Court Opinion

ID: 9482144
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:41:43.098783+00
Date Added: 2024-06-11T17:48:47.736872
License: Public Domain

PAULINE NEWMAN, Circuit Judge,
dissenting.
I respectfully dissent, for this decision provides inadequate implementation of the statutory purpose. Although the majority discusses the finer points of affiliation, joint ventures, and partnership law, the analysis is incomplete insofar as it concerns the case before us, and the conclusion reached does not accommodate the express intention of the lawmakers.
The implementing regulations require that for the Federal Timber Contract Payment Modification Act, 16 U.S.C. § 618, the effect of joint ventures will be decided on a case-by-case basis:
36 CFR § 223.170 Definitions.
“Affiliate.” Concerns are affiliates if directly or indirectly, (a) either one controls or has the power to control the other, or (b) one or more third parties controls or has the power to control both. In determining whether or not affiliation exists, the Forest Service shall consider all appropriate factors, including, but not limited to, common ownership, common management, and contractual relationships ....
Provided further, ... The Forest Service will determine the effect of joint venture agreements upon affiliation on a case-by-case basis based upon the nature of the relationship established by the joint venture.
This is a proviso, not a precatory hope. The issues requiring decision are not whether Timber Investors and Pine Products are each affiliates of the joint venture or of each other, or whether joint venture participants are subject to the laws of partnership — the issues into which the panel majority has been diverted. The case-by-case determination of § 223.170 requires consideration of the facts of this particular case.
For example, it is undisputed that the price of buyout for Timber Investors, for all its holdings subject to the Act, is 300% higher than that of Pine Products. See 16 U.S.C. § 618(a)(3)(A) (buy-out rate proportional to net book worth). The relative situations of these joint venture partners, and all other facts specific to this case, are material to implementation of the Act in accordance with its purpose of aiding small and medium sized businesses:
It is estimated that if all the timber purchasers were to go ahead and log the timber under contract and product the lumber and plywood, they would lose nearly $4 billion.... With the downturn in the market those damages will be overwhelming to small and medium sized businesses [which] could face bankruptcy. The Government could not collect its damages from bankrupt companies, workers would lose their jobs, and timber dependent communities already in precarious situations, would lose their main employer.
S.Rep. No. 98-596, 98th Cong., 2d Sess. 5, reprinted in 1984 U.S.Code Cong. & Admin.News 3796, 3797-98. The nature of this relief act, which provides relief measured by the net worth of the purchaser, requires that this factor be considered in making the case-by-case determination for joint ventures that section 223.170 requires. Remedial legislation should be implemented in a way that serves the class it is intended to benefit. Tcherepnin v. Knight, 389 U.S. 332, 336, 88 S.Ct. 548, 553, 19 L.Ed.2d 564 (1967).
The court today holds, apparently as a bright-line rule, that when one joint venture partner is limited to the higher rate of buyout, the other partner is required to pay the higher rate — whatever the net worth of the latter partner. This holding eliminates case-by-case consideration. The regulation that requires individual consideration in this specified circumstance must be com*1563plied with; and compliance must, in turn, implement the statute as Congress intended.
The Claims Court’s summary judgment was improvidently granted, and should be reversed.