LEH v. GENERAL PETROLEUM CORP.
The Clayton Antitrust Act (“Clayton Act”) was enacted by Congress in 1914 to prevent anticompetitive practices in business. Section 5(b) of the Clayton Act halted the running of the statute of limitations on pending claims arising from the act. It also specified a four-year statute of limitations for these causes of action.
On September 28, 1956, Marc D Leh brought an action against General Petroleum Corportation and five other petroleum manufacturers alleging injury to his business caused by a conspiracy or combination to exclude Leh from engaging in wholesale distribution of gasoline in Southern California. He alleged that this conspiracy began in 1948; all parties agreed that Leh’s right to initiate a cause of action began in February of 1954. Leh anticipated a statute of limitations problem under California law, as California’s Code of Civil Procedure specified a one-year statute of limitations for penal causes of action, in contrast to the Clayton Act’s four-year limit. Hence, Leh cited to United States v. Standard Oil, in which the United States alleged a conspiracy to control prices among a nearly identical set of defendants and successfully applied the Clayton Act’s longer limit.
District court Judge William Mathes ruled in favor of General Petroleum, holding that the tripling of damages was a penalty, and was thus barred by the statute of limitations under California law. The court also held that the Clayton Act did not apply to the claim --distinguishing on the facts from Standard Oil-- primarily because Leh did not allege that the defendants combined to control prices, did not name the same set of defendants, and did not allege a similar period of conspiracy. Judge Stanley Barnes of the U.S. Court of Appeals, Ninth Circuit, affirmed. Judge Barnes affirmed the lower court’s interpretation of California law, and that the application of the Clayton Act used in Standard Oil did not apply here because the facts were not similar enough to justify collateral estoppel.
Is Leh’s claim similar enough to that made by the government in Standard Oil to justify his use of collateral estoppel? Was Leh’s claim valid because the Clayton Act suspended the running of the statute of limitations?
Legal provision: Clayton
Yes and yes. Justice Thomas White, writing for a unanimous Court, held that Leh is not required to allege equivalent means, objectives and conspiracy to rely on Standard Oil. Relying on the Court’s 1965 decision in Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co., Justice White emphasized giving effect to the broad terms of the Clayton Act and Congress’ belief that antitrust litigation is one of the surest weapons for effective enforcement of antitrust laws. He noted that six of the seven defendants were named in both Leh’s claim and the United States’ in Standard Oil, and that the United States similarly alleged an intention to eliminate the competition of independent refiners. Thus, Leh’s pending case halted the tolling of the statute of limitations under the Clayton Act, and his claim was still valid.
Justices John Harlan and Abraham Fortas took no part in the consideration or decision of this case.
Argument of Richard G. Harris
Chief Justice Earl Warren: Number 4, Marc D.Leh, etcetera, Petitioners, versus General Petroleum Corporation, et al.
Mr. Richard G. Harris: May it please the Court.
In this matter, we have had, within the past several months, the decision of this Court in Minnesota Mining & Manufacturing Company versus New Jersey Wood Finishing which was cited in the brief.
In that case, the test laid down by this Court for determining the question of tolling was stated to be “was the conduct challenged by the plaintiff complained of in the government action?”
As stated at page 323 of the Minnesota Mining case.
I submit to the Court that the conduct challenged by the plaintiff was complained of in the government action and referred to the overt acts challenged by the plaintiff and contrast them with the overt acts or conduct complained of by the Government in the following particulars.
In the plaintiffs' complaint, we alleged overt acts consisting of, among others, controlling the sale and distribution of refined gasoline in the Southern California area, denying independent jobbers access to a source of supply of refined gasoline, preventing independent jobbers from obtaining refined gasoline from other sources.
The government complaint, on the other hand, at paragraphs 70 (b) (6), (7), (8), (10), (11), (12), and (15), charges the defendants there named with foreclosing independent wholesale and retail markets otherwise available to independent refiners by requiring independent jobbers, wholesalers, and retailers to handle exclusively the refined petroleum products of the defendant majors.
Again, the plaintiffs' complaint states as an overt act that the defendants prevented the customers of independent jobbers to retailers from obtaining gasoline with which to compete with retail service stations and outlets operated or controlled by the defendants there named.
The government complaint, on the other hand, charges the defendants there named with maintaining agreed upon wholesale and retail prices by refusing to sell gasoline to any wholesale or retail distributors who refuse to follow the prices fixed and by adopting the uniformed policy of refusing to sell gasoline to any wholesale distributor, jobber, or retail dealer who would not agree to sell the products of a single dependent major on an exclusive dealing basis.
Again, the plaintiffs' complaint charges the defendants with maintaining fixed artificial and uncompetitive prices for the wholesale and retail sale of refined gasoline in the Southern California area.
The government complaint charges the defendants there named in almost identical language with fixing and maintaining uniform and noncompetitive resale prices to the charged consumers by retailers handling gasoline.
The plaintiffs charge as an overt act that the defendants destroyed any substantial competition afforded them in the wholesale and retail selling and marketing of refined gasoline in the Southern California area.
The government complaint charges the defendants with sharing wholesale and retail markets in the sale of gasoline by standardizing the various grades, qualities, and structure of gasoline and by selling gasoline and other refined products at identical prices.
The plaintiffs' complaint in the private case charges the defendants as an overt act with controlling the sources of refined gasoline in the Southern California area, and preventing and precluding independent jobbers from obtaining source and supply.
The government complaint, on the other hand, charges the defendants with fixing and maintaining uniform and noncompetitive prices for the sale of gasoline by causing the posting of an agreed price for each type and grade of gasoline at wholesale distribution points and by causing each other to post and charge identical prices at such points.
Now, from a comparison of those overt acts alleged by the plaintiff in the private case with the comparison of the charges by the Government in the government case, it is submitted that the test of this Court in Minnesota Mining, to with, was the conduct challenged by the plaintiff complained of in the government action, is more than satisfied.
However, the respondents in this case address themselves to three distinctions which they urge differentiate that conduct which has just been compared.
Distinction number one is that the complaint in the government case charges a conspiracy commencing in or about the year 1936, whereas, the complaint in the private case charges a conspiracy commencing in or about the year 1948.
Now, again, in addressing myself to this distinction, I do so by asking, “Is the Government complaining of conduct in 1936 or is the Government complaining of conduct at all times and including 1948 and right up until, and including 1950, the time of filing of the government antitrust action?”
In my references, I will refer to the appendix filed by respondents of the government complaint since it's -- since it's in a brief form rather than the typewritten record on which this case is being presented.
In answer to that question of 1936 versus 1948 and what the government was complaining about when it filed its complaint in 1950, I refer first to the appendix at page 40, which takes up at that point at paragraph number 21 of the government complaint.
At that point, the Government, in its complaint, points out that the Conservation Committee of California Oil Producers had its inception in 1930 but that the present committee was organized in 1936 and goes on to state, in effect, its formation constituted merely a reorganization of predecessor organizations.
So that, the 1936 date used in the government complaint, I submit, is clarified as the date upon which the Conservation Committee of Oil Producers was reorganized.
At page 49 and 50 of the appendix, commencing at numbered paragraphs 46 of the government complaint, it is to be emphasized, that in describing the commerce and trade affected, the government is not talking about something that happened in 1936 as a static and frozen thing.
The Government says, as of January 1, 1949, there were approximately 64 crude oil refineries.
Their complying crude oil import -- input was so many barrels per day.
Again, further on that, as of January 1, 1949, there were so many barrels refined from the refineries that were opened and 17 refineries were, at that point, idle.
At pages 52 and -- at page 50, rather, numbered paragraph 50, during 1948 the total gasoline produced by refiners in the Pacific States area was approximately 120 million barrels, at which defendant majors produced and sold approximately 108 million barrels for approximately 90%.
At pages 52 and 55 of the appendix, numbered paragraph 56, the Government, in concluding the description of the trade and commerce affected, uses these very significant paragraphs.
And it is to be emphasized that it was emphasized by this Court in the Minnesota Mining case where the Court might recall there was an argument made that the Federal Trade Commission, in that case, was put to a burden only of showing a possible effect on competition, whereas, the plaintiff was put to the burden of showing an actual effect on competition.
And, the Court pointed out as a significant factor that the Federal Trade Commission had alleged both in terms of possible and positive effect that is that there could be restraint and that there was a restraint.
So, also, the Government in this case alleges speaking in the present tense, not about 1936.
Each defendant major requires independent distributors who handled its refined petroleum products to deal exclusively in the refined petroleum products of said defendant major, and to refrain from dealing in the petroleum products of independent refiners and marketers.
Each defendant major also requires the independent distributors handling its refined petroleum products to sell said products to retail dealers and to large consumers at prices fixed by defendant majors, and otherwise, to conduct their business in the manner desired by defendant majors.
At page 55, each of the defendant majors -- this is numbered paragraph 62, each of the defendant majors requires the independent operators who sell its refined petroleum products to purchase the requirements exclusively from the respective defendant major and not to handle or sell the petroleum products of others.
At page 58, at the top of the page, except for the area within a three-mile radius of Los Angeles Harbor, defendant majors enjoy, in the present tense, a virtual monopoly in the wholesale and retail sale of gasoline and other refined petroleum products manufactured and sold in the Pacific States area.
Now, Mr. Kirkham will undoubtedly say that I have quoted up to that point from numbered paragraph 4 of the government complaint which describes the trade and commerce affected.
However, I submit that is relevant in determining whether the Government is there talking about 1936, 1948, or 1950, or a combination in a continuing thing going up until June of 1950 and thereafter which they were trying in 1950 to prevent.
However, commencing with paragraph V, charging the actual offenses set down by the Government at page 58, numbered paragraph 69, the actual language used by the Government is the following, “beginning in or about the year 1936 and continuing thereafter up to and including the date of filing the complaint, the defendants have been and now are engaged in a combination and conspiracy to restrain unreasonably,” etcetera.
In numbered paragraph 70, “the actual monopolizations have consisted of continuing agreement and concert of action among the defendants, its potential terms of which have been,” etcetera.
And, again -- and, finally, at page 66, “in concluding immediately before the prayer, the Government accuses the defendants of controlling completely the competition of independent producers, retailers and marketers.”
And you'll recall that in the brief in opposition in this case, the respondents have said that they wish to ignore everything but the marketing aspect.
Of course, the Government was concerned with all phases, and I will advert to that shortly.
But, the Government specifically accuses the defendants of controlling completely the competition of producers, refiners, and marketers.
The defendant majors' quadruple monopoly of the production, transportation, refining, and marketing of crude oil and refined petroleum products “has stabilized completely the entire oil industry in the Pacific States area and has resulted in the elimination of all price competition in the sale to consumers of gasoline and other refined petroleum products.
Now, it is submitted, therefore, that Government was concerned with a conspiracy which was in existence at least from 1936 and probably earlier than 1936 date being selected because of the reorganization on that date of the Conservation Committee of California Oil Producers, and was concerned with conduct which was continuing in 1948, 1949, and 1950.
And that, therefore, with in the test laid down by the Minnesota Mining case of whether the Government was complaining of conduct complained of in the plaintiffs' complaint, the plaintiffs submit that it was.
As stated by the Court in Philco versus R.C.A, cited in the brief, we see nothing novel in stating a conspiracy within a conspiracy.
And, indeed, that would seem to be the normal situation in the private antitrust case.
In other words, the Government is concerned with conspiracy in a grand manner on a grand scale covering perhaps the nation or in this case, the five western states.
The impact of that conspiracy on a local level is what the individual private litigant is concerned with, and it has been referred to several times in this term of conspiracy within a conspiracy or a smaller conspiracy within the large, and seems to be the typical pattern.
Justice Tom C. Clark: Your -- your case involves the help yourself or self-service, what do you call it?
Mr. Richard G. Harris: Yes, Mr. Justice Clark.
We were distributors or jobbers of gasoline to self-service stations.
We were not retailers.
We sold the gasoline to the retailer who, in turn, sold it through a self-service channel.
Justice Tom C. Clark: Your defendants, are they the same as the other defendants in the standard stations?
Mr. Richard G. Harris: No, they are not, and I will refer to that as the second distinction urged here.
The defendants do not include, in this case, the Conservation Committee of California Oil Producers or the Shell Oil Company.
On the other hand, we have included as a defendant, now dismissed, the Olympic Oil -- the Olympic Refining Company which was not included in the government case.
Justice Tom C. Clark: You've dealt with these defendants, your man?
Mr. Richard G. Harris: Yes, they dealt with the defendants, specifically General Petroleum Corporation and Olympic Refining Company.
Justice Tom C. Clark: When the -- when was the inception of the help yourself idea?
Mr. Richard G. Harris: Approximately 1947, Mr. Justice Clark.
The date being selected, it received nationwide coverage in a magazine, Life Magazine, and, as a matter of fact, the station there portrayed was the very station that my plaintiffs were servicing as jobbers, the Gilmore station.
That is in the nationwide magazine showing the new way of marketing gasoline.
It so happen that the Gilmore station was portrayed in that magazine.
This was approximately 1947.
Justice Tom C. Clark: The standard station was filed in '50?
Mr. Richard G. Harris: June of 1950.
Justice Tom C. Clark: Thank you.
Mr. Richard G. Harris: The interesting thing about the idea of a conspiracy within a conspiracy is that it has been used in a much stronger setting than is urged by the plaintiffs in this case, and that setting is under Section 5 (a) rather than Section 5 (b).
In other words, it has been used as prima facie proof of a local combination or conspiracy from the national combination or conspiracy shown to exist by the Government in the government action.
And, I would like to cite two cases not cited in the brief in that particular.
The first is Loew's Inc.versus Cinema Amusements, a case in which two of the members of this Court were on the brief, reported at 210 F.2d, page 86, the Tenth Circuit of 1954, page 86 particularly page 90.
And, Twentieth Century-Fox Film Corp. versus the Brookside Theatre Corporation, reported at 194 F.2d 846, particularly to 853, 1729 an Eighth Circuit case, 1952.
In those cases, we had the concept of a national conspiracy being proved to exist by the theatre cases which was then applied as prima facie evidence of a local-level conspiracy, and this was again referred to in the Nisley case, which I have set in the brief at page 529 of Nisley.
Now, the Tenth Circuit and Eighth Circuit agreed with that treatment.
The Seventh Circuit, however, when faced with the problem of whether or not a decree would be used as a prima facie evidence which is, admittedly, a much stronger thing than the plaintiffs are here seeking.
The Seventh Circuit refused to go along in a hypothetical situation which is stated very clearly in another case not cited in the brief, Sun Theatre Corporation versus RKO, 213 F.2d 284, at page 290, Seventh Circuit, 1954.
In that case, the Court set up a hypothetical complaint and conspiracy in terms of a, b, c, and d as follows.
If a decree is entered that a, b, c, and d have conspired together on a national scale to eliminate competition, this decree is admissible in plaintiffs' action as prima facie proof of the nationwide conspiracy but not to prove the existence of a conspiracy directly affecting any particular locality.
Now, the Tenth and Eight Circuits took exactly the contra view of that particular proposition and said that it was admissible to prove the conspiracy at a local level.
However, when the Seventh Circuit addressed itself to the question of tolling at page 291, it said as follows, “our hypothetical complaint charges and our hypothetical decree finds that a, b, c, and d conspired together to eliminate competition on a national scale.
The decree is prima facie evidence as to this question only, and then going on very significantly, p rips the full benefit of Section 5 if the statute is suspended as to the parties named.”
So that, apparently, the Seventh Circuit, while refusing to apply the decree as prima facie evidence under Section 5 (a), would nevertheless suspend the statute at a local level under Section 5 (b) which is all that we are seeking here.
The second distinction referred to by the defendants is that the conspirators are not identical.
Mr. Justice Clark has already pointed out by his questioning and I have stated wherein the conspirators are not at -- conspirators are not identical.
Now, this was a relevant test under the Steiner case.
However, it is no longer a relevant test under the case of Minnesota Mining and Manufacturing, as decided by this Court last May, because under that case, of course, we no longer have the rules of or never did have in that case decided that the rules lf collateral estoppel were no longer pertinent under Section 5 (b) while perhaps still pertinent under Section 5 (a).
Therefore, whether or not the defendants are or are not the same is not any longer a distinguishing feature, and I think that contention has been completely eliminated by the Minnesota Mining case.
The third distinction urged by the -- the respondents in this case is that the cut-off date, that is our overt act which caused us damage which reached us and hurt us, occurred in 1954, some-four years after the filing of the government complaint in June of 1950.
However, for several reasons, this is a distinction without substance.
Number one, the legislative history quoted in the brief, while as I stated in the brief it is somewhat ambiguous, lends credence to the idea that violations occurring after the filing of the government complaint are likewise to be tolled.
Number two and more important, as a question of policy, certainly, if this Court, as it has committed itself to do in the Minnesota Mining case, desires to give the full benefit to the private litigant of government antitrust actions, it would be a very strange rule to state that no tolling were to exist after the filing of the government complaint.
It would be as if by magic, all offenses were to stop with the filling of the government complaint.
And, in fact, instead of protecting the private person, it would hurt the private person and that it might give the persons charged in the government complaint a right to do things as to which the statute of limitations would run whereas, beforehand, the statute of limitations would be suspended.
Finally, this same situation --
Justice Potter Stewart: But before you go on, if you may, I don't -- I didn't quite get that last point and I wonder if you could illustrate what you mean.
Mr. Richard G. Harris: Yes.
In this case, we have a situation where the Government has filed a lawsuit in June of 1950.
Justice Potter Stewart: Yes.
Mr. Richard G. Harris: Now, let us assume that we had a violation of the antitrust laws, hurting a private litigant in 1949.
There would be no question, assuming that we have the necessary holder in part doctrine under Section 5 (b) complied with.
There would be no question but there would be a suspension of the running of the statute of limitations on that cause of action for as long as the government case was filed.
In this case, it was filed for a full 10 years, from 1950 to 1960.
However, if the Court were to adopt the doctrine and say that any overt acts happening after June of 1950 are not suspended so that, let's say, in 1954, as in our case, we were cut off, we alleged, the statute of limitations would run on us and we would be barred using the four-year statute which is now uniform.
We would regard in 1958, whereas the cause of action which accrued in 1949 would continue merrily on its way until 1961.
That is to say, 10 years, the period of the Government's suit plus the one year extra allowed, which is a very anomalous result and I'm certain that's not one that was intended by Congress.
Justice Potter Stewart: I see what you mean.
Mr. Richard G. Harris: And, the Green's case has expressly stated that this should not be so.
I have cited the Green's case in the brief but not for this particular point.
And, I refer now to page 336.
At page 336, Green says as follows, “It was the purpose of Congress that a person, desirous of taking advantage of the use as prima facie evidence of a judgment or decree rendered in a suit brought by the United States under the antitrust laws, might have an opportunity to do so in a private action commenced after the government suit had ended,” and then the very significant phrase added, “even though his cause of action arose while the latter suit was pending,” which is exactly what's happened here.
Our cause of action arose in 1954 while the government suit was pending.
That's at 336 of Greens which is in 232 Federal Reporter.
We submit, therefore, that the private right of action asserted by the plaintiffs in this case is based, at least in part, on matters complained of in the Government's suit.
This is all that is required by 5 (b) and all that is required by Minnesota Mining laid down by this Court in May of this year.
Chief Justice Earl Warren: Mr. Kirkham.
Argument of Francis R. Kirkham
Mr. Francis R. Kirkham: Mr. Chief Justice, may it please the Court.
At the outset, I should say that there are no disputed issues of law that remain in this case.
We have no disagreement as far as this particular case is concerned with any of the tests that have been urged by petitioners, either in their brief or at the oral argument.
The only question that remains, is one of fact on the test that we concede to be the same as those that petitioner has stated, was the plaintiffs' complaint in this case based in whole or in part on any matter complained of in the Government's complaint.
The Government's suit was brought in 1950.
The plaintiff alleges -- plaintiff in a suit brought in 1956, during the pendency of the government case which was finally settled in 1958.
The suit brought by plaintiff in 1956 alleged a conspiracy commencing in or about 1948 which injured him in 1954.
In appraising the relationship between the two cases, one matter should be kept in mind.
The case was filed in 1956 in the same Court in which the Government's action had been pending for six years.
The government case was familiar to the plaintiff and if there had been a cause of action which plaintiff deemed -- plaintiffs deemed was one that was complained of by the Government, certainly, they had the full opportunity to plead at that time.
Secondly, pretrial proceedings have occurred over the course of more than six years, thousands of pages of discovery, and the decision of the Court upon this motion was made in the District Court after the discovery.
There -- certain facts have come out which are undisputed, which served to clarify, in part, the situation of parties upon the complaint itself.
In the first place, as petitioners up here stated, petitioners are what are called rebrand jobbers.
In California, as in many states, gasoline is sold by the major oil companies under the major oil brand, Standard Gasoline, Union Gasoline, and so on.
Under the statute of the State of California, that gasoline may be sold to an independent jobber and rebranded, if permission is given, and that is the familiar gasoline seen usually in the stations of independence.
The Standard of California might sell to a rebrand jobber of gasoline.
That will be rebranded and resold as Gilmore Gasoline and its station.
Now, the essence of petitioners' complaint in this case is that the defendants in this case conspired to eliminate this type of operation.
He was a member of the class of rebrand jobbers and the defendants conspired to eliminate him from competition.
If we turn to the allegations of the complaint in this case which is set out at page 18 of our appendix, the aforesaid combination -- I'm now reading the plaintiffs' case, “the aforesaid combination conspiracy to restrain trade and commerce, and so on, consisted of the following agreement and concert of action, (a) agreed to exclude independent jobbers of refined gasoline from the distribution of refined gasoline throughout Southern California area by forcing such independent jobbers out of the market, eliminating a source of supply of refined gasoline to such independent jobbers, eliminating all competition by or from such independent jobbers.”
There followed then, numbered paragraphs, through (h).
And, the only important or significant addition to the allegations that I've read in (a) are that, in the succeeding paragraphs, the complaint alleges an agreement to eliminate the customers of independent jobbers or an agreement to maintain monopolistic control over distribution or so on by fixing and controlling the price at which gasoline would be sold, if at all, to independent dealers and jobbers selling gasoline in the Southern California area.
The District Court, when it decided this case, pointed out, in line with the particularization of the issues that had arisen in the course of pretrial, that this was a case in which the charge was that the major oil companies and Olympic Oil Company, named in this -- in the plaintiffs' complaint, had conspired to eliminate this type of marketer from the market.
The statements by counsel in the course of the pretrial proceedings were so limit the issues that are set out in our brief.
Now, in comparison to that complaint, and I may say that I feel that for the purposes of this case which we consider to be one which is-- which should be summarily disposed of, for the purposes of this case, we should apply the broadest test that the Court would possibly apply under Section 5 (b).
If we turn to the -- the allegation of the Government's complaint in the west coast case and, thereafter, a recital of the description of the industry in the west coast, the complaint at page 57 of the appendix, under the heading “Control of the Industry,” points out or alleges, which was never proved of course, that the oil industry in the Pacific States area is controlled and dominated completely by the defendant majors.
Now, that suit was brought against all seven of the major oil companies operating on the west coast and the Conservation Committee of California Oil Producers which was alleged to have been a tool of the major oil companies in limiting production in aid of their monopolization of the west coast industry.
It was a typical American Tobacco case, an allegation that, in an oligopolistic market, there had been a concert of action among the companies, the major oil companies that dominated the industry.
And, in paragraph 65, after reviewing the industry, the Government alleged that these seven major oil companies controlled 94% of the crude oil produced, that after transportation level, they controlled approximately 97% of all crude oil trunk lines and 70% of gathering lines, that at the refining level, they controlled 85%, that at the marketing level, they controlled 86%.
And then, with this allegation of the power -- the joint power of the -- alleged joint power of these companies, the complaint alleged in paragraph 69 in the general language of the Sherman Act that beginning in or about the year 1936 and continuing up to and including 1950 when the complaint was filed, the defendants engaged in a combination of conspiracy unreasonably to restrain and to monopolize and had monopolized trade and commerce in the production, transportation, refining, and marketing of crude oil.
And then, specifically, in paragraph 70, come the matters complained of by the Government in this case.
The aforesaid combination of conspiracy and the monopolization have consisted of a continuing agreement and concert of action among the defendants, the substantial terms of which have been that the defendants (a) agree to eliminate competition among themselves in the Pacific States area.
And, may I ask the Court to just turn the page to 61 to the (b) allegation.
First, they agree to eliminate competition among themselves in the Pacific States area.
Secondly, and (b), they agree to utilize their control of the production, transportation, refining, and marketing of crude oil and refined petroleum products to restrict and to eliminate the competition of independent producers, refiners, and marketers in the Pacific States area.
Now, under each of those subdivisions of the alleged conspiracy are the terms of the conspiracy.
They are set out.
And the agreement to eliminate competition among themselves in the Pacific ar -- States area was by stabilizing the amount of crude oil to be produced, by fixing and maintaining uniform and noncompetitive prices to be paid for crude oil, I'm reading the numbered paragraphs on page 59, by pulling their respective crude oil transportation facilities for the reciprocal use of each of them, and then come the allegations with respect to marketing at the top of page 60, by sharing wholesale and retail markets with each other in the sale of gasoline and other refined petroleum products.
And, let me read here more particularly, (a) by standardizing the various grades, qualities, and structure of gasoline and other refined petroleum products in such manner as to make such products really interchangeable among themselves, (b) by making exchange agreements among themselves which permit each defendant major to penetrate markets not otherwise available, (c) by selling gasoline and other refined petroleum products at identical prices, thus, confining effective competition among themselves to the advertising of brand names and the offering of free services.
Then, (6) by fixing and maintaining uniform and noncompetitive prices for the sale of gasoline and other refined petroleum products at wholesale by causing one to post prices and all the other to follow those posted prices, (7) by fixing and maintaining uniform and noncompetitive resale prices to be charged to consumers by retailers, resale price maintenance at the retail level, and (8) by maintaining the wholesale and retail prices agreed upon, first, by refusing to sell gasoline to those who would not sell at the prices fixed by the majors and (b) by adopting a uniform policy of exclusive dealing contracts.
Now, those are the only allegations in the complaint relating to marketing except that under (b), which is the only allegation in the Government's complaint which relates to the exclusion of marketers in the Pacific States area, there is, in the last paragraph of (b) on page 64, an allegation that the major oil companies agreed to foreclose independent wholesale and retail markets otherwise available to independent refiners by requiring independent jobbers, wholesalers, and retailers to handle exclusively the refined petroleum products of defendant majors.
All of the other allegations of (b) relate to the production of crude oil, Conservation Committee, and to the alleged activities of the major oil companies in seeking to eliminate independent refiners on the Pacific Coast area.
Justice Potter Stewart: If one were to look simply at the -- at the first generalized statement of (b), that would cover, would it not, the -- and embrace the alleged wrong in the present case?
Mr. Francis R. Kirkham: If one were to look only to --
Justice Potter Stewart: Without railroad materials --
Mr. Francis R. Kirkham: If there had been no other allegation in the complaint, it might be --
Justice Potter Stewart: Without reference to the bill of particulars.
Mr. Francis R. Kirkham: It might be argued.
Also, it might be argued that it's 69 only -- paragraph 69 only had been alleged that -- which is simply the allegation of the violation of the conspiracy and the monopolization and the terms of the statute.
Justice Potter Stewart: Right.
Mr. Francis R. Kirkham: And nothing else.
However, in response to that, Justice Stewart, such a pleading of course, with no trial, no case would ever have gone to trial on such pleading.
There would have been an immediate motion for a more definite statement.
Justice Potter Stewart: Yes.
Mr. Francis R. Kirkham: The more definite the statement would have been made, and what the Government complained of would have been set forth.
Now, the very significant thing in connection with that language, Mr. Justice, is this.
That the only allegation in the Government's complaint that relates to an alleged agreement to eliminate the competition of “independent marketers,” is the allegation 15 which is exactly 180% different from the right of action which is alleged by the plaintiff in this case.
There, it is stated that we have attempted to foreclose independent wholesale and retail markets otherwise available to independent refiners, not by excluding independent jobbers from the market but by retaining them in the market and tying them up with exclusive-dealing contracts to sell our products instead of the products of independents, an allegation that is exactly the opposite.
Now, there is no allegation, in the first place --
Justice Tom C. Clark: Mr. Kirkham, when you deal with -- then only on an exclusive basis under 15, couldn't they?
Mr. Francis R. Kirkham: Under 15, it would be under -- yes, that the --
Justice Tom C. Clark: Well, if an independent did not waste a deal on an exclusive basis, he wouldn't be able to be deal with an independent refiner, would he?
Mr. Francis R. Kirkham: That is the allegation.
That we would tie up the independent jobbers in the situation of the plaintiff.
Justice William O. Douglas: Mr. Kirkham, the point that you argue was -- is one that neither the District Court nor the Court of Appeals passed on, isn't that right?
Mr. Francis R. Kirkham: No, I don't think that's right, Mr. Justice Douglas.
Justice William O. Douglas: I mean, in their opinions, they dealt with the statute of limitations.
Mr. Francis R. Kirkham: They dealt with both points.
They dealt with the three-year statute of limitations and the 5 (b) point.
Is that what You Honor means?
Justice William O. Douglas: The point that you're making that the -- that these are not -- these causes of action have nothing in common or no identity.
Mr. Francis R. Kirkham: No, they -- they passed upon that point.
In the opinion of the District Court, both the District Court and the Circuit Court of Appeals referred to the strict rule of the Steiner case, and perhaps we should mention that a moment.
Ten years ago, in the Ninth Circuit, the Court of Appeals decided the case -- the Steiner case and there, the Court held in a case that involved the question as to whether there should be a tolling under 5 (b), there, the Court held that in order to be a tolling there must be a greater similarity, and I'm quoting from page 8 of our brief, the small brief, “there must be a greater similarity then than the same conspiracies.
The same means must be used to achieve the same objectives of the same conspiracies by the same defendants,” in other words, the same overt acts.
After that decision in the Steiner case, the Tenth Court -- Circuit Court in the Nisley case, Union Carbide against Nisley, expressly disagreeing with the Court of Appeals for the Ninth Circuit, said that 5 (b) should not be given such a narrow construction.
I should say that, in reaching this decision, the Ninth Circuit applied the reasoning that 5 (b) should be given the same interpretation as 5 (a) with its quasi res adjudicata features.
It followed Judge Wyzanski's opinion and the Momand case in doing that.
In the Nisley case, the Tenth Circuit said that as of this Court did at the last term in the Minnesota Mining case, that that was too rigid a test to place upon 5 (b), that 5 (b) should be given a broader application.
In the Goldwyn case, which came up later then in the Ninth Circuit, after Nisley had disapproved and disagreed with the Steiner case, the Ninth Circuit held in that case that the statute had been tolled, in a motion picture case, even though the conspiracy that was alleged by the Government in the government case had not alleged that it was directed against the class of persons to whom the petitioner belonged in the Goldwyn case.
They adopted a more liberal construction and said, as this Court said in Minnesota Mining, that the plaintiff's case need be based only in part and not entirely on the allegation -- the matters complained of in the Government case.
Later, the -- this case was decided and answering your question, Mr. Justice Douglas, in the District Court is the principle point considered there, as it was in the Court of Appeals, was whether the three-year or one-year statute of limitations of California applied to this case.
The plaintiff had relied upon the three-year statute.
It was in time that that was applicable and both the District Court and the Court of Appeals held that the one-year, and not the three-year statute, was applicable.
Then the plaintiff was compelled to turn to -- to rely upon the tolling statute and it had principally relied, of course, upon the three-year statute before that.
And, toward the end of the District Court's opinion, the Court does consider the question as to whether or not the plaintiff's action is -- is barred or is not tolled by 5 (b).
And there, the Court cites the strict test -- the District Court cites the strict test of the Steiner case and says that under that test, the statute was not tolled.
When the case got to the Court of Appeals, however, the Court of Appeals cited not only its original decision in Steiner but it cited the decision in Nisley, which was quoted and approved by this Court in the Minnesota Mining case last term.
The test in the Nisley case, as I take is really the test in the Minnesota Mining case, is whether there is a substantial identity of subject matter between the two complaints.
And the --
Justice Potter Stewart: You're not depending on the Steiner case here.
Mr. Francis R. Kirkham: I'm not depending on the Steiner case.
The Steiner case obviously was incorrectly decided as far as its reasoning was concerned.
Justice Potter Stewart: Yes.
Mr. Francis R. Kirkham: I am stating, Justice Stewart, that there is not a conflict of decisions.
Justice Potter Stewart: Yes.
Mr. Francis R. Kirkham: And that the representation that there was a conflict of decisions when the petition for certiorari was asked for was mistaken because in this case, the Court of Appeals recognizing specifically that as earlier Steiner decision stated a more rigid rule than had been stated by Nisley and having said in the Goldwyn case that it would reexamine its Steiner decision when the case -- a proper case came before it.
In this case, it said that, under either the Nisley case or the Steiner case, in either of those tests there was no such identity of subject matter here as to toll the statute.
So, both --
Justice Tom C. Clark: (Inaudible) don't you think it says that if the action is based in whole or in part, on what, on any?
Mr. Francis R. Kirkham: Any matter complained of.
Justice Tom C. Clark: Any matter.
So, if you run through the two complaints, I suppose the state is going through the complaints, is it not?
Mr. Francis R. Kirkham: Well, it -- it could be based -- I think, in this case, it was based upon the ultimate issues framed after pretrial.
Justice Tom C. Clark: On the pretrial.
Mr. Francis R. Kirkham: But, we are prepared, for the purposes of decision here, to let it rest on that or upon the memorandum of contentions or upon the complaints themselves.
Justice Hugo L. Black: Well, your position is that there is no matter in the Government's complaint upon which the complaint here could be based.
That's your position.
Mr. Francis R. Kirkham: Our position is that the plaintiffs' complaint in this case is not based in part upon any matter complained of in the Government's complaint, and that, it appears to us, is -- is -- is manifest.
Now, let me state as to the matters that Mr. Harris has mentioned.
In the first place, the question as to whether or not this conspiracy commenced in 1948 and the injury occurred in 1954 might be -- that is not -- we do not consider that that is determinative.
When one complaint, the Government complaints -- complaint, alleges that a conspiracy commenced in or about 1936 among seven major oil companies and the conservation committee and when the plaintiffs' complaint comes along later and specifically says “my conspiracy commenced in 1948 among less than all of the defendants, six of the eight conspirators in the Government's case and one additional company,” then at least that is a flag, an indication, that there -- that there might be an entirely different cause of action alleged.
And that is particularly so when the facts complained of, the conduct complained of, and the matter -- subject matter of the plaintiffs' complaint is a phenomenon in the oil industry, the self-served station, that came into existence 12 years after the complaint and the Government's case was filed.
But, we don't urge that as a determinative test.
Obviously, if this complaint had said that the conspiracy existed in 1948 and hurt me later on, there -- and the Government's case had said the conspiracy was formed in 36 and continued until ‘50, there wouldn't be any question.
And if the plaintiff, instead of saying existed, said the plainti -- the conspiracy commenced in ‘48, whereas, the Government's commenced in ‘36, applying the substantial identity test, Mr. Justice Clark, I don't think the plaintiff would be thrown out of Court because he used the word “commenced” instead of “existed.”
So, the question is “are the conspiracies the same?
Are the terms of the conspiracies the same?
Are the overt acts alleged to have occurred the same in such substantial degree that it can be said that they -- that the plaintiffs' case is based in whole or in part upon any matter complained of by the Government?”
So, I -- I say that the fact that there is a specific allegation that the con -- conspiracy commenced in 1948 and related to an event which had not even been in existence at the time the Government's case was brought is a significant factor to consider.
Secondly, on the members of the conspiracy, now this, it seems to me, is a significant fact in this case.
The Government alleged that all seven oil companies in an oligopolistic market combine completely to monopolize the petroleum industry on the west coast.
The Government's complaint would not have been the same in any way at all if it had alleged, as the plaintiff does in this case, that not all of the major oil companies but only part of it had combined and conspired because the presence of all of those companies was essential to the conspiracy which the Government alleged, namely an overall monopolistic conspiracy.
When the plaintiff comes along and alleges a conspiracy without the presence of the Shell Oil Company or the Conservation Committee, which was -- which was kernelled that core of the Government's case, and with the presence of an independent oil company as a separate conspiracy commenced at a different time, then you are very definitely, and it seems to me uncontrovertibly, stating a different conspiracy.
They can't be the same conspiracy.
Justice Tom C. Clark: (Inaudible) a vertical conspiracy running from production through marketing.
Mr. Francis R. Kirkham: In every aspect --
Justice Tom C. Clark: This jobber would be dealing entirely with marketing, wouldn't he?
Mr. Francis R. Kirkham: That is correct.
Justice Tom C. Clark: So, that depends upon whether there is any matter in the Government's complaint with reference to marketing, upon which the complainant here could hang his head.
Mr. Francis R. Kirkham: Well, that -- that would be the ultimate test, Justice Clark.
I think the first test that you apply in this case is “are the conspiracies the same in any way at all?”
Now, the conspiracies are not the same.
The Government's conspiracy is a conspiracy that all the major oil companies agreed among themselves to eliminate competition with each other and, as it is alleged in paragraph 74 of the complaint, to conduct their businesses as though they were under a single management and a single ownership in a complete monopolization.
Now, the plaintiffs' complaint later on did not include the Shell Oil Company, one of the major oil companies.
It included an independent oil company.
It did not include the conservation committee and it did not allege a monopolization.
It alleged a conspiracy on the part of those different defendants to eliminate a particular type of marketer in the business, the rebrand independent jobber.
Now, if the test is “are the conspiracies the same?”
and that is the test that was applied in the Nisley case and the Goldwyn case, as well as in the Steiner case, then obviously, they're not the same.
But, coming to your point, Mr. Justice Clark, if we go one point beyond that, and we say that you look only to the -- you have to separate and look at every overt act or every term of the conspiracy, then if you read the term of the Government's complaint one by one through the 38 paragraphs, each one which is alleged to be a term of the conspiracy and by 71, the complaint has alleged that the major oil companies did the things which they are charged of having agreed to do so there the overt acts under the conspiracy, if you separate and treat each one of those as something complained of by the Government which, in fact, it wasn't but if you treat it as a separate conspiracy, still the plaintiffs' complaint doesn't read on any of them.
Now, let me call your attention to those that refer to marketing because there are no others.
They're obviously -- the other allegations concerning production, refining, and so on are not the same.
If you turn to page 60 of the appendix and you look at the four allegations there that relate to marketing, paragraph 5 says that the defendants in that case agreed to eliminate competition among themselves, and let's forget the overall broad conspiracy part, and just say that the defendants agreed to share wholesale and retail markets with each other in the sale of gasoline and other refined petroleum products, how?
(a) by standardizing the various grades, qualities, and structure of gasoline and other refined petroleum products in such manner as to make such products really interchangeable among themselves, (b) by making exchange agreements among themselves to prevent defendant majors to penetrate markets; (c) by selling gasoline and other refined petroleum products at identical prices, thus, confining competition among themselves to the advertising of brand names and the offering of free services.
There is no allegation in the plaintiffs' complaint that reads on that in any way whatsoever.
There's a primary price fixing and elimination of competition among the majors.
If you turn to (6), by fixing and maintaining uniform and noncompetitive prices for the sale of gasoline and other refined petroleum products of wholesale by causing one of them to post to each of the wholesale distribution points an agreed price for each type of grade of gasoline and by causing each fee of the defendants to post and charges prices identical.
Here is an allegation of primary price fixing among the defendants on the products that they sell.
The plaintiff alleges only that we fix prices at which we would -- for the sale of product to a particular brand or type of distributor.
If you turn over to his allegations on page 18 again, (b) -- take (b) agree to eliminate the customers of independent jobbers of refined gasoline by refusing to sell gasoline to independents, refusing to sell to the customers of independents, and fixing and controlling the price at which gasoline would be sold, if at all, to independent dealers and jobbers.
Now, an allegation of an overall stabilization of price at the primary level is entirely different from a conspiracy which alleges a discriminatory use of price at a particular level and with respect to a particular class to eliminate that class of marketer from the market.
Reading then in (7), by fixing and maintaining uniform and noncompetitive resale price to be charged to cus -- consumers by retailers, handling the gasoline and other refined petroleum products of defendant majors.
Now there, again, there is no allegation in this complaint -- in the plaintiffs' complaint that the -- that the companies have fixed resale prices at the retail level.
And then, finally, (8), and this is the one that Mr. Harris read to the Court, by maintaining the wholesale and retail prices agreed upon, how?
By refusing to sell their gasoline and other refined petroleum products to any wholesale or retail distributor who fails or refuses to follow the prices fixed by them.
There is no allegation in the plaintiffs' complaint that there has been -- that there was a conspiracy that refused to sell to persons that would not maintain the price, resale price maintenance.
And, that's an entirely different conspiracy.
So, we say that, upon examination of it, there's no issue of law between us, no conflict of decisions, and an examination of the two complaints leads to the conclusion that they are not -- that the plaintiffs' complaint is not based in part on any matter complained of in the Government's complaint.
Chief Justice Earl Warren: Mr. Harris.
Rebuttal of Richard G. Harris
Mr. Richard G. Harris: Yes, in the five minutes that I have left, Your Honor, I would like to address myself briefly to three points raised by the respondent.
Number one, he points out that the complaint in the government case and the complaint in the private case were filed in the same district of the same court and, therefore, we had available to us the various materials that the Government had unearthed.
Nothing could be farther from the truth.
Similarly, it is not so that discovery was completed in our case.
In the government pleas, the files were very early sealed by court order.
In fact, in 1950 or 1951, I moved in 1958 or 1959, I don't know which, to unseal those files.
The files have never, to this day, been unsealed.
That is still pending because, at that time, Judge Mathes suspended our case pending the outcome of the government case, the Texaco case being continued on, and then subsequently decided the statute of limitations issue so that this case should go back to the District Court.
At that time, much discovery remains to be completed.
The government files have never been unsealed in this case.
I've never seen them.
Justice Potter Stewart: Well, it doesn't really make any difference to the question involved at all, does it?
I mean, that --
Mr. Richard G. Harris: Well, perhaps not.
Justice Potter Stewart: The result wouldn't depend on that, on the facts --
Mr. Richard G. Harris: The inference was that I had all of these available to me and if I wanted to draw the complaint this way, I could've.
It wasn't available to us.
Justice Potter Stewart: Whether you did or whether you didn't, the statute either applies here or doesn't.
Mr. Richard G. Harris: I think that --
Justice Potter Stewart: Whether it's filed in the same court or a court across the country 3,000 miles away.
Mr. Richard G. Harris: I think that's a fair statement, Mr. Justice Stewart.
Now, the second point that was raised, the defendants or respondents place great reliance upon the fact that the government complaint charges that the defendants agreed among themselves, and they've even italicized this language at page 3 of their brief, as the Court has probably noted.
However, this argument is completely laid to rest by the Goldwyn case which they, themselves, cite at page 10 of their brief because Goldwyn, you'll recall, involved a government conspiracy alleging that the theatre people were attempting to conspire and did conspire and combined to achieve a monopolization of theatres that has retail distribution of films.
Goldwyn was an independent motion picture producer and it was argued all through the Goldwyn case that he was not, within a car-see language, within the target area of the conspiracy because he was an independent motion picture producer and the Government was talking about people that were conspiring to freeze distribution houses of motion pictures.
And, the Court there didn't find any difficulty at all with that, even in the Ninth Circuit.
They said that even though the Government talked about this type of conspiracy, Goldwyn could still be hurt by it.
So, the fact that the government complaint alleges they conspired among themselves.
It, seems to me, isn't relevant here, insofar as we are claiming that we have been hurt by the same conspiracy.
Justice William J. Brennan: Mr. Harris, had the Government's case gone to trial, would your evidence had been relevant in support of the Government's complaint?
Mr. Richard G. Harris: Well, that has been our contention from the beginning, Your Honor.
Of course, we haven't seen all the evidence but there had been various motions in this case from the beginning to limit proof, to cut off proof at various dates, which we've always resisted and said we wish to go into matters going back to 1936, 1937, 1938, and so on.
And, this is all part of the pretrial order and contentions which I've set forth in which it had been (Voice Overlap).
Justice William J. Brennan: Well, you're talking about your own case.
I'm asking if the Government's case had gone to trial.
I understand the Government's case was settled, wasn't it?
Mr. Richard G. Harris: That's correct.
Justice William J. Brennan: After you had brought your case.
Mr. Richard G. Harris: That's correct.
Justice William J. Brennan: And after there'd been, I gather, considerable pretrial discovery in like.
Mr. Richard G. Harris: In the government case?
Justice William J. Brennan: In the government case.
Mr. Richard G. Harris: Yes, Mr. Justice Brennan.
Justice William J. Brennan: My question was if that case had gone to trial and had been settled, the proofs on which you rely for your case have been relevant to the proof of the Government's case?
Mr. Richard G. Harris: Yes, that is my contention.
I assume the respondents would resist the same as they are here, but that would certainly be my contention.
Still on this point as to whether the allegations between the complaints are the same, first, the charge about conspiring among themselves has to be considered in light of Goldwyn.
And then, the overt acts that Mr. Kirkham referred to at page 18 of his appendix of course alleges -- at page 18, he's referring to matters where we have set forth the terms and conditions of the conspiracy alleged at some length.
However -- and these, we submit, are quite relevant and are based on, at least in part, the government case.
However, when you get over to the overt acts which we allege, which of course are the things most often referred to in the decisions, at page 21 of the appendix, paragraph 22, the overt acts are practically parallel with the charge of the government complaint.
And it was from the overt acts that I quoted at the start of my argument, and I won't re-quote them but, considering page 21, I don't think we have any question that we're talking about, in the language again of the Minnesota Mining case the matters complained of by the government in its case.
And then, finally, there can be no question that the Ninth Circuit relied upon Steiner from simply considering the opinion which is part of the petition for certiorari, of course.
It's true they cited the Nisley case in a footnote.
However, the Ninth Circuit said “from Steiner versus Twentieth-Century-Fox Film Corporation, supra, this Court has already held” and then set forth the test of Steiner “(a), (b), (c),” then said “none of these tests are met.”
Now, the Steiner case has not been repudiated.
They did not state the Nisley test.
They quoted Nisley in a footnote but it was no question that Steiner was applied by the Ninth Circuit.