In re Western Liquid Asphalt Cases
| Decision Date | 19 February 1974 |
| Docket Number | No. 73-1086.,73-1086. |
| Citation | 487 F.2d 191 |
| Parties | In re Coordinated Pretrial Proceedings In WESTERN LIQUID ASPHALT CASES. STATE OF ALASKA et al., Plaintiffs-Appellants, v. STANDARD OIL COMPANY OF CALIFORNIA et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Michael I. Spiegel, Deputy Atty. Gen. (argued), San Francisco, Cal., Edward A. Nugent, Sp. Asst. Atty. Gen., (argued), Salem, Ore., John Havelock, Atty. Gen., Donald Beighle, Asst. Atty. Gen., Juneau, Alaska, Gary K. Nelson, Atty. Gen., Barry Leverant, Alan K. Polley, Asst. City Attys., Phoenix, Ariz., Herbert E. Williams, Donald C. Deagle, Asst. City Attys., Tucson, Ariz., J. La-Mar Shelley, City Atty., Mesa, Ariz., Leonard C. Langford, County Atty., Kingman, Ariz., Milton H. Mares, Deputy City Atty., San Francisco, Cal., Ronald L. Johnson, Chief Deputy City Atty., Robert J. Logan, Deputy City Atty., San Diego, Cal., Frank Wagner, Deputy City Atty., Los Angeles, Cal., Michael R. Downey, Deputy City Atty., M. Van Smith, Santa Clara, Cal., Frederic P. Furth, John H. Boone, Geoffrey P. Knudsen, Peter C. Haley, Offices of F. P. Furth, San Francisco, Cal., Guido Saveri, Steven Swig, Offices of Joseph L. Alioto, San Francisco, Cal., William H. Ferguson, C. David Shepard, Ferguson & Burdell, Seattle, Wash., John Aslin, Larry Nord, Seattle, Wash., James Caplinger, Caplinger & Munn, Seattle, Wash., Ray Siderius, Siderius, Lonergan & Crowley, Seattle, Wash., James Gillespie, Spokane, Wash., Patrick J. Donnelly, Seattle, Wash., James R. Holman, Holman, Lewis & MacArthur, Tempe, Ariz., Robert L. Bluemle, Phoenix, Ariz., Henry A. Carey, Jr., Carey & Hanlon, Portland, Ore., for plaintiffs-appellants.
Richard J. MacLaury (argued), Francis R. Kirkham, James B. Atkin, Pillsbury, Madison & Sutro, San Francisco, Cal., Morris M. Doyle, Graham B. Moody, Jr., Frederic A. Sawyer, Douglas B. Schwab, McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., Moses Lasky, Richard S. Haas, George A. Cumming, Jr., Brobeck, Phleger & Harrison, San Francisco, Cal., Robert D. Raven, F. Bruce Dodge, Morrison, Foerster, Holloway, Clinton & Clark, San Francisco, Cal., Gordon Johnson, Frank D. MacDowell, Thelan, Marrin, Johnson & Bridges, San Francisco, Cal., M. Laurence Popofsky, Heller, Ehrman, White & McAuliffe, San Francisco, Cal., Donald C. Smaltz, Ralph B. Perry, III, Grossman, Smaltz, Graven & Perry, Los Angeles, Cal., Max L. Gillam, Philip F. Belleville, Robert E. Currie, Latham & Watkins, Los Angeles, Cal., Richard W. Curtis, Gulf Oil Corp., Los Angeles, Cal., Jack Corinblit, Corinblit & Shapero, Los Angeles, Cal., Paul G. Bower, Gigson, Dunn & Crutcher, Los Angeles, Cal., William Simon, John Kingdon, Howrey, Simon, Baker & Murchison, Washington, D. C., Patrick J. Donnelly, Lindell & Carr, Seattle, Wash., Bruce R. Merrill, Houston, Tex., Morris Harrell, Rain, Harrell, Emery, Young & Doke, Dallas, Tex., Verne H. Maxwell, Thompson, Knight, Simmons & Bullion, Dallas, Tex., for defendants-appellees.
William J. Scott, Atty. Gen., John P. Meyer, Sp. Asst. Atty. Gen., Springfield, Ill., Theodore L. Sendak, Atty. Gen., Indianapolis, Ind., Vern Miller, Atty. Gen., Jack B. Steineger, Sp. Asst. Atty. Gen., Topeka, Kan., Frank J. Kelley, Atty. Gen., Christopher Nern, Asst. Atty. Gen., Lansing, Mich., Louis J. Lefkowitz, Atty. Gen., Samuel A. Hirshowitz, First Asst. Atty. Gen., John M. Desiderio, Asst. Atty. Gen., Chief, Antimonopolies Bureau, Albany, N. Y., Israel Packel, Atty. Gen., Gerry J. Elman, Deputy Atty. Gen., Harrisburg, Pa., Robert W. Warren, Atty. Gen., Bruce Craig, Asst. Atty. Gen., Madison, Wis., Chauncey H. Browning, Jr., Atty. Gen., Gene Hal Williams, Deputy Atty. Gen., Charleston, W. Va., George T. H. Pai, Atty. Gen., Honolulu, Hawaii, Robert List, Atty. Gen., Carson City, Nev., W. Anthony Park, Atty. Gen., Boise, Idaho, Lee A. Freeman, Jr., Sp. Asst. Atty. Gen., Chicago, Ill., Josef D. Cooper, Francis Scarpulla, San Francisco, Cal., Sp. Counsel for Hawaii, Idaho, and Nevada, for amicus curiae.
Before CARTER and GOODWIN, Circuit Judges, and FERGUSON,* District Judge.
Certiorari Denied February 19, 1974. See 94 S.Ct. 1419.
This interlocutory appeal was allowed under 28 U.S.C. § 1292(b), from an order of the district court granting partial summary judgment to defendants-appellees. In re Coordinated Pretrial Proceedings in Western Liquid Asphalt Cases (N.D.Cal.1972), 350 F.Supp. 1369.
Appellants1 brought these actions for damages and injunctive relief2 under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26. Appellants allege that appellees, suppliers of asphalt, illegally raised and stabilized the price of liquid asphalt, which is used in the construction of public roads, through a conspiracy to fix prices, to submit rigged and collusive bids, to allocate and stabilize the relevant market, and otherwise to eliminate competition. For purposes of summary judgment, these allegations must be assumed to be true.
The district court held3 in substance that appellants, who indirectly purchased an assumedly price-fixed product through contractors, and who are assumed to be able to show that at least part of the illegal overcharge was passed on to them, are precluded as a matter of law from recovering such damages as they ultimately might be able to prove. The court relied for its decision upon Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968). We reverse.
The facts are not seriously in dispute. Some of appellants' purchases of liquid asphalt were made directly from appellees. In those instances, the liquid asphalt alone was obtained for application by appellants in road maintenance work. Such direct purchases are not involved in this appeal.
In other instances, the asphalt was only a part of the product supplied to appellants by its contractors after combination with other ingredients, in a road construction project. These purchases were made in one of two ways. Some were made through pre-existing costplus contracts, in which appellants agreed to pay the cost of materials as charged to the contractors by suppliers, plus a charge for the contractors' services. In others, however, the contractors obtained bids from suppliers, then computed their own, overall bid. The appellants then awarded particular projects to the lowest bidder among responsible contractors. The claims under direct and cost-plus purchases survived the motion granted below, and only the remaining indirect purchases are involved in this appeal.
Affidavits submitted by appellants reflect that the usual bidding process, not disputed in substance by appellees, involves certain common steps. The contractor totals suppliers' sub-bids, adds an amount for his services, including labor and other overhead, and an amount for profit. The total is then re-divided and apportioned to each supply item, but the dollar amount so allocated to each item varies depending on factors such as cost, and method of payment. The overall bid, including allocations to each supply item, is then submitted in competition for the particular project.4 A contractor is not interested in the level of the price charged by suppliers, so long as he receives at least as low a rate as his competitors.
Occasionally a contractor will use a paving subcontractor, in which case the subcontractor prepares his sub-bid in the same general manner as do contractors. In any case, sub-bids from suppliers and subcontractors are regarded as firm.
Appellees also monitor schedules of future road projects, and from time to time offer quotations to contractors, by which they offer to supply materials such as asphalt at a specific price for a particular project only. Also, appellees manufacture asphalt to comply with specifications published by the governmental bodies, and so certify to the contractors.
In addition, documents obtained from appellees during discovery tend to indicate that they control a high percentage of their direct customers of asphalt, either through acquisition of stock, or indirectly through various financial arrangements, including credit.
Appellants contend that the cost of asphalt to the contractor, including allegedly illegal overcharges, is always passed on to them as the ultimate purchasers. Appellees take the position that it is only the initial purchaser—the contractor—who is damaged. Any increase paid by the ultimate purchasers, they say, is too remote from the alleged overcharges to be susceptible of proof.
The district court said, 350 F.Supp. at 1370-1371, that it would rule for appellants, were its decision not controlled by Hanover Shoe, supra, 392 U.S. 481, 88 S.Ct. 2224. That case held that a supplier being sued by an immediate purchaser for alleged overcharges (in violation of antitrust laws) cannot raise a defense that the immediate purchaser may have recovered all or part of the overcharges by passing them on to his customers.
In Hanover Shoe, however, the product involved, shoe machinery, was not itself resold by plaintiffs. The Supreme Court's decision was based in part upon the difficulty of showing whether plaintiff shoe manufacturer's pricing decisions for shoes reflected the illegal overcharge.
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