# Appendix — United States v. General Motors Corp.

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0254%3A01

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1966
- **Citation:** 384 U.S. 127

## Text

———

SUPREME COURT OF THE UNITED STATES

Ocroser Term, 1965
No. 46

UNITED STATES, APPELLANT,
vs.
GENERAL MOTORS CORPORATION ET AL.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF CALIFORNIA

Volume I

INDEX
Original Print
Record from the United States District Court for the
Southern District of California, Central Division
RIN Bo a Va ei balun eeu TS a eee: 1 1
Answer of defendant General Motors Corporation... 9 9
Answer of defendants Losor Chevrolet Dealers Asso-
ciation, Dealers’ Service, Inc., and Foothill Chevrolet
SO BONOUIEMR: 5 os oi ee es 22 17
Reporter’s transcript of proceedings on motion of

plaintiff for pretrial conference, Septe:aber 23, 1963 35a 27
DINE So ioc 2 ERA ets HAE SS 35b 27
Colloquy between Court and counsel. .......... 35d 28

Appendix A to Reporter’s transcript of proceedings—

Stipulation of Facts Number Six, dated May 20,

MO acc iaoe haste be best to proceed along the lines of getting legislation or

whether it was better to put the problem directly in the lap
(fol. 54] of the Chevrolet Motor Division?

A. Well, we at that meeting, if I remember, we thought
that both should be done, but our association wasn’t strong
enough and big enough to do very much from the legal stand-
point, and we thought that we would present what evidence
we could to the Chevrolet Motor Division.

Q. Well, was there a decision then made, Mr. Keown, to
aggressively pursue the attack on the discount houses by
legislative remedy?

A. No.

Q. Well what was decided in respect to the legislation at
this meeting of June 28, 1960?

A. At that particular time we felt that that was being
adequately done by the Southern California Dealers Associ. .
ation.

Q. You felt therefore there was no need for Losor to make
a separate and independent inquiry with respect to legisla-
tion. Is that right, sir?

A. That is right because Mr. Cone and I could keep them
informed as to what went on.

Q. You decided that the best course of action would be to

38

take this problem to the Chevrolet Motor Division. Is that
correct, sir? =
(fol.55) A. That is right.

Q. And was there a discussion among the members at —
that meeting concerning whether or not you should in fact _
take the probiem to Chevrolet? 4

A. Yes, we discussed it. ‘

Q. Now, will you tell us, as best you recall, what the 4
substance of that discussion was by the members then —
present? j

A. Well, the substance of it was that the membership of ©
our Association agreed that the thing to do was to ask
Chevrolet to do something about this, to present the evi- 7
dence that we could accumulate and give it to Chevrolet and —
let them take the action that was necessary.

It was made as a recommendation and the members :
agreed to take certain information to Chevrolet. I don’t 4
know of any opposition to it. We proposed to take positive ©
proof to Mr. O’Connor, Zone Manager of the Chevrolet ;
Motor Division, that dealers were selling their cars through |
discount houses. We wanted to know who the dealers were
who were selling their cars through discount houses so we |
could tell Mr. O’Connor. ‘

We considered taking the problem to Chevrolet because —
the problems became aggravated suddenly because ap-|
[fol. 56] parently there were more cars being sold through
discount houses than there had been up to that time. This
was a subject of discussion among the Losor members in
June of 1960. The substance of the discussion was that the
problem was becoming aggravated, that more and more cars
were being sold through discount houses in the Orange ™
County area. The dealers were concerned about the cars be- ©
ing sold through discount houses because it affected their
business. y

Q. In what way, sir?

A. Lost sales.

Q. They were concerned about the competition created
by the discount house referral service method of mer
chandising?

A. They were.

Q. Which dealers were most concerned about this new]
form of competition?

39

A. All the dealers seemed to be concerned that were in
that area.

Q. In what area, sir?

A. The Orange County area.

Shortly after the June 28 Losor meeting and before
July 26, a group of us called on Mr. O’Connor at the zone
office. The persons present were pretty generally the com-
mittee named at that meeting to call on him. At this
[fol. 58] meeting each person who had evidence that cars
were being sold through discount houses presented it to
Mr. O’Connor. The meeting lasted 20 or 30 minutes. I
think this was the only matter discussed. What we wanted
to present to Mr. O’Connor was evidence of the fact that
cars were being sold through discount houses and what
dealers were doing it. The evidence I submitted to him
was ar actual order that we placed at the More discount
store for a Chevrolet. And I think there were some other
orders, documents of that kind. Mr. O’Connor said in sub-
stance that he agreed with us that the dealers should not
sell their cars in this manner, and that he would talk to
them about it. I don’t remember O’Connor saying whether
or not he was going to ask the dealers to stop selling through
discount houses and referral services, but of course that’s
what we wanted him to do.

On July 26, 1960, at a general meeting of Losor dealers
I gave a report on the meeting held with Mr. O’Connor on
the subject of discount houses (Plaintiff Bxhibit 172,
minutes of this meeting). On or about September 27, 1960,
according to Plaintiff Exhibit 173 (minutes of another
Losor meeting), I reported to a meeting of Losor dealers
that Mr. O’Connor had called on each dealer selling through
(fol. 58] discount houses and requested them to please stop
this source of supply, but I feel very positive that Mr.
O’Connor never told me that he had called upon the
dealers. This was either an error in my reporting or an
error in taking the minutes.

I had a conversation with Warren Biggs and a subse-
quent conversation with Will Newman, both of whom were
doing business with discount houses. Both of them were
operating on a referral basis, referrals from discount
houses. I asked Newman if he would continue to do so. And
he told me he would until he was told not to by the Chev-
_Tolet Motor Division. And I asked him why. And he said

40

if he gave that business up, which he considered extra
business over and above the normal business he did, it was
beneficial to him and profitable, that he wasn’t going to
give it up and have some other Chevrolet dealer then take
that same business that he was geeting; and when the
Chevrolet Motor Division told him not to do it, he knew that
they wouldn’t let some other dealer carry on with it. Mr.
Biggs told me that same thing when I talked to him.

In approximately early November I played golf with
Warren Biggs and Mr. O’Connor. There was also another
dealer present, It was at this golf game that I first had
[fol. 59] occasion to discuss the matter of discount house
selling with Mr. Biggs. This is the conversation Mr. Biggs
refers to in his letter of November 5th, addressed to me
(Plaintiff Exhibit 6). I was simply getting information, and
I did not attempt to persuade Mr. Biggs to discontinue
doing business with Fedco [the referral service]; but I
thought this meeting at the country club would provide
an opportunity for Mr. O’Connor to make some comment
along that line. Mr. Biggs said in front of Mr. O’Connor
that if he was asked not to do this by Chevrolet Motor
Division, that he would immediately not do it; but until
he was asked, he was going to continue, because he thought
it was pretty good business, it was extra business, he liked
it, and he was going to continue it, because if he didn’t,
some other dealer then would take that same business.
Mr. O’Connor didn’t discuss the matter with Mr. Biggs.
He was an onlooker and listener, but he made no comments
that I can remember. At that time I decided perhaps Mr.
O’Connor didn’t have the authority to tell Mr. Biggs to
give up this business.

A good majority of Losor members attended the annual
meeting in Honolulu on November 10, 1960 (Plaintiff Ex-
hibit 175, minutes of this meeting). At this meeting there
(fol. 60] was discussion concerning the writing or wiring
of letters or telegrams to Mr. Gordon, president of General
Motors, Mr. Cole, general manager of Chevrolet Motor
Division at that time, and Mr. Staley about the discount
house situation. I reported to the Association my meeting
with Mr. Biggs and Mr. O’Connor, and I stated that I had
concluded that O’Connor did not have the authority or per-
mission to stop the dealers from this activity which we
thought should be stopped, this method of selling cars, and

41

suggested that we write to these people, telling them of our
problems and asking for their help. And the dealers
present as a group agreed that they would each one do
that individually. And some of them volunteered that they
would have their salesmen also write letters because they
claimed that their salesmen were being affected. The sales-
men were losing sales, losing income, due to the fact that
cars were being sold through discount houses.

We hoped that Mr. O’Connor woula be instructed or
otherwise authorized to bring about an ene to discount
house selling of Chevrolet automobiles in the Southern
California area as the result of these letters and telegrams.
We were seeking the assistance of the higher echelon of-
ficials of Chevrolet and General Motors in bringing about
[fol. 61] an end to the discount house sale of Chevrolets.

On December 15, 1960, I attended a meeting of the di-
rectors of all three Chevrolet dealer groups at Perino’s
Restaurant. It think that Mr. Pollard called the meeting.
The problem of cars being sold through discount houses
was discussed almost exclusively at this meeting. Mr.
Pollard explained that he was chairman because Foothill
Dealer Association was paying the luncheon bill. And in
substance he explained that we were there to discuss the
problem of dealers selling cars through discount houses and
then he called upon the various dealers in the room to ex-
press their opinions as to whether dealers should engage
in this kind of practice. And as I remember, there was no
opposition to the general feeling that the dealers were not
ethical who sold their cars in that manner. Both Mr. New-
man and Mr. Biggs took a position in substance or effect
opposed to discount house selling. I believed that they
were both doing business with Fedco [a referral service }
at that time, and it was common knowledge among the
dealers that this was the case. At this joint meeting of
directors I don’t think the Chevrolet dealer selling agree-
ment was a topic of discussion.

Q. Now, what happened after all the dealer’s views were
(fol. 62] solicited on this matter?

A. Then after everybody had expressed their opinion
Mr. Pollard suggested that he thought the better way to
proceed was to have a general committee composed of
members of the officers of the 3 groups to work together to
see what they could do almost as we had done through

42

Losor, to search out any legal ways that we could stop it,
to find out if they were violating any laws, to see if there
were any laws that we could maybe have passed in Sacra-
mento to protect us and to do such other research as they
could to find out all they could about this particular
problem.

Q. To do whatever they could to see that it ended, in other
words?

A. Yes,

A committee was in fact appointed.

On December 28, 1960, I attended a meeting of the Losor
dealers at which time a report was given to the membership
on what happened at the December 15th meeting of the
directors of the three dealer associations. I made part
of the report. :

Subsequent to that time I received a letter from Mr.
Staley dated December 16, 1960 (Plaintiff Exhibit 198),
(fol. 63] I got a telephone call from Mr. Hawthorne, one of
the city managers for the Los Angeles Zone, who works
under Mr. O’Connor’s supervision. Hawthorne asked me
if I sold ears to discount houses, and I told him no. He
said, ‘‘Well, I have very little to talk to you about then,
because I just want to talk to those dealers who do.’? He
said, ‘‘I am supposed to ask you not to if you were.’’
Hawthorne told me in substance that he had been in-
structed to call dealers and find out whether or not they
were selling through discount houses. I think at our subse-
quent Losor meetings we discussed the fact that eventually
somebody had called the dealers and asked them not to
sell to discount houses. And we were quite pleased about it.

I was a member of the Losor Board of Directors which
approved a letter to the membership of Losor (Plaintiff
Exhibit 176) asking the membership to express their ap-
preciation for the fine job Chevrolet had done in stopping
the sale of cars through discount houses. We thought at
the time that they had stopped it, that General Motors
had responded to our request and had helped eliminate
the sale of Chevrolets through discount houses. We formed
this opinion from conversations with other dealers, and
the fact that Mr. Hawthorne had called me, and I suvpose
[fol. 64] their representatives had called them. I don’t
remember that anybody said that they had stopped, but
when we got the word from the city managers, each of

| epytencpemamarmenceanen

43

us on the phone, that they were calling all the dealers and
ask the offending dealers to stop, that is what we had been
asking for.

The Losor Board of Directors authorized the purchase
of a Chevrolet car through a discount house. I think it
was a telephone conference meeting. We authorized funds
for the purpose of buying a Chevrolet through a discount
house because by that time we had heard that cars were
still being sold through discount houses. So we wanted
to present this evidence to Chevrolet. Miss Evelyn Davis
from the Losor office went to a discount house; I think it
was Gemco. The car was paid for, I am pretty sure. It
was paid for with Losor funds. Mr. Henson, and I think
Mr. Marion Johnson took the evidence to the zone office.

Sometime around February 1961 I attended a meeting
at Brower’s Restaurant of the committee which was ap-
peinted by Mr. Pollard on December 15th. After that
time I discussed with Mr. Henson whether or not Losor
should contribute money that might be used for the pur-
[fol. 65] chase of other cars. Our board of directors au-
thorized them to continue with this. It was understood
at that time those cars were to be purchased that informa-
tion concerning the purchases would be turned over to the
Chevrolet zone office here in Los Angeles.

Prior to a general membership meeting of Losor on
April 6, 1961, the Losor Board of Directors voted $5,000
to the trustee account of Glenn Roberts for the purpose
of buying cars and ultimately turning over the data so
secured to General Motors. The purpose was to continue
what we had been doing. We decided we would have a
fund that could be used for the purchase of cars and the
investigation to find out if this was still going on through
discount houses, and just how they did it. The money was
appropriated to Mr. Roberts with the understanding that
the information so secured was to be delivered to the
Chevrolet Motor Division zone office in Los Angeles. At
about the time Losor approved the $5,000 to Mr. Roberts,
the other associations agreed that they would each give
$5,000 for this purpose. I was at the meeting when the
Dealers’ Service and Foothill representatives said in effect
that they would contribute to the fund the same way Losor
did. It was understood at that meeting that the information
[fol. 66] disclosed as a result using these combined funds

44

would be made available to General Motors as it had in
the past.

Cross-designation by All Defendants

In setting up a dealership and in getting a Chevrolet
contract, we agree as dealers to sell and display our cars
and, in addition, to furnish a service department, adequate
to handle the volume of business that may be in the particu-
lar area in which we are doing business. But the service
department of a Chevrolet dealership is not a profitable de-
partment. Generally it is the opposite, it is a losing depart-
ment. In my own particular case in years past I have had
losses in my service department up to $3500 per month.
In the year 1960 and ’61, I cut those losses down to $1,000
per month, in round figures. The service department thus
has to be maintained by the sale of other Chevrolet prod-
ucts, new cars and trucks and parts. We subsidize the
service department.

We all recognize the fact that if we didn’t have a service
department that we could make more money, and we could
sell cars at a less cost. The service department is an ex-
pense to us. Chevrolet recognizes that the reputation of
their product, the good name they have established through
(fol. 67] their manufacturing of a car, depends on the way
it is serviced. An automobile is not like a piano or some
other piece of furniture that you look at. It is something
that you use every day on the highway, and it has to have
continual service, at least periodic service, if it is going
to function right. The present-day automobile is a very
complex car. It no longer can be repaired by bailing wire
and a monkey wrench and a pair of pliers. It takes an in-
vestment in equipment and machinery that costs hundreds
and hundreds of dollars for a dealer to properly service
the cars that he gets to deliver to the public.

In 1960 Owen Keown Chevrolet sold on the average of
50 or 60 new Chevrolets per month. I think that is a pretty
small dealership. We had about 60 employes and more than
half of them were employed in the service department;
that’s including the service salesmen, the service manager,
the file clerk, the mechanics, wash men, get-ready men, and
so forth. The get-ready men are the ones that get the new
ears ready for delivery. We service the cars after the

45

factory sends them to us. During 1960 we kept a stock of
parts and accessories, in dollar terms, of approximately
$60,000.

(fol. 68] Some time around July 1960 I sent one of my
salesmen to More’s Inc., a discount store in West Los Ange-
les. He placed an order for a Chevrolet and put a deposit on
it. He reported back to me that the automobile referral serv-
ice had an office in the building and there was a man there
who discussed the purchase of the car with him. Mr. Reed,
my salesman, asked where he was going to get this car
and was told that it would be through Warren Biggs
Chevrolet. Mr. Reed had the impression, he told me, that
the man at More was working for Warren Biggs. He
didn’t tell me whether or not the man at the discount store
told him that.

I objected to Mr. Biggs selling a car through More Inc.,
because if they continued to sell cars through discount
houses and more discount houses of that type move in my
area, I wouldn’t be able to be in business very long, and
I want to stay in business. If there were very many of
them established in my area, and they would sell as many
as 10 or 15 cars a month and would deprive me from selling
that many per month, I wouldn’t even break even. The mar-
gin of profit in the Chevrolet operation is just too small to
stand that.

So when this matter of dealers selling through discount
houses got to be quite an extensive business, we realized
(fol. 69] that sooner or later it would affect all of us, because
if it was going to be done in Orange County, in certain
areas, in large numbers, then there would be nothing to
prevent a house of that kind, a discount house, to come into
my area—there may be several of them—and all of them
sell Chevrolets, and those Chevrolets would be furnished
by dealers far away who were not interested in the service,
or interested in the welfare of the customer; all they want
to do is make a sale.

As far back as July 1960 Mr. O’Connor said be would
talk to the dealers about their selling Chevrolets through
discount houses. He told us that he didn’t think the dealers
should sell their cars in that manner, but Mr. O’Connor
never told me that he had called upon them. I never did
get an answer from him on that. And from that time on
every time I would see Mr. O’Connor he would say that

46

he hadn’t had an opportunity to talk to the dealers yet.
I thought the golf game would be a golden opportunity
for him to talk to a dealer in my presence. But Mr. O’Con-
nor didn’t discuss the matter with Mr. Biggs. He was an on-
looker and listener, but he made no comments that I can
remember. I decided perhaps that Mr. O’Connor didn’t have
the authority to tell Mr. Biggs not to sell cars in that
[fol. 70] manner and I thought maybe I shouldn’t em-
barrass him any further.

The purchase of the new Chevrolet by Evelyn Davis
at Schonlaw Chevrolet through Gemco was made in order
to convince Mr. O’Connor that Chevrolets were actually
being sold through discount houses at that time. It was
not done pursuant to his request, and, as far as I know,
it was done without his knowledge. The Losor Board of
Directors decided that after the evidence was submitted to
the Zone Office, one of the dealers in Losor would resell
the automobile.

We had Mrs. Davis make a tape recording of the trans-
action for evidence as to the kind of conversation that was
used in the sale of this car. We thought that if we had a
good recording, we could present that also to the Zone.
I think it was rather jumbled and not very good—lI don’t
remember hearing it myself.

Mr. Henson later told the Board that when they took
the evidence of the purchase of this automobile in to Mr.
O’Connor, they were very surprised to find that Mr. O’Con-
nor already knew about the purchase of this automobile.

A bird dog is an entirely different thing than a discount
{fol. 71] house. The term ‘‘bird dog’’ has a certain mean-
ing in the language of the automobile industry. In the
dealer’s area where he does business, the salesmen get
acquainted with service station operators, people who work
in plants and in any location, stores or any place else, and
they cultivate his acquaintance and ask him if he will tell
him about anybody that wants to buy an automobile; and
then, when he buys the automobile, the salesman will give
him a portion of his commission. Now, that is called
bird dogging, and it has been a very prevalent part of this
business. That is an individual matter between the sales-
man out working his territory and trying to create con-
tacts who will tell him where he might sell a car, and if they

47

tell him, he rewards him by paying him a certain amount.
It can be any amount, five or ten dollars or a bottle of
liquor. He is a bird dog for the salesman.

Additional Cross-designation by Defendants Losor Chevro-
let Dealers Association, Dealers’ Service, Inc., and Foot-
hill Chevrolet Dealers Association

There was no discussion at the Losor meeting in Honolulu

[Nov. 10, 1960] concerning what the content of the letters
we wrote to Detroit were to be. That was left to each in-
dividual dealer. We left it to each individual dealer to ex-
press his own opinions.
{fol. 72] At the December 28, 1960 Losor meeting I re-
ported to the membership that the directors of the three
associations had met at Perino’s on December 15th, and the
meeting was conducted by Mr. Martin Pollard, and that Mr.
Pollard called on each dealer to express his views relative to
the dealer selling cars through discount houses.

I also reported what Mr. Newman had said at that time
at that meeting. I told them that after that discussion, that
Mr. Pollard appointed a committee to further investigate
this matter of discount houses, and what they might come
up with legally, that we might use to combat it, either
through the violation of licensing laws or any other laws of
the State that we could uncover. I made a full report of that
meeting, and then I think the other members of the board of
directors substantiated my statements.

At no time was there any agreement among the members
of the Losor Chevrolet Dealers Association that they would
not do business with discount houses and referral services.
To the contrary—at one meeting I remember that some
dealer made the suggestion that we refuse to trade with
dealers who sold cars through discount houses, and he was
immediately shouted down and they said we cannot possibly
(fol. 73] do this. There never was any agreement of that
kind at any time.

The dealcr associations, Losor and Foothill and Dealers’
Service are each separate entities or corporations. They
are in no way a subsidiary of or part of General Motors.
The most important purpose of our associations is desig-
nated by the name we call them by,—‘ trading associa-
tions.’’ Back before we formed our Losor group, for in-

48

stance, it was necessary for dealers to trade with each other
by individually calling the dealers whom we thought might
find a particular car. It was impossible, even at that time
when we didn’t have so many automobiles and so many op-
tions, to keep all in stock at one time. There was tremen-
dous inconvenience as well as expense to have to go down
the list of dealers and call them individually to find out if
they had a particular car in stock. So we as dealers in dis-
cussing this problem with each other decided to form an as-
sociation, and it was for the purpose of trading cars.

We thought of we could pay a nominal fund into an asso-
ciation and have an office set up where we had girls that
worked for us, we could call that trading center, which we
called our Trading Bureau, and ask the gir! to find or locate
[fol. 74] a particular car that we needed. As time went on
that has become more and more important because of the
tremendous number of models we have, the tremendous
number of options and colors, and it would be physically
impossible for a dealer, even the largest dealer, to carry all
those cars in stock. We trade with each other and that is the
primary purpose of our organization. We pay into our as-
sociation a fee of so much per car to pay the expenses of our
association office and the salaries of the girls. Now, after
that was established, then we found it convenient to do other
things. We have in recent years, when Chevrolet has put
on a campaign, for instance, that has cost the dealers so
much to put on a selling campaign, our association, rather
than the dealers, have paid that amount so that the cost
would be borne by all dealers.

When we first organized this association, our Losor Asso-
ciation also attempted to do some advertising to create pub-
lic acceptance and to advertise our dealers. We have roughly
from 30 to 34 dealers in our dealer association, and we
spent some of the funds that we collected from dealers to
pay for advertising in various ways. That went on for a
number of years and it was quite unsatisfactory, because
our group in Losor was advertising entirely independent of
[fol. 75] what the city dealers were advertising and the
Foothill dealers. The three associations met in 1955 and we
decided to form another corporation, solely for the purpose
of advertising. That is L.F.D., and we contribute to that.
“‘L,.F.D.’’ is the first letter in each of the three associations.

L.F.D. sponsors sports announcements and football and

49

baseball games. L.F.D. retains an advertising agency and
pays them a fee, and they place the advertising for us. A
board that is selected by the dealers reviews in advance
these advertising matters that they are going to use, whether
it is spot announcements, and what the announcements say,
or if it is a program for baseball or football or basketball,
why, it is presented to that board and they epprove it.

Our purpose has been to correct some of the feelings
against Chevrolet dealers and perhaps to give us a better
image in the public eye. From time to time we also sponsor
newscasts, such as the Jack Latham show, Big News, Clete
Roberts, Baxter Ward, and George Putnam. We also have
sponsored some public service programs, such as Airborne
Alert, and Special Report, the X-15. We also discuss com-
mon prvbdlems in the industry in our meetings. There are
many things that we discuss.

The directors of L.F.D. are made up of members from
[fol. 76] the three associations.

With reference to the dealers who sold through discount
houses and those that were known to the association as
having done so, or continued to do so, there was no pressure
placed on them, and no disciplinary action taken by the
association against these members. Our purpose was not
to take action; our purpose was to gather information.
We wanted to find out all we could as to how these cars
were sold. We didn’t deny any of the dealer members the
service of the trading bureau because they happened to. be
selling through discount houses and we didn’t threaten to.
We never made any threats. We didn’t even make any
request of any dealer not to sell. We were very careful
not to. The cordial relationships between the members of
the associations continued on through this entire period of
the problem of discount houses. Our functions we carried
on just the same as we always did. We carried on our
regular business, with the addition of investigations we
made of the activities that were going on through the dis-
count houses.

The activity of the associations—engaging in obtaining
information—was done for the purpose of submitting it
to General Motors, and also for the purpose of possible
(fol. 77] legislation. That was our sole purpose in doing
it. We had no other purpose than to present to Chevrolet
what we could find out through our investigation as to how

50

it was done, and to have positive proof that it was being
done. It wasn’t our place to enforce anything or cause any
dealer not to sell. That information was transmitted to
Chevrolet for their action, and we assumed that Chevrolet
would have the right to take such action. If they didn’t
they would tell us. They never did tell us that they didn’t
have the right to.

In the year 1960, we did not know whether the discount
houses and referral services in Southern California held
dealers licenses from the Department of Motor Vehicles
in the State of California. We tried to find this out through
investigation.

At the December 15 meeting Mr. Pollard appointed a
committee. The purpose of the committee was to try to
find out all we could about this matter. They were told
to find out what violations, if any, might be going on, and
what laws might be violated, State or licensing laws. Get
any other information that they could. I don’t remember
specifically the instructions, but that’s generally as I re-
member it.

[fol. 78] Plaintiff’s Reply Designation

Q. Let’s suppose I bring a Chevrolet in to your place
of business and the motor is hardly running and your
mechanic tells me it needs a motor overhaul; what happens
then, Mr. Keown? I say, ‘‘Go ahead and fix it up.’’

A. Then the service salesman writes up an order at your
request and states what you want done on that automobile.
And then the order is given to the dispatch office and it
goes to the mechanic who is supposed to do that work.
And he does it and it goes back and is billed out to you.

Q. I get a bill at the end?

A. You get a bill.

Q. The bill has a distinction usually between parts and
labor?

A. Yes, it does.

Q. When my engine is going to be overhauled, I get a
lot of parts put in there, don’t I?

A. Yes.

Q. And it is the same thing if I have a transmission
fixed, there are parts and there is labor?

A. That’s right..

51

Q. If I want a new set of valves put in, I have some
(fol. 79] parts and some labor?
* ~ A. Yes.

Q. Practically everything I have done on the car involves
parts and labor?

A. That’s right..

Q. And you bill me separately, you show me at the end
how much parts you use and how much labor is involved ;
is that right, sir?

A. That is correct.

Q. How is that reflected on your accounting records as
part of your income or loss from service?

A. The parts department is not the service department.
The loss from the service department is only from the
service.

Q. The loss on service reflects only the labor, does it not?

A. The operation of the service department, yes.

Q. The operation of what you call the service depart-
ment as a bookkeeping matter means only labor, does it
not, sir?

A. Yes, sir, that’s what the service department is, is
the labor on cars.

Q. That’s what you think it is, but actually you are
putting in parts and labor, aren’t you?

(fol. 80] A. That is the parts department that handles
parts.

Q. That’s what you consider a parts department, but I
am saying when I come in to buy a car, I pay you for parts
and labor, don’t I—when I get my car fixed?

A. You do if there are parts used. Sometimes there is
only labor.

Q. But most of the time there are parts used?

A. Yes. But many times there is only labor, too.

Q. But more substantial repairs involve parts, don’t
they?

A. Yes, substantial repairs.

Q. There are some 2,000 moving parts, and when some-
thing goes wrong with the car, some of those 2,000 parts
have to be replaced or repaired; is that right?

A. Yes, sir, I agree.

Q. Most of the time if you have any substantial amount
of work done you are getting both parts and labor?

52

A. Yes, for a substantial job you would.
Q. All right. I would like to show you the 1960 financial
[fol. 81] statement of Owen Keown Chevrolet. I think you
told us that you sustain a loss in your service department
of $1,000 a month; is that right, sir?

A. Yes.

Q. That would be about $12,000 a year?

A. Yes.

Q. I invite your attention to page 3, to the caption ‘‘De-
partmental Income and Expense,’’ under column C, Serv-
ice Department, and this appears to reflect a loss of $3,-
473.10 for the year ending December 1960; is that right ?
A. That’s true.

Q. That would be about $300 a month loss rather than
$1,000; is that right, Mr. Keown?

A. Yes.

Q. I would like to invite your attention to the column
headed ‘‘Parts and Accessories Account,’’ and invite your
attention to the fact that you reflect a profit there of $17,820
for the year ending 1960; is that right?

A. That is correct.

Q. That is really part of the same operation, when you
fix a car up you put in parts and you put in labor, is it not?

A. That’s right.

[fol. 82] Q. If we put the two of these together, your parts
and labor and accessories, that is the entire service opera-
tion of your dealership, it would reflect a profit of over
$14,000, isn’t that right?

A. That is not right.

Q. Why is that not right?

A. Because you have completely forgotten this column
headed ‘‘ Administrative’’. Now, up until just a few years
ago the administration was divided up and prorated between
departments, but the Chevrolet Motor Division wanted us
to have this changed so that none of this administration was
put in these departments. We now have to allocate them
to find out what our actual profit or loss is in those de-
partments, and we divide them up.

So you have to take the cost of administration and apply
the formula that they let us use to find out how much more
we have lost in the service department. Because those
departments have to pay for administration, too.

53

Q. They give you a formula, then, to break this ap-
proximately $31,000 figure down?

A. Yes.

Q. What is that formula?

A. About 31 per cent, I think, is labor.

[fol. 83] Q. 31 per cent——

A. For the service department.

Q. How much for parts and accessories?

A. I don’t remember.

Q. Se if we took about $10,000 or $11,000 off of that
$15,000, we would still have a plus figure rather than a
minus figure.

A. I was talking about the service department when I
talked to you; not about the parts department.

Q. You told us you lost on your service. You are con-
sidering only the labor?

A. That’s right, service department.

Q. You are not considering the fact when you repair a
car you put in parts, as well as labor, and on the parts you
reflect a net profit before deducting for administrative ex-
pense?

A. I was talking about the service department. I said
that loss had to be made up by the other departments in
the business. And the parts department is one of them.

Q. And do you make it up, in fact, in part, in repairing
cars?

A. We make it up by selling cars, too.

[fol. 84] Cuester F. Henson

Designation by Plaintiff

My name is Chester F. Henson. I reside at 4475 Cerritos
Avenue, Long Beach. I have been a Chevrolet dealer since
1950. The name of my agency is Harbor Chevrolet Cor-
poration, located in Long Beach. I have been a member of
the defendant Losor Dealers Association since 1950, was
elected president in November 1960, and was a director in
1961 and 1962.

In late January or early February 1961 the Losor Board
of Directors made a decision to purchase a car through a

54

discount house or referral service. As far as I know, there
hadn’t been any absolute proof, such as the physical automo-
bile itself presented to Chevrolet, that it could be purchased
through a discount house. It was the belief of the board
that cars were still being made available through discount
houses and referral services.

The Board of Directors authorized Miss Evelyn Davis,
our secretary at Losor, to purchase a car. She borrowed
a tape recorder and went to the Gemco store near Anaheim
and put a $100 deposit on a new Chevrolet; Losor furnished
the funds for the deposit. Miss Davis went back to Gemco
[fol. 85] on a second occasion to purchase the car. She
asked Mr. Johnson, an employee of Harbor Chevrolet, to
accompany her. I think this was at some time after she had
placed a deposit on the car. They went back to make the
purchase with a cashier’s check made out to Gemco for the
car, which I believe Gemco refused. I believe Mr. Johnson
had purchased the check from the Bank of America a few
days before they went back to Gemco. The Losor check to
the Bank of America is dated February 16, 1961. Gemco
was a membership discount house, and Miss Davis used the
membership card of a person named Palmer, and Mr. John-
son might have passed himself off as Mr. Palmer. I be-
lieve the papers that came with the car that was purchased
were made out to the Palmers. I think they took delivery
of that car at Schonlaw Chevrolet in Los Angeles, and the
car was driven back to Harbor Chevrolet. (See Pitf. Exs.
138 and 183) I am sure we probably called the Zone and told
them that we had the car and wanted to bring it up. Subse-
quently, Mr. Johnson and I took the car and papers to the
Zone. Mr. O’Connor said to leave the papers and keys with
him, and we told him the car was in the parking lot. Eddie
Hopper, another Losor dealer from Garden Grove, was also
present. He, too, had purchased a car, but his shopping was
(fol. 86] not pursuant to the board of directors’ meeting.
It was on his own.

I brought the car down there for proof that the car had
been purchased because I brought papers to him once before
when I had purchased a car at another discount house and it
didn’t seem that that had much of an impression on him.
I thought the car would have more impact on him. I thought

55

if he could see the physical automobile that he couldn’t deny
that this was going on.

Russell DeOrto was hired by the three defendant dealer
associations to do some shopping at the discount houses. I
told DeOrto his duties were to shop only for Chevrolets be-
ing sold through discount houses, and to make purchases
through discount houses. He was to make a tape recording
of the conversations and transactions wherever possible, so
we could have it to play to the officials of Chevrolet. DeOrto
was not told that the evidence he was gathering would be
taken to Chevrolet.

I then told DeOrto I’d have to call him later to see if the
deal could be firmed up because I didn’t have authority to
spend $1000 per month. The money was coming from the
three associations. I contacted my Losor board of directors
(fol. 87] and got their approval, and notified the presidents
of the other associations so they could get approval from
their boards. Which they did. There was a mutual under-
standing that it would be a venture paid for equally by the
three associations. DeOrto was hired on a monthly basis
and was told to continue to shop until told to stop. I told
DeOrto of a couple of discount houses to shop, and then,
of course, the other dealers supplied other discount houses
in their areas they would like to have shopped. The evi-
dence obtained would be laid at the doorstep of Chevrolet.
O’Connor knew we were doing this after the first one, and he
didn’t discourage me from doing it. It was necessary to
make a number of shopping transactions to find out the
scope and location of all this type of merchandising, and
it was necessary to identify the dealership that furnished
the car.

Around March 22, 1961, Mr. Glenn Roberts was employed
to direct the activities of DeOrto, as Losor had served notice
on the other two associations that it would not carry the bur-
den of the investigation itself, and we thought it only fair
that they share in the direction of this activity.

[fol. 88] Cross-designation by All Defendants

Shortly after June 28, 1960, in order to get proof to take
to Mr. O’Connor that cars could be purchased through
unauthorized outlets, I sent one of my salesmen to Cal
Stores to make a deposit on a new Chevrolet. The order

56

was written there. He went to Cal Stores and told them
he wanted to buy a new Chevrolet. I think it was an Impala.
They did some dickering and an order was written up there.
Cal Stores have a little enclosure there with a desk and tele-
phone and some literature. I turned the order over to
Mr. O’Connor. We were not gathering this evidence in
response to a request from Mr. O’Connor, and I don’t think
he knew that we were gathering it.

I was of the opinion that the discount house automobile
concessions were unauthorized sales outlets created through
some sort of an association with Chevrolet dealers that was
a violation of our Selling Agreement, because I had personal
experience with that selling agreement and was requested to
close a location that was just outside of my zone of in-
fluence and I thought, by George, if this applies to one
Chevrolet dealer, it applies to all of them.

I didn’t think there was any such thing in the General
(fol. 89] Motors Corporation or Chevrolet Motor Division
that meant that there was a set of double standards set up
for dealers operating under the same Selling Agreement.

In June 1960, when a group of dealers who were members
of Losor visited Mr. O’Connor and presented evidence re-
garding discount house selling of new Chevrolets, we were
undertaking to submit proof that this was indeed going on
—the retailing of new Chevrolet automobiles through an
unauthorized location. We just didn’t think that they
thought it was taking place or that it was very prevalent
or whether it was hearsay or gossip or whatnot. We took
the attitude that we must submit proof to prove it was

going on.
_ When we gave him the papers, he said that he would
have these people contacted. He didn’t say that he would
do it himself. He didn’t tell us when he would do it. He
didn’t tell us what he would say to them. As a matter of
fact, he was pretty vague about the whole thing.

I didn’t learn that he ever did have the dealers con-
tacted. I heard that he was going to have it done but I
never heard that he did. We tried to find out if he did
but I think we got the same kind of vague runaround that
[fol. 90] had been happening all along.

In the November 1960 meeting of Losor, I think Mr.
Keown reported that there wasn’t any progress being

57

made and I think that is the reason it was suggested that
dealers write to Detroit. It was felt necessary to go beyond
the zone’s authority because there didn’t seem to be much
action otherwise. It looked like we were going to have to
appeal to somebody to get something started on this propo-
sition.

I wanted to show Mr. O’Connor the car purchased at
Schonlaw Chevrolet through Gemco to prove to him that
they were still violating their franchise. One of the deal-
ers in Losor was to take the car and re-sell it—that was
our original plan for getting the money back that we had
laid out. In fact, the Board instructed Mrs. Davis to buy
an eight-cylinder Impala sports model because it would
be an easier car to sell.

When we went to Mr. O’Connor’s office with our evidence,
we were quite surprised to find out that the Zone already
knew about the purchase that we had made and which was
quite a surprise to Mr. Johnson and myself. Mr. O’Connor
was well acquainted with the deal before we got there with
it. He asked where the car was, and we said on the roof.
{fol. 91] I didn’t ask him what he was going to do, but it
was my understanding or impression that the supplying
dealer, Schonlaw, had called him and wanted to buy the car
back. Mr. Schonlaw could have called him before or after
the date I went to see O’Connor.

Additional Cross-designation by Defendants Losor Chev-
rolet Dealers Association, Dealers’ Service, Inc., and
Foothill Chevrolet Dealers Association

I was present at a Losor meeting on June 28, 1960, at the
Captain’s Inn in Long Beach. I remember being named to a
committee that was to take proof to Mr. O’Connor at the
Zone Office that cars could be purchased through unau-
thorized outlets, and also we classified them as illegal out-
lets. We endeavored to obtain proof and evidence that this
practice was being carried on. I, for one, classified them
as illegal outlets for this reason: That anyone assisting
in the sale of an automobile or anyone that sells an auto-
mobile must be licensed to the dealer for which he works
and no other dealer.—l had no information as to the li-
censing of these people on June 28, 1960.

I attended a meeting at Perino’s on December 15, 1960.

58

It was attended by members of the boards of directors of
the three defendant associations. I believe Mr. Pollard
(fol. 92] asked us to meet. He didn’t tell us the subject
of the meeting—just requested us to meet. It was pretty
much a diversified, garbled-up meeting. They talked about
legislation, they talked about discount houses, they talked
about various and sundry subjects; they talked about our
licensing laws, our bonding laws, and perhaps it might be
well if we would do something about maybe acquiring new
cooperation from the D.M.V., or perhaps even new legisla-
tion would help. There was quite an argument-about the
Icz"slation. I remember that. Mr. Shammas, one of those
present, went on at quite some length about not wanting
any more legislation, that he felt that the automobile
dealer already had enough legislation—natio ally and
statewide. 1

We thought that presenting the actual proof of purchase
to the General Motors organization would prove to them
that their action of asking dealers not to sell through un-
authorized outlets—prove to them it was still going on. We
were in hopes that it would bring them alive and create
some action.

We decided to ire DeOrto because we could not at
Losor continue to spare our secretary to go out and shop
for autonichiies, and neither could I afford to have one
of my employees spending his time to gather the evidence
[fol. 93] that we felt that we needed to present to Chevro-
let. Therefore I informed the board of directors that as
far as I was concerned, we could no longér do this. We
bought the one car. Therefore it was suggested that we
hire somebody more professionally inclined in that line
outside of our own employees. Consequently, Mr. Eddie
Hopper, who was a Chevrolet dealer at Garden Grove at
the time, called me and informed me that this man Russell
DeOrto was in a business called, I believe, Efficiency Re-
search, that he would like to send him over to see me for
an interview, because my directors had asked me to check
into the possibility of getting an auditing company or
someone to carry out this investigation. I asked Mr. Hop-
per to send Mr. DeOrto over to my dealership. He told
me to judge for myself whether Mr. DéOrto was qualified
for the job. He told me the line of business the man was

59

in, which at this particular point I don’t remember, 7 think
some sort of sales research. When he arrived there i talked
to him in the presence of Mr. Johnson, and he said that he
could do this type of work, and he would be very glad to.

I didn’t tell DeOrto how long the job was going to last
because I thought it would continue until we had proper
enough evidence to submit to Chevrolet and perhaps take
(fol. 94] other action through licensing that might turn up.
We didn’t know what would turn up, we didn’t know
whether these people were licensed or not, we didn’t know
if they had an automobile dealer’s license, and we were
concerned as to whether they had a license that would per-
mit them to sell Chevrolets for some of the Chevrolet
dealers.

None of the three defendant associations sell auto-
mobiles. That is not the function of the Avsociation.

The Associations have Chevrolet dealershins as their
members—it is a series of dealerships. Our Dealer Selling
Agreement is a printed form. Eech of the dealers signs
a similar contract that has the provision against opening
an additional outlet. While there could be variation in the
length of time the contracts run, they are otherwise sub-
stantially identical contracts. When I sign, my contracts,
I rely on the fact that the other dealers are taking on the
same obligation as I am.

General Motors does not give any direction to any of the

associations as to actions they should take. General
Motors does not attend Association meetings.
[fol.95] To my knowledge, at no time did I or any mem-
ber of our Association, or the other two Associations, ever
use any pressure or coercion on any dealer to refrain
from selling through discount houses.

[fol. 96] Martin Poiiarp

Designation by Plaintiff

I am an automobile dealer. I have a financial interest
in the following dealerships: Pollard-Ravenscroft Chevro-
let, Van Nuys; Rancho Chevrolet, Reseda; Pioneer Olds-
mobile, North Hollywood; Century Oldsmobile, Van Nuys;

60

Casa de Cadillac, Sherman Oaks. I formerly owned Martin
Pollard Company, a Chevrolet dealership in North Holly-
wood (now Montgomery Chevrolet) and part of the Pollard-
Carroll Company, a Chevrolet dealership in San Fernando.
I have been a Chevrolet dealer for about 40 years. T was
president of defendant Foothill Chevrolet Dealers Associ-
ation from 1940 through 1961, and now am honorary presi-
dent of that group.

I presided at a luncheon meeting at Perino’s restaurant
on December 15, 1960. The meeting was attended by officers
and directors of Losor Chevrolet Dealers Association,
Dealers’ Service, Inc. and Foothill Chevrolet Dealers Asso-
ciation. I recall the following persons from the following
associations were present at the meeting: Robert Erskine,
Kd Colliau, Roger Sorenson, Glenn Roberts, and George
(Cap) Reade, Jr. (all of Foothill) ; Chester Henson, Owen
Keown, and ‘‘Red’’ Cone (all of Losor); Warren Biggs,
Wilbur Newman, and Nicholas Shammas (all of DSI).

[fol.97] Q. Who called that meeting, sir?

A. Well, I don’t know whether I can answer that. I will
have to tell you how it came about. I was called by Mr.
Henson of the Losor dealers and he said they wished to get
together with the other dealers, the other associations. I
volunteered if he would get hold of the Los Angeles Dealers
Association [Dealers’ Service, Inc.], that we would host it
at Perino’s. So it wasn’t really called by anyone. I called
our people, and I imagine Henson called his people [from
Losor], and somebody from the Los Angeles Motor Car
Dealers [DSI] called their people. So we all had a hand
in it. No one person called that meeting.

Joint meetings of the officers and directors of the three
Gnevrolet dealer associations were infrequent and were
usually called specially, involving matters of some impor-
tance to the automobile business. The meeting at Perino’s
started at about 11:00 AM and lasted until about 1:30 PM:

Well, Mr. Henson and Mr. Cone and the representa-
tives of Losor who were present discussed the trouble
they were having and experience in Orange County
with discount houses and referral business, and the very
bad effect it was having on their business, and wanted
(fol. 98] to know whether we were having, you know,

61

similar problems in’ our associations. And they
brought us some reports of some activities that had
taken place in Losor on their own initiative. I believe
they reported that they had done some shopping on
their own.

Well, we felt after listening to the report from the
Losor that we ought to set up a committee comprised of
members from these three associations, and that this
committee should go out and study this over-all prob-
lem, how it was affecting the Chevrolet dealers, and
come up with some sort of a recommendation, what
to be done about it. There was nothing decided exactly
what we were going to do, that is why the committee
was set up, to report back at some subsequent time as
to what they felt ought to be done.

I selected the committee and appointed “*Cap’’ Reade as
its chairman. I believe I told Reade that “it might be
a good idea to check in with the (Chevrolet) zone office.’’

Following this luncheon meeting at Perino’s on December
15, 1960 which was paid for by Foothill I wrote a letter to
Robert O’Connor, Chevrolet Zone Manager in Los Angeles |
[fol. 99] about the meeting. (Pltf. Ex. 119)

Cross-Designation by All Defendants

When Mr. Henson called me on the telephone to tell
me that the Losor dealers wished to meet with the other
associations, he said that they had developed some in-
formation at Losor that they thought would be of mutual
interest to the other two associations and which he thought
we would like to hear about. I did not go into detail. We
dealers, if one group wants to get together, we will show
up. We don’t get a big notice on it. So that was the basis
of his conversation with me. The directors of the three
Chevrolet dealers associations don’t meet regularly, but
we have met. on several occasions to discuss various mat-
ters pertaining to our business. These meetings are in-
frequent and called for special purposes. While Mr. Hen-
son might have related that the information Losor gathered
pertained to discount house activities, I can’t say from
memory that: he did.

62

At the meeting on December 15, Mr. Henson, Mr. Cone
and the representatives from Losor who were present dis-
cussed the trouble and experience they were having in
Orange County with discount houses and referral services
and told the meeting the very bad effect it was having
[fol. 100] on their business.

Q. You say these gentlemen told you about the bad effect
it was having on their business. Did they say they were
losing sales because of the discount houses?

A. Well, that would have been the inference. I mean
if it was bad, they were losing sales, it was interfering with
their business, and they didn’t like the cars to be distributed
in this method. They thought it was bad for Chevrolet’s
reputation. They talked about a lot of bad things about the
‘discount houses.

. They didn’t talk so much about the price that they were
being sold for because we didn’t think the discount houses
in all cases were selling cars for any less than dealers were.
We were selling them pretty close ourselves. They just
felt it was a bad way to have Chevrolets merchandised. It
was putting in another middleman. There was the factory,
then the dealer, and then the discount house, and then you
finally got to the purchaser.

Among the topics discussed at the meeting was the dealer
selling agreement. That had been discussed many times;
not just at this meeting. This was kind of a general sub-
ject of conversation from sometime back. I don’t remember
[fol. 101] who brought it up, but I believe there was some
discussion concerning the fact that they felt that selling
in this way was a violation of the contract. There was some
discussion on the phase of the contract that had to do with
establishing unauthorized sales outlets in territories other
than that which the dealers occupied themselves.

Nothing specific was decided at the meeting concerning
what we were going to do. That is why the committee was
set up—to report back at some subsequent time what they
felt ought to be done. I appointed the committee and I ap-
pointed Mr. Reade as chairman. The committee was in-
structed to make a study of this problem and recommend
what we could lawfully do to protect ourselves against what
we felt was unfair competition. We didn’t instruct the
committee to do any specific thing, other than to go out

63

and find out and report back to us what they thought
ought to be done about it. I think I did say to Mr. Reade
that it might be a good idea to check in with the zone
office. As a rule, the dealers always sort of keep the zone
office in some sort of contact with anything that we might
be doing that affected them. They had an interest in this,
we felt. I didn’t tell Mr. Reade what to say at the zone
office. I just told him that he ought to check in with the
zone office.

[fol. 102] Previously I had talked to Mr. O’Connor sev-
eral times on the phone and had brought this question up.

Q. You talked with him on the phone?

A. Yes, sir.

Q. Did you call him specifically to bring this to his
attention?

A. When I called Mr. O’Connor up I usually had three
or four things on my mind to talk about. I probably cov-
ered those, and we were always bringing this sort of
pressure to the attention of Chevrolet, that we felt this was
a violation and we would like some help.

Q. What did you expect Chevrolet to do about it?

A. Well, it was a violation of the contract. You know
the contract is kind of ground rules by which all of us
dealers had operated under for years, and this was one
portion of it. As long as the rest of us were playing the
game, we thought three or four others shouldn’t be allowed
to cheat on the rest of us and cheat on their franchise.

Q. You say you thought it was a violation of the con-
tract, sir?

A. Thought it? I knew it was.

[fol. 103] As to how I knew it to be a violation of the
contract I can give you a very dramatic incident for this
particular part of the contract was brought home very close
to my heart. Before 1948 or ’49 I did not belong to the
metropolitan dealers group. The dealers in the Valley were
outside of that group, and this thing didn’t apply outside
of the metropolitan group. I had established—I had bought
a corner lot in Studio City and I had a building on there.
I had parts service, I had sales service, and I had mechan-
ical service. Our agency in the Valley was brought into
the metropolitan group and the zone office came to me and
explained to me that we would have to shut that down,
and we did, on the basis that it was a violation. And it

64

cost me thousands of dollars, so I have known about this a
long time.

Q. That was your own building in Studio City?

A. Yes, sir.

Q. Operated by your own personnel?

A. That’s right.

Q. Stocked with your own parts?

A. Yes. It had our name on it.

Q. You advertised that that was a place of business of
Martin Pollard, Inc?

A. We just called it Studio City Branch.

[fol. 104] What I regarded as a violation of the franchise
agreement was that a dealer was setting up a sales outlet
in the metropolitan area other than his own place of busi-
ness, and that is what is provided in the contract and
Forbin

Q. All I am asking, Mr. Pollard, is whether or not you
people considered whether at the discount house there was
a sign up there which bore the name of a Chevrolet dealer,
or whether there was no sign—was that a thing you
considered?

A. It wouldn’t have made any difference to us whether
this was a clandestine way of selling cars, or whether it
was out in the open, it was still a violation as far as we
were concerned.

The threat that discount house selling posed to me as a
Chevrolet dealer in Reseda, Van Nuys or North Hollywood
was that it was an extra outlet for the sale of automobiles.
And the more outlets, the more people that could sell
automobiles in any give locality, it just cuts the pie thinner.
Anyone can understand that. The more outlets there are
for so many automobiles sold, it just sort of dilutes the
whole market. As profits are pretty well dependent on the
number of cars you sell, the volume of cars, the existence
of discount houses dilutes those profits. The more outlets
[fol. 105] or the more places people can buy a product
in a given area, it dilutes the amount of products that can
be sold by any one outlet. That’s one of the reasons I
objected to discount houses. But on top of all that, I feel
that there are ground rules that I am asked to live up to,
and do live up to as a gentleman, and they should be lived
up to by other dealers that have signed the same contract.

65

I don’t see why some other dealer should get some special
privilege that I don’t have.

Sometime in the latter part of February, 1961, I, along
with six or seven other dealers, met with Mr. O’Connor
in the zone office. I think the conversation had to do with
a car that had been purchased through one of the investi-
gators and what to do with the car, how we are to dispose
of it and that sort of thing. We kicked around whether
one of the Associations would take the (resale) check or
what should be done with the check, and then I said, I
suggested that they send it to Mr. Cameron Aikens because
he was an attorney for the L.F.D. and had other funds of
the dealers, and that was agreed on where we would send
the check. I did not notify Mr. Aikens that the check was
coming. I intended to call him up afterwards but I forgot
entirely about it. To my knowledge there was no sugges-
tion made by anyone that the check be made out to General
Motors Corporation. The reason the dealers didn’t want
(fol. 106] the checks made out to the Associations was
because they felt that it was just an odd matter, where
they didn’t want to get mixed up in their books from the
standpoint of bookkeeping. Remember, our treasurers are
men who volunteer their time. They are dealers. They
don’t get paid for this. So we didn’t want to bother them
with this. We just sent it to a man who was getting paid
for doing a little work for us.

Additional Cross-Designation by Defendants Losor Chev-
rolet Dealers Association, Dealers’ Service, Inc. and
Foothill Chevrolet Dealers Association

There were several reasons we wanted more evidence—
to see what other dealers were engaged in this, and then
we also had another thing up our sleeve. We also wanted to
get some information to use for legislative matters, which
had nothing to do with Chevrolet. And we did get some.
Because we had a Bill—Assembly Bill 714 before the
California Assembly at this time. It is called the Automo-
bile Dealers Commission Bill. It was introduced on the
17th day of January 1961, and we needed more information
to show what was going on. .

We had to sell that Bill to the Assemblymen up there,
and we had to show as reasons abuses that the public

66

was suffering because of poor merchandising practices,
not only of discount houses, but dealers, and a lot of
{fol. 107] other people in the industry.

Regarding the letter identified as Pitf. Ex. 119, wherein
I stated, ‘‘I feel now that the long wait and indecision is
at an end,’’ I was referring to the last couple of years.
F am more than a Chevrolet leader. I was chairman of the
dealers of California Legislative Committee and we had
been working on and trying to get dealers behind a good
legislative program, so that was part of the thing that I
was talking about, that the dealers were now exercised
enough to back up their legislative committee, come up
to Sacramento, take their time, spend their money and
testify before the different sub-committees up there.

Regarding our shopping activities, we had agreed—the
association agreed—to carry on this purchase program
to get more definite information to take to Chevrolet Motor
Company so they would know, so that it would be undis-
putable what was going on, who was selling cars through
the discount house and what the names of the dealers
were, ... The objectives of the shopping service were two-
fold. I think we were trying to uncover all the various
methods that might be used by discount houses in a rela-
tionship with dealers, as well as finding out who the dealers
were that were carrying on sales through discount houses.

{fol. 108] Q. You were trying to clarify which dealers
were involved in discount house merchandising, as well
as the various methods by which the cars got to the cus-
tomer, to or through the discount house?

A. I think that’s what we were trying to nail down.

Q. Those were the principal objectives of the shopping
activities?

A. I said it was one of the objectives.

At a meeting in early March 1961, at Perino’s, we agreed
to put up $5,000.00, and each association agreed to do the
same, for shopping and other matters of interest, that we
were going to use on our legislation in Sacramento...
We had been assembling information for the legislative
program a long time; not the Foothill Chevrolet or Losor,
but through the Los Angeles Motor Car Dealers Associa-
tion and the Southern California Motor Car Dealers Asso-
ciation, both of which groups encompass all kinds of car

67

dealers including foreign cars. It is our practice that if
we take any legislation to Sacramento, that we do it in
the name of the Los Angeles Motor Car Dealers and the
Southern California Motor Car Dealers Associations, not
Foothill, not just one group of Chevrolet dealers, but repre-
senting the entire industry. I am chairman of the Legis-
lative Committee of the Southern California Motor Car
Dealers Association, which group represent about 80 per
[fo]. 109] cent of the dealers in this area.

We were not going to Sacramento to attack the discount
houses as such; we were going to try to get such legislation
through that we could have better control over the discount
houses by the State of California ... We were going to try
to have a Commission formed, like they have of the insur-
ance people, so that we could control bad business practices.

The reason we took the a geo up was that we sent
questionnaires out to all the dealers in the State of Cali-
fornia and get them to vote whether they wanted us to take
this legislation up, and because it was a majority vote we
did. The activating heads of the proposal to establish a
Motor Vehicle Commission and a commissioner to regulate
the automobile industry were the Southern California
Motor Car Dealers Association and the Los Angeles Motor
Car Dealers Association, and the respective members of
those groups, as distinct from Losor, Foothill, and Dealers’
Service. You must remember that all these dealers in
Foothill, Dealers’ Service, and Losor were also members
of the Southern California Motor Car Dealers Association
and were supporting anything that they (the Associations)
were doing.

We were going to put in that Act, and we did put in
the Act, and this Act did pass the Assembly in 1961, that
(fol. 110] every dealer had to be licensed, and every sales-
man had to be licensed, and under the regulations that we
were writing into this Act a discount house could not do
business, because they were not an automotive place of
business.

I discussed the subject of enforcing the dealer licensing
law with Mr. Genzer of the Los Angeles office, and with
Mr. McCarthy, who at that time was head of the Motor
Vehicle Department. The Motor Vehicle Department told
the dealers that they would be glad to have us assist them

68

in digging up the various infractions of the law and
reporting same to them.

One reason we were proposing new legislation was to
take the place of and strengthen the approach of the exist-
ing law. There was to be a Motor Vehicle Commission.
It would be a part of the Motor Vehicle Department, but
it would be in charge of enforcement, and in charge of
putting out dealers’ licenses and salesmen’s licenses, and
all of that . .. The Bill was passed by the Assembly but
was not enacted- at the session of the legislature as the
Senate referred it for further study ... We expect to put
the Bill in again with some changes in it.

Reply Designation by Plaintiff

Q. When we asked you before the grand jury whether
you thought it was wrong for other dealers to} sell to
[fol. 111] discount houses, why didn’t you say at that time
that you thought it violated the franchise agreement?

A. Well, sir, when you appear before one jury, and then
six months later questions are asked differently, you don’t
quite give precisely the same answers on the thoughts you
had in your mind.

Q. Mr. Pollard, in all the time you testified before the
grand jury, 40 pages, did you once there before that body
mention that selling through discount houses was in your
judgment a violation of the franchise agreement?

I will turn the transcript over to the defendants if they
can find any reference to that.

A. You don’t have to do that. I don’t think I did, because
I don’t think that was a question brought up, or you asked
me any question that would have brought that out from me.

Q. Didn’t we just ask you, ‘“‘Did you presume it was
wrong for other dealers to sell to discount houses?’’ and
you answered, ‘‘Well, I think so. I think that has been
in the minds of a lot of desicrs for a long, long time,
that it was wrong, there wes no profit, the dealers couldn’t
make any profit in it, ana there was a certain amount of
annoyance that came from it, customer ‘‘dissatisfaction,
(fol. 112] which we ‘at this letter went out
to all of the dealers throughoui America? Is there any
dispute, Mr. Blecher, about that?

Mr. Blecher: Not 116, your Honor. The letters are
form—they are substantially identical with 121, which
was sent out to all dealers throughout the United States,
I mean in each instance by the general sales manager
in the particular division. ;

The Court: Well, what I am getting at is, to try to be
sure that I understand, and that is that this letter that
dealt with this problem—and I have before me Exhibit 116,
and that is the letter that deals with it, as I remember
it, it did go out.

The Witness: Yes.

Mr. Blecher: Your Honor——

The Court: Not just to Southern California dealers,
but to all the dealers throughout the United States.

* * * * * * *

[fol. 747] Mr. Mitchell: That’s right. But as these let-
ters went out to the Pontiac dealers, it would be signed
by the sales manager of Pontiac, is that not right?

The Witness: Mr. Bridges, that’s right.

By Mr. Mitchell:

Q. And similarly with respect to the letters going to
{fol. 748] the other divisions, they would be signed by the
general sales manager of that division?

A. The general sales manager of each division signed
the letter which went to dealers in other areas, or sections.

Q. And the record here, General Motors Exhibit AV
shows that you sent out an interorganizational letter dated
December 12, 1960, to each of the car divisions, directing
them to send out this letter. You recall that?

A. I recall the letter. I don’t recall the exact date, but
I recall the letter, yes.

[fol. 749] Q. Why didn’t General Motors order its deal-
ers to cease selling through discount houses under penalty
of revoking their franchises?

A. I think to understand the reason for that you would
have to know how we in General Motors attempt to

371

operate with our dealers. It is not our practice to threaten
dealers with termination of their franchise. There are
many areas in which perhaps there would be questionable
discharge of responsibilities under the terms of our selling
agreement with the dealers.

There may be many areas in which we would like to
bring about a correction. It might be for sales perform-
ance, it might be for facilities, it might be inadequate serv-
ice or poor management; any one of a number of reasons.

It is our policy to attempt to work with our dealers on
the basis of reason or reasonable approach, a coopera-
tive approach, and through persuasion to bring the deal-
ers around to our point of view.

We spend a lot of time, we make a great deal of effort
to work with our people, encourage our employees to
work with our dealers on this kind of a basis.

Now, failing over a period of time to accomplish what-
ever purpose we might have in mind, with respect to the
discharge of the responsibilities under the provisions of
our selling agreement, termination might eventually be-
[fol. 750] come the answer to it. But that would be, in
most eases, the last resort.

We viewed this problem in the same light. Certainly,
we would not want our people to go in and wave the
franchise agreement, selling agreement, and threaten the
dealer with termination in the event he didn’t agree, after
following—after reading a letter he was violating our
agreement and should change his practice.

Instead we expected that this would be handled on a
sound, calm, sensible business-like approach.

Q. Why did General Motors adopt the policy that it
did adopt with respect to dealers’ use of discount houses?

A. We adopted it for only one reason. We felt that
it would have a very serious and detrimental effect on
the operation of General Motors Corporation, and that
it eventually would seriously affect the sale of Chevrolet
cars and possibly other General Motors products, in the
event that the practice was taken up extensively among
the other lines——

Q. Taken up how among the other lines?

A. Extensively.

Q. Extensively.

——

A. —among the other lines, and if it did we felt this
would destroy the very carefully planned and constructive
system of distribution that we had worked for so many
[fol. 751] years to establish, and in which we had such a
very substantial investment of time, effort and money, to
bring our operation to the degree of success that we enjoy
today.

We felt that if this thing persisted that it would have
the inevitable result of making our operations in General
Motors, in Chevrolet and the other divisions that might
be affected, much less successful than it is and has been.

Q. You were acting in General Motors’ own interest?

A. Solely in General Motors’ own interests.

Q. Were you engaged in a combination, conspiracy or
concert of action with any Chevrolet dealer or dealers in
Southern California or any Chevrolet dealer association
‘in Southern California?

Mr. Blecher: Let me object to that, your Honor, on the
ground it calls for a conclusion of this witness which this
court will be required to make.

Moreover, whether or not General Motors participated
in a combination and conspiracy is to be judged by what
they did and not by what they said.

The Court: Well, you certainly are not contending—if
you are going to take the position what they said is not
relevant, then I will have to throw out all these letters.

Mr. Blecher: I am taking the position, your Honor, he
[fol. 752] is not permitted to make a self-serving state-
ment as to——

The Court: In this court they can always make a self-
serving declaration. I am never going to change that.

Since I was a prosecutor back in 1933 I never ever made
that objection.

I am going to permit it. After all, he is making a denial
of guilt, is what he is doing, and that is what I am permit-
ting.

I don’t have to accept it and I may not accept it.

I am certainly going to give every defendant an oppor-
tunity in a civil or criminal case to say, “I didn’t do it.”

The Witness: Thank you, your Honor.

That is exactly what I am saying, “I didn’t do it.”

372

——

[fols. 753-754] Q. You mean you did not engage in a
combination or concert of action with the people I asixed
you about?

A. We did not engage in any conspiracy or concert of
action with the people which you are speaking about.

373

The Court: I take it what he is really saying is that—
go ahead. I won’t ask that.

Mr. Mitchell: He said it. That is all.

The Court: Well, what I understand you to say is
simply that you deny from this witness stand that you
ever intended at any time or from anything you saw that
General Motors intended to form a combination or a con-
spiracy or a concert of action or a plan with these dealers
to bring about this result, is that what you are saying?

The Witness: That is exactly right, your Honor.

By Mr. Mitchell:

Or with the dealer associations or any of them.
Or with the dealer associations or any of them.
You deny it.

I deny it absolutely.

PO PO

{fol. 755] Cross-examination.

By Mr. Blecher:

Q. Mr. Roche, is it your judgment that, all factors re-
maining equal, a consumer would prefer to purchase a car
from a franchised Chevrolet dealer, as opposed to some non-
franchised source?

A. Yes, it is.

Q. On what do you base that judgment, sir?

A. I base that judgment on the fact that an established
dealer, as the authorized representative of the manufac-
turer, a business which has been set up for the purpose of
serving customers for that particular line of cars, both in
selling them new cars and providing service facilities re-
quired to maintain those cars, has been an established sys-
tem of distribution since the inception of the industry.

And I think that is by far the preferred method on the

374

part of most people in purchasing their automotive trans-
portation.

[fols. 756-757] Q. What factors do you think, Mr. Roche,
compel a customer to do business with a non-franchised
source?

A. There could be perhaps several factors. One—one
might be that he wanted a particular car, but in the past he
might have had some difference of opinion with a particular
dealer who was selling that car.

In other cases he might feel that he was closer to the
particular individual who might be operating such a busi-
ness.

I suppose it could be any one of a number of factors.
[fol. 758] Q. Mr. Roche, do you believe that the mere exis-
tence of discount houses threatens the destruction of the
franchise system?

A. I think the existence of discount houses through which
our products can be sold threatens the franchise system,

es.

Q. Regardless of the number of cars that are sold by
those discount houses?

A. Well, it obviously would depend on the number per-
haps. A casual sale, such as occasionally happens with a
used-car dealer, perhaps wouldn’t be of any great signifi-
cance. A regular system for providing for a flow of cars
through a discount house location would have a very serious
effect, yes.

Q. In your judgment, Mr. Roche, what number of cars
would have to be sold through discount houses in the Los
Angeles area before there was any serious impairment of
the franchise system, as you have described it?

A. I could not define such a number without a very de-
tailed study of the over-all market and the circumstances
under which the operation would be carried on.

Q. Do you know, Mr. Roche, approximately how many
ears were sold through discount houses——Chevrolets were
sold through discount houses in the year 1960?

[fol. 759] A. I don’t know exactly, no. It is my impres-
sion that there were several thousands, but I can’t vouch
for that.

Q. Do you know what relation that several thousands
bear to the total number of Chevrolets sold in the Los Ange-
les area in 1960?

~S

375

A. I don’t have the exact figures. I would say it was a
reasonably small percentage.

Q. About two per cent, Mr. Roche?

A. Between two and five per cent perhaps.

Q. Now, during that time, 1960, when about two to five
per cent of the cars were sold through discount houses in
the Los Angeles area, what impairment, if any, did you
observe in connection with your franchise system?

A. I didn’t observe any impairment in the franchise sys-
tem at that time. I think this is sort of like waiting for
the disease to kill the patient before we decide what is wrong
with him.

Q. Do I understand from your answer, Mr. Roche, you
contemplated that upon check the discount house distribu-
tion, that is, the sale of Chevrolets by dealers through dis-
count houses, would continue to flourish and increase?

A. We were concerned this problem would spread and
if it did continue on this basis and if it did increase, that
it provided a very serious threat to our system of distribu-
[fol. 760] tion and our interest in the Los Angeles market.

Q. Why did you think it was going to increase, Mr.
Roche?

A. Well, it had gone from nothing to this volume in a
comparatively short period of time and we had every rea-
son to believe it was probably going to increase.

(fol. 761] Q. Well, why do you think that it had gone
from nothing to something in a comparatively short period
of time?

A. I can’t answer that question.

Q. Did you make any observation on that subject at all?

A. No, except that there was—it was a different system
of distribution. And my first knowledge of this came with
the advent of the letters and the telegrams that we received
from dealers, which were referred to me for handling.

Q. Now, is it not a fact, Mr. Roche, that virtually every
letter which you observed, or every telegram that you
observed sent by a dealer or a salesman in the Los Angeles
area complained about the nature of the price competition
being caused by dealers selling through discount houses?

A. I can’t give you the number. Some of them did com-
ment on that, yes.

Q. The fact is that a large number did, did they not, Mr.
Roche?

376

A. Many of them did. I can’t give you the percentage
of the ones that did.

Q. Did you cause any investigation to be made in or
about November of 1960 to determine whether or not
[fol. 762] Chevrolet dealers selling through discount houses
were selling cars at lower prices than the dealers in the
area in which the discount houses were located?

A. No, we did not.

Q. Did you——

A. Because the price was not a matter for our con-
sideration.

Q. Did you consider the price at which these automobiles
were being sold through discount houses wholly irrelevant
to the subject?

A. Well, price is not irrelevant to the sale of a car by
anybody, whether it is a discount house or a franchised
dealer. Price is a very important factor in the sale of a
motor car.

Q. Is it not a fact, Mr. Roche, that back in November
1960 the folks at Chevrolet recognized that this system
would continue to increase only because the discount house
outlets were being furnished cars at low prices?

A. I can’t answer what the people at Chevrolet might
think, or the individuals out here who were in a position
to observe what was going on.

But I would imagine that they would be fully cognizant
of the competitive nature of our business, and the prices,
and the fact that Chevrolets were being sold at varying
prices, depending on the dealer, the location, the season
[fol. 763] of the year, the type of the car, the model, or
’ whatever else may have been involved in it.

Q. Did you, during the period around November of
1960, did you ever have occasion to discuss the matter,
discuss the nature of the complaints coming from the Los
Angeles area with Mr. Kenneth Staley?

A. No, I did not discuss it with Mr. Kenneth Staley.

Q. Did you have occasion——

A. At that time. °

Q. I am sorry. Did you have occasion to discuss the
subject matter of these complaints with Mr. L. N. Mays!

A. No, I did not, not at that time.

Q. Mr. Sidney Gilliatt?

377

A. Shortly after that I did, yes—no, not with Mr. Gil-
liatt either at that time.

Q. You did discuss the subject with Mr. Mays, however?

A. The subject, yes. These letters came in about mid-
November and were referred to me, as I testified this morn-
ing, by Mr. Gordon.

I talked with the people on my staff, distribution siaff
at the time, and turned the letters over to them for in-
vestigation as to what happened.

They reported back to me the results of their findings.
[fol. 764] Q. Well, do you know, Mr. Roche, as you sit
here now, what part Mr. Gilliatt, Mr. Mays and Mr. Staley
played in the formation of a policy in connection with
discount house sales in Southern California?

A. Well, Mr. Gilliatt and Mr. Mays were working with
the people on my staff, endeavoring to determine exactly
as they could what was going on, and to develop a proposed
letter and reply, based on our policy position, that we
could take with these dealers.

That is the extent of my knowledge of their participation
in it.

Q. Do you know whether or not Mr. Gilliatt and Mr.
Mays were assigned the task of collecting the facts and
analyzing them as they applied to the sale of cars thr’ zh
discount houses in Southern California?

A. I think they worked in that direction, yes, sir.

Mr. Blecher: Mr. Clerk, may I ask for Government’s
Exhibit 114, please?

(The exhibit was placed before the witness.)

Mr. Blecher: May I approach the witness, your Honor?
The Court: Yes, you may at all times. The only rule I
require, counsel, is that any lawyer not stand so close to
the witness that he is shouting in his ear. I can’t tolerate
(fol. 765] it for myself and I am sure other people can’t.
But you can stand by him if you need to at any time.

By Mr. Blecher:

Q. Mr. Roche, I hand you the document which is marked
Government’s Exhibit 114, and ask you whether or not
you will examine that document and tell me whether you
have ever seen it before?

378

A. Yes, I have seen this document before.

Q. Did you see this document, sir, at or about the time
it was prepared in December, 1960?

A. Yes, I saw it shortly after that, or approx:mately
this time, yes.

Q. Let me invite your attention, if I may, Mr. Roche,
to the third page of that exhibit, and further direct your
attention if I may to the paragraph next to the bottom of
the page which reads:

‘‘It would appear that one of the real hazards of
condoning this type of operation is that discounted
prices are freely quoted to a large portion of the
publie.’’

Now, Mr. Roche, did you agree with that statement at
the time Mr. Gilliatt made it in or about December of
1960?

{fol. 766] A. I can’t recal! that I paid any particular
attention to that particular statement at that time——

Q. Can you—excuse me.

A. Pardon me. I was just going to add that this is
perhaps Mr. Gilliatt’s opinion. But that would not be
controlling or binding upon me, or anybody else.

Q. Well, isn’t it a fact, Mr. Roche, then, that one of
the hazards of condoning the sale of Chevrolets by dealers
through discount houses was that discounted prices were
being freely quoted to a large portion of the public?
Wasn’t that really the heart of the problem?

A. I don’t think so, Mr. Blecher, because I think dis-
counted houses—discounted prices are very freely quoted
to the public, both by franchise dealers and, in many in-
stances, through advertisements which appear in the public
press.

So I don’t think there is anything very unusual about
quoting discounted prices on automobiles.

Q. I take it that it is your testimony that there is no
hazard involved by Chevrolet dealers selling cars through
discount houses at large discounts?

A. There is no more hazard with respect to the price
problem in that area than there is with the normal com-
petition which exists between Chevrolet dealers and other
competitive dealers, in my opinion.

379

[fol. 767] Q. At the time this problem first came to your
attention, Mr. Roche, in or about November 1960, you
recognized, did you not, that there was a very serious
problem involved in relation to the federal antitrust laws,
did you not?

A. Yes, sir, we are very conscious of our problems in
connection with the federal antitrust laws.

Q. And that subject was discussed among the folks you
mentioned this morning, as having participated in a policy
and program by General Motors?

A. I am sure that it was, because there would be nothing
unusual about that. All of the policies that we formulate
and all of the policies that we develop, we do so with a
very important consideration that all of our activities con-
form with the existing laws as we interpret them, so there
would be nothing unusual in this case, any more than in
any other activity we might undertake.

Q. May I invite your attention, Mr. Roche, to page 4
of the document before you now, and to the fourth para-
graph on the page which reads:

‘“‘The activities of these discount houses have been
the subject of review by Chevrolet, as well as the sales
section and legal staff of the General Motors Corpora-
tion, and is a very delicate matter, inasmuch as it
would appear at the outset there is very little legally
[fol. 768] that Chevrolet or the corporation can do
relative to referral agreements which dealers may have
with certain individuals.’’

Is it not a fact, Mr. Roche, that at the time you formu-
lated this policy that you recognized that it would be a
violation of the law for you to take any steps to interfere
with the relations your dealers may have had with third
parties by way of referral agreements?

A. No, sir, it is not.

Q. Would you say that Mr. Gilliatt’s statement here is

in error?

A. I think you would have to ask Mr. Gilliatt the ques-
tion as to his own interpretation of this. This is merely
an expression of opinion on the part of Mr. Gilliatt. This
certainly does not coincide with my opinion with respect
to our discussions with the legal department.

eo

The Court: What was his position, Gilliattt

Mr, Blecher: In the stipulation, your Honor, it is recited
he was the head of the dealer organization and analysis
department of Chevrolet at that time, —

The Court: Where was he located, Detroit ar out here?

Mr, Blecher: Detroit,

= . . . ° . .

[fols, TEO-TTO] By Mr, Blecher:
QQ. Mr. Gilliatt was, in fact, Mr, Roche,

The Court: He started to say soamething,
The Witness: | was just going to say that Mr, Gilliatt
worked in the sales department of Chevrolet, your Honor,

By Mr, Blecher:

QQ. Mr. Gilllatt was one of the persons in Chevrolet that
was active in putting into effect the policy announced by
General Motors, was he not!

A, He was one of the persons engaged in developing
the information which was used by us in formulating the
poliey position that we teek on it,

Mr, Gilliatt’s primary role was to develop the informa
tion as to what was going on, The policy formation was
bevend his jurisdiction,

{fol. TTL] Q. Mr. Roohe, let me hand you a document
marked Government's Exhibit 282, which is the yearend
financial statement of Cone Bros, Chevrolet of Anaheim,
Is that the flnaancial statement you were talking about!
{fol, T72) A, This is the type of fnancial statement Twas
talking about, ves,
Q. Will you tell me, Mr. Roche, how you can determine
from that financial statement the approximate prices at
which dealers were selling cars?
AY Yes. The accounting system provides that the cars,
that sales of cars will be recorded at the list price at whieh
they are sold, and that any discounts which are given from
that list price will be recorded as a separate item,
Those items are identified in the fnaneial statement

381

through the medium of separate accounts, That is the
principal method for determining, on the average, what
these cars are being sold for,

Q. How would you do that specifically in the ease of Cone
Bros, Chevrolet t

A, Well, in the case of Cone Bros, Chevrolet, this par
ticular statement, for example, shows the sale of 540 cars,
PASLONKLY CALS,

It shows the dollar sales volume and it shows the discount
that has been given,

This particular statement shows 440 unit sales with a dis:
count of S175,000,00, which is an average of some three
hundred or so dollars per car,
jfol, TTB} Q. At the time of the events in question in
November 1960, did you undertake such analysis with re
spect to the dealers who were complaining about the sale
of Chevrolets through discount houses ft

A, No, we did not undertake such an analysis at that
time, because, as T have indicated before, we had ne con.
cern about the fact that our prices are competitive. We
feel that the prices for which Chevrolet products are being
sold are very competitive in the market in which we op:
erate or we wouldn't get the business,

We were concerned primarily with the establishment

of another channel of distribution which we felt would have
the effeet of diluting the volume of business for—in the
areas in which the discount houses were operating versus
the established dealer locations which we had set up only
after long and careful study as to the requirements for a
dealership in that area,
{fol. T74] Q. How would you anticipate, Mr, Roche, that
the dealers selling through discount houses would dilute
the opportunity of neighboring dealers to sell cars, unless
the dealers selling through discount houses were competi
tive?

A, Well, as L said before, we expect our dealers will be
competitive, And if they are not competitive in a particu
lar area, L think that the other dealers in the metropolitan
territory would see to it that they were either competitive,
er some af the other established dealers would get the
business,

1 don't think we need discount houses to help us solve
that problem,

—

382

Q. Well, isn’t that, in fact, what happened here, Mr,
Roche, that some of the city dealers were getting down into
Orange County and selling at prices there that were below
the prices generally being charged by the Orange County
dealers?

A. I can’t answer that question. I think we would have
to look at individual dealers to get an answer to that par-
ticular question.

Every dealer sells cars at different prices. No dealer
sells cars at the same price. There are many factors in-
volved in establishing the price of a car, particularly where
there is a trade-in involved.

Q. Well, as you sit here now then you don’t really know
(fol. 775] whether or not the sale of cars by dealers through
discount houses, for example, generated vigorous price com-
petition in the Orange County area?

A. I think that we have a lot of price competition gen-
erated by the Chevrolet dealers in the metropolitan Los
Angeles area.

And we have established a network of dealers in this
area which we feel will give us good representation in a
highly competitive market, a highly competitive industry
in a highly competitive market, and that we don’t need,
and can’t support additional channels of distribution.

If we felt additional dealerships, if we felt that addi-
tional outlets would sell more Chevrolet cars, more Gen-
eral Motors cars, we would put them in. I don’t think we
need the help of any of our dealers to do it.

Q. I appreciate all of that, Mr. Roche. But what I am
asking you now is whether you know, or knew in or about
November, 1960, whether the dealers who were selling cars
through discount houses in the Orange County area were,
in fact, creating, down in that area, vigorous price competi-
tion? Do you know or don’t you?

A. I am not familiar with the specific prices at which

cars were sold in the Orange County area in November of
1960,
{fol. 776] Q. But you do know, don’t you, Mr. Roche,
that that is precisely what the dealers in Orange County
who wrote you and Mr. Gordon letters were complaining
about, don’t you?

A. Frankly, that doesn’t bother us, Mr. Blecher.

383

The Court: No, he asked you if you know that that was
correct, that was one of the things, I take it, they com-
plained about.

The Witness: I have already admitted—said that, yes,
that many of the letters did make that statement. But it
was not part of our consideration in formulating and de-
veloping the letter which expressed our policy to those
dealers.

By Mr. Blecher:

Q. Now, if you recognized that the dealers were com-
plaining about vigorous price competition, Mr. Roche,
didn’t you expect that if you took steps to correct that,
that you would, in fact, be effecting price competition
among your dealers in the Los Angeles area?

A. No, no, we didn’t, because be had enough other
dealers so that there was a very competitive atmosphere
with respect to prices and to sales competition in this area.

[fol.777] Q. Now, yesterday, Mr. Roche, you looked at
the map which is a General Motors Exhibit, and you dis-
cussed dealer No. 21, who was involved in a flanking move-
ment——

The Court: Let’s refer to the exhibit, so that when you
get up on appeal the court over there will know what you
are talking about, and won’t have to go back and look for
it. What are you talking about?

Mr. Blecher: Yes, sir. This is General Motors Exhibit
No. A.

Q. Mr. Roche, yesterday you were talking about dealer
No. 21, who is Cone Bros, Chevrolet in Anaheim, is it not?

A. I think it is, yes.

Q. And we discussed the fact that there were about three
discount houses, or more, in very close proximity to his
dealership.

A. That is correct.

[fols. 778-779] Q. And you testified that a fellow in those
circumstances might have a difficult time surviving in the
face of that kind of competition, didn’t you?

384

A. Yes, I did.
Q. Now, will you take a look at Mr. Cone’s financial state-
ment?
A. Yes.
* * * * * * *

[fol. 780] Q. Can you state for the record how many new
cars and trucks Cone Bros. Chevrolet of Anaheim sold in
the year 1960?

A. They sold a total of 593 new passenger cars and trucks,

Q. Do you know, Mr. Roche, where that placed him, in
terms of position among all of the dealers in the Los Angeles
metropolitan area in terms of volume?

A. No, I do not.
{fol. 781] Q. Will you examine the profitability of that
dealership and tell me whether or not you think it shows a
due regard for your dealers, as an adequate rate of return?

The Court: First let me-know what the net profit was.
What does it show?

Mr. Blecher: I specifically avoided that in deference to
the objection it be not exposed. I am perfectly willing to
have it stated for the record.

The Court: I don’t know how——

The Witness: I don’t know how——

The Court: I don’t know how he can answer it or I can
pass on it.

Mr. Blecher: I appreciatéthat.

Q. Will you state for-us what the profit or loss of that
dealership was in that year?

A. The profit here was $38,700.00.

The Court: What was that, before or after taxes?

The Witness: After taxes.

By Mr. Blecher:

Q. What was it before taxes, Mr. Roche?

A. Well, that depends, of course, on how you interpret it.
Based on the interpretation you placed on it and the line
you pointed out, it was $90,000.00.

The Court: That means net profit before all taxes?

385

[fol. 782] The Witness: Yes, sir, except real estate taxes
or——

Mr. Blecher: And bonuses.

Mr. Mitchell: And bonuses.

The Witness: Before \axes and bonuses, yes. Bonuses,
of course, which is a cost of doing business; bonuses to
employees.

The Court: Yes.

The Witness: And this resulted in a profit of $38,700.00.

By Mr. Blecher:

Q. On what sort of investment?

A. On an investment of $576,000.00.

Q. How does that compare with your dealers nationally,
as a whole?

A. I would say it is on the low side. I can’t give you the
exact figures. It is a little low.

Q. Are you able to trace whether or not on the basis
of that statement the sale of Chevrolets through the four
or five discount houses in the Anaheim area had any serious
effect on Cone Bros.’s ability to make a profit?

A. I would be unable to trace that at this distance. I
would suspect that it probably didn’t have too much effect
on his profit at this particular time, in view of the limited
number of cars that were sold during that period.

(fol. 783] Q. Now, what sort of increase in the number of
ears being sold through discount houses in the Orange
[fol. 784] County area, Mr. Roche, would you contemplate
would cause any serious effect on Cone Bros. Chevrolet or
Cone Chevrolet Company?

A. I don’t think I would be prepared to answer that;
Mr. Blecher. I would not have any opinion on that.

Q. Do you know what sort of effect on the ability to
retain gross profits of either of those dealerships would
be necessary in order to cause any serious difficulty with
either of those companies?

A. Well, again that could be determined only on the
basis of examining in considerable detail the actual operat-
ing factors in the particular company.

Based on the over-all results of our dealerships, we know

386

that we operate at very close margins in our business and
‘ it doesn’t take too much diversion of business from one
source to another, from one dealer to another, or from
one make of car to another, to have very important reper-
cussions in the profit position of a particular dealership.
That can be determined only on the basis of an analysis
of the individual facts.

Q. Mr. Roche, you spoke during—at great length during
your direct examination about certain benefits that Gen-
eral Motors derived by reason of its franchise system and
how, in your judgment, the sales through discount houses
tended to affect that system.

A. That is right.

{fol. 785] Q. Isn’t it a fact, Mr. Roche, the very same
effect would be created by Citizen Chevrolet coming down
to Orange County and selling in Orange County at the
same prices it was selling in Eagle Rock?

A. That is right, but I think we have to face up realisti-
cally to the facts of life. That is one of the hazards any
Chevrolet dealer expects to encounter when he takes a
Chevrolet franchise. He knows he is going to be operating
in a metropolitan area in competition with many other deal-
ers who are handling exactly the same product that he is,
and if he is unwilling to do that, then the chances are he
would not be a Chevrolet dealer.

Q. Did you recognize that that sort of situation was pre-
cisely what the dealers were complaining about in about
November of 1960?

A. No, that wasn’t the type of situation they were com-

plaining about at all. The dealers had a selling agreement
with us that prevented them from establishing any other
location or any other outlets through which they could sell
Chevrolet products, and I suppose that that is what they
were concerned about. That here beyond their control
or beyond our control were additional outlets being set up
to engage in the sale of Chevrolet cars without the re-
sponsibilities, without any of the responsibilities that go
with a Chevrolet selling agreement.
[fol. 786] Q. Did you think it was probable they would
be complaining if the dealers selling through discount
houses were not charging prices that stimulated price com-
petition in their particular area?

A. I think the same situation would prevail, yes.

387

Q. They would complain, without respect to the prices,
the dealers were selling to discount houses, is that your
judgment?

A. That is my judgment. I think a Chevrolet dealer
would have every right, as would any other General Motors
dealer, to complain about the establishment of any other
location which was not in accordance with the provisions
of our selling agreement.

Even we in General Motors do not appoint other dealers
without giving our existing dealer organization advance
notice, and I am sure that they would expect that they
would have some grounds for complaint, in the event out-
lets were set up through discount houses, as they were.

Q. Mr. Roche, is the Ford system of distribution sub-
stantially similar to that used by General Motors?

A. To my knowledge it is quite comparable. I am not
qualified to speak on Ford problems. But to my knowledge
they operate also under the franchise system of distribu-
tion.

Q. In fact, all the domestic manufacturers use a fran-
chise system, do they not?

A. Yes, they do.

[fols. 787-789] Q. Did you observe what has happened to
their franchise system in the Los Angeles area since 1960?

A. No, I am not familiar with what has happened to
the Ford system of distribution in this area, or in other
areas.

Our concern, of course, is what happens to the General
Motors franchise system of distribution. That is the one
with which we are directly concerned, and that is the one
we try to follow to the best of our ability.

(fol. 790] Q. Well, do you think leasing companies have
an effect similar to discount houses in that they take
poteatial purchasers out of the market and dilute the mar-
ket for dealers?

A. If it were carried to the extreme, I would think that
it could accomplish the same objective, yes.

Q. Has General Motors issued any policy statement
encouraging or discouraging dealers doing business with
leasing companies?

388

A. No. But we have a system for doing business with
recognized leasing companies. And we sell a lot of cars to
leasing companies.

As I explained earlier, we sell many individuals, many
important industries, companies, lease cars. And _ they
[fol. 791] lease them in very large numbers.

And some of our dealers are in the leasing business.

So it is not a strange field, and there may be certain
abuses in the leasing field, the same ag there is in other
business enterprises, perhaps. But if there is anything
affecting the distribution of automobiles, such as addi-
tional outlets, I am not aware of it.

The Court: Well, the thing that concerns me about this
line of questioning is the fact that you drive an automobile
around the corner and it is a second-hand car. So you are
not dealing with new cars at all.

The Witness: That’s right.

The Court: Isn’t that correct?

The Witness: That’s right, your Honor. The minute
the car, the title passes to an individual’s name it becomes
a used car.

The Court: So if you lease a car, counsel, and drive it
around the block it is second-hand, isn’t that right?

Mr. Blecher: That’s right, but the point was that a leas-
ing company, in effect, takes purchases out of the market
every time they lease a new car.

The Court: Oh, I see.

Mr. Blecher: It has the same effect as
[fol. 792] The Court: Oh, I see, as the discount houses.
I see. I didn’t catch your point.

I don’t think General Motors is trying to stop the leas-
ing business.

The Witness: Definitely not. We couldn’t if we wanted
to, and we wouldn’t do it because there are many good and
valid reasons for leasing, not only automobiles but trucks,
and many other items of equipment.

389

[fol. 793] By Mr. Blecher:

Q. Mr. Roche, let me hand you a copy of a document
marked Government’s Exhibit 7.

The Court: What is that, counsel?
[fol. 794] Mr. Blecher: That is a memorandum from Mr.
Averill to Mr. Roche, dated November 18, 1960, which at-
taches a copy of a letter from a dealer named John Connell
in Newport Beach, dated November 11, 1960.

The Court: Thank you.

By Mr. Blecher:

Q. You testified this morning, in effect, you were not
aware—as I recall your testimony—of any contact between
General Motors and dealer organizations, is that correct,
Mr. Roche?

A. Yes; yes.

Q. Let me invite your attention to the attachment to
the memorandum Mr. Averill wrote you, that is, the letter
of Mr. Connell, in particular to the paragraph at the bot-

ton of page 2—or the middle of page 2, which reads:

‘*The local dealer group is already working on this
thing through Mr. O’Connor and no doubt will be
brought to your attention soon.’’

Now, you recall reading that letter from Mr. Connell
at the time Mr. Averill sent it along to you?

A. I don’t know whether I have read it—I have read
the letter, yes. I am not sure I read it at this timie, because
this letter is dated November 18th, and unless I got it
on that day I was gone from the office for the following 10
or 12 days, being in the hospital. So it is possible that
[fol. 795] I read it that day or it is possible I read it when
I came back, but I did read it, yes.

The Court: That is by whom, you say, Connell?

Mr. Blecher: John Connell, who is a dealer in Newport
Beach, your Honor.

The Court: I see.

390

By Mr. Blecher:

Q. Let me hand you, Mr. Roche, a copy of Government’s
Exhibit 12, which is a letter from Eddie Hopper of Eddie
Hopper Chevrolet to Mr. Cole, general manager of Chevro-
let, dated November 16, 1960.

The Clerk: That is the original exhibit, counsel. You
said it was a copy.
Mr. Blecher: I am sorry.

Q. You recall-ever reviewing that letter, Mr. Roche?

A. I don’t remember the letter specifically. It is pos-
sible that I read it afterward. The letter was addressed
to Mr. Cole and I think generally at the time those letters
were retained in the Chevrolet Division. The letters |
read were the letters that were referred to me, that were
addressed to Mr. Gordon. It is possible I saw it; I can’t
answer.

Q. Let me invite your attention to this portion of para-
graph 3 of page 1, which reads:

‘*A group of Chevrolet dealers in the Los Angeles-
[fol. 796] Orange County area are so concerned that
they joined——’’

underscored in the original
‘*__together in order to fight this problem.”’

Does that aid your recollection, Mr. Roche, as to whether
or not there were any discussions among the people at
General Motors or at Chevrolet in which you participated,
in which it was brought to your attention that the writing
of these letters in November of 1960 was part of an orga-
nized effort in the Los Angeles area?

A. No, it was not—to my recollection it was not a part
of any discussion we had, although I suppose it was quite
apparent from the letters, at least the letters and tele-
grams addressed to Mr. Gordon, which I had, that there
was some kind of an activity going on.

Obviously, it represented some kind of a problem or
these letters wouldn’t have all landed about the same time.

Q. Let me refer you back then to Mr. Gilliatt’s mem-
orandum, Exhibit 114, Mr. Roche, page 4 of this exhibit,
the second paragraph, which reads:

391

‘‘Since these merchandising methods have been ex-
panding it has been a disturbing influence to the
normal retail activities of Chevrolet dealers and sales-
men in the Los Angeles metropolitan area, so they
[fol. 797] have organized an activity of wires and
letters to executives of Chevrolet and the General
Motors Corporation.”’

Do you recall whether or not that subject was discussed
at any time?

A. Well, again I think I have to refer to my previous
answer, that with the volume of letters and communications
that we were receiving, that something was going on
that was very disturbing to our salesmen and our dealers
in this area.

I don’t think we needed to have formal discussion to .
realize that fact.

Q. The fact is, Mr. Roche, you recognized that the bar-
rage of letters and telegrams you received all in a period
of two or three weeks, starting around November 11th or
12th, 1960, were part of an organized program on the part
of Chevrolet dealers in Los Angeles to bring this matter
forcefully to your attention?

A. I think that that is perhaps right, but that is a per-
fectly normal occurrence. If there is anything that is af-
fecting our business in the area of our dealers, I think they
would feel privileged to tell us about it.

Q. I appreciate that, Mr. Roche, but what I am getting
at is whether or not you recognized that these letters that
you were receiving in large volume were not haphazardly
coming in but were coming in because they were part of an
[fol. 798] organized effort to write to you?

A. Is there anything wrong with people expressing an
opinion to us? ;

Q. Mr. Roche, did you or did you not recognize at the
time this large volume of letters and telegrams were re-
ceived by you that they were coming to you because it was
part of an organized effort to bring this matter to your
attention, rather than an individual effort on the part of
individual dealers?

A. I think that we recognized that these letters, coming
in as they did, from so many different people indicated

392

that we had a serious problem on our hands with respect
to the distribution of our products.

Q. Did you think this problem was being brought to
your attention by individual dealers or did you recognize
that it was being brought to your attention because dealers
had decided together to write you and bring it to your
attention?

A. I had no idea on that subject.

Q. Did you happen, during the time in November 1960,
to question anyone in Chevrolet about the statement
made by Mr. Gilliatt in his memorandum?

A. No, I had no occasion to question anybody in Chevro-
let with respect to Mr. Gilliatt’s memorandum.

The Court: May I ask a question? How is policy ex-
[fol. 799] pressed? Can some representative of General
Motors just sit down and write a memorandum and just
make up a policy to General Motors?

The Witness No, your Honor. The way this matter was
handled-——

The Court: I mean generally, not this matter. I am ask-
ing generally. If there is going to be a policy, isn’t there
some deciding group or executives that have the final say
that, ‘‘This is the policy,’’ and is that crystallized into
some form?

The Witness: Yes, sir, it would be that. In this par-
ticular instance the policy with respect to the position taken
in this letter was my responsibility.

The Court: What I am getting at is, these memoranda
that come in from various persons, either in the field or at
the home office, are they policy setting in any way?

The Witness: They would influence the action that we
might take under our existing policies, your Honor.

The Court: Either for or against?

The Witness: Either for or against, that is correct.
They would not necessarily have any influence with re-
spect to changing the policy.

Letters of this kind or policy problems of this kind would
be a subject for discussion among the various individuals
[fol. 800] who might be concerned.

393

[fol. 801] By Mr. Blecher:

Q. Now, isn’t it a fact, then, Mr. Roche, that the letter
which went out over your signature was, in fact, prepared
by Mr. Schreitmueller, Mr. Bridenstine and Mr. Mays?

A. They participated in it, yes.

Q. Who else participated in it?

A. Mr. Crawford and myself.

Q. Who drafted the letter initially?

A. I would say that Mr. Schreitmueller did most of the
leg work on the letter.

Q. Now, did Mr. Bridenstine and Mr. Mays assist him in
that?

A. They counseled with him on it, yes.

Q. Now, your intention in this letter, was it, Mr. Roche,
was to explain to the dealers very clearly, as you said this
morning, what your position was?

A. Yes.

[fol. 802] Q. And you think that letter did that?

A. I think it did.

(fol. 803] Q. Now, let me invite your attention to page 3
of the letter, the bottom of the page, and let me read it to
you:

‘‘The procedure whereby some discount outlets,
which offer new cars for sale, make a deal with a cus-
tomer, and then, as prearranged with an authorized
dealer, turn the transaction over to that dealer for
closing and delivery of the vehicle, is being improperly
characterized by some selling dealers as a ‘referral.’
Such arrangements, however, are far different from the
casual practice in the industry whereby salesmen en-
courage referrals from friends and others who chance
upon a prospective new car customer. The reports we
have received indicate that these discount outlets are
advertising new cars for sale at established business
locations, frequently far removed from the location of
the selling dealer. In effect, they in some instances
represent the establishment of a second and unauthor-
[fol. 804] ized sales outlet or location contrary to the
provisions of the General Motors Dealers Selling
Agreements.”’

394

With respect to that paragraph, Mr. Roche, wha
you intend for the dealer to understand by that?

A. We intended that the dealer, for the dealer to u
stand that we were differentiating between a casual :
ral, or a casual tip, as the term is commonly used it
automobile industry, from a friend, an acquaintance
somebody that so-and-so is in the market for a new
or an occasional remark to someone that, if you are i
ested in a car why don’t you go down to the X Chev
Company and see Joe Smith, who is a salesman down t

That type of prospecting on the part of salesmen
the encouragement of friends and relatives, or relative:
acquaintances of salesmen to attempt to have people |
of them when they were in the market for a car is qu
common practice. And of course we would have no r
to want to stop that in any way. On the contrary we
that that kind of an approach is a perfectly norma
for people who are attempting to make their living s¢
cars,

On the other hand, a very definite system for off
cars, such as we were given to understand existed in
discount houses, was quite different from this very ¢:
and normal operation.

{fol. 805] We wanted our dealers to understand tha
regarded such arrangements whereby they were regu
selling cars through the medium of these discount ho
in our view, that represented the establishment of an
location and that, under those circumstances, we woul
gard it as a violation of the Dealer Selling Agreement

Q. Mr. Roche, is that what you think that parag
says?

A. That is what the paragraph says to me. That i
intent that we expected it would have on our dealers,

Q. Then why did you say ‘‘in effect they in some insts
represent the establishment of a second and unautho
sales outlet’’? What did you mean by the words
effect’’?

A. Well, ‘‘in effect’? where there was a regular a
ment, we believe that it was a scondary location establi
without approval. In fact it was another location.

Q. Why didn’t you say that?
A. That is what I think we did say.

what did

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395

Q. Oh. Now, what do you mean by ‘‘they in some in-
stances’’? What instances did they represent a second
location, and what instances did they not?

A. I suppose that in some instances that if it was an
occasional car, it perhaps would not have been a matter
of great significance, as we covered before.

Where it was a regularly established procedure, and
[fol. 806] where these cars were being offered, in effect,
in unlimited numbers as a regular part of the business deal-
ings of a discount house, or whoever might have been oper-
ating a discount desk in the store, that that very definitely,
in our opinion, would have been an unauthorized sales out-
let, contrary to the provisions of our agreement.

Q. How, Mr. Roche, did you expect the dealer to figure
out the standards or criteria that he was to apply in deter-
mining whether or not he came into the category of ‘‘some
instances’’? ,

A. We expected that if a dealer had any questions about
it that he would seek the advice of counsel who would be
capable of interpreting this provision of the agreement for
him.

[fol. 807] Q. Do you know whether Mr. Cash was in-
structed to tell the dealers with whom he subsequently met
that they were violating their Dealers Selling Agreements
by the arrangements they had with discount houses?

A. I think that Mr. Cash was instructed to tell the dealers
that such arrangement did constitute a violation of the
selling agreement, yes.

Q. You think so?

A. Yes,

Q. Who instructed him to that effect?

A. I would presume that his superiors in Chevrolet.

Q. Well, do you know why, then, Mr. Roche, he told some
of the dealers with whom he met that he couldn’t tell them
what to do about this subject?

A. I am not familiar with that, no.

Q. You don’t know what he told the dealers?

I don’t know what he told the dealers. I was not
there.

396

Q. Have you read the testimony of the dealers in the
(foi. 808] record on that subject?

A. No, I have not.

Q. You are not familiar with the fact that Mr. Cash,
according to Mr. Bruder’s testimony, said that, I can’t tell
you what to do about this subject? Do you knew that?

A. No, I don’t, Mr. Blecher.

(fol. 809] Q. -Well, now, you testified this morning, Mr.
Koche—as I understood your testimony—that you did not
engage in any form of concert of activity with the dealers,
is that correct?

A

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0254%3A01. Public record. Not legal advice.