INTERN. ASS'N OF MACHINISTS v. ORG'N OF PETROLEUM

• Decision Date: 18 September 1979
• Docket Number: No. 78-5012-AAH (SX).,78-5012-AAH (SX).
• Citation: 477 F. Supp. 553
• Court: U.S. District Court — Central District of California
• Parties: INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, ("IAM"), an association, Plaintiff, v. The ORGANIZATION OF the PETROLEUM EXPORTING COUNTRIES ("OPEC"), the Democratic and Popular Republic of Algeria, ("Algeria"), the Republic of Ecuador, ("Ecuador"), the Gabonese Republic, ("Gabon"), Republic of Indonesia, ("Indonesia"), Imperial Government of Iran, ("Iran"), Republic of Iraq, ("Iraq"), State of Kuwait, ("Kuwait"), Libyan Arab Republic, ("Libya"), Federal Republic of Nigeria, ("Nigeria"), State of Qatar, ("Qatar"), Kingdom of Saudi Arabia, ("Saudi Arabia"), State of United Arab Emirates, ("United Arab Emirates"), and the Republic of Venezuela, ("Venezuela"), Defendants.

477 F. Supp. 553

INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, ("IAM"), an association, Plaintiff, v. The ORGANIZATION OF the PETROLEUM EXPORTING COUNTRIES ("OPEC"), the Democratic and Popular Republic of Algeria, ("Algeria"), the Republic of Ecuador, ("Ecuador"), the Gabonese Republic, ("Gabon"), Republic of Indonesia, ("Indonesia"), Imperial Government of Iran, ("Iran"), Republic of Iraq, ("Iraq"), State of Kuwait, ("Kuwait"), Libyan Arab Republic, ("Libya"), Federal Republic of Nigeria, ("Nigeria"), State of Qatar, ("Qatar"), Kingdom of Saudi Arabia, ("Saudi Arabia"), State of United Arab Emirates, ("United Arab Emirates"), and the Republic of Venezuela, ("Venezuela"), Defendants.

No. 78-5012-AAH (SX).

United States District Court, C. D. California.

September 18, 1979.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

James H. Davis, Los Angeles, Cal., Albert E. Levy, San Francisco, Cal., Ackerman, Ling & Russell by James H. Ackerman, Long Beach, Cal., Plato E. Papps, Washington, D.C., Schwartz, Alschuler & Grossman by Benjamin F. Schwartz, Los Angeles, Cal., and Klinger & Leevan by Tobias G. Klinger, Los Angeles, Cal., for plaintiff.

Richard I. Fine, Arthur Soll, and Barry Cohen, Los Angeles, Cal., as amicus curiae, in pro. per., urging the granting of the injunction.

S. C. Yuter, New York City, as amicus curiae, in pro. per., urging the granting of the injunction.

Latham & Watkins by Philip F. Belleville, Los Angeles, Cal., and Antonin Scalia, Chicago, Ill., for Indonesia-U.S. Business Committee of the Indonesian Chamber of Commerce and Industry, as amicus curiae urging dismissal.

Holmes & Warden by Khalid Abdullah Tariq Al Mansour, San Francisco, Cal., and Faisal Bin Fahad Al Talal, San Francisco, Cal., for Concerned Black Americans in Support of Africa and the Middle East as amicus curiae urging dismissal.^*

MEMORANDUM OF DECISION AND ORDER OF JUDGMENT FOR DEFENDANTS

HAUK, District Judge.

INTRODUCTORY

In September, 1960, defendants Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met in Baghdad, Iraq. The result of this meeting and subsequent meetings was the Organization of Petroleum Exporting Countries (hereinafter "OPEC"). Thereafter, defendants Algeria, Ecuador, Gabon, Indonesia, Libya, Nigeria, Qatar and The United Arab Emirates joined OPEC, bringing to 13 the number of member nations. The principal aim of this organization was stated as "the unification of petroleum policies for the Member Countries and the determination of the best means for safeguarding the interests of Member Countries individually and collectively." Resolution of the First Conference, Resolution 1.2(4). To accomplish this goal, the organization expressed the desire to "formulate a system to ensure the stabilization of prices by, among other means, the regulation of production, with regard to the interests of the producing and of the consuming nations, and to the necessity of securing a steady income to the producing countries, an efficient economic and regular supply of this source of energy to consuming nations. . . ." Id. Resolution 1.1(3). The system that was implemented by OPEC included, among other features, the setting of prices for the sale of their crude oil.

Plaintiff International Association of Machinists and Aerospace Workers (hereinafter "IAM") filed this action in December 1978, by way of Complaint and then a day later by way of First Amended Complaint, challenging the price setting activities of OPEC and its 13 member nations, naming each nation and OPEC as defendants. Plaintiff alleged that these price setting activities violated Section 1 of the Sherman Act, 15 U.S.C. § 1,¹ under which price fixing has, in a long line of cases,² been ruled a per se violation.³ The injury plaintiff has allegedly received is the payment of higher prices for gasoline at the service station pumps, by virtue of the anticompetitive actions taken by defendants and the antitrust violations involved. In this action, plaintiff asks for damages under Section 4 of the Clayton Act, 15 U.S.C. § 15,⁴ and injunctive relief under Section 16 of the Clayton Act, 15 U.S.C. § 26,⁵ praying this Court to enjoin the price setting activities of these defendants, OPEC and member nations. Plaintiff claims that jurisdiction of this Court is based upon the Foreign Sovereign Immunities Act of 1976 (hereinafter "FSIA"), 28 U.S.C. § 1602, et seq., particularly 28 U.S.C. § 1605(a)(2),⁶ as well as upon the Sherman and Clayton Acts.

On June 25, 1979, plaintiff moved for a preliminary injunction. At that time, none of the defendants had made an appearance in this action or had filed an opposition to that motion. Since default had been entered by the Clerk on only three of the defendants, and since the remainder of the defendants still had time within which they could file an answer, the motion for preliminary injunction was continued. This Court wanted to give each and every defendant a full opportunity to be heard prior to ruling on the motion for preliminary injunction. Furthermore, the Court was aware of the constraints of the FSIA, in particular the provision that "No judgment by default shall be entered by the court . . . unless the claimant establishes his claim or right to relief by evidence satisfactory to the court." 28 U.S.C. § 1608(e). Since the preliminary injunction sought by plaintiff would have given plaintiff a good measure of what it sought, it would have been inappropriate for this Court to proceed on an incomplete record without a full hearing. So the Court ordered the evidentiary hearing on the motion for preliminary injunction consolidated with the trial on the final injunction under Rule 65 of the Federal Rules of Civil Procedure, together with the evidentiary hearing on the motion for default judgment, all to be heard on August 20, 1979. In this manner, the requirements of 28 U.S.C. § 1608(e) could be fulfilled while allowing defendants sufficient time to appear and oppose this action and at the same time allowing plaintiff sufficient time to prepare and gather evidence in support of the injunction. Moreover, the Court also issued an Order To Show Cause asking for factual and legal assistance on some eighteen basic questions from the defendants, and from any other knowledgeable sources as amici curiae, with the requirements that plaintiff effect service on the defendants and on numerous Federal and State officials and agencies, and make copies available to the news media. See Appendix A.

In response, 11 briefs were submitted, and plaintiff and four amici curiae appeared by counsel. As ordered, the consolidated hearings and trial proceeded on August 20, 1979. As of that date, each of the 13 member nations had been validly served. Each, however, had chosen not to make an appearance in this action, and as a result, a default entry had been made by the Clerk of Court against each of the 13 member nations, with determination of whether the Court would make and enter a default judgment to abide the outcome of the hearings and trial.

What follows now shall constitute the Court's written findings of fact and conclusions of law, pursuant to Rule 52(a), F.R. Civ.P.

At the outset, the Court pointed out that OPEC could not legally be served either under FSIA, 28 U.S.C. § 1602 ff., or under the International Organizations Immunities Act, (hereinafter "IOIA"), 22 U.S.C. § 288 et seq., or otherwise, holding that FSIA applies only to foreign sovereignties, which OPEC is not; and, IOIA applies only to those international organizations "in which the United States participates," and the United States does not participate in OPEC. The Court added its doubts that OPEC could ever be legally served with process. But, in any event, plaintiff and its counsel admitted that OPEC could not be and had not been legally served. Whereupon the Court dismissed OPEC from the lawsuit and out of the case entirely.

Thereupon the consolidated hearings and trial commenced and ran four days and four evenings, usually from 9:30 a. m. to anywhere from 8:30 p. m., to 11:30 p. m., with appropriate recesses for rest, physical relief and meals. At the conclusion of a full day of argument, the Court issued its oral decision from the Bench dismissing the case as against all the remaining defendants, to wit, the 13 nations, members of OPEC, and ordering judgment against the plaintiff.

PLAINTIFF AS "INDIRECT PURCHASER"

1. Damages

In the early stages of the proceedings, the Court dismissed the damage portion of plaintiff's complaint. Plaintiff did not allege any direct purchase from defendants. The injury claimed allegedly resulted from the purchase of gasoline here in the United States. Since plaintiff did not allege or show that it purchased any crude oil or gasoline from the defendants, or had any dealings with the defendants at all, it necessarily had to be and was and is an "indirect purchaser" of and from the defendants with respect to the gasoline it purchased in the United States. The most that plaintiff could show or claim was that it purchased in the United States, at service station pumps, gasoline which in part may have been refined in the United States by American companies from defendants' crude. Viewing the facts in a light most favorable to plaintiff, it is clear that since the defendants' crude oil passed f. o. b. the particular defendant country's port, was sold and title passed from defendants to purchasers at such ports, was sold again and title passed again and again — through crude buyers, crude shippers, crude resellers, refineries, was re-refined into gasoline, then went through gasoline distributors and marketing wholesalers and gasoline retailers — until the gasoline was purchased by plaintiff at the service station pumps, plaintiff was and is at the very best an indirect purchaser, eight times removed from the defendants, that is, an indirect purchaser of domestic gasoline eight times removed...