GENERAL ELECTRIC COMPANY еt al. and Carrier Corp., Appellants, v. The CITY OF SAN ANTONIO et al., Appellees. CITY OF SAN ANTONIO et al., Appellants, v. GENERAL ELECTRIC COMPANY et al., Appellees.
No. 20279.
United States Court of Appeals Fifth Circuit.
June 24, 1964.
Walter P. Brenan, San Antonio, Tex., David Bland and Barrow, Bland, Rehmet & Singleton, Houston, Tex., for A. B. Chance Co., Cornell-Dubilier Electric Corp., Federal Pacific Electric Co.
B. J. Bradshaw, Fulbright, Crooker, Freeman, Bates & Jaworski аnd Leon Jaworski, Houston, Tex., for Allis-Chalmers Mfg. Co. and Hubbard and Co.
Josh H. Groce and Groce & Hebdon, San Antonio, Tex., for C. H. Wheeler Mfg. Co., Ohio Brass Co., H. K. Porter Co., Inc., and Lapp Insulator Co.
John H. Wood, Jr., and Beckmann, Stanard, Wood & Vance, San Antonio, Tex., W. N. Blanton, Jr., of Butler, Binion, Rice & Cook, Houston, Tex., for I-T-E Circuit Breaker Co.
John J. McKay and McKay & Avery, Austin, Tex., for McGraw-Edison Co., Maloney Electric Co., and Wagner Electric Co.
W. Pat Camp and William C. Church, Jr., San Antonio, Tex., for McGraw-Edison Co.
Bond Davis and Boyle, Wheeler, Gresham, Davis & Gregory, San Antonio, Tex., for Southern States Equipment Corp., Wagner Electric Corp., and Maloney Eleсtric Co.
Ernest W. Clemens and Clemens, Knight, Weiss & Spencer, San Antonio, Tex., for Sangamo Electric Co.
Fred B. Werkenthin and Herring & Werkenthin, Austin, Tex., for Southern States Equipment Corp.
Thad T. Hutcheson and Hutcheson, Taliaferro & Hutcheson, Houston, Tex., for Joslyn Mfg. & Supply Co., and Porcelain Insulator Corp.
Ben G. Sewell and McGregor, Sewell & Junell, Houston, Tex., for Worthington Corp.
W. L. Matthews, James D. Baskin, Jr., Richard E. Goldsmith, Matthews, Nowlin, MacFarlane & Barrett, San Antonio, Tex., Crawford B. Reeder, City Atty., San Antonio, Tex., for City of San Antonio, Tex.
Robert E. Sher and Sher, Oppenheimer & Harris, Washington, D. C., James W. Wilson and Powell, Rauhut, McGinnis, Reavley & Lochridge, Austin, Tex., for City of Austin, Tex., Lower Colorado River Authority, City of Brady, Tex., and Brazos Electric Power Cooperative, Inc., et al.
Doren R. Eskew, City Atty., Austin, Tex., for City of Austin, Tex.
Mac Umstattd, General Counsel Lower Colorado River Authority, Austin, Tex., for Lower Colorado River Authority.
Carlton J. Smith, Waco, Tex., for Brazos Electric Power Cooperative, Inc., et al.
Before HUTCHESON and GEWIN, Circuit Judges, and CONNALLY, District Judge.
GEWIN, Circuit Judge:
This interlocutory appeal presents the following two questions arising in civil antitrust litigation in the United States District Court for the Western District of Texas: (1) whether the statute of limitations set forth in Section 4B and 5(b) of the Clayton Act,
The defendants are some fifty-two electrical companies. Thе plaintiffs are various cities and other purchasers of electrical equipment manufactured by the defendants.3 As to the first question the trial court ruled against the defendants and concluded:
“* * * that the aforesaid motions to strike or to dismiss or for partial summary judgments predicated upon the statute of limitations contained in Section 4B of the Clayton Act should be and the same are hereby overruled.”
“It is, therefore, ORDERED by the Court that prima facie effect will not be given by the Court to any judgments in criminal proceedings heretofore held in the United States District Court for the Eastern District of Pennsylvania and that no instruction will be given to the juries who will try these civil actions to the effect that judgments in said criminal proceedings will be given prima facie effect under Section 5a of the Clayton Act (15 U. S. C., Sec. 16a).”
As to the second question, the court‘s order related both to pleas of guilty and pleas of nolo contendere. No question is raised as to the ruling of the court on nolo contendere pleas. The questions will be dealt with in the order stated.
I
Prior to the adoption of Section 4B of the Clayton Act,
“We hold that the federal rule as to the effect of concealment on the running of a period of limitation applies to an action for treble damages under the Clayton Act even when a state statute is used to measure the period.” Mоviecolor Limited v. Eastman Kodak Co., 288 F.2d 80, 90 A.L.R.2d 252 (2nd Cir. 1961).6
The first court of appeals to deal with the question now before us was the 8th Circuit in Kansas City, Missouri v. Federal Pacific Electric Co., 310 F.2d 271 (8th Cir. 1962), wherein the court carefully reviewed the congressional history of the statute, the cases dealing with fraudulent concealment, and concluded that when the present statute was enacted, Congress was well aware of the federal fraudulent concealment doctrine announced in the Bailey case and reaffirmed in more recent cases. In Kansas City the court stated:
“* * * as we shall demonstrate in our consideration of the legislative history of § 4B, Congress had actual knowledge of and affirmatively evinced a purpose of having the principle read into the statute.”
To the same effect is the conclusion reached by the 2nd Circuit in Atlantic City Electric Co. v. General Electric Co., 312 F.2d 236 (2nd Cir. 1962), in which the court concluded:
“The failure to enact bills containing provisions that would have embodied a discоvery provision in the words of the statute is hardly the kind of express negative which we think would be necessary to reverse so well established a policy of the law. As we read the Supreme Court‘s opinion in Holmberg v. Armbrecht, supra, that policy is so strong that it is applicable unless Congress expressly provides to the contrary in clear and unambiguous language.
* * *
“It seems far more likely that when Congress enacted § 4B, it intended that the doctrine of fraudulent concеalment continue to apply as it had under Holmberg and its predecessors, than that it be discarded by reference to legislative history.”
Defendants strenuously urge that this Court‘s case of United States v. Borin, (5th Cir. 1954) 209 F.2d 145, compels a holding that the statute is not tolled. We disagree. In Borin we held that the statute of limitations found in the False Claims Act7 was not tolled by fraudulent concealment. We based our decision, however, on our view that the emphatic language of the statute, “Every such suit shall be commenced within six yeаrs from the commission of the act, and not afterward” (emphasis added), clearly demonstrated an intention that fraud or concealment would not toll the statute.7a Although Borin predates Atlantic City, supra, we feel that the statute considered in Borin meets the test enunciated in Atlantic City. The courts
We are in complete agreement with the decision reached by the trial court and affirm the judgment on this phase of the case.
II
We come now to a consideration of Section 5(a),
“(a) A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceeding brought by any other party against such defendant under said laws or by the United States under section 15a of this title, as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto: Provided, That this section shall not apply to consent judgments or decrees entered before any testimony has been takеn or to judgments or decrees entered in actions under section 15a of this title.”
The court below ordered that (1) prima facie effect should not be given to judgments of conviction based on pleas of guilty or pleas of nolo contendere, and that the jury would not be charged to the effect that such judgments are to be accorded prima facie effect; (2) references in the complaints to pleas of nolo contendere and judgments entered thereon are stricken.15 Plaintiffs appeal
We are informed by the parties that while Section 5 has been in the books since 1914,16 there were no reported cases involving the effect of Section 5(a) on convictions based on guilty pleas, prior to the 1960 convictions in question. The defendants point out, however, that in Twin Ports Oil Co. v. Pure Oil Co., (D.C.Minn.1939) 26 F.Supp. 366, Judge Nordbye stated that convictions on criminal pleas were within the proviso and were not entitled to prima facie effect. In answer, plaintiffs point out that Judge Nordbye had no such judgments before him and that whatever he said on the subject is mere dictum. In anаlyzing the case, we find that Judge Nordbye did state that convictions based on guilty pleas are “consent judgments,” but he also made the following statement:
“Before any evidence was introduced, all the defendants who are defendants in this case withdrew their pleas of not guilty, which had been entered in the case, and with the consent of the court and upon recommendation of the Government, entered pleas of nolo contendere. Fines and court сosts were thereupon imposed against each of the defendants, all of which have been paid.” (Emphasis added.)
We reject Twin Ports as authority for defendants’ contentions.
It is clear to us that while the obvious purpose and function of the proviso of Section 5(a) is to encourage capitulation by the trusts, thereby saving the government great expense, the primary purpose of the main body of the section is to facilitate and expedite private actions. The Suрreme Court recognized such purpose in Emich Motors Corp. v. General Motors Corp., 1951, 340 U.S. 558, 71 S.Ct. 408, 95 L.Ed. 545, wherein it stated:
“Congressional reports and debates on the proposal which ultimately became § 5 reflect a purpose to minimize the burdens of litigation for injured private suitors by making available to them all matters previously established by the Government in antitrust actions. See HR Rep No. 627, 63d Cong 2d Sess 14; S Rep No. 698, 63d Cong 2d Sess 45; 51 Cong Rec 9270, 9490, 13851.
* * *
“We think that Congress intended to confer, subject only to a defendant‘s enjoyment of its day in court against a new party, as large an advantage as the estoppel doctrine would afford had the Government brought suit.”
It is obvious that the general overall objective of the Sherman and Clayton Acts will be served by construing Section 5(a) in such a manner as to make compatible the differing purposes of the section and its proviso. Judge Kiley of the 7th Circuit so construed thе section in Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co., 323 F.2d 412 (7th Cir. 1963), cert. denied, 376 U.S. 939, 84 S.Ct. 794, 11 L.Ed.2d 659 (1964), the first reported case involving the question on the appellate level. It was there stated:
“Both purposes of § 5(a) and its proviso serve the broad objective of antitrust enforcement, and although the two purposes are distinct, ‘* * * an accommodation must be made to preserve the essence of both.’
* * *
“If guilty pleas were held to be within the exclusionary proviso, the private litigant, who is injured by the antitrust violation and who is a subject of Congress’ concern in enacting § 5(a), would be, by the defendant‘s plea of guilty, thereby denied the total benefit of that section. Although that result may achieve one purpose of the section in aiding enforcement of the antitrust laws, we think it would help antitrust violators at the direct expense of the victims of those violations. Congress did not intend to confer a benefit in the body of § 5(a), indicating a primary purpose, and, through the proviso, allow its frustration by the unilateral act of an antitrust violator.”
The 9th Circuit agreed with the 7th. City of Burbank v. General Electric Co., 329 F.2d 825 (9th Cir. 1964). While a refusal to grant certiorari by the Supreme Court in Commonwealth Edison cannot be construed as approval of the opinion of the 7th Circuit in that case, it is entirely appropriate to refer to that fact as a point of interest in the history of this antitrust litigation.
We agree with the conclusions reached by the 7th and 9th Circuits. The exclusionary proviso of Section 5(a) does not apply to judgments entered on pleas of guilty by defendants in criminal antitrust actions, and judgments entered on such pleas constitute prima facie evidence of the violation of antitrust laws. The judgment of the trial court is reversed insofar as it decides that judgments entered on pleas of guilty are within the exclusionary proviso.
Affirmed in part and in part reversed and remanded.
CONNALLY, District Judge (concurring specially):
I concur fully in the opinion of Judge Gewin wherein it deals with the question of the tolling of the statute of limitations by fraudulent concealment.
With regard to the question of the effect to be afforded a guilty plea under
To the abundant treatment this issue has already received, I add only the following brief comments.
The argument that a plea of guilty is not a “consent judgment” in my judgment is completely and conclusively answered by the dissent of Judge Knoch in Commonwealth Edison, supra (at page 417 of 323 F.2d). This, in short, is that a defendant by pleading guilty concedes unqualifiedly that judgment go against him in all particulars. No greater consent could be asked. The Government is hardly in position to deny that it consents when the defendant has conceded its case.
A careful examination of the opinions in Commonwealth Edison and City of Burbank leaves me with the impression that underlying each is the sentiment that a defendant who pleads guilty should not avoid having that fact received in evidence against him in a civil proceeding; he should be punished additionally by civil damages. But that is not the question before us. A guilty plea, or any other admission, well may be admissible under ordinary rules of evidence. The question with which we are concerned is whether a special statutory effect should be given to such a plea. I am unable to see any basis for drawing such a distinction—and with such great consequences—between a plea of guilty and a plea of nolo contendere (which I consider to be little more than a plea of guilty by one with his fingers crossed).
The decision of a trial judge, on arraignment in a criminal case, whether to accept a plea of nolo contendere thus will hаve the greatest effect upon a civil action, probably as yet unfiled and, of