First Nat’l Bank v. Cities Service Co., 391 U.S. 253 (1968)

First National Bank of Arizona v. Cities Service Co.

No. 23

Argued November 9, 1967
Decided May 20, 1968
391 U.S. 253

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

One Waldron (hereafter petitioner), in 1956, filed an antitrust action seeking treble damages amounting to $109,000,000 against seven large oil companies, including respondent (Cities). In addition to charging a worldwide cartel maintained since 1928 by oil companies other than Cities, the complaint charged those companies with conspiring to boycott Iranian oil until Iran agreed to return Anglo-Iranian’s properties which it had nationalized in 1951 alleging: that petitioner had a favorable contract to purchase Iranian oil over a five-year period; that negotiations had been conducted with Cities for its participation in the operation of the Iranian oil industry; that Cities joined the conspiracy, having been bribed in the latter part of 1952 by Gulf and Anglo-Iranian by an offer of Kuwait oil at prices lower than petitioner’s offer; that, in 1954, a Consortium Agreement was made whereby all the oil companies, including Cities, shared almost all the Iranian oil production, and that the boycott conspiracy frustrated petitioner’s ability to sell oil under his contract. The trial judge granted defense motions to postpone answering the complaint pending the taking of petitioner’s deposition, and meanwhile petitioner was stayed from any discovery of his own. The deposition of petitioner commenced in September, 1956. From then till May, 1962, he and his associates had their depositions taken (hereafter "were deposed") for 153 days in all, seven of which were attributable to Cities. Various stipulations which resulted in prolonging the deposition period were entered into at petitioner’s request or with his agreement. During the course of his deposition petitioner stated that he had not initially attributed Cities’ failure to buy Iranian oil from him to its participation in the boycott, but that it was his discovery of Cities’ purchase of Kuwait oil from Gulf plus its later participation in the Consortium that prompted him to join Cities as a conspirator. Accordingly, in 1960, Cities moved for summary judgment under Fed.Rule Civ.Proc. 56, on the ground that the affidavit of Hill, its officer in charge of Foreign Operations, and accompanying documents conclusively disproved petitioner’s boycott conspiracy theory by demonstrating that (1) Cities had negotiated to buy Kuwait oil from Gulf since 1948 and had substantially completed a final agreement before petitioner approached Cities and (2) Cities had only started negotiations to participate in the Consortium some two years after it was alleged to have joined the conspiracy and the eventual participation offered to Cities in the Consortium was so small that Cities, following its fruitless objections, transferred it to Richfield, in which Cities held a minority stock interest. The trial judge, following counterarguments by petitioner, though believing it "doubtful" that any issue of material fact existed and feeling that Cities had been joined on mere "suspicion," deferred ruling on Cities’ summary judgment motion, but stated that petitioner’s pretrial discovery would be "closely regulated." Thereafter he ordered that petitioner be allowed to depose Hill under Fed.Rule Civ.Proc. 56(f), which provides for comparatively limited discovery for the purpose of showing facts sufficient to withstand a summary judgment motion. Petitioner’s sole objection was that Cities’ president, Jones, should be deposed, rather than Hill. After depositions had been taken of petitioner’s associates, petitioner deposed Hill for six days between September 10, 1962, and February 27, 1963, and later moved for additional discovery, whereupon Cities renewed its summary judgment motion. At oral argument, on May 27, 1963, the trial judge reiterated his view that petitioner could point to no facts showing Cities’ participation in the conspiracy and that Hill’s deposition and other documentary evidence further disproved petitioner’s theories. On June 28, 1963, petitioner filed an amended complaint eliminating most of the specific fact allegations and, in regard to Cities, omitting the specific allegations about Kuwait oil or membership in the Consortium, and instead making the general allegation that Cities joined the conspiracy in a time and manner not known to petitioner, and that the other oil companies and various coconspirators "secretly threatened, induced and conspired with . . . Cities . . . to break off dealings with" petitioner. On June 23, 1964, the trial judge denied motions for summary judgment by other defendants, postponed final disposition of Cities’ motion, and gave petitioner opportunity under Rule 56(f) to depose the three surviving members of Cities’ executive staff who had participated in the alleged Iranian oil dealings and to have certain documents produced. The depositions were completed and the documents produced in July and August, 1964. In September, 1964, petitioner moved for the production of all documents in Cities’ or the other defendants’ possession relating to Iranian oil between June, 1952, and January, 1955, and documents from and oral examination of Carter, a former Cities employee, who acted as an intermediary between Cities and petitioner. His counsel’s supporting affidavit related facts designed to show that Cities’ failure to follow through on its original interest in dealing with petitioner was substantial evidence of Cities’ participation in the boycott allegedly organized by the other defendants. Cities again renewed its summary judgment motion and, following arguments on both motions, the trial judge granted summary judgment on September 8, 1965, holding that petitioner had failed to meet amended Rule 56(e)’s requirement that a party opposing a properly supported summary judgment motion show by affidavit or otherwise "specific facts showing that there is a genuine issue for trial." The court ruled as to petitioner’s cross-motion for additional discovery under Rule 56(f) that his total failure to produce evidence tending to show Cities’ part in a conspiracy demonstrated that additional discovery would be a fishing expedition and constitute harassment. The Court of Appeals affirmed.

Held:

1. The trial judge’s orders prior to the rendition of summary judgment were proper, and did not place unfair limits on petitioner’s access to relevant information. Pp. 270-274; 290-299.

(a) Petitioner himself, from the beginning, took the position that the two payoffs (the Kuwait contract and participation in the Consortium) were the only links between Cities and the conspiracy. By Hill’s affidavit and supporting documents, Cities apparently felt it could disprove these charges. Pp. 270-271.

(b) The trial judge did not abuse his discretion in ordering petitioner to limit initial discovery to Hill, rather than Jones, Cities’ president, with whom petitioner had primarily dealt; since Hill had been the ranking Cities official in charge of the Kuwait and Consortium transactions, it is unrealistic to suggest that Jones could have involved Cities in such a large conspiracy without knowledge on the part of its other major executives, and, in any case, the issue became moot after Jones’ death, which occurred before petitioner would have been able to depose him had the trial judge permitted him to do so. Pp. 272; 294-295.

(c) After Hill’s deposition and the accompanying documents in its support, petitioner no longer seriously contended that the evidence relating to Kuwait and Consortium was sufficient by itself to raise a genuine issue of material fact. P. 272.

(d) The order permitting petitioner to depose the surviving Cities officials with whom he had dealt was not unduly restrictive, and petitioner was not prejudiced by not being allowed to depose other executives at the time he was allowed to depose Hill because it was not until he had deposed Hill that he began to suggest other possible motivations for Cities to conspire. Pp. 272-274.

(e) As petitioner himself acknowledges, Cities was in a totally different position from the other defendants. The discovery given the other defendants did not unduly favor Cities, whose own deposition testimony of petitioner totaled only 3 1/2 days, since petitioner benefited as much vis a vis Cities from the depositions taken by the other defendants as Cities did. Though the case has been pending in the lower courts 11 years, during which time petitioner has not received a formal answer from any defendant nor been permitted general discovery, Cities has been the only party consistently desirous of expediting the proceedings, and petitioner has always acquiesced in the delays. Pp. 290-292.

(f) Even assuming the disputed claim that petitioner was kept from obtaining general discovery of the other defendants during the period he sought to build a case against Cities, petitioner had discovery against the one party he is now opposing, and that party was a "tangential defendant," whose link to the other defendants was shown to be factually incorrect. Under those circumstances, it was petitioner’s burden, which he did not meet, of showing a significant likelihood that discovery of the other defendants would be fruitful. Pp. 292-294.

(g) Petitioner has not shown any prejudice by not having been allowed to depose Carter, a former employee of Cities originally listed as one of petitioner’s associates, concerning Jones’ alleged interference with Carter’s efforts as an intermediary between Cities and petitioner to sell the United States Government Iranian gasoline for military use, and even if Carter would not voluntarily have furnished petitioner information, petitioner has not explained why he did not try to secure Carter’s testimony in 1961 (when the trial judge described petitioner’s case as "extremely weak") or 1963, rather than waiting till 1964. Pp. 295-297.

(h) The time period to which petitioner’s documentary requests pertain is one largely relating to activities outside the period covered by this phase of the lawsuit, and, in view of petitioner’s failure (despite substantial discovery) to obtain significant evidence of conspiracy for the period during which it was alleged to have directly injured him, the trial court was warranted in denying the additional documentary discovery petitioner requested. Pp. 297-298.

2. On the facts shown, summary judgment was correctly awarded to respondent, since petitioner was unable to show sufficient material facts to raise genuine issues for trial of his case against Cities. Pp. 274-288.

(a) After Iran had nationalized Anglo-Iranian’s properties, Anglo-Iranian, contending that the nationalization violated international law, announced that it would protect its rights in any country and would sue any purchaser of Iranian oil. Petitioner’s evidence showed that the other defendants and other American oil companies, fearful that, if Iranian nationalization of Anglo-Iranian’s property succeeded, other countries would follow suit, refused to deal with any company handling Iranian oil. P. 278.

(b) When that compelling explanation for Cities’ failure to purchase Iranian oil is coupled with Cities’ showing that the Kuwait deal antedated nationalization, that Cities opposed the Consortium, and ultimately refused its minimal share therein, petitioner’s suggestion that Cities was "bought off" becomes insupportable. Pp. 278-279.

(c) Petitioner’s consistent argument that Cities’ interests in this situation were opposed to those of the other defendants prompts him to insist that Cities’ motive for conspiring is not controlling, but for petitioner to say that Cities’ failure to deal with him showed Cities’ participation in the conspiracy is to rely on motive. P. 279.

(d) A report prepared for transmission to Iranian premier Mossadegh in October, 1952, after Jones returned from Iran and Watson, Cities’ senior vice-president, announced to petitioner that Cities was no longer interested in Iranian oil, is used by petitioner in two opposing ways, and does not further petitioner’s theory of conspiracy. Pp. 281-282.

(e) A letter sent by Jones to the incoming Secretary of State and Attorney General in January, 1953, that the only solution was for Iran to reach an accommodation with the British, and a supporting legal memorandum that Iran, under international law, had the right to nationalize Anglo-Iranian’s properties, likewise had no probative value for petitioner’s case. Pp. 282-283.

(f) Petitioner’s failure to sell oil to Richfield, of which Cities was a major, though not a controlling, stockholder, adds nothing to the case against Cities. Pp. 283-284.

(g) Jones’ disassociating himself from Carter’s efforts on petitioner’s behalf to sell Iranian produced aviation gasoline to the United States Air Force occurred at a time when petitioner conceded that Cities was not yet a member of the conspiracy, and, in any case, seems to have constituted no more tan a desire by Jones not to be used in someone else’s financial dealings. P. 284.

(h) In view of the business relationship between petitioner, Cities, and the other defendants, it is much more plausible to believe that Cities’ interests coincided, rather than conflicted, with those of petitioner. Poller v. Columbia Broadcasting System, 368 U.S. 464 (1962), distinguished. Pp. 284-286.

(i) Petitioner’s position that Cities’ failure to deal with him (the one fact that petitioner has produced) is sufficiently probative of conspiracy to withstand summary judgment cannot be supported where no interest of Cities was shown to parallel the interests of the other defendants. Interstate Circuit, Inc. v. United States, 306 U.S. 208 (1939), and Theatre Enterprises, Inc. v. Paramount Distributing Corp., 346 U.S. 537 (1954), distinguished. Pp. 286-288.

3. The lower courts correctly held that amended Fed.Rule Civ.Proc. 56(e) placed upon petitioner the burden of producing evidence of conspiracy after Cities conclusively showed that the facts upon which petitioner relied to support his conspiracy allegation were not susceptible of the interpretation he sought to give them. Pp. 288-290.

361 F.2d 671, affirmed.