California Civil Jury Instructions (CACI)
3304. Presumptions Concerning Costs - Manufacturer
A manufacturer's costs include the cost of raw materials and the cost of manufacturing.
The cost of manufacturing is the average cost of manufacture over a reasonable time, rather than the cost of one item at a particular time.
[If [name of defendant]'s cost for raw materials cannot be computed, the cost is presumed to be the prevailing price for similar raw materials at the time and place those materials would usually be purchased.]
[If [name of defendant]'s trade or industry has an established cost study or survey for the geographic area in this case, that cost survey may be considered in calculating [name of defendant]'s costs.]
[[Name of defendant]'s delivery costs are presumed to be the tariffs set by the California Public Utilities Commission, but this presumption may be overcome by other evidence.]
Directions for Use
The bracketed sentences should be inserted as necessary.
Sources and Authority
Business and Professions Code section 17026 provides, in part: " 'Cost' as applied to production includes the cost of raw materials, labor and all overhead expenses of the producer."
Business and Professions Code section 17072 provides: "Where a particular trade or industry, of which a person complained against is a member, has an established cost survey for the locality and vicinity in which the offense is committed, that cost survey is competent evidence to be used in proving the costs of such person."
Business and Professions Code section 17073 provides: "Proof of average overall cost of doing business for any particular inventory period when added to the cost of production of each article or product, s to a producer, or invoice or replacement cost, whichever is lower, of each article or product, as to a distributor, is presumptive evidence of cost of each such article or product involved in any action brought under this chapter."
Business and Professions Code section 17074 provides: "Proof of transportation tariffs when fixed and approved by the Public Utilities Commission of the State of California is presumptive evidence of delivery cost."
Business and Professions Code section 17077 provides: "In any action or prosecution for sales below cost in violation of this chapter, if the defendant acquires his raw materials for a consideration not wholly or definitely computable in money, the cost of the raw materials shall be presumed to be the prevailing market price for similar raw materials in the ordinary channels of trade in the locality or vicinity in which such raw materials were acquired, at the time of the acquisition."
"Determination of the defendant's cost has always been treated as an issue of fact." (Pan Asia Venture Capital Corp. v. Hearst Corp. (1999) 74 Cal.App.4th 424, 432 [88 Cal.Rptr.2d 118].)
"California appears to have adopted a very expansive approach to the evidence that may be used to establish cost; no formula has been expressly sustained or denounced." (Pan Asia Venture Capital Corp., supra, 74 Cal.App.4th at p. 436.)
"These statutes embody California's fully allocated cost standard, that is, a fair allocation of all fixed or variable costs associated with production of the article or product." (Pan Asia Venture Capital Corp., supra, 74 Cal.App.4th at p. 432, footnote omitted.)
"Cost is to be measured as 'the fair average cost of production over a reasonable time, rather than the cost of one item on a particular occasion.' " (Pan Asia Venture Capital Corp., supra, 74 Cal.App.4th at p. 432, fn. 6, internal citation omitted.)
1 Witkin, Summary of California Law (9th ed. 1987) Contracts, §§ 591- 596, pp. 534-539
1 Antitrust and Trade Regulation Law Section, State Bar of California, California Antitrust Law (2d ed. 1997), § 1.02A.4
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.153 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition (Matthew Bender)
23 California Points and Authorities, Ch. 235, Unfair Competition (Matthew Bender)
(New September 2003)