Warren E. Burger: We'll hear arguments first this morning in 77-10, Exxon Corporation against the Governor of Maryland and the related and consolidated cases. Mr. Simon you may proceed whenever you're ready.
William H. Simon: Mr. Chief Justice and may it please the Court. Appellants challenge the constitutionality of the paragraphs B and C of Chapter 854 of the Maryland Statutes to which I would devote 20 minute and paragraph D of the same statute to which I would devote 10 minutes under the Commerce Clause and the Supremacy Clause of the Constitution respectively. Paragraph B of the Maryland Act provides that after July 1, 1974, no producer or refiner may open a new service station in Maryland operated by company employees and paragraph C provides that after July 1, 1975, no producer or refiner may operate an existing service station by company employees. As of July 1, 1974 only 6%, 233 out of 3800 of the service stations in Maryland were company operated and only 197 of those by refiners. No crude oil has ever been produced in Maryland and it is unlikely that any ever will be. There is no refinery in Maryland and the state's ecology procedures are such that it is unlikely that there will be any refinery in Maryland at least in this century. And thus all gasoline sold in Maryland is imported into the state in interstate commerce and all refiner marketers in Maryland are out of state firms. To make the purpose of paragraphs B and C crystal clear, in 1975 the legislature enacted an amendment to the statute which expressly provided that all service stations must be operated by dealers. The statute's legislative history, the proceedings in the State Courts and the briefs in this Court, all make crystal clear that the purpose of the statute is to insulate major brand dealers from the competition of more aggressive lower priced merchants and to ensure that Maryland motorists and those who travel into the state will not receive the benefits of service stations that are company operated and are price cutters who sell at lower prices and do eliminate that competition from the service station business in Maryland. The two alleged purposes which the Maryland Court of Appeals gave to sustain the validity of the statute are first that it will prevent monopoly, although they concede that this service station business is highly competitive and many Maryland as well as Federal Laws already prohibit monopolies in any line of commerce and secondly that the statute would permit the fair and equitable rationing of gasoline in the event of emergencies. Although paragraph F of this very act so provides and in 1973 the Congress passed the Emergency Petroleum Allocation Act under which the federal government from that day to this has allocated gasoline supplies to service stations.
William H. Rehnquist: Mr. Simon there had been declining number of retail outlets in Maryland, haven't there, at the time this law was passed?
William H. Simon: Yes Mr. Justice Rehnquist and as will point out later, the number of service stations of any kind and all kinds whether or not this act prevails will continue to decline because the economics of high prices in gasoline going from the $0.20, $0.25 range of the 50s to the $0.60 and $0.65 range of current prices makes it essential that we have high volume stations that can operate more economically and not have the inefficient marginal stations. So there will be a diminution of stations no matter what.
William H. Rehnquist: You say it makes it essential, essential from whose point of view?
William H. Simon: First from the point of view of he who wants to compete for the motorist business and secondly for the motorist who wants to get the benefits of competition in the sale of his gasoline.
William H. Rehnquist: Well so essential that it can override Maryland policy on that point?
William H. Simon: Well as I understand the decisions of this Court, a statute which burdens interstate commerce will be sustained only if the local benefits are so persuasive and so important as to override the restraint on interstate commerce which they impose and we submit that this mere matter of fair allocation which is already being done by the federal government and preventing monopoly which is already prevented by many statutes does not justify the restraint on completion which this statute imposes. And may I add Mr. Justice Rehnquist I don't suggest for one instant that there will ever come a time when independent major brand service station dealers will go out of business. The fact is there are many people, I might add including me, who would rather pay a higher price for the extra service and the personal attention you get in a conventional major brand station. But there are also a lot of people who would rather forgo those services and go into a low price no service station and pump their own gas and save as much as $0.8 a gallon and what we advocate is that free competition should prevail, let the motorist make the choice and the mix of how many of each there will be will be decided by how many people want to go to each type of station.
William H. Rehnquist: Well you advocated before the Maryland Legislature and they have turned you down and the question now I suppose is whether you have a constitutional claim?
William H. Simon: Exactly, exactly.
Warren E. Burger: And now traditionally though, have not the price cutters, so they were called by the majors, have not -- the price cutters, the small independents who just bought their gas catches catch can than the people who supplied a major share of price competition in the market, I am not speaking of Maryland specifically but over the country generally.
William H. Simon: No Mr. Chief Justice the motorist may not know it but the large share, certainly not all of it but over 50% of the price cutting gasoline is supplied by integrated refiner suppliers. Ashland Oil is one of the appellants in this case. Ashland sells under its own brand in its home state area of Kentucky, but in Maryland it sells under the names Buy Low, Hi5, Payless, Redhead, names that one would never identify with the Ashland company and those stations sell on a purely price basis saving the customer a great deal of money. The undisputed testimony below was that those stations can't operate unless the management can control not only the operations of the station but the price because price is their key factor and those Ashland stations under those brand names --
Warren E. Burger: When you say the management, do you mean the management is running the station?
William H. Simon: Yes sir, tell him exactly how to run it so as to achieve all of the economies of scale and tell him what to price.
Thurgood Marshall: Aren't there some areas where they buy the gas directly from the big companies?
William H. Simon: I have no doubt that that is true Mr. Justice Marshall --
Thurgood Marshall: Delivered at night --
William H. Simon: Sir?
Thurgood Marshall: Delivered at night in --
William H. Simon: Oh, I don't believe that there is any secret made about it where it occurs, there is no secret about it where it occurs. One of our problems is defining exactly just what is a major, but there are many companies that I think everybody would call majors who sell 50% of their gasoline for resale unbranded and the --
Thurgood Marshall: Is that in the record?
William H. Simon: No sir, no sir. But it is in the record that Ashland which has five refineries around the country and it is in the record that there are 37 refiners in the United States who sell gasoline through service stations that they control and give little or no service, pump your own gasoline, you get a low price. Five of those people do business in Maryland and would be driven out of the state by this law and the other 32 foreclosed from Maryland and the best example I can give is the Hudson stations. There are 315 Hudson stations in the United States in 36 states, five of them in Maryland. Hudson is shown by this record to be one of the vigorous price cutters in the country. The state in it's brief to this Court refers to Hudson as one of the pure independent marketers and yet since the trial of this case Hudson has acquired a refinery and now that they have enhanced their position to compete as Mary Hudson, the president of that company, testified when she appeared on the witness stand in this case, she said when I buy that refinery if this law is upheld I'm going to be driven from the state and so you have the most vigorous competitor in the country in the selling of - low price gasoline who because she was successful enough to integrate backwards and get a refinery is now driven from Maryland.
William H. Rehnquist: Well is the state not entitled to prefer independently operated stations to the kind of perfect model of competition without violating the commerce clause?
William H. Simon: We say no Mr. Justice Rehnquist, no more then North Carolina was entitled to prefer North Carolina apples over Washington apples in the Hunt case.
William H. Rehnquist: Well Maryland isn't preferring Maryland oil over other oil in this case.
William H. Simon: No but Maryland is preferring Maryland dealers, the pinch on competition, the squeeze on interstate commerce comes at he retail level and Maryland is preferring the local retailers against interstate sellers of gasoline at retail.
Warren E. Burger: But are not these local retailers characteristically the price cutters?
William H. Simon: No sir, they are at the high price people. The local retailer Mr. Chief Justice is the man who sells --
Warren E. Burger: Perhaps I was not on the same wavelength in terms what they're called, I'm talking about the individual station the independent who buys this gas wherever he can get it including as you suggest 50% of the major producers output frequently goes to these independents and it sold without a brand name. Now do those people selling with no brand name except one they invent but may sell five different kinds of gasoline over a period of months under that name, are they not the price cutters in the Maryland as they are in most other states?
William H. Simon: I can't answer your question yes or no Mr. Chief Justice because the people that you obviously think as you drive down the street as an individual station who is a price cutter is more likely then not a part of a large chain. For example I would assume that you would never have thought that a Buylow station or a Redhead station on New York Avenue here just beyond the bridge is a station owned by Ashmond oil which is a very large company and has hundreds of stations around the country under various names selling low priced gasoline with minimum service. And what this act is designed to drive out of Maryland is those people who are the majority of what you had described as the independent, there independents but they are chains of independents and what the act is in designed to protect is the major brand dealer who sells at four to eight cents a gallon above these price cutters, selling his well advertised brand, fixing your tire, changing your sparkplugs, giving them any other services and that because of those services feeling he's entitled to a higher price but those are local people who had the local political influence that permitted -- that resulted in this statute being passed --
William H. Rehnquist: Why is Shell appealing here? Shell strikes me as a prototype of the kind of person you say would be protected by this act?
William H. Simon: Mr. Justice Rehnquist, it can be argued that Shell that I represent and Axon and there like would short termed be benefited by driving out these large chains of price cutters and I think in one sense they would. They would also be disadvantaged because it's important to them to be able to innovate with new types of stations, automated stations and the many other kinds of stations that are new and innovated. But the real reason that Shell and Axon and the likes of them oppose this statute is that this industry is over regulated now. There is relatively little area of competition left and what completion remains we want to preserve because we can live with vigorous competition but if regulation gets to the point where there is not competition, no oil company in my judgment will survive as a free enterprise company and we'll have public utility regulation.
William H. Rehnquist: Do you think the state of Maryland would be prohibited by the commerce clause from making a – the selling of gasoline a state monopoly?
Warren E. Burger: As Virginia does with liquor?
William H. Simon: Yes sir. I hadn't thought of that question Mr. Justice Rehnquist but I would say that they would be --
William H. Rehnquist: They couldn't do what Virginia has done with liquor?
William H. Simon: I think not. Liquor is in particularly different question because the amendment which repealed the Volstead Act gave the states a great deal of power over local distribution of whisky. Indeed the constitution under that, I forget the amendment, but it's the amendment that repealed the 18th Amendment even gives them the power to have local option with one county prohibiting sale all together and another county permitting at only at tables and another county state monopolies and so I think that then liquor situation would not be applicable and you could not have --
Thurgood Marshall: Mr. Simon on the question of the interest of these big companies, is there anything in the record about the problem between least stations and company owned stations, in Maryland?
William H. Simon: No sir, only the fact is that less than 5% of the major oil company stations in Maryland are company operated and 95% of them are --
Thurgood Marshall: (Inaudible) about the problem that I read about it in the newspapers?
William H. Simon: No sir that -- that the --
Byron R. White: Mr. Simon would you tell me how the -- you arguing burden on interstate commerce, how does it burden the interstate commerce? All the gas that may want to come in to Maryland from out of state will still come?
William H. Simon: Yes sir but it burdens into respect Mr. Justice White. One out of state refiner marketers will be denied access to this market.
Byron R. White: Which market?
William H. Simon: The Maryland market they will be prohibitive from selling at retail in Maryland.
Byron R. White: So how does that burden interstate commerce?
William H. Simon: Because it denies them access that this Court has said many times that we all --
Byron R. White: Well let's say you have company owned station and you move -- and you supply your own stations and you have storage tanks at the stations you're keeping full and are you suggesting I guess you're that the sale by your company owned station out of that supply that's stored supply to a -- to a motorist is interstate commerce?
William H. Simon: Certainly it affects interstate commerce and –-
Byron R. White: Well, it isn't thought is it?
William H. Simon: Well there are many Sherman Act cases involving retail sales of gasoline where this Court has held that the --
Byron R. White: I know but that is -- that maybe a Sherman act matter of effect but I'm talking about the constitutional burden on interstate commerce.
William H. Simon: Well if the burden on --
Byron R. White: Just because something affects interstate commerce, it doesn't mean its an unconstitutional burden?
William H. Simon: No sir, no sir, but may I give you this example. Just last week in Raymond Transport verses Rice, this Court held that Wisconsin could not constitutionally limit Raymond Transport to 55-foot transports. Now there isn't any question they could use 55-foot transports to go through Wisconsin. Wisconsin didn't say you got to stay out of the state, but this Court said it was a burden on interstate commerce to tell them they couldn't go through Wisconsin with 65-foot transports or anything over 55-foot because Wisconsin was unable to show any local benefits that outweighed the restraint of the economies of operation and the --
Byron R. White: Let me ask you -- are there any examples in, I suppose there must be a lot of them, where the out of state or the out of state refiner or wholesaler sells directly to a consumer other than through a company owned station?
William H. Simon: If you mean consumer literally yes Mr. Justice White.
Byron R. White: Say there's a big truck line that uses gasoline and so you -- do you send your supply you're tank wagons directly to them, from out of state directly to them?
William H. Simon: Yes sir. The Shell --
Byron R. White: Is that -- does this forbid that?
William H. Simon: No sir this law relates solely to dealers Your Honor.
Byron R. White: So I can be a dealer if you sell -- why does that exempt that?
William H. Simon: This law applies solely to service -- retail service stations.
Byron R. White: Yeah but you're selling at retail to this truck line?
William H. Simon: Yes it but the law does not prevent it. The law --
Byron R. White: Well, then I ask you again how does it burden interstate commerce --
William H. Simon: It burdens -- it burdens interstate commerce Mr. Justice White in two reasons, in two ways; one it prevents on out of state refiner from operating a retail gasoline station --
Byron R. White: And selling direct to the consumer?
William H. Simon: And selling direct to the consumer and secondly it dines the consumer the benefits of competition furnished to him by out of state refiners. Let me give you a the most ridiculous example. Under this law Sears Roebuck will continue to be perfectly free to have a gasoline station in conjunction with a Sears Roebuck store selling gasoline at retail, but Montgomery Ward will be prohibited from having the identical facility because Montgomery Ward is a subsidiary of Mobil Oil Company and therefore Montgomery Ward can't have that retail station in front of their store but Sears Roebuck can.
William H. Rehnquist: But the commerce clause isn't though basically protect consumers, it's to prevent barriers erected by one state to people who want to do business and then on the same terms as people who are there?
William H. Simon: Exactly, exactly Mr. Rehnquist Justice, I couldn't have said it better. We want to do business in Maryland at retail on the same basis as the local retail dealers. That's exactly what we want. We want to do business in -- at retail on the same basis that they do and this act says we can't do it just --
William H. Rehnquist: Well all you have to do is sell your gas to an independent retailer.
William H. Simon: Yeah but then we can't do business at retail. It denies us the right to sell gasoline at retail to motorists.
Byron R. White: Well, here -- but critical your argument then is selling -- that selling gasoline at retail to motorists in Maryland is a matter of concern to interstate commerce.
William H. Simon: Yes Mr. Justice White because --
Byron R. White: Within the meaning of the constitution --
William H. Simon: And having in mind that there are no refineries in Maryland, it's all out of state gasoline, having in mind that these refiners like Ashland sell a very substantial part of their refinery runs of gasoline through their own retail stations on a basis of low price. And they outsell these major brand dealers four and five to one because of their low prices and this law would say you got to get out of the state and you either close down that station or lease it to someone and have no control over the manner in which he operates it and we say that's a restraint on interstate commerce exactly like in Pike versus Church, Bruce Church, exactly like in a Hunt versus Washington and Apple, exactly like in Raymond Transport versus Rice, exactly like Cottrell versus A&P, all very recent cases of this Court, all to the same effect. Now if I may, I would like to switch to paragraph D of the statute which we attack on the basis of its being repugnant to and frustrating Sections to A and B --
Byron R. White: I take it your only attack on the sections you've been talking about as the burden on interstate government?
William H. Simon: Yes Your Honor.
Byron R. White: You're not claiming a privilege and immunity to be able to sell at retail if Maryland people can sell at retail?
William H. Simon: No, no Mr. Justice White.
Potter Stewart: Well one of the -- one of the appellants is right relaying on the Due Process Clause of --
William H. Simon: Yes Continental relies on the Due Process Clause but I believe Mr. Justice Stewart and their basis is that as to sea which applies to stations in already existence. They say if you don't want us to build anymore, why we can live that but if you -- want us to tear down our existing stations that deprives us of due process. That is I think another way of saying what I've said under the commerce clause --
Potter Stewart: But – argument under the commerce -- it's under the different provision of the Constitution.
William H. Simon: Yes it is Mr. Justice Stewart.
Warren E. Burger: Mr. Simon we've been taking up a good deal of your time, and perhaps we do the same with your friends, we'll enlarge the time for 10 minutes for you and that will enable the Attorney General to give his colleague equal time if he wishes to, you'll have an additional 10.
William H. Simon: Thank you sir. On paragraph D, the Maryland statute provides that if a supplier reduces his price to one customer, one dealer customer; he must grant that price reduction to every dealer in the state. And that means if you have a competitive controversy in Baltimore which requires you to reduce your price in Baltimore; you must make that price reduction throughout the entire State of Maryland. And we believe that to require a supplier to make a state-wide price reduction, if he grants a local individual price reduction, is contrary to the precompetitive rights which this Court has held a seller has under Section 2(b) of the Robinson-Patman Act to meet competition in individual competitive situations and must therefore be invalidated under the doctrine of Perez versus Campbell and Jones versus Rath Packing company. The Act is due to Section D also is in conflict with Section 2(a) of the Robinson-Patman Act which makes unlawful price discriminations only where they injure competition. This requires the state-wide lowering of price without regard to injury to competition and Section 2(a) makes unlawful a primary line price cut which injures a competitor of the seller which is likely to be triggered and caused when we reduce our price state-wide and thereby extend a Baltimore price war to Cumberland, Maryland let's say where there had been no price war previously.
John Paul Stevens: Mr. Simon, can you give me an example of compliance with the Maryland Statute that would violate the Robinson-Patman Act?
William H. Simon: Yes, the example I just gave --
John Paul Stevens: That to have a uniform price throughout the state, you don't have a price discrimination?
William H. Simon: Well, let's assume for the moment that you have a price war in Baltimore.
John Paul Stevens: Whatever caused it, as long as your price is uniform throughout the state, you don't have price differential to even trigger 2(a).
William H. Simon: Well you have two problems Mr. Justice Stevens; one is Maryland borders the District of Columbia -- Virginia --
John Paul Stevens: Are you talking about differential between the State of Maryland and nearby states?
William H. Simon: Yes sir, I am talking about Silver Spring --
John Paul Stevens: But don't you always have where you have different taxes and that sort of thing, isn't there typically a price differential when you cross state lines?
William H. Simon: There are typically differentials, but where a price war gets the differential to six, seven, eight, nine cents a gallon, that is not the kind of differential that is typical and you can have the problem of a differential with the dealer across the street at the state line particularly in the State of Maryland which borders so many states and where there are so many cities like Washington and Wilmington that are literally across the street from Maryland.
John Paul Stevens: It's the remote possibility, isn't it, six to seven cent differential between a uniform price throughout the State of Maryland and price across the State of Maryland?
William H. Simon: Well I must confess to you Mr. Justice Stevens that I am positive in my own mind that the authors of this bill intended to make -- giving a price assistance to a dealer so costly that it would never be done.
John Paul Stevens: Doesn't the state have the authority to do that? Say that in Maryland you got to charge uniform prices and if you do charge uniform prices, you don't violate the Robinson-Patman Act?
William H. Simon: Not at all. It is contrary to the philosophy of the Robinson-Patman Act. The Robinson-Patman Act in Standard Oil case --
John Paul Stevens: -- contrary to the 2(b) of the Robinson-Patman Act, but the basic philosophy of the Robinson-Patman Act is very similar. It's also anticompetitive statute. I don't like it at all, but I don't see the inconsistency?
William H. Simon: But Mr. Justice Stevens, I am sure you know that this Court has many times sought to balance the anticompetitive problems of Robinson-Patman with the Sherman Act. And this Court's opinions in Robinson-Patman have sought to strike a fine balance between the anticompetitive aspects of one and the pro-competitive aspects of the other. And everything this Court has done in that regard is wiped out by Maryland by saying we just aren't going to have competition in this state in the sale of gasoline.
William H. Rehnquist: Well –-
John Paul Stevens: If Maryland said that gasoline will be sold at $0.75 a gallon in our state, would that be unconstitutional?
William H. Simon: Well, I think so. I think that's exactly what this Court said in Mr. Justice Burton's opinion in the first Standard Oil case that it would not construe Robinson-Patman as permitting. The Court said in the first Standard Oil case that Robinson-Patman was intended to protect competition, not competitors, that Robinson-Patman was intended to promote competition, not prevent competition, that Robinson-Patman would not require a seller to ruinously lose his biggest customer because he couldn't meet the competition and then be forced to raise his price to remaining customers to make up for that volume. You recall there are many discussions in Mr. Justice Burton's opinion there in which he says we don't construe the act as a congressional intent to eliminate this competition. Now, I can see Congress --
Byron R. White: You are saying that although Congress says you don't violate the Robinson-Patman Act if you are lowering your price to meet the price of a competitor, you are saying that a state may not have the contrary rule, a state may not say that you may not lower your price to meet the price of a competitor, are you suggesting that?
William H. Simon: Yes, because I say that frustrates the congressional intent of Congress --
Byron R. White: Well it was just saying – all Congress has said as you don't violate the Robinson-Patman Act if you do that?
William H. Simon: But the Robinson-Patman Act represents Mr. Justice White a congressional policy.
Byron R. White: It doesn't say -- Robinson-Patman doesn't say you have to?
William H. Simon: No sir. But in 2 (b) this Court --
Byron R. White: And the state just says you can?
William H. Simon: But, in 2(b) this Court has held that Congress gave sellers an absolute right to reduce their price to meet competition.
William H. Rehnquist: Well, a minute ago you said how Robinson-Patman has been so tempered by the Sherman Act and now you say it's a fundamental congressional policy.
William H. Simon: Well, I don't suggest for a minute that this Court has amended the Robinson-Patman Act in any of its decisions. What I said to Mr. Justice Stevens was that in interpreting the Robinson-Patman Act, this Court has consistently tried to reconcile it with the Sherman Act and to give it that construction which would permit both to live side by side. And that national policy which is reflected in the Robinson-Patman Act guarantees one the right to reduce his price in individual competitive situations to meet the lower price of the competitor which this statute would take away --
William H. Rehnquist: It simply says he doesn't violate the Robinson-Patman Act if he does that?
William H. Simon: Yes. And that is a statute which represents congressional policy and which the State of Maryland we say cannot enact a law under the Supremacy Clause to deprive us of the rights given by the Robinson-Patman Act.
William H. Rehnquist: Well you say then the Robinson-Patman which the Court has viewed is kind of an intrusion on the Sherman Act nonetheless preempts the field when it comes to the state legislature?
William H. Simon: I would not go so far as to say the Court has viewed it as an intrusion. I know that what Mr. Justice Stevens was referring to was that many commentators have said the acts are inconsistent. But, this Court has never gone that far, and all that I can say this Court has done is to say that we are going to construe Robinson-Patman consistent with the policy of promoting competition and I say that is federal policy which is frustrated by this Maryland Statute.
Harry A. Blackmun: Mr. Simon, let me put it this way, because I am slightly confused, are you arguing that there is a constitutional right to engage in conduct that is protected by the 2(b) defense?
William H. Simon: Well, I think the short answer is, yes, a little longer answer is that under the Supremacy Clause of the constitution we say that the State of Maryland cannot deprive us of a competitive right which the Congress has granted under 2(b) and which this Court in 1951 in Standard Oil said was an absolute defense to a charge of price discrimination no matter how serious the harm and the injury were that it caused.
Harry A. Blackmun: Well, it just seems to me you are arguing that there is a constitutional right to engage in something that's protected by a 2 (b) defense. I am not sure that follows, but may be I misconstrue your argument.
William H. Simon: Well, I think Mr. Justice Blackmun we have exactly the problem that was in Perez where the Bankruptcy Act said that if you go through -- you're discharged in bankruptcy, you don't owe anybody any money anymore, and the State of Arizona passed a law which says if you have a judgment against you for negligence in operation of an automobile, you may not get a driver's license till you pay that judgment. And this Court held in Perez that the Arizona Law was unconstitutional because it conflicted with the Federal Bankruptcy Law that said once you gone through bankruptcy, you didn't owe the money. The same thing is true in the Rath Packing case decided just this last term by this Court where California passed a statute saying that packaged meats had to be measured by their weight at the place where they were sold. And federal law said packaged meats had to be measured by their weight at the place where they were packed. And of course depending on the moisture of the climate, the meat will either gain weight or lose weight after it leaves the factory and the California Law was held invalid because it conflicted with the Federal Law and one could not comply with the Federal Law and the State Law at the same time.
Byron R. White: But now the Robinson-Patman Act doesn't require anybody to lower his price to meet a competitor?
William H. Simon: But the one thing -- and I believe --
Byron R. White: And all it does is permit them to do it without violating Robinson-Patman Act and you are saying Maryland cannot prevent meeting competition that way?
William H. Simon: But Federal Law, Federal Policy which is reflected not only in the Sherman Act but in the Robinson-Patman Act as well is pro-competition. It's more competition. And anything that says that if you reduce your price to one customer in Baltimore, you've got to reduce it to every customer far west as --
Byron R. White: That certainly is the effect of the law?
William H. Simon: It's anticompetitive Mr. Justice White, it seeks to make the price of reducing the cost.
Byron R. White: It costs you; it's really going to cost you, right?
William H. Simon: It seems to make the cost so high --
Byron R. White: That you are not going to lower the price?
William H. Simon: That nobody will do it and certainly if they passed the law and said, you couldn't reduce your price, that would be unconstitutional.
Byron R. White: Would you mind if I went back to your first argument just for a moment?
William H. Simon: No sir.
Byron R. White: I take it that Maryland Law does not forbid just chains of wholesalers -- from a wholesaler who owns a chain of service stations to operate in Maryland.
William H. Simon: As introduced, it did.
Byron R. White: Yes, but it doesn't.
William H. Simon: And the wholesalers that have a little more power have a --
Byron R. White: Let's assume -- well, however it came about, let's assume I have a wholesaling chain of service stations, the headquarters are in Pennsylvania and they buy their gasoline from producers or refiners and have their own delivery system from outside the state into Maryland and they have a string of stations in Maryland, now that's not forbidden by them?
William H. Simon: So long as you do not integrate backward and buy a little refinery, you are exempted.
Byron R. White: So it's a discrimination against producers and refiners, it isn't – it's not a -- why is it a discrimination or a burden on the state commerce?
William H. Simon: Because --
Byron R. White: That kind of commerce is going to --
William H. Simon: Because the record shows that it is the out of state refiners who produce the competition in the marketplace in Maryland, and that it is that very competition which the legislature sought to eliminate to protect the high price major brand dealers so they wouldn't have to compete with these lower price people.
Byron R. White: The interstate -- the Constitution doesn't say that every burden on competition is bad. It says that it forbids burdens on interstate commerce.
William H. Simon: Yes sir, but I can only say Mr. Justice White that this burden is far greater than that one in Hunt or in Raymond Transport or in Cottrell or in the Bruce case, the cantaloupe case in Arizona for this far greater restraint on competition here than in any of those cases.
William H. Rehnquist: But they didn't turn competition, they turned down commerce, didn't they, the movement of goods?
William H. Simon: But in each of those cases the restraint on commerce was much less than that here. In the Rice case last week as I say, all it required is that the fellow run a smaller truck. It didn't say he couldn't run through there, just says a guy use a 55 foot truck --
Byron R. White: But in the long run the same amount of gasoline is going to come into Maryland, isn't it?
William H. Simon: But, it's going to cost the Maryland motorist a lot more money, a lot more money.
Byron R. White: May be.
Warren E. Burger: You are going to end your rebuttal time now.
William H. Simon: I appreciate the extra time and I realize I understand --
Byron R. White: May I ask you one question before you sit down? Do you happen to recall if during the -- back in 1930s or 1920s when a lot of states were enacting legislation prohibiting chain stores from coming in, were those statutes ever challenged on this sort of ground, do you know?
William H. Simon: No sir, at least not in the oil industry.
Byron R. White: I am not talking about the retail grocery business actually.
William H. Simon: I do not know of any challenge. I do know that they were graduated tax on the number of units you have, and I do not know whether they remembered them well, but I --
Byron R. White: Yeah, I know you would. That's right. Thank you.
William H. Simon: Thank you.


Warren E. Burger: We’ll hear arguments in number 88, Ramsey and Nunley against United Mine Works. Mr. Rowntree, you may proceed whenever you’re ready.
John A. Rowntree: Mr. Chief Justice and may it please the Court. The Tennessee, the Southern Tennessee coal producers involved in this case as petitioners charged that there was a conspiracy between major coal producers of the country and the respondent United Mine Workers to restrict competition and to raise prices in the coal industry. They charged that the amendments to the National Bituminous Coal Wage Agreement were use to the further the purposes of this conspiracy. The BCOA, Bituminous Coal Operators Association was organized in 1950. Largely, through the efforts of Consolidation Coal Company, the largest coal producer. The head of consolidation testified in this case with respect to his competitors that even though the competitor operated in poor mining conditions with the less productivity than consolidation did still you don’t want him to have a lower wage scale than you if you can avoid it. And after organized BCOA in 1950, BCOA proceeded to negotiate with UMW throughout the 1950’s and 1960’s amendments to the National Bituminous Coal Wage Agreement of 1950. These amendments consisted very largely of substantial flat across the board wage increases applicable to every job in the coal industry regardless of the productivity or the mechanization of the particular job. These amendments were taken to the hundreds of all the units in the industry outside of BCOA for signing. By 1958, 82% of the industry was less organized under the national contract as thus amended. Then in December 1958, with the next two largest coal associations participating, BCOA negotiated the 1958 amendment which included to Protective Wage Clause, the PWC. The coal associations demanded that UMW signed paragraph “A” of the Protective Wage Clause set forth at page 11 of our main brief. This says that UMW will not enter into become a party to or permit any agreement or understanding other than national contract terms for the duration of the national contract. This provision was in the face of the national contract throughout the damage period in this case. The trial court’s opinion shows that it is matter of fact, the international union of UMW did not enter into become a party to or permit any agreement or understanding other than national contract terms with any unit of the industry. And this was true even though the mining conditions be productivity, the ability to use the big new mining machinery tremendously varied across the country. The repeated flat wage increases made rapidly increasing productivity, increasing mechanization and absolute necessity for any company to stay alive. And from the national viewpoint, from the findings of the trial court there occurred an industrial revolution through mechanization in the coal industry in the period of 1950 to 1964. Productivity tripled in a few short years and nearly three-fourths of the men were forced out of the jobs in the industry. Court also found that by 1960 the class one, the largest mines were rapidly regaining the dominant share of production that they held before World War II. The court also found that if you put the whole coal industry of the country together, taking out the two largest producers that whole industry by 1960 was losing operating losses of millions of dollars a year under the national contract, while the largest companies were prospered and taking over the industry. Now, the Southern -- and that is the picture from the national scene. The Southern Tennessee field was completely organized by 1950, but this flat wage increases got beyond the abilities of the Southern Tennessee producers. The trial court found that since 1960, there has not been a single incident of a successful coal mining operation in southern Tennessee under the national contract even though the only alternatives where they sign the contract or go out a business.
Potter Stewart: This is primarily because of the physical way the coal was embedded in that field in Tennessee that in order, in other words to make maximum and efficient utilization there’s no machinery you have to have thick and rather evenly stratified seams of coals, right?
John A. Rowntree: That’s correct and we say --
Potter Stewart: And those Tennessee fields they are [Voice Overlap] even in thin.
John A. Rowntree: And we say that the reserves of the major companies are adoptable to this big new machinery, but such fields this southern Tennessee --
Potter Stewart: It was not because they are major companies, is it or isn’t?
John A. Rowntree: It’s because they have great reserves of coal.
Potter Stewart: It’s because of I thought [Voice Overlap] of the nature of the coal field?
John A. Rowntree: Yes, well the reserves of the major companies. The major companies on the record do hold tremendous reserves of millions of acres, a billions of tons of reserves which are ideally located such as West Kentucky Coal Company and a lot of proof on its reserves and why UMW invested in those reserves. Now, the trial court’s opinion shows that in the period of damage in this case, 1959 to 1964, major companies actually owned by UMW -- triple their share in the principle market of Southern Tennessee, the TVA market. While the Southern Tennessee field was in out of turmoil and confusion and down with strikes because of the inability to comply with this national contract. After the cancellation of their contracts in 1962 by the Union with demands that they make guarantees of future performance, the southern Tennessee operators organized an association and attempted to bargain with UMW of varying set of wage scales based upon the degree of mechanization or the productivity of the various types of mines in Southern Tennessee. The UMW refused and demanded that the national contract be signed again, but this time with the guarantees of performance. And the trial court found that the strike which followed was because of the inability to negotiate a contract in the field and this strike was actually open warfare. It pervaded three counties. It went on for three years, before the trial it was still going on at the trial, this case. And the trial court found that several men were killed, a great deal of violence, bloodshed and destruction of property have accompanied the strike much suffering deprivation and won’t have occurred, the Southern Tennessee coal field remains “ablated area.” Now, although the court found these facts both on the national level and on the local level, the court held the proof was insufficient to show that the course of conduct of UMW was because of conspiracy or agreement with major coal companies and their associations. The trial court held that this paragraph “A” of the Protective Wage Clause could be construed as UMW contended that it put a straightjacket or restraint on UMW’s bargaining freedom only with respect to those companies that had gotten organized or signed up under the national contract. It held that, thus that it applied to the 82% return of the industry that was under the national contract, but not applicable to the 18% that had not been organized under the contract -- not under UMW’s contracts at that time. Now, the court held that this difference made the restraint valid under antitrust law. Now, beyond the express language of the contract and the Protective Wage Clause, the court went on to hold that the course of conduct of the international union and the international officers in dealing with the industry over this period of 14 or 15 years was such as to show by a preponderance of evidence that there was an implied agreement with BCOA that UMW would negotiate only on national contract terms with all units of the industry, not just to the 82% but to the 100%. But the court held that the plaintiffs have the burden of proving this implied agreement not just by preponderance of evidence from the union’s course of conduct, but they have the duty to approve it by the clear proof rule of Norris-LaGuardia Section 6 and there was an absence of such clear proof. The court went on to hold that the evidence was insufficient to prove a pressure rate conspiracy to drive small coal companies out of the industry. But the court added at the end of this conclusion that were it not for the clear proof rule, the court might have reached different conclusions. Now, it is obvious from the trial court’s opinion throughout that it was applying this clear proof rule all the way to the point of reaching final conclusions as to antitrust violation regardless of the clarity of proof of authorization of the course of conduct of the international union and its officers over this period of 14 years. Regardless of that authorization -- obvious authorization, the clear proof rule was applied to that course of conduct to reach a conclusion as to whether that was a violation of law and the trial court rejected the majority and concurring opinions of this Court in the Pennington decision of 1965 saying that neither opinion expressed through majority rule of this Court and it added that the problem suppose to the small and medium size enterprises by the practice of National Collective Bargaining would appear real and substantial. However, that their solution lies in the federal antitrust laws as now enacted by Congress is doubtful. This was a decision just a few months after the decision of this Court remanding Pennington for trial under the antitrust laws on its similar issues. The one point from this Court’s opinions in Pennington which most impressed the trial court was derived from the second footnote of the majority opinion of Mr. Justice White. We think the Court misconstrued this footnote. Obviously, the Court construed this footnote to me that the union needs to deal in good faith bargaining only with the dominant unit of the industry and over a period of 15 years can take the resulting contracts and cram them down the throats of hundreds of other units and all sorts of varying circumstances without changing a single comma in a single contract over that whole period. Even though, it means obvious repression of competition and even though it means tragic effects on three-fourths of the union’s membership, while the favored companies grow and prosper and take over the industry. Now, three-judge panel of the Court of Appeals therefore with these views of the law applicable to these circumstances and they reverse the judgments in favor of UMW. On UMW’s petition to rehear en banc the full court reconsidered spilt four to four and reinstated the judgments. Under the first question we raise here, we contend that the lower courts were in error. In holding that to be successful, the plaintiffs must show that this clearly authorized course of conduct of the international union and its offices must be such as to show antitrust violation not just by a preponderance of evidence. But this clearly authorize course of conduct must be such as to show clearly unequivocally and convincingly that antitrust law was violated. Now, Section 6 of Norris-LaGuardia by its very language expresses merely a rule of evidence in proving agency or authorization of acts in a labor dispute. The Section has nothing to say about legal standards applicable in evaluating clearly authorized course of conduct or clearly authorized acts in evaluating the legality of such acts. The act assumes that acts have been done in a labor dispute which violates the law and the statute is concerned with the proof of authorization of those acts. It has nothing to say about whether or not what legal standards are to be applied to determine whether the acts truly were unlawful. Now, all the issues in this case obviously can have nothing to do with authorization of the course of conduct in bargaining with the industry over 15 years of this international union and its officers. Obviously, the issues must be centered upon the legal standards to be applied to this course of conduct and the effects in consequences of that conduct over this period of time and neither the legislative history nor the opinions of this Court support the conclusions and construction below with the respect to Section 6. The trial court found a UMW BCOA implicit agreement violating antitrust policy on a preponderance of evidence and we say this finding should have resulted in judgments for these plaintiffs. Under question two, we deal with the express language of the national contract in the Protective Wage Clause, paragraph “A” set forth at page 11 of our main brief. This language was demanded by the coal associations. It says that UMW will not enter into become a party to or permit any agreement or understanding other than national contract terms for the duration of the national contract. Now, the trial court went along with UMW’s we submit rather round about argument to restrict this restraint to the 82% of the industry that had signed up under the national contract. And the Court held that made it valid since the 18% for that that was not organized or was not included in the restraint. Now, we were contending that such a restraint is this, even if limited to the 82% of the industry including Southern Tennessee, the method -- hundreds of companies would be wiped out during the duration of the national contract without any freedom at all to bargain over modified terms over terms that were practical and workable in the situations that were present or that might develop during the life of the contract. And that this meant a deprivation of bargaining freedom for the duration of the national contract which was not amended again until 1964 at the end of the damage period of this case and we say it’s still goes on today that this matter of deprivation of bargaining freedom for great segments for the coal industry. The companies were induced to sign national contracts by all sorts of reasons mostly violence, but by economic pressure by all sorts also. And we say, it is a rule of law that will not work to say that the dominant companies can direct the union to keep all these companies under a contract, under impractical terms. The violence and the warfare of Southern Tennessee is just an example of the efforts of people to stay alive and maintain their only way of living in the face of such a rule and the struggle was going on in numerous coal fields that is shown by the many reported federal cases dealing with violence in this union in the period of 1959 or 1960. And the results could be predicted, they are obvious today repress competition rising coal prices set by in all the company of big energy companies. UMW in its reply brief now says, no restraint at all was put on UMW in this paragraph “A.” It says now, that the whole meaning of paragraph “A” is included within the last clause of the last sentence of that paragraph dealing with UMW’s obligation to enforce the contract against all signatories. It says now, that all the preceding language that UMW will not enter into become a party to or permit any agreement or understanding other the national contract terms for the duration of contract all that adds nothing to the meaning of the last clause about enforcing the contract against all signatories. Now, we submit that this present argument will not hold water as a bare reading of the clause demonstrates. To say nothing of the fact that this language was demanded by the major coal associations. UMW’s brief argues that even if this paragraph did impose a restraint on UMW’s bargaining freedom, still UMW had a legal right to a uniform wage scale throughout the industry and therefore the paragraph does not express anything other than what UMW had a legal right to do anyway. But we think the answer to that is, that even if UMW did have a right to engage in this kind of bargaining with the dominant unit and showing this a resulting contracts down, all these other -- upon all these other units over this period of 15 years still it did not have a legal right to bind itself for the major coal associations and companies to pursue that policy in the industry. Clearly, this is what UMW has done to the suppression of a great segment of the coal industry. Now, third question that brought us to the three questions we raised, we assert that there should be at least a prima facie case of antitrust violation from the union’s force of conduct and the effects and consequences over this period of time of that conduct even without the undisputed proof that the coal associations were making demands upon UMW to restraint it in its bargaining policy. Now, the lower court decisions emphasized exclusively the right, so called right of the union to have a uniform wage scale throughout an industry and obviously the courts think this means that the union can deal in bona fide bargaining only with the dominant unit and can carry out this practice of going through the so called negotiations but never changing a single common, a single contract with the single unit of the hundreds of other units who role this period with all these varying circumstances and with the obvious repression of competition is going on like I said in Tennessee. Now, we say that this emphasis on a uniform wage scale really gives no right whatsoever, no recognition, no reconciliation to rights of the hundreds of all the units not only under antitrust law but also under national labor policy and national employment policy. The lower court decisions subordinate obviously the antitrust law in this case allowing this iron bound completely unfair uniformity policy direct economic devastation over a three county area for three years to say nothing about the effects nationally. The lower court decisions frustrate the most basic purposes of national labor policy, making it obviously impossible for hundreds of employers to deal and any freedom at all with their employees of that terms and conditions where they are situated, making the conflict in the turmoil and finally open warfare shown in Tennessee absolutely necessary the very things which the National Labor statutes expressly were passed to avoid the conflict, the turmoil. The lower court decisions ignored completely the National Employment Act which act was passed six years after the Apex decision. The National Labor Act -- Employment Act says that our national employment policy shall be such as to promote the free enterprise system, the free competitive enterprise system and it says that our national employment policy shall be such as to promote those conditions which afford maximum employment. Now, this policy is obviously frustrated by the lower court decisions which require that these hundreds of all the companies stick to the demands of the UMW BCOA unit that they fire great masses of their employees and substitute heavy machinery or be destroyed throughout of business. Now, the joined economic committee of Congress has spoken out strongly in recent years about this very kind of anti-competitive and anti-job rulemaking policy. But we say that the principle answer to this present reliance upon a so called uniform wage scale throughout an industry is the fact that paragraph “A” was demanded by the major coal associations and the court found on a preponderance of evidence that this was intended to be applied not just to the 82% of industry but to the 100% of the industry. Now, we don’t think that the multi-employer bargaining rules cut across this case at all. This Court held or said in Volkswagenwerk versus Federal Maritime Commission 390 U.S. that the kind of multi-employer bargaining that conforms with national labor policy is free collective-bargaining by representatives of the parties owned unfettered choice. Now, we say that that will not encompass this practice of binding together hundreds of units of an industry under one national contract and all sorts of situations getting them under there mostly by violence and then allowing the dominant companies to direct the union. Now, keep all these companies under this contract regardless of the practicality of the terms for the duration of our national contract. Now, this is just one way to squeeze competition out of an industry, but this is the way it was done in the coal industry. And for these reasons, we ask this Court to reverse the judgment below and direct on the remand in these two cases that the findings of the trial court on this record to establish a violation of antitrust law. Thank you.
Warren E. Burger: Thank you Mr. Rowntree. Mr. Williams.
Edward Bennett Williams: Mr. Chief Justice and may it please the Court. The petitioners in the case at bar have taken the teaching of Pennington against the mine workers decided by this Court in 1965 and they have made it the predicate for two contentions which they have asserted throughout the life of this litigation. The teaching on which they rely is that where a union enters into a contract with a multi-employer bargaining unit for a wage scale and then agrees to impose that wage scale on the risk of the industry that the union loses its antitrust exemption. Now, they make two contentions, if the court please, based upon that teaching. They say first of all, that when the respondent union entered in to its contract with the Bituminous Coal Owners Association in 1958 and specifically entered into what is called the Protective Wage Clause that they lost their antitrust exemption. Secondly, they say, even if the Protective Wage Clause doesn’t mean what we say it means and what nine-judges found below it did not mean. Even so, say they in the disjunctive notwithstanding that there was a clandestine, surreptitious, under the table tacit agreement between the respondent union and the Bituminous Coal Owners Association whereby the respondent union agreed to do just that namely impose the National Wage Scale on the whole coal industry. Now, I would like to address the attention of the Court first of all to the first contention namely the contention that petitioners make with respect to the Protective Wage Clause of the 1958 agreement. The trial court found and all eight judges of the Sixth Circuit found notwithstanding there four to four split on other issues that the Protective Wage Clause meant no such thing as petitioners contend for. The judges below found that all the Protective Wage Clause did in the 1958 agreement was to bind the respondent union not to enter into any more favorable side deal with the signatories to that contract and that it never had, nor was it ever intended to have application to any members of the industry who were not signatories thereto. The Sixth Circuit said this, plaintiff sought to persuade the District Court and now seeks to persuade us that this language namely paragraph “A” taken in the historic context of the bargaining relationship constitutes and express undertaking by defendant to impose the BCOA UMW wage scale on all non-signatory coal operators. We simply do not find language to support this contention. The italicize portions, the disputed agreement clearly indicate that it is expressly limited in its effect to the signatories thereto. That was the finding of all judges in the courts below and if the Court please it has been the finding of every court which has had occasion to pass upon the meaning of this language and indeed it is the only reasonable conclusion that any court could come to from reading paragraph “A” which is set out at page 15 of our brief -- the respondent’s brief because it clearly applies to employees who are covered by the contract.
Byron R. White: Mr. Williams, as you read Pennington and as you read the clause, would the union have sacrifice its -- or forfeit its antitrust immunity, if that meeting of the clause is forever?
Edward Bennett Williams: If that -- if what petitioners contend for Mr. Justice White were --
Byron R. White: Your contention?
Edward Bennett Williams: -- were correct.
Byron R. White: Yes.
Edward Bennett Williams: If their meaning, if what they say paragraph “A” means is correct then under Pennington, the union would have lost its antitrust exemption.
Byron R. White: But under your reading of the clause and under your reading of Pennington, I suppose you would argue that the union has not sacrifice its antitrust.
Edward Bennett Williams: Exactly, under my reading of the clause and under the reading of the clause of all judges below, the union would not have sacrificed its antitrust exemption.
Byron R. White: And, is that the same argument as saying well, it may have sacrificed its immunity but it has to violate the antitrust law?
Edward Bennett Williams: No sir, I'm saying Mr. Justice White --
Byron R. White: But even if it sacrifices immunity, you still have a job proving the unions violating the antitrust law.
Edward Bennett Williams: Oh, yes, because the fact that it is no longer exempt under the antitrust law as I read Pennington does not make the act which rendered it non-exempt a per se violation.
Byron R. White: Assessment?
Edward Bennett Williams: Yes sir. Now, the down side position of the petitioners in this case is that well failing in that contention as all courts have found we did. Nonetheless, there was tacit agreement not expressed in writing, a tacit under the table agreement between the Bituminous Coal Owners Association and the respondent union that the union would in fact impose the terms of that national agreement on the non-signatory members of the industry. Now, the trial court found that there was no such a tacit agreement. The petitioners contend that the trial court applied the wrong standard of proof in arriving at that finding. And so, it becomes necessary for us to see what instructions the trial-judge gave himself in this non-jury case in arriving at the finding that no such clandestine conspiracy existed between the mine workers and the Bituminous Coal Owners Association. We contend, if the Court please that Section 6 means this, it means that when a union is a defendant in a case arising out of a labor dispute or when an employer is a defendant in a case arising out of a labor dispute that before it can be held vicariously liable for the acts of its agents or officers, clear proof must be shown that it authorize such acts or ratify them once it became knowledgeable concerning them.
Warren E. Burger: Mr. Williams, you may continue, you were on Section 6 as we stopped for lunch.
Edward Bennett Williams: Mr. Chief Justice and may it please the Court. Before recess, I was saying that the trial judge understood clearly what Section 6 meant and understood clearly what the burden of proof was in this case and I was about to explicate on that by showing both from evidence extrinsic to the opinion below and intrinsic within the opinion below, we can see that the trial judge knew precisely what the rule of law was with respect to the burden of proof. Within just a number of weeks after this case was tried before the trial judge without a jury, the same trial judge tried a case involving the same issues, factually and legally with the jury. That case is reported at 416 F. 2d at page 1192 Tennessee Consolidated Coal Company against the Mine Workers.
Hugo L. Black: What same -- volume was that?
Edward Bennett Williams: 416 F. 2d, Mr. Justice Black.
Potter Stewart: You talked about that in your brief, I’ve forgotten. Did you have a citation of it in your brief?
Edward Bennett Williams: 1192, yes, I did Mr. Justice Stewart. Now, in that case, there is said out in haec verba the instructions that Judge Wilson gave to the jury with respect to Section 6 Norris-LaGuardia with respect to the burden of proof in a case of this kind and those instructions appeared at pages 22 to 24 in our brief, the brief of the respondent. And there it is laid out with absolute clarity what the burdens -- the respect of burdens of the plaintiff are he says there is one issue in this case upon which the plaintiffs have a heavier burden of proof than I have just described that is whether the defendant actually participated in are authorized or ratified actions which violated the Sherman Act. Labor, he says on every other issue in this case, on every other on the case, the plaintiffs are required merely to preponderate, to show by a preponderance of the evidence that their contentions are correct. He says, Labor Organizations are relieved under the law from liability for damages or imputation of guilt or lowest acts done in labor disputes by officers or agents unless there is clear prove that the organization charged with the responsibility participated in, gave authorization for or read applied such acts after they became knowledgeable with respect to the acts. In other words, the trial judge showed there that he understood precisely what the law was at that time. Now, what do the petitioners say with respect to that? They say in their reply brief to our brief at page 10 that the judge changed his mind with respect to the burden of proof that after extensive argument, he became convinced that he was wrong.
Warren E. Burger: What page are you on, on this? What page is it?
Edward Bennett Williams: I’m now at page 10 of the petitioner’s reply to the brief of respondent, Mr. Chief Justice.
Warren E. Burger: Thank you.
Edward Bennett Williams: They say that he changed his views and they say that, if the Court please, with no record reference and indeed no record support or if they were right with respect to the contention that the trial-judge had undergone a change of mind with respect to what the true burden of proof was, I suggest to the Court that this case neither would have been nor shouldn’t have been here because the remedy was easily available to the petitioners to ask for a remand from the Sixth Circuit of this case back to the trial court for purposes of filing a motion under Rule 60 (b) to correct the judgment upon error of law. And that’s precisely what the petitioners would have done if the trial judge had changed his mind with respect to the burden. But indeed, they did not do that and indeed they could not do that because the record shows the transcript of record shows in Tennessee Consolidated v. The United Mine Workers and that this Court may take judicial notice of it as a record in the Sixth Circuit Court of Appeals that the trial judge did not changed his mind at all, that in fact there was no extensive argument to persuade him to a different point of view and at pages 30 to 54 of that transcript of record, the trial judge announced that he would instruct the jury in all respects on the law as he had found the law in Ramsey. Now, --
Speaker: Mr. Williams.
Edward Bennett Williams: Yes, Your Honor.
Speaker: Is it your view of the Section 6 standard whatever it is, extends to all elements of the antitrust events.
Edward Bennett Williams: It’s my -- No, it’s my view, if the Court please, that Section 6 applies to the issue as to whether the union is liable for any allegedly illicit acts or agreements. In order for a union to act or in order for a union to agree, it is necessary that it act vicariously through its officers or its agents on every issue of vicarious liability Norris-LaGuardia requires that there be clear proof that the union either authorize such conduct or that it ratified it after it became knowledgeable concerning it.
Warren E. Burger: The last year generalization, Mr. Williams, is that any different from corporate activity? I'm not now talking about the burden of proof?
Edward Bennett Williams: No, it’s no different Mr. Chief Justice because Section 6 applies both to employers -- employer organizations and labor organizations in labor disputes only in labor disputes and that’s our contention here that there was a charge, it was charged the union entered into an illicit clandestine agreement. Now, it would have to do so vicariously through the acts of its officers or agents and there was no showing within the meaning of Section 6 that there was clear proof that any such conduct was authorized or ratified. Now, what did the petitioners do in lieu of the course that I have just suggested, they would if followed if they were right about what Judge Wilson held on the burden of proof in this case. They went to the Sixth Circuit Court of Appeals and they seized upon a couple of sentences in a 52-page opinion and they sought to convince the Court of Appeals that Judge Wilson had misunderstood the law on burden of proof. Let’s look at a sentence that they have seized upon as illustrating so they contend that Judge Wilson did not understand the appropriate burden. They say -- Judge Wilson said, having concluded that the Protective Wage Clause does not constitute and express commitment upon the part of UMW to the BCOA not to bargain with any other coal operator upon any terms other than the national contract. This does not conclude the issue of whether the UMW did in fact do not expressly so contract. Where this case being tried upon the usual preponderance of the evidence rule? The court would conclude the UMW did so impliedly agree. However, the standard of proof where a labor union involved is clear proof as required by Section 6 -- a standard different from the ordinary burden of persuasion. The trial judge was there saying since a labor union is the defendant, since the contention is that the labor union entered into an illicit agreement and since the union can enter in to such an agreement only vicariously through its agents or officers or members, then of course the standard of proof is clear. And it must be that the petitioners must carry the day by a clear standard of proof to show that the Mine Workers Union did in fact ratify or authorize such conduct. Again, they seized upon some language, did not the clear evidence rule apply. The Court might have reach to different conclusion upon certain issues. The other issue upon which the court might have reached the different conclusion is the issue concerning violence in the coal fields. This Court said in Gibbs against the Mine Workers in 1966 that the clear proof standard applied when there was an effort by a plaintiff to impute responsibility for violent acts to the apparent union because Section 6 applies so that all of the language of the trial judges entirely consonant with the appropriate interpretation of Section 6. There isn't anything in the 52-page opinion that is at war with the appropriate and proper standard of proof as delineated in Section 6 of Norris-LaGuardia. In fact, I suggest to the Court that Judge Wilson’s instructions in Tennessee Consolidated Coal against the Mine Workers and in his holding Ramsey against the Mine Workers stand out like a beacon on the fog of confusion with respect to this issue on burden of proof. Now, I said earlier --
Potter Stewart: As I understand you aren’t sure now making, you are implying that the all eight members of the Court of Appeals misunderstood what the issue was?
Edward Bennett Williams: I think Your Honor that there was a very, very serious lack of clarity with respect to the positions that were asserted --
Potter Stewart: In both opinions?
Edward Bennett Williams: Yes sir, I do.
Potter Stewart: Because as I understand Judge Edward’s opinion he relies on the phrase that Justice White’s opinion --
Edward Bennett Williams: And that’s what I say Mr. Justice Stewart that the trial-judge’s opinion is entirely accurate here. It was entirely accurate in the case at bar and entirely accurate in the case that immediately followed it and it demonstrates that he understood the burden of proof entirely correct.
Potter Stewart: He understood it and you understood, but the Court of Appeals didn’t quite?
Edward Bennett Williams: I think that’s correct Your Honor. Now, let’s look at the opinion of Judge -- let’s look at the opinion of Judge Wilson in the court below. The petitioners made four subsidiary allegations. They made four subsidiary allegations to prove circumstantially that there was an illicit conspiracy. They say first of all that petitioners insistent upon a national uniform wage policy began in 1950 and this is a basis for inferring the incipiency of a conspiracy with the Bituminous Coal Owners Association. The trial judge found “no evidence” of this, he found affirmatively “that it was clear from all the evidence” the national uniformity in wage policy of the respondent union began in 1890 and that it was no basis for an inference that there was an illicit conspiracy began in 1950. They say secondly, that the tranquility and the serenity of collective bargaining in the post 1950 period in the coal industry is a basis for inferring that there was conspiratorial relationship between the respondent union and the mine workers when that is just oppose to the turbulence and turmoil of the pre-1950 period. In here, the trial judge made a finding I think that goes to the very heart of the case. He said that the United Mine Workers negotiated the 1950 whole wage agreement with spokesman for the major coal producers in the nation and then has uniformly sought to impose the same agreement upon all the rest of the industry might reasonably lead to the inference of the mine workers had agreed with the major operators that it would impose the national agreement upon the rest to the industry, and equally reasonable inference is that the union was but following the pattern of industry wide bargaining established since prior to the turn of the century in electing to negotiate with the agreement with spokesman of the major coal producers and was but following its historic policy of national uniformity of labor standards in seeking to impose the national agreement upon the rest of the industry. Again, they contend that there was predatory pricing in the TVA market on the part of two coal companies in which the respondent union had an interest -- a financial interest. The trial judge in an exhausted analysis of the pricing history in the TVA market over a period of years found not only was there no predatory pricing by the two companies at which the union had an interest, but that at all times the two companies were merely attempting to meet competition rather than to lead the market downward. But each of these subsidiary issues, the trial judge was applying the preponderance of the evidence standard and he was finding that petitioners, the plaintiffs below had failed to satisfy this standard or proof. Finally, if the Court please there was a charged that there was turbulence and turmoil in the Southeastern Tennessee coal fields during the relevant period that there was violence and that this was ascribable to the mine workers. In this instance, once again a trial judge made this finding, he said that the United Mine Workers activities in recent years in the Southeastern Tennessee coal field can be explained equally as well as being unilateral action in pursuing its own interest and policies as they can be explained by inferring that the UMW was acting in furtherance of the conspiracy. With respect to the issue of violence, it was the same violence that was averred before this Court in Gibbs against the Mine Workers of 1966 and he applied the standard of proof mandated by this Court in that case and found that there was no evidence, whatsoever they support an inference that the respondent union was responsible for it and in that instance, the clear proof standard applied.
Warren E. Burger: Mr. Williams, when the trial judge entered for one of the better word that if you’ve been applying a conventional preponderance rule he might have arrived that some different conclusions, what area do you say he was directing himself to?
Edward Bennett Williams: I think there were two issues clearly, Mr. Chief Justice in which the clear standard of proof applied. One issue was whether or not the mine workers union was responsible for violence which was averred in 1960 and in 1962 in the Southeastern Tennessee coal fields. The trial judge said the clear standard of proof applies here because the doctrine of respondeat superior is applicable. And where the doctrine of respondeat superior is applicable then I have to apply standard of clear proof. He also said, if the Court please, that if at one point he were deciding whether the union was responsible for any agreement that might have been made although he never found that such an agreement was made if he were to decide that the union was responsible for any illicit antitrust agreement made with the BCOA, he would have to apply the clear standard of proof because once again for the doctrine of respondeat superior would be applicable. And where that is applicable before a union or an employer can be held in a labor dispute, Congress has mandated under Section 6 that clear proof is necessary on that issue. So there were two issues clearly before us where that doctrine was applicable and I suggest that he found that entirely properly and then all other issues he applied the appropriate standard namely the preponderance of the evidence standard. And an analysis of his findings beginning at -- I believe at pages of 149 to 158-A of volume 1 of the record which is his opinion and which is the overview of all the facts shows that he clearly understood what the burdens were another -- the petitioners criticized us and chastised us for departmentalizing and dismembering and fragmenting and parsing these opinions saying you have to take the overview. You have to look at the whole panorama effects. This is what the trial judge said on that. There remains to be accomplished in evaluation of the full record upon the trial of this case when viewed as whole rather than when viewed in segments as has thus far been necessary. Having taken a look at the individual figures one by one, it’s now the duty of the court to look at the panorama and this was he says he looks at the panorama, while many inferences favorable to the plaintiff’s contentions can reasonably be drown from the evidence. In every instance, a no less equally reasonable inference can be drawn to the contrary. In other words, at best he found the evidence in equipoise which does not even satisfy the preponderance of the evidence standard. So I suggest, if the Court please that the judgment of the trial judge was reached entirely in accord with the appropriate standards of proof and that it should be affirmed for that reason.
Warren E. Burger: Thank you Mr. Williams. Mr. Rowntree, you have about three and a half minutes left.
John A. Rowntree: Thank you Mr. Chief Justice. Counsel says that the court gave a complete overview at the end of his case. However, he pronounced the continental or rule about having to judge the whole case is complete picture, but he did proceed again to dismember the case and then this dismemberment and the overview. He never looked at this Protective Wage Clause again and you can’t interpret that Protective Wage Clause particularly paragraph “A” without looking at the whole picture of this case. We ask the Court to read it, the paragraph “A” particularly. I think its stretching construction beyond reason to whole that it’s limited to the 82% of the industry in the first place. But we say even if it is confined to the 82% of the industry, still it’s going to mean inevitably that hundreds of companies are going to be deprived of any right to survive in this industry. Now, the application of the clear proof --
Harry A. Blackmun: Suppose everybody doesn’t -- no one needs or has to belong with the employer or union?
John A. Rowntree: No, sir.
Harry A. Blackmun: What if he doesn’t want to sign up the agreement that’s negotiated for the unit -- doesn’t need to be a member of the unit?
John A. Rowntree: That’s correct Your Honor and you could belong to BCOA or not. We take the Illinois Coal Operators Association, one of the two largest -- one of the three largest associations. They sought freedom from BCOA according to this record for many years and finally went into it. But and they sought it [Voice Overlap].
Harry A. Blackmun: How many cases have been tried in which the union has been sued for damages on a course of action like this?
John A. Rowntree: Alright, I think it’s about five cases. Now, the first two or first Pennington we brought that here. Now, then there was second Pennington where we lost without a jury and clearly that court upon this clear proof rule all the way to prove and predatory intent by clear proof.
Speaker: Is there any -- has any judge who construed the Protective Wage Clause as itself showing an agreement between the union and the unit to impose these wage standards on outside the [Voice Overlap]?
John A. Rowntree: The two judges who considered it were Judge Tyler in second Pennington. He held -- we have to prove predatory intent by clear proof to win and the second judge was Judge Wilson in this case and that’s all. Now, two juries have held to the contrary that Protective Wage Clause was intended to be applied to the whole industry as obviously it was. And this was a restraint on the economic freedom of the whole industry. This clause says that union will not make any change in any of these units that it’s got the contract on.
Byron R. White: Was it your position that if the Protective Wage Clause is construed to require the union to impose the wage standards on outsiders that the plaintiff has made out a violation to the antitrust laws or only that the union’s exemption is forfeited?
John A. Rowntree: We say that it should be per se violation, Your Honor. Regardless of purpose or effect as Your Honor said in Pennington. This must be a per se violation. The employers in the dominant units got no right to tell the union what it can do in the other units.
Speaker: [Voice Overlap] What if they feel is one of the violation of antitrust laws was in dealing with –-
John A. Rowntree: I beg your pardon?
Speaker: The Pennington did deal is what a violation of antitrust laws, was it? They just dealt with when the exemption applied?
John A. Rowntree: Your Honor says that such an agreement that is an agreement to apply certain wage to terms in other units violates antitrust policy regardless of purpose or effect and we say that should be the law. It’s got to be the law. The dominant units can’t tell the union how to conduct itself in these other bargaining units and we say -- I’m sorry.
Warren E. Burger: Go ahead. You may complete your answer.
John A. Rowntree: That the law cannot allow the dominant unit to keep all the other bargaining units under the same terms for the duration of the understandings between the dominant unit and the union. In other words, this national contract still goes on today and if the other units can’t change their terms during the continuation of the national contract, we never will have any competition in this industry, it’s practically going today.
Warren E. Burger: Thank you Mr. Rowntree. Thank you Mr. Williams. The case is submitted.