GULF OIL CORP. v. COPP PAVING CO.

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Argument of Martin M. Shapero

Chief Justice Warren E. Burger: We’ll resume arguments in Gulf Oil against Copp Paving.

Mr. Shapero I think you’re on.

Mr. Martin M. Shapero: Mr. Chief Justice, may it please the Court.

The position of the petitioners which we heard yesterday is represented by two basic concepts.

Each of which fail to withstand the test of close analysis, their first proposition is that in this case the issue is not what Congress could do but what it did do.

The petitioners’ position is Congress did not intend to apply the antitrust laws to builders and suppliers of instrumentalities of interstate commerce, that fact standing alone.

This position is incorrect and in point effect Congress has stated both generally and specifically its intent that the antitrust laws apply to builders and suppliers of instrumentalities of interstate commerce.

Chief Justice Warren E. Burger: Are you speaking in this context or in other context that you regard as analogous?

Mr. Martin M. Shapero: I'm just speaking in this specific context and herein we are discussing the specific question of instrumentalities consisting of interstate highways.

Chief Justice Warren E. Burger: No, but I -- my question is, are you speaking in the context of antitrust or in others that you consider analogous to this?

Mr. Martin M. Shapero: I'm speaking specifically of this case Your Honor and the cases that I have to support it in the statutes that I have to support it, I believe are practically on the button on this particular situation.Coming to the second proposition which we believe we will demonstrate to be an error is that the term interstate highway has no meaning and it is not a term of art. This is likewise an incorrect position.

The term interstate highway has a recognized meaning both in law and in fact.

The two misconceptions go to the essence of the petitioners’ case since it is clear that if Congress did indeed declare its intent that the antitrust laws apply to instrumentalities of commerce and if interstate highways are clearly understood to be such instrumentalities then this petitioners as well as our clients as builders and suppliers of instrumentalities of interstate commerce are subject to the terms and provisions of each and all of the antitrust acts.

Let us start with the second proposition first.

Does the term interstate highway have a meaning?

Is it a term of art or is it something which has no significance in terms of the law or the English language?

It most certainly has a meaning and that meaning is disclose by both history and the statements of this Court.

You can go back and I bring you old law.

It pays at this time to go back to the language of Gibbons versus Ogden.

The -- Justice Marshall speaking says the subject to be regulated is commerce and our Constitution being as was appellees said at the bar, one of enumeration and not of definition to ascertain the extent of the power it becomes necessary to settle the meaning of the word.

The counsel for the appellee would limit it to traffic, to buying and selling or to the interchange of commodities and do not admit that it comprehends navigation.

This would restrict a general term applicable to many objects to one of its significations.

Commerce undoubtedly is traffic but it is something more, it is intercourse.

It describes the commercial intercourse between nations and parts of nations and all its branches and is regulated by prescribing rules for carrying on that intercourse.

The mind can scarcely conceive a system for regulating commerce between nations which shall exclude all laws concerning navigation which shall be silent on the admission of the vessels of the one nation into the forts of the other and be confined to prescribing rules for the conduct of the individuals in the actual employment of buying and selling or barter.

Perhaps the most striking example of the close and intimate intertwining relationship between interstate commerce on the one hand and the instrumentalities of interstate commerce on the other is the fact that the very first commission in this country which was formed to establish and control -- which was established to control the railroads.

It was not called the Railroad Commission and it was not even called the Transportation Commission.

It was called the Interstate Commerce Commission.

And no one certainly at this stage in our development would deny that the authority of the federal government to control railroads under the commerce power as an instrumentality of interstate commerce does not exist.

And what is the relationship then between interstate highways to interstate commerce.

We’re now approaching the case at bar as a Professor Sharfman in his work on the Interstate Commerce Commission states as follows, “The railroad industry is no more than a century old than the motor carriers and waterlines whose increasingly severe competition it has been encountering in recent years about the modern counterparts of the turnpikes and canals which had largely displaced at the time of its first emergence as an improved source of transportation service.”

Justice Murphy speaking for this Court in Overstreet versus North Shore Corporation put it as follows, “We think the practical test should govern here.

Vehicular roads and bridges are as indispensable to the interstate movement of persons and goods as railroad tracks and bridges are to interstate transportation.”

If they are used by persons and goods passing between various states they are instrumentalities of interstate commerce.

Justice Black speaking in Alstate versus Durkin put the matter vastly, “In Overstreet, we pointed out that the interstate roads and railroads are indispensable instrumentalities in the carriage of persons and goods that move in commerce.”

What’s the retort of the petitioners to this language?

The retort is that in those cases they were talking about labor laws, fair labor standards and here we’re talking about another kind of statute but let us look at the Highway Act itself.

The Highway Act which is 23 United States Code Section 103.

In the Highway Act, we have described a federal primary system, a federal secondary system, a federal aid urban system, and lastly, the interstate system which the Congress in the Highway Act defines as follows.

The interstates -- “The interstate system shall be designated within the United States including the District of Columbia and except as provided in paragraphs 1 and 2 of this subsection.

It shall not exceed 41,000 miles in total extent.”

It shall be so located as to connect by roots as direct us practicable the principle metropolitan area, cities, and industrials centers to serve the National Defense and to the greatest extent possible to connect at suitable border points with roots of continental importance in the dominion of Canada and the Republic of Mexico.

The roots of this system to the greatest extent possible shall be selected by joint action of the state highway departments of each state and the adjoining states subject to the approval by the Secretary as provided in subsection (e) of this Section.

We come to the case at hand.

The language which we consider critical was contained in a stipulation which we entered into very early in this case.

In the stipulation, as set fourth by the trial court reads as follows “a more than de minimis quantity of asphaltic concrete delivered by plaintiffs and their competitors is delivered for use on interstate highways.”

That’s contained in the record in the appendix to the respondent’s brief at page 3.

I submit this to you that the petitioners at the time they entered into that stipulation well understood the distinction and meaning and the clear -- the clear meaning of what was intended and what is intended in law by the phrase interstate highway.

As stated in the respondent’s complaint at page 17 and 18 of the appendix, I'm quoting now from the record in the appendix “Defendants Gulf Union and Edgington sell to end users and contractors including plaintiffs substantial quantities of hot asphalt -- oil to be used as hot asphalt or asphaltic concrete for constructing, maintaining, surfacing, resurfacing and repairing roads and the highways including federal interstate system highways and highways directly connected to interstate highways.

How did the petitioners respond to that?

They admitted those very phrases.

Now, I can represent to the court.

Justice Harry A. Blackmun: Mr. Shapero in that all conceded here?

Mr. Martin M. Shapero: It is conceded and that is the exactly the next point that I was coming to Mr. Justice Blackmun.

It is conceded and they admit that indeed they did apply this to interstate highways.

The petitioners clearly understood at that point and my point is that by making the concession they must have understood the distinction between interstate highways and roads which are merely funded by federal money when they entered into the stipulation, otherwise, the stipulation makes no sense whatsoever.

Chief Justice Warren E. Burger: Mr. Shapero --

Mr. Martin M. Shapero: Yes?

Chief Justice Warren E. Burger: -- would you think that the suppliers of raw material who furnished the sand and the gravel and the binder to Copp Paving would be an interstate commerce?

Mr. Martin M. Shapero: If to the extent that the particular supplies are going on and interstate facility I would say yes, Your Honor, they are.

Chief Justice Warren E. Burger: Well, let's take a hypothetical case a specific one.

Copp close whoever the supplier is or writes them to make the evidence more definite.

It says we have big contract to resurface interstate highway number 81 for 23 miles all inside of California.

We request you to submit business for and then list the following items sand, gravel, whatever else they put into this asphaltic cement.

Mr. Martin M. Shapero: Yes, Your Honor.

Chief Justice Warren E. Burger: Is he an interstate commerce?

Mr. Martin M. Shapero: I believe that he is and I believe that the Congress has so stated and intended that they be so considered and that would be my next point that I would point out to the Court where Congress has indeed expressed its specific intent in a very limited area and that very limited area has reference to the specific instrumentalities of intrastate commerce so that I'm not talking in this case about a big spread or a wide expansion of the reach of the antitrust laws because I must remind the Court at all times that we’re talking about interstate -- an interstate instrumentality so that we’re talking about an expansion within a very, very confined area of the law but as within that confined area Congress has expressed its intent which I will come to shortly, with your permission.

To continue my point to enter into the stipulation which they entered into, that the amount of asphaltic concrete delivered by the petitioner and their competitors would by definition mean that all the paving if we would take the stipulation as its interpreted by the petitioners it would mean that the amount of asphaltic concrete delivered by the petitioner and their competitors which would by definition mean all the paving done in Southern California was more than de minimis.

This would simply be entering into a nonsense stipulation because the terms of the stipulation would mean that we would be stipulating that all the pavers, all the -- the total industry in Southern California is producing all the roads in Southern California and all that activity is more than de minimis, if the stipulation simply has no meaning whatsoever unless you are confining it to the specific reference of the interstate instrumentality.

Now the petitioners I would submit they knew better than this one they entered into this stipulation and they are pleadings and they’re understanding was that at the time that the pleadings were drawn at the time that we entered into the stipulation that we were tracking the use, we were actually tracking statutory language and the statutory language we were tracking in the statutory language which as Justice Blackmun points out that they admitted was the specific statutory language set forth on the Highway Act itself.

And their inability at this point to understand the meaning of the phrase interstate highway is no more than an attempt, I would submit, to remove themselves from one portion of a syllogistic box which they find themselves in.

Now, let's turn to the first issue which still remains.

Did the Congress express the intent to do that which he have had the power to do namely, apply the Antitrust Act to instrumentalities of commerce, namely interstate highways within the meaning of that phrase as we’ve now demonstrated the phrase has a meaning.

The Clayton Act itself expresses the congressional purpose and intent and in reference to the instrumentalities as they existed at the time of the passage of the Clayton Act in 1914.

At that time the development of highways had not yet occurred but the intent of the Congress to control and apply antitrust legislation to the builders and suppliers of the interstate instrumentalities was clear and it was done and it was done even in the view of the fact that the railroads were natural monopolies.

Now, the specific languages contained in Section 10 of the Clayton Act and that’s one that’s a primary act that we’re concerned with.

And Section 10 of the Clayton Act says that no common carrier engaged in commerce shall have any dealings and securities, supplies or other articles of commerce or shall have any contracts for construction or maintenance of any kind to the amount of more than $50,000 in the aggregate in any one year with another corporation, firm, partnership, or association.

When the said common carriers shall have upon its board of directors or as its president manager or its purchasing or selling officer or agent in the particular transaction, any person who is at the same time a director manager, purchasing or selling officer or who has any substantial interest in such other corporation, firm, partnership, or association unless and accept such purchases shall be made from or such dealing shall be with the bidder whose bid is the most favorable to such common carrier to be ascertained by competitive bidding under the regulations to this prescribe by the rules or otherwise by the Interstate Commerce Commission.

And it states further any person, any person, this is contained within the Clayton Act itself, any person who shall directly or indirectly do or attempt to do anything to prevent anyone from bidding or shall do any act to prevent free and fair competition among the bidders of those desiring to bid shall be punished as prescribe in this Section in as in the case of an officer or director.

So that in reference to the construction of the railroads, I think the intent of Congress is spelled out perfectly clear in referring to the question that you put there Mr. Chief Justice.

That here we have a specific intent of the Congress we have a statement by the petitioners that if the Congress declared its intent, they would certainly have the power to do so.

Here we have a specific intent set forth by the Congress.

Now the next question of course immediately is that’s all very well and good but that was in reference to the railroad that had nothing whatsoever to do with the highways.

We have the same specific intent which is set forth by the Congress within the Highway Act and they discussed this in terms of maintaining competition.

I might state that this Court in the unanimous opinion -- in a unanimous written by Justice Douglas stated that the Section that I just quoted from is an Antitrust Act and Mr. Justice Douglas used the following language “It is pointed out that the railroads scandals of that age were not limited to interlocking directors and multiple shareholders but that suppliers of railroad materials had made substantial gifts to the railroad officials with whom they dealt.

With the railroads at that time at least you had in theory at any rate where you had an independent entrepreneur and he was acquiring supplies for his road he had at least the impulse and unless there was a conflict of interest the desire to hold the prices down but we’re you’re dealing with public highways who I would ask the Court is the entrepreneur who is going to protect the public under those circumstances.

And the Congress answered that question and the Congress declared that their both mere position was going to be that the protector of the public under those circumstances would be competition and they’ve stated so and they’ve stated so specifically, they stated the under letting of contracts and I'm now referring to Section -- to 23 Section 112.

The Secretary shall require as a condition precedent to his approval of each contract awarded by competitive bidding pursuant to subsection (b) of this Section and subject to the provisions of this Section a sworn statement executed by or on behalf of the person, firm, association, or corporation to whom such contract is to be awarded certifying that such person, firm, association, or corporation has not either directly or indirectly entered into any agreement participated in any collusion or otherwise taken any action in restraint of free competitive bidding in connection with such contract.

Now that is a clear statement of congressional intent.

They’ve stated it even further at Section 304.

This is 23 Section 304 of the Highway Act it states it is declared to be in the national interest to encourage and develop the actual and potential capacity of small business and to utilize this important segment of our economy to the fullest practicable extent in construction of the federal highways systems including the interstate system.

Now, what’s the answer of the petitioners to this?T

hey say these aren’t directives.

That it’s within the power of the state to ignore each one of these items if they so choose.

All they have to do is forego the federal funds and this I would submit to you is introducing a new doctrine that unlike debt, taxes are no longer inevitable.

All you have to do is give up income because the fundamental facts of life are today in the United States that the money that’s available for the construction of highways is available through the federal government and that’s the only way that this highways are going to be constructed.

Chief Justice Warren E. Burger: Let’s assume, Mr. Shapero that some state gets some astounding notion of independence says, we don’t want any federal money.

We’ll build this extension, we’ll cooperate, and we’ll build this extension with our own money. Do I understand you to say that the source of the money is the key fact?

Mr. Martin M. Shapero: No, absolutely not to that doctrine has already been considered and rejected by the court.

The source of the money does not give the federal government the power.

The power comes from the fact that the particular highway is itself an integral part of the interstate process.

All that I'm stating is that this is a designation and a recitation of what the congressional intent was.

The intent to apply the antitrust laws to an interstate construction of highways because certainly in terms of the protection of the public the advantages and the necessity for having a competition is just as wrong if its paid for by the State of California as if the particular highway is paid for by the federal government.

We still need the same protection and that is the fundamental purpose of these statutes and why they are essential as far as the construction of the highways are concerned.

Because the competition has the ability of limiting and I put (Inaudible) aside, by putting it aside I don’t say that it doesn’t exist but I put it aside.

The other factors what becomes a proper measure of profit, what formulas do you use?

All these matters are eliminated automatically by the presence of competition and we have the clear expression of Congress which states that what the Congress is looking for is not what in the constructions of the highway, what they looking for is not so much that when they want to build their highway they don’t want to look to a company, they want to look and have the ability of looking to an industry in order to build that highway and in order to do it they have declared that we must maintain the integrity in full competition.

Now, the extent there has been -- there were some discussion yesterday that was put in terms of the extent to which the federal government had participated in the extent to which the federal government had made contributions and we have the record is very full with specific references as to the extent of the federal contribution that we have made.

For example at page 172 of the appendix, I invite your attention to examining the fact that in one year for example $294 million went in to the national system of interstate and defense highways in California alone for the year 1972-1973.

Unknown Speaker: Mr. Shapero.

Mr. Martin M. Shapero: Yes.

Unknown Speaker: May I interrupt you for a minute, are you arguing that this transactions had an effect on commerce?

Mr. Martin M. Shapero: This is not an effect case, we are in commerce.

Unknown Speaker: Right, you do not rely on that?

Mr. Martin M. Shapero: We don’t rely on the effect doctrine this is “in commerce” case.

Unknown Speaker: And the District Court found there was no proof of the effect on commerce in this case?

Mr. Martin M. Shapero: Well, the District Court never considered the problems specifically that District Court ruled that there was no effect on commerce and therefore through all of the Acts, it made no distinction when it ruled, it threw out everything because it failed to find an effect on commerce under the Sherman Act.

And since the Sherman Act failed, then it ruled that all four of the Acts failed, so that the District Court made no distinction whatsoever.

I might say that I think you have an effect on commerce almost as a matter of law by the very language of the District Court itself were it spelled out that we already have 75% and this is from the opinion of the District Court that we have 75% of the road construction in Southern California now being built by two parties Industrial and Sully-Miller each of which are owned in turn by two large oil companies Gulf and Industrial.

So that we are already approaching an effect doctrine because the trial court again in the trial court opinions says that where you have monopoly you presumably would have such an effect and we are approaching already by the trial courts own findings such a monopoly situation.

Justice Potter Stewart: You’re supporting the Court of Appeals reasoning and its opinion?

Mr. Martin M. Shapero: That’s correct, yes sir.

Justice Potter Stewart: In contradistinction with the reasoning in the Government’s amicus brief, aren’t you?

Mr. Martin M. Shapero: That is correct, Your Honor.

Thank you for your time.

Chief Justice Warren E. Burger: Do you have anything further, Mr. Lasky?

Argument of Moses Lasky

Mr. Moses Lasky: Yes, if the Court please.

Mr. Chief Justice, if the Court please.

In the few moments that I have I would like to note the consequences of this argument that just been made.

Interstate -- what is called the interstate highway 480 is a stretch of street in San Francisco of about 12 blocks in length running from the so-called Barbary Coast.

If a man should pick up a woman or abduct her and carry her for purpose of prostitution over those 12 blocks, under this argument you’ve just heard, that man would have violated the Dyer Act, the Mann act, and that Lindbergh Kidnapping Act because he would have transported the kidnapped person in a stolen automobile if he had a stolen automobile in interstate commerce.

Now, the only other thing I wish to say is on the subject that effect the District Court in its opinion which is printed as an appendix to our petition for certiorari on page 6 discusses the subject and concludes, I conclude that the local activities of the defendants with regard to as all the concrete did not have a substantial impact on interstate commerce.

Counselor said this is not a impact or effect case and is relying on the arbitrary notion that because asphaltic concrete went into a road as part of it connects with other roads it crosses the state line it is in the interstate commerce.

And with that submission, he has so largely abandoned the bulk of his own brief which was an argument along the lines of that of the Solicitor General.

I submit the case.

Thank you.

Chief Justice Warren E. Burger: Thank you gentlemen.

The case is submitted.

Print this transcript Transcript: 

Argument of Moses Lasky

Chief Justice Warren E. Burger: We will hear arguments next in 73-1012, Gulf Oil against Copp Paving Company.

Mr. Moses Lasky: Mr. Chief Justice --

Chief Justice Warren E. Burger: Mr. Lasky.

Mr. Moses Lasky: -- and may it please the Court.

This case concerns the jurisdictional requirements of interstate commerce in three Sections of the Clayton Act.

Section 2 which is the Robinson-Patman Act, Section 3 which is the provision prohibiting certain tie-in arrangements and Section 7 which is commonly called the Celler-Kefauver Act or Amendment which has to do with mergers and acquisitions.

The case does not involve any question at all of what Congress’ has powers are.

It involves no question what Congress can do.

It only involves the question of what in fact it has seen fit to do by the legislation it has enacted.

Now the starting point, I assume of any consideration of what an act of Congress means is the language of the Act of Congress.

The jurisdictional requirements of the three Acts that I speak of are much the same and are to be contrasted with the provision of the Sherman Act because they are much narrower.

Now, each one of these three Acts, each one requires that the proscribed conduct have an effect and an impact on interstate or foreign commerce.

Now, I'll use the word “commerce” hereafter for interstate or foreign commerce.

The language of the three is identical.

It is required that the “effect maybe substantially to lessen competition or attempt to create a monopoly in the line of commerce” and in this respect these three are identical with the Sherman Act.

They require an effect or impact on interstate commerce, but the Sherman Act requires no more.

Under the Sherman Act it makes no difference who commits the conduct or where it occurs if it has an effect on interstate commerce.

But here under these three Clayton Act Sections, much more is required.

Effect or impact which is expressly spelled out and required is only one of several of the tests of jurisdiction mandated by these Acts.

Robinson-Patman requires, in addition to the effect or impact, that the discriminatory sale would be and I quote “by a person engaged in commerce, in the course of such commerce” and again a discrimination requires at least two sales to have a discrimination between it requires “either or any of the purchasers involved must be in commerce,” that’s in addition to the Effect or Impact Clause.

Section 3 has almost the identical language.

It requires that the tie-in conduct be that of a “person engaged in commerce in the course of such commerce.”

In Section 7, the anti-acquisition section, requires not only that the effect be adverse on a line of commerce, but that the acquiring corporation be “a corporation engaged in commerce” and in addition, that the acquired corporation be a corporation engaged in commerce.

Now, before we go further to discuss the effect of the Act besides from this case, it's necessary to find out what product we’re talking about because that's the key to this case.

The product involved in this case is a substance known as asphaltic concrete, not asphalt.

And I emphasize it is not liquid asphalt because liquid asphalt moves in interstate commerce and while this case started is one of what later became a consolidated as the Western Liquid Asphalt cases, the trial court carved out the asphaltic concrete aspects of it and left the liquid asphalt aspect still going, they're still in the Court, they're still proceeding with the rest of the Western Liquid Asphalt cases.

Asphaltic concrete, let me say when the Court carved it out, the Court said at the beginning there seem to be a jurisdictional element upon asphaltic concrete.

It directed the plaintiff to take all the discovery he needed on the jurisdictional elements, come back and make a showing and when that occurred, the Court ruled out the asphaltic concrete elements.

Asphaltic concrete is a product made in California and which by its very nature cannot be sold across the state line.

It's a bulky product, composed of 95% of rocks, sand and gravel which is mined in the local pits and the other 5% is liquid asphalt, also produced in California from California refineries.

This material is used as a topping, black top, streets, roadways, driveways.

In order to make it, you mix the rock with hot asphalt in a hot plant and the product has to be laid down before it cools.

Consequently, it has to be laid down within 35 miles from the plant where it's made.

That means it can't move in interstate commerce.

The hot plants of all the parties in this case are located in California.

The hot plants of the plaintiff were all located in the Los Angeles basin.

The hot plants of the acquired corporation involved in the Section 7 aspect of this case, Sully-Miller are all located in the Los Angeles basin, that is to say Los Angeles County and the suburbs around it.

None of the asphaltic concrete made or sold involved in this case ever got within 200 miles of an interstate border of California.

Now, the Robinson-Patman in Section 3 accounts concerns sales of asphaltic concrete by the petitioner, industrial asphalt.

It is accused of having discriminated and yet none of its asphaltic concrete sales ever got within 200 miles from the California border.

None of never crossed the state line, none of never could cross a state line.

Now, the Section 7 count involves the acquisition by Union Oil Company which is not in the asphaltic concrete business of one Sully-Miller.

Sully-Miller has its plants solely in Los Angeles County and the neighborhood of Orange County and makes asphaltic concrete from local materials, sells it within a 35 mile range from Los Angeles.

It also engages as a paving contractor and the complaint, the amended complaint in this case alleged that Sully-Miller's business was engaged -- being engaged primarily in the business of operating asphaltic concrete, hot plants and contracting street improvements.

It's a street paver and all -- this appears at the appendix of Page 15.

It is plants from the Los Angeles basin.

It's a contractor in paving streets in that particular area, all 200 miles or thereabouts from the border.

Now upon this state of undisputed fact, the District Court ruled that the jurisdictional requirements of Sections 2, 3 and 7 were absent.

It said that the Robinson-Patman Act did not apply because no sale by industrial of asphaltic concrete was in commerce.

No sale was made in the course of commerce.

For the same reason they held that the Section 3, the tie-in section did not apply and it held that Section 7 did not apply to Union's acquisition of Sully-Miller for the simple reason that Sully-Miller was not a corporation engaged in commerce.

I may add that the District Court also found there wasn't any effect on interstate commerce and it had given the plaintiff, the petitioner every opportunity show their jurisdictional facts.

This case went to the Court of Appeals on an interlocutory appeal, allowed under 1292-B and that Court reversed.

Now, until the decision in this case, it had been the uniformed decision of a mass of cases, the Robinson-Patman does not apply unless at least one of the sales, involving a discrimination crosses a state line.

The Court of Appeals dismissed this state line test and it did it because it said asphaltic concrete is used on streets and roads.

Streets and roads of all hook up and eventually something crosses the state line, so you have an interstate highway system.

Therefore, the roads and the streets are linked up to “an instrumentality of commerce” and therefore said it as a matter of law, the seller and the sale are engaged in commerce.

As for Sully-Miller, it held that as a matter of law, it was engaged in commerce because it sold asphaltic concrete for use on roads and because it paved streets, as I say all 200 miles from an interstate border.

Now, the Ninth Circuit ignored the finding of no effect on the interstate commerce because it said that because an interstate instrumentality of commerce was involved a road, everybody was engaged in commerce and if you're engaged in commerce the effect for all those as a matter of law, I'm not going to discuss that.

This Court, we petitioned for cert -- on the certiorari upon the Sherman Act issue and certiorari was not allowed on that so that's not before us.

The proposition we advance now is that the judgment and decision was wrong because no sales were made in commerce by anybody engaged in commerce and nobody engaged in commerce was acquired.

Now, just this year on May 24th, the Fifth Circuit in Scranton Construction versus Litton Industries reported in 494 F2d 778 referred to the decision below the very one I'm here on now, it referred to it as a “new deliverance” and refused to follow it.

Now, this Court granted certiorari to review this new rule of law and yet now that we're here, the decision of the Court of Appeals for the Ninth Circuit is barely defended.

The Solicitor General has filed an amicus brief the other day in which he urges that Sections 3 and 7 should be read as if they were coextensive with the Sherman Act.

In other words, you delete all of the language above sales in commerce, but in the course of commerce by a corporation engaged in commerce and treat the Acts as if they required no more than the Sherman Act and curiously enough he says nothing about the Robinson-Patman Act, he just talks about Section 3 and Section 7.

We know of course that the Department of Justice in the antitrust division had never been lovers of the Robinson-Patman Act and apparently they don't seem to defend the decision, but the language of those Sections were all the same and whatever decision is made about 3 or 7, would of necessity have apply the Robinson-Patman Section 2.

The principal argument made in respondent’s brief is exactly the same as the Solicitor's General, namely that with respect to all of these Acts, Robinson-Patman 2 and 7, they should be read as expansively as the Sherman Act and that nothing is required other than effect on commerce.

Now, if I maybe forgiven to characterize them, I would say that these two lines of argument are, 1, would work surgery by excising the specific provisions of Robinson-Patman Sections 3 and 7 and the other, that of the Court below is applying LSD to the language and get -- arriving at a rather strange interpretation.

Now, let me turn to the reason in the Court of Appeals.

The great Chief Justice Treanor of California once wrote about the use of magic words as if the use of a certain phraseology, somehow decided the case and I respectfully submit that that’s what the Ninth Circuit did.

It picks up the words, interstate highway which has an inflated sound divorced from reality, but tax -- a compulsive significance to that and then also we'll look for analogy to the Fair Labor Standards Act which is an Act of quite different language, purpose and background.

The Court below talks about interstate highways and if the Court please, that is not a legal term.

It is a loose terminology for roads, for whose construction the Federal Government under grant made statute, the Federal Highway Aid Act contributes money.

It does so for forest roads, trails, farm to market roads, local rural roads, streets, parkways, county roads, and also state roads selected to connect the principal centers.

Respondent called on the petitioners to admit by request for admission and we did admit that 98.5% of these funds received by the State of California went to county roads.

We've already observed that Sully-Miller was a street paver in the suburbs of Los Angeles.

All roads for which Federal Aid is given are under the jurisdiction of the state, local governments.

Federal Act, the Aid Highway Act does not presume to regulate highways or operations of those working on them or supplying materials for them.

It does do more than attached conditions with a gift and none of those conditions have anything to do with the problems of this case.

And so I respectfully submit that what the decision of the Court below comes to is to advance this proposition, “since every street in every city and every road anywhere in United States unless it connects with other is part of an interstate network of highways.

Therefore, the seller of anything used in a street or a road is in commerce and by that reasoning the local society for the care over the blind that sells brooms made by the blind for use to sweeping the streets or the streets cleaner, or the tow truck operator who removes illegally parked cars on the streets, all are engaged in commerce.”

Now, this Court over and over again in its interstate commerce decisions has said that the conception -- the concept of commerce is guided by the most practical considerations.

Commerce is an intensely practical concept drawn from the normal and accepted course of business, these are statements the Court has made.

Now, if this case concerned workers constructing a lock across the canal or a draw bridge across the Mississippi, one might see such an immediacy to their operation of an interstate facility that you might come to the conclusion there practically that the construction of that bridge was an interstate commerce, but I submit that from any practical reality, selling asphaltic concrete to put on a street or a road, 200 miles from the border simply is a horse of another color and so of paving a city street.

Now, if the Court please, we get back to our fundamental.

Our system of government is federalism, certainly where a federal statute plainly applies.

It has to be applied, but when to apply it is going to intrude upon local policies and to apply it requires some procrustean treatment, some stretching then we've been taught by the decisions of this Court that the hand is stayed.

Now, the philosophy of the Robinson-Patman Act is a highly debatable one.

This Court has frequently commented how it is in conflict with the philosophy of the Sherman Act.

California is considered that Robinson-Patman and has deliberately refused to adapt the Robinson-Patman type statute.

California's Supreme Court reviewing the matter has said no.

California has no Robinson-Patman type of statute and has noted this conflict of policy and yet what has happened here is that a Federal Act has been extended in the California area to something local on misconception that asphaltic concrete is put upon a road.

Now if the Court please, California also has not adapted any general anti-acquisition statute.

The proposed uniform state antitrust law has deliberately left out a Section 7 type of provision on the idea that acquisitions at a local level have a different impact and deal with different kind of policies and on a national level.

So we say again, the question here is not how far Congress could go.

I think Congress could go to full length here if it wished to.

How far has it gone and in deciding that question, respect has to be paid first to the language Congress has used and secondly, to the Federal structure of the union.

Justice Byron R. White: Under Section 7 (Voice Overlap) --

Mr. Moses Lasky: Yes, Your Honor.

Justice Byron R. White: -- if the the company -- one of the company has to be engaged in (Voice Overlap)?

Mr. Moses Lasky: The company -- both of them.

Justice Byron R. White: The transactions -- there isn't any transaction language --

Mr. Moses Lasky: No, the requirement of Section 7 is Your Honor notes is that the companies, the acquirer and the acquiring each must be engaged.

Justice Byron R. White: But it does -- they don't don't need to be engaged in commerce with respect to the products involved, I take it?

Mr. Moses Lasky: I doubt it.

But the evidence --

Justice Byron R. White: But doesn't take much of an involvement in commerce side --

Mr. Moses Lasky: Well, except the Sully-Miller is not. [Attempt to Laughter]

And the plaintiff was called on to produce all his evidence, complete discovery as to what Sully-Miller did and Sully-Miller is simply a local paving contractor and manufacturer of this stuff for local stuff.

Justice Byron R. White: You mean (Voice Overlap) there's no evidence, even bought a broom out of the state?

Mr. Moses Lasky: No evidence whatever on that aspect.

The respondent produced no evidence whatever on it but the only business it's in --

Justice Byron R. White: How about the machinery that it used in its business?

Mr. Moses Lasky: There is a -- one could take a guess of course that it buys its machinery and one might guess that the machinery may have originated originally out of the state, probably came into rest in the state, but there's no evidence on the record on it.

Justice Byron R. White: What if it did?

That's engaging in commerce, I take it, isn't it?

Mr. Moses Lasky: May or may not be, it depends -- perhaps on how they bought it.

Justice William J. Brennan: I take it they have this large delivery trucks (Inaudible) you know, these specially constructed things?

Mr. Moses Lasky: Oh!

I -- again, the record is silent on it but I would have to take a guess that they do.

Justice William J. Brennan: (Voice Overlap) around town here, this enormous (Inaudible) --

Mr. Moses Lasky: I would guess they do.

Justice Byron R. White: They are -- those are (Voice Overlap) -- in California, I guess, are they?

Mr. Moses Lasky: Pardon?

Justice Byron R. White: They aren't made in California, are they?

Mr. Moses Lasky: I don't know.

There are large assembly plants in California of all kinds on machinery.

Justice Byron R. White: So it -- but in any event, even if there just isn't any evidence in the record (Voice Overlap).

Mr. Moses Lasky: The evidence, that is right.

The record is silent on that.

Again, I repeat the Court called upon the respondent to take all the discovery and produce all the evidence that they'd wished to bring to bear on the subject and they said nothing about this.

Justice Potter Stewart: Well, what if they did?

Am I engaged in commerce just because I drive a car that was made in Detroit?

Mr. Moses Lasky: Well, I wouldn't think so.

Chief Justice Warren E. Burger: Or a carpenter if he is using hammer and nails that were made outside the state, a building contractor?

Mr. Moses Lasky: I wouldn't think that put them on commerce either.

Chief Justice Warren E. Burger: So the size of the tool whether it's a great big earth moving machine or a hammer wouldn't make any difference --

Justice Byron R. White: But you'd have quite a bit different argument, you'll have a different case if there is evidence in the record that they were regularly buying trucks from out of the state?

Mr. Moses Lasky: Yes sir.

I suppose if there was a constant flow of trucks here --

Justice Byron R. White: Well, it's in continuous business, its using up its trucks all the time?

Mr. Moses Lasky: Yes and -- very well, they may be buying them locally from local distributors.

Again, while it's in the record we all know that this kind of machinery is sold by local distributors.

Justice Byron R. White: Well, I agree, but you'd have a different case?[Attempt to Laughter]

Mr. Moses Lasky: We would be talking about different things.

We would be talking about different things, but I can only talk about the things in the record and I can only reply to the arguments my opponents have presented.

Justice Byron R. White: There isn't anything in the record?

Justice William J. Brennan: And the only thing --

Mr. Moses Lasky: No, it's silent.

The record is silent on it.

Justice William J. Brennan: The only thing that bears on it at all is that this end product by Sully is laid on roads?

Mr. Moses Lasky: That's right.

Justice William J. Brennan: Some of which at least are constructed with -- with the aid of federal funds.

Mr. Moses Lasky: That's right, exactly so.

Justice William J. Brennan: (Inaudible)

Mr. Moses Lasky: The decision of the Court of Appeals was based upon that one fact that a road is an instrumentality of commerce.

The asphaltic concrete went into the road therefore it was as a matter of law engaged in commerce.

That's the decision of the Court of Appeals.

It's not strongly defended as I say.

It's being defended -- even the judgment is being defended on the notion that these -- you just ignore the provisions of these laws and say that Congress intended to exercise its commerce power to the utmost using exactly the language which has often been used about the Sherman Act.

Now may I --

Justice Harry A. Blackmun: Parsley put you'd be making a different here if this were centered in San Diego rather than Los Angeles?

Mr. Moses Lasky: No, I don't think so.

Justice Harry A. Blackmun: Even though then the state line is within 35 miles of such plants as well?

Mr. Moses Lasky: When we said 35 miles everybody has been talking generously, the evidence that talks about 5 to 50.

I think if we had a case in Delaware, a hot plant operator in Delaware, you might have a different problem because the hot plant might very well be crossing the border, but you get -- that border around Southern California surrounds largely desert area.

But again one can conceive where a hot plant operator might be of the crossing state lines.

Here, it did not.

Chief Justice Warren E. Burger: But is it true here in Washington.

The hot plant operator here might deliver both in Virginia and in Maryland.

Mr. Moses Lasky: He might very well.

That would be a different case.

Then we'd have at least one sale crossing a state line then we'd have the counterpart of Sully-Miller engaged in paving all around here, you'd have interstate commerce?

That's a different case and the decision we asked the Court to render here is not going to be the last decision.

It’s going to be asked to rendering in questions like this.

Now, the second advice from the reasoning of the Court below is that it appeals to the analogy of the Fair Labor Standards Act.

That Act provides for minimum wages not only to employees engaged in commerce, but also to employees “engaged in the production of goods for commerce.”

And this Court by a divided decision held that the last words even meant engaged in the production of goods for those engaged in commerce based upon the particular legislative history of that Act.

Amendments to that Act, divided definitions whereby if some employees who are engaged in commerce or in the production of goods for commerce, all employees of the same employer are deemed brought under the Act and Congress could do that sort of thing on Robinson-Patman in Section 3 and unquestionably on Section 7 if it wished to do so, but it hasn't done so.

Now, if the Court please, and this brings me to the Solicitor General's line of argument which I think I can answer very quickly.

Whenever Congress has got on legislate, conflicting views of politics, economics, sociology are pressed upon Congress, each one contending for an option and in the end Congress draws a line and makes compromises.

Now, one can grant that legislation is to be given a scope commensurate with Congress’ purposes and aims, but Congress is the only judge not only of its goals but of the means it wishes to advance them and of the compromises it wishes to make among the contending factors.

And the only way Congress has to express the solution and the compromises that it's forced to make is in words.

Now, here the words are absolutely clear, not to be ignored.

And talking about the Sherman Act, this Court for example in the Southeastern Underwriters case said the words of the Sherman Act were all comprehensive.

Any person who restrains trade falls under the ban of that Act.

Here, we have an English language of body of terms each of separate meaning, each having an -- with an ascending order of reach.

We have in commerce.

We have production of goods for commerce.

We have production of a working on instrumentalities of commerce.

We have the words affecting commerce and each one reaches out a little further and the affecting commerce reaches out to the farthest extent of the law.

These words compromise an armory from which Congress can draw when it wishes to express of its particular purpose and if the Court is to treat all these words as synonymous as you're being asked to do by the Solicitor General, I respectfully submit that corrupts the language, corrupts the law and it impoverishes Congress because it takes away from Congress words it can use.

And if the Court should hold that the words selected so carefully by the legislative branch such as engaged in commerce, engaged in the course of commerce don't mean anymore than affecting commerce then Congress is going to be hard put to express itself when it doesn't wish to exercise the commerce power to its fullest extent.

It will be driven to circumlocution, negatives and provisos.

Now everybody knows the legislative history of the Robinson-Patman Act demonstrates, that Robinson-Patman was the product of a complex series of legislative proposals ending up in compromises that have given many courts headaches in trying to resolve the meaning.

I was quoting at that point from the Meyer Paving case in which this Court denied certiorari, recently in 414 US.

Justice Potter Stewart: When was it enacted, in the 30’s?

Mr. Moses Lasky: Robinson-Patman?

Robinson-Patman was of 1936 Amendment to Section 2 of Clayton which was 1940.

Justice Potter Stewart: It was 1936?

Mr. Moses Lasky: Approx -- yes, 1936.

Enacted incidentally after this Court in the Bendheim Brothers case or the Darby case and the cases involving Labor Relations Act had explicated the far reach of power that Congress possessed.

No doubt as to that this Court by the time Congress enacted this Act had told Congress that it had the most extensive power, nevertheless, there was no extension or change in these words.

Similarly, in Celler-Kefauver in 1951 -- 50, they didn't change the words that they used in 1914 despite the fact that they could have and gone much further.

I submit the case with this submission.

The Congress of the United States still sits and if it is of view, the Department of Justice or others, these three Acts should be made extensive in their reach with the Sherman Act, they can go over to Congress and try to get them enacted and go through all the debates that will occur before the various legislative committees.

But in the time we just been going through a period when everybody has been much concerned that the several departments of the government stay within our own proper ambit and at a time like that that's where they should go to Congress not to this Court.

The words of these statutes are clear.

Thank you.

Chief Justice Warren E. Burger: Thank you.

Counsel, I don't think we'll ask you to take a minute-and-a-half to divide your argument.

We'll begin at 9:00 o'clock there.

Print this transcript Transcript: 

Argument of Martin M. Shapero

Chief Justice Warren E. Burger: We’ll resume arguments in Gulf Oil against Copp Paving.

Mr. Shapero I think you’re on.

Mr. Martin M. Shapero: Mr. Chief Justice, may it please the Court.

The position of the petitioners which we heard yesterday is represented by two basic concepts.

Each of which fail to withstand the test of close analysis, their first proposition is that in this case the issue is not what Congress could do but what it did do.

The petitioners’ position is Congress did not intend to apply the antitrust laws to builders and suppliers of instrumentalities of interstate commerce, that fact standing alone.

This position is incorrect and in point effect Congress has stated both generally and specifically its intent that the antitrust laws apply to builders and suppliers of instrumentalities of interstate commerce.

Chief Justice Warren E. Burger: Are you speaking in this context or in other context that you regard as analogous?

Mr. Martin M. Shapero: I'm just speaking in this specific context and herein we are discussing the specific question of instrumentalities consisting of interstate highways.

Chief Justice Warren E. Burger: No, but I -- my question is, are you speaking in the context of antitrust or in others that you consider analogous to this?

Mr. Martin M. Shapero: I'm speaking specifically of this case Your Honor and the cases that I have to support it in the statutes that I have to support it, I believe are practically on the button on this particular situation.Coming to the second proposition which we believe we will demonstrate to be an error is that the term interstate highway has no meaning and it is not a term of art. This is likewise an incorrect position.

The term interstate highway has a recognized meaning both in law and in fact.

The two misconceptions go to the essence of the petitioners’ case since it is clear that if Congress did indeed declare its intent that the antitrust laws apply to instrumentalities of commerce and if interstate highways are clearly understood to be such instrumentalities then this petitioners as well as our clients as builders and suppliers of instrumentalities of interstate commerce are subject to the terms and provisions of each and all of the antitrust acts.

Let us start with the second proposition first.

Does the term interstate highway have a meaning?

Is it a term of art or is it something which has no significance in terms of the law or the English language?

It most certainly has a meaning and that meaning is disclose by both history and the statements of this Court.

You can go back and I bring you old law.

It pays at this time to go back to the language of Gibbons versus Ogden.

The -- Justice Marshall speaking says the subject to be regulated is commerce and our Constitution being as was appellees said at the bar, one of enumeration and not of definition to ascertain the extent of the power it becomes necessary to settle the meaning of the word.

The counsel for the appellee would limit it to traffic, to buying and selling or to the interchange of commodities and do not admit that it comprehends navigation.

This would restrict a general term applicable to many objects to one of its significations.

Commerce undoubtedly is traffic but it is something more, it is intercourse.

It describes the commercial intercourse between nations and parts of nations and all its branches and is regulated by prescribing rules for carrying on that intercourse.

The mind can scarcely conceive a system for regulating commerce between nations which shall exclude all laws concerning navigation which shall be silent on the admission of the vessels of the one nation into the forts of the other and be confined to prescribing rules for the conduct of the individuals in the actual employment of buying and selling or barter.

Perhaps the most striking example of the close and intimate intertwining relationship between interstate commerce on the one hand and the instrumentalities of interstate commerce on the other is the fact that the very first commission in this country which was formed to establish and control -- which was established to control the railroads.

It was not called the Railroad Commission and it was not even called the Transportation Commission.

It was called the Interstate Commerce Commission.

And no one certainly at this stage in our development would deny that the authority of the federal government to control railroads under the commerce power as an instrumentality of interstate commerce does not exist.

And what is the relationship then between interstate highways to interstate commerce.

We’re now approaching the case at bar as a Professor Sharfman in his work on the Interstate Commerce Commission states as follows, “The railroad industry is no more than a century old than the motor carriers and waterlines whose increasingly severe competition it has been encountering in recent years about the modern counterparts of the turnpikes and canals which had largely displaced at the time of its first emergence as an improved source of transportation service.”

Justice Murphy speaking for this Court in Overstreet versus North Shore Corporation put it as follows, “We think the practical test should govern here.

Vehicular roads and bridges are as indispensable to the interstate movement of persons and goods as railroad tracks and bridges are to interstate transportation.”

If they are used by persons and goods passing between various states they are instrumentalities of interstate commerce.

Justice Black speaking in Alstate versus Durkin put the matter vastly, “In Overstreet, we pointed out that the interstate roads and railroads are indispensable instrumentalities in the carriage of persons and goods that move in commerce.”

What’s the retort of the petitioners to this language?

The retort is that in those cases they were talking about labor laws, fair labor standards and here we’re talking about another kind of statute but let us look at the Highway Act itself.

The Highway Act which is 23 United States Code Section 103.

In the Highway Act, we have described a federal primary system, a federal secondary system, a federal aid urban system, and lastly, the interstate system which the Congress in the Highway Act defines as follows.

The interstates -- “The interstate system shall be designated within the United States including the District of Columbia and except as provided in paragraphs 1 and 2 of this subsection.

It shall not exceed 41,000 miles in total extent.”

It shall be so located as to connect by roots as direct us practicable the principle metropolitan area, cities, and industrials centers to serve the National Defense and to the greatest extent possible to connect at suitable border points with roots of continental importance in the dominion of Canada and the Republic of Mexico.

The roots of this system to the greatest extent possible shall be selected by joint action of the state highway departments of each state and the adjoining states subject to the approval by the Secretary as provided in subsection (e) of this Section.

We come to the case at hand.

The language which we consider critical was contained in a stipulation which we entered into very early in this case.

In the stipulation, as set fourth by the trial court reads as follows “a more than de minimis quantity of asphaltic concrete delivered by plaintiffs and their competitors is delivered for use on interstate highways.”

That’s contained in the record in the appendix to the respondent’s brief at page 3.

I submit this to you that the petitioners at the time they entered into that stipulation well understood the distinction and meaning and the clear -- the clear meaning of what was intended and what is intended in law by the phrase interstate highway.

As stated in the respondent’s complaint at page 17 and 18 of the appendix, I'm quoting now from the record in the appendix “Defendants Gulf Union and Edgington sell to end users and contractors including plaintiffs substantial quantities of hot asphalt -- oil to be used as hot asphalt or asphaltic concrete for constructing, maintaining, surfacing, resurfacing and repairing roads and the highways including federal interstate system highways and highways directly connected to interstate highways.

How did the petitioners respond to that?

They admitted those very phrases.

Now, I can represent to the court.

Justice Harry A. Blackmun: Mr. Shapero in that all conceded here?

Mr. Martin M. Shapero: It is conceded and that is the exactly the next point that I was coming to Mr. Justice Blackmun.

It is conceded and they admit that indeed they did apply this to interstate highways.

The petitioners clearly understood at that point and my point is that by making the concession they must have understood the distinction between interstate highways and roads which are merely funded by federal money when they entered into the stipulation, otherwise, the stipulation makes no sense whatsoever.

Chief Justice Warren E. Burger: Mr. Shapero --

Mr. Martin M. Shapero: Yes?

Chief Justice Warren E. Burger: -- would you think that the suppliers of raw material who furnished the sand and the gravel and the binder to Copp Paving would be an interstate commerce?

Mr. Martin M. Shapero: If to the extent that the particular supplies are going on and interstate facility I would say yes, Your Honor, they are.

Chief Justice Warren E. Burger: Well, let's take a hypothetical case a specific one.

Copp close whoever the supplier is or writes them to make the evidence more definite.

It says we have big contract to resurface interstate highway number 81 for 23 miles all inside of California.

We request you to submit business for and then list the following items sand, gravel, whatever else they put into this asphaltic cement.

Mr. Martin M. Shapero: Yes, Your Honor.

Chief Justice Warren E. Burger: Is he an interstate commerce?

Mr. Martin M. Shapero: I believe that he is and I believe that the Congress has so stated and intended that they be so considered and that would be my next point that I would point out to the Court where Congress has indeed expressed its specific intent in a very limited area and that very limited area has reference to the specific instrumentalities of intrastate commerce so that I'm not talking in this case about a big spread or a wide expansion of the reach of the antitrust laws because I must remind the Court at all times that we’re talking about interstate -- an interstate instrumentality so that we’re talking about an expansion within a very, very confined area of the law but as within that confined area Congress has expressed its intent which I will come to shortly, with your permission.

To continue my point to enter into the stipulation which they entered into, that the amount of asphaltic concrete delivered by the petitioner and their competitors would by definition mean that all the paving if we would take the stipulation as its interpreted by the petitioners it would mean that the amount of asphaltic concrete delivered by the petitioner and their competitors which would by definition mean all the paving done in Southern California was more than de minimis.

This would simply be entering into a nonsense stipulation because the terms of the stipulation would mean that we would be stipulating that all the pavers, all the -- the total industry in Southern California is producing all the roads in Southern California and all that activity is more than de minimis, if the stipulation simply has no meaning whatsoever unless you are confining it to the specific reference of the interstate instrumentality.

Now the petitioners I would submit they knew better than this one they entered into this stipulation and they are pleadings and they’re understanding was that at the time that the pleadings were drawn at the time that we entered into the stipulation that we were tracking the use, we were actually tracking statutory language and the statutory language we were tracking in the statutory language which as Justice Blackmun points out that they admitted was the specific statutory language set forth on the Highway Act itself.

And their inability at this point to understand the meaning of the phrase interstate highway is no more than an attempt, I would submit, to remove themselves from one portion of a syllogistic box which they find themselves in.

Now, let's turn to the first issue which still remains.

Did the Congress express the intent to do that which he have had the power to do namely, apply the Antitrust Act to instrumentalities of commerce, namely interstate highways within the meaning of that phrase as we’ve now demonstrated the phrase has a meaning.

The Clayton Act itself expresses the congressional purpose and intent and in reference to the instrumentalities as they existed at the time of the passage of the Clayton Act in 1914.

At that time the development of highways had not yet occurred but the intent of the Congress to control and apply antitrust legislation to the builders and suppliers of the interstate instrumentalities was clear and it was done and it was done even in the view of the fact that the railroads were natural monopolies.

Now, the specific languages contained in Section 10 of the Clayton Act and that’s one that’s a primary act that we’re concerned with.

And Section 10 of the Clayton Act says that no common carrier engaged in commerce shall have any dealings and securities, supplies or other articles of commerce or shall have any contracts for construction or maintenance of any kind to the amount of more than $50,000 in the aggregate in any one year with another corporation, firm, partnership, or association.

When the said common carriers shall have upon its board of directors or as its president manager or its purchasing or selling officer or agent in the particular transaction, any person who is at the same time a director manager, purchasing or selling officer or who has any substantial interest in such other corporation, firm, partnership, or association unless and accept such purchases shall be made from or such dealing shall be with the bidder whose bid is the most favorable to such common carrier to be ascertained by competitive bidding under the regulations to this prescribe by the rules or otherwise by the Interstate Commerce Commission.

And it states further any person, any person, this is contained within the Clayton Act itself, any person who shall directly or indirectly do or attempt to do anything to prevent anyone from bidding or shall do any act to prevent free and fair competition among the bidders of those desiring to bid shall be punished as prescribe in this Section in as in the case of an officer or director.

So that in reference to the construction of the railroads, I think the intent of Congress is spelled out perfectly clear in referring to the question that you put there Mr. Chief Justice.

That here we have a specific intent of the Congress we have a statement by the petitioners that if the Congress declared its intent, they would certainly have the power to do so.

Here we have a specific intent set forth by the Congress.

Now the next question of course immediately is that’s all very well and good but that was in reference to the railroad that had nothing whatsoever to do with the highways.

We have the same specific intent which is set forth by the Congress within the Highway Act and they discussed this in terms of maintaining competition.

I might state that this Court in the unanimous opinion -- in a unanimous written by Justice Douglas stated that the Section that I just quoted from is an Antitrust Act and Mr. Justice Douglas used the following language “It is pointed out that the railroads scandals of that age were not limited to interlocking directors and multiple shareholders but that suppliers of railroad materials had made substantial gifts to the railroad officials with whom they dealt.

With the railroads at that time at least you had in theory at any rate where you had an independent entrepreneur and he was acquiring supplies for his road he had at least the impulse and unless there was a conflict of interest the desire to hold the prices down but we’re you’re dealing with public highways who I would ask the Court is the entrepreneur who is going to protect the public under those circumstances.

And the Congress answered that question and the Congress declared that their both mere position was going to be that the protector of the public under those circumstances would be competition and they’ve stated so and they’ve stated so specifically, they stated the under letting of contracts and I'm now referring to Section -- to 23 Section 112.

The Secretary shall require as a condition precedent to his approval of each contract awarded by competitive bidding pursuant to subsection (b) of this Section and subject to the provisions of this Section a sworn statement executed by or on behalf of the person, firm, association, or corporation to whom such contract is to be awarded certifying that such person, firm, association, or corporation has not either directly or indirectly entered into any agreement participated in any collusion or otherwise taken any action in restraint of free competitive bidding in connection with such contract.

Now that is a clear statement of congressional intent.

They’ve stated it even further at Section 304.

This is 23 Section 304 of the Highway Act it states it is declared to be in the national interest to encourage and develop the actual and potential capacity of small business and to utilize this important segment of our economy to the fullest practicable extent in construction of the federal highways systems including the interstate system.

Now, what’s the answer of the petitioners to this?T

hey say these aren’t directives.

That it’s within the power of the state to ignore each one of these items if they so choose.

All they have to do is forego the federal funds and this I would submit to you is introducing a new doctrine that unlike debt, taxes are no longer inevitable.

All you have to do is give up income because the fundamental facts of life are today in the United States that the money that’s available for the construction of highways is available through the federal government and that’s the only way that this highways are going to be constructed.

Chief Justice Warren E. Burger: Let’s assume, Mr. Shapero that some state gets some astounding notion of independence says, we don’t want any federal money.

We’ll build this extension, we’ll cooperate, and we’ll build this extension with our own money. Do I understand you to say that the source of the money is the key fact?

Mr. Martin M. Shapero: No, absolutely not to that doctrine has already been considered and rejected by the court.

The source of the money does not give the federal government the power.

The power comes from the fact that the particular highway is itself an integral part of the interstate process.

All that I'm stating is that this is a designation and a recitation of what the congressional intent was.

The intent to apply the antitrust laws to an interstate construction of highways because certainly in terms of the protection of the public the advantages and the necessity for having a competition is just as wrong if its paid for by the State of California as if the particular highway is paid for by the federal government.

We still need the same protection and that is the fundamental purpose of these statutes and why they are essential as far as the construction of the highways are concerned.

Because the competition has the ability of limiting and I put (Inaudible) aside, by putting it aside I don’t say that it doesn’t exist but I put it aside.

The other factors what becomes a proper measure of profit, what formulas do you use?

All these matters are eliminated automatically by the presence of competition and we have the clear expression of Congress which states that what the Congress is looking for is not what in the constructions of the highway, what they looking for is not so much that when they want to build their highway they don’t want to look to a company, they want to look and have the ability of looking to an industry in order to build that highway and in order to do it they have declared that we must maintain the integrity in full competition.

Now, the extent there has been -- there were some discussion yesterday that was put in terms of the extent to which the federal government had participated in the extent to which the federal government had made contributions and we have the record is very full with specific references as to the extent of the federal contribution that we have made.

For example at page 172 of the appendix, I invite your attention to examining the fact that in one year for example $294 million went in to the national system of interstate and defense highways in California alone for the year 1972-1973.

Unknown Speaker: Mr. Shapero.

Mr. Martin M. Shapero: Yes.

Unknown Speaker: May I interrupt you for a minute, are you arguing that this transactions had an effect on commerce?

Mr. Martin M. Shapero: This is not an effect case, we are in commerce.

Unknown Speaker: Right, you do not rely on that?

Mr. Martin M. Shapero: We don’t rely on the effect doctrine this is “in commerce” case.

Unknown Speaker: And the District Court found there was no proof of the effect on commerce in this case?

Mr. Martin M. Shapero: Well, the District Court never considered the problems specifically that District Court ruled that there was no effect on commerce and therefore through all of the Acts, it made no distinction when it ruled, it threw out everything because it failed to find an effect on commerce under the Sherman Act.

And since the Sherman Act failed, then it ruled that all four of the Acts failed, so that the District Court made no distinction whatsoever.

I might say that I think you have an effect on commerce almost as a matter of law by the very language of the District Court itself were it spelled out that we already have 75% and this is from the opinion of the District Court that we have 75% of the road construction in Southern California now being built by two parties Industrial and Sully-Miller each of which are owned in turn by two large oil companies Gulf and Industrial.

So that we are already approaching an effect doctrine because the trial court again in the trial court opinions says that where you have monopoly you presumably would have such an effect and we are approaching already by the trial courts own findings such a monopoly situation.

Justice Potter Stewart: You’re supporting the Court of Appeals reasoning and its opinion?

Mr. Martin M. Shapero: That’s correct, yes sir.

Justice Potter Stewart: In contradistinction with the reasoning in the Government’s amicus brief, aren’t you?

Mr. Martin M. Shapero: That is correct, Your Honor.

Thank you for your time.

Chief Justice Warren E. Burger: Do you have anything further, Mr. Lasky?

Argument of Moses Lasky

Mr. Moses Lasky: Yes, if the Court please.

Mr. Chief Justice, if the Court please.

In the few moments that I have I would like to note the consequences of this argument that just been made.

Interstate -- what is called the interstate highway 480 is a stretch of street in San Francisco of about 12 blocks in length running from the so-called Barbary Coast.

If a man should pick up a woman or abduct her and carry her for purpose of prostitution over those 12 blocks, under this argument you’ve just heard, that man would have violated the Dyer Act, the Mann act, and that Lindbergh Kidnapping Act because he would have transported the kidnapped person in a stolen automobile if he had a stolen automobile in interstate commerce.

Now, the only other thing I wish to say is on the subject that effect the District Court in its opinion which is printed as an appendix to our petition for certiorari on page 6 discusses the subject and concludes, I conclude that the local activities of the defendants with regard to as all the concrete did not have a substantial impact on interstate commerce.

Counselor said this is not a impact or effect case and is relying on the arbitrary notion that because asphaltic concrete went into a road as part of it connects with other roads it crosses the state line it is in the interstate commerce.

And with that submission, he has so largely abandoned the bulk of his own brief which was an argument along the lines of that of the Solicitor General.

I submit the case.

Thank you.

Chief Justice Warren E. Burger: Thank you gentlemen.

The case is submitted.