U.S. v. Bechtel Corp.

• Citation: 648 F.2d 660
• Decision Date: 18 June 1981
• Docket Number: No. 79-4194,79-4194
• Parties: 1981-1 Trade Cases 64,111 UNITED STATES of America, Plaintiff-Appellee, v. BECHTEL CORPORATION, Bechtel Incorporated, Bechtel Power Corporation, Bechtel International, Inc. and Bechtel International Corporation, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 660

648 F.2d 660

1981-1 Trade Cases 64,111

UNITED STATES of America, Plaintiff-Appellee, v. BECHTEL CORPORATION, Bechtel Incorporated, Bechtel Power

Corporation, Bechtel International, Inc. and

Bechtel International Corporation,

Defendants-Appellants.

No. 79-4194.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 14, 1981.

Decided June 18, 1981.

Lee Loevinger, Washington, D. C., argued for defendants-appellants; Hogan & Hartson, Washington, D. C., Janet F. Bentley, Thelen, Marrin, Johnson & Bridges, San Francisco, Cal., on brief.

William D. Coston, Washington, D. C., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before SKOPIL and FLETCHER, Circuit Judges, and EAST, ^* District Judge.

SKOPIL, Circuit Judge:

INTRODUCTION

Bechtel Corporation, Bechtel Incorporated, and certain of their subsidiaries ("Bechtel") appeal the entry of a consent judgment. The decree was entered in an antitrust action based on Bechtel's alleged participation in the Arab boycott of Israel. We conclude that the acts of the government, taken after a stipulation consenting to the judgment was filed, do not require that Bechtel be relieved from its consent. We further find that the trial court did not err in determining that the decree is in the public interest. We affirm.

BACKGROUND AND PROCEEDINGS BELOW

In January 1976 the United States filed a civil action against Bechtel asserting violations of section 1 of the Sherman Act, 15 U.S.C. § 1. The complaint described the Arab boycott, whereby Arab League countries refuse to engage in commercial relations with those who engage in commerce with Israel. It alleged that Bechtel combined, conspired, and agreed with others to participate in the boycott. The government asserted that this activity restrained trade in violation of the antitrust laws, and requested declaratory and injunctive relief.

Bechtel denied the complaint's material allegations and raised eleven defenses, including estoppel, inapplicability of the antitrust laws, government sanction, sovereign compulsion, act of state, non-justiciable controversy, national interest, and failure to state a cause of action.

In January 1977 the parties proposed a consent decree and filed it with the district court, along with the competitive impact statement required by the Antitrust Procedures and Penalties Act ("APPA"), 15 U.S.C. § 16. The parties also filed a stipulation. The stipulation provided that the proposed judgment could be entered

"upon the motion of either party or upon the Court's own motion, at any time after compliance with the requirements of the Antitrust Procedures and Penalties Act (15 U.S.C. §§ 16(b) et seq.) and without further notice to any party or other proceedings, provided that plaintiff (the government) has not withdrawn its consent which it may do at any time before the entry of the proposed Final Judgment by serving notice thereof on defendants and by filing that notice with the Court."

On January 19, 1977 the proposed decree and the government's competitive impact statement were published in the Federal Register and certain newspapers. In the following sixty days the government received comments on the proposed decree from the public. The sixty-day period for public comment, provided by 15 U.S.C. § 16(d), ended on April 3, 1977.

In June 1977 Congress passed the Export Administration Amendments ("EAA") regarding foreign boycotts. 50 U.S.C.App. §§ 2401-13. Department of Commerce regulations interpreting the new law were drafted, published and finally issued in January 1978.

On March 24, 1978 the government published its response to the comments received from the public on the proposed consent decree. On May 10, 1978 it moved for entry of the proposed final judgment.

On June 30, 1978 Bechtel filed its opposition to the entry of the decree. Bechtel argued that: (1) there was no basis for entering the judgment because the government had violated the stipulation by failing to comply with the APPA; (2) Bechtel's consent was vitiated by the new interpretations the government was applying to the decree; and (3) entry of the decree was no longer in the public interest because of the conflicting interpretations and the intervening passage of the Export Administration Amendments.

The district court concluded that the United States had not violated the APPA, or at least that Bechtel had not shown sufficient prejudice from any such violation to nullify its consent. It also determined that the interpretations of the proposed judgment the government had advanced in its response to public comments did not repudiate the agreement or amount to a withdrawal of consent. Further, the court found the EAA no bar to entry of the decree. Finally, the district court found the proposed judgment in the public interest, and ordered it entered. Bechtel appealed.

We must decide: (1) whether the district court had jurisdiction to enter the decree; (2) whether the government violated the provisions of the APPA; (3) if so, whether the violation vitiated the stipulation of consent; (4) whether the interpretations of the decree presented in the government's response to public comments amounted to a repudiation by the government or relieved Bechtel of its consent; (5) what factors must be considered in determining whether

the entry of a consent judgment in an antitrust case is in the public interest; and (6) whether entry of this decree is in the public interest.

DISCUSSION

Decrees entered by consent may be reviewed on appeal where there is a claim of lack of actual consent or a lack of subject matter jurisdiction. Swift & Co. v. United States, 276 U.S. 311, 48 S.Ct. 311, 72 L.Ed. 587 (1928). But a decree that " 'appears by the record to have been rendered by consent, is always affirmed, without considering the merits of the cause.' " Id. at 324, 48 S.Ct. at 314 (quoting Nashville, C. & St. L. R. Co. v. United States, 113 U.S. 261, 5 S.Ct. 460, 28 L.Ed. 971 (1885)).

We must consider only the propriety of the entry of the decree. The merits of the judgment are not before us, except for two limited purposes. The decree may have been beyond the district court's jurisdiction to enter or the substance of the decree may be contrary to the public interest.

I. Jurisdiction

Bechtel argues that its alleged boycott activities were beyond the scope of the antitrust laws. Bechtel contends this means it was beyond the power of the district court to enter the decree or contrary to the public interest for it to do so.

The jurisdictional part of this argument "fails to distinguish an error in decision from the want of power to decide." Swift & Co., supra, 276 U.S. at 330, 48 S.Ct. at 316. If Bechtel is correct in its assertion that the boycott is beyond the reach of the antitrust laws, it proves at most that the complaint failed to state a cause of action. Such a failure is not a jurisdictional defect. Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946).

A judgment dismissing an action for failure to state a claim is a judgment on the merits. In dismissing an action a court must assume jurisdiction. Id. Any error by the court in refusing to enter such a judgment might be corrected on appeal if Bechtel had not waived the defect by its consent. Swift & Co., supra, 276 U.S. at 331, 48 S.Ct. at 316-317.

Bechtel was not required to give its consent to the judgment it now protests. It had a right to litigate the applicability of the antitrust laws to its alleged participation in the Arab boycott. It voluntarily surrendered that right. We cannot decide whether the complaint stated a cause of action without violating the rule against reviewing the merits of consent decrees.

II. Consent

Bechtel contends that the judgment must be vacated because the only basis for its entry, consent, was lacking. In the face of the stipulation Bechtel concededly entered, we must interpret this as an argument that the government withdrew its consent or repudiated the agreement, or that events occurring after the stipulation equitably require that Bechtel be relieved of its consent.

A. Antitrust Procedures and Penalties Act.

The stipulation filed by the parties called for the consent decree to be entered " at any time after compliance with the requirements of the Antitrust Procedures and Penalties Act " Bechtel argues that compliance with the APPA was a condition of its consent that was never met. Alternatively, Bechtel contends that the government's violation of the stipulation entitled it to relief from its consent.

Bechtel asserts that the government violated the APPA by failing to file its responses to public comment on the proposed decree until nearly one year after the close of the comment period. The APPA requires a proposed consent decree to be filed in the district court and published in the Federal Register "at least 60 days prior to the effective date of such judgment." 15 U.S.C. § 16(b). It also provides that "(a)ny written comments relating to such proposal and any responses by the United States thereto, shall also be filed with such district court and published by the United States in the Federal Register within such sixty-day period." Id. (Emphasis added.)

Section 16(d) describes the public comment and government response procedure in more detail. It provides in part:

"(d) During the 60-day period as specified in subsection (b) of this section, and such additional time as the United States may request and the court may grant, the United States shall receive and consider any written comments relating to the proposal for the consent judgment submitted under subsection (b) of this section. * * * At the close of the period during which such comments may be received, the United States shall file with the district court and cause to be published in the Federal Register a response to such comments."

(Emphasis added.)

Bechtel contends that the government had...