Timberlane Lumber Co. v. Bank of America, N.T. and S.A., Nos. 74-2142

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtBefore BROWNING and CHOY; CHOY
Citation549 F.2d 597
Decision Date27 December 1976
Docket Number74-2812 and 74-2813,Nos. 74-2142,74-2354
Parties, 1977-1 Trade Cases 61,233 TIMBERLANE LUMBER CO., Danli Industrial, S.A., Maya Lumber Co., S. de R.L., Plaintiffs-Appellants, v. BANK OF AMERICA, N.T. & S.A., Pedro Casanova E. Hijos, S.A., Bank of America Corp., Importadore Mayorista, S. de R.L., Michael Casanova, Nasser Bonheur, Manuel Ruis, Louis Pasmino, Henry Malatesta, Jose Gonzales, Patrick Byrne, Defendants-Appellees. Gordon Sloan SMITH, Plaintiff-Appellant, v. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, Defendant-Appellee. Miguel ARDON, Plaintiff-Appellant, v. BANK OF AMERICA, N.T. & S.A., Defendant-Appellee. Jorge LIMA, Plaintiff-Appellant, v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSN. and Bank of America Corp., Defendants-Appellees.

Page 597

549 F.2d 597
40 A.L.R.Fed. 314, 1977-1 Trade Cases 61,233
TIMBERLANE LUMBER CO., Danli Industrial, S.A., Maya Lumber
Co., S. de R.L., Plaintiffs-Appellants,
v.
BANK OF AMERICA, N.T. & S.A., Pedro Casanova E. Hijos, S.A.,
Bank of America Corp., Importadore Mayorista, S. de R.L.,
Michael Casanova, Nasser Bonheur, Manuel Ruis, Louis
Pasmino, Henry Malatesta, Jose Gonzales, Patrick Byrne,
Defendants-Appellees.
Gordon Sloan SMITH, Plaintiff-Appellant,
v.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
Defendant-Appellee.
Miguel ARDON, Plaintiff-Appellant,
v.
BANK OF AMERICA, N.T. & S.A., Defendant-Appellee.
Jorge LIMA, Plaintiff-Appellant,
v.
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSN. and Bank of
America Corp., Defendants-Appellees.
Nos. 74-2142, 74-2354, 74-2812 and 74-2813.
United States Court of Appeals,
Ninth Circuit.
Dec. 27, 1976.
As Amended on Denial of Rehearing and Rehearing En Banc March 3, 1977.

Page 600

John H. Boone, San Francisco, Cal., (argued), Norman R. Allenby (argued), Hillyer & Irwin, San Diego, Cal., for plaintiffs-appellants.

Noble K. Gregory (argued), Pillsbury, Madison & Sutro, San Francisco, Cal., for defendants-appellees.

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

Before BROWNING and CHOY, Circuit Judges, and GRAY, * District Judge.

OPINION

CHOY, Circuit Judge:

Four separate actions, arising from the same series of events, were dismissed by the same district court and are consolidated here on appeal. The principal action is Timberlane Lumber Co. v. Bank of America (Timberlane action), an antitrust suit alleging violations of sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2) and the Wilson Tariff Act (15 U.S.C. § 8). 1 This action raises important questions concerning the application of American antitrust

Page 601

laws to activities in another country, including actions of foreign government officials. The district court dismissed the Timberlane action under the act of state doctrine and for lack of subject matter jurisdiction. The other three are diversity tort suits brought by employees of one of the Timberlane plaintiffs for individual injuries allegedly suffered in the course of the extended anti-Timberlane drama. Having dismissed the Timberlane action, the district court dismissed these three suits on the ground of forum non conveniens. We vacate the dismissals of all four actions and remand.

I. The Timberlane Action

The basic allegation of the Timberlane plaintiffs is that officials of the Bank of America and others located in both the United States and Honduras conspired to prevent Timberlane, through its Honduras subsidiaries, from milling lumber in Honduras and exporting it to the United States, thus maintaining control of the Honduran lumber export business in the hands of a few select individuals financed and controlled by the Bank. The intent and result of the conspiracy, they contend, was to interfere with the exportation to the United States, including Puerto Rico, of Honduran lumber for sale or use there by the plaintiffs, thus directly and substantially affecting the foreign commerce of the United States.

Procedural Background

Some of the defendants moved to dismiss the Timberlane action. 2 After a hearing and the submission of memoranda, affidavits, and depositions by both sides, the district court granted the motion in a brief judgment entered on March 20, 1974. The court gave as its reason "that it is prohibited under the act of state doctrine from examining the acts of a foreign sovereign state; and in any event, that there is no direct and substantial effect on United States foreign commerce," the latter apparently being deemed a prerequisite for jurisdiction. No specific findings of fact were announced, nor were any more extensive conclusions of law stated. 3

It is unclear whether the decision was a dismissal for lack of subject matter jurisdiction or for failure to state a claim, F.R.Civ.P. 12(b)(1) & (6), or a summary judgment under F.R.Civ.P. 56. It appears from the transcript of the hearing that the district court and the defendants believed they were acting under Rule 12. 4 Plaintiffs here argue, however, that the defense motion was, in any event, based upon and incorporated affidavits which the court did not exclude, and as such it was a "speaking motion" which must be treated as a motion for summary judgment under the tests of Rule 56. Under Rule 56(e), they contend, they should have been allowed discovery.

Affidavits were submitted and cited by the defendants to the district court and again to us. These submissions were not explicitly excluded by the district court. Plaintiffs are correct in their assertion that Rule 12(b) requires Rule 56 treatment when a motion to dismiss for failure to state a claim (Rule 12(b)(6)) is made and "matters

Page 602

outside the pleading are presented to and not excluded by the court." Erlich v. Glasner, 374 F.2d 681 (9th Cir. 1967). A motion to dismiss based on the act of state doctrine raises such a Rule 12(b)(6) objection, not a jurisdictional defect. Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F.Supp. 92, 113 (C.D.Cal.1971), aff'd, 461 F.2d 1261 (9th Cir.), cert. denied, 409 U.S. 950, 93 S.Ct. 272, 34 L.Ed.2d 221 (1972).

However, it is also true that summary judgment treatment under Rule 56 is not required for a Rule 12(b)(1) "speaking motion." 2A Moore's Federal Practice P 12.09(3), at 2297-2300, 2313 (2d ed. 1975). Therefore, because " speaking motions" to dismiss for want of subject matter jurisdiction are permitted, id. P 12.09(2), at 2288, a dismissal based on affidavits alone without Rule 56 treatment might conceivably be sustainable on this ground.

On the other hand, if the district court did hold as its basis for dismissing for lack of subject matter jurisdiction that the alleged facts bore an insufficient relation to the foreign commerce of the United States, that same deficiency could also be considered a ground on which the suit could be dismissed for failure to state a claim under the antitrust laws. See Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S. 738 742 n.1, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976). Although the Supreme Court in Hospital Building did not elaborate, it seems settled that, when a statute provides the basis for both the subject matter jurisdiction of the federal court and the plaintiffs' substantive claim for relief, a motion to dismiss for lack of subject matter jurisdiction rather than for failure to state a claim is proper only when the allegations of the complaint are frivolous. O'Neill v. Maytag, 339 F.2d 764, 766 & n.3 (2d Cir. 1964). See Bell v. Hood, 327 U.S. 678, 682-83, 66 S.Ct. 773, 90 L.Ed. 939 (1946). Such is clearly not the case here. 5

Thus, if the district court dismissed under either Rule 56 itself or Rule 12(b)(6) (the proper motion for a defense pleading either the act of state doctrine or the lack of a sufficient nexus between the alleged violation and our foreign commerce), Rule 56 treatment would seem to have been indicated for the instant case. See also Rule 12(c).

Having secured Rule 56 treatment, it does not, however, necessarily follow that plaintiffs were entitled under Rule 56(e) to full discovery. That section provides only that the "court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits." (Emphasis added.) Accordingly, plaintiffs had no general right to discovery under the provisions of Rule 56(e).

Nevertheless, we note that the Supreme Court has expressed disapproval of summary disposition in this type of case:

We believe that summary procedures should be used sparingly in complex antitrust litigation where motives and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised. Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of "even handed justice."

Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). Putting plaintiffs to the test in such cases without ample opportunity for discovery is particularly disfavored. Hospital Building, supra 425 U.S. at 746, 96 S.Ct. 1848. From our review of the allegations and affidavits of both sides, it is clear to us that the factual circumstances here involved are indeed complicated. Therefore, in spite of the nonmandatory nature of Rule 56(e), we do not feel that it was proper to dismiss the instant complaint without affording plaintiffs an opportunity for full discovery. 6

Page 603

Moreover, the affidavits and depositions which were offered to the district court indicate clearly that, at least as to the act of state defense, there remained issues of material fact to be resolved. Thus, summary judgment treatment of that issue would seem to have been inappropriate. As the above-quoted passage from Poller indicates, in-court testimony of witnesses and trial by jury generally are the preferred mode of disposing of cases such as this.

The only other possible basis on which the district court could properly have dismissed this suit would have been a ruling that plaintiffs, even with the aid of discovery and the benefit of all doubts on disputed points, could under no circumstances have established a claim for relief. We will, therefore, review the judgment on that basis, treating it as a Rule 12(b)(6) dismissal. Accordingly, we assume the allegations of the Timberlane plaintiffs to be true. Under the circumstances of the instant case, we find pertinent the recent observation of the Supreme Court in Hospital Building :

We have held that "a complaint should not be dismissed for failure to state a claim unless it appears...

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211 practice notes
  • Hartford Fire Insurance Co v. California Merrett Underwriting Agency Management Limited v. California, Nos. 91-1111
    • United States
    • United States Supreme Court
    • June 28, 1993
    ...invoking international comity and applying the Ninth Circuit's decision in Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597 (CA9 1976). The Court of Appeals reversed. In re Insurance Antitrust Litigation, 938 F.2d 919 (CA9 1991). Although it held the conduct involved to b......
  • Sarei v. Rio Tinto, Plc., No. 02-56256.
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    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 7, 2006
    ...See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964); Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 605-607 (9th Cir.1977) (recounting history of doctrine). The doctrine reflects the concern that the judiciary, by questioning the validity......
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    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 2, 2005
    ...Inc., 970 F.2d 552, 554-57 (9th Cir.1992) (applying the jurisdictional "rule of reason" from Timberlane Lumber Co. v. Bank of Am., 549 F.2d 597 (9th Cir.1977): plaintiff must show (1) some effect on United States commerce, (2) an effect that is sufficiently great to be a cognizable injury t......
  • Tel-Oren v. Libyan Arab Republic, TEL-OREN
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • February 3, 1984
    ...77-79 (2d Cir.), cert. denied, 434 U.S. 984, 98 S.Ct. 608, 54 L.Ed.2d 477 (1977); Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597, 605-08 (9th The same separation of powers principles are reflected in the political question doctrine. The Supreme Court gave that doctrine ......
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201 cases
  • Hartford Fire Insurance Co v. California Merrett Underwriting Agency Management Limited v. California, Nos. 91-1111
    • United States
    • United States Supreme Court
    • June 28, 1993
    ...invoking international comity and applying the Ninth Circuit's decision in Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597 (CA9 1976). The Court of Appeals reversed. In re Insurance Antitrust Litigation, 938 F.2d 919 (CA9 1991). Although it held the conduct involved to b......
  • Sarei v. Rio Tinto, Plc., No. 02-56256.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 7, 2006
    ...See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964); Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 605-607 (9th Cir.1977) (recounting history of doctrine). The doctrine reflects the concern that the judiciary, by questioning the validity......
  • McBee v. Delica Co., Ltd., No. 04-2733.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 2, 2005
    ...Inc., 970 F.2d 552, 554-57 (9th Cir.1992) (applying the jurisdictional "rule of reason" from Timberlane Lumber Co. v. Bank of Am., 549 F.2d 597 (9th Cir.1977): plaintiff must show (1) some effect on United States commerce, (2) an effect that is sufficiently great to be a cognizable injury t......
  • Tel-Oren v. Libyan Arab Republic, TEL-OREN
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • February 3, 1984
    ...77-79 (2d Cir.), cert. denied, 434 U.S. 984, 98 S.Ct. 608, 54 L.Ed.2d 477 (1977); Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597, 605-08 (9th The same separation of powers principles are reflected in the political question doctrine. The Supreme Court gave that doctrine ......
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    • United States
    • Mondaq United States
    • November 10, 2022
    ...1956). 2. The Timberlane test was created by the Ninth Circuit in Timberlane Lumber Co. v. Bank of America National Trust & Savings Ass'n, 549 F.2d 597 (9th Cir. 1976) and applied to the Lanham Act in Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 427-28 (9th Cir. 3. The McBee ......
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    • July 1, 2021
    ...S.A., 157 F.3d at 932 (quoting In re Maxwell Commc’n Corp., 93 F.3d 1036, 1050 (2d Cir. 1996)). 248. Timberlane Lumber Co. v. Bank of Am., 549 F.2d 597 (9th Cir. 1976). The Timberlane factors are: (i) degree of conf‌lict with foreign law or policy; (ii) nationality or allegiance of the part......
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    ...within its own territory even if thoseacts would otherwise violate U.S. antitrust law.See,e.g.,Tim-berlaneLumberCo.v. Bank of America, 549 F.2d 597 (9thCir. 1976).Inrecent decisions some courts havecomeclose toholdingthatthe act of state defense does not apply to"com-mercial" acts of a sove......
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    ...concept of "unreasonable inference" as a tool of statutory interpretation). (35) See Timberlane Lumber Co. v. Bank of Am., NT. & S.A., 549 F.2d 597, 614-15 (9th Cir. 1976) (identifying seven factors for evaluating when "the contacts and interests of the United States are sufficient to s......
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    ...Pacific Community, 16 HASTINGSINT'L&COMPoL.REV.295,298-302(1993).14 Timberlane Lumber Co. v. BankofAmericaNat'lTrust and Sav-ings Ass'n, 549 F.2d 597 (9th Cir. 1976); Mannington Mills, Inc. v. Con-goleum Corp., 595 F.2d 1287, 1294 (3d Cir. 1979).1515 International antitrust 61to remove ambi......
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