7 F.R.D. 456 | S.D. Cal. | 1947
I.
The Nature of the Proceedings.
On August 14, 1947,
In the present suit, I am asked to dismiss a Complaint in equity instituted by the Government under Section 4 of the Sherman Anti-Trust Act.
The States of organization of the defendants are as follows: National City Lines, Inc., Delaware; American City Lines, Inc., Delaware; Pacific City Lines, Inc., Delaware; Standard Oil Company of California, Delaware; Federal Engineering Corporation, California; Phillips Petroleum Company, Delaware; General Motors Corporation, Delaware; Firestone Tire & Rubber Company, Ohio; Mack Manufacturing Corporation, Delaware.
The Government claims that all the defendants except Phillips do business in the district or are to be found in it. However, the affidavits on file show conclusively that only three of the defendants do business or are found in the district,-Standard, General Motors and Firestone. The chief defendants, through whom control is exercised— National and American — have always had their main offices in Chicago, Illinois, where all their records are kept.
In substance, the Government charges that National and its subsidiaries, American and Pacific, own and control, or have a substantial financial interest in corporations which are referred to as “operating companies”, and which are engaged in providing local transportation service in more than forty-two cities in sixteen States.
The operating companies of the defendants National, American and Pacific use large quantities of busses, tires, tubes, and petroleum products, which are manufactured and handled by the supplier defendants, such as Phillips, Standard, General Motors, Mack and Firestone. The Government charges that, beginning on or about January 1, 1937, end continuing to the filing of the Complaint on April 10, 1947, the defendants have engaged in an unlawful combination and conspiracy to acquire ownership, control or a substantial financial interest in a substantial part of local transit companies in various cities, towns and counties in various States of the United States and “to restrain and to monopolize the aforesaid interstate commerce in motor busses, petroleum products, tires and tubes sold to local transportation companies in cities, counties and towns in which National, American and Pacific have, or have acquired, or in the future acquire, ownership, control or a substantial financial interest in said local transportation companies, all in violation of Sections 1 and 2 of the Sherman Anti Trust Act [IS U.S.C. A. §§ 1, 2], Defendants threaten to and will continue to violate Sections 1 and 2 of the Sherman Anti Trust Act unless the relief hereinafter prayed for is granted.”
The means of achieving this result are stated to be these: “Supplier” defendants have furnished money and capital to National, American and Pacific who have, in turn, caused their operating companies to purchase practically all their require
Name of Supplier Defendant
Standard Oil Company of Calif.
Federal Engineering Corporation
General Motors Corporation
Phillips Petroleum Company
Firestone Tire & Rubber Company
Mack Manufacturing Corporation
The effect of the combination and conspiracy, the Complaint avers, is to eliminate competition from other suppliers in the sale of supplies and equipment to National, American and Pacific and their operating companies, and to restrain interstate commerce in such equipment substantially and unreasonably, so far as the transportation companies controlled by National, American and Pacific are concerned, to charge non-competitive prices for such equipment and to allocate the nation-wide markets of the defendants National, American and Pacific and their operating companies for supplies and equipment between the various supplier defendants. To end these practices, the Government seeks a decree declaring that the defendants are engaged in a conspiracy in violation of the Sherman Act, that the supplier defendants be required to divest themselves of stock and other interests in the traction companies, that contracts between the parties be declared void, and that the traction and operating companies be enjoined from acquiring their equipment from the suppliers. In addition to this, the following more specific prayers are included which are set forth in full because of their significance in the discussion to follow:
“5. That the defendants National, American and Pacific be ordered to make such disposition of their interests and holdings in local transportation companies as is necessary to restore competition and to dissipate the effects of the unlawful conspiracy; and that defendants National, American and Pacific be permanently enjoined from acquiring, directly or indirectly, any financial interest in any local transportation system operating in any city, town or county of any State of the United States without first obtaining the approval and authority of this Court;
Amount Paid for Stock Purchased
$2,074,310.57
$3,190,802.32
$1,574,064.82
$1,383,403.41
$1,200,071.43
“6. That the defendants herein and each of them and their officers, directors and representatives and all persons and corporations acting or claiming to act on behalf of them be perpetually enjoined and restrained from combining and conspiring to monopolize or to restrain interstate trade and commerce of the United States in the manner and by the means described herein, and be perpetually enjoined from engaging in or participating in agreements, understandings, practices or arrangements having a tendency to revive or continue any of the aforesaid violations of the Sherman Anti Trust Act.”
The defendants have moved to dismiss the Complaint upon the ground of inap
II.
The Doctrine of Forum Non Conveniens.
Jl, 2] The doctrine of forum non conveniens is not of statutory origin. In Anglo-American law, it has been used as a means of declining jurisdiction whenever “considerations of convenience, efficiency, and justice”
This doctrine which permits a court having jurisdiction to refuse to exercise it has been applied either under its Latin name, forum non conveniens, or under its truncated English name, inappropriate forum, in many cases arising in Admiralty
The problem before us must be solved in the light of the principles which have governed its application.
In each instance, the Court which declined to exercise jurisdiction had jurisdiction, and the plaintiff had a choice of venue. Thus, when, under a statute, jurisdiction in a proceeding to limit liability could be brought in either the state court or the federal court, the federal court, in its discretion, could enjoin the prosecution of the action in the state court.
The more recent cases of the Supreme Court applying this doctrine must be interpreted in the light of these principles.
It is the Government’s contention that these cases lay down a distinction between general venue and special venue statutes and that the doctrine of forum non conveniens does not apply to cases in which the Congress, by a special verme statute, has given to the plaintiff the choice of forums.
None of these cases define the difference between the two types of venue statutes.
It is evident, however, that a general venue statute would be exemplified by the provisions of the Judicial Code to the effect that actions shall generally be brought against a person only in the district of which he is a resident, or, in diversity cases, in the district of the residence of either the plaintiff or the defendant.
Concededly suits like the present one, instituted by the Government to enjoin violations of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note, are also governed by a special venue provision. Under it, such suits may be brought in the judicial district (1) where the corporation is an inhabitant, (2) in the district where it may be found, or (3) in the district where it transacts business.
III.
Does the Doctrine of Inappropriate Forum Apply to Actions Brought Under Special Venue Statutes?
It is the contention of the Government that when an action is governed by a special venue provision, the choice of forum by the actor in the case, be he individual or government, is absolute, and the doctrine of inappropriate forum is inapplicable.
There is a language in the Gulf case which, at first blush, lends support to this contention. I so read the case myself and gave expression to the thought in a recent opinion.
“It is true that in cases under the Federal Employers’ Liability Act, 45 U.S.C.A. § 51 et seq., we have held that plaintiff’s choice of a forum cannot be defeated on the basis of forum non conveniens. But this was because the special venue act under which those cases are brought was believed to require it. Baltimore & Ohio R.R. v. Kepner, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222; Miles v. Illinois Central R.R., 315 U.S. 698, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104. Those decisions do not purport to modify the doctrine as to other cases governed by the general venue statutes.”
When passed in 1908, the Federal Employers’ Liability Act contained no special venue provisions. In 1910, it was amended to allow the present choice. Even before the decisions in the Kepner
“The functioning of this backward system of dealing with industrial accidents in interstate commerce burdens it with perhaps two dollars of judgment for every dollar that actually reaches those who have been damaged, and it leaves the burden of many injuries to be borne by them utterly uncompensated. Such being the major burden under which the workmen and the industry must function, I see no reason to believe that Congress could not have intended the relatively minor additional burden to interstate commerce from loading the dice a little in favor of the workman in the matter of venue. It seems more probable that Congress intended to give the disadvantaged workmen some leverage in the choice of venue than that it intended to leave him in a position where the railroad could force him to try one lawsuit at home to find out whether he would be allowed to try his principal lawsuit elsewhere. This latter would be a frequent result if we upheld the contention made in this case and in the Kepner case.”
That this is a special venue statute is evident not only from its wording but also from the following language which appears in Footnote 2 of the opihion in the Koster case
“This reinforces the view that the cause of action is that of the corporation, if reinforcement is necessary. Moreover, it is obvious that the venue statute is not concerned with facilitating suit in the district of the stockholder’s residence, but assures only that suit can be brought in any district in which the corporation could have sued. Greenburg v. Giannini, 2 Cir., 140 F.2d 550, 152 A.L.R. 966. When suit is brought in the district of the stockholder’s residence, the venue statute does not provide for service on the corporation ‘in any district wherein such corporation resides or may be found.’ Since the corporation is an indispensable party, City of Davenport v. Dows, 18 Wall. 626, 21 L.Ed. 938, it must be only the chance stockholder’s suit which can be maintained at the stockholder’s residence. Corporations which have stockholders in many of the states may not find it necessary to qualify to do business and consent to be sued in all the states in which they have stockholders.”
It is quite evident that, if the Gulf case is interpreted as holding that the doctrine of forum non conveniens does not apply to actions brought under special venue statutes, the ruling in the Koster case does not accord with it. For, as already appears from what precedes, there the court, although dealing with a special venue statute, nevertheless applied the doctrine to the situation. The two decisions made on the same day, in opinions written by the same Justice, can be reconciled only if we read the teaching of the Gulf case as here suggested, —namely, that the court refused to apply the doctrine of forum non conveniens of Federal Employers’ Liability cases, not because such cases are governed by a special venue statute, but for the reason that the history of the law, the desire of the Congress to overbalance the privileges under the law in favor of the railroad employes, made the choice under the particular venue statute absolute.
The doctrine of inappropriate forum can be applied by courts in all cases in which it has been applied in the past in Anglo-American jurisprudence. And this should be done, whether dealing with a general or with a special venue statute. Only when the legislative history shows an intent to confer a right so absolute as to exclude any interference on the part of courts, are we justified in failing to give effect to this doctrine.
IV.
The Venue Here.
We have already referred to the venue provision in the Sherman Anti-Trust Act.
That the Congress did not intend to make the Government’s choice absolute is also evidenced by the provision of the Act which reads:
“Whenever it shall appear to the court before which any proceeding under section 4 of this title may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof.” (Emphasis added)
Had the Congress intended to give to the Government complete mastery over the situation, it certainly would not have made the presence of other parties dependent upon the determination by the court that the ends of justice require such presence. Of the nature of this power, a three-judge court said in United States v. Standard Oil of New Jersey
“The question presented by the petition for that purpose was, not in which court the ends of justice required the complainant to choose to institute its suit, but whether or not in this suit the ends of justice required that the nonresident defendants should be brought in.
“The exercise of the power conferred upon the courts by the Constitution and the acts of Congress, to acquire jurisdiction of controversies and parties by the issue and service of their process, is not discretionary with the courts, when a complainant demands it. It is an imperative duty, which may not be renounced, and whose discharge may not be evaded. It is the duty of a court of equity to finally determine the entire controversy before it, and to do complete justice by adjusting all the rights involved therein. Hence, in every suit in which the power to acquire jurisdiction of the subject-matter and of the parties is conferred upon the court, the duty is imposed upon it, if its discharge is
In giving effect to public policy through suits of this character, courts are more likely to grant or withhold relief than in dealing with private interests.
That the facts in this case call for the application of the doctrine of forum non conveniens is apparent from the nature of the action and from the analysis of the facts presented in the affidavits which I made in the companion criminal prosecution.
We should also emphasize the fact, already adverted to elsewhere in this opinion, that the Government by the decree it asks in this case, is seeking to wrest control of local transportation companies from National, American and Pacific and to require them to divest themselves of such control. And this type of long distance control of corporations who are not engaged in business in the state is one of the considerations which have led to the applications of the doctrine of forum non conveniens.
The language of the court in Williams v. Green Bay & W. R. Co. is very opposite
“We mention this phase of the matter to put the rule of forum non conveniens in proper perspective. It was designed as an ‘instrument of justice.’ Maintenance of a suit away from the domicile of the defendant — whether he be a corporation or an individual — might be vexatious or oppressive. An adventitious circumstance might land a case in one court when in fairness it should be tried in another. The relief sought against a foreign corporation may be so extensive or call for such detailed and continuing supervision that the matter could be more efficiently handled nearer home.” (Emphasis added)
Of the nine defendants, five — National, American, Pacific, Mack and Phillips — are not doing business in California and are not to be found in it. Federal Engineering merely makes investments for Standard, does no business in the district, and is not found in it. The control by National of the Los Angeles Transit Lines and of Long Beach City Lines, through ownership of their corporate stock, does not constitute “doing business” in the State.
It follows that the factual situation here calls for the application of the doctrine of forum non conveniens, in the interest of justice, just as the same facts in the companion criminal prosecution required its transfer to another district. And this conclusion is also commanded by the fact that the decree sought by the Government
The Government has suggested that a dismissal of this Complaint might bring about an impossible situation. They refer to the fact that the principal places of business of the defendants are scattered throughout the country. And they express the fear that no matter where the Government reinstitutes its suit, some of the defendants might urge the application of the doctrine of inappropriate forum to them. The matter has received serious consideration. A court of equity should aim to balance societal and individual interests and to maintain the proper equilibrium between (private rights and public weal.
But I feel that no disastrous result to the enforcement of the anti trust laws need, necessarily, follow a ruling adverse to the Government on this motion. Our action is reviewable on direct appeal to the Supreme Court,
In sum, whether the Government challenges this ruling and seeks a direct appeal to the Supreme Court within the sixty-day period, or, accepting it, refiles, the “setback” will be temporary only. And the in-success of the Government being based not on the court’s disapproval of the social philosophy behind the Sherman Anti-Trust law,
The motions to dismiss are granted.
United States v. National City Lines et al., 1947, D.C.Cal., 7 F.R.D. 393.
Rule 21(b), Federal Rules of Criminal Procedure, 28 U.S.C.A. following section 723c.
15 U.S.C.A. § 4.
Rogers v. Guaranty Trust Co., 1933, 288 U.S. 123, 131, 53 S.Ct. 295, 298, 77 L.Ed. 652, 89 A.L.R. 720.
Virginian Ry. v. System Federation, 1937, 300 U.S. 515, 552, 57 S.Ct. 592, 601, 81 L.Ed. 789.
Langnes v. Green, 1931, 282 U.S. 531, 51 S.Ct. 243, 75 L.Ed. 520; Canada Malting Co. v. Paterson Co., 1932, 285 U.S. 413, 52 S.Ct. 413, 76 L.Ed. 837.
Kansas City Southern R. Co. v. United States, 1931, 282 U.S. 760, 763, 51 S.Ct. 304, 75 L.Ed. 684; Rogers v. Guaranty Trust Co., 1932, 288 U.S. 123, 53 S.Ct. 295, 77 L.Ed. 652, 89 A.L.R. 720; Virginian Ry. v. System Federation, 1937, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789; Commonwealth of Massachusetts v. State of Missouri, 1939, 308 U.S. 1, 19, 60 S.Ct. 39, 84 L.Ed. 3.
Langnes v. Green, 1931, 282 U.S. 531, 51 S.Ct. 243, 75 L.Ed. 520.
Rogers v. Guaranty Trust Co., 1932, 288 U.S. 123, 53 S.Ct. 295, 77 L.Ed. 652, 89 A.L.R. 720.
Williams v. Green Bay & W. R. Ry. Co., 1946, 326 U.S. 549, 66 S.Ct. 284, 90 L.Ed, 311; Gulf Oil Corporation v. Gilbert, 1947, 330 U.S. 501, 67 S.Ct. 839; Koster v. Lumbermen’s Mutual Co., 1947, 330 U.S. 518, 519, 67 S.Ct. 828.
See eases in Notes 7 and 8.
28 U.S.C.A. § 112.
See cases in Notes 7 and 8. And see, Neirbro Co. v. Bethlehem Shipbuilding Corporation, 1939, 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, 128 A.L.R. 1437.
17 U.S.C.A. § 35.
28 U.S.C.A. § 109. The language of Mr. Justice Brandeis in Lumiere v. Mae Edna Wilder, Inc., 1923, 261 U.S. 174, 177, 43 S.Ct. 312, 67 L.Ed. 596, lends support to the view here expressed as to what a special venue statute is. Speaking of the special venue provision in copyright cases, he says:
“Ordinarily a civil suit to enforce a personal liability under a federal statute can be brought only in the district of which the defendant is an inhabitant. Judicial Code, § 51 [28 U.S.C.A. § 112]. In a few classes of cases, a carefully limited right to sue elsewhere has been given. In patent eases it is the district of which the defendant is an inhabitant or in which acts of infringement have been committed and the defendant has a regular and established place of business. Judicial Code, § 48 [28 U.S.C.A. § 109]: W. S. Tyler Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723, 35 S.Ct. 458, 59 L.Ed. 808. In cases under the anti-trust laws, it is where the defendant ‘resides or is found or has an agent’ (Act Oct. 15, 1914, c. 323, § 4, 38 Stat. 730, 731 [15 U.S.C.A. § 15]), and, in the case of corporations, the ‘district whereof it is an inhabitant’ or ‘any district wherein it may be found or transacts business.’ ”
28 U.S.C.A. § 105. The United States Court of Appeals for the District of Columbia has held that the doctrine of forum non conveniens is applicable to an action of this character. See Urquart v. American-La France Foamite Corporation, 1944, 79 U.S.App.D.C. 219, 144 F.2d 542, 544.
28 U.S.C.A. § 112.
45 U.S.C.A. §56.
15 U.S.C.A. § 22.
United States v. Standard Oil Co., D.C.1947, 7 F.R.D. 338.
Gulf Oil Corporation v. Gilbert, 1947, 330 U.S. 501, 67 S.Ct. 839, 841.
Baltimore & Ohio Ry. v. Kepner, 1941, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222; Miles v. Illinois Central Ry., 1942, 315 U.S. 698, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104.
Koster v. Lumbermen’s Mutual Co., 1947, 330 U.S. 518, 519, 67 S.Ct. 828.
Baltimore & Ohio Ry. v. Kepner,1941, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222.
Miles v. Illinois Central Ry., 1942, 315 U.S. 698, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104.
The following are among the Circuit Court cases in which the doctrine has been expounded; Schendel v. McGee, 8 Cir., 1924, 300 F. 273; Southern Ry. v. Cochran, 6 Cir., 1932, 56 F.2d 1019; Wood v. Delaware & H. R. Corporation, 2 Cir., 1933, 63 F.2d 235; Chesapeake & Ohio Ry. v. Vigor, 6 Cir., 1937, 90 F.2d 7; Southern Ry. Co. v. Painter, 8 Cir., 1941, 117 F.2d 100, 103, 106; And see, Leet v. Union Pacific Co., 1944, 25 Cal.2d 605, 609, 610, 155 P.2d 42, 158 A.L.R. 1008.
See Thomas B. Gray, Venue of Actions, 33 American Bar Association Journal, July 1947, page 659.
See the language of the late Judge. Grover L. Moskowitz in Sacco v. Baltimore & Ohio Ry. Co., D.C.N.Y.1944, 56 F.Supp. 959.
H.R. 1639.
Missouri Pacific Ry. v. Ault, 1921, 256 U.S. 554, 41 S.Ct. 593, 65 L.Ed. 1087; Alabama & V. R. Co. v. Journey, 1921, 257 U.S. 111, 42 S.Ct. 6, 66 L.Ed. 154.
Miles v. Illinois Central Ry., 1942, 315 U.S. 698, 62 S.Ct. 827, 832, 86 L.Ed. 1129, 146 A.L.R. 1104.
28 U.S.C.A. § 112.
Koster v. Lumbermen’s Mutual Co., 1947, 330 U.S. 518, 519, 67 S.Ct. 828, 831.
See cases in Notes 7 and 8.
Since the foregoing opinion was written, two articles have appeared which were not available at the time, in which the writers reach the identical conclusion here announced as to the meaning of the Gulf and Koster cases. See: Robert Braucher, The Inconvenient Federal Forum, 1947, 60 Harvard Law Review, p. 908, especially pages 926, 927; Edward L. Barrett, Jr., Forum Non Conveniens, 1947, 35 California Law Review, page 380, especially pages 399, 402.
It is significant that both writers consider the statement in the Gulf ease on which the chief contention of the Government here was based, and which is quoted in Portion III of the opinion, dictum, not necessary for the decision. Barrett goes further and holds that there is no
15 U.S.C.A. § 22.
Eastman Kodak Co. of New York v. Southern Photo Materials Co., 1927, 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684.
15 U.S.C.A. § 5.
C.C., 152 F. 290, 296. Counsel for the Government seem to think that this case teaches that the doctrine of forum non conveniens does not apply to antitrust cases. I do not so read it. It is to be borne in mind that the court was not asked to dismiss the action because of the choice of inappropriate forum. An order had been made by the Circuit Court to bring in the non-resident defendants. They moved to vacate the order and to quash the service of summons upon them. The court having exercised its judgment, having granted the order, and having determined that the ends of justice required the presence of the non-resident defendants, the matter was at an end. And the reviewing court, as the first sentence of the quotation says distinctly, was not determining in which court the ends of justice required the complainant to institute its suit, but whether the ends of justice required that other defendants be broxight in. Clearly then, the question which confronts us here was not before the court in that case, and the ruling in it does not help the position of the Government in this case.
Virginian R. Co. v. System Federation, 1937, 300 U.S. 515, 552, 57 S.Ct. 592, 81 L.Ed. 789.
United States v. National City Lines et al., D.C.Cal.1947, 7 F.R.D. 393.
326 U.S. 549, 550, 66 S.Ct. 284, 287, 90 L.Ed. 311.
Peterson v. Chicago etc. Ry., 1907, 205 U.S. 364, 27 S.Ct. 513, 51 L.Ed. 841; Philadelphia etc. Ry., v. McKibbin, 1917, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710; People’s Tobacco Co. Ltd. v. American Tobacco Co., 1917, 246 U.S. 79, 87, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas. 1918C, 537.
Roscoe Pound, A Survey of Social Interests, 1943, 57 Harvard Law Review, 1-39; Roscoe Pound, Law and the State, Jurisprudence and Politics, 1944, 57 Harvard Law Review 1193 et seq.; Roscoe Pound, A Survey of Public Interests, 1945, 58 Harvard Law Review, 909-929.
15 U.S.C.A. § 29.
My attitude towards this law has ¡been expressed in the following opinions: United States v. Heating, Piping & Air Conditioning Contractors Ass’n, D.C.Cal.,1940, 33 F.Supp. 978; United States v. Food and Grocery Bureau, D.C.Cal.,1942, 43 F.Supp. 966; United States v. Food and Grocery Bureau, D.C.Cal.1942, 43 F.Supp. 974; United States v. San Francisco Electrical Contractors Ass’n, D.C.Cal.,1944, 57 F.Supp. 57.