# Brief in Opposition to Petition for Writ of Certiorari — Gates v. P. F. Collier, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Brief in Opposition to Petition for Writ of Certiorari
- **Published:** January 1, 1968
- **Citation:** 389 U.S. 1038

## Text

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SUPREME COURT. U. & NOV 22 1967

| No. 758 :
, iiiiniienteenaneneemeneel esiueceiigiea

IN THE

Supreme Court of the United States

oct OBER TERM, 1967

RONALD E. GATES,
. Petitioner,
Vv.

P. F. COLLIER, IN C., a Delanrate a

rr seenpencent,

ON PETITION FOR A WRIT .OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

~~

BRIEF FOR RESPONDENT IN OPPOSITION |

PeTER MreGaRGEE Brown. -
’ One Wall Street |
_New York, New York 10005
Attorney for Respondent.

CaDWALADER, Wecassenue & Tart,
TERENCE F’. GinHeany,
Of Counsel : -

“~~

oo

.
,

INDEX.

. . PAGE

Proceedings to Date . ; 1
The Facts | 2
The Claims -for Relief : cemmpepunavccoiaeis "Ae
Questions Presented smcanacleiah 6
ARGUMENT a

CERTIORARI SHOULD BE DENIED ... | = 7

‘A. Ne Issue Affects Foreign Relations: The
Foreign Exchange and Foreign Trade Con-

trol Law of Japan 7
ke The Trial Court’s Rulings on Contract Law: .
a Should Not be Disturbed 8
¢. Applicable Law ' ei | 9
D. Allowance of Some Attorneys’ Fees and
_ Travel Expenses as Special Costs :.............- 10
\ E) Ninth Circuit Dicta rail 11

Conclusion | a , : 11

TABLE OF Snmnnanets

Cases: - er : 2 ¢ .
' Banco a de Cuba v. Stille, 376 U. S.
398 (1964) 7
- Bank of China v. Wells Fargo Bank & Dalen Truss
Co., 209 F. 2d 467 (9th Cir. 1953) .... 10.
Fleischmann Distilling Corp. v. Maier Brewing
Co., 386 U. S. 714: (1967) | 10
Rule: ; Pe

Article:

Mr. Justice Harlan, Mannine THE Dikes: Some
CoMMENTS ON. THE STaTuTORY CERTIORARI JURIS-
‘DICTION AND JURISDICTIONAL STATEMENT PRACTICE |
OF THE SuPREME CouRT OF THE UnitTep STArTEs, -

13 Recorp, Assoc. Bar Crry N. Y. 541 (1958) .. = 8

Revisep Ruts, Rute 19(1), 388 U. 8. 948 (1967). 5

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| ‘IN THE
Santon Court of the United States

OCTOBER TERM, 1967

No. 758

Ronaup E. Gates, i.
' | . Petitioner,
v.

P. F. Coiiier, Inc., a Delaware Corporation,
: , Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE NINTH. CIRCUIT

BRIEF FOR RESPONDENT IN OPPOSITION

Proceedings to Date

Petitioner applies for a writ of certiorari. Respondent
opposes on the ground that the record here presents -no
question of sufficient importance to justify review by this
Court. —

“After ten days of trial, the United States District Court
for the District of Hawaii (Martin Pence, C.J.) awarded
respondent P. F. Collier, Inc. judgment of $306,676.25 on
coutiterclaims for fraud, breach of fiduciary duty and
breach of contract, and dismissed petitioner’ s claim for
commissions. . :

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a qrbbesn—

Petitioner appealed on the same issues he reargues here.
The Ninth Circuit entered judgmént affirming the District
Court’s judgment. Thereafter the Ninth Circuit denied
petitioner’s petition for rehearing.

The Facts

Facts relevant to the petition are set forth in 1 the deci-
sion of Chief Judge Martin Pence at 256 F. Supp. 206-210;

D1-D24. The Ninth Circuit refused to set aside the

findings ef fact. 378 F.2d 889; A1-A16.
A brief outline of the facts qut of: which this controversy
arose:

(1) \about 1953, petitioner began oaths respon-
dent’s books in Japan, purchasing the books out-
right from respondent Collier under an arms-length
buyer-seller arrangement (Tr. 251-252, 737). On
April 15, 1960 petitioner Gates entered into a per-
sonal contract with Collier whereby Gates was ap-
pointed Collier’s Far Eastern sales supervisor with
headquarters in Tokyo (PX 1; Tr. 201, 202).. Again
on September 15, 1961 Gates and Collier entered

into a substantially similar contract (PX 2).

(2) Gates’ duties under these agreements were to
recruit, train, maintain and. supervise a book sales
organization to sell respondent’s books, collect ac-
counts and supervise beok-sales (PX 1, PX 2).

*. (3) Orders obtained by Gates were “to be for- |
warded to Collier in New York for acceptance there
(Tr. 82, 203-204, 209). All monies received from
sales to Japanese civflians and schools were to be

_ deposited by Gates in Collier’s account in the
First National City Bank, Tokyo branch (Tr. 80,

' 1438, 206, 800-80), 1013). All dollars received from

«. American military personnel were to be sent di-

rectly to New York (PX 6; Tr. 119). Gates had no

discretion to withhold Collier money (Tr. 800- mm).

. 3.

(4) Gates was to receive 34% of the net sales
price of all orders accepted, and if 50% of the pur- -
chase price was paid within 15 months: after accept-
ance of an order by Collier, Gates was entitled
to 7% more (PX 1, PX 2, PX 9; Tr. 17, 96, 98, 110,
113, 157-158, 174, 997, 325-326, 407). If the gross

sales during a fvelve-month period from the date of
the contract or. in any successive twelve-month
period exceeded $1,000,000, Gates was entitled’ to
‘ 2% more, but if gross sales were between $500,000
and $1,000,000 during such period, then Gates would
receive 1% of 2% (Tr. 99, 126). For cash ‘sales,
Gates was allowed to give to the purchaser a 5% dis-
count or keep 5% himself ia 114, 121, 221, 283,
409).

(5). Collier anticipated, a loss of 12. 5% on. the

total amount of accepted orders (PX 1, PX 2, PX
9).. On 24-month- contracts, a monthly loss analysis
would be madeé 30 months from the month the or-
ders were Te] eported; on 12-month contracts, such an . .
_ analysis would be made 15 months from the time _.
_ the orders were reported (Tr. 99, 110, 115, 379,385, —
399, 430; 435, 437, 466). If the losses were. below
12.5%, Gates would receive the difference between |
that figure and the actual percentage loss ratio in-
eurred; if the actual loss ratio exceeded 12.5%,
Gates was to pay to Collier the difference between
fa. 5% and the actual percentage | of loss _ over that
figure (Tr. 379, 385, 399, 466). . %

(6) Collier agreed to ship books at its expense to
Gates in Tokyo for sale to Japanese civilians and
schools (PX 9; Tr. 15-16, 108-109). All orders to
military personnel were to be shipped to the ‘pur-
chasers by Collier’s”’New York office (PX 9; Tr.
123-124). Gates was to pay all branch operational
expenses (PX 9). All accounts sold by Gates in
Japan were to be accounts receivable of Collier (PX
9; 1% 195, 196, 201, 227, 278).

——s

v

4
(7) Books sold to Japanese civilians and schools _
were imported into Japan under import licenses

‘issued to Collier by the Japanese Government (Tr.

15-16) and collections: in yen were deposited in

‘Collier’s FNCB Tokyo: account. (Tr. 16). These -

yer’ were subsequently converted into U. S. dollars
and transmitted to New York under the Japanesé
import licenses (Tr. 16).

(8) The basic contract between Gates and Collier
was negotiated and consummated in New < City ©

' (Tr. 9-10; Ree. 3-4, 6, 251).

(9) In: April 1962 the collection losses were so

great that Norman FE. Bennett, then Collier’s senior

vice-president and now its President, flew to Tokyo
to review Gates’ operations (Tr. 541, 746-748, 794).

- Bennett discovered that Gates had been systemati-

eally embezzling Collier money (Tr. 563, 753, 770,
814, 999, 1027, 1077). Gates had been reporting
money collected only in a selective manner—he would

report to Collier the cash sales to Japanese civilians

as having been installment sales, thus taking for his -
own use not only the full amount of his commissions

but also that portion of the sales price immediately

due Collier (DX B-13—A, B, C; Tr. 558, 812).
Gates also set up a system of double books and
dummy purchasers to camouflage the fraud from

‘detection 7 Collier and its auditors (PX 161; DX

B-13—A, B, C; Tr. 603, 610, 612, 618, 637, 814).
(10) Gates admitted to Bennett and the auditor -

Van Arsdale that he had engaged.in the fraudulent .

scheme beeause. he needed cash (Tr. 755, 779, 815).
He promised to repay Collier from property. he
owned in Japan (Tr. 755-757, 815, 1160). A few
days later Gates recanted; denying generally that he
had done. anything wrong (Tr. 566-567, 758). On
May 2,.1962 Gates was discharged by Bennett pur-
suant to authorization from Collier’s board of

5

________- directors (DX B-16, DX B-17, DX B-19; Tr,-21, 166,—__—_—.
172, 759-762). ; Oia, | ae,
(11) On June 8, 1962 Gates filed an affidavit with —
_.. a Tokyo district<court claiming that ‘Collier ‘owed
him over $132,000-for commissions, that he had not
been properly discharged and that he was still -
Collier’s representative in Japan (Ct. Ex: A, DX -
G-1, G-34-A; Tr. 181, 804, 947, 1015-1037)... ‘This
affidavit was filed in support of an application for
an ex ‘parte. injunction restraining: Bennett (and —
another Collier officer, Superintendent Simon Nork) .
from interfering with Gates’ business as Gollier’s ©
é alleged representative in Japan (ibid.). Qh’ Gates’
misrepresentations an ex parte order?Was issued
(ibid.). Gates then proceeded to sélf 251 sets of,
encyclopedias (which Collier had pfeviously shipped —
him) without remitting any money to Collier (Tr.
947). = |
(12) In 1963, Gates teft Japan for Hawaii, and in
July 1964 filed this diversity action in the District,
Court in Honolulu for an accounting of commissions
assertedly due him, claiming that Collier some-
how owed him $367,000 under the 1960 and 1961
contracts (Rec. 1-5, 696). Collier then counter-
claimed, charging Gates, with fraud, breach of
fiduciary duty and breach of contract (Rec. 27-33).

Petitioner Gates has not shown that these findings pre-
sent any “special: and important reasons” to grant a writ;
he simply reargues the merits of a case thoroughly tried

- and reviewed below. Revisep Rutes, Rure 19(1), 388 U.S.
948 (1967). Bes ewe

a

- ° . . ‘ - .
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v a , 6 | ; d

th. Claims for Relief

~ In the Trial Court, .petitioner sought an n adjudication
that his discharge by respondent Collier was illegal and

-

that commissions were due him. He also sought a dis-
| missal of the counterclaims.

Questions Dieeented ;

In this Court, petitioner urges ten grounds for granting

-eertiorari. All these arguments were made to the Ninth

Circuit which unanimously affirmed the Trial Court.
Basically, petitioner asks for a writ on two primary

grounds and several’ secondary grounds. All are plainly ee ae
without merit. They aie:

(a) The . cofftract between- petitioner a re-

: sioient violated the Japanese Foreign -Exchange -
A Law, thereby raising a question affecting canard

- - States foreign relations.
bs (b) The Trial Court erred in certain: Setiien laa

©

conclusions with regard to the contract which were ©

affirmed by the Ninth Circuit.-

(ec) The- Trial, Court, as siffirmed by the Ninth’

, Circuit, adopted an erroneous conflict of laws. rule
and applied the wrong law to: this case.

(d) The Trial Court, as affirmed by the Ninth

Cireuit, erred in awarding respondent some counsel

fees and travel expenseg as special costs.

94

~]

_ ARGUMENT

_ CERTIORARI SHOULD BE DENIED.

A. No ‘Sets Affects. Foreign Relations: The anes :
Exchange and Foreign Trade _— Law of
Japan.

Petitioner urges that tlie contract pon him and re-
- spondent somehow violated the J apanese Foreign Ex-
change Law, was conceived. by him and ‘respondent for -
illicit purposes, and is unenforceable (Pet. 2-3, 13-17,
19-36). After full inquiry, the District Court held that
_ “this Court cannot find that the contract was illegal and
_- void”’ since “plaintiff! [petitioner] has not proved the
' judicial interpretation and legal effect of the Japanese
~ law to the particular facts ofthis case.” 256 F. Supp. 214.
Squarely presented with this question on me, the Ninth
_Gireuit. agreed. .378 F. 2d 889.
What remains is simply petitioner’s titties te an the
_ -Trial Court the. meaning and application of a foreign ©
statute upon which he purports to rely. Accordingly, no
important. substantive question of law is raised, and since |
the Trial Court. did ‘not construe or apply the Japanese
law or question its validity, there is no issue for review
bearing on United States foreign relations. (Pet. 19;
Banco Nacional de Cuba v.. Caerenind, 376 U. S. 398, 407
* (1964).) —
Petitioner’s other ground for urging the illegality of the
‘Japanese ‘civilian personnel portion of his contract with
respondent is his notion that a part of every $172.50 per
.set of encyclopedias sold which respondent sent out of
Japan represented commissions of petitioner, and that

8

respondent’s transfer of these assets out of Japan consti-
_. tuted a transfer of petitioner’s claimable asseté and a
' violation of the Japanese. Foreign Exchange Baw (Pet.
13-15, 19-27).- The Trial Court’s rejetion of this contén-
tion was based on two findings of fact: first, that respond-
.. ent obtained from the J apanese Government. the proper
authorization to send $172. 50 per set out of Japan; second,
~ that petitioner failed to prove as a fact that any part of
the $172.50 remittances was not part of respondent’s oot
or cost plus profit per set but rather petitioner’s own com:
missions. 256 F. Supp. 207, 211-212. The Ninth Circuit
held that there is in the feaen’ “nothing to indicate that
this finding of fact of ‘the trial court was inaccurate or
erroneous.” 378 F. 2d°889-890. .
There is no reason to review these questions of fact
' already decided by the Trial Court and carefully reviewed
below. See, Mr. Justice. Harlan, Manninc THe DiKes: '
Some CoMMENTs oN THE SraTuToRY CERTIORARI J URISDIC- |
TION AND- JURISDICTIONAL, STATEMENT PRACTICE OF THE
Supreme Covert or THe Unrrep Srares, 13 Recorp, Assoc.
Bkr Crry N. Y. 541, 549-553 (1958). | |

43

_B. The Trial Court’s Sullings on Contract Law Should
Not be Disturbed.

For the same reasons, petitioner's 8 other contentions with
respect to his contract with respondent provide no basis
for “a. grant of certiorari (Pet. 3, 53-71). Petitioner
merely argues that the evidence of record is insufficient to
sustain the Trial Court’s judgment for respondent on. its
counterclaim.. Petitioner insists. that the Trial Court
should have made the following findings. of fact: (a) that
the contract between petitioner and respondent was divisi- .

ble; (b) that petitioner did, not defraud respondent; (c):

9

assuming petitioner’s fraud, that respondent did not. suffer
loss as a proximate result; and (d) that respondent
rescinded the contract upon which it later counterclaimed. —

The Trial Court found against petitioner on all of these <
factual issues, 256 F. Supp. 208-209, 210-211, 214, and the
Ninth Circuit, after extensive written and oral argument,
discovered no error in the findings. 378 F. 2d 889, 890-891,

896. There is no reason shown for a review of these fact | ae

issues by this Court. |
. Petitioner’s claim (Pet. 3, 36-39) that he is entitled to
recover in quantum meruit for respondent’s unjust enrich-

ment is a factual question of accounting which, on the.¢al-. °

culations most favorable to petitioner, was nevertheless
resolved against him. 256 F. Supp. 214. The Ninth Cir- ©
cuit affirmed with the comment, “The findings. show..that
there are no facts upon which an unjust enrichment. could
be calculated.’ ” 378 F. 2d 896 (italics added). ,

c. Applicable Law. °

Petitioner contends (Pet. 17.18, 39.51) that the Trial
Court, as affirmed by the ‘Ninth Circuit, applied’ a wrong °
conflict of laws rule in this case and thus erroneously con- —
cluded that New York, and not J apanese, law applied to
the issues of -petitioner’s fraud-and embezzlement. But
_ the Ninth (Circuit jheld that regardless of the conflict of
laws rule followed by the Trial Court—the older “lex loci”
theory or the newer “center of gravity” theory—the Trial
Court was correct on the record before it to apply New
York law to the issues invélved.. 378 F. 2d 892-895. The °
trial and appellate Courts below rendered no decision on
conflict of laws departing from established rules and made
no choice between* “lex loci” and “center of gravity”.
There is here no special and important question for re-
view.

10

z

D. ‘Allowance of Some Attorneys’ Fees and Travel
Expenses as Special Costs.

Petitioner seeks review on the ground that the Trial
~ Court erred in awarding respondent as special costs some
attorney’s fees and travel expenses respondent reasonably
and necessarily incurred as a proximate result of peti-
tioner’s fraud (Pet. 4, 18-19,-71). But in Bank of China
v. Wells Fargo Bank & Union Trust Co., 209 F. 2d 467, .
476 (9th Cir. 1953), the Ninth Cirguit held that

“The allowance of costs, including attorneys’ fees,
is a matter within the discretion of the trial court
and will not be disturbed unless an abuse of that

discretion is clearly shown.”
a | ?

The ease relied on by petitioner, Fleischmann Distilling \
Corp. v. Maier Brewing Co., 386 U. S. 714 (1967), is~
plainly limited to the question of allowances of attorneys’’
fees under the Lanham Act. This Court therefore should
not concern itself with what would be essentially a seeond
review of a carefully considered anteaeeld ruling of the
Trial Court.

In allowing the attorneys’ fees to enuidel: the Trial
Court found that petitioner obtained by fraud a restraining
order against respondent from a Japanese court. This
was simply a finding of fact on which the Trial Court
based an allowance to respondent of attorneys’ fees for
litigation in Japan as well as in Hawaii. 256 F. Supp. 215-
216. Despite petitioner’s assumption (Pet. 3; 18, 51-53),
there is in fact no challenge or disregard of a judgment of
the courts of a foreign sovereign state. Accordingly, no
ground exists here for asserting jurisdiction. |

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11

-E. Ninth Circuit Dicta.-
Petitioner’s contentions as to the Ninth Circuit’s com-
. ments on Article XIX of the Japanese-American' Status.
' of Forces Treaty and the substantive Japanese law of ©
mandate (Pet. 17, 30-31, 48-49; 378 F. 2d 890, 891). are
likewise without merit. The Ninth Circuit’s remarks

clearly are-dicta and cannot be censidered ruling§ on a
treaty and foreign statute — this Court’s review.

ad .

Conclusion

‘ This case was decided in accordance with established
legal principles, no federal question of substance is pre-
_ sented, no conflict of decisions exists, and no questions are
presented here of sufficient importance to justify“or war- .
-° rant exercise of this Court’s power of supervision.
Certiorari should therefore be denied.

Respectfully parece ay

-
a?
~“

-Peter Mecarcee Brown,
Attorney for Respondent.

CaDWALADER, WICKERSHAM & Tarr,
Terence F. Gilheany,
Of Counsel.

-Dated: November 21, 1967.

12

| Appenrence and Certificate of. Service

ie Peter Megargee Brown, a member of the Bar of the _
. Supreme Court of the United States and attorney for
respondent P. F. Collier, Inc. in the above-entitled pro-
ceeding, do hereby appear for said respondent in this. pro-
_ ceeding and certify, pursuant to Revised Rule 33(1) and
- (3b) of this Court, that three copies of the within Brief.
for Respondent in Opposition have been served upon each -
of the attorneys for the petitioner herein, the only party
required to be served, by depositing the same in the United
' States Post Office this 22nd day of November, 1967, with
air mail postage prepaid and addressed as. follows:

Wueor K. Watkins, Jr. , Ese.
400 Trusteo Building
Honolulu, Hawaii 96813

Sumo Kasuriwa, Esq.
401 Trustco Building
. Honolulu, Hawaii 96813

Peter Mrcarcee Brown

Peter Megargee Brown

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_0997%3A4. Public record. Not legal advice.