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Pan-islamic Trade Corporation, Plaintiff-appellant, v. Exxon Corporation et al., Defendants-appellees, 632 F.2d 539 (5th Cir. 1980) :: Justia
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Pan-islamic Trade Corporation, Plaintiff-appellant, v. Exxon Corporation et al., Defendants-appellees, 632 F.2d 539 (5th Cir. 1980)
US Court of Appeals for the Fifth Circuit - 632 F.2d 539 (5th Cir. 1980) Dec. 10, 1980
Pan-Islamic Trade Corporation ("Pan-Islamic") brought suit against sixteen oil companies,1 claiming that it was prevented from selling Algerian crude oil which it had purchased from Sonatrach, the national oil company of Algeria, as a result of an unlawful worldwide boycott and conspiracy against Algerian oil entered into by the defendant oil companies. Pan-Islamic alleged violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1 and 2, and tortious interference with contract rights. During the course of the litigation below, Pan-Islamic moved for, but was denied, leave to file an amended complaint. After discovery, the trial court, in a decision reported at 1976-2 Trade Cas. P 61,024 (S.D. Tex. 1976), granted all the defendants' motions for summary judgment with respect to all claims. The issues we must decide on this appeal are (1) whether leave to amend should have been granted, (2) whether discovery was improperly limited, and (3) whether summary judgment should have been granted the defendants with respect to the Section 1 Sherman Act claim.2 We affirm the trial court's decision in all respects.
Fed. R. Civ. P. 15(a)10 provides that a trial court is to grant amendments "freely when justice so requires." Appellate review is restricted to determining whether the trial court abused its discretion in granting or denying leave to amend. Zenith Radio Corp. v. Hazeltine Research, 401 U.S. 321, 330, 91 S. Ct. 795, 802, 28 L. Ed. 2d 771 (1971); Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d 222 (1962); Henderson v. United States Fidelity & Guaranty Co., 620 F.2d 530 (5th Cir. 1980). The trial court can consider many factors in exercising its discretion, "such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment " Foman v. Davis, 371 U.S. at 182, 83 S. Ct. at 230; Henderson v. United States Fidelity & Guaranty Co., 620 F.2d at 534. The trial court can also examine whether undue prejudice to the movant will result from denying leave to amend. Henderson v. United States Fidelity & Guaranty Co., 620 F.2d at 534. Clearly, if a complaint as amended is subject to dismissal, leave to amend need not be given. DeLoach v. Woodley, 405 F.2d 496 (5th Cir. 1969); Byrne v. Kysar, 347 F.2d 734 (7th Cir. 1965), cert. denied, 383 U.S. 913, 86 S. Ct. 902, 15 L. Ed. 2d 668 (1966).
has been construed to impose a standing requirement on antitrust civil litigants. Not simply anyone arguably injured by an antitrust violation may bring suit. Even though an individual may suffer a pocketbook injury, he must be the "target" of the anti-competitive practice before he may sue. Jeffrey v. Southwestern Bell, 518 F.2d 1129, 1131 (5th Cir. 1975). The Supreme Court has noted with approval that "(t)he lower courts have been virtually unanimous in concluding that Congress did not intend the antitrust laws to provide a remedy in damages for all injuries that might conceivably be traced to an antitrust violation." Hawaii v. Standard Oil Co., 405 U.S. 251, 262, n.14, 92 S. Ct. 885, 891, n.14, 31 L. Ed. 2d 184 (1972).
The determination of standing is a preliminary one, to be answered only from an examination of the allegations of the complaint. In re Beef Industry Antitrust Litigation, 600 F.2d 1148, 1168 (5th Cir. 1979), other claims addressed, 607 F.2d 167 (5th Cir. 1979), cert. denied, --- U.S. ----, 101 S. Ct. 280, 65 L. Ed. 2d --- (1980); Yoder Bros., Inc. v. California-Florida Plant Corp., 537 F.2d 1347, 1359 (5th Cir. 1976), cert. denied, 429 U.S. 1094, 97 S. Ct. 1108, 51 L. Ed. 2d 540 (1977). Pan-Islamic, as indicated in both the original complaint and in the amended complaint, has no connection with the oil business other than its single contract with Sonatrach and its attempt to resell the Algerian crude. There is no allegation that Pan-Islamic intended to remain and establish itself in the oil brokerage business after completion of the Sonatrach contract. Pan-Islamic does not allege that it is a competitor in any of the five areas of the oil industry for which it alleges antitrust violations, or that it intends to enter these areas. The only injury claimed is its inability to sell the oil it purchased in the Sonatrach contract.
Pan-Islamic complains that the trial court improperly limited discovery, wrongfully restricting discovery both in time and in scope. Clearly, if Pan-Islamic did not have an adequate opportunity to discover facts to oppose the motion for summary judgment, granting summary judgment would be improper. First-National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1968); George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix, Corp., 554 F.2d 551 (2nd Cir. 1977); Parrish v. Board of Commissioners of Alabama State Bar, 533 F.2d 942 (5th Cir. 1976); see also Hospital Building Co. v. Rex Hospital Trustees, 425 U.S. 738, 96 S. Ct. 1848, 48 L. Ed. 2d 338 (1976) (dismissals in antitrust cases prior to giving plaintiff ample opportunity for discovery to be used sparingly). After a careful review of the record, we are convinced that Pan-Islamic had ample opportunity to engage in discovery on all issues encompassed by its original complaint and to bring appropriate motions to compel answers and the production of documents.
On January 6, 1975, Pan-Islamic filed its Motion for Leave to Amend its Complaint and a motion that the case be handled pursuant to the Manual for Complex Litigation. Thereafter, Pan-Islamic did not initiate any discovery until it filed its First Set of Interrogatories to the defendants on June 11, 1975, fourteen months after the complaint was filed. At this time the trial court had not ruled on Pan-Islamic's motion to amend its complaint. These interrogatories consisted largely of very general, broad questions designed to ascertain what records were available and the identities of responsible officials. They were extensive, consisting of 120 questions, and were wide ranging, encompassing issues within both the original and amended complaint. All the defendants filed answers and objections to Pan-Islamic's interrogatories by October 8, 1975. The responses to these interrogatories among the defendants, not surprisingly, varied extensively. Many of the defendants identified relevant records and documents and indicated a willingness for Pan-Islamic to inspect and copy these documents. Some of the defendants objected on various grounds to questions arguably relevant to the issues of the original complaint. All of the defendants objected to the bulk of the questions on the grounds that such questions were relevant only with respect to the proposed amended complaint, on which the trial court had not yet ruled. Despite the paucity of answers to its interrogatories, Pan-Islamic did not move for a motion to compel answers to interrogatories pursuant to Fed. R. Civ. P. 37(a). Nor did it attempt any further discovery in the form of depositions, additional interrogatories, requests for production of documents, or follow-ups on those offers permitting Pan-Islamic to inspect and copy records.
We test Pan-Islamic's contention of improperly curtailed discovery against the familiar standard that the trial court has wide discretion in determining the scope and effect of discovery. Blum v. Gulf Oil Corp., 597 F.2d 936 (5th Cir. 1979); Washington v. Norton Manufacturing, Inc., 588 F.2d 441 (5th Cir.), cert. denied, 442 U.S. 942, 99 S. Ct. 2886, 61 L. Ed. 2d 313 (1979); Aviation Specialities, Inc. v. United Technologies Corp., 568 F.2d 1186 (5th Cir. 1978).
Finally, Pan-Islamic argues that the trial court erred in failing to compel any answers to Pan-Islamic's interrogatories. The defendant oil companies counter by arguing that Pan-Islamic made no motions to compel and is raising this issue for the first time on appeal. Pan-Islamic maintains that although it may have failed to file any formal motions to compel answers, its motion to reconsider the trial court's initial refusal to extend discovery made it clear that it believed such motions had been filed and was tantamount to actually filing such a motion. The resolution of this issue is muddied somewhat by the trial court's ruling, despite its belief that no motions had been filed, that those interrogatories not answered pertained only to the amended complaint and could not be compelled. We begin our resolution of this issue by noting that the Federal Rules of Civil Procedure provide that if a party objects to or fails to answer interrogatories, the party submitting the interrogatories may move the court for an order under Fed. R. Civ. P. 37(a) compelling an answer. Fed. R. Civ. P. 33(a). An objection to an interrogatory is not passed on by a court unless a motion to compel under Rule 37(a) is made. Fed. R. Civ. P. 33(a); 8 Wright and Miller, Federal Practice & Procedure, Civil, § 2173 (1970). We refuse to hold in the circumstances of this case that Pan-Islamic's statement to the trial court indicating a belief that a motion had been made was the same thing as making such a motion.20 Its statement did not alert its opponents to the need to oppose a pending motion. The statement made by Pan-Islamic was unaccompanied by a supporting brief or any specification of precisely what was sought to be compelled and why such compulsion was justified. Neither the defendants nor the trial court knew why Pan-Islamic believed itself entitled to certain answers. Neither had an opportunity to make a fully informed and rational decision, respectively, of whether or not to answer or to compel answers to the interrogatories Pan-Islamic wanted. Accordingly, we conclude that Pan-Islamic made no proper motion to compel below and thus did not properly present the issue before the trial court and, accordingly, its contention must fail.
Pan-Islamic relies heavily on Poller v. CBS, 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962), to argue that summary judgment may not be granted in a complicated antitrust case. The Supreme Court held in Poller that where there is substantial factual evidence tending to show the existence of a conspiracy to eliminate a competitor and where the crucial question is motive, summary judgment should be used sparingly.21 Poller, though, has not eliminated summary judgment from antitrust litigation. Many cases in this and other circuits have upheld summary judgment for defendants in antitrust suits.22
The holding in First National Bank v. Cities Service Co., 391 U.S. 253, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1968), has a significance equal to the cautionary language of Poller. Cities Service is very similar to the instant case. There the plaintiff unsuccessfully attempted to sell Iranian oil to several major oil companies. He alleged that his attempts were frustrated by a worldwide conspiracy to boycott Iranian oil in response to Iran's nationalization of certain assets. The question before the Supreme Court was whether summary judgment had been properly granted with respect to one defendant, Cities Service Company. In answering this question, the Supreme Court took the allegation of conspiracy among the other defendants to boycott Iranian oil to be both true and legally sufficient. 391 U.S. at 274, n.13, 88 S. Ct. at 1585, n.13. The facts the plaintiff produced to demonstrate participation by Cities Service in the conspiracy were the abrupt decision by Cities Service not to purchase the Iranian oil despite extensive negotiations with the plaintiff and the attractiveness of the plaintiff's offer. The Court noted that these facts standing alone might well be sufficient to require the case to be presented to a jury to determine the motives of Cities Service for not dealing with the plaintiff. But, significantly, the Court upheld summary judgment, noting that there was such an overwhelming amount of contrary evidence as to Cities Service's motives that summary judgment was proper. Among the factors supporting summary judgment were (1) that Cities Service had been engaged in negotiations to purchase Kuwait oil which it bought instead of the Iranian oil long before the offer by the plaintiff of Iranian oil was made, and (2) the obvious lack of common interests of Cities Service with the other alleged conspirators.
391 U.S. at 280, 88 S. Ct. at 1588. In significant language qualifying the Poller caution against use of summary judgment in antitrust litigation, the Court stated:
Ibid. at 291, 88 S. Ct. at 1593.
It is clear that this circuit has heeded the language in Cities Service. When faced with defendants' sworn denial of the existence of a conspiracy, it is incumbent upon the plaintiff to produce significant probative evidence demonstrating that a genuine issue of fact exists as to this element of the complaint. Aviation Specialities, Inc. v. United Technologies Corp., 568 F.2d 1186 (5th Cir. 1978); Solomon v. Houston Corrugated Box Co., 526 F.2d 389 (5th Cir. 1976); Scranton Construction Co. v. Litton Industries Leasing Corp., 494 F.2d 778 (5th Cir. 1974), cert. denied, 419 U.S. 1105, 95 S. Ct. 774, 42 L. Ed. 2d 800 (1975).23
In light of the evidence offered by the defendant oil companies rebutting Pan-Islamic's conspiracy allegation, Pan-Islamic must produce significant, probative evidence supporting its complaint. Pan-Islamic attempts to rebut the defendants' motion for summary judgment with both direct and circumstantial evidence of a conspiracy. Part of Pan-Islamic's circumstantial evidence relies upon the theory of conscious parallelism. Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 74 S. Ct. 257, 98 L. Ed. 273 (1954). We have thoroughly reviewed the evidence Pan-Islamic offers to rebut the defendants' summary judgment motion. This review reveals a total lack of any significant, probative evidence supporting the existence of a conspiracy. We first discuss Pan-Islamic's allegation that there was a French-sponsored boycott of Alergian oil, and then we discuss Pan-Islamic's reliance on the theory of conscious parallelism.
Many of the factors the Supreme Court noted in dicta in First National Bank of Arizona v. Cities Service Co., supra, as supporting the existence of an English-supported boycott of Iranian oil in that case are lacking in this case. There is nothing in the record indicating the direct promulgation throughout the oil industry by the French government or oil companies of a threat to take all actions to protect their rights, including lawsuits, against those dealing in Algerian oil. Ibid. 391 U.S. at 278, 88 S. Ct. at 1585.25 There is no indication of communication by the defendant oil companies of their support of the French position and of their intention to refuse to deal with any company dealing with Algerian oil. Ibid. There is no admissible evidence indicating that the numerous oil companies contacted by Pan-Islamic stated that their refusal to purchase its oil stemmed from fear of retaliation. Ibid. There is no indication of any threats by the defendant oil companies to boycott companies leasing tankers to transport Algerian oil. Ibid. Nor has Pan-Islamic established the holdings of the defendant oil companies in foreign countries where nationalization might be a threat. Such a fact, if established, might establish a motive for the oil companies to boycott Algerian oil after its nationalization of French oil. Ibid.
Mr. Burns' affidavit consists primarily of statements allegedly made by Joseph Buchanan, the president of Petroco, to Mr. Burns or to representatives of Sonatrach in Mr. Burns' presence. Mr. Buchanan allegedly stated that the difficulty Sonatrach was having in selling its oil resulted from a boycott of Algerian crude. Fed. R. Civ. P. 56(e) requires that affidavits in support of or opposition to a summary judgment motion set forth facts that would be admissible in evidence. It is well established that hearsay evidence in such affidavits is entitled to no weight. 6 Moore's Federal Practice P 56.22(1) (2d ed. 1979); Munoz v. International Alliance of Theatrical Stage Employees, Etc., 563 F.2d 205, 213 (5th Cir. 1977); Broadway v. City of Montgomery, Alabama, 530 F.2d 657 (5th Cir. 1976). The statements which Burns attributes to Buchanan constitute hearsay under Fed.R.Evid. 801 and are inadmissible under Rules 802-804 to prove the truth of the matters asserted.
Icsel's testimony concerning Routhier's statement is admissible as an admission by a party opponent. Fed.R.Evid. 801(d) (2). Accordingly, we must determine what inferences may be drawn from this statement. In evaluating Icsel's testimony, we are required to indulge in every reasonable inference in favor of Pan-Islamic. The court, however, need only make reasonable inferences. In this court's modification of the opinion in American Telephone and Telegraph Co., we stated:
Having found the bulk of Pan-Islamic's evidence supporting a French-supported boycott inadmissible, and having found no evidence establishing a motive to join a boycott of Algerian oil, Pan-Islamic in effect asks us to infer a conspiracy on the basis of Routhier's single statement, uncorroborated by other evidence. The statement is ambiguous, perhaps reflecting a willingness by Routhier to reconsider the competitiveness of Pan-Islamic's asking price should another company buy its oil. While it is undisputed that circumstantial evidence can establish the existence of a conspiracy in antitrust litigation, Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S. Ct. 467, 83 L. Ed. 610 (1939), we have found no case where an inference of conspiracy was permitted based on such a slender reed.29 Such a statement standing alone is inadequate to support an inference of the existence of an agreement. It fails to constitute the "substantial factual evidence tending to show the existence of a conspiracy," as required by Cities Service.
Because Pan-Islamic does not discuss either in its brief or in oral argument the trial court's holding on its claim of tortious interference and on the Section 2 Sherman Act claim, these claims are considered abandoned. Fed. R. App. P. 28(a) (4); Harris v. Plastics Manufacturing Co., 617 F.2d 438 (5th Cir. 1980)
Fed. R. Civ. P. 15(a) reads in full:
This section of the Clayton Act is notably different from § 16, 15 U.S.C.A. § 26, which provides for injunctive relief. The Supreme Court, in Hawaii v. Standard Oil Co., 405 U.S. 251, 92 S. Ct. 885, 31 L. Ed. 2d 184 (1972), discusses the different rules and policies behind these two standing provisions. Because Pan-Islamic does not request injunctive relief, we need not address the question of standing under § 16
Billy Baxter, Inc. v. Coca-Cola Co., 431 F.2d 183 (2d Cir. 1970), cert. denied, 401 U.S. 923, 91 S. Ct. 877, 27 L. Ed. 2d 826 (1971) (franchisor has no standing to sue alleging antitrust violations reducing sales of franchisee and thereby reducing profits of franchisor); Reibert v. Atlantic Richfield Co., 471 F.2d 727 (10th Cir.), cert. denied, 411 U.S. 938, 93 S. Ct. 1900, 36 L. Ed. 2d 399 (1973) (employee has no standing to allege illegal merger resulting in loss of job); Jeffrey v. Southwestern Bell, supra, (telephone subscribers have no standing to complain of alleged attempt to monopolize telephone equipment market by phone company by below cost pricing, resulting in higher phone rates to subsidize loss); Southern Concrete Co. v. United States Steel Corp., 535 F.2d 313 (5th Cir. 1976), cert. denied, 429 U.S. 1096, 97 S. Ct. 1113, 51 L. Ed. 2d 543 (1977) (manufacturer of ready-mix concrete has no standing to complain of alleged tying arrangement between seller of cement and a competitor in ready-mix concrete); Donovan Construction Co. of Minnesota v. Florida Telephone Corp., 564 F.2d 1191 (5th Cir. 1977), cert. denied, 435 U.S. 1007, 98 S. Ct. 1878, 56 L. Ed. 2d 389 (1978) (electrical construction contractor has no standing to allege antitrust violation when defendant in phone interconnect business terminated contract when plaintiff entered interconnect business in another area); In re Beef Industry Antitrust Litigation, 600 F.2d 1148 (5th Cir. 1979), other claims addressed, 607 F.2d 167 (5th Cir. 1979), cert. denied, --- U.S. ----, 101 S. Ct. 280, 65 L. Ed. 2d --- (1980) (cattle farmers and ranchers have no standing to allege retail price fixing by grocers, resulting in reduced consumer demand for beef).
368 U.S. at 473, 82 S. Ct. at 491.
Such cases from the Fifth Circuit include: Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107 (5th Cir. 1979); Daniels v. All Steel Equipment, Inc., 590 F.2d 111 (5th Cir. 1979); American Telephone & Telegraph Co. v. Delta Communications Corp., 408 F. Supp. 1075 (S.D. Miss. 1976), aff'd 579 F.2d 972, modified in part, 590 F.2d 100 (5th Cir. 1978); Aviation Specialities, Inc. v. United Technologies Corp., 568 F.2d 1186 (5th Cir. 1978); Solomon v. Houston Corrugated Box Co., 526 F.2d 389 (5th Cir. 1976); Scranton Construction Co. v. Litton Industries Leasing Corp., 494 F.2d 778 (5th Cir. 1974), cert. denied, 419 U.S. 1105, 95 S. Ct. 774, 42 L. Ed. 2d 800 (1975)
Norfolk Monument Co., Inc. v. Woodlawn Memorial Gardens, Inc., 394 U.S. 700, 89 S. Ct. 1391, 22 L. Ed. 2d 658 (1969) (In complaint that defendant cemeteries and burial monument manufacturer conspired to deprive plaintiff monument manufacturers of market in defendant cemeteries, evidence included facts that pamphlets circulated by one defendant among other defendants suggested competitive barriers to plaintiff retailers of burial monuments, that defendant cemeteries required burial monuments of specified alloy manufactured by co-defendant, that plaintiffs had presented evidence attacking the reasonableness of the requirement of a specified alloy, that defendant cemeteries attempted to dissuade purchasers from buying plaintiffs' monuments, and defendants' refusal to let plaintiffs install monuments plaintiffs sold); cf. Moore v. Jas. H. Matthews & Co., 473 F.2d 328 (9th Cir. 1973) (similar facts and similar result.)
Pan-Islamic argues that Bogosian v. Gulf Oil Corp., 561 F.2d 434 (3d Cir. 1977), cert. denied, 434 U.S. 1086, 98 S. Ct. 1280, 55 L. Ed. 2d 791 (1978), establishes that it need not prove it contacted each of the defendants to maintain its conscious parallelism allegation. We do not so read Bogosian. There the Third Circuit held that a complaint alleging oil companies engaged in interdependent parallel conduct by tying their products to leases of stations stated a cause of action even though the plaintiff had business dealings with only one of the defendants. There was, however, sufficient allegation of genuine parallel conduct, i. e., each defendant tying its products with leases of stations. Accordingly, nothing in Bogosian can be construed as obviating in a conscious parallelism action the need to show parallel conduct among each defendant to be held liable