Reeves Inc. v. Stake – Oral Argument – April 16, 1980 (Part 2)

Media for Reeves Inc. v. Stake

Audio Transcription for Oral Argument – April 16, 1980 (Part 1) in Reeves Inc. v. Stake

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Warren E. Burger:

Governor, you may continue.

William J. Janklow:

Mr. Chief Justice, may it please the Court.

I — I would like to draw a correction, if I may, to some of the facts that I stated this morning, I think, in response to Mr. Justice Stevens’ questions.

I draw your attention to three pages in the appendix, pages 31, 25 and 13.

It deals with what the policy is of the Cement Plant Commission, and I’ll read it.

In 19 —

Byron R. White:

Where — where is that?

William J. Janklow:

On pages 31, 20 — 24 and 13 of the appendix.

It’s been stated three times historically.

The first time was in 1920 where they said, and I quote, “That there would be a ready market for the entire output of the State within the State.

In case there is a surplus, a ready market is available in adjoining States.”

Then in 1974, the Commission in its minutes, and I quote from the minutes, “The Commission expressed its desire that South Dakota customers and South Dakota contracts, not residents, but South Dakota customers and South Dakota contracts be given preference in compliance with the constitutional statutes of the States,” and finally in 1978 —

Potter Stewart:

Where — where were you reading from (Voice Overlap) —

William J. Janklow:

That was page 24 on the appendix, at the bottom.

Potter Stewart:

I see — I see it.

Thank you.

William J. Janklow:

And finally, on page 13 under the Commission meeting minutes of 1978 of June 1st, and I quote, “The Commission discussed the plant’s major commitments requiring approximately 218,000 tons of cement for 1978 paving projects only.”

After discussing all these matters at considerable length, the Commission reaffirmed its policy of supplying all South Dakota customers first and to honor all contract commitments with the remaining volume allocated on a first come, first served basis.

So to be correct, we should state that what we are not giving preference to residents but to customers in South Dakota and contractual commitments across the board.

Warren E. Burger:

But what a Minnesota contractor who came out there and was the low bidder on a road contract and set up an office and ordered some cement, will he be a —

William J. Janklow:

This would indicate yes.

Warren E. Burger:

— South Dakota customer?

William J. Janklow:

This would indicate yes.

This would indicate that he’s a customer.

It doesn’t say a preferences to South Dakota residents is —

Potter Stewart:

I suppose he doesn’t make a bid until he knows how — what is cement (Voice Overlap) —

William J. Janklow:

That’s the policy within the —

Warren E. Burger:

It’s a practical —

William J. Janklow:

— but I can’t say it always happens that way.

The — the plaintiff or the appellant, I should say, in this —

William J. Brennan, Jr.:

Well, excuse me, Governor.

William J. Janklow:

Excuse me.

William J. Brennan, Jr.:

But South Dakota customer, I gather he’d have to be the one who did what the Chief Justice suggest, namely, establish a place of business in — in South Dakota?

William J. Janklow:

I don’t know that’s necessarily the case.

William J. Brennan, Jr.:

Well, could Reeves do that?

William J. Janklow:

For a job in South Dakota?

I would assume that he —

William J. Brennan, Jr.:

Well, would Reeves be a South Dakota customer if it came to — to the Commission?

William J. Janklow:

If this was discussed in — at the lower court and it’s in the transcript of the — unfortunate, it wasn’t a trial in this case, it all was done on a TRO.

And there were arguments of counsel with no testimony, it all came on affidavits.

But in some of the discussion, the testimony from the trial court, from the hearing on the TRO, you can see where the discussion was made where the State’s counsel said that a South Dakotan could even buy the cement and — and we couldn’t prohibit them from showing it to Mr. Reeves.

Warren E. Burger:

Let me come back to what we talked about a little bit this morning or someone did.

With cement running out of your brief case now literally, is there a case here since it’s only a TRO, no damages?

William J. Janklow:

I would assume — I would like to say no but I would assume there is only because we still have the policy.

It just so happens we’re not short right now, so it may be moot for today but if we run short again, I would have to tell you that we would again —

Warren E. Burger:

Yes.

But this is the —

William J. Janklow:

— have the policy.

Warren E. Burger:

— kind of thing that we would evade review.

It would be — it would be of some long-lasting period.

William J. Janklow:

That’s correct.

It’s never happened before.

In 70 years, it’s never happened before.

Byron R. White:

Well, Governor, suppose — I’m not quite sure what your answer is.

Suppose a South Dakota contractor bids on a job in Wyoming and he’s a — he — certainly, he’s a — he’s a citizen of South Dakota, he’s a resident of South Dakota, he does business in Wyoming, will you sell him — will you sell him cement to take out of the State for the Wyoming job?

William J. Janklow:

I would have to say yes, we would.

He would be a South Dakota customer.

And finally, I’d like to say that this Court would — this goes —

Byron R. White:

So that a South Dakota contractor can — can compete in Wyoming with — with South Dakota cement but a Wyoming contractor cannot.

William J. Janklow:

Well — well, that’s no different than — I would say yes, we could sell it —

Byron R. White:

So yes, yes.

William J. Janklow:

— (Voice Overlap) private business.

Byron R. White:

Well, I just thought it’s a say yes or no, it’s yes or no.

William H. Rehnquist:

Governor, let — let me ask you this question because I — I would have read the Appendix 24 differently than your answer to Mr. Justice White’s question suggest, where it says, “The Commission expressed its desire that South Dakota customers and South Dakota contracts be given preference.”

Now, supposing that Peter Kiewit which when I was I practicing, was located in Omaha, came up and bid on a South — on a facility to be erected in South Dakota, would that be a South Dakota contract?

William J. Janklow:

Yes, I believe it would be.

That would be a South Dakota contract.

There’s no other way that define the term contract as it’s used in this context.

Warren E. Burger:

Or else it’s a customer.

William J. Janklow:

It doesn’t say contracts entered into only in South Dakota.

Harry A. Blackmun:

So that Mr. Justice White’s question before the recess about the Denver contractor doing a job in South Dakota is answered differently now than — than before.

William J. Janklow:

That’s correct.

That’s why I brought this up.

I’m sure — I thought Mr. Stevens would — is Mr. Justice White’s —

Byron R. White:

But do you still agree that the — you still agree that — that apparently, that Peter Kiewit from Omaha, if — if he was doing a job in the Northern Nebraska and wanted to buy cement from South Dakota, couldn’t buy cement from South Dakota, whereas — whereas a South Dakota contractor bidding on that same job could?

William J. Janklow:

That’s correct.

And we could do the same thing to his kids who wanted to go to school in our State.

The —

Byron R. White:

Well —

William J. Janklow:

— final thing for about five seconds —

Byron R. White:

Well, another case.

William J. Janklow:

— is that this case was sent to back to the Eighth Circuit by this Court for the — for a reconsideration in light of the Court’s decision in Hughes v. Oklahoma.

And even the appellants in this case agree that that case isn’t — doesn’t apply and they try and evade it.

And that we all agree that Hughes versus — the Alexandria case, the Hughes case from Maryland is the one that — really is the one that’s most controlling and is more dispositive of the case.

William H. Rehnquist:

Let me ask you one other question, Governor.

Are there — are there quarry lands available in private hands in South Dakota, does the record show?

Or does the State condemn and purchase up all of the quarry lands from which cement material is obtained?

William J. Janklow:

Our public records would show that virtually, the entire State of South Dakota can be used for making cement and the State of Wyoming.

Its limestone, coal that you get from the Powder River Basin, they have part of the ingredients and — and aggregate — the materials that are readily available virtually all of America, west of the Mississippi River.

There is nothing unique about these particular spots that we happen to be have our plant located.

William J. Janklow:

Our original cement plant was in Yankton, South Dakota, 300 miles east — 400 miles east and was moved to Rapid City.

You could put them up any place.

Minnesota is considering doing it right now over in Pike Stone area.

Thank you.

Warren E. Burger:

Mr. Kirven, you may have heard the question I just put to the Governor.

This being only a TRO, and in light of the subsequent discussion, do you think we still have a case here?

Dennis M. Kirven:

Yes, Your Honor, I do.

The question — the — the policy being enforced at any time is — and that South Dakota declares there is a shortage, it has an immediate effect on my client.

In that effect, any period of time which it takes to have that matter resolved is going to cause my client money.

And —

Warren E. Burger:

Well, that’s — that — that alone is not enough reason to keep the case alive.

Dennis M. Kirven:

Well —

Warren E. Burger:

It always costs money, wouldn’t it?

Dennis M. Kirven:

There’s no assurance that the policy won’t be enforced against Reeves in the policy again as soon as a shortage occurs.

In fact, in May of 1979, the policy was enforced against Reeves.

And Reeves received an allocation formula based on expected needs of South Dakota being met first and then Reeves received an allocation in May of 1979, Your Honor, after 1978 when the shortage occurred.

So it’s obvious that they intend, in all probability will, have or enforce the policy the next time —

William J. Brennan, Jr.:

But it — but is it the fact that — I understood you’ve got some 72,000 units of — yesterday, was it?

Are you getting all you need now?

Is Reeves getting —

Dennis M. Kirven:

At the present time, yes, Your Honor.

But if —

William J. Brennan, Jr.:

And the — and the prospect is that a — you may be able for some while to get all you need?

Dennis M. Kirven:

I would assume that during the summer of this year with the economic condition in the housing industry and with the demand being less that there will be no problem this year.

But the problem arises is — is in Wyoming with the short construction season, the critical point for my client.

In that period of time, if that policy is enforced again, the — even the time that was lost in this suit which was only 19 or 21 days or actually it’s about 30 days, that my client, it’s — the harm is tremendous.

It’s —

William J. Brennan, Jr.:

Well, what is the construction season?

Dennis M. Kirven:

Well, construction season for the ready mix concrete begins about June and goes through October for my client.

William J. Brennan, Jr.:

I see.

Dennis M. Kirven:

Yes.

Byron R. White:

Do you — does your client compete with any South Dakota contractors —

Dennis M. Kirven:

It —

Byron R. White:

— in Wyoming?

Dennis M. Kirven:

It competes with South Dakota ready mix dealers in Gillette, Wyoming, at their plant.

And that is really the essence of our claim as —

Byron R. White:

And —

Dennis M. Kirven:

— without South Dakota cement, we cannot compete in the Gillette market with South Dakota ready mix dealers.

Byron R. White:

And — and they can buy the cement and you can’t.

Dennis M. Kirven:

That’s correct.

Byron R. White:

So they — they are — they are bringing the cement across state line.

Dennis M. Kirven:

That’s correct.

Byron R. White:

And you can’t.

Dennis M. Kirven:

Well, we cannot go into the state —

Byron R. White:

Well, yes, but you — they won’t let you buy it.

Dennis M. Kirven:

That’s right.

And it’s —

Byron R. White:

And — and because — it’s because you’re neither a South Dakota contractor or out — nor as for a South Dakota job.

Dennis M. Kirven:

That’s correct.

Warren E. Burger:

Or a customer.

Customer is the word as well as contractor, isn’t it?

Dennis M. Kirven:

Well, it says South Dakota customer but we apparently do not fit that definition.

I think that implies that you’re a South Dakota resident as used in that policy.

Warren E. Burger:

Well, there — there would seem to be some very practical ways that — that that could be met by setting up an office in Rapid City —

Dennis M. Kirven:

[Laughs]

Warren E. Burger:

— with a telephone operator apparently.

Dennis M. Kirven:

Well, it’s — it’s — the comparison between other types of activities like electricity in Nebraska is not the same because you cannot drive to Nebraska and say, “Give me a bottle of electricity, I live in Wyoming, I want to take it with me.”

That’s all we’re asking for.

That involves a different type of an activity.

We are not saying to this Court that South Dakota is forced to enter into any market areas.

Dennis M. Kirven:

That they are forced to sell in anyone State as to — that they must put distribution lines or open up.

All we’re saying is that Reeves Inc. has a right to go to any State in this national market place and be treated the same manner under the Commerce Clause without any barriers imposed.

Byron R. White:

As South Dakota customers.

Dennis M. Kirven:

As South Dakota customers.

And it —

Thurgood Marshall:

Because you don’t draw on the line between South Dakota as a State and South Dakota as an operator of a cement.

Dennis M. Kirven:

Well, our position is —

Thurgood Marshall:

I mean a proprietary to governmental use, you don’t draw the line.

Dennis M. Kirven:

That state ownership of this product does not make it immune from the implications of the Commerce Clause.

Potter Stewart:

Well, now — now, wait a minute.

Thurgood Marshall:

I say that it is different though, isn’t it?

You don’t recognize any difference.

Dennis M. Kirven:

Well, in this —

Thurgood Marshall:

If it were not owned by South Dakota, you’d have no case.

Potter Stewart:

Exactly.

Dennis M. Kirven:

Well, I — I don’t know that I wouldn’t have any case.

I don’t — the — the assumption that private enterprise would be able to do this carries only so long as they do it absent anticompetitive motives because that private enterprise is covered by Sherman Antitrust Act.

Potter Stewart:

As a single — a single defendant here, you don’t have any possibility of a conspiracy or in agreement with anybody else.

Dennis M. Kirven:

Unless it’s —

Potter Stewart:

And a private cement company clearly could do this, couldn’t it, under the established law?

Dennis M. Kirven:

Absent anticompetitive motives and — and assuming no violation of the Sherman Act —

Potter Stewart:

You don’t have an agreement, own any possibility of agreement.

And you don’t have a monopoly here, do you?

Dennis M. Kirven:

Well, I don’t know if there hasn’t been a conspiracy among the citizens in South Dakota and its State to keep this —

Potter Stewart:

Well, if you had a private enterprise, how could you have a conspiracy among the citizens of South Dakota?

Dennis M. Kirven:

Well —

Potter Stewart:

A private enterprise, it might be a conspiracy among their directors and officers to sell — not to sell to you but that — that’s no violation of the antitrust laws.

Thurgood Marshall:

I should think a private seller could refuse to sell you because he didn’t like your necktie.

Potter Stewart:

Exactly.

Dennis M. Kirven:

Well, that’s true.

Dennis M. Kirven:

My only statement was that — is — if — if there is a violation of the Sherman Act, which I don’t know that that there isn’t a conspiracy with the citizens, this — the Governor went into state court representing not only the State but the South Dakota general contractors of that State to have the 50% allocation policy enjoined.

Potter Stewart:

Well, but when you say therefore, that state ownership doesn’t immunize this from the antitrust law, you’re implying that — that a private cement mill would be violating the — the antitrust law if it did this.

It wouldn’t at all, would it?

Dennis M. Kirven:

Not under the —

Potter Stewart:

No.

Dennis M. Kirven:

— the specific (Voice Overlap) —

Potter Stewart:

An individual cement mill, wouldn’t at all, would it?

Dennis M. Kirven:

If it — if there was a conspiracy of some kind, it would.

Potter Stewart:

Well, how could there be a conspiracy with only one seller?

Dennis M. Kirven:

Well, if they conspired — if a private cement mill in South Dakota conspired to sell with all the citizens of South Dakota to them exclusively, I think there might be a violation with —

John Paul Stevens:

I wonder if there’s a violation of that, Mr. Kirven, isn’t really your point that — no reason why a private seller would restrict its sales for a governmental purpose.

Dennis M. Kirven:

Well, that’s true then.

It — it did (Voice Overlap) —

John Paul Stevens:

That’s the only reason they’re doing it is they have said themselves, “It’s for governmental reason, not for —

Dennis M. Kirven:

That’s correct.

John Paul Stevens:

— any private economic reason.”

Dennis M. Kirven:

That’s correct.

Thank you for your attention.

Warren E. Burger:

Thank you, gentlemen.

The case is submitted.

We’ll hear arguments next in Gomez against Toledo.