Hunt v. Occ Petro Corp

• Court: Court of Appeals for the Fifth Circuit
• Decided: March 25, 2004
• Docket: 95-30795
• Status: Unpublished

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 95-30795 _____________________

NELSON BUNKER HUNT,

Plaintiff-Appellant

versus

OCCIDENTAL PETROLEUM CORPORATION and PLACID OIL COMPANY,

Defendants-Appellees

Appeal from the United States District Court for the Western District of Louisiana (94-CV-2382) _____________________

August 21, 1996 Before BENAVIDES, STEWART and DENNIS, Circuit Judges.

DENNIS, Circuit Judge.*

Appellant, Nelson Bunker Hunt, filed suit under Section 7 of

the Clayton Act, 15 U.S.C. § 18, seeking to dissolve the

acquisition of Placid Oil Co. by Occidental Petroleum Corp. The

district court granted the defendants’ motion for summary judgment

* Local rule 47.5 provides: “The publication of opinions that have no precedential value and merely decide particular cases on the basis of well-settled principles of law imposes needless expense on the public and burdens on the legal profession.” Pursuant to that Rule, the Court has determined that this opinion should not be published. and Hunt appeals. Finding that Hunt lacks standing to sue under

the antitrust laws, we affirm.

Hunt is the sole beneficiary of the Nelson Bunker Hunt Trust

Estate, which owned approximately one-third of the stock of Placid

Oil Co (“Placid”). In 1994, Occidental Petroleum Corp.

(“Occidental”) acquired Placid’s stock in exchange for $250 million

in Occidental stock. Hunt brought suit against Occidental and

Placid under Section 7 of the Clayton Act seeking injunctive relief

to dissolve the acquisition on the ground that the effect of the

merger may be substantially to lessen competition in the

exploration, development and sale of oil and gas in the states of

Texas, Louisiana and Mississippi (the Gulf Coast area). Occidental

and Placid filed a motion for summary judgment, challenging Hunt’s

standing to sue for antitrust violations and arguing that

regardless of standing, Hunt had not demonstrated a violation of

the Clayton Act as the combined market shares of Placid and

Occidental were too small to increase concentration or threaten

competition significantly.1 Hunt’s answer to the motion supplied

little, if any, relevant evidence in support of his position and

1 The defendants attached several exhibits to their motion, including an affidavit by their expert economist, Marion B. Stewart, Ph.D. Using Hunt’s proposed geographical market for purposes of his opinion, Dr. Stewart opined that the merger had little effect on the unconcentrated oil and gas markets in part because the combined market shares of Occidental and Placid accounted for only 1.1 percent of natural gas production and 1.5 percent of oil production in 1994.

2 did not include any expert analysis of his claims.2

The district court granted summary judgment in favor of the

defendants on the ground that Hunt lacks antitrust standing.

Specifically, the court found that (1) Hunt’s status as beneficiary

of a trust that owned shares of Placid did not establish standing

to sue for injuries to Placid; (2) Hunt’s claimed status as a

competitor did not establish standing as Hunt failed to show that

he was a competitor and, moreover, he made no allegation, much less

proved, any predatory pricing; and (3) Hunt did not have standing

as a potential entrant to the relevant market as he did not refute

defendants’ contention that the post-merger Occidental controlled

only 1.5% of the oil and gas reserves in the easily entered

relevant market. Hunt appeals this judgment.

We review the decision to grant summary judgment de novo,

applying the same criteria employed by the district court in the

first instance. Federal Deposit Ins. Corp. v. Dawson, 4 F.3d 1303,

1306 (5th Cir.1993), cert. denied, U.S. , 114 S.Ct. 2673,

2 Hunt’s answer to the motion for summary judgment was supported solely by an affidavit by his attorney attaching as exhibits (1) portions of Occidental’s 1994 annual report; (2) a descriptive memorandum of Placid prepared by Lehman Brothers; (3) portions of Lehman Brothers’ “Review of Merger Process and Formal Offers” regarding the Placid purchase; (4) excepts from “the Pulitzer Prize winning book by Daniel Yergens ‘The Prize: The Epic Quest for Oil, Money and Power’”; (5) portions of the depositions of James Holland, Jr., trustee of the Lamar Hunt Trust, and Alvin H. Lane, Jr.; (6) a summary order entered on April 13, 1995 in Hilo v. Exxon, No. CV 92-4408 (C.D.Ca.), denying summary judgment motions of British Petroleum and Mobil Oil Corp., offered by Hunt “to contradict defendants’ unsubstantiated assertions that the oil and gas industry today is ‘highly competitive.’”

3 129 L.Ed.2d 809 (1994). Summary judgment is proper if "the

pleadings, depositions, answers to interrogatories and admissions

on file, together with affidavits, if any, show that there is no

genuine dispute as to any material fact and that the moving party

is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c);

see also Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91

L.Ed.2d

265 (1986). Once a properly supported motion for summary judgment

is presented, the burden shifts to the non-moving party who bears

the burden of proof at trial to show with "significant probative"

evidence that there exists a triable issue of fact. In re

Municipal Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th

Cir.1982). We may affirm the summary judgment on grounds that

differ from the ones on which the district court relied. Coral

Petroleum, Inc. v. Banque Paribas-London, 797 F.2d 1351, 1355 n. 3

(5th Cir. 1986).

The Clayton Act prohibits mergers the effect of which “may be substantially to

lessen competition, or to tend to create a monopoly.” 15 U.S.C. § 18. “The core question

is whether a merger may substantially lessen competition, and necessarily requires a

prediction of the merger’s impact on competition, present and future.” Federal Trade

Commission v. Procter & Gamble Co., 386 U.S. 568, 577, 87 S. Ct. 1224, 1229, 18 L.Ed.2d

303 (1967). In order to seek injunctive relief under § 16 of the Act, a private plaintiff must

allege “threatened loss or damage ‘of the type the antitrust laws were designed to prevent

4 and that flows from that which makes defendants’ acts unlawful.’” Cargill, Inc. v. Monfort

of Colorado, Inc., 479 U.S. 104, 115, 107 S.Ct. 484, 491, 93 L.Ed.2d 427 (1986); Anago,

Inc. v. Tecnol Medical Products, Inc., 976 F.2d 248, 249 (5th Cir. 1992), cert. dismissed,

U.S. , 114 S. Ct. 491, 126 L.Ed.2d 441 (1993). Thus, to have standing to sue under

the antitrust laws, Hunt was required to show that he will suffer “antitrust injury” as a result

of the merger. Loss or damage “due merely to increased competition does not constitute

such an injury.” Cargill, 479 U.S. at 122, 107 S. Ct. at 495. See also Anago, 976 F.2d at

249 (observing that this circuit “has narrowly interpreted the meaning of antitrust injury,

excluding from it the threat of decreased competition.”). Moreover, “[p]roof that a plaintiff

will be adversely affected by the merger itself will not suffice in this Court, unless the

injuries are related to the anticompetitive effects of the merger.” Id. at 250.

Hunt claims that the merger has caused or will cause him to

suffer antitrust injury in three capacities: as the beneficiary of

a trust that was part owner of the acquired company, as an alleged

competitor in the industry, and as a potential entrant into the oil

and gas market. However, in all three situations, Hunt has failed

to demonstrate the existence of material disputed facts precluding

summary judgment because he has not shown that he has suffered or

will suffer injury cognizable under the antitrust laws. First, in

his capacity as beneficiary of a trust that was one-third owner of

the target company, Hunt presumably seeks to assert rights on

behalf of Placid, much as shareholders in a derivative action

assert rights of the corporation. Circuit precedent, however,

5 holds that a target company lacks antitrust standing because the

target cannot establish that it has suffered antitrust injury

simply by virtue of its loss of independence, see Anago, 976 F.2d

at 250-51, and Hunt’s rights as part-beneficial owner certainly

extend no further than those of the target company in which he had

an interest.3 Similarly, Hunt did not establish standing as an

alleged competitor in the oil and gas market because he failed to

allege or present summary judgment evidence that Occidental would

engage in predatory pricing as a result of the merger. See

Phototron Corp. v. Eastman Kodak Co., 842 F.2d 95, 99 (5th Cir.

1988), cert. denied, 486 U.S. 1023, 108 S.Ct. 1996, 100 L.Ed.2d 228

(1988). Finally, even assuming that Hunt adequately established

that he was a potential entrant,4 he has not demonstrated that the

merger has increased entry barriers and thus has not shown that he

has been competitively harmed. As Hunt has failed to establish the

existence of disputed material facts relative to his alleged

antitrust injury, he has not shown that he has standing to sue

3 Inasmuch as we find that Placid has suffered no antitrust injury, it is unnecessary to reach the issue addressed by the district court regarding whether derivative suits may be brought under the antitrust laws. 4 In addition to the requirement of antitrust injury, a plaintiff seeking recovery as a potential entrant to the market must show both an intention and preparedness to enter the business. See Hayes v. Solomon, 597 F.2d 958, 973 (5th Cir. 1979), cert. denied, 444 U.S. 1078, 100 S. Ct. 1028, 62 L.Ed.2d 761 (1980); Cable Holdings of Georgia v. Home Video, Inc., 825 F.2d 1559, 1561-62 (11th Cir. 1987). Hunt did not bolster his allegations of harm as a potential entrant with evidence that he intended to and was prepared to enter the oil and gas market; consequently, he must be denied standing on this ground as well.

6 under the federal antitrust laws and summary judgment in favor of

defendants was proper.

For the foregoing reasons, the district court’s grant of

summary judgment in favor of defendants is AFFIRMED. The

defendants’ motion for sanctions against Hunt and his attorney is

DENIED.