289 F.2d 86 (9th Cir. 1961), 16149, Continental Ore Co. v. Union Carbide & Carbon Corp.

Docket Nº:16149.
Citation:289 F.2d 86
Party Name:CONTINENTAL ORE COMPANY, a Partnership; and Henry J. Leir, Erna D. Leir, Lina Schloss, as Individuals and as Partners under the trade name and style of Continental Ore Company, Appellants, v. UNION CARBIDE AND CARBON CORPORATION; United States Vanadium Corporation; Electro Metallurgical Company; Electro Metallurgical Sales Corporation; Electro Meta
Case Date:March 22, 1961
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
FREE EXCERPT

Page 86

289 F.2d 86 (9th Cir. 1961)

CONTINENTAL ORE COMPANY, a Partnership; and Henry J. Leir, Erna D. Leir, Lina Schloss, as Individuals and as Partners under the trade name and style of Continental Ore Company, Appellants,

v.

UNION CARBIDE AND CARBON CORPORATION; United States Vanadium Corporation; Electro Metallurgical Company; Electro Metallurgical Sales Corporation; Electro Metallugical Company of Canada, Limited; Vanadium Corporation of America, Appellees.

No. 16149.

United States Court of Appeals, Ninth Circuit.

March 22, 1961

Rehearing Denied May 15, 1961.

Joseph L. Alioto, Maxwell Keith, Richard Saveri and G. Joseph Bertain, Jr., San Franscisco, Cal., and Cadwalader, Wickersham & Taft, New York City, for appellants.

Herbert W. Clark, Richard J. Archer and Girvan Peck, San Francisco, Cal., Morrison, Foerster, Holloway, Shuman & Clark, San Francisco, Cal., of counsel for appellees Union Carbide & Carbon Corp. et al.

Pillsbury, Madison & Sutro, Francis N. Marshall, G, H. Eckhardt, Jr., San Francisco, Cal., Josiah G. Holland, Denver, Colo., Edward R . Neaher, New York City, for appellee Vanadium Corp. of America.

Page 87

Before MERRILL and MAGRUDER, Circuit Judges, and SOLOMON, District judge.

MAGRUDER, Circuit Judge.

Plaintiffs filed in the court below a treble damage antitrust complaint against defendants. Plaintiffs, a partnership and the partners in it suing individually, are the successors in interest to a family corporation known as Continental Ore Corporation. Both the plaintiff partnership, Continental Ore Company, and the previous corporation will be referred to as Continental.

The guiding light in Continental has been and still is the plaintiff Henry J. Leir. Leir was born in Germany and entered the ore and metal business there. His enterprises in Germany involved for the most part the purchase of raw materials for metal producers and the sale of their finished products. Upon Hitler's rise to power Leir moved to Luxembourg, where he formed a company known as Societe Anonyme des Minerais. This corporation subsequently entered into a joint venture with the Societe d'ElectroChimie de Brignoud, a French company otherwise known as Fredet-Kuhlmann. Brignoud undertook to install equipment for the production of ferro-vanadium and other alloys by a process known as the alumino-thermic method; Minerais supplied the raw materials, and the profits were split evenly. In 1938 Leir moved again, this time to the United States. He organized the Continental Ore Corporation in 1939 under the laws of the State of New York.

The defendants named in the complaint are Union Carbide and Carbon Corporation, a New York corporation, United States Vanadium Corporation, a Delaware corporation, Electro Metallurgical Company, a West Virginia corporation, Electro Metallugical Sales Corporation, a New York Corporation, Electro Metallurgical Company of Canada, Ltd ., a Canadian corporation, and Vanadium Corporation of America, a Delaware corporation. Several other persons, whose names were unknown to the plaintiffs, were listed as Doe defendants.

The complaint states that, by means of a combination and conspiracy in violation of §§ 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1 and 2, defendants eliminated the plaintiffs and their predecessor in interest, the Continental Ore Corporation, hereinafter included in the term plaintiffs, from the business of producing, selling and distributing vanadium oxide and ferro-vanadium. Plaintiffs claim that they made several forays into the vanadium industry, sometimes approaching the brink of success, other times not getting quite so far. Their inability to reach the desired goal in any of their various vanadium undertakings is the gist of their complaint. They ascribe their failures to defendants' alleged unlawful course of conduct.

Vanadium is a rare metallic element found for the most part in carnotite and roscolite ores. These vanadium-bearing ores are taken from the mines to the mills where they are 'crushed, ' 'roasted' and 'leached' to form a substance called red cake. The red cake is then fused into a black oxide, which is called vanadium oxide, vanadic acid, vanadium pentoxide, or V(2), 0(5). This oxide is then converted into ferro-vanadium through the application of great heat either by means of an electric furnace or by the alumino-thermic process. The ferrovanadium thus produced is used by steel makers in the steel bath to add toughness and tensile strength to the steel.

According to the complaint, the defendants frustrated the plaintiffs' sallies into the vanadium field in five particulars:

(1) In 1938 Leir negotiated a contract between Apex Smelting Company of Chicago (hereinafter 'Apex') and Societe d'Electro-Chimie de Bringnoud, the French corporation. Subsequently the plaintiffs were assigned one half of Brignoud's interest under the contract. The agreement provided that Apex was to build and operate a ferro-vanadium plant, using Brignoud's alumino-thermic method of conversion. Brignoud was to contribute the secrets of this process as its part of the project. Since the profits were to be divided equally between the two signatories to the agreement, the

Page 88

plaintiffs, as a result of the assignment to them, became entitled to one quarter of the profits realized from the arrangement. Plaintiffs were also appointed exclusive sales agents throughout most of the United States for the ferro-vanadium to be manufactured by Apex.

Production under this agreement was not actually begun by Apex until April, 1940. The agreement was terminated by Apex in the spring of 1942. According to the complaint, Apex ceased operations in ferro-vanadium and canceled the aforesaid agreement because a sufficient supply of oxide could not be obtained, this being attributed to defendants' antitrust violations. More specifically, in pursuance of their illegal combination and conspiracy, defendants were said to have refused to sell enough oxide to Apex and also to have prevented Apex from acquiring the necessary quantities of raw materials from other suppliers.

(2) In 1942, after the termination of the unfortunate Apex joint venture, the plaintiffs transformed rented premises on Long Island, New York, and there packaged a vanadium compound made up of vanadium oxide and small amounts of other materials, This compound, which was sold under the trade name Van-Ex, was designed for direct use in the steel bath where it could be converted into ferro-vanadium and mixed into the steel in one operation, thereby obviating the need to produce ferro-vanadium by a separate procedure. In 1944 the sale of Van-ex was discontinued because, according to plaintiffs' allegations, defendants' antitrust violations precluded the acquisition of sufficient oxide and ore. It is claimed that defendants refused to sell to the plaintiffs and prevented their securing raw materials elsewhere.

(3) During 1942 the plaintiffs sold substantial quantities of ferro-vanadium, apparently produced by Apex, and of Van-Ex to a Canadian company, Atlas Steels, Ltd. These sales ceased during 1943 because, as alleged, defendants agreed with Electro Metallurgical Company of Canada, Ltd., a wholly owned subsidiary of defendant Union Carbide, and the wartime agent of the Canadian Government for the purchase and allocation of vanadium products to Canadian steel firms, to eliminate Continental from the Canadian market. Pursuant to the agreement Electro Metallurgical Company of Canada refused, while exercising its powers as an agent of the Canadian Government, to purchase for and allocate to Canadian steel makers vanadium products made by the plaintiffs.

(4) During 1943, by threats of reprisals defendants allegedly forced the termination of contractual negotiations between Climax Molybdenum Corporation and the plaintiffs.

(5) In 1944 plaintiffs and Imperial Paper & Color Corporation entered into a contract much like the Apex arrangement above described, but providing in addition for the milling of oxide from vanadium ore. Imperial abandoned this contract before the production stage was ever reached because, according to the allegations, neither Imperial nor Continental was able to secure either ore or oxide with which to work as a consequence of defendants' refusal to sell supplies to them and of their actions which precluded the purchase of the same from other persons.

These five particulars by which defendants' alleged monopoly was purportedly furthered at Continental's expense are given as the reason for plaintiffs' assertion that after 1944 they could no longer operate profitably in the vanadium business. The...

To continue reading

FREE SIGN UP