California Court of Appeals, First District, Fourth Division
City
& County of San Francisco Judicial Council Coordination
Proceeding Nos. 4298, 4303 Hon. Richard A. Kramer Trial
Judge.
Counsel for Respondents: Latham & Watkins, Margaret M.
Zwisler, Gregory G. Garre, Jason L Daniels, Michael E. Bern,
Katherine I Twomey, Adam R. Thomas.
Counsel for Appellant: Zelle, Craig Carter Corbitt, Jiangxiao
Athena Hou, Michael S. Christian, Saveri & Saveri, Guido
Saveri, R. Alexander Saveri, Berman DeValerio, Joseph John
Tabacco Jr., Todd A. Seaver, Matthew D. Pearson, Hausfeld,
Michael Paul Lehmann, Michael D. Hausfeld, Christopher L.
Lebsock, Cooper & Kirkham, Josef Deen Cooper, Tracy R.
Kirkham, John D. Bogdanov, Berger & Montague, H. Laddie
Montague, Jr., Lieff Cabraser Heimann & Bernstein, Michele
Chickerell Jackson, Eric B. Fastiff, Cohen Milstein Sellers &
Toll, Daniel A. Small, J. Douglas Richards, Kathleen M.
Konopka, Emmy Levens, Alioto Law Firm, Theresa Driscoll
Moore, Duane Morris, Paul S. Rosenlund, Blecher & Collins,
Maxwell M. Bleecher, Harold Runkle Collins Jr., Zwerling,
Schachter & Zwerling, Robert S. Schachter, Dan Drachler,
Joseph S. Tusa, Amamgbo & Associates, Donald Chidi Amamgbo,
The Terrell Law Group, Reginald Von Terrell, Blumenthal &
Nordrehaug, Norman B. Blumenthal, Morris & Associates,
Stephen Bryan Morris, John Haslet Boone, Chimicles &
Tikellis, Steven A. Schwartz, Glancy, Binkow & Goldberg,
Susan Gilah Kupfer, Lionel Zevi Glancy, John F. Innelli
Schubert Jonckheer & Kolbe, Robert C. Schubert, Willem F.
Jonckheer, Miranda Kolbe, Bramson, Plutzik, Mahler &
Birkhaeuser, Alan Roth Plutzik, Kyle Loyd Crenshaw, Davis,
Cowell & Bowe, Elizabeth Ann Lawrence, Philip F. Bowe,
Finkelstein Thompson, Richard M. Volin, Rosemary Medellin
Rivas, Green & Noblin, Robert Stanley Green, Gordon-Creed
Kelley Holl & Sugerman, Kevin John Holl, James Dombroski, The
Ekenna Law Firm, Chief Nnamdi Ekenna, Hagens, Berman, Sobol &
Shapiro, Steve W. Berman, Anthony D. Shapiro, Elaine Teresa
Byszewski, Hallisey & Johnson, Jeremiah F. Hallisey, Gross
Belsky Alonso, Terry Gross, The Mogin Law Firm, Daniel Jay
Mogin, Lisa J. Frisella Chad McManamy, Alexander Michael
Schack, Lawrence Genaro Papale, Joseph M. Patane, Jeffrey
Kenneth Perkins, Trump, Alioto, Trump & Prescott, Mario
Nunzio Alioto, Reich Radcliffe, Marc Gene Reich.
REARDON, J.
In this
coordinated proceeding, certain purchasers of new automobiles
in California (plaintiffs) brought state law claims against a
number of automobile manufacturers and dealer associations
under the Cartwright Act (Bus. & Prof. Code, §§
167201-6728) and the Unfair Competition Law (Bus. & Prof.
Code, §§ 17200-17210). Specifically, the plaintiffs
allege that the defendant manufacturers and associations
conspired to keep lower-priced, yet virtually identical, new
cars from being exported from Canada to the United States,
thereby keeping new vehicle prices in California higher than
they would have been in a properly competitive market. After
years of litigation, the trial court granted summary judgment
in favor of the two remaining defendants in the case-Ford
Motor Company (Ford U.S.) and its subsidiary, Ford Motor
Company of Canada, Ltd. (Ford Canada) (collectively,
Ford)-concluding that the plaintiffs had failed to produce
sufficient evidence of an actual agreement among Ford and the
other manufacturers to restrict the export of new vehicles
from Canada to the United States.
On
appeal, the plaintiffs challenge the trial court's grant
of summary judgment in favor of Ford, arguing that the
evidence presented in this case was more than sufficient to
raise a triable issue of material fact as to the existence of
an illegal agreement to curb exports. In addition, they claim
that the trial court improperly excluded certain direct
evidence of the alleged conspiracy. Based on our de novo
review of this matter, we conclude that summary judgment was
appropriately granted to Ford U.S. However, we agree with the
plaintiffs that the admissible evidence presented was
sufficient to demonstrate the existence of a material fact as
to whether Ford Canada participated in an illegal agreement
to restrict the export of automobiles from Canada to the
United States in violation of the Cartwright
Act.[1] We therefore reverse the trial
court's grant of summary judgment in favor of Ford
Canada.
I.
BACKGROUND
A.
Preliminary Matters
This
litigation began over a decade ago when, in early 2003, more
than a dozen different lawsuits were filed in California
against various automobile manufacturers and trade
associations, each alleging state law causes of action for
antitrust conspiracy and unfair business practices and each
filed as a class action on behalf of individuals who
purchased or leased new vehicles in California that were
manufactured or distributed within a certain period of time
by one of the named defendants. The lawsuits were eventually
coordinated into this proceeding. (In re Automobile
Antitrust Cases I and II (2005) 135 Cal.App.4th 100, 106
(Automobile Antitrust Cases).) Thereafter, in
October 2003, the plaintiffs filed their consolidated amended
class action complaint, the operative pleading in this
matter.[2] In addition to Ford, the class action
complaint named numerous other automobile manufacturers as
defendants.[3] Also designated as defendants were the
Canadian Automobile Dealers Association (CADA)-a trade
organization that represents, promotes, and protects the
interests of franchised automobile dealers in Canada-and the
National Automobile Dealers Association (NADA), CADA's
United States counterpart. (See ibid.) All told, the
manufacturer defendants accounted for approximately 88
percent of automobile sales in the U.S. and Canada from 2001
to 2003. Sales by Ford, General Motors, and
Chrysler-sometimes referred to as the "Big
3"-constituted approximately 67 percent of that market.
As
indicated above, the complaint alleges that the defendant
automobile manufacturers and dealer associations violated
state antitrust and unfair competition laws by conspiring to
restrict the movement of lower-priced Canadian vehicles into
the U.S. market, thereby avoiding downward pressure on new
vehicle prices in the United States. According to the
plaintiffs, during the timeframe relevant to this litigation,
the defendant automobile manufacturers typically charged
their California dealers between 10 and 30 percent more than
they charged their Canadian dealers for the same make and
model vehicle. Ford Canada, for example, estimated that a
2000 Model F350 Crewcab 4x4 DRW Lariat could be imported from
Canada and sold at a price $8, 265 less than its United
States counterpart ($29, 569 as opposed to $37, 834).
Maintenance of this two-tiered pricing system required the
continued segregation of the Canadian and U.S. automobile
markets.
Beginning
in the 1990's, however, trade policy between the United
States and Canada made exporting simpler and less expensive.
Moreover, after the safety and environmental regulations
governing new vehicles sold in the United States and Canada
were harmonized between 1998 and 2000, the vehicles sold in
the two countries became virtually identical.[4] Then, from at
least 2001 through 2003, the currency exchange rate
differential between the strong United States dollar and the
cheaper Canadian dollar made export sales increasingly
attractive. (See In re New Motor Vehicles Can. Export
Anti. Lit. (1st Cir. 2008) 522 F.3d 6, 9-10.) Faced with
this particularly advantageous arbitrage opportunity,
[5]
exporters began buying more and more Canadian vehicles and
selling them in the United States to franchised dealers,
dealers of another brand, independent dealers, and used car
dealers. This created a discount distribution channel, or
"gray market" for Canadian vehicles in the United
States.[6]
The
plaintiffs claim that, in the face of this mounting activity
by exporters, the manufacturer defendants illegally agreed
that they would all hold firm, each doing their part to stamp
out Canadian exports, rather than taking the profits
available by permitting their Canadian dealers to sell
Canadian cars freely into the U.S. market. According to the
plaintiffs, this alleged conspiracy was created and
implemented through a series of meetings and conference calls
among the defendant manufacturers. These contacts were
facilitated by a number of trade associations, including:
CADA; the Canadian Vehicle Manufacturers' Association
(CVMA), which represented the "key or leading"
automobile manufacturers in Canada, including Ford Canada,
Chrysler Canada, and GM Canada; and the Association of
International Automobile Manufacturers of Canada (AIAMC),
which represented international manufacturers such as Honda
Canada, Toyota Canada, Nissan Canada, BMW Canada, and
Volkswagen Canada.
The
plaintiffs further contend that the manufacturers used a
variety of different tools to discourage the export of new
Canadian vehicles to the United States, thereby furthering
the goals of their conspiracy. By the late 1980's, for
example, Ford had modified its Canadian dealer franchise
agreements (generally Franchise Agreements) to forbid export
sales. The Franchise Agreements of other manufacturers
contained similar provisions. In addition, manufacturers
created and frequently updated "blacklists" of
entities known to export vehicles for resale so that their
Canadian dealers could consult the lists and refrain from
selling to those entities. Additionally, the manufacturers
began tracking every vehicle's unique Vehicle
Identification Number (VIN) to determine which new vehicles
made for sale in Canada had actually been exported to the
United States. Once an exported vehicle was traced back to
the particular dealer who made the export sale, many
Franchise Agreements allowed for the imposition of
"chargebacks, " substantial fines (often in the
thousands of dollars) paid by the dealer to the manufacturer.
The manufacturers also imposed vehicle allocation
restrictions on exporting Canadian dealers, and, at times,
pursued termination of dealers engaged in the export trade.
Ford, for example, initiated successful termination
proceedings against a dealer that had a high incidence of
export sales in 1999 and 2000.
Some
manufacturers also required their Canadian dealers to include
"no export" clauses in their sales agreements,
under which buyers, themselves, could be required to pay a
penalty if the purchased vehicle was transferred to the
United States within a designated period of time. Moreover,
Canadian dealers were required to conduct a "due
diligence" investigation of every buyer to identify
potential exporters. If a Canadian car arrived in the United
States despite the erection of these substantial barriers to
export, manufacturers voided warranties for the repair of new
vehicles exported from Canada, declined to provide
information regarding recalls, and withheld certificates of
origin from exporters. Distribution controls were also placed
on the parts used to convert odometers from kilometers to
miles.
Although
the cross-border sale of used vehicles began to
skyrocket in 1999 and 2000 and continued at very high levels
throughout the alleged conspiracy period, plaintiffs
presented evidence that the manufacturers' multi-faceted
attempt to restrict the export of new vehicles from
Canada to the United States proved effective. In fact, export
sales of new vehicles actually decreased during the alleged
conspiracy period, despite circumstances amounting to a
"perfect storm" for cross-border arbitrage. (Cf.
In re New Motor Vehicles Can. Export Anti. Lit.,
supra, 522 F.3d at p. 10.) The plaintiffs maintain
that cutting off this discount distribution channel allowed
the defendant automobile manufacturers to sell or lease new
cars in California, and indeed throughout the United States,
at artificially inflated prices. Thus, according to the
plaintiffs, class members paid more to buy or lease new
vehicles during the conspiracy period than they would have in
the absence of defendants' illegal agreement to restrict
exports. The plaintiffs' expert estimates total class
damages at $1.073 billion.
During
2004 and into 2005, the trial court considered a number of
preliminary motions filed by the defendants, including
motions contesting personal jurisdiction and demurrers to the
consolidated complaint. For example, the trial court
concluded that it lacked personal jurisdiction over four of
the nonresident defendants-Honda Japan, Volkswagen AG, Nissan
Japan, and CADA-and thus granted their motions to quash
service of summons. (In re Automobile Antitrust
Cases, supra, 135 Cal.App.4th at p. 105.) We
subsequently affirmed this determination on appeal.
(Ibid.)
In
addition, a similar lawsuit had been filed in federal court
against many of the same defendants, alleging violation of
federal antitrust laws. (See In re New Motor Vehicles
Canadian Export (D. Me. 2004) 307 F.Supp.2d 136, 137-138
(the federal multidistrict litigation or MDL).) Parallel
cases were also pending in a number of other state courts. In
June 2004, the trial court issued an order, after
consultation with Judge Hornby-the judge in the federal
MDL-coordinating discovery among this action, the federal
action, and other state actions.
The
plaintiffs filed their motion for class certification in the
instant matter in the Spring of 2005. Proceedings were
stayed, however, while the parties conducted extensive
coordinated discovery and litigated their class certification
motion in the federal MDL.[7] Ultimately, in May 2009, the trial
court granted plaintiffs' motion for class certification
in this proceeding. The court defined the class generally as:
"All persons and entities residing in California on the
date notice is first published, who purchased or leased a new
motor vehicle manufactured or distributed by a defendant,
from an authorized dealer located in California, during the
period January 1, 2001 through April 30, 2003, for their own
use." We later denied defendant's petition for writ
of mandate seeking review of the class certification order.
(General Motors of Canada, Ltd. v. Superior Court
(Aug. 13, 2009, A125424) [nonpub. order].)
In the
interim, Judge Hornby issued an opinion on July 2, 2009, in
the federal MDL action, addressing the viability of the
remaining state law damage claims. (In re New Motor
Vehicles Canadian Export Litig., supra, 632
F.Supp.2d at pp. 42, 44-45.) Before the federal court were
summary judgment motions from each of the remaining
manufacturer defendants challenging the existence of a
conspiracy and a joint summary judgment motion arguing lack
of evidence of antitrust impact. (Id. at p. 45.)
With respect to the conspiracy issue, Judge Hornby concluded
that there "is probably enough evidence to reach a jury
on whether the manufacturers had an illegal horizontal
agreement." (Id. at p. 47.) Of particular
interest here, the judge opined that this conclusion "is
easiest for Ford and Chrysler; it is somewhat closer for GM
because of disclaimer statements it made; it is closest of
all for the Honda and Nissan entities because for them the
evidence is almost entirely circumstantial."
(Ibid., fns. omitted.) In the end, however, Judge
Hornby did not finally decide the issue, because he concluded
that the manufacturers were entitled to summary judgment on
the issue of antitrust impact.[8] (Id. at p. 45.)
While
this litigation progressed in both state and federal courts,
Toyota reportedly agreed to settle. Additionally, in 2009,
both GM and DaimlerChrysler declared bankruptcy, effectively
removing them from the case. Following these settlements and
bankruptcies, the remaining defendants litigating this action
were Ford, GM Canada, Nissan USA, and Honda.
B.
Ford's Summary Judgment Motion and Plaintiffs'
Response
In
January 2010, Ford filed a motion for summary judgment,
arguing that the plaintiffs could not prove on the evidence
presented that Ford's conduct in restraining exports
during the identified conspiracy period was more likely than
not the result of an unlawful agreement rather than
independent action.[9] Specifically, Ford advanced evidence
that it had been independently combating the problem of what
it termed "gray market exports" for decades prior
to the designated conspiracy period and continued to do so
during that period for the same legitimate business
reason-that is, to preserve the integrity of its dealer
distribution system. Given this non-conspiratorial
explanation for its enforcement of export restraints, Ford
argued that its conduct was as consistent with permissible
competition as it was with unlawful conspiracy. Thus, summary
judgment in its favor was appropriate. In addition, although
Ford conceded that it had attended a number of meetings with
other manufacturers during the conspiracy period at which
possible joint action to combat the export problem was
discussed, it asserted that no such joint action was ever
taken as a result of those meetings. Indeed, Ford claimed
that its actions to stop exports after these industry
meetings clearly differed from the methods used by its
competitors to combat exports, making it
"impossible" for the plaintiffs to establish any
kind of conspiracy among the defendants.
In
opposition to Ford's summary judgment motion, the
plaintiffs contended that they had produced documentary and
testimonial evidence showing that the defendants made a
conscious commitment to a common scheme-the restraint of
Canadian new vehicle exports to the United States-and thus
summary judgment was inappropriate. Further, the plaintiffs
suggested that the manufacturers' claimed
"legitimate business reason" for their export
restraints was likely pretextual given the economic realities
of the situation. Specifically, according to plaintiffs'
expert, absent an agreement among the manufacturers to block
exports, all defendant manufacturers facing competition from
Canadian exports would have maximized profits by lowering
list prices in the United States rather than losing U.S.
sales to competitors' Canadian exports. Finally, the
plaintiffs' argued that it was irrelevant that the
manufacturers did not impose the exact same export
restrictions during the alleged conspiracy period. Rather,
evidence that all of the manufacturers imposed some form of
restraint during the relevant timeframe and that none chose
to abandon their export controls in favor of quick profits
was sufficient evidence of parallel conduct.
C.
The Summary Judgment Hearings and Decisions
The
trial court ultimately held a number of hearings on the four
summary judgment motions before it which argued lack of an
actionable conspiracy. After hearing on January 18, 2011, the
trial court granted summary judgment motions in favor of
Nissan USA and Honda. In particular, the trial court
concluded that the evidence produced by the two
manufacturers-including evidence of a legitimate business
purpose for the challenged conduct, denials of wrongful
behavior, and evidence of refusal to participate in meetings
that might possibly have been viewed as conspiratorial-was
sufficient to shift the burden to the plaintiffs to produce
evidence of an issue of material fact regarding the existence
of the alleged conspiracy. Although the trial court
acknowledged that such a conspiracy was "in the economic
self-interest of each of the defendants, perhaps, " it
did not find this fact probative of the existence of an
impermissible agreement among the parties, which it deemed
"the heart" of any Cartwright Act claim. Nor did it
find evidence of shared warranty policies or of the
"stepping up" of anti-export activities after the
date of the alleged conspiracy particularly relevant to the
existence of an actionable agreement. In sum, since the
evidence submitted by the plaintiffs was "not sufficient
to raise a plausible inference that either Honda or Nissan
USA entered into an agreement with any competitor to restrict
export sales from Canada, " the trial court granted both
parties' summary judgment motions.
The
trial court next turned to the summary judgment motions of
Ford and GM Canada. At a hearing on January 24, 2011, the
court discussed its tentative decision to deny the summary
judgment motions of both manufacturers. As with Honda and
Nissan USA, the trial court concluded that the evidence
produced by Ford and GM Canada-including evidence of a
legitimate business purpose behind the conduct at issue,
denials of any wrongful behavior, and refusals to participate
in certain joint export activities-was sufficient to shift
the burden to the plaintiffs to establish an issue of
material fact regarding the existence of the alleged
conspiracy. In the case of Ford and GM Canada, however, the
trial court initially believed that the plaintiffs had
satisfied their burden, creating a material issue of fact
with respect to the existence of an unlawful agreement to
restrict exports in violation of the Cartwright Act. As the
court framed the issue, the crucial question was whether the
manufacturers acted independently to restrict exports or
whether they agreed "to take steps in concert to reduce
the flow of cars."
In
response, Ford first maintained that there was no evidence
that Ford U.S. "conspired with anyone in Canada to do
anything." Ford further asserted that, with respect to
Ford Canada, the evidence established, at most, that the
manufacturer attended meetings and conference calls at which
possible solutions to the export problem were discussed. But,
according to Ford, no agreement with respect to any
particular joint course of action was ever reached. Rather,
Ford strenuously claimed, the evidence established that it
had been taking unilateral action to curb exports for 15
years, and there was no evidence that its actions changed in
any way during the period of the alleged conspiracy. GM
Canada made similar arguments, stressing its repeated
refusals, when asked, to engage in meetings or any kind of
joint activity. After argument, the trial court directed the
plaintiffs to submit a summary of their conspiracy evidence.
While
these summary judgment proceedings were pending, however, GM
Canada agreed to settle its four remaining state court
actions, including this California proceeding. This left Ford
U.S. and Ford Canada as the sole remaining defendants in the
case. At the continued hearing on May 10, 2011, the
plaintiffs reviewed the evidence they believed supported the
existence of an unlawful agreement to restrain exports. Ford
then challenged the plaintiffs' evidence and conclusions.
In the end, the trial court authorized certain additional
filings and indicated that it would take the matter under
submission as of July 8, 2011.
Thereafter,
by order dated November 4, 2011, the trial court granted the
summary judgments motions of both Ford U.S. and Ford
Canada.[10] Specifically, the trial court found
that the evidence produced by the two manufacturers was
sufficient under Aguilar, supra, 25 Cal.4th 826, to
shift the burden to the plaintiffs to produce evidence of an
issue of material fact regarding the existence of the alleged
conspiracy. However, contrary to its earlier tentative
ruling, the trial court now determined that the plaintiffs
had failed to satisfy this burden.
In
particular, the trial court concluded that while Ford
"met at different times with other alleged
co-conspirators and discussed their common problem of the
importation of cars from Canada to the United States, ...
such discussion of a common problem by itself is not a
violation of the Cartwright Act." Further, the trial
court opined that, where there was insufficient evidence of
an agreement, evidence that information was exchanged among
alleged co-conspirators, or that some alleged co-conspirators
"stepped up" their efforts to restrict exports
after the start of the alleged conspiracy period, was not
enough to carry plaintiffs' burden. Finally, the trial
court stated that the evidence presented by the plaintiffs
regarding the alleged co-conspirators' motive and
economic interest to conspire was insufficient, standing
alone, to satisfy the plaintiffs' burden of production.
In sum, under Aguilar, "[t]here was no evidence
to support a conclusion that it was more likely than not that
[Ford U.S.] and/or Ford Canada entered into an agreement with
any other alleged co-conspirator."
Final
judgment was entered with respect to Ford U.S. on January 9,
2012, and with respect to Ford Canada on January 13, 2012.
The plaintiffs' timely notice of appeal again brought the
matter before this court.
II.
EVIDENTIARY ISSUES
We
first address the plaintiffs' challenge to two
evidentiary rulings made by the trial court in connection
with the summary judgment motion here at issue. Specifically,
the plaintiffs contend that, in making its summary judgment
determination, the trial court erred in refusing to consider
on hearsay grounds certain deposition testimony of Pierre
Millette, general counsel for Toyota Canada, regarding a May
15, 2001, CADA meeting, as well as the minutes of that
meeting that were prepared by a CADA employee. The hearsay
rule is easily articulated: Hearsay evidence is
"evidence of a statement that was made other than by a
witness while testifying at the hearing and that is offered
to prove the truth of the matter stated." (Evid. Code,
§ 1200, subd. (a).) It is generally inadmissible, absent
a recognized exception to the rule. (Id., §
1200, subd. (b); see also People v. Seumanu (2015)
61 Cal.4th 1293, 1307 (Seumanu) ["
‘[h]earsay is generally excluded because the
out-of-court declarant is not under oath and cannot be
cross-examined to test perception, memory, clarity of
expression, and veracity, and because the jury (or other
trier of fact) is unable to observe the declarant's
demeanor' "].)
Of
course, when dealing with the hearsay rule, the devil is in
the details of its application to the facts of a particular
case. As we review the trial court's treatment of the
alleged hearsay in this matter, we note that there is some
dispute regarding our standard of review for such
determinations. "[T]he weight of authority holds that an
appellate court reviews a court's final rulings on
evidentiary objections by applying an abuse of discretion
standard." (Carnes v. Superior Court (2005) 126
Cal.App.4th 688, 694 (Carnes); see also Serri v.
Santa Clara University (2014) 226 Cal.App.4th 830, 852.)
However, in Reid v. Google, Inc. (2010) 50 Cal.4th
512 (Reid), our high court acknowledged the argument
that a different rule should apply when evidentiary rulings
are made in the context of a summary judgment motion: "
‘Because summary judgment is decided entirely on the
papers, and presents only a question of law, it affords very
few occasions, if any, for truly discretionary rulings on
questions of evidence. Nor is the trial court often, if ever,
in a better position than a reviewing court to weigh the
discretionary factors.' " (Id. at p. 535,
quoting the appellate court opinion). Ultimately, the
Reid Court concluded that it "need not decide
generally whether a trial court's rulings on evidentiary
objections based on papers alone in summary judgment
proceedings are reviewed for abuse of discretion or reviewed
de novo." (Ibid.; see also Nazir v. United
Airlines, Inc. (2009) 178 Cal.App.4th 243, 255, fn. 4
(Nazir) [observing that the standard of review is
unsettled].)
Similarly,
we will not here resolve this outstanding issue, as our
conclusions are sound under either theory. (See In re
R.T. (2015) 232 Cal.App.4th 1284, 1301 [a court abuses
its discretion when it applies an incorrect legal standard];
Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th
229, 281 [an evidentiary ruling that " ‘
"transgresses the confines of the applicable principles
of law" ' " is an abuse of discretion].) With
respect to the consequences of our evidentiary review,
however, we will follow the tenet-correctly pointed out by
both parties-that the erroneous exclusion of evidence by the
trial court is not grounds for reversal unless we also
determine that the error was prejudicial. (Evid. Code, §
354, subd. (a) [judgment shall not be reversed due to the
erroneous exclusion of evidence unless the error resulted in
a miscarriage of justice]; see also Cal. Const., art. VI,
§ 13 [same]; Carnes, supra, 126
Cal.App.4th at p. 694 [citing the constitutional provision].)
Thus, the plaintiffs must demonstrate that, absent the error,
"a different result would have been probable."
(Pannu v. Land Rover North America, Inc. (2011) 191
Cal.App.4th 1298, 1317 (Pannu).) With these
standards in mind, we turn to the particular evidence
excluded by the trial court in this case.
A.
The Millette Deposition Testimony
During
his March 2007 deposition, Pierre Millette of Toyota Canada
was questioned about the May 15, 2001, CADA meeting which he
attended along with representatives of Ford Canada, AIAMC,
CVMA, GM Canada, Chrysler Canada, CADA, and various local
dealer associations. Both Ford and Ford Canada objected on
hearsay grounds to the following colloquy between counsel for
the plaintiffs and Millette: "Q. Did CADA indicate that
they would not support dealers who were involved in regular
exporting of vehicles from Canada to the United States?
[¶] [Objection.] [¶] A. I can remember comments
being made that everyone supported the concept of trying to
keep the vehicles in Canada, but who said what, on a general
basis, I can't help you there. [¶] [Answer read
back.] [¶] And that was your understanding that there
was a general consensus that the vehicles would be kept in
Canada, not be exported from Canada to the United States?
[¶] [Objection.] [¶] A. There was general support
for the approach."
Later
in the deposition, counsel for Ford elicited this additional
testimony from Millette, which it now also claims is
inadmissible hearsay: "Q. Okay. Was there any agreement,
at that meeting or any time, to work together to keep
vehicles in Canada? [¶] A. I think that would be
characterizing it as a little more than what it was. It
wasn't an agreement. It was simply a concept that there
was some consensus on from everyone at the meeting." As
Ford correctly notes, this discussion was immediately
followed by an additional exchange to which no objection has
been lodged. Specifically Ford's attorney queried:
"Just to be clear in my question, did the participants
in the meeting ever agree to work together to keep vehicles
in Canada?" Millette responded: "No, absolutely
not."
At the
summary judgment hearing on January 24, 2011, after reference
by GM Canada to Millette's statements, the trial court
responded: "I intentionally left out references to Mr.
Millette. I still haven't sorted out in my mind to what
extent, assuming Mr. Millette didn't testify at trial,
anything that Mr. Millette said is admissible for any
purpose." However, when discussing the Millette
testimony at the continued hearing on May 10, 2011, in
response to Ford's hearsay objection, the trial court
stated: "I don't know if any of this is hearsay.
It's all his understanding of what happened. No
out-of-court statement offered for the truth. It's just
what his understanding was."
Later
in the hearing, plaintiffs' counsel and the trial court
had an extended discussion regarding the admissibility of the
Millette testimony. According to counsel for the plaintiffs,
the hearsay rule was not implicated by the deposition
testimony because "there are no other out-of-court
statements here with the exception of Mr. Millette's
testimony itself. There's no other-he is a percipient
witness at a meeting. He perceives what happens at the
meeting. He takes away an understanding of that. He is
competent to testify about what he perceived at the meeting,
that where before there wasn't a consensus and now there
was, there was a consensus to keep the cars in Canada, to
paraphrase Mr. Millette. He's not reporting about
anything anyone else said." Again, the trial court
seemed to agree, stating: "Well, that's what I
think-my present view of that is that he is giving his
understanding of what happened and that this is not
hearsay." Nevertheless, when the trial court issued its
written ruling on Ford's evidentiary objections in
connection with its grant of summary judgment, the court
sustained Ford's hearsay objections to both of the
Millette deposition excerpts.
Initially,
in considering the potential hearsay nature of the Millette
statements, we note that Ford is not arguing that the
challenged testimony is inadmissible hearsay because it is
out-of-court deposition testimony. And, indeed, pursuant to
section 2025.620 of the Code of Civil Procedure (section
2025.620), "[a]t the trial or any other hearing in the
action, any part or all of a deposition may be used against
any party who was present or represented at the taking of the
deposition... so far as admissible under the rules of
evidence applied as though the deponent were then present and
testifying as a witness...." (See id., subd.
(c)(1) [deposition testimony may be used "for any
purpose" where deponent resides more than 150 miles from
the place of the trial]; see also Code Civ. Proc., §
437c, subd. (b)(1) [listing depositions among the
documentation appropriate for use in support of a summary
judgment motion].) Moreover, in accordance with section 1291
of the Evidence Code (section 1291), "former testimony
is not made inadmissible by the hearsay rule if the declarant
is unavailable as a witness and: [¶]... [¶] [t]he
party against whom the former testimony is offered was a
party to the action or proceeding in which the testimony was
given and had the right and opportunity to cross-examine the
declarant with an interest and motive similar to that which
he has at the hearing." (Evid. Code, § 1291, subd.
(a)(2).) As with section 2025.620 testimony, however, the
admissibility of former testimony under section 1291 is
generally "subject to the same limitations and
objections as though the declarant were testifying at the
hearing." (Evid. Code, § 1291, subd. (b).) Thus,
the question before us is whether Millette's testimony
would constitute inadmissible hearsay if he were testifying
as a witness in court.
Ford
argues that the Millette statements at issue are indeed
inadmissible on this basis because they "conveyed"
hearsay. Specifically, according to Ford, when the testimony
is read in context, it is "clear Millette was describing
statements made by the other participants in the
meeting." Ford contends that these out-of-court
statements of other declarants are hearsay, and no exception
to the hearsay rule has been offered justifying their
admission. We disagree. None of the challenged testimony
purported to recount "a statement, " let alone to
prove what was "stated."[11] Millette was not
reporting particular statements made by particular
participants. Rather, he was simply recounting generally his
impressions and conclusions based on his participation in the
meeting. This is not hearsay, and the trial court erred in
concluding that it was.[12]
The
more difficult question, however, is whether the trial
court's evidentiary error was prejudicial such that it
provides grounds for reversal of the court's grant of
summary judgment in favor of Ford. (See Evid. Code, §
354, subd. (a); see also Carnes, supra, 126
Cal.App.4th at p. 694.) As stated above, to make a finding
regarding prejudice we must determine whether, absent the
error, " ‘a different result would have been
probable.' " (Pannu, supra, 191
Cal.App.4th at p. 1317.) In our view, this determination
rests on two separate lines of inquiry. First, we must
consider whether the Millette statements-improperly excluded
on hearsay grounds-are otherwise admissible. Next, if they
are admissible, we must resolve whether it is reasonably
probable that their admission would have changed the outcome.
With
respect to the admissibility of Millette's statements,
the plaintiffs argue that the testimony is admissible
nonhearsay because it was based on his "personal
knowledge, which he gained from having participated in the
May 15, 2001 meeting (and other conspiratorial meetings) on
behalf of Toyota, alongside executives from Ford, GM,
Chrysler and CADA." While this makes him
competent to testify as to facts he personally
observed, it does not necessarily make admissible his
inferences drawn from those facts. Rather, "[t]he
opinion rule, which often rejects testimony of a
competent witness because of the form in which the testimony
is given, is distinct from the knowledge rule, which lays
down a requirement of competency of witnesses. A
witness is not competent to testify on a matter-either as to
facts or opinions-if the witness lacks personal ...