604 F.2d 897 (5th Cir. 1979), 78-1788, Wilson P. Abraham Const. Corp. v. Texas Industries, Inc.

Docket Nº:78-1788.
Citation:604 F.2d 897
Party Name:WILSON P. ABRAHAM CONSTRUCTION CORPORATION, Plaintiff, v. TEXAS INDUSTRIES, INC. and Frank T. Dooley, Defendants. TEXAS INDUSTRIES, INC., Third-Party Plaintiff-Appellant, v. RADCLIFF MATERIALS et al., Third-Party Defendants-Appellees, Jahncke Service, Third Party Defendant.
Case Date:October 16, 1979
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 897

604 F.2d 897 (5th Cir. 1979)

WILSON P. ABRAHAM CONSTRUCTION CORPORATION, Plaintiff,

v.

TEXAS INDUSTRIES, INC. and Frank T. Dooley, Defendants.

TEXAS INDUSTRIES, INC., Third-Party Plaintiff-Appellant,

v.

RADCLIFF MATERIALS et al., Third-Party Defendants-Appellees,

Jahncke Service, Third Party Defendant.

No. 78-1788.

United States Court of Appeals, Fifth Circuit

October 16, 1979

Rehearing and Rehearing En Banc Denied Nov. 29, 1979.

Page 898

Benjamin R. Slater, Jr., William J. Hamlin, New Orleans, La., for third-party plaintiff-appellant.

Stone, Pigman, Walther, Whittmann & Hutchinson, Stephen H. Kupperman, Ewell P. Walther, Jr., New Orleans, La., Lemle, Kelleher, Kohlmeyer & Matthews, Dando B. Cellini, New Orleans, La., Chaffe, McCall, Phillips, Toler & Sarpy, James A. Babst, New Orleans, La., for third-party defendants-appellees.

Bell, Boyd, Lloyd, Haddad & Burns by R. Clifford Potter, Chicago, Ill., for amicus curiae Boise Cascade Corp.

Mandell & Wright, Houston, Tx.; McGovern, Opperman & Paquin, Minneapolis Mn.; Kohn, Millstein, & Cohen, Washington, D. C.; and Sachnoff, Schrager, Jones, Weaver & Rubenstein, Ltd., by Lowell E. Sachnoff, Chicago, Ill., for amici curiae plaintiffs in M.D.L.-310.

Eckert, Seamans, Cherin & Mellott, Pittsburgh, Pa.; Mills, Shirley, McMicken & Ecketl, Galveston, Tx.; Skadden, Arps, Slate, Meager & Flom, by Leslie H. Arps,

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New York City, for amici curiae Georgia-Pacific Corp., Westvaco Corp., and Packaging Corp. of America.

Kirkland & Ellis, by John H. Morrison, Chicago, Ill., for amici curiae Weyerhaeuser Co., and by Hammond E. Chaffetz, Chicago, Ill., for amici curiae Williamette Industries, Inc.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before THORNBERRY, AINSWORTH and MORGAN, Circuit Judges.

THORNBERRY, Circuit Judge:

Texas Industries, Inc., the defendant in a civil antitrust action, appeals the dismissal of its third-party complaint impleading its alleged coconspirators and seeking contribution. The sole issue is whether a right of contribution is available to an antitrust defendant under the federal antitrust laws. We hold that there is no such right of contribution.

I.

This action was instituted on September 8, 1975, by Wilson P. Abraham Construction Corp., not a party to this appeal, against Texas Industries, Inc. 1 for damages arising out of an alleged price-fixing scheme. Abraham's complaint asserts that Texas Industries and certain unnamed coconspirators engaged in an unlawful combination and conspiracy to raise and stabilize the price of ready-mix concrete in the New Orleans area in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. 2 Abraham seeks to recover treble damages under 15 U.S.C. § 15.

Discovery instituted by Texas Industries revealed that the unnamed alleged coconspirators were Radcliff Materials, Inc., Jimco, Inc., and OKC Dredging, Inc. Texas Industries then filed a third-party complaint against these parties seeking contribution from them should it be found liable to Abraham in the main demand. The third-party defendants filed motions to dismiss the third-party complaint pursuant to Rule 12(b)(6) for failure to state a claim upon which relief could be granted.

On October 4, 1977, the district court entered a Minute Entry granting the motions to dismiss the third-party complaint with prejudice on the ground that no right of contribution exists among antitrust coconspirators under federal law. Although persuaded by Texas Industries' arguments in favor of allowing contribution, the court deferred to what it considered the "weight of authority" 3 denying such a right to an antitrust defendant. On March 29, 1978, the court determined that there was no just reason for delay and directed that the Minute Entry be entered as a final judgment. Texas Industries appealed.

In their briefs and at oral argument the third-party defendants correctly asserted

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that no federal court had ever recognized a right of contribution among antitrust coconspirators. See Olson Farms, Inc. v. Safeway Stores, Inc., (1977-2) Trade Reg.Rep. (CCH) P 61,698 (D.Utah 1977), Argued and submitted, No. 77-2068 (10 Cir. March 16, 1979); El Camino Glass v. Sunglo Glass Co., (1977-1) Trade Reg.Rep. (CCH) P 61,533 (N.D.Cal.1976); Sabre Shipping Corp. v. American President Lines, Ltd., 298 F.Supp. 1339 (S.D.N.Y.1969). 4 Unfortunately for the third-party defendants, however, the most recent, and only appellate, court to specifically consider this issue abruptly jettisoned the limited precedent and adopted the very position previously rejected by the district courts. In Professional Beauty Supply, Inc. v. National Beauty Supply, Inc., 594 F.2d 1179 (8 Cir. 1979), an Eighth Circuit panel, with one judge dissenting, held that an antitrust defendant should, at least under certain circumstances, be entitled to contribution from those "joint tortfeasors" 5 not sued by the plaintiff in the main demand. Although we have carefully considered the arguments set forth in the majority's opinion, we are unable to agree that a right of contribution should be allowed among violators of the antitrust laws.

II.

There is no statutory right of contribution provided for under either the Sherman Act, 15 U.S.C. § 1 et seq., or the Clayton Act, 15 U.S.C. § 12 et seq. We do not, however, interpret this omission as evidence that Congress necessarily intended to deny contribution under the antitrust laws. But see Sabre Shipping, supra, 298 F.Supp. at 1345. It is more likely that this narrow question, although a matter of some importance, never occurred to the drafters of the legislation. Our task, therefore, is to guess what Congress "would have intended on a

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point not present to its mind, if the point had been present." 6 We agree with the case law that this issue must be resolved by reference to federal common law. 7

Texas Industries advances a number of arguments for implication of a right of contribution. First, it argues that the deterrent effect of treble damages is dissipated by the possibility that only one of a number of conspirators would actually be liable for the injury. We conclude, consistent with prevailing economic theory, 8 however, that that very possibility of imposition of sole liability has an enhanced deterrent effect. The chance that a participant may be faced with a full judgment is more likely to discourage anticompetitive conduct than would ensuring that each participant pays only some fair share. Allowance of contribution in effect ensures that the burden upon a particular defendant would be ameliorated by a division of liability. See Sabre Shipping Corp. v. American President Lines, Ltd., 298 F.Supp. 1339 (S.D.N.Y.1969); El Camino Glass v. Sunglo Glass Co., 1977-1 Trade Cases P 61,533 (N.D.Cal.1976). Even assuming, however, that the arguments concerning the relative deterrent effects are inconclusive, See Professional Beauty Supply, Inc. v. National Beauty Supply, Inc., 594 F.2d 1179 (8 Cir. 1979) (Hanson, J., dissenting in part), this inconclusiveness would hardly be a compelling reason upon which to base a rule allowing contribution. Id. at 1189.

Second, Texas Industries suggests that a rule prohibiting contribution would encourage collusion by the plaintiff with one or more of the potential defendants to the action. Similarly, the Eighth Circuit expressed concern that under a no-contribution rule a large or powerful wrongdoer would have sufficient economic influence to coerce a plaintiff into excluding it as a defendant. Although the possibility of collusion or coercion has always existed under a no-contribution rule, the courts and legislatures have not deemed this threat sufficient to counterbalance the advantages derived from denying contribution to wrongdoers. Texas Industries has not suggested that there has been collusion or coercion in

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this case, and we are unwilling to assume that the plaintiff engaged in or yielded to these tactics. Should a defendant establish that it is the victim of such maneuvering, it may well have an independent cause of action, at least as against its coconspirators.

Third, Texas Industries contends that a rule denying contribution is inconsistent with the Supreme Court's rejection of In pari delicto as a defense to an antitrust action in Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 88 S.Ct. 1981, 30 L.Ed.2d 982 (1968). Texas Industries reasons that if a participant in an unlawful scheme is not precluded from recovering treble damages from the other participants, no possible rationale can justify the denial of his right to seek contribution from his fellow wrongdoers.

As an initial matter, we are unable to agree with Texas Industries' assessment of the Court's decision in Perma Life. Notwithstanding the language in Justice Black's principal opinion, 9 the decision does not endorse a wholesale rejection of the In pari delicto doctrine in an antitrust treble damages action. First, the Court made clear that the culpable plaintiff in that case was economically less powerful than the defendant and was not in any meaningful sense a voluntary participant in the illegal scheme. Id. at 139, 88 S.Ct. 1981. Consequently, the Court had no opportunity to decide whether a plaintiff might, wholly apart from In pari delicto, be precluded from recovery because of his "complete involvement" in the illegal scheme. Id. at 140, 88 S.Ct. 1981.

More important, five members of the Perma Life court emphasized their belief that some aspects of the In pari delicto doctrine should be retained under the antitrust laws. Id. at 146, 88 S.Ct. 1981 (White, J., concurring) (plaintiff barred where he and defendant bear...

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