HAWAII v. STANDARD OIL CO. OF CALIFORNIA ET AL.
No. 70-49
Supreme Court of the United States
Argued October 21, 1971—Decided March 1, 1972
405 U.S. 251
Maxwell M. Blecher argued the cause for petitioner. With him on the briefs were Bertram Kanbara, Attorney General of Hawaii, Hiromu Suzawa, Acting Attorney General, George Pai, Deputy Attorney General, Joseph L. Alioto, and Peter J. Donnici.
Francis R. Kirkham argued the cause for respondents. With him on the brief were Richard J. MacLaury, Moses Lasky, Malcolm T. Dungan, and William Simon.
Briefs of amici curiae urging reversal were filed by Evelle J. Younger, Attorney General of California, and Anthony C. Joseph, Robert Murphy, Herbert Davis, Michael I. Spiegel, and Carole A. Kornblum, Deputy Attorneys General, for the State of California, and by the Attorneys General and other officials for their respective States and jurisdictions as follows: William T. Baxley, Attorney General of Alabama, Gary K. Nelson, Attorney General of Arizona, Ray Thornton, Attorney General of Arkansas, Duke W. Dunbar, Attorney General of Colorado, Robert K. Killian, Attorney General
MR. JUSTICE MARSHALL delivered the opinion of the Court.
The issue presented by this case is whether § 4 of the Clayton Act,
I. PROCEDURAL HISTORY
Hawaii filed its initial complaint on April 1, 1968, against three of the four respondents.1 On May 24, 1968, and again on August 19, 1968, Hawaii filed amended complaints. The third amended complaint, filed on September 6, 1968, raised for the first time the issue presented herein. That complaint named all four respondents as defendants and charged them with violating the Sherman Act,
The second count read, in relevant part:
18. The above-named plaintiff [Hawaii], [acts] in its capacity as parens patriae, and/or as trustee
for the use of its citizens who purchased refined petroleum products, from any defendant or coconspirator herein . . . . 19. The unlawful contracts, combination, conspiracy in restraint of trade, unlawful combination and conspiracy to monopolize, and monopolization have resulted in the plaintiff, . . . and in its citizens, paying more for refined petroleum products than would have been paid in a freely operating competitive market. Plaintiff has not yet ascertained the precise extent of said damage to itself and its citizens, however, when said amount has been ascertained, plaintiff will ask leave of Court to insert said sum herein.
Very similar language appeared in the class-action count. In all three counts, the State sought both injunctive and monetary relief.
After each of the respondents moved to dismiss the second and third counts of the complaint, the District Court held a hearing to determine the propriety of the State‘s suing on behalf of its citizens. With respect to count two, the court held that Hawaii has not even alleged an interest in its citizens’ claims, much less interest of its own aside from the State‘s proprietary rights, and granted the motions to dismiss.3 Viewing the class action as being overlapping, parallel and/or alternative to the parens patriae claim, the court dismissed the third count as well.4
Hawaii filed its fourth amended complaint on February 27, 1969. This is the complaint with which we are concerned. Count one contains a reiteration of Hawaii‘s claim that in its proprietary capacity the State paid an
The parens patriae claim is stated in the following manner:
19. The State of Hawaii, acting through its Attorney General, brings this action by virtue of its duty to protect the general welfare of the State and its citizens, acting herein as parens patriae, trustee, guardian and representative of its citizens, to recover damages for, and secure injunctive relief against, the violations of the antitrust laws hereinbefore alleged.
20. The unlawful contracts, combination and conspiracy in restraint of trade, unlawful combination and conspiracy to monopolize and monopolization, hereinbefore alleged, have injured and adversely affected the economy and prosperity of the State of Hawaii in, among others, the following ways:
(a) revenues of its citizens have been wrongfully extracted from the State of Hawaii;
(b) taxes affecting the citizens and commercial entities have been increased to affect such losses of revenues and income;
(c) opportunity in manufacturing, shipping and commerce have [sic] been restricted and curtailed;
(d) the full and complete utilization of the natural wealth of the State has been prevented;
(e) the high cost of manufacture in Hawaii has precluded goods made there from equal competitive access with those of other States to the national market;
(f) measures taken by the State to promote the general progress and welfare of its people have been frustrated;
(g) the Hawaii economy has been held in a state of arrested development. 21. Plaintiff has not yet ascertained the precise extent of said damage to itself and its citizens; however, when said amount has been ascertained, plaintiff will ask leave of Court to insert said sum herein.
The class-action count is similar to that in the third amended complaint. As in the previous complaint, Hawaii seeks both injunctive and monetary relief in each count.
Respondents moved to dismiss the second and third counts, and hearing was again had in the District Court. The class action was dismissed by the court on the ground that under the circumstances . . . , the class action based upon the injury to every individual purchaser of gasoline in the State, . . . in the context of the pleadings, would be unmanageable.5 In a rather extensive opinion, the court examined the law that has developed concerning suits by a State as parens patriae and denied the motions to dismiss the second count. 301 F. Supp. 982 (1969). Recognizing that the state of the law was unclear, the District Court certified its decision denying the motions to dismiss for an interlocutory appeal pursuant to
II. THE STATE AS PARENS PATRIAE
The concept of parens patriae is derived from the English constitutional system. As the system developed from its feudal beginnings, the King retained certain duties and powers, which were referred to as the royal prerogative. Malina & Blechman, Parens Patriae Suits for Treble Damages Under the Antitrust Laws, 65 Nw. U. L. Rev. 193, 197 (1970) (hereinafter Malina & Blechman); State Protection of its Economy and Environment: Parens Patriae Suits for Damages, 6 Col. J. L. & Soc. Prob. 411, 412 (1970) (hereinafter State Protection). These powers and duties were said to be exercised by the King in his capacity as father of the country.8 Traditionally, the term was used to refer to the King‘s power as guardian of persons under legal disabilities to act for themselves.9 For example, Blackstone refers to the sovereign or his representative as the general guardian of all infants, idiots, and lunatics, 10 and as the superintendent of all charitable uses in the kingdom.11 In the United States, the royal prerogative and the parens patriae function of the King passed to the States.
The nature of the parens patriae suit has been greatly expanded in the United States beyond that which existed in England. This expansion was first evidenced in Louisiana v. Texas, 176 U. S. 1 (1900), a case in which the State of Louisiana brought suit to enjoin officials of the State of Texas from so administering the Texas quarantine regulations as to prevent Louisiana mer-
This Court‘s acceptance of the notion of parens patriae suits in Louisiana v. Texas was followed in a series of cases: Missouri v. Illinois, 180 U. S. 208 (1901) (holding that Missouri was permitted to sue Illinois and a Chicago sanitation district on behalf of Missouri citizens to enjoin the discharge of sewage into the Mississippi River); Kansas v. Colorado, 206 U. S. 46 (1907) (holding that Kansas was permitted to sue as parens patriae to enjoin the diversion of water from an interstate stream); Georgia v. Tennessee Copper Co., 206 U. S. 230 (1907) (holding that Georgia was entitled to sue to enjoin fumes from a copper plant across the state border from injuring land in five Georgia counties); New York v. New Jersey, 256 U. S. 296 (1921) (holding that New York could sue to enjoin the discharge of sewage into the New York harbor); Pennsylvania v. West Virginia, 262 U. S. 553 (1923) (holding that Pennsylvania might sue to enjoin restraints on the commercial flow of natural gas); and North Dakota v. Minnesota, 263 U. S. 365 (1923) (holding that Minnesota could sue to enjoin changes in drainage which increase the flow of water in an interstate stream).
These cases establish the right of a State to sue as parens patriae to prevent or repair harm to its quasi-sovereign interests.12 They deal primarily with original
The only time this Court has ever faced the question of what relief, if any, the antitrust laws offer a State suing as parens patriae was in Georgia v. Pennsylvania R. Co., 324 U. S. 439 (1945), the case relied on most heavily by the parties herein. In that case, Georgia sought to invoke the original jurisdiction of this Court by filing an amended bill of complaint against 20 railroads, alleging, in essence, that the railroads had conspired to restrain trade and to fix prices in a manner that would favor shippers in other States (particularly Northern States) to the detriment of Georgia shippers.
Like this suit, Georgia arose under the federal antitrust laws. It is plain from the face of the complaint that [t]he prayer [was] for damages and for injunctive relief. 324 U. S., at 445. See id., at 446-447, 450-451.13 Georgia claimed that the conspiracy had
The Court upheld Georgia‘s claim as parens patriae with respect to injunctive relief, but had no occasion to consider whether the antitrust laws also authorized damages for an injury to the State‘s economy, since approval of the challenged rates by the Interstate Commerce Commission barred a damage recovery on the ground that such a remedy would have given Georgia shippers an unfair advantage over shippers from other States. See Keogh v. Chicago & Northwestern R. Co., 260 U. S. 156 (1922). Nowhere in Georgia did the Court address itself to the question whether § 4 of the Clayton Act authorizes damages for an injury to the general economy of a State. Thus, the question presented here is open.
III. HAWAII AND THE ANTITRUST LAWS
Hawaii grounds its claim for treble damages in § 4 of the Clayton Act,
Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney‘s fee.
This section is notably different from § 16 of the Clayton Act,
Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage
by a violation of the antitrust laws . . . when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings . . . .
Hawaii plainly qualifies as a person under both sections of the statute, whether it sues in its proprietary capacity or as parens patriae. Georgia v. Pennsylvania R. Co., 324 U. S., at 447. But the critical question is whether the injury asserted by Hawaii in its parens patriae count is an injury to its business or property.
The legislative history of the Sherman and Clayton Acts is not very instructive as to why Congress included the business or property requirement in § 4, but not in § 16. The most likely explanation lies in the essential differences between the two remedies.
While the United States Government, the governments of each State, and any individual threatened with injury by an antitrust violation may all sue for injunctive relief against violations of the antitrust laws, and while they may theoretically do so simultaneously against the same persons for the same violations, the fact is that one injunction is as effective as 100, and, concomitantly, that 100 injunctions are no more effective than one. This case illustrates the point well. The parties are in virtual agreement that whether or not Hawaii can sue for injunctive relief as parens patriae is of little consequence so long as it can seek the same relief in its proprietary capacity. While some theoretical differences may exist with respect to the parties capable of enforcing a parens patriae injunction as opposed to one secured by a State in its proprietary capacity, these differences are not crucial to the defendant in an antitrust case.
The position of a defendant faced with numerous claims for damages is much different. If the defendant
Every violation of the antitrust laws is a blow to the free-enterprise system envisaged by Congress. See Northern Pacific R. Co. v. United States, 356 U. S. 1, 4 (1958). This system depends on strong competition for its health and vigor, and strong competition depends, in turn, on compliance with antitrust legislation. In enacting these laws, Congress had many means at its disposal to penalize violators. It could have, for example, required violators to compensate federal, state, and local governments for the estimated damage to their respective economies caused by the violations. But, this remedy was not selected. Instead, Congress chose to permit all persons to sue to recover three times their actual damages every time they were injured in their business or property by an antitrust violation. By offering potential litigants the prospect of a recovery in three times the amount of their damages, Congress encouraged these persons to serve as private attorneys general. See, e. g., Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U. S. 100, 130-131 (1969); Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134, 147 (1968) (Fortas, J., concurring in result).
Thus, § 4 permits Hawaii to sue in its proprietary capacity for three times the damages it has suffered from respondents’ alleged antitrust violations.14 The section
A large and ultimately indeterminable part of the injury to the general economy, as it is measured by economists, is no more than a reflection of injuries to the business or property of consumers, for which they may recover themselves under § 4. Even the most lengthy and expensive trial could not, in the final analysis, cope with the problems of double recovery inherent in allowing damages for harm both to the economic interests of individuals and for the quasi-sovereign interests of the State. At the very least, if the latter type of injury is to be compensable under the antitrust laws, we should insist upon a clear expression of a congressional purpose to make it so, and no such expression is to be found in § 4 of the Clayton Act.
Like the lower courts that have considered the meaning of the words business or property, we conclude that they refer to commercial interests or enterprises. See, e. g., Roseland v. Phister Mfg. Co., 125 F. 2d 417 (CA7 1942); Hamman v. United States, 267 F. Supp. 420 (Mont. 1967), appeal dismissed, 399 F. 2d 673 (CA9 1968); Broadcasters, Inc. v. Morristown Broadcasting Corp., 185 F. Supp. 641 (NJ 1960). When the State seeks damages for injuries to its commercial interests, it may sue under § 4. But where, as here, the State seeks damages for other injuries, it is not properly within the Clayton Act.
Support for this reading of § 4 is found in the legislative history of
The United States is, of course, amply equipped with the criminal and civil process with which to enforce the antitrust laws. The proposed legislation, quite properly, treats the United States solely as a buyer of goods and permits the recovery of the actual damages suffered. S. Rep. No. 619, 84th Cong., 1st Sess., 3 (1955).
See also H. R. Rep. No. 422, 84th Cong., 1st Sess., 2-5 (1955). In light of the language used as well as the legislative history of
We note in passing the State‘s claim that the costs and other burdens of protracted litigation render private citizens impotent to bring treble-damage actions, and thus that denying Hawaii the right to sue for injury to her quasi-sovereign interests will allow antitrust violations to go virtually unremedied. Private citizens are not as powerless, however, as the State suggests.
Parens patriae actions may, in theory, be related to class actions, but the latter are definitely preferable in the antitrust area. Rule 23 provides specific rules for delineating the appropriate plaintiff-class, establishes who is bound by the action, and effectively prevents duplicative recoveries.
The judgment of the Court of Appeals is affirmed for the reasons stated above.
So ordered.
MR. JUSTICE POWELL and MR. JUSTICE REHNQUIST took no part in the consideration or decision of this case.
MR. JUSTICE DOUGLAS, dissenting.
Today‘s decision reflects a miserly approach to the fashioning of federal remedies rectifying injuries to the collective interests of the citizens of a State through
Hawaii, in her fourth amended complaint, sues for damages and injunctive relief as parens patriae by virtue of her duty to protect the general welfare of the State and its citizens. She alleges that the alleged conspiracy among the respondent oil companies has injured and adversely affected the economy and prosperity of Hawaii as follows:
(a) revenues of its citizens have been wrongfully extracted from the State of Hawaii;
(b) taxes affecting the citizens and commercial entities have been increased to affect such losses of revenues and income;
(c) opportunity in manufacturing, shipping and commerce have been restricted and curtailed;
(d) the full and complete utilization of the natural wealth of the State has been prevented;
(e) the high cost of manufacture in Hawaii has precluded goods made there from equal competitive access with those of other States to the national market;
(f) measures taken by the State to promote the general progress and welfare of its people have been frustrated;
(g) the Hawaii economy has been held in a state of arrested development.
I see no way of distinguishing the instant case from Georgia v. Pennsylvania R. Co., 324 U. S. 439. The Georgia case held that a State may sue as parens patriae under the antitrust laws for injury to the economy of the State resulting from a conspiracy to restrain trade and commerce through the fixing of railroad rates. Id., at 446. As we said:
Georgia as a representative of the public is complaining of a wrong which, if proven, limits the opportunities of her people, shackles her industries, retards her development, and relegates her to an inferior economic position among her sister States. These are matters of grave public concern in which Georgia has an interest apart from that of particular individuals who may be affected. Id., at 451.
So-called growth, progress, and development are more than symbols of power in modern society; they represent the goal which planners—private and public alike—establish and seek to attain. And the State plays an important, at times crucial, role in achieving that goal.2 If Hawaii can sustain her allegations by proof,
The Court of Appeals was skeptical of the existence of an independent harm to the general economy. 431 F. 2d 1282, 1285. But as Alabama states in her brief amicus:
Economists have developed models for measuring the effects upon local economies from infusions or extractions of given sums of money from those economies. In short, a state‘s economy is susceptible of articulation and measurement.
Hawaii is the magnet of tourism and of industry as well. She measures the health of her economy by her economic growth. No one citizen can stand in her shoes in those respects, for she represents the collective. Those interests should be held to be the State‘s business or property interests, within the meaning of the Clayton Act, and not merely the plants, factories, or hotels which she may own as a proprietor. We held as much in the Georgia case. It is indisputable that if Hawaii does prove damages, Georgia authorizes recovery. For as MR. JUSTICE BRENNAN points out, Georgia was denied damages only because of a technicality irrelevant to the present case.
Injury to the collective will commonly include injury to members of the collective. In that event damages recovered by Hawaii could not later be recovered by individual entrepreneurs. It might, of course, be shown that the individual‘s loss for the period in question was distinct from any impact on the collective. Thus, if
I would adhere to the Georgia case and allow Hawaii a chance to prove her charges and to establish the actuality of damages or the need for equitable relief.3
I would reverse the judgment and remand the case for trial.4
MR. JUSTICE BRENNAN, with whom MR. JUSTICE DOUGLAS joins, dissenting.
The State of Hawaii seeks treble damages and injunctive relief for an alleged conspiracy among respondents to monopolize and fix prices on the sale of petroleum
Georgia v. Pennsylvania R. Co., 324 U. S. 439 (1945), in my view, requires reversal. In that case the State of Georgia sought to invoke the original jurisdiction of this Court to remedy a conspiracy by several railroads to fix rates on the transportation of goods to and from the State. As noted by the Court, ante, at 259 n. 13, Georgia sought damages in each of the four counts of its complaint—in its sovereign capacity, as a quasi-sovereign, in its proprietary capacity, and as representative of its citizens. Treating the complaint as a prayer for damages and for injunctive relief, 324 U. S., at 445, the Court held that Georgia, both as parens patriae and proprietor, was an appropriate party to bring these claims:
The enforcement of the criminal sanctions of [the antitrust] acts has been entrusted exclusively to the federal government. See Georgia v. Evans, [316 U. S. 159,] 162. But when it came to other sanctions Congress followed a different course and authorized civil suits not only by the United States but by other persons as well. And we find no indication that, when Congress fashioned those civil remedies, it restricted the States to suits to protect their proprietary interests. Suits by a State, parens patriae, have long been recognized. There is no apparent reason why those suits should be excluded from the purview of the anti-trust acts. Id., at 447.
Georgia was in fact denied damages, but only because such recovery might operate as an illegal rebate on rates already approved by the Interstate Commerce Commission. See Keogh v. Chicago & Northwestern R. Co., 260 U. S. 156 (1922). Implicit in the decision, however, was the holding that Georgia, as parens patriae, could have recovered damages under the antitrust laws for a conspiracy involving other than agency-approved transportation charges. That holding applies with equal force here. Hawaii is complaining, not of an affront to its abstract sovereignty, but of the economic loss occasioned by respondents’ conspiracy. As in Georgia, this can only be characterized as a wrong to the State which, if proven, limits the opportunities of her people, shackles her industries, retards her development, and relegates her to an inferior economic position among her sister States. 324 U. S., at 451. If that injury would have been a sufficient basis for a damage claim by
Even if Georgia were not dispositive, I would still find in Hawaii‘s parens patriae count a claim of injury to its business or property sufficient to state a claim under § 4. There runs through the Court‘s opinion an assumption that Hawaii‘s proprietary claims, though concededly sufficient to state a cause of action, are wholly distinct in concept from those raised by the State as parens patriae. While I agree that the two counts represent injuries to the State in separate capacities, the injuries themselves are not so unrelated as to justify a different treatment under the Clayton Act. In Chattanooga Foundry & Pipe Works v. City of Atlanta, 203 U. S. 390 (1906), the city brought a treble-damages action against two pipe companies whose trust and combination had been invalidated in Addyston Pipe & Steel Co. v. United States, 175 U. S. 211 (1899). Claiming injury in its business or property, 203 U. S., at 395, the city sought damages in its capacity as a purchaser of water pipes for the municipal water system. In upholding the right of the city to bring that action, the Court stated:
It was injured in its property, at least, if not in its business of furnishing water, by being led to pay more than the worth of the pipe. A person whose property is diminished by a payment of money wrongfully induced is injured in his property. Id., at 396.
See also Georgia v. Evans, 316 U. S. 159 (1942).
The determinant, then, is whether property is diminished by a payment of money wrongfully induced. But what was the nature of the injury to property for which recovery was permitted in Chattanooga? Clearly it was nothing more than the added expense incurred by the city‘s treasury as the result of the antitrust violation.
This is the same sort of interest sought to be protected here. Hawaii‘s economy, to which tourism and the tourist trade are important, would be particularly vulnerable to injury from a price conspiracy involving petroleum products. In seeking to preserve the economic opportunities of its people, and the tax revenues generated thereby, Hawaii is asserting an interest not significantly different in concept from that involved in Chattanooga. Whether the injury sought to be remedied consists of additional payments from the public purse, as in that case, or the failure to generate additional wealth, as here, the result in either instance is the same—the government and its population, as entities, have suffered harm to their economic well-being. If that harm is characterized business or property in one case, then we stretch no traditional property concepts in applying the same label in the other.*
[I]t was believed that the most effective method, in addition to the imposition of penalties by the United States, was to provide for private treble-damage suits. It was originally hoped that this would encourage private litigants to bear a considerable amount of the burden and expense of enforcement and thus save the Government time and money. Id., at 2.
Thus private litigants, encouraged by the hope of triple recovery, were seen as a major instrument of antitrust enforcement, supplemented by criminal prosecutions and civil forfeiture actions brought by the Federal Government. These remedies did not, however, adequately protect the Government as the volume of its procurement grew and collusion among its suppliers became increasingly evident. This was the mischief Congress enacted § 15a to curb:
The American taxpayer is entitled to full value for his tax dollar. He should be protected against its going into the pockets of wrongdoers in the form of excessive prices and profits gained through violation of the antitrust laws. If he were spending the money himself, he could sue for triple damages. Surely, he is entitled to protection from actual loss where the Government spends it for him. By permitting the United States Government to recover the provable damages resulting from
unlawful practices engaged in by those with whom it does business, [§ 15a] would afford those safeguards necessary to the Public Treasury and at the same time severely deter those who would conspire in their dealings with Federal departments. H. R. Rep. No. 422, 84th Cong., 1st Sess., 4-5 (1955).
At the same time, however, Congress felt that unlike the situation with respect to private persons, there is no need to furnish the Government any special incentive to enforce the antitrust laws, a heavy responsibility with which it is already charged, and therefore Congress granted to the Government the right to recover only actual, as distinguished from treble, damages. Id., at 4. In addition, Congress felt that the United States was amply equipped with the criminal and civil process with which to enforce the antitrust laws. The proposed legislation, quite properly, treats the United States solely as a buyer of goods and permits the recovery of the actual damages suffered. S. Rep. No. 619, supra, at 3.
Thus § 15a served a narrower purpose than the treble-damages provisions of the Sherman and Clayton Acts. The United States was amply equipped with criminal and civil process for general enforcement, and needed a damage remedy solely to protect itself as a buyer of goods. On the other hand private litigants, including the States, lacked the Government‘s criminal and civil process. Yet they were viewed as primary enforcers of antitrust policy and were armed with the weapon of triple recovery as a means of stimulating their efforts. It is plain from the history of § 15a that Congress did not intend the States to be denied the treble-damages remedy Hawaii pursues here.
Finally, this result does not necessarily lead to double recovery. Since Hawaii is by definition asserting claims independent of and behind the titles of its citizens,
In sum, I think that since no one questions that Hawaii can maintain a treble-damages action in its proprietary capacity, for analogous reasons, Hawaii may also maintain the action pleaded in count two as parens patriae.