsay—it never exercised its discretion with respect to whether the testimony at issue
was otherwise admissible. If anything, though, the court‘s comments seem to indicate
that it properly understood Millette‘s statements for what they are: His understanding of
what happened at the May 2001 meeting.
22
have tipped the balance in the plaintiffs‘ favor. In short, based on his testimony, a
reasonable juror could conclude that—at least in the mind of one of the key alleged
co-conspirators—all of the participants at the May 15, 2001, CADA meeting had
reached a consensus to keep Canadian automobiles in Canada. Under these
circumstances, exclusion of the Millette statements was not only erroneous, but also
prejudicial.
B. The CADA Minutes of the May 2001 Meeting
After the May 15, 2001, meeting discussed in the Millette testimony, Melissa
Clark—a CADA employee who attended the meeting—drafted minutes based on her
handwritten notes. The document indicates that it is ―confidential notes‖ from the
―Export Sales Meeting‖ held on May 15, 2001, and lists the individuals from Ford
Canada, Toyota Canada, AIAMC, CVMA, GM Canada, Chrysler Canada, CADA,
and various local dealer associations who participated. According to the minutes,
after a CADA representative articulated the meeting objective of ―developing a
strategy to solve the industry problem of export sales,‖ the meeting participants
discussed the pros and cons of various ways they could work together to make export
restraints more effective. The minutes also include a laundry list of proposed follow-
up actions, such as obtaining industry-wide statistics on the size of the export
problem and seeking ―advice from outside counsel with respect to any Competition
Act implications of any industry-wide export sales initiatives.‖ They end with the
admonition: ―PLEASE KEEP THESE NOTES CONFIDENTIAL.‖
In connection with its summary judgment motion, Ford objected to the
admission of the Export Sales Meeting minutes on hearsay grounds and to certain
statements of CADA representatives memorialized in those minutes as multiple
hearsay. In response, the plaintiffs argued that the minutes were admissible under
numerous exceptions to the hearsay rule, including the business record exception
(Evid. Code, § 1271), the exception for adoptive admissions (Evid. Code, § 1221),
and the co-conspirator exception (Evid. Code, § 1223). In the end, however, the trial
court sustained Ford‘s hearsay objection. On appeal, the plaintiffs renew their
23
argument that the meeting minutes are properly admissible, both as a business record
and as an adoptive admission of Ford Canada.
We agree with the plaintiffs that the meeting minutes here at issue are a
―textbook example‖ of an adoptive admission of Ford Canada under section 1221 of
the Evidence Code (section 1221). Pursuant to section 1221, ― ‗[e]vidence of a
statement offered against a party is not made inadmissible by the hearsay rule if the
statement is one of which the party, with knowledge of the content thereof, has by
words or other conduct manifested his adoption or his belief in its truth.‘ The theory
of adoptive admissions expressed in section 1221 ‗ ―is that the hearsay declaration is
in effect repeated by the party; his conduct is intended by him to express the same
proposition as that stated by the declarant.‖ ‘ ‖ (Jazayeri v. Mao (2009) 174
Cal. App. 4th 301, 326; see also People v. Hayes (1999) 21 Cal. 4th 1211, 1257 [―[t]he
hearsay rule does not bar evidence offered against a party who has admitted the truth
of the hearsay statement‖]; People v. Osuna (1969) 70 Cal. 2d 759, 765 (Osuna)
[conversation among codefendants admitted under adoptive admission rule where
―[h]ad one disagreed with what the other said, it is reasonable to assume that he
would have said so‖].)
In the instant case, after Melissa Clark of CADA drafted the meeting minutes,
she forwarded them to Norm Stewart—Vice President of Government Relations and
General Counsel for Ford Canada—for his review and comment. According to
Stewart, he made a few comments that weren‘t ―super substantive‖ and sent the
revised minutes back to Clark. Stewart also stated that he felt that the minutes
―generally captured the sense of what went on at the meeting‖ and were ―pretty
accurate.‖ Indeed, the only complaint he was able to articulate was that he ―didn‘t
think‖ the minutes ―totally accurately recaptured the concept that issues were put out,
but not necessarily brought to closure,‖ an idea which, in our view, is adequately
conveyed within the document. In sum, by engaging in this review and revision
process, Stewart (on behalf of Ford Canada) clearly manifested his belief in the
accuracy of the meeting minutes. Presumably, had he seen any errors, he would have
24
corrected them. (Osuna, supra, 70 Cal.2d at p. 765.) Thus, the minutes were
admissible against Ford Canada as an adoptive admission and were erroneously
excluded by the trial court.
On appeal, Ford does not challenge the plaintiffs‘ characterization of the
meeting minutes as adoptive admissions. Instead, it argues only that the plaintiffs
were not prejudiced by the exclusion of the minutes because evidence of the ―content
of the discussion at the CADA meeting‖ was ―plainly before the court.‖ Moreover,
according to Ford, the minutes do not support an inference of conspiracy because the
meeting participants never adopted any of the specific actions proposed on May 15.
As we discuss further below, we do not find the failure of the alleged co-conspirators
to implement any of the joint actions suggested at the May 15 meeting to be
particularly relevant to the existence of plaintiffs‘ claimed conspiracy. Moreover, we
doubt that being aware of the gist of what was discussed at the meeting has the same
impact as viewing an official document which sets forth the names of each alleged
co-conspirator; indicates the willingness of each to discuss at length engaging in
patently anti-competitive behavior; evinces knowledge by the participants of the
possible anti-competitive nature of their pursuits; and requests that confidentiality be
maintained. However, ultimately, we need not decide the issue of prejudice
because—irrespective of our proper consideration of the minutes as part of our de
novo review—we would reverse the trial court‘s grant of summary judgment in favor
of Ford Canada for the other reasons stated herein. Because we do not rely on the
improper exclusion of the minutes as a basis for reversal, we need not determine
whether that exclusion was prejudicial.
Having resolved these preliminary matters, we turn now to the sufficiency of
the plaintiffs‘ conspiracy evidence.
25
III. SUMMARY JUDGMENT ON EXISTENCE OF AGREEMENT
A. Analytical Framework and Standard of Review
The standards for granting summary judgment are well-settled and easily
delineated. A trial court must grant a motion for summary judgment ―if all the
papers submitted show that there is no triable issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.‖ (Code Civ. Proc.,
§ 437c, subd. (c).) When, as here, defendants move for summary judgment, they can
―meet their burden by demonstrating that ‗a cause of action has no merit,‘ which they
can do by showing that ‗[o]ne or more elements of the cause of action cannot be
separately established . . . .‘ [Citations.] Once defendants meet this burden, the
burden shifts to plaintiff to show the existence of a triable issue of material fact.‖
(Nazir, supra, 178 Cal.App.4th at p. 253.) The initial burden of a defendant moving
for summary judgment is a ―burden of production to make a prima facie showing of
the nonexistence of any triable issue.‖ (Aguilar, supra, 25 Cal. 4th 826, 850.) Thus,
such a defendant is only required to present some evidence creating a rebuttable
presumption that no material fact issue exists before the burden shifts to the plaintiff
opposing the motion. (Id. at pp. 850–851.)
Our review of an order granting summary judgment is de novo. Under such
circumstances, the trial court‘s stated reasons for granting summary judgment ―are
not binding on us because we review its ruling, not its rationale.‖ (Ram’s Gate
Winery. LLC v. Roche (2015) 235 Cal. App. 4th 1071, 1079.) Thus, ―[t]he sole
question properly before us on review of the summary judgment is whether the judge
reached the right result . . . whatever path he might have taken to get there.‖
(Carnes, supra, 126 Cal.App.4th at p. 694.)
In undertaking our analysis, we ― ‗accept as true the facts . . . in the evidence
of the party opposing summary judgment and the reasonable inferences that can be
drawn from them.‘ ‖ (Nazir, supra, 178 Cal.App.4th at p. 254.) We must, however,
disregard any evidence to which objections have been made and sustained. (Guz v.
Bechtel National, Inc. (2000) 24 Cal. 4th 317, 334 (Guz); Code Civ. Proc., § 437c,
26
subds. (b)(5), (c) & (d).) Finally, as an overarching principle, we view the evidence
in the light most favorable to the losing party—here the plaintiffs—liberally
construing the plaintiffs‘ evidentiary submissions and strictly scrutinizing the
defendants‘ evidence in order to resolve any evidentiary doubts or ambiguities in the
plaintiffs‘ favor. (Cheal v. El Camino Hospital (2014) 223 Cal. App. 4th 736, 741;
Nazir, supra, 178 Cal.App.4th at p. 254.)
In addition to these general tenets regarding motions for summary judgment,
our Supreme Court in the seminal case of Aguilar, supra, 25 Cal. 4th 826, set forth
guidance specifically applicable to summary judgment motions in antitrust actions
for unlawful conspiracy. (Id. at p. 843.) In Aguilar, plaintiffs argued that nine
petroleum companies had violated the Cartwright Act by ―enter[ing] into an unlawful
conspiracy to restrict the output of CARB [California Air Resources Board cleaner-
burning] gasoline and to raise its price.‖ (Id. at pp. 837–839.) While concluding that
summary judgment was appropriate on the facts before it, the Aguilar court clarified
―the law that courts must apply in ruling on motions for summary judgment, both in
actions generally and specifically in antitrust actions for unlawful conspiracy.‖ (Id.
at pp. 842–843.)
With respect to antitrust conspiracy cases in particular, the Aguilar court—
after reviewing recent state and federal law on the subject15—opined: ―On the
defendants‘ motion for summary judgment, in order to carry a burden of production
to make a prima facie showing that there is a triable issue of the material fact of the
existence of an unlawful conspiracy, a plaintiff, who would bear the burden of proof
by a preponderance of evidence at trial, must present evidence that would allow a
reasonable trier of fact to find in his favor on the unlawful-conspiracy issue by a
15 ―In antitrust actions brought under the Cartwright Act, we look to interpretations of its
federal law counterpart, the Sherman Antitrust Act (15 U.S.C. § 1 et seq.), for guidance
since the federal act was a model for our own in most respects.‖ (Biljac Associates v.
First Interstate Bank (1990) 218 Cal. App. 3d 1410, 1420 (Biljac), overruled on other
grounds as stated in Reid, supra, 50 Cal.4th at p. 532 & fn. 8.)
27
preponderance of the evidence, that is, to find an unlawful conspiracy more likely
than not. Ambiguous evidence or inferences showing or implying conduct that is as
consistent with permissible competition by independent actors as with unlawful
conspiracy by colluding ones do not allow such a trier of fact so to find.‖ (Aguilar,
supra, 25 Cal.4th at p. 852, italics added; see also Matsushita Elec. Industrial Co. v.
Zenith Radio (1986) 475 U.S. 574, 588 (Matsushita).) Thus, an antitrust plaintiff
must also ―present evidence that tends to exclude, although it need not actually
exclude, the possibility that the alleged conspirators acted independently rather than
collusively.‖ (Aguilar, supra, 25 Cal.4th at p. 852; see also Matsushita, supra, 475
U.S. at p. 588.) ―Insufficient is a mere assertion that a reasonable trier of fact might
disbelieve any denial by the defendants of an unlawful conspiracy.‖ (Aguilar, supra,
25 Cal.4th at p. 852.)
When attempting to prove unlawful conspiracy, antitrust plaintiffs may rely on
both direct and circumstantial evidence. ― ‗ ―[D]irect evidence‖ ‘ means evidence that
directly proves a fact, without an inference or presumption, and which in itself, if true,
conclusively establishes that fact.‖ (Biljac, supra, 218 Cal.App.3d at p. 1430 [quoting
Evid. Code, § 410].) An inference, in contrast, is ― ‗ ―a deduction of fact that may
logically and reasonably be drawn from another fact or group of facts found or
otherwise established in the action.‖ ‘ ‖ (McGrory v. Applied Signal Technology,
Inc. (2013) 212 Cal. App. 4th 1510, 1529, quoting Evid. Code, § 600, subd. (b).) As
the Aguilar court acknowledged, antitrust plaintiffs ―must often rely on inference
rather than evidence since, usually, unlawful conspiracy is conceived in secrecy and
lives its life in the shadows.‖ (Aguilar, supra, 25 Cal.4th at p. 858.)
Whether direct evidence or inference, however, ―if the court determines that
any evidence or inference presented or drawn by the plaintiff indeed shows or
implies unlawful conspiracy more likely than permissible competition, it must then
deny the defendants‘ motion for summary judgment, even in the face of
contradictory evidence or inference presented or drawn by the defendants, because a
reasonable trier of fact could find for the plaintiff.‖ (Aguilar, supra, at pp. 856–857.)
28
In addition, Continental Ore Co. v. Union Carbide (1962) 370 U.S. 690, 699
(Continental Ore) teaches that plaintiffs in an antitrust action for unlawful conspiracy
―should be given the full benefit of their proof without tightly compartmentalizing
the various factual components and wiping the slate clean after scrutiny of each.‖
Thus, ― ‗[t]he character and effect of a conspiracy are not to be judged by
dismembering it and viewing its separate parts, but only by looking at it as a
whole.‘ ‖ (Ibid.)
With respect to the substantive law of conspiracy, while some sort of
concerted activity is necessary for an antitrust claim, it is well settled that an explicit
or formal agreement is not required. (United States v. General Motors Corp. (1966)
384 U.S. 127, 142–143 (General Motors); Biljac, supra, 218 Cal.App.3d at p. 1423.)
In General Motors, for instance, the United States Supreme Court found sufficient
evidence of conspiracy under the federal antitrust laws where General Motors
worked with a number of its dealers and local dealer associations, to ―persuade‖ a
subset of dealers to agree not to sell Chevrolets through certain discount houses. 16
(General Motors, supra, 384 U.S. at pp. 130–131, 134–138.) In rejecting the trial
court‘s conclusion that each alleged co-conspirator was engaging solely in parallel
action in furtherance of its own self-interest rather than acting pursuant to an illegal
agreement, the Supreme Court opined: ―[I]t has long been settled that explicit
16 Other cases considering conspiracy allegations in the context of cutting off a discount
channel of distribution include Coca-Cola Co. v. Omni Pacific Co., Inc. (N.D. Cal. 2000)
2000 U.S. Dist. LEXIS 17089 (Coca-Cola) (sufficient evidence to survive summary
judgment on claim of illegal horizontal conspiracy between Coca-Cola and its
competitors to eliminate exporters selling lower-priced U.S. beverages into higher-priced
foreign markets based on exchanges of information regarding those exporters), Toys “R”
Us, Inc. v. F.T.C. (7th Cir. 2000) 221 F.3d 928 (Toys “R” Us) (agreements between Toys
―R‖ Us and toy manufacturers to restrict sales to a discount competitor of Toys ―R‖ Us
constitute illegal horizontal conspiracy where toy manufacturers would not enter into
agreements without assurances that other manufacturers were also bound), and Alvord-
Polk, Inc. v. F. Schumacher & Co. (3d Cir. 1994) 37 F.3d 996, 1005–1006, 1013–1014
(Alvord-Polk) (evidence insufficient to prove conspiracy among wall-covering
manufacturers to restrict sales by discount 800-number dealers).
29
agreement is not a necessary part of a Sherman Act conspiracy—certainly not where,
as here, joint and collaborative action was pervasive in the initiation, execution, and
fulfillment of the plan.‖ (Id. at pp. 142–143.) Rather, to maintain an actionable
antitrust claim, ―[c]ircumstances must reveal ‗a unity of purpose or a common design
and understanding, or a meeting of minds in an unlawful arrangement.‘ ‖ (Monsanto
Co. v. Spray-Rite Service Corp. (1984) 465 U.S. 752, 764 (Monsanto).) Thus, as the
Biljac court put it in the context of a Cartwright Act claim, all that is required from
an antitrust plaintiff is ― ‗direct or circumstantial evidence that reasonably tends to
prove that the [defendant] and others ―had a conscious commitment to a common
scheme designed to achieve an unlawful objective.‖ ‘ ‖ (Biljac, supra, 218
Cal.App.3d at pp. 1425–1426, quoting Monsanto, supra, 465 U.S. at p. 764.)
In attempting to prove unlawful conspiracy, one type of evidence antitrust
plaintiffs often present—as the plaintiffs do here—is evidence that the alleged co-
conspirators met and shared industry information at conferences or trade association
meetings. The law is clear, however, that ―[i]n general, trade association activities
tend to promote competition and are lawful. Gathering and compiling industry
information and disseminating it among members does not offend antitrust policy,
even though to do so naturally ‗tends to stabilize that trade or business and to
produce uniformity of price and trade practice.‘ ‖ (Biljac, supra, 218 Cal.App.3d at
p. 1430, quoting Maple Flooring Assn. v. United States (1925) 268 U.S. 563, 582
(Maple Flooring).) Moreover, trade association members do not ― ‗become . . .
conspirators merely because they gather and disseminate information . . . bearing on
the business in which they are engaged and make use of it in the management and
control of their individual businesses . . . .‘ ‖ (Biljac at p. 1430, quoting Maple
Flooring.) ―[O]nly when they take concerted action to restrain trade based on such
information do they act illegally.‖ (Ibid., citing Maple Flooring.)
Thus, for instance, in Biljac, the plaintiffs argued the existence of a
conspiracy to manipulate variable interest rates on certain loans. (Biljac, supra, 218
Cal.App.3d at p. 1415.) In support of their position, the Biljac plaintiffs pointed to
30
evidence that interest rates and interest-rate pricing were topics of discussion at trade
association meetings. This, however, was deemed insufficient to prove the existence
of the claimed conspiracy. (Id. at p. 1430.) Specifically, the Biljac court concluded
that no inference of conspiracy could be drawn from industry discussions of this
nature ―without proof of agreement or concerted action to manipulate the . . . market
with such information.‖ (Ibid.) Put another way, the Biljac plaintiffs‘ proof failed
because ―further inferences‖ were required ―to conclude that any agreement or
consensus came out of those discussions.‖ (Ibid.; see Aguilar, supra, 25 Cal.4th at
pp. 839–840, 862–863 [concluding that the gathering and dissemination of pricing
information by the petroleum companies through an independent industry service did
not imply collusive action where there was no evidence the information was misused
as a basis for an unlawful conspiracy; rather, evidence suggested that individual
companies used all available resources ―to determine capacity, supply, and pricing
decisions which would maximize their own individual profits‖ ]; see also In re Citric
Acid Litigation (9th Cir. 1999) 191 F.3d 1090, 1097–1099 [insufficient evidence that
defendant was part of price-fixing conspiracy where there was no evidence illegal
activities took place at trade association meetings attended by the defendant; further,
gathering information about pricing and competition in the industry was a legitimate
function of the trade association]; Alvard-Polk, supra, 37 F.3d at pp. 1005–1006,
1013–1014 [evidence insufficient to prove conspiracy among wall-covering
manufacturers to restrict sales by discount dealers where discussion of issue and
possible responses to it at conventions was an information exchange only, providing
no evidence of an illegal agreement].)
Finally, as we conduct our review of these proceedings, we are also mindful
that ―both California and federal decisions urge caution in granting a defendant‘s
motion for summary judgment in an antitrust case.‖ (Fisherman’s Wharf Bay Cruise
Corp. v. Superior Court (2003) 114 Cal. App. 4th 309, 321 (Fisherman’s Wharf).) As
the United States Supreme Court stated in Poller v. Columbia Broadcasting (1962)
368 U.S. 464, 473: ―We believe that summary procedures should be used sparingly
31
in complex antitrust litigation where motive and intent play leading roles, the proof is
largely in the hands of the alleged conspirators, and hostile witnesses thicken the
plot.‖ (See also Corwin v. Los Angeles Newspaper Service Bureau, Inc. (1971) 4
Cal. 3d 842, 852 [quoting Poller with approval]; Fisherman’s Wharf, supra, 114
Cal.App.4th at p. 321 [same].) The Aguilar court acknowledged as much. (Aguilar,
supra, 25 Cal.4th at p. 852.) However, it went on to opine that the presumption that
such a motion should be granted ― ‗sparingly‘ does not mean ‗seldom if ever.‘
Hence, although such motions should be denied when they should, they must be
granted when they must.‖ (Id. at pp. 847, 852.) On this relatively unhelpful note, we
turn to our review of the conspiracy evidence presented by the plaintiffs in the instant
case.
B. Sufficiency of the Conspiracy Evidence: Ford U.S.
We consider first whether the evidence submitted by the plaintiffs is sufficient
to raise a triable issue of material fact with respect to Ford U.S.‘s participation in the
alleged conspiracy to restrict Canadian exports. Specifically, under Aguilar, we ask
whether it is more likely than not—on the evidence presented—that Ford U.S.
entered into an illegal agreement with any other alleged co-conspirator to restrict the
export of Canadian vehicles into the United States. As a preliminary matter, we
acknowledge the authority cited by Ford for the proposition that a corporation and its
wholly owned subsidiary are incapable of conspiring under the antitrust laws. (See
Copperweld Corp. v. Independence Tube Corp. (1984) 467 U.S. 752, 769–771
(Copperweld); Freeman v. San Diego Association of Realtors (1999) 77 Cal. App. 4th
171, 189.) As the United States Supreme Court explained in Copperweld: ―[T]he
coordinated activity of a parent and its wholly owned subsidiary must be viewed as
that of a single enterprise for purposes of [section] 1 of the Sherman Act. A parent
and its wholly owned subsidiary have a complete unity of interest. Their objectives
are common, not disparate; their general corporate actions are guided or determined
not by two separate corporate consciousnesses, but one. They are not unlike a
multiple team of horses drawing a vehicle under the control of a single driver. With
32
or without a formal ‗agreement,‘ the subsidiary acts for the benefit of the parent, its
sole shareholder. If a parent and a wholly owned subsidiary do ‗agree‘ to a course of
action, there is no sudden joining of economic resources that had previously served
different interests, and there is no justification for [section] 1 scrutiny.‖
(Copperweld, supra, 467 U.S. at p. 771.) In fact, the plaintiffs here acknowledge that
they are not arguing that Ford U.S. is liable because it conspired with its subsidiary,
Ford Canada. Thus, in reviewing the materials the plaintiffs contend establish Ford
U.S.‘s participation in the alleged conspiracy, evidence that Ford U.S. and Ford
Canada were working together to combat the export of Canadian vehicles to the
United States proves nothing more than unilateral action by Ford in response to a
perceived threat.
Nevertheless, in an attempt to meet their burden under Aguilar, plaintiffs point
first to a collection of materials prepared in advance of a November 2001 meeting
between Ford U.S. and Ford Canada on the issue of unauthorized Canadian exports,
referred to in the documents as ―Canadian brokering.‖ The record contains three
different iterations of an agenda or talking points for this anticipated ―Canadian
Brokering Summit,‖ which were prepared by Ford U.S. and make clear that the
company was concerned about the Canadian export issue from a dealer relations
standpoint. Specifically, Ford U.S. was receiving a substantial number of complaints
from their U.S. dealers regarding unfair competition from Canadian exports being
sold as ―new‖ within their franchise areas. The issue was particularly contentious
with respect to Thunderbirds, a ―high-profile, high-margin vehicle.‖ In addition,
Canadian brokering was problematic for Ford U.S. because it was costing them
money. Indeed, according to the materials, Ford U.S. was making ―as much as
$5000 less on some vehicles which [were] sold in Canada and then brokered,
compared to what [they] would have earned had the vehicle gone directly to a US
dealer.‖
Attached to the agenda was a list of suggested actions that could be taken to
help solve the export problem, including the pros and cons of each. For instance,
33
Ford U.S. suggested adding a unique character to Canadian VIN‘s to make the
Canadian vehicles easier to track. Another proposal was to cancel the sale of an
exported vehicle, charge back the Canadian dealer who sold it, and then re-report the
sale using the appropriate U.S. dealer code. None of the proposed action items,
however, suggested or required the involvement of any other manufacturer; nor did
any of the agenda materials mentioned above discuss coordination with competitors.
Indeed, plaintiffs conceded as much below, but argued that the documents show that
Ford U.S. exercised ―a modicum of control‖ and directed Ford Canada on the issue
of exports. To the contrary, we view these materials as revealing only that Ford U.S.
had identified what it saw as a significant problem and was looking to Ford Canada
to help solve it. There is certainly no evidence that Ford Canada was acting as an
authorized agent of Ford U.S. for purposes of entering into an unlawful conspiracy.
(See United States v. Bestfoods (1988) 524 U.S. 51, 61 (Bestfoods) [a parent
corporation generally ―is not liable for the acts of its subsidiaries‖]; see also In re
Capacitors Antitrust Litigation (N.D. Cal. 2015) 106 F. Supp. 3d 1051, 1071 [quoting
Bestfoods in dismissal of parent corporation from antitrust action where there were
no allegations that the parent company, itself, participated in the alleged
conspiracy].)
The plaintiffs also claim that Ford U.S. was likely part of the alleged
conspiracy because it was the primary beneficiary of the export restrictions, which
allowed the manufacturer to sell its U.S. vehicles at a premium. The evidence does
reveal that Ford U.S. possessed a motive to conspire. Reportedly, for instance, the
consensus at the November 2001 Canadian Brokering Summit was that between 500
and 700 Ford vehicles per month were being brokered from Canada to the United
States at that time. As stated above, Ford was losing as much as $5000 on each
Canadian brokered sale. Indeed, in considering the situation, Bill Glick, a Ford U.S.
executive, opined: ―There still appears to be a substantial revenue/profit opportunity
for the Company if we can effectively address the Canadian brokering situation.‖ In
line with this conclusion, Ford U.S. generated a list of proposed follow-up actions
34
after the November 2001 meeting which included: redefining ―new vehicle‖ as
having less than a certain number of miles; working toward eliminating the Canadian
tax rebate (GST) for exported vehicles; rewriting buyer orders to be cancelable if the
buyer is determined to be a broker; increasing manpower to audit dealerships;
reviewing competitive procedures regarding warranties (especially Honda‘s);
providing feedback to dealers on actions taken; engaging a consultant to study the
brokering issue and recommend solutions; and investigating specific brokering
activity involving Hertz as well as the brokering of Ford Thunderbirds. Again,
however—other than collecting information regarding competitors‘ warranty
procedures—none of these proposed actions mentioned involvement of, or
coordination with, competitors. 17 Moreover, although the evidence may show that
Ford U.S had motive to conspire with other automobile manufacturers to restrict
Canadian exports, this, without more, is insufficient to prove conspiracy. (See
Aguilar, supra, 25 Cal.4th at p. 864 [―We recognize that Aguilar did indeed present
evidence that the petroleum companies may have possessed the motive, opportunity,
and means to enter into an unlawful conspiracy. But that is all. And that is not
enough‖].) In sum, nothing in the Canadian Brokering Summit materials ―tends to
exclude‖ the possibility that Ford U.S. was acting independently and in its own self-
interest, rather than collusively with other alleged co-conspirators. (Aguilar, supra,
25 Cal.4th at p. 852.)
In addition, however, plaintiffs point to several emails they claim are evidence
that Ford U.S. ―was involved with and approved of communications with
competitors.‖ The first is a December 1999 email from a Ford Canada executive to
Ford U.S. stating that he had been in touch with his ―contact‖ at Honda Canada, who
reported the use of export controls very similar to those used by Ford Canada. The
email additionally mentions that Honda Canada had been voiding warranties, but had
17We discuss below the insufficiency of information gathering from competitors as a
basis for establishing antitrust liability.
35
been receiving a significant amount of ―push back‖ from relocated Canadian
consumers and U.S. customers who had unknowingly purchased gray market
vehicles. The second email was written by a Ford U.S. executive, Bill Glick, in
March 2002 and indicates that representatives of Ford U.S. had learned from a
former Ford employee working for Chrysler that Chrysler was considering voiding
warranties. With respect to the Ford Canada email, there is no indication that Ford
U.S. either solicited or approved of Ford Canada‘s collection and dissemination of
industry information from Honda Canada. More importantly, though, both emails
fail to go beyond information gathering from competitors regarding an industry
problem, activity that is condoned under the antitrust laws. (See Biljac, supra, 218
Cal.App.3d at p. 1430 [industry participants do not ― ‗become . . . conspirators
merely because they gather and disseminate information . . . bearing on the business
in which they are engaged and make use of it in the management and control of their
individual businesses . . .‘ ‖].) Thus, these emails do little to prove unlawful
collusion.
The only other conspiracy evidence identified by the plaintiffs involving Ford
U.S. is a March 2002 internal Ford U.S. memorandum written by Bill Glick. In that
document, Bill Glick stated: ―[P]lease note that Dave Kelleher [an in-house attorney
for Ford U.S.] has calls into his counterparts at DCX [DaimlerChrysler U.S.] and
GM to discuss potential industry-wide solutions.‖ Plaintiffs contended in the trial
court that this evidence alone showed Ford U.S. ―actively participating in the
conspiracy.‖
However, even assuming the calls were made—a fact disputed below—there
is no indication in this statement that Ford U.S. did anything more than make initial
contact with certain competitors to discuss an industry issue. Further—in contrast to
the meeting evidence discussed below where numerous alleged co-conspirators
accepted an invitation to meet knowing that the sole topic of discussion would be the
development of an industry-wide solution to the Canadian export problem—there is
no indication here that Ford U.S.‘s competitors were even willing to talk about these
36
issues. Under such circumstances, there is simply no evidence, or even inference,
from which a reasonable jury could conclude that Ford U.S. agreed with any other
alleged co-conspirator to do something together about the export problem or that it
even understood the goals of the alleged conspiracy and actively participated in it.
(See Biljac, supra, 218 Cal.App.3d at pp. 1425–1426; see also In re TFT-LCD (Flat
Panel) Antitrust Litigation (N.D. Cal. 2008) 586 F. Supp. 2d 1109, 1117 [―the heart of
an antitrust conspiracy is an agreement and a conscious decision by each defendant
to join it,‖ italics added]; ibid. [finding general allegations against all corporate
entities in a single corporate structure insufficient under federal antitrust law; leave to
amend granted to more specifically plead how each individual corporate defendant
joined the alleged conspiracy].) This single email, then, is manifestly not enough to
raise a triable issue of material fact as to whether Ford U.S. unlawfully conspired
with its competitors in violation of the Cartwright Act. (See Aguilar, supra, 25
Cal.4th at p. 852.) Thus, with respect to Ford U.S., the trial court‘s grant of summary
judgment was proper.
C. Sufficiency of the Conspiracy Evidence: Ford Canada
A summary judgment determination with respect to Ford Canada, however, is
less straightforward. Indeed, the record in this matter—including deposition
testimony, declarations, expert opinions, interrogatories, requests for admission, and
related document production—is factually complex and fills more than 26,000 pages.
Because we need only identify evidence sufficient to establish the existence of one
issue of material fact in order to reverse the trial court‘s grant of summary judgment
in favor of Ford Canada, however, we need not engage in an exhaustive recitation of
all of the potentially relevant evidence presented below.
Moreover, we note that, in ruling on Ford Canada‘s summary judgment
motion, the trial court excluded vast amounts of potentially highly relevant evidence
related to Ford Canada‘s alleged co-conspirators on hearsay grounds, presumably
concluding that the plaintiffs had failed to make the prima facie showing necessary
for application of the co-conspirator exception to the hearsay rule. (See Evid. Code,
37
§ 1223.) Since, on appeal, the plaintiffs have only challenged the trial court‘s
rejection of the two pieces of evidence discussed above, we will not consider the
remainder of the excluded materials in reaching our decision. (Biljac, supra, 218
Cal.App.3d at p. 1420 [failure to raise issue on appeal constitutes abandonment]; see
also Guz, supra, 24 Cal.4th at p. 334 [evidence to which objections have been made
and sustained must be disregarded on review of summary judgment].) Finally, since
the plaintiffs have not contested the trial court‘s conclusion that Ford Canada met its
initial burden of production, making—through general denials of wrongdoing; proof
of prior consistent conduct; and evidence of independent business reasons for its
actions—a prima facie showing of the absence of any conspiracy, we will not here
revisit that determination.
Rather, we are left solely with the question of whether the plaintiffs have
carried the burden of production, as shifted onto their shoulders, to make a prima
facie showing of the presence of an illegal agreement among the named defendants to
curb Canadian exports. In the words of the trial court, we explore whether plaintiffs
produced evidence ―that tends to exclude the possibility that the defendants acted
independently rather than collusively.‖ We believe that the plaintiffs have produced
such evidence in an amount sufficient to defeat Ford Canada‘s bid for summary
judgment.
Preliminarily, however, we note that there is some evidence which, although
stressed by one party or the other, is not particularly helpful in resolving the question
before us. For instance, we do not believe the fact that some or all of the relevant
automobile manufacturers, including Ford, might have engaged in unilateral
activities designed to curtail Canadian exports in the decades preceding the alleged
conspiracy period negates the possibility of unlawful collusive action during that
period. Rather, as the trial court correctly noted,18 entering into an anti-competitive
18 Specifically, the trial judge opined: ―I think the law is that if you‘re doing something
parallel without concerted effort and then at some point you go into—you enter into an
arrangement, an agreement, by which you say we‘re going to keep doing this and now
38
agreement not to stop doing what you previously may have had the ability to do on
your own is sufficient for purposes of liability under the Cartwright Act. (See
Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 41-43, 49-50
(Quelimane).)
For example, Quelimane involved an alleged conspiracy under the Cartwright
Act among title insurers who refused to sell title insurance on real property acquired
through a tax sale. (Quelimane, supra, 19 Cal.4th at p. 48.) Our Supreme Court
determined that the allegations in the complaint were not subject to demurrer despite
the fact that ―an insurer may lawfully and individually conclude that the risks
inherent in insuring a title to property conveyed by tax deed outweigh the potential
benefit and decline to issue title insurance to purchasers of tax-deeded property.‖ (Id.
at p. 49.) The high court reached this conclusion because ―[r]ecognition that a single
participant in the market might refuse to insure tax deed titles for a legitimate
business reason does not demonstrate that there is ‗a purpose unrelated to elimination
or reduction of competition‘ [citation] for an agreement by a combination of insurers
to refuse such policies. . . .‖ (Id. at pp. 49-50, italics added.)
Rather, ―an agreement among all title insurers in a county that none will issue
policies on property conveyed by tax deed . . . implies a purpose of ensuring that
none will seek what might otherwise become a sufficiently lucrative business
opportunity to outweigh the risk. (Id. at p. 50, italics added.) In sum, ―[w]hile
refusing to sell a product to a consumer does not itself violate the Cartwright Act,
when that refusal is the result of a combination, agreement, or conspiracy to make
that product unavailable in a given market a prohibited restraint of trade may be
we‘re all going to do it together like we were before, but we‘re going to keep doing this,
maybe step up our—but we promise we won‘t stop. I think that‘s enough to get to a jury
as a matter of law. I think that is covered by the Cartwright Act.‖ In the end, however,
the trial court described plaintiffs‘ assertion that Ford Canada had conspired with others
to continue doing what it had previously been doing unilaterally as ―pure speculation.‖
As we discuss in detail below, we disagree with this characterization of the plaintiffs‘
evidence.
39
found.‖ (Id. at p. 49.) Thus, it is the existence of an agreement (or lack thereof) that
is controlling. (See also General Motors, supra, 384 U.S. at p. 140 [noting that
whatever General Motors might lawfully have done individually to enforce its dealer
agreements ―is beside the point‖ in the face of evidence of an unlawful combination
in restraint of trade].)
Moreover, evidence of the manufacturers‘ prior course of conduct becomes
less meaningful if a plausible argument can be made that industry conditions changed
significantly at or around the time of the alleged conspiracy. Here, evidence exists
from which a reasonable jury could conclude that segregating the Canadian and
American automobile markets was becoming increasingly difficult by the end of the
last century. Specifically, in the 1980‘s, Canadian vehicles differed from their U.S.
counterparts with respect to physical and mechanical attributes, emission control
systems, and safety parameters. For instance, in 1983, Ford Canada projected that 70
percent of its 1984 Canadian cars and light trucks would not comply with U.S.
exhaust regulations and could not legally be imported or operated in the United
States. GM informed its dealers in 1986 that some of its Canadian vehicles ―may not
meet U.S. EPA requirements.‖ Under such circumstances, it appears that the ―export
problem‖ during this timeframe was smaller and often involved particularly
desirable, or ―hot‖ cars.
In addition, while manufacturers, including Ford Canada, employed certain
export restraints to address the issue, evidence presented suggests that those controls
were based, at least in part, on legitimate customer satisfaction and legal concerns
that no longer existed during the alleged conspiracy period. For instance, Ford
Canada opined that export sales of its 1984 vehicles would present U.S. purchasers
with ―insurmountable difficulties‖ and could result in repercussions for the dealer,
Ford Canada, and Ford U.S. In 1986, GM stated that the importation of gray market
vehicles made it difficult to administer safety recalls and vehicle warranties and led
to ―some customer dissatisfaction.‖ In 1988, Honda noted that parts for warranty
service on non-USA vehicles might not be readily available in the United States.
40
However, as Ford Canada itself recognized, by 1999 the gray market export of
its vehicles ―seemed to be spiking up fairly significantly.‖ At the same time, the
harmonization of the Canadian and U.S. markets occurred and a favorable exchange
rate for arbitrage was available. As a result, for the first time, automobile
manufacturers faced the possibility of large numbers of essentially fungible, yet less
expensive, cars crossing the border from Canada to the United States.19 No longer
primarily an issue of customer dissatisfaction, it became more clearly a lost profits
issue, especially if another manufacturer chose not to enforce export restrictions in
order to reap the profits available from selling into this new discount channel of
distribution.
In fact, the evidence shows that this very thing happened to Ford Canada
immediately prior to the alleged conspiracy period. Specifically, Ford Canada was
approached in 1999 by an alleged rental car dealer seeking to buy 1,300 automobiles.
Suspicious that the company was actually buying the vehicles for export, Ford
Canada declined the transaction. However—as reported to Ford U.S. by two
different Ford Canada executives—GM Canada and Chrysler Canada subsequently
agreed to split the sale of the 1,300 automobiles ―despite the export ‗compromise.‘ ‖
Arguably, these statements indicating the existence of an ―export compromise‖ could
be viewed as evidence that some type of conspiracy involving exports was in
existence as early as 1999.20 At a minimum, however, the evidence of this aborted
19 Unsurprisingly, this coincided with information gathering by the manufacturers with
respect to the scope of the problem and possible solutions implemented by competitors.
In December 1999, a Ford Canada employee reported a discussion with his ―contact‖ at
Honda Canada regarding Honda Canada‘s existing export restrictions, including the
voiding of warranties. In June 2000, a Ford Canada employee contacted his counterpart
at Chrysler Canada and learned exports were a major problem for them. In September
2000, a Ford Canada executive spoke with Toyota Canada and learned about its response
to the export problem, including pricing ―hot‖ cars the same in the United States and
Canada.
20 When deposed, both Ford Canada executives offered nonconspiratorial, though
differing, explanations for their use of the term ―export compromise.‖
41
rental car transaction suggests that Ford Canada‘s adherence to its export policies
cost it millions of dollars in profits and significant market share because its vehicles
were viewed as interchangeable with the vehicles of other manufacturers for gray
market purposes. Indeed, Ford Canada acknowledged that it would ―feel the share
impact.‖ Further, not only did Ford lose money on the initial sale of the vehicles in
Canada, but the exported cars became cheaper, intra-brand competition for Ford in
the United States. Construing all of this evidence in the light most favorable to the
plaintiffs, a plausible inference exists that—whatever Ford Canada‘s previous
policies or ―compromises‖ regarding export sales—a substantial, and seemingly
different, problem was emerging as early as 1999 that may have demanded a new
response.
In arguing against the existence of an illegal conspiracy, Ford also continually
stresses that no agreement to take joint action came out of any of the allegedly
conspiratorial meetings. However, the absence of any post-agreement indication of
specific joint activity among the manufacturers is not fatal to plaintiffs‘ conspiracy
claim. Ford simply ignores the fact that the posited conspiracy was not necessarily to
work together on joint initiatives, but rather, as the plaintiffs described it: ―to
provide assurances that each defendant would enforce anti-export policies.‖ That is,
it was an agreement that no one would break ranks and take for themselves the
significant profits available in the export market, as had happened in 1999 to the
financial detriment of Ford Canada. Judge Hornby concluded as much in the federal
MDL action when, after detailing the many ways in which the defendants declined to
take industry-wide action, he opined: ―But there is nevertheless probably enough for
a jury to find at least an informal agreement to restrain Canadian exports.‖ (In re
New Motor Vehicles Canadian Export Litig., supra, 632 F.Supp.2d at p. 47 & fn. 8;
see also Monsanto, supra, 465 U.S. 752, 764; Jones v. City of Chicago (7th Cir.
1988) 856 F.2d 985, 992 [―[i]t is enough if you understand the general objectives of
the scheme, accept them, and agree, either explicitly or implicitly, to do your part to
42
further them‖].) Thus, we are not persuaded that the lack of evidence of an adopted
industry-wide ―solution‖ necessarily undercuts the plaintiffs‘ conspiracy claims.
Finally, we agree with the trial court that evidence indicating that certain of the
defendant manufacturers ―stepped up‖ their anti-export policies after the start of the
alleged conspiracy period is not necessarily evidence of an agreement to do so. The
evidence that the plaintiffs themselves present shows that manufacturers were facing
an entirely new economic climate in which an unprecedented number of essentially
fungible lower-priced Canadian vehicles were suddenly available for profitable
export to the United States. Under such circumstances, it seems plausible, that—
even in the absence of a conspiracy—manufacturers might decide unilaterally to
boost their efforts to combat this extremely costly problem. Thus, in this case,
without other evidence tending to exclude the possibility of unilateral behavior,
documentation of increased action to combat exports is not particularly probative of
unlawful conspiracy.
Having described the evidence and arguments we find unconvincing, we turn
now to a discussion of the evidence that could be interpreted as tending to exclude
unilateral action, thereby making unlawful conspiracy more likely than not.21
1. Meeting Evidence
First, plaintiffs have produced significant evidence of telephone and in-person
meetings among the manufacturers, aided by CADA, the express purpose of which
21 Citing Continental Ore, plaintiffs argue on appeal that the trial court erred by failing to
consider all of the conspiracy evidence as a whole. Instead, they claim, the court below
compartmentalized the various types of evidence and then gave the benefit of the doubt to
Ford on every category. The trial court, however, expressly addressed this very
argument, stating: ―I didn‘t compartmentalize the evidence. I‘m aware that when you
have a claimed conspiracy, the parts relate to each other.‖ More fundamentally, given
our de novo review of the matter, the trial court‘s process in reaching its decision is
essentially irrelevant. We will engage in our own review of all of the evidence presented.
(See Continental Ore, supra, 370 U.S. at p. 699; see also Code Civ. Proc., § 437c,
subd. (c) [summary judgment appropriate only when ―all the papers submitted‖ show no
issue of material fact].)
43
was to come up with a joint approach to stamping out the gray market export of
Canadian vehicles to the United States. As stated above, there is evidence in the
record that, by 2000, the manufacturers were discussing the magnitude of the export
problem among themselves. In addition, during this timeframe, individual
manufacturers conferred regarding the possibility of working together to address
unauthorized export sales. For instance, Toyota Canada asked a representative of
Honda Canada (Miller) if he was ―interested in joining with some other
manufacturers to come up with a common method of resolving export sales.‖ Miller
was also contacted by Ford Canada and Chrysler Canada to the same effect. Indeed,
a representative of Ford Canada called Miller in an attempt to persuade him to work
together on the export issue, stating that Honda Canada ―should join them. It was for
the betterment of the industry‖ and ―it would be easier if all the manufacturers were
common in their approach to the dealers, as it relates to export sales.‖ 22
On October 25, 2000, Norm Stewart, General Counsel for Ford Canada, sent a
message via facsimile to the CVMA indicating that he wanted the CVMA to ―initiate
a conference call‖ with representatives of GM Canada, Chrysler Canada, Honda
Canada, and Toyota Canada ―as soon as possible, to discuss a proposed meeting with
CADA . . . aimed at developing an industry-wide approach to ending unauthorized
export sales‖ (italics added). On October 27, 2000, Stewart participated in a
conference call with representatives of other automobile manufacturers, including
Chrysler Canada (Grant), GM Canada (McDonald), Honda Canada (Miller), and
Toyota Canada (Millette). According to Stewart, who admitted that the call was
organized at his request, the purpose of the call was to ―talk about export issues.‖
Stewart‘s deposition testimony further reveals that the result of the call was direction
to Dave Adams at CVMA ―to get back to CADA to indicate that we would be
prepared to meet.‖
22 These statements regarding the potential benefits of joint action were not admitted by
the trial court for their truth.
44
Ultimately, an industry meeting was scheduled at CADA‘s offices on May 15,
2001, to discuss the export sales problem. Representatives of Ford Canada (Stewart),
GM Canada (Risebrough and McClean), Chrysler Canada (Rose), Toyota Canada
(Millette), the CVMA (Adams), and the AIAMC (Biggs) attended a ―pre-meeting‖
on May 15 to discuss the issues that they anticipated would be raised at this CADA-
sponsored event. These same individuals—along with additional representatives of
the AIAMC (Hodges and Watkins) and Chrysler Canada (LeBlanc), representatives
from CADA (Little, Gauthier, Ryan, Riccoboni, and Clark) and representatives of
certain regional dealer associations—then attended the actual meeting in CADA‘s
offices, which reportedly lasted from lunchtime until four or five o‘clock.
Minutes from the meeting, the admissibility of which was determined above,
indicate that the meeting‘s objective, as articulated by CADA, was to develop ―a
strategy to solve the industry problem of export sales of new automobiles to the
United States,‖ including the possibility of ―one set of rules, a protocol, which could
be applied across the industry.‖ Possible industry solutions, and the difficulties
associated with them, were explored. For instance, a representative of a regional
dealer association indicated that no-export clauses in sales agreements did not appear
to be an effective deterrent. A common due diligence list was seen as problematic
because it would be overly cumbersome to use with every customer; sophisticated
export brokers would likely find ways to circumvent the standard process; and
customers were reported to resent being questioned regarding their purchase.
Development of a shared database of known exporters, possibly maintained by
CADA, was criticized due to possible definitional differences among manufacturers,
the need for constant updating, and Competition Act, Privacy Act, and defamation
concerns. Participants also discussed the development of a best practices list through
dialogue with the dealers and lobbying the government for tax reform aimed at
combating export sales.
In the end, as mentioned previously, no particular solution was adopted.
Rather, a list of proposed actions was generated, including: (1) determining the size
45
of the problem through collection of statistical data from all manufacturers;
(2) developing an employee education program for the dealers on the export issue;
(3) tax reform to eliminate certain rebates for gray market exports; (4) profiling the
importance of the two-tiered distribution system to Canada, as equalization of pricing
in Canada and the United States could lead to fewer sales in Canada, lost jobs, and
older cars on the road; (5) seeking advice from outside counsel ―with respect to any
Competition Act implications of any industry-wide export sales initiatives‖;
(6) surveying dealers with respect to their best practices in the prevention of exports;
(7) checking with NADA to assess the export situation from the U.S. perspective;
and (8) investigating the possible future development of a shared database. As stated
above, the minutes ended with the admonition: ―PLEASE KEEP THESE NOTES
CONFIDENTIAL.‖
Citing Biljac and the trade association meeting cases, Ford argues that
discussing an industry problem as a group is not evidence of an illegal agreement to
restrain trade and, in fact, is actually condoned by the Cartwright Act. (See Biljac,
supra, 218 Cal.App.3d at p. 1430; see also Aguilar, supra, 25 Cal.4th at pp. 839–840,
862–863; In re Citric Acid Litigation, supra, 191 F.3d at pp. 1097–1099; Alvard-
Polk, supra, 37 F.3d at pp. 1005–1006, 1013–1014.) We agree that, given the
evidence of changed market forces during the timeframe of the alleged conspiracy—
including the harmonization of safety and environmental standards, the weakening of
the Canadian dollar, and the recent spike in gray market exports—the issue of export
sales was a ―timely and natural one[] within the industry.‖ (Biljac, supra, 218
Cal.App.3d at p. 1430.) However, we believe the evidence in this case goes
significantly beyond the benign exchange of information on a common industry
problem permitted under the antitrust laws. Indeed, this is not a situation where the
export issue was part of a general industry discussion covering a large number of
topics. (Biljac, supra, 218 Cal.App.3d at p. 1433.) Instead, the evidence shows a
series of communications and meetings the sole purpose of which was, as plaintiffs
46
put it, ―to figure out an industry solution to stamp out the export problem.‖ 23 In
addition, the record is clear that the participants were aware of the legal problems
inherent in concerted activity among the manufacturers. Yet they met and discussed
working together on restricting exports anyway. Under these circumstances, we
believe that the evidence of telephone and in-person meetings among the alleged co-
conspirators proffered by the plaintiffs could be viewed as tending to exclude the
possibility that the manufacturers acted independently rather than collusively with
respect to exports. (See Aguilar, supra, 25 Cal.4th at p. 852.)
Moreover, our conclusion is not altered by Ford‘s additional claim that
agreeing to meet with competitors to discuss the possibility of an industry-wide
solution does not make it more likely than not that the individual actions
subsequently taken by the manufacturers to restrict exports were the result of an
illegal agreement, especially where the evidence shows that no industry-wide
solution was ever implemented. As discussed above, we do not believe the fact that
no common response to the export problem was ever adopted by the manufacturers
precludes a finding of conspiracy. As for the argument that agreeing to meet is
different than agreeing to conspire, that is, of course, true. However, agreeing to
meet extensively on the sole topic of how best to restrict exports as an industry
certainly raises a plausible inference that the alleged co-conspirators had all
previously agreed to hold the line together on export sales, and were thus willing to
23 Indeed, this is the position that was initially articulated by the trial court, which stated
during the summary judgment hearings below: ―You can‘t satisfy your burden by
showing that there was an opportunity to meet. You can‘t satisfy your burden to show
that they simply met without regard to regarding [sic] anything. So the type of evidence
you usually see that there was a convention and they all went to the convention, and they
all had dinners together and the like; not enough. [¶] What you have here is a series of
communications where it is clear what the topic of the communications would be, and I
think there is admissible evidence as to each of the defendants here that they participated
to some extent in communications with each other where the topic of the problem that
they all shared was discussed. So that‘s different than saying, well, they had lunch at the
American Bankers Association.‖
47
explore together in detail the most effective means of implementing that anti-
competitive pact. Thus, the meeting evidence might be sufficient, in and of itself, to
defeat Ford Canada‘s summary judgment motion. Ultimately, however, we need not
decide whether this evidence, standing alone, is sufficient to persuade a trier of fact
that unlawful conspiracy among the automobile manufacturers is ―more likely‖ than
permissible competition, because the record contains additional evidence supporting
the existence on an illegal agreement to restrict Canadian exports. (See Aguilar,
supra, 25 Cal.4th at p. 852.)
2. Possible Direct Evidence of Agreement
For instance, as discussed at length above, Pierre Millette‘s conclusion after
participating in the May 15, 2001, CADA meeting—as well as a number of previous
meetings and calls—was that there was ―general support for the approach‖ of trying
to keep Canadian vehicles in Canada. Moreover, when asked if there was an
agreement among the manufacturers ―to work together to keep vehicles in Canada,‖
Millette responded that it wasn‘t an ―agreement,‖ but was instead ―simply a concept
that there was some consensus on from everyone at the meeting.‖ We believe that
this evidence—that one of the key alleged co-conspirators thought that there was a
―consensus‖ among all of the meeting participants to work together to keep Canadian
vehicles from crossing the border—could be viewed as highly probative of
conspiracy. Indeed, based on these comments, which the trial court expressly
refused to consider, a reasonable juror could conclude that Ford Canada and the other
alleged co-conspirators ― ‗ ―had a conscious commitment to a common scheme
designed to achieve an unlawful objective‖ ‘ ‖ (Biljac, supra, 218 Cal.App.3d at
pp. 1425–1426.) In other words, the trier of fact could find that each member of the
group had committed to do its part to restrain Canadian new vehicle exports to the
United States, thereby cutting off a burgeoning discount channel of distribution. (Cf.
General Motors, supra, 384 U.S. at p. 144 [―General Motors sought to elicit from all
the dealers agreements, substantially interrelated and interdependent, that none of
them would do business with the discounters. These agreements were hammered out
48
in meetings . . . and in telephone conversations . . . . It was acknowledged from the
beginning that substantial unanimity would be essential if the agreements were to be
forthcoming‖].)
Of course, we recognize that Mr. Millette‘s comments are subject to
interpretation and are at least potentially contrary to other of his statements contained
in the record. Indeed, for its part, Ford argues that the Millette testimony is not direct
evidence of conspiracy proving, at most, only that all of the manufacturers viewed
Canadian exports as a problem. However, as our Supreme Court recently reiterated:
― ‗[T]he task of disambiguating ambiguous utterances is for trial, not for summary
judgment.‘ ‖ (Reid, supra, 50 Cal.4th at p. 541; see also ibid. [―[d]etermining the
weight of . . . ambiguous remarks is a role reserved for the jury‖].) Put another way,
in ruling on a motion for summary judgment, ―the court may not weigh the plaintiff‘s
evidence or inferences against the defendants‘ as though it were sitting as the trier of
fact.‖ (Aguilar, supra, 25 Cal.App.4th at p. 856; see also Monsanto, supra, 465 U.S.
at pp. 767–768 & fn. 12 [―[t]he choice between two reasonable interpretations of the
testimony was properly left for the jury‖].)
For our purposes, then, it is sufficient to conclude that if presented with the
Millette testimony—especially in the context of the meeting evidence discussed
above—a reasonable juror could find an unlawful conspiracy to restrict Canadian
exports more likely than not. (See Aguilar, supra, 25 Cal.4th at p. 852.) Further, we
need not determine whether the deposition testimony is best characterized as direct or
circumstantial evidence of the alleged conspiracy because we conclude that,
regardless, it is evidence that tends to exclude the possibility that the alleged co-
conspirators acted independently rather than collusively. (See ibid.) Thus, it is
sufficient to support reversal of the trial court‘s summary judgment decision in favor
of Ford Canada.24
24Although we do not consider it in reaching our decision, we note that there is other
potential direct evidence of conspiracy in the record that the trial court excluded on
hearsay grounds, a decision not challenged by plaintiffs for purposes of this summary
49
3. Evidence of Actions Taken to Further Alleged Conspiracy
In addition to the materials detailed above, several other categories of evidence
presented by the plaintiffs—while perhaps not sufficient in and of themselves to send
the issue of conspiracy to a jury—do tend to lend further support the plaintiff‘s
theory of the case. For instance, the uncontested evidence shows that all of the
manufacturers continued to enforce export restrictions in the wake of the May 15,
2001, CADA meeting, with many ―stepping up‖ their export efforts. In June 2001,
Ford Canada generated a list of Export Sales Policy Actions, including ―[o]ngoing
dialogue with industry contacts to share ‗best practices.‘ ‖ Thereafter, in August
2001, Ford Canada requested that its regional managers contact dealers, informing
them that continued export sales would ―result in restricted allocations of high
demand products for Canadian Dealers and increased pressure to increase prices.‖
Further, they were to indicate that such sales could lead to termination, chargebacks,
and suspension from dealer incentive programs. Finally, the managers were
instructed to assure the dealers that ―[t]he company will share best practices
volunteered by you and your fellow Dealers in preventing export sales as well as
working with CADA and other vehicle manufacturers on an industry-wide approach
to deter export sales.‖ (Italics added.) There is also evidence that Ford Canada
actually reduced vehicle allocations, provided blacklists of known exporters to its
judgment motion. For instance, a draft letter by a senior executive at Chrysler Canada
dated April 2002 to ―All DaimlerChrysler Canada Retailers‖ states: ―We have joined
forces with the other manufacturers (with CVMA and AIAMC) and have met with
CADA officials to explore additional deterrents to the export activity.‖ (Italics added.)
In addition, an internal email from Pierre Millette to others at Toyota Canada describes
an April 2002 meeting among representatives of CADA, various manufacturers, and
dealers as follows: ―GM was not present but had advised they were supportive of joint
action. They are involved in a lawsuit with one of the biggest exporters and one of the
allegations is an industry conspiracy to stop exports which makes their participation in
the conspiracy (all present agreed there was nothing illegal with what was being done) to
stop exports a problem.‖ (Italics added.)
50
dealers, circulated best practices, imposed chargebacks, and initiated dealer
termination proceedings during this timeframe.
Other manufacturers followed suit, each relying on the export restrictions they
found most effective for their particular situation. Chrysler Canada, for instance,
issued chargebacks, maintained a blacklist of known or suspected exporters, and
supplied its dealers with a list of due diligence ―checkpoints‖ to be employed to
uncover exporters. It began refusing to honor warranties beginning in 2002. GM
Canada issued chargebacks; enhanced its best practices list; and strengthened its
Franchise Agreement to allow for penalties on, and termination of, exporting dealers.
Toyota Canada had an online blacklist of suspected exporters, issued chargebacks,
and monitored the availability of replacement speedometers. Honda Canada stopped
honoring warranties in 1998 for gray market vehicles. During the period of the
alleged conspiracy, it maintained a due diligence checklist, issued chargebacks, and
reduced vehicle allocations to exporting dealers. Thus, the manufacturers
consistently enforced export restraints during the timeframe of the alleged
conspiracy, and there is no evidence in the record that any manufacturer broke ranks
during this period and decided to collect the easy profits available to it from allowing
gray market sales. Although insufficient standing on its own, such parallel conduct
can be probative evidence of unlawful collusion. (Apex Oil Co. v. DiMauro (2d Cir.
1987) 822 F.2d 246, 253.)
An agreement among competitors, however ― ‗may be inferred on the basis of
conscious parallelism, when such interdependent conduct is accompanied by
circumstantial evidence and plus factors.‘ ‖ (Mayor and Council of Baltimore v.
Citigroup (2d Cir. 2013) 709 F.3d 129, 136 (Citigroup).) These plus factors include
things such as: ―a common motive to conspire, evidence that shows that the parallel
acts were against the apparent individual economic self-interest of the alleged
conspirators, and evidence of a high level of interfirm communications.‖ (Ibid.)
Here, the alleged co-conspirators continued to meet and otherwise communicate
regarding the export issue during the alleged conspiracy period. An additional
51
conference call on export sales was held on May 28, 2001. Representatives of Ford
Canada met with CADA in February 2002 to discuss exports. Toyota Canada met
with CADA in March 2002 with respect to similar concerns. Two other CADA-
sponsored industry meetings on the topic of export sales were held in April and
November 2002. Thus, there was a high level of interfirm communication.
In addition, the plaintiffs presented evidence that the alleged co-conspirators
shared information throughout the alleged conspiracy period. For example, in March
2001, Ford Canada obtained a copy of Chrysler Canada‘s blacklist and added the
names to Ford‘s blacklist. During the May 28, 2001, conference call, Norm Stewart
explained Ford Canada‘s process for tracking exports through VIN‘s and suggested
that the industry could undertake a similar analysis. In March 2002, GM Canada was
in possession of export volume data pertaining to both Ford and Chrysler. Further, as
stated above, in June 2001, Ford Canada espoused ―[o]ngoing dialogue with industry
contacts to share ‗best practices.‘ ‖ It sent a copy of its best practices to CADA in
March 2002. However, Ford‘s own expert testified that enforcing export restraints
was a difficult and expensive thing to do and that sharing know-how with a rival that
would reduce its export costs or help protect its dealer network would not be in
Ford‘s unilateral self-interest absent receipt of something in return.
In fact, such information sharing, in and of itself, was found sufficient to
defeat summary judgment in Coca-Cola, supra, 2000 U.S. Dist. LEXIS 17089. In
that case, the plaintiff alleged that the Coca-Cola Company and its horizontal
competitors, including Pepsi Cola and Cadbury Schweppes, were engaged in a
conspiracy to exchange information about exporters and drive them out of business.
(Id. at *28.) Although there was no direct evidence of an express conspiracy to
boycott exporters, there was circumstantial evidence, including: (1) documentation
that Coca-Cola and Pepsi exchanged information regarding exporters; (2) a request
from certain distributors that Coca-Cola handle exports for Canada Dry in the same
way it handled Coca-Cola exports; (3) a memorandum indicating that Coca-Cola had
provided Canada Dry with the names of three exporters; and (4) a report by Cadbury
52
Beverages which included information on Coca-Cola exports. (Id. at *29–30.)
Rejecting Coca-Cola‘s argument that this information sharing revealed only
― ‗isolated contacts‘ that occurred after each manufacturer independently adopted its
own [anti-export] program in the pursuit of each licensors‘ independent economic
interest,‖ the trial court concluded that summary judgment was inappropriate because
―evidence of this concerted activity is more consistent with an impermissible
purpose, an agreement to jointly combat the [exporting] competitors.‖ (Id. at *31.)
In sum, given the particular circumstances of this case, the parallel conduct
engaged in by the manufactures during the alleged conspiracy period provides
additional support for the plaintiffs‘ claimed conspiracy.
4. Evidence of Economic Motive to Conspire
Finally, there is motive evidence in the record, suggesting that the alleged co-
conspirators had no economic incentive to maintain or increase export restraints
during the timeframe of the alleged conspiracy in the absence of an illegal
agreement. (See Citigroup, supra, 709 F.3d at p. 136.) Although the economic
analysis is complex and vigorously disputed by Ford, plaintiffs‘ expert Professor
Robert E. Hall, of Stanford University and the Hoover Institute, essentially maintains
that—under the conditions prevailing during the class period—the unilateral
imposition of export restraints by an automobile manufacturer would have been
unprofitable because that manufacturer would lose the profits available to it from
selling Canadian vehicles into the United States market. Although the manufacturer
would profit from selling more higher-priced American vehicles in the United States,
the loss in profits would be greater than any gain because ―the gray-market sales for
one manufacturer displace the gray-market sales of other manufacturers sufficiently
to more than offset the loss of authorized sales in the U.S.‖ Thus, in Professor Hall‘s
53
opinion, ―export restraints would not have been in place or enforced during the class
period under unilateral action by the manufacturers.‖ 25
The plaintiffs argued below that such evidence made unlawful conspiracy
―more likely‖ than permissible competition and also showed the pretextual nature of
the manufacturers‘ asserted justifications for their export restraints. The trial court,
however, was not convinced that this evidence had any probative value. Indeed,
during the hearings on the various summary judgment motions before it, the trial
court at one point stated: ―I am mindful that the claimed conspiracy is in the
economic self-interest of each of the defendants, perhaps. That alone doesn‘t do
anything for you. That‘s not evidence, that‘s simply a perspective. And the fact that
it would be in somebody‘s self-interest to conspire doesn‘t mean that they did.‖
In its order granting summary judgment for Ford, the court acknowledged that
the plaintiffs had presented ―evidence of motive and economic interest to conspire‖
among the alleged co-conspirators. Citing Aguilar, however, the trial court
concluded that ―[t]his evidence alone does not satisfy plaintiffs‘ burden of
production.‖ (See Aguilar, supra, 25 Cal.4th at p. 864 [―We recognize that Aguilar
did indeed present evidence that the petroleum companies may have possessed the
motive, opportunity, and means to enter into an unlawful conspiracy. But that is all.
And that is not enough. Such evidence merely allows speculation about an unlawful
conspiracy. Speculation, however, is not evidence‖]; see also Serfecz v. Jewel Food
Stores (7th Cir. 1995) 67 F.3d 591, 600–601, quoted with approval in Aguilar, supra,
25 As mentioned above, Ford has filed a motion to exclude the opinions and testimony of
Robert Hall in the trial court, along with voluminous supporting documentation.
Plaintiffs, for their part, have responded with extensive materials of their own opposing
Ford‘s motion. The trial court, however, has yet to take any action on Ford‘s motion to
exclude, and thus the Hall reports submitted by plaintiffs in opposition to Ford‘s
summary judgment motion remain ―evidence set forth in the papers‖ to which no
objection has been sustained by the trial court. (Code Civ. Proc., § 437c, subd. (c).) As
such, they must be considered by the trial court—and in this court‘s de novo review—
―[i]n determining whether the papers show that there is no triable issue as to any material
fact.‖ (Ibid.; see also Code Civ. Proc., § 437c, subd. (b)(2).)
54
25 Cal.4th at p. 865, fn. 32 [―[t]he mere existence of mutual economic advantage, by
itself, does not tend to exclude the possibility of independent, legitimate action and
supplies no basis for inferring a conspiracy‖].) While we agree that motive evidence
alone is insufficient to prove conspiracy, we believe it is nevertheless a relevant
consideration.
Here, if believed (and again we acknowledge that its validity is the subject of
intense debate), Hall‘s economic analysis posits that the auto manufacturers would
not have continued to restrict exports during the alleged conspiracy period in the
absence of an agreement that none of them would break ranks and reap the profits
available in the export market. If true, this ―tends to exclude‖ the possibility that the
alleged conspirators acted independently rather than collusively. (See Aguilar,
supra, 25 Cal.4th at p. 852.) Moreover, this evidence of potential economic motive
to conspire does not exist in a vacuum. Rather, it merely further supports the
meeting evidence discussed above, Millette‘s statements regarding the existence of a
―consensus‖ to keep Canadian cars in Canada, and the manufacturers‘ parallel
conduct in restricting exports.
In the end, this is, perhaps, as the trial court acknowledged, ―not an easy case.‖
Nevertheless, we are mindful of Justice Mosk‘s admonition in Aguilar with respect
to summary judgment motions in antitrust proceedings that ―although such motions
should be denied when they should, they must be granted when they must.‖
(Aguilar, supra, 25 Cal.4th at pp. 847, 852.) Viewing all of the evidence as a whole
and in the light most favorable to the plaintiffs, we conclude that summary judgment
must be denied in this case because it should. Plaintiffs have produced sufficient
evidence to create a genuine issue of material fact as to whether Ford Canada and its
competitors entered into an illegal conspiracy to restrict the export of lower-priced
Canadian vehicles to the United States.
55
IV. DISPOSITION
The judgment of the trial court with respect to Ford U.S. is affirmed. The trial
court‘s summary judgment in favor of Ford Canada, however, is reversed and the
matter remanded for further proceedings consistent with this opinion. The plaintiffs
are entitled to their costs on appeal.
56
_________________________
REARDON, J.
We concur:
_________________________
RUVOLO, P. J.
_________________________
RIVERA, J.
57
Automobile Antitrust Case A134913
58
Trial Court: San Francisco Superior Court
Trial Judge: Hon. Richard A. Kramer
Counsel for Appellant: Zelle
Craig Carter Corbitt
Jiangxiao Athena Hou
Michael S. Christian
Saveri & Saveri
Guido Saveri
R. Alexander Saveri
Berman DeValerio
Joseph John Tabacco Jr.
Todd A. Seaver
Matthew D. Pearson
Hausfeld
Michael Paul Lehmann
Michael D. Hausfeld
Christopher L. Lebsock
Cooper & Kirkham
Josef Deen Cooper
Tracy R. Kirkham
John D. Bogdanov
Berger & Montague
H. Laddie Montague, Jr.
Lieff Cabraser Heimann & Bernstein
Michele Chickerell Jackson
Eric B. Fastiff
Cohen Milstein Sellers & Toll
Daniel A. Small
J. Douglas Richards
Kathleen M. Konopka
Emmy Levens
59
Alioto Law Firm
Theresa Driscoll Moore
Duane Morris
Paul S. Rosenlund
Blecher & Collins
Maxwell M. Bleecher
Harold Runkle Collins Jr.
Zwerling, Schachter & Zwerling
Robert S. Schachter
Dan Drachler
Joseph S. Tusa
Amamgbo & Associates
Donald Chidi Amamgbo
The Terrell Law Group
Reginald Von Terrell
Blumenthal & Nordrehaug
Norman B. Blumenthal
Morris & Associates
Stephen Bryan Morris
John Haslet Boone
Chimicles & Tikellis
Steven A. Schwartz
Glancy, Binkow & Goldberg
Susan Gilah Kupfer
Lionel Zevi Glancy
John F. Innelli
Schubert Jonckheer & Kolbe
Robert C. Schubert
Willem F. Jonckheer
Miranda Kolbe
60
Bramson, Plutzik, Mahler & Birkhaeuser
Alan Roth Plutzik
Kyle Loyd Crenshaw
Davis, Cowell & Bowe
Elizabeth Ann Lawrence
Philip F. Bowe
Finkelstein Thompson
Richard M. Volin
Rosemary Medellin Rivas
Green & Noblin
Robert Stanley Green
Gordon-Creed Kelley Holl & Sugerman
Kevin John Holl
James Dombroski
The Ekenna Law Firm
Chief Nnamdi Ekenna
Hagens, Berman, Sobol & Shapiro
Steve W. Berman
Anthony D. Shapiro
Elaine Teresa Byszewski
Hallisey & Johnson
Jeremiah F. Hallisey
Gross Belsky Alonso
Terry Gross
The Mogin Law Firm
Daniel Jay Mogin
Lisa J. Frisella
Chad McManamy
Alexander Michael Schack
Lawrence Genaro Papale
61
Joseph M. Patane
Jeffrey Kenneth Perkins
Trump, Alioto, Trump & Prescott
Mario Nunzio Alioto
Reich Radcliffe
Marc Gene Reich
Counsel for Respondents: Latham & Watkins
Margaret M. Zwisler
Gregory G. Garre
Jason L Daniels
Michael E. Bern
Katherine I Twomey
Adam R. Thomas
62
Automobile Antitrust Case A134913
63