U.S. v. BNS Inc.
| Decision Date | 27 May 1988 |
| Docket Number | 88-5850,Nos. 88-5849,s. 88-5849 |
| Citation | 848 F.2d 945 |
| Parties | , 1988-1 Trade Cases 68,038 UNITED STATES of America, Plaintiff, v. BNS INC.; Gifford-Hill & Co., Inc., Defendants-Appellants, v. KOPPERS COMPANY, INC., Participant-Appellee. UNITED STATES of America, Plaintiff-Appellant, v. BNS INC.; Gifford-Hill & Co., Inc., Defendants, v. KOPPERS COMPANY, INC., Participant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
John Bodner, Jr., Thomas N. Heyer, James H. Curtin, Jon R. Roellke, Howrey & Simon, Washington, D.C., William C. Conkle, John A. Conkle, Jessica K. Frazier, Conkle & Olesten, Los Angeles, Cal., for participant-appellee Koppers.
Robert B. Nicholson, John P. Fonte, Dept. of Justice, Washington, D.C., for plaintiff-appellant U.S.A.
Mark Leddy, Cleary, Gottlieb, Steen & Hamilton, Washington, D.C., Gregory P. Stone, Munger, Tolles & Olson, Los Angeles, Cal., for defendants-appellants BNS Inc. and Gifford-Hill & Co.
On Appeal from the United States District Court for the Central District of California.
Before PREGERSON, BOOCHEVER, and BEEZER, Circuit Judges.
On April 5, 1988, the United States District Court for the Central District of California entered a preliminary injunction prohibiting BNS Inc. from attempting to acquire a controlling interest in Koppers Co. through a cash tender offer. The order was issued to maintain the status quo while the court considered a proposed consent decree pursuant to the Antitrust Procedures and Penalties Act (APPA), 15 U.S.C. Sec. 16(b)-(h) (1982).
The United States, BNS, and Gifford-Hill & Co., an affiliated firm, stipulated to the proposed decree to remedy anticompetitive effects the government alleged would result in the Los Angeles and Orange County aggregate market from the acquisition of Koppers. Aggregate is rock, sand, and gravel suitable for mixing in concrete, asphalt, and other road or construction materials. Both BNS, through Gifford-Hill, and Koppers, through its wholly-owned subsidiary Sully-Miller Contracting Co., manufacture and distribute road and construction materials in Southern California. The consent decree, if approved by the district court, would require BNS to maintain Koppers' aggregate facility in Irwindale, California separately and to divest it by January 1, 1989.
Koppers, which was granted leave to "participate" in the APPA proceedings under 15 U.S.C. Sec. 16(f), requested the injunction. The court found that its jurisdiction under the APPA would be hindered and irreparable harm to competition in the aggregate market threatened if the transaction was completed before it reviewed the consent decree. The government, BNS, and Gifford-Hill opposed the injunction, and sought interlocutory review under 28 U.S.C. Sec. 1292(a)(1) (1982).
We conclude that the district court had authority to issue a preliminary injunction to preserve its APPA jurisdiction under the All Writs Act, 28 U.S.C. Sec. 1651 (1982). Control by BNS of Koppers' aggregate operation and related facilities in Irwindale during the pendency of the court's proceedings could conceivably result in irreparable anticompetitive harm. We believe that if BNS is sufficiently divorced from control of that operation and related facilities, which currently are managed by Sully-Miller, the district court's concerns will be adequately addressed.
An appellate court may modify an injunction. State of Washington v. Central Contractors Ass'n, 453 F.2d 383, 384 (9th Cir.1971); see Bresgal v. Brock, 843 F.2d 1163, 1171-72 (9th Cir.1987). Upon consideration of possible harm to competition in the aggregate market and the relative hardships to the parties in this case, we have concluded that appointment of an independent trustee to assume control of Sully-Miller will preserve the district court's jurisdiction. We therefore order that the injunction be modified as follows:
(1) The preliminary injunction shall remain in force until a trustee is appointed by the district court to assume control of Sully-Miller. At such time as BNS may acquire a controlling interest in Koppers, the trustee shall:
(a) manage the Irwindale aggregate operation and related facilities separately and independently from the other assets owned by Koppers, BNS, and Gifford-Hill;
(b) maintain the confidentiality of all records and plans pertaining to the aggregate operation and related facilities; and
(c) remain in control of Sully-Miller until the court enters its order approving or disapproving the consent decree under the APPA.
(2) In the event the court disapproves the proposed decree, the trustee shall remain in control of Sully-Miller for an additional fourteen-day period to permit the parties to take such action, if any, that they deem appropriate.
(3) The trustee shall not assume control of Sully-Miller until the United States District Court for the Western District of Pennsylvania has lifted the injunction on the proposed acquisition ordered in Koppers Co. v. American Express Co., Civ. No. 88-557 (W.D.Pa. April 15, 1988).
(4) Reasonable costs of such trusteeship shall be paid by BNS. In the event that BNS does not agree to this provision, the preliminary injunction previously entered by the district court shall remain in effect without modification until such time as the court approves or disapproves the proposed consent decree.
Because this matter has been expedited, we have not set forth our reasons in detail. An opinion will follow.
The district court's order is MODIFIED and the case REMANDED for the immediate appointment of a trustee in accordance with this order.
BNS Inc. and Gifford-Hill & Co., Inc. (BNS) have announced an offer to purchase the common stock of Koppers and Company, Inc. (Koppers). In a filing under the Hart-Scott-Rodino Act, 15 U.S.C. Sec. 18a, BNS volunteered that overlap of aggregate production by BNS and Koppers in Irwindale, California might raise an antitrust question. After an investigation, the Justice Department concluded that a takeover would be anticompetitive only in the aggregate market in Irwindale. The United States filed a civil antitrust action against BNS to remedy this discrete problem. The United States and BNS stipulated to entry of a proposed final judgment (the "consent judgment") according to which BNS would divest itself of Koppers' aggregate facility in Irwindale. The United States and BNS submitted to a proceeding under the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16 ("APPA" or the "Tunney Act"), to review the proposed antitrust consent judgment. Koppers, the target of the tender offer, having obtained the status of "participant" in this proceeding, petitioned for and received a preliminary injunction prohibiting BNS from consummating the purchase of Koppers' shares. The United States and BNS appeal. I would dissolve the injunction.
This case presents the question whether a district court may enjoin a tender offer under the Antitrust Procedures and Penalties Act, at the request of a target company that is but a "participant" in the proceeding, and over the objection of the United States. The district court lacked authority to grant the injunction. Even if the district court had authority, the district court improperly granted an injunction in this case. The order we issue today does not correct the district court's mistakes.
The district court did not have authority to issue a preliminary injunction under the All Writs Act, 28 U.S.C. Sec. 1651. That Act merely states that courts "may issue all writs necessary or appropriate in aid of their respective jurisdictions." A writ in aid of jurisdiction presupposes jurisdiction. In this case, the district court's jurisdiction is itself in question. Our task is to decide whether the APPA establishes jurisdiction allowing for an injunction under the circumstances of this case. In my view, the district court's injunction entails three jurisdictional problems.
To begin with, the district court based its injunction on matters beyond the subject matter of the APPA. The APPA authorizes a district court to review the proposed consent judgment between the government and a defendant. A 60-day notice and comment period culminates in the district court's statement on whether it is in the public interest for the government to resolve its complaint by means of the proposed consent judgment.
As this framework suggests, the APPA confines a district court to scrutiny of violations the government has alleged. At its core the APPA states:
Before entering any consent judgment proposed by the United States under this section, the court shall determine that the entry of such judgment is in the public interest.
15 U.S.C. Sec. 16(e) (emphasis added). The APPA goes on to say that for the purpose of making a public interest determination, the district court may consider "(1) the competitive impact of such judgment, including termination of alleged violations...." Id. In addition, the district court may consider "(2) the impact of entry of such judgment upon the public generally and individuals alleging specific injury from the violations set forth in the complaint...." Id.
From the very language of the statute, Congressional intent is unmistakable: the district court has jurisdiction only over violations alleged in the complaint. 1 As we indicated in an earlier APPA case, United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir.1981), this court does not accept that a district court may, or should, "look beyond the strict relationship between complaint and remedy in evaluating the public interest." The reason is plain: courts must respect prosecutorial discretion inherent in the executive branch. As we said in Bechtel, "balancing of competing social and political interests affected by a proposed antitrust consent decree must be left, in the first instance, to the discretion of the Attorney General." Id....
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