Piedmont Label Co. v. Sun Garden Packing Co.

• Decision Date: 05 June 1979
• Docket Number: No. 77-2088,77-2088
• Parties: 1979-1 Trade Cases 62,719 PIEDMONT LABEL COMPANY, Appellant, v. SUN GARDEN PACKING COMPANY, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 491

598 F.2d 491

1979-1 Trade Cases 62,719

PIEDMONT LABEL COMPANY, Appellant, v. SUN GARDEN PACKING COMPANY, Appellee.

No. 77-2088.

United States Court of Appeals Ninth Circuit.

June 5, 1979.

Phyllis Kay Dryden, John R. Reese, McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., for appellant.

Darrell Salomon, Alioto & Alioto, San Francisco, Cal., for appellee.

Appeal from the United States District Court for the Northern District of California.

Before BROWNING and HUFSTEDLER, Circuit Judges, and BARTELS, ^* District Judge.

HUFSTEDLER, Circuit Judge:

The question presented is whether venue in a private antitrust suit may be founded solely on allegations that a defendant was a member of a conspiracy and that a co-conspirator performed acts in the forum district. This issue has been troublesome ever since the Supreme Court in Bankers Life & Casualty Co. v. Holland (1953) 346 U.S. 379, 74 S.Ct. 145, 98 L.Ed. 106, disapproved an attempt to base venue on vicarious responsibility of one co-conspirator for the acts of another. Because Bankers Life has effectively undermined the co-conspirator theory of venue, we now expressly reject any implication in Giusti v. Pyrotechnic Industries (9th Cir. 1946) 156 F.2d 351, that members of a conspiracy, as agents of one another, "transact business" for venue purposes in any district where one of them transacts business.

I

Piedmont Label Company ("Piedmont") brings this interlocutory appeal, pursuant to 28 U.S.C. § 1292(b), from the denial of a motion for summary judgment based on improper venue. Piedmont is one of the five producers of lithograph paper labels who are defendants in a private antitrust suit filed by Sun Garden Packing Company ("Sun Garden") in the Northern District of California. Sun Garden charges that Piedmont and the other defendants conspired to restrain trade and commerce in lithograph paper labels by price-fixing, bid-rigging, and customer allocation schemes in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. In its amended complaint, Sun Garden alleged that: "(e)ach defendant maintains an office, transacts business and is found within this district . . .. Many of the unlawful acts done pursuant to and in furtherance of the alleged combination and conspiracy and commerce described hereinafter is carried on, in part, within this district."

In support of its motion for summary judgment based on improper venue, Piedmont presented affidavits indicating that it is a Virginia corporation that has never done business in California and that it has never maintained any office, agent, or property in California. Although Piedmont has received in Virginia a few purchase orders mailed by customers in California, all but $535.61 worth of products under those orders were shipped and billed to plants located outside California. As an accommodation to a customer in Louisiana, Piedmont also sent one bill for $304.10 to a California firm to cover the cost of labels shipped to its Louisiana customer.

Sun Garden did not dispute any of the facts presented by Piedmont in support of its motion for summary judgment. Instead, Sun Garden chose to rely on the co-conspirator theory of venue and the alleged vitality of Giusti v. Pyrotechnic Industries, supra. Sun Garden argued that venue was proper because, under Giusti, a resident member of an antitrust conspiracy can be considered an agent of an out-of-state member of the conspiracy, so that the out-of-state conspirator can be considered to have transacted business in California. Despite the Supreme Court's criticism of the co-conspirator theory of venue in Bankers Life & Casualty Co. v. Holland, supra, Sun Garden argued that Giusti remained good law in the Ninth Circuit. The district court agreed and denied Piedmont's motion for summary judgment "solely on the authority of Giusti." ¹ The court's order was then certified for this interlocutory appeal.

II

The venue requirements governing private antitrust actions are set forth in three separate statutes. The general venue statute, 28 U.S.C. § 1391, provides in pertinent part:

"(b) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by law.

"(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes." (28 U.S.C. §§ 1391(b) & (c).)

Special venue provisions for antitrust suits are outlined in the Clayton Act. Section 4 of the Clayton Act, 15 U.S.C. § 15, provides in pertinent part:

"Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, . . . ." (15 U.S.C. § 15.)

Venue provisions for antitrust suits against corporations are established by section 12 of the Clayton Act, 15 U.S.C. § 22, which provides:

"Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business . . . ." (15 U.S.C. § 22.)

It is undisputed that Piedmont is not "incorporated" or "licensed to do business" in California, and that it does not "reside" in and is not "found" in California. Sun Garden maintains that venue is proper in the Northern District of California because, under the co-conspirator theory of venue, Piedmont may be deemed to have an "agent" in the district and to "transact business" in the district. According to Sun Garden, our decision in Giusti establishes that Piedmont's resident co-conspirators are to be deemed Piedmont's agents and that acts performed by co-conspirators in the district can be deemed to be transaction of business by Piedmont.

A review of more than three decades of experience with the co-conspirator theory of venue convinces us that, regardless of any strength it once may have had, Sun Garden's theory of venue is no longer tenable in this Circuit. The co-conspirator theory of venue was given what has been called its "illegitimate birth" by a decision of this court more than thirty years ago in Giusti v. Pyrotechnic Industries, supra, 156 F.2d 351. ² In Giusti, a California fireworks distributor charged a group of fireworks manufacturers, including Triumph, a Delaware corporation, with a price-fixing conspiracy. The complaint charged that the fireworks manufacturers had organized an association to control the sale of fireworks and that the association had held a meeting in San Francisco at which the plaintiff was blacklisted.

At the time of the alleged conspiracy, Triumph was not regularly conducting business in California. Triumph later qualified to do business in the state. After doing business in California for several years, Triumph withdrew from the state. Pursuant to section 411 of the California Civil Code, Triumph filed a certificate of withdrawal from intrastate business with the California Secretary of State. The certificate provided that Triumph consented to service of process on the California Secretary of State in any subsequent action based upon a liability incurred in California prior to Triumph's withdrawal.

The plaintiff in Giusti served Triumph through the California Secretary of State. Triumph moved to quash service of the summons and to dismiss the complaint on the grounds that it had not transacted any business in California during the alleged conspiracy. The district court granted Triumph's motion and an appeal was taken to this court. We reversed, holding that Triumph had waived objections to venue by appointing the Secretary of State as its agent. (156 F.2d at 354.) In the course of the opinion, however, we also said that service was proper because the "continued acts of the conspirators in California" constituted "transacting business" in California within the meaning of the California statute governing service of process. (156 F.2d at 353-54.) Any suggestion that we approved the co-conspirator theory of venue was Dictum. We would nevertheless hesitate to overrule it by a panel decision if the Supreme Court had not intervened.

Seven years after our decision in Giusti, the Supreme Court undercut the co-conspirator theory of venue in Bankers Life & Casualty Co. v. Holland (1953) 346 U.S. 379, 74 S.Ct. 145, 98 L.Ed. 106. In Bankers Life a district court had rejected the co-conspirator theory of venue and entered a severance and transfer order on the ground of improper venue. The Supreme Court was asked to vacate the order by writ of mandamus. Although the actual question decided by the Court was that mandamus was not an appropriate remedy to vacate a severance and transfer order, the Justices unanimously expressly disapproved the co-conspirator theory of venue. The majority observed that:

"While a criminal action under the antitrust laws lies in any district where the conspiracy was formed or in part carried on or where an overt act was committed in furtherance thereof, Congress by 15 U.S.C. § 15 placed definite limits on venue in treble damage actions. Certainly Congress realized in so doing that many such cases would not lie in one district as to all defendants, unless venue was waived. It must, therefore, have contemplated that such proceedings might be severed and transferred or filed in separate districts originally. Thus petitioner's theory has all the earmarks of a frivolous albeit ingenious attempt to expand the statute." (346 U.S. at 384, 74 S.Ct. at 149 (footnote omitted).)

The three dissenting Justices agreed that the co-conspirator theory of venue was "frivolous" and argued that the mandamus question should not have been...