Petition for Writ of Certiorari — Triple "A" Machine Shop, Inc. v. Southwest Marine, Inc.

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FILED

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MAY 26 1987

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No.

CLERK

JOSEPH F. SPANIOK, UR.

In the Supreme Court

OF THE

United States

OCTOBER TERM, 1986

TRIPLE “A” MACHINE SHOP, INC.,

Petitioner,

VS.

SOUTHWEST MARINE, INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

EUGENE CREW

Counsel of Record

TIMOTHY F. PERRY

DANIEL J. MULLIGAN

KHOURIE & Crew, P.C.

101 California Street

Suite 1550

San Francisco, CA 94111

(415) 982-1550

Attorneys for Petitioner

BOWNE OF SAN FRANCISCO. INC. «+ 190 NINTH ST. «¢ S.F.. CA 94103 + (415) 864-2300

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QUESTION PRESENTED

Petitioner won summary judgment below—thereby establishing

that respondent’s antitrust suit was meritless—but the Court of

Appeals ordered petitioner to pay respondent’s attorneys’ fees

anyway. Petitioner won summary judgment because, it was held,

petitioner was merely exercising its First Amendment petition

rights. Yet the Court of Appeals ordered petitioner to pay respon-

dent’s fees as the “price” for exercising those rights.

Of the seven judges who addressed respondent’s audacious

claim (a District Judge and six Circuit Judges), five of them

believed the winner should not have to pay the loser’s attorneys’

fees. But petitioner must pay them nonetheless, merely because

two panel members are holding fast to their error. That er-

ror—labeled a “substantial miscarriage of justice” by four Circuit

Judges—stands as the only appellate decision in the entire 73-

year history of the Clayton Act ever to address the question

presented here, which is:

Whether a Sherman Act defendant who prevails on the

merits is nonetheless liable for plaintiff's attorneys’ fees

under the Clayton Act on the premise that plaintiff “‘substan-

tially prevailed” by exacting favorable concessions from

another defendant who settled.

THE PARTIES

Petitioner is Triple “A” Machine Shop, Inc. (“Triple A”).

Respondent is Southwest Marine, Inc. (“Southwest’’).

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TABLE OF CONTENTS

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tt nas owe Faas KERR Shes eee een ere

ES Ee a

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B. Proceedings in the district court ................

ee is caches eis eada ves ecaunsss

tO gv cc weecsacsaccsecses

Reasons writ should be granted ..................065-

The lower court’s decision conflicts with this court’s deci-

sions in Hanrahan and Ruckelshaus.................

The lower court’s decision conflicts with this court’s deci-

sions in Kentucky and Supreme Court of Virginia... ..

IT]

The lower court’s error is too plain, too egregious and too

EE re rere

ON kh wWwWhN N N N

TABLE OF AUTHORITIES CITED

Cases

Page

Alabama Department of Corrections v. Glover, US.

eee err ee rrrees 16

Alyeska Pipeline Service Co. v. Wilderness Society, 421

See ee a oh ee eed nnad esa ban ess 6

Arizona v. California, 460 U.S. 605 (1983) ............ 13

California Motor Transport Co. v. Trucking Unlimited, 404

Se SG av pbc cena dades eek case ke eUb eae oe 14

Crane Co. v. American Standard, Inc., 603 F.2d 244 (2d

Rts SE as nan Sch ae aan oe We ee ee edie 13

Delano v. Kitch, 663 F.2d 990 (10th Cir. 1981) ........ 13

Eastern Railroad Presidents Conference v. Noerr Motor

Freight, 365 U.S. 127 (1961) ........... 2, 3, 4, 7, 10, 13, 15

Hanrahan v. Hampton, 446 U.S. 754 (1980) ........ 7, 8,9, 10

Hensley v. Eckerhart, 461 U.S. 424 (1983) ............ 7

In Re Airport Car Rental Antitrust Litigation, 521 F.Supp.

568 (N.D. Cal. 1981), aff'd, 693 F.2d 84 (9th Cir. 1982) 14

In Re Airport Car Rental Antitrust Litigation, 693 F.2d 84

Meera. olla Coe Cee Loreadat ada st 4

Kentucky v. Graham, 473 U.S. ___, 105 S.Ct. 3099, 87

wos ft b. ) eer Cerrrry sere npr rr 7, 11, 12, 16

Maher v. Gagne, 448 U.S. 122 (1980) ................ 10

Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157

sc ke obs RS eA RRA OA 13

Ruckelshaus EPA v. Sierra Club, 463 U.S. 680

EE oS aaa aes eee ee ek ae REA ed a eed 7, 8,9, 10

Supreme Court of Virginia v. Consumers Union, Etc., 446

I a os dud oi ae ak ok ee MEAS 7,12

United Mine Workers of America v. Pennington, 381 U.S.

NS ete nya oat nace ke pe ken eke eek ewe 2

Zichy v. City of Philadelphia, 590 F.2d 503 (3d Cir. 1979) 13

TABLE OF AUTHORITIES CITED

Constitution

Page

U.S. Constitution, First Amendment ............. i, 13, 14, 16

Statutes

Cdemton Ak. 6 6:0 06 oo aio vn nant etnvexshciaeene _*

bes tom 9 Ff Pere rrr. 2, 4, 10

42 US.C.:

PRs 466065 se0h asin bsdnaebene kina 12

DR re rr ry pe rs ie iat 7, 10, 12

Bs! ) Fr ree rr a Mote 4 8, 10

Rules

No.

In the Supreme Court

OF THE

United States

OcTOBER TERM, 1986

TRIPLE “A” MACHINE SHopP, INC.,

Petitioner,

VS.

SOUTHWEST MARINE, INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioner Triple “A” Machine Shop, Inc. respectfully prays

that a writ of certiorari issue to review the judgment of the United

States Court of Appeals for the Ninth Circuit entered on August

5, 1986.

OPINIONS BELOW

The first opinion of the Court of Appeals is reported at 732

F.2d 744 (Appendix A hereto). The opinion of the District Court

on remand, granting summary judgment for petitioner and deny-

ing respondent’s request for attorneys’ fees, is reported at 616

F.Supp. 253 (Appendix B hereto). The second opinion of the

Court of Appeals, reversing the District Court’s denial of attor-

neys’ fees, is reported at 796 F.2d 291 (Appendix C hereto). The

third opinion of the Court of Appeals, denying the petition for

rehearing, is not reported (Appendix D hereto). The order of the

Court of Appeals vacating the third opinion is not reported

enna

(Appendix E hereto). The Court of Appeals’ order amending its

second opinion is reported at 806 F.2d 898 (Appendix F hereto).

The final opinion of the Court of Appeals, denying rehearing, is

reported at 811 F.2d 501 (Appendix G hereto).

JURISDICTION

The judgment of the Court of Appeals for the Ninth Circuit

was entered on August 5, 1986. A timely petition for rehearing

with suggestion for rehearing en banc was denied on February 25,

1987 (App. G). This petition is filed within 90 days of that date.

The Court’s jurisdiction is invoked pursuant to 28 U.S.C.

§ 1254(1).

STATUTES INVOLVED

Clayton Act § 4 and § 16, 15 U.S.C. §§ 15 and 26, relevant

excerpts of which are set forth in Appendix H.

STATEMENT OF THE CASE

A. Introduction

This antitrust case began almost ten years ago (CR |) and was

recently concluded when the District Court granted defen-

dant/petitioner Triple A’s motion for summary judgment on

Noerr-Pennington' grounds and plaintiff/respondent Southwest

declined to appeal (App. B). The only question now remaining is

whether Triple A, having prevailed on the merits, should nonethe-

less be required to pay Southwest’s attorneys’ fees under 15

U.S.C. § 26 because Southwest had “prevailed” upon another

defendant to give Southwest what it wanted in compromise of its

claims against that defendant.

Southwest was engaged in the repair and maintenance of Navy

ships in the Port of San Diego, California, as were defendants

' Eastern Railroad Presidents Conference v. Noerr Motor Freight, 365

U.S. 127 (1961); United Mine Workers of America v. Pennington, 381

U.S. 657 (1965).

Campbell Industries, San Diego Marine Construction Corp.,

National Steel and Shipbuilding Co. (“NASSCO”) and Triple A

Machine Shop, Inc. (“Triple A”). Defendants were parties to a

“Users’ Agreement” with the San Diego Port District which

granted each of them the right to use a dry dock facility in

conducting ship repair work under specified conditions. Southwest

applied to the Port District for a special waiver of the financial

responsibility and experience requirements imposed by the Port

District as a condition to the use of its facility. In response, the

Port District held a public hearing and invited comments from

defendants and other interested parties. Defendants (including

Triple A) appeared before the Port District and expressed their

objections to Southwest’s request for dispensation from the Port

District’s requirements. Following the public hearing and the Port

District’s staff’. investigation and recommendation against waiver,

the directors of the Port District voted unanimously to disapprove

Southwest’s request (CR 299, 301). This antitrust suit followed.

B. Proceedings in the District Court

Defendants moved for summary judgment on Noerr-Pen-

nington grounds (CR 11). Their motion was denied without

opinion (CR 34). Southwest moved for a preliminary injunction.

That motion was also denied (CR 34). Shortly thereafter, defen-

dant NASSCO voluntarily acceded to Southwest’s wishes by

granting Southwest a partial assignment of its contract rights to

use the dry dock (CR 299, 301). As a result, Southwest obtained

what it wanted but without having to meet the Port District’s

financial responsibility and experience requirements which the

others had to meet (CR 299, 301).’

The case was tried to a jury in November 1980. The jury, in a

special verdict, found in defendants’ favor (CR 260). The District

Court entered judgment for defendants on the jury’s special

verdict (CR 271). Southwest requested attorneys’ fees because of

the concession it had previously exacted from NASSCO (CR

266). The court denied Southwest’s request because, it believed,

> Southwest later settled with NASSCO and dismissed it from the

action (CR 302).

Southwest had not “prevailed” under 15 U.S.C. §§ 15 and 26

(CR 270, 271). Southwest appealed (CR 278).

C. The First Appeal

The Court of Appeals reversed the lower court’s judgment with

respect to liability and remarded to the District Court for consid-

eration of defendants’ motion for a new trial due to the improper

admission of evidence and, if and when appropriate, for a trial of

damages (App. A at 5). The appellate court also ruled that

Southwest had “substantially prevailed” for attorneys’ fee pur-

poses when it previously gained access to the dry dock facility

through defendant NASSCO’s voluntary assignment of its con-

tract rights to Southwest. Following remand, Triple A renewed its

motion for summary judgment in reliance upon the Noerr-Pen-

nington doctrine as recently interpreted by the Ninth Circuit in /n

Re Airport Car Rental Antitrust Litigation, 693 F.2d 84 (9th Cir.

1982). The District Court granted Triple A’s motion for summary

judgment and denied Southwest’s request for attorneys’ fees

(App. B at 12-13). Southwest did not appeal the summary

judgment but did appeal the denial of attorneys’ fees.

D. The Present Appeal

Reversing, the Court of Appeals cited its previous holding that

Southwest had “substantially prevailed” against Triple A when

NASSCO voluntarily granted Southwest use of the dry dock

through a partial assignment of NASSCO’s contract rights (App.

C). The lower court further declared that its previous decision

“constituted a final and unconditional determination with respect

te the attorney fee issue” and was therefore “law of the case”

(App. C at 15). Circuit Judge Noonan at first concurred in

deference to the law of the case, but with obvious reluctance. He

recognized that “National [mot Triple A] granted Southwest a

partial assignment of its own rights” and that “Triple A was no

party to this concession”; that “Southwest did not vindicate the

antitrust laws”; and that “what it achieved [from NASSCO] was

achieved through a mistake of law by NASSCO” (App. C at 16,

18; emphasis added). Judge Noonan therefore could not see how

Southwest had “prevailed” against Triple A.

Triple A petitioned for rehearing en banc. it stressed that

regardless of whether Southwest had prevailed against NASSCO,

Southwest had not prevailed against Triple A and that recent

Supreme Court authority dictated the denial of Southwest’s claim

for attorneys’ fees against Triple A. Its petition was denied, but

now Circuit Judge Noonan dissented. The panel majority (Cir-

cuit Judges Canby and Reinhardt) declared they were not gov-

erned by this Court’s latest decisions on attorneys’ fees, claiming

they had nothing to do with Southwest’s claim for attorneys’ fees

from a defendant who prevailed on the merits. It held the “law of

the case”-—not this Court’s recent pronouncements—therefore

applied. In his dissent, Judge Noonan declared the law of the case

must yield to this Court’s latest word on the subject: “A long line

of precedent teaches that an appellate court should not be barred

by the law of the case from correcting a decision which is

ultimately seen to be mistaken because of an intervening treaty,

statute, or relevant judicial decision. Rather, when the law

changes, ‘the law must be obeyed, or its obligation denied.’ The

Peggy, | Cranch 103, 110 (per Marshall, C.J.)” (App. D at 21-

22). Judge Noonan thus concluded: “The contrary decision of

this court is in accordance with the law of the case but it is

contrary to law” (App. D at 22).

Four circuit judges—Noonan, Sneed, Goodwin and Ander-

son—dissented from the panel majority’s denial of Triple A’s

petition for rehearing en banc. They were convinced that “[a}

substantial miscarriage of justice is involved in this case” (App. G

at 29).’ Southwest now requests that Triple A pay more than

$360,000 in attorneys’ fees for prosecuting its meritless suit

*The panel majority had vacated their earlier decision (App. E) only

to reinstate it with a new footnote 2, which recited—without any

evidence to support it—that the 1984 panel (consisting of two Circuit

Judges who were not even on the 1986 panel) must have concluded that

Triple A had joined NASSCO in granting Southwest access to the dry

dock facility (App. E). However, this baffling addition of factual error to

the panel majority’s legal error did not escape the four dissenting judges’

attention. They declared “The assignment made by National Steel &

Shipbuilding Co. to Southwest Marine was not an assignment that was

authorized, concurred in or in any way possible by Triple ‘A’. There was

against Triple A. But the four dissenting Circuit Judges did not

consider the amount of Southwest’s claim to be what made it a

“miscarriage of justice.” As they explained:

“Justice is too precious a commodity to have a price. Even if

the ultimate fee awarded should be small, we should not so

turn things on their head that the winner becomes the loser,

nor, out of charity for the mistakes of this court, should we

turn a blind eye when the court itself is the instrument of

injustice” (App. G at 30).

REASONS WRIT SHOULD BE GRANTED

“In the United States, the prevailing litigant is ordinarily not

entitled to collect a reasonable attorneys’ fee from the loser.”

Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240,

247 (1975). Nobody would quarrel with that statement of the

law. But what authority or reason is there to reward the /osing

party with recovery of its attorneys’ fees from the party who

prevailed? That is what occurred here. Circuit Judge Noonan, at

first reluctantly concurring but later vigorously dissenting from

this grave injustice, put it well:

“Most people if told you could bring a lawsuit, lose it, and

then ask your opponent to pay you at least $363,000 in

attorney’s fees would think they had heard a joke or an

extravagant parody of the mysterious ways of that old ass, the

law. But that is exactly what Southwest Marine has done in

this case. It lost at trial. It got a new trial and lost on

summary judgment before the second trial began. It lost its

no way that the defendants could ‘collectively’ permit Southwest Marine

to use the facility” (App. G at 29-30). This led them to conclude:

“For reasons that are not apparent, the court has been unwilling to

acknowledge that the earlier panel committed an error of fact and it

has been unwilling to rectify the miscarriage of justice based cn the

error of fact. Indeed, in footnote 2 of the present opinion, the court

has chosen to repeat the original error. On this appeal Southwest

Marine did not attempt to dispute Triple A’s refutation of this

mistake. The court nonetheless still seems to recite the error as

fact” (App. G at 30).

motion to amend its pleadings and start again. It has not

appealed its defeat which has been mandated by the law.

Nonetheless, Southwest has asked for attorney’s fees, includ-

ing fees for work on all the motions it has lost. Chutzpah

takes on a new definition when one looks at Southwest’s

demands” (App. C at 15-16).

The panel majority’s approval of such a travesty is directly

contrary to at least four Supreme Court decisions—Hanrahan v.

Hampton, 446 U.S. 754 (1980); Ruckelshaus EPA v. Sierra

Club, 463 U.S. 680 (1983); Supreme Court of Virginia v. Con-

sumers Union, Etc., 446 U.S. 719 (1980); and Kentucky v.

Graham, ___. U.S. ——, 105 S.Ct. 3099 (1985). It requires

Triple A to pay attorneys’ fees to Southwest as a price for

exercising its First Amendment rights under Noerr-Pennington.

And by subordinating clearly applicable Supreme Court authority

to clearly erroneous “law of the case,” compromising Triple A’s

constitutional rights in the process, it “has so far departed from

the accepted and usual course of judicial proceedings . . . as to call

for an exercise of this Court’s power of supervision.” Supreme

Court Rule 17(a).

THE LOWER COURT’S DECISION CONFLICTS WITH

THIS COURT’S DECISIONS IN HANRAHAN AND

RUCKELSHAUS

In Hanrahan v. Hampton, 446 U.S. 754 (1980), the Court

declared what it takes to be a “prevailing” party under the

attorneys’ fee provision of the Civil Rights Act, 42 U.S.C. § 1988,

and Southwest utterly fails the test.* The District Court had there

granted defendants’ motion for directed verdict but the Court of

Appeals reversed and remanded for trial. However, it also held

that plaintiffs were entitled to a reasonable attorneys’ fee for

*42 U.S.C. § 1988 standards apply here. The Court in Hensley v.

Eckerhart, 461 U.S. 424, 433 n.7 (1983) declared that § 1988 standards

“are generally applicable in all cases in which Congress has authorized

an award of fees to a ‘prevailing party.’ ”

having “prevailed” on appeal. The Supreme Court reversed,

holding that to secure reversal of a directed verdict—although

obviously beneficial to plaintiff's claim—was not to “prevail” for

attorneys’ fee purposes. The Court recognized that a plaintiff

“may in some circumstances be a ‘prevailing party’ without

having obtained a favorable ‘final judgment following a full trial

on the merits.’ Hanrahan, 446 U.S. at 756-57. But, the Court

stressed, “it seems clearly to have been the intent of Congress to

permit such an interlocutory award only to a party who has

established his entitlement to some relief on the merits of his

claims, either in the trial court or on appeal.” Id. at 757 (empha-

sis added).

Southwest never “established [its] entitlement to some relief

on the merits” of its claim “either in the trial court or on appeal.”

Southwest lost its motion for a preliminary injunction. Southwest

lost its first trial on the merits. Following reversal and remand,

Southwest lost on Triple A’s motion for summary judgment and

chose not to appeal. This is not to “prevail” as “prevail” is defined

by Hanrahan. Although defendant NASSCO voluntarily granted

Southwesi acess to the dry dock through a partial assignment of

its contract rights, that is not enough to overcome the judgment

entered against Southwest. Hanrahan acknowledges that a plain-

tiff may have “prevailed when [it] vindicate[s] mghts through a

consent judgment or without formally obtaining relief.” Jd. at 757.

But this merely quotes the legislative history of a wholly different

statute and, in any event, applies “only to a party who has

established his entitlement to some relief on the merits of his

claims.” Jd. Southwest did not do this. On the contrary, it is now

res judicata that Southwest was not entitled to any relief under

the antitrust laws.

The lower court’s decision is also in direct conflict with the

clarion ruling of this Court in Ruckelshaus EPA v. Sierra Club,

463 U.S. 680 (1983). The question there was, the Court declared,

“whether it is ‘appropriate,’ within the meaning of § 307(f) of the

Clean Air Act (42 U.S.C. § 7607(f)), to award attorney’s fees to

a party that achieved no success on the merits of its claims.” 463

U.S. at 682. Its conclusion: that “some success on the merits be

obtained” before attorneys’ fees will be warranted. Jd. While the

statute there construed was different—indeed more liberal—than

§§ 4 and 16 of the Clayton Act (15 U.S.C. §§ 15 and 26), the

Court’s rationale is dispositive here: “English courts have

awarded counsel fees to successful litigants for 750 years, see

Alyeska, supra, at 247, n 18, 44 L Ed 2d 141, 95 S Ct 1612, but

they have never gone so far as to force a vindicated defendant to

pay the plaintiff's legal expenses.” Ruckelshaus, 463 U.S. at 684-

85 (emphasis in original). Speaking for the Court, Justice Rehn-

quist explained:

“The uniform acceptance of this rule reflects, at least in part,

intuitive notions of fairness to litigants. Put simply, ordinary

conceptions of just returns reject the idea that a party who

wrongly charges someone with violations of the lav should

be able to force that defendant to pay the costs of the wholly

unsuccessful suit against it.” 463 U.S. at 685 (footnote

omitted; emphasis added).

The lower court ignored Hanrahan and Ruckelshaus, appar-

ently on the notion that any plaintiff who “prevails” upon a

defendant to give him what he wants (be it money or some other

commercial favor) in compromise of his meritless lawsuit has

consequently also “prevailed” for purposes of entitling him to

attorneys’ fees. Hanrahan and Ruckelshaus have both plainly

scotched that notion. Plaintiff in Ruckelshaus had a meritless

claim but had nonetheless gotten defendant to abate certain

actions voluntarily, just as here. Plaintiff contended this entitled it

to attorneys’ fees, quoting the Clean Air Act’s legislative history:

“*The Courts should recognize that in bringing /egitimate actions

under this section citizens would be performing a public service

and in such instances the courts should award costs of litigation to

such party. This should extend to plaintiffs in actions which result

in successful abatement but do not reach a verdict.’ 463 U.S. at

686 n.8.

This Court’s reply there is dispositive here as well. First: “The

approval of fee awards in ‘legitimate’ actions offers respondents

little comfort: ‘legitimate’ means ‘being exactly as proposed:

neither spurious nor false,’ which does not describe respondents’

claims in this case.” Jd. Nor does it describe Southwest’s claim

here. Second: “Congress found it necessary to explicitly state that

the term appropriate [as used in the statute] ‘extended’ to suits

that forced defendants to abandon illegal conduct, although

without a formal court order, this was no doubt viewed as a

somewhat expansive innovation. . . .” Jd. (emphasis added). Even

so, declared the Court, “[w]e are unpersuaded by the argument

that this same Congress was so sure that ‘appropriate’ also would

extend to the far more novel, costly, and intuitively unsatisfying

result of awarding fees to unsuccessful parties that it did not

bother to mention the fact.” Jd. If “appropriate” under 42 U.S.C.

§ 7606(f) does not apply to a defendant’s voluntary concession to

plaintiff followed by plaintiffs ultimate loss on the merits, “pre-

vail” under 15 U.S.C. §§ 15 and 26 can hardly be stretched any

further.

THE LOWER COURT’S DECISION CONFLICTS WITH

THIS COURT’S DECISIONS IN KENTUCKY AND SU-

PREME COURT OF VIRGINIA

But give Southwest the benefit of the doubt. Suppose that

Hanrahan and Ruckelshaus had never been decided and that,

under Maher, the antitrust plaintiff who exacts from the antitrust

defendant the commercial favor he wants but ultimately loses on

the merits is said to have “prevailed” for attorneys’ fee purposes.

The question remains: “prevailed” against whom? Southwest has

certainly not prevailed against Triple A. Triple A moved for

summary judgment on Noerr-Pennington grounds, that motion

was granted, and no appeal was taken. It has thus been conclu-

* The court below cited this Court’s decision in Maher v. Gagne, 448

U.S. 122 (1980) to support its ruling that “plaintiff need not obtain

formal relief to recover fees” (App. A at 4). Maher did hold that a

consent decree obtained by plaintiff rendered plaintiff a “prevailing

party” under 42 U.S.C. § 1988, but (1) the Court so held in part

because the legislative history for § 1988—hardly applicable

here—expressly declared that a § 1988 piaintiff has prevailed “when [it]

vindicate[s] rights through a consent judgment or without formally

obtaining relief’ (448 U.S. at 129) and (2) plaintiff in Maher did not

ultimately lose on the merits—as plaintiff did here.

sively established that Triple A did nothing that would entitle

Southwest to anything under the antitrust laws, attorneys’ fees or

otherwise. Triple A—not Southwest—“prevailed.” All that

Southwest obtained from this litigation was a voluntary conces-

sion from a defendant that settled. But as the Court of Appeals

acknowledged, “[ NASSCO]”—anot Triple A—“voluntarily made

the dock available to Southwest Marine through a series of partial

assignments” (App. A at 2). The four dissenting judges also

declared that NASSCO’s partial assignment of its rights “was not

an assignment that was authorized, concurred in or in any way

made possible by Triple ‘A’” (App. G at 29). Circuit Judge

Noonan stressed in his earlier concurrence that “Triple A was no

party to this concession” and that “[w]hat [Southwest] achieved

was achieved through a mistake of law by NASSCO” (App. C at

16, 18; emphasis added). There is no legal basis for parlaying a

“mistake of law” by NASSCO into a loss on the merits by

Triple A.

in holding that Southwest prevailed against Triple A for

attorneys’ fee purposes, the Court of Appeals’ decision also flouts

this Court’s recent decision in Kentucky v. Graham, ___. U.S.

—___., 105 S.Ct. 3099 (1985). That is not overstatement. Circuit

Judge Noonan, speaking on behalf of four Circuit judges who

disapproved the miscarriage of justice condoned by the panel

majority, declared that “Kentucky v. Graham is of a breadth and

weight that makes disregard of its teaching all but direct defiance

of the Supreme Court”(App. G at 27).

What is the “teaching” of Kentucky which the panel majority

defied? It is clear: Kentucky holds that an otherwise successful

plaintiff cannot recover attorneys’ fees from a defendant against

whom it did not prevail. The four dissenting Circuit judges

correctly recognized that Kentucky was directly applicable. Plain-

tiffs there sued individual defendants (policemen) as well as the

Commonwealth of Kentucky for civil rights violations. The Dis-

trict court dismissed the Commonwealth of Kentucky on immu-

nity grounds and plaintiffs thereafter settled with the individual

defendants for $60,000. Plaintiffs claimed attorneys’ fees against

the Commonwealth because they had settled with (and therefore

“prevailed against’) the individual defendants—precisely the

claim Southwest makes here.

In a unanimous decision written by Justice Marshall, this Court

held that plaintiff can only recover attorneys’ fees from a defen-

dant against whom it prevailed. The Court declared this holding

repeatedly as if to leave no room for doubt: Thus: “[I]t is clear

that the logical place to look for recovery of fees is to the losing

party—the party legally responsible for relief on the merits.”

Kentucky, 105 S.Ct. at 3104. “[L]iability on the merits and

responsibility for fees go hand in hand; where a defendant has not

been prevailed against, either because of legal immunity or on the

merits, § 1988 does not authorize a fee award against that

defendant.” /d. at 3105. “That a plaintiff has prevailed against one

party does not entitle hirn to fees from another party.” /d. at 3106.

“{F Jee liability runs with merits liability.” /d. at 3107. “Section

1988 simply does not create fee liability where merits liability is

non-existent.” /d. “There is no cause of action against a defendant

for fees absent that defendant’s liability for relief on the merits.”

Id. at 3108. “[F]ee and merits liability run together.” /d. As

declared by Circuit Judges Noonan, Sneed, Goodwin and Ander-

son, who dissented from the muiling of Circuit Judges Canby and

Reinhardt, Kentucky v. Graham is so clear as to render the panel

majority’s recalcitrant error “all but direct defiance of the Su-

preme Court” (App. G at 27).

The only excuse given by the panel majority for its conscious

disregard of this Court’s later teaching in Kentucky v. Graham

was the homage it believed due its own previous error under the

“law of the case” rubric. But this Court decided Kentucky v.

Graham in 1985, a year after the Ninth Circuit rendered its “law

of the case” at 732 F.2d 744 (9th Cir. 1984). Plainly the law of

° That “merits liability” is the sine qua non of “fee liability” is also

the necessary holding of a unanimous Court in Supreme Court of

Virginia v. Consumers Union, Etc., 446 U.S. 719 (1980). Plaintiffs had

there prevailed on the merits of their civil rights suit (42 U.S.C. § 1983)

but defendant Supreme Court of Virginia was held immune from merits

liability (as was Triple A here) and therefore immune from attorneys’s

fee liability as well.

the case must yield to the law of the land as enunciated in

supervening decisions of this Court. That was made clear in

Arizona v. California, 460 U.S. 605 (1983), the Court there

declaring the “law of the case is an amorphous concept” which

merely “directs a court’s discretion” but “does not limit the

tribunal’s power” and should not be invoked if a court is “con-

vinced that it is clearly erroneous and would work a manifest

injustice.” Id. at 618 & n.8. Justice Brennan (dissenting) also

declared the “federal courts have traditionally thought that cor-

recting a manifest injustice was reason enough to reconsider” the

law of the case. 460 U.S. at 644.’

Can there be any doubt about the “error” or the “injustice”

here? Triple A not only prevailed but did so by summary judg-

ment because—the District Court held—Triple A could not be

held liable under the Sherman Act for having exercised the

petition rights guaranteed it by the First Amendment and the

Noerr-Pennington doctrine. It would surely be a “manifest injus-

tice” to hold, in the name of “law of the case,” that a vindicated

defendant must nonetheless pay the vanquished plaintiff's attor-

neys’ fees as a price for exercising those constitutional rights.

’ The lower courts are equally clear: Zichy v. City of Philadelphia, 590

F.2d 503, 508 (3d Cir. 1979) (“This court has @ duty to apply a

supervening rule of law despite its prior decisions to the contrary when

the new legal rule is valid and applicable to the issues of the case”)

(emphasis added); Pettway v. American Cast Iron Pipe Co., 576 F.2d

1157, 1190 (Sth Cir. 1978) (“Perhaps the most cogent reason possible

for not following a previous decision in the same litigation is an

intervening decision by the Supreme Court”); Delano v. Kitch, 663 F.2d

990, 996 (10th Cir. 1981) (law of the case “must yield to a controlling

decision between the date of the first ruling and the retrial”) (emphasis

added); Crane Co. v. American Standard, Inc., 603 F.2d 244, 248 (2d

Cir. 1979) (when “a decision of the Supreme Court demonstrates that a

ruling on which the judgment would depend was in error, no principle of

the ‘the law of the case’ would warrant a failure on our part to correct

the ruling”’).

THE LOWER COURT'S ERROR IS TOO PLAIN, TOO

EGREGIOUS AND TOO IMPORTANT TO LET STAND

Triple A fully appreciates that legal error, even flagrant error, is

not a sufficient (or even necessary) cause for this Court’s issuance

of a writ of certiorari. But its petition does not rest on the lower

court’s error alone. There is more at stake than at issue. Triple A

(rather than Southwest) did not “prevail” merely because it did

nothing to violate the antitrust laws. It prevailed because it was

exercising its First Amendment petition rights, and is now being

invoiced plaintiff's attorneys’ fees for having done so. Hence the

First Amendment is at stake as well. It should not be compro-

mised the way it has been here. In addressing the tension between

the First Amendment and the Sherman Act, this Court declared

in California Motor Transport Co. v. Trucking Unlimited, 404

U.S. 508, 510-11: “We conclude that it would be destructive of

rights of association and of petition to hold that groups with

common interests may not, without violating the antitrust laws,

use the channels and procedures of state and federal agencies and

courts to advocate their causes and points of view respecting

resolution of their business and economic interests vis-a-vis their

competitors.”

Addressing the need to subordinate “law of the case” to a just

result in a similar First Amendment context, Judge William

Schwarzer of the Northern District of California likewise de-

clared in In Re Airport Car Rental Antitrust Litigation, 521

F.Supp. 568 (N.D. Cal. 1981), aff'd, 693 F.2d 84 (9th Cir 1982):

“The implication of First Amendment rights presents a cogent

reason for reconsideration where, as here, substantial doubts are

raised concerning the validity of plaintiff's claims. The pendency

of a meritless suit can itself chill the exercise of those rights.” 521

F.Supp. at 573 (emphasis added). Those rights are no less chilled

by the prospect that a defendant who exercises them can be

forced to fund a meritless suit against it for having done

so—merely to show comity for a previous error of the court.

Thus by subordinating clearly applicable Supreme Court au-

thority to plainly erroneous “law of the case,” the panel majority

has not merely “so far departed from the accepted and usual

course of judicial proceedings . . . as to call for an exercise of this

Court’s power of supervision.” Supreme Court Rule 17.1(a). In

so doing, it has also trenched upon Triple A’s constitutional rights

under Noerr-Pennington. And, perhaps most importantly for cer-

tiorari purposes, it has established a precedent that is potent with

harm to all defendants of proven innocence. Henceforth every

antitrust plaintiff who sues many and settles with one (which

happens often) may be deemed to have “prevailed” merely

because—as the Ninth Circuit panel declared—there is “a causal

relationship between the litigation brought and the practical

outcome realized” (App. A at 4-5). Having “prevailed,” that

plaintiff would thus be entitled to recover his attorneys’ fees from

all remaining defendants even though plaintiff ultimately loses on

the merits to those defendants—as occurred here.

Whether such a precedent should be allowed to stand, espe-

cially where First Amendment nights are implicated, deserves this

Court’s review. At the least, certiorari should be granted and the

matter remanded to the Court of Appeals “for further considera-

tion in light of Kentucky v. Graham, 473 U.S. 105 S.Ct

3099, 87 L.Ed.2d 114 (1985)”—precisely as was done in Ala-

bama Department of Corrections v. Glover, US. —__.. 106

S.Ct. 40 (1985). The panel majority’s ruling is the only appellate

decision ever to construe “prevail” under the Clayton Act, for

attorneys’ fee purposes, since that Act was passed almost 75 years

ago. It should at least be right.

Respectfully submitted,

EUGENE CREW

Counsel of Record

TimMoTHY F. PERRY

DANIEL J. MULLIGAN

KHouRIE & Crew, P.C.

101 California Street

Suite 1550

San Francisco, CA 94111

(415) 982-1550

Attorneys for Petitioner

(Appendices follow)

Appendix A

Southwest Marine, Inc.,

a California corporation, Plaintiff/ Appellant,

¥.

Campbell Industries, a California corporation;

San Diego Marine Construction Corp.,

a California corporation; National Steel and Shipbuilding Co.,

a Nevada corporation; Triple A Machine Shop, Inc.,

a California corporation; and San Diego Unified Port District,

a California corporation, Defendants-Appellees.

Southwest Marine, Inc.,

a California corporation, Plaintiff-Appellee,

Vv.

Campbell Industries,

a California corporation, et. al., Defendants,

National Steel and Shipbuilding Co. and

Triple “A” Machine Shop, Inc.,

Defendants-Appellants.

Nos. 81-5350, 81-5477.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 1, 1982.

Decided May 7, 1984.

As Amended July 11, 1984.

Appeal from the United States District Court for the Southern

District of California.

Before FLETCHER, NELSON, and REINHARDT, Circuit

Judges.

PER CURIAM:

A drydock facility in San Diego Bay was jointly operated by

Campbell Industries, San Diego Marine Construction Corp.,

Atkinson Marine Corp., Triple A Machine Shop, Inc., and

National Steel and Shipbuilding Co. Use of the dock was gov-

erned by a written agreement between these parties which re-

A-2

stricted use to the signatories. Other companies were granted

access to the dock only if they met certain requirements set forth

in the User’s Agreement.

Arthur Engel had been the general manager of Triple A at the

time the User’s Agreement was executed. He later left Triple A

and became President and Chairman of the Board of Southwest

Marine, a competing ship repair company. Southwest Marine was

denied access to the dock pursuant to the User’s Agreement.

Southwest Marine sued National Steel and Shipbuilding Co.

and Triple A Machine Shop, Inc. for injunctive relief and dam-

ages, alleging a conspiracy in restraint of trade under section | of

the Sherman Act, 15 U.S.C. § 1 (1976). After the district court

denied the request for injunctive relief, National Steel and Ship-

building Co. voluntarily made the dock available to Southwest

Marine through a series of partial assignments. The damages

claim proceeded to trial. The jury, in a special verdict, found for

Southwest Marine on the issue of liability, but also found that

Southwest Marine was barred from recovering damages by its

“truly complete involvement” in the formation of the illegal

scheme. Southwest Marine moved for judgment notwithstanding

the verdict. The district court denied the motion, entered judg-

ment for the defendants and denied Southwest Marine’s motion

for injunctive relief and related attorney’s fees. Southwest Marine

appeals from that denial. Appellees cross-appeal, claiming that

because the jury was inadvertently exposed to inadmissible docu-

ments, they are entitled to a new trial if we hold for the

appellants. Since there was insufficient evidence to support the

jury’s findings of truly complete involvement, we reverse and

remand.

TRULY COMPLETE INVOLVEMENT

To encourage private antitrust actions, the Supreme Court has

refused to recognize the defense of in pari delicto in antitrust

cases. Perma-Life Mufflers, Inc. v. International Parts Corp., 392

U.S. 134, 140, 88 S.Ct. 1981, 1985, 20 L.Ed.2d 982 (1968). The

Perma-Life Court did not decide, however, whether “truly com-

plete involvement and participation in a monopolistic scheme

A-3

could ever be a basis, wholly apart from the idea of in pari delicto,

for barring a plaintiff's cause of action.” /d.

This court faced the unresolved issue of Perma-Life in Javelin

Corp. v. Uniroyal, Inc., 546 F.2d 276 (9th Cir.1976), cert. denied,

431 U.S. 938, 97 S.Ct. 2651, 53 L.Ed.2d 256 (1977), holding that

a plaintiff is barred from recovery in antitrust only when the

illegal conspiracy would not have been formed but for the plain-

tiffs participation. This test is satisfied when the jury has found

that the plaintiff's degree of participation is “equal to that of any

defendant and a substantial factor in the formation of the conspir-

acy.” Id. at 279.

Plaintiff Southwest Marine, as a corporate entity, was not at all

involved in the formation of the User’s Agreement. The jury

found, however, that Southwest Marine was the alter ego of its

president, Arthur Engel. To find Southwest Marine barred from

recovering, therefore, the jury must have found that Arthur

Engel’s personal participation in the conspiracy’s formation oper-

ated to implicate Southwest Marine indirectly. Given the narrow

reach of the Javelin defense, we refuse to attribute Engel’s acts as

a former agent of Triple A to the corporation of which he is now

President. We therefore find that Javelin does not bar Southwest

Marine from recovering against appellees.

ATTORNEY’S FEES

An antitrust plaintiff who “substantially prevails” in an action

for injunctive relief is entitled to attorney’s fees. 15 U.S.C. § 26

(1976)(as amended). The district court improperly rejected

Southwest Marine’s petition for attorney’s fees for services ren-

dered in attempting to obtain injunctive relief.

The legislative history of the 1976 amendment to section 26

Suggests that awards of attorney’s fees are essential if private

attorneys-general are to enforce the antitrust laws. See 1976 U.S.

Code Cong. & Admin.News 2572, 2588-90. To permit defendants

to avoid the award of attorney’s fees in suits for injunctive relief

by ceasing their illegal conduct would reduce the incentive to

bring suit, thereby frustrating Congress’s intent.

A-4

A number of district courts that have examined the Section 16

attorney’s fees provision have considered the question whether it

is proper to infer that Congress intended that the identical

language in the section 16 and section 1988 attorney’s fees

provisions be identically construed. Each of these courts con-

cluded that the “prevailing party” standard was the same under

the two statutes. As the court in Grumman Corp. v. LTV Corp.,

533 F.Supp. 1385, 1387 (E.D.N.Y.1982), explained, “it is more

appropriate to presume that Congress intended [that] identical

language found within the Section 16 and Section 1988 attorney’s

fees provisions, which were enacted by the same Congress, would

be identically construed.... This conclusion is corroborated by

the negative inference which we draw from an examination of a

host of statutes where Congress has expressly imposed the re-

quirement of a final judgment as a condition precedent for

plaintiff's recovery of attorney’s fees.” See also F. & M. Schaefer

Corp. v. C. Schmidt & Sons, Inc., 476 F.Supp. 203, 206

(S.D.N.Y.1979) (relying on case law developed under section

1988 in ruling that [t]he appropriate benchmarks in determining

which party prevailed are a) the situation immediately prior to

the commencement of the suit, and b) the situation today and the

role, if any, played by the litigation in effecting any changes

between the two.”); Harnischfeger Corp. v. Paccar, Inc., 503

F.Supp. 102, 104-5 (E.D.Wis.1980) (relying on F.& M. Schaefer

standard in ruling that a party which obtained a preliminary

injunction preventing a corporate acquisition alleged to be in

violation of the Clayton Act could be considered a prevailing

party even though the court never issued a final judgment on the

merits).

We have never decided the question whether it is appropriate to

apply the standard developed under section 1988 to awards under

section 16 of the Clayton Act, and we know of no circuit court

that has specifically addressed this question. We do, however, find

the reasoning in the cases cited above persuasive and choose to

apply the standard for determining a “prevailing party” developed

under section 1988 to awards under section 16.

Under 42 U.S.C. § 1988 a plaintiff may be awarded attorney’s

fees if he is a “prevailing party.” In American Constitutional

A-5

Party v. Munro, 650 F.2d 184 (9th Cir.1981), we held that

plaintiff need not obtain formal relief to recover fees. Rather, for

there to be a “prevailing party,” there must simply be a causal

relationship between the litigation brought and the practical

outcome realized. /d. at 187; Pomerantz v. County of Los

Angeles, 674 F.2d 1288, 1293 (9th Cir.1982). As a result of the

action filed by plaintiff, the defendants decided to permit South-

west Marine to use the dock under an assignment from National

Steel and Shipbuilding Co. Thus, whether or not plaintiff ulti-

mately prevails on damages on remand, it has “prevailed” within

the meaning of 42 U.S.C. § 1988 (1976). See Maher v. Gagne,

448 U.S. 122, 100 S.Ct. 2570, 65 L.Ed.2d 653 (1980); Virginia

Academy of Clinical Psychologists v. Blue Shield, 543 F.Supp.

126, 130 (E.D. Va.1982). The amount of fees ultimately awarded

must await final disposition of the suit by the district court.

CONCLUSION

That portion of the special verdict finding truly complete

involvement on the part of Southwest Marine is set aside due to

insufficient evidence. We remand to the district court to deter-

mine whether National Steel and Shipbuilding Co. and Triple A

are entitled to a new trial on the issue of liability because the jury

was exposed to documents that were not admitted into evidence.

If the district court decides that a new trial is not required,

Southwest Marine is immediately entitled to a determination of

damages, and an award of attorney’s fees conimensurate with this

judgment.

REVERSED and REMANDED.

A-6

Appendix B

Southwest Marine, Inc., a corporation,

Plaintiff,

¥.

Campbell Industries, a corporation,

Defendants.

Civ. No. 78-0106-G.

United States District Court, S.D. California

July 2, 1985

MEMORANDUM OF OPINION AND ORDER RE DEFEN-

DANT’S MOTION FOR SUMMARY JUDGMENT AND

PLAINTIFF'S REQUESTS FOR LEAVE TO FILE SEC-

OND AMENDED COMPLAINT AND FOR ATTOR-

NEY’S FEES

GILLIAM, District Judge.

The court has reviewed the pleadings submitted by the parties

and has heard oral argument regarding defendant’s motion for

summary judgment. After due deliberation, the court grants said

motion for the following reasons.

PROCEDURAL STATUS OF THE CASE

This matter proceeded to jury trial in this court in November,

1980. The jury returned a verdict which stated that defendants

had concertedly induced the Port District to exclude plaintiff

from the graving dock, in violation of the Sherman Act, but that

plaintiff was barred from recovery on pari delicto grounds.

On plaintiff's appeal, 732 F.2d 744 the Ninth Circuit held that

the pari delicto defense had not been established, because the

record did not provide a legally sufficient basis for imputing Mr.

Engel’s conduct to the corporation which he formed and

controlled.

The case was then remanded to the trial court on May 7, 1984,

to determine whether defendants were entitled to a new trial, on

the grounds that the jury had been exposed to documents that

were not admitted into evidence.

A-7

This court considered the issue of a new trial, and issued a

written Memorandum of Decisions and Orders re Defendant’s

Motions for New Trial and Summary Judgment on February 26,

1985. That decision stated that the scope of remand was limited

and precluded consideration of the summary judgment motion.

The motion for new trial was granted for the reasons set forth

therein, that being that the documents submitted to the jury were

prejudiciai and that the evidence showed that the jury had relied

on them for their finding.

Defendants subsequently refiled the instant motion for sum-

mary judgment. Plaintiff's petition for writ of mandamus was

denied by the Ninth Circuit on April 29, 1985, and the summary

judgment motion is now before this court for consideration.

In response to the motion for summary judgment, plaintiff filed

a request for leave to file a second amended complaint and a

request for attorney’s fees under the Ninth Circuit’s May 7, 1984

decision.

The dates relevant to the merits of the motions now before this

court are as follows:

a re Defendants sought summary judgment on Noerr-

Pennington grounds before Judge Nielsen in this

district court. The motion was denied at that

time, and no written opinion was issued.

ea er Jury trial on the merits.

= Se Appeal of the jury trial was argued before the

Ninth Circuit and submitted.

Poe. 06, F982... ...0 0 In re Airport Car Rental Antitrust Litigation, 693

F.2d 84 (9th Cir. 1982), cert. denied, was pub-

lished, declaring new and controlling principles of

law affecting the instant case.

<3) ee Petition for rehearing was denied by the Ninth

Circuit in Airport (supra. )

SS Ninth Circuit opinion was filed, reversing the

jury’s findings re: pari delicto in the instant mat-

ter, and remanding to this court.

PLAINTIFF'S REQUEST FOR LEAVE TO

FILE SECOND AMENDED COMPLAINT

As ordered at the hearing on these motions, the request of

plaintiff for leave to file a second amended complaint is denied.

A-8

Plaintiff sought to allege new causes of action which would

survive the summary judgment motion now before the court.

Allegations of fraud and active participation in a conspiracy with

the Port District would survive, because case law has declared

that such activity is an exception to Noerr-Pennington.

Plaintiff states in its Declaration of Counsel, David E. Lundin,

that the reason they have not alleged such a cause of action up to

this time is that “there was no need to present facts relating to any

exception to the Noerr-Pennington doctrine”, because govern-

mental immunity was “a fully resolved issue”.

The law as it now stands appears to make the protections of

Noerr-Pennington applicable to this case, and the cause of action

upon which plaintiff has solely relied is subject to summary

judgment. Plaintiff now seeks to plead itself within two exceptions

which have been carved out of the Noerr-Pennington right to free

speech before a governmental body. .

As additional justification for not having alleged these facts

earlier, plaintiff asserts that there were various strategic and

political reasons which supported that decision.

The most important consideration in the court’s determination

whether to grant leave to amend under Federal Rule of Civil

Procedure 15 is whether there will be any prejudice to the

opposing party. Other factors to be considered are whether the

motion is timely, what the reasons for delay were, whether the

motion is brought in bad faith, the futility of the proposed

amendment, and the motivation for bringing the motion at this

particular time. Sackett v. Beaman, 399 F.2d 884 (C.A.Cal.

1968); Ozark Air Lines, Inc. v. Delta Air Lines, 63 F.R.D. 69

(D.C.111.1974); Dow Corning Corp. v. General Elec. Co., 461

F.Supp. 519 (D.C.N.Y.1978); Zenith Radio Corp. v. Hazeltine

Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77

(1971); Matlack, Inc. v. Hupp Corp. 57 F.R.D. 151

(D.C.Pa.1972).

The amendment which plaintiff urges constitutes a substantial

change of the underlying factual allegations. This matter has

proceeded completely through one trial on the merits without

mention of any fraud or active participation in a conspiracy.

A-9

Plaintiff's pleadings indicated the fact that potential allegations of

fraud or conspiracy surfaced during discovery some five years ago.

All discovery is long ago completed, and the evidence and

memories of witnesses have surely dimmed over these seven years

since the original complaint was filed. To grant plaintiff's request

would require defendants to virtually reconduct discovery in its

entirety, and would work a substantial hardship on all parties at

this late stage in the proceedings.

The court finds that extending leave to plaintiff to amend its

complaint at this stage of the proceedings would substantially

prejudice the opposing parties. The court further finds that, as set

out below, plaintiff was on notice at all times herein that the law

in the area of Noerr-Pennington was not settled beyond all doubt

so as to necessarily preclude the assertion of the alternative

theories of recovery which he now seeks to allege. Finally, the

court finds that the timing of the filing of this request evidences

bad faith on the part of plaintiffs, in that they appear to be

attempting to prevent an anticipated adverse judgment through

use of amendment of pleadings.

Finding that the interests of justice would not be served by the

amendment, that the request is untimely, that the reasons for

delay are without foundation or merit, that the request appears to

have been brought at this time for an improper motive, and that

the prejudice to defendant caused by this substantial amendment

of the underlying factual basis of this litigation will be substantial,

the court denies the request of plaintiff for leave to file a second

amended complaint.

* * *

DEFENDANT'S MOTION FOR

SUMMARY JUDGMENT

Defendant seeks summary judgment on the basis of a change in

existing law, contending that the case of /n re Airport Car Rental

Antitrust Litigation, 693 F.2d 84 (9th Cir.1982), cert. denied,

now establishes the principle that Noerr-Pennington does protect

communications made to a governmental body, even though the

A-10

objective of that communication was commercial and

anticompetitive.

Plaintiff responds that summary judgment may not be entered

at this time because it is barred by the doctrines of res judicata

and “law of the case”, the issue having been decided by Judge

Nieisen in 1978.

The court’s inquiry is two-tiered. The first determination is

whether Airport (supra) in fact constitutes a change in the

existing law. If there has been no change in existing law, then

Judge Nielsen's denial of this same motion in 1978 must be given

great deference by this court, and that decision could only be

overturned if it were clearly erroneous. If, on the other hand, there

has been a change of law, then this court must reconsider the

motion in light of that change. Plaintiff's assertion that the law as

it exists on the date of filing of the complaint should control

throughout the varicus stages of litigation is without foundation or

merit.

The court finds that Airport (supra) does constitute a change in

existing law. The court in Airport undertook an extensive review

of previous decisions in this circuit regarding whether or not the

Noerr-Pennington free speech exemption from the antitrust laws

protects concerted efforts to lobby public officials on issues of

governmental commercial activities. That full review convinced

the Ninth Circuit that previous decisions had erroneously held

that governmental decisions which implemented policy, rather

than formulated policy, (in other words, commercial activities of

the governmental body) were not protected under Noerr-

Pennington.

Airport specifically halts the former trend of court decisions on

this issue, and the stated intention of the court was to clarify and

determine this rule of law. For purposes of this motion, then,

there has been a change in existing law which is sufficient to

require a de novo consideration of the issues and which takes this

matter out from under the “due deference” standard otherwise

accorded to prior decisions between the same parties.

The second inquiry, then, is whether that change of law is

applicable to the facts underlying this matter.

A-11

The holding in Airport (supra) was that the distinction be-

tween implementing and formulating policy is not a distinction

which sufficiently lessens the interest in free speech so as to avoid

the Noerr-Pennington doctrine.

Plaintiff draws three distinctions between the facts underlying

Airport and the facts currently before the court, as follows: 1) The

graving dock was owned by the Navy and only leased by the Port

District, whereas the governmental body in Airport actually

owned the land involved. 2) This matter involves execution of a

contract, whereas the Airport facts involved enactment of govern-

mental policy not in contract form. 3) The act complained of here

was not the execution of the contract, but was instead the

subsequent refusal to issue a waiver to plaintiff. Under the terms

of the contract, that decision was made in conjunction with

current users, and was therefore not a purely governmental act.

The court finds that these distinctions are not sufficient to avoid

application of the holding in Airport to these facts. The cases are

substantially identical, and as to those facts which were determi-

native of the court’s ruling, they are the same.

The decision of the Port District to enter into the contract and

the decisions as to what the contract provisions would be were

made after public meetings were held with an opportunity for full

discussion and disclosure. Following those meetings, the matter

was referred to a subcommittee for study and recommendation.

The subcommittee returned with its report, and the Port District

voted unanimously in open, public forum and following further

discussion, to execute the contract. This procedure is inherently

that of a governmental body, and the course of conduct thereby

adopted by the Port District constitutes formulation and imple-

mentation of governmental policy.

The fact that the anticompetitive regulations were set out

within a contract format instead of in legislative policy format is

irrelevant for purposes of this determination. The contract em-

bodies governmental policy. The fact that it is in “contract” form

does not vitiate its basic nature, in view of the fact that full

compliance with public forum and review requirements was

accomplished by the Port District.

A-12

This alleged distinction is not sufficient to take this matter

outside the purview of Airport. Putting the decision into contract

form was a mere implementation of policy, and Airport specifi-

cally states that the distinction between implementation and

formulation of policy is not sufficient to avoid Noerr-Pennington.

Plaintiff's objection that the land was only leased and not

owned outright does not state a determinative fact critical to the

holding in Airport, and therefore this difference is not sufficient to

avoid its dictates.

Plaintiff's third contention, that the act complained of was not

execution of the contract initially but was instead the subsequent

refusal to issue a waiver of user requirements, is not sufficient to

avoid application of the holding in Airport to this matter. Again,

the contractual provisions were entered inte by the Port District

after a full and fair governmental formulation of policy, and the

execution of the contract itself and subsequent acts taken under

the provisions of that contract are merely implementation of that

policy. Such acts are specifically sanctioned by the Ninth Circuit

in Airport.

Finding that the case of Aiport (supra) is controlling as to the

facts at bar, defendant’s motion for summary judgment is granted.

PLAINTIFF'S REQUEST FOR ATTORNEY FEES

Plaintiff seeks attorney’s fees in this matter to date under the

provisions of the Ninth Circuit’s opinion issued May 7, 1984.

In that opinion, the court stated:

“If the district court decides that a new trial is not

required, Southwest Marine is immediately entitled to a

determination of damages, and an award of attorney’s fees

commensurate with this judgment.”

The Ninth Circuit’s statement that plaintiff should recover its

attorney’s fees was expressly conditioned on this court’s finding

that a new trial was not required. As set forth in this court’s

Memorandum of Decisions filed February 26, 1985, a new tral

was found to be required.

A-13

Absent the fulfillment of the express condition on which the

Ninth Circuit’s directive was based, no attorney’s fees are due at

this time to plaintiff under the dictates of the May 7, 1984

opinion.

Plaintiff's requests for leave to file a second amended complaint

and for attorney’s fees are denied. Defendant’s motion for sum-

mary judgment is granted.

IT IS SO ORDERED.

A-14

Appendix C

Southwest Marine, Inc., a corporation,

Plaintiff-Appellant,

Campbell Industries, et al.,

Defendants-Appellees.

No. 85-6157.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 11, 1986.

Decided Aug. 5, 1986.

Rehearing Denied Oct. 3, 1986.

Appeal from the United States District Court for the Southern

District of California.

Before CANBY, REINHARDT and JOAN T. NOONAN,

Jr., Circuit Judges.

PER CURIAM:

In an earlier opinion we held that Southwest Marine was

entitled to recover attorneys fees against National Steel and

Shipbuilding Company and Triple “A” Machine Shop, Inc., 732

F.2d 744, 746-47 (9th Cir. 1984). We held that Southwest

Marine was the prevailing party because of the practical result it

had obtained as a result of prosecuting its antitrust action—the

right to use a diy dock facility to which it had previously been

denied access. This right was afforded to Southwest Marine after

the litigation was instituted but prior to trial. The trial resulted in

a jury verdict in Southwest Marine’s favor but the district judge

entered a judgment n.o.v. for defendants. Southwest Marine

appealed and we reversed. After deciding that Southwest Marine

was entitled to attorney’s fees because of the practical result it

had obtained prior to the actual trial, we remanded the case for a

possible retrial and noted that because a new trial was possible the

“amount of fees” should await final disposition of the suit.

Upon remand, as a result of the emergence of ew case law

affecting the underlying claim, the district court awarded judg-

A-15

ment to Triple “A” Machine Shop.' (By this time National Steel

and Shipbuilding Company had settled with Southwest Marine.)

The district judge believed that our decision did not unequivocally

resolve the question of Southwest Marine’s entitlement to attor-

neys’ fees but that it was conditioned on Southwest Marine’s

ultimately prevailing in the litigation. That construction of our

opinion is erroneous. Our decision constituted a final and uncon-

ditional determination with respect to the attorney fee issue. We

held unequivocally that Southwest Marine was entitled to recover

fees against the defendants. Only the amount of the fees was left

unresolved.

We have considered all the other objections raised by Triple

“A” and reject them. We note that Southwest Marine’s decision

to institute litigation was neither frivolous nor unreasonable. To

the contrary, its legal position at the time it filed its complaint, as

well as at the time it accomplished the practical result that

underlay our attorneys’ fees determination, was supported by the

weight of legal authority.

We express no view as to the amount of legal fees Southwest

Marine is entitled to recover or which particular portions of the

legal services rendered by its attorneys during the litigation are

compensable under our prior decision. Such matters should be

considered initially by the district court.

REVERSED AND REMANDED

NOONAN, Circuit Judge, concurring:

The court does not decide which “particular portions” of the

legal services rendered Southwest shall be paid for by Triple A.

Most people if told you could bring a lawsuit, lose it, and then ask

your Opponent to pay you at least $363,000 in attorney’s fees

' The district court’s decision regarding attorney’s fees is contained in

a published opinion that deals with other issues, including the court's

disposition of the case on the merits. Southwest Marine, Inc. v. Camp-

bell Industries, 616 F.Supp. 253 (S.D.Cal.1985). Because the attorney's

fees decision was published, we are required to publish our reversal of

that decision. 9th Cir.R. 21(b)(5). Otherwise we would have issued a

memorandum disposition in this case.

A-16

would think they had heard a joke or an extravagant parody of the

mysterious ways of that old ass, the law. But that is exactly what

Southwest Marine has done in this case. It lost at trial. It got a

new trial and lost on summary judgment before the second trial

began. It lost its motion to amend its pleadings and start again. It

has not appealed its defeat which has been mandated by the law.

Nonetheless, Southwest has asked for attorney’s fees, including

fees for work on all the motions it has lost. Chutzpah takes on a

new definition when one looks at Southwest’s demands.

In February 1978 Southwest sued National Steel and Ship-

building Company (NASSCO) and Triple “A” seeking access to

a dry dock. In May 1978 National granted Southwest a partial

assignment of its own rights, giving Southwest the desired access

for three years. This assignment was the practical result the

lawsuit achieved. Southwest had prevailed against NASSCO to

the extent of inducing the three-year assignment. Triple A was no

party to this concession.

On appeal, after losing the trial in 1980, Southwest sought

attorney’s fees from both NASSCO and Triple A. Southwest

advanced two arguments: (1) Although Southwest had been

awarded zero damages, a special jury verdict had found that the

defendants had violated Section | of the Sherman Act, and

“Counsel for NASSCO admitted that the jury verdict of illegality

would be in the mind of his client as well as Triple and the Port,”

with the result that such verdict would lead to the elimination of

the unlawful restraints. (2) The end result had been “to compel

the defendants to recognize and honor their obligations under the

antitrust laws.” Counsel offered no basis for knowing what was in

the mind of Triple A and no evidence as to how Triple A had

been compelled to recognize and honor its obligations under the

antitrust laws. The concession by NASSCO had preceded the

verdict that counsel found so salutary. This court, however, in a

per curiam opinion ruled: “As a result of the action filed by

plaintiff, the defendants decided to permit Southwest Marine to

use the dock under an assignment from National Steel and Ship-

building Co.” Southwest Marine Inc. v. Campbell Industries, 732

F.2d 744 (9th Cir.1984). The court remanded the case with this

directive: “If the district court decides that a new trial is not

A-17

required, Southwest Marine is immediately entitled to a determi-

nation of damages, and an award of attorney’s fees commensurate

with this judgment.” /d. at 744.

On remand, NASSCO settled with Southwest and was dis-

missed from the case. The district court did decide that a new

trial was required. Ultimately Triple A prevailed on a motion for

summary judgment. The district court found that Southwest’s

case was barred by the Noerr Pennington doctrine as applied by

this circuit in In re Airport Car Rental Antitrust Litigation, 693

F.2d 84 (9th Cir.1982) cert. denied 462 U.S. 1133, 103 S.Ct.

3114, 77 L.Ed.2d 1368 (1983). The district court denied South-

west’s request for attorney’s fees, declaring: “The Ninth Circuit’s

statement that plaintiff should recover its attorney’s fees was

expressly conditioned on this court’s finding that a new trial was

not required.” Southwest Marine, Inc. v. Campbell Industries, 616

F.Supp. 253, 258 (S.D.Cal.1985). Since a new trial had been

required, the court concluded that the earlier decision of this

court did not mandate the award of the fees.

District courts do not have the authority to override the

mandate of this court, but nothing presents a district court from

interpreting an ambiguous order in such a way that injustice is

avoided. The sentence focused on by the district judge was

ambiguous, and the district court sought to interpret the ambigu-

ity to avoid the anomaly of having the winner pay the loser’s

lawyers. But the district court isolated a single sentence from the

discussion by this court that made it plain that Southwest was in

its view the prevailing party against “the defendants” in the

plural.

Southwest, then, by the law of the case is entitled to attorney’s

fees, but at no point has this court determined that it is entitled to

all its attorney’s fees. Southwest is not entitled to attorney’s fees

for work done by its lawyers that bore no fruit whatsoever.

Hanrahan v. Hampton, 446 U.S. 754, 100 S.Ct. 1987, 64 L.Ed.2d

670 (1980).

Recognizing that “‘a request for attorney’s fees should not result

in a second major litigation” and that the district court has

discretion to determine fees to be awarded, the Supreme Court

A-18

has laid out principles to govern this determination in all cases

where Congress has authorized such an award to a “prevailing

party.” Hensley v. Eckerhart, 461 U.S. 424, 433 n. 7, 103 S.Ct.

1933, 1939 n. 7, 76 L.Ed.2d 40. Where a plaintiff “has succeeded

on only some of his claims for relief,” the district court may adjust

the fee downwards. Jd. at 434, 103 S.Ct. at 1940. Work on an

unsuccessful claim cannot be deemed to have been “expended in

pursuit of the ultimate result achieved.” Jd. at 435, 103 S.Ct. at

1940. What is “the most critical factor” is “the degree of success

obtained.” /d. at 436, 103 S.Ct. at 1941. “A reduced fee award is

appropniate if the relief, however significant, is limited in compar-

ison to the scope of the litigation as a whole.” Jd. at 440, 103 S.Ct.

at 1943.

Southwest prevailed to the extent of getting a partial assign-

ment for three years from NASSCO. That assignment and the

entire Users’ Agreement expired on July 2, 1981 and were not

renewed. This court has not held that the nonrenewal of that

agreement was in any way attributable to Southwest’s suit. Indeed

as that suit turned out, it would be entirely legal for the old Users’

Agreement to be reinstated. The public benefit was zero or

negative. In this respect the case is markedly different from civil

rights cases where a plaintiff acting as a private attorney general

vindicates fundamental rights. Cf. City of Riverside v. Rivera,

—___ US. —__, 106 S.Ct. 2686, 91 L.Ed.2d 466 (1986). South-

west won no permanent victory. Southwest did not vindicate the

antitrust laws. What it achieved was achieved through a mistake

of law by NASSCO. Southwest’s attorney’s fees should be

awarded in the light of this small victory. A portion of the first

appeal and all of this appeal was dedicated to vindicating the

claim to these attorney’s fees. Consequently, work here may also

be appropriately compensated to the extent warranted by the

result obtained.

With these clarifications I concur in the disposition made by

the court.

A-19

Appendix D

United States Court of Appeals

For the Ninth Circuit

No. 85-6157

D.C. No. CV 78-0106-G

FOR PUBLICATION

Southwest Marine, Inc., a corporation,

Plaintiff-Appellant,

VS.

Triple “A” Machine Shop, Inc., a corporation,

Defendant-Appellee.

Opinion Re Rehearing

[ Filed Oct. 3, 1986]

Appeal from the United States District Court

for the Southern District of California

Earl B. Gilliam, United States District Judge, Presiding

Argued and Submitted July 11, 1986, Pasadena, California

Decided August 5, 1986

Before: CANBY, REINHARDT and NOONAN, Circuit

Judges

The petition for rehearing is denied. Triple A Machine Shop’s

reliance on Kentucky v. Graham, ___ U.S. —__, 105 S.Ct. 3099

(1985), is misplaced. Graham held only that a government entity

cannot be held liable in an action against a government official in

his personal capacity. The decision in no way alters or affects the

basic rule that a prevailing party may be awarded attorney’s fees

pursuant to Section 1988. Most important of all, the Court

expressly disavowed any intent to change the current law with

respect to the criteria for, or definition of, a “prevailing party”. As

the Court explicitly said: “We express no view as to the nature or

degree of success necessary to make a plaintiff a prevailing party.

See Maher v. Gagne, 448 U.S. 122, 100 S.Ct. 2570, 65 L.Ed.2d

653 (1980).” 105 S.Ct. at 3105 n.9.

Thus the law of the case, Southwest Marine v. Campbell

Industries, 732 F.2d 744 (9th Cir. 1985), remains applicable.

Moreover, in our view, that law was properly decided. For reasons

stated in the above cited opinion, Southwest Marine was the

prevailing party.

A-20

FOR PUBLICATION

[Filed Oct. 3, 1986]

Southwest Marine, Inc.

Triple “A” Machine Shop

No. 85-6157

NOONAN, Circuit Judge, dissenting:

Appellant’s right to some attorney’s fees was upheld by this

court in an opinion filed August 5, 1986. The basis for the

decision was that this court had so held in an earlier phase of this

litigation. Southwest Marine I, 732 F2d 744, 746-47 (9th Cir.

1984). I concurred because I believed that the law of the case

controlled.

After the 1984 decision and before the 1986 decision, the

Supreme Court decided Kentucky v. Graham, 105 S. Ct. 3099

(1985). The Court was careful to say that it was not deciding

what degree of success made a plaintiff a prevailing party but it

did decide when a defendant was not a losing party. The express

teaching of that case is “that the logica! place to look for recovery

of fees is to the losing party’—the party which is “legally

repsonsible for relief on the merits.” Jd. at 3104. The Court

further declared that there is “no cause of action against a

defendant for fees absent that defendant’s liability for relief on the

merits.” Jd. at 3108. The heart of Justice Marshall’s opinion for

the Court is that “fee and merits liability run together. ” Jd. at

3108.

Kentucky v. Graham deals with fees under 42 U.S.C. § 1988,

but it was clearly established in Southwest Marine I that we apply

case law construing this section to the attorney fee provisions of

15 U.S.C. § 26. See 732 F.2d 744, 746. In the light of Kentucky v.

Graham it is evident that this court’s award of attorney’s fees in

1984 to Southwest Marine was a mistake of law. Normally the

law of the case controls, and litigation on settled points cannot be

continually renewed. Due to the particular facts of this case,

litigation has continued, and we are in a position to correct the

mistake made in 1984. A long line of precedent teaches that an

A-21

appellate court should not be barred by the !aw of the case from

correcting 2 decision which is ultimately seen to be mistaken

because of an intervening treaty, statute, or relevant judicial

decision. Rather, when the law changes, “the law must be obeyed,

or its obligation denied.” The Peggy, 1 Cranch 103, 110 (per

Marshall, C.J.); see also Linkletter v. Walker, 381 U.S. 618, 627

(1965); Vanderbark v. Owens-Illinois Glass Co., 311 U.S. 538,

542 (1941). The law is clear “that if, before a case in a district

court has proceeded to final judgment, a decision of the Supreme

Court demonstrates that a ruling on which the judgment would

depend was in error, no principle of ‘the law of the case’ would

warrant a failure on our part to correct the ruling.” Zdanak v.

Glidden Co., 327 F.2d 944 (2d Cir. 1964) (per Friendly, J.). See

also Fogel v. Chestnutt, 668 F.2d 100, 109 (2d Cir. 1981) (per

Friendly, J.).

Triple “A” was not the losing party in the sense defined by the

Supreme Court. The concession made by its co-defendant was

due to another mistake of law. In no sense was Triple “A”

“legally responsible for relief on the merits.” It had no “merits

liability.” It should pay nothing now. The contrary decision of this

court is in accordance with the law of the case but it is contrary to

law.

A-22

Appendix E

United States Court of Appeals

For the Ninth Circuit

No. 85-6157

DC# CV 78-0106-G(M)

Southwest Marine, Inc.,

Plaintiff-Appellant,

vs.

Campbell Industries, et al.,

Defendants-Appellees.

Order

[Filed Oct. 22, 1986]

Before: CANBY, REINHARDT, and NOONAN, Circuit

Judges.

The mandate issued on October 15, 1986 is recalled. The

Opinion re Rehearing filed on October 3, 1986 is vacated.

A-23

Appendix F

Southwest Marine, Inc., a corporation,

Plaintiff-Appellant,

Campbell Industries, a corporation, et al.,

Defendants,

Triple “A” Machine Shop, Inc., a corporation,

Defendant-Appellee.

No. 85-6157

United States Court of Appeals,

Ninth Circuit

Argued and Submitted July 11, 1986.

Decided Dec. 16, 1986.

Before CANBY, REINHARDT and NOONAN, Circuit

Judges.

ORDER AMENDING OPINION

The opinion filed in this case on August 5, 1986, 796 F.2d 291,

is amended as follows:

A footnote is added at p. 292, Ist col. line 7 from bottom of

text, after “defendants.” and before “Only the amount”. The note

reads:

2. In the original action, Southwest Marine alleged that

National Steel and Triple “A” conspired with others to deny

Southwest Marine access to the dry dock and sought dam-

ages against both. Although the actual assignment of the

right to use the dry dock was made by National Steel, we

found that it was the defendants collectively, including Triple

“A”, who decided to permit Southwest Marine to use the

facility. 732 F.2d at 747. In short, it was the defendants

collectively, including Triple “A”, who, as a result of South-

west Marine’s prosecution of its action, removed the alleg-

edly unlawful obstacle to Southwest Marine’s enjoyment of

its claimed rights. For that reason, we held in our earlier

opinion that Southwest Marine had prevailed against Triple

“A” as well as National Steel.

A-24

Appendix G

Southwest Marine, Inc., a corporation,

Plaintiff-Appellant,

Vv.

Campbell Industries, a corporation, et al.,

Defendants,

Triple “A” Machine Shop, Inc., a corporation,

Defendant-Appellee.

No. 85-6157.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 11, 1986.

Decided Feb. 25, 1987.

Before CANBY, REINHARDT and NOONAN, Circuit

Judges.

ORDER

Triple “A” Machine Shop’s suggestion for en banc considera-

tion is rejected. A vote was taken, but a majority of the active

judges were not in favor of en banc consideration.

OPINION

REINHARDT, Circuit Judge:

The petition for rehearing is denied. Triple “A” Machine

Shop’s reliance on Kentucky v. Graham, 473 U.S. 159, 105 S.Ct.

3099, 87 L.Ed.2d 114 (1985), is misplaced. Kentucky v. Graham

held only that a government entity cannot be held liable in an

action against a government official in his personal capacity. The

decision in no way alters or affects the basic rule that a prevailing

party may be awarded attorneys’ fees pursuant to Section 1988.

Most important of all, the Court expressly disavowed any intent to

change the current law with respect to the criteria for, or defini-

tion of, a “prevailing party”. As the Court explicitly said: “We

express no view as to the nature or degree of success necessary to

————————

A-25

make a plaintiff a prevailing party. See Maher v. Gagne, 448 U.S.

122, 100 S.Ct. 2570, 65 L.Ed.2d 653 (1980).” 105 S.Ct. at 3105

n. 9.

Thus the law of the case, Southwest Marine v. Campbell

Industries, 732 F.2d 744 (9th Cir.1985), remains applicable.

Moreover, in our view, that law was properly decided. For reasons

stated in the above cited opinion, Southwest Marine was the

prevailing party.

NOONAN, Circuit Judge, with whom GOODWIN, SNEED,

and J. BLAINE ANDERSON, Circuit Judges, join dissenting

from the denial of en banc rehearing:

The opinion of the court in this case is defensible if either of the

following propositions is valid:

1. A losing litigant is entitled to be paid his attorneys’

fees by the winning litigant.

2. Once a court makes a serious mistake, the court

should not correct the mistake, even though its error is called

to its attention and the litigation is still in progress.

The present case treats the award of fees under the antitrust

laws, 15 U.S.C. § 26, as parallel to awards under 42 U.S.C.

§ 1988. In Kentucky v. Graham, 473 U.S. 159, 105 S.Ct. 3099, 87

L.Ed.2d 114 (1985) a unanimous decision of the Supreme Court,

Justice Marshall writing for the Court made a number of state-

ments on court-awarded attorneys’ fees under 42 U.S.C.

§ 1988,—statements which very strictly read could be taken as

dicta but which form the warp and woof of the Court’s reasoning

and which, because of the precedential force cf § 1988 cases, are

highly relevant here. Kentucky v. Graham is of a breadth and

weight that makes disregaré of its teaching all but direct defiance

of the Supreme Court.

In Kentucky v. Graham, Justice Marshall for the Court wrote:

... It is clear that the logical place to look for recovery of

fees is to the losing party—the party legally responsible for

relief on the merits.

Id. at 3104.

A-26

Justice Marshall also wrote:

That a plaintiff has prevailed against one party does not

entitle him to fees from another party, let alone from a non-

party.

Id. at 3106.

Justice Marshall further wrote:

... fee and merits liability run together.

Id. at 3108.

In the present case, recovery of fees had been looked to in the

illogical place—the winning party, the party found to be not

responsible for relief on the merits.

In the present case, the plaintiff prevailed against one party by

means of settlement and is now awarded fees from another party

which did not settle, a party which in fact did prevail against the

plaintiff.

In the present case, fee and merits liability do not run together,

but liability for the fee is attached to a defendant that has won on

the merits.

The only conceivable justification for this bizarre result is that

the law of the case in an earlier phase of this litigation had

established that the victorious defendant should be liable. In the

earlier phase, a per curiam opinion stated that “the defendants

decided to permit Southwest Marine to use the dock under an

assignment from National Steel & Shipbuilding Co.” Southwest

Marine, Inc. v. Campbell Industries, 732 F.2d 744, 747 (9th

Cir.1984) The opinion went on to say that the plaintiff had

“prevailed within the meaning of 42 U.S.C. § 1988.” The impli-

cation of the opinion was that the plaintiff had prevailed against

both defendants.

Two major difficulties exist in treating the law of the case thus

set out as binding now:

First, the law of the case is not binding when the law changes.

Kentucky v. Graham clarified the law of court-awarded attorneys’

fees in such a way that it should be read as changing the law

A-27

subsequent to this court’s earlier decision. Accordingly, the earlier

opinion should give way.

Second, the law of the case does not have the same binding

force as res judicata. As Justice Holmes succinctly put it:

In the absence of siatute the phrase, law of the case, as

applied to the effect of previous orders on the later action of

the court rendering them in the same case, merely expresses

the practice of courts generally to refuse to reopen what has

been decided, not a limit to their power.

Messenger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740,

56 L.Ed. 1152 (1912). The difference between the law of the case

and res judicata is that “one directs discretion, the other super-

sedes it and compels judgment.” Southern Railway Co. v. Clift,

260 U.S. 316, 319, 43 S.Ct. 126, 127, 67 L.Ed. 283 (1922).

We are dealing with what is properly a matter of discretion—

discretion so vague that the law of the case has been described by

the Supreme Court as “an amorphous concept.” Arizona v.

California, 460 U.S. 605, 618, 103 S.Ct. 1382, 1391, 75 L.Ed.2d

318 (1983). It is essentially “a rule of practice and not a limit on

authority.” 1 B. J. Moore, J. Lucas, & T. Currier, Moore's

Federal Practice § 0.404[ 1] at 120 (2d ed. 1982). Specifically, to

correct “a manifest injustice” the law of the case should be

reconsidered. Arizona v. California, 460 U.S. at 644, 103 S.Ct. at

1404 (Brennan, J., dissenting). Law of the case should not be

applied woodenly in a way inconsistent with substantial justice.

Moore v. James H. Matthews & Co., 682 F.2d 830, 833-34 (9th

Cir.1982).

A substantial miscarriage of justice is involved in this case. The

single sentence speaking of “the defendants” in the plural is based

on this court’s erroneous impression that the defendants had some

kind of joint control over the dry docks. In fact, the users’

agreement was between the San Diego Port Authority and a

series of independent shipbuilders. No one of these shipbuilders

acted on behalf of all the other shipbuilders. The assignment

made by National Steel & Shipbuilding Co. to Southwest Marine

was not an assignment that was authorized, concurred in or in any

way made possible by Triple “A”. There was no way that the

A-28

defendants could “collectively” permit Southwest Marine to use

the facility.

In its brief on appeal in this case, Triple “A” made crystal

clear the error which the court’s earlier opinion had made. For

reasons that are not apparent, the court has been unwilling to

acknowledge that the earlier panel committed an error of fact and

it has been unwilling to rectify the miscarriage of justice based on

the error of fact. Indeed, in footnote 2 of the present opinion, the

court has chosen to repeat the original error. On this appeal

Southwest Marine did not attempt to dispute Triple “A’”’s refuta-

tion of this mistake. The court nonetheless still seems to recite the

error as fact.

The final liability to be imposed by the district court is as yet

undetermined. Whether it is ultimately small or large (the losing

plaintiff has asked for over $350,000 in fees) is not decisive.

Justice is too precious a commodity to have a price. Even if the

ultimate fee awarded should be small, we should not so turn

things on their head that the winner becomes the loser, nor, out of

charity for the mistakes of this court, should we turn a blind eye

when the court itself is the instrument of injustice.

A-29

Appendix H

Statutory Provisions Involved

15 U.S.C. § 15 states:

§ 15. Suits by persons injured

(a) Amount of recovery; prejudgment interest

Except as provided in subsection (b) of this section, 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 dam-

ages by him sustained, and the cost of suit, including a reasonable

attorney’s fee.

15 U.S.C. § 26 states:

§ 26. Injunctive relief for private parties; exception; costs

Any person, firm, corporation, or association shall be entitled to

sue for and have injunctive relief, in any court of the United

States having jurisdiction over the parties, against threatened loss

or damage by a violation of the antitrust laws, including sections

13, 14, 18, and 19 of this title, when and under the same

conditions and principles as injunctive relief against threatened

conduct that will cause loss or damage is granted by courts of

equity, under the rules governing such proceedings, and upon the

execution of proper bond against damages for an injunction

improvidently granted and showing that the danger of irreparable

loss or damage is immediate, a preliminary injunction may issue:

In any action under this section in which the plaintiff substantially

prevails, the court shall award the cost of suit, including a

reasonable attorney’s fee, to such plaintiff.

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.