170 F.2d 569 (9th Cir. 1948), 11766, Burnham Chemical Co. v. Borax Consol.
|Citation:||170 F.2d 569|
|Party Name:||BURNHAM CHEMICAL CO. v. BORAX CONSOLIDATED, Limited, et al.|
|Case Date:||October 27, 1948|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Rehearing Denied Dec. 6, 1948.
Sterling Carr, of San Francisco, Cal. (Thurman Arnold, of Washington, D.C., of counsel), for appellant.
Maurice E. Harrison, Moses Lasky, and Brobeck, Phleger & Harrison, all of San Francisco, Cal., and Gurney Newlin, Paul Sandmeyer, and Newlin, Holley, Sandmeyer & Tackalbury, all of Los Angeles, Cal., for appellees Borax Consol. Pacific Coast Borax Co. and U.S. Borax Co.
Joseph W. Burns, Fulton, Walter & Halley, Michael F. McCarthy, and Oliver & Donnally, all of New York City, and Charles A. Beardsley, of Oakland, Cal., for appellee American Potash & Chemical Corporation.
Before MATHEWS, HEALY, and BONE, Circuit Judge.
BONE, Circuit Judge.
This is an appeal from a final judgment of the district court entered on May 9, 1947, dismissing appellant's action for treble damages brought in July, 1945 under Section 4 of the Clayton Act, 15 U.S.C.A. 15. Appellant, a Nevada corporation, brought the action for damages claimed to have been sustained by it as the result of a conspiracy or conspiracies by appellee corporations. The prayer of the complaint is for an award of money (trebled) as damages, for costs, interest and attorneys' fees with a general prayer for other and further relief deemed fit and proper.
Appellant was organized in 1921 for the purpose of producing borax in the State of California and in its complaint asserts that up to 1933 it had invested $1, 168, 564 in the development of leased property and a patented process. The great length of the complaint makes an adequate summary within reasonable limits of space an impossible task. Many of its 84 paragraphs deal with historic facts concerning the borax industry and charge generally that prior to 1929 world trade in borax was dominated by certain of the appellees, a domination which still exists as a result of unlawful monopoly practices of appellees.
It is alleged generally that appellees conspired in violation of Federal antitrust laws and committed certain overt acts in 1925 and 1928 in pursuance of the conspiracy or conspiracies which caused the damage to appellant and which gave rise to this action; that all of the acts done and performed by appellees or some of them were done with the intent and purpose of destroying appellant's activities; that due to said intents, purposes and acts of appellees, the appellant had been damaged in the sum of $1, 168, 564.
The complaint alleges that for the reasons therein stated the plant and business of plaintiff were shut down and closed on or about January, 1929 since when its struggle for financial rehabilitation was unsuccessful, the resultant loss and damage to appellant being the amount above named, which is the exact amount demanded as a judgment against appellees in the prayer of the complaint.
Reference appears in the complaint, in the evidence at trial, and in the briefs on appeal, to what was declared to be appellees' last 'overt act' this act being generally spoken of as 'The Little Placer' matter. This was a reference to appellant's efforts (continuing up to filing of suit) to secure a Government lease on a certain tract of California land containing kernite deposits, and it claimed that its efforts before a Government agency were there thwarted by resisting activities of appellees. (See footnote 13.) Relevance of this matter arises from the fact that at the trial the court asked appellant's counsel what (overt) act of appellees occurring after 1929 resulted in damage to appellant, aside from the futile attempts to secure a Government lease on The Little Placer. Appellant's counsel responded that nothing else had occurred; that appellant did not
allege any other incidents in its complaint and that it could prove no damage from The Little Placer incident.
Appellant has at all times contended that its complaint is cast in a form which, while demanding treble damages for injuries to a private suitor resulting from violation of the Federal antitrust laws, is nonetheless a suit in equity and not in action at law. Here and below appellees have wholly disagreed with this argument. It presents an important question and we think it necessary to dispose of the issue at the outset by rejecting appellant's theory regarding the character of its pleading, a view that we think finds support in the cases.
An examination of the complaint convinces us that its allegations clearly indicate an intention to state a claim for relief under the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note. They describe and charge injuries or damages, some sustained in 1924 or 1925, and others sustained as a result of act (price cutting in 1928 by appellees) which forced appellant to close its plant and business in 1929. We think there can be no doubt that appellant's action should be regarded as an action at law for damages predicated upon a liability created by statute, and not a civil action for equitable relief, as appellant would have it. The form in which the complaint is cast does not serve to disguise or change the basic nature of the claim upon which appellant rests its demand for relief. Where (as here) a private suitor asserts a claim under the Sherman Act for damages, the gravamen of the complaint is not the conspiracy. The damage for which a recovery is allowable is the damage which the suitor has suffered as the result of acts of the conspirators directed against him and committed in the course of the conspiracy and in furtherance of its purpose. See cases cited by appellees, infra.
In order that the proceedings in the lower court may be better understood they should be considered in light of the issues raised by the complaint and the material contentions of appellant urged both in that court and on this appeal. For that reason we first present these contentions at some length together with cases cited by appellant as supporting them, since this will serve clearly to delineate and clarify the material issues presented to and decided by the lower court. Appellant's contentions are lengthy and are necessarily summarized.
(1) Under the doctrine of Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743, 162 A.L.R. 719, this is an action in equity; (2) the conspiracy itself was a fraud upon appellant giving rise (thereby) to a claim for relief for fraud; (3) appellant was injured by this fraud (the conspiracy itself); (4) appellant's cause of action is founded on, and exclusively on, the 1929 conspiracy and not upon overt acts; (5) because this is an action in equity the State statute of limitations is not applicable; (6) where a plaintiff has been injured by fraud (the conspiracy itself) and remains in ignorance of this fraud without any fault or want of diligence 1 or care on his part, the bar of the statute of limitations does not begin to run until the fraud is discovered though there may be no special circumstances or efforts on the part of the party committing the fraud (of conspiring) to conceal it from the other party, (citing as authority Holmberg v. Armbrecht, supra); (7) in actions founded on conspiracy and where fraud and concealment are alleged, the question underlying that of the bar of the statute of limitations is not whether plaintiff had 'cause to believe' that conspiratorial action by defendants was responsible for his damage, but whether plaintiff
had 'knowledge' of the existence of the conspiracy (his because 'cause to believe' is not synonymous with 'knowledge') or, having been put on notice, whether plaintiff exercised reasonable diligence to acquire the 'knowledge' giving rise to a cause of action; 2 (8) appellant did not know of the existence of the alleged conspiracy and was without means of ascertaining knowledge of such conspiracy until the Federal Government filed suit against most of appellees in September, 1944, (appellant states that the greater part of its complaint is a copy of the Government's complaint) therefore by reason of this ignorance, and its 'discovery' of the fraud (through the filing of this 1944 Government suit), neither the statute of limitations, if applicable, nor laches began to run against appellant until this 'discovery'; (9) the conspiracy here was a 'continuing conspiracy' and it continued, so far as the statute of limitations is concerned, so long as any further action (an overt act) was taken in furtherance of the conspiracy (citing as authority United States v. Kissel, 218 U.S. 601, 31 S.Ct. 124, 54 L.Ed. 1168). Reference is also made to Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 and Fiswick v. United States, 329 U.S. 211, 67 S.Ct. 224, 91 L.Ed. 196; (10) 'The Little Placer' incident was such an 'overt act, ' completed in 1945; (11) its action, although personal in form, is brought additionally as a representative of the public interest (see Neumann v. Bastian-Blessing Company et al., D.C. 1947, 70 F.Supp. 447), ergo, greater latitude should be shown toward it otherwise public interest will suffer.
As indicated above, these were the basic contentions of appellant advanced at the time of trial.
The Proceedings Below
Appellees made timely motions to strike portions of the complaint, as amended, and to dismiss for failure to state a claim upon which relief may be granted, and also because the action was barred by a California three-year statute of limitations (Section 338(1) of the California Code of Civil Procedure). 3 Appellees supported their motions by affidavits and appellant filed counter-affidavits. The parties entered into a written stipulation in which it was agreed...
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