Jurisdictional Statement — Dana Corp. v. California

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; Supreme Court, U. S.

80-176 FILED

Pesach. ; AUG 61980

Supreme Court of the United'States’ ©

October Term, 1980

DANA CORPORATION and THE ECHLIN MANUFACTURING

Co.,

Appellants,

VS.

STATE OF CALIFORNIA and LEGISLATURE OF THE STATE OF

CALIFORNIA, et al.,

Appellees.

APPEAL FROM JUDGMENT OF THE COURT OF APPEAL

OF THE STATE OF CALIFORNIA.

JURISDICTIONAL STATEMENT.

PAUL, HASTINGS, JANOFSKY & WALKER,

DENNIS H. VAUGHN,

DONALD A. DAUCHER,

DONALD L. Morrow,

STEVEN C. KENNINGER,

555 South Flower Street, 22nd Floor,

Los Angeles, Calif. 90071.

(213) 489-4000.

Attorneys for Appellant,

Dana Corporation.

MUNGER, TOLLES & RICKERSHAUSER,

DENNIS C. BROWN,

612 South Flower Street, 5th Floor,

Los Angeles, Calif. 90016,

(213) 683-9100.

Attorneys for Appellant,

The Echlin Manufacturing Company.

Parker & Son, Inc., Law Printers. Los Angeles. Phone 724-6622

IN THE

Supreme Court of the United States

October Term, 1980

DANA CORPORATION and THE ECHLIN MANUFACTURING

o.-.

Appellants,

VAY

STATE OF CALIFORNIA and LEGISLATURE OF THE STATE OF

CALIFORNIA, et al.,

Appellees.

APPEAL FROM JUDGMENT OF THE COURT OF APPFAL

OF THE STATE OF CALIFORNIA.

JURISDICTIONAL STATEMENT.

Questions Presented.

1) Whether as a matter of law the Appellees could ab-

rogate without consequence their contracts with the Appel-

lants by enacting legislation allegedly under the police

power?

2) Whether the Appellants’ contracts with the Appellees

were invalid ab initio as an impermissible restraint on the

police power of the State of California?

3) Whether the Appellants’ complaints state a cause of

action against the Appellees for taking of property for which

the Fifth Amendment requires compensation.

4) Whether the determination by the California Court

of Appeal that the California Tort Claims Act immunizes

Appellees from suit by Appellants herein for violation of

Appellants’ constitutional rights runs contrary to the Su-

premacy Clause of the United States Constitution.

TABLE OF CONTENTS

Page

III UI ini das cree a sees keiepiee eens i

SR I dog owe eA oe hk os ven ee Smee ae aie l

Po ec ie a ks WT es eee bee aes Ks l

Constitutional Provisions Involved ................ 2

Statutory Provisions Involved ................0008- 2

NS OE Si oo ka os heli d bid te a oe eden 3

How Federal Question Is Presented........... Temes ae

Reasons for Granting the Writ................006. 10

A. The Court of Appeal’s Holding That the Alleged

Contracts Could, as a Matter of Law, Be Abro-

gated Without Consequence in the Exercise of the

Appellees Police Power Ignores Decisions of

This Court Applying the Contract Clause of the

United States Constitution ................. 10

B. The Contracts Between Appellees and Appellants

Were Not Invalid Ab Initio ................ 15

C. The Court of Appeal’s Holding That Appellees

Cannot Be Held Liable for a Taking of Property in

This Case Raises a Novel Question of Law

Specifically Left Unanswered by This Court Last

POU eae ete eS eats: Te 18

D. The California Tort Claims Act of 1963 Cannot

Deny Appellants a Remedy for Constitutional

Violations. To Allow the Clearly Erroneous

Court of Appeal Ruling to Stand Would Impair

the Constitutional Rights of All Who Deal With

the State of California .........c0eccseens 19

1. The California Tort Claims Act Cannot Im-

munize the Appellees From the Require-

ments of the Fifth Amendment to the United

i ee ee 20

2. The California Tort Claims Act Cannot Im-

munize Appellees From Claims Alleging the

Impairment of a Contract to Violation of the

CEE CI a kee a pewerakeats 22

SIN cere oe ae ew eee os oe 23

INDEX TO APPENDICES

Minute Order of the Superior Court of California, County

ee I i iiedc rks coun ees App. p. 1

Opinion of the Court of Appeal of the State of California

PA LVESO SCOTS AER kNs cee Ree oe Rese es 2

Denial of Appellant’s Petition for Hearing by California

Supreme Court Dated May 8, 1980.............. 6

ee te I 0 pyc 64s oo oe cece shaw wanaes 7

I ics ad sala oa'y ba one Cee A Ne ok 12

Air Resources Act, ch. 670, 1974 Cal. Legis. Serv. ,

ae Sa SC ERIE EDCURE A ERA Oe ak 12

a SRA rele etn Rares tect Sats gr eae 15

Air Resources Act, ch. 957, 1975 Cal. Legis. Serv.

ay hae Feb gate + hohe Nk eee eA 15

The California Tort Claims Act, Cal. Claims and Actions

Ce Sees Weeiay MEO So ccieeuweta cheese ees. 19

Dana’s Third Amended Complaint ................ 20

Echlin’s First Amended Complaint ................ 39

Notice of Appeal to the Court of Appeal, Second Appel-

late District, State of California................. 58

Notice of Appeal to the Supreme Court of the State of

California, Dated August 1, 1980 ............... 62

Page

TABLE OF AUTHORITIES CITED

Cases Page

Agins v. City of Tiburon, .... U.S. ...., 100 S.Ct. 2138

CD ares beer wins a eee oe ate a

Allied Structural Steel Co. v. Spannous, 438 U.S. 234,

57 L.Ed.2d 727, reh. denied 439 U.S. 886, 58

i & Ff Berea, on, &@, 85,

Applby v. Buffalo, 221 U.S. 524, 55 L.Ed. 838 (1911)

Chicago B & O.R. Co. v. Illinois ex rel. Grimwood, 200

OB. TEN, FO GB Fe ET 0 0b se ces nbawenes

Dale v. City of Mountain View, 55 Cal. App.3d 101, 127

CL: Dee CRD a. 6 habs dance oy swceeumeses

E & E Hauling, Inc. v. Forest Preserve Dist., etc., 613

GAG Gre CH ts BOOED nc idsewedneyveecuas 13,

El Paso v. Simmons, 379 U.S. 497, 13 L.Ed.2d 446, reh.

denied 380 U.S. 926, 13 L.Ed.3d 813 (1965) .....

N.A.C.C.P. v. Thompson, 357 F.2d 831 (Sth Cir. 1966)

~ RB reer errs err

Sanfilippo v. County of Santa Cruz, 415 F.Supp. 1340

ET Rs SOON 6 vio cok oe Kos eaene acne

United States Trust Co. v. New Jersey, 431 U.S. 1, 52

L.Ed.2d 92 (1977).... 10, 11, 12, 13, 14, 15, 16,

Constitution

United States Constitution, Art. 1, Sec. 10 .........

United States Constitution, Art. 6, cl. 2.......... Y 4

United States Constitution, Fifth Amendment .......

diac ot Se ee i. 2. 9 OO ae ae

United States Constitution, Fourteenth Amendment .. .

Statutes

Air Resources Act of 1967, Ch. 1507, Sec. 8 (1971)

COSA OEY.: ROOD s.: be eens etoscchawans ae

California Government Code, Sec. 814 (West) .

California Government Code, Sec. 818.2 (West)

California Government Code, Sec. 821 (West) .

California Health and Safety Code, Sec. 39177.1 ....

California Vehicle Code, Sec. 4602 (West) ....

United States Code, Title 28, Sec. 1257(2) ....

Appellants' respectfully pray that this Court grant this

Appeal to review the judgment and opinion of the Court of

Appeal of the State of California,’ which affirmed the Su-

perior Court’s dismissal of the Appellants’ complaints with-

out leave to amend.* Appellants sought review of this judg-

ment and opinion in the Supreme Court of the State of

California. Hearing was denied.

OPINIONS BELOW.

The unreported Minute Order of the Superior Court of

California, County of Los Angeles entered December 6,

1977 appears in the appendix at 1.

The reported opinion of the Court of Appeal of the State

of California, Second Appellate District, Division Four,

filed March 13, 1980 appears in the appendix at 2.

The California Supreme Court denied the Appellants’

Petition for Hearing on May 8, 1980 without opinion. The

notice of that denial appears in the appendix at 6.

JURISDICTION.

The Appellants invoke this Court’s jurisdiction under 28

U.S.C. Sec. 1257(2). The judgment and opinion of the

Court of Appeal affirming the dismissal of Appellants’ com-

plaints with prejudice was entered on March 13, 1980. On

‘Appellants were plaintiffs and appellants below. They are: Dana

Corporation (hereinafter *‘Dana’’) and The Echlin Manufacturing Com-

pany (hereinafter ‘‘Echlin’’). The Appellees include the defendants and

appellees below. They are the State of California and the Legislature

of the State of California. In addition, the Appellees include Contig-

nition Company and Combustion Sciences, Inc., who were plaintiffs

and appellants below. However, where the word Appelices is used in

this jurisdictional statement it refers only to the State of California and

the Legislature of the State of California.

California Court of Appeal, Second Appeliate District, Division

Four (per Kingsley, Acting P.J.) (hereinafter ‘‘Court of Appeal’’).

‘Superior Court of Los Angeles County (Hon. Jack T. Ryburn,

Judge).

nan

May 8, 1980, the California Supreme Court denied the

Appellants’ petition for hearing. This jurisdictional state-

ment is filed within 90 days of that denial. Notice of Appeal

was filed in the California Court of Appeal and in the Cal-

ifornia Supreme Court on August 1, 1980. Copies of those

notices appear in the appendix at 58 and 62.

CONSTITUTIONAL PROVISIONS INVOLVED.

Article 1, Sec. 10 of the United States Constitution pro-

vides in pertinent part that ‘‘No state shall . . . pass any

. . . Law impairing the Obligation of Contracts . . .”’

Article 6, cl. 2 of the United States Constitution provides

in pertinent part that ‘‘This Constitution, . . . shall be the

supreme Law of the Land; and the Judges in every State

shall be bound thereby, any Thing in the Constitution or

Laws of any State to the Contrary notwithstanding.”’

The Fifth Amendment to the United States Constitution

provides in pertinent part that *‘No person shall be...

deprived of life, liberty, or property without due process

of law; nor shall private property be taken for public use,

without just compensation.”’

STATUTORY PROVISIONS INVOLVED.

The Air Resources Act, Ch. 1507, 1971 Cal.Legis.Serv.

3205-06 (amending the Air Resources Act of 1967, Cal.

Health and Safety Code $39177.1 and Cal. Vehicles Code

$4602 (West)) and the repealing amendments pertinent to

this action are set out in full in the appendix at 7, 12 and

15.

The relevant sections of the California Tort Claims Act

of 1963 (Cal. Government Code §$§814, 818.2, and 821

(West)) are set out in full in the appendix at 19.

—.

STATEMENT OF THE CASE.

This Appeal results from the affirmance by the Court of

Appeal of an order sustaining demurrers to Appellants’ com-

plaints without leave to amend. Therefore, the courts of

California accepted as true the facts alleged in Appellants’

complaints unless ‘‘contrary to law or to a fact of which a

court may take judicial notice.’’ Agins v. City of Tiburon,

... U.S. ...., 100 S.Ct. 2138, 2141 n.6 (1980) citing Dale

v. City of Mountain View, 55 Cal.App.3d 101, 105, 127

Cal.Rptr. 520, 522 (1976). No other facts are before the .

court for its consideration.

The Complaints stated:

In the late 1960's, there occurred an air pollution crisis

in California. Greatly contributing to this crisis was the

emission of oxides of nitrogen (hereinafter ‘‘NOx’’) from

motor vehicles manufactured in the particular model years

1966-1970. Appendix (hereinafter *‘A’’) at 21-22 and 39-

41.* From 1968 until 1971, demand grew from various

sources, including the Appellees, for action to reduce NOx

emissions from 1966-1970 vehicles. (A at 22 and 41). How-

ever, devices to control such NOx emissions were not com-

mercially available. (A at 22 and 44).

Reacting to the crisis, the Appellees, through the State

of California Air Resources Board (hereinafter ‘‘ARB’’),

consulted with potential manufacturers, including the Ap-

pellants, to determine whether they would develop and make

available devices to reduce NOx emissions for 1966-1970

automobiles. The Legislature was informed by the ARB that

“Certain citations to the appendix will be followed by two sets of

page numbers. The first corresponds to the page in the Appendix at

which this allegation is set forth in Dana’s Third Amended Complaint.

The second corresponds to the page in the Appendix at which this

allegation is set forth in Echlin’s First Amended Complaint.

Pak ise

the manufacturers would undertake such a project if and

only if the law were changed to require the installation of

such devices on all 1966 to 1970 automobiles in California.

(A at 23 and 41-42).

As a result, in November, 1971, the Appellees enacted

legislation (hereinafter the *‘NOx legislation’’) which re-

quired most 1966-1970 motor vehicles (hereinafter ‘‘Subject

Vehicles’’) to be equipped with an ARB accredited NOx

device not later than February 1973. (A at 23-24 and 42-

43). This legislation constituted an offer to Appellants that

if they would undertake to design, obtain accreditation for

and manufacture sufficient numbers of NOx devices, then

the Appellees would require the mandatory installation of

such devices on the Subject Vehicles. (A at 32-33 and 51-

52). In order to assure rapid installation of NOx devices,

the Appellees enacted the NOx legislation as an urgency

Statute, stating:

‘‘This act is an urgency statute necessary for the

immediate preservation of the public peace, health or

safety within the meaning of Article 1V of the Con-

stitution and shall go into immediate effect. The facts

constituting necessity are:

Presently required emission control devices for mo-

tor vehicles of 1966 through 1970 models do not elim-

inate enough of the oxides of nitrogen to insure the

health and safety of the majority of California citizens.

It is now technically feasible to produce devices which

will significantly reduce these dangerous substances.

To insure that such devices are installed on most of

such passenger vehicles within the shortest time pos-

sible, it is necessary to immediately begin programs

for testing and approving such devices. Immediate pas-

sage of this act will also give manufacturers additional

time to develop such devices.’’ Ch. 1507, §8 (1971).

a ee

The NOx legislation vested the ARB with the authority

to accredit and certify for installation on Subject Vehicles

NOx devices and, while it set no absolute standard for

reduction of NOx to be achieved by an accreditable device,

it authorized the ARB to set such standards and to establish

a mandatory installation schedule. (A at 24 and 42-43). In

other words the ARB became a compliance officer, charged

with responsibility for determining whether and when man-

ufacturers had complied with the terms of the Legislature’s

offer.

Despite the urgency of the NOx legislation, by March

31, 1972, no company had yet submitted a device for ac-

creditation. (A at 26 and 44-45). The ARB then wrote a

letter to the manufacturers, including Appellants, which

stated in part:

‘*Gentlemen:

The Air Resources Board, at its meeting on April 19,

1972, at Sacramento, will take up the status of NOx

control devices for 1966-70 light-duty vehicles.

This subject has been discussed by the Board and the

staff with members of the industry for some time. The

Board and staff were led to believe that devices would

be available if the State chose to require their instal-

lation.

The legislature was likewise informed, and as a result

passed SB 578, which requires installation of NOx

devices on 1966-70 light-duty vehicles by January

1973. The bill was signed by the Governor on Novem-

ber 16, 1971 and on November 17 the Board adopted

a test procedure for accreditation.

We understand several companies have undertaken

testing, but no application has yet been filed with the

Board. The Board wishes to find out why there are no

applications and what alternatives exist to comply with

the law and will call upon your representative at the

April 19th meeting to give a brief statement for your

company on the subject.’’ (A at 26 and 44-45)

Appellants accepted Appellees’ offer by designing, obtain-

ing accreditation for and manufacturing the NOx devices.

Both Appellants invested millions of dollars in the design

and manufacture of smog devices at the express request of

the State. The NOx devices submitted by the Appellants

were accredited in August 1972. (A at 27 and 45-46).

The ARB decided that the Appellants would not be able

to produce enough devices, or to establish distribution sys-

tems and train device installers in time to meet the February,

1973, installation deadline provided for in the NOx legis-

lation. Acting under a provision of the NOx legislation

which allowed delay ‘*for extraordinarv and compelling rea-

sons,’’ the ARB suspended the requirement that all vehicles

have the devices installed by early 1973 and began working

on a new schedule. (A at 27-28 and 46). The Appellants

were told by the ARB that an installation schedule would

be adopted if Appellants provided more information re-

garding production, distribution, and installation training

and if Appellants committed themselves to produce the NOx

devices within the time specified in the installation schedule.

(A at 28 and 46). Appellants provided the information and

agreed to produce sufficient devices for all subject 1966-70

vehicles in California. Whereupon the ARB adopted a

schedule providing for mandatory installation of NOx de-

vices on all Subject Vehicles by May, 1974. (A at 28 and

35).

On December 19, 1973, at the request of the Governor

of California the ARB adopted a resolution delaying the

installation deadline. However, in compliance with a writ

of mandamus from the California Supreme Court, the ARB

vacated the resolution to delay mandatory installation and

at, Om

adopted an installation deadline of June 30, 1975. (A at 29

and 47-48).

By January 1, 1974, Dana and Echlin had invested ap-

proximately $10 million and $5 million, respectively, in the

implementation of the NOx program at the inducement of

the legislation and the express request of the ARB acting

pursuant to the legislation. The cost to the Appellants in-

cluded, among other things, the research and development

of the devices and of the installation program, the manu-

facture of a large inventory of NOx devices on an expedited |

basis to meet the requirements of the installation schedules

established by the ARB, training seminars for 11,700 Class-

A mechanics, and the establishment of field offices through-

out California to secure the smooth operation of the instal-

lation program. (A at 30-32 and 48-51).

On September 5, 1974 and again on April 23, 1975, the

Appellees amended the Air Resources Act, (A at 29 and 48)

(hereinafter ‘‘repeal legislation’’). The amendments re-

pealed the provisions which required the mandatory instal-

lation of the NOx devices on all subject vehicles and reduced

to an insignificant number the motor vehicles upon which

the NOx device was required to be installed. By enacting

the repeal legislation the State rescinded its promise to these

appellants to require the installation of NOx devices on all

subject vehicles and rendered the Appellants’ large inven-

tory of NOx devices valueless.

HOW FEDERAL QUESTION IS PRESENTED.

The Appellants initiated this suit in the Surerior Court

of Los Angeles County for breach of contract, for taking

of property without just compensation, and on three other

grounds not discussed in this Appeal.

The complaint of Appellants challenged the validity of

the repeal legislation as an impairment of the contractual

duties which the State had imposed upon itself in entering

into contracts with Appellants and a taking of property with-

out compensation.

The Appellees demurred to the complaints filed by Ap-

pellants on identical grounds. Appellees argued that the

State of California was totally free to abrogate any contract

with Appellanis, without consequence, if the abrogation

occurred in the form of legislation which the State contended

was passed in the exercise of its police power; that any

contract which limited the police power of the State was

‘‘void ab initio’’; and that the repeal of those portions of

the NOx legislation making device installation mandatory

was not a taking for which any compensation was required.

The Superior Court dismissed all five causes of action

alleged by the Appellants without leave to amend.

The Appellants appealed to the California Court of Appeal

asserting that they alleged facts sufficient to state a claim

under all five theories. The Appellants argued that the al-

leged contracts could not, as a matter of law, be abrogated

without consequence in the alleged exercise of the State’s

police power and were not void ab initio. Appellants also

pointed out, as they had in the Superior Court that even the

exercise of the State’s police power may be constrained by

the Contract Clause of the United States Constitution. Ap-

pellants also argued that the facts alleged were sufficient

to constitute a cause of action for the taking of Appellants’

property without compensation.

The Court of Appeal affirmed the Superior Court’s order

dismissing the Appellants’ complaints with prejudice on two

separate grounds. First, the Court of Appeal held that the

Appellees were immune from any suit seeking a remedy for

impairment of contract resulting from legislation assertedly

passed in the exercise of the State’s police power. The Court

— ‘on

of Appeal also held that the California Tort Claims Act of

1963 immunized the Appellees from suit under any of the

alleged theories.

Appellants herein petitioned for a hearing before the Cal-

ifornia Supreme Court, again raising the issues that are now

before this Court. The Appellants argued that the Court of

Appeal misconstrued the nature of the case, ignored the

Contract Clause and the Fifth Amendment of the United

States Constitution, and unconstitutionally expanded the

California Tort Claims Act to deny Appellants a remedy for

the violation of Appellants’ constitutional rights by Appel-

lees. The Supreme Court of Cali:ornia denied Appellants’

Petition for Hearing on May 8, 1980.

—10—

REASONS FOR GRANTING THE WRIT.

The Court of Appeal for the State of California disposed

of this case with two broad theories, both of which presume

to provide Appellees with absolute immunity, as a matter

of law from the constitutional claims asserted by the Ap-

pellants. The Court of Appeal held that ‘‘the state is not

liable for the effect of legislation enacted under the police

power for what the Legislature believes is a public pur-

pose.”’ (A-4). Second, the Court of Appeal found that re-

gardless of the claims alleged by the Appellants, the Cali-

fornia Tort Claims Act of 1963 provides the Appellees with

‘‘an express governmental immunity.’’ As will be discussed

below, both alleged statements of law are incorrect because

they ignore the Contract Clause and the Fifth Amendment

of the United States Constitution and directly conflict with

this Court’s interpretation of these provisions.

A. The Court of Appeal’s Holding That the Alleged

Contracts Could, as a Matter of Law, Be Abrogated

Without Consequence in the Exercise of the Ap-

pellees Police Power Ignores Decisions of This Court

Applying the Contract Clause of the United States

Constitution.

The Court of Appeal’s opinion incorrectly concludes that

even if valid contracts existed between the Appellants and

Appetlees, the Appellees can not be held liable for any

remedy for impairing such contracts if that abrogation was

a result of the exercise of the police power of the State. This

Court has made it clear that ‘‘the power of a state to modify

or affect the obligation of contract is not without limit.’

El Paso v. Simmons, 379 U.S. 497, 509, 13 L.Ed.2nd 446,

reh. denied 380 U.S. 926, 13 L.Ed.2d 813 (1965). This is

so even in the exercise of the state’s police powers. See

United States Trust Co. v. New Jersey, 431 U.S. 1, 52

pee, yee

L.Ed.2d 92 (1977); Allied Structural Steel Co. v. Spannaus,

438 U.S. 234, 57 L.Ed.2d 727, reh. denied 439 U.S. 886,

58 L.Ed.2d 201 (1978).

In United States Trust Co. v. New Jersey, 431 U.S. 1,

52 L.Ed.2d 92 (1977), this Court addressed the relationship

between a state’s police powers and its contractual obli-

gations. The States of New York and New Jersey had passed

legislation which restricted the uses which the Port Authority

(a separate governmental entity) could make of its assets.

That legislation was passed for the purpose of inducing |

investors to purchase Port Authority Bonds by making the

investment appear more secure. The legislation, in effect,

promised prospective bondholders of the Port Authority that

as long as any of the bonds remained outstanding, the Port

Authority could not use pledged revenues or reserves for

other than permitted purposes. In 1974 New York and New

Jersey determined that the Port Authority could not operate

efficiently under this restriction. Therefore, in the exercise

of their police power both States repealed the legislation.

Bondholders sued to challenge this repeal as an unconsti-

tutional impairment of contract.

‘After a trial, the Superior Court ruled that the stat-

utory repeal was a reasonable exercise of New Jersey’s

police power,’’ and therefore did not violate the im-

pairment of contracts clauses of either the United States

or New Jersey constitutions. 431 U.S. at 3. (Emphasis

added. )

This Court reversed. In so doing, this Court ruled that

the assertion that the repeal of the legislation was an exercise

of the police power of the State was not sufficient to insulate

that action from the effects of the Contract Clause of the

Constitution:

The trial court concluded that repeal of the 1962 cov-

enant was a valid exercise of New Jersey’s police power

—

because repeal served important public interests in

mass transportation, energy couservation, and envi-

ronmental protection. (Citation omitted.) Yet the Con-

tract Clause limits otherwise legitimate exercises of

state legislative authority, and the existence of an im-

portant public interest is not always sufficient to over-

come that limitation. 431 U.S. at 21. (Emphasis

added. )

This Court stated that an impairment of a contract is

constitutional only if it is ‘‘reasonable and necessary to serve

an important public purpose.’’ 431 U.S. at 25. In applying

this standard to contracts to which the State is a party, this

Court emphasized that *‘complete deference to a legislative

assessment of reasonableness and necessity is not appro-

priate because the State’s self-interest is at stake.’’ 431 U.S.

at 26.

In Allied Structural Steel Co. v. Spannous, 438 U.S. 234,

57 L.Ed.2d 727, reh denied 439 U.S. 886, 58 L.Ed.2d 201

(1978), this Court reiterated that the Contract Clause limits

the power of the state to abridge existing contracts, even

when the state relies upon its police power:

‘If the Contract Clause is to retain any meaning at

all, however, it must be understood to impose some

limits upon the power of a State to abridge existing

contractual relationships, even in the exercise of its

otherwise legitimate police power. The existence and

nature of those limits were clearly indicated in a series

of cases in this Court arising from the efforts of the

States to deal with the unprecedented emergencies

brought on by the severe economic depression of the

early 1930’s.’’ 438 U.S. at 242.

Allied Structural Steel involved a state’s unconstitutional

impairment of a private contract through the exercise of its

police powers. In order to evaluate the state’s interference

with a private contract, this Court made a detailed factual

inquiry of the trial court record to determine the circum-

stances under which the statute had been passed, the scope

and purpose of the statute and its effect upon those whose

conduct it sought to prescribe. 438 U.S. at 244-51. No such

inquiry was required or allowed in this case, despite the fact

that this Court in both the United States Trust Co., supra

at 22-23 and 25-26, and in Allied Structural Steel Co. v.

Spannaus, supra at 244, noted that ‘‘impairments of a

State's own contracts would face more stringent examina-

tion under the Contract Clause than would laws regulating

contractual relationships between private parties.’’ 438

U.S. at 244.

The Seventh Circuit in E & E Hauling, Inc. v. Forest

Preserve Dist., etc., 613 F.2d 675 (7th Cir. 1980), looked

to the above cited Supreme court cases in setting forth the

proper analysis a trial court should use to determine whether

a state’s impairment of its own contractual obligations is

permissible. In E & E Hauling, the plaintiff alleged that a

contract entered into by it and a county forest preserve

district was impaired as a result of the promulgation and

enforcement of certain ordinances subsequently passed by

the district. After holding that the complaint stated a cause

of action, the Court of Appeals set forth the following guide-

lines for the trial court to consider on remand with respect

to whether the asserted impairment violated the contract

clause:

‘*Not all impairments of contractual obligations are

unconstitutional. (Citation omitted.) Instead a court

‘must attempt to reconcile the strictures of the Contract

Clause with the ‘‘essential attributes of sovereign

power’’. . . necessarily reserved by the States to safe-

guard the welfare of their citizens.’ United States Trust,

431 U.S. at 21,97S.Ct. at 1517, Citing Home Building

& Loan Association v. Blaisdell, 290 U.S. 398, 435,

ae = eee

54 S.Ct. 231, 78 L.Ed. 413 (1934). A state does re-

serve broad power to adopt regulations to protect the

public without being concerned with upseiting con-

tractual obligations. This power, however, is not un-

limited. A substantial impairment will be found un-

constitutional when it is shown that the legislation was

not reasonable and necessary to meet an important so-

cial problem. Allied Structural Steel, 438 U.S. at 242-

44, 98 S.Ct. 2716. (Citations omitted). In addition,

the severity of the impairment ‘measures the height of

the hurdle the state legislation must clear.’ Allied Struc-

tural Steel, 438 U.S. at 245, 98 S.Ct. at 2723. Thus,

on remand we direct the district court, in considering

whether the contract clause has been violated, to bal-

ance the District’s interest in its ordinance with the

degree of impairment of the plaintiff's contractual ex-

pectations.’’ Jd. at 681. (Footnote omitted.)

The analysis engaged in by this Court in Allied Structural

Steel and United States Trust Co. shows that a state’s claim

that its abrogation of a contract was a proper and justifiable

exercise of legitimate police power is an affirmative defense

to be proven by the state at trial. This Court has laid down

standards in these cases which the state must meet in order

to establish that its exercise of the police power, did not

violate the Contract Clause. In both Allied Structural Steel

and United States Trust Co., the states failed to meet that

burden at trial. The Seventh circuit in E & E Hauling

recognized the limitations placed on a state’s exercise of its

police powers by the Contract Clause and remanded the case

to the district court for a factual determination as to whether

the exercise of the police power was reasonable and_nec-

essary to meet an important social problem.

In the case at bar, the Court of Appeal found that as a

matter of law the State is not liable forthe effect of any

legislation ‘‘enacted under the police power for what the

legislature believes is a public purpose.’’ (A at 4) At the

pleading stages, without a trial to determine the reason-

ableness of the Appellees’ asserted exercise of its police

powers, the Court of Appeal found that the repeal of the

NOx legislation did not violate the Contract Clause of the

Constitution. This conflicts with express rulings of this

Court.

B. The Contracts Between Appellees and Appellants

Were Not Invalid Ab Initio.

Appellees argued below that any agreements or contracts

that were formed between the State and these Appellants

to require the installation of NOx devices on vehicles in

California would be invalid, ab initio, as an attempt to

restrict future exercise the police power of the State of

California. In so arguing, the Appellees cited United States

Trust Co. for the proposition that, ‘‘the police power and

the power of eminent domain were among those that could

not be ‘contracted away’.’’. . .’’ 7d. at 431 U.S. at 23-24.

However, United States Trust Co. does not support that

view. The legislation which was attacked in that case, the

repeal of a prior law restricting the use of funds by the Port

Authority, was an exercise of the police power of the States

of New York and New Jersey. This Court determined that

the contract which the states had entered into, by the passage

of the original legislation, did restrict and constrain those

States’ police power to pass the repeal legislation.

In United States Trust Co., this Court did cite earlier

decisions dealing with the reserved-powers doctrine, which

required *‘a determination of the States’ power to create

irrevocable contract rights in the first place, rather than an

inquiry into the purpose or reasonableness of the subsequent

impairment.’’ /d. at 431 U.S. at 23 This Court then said,

em Ee

‘‘In deciding whether a state’s contract was invalid,

ab initio, under the reserved-powers doctrine, earlier

decisions relied on distinctions among the various pow-

ers of the state. Thus, the police power and the power

of eminent domain were among those that could not

be ‘contracted away,’ but the State could bind itself

in the future exercise of the taxing and spending pow-

ers.’’ Id. at 23-24.

However, this Court expressly avoided affirming the valid-

ity of those distinctions. It stated,

‘*Such formalistic distinctions perhaps cannot be dis-

positive... .’’ Jd. at 431 U.S. at 24.

The argument of Appellees below was that this formalistic

distinction is dispositive of these Appellants’ rights without

regard to the facts or circumstances of the contractual re-

lationship.

The contract in this case is very much like the contract

in the United States Trust Co. case.

In United States Trust Co., the states sought the public

marketability of Port Authority bonds, while the Appellees

sought a solution to the air pollution crisis. In United States

Trust Co., the states took action to insure an adequate trans-

portation system between new Jersey and New York, while

the Appellees took action to insure healthful air quality. The

states in United States Trust Co. enacted legislation forcing

the Port Authority to retain security for the outstanding

bonds while the Appellees enacted legislation forcing citi-

zens to buy the pollution control devices. The enactment

of the legislation in United States Trust Co. was intended

to encourage investment in Port Authority Bonds (431 U.S.

at 17-18) while the enactment of the NOx legislation was

intended to encourage investment in the design and man-

ufacture of NOx devices. (A at 30-31 and 48-49). The states

realized their objective by controlling the conduct of the

—\

Port Authority for the benefit of the bondholders while the

Appellees realized their objective by prescribing the conduct

of the citizens of the State for the benefit of Petitioners, as

well as for the citizens themselves.

Instead of enacting the 1962 covenant, New Jersey and

New York could have guaranteed payment of intevest and

principal on the bonds. Such a guarantee would clearly have

been an enforceable financial contract. Similarly, the Ap-

pellees could have contracted with Petitioners to purchase

the NOx devices, with the Appellants intending to distribute

and install the devices through their own authorized dealers.

Such a financial agreement would have been as enforceable

as the guarantee agreement postulated above. The point is

that there are many ways to accomplish the same objective.

If, as here and in United States Trust Co., the subject matter

of the contract centers around a financial obligation, the

method which the State has chosen to accomplish its ob-

jective should not affect the enforceability of the obligation

which is the basis for the agreement.

These Appellants invested approximately $15,000,000

in a smog prevention program, at the express request of the

State of California. They were induced to do so by a promise

from the State that the Appellants would receive an eco-

nomic return. Appellants ask this Court to determine that

the *‘formalistic distinction’ recognized but not affirmed

in United States Trust Co. may not be applied to deny them

any remedy for the losses which they have suffered.

For example, in this case, the application of the Contract

Clause to this case does not necessarily mean that the alleged

exercise of the police power by the State in passing the

repeal legislation need be invalidated. Appellants have

sought compensation for only the amounts they expended

in performing their commitments under the contract. Ap-

pellants have not demanded that the State adhere to a con-

tract that surrenders an essential attribute of its sovereignty.

The granting of a less severe remedy may resolve the ap-

parent friction between the Contract Clause and the reserved-

powers doctrine.

C. The Court of Appeal’s Holding That Appellees Can-

not Be Held Liable for a Taking of Property in This

Case Raises a Novel Question of Law Specifically

Left Unanswered By This Court Last Term.

The Court of Appeal found that Appellees could not be

held liable ‘‘for the effect of legislation enacted under the

police power.”’ (A-4). As applied to the takings claim

asserted by the Appellants, this ‘‘basic rule’’ apparently

reflects the application by the court of the doctrine that

damages are not available in California for takings that result

from inverse condemnations. In Agins v. City of Tiburon,

woe US. 2... , 100 S.Ct. 2138 (1980), this Court specifically

left unanswered the question whether the State of California

could limit the remedies available for an inverse condem-

nation that constitutes a taking to mandamus and declaratory

judgment: ‘‘The State Supreme Court determined that the

Appellants could not recover damages for inverse condem-

nation even if the zoning ordinances constituted a taking.

The court stated that only mandamus and declaratory judg-

ment are remedies available to such a landowner. Because

no taking has occurred, we need not consider whether a

State may limit the remedies available to a person whose

land has been taken without just compensation.’’ /d. at

2142-43. The immediate case provides a particularly good

forum for this Court to decide this issue.

Appellants seek compensation from Appellees for the

alleged taking of their property pursuant to an inverse con-

demnation. As a result of Appellees’ alleged exercise of

their police powers in amending the NOx legislation, Ap-

—

pellants have been denied any substantial or reasonable use

for the NOx devices and technology and have lost the con-

tractual rights whereby Appellees would require all owners

of the Subject Vehicles to install NOx devices. Appellants

seek damages for this taking by Appellees because no other

remedy can provide just compensation to the Appellants.

Repeal of the amendments to the NOx legislation will not

serve to restore to the Appellants the value of the property

taken. The contract between the Appellants and Appellees

required the rapid installation of smog devices on cars built -

in the years 1966 to 1970. In 1974, there were hundreds

of thousands of these cars on the road; in 1980, there are

certainly fewer. By the time this case is resolved, there may

well be no such cars remaining. Because of the temporal

nature of the value of Appellants’ property, Appellants can-

not be justly compensated by any remedy except damages.

To allow the State of California to limit relief available for

an inverse condemnation that constitutes a taking in this

case would leave Appellants without any effective remedy

for such a taking.

D. The California Tort Claims Act of 1963 Cannot

Deny Appellants a Remedy for Constitutional Vi-

olations. To Allow the Clearly Erroneous Court of

Appeal Ruling to Stand Would Impair the Consti-

tutional Rights of All Who Deal With the State of

California.

The Court of Appeal held that despite the claims asserted

by the Appellants *‘the case at bench falls squarely within

an express governmental immunity”’ found in the California

Torts Claims Act of 1963.° By resting its decision on the

California immunity statutes the Court of Appeal denied the

Appellants any remedy for the alleged violation of their

rights under the United States Constitution. The Court of

Appeal’s holding must be interpreted to state that even if

Appellees took Appellants’ property without just compen-

sation and even if the Appellees impaired their contracts

with Appellants in violation of the Contract Clause, the

California Tort Claims Act immunizes the Appellees from

the dictates of the United States Constitution and denies the

Appellants any remedy for the alleged violations of their

constitutional rights.

1. The California Tort Claims Act Cannot Immunize the Appel-

lees from the Requirements of the Fifth Amendment to the

United States Constitution.

The Fifth and Fourteenth Amendments to the United

States Constitution prohibit a state from taking property for

public use without just compensation. See, e.g., Chicago,

B. & Q.R. Co. v. Illinois ex rel Grimwood, 200 U.S. 561,

50 L.Ed. 596 (1906); Appleby v. Buffalo, 221 U.S. 524,

55 L.Ed. 838 (1911). Appellants claim that Appellees took

their property without just compensation in violation of the

Fifth Amendment. The Court of Appeal held, however, that

the Appellees were immune from liability for the alleged

‘The Court of Appeal stated:

*‘No matter under what ingenious theory put forth, the case at

bench falls squarely within an express governmental immunity.

Sections 818.2 and 821 of the Government Code read as Gov-

ernment Code read as follows:

A public entity is not liable for an injury caused by adopting

or failing to adopt an enactment or by failing to enforce any law.

A public employee is not liable for an injury caused by his

adoption of or failure to adopt an enactment or by his failure to

enforce an enactment.”’

Those sections control the case at bench.’ (A-5).

a: 5

taking under the California Tort Claims Act and affirmed

the dismissal of Appellants’ complaints. In so doing the

Court held a state statute supreme to the Fifth Amendment.

This clearly contravenes the dictates of the Supremacy

Clause which provides that, ‘‘This Constitution, . . . shall

be the supreme Law of the Land; and the Judges in every

State shall be bound thereby, any Thing in the Constitution

or Laws of any State to the Contrary notwithstanding.’’

U.S. Const. art. 6, cl. 2.

A claim of immunity similar to that raised by the Ap-

pellees was faced and disposed of by the court in Sanfilippo

v. County of Santa Cruz, 415 F.Supp. 1340 (N.D. Cal.

1976). The court stated:

‘‘Defendants assert that under California law public

entities are immune from suits for monetary damages

growing out of public enactments or permit approval

procedures. While this may be true in many areas of

tort law, such an immunity doctrine does not apply

here. It is an elementary proposition that governmental

entities are not immune from actions brought under

constitutional provisions guaranteeing just compensa-

tion for public takings of private property. To hold,

as defendants assert, that all land use regulations are

by definition valid discretionary legislative acts would

be to ignore the constitutional requirement that takings

be accompanied by just compensation and to eliminate

actions for inverse condemnation. Irrespective whether

protection against inverse condemnation is afforded

under the California Constitution, California immunity

legislation could not limit the substantive rights of land-

owners under the Sth and 14th Amendments of the

United States Constitution.’’ /d. at 1343. (Footnote

omitted. )

Ea ae

Appellants implore this Court to reverse the Court of Ap-

peal’s holding that provides Appellees immunity from the

Appellants’ Fifth Amendment claim. The implications of

such a clearly erroneous holding are staggering.

2. The California Tort Claims Act Cannot Immunize Appellees

from Claims Alleging the Impairment of a Contract to Violation

of the Contract Clause.

The Court of Appeal also affirmed the dismissal with

prejudice of the Appellants’ contracts claim on the grounds

that the State enjoyed an absolute immunity under the Cal-

ifornia Torts Claims Act. In so doing, the court implicity

found that even if the alleged contracts existed and even if

the Appellees impaired the contracts in violation of the

Contract Clause of the United States Constitution, the Ap-

pellants nevertheless were not entitled to a remedy for the

violation of their const‘tutional rights. Just as with the Ap-

pellants’ Fifth Amendment claim, to hold that the State

Statute immunizes the Appellees from suit for the violation

of Appellants’ rights under the Contract Clause denies Ap-

pellants their constitutional rights and conflicts with the

Supremacy Clause. As stated by the Fifth Circuit in

N.A.C.C.P. v. Thompson, 357 F.2d 831 (Sth Cir. 1966),

cert. denied 385 U.S. 820, ‘‘any State law, which is in

conflict with the United States Constitution or a law enacted

by Congress in pursuance thereof, cannot be enforced. Nor

can a valid State law be applied in a way to thwart the

exercise of a right guaranteed by the Constitution and laws

enacted by Congress in pursuance thereof.’’ /d. at 833. The

Court in this case interpreted a State law so as to thwart the

Appellants’ attempt to vindicate their rights under the Con-

tract Clause of the United States Constitution. If this Court

fails to reverse this decision, the State of California as well

a, ee

as the other states will be free to violate constitutional rights

with immunity by enacting statutes such as the California

Tort Claims Act.

CONCLUSION.

For the foregoing reasons, Appellants pray this Court to

note probable jurisdiction of this Appeal.

Respectfully submitted,

PAUL, HASTINGS, JANOFSKY & WALKER,

DENNIS H. VAUGHN,

DONALD A. DAUCHER,

DONALD L. MorROw,

STEVEN C. KENNINGER,

Attorneys for Appellant,

Dana Corporation.

MUNGER, TOLLES &

RICKERSHAUSER,

DENNIS C. BROWN,

Attorneys for Appellant,

The Echlin Manufacturing Company.

eee

IN THE

Supreme Court of the United States

October Term, 1980

DANA CORPORATION and THE ECHLIN MANUFACTURING

Co.,

| Appellants,

STATE OF CALIFORNIA and LEGISLATURE OF THE STATE OF

CALIFORNIA, ef al.,

Appellees.

APPENDIX.

APPEAL FROM JUDGMENT OF THE COURT OF APPEAL

OF THE STATE OF CALIFORNIA.

Minute Order of The Superior Court of California,

County of Los Angeles.

Superior Court of California, County of Los Angeles.

Dept. 82. |

Date: December 6, 1977.

Honorable: Jack T. Ryburn, Judge.

M. Simpson, Deputy Clerk.

Dana Corporation, etc., vs. State of California, et al. C

158 741.

NATURE OF PROCEEDINGS.

C175 498

C 176 787

C iftdta

In the matter heretofore submitted for decision on December

2. 1977, the Court now rules as follows:

Demurrer of defendants State of California, Edmund

G. Brown, Jr., as Governor of California, and the

California Legislature is sustained on grounds as set

forth below. No leave to amend.

The State has correctly set forth the legal doctrines

upon which its demurrers are based. The legislature

acted within its power, it cannot be estopped, the Air

Resources Board was not authorized to bind the State

to a contract, and any promise not to modify prior

legislation is void.

The facts alleged by plaintiffs upon which the ruling

on demurrer must be based, go beyond a business com-

mitting itself in reliance on the passage of legislation,

Plaintiffs allege legislation passed to abate a crisis and

amendments to that legislation to induce development

and production of NOx devices. They also allege co-

operation between plaintiffs and Air Resources Board

and accreditation of certain NOx devices manufactured

by the plaintiffs. Plaintiffs’ reliance cannot be disputed,

but despite a sympathetic approach, this Court has re-

luctantly concluded that plaintiffs have not and cannot

state a cause of action for their loss.

The argument that the loss should be spread among all

of the taxpayers of the state is one that can be made

to the Legislature, but is not a basis for overruling

defendants’ demurrers, nor is the fact that the Legis-

lature may find the business community much less

willing to cooperate under similar circumstances in the

future.

Counsel Joel Moskowitz is to give notice, and is to

prepare an order of dismissal pursuant to section 581(3)

of the Code of Civil Procedure.

A copy of this minute order is mailed to appearing

counsel.

Opinion of the Court of Appeal of the State of California.

In the Court of Appeal of the State of California. Second

Appellate District, Division Four.

Dana Corporation, et al., Plaintiffs and Appellants, v.

State of California, et al., Defendants and Respondents.

2 Civ. No. 55838, (Super. Ct. No. C-158, 741 Consol-

idated with Nos. C-176,787, C-175,498. C-177,272).

Filed: March 13, 1980.

APPEALS from judgments (orders of dismissal) of the

Superior Court, Los Angeles County, Jack T. Ryburn,

Judge. Affirmed.

Paul, Hastings, Janofsky & Walker, Dennis H. Vaughn,

Donald A. Daucher and Steven C. Kenninger for Plaintiff

and Appellant Dana Corporation.

Munger, Tolles & Rickerschauser and Dennis C. Brown

for Plaintiff and Appellant Echlin Manufacturing Company.

ee, aE

Egerman, Brown & Rosen and Philip M. Brown for Plain-

tiff and Appellant Contignitron Company.

No appearance for Plaintiff and Appellant Combustion

Schiences. [SIC]

George Deukemjian, Attorney General, R.H. Connett,

Assistant Attorney General, and Joel S. Moskowitz, Deputy

Attorneys General, for Defendants and Respondents.

Plaintiffs appeal from judgments (orders of dismissal)

entered after demurrers to their complaints were sustained

without leave to amend. We affirm.

In these consolidated actions, the plaintiffs seek damages

from the State of California and the Legislature, for repeal

of certain legislation. In essence, the complaints (third

amended complaint) allege the following:

In November 1971 the Legislature, as part of legislation

intended to alleviate the problem of air pollution caused by

automobiles, enacted an amendment to the Air Resources

Act (c. 1507, Laws of 1971), empowering the Air Resources

Board to adopt standards regulating the emission of oxides

of nitrogen (NOx) and requiring the installation of devices

designed to accomplish that end. There followed a long

period during which the board aggressively sought manu-

facturers (including these plaintiffs) to conduct the necessary

studies to permit the manufacture of controls, saleable at

a reasonable price. During that period, the board also

adopted and amended regulations setting standards for the

desired devices and, from time to time, extending the date

when compulsory installation of such devices would be re-

quired. Plaintiffs, in reliance on the statute, the regulations

and the importunities of the board, expended substantial

sums in designing the type of devices involved and, uti-

mately, secured approval of most of the devices so designed.

In 1974, the Legislature repealed the NOx legislation, ex-

bill pc

cept as to a minor number of motor vehicles. As a result,

the market for the devices designed by plaintiffs and ap-

proved by the Board ceased to exist, causing plaintiffs to

lose the monies expended by them on the NOx program.

Demurrers to the complaints were sustained without leave

to amend and this appeal followed. We affirm the dismis-

Sals.

Plaintiffs attempt to claim a right of recovery on various

theories. All of the claims run afoul of the basic rule that

the state is not liable for the effect of legislation enacted

under the police power for what the Legislature believes is

a public purpose. Plaintiffs here contend that the doctrine

is subject to exceptions, citing to us two cases: United States

Trust Co. of New York v. New Jersey (1977) 431 U.S. |

and Furey v. City of Sacramento (1979) 24 Cal.3d 862.

Neither case is in point here.

In United States Trust, bonds had been sold by an agency

of the state, under a statute which strictly limited the pur-

poses for which the capital and earnings could be used, thus

insuring to the bond holders a reasonable expectancy of

repayment. When the state attempted to broaden the per-

missible uses, the Supreme Court held that the statue under

which the bonds were issued was part of the bond contract

and could not be changed to the detriment of the bond

holders. No such contract appears here.

In Furey the city had collected money from a landowner

for the express purpose of constructing a sewage system

useful only if the area was to be zoned industrial. When the

city zoned the area for other uses, for which the sewer

system was not needed, the Supreme Court held that it was

obligated to refund the money paid for the, now useless,

sewer system. Again, the case is not in point; it is not

alleged, and could not be alleged, that the state has ever

aren, ‘oe

received any money from the plaintiffs, or that it has, in

effect, divered [SIC] plaintiffs’ money to an improper use.

All that plaintiffs have alleged, or could allege, is that

the Legislature, in 1971, thought that requiring NOx devices

on old cars was desirable and that. by 1974, the then Leg-

islature thought that such a requirement was not desirable.

A Legislature is not liable, nor is the state liable. for a

change in its perception of public interest. Many things once

thought desirable or even to be encouraged, are later thought

to be undesirable and to be discouraged. An investment

under the earlier legislation is not protected against a change

in the Legislature’s views of desirability.

No matter under what ingenious theory put forth, the case

at bench falls squarely within an express governmental im-

munity. Section 818.2 and 821 of the Government Code

read as follows:

‘*A public entity is not liable for an injury caused by

adopting or failing to adopt an enactment or by failing to

enforce any law.

‘*A public employee is not liable for an injury caused by

his adoption of or failure to adopt an enactment or by his

failure to enforce an enactment.”’

Those sections control the case at bench.

The judgments (orders of dismissal) are affirmed.

CERTIFIED FOR PUBLICATION.

Kingsley, Acting P.J.

We concur:

Jefferson (Bernard), J.*

Burke (Michael L.), J.*

*Assigned by the Chief Justice of California.

“Assigned by the Chief Justice of Calitornia.

Denial of Appellant’s Petition for Hearing by California

Supreme Court Dated May 8, 1980.

Clerk’s Office, Supreme Court

4250 State Building

San Francisco, California 94102

I have this day filed Order May 8, 1980 Hearing Denied.

In re: 2 Civ. No. 55838 Dana Corporation, etc., et al.

vs. State of California etc.

Respectfully,

Clerk

a, aa

The NOx Legislation.

Air Pollution—Exhaust Emission Devices

Chapter 1507

Senate Bill No. 578

An act to add Sections 39107.6, 39177.1, 39177.2,

39177.3, and 39177.4 to the Health and Safety Code, and

to amend Section 4602 of the Vehicle Code, relating to air

pollution, and declaring the urgency thereof, to take effect

immediately.

The people of the State of California do enact as follows:

SEC. 1. Section 3% 107.6 is added to the Health and Safety

Code, to read: 39107.6.

Notwithstanding Section 39107, the board shall set stand-

ards for devices to significantly reduce the emission of ox-

ides of nitrogen from the exhaust of 1966 through 1970

model year motor vehicles, as determined by the board from

a representative sampling of such vehicles, which the board

has found to be necessary and technologically feasible to

carry out the purposes of this part.

In setting standards under this section, the primary con-

sideration shall be the greatest possible reduction of oxides

of nitrogen.

SEC. 2. Section 39177.1 is added to the Health and Safety

Code, to read:

39177.1.

(a) Whenever an exhaust emission control device meet-

ing the standards established by the board under Section

39107.6 is accredited pursuant to the provisions of this

article and is available for installation as determined by the

board, every 1966 through 1970 model year motor vehicle

having a manufacturer's gross vehicle weight rating of under

6,001 pounds, which is subject to registration in this state,

shall be equipped with such accredited exhaust emission

ants

control device in accordance with a schedule of installation

to be determined by regulation adopted by the board, in

consulation [sic] with the Department of the California

Highway Patrol and the Department of Motor Vehicles.

(b) Enforcement of the provisions of subdivision (a)

shall be as follows:

(1) Vehicle inspections shall be conducted pursuant to

Section 2814 of the Vehicle Code.

(2) Certificates of compliance shall be required upon

initial registration, and upon transfer of ownership and reg-

istration pursuant to Section 4000.1 of the Vehicle Code.

(3) Certificates of compliance shall be required upon

renewal of registration for the year 1973, pursuant to Section

4602 of the Vehicle Code.

(4) By such other authorized means as the board, the

Department of Motor Vehicles, and the Department of the

California Highway Patrol find practicable.

no device shall be accredited which is less effective than

the one or ones initially accredited. Any subsequent accre-

ditation of a more effective device shall not affect the ac-

creditation of a previously accredited device.

SEC. 3. Section 39177.2 is added to the Health and Safety

Code, to read:

39177.2.

The provisions of Section 39177.1 shall not apply to any

motor vehicle which, on the effective date of this section,

is equipped with a device or devices which meet the re-

quirements of subdivision (c) of Section 39101.5, as de-

termined by the board, or which is exempted by the board

pursuant to Section 39177.

SEC. 4. Section 39177.3 is added to the Health and Safety

Code, to read:

EE Saas

39177.3.

In accrediting devices, pursuant to Section 39177.1, the

board shall, ni establishing tests and procedures, adopt

standards, including, but not limited to, the following:

(a) An accredited exhaust emission contro] device shall

not cost more than thirty-five dollars ($35), including the

cost of installation.

(b) An accredited exhaust emission control device shall

not require maintainence more than once each 12,000 miles,

and such maintenance shall not cost more than fifteen dollars

($15), including the cost of parts and labor.

exceed the performance criteria established by the board for

devices for new motor vehicles or, in the alternative, have

an expected useful life of at least 50,000 miles of operation.

(d) The manufacturer of an exhaust emission control

device accredited pursuant to this article shall include with

the sale of such device instructions setting forth what steps

the purchaser should take to maintain such device in proper

working condition, .

SEC. 5. Section 39177.4 is added to the Health and Safety

Code, to read: x

39177.4.

(a) Any manufacturer of a device required by Section

39177.1 shall, as a condition of accreditation of such device

by the board, agree that until there are two or more ac-

credited devices suitable for installation on motor vehicles

of the same classification, such classification to be deter-

mined by the board, the manufacturer shall, with respect

to his device for such classification of motor vehicles, either:

(1) agree to enter into such cross-licensing or other agree-

ments as the board determines are necessary to insure ad-

equate competition among manufacturers of such devices

to protect the public interest; or (2) agre > as a condition to

—10—

such accreditation that, if only one such device from one

manufacturer is made available for sale to the public, the

board shall, taking into consideration the cost of manufac-

turing the device and the manufacturer's suggested retail

price, and in order to protect the public interest, determine

the fair and reasonable retail price of such device and may

require, as a condition to continued accreditation of such

device, that the retail price of such device including in-

stallation, not exceed such price as determined by the board.

In either event, the retail price so determined by the board

for a device required by Section 39177.1 shall not be in

excess of thirty-five dollars ($35) per vehicle, installed.

(b) Accreditation may be revoked by the board after a

public hearing for which notice has been given to the ap-

plicant who obtained the accreditation, if the actual cost of

the device installed exceeds the cost, installed, estimated,

or agreed to by such applicant.

SEC. 6. Section 4602 of the Vehicle Code is amended

to read:

4602.

(a) Application for renewal of a vehicle registration ex-

piring on the 31st day of December shall be made by the

owner not later than midnight of the first Friday in February

succeeding the expiration date and shall be made by pre-

sentation of the registration card last issued for the vehicle

or by presentation of a potential registration card issued by

the department for use at the time of renewal and by payment

of the full annual fee for the vehicle as provided in this

code.

(b) The department shall require, upon 1973 renewal of

registration of any motor vehicle subject to Section 391771

of the Health and Safety Code, a valid certificate of com-

pliance from a licensed motor vehicle pollution control de-

vice installation and inspection station indicating that such

vehicle is properly equipped with a motor vehicle pollution

control device which is in proper operating condition and

which is of a type that has been accredited by the State Air

Resources Board pursuant to Section 39177.1 of the Health

and Safety Code. For extraordinary and compelling reasons

only, the State Air Resources Board may, by regulation,

afier a public hearing, defer or delete the requirement of

certificates of compliance required pursuant to this subdi-

vision. In such event, the board may adjust the schedule of

installation adopted pursuant to subdivision (a) of Section

39177.1 of the Health and Safety Code and shall immedi-

ately report to the Governor and the Legislature the actions

taken and the reasons therefor.

SEC. 7. The State Air Resources Board, the Department

of Motor Vehicles, and the Department of the California

Highway Patrol shall by all practicable means at their dis-

posal advise the motoring public of the provisions of this

act.

SEC. 8. [Urgency statute]

Approved and filed Nov. 12, 1971.

ae ae

REPEAL LEGISLATION.

Air Resources Act, ch. 670, 1974 Cal. Legis. Serv. 1872.

Motor Vehicles—Air Pollution

Chapter 670

Senate Bill No. 2471

An act to amend Section 39177.1 of the Health and Safety

Code, and to amend and repeal Section 4602, as amended

by Chapter 1507 of the Statutes of 1971, of, and to amend

Section 4602, as amended by Chapter 889 of the Statutes

of 1973, of, the Vehicle Code, relating to air pollution.

LEGISLATIVE COUNSEL’S DIGEST

Requires the installation of oxides of nitrogen exhaust

emission control devices on all 1966 through 1970 model

year motor vehicles having a manufacturer’s gross vehicle

weight rating of under 6,001 pounds, registered in any

county included, in whole or in part, within the South Coast

Air Basin, in accordance with a schedule of installation

adopted in July 1974 by the State Air Resources Board, and

on all such motor vehicles registered in the other counties

upon initial registration and upon transfer of ownership and

registration, rather than on all such vehicles subject to reg-

istration in the state, in accordance with such a schedule.

Makes related changes.

The people of the State of California do enact as follows:

SECTION |. Section 39177.1 of the Health and Safety

Code is amended to read: 39177.1

(a) Whenever an exhaust emission control device meet-

ing the standards established by the board under Section

39107.6 is accredited pursuant to the provisions of this

article and is available for installation as determined by the

board, every 1966 through 1970 model year motor vehicle

having a manufacturer’s gross vehicle weight rating of under

— i

6,001 pounds * * * shall be equipped with such an accredited

exhaust emission control device * * * as follows:

(/) If registered in any county included, in whole or in

part, within the South Coast Air Basin, as defined by the

board, in accordance with the schedule of installation

adopted by regulation by the board in July 1974.

(2) If registered in any other county, upon initial reg-

istration and upon transfer of ownership and registration.

(b) Enforcement of the provisions of subdivision (a)

shall be as follows:

(1) Vehicle inspections shall be conducted pursuant to

Section 2814 of the Vehicle Code.

(2) Certificates of compliance shall be required upon

initial registration, and upon transfer of ownership and reg-

istration pursuant to Section 4000.1 of the Vehicle Code.

(3) Certificates of compliance shall be required upon

renewal of registration for the year * * * /976, pursuant to

Section 4602 of the Vehicle Code, for such motor vehicles

registered in any county included, in whole or in part, within

the South Coast Air Basin, as defined by the board.

(4) By such other authorized means as the board, the

Department of Motor Vehicles, and the Department of the

California Highway Patrol find practicable.

no device shall be accredited which ts less effective than

the one or ones initially accredited. Any subsequent accre-

ditation of a more effective device shall not affect the ac-

creditation of a previously accredited device.

SEC. 2. Section 4602, as amended by Chapter 1507 of

the Statutes of 1971, of the Vehicle Code is amended to

read:

4602.

* * * Application for renewal of a vehicle registra-

ot Y am

tion expiration on the 31st day of December shall be made

by the owner not later than midnight of the first Friday in

February succeeding the expiration date and shall be made

by presentation of the registration card last issued for the

vehicle or by presentation of a potential registration card

issued by the department for use at the time of renewal and

by payment of the full annual fee for the vehicle as provided

in this code.

* * * This section shall remain in effect only until

March 10, 1975, and as of that date is repealed.

SEC. 3. Section 4602, as amended by Chapter 889 of the

Statutes of 1973, of the Vehicle Code is amended to read:

4602.

* * * Application for renewal of a vehicle registra-

tion shall be made by the owner not later than midnight of

the expiration date, and shall be made by presentation of

the registration card last issued for the vehicle or by pre-

sentation of a potential registration card issued by the de-

partment for use at the time of renewal and by payment of

the full registration year fee for the vehicle as provided in

this code.

* * * This section shall become operative on March

10, 1975.

Approved and filed Sept. 5, 1974.

ae eae

REPEAL LEGISLATION,

Air Resources Act, ch. 957, 1975 Cal. Legis. Serv. 2474.

Air Pollution—Recodification

Chapter 957

Assembly Bill No. 1758

An act to amend Sections 9889.15, 9889.17, 9889.18,

and 9889.51 of the Business and Professions Code; to amend

Sections 4477, 6253, 11017, and 14808.5 of the Govern-

ment Code; to repeal Chapter 2 (commencing with Section

24198) and Chapter 2.5 (commencing with Section 24345)

of Division 20 of, to repeal Division 26 (commencing with

Section 39000), Division 27 (commencing with Section

39600), Division 28 (commencing with Section 39800), and

Division 30 (commencing with Section 40000) of, and to

add Division 26 (commencing with Section 39000), Divi-

sion 27 (commencing with Section 44500) and Division 28

(commencing with Section 46000) to, the Health and Safety

Code; to amend Section 201.5 and 10753 of the Revenue

and Taxation Code; to amend Sections 2814, 4000, 4000. 1,

4000.2, 4750, 9250.5, 11519, 24007, 24007.5, 27156. and

27156.1 of, and to amend and repeal Section 4602, as

amended by Section 2 of Chapter 670 of the Statutes of

1974, of, and to amend Section 4602, as amended by Sec-

tion 3 of Chapter 670 of the Statutes of 1974, of, the Vehicle

Code; and to repeal Section 3 of Chapter 1599 of the Statutes

of 1970, relating to air pollution.

LEGISLATIVE COUNSEL’S DIGEST

Existing law contains provisions regarding air pollution

and the authority, duties, and responsibilities of the State

Air Resources Board and local air pollution control districts.

This bill would repeal and reenact, with various substan-

tive changes, provisions regarding air pullution contained

in the Health and Satety Code, and make contorming

a,”

changes in the Health and Safety Code and in cross-

references in provisions in various other codes.

This bill provides that no appropriation is made nor any

obligation created for the reimbursement of any local agency

for any costs by it pursuant to the bill.

The people of the State of California do enact as follows:

Article 2. Certified Device Installation

43654.

Every 1966 through 1970 light duty motor vehicle, sub-

ject to registration in this state, shall be equipped with a

certified device to control its exhaust emission of oxides of

nitrogen upon initial registration and upon transfer of own-

ership and registration.

SEC. 22. Section 4000.1 of the Vehicle Code is amended

to read:

4000. |

(a) The department shall require, pursuant to law or reg-

ulation of the State Air Resources Board adopted pursuant

to Section * * * 43655 of the Health and Safety

Code, upon initial registration, and upon transfer of own-

ership and registration, of any motor vehicle subject

to * * * Part 5 (commencing with Section

* * * 43000) of * * * Division 26 of the Health

and Safety Code, a valid certificate of compliance from a

licensed motor vehicle pollution control device installation

and inspection station indicating that such vehicle is properly

equipped with a motor vehicle pollution control device or

devices which are in proper operating condition and which

are in compliance with the provisions of * * *~ Part

5 (commencing with Section * * * 43000)

of * * * Division 26 of the Health and Safety Code.

With respect to new vehicles having a gross vehicle

weight to 6,001 pounds or less, the department shall accept

a statement completed pursuant to subdivision (b) of Section

24007 in lieu of the certificate of compliance.

The provisions of this section shall not apply to a transfer

of ownership and registration when the transferor is either

the parent, grandparent. child, or spouse of the transferee.

when a vehicle registered to a sole proprietorship is trans-

ferred to such proprietor as owner, or when the transfer is

between companies whose principal business is leasing ve-

hicles, if there is no change in the lessee or operator of the

vehicle.

(b) The State Air Resources Board * * * , un-

der * * * Part 5 (commencing with section

* * * 43000)of * * * Division 26 of the Health

and Safety Code, may exempt designated classifications of

motor vehicles from the provisions of subdivision (a) as

they deem necessary, and shall notify the department of

such action * * *,

SEC. 23. Section 4000.2 of the Vehicle Code is amended

to read:

4000.2.

The department shall require upon registration of a motor

vehicle subject to * * * Part 5 (commencing with

Section * * *43000)of * * * Division 26 of the

Health and Safety Code, previously registered outside this

State, a valid certificate of compliance from a licensed motor

vehicle pollution control device installation and inspection

station indicating that such vehicle is properly equipped with

a motor vehicle pollution control device or devices which

are In proper operating condition and which are in compli-

ance with the provisions of * * = * that part.

SEC. 24. Section 4602 of the Vehicle Code, as amended

by Section 2 of Chapter 670 of the Statutes of 1974, is

amended to read:

fee * Sie

4602.

Application for renewai of a vehicle registration expiring

on the 31st day of December shall be made by the owner

not later than midnight of the first Friday in February su-

ceeding the expiration date and shall be made by presen-

tation of the registration card last issued for the vehicle or

by presentation of a potential registration card issued by the

department for use at the time of renewal and by payment

of the full annual fee for the vehicle as provided in this

code.

This section shall remain in effect only until March 8,

1976, and as of that date is repealed.

The California Tort Claims Act, Cal. Claims and Actions

Code §§814, 818.2, 821.

$814. Effect upon liability based on contract or right to

relief other than money or damages. Nothing in this part

affects liability based on contract or the right to obtain relief

other than money or damages against a public entity or

public employee (Added Stats. 1963, c. 1681, p. 3267,

§ 1.)

§ 818.2 Adoption or failure to adopt or enforce enactment.

A public entity is not liable for an injury caused by adopting

or failing to adopt an enactment of by failing to enforce any

law. (Added Stats. 1963, c. 1681, p. 3268, § 1.)

§ 821. Adoption or failure to adopt or enforce enactment.

A public employee is not liable for an injury caused by his

adoption of or failure to adopt an enactment or by his failure

to enforce an enactment. (Added Stats. 1963, c. 1681, p.

3269, § 1.)

—20—

Dana’s Third Amended Complaint.

Superior Court of the State of California, for the County

of Los Angeles.

Dana Corporation, a corporation, Plaintiff, vs. State of

California, the Legislature of the State of California, and

Does I through XXV, Defendants. No. C 158 741.

Filed: Aug. 11, 1977.

1. Atall times mentioned herein Plaintiff DANA COR-

PORATION (hereinafter referred to as ‘“‘Dana’’) was and

now 1s a corporation organized and existing under the laws

of the State of Virginia, and authorized to do business in

the State of California.

2. Atall times mentioned herein Defendant STATE OF

CALIFORNIA (hereinafter referred to as the ‘‘State’’) was

and is a state of the United States of America.

3. At all times mentioned herein defendant LEGIS-

LATURE OF THE STATE OF CALIFORNIA (hereinafter

referred to as the ‘‘Legislature’’) was and now is a govern-

mental unit created by the California Constitution.

4. The true names and capacities, whether individual,

corporate, associate or otherwise, of Defendants named

herein as Does | through XXV are unknown to Plaintiff,

which therefore sues said Defendants by such fictitious

names. Plaintiff will amend this Complaint to show their

names and capacities when the same have been ascertained.

Hereinafter Defendants STATE, LEGISLATURE, and

DOES | through XXV will be collectively referred to as

*‘Defendants’’.

5. At all times mentioned herein, each defendant was

and now is an agent of each other and of every other de-

fendant herein, and as such agent was acting within the

course and scope of its employment at the time and times

herein alleged.

”

9 D comm

6. Inthe late 1960's, air pollution in California reached

crisis levels. A significant contributor to this crisis was the

emission of various pollutants from motor vehicles operating

in the state.

7. In response to this crisis, Defendants caused to be

enacted, in 1967, the Mulfold-Carrell Air Resources Act

(hereinafter referred to as the ‘‘Air Resources Act’’), Cal-

ifornia Health and Safety Code §§ 39000 et seg. This act

established the Air Resources Board (hereinafter referred

to as the ‘‘ARB’’).

8. In further response to this crisis. Defendants caused

to be enacted the Pure Air Act of 1968 (hereinafter ferred

[sic] to as the ‘‘Pure Air Act’’), which amended the Air

Resources Act to specifically require the reduction of pol-

lution from motor vehicles.

9. In passing the Pure Air Act, the Defendants found:

‘‘(a) That the emission of pollutants from motor

vehicles is the primary cause of air pollution in many

portions of the State.

(b) That the control and elimination of such pol-

Jutants is of prime importance for the protection and

preservation of the public health and well-being, and

for the prevention of irritation to the senses, interfer-

ence with visibility, and damage of vegetation and

property.

uniform procedures for compliance with standards

which control or eliminate such pollutants.

(d) That the California goal for pure air quality is

the achievement of an atmosphere with no significant

detectable adverse effect from motor vehicle air pol-

lution on health, welfare and the quality of life and

property by 1975.

(e) That vehicle emission standards applied to new

motor vehicles and to used motor vehicles equipped

with emission control devices are standards with which

all such vehicles shall comply subject to the approval,

accreditation, and certification provisions of this part.”

Ch. 764, $8 (1968) (Health and Satety Code, $3908 1).

10. The Pure Air Act required the ARB to accredit and

certify for installation on automobiles, devices which re-

duced the emissions of each of three particular pollutants

— carbon monoxide, hydrocarbons and oxides of nitrogen

— below certain specifically defined absolute standards.

Ch. 764, §8 (1968) (as amended, Health and Safety Code,

§39107).

11. During the period from 1968 until 1971, vehicles

manufactured in model years 1966 through 1970 (hereinafter

referred to as ‘‘1966-1970 vehicles’’) were particularly sig-

nificant polluters. Their factory installed pollution control

equipment did reduce the emission of carbon monoxide and

hydrocarbons, but caused a significant increase in the emis-

sion of oxides of nitrogen (hereinafter referred to as

‘*‘NOx’’), a primary component in the chemical reaction

which leads to photochemical smog.

12. During the period from 1968 until 1971, devices

to reduce NOx emissions (hereinafter referred to as ‘‘NOx

device|s]’’) suitable for installation on 1966-1970 vehicles

were not commercially available in California.

13. The Pure Air Act gave the ARB no authority to

vary its emission device standards or accredit a device which

reduced only NOx emissions.

14. During the period from 1968 until 1971, demand

grew from various sources, including the Defendants, for

action which would lead to the reduction of NOx emissions

from 1966-1970 vehicles.

ra. > tae

15. During the period from 1968 until 1971, the ARB

and its staff consulted potential manufacturers to determine

whether these manufacturers could develop, and make avail-

able, NOx devices for 1966-1970 vehicles.

16. The ARB was informed by potential manufacturers

that NOx devices would be developed, and made available,

if the law were changed to allow the accreditation of NOx

devices and to require the installation of accredited NOx

devices on all 1966-1970 automobiles in California.

17. The ARB requested such legislation and supported

its passage. In conformance with the ARB request, the Leg-

islature, in November, 1971, amended the Air Resources

Act, Ch. 1507 (1971) (said amendment is hereinafter re-

ferred to as the ‘‘NOx Legislation’’).

18. One purpose of the NOx Legislation was to en-

courage and induce the development, accreditation and pro-

duction of NOx devices by manufacturers by requiring the

installation of such devices as soon as they were available.

Its urgency section provided:

‘This act is an urgency statute necessary for the

immediate preservation of the public peace, health or

safety within the meaning of Article IV of the Con-

stitution and shall go into immediate effect. The facts

constituting necessity are:

Presently required emission control devices for mo-

tor vehicles of 1966 through 1970 models do not elim-

inate enough of the oxides of nitrogen to insure the

health and safety of the majority of California citizens.

It is now technically feasible to produce devices which

will significantly reduce these dangerous substances.

To insure that such devices are installed on most of

such passenger vehicles within the shortest time pos-

sible, it is necessary to immediately begin programs

for testing and approving such devices. Immediate pas-

pan, * ee

sage of this act will also give manufacturers additional

time to develop such devices.’* Ch. 1507, §8 (1971).

19. The NOx Legislation vested the ARB with the au-

thorty to accredit NOx devices for installation on 1966-1970

vehicles having a manufacturer’s gross vehicle weight rating

of under 6,00] pounds (hereinafter referred to as **Subject

.Vehicles’’). It further required every Subject Vehicle to be

equipped with an NOx device in accordance with a schedule

to be developed by the ARB. The NOx Legislation speci-

fically required that all Subject Vehicles be equipped with

a device upon renewal of registration in 1973, absent ex-

traordinary and compelling reasons.

20. The NOx Legislation set no absolute standards for

the reduction of NOx. Instead, it sought to encourage the

development of the best possible devices, given the con-

straints of urgency and of technological and economic fea-

sibility.

21. To accomplish this purpose, the ARB was author-

ized to determine the standard for NOx reduction necessary

for accreditation of an NOx device:

‘*Notwithstanding |Health and Safety Code] Section

39107, [which had set a specifically defined absolute

NOx standard, ] the board shall set standards for devices

to significantly reduce the emission of oxides of nitro-

gen from 1966 though 1970 model year vehicles, as

determined by the buard from a representative sampling

of such vehicles, which the board has found necessary

and technologically feasible to carry out the purposes

of this part.

In setting standards under this Section, the primary

consideration shall be the greatest possible reduction

of oxides of nitrogen.”’ Ch.1507, § 1 (1971).

ae, | eet

22. To further accomplish this purpose, the NOx Leg-

islation provided that no NOx device could be accredited

which was less effective than any already accredited.

23. For several months prior to the passage of the NOx

Legislation and in anticipation thereof, the ARB consulted

with potential manufacturers to develop procedures for eval-

uating NOx devices and to implement an NOx reduction

program.

24. At the ARB meeting on November 17, 1971, the

ARB adopted procedures for evaluating NOx devices. At .

the same meeting. the ARB, speaking through its Chairman,

noted the passage of the NOx Legislation and urged ‘‘the

auto industry to submit devices for approval at an early date

since many of the manufacturers indicated they would do

so if the law were changed.’’

25. Standards for the reduction of NOx emissions re-

quired for accreditation of NOx devices were not set at the

November 17 meeting because the ARB did not possess

sufficient information on the effectiveness of NOx devices

which would be technologically and economically feasible.

Thereafter, the ARB continued its solicitation of information

from manufacturers with regard to potential NOx devices.

In December, 1971, the ARB wrote various manufacturers

stating, “‘[bJefore setting standards for [NOx] devices, the

Board wishes to know the technological possibilities for

control systems within the price limit $35.’’ The ARB also

inquired whether the manufacturers had an NOx device to

offer and, if so, how efficient it would be in reducing NOx

emissions.

26. Dana and other manufacturers provided the ARB

with information concerning the availability and effective-

ness of NOx devices which they had begun to develop as

a result of the passage of the NOx Legislation. Using this

—26—

information, the ARB adopted standards for the accredita-

tion of NOx devices at the ARB meeting on February 16,

1972.

27. The standards for certification required that an NOx

device reduce NOx emissions from various classes of Sub-

ject Vehicles by a specified percentage rather than setting

an absolute standard of maximum allowable emissions. The

standards provided for certification of NOx devices which

would reduce actual NOx emissions by 20% to 30%.

28. On March 31, 1972, the ARB again solicited the

participation of manufacturers in the NOx emission reduc-

tion program It wrote to manufacturers:

‘*Gentlemen:

The Air Resources Board, as its meeting on April 19,

1972, at Sacramento, will take up the status of NOx

control devices for 1966-70 light-duty vehicles.

This subject has been discussed by the Board and the

staff with members of the industry for some time. The

Board and staff were led to believe that devices would

be available if the State chose to require their instal-

lation.

The legislature was likewise informed, and as a result

passed SB 578, which requires installation of NOx

devices on 1966-70 light-duty vehicles by January

1973. The bill was signed by the Governor on Novem-

ber 16, 1971 and on November 17 the Board adopted

a test procedure for accreditation.

We understand several companies have undertaken

testing, but no application has yet been filed with the

Board. The Board wishes to find out why there are no

applications and what alternatives exist to comply with

the law and will call upon your representative at the

April 19th meeting to give a brief statement for your

company on the subject.’

ay) 2 ae

29. At the ARB meeting on April 19, 1972, various

manufacturers, including Dana, informed the ARB that they

had devices which met the ARB standards and that the

manufacturers would soon submit their data and applica-

tions.

30. Dana submitted an NOx device to the ARB tor

accreditation on or about May I1, 1972, supplying the re-

quired test data and other supporting information, including

information relating to Dana’s financial condition and dis-

tribution capabilities. At the ARB meeting on August 23,

1972, Dana’s device was accredited by the ARB for all but

one engine size classification and accredited on August 15,

1973 for that remaining engine size. At the August 23, 1972

meeting an NOx device, manufactured by The Echlin Com-

pany (hereinafter referred to as ‘“‘Echlin’’) was accredited.

At the August 23, 1972 meeting, one ARB member ex-

pressly stated that the Board was ‘‘asking the companies

to embark on a massive program involving large sums of

money.”’

31. The ARB thereafter resolved, pursuant to its sta-

tutory responsibility, that ‘‘the installation of the Dana cor-

poration device shall become mandatory ... when the

Board finds that the device is available for installation.”

A similar resolution was passed with regard to the Echlin

NOx device.

32. Pursuant to this resolution the ARB sought to de-

velop a schedule for the required installation of NOx devices

on the Subject Vehicles. At the ARB meeting of August 23,

1972, Dana and Echlin were requested to submit detailed

information as soon as possible to the ARB on the time

required to produce sufficient NOx devices, train installers

and establish distribution channels.

33. At the ARB meeting on September 27, 1972, the

ARB decided that Dana and Echlin would not be able to

produce enough devices, or to establish distribution systems

and train device installers in time to make NOx devices

Cie...

available for all Subject Vehicles in February, 1973. There-

fore, the ARB suspended the requirement that all Subject

Vehicles be equipped with an NOx device by February,

1973, and established procedures for adopting a new sched-

ule.

34. The ARB thereafter requested further information

from Dana and Echlin concerning possible production, dis-

tribution and training schedules for the NOx devices. The

ARB informed Dana and Echlin that a schedule would be

adopted, requiring installation of NOx devices on the Sub-

ject Vehicles, if the manufacturers provided such infor-

mation and committed themselves to produce the NOx de-

vices within the specified times.

35. Onor prior to November 21, 1972, Dana and Echlin

agreed that they would produce and distribute sufficient

NOx devices and conduct the other necessary activities,

within a period necessary to meet a proposed installation

schedule developed jointly by the ARB staft, other State

officials and the manufacturers.

36. At the ARB meeting on November 21, 1972, the

ARB adopted an installation schedule similar to the one

proposed. The adopted installation schedule, a copy of

which is attached hereto as Exhibit **1’’ and incorporated

herein by reference, provided for the mandatory installation

of NOx devices on all Subject Vehicles by May, 1974.

37. The ARB recognized that the implementation of

this installation schedule would reduce NOx emissions in

California by an average of 138 tons per day, in 1974, and

by 180 tons per day, in 1975.

38. Relying upon this schedule for the mandatory in-

stallation of NOx devices, Dana produced and distributed

NOx devices, and trained device installers, in accordance

with its commitment to the ARB. A limited number of

devices were installed pursuant to the schedule.

= =

39. In June, 1973, the ARB repealed the installation

schedule. In October, 1973, the ARB adopted a new in-

stallation schedule. It provided among other things, that all

Subject Vehicles would be required to have an NOx device

installed on or before December |, 1974. A copy of this

schedule is attached hereto as Exhibit **2’’ and incorporated

herein by reference.

40. On November 16, 1973, the Governor of the State

requested the ARB to reconsider the installation schedule

because of an apparent energy shortage. He then filled an

existing vacancy on the ARB and replaced three members

_ of the ARB. On December 19, 1973, the newly constituted

ARB adopted a Resolution delaying for at least one year

the required installation of NOx devices on the Subject

Vehicles.

41. On June 27, 1974 the Supreme Court of California,

in an action brought by Dana, Echlin, and the Clean Air

Constituency, issued a writ of mandamus directing the ARB

to vacate its Resolution of December 19, 1973, on the

ground that the NOx Legislation required the ARB to adopt

and implement a schedule for the mandatory installation of

NOx devices.

42. In July 1974, the ARB again adopted a schedule

for mandatory installation of NOx devices on all Subject

Vehicles. A copy of this schedule is attached hereto as

Exhibit ‘*3°’ and incorporated herein by reference.

43. On September 5, 1974, and again on April 23,

1975, defendants caused to be enacted certain amendments

to the Air Resources Act, which repealed the provisions of

the NOx Legislation requiring the rapid installation of NOx

devices on all Subject Vehicles, and reduced, to an insig-

nificant number, the number of motor vehicles upon which

the NOx device was required to be installed.

—30—

FIRST CAUSE OF ACTION

(Breach of Contract)

44. Dana realleges and incorporates by reference herein

all the allegations of paragraphs | through 43 above as

though fully set forth at length.

45. Inthe course of and through the events, statements,

and actions described in paragraph 5 through 43 above, as

well as through other events, statements and acts, Defend-

ants entered into a course of conduct designed to induce and

encourage Dana to design and obtain accreditation for, and

to induce, encoyrage and require Dana to manufacture and

maintain an inventory of NOx emission control devices. It

was the plan and requirement of Defendants that Dana de-

velop NOx devices and manufacture and maintain an in-

ventory of NOx devices before the NOx devices were first

required to be installed on the Subject Vehicles. In pursu-

ance of the aforesaid course of conduct, Defandants did,

among other things, the following:

(a) Recruited, requested and encouraged Dana to

design and submit an NOx device for accreditation;

(b) Based the accreditation of Dana’s NOx device,

in part, on a commitment by Dana that it could, and

would, manufacture and maintain a large inventory of

the NOx devices prior to the time installation of said

devices was to be required, and on an investigation of

Dana's financial ability to do so;

large inventory of NOx devices and to develop and

carry out comprehensive training and distribution plans

prior to the time installation of the devices was to be

required;

(d) Represented and deliberately led Dana to be-

lieve that if Dana obtained accreditation for an NOx

device and manufactured a large inventory, Defendants

would require rapid installation of NOx devices on all

Subject Vehicles;

(e) Delayed installation schedules previously es-

tablished, and on each such instance required plaintiff

to manufacture and maintain an even larger inventory

of NOx devices prior to the time installation of the

devices was to be required.

46. Dana, in reliance on the representations, promises,

actions and aforesaid course of conduct of Defendants, was

induced and encouraged to and did design, obtain ac-

creditation for, manufacture and maintain an inventory of

NOx devices, expending in the process, considerable time,

effort and money. In carrying out these actions, Dana,

among other things:

(a) Assigned large numbers of professional per-

sonnel to this development and testing work;

(b) Conducted, and caused to be conducted, nu-

merous costly tests on various automobiles;

ficient for such testing and for submission to the ARB

under its required procedures;

(d) Submitted to the ARB an application for ac-

creditation in accord with ARB requirements for the

control of NOx emissions in 1966-1970 vehicles, with

the required test data and other supporting information,

and in connection therewith, undertook certain affirm-

ative commitments, including those required by the

Statute;

(e) Held numerous meetings with ARB personnel

in the connection with the accreditation procedure;

(f) Having obtained accreditation on August 23,

1972, commenced planning for the manufacture, mar-

keting, and installation of the devices, in cooperation

and consultation with the ARB, its staff and other state

officials;

(g) Established a sales and service group in Cali-

fornia of up to 12 men in connection with the program

mee, ae

for distribution and installation of NOx devices;

(h) Allocated 19,000 square feet of Dana’s man-

ufacturing facility in Pueblo, Colorado for the purposes

of stock accumulation, assembly and storage of the

Dana NOx device:

(i) Hired 23 assemblers and material handlers and

two supervisory personnel;

(j) Began full production on an expedited basis by

January, 1973, in order to develop the inventory of

NOx devices necessary to meet the requirements of the

installation schedule;

(k) Developed a formal audio visual training pro-

gram for Class A mechanics in the State of California

based upon the recommendations of ARB staff;

(1) Conducted numerous seminars for Class A

mechanics in the State of California between January

5, 1973 and June |, 1973, training in excess of 10,000

Class A mechanics and associated automobile service

people;

(m) Established a sales and customer service office

within the State of California and engaged in a news-

paper and radio campaign to disseminate information

concerning both the Dana NOx device and the NOx

device program for 1966-70 vehicles;

(n) Worked closely with the staff of the ARB and

others in monitoring the installations on Subject Ve-

hicles in the field during February and March of 1973

to resolve any possible problems as quickly as possible:

(o) Invested by January 1, 1974, in excess of

$10,000,000 in the implementation of the Dana NOx

device program as described above.

47. Defendants expressly requested Dana to design,

obtain accreditation for, manufacture and maintain an in-

ventory of NOx devices before the NOx devices were first

required to be installed on the Subject Vehicles.

48. In conjunction with this request, Defendants prom-

ised Dana that Defendants would require that each Subject

Vehicle be equipped with an accredited NOx device in a

short period of time.

49. Dana, in reliance on aforesaid course of conduct

of Defendants, and in expectation that each Subject Vehicle

would be required to be equipped with an accredited NOx

device in a short time and in expectation that Dana would

be compensated for its services, expended considerable

time, effort and money in the design, obtaining accreditation

for, manufacture and maintenance of an inventory of NOx

devices.

50. It was the intent of the Defendants and Dana and

the principal inducement for Dana’s expending the aforesaid

time, money and effort that Defendants would require and

continue to require each Subject Vehicle be equipped with

an accredited NOx device once such devices were accredited

and made available for installation.

51. Defendants materially and substantially breached

the agreement stated above by the repeal of the NOx Leg-

islation in such a manner as to reduce to an insignificant

number the motor vehicles on which the NOx device was

required to be installed without compensating Dana for the

time, effort and money it had expended in designing, ob-

taining accreditation for, manufacturing and maintaining an

inventory of the NOx devices.

52. As a direct and proximate result of said breach,

Dana has been damaged in an amount not less than $13,-

000,000. The exact amount of such damage will be dem-

onstrated by proof at trial.

53. With respect to the acts of Defendants in causing

to be enacted on April 23, 1975 certain amendments to

California Health and Safety Code Section 39177.1, plain-

ian Bie

tiff has complied with the claim requirements of Govern-

ment Code Section 900 er seq. by filing with the State Board

of control a claim for damages, and said claim was denied

on April 20, 1976.

SECOND CAUSE OF ACTION

(Estoppel in Pais)

54. Dana realleges and incorporates by reference herein

all the allegations of paragraphs 1-43, 45, 46 and 53 above

as though fully set forth at length.

55. Defendants knew or should have known that as a

result of the aforesaid course of conduct entered into by

them, Dana would be induced and encouraged to, and would

in fact, design, obtain accreditation for, manufacture and

maintain an inventory of NOx devices before the NOx de-

vices were first required to be installed on the Subject Ve-

hicles.

56. As aresult of the aforesaid course of conduct, Dana

was made to believe and did believe that the carrying out

of the schedule mandating rapid installation of NOx devices

on all Subject Vehicles was certain of accomplishment once

Dana had designed, obtained accreditation for, manufac-

tured and maintained an inventory of such devices.

57. Atno time prior to the expenditure of large amounts

of time, effort and money by Dana was there any reason

for Dana to believe that the State would abandon the re-

quirement of rapid installation of NOx devices on all Subject

Vehicles.

58. Acting solely upon the understanding that rapid in-

stallation of NOx devices on all Subject Vehicles would be

required, Dana did each and every one of the acts described

above. But for said understanding, Dana would not have

so acted.

ue a

59. By the actions and the aforesaid courses of conduct

carried out by Defendants, they were estopped to repeal the

NOx Legislation in such a manner as to reduce to an insig-

nificant number the motor vehicles on which the NOx device

was to be installed without compensating Dana for the time.

effort and money it expended in designing, obtaining ac-

creditation for, manufacturing and maintaining an inventory

of the NOx devices.

60. Asa result of the foregoing actions by defendants,

Dana has been damaged in an amount not less than $13,-

000,000. The exact amount of such damage will be dem-

onstrated by proof at trial.

THIRD CAUSE OF ACTION

(Promissory Estoppel)

61. Dana realleges and incorporates by reference herein

all the allegations of paragraphs 1-43, 45, 46 and 53 above

as though fully set forth at length herein.

62. Defendants, in making the aforesaid representa-

tions, and promises, did so with the knowledge that Dana

would reasonably be induced to rely upon Defendants’ rep-

resentations and promises in that Dana would expend con-

siderable time effort and money in designing, obtaining

accreditation for, manufacturing and maintaining an inven-

tory of NOx devices.

63. Dana in reasonble reliance upon Defendents’ rep-

resentations and promises was induced to expend consid-

erable time, effort and money in designing, obtaining ac-

creditation for, manufacturing and maintaining an inventory

of NOx devices, and but for Defendants’ representations

and promises to Dana, Dana would not have so acted.

64. Dana, in reasonably relying upon Defendants’ rep-

resentations and promises has suffered a substantial detri-

ment in that Dana has been damaged in an amount not less

Se ee

than $13,000,000. The exact amount of such damage will

be demonstrated by proof at trial.

FOURTH CAUSE OF ACTION

(Taking and Damaging of Property

Without Compensation)

65. Dana realleges and incorporates by reference herein

all of the allegations in paragraphs !-43, 45-51 and 53 above

as though fully set forth at length.

66. As aresult of the foregoing actions by Defendants,

the uses to which Dana’s property can be put have been

restricted to such an extent that Dana has been denied any

substantial or reasonable use of its property.

67. As a further result of the foregoing actions by De-

fendants, the rights of Dana under its agreement with De-

fendants have been restricted and foreclosed to such an

extent that Dana has been denied any substantial or reason-

able benefit of its bargain.

68. Thus said property and contract rights have been

taken without compensation and their value has been di-

minished and damaged by an amount not less than $13,-

000,000. The exact amount of such damage will be dem-

onstrated by proof at trial.

69. Dana has not been compensated by the Defendants

or any of them for the taking and damaging of its property

and contract rights as aforesaid.

FIFTH CAUSE OF ACTION

(Quasi Contract — Implied in Law)

70. Plaintiff realleges and incorporates by reference

herein all of the allegations of paragraphs 1-43, 45, 46 and

53 above as though fully set forth at length.

71. Defendants, in causing to be enacted the Air Re-

sources Act and the NOx Legislation, and in carrying out

the aforesaid course of conduct, expressly intended to in-

duce, encourage and require Plaintiff to design, obtain ac-

creditation for, manufacture and maintain an inventory of

NOx devices.

72. Plaintiff, in reliance on the actions and aforesaid

course of conduct of Defendants, and in expectation of being

compensated for its services, expended considerable time,

effort and money in designing, obtaining accreditation for,

manufacturing and maintaining an inventory of NOx de-

vices.

73. As a result of these services being rendered by

Plaintiff, Defendants have been unjustly enriched by an as

yet undetermined sum. When the exact amount of this sum

is ascertained, Plaintiff will seek leave of this Court to

amend its complaint and insert the correct figure.

74. Plaintiff has not been reimbursed for these services

it performed at Defendant’s request.

WHEREFORE, Dana prays judgment against Defend-

ants, and each of them, jointly and severally with respect

to each cause of action as follows:

1. The sum of $13,000,000 or such damages as may

be shown at the time of trial;

2. For interest as provided by law;

3. For reasonable attorneys’ fees and costs of suit in

connection with the prosecution of this action: and

a ee

4. For such other and further relief as may be just and

proper.

DATED: August 11, 1977.

PAUL, HASTINGS, JANOFSKY & WALKER

By /s/ Donald A. Daucher

Donald A. Daucher

Attorneys for Plaintiff

DANA CORPORATION

—

Echlin’s First Amended Complaint.

Superior Court of the State of California, for the County

of Los Angeles.

The Echlin Manufacturing Company, a corporation,

Plaintiff, vs. State of California, the Legislature of the State

of California, and Does | through XXV, Defendants. No.

176787.

Filed: Aug. 2, 1977.

1. Atall times mentioned herein Plaintiff THE ECHLIN

MANUFACTURING COMPANY (hereinafter referred to

as ‘‘ECHLIN’’) was and now is a corporation organized

and existing under the laws of the State of Connecticut, and

authorized to do business in the State of California.

2. Atall times mentioned herein Defendant STATE OF

CALIFORNIA (hereinafter referred to as the ‘“‘STATE’’)

was and is a state of the United States of America.

3. At all times mentioned herein Defendant LEGIS-

LATURE OF THE STATE OF CALIFORNIA (hereinafter

referred to as the ‘“‘LEGISLATURE’’) was and now is a

governmental unit created by the California Constitution.

4. The true names and capacities, whether individual,

corporate, associate or otherwise, of Defendants named

herein as Does I through XXV are unknown to Plaintiff,

which therefore sues said Defendants by such fictitious

names. Plaintiff will amend this Complaint to show their

names and capacities when the same have been ascertained.

Hereinafter Defendants STATE, LEGISLATURE, and

DOES | through XXV will be collectively referred to as

‘*Defendants’’.

5. Inthe late 1960's, air pollution in California reached

crisis levels. A significant contributor to this crisis was the

emission of various pollutants from motor vehicles operating

in the state.

—

6. In response to this crisis, Defendants caused to be

enacted, in 1967, the Mulford-Carrell Air Resources Act

(hereinafter referred to as the **‘Air Resources Act’’), Cal-

ifornia Health and Safety Code §§ 39000 et seg. This act

established the Air Resources Board (hereinafter referred

to as the *‘ARB’’).

7. In further response to this crisis, Defendants caused

to be enacted the Pure Air Act of 1968 (hereinafter referred

to as the **Pure Air Act’’), which amended the Air Re-

sources Act to specifically require the reduction of pollution

from motor vehicles.

8. In passing the Pure Air Act, the Defendants found:

‘*(a) That the emission of pollutants from motor

vehicles is the primary cause of air pollution in many

portions of the State.

(b) That the control and elimination of such pol-

lutants is of prime importance for the protection and

preservation of the public health and well-being, and

for the prevention of irritation to the senses, interfer-

ence with visibility, and damage of vegetation and

property.

uniform procedures for compliance with standards

which control or eliminate such pollutants.

(d) That the California goal for pure air quality is

the achievement of an atmosphere with no significant

detectable adverse effect from motor vehicle air pol-

lution on health, welfare and the quality of life and

property by 1975.

(e) That vehicle emission standards applied to new

motor vehicles and to used motor vehicles equipped

with emission control devices are standards with which

all such vehicles shail comply subject to the approval,

accreditation, and certification provisions of this part.’’

Ch. 764, §8 (1968) (Health and Safety Code, $3908 1).

onc scaee

9. The Pure Air Act required the ARB to accredit and

certify for installation on automobiles, devices which re-

duced the emissions of each of three particular pollutants

— carbon monoxide, hydrocarbons and oxides of nitrogen

— below certain specifically defined absolute standards.

Ch. 764, $8 (1968) (as amended, Health and Safety Code,

§39107).

10. During the period from 1968 until 1971, vehicles

manufactured in model years 1966 through 1970 (hereinafter

referred to as ‘*1966-1970 vehicles’’) were particularly sig-

nificant polluters. Their factory installed pollution control

equipment did reduce the emission of carbon monoxide and

hydrocarbons, but caused a significant increase in the emis-

sion of oxides of nitrogen (hereinafter referred to as

‘*NOx’’), a primary component in the chemical reaction

which leads to photochemical smog.

11. During the period from 1968 until 1971, devices

to reduce NOx emissions (hereinafter referred to as *‘NOx

device|s]’’) suitable for installation on 1966-1970 vehicles

were not commercially available in California.

12. The Pure Air Act gave the ARB no authority to

vary its emission device standards or accredit a device which

reduced only NOx emissions.

13. During the period from 1968 until 1971, demand

grew from various sources, including the Defendants, for

action which would lead to the reduction of NOx emissions

from 1966-1970 vehicles.

14. During the period from 1968 until 1971 the ARB

and its staff consulted potential manufacturers to determine

whether these manufacturers could develop, and make avail-

able, NOx devices for 1966-1970 vehicles.

15. The ARB was informed by potential manufacturers

that NOx devices would be developed, and made available,

if the law were changed to allow the accreditation of NOx

devices and to require the installation of accredited NOx

devices on all 1966-1970 automobiles in California.

16. The ARB requested such legislation and supported

its passage. In conformance with the ARB request, the Leg-

islature, in November, 1971. amended the Air Resources

Act, Ch. 1507 (1971) (said amendment is hereinafter re-

ferred to as the ‘*NOx Legislation’’).

17. One purpose of the NOx Legislation was to en-

courage and induce the development, accreditation and pro-

duction of NOx devices by manufacturers by requiring the

installation of such devices as soon as they were available.

Its urgency section provided:

‘‘This act is an urgency statute necessary for the

immediate preservation of the public peace, health or

safety within the meaning of Article IV of the Con-

stitution and shall go into immediate effect. The facts

constituting necessity are:

Presently required emission control devices for mo-

tor vehicles of 1966 through 1970 models do not elim-

inate enough of the oxides of nitrogen to insure the

health and safety of the majority of California citizens.

It is now technically feasible to produce devices which

will significantly reduce these dangerous substances.

To insure that such devices are installed on most of

such passenger vehicles within the shortest time pos-

sible, it is necessary to immediately begin programs

for testing and approving such devices. Immediate pas-

sage of this act will also give manufacturers additional

time to develop such devices.’’ Ch. 1507, §8 (1971).

18. The NOx Legislation vested the ARB with the au-

thority to accredit NOx devices for installation on 1966-

1970 vehicles having a manufacturer’s gross vehicle weight

rating of under 6,001 pounds (hereinafter referred to as

**Subject Vehicles’’). It further required every Subject Ve-

hicle to be equipped with an NOx device in accordance with

ae ee

a schedule to be developed by the ARB. The NOx Legis-

lation specifically required that all Subject Vehicles be

equipped with a device upon renewal of registration in 1973,

absent extraordinary and compelling reasons.

19. The NOx Legislation set no absolute standards for

the reduction of NOx. Instead, it sought to encourage the

development of the best possible devices, given the con-

straints of urgency and of technological and economic fea-

sibility.

20. To accomplish this purpose, the ARB was author-

ized to determine the standard for NOx reduction necessary

for accreditation of an NOx device:

‘‘Notwithstanding |Health and Safety Code] Section

39107, [which had set a specifically defined absolute

NOx standard, ] the board shall set standards for devices

to significantly reduce the emission of oxides of nitro-

gen from 1966 through 1970 mode! year vehicles, as

determined by the board from a representative sampling

of such vehicles, which the board has found necessary

and technologically feasible to carry out the purposes

of this part.

In setting standards under this Section, the primary

consideration shall be the greatest possible reduction

of oxides of nitrogen.’’ Ch.1507, §1 (1971).

21. To further accomplish this purpose, the NOx Leg-

islation provided that no NOx device could be accredited

which was less effective than any already accredited.

22. For several months prior to the passage of the NOx

Legislation and in anticipation thereof, the ARB consulted

with potential manufactures to develop procedures for eval-

uating NOx devices and to implement an NOx reduction

program.

23. At the ARB meeting on November 17, 1971, the

ARB adopted procedures for evaluting NOx devices. At the

—44—

same meeting, the ARB, speaking through its Chairman,

noted the passage of the NOx Legislation and urged ‘‘the

auto industry to submit devices for approval at an early date

since many of the manufacturers indicated they would do

so if the law were changed.’’

24. Standards for the reduction of NOx emissions re-

quired for accreditation of NOx devices were not set at the

November 17 meeting because the ARB did not possess

sufficient information on the effectiveness of NOx devices

which would be technologically and economically feasible.

Thereafter, the ARB continued its solicitation of information

from manufacturers with regard to potential NOx devices.

In December, 1971, the ARB wrote various manufacturers

Stating, ‘“[bJefore setting standards for [NOx] devices, the

Board wishes to know the technological possivilities for

control systems within the price limit $35.’’ The ARB also

inquired whether the manufacturers had an NOx device to

offer and, if so, how efficient it would be in reducing NOx

emissions.

25. ECHLIN and other manufacturers provided the

ARB with information concerning the availability and ef-

fectiveness of NOx devices which they had begun to develop

as a result of the passage of the NOx Legislation. Using this

information, the ARB adopted standards for the accredita-

tion of NOx devices at the ARB meeting on February 16,

1972.

26. The standards for certification required that an NOx

device reduce NOx emissions from various classes of Sub-

ject Vehicles by a specified percentage rather than setting

an absolute standard of maximum allowable emissions. The

standards provided for certification of NOx devices which

would reduce actual NOx emissions by 20% to 30%.

27. On March 31, 1972, the ARB again solicited the

participation of manufacturers in the NOx emission reduc-

tion program. It wrote to manufacturers:

a ee

‘*Gentlemen:

The Air Resources Board, at its meeting on April 19,

1972, at Sacramento, will take up the status of NOx

control devices for 1966-70 light-duty vehicles.

This subject has been discussed by the Board and the

staff with members of the industry for some time. The

Board and staff were led to believe that devices would

be available if the State chose to require their instal-

lation.

The legislature was likewise informed, and as a result

passed SB 578, which requires installation of NOx

devices on 1966-70 light-duty vehicles by January

1973. The bill was signed by the Governor on Novem-

ber 16, 1971 and on November 17 the Board adopted

a test procedure for accreditation.

We understand several companies have undertaken

testing, but no application has yet been filed with the

Board. The Board wishes to find out why there are no

applications and what alternatives exist to comply with

the law and will call upon your representative at the

April 19th meeting to give a brief statement for your

company on the subject.’’

28. At the ARB meeting on April 19, 1972, various

manufacturers, including ECHLIN, informed the ARB that

they had devices which met the ARB standards and that the

manufacturers would soon submit their data and applica-

tions.

29. ECHLIN submitted an NOx device to the ARB for

accreditation on April 21, 1972, supplying the required test

data and other supporting information, including informa-

tion relating to ECHLIN’s financial condition and distri-

bution capabilities. At the ARB meeting on August 23,

1972, ECHLIN’s device was accredited by the ARB. At the

same meeting, an NOx device manufactured by the Dana

Corporation (hereinafter referred to as **‘ DANA’) was ac-

credited. At that meeting, one ARB member expressly stated

that the Board was ‘‘asking the companies to embark on a

massive program involving large sums of money.”’

30. The ARB thereafter resolved, pursuant to its sta-

tutory responsibility, that “‘the installation of the Echlin

corporation devices shall become mandatory . . . when the

Board finds that the device is available for installation.’’

A similar resolution was passed with regard to the DANA

NOx device.

31. Pursuant to this resolution the ARB sought to de-

velop a schedule for the required installation of NOx devices

on the Subject Vehicles. At the ARB meeting of August 23,

1972, ECHLIN and DANA were requested to submit de-

tailed information as soon as possible to the ARB on the

time required to produce sufficient Nox devices, train in-

stallers and establish distribution channels.

32. At the ARB meeting on September 27, 1972, the

ARB decided that ECHLIN and DANA would not be able

to produce enough devices, or to establish distribution sys-

tems and train device installers in time to make NOx devices

available for all Subject Vehicles by February, 1973. There-

fore, the ARB suspended the requirement that all Subject

Vehicles be equipped with an NOx device by February,

1973, and established procedures for adopting a new sched-

ule.

33. The ARB thereafter requested further information

from ECHLIN and DANA concerning possible production,

distribution and training schedules for the NOx devices. The

ARB informed ECHLIN and DANA that a schedule would

be adopted, requiring installation of NOx devices on the

Subject Vehicles, if the manufacturers provided such in-

formation and committed themselves to produce the NOx

devices within the specified times.

34. On or prior to November 21, 1972, ECHLIN and

DANA agreed that they would produce and distribute suf-

Bon? Oe

ficient NOx devices and conduct the other necessary activ-

ities, within a period necessary to meet a proposed instal-

lation schedule developed jointly by the ARB staff. other

State officials and the manufacturers.

35. At the ARB meeting on November 21. 1972. the

ARB adopted an installation schedule similar to the one

proposed. The adopted installation schedule, a copy of

which is attached hereto as Exhibit **1’’ and incorporated

herein by reference, provided for the mandatory installation

of NOx devices on all Subject Vehicles by May, 1974.

36. The ARB recognized that the implementation of

this installation schedule would reduce NOx emissions in

California by an average of 138 tons per day, in 1974, and

by 180 tons per day, in 1975.

37. Relying upon this schedule for the mandatory in-

stallation of NOx devices, ECHLIN produced and distrib-

uted NOx devices, and trained device installers, in accord-

ance with its commitment to the ARB. A limited number

of devices were installed pursuant to the schedule.

38. In June, 1973, the ARB repealed the installation

schedule. In October, 1973, the ARB adopted a new in-

stallation schedule. It provided among other things, that all

Subject Vehicles would be required to have an NOx device

installed on or before December |, 1974. A copy of this

schedule is attached hereto as Exhibit **2°* and incorporated

herein by reference.

39. On November 16, 1973, the Governor of the State

requested the ARB to reconsider the installation schedule

because of an apparent energy shortage. He then filled an

existing vacancy on the ARB and replaced three members

on the ARB. On December 19, 1973, the newly constituted

ARB adopted a Resolution delaying for at least one year

— =F

the required installation of NOx devices on the Subject

Vehicles.

40. Gn June 27, 1974, the Supreme Court of California,

in an action brought by ECHLIN, DANA, and the Clean

Air Constituency. issued a writ of mandamus directing the

ARB to vacate its Resolution of December 19, 1973, on the

ground that the NOx Legislation required the ARB to adopt

and implement a schedule for the mandatory installation of

NOx devices.

41. In July 1974, the ARB again adopted a schedule

for mandatory installation of NOx devices on all Subject

Vehicles. A copy of this schedule is attached hereto as

Exhibit **3’’ and incorporated herein by reference.

42. On September 5, 1974, and again on April 23,

1975, defendants caused to be enacted certain amendments

to the Air Resources Act, which repealed the provisions of

the NOx Legislation requiring the rapid installation of NOx

devices on all Subject Vehicles, and reduced, to an insig-

nificant number, the number of motor vehicles upon which

the NOx device was required to be installed.

FIRST CAUSE OF ACTION

(Breach of Contract)

43. ECHLIN realleges and incorporates by reference

herein all the allegations of paragraphs | through 42 above

as though fully set forth at length.

44. In the course of and through the events, statements,

and actions described in paragraphs 6 through 42 above, as

well as through other events, statements and acts, Defend-

ants entered into a course of conduct designed to induce and

encourage ECHLIN to design and obtain accreditation for,

and to induce, encourage and require ECHLIN to manu-

facture and maintain an inventory of NOx emission control

devices. It was the p!an and requirement of Defendants that

= ae

ECHLIN develop NOx devices and manufacture and main-

tain an inventory of NOx devices before the NOx devices

were first required to be installed on the Subject Vehicles.

In pursuance of the aforesaid course of conduct, Defendants

did, among other things, the following:

(a) Recruited, requested and encouraged ECHLIN

to design and submit an NOx device for accreditation;

(b) Based the accreditation of ECHLIN’s NOx

device, in part, on a commitment by ECHLIN that it

could, and would, manufacture and maintain a large

inventory of the NOx devices prior to the time instal-

lation of said devices was to be required, and on an

investigation of ECHLIN’s financial ability to do so;

tain a large inventory of NOx devices and to develop

and carry out comprehensive training and distribution

plans prior to the time installation of the devices was

to be required;

(d) Represented and deliberately led ECHLIN to

believe that if ECHLIN obtained accreditation for an

NOx device and manufactured a large inventory, De-

fendants would require rapid installation of NOx de-

vices on all Subject Vehicles.

(e) Delayed installation schedules previously es-

tablished, and on each such instance required ECHLIN

to manufacture and maintain an even larger inventory

of NOx devices prior to the time installation of the

devices was to be required.

45. ECHLIN, in reliance on the representations, prom-

ises, actions and aforesaid course of conduct of Defendants

was induced and encouraged to and did design, obtain ac-

creditation for, manufacture and maintain an inventory of

NOx devices, expending in the process, considerable time,

effort and money. In carrying out these actions, ECHLIN

among other things:

—Sj0—

(a) Established a completely equipped research

laboratory for the development and testing of an NOx

device;

(b) Assigned large numbers of professional per-

sonnel to this development and testing work:

merous costly tests on various automobiles;

(d) Manufactured a stock of the NOx devices suf-

ficient for such testing and for submission to the ARB

under its required procedures;

(e) Submitted to the ARB an application for ac-

creditation in accord with ARB requirements for the

control of NOx emissions in 1966-1970 vehicles, with

the required test data and other supporting information,

and in connection therewith, undertook certain affirm-

ative commitments, including those required by the

Statute,

(f) Held numerous meetings with ARB personnel

in connection with the accreditation procedure;

(g) Having obtained accreditation on August 23,

1972, commenced planning for the manufacture, mar-

keting, and installation of the devices, in cooperation

and consultation with the ARB, its staff and other state

officials;

(h) Established a field service engineering group

in California of 11 men in connection with the program

for distribution and installation of NOx devices;

(i) Allocated 5,000 square feet of ECHLIN’s man-

ufacturing facility in Branford, Connecticut for the

purposes of stock accumulation, assembly and storage

of the ECHLIN NOx device;

(j) Hired 20 assemblers and material handlers and

two supervisory personnel;

(k) Began full production on an expedited basis by

December, 1972, in order to develop the inventory of

NOx devices necessary to meet the requirements of the

installation schedule;

(1) Developed a formal audio visual training pro-

gram for Class A mechanics in the State of California

based upon the recommendations of ARB staff;

(m) Conducted 673 seminars for Class A mechan-

ics in the State of California between January 5, 1973

and June 1, 1973, training approximately 11,700 Class

A mechanics and associated automobile service people:

(n) Employed 15 field service engineers and tech-

nical service people for the purpose of conducting the

training program and doing the follow-up consumer

service work in the field;

(0) Established consumer and customer service

offices within the State of California and engaged in

a newspaper campaign to disseminate information con-

cerning both the ECHLIN NOx device and the NOx

device program for 1966-1970 vehicles;

(p) Worked closely with the staff of the ARB and

others in monitoring the installations on Subject Ve-

hicles in the field during February and March of 1973

to resolve any possible problems as quickly as possible;

(q) Moved its production facilities for the ECHLIN

NOx device from Connecticut to new, expanded fa-

cilities at Huntington Beach, California to better serve

the requirements of the installation schedule;

(r) Hired 22 manufacturing employees in Califor-

nia and made improvements to accommodate produc-

tion;

(s) Invested by January 1, 1974, approximately

$5,000,000 in the implementation of the ECHLIN NOx

device program as described above.

46. Defendants expressly requested ECHLIN to design,

obtain accreditation for, manufacture and maintain an in-

ventory of NOx devices before the NOx devices were first

required to be installed on the Subject Vehicles.

47. In conjunctios with this request, Defendants prom-

ised ECHLIN that Defendants would require that each Sub-

ject Vehicle be equipped with an accredited NOx device in

a short period of time.

48. ECHLIN, in reliance on aforesaid course of conduct

of Defendants, and in expectation that each Subject Vehicle

would be required to be equipped with an accredited NOX

device in a short time and in expectation that ECHLIN

would be compensated for its services, expended consid-

erable time, effort and money in the design, obtaining ac-

creditation for, manufacture and maintenance of an inven-

tory of NOx devices.

49. It was the intent of the Defendants and ECHLIN

and the principal inducement for ECHLIN’s expending the

aforesaid time, money and effort that Defendants would

require and continue to require that each Subject Vehicle

be equipped with an accredited NOx device once such de-

vices were accredited and made available forinstallation,

50. Defendants materially and substantially breached

the agreement stated above by the repeal of the NOx Leg-

islation in such a manner as to reduce to an insignificant

number the motor vehicles on which the NOx device was

required to be installed without compensating ECHLIN for

the time, effort and money it had expended in designing,

obtaining accreditation for, manufacturing and maintaining

an inventory of the NOx devices.

51. As a direct and proximate result of said breach,

ECHLIN has been damaged in an amount not less than

$5,000,000, The exact amount of such damage will be dem-

onstrated by proof at trial.

52. With respect to the acts of Defendants in causing

to be enacted on April 23, 1975, certain amendments to

California Health and Safety Code Section 39177.1, ECH-

oat. ee

LIN has complied with the claim requirements of Govern-

ment Code Section 900 ef seq. by filing with the State Board

of Control a claim for damages, and said claim was denied

on April 20, 1976.

SECOND CAUSE OF ACTION

(Estoppel in Pais)

53. ECHLIN realleges and incorporates by reference

nerein all the allegations of paragraphs 1-42, 44, 45 and 52

above as though fully set forth at length.

54. Defendants knew or should have known that as a

result of the aforesaid course of conduct entered into by

then:, ECHLIN would be induced and encouraged to, and

would in fact, design, obtain accreditation for, manufacture

and maintain an inventory of NOx devices before the NOx

devices were first required to be installed on the Subject

Vehicles.

55. Asaresult of the aforesaid course of conduct, ECH-

LIN was made to believe and did believe that the carrying

out of the schedule mandating rapid installation of NOx

devices on all Subject Vehicles was certain of accomplish-

ment once ECHLIN had designed, obtained accreditation

for, manufactured and maintained an inventory of such de-

vices.

56. Atno time prior to the expenditure of large amounts

of time, money and effort by ECHLIN was there any reason

for ECHLIN to believe that the STATE would abandon the

requirement of rapid installation of NOx devices on all Sub-

ject Vehicles.

57. Acting solely upon the understanding that rapid in-

stallation of NOx devices on all Subject Vehicles would be

required, ECHLIN did each and every one of the acts de-

scribed above. But for said understanding, ECHLIN would

not have so acted.

Eee, "es

58. By the actions and the aforesaid course of conduct

carried out by Defendants, they were estopped to repeal the

NOx Legislation in such a manner as to reduce to an insig-

nificant number the motor vehicles on which the NOx device

was to be installed without compensating ECHLIN for the

time, effort and money it expended in designing, obtaining

accreditation for, manufacturing and maintaining an inven-

tory of the NOx devices.

59. As aresult of the foregoing actions by Defendants,

ECHLIN has been damaged in an amount not less than

$5,000,000. The exact amount of such damage will be dem-

onstrated by proof at trial.

THIRD CAUSE OF ACTION

(Promissory Estoppel)

60. ECHLIN realleges and incorporates by reference

herein all the allegations of paragraphs 1-42, 44, 45 and 52

above as though fully set forth at length.

61. Defendants, in making the aforesaid representations

and promises, did so with the knowledge that ECHLIN

would reasonably be induced to rely upon Defendants’ rep-

resentations and promises in that ECHLIN would expend

considerable time, effort and money in designing, obtaining

accreditation for, manufacturing and maintaining an inven-

tory of NOx devices.

62. ECHLIN in reasonable reliance upon Defendants’

representations and promises was induced to expend con-

siderable time, effort and money in designing, obtaining

accreditation for, manufacturing and maintaining an inven-

tory of NOx devices, and but for Defendants’ representa-

tions and promises to ECHLIN, ECHLIN would not have

so acted.

63. ECHLIN, in reasonably relying upon Defendants’

representations and promises has suffered a substantial det-

riment in that ECHLIN has been damaged in an amount not

less than $5,000,000. The exact amount of such damage

will be demonstrated by proof at trial.

FOURTH CAUSE OF ACTION

(Taking and Damaging of Property

Without Compensation)

64. ECHLIN realleges and incorporates by reference

herein all of the allegations in paragraphs 1-42, 44-50 and

52 above as though fully set forth at length.

65. As aresult of the foregoing actions by Defendants,

the uses to which ECHLIN’s property can be put have been

restricted to such an extent that ECHLIN has been denied

any substantial or reasonable use of its property.

66. As a further result of the foregoing actions by De-

fendants, the rights of ECHLIN under its agreement with

Defendants have been restricted and foreclosed to such an

extent that ECHLIN has been denied any substantial or

reasonable benefit of its bargain.

67. Thus said property and contract rights have been

taken without compensation and their value has been di-

minished and damaged by an amount not less than $5,-

000,000. The exact amount of such damage will be dem-

onstrated by proof at trial.

68. ECHLIN has not been compensated by the De-

fendants or any of them for the taking and damaging of its

property and contract rights as aforesaid.

FIFTH CAUSE OF ACTION

(Quasi Contract — Implied in Law)

69. Plaintiff realleges and incorporates by reference

herein all of the allegations of paragraphs 1-42, 44, 45 and

52 above as though fully set forth at length.

oa *

70. Defendants, in causing to be enacted the Air Re-

sources Act and the NOx Legislation, and in carrying out

the aforesaid course of conduct, expressly intended to in-

duce, encourage and require Plaintiff to design, obtain ac-

creditation for, manufacture and maintain an inventory of

NOx devices.

71. Plaintiff, in reliance on the actions and aforesaid

course of conduct of Defendants, and in expectation of being

compensated for its services, expended considerable time,

effort and money in designing, obtaining accreditation for,

manufacturing and maintaining an inventory of NOx de-

vices.

72. As a result of these services being rendered by

Plaintiff, Defendants have been unjustly enriched by an as

yet undetermined sum. When the exact amount of this sum

is ascertained, Plaintiff will seek leave of this Court to

amend its complaint and insert the correct figure.

73. Plaintiff has not been reimbursed for these services

it performed at Defendant’s request.

WHEREFORE, ECHLIN prays judgment against De-

fendants, and each of them, jointly and severally, with re-

spect to each Cause of Action, as follows:

1. The sum of $5,000,000 or such damages as may be

shown at the time of trial;

2. For interest as provided by law;

3. For reasonable attorneys’ fees and costs of suit in

connection with the prosecution of this action; and

poe |; Se

4. For such other and further relief as may be just and

proper.

DATED: July 31, 1977

*MUNGER, TOLLES & RICKERSHAUSER

Dennis C. Brown

Jonathan B. Marks

By /s/ Dennis C. Brown

Dennis C. Brown

Attorneys for Plaintiffs

THE ECHLIN MANUFACTURING COMPANY

a ae

VERIFICATION

State of California, County of Los Angeles—ss.

I, DENNIS C. BROWN, declare as follows:

1. Iam an attorney at law duly admitted and licensed

to practice before all of the courts of the State of California,

and am a member of the firm of Munger, Tolles & Rick-

ershauser, attorneys for Plaintiff The Echlin Manufacturing

Company in the above-entitled action.

2. Said Plaintiff is absent from the county in which |

have my office, and for that reason | am making this ver-

ification on its behalf.

3. Ihave read the foregoing FIRST AMENDED COM-

PLAINT FOR DAMAGES of The Echlin Manufacturing

Company, and know the contents thereof.

4. I am informed and believe that the matters stated

therein are true, and on that ground I allege that the matters

stated therein are true.

I declare under penalty of perjury that the foregoing is

true and correct.

Executed this 3lst day of July, 1977 at Los Angeles,

California.

/s/ Dennis C. Brown

Dennis C. Brown

In the Court of Appeal, Second Appellate District, State

of California.

Dana Corporation and The Echlin Manufacturing Com-

pany, Appellants, vs. State of California, and Legislature

of the State of California, et al., Appellees.

Notice of Appeal to the Supreme Court of the United

States.

Filed: August I: 1980.

—60—

Paul, Hastings, Janofsky & Walker, Dennis H. Vaughn,

Donald A. Daucher, Donald L. Morrow, Steven C. Ken-

ninger. 555 South Flower Street, 22nd Floor, Los Angeles,

California 90071, (213) 489-4000. Attorneys for Appellant,

Dana Corporation.

Munger, Tolles & Rickerschauser, Dennis C. Brown,

612 South Flower Street, 5th Floor, Los Angeles, California

90016, (213) 683-9100. Attorneys for Appellant, The Ech-

lin Manufacturing Company.

In the Court of Appeal, Second Appellate District, State

of California.

Dana Corporation and The Echlin Manufacturing Com-

pany, Appellants, vs. State of California and Legislature

of the State of California, et al., Appellees.

Notice of Appeal to the Supreme Court of the United

States.

NOTICE IS HEREBY GIVEN that Dana Corporation and

The Echlin Manufacturing Company, the Appellants named

above, hereby appeal to the Supreme Court of the United

States from the final judgment the California Court of Ap-

peal, Second Appellate District entered in this action on

March 13, 1980 which judgment affirmed the Los Angeles

Superior Court’s dismissal of the Appellants’ complaints

without leave to amend and as to which judgment the Cal-

ifornia Supreme Court denied a hearing on May 8, 1980.

This appeal is taken pursuant to 28 U.S.C. Section

1257(2). DATED: August 1, 1980.

PAUL, HASTINGS, JANOFSKY &

WALKER,

DENNIS H. VAUGHN,

DONALD A. DAUCHER,

ee ee

DONALD L. MORROW,

STEVEN C. KENNINGER,

By DONALD A. DAUCHER,

Attorneys for Appellant,

DANA CORPORATION.

MUNGER, TOLLES &

RICKERSCHAUSER,

DENNIS C. BROWN,

By DENNIS C. BROWN,

Attorneys for Appellant,

THE ECHLIN MANUFACTURING

COMPANY.

Verification.

Proof of Service by Mail.

State of California, County of Orange.

I am employed in the county of Orange, State of Cali-

fornia. | am over the age of 18 and not a party to the within

action; my business address is 695 Town Center Drive, 17th

Floor, Costa Mesa, California On August | 1980 I served

the foregoing document described as NOTICE OF APPEAL

TO THE SUPREME COURT OF THE UNITED STATES

on the interested parties in this action by placing a true copy

thereof enclosed in a sealed envelope with postage thereon

fully prepaid in the United States mail at Costa Mesa.

Addressed as follows:

Dennis C. Brown, Esq., MUNGER, TOLLES & RICK-

ERSCHAUSER, 612 South Flower St., 5th Floor, Los

Angeles, Calif. 90017.

Philip M. Brown, Esqg., EGERMAN, BROWN & RO-

SEN, 9100 Wilshire Blvd., Beverly Hills, Calif. 90012.

Saul Grayson, Esq., GRAYSON, GROSS, FRIEDMAN,

PHILLIPS & RASCH, 10880 Wilshire Blvd., Suite 2121,

Los Angeles, Calif. 90024.

Joel S. Moskowitz, Esq., Deputy Attorney General, DE-

PARTMENT OF JUSTICE, 555 Capitol Mall, Suite 350,

Sacramento, Calif. 95814.

Executed on August | 1980 at Costa Mesa, California.

I declare under penalty of perjury that the foregoing is

true and correct.

/S/JJAN SELLINGER

JAN SELLINGER

In the Supreme Court of the State of California.

Dana Corporation and The Echlin Manufacturing Com-

pany, Appellants, vs. State of California, and Legislature

of the State of California, et al., Appellees.

Notice of Appeal to the Supreme Court of the United

States.

Paul, Hastings, Janofsky & Walker, Dennis H. Vaughn,

Donald A. Daucher, Donald L. Morrow, Steven C. Ken-

ninger, 555 South Flower Street, 22nd Floor, Los Angeles,

California 90071, (213) 489-4000. Attorneys for Appellant,

Dana Corporation,

Munger, Tolles & Rickerschauser, Dennis C. Brown.

612 South Flower Street, 5th Floor, Los Angeles, California

90016, (213) 683-9100. Attorneys for Appellant, The Ech-

lin Manufacturing Company.

In the Supreme Court of the State of California,

Dana Corporation and The Echlin Manufacturing Com-

pany, Appellants, vs. State of California and Legislature

of the State of California, et al., Appellees.

Notice of Appeal to the Supreme Court of the United

States.

NOTICE IS HEREBY GIVEN that Dana Corporation and

The Echlin Manufacturing Company, the Appellants named

above, hereby appeal to the Supreme Court of the United

States from the final judgment the California Court of Ap-

peal, Second Appellate District entered in this action on

March 13, 1980 which judgment affirmed the Los Angeles

Superior Court’s dismissal of the Appellants’ complaints

a a

without leave to amend and as to which judgment the Cal-

ifornia Supreme court denied a hearing on May 8, 1980,

This appeal is taken pursuant to 28 U.S.C. Section

1257(2). DATED: August 1, 1980,

PAUL, HASTINGS, JANOFSKY &

WALKER,

DENNIS H. VAUGHN,

DONALD A, DAUCHER,

DONALD L. MORROW,

STEVEN C. KENNINGER,

By DONALD A, DAUCHER,

Attorneys for Appellant,

DANA CORPORATION.

MUNGER, TOLLES &

RICKERSCHAUSER,

DENNIS C,. BROWN,

By DENNIS C, BROWN,

Attorneys for Appellant,

THE ECHLIN MANUFACTURING

COMPANY.

Verification.

Proof of Service by Mail.

State of California, County of Orange.

| am employed in the county of Orange, State of Cali-

fornia | am over the age of 18 and not a party to the within

action; my business address is 695 Town Center Drive, 17th

Floor, Costa Mesa, California. On August 1, 1980, I served

the foregoing document described as NOTICE OF APPEAL

TO THE SUPREME COURT OF THE UNITED STATES

on the interested parties in this action by placing a true copy

thereof enclosed in a sealed envelope with postage thereon

fully prepaid in the United States mail at Costa Mesa.

addressed as follows:

Dennis C. Brown, Esq., MUNGER, TOLLES & RICK-

ERSCHAUSER, 612 South Flower Street, 5th Floor, Los

Angeles, Calif. 90017.

Philip M. Brown, Esq., EGERMAN, BROWN & RO-

SEN, 9100 Wilshire Blvd., Beverly Hills, Calif. 90012.

Saul Grayson, Esq., GRAYSON, GROSS, FRIEDMAN,

PHILLIPS & RASCH, 10880 Wilshire Boulevard, Suite

2121, Los Angeles, Calif. 90024.

Joel S. Moskowitz, Esq., Deputy Attorney General, DE-

PARTMENT OF JUSTICE, 555 Capitol Mall, Suite 350,

Sacramento, Calif. 95814.

Executed on August |, 1980 at Costa Mesa, California.

I declare under penalty of perjury that the foregoing is

true and correct.

/S/JAN SELLINGER

JAN SELLINGER

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.