Board of County Com'rs of Custer County v. Wilshire Oil Co. of Texas, 74-1553

• Citation: 523 F.2d 125
• Decision Date: 25 July 1975
• Docket Number: No. 74-1553,74-1553
• Parties: 1975-1 Trade Cases 60,357 BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF CUSTER, and J. D. Metcalfe, Inc., an Oklahoma Corporation, for themselves and for all others similarly situated, Plaintiffs-Appellants, v. WILSHIRE OIL COMPANY OF TEXAS, a corporation, et al., Defendants, Including Mid-America Refining Co., Inc., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 125

523 F.2d 125

1975-1 Trade Cases 60,357

BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF CUSTER, and

J. D. Metcalfe, Inc., an Oklahoma Corporation, for

themselves and for all others similarly

situated, Plaintiffs-Appellants, v. WILSHIRE OIL COMPANY OF TEXAS, a corporation, et al., Defendants, Including Mid-America Refining Co., Inc., Defendant-Appellee.

No. 74-1553.

United States Court of Appeals, Tenth Circuit.

Argued May 2, 1975.

Decided June 11, 1975.

Rehearing Denied July 25, 1975.

John A. Claro, Barefoot, Moler & Claro, Oklahoma City, Okl. (Larry Derryberry, Atty. Gen., State of Oklahoma, James Gray, Asst. Atty. Gen., State of Oklahoma, and Bert Barefoot, Jr., Edward H. Moler, and Joseph A. Claro, Barefoot, Moler & Claro, Oklahoma City, Okl., on the brief), for plaintiffs-appellants.

Lee B. Thompson, Cantrell, Douglass, Thompson & Wilson, Oklahoma City, Okl. (John H. Cantrell, Cantrell, Douglass, Thompson & Wilson, Oklahoma City, Okl., on the brief), for defendant-appellee, Mid-America Refining Co., Inc.

Before LEWIS, Chief Judge, and BARRETT and DOYLE, Circuit Judges.

DOYLE, Circuit Judge.

This is one facet of an antitrust suit which was brought under § 1 of the Sherman Act, 15 U.S.C. § 1. The essence of the action was the alleged conspiracy engaged in by the defendants to fix the price of liquid asphalt. Two other cases involve several of the same defendants named in the present action and also the same conspiracy. See Standard Industries, Inc. v. Mobil Oil Corp., 475 F.2d 220 (10th Cir.), Cert. denied, 414 U.S. 829, 94 S.Ct. 55, 38 L.Ed.2d 63 (1973); United States v. Wilshire Oil Co., 427 F.2d 969 (10th Cir.), Cert. denied, 400 U.S. 829, 91 S.Ct. 58, 27 L.Ed.2d 59 (1970).

The complaint (which was filed in the Western District of Oklahoma) alleged that the conspiracy occurred starting in 1948 and continuing to December 31, 1968. The sole questions here presented are concerned with the validity of venue in the United States District Court for the Western District of Oklahoma in view of the fact that the appellee Mid-America Refining Company is a Kansas corporation having its home office in Chanute, Kansas. Throughout the business dealings in question Mid-America made assiduous efforts to avoid any appearance of doing business in Oklahoma. To show that Mid-America had done or transacted business in Oklahoma, plaintiffs offered extensive evidence of business dealings which culminated in that state.

Substituted service was had on Mid-America and it promptly moved to dismiss, claiming improper venue. The trial court first held on February 7, 1973 that the evidence was insufficient to support a conclusion that venue existed in the Western District of Oklahoma. It did not issue a decision, however, until further discovery had been completed. Then, on June 27, 1974, the defendant's motions to quash and dismiss for improper venue were granted. The court found that the defendant had transacted business in fact and in law in the Northern District of Oklahoma, but went on to hold that this was insufficient to constitute venue in the Western District of Oklahoma where the suit had been filed. In reaching this conclusion the court ruled that the general venue statutes contained in the Judicial Code, 28 U.S.C. §§ 1391 and 1392, were inapplicable.

The court's finding that Mid-America's business contacts within the Northern District of Oklahoma were sufficient in law is not disputed by the plaintiffs. It is the court's ruling that this did not justify venue in the Western District of Oklahoma which is challenged. Plaintiffs maintain that 28 U.S.C. § 1392(a) is fully applicable. ¹

The trial court ruled that this section did not apply to the present case; that venue in this, an antitrust suit, was governed exclusively by 15 U.S.C. § 22, a provision of the Clayton Act which provides for suits to be brought under the antitrust laws in the judicial district where the corporation is an inhabitant, but also in any district wherein it is found to be doing or transacting business. The trial court in effect determined that this section is restrictive in that it does not permit the general venue statute, § 1392(a), which allows an action against defendants residing in different districts in the same state to be brought in one of such districts even though one of the defendants did not reside there, to supplement § 22. The determinative issue for our consideration is whether the transacting of business in one district enables the bringing of suit in another within the state.

There are other questions as to whether business must have been done or transacted as of the time of the filing of the action or whether it is sufficient to show that the corporation transacted business prior thereto in Oklahoma and the cause of action arose as of that time in order for venue to arise.

I.

It is undisputed that Mid-America had no office in Oklahoma; owned no property there; was not incorporated in Oklahoma nor licensed to do business in Oklahoma. In view of this, the business facts adduced in the proceedings below become highly pertinent. The dealings are extensive. ²

Do the several contacts outlined above constitute the transaction of business within the meaning of 15 U.S.C. § 22? The Supreme Court's decision in United States v. Scophony Corp., 333 U.S. 795, 808, 68 S.Ct. 855, 92 L.Ed. 1091 (1948) provides the decisional approach. It holds that in determining whether a corporation is transacting business within a district, practical business conceptions are to be considered rather than hair-splitting legal technicalities. It is not a lawyer's contest. Mid-America contends that inasmuch as all of the transactions were completed at Chanute, Kansas, that in law it did not transact business in the Northern District of Oklahoma. The fact, however, that these sales were technically completed at the time of delivery does not change the important fact that asphalt produced in Kansas was being regularly sold and used in Oklahoma.

B. J. Semel Associates, Inc. v. United Fireworks Mfg. Co., 122 U.S.App.D.C. 402, 355 F.2d 827 (1965) is similar to our case. There the plaintiff, a major customer of defendant (which was an Ohio corporation), sued in the District of Columbia. The deliveries as in our case had been made F. O. B. Dayton, Ohio. The court said:

(A)ppellee's chief reliance . . . is upon the circumstance that deliveries of the goods sold were, in these cases, made for the seller's account to the buyer's place of business. We, however, are unable to believe that the spirit of Scophony (United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948) ) comports with allowing the seller's shipping practices to determine his amenability to suit under Section 12. Were it otherwise, F.O.B. would always, and without more, compel the buyer to litigate on the seller's home grounds the very result which Congress sought to avoid in Section 12.

355 F.2d at 831-32.

In Semel, as in the instant case, the argument was primarily legalistic. To allow, however, a device of this sort to prevail would create an artificial escape from suit which could produce unjust results.

Mid-America was also shown to have purchased a substantial quantity of goods in the Northern District between 1964 and 1969. This tells us something on the subject of the transaction of business in the Northern District of Oklahoma since purchases, as well as sales, constitute the transaction of business. McCrory Corp. v. Cloth World, Inc., 378 F.Supp. 322 (S.D.N.Y.1974); Fashion Two Twenty, Inc. v. Steinberg, 339 F.Supp. 836, 842 (E.D.N.Y.1971); State of Illinois v. Harper & Row Publications, Inc., 308 F.Supp. 1207, 1210-1211 (N.D.Ill.1969); Crusader Marine Corp. v. Chrysler Corp., 281 F.Supp. 802, 804 (E.D.Mich.1968); United States v. Burlington Industries, Inc., 247 F.Supp. 185 (S.D.N.Y.1965).

Thus, the trial court's determination that Mid-America was transacting business in the Northern District of Oklahoma was unquestionably correct in law as well as fact. ³

II.

The next step is consideration of whether the trial court was correct in holding that 15 U.S.C. § 22, the Clayton Act venue provision, applies to this case to the exclusion of the general venue statutes, §§ 1391 and 1392. Plaintiffs challenge the trial court's holding that the Clayton Act provision is exclusive. Plaintiffs maintain that §§ 1391 and 1392, Supra, supplement the special antitrust provision. Plaintiffs further maintain that Mid-America was either transacting business or doing business in the Northern District of Oklahoma and that it was therefore residing in the Northern District of Oklahoma within the meaning of § 1392. There exists no dispute as to some of the other defendants residing and doing business in the Western District of Oklahoma.

In the years before 1957 the court decisions were to the effect that § 22 (of the Clayton Act) did not exclusively govern venue in antitrust cases, but was supplemented by the general venue provisions of 28 U.S.C. ⁴ In the year 1957 the Supreme Court in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957) made an analogous ruling. It held that the special patent venue provisions of Title 28 were not supplemented by the general venue provisions of Title 28. The opinion pointed out that the general provisions here in question and the special patent venue provisions were revised by Congress at the same time. A consequence of this was that the courts tended to hold that the general venue provisions of 28 U.S.C. did not serve to supplement the special provision contained in 15 U.S.C. § 22. ⁵ In 1966, however, the Supreme Court gave an interpretation contrary to that which had been previously given in Fourco Glass Company, supra. This was in Pure Oil Co. v. Suarez, 384 U.S. 202, 86 S.Ct. 1394, 16 L.Ed.2d 474 (1966). It held in this later decision that the general venue provisions of 28 U.S.C. did...