Legal Document

439 U.S. 96 99 Supreme Court Reporter 403 58 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 361 NEW MOTOR VEHICLE BOARD OF the State of CALIFORNIA et al., Appellants,v.ORRIN W. FOX CO. al. NORTHERN CAR DEALERS ASSOCIATION Appellants, versus ORRIN Nos. 77-837, 77-849. Argued Oct. 3-4, 1978. Decided Dec. 5, Syllabus The California Automobile Franchise Act (Act) requires an automobile manufacturer to obtain approval New Motor Vehicle Board (Board) before opening or relocating a retail dealership within market area existing franchisee if latter protests, and also directs notify such requirement upon franchisee's filing protest. is not required hold hearing on merits protest sending notice manufacturer. Appellee proposed new relocated franchisees, after being notified pursuant protests from franchisees any hearings were held, brought suit challenging constitutionality statutory scheme due process grounds. A three-judge District held that absence prior denied manufacturers their procedural mandated by Fourteenth Amendment. Held: 1. does violate process. Pp. 104-108. (a) have effect affording protesting summary administrative adjudication in form tantamount temporary injunction restraining manufacturer's exercise its right franchise at will. Board's has none attributes but serves only inform status, pending determination, permit application. 104-105. (b) Nor can be characterized as order, since it did involve discretion, find assume adjudicative facts, terminate suspend interest was then enjoying. Fuentes Shevin, 407 67, 92 1983, 32 556; Bell Burson, 402 535, 91 1586, 29 90, distinguished. Pacific KF135 P2 105. (c) Even constituted protected when enacted, Legislature still constitutionally empowered enact general business regulation imposed reasonable restrictions right. In particular, legislature subordinate manufacturers' rights franchisees' conflicting where necessary prevent unfair oppressive trade practices, protect through customary safeguards, i. e., providing dealers with opportunity heard impartial tribunal (the Board) franchisor permitted inflict them grievous loss. Such safeguards cannot said deprive 106-108. (d) Once having enacted regulation, provide for individualized each time Act's provisions had delaying consummation plans particular individuals. 108. 2. constitute impermissible delegation state power private citizens requiring delay establishments relocations protested who unfettered discretion whether An otherwise valid rendered invalid simply because those whom designed safeguard may elect forgo protection. 108-109. 3. conflict Sherman Act. 109-111. system displace freedom establishing dealerships hence outside reach antitrust laws under "state action" exemption. This exemption lost accords locate likely subject injurious possible illegal competition. Schwegmann Bros. Calvert Distillers Corp., 341 384, 71 745, 95 L.Ed. 1035, 109-110. To extent there permits invoke purpose intrabrand competition, "cannot itself sufficient reason invalidating . statute," "if adverse competition were, itself, enough render statute invalid, States' engage economic would effectively destroyed." Exxon Corporation Governor Maryland, 437 117, 133, 98 2207, 2218, 57 91. 110-111. 440 F.Supp. 436, reversed. Robert L. Mukai, Sacramento, Cal., Bd. James R. McCall, Univ. San Francisco, Northern Rptr. (West’s) Car Dealers Assn. William T. Coleman, Jr., appellees. Mr. Justice BRENNAN delivered opinion Court. 1 Under Act, motor vehicle must secure franchisee, establishment competing dealership. this timely franchisee. dealer requirement.1 2 Central entered judgment declaring prior-hearing 436 (1977). We noted probable jurisdiction appeals both Number 77-837 77-849,2 434 1060, 1230, 55 760 (1978). now reverse.3 3 * disparity bargaining between prompted Congress4 some 25 legislation car perceived abusive acts manufacturers.5 California's version Act.6 Among other protects equities prohibiting adding areas public interest.7 4 enforce prohibition, proposes establish State, relocate one, first give intention same "line-make" located "relevant area," defined "any radius 10 miles site [the] potential dealership."8 If 15 days, convene 60 days determine good cause refusing relocation dealership.9 franchisor, protest, 5 "that been filed, , shall until board nor thereafter, determined permitting dealership."10 6 Violation requirements misdemeanor ground suspension revocation license do business.11 7 General Motors manufactures, among makes, Buick Chevrolet cars. Orrin Fox company signed agreement appellee May 1975 Pasadena. Muller agreed transfer Glendale La Canada, December 1975. respectively dealers. responded, notifying appellees filed therefore they thereafter dealerships. Before either proceeded hearing, however, Motors, Fox, instant action. II 8 At outset important clarify nature challenge us. Appellees dissent characterize entitling Motors' disagree. 9 injunction. It creates no duty, violation which contempt. restrain exercising previously enjoyed; franchising immune regulation. notice, curtailed Code explicitly conditions terminate, open, compliance and, necessary, Board.12 served advise applications. Moreover, hardly order. Issuance discretion. neither found assumed existence facts. personal property, incidents business. 11 Thus, case like 556 (1972), 90 (1971), relied appellees, official summarily finds assumes certain facts based thereon suspends enjoyment entitlement. There yet determination suspension. 12 Notwithstanding all this, argue deprives liberty pursue lawful occupation without law. contend absent trial-type are entitled franchises while applications proposals awaiting determination. Appellees' argument rests assumption will—which asserted survived passage 13 narrow question us, then, may, rule statute, temporarily Or stated conversely, issue whether, argues, sort suspended case-by-case basis hearings. 14 disagree dissent. "[T]he fact inhibited law mean circumstances inhibited." Zemel Rusk, 381 1, 14, 85 1271, 1279, 179 (1965). least demise concept "substantive process" recognized that, "[l]egislative bodies broad scope experiment problems ." Ferguson Skrupa, 372 726, 730, 83 1028, 1031, 93 (1963). ordinances, restrict commercial use see Euclid Ambler Realty Co., 272 365, 47 114, 303 (1926), geographical location enterprises, Williamson Lee Optical 348 483, 491, 75 461, 466, 563 (1955). "[c]ertain kinds prohibited; conduct business, calling, conditioned. [S]tatutes prescribing terms conducting businesses contract, imposing enter into agreements, state's competency." Nebbia York, 291 502, 528, 54 505, 512, 78 940 (1934). practices. "[S]tates legislate against what practices internal affairs, so long run afoul specific federal constitutional [T]he clause [not] broadly construed Congress legislatures put strait jacket attempt suppress industrial regard offensive welfare." Lincoln Union Northwestern 335 525, 536-537, 69 251, 257, 212 (1949). See alsoNorth Dakota Pharmacy Snyder's Drug Stores, Inc., 414 156, 94 407, 38 379 (1973); supra; supra. 16 Further, authority tribunal—the done here, require regulatory engaging specified See, e. g., North supra (pharmacy-operating permit); St. Louis Poster Adv. Louis, 249 269, 39 274, 63 599 (1919) (billboard permits); Hall Geiger-Jones 242 539, 37 217, 61 480 (1917) (securities registration); Adams Milwaukee, 228 572, 33 610, 971 (1913) (milk inspection); Gundling Chicago, 177 183, 20 633, 44 725 (1900) (cigarette sales license). 17 These precedents compel conclusion erred holding powerless appellees' grant undertake move one's facilities one another hearing. every "[g]eneral statutes passed affect person property individuals, sometimes point ruin, giving chance heard. Their way complex society, power, immediate remote, over make rule." Bi-Metallic Investment Colorado, 239 441, 445, 36 141, 142, (1915). III 18 constitutes 19 merit. Almost quasi-private could objection. eviction, example, becomes tenant his he alone decides will Cusack 526, 190, 472 (1917). IV next conflicts KF62 § seq.13 They whenever gives privately initiated restraints trade, thus 1035 (1951). 21 dispositive answer clearly articulated affirmatively expressed, matter Parker Brown, 317 341, 307, 87 315 (1943); Bates Bar Arizona, 433 350, 97 2691, 53 810 City Lafayette Louisiana Power & Light 435 389, 1123, 364 22 lose because, part framework, possibly Protests serve trigger action.14 mandate significant delay. On contrary, order concludes requires. duration interim restraint ongoing supervision. 23 reliance supra, misplaced. Schwegmann, attempted authorize immunize violative laws. here. Protesting faith governmental action Eastern Railroad Presidents Conference Noerr Freight, 365 127, 81 523, 464 (1961), Mine Workers Pennington, 657, 670, 1585, 626 (1965).15 24 auto "This merely STATING THAT THE STATUTE WILL HAVE AN ANTICOMPETITIVE EFFECT. sense, central policy Act—'our charter liberty.' Nevertheless, statute. For Reversed. 26 MARSHALL, concurring. 27 Although N Immigration Nationality Decisions join Court, write separately emphasize why, my view, Due Process Clause. As observes, ante, 100-103, counterparts, seeks redress franchisees. By empowering superintend franchise, makes more difficult force accept threatening overload markets competitors.1 28 litigation arises necessarily incident inquiry. Given unavoidable lag legality. enjoin transactions franchisors legitimate profits cases eventually approved. hand, allowing go forward bear burden ultimately disapproved Perhaps redressing imbalance thwarted left unprotected made decision, chose former option.2 Assuming immediately implicates Clause, believe outweighs protecting coercion completion Goldberg Kelly, 397 254, 262-263, 1011, 1017-1018, 287 (1970); Regents Roth, 408 564, 570-571, 2701, 2705-2706, 548 (1972). decided impose burdens rather than view substantial stake short lapse Clause dictate contrary legislative decision. 30 BLACKMUN, POWELL joins, concurring result. 31 agree rightly refused abstain commission Pullman 312 496, 643, (1941); delegation-of-power unmeritorious; claims concerned basically, facial Cal.Veh.Code Ann. §§ 3062, 3063 (West Supp.1978); we confronted applied. seems me should recognize forthrightly California, would-be telling utter indicate State's free attack grounds possess Indeed, analyze case. 34 Meyer Nebraska, 262 390, 399, 43 625, 626, 67 1042 (1923), course, "liberty" include "the common occupations life." anyone realistic become franchise; regulates sell cars areas. adoption 1973 surely created susceptible later deprivation. And abstract expectation qualify interest. 35 focusing all. Instead, centers essentially claim substantive conceded legitimately regulate scheme. issue, declare status quo maintained declaration Maintenance final agency many contexts. situation dissimilar widely adopted routine withholding effectiveness announced increases utility rates fulfilled. asserting delay, But foreclosed cases, (1963), cites. summarize: me, demonstrated presence interest; none, safeguards; cases. saying opinion. am, somewhat unsure that. prefer head on; does, answer, inevitable forthcoming. STEVENS, dissenting. rules govern operation satisfied involves validity procedure grants parties exclusive harm even alleging violated about violated. demonstrate fair characterization procedure, review whole, identify provision challenged case, explain actual provision. apparent precedent Court's unique arbitrary correct concluding deprived guaranteed 40 recognizes, member family retailers risks associated unrestrained Like grocers druggists convinced resale price maintenance,1 gasoline Maryland prohibit oil ownership service stations,2 successful persuading various unmixed blessing.3 Many limit Unquestionably, holds, mere inhibit them.4 41 contained two kinds. First, standards satisfy California. enforced licensing regulations.5 Because properly licensed, these rules, relevant Second, regulating contractual relationships dealers, covering matters terminations.6 Again, termination concerning contract dealer. sum, nothing 42 concerns followed licensed contains pertaining number operate given area. includes limitations means increasing bargain franchisees.7 commence business.8 agency, acting own motion, desirable undesirable.9 short, although entirely adopt franchises, reflected statute.10 actually embodies presumption favor locations. That presumption, consistent knowledgeable businessmen normally large capital commitments unless welcome change,11 rest predicate. language interpretation Board. curiously group protestants—competitors 314-square-mile surrounding handle line cars—the demand "there dealership."12 repeated separate sections statute.13 Notably, place manufacturer;14 places demonstrating take objecting dealer.15 scales evenly balanced, prevail. 45 administration confirms analysis. Of 117 law, sustained Board.16 words, 99% contested 46 further confirmed limitation persons standing object opening. Most significantly, independent initiate objection, schedule change.17 consuming complain.18 neighboring might severely affected Finally, able—by whatever means—to persuade wholly vindicated responsible officials. Properly analyzed, confers special benefit limited oppose suffer injury consequence quite different rights. One relatively meaningless, significant. try competitor market. obvious little value, less 1% successful. two-thirds abandoned advance hearing,19 infer prevail primary 48 second complaining unqualified entitlement preliminary absolutely meaningless completed.20 "injunction" issues showing success merits, proof irreparable harm, bond compensation indemnify loss caused uninformative words "I protest" entitle party activities competitor.21 subjects criminal penalties licenses.22 49 identified essence class defendant lawsuits extremely rare instances block rather, assuring "defendants" receive them, probable-cause finding, kind,23 pursuit competitor-"plaintiff."24 50 injunctive relief precisely statute,25 last months.26 dynamic, competitive delays frustrate dealership—as happened cases— participate favorable models. deprivation permanent denial avoid serious character suffered preserved.27 51 Apart presented case28 cites novel surprising resolving flagrantly violates precepts embodied 52 Whenever another, fundamental attention request precede granting relief. Mullane Hanover Bank Trust 339 306, 313, 70 652, 656, 865. provides consideration losing him involve.29 equally exercised except behest decisionmaker. context, correctly observed: "[I]n very things [private] intrusted especially competitor. attempts confer undertakes intolerable unconstitutional interference property." Carter Coal 298 238, 311, 56 855, 873, 80 1160. More recently, applied principles contexts similar 93, 2001, 556, say enabled unconditionally power: "The statutes, moreover, abdicate effective control power. Private parties, serving advantage, unilaterally replevy goods another. No participates decision seek writ; reviews repossession; evaluates need seizure. plaintiff information court matters. largely dark."30 competitor's dealership, body's respect wielded dark. result uncontrolled government blinking ability impair arrangements competitors. blatantly offends neutral dispute resolution creative recharacterization general—and substantively governing how established relocated.31 Accordingly, respectfully pertinent follows: "3062. Establishing "(a) Except provided subdivision (b), event additional line-make represented, writing Within receiving end appeal file When Section 3066, multiple consolidated expedite disposition issue. "For purposes section, reopening year deemed "3063. Good "In determining entering line-make, circumstances, including, to: "(1) Permanency investment. "(2) Effect "(3) Whether welfare established. "(4) adequate convenient consumer care vehicles adequacy facilities, equipment, supply parts, qualified personnel. "(5) in- crease interest." Supp.1978). Appellants 77-849 defendants intervention uncontested application appellants Rehnquist stayed judgment, 1345, 359, (1977) (in chambers). abstained (1941), arguing courts question. abstain. Abstention appropriately where, ambiguity Wisconsin Constantineau, 400 433, 439, 507, 511, 515 (1971). congressional Committee reported 1956: "Automobile production most highly concentrated industries States, grave concern officers Government charged enforcement Today exist passenger-car manufacturers, produce excess percent passenger sold States. approximately 40,000 franchised distributing produced manufacturers. average investment $100,000. vast strength factory arbitrarily affairs. incorporated prepared dealer's signature. "Dealers few exceptions completely dependent invested real sense captive funds inability convert easily uses, dependence single automobiles, difficulty obtaining contribute toward making easy prey domination factory. standpoint manufacturer, expendable. faults factory-dealer directly attributable superior position manufacturer." S.Rep. 2073, 84th Cong., Sess., (1956). S. Macaulay, Law Balance Power: Manufacturers (1966). Dealers' Day 1221-1225; Ariz.Rev.Stat.Ann. 28-1304.02 (1976); 3060 seq. Colo.Rev.Stat. 12-6-120 Fla.Stat. 320.641 (1977); Ga.Code 84-6610(f) (Supp.1977); Haw.Rev.Stat. 437-33 Idaho 49-1901 (1967); Iowa 322A.2 Md.Transp.Code 15-207 Mass.Gen.Laws Ann., ch. 93B, 4(3) Supp.1978-1979); Neb.Rev.Stat. 60-1422 (1974); N.H.Rev.Stat.Ann. 357-B:4 III(c) N.M.Stat.Ann. 64-37-5 (Supp.1975); N.C.Gen.Stat. 20-305(5)(1978); N.D.Cent.Code 51-07-01.1 Ohio Rev.Code 4517.41 Okla.Stat.Tit. 47, 565(j) (Supp.1978); Pa.Stat.Ann., Tit. 63, 805 (Purdon R.I.Gen.Laws 31-5.1-4 S.C.Code 56-15-40(3)(c) S.D.Comp.Laws 32-6A-5 Tenn.Code 59-1714(c) Vt.Stat.Ann., 9, 4074 (Supp.1977-1978); Va.Code 46.1-547 W.Va.Code 47-17-5 Wis.Stat.Ann. 218.01 (1957 Supp.1978-1979). regulations applicable automobiles 1923. 1923 Cal.Stats., 266, 46(a), (b). apply certification identifying plates condition generally registration requirements. 1957 became provision, licenses continue 1319, 7. addition, unlawful October 1957, act procured license. Ibid. prohibition unlicensed activity extended transporters 1967 557, dealer, transporter certificate issued Department Vehicles. Board, originally decisions Vehicles disciplining Its powers expanded empower deal franchises. expressly "in undue distributor insure fulfill obligations consumers generally." 996, sets forth procedures cancellations, delivery preparation warranty reimbursement. 3060, 3061, 3064, 3065 helpful discussion laws—the promotion dealing protection small business—see Forest Home Dodge, Incorporated Karns, Wis.2d 78, 138 Western Reporter, 2nd 214 which, prescribe territory 320.642 84-6610(f)(8), (10) 437-28(a), (b)(22) 322A.4 Mass.Gen.Laws.Ann., 4(3)(e)(1) Supp. 1978-1979); 20-305(5) (1978); 31-5.1-4(C)(11) 32-6A-3 32-6A-4 59-1714 4074(c)(9) 46.1-547(d) 47-17-5(i) 218.01(3), (8) 507 officer, 3067 n. Veh.Code 11713.2 Supp.1978) provides: "It code branch, distributor, branch code: "(l ) modify, replace, into, relocate, refuse renew Article (commencing 3060) Chapter Division 2." interests economy "necessary [and] states: distribution sale vitally affects promote police branches, distributors, representatives distributors doing pass contention. choose address underlying undisputed purely state, appellants: "117 3062 (July 1974). these, gone .. automatic injunctions ever matured injunction." Brief 13. press sham sole vulnerable suits Transport Trucking Unlimited, 404 508, 609, 642 history constraints coerce variety enactments. cited 101 n.5; H.R.Rep.No.2850, 4-5 (1956); S.Rep.No.2073, 2-4 139 dissenting opinion, post, 121, suggests entry "little value," figures, successfully deterrent function. event, conclude "right depend hearing." 87, 1997, n.1, sought aspiring incur commenced operations. efforts Miller-Tydings Fair Trade 1937 amendment Statutes-at-Large 693, 390-395, 748-751, 1035. currently collected Ante, n.5. three waves, late 1930's, mid-1950's third 1960's early 1970's. waves resulted primarily equalize groups. wave well-established type provisions, involved relating C. Hewitt, Agreements 165-167 (1955); Society—Changing Continuing Relationship Between Large Deal it: Manufacturers, Dealers, Legal System, 1965 Wis.L.Rev. 513-521; Note, Harv.L.Rev. 1239, 1243-1246 (1957); Comment, L.Rev. 1060 token, greater used abusively dealers' competitors justification 11700 (Supp.1978). Cf. 437-28(b)(22)(B) 47-17-5(i)(2) 84-6610(f)(8) 32-6A-3, 59-1714(c)(20) 218.01(3)(8) (1957). (1965), reflective 102 However, considerably uncritically imported latter. similarly mistaken Wisconsin's, "require[s] practices." 108 (emphasis original). recognizes earlier point, necessary" such, allow "restrain appellee[s] [a] [they] enjoyed." mischaracterizes describes "prohibiting 102. express 64-37-5(P) (1976). 218.01(3)(f) statement quoted 105 n.12, reference comparison, (1957), officials deny "adequate representation" baron Pashigian, Distribution Automobiles, Economic Analysis System 151 (1961); 3, 1065-1067. provides, part: "When dealership." (Emphasis added.) defines encompasses addition portion 12, increase 1062-1063. 3066(b) ("The [existing] dealership.") 110 14; 10, 322A.7 3066 contrasted approach affords dealerships, (Supp.1975), community represented inequitable dealer." needs public" Existing afforded injunction, damages, both. 64-37-11, 64-37-13 (Supp.1975). normal civil practice—for complaint, judicial afforded—apply authorized suits. 12-6-120(1)(h), 12-6-122(3) 4(3)(l (west supp.1978-1979). 11705(a)(3), 11705(a)(10), 11713.2(l ), 40000.11 informing "plaintiffs" arises. Put traditional analysis, prospective allows permanently demonstration cause. automatically granted, 3066(a) set usually avoided refers imposed. officer reaches adopting indefinite period reaching refer back directions evidence manner thereof present plaintiffs revealed uncontradicted affidavits documentary exhibits submitted parties. Pasadena terminated 1974, replacement 1975, executed agreement. promptly nearby cities Monrovia Gabriel 22, 29, sent letters advising stating 'you Code, dealership.' letter advised fix accordingly. July 8, assigned dates August "However, requests continuance protesters stipulation, protracted prehearing depositions, reset September 15, 1976. April 13, foregoing recital shows able (although geographically remote) fifteen months (including entire 1976 model year), merit lack protests. understandably assesses thousands dollars damages occasioned "Plaintiff took Montrose section 1973. soon physical inadequate rapidly deteriorating much larger mandatory. learned current Volkswagen adjacent Canada available. Negotiations begun contingent finding operation, finance respective moves. After time-consuming negotiations, reached January 16, later, Tujunga, respectively, saying, effect, 'I protest,' February 6, 1976, responded enjoining About weeks 23, 'tentatively' June 25, 21, formal confirming dates. worthy note here scheduled four issued. appears supplemental affidavit 17, 20, Then began thirty-day waiting approved finally lifted (Vehicle 3067). period, leasehold premises longer available failure possession lease. thereupon 'gave up' starting again business." 439-440 (CD Cal.1977) (three-judge court). 84, 85, 1996, ("[I]t well settled temporary, nonfinal nonetheless 'deprivation' Amendment"). 93; 212; 379; 563. distinguished Carolene Products 304 144, 152-153, 4, 778, 784-785 82 1234, carefully distinction applying E. Georgia Finishing, Di-Chem, 419 601, 608, 719, 723, 751; U.S., 89-90, S.Ct., 1998-1999. despite curious citation low level rights, implying endorsed modern relaxation pleading never receded complaints "fair notice" them. Conley Gibson, 355 41, 48, 99, 103, 80. Mitchell Grant 416 600, 615-617, 1895, 1904, 406; Gibson Berryhill, 411 578-579, 1689, 1697-1698, 488; Washington ex rel. Seattle Title Roberge, 278 116, 121-122, 50, 51-52, 73 210; Eubank Richmond, 226 137, 143-144, 76, 77, 156. great store Legislature, body, stands behind But, indicates, abdication prone themselves. reads differently, 106, imply defect open obtained agency. basis. If, mandates party's party.

Classification Label: 3