Source: https://m.openjurist.org/492/us/1301/california-v-american-stores-company
Timestamp: 2020-07-13 22:22:30
Document Index: 708424852

Matched Legal Cases: ['§ 328', '§ 26', '§ 16', '§ 16', '§ 16', '§ 328', '§ 328', '§ 16', '§ 216', '§ 18', '§ 7', '§ 18', '§ 5', '§ 45']

492 US 1301 California v. American Stores Company | OpenJurist
492 U.S. 1301 - California v. American Stores Company
In its application for a stay of the mandate pending this Court's disposition of its petition for certiorari, applicant contends that the Court of Appeals' bond requirement amounts to a denial of a stay and will result in irreparable harm to the State's consumers because of the merger's anticompetitive effects. Applicant also maintains that there is both a reasonable probability that its petition for a writ of certiorari will be granted, because the case presents an issue of great importance on which there is a conflict among the circuits, and a fair prospect that applicant will prevail on the merits. Finally, applicant asserts that the equities justify a stay of the Court of Appeals' mandate.
I am persuaded that applicant has set forth sufficient reasons for granting a stay in this case. I agree with both the District Court and the Court of Appeals that applicant has made an adequate showing of irreparable injury. See 872 F.2d, at 844 (lessening of competition "is precisely the kind of irreparable injury that injunctive relief under section 16 of the Clayton Act was intended to prevent") (citations omitted); 697 F.Supp., at 1134. Even if applicant is free to seek other appropriate injunctive relief on remand, the possibility of irreparable injury, it seems to me, remains to the extent that such other relief would be inadequate to remedy the injury. Cf. 2 P. Areeda & D. Turner, Antitrust Law § 328b, p. 137 (1978) ("divestiture is the normal and usual remedy against an unlawful merger, whether sued by the government or by a private plaintiff").
Moreover, the issue presented appears to be an important question of federal law over which the Circuits are in conflict. Section 16 of the Clayton Act provides in relevant part that "[a]ny person . . . shall be entitled to sue for and have injunctive relief . . . against threatened loss or damage by a violation of the antitrust laws . . . when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity." 15 U.S.C. § 26. The Court of Appeals, relying on Circuit precedent, held that divestiture, whether direct or indirect, did not constitute "injunctive relief" within the meaning of § 16. See 872 F.2d, at 844-846 (citing International Telephone & Telegraph Corp. v. General Telephone & Electronics Corp., 518 F.2d 913, 920 (CA9 1975)); accord Arthur S. Langenderfer, Inc. v. S.E. Johnson Co., 729 F.2d 1050, 1060 (CA6), cert. denied, 469 U.S. 1036, 105 S.Ct. 510, 83 L.Ed.2d 401 (1984). As applicant notes, however, the Court of Appeals for the First Circuit has ruled that divestiture is a remedy available to private plaintiffs under § 16 in appropriate circumstances. Cia. Petrolera Caribe, Inc. v. Arco Caribbean, Inc., 754 F.2d 404, 413-430 (1985); see also NBO Industries Treadway Cos. v. Brunswick Corp., 523 F.2d 262, 278-279 (CA3 1975) (dictum), vacated on other grounds, 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). A number of District Courts have also reached the same conclusion. See, e.g., Tasty Baking Co. v. Ralston Purina, Inc., 653 F.Supp. 1250, 1255-1256 (ED Pa.1987); Julius Nasso Concrete Corp. v. Dic Concrete Corp., 467 F.Supp. 1016, 1024-1025 (SDNY 1979); Credit Bureau Reports, Inc. v. Retail Credit Co., 358 F.Supp. 780, 797 (SD Tex.1971), aff'd, 476 F.2d 989 (CA5 1973); Bay Guardian Co. v. Chronicle Publishing Co., 340 F.Supp. 76, 81-82 (ND Cal.1972). Given the conflict among the lower courts on this important and recurring issue and the need for uniform enforcement of federal antitrust laws, I think it fair to say that there is a reasonable probability that the petition for a writ of certiorari will be granted in this case.
Indeed, the weight of academic commentary favors a reading of § 16 that would permit divestiture as a remedy in private actions. See, e.g., 2 P. Areeda & D. Turner, Antitrust Law § 328b, p. 137 (1978) ("divestiture is available in a private suit challenging unlawful mergers"); P. Areeda & H. Hovenkamp, Antitrust Law § 328'b, pp. 290-291 (Supp.1988) (approving Petrolera, supra ); E. Kintner, Primer on the Law of Mergers 361-364 (1973) (divestiture is available in private actions under § 16); L. Sullivan, Antitrust § 216, p. 672, n. 3 (1977) (same); Kintner & Wilberding, Enforcement of the Merger Laws by Private Party Litigation, 47 Ind.L.J. 293 (1972); Peacock, Private Divestiture Under Section 16 of the Clayton Act, 48 Tex.L.Rev. 54 (1969); Comment, Private Divestiture: Antitrust's Latest Problem Child, 41 Ford.L.Rev. 569 (1973); Note, The Use of Divestiture in Private Antitrust Suits, 43 Geo.Wash.L.Rev. 261 (1974); Note, Availability of Divestiture in Private Litigation as a Remedy for Violation of Section 7 of the Clayton Act, 49 Minn.L.Rev. 267 (1964); Comment, Section 16 of the Clayton Act: Divestiture an Intended Type of Injunctive Relief, 19 Pac.L.J. 143 (1987). Although I cannot, of course, predict with mathematical certainty my colleagues' views on the subject, see New Motor Vehicle Board v. Orrin W. Fox Co., 434 U.S. 1345, 1347, 98 S.Ct. 359, 361, 54 L.Ed.2d 439 (1977) (Rehnquist, J., in chambers), this commentary suggests to me that plausible arguments exist for reversing the decision below and that there is at least a fair prospect that a majority of the Court may vote to do so. Cf. Zenith Radio Corp. v. Hazeltine Re- search, Inc., 395 U.S. 100, 130-131, 89 S.Ct. 1562, 1580-81, 23 L.Ed.2d 129 (1969) ("Section 16 should be construed and applied . . . with the knowledge that the remedy it affords, like other equitable remedies, is flexible and capable of nice 'adjustment and reconciliation between the public interest and private needs as well as between competing private claims.' . . . Its availability should be 'conditioned by the necessities of the public interest which Congress has sought to protect' ") (citation omitted).
Finally, balancing the stay equities persuades me that the harm to applicant if the stay is denied, in the form of a substantial lessening of competition in the relevant market, outweighs the harm respondents may suffer as a result of a stay of the mandate. Applicant alleges, for example, that permitting the merger would cost the State's consumers $400 million a year in higher prices. Respondents contend that they are incurring costs of over $1 million a week by reason of the District Court's injunction and applicant's decision to file suit after the merger had been consummated. To be sure, the cost of enjoining a merger before consummation is staggering, see Western Airlines, Inc. v. Teamsters, 480 U.S. 1301, 1309, 107 S.Ct. 1515, 1519, 94 L.Ed.2d 744 (1987) (O'Connor, J., in chambers), and the cost of enjoining an already completed transaction even greater. But, as the District Court found, "the State conducted [its] investigation as swiftly as was responsibly possible." 697 F.Supp., at 1135. Under the circumstances, and in light of the public interests involved, it appears that the equities favor the applicant.
American Stores initiated a hostile takeover bid for the Lucky chain on March 21, 1988. Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, 90 Stat. 1390, 15 U.S.C. § 18a, American Stores notified the Federal Trade Commission (FTC) of its intentions. On May 23, American Stores increased its tender offer, and Lucky's board of directors approved the merger. On May 31, the FTC filed an administrative complaint alleging violations of § 7 of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 18, and § 5 of the Federal Trade Commission Act, 38 Stat. 719, as amended, 15 U.S.C. § 45. The FTC simultaneously proposed a consent order under which it would settle its antitrust complaint in exchange for American Stores' compliance with certain demands, including divestiture of certain supermarkets in northern California and an agreement to "hold separate" the two firms until American Stores satisfied all of the consent order's conditions. American Stores agreed to the consent order, and by June 9 completed its $2.5 billion acquisition of the outstanding Lucky stock. On August 31, the FTC gave final approval to the proposed consent order without modification. On September 1, applicant initiated the underlying action.