Petition for Writ of Certiorari — Sakamoto v. Duty Free Shoppers, Ltd.
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\ Supreme Court, U.S,
85-552 FILED
7 SEP SO 1986
No. JOSEPH F. SPANIOL, JR.
CLERK
In the Supreme Court
OF THE
United States
OCTOBER TERM, 1985
YosH SAKAMOTO, PAciFIC GIFT SUPPLY
and TOP ENTERPRISES, INC.,
Petitioners,
V.
Duty Free SHoppers, Ltp., GUAM AIRPORT
AUTHORITY and THE GOVERNMENT OF GUAM.
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
THEODORE R. MiTCHELL
Nauru Building, 3rd Floor
P.O. Box 947
Saipan, Mariana Islands 96950
(Counsel of Record)
WILLIAM M. FITZGERALD
P.O. Box 909
Saipan, Mariana Islands 96950
Attorneys for Petitioner
Petitioners Yosh Sakamoto, Pacific Gift Supply Inc., and Top
Enterprises, Inc., respectfuily 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
July 1, 1985.
QUESTIONS PRESENTED
1. Is the Government of Guam bound by the same limitations
that prevent states and their political subdivisions from
burdening interstate and foreign commerce?
2. Are the Government of Guam and its sub-agencies immune
from federal antitrust laws because of their status as federal
instrumentalities?
il
TABLE OF CONTENTS
Questions Presented . oss iasssd5snuweseeeeeernanes i
Table of Authorities Cited ...... (4k eGescaeesaeeenns ill
Opinions Below ....--.+eeeeeeeeecreeeeeseeses sees l
Jurisdiction .....ccveccccccccdeccccesnensessesenss
Constitutional and Statutory Provisions Involved .....
2
Statement of the Case ......-eeeeeeereeeereereerees 3
Reasons for Granting the Writ ....--.-eeeeeeeeereees 4
1. Allowing Guam to burden inte. state and foreign
commerce conflicts with the intention of Congress,
and the case law of the Supreme Court and Third
Circuit Court of Appeals
Il. The grant of antitrust immunity to the government
of Guam is a judicial incursion on the exclusive
right of Congress to make rules and regulations for
the territories and is in conflict with the law in the
District of Columbia Court of Appeals.
Conclusion ....cccsccccscesscenssseeueeeeeseeeeee
ill
TABLE OF AUTHORITIES CITED
Cases
Page
Andersen v. Mullaney, 191 F.2d 123, (9th Cir.)
aff'd, 342 U.S. 415, 72 S.Ct: 428, 6,7,
en ani chien ct beds kdaceae 8,10
Asiatic Trans-Pacific, Inc. v. Maddox,
co a 10
Buscaglia v. Ballester, 162 F.2d 805 (1st Cir. 1947),
cert. denied, 332 U.S. 816, 68 S.Ct. 154,
Ue Seas kk cca heecsaccanscacce 9
Caribtow v. Occupational Safety and Health
Commission, 493 F.2d 1064, (Ist Cir. 1974) ........ 9
Chase Manhattan Bank v. South Acres Development
Co., 434 U.S. 236, 54 L.Ed.2d 501,
an tanca 8
City of Lafayette, Louisiana v. Louisiana Power
and Light Co., 435 U.S. 389 98 S.Ct. 1123,
NE OIE a cnn cncccncuncieacacnccacca 12
Community Communications Co. v. City of Boulder,
Colo., 455 U.S. 40, 102 S.Ct. 835,
VO £.26.20 S16 (1982) ........... Sieh euas Gbsa% ss0 12
Duty Free Shoppers, Ltd. v. Tax Commissioner,
464 F.Supp. 730 (D.Guam 1979) .................. 10
Examining Board of Engineers, Architects and
Surveyors v. Flores De Otero, 96 S.Ct.
ES AE a ne 7
Feldman v. Gardner, 661 F.2d 1295 (D.C. Cir. 1981),
cert. granted, 102 S.Ct. 3481 (1982), vacated on
other grounds, 103 S.Ct. 1303 (1983) .............. 13
First National Bank of Brunswick v . Yankton,
ee Ses. BAW, OO OW. WOOO CORD) wc ccc cc ccccss 5
iV
Granville-Smith v. Granville-Smith, 349 U.S. 1,
75 S.Ct. $33, 99 L.Ed... 773 (1955S) 2... ccccccccccess
Hecht v. Pro Football, Inc., 333 F.2d 931
(D.C. Cir. 1971), cert. denied,
B64 U.S. 157 CIDTA) 2c ccccccccscscsccecccveseses
JDS Realty Corp. v. Government of Virgin Islands,
593 F.Supp. 199 (D.V.1. 1984) ........ eee eee ee eens
Late Corporation of Latter Day Saints v. U.S.,
136 U.S. 1, 10 S.Ct. 792, 34 L.Ed. 478 (1896) .......
Manila Trading & Supply Co. v. Maddox,
335 F.2d 150 (9th Cir. 1964) ...... cece eee eee eee
Murphy v. Ramsey, 114 U.S. 15, 5 S.Ct. 747 (1885) ...
Pacific Broadcasting Corp. v. Riddell, 427 F.2d 519
(Sth Cir. 1DTO) cn ccccdcn deed theccescccncsecsccee
Port Construction Co. v. Government of Virgin Islands,
359 F.2d 663 (3rd Cir. 1966) ....... eee eee eee eee
Sea-Land Services, Inc. v. Municipality of San Juan,
505 F.Supp. 533 (D.P.R. 1980) ...... 6. eee ee ee ees
Southernland v. St. Croix Taxi Association,
315 F.2d 364 (3rd Cir. 1963) ........ cece eee eeeees
Torres v. Commonwealth oj Puerto Rico, 442 U.S. 465,
FD S.Ce. FERS CISTI) ncn ccecccccescsecescswvcceens
Territory of Guam v. Olsen, 431 U.S. 195,
97 S. Ct. 1774, 53 L.Ed.2d 250 (1977) .........505-
United States v. First National City Bank of Houston,
3OG U.S. BB1 CIGST) on cccccccccccssccccescvcesecs
U.S. v. Husband R. (Roach), 453 F.2d 1054 (Sth Cir.
1971), cert. denied, 406 U.S. 935, 92 S.Ct. 1785,
52 0 TODS CIR CHOTA) oc cacccccncwncccccccnsesess
United States v. Wheeler, 435 U.S. 313, 98 S.Ct. 1079,
pe eS iff. errr ee
9,10
10
in
Vv
Constitution
U.S. Constitution Art. I, Sect. 8, Cl. 3 ...............
U.S. Constitution Art. IV, Sect. 3, Cl.2 .............
Statutes
IS U.S.C
Doe Sixties Cesiscccessksvakeisyiceble
Pr Habre eknsdvnanavuacanecnaageee eee
28 U.S.C
ROGER 846eschennseabincckuaienaeeeeeEeRe
POUEE Seeshuvediandlepsueesideaaree me
FOE hens vin ceeneedsvccvecencacaene ee:
48 U.S.C
BUF kiss iecuecannendeaunusxaeseaeeseee eee
BOP 4056s 05¥ 40s dndasndiansasgusalanen cele
OEE Scns essscchindsaksyonsameeeeaen nen
SE PONE $8 h00-500064srsenkenbipe ere oe
BORE b<éesscesscedicwenemceul as RemeennE
Miscellaneous
Senate Rep. No. 2109, 81st Congr., Reprinted in 1950
U.S. Code Congr. and Ad. News 2840 .............
H.R. Rep. No. 1521, 90th Congr., Reprinted in 1968
U.S. Code Congr. and Ad. News 3564 .............
Coudert, The Evolution of the Doctrine of Territorial
Incorporation, 26 Col. L.Rev. 823 oo eee
No.
In the Supreme Court
OF THE
United States
OcTOBER TERM, 1985
YosuH SAKAMOTO, PaciFic GiFT SUPPLY
and TOP ENTERPRISES, INC..
Petitioners,
WV.
Duty Free SHoppers, Ltp.. GUAM AIRPORT
AUTHORITY and THE GOVERNMENT OF GUAM.
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
OPINIONS BELOW
The opinion of the Court of Appeals, is reported at 764 F.2d
1285 (9th Cir. 1985) and appears in the appendix hereto. The
Opinion of the District Court of Guam is not reported and
appears in the appendix hereto.
¢
JURISDICTION
The Judgment of the Court of Appeals for the Ninth Circuit
was entered on July 1, 1985. No Petition for Rehearing or
Rehearing En Banc was requested and this Petition for
Certiorari was filed within 90 days of that date. This court's
jurisdiction is invoked under 28 U.S.C. § 1254(1).
2
CONSTITUTIONAL AND
STATUTORY PROVISIONS INVOLVED
Constitution of the United States
Article 1, Section 8, Clause 3 — The Congress shall have
Power .. . To regulate Commerce with foreign Nations, and
among the several States, and with the Indian Tribes.
Constitution of the United States
Article iV, Section 3, Clause 2 — The Congress shall have
Power to dispose of and make all needful Rules and Regulations
respecting the Territory or other Property belonging to the
United States; and nothing in this Constitution shall be so
construed as to Prejudice any Claims of the United States, or of
any particular State.
United States Code, Title 48
§ 1422. Governor and Lieutenant Governor
The executive power of Guam shall be vested in an executive
officer whose title shall be the “Governor of Guam”. The
Governor of Guam, together with the Lieutenant Governor,
shall be elected by a majority of the votes cast by the people who
are qualified to vote for the members of the Legislature of Guam.
United States Code, Title 48
§ 1423a. Power of Legislature
The legislative power of Guam shall extend to all subjects of
legislation of local application not inconsistent with the
provisions of this chapter and the laws of the United States
applicable to Guam.
United States Cede, Title 48
§ 1423i. Approval of bills
_. . All law enacted by the legislature shall be reported by the
Governor to the head of the department or agency designated by
the President under Section 1421a of this title. The Congress of
3
the United States reserves the power and authority to annul
the same.
STATEMENT OF THE CASE
Guam has is recent years become a resort area for Japanese
tourists. Petitioners and Respondent Duty Free Shoppers, Ltd.
are competitors in the business of selling gift items to these
Japanese tourists to take with them back to Japan for friends
and relatives. Petitioners claim that the Japanese tourist market
is a unique and separate market; that the Japanese expect and
demand that their gift purchases be delivered to them at the
airport so that they will not be inconvenienced during
their vacation.
Respondent Duty Free Shoppers, Ltd., the Government of
Guam and Guam Airport Authority are parties to a contract
that gives Duty Free Shoppers, Ltd. the exclusive concession
for gift items at the Guam airport. A restrictive covenant in the
agreement provides that the Guam Airport Authority may not,
and will not, allow anyone to deliver gift items to departing
passengers at the airport. The Guam Airport Authority has
promulgated and enforced rules and regulations to implement
this exclusion and has forbidden and prevented the petitioners
from delivering gift items to departing passengers at the Guam
International Airport.
Petitioners filed an action in the District Court of Guam
alleging that the agreement by the Guam Airport Authority and
Duty Free Shoppers, Ltd. violated the Sherman and C layton
Acts and that the prevention of deliveries to departing passen-
gers at the airport violated the commerce clause. Jurisdiction
was invoked pursuant to 28 U.S.C. §§ 1331, 1337 and 1343, and
1S U.S.C. §§ 15 and 26.
The District Court issued summary judgment in favor of
defendants dismissing the action, on various grounds. The Ninth
Circuit affirmed, based on the conclusion that the Government
of Guam is not bound by the negative implications of the
commerce clause, and is immune from liability under the
antitrust laws because it is an instrumentality of the federal
government.
4
REASONS FOR GRANTING THE WRIT
I
ALLOWING GUAM TCO BURDEN INTERSTATE AND
FOREIGN COMMERCE CONFLICTS WITH THE
INTENTION OF CONGRESS, AND THE CASE LAW OF
THE SUPREME COURT AND
THIRD CIRCUIT COURT OF APPEALS.
This case marks the first time in history that a popularly
elected American local government has been given a power
explicitly reserved to the Congress of the United States. This
decision give unqualified permission to the Government of
Guam and its agencies to ignore all Supreme Court decisions
that have restricted state governments and their agencies from
burdening interstate and foreign commerce. Not only does this
trammel upon the exclusive right of Congress to regulate
commerce, but it also interferes with the exclusive right of
Congress to regulate the territories by announcing, in direct
contradiction of the specific congressional grant of !ocal
autonomy, 48 U.S.C. §§ 1422, 1423, that the popularly elected
Government of Guam is nothing more than a federal robot, a
mere government-owned railroad.
The Court agrees that an incorporated territory may not
burden interstate commerce, but because Guam is an unin-
corporated territory and under the plenary control of Congress,
as evidenced by Congress's power to annu! Guam legislation, it
is not bound by the same !imitations that bind incorporated
territory governments. Guam may therefore ignore the
commerce clause and all Supreme Court decisions delineating
its reach.
This analysis is faulty and led the Court to an incorrect
conclusion. The language of the Constitution makes no distinc-
tion between incorporated and unincorporated territories.
Rather, it plainly states that Congress has the power to make all
necessary rules for regulating the territories. U.S. Constitution
Art. IV, Sect. 3, Cl. 2. Thus Congress has plenary power over all
territories, incorporated or unincorporated.
Supreme Court case law makes unequivocally clear that
5
incorporated territories are not unique in having their legislation
subject to annuiment by Congress. All territories are subject to
this Congressional prerogative. In First National Bank of
Brunswick v, Yankton, 101 U.S. 129, 25 L.Ed. 1046 (1880), in
finding that Congress had expressly validated the issuance of
bonds to a railroad, although Congress had annulled legislation
of the Dakota Legislative Assembly in the process, the Court
explained that:
“In the Organic Act of Dakota there was no express
reservation of power in Congress to annul the acts of the
territorial legislature, but none was necessary. Such a
power is an incident of sovereignty, and continues until
granted away. Congress may not only abrogate laws of
the territorial legislatures but it may itself legislate
directly for the local government. It may make a void act
of the territorial legislature valid and a valid act void. In
other words, it has full and complete legislative authority
over the people of the territories and all the departments
of the territorial government. It may do for the ter-
ritories what the people of the United States may do for
the states.
First National Bank of Brunswick v. Yankton, 101 U.S. at 133.
Similarly, the Utah Territorial Legislature was subject to the
same restrictions:
“That the legislative powers of said territory shall extend
to all rightful subjects of legislation consistent with the
Constitution of the United States and the provisions of
the act... All the laws passed by the legislative assembly
and governor shall be submitted to the Congress of the
United States and if disapproved shall be null and of
no effect.”
Late Corporation of Latter Day Saints v. U.S., 136 U.S. 1, 10
S.Ct. 792, 803, 34 L.Ed. 478 (1890). See also Murphy v. Ramsey,
114 U.S. 15, 5 S.Ct. 747 (1885).
An examination of the statutes of Alaska and Guam show
that the Congressional grant of legislative power to these two
territories was almost identical.
6
The legislative power of Guam shall extend to all
subjects of legislation of local application not incon-
sistent with the provisions of this chapter and the laws of
the United States applicable to Guam. . . 48 U.S.C. §
1423(a) (Supp. 1985).
The legislative power of the territory of Alaska shall
extend to all rightful subjects of legislation not incon-
sistent with the constitution and laws of the United
States... 48 U.S.C. § 77 (1952).
Moreover, Congress had the power to annul legislation
enacted by the territory of Alaska:
All laws passed by the legislature of the territory of
Alaska shall be submitted to Congress by the president
of the United States, and if disapproved by Congress
they shall be null and of no effect.
48 U.S.C. § 90.
The substance of the power Congress exercised over the
territory of Alaska is the same with regard to Guam:
All laws enacted by the legislature shall be reported by
the governor to the head of the department or agency
designated by the president under Sect. 3 of this Act. The
Congress of the United States reserves the power and
authority to annul the same.
48 U.S.C. § 1423.
Because ail territories generally, and the territory of Alaska
specifically have been held subject to Congressional annulment
of legislation, the attempt to distinguish Guam from the former
territory of Alaska fails. The Ninth Circuit is in direct conflict
with the Supreme Court’s affirmance of its decision in Andersen
v. Mullaney, 191 F.2d 123 (9th Cir. 1951) aff'd, 342 U.S. 415, 72
S.Ct. 428, 96 L.Ed. 458 (1952). This departure from clear and
established precedent was noted by Judge Hug in his concurring
opinion.
“1am not fully convinced that the commerce clause
does not apply to the territory of Guam under the
authority of Andersen v. Mullaney, 191 F.2d 123 (9th
>
Cir. 1951), aff'd 342 U.S. 415, 72 S.Ct. 428, 96 L.Ed. 458
(1952). I find the distinction between the Territory of
Alaska and the Territory of Guam somewhat tenuous.”
Moreover, the attempted distinction fails not only because of
the error in finding the annulment power of Congress unique to
unincorporated territories, but also because of the complete
inapplicability of the doctrine of territorial incorporation to
this issue.
As a legal concept, territorial incorporation developed from
the debate over which Constitutional protections applied to the
inhabitants of the territories acquired by the United States as a
result of the war with Spain. In other words, which provisions of
the Constitution restricted Congress’ broad powers over the
territories under the territorial clause of the Constitution?
Debated questions included whether Congress is bound by the
uniformity clause in laying duties on imports from Puerto Rico;
whether guarantees of grand jury indictment and trial by jury
were applicable in the Philippines, Hawaii and Puerto Rico: and
whether the due process clause is applicable in Puerto Rico. See
Torres v. Commonwealth of Puerto Rico, 442 U.S. 465,99 S.Ct.
2425, 2428 (1979); Examining Board of Engineers, Architects
and Surveyors v. Flores de Otero, 96 S.Ct. 2264 (1978) and cases
cited therein. See also Coudert, The Evolution of the Doctrine
of Territorial Incorporation, 26 Col. L.Rev. 823 (1926).
Unlike the due process clause of the fifth and sixth amend-
ment guarantees that impose restrictions on Congress’ power,
the commerce clause grants a power to Congress. Thus the
Goctrine of territorial incorporation is inapplicable. Although
reasonable men may argue that the fifth amendment’s guarantee
of individual rights or liberties should or should not Operate asa
restriction on Congress in its otherwise absolute power over
administrating the territories, Congress cannot be limited by its
own plenary power under the commerce clause.
The Ninth Circuit recognized this principle in Andersen vy.
Mullaney, supra. In Andersen, the Court held that the
Territorial Government of Alaska was bound by the same
proscription on burdening commerce that bound the states. The
8
reason for this was not because the commerce clause operated
Ex Proprio Vigore as a constitutional limitation, because as far
as the Constitution was concerned Congress could allow Alaska
to burden commerce under its territorial clause powers, article
IV, section 3, clause 2. Rather, the Court stated that “we cannot
conceive that in granting the legislative power to the territorial
legislature it was intended that the power should exceed that
possessed by the legislature of a state in dealing with commerce.”
Id. at 128.
The Supreme Court, in affirming this case, stated regarding
Congressional intent:
“In the light of these sections we cannot presume that
Congress authorized the territorial legislature to treat
citizens of states the way states cannot treat citizens of
sister states. Only the clearest expression of congres-
sional intent could induce such a result. It is not present.”
342 U.S. at 420, 72 S.Ct. at 431, 96 L.Ed. at 463.
Clear congressional intent was the key to solving the problems
in Andersen and it has been used repeatedly to answer
analogous questions. Thus, in finding ne congressional intent to
allow Guam its own supreme court, this Court stated in
Territory of Guam v. Olsen, 431 U.S. 195, 202, 97 S.Ct. 1774,
1778, 52 L.Ed.2d 250, 256 (1977):
“First, we should be reluctant without a clear signal from
Congress to conclude that it intended to allow the Guam
Legislature to foreclose appellate Review by Article III
courts, including this Court, of decisions of territorial
courts in cases that may turn on questions of Federal
law.”
In Chase Manhattan Bank v. South Acres Development Co.,
434 U.S. 236, 54 L.Ed.2d 501, 98 S.Ct. 544 (1978), the Court
found that Guam alone among all the district courts of the land
did not have diversity jurisdiction because Congress had not
expressly authorized it. In Granville-Smith v. Granville-Smith,
349 U.S. 1, 75 S.Ct. 553, 99 L.Ed. 773 (1955), “the rightful
nature of territorial legislation was assailed” and the Court
simply found that Congress did not intend to give the Virgin
se
:
:
:
:
9
Islands’ Legislature power to do what no state had ever
attempted.
Each of these cases involved the Court limiting the power of
the territory because it found no Congressional intent to allow
the territory to exercise the power. These cases explicitly reveal
the error of the Ninth Circuit in failing to understand Congress’
grant of local autonomy, for they recognize the right of the
territory *o pass local legislation, but found that the power
sought was beyond that intended by Congress. Although as
Andersen instructs, Congress could give Guam the right to
burden commerce, there is no reference in the Organic Act to
such power. The Ninth Circuit, however, without any indication
of any Congressional intent in support of its radical decision,
has given its endorsement to the Territory of Guam to burden
interstate commerce. The question, “Has Congress expressly
authorized the territory to exercise this power?”, has been
twisted completely around to frame the question, “Has the
commerce clause been extended to Guam?”
The Ninth Circuit reaches this extreme and unprecedented
result on the basis of two inapplicable cases, Buscaglia v.
Ballester, 162 F.2d 805 (Ist Cir.), cert. denied, 332 U.S. 816
(1947), and U.S. v. Husband R. (Roach), 453 F.2d 1054 (Sth
Cir. 1971), cert. denied, 406 U.S. 935 (1972).
Buscaglia is apparently not even followed in the First Circuit.
See Caribtow v. Occupational Safety and Health Commission,
493 F.2d 1064, p. 1068 n. 11 (Ist Cir. 1974); Sea-Land Services,
Inc. v. Municipality of San Juan, 503 F.Supp., 533, 540 (D.P.R.
1980) (District Court of Puerto Rico describes the conclusion in
Ballester that the commerce clause is inapplicable to Puerto
Rico as “unexpounded dicta.”)
Husband R. (Roach) is simply inapplicable to a territory that
has been granted local legislative power because the text of the
case itself recites that:
“Congress legislates directly for the Canal Zone, there is
no local legislature.”
Id. at 1057.
Relying upon this slender authority, the Ninth Circuit rejected
10
Andersen, supra, and a solid line of case authority within its own
circuit that applied the commerce clause to Guam. See Pacific
Broadcasting Corp. v. Riddell, 427 F.2d 519 (9th Cir. 1970)
(gross receipts tax not violative of the commerce clause); Asiatic
Trans-Pacific, Inc. v. Maddox, 371 F.2d 132 (9th Cir. 1967)
(gross receipts tax not violative of the commerc clause); Manila
Trading & Supply Co. v. Maddox, 335 F.2d 150 (9th Cir. 1964)
(gross receipts tax violative of the commerce clause).
Also ignored were cases from the Third Circuit relating to the
U.S. Virgin Islands, an unincorporated territory like Guam, that
has the power of local legislation. See e.g. Port Construction Co.
v. Government of Virgin Islands, 359 F.2d 663 (3rd Cir. 1966)
(gross receipts tax not violative of commerce clause); Southern-
land v. St. Croix Taxi Association, 315 F.2d 364 (3rd Cir. 1963)
(franchise agreement between government and taxicab associ-
ation preventing interstate travelers from using prior contracted
for transportation from airport to hotel! violation of the
commerce clause).
An ironic feature of the Ninth Circuit’s decision is its
overruling Duty Free Shoppers, Ltd. v. Tax Commissioner, 464
F.Supp. 730 (D.Guam 1979), which held that Guam was bound
by the same limitations as binds the states with respect to both
the commerce clause and the import/export clause. This case
recently was cited with approval! in the cases of Sea-Land
Services, Inc. v. Municipality of San Juan, 505 F.Supp. 533
(D.P.R. 1980), and JDS Realty Corp. v. Government of Virgin
Islands, 593 F.Supp. 199 (D.V.1. 1984). These latter cases held
that neither the Government of Puerto Rico not the Govern-
ment of Virgin Islands can burden interstate and foreign
commerce.
In summary, the decision of the Ninth Circuit has reversed
long established precedent, rejected sound reasoning and thrown
into confusion the issue of Congress’ power over the territories
under the commerce clause.
THE GRANT OF ANTITRUST IMMUNITY TO THE
GOVERNMENT OF GUAM IS A JUDICIAL INCURSION
ON THE EXCLUSIVE RIGHT OF CONGRESS TO MAKE
RULES AND REGULATIONS FOR THE TERRITORIES
AND IS IN CONFLICT WITH THE LAW IN THE
DISTRICT OF COLUMBIA COURT OF APPEALS.
The Ninth Circuit has completely ignored or misunderstood
the purpose of the Organic of Guam and its amendment.
Equating Guam to the Alaska R.R. and other federal admin-
istrative or executive type agencies is unprecedented in the case
law, contrary to the holding in United States v. Wheeler, 435
U.S. 313, 98 S.Ct. 1679, 55 L.Ed.2d 3u3 (1978), and conflicts
with the law in the District of Columbia Circuit Court of
Appeals. The decision also flagrantly violates the clear Con-
gressional intention to grant the people of Guam local self
government which was the fulfillment of a treaty obligation
undertaken when the Senate ratified the United Nations
Charter. Senate Rep. No. 2109, 81st Congr., Reprinted in 1950
U.S. Code Congr. and Ad. News 2849; H.R. Rep. No. 1521, 90th
Congr., Reprinted in 1968 Code Congr. and Ad. News 3564.
Allowing this decision to stand is an insult to the citizens of
Guam who believe they are participating in the democratic
process of local government, and it will provide foreign powers
hostile to the United States with a legitimate claim that the U.S.
is not abiding by its commitment to provide for local self
government in its territories.
With this decision the Ninth Circuit has cleariy overstepped
the boundaries of the judiciary and wandered into the exclusive
preserve of Congress. They have done this based primarily on a
mistaken understanding of the meaning of Wheeler. Wheeier,
while stating that Guam is “entirely the creation of Congress” (a
statement with which we have absolutely no argument), does not
equate Guam with the type of federal agency or instrumentality
represented by the Alaska R.R. and the Federal Reserve Bank of
Atlanta. Rather, Wheeler, and the cases cited therein, at length
explains that the relationship of a territory to the federal
government is like a city to a state. Territories are subject to the
12
ultimate control of Congress and cities to the control of the
states that created them. They are political subdivisions of their
federal and state sovereigns. Wheeler, 435 U.S. at 319 n.2,
321 n. 17.
This case is important because now Guam and the Virgin
Islands and possibly Puerto Rico and the Northern Mariana
Islands wil! be classified as nothing more than federal robots.
The Supreme Court should grant certiorari on this issue because
to do otherwise will leave a judicial decision which clearly con-
tradicts the intention of Congress to give Guam se!f government,
an intention that was framed in light of United States obliga-
tions under the Charter of the United Nations.
Because the clear intention of Congress is to put Guam not in
the status of federal robot but rather in the status of a city under
federal sovereignty, it is logical that Guam should adhere to the
same laws that apply to cities. Guam with the power of local
legislation is in the same position as a city government relative to
the antitrust laws. It has the power to pass laws which may
interfere with the national policy of promoting competition and
may makes choices counseled solely by its own parochial interest
without regard to anticompetitive effects. City of Lafayette,
Louisiana v. Louisiana Power and Light Co., 435 U.S. 389, 408,
98 S.Ct. 1123, 55 L.Ed.2d 364 (1978).
Immunity from antitrust laws is not be lightly implied. United
States v. First National City Bank of Houston, 386 U.S. 361, 368
(1967). It may be granted only by the sovereign, which in the
United States may be only the U.S. or the individual state.
Community Communications Co. v. City of Boulder, Colo., 455
U.S. 40, 102 S.Ct. 835. 74 L.Ed.2d 810 (1982). There is simply no
authority for the proposition that a local territorial government,
whose chief executive officer is elected by the People of Guam,
and an autonomous agency of this government, whose directors
are appointed by that chief executive, may exempt themselves
from federal antitrust laws.
Because Wheeler teaches that Guam should be considered a
city and Lafayette and City of Boulder hold that cities are liable
under the antitrust laws unless the sovereign immunizes them,
the question to be answered in this case should be whether
13
Congress, as the sovereign, has expressed its intention to
immunize Guam from the reach of the antitrust laws.
The District of Columbia Court of Appeals has used this
intent test twice in determining the applicability of the antitrust
laws to governmental entities in the District of Columbia. In
Hecht v. Pro Football, Inc., 444 F.2d 931 (D.C. Cir. 1971), cert.
denied, 404 U.S. 1047 (1972), an agency of the District of
Columbia government charged with running the sports stadium
(in this case we have an agency of the Government of Guam
charged with running the airport) was found liable under the
antitrust laws because Congress had not expressed its intention
to immunize the board, the court noting that immunity from the
antitrust laws was not lightly to be implied. In Feldman v.
Gardner, 661 F.2d 1295 (D.C. Cir. 1981), cert. granted, 102
S.Ct. 3481 (1982), vacated on other grounds, 103 S.Ct. 1303
(1983), the District of Columbia Court of Appeals was found to
be immune from antitrust challenge because Congress had
intended that they be so immune. The Ninth Circuit in addition
to being at odds with the U.N. Charter, the expressed intent of
Congress, and the case of United States v. Wheeler, is also in
direct conflict with the District of Columbia Court of Appeals in
that it has found antitrust immunity without finding a
Congressional intent to immunize.
CONCLUSION
The basic mistake that the Ninth Circuit made in both of these
questions is the failure to understand that Guam has a thriving
and dynamic local government which does not receive daily
operating instructions from Washington. It forged a new
concept of federal territories without any basis or authority. it is
important for the Supreme Court to grant certiorari in this case
to bring order to the case law and coherence to the federa!
territorial relationship established by the Constitution and the
laws of the United States.
i4
Respectfully submitted,
WILLIAM M. FITZGERALD, ESQ.
Post Office Box 909
Saipan, CM 96950
THEODORE R. MITCHELL, ESQ.
Post Office Box 947
Saipan, CM 96950
(Counsel of Record)
Attorneys for Petitioners
[Appendices follow]
APPENDICES
A-|
Appendix A
District Court of Guam
Territory of Guam
Civil Case No. 82-0009
Yosh Sakamoto, et al.,
Plaintiffs,
v.
Duty Free Shoppers, Ltd., et al.,
Defendants.
[Filed December 7, 1983]
MEMORANDUM ORDER
STATEMENT OF THE CASE
Plaintiffs! filed their original complaint in this action
February 8, 1982, and then filed an amended complaint on
February 16, 1982. The Plaintiffs allege that beginning on or
before December, 1976, and continuing to the present, the
Defendants Guam Airport Authority and Duty Free Shoppers,
Ltd. (hereinafter referred to as the “GAA” and “DFS,” respec-
tively) engaged in unlawful combination and conspiracy in
restraint of interstate commerce by entering into contracts which
conferred upon DFS exclusive rights for the sale and delivery of
certain merchandise at the Guam International Airport
Terminal (hereinafter referred to as “GIAT”) and by enforcing
such contracts against the efforts of Plaintiff Pacific Gift Supply
(hereinafter referred to as “PGS”) to deliver merchandise at
the GIAT.
The Plaintiffs further allege that this conduct has harmed
them and that it violates Sections |, 2, and 3 of the Sherman
Act, 15 U.S.C. §§ 1-3, 42 U.S.C. § 1983, 48 U.S.C. § 1471, the
Fourth, Fifth, and Fourteenth Amendments to the Constitution
‘The Amended Complaint was originally filed by six plaintiffs. However,
the Court dismissed with prejudice the claims of three of those plaintiffs —
Hakubotan, Inc., Jenny’s Fashion, Inc., and Para Para, Inc. — by a court
order dated January 10, 1983, for refusal to respond to DFS’ First Set to Inter-
rogatories and First Request of Production of Documents dated June 25, 1982.
A-2
of the United States, and the Commerce Clause, Article I,
Section 8, Clause 3 of the Constitution of the United States.
Jurisdiction is invoked by the Plaintiffs pursuant to 28 U.S.C.
§§ 1331, 1337, and 1343; and 15 U.S.C. §§ 15 and 26.
On May 16, 1983, Plaintiff “PGS” filed a motion for partial
summary judgment pursuant to Rule 56 of the Federal Rules of
Civil Procedure contending that the exclusive concession
agreement between GAA and DFS and the enforcement of such
agreement against the efforts of PGS to deliver merchandise at
the GIAT violates Section | of the Sherman Act, 15 U.S.C. § 1,
the Commerce Clause of the Constitution of the United States,
the Equal Protection Clause of the Fourteenth Amendment to
the Constitution, and “public policy”.
The Defendants filed a cross-motion for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure on
May 19, 1983. The Defendants maintain that the exclusive
contracts between GAA and DFS are lawful, reasonable and
procompetitive. The Defendants, in their memorandum in
support of summary judgment, addressed every claim set forth
by the Plaintiffs in their complaint. The Plaintiffs, however,
have not only failed to address certain arguments of Defendants,
but have limited their claims to the exclusive delivery rights
conferred to DFS by the GAA. This court will, therefore, limit
its decision to claims relating to the exclusive delivery rights
issue and dismiss the following claims which were not addressed
by the Plaintiffs:
1) Claims pursuant to 42 U.S.C. § 1983 and 48 U.S.C. § 1471.
2) Claims pursuant to the due process clauses of the fifth and
fourteenth amendments.
3) Claims pursuant to the fourth amendment.
On August 19, 1983, the Plaintiffs filed a motion to amend
responses to requests for admissions. The Court heard the
motion to amend responses to requests for admissions, the
Plaintiffs’ partial summary judgment motion and the Defend-
ants’ motion for summary judgment on August 30, 1983. The
Plaintiffs were represented by William M. Fitzgerald; the
Defendant “DFS” was represented by Jay N. Fastow and
A-3
William J. Blair; the Defendant “GAA” was represented by
Richard Pipes; and the Defendant Government of Guam was
represented by Margaret E. Bean, Assistant Attorney General.
The Court denied Plaintiffs’ motion to amend admissions and
took the other motions under advisement.
STATEMENT OF FACTS
The Department of Commerce of the Government of Guam
directly managed and operated the GIAT until 1975. in 1975,
the Guam Legislature enacted Public Law 13-57, entitled the
“Guam Airport Authority Act”, creating the Guam Airport
Authority (“GAA”), as a public corporation and autonomous
instrumentality of the Government of Guam, to manage and
operate the GIAT.
In 1967, the Government of Guam entered into an exclusive
merchandise concession agreement with Jones & Guerrero
Company with regard to the GIAT. In 1972, the exclusive
merchandise concession agreement was assigned from Jones &
Guerrero Company to DFS with the approval of the Govern-
ment of Guam. In 1978, the GAA, by competitive bid, offered an
exclusive concession at the GIAT for a term of fifteen (15) years
with an option for the concessionaire to extend the concession
for an additional five years. At this same time, the GAA was also
engaged in planning the financing and construction of a new air
terminal at the Airport. The construction was to be financed
through the sale of revenue bonds, which were to be entirely
supported by the payments under the 1978 concession
agreement.
The GAA publicized the availability of the concession in the
Pacific Daily News, the local newspaper on Guam, and the Wall
Street Journal and made the bid open to any party who could
meet the following qualifications set forth by the GAA:
“. . . being in existence for 5 years, at least 3 years
immediate prior experience operating similar airport
» concessions with annual volume $10 million and finan-
cial strength to provide unconditional minimum guar-
antee, advance cash deposit and start-up capital
A-4
including all tenant improvements... [with] [m]inimum
acceptable guarantee [of] $15 million with 10 percent
advance cash deposit .. .”
A few parties were interested in the exclusive concession but
DFS submitted the highest bid (over $140,000,000.) and was
awarded the exclusive concession at the GIAT. The concession
agreement was executed between GAA and DFS on October 18,
1978. It should be noted that the Plaintiffs did not make a bid,
did not object to the bid qualifications set forth by the GAA,
and did not seek to influence the GAA to offer sale or delivery
privileges on a non-exclusive basis.
On the basis of the guaranteed fees from DFS under the 1978
concession agreement, the GAA sold $43 million in revenue
bonds in 1979. Using the funds it received from the sale of these
bonds, the GAA began constructing a new terminal complex at
the Airport in 1980. The new airport terminal was completed
and opened for beneficial occupancy on January 20, 1982, at a
cost to GAA in excess of $50 million.
The Plaintiff, PGS, has attempted on numerous occasions to
deliver its merchandise to the airport terminal. At first, the
Plaintiff would sell its merchandise and accept payment from
the tourist and then deliver it to the airport and check it in. In
April, 1976, an attorney for DFS informed the airlines that the
pre-check-in procedure violated FAA rules and the airlines
discontinued this practice. From April until August, 1976, the
candy was sold to the tourist and paid for, then delivered to the
airport and carried to the check-in counters by PGS employees.
The tourist would then pick up the merchandise and check it in.
On June 7, 1976, S. T. Leon Guerrero, Acting Executive
Manager of the GAA, sent a letter to Mr. Yosh Sakamoto
advising him to “immediately cease delivery of any merchandise
to departing passengers at GIAT”.
PGS continued the practice of delivering to the check-in
counter between September, 1976, and February, 1977.
On February 2, 1977, David Tancap, Executive Manager of
the GAA, sent a letter to Mr. Yosh Sakamoto of PGS stating the
following:
detente ht ears tis albania YRS Pi Me ies ee
A-5
“It has again been brought to our attention that you are
still delivering candy to departing passengers at the
Guam International Air Terminal (GIAT). You were
advised to cease delivery of any merchandise to depart-
ing passengers at GIAT by my June 7, 1976 letter which
you received in August, 1977 [sic]. Therefore, | am again
advising you to immediately cease delivery of any
merchandise to departing passengers at GIAT. Further-
more, I have instructed our Operations Officer to evict
you or your representative from the airport if you
continue this practice.
To make myself perfectly clear, I will take all necessary
measures under the law to protect the rights of tenants/
concessionaires of the Guam Airport Authority (GAA).”
On the basis of Tuncap’s instructions, PGS discontinued
deliveries to the airport and instead delivered to the hotels. Then
the candy was placed on the tour bus and PGS employees would
off-load the merchandise and carry it to the check-in counter.
This practice continued through 1978 and until February, 1979.
On March 14, 1979, Manual F. L. Guerrero, Executive
Manager of GAA, sent a letter to Mr. Sakamoto requesting
PGS to cease delivery of goods to passengers or would-be
passengers at GIAT. Mr. Sakamoto was further informed that
this regulation applied to everyone. not just PGS.
Subsequently, PGS requested that the tour agents and bus
drivers assist the tourists with their merchandise at the GIAT.
The tour agents and bus drivers »’ere then compensated by PGS
for their service.
A letter dated March 10, 1980, was sent by th attorney for
GAA notifying the attorney for PGS that the GAA has the
authority to prohibit Sakamoto or PGS employees from deliv-
ering candy to departing passengers at GIAT pursuant to § 100.3
of Rules and Regulations of the GAA and has the further right
to eject Sakamoto or PGS employees from the airport premises
pursuant to § 100.6(B) of the GAA Rules and Regulations if
they continue such practices.
Subsequently, this lawsuit was filed by the Plaintiffs.
A-6
I. GOVERNMENTAL ACTION IMMUNITY
The Defendants maintain that the conduct challenged by the
Plaintiffs, i.e., the granting and enforcing by the GAA of
exclusive Airport merchandise delivery rights, is immune from
antitrust scrutiny since such conduct is governmental action.
The State Action Immunity Doctrine
The Defendants initially contend that the conduct challenged
by the Plaintiffs is immune from antitrust scrutiny under the
Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943)
“state action” immunity doctrine. In Parker, Id., the Supreme
Court determined, after carefully reviewing the legislative
history of the Sherman Act, that Congress intended the Act to
restrain only private anticompetitive action, not state action
directed by the legislature.
It appears that the Plaintiffs and the Defendants are in agree-
mem that the challenged conduct in this case is governmental
action. The Plaintiffs, however, reject the Defendants argument
that the Parker “state action” immunity doctrine applies to the
Territory of Guam. This Court is an agreement with the Piain-
tiffs that the Territory of Guam cannot be considered a state for
the purposes of determining the applicability of the Antitrust
laws. It is apparent that the principle of federalism underlies the
“state action” immunity doctrine. As the Supreme Court stated
in Parker, Id. at 351,
“[iJn a dual system of government in which under the
Constitution, the states are sovereign, save only as
Congress may constitutionally subtract from their
authority, an unexpressed purpose to nullify a state’s
control over its officers and agents is not lightly attri-
buted to Congress.”
sith ABA a Sd nd
A-7
Thus, since the Eleventh Amendment to the Constitution of the
United States does not encompass unincorporated territories,
the Territory of Guam lacks the sovereignty of a state.”
The Federal Action Immunity Doctrine
The Defendants also maintain that all federal agencies and
instrumentalities are absolutely immune from antitrust scrutiny.
Sea-Land Service, Inc. v. Alaska Railroad, 659 F.2d 243, 244
(D.C. Cir., 1981) cert. denied, 455 U.S. 919 (1982); Feldman v.
Gardner, 661 F.2d 1295 (D.C. Cir., 1981) cert. granted, District
of Columbia Court of Appeals v. Feldman, 102 S.Ct. 3481
(1982), and vacated on other grounds, 103 S.Ct. 1303 (1983);
and Webster County Coal Corp. v. Tennessee Valley Authority,
476 F.Supp. 529, 532 (W.D. Kentucky, 1979). It follows that the
Defendants then assert that the GAA and the Government of
Guam are agencies and instrumentalities of the federal govern-
ment and as such are absolutely immune from antitrust liability.
The Pia‘ntiffs, on the other hand, contend that the Territory of
Guam should be treated as a municipality and, therefore, not
entitled to antitrust immunity.
It is the Court’s determination that the Government of Guam
and, indirectly, the GAA, ar “zderal agencies and instrumental-
ities for the purposes of the Antitrust law and that their chal-
lenged conduct is immune from antitrust scrutiny. Pursuant to
the Organic Act of Guam, 48 U.S.C. § 142la and § 1423a,
Congress expressly created the Government of Guam and
authorized it to regulate all matters of local concern. The
Government of Guam, acting as an agent and instrumentality of
the Congress in this respect, created the GAA as “a public
corporation and autonomous instrumentality of the Govern-
ment of Guam” (§ 62001 of the Government Code of Guam) “to
2Since this Court has determined that the Territory of Guam cannot be
considered a State within the context of the Antitrust laws, it will not address
the two-prong test applied to independent political subdivisions of a State set
forth in California Retail Liquor Dealers’ Assn. v. Midcal Aluminum, Inc., 445
U.S. 97, 105, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980).
i.e., (a) “the challenged restraint must be one clearly articulated and
affirmatively expressed as state policy,” and
(b) “the policy must be actively supervised by the State itself”.
A-8
acquire, construct, reconstruct, purchase, extend, improve,
better, operate and maintain airports and related facilities for
civil aviation purposes on Guam”. § 62003 of the Government
Code of Guam.
Although the Government of Guam granted the GAA broad
discretionary powers, it is apparent to this Court that the
Government of Guam was concerned with the financial stability
of the Airport and expressly limited and restricted the GAA’s
authority in this particular area. First, the Government of Guam
enacted a comprehensive statutory scheme to authorize and
encourage the issuance of revenue bonds. § 62100 et seq. of the
Government Code of Guam. Second, the Government author-
ized and required the GAA to “manage and operate the Airport
in the most efficient manner consistent with the protection of the
bondholder” and “to keep the Airport on a self-sustaining
basis.” §§ 62010 and 62114 of the Government Code of Guam. It
is obvious that the main concern of the Government of Guam
was to ensure the protection of the bondholder and financial
stability of the Airport. In order to assure this necessary pro-
tection and stability, after consultation with its financial
advisors, the GAA determined that is had to have guaranteed
income from a merchandise concession for 15-20 years. (See
affidavit of R. M. Stone at p. 4.) It is, therefore, apparent to this
Court that the GAA was acting in accordance with the mandate
of the Government of Guam when it entered into the exclusive
Airport merchandise concession agreement with DFS. As
previously stated, DFS submitted the highest bid, over
$140,000,000. in guaranteed concession fees for a period of 15
years, (with an option for DFS to extend for an additional five
years) and on the basis of such guaranteed fees cho GAA was
able to sell $43 million in revenue bonds to finance the con-
struction of the new terminal complex at the Airport. If it were
not for the exclusive nature of the concession, no firm would
have bid the amount bid by DFS to secure the revenue bonds.
(See affidavit of R. M. Stone, at p. 5.)
In addition, it is obvious that the Government of Guam
contemplated the granting of the,exclusive airport concession by
GAA since the policy of exclusive merchandise concessions at
the Airport has been continually and specifically appreved by
A-9
the Government of Guam. In 1967, the Government of Guam
originally adopted the policy of exclusivity when it directly
operated the airport and conferred exclusive concession rights to
J & G Company. In 1972, the Government of Guam reaffirmed
its policy of exclusivity by assigning the exclusive merchandise
concession agreement from J & G Company to DFS. Finally, in
1979, at the request of the Governor, the Government of Guam,
impliedly approved the policy of exclusive Airport delivery
rights by adopting Resolution I-S, in which is expressed its
approval of the GAA’s amendment of the exclusive concession
agreement with DFS and authorized the sale of bonds which
would be supported by revenues accruing under such agreement.
Thus, it is clear to this Court that with respect to the conduct
challenged by the Plaintiffs, the GAA was acting as the alter ego
of the Government of Guam in its capacity as a federal agency
and instrumentality and is to be afforded the same immunity
from the Antitrust laws.
The Court feels the need at this time to distinguish the case of
Hecht v. Pro Football, Inc., 444 F.2d 931 (D.C. Cir., 1971), cert.
denied, 404 U.S. 1047 (1972), upon which the Plaintiff has
placed great reliance. In Hecht, the District of Columbia
Armory Board was established by the Department of the
Interior to provide a stadium for District of Columbia sports
teams. The Board entered into a contract with the Redskins
containing a restrictive covenant prohibiting the use of the
stadium by any professional football team other than the
Redskins for a period of 30 years. The United States Court of
Appeals for the District of Columbia Circuit held that the
Armory Board was not immune from antitrust liability. The
Plaintiffs analogize Washington, D.C. to Guam and the Armory
Board to the Guam Airport Authority. The Plaintiffs maintain
that Washington, D.C. and the Territory of Guam are both local
governments created by the United States Congress and that
both the D.C. stadium Board and the GAA are local instru-
mentalities set up to administer public facilities under those local
governments. Therefore, the Plaintiffs contend that the actions
of the Government of Guam and GAA are not immune from
antitrust liability.
A-10
A more recent case from the D.C. Circuit, however, has held
that acts of the local Court of Appeals were immune from the
antitrust laws, because that court was “plainly a federal instru-
mentality”. Feldman v. Gardner, supra at 1307. The Feldman
court distinguished and clarified its holding in Hecht, stating
that the Armory Board was not immune from antitrust liability
since it was commissioned to operate the stadium as a private
venture.
The operation of the GIAT by the GAA can certainly not be
characterized as the operation of the private venture. The GIAT
is the only commercial airport on the island of Guam providing
essential air service to the people of Guam. Additionally,
tourism is a major industry on Guam and the airport system is
essential to the tourism industry and its expansion. Thus, it is
evident that the people of Guam are dependent upon the GIAT
for their economic well-being and that the GAA as a public
authority maintains and operates the GIAT in the best interest
of the public.
With regard to the actions of DFS in relation to the immune
conduct of the GAA and the Government of Guam, it is the
determination of this Court that such actions of DFS also fall
outside the purview of the Sherman Act’s prohibition. Medical
Association of the State of Alabama v. Schweiker, 554 F.Supp.
955, 966 (N.D. Alabama, 1983).
Thus, the challenged conduct of the GAA, the Government of
Guam and DFS is immune from antitrust scrutiny.
The Noerr-Pennington Doctrine
The Noerr-Pennington doctrine provides that the efforts of
private persons to influence the operation of government for
their own economic advantage are immune from the operation
of the antitrust laws. Eastern Railroad Presidents Conference v.
Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d
464 (1961); United Mine Workers of America v. Pennington,
381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965); and Cali-
fornia Motor Transport Company v. Trucking Unlimited, 404
U.S. 508, 510, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972).
The Plaintiffs agree that the Noerr- Pennington doctrine
Pe eee
el hc tl le i
Fe eee
A-11
immunizes lobbying efforts, but contend that this case is not
covered by the doctrine since it involves a conspiracy between
DFS and GAA evidenced by a written agreement which results
in a restraint of trade. The Defendants reply that the claims filed
against DFS by the Plaintiffs relate only to allegations that it
influenced the GAA to execute and enforce the exclusive
merchandise agreements.
Paragraph 21 of the Plaintiffs’ Amended Complaint states:
“The aforesaid conspiracy consisted of a continuing
agreement . . . to obtain an exclusive dealing arrange-
ment for cencession sales and deliveries at the Airport,
and to prohibit such sales and deliveries by any party
other than Defendant Duty Free.”
It appears to this Court that Paragraph 21 of the Plaintiffs’
Amended Complaint sets forth exactly the type of efforts which
are immune from antitrust scrutiny pursuant to the Noerr-
Pennington doctrine. It is, therefore, the determination of this
Cour: that even if DFS engaged in such efforts it is immune
from antitrust liability.
However, as evidenced by the affidavit of R. M. Stone, the
exclusivity of the Concession Agreement resulted from the
GAA’s unilateral decision to offer such sale and delivery rights
on an exclusive basis. Thus, there was no active government
involvement in restraint of trade, no concerted action and,
therefore, no violation of Section 3 of the Sherman Act. United
States v. Colgate & Company, 250 U.S. 300, 39 S.Ct. 465, 63 LE
992 (1919).
Il. STANDING
In addition to the challenged conduct of the GAA, the
Government of Guam and DFS being exempt from antitrust
scrutiny on the basis of the federal action immunity and the
Noerr-Pennington doctrine, this Court further concludes that
the Plaintiffs do not have standing to bring this action.
Title 15 U.S.C. § 15(a) (Section 4b of the Clayton Act) states
as follows:
A-12
“. |. any person who shall be injured in his business or
property by reason of anything forbidden in the antitrust
laws may sue therefor in any district court of the United
States in the district in which the defendant resides or is
found or has an agent, without respect to the amount in
controversy, and shall recover threefold the damages by
him sustained, and the cost of suit, including a reason-
able attorney's fee.”
In order to have standing under § 15, the Plaintiff must
establish injury to his business or property that occurred by
reason of an antitrust violation. The Plaintiff must further show
that the loss to his business or property was caused by the
alleged antitrust violation. Solinger v. A & M Records, Inc., 586
F.2d 1304, 1308-1309 (9th Cir., 1978), cert. denied, 441 U.S. 908
(1979).
Legal Injury to Business or Property
The GAA and the Government of Guam are fully empowered
to regulate the commercial use of the Airport. In fact, without
written permission from GAA, it is unlawful for anyone to use
Airport premises for commercial purposes. Sections 3030.3 and
3039.5 of the GAA Rules and § 62013 of the Government Code
of Guam. As the Plaintiffs admit, they have never received
permission from GAA or the Government of Guam to sell or
deliver goods at the Airport. Thus, the Plaintiffs, by reason of
the exclusive merchandise concession agreements and their
enforcement, have not been deprived of any legal right which
they had previously and thus cannot claim any legal injury to
their business or property.
Furthermore, the Plaintiffs have no right to conduct their
businesses on others’ property, [Donovan v. Pennsylvania
Company, 199 U.S. 279, 26 S.Ct. 9!, 50 L.Ed. 192 (1905) and
Export Liquor Sales, Inc. v. Ammex Warehouse Company,
Inc., 462 F.2d 251 (6th Cir., 1970), cert. denied, 400 U.S. 1000
(1971)] and no right to deal with the GAA or the Government of
Guam. See Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S.Ct.
869, 84 L.Ed. 1108 (1940).
ee te ae
A-13
Additionally, the GIAT is not, as the Plaintiffs contend, a
facility which is essential to the ability of the Plaintiffs to
conduct their businesses. As noted in Hecht v. Pro Football,
Inc., 570 F.2d 982, 993 n. 45 (D.C. Cir., 1977), cert. denied, 436
U.S. 956 (1978), a facility is essential to the ability of competi-
tors to do business, where, without access to that facility, “all
possible competition is by definition excluded”. As evidenced by
the Plaintiffs’ admissions, they have businesses and have been
able to conduct such businesses and earn profits without the use
of the Airport to make their commercial deliveries. To permit
the Plaintiffs to use the Airport to make their commercial
deliveries is certainly not essential to their businesses; it would
merely provide an added convenience to their customers.
Thus, the Plaintiffs have failed to establish any legal injury to
their businesses.
Antitrust Injury
The second element necessary to establish standing is that a
Plaintiff must show an antitrust injury, i.e., that he has been
injured by a decrease in competition. Associated General
Contractors of California, Inc. v. California State Council of
Carpenters, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). As the
Defendants correctly argue, no one has the right to do business
at GIAT without the written permission of the GAA; so by the
GAA granting the DFS concession, competition has actually
increased the sale of merchandise in Guam since such sale and
delivery services provided by DFS at the Airport would have
been non-existent. It must be emphasized that the Plaintiffs are
not being denied the use of the GIAT for collateral non-trans-
portation purposes, i.e., to make commercial deliveries. They
are not being deprived of the use of the GIAT for transportation
purposes.
Thus, there has been no antitrust violation or injury.
Causal Nexus between Antitrust Violation and Injury
The Plaintiffs have failed to convince this Court that their
purported injury was the result of the alleged unlawful conduct.
A-14
When the 1967 concession agreement was awarded by the
Government of Guam, the Plaintiffs’ businesses were non-
existent. In 1978, it was the unilateral decision of GAA,
pursuant to its statutory authority, to grant an exclusive
concession to insure the financial stability of the airport and the
protection of the bondholders. Additionally, it was the Plain-
tiffs’ failure in 1978 to offer bids or to submit proposals to the
GAA in an attempt to influence the GAA to alter the terms of
the exclusive concession.
Moreover, it is evident that the Plaintiffs do not have the
financial ability to meet the 1978 bid qualifications established
by the GAA for the exclusive airport concession and, therefore,
are not able to engage in the business from which they maintain
they were excluded.
Thus, the Plaintiffs have failed to establish a causal nexus
between the alleged antitrust violation and the purported injury.
ALLEGED UNLAWFUL CONDUCT IS REASONABLE
In order for a restraint of trade to be in violation of the
antitrust laws, it must be “unreasonable” and anticompetitive.
Ron Tonkin Gran Turismo, Inc. v. Fiat Distributors, Inc., 637
F.2d 1376, 1381 (9th Cir., 1981), cert. denied, 454 U.S. 831
(1981) and A. H. Cox & Company v. Star Machinery Company,
653 F.2d 1302, 1305 (9th Cir., 1981). There are two rules which
courts apply to determine whether conduct is unreasonable or
anticompetitive. The first rule is the per se rule, i.e., that the
conduct is unreasonable per se. The second rule is the rule of
reason. Ron Tonkin, supra.
When a court applies the rule of reason test, it inquires as to
the effect the challenged conduct has on competition. Ron
Tonkin, supra, at 1388. If, however, the court identifies conduct
which has been held to be unreasonable per se, it is barred from
inquiring as to its reasonableness. In order for conduct to be
conclusively presumed to beginreasonable, it must have a
pernicious effect on competition and lack any redeeming virtue.
Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5, 78
S.Ct. 514, 2 L.Ed.2d 545 (1958).
—_
A-15
The Plaintiffs maintain that the challenged conduct in the case
at bar is unreasonable per se. This Court does not agree. First,
there is a need to distinguish between horizontal restraints and
vertical restraints. A horizontal restraint is an agreement
between competitors to refuse to deal with one or more persons,
while a vertical restraint involves combinations of parties on
different levels of the distribution system. It has been held that
horizontal restraints are unreasonable per se. Ron Tonkin,
supra.
The Plaintiffs do not contend that the challenged conduct
amounts to a horizontal restraint but they do contend that the
challenged conduct is unreasonable per se since it is a vertical
restraint that has the presence of a horizontal element. In other
words, the Plaintiffs contend that through the concerted action
of DFS and the GAA, the GAA has refused to deal with the
Plaintiffs (competitors of DFS) and, hence, that the per se rule
should be applied. This Court, however, must reject this
argument. As previously mentioned, the exclusivity of the
Airport concession agreement did not result from concerted
action between DFS and the GAA, but from the unilateral
decision of the GAA to offer sale and delivery rights on an
exclusive basis. Even if this Court infers that DFS and the GAA
acted in concert, this Court is only justified in applying the per se
rule if “the challenged conduct clearly had, or was likely to have,
a pernicious effect on competition and lacked any redeeming
virtue.” Ron Tonkin, supra at 1387. Such is not the case. It has
already been stated in this decision that competition has actually
been increased by the GAA permitting DFS to conduct business
on the GIAT premises and that the exclusive concession
agreement was essential to the financial stability of the Airport
and benefits the tourism industry and the economy of the people ‘
of Guam.
Furthermore, the exclusive concession agreement is reason-
able as a matter of law because it was offered pursuant to an
open and fair competitive bid. Parmelee Transportation Co. v.
Keeshin, 292 F.2d 794 (7th Cir., 1961) cert. denied, 368 U.S. 944
(1961) and Bustop Shelters, Inc. v. Convenience & Safety Corp.,
521 F.Supp. 989, 997 (S.D. N.Y., 1981).
A-16
Ill. THE STATUTE OF LIMITATIONS AND
THE DOCTRINE OF LACHES
Finally, this Court determines that all claims filed by the
Plaintiffs are barred by the four-year statute of limitations
pursuant to !5 U.S.C. § 15b (Section 4b of the Clayton Act) and
the doctrine of laches.
Title 15 U.S.C. § 15b states as follows:
Ҥ 15b. Limitation of actions.
Any action to enforce any cause of action under
sections 15, 15a, or 15c or this title shall be forever
barred unless commenced within four years after the
cause of action accrued... .”
It should also be noted that the above four-year statute of
limitations period has been used by the Ninth Circuit as a guide-
line for the computation of the laches period in antitrust suits.
Aurora Enterprises v. National Broadcasting Co., 688 F.2d 689,
694 (9th Cir., 1982).
Statute of Limitations
The Defendants maintain that the Plaintiffs’ cause of action
accrued in 1976 or at least in 1977, the date of the Defendants’
final refusal to deal with the Plaintiffs, and thus, this action is
barred by the four-year statute of limitations. In a case such as
this, where the Plaintiffs’ claim is based upon the Defendants’
refusal to deal with it, i.e., to allow Plaintiffs the right to seil or
deliver at the airport terminal, the Plaintiffs’ cause of action
accrued at the time the Defendants made a final refusal to deal
and no new or continuing claims are created by subsequent
iterations of that refusal to deal. In Re Multi-district Vehicle Air
Pollution, 591 F.2d 68 (9th Cir., 1979.), cert. denied, 444 U.S.
900 (1979) and David Orgell, Inc. v. Geary’s Stores, Inc., 640
F.2d 936, 938 (9th Cir., 1981), cert. denied sub. nom. David
Orgell v. Joseph Wedgwood & Sons, 102 S.Ct. 92 (1981).
As evidenced by the Plaintiffs’ complaint (Paragraph 22(b)
and (m) of Plaintiffs’ amended complaint), and the letter from S.
T. Leon Guerrero, the Acting Manager of the GAA, to Mr.
Sakamoto dated June 7, 1976, the Plaintiffs have known since
A-17
sometime prior to December, 1976, that their deliveries to the
Airport were prohibited by the GAA. Even if Plaintiffs did not
recognize the 1976 refusal to deal as absolute and final, it is
evident that they recognized the refusal to deal as final in 1977.
As stated in paragraph 22(c) of their complaint“... GAA forced
Pacific Gift Supply to cease making delivery of any merchandise
to departing passengers at the Airport in February, 1977”. The
1977 final refusal to deal is further evidenced by the letter from
David Tuncap, Executive Manager of GAA, to Mr. Y. Saka-
moto, Pacific Gift Supply Company, dated February 2, 1977, in
which the following was stated:
“It has again been brought to our attention that you are
still delivering candy to departing passengers at the
Guam International Air Terminal (GIAT). You were
advised to cease delivery of any merchandise to depart-
ing passengers at GIAT by my June 7, 1976 letter which
you received in August, 1977 [sic]. Therefore, | am again
advising you to immediately cease delivery of any
merchandise to departing passengers at GIAT. Further-
more, I have instructed our Operations Officers to evict
you or your representative from the airport if you
continue this practice.
To make myself perfectly clear, I will take all necessary
measures under the law to protect the rights of tenants/
concessionaires of the Guam Airport Authority
(GAA)...”
Thus, the Plaintiffs’ cause of action arose at least by 1977 and
its claim filed in February, 1982, is barred by the four-year
statute of limitations.
The Plaintiffs argue that their cause of action accrued in
October, 1978, the date that the exclusive concession agreement
between DFS and GAA was executed and this is still within the
four-year statute of limitations period. This Court does not
agree. The Defendants’ final refusal to deal was expressed at
least by 1977, and the offer of the new exclusive airport con-
cession in 1978 in no way detracted from its finality since the
policy of exclusive airport concessions at the Airport has been
continually and specifically approved and enforced by the
A-18
Government of Guam and the GAA since 1967. Thus, the
Plaintiffs had no reason t~ believe that the 1978 airport con-
cession agreement would not be in conformity with the policy of
exclusivity adopted by the GAA and the Government of Guam.
The Plaintiffs also contend that since they were hopeful of a
work-out arrangement through March, 1980, their cause of
action did not accrue until that time. This Court rejects this
contention on the basis that the Plaintiffs cannot toll the
running of the statute of limitations by claiming that they still
had a hope of dealing with the Defendants. Orgell, Inc., supra.
Doctrine of Laches
The Court also feels that this is an appropriate case to invoke
the application of the doctrine of laches since the Defendants
have been prejudiced by the five-year delay of the Plaintiffs in
bringing this suit. More specifically, the Plaintiffs could have
filed their suit prior to 1978, or in 1978 when the new airport
concession agreement was up for bid. However, the Plaintiffs
chose to wait until after DFS guaranteed fees in the amount of
$140,000,000. in the concession agreement, the GAA sold $43
million in revenue bonds in 1979 supported by the fees from the
concession agreement, the GAA began to build a new airport
terminal complex in 1980, and the new terminal complex was
completed in 1982 at a cost in excess of $50 million to the GAA.
It would be inequitable to permit the Plaintiffs to attempt to
invalidate the concession agreement at this time after such a
lengthy delay and after having allowed the Defendants to act in
substantial reliance on the validity of such concession agreement.
IV. COMMERCE CLAUSE
The Plaintiffs also maintain that the restriction on deliveries
to the Airport is an unreasonable burden on interstate
commerce in violation of the Commerce Clause, Article I,
Section 8, Clause 3, of the United States Constitution. This
Court determines that there is absolutely no merit to this
contention since Article I, Section 8, Clause 3 of the United
A-19
States Constitution has not been extended to Guam. 48 U.S.C.
§ 1421 b(u).3
However, even if the Commerce Clause were extended to
Guan, it is the Court’s decision that the alleged conduct of the
Defendants does not constitute an unreasonable burden on
interstate commerce in violation of the Commerce Clause since,
as previously mentioned, the Plaintiffs have no right to conduct
their businesss at the airport terminal. Also, the fact that the
GAA has permitted DFS to do business at the airport terminal
has actually facilitated commerce. The guaranteed concession
fees have provided the necessary revenues for the construction,
maintenance and operation of the airport thus benefiting the
tourism industry and the economic well-being of the people
of Guam.
Additionally, since this Court has determined that the alleged
conduct is immune from Sherman Antitrust scrutiny under the
federal immunity doctrine, such conduct cannot be found to
violate the Commerce Clause. The Congress in enacting the
Sherman Antitrust Act has exercised its plenary commerce
power to its fullest extent. McClain v. Real Estate Board of New
Orleans, Inc., 444 U.S. 232, 241, 100 S.Ct. 502, 62 L.Ed.2d 441
(1979) and United States v. American Building Maintenance
Industries, 422 U.S. 271, 278, 95 S.Ct. 2150, 45 L.Ed.2d 164
(1975). Thus, it follows that if the federal immunity doctrine is
applicable to Sherman Act claims it is also applicable to a claim
under the Commerce Clause. See Western & Southern Life
Insurance Co. v. State Board of Equalization of California, 451
U.S. 648, 653, 101 S.Ct. 2070, 68 L.Ed.2d 514 (1981).
3Section 1421b(u) of Title 48 USCA states in pertinent part as follows:
“(u) The following provisions of and amendments to the Constitution
of the United States are hereby extended to Guam to the extent that
they have not been previously extended to that territory and shall
have the same force and effect there as in the United States or in any
State of the United States: article I, section 9, clauses 2 and 3; article
IV, section | and section 2, clause 1; the first to ninth amendments
inclusive; the thirteenth amendment; the second sentence of section |
of the fourteenth amendment; and the fifteenth and nineteenth
amendments.
A-20
V. EQUAL PROTECTION
Section 100.3 of the GAA Rules and Regulations states as
follows:
“No person shall carry on any commercial activity at the
airport without the written consent of the authority.”
The Plaintiffs maintain that the granting of the exclusive
delivery rights to DFS was an arbitrary and capricious applica-
tion of the regulation by the GAA which has created an
invidious discrimination by denying use of the GIAT to one
business while granting it to another in violation of the Equal
Protection Clause of the Fourteenth Amendment to the U.S.
Constitution.
This argument must fail since the Plaintiffs have no right to
conduct their businesses at the airport terminal and the exclusive
concession agreement was granted pursuant to a fair and
competitive bidding procedure. The Plaintiffs were not
discriminated against; they merely failed to seek the exclusive
concession when it was offered and further failed to offer a
proposal to the GAA concerning the granting of non-exclusive
delivery privileges.
Moreover, the equal protection law will not reach a situation
where a government is engaged in economic regulation that is
rationally related to a legitimate governmental interest. City c”
New Orleans v. Dukes, 427 U.S. 297, 96 S.Ct. 2513, 49 L.Ed.2d
511 (1976) and Benson v. Arizona State Board of Dental
Examiners, 673 F.2d 272 (9th Cir., 1982).
In the case at bar, the granting of the exclusive airport
concession by the GAA pursuant to its statutory authority
passes the rationality test. The purpose of the exclusive con-
cession was to maximize Airport revenues to expand and
improve the operations of the Airport and ensure the financial
stability of the Airport, thereby promoting the tourism industry
and the economic well-being of the Territory of Guam. This
Court concludes that the GAA and the Government of Guam
could reasonably decide that in order to expand and improve the
operations of the GIAT, keep the airport on a self-sustaining
basis and protect its bondholders, that it needed to grant an
A-21
exclusive merchandise concession agreement with guaranteed
income from such concession for a period of at leasi 15 to 20
years to a party who could meet the bid qualifications set forth
by the GAA. supra, p. 0.
Thus, this Court determines that there is no denial of equal
protection since the judgments of the GAA and the Government
of Guam are rationally related to a legitimate governmental
interest.
CONCLUSION
There being no material issue of fact in dispute, it is the
determination of this Court that the Defendants are entitled to
their motion for Summary Judgment as a matter of law. To hold
otherwise would result in a substantial loss of guaranteed
concession fees for the GIAT4 which, in turn, would have a
devastating effect on the financial stability of GIAT, GAA’s
ability to operate, maintain and improve the Airport, tourism,
the economy of Guam, and the people of Guam.
Thus, Plaintiffs’ Partial Motion for Summary Judgment is
denied and the Defendants’ Motion for Summary Judgment
is granted.
So Ordered.
Dated this 6th day of December, 1983.
CRISTOBAL C. DUENAS
Judge, District Court of Guam
‘If there is an interruption or loss of any of the concessionaire’s exclusive
rights for a period in excess of sixty (60) days, the guaranteed fee to GAA in
the amount of $140,000,000. will be reduced to an amount in no event greater
than $74.1 million. Concession Agreement dated October 18, 1978, §§ 1.06,
7.01 (e) and 7.02(b).
A-22
Appendix B
United States Court of Appeals
For the Ninth Circuit
No. 84-1587
D.C. No. C-82-0009-CCD
Yosh Sakamoto, et al.,
Plaintiffs-Appellants,
V.
Duty Free Shoppers, Ltd., et al.,
Defendants-Appellees.
OPINION
Argued and Submitted November 8, 1984
Filed July 1, 1985
Appeal from the District Court of Guam
Territory of Guam
Cristobal C. Duenas,
District Judge, Presiding
BEFORE: HUG, TANG, and SCHROEDER, Circuit Judges.
SCHROEDER, Circuit Judge.
The plaintiffs are in the business of selling gifts to tourists in
Guam. They brought this action challenging the legality of an
exclusive concession agreement giving one of their competitors,
Duty Free Shoppers, Ltd., exclusive rights to sell and deliver
certain kinds of merchandise to departing passengers at the
Guam Airport Terminal. The defendants in this suit are the
parties to the concession agreement: Duty Free, the Government
of Guam, the Guam Airport Authority, and the Authority’s
executive manager.
The district court granted summary judgment for the defend-
ants and dismissed the action. The plaintiffs’ principal conten-
tions on appeal are that the concession agreement burdens
A-23
interstate and foreign commerce in violation of the Commerce
Clause of the United States Constitution and violates the
antitrust laws. We affirm.
The business of plaintiffs and Duty Free is primarily aimed at
Japanese tourists in Guam who purchase gifts or “omiyage” to
carry back to Japan. The exclusive concession practice in
question here began in 1967, and the current contract was
entered into in 1978 as the result of competitive bidding. Duty
Free submitted the highest bid, $140 million, and was awarded
the fifteen year concession which gave it the exclusive right to
sell and deliver specified merchandise at the airport. Proceeds
from the contract represent a major source of funding for the
construction and maintenance of the airport terminai.
In their chalienge to the contract as violative of the commerce
clause, plaintiffs do not contest the right of the Government of
Guam and the Airport Authority, its agency, to limit by contract
the number of businesses permitted to make sales on the
premises of the airport. Nor do plaintiffs contend that the
contract directly interferes with their ability to sell to customers
elsewhere. Plaintiffs complain about the limitation on their right
to deliver goods at the airport. They contend that the exclusive
contract with Duty Free, which prevents them from delivering
previously purchased merchandise to departing passengers as
they arrive at the airport, is an undue burden on interstate and
foreign commerce.
The defendants’ threshhold response to this argument, and one
with which we agree, is that the limitations which the commerce
clause places upon the power of state governments to burden
commerce do not apply to the Government of Guam because
Guam is not a state. The defendants correctly point out that
these limitations on states, the “negative implications” of the
commerce clause, flow from the commerce clause’s grant of
plenary authority over commerce to Congress. “[T]he states
have not been deemed to have authority to impede substantially
the free flow of commerce . . . or to regulate those phases of the
national commerce which, because of the need of national
uniformity, demand that their regulation, if any, be prescribed
by a single authority.” Southern Pacific Co. v. Arizona, 325 U.S.
A-24
761, 767, 65 S.Ct. 1515, 1519, 89 L.Ed. 1915 (1945) (footnote
omitted). The historical role of the commerce clause has been
confined to limiting regulatory and taxing actions by states
which may interfere with federal sovereignty. See L. Tribe,
American Constitutional Law at 336 (1978), quoted in Reeves,
Inc. v. Stake, 447 U.S. 429, 437, 100 S.Ct. 2271, 2277, 65
L.Ed.2d 244 (1980).
Since Guam is an unincorporated territory enjoying only such
powers as may be delegated to it by the Congress in the Organic
Act of Guam, 48 U.S.C. § 1421a, the Government of Guam is in
essence an instrumentality of the federal government. See
United States v. Wheeler, 435 U.S. 313, 320-21, 98 S.Ct. 1079,
1084-85, 55 L.Ed.2d 303 (1978). Plenary control by Congress
over the Guamanian government is illustrated by the provision
that Congress may annul any act of Guam’s Legislature. 48
U.S.C. § 1423i. Defendants therefore conclude that the negative
implications of the commerce clause, designed to preserve
congressional authority, cannot limit the Guamanian govern-
ment, which is a creation of Congress itself. Wheeler, 435 U.S. at
321, 98 S.Ct. at 1085, 55 L.Ed.2d 303.
While the reported decisions considering this or similar
questions are few in number, they support defendants’ position.
In Buscaglia v. Ballester, 162 F.2d 805 (Ist Cir.), cert. denied,
332 U.S. 816, 68 S.Ct. 154, 92 L.Ed 393 (1947), the First Circuit
held that the commerce clause did not restrict the unincorpor-
ated Territory of Puerto Rico because Congress had the power
under the territories clause to limit territorial action “even to the
extent of annuling local legislation.” Jd. at 807. Cf. Sea-Land
Service, Inc. v. Municipality of San Juan, 505 F.Supp. 533
(D.P.R. 1980) (decided after Puerto Rico became a common-
wealth and holding that although the commerce clause does not
apply to Puerto Rico ex proprio vigore, its prohibitive effect is
binding on the commonwealth through the territories clause).
In United States v. Husband R. (Roach), 453 F.2d 1054 (Sth
Cir. 1971), cert. denied, 406 U.S. 935, 92 S.Ct. 1785, 32 L.Ed.2d
136 (1972), the Fifth Circuit held that the Governor of the Canal
Zone was not subject to the limitations imposed on a state
legislative body by the commerce clause. /d. at 1059-60. The
A-25
court reasoned that since Congress retains plenary power to
regulate the territories, U.S. Const. art. IV, § 3, cl. 2, and to
regulate interstate and foreign commerce, U.S. Const. art. I, § 8,
cl. 3, the Governor of the Canal Zone as Congress's “delegate,”
is not subject to the commerce clause limitations. 453 F.2d at
1059-60. Scholarly commentary agrees that constitutional
restrictions on the states’ regulation of interstate commerce do
not extend to unincorporated territories. Leibowitz, United
States Federalism: The States and the Territories, 28 Am. U.L.
Rev. 339 (1979); Leibowitz, The Applicability of Federal Law to
Guam, 16 Va.J.Int’l.L. 21 (1975); Fuster, The Origins of the
Doctrine of Territorial Incorporation and Its Implications
Regarding the Power of the Commonwealth of Puerto Rico to
Regulate Interstate Commerce, 43 Rev.Jur.U.P.R. 259 (1974).
Ninth Circuit precedent is not to the contrary. In Andersen v.
Mullaney, 191 F.2d 123 (9th Cir. 1951), aff'd 342 U.S. 415, 72
S.Ct. 428, 96 L.Ed. 458 (1952), we held that while the limitation
on state regulation of commerce through the commerce clause
did not apply by its own force to the Territory of Alaska, the
legislative power granted to the Territorial Legislature was such
that the territory should be treated as if it were a state. Alaska at
that time was an incorporated territory, well on its way to state-
hood, and all provisions of the United States Constitution
applied. Act of August 24, 1912, ch. 387, § 3, 37 Stat. 512
(codified at 48 U.S.C.A. § 23 (1952).
The distinction between incorporated territories which are
thought of as future states, see Granville-Smith v. Granville-
Smith, 349 U.S. 1, 5, 75 S.Ct. 553, 555-56, 99 L.Ed. 773 (1955)
and unincorporated territories, to which only the “essentials” of
the Constitution apply, is not new. It goes back to the 1901 series
of Supreme Court decisions known as the insular cases: Downes
v. Bidwell, 182 U.S. 244, 21 S.Ct. 770, 45 L.Ed. 1088 (1901);
Armstrong v. United States, 182 U.S. 243, 21 S.Ct. 827, 45 L.Ed.
1086 (1901); Dooley v. United States, 182 U.S. 222, 21 S.Ct. 762,
45 L.Ed. 1074 (1901); DeLima v. Bidwell, 182 U.S. 1, 21 S.Ct.
743, 45 L.Ed. 1041 (1901); see also Downes v. Bidwell, 182 U.S.
244, 21 S.Ct. 770, 45 L.Ed. 1088 (White, J., concurring). History
and the views of scholars and judges who have focused on the
issue all support our conclusion that the limitations the
A-26
commerce clause places on the powers of states to regulate
commerce do not affect the government of the unincorporated
Territory of Guam.
This court has never directly addressed the applicability of the
commerce clause’s negative implications to unincorporated
territories like Guam. We have, however, in three cases, assumed
without discussion that the commerce clause limits the govern-
ment of Guam in the same manner that it limits the states.' See
Pacific Broadcasting Corp. v. Riddell, 427 F.2d 519 (9th Cir.
1970) (gross receipts tax not violative of the commerce clause);
Asiatic Trans-Pacific, Inc. v. Maddox, 371 F.2d 132 (9th Cir.
1967) (gross receipts tax not violative of the commerce clause);
Manila Trading & Supply Co. v. Maddox, 335 F.2d 150 (9th
Cir. 1964) (gross receipts tax violative of the commerce clause).
We do not view these cases as controlling precedent on the
applicability of the commerce clause to Guam. In those cases,
this court simply assumed that the commerce clause applied, but
the issue was never raised or discussed. Such unstated assump-
tions on non-litigated issues are not precedential holdings
binding on future decisions. See United States v. L.A. Tucker
Truck Lines, 344 U.S. 33, 37-38, 73 S.Ct. 67, 69, 97 L.Ed. 54
(1952) (prior decision is not binding precedent on point neither
raised by counsel nor discussed in the opinion of the court in
that case); Webster v. Fall, 266 U.S. 507, 511, 45 S.Ct. 148, 149,
69 L.Ed. 411 (1925) (“Questions which merely lurk in the record,
neither brought to the attention of the court nor ruled upon, are
not be considered as having been so decided as to constitute
precedents.”); Matter of Baker, 693 F.2d 925, 925-26 (9th Cir.
1982) (prior case found not to have established controlling
precedent on issue before the court since the question at issue
was neither contested not ruled upon in that case); Sethy v.
‘The district court of Guam has reached inconsistent results on the question
of commerce clause applicability. Cf Ambros, Inc. v. Maddox, 203 F.Supp.
934 (D. Guam 1962) (court refused to hold that Congress had not conferred
upon Guam the power to impose burdens on commerce by its approval of
legislation implicit in its failure to annul). With Duty Free Shoppers, Lid, v.
Tax Commissioner, 464 F.Supp. 730 (D. Guam 1979) (because no language
exists in the Guam Organic Act which indicates Congressional intent to
suspend the commerce clause’s operation, the court concluded that Guam is
bound by the limitations imposed by the commerce clause).
A-27
Alameda County Water District, 545 F.2d 1157, 1159-60 (9th
Cir. 1976) (en banc) (accord). We therefore agree with the
district court’s holding in this case that the commerce clause
does not limit the Government of Guam as it limits the govern-
ments of the states. The agreement does not violate the
commerce clause.
We turn next to the plaintiffs’ antitrust claims. The district
court dismissed the antitrust claims on several alternative
grounds, but we need to reach only the question of immunity.
Plaintiffs acknowledge that acts of both state and federal!
instrumentalities are immune from antitrust liability. See Parker
v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943);
Sea-Land Service, Inc. v. Alaska Railroad, 659 F.2d 243, 244
(D.C. Cir. 1981), cert. denied, 455 U.S. 919, 102 S.Ct. 1274, 7)
L.Ed.2d 459 (1982). Plaintiffs, however, try to fit this case within
the line of Supreme Court cases holding that municipalities,
unlike state goverments and federal instrumentalities, are not
immune unless acting pursuant to clearly articulated and
affirmatively expressed state policy to displace competition. See
Town of Hallie v. City of Eau Claire, U.S. : . 105
S.Ct. 1713, 1717, 25 L.Ed.2d 24 (1985); Community Communi-
cations Co. v. City of Boulder, 455 U.S. 40, 51, 102 S.Ct. 835,
840-41, 70 L.Ed.2d 810 (1982); City of Lafayette v. Louisiana
Power and Light Co., 435 U.S. 389, 413, 98 S.Ct. 1123, 1137, 55
L.Ed.2d 364 (1978); Lorrie’s Travel & Tours, Inc. v. SFO Air-
porter, Inc., 753 F.2d 790, 792 (9th Cir. 1985). Much of the force
of these cases has been prospectively overruled with the enact-
ment of the Local Government Antitrust Act of 1984, Pub. L.
No. 98-544, 90 Stat. 2750 (1984), effective after this lawsuit
was filed.
In Community Commmunication Co., the Supreme Court
held that the City of Boulder was not immune from antitrust
liability in connection with its policy of limiting competition in
cable television. The Court reasoned that the city, a “home rule”
municipality with rights of self government superseding the laws
of the state, was not entitled to the immunity enjoyed by the
state. The grant of home rule was not a “clear articulation and
affirmative expression” of state policy regarding cable television
regulation. Community Communication Co., 455 U.S. at 54-56,
A-28
102 S.Ct. at 842-43, 70 L.Ed.2d $10.
Guam’s relationship to the federal government is different
from Boulder’s relationship to Colorado. As we have seen, the
government of Guam is an instrumentality of the federal
government over which the federal government exercised
plenary control. Congress has granted it far fewer powers of self
government than the State of Colorado has granted the City of
Boulder. There is no reason why Guam should enjoy less
immunity than the federal government itself. See Jet Courier
Services, Inc. v. Federal Reserve Bank of Atlanta, 713 F.2d
1221, 1228 (6th Cir. 1983); Sea-Land Service, Inc., 659 F.2d
at 246-47.
The only remaining contention which plaintiffs pursue on
appeal is that because the contract permits delivery by only one
company, the contract violates the equal protection clause.
Because plaintiffs allege only economic discrimination, we need
detemine oniy whether the contract has a rational relation to
legitimate state interests. Ohio Bureau of Employment Services
v. Hodory, 431 U.S. 471, 489, 97 S.Ct. 1898, 1908, 53 L.Ed.2d
513 (1977); Benson v. Arizona State Board of Dental Examiners,
673 F.2d 272, 277-78 (9th Cir. 1982).
It is not disputed that the franchise agreement raises revenue for
the airport, and revenue production is a legitimate state interest.
See San Antonio Independent School District v. Rodriguez, 411
U.S. 1, 40-41, 93 S.Ct. 1278, 1300-01, 36 L.Ed.2d 16 (1973).
Guam’s interest in regulating traffic and security at the airport is
also implicated. Plaintiffs claim that their deliveries will not in
fact create serious traffic or security problems at the airport, but
these claims,if true, do not serve to denigrate the legitimacy of
the guvernmental interest in this regard.? The concession
contract in this case dves not deny equal protection.
?Plaintiffs rely on Park’N Fly of Texas, Inc. v. City of Houston, 327 F.Supp.
910(S.D. Tex. 1971). There the court found that a Houston ordinance which
permitted only a city “shuttle bus” concessionaire to use favorable positions for
loading and unloading passengers from distant parking lots had no basis,
“much less a reasonable one.” /d. at 925. There, however, the distinction
between the concessionaire and others with similar vehicles actually created
traffic congestion and hindered the ability of the airport to serve its primary
obligations to passengers.
A-29
AFFIRMED.
HUG, Circuit Judge, concurring:
I concur in the result reached by the majority opinion and
with the discussion relative to the antitrust claims. However, I
am not fully convinced that the commerce clause does not apply
to the Territory of Guam under the authority of Andersen v.
Mullaney, 191 F.2d 123 (9th Cir. 1951), aff'd 342 U.S. 415, 72
S.Ct. 428, 96 L.Ed. 458 (1952). I find the distinction between the
then Territory of Alaska and the Territory of Guam somewhat
tenuous. However, I would not reach that issue because I would
hold that the agreement in question places no burden con
interstate commerce.
It is clear that the Airport Authority could grant to a
concessionaire the exclusive right to sell merchandise in the
airport after competitive bidding agreement. No party disputes
this. The plaintiffs maintain that the agremeent does more than
that; they claim that the agreement deprives them of a trans-
portation facility essential to the shipment of their goods in
interstate commerce. In my opinion, this is not the case. Plain-
tiffs can ship goods by air freight just as any other person can;
nothing in the agreement deprives them of the use of the air
carrier facility. What is denied to plaintiffs is the use of the
airport to complete their sales transaction by delivering the
merchandise to the passenger at the airport. The question is,
thus, whether the commerce clause requires that the plaintiffs be
allowed to use the airport to complete their sales transaction
with the customer or whether the Airport Authority can require
that delivery be made elsewhere. I would hold that the com-
merce clause does not prevent the Airport Authority from
establishing this requirement. Goods delivered elsewhere to the
passenger can be taken aboard by him and the plaintiffs are free
to ship by air freight. There is no burden on interstate com-
merce, there is only a limitation on the use of the airport as a
facility to complete the sale by delivery.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.