Leh v. General Petroleum Corporation

• Decision Date: 08 November 1965
• Docket Number: No. 4,4
• Citation: 15 L.Ed.2d 134,86 S.Ct. 203,382 U.S. 54
• Parties: Marc D. LEH, etc., et al., Petitioners, v. GENERAL PETROLEUM CORPORATION et al
• Court: U.S. Supreme Court

382 U.S. 54

86 S.Ct. 203

15 L.Ed.2d 134

Marc D. LEH, etc., et al., Petitioners,

v GENERAL PETROLEUM CORPORATION et al.

No. 4.

Argued Oct. 11, 1965.

Decided Nov. 8, 1965.

Rehearing Denied Jan. 17, 1966.

See 382 U.S. 1001, 86 S.Ct. 525.

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

Francis R. Kirkham, San Francisco, Cal., for respondents.

Mr. Justice WHITE delivered the opinion of the Court.

On September 28, 1956, petitioners, a partnership engaged in wholesale distribution of refined petroleum products and one of the partners, filed in the Southern District of California a trebledamage action charging violations of §§ 1 and 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. §§ 1, 2 (1964 ed.), against seven companies engaged in producing, refining, and marketing gasoline and other hydrocarbon substances in interstate commerce. Defendants contended that the action was barred by the California one-year statute of limitations applicable to suits for statutory penalties or forfeitures, Cal.Code Civ.Proc. § 340(1). Plaintiffs conceded that their cause of action accrued no later than February 1954, and that the four-year limitation provision added to the Clayton Act in 1955, Clayton Act § 4B, 69 Stat. 283, 15 U.S.C. § 15b (1964 ed.), was not applicable to a right of action accruing in 1954. But plaintiffs contended that the governing provision was the California three-year statute of limitations respecting actions on a statutory liability other than a penalty, Cal.Code Civ.Proc. § 338(1), and that in any event the running of the statute of limitations was tolled by § 5(b) of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 16(b) (1964 ed.), because of a civil antitrust proceeding that was commenced by the United States in 1950 and was still pending when plaintiffs filed their complaint. Section 5(b) provides that during the pendency of a civil or criminal proceeding instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws, the running of the statute of limitations shall be suspended in respect of every private right of action 'based in whole or in part on any matter complained of in said proceeding.'¹ The lower courts upheld the defense of limitations and dismissed the complaint, holding that the one-year statute governed and that plaintiffs were not entitled to the benefit of § 5(b), 208 F.Supp. 289 (D.C.S.D.Cal.1962), aff'd, 330 F.2d 288 (C.A.9th Cir. 1964). We granted certiorari limited to the question of the applicability of § 5(b), 379 U.S. 877, 85 S.Ct. 148, 13 L.Ed.2d 85, because of an apparent conflict between this case and Union Carbide & Carbon Corp. v. Nisley, 300 F.2d 561 (C.A.10th Cir. 1962), dismissed under Rule 60 sub nom. Wade v. Union Carbide & Carbon Corp., 371 U.S. 801, 83 S.Ct. 13, 9 L.Ed.2d 46, concerning interpretation of the statutory requirement that the private action for which the benefit of the tolling provision is sought be 'based in whole or in part on any matter complained of' in the government proceeding. We conclude that the lower courts misapplied § 5(b), and we reverse the judgment below.

Prior to the present case, the Court of Appeals for the Ninth Circuit had declared a restrictive interpretation of § 5(b). In Steiner v. 20th Century-Fox Film Corp., 232 F.2d 190 (1956), that court ruled that the scope of § 5(b) was determined by the principles of collateral estoppel applicable under § 5(a) of the Clayton Act, as amended, 69 Stat. 283, 15 U.S.C. § 16(a) (1964 ed.), which provides that a final judgment or decree rendered in a suit by the United States and holding a defendant in violation of the antitrust laws shall be prima facie evidence in a private antitrust action against such defendant 'as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto.'² Accordingly, the court declared in Steiner that '(a) greater similarity is needed than that the same conspiracies are alleged. The same means must be used to achieve the same objectives of the same conspiracies by the same defendants.' 232 F.2d, at 196. In the present case the Court of Appeals purported to follow Steiner and concluded that the running of the statute of limitations was not suspended because here, in the court's opinion, 'there were not only different overt acts charged, but different conspiracies, occurring at different times, between different parties.' 330 F.2d, at 301; see also 208 F.Supp., at 294—295. Conflicting with Steiner and the present case is Union Carbide & Carbon Corp. v. Nisley, supra, which held that the evidentiary rules of estoppel are not determinative and that the running of the period of limitations is tolled by § 5(b) if there is 'substantial identity of subject matter.' 300 F.2d, at 570.

Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 85 S.Ct. 1473, 14 L.Ed.2d 405, which was decided in the interim between the granting of certiorari and oral argument in the present case, establishes certain basic principles for the construction of § 5(b) that are to be followed here. The questions presented for decision in Minnesota Mining were whether proceedings by the Federal Trade Commission under § 7 of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 18 (1964 ed.), activate § 5(b) to the same extent as judicial proceedings and, if so, whether the claim of New Jersey Wood, the private plaintiff, was based on 'any matter complained of' in the Commission action. One of the arguments advanced with respect to the first question was that Commission proceedings did not suspend the running of limitations because, it was asserted, any Commission order that might issue would not be admissible under § 5(a). We rejected this contention that § 5(a) and § 5(b) were coextensive.

'It may be * * * that when it was enacted the tolling provision was a logical backstop for the prima facie evidence clause of § 5(a). But even though § 5(b) complements § 5(a) in this respect by permitting a litigant to await the outcome of government proceedings and use any judgment or decree rendered therein * * * it is certainly not restricted to that effect. As we have pointed out, the textual distinctions as well as the policy basis of § 5(b) indicate that it was to serve a more comprehensive function in the congressional scheme of things. The Government's initial action may aid the private litigant in a number of other ways. The pleadings, transcripts of testimony, exhibits and documents are available to him in most instances. * * * Moreover, difficult questions of law may be tested and defini- tively resolved before the private litigant enters the fray. The greater resources and expertise of the Commission and its staff render the private suitor a tremendous benefit aside from any value he may derive from a judgment or decree. Indeed, so useful is this service that government proceedings are recognized as a major source of evidence for private parties.' 381 U.S., at 319, 85 S.Ct., at 1477.

Minnesota Mining sweeps away much of the foundation for the Steiner view of the scope of § 5(b). The private plaintiff is not required to allege that the same means were used to achieve the same objectives of the same conspiracies by the same defendants. Rather, effect must be given to the broad terms of the statute itself—'based in whole or in part on any matter complained of' (emphasis added)—read in light of Congress' 'belief that private antitrust litigation is one of the surest weapons for effective enforcement of the antitrust laws.' 381 U.S., at 318, 85 S.Ct., at 1477. Doubtlessly, care must be exercised to insure that reliance upon the government proceeding is not mere sham and that the matters complained of in the government suit bear a real relation to the private plaintiff's claim for relief. But the courts must not allow a legitimate concern that invocation of § 5(b) be made in good faith to lead them into a niggardly construction of the statutory language here in question. With those matters in mind we now turn to a comparison of plaintiffs' complaint with the complaint in the government proceeding on which plaintiffs rely, United States v. Standard Oil Co. of California, Civil No. 11584 C, D.C.S.D.Cal.³

The complaint of the United States charged that seven petroleum companies and the Conservation Committee of California Oil Producers had conspired together to restrain and to monopolize interstate commerce in the Pacific States area in violation of §§ 1 and 2 of the Sherman Act, beginning in or about the year 1936, and continuing up to and including the date suit was filed in 1950. The complaint divided the conspiracy into two principal branches: (1) agreement by the defendants to eliminate competition among themselves in the Pacific States area and (2) agreement by the defendants to utilize their control of the production, transportation, refining, and marketing of crude oil and refined petroleum products to restrict and to eliminate the competition of independent producers, refiners and marketers in the Pacific States area. In furtherance of the first branch of the conspiracy, the compalint further charged, defendants had conspired to do and had actually accomplished the following things, among others: sharing wholesale and retail markets with each other by selling gasoline and other refined petroleum products at identical prices, thus confining effective competition among themselves to the advertising of brand names and to the offering of free services in their retail outlets; fixing and maintaining uniform and noncompetitive prices for the sale of gasoline and other refined petroleum products at wholesale and at retail; refusing to sell their petroleum products to any wholesale or retail distributor who failed or refused to follow the prices fixed by them; and refusing to sell their petroleum products to any wholesale distributor, jobber, or retail dealer except on a 'ful...