# Kansas City Power & Light Company v. Douglas McKay Secretary of the Interior

> Court of Appeals for the D.C. Circuit · November 7, 1955 · 225 F.2d 924

URL: https://www.frixlaw.com/law-library/cases/9444756

## Case

- **Full name:** KANSAS CITY POWER & LIGHT COMPANY Et Al., Appellants, v. Douglas McKAY, Secretary of the Interior, Et Al., Appellees
- **Court:** Court of Appeals for the D.C. Circuit
- **Decided:** November 7, 1955
- **Citations:** 225 F.2d 924
- **Precedential status:** Published
- **Opinion:** Dissent by Prettyman
- **Judges:** Prettyman, Bazelon, Washington
- **Cited by:** 127 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9444756

## How later opinions describe it (automated extraction)

- holding that plaintiff power company did not have standing to sue because it would not suffer a “legal wrong” as a consequence of a federally-supported power program likely to increase competition
- emphasizing the limits of § 702 as understood at the time of enactment

## Opinion text

PRETTYMAN, Circuit Judge
(dissenting) .
I disagree with my brethren in their disposition of this case.
In the complaint plaintiffs say that by mutual agreements, evidenced by written documents, certain Government officials and certain private parties, all acting in concert, plan to destroy plaintiffs’ private business and property by acts which are beyond the power conferred by the Congress upon the executive officials involved and are also illegal because in violation of statutes. This court says plaintiffs had no standing to sue, they presented no justiciable controversy. With that I disagree.
The facts are tremendously complicated if described in detail, but they can be stated simply in a general outline which is sufficient for present purposes. The dramatis personae are, by groups, five in number:
1. A number of rural cooperative electric distribution companies. They buy electric power at wholesale and sell it at retail to farmers and others in rural areas principally in Missouri. For these purposes they own and operate distribution lines, stations, etc. Presently they buy their power from the plaintiff Companies.
2. A number of federations of the foregoing cooperatives,, which neither own nor operate any facilities but act advantageously in many matters on behalf of their respective member-cooperatives. These federations are called “Super-Coops”.
3. A number of utility companies, privately owned and operated, which own and operate generating plants and transmission lines. They generate electric energy and transmit it over long high- *935 voltage lines to central stations of the rural cooperatives, where they sell at wholesale. They own hundreds of miles of these transmission lines and a number of generating plants. In the complaint they say they are ready, able and willing to supply all requirements of all customers, present and potential, in these areas. We shall call them the “Companies”. They are our plaintiffs.
4. The Rural Electrification Administration. This is a Government agency in the Department of Agriculture. It was created by the Rural Electrification Act 1 and has power to lend money. We shall call it the “REA”.
5. The Southwestern Power Administration. This is a Government agency created under emergency war power by Executive Orders and thereunder by the Secretary of the Interior. It was authorized by statute 2 to sell the surplus energy generated at multiple-purpose reservoir projects under the control of the Department of the Army. We shall call it the “SPA”.
Five sets of contracts were attacked in the complaint. Each set involved the REA, the SPA, and a Super-Coop as parties. The set used by the court as illustrative is the set to which a Super-Coop called Northwestern (or NW) is a party. This set consisted of three contracts, one a loan contract, one a lease-option contract, and the third a power contract. These contracts were integrated by reciprocal conditions, each being dependent upon execution of the others.
In brief outline what the complaint says in regard to the illustrative contracts is this: By these contracts it was agreed that REA will lend Super-Coop money to build a generating plant and certain transmission lines; Super-Coop will then do two things, lease the lines to SPA for forty years and sell to SPA the entire output of the plant for forty years; Super-Coop will then purchase from SPA all its requirements of electric energy for forty years; 3 the price to be paid Super-Coops by SPA for the output of the plant is to be the cost (principal and interest) of financing the loan to build the plant, plus operating costs assignable to the plant, and the rental for the lease of the lines is to be the cost of financing the loan to build the lines, plus operating costs assignable to the lines; and the purchase of power back from SPA by Super-Coop on behalf of its member rural distributors will be at a rate and not involved in the loan accounting.
The results of these confederated and integrated arrangements, say plaintiffs in their complaint, will be:
1. A duplication of the existing plants and transmission lines of the Companies which are presently fully serving the needs of the several rural areas involved.
2. A transfer by contract of all this rural area business from the Companies to SPA.
3. Loans from REA secured by nothing but the plants and lines to be built with the money loaned.
4. Engagement on a major scale by SPA in the ordinary utility business of generating energy, transmitting it, and selling it at wholesale.
5. The lending of money by REA specifically for the building of plants to *936 serve municipalities of more than 1,500 population.
While the complaint alleges the contemplated sets of contracts to be illegal in a number of respects, we need now notice only one. A principal thrust of the complaint is against concerted action, formalized by written agreement, of the Government officers and the Super-Coops. The allegation is that a number of persons — suppliers' and customers — confederated to deprive plaintiffs of their business by entering into agreements whereby all the customers of plaintiffs would transfer their patronage to a potential competitor. Technically in legal terms, such an agreement and concert of action is a conspiracy.
Another concert of action described in the complaint is among the Government officers. In that respect the complaint deals with violations of the statutes conferring authority. The court considers and discusses that concert of action. '• But that is not the crucial allegation as to concert of action, as I read the complaint. The crucial point is the agreement between the officials and the private parties, i.e., the Super-Coops.
There are several phases to the present problem. The first phase is whether the controversy itself, as described in the complaint, is a justiciable one; this consideration is apart from the identity of the defendant parties against whom the relief is sought. A second phase is whether, if the dispute itself is justicia-ble, the plaintiffs are blocked by the fact that their suit is against Government officers. The court does not consider or pass upon this second phase of the problem, and I shall not do so either. Another phase is whether the Super-Coops are indispensable parties, but the court does not reach that question and I shall not.
It seems to me the allegation of damage by concerted action by the officials and the Super-Coops presents a case of damage by legal wrong. A civil action will lie upon that premise under all the rules and authorities. Disagreeing with' the court, I think the plaintiffs did present a justiciable controversy, so far as the allegation of an actionable wrong is concerned. It follows that I think the court should have proceeded to consider the other point regarding justiciability, i.e., whether. the suit would lie against these Government officers, and then proceed to the point as to the Super-Coops being necessary parties.
It is elementary law that an individual, whether seller or customer, can do many things by himself which he cannot do in concert with others. He can fix his own prices, select his own customers or suppliers, limit his territory, and do many things, so long as he acts alone. But the law forbids such activities by agreement. Statutes make unlawful “Every contract * * * in restraint of trade” 4 and the making of any lease or contract of sale “on the condition * * that the lessee or purchaser thereof shall not use * * * the goods * * * or * * * commodities of a competitor * * * of the lessor or seller, where the effect * * * may be to substantially lessen competition”. 5 We need little citation of authority to establish the proposition that a restraint upon trade which suppresses competition and accomplishes a foreclosure of an appreciable segment of a market is illegal. A few citations will suffice. 6
To be sure, the complaint before us does not contain an allegation of jurisdiction under the antitrust laws. But that is not our problem. Our problem is whether these plaintiffs state a case which shows them to be suffering a legal wrong, apart from the identity of the defendants.
*937 If a citizen alleges that threatened conduct will invade a private, substantive, legally protected interest of the citizen, whether the interest is protected by common law or by statute, he presents a justiciable controversy. 7 And moreover, if a citizen suffers a “legal wrong” the Administrative Procedure Act makes certain and clear that he has a standing in court. 8 I think our plaintiffs show a case which gives them standing to sue. They allege not only that their business would be impaired by these contracts but that it would be wholly taken. Their right to do business is protected by statute from destruction by an agreement among customers and competitors, where the agreement amounts to unreasonable restraint of trade or of competition.
The court treats the contracts as merely setting up competition for the Companies. I do not see them that way. Allegedly these contracts would take all this business away from the Companies and give it to the Government. This would be complete destruction by concerted action, not a mere establishment of competition. And therein lies the vast difference between this situation and the T.V.A. 9 and Alabama Power 10 cases. In the T.V.A. case the problem was one of straight-out competition. The companies objected to the Government’s coming into the open market to sell power in competition with private business. There was no agreement between T.V.A. and all the customers of the companies whereby the customers would stop buying the companies’ power and buy all their power from the Government. The Court referred expressly to the findings of the District Court that there was no concert of action. The Court also pointed out that cooperation between two Government officials, each acting under authority of a statute, does not spell conspiracy. But that is not the case at bar.
In Alabama Power Co. v. Ickes Mr. Justice Sutherland, writing for the Court with meticulous care and completeness, reserved from the decision the question we now have. The case presented a challenge to Government loans on the ground of the resultant competition to the Company. The Court cautioned in the very beginning of the discussion of the point, “If conspiracy or fraud or malice or coercion were involved a different case would be presented, but in their absence, plainly enough, the mere [italics Mr. Justice Sutherland’s] consummation of the loans and grants will not constitute an actionable wrong.” 11 And he closed the opinion by distinguishing “many other cases” on the ground that they involved “fraud, coercion, malice, conspiracy, or some other element or condition of controlling force”. In the course of the opinion the Justice referred by way of illustrative example to a suppositional John Doe who operates a grocery store and objects to a loan being made to a Richard Roe who proposes to open a competing store. The lack of legal right on John’s part to action against Richard is obvious. But a wholly different, problem would be presented if all the customers of John agreed by contract with Richard not to buy any more groceries from John but to buy them all from Richard upon condition that Richard would build a store. *938 Any such agreement would be clearly illegal, and John could bring a civil action to restrain it 12 or to secure triple damages on account of it. 13
I think we should proceed to consider other phases of the jurisdictional problem presented by this case and, if these be resolved in favor of plaintiffs, proceed to the merits as the District Court did.
. 49 Stat. 1363 (1936), as amended, 7 U.S. C.A. §§ 901-914.
. Section 5, Mood Control Act of 1944, 58 Stat. 890 , amended, 61 Stat. 501 (1947), 16 U.S.C.A. § 825s.
. E. g., one allegation of the complaint is that the members of Northwestern would be required “to cease purchasing electric energy from their present suppliers, including plaintiffs, and to purchase all of their requirements for electric energy from Northwestern and indirectly from SPA”. Other allegations are that SPA agrees to supply NW’s requirements of electric energy up to 40,-000 kw; that the aggregate annual peak demand of NW members in 1949 was -approximately 10,000 kw and estimated to increase to 22,000 kw by 1954; and that the capacity of the plant to be built .by NW is 40,000 kw.
. 26 Stat. 209 (1890), 15 U.S.C.A. § 1 .
. 38 Stat. 731 (1914), 15 U.S.C.A. § 14 .
. United States v. Griffith, 1948, 334 U.S. 100 , 68 S.Ct. 941 , 92 L.Ed. 1236 ; Standard Oil Co. of Cal. and Standard Stations v. United States, 1949, 337 U.S. 293 , 69 S.Ct. 1051 , 93 L.Ed. 1371 . And see Rashid, Antitrust Aspects of Exclusive Dealing Arrangements, 40 Geo.L.J. 241 (1952); 5 Toulmin, Antitrust Laws of the United States §§ 10.25, 10.31 (1950).
. See, e. g., discussion in Associated Industries v. Ickes, 2 Cir., 1943, 134 F.2d 694, 700-701 , rev’d on other grounds, 1943, 320 U.S. 707 , 64 S.Ct. 74 , 88 L.Ed. 414 ; Duke Power Co. v. Greenwood County, 4 Cir., 1937, 91 F.2d 665, 676 , expressly approved, 1938, 302 U.S. 485, 490 , 58 S.Ct. 306 , 82 L.Ed. 381 ; and in concurring opinion of Mr. Justice Frankfurter in Joint Anti-Fascist Refugee Committee v. McGrath, 1951, 341 U.S. 123, 152 , 71 S.Ct. 624 , 95 L.Ed. 817 .
. Section 10(a), 60 Stat. 243 (1946), 5 U.S.C.A. § 1009 (a).
. Tennessee Power Co. v. T.V.A., 1939, 306 U.S. 118 , 59 S.Ct. 366 , 83 L.Ed. 543 .
. Alabama Power Co. v. Ickes, 1938, 302 U.S. 464 , 58 S.Ct. 300 , 82 L.Ed. 374 .
. Id., 302 U.S. at page 479 , 58 S.Ct. at page 304.
. 38 Stat. 737 (1914), 15 U.S.C.A. § 26 .
. 38 Stat. 731 (1914), 15 U.S.C.A. § 15 .

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9444756. Public record. Not legal advice.