Petition for Writ of Certiorari — Pacifico Creative Service, Inc. v. Hennegan

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86-383 ) i

Supreme Court, U.S,

SEP § loa"

IN THE

Supreme Court of the United Sta Be NOL UR.

OCTOBER TERM, 1986 °

PACIFICO CREATIVE SERVICE, INC., d/b/a JALPAK, et ai.,

. Petitioners,

—against—'

THOMAS J. HENNEGAN and GLORIA E. HENNEGAN,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

JAY N. FAsTow* RICHARD A. PIPES*

WEIL, GOTSHAL & MANGES CARBULLIDO & PIPES

767 Fifth Avenue Suite 300

New York, New York 10153 Malayan House

(212) 310-8644 316 Hernan Cortes Avenue

Agana, Guam 96910

vaslcaaaaees (011-671) 472-2693

SHELLEY E. HARMS

WEIL, GOTSHAL & MANGES Counsel for Petitioner

767 Fifth Avenue Hakubotan Enterprise, Inc.

New York, New York 10153

ew Yor ow TIMOTHY A. STEWART*

J. BRADLEY KLEMM P.O. Box 2766

WILLIAM J. BLAIR Agana, Guam 96910

KLEMM, BLAIR, STERLING & (011-671) 472-6978

JOHNSON, P.C. Counsel for Petitioners

1008 Pacific News Buiiding J.B. Siaotong Enterprises, Inc.,

238 O’ Hara Street Pacifico Creative Service, Inc.,

Agana, Guam 96910 Micronesian Hospitality, Inc., and

Counsel for Petitioner Yusen Air and Sea Service

Duty Free Shoppers, Ltd. Pacific, Inc.

* Counsel of Record

(Counsel continued on inside front cover)

Of Counsel:

F. RANDALL CUNLIFFE

CUNLIFFE & COOK

Suite 200

210 O’Hara Street

Agana, Guam 96910

(011-671) 472-1824

Counsel for Petitioners

Pacifico Creative Service, Inc.,

Micronesian Hospitality, Inc., and

Yusen Air and Sea Service

Pacific, Inc.

* Counsel of Record

EDWARD TERLAJE*

P.O. Box 1719

Agana, Guam 96910

(011-671) 477-8894

Counsel for Petitioner

Ric Tours “Guam”, Inc.

Questions Presented

1. Does the limitations period for an antitrust refusal to

deal claim expire four years after plaintiff learns of the alleged

decision not to deai?

2. Does Section 2(c) of the Robinson-Patman Price Dis-

crimination Act apply when there is no allegation of price

discrimination or a discount to the purchaser, but only a claim

of commercial bribery?

Parties to the Proceeding

Plaintiffs/Respondents (“plaintiffs”) are Thomas J. Henne-

gan and Gloria E. Hennegan.

Defendants/Petitioners (“defendants”) are: (1) Pacifico

Creative Service, Inc., doing business as Jalpak (now known as

Creative Tours Micronesia, Inc.), (2) Micronesian Hospitality,

Inc., (3) Ric Tours “Guam”, Inc., (4) Yusen Air and Sea

Service Pacific, Inc., doing business as Diamond Tours, (5)

J.B. Siaotong Enterprises, Inc., doing business as Guam Travel

Bureau, (6) Duty Free Shoppers, Ltd., a Hong Kong corpora-

tion, and (7) Hakubotan Enterprise, Inc. The first five defen-

dants are the “defendant tour operators,” and the last two are

the “defendant retail] shops.”

The statements required by Rule 28.1 are set out at Al6-

A20.

ill

TABLE OF CONTENTS

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Reasons for Granting the Petition...................

I. The Court Should Decide Whether The Limita-

tions Period For An Antitrust Refusal To Deal

Claim Expires Four Years After Plaintiff Learns

Of The Alleged Decision Not To Deal, In Order

To Establish Consistency With Its Zenith Decision

And Uniformity Among And Within The Courts

iy as ue sader bosses

A. Plaintiff’s Claims Are Barred Under 15

U.S.C. § 15b And This Court’s Decision In

Zenith, Since, Under Plaintiffs’ Assertions,

Their Only Injury Resulted From An Un-

broken Decision Not To Deal Made More

Than Four Years Before This Suit Was

I a

The Courts Of Appeals Are In Conflict On

EE OS

The Ninth Circuit’s Decision Is Irreconcilable

With Its Prior, Controlling Decision In Orgel!

PAGE

II. The Court Should Decide Whether Section 2(c) Of

The Robinson-Patman Price Discrimination Act

Applies Absent Price Discrimination Or A Dis-

count To The Purchaser, In Order To Establish

Consistency With The Decisions Of This Court

And The Congressional Intent, End The Present

Conflict Among And Confusion Within The

Courts Of Appeals, And Prevent The Unintended

Expansion Of The Antitrust Treble Damages

TT PTT eeT eT Tee ere ee ee eee

A. The Ninth Circuit’s Position Is Inconsistent

With This Court’s Decisions In Broch And

Boston & Maine And The Congressional

Intent With Regard To Section 2(c).........

B. The Courts Of Appeals Are In Conflict And

Disarray On This Recurrent Issue...........

C. Commercial Bribery Is Not The Type Of Con-

duct That The Antitrust Laws, With Their

Treble Damages Remedy, Were Intended To

RL LE A et GIN LR EE ee Pe TL Fa

APPENDIX:

A. Opinion Of The United States Court Of

Appeals For The Ninth Circuit Affirming In

Part And Reversing In Part The Memoran-

dum Order Of The District Court Of Guam,

787 F.2d 1299 (Filed April 17, 1986)

‘os os 6.6 @ &

B. Order Of The United States Court Of Appeals

For The Ninth Circuit Denying Defendants’

Petition For Rehearing And Rejecting Defen-

dants’ Suggestion For Rehearing En Banc

(Filed June il, 1986)

2s 628 4.4 3 £ eo OO 4 & 4° 8 6 4 OR

C. Memorandum Order Of The District Court Of

Guam Granting Defendants’ Motion For Sum-

mary Judgment (Filed September 5, 1984) ...

D. Statements Pursuant to Rule 28.1...........

PAGE

A10

Al6

TABLE OF AUTHORITIES

Cases: PAGE

Allen Pen Co. v. Springfield Photo Mount Co., 653 F.2d

SE A Aa eee eS ee 22, 24

Associated General Contractors of California, Inc. v.

California State Council of Carpenters, 459 U.S. 519

i ee es ha KE LAREA I CKREE DEDERT EOS 25

Barnosky Oils, Inc. v. Union Oil Co. of California, 665

ee ee 10

Calnetics Corp. v. Volkswagen of America, Inc., 532

F.2d 674 (9th Cir.), cert. denied, 429 U.S. 940

ea iano game we ae eh ae de ee SRG 16, 17, 21

Charlotte Telecasters, Inc. v. Jefferson-Pilot Corp., 546

Jb Ry FP fe ee. 2 | ere reer Teer err rer ree 12, 13

Copperweld Corp. v. Independence Tube Corp., 467

7 Me prea rae ere ee 25

David Orgell, Inc. v. Geary’s Stores, Inc., 640 F.2d 936

(9th Cir.), cert. denied, 454 U.S. 816 (1981) ..... 4, 5,7, 8,

11, 13, 14, 15

Ellis v. Carter, 291 F.2d 270 (9th Cir. 1961) ........... 13

Emich Motors Corp. v. General Motors Corp., 229 F.2d

lL | rr rr 11, 12

Empire Rayon Yarn Co. v. American Viscose Corp. , 364

F.2d 491 (2d Cir. 1966) (en banc), vacating and endors-

ing dissenting opinion in 354 F.2d 182 (2d Cir. 1965),

cert. denied, 385 U.S. 1002 (1967)................. 22

Excel Handbag Co., Inc. v. Edison Brothers Stores,

Inc., 630 F.2d 379 (Sth Cir. 1980)...............46. 23

Federal Trade Commission v. Henry Broch & Co., 363

ok a S| err 17, 18, 19,

20, 21, 22, 23, 24, 25

Vii

PAGE

Federal Trade Commission v. Simplicity Pattern Co.,

er ee ee rrr 19, 21

Fitch v. Kentucky-Tennessee Light & Power Co., 136

Pia ee ee a OE vie Siew sada derseseenesen 23, 24

Fontana Aviation, Inc. v. Baldinelli, 418 F. Supp. 464

(W.D. Mich. 1976), aff’d, 575 F.2d 1194 (6th Cir.),

Cat. GE, SAP UE. FEE CIGTED ok ac ei cac cesses. 9, 10

Garelick v. Goerlich’s, Inc. , 323 F.2d 854 (6th Cir. 1963) 10

Gibson v. Federal Trade Commission, 682 F.2d 554 (Sth

Cir. 1982), cert. denied, 460 U.S. 1068 (1983) ....... 23

Grace v. E.J. Kozin Co., 538 F.2d 170 (7th Cir. 1976).. 24

Hormel v. Helvering, 312 U.S. 552 (1941) ............ 17

Howell Industries, Inc. v. Sharon Steel Corp., 532 F.

supp. 400 (E.D? Mich. 1981) ...........02cccceee. 24

Ideal Plumbing Co. v. Benco, Inc., 529 F.2d 972 (8th

a hae aR ok SS CARRE 4d a baa ee es 25

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

Cir.), cert. denied, 444 U.S. 900 (1979)............. 7, 14

Laundry Equipment Sales Corp. v. Borg Warner Corp.,

ccf mw fe Ee | Se ee carrer ren 11

Lupia v. Stella D’Oro Biscuit Co., Inc., 586 F.2d 1163

(7th Cir. 1978), cert. denied, 440 U.S. 982 (1979).... 24

Metrix Warehouse, Inc. v. Daimler-Benz Aktiengesell-

schaft, 716 F.2d 245 (4th Cir. 1983)................ 22

Monell v. New York City Dept. of Social Services, 436

SP eS a avi dd SN VE 6 ba al eaten enews 16

Order of R.R. Telegraphers v. Railway Express Agency,

Oe ER ee rea en eewer reer 8

Parrizlee Transportation Co. v. Keeshin, 292 F.2d 794

(7th Cir.), cert. denied, 368 U.S. 944 (1961)......... 23

Vili

PAGE

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

Poster Exchange, Inc. v. National Screen Service Corp.,

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

SR ae res once Oe Taree ore are 10, 12

Rangen, Inc. v. Sterling Nelson & Sons, Inc., 351

F.2d 851 (9th Cir. 1965), cert. denied, 383 U.S. 936

SPP eres Core ee Te ee Tere 16, 20, 21, 23

Sakamoto v. Duty Free Shoppers, Ltd., 613 F. Supp. 381

(D. Guam 1983), aff’d, 764 F.2d 1285 (9th Cir. 1985),

cert. @ented, 106 5. Ct. 1457 (1966)... . ic ccccnccucs 7

Seaboard Supply Co. v. Congoleum Corp., 770 F.2d 367

AR ED 5 ike d's hE Ge oes a ee ee Os '7, 22, 23

Shell Oil Co. v. Nelson Oil Co., 627 F.2d 228 (Em. Ct.

App.), cert. denied, 449 U-S. 1022 (1980) .......... 1]

Sherman v. Goerlich’s Inc., 238 F. Supp. 728 (E.D.

Mich. 1963), aff'd, 341 F.2d 988 (6th Cir.), cert.

Po ae LR. ee re 10

Siegel Oil Co. v. Gulf Oil Corp., 556 F. Supp. 302 (D.

Colo. 1982), aff'd, 701 F.2d 149 (Em. Ct. App. 1983) 11

2361 State Corp. v. Sealy, Inc., 402 F.2d 370 (7th Cir.

Es ya ORAS Re ee ee en ee 10

Sutliff, Inc. v. Donovan Cos., 727 F.2d 648 (7th Cir.

RI cate tin NS GIS i sof ea ee OND a alee SAR ia Wire 25

Thomasville Chair Co. v. Federal Trade Commission,

ee ce ee ee Go . hk hs oo ewe hak ew ks 23

Inited States v. Boston & Maine Railroad, 380 U.S. 157

SPS 5 oe Ak ee 7, 2, 21, 22

United States v. Jenson, 450 F.2d 1258 (9th Cir. 1971),

cert. Genied, GIB U.S. T0635 CUFF). ccs cv cvicsccwcss 13

Upton v. Commissioner of Internal Revenue, 283 F.2d

716 (9th Cir. 1960), cert. denied, 366 U.S. 911 (1961). 13

PAC sf

Western Pacific Railroad Corp. v. Western Pacific Rail-

peel Co) BE Te ee Ck veh ce ce ee ves es 16

Woodbridge Plastics Inc. v. Borden, Inc., 473 F. Supp.

218 (S.D.N.Y.), aff’d, 614 F.2d 1293 (2d Cir. 1979)... 8,9

Youakim v. Miller, 425 U.S. 231 (1976) .............. 17

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

Uk Me gt) | an o>, | ahaa Eran e ary Ere: 6, 7, 8,

15, 16

Statutory Provisions:

of § oe f Se ee eeere eee errr Cre Ts eer ee 9, 10, 11

ppt 3 2 | ee ere rr se re 4

Pele Ram 2: re rr rrr rrr rrr ror passim

oS. oot © . en rn enmrrcrme reas Far

eis Foe fo: Perera rrr ere tert ro ers 3, 4, : pes

bElh 5 oe > Ser ree. Sees ce 20

p EG Same Et | re rer rere re ee 2

Clayton Act, ch. 323, § 2, 38 Stat. 730, (1941). (Current

version at 15 U.S.C. § 15D (1976) ... «2. ccc cences 18

Legislative History:

OO Cot, Bae, GEE CID os 2k bbs cece teen reece 18

80 Come. Rec. GEZF (IFA). 5 6c cc ccc cc stew cnees 19

oe ag Fr ere 18, 20

ee Me eg, | ee eer ee 20

PAGE

or SOU. Bele. GAPE Te Cs oa os hee oe eek 20

Pe Cy. TUG. DERO CEI OD os ove s sve veccecctsvacdes 19

re A ees, I I ao ooo we 0 oad eee cae e enue 19

H.R. Conf. Rep. No. 2951, 74th Cong. 2d Sess. 6 (1936) 21

H.R. Rep. No. 2287, Pt. 1, 74th Cong. 2d Sess. 15

CE Nis st on ck Cock aed eee ees See ee eea es 19

S. Rep. No. 1502, 74th Cong. 2d Sess. 3 (1936) ....... 19

S. Rep. No. 1502, 74th Cong. 2d Sess. 7 (1936) ....... 19

Rules:

ee ee ee ek rh ee eRe ee 15

Other:

Austin, PRICE DISCRIMINATION 106 (1959) ........... 17

Yeager, Brokerage Problems and Commercial Bribery, 53

PUPRET EADS B..0, BO CIOs oon ev cs cand cwecscucs 17

IN THE

Supreme Cuurt of the United States

OCTOBER TERM, 1986

No. 86-

>_>

PACIFICO CREATIVE SERVICE, INC.,

d/b/a JALPAK, et al.,

Petitioners,

—against—

THOMAS J. HENNEGAN and GLORIA E. HENNEGAN,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

—<j>—_

PETITION FOR WRIT OF CERTIORARI

Petitioners-defendants (“defendants”) respectfully request

that a writ of certiorari be issued to review (1) that portion of

the decision of the United States Court of Appeals for the

Ninth Circuit, filed April 17, 1986, that reversed in part the

Memorandum Order of the District Court of Guam, dated

September 5, 1984, which had granted defendants summary

judgment, and (2) the Order of the Ninth Circuit, filed June

11, 1986, denying defendants’ petition for rehearing with

suggestion for rehearing en banc.

OPINIONS BELOW

The opinion of the District Court of Guam is not reported

(A10-A15). The opinion of the Court of Appeals for the Ninth

Circuit is reported at 787 F.2d 1299 (9th Cir. 1986) (A1-A7).

The order of the Ninth Circuit denying defendants’ petition for

rehearing and rejecting defendants’ suggestion for rehearing en

banc is not reported (A8-A9).

JURISDICTION

The decision of the Court of Appeals was entered on April

17, 1986 (Al-A7). Defendants timely filed a petition for

rehearing with suggestion for rehearing en banc. That petition

was denied on June 11, 1986 (A8-A9). This Court has jurisdic-

iion to review the decision of the Court of Appeals, and its

denial of defendants’ petition for rehearing with suggestion for

rehearing en banc, by writ of certiorari pursuant to 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

Section 2(c) of The Robinson-Patman Price Discrimination

Act, 15 U.S.C. § 13(c)

§ 13. Discrimination in price, services, or facilities—Price;

selection of customers

Payment or acceptance of commission, brokerage

or other compensation

merce, in the course of such commerce, to pay or grant, or to

receive or accept, anything of value as a commission, broker-

age, or other compensation, or any allowance or discount in

lieu thereof, except for services rendered in connection with the

sale or purchase of goods, wares, or merchandise, either to the

other party to such transaction or to an agent, representative,

or other intermediary therein where such intermediary is acting

in fact for or in behalf, or is subject to the direct or indirect

control, of any party to such transaction other than the person

by whom such compensation is so granted or paid.

Section 4b of the Clayton Act, 15 U.S.C. § 15b

§ 15b. Limitation of actions

Any action to enforce any cause of action under sections 15,

15a, or 15c of this title shall be forever barred unless com-

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

cause of action barred under existing law on the effective date

of this Act shall be revived by this Act.

STATEMENT OF THE CASE

This case involves a belated attempt by Guam park vendors

to sue a number of tour operators and retail shops for alleged

antitrust violations. Plaintiffs claim that while the defendant

retail shops allegedly pay the defendant tour operators for

bringing tourists to their places of business and providing other

services, plaintiffs refuse to make such payments.' As a result,

plaintiffs allege, the defendant tour operators have refused to

bring tourists to plaintiffs’ park stand, and have “shepherded”

them to the defendant retail shops.’ Plaintiffs conclude that

such alleged actions constitute a “refusal to deal”? or “group

boycott”? resulting from “commercial bribery.””

Plaintiffs do not assert that the alleged payments by the

retail shops involve price discrimination or a discount in the

l Plaintiffs’ Appellate Brief (“P. Br.”) at 2-3.

2 Id.

3 See P. Br. at 1, 10-11.

4 Compl. 44 19, 29, 39, 49, CR 1 at 9, 13, 17, 21-22. See also Compl.

q4 15-18, 25-28, 35-38, 45-48, CR 1 at 7-8, 11-13, 15-17, 19-21.

3 Compl. 44 22, 26, 32, 42, CR | at 10, 11-12, 14, 18.

sale of goods by the retail shops. Indeed, the Complaint

precludes any s?»." assertion, alleging that the tourists/pur-

chasers are unaware of the claimed payments.°®

As the District Court and the Court of Appeals found,

plaintiffs assertedly have been aware of the alleged refusal to

deal that purportedly caused their claimed injury (lost sales)

since at latest January 1979.’ Plaintiffs also have asserted that

the alleged refusal to deal has remained in effect unabated

from its inception.* Plaintiffs nevertheless waited until June

1983 to bring this suit.

The Complaint plaintiffs ultimately filed claimed violations

of Section 2(c) of the Robinson-Patman Act, 15 U.S.C.

§ 13(c), and Section 3 of the Sherman Act, 15 U.S.C. § 3.? The

District Court dismissed the Complaint in its entirety on

defendants’ motion for summary judgment. It held that plain-

tiffs’ claims accrued outside of the four year antitrust limita-

tions period, and are barred under 15 U.S.C. § 15b and the

Ninth Circuit’s decision in David Orgell, Inc. v. Geary’s

Stores, Inc., 640 F.2d 936 (9th Cir.), cert. denied, 454 U.S. 816

(1981):

6 Compl. 44 15-17, 25-27, 35-37, 45-47, CR 1 at 7-8, 12-13, 15-17,

19-21.

7 Opinion of the Ninth Circuit at A6é; Memorandum Order of District

Court at Al3; Plaintiffs’ Motion to Disqualify Counsel, CR 53 at 3:

Memorandum in Support of Plaintiffs’ Motion to Disqualify Counsel, CR 58

at 1-3; Affidavit of Thomas J. Hennegan in Support of Motion to Disqualify

Counsel 44 c, d, e, CR 62 at 1-2; Transcript of Proceedings on Plaintiffs’

Motion to Disqualify Counsel, CR 76 at 5, 10-15, 19; Holden v. Hennegan

Trial Transcript at 248, 302, CR 104, Exh. B, C.

8 Compl. 44 15, 19, 25, 29, 35, 39, 45, 49, CR 1 at 7, 9, 11, 13, 15, 17,

19, 21-22.

9 The Complaint alleges that “[j]urisdiction over the subject matter of

this case exists in [the District Court of Guam] pursuant to 48 U.S.C.

§ 1424(a) and 15 U.S.C. § 15.” Compl. 4 9, CR 1 at 6.

The Ninth Circuit in David Orgell, Inc. v. Geary’s Stores,

Inc., 640 F.2d 936 (9th Cir.), cert. den. 454 U.S 816, 102

S. Ct. 92 (1981), held that defendant [Wedgwood’s] initial

refusal to sell its chinaware to plaintiff retailer Orgell,

allegedly based on a conspiracy between defendant

[Wedgwood] and plaintiff’s principal competitor, trig-

gered the four-year statute of limitations governing anti-

trust actions. The Ninth Circuit further held that

subsequent refusals by defendant [Wedgwood] to sell its

products to plaintiff did not create new antitrust causes of

action but were merely reaffirmations of its original

decision not to deal with the plaintiff.

Memorandum Order of District Court, Al3.

The Ninth Circuit found that the Hennegans knew of the

alleged refusal to deal, and of the asserted payments and

“shepherding” of tourists, by at latest January 1979. A6. But

rather than applying the decision in Orgell, the Court of

Appeals stated that the initial refusal to deal in Orgell was

“irrevocable, immutable, permanent and final” and thereby

caused all of plaintiff’s injury. AS. The Court reached this

conclusion even though it acknowledged that “it is not evident

from the brief factual summary [in Orgel/] how the defen-

dant’s initial refusal to sell [in that case] caused all the injury

to the plaintiff.” AS. The Ninth Circuit further held that, in

contrast to its view of the situation in Orgell, the refusal to

deal alleged here is a continuing conspiracy characterized by

asserted acts that allegedly caused plaintiffs new injury during

the limitations period, viz., allegations of “payments by the

souvenir vendors to the tour operators and the tour operators’

shepherding of tourists away from the Hennegans’ shop and to

the shops of the souvenir vendors.” A3.

Defendants timely filed a petition for rehearing with sugges-

tion for rehearing en banc. The Ninth Circuit denied the

petition. A8-A9.

REASONS FOR GRANTING THE PETITION

I. The Court Should Decide Whether The Limitations

Period For An Antitrust Refusal To Deal Claim Expires

Four Years After Plaintiff Learns Of The Alleged Deci-

sion Not To Deal, In Order To Establish Consistency

With Its Zenith Decision And Uniformity Among And

Within The Courts of Appeals.

After assertedly learning of the claimed refusal to deal,

plaintiffs did not sue for over four years. Question 1 warrants

review by the Court because the Ninth Circuit’s decision

conflicts with Zenith Radio Corp. v. Hazeltine Research, Inc.,

401 U.S. 321 (1971), and would effectively annul the statute of

limitations in an antitrust refusal to deal case. The Court also

should decide this question in order to resolve the conflict on

this point among the Courts of Appeals and within the Ninth

Circuit.

A. Plaintiffs’ Claims Are Barred Under 15 U.S.C. § 15b

And This Court’s Decision In Zenith, Since, Under

Plaintiffs’ Assertions, Their Only Injury Resulted From

An Unbroken Decision Not To Deal Made More Than

Four Years Before This Suit Was Brought.

An antitrust claim is “forever barred unless commenced

within four years after the cause of action accrued.” 15 U.S.C.

§ 15b. This Court has stated that “[g]enerally, a cause of action

accrues and the statute begins to run when a defendant com-

mits an act that injures a plaintiff’s business.” Zenith, 401 U.S.

at 338.

Defendants submit that when an antitrust claim is based on

an alleged unbroken refusal to deal, the “act that injures

plaintiff’s business” would occur when defendant first refused

to deal with plaintiff; no new injury or cause of action would

arise from the continuation of the refusal to deal, iterations of

the initial refusal or conduct implementing the refusal. Such

actions would be simply “a reaffirmation of the original

decision not to deal with the plaintiff.” Orgell, 640 F.2d at 938.

See also In re Multidistrict Vehicle Air Pollution, 591 F.2d 68,

71-72 (9th Cir.), cert. denied, 444 U.S. 900 (1979)."°

In this case, plaintiffs only claim injury resulting from an

alleged refusal to deal that plaintiffs assert has been in effect

without interruption since at latest January 1979. The Ninth

Circuit nevertheless sought to fit this case within the “continu-

ing conspiracy” application of the rule in Zenith,'' stating that

the alleged payments and “shepherding” caused new asserted

injury to plaintiffs during the limitations period, and that the

refusal claimed here was not necessarily “immutable.” A3-A4.

This holding misapplies Zenith. The alleged payments and

“shepherding” of tourists were simply the purported motiva-

tion for and manifestation of the alleged refusal. They caused

plaintiffs no harm that was new or different from that al-

legedly caused by the claimed initial decision not to deal with

plaintiffs. And while, according to the Ninth Circuit, the

defendant tour operators could have changed their minds and

dealt with plaintiffs, plaintiffs have asserted that the tour

operators have not done so. Under Zenith, plaintiffs’ alleged

injury occurred, and their asserted claims accrued, at the time

of the claimed pre-limitations decision to refuse to deal with

them.

10 Accord Sakamoto v. Duty Free Shoppers, Ltd., 613 F. Supp. 381,

391 (D. Guam 1983), aff’d on other grounds, 764 F.2d 1285 (9th Cir. 1985),

cert. denied, 106 S. Ct. 1457 (1986). Plaintiffs have conceded that the

antitrust claims in Sakamoto were properly dismissed under the statute of

limitations. See Memorandum of Plaintiffs in Opposition to Motion for

Summary Judgment, CR 102 at 12-13.

11 See 401 U.S. at 338 (“In the context of a continuing conspiracy to

violate the antitrust laws, . . . [the rule that the statute of limitations begins

to run when defendant commits an act that injures plaintiff] has usually been

understood to mean that each time a plaintiff is injured by an act of the

defendants a cause of action accrues to him to recover the damages caused by

that act and that, as to those damages, the statute of limitations runs from

the commission of the act.”)

The opinion of the Ninth Circuit in this case will have

substantial undesirable implications if it is not reversed. It

would allow a plaintiff in a refusal to deal case to avoid the

statute of limitations and Zenith merely by alleging that those

with whom the defendant did deal paid for and received goods

or services during the limitations period, or that defendant

hypothetically could have changed its decision and dealt with

plaintiff, although it did not. Indeed, the decision below would

allow a plaintiff in such a case to avoid a statute of limitations

bar simply by making a “forlorn inquiry” to deal with defen-

dant, and receiving the expected negative response.

Such a result would undermine the decision in Zenith, and

the purposes of statutes of limitations to allow repose and

avoid the litigation of stale claims. Order of R.R. Telegraphers

v. Railway Express Agency, Inc., 321 U.S. 342, 348-49 (1944).

It would place control of the statute of limitations in plaintiff’s

hands even after the four year period had expired, and would

subject the courts to claims that had been revived by, for

example, the expedient of a knowingly futile telephone call or

letter.

B. The Courts Of Appeals Are In Conflict On This Issue

The Courts of Appeals are in conflict on the issue of whether

a cause of action for an alleged unbroken refusal to deal

accrues upon the claimed initial refusal. The Second, Sixth and

Seventh Circuits, and the Temporary Emergency Court of

Appeals, have issued decisions in accord with Orgell. The

Fourth, Fifth and the Eighth Circuits have taken contrary

approaches, allowing a plaintiff to avoid a limitations bar

simply by inducing the defendant to iterate its prior decision

not to deal with plaintiff.

In Woodbridge Plastics, Inc. v. Borden, Inc., 473 F. Supp.

218 (S.D.N.Y.), aff’d, 614 F.2d 1293 (2d Cir. 1979), the

plaintiff bought from defendant Borden certain raw materials

from which it manufactured a plastic compound. When Bor-

den began selling plaintiff only limited quantities of the raw

materials, plaintiff’s principal customers (defendants Pickwick

and its subsidiary Keel) began to deal directly with Borden, and

informed plaintiff that they considered their supply contracts

terminated. Four years and three months later, plaintiff

brought suit under the Sherman Act, challenging Pickwick and

Keel’s refusal to buy any longer from plaintiff.

Plaintiff claimed that it suffered injury from two overt acts

during the limitations period—an arbitration proceeding

brought by Keel with respect to its contract with plaintiff, and

Borden’s shipment of the raw materials to Pickwick. The court

did not find such acts significant from a limitations stand-

point. By commencing the arbitration proceeding, Keel “was

merely carrying out an intention [to refuse to deal with plain-

tiff] it had announced some four months earlier. . . .” 473 F.

Supp. at 222. The date of the shipment to Pickwick also was

irrelevant, because plaintiff’s injury occurred when plaintiff

learned that Pickwick and Keel had contracted with Borden

and deemed their contracts with plaintiff terminated. Jd. The

court was not dissuaded from this conclusion by Pickwick and

Keel’s receipt of, and payment for, supplies from Borden

during the limitations period. Nor did the court believe that it

was required to find that Pickwick and Keel’s decision to

refuse to deal with plaintiff was immutable.

The Sixth Circuit has followed the same approach. In

Fontana Aviation, Inc. v. Baldinelli, 418 F. Supp. 464 (W.D.

Mich. 1976), aff’d, 575 F.2d 1194 (6th Cir.), cert. denied, 439

U.S. 911 (1978), defendants Hertz and Avis replaced an airport

representative, plaintiff Fontana, with defendant Baldinelli.

Hertz and Avis stopped paying Fontana as of May 1, 1969, and

Avis thereupon announced in the newspaper that it had “pulled

out” from the airport. Over four years later, plaintiff filed suit

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

held that the suit was time barred, even though Hertz and Avis

had sent Fontana a letter during the limitations period inform-

ing him that their relations with him had been terminated. The

court rejected the argument that defendants had engaged in a

“continuing conspiracy,” stating that “[t]he ‘pullout’ was the

specific act which gave rise to the damages which Fontana

argues continue to this day; [the] later incidents [were] but its

consequences.” 418 F. Supp. at 470.

In another Sixth Circuit decision, Garelick v. Goerlich’s,

Inc., 323 F.2d 854 (6th Cir. 1963), plaintiffs had been distribu-

tors for defendant’s products. Defendant ceased doing busi-

ness with plaintiffs in 1956. Plaintiffs brought an antitrust

refusal to deal case in 1962, and alleged that defendant had

failed to respond to plaintiffs’ requests to be reinstated during

the limitations period. The court held that while those failures

to respond might constitute “overt acts,” they had caused no

new injury or damage. “The incidents were simply acts that

reflected that defendant-appellee continued in refusing to sell

its products to plaintiffs-appellants.” (Jd. at 856). Accord

Sherman v. Goerlich’s, Inc., 238 F. Supp. 728, 730 (E.D.

Mich. 1963), aff’d, 341 F.2d 988 (6th Cir.), cert. denied, 382

U.S. 830 (1965)."°

A string of decisions by the Seventh Circuit also fits this

pattern. For instance, in 236/ State Corp. v. Sealy, Inc., 402

F.2d 370, 374 (7th Cir. 1968), the court held that plaintiff’s

12 In Barnosky Oils, Inc. v. Union Oil Co. of California, 665 F.2d 74

(6th Cir. 1981), the defendant oil company allegedly used its contract with

plaintiff Barnosky to coerce Barnosky to stop dealing with a particular

customer. More than four years after Barnosky agreed to cease sales to that

customer, it brought suit under Section 1 of the Sherman Act, alleging that it

had been injured by that refusal to deal. Despite the allegation that defen-

dant had invoked its contract with Barnosky for this purpose repeatedly

during the limitations period, the court concluded that plaintiff’s alleged

injury occurred outside of the limitations period, and that the actions during

the limitations period were “ ‘merely the abatable but unabated inertial

consequences of some pre-limitations action.’ ” 665 F.2d at 81, quoting

Poster Exchange, Inc. v. National Screen Service Corp., 517 F.2d 117, 128

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

cause of action under Section 1 of the Sherman Act accrued

when “[plaintiff’s] business was injured by the cessation of

[defendant’s] purchases.” Accord Laundry Equipment Sales

Corp. v. Borg-Warner Corp., 334 F.2d 788 (7th Cir. 1964)

(former exclusive distributor’s antitrust conspiracy claim was

time-barred because injury occurred, and cause of action

accrued, upon termination of his franchise agreement); Emich

Motors Corp. v. General Motors Corp., 229 F.2d 714 (7th Cir.

1956) (claim under Section | of the Sherman Act accrued when

defendant terminated the contract pursuant to which it sold

cars to plaintiff).

The Temporary Emergency Court of Appeals has adopted

the same principles, albeit not in aii antitrust case. In Siege/ Oil

Co. v. Gulf Oil Corp., 556 F. Supp. 302 (D. Colo. 1982), aff'd,

701 F.2d 149 (Em. Ct. App. 1983), defendant Gulf Oil refused

to continue supplying gasoline to the plaintiff, and designated

a substitute supplier. The plaintiff protested repeatedly by

letter, in a personal meeting, and by administrative proceeding.

Finally, it commenced a lawsuit for damages, contending that

the defendant’s refusal to supply it constituted “a continuing

violation.” 701 F.2d at 153. The court rejected this argument,

noting plaintiff’s assertion that Gulf’s refusal was “absolutely

unwavering,” id., and relying on the decision in Orgell: “Be-

cause Gulf’s decision was final at the time it designated. . .

Siegel’s substitute supplier, Siegel’s injury was a direct result of

[that designation] and Siegel’s cause of action accrued at that

time.” Jd. Defendant’s presumed ongoing sales to, and receipt

of payments from, other customers did not affect the court’s

analysis. Nor did the court find any reason why defendant

could not have changed its mind and sold to plaintiff.'°

In sharp contrast to these decisions, the Fourth, Fifth and

Eighth Circuits have issued decisions comparable to the Ninth

13 Accord Shell Oil Co. v. Nelson Oil Co., 627 F.2d 228 (Em. Ct.

App.), cert. denied, 449 U.S. 1022 (1980), as described in Siegel, 556 F. Supp.

at 308 (finding last injurious act to be the initial refusal to accept credit card

receipts for cash).

Circuit’s decision here. They have allowed a plaintiff to avoid

a statute of limitations bar to a refusal to deal claim by alleging

some behavior—even a word—during the limitations period

that simply reflected the continuation of the asserted refusal to

deal.

Poster Exchange, Inc. v. National Screen Service Corp., 517

F.2d 117 (Sth Cir. 1975), cert. denied, 423 U.S. 1054 (1976),

involved an alleged conspiracy among the defendants to refuse

to sell advertising accessories to the plaintiff. Although defen-

dants had stopped selling to plaintiff in 1961, plaintiff did not

bring its antitrust suit until 1969. Reversing the district court,

the Fifth Circuit stated that the action would not be time-

barred if the plaintiff could demonstrate some “act or word of

refusal” precluding plaintiff from obtaining supplies from

defendant during the limitations period. /d. at 128.

Similarly, the Eighth Circuit in Pioneer Co., Inc. vy. Talon,

Inc., 462 F.2d 1106 (8th Cir. 1972), held that a jobber’s refusal

to deal claim did not accrue when the defendant terminated

business relations with him. The court concluded that the

defendant’s refusals to fill orders the jobber placed subsequent

to his termination caused injury during the limitations period

for which plaintiff was entitled to recover. /d. at 1108.'4 And in

Charlotte Telecasters, Inc. v. Jefferson-Pilot Corp., 546 F.2d

14 The confusion in this area is emphasized by the Pioneer court’s

attempt to distinguish the Seventh Circuit’s decision in Emich Motors on the

ground that Emich had been a “formal dealer” of GM, while Pioneer was a

jobber without a contractual relationship with the supplier. The court held

that therefore the cancellation of Emich’s contract was a final act which

started the running of the limitations period, 462 F.2d at 1108, but that the

defendant’s notification to Pioneer that it would no longer fill its orders was

part of a “continuing conspiracy” under which Pioneer suffered new injury

every time it placed a futile order. Jd. See also Poster Exchange, 517 F.2d at

126-27 (where plaintiff’s business is “immediately and permanently destroyed

. . Suit must be brought within the limitations period and upon the initial

act,” while the exclusion of plaintiff from an industry, “while perhaps

unequivocal, was not of necessity permanent” and constitutes a continuing

violation).

570, 572-73 (4th Cir. 1976), the Fourth Circuit made clear

position that the mere iteration by defendant during the limita

tions period of its decision to refuse to deal with piaint!

would cause plaintiff new injury and start the limitat

period running anew.

C. The Ninth Circuit’s Decision Is Irreconciiable With Its

Prior, Controlling Decision In Orgell

It is well established that a decision by a Ninth Circuit pas

with regard to the issues involved in a later Ninth Circuit cas:

must be applied with controlling effect by the panel in t!

later case.’ Only the Ninth Circuit en banc may reac!

contrary result.’®

In this case, the Ninth Circuit panel failed to accord Da)

Orgell, Inc. v. Geary’s Stores, Inc., 640 F.2d 936 (9th ¢

cert. denied, 454 U.S. 816 (1981), the controlling effect

warranted, and created an irreconcilable conflict within

Ninth Circuit.

Orgell, a retailer, had claimed that Wedgwood, a china

manufacturer, had refused to sell its products to plaintit! as

result of a conspiracy between Wedgwood and Geary,

tomer of Wedgwood and one of plaintiff's competi!

Wedgwood initially refused to sell to Orgell in 1965, anc

repeated that refusal, in response to Orgell’s requests to deal,

in 1968, 1972, 1976, and 1977. Orgell sued in 1978, and argued

that it was entitled to damages for the four years prior to

15 United States v. Jenson, 450 F.2d 1258, 1264 (9th Cir. 1971)

denied, 405 U.S. 1043 (1972) (panel decision “is binding upon al!

panels of the court”).

16 Ellis v. Carter, 291 F.2d 270, 273 n.3 (9th Cir. 1961) (“A decisior

this court can be overruled only in an en banc proceeding.”), Upron +

Commissioner of Internal Revenue, 283 F.2d 716, 723 (9th Cir. 1960), cert

denied, 366 U.S. 911 (1961) (“this court could not, except in en banc

proceedings, hold in favor of the [defendant] if in another case this court has

reached a contrary result in deciding the same question”)

filing of the suit because the alleged conspiracy had continued

to date.

The district court granted Wedgwood’s motion for summary

judgment on the ground that plaintiff had not commenced suit

within four years after the claim accrued. The Ninth Circuit

affirmed, stating:

[A]ny injury to Orgell resulted from Wedgwood’s 1965

refusal to sell. Orgell’s subsequent requests “were forlorn

inquiries by one all of whose reasonable hopes had been

previously dashed.” The district court’s order granting

summary judgment stated, “each time Wedgwood re-

peated the refusal, it was a reaffirmation of the original

decision not to deal with the plaintiff. Since the original

refusal pursuant to the alleged conspiracy occurred over a

dozen years ago, this action is time-barred by the four

year statute of limitations.” We agree.

640 F.2d at 938 (citation omitted).

The Ninth Circuit panel in this case sought to distinguish

Orgell, declaring that the refusal alleged there was “irrevoca-

ble, immutable, permanent and final,” while hypothesizing

that in the instant case the alleged payments and “shepherd-

ing” could have caused new injury to plaintiffs during the

limitations period. A3-A5. However, no meaningful distinction

exists between Orgell and this case.

In Orgell, the Ninth Circuit upheld the statute of limitations

bar because the plaintiff’s requests to deal within the limita-

tions period “ ‘were forlorn inquiries by one all of whose

reasonable hopes had been previously dashed.’ ” 640 F.2d at

938, quoting In re Multidistrict Vehicle Air Pollution, 591 F.2d

68, 72 (9th Cir.), cert. denied, 444 U.S. 900 (1979). It was not a

question of whether the refusal to deal was immutable, but of

whether the refusal was firmly in place. No reason was given

why Wedgwood could not have changed its mind and sold

china to the plaintiff.

Similarly here, under plaintiffs’ assertions, the alleged re-

fusal to deal was firmly in place by January 1979 and remained

consistently in effect thereafter. See supra at 4. The Henne-

gans’ “reasonable hopes,” like those of Orgell, assertedly “had

been . . . dashed” outside of the limitations period.

The claimed “shepherding” of tourists and payments here

also fail to support any distinction from Orgell. Both cases

involve allegations that defendant refused to deal with plaintiff

while dealing with one or more of plaintiff’s competitors.

While plaintiffs here have asserted that the tour operators have

“shepherded” tourists to the defendant retail shops but not to

plaintifts’ place of business, Orgell complained that

Wedgwood “shepherded” chinaware to Geary but not to plain-

tiff’s store. And while plaintiffs here have alleged that the

defendant retail shops pay the tour operators to bring tourists

to them and provide other services, Geary no doubt paid

Wedgwood to supply chinaware to it. As in Orgell, plaintiffs’

claimed injury here resulted from the asserted pre-limitations

decision to refuse to deal with them, not from any subsequent

alleged implementations or manifestations of that asserted

decision.

Thus, the decision below directly conflicts with the Ninth

Circuit’s governing precedent in Orgell. The Court should

decide Question 1 to end this conflict, resolve the conflict

among the Circuits, and preserve the integrity of its decision in

Zenith."’

17 By refusing to comply with its own requirement that a decision by a

panel of the Ninth Circuit must be followed by subsequent Ninth Circuit

panels unless the decision has been overruled by the Ninth Circuit en banc,

the Ninth Circuit has “departed from the accepted and usual course of

judicial proceedings” (S. Ct. Rule 17.1(a)), and has undermined the integrity

of the substantive rules and procedures on which parties must be able to rely

in litigating cases and conducting their affairs. The Court therefore also

should decide Question 1 in the exercise of its supervisory power Over the

federal courts, in order to uphold the fundamental tenets of judicial adminis-

tration that a court should follow its own procedures and adhere to the

(footnote continued)

Il. The Court Should Decide Whether Section 2(c) Of The

Robinson-Patman Price Discrimination Act Applies

Absent Price Discrimination Or A Discount To The

Purchaser, In Order To Establish Consistency With The

Decisions Of This Court And The Congressional Intent,

End The Present Conflict Among And Confusion Within

The Courts Of Appeals, And Prevent The Unintended

Expansion Of The Antitrust Treble Damages Remedy.

Plaintiffs allege no price discrimination or discount in the

sale of goods by the retail shops. Indeed, the Complaint

precludes such an allegation. See supra at 4. Rather, plaintiffs

allege payments by the defendant retail shops to the defendant

tour operators, and conclude that such payments constitute

‘“commercial bribery’’'® proscribed by Section 2(c) of the

Robinson-Patman Price Discrimination Act.'®

The Ninth Circuit has stated that Section 2(c)’s ‘‘application

is not limited to situations of price discrimination, but also

encompasses commercial bribery.’’ Calnetics Corp. vy.

Volkswagen of America, Inc., 532 F.2d 674, 696 (9th Cir.),

cert. denied, 429 U.S. 940 (1976) (citing Rangen, Inc. v.

Sterling Nelson & Sons, Inc., 351 F.2d 851 (9th Cir. 1965),

cert. denied, 383 U.S. 936 (1966)).

The Court should review Question 2 because: (i) the Ninth

Circuit’s position is inconsistent with two decisions of this

Court and the Congressional intent in énacting Section 2(c); (2)

there is a split among, and confusion within, the Courts of

Appeals on this recurring issue; and (3) the Ninth Circuit’s

principle of stare decisis. See Western Pacific Railroad Corp. v. Western

Pacific Railroad Co., 345 U.S. 247, 260 (1953); Monell v. New York City

Dept. of Social Services, 436 U.S. 658, 700 (1978). See also id. at 709 n.6,

717 (Powell, J. concurring and Rehnquist, J. dissenting).

18 Compl. 4¢ 22, 26, 32, 42, CR 1 at 10, 11-12, 14, 18.

19 See “Popular Name Acts,” U.S.C.A. Title 15, Commerce and

Trade, §§ 12 to 20 (1973) at XIX.

wae ae a

position is inconsistent with this Court’s emphasis on limiting

the antitrust treble damages remedy to persons injured by the

type of conduct the antitrust laws were enacted to prevent.”

A. The Ninth Circuit’s Position Is Inconsistent With This

Court’s Decisions In Broch And Boston & Maine And

The Congressional Intent With Regard Te Section 2(c).

Section 2(c), 15 U.S.C. § 13(c), provides that:

It shall be unlawful for any person engaged in commerce,

in the course of such commerce, to pay or grant, or to

receive or accept, anything of value as a commission,

brokerage, or other compensation, or any allowance or

discount in lieu thereof, except for services rendered in

connection with the sale or purchase of goods, wares, or

merchandise, either to the other party to such transaction

or to an agent, representative, or other intermediary

therein where such intermediary is acting in fact for or in

behalf, or is subject to the direct or indirect control, of

any party to such transaction other than the person by

whom such compensation is so granted or paid.

This language has been criticized as being ambiguous.”!

20 This issue was not raised below in connection with the summary

judgment motion involved in this petition. However, given the Ninth Cir-

cuit’s decisions in Calnetics and Rangen, it is appropriate for the Court to

consider this question. Hormel v. Heivering, 312 U.S. 552, 556-59 (1941)

(reviewing court may, in appropriate circumstances, consider legal issues not

pressed or passed upon below). See also Youakim v. Miller, 425 U.S. 231, 235

(1976).

21 See, e.g., Seaboard Supply Co. v. Congoleum Corp., 770 F.2d 367,

371 (3d Cir. 1985) (quoting C. Austin, Price L*scrimination 106 (1959) (§ 2(c)

is “undoubtedly the most ambiguous and faultily drafted section of the

Act”)); M. Yeager, Brokerage Probiems and Commercial Bribery, 53 Anti-

trust L.J. 1029 (1984) (footnotes omitted) (“Linguistically, Section 2(c) is a

genuine piece of art. It has 115 words, all in one sentence. There are no

semicolons, no clauses, just a few commas—and there has even been a debate

about whether the commas are in the right places”).

The only decision of this Court directly addressing Section

2(c) interprets it as a price discrimination statute. In Federal

Trade Commission yv. Henry Broch & Co., 363 U.S. 166

(1960), the Court held that Section 2(c) proscribed price con-

cessions to a buyer that were funded by a reduction in the

commissions of the seller’s broker. In discussing the scope of

Section 2(c), the Court relied heavily on the legislative history

of the Robinson-Patman Price Discrimination Act as a whole,

and of Section 2(c) in particular.

The Court noted that the price discrimination provisions in

Section 2 of the Clayton Act, which the Robinson-Patman Act

amended, were easily evaded.” It stated that the purpose of the

Robinson-Patman Act was ‘‘to curb and prohibit all devices by

which large buyers gained discriminatory preferences over

smaller ones by virtue of their greater purchasing power.’’

Broch, 363 U.S. at 168.”

The Court emphasized that Section 2(c) was aimed at the

abuse of the brokerage function as a means of effectuating

discriminatory discounts:

A lengthy investigation revealed that large chain buyers

were obtaining competitive advantages in several ways

other than direct price concessions and were thus avoiding

the impact of the Clayton Act. One of the favorite means

22 363 U.S. at 169 and n.3. See also 80 Cong. Rec. 7759 (1936)

(statement of Congressman Patman); 80 Cong. Rec. 6622 (1936) (statement

of Congressman Miller) (“Section 2 of the Clayton Act prohibited price

discrimination, but carved so many exceptions from it, and stated them in

such loose language, that it has fallen short of its purpose; . . . It dealt not

at all with discriminations outside the realm of price discriminations between

customers, through the perversion of the brokerage function. . . .”).

23 80 Cong. Rec. 6622 (1936) (statement of Congressman Miller) (The

Robinson-Patman bill was “aimed at the three principal forms in which price

discriminations and preferences [were in 1936] prevalently practiced in the

channels of trade. These are the excessive quantity discount, the corrupted

brokerage payment or allowance, and allowances in the pretended payment

of advertising and promotional services.”).

of obtaining an indirect price concession was by setting up

‘‘dummy”’ brokers who were employed by the buyer and

who, in many cases, rendered no services. The large

buyers demanded that the seller pay ‘‘brokerage’’ to these

fictitious brokers who then turned it over to their em-

ployer. This practice was one of the chief targets of § 2(c)

of the Act.

Broch, 363 U.S. at 168-69 (footnotes omitted).

The legislative history underscores Congress’ intent to apply

Section 2(c) to a ‘‘prevalent form of discrimination’’ involving

‘secret’? price concessions” obtained by ‘‘the exaction of

brokerage commissions or allowances where true brokerage

services have not been rendered.’’ 80 Cong. Rec. at 6623

(1936).*° While the ‘‘dummy”’ brokerage device ‘‘was not the

only means by which the brokerage system was abused,’’ 363

U.S. at 169, the Court in Broch stressed that Section 2(c) was

intended to cover the ‘‘means by which brokerage could be

24 See Federal Trade Commission v. Simplicity Pattern Co., 360 U.S.

55, 68 (1959) (noting that “[dJuring congressional debates . . . there were

continual references to the subsection (c) . . . practices as ‘secret’ dis-

criminations”); 80 Cong. Rec. 8126 (1936) (statement by Mr. Crawford)

(denouncing “secret rebates”, “secret discounts” and “confidential prices”

arranged by “chain brokers”); 80 Cong. Rec. 8132 (1936) (statement by Mr.

Martin) (this legislation, “to prohibit unreasonable quantity discounts and

false brokerage and false advertising allowances, which are in reality rebates,

bonuses, subsidies,” is analogous to “the many State laws which were

enacted to abolish secret rebates, and rate and service discriminations”).

25 See S. Rep. No. 1502, 74th Cong., 2d Sess. 3 (1936) (“discrimina-

tions are sometimes effected directly in prices or terms of sale, and some-

times by separate allowances to favored customers for purported services or

other considerations which are unjustly discriminatory in their result against

other customers.”); H.R. Rep. No. 2287, Pt. 1, 74th Cong., 2d Sess. 15

(1936) (“Among the prevalent modes of discrimination at which this bill is

directed is the practice of certain large buyers to demand the allowance of

brokerage direct to them upon their purchases, or its payment to an

employee, agent, or corporate subsidiary whom they set up in the guise of a

broker, and through whom they demand that sales to them be made.”); S.

Rep. No. 1502, 74th Cong., 2d Sess. 7 (1936) (same).

used to effect price discrimination.’’ Jd. Plaintiffs here do not

allege any price discrimination or discount in the sale of goods

by the retail shops. They solely conclude that defendants have

engaged in ‘‘commercial bribery.”’

In a subsequent decision addressing Section 10 of the Clay-

ton Act, 15 U.S.C. § 20, this Court considered whether com-_

mercial bribery should be treated as an antitrust matter. It

rejected such a conclusion, stating that: ‘‘Bribery might well be

in the family of offenses covered under a conflict of interest

statute. But it is more remote from an antitrust frame of

reference.’’ United States v. Boston & Maine Railroad, 380

U.S. 157, 162 (1964).

Notwithstanding these decisions and compelling evidence of

Congressional intent, the Ninth Circuit in Rangen, Inc. v.

Sterling Nelson & Sons, Inc., 351 F.2d 851 (9th Cir. 1965),

cert. denied, 383 U.S. 936 (1966), held that Section 2(c)

proscribed the bribing of the superintendent of an Idaho fish

hatchery by a fish food manufacturer to obtain the State of

Idaho’s fish food business. No price discrimination was in-

volved, nor did the buyer receive any of the payments as a

discount, secret or otherwise.

The court conceded that ‘‘in enacting section 2(c), the prime

concern of Congress was to curtail price discriminations ac-

complished by pseudo-brokerage arrangements.’’ Jd. at 856. It

nevertheless expanded the coverage of that statute, asserting

that: the Broch Court had ‘‘expressed the view that the

legislative history demonstrates a Congressional intent to pro-

scribe other practices such as the bribing of a seller’s broker by

the buyer,’’ id.;*° and that ‘‘Section 2(c) is to be construed

independently, without reference to the price discrimination

section’’ (Section 2(a)) of the Robinson-Patman Price Dis-

26 In support of this proposition, the Ninth Circuit cited to “a footnote

(page 169)” in Broch (presumably 363 U.S. at 169-70 n.6), and noted that

Broch had referred to 80 Cong. Rec. 7759-60, 8111-12 (1936). 351 F.2d at 856

and 856 n.2.

aa aril

Pilar see

crimination Act. Jd. at 857.7’ The court also disregarded the

above-mentioned language in Boston & Maine as not ‘‘a

definitive ruling.’’ Rangen, 351 F.2d at 857.

The Ninth Circuit in Rangen failed to recognize that the

Broch Court had mentioned the ‘‘bribing of a seller’s broker

by the buyer’’ simply as one of the ‘‘means by which brokerage

could be used to effect price discrimination,’’ presumably

because the purpose of a buyer’s bribing a seller’s broker

would be to secure a price preference. Broch, 363 U.S. at 169

and 169 n.6. The Ninth Circuit also failed to appreciate that

Section 2(c)’s ‘‘independence’’ from Section 2(a) should be

understood as part of Congress’ plan to force hidden price

discriminations into the open by depriving them of some of the

defenses available to overt price discrimination under Section

2(a), 15 U.S.C. § 13(a). Federal Trade Commission v. Simplic-

ity Pattern Co., 360 U.S. 55, 68 (1959). And, although the

decision in Boston & Maine did not directly construe Section

2(c), it involved the Clayton Act, to which the Robinson-Pat-

man Act is an amendment, and indicated that bribery is not

part of an antitrust frame of reference. Boston & Maine, 380

U.S. at 162.

Despite the fallacies in Rangen, the Ninth Circuit relied on

that decision in Calnetics Corp. v. Volkswagen of America,

Inc., 532 F.2d 674 (9th Cir.), cert. denied, 429 U.S. 940 (1976),

in stating that Section 2(c)’s ‘‘application is not limited to

situations of price discrimination, but also encompasses com-

mercial bribery.’’ 532 F.2d at 696. This view is inconsistent

with Broch, Boston & Maine, and Section 2(c)’s legislative

history, and the Court should address this issue to vindicate its

decisions and the Congressional intent.

27 See Broch, 363 U.S. at 170-71 and 171 n.8, citing H.R. Conf. Rep.

No. 2951, 74th Cong., 2d Sess. 6 (1936) (reference to brokerage in § 2(a)

deleted because “brokerage is dealt with in a subsequent subsection of the

bill”).

B. The Courts Of Appeals Are In Conflict And Disarray On

This Recurrent Issue.

This question of the scope of Section 2(c) in this regard has

resulted in conflict and confusion among and within the

Circuits. Relying on pre-Broch cases and failing even to con-

sider the legislative history, the Fourth Circuit has taken the

same position as the Ninth. Metrix Warehouse, Inc. v.

Daimler-Benz Aktiengesellschaft, 716 F.2d 245 (4th Cir. 1983).

Other Circuits have disagreed or are confused or contradictory

on this issue.

The First Circuit. The decision in Allen Pen Co. v.

Springfield Photo Mount Co., 653 F.2d 17, 25 (1st Cir. 1981),

interprets Section 2(c) as a price discrimination statute. The

court understood Broch to require that the broker ‘‘was

interposed as a device or sham to give the favored customer a

competitive advantage through a lower price,’’ and stated that

‘*§ 2(c) is designed to prevent violation of the basic § 2(a) price

discrimination prohibition under different guise.’’ Jd.

The Second Circuit. Although it has not squarely ad-

dressed this issue, the Second Circuit appears to require a

discount in lieu of brokerage or price discrimination effected

by brokerage devices in order for a claim to be cognizable

under Section 2(c). Empire Rayon Yarn Co. v. American

Viscose Corp., 364 F.2d 491 (2d Cir. 1966) (en banc), vacating

and endorsing the dissenting opinion in 354 F.2d 182, 191 (2d

Cir. 1965) (Moore, J., dissenting), cert. denied, 385 U.S. 1002

(1967).

The Third Circuit. In Seaboard Supply Co. v. Congoleum

Corp., 770 F.2d 367 (3d Cir. 1985), the Third Circuit expressed

doubt that Section 2(c) should be applied to commercial

bribery, stating that “[t]here is good reason to question

whether Congress intended to sweep commercial bribery within

the ambit of section 2(c).” Jd. at 372. Nevertheless, even as the

court noted that “[t]he antitrust laws were never meant to be a

re sn Beni eh Vesa A la ie, i

panacea for all wrongs,””* it stated that “we are not inclined to

take issue with three Courts of Appeals which found that

certain events constituting commercial bribery came within the

terms of 2(c).” Id.”

The Fifth Circuit. The Fifth Circuit in Excel Handbag Co.,

Inc. v. Edison Brothers Stores, Inc., 630 F.2d 379, 387 (Sth Cir.

1980), “specifically” refused to reach a conclusion that com-

mercial bribery alone could constitute a violation of Section 2

of the Robinson-Patman Price Discrimination Act, after find-

ing that there was insufficient evidence of such conduct in that

case. Although they do not concern “commercial bribery,”

other Fifth Circuit decisions apparently make price discrimina-

tion or dummy brokerage a requirement for a Section 2(c)

violation. Compare Thomasville Chair Co. v. Federal Trade

Commission, 306 F.2d 541, 545-46 (Sth Cir. 1962) (holding

that, under Broch, a discount giving effect to reduced commis-

sions paid by the seller violates Section 2(c) only if the discount

is “discriminatory”),*° with Gibson v. Federal Trade Commis-

sion, 682 F.2d 554, 570 (Sth Cir. 1982), cert. denied, 460 U.S.

1068 (1983) (“Section 2(c), in light of the language and pur-

pose, requires no price discrimination in a situation of dummy

brokerage such as is involved here.”).

The Sixth Circuit. The Sixth Circuit’s position is unclear. A

pre-Broch decision, Fitch v. Kentucky-Tennessee Light &

28 Id., quoting Parmelee Transportation Co. v. Keeshin, 292 F.2d 794,

804 (7th Cir.), cert. denied, 368 U.S. 944 (1961).

29 The reference to three Courts of Appeals included the Sixth and

Seventh Circuits, as well as the Ninth. Seaboard Supply, 770 F.2d at 372,

citing Rangen, Grace v. E.J. Kozin Co., 538 F.2d 170 (7th Cir. 1976), and

Fitch v. Kentucky-Tennessee Light & Power Co., 136 F.2d 12 (6th Cir. 1943).

But see infra at 24, for a discussion of the law of the Sixth and Seventh

Circuits.

30 §=©See Allen Pen, 653 F.2d at 25 (citing Thomasville Chair for the

conclusion that “§ 2(c) is designed to prevent violation of the basic § 2(a)

price discrimination prohibition under different guise”).

Power Co., 136 F.2d 12, 14 (6th Cir. 1943), applied Section 2(c)

to a commercial bribery case. However, a 1981 decision in a

district court in the Sixth Circuit granted defendants summary

judgment on the ground that a Section 2(c) claim cannot be

sustained absent an allegation of price discrimination. Howell

Industries, Inc. v. Sharon Steel Corp., 532 F. Supp. 400,

406-08 (E.D. Mich. 1981). The court cited Broch in stating

that:

the Robinson-Patman Act must be construed as a har-

monious whole, and the latter sections, while having

independent significance in their specific provisions, ad-

dress various practices resorted to as a means of avoiding

the broad price discrimination prohibitions. . . . The

caselaw applying section 2(c) has noted this fact and has

construed the Section to include an element of disguised

price discrimination.

Id. at 406. The court further stated that the cases “do not

satisfactorily explain the significance of Fitch and other com-

mercial bribery cases in light of the holding of Broch,” id. at

407, and concluded that:

Absent clearer authority from this circuit that at least

indirect price discrimination is not required under Section

2(c), and in light of the reasoning in Broch and Allen Pen,

I cannot conclude that Plaintiff’s allegations under Sec-

tion 2(c) are sufficient to withstand Defendant’s motion.

Id. at 407-08.

The Seventh Circuit. In Grace v. E.J. Kozin Co., 538 F.2d

170, 173 (7th Cir. 1976), the Seventh Circuit held that Section

2(c) reached commercial bribery. But in the subsequent deci-

sion in Lupia v. Stella D’Oro Biscuit Co., Inc., 586 F.2d 1163,

1169 (7th Cir. 1978), cert. denied, 440 U.S. 982 (1979), the

court stated that “Section 2(c) was enacted in order to prevent

discriminatory rebates granted large sellers under the guise of

‘brokerage fees’ never actually earned.”

rh ee Nae hear a

RED tes Nem A POEL EIA RNS Kart ANNE Re Lt

The Eighth Circuit. The Eighth Circuit came down on both

sides of the issue in a single decision. In Ideal Plumbing Co. v.

Benco, Inc., 529 F.2d 972 (8th Cir. 1976), the court construed

Broch as “emphasizing that discrimination is in fact an element

of the statutory proscription.” Jd. at 976 n.3. On the next

page, however, demonstrating its confusion within a single

sentence, the court stated that “Congress also intended Section

2(c) to reach price arrangements equivalent to illicit brokerage,

such as commercial bribery ... .” Jd. at 977 (emphasis

added).

The Court should address this issue to remedy the pervasive

discord and confusion among and within the Circuits in this

regard.

C. Commercial Bribery Is Not The Type Of Conduct That

The Antitrust Laws, With Their Treble Damages Rem-

edy, Were Intended To Cover.

The antitrust treble damages remedy”’ is an extremely potent

weapon and should be available only where Congress intended.

See, e.g., Associated General Contractors of California, Inc.

v. California State Council of Carpenters, 459 U.S. 519 (1983).

While certain price discriminations have antitrust implications,

bribery does not. See Boston & Maine, 380 U.S. at 162. It

should not, without clear evidence of Congressional intent, be

incorporated into the “antitrust frame of reference,” and be

accorded the exceptional remedies available there. The Court

should review this issue to prevent the misuse of Section 2(c) by

plaintiffs seeking treble damage windfalls.”

31 See Section 4 of the Clayton Act, 15 U.S.C. § 15.

32 Cf. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752,

777 (1984) (discussing desirability of “eliminat[ing] treble damages from

private state tort suits masquerading as antitrust actions”); Sutliff, Inc. v.

Donovan Cos., 727 F.2d 648, 655 (7th Cir. 1984) (no antitrust claim stated

where factual allegations at most describe “a species of unfair competition”).

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

JAY N. FASTOW

WEIL, GOTSHAL & MANGES

767 Fifth Avenue

New York, New York 10153

(212) 310-8644

Counsel of Record for Petitioner

Duty Free Shoppers, Ltd.

Of Counsel:

SHELLEY E. HARMS

WEIL, GOTSHAL & MANGES

767 Fifth Avenue

New York, New York 10153

J. BRADLEY KLEMM

WILLIAM J. BLAIR

KLEMM, BLAIR, STERLING &

JOHNSON, P.C.

1008 Pacific News Building

238 O’Hara Street

Agana, Guam 96910

Counsel for Petitioner

Duty Free Shoppers, Ltd.

EDWARD TERLAJE

P.O. Box 1719

Agana, Guam 96910

(011-671) 477-8894

Counsel of Record for Petitioner

Ric Tours “Guam”, Inc.

RICHARD A. PIPES

CARBULLIDO & PIPES

Suite 300

Malayan House

316 Hernan Cortes Avenue

Agana, Guam 96910

(011-671) 472-2693

Counsel of Record for Petitioner

Hakubotan Enterprise, Inc.

TIMOTHY A. STEWART

P.O. Box 2766

Agana, Guam 96910

(011-671) 472-6978

Counsel of Record for Petitioners

J.B. Siaotong Enterprises, Inc.,

Pacifico Creative Service, Inc.,

Micronesian Hospitality, Inc., and

Yusen Air and Sea Service

Pacific, Inc.

Of Counsel:

F. RANDALL CUNLIFFE

CUNLIFFE & COOK

Suite 200

210 O’Hara Street

Agana, Guam 96910

(011-671) 472-1824

Counsel for Petitioners

Pacifico Creative Service, Inc.,

Micronesian Hospitality, Inc., and

Yusen Air and Sea Service

Pacific, Inc.

APPENDIX

APPENDIX A

Opinion Of The United States Court Of Appeals For The

Ninth Circuit Affirming In Part And Reversing In Part The

Memorandum Order Of The District Court of Guam, 787 F.2d

1299 (Filed April 17, 1986)

FOR PUBLICATION

FILED

APR 17 1986

CATHY A. CATTERSON, CLER:

U.S. COURT OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Decided April 17, 1986

No. 84-2563

D.C. No. C 83-0040 CCD

OPINION

THOMAS J. HENNEGAN and Gloria Hennegan,

Plaintiffs-Appellants,

—_—vV.—

PACIFICO CREATIVE SERVICE, INCORPORATED, d/b/a Jaipak,

Micronesian Hospitality, Inc., Ric Tours “Guam”, Inc.,

Yusen Air and Sea Service Pacific, Inc., et al,

Defendants-A ppellees.

<—-

Appeal from the District Court of Guam

Cristobal C. Duenas,

District Judge, Presiding

Argued and Submitted Nov. 13, 1985

San Francisco, California

Before:

WALLACE, ANDERSON, and PREGERSON,

Circuit Judges.

WALLACE, Circuit Judge:

The Hennegans appeal from the district court’s order grant-

ing summary judgment to appellees on the ground that the

Hennegans’ antitrust claims were barred by the statute of

limitations. We have jurisdiction under 28 U.S.C. § 1291. We

affirm in part and reverse and remand in part.

The Hennegans own and operate a gift and souvenir shop in

Guam. Appellees are five businesses that conduct organized

tours of Guam (the tour operators) and two businesses oper

ing gift and souvenir shops in Guam (the souvenir vendors).

On June 14, 1983, the Hennegans filed a complaint alleging

that the tour operators and souvenir vendors had engaged in

illegal restraints of trade in violation of section 3 of the

Sherman Act, 15 U.S.C. § 3, and section 2(c) of the Robinson-

Patman Act, 15 U.S.C. § 13(c). The Hennegans charged that

the tour operators shepherded tourists to the shops of the

souvenir vendors—and away from their shop—in exchange for

unlawful payments.

In ruling on the motion for summary judgment, the district

court concluded that the Hennegans’ cause of action accrued

prior to June 14, 1979, and that the alleged violations did not

constitute a continuing conspiracy. The court therefore held

that the Hennegans’ action was barred by the four-year statute

of limitations, 15 U.S.C. § 15b, and granted summary judg-

ment.

We review de novo the district court’s grant of summary

judgment. Lojek v. Thomas, 716 F.2d 675, 677 (9th Cir. 1983).

We must determine whether there is any genuine issue of

material fact and whether the substantive law was correctly

applied. /d.

citar et, Noid nicer one Vie Rs oh

We first address the Hennegans’ contention that their action

is not barred by the statute of limitations because they have

alleged a continuing conspiracy within the limitations period.

The Hennegans argue that, irrespective of when their cause of

action first accrued, the tour operators and souvenir vendors

have, in furtherance of the conspiracy, committed overt acts

within the limitations period that injured the Hennegans’

business. Each of these overt acts within the limitations period,

they argue, gave rise to a separate cause of action that is not

barred by the statute of limitations. Accordingly, the Henne-

gans assert that they are entitled to pursue their action to

recover damages for ail injuries caused by the overt acts within

the limitations period.

Suits for damages from antitrust violations must be brought

“within four years after the cause of action accrued.” 15

U.S.C. § 15b. “ ‘A civil cause of action under the [antitrust

laws] arises at each time the plaintiff’s interest is invaded to his

damage, and the statute of limitations begins to run at that

time.’ ” AMF, Inc. v. General Motors Corp. (In re Multi-dis-

trict Vehicle Air Pollution), 591 F.2d 68, 70 (9th Cir.) (brack-

eted text in cited authority) (Air Pollution), cert. denied, 444

U.S. 900, 100 S. Ct. 210, 62 L. Ed. 2d 136 (1979), quoting

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

2d 1264, 1270 (9th Cir. 1975); see Zenith Radio Corp. vy.

Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S. Ct. 795, 806

(1971). When an overt act in furtherance of an antitrust

conspiracy damages the plaintiff within the limitations period,

the plaintiff possesses a cause of action for that damage that is

not barred by the statute of limitations. See Air Pollution, 591

F.2d at 70-71. Here, the Hennegans have alleged numerous

overt acts since June 14, 1979. These overt acts include the

payments by the souvenir vendors to the tour operators and the

tour operators’ shepherding of tourists away from the F*enne-

gans’ shop and to the shops of the souvenir vendors. There-

fore, we hold that the statute of limitations does not bar the

Hennegans from seeking damages for injuries inflicted after

June 14, 1979.

This result is consistent with, and supported by our opinion

in Air Pollution. See Western Shoe Gallery, Inc. v. Duty Free

Shoppers, Ltd., 593 F. Supp. 348, 352 & n.4 (N.D. Cal. 1984)

(Western Shoe). In Air Pollution, AMF, Inc. (AMF) alleged

that four major American automobile manufacturers and their

trade association (automobile manufacturers) had conspired to

exclude AMF from the developing market for afterburners.

591 F.2d at 69. The automobile manufacturers had made the

final decision not to purchase afterburners from AMF outside

the limitations period. Jd. at 71. AMF argued that its action

was not barred by the statute of limitations since it alleged a

continuing conspiracy, with overt acts by the automobile

manufacturers within the limitations period causing damage to

AMF. These alleged overt acts consisted of a negative response

by one of the automobile manufacturers to a contact initiated

by AMF, as well as efforts by each of the automobile manufac-

turers to achieve government certification of iis own emission

control system. Jd.

In Air Pollution, we reaffirmed the rule that an antitrust

conspiracy begun outside the limitations period is actionable if

new overt acts in furtherance of the conspiracy damage the

plaintiff within the limitations period. Jd. at 70-71. We found,

however, that all injury to AMF resulted from the automobile

manufacturers’ “irrevocable, immutable, permanent and

final” decisions, outside the limitations period, not to purchase

the afterburners from AMF. Jd. at 72. As we pointed out, to

integrate the projected afterburners into new automobiles

would require considerable lead time—developing not only

afterburner design but automobile design as well—to assure

successfully integrated full-car designs. Thus, once the auto-

mobile manufacturers embarked upon their own programs of

afterburner development, the market for AMF’s new car

afterburners effectively disappeared. AMF could no longer

produce afterburners that would be marketable even if the

manufacturers refrained from any further acts of conspiracy.

We concluded that these initial decisions made prior to the

limitation period completely and permanently excluded AMF

from the market. Consequently, no separate injury flowed

from the alleged overt acts within the limitations period. /d.

The circumstances such as were present in Air Pollution do

not exist here. The alleged actions outside the limitations

period did not immediately and permanently destroy the Hen-

negans’ business, nor were they “irrevocable, immutable, per-

manent and final.” The Hennegans instead allege that they

have suffered damage from continued, separate antitrust viola-

tions within the limitations period. The rule that we reaffirmed

in Air Pollution therefore requires that we hold that the

Hennegans’ action to recover for these separate violations

occurring within four years prior to its filing is not barred by

the statute of limitations.

The district court erroneously based its contrary holding on

David Orgell, Inc. v. Geary’s Stores, Inc., 640 F.2d 936 (9th

Cir.) (Orgell), cert. denied, 454 U.S. 816, 102 S. Ct. 92, 70 L.

Ed. 2d 84 (1981). In Orgell, the defendant, in response to

plaintiff’s inquiries, had refused to sell its goods to the plain-

tiff on several occasions over a period of twelve years. /d. at

937. Two of these refusals occurred within the limitations

period. Jd. Relying directly on Air Pollution, we held that the

action was barred by the statute of limitations, because defen-

dant’s inital refusal to sell was “ ‘irrevocable, immutable,

permanent and final.’ ” Jd. at 938, quoting Air Pollution, 591

F.2d at 72.

In ruling that the Hennegans’ action was barred by the

statute of limitations, the district court apparently read Orgell

as holding that a continuing refusal to deal cannot be a

continuing conspiracy. However, Orgel/ merely applies Air

Pollution. While it is not evident from the brief factual

summary how the defendant’s initial refusal to sell caused all

the injury to the plaintiff, we clearly held that the case was

governed by Air Pollution and certainly did not purport to

create a rule inconsistent with Air Pollution. Therefore, we

conclude that Orge// cannot sustain the ruling that the Henne-

gans’ action is barred by the statute of limitations. See Western

Shoe, 593 F. Supp. at 352 & n.4 (distinguishing Orgel/).

The Hennegans further argue that they may recover damages

for injuries inflicted prior to the limitations period since they

did not know of the alleged activities of the tour operators and

souvenir vendors prior to this period. In essence, the Henne-

gans contend that their lack of knowledge tolled the statute of

limitations for any causes of action that accrued prior to June

14, 1979.

Ignorance of an antitrust cause of action alone is insufficient

to toll the statute of limitations. Under the equitable doctrine

of fraudulent concealment, however, the statute of limitations

for a cause of action is tolled if the plaintiff proves that the

defendant fraudulently concealed the existence of the cause of

action so that the plaintiff, acting as a reasonable person, did

not know of its existence. Rutledge v. Boston Woven Hose &

Rubber Co., 576 F.2d 248, 249-50 (9th Cir. 1978).

The Hennegans have not alleged specific facts showing that

the tour operators and souvenir vendors engaged in affirmative

conduct that fraudulently concealed the existence of a cause of

action. See id. at 250. Furthermore, the Hennegans have not

shown that they neither knew nor should have known prior to

June 14, 1979, that the alleged activities of the tour operators

and souvenir vendors gave them a cause 0: action. Instead, the

record indicates the contrary. In a prior, successful motion to

disqualify a defense law firm, the Hennegans alleged that they

had retained a lawyer in that firm in January 1979 in a matter

involving “the same circumstances and commercial conditions

that are the subject of the instant antitrust action.” The

Hennegans specifically cited a letter written by that lawyer on

their behalf in March 1979 that complained that tour operators

were shepherding tourists away from their shop. In addition,

in a prior separate action, the Hennegans acknowledged that

they were aware before 1979 of the alleged practice of pay-

ments by souvenir vendors to tour operators for bringing

tourists to their shops.

Under these circumstances, the Hennegans’ allegations of

fraudulent concealment are unpersuasive. The Hennegans are

therefore barred by the statute of limitations from pursuing

recovery of damages for injuries inflicted prior to June 14,

1979.

We hold that the Hennegans are entitled to pursue recovery

of damages from overt acts proven to be in furtherance of the

alleged conspiracy which occurred within the limitations period

(i.e., since June 14, 1979). The Hennegans are not entitled,

however, to seek to recover damages for injuries alleged to

have been inflicted prior to the limitations period.

AFFIRMED IN PART; REVERSED AND REMANDED IN PART.

APPENDIX B

Order Of The United States Court Of Appeals For The Ninth

Circuit Denying Defendants’ Petition For Rehearing And

Rejecting Defendants’ Suggestion For Rehearing En Banc

(Filed June 11, 1986)

FILED

JUN 11 1986

CATHY A. CATTERSON, CLERK

U.S. COURT OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 84-2563

D.C. No. C 83 83-0040 CCD

ORDER

THOMAS J. HENNEGAN and GLORIA HENNEGAN,

Plaintiff-Appellants,

—vs.—

PACIFICO CREATIVE SERVICE, INCORPORATED d/b/a JALPAK,

MICRONESIAN HOSPITALITY, INC., RIC TOURS “GUAM”,

INC., YUSEN AIR AN” SEA SERVICE PACIFIC, INC., et al.,

Defendants-Appellees.

* 5

Appeal from the District Court of Guam

Before:

WALLACE, ANDERSON, and PREGERSON,

Circuit Judges.

The panel, as constituted above, has voted to deny the

petition for rehearing and to reject the suggestion for rehearing

en banc.

The full court has been advised of the suggestion for re-

hearing en banc, and no judge of the court has requested a

vote on the suggestion for rehearing en banc. Fed. R. App. P.

35(b).

The petition for rehearing is denied, and the suggestion for

rehearing en banc is rejected.

Al0

APPENDIX C

Memorandum Order of the District Court of Guam Granting

Defendants’ Motion for Summary Judgment

(Filed September 5, 1984)

FILED

DISTRICT COURT OF GUAM

AGANA, GUAM

SEP 5 2:43 PM ’84

EDWARD L. G. AGUON

CLERK, DISTRICT COURT OF GUAM

DISTRICT COURT OF GUAM

TERRITORY OF GUAM

Civil Case 83-0040

MEMORANDUM ORDER

cal

THOMAS J. HENNEGAN and GLORIA E. HENNEGAN,

Plaintiffs,

—

PACIFICO CREATIVE SERVICE, INCORPORATED,

d/b/a Jalpak,

—and—

MICRONESIAN HOSPITALITY, INC.,

—and—

RIC TOURS “GUAM”, INC.,

—and—

a ene |

All

YUSEN AIR AND SEA SERVICE PACIFIC, INC.,

d/b/a Diamond Tours,

—and—

J.B. SIAOTONG ENTERPRISE, INC.,

d/b/a Guam Travel Bureau,

—and—

DUTY FREE SHOPPERS, LTD.,

—and—

HAKUBOTAN ENTERPRISES, INC.,

Defendants.

The Plaintiffs filed this action against the Defendants on

June 14, 1983, alleging that the defendants Duty Free Shop-

pers, Ltd., (hereinafter referred to as “DFS”) and Hakubotan

have engaged in illegal restraints of trade in violation of 15

U.S.C. Section 3 by conspiring with Defendants Jalpak, Ric

Tours “Guam”, Inc., Diamond Tours Guam, Guam Trave!

Bureau, and Micronesian Hospitality, Inc., (hereinafter

referred to as “Jalpak”, “Ric Tours”, “Diamond Tours”,

“Guam Travel”, and “Micronesian”, respectively), to refuse to

deal with Plaintiffs. The Plaintiffs allege that the basis for the

alleged group boycott by the Defendants is that the Defendants

DFS and Hakubotan have paid certain commission payments

to the remaining Defendants which aliegedly constitute com-

mercial bribery in violation of 15 U.S.C. Sections 3 and 13 and

the Plaintiffs have refused to make such commission

payments.

At the time the complaint was filed, Defendants Micro-

nesian, Jalpak, and Diamond Tours were represented by Attor-

ney Andrew Gayle. The Plaintiffs on December 12, 1983, filed

a motion to disqualify Attorney Gayle from representing

Defendants Micronesian, Jalpak, and Diamond Tours on the

grounds that the representation of these Defendants by Attor-

ney Gayle created a conflict of interest since Attorney Gayle

Al2

had represented the Plaintiffs beginning in January, 1979, in a

matter involving “the same circumstances and commercial

conditions that are the subject of the instant antitrust action.”

(Plaintiffs’ Motion to Disqualify Counsel, filed December 12,

1983, at p.3.) After hearing oral argument, this Court deter-

mined that a conflict of interest existed and granted the

Plaintiffs’ Motion to Disqualify Attorney Gayle from repre-

senting Defendants Micronesian, Jalpak, and Diamond Tours

in this action.

The Defendants subsequently filed a Motion for Summary

Judgment on the grounds that the Plaintiffs’ suit is time-

barred by 15 U.S.C. Section 15b, the four-year statute of

limitations governing antitrust actions, since the Plaintiffs were

aware of the Defendants’ alleged final refusal to deal and the

alleged circumstances surrounding such refusal prior to June

14, 1979. This Court took the matter under advisement.

DISCUSSION

As previously noted, the Defendants contend that the Plain-

tiffs’ action is time-barred by the four-year statute of limita-

tions governing antitrust actions since the Plaintiffs’ cause of

action accrued more than four years before the commencement

of the Plaintiffs’ instant lawsuit. Section 15b of 15 U.S.C.

states as follows:

Any action to enforce any cause of action under sec-

tions 15, 15a, or 15c of this title shall be forever barred

unless commenced within four years after the cause of

action accrued. No cause of action barred under existing

law on the effective date of this Act shall be revived by

this Act.

The Plaintiffs, however, maintain that the cause of action

did not accrue prior to the commencement of the four-year

statute of limitations period (June 14, 1979), and, alternatively

argue that no matter when this cause of action accrued, it

continues to this day by the very nature of the continuing

conspiracy between the Defendants. The Plaintiffs cite, in

Al3

support of their continuing conspiracy proposition, the fifth

circuit case of Imperial Point Colonnades Condominium, Inc.

v. Mangurian, 549 F.2d 1029 (Sth Cir., 1977). As previously

noted, the Defendants maintain that the cause of action ac-

crued prior to June 14, 1979. They additionally maintain that

the law as set forth in Imperial Point, id., is not the law of the

Ninth Circuit. This Court is in full agreement with both

positions of the Defendants. The Ninth Circuit in David

Orgell, Inc. v. Geary’s Stores, Inc., 640 F.2d 936 (9th Cir.,

1981), cert. den. 454 U.S. 816, 102 S. Ct. 92 (1981), held that

defendant Geary’s initial refusal to seli its chinaware to plain-

tiff retailer Orgell, allegedly based on a conspiracy between

defendant Geary and plaintiff’s principal competitor, triggered

the running of the four-year statute of limitations governing

antitrust actions. The Ninth Circuit further held that subse-

quent refusals by defendant Geary to sell its products to

plaintiff did not create new antitrust causes of action but were

merely reaffirmations of its original decision not to deal with

the plaintiff.

In the case at bar, the Plaintiffs by their own assertions and

admissions have set forth that not only were they aware of the

alleged “boycott” by the Defendants in January, 1979, but that

they were also aware of the fact that commissions had to be

paid to tour guides of the Defendant tour companies in order

to get Japanese tourist business.

As mentioned previously, the Plaintiffs stated in their written

motion to disqualify Attorney Gayle from representing Defen-

dants Micronesian, Jalpak, and Diamond Tours, that “the

circumstances underlying the 1979 representation of Plaintiffs

by Andrew M. Gayle and [his law firm] are the same circum-

stances and commercial conditions that are the subject of the

instant antitrust action”. (Plaintiffs’ Motion to Disqualify filed

December 12, 1983, at p.3.) .

The Plaintiffs further argued in their Memorandum in Sup-

port of the Motion to Disqualify Attorney Gayle, that:

. . . [T]here is nothing disputing the relationship be-

tween the matters currently being litigated and those

Al4

invoived in the former representation of Plaintiffs by [Mr.

Gayle’s firm]. In both instances, the rigid control exer-

cised by Guam tour companies over Japanese tourists,

who are shepherded from place to place without much

opportunity to go any place or buy anything not approved

by their tour companies, lies at the heart of the matters

disputed . . . (Letter of Attorney Gayle dated March 30,

1979.) Here, the same alleged control forms the basis of

Plaintiffs’ antitrust action. ... (Emphasis added.)

(Plaintiffs’ Memorandum filed December 12, 1984, at

pp. 2-3.)

Furthermore, at the hearing on the Motion to Disqualify

Attorney Gayle, Plaintiff, Mr. Hennegan, testified on direct

examination that the Plaintiffs had discussed with Attorney

Gayle in January, 1979, the pattern of Japanese tourists avoid-

ing his souvenir stand and that he had informed Mr. Gayle, at

that time, that all the Defendant tour companies named in this

suit were practicing this pattern. (Transcript of Motion to

Disqualify dated January 6, 1984, pp. 10-13.) ¥

Mr. Hennegan also made a statement in his affidavit dated

December 30, 1983, in support of his Motion to Disqualify

Attorney Gayle, that he had received “. . . discreet advice

from certain tour guides that the tourists were actually advised

to avoid our stand.” When questioned on cross-examination at

the hearing for the Motion to Disqualify Attorney Gayle about

nature of this discreet advice, Mr. Hennegan testified that the

tour guides told him “that they were being instructed by their

management to have the tourists avoid our stand.” (/d. at

p.14). Mr. Hennegan further stated on cross-examination that,

in early 1979, he knew that his souvenir stand was being

“boycotted; there was no doubt about it”. (/d. at p.15).

In fact, Mr. Hennegan even testified that in 1976, Mrs.

Hennegan made commission payments to a tour guide for

Japanese tourist business and Mrs. Hennegan testified that she

paid commission payments to another tour guide in 1977 or

1978. [Transcript of the triai of Holden v. Hennegan, Civil No.

23-81, Guam Superior Court, dated August 17-20, 1981, ap-

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peal dismissed January 4, 1984 (District Court of Guam

Appellate Division, Civil Case No. 81-0072A) at pp. 302 and

248.] There was further testimony by Mr. Hennegan that the

Plaintiffs were aware of at least one other vendor who was:

allegedly paying commissions. /d., at 263. And both Plaintiffs

testified that they believed that paying commissions was neces-

sary to obtain Japanese tourist business. (/d. at 248, 287-288.)

Thus, based on the foregoing, it is apparent that the Plain-

tiffs were aware of the Defendants’ alleged refusal to deal and

the alleged circumstances surrounding such refusal prior to

June 14, 1979, and are thus barred from commencing this

action by Section 15b of 15 U.S.C., the four-year statute of

limitations govern ng antitrust actions.

There being no genuine issue of material fact in dispute, the

Defendants’ Motion for Summary Judgment is granted as a

matter of law.

It is so ordered.

Dated this Sth day of September, 1984.

/s/ CRISTOBAL C. DUENAS

Cristobal C. Duenas

Judge, U.S. District Court of Guam

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APPENDIX D

Rule 28.1 Statement of Petitioner

Duty Free Shoppers, Ltd.

DFS Group Limited

Classic Jewellers International Limited

Classic Leather Ltd.

Le Classique (Private) Limited

Duty Free Shoppers K.K.

Duty Free Shoppers Group Limited

International Credit Systems Ltd.

Le Classique Duty Free Shoppers Limited

Duty Free Shoppers Palau, Ltd.

CBOS Limited

Duty Free Shoppers Limited (CNMI)

Duty Free Shoppers N.V.

Clarisse Company Limited

Preferred Products Limited

CBOS N.V.

DFS Marketing Pty. Ltd.

DFS (Private) Limited .

Preferred Products (Private) Ltd.

Commonwealth Investment Company, Inc.

Aero Shops, Inc.

Aero Shops Limited

RHC Luggage, Inc.

Duty Free Shoppers LAX, Inc.

Ukana Limited N.V.

Hawaiian King Candies Limited

Duty Free Shoppers JFK, Inc.

DFS North America, N.V.

Duty Free Shoppers (Private) Limited

Le Classique (Macau) Limited

Le Classique Limited

International Gift Shop, Inc.

42269 Ontario Limited

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DFS Group Limited (Panama)

DFS 1984 (Thailand) Limited

Duty Free Shoppers Macau Limited

Proffer Company Limited

DFS Group Ltd. (CNMI)

Duty Free Shoppers North America Inc.

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Rule 28.1 Statement of Petitioner

Micronesian Hospitality, Inc.

Pacifico Creative Service, Inc. (see Rule 28.1 Statement of

Petitioner Pacifico Creative Service, Inc.)

Baba Corporation

MHI Japan (a Japanese corporation)

Nippon Rent A Car Service of Guam, Inc.

Plaza, Inc.

Phonex International

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Rule 28.1 Statement of Petitioner

Yusen Air and Sea Service Pacific, Inc.

Yusen Air & Sea Service Co. Ltd.

(Japanese parent corporation)

Rule 28.1 Statement of Petitioner

Ric Tours “Guam”, Inc.

R & C Tours (Guam), Inc.

Rule 28.1 Statement of Petitioner

Hakubotan Enterprise, Inc.

Hakubotan Enterprise, Inc. has no parent company, subsidi-

ary (except wholly owned subsidiaries) or affiliate as those

terms are used in Supreme Court Rule 28.1.

Rule 28.1 Statement of Petitioner

J.B. Siaotong Enterprises, Inc.

J.B. Siaotong Enterprises, Inc. has no parent company,

subsidiary (except wholly owned subsidiaries) or affiliate as

those terms are used in Supreme Court Rule 28.1.

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Rule 28.1 Statement of Petitioner

Pacifico Creative Service, Inc. (now known as

Creative Tours Micronesia, Inc.)

Japan Air Lines Co., Ltd. (indirect Japanese

parent corporation).

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.