REGULARS

Cal.4th 826, where the court, in Justice Mosk's final opinion released only five days before his death, clarified the proper interpretation of 1992 and 1993 amendments to the summary judgment procedure followed by state courts.

Aguilar was a complex antitrust case brought as a class action against a number of petroleum companies alleging a conspiracy to raise prices by restricting the output of gasoline in California. As often happens in such cases, the plaintiffs did not have "smoking gun" evidence of a conspiracy. Instead, there was evidence that the companies gathered and disseminated information about capacity, production and pricing through the independently owned and operated Oil Price Information Service; that the companies sometimes employed the same consultants; and that the companies had executed certain exchange agreements. The question was whether this type of evidence was sufficient to withstand defendants' motion for summary judgment, which was supported by evidence explaining how pricing and output decisions were made, asserting that such decisions were made independently, and denying that such decisions were made collaboratively with competitors.

The court used the case as an opportunity to clarify the extent to which state summary judgment law is now essentially the same as federal summary judgment law, particularly in the antitrust context. Applying the federal standards, the U.S. Supreme Court held in Matsushita Elec. Industrial Co. v. Zenith Radio (1986) 475 U.S. 574, that ambiguous evidence showing conduct that is as consistent with permissible competition by independent actors as with illegal conspiracy by colluding actors is insufficient to overcome a defense motion for summary judgment.

Applying the state summary judgment standards, the court in Aguilar reached the same conclusion. The court recognized that the plaintiffs "did indeed present evidence that the petroleum companies may have possessed the motive, opportunity, and means to enter into an unlawful conspiracy. But that is all. And that is not enough. Such evidence merely allows speculation about an unlawful conspiracy. Speculation, however, is not evidence."

It is evident after Aguilar just how similar the federal and state standards for summary judgment are. State summary judgment law no longer requires a plaintiff moving for summary judgment to disprove any defense as well as prove each element of plaintiff's own cause of action; it is enough for the plaintiff to establish each element of plaintiff's cause of action, and it is up to the defendant to establish triable fact questions on defenses. It also no longer requires a defendant moving for summary judgment to conclusively negate an element of the plaintiff's case; instead, it is enough if the defendant shows that one or more elements of the cause of action cannot be established by the plaintiff.

One of the remaining differences between the federal and state standards is that state summary judgment law continues to require - as it should - that a defendant moving for summary judgment must actually present evidence supporting the contention that the plaintiff cannot establish an element of the cause of action. It is not enough in state court simply to point out by legal argument a gap in the plaintiff's evidence. This difference may be more theoretical than practical, however, since any good defense counsel - whether in state or federal court - will file appropriate documents (e.g., affidavits, declarations and such) to support a motion for summary judgment.

Aguilar hopefully ends a decade-long debate about the status of summary judgment law in state court. There has been much talk about summary judgment being used "sparingly" in state court and about a more "liberal" standard in federal court. Aguilar should put such talk to rest. As Justice Mosk noted, "although [summary judgment] motions should be denied when they should, they must be granted when they must." Aguilar clearly sets forth the rules for determining when such motions should be denied or must be granted.

Civil rights

The court's most important civil rights decision this year was Hi-Voltage Wire Works Inc. v. City of San Jose (2000) 24 Cal.4th 537, where the court, in its first decision interpreting Proposition 209, struck down San Jose's program that required contractors bidding on city projects to utilize a specified percentage of minority and women subcontractors or to document outreach efforts to include such subcontractors in bids.

The court held that both the utilization and documentation components of the city's program violated Proposition 209 since each component discriminated against a class of subcontractors, and granted preferential treatment to another class of subcontractors, on the basis of race and gender. The court suggested that only race- and gender-neutral outreach programs - for example, programs that promote outreach to all types of subcontractors without regard to impermissible classifications - would satisfy Proposition 209.

Although the result in Hi-Voltage was not particularly surprising, the opinion drew an enormous, angry response from civil rights advocates, primarily because of its recitation of the history of civil rights and affirmative action in California and the U.S. Some of these critics have truly gone over the top. First, many critics have personalized their attacks on the author of the opinion, Justice Brown, as though the opinion somehow reflected only her views (which these critics condemned as extreme). This was not, however, a separate concurring opinion. It was an opinion for the court joined by Justices Mosk, Baxter, Brown and Chin who, by any measure, represent a broad spectrum of perspectives. Ad hominem attacks serve no one.

Second, some critics are apparently so disappointed with the passage and consequences of Proposition 209 and the result in Hi-Voltage, that they seem unable or unwilling to give the opinion a fair or even accurate reading. A good example is Professor Gerald Uelmen's criticism in the July edition of California Lawyer. Although I am sure there are other things in the opinion which Professor Uelmen would find objectionable, the only shot he takes at the opinion in his article utterly misses the mark.  Professor Uelmen complains that the majority's opinion, in the second paragraph of its legal discussion, "characterized the late U.S. Supreme Court Justice William J. Brennan Jr.'s dissent in McCleskey v. Kemp (1987) 481 U.S. 279, 343-44 as a low point in the effort to articulate a coherent vision of civil rights." He then takes the majority to task for this apparent affront, instructing readers to "Go read what Justice Brennan wrote on those pages, and see if Justice Brown's analysis raises the temperature of your blood as much as it did mine."

Let's lower the temperature just a bit. The problem with Professor Uelmen's argument is that the majority clearly did not characterize Justice Brennan's dissent as a low point. Instead, the majority was citing Justice Brennan's dissent, along with Justice Powell's concurring opinion in Fullilove v. Klutznick (1980) 448 U.S. 448, to support the proposition that, "While the courts have been instrumental in effecting positive change in the quest for equality, their involvement in articulating a coherent vision of the civil rights guaranteed by our Constitution has not been without its low points." Hi-Voltage, 24 Cal.4th at 545. That is precisely the point Justice Brennan made in his dissent in McCleskey and precisely the point Justice Powell made in his concurring opinion in Fullilove. See McCleskey, 481 U.S. at 343-44 (Brennan, J., dissenting); Fullilove, 448 U.S. at 516 (Powell, J., concurring). Professor Uelmen did not make it more than a few sentences into the majority's legal analysis before seriously misreading its content.

A more dispassionate reading of the court's opinion in Hi-Voltage is in order. The legal history that the opinion sets forth is uncomfortable for advocates of affirmative action, and from their perspective, inaccurate. After all, the opinion essentially characterizes the law of affirmative action as an unwarranted and unwise extension of what had previously been race-neutral civil rights laws, an extension which sacrificed equal treatment of individuals in the name of equality for various minority groups, notwithstanding unequal treatment of individuals. But that version of history (and it is clearly only one version) clearly contributed to the enactment of Proposition 209, is reflected in some of the language used in the ballot arguments in favor of 209, explains why the drafters of the measure thought they had to ban both "discrimination" and "preferential treatment," and is certainly relevant to any understanding of the legal, political and social context which informed the voters. To demonize that version of history, as critics have tried to do, ignores the reality of the legal changes wrought by Proposition 209's provisions.

Guns and product liability

The recent successes in tobacco litigation, including the spectacular settlement of suits by governmental entities, have given renewed hope to plaintiffs who are injured by products that are legal to sell but which cause substantial harm to users and third parties even when used as intended. In the wake of the tobacco cases, a number of states and municipalities considered filing suits against gun manufacturers, and a few such suits were actually brought. Private plaintiffs also might have hoped courts would be more receptive to their claims.

In Merrill v. Navegar Inc. (2001) 2001 Westlaw 877117, the court broadly rejected such private suits in California based on a 1983 statute which provides, in part, that "[i]n a products liability action, no firearm or ammunition shall be deemed defective in design on the basis that the benefits of the product do not outweigh the risk of injury posed by its potential to cause serious injury, damage, or death when discharged." Civ. Code §1714.4(a).

Product liability law in California has been marked by a surfeit of theories of liability. A plaintiff could make claims against a manufacturer based on common law negligence, negligence per se, breach of warranty, strict product liability design defect, strict product liability failure to warn, strict product liability manufacturing defect, or strict liability for an abnormally dangerous activity. The court has struggled over the years to try to draw distinctions between negligence and breach of warranty, on the one hand, and strict product liability theories, on the other hand, while maintaining the rule that a manufacturer is not an insurer of products. See, e.g., Anderson v. Owens-Corning Fiberglas Corp. (1991) 53 Cal.3d 987, 1005-1006; Barker v. Lull Engineering Co. (1978) 20 Cal.3d 413, 418. The struggle has created much more confusion than clarity as the court has repeatedly introduced negligence-based concepts into strict products liability, most notably in the definition of what constitutes a design defect, while nevertheless trying to maintain separate causes of action for negligence and strict products liability.

The plaintiffs in Navegar tried to exploit this confusion by asserting, quite plausibly in light of the statutory language, that §1714.4(a) was limited to "products liability" causes of action and therefore did not bar their independent claim for negligence. Plaintiffs further distinguished a general negligence claim that the particular gun at issue should not be made at all from a narrower claim that the gun should not be marketed to the general public and should, instead, be sold only to law enforcement or the military.

The distinctions the plaintiffs tried to draw were reasonable, but ultimately unavailing. The majority read §1714.5(a) as establishing the state's public policy in both products liability and negligence claims that were substantially similar to products liability. The majority also rejected the distinction between negligently making a product with a defective design and negligently marketing a product to a class of customers who are particularly likely to injure others by misusing the product.

Aside from its specific holding regarding the particular gun at issue, the decision has two interesting features. First, the court does not appear inclined to take the lead in changing liability rules applicable to an industry to reflect changing social conditions and perceptions when the legislature has itself also regulated the industry, even if the legislature's regulation would seem to leave room for action by the judiciary.

Second, the decision is another example of the significant overlap between strict products liability and negligence, suggesting once again that the differences between these causes of action are more ephemeral than real.

Contract Law 101

Is a newspaper advertisement an offer which can be accepted merely by tender of the purchase price? Does a unilateral mistake of fact by the offeror negate the offeror's intention to be bound, thereby preventing a contract from coming into existence? If not, is a unilateral mistake a permissible basis for rescission of a contract? What constitutes an unconscionably low price justifying rescission of a contract on the basis of unilateral mistake?

If these questions trigger fond memories from your first-year contracts class, you should definitely take a moment or two to read Donovan v. RRL Corp. (July 30, 2001) 2001 Daily Journal D.A.R. 7821. A car dealership ran an ad in the local newspaper advertising a particular 1995 Jaguar XJ6 Vanden Plas for sale without stating a price. The dealership wanted to replace this ad with an ad for a 1994 Jaguar at a price of $25,995 and instructed the newspaper to make the substitution. The newspaper's staff got confused and printed an advertisement for the 1995 Jaguar with the $25,995 price. The plaintiff went to the dealership and tendered the advertised price. When the plaintiff showed the sales representative the advertisement, the sales rep immediately said that the ad was mistaken. A sales manager apologized and offered to pay for plaintiff's fuel, time and effort expended in traveling to the dealership. Plaintiff rejected this offer and insisted on purchasing the car at the advertised price. In fact, the car cost the dealership $35,000 to purchase, and the dealership indicated it would sell the car to the plaintiff for $37,016. Plaintiff refused and filed suit. The car subsequently sold for $38,399.

Armed with a statute providing that it is a violation of the Vehicle Code for a dealer to "[f]ail to sell a vehicle to any person at the advertised total price" (Veh. Code §11713.1(e)), the plaintiff no doubt had good reason to expect a successful trip to court. The plaintiff should also have been encouraged when counsel for the dealership limited its defense to the contention that the mistaken ad prevented a contract from coming into existence and did not so much as mention or brief the question of whether, if a contract had been formed, the mistake was a basis for rescission.

The plaintiff was in for a surprise. The Supreme Court saved the dealership's bacon in an opinion that, although legally correct as a matter of contract law, leaves one rooting for the consumer. The court first had to deal with the argument that, under traditional common law principles, an advertisement that merely identifies goods and specifies a price is only an invitation to negotiate and not an offer. The plaintiff asked the court to reject this general rule as contrary to consumers' reasonable expectations. The court refused to rule so broadly, however, holding only that, because of Vehicle Code §11713.1(e), an auto dealer's advertisement for the sale of a particular vehicle at a specific price constituted an offer. Score one for the consumer.

The argument that the dealer's unilateral mistake on the price somehow prevented a contract from forming, which was the only defense given by the dealer to the trial court, was rejected by the court in a single sentence. As my readers will of course recall, under the objective theory of contract formation, the offeror's hidden, unexpressed thoughts or mistakes are irrelevant to contract formation.

The question is whether a person in the offeree's position had reason to believe that the communication was intended as an offer such that an acceptance would conclude the bargain. As the court explained, "[b]ecause the existence of an offer depends upon an objective interpretation of defendant's assent as reflected in the advertisement, . . . the mistaken price (not reasonably known to plaintiff to be a mistake) is irrelevant in determining the threshold question whether the advertisement constituted an offer." The score is now two for consumer, zero for dealer.

In my opinion, the court should have ended its opinion at this point and declared the consumer the winner. As dissenting Justices Werdegar and Baxter observed, "defendant did not seek in the trial court to rescind its contract with plaintiff, . . . [and] at no point on appeal or on review in this court has defendant argued for rescission; defendant's position throughout has been, instead, that no contract was formed between plaintiff and itself." Having lost on this point and having failed to seek rescission (which would have given the plaintiff the opportunity to make a record opposing rescission), the defendant should have been held to its apparently strategic choice.

Even at oral argument before the Supreme Court, defense counsel resisted rescission, expressing concern that seeking rescission would in effect concede the existence of a contract. Rescission was essentially crammed down counsel's throat by the court. When counsel finally realized what was happening, he acknowledged that he "would be pleased to prevail on any theory." The lesson here? No matter what the score, if a court is determined to rule in favor of one of the parties, there is precious little a litigant can do.

The question of whether the mistake in the advertisement justifies rescission is a close one, but the most analogous precedents in California involving mistakes in construction contract bids suggest that such a substantial mistake - a 32 percent error in stating the price - is a proper basis for rescission. Absent detrimental reliance by the consumer (and it is worth recalling that the dealer offered to pay for the consumer's time and expenses in coming to the lot), see Drennan v. Star Paving Co. (1958) 51 Cal.2d 409, there is no compelling reason for giving the consumer a windfall because of an honest mistake that the dealer attempted to correct in good faith as soon as the mistake was drawn to the dealer's attention.

This is all good contract law, but my heart still wishes the consumer could just drive off the lot with his used Jaguar. It might be healthy for the dealer and the newspaper to fight between themselves over the loss instead of relieving them of their mistake and visiting the disappointment upon the consumer.

J. Clark Kelso is professor of law and director of the Capital Center for Government Law and Policy at University of the Pacific McGeorge School of Law.

REGULARS

Cal.4th 826, where the court, in Justice Mosk's final opinion released only five days before his death, clarified the proper interpretation of 1992 and 1993 amendments to the summary judgment procedure followed by state courts.

Aguilar was a complex antitrust case brought as a class action against a number of petroleum companies alleging a conspiracy to raise prices by restricting the output of gasoline in California. As often happens in such cases, the plaintiffs did not have "smoking gun" evidence of a conspiracy. Instead, there was evidence that the companies gathered and disseminated information about capacity, production and pricing through the independently owned and operated Oil Price Information Service; that the companies sometimes employed the same consultants; and that the companies had executed certain exchange agreements. The question was whether this type of evidence was sufficient to withstand defendants' motion for summary judgment, which was supported by evidence explaining how pricing and output decisions were made, asserting that such decisions were made independently, and denying that such decisions were made collaboratively with competitors.

The court used the case as an opportunity to clarify the extent to which state summary judgment law is now essentially the same as federal summary judgment law, particularly in the antitrust context. Applying the federal standards, the U.S. Supreme Court held in Matsushita Elec. Industrial Co. v. Zenith Radio (1986) 475 U.S. 574, that ambiguous evidence showing conduct that is as consistent with permissible competition by independent actors as with illegal conspiracy by colluding actors is insufficient to overcome a defense motion for summary judgment.

Applying the state summary judgment standards, the court in Aguilar reached the same conclusion. The court recognized that the plaintiffs "did indeed present evidence that the petroleum companies may have possessed the motive, opportunity, and means to enter into an unlawful conspiracy. But that is all. And that is not enough. Such evidence merely allows speculation about an unlawful conspiracy. Speculation, however, is not evidence."

It is evident after Aguilar just how similar the federal and state standards for summary judgment are. State summary judgment law no longer requires a plaintiff moving for summary judgment to disprove any defense as well as prove each element of plaintiff's own cause of action; it is enough for the plaintiff to establish each element of plaintiff's cause of action, and it is up to the defendant to establish triable fact questions on defenses. It also no longer requires a defendant moving for summary judgment to conclusively negate an element of the plaintiff's case; instead, it is enough if the defendant shows that one or more elements of the cause of action cannot be established by the plaintiff.

One of the remaining differences between the federal and state standards is that state summary judgment law continues to require - as it should - that a defendant moving for summary judgment must actually present evidence supporting the contention that the plaintiff cannot establish an element of the cause of action. It is not enough in state court simply to point out by legal argument a gap in the plaintiff's evidence. This difference may be more theoretical than practical, however, since any good defense counsel - whether in state or federal court - will file appropriate documents (e.g., affidavits, declarations and such) to support a motion for summary judgment.

Aguilar hopefully ends a decade-long debate about the status of summary judgment law in state court. There has been much talk about summary judgment being used "sparingly" in state court and about a more "liberal" standard in federal court. Aguilar should put such talk to rest. As Justice Mosk noted, "although [summary judgment] motions should be denied when they should, they must be granted when they must." Aguilar clearly sets forth the rules for determining when such motions should be denied or must be granted.

Civil rights

The court's most important civil rights decision this year was Hi-Voltage Wire Works Inc. v. City of San Jose (2000) 24 Cal.4th 537, where the court, in its first decision interpreting Proposition 209, struck down San Jose's program that required contractors bidding on city projects to utilize a specified percentage of minority and women subcontractors or to document outreach efforts to include such subcontractors in bids.

The court held that both the utilization and documentation components of the city's program violated Proposition 209 since each component discriminated against a class of subcontractors, and granted preferential treatment to another class of subcontractors, on the basis of race and gender. The court suggested that only race- and gender-neutral outreach programs - for example, programs that promote outreach to all types of subcontractors without regard to impermissible classifications - would satisfy Proposition 209.

Although the result in Hi-Voltage was not particularly surprising, the opinion drew an enormous, angry response from civil rights advocates, primarily because of its recitation of the history of civil rights and affirmative action in California and the U.S. Some of these critics have truly gone over the top. First, many critics have personalized their attacks on the author of the opinion, Justice Brown, as though the opinion somehow reflected only her views (which these critics condemned as extreme). This was not, however, a separate concurring opinion. It was an opinion for the court joined by Justices Mosk, Baxter, Brown and Chin who, by any measure, represent a broad spectrum of perspectives. Ad hominem attacks serve no one.

Second, some critics are apparently so disappointed with the passage and consequences of Proposition 209 and the result in Hi-Voltage, that they seem unable or unwilling to give the opinion a fair or even accurate reading. A good example is Professor Gerald Uelmen's criticism in the July edition of California Lawyer. Although I am sure there are other things in the opinion which Professor Uelmen would find objectionable, the only shot he takes at the opinion in his article utterly misses the mark.  Professor Uelmen complains that the majority's opinion, in the second paragraph of its legal discussion, "characterized the late U.S. Supreme Court Justice William J. Brennan Jr.'s dissent in McCleskey v. Kemp (1987) 481 U.S. 279, 343-44 as a low point in the effort to articulate a coherent vision of civil rights." He then takes the majority to task for this apparent affront, instructing readers to "Go read what Justice Brennan wrote on those pages, and see if Justice Brown's analysis raises the temperature of your blood as much as it did mine."

Let's lower the temperature just a bit. The problem with Professor Uelmen's argument is that the majority clearly did not characterize Justice Brennan's dissent as a low point. Instead, the majority was citing Justice Brennan's dissent, along with Justice Powell's concurring opinion in Fullilove v. Klutznick (1980) 448 U.S. 448, to support the proposition that, "While the courts have been instrumental in effecting positive change in the quest for equality, their involvement in articulating a coherent vision of the civil rights guaranteed by our Constitution has not been without its low points." Hi-Voltage, 24 Cal.4th at 545. That is precisely the point Justice Brennan made in his dissent in McCleskey and precisely the point Justice Powell made in his concurring opinion in Fullilove. See McCleskey, 481 U.S. at 343-44 (Brennan, J., dissenting); Fullilove, 448 U.S. at 516 (Powell, J., concurring). Professor Uelmen did not make it more than a few sentences into the majority's legal analysis before seriously misreading its content.

A more dispassionate reading of the court's opinion in Hi-Voltage is in order. The legal history that the opinion sets forth is uncomfortable for advocates of affirmative action, and from their perspective, inaccurate. After all, the opinion essentially characterizes the law of affirmative action as an unwarranted and unwise extension of what had previously been race-neutral civil rights laws, an extension which sacrificed equal treatment of individuals in the name of equality for various minority groups, notwithstanding unequal treatment of individuals. But that version of history (and it is clearly only one version) clearly contributed to the enactment of Proposition 209, is reflected in some of the language used in the ballot arguments in favor of 209, explains why the drafters of the measure thought they had to ban both "discrimination" and "preferential treatment," and is certainly relevant to any understanding of the legal, political and social context which informed the voters. To demonize that version of history, as critics have tried to do, ignores the reality of the legal changes wrought by Proposition 209's provisions.

Guns and product liability

The recent successes in tobacco litigation, including the spectacular settlement of suits by governmental entities, have given renewed hope to plaintiffs who are injured by products that are legal to sell but which cause substantial harm to users and third parties even when used as intended. In the wake of the tobacco cases, a number of states and municipalities considered filing suits against gun manufacturers, and a few such suits were actually brought. Private plaintiffs also might have hoped courts would be more receptive to their claims.

In Merrill v. Navegar Inc. (2001) 2001 Westlaw 877117, the court broadly rejected such private suits in California based on a 1983 statute which provides, in part, that "[i]n a products liability action, no firearm or ammunition shall be deemed defective in design on the basis that the benefits of the product do not outweigh the risk of injury posed by its potential to cause serious injury, damage, or death when discharged." Civ. Code §1714.4(a).

Product liability law in California has been marked by a surfeit of theories of liability. A plaintiff could make claims against a manufacturer based on common law negligence, negligence per se, breach of warranty, strict product liability design defect, strict product liability failure to warn, strict product liability manufacturing defect, or strict liability for an abnormally dangerous activity. The court has struggled over the years to try to draw distinctions between negligence and breach of warranty, on the one hand, and strict product liability theories, on the other hand, while maintaining the rule that a manufacturer is not an insurer of products. See, e.g., Anderson v. Owens-Corning Fiberglas Corp. (1991) 53 Cal.3d 987, 1005-1006; Barker v. Lull Engineering Co. (1978) 20 Cal.3d 413, 418. The struggle has created much more confusion than clarity as the court has repeatedly introduced negligence-based concepts into strict products liability, most notably in the definition of what constitutes a design defect, while nevertheless trying to maintain separate causes of action for negligence and strict products liability.

The plaintiffs in Navegar tried to exploit this confusion by asserting, quite plausibly in light of the statutory language, that §1714.4(a) was limited to "products liability" causes of action and therefore did not bar their independent claim for negligence. Plaintiffs further distinguished a general negligence claim that the particular gun at issue should not be made at all from a narrower claim that the gun should not be marketed to the general public and should, instead, be sold only to law enforcement or the military.

The distinctions the plaintiffs tried to draw were reasonable, but ultimately unavailing. The majority read §1714.5(a) as establishing the state's public policy in both products liability and negligence claims that were substantially similar to products liability. The majority also rejected the distinction between negligently making a product with a defective design and negligently marketing a product to a class of customers who are particularly likely to injure others by misusing the product.

Aside from its specific holding regarding the particular gun at issue, the decision has two interesting features. First, the court does not appear inclined to take the lead in changing liability rules applicable to an industry to reflect changing social conditions and perceptions when the legislature has itself also regulated the industry, even if the legislature's regulation would seem to leave room for action by the judiciary.

Second, the decision is another example of the significant overlap between strict products liability and negligence, suggesting once again that the differences between these causes of action are more ephemeral than real.

Contract Law 101

Is a newspaper advertisement an offer which can be accepted merely by tender of the purchase price? Does a unilateral mistake of fact by the offeror negate the offeror's intention to be bound, thereby preventing a contract from coming into existence? If not, is a unilateral mistake a permissible basis for rescission of a contract? What constitutes an unconscionably low price justifying rescission of a contract on the basis of unilateral mistake?

If these questions trigger fond memories from your first-year contracts class, you should definitely take a moment or two to read Donovan v. RRL Corp. (July 30, 2001) 2001 Daily Journal D.A.R. 7821. A car dealership ran an ad in the local newspaper advertising a particular 1995 Jaguar XJ6 Vanden Plas for sale without stating a price. The dealership wanted to replace this ad with an ad for a 1994 Jaguar at a price of $25,995 and instructed the newspaper to make the substitution. The newspaper's staff got confused and printed an advertisement for the 1995 Jaguar with the $25,995 price. The plaintiff went to the dealership and tendered the advertised price. When the plaintiff showed the sales representative the advertisement, the sales rep immediately said that the ad was mistaken. A sales manager apologized and offered to pay for plaintiff's fuel, time and effort expended in traveling to the dealership. Plaintiff rejected this offer and insisted on purchasing the car at the advertised price. In fact, the car cost the dealership $35,000 to purchase, and the dealership indicated it would sell the car to the plaintiff for $37,016. Plaintiff refused and filed suit. The car subsequently sold for $38,399.

Armed with a statute providing that it is a violation of the Vehicle Code for a dealer to "[f]ail to sell a vehicle to any person at the advertised total price" (Veh. Code §11713.1(e)), the plaintiff no doubt had good reason to expect a successful trip to court. The plaintiff should also have been encouraged when counsel for the dealership limited its defense to the contention that the mistaken ad prevented a contract from coming into existence and did not so much as mention or brief the question of whether, if a contract had been formed, the mistake was a basis for rescission.

The plaintiff was in for a surprise. The Supreme Court saved the dealership's bacon in an opinion that, although legally correct as a matter of contract law, leaves one rooting for the consumer. The court first had to deal with the argument that, under traditional common law principles, an advertisement that merely identifies goods and specifies a price is only an invitation to negotiate and not an offer. The plaintiff asked the court to reject this general rule as contrary to consumers' reasonable expectations. The court refused to rule so broadly, however, holding only that, because of Vehicle Code §11713.1(e), an auto dealer's advertisement for the sale of a particular vehicle at a specific price constituted an offer. Score one for the consumer.

The argument that the dealer's unilateral mistake on the price somehow prevented a contract from forming, which was the only defense given by the dealer to the trial court, was rejected by the court in a single sentence. As my readers will of course recall, under the objective theory of contract formation, the offeror's hidden, unexpressed thoughts or mistakes are irrelevant to contract formation.

The question is whether a person in the offeree's position had reason to believe that the communication was intended as an offer such that an acceptance would conclude the bargain. As the court explained, "[b]ecause the existence of an offer depends upon an objective interpretation of defendant's assent as reflected in the advertisement, . . . the mistaken price (not reasonably known to plaintiff to be a mistake) is irrelevant in determining the threshold question whether the advertisement constituted an offer." The score is now two for consumer, zero for dealer.

In my opinion, the court should have ended its opinion at this point and declared the consumer the winner. As dissenting Justices Werdegar and Baxter observed, "defendant did not seek in the trial court to rescind its contract with plaintiff, . . . [and] at no point on appeal or on review in this court has defendant argued for rescission; defendant's position throughout has been, instead, that no contract was formed between plaintiff and itself." Having lost on this point and having failed to seek rescission (which would have given the plaintiff the opportunity to make a record opposing rescission), the defendant should have been held to its apparently strategic choice.

Even at oral argument before the Supreme Court, defense counsel resisted rescission, expressing concern that seeking rescission would in effect concede the existence of a contract. Rescission was essentially crammed down counsel's throat by the court. When counsel finally realized what was happening, he acknowledged that he "would be pleased to prevail on any theory." The lesson here? No matter what the score, if a court is determined to rule in favor of one of the parties, there is precious little a litigant can do.

The question of whether the mistake in the advertisement justifies rescission is a close one, but the most analogous precedents in California involving mistakes in construction contract bids suggest that such a substantial mistake - a 32 percent error in stating the price - is a proper basis for rescission. Absent detrimental reliance by the consumer (and it is worth recalling that the dealer offered to pay for the consumer's time and expenses in coming to the lot), see Drennan v. Star Paving Co. (1958) 51 Cal.2d 409, there is no compelling reason for giving the consumer a windfall because of an honest mistake that the dealer attempted to correct in good faith as soon as the mistake was drawn to the dealer's attention.

This is all good contract law, but my heart still wishes the consumer could just drive off the lot with his used Jaguar. It might be healthy for the dealer and the newspaper to fight between themselves over the loss instead of relieving them of their mistake and visiting the disappointment upon the consumer.

J. Clark Kelso is professor of law and director of the Capital Center for Government Law and Policy at University of the Pacific McGeorge School of Law.