Intern. Business Machines Corp., In re
| Decision Date | 13 August 1982 |
| Docket Number | D,No. 1406,1406 |
| Citation | 687 F.2d 591 |
| Parties | 1982-2 Trade Cases 64,899 In re INTERNATIONAL BUSINESS MACHINES CORPORATION, Petitioner. ocket 82-3037. |
| Court | U.S. Court of Appeals — Second Circuit |
Thomas D. Barr, New York City (Cravath, Swaine & Moore, New York City, of counsel), for petitioner I. B. M J. Paul McGrath, Asst. Atty. Gen., Dept. of Justice, Washington, D. C. (Barry Grossman, Susan Herdina, Neil R. Ellis, Dept. of Justice, Washington, D. C., of counsel), for the United States of America.
David C. Vladeck, Washington, D. C. (Alan B. Morrison, Vladeck, Waldman, Elias & Engelhard, New York City, of counsel), for amicus curiae Public Citizen Litigation Group.
Grant W. Kelleher, Washington, D. C. (Worth Rowley, Raymond D. Watts, Neal L. Thomas, Rowley & Watts, Washington, D. C., of counsel), for amicus curiae Philip M. Stern.
Before MESKILL, NEWMAN and KEARSE, Circuit Judges.
International Business Machines Corporation ("IBM") petitions pursuant to 28 U.S.C. § 1651 1 and Fed.R.App.P. 21 2 for a writ of mandamus directing Judge David N. Edelstein of the United States District Court for the Southern District of New York to "conduct no further proceedings of any kind whatsoever with respect to the parties and issues in the case of United States v. International Business Machines Corp., 69 Civ. 200 ( (S.D.N.Y. filed January 17, 1969) )," and to vacate certain orders he has entered "requiring the parties ... to preserve documents." Petition at 45. Alternatively, IBM seeks for the second time an order from this Court directing Judge Edelstein to recuse himself from further proceedings. See In re International Business Machines Corp., 618 F.2d 923 (2d Cir. 1980). IBM's petition raises novel issues regarding the application and scope of the Antitrust Procedures and Penalties Act, 15 U.S.C. § 16(b)-(h) ("Tunney Act"), as well as the propriety of the writ of mandamus. Before reaching these issues, we recount the events leading to IBM's petition.
On January 17, 1969, the United States Department of Justice filed a complaint alleging that IBM had monopolized the market for general purpose electronic digital computer systems in violation of section 2 of the Sherman Act, 15 U.S.C. § 2 (1976). Almost thirteen years later, on January 8, 1982, the case appeared to come to an end with the filing of a stipulation of dismissal under Fed.R.Civ.P. 41(a)(1), which states in pertinent part:
Subject to the provisions of Rule 23(e), of Rule 66, and of any statute of the United States, an action may be dismissed by the plaintiff without order of court ... (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action.
The stipulation, which was signed by counsel for IBM and by Assistant Attorney General William F. Baxter for the United States, provides:
Whereas, the Assistant Attorney General in charge of the Antitrust Division and his staff undertook a review of this case in June of 1981; and
Whereas, that review has included a study of the trial record and a series of meetings with counsel wherein each of the issues in the case was presented in writing and orally and discussed and analyzed at length; and
Whereas, that review has now been completed; and Whereas, plaintiff has concluded that the case is without merit and should be dismissed and has so informed defendant
It Is Hereby Stipulated and Agreed that this case is dismissed without costs to either side.
The Justice Department's decision to abandon what had been one of the nation's longest antitrust suits followed an extensive review by Mr. Baxter from which he concluded that continued litigation would offer "little prospect of victory or meaningful recovery." In a memorandum explaining his decision to dismiss the suit, Mr. Baxter observed that even if the government prevailed at trial, 3 "the likelihood of success on appeal is small" in light of Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093, 100 S.Ct. 1061, 62 L.Ed.2d 783 (1980). Mr. Baxter also stated that "even assuming that the government could prove IBM's liability, there is no assurance that appropriate relief could be obtained."
Judge Edelstein initially gave no indication that he questioned the effectiveness of the stipulation. At the January 8 hearing at which the stipulation was presented to the court, Judge Edelstein explained for the benefit of observers in the courtroom:
The parties of this action have presented to the Court a stipulation of dismissal whereby they agree that this case is dismissed. Now, if you are wondering a little bit about that, let me call your attention to Rule 41(a)(1) (ii) of the Federal Rules of Civil Procedure which in effect states that when parties agree to drop a case the approval of the court is not required, nor is there any need to seek it.
The Court under this rule has no control whatsoever over the actions of counsel or the judgment they have exercised. The stipulation between the parties is not a judgment or order of the Court.
Notably, Judge Edelstein made no mention that the Tunney Act, which requires public disclosure and judicial scrutiny of the terms and potential impacts of "consent decrees," might apply to the stipulation.
Judge Edelstein's initial reaction, however, soon changed. In an article published on January 26, 1982 in The Wall Street Journal, he sharply criticized Mr. Baxter's decision to dismiss the case and called for the decision to "be scrutinized carefully." He further accused Mr. Baxter of having "(run) roughshod over the members of his own trial team." Then, at a hearing on February 8 addressed to certain "housekeeping matters," Judge Edelstein refused to sign several proposed orders presented jointly by the parties which would have allowed them to dispose of billions of pages of unused documents that had accumulated over the course of the litigation as a result of various pretrial orders. 4 Judge Edelstein stressed that "(i)t is especially important in cases of historical significance that the record remain intact for those who seek to inspect it." The documents sought to be destroyed, however, had neither been introduced into evidence nor referred to during the trial. Four days later, an affidavit by an IBM employee was filed with the court indicating that the retention of the documents under the pretrial orders was costing several million dollars each year. A second affidavit to the same effect was filed on February 17.
No further proceedings occurred until March 2, when Judge Edelstein, without prior notice to the parties of the issues to be discussed, conducted a hearing calling into question Mr. Baxter's role in the Justice (I)t is not the role of the Court at this point to review Mr. Baxter's conduct or his decisions. Rather, the appropriate bodies for that review are the Committees on the Judiciary of the Senate and House, the Department of Justice, the Office of Government Ethics, and professional committees of the bar.
Department's decision to dismiss the action. After delaying the conference for approximately forty minutes to allow members of the press to arrive, Judge Edelstein entered into the record several letters which indicated that Mr. Baxter had served as a consultant to IBM during the early stages of a private antitrust suit brought by Memorex Corporation involving "generally similar" issues raised in this litigation. Judge Edelstein expressed his concern that Mr. Baxter had never publicly disclosed his prior representation and raised the possibility of a conflict of interest. At the same time, Judge Edelstein stated:
While Judge Edelstein called for Mr. Baxter to disclose fully "a detailed statement of the dates and nature of services provided to IBM and the compensation received therefor, as well as any other information bearing on this subject," he reiterated his comments made at the January 8 hearing that the court was powerless to interfere with the decision to dismiss the suit:
Earlier, I mentioned the appearance of impropriety. The Court, from the date it was informed of the dismissal of this case, has been concerned that the Department of Justice may not have acted in the best interests of the public. However, there was little the Court could do. By voluntarily dismissing the case the department and IBM circumvented judicial review and the procedural safeguards of the Tunney Act.
As I stated at our last conference, the Tunney Act was adopted in large part as a check on prosecutorial discretion, and indeed, as a means to expose and prevent collusion. The sanction the Court has available in a Tunney Act review is the power to reject the settlement, thus requiring the Department of Justice to proceed in its prosecution of the action. That action, however, is meaningless when the Department decides that the case is without merit and should not be prosecuted.
That the safeguards of the Tunney Act do not apply does not end the Department of Justice's obligation to exercise independent judgment on behalf of the public. The public, after all, is the department's client. The people of the United States have a vital interest in this case. They have a right to know all the facts and how these facts were evaluated by their lawyer in making the decision for them. It is absolutely essential that the public not suspect that the decision of their lawyer was influenced by improper considerations. It is absolutely essential that the public believe that this case was resolved through a genuine adversary and not collusive relationship. Indeed, it is the adversary relationship which forms the basis of our legal system.
On March 19, Philip M. Stern, a "concerned" citizen of the District of Columbia, was granted leave to appear as amicus curiae "for the purpose of inviting the Court's attention" to two issues which, he alleged, questioned the effectiveness of...
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