Ferguson v. Greater Pocatello Chamber of Commerce, Inc.

STEPHENS, District Judge,

dissenting:

I dissent from the majority opinion on two grounds: because neither the district court nor the Court of Appeals have subject matter jurisdiction in this case. And, second, because the district court improvidently granted summary judgment despite an unresolved material issue of fact as to whether a nexus with interstate commerce existed.

These reasons are the result of the lack of any consideration by the district court of the need for a nexus with interstate commerce as the foundation for jurisdiction and as an element of the claim itself.

This means that the commerce element of a Sherman Act claim as identified in the first paragraph of part III of the majority opinion is lacking. It is similarly disposi-tive of the issue of subject matter jurisdiction which briefly stated requires that the dispute be in or affect interstate commerce since the right of Congress to legislate in this field depends upon the commerce clause of the Constitution. This case came from the district court in the form of a summary judgment. The facts were presented to the trial court by affidavit. On this record which is before us, there is no indication that the alleged violations of the Sherman Act by the defendants were in or had any affect on interstate commerce.

The district judge issued a Memorandum Decision which pointed out that the suit was for damages and injunctive relief under sections 1 and 2 of the Sherman Act. It contained a statement of undisputed facts in substantial detail and recognized that summary judgment may be granted only where the movant is entitled to judgment as a matter of law and where there is no genuine dispute as to any material fact. The decision acknowledges that summary judgment must be used sparingly in antitrust cases where motive and interest play a key role, citing Barnes v. Arden Mayfair, Inc., 759 F.2d 676, 680 (9th Cir.1985). Without one word concerning the need for a showing of a nexus with interstate commerce, summary judgment issued.

Every court of limited jurisdiction has one first and inescapable duty. This duty is without exception. The court must satisfy itself that it has jurisdiction over the cause before it. The court can not escape this duty on the grounds that the parties did not raise the issue, that the parties stipulated that the court has jurisdiction, or that the defendant failed to deny the plaintiff’s averments that the court has jurisdiction. The jurisdictional issue must be adjudicated. At this point in the judicial process we have little concern about the aver-ments of the complaint. The averments of the complaint are of no assistance in a summary judgment proceeding which requires affidavits of witnesses, affidavits which are only available to the court of appeals if they are in the record on appeal.

The Supreme Court recently addressed this subject in Bender v. Williamsport School Dist., 475 U.S. 534 , 106 S.Ct. 1326 , 89 L.Ed.2d 501 (1986) as follows:

Federal courts are not courts of general jurisdiction; they have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto. See, e.g., Marbury v. Madison, 1 Cranch 137, 173-180 [ 2 L.Ed. 60 ] (1803). For that reason, every federal appellate court has a special obligation to “satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review,” even though the parties are prepared to concede it. Mitchell v. Maurer, 293 U.S. 237, 244 [ 55 S.Ct. 162, 165 , 79 L.Ed. 338 ] (1934). See Juidice v. Vail, 430 U.S. 327, 331-332 [ 97 S.Ct. 1211, 1215-16 , 51 L.Ed.2d 376 ] (1977) (standing). “And if the record discloses that the lower court was without jurisdiction this court will notice the defect, although the parties make no contention concerning it. [When the lower federal court] lack[s] jurisdiction, we have jurisdiction on appeal, not of the merits but merely for the purpose of correcting the error of the lower court in entertaining the suit.” United States v. Corrick, 298 U.S. 435, *986 440 , 56 S.Ct. 829, 831 , 80 L.Ed. 1263 (1936) (footnotes omitted).

Id. at 541 , 106 S.Ct. at 1331 (footnote omitted).

Although the focus in Bender is on standing, the basic issue is jurisdiction. The Court continues:

Mr. Youngman’s status as an aggrieved parent, however, like any other kindred fact showing the existence of a jus-ticiable “case” or “controversy” under Article III, must affirmatively appear in the record. As the first Justice Harlan observed, “the presumption ... is that the court below was without jurisdiction” unless “the contrary appears affirmatively from the record.” King Bridge Co. v. Otoe County, 120 U.S. 225, 226 [ 7 S.Ct. 552, 552 , 30 L.Ed. 623 ] (1887). Accord, Thomas v. Board of Trustees, 195 U.S. 207, 210 [ 25 S.Ct. 24, 25 , 49 L.Ed.2d 160 ] (1904); Minnesota v. Northern Securities Co., 194 U.S. 48, 62-63 [ 24 S.Ct. 598, 601 , 48 L.Ed. 870 ] (1904). That lack of standing was not noticed by either party matters not, for as we said in Mansfield a & L.M.R. Co. v. Swan, 111 U.S. 379, 382 [ 4 S.Ct. 510, 511 , 28 L.Ed. 462 ] (1884):

“[T]he rule, springing from the nature and limits of the judicial power of the United States, is inflexible and without exception, which requires this court, of its own motion, to deny its own jurisdiction, and, in the exercise of its appellate power, that of all other courts of the United States, in all cases where such jurisdiction does not affirmatively appear in the record on which, in the exercise of that power, it is called to act. On every writ of error or appeal, the first and fundamental question is that of jurisdiction, first, of this court, and then of the court from which the record comes. This question the court is bound to ask and answer for itself, even when not otherwise suggested, and without respect to the relation of the parties to it.”

Accord, Chicago, B. & Q.R. Co. v. Willard, 220 U.S. 413, 419 [ 31 S.Ct. 460, 462 , 55 L.Ed. 521 ] (1911); Kentucky v. Powers, 201 U.S. 1, 35-36 [ 26 S.Ct. 387, 308 , 50 L.Ed. 633 ] (1906); Great Southern Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453 [ 20 S.Ct. 690, 691 , 44 L.Ed. 842 ] (1900). See Thomson v. Gaskill, 315 U.S. 442, 446 [ 62 S.Ct. 673, 675 , 86 L.Ed. 951 ] (1942). Moreover, because it is not “sufficient that jurisdiction may be inferred argumentatively from averments in the pleadings,” Grace v. American Central Ins. Co., 109 U.S. 278, 284 [ 3 S.Ct. 207, 210 , 27 L.Ed. 932 ] (1883); Thomas v. Board of Trustees, 195 U.S., at 210 [ 25 S.Ct. at 25 ], it follows that the necessary factual predicate may not be gleaned from the briefs and arguments themselves. This “first principle of federal jurisdiction” applies “whether the case is at the trial stage or the appellate stage.” P. Bator, P. Mishkin, D. Shapiro, & H Wechsler, Hart and Wechsler’s The Federal Courts and the Federal System 835-836 (2d ed. 1973).

Id. at 546-47, 106 S.Ct. at 1333-34 (footnote omitted).

The Bender opinion concludes on page 549, 106 S.Ct. at 1335 :

We therefore hold that because the Court of Appeals was without jurisdiction to hear the appeal, it was without authority to decide the merits. Accordingly, the judgment of the Court of Appeals is vacated, and the case is remanded with instructions to dismiss the appeal for want of jurisdiction.

The Ninth Circuit is up to date as of March 22, 1988 when it decided Latch v. United States, 842 F.2d 1031 (9th Cir.1988), holding:

The issue of subject matter jurisdiction presents a legal question, which we review de novo. Peter Starr Production Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442 (9th Cir.1986). Furthermore, “every federal appellate court has a special obligation to ‘satisfy itself not only of its own jurisdiction, but also of that of the lower courts in a cause under review,’ even though the parties are prepared to concede it.” Bender v. Williamsport Area School District, 475 U.S. 534, 541 [ 106 S.Ct. 1326, 1331 , 89 *987 L.Ed.2d 501 ] (1986) (quoting Mitchell v. Maurer, 293 U.S. 237, 244 [ 55 S.Ct. 162, 165 , 79 L.Ed. 338 ] (1934)).

As a general rule, if a district court has wrongfully exercised subject matter jurisdiction over a dispute, the appellate court must vacate the district court’s decision, including any award of attorney’s fees.

Latch v. United States, at 1033.

In some cases where the issue of jurisdiction is in doubt, the facts needed to establish subject matter jurisdiction are intertwined with the substantive facts in such a way that the most direct and economical way to proceed may be to proceed with trial until the jurisdictional facts can be sorted out. In doing so, the trial court is viewing the issue prospectively, looking forward as the facts unfold, not knowing the answer to the jurisdictional issue until the facts accumulate in the record. Even in the process of considering summary judgment, the trial court has the power to call for affidavits germane to jurisdiction. On the other hand, the court of appeals has an entirely different role. The record on appeal is presented for review of what has already transpired. It is complete as filed. The court of appeals has no means to add testimony by affidavit or otherwise. If it appears from this record that the trial court did not have subject matter jurisdiction, the court of appeals must correct the trial court’s error of proceeding to judgment.

The court of appeals has no reason whatsoever for deferring this jurisdictional issue and no way to escape deciding it. No case cited by the majority as precedent holds to the contrary. 1 The trial court has options, but the court of appeals has none save to vacate the trial court decision and return the case to the trial court. In this case the trial court did not consider the relationship between the plaintiff’s claims and interstate commerce, but granted sum *988 mary judgment, disposing of the case by noting an absence of substantive merit. The majority on the appellate court follows the same course, bypassing the question of jurisdiction and the commerce element of the claim to examine the “conspiracy and contract claims.” In the majority opinion, the relationship between the plaintiffs claim and interstate commerce is never resolved.

I oppose this decision because it is against the law as articulated in 1986 by the Supreme Court in Bender and by the Ninth Circuit in Latch in March of this year. As a Ninth Circuit precedent it will invite argument that Sherman Act civil cases do not require proof of a nexus with interstate commerce. We have in the majority opinion a ruling which ignores the need to establish a nexus between the claimed wrong and interstate commerce in a Sherman Act case both as an element of the claimed wrong and as a key to establishing or rejecting subject matter jurisdiction.

The facts necessary to establish jurisdiction and the commerce element necessary to state a claim under the Sherman Act for monetary damages or for injunctive relief are the same. From the point of view of stating and proving a claim, the commerce element is on the same level as any other element of a claim. Failure to establish a nexus with interstate commerce is sufficient to defeat the claim. On the other-hand, from the point of view of jurisdiction of Sherman Act claims, when the facts presented in the trial court do not establish a nexus with interstate commerce, the federal courts are without authority to decide the merits, and the Court of Appeals has jurisdiction on appeal, not on the merits but merely for the purposes of correcting the error of the trial court in entertaining the suit.

In this case the trial court failed its special obligation to satisfy itself of its own jurisdiction and the same may be said of the Court of Appeals. In my opinion the district court produced a void judgment which is approved by the majority opinion. 2 The appeal should be dismissed for want of jurisdiction and the district court judgment should be vacated.

. None of the cases that the majority opinion cites decided that a panel of the court of appeals may proceed to a decision on the merits after noting lack of subject matter jurisdiction. Bender has overruled all previously decided cases to the extent of any conflict existed, and all subsequently decided court of appeals cases in conflict with Bender are against the law as articulated by the Supreme Court and are not valid precedents. Cases containing appellate observations as to what are proper district court procedures to resolve jurisdictional problems in complicated cases do not constitute precedent as to what is appropriate procedure in the court of appeals.

Two Ninth Circuit cases that the majority cites, Kern Oil & Ref. Co. v. Tenneco Oil Co., 840 F.2d 730, 734 (9th Cir.1988), and Kerr Center Parents Ass’n v. Charles, 842 F.2d 1052 (9th Cir.1988), have been decided since Bender . To the extent they are viewed as applicable to this situation, they can not undercut the authoritative value of Bender . This has been recognized within the Ninth Circuit since both cases were decided before this circuit decided Latch . Moreover, neither Kerr Center nor Kern Oil involved the issue of subject matter jurisdiction. Kerr Center involved state immunity under the eleventh amendment, a defense which is not a jurisdictional bar. Kern Oil involved the district court’s loss of jurisdiction upon the filing of the notice of appeal. The court noted that the doctrine was a judicial creation. 840 F.2d at 734 . As I have heretofore noted, the need to establish a nexus with interstate commerce is a constitutional necessity.

It is also important to note that the majority’s reliance on McLain v. Real Estate Bd. of New Orleans, 444 U.S. 232 , 100 S.Ct. 502 , 62 L.Ed.2d 441 (1980), is misplaced. In McLain the Court articulated a very specific standard for determining the sufficiency of the nexus to interstate commerce in Sherman Act cases at different stages of the proceedings:

[J]urisdiction may not be invoked under [the Sherman Act] unless the relevant aspect of interstate commerce is identified; it is not sufficient merely to rely on identification of a relevant local activity and to presume an interrelationship with some unspecified aspect of interstate commerce. To establish jurisdiction a plaintiff must allege the critical relationship in the pleadings and if these allegations are controverted must proceed to demonstrate by submission of evidence beyond the pleadings either that the defendants’ activity is itself in interstate commerce or, if it is local in nature, that it has an effect on some other appreciable activity demonstrably in interstate commerce.

444 U.S. at 242 , 100 S.Ct. at 509 .

Moreover, under McLain , the Fergusons had the burden of ”demonstrat[ing] a substantial effect on interstate commerce.” Id. See also Turf Paradise Inc. v. Arizona Downs, 670 F.2d 813, 818-19 (9th Cir.1982). In McLain the Court allowed the plaintiffs-petitioners to proceed to trial only because they had met the strict requirements of the McLain test.

. Dismissing the appeal for lack of subject matter jurisdiction would not be "an exercise in futility.” The Fergusons would then lose only the right to rely on the Sherman Act. The Idaho courts remain open to them to pursue their claims under the anti-trust statutes of Idaho. For this reason the majority decision on the substantive issues is highly prejudicial to the Fergusons who might present a very different case in the state courts if allowed to proceed to trial.