International Raw Materials, Ltd. v. Stauffer Chemical Co.

• Decision Date: 30 October 1992
• Docket Number: No. 91-1511,91-1511
• Citation: 978 F.2d 1318
• Parties: , 1992-2 Trade Cases P 70,016 INTERNATIONAL RAW MATERIALS, LTD., Appellant, v. STAUFFER CHEMICAL COMPANY, Rhone Poulenc Inc., TG Soda Ash Inc., General Chemical Partners, Tenneco Minerals Company, FMC Wyoming Corp., Kerr-McGee Chemical Corp., American Natural Soda Ash Corporation, Appellees.
• Court: U.S. Court of Appeals — Third Circuit

Page 1318

978 F.2d 1318

61 USLW 2285, 1992-2 Trade Cases P 70,016

INTERNATIONAL RAW MATERIALS, LTD., Appellant, v. STAUFFER CHEMICAL COMPANY, Rhone Poulenc Inc., TG Soda Ash

Inc., General Chemical Partners, Tenneco Minerals Company,

FMC Wyoming Corp., Kerr-McGee Chemical Corp., American

Natural Soda Ash Corporation, Appellees.

No. 91-1511.

United States Court of Appeals, Third Circuit.

Argued Dec. 13, 1991.

Decided Oct. 30, 1992.

David Berger, (argued), Howard Langer, Jeffrey Rockman, Berger & Montague, P.C., (David W. Marston, Buchanan Ingersoll, P.C., of counsel), Philadelphia, Pa., for appellant.

Norman H. Seidler, (argued), Charles H. Critchlow, Coudert Brothers, New York City, Patrick W. Kittredge, Joseph M. Donley, Kittredge, Donley, Elson Fullem & Embick, Stephen W. Armstrong, Montgomery, McCracken, Walker & Rhoads, Alfred H. Wilcox, Pepper, Hamilton & Scheetz, Philadelphia, for appellees.

Before: BECKER, GREENBERG, and ALITO, Circuit Judges.

OPINION OF THE COURT

BECKER, Circuit Judge.

This appeal presents a question of antitrust immunity under the Webb-Pomerene Act, 15 USC §§ 61-65 (1988). Plaintiff International Raw Materials ("IRM"), a marine terminal operator, appeals from an order of the district court for the Eastern District of Pennsylvania granting, for the second time, summary judgment against the plaintiff in its antitrust suit against an association of soda ash producers and its members. The district court held that the association and its members were exempt from liability by virtue of the association's status as an export trade association registered with the Federal Trade Commission pursuant to the Webb-Pomerene Act. Under that Act, "an association entered into for the sole purpose of engaging in export trade and actually engaged solely in such export trade" enjoys immunity from the antitrust laws with respect to any "agreement made or act done in the course of export trade." 15 USC § 62 (1988).

IRM's position in the case is that the association has forfeited that immunity because it has (1) included foreign-owned corporations as members; (2) conspired with non-exempt foreign soda ash producers to depress competition in the soda ash industry; and (3) pursued purposes other than export trade by entering into a terminalling agreement with one of IRM's rival terminal operators. In addition, IRM contends that summary judgment was inappropriate because the novel questions of law presented by this case should not have been decided without the benefit of a fully developed factual record.

We conclude that immunity under the Act is not limited to associations composed solely of American-owned firms; that IRM lacks standing to argue that the association has forfeited the exemption by depressing competition in the market for soda ash; and that the association did not forfeit its right to the exemption by entering into the terminalling agreement. We also conclude that further factual development is not necessary to decide the questions of law presented, although they are admittedly both novel and complex. Accordingly, we will affirm the district court's grant of summary judgment for defendants.

I. FACTS

IRM operates a terminal in Port Longview, Washington, where it loads dry white bulk product, primarily soda ash, ¹ onto ocean-going vessels. Formed in 1983, the American National Soda Ash Corporation ("ANSAC") is an association of soda ash producers organized pursuant to the Webb-Pomerene Act. Although all of its members are United States corporations whose principal places of business are in the United States, all but one is partly or wholly owned by, or affiliated with, a major foreign corporation. ²

Prior to ANSAC's formation, each soda ash producer bargained separately for terminal services. Once ANSAC was formed, however, each member ceased individual bargaining and instead authorized ANSAC to negotiate a common rate on behalf of them all. ³ IRM bargained for rates under both regimes.

Other terminal operators also bargained for rates with ANSAC. In early 1984, Hall-Buck Marine, Inc. ("Hall-Buck" or "HBM"), a terminal operator in competition with IRM, proposed an arrangement whereby ANSAC would guarantee to ship 400,000 metric tons of soda ash each year for five years, in return for which ANSAC would receive lower rates and would share in revenues for all soda ash cargoes shipped by other firms. ANSAC did not accept Hall-Buck's proposal.

In September 1985, ANSAC entered into a three-year agreement with IRM in which ANSAC agreed to use IRM's Longview facility to load at least 66 percent of ANSAC's West Coast exports. At $3.72 to $4.72 per metric ton, the collective rates ANSAC and IRM agreed to were significantly lower than the range of rates IRM had negotiated with the individual producers between 1982 and 1984. ⁴

As their agreement neared expiration, ANSAC and IRM resumed negotiations. Although IRM offered ANSAC a flat rate of $3.72 per metric ton, ANSAC took its business to Hall-Buck, which had signed a lease with the Port of Portland, Oregon and planned to construct a new terminal there. On October 30, 1987, ANSAC and Hall-Buck entered into a Terminalling Agreement in which Hall-Buck promised ANSAC rates substantially lower than those ANSAC had previously negotiated with IRM. ⁵ In return, ANSAC promised to ship at least 500,000 metric tons of soda ash through Hall-Buck's Portland terminal each year, unless Hall-Buck obtained more than 250,000 tons of business from customers other than ANSAC, in which case ANSAC's annual commitment would be reduced to 425,000 tons.

The ANSAC/Hall-Buck agreement provides for a term of five years, with two five-year options to renew. More specifically, the Agreement entitles ANSAC to renew on the same terms at the end of the first five years. If ANSAC exercises its option to renew, the Agreement also entitles it to renew on the same terms at the end of the next five years. If ANSAC chooses not to renew at the end of the first five years, the Agreement requires ANSAC to pay Hall-Buck half of the estimated unamortized cost of constructing the terminal within thirty days after the end of the five-year term. Payment of this amount gives ANSAC "the right to require" a 50 percent ownership interest in the terminal. ⁶ The Agreement further provides:

In such event, Hall-Buck shall be given a contract to operate the Terminal for the duration of the lease on a basis to be negotiated between both parties. Parties agree that such 50 percent ownership interest by ANSAC is not intended to put ANSAC in the Terminalling business, but is rather intended to confer on ANSAC an appropriate equity interest in compensation for its contribution to the cost of the investment and that ANSAC shall have the right to sell, assign, or otherwise dispose of such ownership, provided however that Hall-Buck shall have the right of first refusal should ANSAC decide to sell its ownership interest.

IRM III, 767 F.Supp. at 690.

II. PROCEDURAL HISTORY

IRM filed this suit on November 23, 1987, less than one month after it lost ANSAC's business to Hall-Buck. IRM's initial complaint alleged that ANSAC and its members conspired to fix the rates of domestic terminalling services for soda ash in violation of section 1 of the Sherman Act, 15 USC §§ 1-7 (1988). On January 11, 1989, defendants moved for dismissal under Federal Rule of Civil Procedure 12(b)(6), claiming that, as a matter of law, their status as a Webb-Pomerene association exempted them from antitrust liability.

In response, IRM argued that ANSAC does not qualify for Webb-Pomerene status because (1) many ANSAC members are owned by foreign corporations and (2) further discovery might reveal that, through its relationship with Hall-Buck, ANSAC was actively engaging in the terminalling business, thereby violating the "sole purpose" provision of the Act, which restricts the exemption to export-related activity. See 15 USC § 62.

Because the district court considered the affidavits supporting the defendants' 12(b)(6) motion, it treated that motion as one for summary judgment under Federal Rule of Civil Procedure 56. International Raw Materials, Ltd. v. Stauffer Chemical Co., 716 F.Supp. 188, 190 (E.D.Pa.1989) ("IRM I "), vacated, 898 F.2d 946 (3d Cir1990) ("IRM II "). Concluding that ANSAC's practices "fall squarely within" the Webb-Pomerene exemption, 716 F.Supp. at 191, the court granted summary judgment for the defendants. IRM appealed.

Although IRM had argued before the district court that ANSAC's relationship with Hall-Buck was such that ANSAC was no longer entitled to immunity under the Webb-Pomerene Act, little, if any discovery, had been conducted on the facts of that relationship. We held that it was necessary to develop a more complete factual record before we could determine the applicability of the Webb-Pomerene exemption. See 898 F.2d at 949-50. Accordingly, we vacated the grant of summary judgment and remanded to the district court for further fact finding.

On remand, the district court limited discovery to the issue of the relationship between ANSAC and Hall-Buck. ⁷ Upon completion of discovery as to that issue, the parties renewed their cross-motions for summary judgment. While those motions were pending, IRM amended its complaint to add six foreign corporations and Hall-Buck as alleged co-conspirators with ANSAC and its members. The amended complaint also added a second count, alleging that ANSAC's relationship with Hall-Buck violated section 1 of the Sherman Act by restraining trade and depressing competition in the business of terminal services.

Before the district court's disposition of the pending motions, IRM also moved to lift the limitation on further discovery. In an order accompanying its opinion on the summary judgment motions, the district court denied the motion for additional discovery because "no further discovery is necessary to effect a disposition of this case--all facts pertinent to...