Source: https://openjurist.org/395/us/464
Timestamp: 2019-04-26 14:40:08+00:00

Document:
EL PASO NATURAL GAS COMPANY et al.
Vernon B. Romney, Salt Lake City, Utah, for appellant.
Leon Payne, Houston, Tex., for appellee, El Paso Natural Gas Co.
Richard B. Hooper, Seattle, Wash., for appellees, Cascade Natural Gas Corp., et al.
John F. Sonnett, New York City, for appellee, Colorado Interstate Corp.
Iver E. Skjeie for appellee, State of California.
Sol. Gen. Irwin N. Griswold for appellee, The United States, at the invitation of Court.
William M. Bennett, San Francisco, Cal., consumer spokesman.
'We do not question the authority of the Attorney General to settle suits after, as well as before, they reach here. The Department of Justice, however, by stipulation or otherwise has no authority to circumscribe the power of the courts to see that our mandate is carried out. No one, except this Court, has authority to alter or modify our mandate. United States v. E. I. du Pont De Nemours & Co., 366 U.S. 316, 325, 81 S.Ct. 1243, 6 L.Ed.2d 318. Our direction was that the District Court provide for 'divestiture without delay.' That mandate in the context of the opinion plainly meant that Pacific Northwest or a new company be at once restored to a position where it could compete with El Paso in the California market.' 386 U.S., at 136, 87 S.Ct. at 937.
'In the present case protection of California interests in a competitive system was at the heart of our mandate directing divestiture. For it was the absorption of Pacific Northwest by El Paso that stifled that competition and disadvantaged the California interests. It was indeed their interests, as part of the public interest in a competitive system, that our mandate was designed to protect.' Id., at 135, 87 S.Ct. at 937.
On remand the District Court decided it should choose from among the various applicants the one that is 'best qualified to make New Company a serious competitor' in the California market. United States v. El Paso Natural Gas Co., 291 F.Supp. 3. That court chose Colorado Interstate Corp., the only gas pipeline operator among the various applicants.
Utah's jurisdictional statement, which she now moves to dismiss, was filed here Noveme r 25, 1968. That jurisdictional statement presents the question whether the decree entered below satisfies our mandate. It is the filing of that jurisdictional statement that brings the question here. See United States v. E. I. duPont De Nemours & Co., 366 U.S. 316, 81 S.Ct. 1243, 6 L.Ed.2d 318. In fact, in its jurisdictional statement, Utah urged that the decree does not meet the requirements of duPont. We thus need not decide whether the papers filed by amicus curiae or Mr. Bennett properly presented the question of compliance. We find that the decree of the District Court does not comply with our mandate: it does not apportion the gas reserves between El Paso and New Company in a manner consistent with the purpose of the mandate, and it does not provide for complete divestiture. We therefore vacate the judgment and remand the case for further proceedings.
When the case was last here we said, 'The gas reserves granted the New Company must be no less in relation to present existing reserves than Pacific Northwest had when it was independent; and the new gas reserves developed since the merger must be equitably divided between El Paso and the New Company. We are told by the intervenors that El Paso gets the new reserves in the San Juan Basin—which due to their geographical propinquity to California are critical to competition in that market. But the merged company, which discovered them, represented the interests both of El Paso and of Pacific Northwest. We do not know what an equitable division would require. Hearings are necessary, followed by meticulous findings made in light of the competitive requirements to which we have adverted.' 386 U.S., at 136—137, 87 S.Ct. at 937.
The District Court awarded 21.8% of the San Juan Basin reserves to the New Company saying that was 'no less in relation to present existing reserves' than Northwest had when it was independent. The District Court also gave the New Company more than 50% of the net additions to the reserves developed since the merger. Concededly the total reserves of the New Company will not be sufficient to meet the old Northwest's existing requirements and those of a California project.
The purpose of our mandate was to restore competition in the California market. An allocation of gas reserves should be made which is 'equitable' with that purpose in mind. The position of the New Company must be strengthened and the leverage of El Paso not increased. That is to say, an allocation of gas reserves particularly those in the San Juan Basin—must be made to rectify, if possible, the manner in which El Paso has used the illegal merger to strengthen its position in the California market. The object of the allocation of gas reserves must be to place New Company in the same relative competitive position vis-a -vis El Paso in the California market as that which Pacific Northwest enjoyed immediately prior to the illegal merger.
A reallocation of gas reserves under this standard may permit an applicant other than Colorado Interstate Corporation to acquire New Company and make it a competitive force in California. Thus, the District Court is directed to effect this reallocation of gas reserves, and, in light of the reallocation, to reopen consideration of which applicant should acquire New Company. Suh consideration should, of course, include whether an award to a particular applicant will have any anti-competitive effects either in the California market or in other markets.
Our mandate directed complete divestiture. The District Court did not, however, direct complete divestiture. Neither appellant nor any party supporting the dismissal argues that the District Court did so. Rather they argue that the disposition made by the District Court was the best that might be made without complete divesture. Clearly this does not comply with our mandate. United States v. E.I. du Pont De Nemours & Co., 366 U.S. 316, 81 S.Ct. 1243, 6 L.Ed.2d 318, was another § 7 case in which we ordered 'complete divestiture.' Id., at 328, 81 S.Ct. at 1251. One plan proposed was a distribution of General Motors shares held by du Pont, most of them to be distributed pro rata over a 10-year period to du Pont stockholders; the rest were to be sold gradually over the same 10-year period. Id., at 319—320, 81 S.Ct. at 1246 1247. Du Pont's alternate plan was to retain all attributes of ownership, passing through to its shareholders the voting rights proportional to their holdings of du Pont shares. We did not approve that plan but directed 'complete divestiture.' Id., at 334, 81 S.Ct. at 1254. We said: 'The very words of § 7 suggest that an undoing of the acquisition is a natural remedy. Divestiture or dissolution has traditionally been the remedy for Sherman Act violations whose heart is intercorporate combination and control.' 366 U.S., at 329, 81 S.Ct. at 1251. We said that divestiture only of voting rights was not an adequate remedy. What was necessary was dissolution 'of the intercorporate community of interest which we found to violate the law.' Id., at 331, 81 S.Ct. at 1253.
The reason advanced for allowing El Paso to take a stock interest in the New Company rather than cash is to reduce its income tax burden. We have emphasized that the pinch on private interests is not relevant to fashioning an antitrust decree, as the public interest is our sole concern. United States v. E.I. du Pont De Nemours & Co., supra, 366 U.S., at 326, 81 S.Ct., at 1250.
All semblance of judicial procedure has been discarded in the headstrong effort to reach a result that four members of this Court believe desirable. In violation of the Court's rules, the majority asserts the power to dispose of this case according to its own notions, despite the fact that all the parties participating in the lower court proceedings are satisfied that the District Court's decree is in the public interest. The majority seeks to justify this extraordinary step on the ground that District Judge Chilson's painstaking opinion of over 30 pages is in violation of the mandate issued in Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 87 S.Ct. 932, 17 L.Ed.2d 814 (1967), although (1) we have heard no oral argument directed to this question1 and (2) we have not ordered the interested parties to file full briefs on this issue. Actualy , as will appear, what the Court has done is to substitute, sua sponte, a new mandate for its old one. I cannot possibly subscribe to such an abuse of the judicial process.
Moreover, even if the impropriety of the Court's precipitate course is swallowed, it seems to me clear that the District Court's decision in the present case did not violate any prior mandate this Court has entered in this long and complicated litigation.2 Rather than frustrating Cascade's command that 'a new company be at once restored to a position where it could compete with El Paso in the California market,' 386 U.S., at 136, 87 S.Ct. at 937, Judge Chilson's decree adopted the solution which, so far as one can now tell most effectively realized the goals of § 7 of the Clayton Act. Indeed, it is unlikely that as a result of the Court's order today, California's natural gas consumers will ever obtain the benefits of competition that this lawsuit was intended to achieve when it was initiated by the Department of Justice in 1957.
The language of the rule could not be clearer—the parties to a lawsuit are given the absolute right to dismiss their appeal without judicial scrutiny. Since 1858, the rules of this Court have expressly recognized the existence of this right, see Rivised Rules of the Sup.Ct. of the United States, Rule No. 29 (1858),3 and I have found no decision in which this right has ever been questioned or limited. Nevertheless, the Court today, without any discussion whatever, ignores the heretofore unquestioned interpretation of the rule and declares that 'there is an exception where the dismissal implicates a mandate we have entered in a cause.' Ante, at 466.
I see no reason why we should turn our back on such basic traditions at this late date. Moreover, if we are to take such drastic action, surely we should not do so in an ad hoc manner, under the pressures of the closing days of the Term. Rather, if we are to change Rule 60, we should do so in an appropriate rule-making proceeding, in which the arguments on both sides of the question may be canvassed with the dispassionate neutrality that is appropriate.
It is with great hesitation that I turn to consider the Court's decision finding Judge Chilson's decree in violation of Cascade's mandate. The case before us is one of enormous complexity. In addition to the plaintiff and defendant, 22 intervenors and nine applicants for the acquisition of the New Company participated in the proceedings below. Judge Chilson heard testimony for more than three months; the record in this case covers more than 14,000 pages, not to mention voluminous exhibits. And yet, we have not received any briefs which even attempt a complete discussion either of the merits of this case or of the question whether our mandate has been followed in a satisfactory way. The Jurisdictional Statement submitted by the State of Utah properly does not suggest that this case is suitable for summary disposition and simply attempts to persuade the Court that the questions presented are substantial. The documents filed in support of Judge Chilson's decision are no more satisfactory. While many of the parties who participated below have tendered motions in support of Utah's request to dismiss its appeal, these papers principally discuss the reasons why each party was satisfied with the result reached below and do not attempt a full-scale analysis of the merits of this extended and complicated controversy. Only the Memorandum submitted by the Solicitor General deals with the substance of the case in any significant way, since it contains the Government's Motion to Affirm which had been prepareda § an answer to Utah's Jurisdictional Statement. Yet the Government's 18-page document does not pretend to deal thoroughly with this case's factual intricacies.
Despite the inadequate briefing, however, enough emerges from the record to suggest that, far from disobeying Cascade's mandate, Judge Chlson made a decision which may well be the only one which realistically promises to fulfill the purposes of the Clayton Act.
'The Government * * * (in) its Brief * * * states: 'It is too early to predict the ultimate direction or final outcome of this current FPC proceeding. The opportunity it presents to the new company which is to emerge from this law suit is evident. If a full scale 42-inch proceeding gets underway * * * the new company should be equipped to enter as a contender with at least the minimum qualifications for serious consideration." 291 F.Supp., at 27—28.
Despite the fact that the Clayton Act may well be the loser, the majority prolongs this lawsuit for two reasons. First, it is said that the District Court violated Cascade's requirement that '(t)he gas reserves granted the New Company must be no less in relation to present existing reserves than Pacific Northwest had when it was independent; and the new gas reserves developed since the merger must be equitably divided between El Paso and the New Company.' 386 U.S., at 136—137, 87 S.Ct. at 937. But the Court's own discussion of this question unmistakeably demonstrates that Judge Chilson fully complied with this branch of Cascade's mandate. The Court cannot and does not deny that Judge Chilson granted reserves to the New Company which are "no less in relation to present existing reserves' than Northwest had when it was independent.' See ante, at 469. The only question that remains is whether the District Court decreed an 'equitable' division of gas resources discovered since the merger. The answer to this question also seems quite easy, since the Court does not deny that Judge Chilson granted New Company about 50% of these reserves, which is much more than its proportionate share of the assets.
Although this equal division seems more than equitable to the New Company, the majority fastens on the fact that even with this distribution of resources, the New Company will not be assured of sufficient gas both to meet the anticipated demand of New Company's present customers in the Pacific Northwest and to satisfy the requirements of its potential customers in the California market. This indeed would be a source of concern if it were found that New Company could not practically obtain additional gas resources if it decides to compete in California. But Judge Chilson concluded that just the opposite situation obtains; the District Court found that the New Company 'can obtain the reserves necessary to compete in the California market.' 291 F.Supp., at 20. The Court, however, ignores this finding completely and does not even attempt to show how, given this fact, New Company's equal share of reserves can in any sense be called 'inequitable.' Indeed, it is perfectly clear that the Court, under the guise of enforcing its mandate, is really creating a new, and more stringent, standard by which to test this divestiture. But surely this is completely illegitimate in a case where no party has challenged the legality of the District Court's decision, and where, at the most, the issue is the lower court's compliance with our previous mandate.
The Court's second ground for claiming disobedience with Cascade's command is equally untenable. It is said that Cascade ordered 'complete divestiture' without delay and we are told that no divestiture can be complete unless there is a cash sale. Since the trial court did not order a cash sale, the majority finds that Cascade's mandate has not been obeyed.
Since Cascade did not require a cash sale it is difficult to see how the present divestiture plan, in which all the common stock of the New Company is transferred to CIG is a per se violation of this Court's earlier mandate. Once again, the Court has created a new standard for judging the validity of the District Court's decision instead of limiting itself to a consideration of whether the decree fulfilled Cascade's demand 'that El Paso interests do not acquire a controlling interest' in the New Company.
'the decree does not prohibit members of the families of such prohibited purchasers from obtaining New Company stock. Further, under the terms of the decree, it would be ps sible for a group of El Paso stockholders, each with less than one-half of one percent of El Paso stock, to acquire at the initial public offering enough New Company stock substantially to influence or even to dominate the New Company. Or, such a group could combine with the families of prohibited purchasers in order to control the New Company. After the exchange or public offering, there is no restriction on the number of New Company shares El Paso shareholders may acquire. Thus, there is a danger that major El Paso stockholders may, subsequent to the exchange or public offering, purchase large blocks of New Company stock and obtain effective control.' 386 U.S., at 140—141, 87 S.Ct. at 939.
It may be that, on appeal, even these stringent conditions may not be found to have fully satisfied the purposes of the Clayton Act. A decision of this question would of course require an analysis of the financial structure of El Paso in order to determine whether it was possible for the Company or its owners to evade the conditions imposed upon them. But it is surely impossible to hold on this record that Judge Chilson's decree is a violation of the mandate issued in Cascade when the present divestiture plan manifests a conscientious effort to comply with all of the suggestions advanced by the Court in that opinion.8 Indeed, the majority today does not even attempt to make such a claim. Instead, it ignores the fact that the District Court carefully framed conditions to assure the New Company's independence. At no point in its brief opinion does the Court analyze this aspect of Judge Chilson's decree, contenting itself with the cryptic comment that 'it is said * * * (that) there will be provisions to restrict El Paso control over the New Company.' Ante, at 468.
What eventuates today evinces a course of unjudicial action that transcends even that which marked the last appearance of the case in this Court. See the dissenting opinion of Stewart, J., in Cascade, 386 U.S. 129, 143, 87 S.Ct. 932, 940.
'The motion of appellant to dismiss the appeal under Rule 60 and the motion of William M. Bennett for a hearing are set for oral argument on April 29, 1969. The Solicitor General is invited to file a brief and present oral argument if he so desires. Mr. Justice Harlan and Mr. Justice Stewart dissent, believing that the action taken by the Court abuses its own processes. See Rule 60. Mr. Justice White, Mr. Justice Fortas, and Mr. Justice Marshall took no part in the consideration or decision of this matter.' 394 U.S. 970, 89 S.Ct. 1453, 22 L.Ed.2d 751 (1969). Pursuant to the Court's order, the parties used their limited time for oral argument in an effort to satisfy the Court that they had acted properly in refusing to take an appeal from the District Court's decision. No party presented any substantial arguments on the merits of this case.
See Cascade Natural Gas Corp. v. El Paso Natural Gas Co., supra; United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964); cf. California v. Federal Power Commission, 369 U.S. 482, 82 S.Ct. 901, 8 L.Ed.2d 54 (1962).
It is of course perfectly appropriate for a court to make an independent judgment as to the merits of an antitrust consent decree which the parties submit for approval. See, e.g., United States v. Pan American World Airways, Inc., 1959 Trade Cas. 69,300, at 75,138 (D.C.S.D.N.Y.). For in the consent decree context, the parties are requesting affirmative action from the judiciary in order to resolve their dispute, while in the situation we confront, none of the parties are requesting further judicial relief.
See In re Potts, 166 U.S. 263, 17 S.Ct. 520, 41 L.Ed. 994 (1897); cf. In re Sanford Fork & Tool Co., 160 U.S. 247, 16 S.Ct. 291, 40 L.Ed. 414 (1895); Ex parte The Union Steamboat Co., 178 U.S. 317, 20 S.Ct. 904, 44 L.Ed. 1084 (1900).
The Court does not decide whether the papers opposing Utah's motion to dismiss which were presented by John J. Flynn and I. Daniel Stewart, as amicus curiae, and those tendered by William M. Bennett, as 'consumer spokesman,' may be properly considered at this late stage in the proceedings. Since the Court does not reach this question, I do not believe it appropriate to state my views on the matter; nor have I believed it proper to consider in any way the arguments made by Messrs. Flynn, Stewart, and Bennett.
The Court relies heavily on United States v. E.I. du Pont De Nemours & Co., 366 U.S. 316, 81 S.Ct. 1243, 6 L.Ed.2d 318 (1961), to support its claim that Cascade's mandate has been breached. But du Pont only holds that the District Court must assure itself that 'the inter-corporate community of interest which we found to violate the law' must be dissolved by divestiture. 366 U.S., at 331, 81 S.Ct. at 1253. Nothing in du Pont suggests, let alone holds, that a cash sale is the only way to accomplish this objective. Like Cascade, du Pont established no per se rule in this area.

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