Alton Box Bd. Co. v. Esprit De Corp.

Citation682 F.2d 1267
Decision Date23 April 1982
Docket NumberNo. 80-4338,80-4338
Parties1982-1 Trade Cases 64,711 ALTON BOX BOARD COMPANY, et al., Plaintiffs-Appellants, v. ESPRIT DE CORP., Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

R. Clifford Potter, Bell, Boyd, Lloyd, Chicago, Ill., for plaintiffs-appellants.

Francis O. Scarpulla, Scarpulla & Garlock, San Francisco, Cal., for defendant-appellee.

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

Before CHOY and WALLACE, Circuit Judges, and EAST, * District Judge.

WALLACE, Circuit Judge:

Plaintiffs-appellants Alton Box Board Co. and twenty-eight other manufacturers of corrugated containers (the manufacturers) appeal from the district court's grant of summary judgment for appellee Esprit de Corp. (Esprit). The primary question presented is whether the district court improperly refused to enjoin a state court action arising under state antitrust law, when another antitrust claim, challenging the same conduct but arising under federal antitrust law, is being prosecuted by different plaintiffs against the same manufacturers in a multidistrict action in federal court. A declaratory judgment claim based upon the same contentions was also dismissed. We affirm.

I

Esprit is an indirect purchaser of corrugated containers. Prior to the filing of the manufacturers' complaint in this case, a multidistrict class action "of nearly unprecedented scope" was pending in the United States District Court for the Southern District of Texas against the manufacturers. In re Corrugated Container Antitrust Litigation, 611 F.2d 86, 89 (5th Cir. 1980); In re Corrugated Container Antitrust Litigation, 80 F.R.D. 244 (S.D.Tex.1978). The plaintiffs in that multidistrict action sought treble damages under section 4 of the Clayton Act, 15 U.S.C. § 15, for an alleged horizontal price fixing conspiracy by the twenty-nine manufacturers of corrugated containers, 1 in violation of section 1 of the Sherman Act, 15 U.S.C. § 1.

Esprit purchased its corrugated containers solely from distributors; none of these purchases were made directly from any of the manufacturer-defendants in the multidistrict litigation. Foreclosed from joining the plaintiff class in the multidistrict litigation by the "direct purchaser" requirement of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977) (Illinois Brick ), Esprit filed a state antitrust action under California's Cartwright Act, Cal.Bus. & Prof.Code §§ 16720, 16750 (West 1964 & Supp.1981), against the manufacturers and certain unnamed co-conspirators. This action was brought on behalf of a purported class of indirect purchasers of corrugated containers and was filed on March 22, 1979, more than six months after certification of a nationwide plaintiff class of direct purchasers in the federal multidistrict litigation. The manufacturers joined as defendants in Esprit's state complaint are also defendants in the multidistrict action and plaintiffs-appellants in this case. 2 The essence of Esprit's state suit is that some or all of the overcharges allegedly paid by members of the plaintiff class in the multidistrict litigation were passed on to the injury of Esprit and other indirect purchasers. The Cartwright Act specifically allows an antitrust action to be brought on behalf of indirect purchasers. Id. § 16750(a).

On May 2, 1979, the manufacturers filed a complaint in the District Court for the Northern District of California seeking an injunction precluding Esprit from pursuing its Cartwright Act claims in the state courts and a declaratory judgment that the Supreme Court's decision in Illinois Brick preempted such an "indirect purchaser" antitrust action. The next day, the manufacturers filed a petition for the removal of Esprit's state suit against them to the district court pursuant to 28 U.S.C. § 1441(b), 3 alleging that the parallel nature of the violations alleged by Esprit and the plaintiff class in the federal multidistrict litigation, together with the equivalence of the facts in dispute in both cases, provided adequate grounds for retention of jurisdiction by the district court and for eventual transfer of the action to the district court assigned the multidistrict litigation. On May 4, 1979, Esprit moved to remand its Cartwright Act case to the state court. 4 Over a year later, the district court granted the motion for remand. 5 The manufacturers moved for an injunction and for summary judgment on their federal claims. Esprit filed a cross-motion for summary judgment. The district court denied the manufacturers' motion and ordered the complaint dismissed on May 29, 1980. The next day the court entered summary judgment for Esprit. The manufacturers filed a timely notice of appeal from this final judgment. We have jurisdiction pursuant to 28 U.S.C. § 1291.

II

We do not reach the merits of this dispute. For reasons we will explain in detail, the Anti-Injunction Act, 28 U.S.C. § 2283, 6 precludes the injunctive relief the manufacturers seek. Declaratory relief is unavailable because the district court lacked an independent basis of jurisdiction to rule on the preemption issue, which is a defense arising under federal law that can and should be asserted in the state courts. If their preemption defense is not recognized by the state courts, the manufacturers can obtain federal review by appealing to the Supreme Court pursuant to 28 U.S.C. § 1257(2).

A.

The Anti-Injunction Act precludes federal courts from enjoining state court actions unless (1) Congress has expressly authorized such relief by statute, (2) an injunction is "necessary in aid of (the court's) jurisdiction," or (3) an injunction is necessary "to protect or effectuate (the court's) judgments." 28 U.S.C. § 2283. In the interest of comity and federalism, these three exceptions must be strictly construed. " '(D)oubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed in an orderly fashion to finally determine the controversy.' " Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 630, 97 S.Ct. 2881, 2887, 53 L.Ed.2d 1009 (1977) (plurality opinion), quoting Atlantic Coast Line R. Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 297, 90 S.Ct. 1739, 1748, 26 L.Ed.2d 234 (1970). The exceptions to the Act "should not be enlarged by loose statutory construction." Atlantic Coast Line R. Co. v. Brotherhood of Locomotive Engineers, supra, 398 U.S. at 287, 90 S.Ct. at 1743. In short, a federal injunction restraining prosecution of a lawsuit in state court is absolutely prohibited unless authorized by one of the three narrow statutory exceptions specifically defined in the Anti-Injunction Act. Mitchum v. Foster, 407 U.S. 225, 228-29, 92 S.Ct. 2151, 2154, 32 L.Ed.2d 705 (1972). It makes no difference whether the injunction applies to the private litigants or is imposed directly on the state court itself. See, e.g., Henry v. First Nat'l Bank of Clarksdale, 595 F.2d 291, 300 (5th Cir. 1979), cert. denied, 444 U.S. 1074, 100 S.Ct. 1020, 62 L.Ed.2d 756 (1980); 17 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 4222, at 317 (1978).

The district court held that injunctive relief was "unequivocally" barred by the Act because the manufacturers' action fell within none of the Act's exceptions. We agree. The first exception does not apply because there clearly has been no statutory authorization by Congress for the relief sought by the manufacturers. Nor does the second exception apply: an injunction is not necessary to aid the district court's jurisdiction. The manufacturers insist that an injunction is necessary to prevent "(t)he devastating effect that a state court proceeding would have on the ongoing multidistrict litigation." However, their own argument demonstrates conclusively that an injunction would not at all aid the jurisdiction of the district court in which injunctive relief was requested, the District Court for the Northern District of California. The "jurisdiction" the manufacturers wish to preserve is that of the District Court for the Southern District of Texas, which is presiding over the multidistrict direct purchasers' class action.

The authorities cited by the manufacturers do not conflict with this conclusion, but rather support it. The multidistrict litigation court enjoined a state case brought by a direct purchaser member of the plaintiff class in order to protect its own jurisdiction over the case. See In re Corrugated Container Antitrust Litigation, 659 F.2d 1332, 1334-35 (5th Cir. 1981). Unlike the plaintiffs in Three J Farms, Inc. v. Alton Box Board Co., 1979-1 Trade Cas. P 62,423 at 76,549 (D.S.C.1978), vacated on other grounds, 609 F.2d 112 (4th Cir. 1979), cert. denied, 445 U.S. 911, 100 S.Ct. 1090, 63 L.Ed.2d 327 (1980), Esprit is not a direct purchaser, has never been and cannot be a member of the federal class, and has never been subject to the jurisdiction of the multidistrict litigation court. See In re Corrugated Container Antitrust Litigation, supra, 659 F.2d at 1336 (multidistrict litigation court's injunction would not bar indirect purchaser suit brought under state antitrust law). Therefore, the district court correctly concluded that an injunction was not "necessary in aid of its jurisdiction." 7

The manufacturers argue creatively that an injunction is necessary to aid the district court's jurisdiction because Esprit's state Cartwright Act class action involves a claim to the same "common fund-the amount of the alleged overcharge," Illinois Brick, supra, 431 U.S. at 737, 97 S.Ct. at 2070, over which the multidistrict litigation court is charged with determining the rights and liabilities of the parties thereto. This argument is persuasive. It highlights the risk that Esprit's state suit may result in the "duplicative recoveries" condemned by ...

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