F. D. RICH CO., v. INDUSTRIAL LUMBER CO.

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Argument of Lawrence Gochberg

Chief Justice Warren E. Burger: We’ll hear arguments next in 72-1382, Rich against United States for the use of Industrial Lumber Co.

Mr. Gochberg you may proceed whenever you are ready.

Mr. Lawrence Gochberg: Mr. Chief Justice and may it please the Court.

This case involves the Miller Act 40 U.S.C. 270b.

It involves a suit by a supplier of a middle party, Cerpac, supplied plywood to the general contractor, the F.D. Rich Co. for a federal project at the Beale Air Force Base in California.

The Court and the District Court found in favor of the supplier on a number of issues.

It denied attorney’s fees and appeal was taken by the Rich Co. and Industrial Lumber took a cross-appeal.

The Court of Appeals for the Ninth Circuit reversed the District Court on as to the denial of attorney’s fees, and also reversed on an interest question as to whether 7% or 8% interest should be granted under California Law, and affirmed on all other issues against --

Justice Harry A. Blackmun: Are you bringing the interest question here?

Mr. Lawrence Gochberg: No, Your Honor, I think it will -- I am not prepared to argue that.

Justice Harry A. Blackmun: Are you abandoning then?

Mr. Lawrence Gochberg: I think we briefed it shortly.

Justice Harry A. Blackmun: You have briefed it that’s why I’m asking.

Mr. Lawrence Gochberg: We briefed it, I’m not abandoning in it but it do have three other issues that I would like to argue that I think are more --

Justice Harry A. Blackmun: My question is, as I read your brief you bring all five points here, and yet in your petition for certiorari you cover only three, and therefore, I asked why they’re trying to bring all five as a violation of our Rule 40.

Mr. Lawrence Gochberg: I am sorry.

Justice Harry A. Blackmun: Maybe that’s something you can take up later but --

Mr. Lawrence Gochberg: If that is true.

Justice Harry A. Blackmun: The two in question are the interest point and the --

Mr. Lawrence Gochberg: And the 90-day, the standard.

Justice Harry A. Blackmun: Point number two, the extension --

Mr. Lawrence Gochberg: Yes, the standard of the 90 days.

Justice Harry A. Blackmun: Right.

Mr. Lawrence Gochberg: I think that is true and I do believe that there has been an inadvertent violation of your rules, if it is so then I stand correct and I will --

Justice Harry A. Blackmun: I suspect those two issues are not here but --

Mr. Lawrence Gochberg: I did not intend to argue them in any event, and I will abide by the Court’s rules on the matter.

I apologize for the oversight.

The plaintiff below, the contract involved here, was Cerpac and Industrial, and Cerpac and Rich.

Rich being the general contractor, Cerpac being the supplier, and Industrial being supplier, was for standard manufactured plywood and a simple contract for the furnishing of that plywood was given from Rich to Cerpac, and in turn from Cerpac to Industrial, and Industrial caused the material, plywood, to be shipped directly to Rich’s job at the Beale Air Force Base in California.

What happened was that during the course of the job, that’s toward the end of it, Cerpac became in financial trouble went bankrupt despite the payments from Rich to with, and Industrial is now sought to bring a Miller Act suit seeking to collect for the plywood.

Now, the Court of Appeals in the Ninth Circuit has adverted to the fact that Cerpac was an important member and subcontractor of the Rich Co., relying on the fact that not only that Cerpac have a contract to supply plywood, but it also had a separate contract to supply millwork.

The millwork issue was not at all in the case.

In this case, it was only introduced and used in this case to point out that Cerpac was an important supplier and/or “subcontractor of the F.D. Rich Co.”

The fact is, however, that in this particular case, Industrial supplied plywood to Cerpac who in turn supplied the same plywood to Rich.

It would seem to be that at least since the MacEvoy decision in 322 U.S., that relationship can give rise to nothing but a materialman, and a supplier of a materialman under the Miller Act has long been understood to be too far to receive any relief under the Miller Act.

Justice William H. Rehnquist: A materialman can get a relief, but the supplier to the materialman cannot.

Mr. Lawrence Gochberg: Yes.

Anyone having a direct contract with the general contractor under 270b (a), a direct contract does not have to give notice and after 90 days of not being paid may bring a suit against the principal, which is the general contractor and at surety here, Transamerica.

And that’s whether he be a materialman or a subcontractor and it is unimportant, which he is.

However, if you do not have a direct contract with the general contractor, you can still get relief under the Miller Act bond if you have a contract with the subcontractor, and that goes from the language as interpreted by this Court in MacEvoy against United States, 322 U.S. 102, I believe.

And it really talks about the language in the case, which states that in the proviso that any person having a direct contractual relationship with the subcontractor but no contractual relationship express or implied with the contractor, that is the general contractor, furnishing said payment bond shall give notice and then goes on to say he has a right of action.

Now, the Court of Appeals in bringing in what was a really of strenuous matter is the fact that, there was a contract between Rich and Cerpac, under which Cerpac supplied no work.

By the way, the Court and it’s not borne out by anything in the findings of the District Court.

The Court held that Cerpac installed the millwork, but that is completely untrue and it is not adverted to in the brief for the respondent.

Well, be that as it may, we suggest to you that the proper test on the question of whether or not the Cerpac was a materialman or a subcontractor, is the test set forth by the Court of Appeals for the Fifth Circuit in Aetna Casualty Co. against Gibson Steel Co., 382 F.2d 615, in that case the supplier or the middle man was a metal supplied steel and iron products, and if fact customized some of the products.

He made ladders and deck plates, and switch plates, and various steel and iron products costumed for the particular government contract and supplied them, and the Court of Appeals held there that he was a materialman.

The virtue of adopting the Gibson Steel approach is that we don’t have to get into this almost future interest type of discussion of the law.

A man is either a subcontractor or a materialman, and in the MacEvoy case, this Court held that if he takes over and is important and does a lot of the work, he may become a subcontractor, but if he is one that merely supplies material, he is a materialman.

The respondent has ceased in his brief on the fact that during a deposition, one of the officers of the F.D. Rich Co. stated that Cerpac was a subcontractor for the plywood.

I only point out to you that this Court in 322 U.S. in the MacEvoy case in Footnote 4 also stated that any use by the Court previous to that time of the loose use of the word “subcontractor materialman” by the Supreme Court would not be binding on it.

I ask the Court to view this in the -- that it is unimportant as to what Mr. Rich who was giving the deposition happened to call Cerpac.

What is important is an examination of what the function he did, and not what his relationship was but the function that he performed.

And his function was to supply plywood which he bought from Industrial, so, therefore as a materialman of the materialman, and clearly interdicted by the MacEvoy case.

Now, another question of that venue and then I want to come to the attorney’s fees question, which is of great interest.

On the question of venue, the statute very clearly says 270 -- 40 U.S.C. 270b (b), every suit instituted under this Section shall be brought in the name of the United States etcetera, in the Unites States District Court for any district in which the court was to be performed and executed, and not elsewhere.

Now, starting with the language in Justice Brandeis' language in Illinois Surety Co. against the John Davis Co. which this Court then in a dictum used in the MacEvoy case at 322 U.S. in which you said that this Miller Act is a remedial statute and you ought to liberally construe it.

The lower courts have absolutely gone wild and they’ve liberally construed it so that they forgotten the language of the statute, and they have forgotten the ratio decidendi of the MacEvoy case.

The MacEvoy case, you clearly stated that even though it has to be liberally construed, there is no way to impose liability on a materialman or a materialman claim words of the statute may not be disregarded.

Well, the Court of Appeals for the Ninth Circuit does not believe the ratio decidendi of the MacEvoy case and it has stated that even though two of the shipments involved here were sent by Industrial to South Carolina for a different contract, different federal contract on which there was a different surety that venue could be had in the District Court for California for recovery of those two shipments.

The Court however realized that it was kind of embarrassing since Transamerica Insurance Co. was not the surety for the South Carolina job. [Laughter Attempt]

So it said “Alright, we’re holding that the principle under the Beale bond, i.e. the general contractor F.D. Rich Co. is liable, but we’re excusing Transamerica.”

Well, you know the bond is only one instrument where either you can’t be a little bit pregnant about this whether liable or were not liable.

Justice Harry A. Blackmun: Well, the reason you had a different surety is because it was a different job.

Mr. Lawrence Gochberg: Yes, sir.

There were two different federal jobs.

Justice Harry A. Blackmun: And that these two shipments come to California clearly it would be under the Transamerica bond.

Mr. Lawrence Gochberg: No question Mr. Justice Blackmun.

And in the court, I really don’t understand the court, because it’s a circuit which I have often admired and I just didn’t understand their decision here on that issue of saying that the South Carolina shipments for a different job was somehow cognizable under the District Court here.

Judge Wollenberg in the Roscoe case -- Judge Wollenberg in U.S. against Roscoe Ajax in 246 F. Supp. 439 has set down a splendid exposition of the venue statute, and he has said that the venue statute is jurisdictional and cannot be disregarded by the courts.

In other words, the plain language of the statute, which says “and not elsewhere” must be enforced.

Justice William H. Rehnquist: Well, that’s a contradiction in terms so far as normal legal usage is concerned, isn't it?

I mean jurisdiction is one thing, venue is another and venue can be waived.

Mr. Lawrence Gochberg: But this, you know, this is semantic problem.

It is a semantic problem.

The Congress of the United States did not use the word “venue.”

The Congress of the United States said that anybody who wants to sue under the Miller Act must sue in the United States District Court for any district in which the contract was to be performed and executed and not elsewhere.

We, lawyers and we lower courts, and hopefully not the Supreme Court, have introduced concepts of venue and jurisdiction.

I agree with you.

Judge Wollenberg agrees with you.

He says that it is not a venue problem; it's a jurisdictional problem and cannot be waived.

In that case, he refused to allow two parties to change the venue that they had in a private contract.

You considered this question in passing in the Moseley case.

In Moseley, you considered it on the question where the contract had an arbitration clause and you considered the effect of arbitration, United States Arbitration Statute, on the Miller Act and on this jurisdictional point.

And there you send it back and it was inconclusive and never decided because there was a question of fraud and you held that it should go back to the District Court, but in a concurring opinion, I think it was concurring, the Chief Justice Warren pointed out that there were problems and Judge Wollenberg has dealt with that issue in the Roscoe Ajax case.

The most fascinating part of the Court of Appeals’ decision, aside from this venue question on which I submit they are clearly wrong, and on the question of the materialman, is the court’s action on attorney’s fees.

The attorney fee question has been plaguing the lower courts and lawyers who represent surety companies as well as contractors for the last 10 or 15 years.

For a time there, nobody even thought that to ask for attorney’s fees, and then suddenly lawyers are starting to ask and, lo and behold, federal courts are beginning to grant attorney’s fees, this Court held in the Fleischmann case, Fleischmann against Maier involving the Lanham Act that only Congress, at least in our courts, gives attorney’s fees, and it’s pointed out that this has been that in American jurisprudence, attorney’s fees are not granted absent a specific statute or a contract which provides for them.

In that case the Lanham Act, you held that the Lanham Act set forth the remedies, and therefore that was the end of it and attorney’s fees could not be granted regardless of the public policy to encourage actions under Lanham Act or not.

In the Miller Act, in this case, the Court of Appeals has held relying on the Red Top Metal, Inc. case, the Fifth Circuit case and relying on the broad language of Mr. Justice Brandeis’ decision in the Illinois Surety Co. case that attorney’s fees should be awarded.

And this is a curious situation, a curious result.

The appellate, Intermediate Appellate Court in California in the Richter case quoted in the opinion of the Appellate Court has held that -- had held in another type of bond, not a Miller Act bond that the California Law had no application to a private construction projects or to projects of the United States.

The lower court followed that case, and the Appellate Court reversed and approved Judge MacBride, the Chief Judge of the Eastern District of California’s decision, which is cited in the opinion.

The court approved this language and it held that federal law and hedl that under the policy of California Law, not its letter, attorney’s fees were recoverable and Miller Act cases to be taxed as costs.

Now, this situation was foresaw by the Red Top Metal’s case in which Judge Wisdom in a very well written decision with an erroneous result in the Fifth Circuit has reasoned through this whole question of the attorney’s fees.

He reasoned and he said “Well no, you can’t look to state statute law, because the states aren’t legislating for Congress, and it really is a federal question.”

But he found that the Miller Act had a hiatus and we look to the state law to fill in the hiati, if that is the plural or the hiatuses.

He really did something that this Court seems to have done in the Electric Auto-Lite case involving the Section 14 (a) of the Security Act of 1934.

In that case if you recall, in finding that there was a private remedy under Section 14 (a), this Court also held that you could award attorney’s fees.

And it held that it had a right to do so because Congress had left to you the question of interpretation of whether there is a private remedy under Section 14 (a) and therefore, you could write the entire remedy including the attorney’s fees.

And you distinguished the Fleischmann case in which would clearly lay down a very clear line of law saying that where there’s a federal statute involved and the statute doesn’t involve attorney’s fees, the lower courts are not to grant them.

Justice Harry A. Blackmun: Mr. Gochberg, on the attorney’s fee point you do have the Richter case going for you, don’t you?

Mr. Lawrence Gochberg: Yes, but that is an interpretation by a state court of a state law.

Justice Harry A. Blackmun: Well --

Mr. Lawrence Gochberg: And literally --

Justice Harry A. Blackmun: Isn’t that something in your favor?

Mr. Lawrence Gochberg: Well, I think I have the Fleischmann case that this Court decided in our favor, because I think the remedy under the Miller Act which says exactly what the subcontractor, a materialman is to recover is identical with the remedy set forth in the Lanham Act.

And you have interpreted the Lanham Act that way and you ought to interpret the Miller Act that way, and we ought not to get into constant litigation as to whether or not something which is clearly decided by the Supreme Court is to be eroded now.

We must have 40 cases now on attorneys, and some circuits give them and in Texas, a federal contractor -- now in Texas, you don’t have to pay attorney’s fees if you lose --

Justice Harry A. Blackmun: But if you could win on state ground, you just sue and win on that ground, wouldn’t you, in this case?

Mr. Lawrence Gochberg: As an old member of the Department of Justice and an associate of Mr. Freidman, I would hope to win on a broader issue, but I wouldn’t like to win on anything.

I do think the issue was more important than the actual amount of dollars, although I will point out to you that the District Court here has awarded 25% of the recovery, and certainly we have an interesting situation going.

Justice William H. Rehnquist: Well, Judge Wisdom’s opinion on Red Top refers to state law for the source of attorney’s fees, doesn’t it, and pretty much as the Ninth Circuit?

Mr. Lawrence Gochberg: Yes, and he certainly held there that -- but he said he’s not compelled.

You just look at it and you see what the spirit is.

Now, in Texas you don’t get attorney’s fees because Texas Law doesn’t do it.

In California by the way, private mechanics liens don’t give rise to attorney’s fees.

You can’t get attorney’s fees.

Justice William H. Rehnquist: Well, then one of your arguments I suppose is that the Miller Act is really a substitute not for a state Miller Act, but for the private materialman’s lien that you have in a private job and there you don’t get attorney’s fees under California Law.

Mr. Lawrence Gochberg: You don’t get it under California Law, and you don’t get it under Connecticut Law, and you don’t get it under any law unless you have a statute which gives it to you.

And I go further Mr. Justice --

Justice Byron R. White: Well, you say Fleischmann ought to apply it exactly.

Mr. Lawrence Gochberg: I’m saying Fleischmann.

Why do we have to go see what the 50 states are doing when we have a law enacted by Congress which tells you what the measure of recovery is?

I will -- I don’t want to look at -- I don't want --

Justice William H. Rehnquist: Give towards an amount?

Mr. Lawrence Gochberg: Give towards an amount, but I will accept your suggestion.

But I do think the statute says that you may prosecute said action to final execution and in judgment for the some or some justly do them.

And that’s the end of it.

That’s precisely the kind of language you have in Lanham.

Now, I don’t think that your decision in the Electric Auto-Lite case really distinguishes Fleischmann, because in that case you granted attorney’s fees, but you did it on a classical basis for granting attorney’s fees.

There has also been -- I’m sorry Mr. Justice?

Justice Byron R. White: (Inaudible)

Mr. Lawrence Gochberg: No, no, that face you always had.

Justice Byron R. White: As the fund.

Mr. Lawrence Gochberg: As the fund.

It was the one stockholder doing that which will be the benefit of all of the stockholders, which the chancellor in equity has always been able to grant attorney’s fees for.

So I think that you have some unfortunate language though in the Electric Auto-Lite case, because you seem to push Fleischmann too far apart.

In Fleischman you thought, and this Court did write in Fleischmann that there are exceptions, and one of the exceptions was the fun or doing good for the public good.

I’ve only pointed out to the Court that in the Public Accommodation Act and the Equal Opportunity Act where Congress meant to give us attorney’s fees, it clearly said that we get attorney’s fees, 14 U.S.C. 2000a, 3b and 14 U.S.C., I’m sorry I don’t have the other court.

It’s not cited in the brief, I apologize for that.

But it is the Public Accommodation’s Act and the Equal Opportunity Act.

I’ll reserve the balance of my time.

Thank you.

Chief Justice Warren E. Burger: Mr. Harlowe.

Argument of Dennis S. Harlowe

Mr. Dennis S. Harlowe: Mr. Chief Justice and may it please the Court.

I should like to pick up where counsel left off, namely with the attorney fee question and first apologize for an oversight in my brief.

I think I should have updated the California Code for the benefit of the Court.

The Government Code Section on attorney’s fees that has been referred to as this case has come forward is the Government Code Section 4207 by the 1970 statutes of California effective January 1, 1971.

In that code section you will find today is Civil Code Section 3250.

It was at this point that the California legislature brought together its government and civil code as it pertained to mechanics liens.

And I think at this point, it would be appropriate to hearken back to the type of question that Justice Rehnquist raised and that is, in California or perhaps it was Justice Blackmun and that is in California “Do you not get attorney’s fees because the Appellate Court of California says you do not get them?”

And our answer to that of course is, “No, the Intermediate Appellate Court in California in dicta made the comment that attorney’s fees under their Civil Code statute do not apply.”

That statute does not apply to a project of the United States.

That type of contention was first overcome in our view in Chevron Asphalt, the decision by Judge MacBride cited in our brief, when he points out that certainly that this Court could not be expected to look to a California statute to determine what the remedy is that’s afforded by Congress in a federal statute.

What is the remedy that’s afforded a claimant on the Miller Act bond under the federal statute?

Justice Harry A. Blackmun: You’re not purporting to say though that the Federal Court could override the decision of the California Court of Appeal with respect to state law in any event?

Mr. Dennis S. Harlowe: No, Your Honor, I think all that we’re saying and all that the Chevron Asphalt case has said, and all that the Ninth Circuit in our case has said is that case did not make such a decision.

It has not for Miller Act purposes determined what “state law” is particularly when state law states at this Section 3250, the current point, that in any action the Court shall award to the prevailing party of reasonable attorney’s fee to be taxed as cost.

The troublesome angle in Chevron Asphalt was that the California legislature had seemed fit to make a distinction in its statutory scheme between a state government and a private state project.

Therefore, in both Chevron Asphalt and the Ninth Circuit decision in our case they said “Look, we have a government project, California on a government project awards attorney’s fees.

We are going to do so.”

And that’s kind of a way to back in to the point I want to make.

This Court is not being asked to affirm a judgment which says “you are entitled to attorney’s fees in a Miller Act case” that isn’t the point.

The point is, this Court is being asked to affirm a judgment which says “look to state law to make that determination”, why is that type of judgment necessary?

Because the Miller Act does not provide the remedy, as my learned opponent has set forth, he would believe that the Miller Act somehow tells you what the nature of the recovery should be.

We submit that it does not.

It says “you shall receive the sums justly do.”

Contrast that with Maier-Fleischmann.

Under the Lanham Act, you’re entitled to all sorts of a detailed remedy.

You get the defendant’s profits for example, plus your damages, plus there’s an elaborate provision whereby discretion in the district judge can increase or decrease the amount of the award.

It’s a very detailed remedy and as pointed out by the Ninth Circuit in this decision, in that instance when Congress has taken the pains to detail exactly what’s going to happen, you should not imply another remedy.

I think there’s another reason for it, and that in a sense is a pure federal situation.

Its trademark law and what is the consequence of a violation.

That isn’t our case here.

If this Court or any court were to say “you get attorney’s fees” well, I guess this Court is the only one who could to do, we’re to say you get attorney’s fees in the Miller Act case that would be unfair in states that don’t award Miller Act cases on state projects.

Justice William H. Rehnquist: Well, Mr. Harlowe, why isn’t it then that you look to state law for deciding whether under the Miller Act you get attorney’s fees?

Mr. Dennis S. Harlowe: Because there is no other way Your Honor, to define what type of recovery is intended in a Miller Act case.

It’s at this point that Ninth Circuit in our case and in Red Top Metals in an even more definitive statement I think, in USF&G versus Henry, a Florida case that the courts all say “Well, let’s look at the purpose of the Act.”

And at that point they look at Illinois Surety versus John Davis in the language of Justice Brandeis where he points out the Miller Act was intended to be in lieu of the lien customary on private property, customary lien.

Justice William H. Rehnquist: Okay, now but then if you look to California Law on that kind of a lien, you don’t get attorney’s fees, do you?

Mr. Dennis S. Harlowe: Yes, you do.

Justice William H. Rehnquist: On a private materialman’s action without the state being involved in any way?

It was my impression that under the California Law you didn’t get it.

Mr. Dennis S. Harlowe: Oh! Excuse me.

Yes.

Prior to the time that the Government Code Section was extracted and put in to the Civil Code, that would have been the case.

Justice William H. Rehnquist: But you say that under the appellate --

Mr. Dennis S. Harlowe: Now, you get them in both sides.

Justice William H. Rehnquist: Under California Law you get attorney’s fees now even though it’s a private party on all sides and private ownership of the land?

Mr. Dennis S. Harlowe: Yes.

Including you will notice in that same Section I cited you that is 3250, they have a nice thing in California.

They provide you with some of the legislative notes.

And I think I should mention is that the legislative note to 3250 points out that it is the intent of the legislature by this Act to change the basis for a decision of law denying attorney’s fees on appeal, so as to permit prevailing party to recover such fees on appeal.

It is that type of statute, that type of statutory determination by the legislature of the form of state that clearly expresses the policy of that state that the businessman in that state expect to do business under within the boundaries of that state.

And the only thing that we’re suggesting is that the Miller Act was intended to replace that not to unfairly benefit federal government projects.

Justice William H. Rehnquist: But, that isn’t the ground that Court of Appeals told you, is it?

It is, as I read, the Court of Appeals' opinion, it relied on the fact that under California Law, under California’s equivalent of the Miller Act where you’re working on a state project, you get attorney’s fees?

As I read that opinion, they didn’t rely on the Section that you cite that you say now provides for attorney’s fees even in a private action.

Mr. Dennis S. Harlowe: Yes, Your Honor the one point that we made there that did not prevail in the Court of Appeals, perhaps I shouldn’t say not prevail, you notice on a footnote in their decision they say that we urged at that time that it should be made retroactive if that’s necessary.

And the Ninth Circuit in this case said “No, we’re not even going to enter into a retroactivity type of question.”

Because they felt that was not necessary.

They took the same position that Judge MacBride took in Chevron Asphalt, namely if you get it on a state government project, you get it on a federal government project.

And we’re not going to concern ourselves and as Judge MacBride points out he says “I don’t know why California wants to make a distinction like that?”

And as it turned the state legislature of California subsequently agreed with him, so even prior to the time of the judgment on remand in this case, we have that combination where attorney’s fees are available in both sides of the case.

Without cutting this too short, I would like to make an observation on the argument urged by my opponent in connection with the status of Cerpac as a contractor.

I think the facts are exhaustively presented in the findings and conclusions.

The reason for that was this case was tried as a companion to a prior case with similar parties involved and it was possible to do it largely by stipulation in the record, and we wanted to set out at that point what it was that the documentation showed, and a few of the factors that should be rehearsed are the very ones that counsel has emphasized in the Aetna case is showing the contrary.

And that is in this case, we’ve got a contractor who worked under a contract agreement, received progress payments for specific and substantial sections of the work at a fixed price with progress payments in a continuing relationship and guaranteed against defects and workmanship in material.

All of which, in addition to a vast number of other details of the relationship that are set forth in our brief, without question, show that Cerpac is a contract -- subcontractor.

Going behind that however, is the finding of the District Court.

Again, one that was not necessary to the decision at the Ninth Circuit, and that finding was that there was a direct implied relationship between Rich and Industrial.

And that relationship had its germination.

You can go back to the findings of the trial judge as early as May, and during the course of their relationship in 1966, it was perfectly clear to the parties at that time what it was they wanted the contract for, what each party was expecting to have done.

Unfortunately, our client fulfilled his half of it and did not get paid.

That was the implied contract.

That was the meeting of the minds that the district judge found that the Ninth Circuit courts did not rely upon.

It could not say those findings were clearly erroneous.

It simply found that it had another issue to meet, and that is the one of the subcontractor status.

And the reason that question came up was principally so our opponents at that time could argue they had not have timely notice of our claim, when the essence of it was they had had notice far prior to the time they get into conceding to us that they owe us for the last two shipments.

As far as the venue question is concerned urged here as being jurisdictional, I think the authority set forth in our brief adequately handle that.

I would like to emphasize that the bonding company with Miller Act coverage on this project correctly we believe by the Ninth Circuit, was not subjected to liability for the shipments to South Carolina.

The prime contractor was we feel that was correctly done.

And I think that would be adequate for us.

Thank you.

Chief Justice Warren E. Burger: Thank you Mr. Harlowe.

Do you have anything further Mr. Gochberg?

Rebuttal of Lawrence Gochberg

Mr. Lawrence Gochberg: Yes I have.

On the question of the attorney’s fees raised by Mr. Justice Rehnquist as to the question of local law, I would like to point out to you that the plaintiff here, the real plaintiff not the United States, but the plaintiff here is a State of Washington Corporation.

The defendant is a Connecticut Corporation and the work that was performed was not performed under any contract or direct relationship between the defendant and the plaintiff.

Had they had a direct contract, and had we under the conflicts of law look to that contract, we might be applying the law which we usually write into our direct contracts that this shall be governed by Connecticut Law, or Washington Law, or Texas Law.

Justice William H. Rehnquist: Though the land was in California?

Mr. Lawrence Gochberg: Yes.

Justice William H. Rehnquist: Well, then if you are talking about the substitute materialman’s bond, you’re talking about California Law.

Mr. Lawrence Gochberg: Yes, I understand that, but I am not -- but I am pointing out to you that there is a vice in my opinion in allowing the various state law.

In Texas, you get attorney’s fee -- you don’t get attorney’s fees, in California, in Alaska that you do, Louisiana you don’t in Florida, etcetera.

The other point on attorney’s fees and the spirit of the law, I would like to -- there is a Trade Secrets case that I saw though this morning, very interesting one.

But the Ninth Circuit has considered this question in the Trade Secret case in the Midwest Co. against Kaiser Aluminum 407 F.2d 288, it is not in my brief, a 1969 case where the Court of Appeals held against granting attorney’s fees in a Trade Secret case, finding there was no compelling public interest.

Why there’s a compelling public interest in Miller Act cases escapes me, I’ve never understood it.

I do think it is Mr. Justice Brandeis’ words as re-promulgated by this Court in MacEvoy, which has given a false direction to the lower courts.

I want to bring out the Monroe Port case on the question of the subcontractor and the relationship of Cerpac.

There is nothing that was said by my learned brother as to Cerpac’s status which applies to the plywood which is here under consideration.

It was a separate contract for the plywood.

It was simply invoiced separately and shipped.

In the Monroe Port case and decided in the First Circuit, you will recall that the First Circuit upheld in the necessity for giving a 90-day notice.

Even though the Miller Act claimant was a direct subcontractor of the plaintiff, but there he had done some work for another subcontractor and thus he had, for that portion of work, been a subcontractor of the subcontractor.

He was also a direct subcontractor of the general contractor, and the Court of Appeals for the First Circuit in Monroe Port held that he had to give the 90-day notice.

And I hold that whatever Cerpac may have been in relationship to Rich insofar as the millwork, although I think he’s still a materialman there too, but those facts are not before you.

He certainly cannot be considered to be a subcontractor for plywood.

Thank you Mr. Chief Justice.

Chief Justice Warren E. Burger: Thank you gentlemen.

The case is submitted.