# Jurisdictional Statement — United States v. American Bldg. Maint. Industries

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Jurisdictional Statement
- **Published:** January 1, 1975
- **Citation:** 422 U.S. 271

## Text

EE Seal

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4 INDEX
2 bs Page
Do) 1
h iedidion .-_.......____._3 ewe meme m eee n ne 1
Question presented_._______________ ee 2
Matutes involved........._.__...._....._.__ 2
tat pc Gankacomsmcwnwocececencucneee 3
fe A.The acquiring company and the industry __ 4
© _B. Theacquired companies_________________ 5
=’ -C. Benton’s operations_________...._______ 5
> D. The summary judgment proceedings_____ 7
The questions are substantial._________________. 8
Con desig nin ps Wie ao ook eeecnccneee. + 14
yA ane 15
m Appendix B__._.._.._......._.._._______. 21
NE Rte e fevee iets eal bececwenn 24
CITATIONS

Brown Shoe Co. v. United States, 370 USS.
Ne ek mtn Re enim eden cia ade sat 10, 11
Burke v. Ford, 389 U.S. 320.____..__________ 14

Federal Trade Commission v. Bunte Bros.,
came, oie US. S40. oo 12

Gulf Oil Corp. v. Copp Painting, Inc. No. 73-
1012, certiorari granted, March 25, 1974____ 9
Mandeville Island Farms, Inc. v. American

Crystal Sugar Co., 334 U.S. 219______.____ 9
~ Shreveport Rate Cases, 234 U.S.342_...______ 1]
~ Transamerica Corp. v. Board of Governors, 206

i ik ah anes a dnd wee enanc 10

533-699—74——1 oe

Cases—Continued
United States v. Employing ee Assoc.,

Page
aoa ewe 14
United States y. Penn-Olin Chemical Co., 378

Si, BEG edvnekeccnccmeckoace ae 13
United States v. South-Eastern Underwriters
pS, ke eee eee 9 F
Statutes:
Cellar-Kefauver Amendments of 1950, 64 i
Re SE Ns tie he ccd ae 3, 13 §

Clayton Act, 38 Stat. 730, as amended, 15
US.C. 12 et seq.:
Mee 6 DBE, 12.3. nannkcBaens-: 2,11 |
Section 7, 15 U.S.C. 18.__ 3, 8, 10, 11, 12, 13, 14
Miscellaneous:
H. Rep. No. 627, 63d Cong., 2d Sess-------- ll}

H. Rep. No. 1191, 81st Cong., Ist Sess. _..-. 12 |

Gu the Supreme Court of the United States

OctoBER TERM, 1973

No.

UnitEep STATES OF AMERICA, APPELLANT
an
AMERICAN BUILDING MAINTENANCE INDUSTRIES

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR
THE CENTRAL DISTRICT OF CALIFORNIA

JURISDICTIONAL STATEMENT

OPINION BELOW

The findings and conclusions of the district court
(App. A) are not reported.

JURISDICTION

The judgment of the district court (App. B) was
entered on December 12, 1973. A notice of appeal to
this Court (App. C) was filed on February 7, 1974.
On March 1, 1974, Mr. Justice Douglas extended the
time for docketing an appeal until May 11, 1974. The
jurisdiction of this Court is conferred by Section 2 of
(1)

the Expediting Act (15 U.S.C. 29). United States y.
Falstaff Brewing Corp., 410 U.S, 526.

2

QUESTION PRESENTED

Whether a corporation which performs janitorial

and maintenance services within a single state for
companies which sell products in interstate and for-
eign commerce, which solicits and negotiates such
contracts through interstate communications, and
which purchases substantial quantities of supplies

originating in other states, is ‘‘engaged in commerce”
for purposes of Section 7 of the Clayton Act.

STATUTES INVOLVED

Section 1 of the Clayton Act, 38 Stat. 730, as amended,
15 U.S.C. 12, provides in pertinent part:

“Commerce’’, as used herein, means trade or
commerce among the several States and with
foreign nations, or between the District of Co-
lumbia or any Territory of the United States
and any State, Territory, or foreign nation,
or between any insular possessions or other
places under the jurisdiction of the United
States, or between any such possession or place
and any State or Territory of the United States |
or the District of Columbia or any foreign
nation, or within the District of Columbia or
any Territory or any insular possession or
other place under the jurisdiction of the
United States: Provided, That nothing in this
Act contained shall apply to the Philippine

_ Islands.

3

Section 7 of the Clayton Act, 38 Stat. 731, as
amended, 64 Stat. 1125, 15 U.S.C. 18, provides in
pertinent part:

No corporation engaged in commerce shall ac-
quire, directly or indirectly, the whole or any part
of the stock or other share capitai and no cor-
poration subject to the jurisdiction of the Fed-
eral Trade Commission shall acquire the whole
or any part of the assets of another corporation
engaged also in commerce, where in any line of
commerce in any section of the country, the ef-
fect of such acquisition may he substantially to
lessen competition, or to tend to create a
monopoly.

STATEMENT

The United States instituted this civil antitrust suit
against American Building Maintenance Industries
(*“ABMI”’) on January 8, 1971, contending that
ABMI violated Section 7 of the Clayton Act, 15
U.S.C. 18, by acquiring the stock of J. E. Benton Man-
agement Corp. and by merging Benton Maintenance
Company into American Building Maintenance Com-
pany of California. The complaint alleged that the
merger and acquisition, which was consummated in
1970, may substantially lessen competition in the sale
of janitorial services in Southern California and the
Los Angeles area.’ On December 12, 1973, the district
court granted the defendants’ motion for: summary
judgment, holding that neither of the Kenton com-

* The complaint defines “Southern California” as Santa Bar-
bara, Ventura, Los Angeles, Orange, San Bernardino and River-
side Counties.

4

panies was “engaged in commerce” within the mean-
ing of Section 7 of the Clayton Act at the time of the
merger and acquisition.

A. THE ACQUIRING COMPANY AND THE INDUSTRY

American Building Maintenance Company of Cali-
fornia is a wholly owned subsidiary of ABMI. The
complaint alleged that ABMI is the largest seller of
janitorial services in Southern California and one of
the largest sellers of such services in the country. It
has 56 janitorial service branches serving 500 com- ©
munities in the United States and Canada. The com- |
plaint alleged that ABMI had national revenues of —
about $52.4 million and Southern California revenues
of about $10.9 million frém janitorial services in 1969.
ABMI’s Southern California sales represented about
10 percent of the total janitorial service sales in that
area.

The service industries are the fastest growing seg-
ment of the American economy. More than half of f
the nation’s work force is employed in those industries
and soon more than half of this country’s Gross Na-
tional Product will be generated in the service sector.
The supplying of janitorial services by independent *
contractors is one of the fastest growing service busi-
_ nesses. Receipts for such services increased by 324
percent from 1958 to 1967. In 1972, national receipts
for commercial, institutional and industrial cleaning
services were more than $1 billion (Aff. of Philip
Neff).

There is a nationwide trend toward concentration
in the janitorial service industry. The four largest

5

firms have made at least 170 acquisitions of janitorial
service and related businesses since 1961. ABMI made
54 of those acquisitions. ABMI’s acquisitions included
five janitorial service companies in the Los Angeles
area in addition to the Benton companies (Aff. of
John D. Gaffey).

ABMTI has publicly acknowledged that it intends to
accelerate this acquisition program. In a December
1971 speech to institutional investors, ABMI’s presi-
dent stated: “We have been buying four-six companies
a year. I would say in the future it would be fair to

| | estimate that we will buy between six and eight com-
4 panies a year” (Aff. of John D. Gaffey).

B. THE ACQUIRED COMPANIES

Jess E. Benton, Jr. owned all of the stock of J. FE.
Benton Management Corp. and 85 percent of the stock
of Benton Maintenance Company at the time of the
merger and acquisition (Aff. of Jess E. Benton, Jr.).
Both companies sold janitorial services; Benton Man-
agement also provided building management services
and engaged in the real estate business. All of the
facilities served by these companies were located in
Southern California, The complaint alleged that the
Benton Companies (‘‘Benton”) was the fourth larg-
est seller of janitorial services in Southern California,
with 1969 sales of about $7.2 million. This represented
about 7 percent of the total sales in that area.

C. BENTON’S OPERATIONS

Benton’s customers included TRW, Inc., Jet Pro-

pulsion Laboratory, Rockwell International, General
t

6

Telephone Co. of California, Pacific Telephone and
Telegraph Co., Mobil Oil Corp., Union, Oil Co.,
Texaco, Inc., Carnation Co., Teledyne, Inc. and Tish-
man Realty & Construction Co. Benton maintained
and cleaned offices, manufacturing areas, and labora-
tories for its aerospace customers, offices and rooms
housing telephone switching equipment for its tele-
phone company clients, corporate headquarters build-
ings for Union Oil, Carnation and Teledyne, and re-
gional headquarters buildings for Mobil and Texaco.’
Benton also performed all the janitorial services for
the owner and tenants at Tishman Plaza, a large of-
fice complex in the Los Angeles area se of Alan ©
D. Levy).

In some cases Benton’s activities were cilities to
cleaning services, in other cases it assumed responsi-
bility for maintaining heating, air conditioning, elec-
trical and plumbing services, and paid utility bills for
Texaco (Aff. of Edward H. Patotzka).

Although all of Benton’s maintenance contracts
were performed in California, some of the contracts
were negotiated with out-of-state owners. The Tish-
man Plaza contract was executed by Tishman execu-
tives based in New York (Aff. of Alan D. Levy), and
the New York Life Insurance contract was the prod-
uct of interstate negotiations. Those two contracts

? Affidavits of Charles V. Engle (TRW);, Raymond Her-
nardez (Jet Propulsion Laboratory); Charles. W. Moxley and
John Blain (Rockwell); Donald E. Del Dosso (General Tele-
phone); George G. Guest (Pacific Telephone); John Stover
(Mobil); L. B. Higbee (Union Oil); Edward H. Patotzka
(Texaco) ; Maynard Heider (Carnation); and Edmund Sako-
wicz (Teledyne). $

7

made a significant contribution to Benton’s tota) rev-
énue.’ Benton also used interstate communications to
solicit other contracts (Aff. of John D: Gaffey).

Benton. purchased substantial quantities of jani-
torial supplies and other goods manufactured outside
of California. In 1969 Benton purchased more than
$120,000 in janitorial supplies which were manufac-
tured outside California* and paid about $36,000 in
lease fees attributable to, vehicles and a computer
which ‘were manufactured in other states (Aff. of
John D. Gaffey).’:

D. THE SUMMARY JUDGMENT PROCEEDINGS

ABMI filed a motion for summary judgment to-
gether with proposed findings of fact and conclusions
of law, After réceiving memoranda, affidavits and
counter-affidavits from both parties and hearing oral
argument, the district judge signed the findings and
conelusions which ABMI had submitted.

The court found that the Benton companies con-
ducted their businesses entirely within California, °
that Benton did not advertise nationally, The court

* The details of these transactions are contained in ,exhibits
covered by the district court’s protective order of June 2, 1971.

*The district court findings focused only on Benton's direct
interstate purchases which were admittedly small. The court found
direct purchases aggregating approximately $140 and interstate
telephone calls of $19.78 (Finding 7, App. A, pp. 16-17; Finding
15, App. A, p. 18). The findings do not reflect Benton's purchases
of out-of-state products from local citi ton as noted in
the text, were substantial.

* Benton also expended about $80,000 of funds advanced by
clients for gas, water, electricity and elevator parts which
originated outside of California (Affidavits of John D. Gaffey,
James J. Breen).

533-699—74——2

/ /

SSS
| 8

also found that Benton’s purchases: of produc
“which were shipped to it from outside California
and its expenditures for interstate telephane cal
were de minimus. (App. A, pp. 17, 18) The court co
cluded that each Benton company “was not a corpor'
tion engaged in commerce” and that “[t]here is no juri
diction of the Federal Court in this action under Sectic
7 of the Clayton Act (15 U.S.C. § 18)” (App. A, p. 20

THE QUESTION 18 SUBSTANTIAL

This appeal presents a substantial question invol
ing the reach of Section 7 of the Clayton Act. Thi

' section prohibits anticompetitive acquisitions of co’
porations - “engaged in commerce.” The questic
is whether Section 7 applies to acquisitions <
firms which, although conducting primarily a loc
business, nevertheless ‘serve customers who- then
selves ‘are engaged | fn interstate commerce, an
which, - in providing such services, make substanti:
purchases of goods shipped. in interstate commerce
The district court’s narrow interpretation of the reac
of Section 7 is inconsistent with the basie congre:
sional purpose reflected in that’ section of arrestin
in their incipiency anticompetitive trends towa1
concentration, and would seriously weaken the effe
tiveness of that section in accomplishing that purpos

, Court has already recognized the importan:
of the issue. One of the questions which it agreed 1
review when it granted the petition for certiorari i

i

lucts
nia”

volv-
That
cor-
stion
s of
local
hem-
and
ntial
erce.
pach
sting
ward
Lffec-

9

Gulf’ Oil Corp. v: Copp Painting, ‘Ine: No. 73-1012
(granted March 25, 1974], involves the’ applicability
of Section 7 to the acquisition of a company which
produces and sells intrastate asphalt that is used ‘on
interstate highways.’’ The present case involves a
similar question concerning the reach of Section 7.
We believe that it would be appropriate for the Court
to consider the two cases together, which would enable
it to examine the reach of the statute in related but
different factual settings.

1. This Court has recognized that in enacting the
Sherman Act, Congress ‘‘wanted to go to the utmost
extent of its Constitutional power in restraining trust
and monopoly agreements * * *.” United States v.
South-Eastern Underwriters Assoc., 322 U.S. 533,
508. Accordingly, the Sherman Act has been applied
to all activities which substantially affect interstate
commerce. See, ¢.g., Mandeville Island Farms, Inc. v.
American Crystal Sugar Co., 334 U.S. 219. We sub-

*The question states in relevant part:

With respect to a commodity which is not only made
and sold in one state alone but is only salable and usable
in that state, does the fact that it is used in an instru-
mentality of commerce such as a highway supply the
necessary.requirements, by itself and as a matter of law.

* * * * k

(c) Of Section 7 of the Clayton Act that the acquisi-
tion by a “corporation engaged in commerce” be of a corpo-
ration “engaged also in commerce”, and that “the effect * * *
may be substantially to lessen competition or tend to create
a monoply,” where the acquired corporation sold nothing
in commerce and the product it made did not enter com-
merce ?

10 Mii

mit that Section 7 of the Clayton, Act, which, was de-
signed to provide ‘authority; for arresting: mergers at
a time when the trend toa lessening. of competition
in a line of commerce was still in its incipieney” (Brown
Shoe Co. v. United States, 379 U.S, 294, 317), was in-
tended to have a similar reach,..

-.The Court of Appeals for, the ‘Third Circuit pee
recognized that when Congress originally enacted See-
. tion 7 ,0f the Clayton Act in 1914, it intended that
provision to have just as broad a reach as the Sher-
man Act. In T'ransamerica Corp. v. Board of Governors,
206 F. 2d 163, 166, the court said:

We find nothing in the legislative history, how-
ever, to indicate that Congress did not intend
by Section 7 to exercise its power under the
commerce clause of the Constitution to the full-
est extent. The avowed purpose of the Clayton
Act was to: supplement the Sherman Act, 15
U.S.C.A. §81-7, 15 note, by arresting in their
incipiency those acts and practices which might
ripen into a violation of the latter act. Since
the general language of the Sherman Act was
designed hy Congress ‘‘to go to the utmost ex-
tent of its Constitutional power in restraining
trust and monopoly agreements’’ the supple-
mentary general language of the..Clayton Act
was undoubtedly intended to have the same all
inclusive scope. .

While the legislative history of the original Section
7 does not contain an extended discussion of the ‘‘com-
meree’’ requirement, it does indicate that Congress
intended fully to exercise its commerce power. The
“engaged in commerce”? language of Section 7 and

a

t

11

the definition of commerce in Section 1 of the Clayton
Act, 15 U.S.C. 12, were part of the original bill re-
ported by the House of Representatives Judiciary
Committee. The House Report stated that the ‘‘defini-
tion of commerce * * * is broadened so as to include
trade and commerce between any insular possessions
or other places under the jurisdiction of the United
States, which at present do not come within the scope
of the Sherman antitrust law or other laws relating
to trusts.” H. Rep. No. 627, 63rd Cong., 2d Sess.,
p. 7. The Report also said that Section 8, which be-
came Section 7, ‘‘* * * is intended to eliminate this
evil [the aggregation of economic power through stock
acquisition] so far as it is possible to do so * * *.” Id.
at 17.’ :

In 1950 Congress amended Section 7 to extend it to
acquisitions of assets. Although the legislative history
of the 1950 amendments did not deal directly with the
“commerce” requirement, that history reflects a con-
tinuing Congressional intent to fully exercise its regu-
latory powers.

In Brown Shoe Co. v. United States, 370 U.S. 294,
315-323, this Court reviewed the 1950 legislative his-
tory and found that “[t]he dominant theme pervading

* At the time of the passage of the Clayton Act in 1914 the
distinction between activities “in commerce” and activities
“affecting commerce” had not been fully developed. The Shréve-
port Rate Cases, 234 U.S. 342, decided in 1914, has recognized.
Congress’ power to regulate activities substantially affecting
interstate commerce. The principles of the Shreveport Rate
Cases were subsequently applied to the Sherman Act, passed in
1890. See Mandeville Island Farms, supra. Those principles are
equally applicable to Section 7 of the Clayton Act.

12

congressional consideration * * * was a fear of what
was considered to be a rising tide of economic concen-
tration in the American economy.” Id. at 315. In addi-
tion, the legislative: history reflected Congressional
concern: over the “desirability of retaining ‘local con-
trol’: over: industry and the protection of small busi-
nesses.” Jd. at 315-316. Motivated by its concerns over
increasing -concentration, Congress sought to give
“#*"*:* eourts' the power to brake this force at its
outset and. before. it gathered momentum.” "Id. at 317-
318.

--Under the district setsie' s restrictive interpretion of
Section 7, a firm such as ABMI could obtain a virtual
monopoly of a service industry, which is inherently
local, by acquiring one local firm after another. Such
a result’ would be contrary to the aim of Section 7,
which was intended to block all acquisitions likely to
contribute to increasing levels of concentration. As the
House Report tothe 1950 amendment stated:

Acquisitions * * * have a cumulative effect,
and control of the market * * * may _ be
achieved not in a single acquisition but as the
result of a series of acquisitions. The bill is
intended to permit intervention in such a cumu-
lative process when the effect of an acquisition
may be a significant reduction in the vigor of
competition * * * [H. Rep. No. 1191, 81st adie,
Ist Sess. 8.]

This Court has observed that the commerce require-
ment in every statute ‘‘presents a unique problem in
which words derive vitality from the.aim and nature
of the specific legislation.” Federal Trade Commis-
sion V. Bunte Bros., Inc., 312 U.S. 349, 351.

13

In Section 7% as it stood after the Celler-Kefauver
Amendments of 1950, 64 Stat. 1125, 1126, The com-
merce requirement was not stated separately. Instead,
in a single comprehensive sentence the amended
statute bars corporations “engaged in commerce’”’
from aequiring the stock or assets “of another cor-
poration engaged also in commerce’’, ‘‘where in any
line of commerce in any section of the country, the
effect of such acquisition may be substantially to
lessen competition, or to tend to create a monopoly.” 15
U.S.C. 18. The commerce requirement, therefore, was
defined by the entire sentence. It should have been read
by the district court in its total context rather than in
isolation. See United States vy. Penn-Olin Chemical Co.,
378 U.S. 158, 168. o Xe

It would indeed have been anomalous for Congress,
which in 1950 strengthened Section 7 to prohibit in
their incipiency anticompetitive practices before they
developed into full-blown violations of the Sherman
Act, not to have intended to exercise the same full
reach of its commerce power that it had long since
utilized in the Sherman Act itself. Otherwise, the con-
gressional attempt to deal with these practices before
they reached the stage of Sherman Act violations
would have been seriously weakened.

2. This merger and acquisition had a substantial ef-
fect upon interstate commerce. Benton derived 80
percent to 90 percent of its revenues from customers
who were engaged in selling goods in interstate and
foreign commerce or in providing interstate communi-

14

cations facilities (Aff. of John D. Gaffey). Benton’s
Services were an essential and important part of the
interstate and international operations of those
clients.°

Benton also purchased or leased substantial quan-
tities of janitorial supplies and other goods which
originated outside of California. Purchases of sup-
plies originating in other states have frequently been
recognized in Sherman Act cases as sufficient to estab-
lish the requisite effect upon interstate commerce. See,
e.g., Burke v. Ford, 389 U.S. 320; United States v. Em-
ploying Plasterers Assoc., 347 U.S. 186.

CONCLUSION

* Probable jurisdiction should be noted.
Respectfully submitted.

Rosert H. Bork,
Solicitor General.

THomas E. Kauper,

Assistant Attorney General.

Wiuuiam L. Patron,

Assistant to the Solicitor General.

Car. D. Lawson,

LEE I. WEINTRAUB,

Attorneys.
May- 1974.

* Affidavits cited in n. 2, supra. Even if Section 7 were
deemed to require activities in the “flow of commerce”, Ben-
ton’s intimate involvement in the operations of its clients which
were unquestionably engaged in interstate commerce satisfies
such a restrictive test.. Moreover, Benton engaged in a form of
‘interstate sales activity by negotiating contracts with persons in
other states and by soliciting contracts through the use of in-
terstate facilities.

., APPENDIX: A

Unirep States Districr Court, CENTRAL District oF
California :

CIVIL ACTION NO. 71-55

Unitep States oF AMERICA,, PLAINTIFF
oo

AMERICAN BurmpDInG MAINTENANCE INDUSTRIES,
DEFENDANT

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The above entitled action came on regularly for
hearing on September 4, 1973, before the Court, the
Honorable Jesse W. Curtis, United States District
Judge presiding, on the motion of defendant Ameri-
ean Building Maintenance Industries for a summary
judgment of dismissal for lack of federal jurisdic-
tion against plaintiff United States of America, and
said plaintiff and said defendant being represented by
their respective counsel, and the Court having con-
sidered the pleadings and said motion and the papers
filed in support thereof and other papers on file
herein and the arguments of counsel, and being fully
advised in the premises, and it appearing that there
is no genuine issue as to the facts hereinafter set
forth, the Court now makes its Findings of Fact and
Conclusions of Law as follows:

FINDINGS OF FACT

1. Defendant American Building Maintenance In-
dustries is, and at all times relevant to this action was,

(15)

- 16

a corporation organized under the laws of the State of
California, having its principal office in San Francisco,
California.

2. J. E. Benton Management Corporation, formerly
named Pacific Realty Securities Company, was at all
times rélevant to’ this’ action a corporation organized }
under the laws of the State of California having its |
only office in Los Angeles, California,

3. On June 30, 1970 all of the stock of J. E. Benton
Management Corporation was acquired by defendant.

4. Prior to June 30,1970 and at all times relevant
to this action, J. E. Benton Management Corpora-
tion engaged in the real estate business and _ the
business of providing building management, janitorial
and related services. These were the only businesses |
engaged in by J. E. Benton Management Corporation |;
and they were conducted entirely within Los Angeles, |
Orange and Ventura Counties in California.

5. J. E. Benton Management Corporation had no
manufacturing plant, no sales or distribution outléts, |
no product which was sold or shipped, no patents or
scientific know-how, and no location or business situs
advantage,

6. Between March 1, 1970 and June 30, 1970 J. E.
Benton Management Corporation made no purchases
of products which were shipped to it from outside
California.

7. Between March 1, 1969 wad Febuary 28, 1970 }
J. E. Benton Mariagement Corporation made no pur- [
chases of any product or services of any kind or char-
acter which were shipped to it from outside California
except the following:

(a) Real estate publications costing $13.39
from Matthew Bender PaRORY, Albany, New
York;

SS

17

(b) Reel rack costing $25.01 from Monarch
Metal Products, New Windsor, New York; ~

(c) Income tax publication costing $79.98 from
Prentice Hall, Ine., Englewood Cliffs, New Jer-
sey; and .

(d) Sign purchase costing $11.97 from Ready
‘Made Sign Company, Long Island, New York.

These purchases do not represent a substantial or
appreciable amount of interstate commerce by any
standard and are de mutimus.

8. J. E. Benton Management Corporation did not
advertise nationally. It purchased advertising in the
yellow pages of local telephone directories and dis-
tributed brochures describing its business to prospec-
tive customers.

9. Benton Maintenance Company, formerly named
S. W. Straus & Co. and Affiliated Maintenance Com-
pany, was at all times relevant to this action a cor-
poration organized under the laws of the State of
California, having its only office in Los Angeles,
California.

10. On June 30, 1970 Benton Maintenance Com-
pany was merged into American Building Mainte-
nance Company of California, a subsidiary corpora-
tion of defendant.

11. At all times relevant to this action Benton

' Maintenance Company was engaged in the business
_ of providing janitorial and related services. This was
_ the only business engaged in by Benton Maintenance
» Company and it was conducted entirely within Los
. Angeles, Orange and Ventura Counties in California.

12. Benton Maintenance Company had no manufac-

turing plant, no sales or distribution outlets, no prod-
_ uet which was sold or shipped, no patents or scien-
_ tifie know-how and no location or business situs

advantage.

tee PA ee er —
18

13. Between January 1, 1969 and June 30, 1970
Benton Maintenance Company made no purchases of
products which were shipped to it from outside
California.

14. Benton Maintenance Company did not adver-
tise nationally. It purchased advertising in the yellow
pages of local telephone directories and distributed
brochures describing its business to prospective
customers.

15. J. E. Benton Management Cicsassilin and
Benton Maintenance Company received telephone
services from The Pacific Telephone and Telegraph
Company (‘Pacific’) over telephone number 737-
3220 through a single switchboard at their offices
located at 3727 West Olympic Boulevard, Los An-
geles, California. From January 1969 through June
1970 Pacific billed J. E. Benton Management Cor-
poration $18,310.70 for these services. Pacifie was
paid $18,260.45 on these bills of which $19.78 repre-
sented payment of charges for ten out-of-state calls
apparently related to the business activities of the
Benton corporations. These ten calls do not represent
a substantial or appreciable amount of interstate
commerce by any standard and are de minimus.

16. The business of the Benton corporations in pro-
viding janitorial services, and the janitorial: service
business generally is an intensely local activity. No
commodity is sold. The only sale made (if it be a sale)
is the sale of unskilled labor of janitors necessary to
clean buildings. There is no tangible property in-
volved in the business except insignificant, incidental
facilities.

-17. The Benton corporations purchased supplies as
needed. They did not enter into any requirements or
continuing supply contracts with its suppliers. There
are no significant economies to be realized through

C0

Pe ae AAE te nome ey

19

bulk or quantity purchases of supplies necessary to
the provision of janitorial services, Supplies represent
a minor part of the total costs of providing janitorial
service, The basic service provided was the labor nec-
essary to perform the cleaning work. Costs of supplies
represent approximately three percent of total
amounts paid by customers for janitorial services.

18. The major suppliers of the Benton corporations
were:

(a) Ball Industries, El] Segundo, California,
which delivered itidustrial and janitorial equip-
ment and supplies from its warehouse to the Ben-
ton corporations’ warehouse at 3727 West Olym-
pic Boulevard or to customer locations specified
by the Benton corporations ;

(b) National Sanitary Supply Co., Los An-
geles, California, which delivered paper goods and
other janitorial supplies from its warehouse to the
Benton corporations’ warehouse or to customer
locations specified by the Benton corporations ;

(c) U.S. Guards, Monterey Park, California,
which provided the Benton corporations with
building guard services on a subcontract basis;
and

(d) Courtesy Chevrolet Leasing, Los Angeles,
California, which leased vehicles to the Benton
corporations.

19. Plaintiff United States of America does not al-
lege in its complaint herein that the Benton corpora-
tions, or either of them, are engaged in commerce, nor
does plaintiff allege that the effect of the acquisi-
tion and merger may be to substantially lessen ecompe-
tition or tend to create a monopoly in the sale of jani-
torial services in areas other than areas wholly within
California.

20. The following Conclusions of Law, insofar as

20

they may be considered Findings of Fact, are so found
to be true in all respects and are to that extent adopted
by the Court as Findings of Fact.

Based upon the foregoing Findings of Fact, the
Court concludes as follows:

CONCLUSIONS OF LAW

21. There is no genuine issue as to any of the fore-
going facts which are determinative of the cause.

22. J. E. Benton Management Corporation was not a
corporation engaged in commerce at the time of the
acquisition of its stock by defendant.

23. Benton Maintenance Company was not a cor-
poration engaged in commerce at the time of its
merger into American Building Maintenance Company
of California, a subsidiary corporation of defendant.

24. There is no jurisdiction of the Federal Court
in this action under Section 7 of the Cayen Act. (15
U.S.C. § 18.)

25. Plaintiff United States of América is not en-
titled to a judgment or a final decree or damages
against defendant.

26. Defendant is entitled to a summary judgment |
in its favor dismissing this action and judgment of
dismissal should be entered accordingly.

27. The foregoing Findings of Fact, insofar as they
or any of them may be considered Conclusions of Law,
are to that extent hereby adopted by the Court as Con-
clusions of Law.

Dated at Los Angeles, California, this 12th day of
December, 1973.

JESSE W. CurrTIs,
United States District Judge.

ah

APPENDIX B

United States District Court, Central District of
‘California

CIVIL ACTION NO. 71-55 !
UNITED STATES OF AMERICA, PLAINTIFF
ve 7
AMERICAN BumpInc’ MAINTENANCE INDUSTRIES,
DEFENDANT

SUMMARY JUDGMENT OF DISMISSAL IN FAVOR OF DE-
U

FENDANT AMERICAN BUILDING MAINTENANCE INDUS-

TRIES AGAINST PLAINTIFF UNITED STATES OF AMERICA

The above entitled action came on regularly for
hearing on September 4, 1973, before the Court, the

| Honorable Jesse W. Curtis, United States District

Judge presiding, on the motion’ of defendant Ameri-

can Building Maintenance Industries for a summary
judgment of dismissal for lack of federal jurisdic-
tion against plaintiff United States of America, and
said plaintiff and said defendant being represented by

their respective counsel, and the Court having con-

| sidered the pleadings and said motion and the’ papers
_ filed in support thereof and other papers on file herein
_ and the arguments of counsel, and being fully advised

in the premises, the Court made its Findings of Fact
and Conclusions of Law, and it appearing that there
is no genuine issue as to any material fact and that
said defendant is entitled to a judgment of dismissal
as a matter of law.

IT IS HEREBY ORDERED, ADJUDGED AND:

DECREED that summary judgment of dismissal be

/

(21),

f

22
entered in favor or defendant American Building
Maintenance Company against plaintiff United States
of America dismissing the above entitled action, and
that said plaintiff take nothing on his complaint from
defendant, and that said defendant have and recover
its costs from said plaintiff in the sum of $

Dated at Los Angeles, California this 12th day of
December, 1973.

JeEssE W. CvurRTIs,
United States District Judge.

United States District ‘Court, Central District of
California

CASE NO. 71-55

UnttTep States OF AMERICA, PLAINTIFF
Vv.

AMERICAN BumLpInG MAINTENANCE INDUSTRIES,
DEFENDANT

NOTICE OF ENTRY

To the above named parties and to their attorneys
' of record:

You are hereby notified that Summary judgment of
dismissal in favor of defendant American Building
Maintenance Industries against plaintiff United States
of America in the above entitled case was entered in
the docket on December 12, 1973.

You are al.o notified that if this case was tried and
you introduced exhibits into evidence, they must be
claimed at this office after the expiration of thirty
days from the receipt of this notice. (After sixty days
im cases in which the United States, its officers or

23

agencies were parties) Unless they are claimed within
thirty days after the expiration of the above period,
they will be destroyed pursuant to Local Rule 20(a).
If an appeal is taken they will, of course, be held
until the Appellate Court finally determines the mat-
ter. Exhibits which are attached to a pleading will not
be destroyed but will remain as a permanent record
in the case file.

Ss —_— oo &S VS

CERTIFICATE OF MAILING

I, Edward M. Kritzman, Clerk, United States Dis-
trict Court, Central District of California, and not a
party to the within action, hereby certify that on
December 12, 1973, I served a true copy of this notice
of entry on the parties in the within action by deposit-
ing true copies thereof, enclosed in sealed envelopes,
in the United States Mail in the United States Post
Office inail box at Los Angeles, California, addressed
as follows:

Lawler, Felin & Hall,

605 W. Olympic Blvd.,

Los Angeles, Calif.

Michael J. Dennis, Esq.,

Department of Justice.

Antitrust Div.

Los Angeles, Calif.

Epwarp M. KritzMan,
Clerk.

By Joe R. Fores,
Deputy Clerk.

APPENDIX C

United States District Court, Central
District of California

CIVIL NO. 71-55

UNITED STATES OF AMERICA, PLAINTIFF
Vv.

AMERICAN BUILDING MAINTENANCE INDUSTRIES,
. DEFENDANT

NOTICE OF APPEAL OF SUMMARY JUDGMENT OF DISMISSAL

To: Defendant American Building Maintenance In-
dustries and to its attorneys of record:

PLEASE TAKE NOTICE that the plaintiff
United States of America appeals to the United States
Supreme Court under the provisions of 15 U.S.C. § 29
the Summary Judgment of Dismissal in Favor of
Defendant American Building Mainteniance Indus-
tries Against Plaintiff United. States of America
entered herein on December 12, 1973.

Datep Fesruary 6, 1974. :

MicHakL J. DENNIS,
Attorney, Department of Justice.

(24)

U.S. GOVERNMENT PRINTING OFFICE: 1974

ll a —

ical eo airicaetaieetel

am |

TOPICAL INDEX

Page
Be | Pema ie neways Meme MCS 1
I NN oi 1
MN car casoisnkeseciscvensstle since td cies bls Sosaaselaseasouasainas 2
The Question Presented Is Not Substantial ............ 5

A. In‘Section 7 of the Clayton Act Congress
Used Only a Limited Part of Its Constitu-
tional Power to Regulate Commerce ............ 6

B. The Purchase of Supplies Originating in
Other States Is Insufficient to Establish J uris-
GUNG 5c ee be

C. The Acquired Benton ist Sea Were
Not Engaged in Commerce Merely Because
of the Commerce Carried on by Their Cus-
COE sacs icrsditnecosiganuleactesaniiiiseniubuinseiones 17

D. The Acquired Benton Colsdbanions Were
Not Engaged in Commerce by Reason of
Their Use of Interstate Communications ...... 18

E. The Question Presented in This Case Is Not
: the Same as the Question Presented in Gulf
. Oil Corp. v. Copp Paving, Ine. .................... 19

CN ee ae “i ee

ii.
TABLE OF AUTHORITIES CITED

Cases Page

Belliston v. Texaco, Inc., 455 F.2d 175 (10th Cir.
1972), cert. den. 408 U.S. 928 (1972) ...2000....... 10

Brown Shoe Co. v. United States, 370 U.S. 294
Bie IRENA EO SA ci ect es sana aaa aeeR 7
Burke v. Ford, 389 U.S. 320 (1967) | 15

Page
Ekco Prods. Co., CCH Trade Reg. Rep. 916,879
at 21,901 (FTC 1964), aff'd 347 F.2d 745 (7th

Cir. 1965) . 9
Federal Trade Colidiiadion v. uate ahi, in a
312 U.S. 349 (1941) 11, 12
Golden Grain Macaroni Company v. F.T.C., 472
fe AE 2a |: ain eee Oe 9
Gulf Oil Corp. v. Copp Paving, Inc., No. 73-1012
now pending before this Court ........ 19

John Kalin Funeral Home, Inc. v. Fultz, 313 F.
Supp. 435 (W.D. Wash. 1970), aff'd 442 F.2d
1342 (9th Cir. 1971), cert. den. 404 U.S. 881
(1971) ie

Kirschbaum v. Walling, 316 WIS. 517 (1942) _... 14
Klor’s Inc. v. Broadway-Hale Stores, 255 F.2d 214

(9th Cir. 1958), rev’d on other grounds, 359
U.S.. 207 (1959) ..... 8

Las Vegas Merchant Plumbers Ass’n v. United
States, 210 F.2d 732 (9th Cir. 1954), cert. den.
286. U3, Siz (19ee) 8

Littlejohn v. Shell Oil Company, 483 F.2d 1140
(Sth Cir. en banc 1973), cert. den. 414 U.S.
RI RIED. Snhnecesquinsc ancien Madanetettag iets cs 10

McNutt v. General Motors, 298 U.S. 178 (1936) .. 20

Page

Mitchell v. Lublin, McGaughy & Assoc., 358 U.S.
oi MNT A Nap shhiiisivnponkssansiecili vcbingthanstailidiene mop 11

| Myers v. Shell Oil Company, 96 F.Supp. 670
SRG Se” TEES |S @ ae AA ap caster Me can OO MOP LAE 9
Rasmussen v. American Dairy Association, 472 F.
en ee PI, DOTE gcc i 7
Rosemound Sand and Gravel Co. v. Lambert Sand
and Gravel Co., 469 F.2d 416 (5th Cir. 1972) .. 10

j Transamerica Corp. v. Board of Governors, 206

am ee ee RD 14
United States v. Employing Plasterers Ass’n, 347
Sy ae Ss, Cs RISERS cele 15
United States v. Frankfort Distilleries, 324 U.S.
He Bs 2k BIDEN Sitcnon ie dt de 5c al nop 16
United States v. Philadelphia National Bank, 374
FRE 3 kp es ble bed aA. IS eet OD 14
United States v. South-Eastern Underwriters Ass’n,
ee See Doe Cee 7
United States v. Yellow Cab Co., 332 U.S. 218
a) peddle ieaicictacecrabictathdsad ibindascic asco 17

Western Laundry and Linen Rental Co. v. United
States, 424 F.2d 441 (1970), cert. den. 400
TD aig i eect ccs

Urban Business Profile, Building Service Contract-
ing, United States Department of Commerce,
SN I

oe

Statutes Page
Clayton Act, Sec. 1 .............. b dsdhschintaddd Sfsanadlveshiboil 2

Clayton Act, Sec. 2, as amended by the Robinson-
Patman Act (Act of June 19} 1936, c. 592, 49

Stat. 1526, 15 U.S.C. §13(a)) oo.) cece eeeeceeeeeoes 9, 10
Clayiter. Act; Sec: 2(a) ccdoccccicccied sc 9
Clayton Act, Sec 7 ooocc.n..ccccccccoseoccece i, 2, 3, 6,7; 8, 9

BPR ES METIS ELE OR a BR 12, 13, 14, 15, 17; 18, 20
Clayton Act (Act of October 15, 1914, c. 323,

38 Stat. 730, as amended) ............................. 2
Fair Labor Standards Act, Sec. 6 .0...2....c-ccccccceo-0---- 11
Federal Trade Commission Act, Sec. UP occccsiconce 11
Rn tN 6

‘ IN THE

Supreme Court of the United States

October Term, 1973
No, 73-1689

UNITED STATES OF AMERICA,
i Appellant,
: vs. ;
AMERICAN BUILDING MAINTENANCE INDUSTRIES,
_ Appellee.

Appeal From the United States District Court for the ,
: _ Central District of California.

_ MOTION TO AFFIRM.

Appellee moves the Court to affirm the judgment
sought to be reviewed on this appeal on the ground
that it is manifest that there are no material disputed
questions of fact and the questions of law as to which
review is sought are, on their face, without substantial -
merit. PX

The Question Restated. et :

May a corporation engaged in rendering janitorial
services solely within a single state, using for that pur-
pose labor obtained in that state and supplies purchased
in that state, be deemed “engaged also in’ commerce”
within that clause of Section 7 of the Clayton Act?

Statutes Involved.

Involved here is the phrase “engaged also in com-
merce” as it appears and is defined in the following

/
/

po So

sections of the Clayton Act (Act of October 15, 1914,
- ¢€. 323, 38 Stat. 730, as amended):
Section 7 (15 U.S.C. §18):
“No corporation engaged in commerce shall
acquire, directly or indirectly, the whole or any
, part of the stock or other share Capital * * *
of another corporation engaged also in commerce,
where in any line of commerce in any section of
the country, the effect of such acquisition may
be substantially to lessen competition, or to tend
to create a monopoly. * * *”!
Section 1 (15 U.S.C. §12):
““*Commerce’, as used herein, means trade or
commerce among the several States and with for-
eign nations * * *”

Statement.

On January 8, 1971 this action was filed to assert
the illegality of the June 30, 1970 acquisition by Ameri-
can Building Maintenance Industries (“ABMI”) of J. |
E. Benton Management Corporation and Benton Mainte-
nance Company (“Benton ~ corporations”). The sole
contention was that the acquisition violated Section 7 of
the Clayton Act. Notwithstanding the explicit limita-
tion: in Section 7 that the acquired corporation must
be “engaged also in commerce” before Section 7 can
apply, the complaint failed to allege that the acquired
corporations. were so engaged. It is conceded that the
acquired corporations operated only within the State
of California. ,

_ Since the acquiring corporation (appellee ABMI)
operates’ in a humber of states, it is not controverted

*Emphasis added herein unless otherwise noted.

sine
that ABMI is “engaged in commerce.” There is ac-
cordingly no issue relative to ABMI’s activity, and the

comments on that activity in the Jurisdictional State-
ment are plainly irrelevant.”

The court below on motion for summary judgment
found that the acquired corporations were not “engaged
also in commerce” and that accordingly the District
Court lacked jurisdiction under Section 7 of the Clay-
ton Act.’ The Governnient makes no contention that
there was any procedural impropriety in the presenta-
tion or the consideration of the motion for summary
judgment or that the findings of fact are in any way
erroneous. The Government disputes only the conclu-
sions of law drawn from the findings of fact.

The findings of fact show:

1. Both Benton corporations (the acquired corpora-
tions) were engaged in the business of providing jani-
torial and related services. One ‘of them, J. E. Benton
Management Corporation (“Benton Management” ),
also engaged in the real estate and building manage-
ment businesses. The Benton corporations conducted
their businesses entirely within Los Angeles, Orange
and Ventura Counties in California.‘

2. The Benton corporations had no manufacturing
plants, no sales or distribution outlets, no products

*Appeliee disputes the accuracy and completeness of the Gov-
ernment’s characterization of the acquiring company in the Juris-
dictional Statement. That characterization constitutes a thinly
disguised effort to argue matters noi properly germane.

*Findings 22 through 24 of the District Court’s Findings of
Fact and Conclusions of Law attached as Appendix A to the
Jurisdictional Statement, hereinafter “Findings”.

‘Findings, 4 and 11.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0463%3A02. Public record. Not legal advice.