301 F.Supp. 982 (D.Hawai'I 1969), Civ. 2826, State of Hawaii v. Standard Oil Co. of California

Docket Nº:Civ. 2826
Citation:301 F.Supp. 982
Party Name:State of Hawaii v. Standard Oil Co. of California
Case Date:July 02, 1969
Court:United States District Courts, 9th Circuit

Page 982

301 F.Supp. 982 (D.Hawai'I 1969)



STANDARD OIL COMPANY OF CALIFORNIA, Union Oil Company of California, Shell Oil Company, and Chevron Asphalt Company, Defendants.

Civ. No. 2826.

United States District Court, D. Hawai'i

July 2, 1969

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Bert T. Kobayashi, Atty. Gen. of Hawaii, Gilbert K. Hara, Joseph Kinoshita, Deputy Attys. Gen., Dept. of the Attorney General, Honolulu, Hawaii, Law Offices of Joseph L. Alioto, Joseph L. Alioto, Maxwell M. Blecher, Francis O. Scarpulla, San Francisco, Cal., for plaintiff.

Francis R. Kirkham, Richard J. MacLaury, James B. Atkin, Pillsbury, Madison & Sutro, San Francisco, Cal., Daniel H. Case, Pratt, Moore, Bortz & Case, Roy A. Vitousek, Jr., Honolulu, Hawaii, for defendants Standard Oil and Chevron Asphalt.

L. A. Gibbons, Douglas C. Gregg, E. A. McFadden, Los Angeles, Cal., Moses Lasky, Malcolm T. Dungan, Brobeck, Phleger & Harrison, San Francisco, Cal., Frank D. Padgett, Honolulu, Hawaii, for defendants Union Oil.

Gilbert E. Cox, William M. Swope, Smith, Wild, Beebe & Cades, Honolulu, Hawaii, S. R. Vandivort, New York City, William Simon, Richard T. Colman, Howrey, Simon, Baker & Murchison, Washington, D.C., for defendant Shell Oil.


PENCE, Chief Judge.

The State of Hawaii brought this antitrust action against three oil companies and a subsidiary of one, alleging in Count I of its Fourth Amended Complaint, basically, that the defendants violated Sherman 1 and 2 by bid rigging, price fixing, market monopolization, and other acts in restraint of trade, and asks for damages based upon the illegal excess prices paid for defendants' products by the State in its proprietary capacity, as a buyer of petroleum products.

In Count II the State 'brings this action by virtue of its duty to protect the general welfare of the State and its citizens, acting herein as parens patriae, trustee, guardian and representative of its citizens, to recover damages for, and secure injunctive relief against, the violations of the antitrust laws hereinbefore alleged.' 1 Plaintiff continues to allege that the combination and conspiracy of the defendants in restraint of trade and to monopolize the sale, marketing and distribution of refined petroleum products has 'injured and adversely affected the economy and prosperity of the State of Hawaii' by:

'(a) revenues of its citizens have been wrongfully extracted from the State of Hawaii;

'(b) taxes affecting the citizens and commercial entities have been increased to affect such losses of revenues and income;

'(c) opportunity in manufacturing, shipping and commerce have been restricted and curtailed;

'(d) the full and complete utilization of the natural wealth of the State has been prevented;

'(e) the high cost of manufacture in Hawaii has precluded goods made

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there from equal competitive access with those of other States to the national market;

'(f) measures taken by the State to promote the general progress and welfare of its people have been frustrated;

'(g) the Hawaii economy has been held in a state of arrested development.' 2

Plaintiff then alleges it 'has not yet ascertained the precise extent of said damage to itself and its citizens;' but asked leave to insert such sum when ascertained. 3

Defendants moved to dismiss Count II-- maintaining (a) 'there can never be a parens patriae suit for damages; such a suit lies only in equity, and only for preventive relief;' (b) 'Count II does not in fact allege any injury to the general economy of the State of Hawaii, or to Hawaii in its sovereign or quasi-sovereign capacity, that would support a parens patriae injunction;' (c) a parens patriae suit for damages is not maintainable under Section 4 of the Clayton Act which permits damages only to business and property, arguing that damages to a state's business or property are by definition and nature not damages to its sovereignty or quasi-sovereignty; (d) if dollar damages to the economy of the State were measured by the harm done to the individual inhabitants, there would be created the risk of double recovery, inasmuch as each of the State's inhabitants, in theory at least, would be entitled to sue for any direct damage to his own business or property; and (e) a parens patriae suit for damages under the antitrust laws will not lie because an injury to the state's sovereignty is by its very nature too remote or speculative to be measurable in money damages.

The problem has been twice fully briefed and argued by all parties. 4

The concept of a parens patriae count in an antitrust action of the nature of the present one, emanates from Georgia v. Pennsylvania R. Co., 324 U.S. 439, 65 S.Ct. 716, 89 L.Ed. 1051 (1945), where the Supreme Court granted the State of Georgia's motion to file an amended complaint which alleged and sought relief from an antitrust violation by twenty railroad companies. The amended complaint asserted four counts of injury, the Third and Fourth of which sought treble damages for the alleged discriminatory freight rates charged the State and its citizens. 5 The Supreme Court held that Georgia had properly asserted a cause of action for injunctive and damage relief as parens patriae as well as proprietor, and permitted the complaint involving the Court's original jurisdiction to be filed. The Court stated:

'Georgia, suing for her own injuries, is a 'person' within the meaning of 16 of the Clayton Act, 15 U.S.C.A. 16; she is authorized to maintain suits to restrain violations of the antitrust laws or to recover damages by reason thereof. * * * But Georgia is not confined to suits designed to protect only her proprietary interests. The rights which Georgia asserts, parens patriae, are those arising from an alleged conspiracy (which) * * *

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injured the economy of Georgia. * * * When it came to other sanctions Congress * * * authorized civil suits not only by the United States but by other persons as well. And we find no indication that, when Congress fashioned those civil remedies, it restricted the States to suits to protect their proprietary interests. Suits by a State, parens patriae, have long been recognized. There is no apparent reason why those suits should be excluded from the purview of the anti-trust acts.' 324...

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