Appendix — Thrifty Shoppers Scrip Co. v. United States

a

APPENDIX A

%. UNITED STATES DISTRICT COURT

“CENTRAL DISTRICT OF CALIFORNIA

Civil Action No. apni i

UNITED STATES OF AMERICA, .

aa oe 7 Plaintiff, .

mM .v. s

BLUE Cup STAMP CoMPANy; ALEXANDER’S ‘MARKETS;

Lucxy STorES, INC.; MARKET® BASKET; PURITY ©

STORES, INC.; RALPHS GROCERY COMPANY; SAFEWAY

STORES, INCORPORATED; THRIFTIMART, INC.; THRIFTY

Druc Stores Co., INc.; and Von’ s GROCERY Co.,

:

ORDER DENYING MOTIONS

WHEREAS, on October 28, 1966 the Government and

all but two defendants lodged a proposed decree settling

the above action as to said parties and the proposed de-

eree was set for argument December 13, 1966; and |

_ WHEREAS, said hearing received wide publicity and

numerous parties filed briefs amici curiae opposing the

proposed decree or made appearances at the argument

and argued in Oppotition to said dacses; and

- WHEREAS, on December 13, “14 and 15, 1966 argu-

ment by all parties and by numerous amici curiae was

heard by the Court, which thereon determined not to. .

he ped de tie tin pre ai es

= Oe Caeeeeent Bh my Sree sectng the caer: 9nd, robes

“Warts, on April 28, 1987 a proposed-donisent de- Ss

| eree was lodged settling the case-as to all parties and

. the matter Was set down for argument June 5, 1967, with’

ee notice being given all persons shown by the record as

. __- having appeared as amici curiae in said case; and sone

eee WHEREAS, humerous persons filed briefs ‘amnict’ curlae

S *n opposition to said proposed consent decree, including

Bae Thrifty Shoppers ‘Scrip Co and —— California

< * Weicuasla on Soa’: "1967. numerous persons’ ap- :

; _pdbed'f pioation ad mail oral acgonioat in oppo ae

: tion to said proposed decree, including the two persons

- * * just niamed and Raley’s, Inc., who at that time presented _

; both written and oral’ argunient, following. which said :— 2

ee ne et a exerts i

Ee . Wana, the persons listed below served the motions

_ Relat satire to eid edge: pds ae

* (i) On Tune 15, 1967. the Independent Cali- oe

lent ’ Service Station Operators served a motion to Ake

;_intetvene under Rule 24 of the Federal Rules of =

Bese | ste Predepe sod motion to vacate said Jody.

ee acres oes es

fae. ee ‘On: aly: 14, 1967 the Independent Cali

nia Service: Station Operators served 2 motion

| 2 sande Rule 15.(a)-0f the. a of Civil,

ee | of * Prwcedare to substitute an am same ed complaint. in

, . : e “ *. : ’ } t wee

a es , ; a. —3a— . : i

viously served and filed by it;

iii) On July 7, 1967 Thefty Shoppers Scrip Co.

served a motion to interven@ander Rule.24 of the

‘Federal Rules of Civil Procedure and = motion to

7 : 3 vacate said judgment; and wit aera

| he Jaly 14, 1967 Raley's, Tic. sccved ‘3

ae fae motion to interyene under Rule 24 of the Federal

_- Rules of Gtvil Procedure; and ;

- WHEREAS, potice having | been duly given, sekaitilbinite «.

of authorities having been fubmitted ‘by said movants in

favor of their motions ani by all parties to said judgment .

_in opposition to said motions, and the matter having come eh

on to-be heard on July 31, 1967 and oral acgument ae

; ‘being heard and considered; oh

*-

ee

E> bee 3 Ir Is HEREBY ORDERED that al sid motion be denied

‘ for the followitig reasons among others: =

ae... Said motions were not made upon timely appli-

@ os. cation; -. Be STR SM

No sufficient interest in the subject matter of said

judgment. hse beta eatablished ey . any, of. eald |

movants;

ee ee a eS =

. - a

= ies; 3 aM dntereste ob chcta 0h snl ervents'aabdiahaded

: ee : - -within these public interests which have-been con-

ee eee

pranin.<s. S HalAP WSDOUE tonw Sled 0: etabe ap wad

pa eee reason wity said jadgment shouldbe altered; and” :

eg le Intent fo the compat fa imerendon ro

- . ‘

: \ ae te :

ie, a ge ee . ie é ¢ : AS

et ete ‘ ess - 4a ‘ es a

A : : omen emer

To grant. any said motion. would unduly delay and

ae ee '

Dated: “August 3, 1987.

a,

ise ance Wise} paw

United -States District Judge

. ~

verge re «ellen

V8 toh | APPENDIX B |

UNITED. STATES DISTRICT COURT

‘CENTRAL DISTRICT OF CALIFORNIA i

% "+, Civil No. 63-1552-F

» - ‘ .

m. o--.~

~Unirep STATES OF + AMERICA, gener

* >

aes ve - RU ICR

BLUE. Cut —_ CoMPANY; ALEXANDER’S Manxeis;

" Lucky STORES, INC.; MARKET. BASKET; * PURITY

* STORES, INC.: RALPHS GROCERY CoMPANY; SAFEWAY

STORES, INCORPORATED; THRIFTIMART, INC. ; . THRIFTY .

Drus STORES Co., INC.; and’ Von’s GROCERY Co.,

& n . —

i y

FINAL JUDGMENT.

Plaintiff, United States of America, having filed its

—+— compat in the United-States District. Co

- Southern District of California, Central. Tividon, on De- .

+ ge

-_cember 26, 1963; each of the defendants having appeared

and ‘filed its answer denying the substantive allegations |

thereof; and the plaintiff and the defendatits, by their

-attorneys, having severally consented to the entry of this

Final Judgment without trial or adjudication of any issue

__.of fact or law herein, without the taking of any evidence,

; and without this Final Judgment constituting any evi-

daacp 2 pmitaion by, hy pay in sogpest Joan Seve

of factor law herein;

Now, therefore, before the taking of any teetimoniy and :

: without _— or — ofvany issue of fact or law

‘ Plaintif, |

herein and upon the consent of the parties hereto, it is

| i Oita pelatont ant Diced 46 Sellen:

L

| " ‘This Court has jurisdiction of tie subject matter this

action and of the parties consenting: hereto. The com-

_ ~~ plaint states claims for relief against the defendants under

Sections 1 and 2 of the Act of Congress-of July 2, 1890,

as amended, entitled “An Act to protect trade and com-

merce against unlawful restraint and monopolies,” com-

Breie puny emcee teers

Fot the purposes of this Final Judgriat: reat

| (A) “Person” shall mean an individual, partnership,

~~. firm, association, codparetiod or t other legal 0 or business~

; =. f Bo epee al “ “es

s Sutheth California” is that part of California

su of the ine formed by th northern boundaries of

we i jak 38

“,

—Ta— .

. (F) “New Blue Chip” shall mean: a. purchaser‘ 6fj ot

Cty thnitatnpicbis Blue Chip's trading stamp business 3

eS ee

pursuant to Sections V or VII herein.

-(G) “Reorganization” Se ee |

the stock structure of Blue Chip and. shall include the

creation of a new company to which the assets and liabili-

Se Oe

Se a s

. "The provisions ‘of this Final: Judgment: applicable 0 ;

” any defendant and any person-agreeing to be bound shall

also apply to-each of its subsidiaries, successors, assigns,

ia - Officers, directors, and employees, and to all other persons

"in active concert or participation with such defendant or ”

"persons who shall have received actual notice of this Final .

Judgment by persanal:service or otherwise, but shall not

apply to transactions solely between or among such de- .

_- fendant or ‘person and its, officers, directors, employees,

nana ea a ae ane

them.“ Alogetyg

| Each of the reer defendants i enjoined andre

. Strained from: cs

be (A): Cb iahin:ce:uonain toeelia aides 5

mongpolizing or attempting to monopolize the trading

stamp business in the State of California; or Carrying out, iy

‘directly or indirectly, an, Pact mare, Compa, |

stot 9 panopolae & meaner

°

—8a— : .

(B). sili ise; nguniinat 06 np Bier

staniling..with any other’ weer ‘of teading tempeh. the

sameé line of business: tae

; Gd) To refrain, inthe State of California or in

(ii) To limit the fate of issue employed in. dis-

ES Re SES Oe AE |

mers in such state;

‘() Acting joledy. Withceey other war of tinding

"stamp services in the same line of business to organize or

scquire a trading stamp company to operate in the State

of California except as provided in Sections V, Vi or VIE

hereof.

Pre a i Sein Yl tne ae

+ defendaiit, acting independently: (i) in obtaining or enter-

. ing ‘into any contract to obtain trading.stamp services

from any trading’ stamp ‘coffipany; or (ii) when such

defendant is engaged in the trading stamp business (either y

directly or through a subsidiary or affiliate), in furnishing

or entering into any contract to furnish trading stamp —

‘services to any person, and provided further that this.

”. Section IV shall ot apply to the. provision of trading

. Winall ‘wdcrisGs By ‘ant "trading stung comapasty Which is

/ not hamed as a defendant herein.

ye,

<i ih tt tS rt a

a” eel PS me,

i a plan for the tify

Gin Samp Cony "ee Salt bay

* / servi entirely or from using the ‘trading stamp |

<i services of any particular person or persons; or aS

-

" poconlente ‘eth itn iat fepgsiedytulieed

to plaintiff. Upon. approval of the plan:by'the Court,

Blue Chip’ shall. make bona fide and diligent efforts to

reorganize the company pursuant to the said plan. If at.

any time, in plaintiff's judgment, soch efforts are not .

being made, plaintiff may apply to the,Court for an order

directing that this. Section V shall no longer apply. In the

event that such order issues, Blue Chip shall be required

to divest pursuant to Section VE ¢r to reorganize pursuant

| to Section VII hereof, .

(A) In the event that Section V becomes inapplicable —

Blue Chip is ordered and directed: to divest, with all due

diligence, within 15 months from the date upon which

- Section V shall no longer apply, all of the. company’s :

capital assets, goodwill, and the right to the service mark

and to the use of the name “Blue Chip,” and, in

: -_guch divestiture; to’ discontinue” issuance of -

—— stamips,. cease doing business as’ an operating

ah

and thereafter to wind up its affairs and dissolve consist-

ent with the applicable laws of the State of California.

The divestiture, ehall be. made, upon, the following ferme are

and conditions:

Cae an leon capi

trading stamp business shall agree fo enter its’ ep-

pearance in this proceeding and: shall furnish its

Bere sopeecrecy sheet moved ho meet ea

visions of this Final Judgment. iiey ani hats

(ay ah ark ea gales

> engage in the trading stamp busiiess in Calfornin 2

ee

—~<ia~a

ei igtec i ign baiditataaet

| - with Blue Chip on mutually satistactory’ terms; for

the redemption of all outstanding trading stamps

theretofore issued by Blue Chip and said contract

. Shall “insure discharge of Blue Chip’s redemption

obligations and shall require the purchaser or suc

‘cessor to redeem its stamps interchangeably. with

the wcadhags suche dsieatatcce tated by: ive Chip.

(4) ‘The purchasér or sticcessor shall assume

such other obligations as Blue Chip and it may agree

- and Blue Chip shall transfer such cash, securities or

| other: assets as it and Blue Chip may agree.

' ‘The said divestiture may be made by a sale of assets, a

- gale of stock of a corporation which controls the assets,

or im any other manher not otherwise inconsistent with

the terms of this decree. Provided, that in the event that

all of the stockholders of Blue Chip. dispose of their stock

to a purchaser or successor said disposal shall be regarded

» SanRenTENa ot ehinaaeae Repemnaeete ial

‘Judgment. -

~ (B) ive Chip shall make known the availablity of

pea at pele: Biue°Chip shall furnish to bona fide

prospective purchasers making inquiry to it, such infor-

mation-as is reasonably necessary for them to proceed |

: with negotiations looking toward the ultimate acquisition

of the assets to be divested and shall furnish plaintiff con-

_ ‘CUtrently, ‘with the nameof any such prospective pur-

- chaser. Blue Chip shall réndet: quarterly’ reports to the

Assistant’ Attorney General in charge of the Antitrust

_ Rite seein in etien Ssome Me ay

“X o.* | ¥.

— ‘ited

: suuiced tha nt: sadiepelnteinninndabehaiin: ae

“eh, sneer enenteen aeerenenn :

plaintiff withthe ‘name of the meer mr

purchase contract, and with such other nin its

roth 6 had i tad ipa aE ‘plant |

requests, the éaid closing date shall be extended: to the

extent necessary to afford plaintiff 60 days between the |

_ date of the receipt of the said information and the closing

date. Blue Chip may close any sale unless plaintiff serves

upon Blue Chip, at least 15 days in advance of the clos- |

_ing date, written notice that plaintiff objects thereto. If

plaintiff serves such written notice with respect to a sale —

to a purchaser engaged in the trading stamp business, or -

a purchaser engaged in the operation of retail food stores

, in the State of California, such sale shall not be closed.

If plaintiff serves such-written notice with respect to any

other salé, the sale ‘shall not be closed unless approved

by the Court. The time period set forth jn Section VI(A)

‘above shall be tolled during the pendency of any exten-

‘ sion or of any proceeding under this Section VI(C).

(D): The divestiture ordered: and. directed. by Section

VI(A) of this Final Judgment shall be made in good _

faith and shall be absolute ‘and unqualified ‘except as _

follows:

: or seceen BE egeeati Sesion ee he

° |

- (1) Nothing herein contained shallbe deemed

-.. and enforcing a bona fide lien, mortgage, deed of .

trust or any other form of security reasonably neces-

~

iat en cce sits sere

any. other obligation of @ purchaser or successor,

ya provided. that if Blue Chip shall regain ownership ~

Of or control over the property divested as'a result

it of any lien, mortgage, deed of trust, or other under-

taking Chip shall be required to terminate such”

ms omncctbip or control within 18 months thereafter.

~ (2) In the event that ‘Blue Chip receives, as a

result of any divestiture hereunder, stock of a corpo- |

‘ration which controls the divested .assets:

(a) Blue Chip shall be required: {i) to dispoat_

” . of any amount-of such stock in excess of 10% of |

_ the e outstanding common stock of such ‘corpo-

' within one year following the date of

© Teceipt or within 22 months following’

“the date Section V shall no longer apply, prhich-_

ever is earlier, provided that in no event, shall

_ such’ disposal be required within less than 6

“months. following the date of receipt| of such

eet.”

- excess; and (ii) to dispose of -the balance of ©

“sich stock no later than the date of final distri-

** bution i in liquidation; and ( iii) pending disposal,

* to’ cause any -voting rights of such stock to be

___ gxercived by a financial institution or other third |

ee eet

_ Uy, tie Court; and

(b). In the event Blue. Chiptiistributes such

‘stock ‘to its shareholders, no distribution shall _

‘be made pursuant to which any Blue Chip share-

holder will retain more than 1% of the outstand-

a common ‘stock of the. ‘said an

—

cn the lia eelecnitp ian 4

peer sates Rises 20s cane |

VIL.

In the event that Sectinn Vv ‘Bint inapplicable, Blue’

Chip may also enter into a reorganization pursuant to a

a for the reorganization of Blue Chip Stamp Company _

ble to the Court. The plan shall be ‘substantially

in acconibach: wih sibe of the tinh eg as.

ished >. PIMENIT. ce Jn -pccontone sith ay: feet glen

er to Blue iain to — ager.

(A) ‘Blue Chip is ordered, and directed to continue its

trading stamp business and to confinue to promote its

trading stamp. service ‘until completion of. the Teorganiza-

tion set forth in Sections V and VII above or until the

divestiture set forth in Section -VI above. Until such |

= Teorganization or divestiture — Chip i is. s enjoined and =

:: restrained from: Ss ie te

(1) Refusing to provide a trading stamp service S

or imposing any limitation on such service. to any

person because of: (i) the presence in the same

_ locality of any establishment operat by another

person using Blue Chip’s stamp service; (ii)' the

rate of issue efployed by such: petson in offering 7

Blue Chip’s or any other person’s stamps; or (iii) ©

ate rh engin gt ey aa

| Setvice, ° os

” /(2) Coercing or compelling any- person: (i) to |

FR a Lae

-

hi

+ |

_ Chip’s or any other person's stamps; or (ii) to re-

" frain from using any other trading stamp service.

‘on :

(B) New Blue Chip, in the event that it is not already |

~ a party hereto, shall enter its‘appearance in this proceed-

ing and give its consent to be bound by the applicable

_ provisions of this Final Judgment. A purchaser of assets

pursuant to Section IX hereof shall enter its appearance

in this proceeding and give its consent to be bound by

the applicable provisions of this Final Judgment. New

Blue Chip and such purchaser are enjoined and restrained

(1) ‘Refusing to provide a trading om service.

or imposing any limitation on such service to any —

person because of; (i) the presence in the same

locality of any establishment operated by: another ;

person using the company’s stamp service; fii) the

rate of issue employed by such person in offering

the company’s or any other person’s stamps; or (iii)

Bow sio- ahora pepciccpedmir ss ansdorat

‘service;

‘limit the rate of issue employed in offering the

ge company’s or any other person’s stamps; or (ii) to

ay alekal “seca tg pera 1 0.

: "refrain from using, any other trading stamp service;

a (3).Having as an officer or employee. any per-

ae er ‘son who, while holding such position, .also, serves

_., }.88 an officer, director, or employee of any person

using trading stamp services; or from. having, for .

a «Cad gigs itn fon cao,

iis nil: re

director or employee of any person who was'a Blue.

Chip stockholder i in :1956 or 1957.

-(C) Each of. the retailer defendants is enjoined i

restrained fora period of ten years ary the date

of entry of this Final Judgment:. “= &:

(1) From having as an officer, istsin. or em-

‘ployee any person who, while holding such position, . - -

also serves as an Officer, director or employee of

“New Blue Chip; or

' (2) From. exercising any ‘right which it might

acquire to vote for the election of any official of

New Blue Chip; provided that a retailer defendant _

may cause such right to be exercised-independently

by a financial institution or other third party accept-

able to plaintiff or approved by the Court.

_ Each retailer. defendant shall be free to “utilize or not ©

utilize the trading stamp services of Blue Chip and New

Blue Chip and, except as provided in this ‘Section }

VIII(C), to exercise the same rights and privileges avail- ©

able to every othier user. of the ‘stamp: services of Blue —

aia or New Blue bial |

New Blue Chip shall, within 30 months after the date

‘ of completion of the reorganization under Sections V or.

VII above .or the divestiture under Section VI above

Ln

include the following terms: ;: 3

(1) New Blue Chip shall offer for tale one-third

9 io ee eS cae See, Aen

Yes

a °

Se ENE ae ‘\

" State of California. SER REENCr one © Sey

sale shall be located within a contiguous —

pac area within Southern California.

* (2) A purchaser shall be permitted to acquire

te business only upen the condition: that it enter

its appearance in this proceeding and agree: (i) to. -

be bound by the applicable provisions of Sections

VHI(B), IX, X and XI of this Final Judgment and

(ii) to engage in the trading stamp business for a

reasonable period of.time. A purchaser shall have

_ the right, if it so elects, to redeem New Blue Chip.

_ trading stamps within the contiguois area for the

‘period of one year following the consummation.

of the sale. Plaintiff shall’ have the right to object

to a purchaser in the same manner as it may object _

to a purchaser utider Section vi(C) above...

a é}) New Blue Chip shall not, during the period’ Hee

. _épf one year following the consummation of the sale:

(i) Knowingly allow-any person operating retail :

- establishments in the contiguous area to issue New

Blue Chip stamps to customers of such establish-” _

_ ments; or (ii) furnish New Blue Chip stamps to any

person with knowledge that the stamps will be issued

2 to customers at any retail establishment iti the con-

' tiguous area; or (iii) otherwise engage in the trading

) stamp business in the:contiguous area except that,

if thie. purchaser does not elect to'redeem New Blue ©

- Clif stamps or if the purchaser fails to perform in .

ame ape Ecireapeed

-O

me 17a—

period, New Blue Chip sal fer it trading etamp

ssrvice in th comtlguian hepa: |

x er feeling

For the purpose of securing compliance with this Jad

? amenf and for no other purpose:

(A) Any duly. ‘authorized representative or repre-

sentatives of the Department. of Justice shall, upon written

request by the Attorney General or the Assistant Attorney

General in charge of the Antitrust Division and on reason-

"able notice to any defendant, New Blue Chip, or any.

purchaser under Section IX. hereof, made to its principal

. Office, and sabject to any legally peter ee be

: permitted:

"__ledgers;-accounts, correspondence, memoranda, and

(1) Accsae haha thevcllce divadrnell books: |

other records and documents in the possession ‘or

under the control of any person specified in this

Section X(A) related to “7 matters contained in |

this Judgment; sot as

(2) Subject to the reasonable convenience. of,

and without restraint or interference from, any per-

son: ‘specified in‘ this Section X(A), to interview -

. - Officers or employees of any such person ‘who may

: have counsel present, regarding any such matters...

(B) Upon written request of the Attorney General or

the Assistant Attorney General in charge of the Antitrust _ os

Division, any defendant, New Blue Chip or a purchaser'*";

“under Section TX shall'submit such additional reports in

_ writing with respect to the matters contained in this Final _

— as may be requested. Provided that no infor-

x

_— ti

: mention obtained bry the tnsedn ptonided fo tn’ thie Section

X shall be divulged by any representative of the Depart-

: ment of Justice to any person other than a duly authorized - ’

- Tepresentative of the Executive: Branch of the United -

| ' States, except in the course pf.fegal proceedings to which

the United States is a party for the purpose of securing . i.

compliance with this Final areca or as So. i el

Pro socsfyin 3 9 |

OA, MGA A Se a :

Be jaca wethined toe the porpoee of enabling any

. of the parties to this Final Judgment to apply to this _

: Court at any time for such further orders and direction as

“may be nécessary or appropriate for construction, carry-

ing opt, modification, termination or enforcement of or

_ compliance with the provisions of this Final Judgment" _

Erker sg RONAN

Dated: June 5, 1967

py WARREN J. FERGUSON __

United States District Judge .

—

| 7 APPENDIX C.

‘UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA |

6 Civil No. 63-1552F

| Uletes STATES | OF AMERICA,

vy &

BLUE Cur STAMP CoMPANY; Aneemiiiaiti arers; =

LUCKY STORES, INC.; MARKET BASKET: . PurRITY

Srorgs, INc.; RALPHS Gaocary CoMPANY; SAFEWAY

STORES, INCORPORATED; THRIFTIMART, INc.; THRIFTY

"-Drus STORES Co., INc.; and Von’s Grocery Co.,

aS Détilidanns

. INDEPENDENT aciieialia SERVICE STATION OPER-

ATORS, plaintiffs in the action of TWYMAN, et al. v.

BLUE CHIP STAMP CoMPANY, etal., 9

at | Petitioners for Intervention

: RALEi’s, a corporation,

Taurry SHOPPERS ‘ScRIP Co.,

"OPINION DENYING MOTIONS TO INTERVENE

AND TO VACATE CONSENT DECREE

On June 5, 1967, the Court approved and signed a

consent decree in. this antitrust action. “ Subsequent

_' thereto Petitioners for Intervention filed motions which

: seek — —

. Plaintigy

Petitioner for Intervention aa

Petitioner for Intervention : :

ty .

sei

(a) to.intervene'as.a matter of-right under Rule

24(a) of the Fedéral Rules of Civil Procedure;

24(b); and

' .At the conclusion of argument on July 31, 1967, the

Court orally announced its decision, 4nd by minute order

denied the motions. This opinion is written in order to

oe

| BACKGROUND |

mn December 26, 1963, the United States filed rm

complaint . alleging. that Blue. Chip Stamp Company,

“ Thrifty Drug Stores Co., Inc. (the largest pharmacy chain ,

“jn California) and eight grocery chains (whose 1962

sales constituted 30 percent of -all sales of grocery stores

ae in California) had since 1955 engaged in a conspiracy -

in restraint of trade, and had monopolized the trading

stamp business in California, in violation of.Sections 1

and 2 of the Sherman Act (15 U.S.C. §§1 and-2). .The

, complaint sought an injunction against continuation of

the ‘activities charged and asked that the defendant re-

po dh er aaa a

; er aas

gE SPEER gg oy eC Oa

. 5 in detailed negotiations to settle the -

litigation by consent decree. These negotiations extended

fendants,¢

over’ two years in time, and the Government afforded an

Bod “@efendants and to’ all other parties

f in the case to be heatd. Asa

ro thew eps Ge pete cont

(b) to be permitted to intervene jinder Rule

: (c) fo vacate the consent deoree of June 5, 1967.

\"

—2la—

crees were proposed, each ofwhich was lodged with:this

Court.. In-order that interested parties might have time

. _to stily each proposed decree:and to make’ known their

3 views with respect to it, there was annexed to each decree

astipulat providing that all signatory parties consented :

to entry of the. given decree after 30 days unless the

Governinent withdrew its eonsent duri..g--the -30.day

On July 22, 1966, ds tint sini ila baaaen |

with the consent of all parties except defendants Market

- Basket and Thriftimart. The two non-consenting de-

fendants as well asthe State of California, Certified

Grocers Association, and California Grocers Association

(alt non-parties), raised objections to the decree before - 3

the 30-day. period had: expired. The Government then -

withdrew its consent and: the decree was. withdrawn. .

Following further negotiations, a second decree was _

drafted and lodged with the Court on October 28, 1966.

The annexed stipulation to the decree was signed by the

. Government and all ‘defendants except Market Basket

and Thriftimart. The Government and the consenting

defendants filed briefs in support of the decree. The two

non-consenting defendants, and the California Grocets

Association, Certified Grocers Association, S & H Stamp

Company, and the State of California filed briefs in op-

position to entry of the decree. On December 13, 14 and

. 15, 1966, this. Court held hearings, and all parties favor-— :

ing et opposing the decree were given opportunity to be

heard. At the conclusion of the hearings, the Court re-

fused to sign the proposed decree and outlined certain |

sy aquaria di, he ty Ie

the case. es ; vere

S

Pak

aeieie.®

On. April 28; 1967, sdietitenniinatatee, tie

sented to by all defendants. The Court ordered notice -

should be given to all parties previously appearing in the

case, including parties amici curiae. Argument was set .

- for June 5, 1967. Such notice was given. - Briefs in favor oo

of this third proposed decree were filed by the Govern- : }

ment, all defendants, and also by the State of California,

Association, who had been active in opposing the earlier

~ decrees. Briefs amici curiae in oppggition to the proposed’) ss

decree were filed by the petitioners herein, byS&HStamp

3 _ Company, and by Gold Bond Stamp Company. After a . ?

: Study of the briefs and consideration of the oral argu-»

ran SS One Ie Sev oe BrTeINS copie

on June 5, 1967. ; Pa Saha ~

DESCRIPTION OF PETITIONERS

ion Independent California Service Station Operators-are

plaintiffs in. the case of Twyman et gly. Blue Chip Stamp

_ Company et al., Civil No. 66-1522-F, how pending before

_ this Court. The complaint therein alleges substantially

| the same violations as those alleged in the. Government

complaint (yiolation of Sections 1. and 2 of the Sherman aca

Act). Likewise, the Government complaint is incorpo- ,

rated in the petition to intervene. The service station’ . |

7 operators suing in Twyman and seeking to intervene here

‘Gaim thas Yo vovus of ths loo Chip trading, stamp |

7 ponopoly, 4 customer demand has been created for :

: fing stamps, 90 that service station operators must

trading. oe oH i slognd thet ty being hes

. — 234 —

station operators are damaged. Their somaiaioi

tereateld Seanene ender Ge ert LE UAC: gis.

Thrifty Shoppers Scrip Co. is ‘a stamp c y which

competes with Blue Chip. It has filed an% in this

Court, Thrifty Shoppers Scrip Co. v. Blué’ Chip Stamp

Co., No. 67-596-F, against the same defendants -as ‘are

here, alleging injury in its efforts to compete in the,trading _

stamp business in California due to the restraints pf tfade

atindenen one tere pr geaas

Raley’s, Inc. a retail grocery chain, also-is the plaintiff

in a civil action now. pending before this Court. A2% .

stockholder of Blue Chip, Raley's is suing on behalf. of

said company and other stockholders. Raley's e al. v.

‘Alexander's Markets et al., Civil No. 64-666-F, Named

as defendants are Blue Chip, ‘the other defendants in the

Government suit, and certain jndividual- shareholders of

Blue ‘Chip Stamp Company. Raley’s complaint alleges

violation of Sections 1 and 2 of the Sherman Act, aiid

prays for money damages, for a decree. requiting the

y defendants’ to ‘sell their stock in Blue Chip Stamp Com- —

pany, and for an injunction prohibiting the defendant. _

shareholders from participating in future profits of Blue .

“Chip. Iti 1966 Ratey’s commenced wsirig Gold Bond,

q, Stamps. From 1959 to 1966 it had used its own stamps; |

sche dnenteiherntgerie ny wit

Ce OS

Py

= do 7

&, ss ae 2S. Sa

; ‘ ae on RULE.24 epi 4 :

| Damme tk Federal Rules of Cv 3

4 :

4

—24a— 5

Rule 24. Intervention.

(a) INTERVENTION OF Rint. ‘Upon. timely ap-"

_ anyone shall be permitted to intervene in

: (1) when a atatute of the United States

canes i onan fight to intervene; or (2).

when the applicant claims an interest relating to ©

| the property or: transaction which is the-subject of

the action and he is so situated that the disposition

of the action may as a practical matter impair or

impede his ability to protect that interest, unless the :

_ applicant’s interest is veritas er: ay

existing parties.

A

» (b) PERMISSIVE INTERVENTION. Upon timely ~

‘application anyone be permitted to. ‘ihtervend

in an action: (1) w statute of the United Statés

confers a: conditional right. to intervene; or (2)

when an applicant's claim or defense and the main

, action have a question of law or fact in common:

” When a party to an action relies fot ground of claim

or defefise upon any statute or executive order ad- -

__ ministered by a federal or stajo governmental officer

_ OF agency or upon any regulation, order, ‘require- -

~ ment, or agreement issued or made pursuant to thie

’ statute or executive order, the officer or agency

- ‘upon timely application may. be permitted to inter-

vene in the action. Jn, exercising its discretion the — :

court shall consider whether the intervention will

"unduly delay or Prejudice the adjudication aie ..-°

Le ncids abceel gua

. Vededditetad bimentiees

i si 6 — 254 —

wus cnciuiain PRESENTED |

Te questions presented are (1) whether petitionsrs

shave a right to intervene [Rule 24(a)], or (2). should

be permitted to intervene [Rule.24(b)] in an action

- brought by the Government. and subsequently settled,

' with the consent of the Court after a full hearing, and,

_ (3) whether, ‘ancillary to this, the petitioners hive a right :

to have the consent decree vacated. |

THE PETITIONS WERE NOT TIMELY —

; . 4 ‘. : ati _

~ Rules'24(a) and 24(b) specifically provide for inter-

vention only upon “timely application”. The present mo- -

tions were neither served nor filed until: after June 5, :

1967, the date the consent decree was entered. Twyman’s

- motion was filed June 19,-1967; Thrifty Shoppers’ on

. July 12, 1967; and Raley’s on July 14, 1967. The rule .

for intervening after entry of a final judgment is set fgrth

in Barron, &. Holtzoff, Fed. Prac. & Proc., vol. 2, 1594:

| ‘tnterwation may be allowed after a final judgment

or decree if it'is necessary ‘to preserve some right

which cannot otherwise be protected, but such inter-

' vention will not be permitted unless a ‘strong show-— A

ing~is made.”

” Petitioners have’ failed % make any sande at all as to

_any right-which can only. be protected by intervention.

_ Furthermore, there is no showing that their applications

are “timely”. a ised |

" Bach petitioner latins it demonstrated its i aatien

; to the decree by filing an amicus curiae brief and by.argu- Ae

. ing’in opposition to its entry. However, if petitioners’

; . : : e } A .

had time to make known their opposition to the decree,

ther. Ane, ae Bp, Me Shee applications -t- intervene.

‘In United States” v. Wilhelm Reich Foundation ”

' E.R.D. 96 -(D. Maine 1954), afd, 221, F.2d 957, ‘cert.

_ denied, 350 U.S. 842, the Court stated:

7 “Although the deteimiination of timeliness ea

a considetation of a number of factors and the time

element alone is‘ not controlling, a strong showing as °

must be made by the applicants in order to be al- S|

lowed to intervene after the entry of a final judg- — |

-. ment. See 4 Moore’s Federal Practice, 2d Ed., Par.

24. 13.” 17 F. RD. at 102.

In Slusarski v. United States Lines a 28 F.R.D. 388,

390 (E.D. Pa. 1961), the Court stated:-“Where, as here,

all issues have been resolved and the litigation concluded, |

: with entry of judgment, we think the application is clearly :

too late.” For similar rulings see Alleghany Corp. . a

Kirby, 344 F.2d 571 (2d Cir. 1965), appeal dismissed |

|. <=cert. improvidently granted, 384 U.S. 28; Kaplan v. — | |

Guardian Life Ins. Co: of Amer., 231 F.Supp. 874, . |

876-77 (W.D. Mo. 1964); Union Nat. Bank of Youngs-

’ town, Ohio v. . Superior Steel Corp., 9 F.R-D. 124 (W.D. —

Pa. 1949). : |

Bil Zd Bin we petri any. ao oa by which timdii-

ness may be tested. Thus, it is necessary to look to all

.- the circumstances in a given case. “However, the courts »

-- do not.look with favor upon one who, fully aware of —

. what has transpired, nonetheless fails to act on his rights '

: ‘and is unreasonably tardy in filing a petition for inter-

vention. — xy

= 27Ta—

. we might say we. do ‘not see any reason why

thine interveners could not have sought intervention

> Mauch earlier. The Court should also consider the

_ State of the cause. That is, as we have pointed’out,

‘the case has been conciaded: 'a decree entered; and

the parties have reached an amicable settlement and

dismissed ‘their appeal. The applicants for inter-’

vention here have in effect slept on their rights, and

now they want this Court in effect to administer the

motion picture industry in the distribution of motion

; pictiites i in Western Pennsylvania. We do not feel.

‘Mat this is 4 function of a district court.” Basle.

Theatres, Inc. v. Warner Bros. Pictures Distributing

Corp., 24 F.R.D. 476, 477 (W.D. Pa. 1959).

The requirement of timeliness i is not without founda-

tion. The interest in expeditious administration of jus-

tice does not permit litigation interminably protracted

through continuous reopening. A motion to intervene

after entry of the decree should therefore be denied in _

other than the most unusual tircumstances. Such circum-

. stances are not present here. Petitioners have for some

_ time been aware of the existence and nature of the nego- |

~ tiations leading to the final decree entered by this Court. *

_ They. have been given every. opportunity to be heard.

Had they felt their interests were not being given adequate,

consideration, they should have moved to intervene.

They chose not to do so, but rather waited until lengthy

and complex negotiations had been completed, all argu-- -

ments of. amici in opposition to the three proposed des

crees had been heard, and a consent judgment entered,

; before. isceenely ioe to intervene. :

— 28a —

“ Petitioners cite Kozak v. Wells, 278 F.2d 104 (8th

* Cir. 1960), as purported authority. for. the proposition

‘that intervention is proper after entry of a consent judg- .

ment. However, Kozak is not applicable here. In that

‘case the motion to-intervene camesprior to entry of the

decree and before the issues had been drawn. The opin-

jon did note, however, that “There are even occasions ie

where intervention is proper after judgment.” But such.

cases have typically involved a refusal or unwillingness —

by the losing party to diligently prosecute the lawsuit,

this fact not becoming apparent until after the Court’s

- decision. E.g., Hurd v. Ill. Bell Tel. Co., 234 F.2d 942,

- 944 (7th Cir. 1956) (intervention granted at appellate

level where in a spurious class action, it. appeared that cér-

tain members of the class doubted the faithfulness of the

named plaintiff in prosecuting: the appeal on behalf of

the class); Pellegrino: v. Nesbit, 203 F.2d 463 (9th Cir.

1953) (intervention granted for purposes of prosecuting

appeal by a stockholder who learned after judgment had

been entered against the corporation, that the corpora-

tion had decided not to appeal, despite the fact that the ,

corporation’s suit against its officers to recover allegedly ~

improper profits had been instigated at the request of.

this stockholder) ; Wolpe v. Poretsky, 144 F.2d 505.

(D.C. Cir:. 1944), cert. “denied, 323 U.S. 777 (inter-

vention granted for purposes of prosecuting appeal be-

‘cause affected property owners did not learn until after S

judgment that thé zoning commission did not intend to

appeal an adverse judgment). Under circumstances such

as these, ‘where the inadequate: representation of the

pétitioner’s ititerest comes to light only after entry of the :

- decree, the courts have been willing, with good reason,

| to recognize an exception to the general rule forbidding

9

intervention after: ‘entry of the decree. This exception i)

has been narrowly defined: “Intervention. -may be al-

| lowed after a final decree where it is necessary to pre-

serve some right which cannot otherwise be protected.”

ae ‘Wolpe v. Pomel supre, ie F 2d at 508.

Mie Referring again. to Kozak, supra, the motion to

intervene therein, . as ‘noted above, was filed before

entry of final judgment. Thus, Kozak is not authority

excusing petitioners here from the necessity of making:

a “strong showing” as to why they did not proceed

more diligently. -The delay in serving and filing. the

. motions cannot be overlooked when considered in

light of the injury sure to result to the public should

implementation of the decree be postponed. :

Petitioners contend they meet ‘the requirement ae

timeliness since the El Paso-case [Cascade Natural Gas . .

Corp. v.-El Paso Natural Gas Co., 386 U.S. 129 (1967)]

- holds that even after entry of. the consent judgment,

intervention. may be permitted. Whether or not: this is

in fact the holding i in El Paso, it is clear that that case.

*. does not rewrite Rule 24(a). and (b) to eliminate the

requirement of timeliness. After the. Supreme’ Court

. ordered divestiture, United. States v. El Paso Natural

Gas Co., 376 U.S. 651 (1964), the District Court held

hearings on the form of relief. Twenty- parties, includ-.

| ing the’ State of California and Cascade Natural ‘Gas

_ Corp., filed motions to intervene. These motions were.

_ filed and denied before the District’ Court entered its

consent’ decree. Thus, in the opinion whereby interven-

tion was denied, the District Court stated, “All that re-

- mains is to fashion a divestiture decree which complies

ORE ATR ORY AS oN WADE ih

ttn cen Re

— 30a—

‘with the mandate of the Supreme Court.” U.S. v.. El:

___ Paso Ni Natural - Gas Co., 37 F.R.D. 330, 332 (D.:Utah

1965). ‘Of ‘the 20° prospective intervenors,. California,

and Cascade Natural Gas Corp., appealed to the Su-

-_prenie Court, along with Southern California Edison

Co., which had petitioned to intervene at a later date.

- .The Supreme Court reversed, permitting intervention. —

The Court’s opinion, per Mr. Justice en does not

; .even discuss timeliness. .

As noted above, California, and Cascade Natural Gas

Corp. both sought intervention well in advance of entry .

of the consent decree. It is not clear when the petition

of Southern California. Edison Co. was filed. However, —

on these facts, and in view of the fact that the Supreme —

Court did not discuss timeliness of the dates the: peti-

~ tions were filed, it is clear that E] Paso cannot be taken

as authority for the proposition that intervention may - -

be permitted after entry of a consent decree. | oe ac:

In El Paso, the Supreine Court observed that it-had 7

_ a right to protect and to insure obedience to its own ee,

previous mandate. Similarly, this Court likewise has = =

broad powers to protect and interpret decrees which it ; |

has approved and issued. Obviously, a ruiing by a court

that-intervention is proper to insure compliance with its

earlier mandate is no authority for asserting that a court, —

"which has issued a mandate, should permit intervention.

for the purpose. of attacking the mandate. In this. re-.

spect, El. Paso. is actually authority for the denial of the }

poses instant motions to intervene, because the present Court

hes. ewig t,fomnacert, sn enforce. the ananyiate. which

: ichesieoped. : |

ef

— 3la—

“This interpretation of El Paso, supra, has been sus-

tained tin th-ncieecion Sdn 0 thi Shipiile Count:

| The Government had prevailed in an action brought to )

. force. Alcoa to’ divést. itself” of Cupples. (United

_ States v. Aluminum Company of America, 233 F. Supp.

718, 247 F. Supp. 308 (E.D. Mo. 1962), affirmed per —

curiam, 382 U.S. 12.) During the pendency of the ac-

tion, and subsequent negotiations for divorcement, Alcoa

“and Cupples bid on a contract to supply aluminum cur-

tain walls for the proposed New York Port Authority

building, under an agreement that if Alcoa were forced

to divest itself of Cupples, it would relinquish the con- _

tract to Cupples. Lupton Manufacturing Co. also’ bid

to supply aluminum curtain walls for the building. When

the order of divorcement became final, Lupton moved

‘to intervene under Rule’ 24(a). and (b). . Lupton did -

not coritend that it. had a right to bid free from compe-

tition, but ‘rather asserted that if Cupples were permit-

ted to retain the contract it would retain part of the -

profit of an ‘illegal merger, and thereby frustrate the.

purposes of the Government's case, namely, to restore

free and open competition in the aluminum cyrtain wall -

industry. The District Court denied Lupton’s | motion

to intervene and a direct appeal was taken to the Su-

preme Court. United States v. Aluminum Company of

America and Cupples Products Corp.; 41 F.R.D. 342

_ (E.D. Mo. 1967), appeal to Supreme Court dismissed,

87 S. Ct. (Adv.) 2112 (June 12, 1967). :

eek

oe yo SN

* PETITIONERS HAVE NO RIGHT To

_INTERVENE UNDER RULE. 24(a)

Rule 24(a), governs intervention as of right. In ad- :

' dition to the requirement of “timely application”, 24

(a): further requires that é. Prospective. intervenor

. an interest relating to\ the property or trans-

paar rp hal

. situated that the disposition of the action may as ;

a ee yb

-prot&t his interest. .

Petitioners have not demoistrated the existence of:

any “interest relating to the property or transaction”

which is the subject of the Government’s suit which

mi might support their applications to intervene.

Each petitioner has filed an action, pending in this -

_ Court, ‘charging the defendants with substantially the .

same’antitrust violations as those charged in the Gov-

ernment’s case. They seek damages for the injuries suf-

fered as a result of these violations. None of “in-

_ terests” are in any way “impaired or impeded” by settle-

ment of the Government's ‘case. Nor is their ability: to

- ‘Provecutte their respective cases impaired or impeded by ”

the Government's case, The speculation that petition-

ae ene ed in the trial of their respective cases.

“if the Government is forced to litigate its case certainly

does not give them an “interest” in the Government's

. ©ase buifficient to support the motions to intervene, es

If the’ petitioners are appearing merely as members ,

ofiie Pete, in the public intent, thea i s incamboat

sa» a

upon. them to establish that the Governniént has not

lic interest in the present

. matter, the Government first ifivestigated, and then filed

its complaint seeking to restrain the violations and to -

dissipate the monopoly revealed by its investigation. Sub- ys

stantial effort was expended both in préparing the case

for trial and in seeking to negotiate the consent decree,

and provides for drastically reducing the power of the

defendant retailers over Blue Chip Stamp Company; de-

‘fendant retailers are enjained acting in concert:

in the trading stamp industry in the future. The mo-

nopoly power of Blue Chip is decreased, and competi-

tion is opened. at, Sanat oe) CMR

PETITIONERS SHOULD ‘NOT BE

—\. UNDER: RULE 24(b) - ie ba

_ Genérally speaking, the tight’to intervese to defeat

entry of & consent decree in any governmént antitrust”

» In Sutphen:

19 (1951), the.

United States _v, P

~» US. 131 (1948), |

e >

“2g

3 Se FGA ee “A }

tion was ordered reorganized in a manner similar to

- divestiture. Sutphen’ Estates had leased property to a

3 Warner affiliate and Warner had guaranteed the les-

"*- "see's performance of the lease. Intervention was sought —

. ‘by the lessor to protect its rights against Warner as guar-

oN -anter. Intervention was denied because the lessor was” .

not a privy of Warner and the “reorganization” decree

would nat bind the lessor in any legal sense. The Court.

stated that “. . . the claim:of injury to appellant is too

speculative and too contingent on unknown ‘factors to

conclude that there was an abuse of discretion in de- -

pene gnssrtncpon rg? 342 US. at 23.

‘* In Sam. Fox Publishing Co. et al. v. United States,

~ 366 U.S. 683 (1961), the- District Court denied cer-

tain music publishers intervention in proceedings for

the modification of a prior consent decree in-a govern- ;

ment antitrust suit. lee sicuacaeemer al

Justice Harlan, stated: Pad

ai

private interests coincide with the public interest

in government, antitrust litigation is nonetheless

_ not bound by the eventuality of such litigation,

arid hence may not, as of right, intervene in it.

In United States \v. ‘Borden Co.; 347 U.S. 514, it

was ruled that i wag an abuse of discretion for

_., the District {6 refuse, the Government an in-

junction’ against cértain’ acts held violative of the

antitrust ‘laws, even though the’ same acts had al-

ready’ been enjoined in a private suit. It was there

thal a ect Yoong tat "petenns and gute ec

| “ie regan it fll sete tht person whee, |

9g ‘

eal etn dengned thn aati. at |

exclusive’ (id, at 518). . . .” 366 US. at 689.

See also, United. States v. Loew's, Ine. et al., 20 FRD.

- 423 ¢S.D. NY. 1957).

In United States. of America v. “Radio Corporation

of America, 186 F. Supp. 776 (B.D. Pa. 1960), ap-

peal dismissed, 364 U.S. 518, a. competitor of the de-

-fendant attempted to intervene after a consent decree —

“had been entered, for the purpose of objecting: to pro-

posed acquisitions to‘which the Government did not ob-

ject. The Court denied intervention, as undér the con-

~ Sent decree it had retained jurisdiction only to allow any

of the parties to the final judgment — no one else — to .

_ apply to the Court for further orders or directions. How-

- ever, the Court also stated: |

“The Govecumnbat ‘Opyicaii- ti ‘abelen Sie ts

tervention and has informed the Court that it has

. carefully investigated and reviewed all the facts-and

reached the conclusion that the ‘proposed Boston

and San Francisco acquisitions do not violate the

decree. In this state of facts, even if I had dis-

cretion to allow the intervention, I would not do

Aree. The Government is concerned with the pub-

.- lic interest and is satisfied that the conduct which

Westinghouse complains of is not’ against that in-

terest. It would not: lead to an orderly adminis-

"tration of justice to allow intervention in this type

Of antitrust litigation over the objection ‘of the au--

” thorized agency of the United States in charge of

cade ovate roo ge

we

_ 4 Grinnell is

—36a—"

: movant, if it is aggrieved, must he left to ‘such pri-

vate remedy as Congress may ha eoies for

;; 186F. Supp. at sg Sl

This ‘naan: is particularly deli for the case. at

bar, where the Government opposes intervention and _

‘where the proposed intervenors liave already oomimenced oo

a of private remedies. |

ak ce ae oe (em

-“ \\. ARE WITHOUT MERIT \__.

¥

‘There is no merit to the claims petitioners ‘seek ‘to

advance; intervention should thus be denied. In Marx |

x ‘Madgrey, 106 F. Supp. 535 (E.D. N.C. 1952), pe-

titioner oved to intervene ‘and to set. aside an order

previously: entered. The: Court. denied. intervention on |

_ ot “the ground that . the. arguments raised ih opposition to

the order were, withdut merit. .

' Petitioners here do nothing more than Teiterate argu- ;

& ments previgusly presented; they fail to raise any addi-

“iy tional arguments not already ‘heard at length and de-

“nied by. this, Court. To permit intervention and vaca-

’ tion Of’ the decree so that these very same arguments

_ apne of rae would impose ‘an unwarranted bur- A

/ > dent on\the parties and the Court raged attest

os In of their conténtion that their claims should ae

_be heard, titioners cite United States vi Grinnell, 384

US. 563. ( 66), for the proposition that complete de--

“a> . struction of | monopoly .power: is the standard of re-

© ania newer However, the reliance on

Unlike the case at bar, Grinnell

— —

a oe

was litigated to judgment; there was no consent decree. .

“The authorities do fipt require complete divestiture where

erseof Bluc Chip and to open up and increasé ‘compe-

tition in the stamp ‘industry in California, while at Ahe

- same time _preserving the legitimate interests of the users

. of Blue ‘Chip stamps. This is consistent with the /prin-

| oe embodied i in the antitrust. laws..

> ‘ip

The. consent judgment is indispensable to antitrust

” enforcement. The Government notes that seventy -per- .

_ cent ‘of their antitrust judgments are consent decrees. -

Such’ decrees result from négotiation, thus typically may °

: provide something less than the full relief prayed for .

‘ (and often something more than that which the Govern-

ment could .obtain after trial). Litigation that might |

‘proceed for many years is avoided by utilization of this =

.. procedure. Its legality i is beyond question. In Sam? Fox re

annene Co., supra, ‘the . ee Court —

hat: ....’. 7 “ne

Miia from seh else, strong policy! would

strongly lead us to delclline appellant’s invitation to

| assess the wisdom of the Government’ $ judgment

‘in négofiatihg and accepting the 1960 consent de-'

cree, at. least in the absence of. any claim of bad

tee eee

ment in 80. acting.” 366 U. S. at 689.

++. ae

As petitioners have not furnished the Court with ' any- *

‘thing beyond that which has already been carefully

_., considered and rejected upon ordering entry of the con-

franchised ones, in order to permit}s

‘in California to compete with lar chain establishments.

ray = ~ ‘

; . @

s ‘sent decree, there is nothing to be gained and sch to

be lost by vacating the decree. si 9

Petitioners, when asked by the Court to present in

substarice a: decree which would better serve the public -

weré unable to do sc. Their arguments are general and |

without economic substance. This Court, has deter- _

mined that it is essential that there be a Viable non-fran- ©

chised stamp corapany which can compete with the strong,

small retail businesses

At the present time there is onl! one non-franchised

stamp company in California, B Chip. The: decree,

among other matters, provides that one-half of Blue

Chip’s Southern California business ‘must be sold to a.

purchaser who will operate on a non-franchised basis.

_ This is the most. practical way to increase competition |

-. in the retail trading stamp business that has been ad-

_ . vanced in 3¥%years, and petitioners’ arguments against

- the decree are 20 shallow as to be devoid of merit.

: Dated vs 18th day of August, 1967.

/s/ WARREN J. FERGUSON ;

_ Warren J. Ferguson:

United States District Judge

—3%2— =,

_ APPENDIX D-

<3, IN THE UNITED STATES DISTRICT COURT.

_ | CENTRAL DISTRICT OF CALIFORNIA —

-

Civ. No. 63-1552-WIF

UNITED STATES OF AMERICA, ie =

| | : Plaintiff,

BLUE Cup Stamp CoMPANy, et al., :

; : se a

REPORTER’S ‘TRANSCRIPT OF PROCEEDINGS

Date: Thursday, December 15; 1966 incu

[Argument. ] , nee

‘THE COURT:....— i wd oi |

In deciding whether or not to decide to sign the -

proposed consent decree, I have to take as an established _

_ fact the allegations contained in the Complaint; and for ©

. the purposes of my discussjon this afternoon I will accept |

- . @ being ‘conclusively proved thie allegations .of the

. Government ee all ‘of the defendants who are

before the court. 2

: { diik te toad bs Ge a Se

decree in the manner proposed, even though there may |

be two non-consenting defendants. :

I think in this case if I were going to sign a decree I

_ would make a findirig, without any hesitation whatsoever, - Ny

~ that there is no reason for any further delay.’ I think the

ee ee

°

ee ee ee ee

-

z

— 40a —

It isn’t doing the administration of justice any good to

continue this much longer. . It isn’t doing the payed

of California any good to continue it any longer. It isn

helpful upon the emotional stability of the defendants .

have the case continued any longer; and assuming, like

F am assuming, that there is a violation or violations of

the Sherman Act, then = matter . should be corrected:

promptly. - | | :

- Tt appears that the case, ene: any aeniitin, is: a-case

'. of unusual quality. Thé economic ramifications are

_ probably greater within a narrower geographical aspect,

_ however, than any like case that has been presented’ be-

- fore, because the case not only concerns a monopoly with-

in the trading stamp industry in California, but whatever.

is done by this court will have a tremendous impact upon —

the economy of the State, not -only the economy of the

S & H and any trading stamp companies that want.to

come in but upon the entire retail, wholesale and con-

sumer industry. :

. is for the rollback veculalons purer that I am refus-

ing to sign the decree. After listening to arguments for

three days, after reading the briefs and studying them as -

well as I could, I am convinced that. the rollback pro-

visions would have such an impact upon the economy of _

the State that I would be performing a terrible injustice.

I do think, homever, that there are possible alternatives —

to the rollback provisions, and I think it is incumbent

upon'me iti any decree I sign, whether it be a consent

pes decree or a decree after a trial — assuming I find there ,

has been after a trial.a violation of the Sherman Act’as

Kee alleged — I must do something to insure,,as much as his

Ne

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humanly posgle atatan, of future vigorous competition . :

in the trading stamp industry, without impairing the

economy of the State, particularly the grocery business.

In order to do so I have a dual problem. The problem

is a complex dual one, and I can appreciate why we have

| _ had 16 months or 18 months, whatever it was, in negotia-

_ tions by eminently qualified people. »

I think the Government understands the grocery iis,

try. in California. I think they are attuned to the problems

which are specific in California, and I don’t think that -

anybody has any right to say — at least by what has been

demonstrated to me so far — the sc ecacemsesih is not con- _

cerned and aware. : el

- The problem then requires po things. inh to estab- .

' lish a viable new company, a viable stamp business in

- California which will compete with S & H, and alsa at the

"same time eliminate the monopoly which. Blue ‘Chip

presently has today. . 5

‘In order to accomplish the viability I would iiiiaeeA

a decree. which transfers not only to new company the

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name “Blue Chip”.

| | T think that if the new company is going to be viable —

and I will not have it hanging over my conscience if it

doesn’t prove viable — it is necessary that the name “Blue

Chip” be transferred to the new company together with all #4

the assets of Blue. Chip. I think this transfer should be

made immediately, -

Now, I think itis vital and necessary that all of manage-

ment, all of the ares peieety ene of

) —4a—

Blue Chip go to the new company right away. ‘Of course,

this is an individual choice of management, if they want to"

transfer. But I think the new company should be.started —

_ immediately. I think Blue Chip should be dissolved im-

mediately, and I think all management of Blue Chip

should go to the new company. I think it is vital and

' imperative that the restraining orders which are contained

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~ decree.

Now, that is, the provisions.concerning the fact that the.

new. company shall — oh, with one exception. I can’t

‘conceive of any reason, any economic reason — I guess .

- we are dealing in economics as much as we are dealing in

law— that new es ge a be a Te COrpo-

ration. .

LT have thought as much as I possibly could as to the

reason, economic reason and legal reason, why. it should

_ be a non-profit corporation. If it is going to remain viable

I think it has to be a competing business organization

which remains healthy and enters the profit field.

e So I won't sign a decree which says the new company

has to be’a non-profit one.

Now, I guess probably nobody has too much argument

on what I have said so far.

Now we get tothe point where we have to do something ”

7 to make sure that new company opens up, permits an

apeaaing eee ene me Sa and how

do you do that?

smlesrveemitiiemninkdapiinitemnenbapads

axing exept chaos. oe

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in AB

"court uses ‘predatory people going out .and creating

_ monopolies, all the harsh language that the Supreme

Court has used to criticize conduct which creates monop-

_- Olistic operations, and not only is the rollback provision

- inoperable, but I think it is too harsh. ©

_ Therefore, as an alternative I would Propose something

iat oi oa oe a eo ag 2 two or a

three; a sufficient period of time to insure that new com-

pany is viable, that new company shall present to the court }

a plan to sell within a srogrenhical area one-third of its

existing business. ery

‘The sale, isjetaatln: te Adlesiinhs ie, dae at:

|, present, but I'think that a plan could be worked out by

-hew company within that period of time whereby they

will offer to-sell to anybody who wants to buy within a

specific geographical ‘area one-third of the existing busi-

ness of the. new company, of the then existing business

of the new company. The buyer will have to guarantee

-that they will continue a non-franchise stamp business.

- They will have, to guarantee that they will remain in oper-

‘ation for a reasonable period of time regardless of the .-

- business consequences of their act. Then there should |

probably be a period of a year in which new company

agrees it will not compete within the geographical area

with the buyer, and then at the end of that year new com-

ee

that geographical area. i 7

Itis entirely possible that nobody woud ever buy mnder

those terms and conditions, but if they don’t buy, as Mr.

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by

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nine dachatssthien hitilabetenitisetatihes Oinb wine ;

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er

1 think tis g@S0Stabet regi the ropeyinente of the

- $1,500,000.00 has to be clarified, that it doesn’t have to. .

be paid back within six months, and I think the decree

has to be more specific‘as to the redemption program

between Blue Chip and new-company, and in accord with

the restraining orders as proposed and in accord with the

= type of enterprise that new company shall engage in, but ;

I would urge that Blue Chip be dissolved forthwith, that

"new company begin operations forthwith, carry on the |

"trading stamps known as Blue Chip. :

‘Does anybody have any questions? - oe

MR.. ALSUP: Your Honor has made a very fine sug |

gestion and we appreciate it. : |

"MR. SPIVACK: Sin. aeidienamnd jou onqget tins

cnethird of the total business of Bue Chip be sold

_ THE COURT: Within a geographical area, one-third

of its total. |

MR. SPIVACK: ‘That otal should be allocated in

one geographical area? a

‘THE COURT: "Right.

MR. SPIVACK: isiaeateeniibeet adi Vibe: ta

sufficiently contiguous to an area in which Blue Chip can

compete so that it can go in? ,

—_

THE COURT: Yes. =

"MR. SPIVACK: ‘As understand from the geography

of California, that would have to be a part of Southern.

or ey

‘THE COURT: Well, senithaagdacenste I think

a plan can_be worked out. The details, I think, are\going

to be too onerous for me to try to decide that, but I think

you have my idea, Mr. Spivack, as to how this is to

accomplished, |

| shee to much opostion offhand tha you can se

to this? | :

‘MR. SPIVACK: Well, the sibanaé was, your Honor,

you remember originally at one: tithe we were going to oe

split it in two, one North and one South. .

THE COURT: Well, within-a period of three years,

probably, I think new company. with an entirely new out-

look will be able to come up with a program, with this

Kind of plan, and the plan is going to have to be approved

by the court. We are going to have to work out a program

- in which the offer is made to other companies, and there

may have to be a bid procedure whereaby sealed bids are

‘taken for so much money, I don't know. 9

_ I would urge and recommend also further, however, ans

_that in addition that the arbitration program as set forth

"in the proposed decree. be brought not only to include

arbitration of that one aspect -— I think the arbitration

program is limited only to the paragraph which is self-

contained —I think all aspects of this thing should be

subject to arbitration so that any problems between Blue

- Chip and new company can’ be worked out within the

Se business field.

‘One thing concerned me. I don't know whether or not

" the court should insist that a certain. number of the di-

rectors yf new company be approved by the Attorney-

| oe Oe

"General or approved by the Government. I was inclined

_ seriously to consider the advisability of making at least

_ one-third of the directors of new company approved by the

Government. I won't insist on this, however, because it

RRS RCN isn’t necessary, it is not

Anything else?

MR. LERMAN: Your Honor, did you have or ‘include

a suggestion as to who it is that would own the'inew com

pany to be created?

THE COURT: No. I wish that I could, and I would

like to be able to. say something about that, and this is a

problem that concerns Mr. Howland. It is a problem that

_ concerns me.”

I dott think it is going to make any’ difference. I don't

think it is probably“going to make any difference. If it

is going to make any difference, then the furthest I would

go in determining who would own new company would |

be to insist that the Attorney-General be able to approve .

at least one-third of the directors of that company. Like _

I say, I don’t know whether it is tecessary. If it isn’t

; necessary — and I am talking about necessary and open,

in order to open up the monopoly — — then it would be”

unwise. But other than that I am not making any sugges-

"tion as to who would own new company.

Mr. Howland? ; “as

MR: HOWLAND: I have-a question, your Honor:

: Does what your Honor has to say on the subject of a non-

profit corporation, does that also apply to a co-op, a profit-

making organization, the emoluments of which went to

users? ~

| + 47a—

_ THE COURT: The proposed decree ‘says that the

_articles of the new corporation shall either be a non-profit

corporation or else as ‘approved by the — |

~ MR. HOWLAND: Yes.

THE COURT: Now, nobody has rn any comment

on the authority vested in the plaintiff by the decree. So -

if nobody is objecting, I am not making the objection.

There was violent objection by’ Mr. Lydick concerning

the non-profit aspect of it, and I think he is validly justified .

ee .

tion.

inion, the court wishes to- comment that. your

presentations, your demeanor and attitude have been

entirely beneficial to the court, and all of you are a com-

_ pliment to your clients and to the legal wares

The court will be in recess.

(Whereupon, at 3:30 o'clock p.m., ., Thursday, Decem-*

ber 15, 1966, an adjournment was taken.)

(Tr. Dec. 15, 1966, 401-412.)

nae”

ee tated