Cascade Natural Gas Corporation v. El Paso Natural Gas Company

PETITIONER: Cascade Natural Gas Corporation
RESPONDENT: El Paso National Gas Co., United States, Pacific Northwest Pipeline Corp.
LOCATION: El Paso Natural Gas Co. Headquarters

DOCKET NO.: 4
DECIDED BY: Warren Court (1965-1967)
LOWER COURT:

CITATION: 386 US 129 (1967)
ARGUED: Jan 12, 1967
DECIDED: Feb 27, 1967
GRANTED: Jan 17, 1966

ADVOCATES:
Daniel M. Friedman - for the United States
Gregory A. Harrison - for the appellee El Paso Natural Gas Co.
Richard B. Hooper - for the appellant in 4
Richard W. Sabin - for the state of Oregon, as amicus curiae
Rollin E. Woodbury - for the appellant in 24
William M. Bennett - for the appellant in 5

Facts of the case

In an antitrust suit, the U.S. Supreme Court directed the district court to order El Paso National Gas Co. to divest itself of all Pacific Northwest Pipeline Corp. stock. Several competing gas companies attempted to intervene under the Federal Rules of Civil Procedure, but the district court denied the motions. The district court approved El Paso’s divestiture plan, under which El Paso would create a new company to receive all of the Pacific Northwest assets. The gas companies again attempted to intervene, arguing that the divestiture plan would not create a valid competitor. The U.S. Supreme Court heard this case on direct appeal.

Question

Did the district court err in denying California and the gas companies the right to intervene?

Media for Cascade Natural Gas Corporation v. El Paso Natural Gas Company

Audio Transcription for Oral Argument - January 12, 1967 in Cascade Natural Gas Corporation v. El Paso Natural Gas Company

Earl Warren:

Number 4, Cascade Natural Gas Corporation versus El Paso Natural Gas Company, et al., Number 5, People of the State of California, appellant versus El Paso Natural Gas Company, et al., and Number 24, Southern Pacific -- Southern California Edison Company, appellant versus El Paso Natural Gas Company.

Commissioner Bennett.

William M. Bennett:

Yes.

Mr. Chief Justice and members of the Court.

This case has a long history to it and that it's necessary to go into it to understand why we are here today.

It was in November 8, 1956 that there was an agreement between El Paso and Pacific to exchange stock and it was on May 1, 1957 to that exchange agreement was completed.

It took a mere seven months to do that.

And on July 22, 1957, the United States Government filed a complaint charging that that stock acquisition violated Section 7 of the Clayton Act.

Now despite warnings from the Department of Justice in the State of California that this merger proceeding should be halted.

Nonetheless, the EL Paso Company and Pacific Northwest went to the Federal Power Commission and asked that this merger be approved and it was approved.

Now, that was on December 31, 1959.

There was an appeal from that in a California versus the Federal Power Commission.

This Court set aside the approval by the Federal Power Commission saying that the trial in Utah should have preceded first.

Now the trial in Utah went forward, Judge Ritter found there was no violation of Section 7.

It came to this Court and this Court found that there was a violation of Section 7.

Now, we are here under the Doctrine of the General Motors case that this Court having given a mandate to Judge Ritter to the best without delay has not left the mandate of this Court and we are here as a proper party in a proper way urging that the divestiture be set aside at once.

Now, that the divestiture plan requires three years before El Paso will writ itself of Pacific Northwest and this is after they go to Federal Power Commission and seek a certificate of approval from that agency.

And this is hardly a divestiture without delay.

Furthermore, El Paso is not making a complete divestiture.

It is keeping certain properties of its own favorable to itself and is giving Pacific Northwest properties less favorable to that company.

For example, it is keeping the West Coast Transmission stock which is a valuable asset which should be given a Pacific Northwest but El Paso seeks to retain it.

California sort to intervene or deny this for other appellants here and we are here as we say under the theory of the General Motors case that this Court has the right to review the judgment below.

Now, when you said that this should be done without delay, we do not concede that a certificate proceeding like the Power Commission and other three years to rid itself of Pacific Northwest is in keeping with the concept without a delay?

Potter Stewart:

Mr. Bennett, what we have is a consent type --

William M. Bennett:

Pardon, Your Honor?

Potter Stewart:

Is the decree below entered by consent?

William M. Bennett:

There was a stipulation between the United States of America and El Paso that a decree for the divestiture would be filed, the party will have 30 days to object and it would be signed and that is what was done.

But this was after the Supreme Court of the United States in USA versus El Paso found that Section 7 had been violated.

This was not a consent decree.

This was a decree for divestiture after the Government had won the case and it was agreed to by the Government.