Opposition — David Orgell, Inc. v. Josiah Wedgwood & Sons, Inc.

S.

Ottice-Supreme Court, v

FILED

No. 80-1777 WAY 19 1981)

_ STEVAS,

4 CLERK

IN THE

Supreme Court of the United States

OcToBER TERM, 1980

DaviD ORGELL, INC.,

Petitioner,

Vv.

Josiah WeDGwoop & Sons, INC.,

Respondent,

and

GEaARY’S STORES, INC.,

BACCARAT, INC., BUCCELATTI,

Inc., and CERALENE, INC.,

Defendants.

RESPONSE TO PETITION FOR WRIT OF CERTIORARI

TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MITCHELL, SILBERBERG & KNUPP

EDWARD M. MEDVENE

Roy L. SHULTS

AMELIA K. SHERMAN

1800 Century Park East

Los Angeles, California 90067

(213) 553-5000

Counsel for Respondent

PANDICK PRESS, WEST COAST, 1945 S. FIGUEROA, LOS ANGELES, CALIFORNIA (213) 747-4321

i

QUESTION PRESENTED

Whether a claim that thirteen years before the filing of the

complaint a non-monopolist manufacturer of a continuously

available product engaged in a concerted refusal to deal with a

retailer was properly dismissed as barred by the four-year

antitrust statute of limitations where the only acts allegedly

committed by the manufacturer during the limitations period

were simple reiterations of the original refusal to deal.

ii

TABLE OF CONTENTS

PAGE

QUESTION PRESENTED .......:s:ssssrscersssesosesersosssesesoseresseseseresesees i

PRELIMINARY STATEMENT...........:ssssssessssssessssesesseressssssnserenees l

REASONS FOR DENYING THE WRIT .........c:s:sssssseseseseeeeneneees 2

I

THE COURT OF APPEAL, IN AFFIRMING THE GRANT

OF SUMMARY JUDGMENT BY THE DISTRICT

COURT, CORRECTLY APPLIED ITS OWN PRECEDENT

AND THE LIMITATION STATUTE ........::s:sesssesssveesseseeeneneens 3

THE NINTH CIRCUIT'S APPLICATION OF THE STATUTE

OF LIMITATIONS IS HARMONIOUS WITH THE DECI-

SIONS OF THE OTHER CIRCUIT COURTB...........c:eseseeeees 5

CONCLUSION wcccoccscssceveresessececosvscosesescosvossssesessonseosesvensesesenvecesoseces 8

iii

TABLE OF AUTHORITIES

CASES PAGE

Braun v. Berenson, 432 F.2d 538 (5th Cir. 1970).........::00000 5,6, 7

Garelick v. Goerlich’s, Inc., 323 F.2d 854 (6th Cir. 1963).......... 3, 4

Hanover Shoe Inc. v. United Shoe Machinery Corp., 392 U.S.

SBE BOGE) acacincrinccsciiicnsisnssinstidesdesnatisaiasenanspianteiiasensstiiantaiiaiainibaniies 4

Harold Friedman, Inc. v. Thorofare Markets, Inc., 587 F.2d 127

C Dak Gio. SOFOD ic evsiicssisctomavespscssiaenvitietnstindiialatmainnsaibabiniaad 5, 7

Imperial Point Colonnades Condominium, Inc. v. Mangurian,

549 F.2d 1029 (Sth Cir. ), cert. denied sub nom. Mangurian v.

Thompson, 434 U.S. 859 (1977) ....ccccccsssesseseeseeresessseeeeeenseesseeens 6

Manok v. Southeast Dist. Bowling Association, 306 F. Supp.

1215 (C.D, Cal., 1969)... ‘scpeniiesieunbniseteniinediivaidensbinliies 3

In re Multidistrict Vehicle Air Pollution, 59\ F.2d 68 (9th Cir. ),

cert. denied, 444 U.S. 900 (1979) .........008 ; 3,4,5, 7

Pioneer Co. v. Talon, Inc., 462 F.2d 1106 (8th Cir, 1972)......... 5, 7

Poster Exchange v. National Screen Service Corp., 517 F.2d 117

(Sth Cir. 1975), cert. denied, 423 U.S. 1054 (1976)......c000 5, 6

Program Engineering Inc. v. Triangle Publications, Inc., 634

F.2d 1188 (9th Cir. 1980)... ales eatsendiaienabianseinnaiids 4

Saunders v. National Basketball Association, 348 F. — 649

(N.D. Ill. 1972).. iaiciestiisaiansittemidlauscenibiaiesiiidciitiatdaiaaananads 3

Sherman v. Goerlich’s Inc., 238 F. ok 78 (E.D. Mich, 1963),

Cert. denied, 238 U.S. 830 (1965) .....ccccceesessereeseeeeeerereeeeseseerenes 8

Southeastern Hose, Inc. v. Imperial-Eastman Corporation, CCH

1973-1 Trade Cas. 9 74, 479 (N.D.Ga. 1973) .....cccccccsecsereeseeeees 7

Steiner v. 20th Century-Fox Film aes 232 F.2d 190 (9th Cir.

BOGE) so cssidlndcseevitisinianssistsimenisisegnsitiitaanalaliabinibamabiasin

Twin City Sportservice, Inc. v. Charles O. Finley & Co., 512 F.2d

1264 ( 9th Cir. 1975) ..... saedicmpanniadbaiunenaisi

MISCELLANEOUS

C. Hills, Antitrust Advisor § 11.13, at 710 (2d ed. 1978) .....cse000 4

No, 80-1777

IN THE

Supreme Court of the United States

OctToser Term, 1980

Davib ORGELL, INC.,

Petitioner,

Vv.

Josiah WepGwoop & Sons, INc.,

Respondent,

and

Geary’'s Stores, INC.,

BACCARAT, INC., BUCCELATTI,

Inc., and CERALENE, INC.,

Defendants.

RESPONSE TO PETITION FOR WRIT OF CERTIORARI

TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PRELIMINARY STATEMENT

Respondent Josiah Wedgwood & Sons, Inc. (“Wedg-

wood") respectfully prays that this Court deny petitioner David

Orgell’s (““Orgell”) petition for a writ of certiorari to review the

judgment of the United States Court of Appeals for the Ninth

Circuit entered in this proceeding on January 19, 1981, affirm-

2

ing the summary judgment of the United States District Court

for the Central District of California entered on January 10,

1979, dismissing, as time barred, petitioner’s complaint as

against respondent.

Wedgwood adopts the statements of undisputed facts set

forth in the petition and in Appendices la-3a, 6a-7a and 14a-

16a thereof. In essence, Wedgwood, a manufacturer of a line of

ceramic products, has always refused to sell that line of

products to Orgell. Wedgwood first so refused in 1965, and at

all times thereafter has done nothing more than reiterate

precisely the same refusal to sell.

REASONS FOR DENYING THE WRIT

The courts below correctly applied the established, con-

sistent antitrust principle that the statute of limitations govern-

ing such a claim accrues with the last overt act causing injury to

plaintiff. Where, as here, the antitrust violation alleged is a

refusal to deal which is simply reiterated, the decisions are

uniform that the date of the last overt act causing injury is the

date of the initial refusal to deal. Petitioner seeks to obfuscate

this plain rule by citing numerous cases which are not on point,

in a futile attempt to show a misapplication of law and to

manufacture a conflict in the circuits.

In reaching its result in this case—that Orgell’s lawsuit is

time-barred because the last overt act causing injury was the

initial refusal to deal—the Ninth Circuit correctly applied its

own precedent and principles enunciated by this Court. In so

doing, the Ninth Circuit acted in complete accord with the

decisions petitioner cites from the Third, Fifth and Eighth

Circuits. As this Court has done on numerous occasions, the

Ninth Circuit reaffirmed its recognition of the need for a statute

of repose. A plenary review of the ruling below by this Court is

unwarranted.

3

THE COURT OF APPEAL, IN AFFIRMING THE GRANT

OF SUMMARY JUDGMENT BY THE DISTRICT COURT,

CORRECTLY APPLIED ITS OWN PRECEDENT AND

THE LIMITATION STATUTE.

The Ninth Circuit correctly applied its own precedent, Jn

re Multidistrict Vehicle Air Pollution, 591 F.2d 68 (9th Cir.),

cert. denied, 444 U.S. 900 (1979), to affirm the District Court's

decision that this action is timebarred. In Jn re Multidistrict, a

refusal to deal was reiterated during the 4-year limitations

period. Yet the Ninth Circuit held that plaintiff's action was

time-barred:

“Nothing in the record indicates other than that the

1964 [time-barred] decisions, as to AMF, were irrevo-

cable, immutable, permanent and final. ... Acts

subsequent to January 10, 1965 [including subsequent

refusals to deal] . . . were... but unabated inertial

consequences of some pre-limitations action.” 591 F.2d at

72. (Citations omitted. )

The District Court, whose decision in this case was reached

before Jn re Multidistrict was decided, correctly relied upon

existing authority from the Ninth Circuit and elsewhere, citing

in its opinion Garelick v. Goerlich’s, Inc., 323 F.2d 854 (6th Cir.

1963); Steiner v. 20th Century-Fox Film Corp., 232 F.2d 190

(9th Cir. 1956); Manok v. Southeast Dist. Bowling Association,

306 F. Supp. 1215 (C.D. Cal., 1969); and Saunders v. National

Basketball Association, 348 F. Supp. 649 (N.D. Ill. 1972).

In Garelick v. Goerlich’s, supra, for example, the court

stated the rationale for the general rule in affirming a district

court’s ruling that an antitrust action was time-barred because

the action accrued with the initial refusal to deal, and was not

renewed by subsequent reiterations thereof:

“The conduct on these two occasions [reiterations of

earlier refusal to deal] might be overt acts but obviously

the plaintiffs-appellants were not in any way injured or

4

damaged thereby. The incidents were simply acts that

reflected that defendent-appellee continued in refusing to

sell its products to plaintiffs-appellants.”

Petitioner bases its entire argument on the assertion that /n

re Multidistrict stands for the proposition that to be time-

barred, the initial refusal to deal must destroy petitioner's

business. Nothing in that or any other relevant case supports

that assertion; indeed, the law is clearly contrary to petitioner's

suggestion. See In re Multidistrict, 59\ F.2d at 72; Garelick v.

Goerlich’s, Inc., 323 F.2d. 854 (6th Cir. 1963) (initial refusal to

deal reiterated to ongoing business was time-barred. )

Petitioner asserts that “permanency with respect to refusals

to deal clearly does not refer to the emphatic nature of the

refusing party’ negative response... .” Petition, page 8. In

fact, permanency with respect to refusals to deal refers to

nothing bur the emphatic and permanent nature of the initial

negative response. Jn re Multidistrict, 591 F.2d at 72; Garelick

v. Goerlich’s, Inc., 323 F.2d 854, 856; C. Hills, Antitrust Advisor

§ 11.13, at 710 (2d ed. 1978).

Petitioner’s futile effort to show that the Ninth Circuit

misapplied its own jurisprudence as a basis for the petition rests

on two Ninth Circuit cases that are factually remote from this

case. In Program Engineering Inc. v. Triangle Publications,

Inc., 634 F.2d 1188 (9th Cir. 1980), the Ninth Circuit reversed

on the issue of the statute of limitations where overt acts other

than a reiterated refusal to deal were alleged within the

limitations period. Similarly, in Twin City Sportservice, Inc. v.

Charles O. Finley & Co., 512 F.2d 1264 (9th Cir. 1975), the

Ninth Circuit held that a cause of action for (ing continues to

accrue so long as the defendent continues to accept benefits

under or assert the validity of an unlawful ming arrangement.

Petitioner’s failure to comprehend the governing standard

likewise emerges from its citation of Hanover Shoe Inc. v.

United Shoe Machinery Corp., 392 U.S. 481 (1968). In

Hanover Shoe, defendant did not merely refuse to sell; it

5

required that machinery be leased instead of bought, it collect-

ed rentals on those leases and it entered into replacement leases

during the limitations period. Its monopolistic conduct injured

plaintiff on both a continuing basis and under varied circum-

stances of inflicted harm.

Petitioner seeks to justify this petition citing cases that

analyze the statute of limitations in other than the refusal to

deal-reiterated context. In contrast, the well-reasoned opinion

of the Ninth Circuit in this case is properly focused and is

supported by its own precedents and those of other jurisdic-

tions. It is not an appropriate subject for review by this Court.

THE NINTH CIRCUIT’S APPLICATION OF THE STAT-

UTE OF LIMITATIONS IS HARMONIOUS WITH THE

DECISIONS OF THE OTHER CIRCUIT COURTS.

The Fifth, Third and Eighth Circuits have adopted the

general rule, and the Ninth Circuit has concurred in this case, in

In re Multidistrict, supra, and in earlier cases, that a new cause

of action accrues with each injurious act committed against an

antitrust plaintiff. Poster Exchange v. National Screen Service

Corp., 517 F.2d 117, 128 (Sth Cir. 1975), cert. denied, 423 U.S.

1054 (1976); Braun v. Berenson, 432 F.2d 538, 543 (Sth Cir.

1970), Harold Friedman, Inc. v. Thorofare Markets, Inc., 587

F.2d 127 (3rd Cir. 1978); Pioneer Co. v. Talon, Inc., 462 F.2d

1106 (8th Cir. 1972).

However, in the refusal to deal setting, courts have re-

quired a further analytical step focusing on what constitutes the

injurious act. In this case, as with Jn re Multidistrict, the

injurious act was the initial refusal to deal.

The above cases cited by petitioner, Petition, p. 10, do not

conflict with the rule of the Ninth Circuit because they are not

simply refusal to deal cases. Indeed, in one of the Fifth Circuit

cases cited by petitioner, the court was careful to distinguish its

fact situation from classic refusals to deal. In Braun vy.

6

Berenson, 432 F.2d 538 (Sth Cir. 1970), it was held that each

time a lessee of shopping mall space attempted to lease

additional space or move to another location within the mall,

but was refused, a new cause of action accrued.

“The plaintiff and the defendants did not stand in a

continuing relationship to each other as buyer and seller of

a product, as in the classic ‘refusal to deal’ situation.

Moreover, the store spaces sought by the plaintiff were not

a continuously available commodity, as were the products

involved in the cases relied on by the defendants, but

became available only periodically and under uniquely

different circumstances, so that even the second refusal to

rent . . . was not merely the reiteration of the previous

refusal to lease. . . but was a new overt act giving rise to

new and independent damages to the plaintiff. . .” 432

F.2d at 543. (Emphasis in original.)

Similarly, Imperial Point Colonnades Condominium, Inc. v.

Mangurian, 549 F.2d 1029 (Sth Cir.), cert. denied sub nom.

Mangurian v. Thompson, 434 U.S. 859 (1977), concerned not a

refusal to deal, but a tying arrangement wherein it was held

that the statute of limitations began anew each time rents were

collected pursuant to the tied lease, since a different affirmative

act was taken by the defendant on each such occasion to reap

additional benefits from its allegedly anticompetitive actions.

Poster Exchange v. National Screen Service Corp., 517

F.2d 117 (Sth Cir.), cert. denied, 423 U.S. 1054 (1976),

concerned not the simple reiteration of a refusal to deal, but

alleged monopolization, monopolistic pricing and exclusion

from an entire industry as well. Petitioner nowhere contends

that any of those special circumstances existed in this case; and

they obviously alter the analysis significantly since a refusal to

deal by a monopolist has effects close to those of a tying

arrangement, and has the purpose of extending or maintaining a

monopoly, over and above the mere desire not to deal.

7

When confronted with a classic refusal to deal situation

outside of the monopoly context, the Fifth Circuit, as noted in

Braun v. Berenson, 432 F.2d at 543, has ruled, in accord with

the Ninth and other circuits, that the relevant injurious act is the

initial refusal to deal and the action, if time-barred, remains so

despite subsequent reiterations within the limitations period.

See also Southeastern Hose, Inc. v. Imperial-Eastman Corpo-

ration, CCH 1973-1 Trade Cas. J 74, 479 (N.D.Ga. 1973).

In the Third Circuit case cited by petitioner, Harold

Friedman, Inc. v. Thorofare Markets, Inc., 587 F.2d 127 (3d

Cir. 1978), the court held in a case concerning a refusal to

extend a lease that the action was not barred by the statute of

limitations because damages were (oo speculative at the time of

the initial refusal to extend the lease. Petitioner here has not

contended that its damages were too speculative at the time

Wedgwood initially refused to deal with it and the cited case is

again inapposite. And, of course, Braun v. Berenson, supra,

recognized the unique character of refusals to /ease, as con-

trasted with a refusal to sell the kind of standardized, contin-

uously available product which is at issue in this case.

Pioneer Co. v. Talon, Inc., 462 F.2d 1106 (8th Cir. 1972),

is the only case cited in Orgell’s petition that actually concerns

and is limited to a refusal to deal. Yet, it too is entirely

consistent with Jn re Multidistrict, supra, and the Ninth Circuit

decision in this case. Here, a course of dealing never existed

between the parties at amy time. Therefore, when Orgell

initially requested the Wedgwood line and was refused, the

injurious act occurred and was complete. Reiteration in no way

altered the complexion of the original act or the nature of the

blow struck thirteen years before the complaint was filed.

In Pioneer, a prior course of dealing had existed between

the parties, and expectations had therefore been created. At a

point outside the limitations period, an agent of Talon orally

announced the policy by which it would no longer supply

zippers to Pioneer. The court held that, because of the pre-

existing relationship between the parties, an injurious act did

not occur until an order was actually placed and was refused by

8

Talon, which occurred within the limitations period. The

announcement of no further dealing could not have caused

damage, in the Court’s view, because there was then no contract

between the parties. “It is . . . clear that even though [the

agent] gave notice, it terminated nothing of legal signifi-

cance.” 462 F.2d at 1108. Here, of course, no relationship

ever came into being between petitioner and respondent Wedg-

wood. And the original refusal to deal was confirmed at least

once in writing, unequivocally, six years before petitioner filed

its complaint.

The Circuits are in agreement. A new cause of action does

accrue with each new injurious act against an antitrust plaintiff.

But, where no monopoly or monopolization is claimed, and the

injurious act is a simple refusal to deal which is merely

reiterated within the statute of limitations period, the injury

flows from and is complete with the initial refusal to deal. This

is not a “crazy-quilt application of the antitrust laws throughout

the nation” as petitioner asserts, Petition, p. 11. It is a logical,

careful and consistent application of settled basic rules to a

particular situation.

CONCLUSION

This case is not controversial; it is simple, and presents no

novel questions of law. The court below applied its own

precedents in the only legally correct way to affirm the dismissal

of petitioner’s time-barred antitrust complaint. Its decision was

inevitable if it was to be consistent with the decisions of other

Circuits. Had the court below ruled otherwise, in the context of

this case, it would have “effectively destroy(ed) the statute of

limitations as a statute of peace.” Sherman vy. Goerlich’s Inc.,

238 F.Supp. 728, 730 (E.D.Mich. 1963), cert. denied, 238 U.S.

830 (1965). For all of the foregoing reasons, respondent Josiah

Wedgwood & Sons, Inc. prays that the petition of David Orgell,

Inc. for writ of certiorari be denied.

Respectfully submitted,

MITCHELL, SILBERBERG & KNuPP

EDWARD M. MEDVENE

Roy L. SHULTS

AMELIA K. SHERMAN

Counsel for Respondent