A. Cherney Disposal Co. v. CHICAGO & SUB. REFUSE DIS. ASS'N

• Decision Date: 28 June 1973
• Docket Number: No. 72-1303.,72-1303.
• Citation: 484 F.2d 751
• Parties: A. CHERNEY DISPOSAL CO. and O. Z. Miller, Ltd., Plaintiffs-Appellants, v. CHICAGO & SUBURBAN REFUSE DISPOSAL ASSOCIATION et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

484 F.2d 751 (1973)

A. CHERNEY DISPOSAL CO. and O. Z. Miller, Ltd., Plaintiffs-Appellants, v. CHICAGO & SUBURBAN REFUSE DISPOSAL ASSOCIATION et al., Defendants-Appellees.

No. 72-1303.

United States Court of Appeals, Seventh Circuit.

Argued April 11, 1973.

Decided June 28, 1973.

Rehearing Denied August 9, 1973.

Certiorari Denied January 7, 1974.

Jerrold E. Salzman, Chicago, Ill., for plaintiffs-appellants.

Glenn W. McGee, Peer Pedersen, W. Donald McSweeney, Chicago, Ill., for defendants-appellees.

Before SWYGERT, Chief Judge, and KILEY and BARNES,^* Circuit Judges.

Certiorari Denied January 7, 1974. See 94 S.Ct. 870.

BARNES, Circuit Judge:

This is an appeal in a private antitrust action from a judgment of dismissal granted and entered after defendant's motion for summary judgment was treated as a motion to dismiss for lack of jurisdiction. We reverse and remand for further proceedings.

I. THE NATURE OF THE PROCEEDINGS IN THE DISTRICT COURT.

We here adopt from the "Judgment Order and Memorandum Opinion" of the District Court, its statement of the cause, proceedings and pleadings leading up to the dismissal.¹

As can be seen, the District Court took a position in the last paragraph of its order contrary to that taken by defendants during pre-trial motions.² Its authority for treating this as a motion to dismiss — not the motion for summary judgment relied on by the defendants — was to consider this "a speaking motion" — (matters apart and beyond the pleadings — here affidavits and depositions) and cite: 2A Moore's Federal Practice, § 12.09, Pintozzi v. Scott, 436 F.2d 375 at 378, n. 3 (7th Cir. 1970).

It is true that note 3 in Pintozzi specifically held: "It is appropriate for the trial court to consider, in a motion to dismiss under rule 12(b)(1), matters outside the pleading — . . . i.e., the pleadings and orders (made) in the state court, which were attached to the . . . motion to dismiss." But this note actually relates to that limited portion of the Pintozzi opinion which holds that 28 U.S.C. § 1341 bars the exercise of Federal equity power which interferes with collection of state taxes under adequate state laws.

The reference to Moore's Federal Practice Vol. 2A, § 12.09 is not specific. In that section we find certain authorities that are contrary to the rule relied upon by the district judge. We give examples in the margin.³

Appellee also relies on Rosemound Sand & Gravel Co. v. Lambert Sand & Gravel Co., 469 F.2d 416 (5th Cir. 1972). There a procedure similar to that adopted by the District Judge in this case was approved (p. 418), but on completely different facts. (1) Rosemound, the appellant, had every opportunity to present affidavits to prove interstate commerce, but after "only the barest conclusionary statements in the complaint", the "weak" answers to interrogatories "clearly show that none of defendant's products were shipped out of state or entered the flow of commerce." (2) The jurisdictional requirements of the Clayton Act and the Robinson-Patman Act were involved, not the Sherman Act Sec. 1 requirements (as here).

"This failure of any party to have any interstate business disposes of the Clayton Act and Robinson-Patman claims (citing cases). While these interstate activities could be found to violate the Sherman Act if they had a direct and substantial effect on interstate commerce (citing Fifth and Ninth Circuit cases), the evidence introduced below established no such connection," (id. at 418-419); and no "nexus with interstate commerce," (id. n. 1).

II. DID DISPUTED QUESTIONS OF FACT EXIST BEFORE THE DISTRICT COURT?

Plaintiffs' complaint alleges, as the district judge correctly pointed out, three grounds for jurisdiction:

1. Defendants' interference with interstate commerce in scavenger packer equipment for plaintiffs' trucks.

2. Threatening boycotts of retail grocery chains operating in interstate commerce to prevent employment of plaintiffs.

3. Defendants' scavenger business includes substantial transportation and sales across state lines.

If any one of these grounds is substantially disputed, the plaintiffs are entitled to have a trier of fact determine the issues.

In summary, the district court's order held (1) the first allegation was "merely incidental to plaintiffs' local business"; (2) that the second "did not affect interstate commerce in the business," and "had no effect, except the most meta-physical, upon the interstate business of the third party grocery chains"; and (3) that the admitted transportation across state lines was "de minimis" in its effect upon interstate commerce.

II (1) In support of the court's ruling as to the plaintiffs' first ground (garbage compacting truck equipment), the District Court relied upon Sun Valley Disposal Co. v. Silver State Disposal Co., 420 F.2d 341, 343 (9th Cir. 1969); Lieberthal v. North Country Lanes, Inc., 332 F.2d 269 (2d Cir. 1964); Marks Food Corp. v. Barbara Ann Baking Co., 162 F.Supp. 300 (S.D.Cal.1958), rev'd on other grounds, 274 F.2d 934 (9th Cir. 1960); and Page v. Work, 290 F.2d 323 (9th Cir. 1961), cert. denied, 368 U.S. 875, 82 S.Ct. 121, 7 L.Ed.2d 76 (1961).

There is no question but that the installation of equipment in one bowling alley in Plattsburg, New York as in Lieberthal, supra, might well be held to have no possible substantial effect on interstate commerce. As Judge Hays says at 271 of 332 F.2d:

"The controlling consideration . . . is a very practical one — the degree of interstate activity in the particular business under review," citing United States v. International Boxing Club, 348 U.S. 236, 243, 75 S.Ct. 259, 99 L.Ed. 290.

The same could be said of any "purely local restraint applied at a local level to a product which never enters into the flow of interstate commerce." Page v: Work, 290 F.2d 323, 331-(9th Cir. 1961, where legal advertising was involved).

In Lieberthal, supra, the judge relied on uncontested allegations of facts as alleged in the complaint, and assumed they were true. In Page v. Work, supra, the motion for summary judgment occurred after a trial,⁴ on the stipulated limited issue of jurisdiction only.

In Sun Valley Disposal Co., supra, recovery was denied on two grounds, first, because it was held no federal cause of action exists where the defendant's alleged illegal acts were sanctioned by the Nevada State Legislature and the Clark County Commission; and second, because the acts did not involve interstate commerce for the defendants "conducted a wholly local garbage disposal and container leasing business," although supplying this business from out of state. "This fact alone, does not turn what was really a local activity into an interstate one." Thus this case, standing alone on its facts, constitutes valid authority for the general rule that authorizes the District Court's action denying the first ground urged by appellant for antitrust jurisdiction.

Appellants, however, urge that Sun Valley is not controlling because the case of United States v. Bensinger Company, 430 F.2d 584 (8th Cir. 1970) delineates an exception to the general rule, i. e., that while the mere existence of an appreciable but minute interstate flow of supplies (as in Sun Valley, Lieberthal, Page and Marks Food) may not be sufficient to establish jurisdiction, when there is added some appreciable interstate flow to the charge that a conspiracy existed between defendants and manufacturers located outside of the state, to block that flow, then a direct restraint on interstate commerce exists, and is actionable under the Sherman Act, Sec. 1. (App. at 205-6; 266, 272). Klor's v. Broadway-Hale Stores, 359 U. S. 207, 210, and 211, 79 S.Ct. 705, 3 L. Ed.2d 741; Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619.

If the instructions given by the District Court to the jury in Bensinger (quoted on the appeal),⁵ correctly states the law, there is merit to appellants' position here opposing appellees' assertion that the plaintiffs' first ground of alleged jurisdiction is invalid. If a group boycott is alleged, Klors, supra,⁶ and Standard Oil Co., supra, require reversal.

One of the most recent cases reversing a District Court's determination there was a lack of jurisdiction because of the local nature of the business involved, in which the trial court similiarly relied on two of the Ninth Circuit cases herein cited by appellees,⁷ states as follows:

". . . an important distinction should be stressed — the distinction between the jurisdictional question, with which we are concerned, and the question of whether, in other respects, a substantive violation of the Sherman Act is alleged.

"The two problems are frequently confused, and understandably so. See P. Areeda, Antitrust Analysis 59-60 (Little, Brown & Co. 1967). Section 1 of the Act prohibits contracts, combinations, and conspiracies `in restraint of trade or commerce among the several States.\' This single cryptic phrase defines both the conduct prohibited by the Act and the statute\'s jurisdictional reach. As the Court explained in Apex Hosiery Co. v. Leader, 310 U.S. 469, 494-495, 60 S.Ct. 982, 992, 84 L.Ed. 1311 (1940): `The phrase "restraint of trade" which . . . had a well-understood meaning at common law, was made the means of defining the activities prohibited. The addition of the words, "or commerce among the several states" was not an additional kind of restraint to be prohibited by the Sherman Act but was the means used to relate the prohibited restraint of trade to interstate commerce for constitutional purposes. . . .\' The same general distinction is drawn in Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 235, 68 S.Ct. 996, 92 L.Ed. 1328 (1948), and United States v. Women\'s Sportswear Manufacturers\' Ass\'n, 336 U.S. 460, 461-462, 69 S.Ct. 714, 93 L. Ed. 805 (1949).

"Whether a defendant\'s conduct constitutes a substantive Sherman Act violation is entirely a matter of congressional

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