NEW MOTOR VEHICLE BD. OF CAL. v. ORRIN W. FOX CO.
Term:
- 1970-1979
Facts of the Case
None
Question
None
Argument
New Motor Vehicle Bd. Of Cal. v. Orrin W. Fox Co. - Oral Argument, Part 1New Motor Vehicle Bd. Of Cal. v. Orrin W. Fox Co. - Oral Argument, Part 2New Motor Vehicle Bd. Of Cal. v. Orrin W. Fox Co. - Oral Argument, Part 2 Conclusion
Decision: 8 votes for New Motor Vehicle Bd. Of Cal., 1 vote(s) against
Legal provision: Due Process
Legal provision: Due Process
None
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Transcript:
Argument of Robert L. Mukai
Chief Justice Warren E. Burger: We'll hear arguments next in 837 and 849, Motor Vehicle Board of California against Fox.
Mr. Mukai, I think you can proceed whenever you're ready.
Mr. Robert L. Mukai: Thank you, Mr. Chief Justice and may it please the Court.
The issue in this case is whether a state must provide commercial enterprises subject to it's state regulatory capacity, a hearing prior to obliging those enterprises to delay consummation of certain commercial expectancies pending a state inquiry in the regulatory interest.
And this case arises from a partial summary judgment entered in the Central District of California, declaring facially void and enjoining enforcement of a Motor Vehicle Dealership Establishment and Relocation Act of the state, which I shall refer to as the California Automobile Franchise Act.
The judgment of the three-judge court holds that the act deprives franchisors and their business associates of liberty and property without due process of law.
Now, Your Honors, with the Court’s permission, I propose to focus my remarks principally upon the basic reason that we contend the District Court ought not to decided this case at all.
And further, I propose, with the Court's permission, to defer to counsel for appellants in Number 849, the discussion of the alternative grounds for affirmance which have been urged by the appellees.
I'd like to spend a few moments with the statute in question, that statute in Section 3062 of the California Vehicle Code provides that in the event that a franchisor seeks to establish or relocate a dealership within 10 miles of one of its existing dealerships, then the franchisor must first notify the New Motor Vehicle Board of the State, an administrative agency, and each of the franchisors’ existing franchisees in the same line-make, within 10 miles of the prospective dealership site.
Any franchisee, so notified, who is located within 10 miles of the proposed site may then file a protest with the New Motor Vehicle Board within 15 days.
When a protest has been filed, the franchisor is prohibited from effectuating the proposed establishment or relocation until a hearing has been held by the Board.
The California Vehicle Code Section 3062 implements this prohibition by requiring the Board, upon the receipt of a protest, to notify the franchisor first that a timely protest has in fact been filed, second, that a hearing is required to be held by the Board and third, that the franchisor shall not establish or relocate the proposed dealership until such time as the requisite hearing has been held, nor following the hearing if the Board should determine that cause exists not to permit the dealership.
And the Board notifications that were issued to General Motors franchising divisions in this case are found at pages 52 and 80 of the joint appendix.
I should add that the Act does require a full evidentiary hearing within 60 days after a notice of hearing has been issued by the Board.
And as the District Court itself noted, if the Board itself hears the protest, it must issue its decision within 30 days after holding the hearing or else the franchisor’s proposed action for establishment or relocation is deemed approved by law.
Justice Harry A. Blackmun: If no protest is filed, is the approval of automatically forthcoming?
Mr. Robert L. Mukai: Your Honor, in the event that no protest is filed, there is no further step to be taken by the Board as an administrative agency and the franchisor is permitted to go ahead with its plans.
Justice John Paul Stevens: What if a protest is filed and then withdrawn before the hearing?
Mr. Robert L. Mukai: If a protest is withdrawn prior to the hearing, the Board issues a notice of dismissal of the protest and the franchisor is permitted to consummate its plans.
Justice John Paul Stevens: So that the vindication of the public interest depends entirely of the activity of the protestor?
Mr. Robert L. Mukai: Not exactly Your Honor.
The Act utilizes the protest as the means for bringing the public interest to issue before the New Motor Vehicle Board and in this respect, the California --
Justice John Paul Stevens: But after it's at issue, the protestor can take it -- can withdraw?
Mr. Robert L. Mukai: The Board has in the past taken the position that although a protest maybe withdrawn, the Board is not automatically deprived of jurisdiction to regulate.
The order of dismissal ordinarily issues following the withdrawal of the protest, but it's not required by law to so issue.
Justice Harry A. Blackmun: Who may protest?
Mr. Robert L. Mukai: Under the California statute, any dealer in the same line-make as the proposed dealership to be established or relocated.
Justice Harry A. Blackmun: So, no stranger or a member of the public may protest?
Mr. Robert L. Mukai: That is true, Your Honor.
However, members of the public may appear at the hearing and be represented and produce evidence and be heard fully at the evidentiary hearing prescribed by Section 3066 of the Vehicle Code.
Justice Harry A. Blackmun: So, an existing Ford dealer however could protest a new Chevrolet agency?
Mr. Robert L. Mukai: No Your Honor, that could not happen under the Act.
Only an intra-brand situation exists here, only a competitor in the same line-make can protest.
Justice William J. Brennan: Oh, let's see, does that mean only a Pontiac --
Mr. Robert L. Mukai: Only a Pontiac automobile dealer.
Justice William J. Brennan: Chevrolet couldn't protest the relocation of Pontiac, it was --
Mr. Robert L. Mukai: That is correct Your Honor, yes.
Chief Justice Warren E. Burger: But the Ford dealer could go and get one of his friends on a lot of his neighbors to go in from what you say just as citizens?
Mr. Robert L. Mukai: That is possible, Your Honor to the --
Chief Justice Warren E. Burger: What would the citizens be presenting?
What's the basis of their appearing?
There's too many automobile dealers around the neighborhood?
Mr. Robert L. Mukai: That could certainly be one basis.
Chief Justice Warren E. Burger: That's a zoning matter, isn't it?
Mr. Robert L. Mukai: It borders on the zoning matter in many instances Your Honor, but the state’s interest in this form of regulation can take on many different aspects.
There could conceivably be a situation where disinterested in the sense of purely private individuals could take an interest in the number or the location, perhaps the location of --
Chief Justice Warren E. Burger: As a practical matter, do citizens -- have any citizens ever appeared?
Mr. Robert L. Mukai: Your Honor, I can't answer that.
I'm simply unaware of whether any citizens have ever appeared in these kinds of proceedings.
Justice Thurgood Marshall: Could California pass the same law involving gasoline stations?
Mr. Robert L. Mukai: Yes, Your Honor, it could.
I'm certainly --
Justice Thurgood Marshall: Or any other business?
Mr. Robert L. Mukai: Virtually, any other business, I am sure Your Honor, based upon among other things this Court's decision, clarifying decision on Exxon Corporation against Governor of Maryland.
Your Honors, the District Court interpreted the Act as requiring the Board to set a hearing date concurrent with its issuance of the statutory notification to the franchisor.
But even though under this interpretation, the period of delay between invocation of the statute’s prohibition and the time of a final decision on the merits, is potentially as short as 90 days.
The Court held that the Act's failure to provide a hearing before imposing any delay or to require a hearing soon thereafter constituted a deprivation of liberty on property without due process of law.
In the District Court, we cited the Chief Justice’s dissenting opinion in the 1971 case of Wisconsin versus Constantino.
Chief Justice Warren E. Burger: That won't help you very much, would it?
Mr. Robert L. Mukai: That is exactly what Judge Ely said to me Your Honor, but we cited it because we believe that that dissent which was concurred in by Mr. Justice Blackmun, has now become the role for application of Pullman abstention through this Court's more recent decisions in Harris County Commissioner's Court against Moore decided in 1975 and the 1976 decision in Bellotti against Baird which was decided unanimously by this Court.
And that rule we submit is that the Pullman doctrine applies even to an unambiguous statute which appears to be in conflict with accepted notions of due process if it is susceptible of a state court ruling which would either avoid a necessity of a federal constitutional decision or in the alternative substantially modify the federal issue involved.
In the present case entirely apart from the suggestion that the California Court could invalidate the Act under the State Constitution, we have submitted that this statute is susceptible of at least two constructions, one of which would avoid Federal constitutional issue and the other of which would substantially modify it.
First, as was the case in Constantino, this Act could be construed to require a hearing before a state action occurs at all.
This California precedent for such a situation we've cited to the Court, the case of Endler against Schutzbank involving a real estate commissioner's case in California and Rios versus Cousins heard in this Court’s sub nom, Department to Motor Vehicles against Rios.
Appellees point out in their brief that we have never affirmatively advocated this construction and of course this is true because we do not believe that the Act interferes with the liberty or a property interest and because we do not believe that due process requires a prior hearing even if some such interest is involve in this case.
Justice Potter Stewart: As I understand it, Mr, Mukai, your fellow appellants have expressly abandoned the claim that the Court should have abstained under the Pullman?
Mr. Robert L. Mukai: Yes, Your Honor, as we understand --
Justice Potter Stewart: (Voice Overlap) reply brief.
Mr. Robert L. Mukai: As we understand the appellants in the consolidated appeal, they believe that this statute is totally unambiguous.
Justice Potter Stewart: Well, in any event, that perhaps, even though the Court could have abstained that it's almost moot now and academic, since the Court did decide it on the merits, they asked us to decide it on the merits, that's way I read their reply brief?
Mr. Robert L. Mukai: That is my understanding, Your Honor, and that's why I feel that it's important that I bring at least one ambiguity to this Court's attention.
And that is the second interpretation which we have advocated affirmatively and it's the interpretation of which would substantially modify the due process issue dealt with by the District Court.
That interpretation would hold that the Act requires the manufacturer to provide notice to the Board and to its franchisees before its commitment to its plans has advanced so far that the manufacturer simply cannot bear the delays of state regulation.
This interpretation focuses on the first words of Vehicle Code Section 3062 which is the crux of this case.
Those words are, “In the event that a franchisor seeks to enter into a franchise, establishing an additional dealership or relocating an existing dealership.
The interpretation which we have advocated would settle the time related ambiguity of these first words present and the necessity of such an interpretation is demonstrated by the facts that the Fox enfranchisement and the Muller relocation in this very case, presented situations where in neither case did General Motors’ notice of intent precede finalization of its plans with those dealers and in both cases, General Motors waited to give notice until after it had already entered into the franchises with its respective dealers.
In fact, in the case of Fox, General Motors didn’t give notice at all until some three months after the franchise became effective.
Now, appellee's due process claim rests at least in part on the assertion of a protected property right by virtue of contractual arrangements regarding its franchise.
If a state court were to interpret this section to require the manufacturer to issue its notice at sometime, before these contractual arrangements are made and finalized, then there could be no basis whatsoever for the due process claim predicated on the existence of contract.
In addition, if some liberty or property interest is implicated by this statute, the determinants of what process is due would be completely different because of the nature of the so-called right that is being interfered with, because in that situation --
Justice John Paul Stevens: Mr. Mukai, may I ask you a question on this?
Supposing there's an existing Ford dealership at a given location and General Motors is negotiating with that dealer to become a Chevrolet dealer, would the statute apply if the Ford dealer switched to Chevrolet?
Mr. Robert L. Mukai: Yes, it would Your Honor.
Justice John Paul Stevens: So, that you are in effect saying that you ask the statute be construed that before negotiations go too far, General Motors give notice to Ford that it's soliciting --
Mr. Robert L. Mukai: We advocate the interpretation that this is what the statute requires Your Honor based upon the language in the event that and seeks to enter into.
I think the language is clearly anticipatory.
If the Court please, I'll reserve any remaining time I may have for rebuttal.
Argument of James R. McCall
Chief Justice Warren E. Burger: Mr. McCall.
Mr. James R. McCall: Mr. Chief Justice, and may it please the Court.
Mr. Justice Stewart has accurately stated our position in reference to the abstention issue.
It is the position of the dealer association appellants here that abstention of the Pullman variety is an equitable doctrine at this point.
It serves no useful purpose to say that District Court should have abstained.
I would like to pass momentarily to the due process clause attack which was brought on the statute and which was the specific ground on which the District Court held that the statute was facially invalid.
It is our position that there is no conceivable liberty or property interest which can be made out by General Motors or the other appellees.
The long and short of it is that they assert the right to establish an automobile franchise or to become a franchise dealer whenever they want and wherever they want.
And we submit that this is not the type of liberty or property concept which has been given due process procedural protection by this Court, ever.
One other point in reference to the due process clause, and that is that the appellees in their brief have stated that if the due process procedural protections are not available to General Motors in Fox and Muller, in this situation, then they have no protection whatsoever under the Due Process Clause.
That seems to be a statement which is hard to sustain.
Clearly, there's a notion of substantive due process in the sense that all state regulation of economic enterprises as well as other enterprises and other activity must be rationally related to a legitimate end of Government.
Clearly, we submit and we have submitted this in our reply brief, this kind of legislation is indeed rationally related to illegitimate end of Government.
The Automobile Dealers’ Day in Court Act on the federal level is an express recognition by Congress of the inadequate status at the bargaining table, if you will, which dealers have when they bargain with automobile manufacturers.
The problem of overloading in terms of putting in too many dealerships in the same line-make in one marketing area has brought a number of states other than California to the same position.
In other words, some form of legislation which limits the Carte Blanche authority of the manufacturer to establish a new or additional dealership in a given market area.
19 states have statutes which are similar to California in that respect.
11 of these states of these 19, have a Board or an official state body that passes upon or supervises or looks over in some way this decision by the manufacturer to put in an additional dealership in an area already served by a dealer carrying the same line-make.
Justice Thurgood Marshall: Mr. McCall, is it true that some of the companies have arbitrations set up?
Mr. James R. McCall: Yes, Mr. Justice Marshall.
Justice Thurgood Marshall: Like General Motors, I know has one, do the others have it too?
Mr. James R. McCall: As far as I know, Ford is the only manufacturer that has an arbitration, an institutionalized arbitration arrangement which is --
Justice Thurgood Marshall: But General Motors has one?
Mr. James R. McCall: Do they?
I'm not familiar with it if they do.
Justice Potter Stewart: A former -- a former member of this Court said --
Justice Thurgood Marshall: Justice Whittaker.
Justice Potter Stewart: -- had a position as a -- I think it was the arbitrator, maybe like --
Justice Thurgood Marshall: He was promoted to arbitrator.
Justice Potter Stewart: -- to resolve differences between the General Motors on one hand and its distributors and dealers on the other, at least that was my understanding?
Mr. James R. McCall: That would appear to be a recognition by the commercial entities involved of the need for some kind of regulation of this activity and clearly, Congress and the other state legislatures have felt the same way, other state legislatures beside California.
I would like to pass to the supremacy clause argument which is made by General Motors in this case.
It was not the ground on which Judges Ely and Gray and Takashi relied down below, but it was urged to the to the District Court.
As I take it, the supremacy clause argument here is that since the California Act, Automobile Franchisers Act imposes some limitation upon the total freedom of General Motors to put a dealership in wherever and whenever they want to, that this somehow conflicts with the central policy of the Sherman Act.
Now, at the present time, I know of no case and I certainly would stand corrected on this, where this Court has voided a state statute on the grounds that it conflicts with the Sherman Act.
This Court has voided activities of price fixing.
Attorneys have said that monopolistic practices on the part of utilities are municipally owned and otherwise are subject to the anti-trust laws, but it is not struck down as state statute on the ground that it conflicted with anti-trust laws.
The California Supreme Court has struck down its liquor fair pricing law recently in a case which is cited in our reply brief but as far as I know with this Court has not.
I would make so bold as to partially that there would have to be two steps in any such analysis which would have to undergone before a state statute could be struck down on the ground that it “violates the Sherman Act or violates the central policy of the Sherman Act.
First, it would seem to me, it would have to be shown that the state statute authorizes conduct which -- but for the state statute would violate the Sherman Act.
And secondly, that the statute authorizes conduct which is not “state action” as that phrase is come to be defined in a number of decision which this Court has rendered.
Obviously, state action itself cannot be illegal under the Sherman Act and that dates from Parker versus Brown and that is a concept never questioned by this Court subsequently.
So, what we're talking about here is an attack on the only private conduct which is really authorized by this Act and that is the right of a dealer to protest to this Board, that is the only conduct undertaken by private party.
Now, we submit that --
Justice John Paul Stevens: Isn't that quite right, Mr. McCall?
Isn't that correct that the private party could -- all the dealers within 10 miles of the new location could agree with on another that they would let General Motors open the new dealership provided General Motors pay them a certain amount or gave them some consideration, couldn’t they, without any state involvement at all?
Mr. James R. McCall: Mr. Justice Stevens, that's not authorized by the Act.
That's not a conduct which is authorized by the statute.
It might be undertaken.
Justice John Paul Stevens: As I understand it, basically what the Act does is give any dealer within the 10-mile radius the right to say, “You cannot open the dealership without paying the amount of money involved in conducting an evidentiary hearing of some kind” and if it instead of doing that, the dealer said, “Well, if you just give us $5,000.00 a piece, you go ahead.
The public wouldn't care anyway, would they?
Mr. James R. McCall: I think there would be problems under the anti-trust laws with the claim --
Justice John Paul Stevens: You admit then that would be a problem with the anti --
Mr. James R. McCall: Oh yes, the collective agreement, sure, between them to engage in what, extortion or a shakedown. Certainly, I think that could be cognizable under the anti-trust laws, perhaps under some of the other laws.
Justice John Paul Stevens: Would it be illegal for General Motors to adopt the policy in California that when they open a new dealership, they give notice to all the dealers that if you don’t protest, we'll hand you $10,000.00, they send out a notice of that kind?
Mr. James R. McCall: The unilateral act.
Justice John Paul Stevens: And then they all decide, “Well, that’s better than going through the cost of hearing.”
Mr. James R. McCall: Well, each of the dealers decide on their own that, “Yes, they’ll take the $10,000.000.”
I see nothing wrong with General Motors adopting that --
Justice John Paul Stevens: That would be consistent with the policy that the statute is vindicating, isn't it, namely protecting those dealers from excessive competition?
Mr. James R. McCall: If the dealers felt that excessive competition was worth --
Justice John Paul Stevens: More than $10,000.00, they would say, “Well, we won’t take the $10,000.00, but give us $15,000.00.”
Mr. James R. McCall: That's correct.
Justice Byron R. White: Is the anti-trust issue here or the preemption of the supremacy clause?
Mr. James R. McCall: Yes, as I understand, that's what they're --
Justice Byron R. White: That's an adequately -- until he urges that as a ground for deferments?
Mr. James R. McCall: Yes, Your Honor.
Justice Byron R. White: And was that presented to the District Court?
Mr. James R. McCall: Yes it was.
It was one of the grounds of the motion for summary judgment.
Justice Byron R. White: But it was not dealt with the District Court?
Mr. James R. McCall: No, the District Court specifically said it didn't have to reach that issue because its going off on its notion of procedural due process.
Justice William H. Rehnquist: Isn't that somewhat unusual when the District Court is presented with both a statutory claim and a constitutional claim for it to decide the constitutional claim in preference to the statutory claim?
Mr. James R. McCall: Well, of course, statutory claim is based on the supremacy clause, it would seem to me unusual.
Justice Byron R. White: But we've only -- but we've classified the supremacy issues for purposes of this policy with statutory issues?
Mr. James R. McCall: Well, it would seem unusual to me, yes.
Justice Potter Stewart: Well, do you suggest that if we -- that if we must deal with -- if that issue is in the case, that we pass on it here or we remand it?
Mr. James R. McCall: My position, I would prefer to have this Court pass on it myself at this point.
It seems to me the precedents are clear and it's a point that could be passed on under the precedence that you have because it was urged to the lower court indeed.
If I may proceed on the -- my concept that the conduct here would not be illegal even if there were no statute, the conduct authorized, that is a right to protest to the Government.
I would call this Court's attention and remind it of the cases and decisions that's rendered in Noerr and in the Pennington case, Cali Motor Transport and other subsequent cases holding that the --
Chief Justice Warren E. Burger: We'll resume there at 10:00 in the morning gentlemen.
Print this transcript
Transcript:
Argument of Robert L. Mukai
Chief Justice Warren E. Burger: We'll resume in 837 and Mr. Mukai, you have about five minutes remaining.o
Mr. Robert L. Mukai: Thank you, Your Honor.
Mr. Chief Justice and may it please the Court.
At the close of Court yesterday I was discussing the fact that the private conduct which is authorized by the California statute could in no sense be considered a violation of the antitrust laws because it does not involve conduct, which has been declared illegal under the antitrust laws.
Far from it, the conduct is protected by the Noerr-Pennington political action exception.
I also would stress that the act itself, even if it did authorize conduct which was not political action, and which could conceivably be held to violate the antitrust laws but for the statute itself would still constitute state action under the test.
Justice William H. Rehnquist: Mr. Mukai, are we as free in dealing with an appeal from a judgment of a three-judge District Court to consider a matter that was not passed on by a three-judge District Court as we would be of considering a petition for certiorari in the Court of Appeals.
Mr. Robert L. Mukai: I must confess some ignorance as to that Mr. Justice Rehnquist.
I assume that is the case, but I did not research that particular point.
This quickly because the point is made I think in appellant's replied briefs.
Under the standards that this Court has come down with in the five or six cases really in the last four or five years, the conduct here of making a protest to the board would be clearly authorized by a state statute exhibiting a clear intent to remove this operation of this particular industry from competition and therefore, from the application of the Sherman Act and there is a clear intent in the statute to substitute state regulation.
As established I think in the briefs distinguishes it from (Inaudible) of Cantor, Lafayette Power and the Schwegmann case of 1951.
Chief Justice Warren E. Burger: Do you agree that the contract clause issue is no longer in the case?
Mr. Robert L. Mukai: Yes I do.
I would in closing like to make several general comments about the Sherman Act issue here, and also the Commerce Clause issue which the appellees have tendered by way of footnote.
I think that as far as the preemption issue is concerned here, appellee's argument has an Alice in Wonderland quality to it.
You have a statute which does not authorize illegal conduct in the Sherman Act and which does have adequate state supervision.
To extend the idea of --
Justice William J. Brennan: On that question (regarding state's supervision, you said it's just like these other cases where the Parker against Brown exception is going to apply.
But here what kind of state -- what the does the state do other than to say that the nearby dealer shall be protected from competition?
That's all its says, isn't it.
Mr. Robert L. Mukai: Well, the statute provides that of course there will be a board hearing as to whether or not there'll be any permanent prohibition of putting in the new franchise.
The state also controls the time during which the temporary order will be in effect because the board can hold a hearing quickly or it can wait the full 60 days.
It must hold the hearing within 60 days.
Justice William J. Brennan: But, it's just a yes or no situation, either the new dealership can open or it can't.
There is no continuing regulatory supervision of any kind.
Mr. Robert L. Mukai: That's correct, that's correct, there is no continuance.
Justice William J. Brennan: And the sole state interest is in protecting the old dealer from additional competition by a new dealer.
Mr. Robert L. Mukai: I would phrase it slightly differently.
I think it's to prevent overloading in a particular --
Justice William J. Brennan: To prevent too much competition is another way, then.
Mr. Robert L. Mukai: That might deprive consumers of warranty facilities through business failures and things of that type, yes.
That's -- I think --
Justice William J. Brennan: You don't describe this as protecting consumers, do you?
Mr. Robert L. Mukai: I think it is in part designed for that, yes.
Justice William J. Brennan: Well,I see.
Mr. Robert L. Mukai: Certainly, to the same extent the State of Maryland's law was in the XY cases.
Justice William J. Brennan: Well, nothing in our opinion suggest that the State of Maryland law did anything for the consumer did it?
Mr. Robert L. Mukai: That didn't seem to be crucial for the opinion, no.
I would lastly say that it seems to me that the antitrust laws yoked with the supremacy clause as a poor vehicle to be used to strike down statutes, which maybe unpleasing to manufacturers.
Essentially GM complains, it's a bad law, and they don't like it.
I think that's quite questionable, Congress and other state legislators have passed similar laws but the remedy in that case is not before this Court.
It is before the state legislators and the automobile manufacturers lack neither the sophistication or the resources to get an adequate hearing in state legislatures.
I'd like to reserve whatever time we have left for rebuttal.
Argument of William T. Coleman, Jr.
Chief Justice Warren E. Burger: Very well.
Mr. Coleman, you may proceed whenever you're ready.
Mr. William T. Coleman, Jr.: Good morning, Mr. Chief Justice, may it please the Court.
The basic issue here is whether under the Fourteenth Amendment a state may grant private individuals the unrestrained use of state power to exclude selectively other private individuals from enjoying the common occupations of life for substantial periods of time.
Such a grant of state power to private individuals ought to be particularly suspect since once exercise whether individually or collectively it results in a horizontally imposed restraint on trade long held per se legal under the Sherman Antitrust Law.
Now, let me make crystal clear that appellants do not challenge the power of the state to regulate business activities within its boarders through active state supervision.
What it does challenge is the ability of an existing franchise dealer to use state power selectively, arbitrarily, and capriciously to prevent other equally competent and qualified franchise dealers from enjoying their franchise.
The existing franchise dealers can do this because the state issues even though the statute is a for core statute, a temporary injunction in favor of the existing dealer without any notice, any hearing or even the slightest consideration by any state official.
Such a total avocation of state power to private individuals lies at the heart of the matter.
It's not only unreasonable, I really submit it's outrageous.
Justice John Paul Stevens: Mr. Coleman, the three-judge court in this case as I understood it, held that I think quite clearly if perhaps implicitly that the state could do precisely this so long as sufficient procedural due process was afforded, isn't that correct?
Mr. William T. Coleman, Jr.: Yes sir.
Justice John Paul Stevens: And in your opening statement, I think you posed the question as whether or not the state can do it all with or without procedural due process.
Mr. William T. Coleman, Jr.: So, the state could not do it in this matter where they put in the hands of private individual the uncontrolled power to keep another person out of business.
Justice John Paul Stevens: Can't do it all or can't do (Voice Overlap)
Mr. William T. Coleman, Jr.: Well, if what you're saying Your Honor, I think you'd have a different question.
If what you're saying is that the state would determine that in California for example, there was sufficient number of business dealers and we're not going to let any other business dealer in.
I think you had a completely different question there, but what we claim here is the particular wrong is the state advocated its power and instead says,We'll do nothing, but if any private competitor, the one person that has an interest adverse to the interest of the other person objects, you then have this injunction issue.
In other words, I'd like to say here, this ought to be clear, under this statute, once General Motors entered into the franchise agreement with Miller and Fox and each of them already had a state license, at that point, under this statute the state was powerless to do anything.
In the first place, if the franchise was set more than ten miles, not in the 314 mile area, no one could do anything, if it were within the area as you pointed out Justice Stevens, and no one objects it, my clients had an absolute right to open and it's only because there's somebody in that area which I think everyone here has to agree has to be the one person that I cannot depend upon to give me a fair, unbiased determination as to whether there is a violation of the statute.
That's the one person that can prevent me from going ahead with the fruits of my contract and that's why I think --
Justice William H. Rehnquist: Don't you think that's a constitutional argument (Voice Overlap) Is that a constitutional?
Mr. William T. Coleman, Jr.: Yes sir.
Justice William H. Rehnquist: Lack of procedural due process.
Mr. William T. Coleman, Jr.: Lack of procedural process and a state -- number one, number two, a state statue which gives private individuals the uncontrolled right to affect my liberty and that strictly the Richmond, the Eubank versus Richmond case, Your Honor, where the Court said there that you can't have a statute which says that the landowners, if two-thirds of them decide where the property line should be, that ends the matter and that's where you put the property on.
Justice William H. Rehnquist: Well, what if General Motors and your client, General Motors and the new franchise did have an agreement to open up at particular place, but it's zoned residentially?
Mr. William T. Coleman, Jr.: Well sir we don't have that problem here because in this case the places which was selected were already used as automobile places.
Justice William H. Rehnquist: Well, what if it were?
Mr. William T. Coleman, Jr.: Well that's, if you had a general law, a general law applicable to everybody, not a law where only and only my competitor can bring it into force and a law where when he brings it into force prior to any state hearing, he gets all the relief that he's trying to get and that's what the wrong here.
If what you're saying is can you have a general statute, regulatory statute saying that in a particular area, if you don't -- if it doesn't qualify that there can be a hearing or you can object and the state independently determines I will or I will not, that's completely the difference.
Justice William H. Rehnquist: Well, you can get an immediate injunction, can't you?
In most states, if a person simply opens up and use that is not permitted under the zoning law?
Mr. William T. Coleman, Jr.: Well sir, based upon the wisdom of your own rules, you don't get immediate injunctions in the federal court.
What you do is you file a piece of paper, you file a pleading, you have an affidavit and then the most independent person of all, a federal district judge passes upon that and I've won some and I've lost some, Your Honor.
Justice William H. Rehnquist: Well, how about a state court?
Mr. William T. Coleman, Jr.: Well, I'm pretty sure that if any state court raises Judge -- Justice White opinion in the North Georgia Finishing Company case, I think that a state court ought to be constitutionally under the same restriction.
That's what the whole line of Fuentes case is about --
Justice Byron R. White: So your problem would be cured here if the California law said that when -- you can't put in a dealership, unless some -- unless there's an objection filed.
If there's an objection filed, we shall hold a hearing, and you won't be prevented from putting it in until the hearing is over and if it goes against you?
Let's suppose that's the scheme.
They have the hearing and they decide that the objection is valid, we're not going to permit another dealerin this area, would your problem all be over?
Mr. William T. Coleman, Jr.: Well that's a different case if what you're saying is that if it were a statute on which before the state powers exercise that we obtain a hearing, then obviously we could no longer argue the due process issue.
We may have other issues in the case, but we wouldn't have to --
Justice Byron R. White: So your problem is devoted to the period below before there is a hearing in a state decision?
Mr. William T. Coleman, Jr.: That's right, yes, yes.
Justice Byron R. White: Although only in my examples, the state procedures would never be engaged, unless some private party filed an objection?
Mr. William T. Coleman, Jr.: Well, I think that's a more difficult case.
I think that what usually happens -- I think that the statute ought to read that a state independently or upon objections.
I mean, you know, for example when most statute say that if you file and someone had standing of due cause makes an objection or the state independently and I think that one of the wrong of this statute is the state independently can never act and it could only act if a competitor comes on.
I think that it's clear in this case, since there is no hearing that under your cases of the Court that the statute is clearly unconstitutional.
If you say there is a hearing, then obviously you don't have the constitutional issue but you might have other issues if you say that there will only be a hearing if a competitor is the one that asked for the hearing.
I just think that's a different case.
With respect to Fox, the record is clear that Fox had a franchise agreement, he had a license.
All he wanted to do was to add another line to the place, his place of business.
It's equally clear that under state law, having a license, his only duty was to indicate to the state official where the location was going to be.
At that point, the state gave him an entitlement.
He had the right to go forward and the only thing that prevented him from going forward was this particular statute enacted lately which said, Oh wait, if a competitor objects, you can't go forward.
He doesn't have to give me any reason whatsoever.
All he does is file and if you look at the record on page 77, you will see the objection.
It just says, I object and based upon that, Fox was held up for over 11 months.
He lost the entire season of sale and we think that's what's wrong with this statute.
I think I made it clear as to what I think the liberty interest is.
I think that every American citizen has an absolute right to go into business and he or she cannot be interfered with except under a state statute which either regulates somebody generally applying to everyone or one which first applies for a type of hearing.
Justice William J. Brennan: Well, you rely for your basic constitutional liberty upon cases such as Meyer against Nebraska, don't you?
Mr. William T. Coleman, Jr.: Among ten or 12 others it's been cited on --
Justice William J. Brennan: (Voice Overlap) 12 others, so in that case that the three-judge court particularly relied upon.
And in that case, the Court held that that all the hearings in the world wouldn't have made that statute valid.
That wasn't a procedural due process.
Mr. William T. Coleman, Jr.: That's right, Your Honor.
You've made the point I've been trying to make dramatically about the (Inaudible).
But with all due respect, well, Justice Rehnquist sometime said that because after Meyers, a statute permits a certain type of substantive regulation, that means that Meyers has been overruled, there's no liberal interest, it doesn't.
It just means that there's still the liberty interest but the Court will permit state action to affect that.
But what we're saying is that one way you can affect it in this type of statute applying only to competitor is without requiring a hearing.
Justice William J. Brennan: But the Meyer case and that line of cases Pierce against the Society of Sisters and so on, doesn't -- those are not procedural due process case, aren't they?
Mr. William T. Coleman, Jr.: That's right, we used Meyers only to establish that we have a liberty(Voice Overlap).
Justice William J. Brennan: Those cases held that the state couldn't do what it did at all, with all the hearings in the world, it still couldn't do it.
Mr. William T. Coleman, Jr.: That's right for one, because the person had a liberty interest and we say that once you recognize that a liberty interest then they can't do what they wanted to do here without a certain type of hearing.
We also say we have an entitlement in Justice Powell in his opinion in the Kennedy case on that Kennedy and once again says that once you establish either by the Constitution or by statute that you have an entitlement and Justice Brennan, you, in the Goldberg case, once you establish that, then you have the right to say that the state cannot affect that without granting me a hearing.
And even though Justice Rehnquist would say and I think erroneously, that at that state, if the same statute like in Arnett says but our hearings are different type of hearing that somehow you read that back in the cut down on the liberty or entitlement interest.
Fortunately for me, six members of this Court have held to the contrary and I think for that reason that my cycle fits you that there is this liberty interest.
Then you have to determine, can this type of interest be taken away by a competitor without a hearing once I demonstrate that there is an entitlement under the license that I demonstrate to you that here the state license gave my clients and including General Motors this right.
Can that right be affected not by the state acting independently but by private competitor without first getting a hearing?
I don't think I have to argue the question of the hearing because here there was no hearing at all.
Justice John Paul Stevens: Mr. Coleman, just to be sure I understand your submission, I take it you emphasize the absence of any governmental participation prior to the adverse impact on the liberty interest which you claim.
Mr. William T. Coleman, Jr.: Yes sir.
Justice John Paul Stevens: Which, if I understand you correctly, would mean that your argument would not cast any doubt on the validity of a statute which flatly prohibited new dealerships within a 10-mile radius of old dealerships or alternatively a statute which said you cannot open a new dealership without getting permission from an appropriate licensing agency or something like that and you'd apply it to a state agency for a new dealership.
Mr. William T. Coleman, Jr.: Well I think --
Justice John Paul Stevens: Either those would be safe under your argument.
Mr. William T. Coleman, Jr.: I -- there'd be a different problem.
Justice John Paul Stevens: But I'm thinking your argument wouldn't be (Voice Overlap).
Mr. William T. Coleman, Jr.: My argument would not go to that and I must be -- because I'm affected greatly by Justice Brennan's opinion in the Bell versus Burson case.
In the first paragraph of that opinion said, if you have a state statute which said that anybody that wanted to drive a car had to have automobile insurance, that that statute would probably be constitutional, but if the state statute doesn't do that and say that if you drive and you don't have insurance that if you're there and get into an accident and if you don't pay up in a certain time and therefore, it's at fault that we're going to keep you from enjoying this license.
Then under those circumstances, you first have to have some type of hearing, so we would have to say here that obviously, if you drew a different statute, we'd have a different problem, but we think under this statute you don't have that type of problem and it's clear that the state isn't thinking about barring all the automobile dealers.
What it did was to put in the hands of the competitor this type of action, which we think it's clearly unconstitutional.
Now, I would next like to turn to the antitrust and supremacy argument.
Justice John Paul Stevens: Let me ask one other question if I may before you do.
Could we view this statute as the equivalent of creating a legislative or statutory presumption that every new dealership within ten miles of an old dealership is contrary to state policy in some way?
Mr. William T. Coleman, Jr.: No sir.
Justice John Paul Stevens: And why not?
Mr. William T. Coleman, Jr.: Simply because under those facts if you opened up and a dealer within that area doesn't do anything, the state is powerless to act.
Justice John Paul Stevens: Is there experience under the statute as to how most of these disputes are resolved?
Mr. William T. Coleman, Jr.: Yes sir, the footnote in our briefs sir, there were 170 protest.
I think it's about page 33, but in footnote in our brief sir, there were 170 protest filed, only one has ever been sustained.
Justice John Paul Stevens: Is that a matter of public record or that's in the record (Voice Overlap)
Mr. William T. Coleman, Jr.: It's a record of my good friend, one of the parties wrote a letter and said -- it's clear there's no doubt I think.
Justice John Paul Stevens: I see.
Mr. William T. Coleman, Jr.: So that should dramatically show to you --
Justice John Paul Stevens: So you would say the experience would demonstrate that the presumption runs the other way.
Mr. William T. Coleman, Jr.: Well, it certainly does and if you just look at it why should it be that if there's business decision that there should be additional dealer selling Buick, this statute is 314 miles, do you realize that's every city -- that means you can block people from going to any city more than one other than -- other than Los Angeles and San Diego.
Those are the only two cities.
Justice Byron R. White: Well, do you think a state can have a general statute?
Justice Stevens asked you about you can't put it in a dealership without permission.
Suppose the state said, before you can establish a dealership, you must give us notice and give us 90 days to investigate and meanwhile, you may not establish the dealership.
Mr. William T. Coleman, Jr.: The state -- (Voice Overlap) the state one did not do that here sir.
Justice Byron R. White: Sir?
Mr. William T. Coleman, Jr.: The state -- that's a completely different question and what would happen here is (Voice Overlap) you had the privilege of --
Justice Byron R. White: Would you say that you were denied of due procedural process or something?
Mr. William T. Coleman, Jr.: What I would say is whatever my rights are, they're not in the hands of my private competitor.
Justice Byron R. White: Well that maybe true --
Mr. William T. Coleman, Jr.: They're in the hands of a public official --
Justice Byron R. White: That maybe true but you're being deprived of your liberty, unless without a hearing for 90 days.
Mr. William T. Coleman, Jr.: Well sir, when you were in the Justice Department, you had matters of merger sometimes and you got a certain time to act but if people could come into you and say, Mr. Justice, I got a problem we want to(Voice Overlap).
Justice Byron R. White: I know (Voice Overlap) we're dealing with my example, not yours.
Mr. William T. Coleman, Jr.: That's what I'm saying, I'm saying that the moment it's a state official, I as a citizen have the right to go to that state official to explain to him--
Justice Byron R. White: The state official says, You just give us 90 days and we're not talking to you for 90 days.
Just stay out for 90 days and we may give you permission, we may not.
Mr. William T. Coleman, Jr.: Well, that's a completely different case and if I could show that he was acting arbitrarily or something I'd have a different problem --
Justice Byron R. White: But assuming -- as assuming that would be good, assuming that would be acceptable, do you think putting it in the hands of the private party to trigger the delay is itself unconstitutional.
Mr. William T. Coleman, Jr.: Yes sir I do.
I think that's what the Richmond case holds, I think.
Justice Byron R. White: And that isn't quite a procedural due process issue.
Mr. William T. Coleman, Jr.: Well, what really happened was that that your decisions developed that way even before you got to the due process.
The due process is an additional reason.
I mean that's two separate, that's why we mentioned the Richmond case, Your Honor, because long before you got to this later due process, the Court already recognized that this was improper, but then you add to the private the fact that --
Justice Byron R. White: Well, I would really like to get your -- I think that to me anyway, the important have your view on whether you think the state could itself say, "Delay for 90 days and we won't talk to you meanwhile, but you got to get our permission and we're not going to give it to you for 90 days."
Now, if that is acceptable, then you must rely on the other branch of your argument.
Mr. William T. Coleman, Jr.: But no sir.
I don't -- I think even that's acceptable I don't have to -- if the state statute goes on and says, but I as a state have no concern in this.
But I would only get concern if a private competitor who's within a certain area files a paper.
I think that's a completely different case.
That's what the wrong is to trigger here particularly when they already have a license.
Justice Byron R. White: I don't know why that makes it into a procedural due process case.
Mr. William T. Coleman, Jr.: Well, because I think that there, what the state has done is to say that we're not going to decide this legislatively.
We're going to decide this in a judicatory proceeding, and once you have a judicatory proceeding, which is based upon fault, then you have the rules of the game which says that you don't affect a person's right without first giving him some type of hearing.
Incidentally that footnote is on page 10 of the brief, I apologize.
I next would like to turn --
Chief Justice Warren E. Burger: Before you go on Mr. Coleman, would you say it's beyond state power taking Justice White's illustration in part.
You say there must a be a 90-day waiting period while the state or the local authority as its surrogate checks into the traffic patterns possible increased air pollution because of the greater frequencies of cars and so forth.
Would that be unreasonable?
Mr. William T. Coleman, Jr.: Well, that would be a completely different statute and if what you're saying is that if the state had said that before anybody who's going to business, you have to file a piece of paper with the state and the state for a certain period of time will suspend any hearing on that to develop the proper type of evidence then obviously because we live in an organized society where it takes time to decide something.
You have to -- you have to recognize that public officials can't act the next day.
Certainly, Justice White, you're talking about a statute of general application and I think it makes all the difference in the world.
I mean this kind of cases make it quite different.
You're talking about generally where you affect it --
Justice Byron R. White: (Voice Overlap) it's just general about automobile dealers, that's all, it's -- it says if you're going to establish another dealership within a 10-mile radius, if you're going to have more than one, you must give us notice and you have got to wait 90 days.
Mr. William T. Coleman, Jr.: Yes but that's not the statute.
Justice Byron R. White: Well, I know that's not the statute and how about that statute, would it be acceptable or not?
Mr. William T. Coleman, Jr.: That statute would raise other problems.
It wouldn't raise the problems that --
Justice Byron R. White: Well, how would you solve that problem?
Mr. William T. Coleman, Jr.: Well --
Justice Byron R. White: Would it be constitutional or not?
Mr. William T. Coleman, Jr.: Well, I'd have to read the statue first, there you don't --
Justice Byron R. White: Well, I have just given it to you.
Mr. William T. Coleman, Jr.: Well today, the reason why I'm not being more forthcoming to you than I normally would be sir, I've had experience to this fear, you just don't get statutes drawn that simply.
And I have to read the statute and I don't want anybody to say that I've concede that any statute here --
Justice Byron R. White: No I know, I never heard you conceded very much (Voice Overlap).
Unknown Speaker: (Voice Overlap) that your present argument would not apply to that statute.
Mr. William T. Coleman, Jr.: That's right, I would say that's a different case.
And maybe GM will get a different lawyer to argue that one, but this particular one that's not my problem and I think that's a completely different case.
As I said I'd like to turn to the antitrust consistency argument.
GM entered into an agreement with Fox to sell Buick.
After reviewing the facts and making a determination that the Pasadena location would comply with Section 3063 of the Act, but two competing dealers who also have GM agreements jointly protested.
The Act inferred upon them the power without any independent state decision to prevent Fox as a competing dealer from locating in the territory because it is within the 314-mile area and Mr. Justice Marshall, when you indicated that there was an empire planned.
That has been changed and it was changed because of in part the decision of the Third Circuit in the Holiday Inn case and GM felt that perhaps it might be a problem if you would permit some of the existing dealers to object to a new dealer coming in.
And so therefore, with respect to this type of decision, there is not an empire plan, but that is the reason why it seems that this statute has to be bad because if you say that GM with its dealers cannot make this type of arrangement, then clearly, a competing dealer merely by saying, I protest ought not for a period from 90 days to a year-and-a-half be able to impose what is basically a horizontal trade restraint.
As I understand the law, the Sherman Act says that any statute, state statute which permits a private competitor to do this is invalid.
That's what I think your decision in Schwegmann says, in Schwegmann, the liquid distributor had a valid contract for retail price maintenance with some local retailers.
The Louisiana statute, however, attempted to arm the private competitor with the ability to extend this contract by making such price fixing enforceable against non-signing retailers.
Because this extension conflicted with basic antitrust principle, the Louisiana statute was preempted by the Sherman Act.
In Schwegmann, this Court never inquired into whether any private individual had violated the antitrust law.
For all higher value imposed restrictions to restrain trade are patently pernicious and are per se violations of the Federal Antitrust Law.
Justice John Paul Stevens: But Mr. Coleman, don't you have a problem with the facts that here if there is an agreement between the existing dealer who objects and the General Motors.
The agreement is one which permits the new company to new dealership to open.
The existing dealer can object without agreeing with anybody, so where do you get the conspiracy element of the Sherman Act violation.
Mr. William T. Coleman, Jr.: What you do sir is the same way with Schwegmann.
The fact is that you have a state statute which permits --
Justice John Paul Stevens: Did that gave affect to a vertical agreement between the liquor company and its wholesaler and its retailer.
There was an underlying agreement there which you don't have here.
Mr. William T. Coleman, Jr.: Well sir, what you have here, you have a state statute which permits an individual to bring about the same type of conduct that normally he could only bring about by way of an agreement.
You know suppose you had a state statute which says --
Justice John Paul Stevens: But you're saying is that a state statute replaces the conspiracy element of the Sherman Act?
Mr. William T. Coleman, Jr.: That's right because it permits a private individual acting by himself to bring about exactly the same result that otherwise --
Justice John Paul Stevens: I don't think any case has so held.
Mr. William T. Coleman, Jr.: Well, I think --
Justice John Paul Stevens: The Schwegmann, as I say have a two-party agreement in it.
Mr. William T. Coleman, Jr.: Well, I would ask you to reread Schwegmann because I think that Schwegmann does not depend upon any agreement, which is anyway has determined to be illegal or improper.
What Schwegmann says is that you can't use the state power to bring about exactly the same result that otherwise you can bring about only by an agreement.
And I think that the only thing that would save the statute would be the so-called Parker doctrine, but if there's is anything clear from Cannor and your case is decided in less two or three years is that the state has to do something in terms of act of supervision before you say the Parker doctrine is applicable and here there is no act of supervision whatsoever.
I didn't think I was going to get this far without Justice White asking me about the question he asked the other day about this question of whether since we raised both issues below and now the Court passed upon one constitutional issue.
Justice Byron R. White: Is there any problem with respect to the other?
Mr. William T. Coleman, Jr.: I think under the cases, I think the case that you were referring to was Hogan versus Lathen and as I read that case or somebody read it for me last night then I read it this morning.
That case says that both issue with constitutional issues also what we're asking here is only what the Court did in Ohio Bureau of Employment versus Hodory, which is 431 U.S. --
Justice Byron R. White: And haven't we said three-judge courts would normally reach the supremacy clause issue first?
Mr. William T. Coleman, Jr.: I dont think that's what you said, you said -- but if they don't reach that first and they decide the other issue, both would never both submit it and here they're both constitutional issues which in Hagen you indicated that there's not -- and we submitted both of them.
And we argued both of them equally as vigorously.
Now, if the Court says as I look at the constitutional cases dealing with the due process, that's so clear that our resolve on that phase is they give us the injunction and I don't see it how we can do anything else but accept it and wait hoping that nobody would take it --
Justice Byron R. White: Well, if we disagree with you on your first submission, what should we do with your supremacy clause issue, remand it.
Mr. William T. Coleman, Jr.: No sir, I think that you should resolve it here.
I think that the facts are clear, the argument is clear and in my understanding is that what you did in Ohio Bureau of Employment versus Hodory and also, Sterling versus Constantin, thank you sir.
Rebuttal of Robert L. Mukai
Chief Justice Warren E. Burger: Mr. Mukai.
Mr. Robert L. Mukai: Mr. Chief Justice and may it please the Court.
Mr. Coleman suggest that the Schwegmann decision relieves the appellees of the necessity of demonstrating at least some conduct violative of the federal antitrust laws.
I would ask the Court to refer to page 386 of that decision reported in 341 U.S in which Justice Douglas unequivocally stated that the scheme their question would be illegal, would be enjoined and would draw civil and criminal penalties and that no court would enforce it.
And that was the Louisiana statute which was struck down by this Court in Schwegmann.
So it is our submission that Schwegmann cannot relieve the appellees of stating an antitrust claim without showing the predicate facts necessary to make out a violation of some federal antitrust statute.
With the Court's permission, Mr. Coleman has pointed out or has characterized a right existing in appellees which depends in large part upon the view that the license granted to a dealer provides him with some unassailable right to locate wherever he wants.
In effect, Mr. Coleman posits a portable property interest in the dealer which you could not be deprived of without a due process hearing.
Well, his characterization is mistaken because a fixed geographical location is integral to the initial issuance and the continued entitlement to a dealer license under California law.
In Section 11712 of the California Vehicle Code, the Department of Motor Vehicles, the licensing authority is prohibited from issuing a dealer license to an applicant without an established place of business.
Section 11721 requires the automatic cancellation of a dealer license whenever a dealer abandons an established place of business.
Section 11713 makes it a violation of the code not to maintain an established place of business and Section 40000.11 makes that violation a misdemeanor under California law.
Your Honors, I see that my time has expired and I thank the Court for its attention.
Chief Justice Warren E. Burger: Thank you gentlemen, the case is submitted.
Print this transcript
Transcript:
Argument of Robert L. Mukai
Chief Justice Warren E. Burger: We'll resume in 837 and Mr. Mukai, you have about five minutes remaining.o
Mr. Robert L. Mukai: Thank you, Your Honor.
Mr. Chief Justice and may it please the Court.
At the close of Court yesterday I was discussing the fact that the private conduct which is authorized by the California statute could in no sense be considered a violation of the antitrust laws because it does not involve conduct, which has been declared illegal under the antitrust laws.
Far from it, the conduct is protected by the Noerr-Pennington political action exception.
I also would stress that the act itself, even if it did authorize conduct which was not political action, and which could conceivably be held to violate the antitrust laws but for the statute itself would still constitute state action under the test.
Justice William H. Rehnquist: Mr. Mukai, are we as free in dealing with an appeal from a judgment of a three-judge District Court to consider a matter that was not passed on by a three-judge District Court as we would be of considering a petition for certiorari in the Court of Appeals.
Mr. Robert L. Mukai: I must confess some ignorance as to that Mr. Justice Rehnquist.
I assume that is the case, but I did not research that particular point.
This quickly because the point is made I think in appellant's replied briefs.
Under the standards that this Court has come down with in the five or six cases really in the last four or five years, the conduct here of making a protest to the board would be clearly authorized by a state statute exhibiting a clear intent to remove this operation of this particular industry from competition and therefore, from the application of the Sherman Act and there is a clear intent in the statute to substitute state regulation.
As established I think in the briefs distinguishes it from (Inaudible) of Cantor, Lafayette Power and the Schwegmann case of 1951.
Chief Justice Warren E. Burger: Do you agree that the contract clause issue is no longer in the case?
Mr. Robert L. Mukai: Yes I do.
I would in closing like to make several general comments about the Sherman Act issue here, and also the Commerce Clause issue which the appellees have tendered by way of footnote.
I think that as far as the preemption issue is concerned here, appellee's argument has an Alice in Wonderland quality to it.
You have a statute which does not authorize illegal conduct in the Sherman Act and which does have adequate state supervision.
To extend the idea of --
Justice William J. Brennan: On that question (regarding state's supervision, you said it's just like these other cases where the Parker against Brown exception is going to apply.
But here what kind of state -- what the does the state do other than to say that the nearby dealer shall be protected from competition?
That's all its says, isn't it.
Mr. Robert L. Mukai: Well, the statute provides that of course there will be a board hearing as to whether or not there'll be any permanent prohibition of putting in the new franchise.
The state also controls the time during which the temporary order will be in effect because the board can hold a hearing quickly or it can wait the full 60 days.
It must hold the hearing within 60 days.
Justice William J. Brennan: But, it's just a yes or no situation, either the new dealership can open or it can't.
There is no continuing regulatory supervision of any kind.
Mr. Robert L. Mukai: That's correct, that's correct, there is no continuance.
Justice William J. Brennan: And the sole state interest is in protecting the old dealer from additional competition by a new dealer.
Mr. Robert L. Mukai: I would phrase it slightly differently.
I think it's to prevent overloading in a particular --
Justice William J. Brennan: To prevent too much competition is another way, then.
Mr. Robert L. Mukai: That might deprive consumers of warranty facilities through business failures and things of that type, yes.
That's -- I think --
Justice William J. Brennan: You don't describe this as protecting consumers, do you?
Mr. Robert L. Mukai: I think it is in part designed for that, yes.
Justice William J. Brennan: Well,I see.
Mr. Robert L. Mukai: Certainly, to the same extent the State of Maryland's law was in the XY cases.
Justice William J. Brennan: Well, nothing in our opinion suggest that the State of Maryland law did anything for the consumer did it?
Mr. Robert L. Mukai: That didn't seem to be crucial for the opinion, no.
I would lastly say that it seems to me that the antitrust laws yoked with the supremacy clause as a poor vehicle to be used to strike down statutes, which maybe unpleasing to manufacturers.
Essentially GM complains, it's a bad law, and they don't like it.
I think that's quite questionable, Congress and other state legislators have passed similar laws but the remedy in that case is not before this Court.
It is before the state legislators and the automobile manufacturers lack neither the sophistication or the resources to get an adequate hearing in state legislatures.
I'd like to reserve whatever time we have left for rebuttal.
Argument of William T. Coleman, Jr.
Chief Justice Warren E. Burger: Very well.
Mr. Coleman, you may proceed whenever you're ready.
Mr. William T. Coleman, Jr.: Good morning, Mr. Chief Justice, may it please the Court.
The basic issue here is whether under the Fourteenth Amendment a state may grant private individuals the unrestrained use of state power to exclude selectively other private individuals from enjoying the common occupations of life for substantial periods of time.
Such a grant of state power to private individuals ought to be particularly suspect since once exercise whether individually or collectively it results in a horizontally imposed restraint on trade long held per se legal under the Sherman Antitrust Law.
Now, let me make crystal clear that appellants do not challenge the power of the state to regulate business activities within its boarders through active state supervision.
What it does challenge is the ability of an existing franchise dealer to use state power selectively, arbitrarily, and capriciously to prevent other equally competent and qualified franchise dealers from enjoying their franchise.
The existing franchise dealers can do this because the state issues even though the statute is a for core statute, a temporary injunction in favor of the existing dealer without any notice, any hearing or even the slightest consideration by any state official.
Such a total avocation of state power to private individuals lies at the heart of the matter.
It's not only unreasonable, I really submit it's outrageous.
Justice John Paul Stevens: Mr. Coleman, the three-judge court in this case as I understood it, held that I think quite clearly if perhaps implicitly that the state could do precisely this so long as sufficient procedural due process was afforded, isn't that correct?
Mr. William T. Coleman, Jr.: Yes sir.
Justice John Paul Stevens: And in your opening statement, I think you posed the question as whether or not the state can do it all with or without procedural due process.
Mr. William T. Coleman, Jr.: So, the state could not do it in this matter where they put in the hands of private individual the uncontrolled power to keep another person out of business.
Justice John Paul Stevens: Can't do it all or can't do (Voice Overlap)
Mr. William T. Coleman, Jr.: Well, if what you're saying Your Honor, I think you'd have a different question.
If what you're saying is that the state would determine that in California for example, there was sufficient number of business dealers and we're not going to let any other business dealer in.
I think you had a completely different question there, but what we claim here is the particular wrong is the state advocated its power and instead says,We'll do nothing, but if any private competitor, the one person that has an interest adverse to the interest of the other person objects, you then have this injunction issue.
In other words, I'd like to say here, this ought to be clear, under this statute, once General Motors entered into the franchise agreement with Miller and Fox and each of them already had a state license, at that point, under this statute the state was powerless to do anything.
In the first place, if the franchise was set more than ten miles, not in the 314 mile area, no one could do anything, if it were within the area as you pointed out Justice Stevens, and no one objects it, my clients had an absolute right to open and it's only because there's somebody in that area which I think everyone here has to agree has to be the one person that I cannot depend upon to give me a fair, unbiased determination as to whether there is a violation of the statute.
That's the one person that can prevent me from going ahead with the fruits of my contract and that's why I think --
Justice William H. Rehnquist: Don't you think that's a constitutional argument (Voice Overlap) Is that a constitutional?
Mr. William T. Coleman, Jr.: Yes sir.
Justice William H. Rehnquist: Lack of procedural due process.
Mr. William T. Coleman, Jr.: Lack of procedural process and a state -- number one, number two, a state statue which gives private individuals the uncontrolled right to affect my liberty and that strictly the Richmond, the Eubank versus Richmond case, Your Honor, where the Court said there that you can't have a statute which says that the landowners, if two-thirds of them decide where the property line should be, that ends the matter and that's where you put the property on.
Justice William H. Rehnquist: Well, what if General Motors and your client, General Motors and the new franchise did have an agreement to open up at particular place, but it's zoned residentially?
Mr. William T. Coleman, Jr.: Well sir we don't have that problem here because in this case the places which was selected were already used as automobile places.
Justice William H. Rehnquist: Well, what if it were?
Mr. William T. Coleman, Jr.: Well that's, if you had a general law, a general law applicable to everybody, not a law where only and only my competitor can bring it into force and a law where when he brings it into force prior to any state hearing, he gets all the relief that he's trying to get and that's what the wrong here.
If what you're saying is can you have a general statute, regulatory statute saying that in a particular area, if you don't -- if it doesn't qualify that there can be a hearing or you can object and the state independently determines I will or I will not, that's completely the difference.
Justice William H. Rehnquist: Well, you can get an immediate injunction, can't you?
In most states, if a person simply opens up and use that is not permitted under the zoning law?
Mr. William T. Coleman, Jr.: Well sir, based upon the wisdom of your own rules, you don't get immediate injunctions in the federal court.
What you do is you file a piece of paper, you file a pleading, you have an affidavit and then the most independent person of all, a federal district judge passes upon that and I've won some and I've lost some, Your Honor.
Justice William H. Rehnquist: Well, how about a state court?
Mr. William T. Coleman, Jr.: Well, I'm pretty sure that if any state court raises Judge -- Justice White opinion in the North Georgia Finishing Company case, I think that a state court ought to be constitutionally under the same restriction.
That's what the whole line of Fuentes case is about --
Justice Byron R. White: So your problem would be cured here if the California law said that when -- you can't put in a dealership, unless some -- unless there's an objection filed.
If there's an objection filed, we shall hold a hearing, and you won't be prevented from putting it in until the hearing is over and if it goes against you?
Let's suppose that's the scheme.
They have the hearing and they decide that the objection is valid, we're not going to permit another dealerin this area, would your problem all be over?
Mr. William T. Coleman, Jr.: Well that's a different case if what you're saying is that if it were a statute on which before the state powers exercise that we obtain a hearing, then obviously we could no longer argue the due process issue.
We may have other issues in the case, but we wouldn't have to --
Justice Byron R. White: So your problem is devoted to the period below before there is a hearing in a state decision?
Mr. William T. Coleman, Jr.: That's right, yes, yes.
Justice Byron R. White: Although only in my examples, the state procedures would never be engaged, unless some private party filed an objection?
Mr. William T. Coleman, Jr.: Well, I think that's a more difficult case.
I think that what usually happens -- I think that the statute ought to read that a state independently or upon objections.
I mean, you know, for example when most statute say that if you file and someone had standing of due cause makes an objection or the state independently and I think that one of the wrong of this statute is the state independently can never act and it could only act if a competitor comes on.
I think that it's clear in this case, since there is no hearing that under your cases of the Court that the statute is clearly unconstitutional.
If you say there is a hearing, then obviously you don't have the constitutional issue but you might have other issues if you say that there will only be a hearing if a competitor is the one that asked for the hearing.
I just think that's a different case.
With respect to Fox, the record is clear that Fox had a franchise agreement, he had a license.
All he wanted to do was to add another line to the place, his place of business.
It's equally clear that under state law, having a license, his only duty was to indicate to the state official where the location was going to be.
At that point, the state gave him an entitlement.
He had the right to go forward and the only thing that prevented him from going forward was this particular statute enacted lately which said, Oh wait, if a competitor objects, you can't go forward.
He doesn't have to give me any reason whatsoever.
All he does is file and if you look at the record on page 77, you will see the objection.
It just says, I object and based upon that, Fox was held up for over 11 months.
He lost the entire season of sale and we think that's what's wrong with this statute.
I think I made it clear as to what I think the liberty interest is.
I think that every American citizen has an absolute right to go into business and he or she cannot be interfered with except under a state statute which either regulates somebody generally applying to everyone or one which first applies for a type of hearing.
Justice William J. Brennan: Well, you rely for your basic constitutional liberty upon cases such as Meyer against Nebraska, don't you?
Mr. William T. Coleman, Jr.: Among ten or 12 others it's been cited on --
Justice William J. Brennan: (Voice Overlap) 12 others, so in that case that the three-judge court particularly relied upon.
And in that case, the Court held that that all the hearings in the world wouldn't have made that statute valid.
That wasn't a procedural due process.
Mr. William T. Coleman, Jr.: That's right, Your Honor.
You've made the point I've been trying to make dramatically about the (Inaudible).
But with all due respect, well, Justice Rehnquist sometime said that because after Meyers, a statute permits a certain type of substantive regulation, that means that Meyers has been overruled, there's no liberal interest, it doesn't.
It just means that there's still the liberty interest but the Court will permit state action to affect that.
But what we're saying is that one way you can affect it in this type of statute applying only to competitor is without requiring a hearing.
Justice William J. Brennan: But the Meyer case and that line of cases Pierce against the Society of Sisters and so on, doesn't -- those are not procedural due process case, aren't they?
Mr. William T. Coleman, Jr.: That's right, we used Meyers only to establish that we have a liberty(Voice Overlap).
Justice William J. Brennan: Those cases held that the state couldn't do what it did at all, with all the hearings in the world, it still couldn't do it.
Mr. William T. Coleman, Jr.: That's right for one, because the person had a liberty interest and we say that once you recognize that a liberty interest then they can't do what they wanted to do here without a certain type of hearing.
We also say we have an entitlement in Justice Powell in his opinion in the Kennedy case on that Kennedy and once again says that once you establish either by the Constitution or by statute that you have an entitlement and Justice Brennan, you, in the Goldberg case, once you establish that, then you have the right to say that the state cannot affect that without granting me a hearing.
And even though Justice Rehnquist would say and I think erroneously, that at that state, if the same statute like in Arnett says but our hearings are different type of hearing that somehow you read that back in the cut down on the liberty or entitlement interest.
Fortunately for me, six members of this Court have held to the contrary and I think for that reason that my cycle fits you that there is this liberty interest.
Then you have to determine, can this type of interest be taken away by a competitor without a hearing once I demonstrate that there is an entitlement under the license that I demonstrate to you that here the state license gave my clients and including General Motors this right.
Can that right be affected not by the state acting independently but by private competitor without first getting a hearing?
I don't think I have to argue the question of the hearing because here there was no hearing at all.
Justice John Paul Stevens: Mr. Coleman, just to be sure I understand your submission, I take it you emphasize the absence of any governmental participation prior to the adverse impact on the liberty interest which you claim.
Mr. William T. Coleman, Jr.: Yes sir.
Justice John Paul Stevens: Which, if I understand you correctly, would mean that your argument would not cast any doubt on the validity of a statute which flatly prohibited new dealerships within a 10-mile radius of old dealerships or alternatively a statute which said you cannot open a new dealership without getting permission from an appropriate licensing agency or something like that and you'd apply it to a state agency for a new dealership.
Mr. William T. Coleman, Jr.: Well I think --
Justice John Paul Stevens: Either those would be safe under your argument.
Mr. William T. Coleman, Jr.: I -- there'd be a different problem.
Justice John Paul Stevens: But I'm thinking your argument wouldn't be (Voice Overlap).
Mr. William T. Coleman, Jr.: My argument would not go to that and I must be -- because I'm affected greatly by Justice Brennan's opinion in the Bell versus Burson case.
In the first paragraph of that opinion said, if you have a state statute which said that anybody that wanted to drive a car had to have automobile insurance, that that statute would probably be constitutional, but if the state statute doesn't do that and say that if you drive and you don't have insurance that if you're there and get into an accident and if you don't pay up in a certain time and therefore, it's at fault that we're going to keep you from enjoying this license.
Then under those circumstances, you first have to have some type of hearing, so we would have to say here that obviously, if you drew a different statute, we'd have a different problem, but we think under this statute you don't have that type of problem and it's clear that the state isn't thinking about barring all the automobile dealers.
What it did was to put in the hands of the competitor this type of action, which we think it's clearly unconstitutional.
Now, I would next like to turn to the antitrust and supremacy argument.
Justice John Paul Stevens: Let me ask one other question if I may before you do.
Could we view this statute as the equivalent of creating a legislative or statutory presumption that every new dealership within ten miles of an old dealership is contrary to state policy in some way?
Mr. William T. Coleman, Jr.: No sir.
Justice John Paul Stevens: And why not?
Mr. William T. Coleman, Jr.: Simply because under those facts if you opened up and a dealer within that area doesn't do anything, the state is powerless to act.
Justice John Paul Stevens: Is there experience under the statute as to how most of these disputes are resolved?
Mr. William T. Coleman, Jr.: Yes sir, the footnote in our briefs sir, there were 170 protest.
I think it's about page 33, but in footnote in our brief sir, there were 170 protest filed, only one has ever been sustained.
Justice John Paul Stevens: Is that a matter of public record or that's in the record (Voice Overlap)
Mr. William T. Coleman, Jr.: It's a record of my good friend, one of the parties wrote a letter and said -- it's clear there's no doubt I think.
Justice John Paul Stevens: I see.
Mr. William T. Coleman, Jr.: So that should dramatically show to you --
Justice John Paul Stevens: So you would say the experience would demonstrate that the presumption runs the other way.
Mr. William T. Coleman, Jr.: Well, it certainly does and if you just look at it why should it be that if there's business decision that there should be additional dealer selling Buick, this statute is 314 miles, do you realize that's every city -- that means you can block people from going to any city more than one other than -- other than Los Angeles and San Diego.
Those are the only two cities.
Justice Byron R. White: Well, do you think a state can have a general statute?
Justice Stevens asked you about you can't put it in a dealership without permission.
Suppose the state said, before you can establish a dealership, you must give us notice and give us 90 days to investigate and meanwhile, you may not establish the dealership.
Mr. William T. Coleman, Jr.: The state -- (Voice Overlap) the state one did not do that here sir.
Justice Byron R. White: Sir?
Mr. William T. Coleman, Jr.: The state -- that's a completely different question and what would happen here is (Voice Overlap) you had the privilege of --
Justice Byron R. White: Would you say that you were denied of due procedural process or something?
Mr. William T. Coleman, Jr.: What I would say is whatever my rights are, they're not in the hands of my private competitor.
Justice Byron R. White: Well that maybe true --
Mr. William T. Coleman, Jr.: They're in the hands of a public official --
Justice Byron R. White: That maybe true but you're being deprived of your liberty, unless without a hearing for 90 days.
Mr. William T. Coleman, Jr.: Well sir, when you were in the Justice Department, you had matters of merger sometimes and you got a certain time to act but if people could come into you and say, Mr. Justice, I got a problem we want to(Voice Overlap).
Justice Byron R. White: I know (Voice Overlap) we're dealing with my example, not yours.
Mr. William T. Coleman, Jr.: That's what I'm saying, I'm saying that the moment it's a state official, I as a citizen have the right to go to that state official to explain to him--
Justice Byron R. White: The state official says, You just give us 90 days and we're not talking to you for 90 days.
Just stay out for 90 days and we may give you permission, we may not.
Mr. William T. Coleman, Jr.: Well, that's a completely different case and if I could show that he was acting arbitrarily or something I'd have a different problem --
Justice Byron R. White: But assuming -- as assuming that would be good, assuming that would be acceptable, do you think putting it in the hands of the private party to trigger the delay is itself unconstitutional.
Mr. William T. Coleman, Jr.: Yes sir I do.
I think that's what the Richmond case holds, I think.
Justice Byron R. White: And that isn't quite a procedural due process issue.
Mr. William T. Coleman, Jr.: Well, what really happened was that that your decisions developed that way even before you got to the due process.
The due process is an additional reason.
I mean that's two separate, that's why we mentioned the Richmond case, Your Honor, because long before you got to this later due process, the Court already recognized that this was improper, but then you add to the private the fact that --
Justice Byron R. White: Well, I would really like to get your -- I think that to me anyway, the important have your view on whether you think the state could itself say, "Delay for 90 days and we won't talk to you meanwhile, but you got to get our permission and we're not going to give it to you for 90 days."
Now, if that is acceptable, then you must rely on the other branch of your argument.
Mr. William T. Coleman, Jr.: But no sir.
I don't -- I think even that's acceptable I don't have to -- if the state statute goes on and says, but I as a state have no concern in this.
But I would only get concern if a private competitor who's within a certain area files a paper.
I think that's a completely different case.
That's what the wrong is to trigger here particularly when they already have a license.
Justice Byron R. White: I don't know why that makes it into a procedural due process case.
Mr. William T. Coleman, Jr.: Well, because I think that there, what the state has done is to say that we're not going to decide this legislatively.
We're going to decide this in a judicatory proceeding, and once you have a judicatory proceeding, which is based upon fault, then you have the rules of the game which says that you don't affect a person's right without first giving him some type of hearing.
Incidentally that footnote is on page 10 of the brief, I apologize.
I next would like to turn --
Chief Justice Warren E. Burger: Before you go on Mr. Coleman, would you say it's beyond state power taking Justice White's illustration in part.
You say there must a be a 90-day waiting period while the state or the local authority as its surrogate checks into the traffic patterns possible increased air pollution because of the greater frequencies of cars and so forth.
Would that be unreasonable?
Mr. William T. Coleman, Jr.: Well, that would be a completely different statute and if what you're saying is that if the state had said that before anybody who's going to business, you have to file a piece of paper with the state and the state for a certain period of time will suspend any hearing on that to develop the proper type of evidence then obviously because we live in an organized society where it takes time to decide something.
You have to -- you have to recognize that public officials can't act the next day.
Certainly, Justice White, you're talking about a statute of general application and I think it makes all the difference in the world.
I mean this kind of cases make it quite different.
You're talking about generally where you affect it --
Justice Byron R. White: (Voice Overlap) it's just general about automobile dealers, that's all, it's -- it says if you're going to establish another dealership within a 10-mile radius, if you're going to have more than one, you must give us notice and you have got to wait 90 days.
Mr. William T. Coleman, Jr.: Yes but that's not the statute.
Justice Byron R. White: Well, I know that's not the statute and how about that statute, would it be acceptable or not?
Mr. William T. Coleman, Jr.: That statute would raise other problems.
It wouldn't raise the problems that --
Justice Byron R. White: Well, how would you solve that problem?
Mr. William T. Coleman, Jr.: Well --
Justice Byron R. White: Would it be constitutional or not?
Mr. William T. Coleman, Jr.: Well, I'd have to read the statue first, there you don't --
Justice Byron R. White: Well, I have just given it to you.
Mr. William T. Coleman, Jr.: Well today, the reason why I'm not being more forthcoming to you than I normally would be sir, I've had experience to this fear, you just don't get statutes drawn that simply.
And I have to read the statute and I don't want anybody to say that I've concede that any statute here --
Justice Byron R. White: No I know, I never heard you conceded very much (Voice Overlap).
Unknown Speaker: (Voice Overlap) that your present argument would not apply to that statute.
Mr. William T. Coleman, Jr.: That's right, I would say that's a different case.
And maybe GM will get a different lawyer to argue that one, but this particular one that's not my problem and I think that's a completely different case.
As I said I'd like to turn to the antitrust consistency argument.
GM entered into an agreement with Fox to sell Buick.
After reviewing the facts and making a determination that the Pasadena location would comply with Section 3063 of the Act, but two competing dealers who also have GM agreements jointly protested.
The Act inferred upon them the power without any independent state decision to prevent Fox as a competing dealer from locating in the territory because it is within the 314-mile area and Mr. Justice Marshall, when you indicated that there was an empire planned.
That has been changed and it was changed because of in part the decision of the Third Circuit in the Holiday Inn case and GM felt that perhaps it might be a problem if you would permit some of the existing dealers to object to a new dealer coming in.
And so therefore, with respect to this type of decision, there is not an empire plan, but that is the reason why it seems that this statute has to be bad because if you say that GM with its dealers cannot make this type of arrangement, then clearly, a competing dealer merely by saying, I protest ought not for a period from 90 days to a year-and-a-half be able to impose what is basically a horizontal trade restraint.
As I understand the law, the Sherman Act says that any statute, state statute which permits a private competitor to do this is invalid.
That's what I think your decision in Schwegmann says, in Schwegmann, the liquid distributor had a valid contract for retail price maintenance with some local retailers.
The Louisiana statute, however, attempted to arm the private competitor with the ability to extend this contract by making such price fixing enforceable against non-signing retailers.
Because this extension conflicted with basic antitrust principle, the Louisiana statute was preempted by the Sherman Act.
In Schwegmann, this Court never inquired into whether any private individual had violated the antitrust law.
For all higher value imposed restrictions to restrain trade are patently pernicious and are per se violations of the Federal Antitrust Law.
Justice John Paul Stevens: But Mr. Coleman, don't you have a problem with the facts that here if there is an agreement between the existing dealer who objects and the General Motors.
The agreement is one which permits the new company to new dealership to open.
The existing dealer can object without agreeing with anybody, so where do you get the conspiracy element of the Sherman Act violation.
Mr. William T. Coleman, Jr.: What you do sir is the same way with Schwegmann.
The fact is that you have a state statute which permits --
Justice John Paul Stevens: Did that gave affect to a vertical agreement between the liquor company and its wholesaler and its retailer.
There was an underlying agreement there which you don't have here.
Mr. William T. Coleman, Jr.: Well sir, what you have here, you have a state statute which permits an individual to bring about the same type of conduct that normally he could only bring about by way of an agreement.
You know suppose you had a state statute which says --
Justice John Paul Stevens: But you're saying is that a state statute replaces the conspiracy element of the Sherman Act?
Mr. William T. Coleman, Jr.: That's right because it permits a private individual acting by himself to bring about exactly the same result that otherwise --
Justice John Paul Stevens: I don't think any case has so held.
Mr. William T. Coleman, Jr.: Well, I think --
Justice John Paul Stevens: The Schwegmann, as I say have a two-party agreement in it.
Mr. William T. Coleman, Jr.: Well, I would ask you to reread Schwegmann because I think that Schwegmann does not depend upon any agreement, which is anyway has determined to be illegal or improper.
What Schwegmann says is that you can't use the state power to bring about exactly the same result that otherwise you can bring about only by an agreement.
And I think that the only thing that would save the statute would be the so-called Parker doctrine, but if there's is anything clear from Cannor and your case is decided in less two or three years is that the state has to do something in terms of act of supervision before you say the Parker doctrine is applicable and here there is no act of supervision whatsoever.
I didn't think I was going to get this far without Justice White asking me about the question he asked the other day about this question of whether since we raised both issues below and now the Court passed upon one constitutional issue.
Justice Byron R. White: Is there any problem with respect to the other?
Mr. William T. Coleman, Jr.: I think under the cases, I think the case that you were referring to was Hogan versus Lathen and as I read that case or somebody read it for me last night then I read it this morning.
That case says that both issue with constitutional issues also what we're asking here is only what the Court did in Ohio Bureau of Employment versus Hodory, which is 431 U.S. --
Justice Byron R. White: And haven't we said three-judge courts would normally reach the supremacy clause issue first?
Mr. William T. Coleman, Jr.: I dont think that's what you said, you said -- but if they don't reach that first and they decide the other issue, both would never both submit it and here they're both constitutional issues which in Hagen you indicated that there's not -- and we submitted both of them.
And we argued both of them equally as vigorously.
Now, if the Court says as I look at the constitutional cases dealing with the due process, that's so clear that our resolve on that phase is they give us the injunction and I don't see it how we can do anything else but accept it and wait hoping that nobody would take it --
Justice Byron R. White: Well, if we disagree with you on your first submission, what should we do with your supremacy clause issue, remand it.
Mr. William T. Coleman, Jr.: No sir, I think that you should resolve it here.
I think that the facts are clear, the argument is clear and in my understanding is that what you did in Ohio Bureau of Employment versus Hodory and also, Sterling versus Constantin, thank you sir.
Rebuttal of Robert L. Mukai
Chief Justice Warren E. Burger: Mr. Mukai.
Mr. Robert L. Mukai: Mr. Chief Justice and may it please the Court.
Mr. Coleman suggest that the Schwegmann decision relieves the appellees of the necessity of demonstrating at least some conduct violative of the federal antitrust laws.
I would ask the Court to refer to page 386 of that decision reported in 341 U.S in which Justice Douglas unequivocally stated that the scheme their question would be illegal, would be enjoined and would draw civil and criminal penalties and that no court would enforce it.
And that was the Louisiana statute which was struck down by this Court in Schwegmann.
So it is our submission that Schwegmann cannot relieve the appellees of stating an antitrust claim without showing the predicate facts necessary to make out a violation of some federal antitrust statute.
With the Court's permission, Mr. Coleman has pointed out or has characterized a right existing in appellees which depends in large part upon the view that the license granted to a dealer provides him with some unassailable right to locate wherever he wants.
In effect, Mr. Coleman posits a portable property interest in the dealer which you could not be deprived of without a due process hearing.
Well, his characterization is mistaken because a fixed geographical location is integral to the initial issuance and the continued entitlement to a dealer license under California law.
In Section 11712 of the California Vehicle Code, the Department of Motor Vehicles, the licensing authority is prohibited from issuing a dealer license to an applicant without an established place of business.
Section 11721 requires the automatic cancellation of a dealer license whenever a dealer abandons an established place of business.
Section 11713 makes it a violation of the code not to maintain an established place of business and Section 40000.11 makes that violation a misdemeanor under California law.
Your Honors, I see that my time has expired and I thank the Court for its attention.
Chief Justice Warren E. Burger: Thank you gentlemen, the case is submitted.
Cite this Page
NEW MOTOR VEHICLE BD. OF CAL. v. ORRIN W. FOX CO.. The Oyez Project at IIT Chicago-Kent College of Law. 28 April 2013. <http://www.oyez.org/cases/1970-1979/1978/1978_77_837>.
NEW MOTOR VEHICLE BD. OF CAL. v. ORRIN W. FOX CO., The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1970-1979/1978/1978_77_837 (last visited April 28, 2013).
"NEW MOTOR VEHICLE BD. OF CAL. v. ORRIN W. FOX CO.," The Oyez Project at IIT Chicago-Kent College of Law, accessed April 28, 2013, http://www.oyez.org/cases/1970-1979/1978/1978_77_837.