Phillips v. Crown Central Petroleum Corp.

• Decision Date: 02 July 1979
• Docket Number: Nos. 77-1780,78-1078,s. 77-1780
• Citation: 602 F.2d 616
• Parties: 1979-2 Trade Cases 62,743 John T. PHILLIPS, Jr., Corrado Frank Tumminello, Charles Phillip Freitag, and Carroll Charles Myers, Plaintiffs-Appellees, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 616

602 F.2d 616

1979-2 Trade Cases 62,743

John T. PHILLIPS, Jr., Corrado Frank Tumminello, Charles Phillip Freitag, and Carroll Charles Myers Plaintiffs-Appellees, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant-Appellant.

Nos. 77-1780, 78-1078.

United States Court of Appeals Fourth Circuit.

Argued Oct. 2, 1978.

Decided July 2, 1979.

James H. Kelley, Robert A. Burka, Arthur Wineburg, Washington, D. C. (Bergson, Borkland, Margolis & Adler, Washington, D. C., on brief); Morton A. Sacks, Baltimore, Md. (Cable, McDaniel, Bowie & Bond, Baltimore, Md., on brief), for appellants.

Robert G. Levy, Peter H. Gunst, Allan P. Hillman, Baltimore, Md. (Frank, Bernstein, Conaway & Goldman, Baltimore, Md., on brief), for appellees Phillips, Freitag & Myers.

J. Hardin Marion, William C. Sammons, Baltimore, Md. (Tydings & Rosenberg, Baltimore, Md., on brief), for appellee Tumminello.

Before HAYNSWORTH, Chief Judge, COWEN, ^* Senior Judge, and WIDENER, Circuit Judge.

COWEN, Senior Judge:

Defendant Crown Central Petroleum Corporation (Crown), is an independent wholesaler of gasoline and other oil products in the Maryland marketing area. Plaintiffs are four of Crown's independent dealers. The plaintiffs brought private antitrust actions against Crown, charging violations of 15 U.S.C. §§ 1, 15, and 26 (§ 1 of the Sherman Act, and §§ 4 and 16 of the Clayton Act). The complaints alleged that Crown entered into a horizontal conspiracy with its competitors to stabilize the retail price of gasoline in Maryland; that Crown forced its independent dealers into a vertical price-fixing agreement to control the retail price of gasoline; that Crown entered into tying agreements with its dealers which required that only Crown brands of motor oil could be sold, and that these conspiracies and agreements supported and reinforced each other to create an elaborate and pervasively illegal system of reducing competition and restraining trade in the Maryland gasoline market. After a trial, the district court found Crown liable on most of these charges and issued an injunction which required the defendant to enter into new 3-year leases with each of the plaintiffs and forbade Crown from cancelling the leases (or refusing to renew them) for any retaliatory or illegal reason. The determination of money damages was reserved for a separate trial.

Three days after the permanent injunction issued, the attorney for the plaintiffs notified the court that one plaintiff, Corrado Frank Tumminello, had committed perjury, both in pretrial proceedings and during the course of the trial. Tumminello had also fabricated business records to support his perjured testimony. Crown moved for various forms of relief based on the discovery of perjury; but the district court, after considering the motions and the evidence, reaffirmed all of its previous actions except the permanent injunction (which was vacated with respect to Tumminello to protect "the integrity of the court" and otherwise continued) and one finding of fact (which was stricken). Crown appealed to this court all of the district court's rulings in favor of the plaintiffs.

While this appeal was pending, the district court held a separate trial to determine the quantum of money damages. On February 17, 1977, the court awarded plaintiffs total treble damages of $434,310 and attorneys' fees of $200,000. Phillips v. Crown Central Petroleum Corp., 426 F.Supp. 1156 (D.Md.1977). An appeal from the damage award followed.

In Phillips v. Crown Central Petroleum Corp., 556 F.2d 702 (4th Cir. 1977), we vacated the permanent injunction without prejudice and remanded the case to the district court with instructions to hold a hearing regarding the extent of Tumminello's perjury. Consideration of all the other issues on appeal was stayed pending the outcome of this hearing, which was held on July 22, 1977. After the hearing the district court struck some of its findings of fact, but reaffirmed its previous decision in all important respects. Crown now appeals again to this court, challenging the manner in which the remand hearing was conducted and renewing its appeals on all the previous rulings of the district court.

I. The Remand Hearing

We turn first to the objections raised by the defendant to the proceedings on remand from the original appeal. To understand the posture of this aspect of the case, some factual background is necessary.

Plaintiff Tumminello testified at trial and in pretrial proceedings to several events which tended to prove the existence of a horizontal conspiracy among Crown and its competitors to fix prices. According to his testimony, he had on at least four occasions refused to raise his retail gasoline price when instructed to do so by Crown representatives. Those representatives told him at those times that he had to raise his price because his delay was "screwing up the arrangement" with the other oil companies. This testimony formed the basis for several of the district court's findings of fact.

After the first permanent injunction issued, an accountant examining Tumminello's business records was unable to square the written account books with Tumminello's story of one of the episodes described above (the one alleged to have taken place on April 24, 1971). Tumminello finally admitted to his counsel that he had lied about the incident; destroyed the genuine business records for that day, and fabricated new records that would support his false story. He continued to stand by his other testimony.

The defendant filed motions pursuant to Rules 52(b), 59(a), and 60(b) of the Federal Rules of Civil Procedure, asking the court to dismiss all of the claims of every plaintiff, or to grant a new trial or other extensive discretionary relief. The district court simply struck the finding of fact which dealt with the spurious incident and reaffirmed its judgment in all other respects. On appeal from this decision, we stayed consideration of the merits of the case until the district court could conduct a "plenary hearing," "re-appraise the case," and then determine the appropriate findings and conclusions. Phillps v. Crown Central Petroleum Corp., supra, 556 F.2d at 705. By so doing we intimated no view on the soundness of the conclusion reached by the district court (a finding that the perjury was limited and did not infect large areas of the case); we simply instructed the court to hear Tumminello Ore tenus and receive such order evidence as might be required to assess the full impact of the perjury on the case as it stood.

The remand hearing took place July 22, 1977. Prior thereto Crown took a 2-day deposition of Tumminello and this was offered in evidence. However, Crown had previously indicated that it did not intend to call Tumminello to testify but would rely instead on his deposition. In view of the explicit directions from this court, the district court directed plaintiff to call Tumminello, who testified and was cross-examined extensively in open court by Crown. Crown also called as a witness, Mr. Barry Owens, an employee of Crown's counsel, who had performed the analysis of Tumminello's records. Crown introduced exhibits and a deposition in testimony. The trial court denied the requests of both parties to call a large number of witnesses on the issue of horizontal price fixing on the ground that such action would transform the remand hearing into a new trial. The trial judge also denied Crown's request to recall to the stand several of Crown's witnesses who had testified in the 1974 trial, plus another witness, James C. Blackman, who had testified previously only by deposition. The court concluded that the hearing of such testimony was not required by our order. In an opinion filed August 19, 1977, the district court denied all of Crown's post-trial motions and reaffirmed the court's former findings and conclusions, except for two findings of fact which were stricken in view of the testimony given at the remand hearing.

The defendant raises several objections to the conduct of the remand proceedings. Most of them can be traced to a disagreement over the precise nature of the hearing contemplated by this court when we issued the remand order. The district court enunciated in this way the question to be answered at the hearing:

The question ultimately presented at the remand hearing was essentially a narrow one, namely, whether Tumminello is now telling the truth or whether he is now lying in confirming on the stand under oath substantially all his prior testimony. * * *

The defendant argues that this approach is somehow inconsistent with our instruction to "reappraise the case and * * * determine the appropriate findings and conclusions" in light of the evidence adduced at the hearing. We do not agree. The difficulty we found with the case on the first appeal was that the trial judge had not heard testimony from Tumminello since the disclosure of his perjury and it was uncertain how pervasive his perjury may have been. Therefore, we were reluctant to affirm findings of fact based, in part at least, on the testimony of an admitted perjurer until Tumminello was examined Ore tenus and the district court had an opportunity to reassess his testimony.

On review, we find that the purpose of the remand order was fulfilled to the extent that no reversal is required on account of the conduct of the remand hearing. The trial court's refusal to again hear four Crown witnesses who were implicated in varying degrees by Tumminello's testimony was not error, since the district court had previously found their testimony uncorroborated, and since only one of them, John W. Conway, was involved in the particular incident which Tumminello admitted he had fabricated. To put it in another way, the district court would have been required to hear these witnesses again only if Tumminello's perjury extended into areas other than those covered by his frank admission. Since the trial judge decided...