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U.S. v. BAROID CORPORATION

November 19, 2004.

UNITED STATES OF AMERICA, Plaintiff,
v.
BAROID CORPORATION, BAROID DRILLING FLUIDS, INC., DB STRATABIT (USA) INC., and DRESSER INDUSTRIES, INC., Defendant.



The opinion of the court was delivered by: ROYCE LAMBERTH, District Judge

MEMORANDUM OPINION

Defendant Smith International, Inc. ("Smith") has moved the Court for an order construing its obligations under the Modified Final Judgment entered in this case by Judge Sporkin on September 19, 1996. After Anchor Drilling Fluids U.S.A., Inc. ("Anchor"), a party to the Modified Final Judgment, filed its opposition and Smith filed its reply, Anchor moved for leave to file a surreply. Now before the Court are the motion for leave to file a surreply and the motion for a construal order. For the reasons set forth herein, the Court denies the motion for leave to file a surreply and grants the motion for a construal order. I. BACKGROUND

A. History of the Case

  In 1993, the Department of Justice filed this antitrust lawsuit against Baroid Corporation and Dresser Industries, Inc. to prevent the two companies' planned merger. The companies assuaged the Department of Justice and the parties entered into a consent decree that became embodied in the Final Judgment entered on April 12, 1994. In compliance with that Final Judgment, Dresser Industries sold its ownership interest in M-I, a drilling fluids business, to Smith, which agreed to be bound by the Final Judgment. The Final Judgment prohibited Smith, as purchaser, from further acquiring certain other drilling fluid businesses, including Anchor Drilling Fluids AS of Norway.

  On September 19, 1996, about two years after entry of the Final Judgment, the Court entered a Modified Final Judgment upon the joint motion of Smith and the Department of Justice. The Modified Final Judgment permitted Smith to purchase Anchor Drilling Fluids AS of Norway so long as Smith sold off that company's United States drilling fluids operation and complied with the Stipulated Divestiture Agreement filed on June 5, 1996. Smith then acquired Anchor Drilling Fluids AS of Norway and divested itself of the United States operation, which led to the creation of Anchor. As a result of this transaction, Anchor became bound by the Modified Final Judgment.

  The Stipulated Divestiture Agreement gives Anchor the opportunity to purchase from Smith unlimited quantities of crude barite ore, an important component of drilling fluids. The agreement provides: At the option of the purchaser of Anchor USA [Anchor], M-I [now Smith] shall supply the purchaser unlimited quantities of crude barite ore for its own consumption until five years from the date the order modifying the Judgment is filed and entered, at a price no greater than the highest price set forth in Industrial Minerals Magazine for the month which the order is placed with M-I for the country from which the crude barite ore will be sourced and for the appropriate form of packaging. If the purchaser of Anchor USA exercises its option to have M-I supply crude barite ore, it must notify M-I no less than four months prior to the date of delivery of the crude barite ore. At the option of the purchaser of Anchor USA, M-I's obligation to supply crude barite ore on the terms stated herein may be extended an additional five years.

 Joint Mot. to Modify Final Judgment & Stipulated Divestiture Agreement ¶ II.G, United States v. Baroid Corp., No. 93-2621 (D.D.C. June 5, 1996).

  Since entry of the Modified Final Judgment, Smith has offered to supply Anchor with crude barite ore, but Anchor has contracted with Smith to purchase only ground barite ore, not crude barite ore. (Brown Aff. ¶¶ 14, 21.). Crude barite ore is a "rock-like material" in a "semicrushed state, with pieces ranging . . . in size from approximately 12-inch chunks to particles the size of sand." Id. ¶ 4. Ground barite ore is a finished product: it is "flour-like" and "ready for sale and use as a drilling fluid additive." Id. ¶ 5.

  Both Smith and Anchor agree that their companies' relationship has been rocky and subject to a series of ongoing disputes concerning Smith's supply of barite ore to Anchor. Due to transportation costs, Smith has had to raise its price for delivery of ground barite for all customers, including Anchor. Anchor protested. Brown Aff. ¶ 17. In 1999, Anchor filed and the parties settled a suit concerning the supply of barite ore. Earlier this year, Anchor filed a second suit against Smith in the United States District Court for the District of Oklahoma. See Compl., Anchor Drilling Fluids, U.S.A., Inc., v. M-I LLC, No. 04-CV-375 (D. Okla. Apr. 28, 2004). In several parts of the complaint, Anchor alleged breach of the supply agreement set forth in the Modified Final Judgment. See, e.g., id. ¶ 34 (as violation of the Sherman Act), id. ¶ 61 (as violation of the Oklahoma law), id. ¶ 67 (as violation of the contract law).

  B. Motion to Construe

  On May 14, 2004, Smith moved this Court to issue an order construing the September 19, 1996 Modified Final Judgment. Smith's motion asks the Court to make the following construction of Paragraph II.G: first, that Smith's obligation to supply "crude barite ore" does not require Smith to supply ground barite ore; and second, that the obligation to supply crude barite ore does not include the obligation to process or deliver that ore. Smith served its motion on Anchor and on the Department of Justice. Anchor lodged an opposition with this court; the Department of Justice has remained silent. Anchor's main argument is that this Court lacks jurisdiction to enter an order construing the Modified Final Judgment.

  II. ANALYSIS

  A. Jurisdiction

  Anchor contends that this Court lacks jurisdiction to issue the requested construal order because there is no case or controversy as required by Article III of the Constitution. Anchor is mistaken on the law. There is "no doubt" that federal courts have continuing jurisdiction to protect and enforce their judgments and consent decrees. Central of Ga. R.R. Co. v. United States, 410 F. Supp. 354, 357 (D.D.C. 1976) (citing Riggs v. Johnson Cty., 73 U.S. (6 Wall.) 166 (1867); Pigford v. Veneman, 292 F.3d 918, 923 (D.C. Cir. 2002). "First, they may interpret and enforce a decree to the extent authorized ...


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