United States Court of Appeals
For the First Circuit
No. 00-1867
ALMA I. PEREZ ET AL.,
Plaintiffs, Appellants,
v.
VOLVO CAR CORPORATION,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and Acosta,* Senior District Judge.
Gordon T. Walker, with whom Marc E. Sorini, Laura McLane,
and McDermott, Will & Emery were on brief, for appellants.
Gael Mahony, with whom Alexander W. Moore, Shannon McCarthy
Jandorf, Joseph C. Lyons, Hill & Barlow, Rubén T. Nigaglioni,
Veronica Ferraiuoli Hornedo, Joanne Habib Figueroa, and
McConnell Valdes were on brief, for appellee.
May 2, 2001
_____________
*Of the District of Puerto Rico, sitting by designation.
SELYA, Circuit Judge. In this case, purchasers of
certain Volvo automobiles claim that they were tricked into
overpaying for their cars. The district court, referring to our
decision in Bonilla v. Volvo Car Corp., 150 F.3d 62 (1st Cir.
1998), declared that the doctrine of res judicata barred this
suit and granted the manufacturer's motion for summary judgment.
Although we disagree with the district court's rationale, we
affirm the entry of summary judgment on an alternate ground.
I. BACKGROUND
The complaint in this case alleges that Volvo Car
Corporation (a Swedish automobile manufacturer) acted in concert
with Trebol Motors (its exclusive importer/distributor and
principal dealer in Puerto Rico),1 and other affiliated
individuals and firms, to violate the Racketeering Influenced
and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962. The
gravamen of the plaintiffs' complaint involves allegations that
Volvo assisted in the commission of a series of fraudulent acts.
This is essentially the same approach taken by the Bonilla
plaintiffs in their earlier suit against Volvo, and the reader
who desires more information about how the RICO statute operates
1
Volvo actually dealt with two related entities, Trebol
Motors Corporation and Trebol Motors Distributor Corporation.
Because the distinction is immaterial here, we refer to these
entities, collectively, as "Trebol."
-3-
in this context should consult that opinion. See Bonilla, 150
F.3d at 66-67.
In their third amended complaint, the Bonilla
plaintiffs alleged five frauds. See id. at 67-75. This case is
more narrowly focused. The particular fraud allegations that
matter here are those that we previously characterized as
involving double invoicing and disclosure labeling. Id. at 72-
75. For present purposes, these merge into a single scheme,
which we sometimes call "sticker fraud."
As Bonilla makes clear, id. at 72-74, this scheme had
its genesis in the triangulation of the manufacturer-dealer
relationship caused by the interposition of a Liechtenstein-
based corporation, Auto und Motoren Aktiengesellschaft (AUM),
into that relationship. AUM's ostensible role was as a
guarantor of Trebol's debts to Volvo. The guarantee worked this
way: when Trebol ordered motor vehicles, Volvo would ship them
to Puerto Rico, sending duplicate invoices to both Trebol and
AUM. AUM would pay Volvo. It also would re-invoice Trebol for
the same vehicles, but at higher prices (ostensibly to cover
AUM's "guarantee fee" and a smaller "processing fee").2
2
Trebol actually remitted the higher amounts to AUM,
resulting in the accumulation of a pool of excess funds in
Liechtenstein. The plaintiffs allege that some of these funds
were funneled back to Trebol or its principals. There is no
proof, however, either that Volvo knew of any such kickbacks or
-4-
The instant case centers on the plaintiffs' allegation
that the double invoicing permitted Trebol to misrepresent
information on disclosure labels (commonly called "stickers")
mandated by law. From 1972 to 1992, a Puerto Rico statute (Law
77) required automobile dealers to affix to each vehicle held
for sale a label disclosing various kinds of data, including the
name and address of the selling entity, the factory cost of the
vehicle, and the "[r]etail price in Puerto Rico suggested by the
seller." 23 P.R. Laws Ann. § 1023 (1987) (repealed 1992). A
parallel federal law also required (and still requires) certain
disclosures. See 15 U.S.C. §§ 1231-1233. The plaintiffs —
Myrna Font, Angel Muñoz, Alma Perez, Venancio Rodríguez, María
Rodríguez, Francisco Ramos, Marina Resto, Francisco Cortez, Ada
Moreno, Efraín González, Migdalia Berdecia, José Colón, and
Mirta Rivera3 — are persons who purchased Volvo automobiles of
the 700, 800, or 900 series in Puerto Rico on various dates
ranging from 1985 to 1993. They maintain — as did the Bonilla
plaintiffs, 150 F.3d at 72-74 — that AUM functioned primarily as
a device to permit Trebol to boost the prices paid by consumers.
that Volvo officials received payments on the side.
3
Certain of the plaintiffs are married to each other, and a
number of conjugal partnerships also are designated as parties
plaintiff.
-5-
Consistent with this theme, the plaintiffs aver that
Trebol's stickers reflected artificially high "factory costs"
and "manufacturer's suggested retail prices" because Trebol
based those calculations on the inflated figures contained in
the AUM invoices. They further allege that Trebol, which had
copies of the original Volvo-prepared invoices, knew the actual
figures and, consequently, knew that the posted sticker prices
were false and misleading. For their part, the plaintiffs were
exposed to, and duped by, the bogus cost figures displayed on
the stickers of the cars that they bought, and were damaged in
that those fraudulent misrepresentations marked the starting
point for negotiations as to price and caused them to pay more
than they otherwise would have.
Since Trebol has gone bankrupt and is no longer
involved in this case, the plaintiffs' guns are trained on
Volvo. They allege that Volvo knew of, and helped facilitate,
Trebol's nefarious activities by, among other things, allowing
Trebol to misrepresent its costs and condoning Trebol's
arrangement with AUM even though Volvo knew that the guarantees
issued by AUM were worthless. Volvo adamantly denies these
accusations.
The district court stayed proceedings in this case
pending resolution of the Bonilla appeals. That was prudent
-6-
because the Bonilla plaintiffs, comprising a class of persons
who had purchased Volvo automobiles of the 200 series, had
leveled virtually indistinguishable charges and, moreover, had
prevailed at trial. Eventually, however, this court found, as
a matter of law, that the Bonilla plaintiffs had offered
insufficient evidence of Volvo's awareness of, or participation
in, the ongoing fraud. See Bonilla, 150 F.3d at 72-76.4 Volvo
then moved for summary judgment in this case, alleging that
here, as in Bonilla, the plaintiffs had failed to tie Volvo to
the fraudulent scheme. The plaintiffs opposed the motion, but
the district court granted it, adverting to our decision in
Bonilla and invoking the doctrine of res judicata. The
plaintiffs moved unsuccessfully for reconsideration and then
filed this timely appeal.
II. THE SUMMARY JUDGMENT STANDARD
4
After mandate issued, the Bonilla plaintiffs docketed a
motion in the district court entitled "Informative Motion
Regarding Fraud by Volvo Sufficient to Warrant Further Discovery
and Potentially Re-Open the Judgment." In support of this
motion, they filed the Gonzalez affidavit, discussed infra Part
IV(A). On April 16, 2001, the district court (Pieras, J.)
granted the motion in part, allowing discovery to go forward on
the issue of Volvo's alleged misconduct. The court specifically
reserved decision as to whether it would (or could) reopen the
judgment and order a new trial. Notwithstanding these ongoing
proceedings, the Bonilla judgment may be regarded as final for
res judicata purposes. See Cruz v. Melecio, 204 F.3d 14, 20-21
(1st Cir. 2000); see also 18 James Wm. Moore et al., Moore's
Federal Practice §§ 131.20[2][c] (3d ed. 1999).
-7-
This appeal stems from an order granting summary
judgment. Since we have written at length about the
jurisprudence associated with that procedural device, e.g.,
McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 314-15 (1st
Cir. 1995) (collecting cases), an outline suffices here.
A district court may enter summary judgment only to the
extent that "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law." Fed. R. Civ. P. 56(c). To
determine whether these criteria have been met, a court must
pierce the boilerplate of the pleadings and carefully review the
parties' submissions to ascertain whether they reveal a
trialworthy issue as to any material fact. Grant's Dairy-Me.,
LLC v. Comm'r of Me. Dep't of Agric., Food & Rural Res., 232
F.3d 8, 14 (1st Cir. 2000). In applying this screen, the court
must construe the record and all reasonable inferences from it
in favor of the nonmovant (i.e., the party opposing the summary
judgment motion). Suarez v. Pueblo Int'l, Inc., 229 F.3d 49, 53
(1st Cir. 2000). In this formulation, an absence of evidence on
a critical issue weighs against the party — be it the movant or
the nonmovant — who would bear the burden of proof on that issue
-8-
at trial. See Torres Vargas v. Santiago Cummings, 149 F.3d 29,
35-36 (1st Cir. 1998); Garside v. Osco Drug, Inc., 895 F.2d 46,
48 (1st Cir. 1990).
In appraising summary judgment orders, an appellate
court applies essentially the same standards. See Werme v.
Merrill, 84 F.3d 479, 482 (1st Cir. 1996). Withal, the
appellate tribunal is not wed to the trial court's reasoning.
Because appellate review is plenary, the court of appeals may,
if the occasion arises, "reject the rationale employed by the
lower court and still uphold its order for summary judgment."
Houlton Citizens' Coalition v. Town of Houlton, 175 F.3d 178,
184 (1st Cir. 1999). In other words, we may affirm the entry of
summary judgment on any ground made manifest by the record. See
Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991).
Against this backdrop, we divide the discussion that
follows into two parts. First, we examine the district court's
stated rationale. Finding that rationale unpersuasive, we
address Volvo's alternate line of defense.
III. THE DISTRICT COURT'S RATIONALE
As said, the district court decided this case on the
basis of res judicata. Federal law determines the preclusive
effect of a judgment previously entered by a federal court. See
Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d
-9-
26, 37 (1st Cir. 1998). Under federal law, the doctrine of res
judicata dictates that "a final judgment on the merits of an
action precludes the parties or their privies from relitigating
issues that were or could have been raised in that action."
Allen v. McCurry, 449 U.S. 90, 94 (1980). Three conditions must
be met in order to justify an application of the doctrine: "(1)
a final judgment on the merits in an earlier suit, (2)
sufficient identicality between the causes of action asserted in
the earlier and later suits, and (3) sufficient identicality
between the parties in the two suits." Gonzalez v. Banco Cent.
Corp., 27 F.3d 751, 755 (1st Cir. 1994).
The district court concluded that these conditions had
been fulfilled. As to the first two conditions, this conclusion
is irreproachable: Bonilla went to final judgment, and there is
an apparent congruence between the causes of action asserted
there and here. The third condition, however, is not so easily
overcome.
The lower court thought that the parties in the two
cases — Bonilla and the case at bar — were to all intents and
purposes identical. But in arriving at this conclusion, the
court mistakenly relied on a proposed description of the Bonilla
class, derived from the Bonilla plaintiffs' complaint. The
proposal importuned the court to certify a class of plaintiffs
-10-
that included the named plaintiffs and "all other persons who,
as a direct result of defendants' scheme, . . . bought or
acquired from defendants motor vehicles of the Volvo model 240
GLE and/or any other Volvo model." Withal, the district court
in Bonilla eschewed this proposal. Instead, it ultimately
certified a narrower class composed of "all persons who
purchased or acquired from any of the defendants from 1983 to
the present, Volvo motor vehicles sold as, or represented to be,
new or used 200 Series [vehicles]."
This deviation shrank the boundaries of the Bonilla
class and, in the process, destroyed any basis for a claim that
the Bonilla class encompassed the plaintiffs in this case
(purchasers of Volvo motor vehicles in the 700, 800, or 900
series). The two groups are entirely separate and distinct. It
follows inexorably that identicality of parties does not exist.
While this descriptive difference undermines the
district court's stated rationale, it does not altogether
preclude the possible applicability of res judicata. There are
recognized proxies for identicality of parties, see Gonzalez, 27
F.3d at 757-63, and we briefly explore the record in an effort
to detect their presence.
One such proxy arises when a party has had a
"significant degree of effective control in the prosecution or
-11-
defense of the [earlier] case — what one might term, in the
vernacular, the power — whether exercised or not — to call the
shots." Id. at 758. No such control existed here. By
definition, the plaintiffs in the two cases are owners of
different models of automobiles. The one noteworthy commonality
is that the same attorneys represented the plaintiffs in both
cases. The law is settled, however, that the appearance of
common counsel, without more, does not prove substantial
control. Id. at 759.
The other possible proxy for identicality of parties
is virtual representation. This looks promising at first blush.
There is, in a sense, an identity of interests between the two
sets of plaintiffs: both sued the same manufacturer for damages
suffered as a result of the same alleged chicanery. In order
for this proxy to pertain, however, there must be something more
than a mere confluence of interests (or else, a manufacturer's
successful defense of a product liability suit would bar other
unrelated persons from pressing claims arising out of the same
product defect). For nonparty claim preclusion to operate on
this level, the party urging preclusion (typically, the
defendant) must demonstrate, at a bare minimum, that the
plaintiffs in the second suit had notice of, and an opportunity
to participate in, the earlier suit. See id. at 761. Put
-12-
another way, the doctrine of virtual representation cannot be
used to bar the claim of a person who was not a party to the
earlier suit unless that person, at the least, had actual or
constructive notice of the earlier suit and, thus, a chance to
join it.5 See id.
The case at hand cannot qualify under this rubric. The
record does not suggest (and Volvo does not argue) that the
Volvo owners here (purchasers of vehicles in Volvo's 700, 800,
or 900 series) had either actual or constructive notice of the
Bonilla litigation (brought by purchasers of Volvos in the 200
series).6 Hence, virtual representation is not a viable option
here.
That ends this aspect of the matter. There is no
credible basis for applying res judicata principles in their
5
We do not mean to suggest that notice of, and an
opportunity to join, an earlier suit is all that is required for
virtual representation. These are, however, the most
abecedarian requirements — and since they are not satisfied
here, we need go no further.
6
Although this case and the earlier case involved different
vehicle models, one plaintiff — Efraín González — straddles both
cases because he owned a Volvo of the 200 series as well as a
Volvo of the 700 series. We do not regard this minuscule
overlap as significant. González was not a named plaintiff in
the Bonilla case, and the class notice that he received
specifically stated that the suit involved only Volvos in the
200 series. Nothing in the record suggests that he was put on
notice that an adjudication of the claims before the Bonilla
court would preclude later claims involving other Volvo
automobiles.
-13-
classic iteration to bar the plaintiffs' suit. By like token,
the facts necessary to support related theories of nonparty
claim preclusion do not lurk in the penumbra of this record.
Accordingly, we disavow the district court's stated rationale.
IV. THE ALTERNATE LINE OF DEFENSE
Volvo hypothesizes that it was entitled to brevis
disposition on an alternate ground: insufficiency of the
evidence. We test this hypothesis.
As we have said, the plaintiffs' claim against Volvo
builds upon the RICO statute. Both sides agree that this claim
depends, inter alia, on the plaintiffs' ability to show the
conduct of an "enterprise" through a "pattern of racketeering
activity." 18 U.S.C. § 1962(c). In turn, this requires a
corollary showing of "at least two acts of racketeering
activity" within ten years of each other. Id. § 1961(5). For
summary judgment purposes, the plaintiffs have attempted to
satisfy this "predicate act" requirement by proving numerous
instances of mail and wire fraud. See id. § 1961(1)(B)
(defining racketeering activities to include mail and wire
fraud). As a practical matter, this strategic choice makes a
showing of attribution — that is, Volvo's complicity in no fewer
than two of the predicate acts — crucial to the success of the
-14-
plaintiffs' RICO claim. See Bonilla, 150 F.3d at 66; Ahmed v.
Rosenblatt, 118 F.3d 886, 888-89 (1st Cir. 1997).
To prove mail or wire fraud attributable to Volvo, the
plaintiffs must adduce evidence of (1) a scheme to defraud; (2)
Volvo's knowing and purposeful participation in the scheme,
intending to defraud; and (3) the use of the mails or interstate
wire or radio communication in furtherance of the scheme.
Bonilla, 150 F.3d at 66; United States v. Cassiere, 4 F.3d 1006,
1011 (1st Cir. 1993); McEvoy Travel Bureau, Inc. v. Heritage
Travel, Inc., 904 F.2d 786, 790 (1st Cir. 1990). Thus, in order
to survive summary judgment, the plaintiffs must proffer
competent evidence on each of these three elements — evidence
which, when taken in the light most favorable to them, suffices
to create a jury question. This quantum of evidence is
analogous to the quantum of evidence needed at trial to defeat
a Rule 50 motion for judgment as a matter of law. See Cont'l
Grain Co. v. PRMSA, 972 F.2d 426, 431 (1st Cir. 1992). Given
that comparability, Bonilla (which was decided under the
"judgment as a matter of law" standard) serves as a useful
prototype for the inquiry we must undertake.
In Bonilla, 150 F.3d at 72-75, the plaintiffs' "sticker
fraud" evidence was adequate as to the first and third elements,
but fizzled on the second; we ruled that the evidence did not
-15-
support a finding that the acts of mail or wire fraud could be
attributed to Volvo. Essentially the same evidence has been
proffered here, and Volvo does not raise any questions of
evidentiary sufficiency as to the first and third elements of
the plaintiffs' prima facie case. We assume, therefore, that
the record establishes trialworthy issues as to the existence of
the "sticker fraud" scheme and the repeated use of the mails and
international telephone lines to facilitate that scheme. Thus,
we train the lens of our inquiry on the second element: Volvo's
knowing and willful participation in the scheme (and its intent,
if any, to defraud).
Bonilla decided, as a matter of law, that the
plaintiffs there had offered insufficient evidence to implicate
Volvo in the fraudulent scheme. See id. at 72-76. Although
Bonilla has no res judicata effect here, see supra Part III, we
nonetheless are bound to follow it, under principles of stare
decisis, insofar as the record now before us does no more than
replicate the same facts that were before us in Bonilla. See
Stewart v. Dutra Constr. Co., 230 F.3d 461, 467 (1st Cir. 2000)
(explaining the operation of stare decisis).
The plaintiffs do not quarrel with this concept, but,
rather, point to new information concerning Volvo's role
(information that was not before this court in Bonilla). This
-16-
new material comprises (1) the affidavit of Ricardo Gonzalez
Navarro (Gonzalez), and (2) two internal Volvo e-mails. We
consider these items sequentially, with a view toward
determining whether, singly or in combination, they fill the
void that the Bonilla court perceived.
A. The Gonzalez Affidavit.
To place the first of these items into perspective, it
is helpful to understand its provenance. Gonzalez was a member
of the family that owned and operated Trebol and, beginning in
1988, served as Trebol's general manager. When the Bonilla
litigation began, Trebol, Gonzalez, and certain of Gonzalez's
relatives were named as defendants, along with Volvo. Years of
acrimonious pretrial proceedings ensued and, somewhere along the
line, Gonzalez opted to depart for Spain. He did not testify in
the Bonilla lawsuit.
Notwithstanding Gonzalez's absence (or, perhaps,
because of it), the Bonilla plaintiffs prevailed at trial. They
lost on appeal. Endeavoring to gain a new trial, they then
"turned" Gonzalez and secured an affidavit from him (signed and
sworn to on September 7, 1999) as part of a negotiated
settlement of the pending lawsuits brought by the Bonilla
plaintiffs against Gonzalez, his family members, and their
business interests. The Bonilla plaintiffs' efforts to obtain
-17-
a new trial remain unresolved, see supra note 4, but the details
need not concern us.
The plaintiffs here submitted the same affidavit —
which we call "the Gonzalez affidavit" — as part of their
opposition to Volvo's motion for summary judgment. Inasmuch as
the affidavit was not before the court of appeals in Bonilla, it
qualifies as new matter — but it is nonetheless controversial.
Like dueling swordsmen, the parties thrust and parry concerning
both the admissibility of this new matter and its probative
force. Volvo asserts that the affidavit should not be
considered at all because it does not conform to the
requirements of the Civil Rules. Whatever portions of the
affidavit avoid this objection, Volvo says, prove nothing of
consequence. The plaintiffs counter that Volvo has forfeited
any right to raise an objection because it did not move to
strike the affidavit. In all events, the plaintiffs urge us to
find that the affidavit both satisfies the baseline requirements
for admissibility and proves a great deal.
In the interest of orderliness, we start our appraisal
with the question of whether Volvo properly preserved its right
to object to the statements contained in the Gonzalez affidavit.
We then mull the admissibility of those statements. Finally, we
assess their probative force.
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1. The Need for a Motion to Strike. The law as to
what is required to preserve a party's right to object to the
admissibility of statements contained in an affidavit proffered
in connection with a summary judgment motion is not crystal
clear. The plaintiffs invite us to apply literally language
lifted from one sentence in this court's opinion in Lacey v.
Lumber Mutual Fire Insurance Co., 554 F.2d 1204, 1205 (1st Cir.
1977) (stating that, in such circumstances, a party "must move
to strike an [allegedly violative] affidavit," and that "if he
fails to do so, he will waive his objection," thus opening the
door for the court, absent "a gross miscarriage of justice," to
"consider the defective affidavit") (citations and internal
quotation marks omitted). This invitation would, however, make
matters murkier and, in the bargain, require us to ignore the
Lacey court's reasoning. Accordingly, we decline the
invitation.
Statements of law should be taken in context and
applied in a practical, commonsense manner. We believe that
what is required to preserve a party's rights vis-à-vis an
allegedly deficient affidavit is for the dissatisfied party to
(a) apprise the trial court, in a conspicuous manner and in a
timely fashion, that she considers the affidavit defective, and
(b) spell out the nature of the ostensible defects clearly and
-19-
distinctly. Whether the dissatisfied party fulfills these
requirements by means of a motion to strike or in some
substantially equivalent way (say, by an objection or, as here,
in a legal memorandum urging the granting of summary judgment
notwithstanding the affidavit) is of little moment.
This rule is fully consistent with the Lacey court's
reasoning.7 There the court's principal concerns plainly related
to notice and fair play, not to the form which a challenge to an
affidavit might take. Thus, in explicating its rationale, the
court stated:
Were a summary judgment to be set aside
[where no complaint about the affidavit was
lodged in the district court], a party could
play dog in the manger, making no response
to a movant's affidavits with the chances of
both . . . defeating the motion and, if
unsuccessful, of later setting it aside.
Id.
The rule that, in summary judgment proceedings,
something less than a formal motion to strike can suffice to
preserve an objecting party's rights vis-à-vis a defective
affidavit also finds favor in case law from other circuits.
7
This consistency is adequately evinced by the Lacey court's
citation, with approval, 554 F.2d at 1205, of Noblett v. General
Electric Credit Corp., 400 F.2d 442, 445 (10th Cir. 1968), in
which the Tenth Circuit hinged waiver in this sort of situation
to a failure to make "a motion [to strike] or other objection"
(emphasis supplied).
-20-
See, e.g., Williams v. Evangelical Ret. Homes, 594 F.2d 701, 703
(8th Cir. 1979); Associated Press v. Cook, 513 F.2d 1300, 1303
(10th Cir. 1975). Equally as important, the rule coheres with
our post-Lacey jurisprudence. For example, in Maiorana v.
MacDonald, 596 F.2d 1072 (1st Cir. 1979), we found an issue
anent the form of affidavits preserved for review
notwithstanding the defendant's failure to file a motion to
strike. We premised our ruling on two facts: a codefendant had
interposed a written objection to the challenged affidavits, and
the district court had noted the ostensible defects and taken
appropriate action. Id. at 1079 n.9; see also Davis v. Sears,
Roebuck & Co., 708 F.2d 862, 864 (1st Cir. 1983) (suggesting, at
least inferentially, that an oral objection would suffice to
preserve such an issue for appeal).
We need not tarry. While Volvo did not move to strike
the Gonzalez affidavit, it objected seasonably, strenuously, and
specifically to critical portions of the affidavit on the ground
that those excerpts violated Federal Rule of Civil Procedure
56(e). In that fashion, Volvo straightforwardly brought the
claimed shortcomings in the affidavit to the district court's
(and the plaintiffs') attention in a timeous manner. Given
these detailed objections, we conclude that Volvo has
-21-
satisfactorily preserved its right to challenge the Gonzalez
affidavit in this proceeding.
2. Admissibility. We next inspect the Gonzalez
affidavit to determine the admissibility of the statements
contained therein. For ease in reference, we have reprinted the
material portions of the affidavit as an appendix to this
opinion. In so doing, we have omitted paragraphs 21 through 27,
all of which deal with aspects of the broader array of claims
asserted by the Bonilla plaintiffs (the so-called "five
frauds"), but not with the sticker fraud scheme.
The question of admissibility is governed by Rule
56(e). That rule provides:
Supporting and opposing affidavits shall be
made on personal knowledge, shall set forth
such facts as would be admissible in
evidence, and shall show affirmatively that
the affiant is competent to testify to the
matters stated therein.
Fed. R. Civ. P. 56(e). The rule requires a scalpel, not a
butcher knife. The nisi prius court ordinarily must apply it to
each segment of an affidavit, not to the affidavit as a whole.
Akin v. Q-L Invs., Inc., 959 F.2d 521, 531 (5th Cir. 1992) ("On
a motion for summary judgment, the district court should
disregard only those portions of an affidavit that are
inadequate and consider the rest."). We therefore take a
-22-
selective approach to the Gonzalez affidavit, intending to
disregard those parts of it that are inadmissible and to credit
the remaining portions. See Casas Office Machs., Inc. v. Mita
Copystar Am., Inc., 42 F.3d 668, 682 (1st Cir. 1994).
In conducting this tamisage, personal knowledge is the
touchstone. See Sheinkopf v. Stone, 927 F.2d 1259, 1271 (1st
Cir. 1991) ("It is apodictic that an affidavit . . . made upon
information and belief . . . does not comply with Rule 56(e).")
(citations and internal quotation marks omitted). Of course,
the requisite personal knowledge must concern facts as opposed
to conclusions, assumptions, or surmise. Stagman v. Ryan, 176
F.3d 986, 995 (7th Cir. 1999). While the line between facts and
non-facts often seems blurry, courts nonetheless must strive to
plot it. Cf. Dartmouth Review v. Dartmouth Coll., 889 F.2d 13,
16 (1st Cir. 1989) (explaining, in the context of a motion to
dismiss, that "facts are susceptible to objective verification"
whereas conclusions "are empirically unverifiable in the usual
case").
The Gonzalez affidavit is a mixed bag. Some portions
of it plainly meet the requirements of Rule 56(e), while others
obviously do not. For instance, Gonzalez's statements about his
job responsibilities and Trebol's overall working relationship
with Volvo (e.g., Appendix, ¶¶ 2, 3, 5) are based on personal
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knowledge and, accordingly, are properly considered for summary
judgment purposes. But his statements anent the origins of
Trebol's relationship with AUM (Appendix, ¶ 7) are a different
matter. Because the record makes manifest that the relationship
began before Gonzalez became Trebol's general manager, his
statements about the early years of the Volvo/Trebol/AUM
arrangement cannot properly be considered.
This comparison illustrates the general nature of what
must be done to separate wheat from chaff. We refrain, however,
from classifying every statement in the Gonzalez affidavit. The
proof of the pudding lies in those (relatively few) paragraphs
which, if admissible, tend to prove Volvo's complicity in the
sticker fraud. We turn, then, to those paragraphs, assuming,
for argument's sake, that the remainder of the affidavit passes
muster.
Paragraph 8 reads:
Volvo knew about the higher AUM invoice cost
figures. From my personal discussions with
various Volvo representatives, I know that
Volvo was fully aware of the relationship
between Trebol and AUM, including the nature
and amount of the guarantees.
If admissible, these statements are little short of damning. We
conclude, however, that they cannot be considered. Although the
statements purport to be based on personal knowledge, they are
totally lacking in specificity about the identity of the "Volvo
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representatives" with whom Gonzalez ostensibly spoke, when those
alleged conversations occurred, what was said, how Volvo "knew
about the higher AUM invoice cost figures," and how Gonzalez
"kn[e]w" the extent of Volvo's knowledge. Affidavits purporting
to describe meetings or conversations need not spell out every
detail, but to receive weight at the summary judgment stage they
must meet certain rudiments. Statements predicated upon
undefined discussions with unnamed persons at unspecified times
are simply too amorphous to satisfy the requirements of Rule
56(e), even when proffered in affidavit form by one who claims
to have been a participant. See Jefferson Constr. Co. v. United
States, 283 F.2d 265, 267 (1st Cir. 1960); Alger v. United
States, 252 F.2d 519, 521 (5th Cir. 1958); see also 11 James Wm.
Moore et al., Moore's Federal Practice ¶ 56.14[1][d] (3d ed.
1997) ("The affidavit, in addition to presenting admissible
evidence, must be sufficiently specific to support the affiant's
position.").
For similar reasons, we find the statements contained
in paragraphs 9, 14, 16, and 20 of the Gonzalez affidavit to be
insufficiently supported with particularized factual
information. The same holds true for the last two sentences of
paragraph 19. Although these statements purport to deal with
Volvo's knowledge of ongoing events, they are conclusory rather
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than factual. See, e.g., Appendix ¶ 20 ("[T]here is no doubt
that Volvo did in fact know of the stickers' contents."). Such
gauzy generalities are not eligible for inclusion in the summary
judgment calculus.
We add a coda. We think it bears mentioning that, in
December of 1999 — three months after Gonzalez switched sides
and executed the affidavit — the parties took his deposition in
this case. Although both sides offer an occasional reference to
the deposition, the complete transcript is not part of the
summary judgment record. More importantly, the plaintiffs do
not claim that Gonzalez, when deposed, divulged the specifics
(names, dates, places, and the like) that are so conspicuously
absent from his affidavit. The plaintiffs' failure to fill the
gaps in the Gonzalez affidavit, despite ample opportunity to do
so, seals the deal.
3. Probative Value. We proceed at last to the
question of whether the admissible portions of the Gonzalez
affidavit (all the challenged statements other than those
specifically proscribed above), when added to the proof
marshaled at trial by the Bonilla plaintiffs, create a genuine
issue of material fact anent Volvo's knowledge of the fraudulent
scheme (and, thus, allow the plaintiffs to avert the swing of
the summary judgment ax). For the plaintiffs to achieve this
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safe haven, the proof must consist of something more than
grounds for suspecting that Volvo knew of the ongoing
machinations. See Dow v. United Bhd. of Carpenters & Joiners,
1 F.3d 56, 58 (1st Cir. 1993) (holding that "unsupported
speculation" will not suffice to block summary judgment);
Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st
Cir. 1990) (same). The mustered evidence must be significantly
probative of specific facts. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249-50 (1986); Sheinkopf, 927 F.2d at 1262.
The decisive question here reduces to whether the
redacted Gonzalez affidavit, when married to the evidence
adduced during the Bonilla trial, is "significantly probative"
on the issue of Volvo's complicity in the fraud. We know from
the surviving portions of the Gonzalez affidavit that Volvo had
a close working relationship with Trebol, including frequent
inter-staff communications; that Volvo representatives regularly
visited Trebol's showroom in Puerto Rico (and from time to time
saw stickers displayed on vehicles offered for sale); that Volvo
executives periodically reviewed Trebol's financial statements;
that Volvo knew of, and did not object to, the Trebol-AUM
guarantee arrangement; that Volvo produced and sent to both AUM
and Trebol original invoices for each motor vehicle shipped;
that AUM, in turn, re-invoiced Trebol, invariably showing a
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higher per-car dealer cost; that Volvo loaned AUM $2,700,000 in
a three-way transaction among Volvo, AUM, and Trebol;8 that Volvo
representatives attended several meetings at which Trebol's
entire cost structure (including the cost of the AUM guarantee)
was discussed; and that Volvo officials offered Trebol their
views as to acceptable pricing policies. Taken in the
aggregate, this information fleshes out the scenario that was
before the court of appeals in Bonilla, but adds nothing very
substantial to it.
To be sure, the new material shows that Volvo was
involved in some of the financial aspects of Trebol's business
and that Volvo had the capability to discover the scam if it had
sought to do so. But this is a fraud case, not a negligence
case, and the new matter falls well short of proving that Volvo
was aware of the fraud — let alone that Volvo participated in it
or knowingly abetted it. The most that the redacted affidavit
reveals is that Volvo knew certain cars were being priced higher
because of a costly guarantee arrangement with a third party.9
8
This transaction occurred in 1993, some eight years after
the commencement of the guarantee relationship. By then, all
the plaintiffs had purchased their Volvos. If the transaction
proves anything, it tends to prove that Volvo did not know, even
at that late date, that AUM was a dummy corporation. Elsewise,
why would Volvo lend AUM so large a sum?
9We note that Gonzalez's carefully crafted affidavit never
once says that any price-inflation practices actually were
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With the other evidence of record, this may be enough to prove
that Volvo condoned an inefficient business practice, but it is
not enough to prove that Volvo knowingly condoned a fraud.
Indeed, neither the Gonzalez affidavit nor any other piece of
the plaintiffs' proof so much as suggests a reason why Volvo
might have thought that the AUM guarantee was a tool to help
Trebol bilk car buyers.
In sum, while the redacted Gonzalez affidavit provides
more detail on some points, it is essentially cumulative of the
evidence that was before the Bonilla court. Where, as here, the
nonmovant has the burden of proof on a critical issue and the
evidence that she proffers in opposition to summary judgment is
so vague that she could not prevail at trial, the motion must be
granted. See Liberty Lobby, 477 U.S. at 252; Yusefzadeh v.
Ross, 932 F.2d 1262, 1264-65 (8th Cir. 1991); cf. Smith v. F.W.
Morse & Co., 76 F.3d 413, 425 (1st Cir. 1996) (holding that "a
mere scintilla of evidence is not enough to forestall a directed
verdict"). Because the Gonzalez affidavit is not significantly
probative of Volvo's complicity in the ongoing sticker fraud
scheme, the record still lacks evidence indicating that Volvo
knowingly and willingly participated therein.
B. The Internal E-mails.
discussed with Volvo officials.
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Our journey continues. After the district court
granted summary judgment, the plaintiffs moved for
reconsideration. They not only disputed the court's res
judicata analysis but also cited, for the first time, two
internal Volvo e-mails that discussed employees' concerns about
the actual value of the AUM guarantee. The district court
denied the motion without comment. The plaintiffs assign error,
arguing (insofar as relevant to Volvo's alternate line of
defense) that the e-mails make a dispositive difference on the
issue of Volvo's knowledge of the fraud. Volvo says that the
proffered e-mails are too late and, in all events, prove too
little.
In the peculiar circumstances of this case, we reject
Volvo's assertion that the plaintiffs proffered the e-mails too
late. Although the e-mails were not called to the district
court's attention until after the court had granted summary
judgment, the plaintiffs seem relatively blameless. After all,
Volvo did not produce the e-mails to the plaintiffs until
January 2000 (the same month that Volvo filed its summary
judgment motion) — and then only in Swedish. Given the timing,
the sheer volume of documents involved in the case, and the need
for translation, fundamental fairness counsels in favor of
treating the e-mails as newly-discovered evidence within the
purview of Federal Rule of Civil Procedure 59(e). See Aybar v.
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Crispin-Reyes, 118 F.3d 10, 16 (1st Cir. 1997) (explicating the
reach of Rule 59(e)). Thus, timeliness is not a significant
issue.
We likewise reject Volvo's suggestion that we should
apply a deferential standard of review to the district court's
denial of reconsideration. Although we typically review a
district court's disposition of a Rule 59(e) motion for abuse of
discretion, e.g., Vasapolli v. Rostoff, 39 F.3d 27, 36 (1st Cir.
1994), this is not the typical case. The court below never
really considered the contents of the plaintiffs' proffer,
instead basing its denial of reconsideration on the mistaken
belief that res judicata barred the action. This was an error
of law, subject to de novo review.
The question then becomes how best to remedy this
error. We could remand to allow the lower court to ponder the
significance vel non of the e-mails, but we prefer, in the
interests of judicial economy, to resolve a quintessentially
legal judgment: do the e-mails have enough probative value to
ward off summary judgment? If they do, then the error requires
that we vacate the existing order for summary judgment. If they
do not, then any error in the denial of reconsideration was
harmless.
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The plaintiffs assert that the e-mails constitute
"smoking gun" evidence of Volvo's culpability.10 We think that
this colorful metaphor grossly overstates their probative force.
The first e-mail, transmitted on September 12, 1991, reads as
follows:
Marie, the latest news is that the guarantee
that [Volvo] has had for many years is
valueless, we must have a discussion with
Antonio Pauli [a Volvo representative whose
responsibilities included dealing with
Trebol] when he has returned!
The second e-mail, sent on October 2, 1991, reads as follows:
The value of Trebol Motors' guarantee = 0.
We have had a guarantee from a company in
Liechtenstein (since 1986) that should cover
our risks in P[ue]rto Rico, after studying
this guarantee of payment, I can only come
to the conclusion that, unfortunately, it is
not worth more than paper it is written on!
Before our next customer visit, we must take
up the question of security of payment with
Trebol Motors immediately.
The trail goes cold at this point; the plaintiffs have supplied
no information as to what (if any) follow-up the e-mails
generated.
While these e-mails, read in the light most favorable
to the plaintiffs, show that some individuals at Volvo had
concerns about the value of the AUM guarantee in 1991, they do
10
The record contains competing translations of the e-mails.
These differ slightly, but the differences are not material for
our purposes.
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not reflect knowledge on Volvo's part that AUM was part and
parcel of an ongoing fraud. More importantly, even if Volvo had
come belatedly to realize that AUM was a dummy corporation, the
logical inference to be drawn was that AUM had been utilized
either to dupe Volvo into extending credit to Trebol or to put
funds beyond the reach of the tax collector. There is simply
nothing in the e-mails that suggests an awareness on Volvo's
part that AUM was being used as a mechanism to boost sticker
prices artificially (and, thus, to swindle retail customers).
We need not probe this point more deeply. Because the
e-mails, even when added to the Bonilla record and the
admissible portions of the Gonzalez affidavit, are not
significantly probative of Volvo's complicity in the sticker
fraud, the district court's error in handling the motion for
reconsideration was harmless.
V. CONCLUSION
We need go no further. In this complicated case, the
district court reached the correct destination, albeit by the
wrong route. Even when one piles the admissible portions of the
Gonzalez affidavit and the newly-discovered e-mails atop the
record amassed in Bonilla, the total does not suffice to raise
a genuine issue of material fact as to Volvo's knowledge of, or
complicity in, the fraudulent scheme. Consequently, the
plaintiffs cannot stave off Volvo's motion for summary judgment.
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Affirmed.
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APPENDIX
SWORN STATEMENT OF RICARDO GONZALEZ
[1] My name is Ricardo Gonzalez Navarro. I am at least
twenty-one years of age. Except where specifically noted, I
describe the facts set out below based upon my own personal
knowledge.
[2] I serve as the General Manager of Trebol Motors
Corporation and the General Manager of Trebol Motors Distributor
Corporation (collectively "Trebol"). I have held those
positions since 1988. Prior thereto I worked at Trebol. My
family has been the 100% owner of Trebol since 1979.
[3] After 1984, Trebol has been an importer and
retailer of Volvo automobiles. Since 1988, I have been the
Trebol employee with the most extensive relationship and contact
with Volvo Car Corporation; maintaining that relationship is
part of my job responsibility.
[4] Throughout the time that I have been responsible
for Trebol's relationship with Volvo, officials of Volvo have
possessed detailed knowledge of Trebol's importation and sales
practices. I have read, for example, [a district court opinion
in the Bonilla case] which accurately discusses the very close
relationship between Trebol and Volvo, including (as the opinion
sets forth): Volvo's assistance in advertising, training, and
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financing; many trips by Volvo's representatives to Trebol and
Trebols' representatives to Volvo; and other regular
communications by fax and phone.
[5] It is fair to characterize Volvo's relationship
with Trebol as an "open book" relation and very "hands on."
Volvo was deeply involved in the entire process, all the way
down to monitoring the status of vehicles "on the lot." Volvo's
representatives specifically were very interested in and aware
of Trebol's sales practices and finances. I want to
specifically note that Volvo utilized its "open book"
relationship and participated intimately in the decision-making
process of the dealership. Indeed, when they wanted the final
say on any matter, they had it and they exercised this power
often. They specifically did review financial statements of
Trebol.
[6] I discuss below Volvo's knowledge of certain
specific conduct raised by the plaintiffs in these matters.
[7] AUM Guarantee: On or about July 1985, Trebol and
Volvo arranged for a Liechtenstein company named Auto Und
Motoren ("AUM") to serve as a "guarantor" of Trebol's payment
obligations for new cars purchased by Trebol from Volvo for the
1986 model year and beyond. This relationship continued until
approximately April 1995. As "guarantor", AUM received an
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invoice for each Volvo car sold to Trebol (the "Volvo invoice")
and issued a new, second invoice to Trebol for the same car (the
"AUM invoice"). From the beginning of the relationship with AUM
in or about July 1985 until June 1989 (approximately the end of
the 1989 model year), every AUM invoice was substantially higher
than the Volvo invoice as AUM included the "guarantee" fee in
the cost figure of each AUM invoice. To the best of my
knowledge, the "guarantee" fee for model years 1986, 1987, 1988
and 1989 was determined as a percentage of the CIF cost on each
Volvo invoice — 15%, 20%, 25% and 10% respectively. AUM also
charged a processing fee of approximately $25 per car for model
years 1986-1989 and increased this fee progressively for later
model years until it was approximately $200 per car for model
year 1995.
[8] Volvo knew about the higher AUM invoice cost
figures. From my personal discussions with various Volvo
representatives, I know that Volvo was fully aware of the
relationship between Trebol and AUM, including the nature and
amount of the guarantees.
[9] Volvo knew that Trebol had a guaranty agreement
with AUM, including the collateralization clause in the
agreement and did not object to this agreement despite the fact
that the original importer contract for the sale of Volvos in
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Puerto Rico required that any payment guarantor be a Swedish
bank, which AUM is not.
[10] In addition, in 1993, I discussed in person and
through correspondence with Antonio Paulli and other Volvo
representatives a $2.7 million loan transaction between Volvo,
AUM and Trebol whereby Volvo loaned money to AUM to assist the
payment obligations of AUM and Trebol. I signed this agreement
on behalf of Trebol.
[11] Further, in 1995, I discussed in person and
through correspondence an agreement entered into by Trebol and
AUM whereby AUM agreed to swap Trebol's debt to AUM for equity
with Antonio Paulli and other Volvo representatives. As part of
this agreement, Trebol had to collateralize the Volvo franchise.
Volvo was aware of this arrangement and did not object.
[12] Throughout my service as General Manager of
Trebol, I know that Volvo representatives were aware of the
amount of the AUM guarantee and the AUM invoices because I
personally attended several meetings each year at which Trebol's
entire cost structure — i.e., every cost from invoice cost to
"cost build-up" (i.e., the costs of additions, taxes, warranty,
etc.) to dealer profit — were discussed and factored into the
retail price of each Volvo car sold in Puerto Rico. Included in
the cost structure was the cost from the AUM invoice.
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[13] Specifically, Trebol and Volvo held regular
meetings, which I attended, which addressed Trebol's "cost
build-up." These meetings occurred, at the very least, prior to
each new model year, which required that new retail prices be
determined. I discussed and debated specific amounts and costs
with Volvo officials. Volvo made its view clear that certain
prices were, or were not, acceptable from its perspective.
[14] . . . I can say with certainty, for the reasons
described above, that Volvo did know of the AUM invoices and
their contents.
[15] Lower prices meant greater sales volume and the
AUM invoices added to the ultimate consumer price. The AUM
relation was in place prior to my joining Trebol, so I do not
have first hand knowledge. I know that my family and company
derived no benefit from AUM commensurate with the extremely high
guarantee cost per car.
[16] Volvo's representatives also knew and understood
the contents of the retail "Law 77" stickers placed on the
windows of new Volvo automobiles offered for sale in the Trebol
showroom. The cost buildup was reflected on the face of the
sticker Trebol placed on the window of each vehicle for sale.
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[17] Volvo also assisted in sales training. Volvo was
also involved in pricing, which also involved the information on
the stickers.
[18] In addition, Volvo's practice was for its
representatives to inspect the vehicles both in the showroom and
on Trebol's lot and I am certain Volvo representatives have seen
the Law 77 inspection stickers. I know that at least one of
these representatives, Antonio Paulli, spoke Spanish. While in
Puerto Rico, Volvo representatives also visited competitor's
showrooms to gather information, which they could do effectively
only if they could read competing Law 77 stickers, most, if not
all, of which were also in Spanish. Moreover, Volvo
representatives, over the years, attended meetings with local
advertisers during which Spanish language advertising copies
were reviewed and discussed and were regularly sent Spanish
language copies of proposed advertisements to Sweden for review.
[19] When [a government agency] began to question the
. . . sticker, I immediately wrote to Volvo because I believed
they were aware of the sticker. Since Volvo organized Canada,
USA and Puerto Rico as one business unit, I was referred by my
contact at Volvo to Volvo North America (USA) for guidance on
USA law and other Volvo concerns. This happened on more than
one occasion. From my perspective, this was Volvo's
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responsibility. This was Volvo's way of discharging its
responsibility.
[20] . . . For the reasons just discussed, there is
no doubt that Volvo did in fact know of the stickers' contents.
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