Tekton, Inc. v. Builders Bid Service of Utah, Inc.

676 F.2d 1352
CourtCourt of Appeals for the Tenth Circuit
DecidedMay 4, 1982
DocketNos. 81-1060, 81-1085
StatusPublished
Cited by3 cases

This text of 676 F.2d 1352 (Tekton, Inc. v. Builders Bid Service of Utah, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tekton, Inc. v. Builders Bid Service of Utah, Inc., 676 F.2d 1352 (10th Cir. 1982).

Opinion

BARRETT, Circuit Judge.

Builders Bid Service of Utah, Inc. (BBS) and Utah Sub-Contractors Bid Service (USBS) appeal from a judgment entered by the district court declaring certain of their operating rules to be invalid as violative of Sections 1 and 2 of the Sherman Act (15 U.S.C.A. §§ 1, 2), and enjoining future enforcement of the proscribed rules.

BBS and USBS are non-profit Utah corporations which operate depositories for the submission and distribution of construction bids. The depositories were created in an attempt to organize the construction bidding process and to alleviate the effects of bid shopping, bid peddling and bid chiseling.1 Pursuant to this purpose, operating rules were promulgated concerning the time and manner of submitting bids. Article X(B) of the USBS Rules and Procedures, specifically at issue in this case, provides:

In order to be eligible to receive bids through the Bid Service, any General Contractor who has accepted bids in the categories covered by these Rules and Procedures from bidders not using the Bid Service shall provide a copy of such bids, addressed to the Bid Service, sealed and deposited in the Depository Box at the designated Bank, prior to the announced Depository closing time. Each of the sealed envelopes deposited by General Contractors shall, on its outside cover, specify the name and address of the bidder, the project for which the bid is made, and the categories of work included in the bid. Such bids, designated as outside bids, shall be deposited by the General Contractor himself, or one of his regular employees, and cannot be deposited by the Sub-Contractor. Company stationery shall be used for identification in depositing these bids.

Under Article X(B) and its resulting practices, all general contractors and subcontractors who are licensed to do business in the State of Utah are eligible to participate in the bid depositories. Subcontractors who wish to bid on a construction project handled by the depository, submit the bid, recorded on a form provided by the depository, in a sealed envelope to the depository. The subcontractor submits one envelope for each general contractor by whom he wishes to be considered. All bids must be submitted four hours before the general contractors’ bids are due. No bids are accepted by the depository after the four-hour deadline.

After the closing deadline, the depository delivers the submitted subcontractors’ bids to the respective general contractors. Before receiving any bids, a general contractor must agree in writing to abide by the rules of the depository and to not consider “outside” bids submitted after the depository has closed. An outside bid is one submitted by a subcontractor not participating in the depository process. A general contractor who refuses to sign the agreement will not receive any subcontractor bids. A contractor may only use an outside bid, submitted directly to him, if a copy of the bid is first submitted to the depository.

Subcontractors who submit outside bids and general contractors who accept such bids are subject to suspension from future use of the depository. Furthermore, subcontractors, when submitting their bids, may instruct the depository that their bids shall not be delivered to general contractors who utilize outside bids. Finally, notice [1354]*1354that a general contractor has violated depository rules is sent to subcontractors who may choose to boycott that contractor on future projects.

Tekton, Inc. (Tekton), Paulsen Construction Co. (Paulsen) and Rocky Mountain Contractors, Inc. (Rocky Mountain), general contractors engaged in the business of constructing commercial and industrial buildings in Utah, brought suit against USBS and BBS seeking a declaration that their operating rules were violative of Sections 1 and 2 of the Sherman Act (15 U.S.C.A. §§ 1, 2),2 and an injunction against the future enforcement of the rules. Prior to trial, Tekton, Paulsen and Rocky Mountain moved for summary judgment contending that the USBS and BBS rules were per se violations of the Sherman Act. The motion was denied.

After the presentation of the evidence, the court rendered a judgment declaring several of appellants’ operating rules, including Article X(B), to be violative of the Sherman Act. Appellants, seeking to have Article X(B) upheld, moved to amend the judgment. The motion was denied.

BBS and USBS appeal from the court’s declaration that Article X(B) and the resulting practices thereunder violate the Sherman Act. Tekton, Paulsen and Rocky Mountain cross-appeal the court’s denial of the motion for summary judgment.

The decision to grant declaratory relief is within the discretion of the trial court, and will not be disturbed on appeal in the absence of a showing that the trial court abused its discretion. St. Paul Mercury Insurance Company v. Huitt, 336 F.2d 37 (6th Cir. 1964).

Appellants contend that Article X(B) and the practices thereunder are not unreasonably restrictive of competition, and therefore violative of the Sherman Act, because they are necessary to preserve the integrity of the sealed bid system, which the court applauded as beneficial to competition. [R., Vol. Ill p. 490],

Not all combinations or conspiracies which effect a restraint on interstate trade are violative of the Sherman Act; only those which “unreasonably” restrict competition are unlawful. White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963); Northern Pac. R. Co. v. United States, 356 U.S. 1, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958); Chicago Board of Trade v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683 (1918); Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). To determine if a restraint is “unreasonable”, the court must consider the circumstances in which the restraint is applied, the nature of the restraint and its effect. U. S. v. American Oil Co., 262 U.S. 371, 43 S.Ct. 607, 67 L.Ed. 1035 (1923). In so doing, the court determines if the restraint “merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.” Chicago Board of Trade v. United States, supra, at p. 238, 38 S.Ct. at 243.

Appellants argue that the rules are an honest attempt to curb the chaotic effects of bid shopping, bid peddling and bid chiseling.3 They contend that, by eliminating [1355]*1355these practices, competition is enhanced and commerce is promoted rather than restrained. In any event, appellants’ rules must be judged according to their effect on interstate commerce independent of appellants’ good or bad intentions. Fashion Guild v. Trade Comm’n., 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941).

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676 F.2d 1352, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tekton-inc-v-builders-bid-service-of-utah-inc-ca10-1982.