Appendix — United States v. General Motors Corp.

Supreme Court brief1966

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Text

SUPREME COURT OF THE UNITED STATES

Octoser 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 III

INDEX

Record from the United States District Court for the

Southern District of California, Central Division—

Continued

Plaintiffs Exhibits—Continued Original Print

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

Geigy Ore ee inl ce Le oes ewes fea 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)

(See Clerk’s note.)............. . 1813 1232

(Stipulation of Facts Number Three) (Blue

PME oo Naa Roo kip een cea Rae 1814 1233

ll

INDEX

Record from the United States District Court for the

Southern District of California, Central Division—

Continued

Defendants’ Exhibits—Continued

Original

D—Listing of discount houses and referral serv-—

ices and identifying numbers for Defendants’

Exhibit A (Stipulation of Facts Number Three)

(UE | Feared ea eee ee ee

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-

WR ean ters t Late ts Ce ewes oon cee

AA—Stipulation of Facts Number Two, dated

May 20, 1964, with attachments—Gemeo Auto

Show—Discount house ads (excerpts)........

AP—Dealers Diversified Services, Inc. letter of

instructions to cooperating dealers—undated. .

AQ—Letter to J. H. Connell from L. N. Mays,

dated Noweniber 23, 1960. . 2...) 5 0...

AR—Letter to K. E. Staley from Frank Green,

dated December 2, 1960, with attached copy of

Auto Dealers Business Letter dated December

AS—Letter to Frank Green from J. M. Roche,

Gated Tesemiher 16, 1900: oo. ces

AV—Inter-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..........

AW—lInter-Organization letter to J. M. Roche

from K. E. Staley, dated December 29, 1960. .

AX—Letter to John S. Gordon from James Fahy

and Virgil Dunn, dated February 15, 1961. ...

AY—Inter-Organization letter to Lawrence Ave-

rill from A. H. Belfie, dated March 23, 1961,

with attached copy of letter to James Faby and

Virgil Dunn, Fleet Sales Company, from A. H.

Belfie, dated March 23, 1961................

AZ—Stipulation of Facts Number Three, dated

May 20, 1964, re Defendants’ Exhibits A

I ii ia oe nT Sacks SRE E RTD

BA—P-W Exhibit—Summary of Profitability in

the Service and Parts Departments in 1960 for

the 76 Los Angeles Metropolitan Area Chev-

SON I Se an eee

1821

1824

1846

1879

1880

1881

1885

1887

1905

1906

1907

1911

Print

1238

1240

1261

1293

1295

1296

1301

1303

1324

1325

1326

1329

1333

INDEX iii

Record from the United States District Court for the

Southern District of California, Central Division—

Continued

Defendants’ Exhibits—Continued Original Print

BB—P-W Exhibit—Estimated Reduction in New

Car Volume to Eliminate all Profit for Volume

Classes of Los Angeles Metropolitan Area

REE SI ect cero 1918 1333

BC—P-W Exhibit—Estimated Reduction in New

Car Selling Price to Eliminate all Profit for

Volume Classes of Los Angeles Metropolitan

Area Chevrolet Dealers..................... 1919 1334

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

ON ee Fate nas OLDEN Te ee ets: 1920 1334

BE—P-W Exhibit—Reprint from Collier’s—taken

from Hirscu, Introduction to Modern Statis-

aa eg RO TOE A nee cae ee 1921 1335

BF—P-W Exhibit—Graph: 1960 Combined Gross

Profit for New and Used Car Departments

(Based on 1960 Financial Stetements of the

73 Los Angeles Metropolitan Area Chevrolet

OI 9 ic i kpc th tab She AO ETS 1922 1337

BG—P-W Exhibit—Graph: 1960 Combined Gross

Profit for Service and Parts Departments

(Based on 1960 Financial Statements etc.).... 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

NN IRE fs Sac ae 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

Ws Bie ata cai hid Roa ee eo ee 1926 1341

BK-—P-W Exhibit—Graph: 1960 Combined Semi-

fixed Expenses of the Service and Parts Depart-

menis (Based on 1960 Financial Statements

PE aes hg Sh ee ae ee 1927 1342

BL—P-W Exhibit—Graph: 1960 Fixed Expenses

of the Dealership (Based on 1960 Financial

ey UD Cn re 1928 1343

ume upon a Los Angeles Metropolitan Area

Chevrolet Dealer of the 300 New Car Volume

iv INDEX

Record from the United States District Court for the

Southern District of California, Central Division—

Continued

Defendants’ Exhibits—Continued Original = Print

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

vid Cae ere wat i Fin cain yee eer .. 1930 1346

BO—P-W Exhibit—Effect of a Loss in Sales Vol-

ume upon a Los Angeles Metropolitan Area

Chevrolet Dealer of the 500 New Car Volume

Pe es Coco eek eee Peet thee 1347

BP—P-W Exhibit—Effect of a Loss in Sales Vol-

ume upon a Los Angeles Metropolitan Area

Chevrolet Dealer of the 600 New Car Volume

Pps Earn Pen ee re ; rg ae 1932 1348

BQ—P-W Exhibit—Effect of a Loss in Sales Vol-

ume upon a Los Angeles Metropolitan Area

Chevrolet Dealer of the 700 New Car Volume

ry ere eee RS Rene acer Oe Re ae 1933 1349

BR—P-W Exhibit—Graph: 1960 New Retail

Passenger Car Sales Receipts (Based on 1960

Financial Statements of the 73 Los Angeles

Metropolitan Area Chevrolet Dealers)....... 1934 1351

BS—P-W Exhibit—Graph: 1960 Sales Commis-

sions on the New Cars (Based on 1960 Financial

Statements ete.).......------s ser lye’ eee 1352

BT—P-W Exhibit—Effect of Reductions in Sell-

ing Prices of New Chevrolets upon Los Angeles

Metropolitan Area Chevrolet Dealers of Various

Volume Clasees.......-----secesrc rier: 1936 1353

BU—Chevrolet Dealers in Los Angeles Metropoli-

tan Area Within 5 Miles of Each of the Dis-

count Houses and Referral Services Shown on

Defendants’ Exhibit A.........-----) 1937 1354

BW—Distribution of Franchised Chevrolet Dealers

by New Passenger Car and Truck, Volume

Groups 1960, Chevrolet Los Angeles Metropoli-

het BOOK... csvecncecunncnms este? af 1935 1354

BX—Distribution of Franchised Chevrolet Dealers

by New Passenger Car and Truck Volume

Groups, 1960, Chevrolet Los Angeles Zone ... 1939 1355

BZ—Distribution of 85 Franchised Chevrolet

Dealers in the Chevrolet Los Angeles Metro-

politan Area by Number of Other Franchised

New Car Dealers Located Within a Radius of

5 Miles from Their Places of Business...... 1940 1355

INDEX Vv

Record from the United States District Court for the

Southern District of California, Central Division—

Continued

Defendants’ Exhibits—Continued Original = Print

CA—Chart dated March 7, 1962, prepared by

Dealer Organization & Analysis Dept. showing

National Price Class Performance of Chevrolet

and Other Makes for the Years 1922 through

CE EOE NO ean ge ig 1941 1357

CD—Letter to Owen Keown from K. E. Staley,

dated December 16, 1960 .................. 1942 1359

Reporter’s transcript of proceedings, August 24, 1964 1946a 1364

SN WR Qe ce i eer 1946b 1364

Findings of fact and conclusions of law, September

14, 1964. et , e aaa 1947 1373

WI soo i hae vee 1985 1400

Notice of entry of judgment... sssi‘(‘(siéstst. 1987 1401

Notice of appeal to the Supreme Court of the United

DIR Si siden hot dicw Gthacerc ae 1988 1402

Order noting probable jurisdiction. = ===—==—=—=—~—~—=«4990~—S—«1.403

1229

[fol. 1810] Is rae Unirep States Disraict Court

Puamtirr’s Exursir No. 287

1960 Chevrolet Dealer Volume

Number of

Dealer New Vehicle

es

Seieee a Pee es Pro Pee eee 241

Secu ty 5p ETRE OEE Fn re eer eer Cee 243

cect encneeeeae eben steers eyes 273

ew oben ce SO ESOP ETS Ohad see EE RES 328

Metropolitan. ........0.0. ce ceeee reer cwetenere 388

ec rene add CSV ER HEL OSS PR EOES 418

OS IRE err rene ery 443

aL cevieeneeeet petbakes <uweyeewees 473

| Er re reer en ok 479

he new ce lwknee kW EP EUR STS 69" 495

EEE OLDE TEES CT ee CL The 508

er eC eae ene vaae tm mith 538

Re 66 ke kU eben id ese eee Cu Reeve reetes terse 552

SE errr re errr Le T 566

ee aaa ey Pee VEO LEN RES SRN EOI ENS 573

PR in cad ch eekecnts VeenKeeteée 573

Cone Bros. (Anaheim).......... 5. .seeeeeees 593

Ca gewe and awe CW NN 595

Ce ie aiden benaeh es ek aedexir ees 595

GUT s b cbs cbedwend, vicyedvencvoecncesevesys 623

Pp Oy ee Ee Per ee ee 639

Sea ae ee: La tart errr ete 1 656

Ef hie ee a ad bie SOLA RNAS 656

Cone (Fullerton) Bet AE nal dik » « Wale Wa ee Mae 666

ET CEs oo einy eas wakes vRORE CN ERM 671

ee ee errr. oe 676

Ss ce. CLS Suen eeak Ws obese items 688

| a UI i sri opr reer er mer etre ten 701

Cd ee ta eerlkew eka e yee RUNS Owns 702

Fw eh dale whee gw wn Re ani 704

wadetosdutenbaen ssa ee eveayey 707

TURE 5 a cece eeecensessececcnnyecseouen 754

ND in ind ou uh Ke owe x Lae g NR RRN OUST

SS ee ares mere rrr re 817

te nly Soe bee CR eEN Seu CENeeD 860

NN ECE RET TE ee Te TT 862

wc a uinie poe ie heo aceon aN 886

a od cake wo CRN eoneuee ss 915

IR iv gccuer vines inetereenewen 916

I, gn sade sei eres chenerwe une 920

oe. oe cans ces nes Nuweurnaee nae 948

ae re = gongs bE OeE Cow y. OLS Vee EEN SE 977

Ton oor cc aac sae SRA eNOS 994

CUMNNET ow cn vccnsccseccsccesscusevoescurenes 1,027

Sopp & Son. ...... 6... cece cece e cece eee eeeeees 1,

1230

[fol.1811] 1960 Chevrolet Dealer Volume

Number of

Dealer . New Vehicle

Sales

BAMMea. os tcc c cece weer ecesorevenscsees 1,064

ce lee Gcudace ets We ebaccdssuueecsteryes 1,088

DOE crcccecvivevccsrogercecrnpsoreseee? 1,094

Ss cycercctevene vKoneret sees she nnneees” 1,111

PN ns iL perdauk ivaesewdsene ste 1,119

WOOO os icc cc cer eter cavessreew trees 1,119

Pn, cue paneer ee keadepe tate tatee 1,128

Ce cvncvcccucevsstvecessanccreveres esse nee 1,147

GUM oo in cececrncsserernbuvenvendrerurns 1,167

BE cb. cabs due genre shee er eres SeeoeReees 1,184

NE os ce saudend> vcc¥ettyecenedakensense 1,263

COMMOORY oc cece r een cneeeerecercerncees 1,293

cS gs piddeo pans? corks 1,362

iba gewevencrveeerreinccreertetines4 1,363

Pollard-Ravenscroft.......-0::::sssrertrrereee 1,366

DR, ci cidavaresverseveeearenrsneede reer: 1,406

re enn 1,440

Briggs a as ngn a vER I eke EERE RO RED UNE 1,501

ot ee oa 1,587

Cli BA, gc nessesevedsesddreesteuses neat OMe 1,701

Be Re ee ee kons Keke aCe ORE Ne COTE OERE He 4

poms OPPO TTT TTT ‘

Fletcher Jones........-::::scecrereeeeeneeeeees 1,984

PaskwWO0d....0.0.ccccccccerccecnceeneceneeees 2,063

WOE, oo veces cuevernrecccesenencrersaussess 2,146

CD occcccvecnvecesanersenrensssoeeress 2,194

Sc cecnncnesenperstsrnecseretereren ts 2,212

CIID. cccccenccrvcsnccncevernrersouereereas 2,901

CE ci vc cnvonoveverensnndveersureseerags 4,203

Ds coy peavevuancesenes svdurvacsevanteeess 4,789

1231

(fol. 1812] In tHe Unrrep Starrs Districr Court

Piarntirr’s Exursir No. 290

Received March 22, 1961

Cottece Curvroer, Inc.

191 South Alexander Ave—NAtional 4-454]

Claremont, California

March 21, 1961.

Phil Johnston

President

OK was on order at time of conference,

Mr. Robert O’Conner

Chevrolet Motor Division

3325 Wilshire Boulevard

Los Angeles 5, California

Dear Bob,

You and Mr. Jere Faust had asked me to be on the

lookout for any new Chevrolet delivered through a dis-

count house. A local registration covers a 727 delivered

through Fedeo, Federal Purchasing Corporation, and it

was purchased from Broder Chevrolet. The serial num-

ber is 107270119546, and the owner is Paul D. Muchnice,

Pomona College, Claremont. Trusting that this informa-

tion will be of assistance, I remain your friend.

Yours truly, Phil Johnston.

PJ:EME

Ordered 12/31/60

Delivered 2/8/61

Order #43100 1-5-61

RS#249684

a ee ar a Oe a

1232

[fol. 1813] Clerk’s Note Re Defendants’ Exhibits A& B

A—Map of Chevrolet—Los Angeles Metropolitan Area

(expanded) showing Chevrolet dealer and discount

house locations (Stipulation of Facts Number Three)

B—Map of Chevrolet—Los Angeles Metropolitan Area

(expanded) showing Chevrolet dealer, Ford (Ford,

Mercury, Comet) dealer, Chrysler (Plymouth, Dodge)

caler, Rambler dealer, Studebaker dealer, and Volks-

wagen dealer locations (Stipulation of Facts Number

Three)

Copies of colored photographs of the above maps do not

physically appear in the printed record, but are on file

with the Clerk.

a

(fol. 1814] In rae Unsrrep Srares District Court

Derenpants’ Exuisir ©

Chevrolet Dealers Shown On Exhibits A and B

(Indicated by blue dots)

Identif

Nember® Name and Address of Chevrolet Dealer

1. Angelus Chevrolet Co.

5001 N. Figueroa St.

Los ——

2. Arrow Chevrolet, Inc.

1225 E. 7th St.

Los An

(Central Ch Chevrolet until 4/1/61)

E. Baher, Inc. DBA

H. E. Baher’ Chevrolet

> ae Pacific Coast Hwy.

Hermosa

‘ca Chev. Som 10/2/61)

V. Baldwin

1417 S. a St.

Los es

5. Bill Barnett Chev.

1440 E. Compton BI.

Compton

6. Bartons Chevrolet

‘ 4916 S. Main St.

Long Beach

8. Bellwood Chevrolet

— Atlantic Bl.

9. Warren Biggs Chevrolet

205 8. — Ave.

Los

10. Bliss & Paden, Inc.

1290 Westwood BI.

Los Ange’

11. Boulerend'c Chevrolet Co.

545 8. Atlantic Bl.

Los Angeles

{fol. 1815)

12, Bruder Chevrolet

5950 Hollywood BI.

Hollywood

13. Pollard-Carrell Co., DBA

Tom Carrell Chev.

1234

2 hoy ,

Num Name and Address of Chevrolet Dealer

15. Citizens Chev. Co.

2030 Colorado BI.

16. Frank D. Clay & Son, Inc.

2605 E. Colorado St.

E. Pasadena

17. Cli r Chev.

iat Ww. Bervardino

Covina

18. C Chevrolet

19. Colliau Chev. Co

a

20. Community Chevrolet

80 E. Olive St.

Burbank

21. Cone Bros.

215 N. Los Angeles St.

Anahei

im

22. Cone Chevrolet Co.

320 S. Spadra St.

Fullerton

23. Cormier Chevrolet

601 Long Beach BI.

Lon, Beach

24. Couresy Chevrolet

866 &. Western Ave.

Los Angeles

{fol. 1816]

25. Davies Chev.

214 W. Foothill Bl.

Glendora

26. R. V. Dorweiler Co.

3436 N. Tyler

El Monte

27. Economy Chevrolet

1247 W. Main St.

Alhambra

Enoch Chevrolet Co.

8730 Long Beach BI.

South Gate

Bob Erskine Chev.

363 E. Holt

Pomona

Felix Chevrolet Co.

3330 8. Figueroa St.

Los Angeles

31. Chevrolet

17150 8. Lakewood BI.

Bellflower

32. Fred Gledhill Chev.

304 E. Anaheim

Wilmington

McDonald & O’Boyle Inc., DBA

Hal Greene Chevrolet

201 W. Huntington Dr.

Monrovia

(McDonald & O’Boyle until 5/1/61)

1235

ieentifying

Number Name and Address of Chevrolet Dealer

Ted Grimm Chev.

Fee 1s , tees Bl.

cian‘. c A. Cont until 6/10/60)

pins yt let Co.

Ocean ——

enters on Beach

(Wiliam Ch Chev. Inc. until 7/18/61)

uaranty Chev.

120 W. Ist St.

Santa Ana

36.

(fol. 1817]

37. Allen os Chev.

1400 S. Brand BI.

Glendale

38. Robert Hall Chev., Inc.

6467 Footuill Bl.

Tujunga

39. Hansen Chevrolet

11351 W. Olympic BI.

Los Angeles

40. Harbor , cnovrolet

phd A cf Ave.

41. fone Chev. Co.

42. Hessell Chev.

43. Hoehn Chevrolet Co.

9018 Wilshire BI.

Beverly Hills

44. Leo Hoffman Chev.

15432 E. Nelson Ave.

45. ie Hopper Chev.

ion Grove BI.

Garden Grove

46. Hovey-Dallas Chev.

15600 S. Western

Gardena

ush Chev. wit sayet et)

letcher Jones C

5001 S. Brosdway

Los Angeles

48. Sposa sd Jones Chev. DBA

Glenn Jones Chev.

925 S. Paramount BI.

47.

Paramount

49. Tom Keating Chev., Inc.

6125 Manchester Bi.

Buena Park

[fol. 1818]

50. Deeb coon, Inc. DBA

Kendall Chev. Co.

315 N. Paeite Coast Hwy.

Redondo Beach

[fol.

57.

61.

1819]

62.

67.

Name and Address of Chevrolet Dealer

Kenneth Chev.

422 N. Hawthorne Bl.

Arcadia

Galvin Chev. until 7/1/60)

Keown Chev. Co.

3233 Washington BI.

Venice

Harry Mann Chev. Co.

5735 5 Crenshaw Bl.

Los Angeles

Met itan Chev.

3225 Sunset

Los les

Miller Connell Chev.

a West Coast Hwy.

wport Beach

i iller ler Chev _ until 8/7/61)

illiken Ch ev. Inc.

9032 Washington Bl.

Culver City

Mission Chev. Co.

100 8. San Gabriel

San Gabriel =

A. E. Nugent Chev.

400 S. LaBrea Ave.

Los Angeles

Ostrom Chev.

310 ht os oy Bl.

Montebe

a Th — & Son until 7/1/61)

ount Chev. Co.

11212 S. Paramount

Downey

Parkwood Chev.

5059 Lakewood BI.

Lakewood

Paul’s Chevrolet Inc.

1640 Cabrillo Ave.

Torrance

Martin Pollard Co.

5430 Lankershim BI.

No. Hollywood

Pollard-Ravenscroft Co.

6232 Van Nuys Bl

Van Nuys

Ernie Porter Chev.

245 W. Colorado St.

Pasadena

Potter Motor Co.

100 E. Valley BI.

Ed Priester Chev.

3701 Oceanview BI.

Montrose

Identifying

Num

fol.

1820]

e £ 8 B

1237

Name and Address of Chevrolet Dealer

Rancho A

7056 Reseda B!

Reseda

Clem Ruh Chevrolet Co.

21100 Sherman Way

11900 E. South St. E

Artesia

Charles Schonlaw

7601 Sunset BI.

Hollywood

Seaboard Motors

1831 S. Pacific Ave.

San Pedro

Security Chevrolet

ay S. Brea BI.

a Chevrolet Co.

402 W. Chapman

Orange

Service Chevrolet

i 8. Mead a. ‘ag 10/6/60)

K. Smith

319 W. Holt a

Ontari

o

Maurice J. Sopp & Son

5801 Pacific BL

Huntington Pk.

Bob Sorenson Chev.

201 S. Greenleaf

Whittier

Southwest Chevrolet Co.

7101 8. baa Ave.

Los Ange

Stanley C Chevrolet

11980 E. Firestone BI.

Norwalk

Don Steves Chev.

401 W. Whittier BI.

LaHabra

Vista Chevrolet

5390 Riverside Dr.

Chin

Oo

West Adams Chev.

4471 W. Adams BI.

he ae

on es otors.

Bob Wondries Chevrolet

(Howell Chev. until 12/9/60)

1238

[fol. 1821] In rae Unrrep Srartes District Court

Derenpants’ Exuisit D

Discount Houses and Referral Services Shown On Exhibit A

Identifying Name and Location of

Number Discount House or Referral Service

1. AAAA Auto Lease & Sales, Inc.

(Leonard’s Discount Store)

600 N. Sepulveda

El te)

ws AAAA Auto Lease & Sales, Inc.

(Leonard’s Discount Store)

12891 Harbor

Garden Grove

3. AAAA Auto Lease & Sales, Inc.

2514 W. Olympic Blvd.

Los Angeles

4. AAAA Auto Lease & Sales, Inc.

5200 Laurel Canyon Blvd.

North Hollywood

6. The Brockway Plan

1809 S. B Blvd.

Glendale

* Cal Fleet Auto Sales [f

Union Fleet, Inc.

(Cal Stores, Lakewood)

2500 Carson

Lakewood

8. Car Wholesalers

13306 Ventura Blvd.

Sherman O

9. Castle Sales, Inc.

(More Department Store)

18300 Vanowen

Reseda

[fol. 1822]

10. Castle Sales, Inc.

(More Department Stores)

3443 S. Sepulveda

Los Angeles

11. Robt. Chico (AKA Chico Auto Sales, Inc.)

(Gemco, Anaheim)

9700 Lincoln Ave. (now 2310 Lincoln Ave. due to renumbering)

Anaheim

Gemcv, Anaheim

9700 Lincoln Ave. (now 2310 Lincoln Ave. due to renumbering)

Anaheim

Pia

Identifying

r

Num

[fol.

12.

13.

14.

15.

16.

17.

18.

1239

Name and Location of

Discount House or Referral Service

Robt. Chico (AKA Chico Auto Sales, Inc.)

(J.M. Arnoff Co.)

(Big “A” Stores)

8431 Canoga Ave.

Canoga Park

Robt. Chico (AKA Chico Auto Sales, Inc.)

oe Store)

ee Bellflower

Robt. Chico (AKA Chico Auto Sales, Inc.)

(Onin Store)

9135 Central Ave.

Montclair °

Robt. Chico (AKA Chico Auto Sales, Inc.)

(ABC Store)

Dealer’s Diversified Services, Inc.

hag ee)

5436 N. Woodruff

Lakewood

mwa) copies Services, Inc.

3912 Siauson

Los Angeles

Dealer’s Diversified Services, Inc.

tana Store)

14920 Raymer

Van Nuys

Arthur Diamond

12135 Victory Blvd.

North Hollywood

Fleet Sales Co.

peg pam sama Blvd.

ia — Sales

(Consumer’s Mart of America)

1440 8. Los Angeles St.

Anaheim

Union Car Sales

(Certi-Bond Store)

501 8S. Arlington

8682 Garvey Blvd.

South San Fe

abriel, California

1240

[fol. 1824] In toe Unirep States District Court

Derenpants’ Exuisit J

List of New Car Dealers of Certain Manufacturers Located

Within Five Mile Radii of Each Chevrolet Dealer in the

Los Angeles Metropolitan Area

(A) (B) (C) (D) (E) (F)

Dealer Chev. Ford Chrys. AMC Stude.

Angelus 15 1 1 1 1

19 2 2 12 6

(No: 1) 27 24 20 17

37 25 2

55 26 22

66 44 41

67 48 43

85 49 50

51 60

56

71

89

Total: 8 12 9 2 3

Arrow 4 6 29 15 7

8 32 19 12

(No: 2) 9 33 40 21 16

11 42 41 25

24 49 44 26

30 50 45

47 51 50

55 51

78 52

53

»|#88B8 al Sassarae

Total: 10 5 3

H. E. Baker 42 24 13 9

46 25 14 20

(No: 3) 50 26 17

51

Total: a 3 3. 2

(G)

vw

1

7

10

14

15

—

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

[fol. 1825]

J. V. Baldwin 2 32 29 15 7 i)

9 33 30 20 13 10

(No: 4) 24 43 41 21 15 13

30 45 42 22 16 14

47 46 44 23

54 47 45 25

55 49 46 26

59 50 47

78 51 48

80 52 50

84 53 51

54 52

55 53

56 54

57

58

59

Total: ll 17 14 7 4

Bill Barnett 28 7 4 3 10 4

31 8 8 6 23

(No: 5) 48 14 9 37

61 15 10

62 23 ll

70 19

88 33

38

71

Total: 5 7 9 3 2 1

o| S88eRe |

(B) (C) (D) (BE) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

[fol. 1826)

Bellwood 2 6 il 9 7 6

ll 19 15 15 12 10

(No: 8) 28 20 16 19 23

60 32 2 28

61 33 30 37

78 42 40

52 71

58

61

65

8S

Total: 6 il 7 5 3 2

Warren Biggs 2 24 22 21 6 7

4 30 27 23 l4 9

(No: 9) 12 31 28 25 15 13

a4 43 41 26 16 14

30 45 42

37 46 44

47 49 45

55 50 46

59 51 47

72 54 48

S4 AS) 50

85 56 51

57 §2

58 53

59 ‘a

Total: 12 15 15 4 4 4

Bliss & Paden 39 9 13 4 2 2

41 10 14 8 22 5

(No: 10) 43 17 69 24 21

53 18 70 36

57 60 41

85

86

95

a7

9

12438

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. Vw

[fol. 1827]

Boulevard 2 2 1 1 1 1

Ss 6 7 15 7 10

(No: 11) 27 32 29 19 12

60 33 30

67 42 40

78 51

52

65

Total: 6 s 5 4 3 2

Bruder 9 i) 20 5 2 3

24 10 2 12 < - 7

(No: 12) 37 ll 22 23 6 9

43 12 27 24 14 13

55 24 28 25 15 16

59 25 42 16

rp 26 46

S4 30 47

85 3 48

43 50

49 51

54 52

58 58

7

Total: 9 l4 13 5 6 5

Tom Carrell 78 66 34 25 20

79

‘No: 18 + sy > 4

MY -- 2 1 1 1 i

Century 42 22 24 11

(No: 34) 4 34 32 17 i

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

[fol. 1828}

Citizens 1 24 20 12 6 7

19 25 21 17

(No: 15) 37 26 22

66 44 43

68 48 50

85 51 60

66

71

89

Total: 6 9 6 1 2 1

Frank D. Clay 19 1 1 2 1 1

27 2 2 31 19 17

(No: 16) 52 3 55 35

58 63 60

66 71 67

67 72 72

76 73

80

81

82

87

89

Total: 7 12 3 2 2

Clippinger 25 5 12 7 23 (

16 23

(No: 17) 27 78

77 79

96

Total: 1 5 4 1 _ 1

College 29 74 61 32 32 18

34 115 62 52

(No: 18) 77 116 63

117 96

97

98

Total: 3 4 6 2 1 1

(A)

Dealer

[fol. 1829]

Colliau

(No: 19)

Total:

Community

(No: 20)

Total:

Cone Bros.

(No: 21)

Total:

Cone Chevrolet

(No: 22)

Total:

(c) ()

Ford Chrys

1

2

43

60

67

7”

eeee ol seseee sl zaegeeee ce. a!

a |

(E)

AMC

SBa oo!

|

—

SDOrw w

1245

(G)

NO int

—

ce

so

1246

Dealer

[fol. 1830)

Cormier

(No: 23)

Total:

Courtesy

(No: 24)

(B)

Chev.

SSx

SISEERESSoan wo!

(C)

Ford Chrys. AMC

(D)

| @BSeese

(E)

18

43

BEER» ws!

ja uaa

RSw oa

os |

(F)

Stude.

10

il

a

1247

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

[fol. 1831]

Economy 1 1 1 1 1 1

11 2 2 19 12 17

(No: 27) 16 30 40 31 17

19 42 43 35 19

58 48 60

66 51 67

67 71 72

76 72

73

81

82

89

Total: 8 12 7 4 4

Enoch 5 6 8 6 7 4

8 14 9 15 23 10

(No: 28) 47 15 10 22

61 32 ll 37

78 33 29

52

53 49

55 71

61

88

Total: 6 10 8 4 2 2

Bob Erskine 18 74 61 32 32 18

77 77 62 52

(No: 29) 83 114 63

115 97

116 98

Total: 3 5 5 2 1 1

Felix 2 32 29 15 7 10

4 33 30 20 13 13

(No: 30) 9 45 41 21 15 14

24 46 42 22 16

47 47 44 23 —

54 50 45 25

55 51 47 26

59 52 48

78 53 49

80 54 50

84 55 51

56 52

57 53

58 54

59

Total: 11 15 14

3 3

4 6

8 9

9 30

10

11

15

33

37

38

10

34 18

35 38

36

37

39

68

82

83

Total: 3 8 3

McDonald & O’Boyle 26 18 2

, 52 27

(No. 33)

Total:

—s

il

(G)

(A)

Dealer

(fol. 1833]

Gwynn

(No: 37)

Total:

Robt. Hall

(No: 38)

Total:

Hansen

(No: 39)

Total:

Harbor

(No: 40)

Total:

(B)

Chev.

RaSaScr

Bs .|

(Cc) WD) (E)

Ford Chrys. AMC

ll 5 5

12 6 12

24 7

25 20

26 21

30 22

31 27

44 28

48 4l

49 43

51 46

54 50

52

13 2

11 5 39

66 6

92 7

73

74

3 5 1

9 13 4

10 14 8

17 69 24

18 70 36

60 41

85

86

95

97

9 5

7 18

8

15

37

38

#

o| S8egeee.. |

—

(F)

Stude.

10

il

wo |

1249

wo |

os |

12

=

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

[fol. 1834]

Hastings 10 60 69 36 22 21

39 85 70 41

(No: 41) 53 86

95

97

Total: 3 5 2 2 1 1

Hessell 3 22 24 13 8 11

14 28 25 14 9 15

(No: 42) 51 29 26 16

53 34 31 17

35 32

62

Total: 4 6 5 4 2 2

Hoehn 10 9 13 4 2 2

12 10 14 8 14 5

(No: 43) 24 17 27 23 15 9

39 18 28 24 16 13

57 30 42 41 16

59 31 47

72 43 48

84 45 51

46 52

' 58 53

60

97

Total: 8 12 10 5 4 5

Hoffman 5 78 23

36 79

(No: 44) 96

Total: — 3 2 —_ —_ 1

Eddie Hopper 21 102 84 44 29

106 88 47

(No: 45) 111 89 51

95

Total:

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. Vw

(fol. 1835]

Harvey Dallas 3 23 19 ll 9 15

51 28 24 13

(No: 46) 63 29 25 14

34 26 16

62 32 17

91 49 38

Total: 3 6 6 6 1 1

Fletcher Jones 2 32 29 15 7 10

4 33 30 20 8 13

(No: 47) 9 35 31 21 13 14

24 45 42 22 23

28 46 44 25

30 47 45 26

54 50 49

78 52 51

80 53 53

84 55 54

56 ,

57

58

59

88

Total: 10 15 10 6 3

Glen Jones 5 4 3 3 10 4

31 rj 4 6 23 6

(No: 48) 40 8 8 9

61 14 9 37

62 15 10

81 19 11

20 15

61 16

69 33

70 38

71

Total: 6 10 ll 4 2

Tom Keating 22 4 85 30 24

71 69 86 46 25

(No: 49) 81 103 87

104

105

Total:

Kenneth

(No: 51)

Total:

(C) (D) (E) (F) (G)

Chev. Ford Chrys. AMC Stude. vw

3 25 13 9 15

63 26 14 20

17

2

3

14

42

46

54

80

| eeeeseeten. ol SSkESBBS o| LASBBY

1253

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

{fol. 1837]

Harry Mann 4 17 13 8 8 5

14 18 14 16 13 ll

(No: 54) 24 34 24 20 15 13

30 35 31 22 14

47 45 32 23

51 46 42 24

57 47 44 25

80 53 45 26

84 55 49

57 51

58 53

59 54

Total: 9 12 12 8 3 4

Metropolitan 1 24 20 12 6 7

2 25 21 21 14 9

(No: 55) 4 26 22 23 15 14

9 30 27 16

12 31 28

15 43 41

24 49 42

30 50 44

37 51 45

59 54 46

72 56 47

85 57 48

58 50

51

52 ‘

53

Total: 12 13 16 4 4 3

Miller Connell 109 91 . 45 26

110

(No: 56)

Total —_ 2 1 1 — 1

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. Vw

{fol. 1838]

Milliken 10 9 13 4 2 2

34 10 14 8 8 5

(No: 57) 39 17 31 20 13 11

43 18 42 23 14 13

53 35 47 24 15

54 43 48 4l

59 45 51

46 54

47

58

59

60

95

97

Total: 7 14 8 6 5 4

Mission 16 1 1 1 1

19 2 2 2 5 17

(No: 58) 26 3 17 10 19

27 21 18 31

52 71 60 35

56 72 67

7 73 72

6 80

81

82

87

89

Total: 8 12 z 5 3 2

A. E. Nugent 4 9 13 4 2 2

9 10 14 8 13 5

(No: 59) 12 17 27 20 14 9

24 18 28 21 15 13

30 30 42 23 16 14

43 31 44 24

55 43 45 25

57 45 46 26

72 47

84

1255

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

[fol. 1839]

Ostrom 8 2 15 12

11 6 16 9 26

(No: 60) 61 19 40 19 /

67 20 80 28

79 42 42

65

98

99

Total: 5 8 4 5 2 —

Paramount 5 6 3 3 23 6

8 7 4 6

(No: 61) 28 8 9 9

31 14 10 28

48 19 ll 30

60 20 15 37

81 61 16

65 71

69

7

88

Total: 7 11 6 l 1

Parkwood 5 4 3 10 4

Xi 7 18

(No: 62) 31 8

40

48

71

(A) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. Vw

[fol. 1840)

Martin Pollard 20 ll 5 5 3 3

65 12 6 29 4 16

(No: 64) 72 67 7 40 18 22

68 58 24

90 59 25

93 75

94 76

77

Total: 3 7 8 3 “3

Pollard Ravens 64 68 58 29 18 16

90 59 40 24 19

(No: 65) 93 65 25 22

94 75

76

77

Total: 1 6 2 8

Ernie Porter 1 1 1 1 1

15 2 31 17 17

(No: 66) 16 43 35 19

19 60

27 67

%

levees a |

=

on

wo

wo

Total: 8

| 1257

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

(fol. 1841]

Ed. Priester 15 ll 5 5 3

38 12 6 12

(No: 68) 85 25 7 39

26 20

44 21

66 73

92

Total: 3 7 6 3 1 —

Rancho 70 13 64 33 21 19

76 65

(No: 69) 94 77

Total: 1 3 3 1 1 1

Clem Rub 69 13 64 33 21 19

76 65

(No: 70)

Total 1 2 2 1 1

S&J 31 4 3 3

49 7 4 30

(No: 71) 62 & 33

81 69

103

Total: 4 5 3 2 a —

Schonlaw 9 9 27 4 2 2

12 10 28 23 14 3

(No: 72) 24 17 42 24 15 9

43 30 46 25 16 13

55 31 47 16

59 43 48

64 45 51

84 49 52

54 53

58 58

67

90

Total: 8 12 10 4 4 5

(A) (B) (C) (D) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Studee VW

fol. 1842}

Seaboard 32 83 68 43 8

84 82

(No: 73) 100 83

Total: 1 3 3- 1 — 1

Security 22 104 85 46

82 105 86 49

(No: 74) 108 87

2 3 2 —_ —

21 84 27

36 92 50

93 51

94

95

Total: 2 5 3 1 1

Service 16 1 1 1 1

19 2 31 17 17

(No: 76) 43 19

60

67

72

1259

(A) (B) (C) (D) (E) (PF) (G)

Dealer Chev. Ford Chrys. AMC Stude. VW

[fol. 1843]

Sopp 2 6 29 15 7 10

4 32 30 19 12 14

(No: 78) 8 33 40 21 23

1l 42 44 22

28 50 45 26

30 52 71 37

47 53

80 55

56

57

59

61

88

Total: 8 13 6 6 3 2

Sorenson 60 20 16 28 26 24

65 80 42 27

(No: 79) 98 81 49

99

Total: 1 4 3 3 2 1

Southwest 4 32 24 15 7 10

14 33 29 16 8 ll

(No: 80) 28 34 30 13 13

30 35 31 21 23 14

47 45 32

51 46 42

54 47 44

78 50 45

84 52 49

53 51

55 54

57

58

59

88

Total: 9 15 11 6 4 4

Stanley 31 4 3 3 27 6

48 7 4 9

(No: 81) 49 8 15 30

61 19 16

71 20 33

69 80

70 81

98

99

Total: 5 9 7 3 1 1

(A) (B) (Cc) @) (E) (F) (G)

Dealer Chev. Ford Chrys. AMC Stude. Vw

[fol. 1844)

Steves 74 104 81 49 27 24

105 85

(No: 82) 108 86

Total: 1 3 3 1 1 1

Vista 29 74 61 32 32 18

77 114 62 52

(No: 83) 115 63

116 96

97

98

Total: 2 4 6 2 1 1

West Adams 4 9 13 4 2 2

9 10 14 8 8 5

(No: 84) 12 17 27 20 13 9

24 18 28 21 14 13

30 30 31 23 15 14

43 31 42 . 16

47 35 44 ~ 2

54 43 45

57 45 47

59 46 48

72 47 51

80 50 52

54 53

55 54

56

57

58

59

Total: 12 18 14 7 6 5

Wondries 1 ll 5 5 3 7

9 12 6 12 4

(No: 85) 12 24 rj 6

15 25 20 i7

20 26 21

37 30 22

55 31 27

44 28

48 41

49 43

51 46

54 50

Total: 8 12 12 2 4 1

(fol. 1845] [File endorsement omitted]

—

(fel. 1846] In THe Untrep States Distaicr Court

1261

Derrenpants’ Exuisrr AA

In THe Unrrep States Disrricr Court FoR THE SouTHERN

Disrricr or Catirornia, CENTRAL Division

Civil No. 62-1208-C'C

Unirep States or AMERICA, Plaintiff,

v.

GENERAL Morors Corporation; Losor CHEVROLET DraLers

AssociaTIon; DEALERS’ SERVICE, Inc.; anp Foor

CHEVROLET DEALERS AssocIATIon, Defendants.

Strputation or Facts N UMBER T'wo—May 20, 1964

(fol. 1847] Plaintiff and each of the defendants, through

their respective counsel, hereby stipulate that witnesses,

if called, would testify to the following facts:

(1) A 1961 Model 927 Chevrolet Monza Coupe (white)

(Shown in Attachment 1);

(2) A 1961 Model 927 Chevrolet Monza Coupe ( black)

(Shown in Attachments 3 and 5);

(3) A 1961 Model 1839 Chevrolet Impala Sports

Sedan (Shown in Attachments 1, 3 and 4);

(4) A 1961 Model 1837 Chevrolet Impala Sports

Coupe (Shown in Attachments 1, 3, 4 and 5).

1262

[fol. 1848] 2. As shown in Attachment 1, attached to the

rear bumper of the 1961 Model 1837 Chevrolet Impala

Sports Coupe is a Citizens Chevrolet license plate frame

and cardboard filler similar to the one pictured in Attach-

ment 2 of this stipulation.

3. Attachment 2 annexed hereto is a true and correct

photographic copy of the license plate frame and card-

board filler regularly attached to new 1961 Chevrolets by

the Citizens Chevrolet Company, Eagle Rock, California.

4. As shown in Attachments 3 and 5, pasted on the

inside of the left rear window of the 1961 Model 1837

two-door Impala Sports Coupe is a manufacturer’s sug-

gested retail price “sticker” required by federal statute

(Public Law 85-506, 85th Congress) to be attached by each

manufacturer to each new car it sells to a dealer. A

sample of the form of such sticker used by the Chevrolet

Motor Division for this purpose is attached to this stipula-

tion as Attachment 6.

5. As shown in Attachment 4, a Citizens Chevrolet

license plate frame similar to the one pictured in Attach-

ment 2 (without the cardboard filler) is attached to the

center of the rear bumper of the 1961 Model 1837 Chevro-

let Impala Sports Coupe.

[fol. 1849] 6. The advertising materials attached hereto

as Attachments 8 through 59 and described in the attached

list, marked Attachment 7, are true and accurate samples

of the advertising material of the described kinds used

by the concessionaires, discount houses and referral

services named therein during the period between January

1, 1960 and October 12, 1961.

A. Each of such advertising materials designated

as a “newspaper ad” in column 2 of such list is a

true and correct copy of a page from the newspaper

named in column 3 of such list, circulated on the date

or dates shown in column 4 thereof, containing a paid

advertisement which the concessionaire, discount

house or referral service named in column 5 of such

list caused to be so published in the said newspaper.

B. Each of such advertising materials designated

as “general ad” in column 2 of such list is a true and

correct copy of a piece of advertising or a page from

1263

Motor Division to Chevrolet dealers, Subsequent to

such distribution this brochure was hand stamped by

or at the direction of Leonard's Store as follows:

“$$$ Save $$¢

New Cars

Leonard’s

International

600 No. Sepulveda-E] Segundo”

and was distributed to the public at such Leonard’s Store.

7. The advertising materials attached hereto as Attach-

ments 60 through 63, and described below, are true and

accurate samples of the advertising material of the de-

scribed kinds used by the concessionaires, discount houses

and referral services named during the period between

January 1, 1960 and October 12, 1961,

A. Attachment 60 hereto is a true and correct copy

of a business card used by sales representatives at

and distributed to the public under the direction of

J. M. Arnoff Co. (Big “A” Store), 8341 Canoga Ave-

nue, Canoga Park, California.

[fol. 1851] B. Attachment 61 hereto is a true and

correct copy of a “fold-over” business card used by

sales representatives at and distributed to the public

under the direction of Fleet Sales Company, 3870 Cren-

shaw Boulevard, Los Angeles, California.

C. Attachments 62 and 63 hereto are true and cor-

rect copies of a portion of the “referral slip” used

by certain Chevrolet dealers and Fleet Sales Com-

pany, as described by Charles Miller and Bernard . J

Dottl in Defendants’ Designations and Affidavits.

[fol. 1852] Dated May 20, 1964.

Maxwell M. Blecher, Robert C. Weinbaum.

Maxwell M. Blecher, Attorney, Department

Justice. O’Melveny & Myers, Lawler, Felix

Hall, Aloysius F. Power, Robert A. Nitsch

Nicholas J. Rosiello. By Homer I. Mitch

Hansen & Dolle, Glenn S. Roberts. By Victor

Hansen, Attorneys for Defendants.

It is so ordered this 1st day of June, 1964.

Charles H. Carr, United States District Judge.

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{fol. 1879] In tae Untrep States District Court

DerEeNDANTs’ Exuisir AP

Deacers DiversiFiep Services, Inc.

Advertising Consultants

3912 West Slauson Avenue

Los Angeles 43, California

AXminster 9-0796

Instructions

Please have the letter below copied on your Dealership’s

letterhead (an original and three copies), and have it

signed by the Owner or an Officer of your company, and

submit it to this office immediately. If you handle more

than one make of car, please include amount of gross

profit on each make of car. If the gross profit is on a

sliding scale, with more profit on some models than on

others, please so state.

(Date)

Dealers Diversified Services, Inc.

Advertising Consultants

3912 West Slauson Avenue

Los Angeles 43, California

To Whom It May Concern:

We hereby agree to sell our 1961 (make of car) at

$——- over actual invoice. We guarantee that a customer

referred by you will in no case be charged more than

the above price. If a raise in gross profit becomes neces-

sary, we shall so advise your office in writing.

All accessories and options will be sold at invoice, and

extra services at time of delivery at our cost. Our price

includes all pre-delivery service and regular new car war-

ranty, the salesman’s commission, and a $50.00 fee payable

to your office. All trades will be taken into our inventory

at cash value.

The $50.00 fee will be paid to Dealers Diversified Serv-

ices, Inc. for each new or used car sold and delivered at

(name of Dealership) by referral from Dealers Diversified

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Services, Inc., and will be paid upon receipt of your

billing.

We understand that our prices will be treated by you

in the strictest confidence, and will not be advertised or

circulated. (Name of salesman) will be the salesman

designated to handle your account. We agree that he will

send two (2) exact copies of each purchase order to your

office at time of delivery of new car, noting amount of

over-allowance on trade, if such form of discount is used.

1294

>

1295

(fol. 1880] In tHe Unrrep States Districr Court

Derenpants’ Exarsrr AQ

CHEVROLET—CENTRAL OFFICE

Division of General Motors Corporation

General Motors Building

Detroit 2, Michigan

Chevrolet

(trade mark)

November 23, 1960.

Mr. J. H. Connell

Miller Chevrolet Company

1000 West Coast Highway

Newport Beach, California

Dear John:

May I acknowledge your personal letter of November

11th to Mr. Staley, which he immediately turned over to

me as we were in the process and still are of thoroughly

investigating the increased activity of discount houses on

the Pacific Coast, and particularly in the general Los

Angeles area.

You can rest assured that we, too, are disturbed by this

situation, as are the management of General Motors Cor-

poration, and as soon as the current investigation is com-

pleted all the facts will be reviewed very carefully to

determine what position we will be able to take on this

important subject.

I was glad to learn some time ago that you are now the

operator at Newport Beach and, certainly, I want to wish

you every success.

Yours very truly, L. N. Mays, Assistant General

Sales Manager.

LNM/ec

a

1296

{fol. 1881] In tHe Unrrep States District Court

Derenpants’ Exursitr AR

Mr. K. F. Staley, Chevrolet December 2, 1960.

Detroit, Mich.

Dear Mr. Staley:

For publication, what is your policy on the matter out-

lined in the attached copy of the letter?

Sincerely, Frank Green.

[fol. 1882] Auto DeaLer Business LETTER

The “Green Sheet,” now in its third year, published

every week for all motor car dealers in Los Angeles

and Orange Counties, the world’s greatest automotive

market. Subscription $5 a month quarterly ; $50 a year

annually. Frank Green, publisher.

P.O. Box 664, Balboa, California. Phone ORiole 3-8068.

December 2, 1960.

The dealer has blood in his eye about the discount

house, finally after watching everybody fumble around

about it, and there is a groundswell running that will

do it in.

The fight is over whether or not in the future all new

cars will be sold by department stores, and whether or not

the dealer will maintain his investment in service facili-

ties, where somebody else snags the sales from him.

The stuff hit the fan finally, because too many discount

houses came in. The dealers see it as a national trend.

And before everybody goes down the tubes, they are

going to find out who stands where.

A campaign is being put on by the Motor Car Dealers

Association of Orange County, of which Dick Heffern is

the Secretary, and the membership of the group includes

enough livewires that it will get a good going over, and of

course it is the live wire that’s got it in the end.

They were stung into action, you might say, to sting

the factories into action. They turned to this as the last

resort, because one day a salesman lost a deal to a dis-

count house, and he asked his dealer what was being done

about the discount house.

1297

The review of the matter was not too complimentary,

and the salesman threw up his hands and quit his job and

went into another line of business altogether. Here is

what he found out had been done:

A law was passed that would give the Department of

Motor Vehicles a weapon with which the discount houses

could be killed. The law was hastily drawn, pushed

through against advice of counsel, worded in a way that

made it bend in the middle.

The DMV then took this law out on the hunt, looking

for a discount house to do in. The discount house‘ was

brought into court and made a shambles of the whole thing.

The law has been called unconstitutional, among other things,

and the discount houses have been found to be legal.

The Orange County guys were faced with seven dis-

count houses, nestled in among seventy-seven dealers. One

Chevrolet dealer in Los Angeles seni one of the discount

houses thirty Chevrolets in one month. ;

The discount houses did things like put on an auto

show, attracted thousands to see “all lines” had hundreds

of inquiries, and dozens of sales. A salesman looking at

this would naturally get his Irish up.

The dealers had their factory men out, some of them

went to the show, others shopped the discount houses, it

was a matter of getting the factory man to understand

and believe what was going on, and what it was doing to

seventy-seven cash customers of theirs.

(fol. 1883] The next thing that happened, the dealers

had all their salesmen sit down and write to the president

of their company, and ask him what he was doing about

the dealers who sold to the discount houses.

Some factories got it back by long distance telephone

right now, some have looked out the window, N. L. Me-

Laughlin, the manager of the Long Beach Dealers Associ-

ation had the assistant public relations director of Ford

Motor Company fly out here from Detroit to talk about

the Ford quality dealer program, and to add the informa-

tion that they had already cut off the supply from one

dealer who had been furnishing the main volume of cars

to the discount houses. They could do this forthwith be-

cause Ford had a financial interest in the firm.

Other factory men drove out to talk to the salesmen, to

explain the factory interest in the problem, promise some

1298

remedy would be forthcoming as soon as it is possible to

pr’ tuee it.

Ac least one factory man bitched at the dealers for

going over his head to the big boss. He found they are

hepped up on the idea that the factory can stop it if the

factory wants to.

One of the Rambler men told his factory man that he

would buy that extra five thousand dollars in spare parts,

and the display rack, and the batch of accessories that was

being urged on him, if the factory would push a similar

batch on the discount house down the street.

A Studebaker man told his factory man that he con-

siders himself a used car dealer, and that selling new cars

is a sideline, in which he engages when there is a profit in

it, and if there is no profit in it, then the new cars will

just sit there until there IS a profit in it.

The idea captures the imagination of every dealer who

hears of it. One old-timer recommended that they go a

step farther, and follow up to the president of the manu-

facturing firm, a month later, and tell him that thirty days

have now gone by since the first letter, and what has he

done abont cutting off the supply?

What a lot of dealers hope will happen, is that the

factory man will go to the guy who is supplying the cars

to the discount houses, and Sell him on the idea that

what he is doing is not so good. They quote instances

where the factory men had the urge to be persuasive with

a dealer over some other matter, and it turned out that

the factory men can be Very persuasive when they put

their mind to it.

One part of the Orange County struggle involved hiring

the lawyer who has the reputation for being the best legal

brains in automotive matters in Southern California. He

has compiled a file two inches thick on the matter, and he

then gives the off-the-cuff opinion that fourteen states

have tried to outlaw discount houses, and they all fourteen

ended up talking to themselves.

Another part of it brought out that the discount houses

are becoming more and more national in scope, with

lawyers who draw down fifty thousand a year just to take

care of problems that are brought up by the surrounding

merchants, and land in court.

And one final note, that might give an insight into which

1299

way the wind is blowing on the factory attitude toward

dealers who supply the discount houses: The letters that

came back from the Ford factory to the salesmen,

acknowledging the complaint, were signed by the president

himself, and promised that everything would be done to

correct it, as soon as it was possible.

One dealer in Long Beach told the customer to take his

ear back to the discount house for service. The customer

did that, then came back, paid for the service he needed,

and turned around and sued the dealer for the amount.

There was the distinct feeling here that the legal beagle

at the discount house contentedly feels that the dealer’s

service department is available to discount house custom-

ers, and if you don’t believe it, just try something.

[fol. 1884] In the San Fernando Valley, where seldom is

heard a discouraging word, a big discount house went in

in Canoga Park, and Dick Stewart wrote a letter on his

Pioneer Oldsmobile stationery to the Director of the

Department of Motor Vehicles, in Sacramento, which said:

“The J. M. Arnoff Company, 8341 Canoga Avenue,

Canoga Park, California, ran an ad in the Los Angeles

Times November 24, 1960, offering in their ‘new car de-

partment, all makes, all models, complete factory war-

ranty and service. Big discounts and trade-ins accepted

at top market value.’

“This clearly is an offering to sell new cars by a com-

pany which does not have a franchise for all makes or the

parts and service facilities to function as a new car dealer.

“The legitimate auto dealers represent a tremendous

investment in this state. They employ thousands of people,

carry a large tax burden and sincerely contribute to solv-

ing the transportation problem of our millions of people

through licensed sais and maintaining proper service de-

partments to keep the cars rolling. They render a genuine

service to the community.

“We pay our licenses, our bonds, our taxes, our permits

to operate, therefore we must ask for protection from

-hose who clearly do not conform to the requirements of

being a dealer.

“Therefore we feel that our state, county and city must

be made a safe place in which legitimate business can

prosper and the vital transportation needs of the publie

be served properly.

1300

“We do hereby respectfully request that your office:

1. Take immediate and continuing action to stop this

and all other operations of this type.

2, Conduct an investigation of all leasing companies

operating in Los Angeles and when it is found that they

are engaged in the business of selling new or used cars

as well as leasing, that action be taken to stop them from

operating as a new or used car dealer.

3. Counsel with newspapers and secure their cooperation

in refusing to run ads offering new and used cars for sale

except from a properly licensed dealer or an individual.

“We feel that this requested action is urgent and neces-

sary for the protection of all automobile dealers and in

the interests of the motoring public.”

The same day, Dick distributed to a number of other

dealers a letter which read: “Dear Dealer: The enclosed

letter, with copies of the ad, was sent to the following

offices: State of California, Department of Motor Vehicles,

3500 South Hope Street, Los Angeles, Calif.; Walter L.

Peterson, City Clerk, City Hall, Los Angeles, Calif.;

Mayor Norris Poulson, City Hall, Los Angeles, Calif. ;

Governor Pat Brown, State of California, Sacramento,

Calif.; Police Commissioner, City of Los Angeles, 150 N,

Los Angeles St., Los Angeles, Calif.; District Attorney,

Los Angeles County, 211 Temple Street, Los Angeles,

Calif.; Board of Supervisors, Los Angeles County, 211

Temple Street, Los Angeles, Calif.; Director, Department

of Motor Vehicles, State of California, Sacramento, Calif.

“If you feel that the cause is right, to try and protect

your business, won't you write a letter expressing your

views and mail to some or all of the above offices or other

offices that may help. Will you contact several other

dealers in your community and urge them to write letters

also.

“A group effort could produce results.”

Dick Stewart has been in the automobile business in the

San Fernando Valley for twenty-five years or so. His

Pioneer Olds place is in North Hollywood, 4610 Lanker-

shim Boulevard, Stanley 7-8115.

FG

1301

[fol. 1885] Ly rae Unrrep States Disrricr Court

Derenpvants’ Exumrr AS

December 15, 1960.

Mr. Frank Green, Publisher

Auto Dealer Business Letter

P. O. Box 664

Balboa, California

Dear Mr. Green:

Recently, you wrote the executives of the Divisions of

General Motors at their Central Offices in Michigan as

Well as to some of the Zone Managers in Los Angeles.

Your letter to these individuals attached a copy of the

“Auto Dealer Business Letter” issued on December 2 and

requested “For publication, what is your policy on the

matter outlined in the attached copy of the Letter?”

Kor your information, the activities of membership dis-

count outlets in Orange County, California, were brought

to the attention of the managements of the General Mo-

tors Corporation as well as to its Divisions, by General

Motors dealers and their retail organizations located in

the area, In addition, we have been kept informed of

these activities by the local field organizations of General

Motors.

This is a matter of deep concern to us in General

Motors as well as to our Divisions. We are in the process

of reviewing this matter with the individual General

Motors dealers in the Los Angeles and Orange County

areas.

The position and attitude of General Motors toward

such activities has been conveyed to the individual dealers

who have expressed their concern to us, and in addition

[fol. 1886] the loeal wholesale organizations of each of

our Divisions will diseuss this situation in detail with the

individual dealers,

Over a long period of years, the position of General

Motors has been unchanging as to practices which have

crept into the business from time to time, that represent

1302

a threat to the fundamental structure of our system of

distribution. We will continue our efforts to protect the

good will of our products by every available legal means.

Will you please regard this letter as reply to each of the

letters that you have addressed to executives of our Car

Divisions, whether located at their Central Offices or in

Los Angeles.

Very truly yours, J. M. Roche, Vice President.

bk

1303

[fol. 1887] Ly tae Untrep States District Court

Derenpants’ Exurerr AV

GENERAL Motors Corporation

Detroit 2, Michigan

December 28, 1960.

General Sales Managers U.S. Car Divisions

You are familiar with the increasing activity on the part

of membership discount houses operating new ear sales

departments. This condition has prompted certain South-

ern California dealers and their retail salesmen to send

letters and telegrams to Mr. Gordon and to Divisional

executives expressing their deep concern over this latest

development which is having a direct effect on the normal

retail sales of new cars. We have sent you copies of cor-

respondence we received in this connection along with

copies of replies that were made to your dealers.

This matter was reviewed at the meeting of the Dis-

tribution Group on December 21, 1960, and it was felt

that a letter containing similar information should be

sent to all dealers over the signature of the General Sales

Managers of the Car Divisions. We are attaching a copy

of a suggested letter which the Divisions may use in con-

nection with this matter. The suggested letter has been

developed for the Chevrolet Division, but of course can

be readily adapted for use by the other Divisions.

We would like to suggest that this letter be dated and

sent out to each of your dealers on December 30, 1960, so

that letters from all Divisions will arrive at approximate-

ly the same time on January 3, 1961. Will you kindly

send us five copies of the letter which you send to your

dealers.

J. M. Roche.

gz

Attach.

Pad

1304

[fol. 1888] Capmiac Moror Car Dtvision

General Motors Corporation

Detroit 32, Michigan.

Office of the General Sales Manager

December 30, 1960.

To Cadillae Distributors and Dealers

We are taking this means of aecquainting Cadillac dis-

tributors and dealers with the problems incident to mem-

bership discount outlets offering new Cadillac cars for

sale to members and their friends and the position of

Cadillae 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 Cadillae Motor Car Division as a

manufacturer is either not aware of these practices or,

that knowing about the situation refuses to recognize

such practices as “unfair competition” to enfranchised

dealers, as well as an unsound method for potential

customers to invest in new Cadillae products. Some have

even suggested that Cadillac 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 Cadillac

Quality Dealer Program and the continuity of our efforts

to implement the Program.

Cadillac Motor Car Division does not and has not sold

its new passenger cars for resale to any outlets other than

authorized Cadillac dealers. Frankly, I believe every

Cadillae 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 the Cadillac field organization.

Inquiries have been made, and we are advised that these

discount outlets either. (1) purchase their Cadillac motor

vehicles from Cadillac dealers for resale to members and

their friends, or (2) by prearrangement with some Cadil-

1305

lac dealers, they are in a position to make a deal with a

customer for a price and then refer the customer to

the Cadillac dealer for delivery of the vehicle at the

price established by the discount house. In the latter

event, the delivering Cadillac dealer reportedly pays a

[fol. 1889] substantial portion of the gross profit realized

on the deal to the discount establishment for division

among the operator of the discount house, the operator

of the automobile concession, and the automobile salesman.

Where the motor vehicles are purchased from a Cadillac

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 distributor and 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 identi-

fied with, the dealer, the manufacturer and the product.

When a customer purchases a new-used Cadillac car

from one of the so-called discount houses, he reportedly

does not receive a Cadillac Dealer New Car Warranty as

would the original purchaser of the vehicle. Further-

more, 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 customer to take his car to any authorized

Cadillac dealer for his service requirements. If the pur-

chaser is not satisfied with the service he receives from

the authorized dealer, he then blames Cadillac because,

as an owner of a Cadillac product, he expects the same

high degree of service which owners of Cadillac vehicles

have learned to enjoy over the years from the Cadillac

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-

belie

1306

poration sent all General Motors dealers a copy of his

letter-reply to a protest against bootlegging from the

Automobile Dealers Association of Indiana. The follow-

ing 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 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

{fol. 1890] 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’ asthe 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

motivated 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

transaction over to that dealer for closing and delivery

of the vehicle, is being improperly characterized by some

selling dealers as a “referral.” Such arrangements, how-

ever, 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 location 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 Cadillac Selling Agreements.

More importantly, arrangements of this type tend to

downgrade the enfranchised dealer as a new car merchant

1307

in the eyes of the public. It is difficult to understand how

any dealer who has invested thousands of dollars in capi-

tal equipment to merchandise new cars can be a party to

an arrangement which permits a discount outlet to dis-

credit 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.

Cadillac Motor Car Division recognizes the problems

raised by the discount house new car merchandising activ-

ities. They are critical problems for the public, the

franchised dealers, and the manufacturers. New car sales

(fol. 1891] by these outlets do not represent one iota of

additional 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 trans-

action which would otherwise be made by the franchised

dealers who have the service facilities and trained mechan-

ics 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 Cadillac field organization will give special atten-

tion to these problems. They propose to personally dis-

cuss this matter with dealers in those areas where such

activity is reported to exist 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 dis-

count house under the provisions of their Cadillac 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 Cadillac with respect to the matters outlined herein.

Very truly yours, F. H. Murray, General Sales

Manager.

FHMurray :mm

1308

[fol. 1892] Buick Moror Division,

General Motors Corporation,

Flint 2, Michigan’

December 30, 1960.

To all Buick Dealers

We are taking this means of acquainting all Buick deal-

ers with the problems incident to membership discount

outlets offering new Buick cars for sale to members and

their friends and the position of Buick 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 Buick Motor Division as a manu-

facturer is either not aware of these practices or, that

knowing about the situation refuses to recognize such

practices as “unfair . »mpetition” to enfranchised dealers,

as well as an unsound method for potential customers to

invest in new Buick products. Some have even suggested

that Buick condones these practices as a means of obtain-

ing additional sales.

All these implications are entirely unwarranted, and

reflect a lack of understanding by some individuals of the

Buick Quality Dealer Program and the continuity of our

efforts to implement the Program.

Buick Motor Division does not and has not sold its new

passenger cars for resale to any outlets other than author-

-ized Buick dealers. Frankly, I believe every Buick dealer

knows this, but it appears that some of their employes

may not be quite as well iiformed.

The reported recent expansion of the activities of so-

called membership discount houses into the field of motor

vehicles 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 Buick motor

vehicles from Buick dealers for resale to members and

their friends, or (2) by prearrangement with some Buick

dealers, they are in a position to make a deal with a cus-

Mi

1309

tomer for a price and then refer the customer to the

Buick dealer for delivery of the vehicle at the price estab-

lished by the discount house. In the latter event, the

delivering Buick dealer reportedly pays a substantial

portion of the gross profit realized on the deal to the

discount establishment for division among the operator of

the discount house, the operator of the automobile con-

cession, and the automobile salesman.

[fol. 1893] Where the motor vehicles are purchased from

a Buick dealer and resold as new-used cars, the transac-

tion is nothing more than what has generally become to

be recognized in the trade as a “bootleg” sale. On

numerous oceasions during the past several years, the

management of General Motors Corporation has gone on

record with the General Motors dealer organization ex-

pressing 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 dealer, the manufacturer andthe

product.

When a customer purchases a new-used Buick ear from

one of the so-called discount houses, he reportedly does

not receive a Buick 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 attempting

to trade upon the capital facilities of authorized dealers,

the discount house seller reportedly tells the eustomer to

take his car to any authorized Buick dealer for his service

requirements. If the purchaser is not satisfied with the

service he received from the authorized dealer, he then

blames Buick because, as an owner of a Buick product, he

expects the same high degree of service which owners of

Buick vehicles have learned to enjoy over the years from

the Buick dealer organization,

While the management of General Motors Corporation

has repeatedly pointed out the pitfalls of the “qnick-

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

1310

letter-reply to a protest against bootlegging from the

Automobile Dealers Association of Indiana. The follow-

ing 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 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 violation ef 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 chan-

nel. Even if there were extenuating circumstances

which motivated the movement of cars into the boot-

leg channel, unquestionably there are many such sales

by authorized dealers made solely for the purpose of

obtaining a quick profit.”

[fol. 1894] The procedure whereby some discount out-

lets, 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 character-

ized by some selling dealers as a “referral”. Such arrange-

ments, 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 re-

moved from the location 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 Buick Dealer Selling Agreements.

More importantly, arrangements of this type tend to

downgrade the enfranchised dealer as a new car merchant

in the eves of the public. It is difficult to understand how

any dealer who has invested thousands of dollars in capi-

1311

tal equipment to merchandise new cars can be a party to

an arrangement which permits a discount outlet to dis-

credit 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 discoun: house.

Buick Motor Division recognizes the problems raised by

the discount house new car merchandising activities. They

are critical problems for the public, the franchised dealers,

and the manufacturers. New ear sales by these outlets do

not represent one iota of additional business for the deal-

er organization or the factories. They represent no sav-

ings 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 mechanies to insure the customer’s

enjoyment of his investment in a new car. Most impor-

tantly, they threaten the good will of the dealer orga-

nization, the manufacturer, and the product.

The Buick wholesale organization will give special at-

tention 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 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 dis-

tribution, and the validity of any arrangement they may

have with a discount house under the provisions of their

Buick 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 will more fully understand the position of

Buick with respect to the matters outlined herein.

Very truly yours, E. C. Kennard, General Sales

Manager.

ECK :bb

1312

(fol. 1895] CurvroLetT—CrntrRAL 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 re-

spect to this growing activity. We have received letters

and telegrams from some dealers and employes of dealer-

ships 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

manufacturer is either not aware of these practices or,

that knowing about the situation refuses to recognize such

practices as “unfair competition” to enfranchised dealers,

as well as an unsound method for potential customers to

invest in new Chevrolet products. Some have even sug-

gested that Chevrolet 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 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

1313

and their friends, or (2) by prearrangement with some

Chevrolet dealers, they are in a position to make a deal

with a 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

(fol. 1896] substantial portion of the gross profit realized

on the deal to the discount establishment for division

among the operator 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 transac-

tion is nothing more than what has generally become to

be recognized in the trade as a “bootleg” sale. On numer-

ous occasions during the past several years, the manage-

ment 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 identi-

fied with, the dealer, the manufacturer and the produet.

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. Further-

more, 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 author-

ized dealers, the discount house seller reportedly tells the

customer .o take his car to any authorized Chevrolet deal-

er 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 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.

1314

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

Automobile Dealers Association of Indiana. The follow-

ing quotation is from that letter:

“For several years it has been quite clear to those

[fol. 1897] who have kept informed as to the inter-

pretation of the 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 mo-

tor vehicles to anyone, anywhere at any price, was

a violation of the antitrust laws. Jvdicial 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.

Even if there were extenuating circumstances which

motivated 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

transaction over to that dealer for closing and delivery of

the vehicle, is being improperly characterized by some

selling dealers as a “referral.” Such arrangements, how-

ever, 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 location 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

1315

downgrade the enfranchised dealer as a new car merchant

in the eyes of the public. It is diffieult to understand how

any dealer who has invested thousands of dollars in capi-

tal equipment to merchandise new cars can be a party to

an arrangement which permits a discount outlet to dis-

credit 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. 1898] Chevrolet Motor Division recognizes the

problems raised by the discount house new car merchan-

dising 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 business for the dealer organization or the

factories. They represent no savings to the publie but

only result in a dilution of the gross profit on each trans-

action which would otherwise be made by the franchised

dealers who have the service facilities and trained

mechanics to insure the eustomer’s enjoyment of his in-

vestment in a new ear. Most importantly, they threaten

the good will of the dealer organization, the manufactur-

er, 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 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 distribu-

tion, and the validity of any arrangement they may have

with a discount 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 _aevrolet with respect to the matters outlined herein.

Very truly yours, K. FE. Staley, General Sales

Manager.

1316

{fol. 1899] OLDSMOBILE

Division of General Motors Corporation

Lansing 21, Michigan

December 30, 1960.

To all Oldsmobile Dealers:

We are taking this means of acquainting all Oldsmobile

dealers with the problems incident to membership discount

outlets offering new Oldsmobile cars for sale to members

and their friends and the position of Oldsmobile with

respect to this growing activity. We have received letters

and telegrams from some dealers and employes of dealer-

ships 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 Oldsmobile Division as a manu-

facturer is either not aware of these practices or, that

knowing about the situation refuses to recognize such

practices as “unfair competition” to enfranchised dealers,

as well as an unsound method for potential customers to

invest in new Oldsmobile products. Some have even sug-

gested that Oldsmobile 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 Oldsmobile

Quality Dealer Program and the coniizuity of our efforts

to implement the Program.

Oldsmobile Division does not and has not sold its new

passenger cars and trucks for resale to any outlets other

than authorized Oldsmobile dealers. Frankly I believe

every Oldsmobile 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) purehase their Oldsmobile

motor vehicles from Oldsmobile dealers for resale to mem-

bers and their friends, or (2) by prearrangement with

some Oldsmobile dealers, they are in a position to make

1317

a deal with a customer for a price and then refer the

customer to the Oldsmobile dealer for delivery of the

vehicle at the price established by the discount house. In

the latter event, the delivering Oldsmobile dealer report-

edly pays a substantial portion of the gross profit realized

on the deal to the discount establishment for division

among the operator of the discount house, the operator of

the automobile concession, and the automobile salesman.

[fol. 1900] Where the motor vehicles are purchased from

an Oldsmobile dealer and resold as new-used cars, the

transaction is nothing more than what has generally

become to be recognized 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 dealer, the manufacturer and the

product.

When a customer purchases a new-used Oldsmobile car

from one of the so-called discount houses, he reportedly

does not receive an Oldsmobile Dealer New Car Warranty

as would the original purchaser of the vehicle. Further-

more, the discount house normally provides no service

facilities for the after-purchase needs of the eustomer. In

attempting to trade upon the capital facilities of author-

ized dealers, the discount house seller reportedly tells the

customer to take his car to any authorized Oldsmobile

dealer for his service requirements. If the purchaser is

not satisfied with the service he receives from the au-

thorized dealer, he then blames Oldsmobile because, as an

owner of an Oldsmobile product, he expects the same

high degree of service which owners of Oldsmobile ve-

hicles have learned to enjoy over the years from the

Oldsmobile 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-

1318

poration sent all General Motors dealers a copy of his

letter-reply to a protest against bootlegging from the

Automobile Dealers Association of Indiana. The follow

ing 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 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 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.

Sven if there were extenuating circumstances which

motivated 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.”

[fol. 1901] The procedure whereby some discount out-

lets, 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 clos-

ing and delivery of the vehicle, is being improperly

characterized by some selling dealers as a “referral.”

Such arrangements, however, are far different from the

casual practice in the industry whereby salesmen encour-

age referrals from friends and others who chance upon a

prospective new car customer. The reports we have re-

ceived indicate that these discount outlets are advertising

new cars for sale at established business locations, fre-

quently far removed from the location of the selling deal-

er. In effect, they in some instances represent the estab-

lishnient of a second and unauthorized sales outlet or

location contrary to the provisions of the Oldsmobile

Dealer Selling Agreements.

More importantly, arrangemen's of this type tend to

1319

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 equipment to merchandise new ears can be a party

to an arrangement which permits a discount outlei to

discret his merchardising 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 cae discount house.

Oldsmobile Division recognizes the problems raised by

the discount house new ear 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 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 eustomer's enjoyment of

his investment in a new car. Most importantly, they

threaten the good will of the dealer organization, the manu-

facturer, and the product.

The Oldsmobile wholesale organization will give speciai

attention to these problems. They propose to personally

diseuss this matter with each of their dealers in those areas

where such activity is reported to exist 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 Oldsmobile

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

Oldsmobile with respect to the matters outlined herein.

Very truly yours, Emmett P. Feely, General Sales

Manager.

1320

{fol. 1902] GeneraL Motors Corporation

Pontiac, Michigan

Pontiac Moror Division

December 30, 1960.

To all Pontiac Dealers:

We are taking this means of acquainting all Pontiac

dealers with the problems incident to membership discount

outlets offering new Pontiac cars for sale to members and

their friends and the position of Pontiac with respect to

this growing activity. We have received letters and tele-

grams 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 Pontiac Motor Division as a

manufacturer is either not aware of these practices or,

that knowing about the situation refuses to recognize such

practices as “unfair competition” to enfranchised dealers,

as well as an unsound method for potential customers to

invest in new Pontiac products. Some have even sug-

gested that Pontiac 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 Pontiac

Quality Dealer Program and the continuity of our efforts

to implement the Program.

Pontiac Motor Division does not and has not sold its

new passenger cars for resale to any outlets other than

authorized Pontiac dealers. Frankly, I believe every Pon-

tiac 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 Pontiac motor

vehicles from Pontiac dealers for resale to members and

their friends, or (2) by prearrangement with some Pontiac

dealers, they are in a position to make a deal with a cus-

1321

tomer for a price and then refer the customer to the

Pontiac dealer for delivery of the vehicle at the price

established by the discount house. In the latter event,

the delivering Pontiac dealer reportedly pays a substan-

tial portion of the gross profit realized on the deal to the

discount establishment for division among the operator of

the discount house, the operator of the automobile con-

cession, and the automobile salesman.

(fol. 1903] Where the motor vehicles are purchased from

a Pontiac dealer and resold as new-used cars, the transac-

tion is nothing more than what has generally become to

be recognized in the trade as a “bootleg” sale. On nu-

merous occasions during the past several years, the map

agement of General Motors Corporation has gone on rec-

ord with the General Motors dealer organization express-

ing 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 identi-

fied with, the dealer, the manufacturer and the product.

When a customer purchases a new-used Pontiac car

from one of the so-called discount houses, he reportedly

does not receive a Pontiac 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 attempting

to trade upon the capital facilities of authorized dealers,

the discount house seller reportedly tells the customer to

take his car to any authorized Pontiac dealer for his

service requirements. If the purchaser is not satisfied

with the service he receives from the authorizd dealer,

he then blames Pontiac because, as an owner of a Pontiac

product, he expects the same high degree of service which

owners of Pontiac vehicles have learned to enjoy over

the years from the Pontiac 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

1322

Automobile Dealers Association of Indiana. The follow-

ing 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 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 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 pruhlems. It is the exercise of this right which

first moves the motor vehicles into the bootleg chan-

nel. Even if there were extenuating circumstances

which motivated the movement of cars into the boot-

leg 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

transaction over to that dealer for closing and delivery

of the vehicle, is being improperly characterized by some

selling dealers as a “referral.” Such arrangements,

however, are far different

[fol. 1904] 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 in-

stances represent the establishment of a second and

unauthorized sales outlet or location contrary to the provi-

sions of the Pontiac Dealer Selling Agreements.

More importantly, arrangements of this type tend to

downgrade the enfranchised dealer as a new car merchant

in the eves of the public. It is difficult to understand how

any dealer who has invested thousands of dollars in capi-

1323

tal equipment to merchandise new cars can be a party to

an arrangement which permits a discount outlet to dis-

credit 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.

Pontiac Motor Division recognizes the problems 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 business

for the dealer organization or the factories. They repre-

sent no savings to the public but only result in a dilution

of the gross profit on each transaction which would other.

wise 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 ear.

Most importantly, they threaten the good will of the

dealer organization, the manufacturer, and the product.

The Pontiac 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 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 distribu-

tion, and the validity of any arrangement they may have

with a discount house under the provisions of their Pon-

tiac 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 Pontiac with respect to the matters outlined herein.

Very truly yours, Frank V. Bridge, General Sales

Manager.

1324

[fol. 1905] Is rae Unrrep States Disreicr Court

Derenpants’ Exuisir AW

Mr. J. M. Roche, 14-146 G.M. Bldg.

K. E. Staley, A-246 G.M. Bldg.

December 29, 1960.

This is to advise that the letter on “discount houses”

referred to in your memorandum of December 28th, 1960

to General Sales Managers was mailed to all Chevrolet

Dealers on December 29th, 1960.

The five copies of this letter which you requested are

attached.

Very truly yours, ——, ——.

KES mw

Attachs.

1325

(fol. 1906] In THe Unrrep States District Court

Derenpants’ Exursrr AX

February 15, 1961.

Mr. John S. Gordon, President

General Motors Building

New York City, New York

Dear Sir:

For the past seven years the Fleet Sales Company has

provided qualified prospects for new cars dealers in the

Los Angeles Area. We have developed a particular

method which has been successful in locating and qualify-

ing new car prospects for those dealers wishing to avail

themselves of our services. This is our sole function.

As you well know, factory pressure has been brought to

bear on General Motors dealers suggesting that they cease

to do business with “discount houses”. Unfortunately and

wrongly, we have been included in this group.

It is not practical for us to remain in business unless

we prospect for all makes of cars and certainly we could

not survive without Chevrolet. Therefore, unless our pros-

pecting service is approved or at least left up to each

dealer to freely decide for himself, you will be forcing us

out of existence.

We would be most happy to discuss this matter with you

in your office, our office, by telephone or any place you may

suggest at your earliest convenience in order +o clarify

any misconceptions you may have regarding our function.

Very truy yours, James Fahy, Partner, Virgil Dunn,

Partner.

Copies to: E. N. Cole, General Mgr., R. M. O'Connor,

Chevrolet Zone Mgr., R. M. Cash, Chevrolet Regional Man-

ager.

(fol. 1907] Is tHe Unrrep States District Court

Derenpants’ Exuisir AY

GENERAL Motors CorPoraTION

Inter-Organization Letters Only

March 23. 1961.

To: Mr. Lawrence Averill

Assistant General Sales Manager

Address: Chevrolet Motors Division

A-268

Dear Larry:

You will recall our conversation relative to a letter John

F. Gordon, President, received from Mr. James Fahy,

Fleet Sales Company, Los Angeles complaining that “fac-

tory pressure has been brought to bear on General Motors

dealers suggesting they cease doing business with discount

houses”. Copies of Mr. Fahy’s letter were sent to Messrs.

FE. N. Cole, R. M. O’Connor and R. M. Cash.

Attached is copy of our reply to Mr. Fahy as drafted

by the Legal Department. We are forwarding copies of

this correspondence to Messrs. Cole and O’Connor.

Sincerely, A. H. Belfie, Merchandising Manager.

AHB:jf

Attach.

1327

[fol. 1908] GBH

Genera. Motors CorPoraTION

General Motors Building

3044 West Grand Boulevard

Detroit 2, Michigan

Department of Justice, March 29 1961,

Division of Records, Anti-Trust

March 23, 1961.

Mr. James Fahy

Mr. Virgil Dunn

Fleet Sales Company

3870 Crenshaw Boulevard

Los Angeles 8, California

Gentlemen:

Your letter of February 15, 1961, addressed to Mr. John

F. Gordon, President, General Motors Corporation, has

been referred to the undersigned for attention and reply.

This will also serve as an acknowledgement of the copies

of that letter which you sent to Mr. E. N. Cole, General

Manager, Chevrolet, Mr. R. M. Cash, Chevrolet Regional

Manager, and Mr. R. M. O'Connor, Chevrolet Zone Man-

ager.

I have no knowledge of what you term “factory pres-

sure” having been brought to bear on General Motors

dealers suggesting that they cease to do business with

“discount houses”.

Every General Motors dealer has a Selling Agreement

which provides among other things, that the dealer shall

furnish a place of business satisfactory as to appearance

and location and adequate in size for new motor vehicle

sales and service operations; and that once established

in facilities and at a location mutually satisfactory to the

dealer and General Motors, the dealer will not establish

a new or different location, branch sales office, or place of

business without the prior written approval of General

Motors.

It was brought to our attention that some dealers had

entered into arrangements with discount houses operating

from advertised locations, far removed from the dealers’

1328

locations—under which the discount houses were paid a

commission for advertising and sell cars on behalf of the

dealers. The dealers were advised that such arrangements

were subject to investigation by General Motors Corpora-

tion in the light of the provisions of the Dealer Selling

Agreements.

[fol. 1909] This notice to dealers reminding them of the

lawful obligations which they had assumed as a part of

their Selling Agreements is not to be confused with the

idea of “factory pressure” as implied in your letter.

Every dealer knows, and has been so advised by Gen-

eral Motors, that as an independent merchant he is law-

fully entitled to sell his inventory to anyone, anywhere, at

any price. In doing so, however, he is not privileged to

breach a lawful provision in the Selling Agreement which

he has executed without rendering himself responsible for

such breach.

Very truly yours, A. H. Belfie, Merchandising Man-

ager.

AHB:jf

[fol. 1910] [File endorsement omitted]

1329

[fol. 1911] In rae Unrren States District Court

DerenpDANTs’ Exuisir AZ

In tHe Unitrep States District Court ror THE

SoutHern Disrrict or Catirornia, CentRAL Drvision

Civil No. 62-1208-CC

StrPu.aTion or Facts Number Toree—May 20, 1964

Untrep States or America, Plaintiff,

v.

GENERAL Motors Corporation, Loson CHEVROLET DEALERS

Association; Derauers’ Service, Inc.; and Fooruinn

CueEvroteT Deauers Association, Defendants.

[fol. 1912] Plaintiff and each of the defendants, through

their respective counsel, hereby stipulate that witnesses,

if called, would testify to the following facts:

1. GM Exhibits A and B are accurate photographic

copies of maps prepared and copyrighted in 1961 by Renie

Map Service, Los Angeles, California and are accurately

scaled and topographically correct representations of those

portions of Los Angeles, Orange and San Bernardino

Counties, California, shown thereon as they were during

the period January 1, 1960 through October 12, 1961.

Colored numbered dots have been affixed to each of said

maps. (Reduced photographic copies of said Exhibits are

attached to this stipulation as Attachments A and B,

respectively. )

2. The blue numbered dots shown on GM Exhibits A

and B accurately reflect the geographic location of each

Chevrolet dealer described in Paragraph 17 of the Stipula-

tion of Facts No. 1 in these proceedings, located in the

Chevrolet Los Angeles Metropolitan Area (as defined in

Paragraph 17, Exhibit 4.2 of said Stipulation) during the

1330

said period of January 1, 1960 through October 12, 1961.

The number on each blue dot represents the name of the

Chevrolet dealer described opposite the same number in

GM Exhibit C, a copy of witch is attached hereto as

Attachment C.

[fol. 1913] 3. The red numbered dots shown on GM

Exhibit A accurately reflect the geographic locations of

those discount houses and referral services, set forth in

Paragraph 28 of the Stipulation of Facts No. 1 in these

proceedings, located within said Los Angeles Metropolitan

Area. The number on each red dot represents the name

of the discount house or referral service described opposite

the same number in GM Exhibit D, a copy of whieh is at-

tached hereto as Attachment D.

4. GM Eyhibit FE, a copy of which is attached hereto

as Attachment FE, is an accurate listing as of September

1961, obtained from R. L. Polk & Co., Detroit, Michigan,

of every Ford, Mercury and Comet new car dealer (here-

after: “Ford Dealer”) and its location, located in said Los

Angeles Metropolitan Area. Each black numbered dot

shown on said GM Exhibit B accurately reflects the geo-

graphic location of each such Ford Dealer in said area.

Each number on each black dot represents the name of the

Ford Dealer described opposite the same number in said

GM Exhibit EF.

5. GM Exhibit F, a copy of which is attached hereto

as Attachment F, is an accurate listing as of September

1961, obtained from R. L. Polk & Co., Detroit, Michigan, of

every Plymouth and Dodge dealer (hereafter: “Chrysler

Dealer”) and its location, located in said Los Angeles

Metropolitan Area, Fach orange numbered dot shown on

[fol. 1914] said GM Exhibit B accurately reflects the geo-

graphic location of each such Chrysler Dealer in said area.

‘ach number on each orange dot represents the name of

the Chrysler Dealer described opposite the same number

in said GM Exhibit F.

6. GM Exhibit G, a copy of which is attached hereto

as Attachment G, is an accurate listing as of September

1961, obtained from R. L. Polk & Co., Detroit, Michigan,

1331

of every Rambler dealer and its location, located in said

Los Angeles Metropolitan Area. Each green numbered

dot shown on said GM Exhibit B accurately reflects the

geographic location of each such Rambler dealer in said

area, Each number on each green dot represents the name

of the Rambler dealer described opposite the same number

in GM Exhibit G.

7. GM Exhibit H, a copy of which is attached hereto as

Attachment H, is an accurate listing as of September

1961, obtained from R. L. Polk & Co., Detroit, Michigan,

of every Studebaker dealer and its location, located in

said Los Angeles Metropolitan Area. Each brown num-

bered dot shown on said GM Exhibit B accurately reflects

the geographic location of each such Studebaker dealer in

said area. Each number on each brown dot represents

the name of the Studebaker dealer described opposite the

same number in GM Exhibit H.

[fol. 1915] 8. GM Exhibit I, a copy of which is attached

hereto as Attachment I, is an accurate listing as of Sep-

tember 1961, obtained from R. L. Polk & Co., Detroit,

Michigan, of every Volkswagen dealer and its location,

located in said Los Angeles Metropolitan Area. Each

magenta numbered dot shown on said GM Exhibit B

accurately reflects the geographic location of each such

Volkswagen dealer in said area. Each number of each

magenta dot represents the name of the Volkswagen

dealer described opposite the same number in GM Ex-

hibit I.

9. GM Exhibit J, a copy of which is attached hereto

as Attachment J, is an accurate and complete tabulation

and compilation prepared from Exhibit B, showing by

identifying number, esch Chevrolet dealer, Ford dealer,

Chrysler dealer, Rambler dealer, Studebaker dealer and

Volkswagen dealer located within a five mile radius of

each Chevrolet dealer indexed in Exhibit C.

1332

[fol. 1916] Dated: May 20, 1964.

Maxwell M. Blecher, Robert C. Weinbaum. By:

Maxwell M. Blecher, Attorney, Department of

Justice. O’Melveny & Myers, Lawler, Felix &

Hall, Aloysius F. Power, Robert A. Nitschke,

Nicholas J. Rosiello. By Homer I. Mitchell,

Hansen & Dolle, Glenn S. Roberts. By: Victor

R. Hansen, Attorneys for Defendants.

It is so ordered this 1st day of June, 1964.

Charles H. Carr, United States District Judge.

1333

(fol.1917] I~ rue Unirep States District Court

’

Derenpants’ Exnrir BA

Summary of Profitability in the Service and Parts Departments in 1960 for

the 76 Los Angeles Metropoli

tan Area Chevrolet Dealers

Median

Net Profit

or (Loss)

Number Percent in Serv.

of of & Parts

Dealers Dealers Depts

No. % 3

ERE ST ER Naa eelt ran he 23 30 11,900

Non-profitable................ 53 70 (20, 500)

Eee ee 76 100 (14, 100)

(fol. 1918] In tHe Unrrep States District Court

Derenpants’ Exuisir BB

Estimated Reduction in New Car Volume to Eliminate All P

rofit for Volume

of Los Angeles Metropolitan Area Chevrole Ts

t Deale

Dealer Volume Class Reduction to Eliminate Profit

(Before Reduction)

% Reduction No. Cars Per Year

Me ts ye eee 12% 36

eee RMK dee we 17% 68

eRe een yo 33% 165

eR epee 21% 126

700

atrah aie a deine aera 30% 210

[fol. 1919] In tHe Unrrep States District Court

Derenpants’ Exuisir BC

Estimated Reduction in New Car Selling Price to Eliminate All Profit for Volume

Classes of Los Angeles Metropolitan Area Chevrolet Dealers

Price Reduction to Eliminate Profit

Dealer Volume % Reduction Dollars Per Car

eS ee 1.0% $27

Ms = loieacd varios 1.4% $38

Gr apes ewcoe Ws 2.9% $77

RR a 1.8% $48

. er: 2.6% $69

[fol. 1920] Is tHe Unrrep Srares District Court

Derenpants’ Exuisir BD

Median Gross Profit Per New Chevrolet Pavone Ove Sold in 1960 by Les

Angeles Metropolitan Area Chevrolet Dealers o Sold Through Discount

Houses or Referral Services

(Current Models Only)

Median Gross

Number Sold Profit Per Car

Referral- Referral-

Discount Discount

Dealer Regular House Regular House

(No.) (No.) ($) ($)

ee ee 5,970 1,336 220 235

a ads Vvcen sees 643 355 249 254

CN awa besee son 600 239 231 251

RS ons oe v6 oe as 1,259 262 195 223

NS Orr a 1,573 104 223 227

ASRS AE Se 668 93 232 221

aso chooks 789 138 230 224

1335

(fol. 1921] Ly THe Unrrep States District Court

Derenpants’ Exuisir BE

Taken From Hirscu, Intropuction to Mopern STATISTICs,

p 45 (The Macmillan Company, 1957)

oe AU

Oocvicanes

ie esac,

Reprinted from Collier's by Permission, copyright 1953, The Crowell-Collier Publish

ing Company.

“Average annual income here's about $12,000. There's fifty of us

clears $2,000 and one fellow makes half « million”

In the example depicted the Average as determined by

the Mep1an is $2,000 while the Average as determined by

the Arrrumetic Mean is $11,765.

1337

In THe Unrrep States District Covurr

(fol 1922)

Derenpants’ Exurir BF

++

7

4

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NUMBER REFERS TO THE NUMBER OF DEALERS

WITHIN THE VOLUME CLASS AND INCLUDED

THE AVERAGE VALUE REPRESENTED BY THE

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l N

(Based on 1960 Financial Statements of the 73

1960 COMBINED GROSS PROFIT FOR NEW AND USED CAR DEPARTMENTS

1 oh

(# ,000° 'T$) SamueienE Wes Guan, Gry tan Wea 110ua S80HD

Paar er Pe eT ae

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4 414 eae eae eee eae ei 444 aH} head DLS ie S| *

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pn on ey t , ss ia em i “ttt T 77 mt rs 4 ' -4-5 44 1

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BRM aw My Sas Ee i BE ie 9 ' -}- +} |

In tHE Unrrep States District Court

Derenpants’ Exursrr BG

—

GROSS PROFIT FOR SERVICE

P.

/

= +} —-- -

7

|

i

!

!

!

ae Se a

= a

RTMENT VOLUME

E NUMBER OF DEALERS

ie iam, REFERS TO

Bete WITHIN THE |

ae THE AVERAGE

—— } acne ms

|

|| % Ree baa

1960 COMBINED GROSS PROFIT FOR SERVICE AND PARTS DEPARTMENTS 7 Ltt i}

(Based on 1960 Financial Statements of the 73 > ga Be hes ie He waSs ae

Los Angeles Metropolitan Area Chevrolet Dealers) Ri Gy Se | |

; e 7 | j a. eo

q Ve = UF : a ee ee ap

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. 4 sam Seana Be addin ae

=~ {| | Pa | | |

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B83 | a | i Linear Regression Equation

st _.¥ =-$624,800 + $279,200 Log x

~~ lo i H ; ;

E oy Sd os Es ——) Soon ae @ ad

a

a

JOLUME CLASS AND INCLUDED IN

VALUE REPRESENTED BY THE DOT.

a

i i

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1338

—

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t+ 4 ia t+ 4 = : .

{

i

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|

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Derenvants’ Exurrr BH

In tHE Unrrep Srares District Courr

Los Angeles Metropolitan Area Chevrolet Dealers)

ae a

(Based on 1960 Financial Statements of the 73

1960 NET MISCELLANEOUS INCOME OF THE ENTIRE DEALERSHIP

: Maes EMEAS LEE ERED SeSeS Sease goaRA & 6

' pee —— . 4 ee

+ (8,000‘1I$) dIHSUATvVad AYLINA FHL SOS fe x oe

Rees Fee 40 HAOONI SMOANVTTROSIN TAN |

b.} “<3 He ie : or a | ar Ne abe to ran ’ {: 2: © eee \ : z 4 } +4--LP bein a 8

ro} re) e.. ro) ro) ro) fo) on

a N @ co = WN :

4 aA os

600

500

400

[fol. 1925]

In THE Unirep States District Courr

Derenpants’ Exuisir BI

* eee 1960 COMBINED VARIABLE SELLING EXPENSES FOR THE NEW AND USED CAR DEPARTMENTS |

see |

gree BETH SER : ay (hres "a

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7 bh Los Angeles Metropolitan Aree Chevrolet Dealers) a es as

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| | Linear Regregsion Equation:

| _¥ =-$13,009 + $175 xX !

NEW CAR DEPARTMENT VOLUME

| . i ot ok ee!

800 1000 1200 1400 1600 1800 2000

In tHe Unrrep Srares District Court

Derenpants’ Exursit BJ

—+ :

(Based on 1960 Financial Statements of the 73

Los Angeles Metropolitan Area Chevrolet Dealers)

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{fol. 1927] In tHE Unrrep States District Courr

Derenpants’ Exurerr BK

| ayers “1960 COMBINED SEMI-FIXED EXPENSES OF THE SERVICE AND PARTS DEPARTMENTS

(Based on 1960 Financial Statements of the 73

Los Angeles Metropolitan Area Chevrolet Dealers)

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Derenpants’ Exurerr BL

In THE Untrep Srares District Covrr

(fol. 1928}

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[fol.1929] Uv tHe Unrrep Srares District Court

Derenpants’ Exurerr BM

Mori ot a how ie: Roles Volume Upes Ton neeles Metropolitan Area Cheyrolet

Per Cent Reduction

10 12

Financial Reference Number of of New C Car %

Item Exhibit 300 264

($000’s) Poor Dh ath (3000's)

Grom profit on new and used cars. . BF 113.8 108.2 102.7 100.5

Gross profit on parts and service.. BG 66.8 668 66.8 66.8

Mi us net income........

Ce stetwesrveowvee

ee 2. ee

Oe es

SOP CS Perecesesweesceserses

ee

1346

{fol. 1930] In tHe Unrrep Srares Disrricr Court

Derenpants’ Exureir BN

Effect of a Loss in Sales Volume Upon a Los Angeles Metropolitan Area Chevrolet

Dealer of the 400 New Car Volume Class

Per Cent Reduction

5% 10% 15% 17%

Number of New Car Sales

Financial Reference

Item Exhibit 400 380 360 340 332

($000’s) ($000’s) ($000’s) ($000’s) ($000’s)

Gross profit on new and

anes Le ahaa BF 150.8 143.4 136.0 128.6 125.6

Splat Paola is BG 101:7° 103.7 101.7. 101.7 - 14.7

Miscellaneous net income. BH 24.8 23.7 22.6 21.6 21.1

Total gross profit. . . 277.3 268.8 260.3 251.9 248.4

Variable selling expenses.. BI 57.0 53.5 50.0 46.5 45.1

Semi-fixed new and used

car expemses.......... BJ 63.6 62.3 61.1 59.8 59.3

lll BK 89.5 89.5 89.5 89.5 89.5

parts expenses........ 5 ; 4 ; '

Fixed expenses.......... BL 55.0 55.0 55.0 55.0 55.0

Total expenses...... 265.1 260.3 255.6 250.8 248.9

Net profit before bonuses

and income taxes..... 12.2 5 4.7 & (0.5)

aes sie Breakeven

point

1.547

[fol. 1931] In toe Unrrep States Disreict Court

Derenpants’ Exuisir BO

Effect of a Loss in Sales Volume Upon a Los Angeles Metropolitan Area Chevrolet

Dealer of the 500 New Car Volume Class

Per Cent Reduction

10% 20% 30% 33%

Number of New Car Sales

Financial Reference

Item Exhibit 500 450 400 350 335

($000’s) ($000’s) ($000’s) ($000’s) ($000’s)

Gross profit on new and

ee BF 187.8 169.3 150.8 132.3 126.7

I pare aurea dace shen BG 128.8 128.8 128.8 128.8 128.8

Miscellaneous net income. BH 30.2 27.5 24.8 22.1 21.3

Total gross profit. . . 346.8 325.6 304.4 283.2 276.8

Variable selling expenses. BI 74.5 65.8 57.0 48.2 45.6

Semi-fixed new and used

car expenses.......... BJ 78.3 75.2 72.0 68.9 68.0

a a. ae we teks 08.2 108.2

parts expenses........ 108. 108. 108. 108. 108.

Fixed expenses.......... BL 55.0 55.0 55.0 55.0 55.0

Total expenses...... 316.0 304.2 292.2 280.3 276.8

Net profit before bonuses

and income taxes..... 30.8 21. 12. 2. —0-

ae Breakeven

1348

(fol. 1932] Is tHe Untrep Srares District Court

Derenpants’ Exuisir BP

Effect of a Loss in Sales Volume U ne Metropolisen Area Chevseies

Dealer of the Noo aan olume C!

Per Cent Reduction

10% 20% 21%

Number of New Car Sales

Financial Reference

Item Exhibit 600 540 480 474

($000’s) ($000’s) ($000’s) ($000’s)

Seven pends om ane el vend come. BF 224.8 202.6 180.4 178.2

oe fit on parts and service... BG 150.9 150.9 150.9 150.9

us net income........ BH 35.6 32.4 29.1 28.8

Tota

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