Opposition — Alton Box Board Co. v. Three J. Farms, Inc.

JAN 832 1980 Vi

:

’

MICHAEL RODAK, JR., CLERK

ttm

IN THE

Supreme Court of the United States

October Term, 1979

No. 79-1005

ALTON BOX BOARD COMPANY, et al.,

Petitioners,

v.

THREE J FARMS, INCORPORATED, et al., in behalf of

themselves and all other parties similarly situated and

circumstanced,

Respondents.

RESPONSE TO PETITION FOR WRIT OF

CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE FOURTH CIRCUIT

I. Walton Bader

Bader and Bader

65 Court Street

White Plains, New York 10601

(914) 682-0072

Attorneys for Respondents

Robert L. Stoddard

Moore, Stoddard, Stoddard & Wood

207 Magnolia Street

Spartanburg, S. C. 29301

(803) 582-5622

Attorneys for Respondents

IN THE

Supreme Court of the United States

October Term, 1979

No. 79-1005

ee a ee

ALTON BOX BOARD COMPANY, et al.,

Petitioners,

v.

THREE J FARMS, INCORPORATED, et al., in behalf of

themselves and all other parties similarly situated and

circumstanced,

Respondents.

RESPONSE TO PETITION FOR WRIT OF

CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE FOURTH CIRCUIT

I. Walton Bader

Bader and Bader

65 Court Street

White Plains, New York 10601

(914) 682-0072

Attorneys for Respondents

Robert L. Stoddard

Moore, Stoddard, Stoddard & Wood

207 Magnolia Street

Spartanburg, S. C. 29301

(803) 582-5622

Attorneys for Respondents,

ee a

TABLE OF CONTENTS

PAGE

Counter uestion Presented .....c. ccc cccccnsccess 1

Counter-Statement of the Case ..........0.0c0cc00. 2

Reasons for Denying the Writ .............-+e-eee- 2

1. So long as a court remands an action under any

rational basis under 28 USC 1447 (provided that

the case is not a civil rights action) the Order of

Remand is not reviewable for any cause

RPC CE CCT Ee TT LTTE LET 2

2. The real basis of the present petition is to prevent

state court consideration of exclusively stateclaims 4

ee ewe cae ae Pewee ee 5

Appendix

A—Opinion and Order of October 13, 1978 of the

United States District Court for the District of

eae aie eee areas Al

TABLE OF AUTHORITIES

PAGE

Cases:

Cort v. Ash, 422 US 66 (1974) .......ccccccccccccees 4

Gravitt v. Southwestern Bell Telephone Co., 430 U.S.

eo NG op etree err rrr eT ere ee ee ee 4

In Re La Providencia Development Corporation, 405

F.2e 251 (let Cir. 1969) 2.0 cccccnsccsccsseszecons 4

Piper v. Chris-Craft Industries, 430 U.S. 1 (1977)..... 4

Santa Fe Industries, Inc. v.Green, 430 U.S.462(1977) .. 4

Sullivan v. Simons, 337 F.2d 239 (4th Cir. 1964)...... 4

Thermatron Products, Inc. v. Hermansdorfer, 423 US

336, 96 Sup.Ct. 584, 46 L.Ed. 2d 542 s.r 3

Volvo of America Corporation v. Schwarzer, 429 US

1331, 97 Sup.Ct. 284, 50 L .£b.236. 273 (ISTE) ccc vewass 1,2

Statutes and Regulations:

BO UIT. BOG oo cc cccceccesvceviveccuseureeeecs 1,2, 3,4

IN THE

Supreme Court of the United States

October Term, 1979

No. 79-1005

ALTON BOX BOARD COMPANY, et al.,

Petitioners,

v.

THREE J FARMS, INCORPORATED, et al., in behalf of

themselves and all other parties similarly situated and

circumstanced,

Respondents.

RESPONSE TO PETITION FOR WRIT OF

CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE FOURTH CIRCUIT

Counter-Question Presented

Respondents submit that there is really only a single

question presented to this Court in this Petition and the law

is well settled in connection therewith. The single question is

that, where a Court grants remand under 28 USC 1447(c),

and where the Order of remand has any legal basis what-

soever, the Court thereafter loses jurisdiction over the case

and cannot change its mind for any reason.

Respondents submit that the law is well settled in this

connection, the most recent case being Volvo of America vs.

Schwarzer, 429 US 1331, 97 Sup. Ct. 284, 50 L.Ed 2d. 273.

While respondents will respond to the other questions

presented in this petition, it is submitted that the above

counter-question effectively disposes of the petitioner's

arguments and that the grant of a petition for a writ of

certiorariin this case would merely burden this Court witha

re-definition of already well-defined law.

Counter-Statement of the Case

On the argument of the present case before the United

States Court of Appeals for the Fourth Circuit, in response to

a question from Circuit Judge Field, the attorney for the

respondents (Petitioners here) was specifically asked whether

there was any additional fact which was brought to the

attention of the Court in the respondent’s memorandum

submitted to the Court after the Court withdrew its initial

Order of Remand and the papers that had previously been

submitted to the Court in connection with the stay applica-

tion which had been initially denied by the District Judge.

The respondents (Petitioners here) conceded that no such

new matter was presented. This significant fact has not been

brought to the attention of this Court by the petitioners and

this fact, even standing alone, is sufficient to warrant sum-

mary denial of this petition.

POINT ONE

So long as acourt remands an action under any rational basis

under 28 USC 1447 (provided that the case is not a civil

rights action) the Order of Remand is not reviewable for any

cause whatsoever.

The precise question involved in this petition came up for

review before Mr. Justice Rehnquist in Volvo of America Corpo-

ration vs. W. Schwarzer, supra. In that case the District Court

granted remand of a State Anti-Trust Action (even though

the requisite diversity was present) upon the ground that

only a few members of the class had the requisite jurisdic-

tional amount. In denying a stay application in that matter

Mr. Justice Rehnquist held as follows (97 Sup. Ct. 285):

The flaw in this argument is that, while the District

Court may have been wrong in its analysis, it clearly

stated, citing to Section 1447 (c), that it considered itself

without jurisdiction. The District Court therefore

or it was acting in accordance with Section 1447(c),

which allows a remand where an action is “removed

ek Saat and without jurisdiction.” Review of this

or

er, therefore, is presumptively barred by the opera- .

tion of 28 U.S.C. Section 1447(d).

We held last term in Thermatron Products, Inc. vs. Her-

mansdorfer, 423 US 336, 96 Sup. Ct. 584, 46 L.Ed 2d 542

(1976), where the District Court ordered a remand

because of its crowded docket, that Section 1447(d) did

not bar review of remand orders ‘issued on grounds not

authorized by Section 1447(c)’. (citation omitted) But

the District Court here did base its order on 1447(c).

Thermatron is of no help to applicant as the remand was

explicitly based on an alleged erroneous finding that the

court ‘does not have jurisdiction of this action’. (citation

omitted) Applicant’s position would mean that any

allegedly erroneous application of Section 1447(c) would

be reviewable by writ of mandamus, leaving the Section

1447(d) bar extant only in the case of allegedly proper

applications of Section 1447(c), a reading too Pickwick-

ian to be accepted and contrary to the clear language in

Thermatron.

In Thermatron, supra, itself, at 423 US 343 the Court held

as follows:

“It is unquestioned in ;this case and conceded by peti-

tioners that this section (Section 1447[d]) prohibits

review of all remand orders issued pursuant to Section

1447(c) whether erroneous or not***If a trial judge purports

to remand ‘improvidently and without jurisdiction’ his

order is not subject to challenge in the court of appeals,

by mandamus or otherwise.” (emphasis supplied.)

The original Order of the District Court (See Appen-

dix annexed to this Response) specifically remanded the case

under 28 USC 1447(c) the Order of October 13th, 1978 reads

in part as follows:

“Having among its parties three plaintiffs and one

defendant who are citizens of South Carolina and one

plaintiff and seven defendants who are citizens of New

York, this case lacks complete diversity of citizenship

among all of the parties and is not sustainable in this

court under 28 USC 1332. In addition no federal ques-

tion is involved, leaving this Court without any jurisdic-

tion over the case. Under these circumstances, it is the

duty of this Court pursuant to 28 USC 1447(c) to

remand the case to the state court’

Thus, the case at bar is merely one of a long series of cases

holding that, where a District Court remands an action, and

there is any reasonable basis for its action, its action so

4

remanding the case is not subject to review and the District

Court cannot thereafter change its mind. See, for example,

Gravitt vs. Southwestern Bell Telephone Co., 430 US 723 (1977);

Sullivan vs. Simons, 337 F.2d. 239 (4 Cir. 1964); In Re La Providen-

cia Development Corporation, 405 F.2d. 251 (1 Cir. 1969).

Petitioners cite a number of cases holding that a District

Court has Rule 60(b) power to review its own orders and

judgments and to correct them. This is true, of course, in

cases properly before District Courts. However Congress, in

its wisdom, did not give District Courts the power to review

remand orders after they were issued. Indeed, if this Court

were to so hold the provisions of 28 USC 1447(d) would be

eroded since the power of a court to review orders and

judgments under Rule 60(b) is very wide and, given this

power, acase could conceivably “ricochet” between state and

federal forums indifinitely.

POINT TWO

The real basis of the a petition is to prevent state court

consideration of exclusively state claims.

While “POINT ONE” of this response disposes of the

issues involved in this petition, the respondents point out

that the real reason for the present exercise is to attempt to

prevent State Court consideration of State Law Claims.

Thus, while the Federal Anti-Trust Laws provide for treble

damages for price fixers, South Carolina State Anti-Trust

Laws, and the laws of Kansas and Missouri, provide for

reimbursement of the full purchase price to the purchasers of

price-fixed goods. In the Corrugated Container Anti-Trust Litiga-

tion the defendants have been able to” buy off” class anti-trust

claims for less than 3 cents on the dollar of sales. Contrary-

wise, in the case of South Carolina, no State Court would

approve such a settlement where the “exposure” is 100% of

the sales price of the goods. This, of course, was the reason

that the State Court issued its injunction against settlement

of these claims without its approval.

This Court has repeatedly held that purely State Claims

will not be adjudicated by Federal Courts. See, for example,

Cort vs. Ash, 422 US 66 (1974); Santa Fe Industries, Inc. vs. Green,

430 US 462; Piper vs. Chris-Craft Industries, 430 US 1.

CONCLUSION

The Petition for a Writ of Certiorari to the United States

Court of Appeals for the Fourth Circuit should be in all

respects denied.

Dated: January 2, 1980

Respectfully submitted,

BADER and BADER

Attorneys for Respondents

I. WALTON BADER 65 Court Street

of counsel White Plains, New York 10601

APPENDIX TO PETITION FOR A WRIT

OF CERTIORARI

Order of US District Court of District of South Carolina

Remanding Cause to Court of Common Pleas of Spartan-

burg County Dated October 13, 1978 (61-68)

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF SOUTH CAROLINA

SPARTANBURG DIVISION

Civil Action No. 78-1257

Three J Farms, Incorporated; U.S. Textile Corporation; Sha-

piro & Son Bedspread Corporation; and Troy H. Cribb &

Sons, Inc., in behalf of themselves and all other parties sim-

ilarly situated and circumstanced,

Plaintiffs,

vs

Alton Box Board Company, et al.,

Defendants.

This action was removed by defendants from the Court of

Common Pleas, County of Spartanburg, South Carolina, to

this court on July 31, 1978, and is presently before the Court

on the motion of plaintiffs to have the case remanded to that

state court. As could be expected of any suit that alleged

extensive antitrust violations on the part of approximately

40 defendants, there has been a flurry of procedural activity

since the case’s recent arrival in this court. The plaintiffs base

their claim against the defendants on the antitrust provisions

of the South Carolina Code, Section 39-3-10 et seq., S.C. Code

(1976), alleging that certain concerted action by the defend-

ants in the corrugated container industry violated these pro-

visions. The Judicial Panel on Miultidistrict Litigation in

response to sizable number of lawsuits over the nation with

similar allegations ordered a large number of these actions

from cther jurisdictions to be transferred to the United

States District Court for the Southern District of Texas for

A2

coordinated or consolidated pretrial proceedings pursuant to

28 U.S.C. Section 1407. In re Corrugated Container Antitrust Litiga-

tion, 441 F.Supp. 921 (1977). On August 11, 1978, the Panel

issued a conditional transfer order removing this action to

the Texas court in reliance on its earlier rulings regarding

similar litigation.

Plaintiffs have objected to the transfer by the Panel and

on August 16, 1978 filed a notice of opposition with the

Panel. On this same day, plaintiffs also filed in this Court

their motion to remand the case to the state court from

which it arose. Plaintiffs then filed with the Panel a motion to

vacate the conditional transfer order and a memorandum in

support of that motion. Meanwhile, the defendants made

motion before this Court for an order staying further pro-

ceedings until the Panel’s determination regarding the plain-

tiff’s motion to vacate the action taken earlier by that body.

Once a transfer by the Panel of a case becomes final and

the transfer order is filed with the clerk of the transferee

court, the transferor court loses all jurisdiction and power

over pretrial proceedings until the action is later returned to

it. However, if notice of objection to a conditional transfer

order is filed with the Panel and a motion to vacate the

transfer accompanied by a supporting memorandum is addi-

tionally filed within 15 days of the filing of the notice of

objection, as was done in the present case, the conditional

transfer order will not be transmitted to the transferee court

and thus will not become effective since such orders do not

complete a transfer unless they are filed with the clerk of the

transferee court. Rule 9 of the Rules of Procedure of the

Judicial Panel on Multi-district Litigation. Since the transfer

of this case has been arrested until further order of the Panel,

the transferor court still has full power and jurisdiction to

rule upon matters properly presented to it for decision. In re

Air Crash Disaster at Paris, France, on March 3, 1974, 376 F.Supp.

887 (Jud. Pan. Mult. Lit. 1974); Rule 16 of the Rules of

Procedure of the Judicial Panel on Multidistrict Litigation. A

decision by this Court on plaintiffs’ motion to remand at this

time is proper, timely and necessary. ;

The defendants have made motion before this Court fora

stay of further proceeding until the Panel has disposed of

A3

plaintiffs’ motion to vacate. The defendants argue that judi-

cial efficiency and consistency, two essential purposes of 28

U.S.C. Section 1407, would be frustrated were this Court to

act on plaintiffs’ motion and that the Panel, not this Court,

provides the proper tribunal for deciding the question of

remand. Consideration of removal of this action, however,

deals with the subject matter jurisdiction of this court, and

any past or future handling of this case by the Panel does not

dispense with this fundamental prerequisite. In dispelling the

notion that action by the Panel somehow does away with

ordinary jurisdictional considerations of removal, the Court

in Bancohio Corporation v. Fox, 516 F.2d 29, 32 (6th Cir. 1975)

stated the following:

Neither does the statute on multidistrict litigation, 28

U.S.C. Section 1407, ‘compel a different result

. . . [T]here is nothing in the applicable statute to pro-

vide an exception to the rules normally ees rem-

oval of cases from state courts. Such a transfer [by the

Panel] cannot be made unless the district court properly

has jurisdiction of the subject matter.

Contrary to what defendants advocate, both money and time

in this matter would be saved by having this Court now

analyze the jurisdictional question, for an existing jurisdic-

tional deficiency would nullify any proceedings by or before

the Panel.

Scrutiny of the face of plaintiffs’ complaint reveals no

basis for federal jurisdiction over this action. Plaintiffs pre-

mise their action exclusively on South Carolina antitrust law

and expressly state they do not charge any Federal Law

violations, thus excluding federal question jurisdiction. More-

over, the case apparently lacks diversity jurisdiction under 28

U.S.C. Section 1332 since there is not complete diversity of

citizenship between the parties — three plaintiffs and two of

the individual defendants are citizens of South Carolina and

one plaintiff and numerous corporate defendants are citizens

of New York. To support their argument that this Court has

subject matter jurisdiction over this action, the defendants

contend that the plaintiff New York corporation, Shapiro &

Son Bedspread Corporation, and the two South Carolina

defendants, Tim Poffenbarger and Ennis McCarter, are not

A4

proper parties but were improperly joined for the sole pur-

pose of defeating diversity jurisdiction. Defendants rely on

the long standing principle that the right to remove to federal

court cannot be defeated by joining formal or unnecessary

parties. Salem Trust Co. v. Manufacturers’ Finance Co., 264 U.S.

182, 445 S.Ct. 266, 68 L.Ed. 628 (1924).

Defendants raise the issue of whether the parties whose

citizenship prevents complete diversity are prop-

er parties to this action. In delineating a test for determining

if a defendant is a proper party to be considered for diversity

purposes upon removal, this Court in Jacks v. Torrington Com-

pany, 256 F.Supp. 282 (D.S.C. 1966), addressed the matter of

fraudulent joinder as follows:

Defendants also removed upon the ground of improper

and fraudulent joinder of Wassung [an employee of the

out of state corporate defendant]. The issue is one of

fraud in a legal sense and in no way involves the integ-

rity of plaintiffs or the professional conduct of their

counsel. The issue is, rather, whether the futile joinder

of a party against whom no valid claim for relief is stated

will be permitted to defeat diversity jurisdiction which

would otherwise exist against remaining defendant. . .

Should these allegations not constitute a valid claim for

relief against Wassung then he is not a proper party;

there is no basis for his joinder; and such a joinder to

prevent removal would in law amount to a legal fraud

upon defendants. 256 F.Supp. at 285, 286.

In deciding whether plaintiffs have a valid claim for relief

against defendants Poffenbarger and McCarter, the Court

must see if Section 39-3-10 et seq., S. C. Code (1976), casts

liability upon them in light of the allegations of the com-

plaint. Plaintiffs have submitted the affidavit of Kenneth

Cribb, who avers that Pofferbarger was the representative of

and salesperson for defendant Packaging Corporation of

America. Plaintiffs’ affidavit of James Gossett regarding

McCarter states that although plaintiff Three J Farms, Inc.

purchased corrugated boxes from defendant Westvaco

through him the exact relationship between McCarter and

Westvaco remains unknown to them. Defendant has not

contested these affidavits with any opposing affidavits.

AS

In State v. National Linen Service Corp., 225 S.C. 232, 815

S.E.2d 342 (1954), the South Carolina Supreme Court

construed the statute upon which plaintiffs base their com-

plaint and held that agents or employees of a corporation

when working to promote the corportion’s business could

not be found to conspire with the corporation. The discus-

sion and interactions between the corporation and its agents

when performed in furtherance of the corporate business

cannot be held, according to the reasoning of that case, to

constitute illegal concerted action under the statute because |

to do so would be tantamount to holding that a corporation

could conspire with itself. Applying this substantive law to

the facts as alleged in the complaint and averred in plaintiffs’

affidavit of Kenneth Cribb, it appears that plaintiffs would

not have valid claim against defendant Poffenbarger. Plain-

tiffs have gone no farther than attempting to establish that

Poffenbarger was a representative of defendant Packaging

Corporation of America who, with knowledge of the alleged

intercorporate conspiracy, would quote noncompetitive pri-

ces to plaintiff T. H. Cribb & Sons, Inc. in order to sell his

employer's product. It is not contended by plaintiffs that

Poffenbarger acted independently of his employer with any

of the other corporate defendants. Under State v. National Linen

Service Corporation, 225 S.C. 232, 81 S.E.2d 342 (1954) Poffen-

barger’s conduct with his employer does not appear actiona-

ble under Section 39-3-10 S.C. Code (1976) since, according

to the record, he never acted as more than an agent of a

corporation which itself is a named defendant.

This same rationale used to determine that no valid claim

against defendant Poffenbarger is stated in the complaint

would apply also as to defendant McCarter to reach the same

conclusion were it not for the fact that the affidavit of James

L. Gossett fails to fully specify the exact relationship between

this individual defendant and defendant Westvaco Corpora-

tion. In particular, it is still unclear if McCarter was merely a

sales representative of Westvaco or worked for himself or

another independent business entity. Since there is a ques-

tion whether this defendant was acting in an individual ousi-

ness capacity in relation to other corporate defendants and

may have been capable of engaging in the alleged unlawful

Aé

conspiracy, this Court determines on the basis of the record

before it that defendant McCarter is a proper party to this

action for whom there exists a basis for joinder as a

defendant.

The determination of whether a plaintiff is more than a

nominal party and is an actual real party in interest for

diversity purposes involves a similar analysis of ascertaining

“who, under governing substantive law, is entitled to enforce

the right asserted.” Iowa Public Service Commission v. Medicine Bow

Coal Company, 556 F.2d 400, 404 (8th Cir. 1977). In the affi-

davit of Jerry Shapiro, it is averred that plaintiff Shapiro &

Son Bedspread Corporation purchases items packaged in

-cerrugated containers from plaintiff U. S. Textile Corpora-

tion on a “cost-plus” basis. Although the Court is somewhat

confused regarding the plaintiffs’ characterization of these

two corporations as a “joint economic unit”, it would seem

that any economic injury resulting from the alleged higher

noncompetitive price paid for the containers in which goods

were shipped from U. S. Textile Corp. to Shapiro & Son

Bedspread Corp. would be suffered by the latter since it was

purchasing on the cost plus basis. Section 39-3-30, S.C. Code

(1976), gives the right of action for violation of this state’s

antitrust provisions to “any person who may be injured or

damaged by any such arrangement, contract, agreement,

trust or combination.” The facts alleged by plaintiff Shapiro

& Son Bedspread Corp. confer upon it under South Carolina

law a right of action against the defendants; therefore, this

Court determines on what is before it that Shapiro & Son

Bedspread Corp. is a proper plaintiff.

Defendants have failed to show that the joinder of Ennis

McCarter as a defendant and Shapiro & Son Bedspread Corp.

as a plaintiff is fraudulent and improper with the purpose of

defeating diversity jurisdiction. Having among its parties

three plaintiffs and one defendant who are citizens of South

Carolina and one plaintiff and seven defendants who are

citizens of New York, this case lacks complete diversity or

citizenship among all the parties and is not sustainable in this

court under 28 U.S.C. Section 1332. In addition no federal

question is involved, leaving this court without any jurisdic-

tion over the case. Under these circumstances, it is the duty

A7

of this Court pursuant to 28 U.S.C. Section 1447(c) to

remand the case to the state court. No matter how numerous

are the common questions of fact at issue in this case and

those cases which the Judicial Panel on Multidistrict Litiga-

tion has consolidated for pretrial discovery in In re Corrugated

Container Antitrust Litigation, 441 F.Supp. 921 (Jud. Pan. Mult.

Lit. 1977), the absence of jurisdiction of this court is fatal to

defendants’ attempt to remove the action from state court.

The statute on multi-district litigation, 28 U.S.C.

Section 1407, does not confer jurisdiction nor provide an

exception to the requirement of jurisdiction when this fun-

damental element is not otherwise met. For the foregoing

reasons, this Court finds that the complete absence of subject

matter jurisdiction necessitates a remand of this case to the

Spartanburg County Court of Common Pleas.

IT IS, THEREFORE, ORDERED that defendants’ motion

for a temporary stay of proceedings be and the same is hereby

denied.

IT IS FURTHéR ORDERED that plaintiffs’ motion to

remand this action to the Court of Common Pleas for the

County of Spartanburg, South Carolina, be and the same is

hereby granted.

AND IT IS SO ORDERED.

Is| Robert F. Chapman

ROBERT F. CHAPMAN

United States District Judge

October 13th, 1978

Columbia, South Carolina

TRUE COPY

Test:

MILLER C. FOSTER, JR. CLERK

/s/ Tanya Carson

By: Deputy Clerk