Appendix — Avondale Shipyards, Inc. v. Kaiser Aluminum & Chemical Sales, Inc.

COURT OF APPEALS OPINION (6/7/82)

UNITED STATES COURT OF APPEALS

For THE Firta Criacuii

Nos. 81-3162, 81-3519

KAISER ALUMINUM & CHEMICAL SALES, INC.,

Plaintiff-Appellee,

v.

AVONDALE SHIPYARDS, INC.,

Defendant-Appellant.

June 7, 1982.

Appeals from the United States District Court for the

Eastern District of Louisiana.

Before Wispom, Po.irz and Tate, Circuit Judges.

Tate, Circuit Judge:

Kaiser Aluminum and Chemical Sales, Inc. (“Kaiser”) _

initiated this action in 1979 for simple breach of contract

against Avondale Shipyards, Inc. (“Avondale”). In its

answer to Kaiser’s complaint, Avondale defended on the

grounds that the contract sought to be enforced by Kaiser

was violative of the antitrust laws. Avondale also filed a

counterclaim seeking, inter alia, damages and equitable

relief for the antitrust injury.

The district court dismissed the antitrust counterclaim

and struck the antitrust defense. The court also entered

(Al)

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partial final judgment with respect to the antitrust counter-

claim, Fed.R.Civ.P. 54(b), and later certified its striking

of the antitrust defense as a matter appropriate for inter-

locutory review, 28 U.S.C. § 1292(b). We granted Avon-

dale’s petition for review of the order striking the antitrust

defense, and consolidated appeal on that issue with Avon-

dale’s appeal of the dismissal of the counterclaim.

On appeal, Avondale argues that: (1) the district

court erred in dismissing Avondale’s antitrust counter-

claims on the basis of prescription or laches; and (2) the

district court erred in striking Avondale’s antitrust defense.

Finding no error, we affirm.

I. Facts and Issues

- This case involves a dismissal of Avondale’s counter-

claim under Fed.R.Civ.P. 12(b)(6)* and the striking of

its defense under Fed.R.Civ.P. 12(f).* For purposes of

appeal we construe as true the factual allegations in Avon-

dale’s complaint.

Avondale entered into negotiations with El Paso

Natural Gas Company (“El Paso”) for the construction

1. Fed.R.Civ.P. 12(b)(6) provides:

(b) How Presented. Every defense, in law or fact, to a

claim for relief in any pleading, whether a claim, counterclaim,

cross-claim, or third-party claim, shall be asserted in the re-

sponsive pleading thereto if one is required, except that the

defenses may at the option of the pleader be made

by motion: . . . (6) failure to state a claim upon which relief

can be granted.

2. Fed.R.Civ.P. 12(f) provides:

(f) Motion to Strike. Upon motion made by a party be-

fore responding to a pleading, or, if no responsive pleading is

permitted by these rules, upon motion made by a party within

20 days, after the service of the pleading upon him or upon

the court’s own initiative at any time, the court may order

Court of Appeals Opinion (6/7/82) A3

and fitting of three liquid natural gas vessels. Although

Avondale was experienced in the construction of the basic

portions of these vessels, it was not experienced in the

design or construction of the cryogenic (i.e., for very low-

temperature(s)) cargo containment system in which the

liquefied gas is actually stored. It was necessary, there-

fore, for Avondale to subcontract design and construction

of the containment system portion of the vessels.

El Paso chose a containment system whereby the gas

is held in aluminum tanks that sit in the center of the

vessel's cargo holds. The holds are insulated with a poly-

urethane spray that protects the hull from the cryogenic

temperature of the gas, and provides a barrier against the

escape of any gas. The only cargo containment system of

the type that has received the necessary regulatory ap-

proval utilizes a polyurethane spray insulation made by

Kaiser. Avondale alleges that Kaiser refused to supply or

install insulation spray unless Avondale agreed to have

Kaiser supply the aluminum tanks as well, and that Kaiser

refused to submit separate bids for the aluminum tanks

and the spray so that Avondale could compare Kaiser's

tank prices with those of other manufacturers who desired

to supply Avondale with the tank portion of the contain-

ment system.

Avondale agreed to purchase the spray and tanks

from Kaiser, and on May 25, 1973, entered into a written

subcontract that required Kaiser to supply fifteen alu-

minum tanks, and the required insulation, for a total con-

sideration of $70,955,000. The subcontract provided for

progress payments by Avondale, and contained a provision

for the adjustment of the contract price as changes were

made in the scope of the work. According to Avondale,

Kaiser insisted on including provisions in the subcontract

that would limit its liability for damages to Avondale, and

would permit Kaiser to disclaim any responsibility for the

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design of the containment system that El Paso required

Avondale to use.

Avondale claims that Kaiser's performance of its ob-

ligations under the subcontract proved to be highly un-

satisfactory. Avondale alleges extensive delays, defects,

and deficiencies with respect to Kaiser's construction of

the aluminum tanks and application of the insulation

spray that forced Avondale to undertake corrective

measures at its own expense.

In July 1979, Kaiser filed suit under the subcontract,

seeking to recover a balance it claimed to be due under

the contract change provisions, and also seeking additional

compensation related to what it alleges was Avondale’s

breach of certain contract provisions.

At about the time Kaiser instituted its suit against

Avondale, Avondale claimed that it discovered numerous

deep and massive cracks in the Kaiser insulation in each

of the cargo holds in one of the vessels. Avondale also

claims that the utility of the entire cargo containment

system aboard one of the vessels was completely de-

stroyed, and that it expects that the defect will be repeated

on the other two vessels because of the defective nature

of the insulation spray.

Avondale filed a counterclaim against Kaiser seeking,

inter alia, damages for delays, deficiencies, and perform-

ance under the contract, and redress for the harm suffered

as a result of the defects in the Kaiser insulation spray.

Avondale also alleged that the subcontract violated sec-

tions 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2° and

3. Section 1 of the Sherman Act, 15 U.S.C. § 1, provides that:

Every contract, combination in the form of trust or other-

wise, or conspiracy, in restraint of trade or commerce among

the several States, or with foreign nations, is declared to be

illegal. Every person who shall make any contract or engage

in any combination or conspiracy hereby declared to be illegal

Court of Appeals Opinion (6/7/82) A5

§3 of the Clayton Act, 15 U.S.C. § 144

The thrust of Avondale’s antitrust argument is that

the subcontract between it and Kaiser contained an illegal

“tying” arrangement in that Kaiser allegedly conditioned

its sale of the desired insulation spray (the “tying”

product) to Avondale’s purchase from Kaiser of the un-

3. (Cont'd. )

shall be deemed guilty of a felony, and, on conviction thereof,

dollars or by imprisonment not exceeding three years, or by

both said punishments, in the discretion of the court.

Section 2 of the Sherman Act, 15 U.S.C. § 2, provides that:

A6 Court of Appeals Opinion (6/7/82)

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U.S.C. § 15, provided:

district in which the defendant resides or is found or has an

Court of Appeals Opinion (6/7/82) AT

sought permanently to enjoin Kaiser from enforcing any

provisions of the subcontract, including those clauses that

purport to limit Kaiser's liability to Avondale for damages

and permit Kaiser to disclaim responsibility for the design

of the cargo containment system. Avondale also asserted

the unlawfulness of the subcontract as an affirmative

defense.

Kaiser filed a motion to strike the defense under Fed-

eral Rule of Civil Procedure 12(f) and to dismiss the anti-

trust counterclaim under rule 12(b)(6) (as barred by the

statute of limitations). Those motions were granted on

January 5, 1981, by the district court. Avondale then

movea for amendment of the district court's order to

certify that the striking of the defense involved issues

for interlocutory review under 28 U.S.C.

§ 1292(b),” and for entry of partial final judgment with

of opinion and that an immediate appeal from the order may

materially advance the ultimate termination of the litigation,

he shall so state in writing in such order. The Court of Ap-

peals may thereupon, in its discretion, permit an appeal to be

taken from such order, if application is made to it within ten

days after the entry of the order: Provided, however, That ap-

plication for an appeal hereunder shall not stay proceedings in

the district court

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Federal Rule of Civil Procedure 54(b).* The district

court entered partial final judgment and Avondale filed a

notice of appeal with respect to that judgment. The dis-

trict court later amended its January 5 order to certify that

its dismissal of the antitrust defense was a matter appro-

priate for interlocutory review. Avondale filed a petition

for permission to appeal to this court, and we granted that

permission on September 2, 1981. In the September 2

order, we consolidated the antitrust defense appeal with

the appeal of the antitrust countercia ~ lismissal.

Issues

On appeal, Avondale argues that: (1) the district

court erred in dismissing Avondale’s antitrust counterclaim

on the pleadings because the Clayton Act four-year statute

of limitations had run; and (2) the district court erred in

deciding on the pleadings that Avondale’s antitrust de-

fense was improper.

II. Dismissal of the Antitrust Counterclaim

1. The Standard for Rule 12(bX6) Dismissals

We begin our examination of the dismissal of the anti-

trust counterclaim by observing that “the motion to dis-

miss for failure to state a claim is viewed with disfavor and

is rarely granted.” Wright & Miller, Federal Practice and

Procedure: Civil § 1357 at 598 (1969). In Barber vo.

Motor Vessel “Blue Cat,” 372 F.2d 626, 627 (5th Cir.

1967), we wrote that dismissal of a claim on the basis of

barebones pleadings is a “precarious disposition with

8. Fed.R.Civ.P. 54(b) provides in pertinent part that:

relief is

action . . . the court may direct the entry of a final judgment

as to one or more but fewer than all of the claims or

only upon an express determination that there is no just

for delay and upen an express direction for the entry of judg-

ment.

Court of Appeals Opinion (6/7/82) Ag

high mortality rate.” See also Voter Information Project,

Inc. v. City of Baton Rouge, 612 F.2d 208, 210 (5th Cir.

1980); Madison v. Purdy, 410 F.2d 99, 100-01 (5th Cir.

1969); International Erectors, Inc. v. Wilhoit Steel Erec-

tors & Rental Service, 400 F 2d 465, 471 (5th Cir. 1968).

Within the strong framework of policy considerations

that militate against granting motions to dismiss for failure

to state a claim,” we have developed two primary prin-

ciples that guide our review of a complaint so dismissed.

First, we must accept as true all well pleaded facts in the

complaint, and the complaint is to be liberally construed

in favor of the plaintiff. Miller v. Stanmore, 636 F.2d 986,

988 (5th Cir. 1981); Voter Information Project, Inc.,

supra, 612 F.2d at 210; Madison, supra, 410 F.2d at 100.

Second, a complaint should not be dismissed for failure to

state a claim unless it appears beyond doubt that the

plaintiff can prove no set of facts in support of his claim

that would entitle him to relief. Conley v. Gibson, 355

U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Dike

v. School Board of Orange County, Florida, 650 F 2d 783,

787 (5th Cir. 1981); Miller, supra, 636 F 2d at 992; Fadjo

v. Coon, 633 F.2d 1172, 1174 (5th Cir. 1981).

These two principles are, however, subject to the fol-

lowing limitations. Although we must accept as true the

well-pleaded allegations of a complaint dismissed for

failure to state a claim, we do not accept as true con-

clusionary allegations in the complaint. Associated

Builders, Inc. v. Alabama Power Company, 505 F.2d 97,

100 (5th Cir. 1974). Further, a complaint that shows

relief to be barred by an affirmative defense, such as the

statute of limitations, may be dismissed for failure to state

a cause of action. United Transportation Union v. Florida

East Coas: Railway Company, 586 F 2d 520, 527 (5th Cir.

1978); Mann v. Adams Realty Company, Inc., 556 F 2d

9. See Wright & Miller, Federal Practice and Procedure: Civil

§ 1357 at 599-605 ( 1969).

Al0 Court of Appeals Opinion (6/7/82)

288, 293 (5th Cir. 1977); Joe E. Freund, Inc. v. Insurance

Company of North America, 370 F.2d 924, 924 (5th Cir.

1967); J. M. Blythe Motor Lines Corporation v. Blalock,

310 F.2d 77, 78 (5th Cir. 1962); Herron v. Herron, 255

F.2d 589, 593 (5th Cir. 1958).

2. The “Tying” Counterclaim

The essence of Avondale’s counterclaim is that it de-

serves antitrust damages and equitable relief because the

contract involves an illegal “tying” arrangement whereby

Kaiser conditioned its sale of the insulation spray (the

“tying” product) on Avondale’s agreement to permit Kaiser

to supply the aluminum tank portion of the cargo con-

tainment system (the “tied” product). The alleged tie,

Avondale argues, violates sections 1 and 2 of the Sherman

Act, 15 U.S.C. §§ 1, 2, and sectiou 3 of the Clayton Act,

15 U.S.C. § 14. The difficulty arises because of the four-

year statute of limitations provided by the Clayton Act.”

In its counterclaim, Avondale admits that the contract

with Kaiser that forms the basis of the present lawsuit

filed in 1979 was executed on or about May 25, 1973—a

date ostensibly outside the limitations period. The coun-

terclaim on its face appears to reveal the existence of an

affirmative defense to it, which would make the granting

of a Rule 12(b)(6) dismissal proper.

Generally, an antitrust cause of action accrues, and

the four-year statute of limitations begins to run, when a

10. At the time relevant to this suit, section 4B of the Clayton

Act, 15 U.S.C. § 15b provided that:

Any action to enforce any cause of action under sections

15 or 15a of this title shall be forever barred unless commenced

within four years after the cause of action accrued. No cause

of action barred under existing law on the effective date of

this section and sections 15a and 16 of this title shall be re-

vived by said sections.

Court of Appeals Opinion (6/7/82) All

defendant commits an act that injures a plaintiff's business.

There are two grounds for allowing an antitrust suit to be

brought more than four years after the events that initially

created a cause of action. These grounds are derived from

Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S.

321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971) and Hanover

Shoe, Inc. v. United Shoe Machinery Corp. 392 U.S. 481,

88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968).

The first ground is the continuing conspiracy or con-

tinuing violation exception that permits a cause of action

to accrue whenever the defendant commits an overt act in

furtherance of an antitrust conspiracy or, in the absence

of an antitrust conspiracy, commits an act that by its very

nature is a continuing antitrust violation. See Zenith,

supra, 401 U.S. at 338-40, 91 S.Ct. at 806-07; Hanover

Shoe, supra, 392 U.S. at 501 n. 15, 88 S.Ct. 2236 n. 15.”

11. Zenith arose out of a counterclaim by Zenith Radio against

injures a plaintiffs business.” 401 U.S. at 338, 91 S.Ct. at 806. The

Court observed, however, that when a continuous antitrust violation

damages caused by that act and .. . as to those damages, the

statute of limitations runs from the commission of the act.

401 U.S. at 338, 91 S.Ct. at 806.

12. Hanover Shoe involved no conspiracy; rather, the plaintiff

shoe manufacturer sued the single defendant shoe machine manu-

facturer and distributor, claiming that the defendant's policy of

Al2 Court of Appeals Opinion (6/7/82)

The second ground involves situations where the de-

fendant’s antitrust act is “revived” outside the limitations

period, as a basis for damages, because when the act

originally occurred, the plaintiff's damages were specula-

tive or unprovable. See Zenith, supra, 401 U.S. at 339-40,

91 S.Ct. at 806-07."

In the present case, Avondale invokes two versions

of the continuing violation argument, as well a: the specu-

lative damages argument. Although these exceptions are

ostensibly separate, there is some relation between them.

Our decision in City of El Paso v. Darbyshire Steel Com-

pany, Inc., 575 F.2d 521, 523 (5th Cir. 1978), cert. denied,

439 U.S. 1121, 99 S.Ct. 1033, 59 L.Ed.2d 82 (1979), es-

tablished a relationship between the continuing violation

exception in Zenith and Hanover Shoe and the speculative

damage exception in Zenith. In El Paso, we made appli-

12. (Cont'd.)

leasing and refusing to sell its shoe machinery was an instrument

of unlawful monopolization. The defendant argued that it first

refused to sell its machinery to the plaintiff in 1912, and plain-

tiff was, therefore, barred from bringing its suit in 1955 by the ap-

plicable Pennsylvania statute of limitations. The Supreme Court

agreed with the Third Circuit's rejection of this argument:

We are not dealing with a violation which, if it occurs at all,

Rather, we are dealing with conduct which constituted a con-

tinuing violation of the Sherman Act and which inflicted con-

tinuing and accumulating harm on [the plaintiff].

392 U.S. at 501 n. 15, 88 S.Ct. at 2236 n. 15.

13. In Zenith, the Court stated:

[I]t is hornbook law, in antirust actions as in others, that even

if injury and a cause of action have accrued as of a certain

date, future damages that might arise from the conduct sued

on are unrecoverable if the fact of their accrual is speculative

or their amount and nature unprovable.

401 U.S. at 339, 91 S.Ct. at 806.

Court of Appeals Opinion (6/7/82) A13

cation of one version of the continuing violation exception

—the continuing benefits exception (receipt of benefits

under the contract is a continuing violation of the antitrust

laws )—contingent on whether antitrust damages were as-

certainable at the time of the original antitrust violation.

Because of this relationship, it is necessary for us to con-

sider Avondale’s speculative damages argument in the con-

text of its continuing benefits argument.

A. Continuing Violations: The Acceptance of Benefits

and Speculative Damages

Avondale argues that Kaiser committed a continuing

violation of the antitrust laws by accepting benefits under

its subcontract with Avondale. The “prime example” of

these benefits is, according to Avondale, Kaiser’s continued

receipt of contract payments. Avondale’s primary support

for this argument is our decision in Imperial Point Colon-

nades Condominium, Inc. v. Mangurian, 549 F.2d 1029

(Sth Cir.), cert. denied, 434 U.S. 859, 98 S.Ct. 185, 54

L.Ed.2d 132 (1977), where unit owners in a condominium

complex claimed that a sales contract requirement that the

condominium purchasers also accept assignment of a por-

tion of a ninety-nine year recreational facility lease as a

condition of purchasing a unit constituted an illegal tying

arrangement. The recreational lease provided that the

rent due under it could be adjusted, at the election of the

defendants,"* to maintain the real purchasing power of the

14. The defendants in Imperial Point were Mangurian and

Drexel Properties, Inc., of which Mangurian was president, director,

and sole stockholder. Drexel Properties owned the actual condo-

minium units and Mangurian owned the adjacent land on which

recreational facilities had been built. Mangurian leased the land

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rent. In 1969, the plaintiffs signed a sales contract with

the incorporated lease provision; they brought suit in 1975

after the defendants imposed a rent increase. The plain-

tiffs sought damages and equitable relief, and the defend-

ants pleaded the statute of limitations and laches.

We reversed the district court in Imperiol Point and

held that the plaintiffs’ suit was not barred by the statute

of limitations because every time the defendants increased

the rent under the recreational lease, they accepted a

benefit that was equivalent to committing an overt act in

furtherance of the “ ‘conspiracy among defendants the ob-

ject of which was establishment of a continuing relation-

ship with individual plaintiffs, ” 549 F.2d at 1043 (quot-

ing Baker v. F & F Investment, 420 F.2d 1191, 1200 (7th

Cir.), cert. denied, 400 U.S. 821, 91 S.Ct. 42, 27 L.Ed.2d

49 (1970)).

In the present case, Avondale seeks to analogize its

situation to that of the condominium owners in Imperial

Point, and argue that Kaiser's continued receipt of bene-

fits under the contract constitutes a continuing violation of

the avtitrust laws.

We must reject Avondale’s contentions under the

limitations we placed on the continuing violation benefit

exception in City of El Paso v. Darbyshire Steel Company,

Inc., 575 F.2d 521 (5th Cir. 1978), cert. denied, 439 U.S.

1121, 99 S.Ct. 1033, 59 L.Ed.2d 82 (1979).

14. (Cont'd.)

We noted that in Imperial Point, the tying arrangement was

different from the typical single-defendant tie-in because the unit

owners agreed with one defendant to buy the tying product (the

condominium ), and agreed with another defendant to assume an

obligation to pay rent for the tied product (the recreational facili-

ties). 549 F.2d at 1042-43. We held that the defendant could not

“escape suit via the statute of limitations by splitting itself into two

separate legal entities and causing one of them to force plaintiff to

buy the tied product from the other one.” Id. at 1043 n. 24.

Court of Appeals Opinion (6/7/82) Al5

In El Paso, the City of El Paso, Texas, brought suit

against several steel fabricators, claiming that the defend-

ants conspired to submit a collusive bid on steel required

for the construction of a city civic center. The contract

between the defendants and the general contractor was

executed in 1970 and El] Paso sued in 1975. El Paso ar-

gued that because the defendants received benefits under

the contract in the form of payments for deliveries of steel

within the limitations period, the suit was not barred by

15 U.S.C. § 15b.

Our examination of the contract involved in El Paso

revealed that

the rights and liabilities of the parties were finalized

by the contract signed on September 4, 1970. On

that date, the price, the quantity, and the delivery

schedule were fixed by the terms of the contract. Any

damages caused by the alleged conspiracy were

provable with certainty on that date.

575 F.2d at 523.

The nature of the El Paso contract led us to two con-

clusions. First, we determined that the plaintiff felt “ ‘the

adverse impact of an antitrust conspiracy on a particular

date, ” 575 F.2d at 523 (quoting Zenith, supra, 401 U:S.

at 339, 91 S.Ct. at 806 (1971)). Second, we held that

the damages caused by the alleged conspiracy among the

steel fabricators were provable by expert testimony con-

cerning the value of steel in a freely competitive market.

Therefore, the pre-limitations collusion amongst the steel

fabricators could not be “revived” on the grounds that an

antitrust cause of action does not accrue until damages can

be reasonably established. See Poster Exchange, Inc. v.

Natienal Screen Service Corporation, 456 F.2d 662, 667

(5th Cir. 1972), cert. denied, 423 U.S. 1054, 96 S.Ct. 784,

46 L.Ed2d 643 (1976). See also Zenith, supra, 401 US.

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at 339-40, 91 S.Ct. at 806-07. In El Paso, we distin-

guished Imperial Point as a case involving damages that

were not ascertainable at the time of the execution of the

contracts involved therein because the defendants could

arbitrarily and unilaterally continue to engage in acts that

amounted to overt acts in furtherance of their antitrust

conspiracy. 575 F.2d at 523-24.

In so analyzing the El Paso case, we established the

principle that the continuing benefits aspect of the anti-

trust statute of limitations was not applicable to those

situations where antitrust damages were not speculative

or unprovable.

The present case involves a contract similar to the

one in El Paso. Kaiser agreed to supply Avondale with

both the insulation spray and tank portions of the cargo

containment system. The contract had fixed price, quan-

tity, and delivery schedule terms. The rights and liabili-

ties of both parties were established on May 25, 1973—

the date on which the parties executed the subcontract.

To the extent that Kaiser received benefits under the con-

tract, such receipts were merely “the abatable but un-

abated inertial consequences of some pre-limitations ac-

tion,” rather than from “some injurious act actually

occurring during the limitations period.” Poster Ex-

change, Inc. v. National Screen Service Corporation, 517

F.2d 117, 128 (5th Cir. 1975), cert. denied, 425 U.S. 971,

96 S.Ct. 2166, 48 L.Ed.2d 793 (1976). We restated this

proposition in Imperial Point:

[Where a defendant commits an act injurious to

plaintiff outside the limitations period, and damages

continue to result from that act within the limitations

period, no new cause of action accrues for the dam-

ages occurring within the limitations because

Court of Appeals Opinion (6/7/82) Al?

no act committed by the defendant within that period

caused them.

549 F.2d at 1035 (emphasis in original). See also Barno-

sky Oils, Inc. v. Union Oil Company of California, 665

F.2d 74, 81-82 (6th Cir. 1981).

Avondale presents three arguments to attempt to

show that its antitrust damages were speculative, and

therefore, the continuing benefits theory applies and the

contract in the present case is like the one in Imperial

Point and unlike the one in El Paso.

First, Avondale argues that Kaiser offered one price

in its bid to Avondale for the insulation spray and the

tanks, and Avondale was consequently unable to tell to

what degree the bid price represented the allegedly in-

flated price for the tied tanks. Assuming Avondale’s con-

tention about Kaiser's refusal to separate the price for

the tying and tied products to be true, there was no

greater difficulty in proving antitrust damages in 1973

than there is today. If Avondale sued in 1973, it could

have sufficiently established the difference between the

value of the tanks in a freely competitive market and the

price actually paid to Kaiser by expert testimony, discov-

ery from Kaiser, and the other bids that Avondale claims

were submitted to it by Kaiser competitors.

The second argument that Avondale makes is con-

siderably more complex and is related to the measure of

antitrust damages in tying cases. In a tying arrange-

ment, “the ordinary measure of damages would be the

difference between the price actually paid for the tied

product and the price at which the product could have

been obtained on the open market.” Pogue v. Interna-

tional Industries, Inc., 524 F.2d 342, 344 (6th Cir. 1975).

Further, “[i]n an extraordinary case, the plaintiff might

be able to establish a causal relationship between a tying

Al8 Court of Appeals Opinion (6/7/82)

arrangement and other kinds of economic injury.” Id. at

345. Avondale contends that because its contract con-

tained a changes provision that would cause a price fluc-

tuation in the price that Avondale would ultimately have

to pay for the entire cargo containment system, the “price

actually paid for the tied product” under Pogue, supra,

could not be calculated until all changes were performed.

(The changes provision concerned the manner in which

the parties agreed to handle any alterations of the specifi-

cations in the design of the gas containment system. )

The plain language of the Avondale-Kaiser contract

indicates that in no event could Kaiser order or approve

changes under the changes provision. Although Avon-

dale argues that the originator of each change actually

performed is a factual matter to be determined at trial, it

does not dispute Kaiser's characterization of the plain lan-

guage of the agreement, except to note that in some cir-

cumstances, changes would occur automatically if particu-

lar agency regulations required them. The present

cortract, then, is much unlike the one in Imperial Point

where the defendants alone could unilaterally and arbi-

trarily raise the rent due under the recreational lease. We

also note without further comment, that in El Paso, we

implicitly rejected an argument that the presence of a

changes provision in a contract renders antitrust damages

unascertainable.”

More important, however, is the fact that Avondale

does not allege that Kaiser ever sought an inflated price

for the work ordered by Avondale under the changes pro-

vision. Under the terms of the contract, the compensation

15. In El Paso, the City of E] Paso argued that a changes pro-

See El Paso reply br. at 3-4. We ignored this argument in our

opinion.

Court of Appeals Opinion (6/7/82) Alg

due to Kaiser for any changes made was to be either

agreed on by the parties, or, in the absence of agreement,

a “fair and reasonable” price.

Avondale argues in its reply brief that since “the

district court has not interpreted the ‘fair and reasonable’

provisions . . . there is absolutely nothing in the record

to indicate that what would be a ‘fair and reasonable’ cost

for one contractor necessarily would be a ‘fair and rea-

sonable’ cost for all others.” Avondale reply br. at 12.

This argument is equivalent to the tenuous position that

the district court could interpret such a provision as al-

lowin., Kaiser to recover compensation for changes work

(that it could not order or approve ) amounting to an in-

flated antitrust-prohibited price. Avondale’s argument

must be rejected.

Any amounts due under the changes provision do not

affect the plaintiff's antitrust damages, and, therefore, the

fact that the charges under the changes provision could

not, by definition, be ascertained when the contract was

executed is irrelevant as to whether Avondale’s antitrust

damages were speculative.

Finally, Avondale appears to argue, without support,

that its contract was not “final” under El Paso because

Avondale had to perform corrective work within the limi-

tations period to correct unsatisfactory work by Kaiser.

Avondale misunderstands our holding in El Paso. What

were considered “final” in that case were contract rights

and liabilities for the purpose of assessing antitrust dam-

ages. Under El Paso’s rationale—which established final-

ity for purposes of assessing antitrust damages on the date

that the rights and liabilities of the parties with regard to

those damages were fixed so as to permit calculation of

antitrust damages—any subsequent breach-of-contract

damages (the corrective repairs) are irrelevant to the

finality of the antitrust violation.

2

Court of Appeals Opinion (6/7/82)

B. Continuing Violations: Initiation of Suit, Enforce-

ment of Contract Provisions, Delivery of the Tied

Product, and Unsatisfactory Work

Avondale also argues that Kaiser engaged in a num-

ber of continuing antitrust violations apart from its receipt

of benefits under the contract. These alleged actions in-

volve: (1) Kaiser's initiation of its suit to recover sums

alleged to be owed to it under the changes provision, to-

gether with damages for breach of contract; (2) Kaiser's

raising of the disclaimer of design responsibility and limi-

tation of damages provisions of the contract in its answer

to Avondale’s counterclaim; (3) the fact that Kaiser never

delivered the allegedly tied aluminum tanks until 1979;

and (4) what Avondale claims was highly unsatisfactory

correct inadequate performance. This fourth “violation”

was also argued by Avondale to show that its rights and

under

vondale’s argument in that context.

y specific support that Avondale offers to

show that these acts constitute continuing violations con-

cerns Kaiser's initiation of the suit. Avondale relies on

Weber v. Consumers Dig «2, Inc., 440 F.2d 729, 731 (7th

Cir. 1971), and Thomas v. Petro-Wash, Inc., 429 F.Supp.

808, 812 (M.D.N.C. 1977), which held that antitrust con-

spirators engaged in an overt act in furtherance of the

Court of Appeals Opinion (6/7/82) AQ]

however, Kaiser has instituted a suit to recover amounts

allegedly owed to it under the changes provision of the

contract and not to enforce the tie-in. If Avondale suf-

fered antitrust damage, it was the result of a tying arrange-

ment; initiation of a suit to recover the “fair and reason-

able” price of changes that Kaiser could not even order or

approve cannot be said to cause any of the antitrust in-

juries of which it complains. See Woodbridge Plastics,

Inc. v. Borden, Inc., 473 F.Supp. 218, 222 (S.D.N.Y.),

aff d, 614 F.2d 1293 (2d Cir. 1979).

For the proposition that these four acts constitute

violations Avondale relies generally on Poster

Exchange, supra, 517 F 2d 117 (5th Cir. 1975); Twin City

Sportservice, Inc. v. Charles O. Finley & Company, Inc.,

512 F.2d 1264 (9th Cir. 1975); and Baker, supra, 420 F.2d

1191 (7th Cir. 1970). Although these cases support the

proposition that continuing violations of the antitrust law

give rise to new causes of action for purposes of the anti-

trust statute of limitations, Avondale’s reliance on them is

misplaced because the harm that creates the new cause

of action must be “antitrust harm, i.e., a continuing injury

to competition, not merely a continuing pecuniary injury

to a plaintiff.” Electroglas, Inc. o. Dynatex Corporation,

497 F.Supp. 97, 105 (N.D.Cal. 1980) (emphasis in

original ).

In Poster Exchange, we held that the statute of limi-

tations did not bar plaintiffs claim for relief based on

overt acts in furtherance of an antitrust conspiracy, which

acts amounted to continued exercise of monopoly power to

prevent plaintiff from obtaining certain articles. See 517

F.2d at 125-26. In Twin City Sportservice, the Ninth Cir-

cuit held that the statute of limitations did not bar an

antitrust challege to an exclusive baseball stadium conces-

sion franchise even though the allegedly last damaging

act (amendment of the contract) occurred outside the

A22 Court of Appeals Opinion (6/7/82)

limitations period. Each time the parties dealt with each

other exclusively because of the franchise agreement, the

antitrust harm to the plaintiff “recurred.” See 512 F.2d

at 1270." Finally, in Baker, the Seventh Circuit found no

statute of limitations problem where there was an antitrust

conspiracy “the object of which was the establishment of a

continuing relationship with individual plaintiffs.” 420

F.2d at 1200.

Assuming Avondale’s allegations to be true, neverthe-

less, the “acts” that Kaiser committed can in no way be

construed to represent separate antitrust violations that

give rise to new causes of action under the antitrust laws.

The antitrust laws were enacted for “the protection of

competition not competitors.” Brunswick Corporation v.

Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 97 S.Ct. 690,

697, 50 L.Ed.2d 701 (1977) (quoting Brown Shoe Co. v.

United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 1521, 8

L.Ed2d 510 (1962)). See also Electroglas, supra, 497

F.Supp. at 105. The claimed injury to competition in the

present case occurred when the alleged tie-in was formed,

thus precluding Avondale from purchasing the aluminum

tanks from one of Kaiser's competitors. The acts that

Avondale alleges constituted continuing violations of the

antitrust laws are acts that may have resulted in pecuniary

injury to Avondale; they do not, however, constitute acts

injurious to plaintiff as antitrust damage.

C. Tolling of the Statute of Limitations by Duress

Avondale next argues that the four year statute of

limitations was tolled by Kaiser's duress and remained

16. Although the Ninth Circuit held that the antitrust claim

was not barred by the statute of limitations because of the “neces-

sarily continuing nature of the alleged harm,” 512 F.2d at 1270, it

dismissed the tying cause of action because two separate products

were not involved in the alleged tie-in. Id. at 1276.

Court of Appeals Opinion (6/7/82) A23

suspended at least until its discovery of the allegedly de-

fective nature of the insulation spray in 1979." As far as

we understand Avondale’s argument, the duress it com-

plains of emanates from two separate sources. First,

Avondale complains of the duress inherent in the tying

arrangement: “Kaiser used its position as sole supplier of

[the insulation spray] . . . to cause Avondale, as a result

of duress and coercion, to enter into the Kaiser subcon-

tract.” Avondale br. at 32. Second, Avondale claims that

Kaiser used dmess to prevent Avondale from bringing

suit at an earlier time. Avondale does not allege any spe-

cific threat or action undertaken by Kaiser from which it

could conclude the existence of this duress. Rather, Avon-

dale’s sole support for this aspect of its duress claim is

that “Avondale surely could reasonably conclude that in-

stitution of such litigation would trigger refusal by Kaiser

to complete performance of the . . . work.” Id.

Both aspects of Avondale’s duress argument are

without merit. With respect to Avondale’s claim that the

duress was inherent in the tie, we observe that if Avon-

dale’s argument were accepted, then the four-year statute

of limitations in antitrust actions would never begin to

run in tying cases. This conclusion contravenes the plain

language of 15 U.S.C. § 15b, which establishes a statute

of limitations for antitrust actions, including tying actions.

The essence of a tying arrangement is coercion and du-

ress: In order to obtain the desired tying product, a party

is virtually forced to accept the undesired tied product.

Acceptance of Avondale’s argument would effectively nul-

lify the existence of a statute of limitations in tying cases.

17. Antitrust damage actions must be “commenced within four

years after the cause of action accrued,” 15 U.S.C. § 15b, plus any

additional number of years during which the statute of limitations

was tolled.” Zenith Radio Corp. v. Hazeltine Research, Inc., 401

US. 321, 338, 91 S.Ct. 795, 806, 28 L.Ed.2d 77 (1971).

A? Court of Appeals Opinion (6/7/82)

The only support offered by Avondale for its argu-

ment that the tying arrangement inherently involved

duress is McAlpine ©. AAMCO Transmissions, Inc.,

[1977] Trade Reg. Rep. (CCH) $61,359 (E.D.Mich.

1977), which held that a material issue of fact was pre-

sented when the plaintiffs alleged that they did not bring

their tying claim within the four-year period because the

defendant fraudulently promised to cease its imposition of

the tie-in as part of an earlier settlement agreement. Al-

though the court mentioned without comment that

“[p]laintiffs also argue that . . . defendants utilized du-

ress to prevent plaintiffs from commencing suit on their

tying claim,” there was no indication that plaintiffs had

merely assumed duress inherent in the tie. From the

context of the court’s discussion of the defendant's alleged

fraud during the limitations period, the more probable

inference is that plaintiff alleged specific acts of duress.

In any event, the McAlpine court was far more concerned

with the alleged fraudulent promise to stop tying activities.

As to Avondale’s claim that Kaiser's duress consisted

in Avondale’s “reasonable conclusion” that if it sued

dale’s seliance on cases that indicate the very restricted

scope of the duress defense in antitrust statute of limita-

tions contexts. See Cooper v. Fidelity-Phila. Trust Co.,

201 F.Supp. 168, 170 (E.D.Pa. 1962); Philco Corporation

v. Radio Corporation of America, 186 F.Supp. 155, 162

(E.D.Pa. 1960). More perplexing, however, is that Philco

duress. This argument fails as a matter of law.

Court of Appeals Opinion (6/7/82)

D. Laches

A25

Avondale’s final argument with respect to its anti-

trust counterclaim is that, in addition to treble damages, it

sought equitable relief in the form of a permanent injunc-

tion against Kaiser to restrain it from enforcing the

visions of the subcontract, and that the district

erred in dismissing its equitable claims on the basis of

laches.

In an antitrust case, as in other types of cases, an

analogous statute of limitations does not necessarily control

the application in laches in claims brought in equity.

ration v. General Telephone & Electronics Corporation,

518 F.2d 913, 926 (9th Cir. 1975). See also Bratton v.

Bethlehem Steel Corporation, 649 F.2d 658, 667 (9th Cir.

1980); Boone v. Mechanical Specialties Company, 609

F.2d 956, 958 (9th Cir. 1979); Gruca v. United States

Steel Corporation, 495 F.2d 1252, 1258-59 (3d Cir. 1974).

The plaintiff who delays bringing suit must show that his

delay is excusable and that there is no prejudice to the

defendant. Russel v. Todd, 309 U.S. 280, 287, 60 S.Ct.

527, 531, 84 L.Ed. 754 (1940).

In the present case, Avondale argues that its delay

in bringing suit was excusable because of Kaiser's duress.

In our discussion above, we rejected both aspects of

Avondale’s duress argument. Because the pleadings show

no excusable reason for Avondale’s delay, its laches argu-

ment must fail.

III. Dismissal of the Antitrust Defense

The second portion of this consclidated appeal con-

cerns whether the district court erred in granting Kaiser’s

A26 Court of Appeals Opinion (6/7/82)

Rule 12(f) ** motion to strike Avondale’s antitrust defense.

The motion was granted on the basis that, as pleaded, the

counterclaim was barred by the four-year statute of limi-

tations. Specifically, Avondale argues that Kaiser is seek-

ing to enforce a contract that is “intrinsically illegal” under

the antitrust laws and that this illegality constitutes a valid

defense to Kaiser's suit.

Although motions to strike a defense are generally

disfavored, a Rule 12(f) motion to dismiss a defense is

proper when the defense is insufficient as a matter of law.

Anchor Hocking Corporation v. Jacksonville Electric Au-

thority, 419 F.Supp. 992, 1000 (M.D.Fla. 1976). See also

Lunsford v. United States, 570 F.2d 221, 228 (8th Cir.

1977); 2A Moore’s Federal Practice { 12.21 at 2437 (2d

ed. 1948); Wright & Miller, Federal Practice and Pro-

cedure: Civil § 1381 at 799-800 (1969). The issue that

we must decide, then, is whether the antitrust defense in

this context is insufficient as a matter of law.

to different conclusions about what the appropriate suffi-

ciency standard is. According to Avondale, the sufficiency

of the antitrust defense in contract actions is to be deter-

arrangement; therefore, the alleged antitrust illegality is

not merely a collateral matter, and it infects the entire

Court of Appeals Opinion (6/7/82) AQT

under the changes provision, Kaiser argues that striking

the defense would not have the effect of permitting en-

forcement of conduct prohibited by the antitrust laws.

Violations of the antitrust laws as a defense to actions

on a contract were discussed by the Supreme Court ini-

tially in Connolly v. Union Sewer Pipe Company, 184

USS. 540, 22 S.Ct. 431, 46 L.Ed. 679 (1902). In Connolly,

the defendant buyers attempted to escape an obligation to

pay for sewer pipe on the ground that the seller of the

pipe was engaged in monopolistic activi'» alculated to

raise the price of the pipe. In rejecting this putative <nati-

trust defense, the Court stated:

The defence cannot be maintained. Assuming,

as defendants contend, that the alleged combination

was illegal if tested by the principles of the common

law, still it would not follow that they could, at com-

mon law, refuse to pay for pipe bought by them under

special contracts with the plaintiff. The illegality of

such combination did not prevent the plaintiff cor-

poration from selling pipe that it obtained from its

constituent companies or either of them. It could

pass a title by a sale to anyone desiring to buy, and

the buyer could not justify a refusal to pay for what

he bought and received by proving that the seller

had previously, in the prosecution of its business, en-

tered into an illegal combination with others in refer-

ence generally to the sale of [the] . . . pipe.

184 U.S. at 545, 22 S.Ct. at 434.

Connolly was distinguished by the Court in Continen-

tal Wall Paper Company v. Louis Voight & Sons Com-

pany, 212 U.S. 227, 29 S.Ct. 280, 53 L.Ed. 486 (1909), in

which the contract sued upon was not deemed to be col-

lateral to the alleged antitrust violation because the con-

A28 Court of Appeals Opinion (6/7/82)

tract was “based upon agreements that were and are

essential parts of an illegal scheme.” 212 U.S. 261, 29

S.Ct. at 291-92 (emphasis in original). In such an in-

stance, the court in Continental refused to “give effect . . .

to agreements that constituted that combination, and by

means of which the combination proposes to accomplish

forbidden ends.” Id. at 262, 29 S.Ct. at 292. This dis-

tinction between Continental and Connolly was explained

in a later case as turning on whether the contract sued

upon was “intrinsically illegal” or whether the antitrust

violation was merely collateral to the contract. See

Bruce’s Juices, Inc. v. American Can Co., 330 U.S. 743,

755, 67 S.Ct. 1015, 1020, 91 L.Ed. 1219 (1947).

Continental was given a very restricted reading by

the Court in Kelly v. Kosuga, 358 U.S. 516, 79 S.Ct. 429,

3 L.Ed.2d 475 (1959). In that case, Kelly threatened

Kosuga, an onion grower, that he, Kelly, would dump

1000 carloads of onions on the futures market to depress

prices unless Kosuga and other onion growers purchased

some of these onions. Kosuga agreed to purchase 50 car-

loads, and also agreed not to deliver any of these onions

on the futures market for the remainder of the season in

order to create “‘a false and fictitious market condition.’ ”

358 U.S. at 517, 79 S.Ct. at 430 (quoting Kosuga’s brief).

When Kelly sued Kosuga for the purchase price of the

19. Continental was limited even earlier in D. R. Wilder Man-

Company v. Corn Products Refining Company, 236 US.

165, 177, 35 S.Ct. 398, 402, 59 L.Ed. 520 (1915).

Some commentators have construed Kelly to represent aban-

donment of the intrinsically illegal-collateral distinction. For ex-

ample, von Kalinowski states: “Although not expressly overruling

the Continental Wall Paper case, the Kelly Court abandoned the

distinction made . . . [in Continental] between contracts inherently

illegally and those which are only collateral to the alleged activi-

ties.” 15 von Kalinowski, Antitrust Laws and Trade Regulation

§ 109.06 at 109.37 (1981).

Court of Appeals Opinion (6/7/82) A29

50 carloads that Kosuga agreed to buy, Kosuga attempted

to raise an antitrust defense based on Continental.

In affirming the striking of the defense, the Court

noted that “[a]s a defense to an action based on contract,

the plea of illegality based on a violation of the Sherman

Act has not met with much favor in this Court.” 358

USS. at 518, 79 S.Ct. at 431 (footnote omitted). The rea-

sons for this lack of success, the Court went on to explain,

were that the antitrust laws provided remedies that “could

not be added to judicially by including the avoidance of

private contracts as a sanction,” Id. at 519, 79 S.Ct. at

431, and that “the federal courts should not be quick to

create a policy of nonenforcement of contracts beyond

that which is clearly the requirement of the Sherman

Act.” Id. The Court quoted sympathetically Justice

Holmes’s dissent in Continental: The courts are to be

guided by the policy “ ‘of preventing people from getting

other people’s property for nothing when they purport to

be buying it.’” Id. 358 U.S. at 520-21, 79 S.Ct. at 432

(quoting Continental supra, 212 U.S. at 271, 29 S.Ct. at

296 (Holmes, J., dissenting) ).

In discussing the “narrow scope” of the antitrust de-

fense, the Court in Kelly distinguished Continental as a

case where striking the antitrust defense would “make

the courts a party to the carrying out of one of the very

restraints forbidden by the Sherman Act.” Id. 358 US.

at 520, 79 S.Ct. at 432. The Court concluded:

Accordingly, while the nondelivery agreement

between the parties could not be enforced by a court,

if its unlawful character under the Sherman Act be

assumed, it can hardly be said to enforce a violation

of the Act to give legal effect to a completed sale of

onions at a fair price.... [WJhere, as here, a law-

ful sale for a fair consideration constitutes an intelli-

gible economic transaction in itself, we do not think

A30 Court of Appeals Opinion (6/7/82)

it inappropriate or violative of the intent of the par-

ties to give it effect even though it furnished the

occasion for a restrictive agreement of the sort here

in question.

The restrictive Kelly approach was reinforced in

Kaiser Steel Corporation v. Mullins, — U.S. —, 102 S.Ct.

851, 70 L.Ed.2d 833 (1982).*” This court has had occa-

sion to apply the restrictive Kelly analysis on a number

of occasions. See Delta Marina, Inc. v. Plaquemine Oil

Sales, Inc., 644 F.2d 455, 458-59 (5th Cir. 1981); Carpa,

Inc. v. Ward Foods, Inc., 536 F.2d 39, 54-55 (5th Cir.

1976); Abercrombie v. Lum’s, Inc., 531 F.2d 775, 778-79

(5th Cir. 1976); Response of Carolina v. Leasco Response,

Incorporated, 498 F.2d 314, 319 (5th Cir.), cert. denied,

419 U.S. 1050, 95 S.Ct. 626, 42 L.Ed.2d 645 (1974). In

both Abercrombie and Carpa, we applied the Kelly rule

in a tie-in context.

The thrust of Avondale’s argument is that Continental

establishes the proposition that if the underlying agree-

ment sued upon has any taint of antitrust illegality, then

the entire agreement is subject to the antitrust defense.

We must reject this argument. Contrary to Avondale’s

assertions, Continental did not sire the distinction Avon-

dale seeks to make between “intrinsically illegal” contracts

and those contracts merely collateral to an illegal agree-

ment. Rather, Continental involved a situation where

the Court permitted the defendant to assert the antitrust

20. Kaiser also argued that because performance under the

contract is now complete, and not executory, Avondale cannot in-

terpose the antitrust defense. This position must be rejected be-

cause of the Supreme Court's recent decision in Mullins. The

Court affirmed the Kelly standard, but rejected the view that ap-

plication of the restrictive approach of Kelly was contingent on

whether the contract was executory or not.

Court of Appeals Opinion (6/7/82) A31

defense because the contract sued upon was considered to

be one of a number of agreements that constituted, in

and of themselves, the illegal scheme. Continental did

not involve one party trying to enforce an “innocent” pro-

vision of a contract that involved antitrust illegality; the

entire contract was infected by illegality because the con-

tract, and those like it, were responsible for the existence

of the illegal combination in the first instance.

It is clear from Kelly that the Continental rule is re-

stricted solely to those cases where the denial of the anti-

trust defense “would itself be enforcing the precise con-

duct made unlawful by the [antitrust law].” 358 U.S. at

520, 79 S.Ct. at 432. See also Kaiser Steel Corporation v.

Mullins, — U.S. —, 102 S.Ct. 851, 70 L.Ed. 2d 833 (1982).

“If the contract provisions [sought to be enforced] do not

embody or further anti-competitive practices, then there

has been no irreparable loss or damage from a violation of

the anti-trust law.” Response of Carolina, supra, 498 F.2d

at 319 (emphasis in original). See also Abercrombie,

supra, 531 F.2d at 779.

In the present case, Kaiser has instituted a suit for

the fair and reasonable price of change-work. Kaiser does

not seek to enforce the tie-in by suing a party who has

received the desired tying product and now refuses to ac-

cept the tied product. Avondale does not allege that

Kaiser is requesting an inflated price for the work nor does

it allege that the changes provision is a tied item. It

argues only that these provisions occur as part of a con-

tract that embodies an allegedly illegal tie-in.

The precise conduct against which the antitrust laws

seek to protect in the present context is tying. The

change work constitutes an “intelligible economic trans-

action in itself’ under Kelly, 358 U.S. at 521, 79 S.Ct. at

432, and the antitrust defense is inapplicable.

A32 Court of Appeals Opinion (6/7/82)

Before concluding, we will note briefly several argu-

ments made by Avondale designed to escape the applica-

tion of Kelly to the present case.

First, Avondale argues that Kaiser's reliance on Carpa

v. Ward Foods, Inc., 536 F.2d 39 (5th Cir. 1976) is in-

applicable because Carpa’s acceptance of Kelly is by way

of dictum. Avondale argues that Kelly was a “simple col-

lection case,” Avondale br. at 27, and did not involve

tying, so Kelly is not applicable to the present case.

Even if Avondale were correct in its characterization

of our application of Kelly in Carpa as mere dicta, Carpa

is not necessary to Kaiser's argument. Irrespective of

what factual differences exist between Kelly and the

present case, the specific rationale in Kelly encompassed

the principle that the antitrust defense is applicable only

in one circumstance—where rejection of the defense is

tantamount to making the court literally assist a party to

commit the precise conduct that the antitrust laws forbid.

Since that one circumstance is not present in the case be-

fore us, the rationale of Kelly is applicable. In addition,

we accepted Kelly in a tying context prior to Carpa. See

Abercrombie, supra, 531 F.2d at 778-79.

The real flaw in Avondale’s argument, however, is

that Kaiser’s reliance on Carpa is not misplaced. Carpa

y emg cha yeaa Plaintiff Carpa, a ie

chisee, cross-appealed a determination of the district court

that cancelled the lease that bound Carpa to pay an ex-

Court of Appeals Opinion (6/7/82) A33

the lease, which was collateral to the tying arrangements,

536 F.2d at 55." Kelly was the rationale for our affirmance

of the district court’s determination of this issue in Carpa;

our interpretation of the ambit of antitrust defense in

Carpa can hardly be labeled as “mere dicta.”

The second argument that Avondale mounts against

application of Kelly is that in the present case, the Kaiser

spray is defective and since Avondale has not received any

of Kaiser's property, “one should not be able to get some-

thing for nothing” sentiments are inapplicable. Avondale

misses the point. Kaiser has equipped the vessels with a

cargo containment system and now seeks the reasonable

21. Kaiser claims that Carpa goes further than Kaiser requires

because while Kaiser wants to recover the uninflated price allegedly

due to it under the changes provision, Carpa “recognized the right

of an alleged antitrust violator to recover amounts due and owing

on that cancelled lease, even though a portion of those amounts

constituted antitrust damages.” Kaiser br. at 27. The language in

Carpa upon which Kaiser relies provides:

do so were violative of the Sherman Act.

536 F.2d at 54 (emphasis supplied). This language, however,

Nevertheless, we are compelled to observe that the two quotes

cited above are consistent with the view that the

Court of Appeals Opinion (6/7/82)

in the form of spray, aluminum tanks, and installation.

If Avondale disputes the value of this “something,” it has

an appropriate remedy in contract or tort.

We conclude that the antitrust defense is inapplicable.

IV. Conclusion

We have examined Avondale’s contentions at length

and we find them without merit. Even if we assume all of

Avondale’s allegations to be true, its antitrust counterclaim

fails to state a claim, and its antitrust defense is insufficient

as a matter of law. Accordingly the dismissal of the

counterclaim and the striking of the defense by the district

court are AFFIRMED.

AFFIRMED.

District Court Order (1/5/81) A35

DISTRICT COURT ORDER (1/5/81)

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

Civu. Action Numser 79-2516 Section L (3)

KAISER ALUMINUM & CHEMICAL SALES, INC.

versus

AVONDALE SHIPYARDS, INC.

Minute Entry

January 5, 1981

This matter came before the Court on a former

After considering the argument and briefs of counsel

the law applicable to this case:

strike

Ir Is Onperep that motion of plaintiff to

fendant’s antitrust counterclaim and defense on

grounds of prescription is GRANTED.’ -

/s/ Veronica D. WickER

United States District Judge

1. Kelly v. Kosuga, 358 US 516, 79 S.Ct. 429 (1959); Carpa,

Inc. v. Ward Foods, Inc., 536 F.2d 39 (5th Cir.-1976).

A36 District Court Order (7/2/81)

DISTRICT COURT ORDER (7/2/81)

UNITED STATES DISTRICT COURT

Eastern District OF LOUISIANA

Civm Action Numer 79-2516 Secrion L (3)

KAISER ALUMINUM & CHEMICAL

versus

AVONDALE SHIPYARDS, INC.

Order

On January 5, 1981, this Court granted motion of

plaintiff, Kaiser Aluminum & Chemical Sales, Inc., to strike

defendant's antitrust counterclaim and antitrust defense.

- ince an appeal on the dismissal of defendant's anti-

trust counterclaim is presently pending in the U. S. Court

of Appeals for the Fifth Circuit:

Ir Is Onpenep that the Court's minute entry of Janu-

ary 5, 1981 be amended adding:

The Court is of the opinion that the dismissal of de-

fendant'’s antitrust defense involves a controlling ques-

tion of law; there are substantial grounds for a differ-

ence of opinion as to its correctness and an immediate

appeal of this issue would materially advance the

ultimate opinion as to its correctness.

New Orleans, Louisiana, this 25th day of June, 1981.

/s/ Veronica D. WicKER

United States District Judge

Date or Entry: Jul. 2, 1981.

Court of Appeals Order (9/2/81) A37

COURT OF APPEALS ORDER (9/2/81)

IN THE

UNITED STATES COURT OF APPEALS

For THE Firrxa Criacurr

Unrr A

No. 81-9175

AVONDALE SHIPYARDS, INC.,

Petitioner,

versus

KAISER ALUMINUM & CHEMICAL SALES, INC.,

Respondent.

On APPLICATION FOR LEAVE TO APPEAL FROM AN

INTERLOCUTORY ORDER

Before Brown, Pourrz and WiiiaMs, Circuit Judge.

By Tue Court:

Ir Is Orperep that leave to appeal from the inter-

locutory order of the United States District Court for the

Eastern District of Louisiana entered on July 2, 1981. is,

GRANTED.

Ir Is FurrHer Ornperen that this appeal be consoli-

dated with the appeal pending in No. 81-3162.

A38 Court of Appeals Judgment (6/7/82)

COURT OF APPEALS JUDGMENT (6/7/82)

UNITED STATES COURT OF APPEALS

For Toe Firra Cracurr

Nos. 81-3162

81-3519

D. C. Docket No. CA-79-2516-"L”

KAISER ALUMINUM & CHEMICAL SALES, INC.,

Plaintiff-Appellee,

versus

AVONDALE SHIPYARDS, INC.,

Defendant-Appellant.

APPEAL FROM THE UNiTep States Districr Courr FoR

THE EAsTERN District OF LOUISIANA

Before Wispom, Po.rrz and Tare, Circuit Judges.

Judgment

This cause came on to be heard on the record on ap-

peal from the United States District Court for the Eastern

District of Louisiana, and was argued by counsel;

On ConswERATION WueEnreor, It is now here ordered

and adjudged by this Court that the judgment of the said

District Court in this cause be, and the same is hereby,

affirmed;

Court of Appeals Judgment (6/7/82) A39

It is further ordered that defendant-appellant pay to

plaintiff-appellee, the costs on appeals to be taxed by the

Clerk of this Court.

June 7, 1982

Issued as Mandate: Aug. 5, 1982

A40 Court of Appeals Order (7/26/82)

COURT OF APPEALS ORDER (7/26/82)

IN THE

UNITED STATES COURT OF APPEALS

For THe Firtx Ciacuir

Nos. 81-3162 & 81-3519

KAISER ALUMINUM & CHEMICAL SALES, INC.,

Plaintiff-Appellee,

versus

AVONDALE SHIPYARDS, INC.,

Defendant-Appellant.

APPEAL FROM THE UNiTEep States Distnicr Court FOR

THE EasTERN District or LOUISIANA

On Petition for Rehearing and Suggestion for

Rehearing En Banc

(Opinion June 7, 5 Cir., 1982, — F. 24 —).

(July 26, 1982)

Before Wispom, Pourrz and Tate, Circuit Judges.

Court of Appeals Order (7/26/82) AAl

Procedure; Local Fifth Circuit Rule 16) the Suggestion

for Rehearing En Banc is Dentmp.

ENTERED FOR THE CouRT:

/s/ Atpert TATE

United States Circuit Judge

A42 Statutory Provisions and Court Rule Involved

STATUTORY PROVISIONS AND

COURT RULE INVOLVED

Section 1 of the Sherman Act, 15 U. S. C. §1,

provides:

“Every contract, combination in the form of

trust or otherwise, or conspiracy, in restraint of trade

or commerce among the several States, or with for-

eign nations, is declared to be illegal. Every person

who shall make any contract or engage in any com-

bination or conspiracy hereby declared to be illegal

shall be deemed guilty of a felony, and, on convic-

tion thereof, shall be punished by fine not exceeding

one million dollars if a corporation, or, if any other

person, one hundred thousand dollars or by imprison-

ment not exceecing three years, or by both said pun-

ishments. ir. the discretion of the court.”

Section 2 of the Sherman Act, 15 U. S. C. §2,

provides:

“Every person who shall monopolize, or attempt

to monopolize, or combine or conspire with any other

person or persons, to monopolize any part of the

trade or commerce among the several States, or with

foreign nations, shall be deemed guilty of a felony,

and, on conviction thereof, shall be punished by fine

not exceeding one million dollars if a corporation,

or, if any other person, one hundred thousand dollars

or by imprisonment not exceeding three years, or by

both said punishments, in the discretion of the

court.”

Section 3 of the Clayton Act, 15 U. S. C. §14,

provides:

Statutory Provisions and Court Rule Involved A43

“It shall be unlawful for any person engaged in

commerce, in the course of such commerce, to lease

or make a sale or contract for sale of goods, wares,

merchandise, machinery, supplies, or other commodi-

ties, whether patented or unpatented, for use, con-

*;aption, or resale within the United States or any

Territory thereof or the District of Columbia or any

insular possession or other place under the jurisdic-

tion of the United States, or fix a price charged

therefor, or discount from, or rebate upon, such price,

on the condition, agreement, or understanding that

the lessee or purchaser thereof shall not use or deal

in the goods, wares, merchandise, machinery, sup-

plies, or other commodities of a competitor or com-

petitors of the lessor or seller, where the effect of such

lease, sale, or contract for sale or such condition,

agreement, or understanding may be to substantially

lessen competition or tend to create a monopoly in

any line of commerce.”

Rule 12(f) of the Federal Rules of Civil Procedure

provides:

“Upon motion made by a party before respond-

ing to a pleading or, if no responsive pleading is per-

mitted by these rules, upon motion made by a party

within 20 days, after the service of the pleading upon

him or upon the court’s own initiative at any time,

the court may order stricken from any pleading any

insufficient defense or any redundant, immaterial,

impertinent, or scandalous matter.”