United States v. Du Pont De Nemours and Company, 55

• Citation: 81 S.Ct. 1243,366 U.S. 316,6 L.Ed.2d 318
• Decision Date: 22 May 1961
• Docket Number: No. 55,55
• Parties: UNITED STATES, Appellant, v. E. I. DU PONT DE NEMOURS AND COMPANY et al
• Court: United States Supreme Court

366 U.S. 316

81 S.Ct. 1243

6 L.Ed.2d 318

UNITED STATES, Appellant,

v E. I. DU PONT DE NEMOURS AND COMPANY et al.

No. 55.

Argued Feb. 20, 21, 1961.

Decided May 22, 1961.

[Syllabus from pages 316-317 intentionally omitted] Mr. John F. Davis, Washington, D.C., for appellant.

Mr. Hugh B. Cox, New York City, for appellee, E. I. du Pont de Nemours and co.

Mr. Robert L. Stern, Chicago, Ill., for appellee, General Motors Corp.

Mr. Wilkie Bushby, New York City, for appellees, Christiana Securities Co. and Delaware Realty and Investment Co.

Mr. Justice BRENNAN delivered the opinion of the Court.

The United States filed this action in 1949 in the District Court for the Northern District of Illinois. The complaint alleged that the ownership and use by appellee E. I. du Pont de Nemours & Co. of approximately 23 percent of the voting common stock of appellee General Motors Corporation was a violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2, and of section 7 of the Clayton Act, 15 U.S.C. § 18, 15 U.S.C.A. § 18. After trial, the District Court dismissed the complaint. D.C.N.D.Ill.1954, 126 F.Supp. 235. On the Government's appeal, we reversed. We held that du Pont's acquisition of the 23 percent of General Motors stock had led to the insulation from free competition of most of the General Motors market in automobile finishes and fabrics, with the resultant likelihood, at the time of suit, of the creation of a monopoly of a line of commerce, and, accordingly, that du Pont had violated § 7 of the Clayton Act. United States v. E. I. du Pont de Nemours & Co., 1957, 353 U.S. 586, 77 S.Ct. 872, 885, 1 L.Ed.2d 1057. ¹ We did not, however, determine what equitable relief was necessary in the public interest. Instead, we observed that '(t)he District Courts * * * are clothed 'with large discretion to model their judgments to fit the exigencies of the particular case.' International Salt Co. v. United States, 332 U.S. 392, 400—401, 68 S.Ct. 12, 17, 92 L.Ed. 20,' and remanded the cause to the District Court 'for a determination, after further hearing, of the equitable relief necessary and appropriate in the public interest to eliminate the effects of the acquisition offensive to the statute.' 353 U.S. at pages 607—608, 77 S.Ct. at page 885.

On remand, the District Court invited the Government to submit a plan of relief which in its opinion would be effective to remedy the violation. The court also appointed two amici curiae to represent the interests of General Motors and du Pont shareholders, respectively, most of whom, of course, had not been made parties to this litigation. The Government submitted a proposed plan of relief. That plan included diverse forms of injunctive relief, but its principal feature was a requirement that within 10 years the du Pont company completely divest itself of its approximately 63 million General Motors shares. The Government proposed that about two-thirds of these shares be distributed pro rata to the generality of du Pont shareholders in the form of dividends over the 10-year period. The other one-third of du Pont's General Motors holdings—stock which would have gone to appellees Christiana Securities Company and Delaware Realty and Investment Company, holding companies long identified with the du Pont family itself—weret o go to a court-appointed trustee, to be sold gradually over the same 10-year period. Du Pont objected that the Government's plan of complete divestiture entailed harsh income-tax consequences for du Pont stockholders and, if adopted, would also threaten seriously to depress the market value of du Pont and General Motors stock. Du Pont therefore proposed its own plan designed to avoid these results. The slient feature of its plan was substitution for the Government's proposed complete divestiture of a plan for partial divestiture in the form of a so-called 'pass through' of voting rights, whereby du Pont would retain all attributes of ownership of the General Motors stock, including the right to receive dividends and a share of assets on liquidation, except the right to vote. The vote was to be 'passed through' to du Pont's shareholders proportionally to their holdings of du Pont's own shares, except that Christiana and Delaware would 'pass through' the votes allocable to them to their own shareholders. The amici curiae also proposed plans of compliance, substantially equivalent to the du Pont plan. The amicus representing the generality of du Pont shareholders proposed in addition a program of so-called 'take-downs,' by which du Pont shareholders would be allowed to exchange their du Pont common stock for a new class of du Pont 'Special Common,' plus their pro rata share of du Pont-held General Motors common stock.

The District Court held several weeks of hearings. The evidence taken at the hearings, largely of expert witnesses, fills some 3,000 pages in the record before us, and, together with the numerous financial charts and tables received as exhibits, bears mainly not on the competition-restoring effect of the several proposals, but rather on which proposal would have the more, and which the less, serious tax and market consequences for the owners of the du Pont and General Motors stock. The District Court concluded that although '* * * there is no need for the Court to resolve the conflict in the evidence as to how severe those consequences would be(, t)he Court is persuaded beyond any doubt that a judgment of the kind proposed by the Government would have very serious adverse consequences.' D.C.N.D.Ill.1959, 177 F.Supp. 1, 42. The court for this reason rejected the Government's plan and adopted the du Pont proposal, with some significant modifications. The 'pass through' of voting rights, for example, was so limited that neither Christiana, Delaware, nor their officers and directors (plus resident members of the latter's families), should be able to vote any of the du Pont-held General Motors stock; General Motors shares allocable to the two companies or to their officers and directors, or to the officers and directors of du Pont, or to resident members of the families of the officers and directors of the several companies, were to be sterilized, voted by no one. Du Pont, Christiana, and Delaware were forbidden to acquire any additional General Motors stock. Du Pont and General Motors might not have any preferential or discriminatory trade relations or contracts with each other. No officer or director of du Pont, Christiana, or Delaware might also serve as an officer or director of General Motors. Nor might du Pont, Christiana, or Delaware nominate or propose any person to be a General Motors officer or director, or seek in any way to influence the choice of persons to fill those posts. The Government objected that without a provision ordering complete divestiture the decree, although otherwise satisfactory, was inadequate to redress the antitrust violation, and filed its appeal here under § 2 of the Expediting Act, 15 U.S.C. § 29, 15 U.S.C.A. § 29. We noted probable jurisdiction. 1960, 362 U.S. 986, 80 S.Ct. 1075, 4 L.Ed.2d 1020.

A threshold question—and one which, although subsidiary, is most important—concerns the scope of our review of the District Court's discharge of the duty delegated by our judgment to formulate a decree. In u r former opinion we alluded to the 'large discretion' of the District Courts in matters of remedy in antitrust cases. Many opinions of the Court in such cases observe that '(t) he formulation of decrees is largely left to the discretion of the trial court * * *,' Maryland & Virginia Milk Producers Ass'n v. United States, 1960, 362 U.S. 458, 473, 80 S.Ct. 847, 856, 4 L.Ed.2d 880; '(i)n framing relief in antitrust cases, a range of discretion rests with the trial judge,' Besser Mfg. Co. v. United States, 1952, 343 U.S. 444, 449, 72 S.Ct. 838, 841, 96 L.Ed. 1063; '(t)he determination of the scope of the decree to accomplish its purpose is peculiarly the responsibility of the trial court,' United States v. United States Gypsum Co., 1950, 340 U.S. 76, 89, 71 S.Ct. 160, 169, 95 L.Ed. 89; '(t) he framing of decrees should take place in the District rather than in Appellate Courts,' International Salt Co. v. United States, 1947, 332 U.S. 392, 400, 68 S.Ct. 12, 17, 92 L.Ed. 20. The Court has on occasion said that decrees will be upheld in the absence of a showing of an abuse of discretion. See, e.g., Maryland & Virginia Milk Producers Ass'n v. United States, supra, 362 U.S. at page 473, 80 S.Ct. at page 856; United States v. W. T. Grant Co., 1953, 345 U.S. 629, 634, 73 S.Ct. 894, 898, 97 L.Ed. 1303; Timken Roller Bearing Co. v. United States, 1951, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199;² United States v. National Lead Co., 1947, 332 U.S. 319, 334—335, 67 S.Ct. 1634, 1640—1641, 91 L.Ed. 2077; United States v. Crescent Amusement Co., 1944, 323 U.S. 173, 185, 65 S.Ct. 254, 260, 89 L.Ed. 160.³ These expressions are not, however, to be understood to imply a narrow review here of the remedies fashioned by the District Courts in antitrust cases. On the contrary, our practice, particularly in cases of a direct appeal from the decree of a single judge, is to examine the District Court's action closely to satisfy ourselves that the relief is effective to redress the antitrust violation proved. 'The relief granted by a trial court in an antitrust case and brought here on direct appeal, thus by-passing the usual appellate review, has always had the most careful scrutiny of this Court. Though the records are usually most voluminous and their review exceedingly burdensome, we have painstakingly undertaken it to make certain that justice has been done.' International Boxing Club of New York v. United States, 1959, 358 U.S. 242, 253, 79 S.Ct. 245, 252, 3 L.Ed.2d 270; see also id., at page 263, 79 S.Ct. at page 256 (dissenting opinion). We have made it clear that a decree formulated by a District Court is not ...