Leh v. GENERAL PETROLEUM CORPORATION

• Decision Date: 30 August 1962
• Docket Number: Civ. A. No. 20531-WM.
• Court: U.S. District Court — Southern District of California
• Parties: Marc D. LEH, individually and the Progress Company, a co-partnership comprised of Marc D. Leh and David Brown, co-partners, Plaintiffs, v. GENERAL PETROLEUM CORPORATION, a corporation, Standard Oil Company of California, a corporation, Texaco, Inc., a corporation, Richfield Oil Corporation, a corporation, Union Oil Company of California, a corporation, Tidewater Oil Company, a corporation, Defendants.

208 F. Supp. 289

Marc D. LEH, individually and the Progress Company, a co-partnership comprised of Marc D. Leh and David Brown, co-partners, Plaintiffs, v. GENERAL PETROLEUM CORPORATION, a corporation, Standard Oil Company of California, a corporation, Texaco, Inc., a corporation, Richfield Oil Corporation, a corporation, Union Oil Company of California, a corporation, Tidewater Oil Company, a corporation, Defendants.

Civ. A. No. 20531-WM.

United States District Court S. D. California, Central Division.

August 30, 1962.

Richard G. Harris, Los Angeles, Cal., for plaintiffs.

P. E. Bermingham, Sims Hamilton and Howard Painter, Los Angeles, Cal., for defendant General Petroleum Corporation.

Marshall P. Madison, Francis R. Kirkham, William E. Mussman and Pillsbury, Madison & Sutro, San Francisco, Cal., for defendant Standard Oil Company of California.

George W. Jansen, New York City, J. A. Tucker and Beardsley, Hufstedler & Kemble, Los Angeles, Cal., for defendant Texaco, Inc.

Wm. J. DeMartini and William H. Powell, Los Angeles, Cal., for defendant Richfield Oil Corporation.

L. A. Gibbons, Douglas C. Gregg and A. Andrew Hauk, Los Angeles, Cal., Brobeck, Phleger & Harrison, Moses Lasky and Richard Haas, San Francisco, Cal., for defendant Union Oil Company of California.

Edmund D. Buckley, Overton, Lyman & Prince and Wayne H. Knight, Los Angeles, Cal., for defendant Tidewater Oil Company.

MATHES, District Judge.

Plaintiffs brought this action for treble damages under § 4 of the Clayton Act 15 U.S.C.A. § 15, alleging injury to their business proximately resulting from a combination or conspiracy among defendants to exclude and prevent plaintiffs from engaging in the wholesale distribution of gasoline in Southern California, in violation of §§ 1 and 2 of the Sherman Act 15 U.S.C.A. §§ 1 and 2. Federal jurisdiction is invoked under 28 U.S.C. § 1337.

In addition to denying plaintiffs' allegations both as to the alleged tortious conduct and the alleged damage, defendants assert by way of affirmative defense that plaintiffs' action is barred by the applicable State statute of limitations Fed.R.Civ.P. 8(c), 28 U.S.C., and now move for a summary judgment of dismissal upon the defense of time bar Fed. R.Civ.P. 56(b).

Plaintiffs allege that a conspiracy was initiated among defendants in 1948 unlawfully to restrain and monopolize interstate commerce in the distribution and sale of refined gasoline, and that defendants then and thereafter combined to exclude plaintiffs as wholesale distributors of this product, both by controlling sales to plaintiffs and by eliminating plaintiffs' sources of supply. All parties agree that plaintiffs' alleged cause of action accrued in February of 1954, and that the applicable State statute of limitations— unless suspended under § 5 of the Clayton Act 15 U.S.C.A. § 16, as amended, id. § 16(b) (1955) by some similar proceeding "instituted by the United States"— commenced to run at that time cf.: Steiner v. 20th Century-Fox Film Corp., 232 F.2d 190, 194 (9th Cir. 1956); Suckow Borax Mines Consol. v. Borax Consolidated, 185 F.2d 196, 207-208 (9th Cir. 1950), cert. denied, 340 U.S. 943, 71 S.Ct. 506, 95 L.Ed. 680 (1951).

It was not until January 7, 1956, that the four-year Federal limitations period with respect to private causes arising under the antitrust laws became effective. 69 Stat. 283 (1955), 15 U.S.C.A. § 15b. Four years was chosen for the Federal statute, since that period appeared to be "the average limitation for all the 48 States * * *." See S.Rep. No. 619, 2 U.S.Code Cong. & Adm. News, 84th Cong., 1st Sess., pp. 2331-2332 (1955).

The Act providing this new Federal statute of limitations declares that: "No cause of action barred under existing law on the effective date of this section and sections 15a and 16 of this title shall be revived by said sections." 15 U.S.C.A. § 15b.

Inasmuch as the cause at bar admittedy accrued in 1954, resort must be had to the applicable State statute of limitations in order to determine whether plaintiffs' action is "barred under existing law". See: 28 U.S.C. § 725, as amended, id. § 1652 (1948); Chattanooga Foundry & Pipe Works v. Atlanta, 203 U.S. 390, 397, 27 S.Ct. 65, 51 L.Ed. 241 (1906); Campbell v. City of Haverhill, 155 U.S. 610, 618, 15 S.Ct. 217, 39 L.Ed. 280 (1895); Burnham Chemical Co. v. Borax Consolidated, 170 F.2d 569, 576 (9th Cir. 1948), cert. denied, 336 U. S. 924, 69 S.Ct. 655, 93 L.Ed. 1086 (1949).

Specifically, the problem is to determine which of two California statutes applies: one providing a three-year period to govern actions to recover upon a statutory liability "other than a penalty or forfeiture" Cal.C.C.P. § 338(1), and the other providing a one-year period to govern actions to recover "upon a statute for a penalty or forfeiture, when the action is given to an individual, or to an individual and the State * * *." Cal. C.C.P. § 340(1).

This action was commenced in September of 1956—more than two and one-half years after the date of accrual of plaintiffs' alleged cause—and so would be barred if deemed a statutory "penalty or forfeiture" within the meaning of the one-year limitation provisions of Cal. C.C.P. § 340(1). On the other hand, if the three-year period of Cal.C.C.P. § 338 (1) is properly applicable, then the action was not "barred under existing law" as of the effective date of the 1955 Federal statute, and so defendants' plea of time bar would fall. See 15 U.S.C.A. § 15b.

The correct method whereby to determine which State statute of limitations is properly applicable to a cause arising under the antitrust laws prior to the Federal limitations statute has been the subject of some judicial disagreement. One view is that, inasmuch as the private antitrust action involves a Federal cause of action, whatever State limitations period is to be applied turns upon the Federal court's view as to the nature of the Federal action, as being either "remedial" or "penal". Cf.: Fulton v. Loew's Inc., 114 F.Supp. 676, 682 (D.Kan.1953); Christensen v. Paramount Pictures, 95 F. Supp. 446, 449 (D.Utah 1950); see also Momand v. Universal Film Exchange, 43 F.Supp. 996, 1008-1009 (D.Mass.1942). And since the Court concluded in the Chattanooga Foundry case, supra, 203 U. S. 390, 27 S.Ct. 65, 51 L.Ed. 241, that actions for treble damages under the Federal antitrust laws are not subject to the general Federal statute of limitations governing actions to recover a "penalty" under the laws of the United States 28 U.S.C. § 791, as amended, id. § 2462 (1948), it has been reasoned that a State limitations statute dealing with recovery of "penalties" in the State courts cannot in any event be applied to treble-damage claims grounded upon Federal antitrust violations. See: Greene v. Lam Amusement Co., 145 F.Supp. 346, 348 (N.D.Ga.1956); Wolf Sales Co. v. Rudolph Wurlitzer Co., 105 F.Supp. 506, 509 (D.Colo.1952).

The majority view, however, as formulated in recent years, holds that the question of limitations applicable to private antitrust actions was, as Mr. Justice Holmes put it, "left to the local law by the silence of the Statutes of the United States". Chattanooga Foundry & Pipe Works v. Atlanta, supra, 203 U.S. at 397, 27 S.Ct. 65. Moreover, the word "penalty", as applied in a Federal statute such as 28 U.S.C. § 2462, obviously may have "a different meaning than the same word in the * * * State statute". Bertha Building Corp. v. National Theatres Corp., 269 F.2d 785, 788 (2d Cir. 1959), cert. denied, 361 U.S. 960, 80 S. Ct. 585, 4 L.Ed.2d 542 (1960). Accordingly, in keeping with the principle that statutory construction by a State's highest court is deemed an integral part of the text of the State's statute of limitations, it has been declared that Federal courts "must accept the statutes as construed and interpreted by the * * * State courts. It is for them to determine what is meant by the word `penalty' in the * * * State statute". Bertha Building Corp. v. National Theatres Corp., supra, 269 F.2d 785, 788 (2d Cir. 1959), cert. denied, 361 U.S. 960, 80 S.Ct. 585, 4 L.Ed.2d 542 (1960); cf.: Moore v. Illinois Central R. Co., 312 U.S. 630, 634, 61 S.Ct. 754, 85 L.Ed. 1089 (1941); Costello v. Bank of America, 246 F.2d 807, 812 (9th Cir. 1957).

Adherence to the rationale just stated has required the Federal courts to compare the nature of the Federal treble-damage antitrust action with that of analogous State causes, as construed by the courts of the particular State involved, and from such a comparison to decide which local statute of limitations the courts of the State would deem applicable to actions embracing Federal treble-damage antitrust claims. See: North Carolina Theatres, Inc. v. Thompson, 277 F.2d 673 (4th Cir. 1960); Powell v. St. Louis Dairy Co., 276 F.2d 464 (8th Cir. 1960); Bertha Building Corp. v. National Theatres Corp., supra, 269 F.2d 785; Gordon v. Loew's Inc., 247 F.2d 451 (3rd Cir. 1957); Green v. Wilkinson, 234 F.2d 120 (5th Cir. 1956); Hoskins Coal & Dock Corp. v. Truax Traer Coal Co., 191 F.2d 912 (7th Cir. 1951), cert. denied, 342 U.S. 947, 72 S. Ct. 555, 96 L.Ed. 704 (1952); Leonia Amusement Corp. v. Loew's Inc., 117 F. Supp. 747 (S.D.N.Y.1953); and see: Cope v. Anderson, 331 U.S. 461, 67 S.Ct. 1340, 91 L.Ed. 1602 (1947); Englander Motors, Inc. v. Ford Motor Co., 293 F. 2d 802, 806 (6th Cir. 1961); Nomand v. Universal Film Exchanges, 172 F.2d 37, 47 (1st Cir. 1948), cert. denied, 336 U.S. 967, 69 S.Ct. 939, 93 L.Ed. 1118 (1949); United Banana Co. v. United Fruit Co., 172 F.Supp. 580, 585 (D. Conn. 1959); compare: Brady v. Daly, 175 U.S. 148, 20 S.Ct. 62, 44 L.Ed. 109 (1899); Huntington v. Attrill, 146 U.S. 657, 13 S.Ct. 224, 36 L.Ed. 1123 (1892).

A study of the decisions convinces me that the precedent of seeking guidance from the construction given a particular limitations statute by State courts is a sound one to follow in the case at bar, notwithstanding the inherent difficulty of diverse...