Petition — Rocky Mountain Motor Tariff Bureau, Inc. v. Clipper Exxpress

Supreme Court, U.S.

82-1110 FILED

JAN 3 1983

ALEXANDER L. STEVAS

CLERK

No.

IN THE

Supreme Court of the United States

OcTOBER TERM 1982

Rocky MOUNTAIN Motor TAariFF BUREAU, INC., YELLOW

FREIGHT SYSTEMS, INC., CONSOLIDATED FREIGHTWAYS COorRPO-

RATION OF DELAWARE, ILLINOIS-CALIFORNIA Express INc., IML

FREIGHT INc., PaciFiC INTERMOUNTAIN Express Co.,

T.I.M.E.—D.C. INc., CONSOLIDATED COPPERSTATE LINES, GaR-

RETT FREIGHT LINES, INC., NAVAJO FREIGHT LINES, INC., N.W.

TRANSPORT SERVICE, INC., RINGSBY TRUCK LINES, INC., RIO

GRANDE Motor Way, SALT CREEK FREIGHT WAYS, TRANSCON

LINES, UNITED BUCKINGHAM FREIGHT LINES And WESTERN

GILLETT, INC.,

Petitioners,

VS.

CLipPER EXxPRESS,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

McCuTCHEN, DoyLe, BROWN’ = JOHN R. REESE

& ENERSEN ( Counsel of Record)

Three Embarcadero Center J. THOMAS ROSCH

San Francisco, CA 94111 CATHERINE CURTISS

Three Embarcadero Center

WILLIAM E, KENWORTHY San Francisco, CA 94111

DONALD R. DEVINE (415) 393-2000

4045 Pecos Street

Denver, Colorado 80217 Attorneys for Petitioners

Of Counsel

QUESTIONS PRESENTED

At issue here is the proper balance to be struck between the

antitrust laws and the right to petition guaranteed by the First

Amendment, as enforced by this Court under the Noerr-

Pennington doctrine.! The Court of Appeals struck the balance

against the First Amendinent. Also at issue is whether the fact

of antitrust injury may rest upon speculation. The Court of

Appeals conceded that the claim in this case involves specula-

tion, but held the degree of speculation to be acceptable.

The specific questions presented are:

1. Are First Amendment rights lost if a motor carrier’s

protest against a competitor’s rate tariff is alleged to be

baseless where (a) only one protest is filed, (b) the tariff

protested is novel and experimental, (c) the protest’s lack

of success is the only objective evidence offered to support

the allegation that the protest was “‘baseless” and (d) the

protest does not bar anyone’s access to the administrative

process?

2. Are First Amendment rights lost if a motor carrier

is alleged to have made misrepresentations to an adminis-

trative agency in a legislative-type proceeding where (a)

the carrier’s adversary can and does respond to the repre-

sentations (b) the agency disregards them and (c) the

agency rules against the party making them?

3. May an antitrust plaintiff, whose rates must be filed

with and allowed by an administrative agency, base the

fact of damage on speculation that the agency would have

allowed it to charge an experimental rate that was not filed

with the agency?

' Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc.,

365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S. 657

(1965).

ii

LIST OF PARTIES IN THE COURT OF APPEALS

The parties to the proceeding in the Court of Appeals for

the Ninth Circuit are those listed in the caption of this Petition

and Lee Way Motor Freight, Inc. Consolidated Freightways

Corporation of Delaware is owned by Consolidated Freight-

ways, Inc. and through its parent is affiliated with United

Terminals, Ltd., CF Air Freight, Inc., Canadian Freightways

Eastern, Ltd., Interport Sufferance Warehouse, Ltd., CF Data

Services, Inc., and Centron, Ltd. Illinois-California Express

Inc., is owned by ICX, Incorporated. N.W. Transport Service,

Inc., is owned by Northwest Transport Service, Inc., and

through its parent is affiliated with North Eastern Motor

Freight, Inc. and Westway Motor Freight, Inc. Rio Grande

Motor Way is owned by Rio Grande Industries, Inc., and

through its parent is affiliated with Denver and Rio Grande

Railroad. Pacific Intermountain Express Co. is affiliated with

Ryder Truck Lines, Inc., and is owned by IU Transportation

Services, Inc., which in turn is owned by IU International

Corporation. Garrett Freight Lines, Inc., is affiliated with

Associated Truck Line, Inc., New Life Transport Parts Center,

Inc., Road Equipment Inc. and Graves Truck Line, Inc., and is

owned by ANR Freight System, Inc., which in turn is owned by

American Natural Resources Company. Navajo Freight Lines,

Inc., and Consolidated Copperstate Lines are now owned by

ABF Freight System, Inc., which is owned by Arkansas Best

Corporation and is affiliated with Riverside Furniture Corpo-

ration, Arkansas Bandag Corporation, Data-Tronics Corp.,

Container Carrier Corporation, Arkansas Underwriters Corpo-

ration, Universal Insurance Company and Trans-States Lines,

Inc.

TABLE OF CONTENTS

Pogo

Se OTe CEM vccsuiespistsescesantneshinniiabtisessonpnsteéetns i

LIST OF PARTIES IN THE COURT OF APPEALG.............. ii

Fr BE i ininscsiernticemtinsescieptinsieanvtensionesienn iv

en ITI OD 905 ssc onieasenbvenninsasiicodnisinbosedbscoceninareietinarcemess

i |, RE Sa eee eee eRe 2

CONSTITUTIONAL AND STATUTORY PROVISIONS

Saray MIT UIT ci sesunscliicditniaphesebiientssentestcesevnibicanbdeanibesesninieueeresnindenenae

2

2

ie Pe CN SI aids paccinsesneserotevevacintncctntasticeerdieamniennee 2

a eee ee 3

IT aA s SED oS PE 5

REASONS FOR GRANTING THE WRIT............0cccc0000000000 7

I. Summary of Reasons for Granting the Writ................. 7

II. The Court of Appeals’ Decision on the Sham Ex-

ception Conflicts with Decisions of This Court and

Several Courts of Appeals and with the First

PURINES UNI eatsicecsondinisisasttnluiiestiisisinruitctehcoseees 8

Ill. The Court of Appeals’ Decision on the “Walker

Process Doctrine” Conflicts with Decisions of This

Court and Threatens the Exercise of First Amend-

EE Sy, sotiaatiesectecediaeccsioentsbdieasietatuacchedenoss 14

IV. The Court of Appeals’ Decision Permits Speculation

as to the Fact of Damage in Treble Damage Cases

and Therefore Conflicts with This Court's Deci-

sions in Keogh v. Chicago & N.W. Ry., 260 U.S. 156

(1922), and Arkansas Louisiana Gas Co. v. Hall,

Ge Ay IEEE © COP De: dccctnsidatialaactdinceidchdvmniclacsicseadetens 17

Ce NETO nsssishrbineciischcioccddsscilesdaendabinceumeuseprceloeidadieliacanes 20

FINE jacsteiss ce siniticcvantgestbincetticadasctadedetans Following page 20

Court of Appeals’ Opinion— Appendix A...........0.0000000 A-|-A-42

District Court’s Order Granting Summary

Judgment—Appendix B...............ssscssessssssersesssresesees B-43-B-44

District Court’s Order Denying Motion to

Vacate Judgment—Appendix C.............cccccccesseseeseeees C-45-C-46

Court of Appeals’ Order Denying

Rehearing—Appendix D..............:cssssssssssesssesesseseesees D-47-D-49

Constitutional and Statutory Provisions

CURT OG = FINE Ue siscttisinsnovectevsnstcibicnriessesocstestess E-50-E-51

Conflicting Decisions on the Sham Exception to

Noerr-Pennington Immunity —Appendix F............... F-52-F-63

iv

TABLE OF AUTHORITIES

CASES PAGES

Aberdeen & Rockfish R.Co. v. SCRAP, 409 US.

Ng ian ok cneat decree at aa aa bales tu daneddpnatesoneeneteies 13

Akron, Canton & Youngstown R.Co. v. United States,

Se ae ee Pa ates OPTED vonccaccosscceverasnecspsmvenssssqnessvsnconens 13

Alberta Gas Chemicals, Ltd. vy. Celanese Corp., 650

F.2d 9 (2d Cir.1981), cert. denied, 51 U.S.L.W.

UIE IIL: ONT UIE 0b ds cacchatectdcscencepenntinabesbnapbnibescabneeipevesiectes 17

Alexander v. National Farmers Organization, 687 F.2d

Siniy AU TIL WIE Us sdatasencpeesanadeaskeahdeapbanunsvseioniamnasintoesinns 12

All States Freight v. New York, N.H. & N.R. Co., 379

inti IEE ITE cccanachceituceunnadebisainensesnsasiamistenemseebeegdsensazenstons 3

Arizona Grocery Co. v. Atchison, T. & S.F. Ry., 284 U.S.

3 RRC oft SEEPS Aletha an 16

Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571

Cg ARMA eR Sap E Per eORe At Ste EOE REN 8,17, 18

California Motor Transport Co. v. Trucking Unlimited,

RE Sic IEEE SUNT Don vacdhuitesostssevcabendusboeseness? lescensennesoucss passim

City of Gainsville v. Florida Power & Light Co., 488

Be eS Ole UI Bccterareenersitasnsevecedsescosnscseesceese 10

City of Mishawaka v. American Electric Power Co.,

616 F.2d 976 ( 7th Cir. 1980), cert. denied, 449 U.S.

on) BRR SS ISIE eg SSI A Oe 12

City of Newark v. Delmarva Power & Light Co., 467

rs PT ccocacinccs cashes inteentvevecessonnensedbees 18

Eastern Railroad Presidents Conference v. Noerr

Motor Freight, Inc., 365 U.S. 127 (1961) .........cccceeeeees passim

Feminist Women’s Health Center v. Mohammed,

586 F.2d 530 ( Sth Cir. 1978), cert. denied, 444 U.S.

Eg Re eco RRP cac ve ERAS Sa ca ee a a 10

Ford Motor Co. v. Websier’s Auto Sales, Inc., 361

SE OR, 9 ERS A Re a a OR 18

Georgia v. Pennsylvania R.R., 324 U.S. 439 (1945) .........000 18

Great Northern Ry. v. Merchants Elevator Co., 259

a ac cauae 16

Hydro-Tech Corp. v. Sundstrand Corp., 673 F.2d 1171

I auplonumesuven 10, 12

In Re Airport Car Rental Antitrust Litigation,

1982-83 Trade Cases J 65,039 ( 9th Cir. 1982)... 11

Keogh v. Chicago & N.W. Ry., 260 U.S. 156

Ss 8) RESO RS RARER cad GOREN 5 2 A Ce ee 6, 7, 8, 17-19

Mark Aero, Inc. vy. Trans World Airlines, Inc., 580

Dn a conacuonien 12

McLeran v. El Paso Natural Gas Co., 357

F. Supp. 329 (S.D. Tex. 1972), aff'd without op., 491

CF OY OR 2 ES en ee 18

Vv

Merchandise To and From Chicago, 66 M.C.C. 287

aaa encscoitacnluoseeeced 3

Metro Cable Co. v. CATV of Rockford, Inc., 516

a a ccrensennninnnne 10

Mid-Texas Communications Systems, Inc. v. American

Telephone & Telegraph Co., 615 F.2d 1372 (Sth Cir.

1980), cert. denied, 449 U.S. 912 (1981) .ccccceeeeeseeseeeeees 12

Miracle Mile Associates v. City of Rochester, 617

STEEL: UID seri scecsnndeanbiesactniisbiaswtcessevenveneeseens 10, 12

Monticello Heights, Inc. v. Morgan Drive Away, Inc.,

1974-2 Trade Cases J 75,282 (S.D.N.Y.

RELA a aes 18 AR a ea 18

Otter Tail Power Co. v. United States, 410 U.S. 366

Sih SER BEE Aa RA a ee eR i)

Ross v. Bremer, 1982-2 Trade Cases J 64,746 ( W.D.

= casusnweuanesnovevenensvess 10

Shumate & Co. v. National Ass'n of Sec. Dealers, Inc.,

509 F.2d 147 ( Sth Cir. 1975), cert. denied, 423

ascent ded stnembcnebboneenesbenboeeeneees 18

Story Parchment Co. v. Paterson Parchment Paper Co.,

I cc na aed pinceneshisnstrdeeoensnianes 8, 18

Taylor Drug Stores, Inc. vy. Associated Dry Goods Corp.,

I rE © MING WEP B catceneessnpesnssorscsncsctnevenvocerereeneses 10

TOFC Rates and Charges, Official Territory, 337 ICC

Tel asia sassaesemmensseusevenvenies 3

United Mine Workers v. Pennington, 381 U.S. 657

SII ascuiinsalgiaisneadisebbenhsiseatscvenincibadinmenceinsessceepereveensees passim

United States vy. American Telephone & Telegraph Co.,

ee Ns BO CPLR I ie. BUEN D ccvevvscecesvesccsocesosrnevecee 10, 12

Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623 (1977).......... 9

Walker Process Equipment, Inc. vy. Food Machinery &

Chemical Corp., 382 U.S. 172 (1965 ).....ccccccccceeeees 7, 8, 14-17

STATUTES

aio ccd cada hetanprpnasionsteeieettorneesonsieeniens 2

i To ascacasnsenpbomecnbaevaneseseoneosoenonentes 2

i caioncapsanetcteneineestnoe 15, 16

| REEL SNE aE Ee eo 14

49 U.S.C. § 5b, recodified as 49 U.S.C. § 10706... 6

49 U.S.C. §§ 1005-06, recodified as §§ 10761(a),

10762(a)( 1) and 10708(a)(1).......... sstdatidiomincsbisoemuitecannians 2

Sn a 2,3

I i sii oad aocin dee aneentp eb evenbesostvetvanenceeieeneyes 2,3

SNEED IIIT icra dics nabeeediaamvndetsevcsensinacmeccdensninescone 2.3

MISCELLANEOUS PAGES

P. Areeda, ANTITRUST Law (Supp. 1982)

eae cnduipanbnseedesnsdnodobens 13

a snaieoueuusocedons 13

ee snsndsnoaunins 14

a cdaseaveconsen 14, 15, 16

Asimow, Public Participation in the Adoption of

Interpretive Rules and Policy Statements, 75

SN SN ED ENP T Bic sccnsesecicssnsccebnveovescscssscovevscenseoste 13

Bakke, Joint Efforts in Developing Standards, 44

I is I TO BEE © ciccnsnnsopenichoonsescdeessesesssescvssceseeste 13

R. Bork, THE ANTITRUST PARADOX 349 (1978) ooo. 10

K. Davis, ADMINISTRATIVE LAW TExT § 6.03 (3d ed.

a cusuauabavens 13

K. Davis, ADMINISTRATIVE LAW TREATISE § 7:6

en saadsdsnuadounesuciisisbeniososase 13

Fischel, Antitrust Liability for Attempts to Influence

Government Action: The Basis and Limits of the

Noerr-Pennington Doctrine, 45 U. Cut. L. Rev. 89

I ed acetates iad inacabacdadensinsolabaieonancintonens 10, 13

ICC 1981 ANNUAL Report, Appendix B, Table 7.................. 13

E. Kintner, I FEDERAL ANTITRUST Law § 5.12 (1980) .......... 10

Stewart, Regulation, Innovation and Administrative Law:

A Conceptual Framework, 69 Cacir. L. Rev. 1256 (1981) 13

No.

IN THE

Supreme Court of the United States

OctoBer TERM 1982

Rocky MOuNTAIN Motor Tariff BuREAU, INC., YELLOW

FrReiGHTt Systems, INC., CONSOLIDATED FREIGHTWAYS CoRPO-

RATION OF DELAWARE, ILLINOIS-CALIFORNIA Express INc., IML

FreiGHt Inc., Pacific INTERMOUNTAIN' Express CoO.,

T.LM.E.—D.C. INc., CONSOLIDATED CopPERSTATE LINES, GAR-

RETT FreiGut Lines, INC., NAVAJO FREIGHT LINES, INC., N.W.

TRANSPORT Service, INc., RinGSBY Truck Lines, INc., Rio

GRANDE Motor Way, SALT CREEK FREIGHT Ways, TRANSCON

Lines, UNITED BUCKINGHAM FREIGHT LINES And WESTERN

GiutetTt, INC.,

Petitioners,

VS.

CLIPPER EXXPRESS,

Respondent.

-

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioners respectfully pray that a writ of certiorari issue to

review the judgment and opinion of the United States Court of

Appeals for the Ninth Circuit entered in this proceeding on

April 19, 1982.

2

OPINIONS BELOW

The opinion of the Court of Appeals is reported at 674

F.2d 1252 and is reproduced as Appendix A. The District

Court wrote no opinion. Its unreported orders granting peti-

tioners’ motion for summary judgment and denying respond-

ent’s niotion to vacate the judgment are reproduced respectively

as Appendix B and Appendix C. The Court of Appeals’ order

denying Petitioners’ Petition for Rehearing wiih Suggestion for

Rehearing en Banc is reported unofficially at 1982-83 Trade

Cases §] 65,063; it is reproduced as Appendix D.

JURISDICTION

The Court of Appeals’ judgment was entered on April 19,

1982. A timely Petition for Rehearing with Suggestion for

Rehearing en Banc was denied on October 6, 1982. (App. D)

This Petition is filed within 90 days of that date. The Court has

jurisdiction to review the judgment in question by writ of

certiorari under 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY PROVISIONS

INVOLVED

The constitutional provision involved is the First Amend-

ment to the Constitution of the United States. The statutes

involved are 49 U.S.C. §§ 1005-06, recodified as §§ 10761(a)},

10762(a)(1) and 10708(a)(1). They are set out verbatim in

Appendix E.

STATEMENT OF THE CASE

A. Nature of the Case.

This is a private antitrust action brought under Section 4 of

the Clayton Act, 15 U.S.C. § 15, by respondent Clipper

Exxpress (“Clipper”). (C.T. 2) Clipper is a freight forwarder

doing business as a common carrier regulated by the Interstate

3

Commerce Commission (“ICC”) under the Interstate Com-

merce Act. Petitioners are Rocky Mountain Motor Tariff

Bureau (“RMMTB”), an ICC-approved trucking rate bureau,

and carrier members, some of whom compete with Clipper.

Clipper’s antitrust claim is based upon RMMTB’s protest

of an experimental tariff series Clipper filed with the ICC. The

protest was unsuccessful, and Clipper’s rates went into effect as

scheduled. Nevertheless, Clipper claims $90 million in dam-

ages (after trebling).

B. The Undisputed Facts.

The following facts were undisputed for purposes of the

summary judgment motion. Almost all are based on Clipper’s

own admissions.

Interstate truckers (like the carrier defendants) and freight

forwarders (like Clipper) may only charge rates that have been

filed with and allowed by the ICC. (49 U.S.C. §§ 10761-62,

10708) Prior to 1970, the rate structure approved by the ICC

for both truckers and freight forwarders generally specified

different rates for different classes of commodities.

In 1970 Clipper decided to break from this rate structure

and to charge a single rate for freight of all kinds, an “FAK”

rate. Clipper wanted to set this rate at $842 per 30,000 pound

shipment. However, Clipper knew that the ICC considered

FAK rates to be suspect because they are potentially dis-

criminatory and injurious to shippers of low-grade com-

modities.? Clipper also knew that if it published an FAK rate

2 All-freight rates which apply on shipments of a single high-grade

commodity necessarily ignore sound classification and commodity rate

principles upon which the existing rate structures of the motor and rail

carriers are constructed, If not restricted, such rates could break down

these rate structures to the detriment of both the carriers and the

public.

Merchandise To and From Chicago, 66 M.C.C, 287, 293 (1956). See also

TOFC Rates and Charges, Official Territory, 337 1CC 557, 566 (1970),

This Court has held that FAK rates are not unlawful per se, but may be

unlawful depending on their effects. A// States Freight v. New York, N.H. &

N.R. Co., 379 U.S. 343 (1964),

4

as low as $842, “it would have been a guarantee—it would

have been an absolute certainty it would have been suspended”

by the ICC pending an investigation of its lawfulness, (Stelzer

Deposition, p. 101) Clipper therefore decided not to ask the

ICC for an FAK rate of $842 at the outset, but rather to move

to that rate gradually, in pieces and over time. Thus, when

Clipper filed its initial tariff (“Tariff 55"), in November 1970, it

sought an FAK rate of $1,056 in a limited geographic area.®

Clipper labeled Tariff 55 “experimental” right on its face, but

Clipper did not disclose its intention ultimately to seek an $842

FAK rate for a broad geographic area.

Because Clipper’s self-labelled “experimental” FAK Tariff

55 was a radical departure from the commodity rate system,

RMMTB protested, requesting the ICC to investigate and

disapprove Tariff 55 if it was unlawful.4 The ICC’s Board of

Suspension found that there was “reason to institute an in-

vestigation to determine whether [ Tariff 55] was... unjust and

unreasonable” (C.T. 98-99, 133), but the ICC did not suspend

the $1,056 rate, and its investigation did not prevent Clipper

from operating under that rate immediately.

The ICC investigation was an adversary proceeding in

which RMMTB and Clipper advocated their conflicting posi-

tions. The investigation lasted six months. On June 29, 1971,

the ICC hearing officer approved the $1,056 FAK rate as a

“lawful innovation and experiment.” (C.T. 49) RMMTB ap-

pealed, but the decision was sustained by a Review Board on

9 The tariff, designated as Freight Forwarders Tariff Bureau Tariff 55,

applied to all transcontinental freight forwarders, but it was proposed and

primarily defended before the ICC by Clipper alone.

4 Prior to Clipper’s experimental Tariff 55, defendants had not protested

any freight forwarder tariff for three years. And, in the five years before that,

defendants had protested only four of the 1,885 freight forwarder tariffs

which sought reduced rates. (C.T. 605-06, 2138; Chambers Deposition, p.

100)

5

August 14, 1972, by Division 2 on May 31, 1973 and by the

Commission itself on June 11, 1973.5

The ICC's investigation and the subsequent appeals did

not prevent Clipper from pursuing its piecemeal filing strategy.

Commencing February 16, 1971, it filed seven progressively

lower and geographically broader rates under Tariff 55. The

seventh and last of these new rates was filed September 16,

1972. It contained the $842 FAK rate Clipper ultimately had in

mind. To prevent its protest of the $1,056 FAK rate from

becoming moot, RMMTB protested each of Clipper’s new FAK

rates.6 But Clipper’s filing strategy worked exactly as it had

planned. Although the ICC investigated some of the rates, it

did not suspend any of them, and they all went into effect right

on schedule.’

C. Proceedings Below.

Despite the unqualified success of its ICC strategy Clipper

was not satisfied. On May 12, 1972, it filed this action, claiming

that RMMTB’s protest of Tariff 55 was a sham, that RMMTB

defrauded the ICC and that defendants unlawfully conspired to

fix their own transcontinental rates. Clipper claimed $90

million (after trebling) on the hypothesis that but for

5In 1977 Clipper filed an amended complaint alleging for the first time

that during the ICC investigation RMMTB made misrepresentations to the

ICC about carrier costs and about the law applicable to Tariff 55. (C.T. 778)

However, Clipper admitted that the alleged misrepresentations about costs

were made only after the ICC already had initiated its investigation, (Docket

No, 509, Ex, D; C.T, 2123-28; Chambers Deposition, p. 321 and Exhibit 11)

Clipper also admitted that it could and did respond to the alleged mis-

representations, that the ICC had its own independent information about

carrier costs and, of course, the law, and that the entire investigation lasted

less than six months, (Stelzer Deposition, pp. 51-55; Chambers Deposition,

pp. 365, 373-74; R.T. Vol. 3, pp. 151-52; Docket No, 509, Ex. D) Thus, no

representation by RMMTB caused the ICC's investigation, or affected its

outcome, or prevented Clipper from operating under the rates it had filed.

®RMMTB did not protest other freight forwarder tariffs filed on behalf

of Clipper during this period.

’ The Court of Appeals’ description of this process contains two signifi-

cant errors. First, the ICC investigation lasted six months, not two years.

(App. A, p. A-3) Second, Clipper’s $842 rate was not filed at “the conclusion

of [the] administrative process.” (App. A, p. A-4) It was filed on September

16, 1972, eight months before the conclusion of the process. Thus, the process

was brief and its pendency did not deter Clipper from filing and operating

under any tariff it chose to file.

6

RMMTB’s protest the ICC would not have investigated the

$1,056 FAK rate, that Clipper would then have filed the $842

rate two years sooner than it did, that the ICC would not have

investigated the $842 rate either and that the $842 rate would

have increased its net profits by $30 million—more than 400

percent. (Docket No. 509, Exhibit B and Exhibit C, Answer to

Interrogatory No. 34)

In June 1978, after six years and completion of discovery,

defendants moved for summary judgment on the basis of

Clipper’s admissions and the undisputed facts.® The District

Court found there was no dispute as to any material fact, that

defendants’ protest of Tariff 55 was protected by the First

Amendment under the Noerr-Pennington doctrine and that

Clipper’s injury claim was speculative and barred as a matter of

law by Keogh v. Chicago & N.W. Ry., 260 U.S. 156 (1922).

Accordingly, the motion was granted and judgment was en-

tered for defendants. (C.T. 2089-91) Clipper’s motion to

vacate the judgment and for reconsideration was denied. (C.T.

2233-34)

The Court of Appeals reversed. It held that:

1. The District Court erred in holding that RMMTB's

protest of Tariff 55 was protected by the First Amendment.

Instead, according to the Court of Appeals, a single adminis-

trative protest of an admittedly experimental tariff may be

“baseless” and within the “sham” exception to the Noerr-

Pennington doctrine, although there is no objective evidence of

baselessness except the protest’s lack >f success and no evidence

that the protest barred anyone's access to the administrative

process. (App. A, pp. A-12-A-28)

2. The District Court erred in not letting Clipper go to trial

on its claim of RMMTB’s alleged misrepresentations to the

® In addition, for purposes of the motion only, defendants admitted (1)

the existence of an alleged conspiracy to fix defendants’ own transcontinental

rates ( because any such conspiracy was expressly exempted from the antitrust

laws by 49 U.S.C. § 5b, recodified as 49 U.S.C. §10706, and, in any event,

would not strip the protest of its immunity), and (2) that defendants’ purpose

in protesting Tariff 55 was to prevent and eliminate rate competition ( because

Noerr and Pennington both hold that efforts to influence public officials

cannot violate the antitrust laws no matter how anticompetitive their pur-

pose). (C.T. 1830, Docket No. 508, pp. 5, 31)

7

ICC. Instead, under the Court of Appeals’ interpretation of

Walker Process Equipment, Inc. v. Food Machinery & Chemical

Corp., 382 U.S. 172 (1965), an antitrust plaintiff can get to trial

by claiming that misrepresentations were made in a legislative-

type ICC investigation, even though the plaintiff had full access

to the ICC to refute the alleged representations, the ICC was

not deceived by them and there was no evidence that the

representations in any way corrupted the ICC's investigation.

(App. A, pp. A-28-A-34)

3. The District Court erred in holding that Clipper’s

speculative injury claim was legally insufficient. Instead, ac-

cording to the Court of Appeals, this Court’s decision in Keogh

v. Chicago & N.W. Ry., 260 U.S. 156 (1922), allows a claim of

antitrust injury to be based upon speculation that (1) a

particular low experimental rate would have been filed two

years sooner than it was filed, (2) the ICC would not have

investigated the rate if it liad been filed two years sooner than it

was filed, and (3) the lower rate would have caused plaintiff's

net profits to be $30 million higher than they actually were.

(App. A, pp. A-39-A-42)

REASONS FOR GRANTING THE WRIT

i. Summary of Reasons for Granting the Writ

Defining the elements and proper scope of the “sham”

exception to the Noerr-Pennington doctrine is an important and

recurring antitrust problem that has divided the lower courts for

the decade since this Court last addressed it. This case poses

the problem in its clearest form, as a pure question of law. The

Court of Appeals’ holding that a single protest may be a

“sham” although there is no objective evidence of baselessness

except lack of success, and although the protest does not bar

access to the administrative process, conflicts with the Noerr-

Pennington doctrine as it has been defined by this Court and

applied by other courts of appeals. The effect of the Court of

Appeals’ decision is to make the “sham” exception to Noerr-

Pennington immunity so broad that it swallows up the immu-

nity itself. This threat to the First Amendment right of petition

makes the need for this Court to grant the writ all the more

compelling.

The Court of Appeals’ holding that an antitrust plaintiff

can get to trial by claiming that misrepresentations were made

to an agency in a legislative-type proceeding, even if plaintiff

could and did respond to the alleged representations, and even

if the agency was not deceived by them, is contrary to the

Court’s decisions in Walker Process Equipment, Inc. v. Food

Machinery & Chemical Corp., 382 U.S. 172 (1965) and Califor-

nia Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508

(1972), and to the cases applying those decisions. The effect of

the Court of Appeals’ rule will be to chill the vigorous advocacy

which is encouraged in forums where opposing parties are able

to debate and to contradict one another. This problem is also

one of continuing importance in the administration of the

antitrust laws. The Court has not squarely addressed it for

seventeen years.

The Court of Appeals’ holding that the fact of injury in an

antitrust case can rest upon speculation that an administrative

agency would not even have investigated an experimental tariff

for which its permission was required but not sought conflicts

with this Court’s decisions in Keogh v. Chicago & N.W. Ry., 260

U.S. 156 (1922), Story Parchment Co. v. Paterson Parchment

Paper Co., 282 U.S. 555 (1931) and Arkansas Louisiana Gas

Co. v. Hall, 453 U.S. 571 (1981), and with decisions of other

courts of appeals which hold that the trier of fact may not

speculate about the fact of injury in antitrust cases. This, too, is

a question of major importance to future antitrust litigation.

Il. The Court of Appeals’ Decision on the Sham Exception

Conflicts with Decisions of This Court and Several Courts

of Appeals and with the First Amendment Itself.

This Court held in Noerr, Pennington and Trucking Unlim-

ited, that concerted efforts to influence governmental action

(whether legislative, executive, judicial or administrative) are

exercises of the right to petition that are absolutely immunized

9

from antitrust liability by the First Amendment. The Court

allowed for a narrow exception to this immunity where os-

tensible petitioning activity involves no real effort to influence a

public official but rather is a “sham” to cover direct interference

with a competitor. Noerr, 365 U.S. at 144.

Although the intersection between the First Amendment

and the antitrust laws (the “charter of economic liberty”) is a

recurring problem of obvious importance, this Court has ad-

dressed it directly only once. In Trucking Unlimited the Court

found the “sham” exception satisfied by allegations of three

elements: a “pattern of [1] baseless, [2] repetitive claims”

which produced an “illegal result, viz., [3] effectively barring

respondents from access to the agencies and courts.” 404 U.S.

at 513. This Court has not explicitly considered whether the

“sham” exception might apply in the absence of one or more of

these elements, but it has ~endered decisions that make matters

uncertain, '°

® For example, in Noerr the findings of fact established that in the course

of seeking legislation the defendant railroads had conducted a malicious and

fraudulent publicity campaign for the sole purpose of destroying truckers as

competitors. The railroads’ purpose was to injure the truckers in every way

possible even though no legislation was secured, and the railroads actually did

inflict direct injury on the truckers. 365 U.S. at 133, 138, 142-43. Never-

theless, this Court unanimously held that the legality of the railroads’

campaign “was not at all affected by any anticompetitive purpose it may have

had,” that the fraud “was, so far as the Sherman Act is concerned, legally

irrelevant” and that the direct injury which the railroads knowingly inflicted

on the truckers was also immune as an inevitable effect of any campaign. 365

U.S. at 140, 142-44,

[n Otter Tail Power Co. v. United States, 410 U.S. 366 (1973), the

Court seemingly held that the access-barring element was not required where

the defendant was charged, not with preventing plaintiff from access to a

court or agency, but rather with forcing plaintiff into litigation, the pendency

of which blocked it from getting financing, and where the other two

elements—multiple and baseless lawsuits—were present. In Vendo Co. v.

Lektro-Vend Corp., 433 U.S. 623 (1977), four dissenting Justices stated that

the “sham” exception might apply to a single baseless lawsuit. Two

concurring Justices squarely disagreed, while the three-Justice plurality stated

that “repetitive, sham litigation... may constitute an antitrust violation,” 433

U.S. at 635 n.6 (emphasis added), but otherwise took no position on the

question. The Court of Appeals in this case says that in Vendo this Court was

“given the opportunity” to decide whether the “sham” exception can apply to

a single suit but “avoided the question.” (App. A, p. A-21 0.24)

10

The uncertain state of the law in this Court is reflected in

the lower courts and in the commentaries.‘’ The lower courts

are divided, for example, with respect to the elements of

repetitive action’? and access-barring.'2 (An outline of

irreconcilable decisions on all aspects of the “sham” exception

is set forth in Appendix F.) The Ninth Circuit itself is in a state

of total confusion about the “sham” exception. After the

decision in this case, another panel of that court declared:

In this circuit, the sham exception was initially construed

quite narrowly... but has recently been given broader

application.... As we conceded recently, “There is no

precise definition to the sham exception.”... We there-

fore decline to utilize the sham-exception analysis here in

our examination of the interests upholding Noerr-

Pennington.

11 Commentators: R. Bork, THE ANTITRUST ParnaDox 349 (1978) (“The

Supreme Court’s opinions in these cases by no means completely clarify the

law and its criteria”); E. Kintner, | Feperat ANTiTRUST Law § 5.12, at 273

(1980) (“[ T]he standard enunciated in California Transport... is a difficult

standard to define”); Fischel, Antitrust Liability for Attempts to Influence

Government Action: The Basis and Limits of the Noerr-Pennington Doctrine,

45 U. Cui L. Rev. 80, 86 (1977) (“[T]he Supreme Court's failure... to

indicate the limits of the antitrust exemption for attempts to influence

governmental action has understandably confused the lower courts”).

Lower courts: See, e.g., Metro Cable Co. v. CATV of Rockford, Inc., 516

F.2d 220, 225 n.6 ( 7th Cir. 1975) (“Commentators and courts have disagreed

about the implications of [ Trucking Unlimited|”); Ross v. Bremer, 1982-2

Trade Cases 9 64,746, at 71,618 (W.D. Wash. March 16, 1982) (“No

satisfactory definitiun of the sham exception to Noerr-Pennington immunity

exists”); United States vy. American Telephone & Telegraph Co., 524 F. Supp.

1336, 1362 (D.D.C. 1981) (“[I]m various cases the courts have come to

conclusions that are not always easy to reconcile”); City of Gainsville v.

Florida Power & Light Co., 488 F. Supp. 1258, 1264-65 (S.D. Fla. 1980)

(“Lower courts have variously interpreted the sham exception”).

12 The full extent of the division is shown in Appendix F. For example,

compare Taylor Drug Stores, Inc. v. Associated Dry Goous Corp., 560 F.2d 211

(6th Cir. 1977) (requiring multiple actions), with Feminist Women’s Health

Center v. Mohammed, 586 F.2d 530, 543 n.6 (Sth Cir. 1978) (holding one

action sufficient), cert. denied, 444 U.S. 924 (1979).

13 This division is also shown in Appendix F. For example compare

Miracle Mile Associates v. City of Rochester, 617 F.24 18, 21 (2d Cir. 1980)

(requiring full access barring), with Hydro-Tech Corp. v. Sundstrand Corp.,

673 F.2d 1171 (10th Cir. 1982) (requiring interference with the legal

process ).

In re Airport Car Rental Antitrust Litigation, 1982-83 Trade

Cases J 65,039 at 70,792 n.3 (9th Cir. 1982) (citations

omitted ).

The conflicting decisions and uncertainty make narties’

rights and duties vary by geographic accident and breed more

litigation over the proper scope of the “sham” exception to

Noerr-Pennington.

Despite this uncertainty, before the Ninth Circuit’s decision

here, no court had even suggested that the “sham” exception

could be applied where none of the three Trucking Unlimited

elements was present. That, however, is the effective result of

the Court of Appeals’ decision in this case. Under the “sham”

exception fashioned by the court below, no “pattern of repeti-

tive claims” is needed; one is enough. (App. A, pp. A-19-A-

23) Nor is it necessary that the single protest or lawsuit be truly

“haseless”; lack of success is enough obiective evidence to get

the plaintiff to trial—even if the protest is directed against a rate

that is admittedly “experimental.” (App. A, p. A-23)'4 Finally,

there is no need to show access barring. (App. A, pp. A-23-A-

28)

The Court of Appeals’ expansive decision is a major

departure from the “sham” exception that this Court defined

narrowly to protect the First Amendment right to petition.

Obviously the decision cannot be reconciled with Trucking

Unlimited. Nor can it be reconciled with Noerr, where this

Court held that even a malicious and fraudulent publicity

campaign intended solely to injure a competitor, and which

does directly injure him, is protected by the First Amendment

from antitrust attack. (p.9, n.9, above)

The Court of Appeals’ decision also conflicts with decisions

from other circuits with respect to all three of the Trucking

Unlimited elements. First, as the court below notes, there is a

4 The Court of Appeals itself seems uncertain about this aspect of its

decision. At one point it says that lack of success alone is sufficient proof of

baselessness to prevent summary judgment. (App. A, p. A-23) At another

point it says that lack of success is sufficient when combined with evidence

that the protest was not filed with any intent to influence the ICC. ( App. A, p.

A-18)

12

clear split among the Circuits (as in this Court) regarding its

conclusion that the “sham” exception can apply to a single

protest or lawsuit. (App. A, p. A-21, n.24) See App. F, pp. F-

52-F-55.

Second, contrary to the decision below, the courts in other

Circuits have refused to treat lack of success as sufficient

objective evidence of “baselessness.” (App.F, pp. F-55-F-59)

Indeed, some decisions have held that even lack of probable

cause cannot properly be treated as a basis for applying the

“sham” exception. '5

Third, again contrary to the decision below, the Second,

Seventh, Eighth, Tenth and District of Columbia Circuits all

have held that the “sham” exception applies only where the

defendants have barred the plaintiff's access to the adminis-

trative or judicial process.'6 Even in Circuits where true access

barring is not required, the courts have explicitly required some

other evidence of interference with the judicial or adminis-

trative process for the “sham” exception to apply.'7

Taken separately, the components of the Court of Appeals’

redefinition are questionable and unwise. Taken together, their

practical effect is to vitiate Noerr-Pennington and to chill the

exercise of First Amendment rights over a broad range of

petitioning activity before a myriad of local, state and federal

courts, agencies and boards. In particular, the Court of

Appeals’ holding that lack of success may be sufficient objective

evidence to suppori a finding that a protest or other use of legal

process was “baseless” must surely chill the exercise of those

1S Hydro-Tech Corp. v. Sundsirand Corp., 673 F.2d 1171, 1176 ( 10th Cir.

1982) (“ ‘sham’ is something more than a mere ‘absence of probable

cause’”’); United States vy. American Telephone & Telegraph Co., 524 F. Supp.

1336, 1363-64 (D.D.C.1981). See also Alexander v. National Farmers

Organization, 687 F.2d 1173, 1200 (8th Cir. 1982) (existence of “genuine

disputes” precludes finding of baselessness ).

16 See, 2.g., Miracle Mile Associates v. City of Rochester, 617 F.2d 18, 21

(2d Cir. 1980) (“‘*[A]ccess barring is the cornerstone to the sham ex-

ception.’ ”); City of Mishawaka v. American Electric Power Co., 616 F.2d 976,

982 (7th Cir. 1980), cert. denied, 449 U.S. 1096 (1981); Mark Aero, Inc. v.

Trans World Airlines, Inc., 580 F.2d 288, 297 ( 8th Cir. 1978). See also other

cases cited in Appendix F, pp. F-59-F-63.

17 Hydro-Tech Corp. v. Sundstrand Corp., 673 F.2d 1171, 1176 ( 10th Cir.

1982). See Mid-Texas Communications Systems, Inc. vy. American Telephone

& Telegraph Co., 615 F.2d 1372, 1384 n.10 (Sth Cir. 1980), cert. denied, 449

U.S. 912 (1981).

13

rights.'® The chilling effect is increased exponentially by the

Court of Appeals’ further holdings that just one unsuccessful

action may invoke the “sham” exception and that it need not

bar access to the process.

The most obvious effect of the decision below will be to

deter the assertion of any novel or unusual legal theory. But the

effect will be much broader than that. The decision will also

deter the pursuit of even routine administrative and judicial

action. For example, the ICC and most state administrative

agencies have extremely broad discretion in determining

whether a rate is acceptable.'9 Thus, inherent in every rate

protest is a substantial risk that it will be unsuccessful. If the

result of making an unsuccessful protest is what the Court of

Appeals holds in this case, protest will be inhibited and state

and federal agencies will be deprived of information they need

to make informed decisions.2°

18 It is clear that “baselessness” must be determined by an objective

standard, and that lack of success is not sufficient. P. Areeda, ANTITRUST LAW

19 203.1c, 203.le (Supp. 1982). 'ndeed, lack of success alone should not

even be relevant to the question. As Professor Areeda puts it:

The mere fact that the antitrust defendant was unsuccessful in the other

forum does not mean that it was unreasonable of him to pursue his

interest there. Many altogether reasonable claims or defenses are lost.

While victory presumptively demonstrates reasonableness, defeat leaves

that issue altogether open.

Id. 9 203.1e at 7.

19 See Aberdeen & Rockfish R.Co. v. SCRAP, 409 U.S. 1207, 1208

(1972) (The Commission has “broad discretion in the exercise of its power of

suspension. ..."); Akron, Canton & Youngstown R.Co. v. United States, 586

F.2d 29, 32 (7th Cir. 1978) (“*The Commission’s broad discretion in the rate-

making process applies to the separate elements of that process. ...").

20 in 1981 alone there were 654,069 tariff applications filed with the ICC

by carriers subject to its regulation. ICC 1981 ANNUAL Report, Appendix B,

Table 7, at p. 105. Obviously, the ICC needs all the help it can get from

interested parties.

In our system of representative government, participation in govern-

mental decision-making by persons affected by it is an affirmative good.

This is particularly true in the case of administrative agencies. . . .

Asimow, Public Participation in the Adoption of Interpretive Rules and Policy

Statements, 75 Micu L. Rev. 521, 574 (1977). Accord, Fischel, Antitrust

Liability for Attempts to Influence Government Action: The Basis and Limits

of the Noerr-Pennington Doctrine, 45 U. Cui. L. Rev. 80, 118 (1977);

Stewart, Regulation, Innovation and Administrative Law: A Conceptual

Framework, 69 Cauir. L. Rev. 1256, 1274 (1981); Bakke, Joint Efforts in

Developing Standards, 44 Antitrust L. J. 337, 342 (1975); K. Davis,

ADMINISTRATIVE LAW Text § 6.03 (3d ed. 1972); K. Davis, ADMINISTRATIVE

Law Treatise § 7:6 (2d ed. 1979).

14

In sum, the Court should grant the writ to resolve conflict-

ing decisions and to restore the proper balance between the

antitrust laws and the First Amendment.

Ill. The Court of Appeals’ Decision on the “Walker Process

Doctrine” Conflicts with Decisions of This Court and

Threatens the Exercise of First Amendment Rights.

The Court of Appeals’ decision on the “ Walker Process

doctrine” is bad antitrust law, bad fraud law and bad for the

exercise of First Amendment rights.

Contrary to what the court below says, this Court’s decision

in Walker Process Equipment, Inc. v. Food Machinery &

Chemical Corp., 382 U.S. 172 (1965), does not provide “‘anti-

trust liability for the commission of fraud on administrative

agencies, for predatory ends.” (App. A, p. A-29) Walker

Process was an action to enforce a patent. The defendant

counterclaimed under Section 2 of the Sherman Act, alleging

that the patent had been obtained by plaintiffs fraudulent

representations to the Patent Office. This Court held that if the

patent was obtained by fraud, it would lose its antitrust

exemption, and plaintiff's market position would be subject to

regular antitrust analysis. 382 U.S. at 177. Under Walker

Process it is not the fraud on the Patent Office that creates

antitrust liability; rather, it is the enforcement of the unpro-

tected monopoly.

This Court has never considered whether an allegation of

fraud on an administrative agency by itself will support an

antitrust claim. If and to the extent it will, there are good

reasons for confining the doctrine to the unique patent setting

involved in Walker Process. First, the patent application

process is ex parte, even secret, 35 U.S.C. § 122; there is no

adversary process and no independent source of information to

help the agency learn the truth. This lack of safeguards makes

a patent proceeding vulnerable to fraud in a way that most

other agency proceedings are not. See P. Areeda, ANTITRUST

Law 97 204.lc at 29, 204.1d at 31 (Supp. 1982). Second,

unless specific statutory criteria are satisfied, the Patent Office

15

has no power to issue a patent. (35 U.S.C. § 102) Thus, the

effect of fraud on the Patent Office decision is certain. Other

agencies, like the ICC here, have wide discretion in determining

whether to grant a request; predicting what the agency would

have done “but for” the fraud is entirely speculative. See P.

Areeda, ANTITRUST Law § 204.1d at 30 (Supp. 1982). Third,

the issuance of a patent automatically confers a complete

monopoly. This immediate and obvious threat to competition

is not present in most orders of other agencies.2' In sum, in the

patent setting the need for protection against fraud is great and

the danger to competition is clear. This is not true of other

agencies such as the ICC.

Moreover, even if the ‘“ Walker Process doctrine” applied

outside the patent context, the Court of Appeals’ version of it in

this case bears no resemblance to Walker Process. In Walker

Process the fraud served only to remove the antitrust immunity

it had procured so that traditional antitrust principles could be

applied. Here, the alleged fraud is held to be “rhe basis for

antitrust liability, if the requisite predatory intent is present and

the other elements of an antitrust claim are proven.” (App. A,

p. A-30; emphasis added ) That holding makes no sense. If the

other elements of an antitrust claim are proven, making fraud

“the basis” of the claim is pointless. It is also wrongheaded, for

it diverts attention from antitrust analysis and focuses it instead

on an inflammatory issue having no antitrust or economic

significance. That is bad antitrust law.

The Court of Appeals’ decision is even bad fraud law, for it

is a doctrine of fraud under which no one need be defrauded.

Assuming RMMTB submitted false information to the ICC, it is

undisputed that neither Clipper nor the ICC was deceived.

Clipper responded with information and arguments of its own,

and the ICC ruled against RMMTB. The Court of Appeals’

only response to this fact is to say that Walker Process does not

“require that the body on whom the fraudulent misstatements

are pressed ultimately believe those statements.” (App. A,

21 This case, of course, does not involve any effect on competition.

RM'MTB’s alleged fraud did not cause the ICC to issue any order or to do

anything at all.

16

pp. A-32-A-33) That misses the whole point of Walker Process.

If the Patent Office had known the truth it would not have

issued the patent.22 There would have been no case and no

‘Walker Process doctrine.” The same should be true here. See

P. Areeda, ANTITRUST Law § 204.1d (Supp. 1982).

Additionally, the Court of Appeals’ ‘Walker Process doc-

trine”’ presents a clear threat to the legitimate exercise of First

Amendment rights protected by the Noerr-Pennington doctrine.

The court below refuses to acknowledge this, asserting that

fraud in administrative or court proceedings is not protected by

the First Amendment. (App. A, p. A-31) That is a truism;

however, it does not come to grips with the problem and it

ignores the teaching of Trucking Unlimited. First, it conflicts

with the express statement in Trucking Unlimited that Noerr-

Pennington immunity applies to claims of misrepresentation in

legislative proceedings, and that a claim based on alleged

misrepresentations couid lie only if the proceeding were

adjudicatory. The alleged misrepresentations here were in a

rate making proceeding—a process that this Court has repeat-

edly described as legislative rather than adjudicatory. Arizona

Grocery Co. v. Atchison, T. & S.F. Ry., 284 U.S. 370, 386-89

(1932); Great Northern Ry. v. Merchants Elevator Co., 259 U.S.

285, 291 (1922). Thus, the “fraud” theory fails even the

threshold test.

Second, Trucking Unlimited makes clear that First Amend-

ment values may not be jeopardized by allowing antitrust

claims based on simple allegations of fraud. As the Court

observed, opponents in litigation frequently charge each other

with fraud. For this reason, the Court held that there must also

be an “illegal result.” 404 U.S. at 513. The Court of Appeals’

only answer to this point is to say that Trucking Unlimited did

not involve “claims arising from the furnishing of fraudulent

22 Indeed, it could not have issued the patent because the fraud con-

cerned the extent of prior use of the invention, a statutory condition as to

which the Patent Office has no discretion. 35 U.S.C. § 102(b).. Here, of

course, the ICC had discretion to investigate, suspend and disapprove

Clipper’s experimental tariff regardless of the truth or falsity of any repre-

sentations by RMMTB. (p. 13 above)

17

information for predatory purposes.” ( App. A, p. A-34) That is

no answer at all. A false representation that is not believed and

has no effect is not even a common tort. Alberta Gas Chemicals,

Lid. v. Celanese Corp., 650 &.2d 9 (2d Cir. 1981), cert. denied,

51 U.S.L.W. 3456 ( Dec. 13, 1982) (specifically so holding with

respect to fraud on an administrative agency). To make it

sufficient evidence to support an antitrust violation, as the Court

of Appeals has done in this case, is indefensible.

If such charges can be prosecuted as antitrust treble

damage claims, with the enormous burden and expense that

such claims entail, the net result will not be simply to eliminate

fraud; it will also choke off the kind of robust debate that is

favored where adversaries are present to contradict each other.

That is why this Court in Trucking Unlimited imposed limita-

tions on the circumstances in which such claims can be prose-

cuted, safeguards eliminated by the court below.

The Court should review and repudiate the “Walker

Process doctrine” created by the Court of Appeals.

IV. The Court of Appeals’ Decision Permits Speculation as to

the Fact of Damage in Treble Damage Cases and There-

fore Conflicts with This Court’s Decisions in Keogh v.

Chicago & N.W. Ry., 260 U.S. 156 (1922), and Arkansas

Louisiana Ges Co. v. Hall, 453 U.S. 571 (1981).

The Court of Appeals’ allowance of Clipper’s damage

claim conflicts with the settled general principle that precludes

speculation on the fact of damage in antitrust cases, and with

the particular application of that principle in Keogh v. Chicago

& N.W. Ry., 260 U.S. 156 (1922). In Keogh, the plaintiff

shipper complained that a group of rail carriers had conspired

to raise and fix freight rates higher than the rates that would

have been charged absent the unlawful conduct. Plaintiff

sought damages based on the extra profits it would have earned

if the lower, non-fixed rates had continued in effect. This Court

held as a matter of law that plaintiff could not recover such

damages under the antitrust laws.

18

Since Keogh, the principle precluding speculation as to the

fact of antitrust damage has become an axiom.23 Mureover, it

has been specifically applied to prevent a damage claim based

on the assumption that the ICC or a similar agency would have

permitted a regulated carrier to charge rates different from

those on file.24 Indeed, this application of the principle was

reaffirmed only a year ago in Arkansas Louisiana Gas Co. v.

Hall, 453 U.S. 571 (1981). The Louisiana Supreme Court had

held that natural gas producers were entitled to recover dam-

ages from their customers for breach of contract, measured by

the difference between the rates actually filed with the Federal

Power Commission and the rates that would have applied but

for the breach of contract. This Court reversed, and said:

No matter how the ruling of the Louisiana Supreme Court

may be characterized, [petitioners] argue, it amounts to

nothing less than the award of a retroactive rate increase

based on speculation about what the Commission might

have done had it been faced with the facts of this case.

This, they contend, is precisely what the filed rate doctrine

forbids. We agree. It would undermine the congressional

scheme of uniform rate regulation to allow a state court to

award as damages a rate never filed with the Commission

and thus never found to be reasonable within the meaning

of the Act.

453 US. at 578-79.

23 See Story Parchment Co. v. Paterson Parchment Paper Co., 282 US.

555, 562 (1931); Shumate & Co. v. National Ass'n of Sec. Dealers, Inc., 509

F.2d 147, 152 (Sth Cir. 1975) (“[CJourts do not permit the fact of damage

necessary to prove liability to be based on speculation”), cert. denied, 423

U.S. 868 (1975); Ford Motor Co. v. Webster's Auto Sales, Inc., 361 F.2d 874

(ist Cir. 1966) (fact of damage must be established by a “reasonable

probability there was a substantial causal connection” between plaintiff's

injury and defendant's misconduct).

24 See Georgia v. Pennsylvania R.R., 324 U.S. 439, 453 (1945); Monti-

cello Heights, Inc. v. Morgan Drive Away, Inc., 1974-2 Trade Cases 4 75,282

at 97,862 (S.D.N.Y. Sept. 30, 1974) (damages based on hypothetical rate

determination are “entirely speculative” and cannot be awarded); City of

Newark v. Delmarva Power & Light Co., 467 F. Supp. 763, 770 (D. Del.

1979) (no legal right to pay or receive any price other than that fixed or

accepted by FPC); McLeran v. El Paso Natural Gas Co., 357 F. Supp. 329

(S.D. Tex. 1972), aff'd without op., 491 F.2d 1405 (Sth Cir. 1974).

19

The Court of Appeals’ decision here would destroy the

principle. The Court of Appeals acknowledges that one of the

bases of Keogh was that judicial relief “would require the

[antitrust] court to speculate on the level [at which] the rate

would have been set by the carriers and approved by the ICC

absent the conspiracy, thereby assuming what ICC action

would be.” (App. A, p. A-41) The Court of Appeals also

acknowledges that Clipper’s primary damage claim is that

petitioners’ protest prevented it from filing the $842 rate for two

years. Thus, it rests on the hypothesis that if Clipper had filed

the $842 rate two years earlier than it did, the ICC would have

approved it. (App. A, p. A-39, A-41) And the Court of

Appeals agrees that “there is no certainty the rate would have

been approved.” (App.A, p. A-42) Nevertheless, it concludes

that Clipper can make the damage claim because “[t]he

speculation involved in the instant case...in no way app-

roaches the degree of speculation disallowed in Keogh.” ( /d. )

The Court of Appeals’ analysis is dead wrong. The degree

of speculation disallowed in Keogh was far less than that

involved in this case. In Keogh the plaintiff wanted to assume

only that a rate which actually had been in effect would have

continued in effect. 260 U.S. at 160. In this case the plaintiff

wants to assume that an experimental rate that had never been

in effect, and that was expected to draw protest, would have

gone into effect without even an investigation two years before

it was actually filed.

More important, this Court held the assumption in Keogh

to be speculative simply because the ICC was empowered to

disapprove the rate. 260 U.S. at 164. Thus, the question does

not turn on a court’s assessment of the degree of speculation

involved. Keogh forbids any speculation about what the ICC

would have done with respect to an unfiled rate.

In sum, the Court of Appeals has opened the door to

damage claims requiring antitrust courts to make hypothetical

rate decisions even the ICC is not empowered to make. See 260

U.S. at 162. Beyond that, the court below has opened the door

to speculation about the fact of damage in antitrust cases

20

generally, where the consequence of miscalculation is trebled.

This Court should review the decision below and close these

doors.

CONCLUSION

A writ of certiorari should issue to review the judgment

and opinion of the Court of Appeals for the Ninth Circuit.

Respectfully submitted,

JOHN R. REESE

J. THOMAS ROSCH

McCuTCHEN, DoYLe, BROWN CATHERINE CURTISS

& ENERSEN Three Embarcadero Cenier

San Francisco, CA 94111

WILLIAM E. KENWORTHY (415) 393-2000

DONALD R. DEVINE

Attorneys for Petitioners

Of Counsel

January 3, 1983