Leh v. General Petroleum Corporation

Citation330 F.2d 288
Decision Date02 April 1964
Docket NumberNo. 18333.,18333.
PartiesMarc D. LEH, individually, and The Progress Company, a co-partnership comprised of Marc D. Leh and David Brown, co-partners, Appellants, 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, Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Richard D. Harris, Los Angeles, Cal., for appellants.

Paul E. Bermingham, New York City, J. Arthur Kelly, Howard Painter, Los Angeles, Cal., for appellee General Petroleum Corp.

Francis R. Kirkham, William E. Mussman, Thomas E. Haven and H. Helmut Loring, San Francisco, Cal., for appellee Standard Oil Co. of Cal.

Charles E. Beardsley, Los Angeles, Cal., and George W. Jansen, New York City, for appellee Texaco Inc.

William J. DeMartini, Los Angeles, Cal., for appellee Richfield Oil Corp.

Moses Lasky and Richard Haas, San Francisco, Cal., for appellee Union Oil Co. of Cal Edmund D. Buckley and Wayne H. Knight, Los Angeles, Cal., for appellee Tidewater Oil Co.

Before BARNES and JERTBERG, Circuit Judges, and BURKE, District Judge.

BARNES, Circuit Judge.

This is an appeal from a judgment of dismissal below, upon the sole ground the statute of limitations had run against The Progress Company on its cause of action against appellees, filed September 28, 1956. The action was for treble damages under Section 4 of the Clayton Act (15 U.S.C. § 15), arising from the alleged violation of Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2). Jurisdiction below rested on Section 1337 of Title 28 United States Code, and rests here on Sections 1291 and 1294(1) of Title 28 United States Code.

It is conceded by appellants that their cause of action accrued no later than February 1954, and that the applicable statute of limitations began to run at that time. The question before us is first: What is the applicable statute of limitations? And, second: Whether (if the one year statute Cal.Code Civ.P. § 340(1) is applicable, rather than the three year statute Cal.Code Civ.P. § 338(1)) it was tolled or suspended under § 5 of the Clayton Act (15 U.S.C. § 16, as amended, 15 U.S.C. § 16(b), 1955) by a similar proceeding "instituted by the United States."

The alleged similar proceeding was United States v. Standard Oil Co., et al., Civil No. 11584-C, heretofore pending in the United States District Court for the Southern District of California (the same district from which this case arose, although the cases were assigned to and tried by different judges).

Seven specifications of error raise the above primary questions. They need not here be quoted in full. The appellees likewise raise two separate defenses,1 which need not here be considered in view of our subsequent primary conclusions.

It is further conceded by both parties that the four year federal limitations period with respect to private causes of action under the antitrust laws is inapplicable to a cause accruing in 1954; and that resort must be had to state law. (Steiner v. 20th Century-Fox Film Corp., 9 Cir. 1956, 232 F.2d 190, 194.2)

The difficulty with the "solution" of "looking to state laws" is that there the problem starts.3

I

This action is one where much can be said on both sides. Where a strong diversity of judicial opinion exists, and we attempt to prognosticate (as all other federal courts must who face the problem) the result at which a state court would arrive, we find many gray areas. Are we to consider what our opinion might be, based on an original solution of the problem, or are we to consider the trial court's conclusion and opinion, and determine only whether it is clearly erroneous? We conclude the latter is the proper measuring stick, and under it, after some soul searching, we affirm the district court. We are reminded of what Judge Wyzanski said so frankly to a jury in a private treble damage antitrust action (Cape Cod Food Products v. National Cranberry Association, D.Mass.1954, 119 F.Supp. 900, 910) speaking of damages, "You can't go to a book and look for the answer."

The California Code of Civil Procedure §§ 335 and 338(1) read as follows (in pertinent part):

"§ 335. The periods prescribed for the commencement of actions other than for the recovery of real property, are as follows * * *
"§ 338. * * *
"Within three years:
"1. An action upon a liability created by statute, other than a penalty or forfeiture."

California Code of Civil Procedure, § 340(1) reads as follows (in pertinent part):

"§ 340. * * *
"Within one year:
"1. Statutory penalty or forfeiture. An action upon a statute for a penalty or forfeiture, when the action is given to an individual, or to an individual and the State, except when the statute imposing it prescribes a different limitation; * * *"

Is the action based upon a statutory penalty or forfeiture, or is it an action based upon a liability created by statute other than a penalty or forfeiture?4

In considering this question, it is our problem, as it was that of the court below, to determine not what we would rule were it a case of first impression before us, but which of said statutes a California court would apply if it had jurisdiction of this case. Hall v. Copco Pacific, Ltd., 9 Cir., 1955, 224 F.2d 884.

Appellants have five prongs to their spear in their attack on the one year penal statute interpretation. We discuss each of appellants' contentions in turn.

(A) Appellants suggest that "at least one California trial court has construed the action as compensatory rather than penal." This decision is unreported, but what purports to be a certified copy of a "Memorandum and Order on Demurrers and Motions to Strike" is attached to appellants' opening brief as an appendix. It is from the Superior Court of the State of California in and for the County of Fresno, No. 97179, and is entitled "Charles S. Ehrhorn, d.b.a. Navy Gas Co., Plaintiff, vs. Caminol Company, et al, Defendants."

The trial judge in Ehrhorn v. Caminol Co., supra, first sustains certain general and special demurrers, and grants leave to amend. He likewise states: "The Court is of the opinion that the three year statute of limitations applies." This is a state action based on the Cartwright Act, a state antitrust statute. No reasons are given for the holding; and no authority is cited. We do not know what the precise issue was, raised by the pleadings then before the trial judge, or whether he was merely delivering "an advisory opinion" to aid counsel for plaintiffs therein in drafting his required new complaint. We think it of some, but little, precedential value.

We adopt in this connection a portion of appellees' argument, appearing in their opening brief:

"A decision of the Superior Court at an intermediate stage of the case is binding on no one, Stevens v. Key-Resistor Corp. (1960) 186 C.A.2d 325, 8 Cal.Rptr. 908; Carley v. City of Santa Rosa (1957) 154 C.A.2d 214, 315 P.2d 905; Curnutt v. Holk (1962) 203 A.C.A. 6 203 C.A.2d 6, 21 Cal.Rptr. 224; Phillips v. Phillips (1953) 41 Cal.2d 869, 874, 264 P.2d 926; Grable v. Citizens Nat. Trust & Sav. Bank (1958) 164 C.A. 2d 710, 331 P.2d 103, and even a final decision is not binding on any other superior court. People v. Cowles (1956) 142 C.A.2d Supp. 865, 298 P.2d 732; see generally Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455-456 20 Cal.Rptr. 321 369 P.2d 937. Superior Court opinions are rarely reported in California and there is no digest of points decided in such opinions. It is precisely for this reason that King v. Order of United Commercial Travelers (1948) 333 U.S. 153, 161-162 68 S.Ct. 488, 92 L.Ed. 608, held that state trial court decisions need not be regarded by federal courts in diversity actions as declaratory of state law. Otherwise a plaintiff might secure a fortuitous victory in a federal court by virtue of an authority that would not be recognized in the state courts and might be contrary to many other such unreported cases.
"Upon the basis of its own thorough knowledge of the nature of California Superior Courts, this Court in State of California Dept. of Employment v. Fred S. Renauld & Co., 179 F.2d 605 (9 Cir. 1950) with careful analysis rejected an argument that a decision of a Superior Court is binding on the United States Court of Appeals, saying (179 F.2d at 609):
`federal courts are bound (a) when the supreme judicial tribunal of the state has decided a given question, or (b) a state appellate court which is in the line of the state appellate structure leading up to the supreme tribunal of the state has decided it, or (c) a goodly number of the trial courts of the state generally and for a considerable period of time have adhered to a common interpretation of the point. Neither of the cited California decisions is binding on any other court of the state excepting only that the Superior Court Appellate Department decisions may be said to be binding on other Municipal Courts of the county in which the decision was had.
`It is our opinion that neither of the California cases cited falls within either of the categories mentioned and neither, nor both of them together, bind the federal court.\'" (Emphasis appellees\'.)

In Reid v. Doubleday & Co., N.D.Ohio 1952, 109 F.Supp. 354, Judge Kloeb, a trial judge experienced in antitrust litigation, held that treble damages awarded under the Robinson-Patman Act were remedial rather than penal, and in doing so, considered whether a federal court, in determining what state law is or is to be, and eliminating "other persuasive evidence," must follow (a) the Supreme Court of that state; (b) an intermediate appellate court; (c) lower state courts of original jurisdiction. He stated the answers are to (a) "Yes." Erie Railroad Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188; to (b) "Yes." King v....

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