431 F.2d 1282 (9th Cir. 1970), 24603, State of Hawaii v. Standard Oil Co. of California

Docket Nº:24603.
Citation:431 F.2d 1282
Party Name:STATE OF HAWAII, Plaintiff-Appellee, v. STANDARD OIL COMPANY OF CALIFORNIA, Union Oil Company of California, Shell OilCompany and Chevron Asphalt Company, Defendants-Appellants.
Case Date:September 25, 1970
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1282

431 F.2d 1282 (9th Cir. 1970)

STATE OF HAWAII, Plaintiff-Appellee,

v.

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

No. 24603.

United States Court of Appeals, Ninth Circuit.

Sept. 25, 1970

Francis R. Kirkham (argued), Richard J. MacLaury, James F. Kirkham, Richard W. Odgers, of Pillsbury, Madison & Sutro, San Francisco, Cal., for Standard Oil Co. of Cal. and Chevron Asphalt Co.

Moses Lasky (argued), and Malcolm T. Dungan, of Brobeck, Phleger & Harrison, San Francisco, Cal., Douglas C. Gregg and E. A. McFadden, Los Angeles, Cal., for Union Oil Co. of Cal.

William Simon & Richard T. Colman, of Howrey, Simon, Baker & Murchison, Washington, D.C., for Shell Oil Co.

Maxwell M. Blecher (argued), Francis O. Scarpulla, Peter Donnici, of Law Offices of Joseph L. Alioto, San Francisco,

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Cal., Bertram Kanbara, Atty. Gen., State of Hawaii, George Pai and Joseph S. Kinoshita, Deputy Attys. Gen., Honolulu, Hawaii, for respondent.

Thomas C. Lynch, Atty. Gen., Wallace Howland, Asst. Atty. Gen., Robert E. Murphy, Michael I. Spiegel, Carole A. Kornblum, James R. McCall, Deputy Attys. Gen., Sacramento, Cal., Amicus curiae, State of California.

Before MERRILL, WRIGHT and TRASK, Circuit Judges.

MERRILL, Circuit Judge.

This appeal presents the question whether a state can, under § 4 of the Clayton Act, 15 U.S.C. § 15, 1 maintain a suit for treble damages as parens patriae for injury done to the general economy of the state. We hold it cannot.

The amended complaint filed by the State of Hawaii alleges that appellants conspired to fix and maintain unreasonably high prices for motor gasoline and asphalt in Hawaii. Count I alleges losses suffered by the state in its proprietary capacity. Count II with which we are concerned, alleges:

'The State of Hawaii * * * 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.'

The complaint then continues:

'The unlawful contracts * * * have injured and adversely affected the economy and prosperity of the State of Hawaii in, among others, the following ways:

Then are listed the seven specifications of injury set forth in the margin. 2

The prayer is for injunction and for treble damages under § 4 of the Clayton Act. Respecting damages under Count II, the complaint alleges:

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

Appellants moved to dismiss Count II on the ground that it failed to state a claim. The motion was denied. 3 The opinion of the court in support of its order appears at 301 F.Supp. 982 (D.C. Hawaii 1969). This appeal is taken

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from the court's order pursuant to 28 U.S.C. § 1292(b).

Appellants attack Count II on many grounds. They contend that parens patriae suits will not lie to recover money damages. They contend that injury to the general economy of a state is not susceptible of computation or of proof, and that allegations of such injury should not be recognized as presenting a justiciable case or controversy. The basis of our disposition of the case makes it unnecessary to reach these issues. We hold only that damages for injury done to the general economy of a state are not recoverable by the state under § 4 of the Clayton Act.

Hawaii relies (as did the District Court) on Georgia v. Pennsylvania Railroad Co., 324 U.S. 439, 65 S.Ct. 716, 89 L.Ed. 1051 (1945). Georgia, invoking the original jurisdiction of the Supreme Court (Art. III, § 2 of the Constitution), there sought leave to file a complaint against twenty railroad companies charging a conspiracy to fix arbitrary and noncompetitive freight rates to and from Georgia so as to prefer the ports of other states over those of Georgia. The nature of the injury allegedly suffered by Georgia is similar to that here alleged by Hawaii (see footnote 2).

Leave was granted. The Court stated:

'Georgia as a representative of the public is complaining of a wrong which, if proven, limits the opportunities of her people, shackles her industries, retards her development, and relegates her to an inferior economic position among her sister States. These are matters of grave public concern in which Georgia has an interest apart from that of particular individuals who may be affected.' 324 U.S. at 451, 65 S.Ct. at 723.

And:

'But Georgia is not confined to suits designed to protect only her proprietary interest. The rights which Georgia asserts, parens patriae, are those arising from an alleged conspiracy of private persons whose pricefixing scheme, it is said, has injured the economy of Georgia. * * * Suits by a State, parens patriae, have long been recognized. There is no apparent reason who those suits should be excluded from the purview of the anti-trust acts.' 324 U.S. at 447, 65 S.Ct. at 721.

As the Court made clear, however, it was concerned with the relief offered by§ 16 of the Clayton Act.

'Sec. 16 of the Clayton Act provides for relief by injunction 'when and under the same conditions and principles as injunctive relief against the threatened conduct that will cause loss or damage is granted by courts of equity.' Those requirements are sufficiently satisfied to justify a filing of this bill. It must be remembered that this is a suit to dissolve an illegal combination or to confine it to the legitimate area of collaboration.' 324 U.S. at 460, 65 S.Ct. at 727.

And:

'Dissolution of illegal combinations or a restriction of their conduct to lawful channels is a conventional form...

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