# Appendix — United States v. General Motors Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0254%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1966 - **Citation:** 384 U.S. 127 ## Text e 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 II INDEX Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff's Exhibits—Continued Original Print No. 17—Inter-Organization Letter to R. M. O’Connor from Fred M. Thompson, Chevrolet City Manager, Los Angeles, dated November 17, 1960, with attachments...................... 1220 641 No. 18—Memorandum to File (Chevrolet-Central Office) from L. H. Averill, dated November 18, ME SoS SS pulley LeU ER ypy ees 1223 644 No. 19—Letter to Edward Cole, General Motors, from Stanley O. Drake, dated November 18, ee) GE FOE re RET tate cee Re CaS 1224 645 No. 20—Handwritten letter to Mr. Cole from Jack Stuh of Eddie Hopper Chevrolet, dated No- OS 5s TCG cae eee bee eee e dese 1225 646 No. 21—Letter to Edward Cole from Dick Pru- szynski, Salesman at Don Steves Chevrolet... 1227 647 fe No. 22—Inter-Organization letter to L. N. Mays, Bese Chevrolet Central Office, from R. M. O’Connor, Los Angeles Zone Office, dated November 22, i SACRA SSR SE IRR Sent oe ale ce Se 1228 649 No. 23—Letter to Edward Cole, General Man- ager, Chevrolet Motor Division, from Art Tay- lor, dated November 22, 1960................ 1231 652 ii INDEX Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff’s Exhibits—Continued Nos. 25 & 26—Memo to K.E.S. (Kenneth E. Staley, General Sales Manager, Chevrolet Motor Division) from M.W, dated November 28, 1960, with Plaintiff's Exhibit 26 attached—Letter to Ed Cole from Don Steves of Don Steves Chev- rolet dated November 22, 1960 No, 27—Telegram to Jack Gordon, President, General Motors, from Kenneth R. Field, Chev- rolet Salesman with Cone Bros. Chevrolet, dated No. 28—Telegram to Jack Gordon from W. K. Banks, Salesman, dated November 22, 1960 No. 29—Telegram to Jack Gordon from Ray Ber- ney, Salesman, dated November 22, 1960 ..... No. 30—Telegram to Jack Gordon from Leo Kluthe, dated November 22, 1960 No. 31—Telegram to Jack Gordon from R. W. Hughes, Cone Bros. Chevrolet, dated November 960 to Jack Gordon from Hal Beebe dated November 22, 1960....... No, 33—Telegram to Jack Gordon from Al Phil- lips, Chevrolet Salesman with Cone Bros. Chev- rolet, dated November 22, 1960 No. 34—Telegram to John F. Gordon from Harsel Snyder, Cone Bros. Chevrolet, dated November No. 35—Letter to John Gordon, from C. D. Cone, President, Cone Chevrolet Company, dated No- No. 36—Letter to E. N. Cole from C. D. Cone, President, Cone Chevrolet Company, dated No- No. 37—Letter to Gene Staley from C. D. Cone, President, Cone Chevrolet Company, dated No- WEE UN AI xis Os die ha vvwneeie west No. 38—Letter to R. M. O’Connor from C. D. Cone, President, Cone Chevrolet Company, dated November 23, 1960 No, 39—Letter to E. N. Cole, from E. M. Cone, Cone Brothers Chevro’ct, dated November 23, OEP | wien. No. 40—Telegram to Jack Gordon from Charles P. Robinson, datd November 23, 1960. ._.. No. 41—Telegre:a to Jack Gordon from Carroll Cone, Jr., Salesman, dated November 23, 1960 Original Print INDEX iii Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff's Exhibits—Continued Original Print No, 42—Inter-Organization Letter from L. N. Mays, Assistant General Sales Manager for the West, Chevrolet Motor Division, to H. E. Craw- ford, dated November 25, 1960............... 1250 669 No, 43—Letter to J. F. Gordon from E. L. Linde- mann, Salesman, Harbor Chevrolet, dated No- Se itiad « «cunine dae o> oe teed ne 1251 670 No. 44—Letter to E. N. Cole from E. L. Linde- mann, Salesman, Harbor Chevrolet, dated No- fl en oe 1253 672 No. 46—Handwritten letter to Mr. Cole from Bob Erskine, Bob Erskine Chevrolet, dated Novem- ber 25, 1960, with news clipping attached 1255 674 No. 48—Handwritten letter to J. F. Gordon from James Seidlitz, M , Harbor Chevrolet, ceived November 1960. Seo lah 1256 676 No. 49—Handwritten ‘letter to E. N. Cole from James Seidlitz, Manager, Harbor Chevrolet, dated November 26, 1960................... 4257 No. 50—Letter to E. N. Cole from Blane Peart, dated November 27, 1960, with carbon copies to ’ J. F. Gordon, and K. E. Staley. 1258 No. 52—Handwritten letter to K E. Staley from Daniel R. MeGowan, Salesman, Harbor Chev- rolet, dated November 27, 1960........ 1259 No. 53—Handwritten letter to E. N. Cole from Daniel R. McGowan, Salesman, Harbor Chev- rolet, dated November 27, 1960............. 1261 No. 54—Handwritten letter to J. F. Gordon from Omer L. Bernard, Salesman, Harbor Chevrolet, dated November 27, 1960.......... 1262 No. 60—Handwritten memo to L. N. Mays from K. E. Staley, undated ......... 1263 No. 61—Memo to . N. Mays from K. E. ‘Staley, dated November 28, 1960 ................... 1264 No. 62—Handwritten letter to J. F. Gordon from Buck Pryor, Harbor Chevrolet, dated November 28, 1960 5 eit athen Ak0s WES 36 OS EEN R A oe 1265 No. 65—Handwritten letter to J. F. Gordon from W. E. Daley, Harbor Chevrolet, dated Novem- EP ST Noaae COs aCe ieadakvuctvecstee 1267 No, 68—Handwritten letter to K. E. Staley from “Corny” Cline, Salesman, Harbor Chevrolet, dated November 28,1960 ._. 1268 687 No. 69—Handwritten letter to Mr. Cole from Let- ton H. Lapley, Eddie Hopper Chevrolet, un- dated with attachment.......-.=-—s—s........... 1272 689 22 8. 8: €3-3- 5 & Lv INDEX Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff's Exhibits—Continued No. 70—Handwritten letter to Mr. Cole from G. No. 73—Handwritten letter to K. E. Staley from Phil Chauvin, Salesman, Harbor Chevrolet, dated November 28, 1960 No, 74—Handwritten letter to E. N. Cole from Ed Lundberg, Salesraan, Harbor Chevrolet, dated November 28, 1960... No. 75—Handwritten letter to J. F. Gordon from R. D. McGowan, Salesman, received November No. 76—Handwritten letter to E. N. Cole from R. D. MeGowan, Salesman, dated November 28, 1960 . No. 77—Handwritten letter to K. E. Staley from R. D. MeGowan, Salesman, dated Navember 28, 1960 No. 78—Handwritten letter to K. E. Staley from Bert Beria, Salesman, Harbor Chevrolet, dated November 28, 1960 No. 79—Handwritten letter to J. F. Gordon from Norman J. Flynn, Salesman, received December 2, 1960 No. 80—Handwritten letter to E. N. Cole from Norman J. Flynn, Salesman, received December 2, 1960 No. 83—Letter to J. F. Gordon from C. F. Hen- son, President, Harbor Chevrolet, dated Novem- No. 85—Letter to K. E. Staley from C. F. Hen- son, President, Harbor Chevrolet, dated Novem- ber 28, 1960 with attachment No. 86—Letter to Messrs. Gordon, Cole, and Sta- ley, General Motors, from Glenn Jones, Presi- dent, Drewer-Jones Chevrolet, dated November 28, 1960, with enclosure No, 87—Letter to Jack Gordon from F. J. Gled- hill, President, Fred Gledhill Chevrolet, dated November 28, 1960 No. 90—Letter to Ed Cole from Bill Barnett, Bill Barnett Chevrolet, dated November 28, 1960, with copies of Fedeo and Gemeo ads. .... No. 91—Inter-organization memo to L. N. Mays from K. E. Staley, Chevrolet Motor linea dated November 30, 1960. . INDEX Vv Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff's Exhibits—Continued Original ~—- Print No. 92—Inter-organization memo to L. N. Mays from K. EB. Staley, Chevrolet Motor Division, dated November 30, 1960, with attachments .. 1209 720 No. 93—Memorandum of meeting held in H. E. Crawford’s office on November 30, 1960, signed A SEE EEEEL et ee 1300 721 No, 95—Letter to E. N. Cole from Donald J. Cor- rigan, President, 8. & J. Chevrolet, dated No- ORT ah 15 548s Gab biN Peed Be Sy3 1301 723 No. 96—Letter to “Gentlemen” from R. M. Gil- bert, Sales Representative, Bill Barnett Chev- rolet, dated December 2, 1960.......... 1302 724 No. 97—Letter to “Gentlemen” from A. P. Hof- kins, Sales Representative, Bill Barnett Chev- rolet, dated December 2, 1960............... 1303 724 No. 98—Letter to “Gentlemen” from Don Teague, Sales Representative, Bill Barnett Chevrolet, dated December 2, 1960.................... 304 725 No. 99—Letter to “Gentlemen” from Byron J. Booker, Sales Representative, Bill Barnett Chevrolet, dated December 2, 1960......... 1305 725 No. 100—Letter to “Gentlemen” from Larry Char- rey, Sales Representative, Bill Barnett Chev- rolet, dated December 2, 1960 .......... 1306 726 No. 101—Letter to “Gentlemen” from Stan Adams, Sales Representative, Bill Barnett Chev- rolet, dated December 2, 1960 ............... 1307 726 No. 102—Letter to “Gentlemen” from Casey Gal- vin, Sales Representative, Bill Barnett Chev- rolet, dated December 2, 1960. . “ve 1308 727 No. 103—Letter to “Gentlemen” from Norm Christoffersen, Sales Representative, Bill Bar- nett Chevrolet, dated December 2, 1960 .. 1309 728 No. 106—Letter to Bob O’Connor from C. D. Cone, President, Cone Chevrolet Co., dated December 6, 1960 atl 1310 729 No. 107—Letter to John Gordon from Harry M. Ostrom and Harold Ostrom, Partners, Harry M. Ostrom and Son Chevrolet, Montebello, Calif., dated December 6, 1960 ............ 1311 730 No. 111—Letter to B. N. Cole from Owen Keown, Owen Keown Chevrolet Company, dated De- cember 6, 1960 __. 1312 731 No. 112—Letter to E. N. Cole from Frank K. Swift, Jr., Seaboard ee: dated December 7, 1313 733 vi INDEX Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff’s Exhibits—-Continued Original = Print No. 114—Memorandum to K. E. Staley from L. N. Mays, Chevrolet Central Office, in re Discount House Activities, dated December 12, 1960, with attached “Resume of Discount House Activi- ties”, signed by S. G. Gilliatt and dated De- ert Me ee eee Ok 1314734 No. 115—Letter to “General Sales Managers, U.S. Car Diyisions’” from H. E. Crawford, dated Demin 10, Tee A ae 1319 739 No. 116—Duplicate of Exhibit No. 115, with at- tached letter to C. F. Henson, President, Harbor Chevrolet, from J. M. Roche, Vice-President, General Motors, dated December 15, 1960. . 1320 741 No. 117—Inter-Organization letter to R. M. O’Connor from L. H. Averill, dated December SO ie re ee a as, 1326 747 No. 118—Memorandum to Mr. Cash from R. D. Lund, dated December 16, 1960.............. 1328 749 No. 119—Letter to R. M. O’Connor from Martin Pollard, dated December 17, 1960............ 1329 750 No. 120—Memorandum to R. M. Cash, Chevrolet Regional Manager, Pacific Coast, from L. H. Averill, Executive Assistant to General Sales Manager, Chevrolet, dated December 20, 1960.. 1331 752 No. 121—Memorandum dated December 29, 1960, to Regional and Zone Managers, subject, “Dis- count House Operations”, with attachment: Letter “To All Chevrolet Dealers” from K. FE. Staley, General Sales Manager, Chevrolet Motor Division, dated December 29, 1960............ 1332 753 No. 122—Letter to K. E. Staley from Jack Coyle, Jack Coyle Chevrolet, dated January 4, 1961.. 1337 758 No. 123—Letter to K. E. Staley from D. C. Stach- ler, Stack Chevrolet, dated January 5,1961.... 1339 760 No. 125—Letter to Jack L. Coyle, Jack Coyle Chevrolet, from K. E. Staley, dated January By at Os ae Nee S 5 Oe DE Ne WRT 1340 761 No. 126—Letter to Gene Staley from Harry A. Mann, Harry Mann Chevrolet, dated January Wis Bs i ERS rea eee eas SN oa 1341 763 No. 127—Inter-Organization letter to L. H. Ave- rill, Central Office, Detroit, from R,. M. O’Con- nor, Los Angeles, subject: “Sales to discount houses, referrals, ete.”, dated January 17, 1961, with copies to Mays and Cash............... 1342 764 INDEX Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiffs Exhibits—Continued No. 128—Letter to R. M. O’Connor from C. D. Cone, Cone Chevrolet Co., dated January 18, 1961, with handwritten note January 24, ini- tialed MAY, with attachment................ No. 129—Letter to K. E. Staley from Allen Gwynn, Allen Gwynn Chevrolet, dated January DR AOR K's Geeah Ube Eee eee ea ER OTL as No. 130—Letter to K. E. Staley from Bill Bar- nett, Bill Barnett Chevrolet, dated January 25, Be Crk eee Pins ee ee na Lee ee ete 6 No. 131—Letter to Gene Staley from C. D. Cone, President, Cone Chevrolet Co., dated January No. 132—Letter to K. E. Staley from Frank K. Swift, Jr., Seaboard Motors, dated January 26, WR eis a ee oye ep he eee ey grin No. 133—Letter to Jere C. Faust from E. N. Hopper, President, Eddie Hopper Chevrolet, Gate JRRUATY. 20, LOG ok ks eda > No. 134—Letter to Bob O’Connor from C. D. Cone, Cone Chevrolet Co., dated January 26, j IRR RR abet Ry a anata a ee No. 135—Letter to Jim Roche, Vice-President, General Motors, from Don Steves, Don Steves Chevrolet, dated February 1, 1961............ No. 136—Letter to R. M. O’Connor from Marty Lockney, President, Guaranty Chevrolet Motors, fate@ Penawy 4, TRS . Esse. No. 138—Memo on letterhead of Losor Chevrolet Dealers Association, signed by Evelyn G. Davis, With mbieetinie 6 ep OR eek’ No. 139—Extract from Minutes of 16th Presi- dent’s Dealer Advisory Council, February 14, 15, and 16, 1961—Remarks by William G. Nugent, A. E. Nugent Chevrolet, Los Angeles No. 140—Letter to Gene Staley from E. H. Col- liau, Colliau Chevrolet, dated February 15, 1961 No. 141—Handwritten memo “To Whom It May Concern” signed by Inez Oelwein, dated Feb- ruary 25, 1961, with attachments............ No. 142—Letter to Bob O’Connor from Bob Ers- kine, Bob Erskine Chevrolet, dated March 3, ees a Pes ENO ERNE uae ee obs es oO No. 143—Letter to Gene Staley from E. H. Col- liau, Colliau Chevrolet, dated March 17, 1961. . Original 1343 1346 1347 1348 1349 1350 1352 1353 1354 1355 1362 1363 1364 1374 1375 Vii Print 768 769 770 771 772 774 775 795 796 INDEX Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff’s Exhibits—Continued Original Print No. 144—Memo to File, from L. N. Mays, Assist- ant General Sales Manager for the West, Chev- rolet Motor Division, dated March 27, 1961.... 1377 798 No. 146—Letter to Dealers Diversified Services, Ine. (FEDCO) from Warren Biggs, Warren Biggs Chevrolet, dated September 30, 1959... 1379 801 No. 147—Letter to Dealers Diversified Services, Ine. (EFEDCO) from Warren Biggs, Warren Biggs Chevrolet, dated October 13, 1960...... 1380 802 No. 149—-Letter to Autoresco (Dealers Diversified Services, Inc.—also referred to as FEDCO), from Paul O’Sullivan, Bruder Chevrolet, dated ey IE bo 5 ROARS v Adie ts Os orn hc 1381 803 No. 151—Letter to Dealers Diversified Services, Ine. (FEDCO) from M. Harvey, Bruder Chev- rolet, dated September 29, 1959.............. 1382 804 No. 152—Letter to Dealers Diversified Services, Ine. (FEDCO) from Cecil R. Glover, Bruder Chevrolet, dated October 1, 1960 ........... 1383 805 Wo, 153—-Letter to Dealers Diversified Services, Ine. from Cecil R. Glover, General Manager, Bruder Chevrolet, dated January 3, 1961..... 1384 806 No. 158—Letter to Jim Deupie, Dealers Diversi- fied Services, Inc., from James M. Snow, Sales Manager, Parkwood Chevrolet, dated May 25, BOE go iS oa Ca ee OL: Bees 1385 807 No. 162—Letter to Dealers Diversified Services, Ine., from G. V. Jones, Glenn Jones Chevrolet, dated January 13, 1960, with attachments ... 1386 809 No. 163—Letter to Joan Miller, Dealers Diversi- fied Services, Inc. (FEDCO), from W. S. New- man and Bill Spoo, Citizens Chevrolet, dated Bapbenivey DR Bie se ts ie. 1388 813 No. 170—Letter to R. M. O’Connor from J. N. Armour, Business Manager, Eddie Hopper Chevrolet, dated June 9, 1960, with postseript by F. N. Hopper, President, and attachment.. 1389 815 No. 171—Minutes of Meeting of Losor Chevrolet Dealers Association, held June 28, 1960...... 1392 818 No. 172—Minutes of Meeting of Losor Chevrolet Dealers Association, held July 26, 1960...... 1394 820 No. 173—Minutes 0f Meeting of Losor Chevrolet Dealers Association, held September 27, 1960.. 1395 821 No. 174—Minutes of Meeting of Losor Chevrolet Dealers Association, held October 27, 1960.... 1397 823 No. 175—Minutes of Meeting of Losor Chevrolet Dealers Association, held November 10, 1960.. 1398 824 INDEX ix Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff's Exhibits—Continued Original Print No. 176—Letter to Losor Dealer Members from Board of Directors, Losor Chevrolet Dealer’s ° Association, dated January 26, 1961......... 1399 825 No. 177—Minutes of Meeting of Losor Chevrolet Dealers Association, held April 6, 1961....... 1400 826 No. 178—Minutes of Directors’ Meeting of Dealers’ Service Inc., held December 21, 1960 1401 827 No. 184—Letter to Jerry Faust from C. D. Cone, Cone Brothers Chevrolet, dated June 22, 1960, Se een RE CIEEIIRING om etn Tera ees ates 1403 829 No. 185—Presentation of Discount House Activi- ties, Distribution Policy Group Meeting, Wed- nesday, December 21, 1960.................. 1405 833 No. 186—Shopping Report for Month of April MS sh hrun wie rs Aap wes Mae eel eed. 1426 841 No. 187—List of discount houses found to be selling, or not to be selling, 1961 Chevrolets.. 1431 848 No. 189—Shopping Reports of April 6 and 7, BE a aan £4 eee eo ee ba eee 1432 849 No. 190—Statement of Russ De Orto, May 23, eh See Ok es ee 1433 850 No. 191—Report re various discount houses, ete. 1435 852 No. 192—Report re Union Store, Montelair..... 1440 857 No. 193—Report re Brockway Plan plus business eard and handwritten notes................. 1443 859 No. 195—Letter to Glenn S. Roberts, Los Angeles, from E. H. Colliau, dated March 4, 1961...... 1447 862 No. 196—Letter to Glenn Roberts, Los Angeles, from Bob Erskine, Bob Erskine Chevrolet, Caheg, Tis GR ss Se CBA 1448 863 No. 197—Letter to Glenn S. Roberts, Los Angeles, from Robert Sorensen, Community Chevrolet, SOUT EG Ty I oe ds oe eee Gee 1449 864 No. 198—-Letter to Owen Keown, President, Owen Keown Chevrolet, from K. E. Staley, dated TOO Fe Fs ke wise be es Sedans 1450 865 No. 200—Letter to All Chevrolet Dealers from K. E. Staley, General Sales Manager, Chevrolet Motors Division, dated August 1, 1960, with attached letter of instructions addressed to All Chevrolet Wholesale Personnel from K. E. Sta- Wy; dated: Jaly Ze. 2908). 2. 1455 870 x INDEX Record from the United States District Court for the Southern District of California, Central Division— Continued Plaintiff's Exhibits—Continued Original Print No. 201—Inter-Organization letter to H. E. Craw- ford from L. N. Mays, Assistant General Sales Manager for the West, Chevrolet Motor Divi- sion, re Discount House Activity Pacific Coast Region, dated January 18,1961.............. 1458 873 No. 212—Looseleaf booklet entitled, “Prepared by Statistical Tabulating Corporation”—contains “print out” listing all 1960 sales of Chevrolets by seven dealers who sold through discount houses and referral services................. 1460 876 Volume III No. 287—Chart showing 1960 Chevrolet Dealer Volume in Los Angeles metropolitan area.... 1810 1229 No. 290—Letter to Robert O’Connor from Phil Johnston, College Chevrolet, Inc., dated March ARR S Ca aR ie te ai ig Satan ine oe 1812 1231 DEFENDANTS’ EXHIBITS: A—Map of Chevrolet-Los Angeles Metropolitan Area (expanded) showing Chevrolet dealer and discount house locations (Stipulation of Facts Number Three) (See Clerk’s note.).......... 1813 = 1232 B—Map of Chevrolet-Los Angeles Metropolitan Area (expanded) showing Chevrolet dealer, Ford (Ford, Mercury, Comet) dealer, Chrysler (Plymouth, Dodge) dealer, Rambler dealer, Studebaker dealer, and Volkswagen dealer loca- tions (Stipulation of Facts Number Three) 8 Re ek ee er ee 1813 =: 1232 C—Listing of Chevrolet dealers and identifying numbers for Defendants’ Exhibits A and B (Stipulation of Facts Number Three) (Blue WN ice oe op hnn a es aN erg SW ca ters. ia 1814 1233 D—Listing of discount houses and referral serv- ices and identifying numbers for Defendants’ Exhibit A (Stipulation of Facts Number Three) gE SR gaan OO nen nee = te aE 1821 1238 J—Tabulation from Defendants’ Exhibit B by identifying number showing each Chevrolet dealer, Ford dealer, Chrysler dealer, Rambler dealer, Studebaker dealer and Volkswagen dealer located within a five mile radii of each Chevrolet dealer indexed in Defendants’ Ex- INDEX xi Record from the United States District Court for the Southern District of California, Central Division— Continued Defendants’ Exhibits—Continuned Original Print AA—Stipulation of Facts Number Two, dated May 20, 1964, with attachments—Gemco Auto Show—Discount house ads (excerpts)........ 1846 1261 AP—Dealers Diversified Services, Inc. letter of instructions to cooperating dealers—undated.. 1879 1293 AQ—Letter to J. H. Connell from L. N. Mays, dated November 23, 1960................... 1880 1295 a, AR—Letter to K. E. Staley from Frank Green, dated December 2, 1960, with attached copy of Auto Dealers Business Letter dated December SW Nae eee ete be 1881 1296 AS—Letter to Frank Green from J. M. Roche, dated December 15, 1960................... 1885 1301 AV—lInter-Organization letter to All Car Divi- sions from J. M. Roche, dated December 28, 1960, with attached letters “To All (Cadillac, Buick, Chevrolet, Oldsmobile and Pontiac) Dealers”, dated December 30, 1960... 1887 1303 AW—Inter-Organization letter to J. M. Roche from K, E. Staley, dated December 29, 1960.. 1905 1324 AX—Letter to John S. Gordon from James Fahy and Virgil Dunn, dated February 15, 1961.... 1906 1325 AY—Inter-Organization letter to Lawrence Ave- rill from A. H. Belfie, dated March 23, 1961, with attached copy of letter to James Fahy and Virgil Dunn, Fleet Sales Company, from A. H. Belfie, dated March 23, 1961............. 1907 1326 AZ—Stipulation of Facts Number Three, dated May 20, 1964, re Defendants’ Exhibits A NE iis oe Vie ves ER Fae ne beds 1911 1329 BA—P-W Exhibit—Summary of Profitability in the Service and Parts Departments in 1960 for the 76 Los Angeles Metropolitan Area Chev- || CU Bie eager. ay Vinee etn aera 1917 1333 BB—P-W Exhibit—Estimated Reduction in New Car Volume to Eliminate all Profit for Volume Classes of Los Angeles Metropolitan Area Cheviclek: Dhenlene a. 4.56 ks heck ieee 1918 1333 BC—P-W Exhibit—Estimated Reduction in New Car Selling Price to Eliminate all Profit for Volume Classes of Los saaond rere Area Chevrolet Dealers. . pon Hees 1919 1334 xii INDEX Record from the United States District Court for the Southern District of California, Central Division— Continued Defendants’ Exhibits—Continued Original Print BD—P-W Exhibit—Median Gross Profit per New Chevrolet Passenger Car Sold in 1960 by Los Angeles Metropolitan Area Chevrolet Dealers Who Sold Through Discount Houses or Referral See ce ee 1 Be an 1920-1334 BE—P-W Exhibit—Reprint from Collier’s—taken from Hirscu, Introduction to Modern Statis- OR DIE. 60s as 1921 1335 BF—P-W Exhibit—Graph: 1960 Combined Gross Profit for New and Used Car Departments (Based on 1960 Financial Statements of the 73 Los Angeles Metropolitan Area Chevrolet Deaetes = oe 1922 1337 BG—P-W Exhibit—Qraph : 1960 Combined Gross Profit for Service and Parts Departments (Based on 1960 Financial Statements ete.) 1923 1338 BH—P-W Exhibit—Graph: 1960 Net Miscel- laneous Income of the Entire Dealership (Based on 1960 Financial Statements ete.) 1924 1339 BI—P-W Exhibit—Graph: 1960 Combined Vari- able Selling Expenses for the New and Used Car Departments (Based on 1960 Financial Statements ete.) . 1925-1340 BJ—P-W Exhibit—Graph: 1960 Combined Semi- fixed Expenses of the New and Used Car De- partments (Based on 1960 Financial Statements ete.) . 1926 1341 BK—P-W Exhibit—Graph: 1960 Combined Semi- fixed Expenses of the Service and Parts Depart- ments (Based on 1960 Financial Statements ete.) 192 = «1342 BL—P-W Exhibit—Graph: 1960 Fixed Expenses of the Dealership (Based on 1960 Financial Statements ete.) 1928s 143 BM—P-W Exhibit—Effect of a Loss in Sales Vol- ume upon a Los Angeles Metropolitan Area Chevrolet Dealer of the 300 New Car Volume Class 1929 1345 BN—P-W Exhibit---Effect of a Loss in Sales Vol- ume upon a Los Angeles Metropolitan Area Chevrolet Dealer of the 400 New Car Volume Class 1930 1346 BO—P-W Exhibit—Effect of a Loss in Sales Vol- ume upon a Les Angeles Metropolitan Area Chevrolet Dealer of the 500 New Car Volume WE). ae. . +e { : | : | i A ; : ; t x : ; 7 ye A t : aan St 4 i _ as tle - s ' a ¥ ] 7 Y Fe i. a | . a ; = rs ; a 3 - ~ ae a _ : — i a . Sige! Tem =i » te P y 7 = - rea weet Keclbal il oh bee Dien ‘% : x 7 * 3 a ay ee eee “4 oe = ——— (fol. 1290] In rHe Unrrep States Distrior Court Puarntirr’s Exursitr No. 86 Drewer-JoNES CHEVROLET 14925 Paramount Blvd.—Paramount, California MEtcalf 0-5861 — NEvada 6-3700 November 28, 1960. Mr. K, E. Staley Mr. Gordon Mr. Cole Mr. Staley Chevrolet Motor Division General Motors Bldg. Detroit 2, Michigan Gentlemen : As authorized Chevrolet Dealers, the present practice of a few fellow Dealers selling Cars and Trucks to Discount Houses and Referal Companies at a ridiculously low mark up is a matter of grave concern to us. We have always endorsed most enthusiastically General Motors program of franchising dealers and your demands made upon us as business men has established tke sale and servicing of your products on the extremely high plateau that you and we have endorsed, and strive to attain and maintain through the years, but now, because of the greed, or some other equally low base desires, of a few so-called quality dealers they are jeopardizing the entire General Motors Authorized Dealer Franchising system by selling Cars and Trucks to these Discount houses and referal Com- panies, Here in Southern California the Discount Houses and referal Companies are boldly advertising by TV, radio and Newspapers, (ad enclosed), that they ean and will give the public big discounts on the purchase of any New Car, with complete Factory Warranty and Service and even take trades at top market value. Needless to say we and every other Dealer, with large or medium investments, as the case may be, are loosing sales to these discount houses and referal Companies, some with very low if any investments, and none with Service Departments nor Parts Inventory to 708 back up General Motors owner protection plan and General Motors Guardian Maintenance program. Auto Salesmen are finding is hard to maintain high stand- ards of morale and the enthusiasm for the authorized fran- chise system that they have known for so long and in some cases feel no desire to attempt to advance to the status of Dealer because of this situation. [fol.1291] Is there a ready solution? We feel there is! We feel that if all General Motors Dealers were in- structed by the Corporation that selling Cars and Trucks to or through Discount Houses and referal Companies was against the wishes and policy of General Motors and that you wanted it stopped now, and that all angles and loop- holes and devious matters of selling Cars and Trucks to or through these Companies to the buying public be stopped at once, Jt would be done! We feel sure that the General Motors ‘‘Franchising Dealer Program’’ would be strengthened and saved by your immediate action. Respectfully, Drewer-Jones Chevrolet, Glenn V. Jones, President; Bob Drewer, Partner. GVJ/BD :ms encl/1 e/e to: Mr. Roy M. Cash, Regional Manager; R. M. O’Con- nor, Zone Manager. P.S.—One of our top producers resigned today, to accept a Sales job with one of the large referal Companies known as the 4-A Auto Sales on Olympic Ave. in Los Angeles. 709 | i : oad ai * ONIDNVNId NO 3AVS OSC ame oes : 717 #09034 1V SalLVa JONVNIZ OLNV %%b MOT M3N "SuOd JAVS NOA N3HM OW WHINZ 5 — 719 [fol.1298] In tHe Unrrep States Districr Court Puarntirr’s Exureir No. 91 InTER-ORGANIZATION Letrers ONLY November 30, 1960. Mr. L. N. Mays: Here are some ‘‘discount house’’ letters which came up from Mr. Cole. I sincerely believe that we must accelerate our action in this regard, with full support of the Corporation and Legal Department. Will try to get time today to listen to the recording which you told me about last evening—and am anxious to have your letter of resume, so that I might advise Mr. Cole as to the situation. Very truly yours, KES KES mw Attachs. 720 {fol. 1299] Is rae Unrrep States District Court Piarntirr’s Exureir No. 92 Inter-OrGanizaTIOn Letrers ONLY Chevrolet ‘November 30, 1960 Mr. L. N. Mays: As per our discussion, we must be in a position to answer letters such as the attached concerning the ‘‘discount house’’ problem. While you are attempting to get authorized letter from me to dealers, we should also draft a letter (approved by Legal) which can be in answer to specific communications such as the attached. It is disconcerting to see that Mr. Henson states (hat Mr. O’Connor seems to be powerless, and without authority to do much about it, when you and I know that he has talked to dealers in this regard. In other words, Lee, I’m talking about two letters. One to specifically answer Harbor Chevrolet and others—and two, a general letter to dealers stating our position in the matter. This applies to all of the attached. We cannot wait much longer for the proper reply, and we need the full support of the Corporation and the Legal Department. This threat to the franchise-system of distribution in this industry, in my opinion, is far more serious than the ‘‘boot- legging’’ situation we faced some few years ago. Moral suasion can only go so far. We need strong and immediate backing. We can secure that only from the Corporation, with proper guidance from the Legal Department. I’m willing to take any necessary busiicss risks to step up to this deplorable situation, and would be remiss in my respon- sibility if I did not positively state that we must take such necessary business risks now. Very truly yours, F.. E. Staley KES mw Attachs. 721 {fol. 1300] Is tHe Unrrep States Disrricr Court Puiaintirr’s Exutsit No. 93 Meetine Hevp in Mr. H. E. Crawrorp’s Orrice on Novemser 30, 1960 Attended by: Messrs. H. E. Crawford, Lee. Mays, R. F. Schreitmueller, G. A. Greig, S. G. Gilliatt, E. D. Foley. Meeting held to discuss the matter of car sales through large discount stores. Mr. Mays pointed out that CMA (Consumers Mart of America) has 3 stores in Orange County, California, and is planning to put automobile desks in their ? stores in Chicago and the 1 store in San Francisco. Listened to part of a regording of conversation» between a dealer, Mr. Chocran, and the Sales Manager of the auto- mobile phase of CMA, a Mr. Myer, in which he outlines in quite some detail the method of operation. They buy the car from the dealer ; register it in the name of an individual, generally a salesman of the discount house; remove the label and place the car on display either in a showroom or a suitable lot. Cars are sold at $275 over dealer cost, with $125 going to the dealer, $25 to the automobile desk as rent and the balance is the salesman’s commission and automobile desk profit. Chevrolet is receiving many complaints from both dealers and salesmen by letter and telegrams, wanting to know what General Motors is going to do about this practice as it is costing them business. Mr. Crawford requested that we obtain Dun & Brad- street reports on all of these companies and ask them to have the information up to date—special reports if neces- sary—specifying that we are particularly interested in their activities with respect to the sale and offering for sale of automobiles. Chevrolet is to select the best letters and wires as ex- amples and with the assistance if Mr. Schreitmueller and Mr. Bridenstine, Mr, Mays will work to develop a satis- factory letter of reply explaining General Motors position. It is felt that possibly copies of that letter could then be 722 sent to all dealers as a matter of information since al] dezlers would be interested in a statement of General Motors position. It is proposed that such a letter would deal with the reasons why we are opposed to this program. E. D. Foley x 723 {fol. 1301] Ins tHe Unrrep Srates Disrricr Court Puarntirr’s Exursit No. 95 S & J CHEVROLET Sales—Service—Parts 11900 East South Street—Artesia, California Telephone : UNderhill 5-1276 November 30, 1960. Mr. E. N. Cole General Manager Chevrolet Motor Division Detroit, Michigan Dear Mr. Cole: I am writing this letter to discuss a matter of the utmost importance to me, and to my brother dealer. The problem that has arisen in Southern California is the trend towards Discount Houses. These places of busi- ness are delivering new Chevrolets and other makes of cars at $100.00 over invoice; they have become very brazen with their advertising, and even have new cars on display. This type of competition is becoming increasingly more difficult to compete against because of their phenominal growth. These Discount Houses have no selling expense or after-sale expense as their customers are told to take their car to their local Chevrolet Dealer. There are only a few dealers in my immediate area who are delivering new Chevrolets to these Discount Houses; I am hoping that something can be done to stop these unscrupulous sales. My salesmen are encountering these deals more and more frequenily, it is very discouraging to a salesman who is trying to make a profitable deal to be told by a customer that he can buy elsewhere for $100.00 over invoice. At the rate Discount Houses are being built the situation will soon become critical. I know that after you have reviewed the situation some- thing will be done to alleviate this problem if it is at all possible. Yours very truly, Donald J. Corrigan, President, S. & J. Chevrolet. 724 {fol. 1302] In tae Unirep States District Court Puarntirr’s Exursit No. 96 December 2, 1960. Gentlemen: I have had people in to look at new cars, and that had intentions of buying. While in the process of making a deal the people would ask if we could match a deal the same way a discount house would. After trying to make them understand about service ete. they still went to a discount house. Customer also said they could get just as good of service anywhere they bought the car, and beat the price. Every customer Ive had, that said anything about discount houses said they could beat our deal by quite a margin, even a minimum deal. R. M. Gilbert, Sales Rep., Bill Barnett Chevrolet. {fol. 1303] In tare Unrrep States District Court Puaintirr’s Exureir No. 97 December 2, 1960. Gentlemen: In the past few years discount houses have become an absolute disgrace to the Automobile Industry, especially the men who are depending on automobile sales as their livelihood. I, as an automobile salesman have lost sale after sale to these discount houses. It is true that the low prices that are charged by these companys are almost impossible to meet at a legitimate dealership. I believe in everyone making a substantial living, but I also believe that people should buy from a department store what a department store sells and leave the auto- mobile sales to the automobile dealership and to the sales- man. A. P. Hofkins, Sales Rep., Bill Barnett Chevrolet. 725 (fol. 1304) In tue Unrrep States District Court Puatwntirr’s Exuisit No. 98 December 2, 1960. Gentlemen : The other day some people named Sautter were in to look at a new parkwood wagon. They told me they were just looking at it here to make sure of what they were going to get through a discount house. The price they had was $600.00 off of the retail list. When I tried to explain our policy of service ete., they told me that the discount house had told them that what- ever dealer they got their car from would service it as well as any other. As a result they felt they had everything to gain and nothing to lose by buying from the discount house. Don Teague, Sales Rep., Bill Barnett Chevrolet. [fol. 1805] Is tHe Untirep States District Court PuLatntirr’s Exutstr No, 99 December 2, 1960. Gentlemen: On announcement evening C.M.A. discount house dis- counted a 1961 Chevrolet to Mr. & Mrs. Willowby 17% off of a window price. They also promised delivery within 30 days. We could not meet the price or promise delivery within that period. Within the past week we lost another new Chevrolet for the exact same reason. This time to Fed-Co. Byron J. Booker, Sales Rep., Bill Barnett Chevrolet. 126 (fol. 1306] In tHe Unirep States District Court PuarntirF’s Exuisit No. 100 December 2, 1960, Gentlemen: Cal Stores forced us to take a $100.00 gross profit deal on a new 1961 Chevrolet—C 2534. This truck had lots of optional equipment on it and should have shown at least $350.00 profit. Mr. Maddox is an old customer of our firm and in order to protect our business we had to take the deal on this basis, Larry Charrey, Sales Rep., Bill Barnett Chevrolet, [fol. 1307] I~ 1Hz Untrep States District Court PuarntiFF’s Exursir No. 101 December 2, 1960 Gentlemen: I’ve lost three prospective customers to discount houses that I know of. I feel that many of the people coming in have solid prices from these places and use them to com- pare our prices. To go below $200.00 gross is not a com- mon practice so I feel many car buyers leave our front door with a price of $150.00 over. They do this rather than tell the salesman the price they have received from the dis- count house. The Dealers must stop this supply of cars, a salesman can only hope for it. The Dealers are doing it so the Dealers must stop it, not salesman. Stan Adams, Sales Rep., Bill Barnett Chevrolet. 727 (fol. 1308] In tHe Untrep States District Court PuaintirF’s Exursir No. 102 December 2, 1960. Gentlemen : I have had severai people recently that would not come to terms on a car because of Fed-Co or Cal Stores and we lost the deals because they were selling at much less than I could make the deals for. I tried to convince them that they would not receive proper service or care on their car buying in this manner, but they were assured they would get good service. I have called back on these people and they had bought the car at the figure quoted to them. Casey Galvin, Sales Rep., Bill Barnett Chevrolet. [fol. 1309] Is rar Unrirep States District Courr Puaintirr’s Exurerr No, 103 " December 2, 1960, Gentlemen: I have lost three sales to discount houses that I know of and I believe there was about seven others that I could have put into a new car if they hadn’t gone to a discount house, I have delivered one Corvair to prospects after they had been to Fed-Co. The only reason we did put them into the car was the fact that we had the car they wanted. Most of these people have come on the showroom floor and were definite buyers. I’ve given them demo rides and presented the features of the 1960 & 1961 Chevys, we got together in the closing booth and worked out a good offer or deal and they seemed to like it, but they wanted to go to the discount houses before they bought. When I next contacted them they were in a new Chevy. Their deal was anywhere from $50.00 to $200.00 less than ours. These people express their gratitude for the time I spent with them and I have been told that it was through my efforts that they decided to get a Chevy. I believe that these discount houses are harmful to the New Car Sales because: 1. They don’t sell the product. 2. There only advantage is cheap price, and when they sell cheap the customer is treated cheap. Norm Christoffersen, Sales Rep., Bill Barnett Chev- rolet. ~) be e {fol.1310] Is rue Unrrep Srares District Court Puaintirr’s Exursit No. 106 6 December 1960. Mr. Bob Q’Connor Chevrolet Motor Division 3325 Wilshire Blvd. Los Angeles, 5, California Dear Bob, As a result of our phone conversation, | had a set of pic- ‘ures made as documentary evidence as to the Automobile Show, held by Gemeo, November 11, 12, and 13th. A copy of their add from the Los Angeles Times is also enclosed which you no doubt already have. If you find these pictures of any value to you, go ahead and use them. If they duplicate evidence vou already have, please return them. Yours very truly, Cone Chevrolet Co., C. D. Cone, Pres. ede/ewk enel 730 {fol. 1311] In tHe Unrrep Stares Disrricr Courr PLAINTIFF’s Exxurpit No. 107 Received December 12, 1960 December 6, 1960. Mr. John Gordon, President General Motors Corporation General Motors Building Detroit 2, Michigan Dear Sir: We are very much concerned over the establishing of dis- count houses in our area and are protesting the sale of Chevrolets by a few dealers to these discount houses. After having served this area for over 32 years until we now have an investment of approximately three quarters of a million dollars, we now find our business threatened by such discount houses and unethical advertising. We therefore ask your help in curbing such sales by these Chevrolet Dealers. Sincerely yours, Harry M. Ostrom and Son, Harry M. Ostrom, Partner, Harold L. Ostrom, Partner. HMO:bb c/o: Mr. F. M. Cole, General Manager, Chevrolet Division, Mr. Gene Staley, General Sales Manager, Chevrolet Divi- sion, Mr. R. M. O’Connor, Zone Manager, Chevrolet Divi- sion. 731 [fol. 1312] Is roe Unirep States District Court PuatntirF’s Exuisir No. 111 Owen Keown CHEVROLET CoMPANY Lincoln & Washington Blvds., Venice Phone EX 8-6243 December 6, 1960. Discount House File Mr. E. N. Cole, General Manager Chevrolet Motor Division General Motors Building Detroit, Michigan Dear Mr. Cole: I have been informed that you have been advised by various dealers and your Los Angeles Zone office personnel of the serious problem created by many discount houses in this Los Angeles area. As I see it one of the most serious results of this can- cerous growth in our industry is that so many of the cus- tomers who are buying from discount houses are very unhappy with their cars because of the lack of service. The dealer who sells to a discount house retains very little gross and therefore does little or no pre-delivery service on the ear. You are aware of the caliber of the Los Angeles labor market and that our cars do not reach us in such condition that they can be delivered without pre-delivery service. The customer is always told he can take his car to any dealer for service which may be required. When the cus- tomer reaches our service department he has a long list of items that should have been corrected before the car was delivered. We do our best to explain that we would be willing to do any work on his car that would be necessary provided it was covered by Factory Warranty, but that he should take the ear back to the selling dealer for free service work which is not covered by warranty. Almost always the customer is indignant because he had been told ‘‘to just take his car to any dealer and they had to give him the service.’’ 732 We have had this problem of handling such customers diplomatically and not offending them for some time, but with the recent advent of so many new discount houses, all advertising new cars for sale, our difficulties have multi. plied ten fold. Your advice on how to proceed with this kind of cus. tomer will be most welcome. Very truly yours, Owen Keown. ce: Mr. R, J. O’Connor {fol. 1313] Ly rar Unirep Starrs District Court Pian tirr’s Exuusrr No, 112 Srasoarp Motors Frank K. Swift—Frank K. Swift, Jr. TErminal 2-0316 1831 South Pacifie Ave——San Pedro, California December 7, 1960. Mr. EK. N. Cole General Manager Chevrolet Motor Division General Motors Building Detroit 2, Michigan Dear Mr. Cole: I realize that during the recent weeks you have received many messages from Southern California Chevrolet Deal- ers and Salesmen regarding the sale of new cars through “Discount Houses.’’ However, we feel that this situation is so degrading and vicious that we would like to add our voice in a plea to help us stamp out this cancerous practice. A discount house is a jeopardy to all facetes of the auto- mobile industry for the following reasons: 1. Demoralizes Salesmen and Dealers alike. 2. Creates confusion among buyers. 3. Provides a product distaste of the area surrounding ‘Service Responsibility’’. 4. They have no loyalty, investment, inventories and can never create customer goodwill. We all belong to a great industry and no franchise is more sought after than Chevrolet. That is why we should not permit a few short sighted dealers to prostitute our great product which will eventually ruin our franchise system, Mr. Cole, I am enclosing an independent publication which will show you the pulse in Southern California. Thank you, we remain, Respectfully yours, Frank K. Swift, Jr. Enclosure: FKS :mr 734 {fol. 1314] In tHe Unirep States District : JurtT Puarntirr’s Exursit No. 114 CHEVROLET-CENTRAL OFFICE Division of General Motors Corporation General Motors Building Detroit 2, Michigan Mr. E. E. Staley L. N. Mays Discount House Activities December 12, 1960. Dear Mr. Staley: Per your request, attached is a brief resume of discount house activities in the sale of new Chevrolet products since this subject was first brought to our attention in St. Louis in August of 1958. You had indicated that you might want to forward this resume to Mr. Cole. Approximately a week ago you received a letter dated December 2nd from a Mr. Frank Green, to which he at- tached a so-called ‘‘ Auto Dealer Business Letter,’’ bearing the same date, apparently published by someone in Cali- fornia for distribution among dealers. The latter dealt entirely with the discount house activities on the West Coast and gave perhaps the most complete story on this subject that we had seen. We, therefore, forwarded a copy of it immediately to Mr. Crawford’s office, requesting a reply for your signature to this Mr. Green and, at the same time, feeling that the contents of this so-called ‘‘busi- ness letter’’ would be helpful in the statement of General Motors’ position on this subject currently being drafted by the Sales Section and the Legal Department. Just in ease you did not have the opportunity to read it, I am attaching a copy of this Auto Dealer Business Letter which, too, you might desire to send to Mr. Cole. Mr. Crawford advised me by telephone last Friday that they are hoping to have their statement on General Motors’ position on dis- count house activities sometime this week. Mr. Gilliatt just called me this morning to state that he had just had a call from Willmark Service System, Ine, stating that their New York office had not approved their 735 accepting our proposed assignment that they shop discount houses for us as had been proposed. They said that they normally preferred to deal only in contract business ex- tending over a period of time rather than jobs of such short duration. This was quite surprising as the local Willmark manager last week had given us every assurance that they could and would like to have the job and he would be in contact with us today. It now appears that if we want to go ahead with this idea that we will have to make arrange- ments through either the Pinkerton or Burns agencies. We are checking now as to which of these two companies would be more apt to handle this type of assignment. [fol. 1315] Almost daily we have been insisting on Legal Department assistance on some kind of reply letter, even if it had to be some sort of a stalling letter, to acknowledge the many letters from dealers and wires from salesmen on this subject. As late as last Friday, we were again told they believed such replies should not be made until General Motors’ statement on this subject could be approved. Obviously, this is causing quite a delay in getting these replies on their way. We will keep you advised of further developments. Yours very truly, L. N. Mays LNM/ee Att. ee: Mr. L. H. Averill, Mr. H. P. Sattler 736 {fol. 1316] Resume or Discounr House Activities As Tuey AppLy To CHEVROLET This matter was first brought to Chevrolet’s attention as a problem area in the St. Louis Zone as early as August 1958 when the St. Louis metropolitan dealers were com- plaining about the activities of G.E.M. (Government Em- ployes Mart). At that time it was disclosed that Mr. Robert L. Wolfson, who was named in Paragraph Third and owned 25% of Feld Chevrolet Company, Maplewood, Missouri, has a sizable investment and is active in the management of G.E.M. At that time this matter was brought to Central Office attention and Mr. Wolfson was advised that Chevrolet in no way would consider making product available for dis- tribution through G.E.M. and that in the event he had auto- mobiles on display and personnel located at this location, we would consider that he had established a branch loca- tion which would be in violation of his Selling Agreement. The activities of this discount house have been observed continuously by the St. Louis Zone. The matter was again reopened by the Sales Section of the General Motors Corporation and the General Motors Legal Staff in December 1958 at which time they reviewed Chevrolet’s Central Office and Field files on this matter. The activities of G.E.M. disclosed that basically the meth- od of operation was a well organized and planned referral system for all makes of cars. G.E.M. works with a selected dealer with whom they have reached an agreement. The actual transaction takes place between the customer and the selected dealer with G.E.M. receiving a flat fee, part of which goes to the company and part of which goes to the operator of the automotive desk. The G.E.M. stores are operated ostensibly for the benefit of members only. Such members qualifying on the basis that they work for some branch of the Federal, State or Local Governments or School Systems, with a membership | fee normally in the amount in the area of $2.00 to $3.00. It would appear that one of the real hazards of condon- ing this type of operation is that discounted prices are freely quoted to a large portion of the public. The G.E.M. operation has expanded and now has branches 737 operating, to our knowledge, in Denver, Kansas City, Los les and the Washington Metropolitan Area. These {fol. 1317] merchandising tactics have been more active in the Los Angeles Metropolitan Area. In addition to G.E.M., we are aware of six other discount houses operating with similar types of setups. Since these merchandising methods have been expanding, it has been a disturbing influence to the normal retail activi- ties of Chevrolet dealers and salesmen in the Los Angeles Metropolitan Area so that they have organized an activity of wires and letters to executives of Chevrolet and the General Motors Corporation. The Chevrolet Los Angeles Zone has been making a con- tinuing investigation of the activities of discount houses. Their investigation so far as disclosed in addition to refer- ral type of operation that one discount house, C.M.A., is actually purchasing cars from dealers which they resell. This discount house plans to expand in the Los Angeles Area, as well as San Francisco, Phoenix and Chicago. The activities of these discount houses have been the sub- ject of review by Chevrolet, as well as the Sales Section and Legal Staff of the General Motors Corporation and is avery delicate matter inasmuch as it would appear at the outset there is very little legally that Chevrolet or the Cor- poration can do relative to referral agreements which deal- ers may have with certain individuals. | The C.M.A. method of operation is very comparable to the usual bootleg activities. The difficulty in coping with both of these situations is ascertaining how many cars a particular dealer is channelling through these outlets since on the referral basis the ultimate deal is made between the customer and the dealer and on the direct purchases and resale by the discount houses, the cars are apparently sold and registered to an employe or an associate of people connected with the discount house operation. Chevrolet’s current plans on this matter because of the seriousness of it in the Los Angeles Zone which prompted the many letters from dealers and salesmen is to formulate a reply to the dealers and salesmen that we have the matter under consideration, giving very serious thought to the mat- ter and hope to be able to furnish them with more definite _ information at a future date. 738 It should be noted this activity is a national problem and we are concerned because of the expansion of the activity, So that Chevrolet will have more definite facts on which to base any opinions or policies, it is proposed and arrange: [fol. 1318] ments are being made that the services of an outside investigating agency be engaged to make a shop- ping survey of some of the typical discount houses, carry- ing through if necessary to the purchase of an automobile from them. S. G. Gilliatt. SGG :bjm 12/7/60 739 {fol.1319] Is tae Unitep States Disrricr Court PiarntirF’s Exutsir No. 115 GENERAL Motors CorPoraTION Detroit 2, Michigan December 15, 1960. Handwritten Note Discussed with Averill 12/19 who is handling with field. K.E.S. U.S. Car Division General Sales Managers This has reference to the activities of discount houses in Southern California who engage in the sale of new cars. You are also familiar with the letters and telegrams which have been received from GM dealers and salesmen regard- ing this activity, addressed to Mr. Gordon as well as to Divisional executives. Attached is a copy of reply over Mr. Roche’s signature that is going forward today to each of the dealers who has written to Mr. Gordon. A large number of retail salesmen have also sent letters or wires to Mr. Gordon. We are attaching a list of all of the senders of the letters and telegrams received from your dealers or retail salesmen, where such individuals can be identified from their wire or letter. We would like especially to call your attention to the following paragraph from Mr. Roche’s letter: ‘‘The wholesale organization of each of our Divisions will give special attention to these problems. They propose to personally discuss this matter with each of their dealers and ask them to review their operations in the light of the critical nature of the problem as it affects the good will of the product they sell, the entire franchise system of distribution, and the validity of any arrangement they may have with a discount house under the provisions of their General Motors Dealer Selling Agreement.’’ 740 In accordance with this paragraph, will you please ar- range to have the Zone Manager of your Los Angeles Zone contact each of his dealers in the Los Angeles area to discuss the subject matter of this paragraph. We feel that these contacts will also serve as a reply, to the salesmen of those dealers who have not written Mr. Gordon. I shall discuss this matter in greater detail with you after you have had an opportunity to review the attached. H. E. Crawford. g Attach. (fol. 1320] In rae Unrrep States District Court PuiarntiFF’s Exursit No. 116 GENERAL Motors CorPoraTION Detroit 2, Michigan December 15, 1960. U.S. Car Division Discussed with Murray, Averill, Kennard Hudgins, Feely. {Handwritten in Right-Hand Corner.] General Sales Managers This has reference to the activities of discount houses in Southern California who engage in the sale of new cars. You are also familiar with the letters and telegrams which have been received from GM dealers and salesmen regard- ing this activity, addressed to Mr. Gordon as well as to Divisional executives. Attached is a copy of reply over Mr. Roche’s signature that is going forward today to each of the dealers who has written to Mr. Gordon. A large number of retail salesmen have also sent letters or wires to Mr. Gordon. We are attaching a list of all of the senders of the letters and telegrams received from vour dealers or retail salesmen, where such individuals can be identified from their wire or letter. We would like especially to call your attention to the following paragraph from Mr. Roche’s letter: The wholesale organization of each of our Divisions will give special attention to these problems. They propose to personally discuss this matter with each of their dealers and ask them to review their operations in the light of the critical nature of the problem as it affects the good will of the product they sell, the entire franchise system of distribution, and the validity of any arrangement they may have with a discount house 742 under the provisions of their General Motors Dealer Selling Agreement. In accordance with this paragraph, will you please ar. range to have the Zone Manager of your Los Angeles Zone contact each of his dealers in the Los Angeles area to dis- cuss the subject matter of this paragraph. We feel that these contacts will also serve as a reply, to the salesmen of those dealers who have not written Mr. Gordon. I shall discuss this matter in greater detail with you after you have had an opportunity to review the attached. H. EF. Crawford. g Attach. 743 [fol. 1321] Mr. C. F. Henson, President Harbor Chevrolet Corporation 3770 Cherry Avenue Long Beach 7, California Dear Mr. Henson: December 15, 1960. This will acknowledge receipt of your letter of Novem- ber 28, 1960, addressed to Mr. John F. Gordon, President, General Motors Corporation, referring to the increasing number of membership discount outlets in your area of sales and service responsibility offering new General Motors cars for sale to members and their friends. As you are no doubt aware, the Car Divisions of the Corporation have received similar letters and telegrams from a number of their dealers and employes of such dealership in dif- ferent sections of the country. The substance of these communications while varying in content, implies that General Motors Corporation as a manufacturer is either not aware of these practices or, that knowing about the situation refuses to recognize such prac- tices as ‘Sur fair competition’’ to enfranchised dealers, as well as an unsound method for potential customers to invest in new General Motors products. Some have even suggested that General Motors condones these practices as a means of obtaining additional sales. All these implications are entirely unwarranted, and reflect a lack of understanding by some of the General Motors Quality Dealer Program and the continuity of our efforts to implement the Program. General Motors Corporation does not and has not sold its new passenger cars and trucks for resale to any outlets other than authorized General Motors dealers. Frankly, I believe every General Motors dealer knows this, but it appears that some of their employes may not be quite as well informed. The reported recent expansion of the activities of so- called membership discount houses into the field of motor vehicle retail sales has been brought to our attention by members of our wholesale organizations of the Car and Truck Divisions. (fol. 1322] Inquiries have been made, and we are advised v44 that these discount outlets either (1) purchase their Gen. eral Motors motor vehicles from General Motors dealers for resale to members and their friends, or (2) by pre. arrangement with some General Motors dealers, they are in a position to make a deal with a customer for a price and then refer the customer to the General Motors dealer for delivery of the vehicle at the price established by the discount house. In the latter event, the delivering General Motors dealer reportedly pays a substantial portion of the gross profit realized on the deal to the discount establish- ment for division among the operator of the discount house, the operator of the automobile concession, and the auto- mobile salesman. Where the motor vehicles are purchased from a General Motors dealer and resold as new-used cars, the transaction is nothing more than what has generally become to be ree- ognized in the trade as a ‘‘bootleg’’ sale. On numerous occasions during the past several years, the management of General Motors Corporation has gone on record with the General Motors dealer organization expressing our deep concern with respect to this practice, which is recognized as being most detrimental to the good will which has been established over the years for, and identified with, the dealer, the manufacturer and the product. When a customer purchases a new-used General Motors car from one of the so-called discount houses, he reportedly does not receive a General Motors Dealer New Car War- ranty as would the original purchaser of the vehicle. Fur- thermore, the discount house normally provides no service facilities for the after-purchase needs of the customer. In attempting to trade upon the capital facilities of authorized dealers, the discount house seller reportedly tells the cus- tomer to take his car to any authorized General Motors dealer for his service requirements. If the purchaser is not satisfied with the service he receives from the authorized dealer, he then blames General Motors because, as an owner of a General Motors product, he expects the same high degree of service which owners of General Motors vehicles have learned to enjoy over the years from the General Motors dealer organzation. [{fol. 1323] While the management of General Motors Cor- poration has repeatedly pointed out the pitfalls of the ‘‘quick-profit’’ bootleg sale to its dealer organization, We, ESE SS ee ee eS a ied no os 745 have at the same time recognized the right of every dealer to lawfully resell his merchandise to anyone. On May 3, 1957, the President of General Motors Cor- poration sent all General Motors dealers a copy of his letter-reply to a protest against bootlegging from the Auto- mobile Dealers Association of Indiana. The following quo- tation is from that letter: ‘‘For several years it has been quite clear to those who have kept informed as to the interpretation of the anti- trust laws that the Department of Justice has taken a firm position, both in statements and opinions, that any restriction upon the right of a dealer having title to motor vehicles to sell such motor vehicles to anyone, anywhere at any price, was a violation of the antitrust laws. Judicial opinions handed down over these years tended to confirm this interpretation. ‘‘This ‘right of the dealer to sell the motor vehicles to which he has title’ as he pleases, is the key to these problems. It is the exercise of this right which first moves the motor vehicles into the bootleg channel. Eve if there were extenuating circumstances which moti- vated the movement of cars into the bootleg channel, unquestionably there are many such sales by authorized dealers made solely for the purpose of obtaining a quick profit.’’ The procedure whereby some discount outlets, which offer new cars for sale, make a deal with a customer, and then, as prearranged with an authorized dealer, turn the trans- action 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 where- by salesmen encourage referrals from friends and others (fol. 1824] who chance upon a prospective new car cus- tomer. The reports we have received indicate that these discount outlets are advertising new cars for sale at estab- lished business locations, frequently far removed from the location of the selling dealer. In effect, they in some in- stances represent the establishment of a second and unau- thorized sales outlet or location contrary to the provisions of the General Motors Dealer Selling Agreements. 746 More importantly, arrangements of this type tend to down-grade the enfranchised dealer as a new car merchant in the eyes of the public. It is difficult to understand how any dealer who has invested thousands of dollars in capital equipment to merchandise new cars can be a party to an arrangement which permits a discount outlet to discredit his merchandising ability by offering new cars for sale at purported ‘‘savings’’ to the customer, and then not only assume the obligation for the sale but also share his gross profit on the transaction with the discount house. General Motors Corporation recognizes the problems raised by the discount house new car merchandising activi- ties in your area, They are critical problems for the pub- lic, the franchised dealers, and the manufacturers. New car sales by these outlets do not represent one iota of addi- tional business for the dealer organization or the factories, They represent no savings to the public but only result in a dilution of the gross profit on each transaction which would otherwise be made by the franchised dealers who have the service facilities and trained mechanics to insure the customer’s enjoyment of his investment in a new car. Most importantly, they threaten the good will of the dealer organization, the manufacturer, and the product. The wholesale organization of each of our Divisions will give special attention to these problems. They propose to personally discuss this matter with each of their dealers and ask them to review their operations in the light of the critical nature of the problem as it affects the good will of the product they sell, the entire franchise system of [fol. 1325] distribution, and the validity of any arrange- ment they may have with a discount house under the pro- visions of their General Motors Dealer Selling Agreement. Let me assure you that we will continue our efforts to protect the good will of our products by every available legal means. I would appreciate your reviewing this letter with vour salesmen, so that they will more fully understand the posi- tion of General Motors with respect to the matters outlined herein. If any of your salesmen have written or wired us on this matter, this would serve as a means of acknowl edging their letters. Very truly yours, J. M. Roche. M 747 [fol. 1326] In tHe Unrrep Srares District Courr PuatntirF’s Exuisit No. 117 InTER-ORGANIZATION LETTERS ONLY Received December 21, 1960 December 16, 1960. To: Mr. R. M. O’Connor, Los Angeles Zone From: Mr. L. H. Averill, Central Office This has reference to the activities of discount houses in Southern California who engage in the sale of new cars. You are familiar with the letters and telegrams, which have been received from dealers and salesmen regarding this activity, addressed to Mr. Cole, Mr. Staley and Mr. Gordon. Attached is a copy of the reply going to the dealers who have written Mr. Cole and Mr. Staley, and in the content of same, you will note we have quoted the reply being sent over Mr. Roche’s signature to those dealers: who wrote Mr. Gordon. We are attaching a list of all the senders of letters and telegrams received from your dealers and retail salesmen where such individuals can be identified from their wire or letter. The dealers who are being answered by Mr. Sta- ley are so identified. The remaining dealers are being answered by Mr. Roche. We would like to especially call your attention to the following paragraph from Mr. Roche’s letter. “The wholesale organization of each of our Divisions will give special attention to these problems. They propose to personally discuss this matter with each of the dealers and ask them to review their operations in the light of the critical nature of the problem as it affects the good will of the product they sell, the en- tire franchise system of distribution, and the validity of any arrangement they may have with a discount house under the provisions of their General Motors Dealer Selling Agreement.”’ In accordance with this paragraph, will you please ar- range, through the medium of yourself, City Managers and 748 Assistant Zone Manager, to personally contact each of the [fol. 1327] dealers in the Los Angeles area to discuss the subject matter of the above paragraph. We feel that these contacts will also serve as a reply to the dealers and their salesmen who have not written Mr. Cole, Mr. Staley, or Mr. Gordon. The above subject was thoroughly discussed at our Re- gional Managers meeting on Wednesday, December 14th, hence I am sure Mr. Cash will discuss this subject in greater detail with you. After these contacts have been completed by Zone Man- agement, we would appreciate your advising this office the results of your conferences. Very truly yours, L, H. Averill, Executive Asst, General Sales Manager. LHA :rm Att. ec: Mr. L. N. Mays, Mr. R. M. Cash. 749 {fol. 1328] Ly rae Unirep Srares District Court PuarntiFF’s Exuisit No, 118 12-16-60. Mr. Cash: I was talking to Sid Gilliatt on the telephone today and he advised me that with respect to the discount house deal Jim Roach, G.M. Corp., is writing to Cone at Fullerton, Harbor Chevrolet at Long Beach, Fred Gledhill at Wilming- ton and Harry Ostrom at Montebello concerning the Cor- poration’s viewpoints in this regard. While the letter is quite lengthy, in essence it tells the dealers that we, too, dislike discount house operations, but cannot stop it. Any further letters of this nature will be answered over Mr. Staley’s signature. With regard to a publication, referred to as the ‘‘green letter’, which apparently had been forwarded to the cor- poration by some dealer in Southern California—Mr. Roach will also reply to this. Sid further advises that the Corpo- ration’s Distribution Staff will meet next Wednesday at which time they will decide what will be done regarding publication of the Corporation’s stand on the matter of discount houses. R. D. Lund 750 [fol. 1329] In tHe Unirep Srares District Court PuarntiFF’s Exuisit No. 119 Casa DE CapILLac 14401 Ventura Boulevard—Sherman Oaks, California Stanley 3-1430—State 4-9901 December 17, 1960. Martin Pollard. Mr. R. M. O’Connor Chevrolet Motor Division 3325 Wilshire Boulevard Los Angeles 5, California Dear Bob: ' Iam sure it is no news to you that the automobile dealers of Southern California are in a highly inflammable mental state over the menace that the discount house holds over their future business existence. Their fears are well- founded and most everyone is convinced that the discount house will destroy the franchise dealer, the dealer’s capital, and the franchise system, if not stopped now. Once this'is accomplished, the factories will become victims of the creeping cancerous attrition of the discount house method of merchandising. It is believed by many dealers that there is no escape, unless the discount house is attacked on all fronts and gradually pushed back until they are out of the automobile retail business. This is not a pretty picture. About 90% of the dealers want to have a show-down fight now as a last ditch effort to preserve themselves and save the franchise system. They would like to have their respective factories back them up in this fight. If this is not possible, they are prepared to go it alone, and go all the way. This does not apply to GM dealers only. It applies to all franchised dealers representing all lines of cars sold in this area. A meeting was held last Thursday, over which I presided. The main reason I chairmaned the meeting was because the Foothill Dealers picked up the tab for the luncheon. The meeting was attended by representatives of the three 751 Chevrolet dealer associations, and the purpose was to dis- cuss ways and means by which the dealers could combat the discount house. Out of this meeting was born a com- mittee instructed to take certain measures as directed. The chairman elected was Cap Reade. He intends to see you at once (I suppose he has by now) and explain the objec- tives of the committee. His reason for so doing is twofold: Out of respect for you as a man and as Zone Manager, and to assure you that the work of the committee will be out in the open and not behind your back. It is my opinion that the meeting and the resultant com- mittee is a good thing for Chevrolet and for Chevrolet business. I feel that the dealers who have been drawn together in a common defense of what is dear to them— [fol. 1330] the financial security of their families—is a healthy condition. I feel now that the long wait and indeci- sion is at an end, that the dealers as they go into action will replace their fears with courage, and you will end up being the head of the fightingest bunch of Chevrolet senters anywhere in the U.S.A. The fight for survival will lead to many good by- jredante. It will lead to a cohesiveness of a dealer-body that will erystalize into a better cooperative spirit in all things of | mutual interest; a more cooperative team of dealers more determined to succeed over competition and less inclined to cut each other’s throats, competitively. I feel this will greatly help in bringing back a respectable profit for their investment and for their efforts. This, then, will once again put the Chevrolet franchise back in the premium column. I am sure that you and everyone at Chevrolet joins with me in high hope for success. Sincerely, Martin Pollard. MP:1 P.S. Please excuse the letterhead temporary. I am out of Chevrolet stationery. 752 {fol. 1331] Is tus Unrrep Srates District Court Puiarntirr’s Exuisit No. 120 Chevrolet Dir. Org. & Anal. Dept. December 22 11:17 AM’ 60 Mr. R. M. Cash, Regional Office—Oakland Mr. L. H. Averill, Central Office December 20, 1960. Yesterday we mailed you copy of letter addressed to Bob O’Connor with reference to the activities of discount houses in the Southern California area. I am sure you will agree this letter provides you with an excellent vehicle that can be effectively used in the selected dealer conferences you will hold in tune with our discussions at our Regional Man- agers meeting, Wednesday, December 14th. In light of our discussions of this subject at the afore- mentioned meeting, I am sure you will want to lend your counsel to Mr. O’Connor and the members of his staff in the handling of their dealer conferences, as well as the im- portance of their being completed at the earliest possible date. If there is anything further we can do to assist you from this office, please advise. Very truly yours, Executive Asst. General ‘Sales Manager. LHA:rm 753 {fol. 1832] Ivy tae Unrrep States Districr Court Piantirr’s Exurit No, 121 February 7, 1961 Origin No. SM-63 C.0. No. 60-1079 Subject: Discount House Operations CHEVROLET—CENTRAL OFFICE Division of General Motors Corporation Detroit 2, Michigan December 29, 1960. To: Regional and Zone Managers ‘*Have all serv. Reps. read, initial & return.’’ [Initials [legible] Attached for your information is a copy of a letter to all Chevrolet dealers dealing with the subject matter of Dis- count House operations. You may recall I discussed this matter at quite some length at the last Regional Managers’ meeting and I feel that the attached letter should give the dealers a full under- standing of Chevrolet’s position with respect to this matter. Yours very truly, K. E. Staley, General Sales Manager. KES:@1 ec: Mr. L. H. Averill Assistant General Sales Managers Wholesale Organization Attach. | Depomppnsssae 754 [fol. 1333] CHEVROLET—CENTRAL OFFICE Division of General Motors Corporation General Motors Building Detroit 2, Michigan December 29, 1960, To all Chevrolet Dealers We are taking this means of acquainting all Chevrolet dealers with the problems incident to membership discount outlets offering new Chevrolet cars for sale to members and their friends and the position of Chevrolet with respect to this growing activity. We have received letters and telegrams from some dealers and employes. of dealerships expressing deep concern as to the effects of this type of competition on their business. The substance of these communications, while varying in content, implies that Chevrolet Motor Division as a mant- facturer is either not aware of these practices or, that knowing about the situation refuses to recognize such prae- tices as ‘‘unfair competition’’ to enfranchised dealers, as well as an unsound method for potential customers to in- vest in new Chevrolet products. Some have even suggested that Chevrolet condones these practices as a means of ob- taining additional sales. All these implications are entirely unwarranted, and re- flect a lack of understanding by seme of the Chevrolet Quality Dealer Program and the continuity of our efforts to implement the Program. Chevrolet Motor Division does not and has not sold its new passenger cars and trucks for resale to any outlets other than authorized Chevrolet dealers. Frankly, I be lieve every Chevrolet dealer knows this, but it appears that some of their employes may not be quite as well informed. The reported recent expansion of the activities of so called membership discount houses into the field of motor vehicle retail sales has been brought to our attention by members of our wholesale organization. Inquiries have been made, and we are advised that these discount outlets either (1) purchase their Chevrolet motor vehicles from Chevrolet dealers for resale to members and their friends, or (2) by prearrangement with some Chev- rolet dealers, they are in a position to make a deal witha 755 customer for a price and then refer the customer to the Chevrolet dealer for delivery of the vehicle at the price established by the discount house. In the latter event, the delivering Chevrolet dealer reportedly pays a substantial [fol. 1334] portion of the gross profit realized on the deal to the discount establishment for division among the oper- ater of the discount house, the operator of the automobile concession, and the automobile salesman. Where the motor vehicles are purchased from a Chevrolet dealer and resold as new-used cars, the transaction is nothing more than what has generally become to be recog- nized in the trade as a ‘‘bootleg’’ sale. On numerous occasions during the past several years, the management of General Motors Corporation has gone on record with the General Motors dealer organization expressing its deep concern with respect to this practice, which is recognized as being most detrimental to the good will which has been established over the years for, and identified with, the deal- er, the manufacturer and the product. When a customer purchases a new-used Chevrolet car from one of the so-called discount houses, he reportedly does not receive a Chevrolet Dealer New Car Warranty as would the original purchaser of the vehicle. Furthermore, the discount house normally provides no service facilities for the after-purchase needs of the customer. In attempt- ing to trade upon the capital facilities of authorized dealers, the discount house seller reportedly tells the customer to take his car to any authorized Chevrolet dealer for his service requirements. If the purchaser is not satisfied with the service he receives from the authorized dealer, he then blames Chevrolet because, as an owner of a new Chevrolet product, he expects the same high degree of service which owners of Chevrolet vehicles have learned to enjoy over the years from the Chevrolet dealer organization. While the management of General Motors Corporation has repeatedly pointed out the pitfalls of the ‘‘quick-profit”’ bootleg sale to its dealer organization, it has at the same time recognized the right of every dealer to lawfully resell his merchandise to anyone. On May 3, 1957, the President of General Motors Cor- poration sent all General Motors dealers a copy of his letter-reply to a protest against bootlegging from the Auto- 756 mobile Dealers Association of Indiana. The following quotation is from that letter: ‘*For several years it has been quite clear to those who have kept informed as to the interpretation of the {fol. 1335] antitrust laws that the Department of Justice has taken a firm position, both in statements and opinions, that any restriction upon the right of a dealer having title to motor vehicles to sell such motor vehicles to anyone, anywhere at any price, was a viola- tion of the antitrust laws. Judicial opinions handed down over these years tended to confirm this interpre- tation. ‘«This ‘right of the dealer to sell the motor vehicles to which he has title’ as he pleases, is the key to these problems. It is the exercise of this right which first moves the motor vehicles into the bootleg channel. Even if there were extenuating circumstances which moti- vated the movement of cars into the bootleg channel, unquestionably there are many such sales by author- ized dealers made solely for the purpose of obtaining a quick profit.’’ The procedure whereby some discount outlets, which offer new cars for sale, make a deal with a customer, 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 sell- ing dealers as a ‘‘referral.’? Such arrangements, however, are far different from the casual practice in the industry whereby salesmen encourage 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 loca- tion of the selling dealer. In effect, they in some instances represent the establishment of a second and unauthorized sales outlet or location contrary to the provisions of the Chevrolet Dealer Selling Agreements. More importantly, arrangements of this type tend to downgrade the enfranchised dealer as a new car merchant in the eyes of the public. It is difficult to understand how any dealer who has invested thousands of dollars in capital 757 equipment to merchandise new cars can be a party to an arrangement which permits a discount outlet to discredit his merchandising ability by offering new cars for sale at purported ‘‘savings’’ to the customer, and then not only assume the obligation for the sale but also share his gross profit on the transaction with the discount house. [fol. 1336] Chevrolet Motor Division recognizes the prob- lem raised by the discount house new car merchandising activities. They are critical problems for the public, the franchised dealers, and the manufacturers. New car sales by these outlets do not represent one iota of additional busi- ness for the dealer organization or the factories. They represent no savings to the public but only result in a dilu- tion of the gross profit on each transaction which would otherwise be made by the franchised dealers who have the service facilities and trained mechanics to insure the cus- tomer’s enjoyment of his investment in a new car. Most importantly, they threaten the good will of the dealer organ- ization, the manufacturer, and the product. The Chevrolet wholesale organization will give special attention to these problems. They propose to personally . discuss this matter with each of their dealers in those areas where such activity is reported to exist and ask them to re- view their operations in the light of the critical nature of the problem as it affects the good will of the product they sell, the entire franchise system of distribution, and the validity of any arrangement they may have with a dis- count house under the provisions of their Chevrolet Dealer Selling Agreement. Let me assure you that we will continue our efforts to protect the good will of our products by every available legal means. You may wish to review this letter with your salesmen, so that they too will more fully understand the position of Chevrolet with respect tw the matters outlined herein. Very truly yours, K. E. Staley, General Sales Manager. 758 [fol. 1337] In THe Untrep Statzs District Court PLarintiFF’s Exursit No, 122 Jack CoyLe CHEVROLET 808 F St., San Bernardino, Calif. January 4, 1961 Mr. K. E. Staley, General Sales Manager Chevrolet Motor Division General Motors Building Detroit 2, Michigan Dear Gene: I have read and re-read your letter of December 29 with reference to the selling of new Chevrolets thru discount outlets. I agree wholeheartedly with the importance of pre- serving the value of the new car franchise, and will pledge my best efforts in that regard. Your letter indicates some lack of familiarity with the finer points of this type of selling. On page 2, reference is made to a new-used Chevrolet being delivered to the ecus- tomer without a new car warranty. This is not the case. The discount house in our area acts as a broker and delivers the new car complete with New Car Warranty direct from the selling dealer. I am sure this practice is not peculiar to San Bernardino. About 18 months ago it came to my attention that the dealer in Eagle Rock was selling cars thru a discount house —the Union Stores of Montclair and Riverside. This is out of my territory but close enough to bear watching. Within a few weeks we got a rash of warranty work on new Chev- rolets, all from Citizens Chevrolet at Eagle Rock. Upon questioning the customers, we found that an outlet had been set up in San Bernardino at Art’s Used Car lot. Upon presentation of the facts complete with serial numbers, the Los Angeles Zone Office promptly put a stop to the deliver- ies in San Bernardino by this dealer. We estimate that at least 20 cars were delivered in this fashion, all complete with New Car Warranties. I do not wish to be unjust or unfair, but recently this same dealer (who used to bea 759 Chevrolet wholesale representative) commented that he was still moving many cars outside of his territory. Obviously, Gene, not every dealer can move two or three times as many cars as are being registered in his own terri- For what it is worth, may I suggest that Chevrolet sup- ply each dealer with his needs, and large amounts in excess of this should be scrutinized to determine that the custom- ers are legitimate (such as Hertz, utility companies, politi- cal subs, etc.). [fol. 1338] Recently a new discount house opened in San Bernardino, called the Fore Stores. During a hectic week of full page newspaper ads, the operators brazenly an- nounced the opening of the automotive department, and declared that all makes of new cars were available, includ- ing Chevrolet. To date we are not aware of any great suc- cess in this activity, altho several of my employes have joined the organization and have carried on negotiations with the department in an effort to find out how it works. Up until a few days ago, we could have purchased a new Chevrolet at any time. In some petulance, we suggested to our District Manager that either the practice be stopped or we should ‘‘ get on the bandwagon’’ and supply them with cars ourselves. We did not seriously present this suggestion. Yesterday, January 3, our Assistant Zone Manager, Jere Faust called to tell me of a meeting held last week in Los Angeles by Mr. Roy Cash and some of the offending dealers. He reported that the dealers agreed to discontinue the prac- tice immediately, and I hope the agreement will be honored by all parties. Your letter mentions the fact that new car sales are not increased one iota by these outlets. More importantly, they threaten the goodwill of the dealer organization, the manu- facturer, and the product, I sincerely hope your letter and its vigorous application by both dealer and wholesale or- ganization will produce the results we seek. Happy New Year! Jack Coyle. 760 {fol. 1339] Ln rae Unrrep States District Court Pvaintirr’s Exuisit No, 123 Stack CHEVROLET Sales Dept.—687 S. Palm Canyon Drive Service and Parts—330 Sunny Dunes Road Telephone FA 4-9166 Palm Springs, California January 5, 1961 Mr. K. E. Staley General Sales Manager Chevrolet Motor Division General Motors Building Detroit 2, Michigan Dear Mr. Staley: I received your letter regarding sales to Discount Houses. I certainly want to commend you on your aggressive stend against such ‘‘ Franchise destroying’’ activities ; also, to commend you on the follow-up personal interviews that have already been handled by the wholesale personnel. Great work, and thank you. Don’t give up! Sincerely yours, Stack Chevrolet, D. C. Stachler. DCS :ee, ec: R. M. O’Connor, R. M. Cash, Lee Mays (Chev- rolet Motor Division) 761 [fol. 1340] In rue Unrrep States District Court PuarntirF’s Exnisit No, 125 CHEVROLET-CENTRAL OFFICE Division of General Motors Corporation General Motors Building Detroit 2, Michigan January 10, 1961 Mr. Jack L. Coyle Jack Coyle Chevrolet 808 ‘‘F’’ Street San Bernardino, California Dear Jack: I read with considerable interest your letter of January 4th and appreciated the attitude you, too, expressed with regard to the selling of new cars through discount houses. We have been very encouraged by the cooperative atti- tude of practically all Chevrolet dealers as a result of the position expressed on this subject in my letter of December 2Sth, and from discussing the matter with various members of our field management. I am very hopeful that, through the voluntary cooperation of dealers, this form of vicious competition will diminish to almost the vanishing point. While my letter of December 29th did not go into all of the details, we are familiar with many variations being used by the discount houses and that, where deliveries are made on a referral basis, the cooperating dealer does furnish the new car warranty. However, regardless of the procedure used, the end result is still the same and one which, in our opinion, could pose the most serious threat to date to the franchise system. T also want to assure you that Chevrolet is very carefully watching its distribution to all dealers to be sure that no one can accuse Chevrolet of encouraging any kind of so- called bootlegging activity as a result of overshipping new products to a particular dealer. 762 Again, I want to thank you for your letter, and I hope that 1961 will be a happy, healthy and prosperous year for you. Best personal regards. Very truly yours, K. E. Staley, General Sales Manager KES/Me bee: Mr. R. M. Cash, Mr. R. M. O’Connor 763 [fol. 1341] In rue Unirep States District Court PuarntiFF’s Exuisir No. 126 Harry Mann CHEVROLET COMPANY 5735 Crenshaw Boulevard Los Angeles 43, California Telephone: AXminster 4-6101 January 12, 1961. Keep in our file. EK. J. Mr. Gene Staley Chevrolet Motor Division Detroit, Michigan Dear Gene: A few lines to express my appreciation for the position you have taken in regard to the Discount House evil and my thanks for the prompt action taken against them. In my opinion they have dealt product loyalty, dealer loyalty, and dealer profits a bad blow and we must keep after them constantly to nip new plans for a supply source in the bud. Best regards. Sincerely, Harry A. Mann. HAM/dr 764 [fol. 1342] Is tHe Unirep States Districr Court Pratntirr’s Exuisit No. 127 Inter-organization Letters Only CHEVROLET Mr. Guig: For your ‘‘ Discount House’’ file. Larry. To: Mr. L. H. Averill, Central Office, Detroit From: R. M. O’Connor, Los Angeles, California Subject: Sales to Discount Houses, Referrals, ete. January 17, 1961. Dear Mr. Averill: Our letter is in reference to your letter of December 16, 1960, to which was attached copies of the replies made by Mr. Staley and by the Corporation to dealers and salesmen in the Los Angeles Zone Area, concerning the above men- tioned subject. In accordance with your instructions, we have personally contacted each of the dealers in the Los Angeles Metropoli- tan Area, the Orange Metropolitan Area and those in the San Diego Metropolitan Area. We have discussed with them the subject matter of the excerpt you quoted taken from Mr. Staley’s letter. Our contacts were extremely well received, and I believe this action together with the letter they received from Mr. Staley, will materially alleviate the serious concern that had been evident on the part of many dealers. We do feel, however, that complete correction of the problem will require constant scrutiny and follow-up on the part of all of us in the Los Angeles Zone. This we are cur- rently doing. Our dealers and wholesale personnel alike, appreciate very much the position our Management has taken on this matter. Very truly yours, R. M. O’Connor, Zone Manager. RMO’C/jhm ec: Mr. L. N. Mays, Central Office-Detroit; Mr. R. M. Cash, Pacific Coast Region. , {fol. 1343] In THe Unrrep Srares District Court PiarntiFF’s Exutisit No. 128 Received January 20, 1961 Cone CHEVROLET Co. 320 South Harbor Boulevard—LAmbert 5-2311 Fullerton, California 18 January, 1961. Mr. R. M. O’Connor, Zone Manager Chevrolet Motor Division 3325 Wilshire Blvd. Los Angeles 5, Calif. Dear Bob: I am enclosing a shopping report that was made on Sat- u'day, 14 January 1961 at Gemco on West Lincoln Ave., Anaheim. I believe you will find this information self- explanatory. We also shopped CMA, South Los Angeles Street, Ana- heim, Calif., and found signs indicating that they had tem- porarily suspended operations. Bob, I feel that we have made good progress but it ap- pears that some policeing and follow-through is going to be necessary to maintain the ground we have gained. I wish to thank you and compliment the Corporation on the stand they have taken. Yours very truly, Cone Chevrolet Co., C. D. Cone. ede ;ewk 1/24 Delivered to Robt. Chico on 12/31/60 taken back on 1/20 shown on DMV form 107—now driven by service manager. 766 (fol. 1344] May Report on Gemco New Car Department January 14th, 1961 No new cars on show on the lot, but I did see a 1961 Chey- rolet Impala Sport Coupe in the parking lot which looked like it might be ready for delivery. Serial #11837L134614, Just registered with paper plate #0862706. No registration on windshield. Sticker showed dealer as Citizens Chev- rolet. New Car Office Located inside building with three men. Literature avail- able on all makes of car with factory fact books and color guides on most makes. All three men were busy when I went in and seemed to have plenty of prospects through- out the time I was there. Finally talked to a salesman Mr. Jim Kohn and asked about a 1961 Chevrolet Impala Spt. Cpe. and he gave me the following figures :— 2345.43) ; 37.00) Car 83.00 Small V8 154.70 Powerglide 51.04 Radio 57.69 Heater 58.55 Power Steering 24.35 WSW tires 15.50 Tinted windshield 2827.26 113.09 Sales Tax 61.00 License 3001.35 601.35 Trade in (1956 Chevrolet Bel Air 4dr.) 2400.00 36 payments of 77.71. In answer to specific questions his answers were as follows :— 767 Availability--depended on the model and equipment selected but was normally oné to three weeks. Price—compared with normal dealer prices he assured me that Gemco could save me several hundred dollars. Service problems—I mentioned that I had heard from a friend who bought a car at a discount house that local dealers would not service the car under the factory war- ranty. His reply was that this had been true in the past in some cases, but that if I bought from them there would be no problem as they themselves did some of the service there, and if not they would take it to the selling dealer for me. This would be handled so that I would not lose any time getting service, as I explained that my work was such that I could not take the time to wait around or drive too far for service. Financineg—I mentioned Crédit Union, but he assured me that they would finance for 544%. When asked what bank or finance company, he said that due to the low rate of in- terest they had to shop around for outlets to sell their paper, but I could be assured that it would be a reputable bank or finance company. Insurance—They had signs advertising Accident & Health insurance, and he said that they could cover the ear with collision insurance but not liability. [fol. 1845] Trade In—When I mentioned that I had a car to trade, he sent me over to the Autorama Used Car lot next door for an appraisal. J then went back to Kobn to get the appraisal figure and the final figures on the deal. Demonstration—I ’phone later in the afternoon and said after talking this over with my wife she had decided that we should take a demonstration drive. His first suggestion was to go to a local dealer, but then said that if I went over during the week I could drive the manager’s car. Delivery—Would be made at Gemco. In conclusion I would say that Gemco still have a flourishing new car dept. and apparently have no trouble getting cars of any make. During the time I was there, they had a steady stream of prospects and the appraiser seemed to be busy giving appraisals. Perhaps the actual purchase of a car would provide more details of the organ- ization and more concrete evidence to work on. 768 [fol. 1346] In tHe Unirep States District Courr PuarntiFrr’s Exursir No. 129 ALLEN GwyNN Chevrolet Where Los Feliz crosses Grand in Glendale, California Chapman 5-6821 Citrus 4-8411 A Better Service for Better Driving January 21, 1961. Mr. K. E. Staley General Sales Manager Chevrolet Motor Company General Motors Building Detroit 2, Michigan Dear Sir: I was delighted to receive your letter relating to discount houses and bootlegging of new Chevrolet products by fran- chised dealers. It has become so bad that unless you are really serious in the enforcement of your convictions in this matter your dealers will be forced out of business by lack of profit. Many of the evils have been brought about by giving Chevrolet Dealers three and four times the units their plan- ning potentials called for. The other divisions of General Motors apparently are doing nothing about this problem. Some of my friends have not had it even mentioned to them. Ford and American Motors seem to be going along with Chevrolet thinking, which is all to the good. I sincerely hope that you will have your local zone people really police the selling of New Chevrolet units to discount houses and referral houses. Yours very truly, Allen Gwynn. AG :js ec: Roy Cash, Oakland, Calif. Robert O’Connor, Los Angeles, Calif. 769 [fol. 1347] Ly tHe Unitep States District Court PuatntiFr’s Exuisit No. 130 Brit Barnett CHEVROLET 1440 East Compton Blvd.—Compton, California Phone Compton NEwmark 9-3060 Los Angeles NEvada 6-3208 January 25, 1961. Mr. K. E. Staley Chevrolet Central Office General Motors Building Detroit, Michigan Dear Mr. Staley: I would like to take this opportunity to express my thanks for your very recent cooperation in assisting to clean up the discount house problem here in Southern California. To my knowledge things are once more back to normal and we certainly hope will remain that way for some time. How- ever, I would like to point out that I believe it important that a coustant vigil be kept on the subject. For we know that discount houses are attempting to gain merchandise for their automobile divisions through phony leasing com- panies, and dealers in other parts of the country. We have alerted all of our people and as soon as any of these ‘boot- leg cars’ appear on the market our local zone office will be the first to hear of it. Talking to all of the other dealers in our entire Los Angeles zone it is certainly very encouraging to see their enthusiasm over the manner in which you and Chevrolet stepped up to the problem and did something about our discount houses in this area. Once again I would like not only to extend by own thanks to you and your staff but also the thanks of all of my em- ployees and all of the Chevrolet dealers in this entire area who I am sure you have heard from or will hear from in the very near future. Thank you. Very sincerely, Bill Barnett. ce: Mr. Ed Cole 770 [fol. 1348] In tHe Unirep States District Court PxiarntiFF’s Exuisit No, 131 Cone CHEvro.et Co. 320 South Harbor Boulevard—LAmbert 5-2311 Fullerton, California 25 January 1961. Mr. Gene Staley, General Sales Manager Chevrolet Motor Division General Motors Building Detroit 2, Michigan Dear Mr. Staley: I wish to thank you for your letter of December 15, 1960. T whole heartedly agree with its contents and also compli- ment you on your thorough knowledge of the “Discount House” situation as it exists in Southern California. If the “follow through”, that you mentioned in your let- ter is maintained on a constant basis, I am sure that we will up-grade the franchise system of selling and substan- tially improve our customer relations. Also it will become possible to hire and develop higher class young people in the retail automobile business. I congratulate you for the stand that you and the corpo- ration have taken. Yours very truly, Cone Chevrolet Co., C. D. Cone, president. CDC :kh 771 [fol. 1349] In THe Unirep States District Court PuarntiFr’s Exuisit No, 132 Szasoarp Morors Frank K. Swift Frank K. Swift, Jr. 1831 South Pacific Ave. San Pedro, California TErminal 2-0316 January 26, 1961. Mr. K. E. Staley General Sales Manager Chevrolet Motor Division General Motor Bldg. Detroit 2, Michigan Dear Mr. Staley: I wish to personally thank you for your letter and inter- est pertaining to the Discount Houses in Southern Cali- fornia. Your commendable action on this matter has defi- nitely brought the situation under control among the dealers of this area. Because of your action, the moral of Dealers and Salesmen alike have improved and I know that it will increase customer loyalty to Chevrolet. Thank you for a job well done. Respectfully yours, Frank K. Swift Jr. FKS :mr {fol. 1350] In tHe Unitep States District Court Puiarntirr’s Exutit No. 133 Eppiz Hopper CHEVROLET 10511 Garden Grove Boulevard JEfferson 4-2700—HEmlock 2-6411—MAdison 5-2963 Garden Grove, California Discount House File JSF January 26, 1961, Mr. Jere C. Faust Assistant Zone Manager Chevrolet Motor Division 3325 Wilshire Boulevard Los Angeles 5, California Dear Mr. Faust: We have complied with your telephone request to contact the ‘‘Gemco’’ Organization in regard to the purchase of a new car. This contact was made by John N. Armour who requested prices on a four door “Monza.” Mr. Armour talked with Mr. Jim Webb and was informed that prices on the four door car were not available, but they expected information in the near future. on Jan 18— Mr. Webb did quote prices on a two door “Monza” and stated that delivery could be made within three or four weeks. Mr. Armour raised questions regarding the servie- ing of the car and was informed as follows: 1. On the thousand mile check the car was to be re turned to “Gemco” and left for them (“Gemco”) to have the work performed. This service would take one or two days. During this time, “Gemeo” would not furnish a car for the customer, and said customer would have to shift for himself. Further, that it might be possible for “Gemco” to arrange to have the customer returned to his home or work. No mention was made regarding the arrangements for returning the car to the customer. 2. Any further service adjustments, etc., the customer could or should contact any Chevrolet dealer. 773 At the close of the interview, Mr. Armour was informed that Mr. Webb had just discovered a notation that the four door prices were $54.00 more than the two door. This contact was made about 1:00 P.M. I instructed Mr. Armour to purchase the car, and about 4:00 P.M. of the same day, he returned to the store to do 80. At this time, he was informed that it would be impossible to accept an order for the car. The reason given was that they were changing their license (to sell cars) arrangement [fol. 1351] and until this change was accomplished it was illegal for them to sell cars, and that they would be subject to severe penalties ; that the Motor Vehicle Department was very strict in this regard, and that they could not take chances. He was told to return on Tuesday of this week. Jan 24 On Wednesday, Mr. Armour returned to the store. Mr. Webb was not present, but he was informed that the license arrangements were not completed. Mr. Armour asked about all this red tape, that if they had a license to sell, why would different arrangements be made. The reply was that in the past the car operations had heen conducted by an outside concern, and that they were eliminating this concern and that in the future it would be under the store name. That they believed the change would be much better for everyone concerned. Mr. Armour then requested information regarding the possible time they could accept orders. The reply was that such changes take time, and that it was very indefinite when completion of the transfer could be effected. That it was necessary to have an inspection before they could expect to have the new license. Yours very truly, E. N. Hopper, President, Eddie Hopper Chevrolet. ENH/wly 774 {fol. 1852] In tHe Unirep States District Court Priarntirr’s Exursit No. 134 Cone Cuevrotet Co. 320 South Harbor Boulevard—LAmbert 5-2311 Fullerton, California 26 January 1961. Mr. Bob O’Connor, Zone Manager Chevrolet Motor Division 3325 Wilshire Blvd. Los Angeles, 5, California Dear Bob, I am giving you the latest information as to what appears to be a flagarant violation of our discount house agreement. The purchasers, John and Lavinia J. Nefroney, 2043 Gale Lane, Anaheim, home telephone LE 9-3286, office phone, JA 7-7731, took delivery yesterday, January 25th of a Cheyro. let, Model 1837, white, Serial 11837L14264. Selling dealer, Citizens Chevrolet. They reported that they had made the purchase approximately 15th January, and was referred by A.B.C. in Santa Ana, to Bill Spoo of Citizens Chevrolet, Eagle Rock. They were in turn, told that any service needed done could be at Cone Chevrolet Co. as they were a very reputa- ble concern. The items of service necessary were all of a pre-delivery nature. John and Lavinia Nefroney would appreciate a telephone call from Chevrolet Motor Co, Bob, this is the connection that Cormier in Long Beach, formerly handled. Last week, A.B.C. was contacting dealers in Orange County, namely Tommy Ayres Chevrolet, Laguna Beach, Calif., trying to find an outlet for fifteen orders which they had on hand. Yours truly, Cone Chevrolet Co., C. D. Cone. ede ;ewk Toland to Hend 1/30—2:15 pm. will give me details. 775 (fol. 1353] Is tHe Unrrep Sratzs District Court Piarntirr’s Exuisit No. 135 Received February 7 1961, J. M. Roche Don Srevens CHEVROLET 401 West Whittier Blvd.—La Habra, California OWen 7-6705 February 1, 1961. Mr. Jim Roche, Vice President Chevrolet Motor Division deneral Motors Corporation General Motors Building Detroit, Michigan Dear Mr. Roche: Just a note to thank you for the stand you and General Motors have taken in stopping the sale of Chevrolets in discount houses. I believe this move will substantially help the dealers, and will certainly increase the value of the Chevrolet franchise. I enjoyed talking with you at the Chevrolet party at the recent NADA convention, and it certainly is reassuring to find men of your caliber helping to direct the destination of General Motors and its dealers. Very truly yours, Don Steves Chevrolet, Don Steves. DS :nm {fol. 1854] In tHe Unrrep States District Court Puaintirr’s Exuisit No, 136 GuarRANTY CHEVROLET First (illegible) Santa Ana KImbrely 3-9311 February 4, 1961, Mr. R. M. O’Connor Zone Manager Chevrolet Motor Division 3325 Wilshire Blvd. Los Angeles 5, Calif. Dear Bob: Just a note to express the appreciation of our entire organization, as well as myself personally, for the wonder. ful job that you did in stopping the sale of Chevrolet prod- ucts to discount houses. This did more to boost the morale of our Sales Depart- ment than anything else that could have been done. Should you need our cooperation in any way, please do not hesitate to call. Thanks again. Very sincerely yours, Guaranty Chevrolet Motors, Marty Lockney, President. ML:ep ~) ~] {fol. 1855) In tae Unrrep States District Court Puarntirr’s Exursit No, 138 Losor CuevroretT DeaLers ASSOCIATION HEmlock 5-4844 Room 2, Security First National Bank Building : First Street at Pine Avenue Long Beach 2, California On Tuesday, February 14th, Mrs. Judy Hyer and myself went to the Gemco Discount House on the pretext of buying anew Chevrolet. We were met by a Mr. Jim Webb in their new car department. I asked him if it were possible to buy a Chevrolet thru their store and he replied, “Oh yes, we can get you most any model you wish.” Trying to act like I didn’t know too much about cars I told him we had finally agreed to help my son buy a new car and we had been shopping around to try and get the best deal possible and that he had decided on a hard top sport coupe Impala with the normal options. He looked in a book he kept on his desk and said that this particular model would be no problem to get immediate delivery on. With that, I told him just what we wanted on the car and he wrote it all down on a pink piece of paper and handed it to me so I could compare his price with the prices I had supposedly obtained from other dealers. While I was checking the prices he made the state- ment that he was glad that we had shopped around as no one could possibly beat their deal as they had no overhead and could make you a deal which amounted to about $150.00 over the dealer cost. I pretended to be very pleased with the deal and asked him how much down I would have to have and he said a deposit of a $100.00 wonld guaranty delivery of the car. With that, I told him that we wanted id know where the car was coming from so that if anything were wrong we would know where to take it back and also where we should get it serviced. At this point he began beating around the bush. He stated that the car would be fully serviced upon delivery and that we could take it to any Chevrolet dealer for future service or bring it back to them as they had a service department. As far as a guar- anty, we not only were protected by the Chevrolet war- 778 ranty, but Gerco was a million dollar business and stood back of all merchandise that was sold thru them. With this statement he began running other discount houses down and telling their type of operation. Mrs. Hyer and myself continued to chit chat back and forth and said we were satisfied and that we would take the paper over and show my husband and if he were satisfied we would get the money for the deposit and return. With that, we left and went to a public telephone and called me Don Steves and told him of our conversation. He told us to go back and give him the $100.00 on the condition that we could take delivery by Friday, February 17th and also that we had to know where the car was coming from. We went back and reported to Mr. Webb that my husband was very pleased with the deal but only on the condition that we could take delivery by Friday, as it was worth the extra money to buy it elsewhere and get the boy a car and off our back, and also, he had been reading about all these snow bound cars and he wanted to take delivery of the car at the dealership supplying the car. All this time I am sit- ting there with the money clutched tightly in my hand and he wasn’t about to let me get out the door. He made the statement that he could show by husband the serial number on the car and prove the car was made in Van Nuys. He [fol. 1356] said that right at the moment he couldn’t tell where he would get the car as they had a number of places they could go. He finally agreed that he would call and take my husband and I up when the car was ready. However, | have the feeling that the car will be delivered right at Gen- co’s door. He did make the deposit refundable if they could not deliver by Friday. Our purpose in hurring them was to be sure we didn’t get stuck with a Eastern car. Mr. Webb then wrote up the deal, gave us our receipt. He check with an older gentleman on definite availability and he said there won’t be any problem on that model. As we started to Jeave, he said I may even be calling you tomor- row as I feel sure we can get this car located today. The above are highlights of the conversation between my- self and Mr. Jim Webb Evelyn G. Davis. 779 While we were there, the gentleman at the next desk waited upon 6 couples asking questions regarding the pur- chase of a new car. Of the 6, 3 couples were interested in Chevrolet. Only one couple sat down and got prices and that was on a 927 (Monza coupe). e l § e I 1 d ee — “ung ® “s@1J@5 yO seBouew-sejeg Jo 4021440 Aq Buyism ut Peyderre jun 49)J95 vo Buipuig jou 8} J@PsE “JOA@OS}OUM seuUEW Aue U! 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V4 “444° Mas a) 3 - . wy, os “ON 9®L “ON S8u82r) | “ON J0;0W lepow bed J $ 301¥d ONITIS HSV ¥O109 O aasn - 6) MaN ‘ TPIS @tEAG YO PU Mojeq YjI0} Jes BUOY)IPUCD PUB sue} ey; JepUN Mojeq Pejsy @2u . . 79-77 = Zz oe TSK Su0108 1YHINIS % ONIAI 831199 SNVIW DNIANG 839113T & IPM “IC INIWLUYdI0 YW MIN OS'd 0°:3°wW:°3°9 0002-2 153080ud ANY ‘WIBHYNY =f | NTOONID 463M O1EZ —SYOLOW WH9NI9 Z VA —o LOC UT ¢ SIDOWO ae PFS #01100 a. — 5 VIVA (AAT rT Fuios4 paniaray - 2 Z Y p PSELON S76 Av 7G 44139394 = LANA SNS POE cAI - {fol. 1360] Disc New Car Department Jim Webb — Tee ei eee eee ee ee ee ee ee ee ee ee ee OT CR ER CHESO COE HO SPEC HOH KD OED OHH SHEKELS eRe ee ee ee ee ee ee ee 2 2 ee ee eee Payments $77.66—36 MO. 785 [fol. 1362] In tHe Unrrep States District Court Puarntirr’s Exurair No. 139 Extract From Minutes oF 16TH PRESIDENT’s ADVISORY CouncIL February 14, 15, and 16, 1961 Remarks by William G. Nugent A. E. Nugent Chevrolet Los Angeles, California Mr. Nugent The dealers in our area want to thank you on the action that you took on the discount houses. It was really handled efficiently and they have requested that I thank you and that you continue to follow this program up. 787 [fol. 1363] Is tHe Unrrep Staves District Court Piarntirr’s Exursit No. 140 Ree’d February 16 1961 Cotitiau CHEVROLET CoMPANY 711 Fair Oaks Avenue—South Pasadena, California SY 9-4101—MU 2-2151 February 15, 1961. Mr. Gene Staley, General Sales Manager Chevrolet Motor Division General Motors Building Detroit 2, Michigan Dear Gene: A brief note covering two points. First, thanks a million for the lovely party you put on for the Dealer Group at the NADA. It has come to be, as I am sure you have been told many times, one of the highlights of the NADA Conven- tions. Secondly, thanks for everything you did to help us with the discount store problem we had here in Los Angeles. Two of the dealerships most deeply involved in supplying the discount houses with cars were two neighboring dealers of mine. Rumor has it that one is still involved on a limited seale, but the overall situation has cleared up con- siderably. I learned just yesterday that the former manager of the automotive department for one of the largest chains of discount stores has just been approached to return to his former position because of a possibility of the reopening of their auto departments. He was told that they were assured of a substantial supply of cars (he didn’t specify what makes) from Texas and the East. It is my feeling, however, that the prompt action taken by Chevrolet has probably brought an end to the vicious situa- tion we were facing. The only two problems still facing us, along the lines of the above, are the phony fleet companies and the frequent 788 bootlegging of new cars to used car dealerships in Southern California. I am sure, if you continue the aggressive job you did on the discount houses, that these two cancerous conditions can be cleaned up. Thanks again for your prompt action and your sincere interest in dealer welfare. Very truly yours, E. H. Colliau. EHC:s CC: Bob O’Connor 789 {fol. 1364] Is rue Unirep Srares Districr Court Puaintirr’s Exuisition No. 141 To whom it may concern :— I, Inez A. Oelwein on this date, February 25, 1961 at eleven A.M. entered MORE Ine. located at 3443 Sepulveda Boulevard. As I approached the “Castle Sales” booth, I noticed a 1961 White Piymouth Savoy on display with a retail sales price sticker pasted to the left rear window. I approached the desk and was greeted by a Mrs. Enright. I asked her if she also handled the Chevrolet line. She said, “Yes, do you know what you want?” I replied “yes, I know exactly what I want, I have been shopping around.” She said, “You should shop around, before you check with us.” I told her I wanted a 1961 Chevrolet Impala Sport Coupe —with the 170-V8 Motor, powerglide, manual radio, recir- (fol. 1365] culating heater, tinted windshield, white side wall tires, padded dash, power steering, and side mirror. As I listed these items she wrote them on a piece of paper, then referring to a large black loose leaf binder with plastic enclosed pages wrote prices on this piece of paper. She quoted me a price of $2807.00 plus tax and license, giving me nothing in writing. She then told me of the difficulty with car manufacturer, and their crack down on discount houses, showing me a magazine opened to an article headed roughly with title “Manufactures crack down on discount houses.” This was an oversize magazine printed on shiney white paper. I could not see the name of the publication. I (fol. 1866] told her I wanted to deal today, because of working, Saturday afternoon was my only free time, and I was selling my own car on the following Monday. She said she doubted if she could contact her “man,” that he was de- livering a car to one of their customers. I insisted I wanted to deal “now.” She phoned one number, asking for “Joe,” and was evidently told he was not in. She phoned one more number, evidently getting [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0254%3A02. Public record. Not legal advice.