I was under my 1985 300D yesterday looking for this same thing. Mine is the federal version, so the modulator is green, making it a bit easier to find. I believe the California model has a black modulator, so you have that to add to the difficulty. I, too, couldn't find the thing, but eventually did. I put the car on ramps and found the easiet access was to get under the car, just below the front driver's side wheel. By below, I mean between the two wheels on the drivers side. The modulator is indeed on the driver's side. It's located between the transmission and the transmission fluid pan, so it's in a fiarly tight place. Also be sure your care is cool or else you'll most likely burn your hand due to the tight quarters in which the modulator resides.

The rubber cap on mine is torn. I'm hoping that's the problem. I don't know where to get a real reaplacement one, but am guessing a hardware store will have an adequate cap that'll do the job.