California v. Automobile Manufacturers Ass'n

481 F.2d 122
CourtCourt of Appeals for the Ninth Circuit
DecidedJune 4, 1973
DocketNo. 71-1241
StatusPublished
Cited by2 cases

This text of 481 F.2d 122 (California v. Automobile Manufacturers Ass'n) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
California v. Automobile Manufacturers Ass'n, 481 F.2d 122 (9th Cir. 1973).

Opinion

OPINION

ELY, Circuit Judge:

This certified interlocutory appeal under 28 U.S.C. § 1292(b) arises from pretrial proceedings in Multidistrict Air Pollution Control Litigation (C.D.Cal. M.D.L. 31), which is a consolidation of numerous actions1 under 28 U. S.C. § 1407. In re Motor Vehicle Air Pollution Control Equipment, 311 F. Supp. 1349 (Jud. Panel Mult. Lit. 1970.) Since this appeal is from denial of motions to dismiss, factual allegations are east most favorably to the appellees. See Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 2 L.Ed.2d 80 (1957).

As early as 1953, the nation’s automobile manufacturers and their trade association allegedly conspired to eliminate competition among themselves in the research, development, manufacture, installation and patenting of automotive air pollution control devices. Appellees urge that this horizontal antitrust conspiracy was motivated: (1) by appellants’ conviction that antipollution devices are externalities, whose development would increase price without concomitant spur to consumer interest; (2) by the apprehension that the first com[125]*125petitor to perfect such a device would garner exclusive contracts with governmental purchasers; and (3) by the fear that technological realization of the devices would prompt laws compelling their use.2

Appellees argue that this conspiracy inflicted financial losses that would not have occurred but for the conspiracy-induced absence of antipollution equipment. Governmental entity appellees claim losses resulting from diminution in value of, and expenditures in connection with, government property and interests. Crop farmer appellees assert direct damage to crop yields. Variously proceeding in their individual capacities, as parens patriae and as class representatives, all appellees seek treble damages and equitable relief under sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26.

On appeal, appellants challenge the District Court’s rulings that appellees have standing to sue under sections 4 and 16 of the Clayton Act, that certain appellees may proceed as parens patriae, and that others may proceed as class representatives under Fed.R.Civ.P. 23.

1. STANDING UNDER SECTION 4

Appellees ground their claims for treble damages on section 4 of the Clayton Act, 15 U.S.C. § 15, which reads:

“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, without respect to amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit including a reasonable attorney’s fee.”

Read literally, this statute could afford relief to all persons whose injuries are causally related to an antitrust violation. Recognizing the nearly limitless possibilities of such an interpretation, however, the judiciary quickly brushed aside this construction.3 Instead, a measured approach has prevailed; ¿ourts have impressed a standing doctrine so as to confine the availability of section 4 relief only to those individuals whose protection is the fundamental purpose of the antitrust laws. Cf. Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970); Association of Data Processing v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); Mount Clemens Industries, Inc. v. Bell, 464 F.2d 339, 341-344 (9th Cir. 1972). Unfortunately, no “bright line” has yet emerged to divine this group, and courts have formulated varied definitions.

In this case, however, the District Court declined to apply any of the extant definitions, choosing instead to expand 4 the coverage of section 4:

“We are now concerned with the phrase ‘injured in his business or property by reason of anything forbidden in the antitrust laws’ in the light of the allegations of these complaints, rather than the traditional, legalistic approach defined by the eases cited by defendants in their motion to [126]*126dismiss. Each of the plaintiffs allege injury to their respective business or property by reason of anti-trust violations of the defendants.
“Plaintiffs may fail in their proof, but until then, they should be given the benefit of employing ‘any available remedy to make good the wrong done.’ ” [footnote citing J. I. Case Co. v. Borak, 377 U.S. 426, 433, 84 S. Ct. 1555, 12 L.Ed.2d 423 (1964); Bell v. Hood, 327 U.S. 678, 684, 66 S.Ct. 773, 90 L.Ed. 939 (1946)].

52 F.R.D. 398, 401 (C.D.Cal.1970). In the aftermath of the Supreme Court’s recent decision in Hawaii v. Standard Oil Co., 405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972), however, we cannot so easily disregard the so-called “traditional, legalistic approach” of the cases.

Judicial constructions of standing under section 4 have keyed on the phrases “business or property” and “by reason of” as indicating twin requisites for standing. First, a plaintiff must allege injury to his “business or property”, a term definitively limited to interests in commercial ventures or enterprises : “the words ‘business or property’ . . . refer to commercial interests or enterprises.” Hawaii, supra at 264, 92 S.Ct. at 892. See Control Data Corp. v. IBM, 306 F.Supp. 839, 845 (D.Minn.1969) (corporate plaintiff not in legal existence at time of antitrust violation is without commercial injury). Secondly, a plaintiff must allege that the injury suffered was occasioned “by reason of” an antitrust violation. Hawaii, supra at 263-264 n.14, 92 S.Ct. 885.

Applying the first predicate, since neither the government’s individual claims, nor their class claims, nor their parens patriae claims allege any injury to commercial ventures or enterprises, the governmental entities cannot seek recovery under section 4 of the Clayton Act. In contrast, the farmers satisfy the first requisite, since a diminished crop yield, for example, would constitute injury to commercial interests.

Application of the second prong of the standing formulation is more difficult since “by reason of” has consistently eluded efforts at uniform definition or application. Compare, e. g., Mulvey v. Samuel Goldwyn Productions, 433 F.2d 1073 (9th Cir. 1970) with, Fields Productions, Inc. v. United Artists Corp., 432 F.2d 1010 (2d Cir. 1970), aff’g,

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