Court Opinion

ID: 9466553
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:19:31.403562+00
Date Added: 2024-06-11T17:39:48.039428
License: Public Domain

CLAIBORNE, District Judge,
Sitting by Designation (dissenting):
This case demonstrates perfectly the “Hobson’s choice” which a United States District Judge sometimes faces in attempting to render a decision. The Court below, in dismissing the complaint on the grounds of want of subject matter jurisdiction on a motion for summary judgment, held that the case of Sun Valley Disposal Co. v. Silver State Disposal Co., 420 F.2d 341 (9th Cir. 1969) was so indistinguishable as to be controlling. The Court was correct. The problem Judge Craig faced was that the Sun Valley opinion, arguably, is incorrect as a matter of law. As a District Court Judge in the Ninth Circuit, I recognize the dilemma which the lower Court faced; my brother Craig acted as I would have, which is to follow controlling Ninth Circuit authority which, however questionable, has not been explicitly overruled.
The fact that the two cases are indistinguishable is readily apparent. Sun Valley involved a Sherman Act complaint as between two garbage disposal and container leasing services in Clark County, Nevada, and an affirmance of a granting of a motion for summary judgment in favor of the defendants on the grounds of want of subject matter jurisdiction. The Ninth Circuit held: 1) The acts complained of did not occur within the flow of interstate commerce, since the business of container leasing is wholly local in character; the acts complained of did not affect any “interstate commerce part” of plaintiff’s business; 2) *1100Plaintiff conducted a wholly local garbage disposal and container leasing business, and the mere fact that it supplied this business with equipment from out of state did not substantially affect interstate commerce, since it alone does not turn what was really a local activity into an interstate activity. 420 F.2d at 343.
Like Sun Valley, the instant case involves the business of refuse hauling and container leasing within Maricopa County, Arizona, a business which is indisputably intrastate in nature; neither Appellant nor Appellee Universal services any accounts outside of that county. And, like Sun Valley, the Appellant at bar ultimately has shown nothing more than the mere fact that it has purchased equipment and supplies which have moved in interstate commerce.
However, the majority takes the positions first, that the Sun Valley case has been somehow overruled by implication in subsequent Ninth Circuit and Supreme Court opinions; and second, that the Sun Valley case is factually distinguishable from the case at bar. I disagree with both views. It is more accurate to conclude first, that the veracity of Sun Valley has always been seriously questionable; second, that the Ninth Circuit, in distinguishing Sun Valley, has caused considerable confusion as to the meaning of “substantial effect on interstate commerce”; and third, the appropriate manner in which to dispose of this appeal is to affirm but to recommend rehearing en banc so that the full panel can address itself to the first two concerns.
As to the “factually distinguishable” view, the majority distinguishes Sun Valley on two bases: first, a direct restraint on a line of commerce was demonstrated herein but not in Sun Valley; and second, that Universal hauls wood and paper waste byproducts as a beginning point for an ancillary “but significant” line of commerce.
As to the first point, I see no distinction conceptually between the garbage collection business in Clark County, Nevada and the garbage collection business in Maricopa County, Arizona. Moreover, in terms of specific facts and figures, the impact on interstate commerce in terms of real dollars as between the two cases is similar. Plaintiff proved in Sun Valley that it spent roughly $40,000/year on an average for equipment from out-of-state sources for fiscal years 1961-1965;1 Plaintiff/Appellant herein proved that it spent roughly $100,-000/year for fiscal years 1976-1977 on “interstate” equipment.
As to the second point, the facts herein demonstrate that the recycling businesses in question, and not the Appellant, cause the wood and paper waste by-products to move in interstate commerce and, further, that this aspect of Appellant’s business is quite secondary and incidental to its primary purpose of garbage hauling and container leasing. Like the Court below, I would rely upon John Kalin Funeral Home, Inc. v. Fultz, 313 F.Supp. 435, 438 (W.D. Wash.1970), aff’d., 442 F.2d 1342 (9th Cir. 1971), cert. denied, 404 U.S. 881, 92 S.Ct. 210, 30 L.Ed.2d 162 (1971) and United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947)2 in refuting the majority’s distinction.
As to the “overruled by implication” view, the majority states that Sun Valley *1101was decided on the basis of a test which was expressly disapproved in the recent case of McLain v. Real Estate Board of New Orleans, Inc., - U.S. -, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980). This is not entirely correct; in fact, the two eases are not at all inconsistent. The McLain Court did away with the notion that a plaintiff must prove a substantial nexus between a defendant’s unlawful conduct and interstate commerce in order to establish subject matter jurisdiction under 15 U.S.C. § 1; instead, to establish the jurisdictional element of a Sherman Act violation, a plaintiff need only demonstrate a substantial negus between plaintiff’s business activities and interstate commerce. Cf. 100 S.Ct. at 509 (emphasis supplied). But clearly, a substantial part of the Sun Valley holding, supra, is that the appellant therein’s business activities were of a substantially local nature, and that the fact that appellant therein purchased some equipment in interstate commerce did not establish a substantial nexus between those essentially local activities and interstate commerce. Thus, if Sun Valley is no longer good law, McLain is not the reason why.
Similarly, and contrary to the suggestion of the majority, there is nothing in Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 96 S.Ct. 1848, 48 L.Ed.2d 338 that controls the disposition herein. That case came before the Supreme Court on the pleadings alone, unlike the case at bar,3 and the Supreme Court held in Rex Hospital that an “indirect effect on interstate commerce” does not make the action per se inactionable under the Sherman Act; rather, the fact that complainant’s allegations fairly claimed that the conspiracy, if successful, would place “unreasonable burdens on the free and uninterrupted flow” of interstate commerce, made it sufficient to withstand a motion to dismiss. 426 U.S at 747, 96 S.Ct. at 1853.4 The majority attempts to apply the Rex Hospital case to the situation at bar by stating that the record herein supports a reasonable inference that Universal, in allegedly attempting to drive Western Waste out of business, reduced Western Waste’s purchases during the year in question. The record suggests otherwise. Appellant’s own facts and figures demonstrate that its purchases of equipment in interstate commerce during the years in question have increased, and Appellant’s agents and employees have admitted several times in deposition that Appellant has experienced no problem thus far in obtaining equipment.
The cases which actually deserve the most comment to the situation at bar, apart from Sun Valley, are United States v. Employing Plasterer’s, 347 U.S. 186, 74 S.Ct. 452, 98 L.Ed. 618 (1954) and Rasmussen v. American Dairy Association, 472 F.2d 517 (9th Cir. 1973). In the Employing Plasterer’s case, the United States Supreme Court, in an opinion which predated Sun Valley by fifteen years, quoted from the complaint therein which it held to state a cause of action:
[Defendants] do approximately 60% of the plastering contracting business in the Chicago area of Illinois . . . Substantial quantities of this material are produced in in other states, bought by Illinois building materials dealers and shipped into Illinois . . . The practical effect of all this is a continuous and *1102almost uninterrupted flow of plastering materials from out-of-state origins to Illinois job sites for use there by plastering contractors. Restraint or disruption of plastering work in the Chicago area thus necessarily affects this interstate flow of plastering materials adversely.
347 U.S. at 189, 74 S.Ct. at 453. Needless to say, there seems to be a large inconsistency between Sun Valley and Employing Plasterer’s, which is made all the more significant by the fact that the Sun Valley opinion did not even address the Employing Plasterer’s case in passing.5
Even more troublesome, however, is the subsequent Ninth Circuit opinion in Rasmussen. The Ninth Circuit held in Rasmussen that the complaint in that suit, alleging that the ingredients of plaintiff’s “filled milk” product other than water were brought into the state from other states, alleged a sufficient relationship between defendant’s alleged conduct and interstate commerce to justify holding that the conduct “substantially affected” interstate commerce. 472 F.2d at 526-527.6 The Rasmussen Court distinguished Sun Valley by noting that each Sherman Act case must turn on its own facts, and stated that the Sun Valley opinion discloses none of the underlying business facts existent in Rasmussen (e. g., the fact that more than 50% of the “filled milk” product was comprised of ingredients shipped in interstate commerce) and, therefore, the “incidental” effect on interstate commerce which existed in Sun Valley was not present in Rasmussen. Id.
While it is true that the Sun Valley opinion discloses none of the underlying business facts, the truth is that appellant in Sun Valley discovered and disclosed those facts to the Sun Valley court, who proceeded to ignore them. Thus, the distinction is quite artificial, at least from the practicing lawyer’s point of view. More troublesome, however, is the Rasmussen court’s inability to define what is meant in this Circuit by a “substantial effect on interstate commerce.” I recognize the principles that each Sherman Act case must turn on its own facts, and that jurisdiction is not defeated by plaintiff’s failure to quantify the adverse impact of a defendant’s conduct. Nonetheless, neither of these is very specific or helpful; if there is a way to harmonize Sun Valley, Rasmussen and the case at bar, it is in a definition of “substantial effect” on “interstate commerce” which has not been heretofore stated. Otherwise, I am at a loss to explain why the appellant in Sun Valley failed to meet its burden of proof as to the “substantial effect” element of Sherman Act jurisdiction, but the appellant herein did not so fail.
In sum, I see only two courses of action which are feasible. One is to overrule Sun Valley, which this panel has no power to do. Cf. Ellis v. Carter, 291 F.2d 270, 273 (9th Cir. 1961). The other is to redefine “substantial nexus between'plaintiff’s activities and interstate commerce,” so as to harmonize and shed some much needed light on Sun Valley, Rasmussen and the case at bar. In either case, because of the controlling nature of Sun Valley, the only proper thing to do procedurally is to affirm and to address these problems in a rehearing en banc.7
For these reasons, then, I would affirm.

. These figures appear on p. 11 of Appellant’s Opening Brief in Sun Valley, and are admitted as being correct on p. 26 of Appellee’s Brief therein. The fact that these figures were in no way referred to in the Sun Valley opinion should be a source of concern to the Judges of this Circuit, for reasons hereinafter mentioned.

. Yellow Cab involved a Sherman Act action alleging a conspiracy to control principal taxicab companies in Chicago. Plaintiffs therein attempted to demonstrate a nexus with interstate commerce by showing that the local taxicabs transported people to and from their homes who had just traveled/were about to travel in interstate commerce. The Supreme Court held that these facts failed to establish the requisite jurisdictional facts under the Sherman Act. 332 U.S. at 234, 67 S.Ct. at 1568. Yellow Cab clearly controls the situation at bar with respect to establishing jurisdiction on Appellant’s hauling of by-products to local recycling centers. The majority’s reliance in this regard upon McLain v. Real Estate Board of New Orleans, infra, is clearly misplaced since the McLain opinion does not even refer to Yellow Cab in passing.

. The Rex Hospital Court noted in footnote 5 that even if the complaint therein adequately alleged an effect on interstate commerce, further proceedings could demonstrate no substantial effect thereon, thereby warranting dismissal of the action. See 426 U.S. at 748, n. 5, 96 S.Ct. at 1853, n. 5.

. Appellees herein suggest that there may be some inconsistencies between Rex Hospital and McLain. 1 am likewise concerned. Rex Hospital seems to set the standard of Sherman Act jurisdiction as any nexus between a plaintiffs activities and interstate commerce plus a defendant’s restraint of trade which substantially and adversely affects interstate commerce (cf. 96 S.Ct. at 1852-1853), where as McLain sets the standard of a substantial and/or “demonstrable” nexus between a plaintiffs activities and interstate commerce. (Supra 99 S.Ct. at 509, 511.) Perhaps the Supreme Court has implicitly suggested alternate formulations of the same jurisdictional test, but language in the McLain opinion would seem to indicate otherwise. (See Majority Opinion above.)

. The Sun Valley Court relied principally upon Page v. Work, 290 F.2d 323 (9th Cir.), cert./ denied, 368 U.S. 875, 82 S.Ct. 121, 7 L.Ed.2d 76 (1961); both cases have since been disapproved in other courts. See Mascaro & Sons, Inc. v. O’Hara, Inc., 565 F.2d 264, 266 (3rd Cir. 1977).

. The specific holding of Rasmussen, supra must now be considered questionable in light of McLain.

. Since I am not an active Judge of the Ninth Circuit, I have no power to suggest a rehearing en banc.