Horizons Intern., Inc. v. Baldrige

• Decision Date: 28 January 1987
• Docket Number: Nos. 86-1135,No. 86-,86-1144,86-,s. 86-1135
• Citation: 811 F.2d 154
• Parties: , 1987-1 Trade Cases 67,422 HORIZONS INTERNATIONAL, INC. and Kenchem, Inc. v. BALDRIGE, Malcolm, Secretary, United States Department of Commerce; United States Department of Commerce; Smith, William French, Attorney General of the United States; and United States Department of Justice, Appellants in1135. Appeal of OCCIDENTAL CHEMICAL CORPORATION.
• Court: U.S. Court of Appeals — Third Circuit

Page 154

811 F.2d 154

55 USLW 2401, 1987-1 Trade Cases 67,422

HORIZONS INTERNATIONAL, INC. and Kenchem, Inc. v. BALDRIGE, Malcolm, Secretary, United States Department of

Commerce; United States Department of Commerce; Smith,

William French, Attorney General of the United States; and

United States Department of Justice, Appellants in No. 86- 1135.

Appeal of OCCIDENTAL CHEMICAL CORPORATION.

Nos. 86-1135, 86-1144.

United States Court of Appeals, Third Circuit.

Argued Nov. 17, 1986.

Decided Jan. 20, 1987.

As Amended Jan. 28, 1987.

Daniel R. Shulman (argued), Eleanor M. Dilkes, Gray, Plant, Mooty, Mooty & Bennett, Minneapolis, Minn., Joseph M. Alioto, Alioto & Alioto, San Francisco, Cal., M. Norman Goldberger, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa., for Horizons Intern., Inc.

Douglas H. Ginsburg, Asst. Atty. Gen., W. Stephen Cannon, Deputy Asst. Atty. Gen., Robert B. Nicholson, Craig W. Conrath, John P. Fonte (argued), Rosemary T. Rakas, Attys., Dept. of Justice, Washington, D.C., Douglas A. Riggs, Gen. Counsel, Eleanor Roberts Lewis, Deputy Chief Counsel for Trade Development, William C. Yue, Atty. Advisor, U.S. Dept. of Commerce, Washington, D.C., for Malcolm Baldrige, et al.

Bruce W. Kauffman (argued), David H. Pittinsky, Lawrence D. Berger, Carl W. Hittinger, Dilworth, Paxson, Kalish & Kauffman, Philadelphia, Pa., for Occidental Chemical Corp.

Before SEITZ, GIBBONS and HUNTER, Circuit Judges.

OPINION OF THE COURT

GIBBONS, Circuit Judge:

This appeal is from an order of the district court entered in the first instance of judicial review of a decision of the Secretary of Commerce under Title III of the Export Trading Company Act of 1982, 15 U.S.C. Secs. 4011-4021. Title III authorizes the Secretary to issue certificates of review providing limited antitrust immunity to engage in specified concerted export activity if he finds that the proposed activity meets statutory requirements. 15 U.S.C. Sec. 4013(a). The Secretary acts upon an application after publication in the Federal Register of notice of that application. 15 U.S.C. Sec. 4012(a), (b). The purpose of such a certificate is to provide immunity from criminal or civil action under the antitrust laws for conduct which is specified in the certificate in effect when the conduct occurred. 15 U.S.C. Sec. 4016(a). Parties aggrieved by the grant or denial of an application may within 30 days of the Secretary's determination "bring an action in any appropriate district court of the United States to set aside the determination on the ground that such determination is erroneous." 15 U.S.C. Sec. 4015(a).

In the instant case, the Secretary issued such a certificate to Chlor/Alkali Producers International (Chlor/Alkali), a joint venture comprising four major domestic manufacturers of caustic soda and chlorine. ¹ The plaintiffs, Horizons International, Inc. and Kenchem, Inc., are traders in caustic soda and chlorine and claim to be aggrieved by that determination. Their complaint names as defendants the Secretary and Department of Commerce and the Attorney General and Department of Justice. One of the joint venturers, Occidental Chemical Company, successfully moved to intervene. Over objections by the government the district court permitted discovery. The court denied the government's motion to dismiss the Attorney General as a party, and denied its motion for summary judgment based upon the administrative record. Based on the expanded record, which included district court discovery materials, the court vacated the certificate of review and remanded the case for further proceedings. ² The government and the intervenor appeal. We reverse.

I. Agency Proceedings

On November 1, 1984, Chlor/Alkali applied pursuant to 15 U.S.C. Sec. 4012(a) for a certificate of review for a proposed joint venture in the export sale of caustic soda and chlorine. Chlorine and caustic soda are produced simultaneously by the electrolysis of salt water. The process yields approximately 1.1 tons of caustic soda for every ton of chlorine. Although they are co-produced, chlorine and caustic soda are used for different purposes and are subject to different demand cycles. Production of both products is geared to chlorine demand because the toxic and corrosive nature of chlorine makes it difficult to store and to transport. The application for the joint venture sought a certificate of review which would permit use of an exclusive sales agent for sale by its members of quantities of both products to be sold exclusively in foreign markets. The joint venture proposed to determine quantities to be sold, to allocate markets, to discuss and to exchange information on export-related topics among the members, to refuse to quote prices to or sell to foreign competitors, and to restrict withdrawal from or entry to the venture. It also proposed to make purchases from nonmembers. As required by 15 U.S.C. Sec. 4012(b)(1), the application was submitted to the Federal Register for publication on November 9, 1984 and published on November 15, 1984. 49 Fed.Reg. 45203 (1984). The notice specified that comments would be received within 20 days after publication.

Upon the filing of the application the Secretary was required under 15 U.S.C. Sec. 4013(b) to act upon it within ninety days. Since Title III also provides for expedited review if an applicant indicates a need for prompt disposition, Chlor/Alkali sought expedited review. 15 U.S.C. Sec. 4013(c). But it voluntarily withdrew that request when the Department of Justice indicated that its review could not be completed in the 30 days specified in section 4013(c). Thus agency action on the application was mandated no later than 90 days from November 1, 1984, or January 30, 1985. The participation of the Department of Justice was required because a certificate of review is issued "[i]f the Secretary [of Commerce], with the concurrence of the Attorney General, determines that ... standards [for its issuance] are met...." 15 U.S.C. Sec. 4013(b). Title III requires the Secretary to submit to the Attorney General a copy of the application, applicant information submitted in connection with it, and any other information the Secretary deems relevant. 15 U.S.C. Sec. 4012(b)(2).

The plaintiffs filed no comments with the agency. The Department of Commerce reviewed the materials submitted by Chlor/Alkali, interviewed other members of the industry, and made an economic analysis of the probable domestic effects of Chlor/Alkali's proposed conduct. It also reviewed judgments in antitrust cases extant against members of the caustic soda and chlorine industry. The Department's investigation was conducted because Title III mandates the issuance of a certificate

to any applicant that establishes that its export trade, export trade activities, and methods of operation will--

(1) result in neither a lessening of competition or restraint of trade within the United States nor a substantial restraint of the export trade of any competition of the applicant,

(2) not unreasonably enhance, stabilize, or depress prices within the United States of goods, wares, merchandise, or services of the class exported by the applicant,

(3) not constitute unfair methods of competition against competitors engaged in the export of goods, wares, merchandise, or services of the class exported by the applicant, and

(4) not include any act that may reasonably be expected to result in the sale for consumption or resale within the United States of the goods, wares, merchandise, or services exported by the applicant.

15 U.S.C. Sec. 4013(a).

On January 25, 1985, with the concurrence of the Attorney General, the Secretary issued a certificate of review, authorizing Chlor/Alkali to engage in the export trade of caustic soda and chlorine on specified conditions. This was final agency action.

II. District Court Proceedings

On February 22, 1985 the plaintiffs sued in the district court, alleging that the Secretary and the Attorney General acted erroneously, improperly, and contrary to law in issuing the certificate of review. Specifically it was alleged that the export trade, export trade activities, and methods of operation of Chlor/Alkali would: (1) result in a substantial lessening of competition or restraint of trade within the United States, or a substantial restraint of the export trade of its competitors; (2) unreasonably enhance, stabilize or depress prices of caustic soda or chlorine within the United States; and (3) constitute unfair methods of competition against competitors engaged in the export trade of those chemicals. The complaint set forth a history of antitrust law violations in the caustic soda-chlorine industry and charged an ongoing conspiracy in that industry in violation of Sections 1 and 2 of the Sherman Act. 15 U.S.C. Secs. 1, 2 (1982). It sought a declaration that the defendants have engaged in such violations of the Sherman Act and an order setting aside the issuance of the certificate of review.

The plaintiffs undertook discovery going beyond the contents of the administrative record. Pursuant to Fed.R.Civ.P. 26(c)(1), the government moved that discovery not be had beyond the administrative record of the issuance of the certificate of review. It also sought a stay of discovery pending consideration of its summary judgment motion. It was the government's position that review under 15 U.S.C. Sec. 4015 was confined to the record considered by the Secretary and the Attorney General. The motion to limit discovery or stay it until consideration of the motion for summary judgment was denied on April 24, 1985. Extensive discovery ensued.

On May 6, 1985 the government moved pursuant to Fed.R.Civ.P. 12(b)(1) to dismiss the action against the Attorney General, alleging that 15 U.S.C. Sec. 4015 (1986 Supp.) does not authorize judicial review of his concurrence in the Secretary's determination. The government moved simultaneously for summary judgment, relying on the...