Opposition Brief — Exxon Corp. v. United States

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Supreme Court, U.S,

| FILED

Nos, 85-429, 85-430, 85-432, 85-440 and 95-444 OFC 23 SP

SPANIOL, JR,

GCLERK

IN THE -

Supreme Court of the United States

OCTOBER TERM, 1985

EXXON CORPORATION, et al.,

Petitioners,

UNITED STATES OF AMERICA, et ai.,

Respondents.

On Petitions for a Writ of Certiorari to the

Temporary Emergency Court of Appeals

of the United States

Laden

—

— /

—

— 2

bere:

heeded

BRIEF FOR THE STATE RESPONDENTS

IN OPPOSITION

FRANCIS X. BELLOTTI ANDREW P. MILLER

Attorney General GEORGE KAUFMANN

of Massachusetts STEPHAN G. WIELGOZ

GEORGE B. DEAN DICKSTEIN, SHAPIRO & MORIN

ALAN L. Kovacs 2101 L Street, N.W.

One Ashburton Place— Washington, D.C. 20037

20th Floor (202) 785-9700

Boston, Massachusetts 02108

BERNARD NASH

DAVID FROHN MAYER EDWARD G. MODELL

Attorney General of Oregon BLUM, NASH & RAILSBACK

DONALD C. ARNOLD 1133 Fifteenth Street, N.W.

100 State Office Building Suite 1100

Salem, Oregon 43710 Washington, D.C. 20005

(202) 857-0220

JOHN VAN DE KAMP ; JAMES F. FLUG

Attorney General of California PAULA DINERSTEIN

Yeroryios C. APALLAS LOBEL, NOVINS & LAMONT

6000 State Building 1275 K Street, N.W.

350 McAllister Suite 770

San Francisco, California 94102 Washington, D.C. 20005

(202) 371-6626

December 23, 1985

AT STINT LC CETTE ES | EEL )

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

ewe J

QUESTIONS PRESENTED

1. Did the District Court abuse its discretion under

§ 209 of the Economic Siabilization Act of 1970, as

amended, in formulating a remedy for overcharges mod-

eled on previous restitutionary legislation, where the

spreading of the consequences of the violation to con-

sumers throughout the economy made it impossible to

determine the injuries of individual victims?

2. Do any of the petitioners raise a substantial ques-

tion that the District Court erroneously denied them any

procedural right?

(i)

LIST OF JURISDICTIONS JOINING IN THIS BRIEF

We accept the listing of parties below as set forth in

the respective petitions; however, we here specifically

list the jurisdictions which join in this brief.

Alabama Nevada

Arkansas New Hampshire

California New Jersey

Colorado New Mexico

Connecticut New York

Delaware North Carolina

District of Columbia

North Dakota

Georgia Ohio

Guam Oregon

Hawaii Pennsylvania

Idaho Puerto Rico

Illinois Rhode Island

Indiana South Carolina

Iowa South Dakota '

Kansas Tennessee

Louisiana Texas

Maine Utah

Maryland Vermont

Massachusetts Virgin Islands

Michigan Virginia

Minnesota West Virginia

Mississippi Wisconsin

Montana Wyoming

Nebraska

1 South Dakota joins in the brief as amicus curiae pursuant to

Rule 36.4 of this Court.

TABLE OF CONTENTS

Page

ou ge 8 Be 8! he | | ae i

LIST OF JURISDICTIONS JOINING IN THIS

ie ARIST ES ete ees ie ii

COUNTERSTATEMENT OF THE CASE 1

i eee eens F POUraM ................................. 3

B. The Proceedings Below FI Re es 5

i. Tae District Court ................. etngre tae 5

2. The Court of Appeals .................... cee 9

REASONS FOR DENYING THE PETITIONS _____. 12

I. TECA’S AFFIRMANCE OF THE DISTRICT

COURT’S EXERCISE OF ITS EQUITABLE

DISCRETION RAISES NO ISSUE WAR-

RANTING FURTHER REVIEW BY THIS

SEDC OSE ELAS i 14

A. Because Section 209 of the ESA Vested the

District Court with Broad Equitable Powers,

the Scope of “Appellate Review is Corre-

I ace wc cabins 14

B. The Remedy Chosen by the District Court

Was Well-Grounded in Fact and Law... 15

1. The Record and Regulatory Scheme Made

It Clear That It Was Impossible to Trace

the Impact of Exxon’s Overcharges to In-

I i oepecvtceerandacokneovance 15

2. The Restitutionary Remedy Selected ‘oe

the District Court Was Equitable, Fair

LEE eee ee 18

3. TECA’s Decision Is Entirely Consistent

With This Court’s Decisions 22

II. NONE OF THE PETITIONS PRESENTS A

PROCEDURAL ISSUE WARRANTING RE-

SS teal Te Oe ce va 25

Ee ieclenins Ribsaitibaicetdbiab mtnasinigiesaspcceaaascsnintenguh 30

TABLE OF AUTHORITIES

CASES: Page

Adams Resources and Energy, Inc., 9 DOE © 82,553

(+ IRR Meee relapse sb ees, Sa ier er ts no rae oa eS 19

Alfred E. Alkek, 9 DOE { 82,521 (1982) _.............. 19

Cities Service Co. v. FEA, 529 F.2d 1016 (Em

App. 1975), cert. denied, 426 U.S. 947 (1976)... 5,7

Citronelle-Mobile Gathering, Inc. Vv. Edwards, 669

F.2d 717 (Em. App.), cert. denied, 459 U.S. 877

| BE rere ee each Sax dt aero) ae one OES 14, 22, 25

Department of Energy Stripper Well Exemption

Litigation, M.D.L. No. 378 (D. Kan.) —.......-....... 16

Federal Power Commission v. Interstate Natural

Gas Ce, 26 GUS. GFF 1 i0ee) ............................. 24

Hanover Shoe, Inc. v. United Shoe Machinery

ee Dp BP | cer eran 27

Hecht Co. v. Bowles, 321 U.S. 321 (1944) ............ 20

Hodgson v. United Mine Workers, 153 U.S. App.

Be. Ge, Ge We Ee CRD eevee... 29

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) . 27

Lemon v. Kurtzman, 411 U.S. 192 (1973) -........... 15

Mitchell y. DeMario Jewelry, Inc., 361 U.S. 288

(1960) _.... ee Re ARM Dak Seca ent RES Oe oN 14, 15, 20

NAACP v. New York, 413 U.S. 345 (1973) ............. 29

Peilegrino v. Nesbit, 203 F.2d 463 (9th Cir. 1953) .. 29

Porter v. Warner Holding Co., 328 U.S. 395

PIII. « soncrieclodceiicaaeuaianeeeatedicinegetiababinidamasiegs 14, 15, 20, 22-23

Sauder v. DOE, 648 F.2d 1341 (Em. App. 1981)... 14, 22

Smuck v. Hobson, 132 U.S. App. D.C. 372, 408

TUE BNI cccaissaucsimendaecadsasaibliaesoecpaniiecscinkoies 29

Textile Workers v. Lincoln Miils. 353 U.S. 448

| prea a eS SEV SAME ARON ae PLE: el Seanad URL Te ED 22

Tully v. Mobil Oil Corp., 455 U.S. 245 (1982) ..... 12

Tumey V. Ohio, 273 U.S. 510 (1927) -...00000022.. 18

Union Oil Co. v. DOE, 688 F.2d 797 (Em. App.

1982), cert. denied, 459 U.S. 1202 (1983) .......... 5,7

United Airlines, Inc. v. McDonald, 432 U.S. 385

ER INUPEE « \chsdesatcnietedicn asset taanscoaccad apeailabedadciecbaas 29

United States v. Leib, 333 F. Supp. 424 (W.D. Tex.

1971), aff'd, 462 F.2d 1161 (Em. App. 1972)..... 22

Wolpe v. Poretsky, 70 U.S. App. D.C. 141, 144 F.2d

505, cert. denied, 323 U.S. 777 (1944) .......00000..... 29

TABLE OF AUTHORITIES—Continued

UNITED STATES CONSTITUTION Page

I: | Rm oe a eer eee 25

STATUTES

Economic Stabilization Act of 1970, as amended,

12 U.S.C. § 1904 note

AIT wsctiinicinschesneahdlidameebesapaaianiicnisieiia 1, 2, 5, 7, 9, 11, 14

FEE si kahinaveiajeeeyiteniagiicdenainabetadisliiene tiiuemdnadaedate 11

I irs cas crceenccebcctacecheagsccaened 2

Emergency Petroleum Allocation Act of 1973, as

amended, 16 U.5.C. $761 ef seg. ....................... &

Teens Oe I ED oes otc saahede nici 3

15 U.S.C. § 753 (b) (2) (A) 4

15 U.S.C. § 754(a) (1) . 2

Emergency Price Control Act of 1942, ch. 26, 56

Stat. 23 (repealed 1946)

I pede a a ae a oe eee 14, 22

Eee tg RA LE TO ah OTe Bird mia Ree 22

Energy Conservation and Existing Buildings Act

of 1976, Part A, 42 U.S.C. § 6861 et seq. _.......... 20

Energy Policy and Conservation Act, Part D of

Title III, 42 U.S.C. § 6321 et seq. _......... me 20

A ie 21

ED sere ipncecte ee sanaeenapeiadakial ses hatte Ec 21

Dei ec eee ae te 21

Energy Policy and Conservation Act, Part G of

Title III, U.S.C. 42 U.S.C. § 6371 et seq. .............. 20

Further Continuing Appropriations Act 1983, Pub.

L. No. 97-377, 96 Stat. 1830, 1919 § 155 (1982). 8,9,

18-22

Low-Income Home Energy Assistance Act of 1981,

4 VA SO Oe ee ee 21

National Energy Extension Service Act, 42 U.S.C.

bk ye eA ot 20

3 | | Oe ete EE owe Mt Seno 21

&. [1 to ¢ SR erarnessin eee se Ss cial eae 21

Oe FD basics csccnneipnsticinciecessaiti ied eae aaa 21

TABLE OF AUTHORITIES—Continued

COURT RULES Page

Rules of the Supreme Court of the United States

Sa TREC Pe eee aes aee ener Es PI ee ER = Se 12

RET Set I Re is AAP sc satiahaaind ii

Federal Rules of Civil Procedure

I ~~ 0s sca eaummb een ancadoeemnnnanaeniellanaeaanntiel 25

| ee. - scaieiciacdebacnialsataonsicigietaccunmmeniantlia 28, 29

ITE <5 eancenstheircieniicssesuaminesdecneaetinaheegiumaeiin 29

TID ook caraknnisiveicseiccocscalaciveveccaabeoubiesemmmaneisamnianaieinlite 25, 28

REGULATIONS AND PROPOSED REGULATIONS

Executive Order No. 12287, 46 Fed. Reg. 9909........ 4

Mandatory Petroleum Allocation and Price Reg-

ulations, 10 C.F.R. § 211 et seq. (1984)

GIR ia iniitanscsitnerinseseicwinmanboieotowiieatmaihnss 4,5, 7, 9, 10

Part 219, Subperte FP mm Be ncncccciccecccticcticnnne 7

§ 212.83 (c) .......... PEA. CS EE en eh A Po 10

TI ec esissescesoresesonsecanenagneniteiontnensaniahinpnens 10

| 5 t _; 5 TARR pniRnipnacnsnenet iaeaere Beare Ooi eed twa 10

Energy Measures and Energy Audits, 10

CO. R. Pek Sa Ce | cwicetietcaieeeein 21

Mandatory Petroleum Products Allocation and

Procedural Regulations, 59 Fed. Reg. 1924

CRIGY: aesicccisckktccs chicercetenticuibactabscendakeascembaeaa 4

Allocation of Old Oil, 39 Fed. Reg. 31650 (1974),

reprinted in Energy Mgmt. (CCH), Proposed

Regulations 1974-1978, { 12,526 ...................-----.-- 4

LEGISLATIVE MATERIALS

128 Cong. Rec. $15115 (daily ed. Dec. 16, 1982)... 19

128 Cong. Rec. $15116 (daily ed. Dec. 16, 1982)... 18

128 Cong. Rec. §15117 (daily ed. Dec. 16, 1982)... 20

128 Cong. Rec. 815701 (daily ed. Dec. 20, 1982)... 19

IN THE

Suprene Court of the Wniten States

OCTOBER TERM, 1985

Nos. 85-429, 85-430, 85-432, 85-440 and 85-444

EXXON CORPORATION, et al.,

. Petitioners,

UNITED STATES OF AMERICA, et al.,

Respondents.

On Petitions for a Writ of Certiorari to the

Temporary Emergency Court of Appeals

of the United States

BRIEF FOR THE STATE RESPONDENTS

IN OPPOSITION ?

COUNTERSTATEMENT OF THE CASE

This is an action brought by the United States under

§ 209 of the Economic Stabilization Act of 1970 (“ESA”),

1 This brief is filed on behalf of the States and other jurisdictions

listed on p. ii, supra. Although we maintain that the courts below

correctly resolved all questions of liability (including amount) in

favor of the United States and against the Exxon Corporation

(“Exxon”), because of the limited scope of the intervention which

we were granted below, this brief does not respond to Exxon’s

petition for certiorari (No. 85-429), which presents no question

concerning the distribution of the amoun.s for which Exxon was

held liable.

The opinions below wi!l be cited to the Appendix to the Exxon

petition (“Exx. App.”).

as amended,? against Exxon Corporation, alleging that

the prices Exxon charged beginning in January 1975 for

crude oil produced from the Hawkins Field Unit (“HFU”’)

in Texas exceeded the maximum prices permitted by law.

The District Court found in favor of the United States

on the issue of liability. In fashioning an equitable reia-

edy under § 209, the District Court accepted the Govern-

ment’s contention that, “[d]jue to the pervasive reach of

oil price regulation at the time these overcharges oc-

curred, . .. the overcharges worked their way throughout

the econor. y nationwide to the millions of ultimate con-

sumers of petroleum products,” * and ordered Exxon “to

make restitution of the full amount of the overcharges,

plus interest, to the [United States] Treasury” *, to be

held in trust for immediate redistribution to the States,°

in proportion to each State’s share of nationwide con-

sumption of petroleum products, for expenditures on

energy-related programs designed to benefit their injured

citizens. TECA, which has exclusive appellate jurisdic-

tion in all ESA and EPAA matters (see ESA § 211),

affirmed the District Court’s Order.

Four petitions for certiorari, in addition to that of

Exxon, have been filed by intervenor-parties at virtually

every level of distribution and use of petroleum products,

212 U.S.C. § 1904 note, as incorporated by §5(a)(1) of the

Emergency Petroleum Allocation Act of 1973 (“EPAA”’), as

amended, 15 U.S.C._§ 754(a)(1). In relevant part, § 209 of the

ESA provides that a court may “order restitution of moneys re-

ceived in violation of any .. . order or regulation [under this

Title].”

3 Exx. App. 239a (emphasis added).

4 Exx. App. 254a.

5 As used herein, the term “States” refers to all fifty States, the

District of Columbia, American Samoa, Guam, the Northern Mari-

ana Islands, Puerto Rico and the Virgin Islands.

® Exx. App. 255a-256a.

from refiners to an individual motorist.* All cha'enge

the District Court’s restitutionary order and contend that

awards should instead have been made to them (and to

the classes which some purport to represent).

A. The Regulatory Program

The District Court’s Order and TECA’s affirmance rest

squarely on the regulatory program which these decisions

implement: we therefore begin by describing that pro-

gram.

The LPAA, 15 U.S.C. § 751 eé seg., directed the Presi-

den. tc promulgate regulations implementing price and

allocation controls on petroleuya and petroleum products,

and further directed, in relevant part, that:

lijir specifying prices (or prescribing the manner

for determining them), the regulation shall provide

for (A) a dollar-for-dollar passthrough of net in-

creases in the cost of crude oil, residual fuel oil, and

refined petroleum products to all marketers or dis-

tributors at the retail level .. . [EPAA, § 4(b) (2),

15 U.S.C. § 753 (b) (2) |

“Passthrough” is the key word in this passage and the

cornerstone of the implementing regulations. From their

‘The four petitions were filed by: Marathon Petroleum Com-

pany, Mobil Oil Corporation, Murphy Oil Corporation, Ashland Oil,

Inc., Pennzoil Company, Tenneco Oil Company, and Tosco Corpo-

ration (collectively “Marathon”) (No. 85-430); Air Transport As-

sociation of America, Petroleum Marketers Association of America,

The Jobbers’ Group, and Independent Gasoline Retailers (collec-

tively “ATA”) (No. 85-432); Philadelphia Electric Company

(“PECO”) (No. 84-440); and National Freight Inc., RJG Cab

Co. Inc., and Geraldine H. Sweeney (collectively “National Freight” )

(No. 85-444). These petitions and their appendices are referred to

hereafter, respectively, as, ““Mar. Pet.” and “Mar. App.”, “ATA Pet.”

and “ATA App.”, “PECO Pet.” and “PECO App.”, ind “Nat. Frt.

Pet.” and “Nat. Frt. App.” The 45-volume Record of proceedings in

the District Court as filed in the TECA will be referred to by vol-

ume number and page number as “— R. —.”

adoption on January 14, 1974,* until all petroleum prod-

ucts were decontrolled on January 28, 1981,’ the regula-

tions promulgated pursuant to the EPAA permitted re-

finers, crude oil resellers and petroleum product resellers

to pass through to their customers their net increases in

crude oil costs for refined petroleum products, together

with their increased costs of purchased refined products

and certain “non-product” costs." On August 30, 1974,

the Department of Energy’s (“DOE”) predecessor agency,

the Federal Energy Administration (“FEA”), published

a Notice of Proposed Rulemaking concerning the Old Oil

Allocation (“Entitlements”) Program.'' FEA stated that

“'t)he objective of the entitlements program proposed is

to achieve the equitable distribution of the low priced old

oil among all] sectors of the petroleum industry ... .”

(389 Fed. Reg. at 31650). FEA also commented that

“lujnder the proposal, all money spent or received as the

result of the purchase or sale of entitlements would be

passed through to consumers, either as a cost increase or

decrease, respectively.” (Jd.).

Effective November 29, 1974, FEA adopted regulations

instituting the Entitlements Program.” In keeping with

the Congressional mandate that there be “dollar-for-

dollar passthrough of the net increases in the cost of crude

oil,” 15 U.S.C. § 753(b)(2)(A), the regulations pro-

vided that the entitlements costs or proceeds would be in-

cluded in crude oi] cost calculations. In upholding the

constitutionality and validity of the Entitlements Pro-

gram, TECA explained:

The basic purpose of the Entitlements Program was

to spread the benefit of access to old price-controlled

5 See 39 Fed. Reg. 1924 (1974).

* See Exec. Order No. 12287; 46 Fed. Reg. 9909 (1981).

10 See 10 C.F.R. § 212.83(c) and (d).

11 See 39 Fed. Reg. 31650 (1974).

12 See 10 C.F.R. § 211.67 (1974).

oil and the burden of dependence on uncontrolled oil

among all sectors of the petroleum industry, all re-

gions of the country, and among all consumers of

petroleum products. .. .”

As TECA stated in its opinion herein, one consequence

of the Entitlements Program was that if, as happened

here, price-controlled crude was improperly certified as

exempt (or higher priced) crude oil, the effects of the

overcharges initially would be distributed among all do-

mestic refiners; thereupon “the regulatory system was

designed to insure that money spent or received by the

refiners as the result of their purchases or sales of en-

titlements would be passed along to the ultimate con-

sumers.”’

B. The Proceedings Below

1. The District Court

On June 8, 1978, DOE instituted this enforcement ac-

tion against Exxon under § 209 of the ESA, alleging that

the prices Exxon had been charging since January 1975

for crude oil produced from the HFU exceeded the maxi-

mum prices permitted by law. (I R. 16). In its prayer

for relief, DOE urged the District Court to order Exxon

to pay the overcharges, with interest, to the United

States Treasury.'’ Over the ensuing 4 years, the District

Court issued 8 reported opinions and over 100 separate

13 Cities Service Co. v. FEA, 529 F.2d 1016, 1021 (Em. App.

1975), cert. denied, 426 U.S. 947 (1976) (emphasis added).

14 Exx. App. 87a, citing Union Oil Co. v. DOE, 688 F.2d 797, 802

(Em. App. 1982), cert. denied, 459 U.S. 1202 (1983). See also the

decision of the District Court herein quoted at p. 7, infra.

15 “Plaintiff prays that this Court enter judgment in its favor

upon this Complaint: ... 3. Ordering that Exxon make restitu-

tion of moneys, in the form of payments to the United States Treas-

ury, equal to the amount of its overpricing for first sales of crude

oil from the [Hawkins Field Unit|];” (I R. 33).

orders, and TECA issued 3 reported opinions on inter-

locutory appeals brought by Exxon.

On August 27, 1982, DOE and Exxon filed cross-

motions for summary judgment presenting both liability

and remedy issues for decision. On November 24, 1982,

five weeks after oral argument on the summary judg-

ment, a group of 6 refiners, including 4 of the 7 petition-

ers in No. 85-430, and a trade association representing

other refiners (“Indicated Refiners’’) filed a “Conditional

Motion . . . To Intervene” in which they argued, as

Exxon had, that “it is impossible to trace the impact of

the overcharges,” and that, based upon precedent in pri-

vate antitrust damage actions, refiners should receive the

entire overcharge fund (XLV R. 38973). Some three

months after oral argument, 5 gasoline station operators

(“Gasoline Retailers’), purporting to represent 187,000

independent branded retailers throughout the United

States, filed a motion for limited intervention in the Dis-

trict Court; they urged that the “impact of the over-

charge” should be traced through the DOE Entitlements

Program to the “more than 200 refiners nationwide” and

then, “taking into account each refiner’s banked costs”

and DOE’s “{c]omprehensive compliance audits”, to all

“purchasers of refined products throughout the period of

violation” (XLV R. 38995-38997). At Exxon’s request,

the District Ceurt stayed consideration of both the Indi-

cated Refiners’ and the Gasoline Retailers’ intervention

motions. (ATA App. A-288 and A-289.)

On March 25, 1983, the District Court issued its Mem-

orandum Opinion holding Exxon liable for some $895

million in crude oil overcharges between January 1975

and January 1981, plus interest. The District Court

determined that, as a matter of law, Exxon was re-

quired to change its accounting practices relating to

Hawkins Field crude oil on January 1, i975, and that

there was no factual dispute as to its failure to do so

In fashioning an equitable remedy under § 209 of the

ESA, the District Court determined that “the over-

charges worked thcir way throughout the economy na-

tionwide to the millions of ultimate consumers of petro-

leum products.” ** Following TECA’s prior holding con-

cerning the operation of the Entitlements Program, the

District Court reasoned that “[j]just as the program

spread the benefit of access to old oil, so too did the

program spread the burden of Exxon’s overcharges among

all sectors of the j~ roleum industry, all regions, and all

consumers [of petroleum products].”'7 The District

Court also referred to record evidence of Exxon’: ad-

mitted understanding of this impact '* as well as the cost-

passthrough effects of DOE’s price regulations.’® It deter-

mined:

Exxon’s overcharges were not, as it simplistically

asserts, borne by Exxon itself, but instead were

borne by ultimate consumers of petroleum products

throughout the entire country.”

Accordingly, the District Court found that:

[t]he broad scattering of the ill effects of Exxon’s

wrongdoing renders impossible the tracing of the

overcharges to their ultimate victims and the calcu-

lation of the precise damages suffered by each.”!

16 Exx. App. 239a (emphasis added).

17 Exx. App. at 248a, citing Cities Service Co. v. FEA, p. 5 n.13,

supra. See also id. at 248a-249a, quoting Union Oil Co. v. DOE,

supra, p. 5, n.14.

18 Exx. App. 248a-249a.

19 Exx. App. 249a, citing 10 C.F.R. § 212.83(c) (2) (iii) and 16

C.F.R., Part 212, Subparts F and L.

2” Exx. App. 249a. Based on this finding, the District Court

initially denied the conditional intervention motion of the Indicated

Refiners and the motion for limited intervention of the Gasoline

Retailers. Exx. App. 249a, n.56.

21 Exx. App. 250a.

The District Court ordered Exxon “to make restitution

of the full amount of the overcharges, plus interest, to

the [United States] Treasury” ** to be held “in trust” **

for distribution to the States, in proportion to each State’s

share of nationwide consumption of petroleum products,

for use in energy-related programs designed to benefit

their injured citizens.** The procedures for disbursement

to the States were modeled on the Congressional enact-

ment of § 155 of the Further Continuing Appropriations

Act, 1983.” The District Court cx»lained:

In formulating its order, the court in no way relies

on Section 155 as an express statutory grant of au-

thority to this court, but acts instead in the exercise

of its broad equitable powers to order restitution.

However, Section 155 clearly bespeaks the intent of

Congress that violators of the petroleum price regu-

lations should be made to disgorge their illgotten

gains even in situations, like the case before the

court, where the victims of the petroleum over-

charges cannot be identified. The colossal scale of

Exxon’s wrongdoing, and the workings of pervasive

regulations to spread the burden of that wrongdoing

impossibly far and wide, must not deter this court

from fashioning an appropriate equitable remedy.

The purpose of the domestic petroleum price regula-

tions was to keep oil prices down, to relieve con-

sumers of some of the burden of towering oil costs.

22 Exx. App. 254a.

23 District Court Judgment, XXXV R. 31658 at 31659.

4 Exx. App. 255a-256a. The programs are listed infra at p. 20,

n.4l1.

25 Pub. L. No. 97-377, 96 Stat. 1830, 1919, § 155 (1982) (“Warner

Amendment” or the “Amendment”), reproduced at ATA App. A-

316. In the Warner Amendment, Congress directed the Secretary

of Energy to distribute up to $200 million in escrowed overcharge

funds for energy related uses by the States in proportion to the

relative consumption of both price-controlled and uncontroiled petro-

leum products in each State during the period in which price con-

trols were in effect.

The five energy conservation programs identified in

Section 155 operate across the nation to reduce that

same burden, either by reducing overall consumption

through conservation or by direct financial assistance

to those most in need. Although one might speculate

as to alternative remedies, this court respects the

wisdom of the solution chosen by Congress and shall

adopt it as the most appropriate equitable remedy in

the circumstances of this case. |Exx. App. 256a,

footnote omitted, emphasis added. |

Thereafter 33 States and Territories and the District

of Columbia were allowed to intervene to support the

District Court’s restitution order on appeal.*® Six addi-

tional separate motions to intervene were filed by a joint

total of 14 parties, including refiners, jobbers, utilities,

a trucking company, a taxicab company, and an individ-

ual motorist. Each of these motions sought only to inter-

vene for purposes of appeal. None moved the District

Court to reopen the record on the question of the feas-

ibility of tracing the effect of the overcharges or for a

hearing on or reconsideration of any issue. The District

Court granted all applications for intervention, includ-

ing on reconsideration those of the Indicated Refiners

and the Gasoline Retailers, for the purpose of arguing

the remedy issue on appeal. (See ATA App. A-290

through A-298).

2. The Court of Appeals

On appeal, TECA unanimously affirmed the judgment

of liability against Exxon. Ry a 2-1 vote, TECA also

affirmed the District Court’s remedy under § 209.

TECA rejected the contention “that the trial court was

required to trace, or attempt to trace, the overcharges

from first purchaser, ta refiner, through various monthly

accountings required by the Entitlements Program and

its ‘banking’ system, and then to determine the nature

*6 Subsequently, 12 additional States intervened for the same pur-

pose before TECA.

and extent of any passthrough of increased costs through

the distribution system, such as might be authorized by

10 C.F.R. Section 212.83(c)-(d) (refiners) and 212.93(a)

(resellers and retailers).” (Exx. App. 85a). TECA

agreed with the District Court that:

any attempt to trace the overcharges would be

doomed to failure because of the pervasive influence

of the Entitlements Program and other regulations

which had the effect of passing on and diffusing the

HFU overcharges through the distribution system.

|[Exx. App. 86a-87a.]

TECA explained the consequences of the Entitlements

Program whereby overcharges would be passed along to

the ultimate consumers (Exx. App. 87a; see pp. 3 to 5,

supra) and continued:

We agree with the trial court’s conclusion that any

attempt to trace increased costs attributable to the

HFU overcharges would require a full scale audit

of the entire petroleum industry, and that any effort

to do so would be futile. As the Government sug-

gests, the first step in any such audit would require

recalculating over seventy monthly entitlement lists

issued during the period of the overcharges, taking

into account such variables as the volumes of new

and old oil produced during each month, the average

acquisition costs, and the values of each entitlement.

In determining the precise impact of the overcharges

on any particular refiner, it would then be necessary

to consider the impact of exception relief which may

have been granted by the agency over the term of

the Entitlements Program.

* * *

Even if the HFU overcharges could be traced to in-

dividual refiners, it would then be necessary to trace

their effect on product resellers, retailers and con-

sumers, through the provisions of passthrough regu-

lations. That this task would be futile is illustrated

by the difficulty of applying only one aspect of the

regulations, that is, the calculation of “banked

costs.” Exxon itself admitted that it was unable to

supply information on its own costs... .

* * *

The fact that banked costs might exist as to any

particular refiner does not mean of course that in-

creased costs were not passed on through the dis-

tribution system. To determine this would require

an investigation into the state of mind of each re-

finer in setting prices for individual petroleum prod-

ucts each month. Such a task would be impossible,

and several of the intervenors have so conceded.

[Exx. App. 88a-90a. |

TECA rejected the refiners’ suggestion “that refunds

be made payable to themselves as ‘first purchasers’ [be-

cause] that would result in inequities, inconsistent with

the fundamental purpose of restitution under Section

209.” (Exx. App. 90a). Moreover, TECA ruled:

There was no need for the District Court in this

action to attempt the impossible task of attempting

to ascertain the damage sustained by individual con-

sumers of petroleum products. In this respect, it

should be noted that this action for restitution under

Section 209 differs in significant degree from a pri-

vate action of damages under Section 210 [Exx. App.

90a-91a. |

In conclusion, TECA approved the “form of relief

chosen by the trial court in this action by which the res-

titution funds will be channeled through the states for

use in the enumerated energy programs designed to bene-

fit the consuming public... .” (Exx. App. 9la):

We believe this form of disbursement to be equita-

ble, and fair, and a reasonable method of compensat-

ing the consuming public for the HFU overcharges.

It accomplishes the intent of Congress that violators

of the price regulations be required to disgorge their

gains, even in situations where it may not be possi-

ble to identify and compensate each individual vic-

tim. While other remedies might have been adopted

by the trial court, the remedy chosen avoids further

administrative delay and confusion, with additional

costs, it prevents the frustration of congressional ob-

jectives in securing prompt enforcement of what has

been denominated as “emergency” price regulations,

and it is a reasonable means to protect the public

interest. [Exx. App. 9la-92a, footnote omitted. ]

Petitions for rehearing and/or suggestions for rehear-

ing en banc filed by Exxon and several intervenor appel-

lants were denied. (Exx. App. 269a-270a). On October

23, 1985, TECA denied a motion by Marathon, Mobil and

Murphy for leave to file a second petition for rehearing.

REASONS FOR DENYING THE PETITIONS

The several petitions filed herein uniformly fail to

demonstrate that there are, as Rule 17 requires, “special

and important reasons” for this Court to grant another

round of review of the District Court’s exercise of its

equitable discretion in formulating a restitutionary rem-

edy for this case. The remedy chosen rests on the District

Court’s reasoned conclusion—based upon the regulatory

scheme and the voluminous record before it—that the con-

sequences of Exxon’s overcharges were spread throughout

the economy so that individual victims and amounts of

injury cannot possibly be identified and that, ultimately,

all oil products consumers nationwide suffered as a result

of the overcharges. Accordingly, the District Court fash-

ioned a well-grounded remedy to benefit those ultimate

consumers.

In turn, TECA, “a court intimately familiar with the

intricacies of federal energy regulations,” (Tully v. Mobil

Oil Co., 455 U.S. 245, 248 (1982) ), and empowered with

exclusive appellate jurisdiction in these matters, agreed

with the District Court’s findings, and approved its choice

of remedy as “equitable, and fair, and a reasonable

method of compensating the consuming public for the...

overcharges”. (Exx. App. 91a). In so ruling, TECA ob-

served that “other remedies might have been adopted by

the trial court” (Exx. App. 92a), and thus refrained

from limiting future decisions in similar cases. Thus, far

from deciding any “important question of federal law

which has not been, but should be settled by this Court’,

it merely applied its long experience with and expertise

in the regulatory mechanism it supervises to confirm that

the District Court’s restitutionary choice not only fell

within the broad equitable discretion which prior opinions

of this Court and TECA had already settled, but was a

commendable exercise of that discretion in the complex

context of the particular regulatory violation at issue,

where identification of individual injury among many

millions of potential claimants was impossible. Petition-

ers’ attempt to narrow this discretion, and to have this

Court require the trial court in every case to attempt

identification of individual injury even where that task is

impossible, lacks both logic and precedent.

Finally, the petitioners’ various contentions that they

were improperly denied procedural rights are wholly with-

out merit. The only petitioners who sought intervention in

the District Court prior to the entry of judgment did so

well after final oral argument on the summary judgment

motions, and their intervention papers merely added rea-

sons for a finding of impossibility, as described above. All

other petitioners requested—and were granted—interven-

tion only for purposes of appeal. Thus, there has been no

departure “from the accepted and usual course of judicial

proceedings” requiring further review by this Court.

I. TECA’S AFFIRMANCE OF THE DISTRICT

COURT’S EXERCISE OF ITS EQUITABLE DIS-

CRETION RAISES NO ISSUE WARRANTING

FURTHER REVIEW BY THIS COURT

A. Because Section 209 Of The ESA Vested The Dis-

trict Court With Broad Equitable Powers, The

Scope Of “Appellate Review Is Correspondingly

Narrow”

Section 209 of the ESA, under which the United States

brought this suit against Exxon, provides that, in addi-

tion to the power to issue mandatory injunctions granted

therein, “the court may also order restitution of moneys

received in violation of any ... order or regulation [un-

der this Title].””’ The District Court was thus vested with

broad discretionary power.“ As Justice Harlan wrote in

Mitchell v. DeMario Jewelry, Inc., 361 U.S. 288, 291-

292 (1960) :

When Congress entrusts to an equity court the en-

forcement of prohibitions contained in a regulatory

enactment, it must be taken to have acted cognizant

of the historic power of equity to provide ~omplete

relief in light of the statutory purposes.

Justice Harlan also quoted with approval and followed

this Court’s decision on the scope of equitable jurisdiction

under § 205(a) of the Emergency Price Control Act of

1942, Porter v. Warner Holding Co., 328 U.S. 395

(1946):

Thus the Administrator invoked the jurisdiction of

the District Court to enjoin acts and practices made

illegal by the Act and to enforce compliance with the

Act. Such a jurisdiction is an equitable one. Unless

otherwise provided by statute, all the inherent equi-

table powers of the District Court are available for

the proper and complete exercise of that jurisdiction.

And since the public interest is involved in a pro-

27 Exx. App. 86a; Citronelle-Mobile Gathering, Inc. v. Edwards,

669 F.2d 717, 721-722 (Em. App.), cert. denied, 459 U.S. 877

(1982) ; Sauder v. DOE, 648 F.2d 1341, 1848 (Em. App. 1981).

ceeding of this nature, those equitable powers as-

sume an even broader and more flexible character

than when only a private controversy is at stake...

Moreover, the comprehensiveness of this equitable

jurisdiction is not to be deniv« or limited in the ab-

sence of a clear and valic » »:s\ative command. Un-

less a statute in so many words, or by a necessary

and inescapable inference, restricts the court’s juris-

diction in equity, the full scope of that jurisdiction is

to be recognized and applied. “The great principles

of equity, securing complete justice, should not be

yielded to light inferences, or doubtful construction.”

Brown y. Swann, 10 Pet. 497, 508. [861 U.S. at 292,

quoting 328 U.S. 397-398).

These decisions give special force herein to a corollary

of the trial court’s “broad discretionary power” in shap-

ing equity decrees—that “appellate review is correspond-

ingly narrow.” See Lemon v. Kurtzman, 411 U.S. 192,

200 (1973) (Op. of Burger, C.J.). A fortiori, where as

here, the Court of Appeals has approved as “equitable,

and fair, and . . . reasonable” the District Court’s exer-

cise of its equitable jurisdiction, only a most compelling

showing of abuse could justify a second round of review

by this Court. No such showing has been made by any

of the petitioners herein.*

B. The Remedy Chosen By The District Court Was

Well-Grounced In Fact And Law

t. The Record And Regulatory Scheme Made It

Clear That It Was Impossible To Trace The

Impact Of Exxon’s Overcharges To Individual

Victims

The District Court found, on the basis of the record

before it: “The broad scattering of the ill effects of

Exxon’s wrongdoing renders impossible the tracing of

28 Petitioners are not identically situated substantively or prove-

durally. Where pertinent in this discussion, we will identify partic-

ular petitions or petitioners. Otherwise, the term “petitioners” will

mean some or all of those identified in n.7, supra.

the overcharges to their ultimate victims and the calcula-

tion of the precise damages suffered by each.” (Ex. App.

250a).*° (See p. 7 supra). TECA “agree[d} with the

trial court that any attempt to trace increased costs at-

tributable to the HFU overcharges would require a full-

scale audit of the entire petroleum industry, and that

any effort to do so would be futile.” (Exx. App. 88a).

It explained that conclusion by detailed examination of

the regulatory scheme, about which it has developed spe-

cial expertise in the exercise of its exclusive appellate

jurisdiction.

Petitioners point to no evidence which was in the rec-

ord before the District Court which contradicts, let alone

renders unreasonable, the District Court’s and TECA’s

conclusion that the ultimate victims of Exxon’s over-

charges ard ui? extent of their individual injuries cannot

be ascertained in any manageable proceeding. Nor did

any of the petitioners offer to present such evidence to

the trial court in motions to intervene or otherwise.

Here, however, they rely on a 1985 report by DOE’s

Office of Hearing and Appeals (the “OHA report”) in a

separate, ongoing proceeding.*® That report, obviously,

*® The tracing issue was vigorously litigated before the District

Court entered judgment. As that court observed, in order “to post-

pone its day of reckoning” Exxon had argued:

that it must be allowed to conduct further discovery to deter-

mine if the Entitlements Program in fact operated as it was

designed and to trace the Hawkins Field overcharges to their

ultimate victims. In effect, Exxon would like to launch a na-

tionwide inquiry into the workings of more than 200 domestic

refiners during a period of several years. [Exx. App. at 247a-

248a. |

3° Report of the OHA to the United States District Court for the

District of Kansas in Department of Energy Stripper Well Exemp-

tion Litigation (“Stripper Weli Litigation”), M.D.L. No. 378, re-

produced in ATA App. at A-320. Although OHA’s factfinding in

the Stripper Well Litigation should have no bearing upon the cor-

rectness of the District Court’s earlier findings in this case, based

upon the record at the time judgment was entered, the States note

was not before the District Court when it rendered its de-

cision or thereafter. In fact, the OHA report was issued

on June 21, 1985, more than a year after oral argument

of this case before TECA and less than two weeks before

TECA issued its opinion affirming the District Court.”

The District Court’s finding cannot be overturned on

the basis of a report which was not before it.** Nor can

it be overturned on the basis of a criticism of that report,

that, like the District Court here, the recent report found, after

nearly two years of effort, that:

it is impossible to trace these increased costs [of crude oi! to

all domestic refiners] crough an individual refiner’s refining,

distribution and marketing operations. In fact, no party sought

to establish such a tracing in the context of this proceeding, or

suggested a valid tracing methodology based on inspection of

an individual refiner. [ATA App. A-339.]

31 ATA’s assertion that the “very facts” which it alleges concern-

ing the possibility of tracing “appear in the instant record in the

form of a detailed fact finding report by the OHA” (ATA Pet. 14)

is, therefore, incorrect. Indeed, when the OHA report was sub-

mitted to TECA that court was careful to provide only “that the

Report of OHA of June 21, 1985 be filed in the Office of the Clerk

of this Court.” Order Denying Without Prejudice Mction To Per-

mit Parties To File A Supplemental Brief On The Significance Of

The June 21, 1985 OHA Report And Granting Leave To File The

Report. (ATA App. at A-189.)

32 Indeed, the Kansas district court has not yet decided whether

to adopt the OHA report. Moreover, in relying on that report for

the proposition that it would be feasible to trace the injuries of the

victims of the overcharges, petitioners fail to take due account of

the two serious deficiencies which that report itself acknowledges:

First, the report rests on assumptions and estimates which it ad-

mits are subject to valid criticism. It is, in its own terms, only one

theoretical estimate of the impact on the refining industry as a

whole if a particular set of contested assumptions is applied.

Second, as the report states, no methodology erists by which to

determine the impact on any particular refiner, much less down-

stream customers of any refiner or direct purchaser. See n.30,

supra; ATA App. at A-346, A-380 to A-381.

as three refiners remarkably argue in a supplemental

brief.**

2. The Restitutionary Remedy Selected By The Dis-

trict Court Was Equitable, Fair and Reasonable

The District Court’s decision to look to the Warner

Amendment (also referred to as “§ 155”) as the model

for its choice of restitutionary distribution to benefit con-

sumers was a sound exercise of its discretion since “the

victims of the petroleum overcharges cannot be identi-

fied.” (Exx. App. 256).** Three points about the Amend-

ment are especially noteworthy. First, Congress stated

that where particular injured individuals “cannot be rea-

sonably identified,” or their injury “is too small to be

capable of reasonable determination,” a refund for energy

related purposes through the States is one which is “rea-

sonably expected to benefit the class of persons injured.”

§ 155(a) (emphasis added).** Second, in choosing a State

33 See Supplemental Brief of Petitioners Marathon, Mobil, and

Murphy in Support of Petitioners (No. 85-430). The materials

which that brief presents concerning a controversy over various

drafts of the OHA report are, of course, entirely outside the record

which was before the District Court and before TECA when it af-

firmed. It is a measure of these petitioners’ desperation that they

must rely on such materials, and on the contention that OHA’s sup-

posed bias creates a due process issue under Tumey v. Ohio, 273

U.S. 510 (1927), in order to seek review of a judgment which did

not in any way depend on the OHA report.

34 Because of the change of circumstances resulting from decon-

trol in 1981, previous mechanisms for passing refunds along the dis-

tribution chain to ultimate consumers no longer exist. Thus, as

TECA stated, refunds to ijirst purchasers would “result in inequi-

ties, inconsistent with the fundamental purpose of restitution un-

der § 209.” (Exx. App. 90a).

35 See, e.g., 128 Cong. Rec. 815116 (daily ed. Dec. 16, 1982)

(statement of Senator Percy):

This money would come from $200 million now in escrow which

has been collected from oil company overcharges to consumers

during the seventies. This money rightfully belongs to the con-

based remedy, Congress necessarily found that paying

such funds to the States, in proportion to their oil product

consumption and on behalf of their injured citizens for

energy related purposes, is “restitutional.” Jd. Third, in

adopting the Amendment, Congress confirmed the propri-

ety of DOE’s repeated use of the State remedy to benefit

ultimate consumers,” and accelerated what DOE had been

intending to do with escrowed overcharge funds even

without Congressional action, i.e., distribute funds to

States on behalf of ultimate consumers.”

The petitioners’ primary disagreement with the Dis-

trict Court’s remedy is, of course, that they would prefer

to receive the money themselves. While they do raise ob-

jections directed specifically to the use of the Warner

Amendment, these do not have any merit.

a. Petitioners argue that the District Court should not

have turned to the Warner Amendment as a model be-

sumers who were actually overcharged during this period. But

because it is impossible to identify each individual consumer,

we should at least attempt to place this money where consumers

in general will benefit. Distribution to the States provides the

quickest means to get this money out.

% See e.g., Alfred B. Alkek, 9 DOE { 82,521, at p. 85,134 (1982)

(“We chose to distribute the money to state governments because

we believed that they would be able to design a distribution scheme

for the refund proceeds which would benefit all injured consumers

in each state, and account for the varying energy-related needs

of their citizens. We also believe that the states would be able to

expend the proceeds in an administratively efficient and cost-effective

manner.”); Adams Resources and Energy, Inc., 9 DOE 82,553

at p. 85,292 (1982).

37In proposing the Amendment, Senator Warner stated: “The

Department of Energy is seeking to provide secondary remedies to

State governments and is currently reviewing a distribution plan

which I understand is consistent with this amendment.” 128 Cong.

Rec. 815115 (daily ed. Dec. 16, 1982). See also 128 Cong. Rec.

$15701 (daily ed. Dee. 20, 1982) (statement of Senator Kennedy) :

“DOE has in part been proceeding in this fashion. It is the most

appropriate method of providing restitution for the injuries suf-

fered by the consumer.”

cause the Amendment provided only for a one-time dis-

tribution of funds. The argument overlooks the court’s

clear statement that it was “in no way rel[ying] on Sec-

tion 155 as an express statutory grant of authority to this

court but [was acting] instead in the exercise of its broad

equitable power to order restitution.” (Exx. App. 256a,

quoted at p. 8, supra).* Congress’ decision not to

compel future distribution on the basis of the Warner

Amendment formula” cannot be taken as precluding a

court of equity from choosing to do what Congress had

done and for similar reasons.” “Unless otherwise pro-

vided by statute, all the inherent equitable powers of the

District Court are available for the proper and complete

exercise of that jurisdiction.” DeMario .Jewelry, 361

U.S. at 291, quoting Porter, 328 U.S. at 398; see also

Hecht Co. v. Bowles, 321 U.S. 321, 330 (1944).

b. Some petitioners present undocumented assertions

that they will not receive any benefit at all from the pro-

grams which the States must fund under the District

Court’s order.** While there is no requirement that the

38 This fact renders frivolous the assertion of the National

Freight petitioners that by selecting the approach of the Warner

Amendment, the District Court violated the constitutional separa-

tion of powers. (Nat. Frt. Pet. 13-14, 21-22).

3° The Senate-passed version made the Warner mechanism manda-

tory in all future cases. See 128 Cong. Rec. S15117 (daily ed.,

Dec. 16, 1982).

Dingell as forbidding any use of the Warner Amendment as prece-

dent; but, where, as shown above, the statute on its face makes

clear Congress’ view that its own remedy was reasonable and resti-

tutionary, a court may accept the soundness of that judgment.

41 The five Federal energy conservation programs involve (1)

weatherization of buildings (see 42 U.S.C. § 6861 et seq.); (2) im-

plementation of State energy conservation programs (see 42 U.S.C.

§ 6321 et seq.); (3) reduction of energy consumption in, or the

funding of alternate energy sources for, schools and hospitals (see

42 U.S.C. § 6371 et seq.); (4) promotion of conservation by small -

businesses and individuals, (see 42 U.S.C. § 7001 et seq.); and (5)

remedy adopted by the court directly benefit each person

who was injured by the overcharges, it is plain that peti-

tioners’ view of these programs is far too narrow. For

example, State energy conservation plans are intended to

reduce total energy consumption by all citizens and busi-

nesses within the State. See 42 U.S.C. § 6322(a) (1).

A reduction in demand can lower oil product prices, bene-

fitting ail buyers, especially commercial users, in propor-

tion to consumption, and in long-range terms will reduce

the dangers of harmful energy shortages. Moreover, the

provisions which are listed in the District Court’s order

are sufficiently broad and flexible to permit funding of

programs which would quite specifically benefit businesses

such as those represented by various petitioners. Without

attempting to be exhaustive, we note in the margin some

possibilities which readily come to mind.**

assistance te low-income people in paying home utility bills (see 42

U.S.C. § 8621, et seq.). See Exx. App. 255a, n.58.

42 To achieve that goal, the plans are required to promote more

efficient lighting for public buildings and thermal efficiency stand-

ards and insulation requirements for new and renovated buildings.

42 U.S.C. §6322(c). The States are further permitted to adopt

transportation controls, programs of public education, and “any

other appropriate method or programs to conserve and to improve

efficiency in the use of energy.” 42 U.S.C. § 6322(d) (5).

4% State energy conservation plans are intended to be coordinated

with the operation of State energy extension service plans, 42

U.S.C. §7005(h), which in turn allow the States to provide on-site

energy use evaluations and recommendations to consumers and

businesses, including information about the availability of aid for

“planning, financing, installation, and effective monitoring of en-

ergy-related facilities and activities.” 42 U.S.C. § 7004(b)(6) and

(b)(7). Airports and airlines could seek aid for airport improve-

ments to reduce fuel burning caused by delays in landing time un-

der these provisions. Part 450 of 10 C.F.R. contains a list of

energy conservation measures already approved by DOE for imple-

mentation by State energy extension services with both residential

and industrial applications, including, for example, audits, insula-

tion measures, control systems and installation of high efficiency

In short, it was fully appropriate for the District

Court to look “at the policy of the legislation and fash-

ion{] a remedy that will effectuate that policy,” Textile

Workers v. Lincoln Mills, 353 U.S. 448, 457 (1957), and

in doing so, (as the District Court said) to “respect[]

the wisdom of the solution chosen by Congress and [to]

adopt it as the most appropriate equitable remedy in the

circumstances of this case.” (Exx. App. at 256a).

3. TECA’s Decision is Entirely Consistent With

This Court’s Decisions

TECA in this case and in its prior decisions has fully

attended to this Court’s major teaching in Porter v. War-

ner Holding Co., supra, that in these public enforcement

cases, coui'ts should exercise broad and flexible powers to

do equity.** Nevertheless, citing private damage action

precedents, and ignoring Porter’s distinction between

such private actions and public restitution actions,* pe-

titioners argue that Porter restricted the scove of equita-

ble jurisdiction, and required individual injury determi-

nations in every overcharge restitution case. They do so

by tearing out of context the concluding paragraph of the

Porter opinion, from which they quote.** That paragraph

equipment. These are precisely the type of efforts in which many

utilities already engage and which the States could help finance un-

der the remedy adopted by the District Court.

4 See Citronelle-Mobile and Sauder, p. 14, n.27, supra.

* “Restitution, which lies within that equitable jurisdiction

[granted by § 205(a) of the 1942 price control Act] is consistent

with and differs greatly from the damages and penalties which

may be awarded under § 205(e).” 328 U.S. at 402.

46 Marathon’s argument that by “restitution, Congress meant the

refund of overcharges to the party injured” as in United States v.

Lieb, 333 F. Supp. 424 (W.D. Tex. 1971), aff’d, 462 F.2d 1161 (Em.

App. 1972) (Mar. Pet. 15), is wholly without merit. Where Con-

gress takes pain to confirm an expressly “inherent equitable power”

of historically large scope, its action is not to be construed as nar-

set forth the trial court’s authority and responsibility on

remand to resolve “conflicting claims and counterclaims

between tenants and landlord as to the amounts due.. .”

(328 U.S. at 403). The “interested parties” whom the

trial court was instructed to bring in, if necessary, were

the tenants against whom the landlord had such counter-

claims, a small and readily ascertainable class.7 The

purpose of bringing them in was not to allow them to

assert claims for restitution (which the Secretary was

doing on their behalf) but to enable the court to adjudi-

cate any “counterclaims” against them by the landlord.

Because “[t]he broad scattering of the ill effects of

Exxon’s wrongdoing renders impossible the tracing of the

overcharges to their ultimate victims and the calculation

of the precise damages suffered by each,” ** the teachings

of Porter which are truly applicable in this case are those

which forcefully affirm the broad powers of the courts of

equity to fashion a restitutionary remedy, see pp. 14 to

15, supra. Petitioners’ insistence that proceedings were

required which would enable them, and the literally

countless other persons and entities who were similarly

rowing the courts’ discretion by requiring them to conform to the

particular circumstance of a case which is cited in the legislative

history to illustrate that the power already exists.

47 This portion of the Porter opinion was a response to the iand-

lord’s argument, based on evidence that he “‘may have valid counter-

claims against certain tenants for damage to or theft of its prop-

erty.” (Br. for Warner Holding Co., No. 793, Oct. T. 1945, p. 36,

quoting 60 F. Supp. 513, 520.) This Court’s opinion answered the

trial court’s question: “Could this court, without a jury, adjudi-

cate the amount of restitution in each of the twenty rental units

involved here, some of which have had sevéral different tenants.

without the tenants before it and without the defendant having an

opportunity to interpose valid counterclaims as a defense?” (Jd.)

This Court held that a court of equity did have the power to adjudi-

cate the counterclaims and to bring the tenants before it for that

purpose.

48 Exx. App. at 250a.

situated, to prove their individual injuries in order

that they may be compensated, cannot be reconciled with

those teachings. Indeed, as the District Court recognized,

adoption of the petitioners’ position would, as a practical

matter, nullify the restitutionary remedy “because DOE

[or a court] could never accurately determine the losses

suffered by any one claimant.” (Exx. App. at 253a.)

The decision below is also entirely consistent with Fed-

eral Power Commission vy. Interstate Natural Gas Co.,

336 U.S. 577 (1949). While Interstate directed the fed-

eral court to make a “prognostication” as to what would

in fact have happened as a consequence of federal or

State law if the stay had not been issued (id. at 584), it

was evidently anticipated that this task could readily be

accomplished:

Distribution of the fund should not involve prolonged

litigation. It is an administrative matter involving

the exercise of an informed judgment by the federal

court and should have the flexibility and dispatch

which characterize the administrative process. [Jd.]

Here, by contrast, the courts below have found that allo-

cating the fund among the potential individual claimants

is “impossible.” (Exx. App; 86a-9la, 247a-151a).*

Surprisingly, since this Court does not sit to resolve

intracircuit conflicts, petitioners attempt to make much

of a supposed inconsistency between the decision below

4% Some petitioners place particular reliance on a portion of Jus-

tice Frankfurter’s separate concurring opinion. In so doing, they

omit the concluding sentence of the paragraph from which they

quote: “It will be time enough to distribute the fund by some

makeshift rule of thumb if what is concededly a rule of intrinsic

fairness should be found judicially unenforceable.” (336 U.S. at

590). Justice Frankfurter recognized that even a “makeshift rule

of thumb” would be preferable to imposing upon the lower court a

duty which it could not perform; here, no “makeshift” rule was

needed since there exi..ed a mode! well grounded in Congressional

and administrative example.

and that in Citronelle-Mobile Gathering, supra. In so

doing, petitioners simply disregard TECA’s careful and

detailed explanation (Exx. App. 85a-87a) of why “the

District Court’s judgment and Order . . . are fully in

accord with our ruling in Citronelle ....” (Id. 85a).

II. NONE OF THE PETITIONS PRESENTS A PROCE-

DURAL ISSUE WARRANTING REVIEW

Petitioners present an array of procedural objections to

the District Court’s decision, invoking variously Rules 24

(intervention) and 56 (summary judgment) of the Fed-

eral Rules of Civil Procedure and the Due Process Clause

of the Fifth Amendment. Their common objection, what-

ever the form of their individual arguments, is that the

District Court should have granted them a hearing on

the issue of remedy. A close examination of the proceed-

ings below and of the respective petitions shows that

none of the petitioners present a procedural issue merit-

ing review.

A. At the outset, it is essential to recall that most of

the parties that are now petitioners here sought leave

from the court to intervene only for the purposes of

appeal. This was true of all the parties who moved to

intervene after the court issued its decision—specifically

three of the refiners who petition in No. 85-430 (Mara-

thon, Mobil and Murphy); all parties to the ATA peti-

tion (No. 84-432) except the Gasoline Retailers (spe-

cifically ATA, Petroleum Marketers and Jobbers); as

well as PECO (No. 85-440); and all parties to the Na-

tional Freight petition (No. 85-444) (National Freight,

RJG Cab and Sweeney). These parties did not move the

District Court for leave to adduce any evidence to refute

any of the findings which the court had made or other-

wise to reconsider its decision. In short, since the Dis-

trict Court granted the postjudgment movants all the

intervention which they sought, they cannot now assert

that the c»irt denied them any procedural rights.

B. This leaves to be considered only the procedural

objections of the prejudgment (but post-oral argument)

movants, the Indicated Refiners and the Gasoline Re-

tailers.

1. Four of the refiners who were parties to the Indi-

cated Refiners’ prejudgment motion to intervene have

joined in the Marathon petition; that petition raises

two related procedural issues. (Mar. Pet. i).

The first is that the District Court should have given

notice and an opportunity to be heard to all potential

claimants. That issue is insubstantial. The court could

not possibly provide notice or an opportunity to be heard

to all such persons, which include not only the present

intervenors, but all others similarly situated, including,

for example, 187,000 gasoline retailers and tens of mil-

lions of individual motorists. The refiners have asserted

that they were injured and were unable to pass through

all of the overcharges, but not that other persons such as

consumers bore none of the burden. Moreover, as the

refiners recognize, TECA ruled that such notice was un-

necessary ‘on the theory that actual overcharges are

incapable of judicial proof.” (Mar. Pet. 20). They now

contend—and this is the second part of the question which

they present—that “that ‘finding’ is pure speculation.”

(Id.).

As shown above, however, the District Court’s finding

was fully substantiated in the Court’s analysis of the

regulatory framework and the particular record before

it, the issue having been pressed by Exxon. Even more

important for present purposes, the refiners cannot ask

this Court to review that finding because, far from prof-

fering any contrary evidence, they conceded the impos-

sibility of tracing the overcharges below. In the District

Court the Indicated Refiners asserted that “it is impos-

sible to trace the impact of the overcharges directly to

any subsequent purchasers.” (XLV R. 38973). Before

TECA, the other refiners who here join in the Marathon

petition asserted that with respect to both controlled and

uncontrolled petroleum products that it would be im-

possible to determine whether or not the refiners absorbed

or passed on the overcharges.”

The refiners so argued because their position in the

courts below was that the rule in antitrust damage suits

under Hanover Shoe, Inc. v. United Shoe Machinery

Corp., 392 U.S. 481 (1968) and Illinois Brick Co. V.

Illinois, 431 U.S. 720 (1977) should be applied by anal-

ogy. They argued that in providing a remedy under

§ 209, the District Court was bound to award restitu-

tion to the first purchaser without regard to actual in-

jury, as TECA had done in certain circumstances in pri-

vate § 210 damage suits. TECA rejected that restrictive

view of § 209 (Exx. App. 90a) and the question pre-

sented in the Marathon petition does not challenge this

basis for denying the refiners’ claim. That is, of course,

a separate and independent ground for denying the

refiners’ petition.”

2. The Gasoline Retailers present no question or argu-

ment relating to the fact that their motion to intervene

51 Brief of Intervenor-Appellants Marathon Petroleum Company,

et al., at 16-17. This statement by Marathon, et al. and that of an-

other refiner which is not a petitioner here were cited by TECA

in making the very ruling which the refiners now challenge. See

Exx. App. 90a, quoted at p. 11, supra.

52 In the closing footnote of their petition, the refiners say that,

if the lower courts had applied the principles of the above-cited de-

cisions, “the impossibility of proving the absorption or pass on of

overcharges in transactions subsequent to the first purchases

would have required the entire restitutionary award to be made to

the first purchaser unless a showing was made that a subsequent

purchaser had a fixed quantity cost plus contract or its functional

equivalent.” (Mar. Pet. 24, n.21, emphasis added). The under-

scored passage is consistent with the refiners’ position below, but

cannot be reconciled with the theory of their petition—that they

are entitled to a hearing on whether it is “impossible”.

was filed prior to the District Court’s judgment.™

Rather, their petition makes a more general point, appli-

cable to all the parties which join therein, that, because

the District Court had granted them intervention as a

matter or right under Rule 24(a), it violated that Rule

by denying them the opportunity to present evidence of

their injury. ATA Pet. i, first question; 18-21. This

contention is a non sequitur, for Rule 24(a) contains

within it the requirement that the motion to intervene

as of right be “‘timely”’.

Here, all the motions which sought intervention for the

purpose of appeal were timely for that purpose and were

granted. On the other hand, neither the motion of the

Gasoline Retailers nor that of the Indicated Refiners,

which were filed prior to judgment but after oral argu-

ment on DOE and Exxon’s motions for summary judg-

ment, were timely for the purpose of requiring the Dis-

trict Court to reopen its proceedings. The indisputable

fact is that from the very outset of this case it has been

clear that the United States was seeking restitution in

the form of a payment into the United States Treasury.

(See Complaint quoted at p. 5, n. 15, supra). The mov-

ants did not suggest in the District Court—nor do they

53 The Retailers’ motion to intervene was originally denied by the

District Court on the basis of its finding that the real victims of

the overcharges were the ultimate consumers of petroleum products.

(Exx. App. 249a, n.56). It is significant that the petition for certi-

orari in which they joined contains nothing to show that any re-

tailer can demonstrate injury as a result of Exxon’s overcharges.

54 The parties to the ATA petition other than the Gasoline Re-

tailers cannot maintain that contention for the additional reason

that they moved to intervene only for the purposes of appeal. They

are thus making the unsupportable assertion that the District

Court erred by denying them that for which they did not ask. Like-

wise, since none of the petitioners opposed the granting of summary

judgment, in accordance with the procedures of Rule 56 or other-

wise, the argument in the ATA petition, pp. 21-23, that their rights

under Rule 56 were infringed is also untenable.

demonstrate now-——that they had a right to wait until the

proceedings before the District Court were virtually com-

plete before seeking to make a record on their claims.

The position urged in the ATA petition would lead to

the absurd result that, where intervention is as of right,

intervention may not be granted for purposes of appeal

only. This Court has, however, approved intervention for

purposes of appeal only, stressing that the propriety of

such an appeal depends on “whether in view of all the

circumstances the intervenor acted promptly after the

entry of final judgment.” United Airlines, Inc. v. McDon-

ald, 482 U.S. 385, 395-396 (1977). Cf. NAACP v. New

York, 413 U.S. 345, 366 (1973). In McDonald, interven-

tion had been allowed under Rule 24(b), see id. at 390,

hut the Court there cited with approval a series of court

os appeals decisions which allowed intervention for pur-

poses of appeal only under Rule 24(a). (Jd. at 395-396,

n.16).*°

No distinction between Rules 24(a) and (b) for this

purpose has been proffered in the ATA petition, or read-

ily suggests itself. If petitioners’ submission were cor-

rect, a party whose interest is sufficient to allow inter-

vention as of right and is timely for purpose of appeal

could not be granted such intervention without being al-

lowed to reopen the case in the trial court, even if its

intervention is untimely for that purpose. Any such re-

sult would either defeat the right to intervene for pur-

poses of appeal only or undermine the timeliness require-

ment of Rule 24(a).

55 These cases are: Hodgson v. United Mine Workers, 153 U.S.

App. D.C. 407, 419, 473 F.2d 118, 129 (1972); Smuck v. Hobson,

132 U.S. App. D.C. 372, 378-379, 408 F.2d 175, 181-182 (1969) ;

Pellegrino Vv. Nesbit, 203 F.2d 463, 465-466 (9th Cir. 1953); Wolpe

v. Poretsky, 70 U.S. App. D.C. 141, 144, 144 F.2d 505, 508, cert.

denied, 323 U.S. 777 (1944). The reports of the other cited cases

do not state whether Rule 24(a) or (b) intervention was involved.

In sum, the prejudgment movants’ procedural objec-

tions are no more worthy of review than those of the

other petitioners, who intervened for purposes of appeal

only.

CONCLUSION

For the foregoing reasons, the petitions for certiorari

should be denied.

Respectfully submitted,

FRANCIS X. BELLOTTI ANDREW P. MILLER

Attorney General GEORGE KAUFMANN

of Massachusetts STEPHAN G. WIELGOZ

GEORGE B. DEAN DICKSTEIN, SHAPIRO & MoRIN

ALAN L. KOvACS 2101 L Street, N.W.

One Ashburton Place— Washington, D.C. 20037

20th Floor (202) 785-9700

Boston, Massachusetts 02108

DAVID FROHN MAYER BERNARD NASH

Attorney General of Oregon EDWARD G. MODELL

DONALD C. ARNOLD BLUM, NASH & KAILSBAC'K

100 State Office Building 113. Fifteenth Street, N.W.

Salem, Oregon 43710 Suite 1100

Washington, D.C. 20005

(202) 857-0220

JOHN VAN DE KAMP JAMES F. FLuUG

Attorney General of California ‘PAULA DINERSTEIN

YeEorRYIOS C. APALLAS LOBEL, NOVINS & LAMONT

6000 State Building 1275 K Street, N.W.

350 McAllister Suite 770

San Francisco, California 94102 Washington, D.C. 20005

(202) 371-6626

December 238, 1085

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