Opposition — Browning-Ferris Industries, Inc. v. Tiger Trash

-—— Supreme Court, U. &-

FILED

EC 10 1977

MICHAEL RODAK, JR., CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No. 77-705

BROWNING-FERRIS INDUSTRIES, INC.,

Petitioners,

vs.

TIGER TRASH, A Division of

JOE W. MORGAN, INC.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

BRIEF FOR RESPONDENT, TIGER TRASH, A Division of

JOE W. MORGAN, INC., IN OPPOSITION

ALAN N. SHOVERS

FRANK R. HAHN

KAHN, DEES, DONOVAN & KAHN

305 Union Federal Building

Evansville, Indiana 47708

(812) 423-3183

Counsel for Respondent

December, 1977

Unigraphic, Inc., 1401 N. Fares Ave., Evansville, Ind. 47711, Phone 424-3680

INDEX

Page

Question Presented for Review ..............cececeees l

666 ceed ene nneeedetne teeeenee eed 2

PT TTT TT TTT Tee 5

EY wid b 464 w66066506656569440N4 66088 06660004 5

l. Whether There is Any Conflict Amongst

the Various Circuits in the Application

of Section 12 of the Clayton Act ........... 5

2. Scope of Federal Antitrust Venue Law ....... 6

le ee eee ee ee ee eene « 7

TABLE OF AUTHORITIES CITED

Cases

Page

Aro Manufacturing Co. vs. Automobile Body Re-

search Corporation, 352 F.2d 400 (Ist Cir. 1965)

cert. denied, 383 U.S. 947 (1966) ..............008 6

Cannon Mfg. Co. vs. Cudahy Packing Co., 267 U.S.

Ss a6 ose Cee cds ede oe eee eueeeneeeeedse 6,7

Eastman Kodak Co. vs. Southern Photo Materials

ls Oe ee SU POOPED 6c cccsedccenccceces 7

Golf City, Inc. vs. Wilson Sporting Goods, Co., 555

Fees PS DEPTO 6 bec 0c ccccccocaces 5

San Antonio Telephone Co. vs. American Telephone

& Telegraph Co., 449 F.2d 349 (Sth Cir. 1974) ........ 5

United States vs. Scophony Corporation of America,

Se ee CED 6b 050s 60606660 0s6beves 3,5,6,7

Statutes

Section 12 of the Clayton Act (15 U.S.C. 822) ..... 2,5, 6,7

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No. 77-705

BROWNING-FERRIS INDUSTRIES, INC.,

Petitioners,

vs.

TIGER TRASH, A Division of

JOE W. MORGAN, INC.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

BRIEF FOR RESPONDENT, TIGER TRASH, A Division of

JOE W. MORGAN, INC., IN OPPOSITION

The respondent, Tiger Trash, A Division of Joe W.

Morgan, Inc. (“Tiger Trash”), respectfully opposes the petition

of the petitioner, Browning-Ferris Industries, Inc. (“BFI”), to

issue a writ of certiorari to the United States Court of Appeals

for the Seventh Circuit to review the decision entered by that

Court in Cause No. 76-2259 on August 18, 1977.

QUESTION PRESENTED FOR REVIEW

The issue presented to this Court for review concerns

2

the application of the antitrust venue provision of Section

12 of the Clayton Act (15 U.S.C. 822). BFI’s Question Pre-

sented for Review states as an ultimate fact that BFI does

not transact business in Indiana, the forum district of its sub-

sidiary, Browning-Ferris Industries in Indiana, Inc., (“its sub-

sidiary”) and that it has no control over its subsidiary. These

factual recitals are contrary to the findings of the Seventh

Circuit. For purposes of illustration, the Question Presented

for Review by BFI is repeated with Tiger Trash underlining

those facts found contrawise by the Seventh Circuit:

“Whether a national holding or parent corporation

is subject to venue and jurisdiction under Section 12

of the Clayton Act (15 U.S.C. §22) in a district in which

its wholly-owned subsidiary transacts business, when

the parent itself transacts no business there, when the

parent and its subsidiary are separate corporations, and

when the parent exercises no control over the subsidiary

sufficient to make the subsidiary its agent or alter ego.”’

[Pet. Br. 3]

Rather, the proper question presented for review relates

to the factual findings, and that is:

Whether in fact, in the ordinary and usual sense, BFI

transact business in Indiana of any substantial character or was

found there.

STATEMENT OF THE CASE

Tiger Trash does not take issue with the general back-

ground of the parties’ organization nor procedure of the case.

However, the factual background, as it relates to BFI’s trans-

acting its subsidiary’s business or its presence in the State of

Indiana, is not completely and fairly stated.

First, it should be noted that BFI makes reference to

a “uncontroverted affidavit” showing that BFI -- being a non-

operating parent company -- does not do or solicit business

in Indiana; has no property or office of any kind in Indiana;

Le ee eee

3

has no employees or agents in Indiana; has never supplied

services, goods or materials of any kind in Indiana; and has

never manufactured or sold goods or materials which were

shipped into Indiana. [Pet. Br. 3-4] The Seventh Circuit

took particular note of the fact that notwithstanding the

so-called “uncontroverted affidavit,” later evidence found

independently of discovery, by Tiger Trash, which was then

admitted by BFI, established a set of facts quite opposite from

the “uncontroverted affidavit.” It should be noted this BFI

affidavit was then never withdrawn, modified, corrected or

otherwise properly explained. The Seventh Circuit, in its

decision, finds the relevant facts, notwithstanding the “un-

controverted affidavit,” to be as follows, as it relates to a BFI

Regional Sales Manager, who was not a subsidiary employee,

soliciting sales in Indiana:

“Although only one BFI service agreement executed

by Henson in Indiana was attached to plaintiff's request

for admissions, paragraph 9 of defendant’s response

admits that he solicited other sales and service agreements

for BFI Indiana. This is, of course, an indication of

control relationship between parent and subsidiary.”

[Pet. App. 22]

BFI proceeds to set forth in its brief a number of factors

where its subsidiary, through its own actions, acts indepen-

dently of the parent. As this Court noted in United States vs.

Scophony Corporation of America, 333 U.S. 795 (1948), at

page 804:

“Because all corporate action must be vicarious, that

content could be determined only by an act of judgment

which selects and attributes to the corporation, from the

mass of activity done or purporting to be done on its

behalf, those acts of individuals which are relevant for

the particular statutory purposes and pelicies in hand.”

Therefore, it is not only the negating facts supplied by BFI

through their affidavits which need to be taken into account,

4

but it is the totality of factors, including the affirmative relation-

ships between the parent, BFI, and its subsidiary. In this frame-

work the Seventh Circuit found substantial relationships between

the parent and subsidiary which were not denied or contro-

verted by BF in its affidavits: [Pet. App. 23]

1. BFI’s corporate policy is to provide a single source

of reliable waste services for companies with a number

of geographically dispersed plants.

2. BFI’s officers, some of whom are officers of BFI-

Indiana, assist its subsidiary through national marketing

programs. BFI assisted its subsidiary through signing

of customers and making basic market development

decisions.

3. BFI assists in supervising the subsidiary; by

allocating financial resources; by providing finances;

by providing system accounting methods; and by manage-

ment supervision and examination.

4. BFI assists its subsidiary by setting standards for

return on capital investment from the subsidiary, and

if this return is insufficient to meet the BFI standards,

BFI imposes corrective action.

5. BFI’s Indiana subsidiary licenses and utilizes the

parent’s trade name without complying with Indiana

statutes requiring registration of the trade name, and

neither BFI nor BFI-Indiana makes a determined effort

to notify the public they are separate entities.

6. Certain of the officers of BFI’s Indiana sub-

sidiary are also officers of BFI.

7. BFI and its subsidiary conduct their advertising

and promotional activities in such a manner so as to give

the appearance of one company operating nationwide

to provide waste removal services.

5

REASONS NOT TO GRANT WRIT

Summary

The Question is one of fact weighing to determine

whether BFI is either found or has so acted in transacting

its business of such a substartia! character as to bring it within

the Indiana forum. To the extent that the Seventh Circuit

Court of Appeals’ decision is opposite other Circuits, it is only

because each decision depends entirely upon its own particular

facts; this set of facts as applied to the decisions cited in any

other circuit would likely have a similar result to the Seventh

Circuit. Also, the factual findings are sufficient to meet federal

venue law as applied by this Court in United States vs. Scophony

Corporation of America, 333. U. S. 795 (1948).

1. Whether there is any conflict amongst the various

Circuits in the application of Section 12 of the Clayton Act.

In the case cited by BFI, Golf City, Inc. vs. Wilson Sporting

Goods, Co., 555 F.2d 426, 438 (Sth Cir. 1977), the Court

notes that it must go beyond analyzing contacts seriatim; but

rather the harder task remains which is, do the contacts taken

together constitute the transaction of business in the district

in the ordinary and usual sense. Then the Court goes on and

notes:

“This aspect of the inquiry is most responsible for

the observation that ‘the only rule of law which is uni-

formly applicable to all cases involving venue [is that]

the decision depends entirely upon the particular facts

involved.’ [citation omitted]

While the citation by BFI to the San Antonio Telephone

Co. vs. American Telephone & Telegraph Co., 499 F.2d 349

(Sth Cir. 1974) is, of course, interesting and does set forth a

proper standard, this standard is consistent with the Seventh

Circuit’s decision. In San Antonio Telephone, the evidence

merely indicated a parent-subsidiary tie of general policy

decisions, not more significant “daily business affairs’? such

6

as BFI’s relation to its subsidiary.

BFI cites a number of cases where there have been no

venue decisions by various Circuit Courts. However, case by

case, there were not the totality of cumulative facts as with

the case of BFI. For example, in Aro Manufacturing Co. vs.

Automobile Body Research Corporation, 352 F. 2d 400 (ist

Cir. 1965), cert. denied, 383 U.S. 947 (1966), not only were

there no such a group of facts, but the court concluded there

was no valid service of process, and the First Circuit found it

was unnecessary for that Court to consider the question of

venue.

Neither is BFI’s references to non-antitrust cases, parti-

cularly meaningful or useful. For example, BFI’s particular

reliance on Cannon Mfg. Co. vs. Cudahy Packing Co., 267

U.S. 333 (1925) where Section 12 of the Clayton Act was not

in issue. Rather, the Seventh Circuit placed great reliance on

the venue standards established by this Court in United States

vs. Scophony Corporation of America, 333 U.S. 795 (1948),

which is the leading case under Section 12 of the Clayton Act.

The standard established in Scophony for engaging in business

in a district is “if in fact, in the ordinary and usual sense, it

‘transacts business’ therein of any substantial character.”

(333 U.S. 807) In Scophony this Court went out of its way

to substitute “. . . practical, business conceptions for the

previous hair-splitting legal technicalities encrusted upon the

... ‘carrying-on-business’ sequence .. .”. (333 U.S. 808) This

Court notes that this enactment of Section 12 of the Clayton

Act is thereby to relieve persons, who are injured through

violations of the antitrust laws from the obstacles of having

to resort to distant forums.

2. Scope of Federal antitrust venue law.

BFI places primary reliance for its argument on the

scope of Federal antitrust venue law on Cannon Mfg. Co.

vs. Cudahy Packing Co., 267 U.S. 333 (1925), a non-antitrust

case not utilizing Section 12 of the Clayton Act. BFI points

out that in United States vs. Scophony Corporation of America,

333 U.S. 795 (1948), the Cannon decision was not overturned

and would still remain applicable. Thereafter, their argument

!

7

centers on Cannon. It is true that Cannon and certain other

of the non-antitrust decisions cited by BFI may not go as far

as either Scophony or other Section 12 cases. However, as

noted in Scophony, Section 12 of the Clayton Act was an

expansion of the application of practical business concepts

for technicalities. Scophony causes the Court to take a look

at all the facts taken together. It goes on and establishes a

test of whether, in fact, in the ordinary and usual sense, [BFI]

transacts business [in Indiana] of any substantial character.

(333 U.S. 807) See also Eastman Kodak Co. vs. Southern

Photo Materials Co., 273 U.S. 359, 372-73 (1927).

The Seventh Circuit has not adopted, as suggested by

BFI, any new standard but has very carefully tracked and

heavily relied on the Scophony and Eastman Kodak decision.

What the various districts have in common, including

the Seventh Circuit, is the analysis raised ir. the Scophony case,

which is whether the parent is holding stock in its subsidiary

for investment purposes and exercising merely shareholder

rights, or alternatively, whether the use of the stock is for

purposes of exercising supervision over and intervention in

the subsidiary’s affairs. If factually there is sufficient inter-

vention based upon a pattern of regular and continuing ex-

ploitation of the subsidiary, and the holdings go beyond mere

stock ownership or investment purposes and beyond occasional

acts of contracting, then venue will exist. See 333 U.S. 814.

The Seventh Circuit has found this standard to be met and

nothing more.

As this Court said in Scophony, as it would relate to

the Cannon case: “We are unwilling to construe Section 12 in

a manner to bring back the evils it abolished, for the situations

not foreclosed by prior decisions, and thus to defeat its policy

together with that of the antitrust laws, so as to make another

amendment necessary.” (333 U.S. 817)

CONCLUSION

For foregoing reasons, the Petition for a Writ of Certiorari

should be dismissed.

Respectfully submitted,

ALAN N. SHOVERS

FRANK R. HAHN

KAHN, DEES, DONOVAN & KAHN

305 Union Federal Building

Evansville, Indiana 47708

(812) 423-3183

Counsel for Respondent