Kaiser Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc.

Decision Date07 June 1982
Docket Number81-3519,Nos. 81-3162,s. 81-3162
Citation677 F.2d 1045
Parties1982-2 Trade Cases 64,776 KAISER ALUMINUM & CHEMICAL SALES, INC., Plaintiff-Appellee, v. AVONDALE SHIPYARDS, INC., Defendant-Appellant.
CourtU.S. Court of Appeals — Fifth Circuit

Milling, Benson, Woodward, Hillyer, Pierson & Miller, James K. Irvin, Guy C. Lyman, Jr., New Orleans, La., Schnader, Harrison, Segal & Lewis, Kimber E. Vought, Philadelphia, Pa., for defendant-appellant in both cases.

Carl A. Solano, Philadelphia, Pa., for defendant-appellant in No. 81-3519.

Lemile, Kelleher, Kohlmeyer & Matthews, Ernest L. Edwards, New Orleans, La., for plaintiff-appellee in both cases.

Joseph N. Mole, New Orleans, La., for plaintiff-appellee in No. 81-3162.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before WISDOM, POLITZ and TATE, Circuit Judges.

TATE, Circuit Judge:

Kaiser Aluminum and Chemical Sales, Inc. ("Kaiser") initiated this action in 1979 for simple breach of contract against Avondale Shipyards, Inc. ("Avondale"). In its answer to Kaiser's complaint, Avondale defended on the grounds that the contract sought to be enforced by Kaiser was violative of the antitrust laws. Avondale also filed a counterclaim seeking, inter alia, damages and equitable relief for the antitrust injury.

The district court dismissed the antitrust counterclaim and struck the antitrust defense. The court also entered partial final judgment with respect to the antitrust counterclaim, Fed.R.Civ.P. 54(b), and later certified its striking of the antitrust defense as a matter appropriate for interlocutory review, 28 U.S.C. § 1292(b). We granted Avondale's petition for review of the order striking the antitrust defense, and consolidated appeal on that issue with Avondale's appeal of the dismissal of the counterclaim.

On appeal, Avondale argues that: (1) the district court erred in dismissing Avondale's antitrust counterclaims on the basis of prescription or laches; and (2) the district court erred in striking Avondale's antitrust defense. Finding no error, we affirm.

I. Facts and Issues

This case involves a dismissal of Avondale's counterclaim under Fed.R.Civ.P. 12(b)(6) 1 and the striking of its defense under Fed.R.Civ.P. 12(f). 2 For purposes of appeal we construe as true the factual allegations in Avondale's complaint.

Avondale entered into negotiations with El Paso Natural Gas Company ("El Paso") for the construction and fitting of three liquid natural gas vessels. Although Avondale was experienced in the construction of the basic portions of these vessels, it was not experienced in the design or construction of the cryogenic (i.e., for very low-temperature(s)) cargo containment system in which the liquefied gas is actually stored. It was necessary, therefore, for Avondale to subcontract design and construction of the containment system portion of the vessels.

El Paso chose a containment system whereby the gas is held in aluminum tanks that sit in the center of the vessel's cargo holds. The holds are insulated with a polyurethane spray that protects the hull from the cryogenic temperature of the gas, and provides a barrier against the escape of any gas. The only cargo containment system of the type that has received the necessary regulatory approval utilizes a polyurethane spray insulation made by Kaiser. Avondale alleges that Kaiser refused to supply or install insulation spray unless Avondale agreed to have Kaiser supply the aluminum tanks as well, and that Kaiser refused to submit separate bids for the aluminum tanks and the spray so that Avondale could compare Kaiser's tank prices with those of other manufacturers who desired to supply Avondale with the tank portion of the containment system.

Avondale agreed to purchase the spray and tanks from Kaiser, and on May 25, 1973, entered into a written subcontract that required Kaiser to supply fifteen aluminum tanks, and the required insulation, for a total consideration of $70,955,000. The subcontract provided for progress payments by Avondale, and contained a provision for the adjustment of the contract price as changes were made in the scope of the work. According to Avondale, Kaiser insisted on including provisions in the subcontract that would limit its liability for damages to Avondale, and would permit Kaiser to disclaim any responsibility for the design of the containment system that El Paso required Avondale to use.

Avondale claims that Kaiser's performance of its obligations under the subcontract proved to be highly unsatisfactory. Avondale alleges extensive delays, defects, and deficiencies with respect to Kaiser's construction of the aluminum tanks and application of the insulation spray that forced Avondale to undertake corrective measures at its own expense.

In July 1979, Kaiser filed suit under the subcontract, seeking to recover a balance it claimed to be due under the contract change provisions, and also seeking additional compensation related to what it alleges was Avondale's breach of certain contract provisions.

At about the time Kaiser instituted its suit against Avondale, Avondale claimed that it discovered numerous deep and massive cracks in the Kaiser insulation in each of the cargo holds in one of the vessels. Avondale also claims that the utility of the entire cargo containment system aboard one of the vessels was completely destroyed, and that it expects that the defect will be repeated on the other two vessels because of the defective nature of the insulation spray.

Avondale filed a counterclaim against Kaiser seeking, inter alia, damages for delays, deficiencies, and performance under the contract, and redress for the harm suffered as a result of the defects in the Kaiser insulation spray. Avondale also alleged that the subcontract violated sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 3 and § 3 of the Clayton Act, 15 U.S.C. § 14. 4

The thrust of Avondale's antitrust argument is that the subcontract between it and Kaiser contained an illegal "tying" arrangement in that Kaiser allegedly conditioned its sale of the desired insulation spray (the "tying" product) to Avondale's purchase from Kaiser of the undesired aluminum tank portion (the "tied" product) of the containment system. 5

In addition to seeking treble damages pursuant to section 4 of the Clayton Act, 15 U.S.C. § 15, 6 Avondale sought permanently to enjoin Kaiser from enforcing any provisions of the subcontract, including those clauses that purport to limit Kaiser's liability to Avondale for damages and permit Kaiser to disclaim responsibility for the design of the cargo containment system. Avondale also asserted the unlawfulness of the subcontract as an affirmative defense.

Kaiser filed a motion to strike the defense under Federal Rule of Civil Procedure 12(f) and to dismiss the antitrust counterclaim under rule 12(b)(6) (as barred by the statute of limitations). Those motions were granted on January 5, 1981, by the district court. Avondale then moved for amendment of the district court's order to certify that the striking of the defense involved issues appropriate for interlocutory review under 28 U.S.C. § 1292(b), 7 and for entry of partial final judgment with respect to the antitrust counterclaim dismissal pursuant to Federal Rule of Civil Procedure 54(b). 8 The district court entered partial final judgment and Avondale filed a notice of appeal with respect to that judgment. The district court later amended its January 5 order to certify that its dismissal of the antitrust defense was a matter appropriate for interlocutory review. Avondale filed a petition for permission to appeal to this court, and we granted that permission on September 2 1981. In the September 2 order, we consolidated the antitrust defense appeal with the appeal of the antitrust counterclaim dismissal.

Issues

On appeal, Avondale argues that: (1) the district court erred in dismissing Avondale's antitrust counterclaim on the pleadings because the Clayton Act four-year statute of limitations had run; and (2) the district court erred in deciding on the pleadings that Avondale's antitrust defense was improper.

II. Dismissal of the Antitrust Counterclaim
1. The Standard for Rule 12(b)(6) Dismissals

We begin our examination of the dismissal of the antitrust counterclaim by observing that "the motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted." Wright & Miller, Federal Practice and Procedure: Civil § 1357 at 598 (1969). In Barber v. Motor Vessel "Blue Cat," 372 F.2d 626, 627 (5th Cir. 1967), we wrote that dismissal of a claim on the basis of barebones pleadings is a "precarious disposition with a high mortality rate." See also Voter Information Project, Inc. v. City of Baton Rouge, 612 F.2d 208, 210 (5th Cir. 1980); Madison v. Purdy, 410 F.2d 99, 100-01 (5th Cir. 1969); International Erectors, Inc. v. Wilhoit Steel Erectors & Rental Service, 400 F.2d 465, 471 (5th Cir. 1968).

Within the strong framework of policy considerations that militate against granting motions to dismiss for failure to state a claim, 9 we have developed two primary principles that guide our review of a complaint so dismissed. First, we must accept as true all well pleaded facts in the complaint, and the complaint is to be liberally construed in favor of the plaintiff. Miller v. Stanmore, 636 F.2d 986, 988 (5th Cir. 1981); Voter Information Project, Inc., supra, 612 F.2d at 210; Madison, supra, 410 F.2d at 100. Second, a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Dike v. School Board of Orange County, Florida, 650 F.2d 783, 787 (5th Cir. 1981); Miller, supra, 636 F.2d at 992; Fadjo v. Coon, 633 F.2d 1172, 1174 (5th Cir. 1981).

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