# Appendix — United States v. General Motors Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0254%3A03 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1966 - **Citation:** 384 U.S. 127 ## 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 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 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. 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FLEET SALES COMPANY GROUP PURCHASING SERVICE — LOS ANGELES Ali Mekes + Cash or Terms + Trade-las O.K, Pl-ot Jee Op PNR IM OATS TR ARN ee. aOR anny AOD TEI IO TARY ae seni ty REET oh Soa al Nyon fe reer Me \ ey am oe Uy Wer 2 1293 {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 5 - /- Pe] > : = Ry: Li . 7 y ts : - , . » a ’ . . . 4 ; . [ i 1% 7 _ . i : . . : - ‘s > s os E : . cA P 7 - s 5 : 3 : - . ‘ ; : ae . ; 3 - ; r / i & * ‘ i, > 5 z : 7 eae 7 ; 4 i z 7 3 y 7 ; 4s . £ff o ire c ss | . | | | es iy coe . : : Ps. - : a a Was ; - *) anil Ve = otal arral sed seal sateen toe Salt : 4 e ei an ( sar are SP SLE we mertarer ten OR eh pear ap r lea S ae =A a ary — Na 7 “ ot. ——q 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 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0254%3A03. Public record. Not legal advice.