Coastal States Marketing, Inc. v. Hunt

• Decision Date: 14 January 1983
• Docket Number: No. 81-2303,81-2303
• Citation: 694 F.2d 1358
• Parties: 1982-83 Trade Cases 65,140 COASTAL STATES MARKETING, INC. and Valero Energy Corporation, Plaintiffs-Appellants Cross-Appellees, v. Nelson Bunker HUNT, et al., Defendants-Appellees Cross-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1358

694 F.2d 1358

1982-83 Trade Cases 65,140

COASTAL STATES MARKETING, INC. and Valero Energy

Corporation, Plaintiffs-Appellants Cross-Appellees, v. Nelson Bunker HUNT, et al., Defendants-Appellees Cross-Appellants.

No. 81-2303.

United States Court of Appeals, Fifth Circuit.

Jan. 14, 1983.

Stephen D. Susman, William H. White, Robert E. Walls, Houston, Tex., for plaintiffs-appellants cross-appellees.

Vinson & Elkins, Harry M. Reasoner, Houston, Tex., Shank, Irwin, Conant, Williamson & Grevelle, A.B. Conant, Jr., Dallas, Tex., for N.B. Hunt, H. Hunt and L. Hunt.

Appeals from the United States District Court for the Southern District of Texas.

Before RUBIN, RANDALL and JOLLY, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

The issue is whether petitioning immunity ¹ shields from antitrust scrutiny the defendants' pursuit of companies dealing in nationalized Libyan oil. The district court concluded that substantially all of the defendants' conduct was undertaken to obtain relief from courts in this country and abroad. The court, therefore, directed a verdict in defendants' favor at the close of the plaintiffs' case.

We have carefully reviewed the entire record. It is clear that the challenged conduct was, at least facially, undertaken to obtain judicial relief and that at least a substantial part of the defendants' purpose was to seek redress in the courts. We affirm because we agree that the pretrial stipulations, read in context with all of the evidence, precluded the plaintiffs from rebutting the immunity defense by showing that it was a sham.

I.

The Libyan Government granted Concession No. 65 to Nelson Bunker Hunt and his brothers ² in 1957. The concession gave the Hunts, for fifty years, the exclusive right to "search for ... bore for, and extract petroleum" from an area within the Province of Cyrenaica, Libya, and "to use, process, store, export and dispose of the same." In 1960, the Hunts assigned a fifty percent interest in the concession to BP Exploration Company (Libya) Ltd., a subsidiary of the British Petroleum Company, Ltd. (together referred to as BP). ³

The Hunts and BP discovered oil in the concession area in 1961. They developed the find into the Sarir oil field and constructed a pipeline from the field to the Libyan coast. By 1967 they were exporting and marketing Sarir crude oil.

In 1971, the Libyan Government nationalized BP's interest in Concession No. 65, assigning it to the government-owned Arabian Gulf Exploration Company (AGEC). BP, of course, refused to accept the Libyan action. It published notices claiming title to Sarir crude in newspapers throughout the world. Its investigators traced the movement and sale of oil produced from the concession. It sent notices of its title claim to everyone suspected of dealing in Sarir crude. In addition, BP initiated twenty-nine lawsuits in various countries claiming title to Sarir crude oil that had been exported by the Libyans.

In May 1973, the plaintiff, Coastal States, had contracted with Ashland Oil Company of California ⁴ and AGEC to purchase Sarir crude. Coastal made arrangements to process the oil at the Montedison refinery in Italy and began to market products refined from Sarir crude.

Sometime prior to June 1973, Don Harris, a BP employee, communicated with Sam Willson of Coastal. ⁵ Willson testified that Harris warned him against Coastal's involvement with Sarir crude. According to Willson, Harris stated that "BP would be doing everything in their power to hamper the fulfillment of any contract that was entered into for this crude."

In June 1973, the Libyan Government nationalized the Hunts' interest in Concession No. 65. The Libyans transferred this interest also to AGEC. Shortly after the nationalization, a BP director wrote to Nelson Bunker Hunt suggesting that they "join together in claiming ownership" to Sarir crude "or to take other joint action to protect our respective rights."

The Hunts initiated a worldwide campaign to notify crude oil users of their claim to Sarir crude. ⁶ Like BP, the Hunts tried to investigate the movement of Sarir oil from Libya. The Hunts also joined in twenty-one of the suits filed by BP claiming title to Sarir oil.

The suits included a conversion action by the Hunts and BP against Coastal filed in the Texas state courts. Coastal counterclaimed for tortious interference with business relations. The counterclaim was based upon the same events as is the present suit. The state trial court denied both parties recovery, and the decision was affirmed in the state court of appeals and supreme court. ⁷

Another legal skirmish between Coastal and the Hunts occurred in connection with an oil tanker, the S/T Hilda. The Hilda was chartered by Coastal to lift crude oil from the Montedison refinery to the east coast of the United States. She was scheduled to deliver the crude to Texaco Oil Co. in Boston. While the Hilda was en route, the Hunts informed Texaco that they intended to attach her cargo when she docked. As a result, Texaco informed Coastal that it would not accept crude oil from the Hilda.

Coastal then attempted to re-route the Hilda to another port. The Hunts tried to persuade the Hilda's owner to order her to Boston in spite of Coastal's contrary instructions. They offered to indemnify the ship's owner for any damages incurred in doing so. Nevertheless, Coastal successfully re-routed the Hilda to Philadelphia. The Hunts then initiated federal court attachment proceedings against the Hilda's cargo in a Pennsylvania federal district court. The suit, however, was dismissed for lack of jurisdiction. ⁸

The campaign by the Hunts and BP to publicize their claims to Sarir oil also hindered Coastal's efforts to market that oil. On several occasions the Hunts or BP communicated with crude oil users to inform them of the title dispute ⁹ while Coastal was trying to sell oil to them. There was evidence that these communications with Coastal's customers frustrated potential sales by Coastal. The publicity surrounding the Hilda incident, generated in part by a Hunt press release, also hampered Coastal's sales efforts.

Finally, Coastal's bankers refused to extend Coastal's credit so long as it continued to deal in Sarir crude. Coastal was the center of a controversy unrelated to the Sarir oil and the bankers did not want additional publicity concerning the company. Whether this fact raises an inference or is mere coincidence, two of the banks had employees of Standard Oil Company of Ohio (Sohio) on their board of directors. Sohio is owned in part by BP.

In August 1973, Coastal's economic condition forced it to assign its rights to purchase Sarir crude oil to another company. It contends that it lost millions of dollars of profits by assigning these rights. Moreover, Coastal claims that, because it did not have Sarir crude to be refined, it incurred penalties for failing to utilize reserved petroleum processing time at the Montedison refinery. Finally, Coastal seeks to recover the cost of re-routing the Hilda from Boston to Philadelphia.

This antitrust action was filed by Coastal in October 1974. ¹⁰ In November BP settled its dispute with the Libyan Government. As it was required to do by the settlement agreement, BP dismissed its suits asserting title to the Sarir crude, including the Texas conversion action against Coastal. The Hunts, however, continued to prosecute their action against Coastal. In May 1975, they settled their dispute with Libya and then dismissed their other title suits. ¹¹

Coastal contends that the publicity and lawsuits initiated by the Hunts constituted a secondary boycott that sought to and did intimidate its potential customers and bankers. It seeks damages for this alleged conspiracy in restraint of the trade in Sarir crude pursuant to Section 1 of the Sherman Antitrust Act, 15 U.S.C. Sec. 1 (1976). The Hunts filed a counterclaim seeking damages for Coastal's conversion of Sarir crude. The counterclaim is admittedly identical to the cause of action decided adversely to the Hunts in the Texas state courts.

Coastal moved for summary judgment with respect to the Hunts' counterclaim on the ground that the previous litigation of that claim in the Texas courts barred its relitigation in federal court. The district court granted this motion. The Hunts moved repeatedly for summary judgment on the antitrust claim, arguing in part that all of their conduct was protected by the antitrust petitioning immunity. ¹² The Hunts relied primarily upon four stipulations indicating that their "purpose" in instituting the investigations and litigation was to establish legal title to the expropriated Sarir crude oil. ¹³

The Hunts' motions for summary judgment were denied and the case went to trial. Coastal presented evidence in an effort to show, among other things, that the Hunts initiated the litigation, publicity, and investigations in an effort to make Sarir crude unmarketable. In addition to the facts set forth above, Coastal introduced two documents prepared by one of Nelson Bunker Hunt's employees, G. Henry M. Schuler. One was a letter to the State Department requesting the text of an official protest sent by the United States to Libya in connection with the nationalization of the Hunts' interests. The letter indicated that the Hunts intended to litigate their claims to the oil, and concluded: "[i]t is at least possible that the Libyans will reconsider their belief that they can market expropriated oil without serious impediment, in which case they may back-off their threat."

The other Schuler document was a discussion draft prepared in 1971 for a meeting of the London Policy Group, an organization of oil company representatives that met to discuss a joint response to OPEC. The document discussed possible responses to tax legislation being considered by Libya. One measure proposed was a public relations campaign to: "Emphasize the clear terms of our concession agreements--this...