Hawaii v. Standard Oil Company of California 8212 49

• Decision Date: 01 March 1972
• Docket Number: No. 70,70
• Parties: State of HAWAII, Petitioner, v. STANDARD OIL COMPANY OF CALIFORNIA et al. —49
• Court: U.S. Supreme Court

405 U.S. 251

92 S.Ct. 885

31 L.Ed.2d 184

State of HAWAII, Petitioner,

v STANDARD OIL COMPANY OF CALIFORNIA et al.

No. 70—49.

Argued Oct. 21, 1971.

Decided March 1, 1972.

Syllabus

Section 4 of the Clayton Act does not authorize a State to sue for damages for an injury to its general economy allegedly attributable to a violation of the antitrust laws. Pp. 257—266.

431 F.2d 1282, affirmed.

Maxwell M. Blecher, San Francisco, Cal., for petitioner.

Francis R. Kirkham, San Francisco, Cal., for respondents.

[amici curiae information on Pages 251-252 intentionally omitted] Mr. Justice MARSHALL delivered the opinion of the Court.

The issue presented by this case is whether § 4 of the Clayton Act, 38 Stat. 731, 15 U.S.C. § 15, authorizes a State to sue for damages for an injury to its economy allegedly attributable to a violation of the antitrust laws of the United States. We hold that it does not.

I. PROCEDURAL HISTORY

Hawaii filed its initial complaint on April 1, 1968, against three of the four respondents.¹ On May 24, 1968, and again on August 19, 1968, hawaii filed amended complaints. The third amended complaint, filed on September 6, 1968, raised for the first time the issue presented herein. The complaint named all four respondents as defendants and charged them with violating the Sherman Act, 26 Stat. 209, 15 U.S.C. § 1, in the following ways: by entering into unlawful contracts; by conspiring and combining to restrain trade and commerce in the sale, marketing, and distribution of refined petroleum products; and by attempting to monopolize and actually monopolizing said trade and commerce. ² The State sought to recover damages in three distinct capacities: in its proprietary capacity for overcharges for petroleum products sold to the State itself (first count); as parens patriae for similar overcharges paid by the citizens of the State (second count); and as the representative of the class of all purchasers in Hawaii for identical overcharges (third count).

The second count read, in relevant part:

'18. The above-named plaintiff (Hawaii), (acts) in its capacity as parens patriae, and/or as trustee for the use of its citizens who purchased refined petroleum products, from any defendant or co-conspirator herein . . ..

'19. The unlawful contracts, combination, conspiracy in restraint of trade, unlawful combination and conspiracy to monopolize, and monopolization have resulted in the plaintiff, . . . and in its citizens, paying more for refined petroleum products than would have been paid in a freely operating competitive market. Plaintiff has not yet ascertained the precise extent of said damage to itself and its citizens, however, when said amount has been ascertained, plaintiff will ask leave of Court to insert said sum herein.'

Very similar language appeared in the class-action count. In all three counts, the State sought both injunctive and monetary relief.

After each of the respondents moved to dismiss the second and third counts of the complaint, the District Court held a hearing to determine the propriety of the State's suing on behalf of its citizens. With respect to count two, the court held that Hawaii 'has not even alleged an interest in its citizens' claims, much less interest of its own aside from the State's proprietary rights,' and granted the motions to dismiss.³ Viewing the class action as being 'overlapping, parallel and/or alternative to' the parens patriae claim, the court dismissed the third count as well.⁴

Hawaii filed its fourth amended complaint on February 27, 1969. This is the complaint with which we are concerned. Count one contains a reiteration of Hawaii's claim that in its proprietary capacity the State paid an excessive price for the petroleum products that it purchased from respondents. Count two states a new parens patriae claim, and count three is drawn as a class action.

The parens patriae claim is stated in the following manner:

'19. The State of Hawaii, acting through its Attorney General, 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.

'20. The unlawful contracts, combination and conspiracy in restraint of trade, unlawful combination and conspiracy to monopolize and monopolization, hereinbefore alleged, have injured and adversely affected the economy and prosperity of the State of Hawaii in, among others, the following ways:

'(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 (sic) 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 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.

'21. Plaintiff has not yet ascertained the precise extent of said damage to itself and its citizens; however, when said amount has been ascertained, plaintiff will ask leave of Court to insert said sum herein.'

The class-action count is similar to that in the third amended complaint. As in the previous complaint, Hawaii seeks both injunctive and monetary relief in each count.

Respondents moved to dismiss the second and third counts, and hearing was again had in the District Court. The class action was dismissed by the court on the ground that 'under the circumstances . . ., the class action based upon the injury to every individual purchaser of gasoline in the State, . . . in the context of the pleadings, would be unmanageable.'⁵ In a rather extensive opinion, the court examined the law that has developed concerning suits by a State as parens patriae and denied the motions to dismiss the second count. 301 F.Supp. 982 (1969). Recognizing that the state of the law was unclear, the District Court certified its decision denying the motions to dismiss for an interlocutory appeal pursuant to 28 U.S.C. § 1292(b).⁶ On appeal, the United States Court of Appeals for the Ninth Circuit reversed the decision of the District Court and directed that the second count of the complaint be dismissed.⁷ 431 F.2d 1282 (1970). Certiorari was granted so that we might review this decision. 401 U.S. 936, 91 S.Ct. 931, 28 L.Ed.2d 215 (1971).

II. THE STATE AS PARENS PATRIAE

The concept of parens patriae is derived from the English constitutional system. As the system developed from its feudal beginnings, the King retained certain duties and powers, which were referred to as the 'royal prerogative.' Malina & Blechman, Parens Patriae Suits for Treble Damages Under the Antitrust Laws, 65 Nw.U.L.Rev. 193, 197 (1970) (hereinafter Malina & Blechman); State Protection of its Economy and Environment: Parens Patriae Suits for Damages, 6 Col.J.L. & Soc.Prob. 411, 412 (1970) (hereinafter State Protection). These powers and duties were said to be exercised by the King in his capacity as 'father of the country.'⁸ Traditionally, the term was used to refer to the King's power as guardian of persons under legal disabilities to act for themselves.⁹ For example, Blackstone refers to the sovereign or his representative as 'the general guardian of all infants, idiots, and lunatics,' ¹⁰ and as the superintendent of 'all charitable uses in the kingdom.'¹¹ In the United States, the 'royal prerogative' and the 'parens patriae' function of the King passed to the States.

The nature of the parens patriae suit has been greatly expanded in the United States beyond that which existed in England. This expansion was first evidenced in Louisiana v. Texas, 176 U.S. 1, 20 S.Ct. 251, 44 L.Ed. 347 (1900), a case in which the State of Louisiana brought suit to enjoin officials of the State of Texas from so administering the Texas quarantine regulations as to prevent Louisiana mer- chants from sending goods into Texas. This Court recognized that Louisiana was attempting to sue, not because of any particular injury to a business of the State, but as parens patriae for all her citizens. 176 U.S., at 19, 20 S.Ct., at 257. While the Court found that parens patriae could not properly be invoked in that case, the propriety and utility of parens patriae suits were clearly recognized.

This Court's acceptance of the notion of parens patriae suits in Louisiana v. Texas was followed in a series of cases: Missouri v. Illinois, 180 U.S. 208, 21 S.Ct. 331, 45 L.Ed. 497 (1901) (holding that Missouri was permitted to sue Illinois and a Chicago sanitation district on behalf of Missouri citizens to enjoin the discharge of sewage into the Mississippi River); Kansas v. Colorado, 206 U.S. 46, 27 S.Ct. 655, 51 L.Ed. 956 (1907) (holding that Kansas was permitted to sue as parens patriae to enjoin the diversion of water from an interstate stream); Georgia v. Tennessee Copper Co., 206 U.S. 230, 27 S.Ct. 618, 51 L.Ed. 1038 (1907) (holding that Georgia was entitled to sue to enjoin fumes from a copper plant across the state border from injuring land in five Georgia counties); People of State of New York v. New Jersey, 256 U.S. 296, 41 S.Ct. 492, 65 L.Ed. 937 (1921) (holding that New York could sue to enjoin the discharge of sewage into the New York harbor); Pennsylvania v. West Virginia, 262 U.S. 553, 43 S.Ct 658, 67 L.Ed. 1117 (1923) (holding that Pennsylvania might sue to enjoin restraints on the commercial flow of natural gas); and North Dakota v. Minnesota, 263 U.S. 365, 44 S.Ct. 138, 68 L.Ed. 342 (1923) (holding that...