Northern California Record

Monday, July 15, 2019

Appeals court breathes new life into auto manufacturer conspiracy case

By Taryn Phaneuf | Sep 16, 2016

SAN FRANCISCO – Plaintiffs in a decade-long lawsuit may finally take their case to trial after an appellate decision revived claims against an automaker’s Canadian affiliate.

The case involves California buyers of new vehicles who sued several automobile manufacturers and dealer associations in 2003 for violating state antitrust and unfair competition laws. The plaintiffs alleged that manufacturers and associations conspired to keep cheaper, almost identical new cars from being exported to the United States from Canada. That kept California prices higher than they should be in a free market system, court documents state.

The trial court offered summary judgment against Ford U.S. and Ford Canada in 2011, saying the plaintiffs didn’t show enough evidence that Ford had colluded with other manufacturers to restrict exports. These were the last two defendants in a suit that included several other automakers who either were granted summary judgments or settled.

Plaintiffs appealed to California's First Appellate District, challenging the trial court’s exclusion of evidence that supported their conspiracy claims. In a detailed 56-page decision issued in July by a three-member panel, the court affirmed the summary judgment ruling against Ford U.S., but agreed with the plaintiffs and reversed summary judgment against Ford Canada.

The decision provides a “clear path” to trial, Todd Seaver, a partner at Berman DeValerio in San Francisco and an attorney for the plaintiffs, told the Northern California Record.

“Plaintiffs are delighted with the court of appeals decision, which is careful and thorough,” Seaver said. “The in-depth treatment of the facts as they pertained to the trial court’s evidentiary rulings were especially thoughtful. The decision means that there is a clear path to trial now against Ford Canada, who is exposed to hundreds of millions of dollars in damages to the class of California new vehicle buyers and lessees.”

Court documents detail the trade policies and economic realities of the 1990s and early 2000s that made export from Canada to the U.S. both cheaper and easier. This also made it more difficult to engage in the price discrimination the industry relied on. At the relevant time in the lawsuit, the automobile manufacturers named in the suit normally charged California dealers 10 to 30 percent more than they charged Canadian dealers for the vehicles.

Maintaining such a price difference became difficult when U.S. dealers could buy more Canadian vehicles at a discount, and then bring them across the border to sell them. Plaintiffs claim that several manufacturers worked together through meetings and conference calls to discourage exports.

“The case involves the international auto industry and its ability to price discriminate between low and high demand markets,” Seaver said. “The lesson, however, involves the most old-fashioned antitrust principle: do not collude with your competitors.”

Evidence of their alleged collusion includes deposition testimony of Pierre Millette, general counsel for Toyota Canada, who said he attended a meeting with others in the industry who all supported the idea of “trying to keep the vehicles in Canada.”

That testimony was excluded by the trial court judge as hearsay, but the appellate judges concluded that was an error.

“It is sufficient to conclude that if presented with the Millette testimony – especially in the context of the meeting evidence discussed above – a reasonable juror could find an unlawful conspiracy to restrict Canadian exports more likely than not,” the decision states.

“In the end, this is, perhaps, as the trial court acknowledged, ‘not an easy case,’” it concludes. “Viewing all of the evidence as a whole and in the light most favorable to the plaintiffs, we conclude that summary judgment must be denied in this case because it should.”

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