639 F.2d 1278 (5th Cir. 1981), 79-2094, Summit Office Park, Inc. v. United States Steel Corp.
|Citation:||639 F.2d 1278|
|Party Name:||SUMMIT OFFICE PARK, INC., a Texas corporation, acting on behalf of itself and all other Owner-Builders similarly situated, Plaintiffs-Appellants, v. UNITED STATES STEEL CORPORATION et al., Defendants-Appellees.|
|Case Date:||March 19, 1981|
|Court:||United States Courts of Appeals, Court of Appeals for the Fifth Circuit|
William E. Wright, Larry G. Patton, Houston, Tex., for plaintiffs-appellants.
Bracewell & Patterson, J. Clifford Gunter, III, Houston, Tex., for Border Steel Rolling Mills, Inc.
Morton L. Susman, Houston, Tex., for Confederate Steel Corp.
Vinson, Elkins, Searls, Connally & Smith, Houston, Tex., for U. S. Steel Corp.
Baker & Botts, Rufus W. Oliver, III, Houston, Tex., for Bethlehem Steel Corp. and The Ceco Corp.
Hutcheson & Grundy, Thad T. Hutcheson, Houston, Tex., for Laclede Steel Co.
Andrews, Kurth, Campbell & Jones, Houston, Tex., for Structural Metals, Inc. and Marvin Rinn.
Butler, Binion, Rice, Cook & Knapp, Houston, Tex., for Harry H. Gray.
Baker, Glast, Riddle, Tuttle & Elliott, W. Randolph Elliott, Dallas, Tex., for Evan V. Nance.
Breed, Abbott & Morgan, New York City, for Armco Steel Corp.
Fulbright & Crooker, Houston, Tex., for Whitlow Steel Co., Inc., Lewis Tubb and Penden Industries, Inc.
Besing & Rentzel and Geary, Brice, Barron & Stahl, Dallas, Tex., for Continental Steel Co.
Reynolds, Allen & Cook, Houston, Tex., for Schindler Bros. Steel.
Foreman & DeGuerin, Houston, Tex., for Schindler Bros. Steel and Dan Prause.
Carrington, Coleman, Sloman & Blumenthal, James E. Coleman, Jr., Dallas, Tex., for the Lofland Co. and Oscie Kirkland.
Haynes & Boone, Robin P. Hartmann, Dallas, Tex., for Huffhines Steel Co. and Allen Huffhines.
Worsham, Forsythe & Samples, Dallas, Tex., for Austin Steel Co., Royal Alexander and Roger Montgomery.
Hunter, Stewart, Salzberger & Vineyard, Dallas, Tex., for Texteel Mfg. Co. and Nash L. Kelley.
Appeal from the United States District Court for the Southern District of Texas.
Before WISDOM, AINSWORTH and GEE, Circuit Judges.
AINSWORTH, Circuit Judge:
Summit Office Park, Inc. brought this antitrust suit against numerous steel and metal companies 1 on behalf of itself and a
putative class seeking the recovery of damages resulting from alleged antitrust violations of the Sherman Act (15 U.S.C. §§ 1, 2) and the Clayton Act (15 U.S.C. § 15) in the sale of fabricated reinforcing steel bar (rebar) materials. The district court granted the defendants' motion for summary judgment, dismissing the claims of Summit and the class on the basis of the recent Supreme Court decision in Illinois Brick Company 2 since Summit and the putative class were indirect purchasers of rebar materials and the Supreme Court decision in the cited case barred antitrust claims by indirect purchasers. In its order of dismissal the district court also struck an amended complaint which attempted to substitute for the dismissed plaintiff Summit, two direct purchasers D. G. White and S. F. Sanders, Jr., Inc. as parties plaintiff and as representatives of a new and different class of direct purchasers. The district court held that Rule 15(a), Fed.R.Civ.P., does not contemplate the substitution of an entirely new cause of action, a new class, and new plaintiffs by the original plaintiff who could not benefit from the new cause of action or identify with the new plaintiffs or class. 3
Summit's complaint, filed in November of 1973, was the first of two class action suits, later consolidated, 4 that were filed on behalf of private parties. Representing the class of "builder-owners," Summit allegedly suffered injury through payment of unlawfully inflated prices for rebar materials. According to the complaint, "the invariable and uniform practice" was for the cost of rebar materials to be paid by contractors to appellees and then passed on directly to the builder-owners for the contractors' labor and materials. 5 Of the thirty-one defendants named in the suit, four answered the complaint; the remainder filed various motions to dismiss under Rule 12, Fed.R.Civ.P.
Following the initial filing of pleadings and motions, the case lay dormant until June of 1977 when the Supreme Court rendered its decision in Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), which held that indirect purchasers such as plaintiff Summit herein had no cause of action under federal antitrust laws in cases such as the instant suit. During this period, no formal motion for class certification was made, no class was certified, and no ruling was made on defendants' Rule 12 motions.
Within two weeks after the Illinois Brick decision, defendants moved for summary judgment. After waiting long enough to assure himself that no legislative action
would be taken by Congress to overturn Illinois Brick, the district judge announced he would decide the case in light of that Supreme Court ruling by May 2, 1978. However, on May 1, Summit attempted to file an "amended complaint" on behalf of a restructured class limited only to direct purchasers. The new amended complaint added two new plaintiffs, White and Sanders, who purported to be direct purchasers. The new amended complaint also changed the cause of action in an apparent attempt to conform to the principles set forth in the Illinois Brick decision. Additionally, Summit admitted in the new amended complaint, along with a letter to the trial judge two weeks later, that it was only an indirect purchaser. 6
In August 1978, the district court issued its order in which it granted summary judgment as to all causes of action filed on behalf of indirect purchasers. 7 In its order, the court also disposed of the attempt to substitute new plaintiffs, a new class, and new cause of action by way of amendment. The court held that the Federal Rules of Civil Procedure do not contemplate the use of the amendment process in this manner. The court likened this attempt to amend the complaint to the procedural posture of a lawsuit in search of a sponsor. It noted that the cause of action and original named plaintiff had been dismissed, and that no named plaintiff or certified class member remained with any further stake in the outcome of the litigation. Continuing, the district judge stated, "such a 'revolving door' theory of representation through the imaginative use of the amendment process ... would vest in plaintiffs' counsel a power and control over litigation, particularly class action litigation, heretofore not recognized by the federal courts." In addition, the court observed that no one with a valid claim remained to urge the amendment and that any litigation on behalf of direct purchasers should be filed in a new lawsuit. 8
The amended complaint was treated as a motion for leave to amend and stricken by the court.
Summit and the new parties plaintiff appeal, asserting a right to amend the complaint as a matter of course. In the alternative, they contend that the district court abused its discretion in denying leave to file the amended complaint. We affirm.
The circumstances of this case are unique. Here the original plaintiff was left with no cause of action upon which it could recover as the result of an intervening Supreme Court decision. There was no way in which the plaintiff could properly amend the complaint to give it a cause of action. Plaintiff had no identity of interest with either the new proposed plaintiffs, or the new class named in the complaint, or their cause of action. It is clear that the new cause of action which the new proposed amended complaint attempted to insert could not benefit the original plaintiff. 9
The order of the district court is not contrary to the liberal use of the amendment process in federal practice. Nor is our decision in this case a restriction or limitation on the amendment procedure as it pertains to adding parties plaintiff or curing a defect in the cause of action. Rather, we hold only that where a plaintiff never had standing to assert a claim against the defendants, it does not have standing to amend the complaint and control the litigation by substituting new plaintiffs, a new class, and a new cause of action.
The principal issue involved is not whether the complaint can be amended as a matter of course, as urged by appellants, but under the special circumstances here whether Summit could offer an amendment to the complaint at all. Since there was no plaintiff before the court with a valid cause of action, there was no proper party available to amend the complaint. Thus none of the appellants had a right to file the amended complaint.
It is clear that once the Supreme Court's decision in Illinois Brick was announced, Summit as an indirect purchaser of materials had no standing to assert a claim against defendants. No amendment could give Summit a cause of action. Summit twice conceded it was only an indirect purchaser: once at the time of its attempt to amend and also later in the letter to the district court judge. 10 Since Summit had
no standing to assert a claim, it was without power to amend the complaint so as to initiate a new lawsuit with new plaintiffs and a new cause of action.
No case has been brought to our attention directly in point with the circumstances presented here, 11 but there are two district court cases which are closely analogous. 12
In Turner v. First Wisconsin Mortgage Trust, 454 F.Supp. 899 (E.D.Wis.1978), a plaintiff brought a class action suit under the Securities Act of 1933 concerning securities purchases made in connection with a false registration statement. The court determined that plaintiff...
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