365 U.S. 127 (1961), 50, Eastern Railroad Presidents Conference

Docket Nº:No. 50
Citation:365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464
Party Name:Eastern Railroad Presidents Conference
Case Date:February 20, 1961
Court:United States Supreme Court
 
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365 U.S. 127 (1961)

81 S.Ct. 523, 5 L.Ed.2d 464

Eastern Railroad Presidents Conference

No. 50

United States Supreme Court

Feb. 20, 1961

v. Noerr Motor Freight, Inc.

Argued December 12-13, 1960

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Syllabus

A group of trucking companies and their trade association sued under §4 of the Clayton Act for treble damages and injunctive relief against a group of railroads, a railroad association and a public relations firm, charging that the defendants had conspired to restrain trade in, and monopolize, the long-distance freight business, in violation of §§ 1 and 2 of the Sherman Act. They alleged, inter alia, that the railroads had engaged the public relations firm to conduct a publicity campaign against the truckers designed to foster the adoption and retention of laws and law enforcement practices destructive of the trucking business, to create an atmosphere of distaste for the truckers among the general public, and to impair the relationships existing between the truckers and their customers. After a trial, the District Court entered a judgment awarding damages to the plaintiffs and enjoining the practices complained of.

Held: The judgment is reversed. Pp. 128-145.

(a) No violation of the Sherman Act can be predicated upon mere attempts to influence the passage or enforcement of laws. Pp. 135-136.

(b) The Sherman Act does not prohibit two or more persons from associating together in an attempt to persuade the legislature or the executive to take particular action with respect to a law that would produce a restraint or monopoly; and it does not apply to the activities of these railroads, at least insofar as those activities comprised mere solicitation of governmental action with respect to the passage and enforcement of laws. Pp. 136-138.

(c) At least insofar as the railroads' campaign was directed toward obtaining governmental action, it was not made violative of the Sherman Act by any anticompetitive purpose it may have had, such as a purpose to destroy the truckers as competitors for the long-distance freight business. Pp. 138-140.

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(d) Nor was the railroads' campaign made violative of the Sherman Act by their use of the so-called third-party technique, whereby propaganda actually circulated by a party in interest is given the appearance of being the spontaneously expressed views of independent persons and civic groups. Pp. 140-142.

(e) A different conclusion is not required by the finding of the District Court that the railroads' campaign was intended to, and did in fact, injure the truckers in their relationships with the public and with their customers. Pp. 142-145.

273 F.2d 218, reversed.

BLACK, J., lead opinion

[81 S.Ct. 525] MR. JUSTICE BLACK delivered the opinion of the Court.

American railroads have always largely depended upon income from the long-distance transportation of heavy freight for economic survival. During the early years of their existence, they had virtually no competition in this aspect of their business, but, as early as the 1920's, the growth of the trucking industry in this country began to bring about changes in this situation. For the truckers found, just as the railroads had learned earlier, that a very profitable part of the transportation business was the long hauling of heavy freight. As the trucking industry became more and more powerful, the competition between it and the railroads for this business became increasingly intense until, during the period following the conclusion of World War II, at least the railroads, if not both of the competing groups, came to view the struggle

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as one of economic life or death for their method of transportation. The present litigation is an outgrowth of one part of that struggle.

The case was commenced by a complaint filed in the United States District Court in Pennsylvania on behalf of 41 Pennsylvania truck operators and their trade association, the Pennsylvania Motor Truck Association. This complaint, which named as defendants 24 Eastern railroads, an association of the presidents of those railroads known as the Eastern Railroad Presidents Conference, and a public relations firm, Carl Byoir & Associates, Inc., charged that the defendants had conspired to restrain trade in and monopolize the long-distance freight business in violation of §§ 11 and 22 of the Sherman Act. The gist of the conspiracy alleged was that the railroads had engaged Byoir to conduct a publicity campaign against the truckers designed to foster the adoption and retention of laws and law enforcement practices destructive of the trucking business, to create an atmosphere of distaste for the truckers among the general public, and to impair the relationships existing between the truckers and their customers. The campaign so conducted was described in the complaint as "vicious, corrupt, and fraudulent," first, in that the sole motivation behind it was the desire on the part of the railroads to injure the truckers and eventually to destroy them as competitors in the long-distance freight business, and, secondly, in that the defendants utilized the

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so-called third-party technique, that is, the publicity matter circulated in the campaign was made to appear as spontaneously expressed views of independent persons and civic groups when, in fact, it was largely prepared and produced by Byoir and paid for by the railroads.3 The complaint then went on to supplement these more or less general [81 S.Ct. 526] allegations with specific charges as to particular instances in which the railroads had attempted to influence legislation by means of their publicity campaign. One of several such charges was that the defendants had succeeded in persuading the Governor of Pennsylvania to veto a measure known as the "Fair Truck Bill,"4 which would have permitted truckers to carry heavier loads over Pennsylvania roads.

The prayer of the complaint was for treble damages under § 4 of the Clayton Act5 and an injunction restraining the defendants from further acts in pursuance of the conspiracy. Insofar as the prayer for damages was concerned, a stipulation was entered that the only damages suffered by the individual truck operators was the loss of business that resulted from the veto of the "Fair Truck Bill" by the Governor of Pennsylvania, and, accordingly, the claim for damages was limited to an amount based upon the loss of profits as a result of this veto plus the expenses incurred by the truckers' trade association

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for the purpose of combatting the railroads' publicity campaign. The prayer for injunctive relief was much broader, however, asking that the defendants be restrained from disseminating any disparaging information about the truckers without disclosing railroad participation, from attempting to exert any pressure upon the legislature or Governor of Pennsylvania through the medium of front organizations, from paying any private or public organizations to propagate the arguments of the railroads against the truckers or their business, and from doing "any other act or thing to further . . . the objects and purposes" of the conspiracy.

In their answer to this complaint, the railroads admitted that they had conducted a publicity campaign designed to influence the passage of state laws relating to truck weight limits and tax rates on heavy trucks, and to encourage a more rigid enforcement of state laws penalizing trucks for overweight loads and other traffic violations, but they denied that their campaign was motivated either by a desire to destroy the trucking business as a competitor or to interfere with the relationships between the truckers and their customers. Rather, they insisted, the campaign was conducted in furtherance of their rights

to inform the public and the legislatures of the several states of the truth with regard to the enormous damage done to the roads by the operators of heavy and especially of overweight trucks, with regard to their repeated and deliberate violations of the law limiting the weight and speed of big trucks, with regard to their failure to pay their fair share of the cost of constructing, maintaining and repairing the roads, and with regard to the driving hazards they create. . . .

Such a campaign, the defendants maintained, did not constitute a violation of the Sherman Act, presumably because that Act could not properly be interpreted to apply either to restraints of trade or monopolizations that result from the passage or enforcement of laws

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or to efforts of individuals to bring about the passage or enforcement of laws.6

[81 S.Ct. 527] Subsequently, defendants broadened the scope of the litigation by filing a counterclaim in which they charged that the truckers had themselves violated §§ 1 and 2 of the Sherman Act by conspiring to destroy the railroads' competition in the long-distance freight business and to monopolize that business for heavy trucks. The means of the conspiracy alleged in the counterclaim were much the same as those with which the truckers had charged the railroads in the original complaint, including allegations of the conduct of a malicious publicity campaign designed to destroy the railroads' business by law, to create an atmosphere hostile to the railroads among the general public, and to interfere with relationships existing between the railroads and their customers. The prayer for relief of the counterclaim, like that of the truckers' original complaint, was for treble damages and an injunction restraining continuance of the allegedly unlawful practices. In their reply to this counterclaim, the truckers denied each of the allegations that charged a violation of the Sherman Act and, in addition...

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