Monarch Asphalt Sales Co., Inc. v. Wilshire Oil Co. of Texas

• Decision Date: 04 April 1975
• Docket Number: 74--1391,Nos. 74--1196,s. 74--1196
• Parties: 1975-1 Trade Cases 60,181 MONARCH ASPHALT SALES CO., INC., et al., Applicants for Intervention and Appellants, v. WILSHIRE OIL COMPANY OF TEXAS et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1073

511 F.2d 1073

1975-1 Trade Cases 60,181

MONARCH ASPHALT SALES CO., INC., et al., Applicants for

Intervention and Appellants, v. WILSHIRE OIL COMPANY OF TEXAS et al., Defendants-Appellees.

Nos. 74--1196, 74--1391.

United States Court of Appeals, Tenth Circuit.

Argued Nov. 14, 1974.

Decided Feb. 26, 1975.

Rehearing Denied April 4, 1975.

John A. Claro, Oklahoma City, Okl. (Bert Barefoot, Jr., Edward H. Moler, Joseph A. Claro and Barefoot, Moler & Claro, Oklahoma City, Okl., on the brief), for appellants.

R. L. Davidson, Jr., Tulsa, Okl., for Empire Const., Inc., appellant in No. 74--1391.

Jay M. Galt and Clyde J. Watts, Oklahoma City, Okl., for B & P Const. Co. and K--P Const. Co., appellants in No. 74--1391.

Lynn F. Wade, Fayetteville, Okl., for Anchor Const. Co., appellant in No. 74--1391.

A. Duncan Whitaker, Washington, D.C., for defendants-appellees. With him on the brief were Coleman Hayes, Oklahoma City, Okl., and M. R. Glover, Chicago, Ill., for Standard Oil Co.; Gordon F. Rainey, Oklahoma City, Okl., and Colvin A. Peterson, Jr., Kansas City, Kan., for American Petrofina Co. of Tax.; Edward F. Howrey, A. Duncan Whitaker, John R. Fornaciari, Washington, D.C., Charles F. Rice, New York City, and S. M. Groom, Jr., Oklahoma City, Okl., for Mobil Oil Corp.; Coleman Hayes, Willard P. Scott and Carl G. Engling, Oklahoma City, Okl., for Kerr-McGee Corp.; C. W. McDermott, V. P. and Gen. Counsel, Colo. Oil & Gas Corp., Denver, Colo., Peter B. Bradford and Joseph W. Kennedy, Morris, Laing, Evans, Brock & Kennedy, Chartered, Wichita, Kan., for Colo. Oil & Gas Corp.; John A. Ladner, Tulsa, Okl., and John J. Runzer, Philadelphia, Pa., for Sun Oil Co. of Pennsylvania; John H. Cantrell, Oklahoma City, Okl., for Mid-America Refining Co., Inc.; V. P. Crowe, Oklahoma City, Okl., John W. Hammett, Houston Tex., and John S. Kerr, Oklahoma City, Okl., for APCO Oil Corp.; S. E. Floren, Bartlesville, Okl., R. B. McDermott, Tulsa, Okl., Thomas M. Blume and Thomas L. Barton, Denver, Colo., for Phillips Petroleum Co.; John F. Smith and Sam C. Oliver, Tulsa, Okl., for Skelly Oil Co.; Robert H. Bingham and Robert L. Gowdy, Kansas City, Kan., for Farmland Industries; and Robert J. Woolsey and Lawrence A. G. Johnson, Tulsa, Okl., for Wilshire Oil Co. of Tex.

Before LEWIS, Chief Judge, and BREITENSTEIN and McWILLIAMS, Circuit Judges.

BREITENSTEIN, Circuit Judge.

This suit is another episode in the liquid asphalt antitrust litigation. See Standard Industries, Inc. v. Mobil Oil Corporation, 10 Cir., 475 F.2d 220, cert. denied 414 U.S. 829, 94 S.Ct. 55, 38 L.Ed.2d 63, and United States v. Wilshire Oil Company of Texas, 10 Cir., 427 F.2d 969, cert. denied 400 U.S. 829, 91 S.Ct. 58, 27 L.Ed.2d 59. The court denied class status to certain contractors who then sought to intervene. The court rejected the interventions. We affirm.

The named plaintiffs are the Board of County Commissioners of Custer County, Oklahoma, a public body, and J. D. Metcalfe, Inc., a private contractor. As purchasers of liquid asphalt, they sued on behalf of themselves and other purchasers of liquid asphalt in a three-state area. Defendants are 12 sellers of liquid asphalt. The charge is price rigging during the period July 22, 1961--December 31, 1968, in violation of the Clayton and Robinson-Patman Acts.

Plaintiffs moved for a Rule 23(c)(1) order that the suit be certified as a class action. Defendants objected and asserted that the action was barred by the statute of limitations. The trial court deferred the limitation issue until decision on the class action motion.

On February 28, 1973, the court ruled out all putative class members from states other than Oklahoma, approved class status for all Oklahoma public bodies, and denied class status to the Oklahoma private contractors. During the period April 9--13, 1973, nine contractors filed petitions for leave to intervene. The trial court upheld defendants' contentions that the interventions were barred by the statute. The appeals are by the nine contractors who were denied intervention.

The first question is the reviewability of the order denying class status. Barring the death knell exception, not applicable here, an order denying class status is interlocutory and not appealable. See Eisen v. Carlisle & Jacquelin, 2 Cir., 370 F.2d 119, 121, cert. denied 386 U.S. 1035, 87 S.Ct. 1487, 18 L.Ed.2d 598; Falk v. Dempsey-Tegeler & Co., Inc., 9 Cir., 472 F.2d 142, 143. See also Herbst v. International Telephone and Telegraph Corp., 2 Cir., 495 F.2d 1308, 1311; Eisen v. Carlisle & Jacquelin, 2 Cir., 479 F.2d 1005, 1007 n. 1, vacated 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732.

On March 13, 1974, the trial court entered 'final judgment' in favor of defendants and against intervenors and in so doing complied with Rule 54(b), F.R.Civ.P. The general rule is that interlocutory orders from which no appeal lies are merged into the final judgment and open to review on appeal from that judgment. Atchison, Topeka and Santa Fe Railway Co. v. Jackson, 10 Cir., 235 F.2d 390, 392, and Skirvin v. Mesta, 10 Cir., 141 F.2d 668, 671--672.

Apparently there are no cases on the question of whether a person denied class status and intervention can, on appeal from denial of intervention, raise as error denial of class status. The general rule is applicable. Nothing in American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713, justifies a contrary result. Accordingly, the class action order is presently reviewable.

A class action may be maintained if all four prerequisites of Rule 23(a), and at least one of the prerequisites of Rule 23(b), are satisfied. Class action certification is discretionary with the trial judge. Wilcox v. Commerce Bank of Kansas City, 10 Cir., 474 F.2d 336, 342--347. The question is abuse of discretion.

The complaint pleads an overall class of purchasers of liquid asphalt. No one attacks the order limiting that class to Oklahoma purchasers. Those purchasers are divided into two subclasses, (1) public bodies and (2) private contractors. Rule 23(c)(4)(B) says that 'a class may be divided into subclasses and each subclass treated as a class, and the provisions of this rule shall then be construed and applied accordingly.' The interests of public bodies and private contractors are divergent rather than similar. Representatives of one group may not adequately represent members of another group. These factors justify the discretionary creation of the two appropriate subclasses. See 3B Moore's Federal Practice 23.65, p. 23--1251. Each subclass must meet the prerequisites established by the rule. 7A Fed.Pract. & Proc. § 1790, pp. 191--192. The class composed of members of the public group meets the requirements of Rule 23(a) and (b).

The situation of the private contractors is different. The prerequisites of Rule 23(a)(1), numerosity, and (4), fair and adequate representation, were not satisfied. The class of Oklahoma private contractors had 37 potential members. The court doubted, and we doubt, that joinder of all members was impracticable.

With regard to representation, the court found that the purported representative, Metcalfe, Inc., could not fairly and adequately represent the class because it had not been in the road construction business, and had not purchased liquid asphalt, for four years prior to the filing of this suit. A class action may not be maintained by a putative representative who is not a member of the class. Bailey v. Patterson, 369 U.S. 31, 32--33, 82 S.Ct. 549, 7 L.Ed.2d 512; Fed.Pract. & Proc. § 1761, p. 584; 3B Moore's Federal Practice 23.04, p. 23--254. Fair and adequate representation requires more than competent counsel. The putative representative must have a common interest with class members. See Free World Foreign Cars, Inc. v. Alfa Romeo, S.D.N.Y., 55 F.R.D. 26, 28--29. In the instant case it was not a member of the class when suit was brought.

Although consideration of Rule 23(b) is unnecessary when, as here, Rule 23(a) is not satisfied, the court discussed the Rule 23(b) requirement that a class be 'superior to other available methods for the fair and efficient adjudication of the controversy,' and made three points. First, there was prior litigation in which the contractors could have been, but were not, joined and in which they could have, but did not, intervene. Second, the contractors are sophisticated and economically powerful entities 'fully able to make intelligent and informed decisions regarding the institution of antitrust litigation.' Third, representatives of two contractors, which purchase large quantities of liquid asphalt, testified as defense witnesses before the same judge in the previous litigation relating to price rigging in defendants' sales of liquid asphalt. The court said that if their companies are within the class their admissions 'might be extremely harmful to the cause of action of the political subdivisions.'

Esplin v. Hirschi, 10 Cir., 402 F.2d 94, 101, cert. denied 394 U.S. 928, 89 S.Ct. 1194, 22 L.Ed.2d 459, holds that in doubtful class actions certification of the class is to be favored. In Wilcox, 474 F.2d at 344, we said that the Esplin doctrine 'should not be extended to limit unreasonably the sound discretion of trial courts' in class action cases. We have problems of numerosity under Rule 23(a)(1), of fair and adequate representation under Rule 23(a)(4), and of superiority of class action procedure under Rule 23(b)(3). The court properly exercised its discretion in denying class status to the Oklahoma private contractors.

The February 28, 1973, order denying class status said that 'those entities (contractors) as are desirous of so doing will have forty-five days from this date within which to seek to intervene as a co-Plaintiff herein.' Nine petitions to intervene were filed in the April 9--13 period. The court denied leave to intervene because of the bar of the statute of limitations.

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