Earl Warren: Number 23 Patricia Waldron, etcetera, petitioner versus City Service Company. Mr. Kelly.
William E. Kelly: Please the Court. I represent the petitioner Patricia Waldron the Executrix of the estate of her late husband Gerald B. Waldron, who is the original plaintiff in this action. For the purposes of simplicity the parties on this appeal continue to refer to Mr. Waldron as the petitioner or the plaintiff. A word of background; in 1951 Iran nationalized its oil resources. Up until this time and for many years the Anglo-Iranian Oil Company, one of the defendants in this action, now known as British Petroleum had operated the Iranian oil industry under a long term concession. The act of nationalization in effect kicked the British out. The British retaliated and in this case when I refer to the British, I refer to the British government as well because British Petroleum is 51% owned by the British government, retaliated by a boycott on Iranian oil. The other defendants in this action who are the international major oil companies respected this boycott with the result that the Iranians from the spring of 1951, indeed throughout the entire period of time we refer to were unable to sell any oil in the world markets. In 1952 plaintiff who conceitedly did not have any experience in the oil business up to that time nonetheless obtained a contract from the Iranian Government allowing him to purchase an enormous amount of oil, 50 million metric tons of oil at significant discounts below the posted Persian Gulf prices. Thereafter he attempted to sell this oil in the United States approaching over 50 independent oil companies and he was unable to sell a single drop of that oil. One of the companies he approached was the respondent Cities Service and it is that particular aspect of the case that is before the Court today. His contract expired in the summer, 1953. The action itself was commenced on June 11, 1956. It is of course an action, treble damage anti-trust action, a private antitrust action. Almost immediately the defendants claiming one case at least that they never heard of plaintiff obtained a stay of plaintiff’s discovery in order to permit them to depose him and to frame answers in response to the complaint. That stay which was obtained in early July 1956 has been enforced throughout the entire ligation, 11 years. It in enforced today but plaintiff has been under that state for the entire period of this litigation. He has had no opportunity to conduct any general discovery whatever. In 1960 --
Earl Warren: What date was that, you were saying.
William E. Kelly: The stay itself was obtained I believe it was July 3, 1956, an order of the district court.
Speaker: Stay of what, stay of what
William E. Kelly: Stay of any discovery on his part, preventing him from taking any general discovery. I will return to this point in a moment Your Honor. I just want to lay out the overall action and the appeal. In 1960 while the plaintiff was still under this stay and after the plaintiff had been deposed Cities moved for summary judgment. This motion was adjourned several times to allow plaintiff to conduct limited discovery of Cities Service. The motion was finally granted in 1965. Appeal followed to the circuit court and certiorari was granted by this Court. We make three points on this appeal. First of all that it was error for the district court to limit plaintiff's discovery throughout the entire course of this litigation and particularly when he was forced to oppose a summary judgment by Cities Service, that is point one of our brief. Point two of our brief is that in opposing this motion for summary judgment, the burden of showing treble issues of the fact was placed on the plaintiff. It should have been placed on the defendant, who in his papers utterly failed to negate the allegations of conspiracy and it is that we claim as the second error, that is point two of our brief. Point three of our brief is even on the limited facts that we have been able to gather in the course of the 11 years, we nonetheless believe we make out a case for the jury on the conspiracy issue against all defendants. Now let me go back and give some of the background facts.
Speaker: [Inaudible]
William E. Kelly: Yes the plaintiff was boycotted completely from selling his oil that he had under this contract in the United States and I'll develop that point, I am just coming to that point factually right now. Time will not permit us to discuss all of the incidents, but there are two that I think bear reputation. As I said before when he obtained this contract in May of 1952, plaintiff immediately got together with a number of other people, 4 or 5 in number and approached over 50 independent American oil companies and asked them, would they be interested in purchasing oil that he had under the contract from the Iranian Government. Universally without exception, all refused to deal with him when they heard where the oil was was coming from. In good deal we've citied in our four or five specific examples one went even so far of putting a letter saying that the threat of retaliation by the majors is too great. Now one of the background facts is important. I think it is important for the Court and I am sure it probably understands it anyways that 99% of the world's oil production is under the control of the six or seven defendants in this action. The international major oil companies, all other independent oil companies have to purchase their oil from these defendants.
Abe Fortas: Are they still in the action?
William E. Kelly: All of the defendants, oh yes, except one Gulf, there has been a settlement, Gulf has dropped out of the case, it's now in the position of a co-conspirator.
Abe Fortas: Are they all respondents before us?
William E. Kelly: No, just Cities, who have moved for summary judgment in 1960 and just that branch of the case is now before the Court.
Abe Fortas: What's happened to the rest of the case?
William E. Kelly: It waits.
Abe Fortas: The rest of the case is pending and this -- so what you have to do, am I correct in assuming on what you have to do here is to make a case for relief that you seek against Cities Service itself.
William E. Kelly: Just against Cities for the moment.
Abe Fortas: Yes.
William E. Kelly: Cities in the facts that I'm beginning to state aren't disputed by Cities, I am coming to the peculiar role of Cities in this particular matter in a moment otherwise the overall conspiracy is assumed for the purpose of this motion and then we have to deal with Cities as a particular exception I began to point that out I'll come to that in a moment. I think I had just reached the point where I said that none of the independent oil companies would even take this oil because they were afraid of losing the supply that they would obtain from the major oil companies. One particular example of how the cartel, if you would please, touched the plaintiff was in the spring of 1952, plaintiff was required to obtain a letter of credit under his contract to purchase oil from the Iranian Government. He went to the Chase National Bank now known as the Chase Manhattan Bank. He was on the verge of receiving a letter of credit when a telephone call came into the Branch Manager telling him we can't do it. Chase is unable to do it because it has preferred customers in the oil business. Branch Manager very excited and went downtown met the Chase Vice President and this Chase Vice President told him that one of the preferred depositors or customers of the Chase Bank was a major oil company, the Gulf Oil Company. Colonel Drake had issued instructions, Colonel Drake being the Chairman of the Board not to give plaintiff a letter of credit. This is the way, this is the background fact, I don't think it's too important but it gives you an example I think of how this thing works. Now coming to Cities; Cities was not a major international oil company in 1952. It was a deficit oil company. It had to purchase oil from the majors. It had purchase one half of its daily requirement from the majors. One of plaintiff's associates had been a former employee of Cities Service. He suggested that they go to Cities Service to see if they would be interested in plaintiff's contract to purchase Iranian oil. They went into see plaintiff -- they went into Cities, and Cities was vitally interested in this. There was meeting between plaintiff's associates and several of this Cities Executive Officers. Plaintiff was asked, could he go to Iran where he had been to obtain this contract originally where he met the high officials of the Iranian Government including Premier Mossadegh, could you obtain an invitation to W. Alton Jones, the President of Cities Service inviting Mr. Jones to Iran? He said he could, he'd try it, went back to Iran, obtained the invitation, brought it back and delivered it to the Cities Service's officers. Jones was delighted at this point. Immediately, he moved the Cities Service executive personnel to see what could be developed with this opportunity. A working party was formed consisting of three experts in the production, refining and distribution areas and they together with Jones and plaintiff and plaintiff's associates left for Iran where there was a three or four week inspection of the Iranian oil facilities. One of the things that was prepared by one of the Executives of Cities Service was a draft report, a secret report laying out how Cities could use this opportunity to ensure a long-term supply of oil and they made no bones about it this time, this was a tremendous opportunity for them at this point. They went to Iran. Now this received a considerable amount of publicity back in 1952. I don't know whether the Court remembers it or not, I vaguely do myself. When they got to Iran there were rumors of this, that the plant, the Abadan Refinery had been sabotaged. They went around and they looked at it. This was the purpose of the inspection tour and they found that everything was all right, there was no particular problems at all. The opportunity was there, there were no obstacles in the way. They met with Premier Mossadegh. Jones had an oral conversation with him, outlined his findings, promised to give Mossadegh a written report upon on his return to the United States, and with this they came back to the United States. Now there's one incident that I want to call to the Court's attention. Kuwait Oil is in this case and we will hear a little bit about it later. Kuwait is a concession, Kuwait concession is operated, it's little bit below Iran on the Persian Gulf is operated by British Petroleum and Gulf jointly. In the middle of these negotiations in Iran, unknown to plaintiff, Jones secretly went down to Kuwait. what happened there, we don't know, we don't have any idea. In 1960, this is very important because it was expressly denied by Cities that Jones had gone to Kuwait, the very time this motion was made, I'll comeback and explain the significance of that in a moment because Jones' affidavit was never, never submitted on the summary judgment motion that is this that what we say, this is manner we say that Cities never negated the conspiracy in this case, the allegations of conspiracy. Jones returned to the United States. On the way to and from the United States, he met with the gentleman named Sandberg in Holland. Now, we don't know Sabdberg's role in this case either except Watson, Cities Executive Vice President believed him to have a connection with Royal Dutch Shell one of the co-conspirators in this case. We don't know whether he has that connection or not, an affidavit has been submitted by Mr. Sandberg in which he denies any such connection. What is known is that Sandberg is the head of one of the leading private banking houses in Holland, Pierson & Heldering. The affidavit that's submitted by Sandberg doesn't say what Jones discussed for five days on his way to Iran or in the trip back. Again, we say this is most significant, we don't know what occurred. The promised report to Mossadegh was prepared by Cities personnel. However, at this time there began to be an outcry against Cities activities in Iran. The American Petroleum Institute convention in November 1957, excuse me, not 1957, 1952, Jones went to that convention bearing in mind that he's a deficit oil company. We have in the record what occurred an admission by one of the Cities' personnel to plaintiff and the quote is in the record. “Boys, we really got into hot water over this one. The big boys said that they wish Jones well in his Iranian oil venture and hoped he get a lot of oil and hoped that he got it right away, because he wasn't going to get any more from them.” Now, at this point Jones immediately change his direction, no longer is he interested in plaintiffs --
Abe Fortas: On what point it appears in the record?
William E. Kelly: Well, that's a quote in the deposition.
Abe Fortas: Of whom?
William E. Kelly: Of the plaintiff Your Honor, at page 4034 of the plaintiff's deposition which is some 6000 pages --
Abe Fortas: The plaintiff overheard this or?
William E. Kelly: No, it was the statement by plaintiff, two plaintiffs by one of the Cities Executive Officers, a fellow named Wetzel (ph).
Abe Fortas: Was that -- was Mr. Wetzel ever called as witness?
William E. Kelly: He died before we ever to got a chance to take his deposition that's one of the points we make throughout this case. Four or five people have died Cities' officers that we have never been able to depose, including Jones, I'll come to that.
Abe Fortas: Right.
Speaker: [Inaudible]
William E. Kelly: I am sorry Your Honor, I can't hear you.
Speaker: Is there a testimony [Inaudible] Mr. Wetzel's death?
William E. Kelly: My client's testimony occurred before Mr. Wetzel's death. Mr. Wetzel died in January of 1960 as I recall.
Abe Fortas: Was it contraverted?
William E. Kelly: No.
Abe Fortas: By Cities Service in any way?
William E. Kelly: No, not at all.
Abe Fortas: Or is that you want us to take that as incontrverted statement to this point in the litigation?
William E. Kelly: Well I think Cities --
Abe Fortas: -- that the Cities Service employee presumably I don't know what that means. If that a Cities Service employee has said that the major oil company said to Cities Service, said to Mr. Jones of Cities Service you get the Iranian oil first, if you don't let them get any from us?
William E. Kelly: Yes.
Abe Fortas: Alright.
William E. Kelly: I think the point is Your Honor when I come to this Your Honor and this motion Cities concedes all these facts except one thing and that is that Sandberg incident that I just referred to, none of these are disputed. After Jones returned to the United States and after these threats, changed direction immediately and at this point plaintiff entree to Iran were dropped. Jones immediately began to follow-up another deal that had been pending with Kuwait Oil, with Gulf for the purchase of Kuwait oil. This contract was finally executed in January 1953, I'll come to that again in a moment. At the same time Jones began to take the position that the only honorable solution to the Iranian situation was to compromise with the British and he wrote such a letter to incoming Secretary of State, Dulles and incoming Secretary of State Brownell (ph), he had kept the United States government informed what his activities were during his period going down to Washington, meeting with President Truman before he went to Iran. Now the focus was entirely different. Now it was compromised with the British Government, compromise with British Petroleum. The promised report to Mossadegh which we have is an exhibit in this record was never sent, it was never sent, although we don't know why because there was one very significant recommendation in that report, two recommendations. One significant recommendation was that the Iranians like the Mexicans in 1938 could begin to develop their own oil markets that would take them much, much longer but there was no obstacles to that approach. This report was never sent so far as we know. Plaintiff's contract expired in June of 1963 as I indicated before without him selling any oil whatsoever. The action was brought in 1956. The stay of discovery immediately imposed and plaintiff's depositions begin some 60 some, some 62 or 63 deposition sessions were held between 1956 and the end of 1958 at which time the plaintiff moved in the district court for an order terminating his deposition compelling the defendants to answer. They now knew enough about plaintiff to surely submit answers to the complaint. A motion was assigned and came on to be heard regularly, the regular course of the motion by Judge Herlands who later was assigned to the case for all purposes. Judge Herlands not denied the motion, but he then increased the term of the stay upon plaintiff by now giving defendants, although they hadn't ask for it at all, the opportunity to depose all of plaintiff's associates and send a schedule of a 174 days to complete the deposition, the cumulative depositions of plaintiff's associates and in addition asked everybody how many more days they needed to depose the plaintiff. I think the total came to 60 some odd sessions. Now the entire schedule was filled. Plaintiff was in fact only deposed for 30 some odd sessions more. The witnesses' depositions I believe consumed some 50 to 60 days, 60 deposition days. In any event, the plaintiff's deposition ended finally in I believe it was January or February of 1960. Cities immediately moved for summary judgment. Plaintiff is still under the stay that I referred to. The motion is an interesting one because Cities took the position at this time that since plaintiff had admitted in his testimony, that the two items, that he saw in the newspapers in 1954 and which caused him to think, he had particularly no idea about this before, an announcement of the purchase of oil by Cities from Gulf, which had begun in 1952, and the fact that the Cities had gone into the Iranian consortium, which was the ultimate solution to the case, the ultimate solution of the Iranian situation. These two events are what caused the Cities, they were reason that caused plaintiff, they were the reasons why plaintiff brought this action. Cities therefore focused just on these two issues in attempt to disprove them as if they were essential question in the case. A motion came on to be heard. Mr. Hill's affidavit was the only affidavit submitted by Cities. He was an attorney working with Cities and had been the chief negotiator on the contract with Gulf and in connection with Cities' opportunities to participate in the consortium situation. Jones' affidavit was never submitted. The motion came on. We argued that it should be denied because it was impossibly premature. We couldn't begin to oppose it. We haven't had deposition of Jones, a key figure. We have pointed out previously in 1958 that we were losing time that we ought to be permitted to examine these witnesses. We listed a whole series of people we wished to depose in opposition to the motion. Instead, we were told to oppose the motion on the merits, and we attempted to do so, emphasizing however that we wanted discovery throughout.
Abe Fortas: Isn't there some general rule in New York in the Southern District of New York with respect to taking depositions as between the plaintiff and defendant?
William E. Kelly: There was a rule of priority when the case came on in 1956.
Abe Fortas: And what was that rule?
William E. Kelly: If the defendants served their notices first, they had priority to complete the deposition. That rule has since been changed.
Abe Fortas: I know it, but that was a rule and that was a rule that governed this case and it said if the defendant serves notice first then the defendant goes into completion.
William E. Kelly: That's right.
Abe Fortas: So that was a rule that was invoked in this case?
William E. Kelly: It was a rule that would be considered to apply.
Abe Fortas: Your fact, and I understand your fact and--
William E. Kelly: Yes.
Abe Fortas: --the application here and, so that there wasn't any special rule devised just for this case?
William E. Kelly: I wouldn't say so, but it's a case on itself because it's a --
Abe Fortas: I understand your position on that.
William E. Kelly: Yes, yes there was a rule in effect it since has been changed and now there is no priority as such there can be concurrent discovery, which is of course what we are asking for. It wasn't so much that we were protesting against our deposition be taking, which I didn't, but we wanted to take the deposition of the defendants.
Abe Fortas: I am sorry, but I think we haven't had -- because of the change in order of the cases and then the time we spend on these briefs, did you take any -- did you have any pretrial discovery at all, did the plaintiff have any pretrial discovery at all?
William E. Kelly: None as such, except what I am coming to I was just about to say that we were giving, we were given the right to depose Hill immediately after the conclusion of this first hearing on summary judgment.
Abe Fortas: Well as of the time that the motion for summary judgment was filed by the defendant, did you have, you had no pretrial discovery?
William E. Kelly: We haven't had any to this day Your Honor.
Abe Fortas: Alright.
William E. Kelly: None.
Abe Fortas: That what's you're going to tell us about now?
William E. Kelly: Now we are coming to the discovery, the limited discovery we had in connection with the Cities Service motion, and of course we asked that we should have general discovery of all defendants, because evidence of this conspiracy could be anywhere on the defendants' files. We were given the deposition of Hill despite the fact that we wanted Jones. Jones' affidavit had been withheld. Our position was we had dealt with Jones, we didn't know Hill. I don't think the plaintiff had even met Hill except possibly once casually while he was at Cities Service. This deposition was taken and completed. It revealed very little because Hill didn't know anything to speak of. He knew about the details of the contract and then in one significant case, he didn't even know that there had been a most favored nation's letter obtained by direct dealing between Jones and Drake of Cities Service. I see my time is up, I would like to save a few minutes for reply.
Earl Warren: Yes, you may, you my Mr. Kelly. Mr. Rifkind.
Simon H. Rifkind: Mr. Chief Justice may it please the Court. The case that I've just heard argued is somewhat different from the case to which I have spent about 11 years of my life. The plaintiff had been represented until this argument by the late Mr. Samuel Lane, who is a very able, very resourceful lawyer, in addition if I maybe allowed to say a very gallant gentleman. He has been lost at sea and on one have seen him for sometime, I assume his death is now presumed. So I shall assume that those departures from what happened from the story of this case to which my learned friend has just treated this Court are the result of a lack of familiarity, he not having participated in the many, many hearings, the many, many debates, the many, many briefs that have been exchanged, that I shall narrate in the course of my argument. But unless the force of what I want to say be forgotten I should like to address myself before I make my organized argument to a few propositions which Mr. Kelly has adverted to before the effect of them is forgotten. Number one, you were told that the plaintiff has been stayed to this moment from proceeding with his side of the case procuring an answer, or taking depositions, or doing anything of the kind. It is not so. Four years after the case began in 1960, I stated orally to Judge Herlands, the trial judge who presided, that I wanted to go ahead with the case that apparently my learned adversary then preferred not to move it along, and that I thought the reason he didn't want to move it along, was that he was waiting for the United States government to try a oil case which it had started and hoped that (a) the government might give him the proof which he needed or (b) he might have the judgment which would dispense with the proof. But the government never went ahead with that case, incidentally Cities Service was not a party to that case. Now I did not expect in 1960 that in 1967 I would again have to tell a court that my learned friend does not want to proceed with his case. He could have had his answers for five years. He could have had his depositions for years. Volume IV of the transcript of this record, which is available to the Court is the monument to these self-inflicted delays, which my learned friend has suffered from. Incidentally, I should say to this Court that as far as Cities Service is concerned, we did not make the motion, which called for the deposition to which Mr. Justice Fortas has addressed himself. It is true that a number of the other defendants who are still in the case did tell Judge Weinfeld who presided on that application that they had never heard of this plaintiff and that was a fact. He had never been in the oil business before. He was food broker in Denver. Cities Service had heard and had dealt with this plaintiff, consequently we were in no position to make any such declaration, but the other defendants made the motion and did persuade a very careful judge to allow them to examine first before they were required to answer. In the formulation of that decision I suspect that the -- then prevailing rule that he who first moved shall have priority played a part, but was by no means the only consideration, which moved the learned judge in making that decision. Now another thing that was referred to and I want to mention before I get into my argument is that the judges below that is both Judge Herlands who heard this case and the Court of Appeals that unanimously affirmed his judgment had imposed upon the plaintiff in this case the petitioner, the burden of demonstrating that he did have an issue, whereas he says the burden should have be been upon me to demonstrate that he had no issue. My learned friend is in error. I remember as vividly as I now stand that before Judge Herlands I was obliged to demonstrate his lack of an issue to the point where I was asked to demonstrate the elimination of every possible hypothesis of complicity in this conspiracy. That was the test which Judge Herlands imposed upon me, that was the test which he said, “I lived up to when I succeeded in procuring the summary judgment.”
Byron R. White: [Inaudible]
Simon H. Rifkind: I will try to give you that in a minute.
Byron R. White: That's alright, you go ahead and --
Simon H. Rifkind: I didn't make a note of it and maybe my colleague will find a few and I will furnish it. I do not want to pretend to a capacity which I -- like this case has been in progress now for a 11 years and I do not pretend to be able to remember the exact succession of events, but I'll do my best. The record reference is given at page 82 of my brief and it occurs at transcript volume three, page 97 and 98.
Abe Fortas: Judge Rifkind I take it you don't quarrel with the proposition on law, that's the first of the rules for summary judgment has a burden of showing that are no material issues of fact?
Simon H. Rifkind: Well of course I do not, that's been the law as long as I can remember the rule of summary judgment.
Abe Fortas: Yes of course, what you're saying is that was satisfied here?
Simon H. Rifkind: Certainly I'll go -- I want to make this point. I have not discovered expect for this frivolous suggestion that the Second Circuit notorious for its restricted view of summary judgment has misplead that burden. Except for that frivolous suggestion there is no question of law here. We're all in agreement as to what the rules relating to summary judgment are and as far as I can understand the only argument that my learned friend may properly advanced to you is that in this case the district judge and the Court of Appeals has misvalued the information at their disposal in deciding that as a matter of fact the plaintiff had not demonstrated the existence of a genuine issue. My learned friend said in the course of his opening remarks that he wants us to assume for purposes of this motion that all of the other defendants are guilty of a conspiracy. Well, I must part company with him and I hope this Court will. I hope that we will not argue this motion on the assumption that all of the other defendants are guilty of a conspiracy. Suffice it, I should think to my adversary's case is that there is a pending case before the district court now un-disposed off, indeed unanswered in which he asserts the existence of a conspiracy on behalf of the -- on the part of the other defendants, and that matter is at issue. That is per se or at least is in controversy. It has not yet to put at issue because no answer has yet been demanded by my learned friend from the other defendants. Today I in my brief I suggested that there were three times at which plaintiff changed course and indeed the Court of Appeals in its opinion calls attention to the fact that at three different stages the plaintiff adopted three theories of conspiracy here. Today for the first time I heard a fourth and today the fourth one was that Cities Service joined the conspiracy at some industry association meeting in November of 1952. I'll simply say to Your Honor that this is the first time in all these many years that this motion has been pending and the motion was made in 1960, seven years ago and this is the first time de novo that I hear suggest that the conspiracy was joined in November of 1952. The question was asked as to whether the rumor or the statement that was attributed to Mr Wetzel was denied. We had no opportunity Mr. Justice Fortas or an occasion at which we could have done that. We had hoped to be able to depose Mr. Wetzel but he died as have a number of other persons connected with case before his turn arrived. But it is not true that Jones began to take a different position after that meeting because the position that is attributed to Jones is one that he consistently maintains throughout as the district court and the Court of Appeals found. Now let me go on to the regular portion of my argument. The action as you heard was instituted against seven companies, one of them Cities Service moved for summary judgment. It was granted by Judge Herlands. The others also moved for summary judgment, that you have not yet been told. Later in the proceeding, the six other defendants likewise made a motion for summary judgment and in the same decision which he looked with favor, but did not finally grant upon Cities Service motion Judge Herlands denied the motion of all of the other defendants, so that the action against them is still in effect and it was the granting of the motion in favor of Cities Service which was unanimously affirmed by the Court of Appeals. Both courts agreeing specifically on this proposition, that there was no issue to be tried, no genuine issue. But I think it is interesting if you will read the opinion of the Court of Appeals and of the district court, that they went beyond that. They not only said that the plaintiff had not demonstrated the existence of a genuine issue, which they did so, but they also said that it appears plain that Cities had nothing to do with this conspiracy.
Speaker: Just like the other I mean [Inaudible] is that a separate action?
Simon H. Rifkind: No, and they were co-defendants in the same action. But they, motion to dismiss was denied whereas our motion to dismiss was granted. I will develop it a little bit and you will see very conspicuously why that differentiation was made. I assume that the legitimate errors of which my learned friend may complain here is two. First that the respondent has not in fact satisfied the requirements of the rule which must be met before summary judgment may be granted; and second that the trial court abused its discretion in limiting its deposition, its examinations of the plaintiff under Rule 56(f). Now I should like to take a moment to emphasize that. 56(f) is a subdivision of the summary judgment rule which provides that if it appears that the person to whom the motion is addressed, is unable to furnish the necessary affidavits to resist the motion for some good and valid reason, the court may authorize him to take the deposition with respect to those matters that he says he wants to establish. That of course is an entirely different section of the rule from that which provides for general discovery, 26 Fd 2nd. Now I would like to emphasize here that contrary to what my learned friend has said and contrary to what he says in his brief, the motion he made before the district court was for examination under 56(f) and not for the general right of examination. Indeed I give you the record reference to that is transcript volume three, page 81. He said he wanted an opportunity under Rule 56(f) to conduct discovery proceedings and when the Judge Herlands rendered his decision he said with respect to the motion under Rule 56(f) and when the Court of Appeals wrote its opinion it addressed itself to 56(f), but I go further and again I must assume that in this vast record of thousands of pages Mr. Kelly has not been able to familiarize himself with all of it. In the oral argument Judge Herlands addressed himself to counsel and said, “I call your attention to fact that 56(f) is more restrictive in scope than the general discovery proceedings under 26 and so forth. Do you realize that?” Mr. Lane said, “Yes, I realize it and I accept it.” Now I should like to address myself to both possible errors to which Mr. Kelly has adverted, a few preliminaries.
Abe Fortas: Well I beg your pardon Judge Rifkind. I don't quite understand the end of that last point. Is Mr. Kelly's point that the – his access to depositions was cut off prematurely and is your answer to it that he willed only under Rule 56(f) and that he exhausted the deposition taking the process under 56(f)?
Simon H. Rifkind: Well, there's no question that he utilized it to its full extent. He had several opportunities to examine under 56(f) as the Court of Appeals says ample opportunities, but I'm simply saying that down below with respect to my motion for summary judgment he never asked for a more generalized examination, so that I don't see how I can be now subjected to the argument the he hasn't had it. He never asked for it as far as my motion was concerned.
Abe Fortas: Was there any order added at any time that terminated his opportunity to take additional depositions under 56(f)?
Simon H. Rifkind: Well there came a point -- let me put it to you this way. This motion was made, it was held in abeyance until he could examine Mr. Hill for reasons, which will appear in a moment. He then examined Mr. Hill and he produced nothing and we went back to the judge several years later and we said he's come up still with nothing. He said well --
William J. Brennan, Jr.: Did Mr. Kelly say, it wasn't Hill he wanted to examine; he wanted to examine Mr. Jones?
Simon H. Rifkind: Oh, I'll come to that in a moment Mr. Justice Brennan, if you allow me? The judge said to him, “Start with Hill,” and I'll tell you why in a moment, but just let me answer Mr. Justice Fortas' question. Then he came back with a new theory and that new theory, a new hypothesis of conspiracy justified a broader examination. Whereupon Judge Herlands said to him, “I'll allow you to examine every living person who participated in the Iranian adventure. You can examine Mr. Watson, the Chairman of the Board of the company, Mr. Fried and Mr. Heskin and by that time Jones was dead and I'll tell you how that came about. So that he had every examination. When he finished with those he still produced nothing and he came back and he said well let me have a broad examination in Brooks and the judge said, “No, you had your chance,” and that was the story. Now Jones, Mr. Justice Brennan, when this case was presented to the district court, it came up in the following manner and I think it is of the utmost gravity that we get – important that we understand. The plaintiff in his complaint segregated Cities Service from all of the other defendants. He said that the other defendants engaged in a cartel, but that Cities was not a member of it, in so many words. He said that the other defendants had conspired to monopolize the Iranian oil, but that Cities was not a member of it. He said that the other defendants had conspired to boycott his oil, but that Cities was not a member of it. He said that the others had conspired to prevent his access to the money market, but that Cities was not a member of it. He said Cities joined the conspiracy and I quote his words from memory, “By these acts,” and what were these acts? These acts he said were that he had learned later, mind you these events occurred in 1952; he brought his complaints in 1956. He said he discovered in 1954 that in 1952 Gulf and British Petroleum had conspired to bribe Cities Service with a contract to buy oil from Kuwait. He said when you learn that, he said by these acts it joined the conspiracy, and then he went on to say it was thereafter rewarded for joining the conspiracy by being allowed to participate in a consortium which was established in 1955. So when I proceeded to examine the plaintiff, and I would solicit your attention to that, I examined him precisely and I asked him this question. Are you saying that except for these two events Kuwait and consortium, you have no fault to find Cities Service? He said that is right. I went further, I said would have made them defendants but for these two things? He said, I never would have made them defendants, and he had good reason for saying so, why? Because Cities Service treated him with the utmost consideration although he was utterly unknown in the oil business. He testified that his only contact with the oil business was an occasional visit to the corner pump to buy 10 gallons of gas for his car. Although he was a man who had never earned as much as $10,000 a year, he was trying to enter a multi-million dollar business, although he had never seen a tanker, he was looking for a fleet of several hundred tankers, you can imagine. Nevertheless, Cities Service embraced him and with him went to Iran and they made a thorough investigation and when he got through and the whole thing blew up and nothing came of it, he came back and he said I spent some time and some money on this, won't you reimburse me and they reimbursed him, and he was very happy and their relations were of the most amicable. But he later said that he discovered this Kuwait and consortium deal, he said that's why he named them as defendants. Shall we examine him of that and having established, we then came into court with documentation of monumental magnitude to demonstrate that he was wrong about his basis of his belief, that the Kuwait contract had been started in 1948, had been negotiated, it was a very elaborate operation that involved the building of many tankers, it involved the building and assignment of a refinery and before Mr. Waldron had ever set foot in Cities Service office, the contract between Gulf and Cities Service for Gulf -- Kuwait oil had been fully approved, but only the signature remained open. That was our proof and we also demonstrated that as far as the consortium was concerned far from being invited into the consortium, Cities Service fought like a tiger to be given an opportunity to participate. It finally got a minuscule invitation of forty five hundredths of a percent, and they said we won't take it, it's too small to bother. So having demonstrated that we made our motion for summary judgment, almost there, but here was a man who says the only reason I made you a defendant is because I think you were bribed by Kuwait and rewarded by consortium, here is the proof that it isn't so. Well our learned adversaries did their best to try to demolish what we did, but they failed. So much so, that after that argument we never heard another word about Kuwait or consortium until we got here into this Court, as if this was a trial de novo. Indeed --
William J. Brennan, Jr.: Well judge how does this lead up to Jones if that's what you --
Simon H. Rifkind: Well, the reason we didn't tender Jones in the first instance was because Jones was irrelevant to that discovery since he had nothing to do with the Kuwait or the consortium operation, with that --
William J. Brennan, Jr.: What did Hill have to do with it?
Simon H. Rifkind: Oh Hill was in-charge of it. He was the executive who had negotiated the entire Kuwait operation.
William J. Brennan, Jr.: Well when was Jones killed?
Simon H. Rifkind: In 1962. He was killed in an airplane accident and -- so at the time that this deposition was ordered of Hill, Hill was the logical man, indeed they asked him.
William J. Brennan, Jr.: When was that?
Simon H. Rifkind: This was in 1961.
Speaker: Was order taken in 1962?
Simon H. Rifkind: 1962 yes. In 1961, and then Mr. Judge Herlands said to my adversary, “Start with Hill. If it then develops that you need somebody else, I'll allow you.”
William J. Brennan, Jr.: Did you adversary ask for Jones at that --?
Simon H. Rifkind: No, no, no, no. He didn't ask – he suggested that he wanted to examine. Now by the time Hill's examination was taken Jones was dead. The reason that Hill's examination was delayed was because my learned friend just didn't move it along, he took a year before he reached us. I think 20 days of examination. 25 days examination was taken during that whole year while we waited clamoring for an opportunity to have him examine Hill so that we could go along, and as I told Judge Herlands, I wanted to resign from this very expensive club in which I was a compelled member, it was very expensive for Cities Service to participate in this controversy. Well my time is running very fast.
Earl Warren: You may have five minutes more.
Simon H. Rifkind: Thank you, Your Honor.
Earl Warren: And you too Mr. Kelly you have additional five minutes.
Simon H. Rifkind: So we come to the point where the Kuwait and consortium deal was destroyed and demolished and so much so that Judge Herlands made a finding. He said, “I am convinced to a certainty that neither Kuwait nor consortium had anything to do with the conduct of Cities Service in this case.” Thereupon permissibly they came up with a new hypothesis. They said it wasn't Kuwait, consortium, it was something different. They said –-
William J. Brennan, Jr.: By this time Jones had --?
Simon H. Rifkind: Gone. They came in and said this conspiracy really happened on September 25, 1952, pinpointed it just like that, where the dart on the date. On that date Waldron and Jones said goodbye to each other in Paris on their way back from Iraq and said Mr. Lane, at that moment of time Jones joined the conspiracy and how does he measure that? He says, they were going one way and then he turned a 180 degrees around and went the other. What was the other way? He says until then they were interested in taking over the management of the Iranian industry, on that day he decided he wasn't going to do it. Well a lot of water went over the dam after that time until we come to a later date and Mr. Lane files an affidavit under oath in which he says, “I have found out that I was wrong.” You will find a citation to the record where he said it on page 54 of my brief. He said, “It does not happen to be the fact however that Cities lost interest in Iranian oil,” and he negates his 180 degree turnaround. And if you read the opinion of the district court and the Court of Appeals you see that they too find that it was a misapprehension on our learned friend's part when he thought that was. Indeed after September 25, Jones did a hundred different things to continue his interest in Iranian oil. So much so that he went out and hired John W. Davis to write an opinion to establish the proposition that the British were wrong and that the Iranians were right. He kept that opinion and he sent it to the incoming Attorney General Mr. Brownell and to the incoming Secretary of State Mr. Dulles and he said this is what I believe the law to be, but he also said having been in the ramp they came to the conclusion that he can't overnight take a market which had existed in the eastern hemisphere and suddenly convert it and make it available for the western hemisphere. He didn't know how to do that, and he says you can't take an industry of that size requiring 500 tankers to move and suddenly overnight build a fleet of that kind in order to shift that market into the western hemisphere and other reasons why it couldn't be done. He said why he couldn't operate the plant because it was built by the British and they are the only ones who control the replacement and repair parts for it. Well there upon they said other things and just to briefly use up my few moments, we then submitted an affidavit and in which I listed every blessed fact that have been stated by the plaintiff and demonstrated to a QED but they didn't have an issue. Then it was under the pressure of that that Mr. Lane wrote in his brief what I quote on page, top of page of 54 and which appears at volume 2, page 460 of the transcript. He said, “I don't claim -- plaintiff doesn't claim that Jones was acting on behalf of the conspiracy when he went to Iran, that was in August of 1952, or when he held his Tehran Conference, or when he wrote his conclusions to his draft report,” and that he says occurred on October 31, 1952. So that we have Mr. Lane's admission in the most formal manner that you could present it in the court, that down to October 31, 1952, Jones had not yet joined the conspiracy. Now my learned friend in his reply brief charges me, he says that I have read that language out of context. I suggest to you that if you read it, you will find that I did not read it out of context, but I'll go further. I made that argument in the Court of Appeals and Mr. Lane was there and Mr. Lane never said that I spoke anything out of context with respect to that. He did not say I misunderstood him. This was an admission that down to that time there were no conspiracy. The next date of significance is 1955, that's the date when the consortium is put together, but we have it in this record that in 1954 the representative of Cities Service went down to Washington and pleaded and argued against the so called conspiracy. They told Herbert C. Hoover, then the Assistant or Under Secretary of State that the consortium idea was antithetical to non monopolistic practices in the oil industry and that it was a mistake to create it and that what they ought to do is open it wide open and they fought for that, certainly none anti-conspiratorial conflict.
Abe Fortas: Well, did they ever join it?
Simon H. Rifkind: As I said the Secretary of State appointed Price Waterhouse, a company to examine applicants into the consortium and Cities was one of the applicants and they came out with a report and said they were qualified to enter it, but they were entitled to forty five hundreds a percent of 1% of the supply, and the Cities Service said they wouldn't be bothered with that. They turned that over to Richfield Oil Company and I think Richfield did it. The majors that we talk about here got 30% of the total consortium allotment under that consortium arrangement.
William J. Brennan, Jr.: Which is that then only as Richfield joined is there any connection of Cities Service was --?
Simon H. Rifkind: Cities Service at that time is a minority stock holder of Richfield, that is true.
William J. Brennan, Jr.: Cities Service as Cities Service never joined?
Simon H. Rifkind: Never joined and has never been a member of it.
Abe Fortas: Cities Service has not acquired Richfield, isn't it?
Simon H. Rifkind: Cities Service has not Richfield. Richfield was as a matter of fact it split off from Cities Service and joined with Atlantic Oil.
Abe Fortas: Sorry, I'm sorry.
Simon H. Rifkind: That was another case in California.
Speaker: [Inaudible]
Simon H. Rifkind: Well I just haven't got the fact. Now I don't know whether I mentioned the fact but I should mention the fact, we had nine arguments before Judge Herlands and I don't know whether this is in order but in the Second Circuit at least we regard him as one of the most painstaking judges. He denied me the motion on the first argument. He said because of the highly restricted policy in the Second Circuit, and he later said on the record, I should have granted it then. Indeed he said I should have perhaps stricken the complaint because once the basis for the allegation evaporated the plaintiff's lawyer really should have withdrawn his signature to the complaint under the Rule of 11. But he said as a matter of policy not of logic he said so, I allow them to have some examination. When he used the power under the 56(D) to interrogate counsel, counsel told him that he thought he was entitled to have an antitrust case based on suspicion alone. He said he thought that's the way antitrust cases should be initiated on suspicion and he thought, that once he was able to utter the words, did Cities Service join the conspiracy, that was that. I want to take the last minute or two I have to refer to one thing about which I feel very badly. As reference made in this brief the conversations between Jones and a man named Sandberg in Amsterdam. The facts are, the record shows that Sandberg a very large and substantial stockholder of Cities Service, a resident of Amsterdam was Jones' host on the way from New York to Iran, he stopped off in Amsterdam and did all on the way back and the following occurred. At the EBT, Examination Before Trial of Mr. Watson then the Chairman of the Board or the retired Chairman of the Board.
Hugo L. Black: Where is it, where is this statement?
Simon H. Rifkind: Mr. -- Counsel for the plaintiff said to Mr. Watson, I have just discovered that Sandberg is a member of the Finance Committee of Shell Oil and then, and this was off the record before we met, and it is now in our affidavit. Then he begins his questioning, he says, “Did you know that Sandberg was a member of the Shell Oil Finance Committee?” He says, “I know it now. I don't know when I learned it first,” he is a man then in his early 70s. We then investigated the matter and found that there was utterly no basis for to Sandberg file his affidavit that we never had anything to do with Shell. We told that to Mr. Lane. Mr. Lane says I am going to investigate. This was in November 1964, three years ago. There hasn't been one scintilla since then to contradict what we said, but I find it referred to in this brief and to that I would like to take exception.
Earl Warren: Thank you. Mr. Kelly?
William E. Kelly: Thank you, Your Honor. My opponent made the point that we didn't ask for Jones. I read from the affidavits submitted to the district court in 1961, the motion first came on, at this point plaintiff cannot name all the witnesses that would have to be examined concerning the above transactions, but again for the court's convenience, plaintiff can list those within the top management with whom he dealt and logically should have the answers, they are as follows, the first one W. Alton Jones, President and Director of Cities Service, the man for whom the invitation was obtained from Premier Mossadegh and who headed the team that went to Iran. At the oral argument of the motion, my late partner said, “I think the obvious place to begin is with Cities Service with the personnel with whom all these dealings were had,” and then skipping down on page 118 of volume III, “the place to begin is with W. Alton Jones,” that is in May of 1960, three years before Jones died.
Abe Fortas: Did you ever notice his deposition?
William E. Kelly: We were under a stay, Your Honor, this was the proceeding which we asked, give us Jones.
Abe Fortas: There was a stay?
William E. Kelly: A stay, we couldn't serve anything.
Abe Fortas: Did you move that you would be allowed to examine him, is anything--?
William E. Kelly: Yes, yes.
Abe Fortas: -- is anything beyond those statements?
William E. Kelly: No, this was an application of the rule 56(f), we had to make our application under rule 56 (f).
Abe Fortas: Well, that didn't sound like an application to me, it sounded like statement --
William E. Kelly: That's a supporting affidavit to a motion, that submits this --
Abe Fortas: Did you make an application that you be allowed to examine Jones?
William E. Kelly: Yes.
Abe Fortas: Was that one of the things to which you referred?
William E. Kelly: I am reading from it, “and submits this affidavit pursuant to rule 56(f) of the Federal Rules of Civil Procedure in opposition to the defendant's Cities Service motion for summary judgment,” the very first affidavit submitted on this proceeding.
Abe Fortas: Alright, your position is that's an application for leave to take Jones' deposition, I understand your position, but it sounded like to me.
William E. Kelly: A whole series of other peoples' depositions as well.
Byron R. White: Where is it, do you know?
William E. Kelly: Where is it in the record, we have a page reference to it in our briefs. It's not in the printed portion of the record, not as such we just have the opinions, but what I just read when we were arguing this point before Judge Herlands is in the printed record, volume III, page 118, the first argument May 9, 1960, “the place to begin is with W. Alton Jones.” We made the point early. We made it often. We asked for general discovery on four separate occasions. Now my opponent has made the point.
Thurgood Marshall: Which of these four separate occasions that you ask for are general discovery, can you give me those?
William E. Kelly: The first one in May in December of 1958 when the motion, when the deposition of plaintiff had gone on for some 66 occasions, we came in and said allow us to terminate our deposition and to go forward with the depositions of the plaintiff. That was before any summary judgment motion had been made at all at that point.
Thurgood Marshall: 1958.
William E. Kelly: 1958 we asked for the termination of the plaintiff's deposition, the filing of answers and to allow us to go forward and conduct our own general discovery. Now--
Thurgood Marshall: When was the next time --?
William E. Kelly: In connection with rule 56(f) our position is --
Thurgood Marshall: 56(f) is not general.
William E. Kelly: I say it is, and I was coming to that point Your Honor. When a motion for summary judgment is made on the merits, rule 56(f)'s discovery is coterminous with general discovery under the earlier sections of the rule, it has to be, there is no limit. Now, there maybe occasions where somebody moves for summary judgment on the special provision, a release or something of that sort, that of necessity, a Rule 56 discovery need not to as extensive as the general discovery provisions. But where as in the present case, Cities moves to summary judgment on the merits we say rule 56(f) gives us the right to general discovery of the entire issues of the case. Now the next point is throughout we've had one theory. We have never changed theories. We have never abandoned theories from the very first we have said, we have an antitrust conspiracy case. We preserved our position throughout. We have never abandoned anything. The problem is throughout this matter the evidence rests in the hands of the defendants, where else are we going to get this evidence? We know a little bit here, a little bit there, pieces of evidence here and there, but we cannot know all the details of this conspiracy and it is this point that I think is essential to this Court. One reference to a case, the Paula (ph) case, I am sorry--
Earl Warren: You have got five minutes.
William E. Kelly: Oh, I am sorry. Thank you.
Byron R. White: Let's assume that we decide it in your favor, what would you do in the district court to oppose another motion for summary judgment?
William E. Kelly: I hope I'd get the permission -- I hope I would get the opportunity to conduct discovery of all the defendants in the case before motions come on.
Byron R. White: How about Cities Service?
William E. Kelly: Yes, we haven't had, we have not had general discovery of Cities Service, we haven't had the opportunity to develop this on the record. The first person we got was Hill. Hill was a technician, an attorney. He knew nothing, he knew nothing of Iranian venture. He knew nothing about Jones' activities. We then were given after another application limited discovery of three surviving Cities personnel, Watson, Heston and Fran.
Byron R. White: Did you pick those?
William E. Kelly: No, we wanted them of course, but we wanted Jones long before he died, these were the survivors that we were given the right to examine and under the most restrictive discovery order I've ever seen in the district court anywhere, it's set forth in the provisions of our brief. It has time limitations. We weren't even permitted to inquire into the API Convention where these threats were made. The time limit was November 1 in the order of the district court. This occurred on November 7.
Byron R. White: Well, suppose you get Mr. Jones now?
William E. Kelly: We can obtain complete discovery of Cities files to find out what Jones did when he went to Kuwait. What Jones said in response to the threats at the API Convention? What Jones said to Sandberg when he went to Holland? We can obtain it from all sources including the defendant's files.
Thurgood Marshall: As I read correctly in your reply brief that Jones didn't tell anybody anything?
William E. Kelly: Jones was apparently an individual who kept things to himself, that's right. Now what we find out from the record I don't know, but the point is Cities Service having withheld Jones from the very outset, and he never submitted his motion, his death should not be visited on us. We should have the opportunity to find this information, these facts, anywhere we can find them under the limits of general discovery, by withholding Jones his affidavit at the outset, denying our motion to get Jones' testimony three years before he died, we never had the opportunity to get what we have should have gotten. Now Cities should not be permitted to obtain summary judgment simply because it's going to be hard or difficult for us to find this evidence. I can see it will be hard and difficult, we'll take that chance, we'd like to have that opportunity.
Byron R. White: [Inaudible]
William E. Kelly: Yes, I was coming to Paula case, I think Paula case makes it quite clear that summary judgment I think all of the bench was in agreement on this point that you can't decide complex summary antitrust cases until everybody has an adequate discovery. The dissenting opinion, assumes and says at three or four different place, a plaintiff has had discovery of all the people he needs in this particular situation and it was a split in the opinion on the facts of the case whether it was or wasn't appropriate for summary judgment, but in that case it was assumed, as it is in almost any case that I've ever seen that there ought to be complete discovery by the plaintiff under the rules before you bring on a summary judgment motion. We've asked for that, we asked for a five, six seven times denied all the time. We've given restricted discovery of people that we would take in due course, but not the people we wanted throughout this point, throughout the litigation.
Byron R. White: [Inaudible]
William E. Kelly: Yes Mr. Justice White my associate hands me a record reference to Mr. Lane's affidavit in 1960 it's in the record of page 11449. Now coming back to where we got started on this point I have a moment or two, the first opinion in this case indicates the district court's attitude towards our case. At the very outset before we had any discovery at all, the motion for summary judgment is made and this opinion is rendered. The opinion is the opinion that put us upon this course of narrow limited tortuous discovery. That makes the point in complete contrast you read this opinion paragraph 5 of it, with the opinion of this Court in Hickman v. Taylor and you wonder they just don't square. There is no attempt, extensive discovery is not to be given. “Such proceedings will be closely regulated. Adjust and workable balance will be maintained between the parties. The usual federal rule permitting fishing expeditions will be curtailed.” Now we are not on any fishing expedition here. We simply wanted general discovery under the rules of the people we wanted. We didn't want them selected by the defendant as they were. We didn't want the witnesses who subsequently died throughout these proceeding suppressed from us and kept from us, we wanted a general discovery and we've never, never had it in the entire time throughout this litigation. Thank you I am sorry I don't have more time.
Earl Warren: Very well.