United States v. Standard Oil Co.

330 F. Supp. 371, 1971 Trade Cas. (CCH) 73,655, 1971 U.S. Dist. LEXIS 12414
CourtDistrict Court, N.D. California
DecidedJuly 15, 1971
DocketCiv. No. 52334
StatusPublished
Cited by1 cases

This text of 330 F. Supp. 371 (United States v. Standard Oil Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Standard Oil Co., 330 F. Supp. 371, 1971 Trade Cas. (CCH) 73,655, 1971 U.S. Dist. LEXIS 12414 (N.D. Cal. 1971).

Opinion

OPINION AND ORDER

CONTI, District Judge.

This is a civil action brought by the Government charging the defendant, Standard Oil Company of California, with violations of Section 3 of the Sherman Act (15 U.S.C. § 3). The complaint alleges that the defendant has violated said Act by combining to unreasonably restrain and monopolize the distribution and sale of petroleum products in the Territory of American Samoa, and by entering into contracts in unreasonable restraint of that trade. Defendant has moved to dismiss the action for lack of jurisdiction.

Section 3 of the Sherman Act provides in pertinent part:

“Every contract, combination * * * or conspiracy, in restraint of trade or commerce in any Territory of the [372]*372United States or of the District of Columbia, or in restraint of trade or commerce between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, is declared illegal.”

It is apparent that American Samoa is not the “District of Columbia”, nor a “State”, nor a “foreign nation”. Therefore, if the Sherman Act is to extend to Samoa, then such possession must fall within the category of “Territories”.

At the time of the Sherman Act (1890), the United States had no insular possessions and Congress could not, therefore, have had Samoa in mind. But this is not determinative so long as the word “territory” as used in the Sherman Act can properly be applied to American Samoa. The issue here is basically the same as was presented in Puerto Rico v. Shell Co., 302 U.S. 253, 58 S.Ct. 167, 82 L.Ed. 235 (1937), wherein the Court stated:

“The only question, therefore, is whether the word “territory”, as used in section 3 of the Sherman Act, properly can be applied to a dependency now bearing the relation to the United States which is borne by Puerto Rico (American Samoa).”

The defendant contends that the word “territory”, as used in the Sherman Act and many other statutes passed by Congress, applies only to organized territories, that American Samoa is not organized, and that therefore the Sherman Act does not apply to activities in Samoa.

The Government, on the other hand, contends that the word “Territory” in the Sherman Act was used in its most comprehensive sense as including all possessions of the United States, whether organized or not.

Since both parties rely heavily on the Shell case, supra, it seems appropriate to begin with an analysis of that decision. The main issue in that case was whether Puerto Rico could be considered a “Territory” within the meaning of Section 3 of the Sherman Act. Prior to holding that Puerto Rico was such a “Territory” the court discussed its earlier decision of Kopel v. Bingham, 211 U.S. 468, 29 S.Ct. 190, 53 L.Ed. 286 (1909).

In Bingham, the Court was called upon to determine if Puerto Rico was a “territory” within the meaning of § 5278 of the Revised Statutes, which provided for the demand and surrender of criminal fugitives by governors of territories and of states. The Court defined “territory”, as used in § 5278, to mean “a portion of the country not included within the limits of any state, and not yet admitted as a state into the Union, but organized under the laws of Congress with a separate legislature under a territorial governor and other officers appointed by the President and Senate of the United States.” In conclusion, the court in Bingham further stated that “it may be justly asserted that Puerto Rico is a completely organized territory, although not a territory incorporated into the United States, and that there is no reason why Puerto Rico should not be held to be such a territory as is comprised in § 5278.”

Immediately following this discussion of Bingham, the Court in Shell concluded: [373]*373merce clause, in passing section 3 it exercised a general power, unlimited by that clause. We therefore concluded that the word ‘trade’ as used in section 3 should be given a more extended meaning than the same word as used in section 1.

[372]*372“With equal force, it may be said here that there is no reason why Puerto Rico should not be held to be a ‘territory’ within the meaning of section 3 of the Sherman Act. We pointed out in the Atlantic Cleaners & Dyers case [Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 52 S.Ct. 607, 76 L.Ed. 1204] * * * that in the light of applicable history and circumstances it was apparent that Congress meant to deal comprehensively with the subject of contracts, combinations, and conspiracies in restraint of trade, ‘and to that end to exercise all the power it possessed;’ that while Congress in passing section 1 exercised only the power conferred by the com-
[373]*373If, as we there determined, Congress intended by the Sherman Act to exert all the power it possessed in respect of the subject matter, — trade and commerce, — it is equally reasonable to conclude that Congress intended to include all territories to which its powers might extend. The same reason which requires the utmost liberality of construction in respect of the word ‘trade’ also requires the same degree of liberality of construction in respect of the word ‘territory’; and we hold, accordingly, that the word ‘territory’ was used in its most comprehensive sense, as embracing all organized territories, whether incorporated into the United States or not, including Puerto Rico.” (Emphasis added).

The United States cites the Shell case for the proposition that Congress, in passing Section 3 of the Sherman Act, exercised all the power it possessed under Article IV, Section 3, Clause 2 of the Constitution of the United States. It is submitted that in so doing, Congress intended Section 3 to apply to all possessions of the United States, whether organized or not.

Standard Oil, on the other hand, points to the specific language in the holding of Shell which states that the word “territory” embraces “all organized territories, whether incorporated into the United States or not. * * *” (Emphasis added).

Although the Shell case is not entirely clear, this court is of the opinion that the Supreme Court interpreted the word “territories” as used in Section 3 to mean only organized territories.

Although the court did say that Congress intended to include within the reach of Section 3 “all territories to which its powers might extend”, said statement can only be viewed in the context of the previous discussion of Bingham, supra, and the subsequent language that the word “territory” embraces “all organized territories. * * *” This court is particularly influenced by the fact that the Supreme Court’s holding springs directly from its discussion of Bingham.

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Related

United States v. Standard Oil Co. of Cal.
404 U.S. 558 (Supreme Court, 1972)

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Bluebook (online)
330 F. Supp. 371, 1971 Trade Cas. (CCH) 73,655, 1971 U.S. Dist. LEXIS 12414, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-standard-oil-co-cand-1971.