The opinion of the court was delivered by: HERLANDS
The issues raised by defendants' motion to dismiss plaintiff's antitrust action and for summary judgment
have such far-ranging implications that an extensive recital of the facts is unavoidably necessary.
The controversy at bar originates out of the dispute between Great Britain and Iran over the nationalization of Iranian Oil. In March and April of 1951, the Iranian Parliament, under the leadership of Dr. Mossadegh, enacted legislation which nationalized the oil industry and thereby abrogated a concession held by the Anglo-Iranian Oil Company (hereinafter 'AIOC') pursuant to a 1933 agreement with the Iranian Government.
Cmd. 8425, Explanatory Memorandum, pp. 3-4; Cmd. 8425, No. 1, pp. 9-19; Cmd. 8425, No. 10, pp. 29-31.
The nationalization of the oil industry without provision for compensation to AIOC precipitated a serious international dispute between Iran and Great Britain. This eventually led to the severance of diplomatic relations between those two countries.
On May 18, 1951, the United States expressed deep concern about this dispute and urged the parties to solve the dispute through negotiation. State Dept. Bull., May 28, 1951, p. 851.
Thereafter, the United States made repeated attempts to effectuate a settlement.
It was not until the fall of 1951 that plaintiff or any of his associates became interested in Iranian oil. In November of that year, Richard S. Nelson, who was at the time acting as an export manager for local firms in Denver, Colorado (Tr. 6478),
received a letter from James A. Raphael, an Iranian resident, asking him whether he knew anyone who would be interested in bartering sugar for oil. Tr. 6504.
Nelson, who had experience neither in the food nor oil businesses, approached plaintiff Waldron in the hope that Waldron would have some connections in the food industry. Tr. 6506-6507.
Nelson and Waldron soon found it impracticable to effectuate such a barter. Instead, they became interested in the direct sale of oil.
Some preliminary efforts were made to locate purchasers for the oil. Tr. 6605-6619. Much correspondence was exchanged with Raphael about purchasing the oil from Iran and transporting it to this country. See SONJ Exs. 15, 27A, 29, 71 for id.
Waldron and Nelson were aware of the delicate international problems posed by the Anglo-Iranian dispute. On January 28, 1952, Waldron wrote to United States Senator Johnson of Colorado to ascertain the attitude of the State Department with respect to the sale of Iranian oil in this country. SONJ Ex. W-115 for id.
Approximately one week later, Senator Johnson forwarded to Waldron, without comment, the reply of the State Department which, in relevant part, was as follows:
'In the Department's opinion the British-Iranian oil controversy is basically a matter for negotiation between the two Governments directly concerned. Because of our vital interest in this matter the United States Government continues to use its influence toward finding a solution of this difficult problem. In line therewith, we welcome the initiative of the International Bank for Reconstruction and Development which is currently trying to work out a plan for settlement of the controversy and are extending every appropriate assistance in such efforts as the Bank is making in this regard.
'The Department is of the opinion that the injection of any non-official individual, group or organization into this dispute might prejudice the ability of the parties concerned in reaching a satisfactory solution. Accordingly, the Department believes that non-official entities should refrain from getting involved in the dispute.' SONJ Ex. 3 for id.
Knowledge of the State Department's attitude toward the Iranian problem in no way dissuaded the efforts of plaintiff to procure a contract for the sale of Iranian oil.
On February 13, 1952, Nelson sent a coded cablegram to Raphael containing the admittedly false information that he had cash purchasers for two million tons of oil. SONJ Ex. 37 for id.
On February 19, 1952, Raphael communicated this false information to Dr. Abuzia, the authorized foreign sales representative for the National Iranian Oil Company (hereinafter 'NIOC'). SONJ Ex. 39 for id.
At the time that these false representations were being passed on to Iranian officials, representatives of the World Bank were in Tehran attempting to work out a solution to the Anglo-Iranian dispute. International Bank for Reconstruction and Development Press Release No. 285, April 3, 1952, p. 6.
From this point forward and continuing until the time that the contract was actually negotiated, the Waldron group and Raphael engaged in a correspondence that contained patent misrepresentations and none-too-subtle hints of bribery.
Shortly after receiving the false information about the interested oil purchasers, NIOC (which was the Iranian Government instrumentality responsible for operating the nationalized oil industry) indicated to Raphael that it was interested in a more extensive deal encompassing a five-year contract for fourteen million tons of oil.
Raphael drafted an outline of such a contract and sent one copy to NIOC and the other to Nelson. See SONJ Exs. 8, 9, 40 for id.
On March 3, 1952, Nelson cabled Raphael the false information that the five-year, fourteen million-ton oil contract was acceptable to his 'principals.' SONJ Ex. B-1045 for id.
When the World Bank's mission returned to Iran from London on March 5, 'New complexities * * * developed in regard to an Iranian proposal that Iran should have an option to sell directly on world markets substantial quantities of crude oil and products.' International Bank for Reconstruction and Development Press Release No. 285, April 3, 1952, p. 8.
Several days after he had cabled Raphael in regard to the five-year contract, Nelson received a letter which injected a new and seemingly corruptive force into the negotiations. Raphael wrote Nelson to 'Explain to your friend that you'll have to spend about one per mille to the persons who will assist us to realize signing this contract. You know Dick, in Iran for getting such a tremendous contract under way, one should pay left and right to the officials who will have some say in the matter.' SONJ Ex. 4 for id.
Thereafter, the correspondence continued in the same malodorous manner. On March 31, April 4 and April 8, 1952, additional false information was sent to Raphael. SONJ Exs. 64, 67 for id; see SONJ Ex. 13 for id.
On April 16 and May 1, 1952, Raphael reminded Nelson about the necessity of bringing enough money to meet the expenses referred to in his previous correspondence. SONJ Exs. 13, 83 for id.
At this point, the Waldron group decided that the time had come for Waldron and Nelson to fly to Iran and consummate the contract. After discussing the situation among themselves, the Waldron group decided that the term 'oil' should be omitted in plaintiff's and Nelson's passport applications. Tr. 1114. The relevant portion of their letters to the State Department's Passport Agency read:
'My trip is for both business and pleasure, and I expect to visit several countries in Europe, as well as the Middle East. The business portion of my trip will be primarily concerned with making connections for obtaining sources of raw materials.'
SONJ Exs. B-108, B-109 for id.
Waldron claims that, upon arrival in Iran, he and Nelson told Raphael that there was to be no bribery involved in procuring the contract. Tr. 699. However, they advised Raphael not to tell anyone about their interest in oil. Consequently, in responding to an inquiry from an official of the American Embassy, Raphael falsely replied that Waldron and Nelson 'were there on other business than oil.' Tr. 1108-09.
Finally, on May 25, 1952, Waldron and Nelson obtained the highly desired contract.
Upon their return to the United States, they informed Senator Johnson and the State Department of their activities. They stated that they believed their action to 'be for the best interests of the United States, Iran and the entire Western world.' SONJ Exs. N-113, W-114 world.' SONJ Exs. N-113, W-114
Starting in June of 1952, plaintiff and his associates (which by this time included James E. Zoes, who had been brought into the group while Nelson and plaintiff were in Iran) made serious efforts to both implement and assign the contract. Zoes began to investigate the possibility of buying or renting tankers. Tr. 9109-11.
At about this time, an offer to sell the oil to some of the larger oil companies was made and quickly rejected. Tr. 8425-29, 8619.
On June 6, 1952, the Waldron group decided to concentrate their efforts on the First National Oil Company of Long Island (hereinafter 'FNOC'). The negotiations with FNOC soon bogged down, however, because that company was reluctant to be linked publicly with Iranian oil (SONJ Ex. B-998 for id.) and because FNOC thought that the terms of the contract required substantial revision. See SONJ Ex. B-148 for id.
More important, however, was the fact that, on June 11, 1952, the Waldron group made an important contact with the Cities Service Company. See SONJ Ex. B-254 for id; Tr. 8842.
Several meetings followed between Cities Service officials and several members of the Waldron group. These meetings culminated in an oral agreement by the terms of which (1) Waldron and Nelson were to attempt to procure an invitation for W. Alton Jones, president of Cities Service Company, from the Iranian Government, and (2) in the event that Waldron and Nelson succeeded in obtaining the invitation and Cities Service thereafter secured a contract with the Iranians to manage and operate the Iranian oil industry, the Waldron group was to receive as its compensation one or two cents per barrel of oil run through the Abadan refinery or taken as crude oil from the wells. Tr. 2186, 2223-24; SONJ Ex. W-343 for id.
In July, 1952, Waldron and Nelson again flew to Iran. They secured the coveted invitation in writing. Ex. B attached to Affid. of Samuel Lane, sworn to May 6, 1960. The invitation, dated July 26, 1952, written in French, was addressed to W. Alton Jones, president of Cities Service Company and signed by Dr. M. Mossadegh, the prime minister of Iran.
In August, 1952, Jones and his entourage flew to Iran. Jones attempted to keep his trip to Iran highly secret. But soon after his arrival, word leaked out that he was there to negotiate with respect to Iranian oil.
Discovery of the nature and purpose of his visit caused excitement and anxiety in British oil and governmental circles. See, e.g., N.Y. Times, Aug. 26, 1952, p. 3, col. 5; Business Week, Sept. 27, 1952, p. 29; Oil and Gas Journal, Sept. 29, 1952, pp. 155-56.
Despite threats of harassment and litigation, Jones displayed strong interest in Iranian oil. See N.Y. Times, Sept. 19, 1952, p. 8, col. 3.
In late September, 1952, Jones returned to the United States. He appeared to have suffered a complete change of heart and mind. He refused to have any further dealings with plaintiff. Ostensibly he lost all interest in purchasing or managing Iranian oil.
On October 22, 1952, Iran severed diplomatic relations with Great Britain.
On December 6, 1952, the State Department expressed its attitude toward the purchase of oil from Iran by American nationals or American firms, in a press release declaring:
'The question of moving relatively small quantities of oil or oil products has seemed to us as of minor importance in comparison with the necessity to find some solution which could drive to the heart of the matter and result in resumption of large-scale movement of Iranian oil. * * *
'Under present circumstances, this Government believes that the decision whether or not such purchases of oil from Iran should be made must be left to such individuals or firms as may be considering them, and to be determined upon their own judgment.' State Dept.Bull., Dec. 15, 1952, p. 946.
In December of 1952, although plaintiff had still been unable to locate purchasers for the Iranian oil -- allegedly because of defendants' conspiracy -- NIOC extended the impending expiration date of its contract with plaintiff until June of 1953. SONJ Ex. W/N-557 for id.
In January, 1953, the Sun Oil Company rejected an offer for the sale of oil made by the Waldron group. SONJ Ex. C-669 for id.
Finally, in June, 1953, the Waldron group attempted to sell the oil to the Richfield Oil Company. However, even before the group's effort could be thwarted by the alleged conspiracy, the June 30, 1953 deadline of the NIOC contract expired.
Grounds of Defendants' Motion
The motions presently before the Court rest solely upon facts culled from the writings and sworn testimony of plaintiff and his associates and from official publications.
Defendants have moved for summary judgment and to dismiss on the following grounds:
1. that plaintiff lacked the requisite 'business or property' interest prescribed by § 4 of the Clayton Act;
2. that any injury to plaintiff's claimed 'business or property' was indirect and secondary, and therefore cannot support an action under § 4 of the Clayton Act; and
3. that the Court should not lend its power to assist this plaintiff because his conduct and his oil contract were (a) contrary to the best interests of the United States, (b) contrary to United States foreign policy and (c) tainted by fraud and illegality and repugnant to public morality.
Was Plaintiff Injured In His Business Or Property?
Defendants contend that the undisputed facts demonstrate that plaintiff lacked the 'business or property' interest requisite for an action under § 4 of the Clayton Act, 15 U.S.C. § 15.
The gist of plaintiff's counterargument is that he was or could have been in the 'business' of dealing in Iranian oil and that defendants destroyed that business or prevented plaintiff from engaging in that business before it was soundly established.
Under § 4 of the Clayton Act, it is as unlawful to prevent a person from engaging in a business as it is to drive a person out of business. Pennsylvania Sugar Refining Co. v. American Sugar Refining Co., 166 F. 254 (2d Cir. 1908); Delaware Valley Marine Supply Co. v. American Tobacco Co., 184 F.Supp. 440, 443 (E.D.Pa.1960), aff'd, 297 F.2d 199 (3d Cir. 1961), cert. denied, 369 U.S. 839, 82 S. Ct. 867, 7 L. Ed. 2d 843 (1962); Timberlake, The Legal Injury ...