Uranium Antitrust Litigation, In re
| Citation | 617 F.2d 1248 |
| Decision Date | 15 February 1980 |
| Docket Number | 79-1641,79-1502,79-2004 and 79-2318,Nos. 79-1427,s. 79-1427 |
| Parties | 1980-1 Trade Cases 63,183 In re URANIUM ANTITRUST LITIGATION. WESTINGHOUSE ELECTRIC CORPORATION, Plaintiff-Appellee, v. RIO ALGOM LIMITED, Rio Algom Corporation, Rio Tinto Zinc Corporation Limited, RTZ Services Limited, Rio Tinto Zinc Corporation, Conzinc Rio Tinto of Australia Limited, Mary Kathleen Uranium Limited, Pancontinental Mining Limited, Queensland Mines Limited, Nuclear Fuels Corporation, Anglo-American Corporation of South Africa, Limited, Engelhard Minerals and Chemicals Corporation, Denison Mines Limited, Denison Mines (U.S.) Incorporated, Noranda Mines Limited, Gulf Oil Corporation, Gulf Minerals Canada Limited, Kerr-McGee Corporation, the Anaconda Company, Getty Oil Company, Utah International Inc., Phelps Dodge Corporation, Western Nuclear, Inc., Homestake Mining Company, Federal Resources Corporation, Pioneer Nuclear, Inc., Atlas Corporation, Reserve Oil and Minerals Corporation, United Nuclear Corporation, and Atlas Alloys, Inc., Defendants-Appellants. to 79-2321. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Keith F. Bode, Jenner & Block, Chicago, Ill., for appellant, Rio algom.
Carl J. Schuck, Los Angeles, Cal., for appellant, Getty Oil Co.
Jonathan G. Bunge, Chicago, Ill., for appellant Gulf Oil Corp.
Jeffrey N. Cole, Jeffrey N. Cole, Ltd., Chicago, Ill., for appellant, Atlas Alloys, Inc. William J. T. Brown and Samuel W. Murphy, New York City, for appellee, Westinghouse Corp.
Before SWYGERT, a BAUER b and WOOD, Circuit Judges, c and CAMPBELL, Senior District Judge. d
In October of 1976, plaintiff-appellee, Westinghouse Electric Corporation, filed a complaint alleging anti-trust violations against twenty-nine foreign and domestic uranium producers. All of the defendants were duly served with process; however, nine foreign defendants chose not to appear. 1 On February 2, 1977, the District Court entered defaults pursuant to Rule 55(a) of the Federal Rules of Civil Procedure against each of the nine defaulting defendants. In August 1977, Westinghouse moved for entry of final judgment against the defaulters on the issue of liability. On January 3, 1979, the District Court granted the motion for entry of default judgment against the defaulting defendants.
On January 12, 1979, Westinghouse moved ex parte for a temporary restraining order and for a preliminary injunction seeking to require the defaulting defendants to give twenty days' prior notice to the Court of any transfers of assets in excess of $10,000 out of the United States. In support of the motion, counsel for Westinghouse submitted an affidavit stating that several of the defaulters, and particularly Rio Tinto Zinc Corp. Ltd. of London, held substantial assets in the United States through wholly owned subsidiaries. Westinghouse counsel further stated that there was reason to believe that those assets were being, or were about to be, removed from the United States to avoid execution on the default judgment entered on January 3, 1979.
On January 15, 1979, the District Court temporarily restrained transfers in excess of $10,000 pending a hearing on January 24. On the latter date, the District Court entered the preliminary injunction sought by Westinghouse.
Notice of the TRO was served on the defaulting defendant, Rio Tinto Zinc Corp. (RTZ), in London, on January 17, 1979. Rio Algom Limited in Canada was served with notice of the TRO that same day. It was later learned that within hours after notice of the TRO, RTZ instructed employees of its subsidiaries to transfer as much money as possible out of American bank accounts and into Canada. Approximately three million two hundred thousand dollars were transferred from the accounts of Atlas Alloys to Rio Algom Limited in Canada. Neither the plaintiff nor the District Court were given notice of these transfers, in apparent violation of the TRO and the subsequent preliminary injunction.
On January 25, 1979, Atlas Alloys moved for an exemption from the preliminary injunction, seeking to make arms length purchases of steel or metal products in the ordinary course of business in amounts of less than $40,000. Approximately one month later, Atlas Alloys gave twenty days' advance notice that it intended to pay its defaulting parent, Rio Algom Limited 2 approximately $1.6 million dollars, which had been owed to Rio Algom Limited for some time. Westinghouse moved to enjoin the proposed transfer and sought to require Atlas Alloys to pay the funds into a trust account under the jurisdiction of the District Court. The District Court heard argument on the question and indicated that a ruling would be forthcoming shortly. In the interim, Atlas Alloys transferred about.$1.2 million dollars to its defaulting parent by means of writing 124 separate checks for amounts slightly less than $10,000. On March 27, 1979, the District Court enjoined the transfer of the.$1.6 million dollars, and required that the funds be deposited in a trust account with the Court. The Court also found that five out of six of Atlas Alloys' top officers and directors were also officers and directors of the defaulting defendant, Rio Algom Limited. The District Court further found that the monies which Atlas Alloys sought to transfer out of the United States to its parent, Rio Algom Limited in Canada, were assets of Rio Algom Limited here in the United States and that the entirety of Atlas Alloys is an asset of Rio Algom Limited.
On March 27 and April 2, 1979, Atlas Alloys gave further notice of its intent to make transfers of an additional $168,000 to its defaulting parent. Westinghouse again moved to enjoin these transfers, and to have the monies deposited in a trust account. At this time Westinghouse also moved for further injunctive relief against Atlas Alloys based on the discovery of Atlas Alloys' practice of transferring funds out of the United States by means of checks written for amounts slightly under $10,000. At that point Atlas Alloys had written 481 checks for a total of $3.9 million dollars to its defaulting parent.
On May 4, 1979, the District Court entered a third injunction. The Court enjoined the proposed transfer of $168,000 from Atlas Alloys and, based on evidence of the transfers to Rio Algom Limited, the Court granted further injunctive relief requiring that all transfers of funds be approved by the Court upon twenty days' prior written notice, regardless of amount.
Westinghouse also moved for similar injunctive relief to preserve the assets of Rio Algom Corporation, the wholly-owned subsidiary of Atlas Alloys. Rio Algom Corporation is a Delaware corporation engaged in uranium mining in Utah. In its motion Westinghouse sought to enjoin Rio Algom Corporation from making deposits in bank accounts outside the United States; from making any transfers out of the United States without twenty days' prior notice to the Court; requiring Rio Algom to deposit the revenues of its Utah mining operation in United States banks; and enjoining the officers, directors and employees of the defaulting Rio Algom Limited from making withdrawals from bank accounts of Rio Algom Corporation. On June 20, 1979, the District Court granted Westinghouse's motion for a preliminary injunction. The Court likened the situation respecting Rio Algom Corporation to the actions of its parent, Atlas Alloys. The Court noted that the single difference was that Rio Algom Corporation, unlike Atlas Alloys, was a defendant in the anti-trust action. The Court concluded, however, that the injunction would in no way impair Rio Algom Corporation's ability to defend on the merits.
The three injunctions against the defaulters in respect to the assets of Atlas Alloys and the one injunction against Rio Algom Corporation comprise the first interlocutory appeal pending before this Court. The Court has jurisdiction to consider these injunctions pursuant to 28 U.S.C. § 1292(a)(1). The Court 3 heard oral argument on the appropriateness of the injunctions on September 20, 1979. 4
Shortly after the Court heard oral argument on the first appeal, Rio Algom Corporation, Gulf Oil Corporation, and an additional group of answering defendants led by the Getty Oil Corporation filed a petition for further interlocutory review. 5 The District Court certified that the issues raised in this appeal are controlling questions of law to which there is room for substantial disagreement, and that the matter is appropriate for interlocutory review pursuant to 28 U.S.C. § 1292(b). This Court concurred with the District Court and accepted the matter for immediate review. 6
This appeal arises out of an Order of September 17, 1979, in which the District Court denied motions filed by the answering defendants seeking to postpone any hearing on damages as to the defaulting defendants until after trial on the merits. The appellants claim that the January 3, 1979, entry of default judgment and the subsequent determination to proceed to a damages hearing are an abuse of discretion by the District Judge. The appellants claim that the entry of judgment against the defaulting defendants prior to adjudication on the merits as to the answering defendants is prohibited by Frow v. De La Vega, 82 U.S. (15 Wall.) 552, 21 L.Ed. 60 (1872), and that they will be severely prejudiced by a determination as to damages against the defaulting defendants. 7
The Frow case involved the entry of a default judgment against one defendant in a multi-defendant action. De La Vega filed a complaint claiming that eight defendants had conspired to defraud him of title to a tract of land. Frow defaulted while the other defendants contested the allegations and won on the merits. Subsequently, Frow successfully petitioned the Supreme Court to vacate the default judgment. 8
When the District Judge entered default judgment on ...
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