filed: March 21, 1990; As Amended March 21, 1990.
On Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil Action No. 87-7541.
Higginbotham, Chief Judge,*fn* Scirica, Circuit Judge, and Politan, District Judge.*fn**
A. LEON HIGGINBOTHAM, JR., Chief Judge.
This is an appeal by plaintiff, International Raw Materials, Ltd. ("IRM"), from a summary dismissal of a suit alleging that the defendants, who include the major producers of soda ash in the United States, conspired to fix the rates of domestic terminalling services for soda ash in violation of § 1 of the Sherman Act, 15 U.S.C. §§ 1-7 (1988). The district court treated the defendants' motion to dismiss as a motion for summary judgment and granted it before the plaintiff was able to conduct effective discovery. The court found that the defendants were exempt from liability under the Sherman Act because of their certification as exporters under the Webb-Pomerene Act, 15 U.S.C. §§ 61-65 (1988). Because we find that there are genuine issues of material fact that should be explored and resolved, we will vacate the judgment and remand to the district court for further proceedings.
I. FACTS AND PROCEDURAL HISTORY
IRM is the operator of a terminal in Port Longview, Washington which is used to load "white bulk product," primarily soda ash, onto ocean-going vessels.*fn1 Defendants are the American Natural Soda Ash Corporation ("ANSAC") and its member organizations: Stauffer Chemical Company, TG Soda Ash, Inc., General Chemical (Soda Ash) Partners, Tenneco Minerals Company, FMC Wyoming Corporation and Kerr-McGee Chemical Corporation. Each of the member organizations is a United States corporation or partnership with its principal place of business in the United States. Several of them are owned wholly or partly by foreign companies. Stauffer Chemical Co. is wholly owned by Rhone Poulenc Chemie S.A., a French corporation and one of the largest producers of soda ash in the world. TG Soda Ash is owned by the French chemical conglomerate, Societe Nationale Elf Aquitaine. General Chemical Partners is forty-nine percent owned by Australian Consolidated Industries.
ANSAC was organized in 1983 as a United States export association and registered with the Federal Trade Commission under the Webb-Pomerene Act. The Webb-Pomerene Act was passed to allow United States companies exporting United States products to compete more effectively in the world market. H.R.Rep. No. 1056, 64th Cong., 2d Sess. 1-2 (1917); S.Rep. No. 1118, 64th Cong., 1st Sess. 1 (1916). It provides a limited exception to the Sherman Act prohibition on acts in restraint of trade when those acts are performed by certified United States organizations engaged solely in export trade and the acts are in the course of their export trade. ANSAC's Certificate of Incorporation and its membership agreement establish that it was organized to engage solely in export trade in soda ash. ANSAC maintains that loading its soda ash onto ships (i.e., terminalling) is an act in the course of its export trade.
Between 1982 and 1984, IRM entered into separate terminalling agreements with several of the major soda ash producers who now belong to ANSAC. The rates on these contracts ranged from $5.65 to $8.46 per metric ton, depending on volume. After ANSAC was formed, each of the defendants who then had a contract with IRM assigned it to ANSAC and advised IRM to negotiate solely with ANSAC for future terminalling contracts. A July 1985 agreement between IRM and ANSAC for terminalling services set the rate per metric ton at between $3.72 and $4.72. IRM argues that the reduction in rates was a result of ANSAC's price-fixing in violation of the Sherman Act, while ANSAC claims that its negotiations for terminalling prices fall within the exception provided by the Webb-Pomerene Act.
In 1987, the Port of Portland, Oregon entered into a lease with Hall-Buck Marine Inc. ("Hall Buck") for land on which Hall Buck was to build a terminal in the Port of Portland for the loading of white bulk product, not limited to soda ash. The lease provides that the premises leased shall be used only for "[construction] and operation of a facility for the export of soda ash and compatible mineral bulk products." Appendix ("App.") at 202. At the same time, ANSAC and Hall Buck entered into a five-year contract that included two five-year renewal options. As reported in the press, the agreement provided that ANSAC would guarantee a minimum annual shipment of 500,000 metric tons of soda ash through the Portland facility. IRM claims that this agreement allowed Hall Buck to finance construction of the terminal. IRM also alleges that the agreement between Hall Buck and the Port of Portland in effect put ANSAC into the terminalling business because through it ANSAC financed the building of the terminal to be used for products other than soda ash, and the agreement contemplated "the actual existence or formation of a joint venture between Hall Buck and ANSAC to operate the terminal." Appellant's Brief ("Applt's Br.") at 8 (citing App. at 122). It provides that "[the] parties recognize that, during the term of this Agreement, Hall-Buck and ANSAC may form a new joint venture to operate the facility." App. at 225.
IRM filed suit in district court in November 1987, alleging that the members of ANSAC, who account for virtually all of the soda ash production in the United States, were conspiring in a horizontal price-fixing scheme, in violation of the Sherman Act, to depress terminalling prices through their monopoly. IRM submitted interrogatories and document requests and the defendants responded by moving for dismissal under Fed.R.Civ.P. 12(b)(6), claiming, as a matter of law, that their certification under the Webb-Pomerene Act exempted them from liability.
The district court considered the motion to dismiss as a motion for summary judgment under Fed.R.Civ.P. 56 and initially denied it by an order dated February 10, 1988, holding that IRM was "entitled to obtain sufficient discovery to develop a material fact issue" for the purpose of responding to the motion. The court explained that "[to] limit [IRM'S] ability to conduct discovery as contemplated by the defendants, would deny [IRM] its rights under the Federal Rules of Civil Procedure." App. at 115.
IRM claims that, in spite of this ruling, it was never able to obtain the information it needed because defendants continued to object to all of its discovery as overbroad and unnecessary to the disposition of their motion to dismiss; specifically, IRM was unable to obtain a copy of ANSAC's lease with Hall Buck. In January, 1989, IRM filed a motion to compel discovery. It reports that the question of discovery was raised at an untranscribed conference on April 12, and that the court deferred the issue until oral argument on the defendants' motion. Applt's Br. at 4. The court thereafter ...