# Appendix — J. Truett Payne Co. v. Chrysler Motors Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_2515%3A03 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1981 - **Citation:** 451 U.S. 557 ## Text NO. 79-1944 IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1980 J. TRUEPT PAYNE COMPANY, INC... a corporation, Petitioner VS. CHRYSLER MOTORS CORPORATION, a ¢ orporation, Respondent JOINT APPENDIX C. Lee REEVES J. Ross Forman, ITI 2922 Arlington Avenue 1600 Bank for Savings South Building Birmingham, Alabama Birmingham, Alabama $5259 35203 (205) 933-7111 (205) 251-3000 Counsel for Petitioner Counsel for Respondent i TABLE OF CONTENTS Page Relevant Docket Entries 1S AE, Opinion of Fifth Circuit in Chrysler Credit Corp. v. J. Truett Payne, Inc., 607 F.2d 1133 (5th Cir. 1979) _ 2 Excerpts of TRANSCRIPT of the Evidence Witnesses: J. Truett Payne 11-95; 223-225 George Ignatin 96-166; 222-223 Leonard J. Piconke ...... 167-190 Eric W. Lindenberg .... 190-196 Martin Geisel 196-221 Exhibits Plaintiff's Exhibits No.: 37 Le i A ENCORE 39 Pilabdian oaienee dd pace EOS aaannwsig A IE iacecionsyolccnices caanhgecenaee a 42 eenaoaa one ee | none OS BR aaa pie ee 45 saieiace ae I assole ocho Pe | STE eee Oe in LTT ST, EET TOE. ER eS HO in A OE BF Wedaobckous Ce 55 reiebaiteabulereccancickNikaacagtal 246 Defendant’s Exhibits No.: ] .....247-265 OE Sainheaielsiaintodaa tennis ga a __ pee Seer Bee 267 31] OORT SEM, _: SERRE: DP het atenensod a tenechncsiccnaghac ERS RE Certificate of Service... REE Se TEVA VEL 275 ] RELEVANT DOCKET ENTRIES Date Complaint against Chrysler Motors Cera oo avec, 20, SOOO Answer of Chrysler Motors Corporation __._.May 14, 1975, District Court Judgment in favor of J. Truett Payne Company and against Chrysler Motors Corporation April 28, 1977 District Court Order Denying Chrysler Motors Corporation’s Motion for Judgment Notwithstanding the Verdict or For New Trial ____.. Maeamrenrrecen ee Ue, Opinion of Fifth Circuit Court of Appeals Reversing District Court’s Judgment _..... Dec. 7, 1979 Order of Fifth Circuit Court of Appeals Denying J. Truett Payne Company's Petition for Rehearing, or in the Alternative, Petition for Rehearing PRA Bh hee _......March 18, 1980 Filing of Petition for Certiorari by Petitioner, J. Truett Payne Company ___ June 10, 1980 Supreme Court’s Order Granting J. Truett Payne Company's Petition for Certiorari eens atk Oct. 6, 1980 2 CHRYSLER CREDIT CORPORATION, a corporation, Plaintiff, v. J. TRUETT PAYNE, INC., etc., et al., Defendants- Third Party Plaintiffs-Appellees, v. CHRYSLER MOTORS CORPORATION, a corporation, Third Party Defendant-Ad- ditional Party Defendant-Appellant. No. 77-2331. United States Court of Appeals, Fifth Circuit. Dec. 7, 1979. Rehearing and Rehearing En Banc Denied Jan. 18, 1980. Appeal from the United States District Court for the Northern District of Alabama. Before GODBOLD, RONEY and FRANK M. JOHN- SON, Jr., Circuit Judges. FRANK M. JOHNSON, Jr., Circuit Judge: This is an appeal from a treble damages judgment awarded against Chrysler Motors Corporation for price dis- crimination in violation of section 2 (a) of the Clayton Act, as amended by the Robinson-Patman Act.’ 1Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a), provides in part as follows: “It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality . . . where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of com- 3 From January 1970 through August 1974, the period at issue, Chrysler Motors was a wholly owned subsidiary of Chrysler Corporation, engaged in wholesaling Chrysler- Plymouth automobiles to retail dealerships throughout the country. J. Truett Payne, Inc., was one of four such dealer- ships in the Birmingham, Alabama, area. Payne went out of business in May 1974. In September 1974, Chrysler Credit Corporation filed suit for the recov- ery of certain unrepaid loans. Part of Payne’s response was the filing of this price discrimination claim against Chrys- ler Motors. Payne alleged that as a result of certain discriminatory sales incentive programs conducted by Chrysler Motors among its dealerships in the Birmingham area, Payne had been forced to pay higher prices for Chrysler automobiles than had its competitors. Payne claimed that because of the higher prices it lost sales and profits, and was eventually forced out of business. Payne sought treble damages under section 4 of the Clayton Act.? In defense, Chrysler Motors maintained that the sales in- centive programs were available on a non-discriminatory basis to all Chrysler dealerships in the Birmingham area, including Payne, and denied that they had had an adverse effect on competition or that they had injured Payne. The district judge severed trial of this Chrysler Motors issue from trial of the Chrysler Credit issues. Testimony merce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimina- Hom... 6 *Section 4 of the Clayton Act, 15 U.S.C. § 15, provides as follows: “Any person who shall be injured in his business or property by rea- son of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover three-fold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.” 4 was taken for six days. Chrysler's motions for a directed verdict made at the close of Payne’s case and at the close of all the evidence were denied. The jury reached a verdict and award against Chrysler of $111,247.48 (Payne had asked for $180,000), which the court trebled. Chrysler's motion for judgment notwithstanding the verdict or for a new trial was denied, and Chrysler filed this appeal. [1] It is well established that in order to recover treble damages under section 4 of the Clayton Act, a plaintiff must prove (1) a violation of the antitrust laws, (2) cog- nizable injury attributable to the violation, and (3) at least the approximate amount of the damage. Larry R. George Sales Co. v. Cool Attic Corp., 587 F.2d 266, 270 (5th Cir. 1979) ; Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 694 (5th Cir. 1975), cert. denied, 424 U.S. 943, 96 S.Ct. 1412, 47 L.Ed.2d 349 (1976); Terrell v. Household Goods Carriers’ Bureau, 494 F.2d 16, 20 (5th Cir.) , cert. dismissed, 419 U.S. 987, 95 S.Ct. 246, 42 L.Ed.2d 260 (1974) . [2] We find it unnecessary to cunsider whether Payne proved that the Chrysler incentive programs violated the Robinson-Patman Act. Because Payne failed to introduce substantial evidence of injury attributable to the programs, much less substantial evidence of’ the amount of such in- jury, the district court erred in refusing Chrysler’s motions for directed verdict and in denying Chrysler’s motion for judgment notwithstanding the verdict. I. Cognizable Injury To show that Chrysler's incentive programs caused it to lose sales, Payne introduced the unsupported testimony of J. Truett Payne, its owner, that customers and salesmen had told him that the dealership was being undersold, and that some salesmen had quit as a result. Payne also introduced 5 evidence showing that its share of retail Chrysler-Plymouth sales in the Birmingham area was 24% in 1970, 27% in 1971, 23% in 1972, and 25% in 1973. Payne contends that it was proper to infer that the 4% drop in 1972 was a re- sult of the incentive program.’ To show lost profits by reason of the programs, Payne introduced only the unsupported testimony of Mr. Payne that he was forced to lower prices in order to meet compe- tition and that for the same reason the dealership had to, or possibly had to, give greater allowances on used-car trade-ins. In an effort to show that the programs forced the dealer- ship out of business, Payne relied on merely conclusory statements to that effect by Mr. Payne and an expert witness.* [3,4] Under Boeing Co. v. Shipman, 411 F.2d 365, 373- 77 (5th Cir. 1969) (en banc) (standard for directed ver- dict and judgment notwithstanding the verdict) , this show- ing was clearly not such as to allow the case to go to the jury. In an antitrust action, as noted above, the plaintiff must show that the defendant’s cond ict materially contrib- uted to his injury. Zenith Radio Corp. v. Hazeltine Re- search, Inc., 395 U.S. 100, 114 n.9, 89 S.Ct. 1562, 23 L.Ed. 2d 129 (1969). He must do so “as a matter of fact and with a fair degree of certainty.” Terrell v. Household Goods Carriers’ Bureau, supra, 494 F.2d at 20. Conclusory state- ments by the plaintiff, without evidentiary support, as to the fact of damage caused by the alleged antitrust violation ’Payne also contends that the 2% increase in 1973 was the result of a 1973 revision of the incentive programs that resulted in sales quotas more favorable toward Payne. While it is true that certain of the incentive pro- grams were so revised, none of these types of programs operated in 1973. The 1973 increase cannot be attributed to their revision. ‘The expert prefaced his statement on the issue with the comment, “I really can’t tell you without having, you know — it’s a hypothetical ques- tion.” 6 are not sufficient. Evidence of a slight decrease in market share roughly coincident with the alleged violation is not sufficient either.* The plaintiff must put forth substantial evidence. If he fails to do so, the defendant is entitled to a directed verdict. See, e. g., Comfort-Trane Air Condition- ing Co. v. Trane Co., 592 F.2d 1373, 1383 (5th Cir. 1979) ; Yoder Brothers, Inc. v. California-Florida Plant Corp., 537 F.2d 1347, 1371 (5th Cir. 1976), cert. denied, 429 USS. 1094, 97 S.Ct. 1108, 51 L.Ed.2d 540 (1977); Foremost- McKesson v. Instrumentation Laboratory, 527 F.2d 417, 418-50 (5th Cir. 1976) ; Shumate & Co. v. National Ass’n of Securities Dealers, Inc., 509 F.2d 147, 153 (5th Cir.), cert, denied, 423 U.S. 868, 96 S.Ct. 131, 46 L.Ed.2d 97 (1975). [5, 6] Payne maintains on this appeal that in a section 2 (a) case mere proof of the alleged price discrimination is sufficient to establish injury by reason of an antitrust viola- tion entitling the plaintiff to damages. This Robinson-Pat- man “automatic damages” concept, as it has come to be called, has some precedential support. See Fowler Manu- facturing Co. v. Gorlick, 415 F.2d 1248 (9th Cir. 1969), cert. denied, 396 U.S. 1012, 90 S.Ct. 571, 24 L.Ed.2d 503 (1970) ; Elizabeth Arden Sales Corp. v. Gus Blass Co., 150 F.2d 988, 996 (8th Cir.), cert. denied, 326 U.S. 773, 66 S.Ct. 231, 90 L.Ed. 467 (1945). But we decline to follow it. As the Supreme Court ruled in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977), the antitrust laws do not provide 5Cf. Feminist Women’s Health Center, Inc. v. Mohammad, 586 F.2d 530, 547 (5th Cir. 1978), cert. denied, US. —.., 100 S.Ct. 262, 62 L.Ed.2d 180 (1979) (decrease in income, without more, does not establish fact of damage). In this case, as Mr. Payne himself testified, there was evidence that the material cause of the 4% decrease in market share Payne experi- enced in 1972 was the relocation of a competing Chrysler-Plymouth dealer into Payne’s immediate sales area, and not the Chrysler incentive programs. 7 a damages remedy for all losses traceable to conduct violat- ing the antitrust laws, only for losses that are part of the anticompetitive effect of such conduct. When a seller charges different prices to different purchasers, as alleged here, injury to competition does not necessarily result. Both the statute and the courts recognize this. 15 U.S.C. § 13 (a). See, e. g., United States v. United States Gypsum Co., 438 U.S. 422, 450, 98 S.Ct. 2864, 57 L.Ed.2d 854 (1978). Competition is harmed only to the extent that the favored purchaser, by use of the discriminatory price differ- ence, actually draws sales or profits fromm his unfavored com- petitor. See, e. g., Enterprise Industries, Inc. v. Texas Co., 240 F.2d 457 (2d Cir.) , cert. denied, 353 U.S. 965, 77 S.Ct. 1049, 1 L.Ed.2d 914 (1957); Uniroyal, Inc. v. Jetco Auto \ Service, Inc., 461 F.Supp. 350, 357-59 (S.D.N.Y. 1978) ; Mc- Caskill v. Texaco, Inc., 351 F.Supp. 1332, 1341 (S.D.Ala. 1972) , aff'd sub nom. Harrelson v. Texaco, Inc., 486 F.2d 1400 (5th Cir. 1973) ; Handler, Changing Trends in Anti- trust Doctrines, 77 Colum.L.Rev. 979, 992-93 (1977). See also Perkins v. Standard Oil Co., 395 U.S. 642, 648-49, 89 S.Ct. 1871, 23 L.Ed.2d 599 (1969) (implying that disfa- vored purchaser must show more than mere price differ- ence to recover damages). As discussed above, there is no evidence, much less substantial evidence, that such was the case here. [7, 8] Payne’s reliance on FTC v. Morton Salt Co., 334 U.S. 37, 68 S.Ct. 822, 92 L.Ed. 1196 (1948) , and its prog- eny is misplaced. In Mort.n Salt, the Supreme Court held that a violation of Robinson-Patman Act § 2(a) may be in- ferred from a substantial price difference. 334 U.S. at 46- 47, 68 S.Ct. 822. But the showing necessary to establish a section 2 (a) violation is not the same as the showing neces- sary to support a private action for damages. The Robin- 8 son-Patman Act is an incipiency statute.’ Price discrimina- tion which threatens competition but which has not caused any actual competitive injury may be held to violate the statute even though it will not support an action for dam- ages. See Areeda, Antitrust Violations Without Damage Recoveries, 89 Harv.L.Rev. 1127, 1127-28 (1976). See also Gottesman v. General Motors Corp., 436 F.2d 1205, 1210 (2d Cir.) , cert. denied, 403 U.S. 911, 91 S.Ct. 2208, 29 L. Ed.2d 689 (1971) (private injury does not necessarily ac- company public injury). What Morton Salt found infer- able from a substantial price difference was a threat to com- petition sufficient to violate the statute. 334 U.S. at 46-47, 68 S.Ct. 822. Even assuming that Morton Salt is still viable, it is of no help to Payne. In order to recover damages, Payne had to show more than just a threat of antitrust in- jury. As discussed above, it failed to do so. II. Amount of Damage Our conclusion that Chrysler was entitled to a directed verdict is buttressed by Payne’s failure to adequately prove the amount of its alleged injury. Payne relied on its calculation of the alleged price dis- crimination to establish the amount of its alleged lost sales and profits. There is no necessary correlation, however, and Payne failed to establish one. To indicate the going concern value of the dealership at the time it was allegedly forced out of business, Payne relied on two alternative methods of calculation. Under the first, Payne’s expert assumed a good will value for the dealership of $52,000 in 1955 and appreciated this amount over 20 6Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13 (a), proscribes price discrimination “where the effect of such discrimination may be substantially to lessen competition. . . .” (Emphasis added) . 9 years at an annual rate of 4%. The expert testified that the $52,000 figure was not based on an examination of Payne’s financial statements. It represented an unsupported esti- mate by Mr. Payne. The 4% rate was a rough average of the prevailing inflation and prime interest rates from 1955 until the time Payne folded. Under the second method, Payne’s expert discounted projections of what the dealer- ship’s profits would have been if it had continued in busi- ness free of the incentive programs. The expert testified that he did not take into account local market changes or conditions. ‘The projections were apparently nothing more than some of Payne’s past earnings roughly adjusted accord- ing to Chrysler’s performance nationwide or the perform- ance of the automobile industry in general. If Chrysler or the industry had a good year it was assumed, without an ex- planation why, that Payne would have a good year also. [9-11] As was the case with Payne's fact of damage evi- dence, this showing was clearly not such as to allow the case to go to the jury. In an antitrust damages action, as noted above, the plaintiff must establish the amount as well as the fact of damage. The burden of proving the amount of dam- age is less severe than the burden of proving the cognizable injury. See, e. g., Story Parchment Co. v. Patterson Parch- ment Co., 282 U.S. 555, 562, 51 S.Ct. 248, 75 L.Ed. 544 (1931); Terrell v. Household Goods Carriers’ Bureau, supra, 494 F.2d at 23-24. But the plaintiff must put forth substantial evidence. The burden is not satisfied by mere speculation or guess work. See, e. g., Bigelow v. RKO Ra- dio Pictures, Inc., 327 U.S. 251, 264, 66 S.Ct. 815, 90 L.Ed. 1040 (1946) ; Keener v. Sizzler Family Steak Houses, 597 F.2d 453, 457 (5th Cir. 1979). Payne failed to meet this burden. A price difference without more does not indicate the amount of lost sales or profits. Self-serving and unsup- ported assumptions cannot sustain a calculation of going 10 concern value. On this ground as well, Chrysler was enti- tled to a directed verdict. See, e. g., Kestenbaum v. Falstaff Brewing Corp., supra, 514 F.2d at 695; Copper Liquor, Inc. v. Adolph Coors Co., 506 F.2d 934, 953-55 (5th Cir. 1975). The district court is directed to enter judgment for Chrysler. REVERSED AND REMANDED WITH DIREC- TIONS. 1l JOHN TRUETT PAYNE (TR. 40] Q. And when is the first time you became a Chrysler direct dealer? A. In 1944 or '45, Q. Where were you located, Mr. Payne? A. 408 South 2lst Street in Birmingham. Q. How long had you or did you remain in that location? A. About ten years. Q. And were you selling Chryslers after you moved from that location? (TR. 41] A. Yes, sir. Q. Excuse me. When did you acquire the J. Truett Payne Company? A. Well, we bought out Leseur Motors in 1955 and merged the two com- panies. 12 Q. Now, in 1965 were you selling Chrysler automobiles, your company? A. Yes, sir. Q. Was Leseur? A. Yes, sir. Q. And what was the price, or the purchase price that you paid for this buying of the Leseur Motors? A. I believe I paid forty-five thousand dollars for his fixtures and what equipment he had in parts. Q. All right. Was there anything else included in that price? A... Wd,. G18» Q. Out of that price, Mr. Payne, that you paid for Leseur, did he have forty-five thousand dollars worth of parts and fixtures on hand or was there anything else in that price? A. No. I would believe that, as well as I remember, that about half of 13 that would be for equipment and parts and the other half for goodwill, I guess. Q.. Had he been in business a while? (TR, 42] A. Several years. I don't remember how long. Q. All right. In any event, you bovght him out and you started selling Chryslers with his inventory, is that correct? A. Yes, sir. Q. Did you have an ii.ventory of your Own? A. I had an inventory of my own and then we took over some cars that he had, but we bought them from Chrysler. Q. All right. What was the net worth of your business at that time, J. Truett Payne Company, the Chrysler dealer? A. I would think around seventy-five 14 hundred or a thousand dollars. I don't know. Q. Was any of that portion of that business amount made up of goodwill or was it all stock merchandise, parts? A. In mine? Q. Yes, sir, in yours. A. I would say it was all in mer- chandise. Q. All right. Since 1955 did you operate J. Truett Payne Company Chrysler- Plymouth dealership just like you oper- ated it through 1974? Have you been operating it -- A. Yes. (TR. 43] Q. -- since 1955 with Chrysler? As BOB, SiS. Q. When did you terminate your dealership relationship with Chrysler Motors? 15 A. I believe it was in May of '74. Q. All right. Prior to that time in the 1960's, in the early '60's, beginning of that decade, were you the Only Chrysler Plymouth dealer in the Birmingham area or was there any other dealership? A. Well, there had been dealers in Bessemer, but I believe we were -- what time are you -- Q. In 1960. A. Well, I believe I was the only Chrysler dealer in downtown Birmingham until -- I don't know, when they put Central Motors in. Was it in '61? Q. Well, in your best judgment, do you know? When they put in Central Motors, is that correct? A. Yes, it was the first dealer they put in. Q. After they put in Central Motors 16 there was you and Central Motors, is that correct? A. Yes. When they put Central Motors in, they put them in originally as Plymouth only. They did not give them Chrysler and Imperial. It was just when they originally opened up, they opened up with Plymouth, [TR. 44] Q. And subsequent to that time did they acquire Chrysler and Imperial? A. Sir? Q. Did they start selling Chrysler and Imperials after that? A. At a later date, yes. Q. All right. During 1970 through 1974 you were selling, your company was selling Chryslers and Imperials and Plymouths, correct? A. Yes, yes. Q. Can you tell the ladies and 17 gentlemen of the jury what other dealers during that time, direct dealers, were selling Chryslers, Plymouths in the Birmingham area? A. From '70 until -- QO... ° 98, A. Well, I believe it was Roebuck, Roebuck Chrysler Plymouth, Vestavia Chrysler Plymouth, and Central Motors. Q. All right. And yourself? A. And us, yes. Q. Can you tell the ladies and gentlemen of the jury who were your competitors in your market in the Birmingham market area for selling Chrysler and Plymouth automobiles during that time period? (TR. 45] A. It would have been Roebuck Chrysler, Central Motors, Vestavia. Q. All right. Can you tell the 18 jury, the ladies and gentlement of the jury a little bit or characterize the type or quality of competition in the Birmingham market? A. Well, it was rough. It was -- ask me that question again. Q. Well, you said it was rough? A. Yes, sir. Q. Can you tell us whether or not you know if customers would check out the prices of your automobiles? A. Oh, yes. MR. INGRAM: Wait a minute. If it please the Court, I'm going to object to does he know this and that unless he's able to give specific facts and circumstances. THE COURT: Well, if it was based on hearsay, it would not be admissible, Q. No, sir. Mr. Payne, I'm not asking you based on hearsay. I want to 19 know in the industry your knowledge of the industry. Do you know whether or not your customers checked the prices of your cars and checked prices of your competitors' cars? [TR. 46] A. Yes, sir. Q. Did that happen frequently? A. Yes, sir, because every deal, every retail deal that you make is an individual deal and the customers, the people that shop us, that shop with us, shop with the other dealers and there's many things that contributed to it. As these dealers opened up, they opened up with new modern facilities, they put _ Grand Opening sales on, and people that buy automobiles, even though they pre- sold through news media, if they make up their mind they're going to buy a Chrysler car, they're going to shop the other dealers. Q. Well, do you know of -- let me ask you one question. You mentioned some- thing about mcedern facilities. How old was your building? A. I think -- Q. How long had you been in the location that you were in during 1970 through '74? A. We moved in in 1955. Q. Where was that? A. At 231 South 2lst Street. Q. All right. And during that time period 1970 through 1974 can you tell the ladies and gentlemen on the jury whether or not on any occasions of your | (TR. 47] Own personal knowledge you knew the cus- tomers would shop the prices of the different dealers that you just men-— tioned? 21 A. Oh, yes, yes, sir, because -they would tell you when you were trying to trade with them. Q. All right. Have you ever talked to == MR. INGRAM: If it please the Court, hold it. I object to any testi- mony about shopping prices. That's exactly what I was getting at. He said people would tell them. That's a very vague -- THE COURT: Well, that would be inadmissible as hearsay. I sustain that objection. Q. All right. Mr. Payne, can you tell the Court where in your opinion most of your customers came from that purchased cars from your dealership, Chrysler Plymouth, new automobiles? A. You mean the section of town? Oo. Yes, eif. 22 A. I would believe that most of our customers came from the eastern section and the southern section because that's the heavier populated section. Q. And was there or were there repeaters, or people that came back to you yearly and bought new cars from you? A. Over a period of years, yes, We had a lot of (TR. 48] repeat customers. Q. And during -- let me rephrase that. During 1970 to 1974, do you know of people that came to you, would check Out your prices on new Chryslers and Plymouths and then ended up buying another car at one of the other dealers? A. Yes, sir. Q. You know that how, Mr. Payne? A. From -- in dealing with the people. Q - Did they come back for service at — PE 1 a Rr er) PO Sa 23° your automobile facility? A. Many of them did. Some of them did not, but some of them did. Q. So they would buy a car ata different location and come back to you? A. Come back to us to service the automobile, yes. Q. Did that happen numerous times -- A. Yes, ‘sir. Q. -- over that four year period? A. Yes, sir. THE COURT: Gentlemen, I will review my ruling. I will permit testi- mony as to what customers told him, not for the truth of what they said, but for what they actually did tell him. you may go into that. (TR. 49] Q. Thank you, Judge. Now, Mr. Payne, during this four year time period were there any incen- 24 « tive and rebate programs that Chrysler Plymouth or Chrysler Corporation spon- sored for all the dealerships in the area? A. Yes. Q. Can you tell the ladies and gentlemen exactly what your understand- ing is of those rebate programs? A. Well, they had different kinds of programs. Some of the programs were -- you were required to buy a certain amount of automobiles to participate in the program. Some of the other programs you were on a quota basis. After you sold a certain number of automobiles, you would become eligible for the2 rebate, There were several of those programs and it's been several years ago, I can't recall these programs, but that was the type programs they were. Q. Do you know who established the 25 quotas that you mentioned on these programs? A. Well, the Chrysler Corporation established them, but I don't know who. Q. Were these programs written out? Were they written in written form? A. Yes. Yes, sir. Yes, sir. Q. Your Honor, we would like to introduce per (TR. 50] our stipulation some sixteen programs that took place over this period of time. (TR. 51] THE COURT: They will be received in evidence as authentic with leave to substitute any omissions, MR. REEVES: Thank you, Judge. Q. Mr. Payne, you mentioned earlier that you had been in that location for approximately since 1955 -- 26 A.» Yes, sir. Q. -- right before you went out of business? How old was your facility there? A. I'm not sure, but I believe it was built in 1925 or thereabouts. (PR. 53] Q. Mr. Payne, what did they tell you about the ownership or renting of those buildings, the facilities for Vestavia and Roebuck? A. Well, just in general discussion they said that they were building -- they built Roebuck first; it was under construction a long time and it was dis- cussed from time to time and they just told me that they were building it and were going to put a dealer there. Q. Do you know when approximately it was built? A. Well, I don't know exactly, but 27 it was around '67 or '68, wasn't it? Q. All right. Now, what about Bessemer which later moved to Vestavia, when did they move to Vestavia, do you remember? A. Was it '70? Q. Well, do you have a judgment? A. It was about that time. I don't remember exactly. Q. And was that a new or old facil- ity? A. It was a new facility. It was pretty much the same discussion about Vestavia that it was about Roebuck. Q. For these ladies and gentlemen. who might not be from Birmingham, could you tell them in general terms where you're located and then describe if we (TR. 54] can, and I will draw where you tell me to draw, describe on the board where 28 these other dealers were put in. If we assume that this is the Birmingham city limits -- A. Well, you're going east would be Roebuck. Q. This would be north right here. No, that's west. I'm sorry. East would be Roebuck, right? A. Yes, sir. Q. Ali tight. A. South would be Vestavia. QO. ek. A. And west would be Central Motors. Q. All right. Now, where are you located? A. Well, based on the chart, I would be more or less kind of in the middle of the circle. Q. Right here? A. Yes. I was bottled in from all sections except the north. 29 Q. Can everybody see that? Let me move this over a little bit. O.K. Now, did the Chrysler rep- resentatives that you mentioned, Sandusky and other people, tell you anything about who owned the Vestavia facility south of you? A. Said Chrysler. (TR. 55] Q. Did they specify who, what corpo- ration? A. No, just Chrysler. Q. All right, sir. Now, in these -- let's go back to these rebate programs a minute we were talking about. Did you participate -- did your company partici- pate in the rebate programs that Chrysler sent out? A. Well, we certainly didn't parti- Cipate in all of them. I don't remember whether we participated maybe in one or 30 two or not, but we didn't participate in all of them or most of them. Q. Were you able to -- and what was the effect of these rebate programs? Just tell the ladies and gentlemen what happened. A. On me? Q. On your company. What did they do? A. Well, they had a -- we were placed in a disadvantage in a trading position and it had a demoralizing effect on my sales force. We made some deals, natur- ally. We had to sell some automobiles. But we would possibly have to over-allow beyond what we normally would on used cars to make a deal because in some of those cases the rebates ran from, I would believe, thirty to maybe two hundred dollars, maybe more. 31 (TR. 56] MR. INGRAM: Your Honor, I'm going to object to this line of testi- mony. He's saying they had to over- allow. He's not testified as to what Other prices the other dealers were selling them for. He hasn't testified On any basis that there was any over- allowance based on any sort -- THE COURT: Well, that's a con- clusion. Q. All right, sir. I'll go into it. These rebate programs, can you tell the ladies and gentlemen of the jury what happened if you got or if you qualified for the rebate program? What was the effect of that? Did you get anything from Chrysler? A. Yes. You would get a rebate on the cars that you sold to the retail customer. 32 Q. All right. When you say a rebate, what happened? What was the effect of that rebate on your company's cost? A. Well, it would lower the cost of the car. Q. The cost of the car you purchased from Chrysler? [TR. 62] Q. What does a customer look for -- well, let me rephrase that question. When you were selling these automobiles did you ever have occasion to determine the price that you would charge the cus- tomer based upon what you might get back from the rebate program? Would that influence the price that you charged? A. Would that -- the customer? Q. No. Would it influence the price that you could charge the customer? A. Well, yes, because on those rebate programs if I was not getting the #> “= 33 rebate and the other dealer was getting it, it would certainly influence it because he would be actually Owning a unit cheaper than I owned it. (TR. 65] Q. Did you ever participate in what's known as a stock rebate on old models? A. Yes, sir. Q. Can you tell the ladies and gentlemen how that took place, what type of program that was? A. At the introduction of the new models the Chrysler Corporation would give us five percent rebate on all new and unused Chrysler and Plymouth cars that we had in stock as of announcement date of the new models. Q. All right. the didn't have to reach any sort of quota for that, did you? A.-No, sir. . | * > 34 Q. Mr. Payne, you have described generally to the ladies and gentlemen what these programs were like, these rebate programs that we're talking about today. Can you tell the ladies and gentlemen whether or not you have a judgment or knowledge as to whether or not it hurt your business that you could not participate in all of those programs? A. Definitely it hurt our business when we couldn't participate. Q. How would it hurt your business? Just explain [TR. 66] it if you can. A. Well, we would be unable to make sales. We were not -- we were not in a competitive situation. Q. How did that affect the customer that might be interested in buying a Chrysler or Plymouth automobile? 35 A. Well, if I understand your ques- tion, the customer would buy where he could buy at the best price. MR. INGRAM: If it please the Court, I'm going to object again to this line of questioning. He makes these conclusions without any statement of fact to back them up. I think it's irrelevant to the issues in this case and I think it's unsupported conclusion. THE COURT: I overrule that objection. MR. REEVES: I'm sorry, Judge, I couldn't hear. THE COURT: I overrule the objection. Q. (BY MR. REEVES) Thank you, Judge. What do you mean, Mr. Payne, when you said that you couldn't participate in the plans? I want to try to explain this as much as we can. 7% “S 36 A. Well, I'll try to explain it as best I can. When we didn't qualify for the program, we couldn't meet the quota. All of those cars were bought from [TR. 67] Chrysler Corporation by all dealers at the same price. Now, the dealers that could meet their quotas and did parti- cipate in the programs were at a finan- cial advantage because they were actu- ally buying cars cheaper from Chrysler Corporation than we were because when they sold those cars they were rebated and in some cases it was as much as two hundred dollars. Now, I know for a fact because I was sales-minded, I talked to and I had been in business a long time, when I was a much smaller dealer, I did a lot of retail selling myself, and I knew a lot of these customers and a lot of these customers would tell me I can 37 buy this car at this other dealer for less money than I'm buying it from you and I was in an unfair competitive posi- tion. There was nothing I could do about it. Another thing that it did, you know, we worked salesmen on commission. They would go out and lose business based on that -- for that reason, and they would become disenchanted. It was like throw- ing a wet blanket over them when they would lose deal after deal after deal. It's just that simple, that those rebates put me out of a competitive, or weakened my competitive position. Q. And when did your business close, Mr. Payne? [TR. 68] A. May 24th, '74. Q. And at that time what caused the closing of the business? A. Chrysler Credit Corporation 38 withdrew our line of credit. Q. ad dheks. Why did they withdraw it, do you know? A. Yes, we were out of trust. Q.. When you say out of trust, what does that mean for the jury? A. Well, we had sold some automo- biles, that when we were unable to pay for them, our cash flow had stopped and had gotten to the point that we couldn't pay for them. Q. So you just couldn't -- you didn't have enough money coming in from sales is what you're saying -- A. That's correct. Q. -- to satisfy your credit? A. That's correct, if I may -- Q. Well, let me, if I may -- I don't want you to volunteer anything. It might be objectionable. A. All right. 39 Q. So let me ask you, Mr. Payne, if you can tell the ladies and gentlemen what caused you to not be [TR. 69] able to pay for the cars that you owed Chrysler Credit? What was the cause of that? A. Well, I had -- I had run out of money. I was not able to sell enough automobiles at enough gross profit to make money. It was -- that would be the primary reason. Q. Did the rebate program have any ‘ effect on your ability to sell at a high enough margin? A. It should because again I was at a traded disadvantage. Q. How did they affect you is what I want you to tell the jury? How did they affect your inability to make sales? A. Well, they could offer them to 40 the public cheaper than I could. Q. Who is they you're talking about? A. The other dealers, the dealers who were participating in the prgrams [sic]. Q. When you're talking about in this area -- let me rephrase that. Who were your competitors again? A. Central Motors, Vestavia and Roebuck Chrysler. Q. So when you're referring to they in those dealers, you're talking about your competitors in Birmingham? A. Yes, sir. [TR. 77] Q. (BY MR. REEVES:) Mr. Payne, yesterday you had mentioned a little bit about these rebate programs, incen- tive programs. Can you tell the ladies and gentlemen of the jury if fleet sales -- what a fleet sale is in the business? vw Al A. A fleet sale is a sale of an automobile to people who qualified for wholesale price, so to speak, because they used several automobiles in their business. Q. Were those sales made by you to different people? A. Yes. Q. For instance, whom would your company [TR. 78] sell a fleet to just as an example? A. Well, Alabama Power Company, Southern Natural Gas, people of that type. Q. Excuse me. I'm sorry. Go ahead. A... Sag? Q. I didn't mean to interrupt you. Go ahead. A. Alabama Power Company, Southern Natural Gas, people in that type of *% 42 business, Q. And did these rebate programs cover fleet sales? A. No, sir. I don't remember, but there might at some time have been a fleet program with a rebate attached to it, but I don't remember of any, I don't remember any. Q. Well, normally then they would not? A. No, sir. No, sir, would not. (TR, 81] Q. I said, in your opinion, how much was the good will of the J. Truett Payne Company in 1955, when you merged? A. I would say it would be at least twenty-five thousand dollars, because that's about what we figured LaSeuer's good will was at the time we bought them out, and we had been in business approximately the same amount of time. 43 [TR. 84] Mr. Payne, the rebate programs that you have mentioned, I wonder if you could tell us -- I don't know if I asked you. I may be repeating. But if you could, tell the jury the effect those rebate programs had on your competition with the other dealers you testified that you competed with. A. My quotas were high, and we felt for that reason or for that reason that we were unable to compete with the other dealers because we had to sell more auto- mobiles, some cases in the purchase pro- grams we had to purchase more automobiles, and in many cases we just wasn't in posi- tion to do it, we just didn't feel it would be a good [TR. 85] business to do it, and in many cases we actually couldn't do it. = 44 Q. Did that affect the price that the ultimate purchaser in the Birmingham sales area would have to pay for a Chrysler-Plymouth automobile? MR. INGRAM: I'm going to object to that, Your Honor. It's pure specula- tion without any further predicate on that question. THE COURT: I overrule that objection. Q. You can answer it, Mr. Payne. A. Will you ask the question again? Q. Will the reporter read that ques- tion back? (The last question was read by the reporter.) A. I would say no. I can't see where it would affect the retail customer, because the rebates in most of those programs were given to the dealer. They were not passed on to the customer. 45 (TR. 86] CROSS-EXAMINATION .Q. -Mr. Payne, you have talked about the fact that you went out of business, I believe, in May of 1974; is that cor- rect? A. Yes, sir. Q. And I believe you said you lost your line of credit? A. Yes, sir. Q. And that was with Chrysler Credit Corporation? A. Yes, sir. Q. Mr. Payne, isn't it a fact and you've also alluded to a two hundred thousand dollar judgment by Chrysler Credit Corporation against your company; isn't that right? [TR. 87] A. Yes, sir. Q. Isn't it a fact, Mr. Payne, that -% 46 the reason you went out of business and what happened was that you sold about two hundred thousand dollars worth of automobiles and didn't pay Chrysler Credit for them and that's the reason you lost your line of credit? A. At the time that I lost my line of credit it was the reason. Q. In other words, you were selling cars in what they call out of trust; isn't that right? A. Yes, sir. Q. And when that occurred, Chrysler Credit came in and in effect foreclosed on your inventory; isn't that right? A. We assigned our inventory to Chrysler Credit. Q. And you ended up owing them some- thing like a hundred seventy to two hundred thousand dollars, didn't you? A. Something like that. 47 Q. Now, you remember when I took your deposition, Mr. Payne, and we talked about your past history as an automobile dealer in Birmingham, and I believe you told me that you were the oldest Chrysler Plymouth dealer in the state, isn't that right? A. Yes, sir. (TR. 88] Q. And didn't you tell me that you sold more cars than anybody else in the state? A. I would believe that we sold more Chrys.er and Plymouth cars than anybody. Q. Now, that being true, when is the last time you made a profit in your company, Mr. Payne? A. We lost money for the last four or five years that we were in business. I would say that the last time that we made a profit was before Chrysler put '* 48 these additional dealers in to share this market with us. Q. You made a profit in 1968, didn't you, Mr. Payne? A. I think so, yes, sir. Q. And didn't all of those dealers go into effect prior to 1968? A. No, sir. Q. Who didn't? A. Vestavia was not in. Q. Wasn't Vestavia the same as Bessemer Chrysler, and located in Bessemer prior to 1968? A. Yes, sir. Q. All it did was move from Bessemer to Vestavia,.is that correct? A. No, sir. Bessemer Chrysler Plymouth was a (TR. 89] very small dealer and had a very small facility and did a very small business. 7% 3. 49 When they moved into Vestavia, they moved into supposedly a million dollar facil- ity -- [TR. 90] Q. All right. Thank you, sir. Now, you said that one of the problems you had was that Bessemer moved over to Vestavia, is that correct, and caused some of your problems? A. Yes, sir. Q. Of course, you had no contractual right, did you, Mr. Payne, to have an exclusive franchise in that area that covered Vestavia, did you? A. Not at this time, no, sir. Q. And in your mind there was nothing legally impermissible about Bessemer moving to Vestavia, was it? A. Illegal? Q. Yes. A. I wouldn't know, sir. a4 50 Q. Now, when they moved over there, didn't they move over there in May of 1971? A. It was about that time. I don't remember the exact date. Q. Now, I'll ask you, after they moved over (TR. 91] there, Mr. Payne, in May of 1971, whether or not you in fact sold more automobiles in 1972 than you did in 1971? A. I don't remember whether we did or we didn't, but I don't think the amount of automobiles that we sold would have anything particularly to do with the amount of profit we made. Due to increased competition and tougher com- petition, we were having to sell those cars at a smaller gross. So, certainly when Vestavia, when Chrysler opened up in Vestavia, it suddenly hampered our 5) business, Q. Well, I don't understand that, Mr. Payne. I want you to explain that to me. If you are selling more cars than you were the year before with them over there in Vestavia, you're not losing any volume, how is it that that is not competitive? A. Well, in 1969, Chrysler changed the body style of the automobiles. It wasn't a good year for Chrysler -- I'll try to answer this as best I can. The number of automobiles that you sell doesn't always determine the amount of gross, of profit that you make because the more automobiles you sell, the more it costs to jhandle them. We were trying desperately to reach our quotas and in many cases we had to take deals that under normal circumstances we wouldn't take 52 [TR. 92] due to increased competition, Q. Mr. Payne, I mean, are you telling me and are you telling the jury that the less cars you sell, the better off you are? A. No, sir, I'm not telling the jury that. I'm trying to say that we were forcing business and when you force business you cannot force it at a profit, a good profit or a reasonable profit. Q. Why were you forcing business? A. Because I was trying to reach my objectives. I was trying to sell the automobiles. I was trying to stay in business. I was losing money and I was trying to stay in business. Q. Well, what did that have to do with the sales incentive programs, Mr. Payne, if you were just trying to meet competition because they were selling 53 your customers? What's that got to do with the sales incentive program? A. Well, on those rebate programs -- I have testified before that it gave the dealers that could participate an advan- tage because they owned those cars at a per unit less cost than I owned them and it put me at a disadvantage. Q. Mr. Payne, now, I want to ask you this. I want to get to that subject matter. You've testified [TR, 93] that it put you in a competitive disad- vantage, that you lost sales and that they were underselling you and all this sort of thing. Let me ask you this. How many sales did you lose? Do you have any record of the number of sales that you lost to another dealer because of the bonus paid those dealers under these incentive sales programs? 54 A. I wouldn't have any record of that, no, sir. Q. You don't have any idea, do you? A. @ think if you would look at the -- when we started to losing money, we had been here for twenty-five years and I think that the fact that when they moved in these dealers on top of us, I think that is proof enough that that was the reason we were losing money. Q. I'm, not talking about the dealers, Mr. Payne, I'm talking about the sales incentive programs. I want to know how you know and what you have to prove that you lost sales to another Chrysler Plymouth dealer because of the bonuses paid under sales incentive programs? A. I don't have anything specifically. That's been several years ago. I can't remember. I know this, that I was there every day in the operation of my business 55 and I knew daily that we were losing (TR. 94] business on account of that. I don't think any dealer could answer that ques- tion. Q. That's right, I agree with you, Mr. Payne, because the only way you could answer that, isn't it a fact, is if you were to compare a sale that another dealer made and see what that individual bought it for and see what you would have sold the same car for; isn't that right? A. I didn't understand the question. Q. Well, the only way you'd ever be able to know about that sort of thing is to go and talk to your competing dealers and see if they took a customer and used the bonus rebate, the bonus incentive program to reduce the price of the car to the customer; isn't that right? A. They had the rebate program, we 7 > 56 did not. So, I maintain that it put us at a disadvantage. I'm trying to answer these things as best I can and I won't change my mind about that. Q. Well, let me ask you this, Mr. Payne, and I'll go back to my original question. Do you have records, do you have any concrete proof that you lost a certain sale or a certain number of sales that you otherwise would have made except for the bonus program? (TR. 95] A. I think it would reflect in our financial statement. That would be the only proof that I'd have. Q. But you don't know of any speci- fic sales? You couldn't tell me today? A. At the moment I don't know, but I knew when it was happening when we were operating the business. I knew then because I talked to the customers, many 57 of them myself. My salesmen complained of losing business for that reason. Q. Now, let me ask you this, Mr. Payne. Another thing you responded to is that your competitors, the other Chrysler Plymouth dealers were using this bonus money to reduce the cost of the automobiles, is that what you were saying, to the consumer? A. I was saying that the rebate pro- gram reduced the cost of the automobile to the dealer. I would not know what happened after then. But my statement was that it reduced the cost per unit to the dealer that qualified for the bonus. Q. Well, I believe it was your testi- mony also that it wouldn't affect the retail value of the automobile, the last thing you testified to, that it would not affect the retail value of the automobile, the resell cost of the automobile to the -*% 58 consumer? (TR. 96] A. To the consumer? I would have no way of knowing that because I wouldn't know whether they passed that on to the consumer or whether they didn't. Q. Well, you testified -- the last question Mr. Reeves asked you is whether or not it would have any effect on the retail sale of the automobile and you said no. A. I wouldn't think so. I still say it would not. Q. So, what you're saying is to the consumer or to the individual on the street the bonus program is not going to have any effect in enticing him to buy from one dealer or another? A. I didn't say that. It might have an effect in enticing him to buy the automobile, but I don't think that 59 through a rebate program that anybody particularly benefitted except the dealers that were qualified for the program and the manufacturere [sic] because it helped the manufacturer move automobiles by giving rebates to those dealers who did qualify. Q. Well, Mr. Payne, I need for you to explain to me that if the purchaser of the automobile, the retail purchaser doesn't get any benefit out of it, how is it going to affect competition? How is it [TR. 97] going to affect whether he buys a car from you or from somebody who qualified under one of the bonus programs if the retail price is not affected by it? A. I don't think that the retail customer would actually know. He would know if he was getting a buy in a car at 60 a lower price, and if he was buying a car at a lower price, he would naturally buy it from the dealer that gave him the low- est price. That's where I say that the rebate program was unfair because it was on a unit basis. Q. But you told me that the retail bonus was not used to reduce the price to the consumer. Now, how is that going to influence the consumer whether he buys from you or somebody else? A. I can't answer that question, Mr. Ingram. Various advertising gimmicks are used daily to attract the customer. Now, how would the customer know whether he would profit by that or not? He thinks so because he goes in, I guess, to look at automobiles. There's programs now running where you can buy an automo- bile for one dollar above invoice. Now, how does the customer, you know, the 61 retail buyer know that he can buy that car for one dollar above invoice? Q. Now, Mr. Payne, isn't it a fact that the (TR. 98] thing that really ended your business was the fact that you had a very poor used car operation? Ris: WBo BS85 Q. It is not? A. No, sir. Q. You didn't testify in that depo- sition that I took that the fact that your wholesale or that your line of credit on used cars was reduced is what put you out of business? A, I tesified that my, that they reduced my line of credit on used cars and we were forced to wholesale the used cars that we could wholesale and try to retail the other automobiles. Now, that 62 was brought about by Chrysler Credit reducing our line of credit on used cars. Q. Mr. Payne, on page 77 of your deposition, I want to ask you whether or not Mr. Hairston, the lawyer for Chrysler Credit Corporation, asked you these questions and whether or not you made these responses. "And in 1974, the year you closed, you owed them six hundred forty thousand dollars, in 1973 you owed them seven hundred eighty~nine thousand dollars. Is that what you mean by your credit, that your credit was curtailed? Answer: Mr, Hairston, I have never complained about my credit being curtailed [TR. 99] on new cars, The thing that put me out of business was when they curtailed my used car operation, and they never did -- 63 I always had enough new cars to sell. That's not what I contend at all." Didn't you say that, Mr. Payne? A. Yes, sir. Q. And again on page 78 of your deposition following that dialogue we just had beginning at the bottom of 77. "Question: Well, there wasn't any real dramatic change in the amount of credit that you were actually receiv- ing from Chrysler Credit during the time you were dealing with them, was it? Answer: On new cars? Question: On new. Answer: I don't know. Right there at the last they might have cut it some, but that is not my argument at all. It is the used cars, When they cut my used car credit, that's what murdered me." Did you say that? A. I don't know whether I said those exact words or not, but I assume that I 64 did. Q. And again on page 79 Mr. Hairston asked you this. "So, you were still maintaining the same sales level but the cost of doing business was increasing and cutting down on your profit picture; is that right? Answer: Mr. Hairston, this has come up twenty times before. The thing that murdered me was that I ? (TR. 100] would go and sell a new car and trade in a used car and because I didn't have the line of credit to put it on my used car lot, I had to take it would and whole- sale it. That is what murdered me." Didn't you say that, Mr. Payne? A. I assume that I did, yes, sir. Q. Mr. Payne, in fact, didn't you attribute the fact that your used car operation as affected by your line of credit is what put you out of business? 65 A. No, sir. Q. In other words, you didn't mean what you said in that deposition? A. That was one of the things that caused it. The thing that put me out of business, and obvious from my finan- cial statements, was the fact that when Chrysler Corporation built these new buildings and put in these dealers in strategic points in the heavily populated points. That's what primarily put me out of business. It's that simple. Q. And it wasn't the sales incentive program? A. The sales incentive program was one of the things that was involved, There was many things involved, but the rebate programs were certainly a part of at. Q. Now, on these sales incentive programs, Mr. 66 (TR. 101] Payne, are you familiar with them gener- ally, those that you introduced into evidence? A. Most of those programs are differ- ent. I'm familiar with them to a degree, yes, sir. Q. And basically would it be fair to say that there are two types of programs? One had a wholesale purchase objective whereby you had to purchase a number of cars to first qualify and then you were paid on cars sold after you qualified. That's one type, is it not? A. Yes, sir. Q. And the other type, as I under- stand it, was basically a retail sales program without any wholesale purchase objective attached whereby you had some base line objective to obtain and then if you met that objective or went above 67 it, you received a bonus; is that cor- rect? A. Yes, sir. Q. Now, as I understand it, and you tell me if I'm wrong, in order to qualify for these wholesale, what I call whole- sale, retail programs where you had a wholesale purchase objective, basically what you were required to do was to pur- chase a given number of cars; is that correct? A. Yes, sir. (TR. 102] Q. Now, isn't it a fact that in many of those programs, Mr. Payne, you did not qualify? A. That's correct. Q. In other words, you didn't buy the automobiles, purchase automobiles? A. That's correct. In many of those programs we could not buy it because our 68 quota, our percentage that they expected us to buy was unfair, it was unreasonably high. I maintain that is the reason we could not participate in those rebate programs. Q. You say it's unfair and unreason- ably high. Do you know how they were calculated? A. No, sir, but we were -- I know this, that we were charged with forty percent of the sales expectancy in this area and some of the dealers were down as low as twenty in those programs, and that certainly had something to do with the program. Q. Now, the dealers you talked about that had a smaller fair share, they were younger dealers and they had been in business less time, had they not? A. Yes, they had been in business less time. 69 Q. And they were located in different parts of the city. One was in the east, one was in Bessemer, until it moved to Vestavia, and one was further west toward Bessemer than you; isn't that correct? A. Yes, sir. (TR. 103] Q. So y'all were located in different areas? A. We were ~-- the sales areas, I assume, for all the Chrysler dealers were the same. Q. And you were in the central down- town area, that's correct, isn't it? A. Yes, sir. Q. All right. And you were sur- rounded, there were a lot of dealers in the downtown area? A. Wee; 6it. Q. And good, strong dealers, isn't that correct? 70 A. Yes, sir. Q. Like Drennen Motor Company and Doug Willey Pontiac? A. Yes, sir. Q. And a number of them like that who are really strong dealers? A. (Nodding head affirmatively.) Q. Now I want to ask you something about your fleet sales, Mr. Payne. I believe you testified that when you sell a fleet, you get a lesser gross per unit sold, is that correct? A. Yes, sir. Q. All right. And I believe you also testified that as a general proposition, these fleet sales did not qualify under these sales incentive (TR. 104] programs? A. Yes, sir. Q. Mr, Payne, do you know what 71 percentage of your business was fleet? A. Offhand, no, sir. Q. What if I told you it was around twenty-four or twenty-five percent of your volume, volume of new cars sold? A. Well, that's conceivable. Q. And if that were true, and they didn't count toward retail sales for the sales incentive programs, wouldn't that have some affect on your earnings by the sales incentive programs? A. I didn't understand the question. Q. Well, if fleet sales do not qualify under these various sales incen- tive programs as retail sales for the purpose of payment, and your business constituted twenty-five percent fleet sales, wouldn't that have some affect On your earnings under these sales incentive programs? A. I wouldn't think so. 72 Q. You say vies stake? A I would not. Q. Why not? A . Because the rebate programs were (TR. 105] on a per unit basis, and it didn't apply to fleet. Q. That's what I'm saying. If you sold a fleet car, and you couldn't get a bonus payment on that fleet car, that's a car you sold, you couldn't get a bonus on, isn't that right? A Tes, sic. Q. And if you had a high percentage of your retail sales that were in fleet, that would have an affect on your earn- ings under our retail bonus program, wouldn't it? A. I can't answer that question. I don't know. 73 Q. On these bonus programs, Mr. Payne, and of the number that have been introduced here into evidence, do you know on the total how you compared with the other four dealers in terms of earnings? A. No, sir. Q. Would it surprise you to know that you were second? A. I didn't know that I was second, but if I had been able to compete in those bonus programs on those rebates, maybe I would have still been in busi- ness, if I was second. Q. And, Mr. Payne, let me ask you this, on those bonus programs it's your understanding, is (TR. 106] it not, that anyone who qualifies ata given level receives the same amount of money per car as anyone else who 74 qualifies at the same level? A. Yes, sir. Q. No difference there? A. No, sir. Q. The difference is where you don't qualify at all or where you qualified at a lower level, is that correct? A. Yes, sir. Q. Now, on the wholesale purchase program where you':-e required to buy a number of cars before you could sell, you said you couldn't buy that number, you weren't able to buy them. I assume that's what you said, is that correct? A. I don't remember the specific programs, but they could have been a number of things. We might have been up to our limit on our line of credit. We might have been overstocked with cars at the time. We didn't feel it was good business to enter into them and "> 75 for that reason we didn't. We felt that we could not afford to for one reason or the other. There was several things that would be involved there, and, you know, after all it's been several years ago, and I just can't remember (TR. 107] each specific program. Q. Yes, sir, I can: understand that, and I'm not asking you to do that. But basically it was an election on your part not to purchase, isn't that correct? A. Yes, sir. Q. Now, you say your line of credit -- I believe you testified in your depo- sition that I read that you always had an adequate line of credit for buying new cars, did you not? A. Not always, but most of the time we did. ! Q. And you said that your decision to 76 enter or not to enter one of these pro- grams might be affected by what your inventory was, is that correct? A. Yes, sir. Q. And are you aware that in calcu- lating the wholesale purchase objectives, the amount of the dealer's inventory is drawn out of the objective, what he already has on hand or in transit? Were you aware of that? A. I didn't understand your eusntion, Mr. Ingram. Q. Well, you said that one of the reasons that you gave for not entering one of these wholesale purchase objective programs is that you may (TR. 108] have had a large inventory at the time? A. Correct. Q. My question is, do you know that in calculating your wholesale purchase 77 objective that Chrysler pulled out from that your present inventory to reduce what ordinarily would be your objective by the amount you already had in inven- tory? Did you know that? A. I can't answer that question. I don't know whether -- I assume that they did, but I just don't know. Q. Yes, sir. Now, Mr. Payne, one of your programs would come out, and isn't it factually true that one of the dis- trict managers would usually come by and explain the program to you? A. Yes, sir. Q. And tell you how it operated? A. BOs. Bids Q. I mean you had no problem under- standing the programs? A. Wo, sir. Q. Now, Mr. Payne, let me ask you about -- I'll turn to another line here 78 that we've been discussing a little bit, and when you were talking about your value of your business and your good will, [TR. 109] and that sort of thing, I believe you said you purchased LaSeuer Motor Company in 1955, is that correct? A. Yes, sir. Q. You paid what, forty-five thousand dollars for it? A. Yes, sir. Q. And you are saying half of that amount to good will, is that correct? A. Approximately. Q. Well, what do you base that on? I mean, how do you make that division, half good will, half assets? A. I didn't make that division, What we bought from LaSeuer Motor Company was his office equipment and his shop equip- ment and parts, and I figured about 79 half ~- when I agreed to pay forty-five thousand dollars for the business, I figured that he did not have that many parts, but it was worth it for me to get the business and the rest I con- sidered good will. Q. Well, are you saying that what wasn't the value of the parts was simply a sum you paid him just simply to buy the business from him or was it good will or do you know or can you divide (TR. 110] them? A. I'm trying to answer your question. I just didn't understand that question, Mr. Ingram. Q. Well, what I'm asking you is, did you simply pay him forty-five thousand dollars to get and buy the business or were you really paying him for good will? I mean, was it set out that way in your 60 agreement? A. No, sir. Mr. LaSeuer wanted forty-five thousand dollars for the business, and we felt that it was -- that we should buy it, and knowing or feeling that there wasn't forty-five thousand dollars worth of actual assets that we were getting, we got none of his accounts, none of his used cars or anything like that. Q. You say feeling. Did you take an inventory? Did you do anything to deter- mine what the actual value of the assets were? A. Mr. Rawls, who was our business manager, handled that. It was his opin- ion that there wasn't enough there to compensate for the forty-five thousand dollars, but we felt that LaSeuer had a good reputation, he had been in business about the same length of time that we 81 had been, and we were willing to go on and buy it. (TR. 111] Q. And you did not continue to use LaSeuver's name in your business? A. Wo, eif. Q. All right. What did you do, just take over? Did he have a building or anything? A. Yes, sir. Q. He had some real property, and he had parts and equipment? A. Yes, sir. Q. Repair equipment and that sort of. thing? A. Yes, sir, office equipment and some shop equipment, but LaSeuer had taken it -- there had been a Chrysler dealer there before, and a lot of that equipment was old and unusable, but that's actually what happened. B2 Q. Now, Mr. Payne, you also testified that at that time that the value of your business in 1955 was, I believe you said, seventy-five thousand dollars, is that correct? A. I can't testify to the exact figure, but I would say that that is reasonably correct, yes. Q. Isnt't [sic] that what you said? A. Yes, sir. Q. Now, did you say that in addition to that or as a part of that, there was twenty-five thousand (TR. 112] dollars in good will? A. I would say as a part of it. Q. As a part of the seventy-five thousand dollars? A. I can't answer that question, What I said was that I felt that we had been in business for ten years, and that 83 suddenly our good will -- we certainly had, in my opinion, twenty-five thousand dollars worth of good will, having been in business ten years in the same loca- tion. Q. Did you sit down -- have you cal- culated the value of your business at that time? 60 you have any figures or calculations that you arrived at that figure from at that time? A. At the time that we made -- that we merged and bought out LaSeuer, was that your question? Q. Yes, sir. Well, or at present? Have you made any calculations to derive that seventy-five thousand dollar figure? A. I still don't understand your question, Mr. Ingram. Q. Mr. Payne, let me simplify it for you. A. Please do. 84 Q. You told me your business is worth seventy-five thousand dollars, and I want to know how you [TR. 113] derived that figure of seventy-five thousand dollars. I want to see where you sat down and added up things and came up with the severnty-five [sic] thousand dollars. A. At what time, Mr. Ingram? Which business are you talking about, at the time we merged with LaSeuer or at the time I went out of business? Q. I'm talking about at the time you merged with LaSeuer. A. Well, certainly. we had records to substantiate it at the time. Now, that's been twenty years ago. Q. Yes, sir, that's what concerns me. YOu are now saying twenty years later it was worth seventy-five thousand 85 dollars, but you don't tell me the basis of the seventy-five thousand dollars. That's what I want to know. Where are your calculations to show that it was the value of seventy-five thousand dollars or is that just some figure you picked up out of the air? A. Mr. Ingram, it would be absolutely impossible for me to go back twenty years and tell you exactly what I remember at the time, that when we made the transfer we borrowed the forty-five thousand dollars from CIT Corporation to buy out LaSeuer, and we had to furnish them with a reasonable financial (TR. 114] statement to be able to borrow the money. Q. Mr. Payne, I'm talking about the seventy-five thousand dollars that you said your business was worth. Now, I don't know whether you're talking about 86 your business combined with LaSeuer or your business before you bought LaSeuer. A. I'm talking about our business before we bought LaSeuer out, because CIT Corporation loaned -- made us a capital loan to buy out LaSeuer Motor Company, and it was a forty-five thousand dollar loan; and it's reasonable to believe, and I would believe that the business certainly was worth that or CIT wouldn't have loaned us the money. Q. Well, you testified it was worth seventy-five thousand dollars? A. I still testify that I think it was worth seventy-five thousand at least. Q. But you can't tell me how you got the seventy-five thousand dollars, I guess is what you're saying? A. Mr. Ingram, again this wae twenty years ago. I would have no way of -- my memory is not that good. I can't 87 remember exactly what the assets were at that time. I would believe that it could have been worth even more money than that, but I (TR. 115] would believe or would have to believe that it was worth at least that much or CIT would not have made us a capital loan to buy out LaSeuer. Q. But you don't have any present books and records to reflect that? A. No, sir, I do not. No, sir, I do not. Q. And it's just your best opinion, I suppose? A. Yes, sir. Q. All right. I just want to ask you a question. I may not have understood. But when was your present facility built? A. I'm not sure, but I believe it was 1925. wo 88 QO. .'352 A. Or it could have been 1935. I'm not sure. I wouldn't know. Q. Now, when you went out of business in 1974, Mr. Payne, I believe you valued the present value of your property at fifty to seventy thousand dollars or the value of the business at that time? A. Yes, sir. Q. Now, I'm going to go through the same thing we did on the seventy-five thousand dollars. I want you to tell me how you got fifty to seventy thousand dollars? A. Well, at the time we went out of business [TR. 116] after we had turned over our inventory to Chrysler Credit, we had some office equipment, some other equipment and I would -- we were there -- we had been 89 in business for thirty years. It was actual -- actually it was a going concern. We had not -- the company -- the corpora- tion was still in existence, and I feel that the good will alone would have been worth seventy-five -- fifty to seventy- five thousand dollars. Q. Well, now, you say the good will alone. Let me ask you if you took this into consideration in figuring that, Mr. Payne: Now, here you had a business that hadn't made a profit since 1969; here you had a business that didn't even own the building they were in, and the building was built in 1925 or 1935, and leased, and isn't it a fact that your Chrysler franchise agreement says you can't sell your franchise without the written consent of Chrysler? A. That's correct. Q. Did you take all of that into 90 consideration in arriving at that figure, Mr. Payne? A; Yes, sir, I took it ail into con- sideration, because a lot of people would like to have a downtown or Chrysler dealership, and I would believe (TR, 117] that that would be more than a fair price as far as good will is concerned for a company that had been in business thirty years. Q. And hasn't made a profit in the last five or six years? A. That's correct, sir. We made profit from time to time. Other busi- nesses, other automobile dealerships right in the City of Birmingham have gone for periods of time without making a profit. Maybe if we had been able to participate in those rebate programs, maybe we would have had a better flow of 91 cash and could have made a profit instead of having a long losing streak. Q. And maybe if you had had a better used car business, you would have stayed in business, isn't that right? A. And I'm not trying to get into a discussion with you, Mr. Ingram. Basi- cally I believe and I cannot change my mind that the fact that Chrysler Corpo- ration came in and put dealers all over me in new buildings, that participated in the same occupation that I was parti- Ccipating in, that I can't help but believe that that is what put me out of business. I will die believing it, because that is the primary reason. I did all right for twenty-five years without [TR. 118] that competition. 92 [TR. 123] REDIRECT EXAMINATION (TR. 124] Q. Okay. You also mentioned on your examination with Mr. Ingram that there was tough competition in this area, and that you were having to sell at a smaller gross profit in order to compete? A. Tjat's [sic] correct. Q. Could you in many cases meet the low price that the other dealers, Chrysler-Plymouth dealers were offering? A: Bes Oaks (TR. 125) Q. Was this during the rebate pro- grams that we're talking about? A. Yes, sir. Q. Did those rebate programs -- I think you have said -- let me rephrase ah. I think you have said those 7% 93 rebate programs affected the cost per unit? A. They did. Q. Now, if you had a higher cost per unit because you didn't participate in the rebate program, and another dealer here did participate in it, and had a lower price per unit, then would that affect the price at which you could offer the car for sale to the public? A. Yes, sir. Q. So it would affect the price of the car to the public, is that correct? A. It could, yes, sir. Q. Okay. Can you lean back a little, Mr. Payne. There you go. You were breathing in the microphone. That's all right. Mr. Payne, do you know how many cars you sold, your corporation sold in 1970? Would that be or would that be 94 reflected on some document somewhere? [TR. 126] A. It would be reflected on a fin- ancial statement. Q. You're talking about the dealer financial statement? A. Yes, sir. Q. Do you know whether or not or did you ever discuss with Chrysler Corporation whether or not in 1970 your sales for the Birmingham area amounted to forty percent of the business in this area, in other words, what they said was your fair share? A. Well, now, that was my fair share, according to Chrysler Corporation. We discussed it from time to time, yes, sir. Q. That's because you never did -- you could not ever get to that fair share? 95 A. That's correct. Q. During these rebate programs you told Mr. Ingram that you didn't have any specific data on each sale that your company lost. Can you tell us how you know that your company lost sales because of the rebate program? A. Well, your customers would come into your showroom, and you would lose the business there. You knew they bought Chrysler automobiles, because it would be shown in your registration sheet, and [TR. 127] they would tell you, "I could buy this car over here for less than I can buy it from you, and I'm going to buy it over there," and in many cases some of our customers that we had had for years bought and then came back to us to ser- vice the automobiles for them,even for the free service. 96 (TR. 134] GEORGE IGNATIN (TR. 137] Q. Can you tell the ladies and gentlemen of the jury just briefly what types of programs and what are the effects and what happens when a dealer [TR. 138] participates in those programs in Birmingham? A. It's my understanding that this is a fairly normal procedure in the automobile industry, at least it is for Chrysler. They have a regular means of rebating monies to the dealership. These are bonus programs, quota programs set up in which each of the dealers is given some kind of a planning potential or a fair share and if they meet or exceed that, depending on which program, they then get certain monies back from 97 Chrysler. Now, the effect of this is to reduce the cost of the car to the dealers per unit. The money is paid by Chrysler in almost all of these programs on the number of cars that these dealers sell to final consumers. The dealers pay Chrysler an equal amount for the cars and then the effect of this, or of all these programs, then, is to reduce the cost to the dealer of the cars that the dealer buys from Chrysler. Q. Can you tell the ladies and gen- tlemen if there is a purchase objective in most of these programs, and tell them what that means. A. In a couple of programs, not most of them as I recall, there was what we call a wholesale purchase objective as well as a retail objective. Now, the purchase objective refers to the dealer's 98 (TR. 139] purchases from Chrysler. The retail objective refers to the number of cars the dealer sells to ultimate consumers, Now, as I say, in a couple of these pro- grams, not a majority of them, the dealers have to purchase a certain num- ber of cars from Chrysler before they qualify for the rebates which are based on the sales made to the ultimate con- sumers. Q. So, the monies paid are based on the sales for the most part; is that correct? A. Yes. The monies in all cases except, I think, two where there was a floor plan involved, and it's not clear whether that's a purchase or retail, but in all the cases other than that, the actual rebate or discount on cost was paid on retail sales by the 99 dealership to consumers. (TR. 191] Q. Do you have a total figure, Dr, Ignatin, for the amounts of rebates that you have figured on your chart in the last column, the charts, excuse me, that we were gOing over a little while ago that shows the total difference over the four year span for J. Truett Payne Company? A. Yes. The total difference between what -- you mean between what J. Truett Payne would have received if they had not been discriminated against? Q. Right. A. My figure is eighty-one thousand two hundred forty-eight dollars and ninety-four cents. (TR. 202] Q. Now, based on your knowledge and the fact that you have been teaching and 100 dealing in competition and the effects that price differences have on competi- tion in a given market, can you tell the ladies and gentlemen of the jury ycur opinion of the effect that these programs that you've charted for us have On competition in the Birmingham market? MR. FORMAN: Your Honor, I would object to that on the grounds he shows no knowledge of the automobile market, that he's made any studies in the automobile market. THE COURT: I overrule. His Opinion, the credibility of it is for the jury. A. This is, of course, in the form of some degree of speculation. But we do go back to economic theory and see what we would predict would happen from this kind of a situation. The cost difference to Payne means that they're paying Chrysler 101 more per unit than the other dealers. Now, they have to compete with these other dealers and they have to compete although they're paying higher costs to Chrysler for the cars. Now, this has a two-pronged [TR. 203] effect on competition which we would look for. First, it makes Payne less able to compete in the selling of cars. It's normal business procedure and it's well known that the salesman discounts off of list price, and the ability of the sales[man] to discount off of list price clearly will be related to the cost of the dealership to the automo- bile company. So, if you have two com- panies competing with each other and one has a higher cost than the other, the ability of the one company to compete is less than the other. Now, not only does 102 this impair Payne's ability to compete with the other company, it also hurts competition in the sense that the company enjoying the price discrimination is insulated from competitive forces and does not itself have to compete vigor- ously, which is to say, they're isolated from the competition that would have resulted from Payne if Payne had gotten the equally low price or the equally high rebate. So, Roebuck or Central, which in most of these cases were the ones who received the benefits of these price discriminations, were insulated from having to compete as vigorously with Payne as they otherwise would have had to. Q. What effect does that have on the price of a given product to the ultimate consumer? [TR, 204] A. Well, the predicted effect is that 103 these other companies not having to compete as hard and Payne not being able to compete because of this price dis- crimination, the predicted effect is that the price that the ultimate consumer would pay for the goods would be slightly higher. Q. Have I asked you, Dr. Ignatin, to determine from the dealer financial statements of the J. Truett Payne Company as best you ond the different cash flows and revenues over a given period of time? A. Yes, I did look at that. Q. Have you examined the volume of sales over a period of time from 1967 through 1974 for J. Truett Payne Company? A. Yes, I have. Q. Where did you get all this inform- ation? A. From the financial statements. 104 Q. Dealer financial statements? A. Dealer financial statements, yes. Q. And have you made an attempt -- let me rephrase that question. In the studies and courses that you are teaching at the University of Alabama and else- where, Goes the study of economics get involved with or do you determine the going value or the market value of a going concern in a market, [TR. 205] business of selling products in a given market? A. Yes, this is a standard question in many economics courses and finance courses, the valuation of a business, yes. Q. And have you made an attempt to make an evaluation or give your opinion as to the market value of J. Truett Payne Company as of May 28, 1974, when it 105 went out of business? A. Yes, I have made two attempts. I have used two methods. Q. When you say two attempts, you mean you took two different approaches? A. Yes, two different methods. Q. Could you tell the ladies and gen- tlemen of the jury your opinion as to the value of the going concern of J. Truett Payne Company on May 28, 1974? na OB. MR. FORMAN: Your Honor, we'd object to that until he lays an adequate predicate of what he did. THE COURT: I overrule the objec- tion. Q. You may answer, A. First let me say the problem involved is to figure out what J. Truett Payne would have been worth in May of 1974 as a going concern if they had not 106 suffered the price discrimination which I have (TR. 206] estimated cost them approximately eighty-one thousand dollars over the previous four years. Now, J. Truett Payne lost money in each of those four years and they would have lost eighty- one thousand dollars less than that if they hadn't been discriminated against. So, the question, then, for me to figure out is how much was that business worth as of May, 1974, if they had not been discriminated against in these programs, cr which is to say, had eighty-one thousand dollars more than they actually did. Now, I used two methods. The one method ~ is a very simple method which I used just to get a ballpark estimate to see if I'm going to come to somewhere in the right place to it. For that I went back to 107 what the business was worth back in 1955 when it opened in the location it was in in 1974. From conversations with Mr, Payne, he told me that he bought out Leseur in 1955 for forty-five thousand dollars and he estimated that of that purchase price, about twenty-two thousand five hundred dollars was goodwill. Now, goodwill refers to the value of the busi- ness beyond its physical assets. This refers to the value of customers and the good name of the business. Well, at the time that J. Truett Payne bought Leseur in 1955, he merged his own business, which it was itself (TR, 207] a going concern into the business, or he actually did it the other way, he merged Leseur into his business at a new loca- tion, and from conversations with Mr. Payne he said that his business was worth 108 about a hundred thousand dollars at the time. He was not clear as to what the goodwill of his business was worth. Q. Let me give you an assumption or a hypothetical to take into account in your answer, Doctor, that assuming that J. Truett Payne has stated or testified that his goodwill at that time was approximately twenty-five thousand dollars. Could you make an opinion, give your opinion as to the goodwill of the company as of May 28, '74? A. He declared in court that it was twenty-five thousand dollars? Q. Yes. I want you to assume that. A. Now, the estimates I had made the other day which I gdve to the other attorneys was that I assumed about a thirty thousand dollar goodwill involved for Mr. Payne's business based on what he had paid for Leseur's goodwill and if ! 109 his evaluation of his company was a hundred thousand dollars, that it would be worth somewhere around thirty thousand dollars, I started on the assumption that his (TR. 208] goodwill in 1955 was fifty-two thousand five hundred dollars. Now, you're saying that it would be, that his part was only twenty-five thousand. That would reduce it to forty-seven thousand five hundred dollars, the goodwill in 1955. Q. Right. Do you need a calculator, Doctor? A. I think I might be able to do this by hand. Q. I apologize. A. It looks like about a twelve thousand dollar difference. Q. What is your opinion as to the market value of the going concern as of 110 May 28, '74? A. Now, using this first method, I used a figure of about a four percent growth in the value of that firm per year for each of those twenty years, Now, the method I used was to use a combination of interest rates and rates of inflation. Economists use both methods. It usually depends on which one is higher and what they're interest in seeing. I don't feel particularly strong about either method. They're both good methods. They're both accepted methods in the profession. I'm not prepared to argue that one method is superior to the other. I prefer using both. So, I used four percent, which is just a rough average of the inflationary and the prime interest (TR. 209] rate over that twenty year period. 111 Interest rates tended to be a little higher than that and inflation tended to be a little lower than that four percent, My figures indicated that with my origin- al estimate of fifty-two thousand five hundred as the going concern value in 1955, that the firm in 1974 would be worth about a hundred fifteen thousand dollars. Given what you just said that Mr. Payne testified, if the firm started out at forty-seven thousand five hundred dollars, that would mean and this is a guess, I think I need a calculator, you can use one if you want, but it's going to be slightly over a hundred thousand dollars. I don't know if you need preci- sion on this anyway. Q. Is that a common and standard method in your profession as to make adjustment of a value of the goodwill of a company over a period of years? 112 A. Yes. It's not the preferred method, but it is one other method if you have no other way and it is good to give you some idea of what kind of estimate you're coming up with to check your figures to see if things are happening. Obviously the value of Payne's business could have grown more or less than this four ‘percent average per year over the twenty years. A better method is the second method which (TR. 210] I used, and this was an attempt to esti- mate how much money J. Truett Payne would have earned or lost in each of the four years after it went out of business. Q. The second method is also a stand- ard method in your profession in deter- mining goodwill and value of a going concern? Ae £68. 113 Q. O.K. A. Now, in 1974, Payne lost twenty- two thousand three hundred thirty-five dollars in the four months it was in business. However, I also determined that in 1974 they lost sixteen thousand and thirty dollars due to price dis- crimination in these rebate and bonus programs, which means that in 1974 Payne would have lost a little over six thousand dollars if it had not suffered price discrimination in these programs. Now, they were in business for four months. I took that figure of about sixty-three hundred and five dollars and I multiplied that by three, and that came to nineteen thousand dollars and I raised it to twenty because it's easier to work with and I said let's assume that Payne would have lost twenty thousand dollars during 1974 if they had been in 114 business the entire year and had not been subject to these discriminatory rebates. All right. 1974 was (TR. 211] a very bad year in the American automo- bile industry. This was the year follow- ing the Arab oil boycott, the embargo on Oil sales, the extremely rapid increase in the price of all forms of energy and the overall inflation in the country. In addition, gross national products, the total dollar value of goods and services sold in this country in real terms fell in 1974. So, it was a very bad year for the whole economy and it was particularly bad for the automobile industry. Now, in 1975, what would Payne have done? Well, I related 1975 to '74. '75 was a bad year for the American automobile industry, but not as bad as 1974, although Chrysler had their worst year in their history in 115 1275. This was a disaster year for Chrysler, in large part, however, due to overseas operations. Now, what I figured was that given the fact that '74 was such a bad year with inflation, with the rising price of gas, with Chrysler being caught perhaps with the wrong models or whatever, but in real bad shape,, that if Payne would have lost twenty thousand dollars in 1974, he probably would have lost around ten thousand dollars in 1975. Now, that ten thousand dollars loss in 1975 needs to be refigured back as to its dis- counted value in 1974, (TR. 212] Q. Is that because -- can you tell the ladies and gentlemen why? A. As I understand it, what I'm trying to do here is figure out how much the firm was worth in 1974 and so 116 losses suffered in 1975 need to be discounted either by the rate of infla- tion or the interest rate to figure out how much the value in 1974 of these losses in 1975 were. Q. Okay. A. Again we're trying to figure out what the value in 1974 was for losses or gains in years after 1974. I used a six percent discount figure. Now, here again we have three different figures. We can use the rate of inflia- tion [sic], we can use the prime rate of interest or the legal rate, and the legal rate is six percent. That has never appealed very much to economists except coincidentally. We've always preferred primary or the rate of increase in the Consumer Price Index. The reason I use six percent is because that is a better figure for later years and it's 117 actually over -- this understates the value of Payne's business, if I use that lower figure in 1975. Q. So this would be a conservative result? A. Yes, this is a conservative figure, and (TR. 213] I wanted to do it for consistency. Instead of using like a nine percent in '75, and then a six percent figure in '76, I figured I would just use a six percent figure for both years, even though this reduces the value of Payne's business slightly. It's not enough to make a big difference, though. Okay. For 1976, what would have happened? Well, 1976 was a banner year, this was the best year in Chrysler's history, this was the best year in the American automobile history. General 118 Motors made the largest profit they had ever made. Chrysler made the largest profist [sic] they had ever made. American Motors made the largest profit they had ever made. To see how well J. Truett Payne would have done in 1976, if they could have stayed in business, and I think they could have stayed in business because as I said, they suffered $81,000.00 worth of discrimination, and their losses in '74 and '75-would have Only been $30,000.00, so I then went back to see what J. Truett Payne's best year was, and coincidentally J. Truett Payne's best year also was the best year that Chrysler had ever had prior to 1976, so the Chrysler Corporation's best year prior to 1976 was 1968. J. Truett Payne's best year was 1968. 119 (TR. 214] In 1968 J. Truett Payne made $36,000 some odd dollars, a little more than $36,000.00. Now, how much would that $36,000.00 that Payne made in 1968 have been in 1976, recognizing inflation, the growth of the economy, growth in the Birmingham area, et cetera? Well, the method I used again was a conservative method. I decided to use the increase in profits that Chrysler itself came up with between those two years, Now, Chrysler made approximately 33 percent more in 1976 than Chrysler made in 1968. It seemed to me then very reasonable to say that Payne would have made about 33 percent more in 1976 than it would have made -- than they made in '68. So they made a little more than $36,000.00. I think the exact figure was $36,800.00 that they made in 1968. 120 I increased that by one-third, and I came out to a round $50,000.00 is what Payne would have made in 1976, if they could have stayed in business until last year, and of course that has to be discounted and when I discount that at a six percent rate for two years, that is a present value in 1974 of $44,500.00. Now, the question is, what would Payne have done in 1977? Well, '77 is a good year for automobiles, it's a better year for Ford and Gixticnd Motors than it is for Chrysler. Now, remember Chrysler [TR. 215] had the best year in its history in 1976. This year they are not doing quite as well. I believe their sales were off about twelve percent as opposed t» last year. So I figured that Payne's profits and sales probably would have fallen off for 1977, and so I estimated that . 121 although 1977 will be a good year, and all of the signs are favorable, that the economy is starting to pick up even after the bad winter, that Payne still would have made at least $20,000.00 this year, and when this was discounted back to 1974 values that comes out to $16,792.00 using six percent discount figure. By the way, I said the economists don't usually like the legal six percent figure. We've got a very nice coinci- dental situation today. The rate of inflation is about six percent, the prime rate on interest is six percent, and the legal rate is six percent today, so it's one of those happy coincidences in his- tory when they all come together to use the same discounting figure, and there is some reason to believe. that this will Stay that way over the next six to eight w 122 months. Okay. For 1978, again we are trying to figure out what's going to happen. I suspect that '78 will be about as good a year as 1977. There (TR. 216] will be changes in the American auto- mobile market, no doubt, but basically in terms of predictions of what happens to Gross National Product, the rates of inflation, et cetera, '78 looks like it Ought to be a slightly better year than 1977. Looks like it will be -- MR. FORMAN: Your Honor, I'm going to object to him going any further. This is pure speculation. He «ven said he just suspects this. THE COURT: I sustain with respect to °78. Q. All right. Dr. Ignatin, then based on up through your judgment in '77 123 as to the performance that J. Truett Payne Company would have had, had it stayed in business, can you give us your opinion as to the value of the company as far as its value as a going concern in 1974, when it went out of business? A. - Okay. Up through 1977, I can add that, it comes out to about $32,000.00 in additional value which is to say $32,000.00 would be the discounted value in 1974 of the earnings from 1974 through 1977 that Payne would have earned if they had not been subject to this dis- criminatory bonus and rebate program, and if they had stayed in business through 1977, so that was $32,000 -- approximately $32,000.00 (TR. 217] I think it comes out to $31,858.00. Q. All right. What's the -- 124 A. Well, that's not precise. That's more precise than -- somewhere around $32,000.00. Q. All right. Now -- r A. Now, in addition to that, however, if the firm had stayed through 1977, it would have been a going concern, and it would have had a value in 1977. This would have a value to someone who would purchase the business. MR. FORMAN: I object to this. He's already trying to recover future earnings, and now he's going to try to Capitalize future earnings at some arbi- trary date. THE COURT: Overrule the objection, Q. I'm interested right now in get- ting your value as to your opinion in 1974, I think you're getting to it. I just want the value and then we can talk about how you got it. _———- f > 125 A. I wanted to go back on that. What I'm trying to do again is see how much Payne would have earned or lost over those next four years, and then the ques- tion is, what would the value of that firm have been in 1977, and then try and discount that back to 1974 values, (TR. 218] Q. Okay. A. So the question is, how much would this firm be worth in 1977 to a prospec- tive buyer in the Birmingham market who wanted to go into business and take over a going concern which is now profitable and faced with non-discriminatory rebates and bonus programs, and what I was assum- ing then was about a $20,000.00 a year net profit, that how much is the firm worth that's makeing [sic] about $20,000.00 a year, and the answer is we use a discount figure of ten percent, a 126 conservative figure, and say that the Capitalized value of that firm in 1977 would have been $200,000.00. That's what a prospective buyer would be willing to pay to get an income stream of $20,000.00 a year. Q. And then you discount that figure of $200,000.00 back to 1974 dollars? A. Discount that figure back into 1974 dollars. Now, again I did the figure of 1978, $200,000.00 in 1978, at a six percent rate of discount would discount to a value of $158,400.00 in 1974. If we discount it back from 1977, the value of that firm would have been about $170,000.00, and I don't have it exactly because -- Q. Well, your best judgment. (TR. 219] A. -- my calculator battery went dead. 127 Q. Your best judgment is what we are interested in. Approximately $170,000.00? A. Yes. Q. Do you take into account at that time -- you said the value as a goind [sic] concern would be $170,000.00? A. Yes, Q. Do you take into account the los- ses during -- A. Yes. Q. -- this time? A. We take into account the losses and the gains which would have netted out to a plus $32,000.00. Q. Oh, I see. The $32,000.00 figure is taking into account the losses over the past five years, and the gains over the next three? A. Correct. Q. Okay. So that's your figure then, $170,000.00? = *% 128 A. He had $32,000.00 worth of net earnings which offset the losses or the total would be $32,000.00 in 1974 dollars plus an additional $170,000.00, and Since these are just rough figures because of my calculator problem, what I'm saying is that this method says that the value of Payne's business in 1974 when he went out of business was right around (TR. 220] $200,000.00. Now, the first method gave me $100,000.00 That was $170,000.00 plus the 32. Q. Oh, I'm sorry. A. So it should be about $200,000.00. So these are the two methods. As I Say, I prefer the second method. I think it's a more reasonable figure. Q. Do you think that this method that I am writing on the board now is the more 129 reasonable method? A. Yes, that is a more reasonable method, because it's not based on this constant gain of value over the twenty year period between 1955 and 1974. Q. Now, I want to ask you, you've been through the methodology and how economists value companies. Is that Standard in normal practice’ ‘to value companies in that method, by that method? A. Yes. Q. And accepted in the practice of your field? A. Yes. Q. I'm sorry, you'll have to speak up. A. Oh, yes. Yes, yes, it is, Q. All right, sir. MR. FORMAN: Your Honor, I would like to 130 [TR. 221] move to strike all of this testimony con- cerning the going value of the concern either on the first method or the second method. It's all based on speculation. It's one assumption after another. There is no relation of that to the Birmingham market, and he says Chrysler may have had a good year. He doesn't say whether the Birmingham market is a good market for Chrysler or a poor market for Chrysler. He in no way relates anything back to what was happening here in Birmingham. THE COURT: Overruled. [TR. 222] Q. Just one moment, Judge, I think I'm about through. | Doctor, in your opinion as an economist, did these rebate programs that you've studied have a good or an adverse effect on competition between 131 the four dealers, four Chrysler-Plymouth dealers in those years? A. Oh, I think it reduced competi- tion. I think it was an injury to com- petition. As I said before, it had a two-pronged effect. It reduced Payne's ability to compete, and by reducing Payne's ability to compete, it reduced the need for these other companies to compete as vigorously. So it reduced the vigor of gompetition in the Birmingham market for Chryslers and Plymouths. Q. Thank you. Judge, at this time I would like to offer into evidence the exhibits that we have used as summaries of those programs which we had previously offered. We identified them all in Dr. Ignatin's testimony. THE COURT: All right. MR. FORMAN: Your Honor, we would 13:2 to object to those, these been no showing, not even a basic showing that those dealers are actually in competition, no showing by this expert that he's (TR... 223] made any study along that line. THE COURT: Overrule the objection. CROSS EXAMINATION (TR. 228] o Ge. Ignatian, is it «6 fair state- ment of your testimony that the programs in which you have concluded that there is some discrimination, results in some discrimination of price, are the programs where you have basically taken the amount of money which, say, J. Truett Payne Company made, divided the number of cars that he sold during the time of that pro- gram into that figure, and come up with a payment per unit, and when that payment 133 per unit differs, you have considered that to be discrimination? A. Yes. Again, what I did is, I took the amount of rebate on each car line group that J. Truett Payne received, and I divided that by the number of cars that Payne sold, and that gave me the rebate per unit that Payne got on that car line group. I then went to the other dealers and took the amount of rebates they got for each car line group, and divided that by the number of cars sold in each car line group, and where there was a difference, I would then take the dif- ference in per unit rebate that the other dealers got, and subtracted what Payne got on a rebate per unit, and I multi- plied that by the number of cars sold (TR. 229] by Payne, and that was the difference ¢ % 134 between the two, or what I would call the difference due to the discrimination, yes. Q. Okay. The difference in payment, and you said that was the discrimination? A. Yes. There was a difference per unit in the payment Chrysler made to the dealers. (TR. 255] Q. Dr. Ignatin, I believe you've testified on your direct examination that you felt these sales incentive programs had an adverse effect on competition, one, in a sense, because J. Truett Payne's salesmen could not, as you say, discount, could not discount the price of the cars? A. As much as -- Q. As much as the other dealers? A. Uh huh. Q - And because you say the other 135 dealers are insulated from competition? A. Yes, because J. Tryett Payne could not discount their cars as much as they otherwise could have. This meant that the other firms did not have to discount their cars as much as they would have had to. Q. You say the effect of this would be, the price that the ultimate consumer would have to pay might be slightly higher? A. Yes. Q. Let me ask you this: do you have any evidence that the other car dealers discounted their cars more than J. Truett Payne Company did during the period '71 through him going out of [TR. 256] business, the date he went out of busi- ness on May 28th, 1974? A. No, I did not compute that. g*% 136 Q. Let me ask you this: if the other dealers took the incentive money and simply ran it through the corporation into their pocket, the pocket of the principal stockholders, what effect would that have on J, Truett Payne Company? A. Well, the fact that Payne did not get the money to run through to its stockholders, of course, injured Payne, but their ability -- Q. It injured the stockholders? A. Yeah. It would injure the stock- holders of the Payne corporation, if they didn't have that money to run through. But it would also reduce the ability of the Payne people to compete. I'm not too sure exactly how you just run that money through. This rebate is, in fact, a reduction in the cost of the car that Chrysler is getting from these dealers. 137 (TR. 257] A. The point that I am trying to make is that exactly what these firms do with it is not at all clear. The effect as it hits Payne, however, is that they get a lessened ability to compete. Q. I don't understand how they have a less ability. Let's just say the dealer pays all the -- let's say Roebuck A. Uh huh. Q. -- receives more incentive money, all of his incentive money is paid to his salesman as, say, a commission. A. Uh huh. Q. The price that they are selling the car for may not be lowered. How is that going to have an adverse effect on J. Truett Payne Company? A. Well, in that case, if they didn't lower the price -- of course, the 138 salesman can lower the price. The ultimate deal is worked out between the salesman, the sales manager and the customer, [TR. 258] and the salesman in selling the car, Since he's getting more for the car, will try harder, and one of the methods sales- man have in the automobile industry of trying harder is to reduce the amount of commission they make on the car. A typical salesman might figure if he sells the car for $5,000 he will make $500, this is just hypothetical. If he knocks the price down to forty- eight hundred dollars he might make only $400. -Well, he might just want to do that. And with this extra money coming in, of course, he's got the ability to do that and compete, whereas, the Payne salesman and the Payne Company does not. 139 Q. But in effect if the other company did not lower their price, the J. Truett Payne Company is not going to be adversely affected by competition, isn't that a fact? A. Well, if both companies charge the same price, then the gross profit would be different per car. And, yes, it would hurt Payne. They would be getting less per car than the other company would by the amount of that difference in rebate, (TR. 260] Q. Doctor, when you gave us your calculations of the goodwill of J. Truett Payne Company as of May 28, 1974, you used two methods? A. Right. (TR. 261] Q. The first method, in effect, you discounted -- well, let's go through that. = 140 A. O.K. Q. In the first method, you attempted to determine the goodwill of J. Truett Payne Company after the merger between J. Truett Payne Company and Leseur which occurred in 1955? A. Right. Q. And you said that Leseur, in talking to Mr. Payne, you decided that Leseur had twenty-two thousand five hundred dollars of goodwill? A. Correct. Q. Did you see any books or anything to verify this determination? A. No. Q. You say you also had to take Mr. Payne, Mr. Payne's statement that the goodwill value of his business was twenty-five thousand dollars? A. i took that in court. I had determined from my own conversations 141 with Mr. Payne that his goodwill was on the order of thirty thousand dollars. Q. How did you determine that? A. That was based on his estimate that his firm was worth about a hundred thousand dollars, that when he had merged Leseur into his company or his firm (TR. 262] into Leseur, whichever way it went, that his firm was worth about twice as much as Leseur's and that he had paid about twenty-two thousand five hundred for the goodwill of Leseur. So, I had estimated that Payne had around thirty thousand dollars worth of goodwill in his own business at the time of the merger. Now, I understand that in court Mr. Payne had said about twenty-five thousand dollars. So, that was about a five thousand dollar difference between the estimate I had made and what Mr. Payne himself said in 142 court. Q. You never made any independent study of any records to verify that Mr. Payne's company may be worth twenty- five thousand dollars, did you? A. No, I did not. Q. So, what you did, you then totaled the twenty-five thousand and the twenty- two thousand five hundred and came to a figure of forty-seven thousand five hun- dred dollars which was goodwill value of the merged company in 1955? A. Yes, as an estimate, as a bench mark, as a bench mark to check on the other method which I find preferable. (TR, 264] Q. Let me ask you this. When the companies were merged, the name of Leseur was dropped, was it not? A. Yes. Q. Don't you believe that would 4 wl 143 eliminate some of the goodwill, if not a large portion of the goodwill attached to that company? A. It might. It would depend on exactly how the merger was done, the advertising campaign at the time. As I understand it, Mr. Payne took over the Leseur Agency and the location. So, there would be some -- there's a trade- off in there also that -- goodwill isn't based on the name in the sense of the name. When we use the term name, we're talking about the reputation of the dealer, and the question would be did Payne then acquire the reputation of Leseur when he acquired the company and the location. _ Q. You have no way of estimating that, do you? A. Well, from what he said he paid for it. Whether he got it was another 144 story. Q. Whether it disappeared after he took over would be a different story? A. It might and it might not. We don't assume that it disappears just because he took over. He paid for it. He assumed it and then he started [TR. 265] dealing. Whether it disappeared, I don't know. Q. Well, after you made this initial assumption that it was forty-seven thousand five hundred dollars as the goodwill, and that's what it is, an assumption, you then took a discount figure of four percent? A. Yes. It's not a discount figure in this case. I increased the value by four percent per year for the next twenty years until 1974, Q. And that was based on an RN 145 inflation rate and the interest rate? A. Yes, a combination of the two, a rough average of the two. Q. Did you take into any considera- tion in arriving at the four percent figure the automobile market during that period, whether it was good or bad, its ups and downs? A. Well, this is one of the reasons why I don't think this method is all that good and why I used it as a bench mark. The market went up and down over the years. He had some good and bad years over that twenty year period. Q. How do you know that? A. Through talking with him and seeing some of his financial statements. [TR. 266] Q. What financial statements did you see? A. I saw them going back to, what, 146 1966, I believe, his profit and loss fig- ures. I believe it went back to '66. Q. You have nothing between '55 and A. No, I did not look at them. I just relied on my conversations with Mr. Payne. Q. And-by using this four percent figure, you determined that the goodwill of J. Truett Payne Company on May 28, 1974, was a hundred thousand? Is that your -- A. I don't have my calculator. The figure I have is a hundred fifteen thou- sand based on the fifty-two thousand five hundred that I had done previously. Forty-seven thousand five hundred times four percent per year for twenty years Ought to come out to around a hundred thousand. Q. So, to get -- A. About a hundred and two thousand. I saw somebody guess around a Q. And you to verify your A. Yes, to comes out. 147 doing the figure. I would hundred and two thousand. used this as a bench mark next figure; is that right? see how my next figure Q. Your next method, your second method really (TR. 267] consists of trying to speculate as to what the market is going to be over the next few years? A. And what the market was in 1974 and how well Payne would have done given non-discriminatory programs, say, rebates and quota programs that treated all dealers equally. Q. Let me ask you this. Why do you pick to begin with the year 1974? A. Well, because that's when we are trying to figure out what the value of ’% 148 the firm was. / Q. Isn't it a standard practice to look at what the past record of the firm has been and then capitalize that figure over some period to determine the going concern of a business? A. Yes, that's one method, yes. Q. In fact, when you explained your methodology to me, you started with the year 1973, did you not, in one of your initial calculations? A. I don't recall. I'm trying to think. Q. Let me ask you this. A. I think the question as it was put to me the other day was what was the value of the firm in May, 1974, and I said, well, you could figure out, well, One method you could use is to take 1974 and figure out what the stream of earnings from that point would be. 149 [TR. 268] Q. Let me ask you this, Doctor. If you totaled up -- you have a copy of Mr. Payne's dealer records or dealer statements for the year '71 through the first quarter in '74? A. Yes. Q. If you had used those figures and had deducted from that figure your eighty-one some odd thousand that you figure he had payments coming to him, would you arrive at a loss or a profit for Mr. Payne over that four year period? A. He would have lost about thirty thousand dollars. Q. In fact, if you use the entire year of '74, you estimated he lost another twenty thousand? A. I showed you that he had lost twenty-two thousand during the first four months of '74, but that he had suffered 150 discriminations of about sixteen thousand, so that for his total year he would have lost a total of twenty thousand, Q. The first year -- you started in '71. Even adding in this figure of eighty-one thousand that you contend is his amount he's entitled to in incentive payments, the first year that you would show him making a profit would be in 1975? A. 1976. (TR. 269] Q. ‘'75 he lost again? A. Yes. Q. That's right, he did, didn't he. In fact, he lost another twenty thousand dollars? A. No. He would have lost ten thou- sand in ‘75. Q. And how did you determine he would have lost ten thousand? -_ 131 A. Well, based on the fact that he was losing twenty thousand dollars in 1974 on a yearly basis and '75 would have been a bad year, but not as bad as '74 given the recovery of the economy during '75, the reduction in the rate of inflation and some of the solving of the problems in the car industry. Q. You decided that it would be only half as bad? A. Yes. '74 was a very bad year. Everything came together in 1974 to mess up the American automobile industry. Q. Did you make a study to see what was actually happening in the automobile market in the Birmingham, Alabama area in 1975? A. No, I did not. Q. Do you know whether the Birminghan, Alabama sales area is a good sales area for Chrysler Corporation or a poor sales °% 152 area? (TR. 270] A. You mean relative to the country as a whole? Q. Yes, that's right. A. From some of the data I've seen, Chrysler did relatively poor in the Birmingham area than they did to the country as a whole, at least in the early years. I don't have it for 1975. Q. Doesn't the failure to take that into account go considerably to your credibility of this ten thousand dollar figure you have arrived at as a loss figure for the year 1975? A. The ten thousand dollar figure for 1975 is based on the year 1975 and is related to the previous years. Now, we do have previous results for Payne going back quite a long ways and Payne was a profitable dealer for many years in the 153 past regardless of how well Birmingham did relative to the country as a whole. He did suffering a lot of troubles in about 1970 and this was when these programs came in and started affecting him. My estimate of the ten thousand loss in '75 was based on the assumption that these discriminatory programs ceased to be discriminatory, that they continued to offer them on a non-dis- criminatory basis and Payne would then be able to compete on an equal basis with the other dealers in 1975 and I Still thought that he would (TR. 271] lose money in '75, but not as much as he lost in '74. Q. You say the sales incentive pro- grams did not have an effect until 1970? A. No, I did not say that, or if I did, I did not mean to say it. I did not 154 Study them before that. I was actually told that I should study them and it was irrelevant to the case, Q. The year 1976, you say it's going to be a banner year for Chrysler and for the automobile industry? A. Yes. Q. And so, then, to determine what J. Truett Payne Company would have done, assuming that it would have stayed in business that long, you looked at what he did in 1968 which on the information you have was his best year; is that right? A. Correct. It was also Chrysler's best year prior to 1976. So, Chrysler had the best year in their history in 1968, Payne had its best year in history in 1968. I don't find that particularly coincidental. Q. Let me -- A. Chrysler did have the best year 155 in its history in 1976. It is not unreasonable to assume that Payne would have had the best year in their history in (TR. 272] 1976. Just as everything came together in 1974 to make 1974 a disaster, a lot of things came together in 1976 to make it a wonderful year for the American automobile industry. Q. Did you make any determination how the industry did in the Birmingham, Alabama area on that date? m A. No. Q. Did not. Did you make an analysis to see what the market structure was or where the locations were for the Chrysler Plymouth dealers in 1968 as compared to 1976? A. The change I think is that in 1968 Vestavia or Hall was in Bessemer. 156 Q. That's right. A. And I believe are still in busi- ness. They go in and out of business, Q. Do you feel that the bemnadex of the dealer from Bessemer to Vestavia may well have affected what Mr. Payne would have done, may have prevented him from making as much profit than in '68? A. Well, there are two things. Bessemer did move from Bessemer to Vestavia. So, if Vestavia were in exis- tence in 1976 and were in business in Vestavia, this would take some of the business away (TR. 273] from Payne from that area; however, that area also is the most rapidly growing area in Birmingham in terms of both population and incomes and a very good area for car sales. The data we have and the most recent study that was done 157 for the City of Birmingham, which they didn't like by the way, by Brookins Institute, I'm sorry, Patelle Institute in Columbus, Ohio, indicates that almost, about half of all the population growth in the Birmingham area since 1970 has occurred in that part of the county, the southern part of the county and over into Shelby County. Q. Well, if there was a dealer loca- ted out there at that time, that might substantially or might very well keep those people going to that dealership, wouldn't it? A. Well, except that the data shows that Payne did a good part of his busi- ness in that area and that these people to a large extent, from a study I have done involving work habits, these people do work downtown, and other studies the macketing men have done indicate that 158 . people do have this trade-off between purchasing from dealers near their house as opposed to where they work, Generally marketing people feel that a person would rather on a balance buy near his place of business rather than his place (TR. 274] of work. What you are saying, though, is basically correct, there would have been incr [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_2515%3A03. Public record. Not legal advice.