Locklin v. Day-Glo Color Corporation

• Decision Date: 15 September 1970
• Docket Number: 17731.,No. 17730,17730
• Citation: 429 F.2d 873
• Parties: Harry P. LOCKLIN and Elmer J. Brandt, d/b/a Radiant Color Company, Counter-Plaintiffs, Appellees, and Cross-Appellants, v. DAY-GLO COLOR CORPORATION (formerly Switzer Bros., Inc.), Robert C. Switzer, and Joseph L. Switzer, Counter-Defendants, Appellants, and Cross-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

429 F.2d 873 (1970)

Harry P. LOCKLIN and Elmer J. Brandt, d/b/a Radiant Color Company, Counter-Plaintiffs, Appellees, and Cross-Appellants, v. DAY-GLO COLOR CORPORATION (formerly Switzer Bros., Inc.), Robert C. Switzer, and Joseph L. Switzer, Counter-Defendants, Appellants, and Cross-Appellees.

Nos. 17730, 17731.

United States Court of Appeals, Seventh Circuit.

June 26, 1970.

Rehearing Denied September 15, 1970.

Charles L. Michod, Chicago, Ill., Carl Hoppe, San Francisco, Cal., for Locklin.

Samuel W. Kipnis, Chicago, Ill., Thomas V. Koykka, Arter & Hadden, Thomas J. Gray, Cleveland, Ohio, for Day-Glo Color Corp., and others.

Before SWYGERT, Chief Judge, KILEY, Circuit Judge, and GRANT, District Judge.^*

GRANT, District Judge:

INTRODUCTION

In these cases, Day-Glo Color Corporation, et al., (hereinafter "Switzer") appeal, and Locklin and Brandt (hereinafter "Radiant") cross appeal, from the district court's judgment. We affirm.

HISTORY

The parties compete in the daylight fluorescent materials market. The two types of products involved are liquid colors (variously known as silk screen colors, wet colors, paint, and ink) and paper coated with fluorescent colors.

On 20 October 1948 Switzer began its United States licensing program, the first successful step in the commercial exploitation of patent rights, culminating fifteen years of preparatory work. Radiant, after two years of preparation, entered the business on 1 January 1949.

On 5 June 1952 Switzer began this case in the district court as a patent infringement suit against sixteen of Radiant's customers, including the Chicago Cardboard Company. Seven months later Radiant was allowed to intervene as a party defendant and on 19 February 1954, after this court reversed the district court's denial of leave,¹ filed an anti-trust counterclaim charging violation of 15 U.S.C. §§ 1, 2, and 14.

Several years later Switzer encountered rough going in its similar patent infringement suit against another Radiant customer in Ohio. The Ohio suit was dismissed for failure to join indispensable parties, co-owners of the patent in issue.² The court below gave Switzer the same treatment in the Illinois suit and we affirmed. Switzer Bros., Inc. v. Chicago Cardboard Co., 252 F.2d 407 (7th Cir. 1958).

The cause now before us then went to trial on Radiant's amended counterclaim and Switzer's counterclaim against Radiant, culminating in the 12 August 1960 judgment that Switzer, without malice or bad faith, violated the anti-trust laws. Switzer's counterclaim was dismissed for lack of evidence. We affirmed.³ The district court, on 14 June 1962, referred the case to a special master to report on damages as enumerated in the findings,⁴ costs expended, and the amount of reasonable attorney fees.

The master began hearing evidence on 31 March 1964. Subsequently Radiant was rebuffed by the district court in its effort to file a supplemental counterclaim on the ground that the issues sought to be raised had been litigated elsewhere. We affirmed the district court's denial of leave to file the supplemental counterclaim.⁵

Six years after the reference, during which time forty-three days were spent in presenting evidence and argument, the master filed his report of over two hundred and thirty-one printed pages, based upon nine thousand pages of documents and testimony concluding that Radiant was damaged in the amount of $1,145,378.73.⁶ Over objection, the district court entered judgment for that amount. The parties, for the fifth time, appeal here.

STANDARD OF REVIEW

The parties are entitled to a real review to determine whether or not the factual findings are clearly erroneous. Becker v. Loew's, Inc., 133 F.2d 889 (7th Cir.), cert. denied, 319 U.S. 772, 63 S.Ct. 1438, 87 L.Ed. 1720, rehearing denied, 320 U.S. 811, 64 S.Ct. 30, 88 L.Ed. 490 (1943). Although the master's findings of fact are binding on the district court unless clearly erroneous, Rule 53(e) (2), Fed.R.Civ.P., that rule is not "an invitation to abdicate the judicial function upon receiving a master's report." Krinsley v. United Artists Corp., 225 F.2d 579, 583 (7th Cir. 1955). It is incumbent upon us to determine whether or not the district court correctly applied the clearly erroneous test to the master's findings of fact.

THE CROSS APPEAL

Radiant, on cross-appeal, raises two issues. First, we are asked to decide that the judgment, expressed in dollars, is erroneous for lack of an upward adjustment equivalent to the inflationary shrinkage occurring since the 1950's, the time during which damage was actually sustained, until the entry of judgment.

There are some cases where inflation was considered as a factor in assessing damages, see e. g., Waterman S. S. Corp. v. Dean, 171 F.2d 408 (4th Cir. 1948), cert. denied, 337 U.S. 924, 69 S.Ct. 1168, 93 L.Ed. 1732 (1949) salvage; many cases where dollar value is simply ignored, see e. g., Bates v. United States, 108 F.2d 407 (7th Cir. 1939), cert. denied, 309 U.S. 666, 60 S.Ct. 591, 84 L.Ed. 1013 (1940) tax refund suit; and a host of cases where inflation is used to demonstrate why a trial court committed no error in refusing to order a remittitur when a damage award, compared to past cases, seems high, see e. g., Virginian Ry. Co. v. Rose, 267 F.2d 312 (4th Cir.), cert. denied, 361 U. S. 837, 80 S.Ct. 89, 4 L.Ed.2d 77 (1959) personal injury. We are unable, however, to find any authority requiring, or even allowing, the increase of a damage award, once found, to offset the decreased value of the dollar.

Nor can Radiant successfully contend that the master erred in failing to consider inflation to arrive at the damage figure on the ground that this is customary in other types of "tort" situations and that the lack of a consumer price index adjustment deprives it of property without due process of law. Both of these arguments can be met with the single observation that Radiant's 1950 economic losses, awarded in 1960 dollars, were trebled.⁷

Radiant next asks that interest run, not only from the date of judgment, 13 March 1969, but also from the date the master's report was filed, 3 June 1968. Interest is not enumerated as a recoverable item in the statute, 15 U.S.C. § 15. Recovery of it is therefore precluded. Cf. Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945).⁸ Radiant is then relegated to the general interest statute, 28 U.S.C. § 1961, which allows interest on a money judgment only from its entry date. The judgment on cross appeal must be affirmed.

THE APPEAL

Switzer presents five main points in support of its position that the judgment must be reversed, in whole or in part.

A. The Settlement

Radiant brought a suit similar to this one in California on 21 October 1955 charging Switzer, Sherwin-Williams, one of its subsidiaries, and another, with conspiracy to violate the anti-trust laws. The case was terminated by the granting of Radiant's motion to dismiss on 25 August 1960. Switzer says that Radiant should have no damages here because the latter released its claim against Sherwin-Williams in the California conspiracy suit without a reservation of rights against remaining tortfeasors who committed the same tortious acts,⁹ even if they were not sued,¹⁰ even if no written release were signed,¹¹ and regardless of plaintiff's intent.¹²

Reliance is had upon the following facts, as found by the master: The California conspiracy suit involved the same wrongs here asserted, Sherwin-Williams would do no business with Radiant until the law suit was dismissed, the former making it clear that a one-year supply contract for Radiant's pigments would be waiting upon dismissal, Radiant dismissed the suit "in anticipation" of the supply contract, and the contract was executed.

The record, however, reveals at least two additional critical facts, viz., Locklin denied any settlement agreement, and the supply contract was the third in a series. This sufficed, as both the master and the district court noted, to put the matter in dispute.

Switzer of necessity must argue that the facts surrounding dismissal of the California suit show, as a matter of law, that the dismissal was the quid pro quo for the supply contract. Put another way, that the supply contract was the satisfaction for the wrongs Radiant alleged it suffered. The facts, of course, show no such thing. Switzer's conclusion is merely an inference to be drawn from the facts. The master, on both direct and circumstantial evidence, drew another inference — that while Radiant hoped to get the Sherwin-Williams contract, its dismissal of the California suit was not the consideration therefor. The master's factual determination was not clearly erroneous, and we must affirm on that basis, having no need, therefore, to pass on the validity of the legal propositions urged by Switzer.

B. Treble Damages

Both the district court and this court have found that Switzer's antitrust violation was without malice or bad faith. Switzer Bros., Inc. v. Locklin, 297 F.2d 39, 49 (7th Cir. 1961), cert. denied, 369 U.S. 851, 82 S.Ct. 934, 935, 8 L.Ed.2d 9 (1962). Although the controlling statute says that one injured by reason of an anti-trust violation "shall recover threefold the damages by him sustained * * *," 15 U.S.C. § 15, Switzer asserts that it was error to treble damages here. Reliance is had upon two cases, Rogers v. Douglas Tobacco Bd. of Trade, Inc., 244 F.2d 471 (5th Cir. 1957), and Haskell v. Perkins, 28 F.2d 222 (D.N.J.1928), rev'd on other grounds, 31 F.2d 53 (3rd Cir.), cert. denied, 279 U.S. 872, 49 S.Ct. 513, 73 L.Ed. 1007 (1929), both of which hold that damages need not be trebled in every case. Sun Theatre Corp. v. R.K.O. Radio Pictures, Inc., 213 F.2d 284 (7th Cir. 1954) holds that anti-trust damages must be trebled. We are asked to reassess Sun Theatre and hold that the statute does not require the trebling of damages "willy-nilly."

Both Rogers and Haskell involved anti-trust suits...