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Horizons International Inc. v. Baldrige

filed as amended january 28 1987.: January 20, 1987.



Author: Gibbons

Before SEITZ, GIBBONS and HUNTER, Circuit Judges.


GIBBONS, Circuit Judge:

This appeal is from an order of the district court entered in the first instance of judicial review of a decision of the Secretary of Commerce under Title III of the Export Trading Company Act of 1982, 15 U.S.C. § 4001 et seq. (1986 Supp.). Title III authorizes the Secretary to issue certificates of review providing limited antitrust immunity to engage in specified concerted export activity if he finds that the proposed activity meets statutory requirements. 15 U.S.C. § 4013(a) (1986 Supp.). The Secretary acts upon an application after publication in the Federal Register of notice of that application. 15 U.S.C. § 4012(a), (b) (1986 Supp.). The purpose of such a certificate is to provide immunity from criminal or civil action under the antitrust laws for conduct which is specified in the certificate in effect when the conduct occurred. 15 U.S.C. § 4016 (a) (1986 Supp.). Parties aggrieved by the grant or denial of an application may within 30 days of the Secretary's determination "bring an action in any appropriate district court of the United States to set aside the determination on the ground that such determination is erroneous." 15 U.S.C. § 4015(a) (1986 Supp.).

In the instant case, the Secretary issued such a certificate to Chlor/Alkali Producers International (Chlor/Alkali), a joint venture comprising four major domestic manufacturers of caustic soda and chlorine.*fn1 The plaintiffs, Horizons International, Inc. and Kenchem, Inc., are traders in caustic soda and chlorine and claim to be aggrieved by that determination. Their complaint names as defendants the Secretary and Department of Commerce and the Attorney General and Department of Justice. One of the joint venturers, Occidental Chemical Company, successfully moved to intervene. Over objections by the government the district court permitted discovery. The court denied the government's motion to dismiss the Attorney General as a party, and denied its motion for summary judgment based upon the administrative record. Based on the expanded record, which included district court discovery materials, the court vacated the certificate of review and remanded the case for further proceedings.*fn2 The government and the intervenor appeal. We reverse.


Agency Proceedings

On November 1, 1984, Chlor/Alkali applied pursuant to 15 U.S.C. § 4012(a) (1986 Supp.) for a certificate of review for a proposed joint venture in the export sale of caustic soda and chlorine. Chlorine and caustic soda are produced simultaneously by the electrolysis of salt water. The process yields approximately 1.1 tons of caustic soda for every ton of chlorine. Although they are co-produced, chlorine and caustic soda are used for different purposes and are subject to different demand cycles. Production of both products is geared to chlorine demand because the toxic and corrosive nature of chlorine makes it difficult to store and to transport. The application for the joint venture sought a certificate of review which would permit use of an exclusive sales agent for sale by its members of quantities of both products to be sold exclusively in foreign markets. The joint venture proposed to determine quantities to be sold, to allocate markets, to discuss and to exchange information on export-related topics among the members, to refuse to quote prices to or sell to foreign competitors, and to restrict withdrawal from or entry to the venture. It also proposed to make purchases from nonmembers. As required by 15 U.S.C. § 4012(b)(1) (1986 Supp.), the application was submitted to the Federal Register for publication on November 9, 1984 and published on November 15, 1984. 49 Fed. Reg. 45203 (1984). The notice specified that comments would be received within 20 days after publication.

Upon the filing of the application the Secretary was required under 15 U.S.C. § 4013(b) (1986 Supp.) to act upon it within ninety days. Since title III also provides for expedited review if an applicant indicates a need for prompt disposition, Chlor/Alkali sought expedited review. 15 U.S.C. § 4013(c) (1986 Supp.). But it voluntarily withdrew that request when the Department of Justice indicated that its review could not be completed in the 30 days specified in section 4013(c). Thus agency action on the application was mandated no later than 90 days from November 1, 1984, or January 30, 1985. The participation of the Department of Justice was required because a certificate of review is issued "if the Secretary [of Commerce], with the concurrence of the Attorney General, determines that . . . standards [for its issuance] are met . . . " 15 U.S.C. § 4013(b) (1986 Supp.). Title III requires the Secretary to submit to the Attorney General a copy of the application, applicant information submitted in connection with it, and any other information the Secretary deems relevant. 15 U.S.C. § 4012(b)(2) (1986 Supp.).

The plaintiffs filed no comments with the agency. The Department of Commerce reviewed the materials submitted by Chlor/Alkali, interviewed other members of the industry, and made an economic analysis of the probable domestic effects of Chlor/Alkali's proposed conduct. It also reviewed judgments in antitrust cases extant against members of the caustic soda and chlorine industry. The Department's investigation was conducted because Title III mandates the issuance of a certificate

to any applicant that establishes that its export trade, export trade activities, and methods of operation will --

(1) result in neither a lessening of competition or restrain of trade within the United States nor a substantial restrain of the export trade of any competition of the applicant,

(2) not unreasonably enhance, stabilize, or depress prices within the United States of goods, wares, merchandise, or services of the class exported by the applicant,

(3) not constitute unfair methods of competition against competitors engaged in the export of goods, wares, merchandise, or services of the class exported by the applicant, and

(4) not include any act that may reasonably be expected to result in the sale for consumption or resale within the United States of the goods, wares, merchandise, or services exported by the applicant.

15 U.S.C. § 4013(a) (1986 Supp.).

On January 25, 1985, with the concurrence of the Attorney General, the Secretary issued a certificate of review, authorizing Chlor/Alkali to engage in the export trade of caustic soda and chlorine on specified conditions. This was final agency action.


District Court Proceedings

On February 22, 1985 the plaintiff sued in the district court, alleging that the Secretary and the Attorney General acted erroneously, improperly, and contrary to law in issuing the certificate of review. Specifically it was alleged that the export trade, export trade activities, and methods of operation of Chlor/Alkali would: (1) result in a substantial lessening of competition or restraint of trade within the United States, or a substantial restraint of the export trade of its competitors; (2) unreasonably enhance, stabilize or depress prices of caustic soda or chlorine within the United States; and (3) constitute unfair methods of competition against competitors engaged in the export trade of those chemicals. The complaint set forth a history of antitrust law violations in the caustic soda-chlorine industry and charged an ongoing conspiracy in that industry in violation of Sections 1 and 2 of the Sherman Act. 15 U.S.C. §§ 1,2 (1982). It sought a declaration that the defendants have engaged in such violations of the Sherman Act and an order setting aside the issuance of the certificate of review.

The plaintiffs undertook discovery going beyond the contents of the administrative record. Pursuant to Fed. R. Civ. P. 26(c)(1), the government moved that discovery not be had beyond the administrative record of the issuance of the certificate of review. it also sought a stay of discovery pending consideration of its summary judgment motion. It was the government's position that review under 15 U.S.C. § 4015 (1986 Supp.) was confined to the record considered by the Secretary and the Attorney General. The motion to limit discovery or stay it until consideration of the motion for summary judgment was denied on April 24, 1985. Extensive discovery ensued.

On May 6, 1985 the government moved pursuant to Fed. R. Civ. P. 12(b)(1) to dismiss the action against the Attorney General, alleging that 15 U.S.C. § 4015 (1986 Supp.) does not authorize judicial review of his concurrence in the Secretary's determination. The government moved simultaneously for summary judgment, relying on the administrative record which, it urged, amply supported the Secretary's action. These motions were not argued until October 18, 1985. They were denied by an order dated January 3, 1986. In ruling on the motion for summary judgment the trial court considered evidence outside the administrative record. Although the plaintiffs had not moved for summary judgment, the trial court ordered:

Chlor/Alkali's certificate of review is vacated and the matter is remanded to the Secretary of Commerce and the Attorney General. On remand, the agencies should consider the questions, set forth below, which raise genuine issues of material fact concerning whether the grant of a certificate of review to Chlor/Alkali was arbitrary, capricious, and an abuse of discretion.

624 F. Supp. at 1582-83. The order then listed 5 questions, all of which appear to be predicated upon materials obtained during discovery.


Appellate Jurisdiction

The plaintiffs urge that we should dismiss the appeals of the government and the intervenor because it is not a final judgment. That contention requires an exploration of the application of 28 U.S.C. § 1291 (1982) to a district court order in a proceeding under a statute authorizing judicial review of administrative agency action. In that context interpretations of section 1291 announced in more garden variety civil litigation suits are not controlling. Moreover judicial review of agency action appears in different guises. The governing statute may authorize judicial review of agency action that is essentially adjudicatory. E.g., 42 U.S.C. § 405(g) (1982). It may authorize review of legislative rule making which is neither adjudicatory nor adversarial. E.g., 15 U.S.C. § 2618 (1982). It may authorize review of the non-adversarial grant of a license. E.g., 47 U.S.C. § 402 (1982). Each of these different kinds of agency actions may present the issue of finality differently. Any one of them may present it differently by virture of the type of relief sought and the type of relief ordered. Thus finality holdings in one such context may shed very little light on another.

The plaintiffs rely heavily on Bachowski v. Usery, 545 F.2d 363 (3d Cir. 1976). In that case an unsuccessful candidate for election to office in a labor organization filed a complaint with the Secretary of Labor alleging that there had been violations of Title IV of the Labor-Management Reporting and Disclosure Act which affected the outcome of the election. He sought to have the Secretary of Labor, who alone under that statute could do so, institute a suit to set aside the election. When the Secretary declined to sue the candidate brought a suit in the district court for an order compelling him to do so. The district court dismissed the complaint. This court reversed.*fn3 The Supreme Court in turn reversed the judgment of this court, holding that while the Secretary's action in declining to sue was judicially reviewable, such review should ordinarily "be confined to examination of the 'reasons' statement [prepared by the Secretary], and the determination whether this statement, without more, evinces that the Secretary's decision is so irrational as to constitute the decision arbitrary or capricious."*fn4 The Supreme Court directed this court to enter an order remanding the case to the district court. On remand the district court first ordered the Secretary to submit a supplemental statement of reasons. After reviewing it, the district court remanded for a recount of the ballots by the Secretary. The remand order clearly contemplated further proceedings, for the district court neither granted nor denied the request for an order directing the Secretary to file suit. We held this order to be interlocutory for purposes of section 1291.

Backowski is different from this case in several significant respects. First, Chlor/Alkali, prior to this suit, had in hand a certificate of review vesting it with a significant statutory right to antitrust immunity, whereas Mr. Bachowski had no vested interest in anything. His suit was to obtain what he did not then possess -- an opportunity, after the Secretary's lawsuit, to participate in a new election. Second, the action of the district court deprived Chlor/Alkali of its vested statutory right by vacating the certificate of review, while the district court action in Backowski neither took away nor granted anything. It only postponed final resolution. Third, there are significant differences between the statutory scheme in Bachowski and the Export Trading Company Act such that the role of the district court in each case is entirely different. All these differences suggest that the Bachowski holding, where the order was not as a practical matter final, cannot be regarded as precedential in the present context.

Even less closely on point is the two-sentence disposition in Marshall v. Celebrezze, 351 F.2d 467 (3d Cir. 1965), which dismissed an appeal from an order remanding the case to the HEW Secretary for the taking of additional evidence. That order plainly was no more than an interlocutory step in an adjudicative proceeding -- a dispute over eligibility for benefits. It was analogous ...

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