Department of Water & Power v. Allis-Chalmers Mfg. Co., Civ. No. 568-61.

• Court: United States District Courts. 9th Circuit. United States District Court (Southern District of California)
• Writing for the Court: William C. Dixon, Los Angeles, Cal., for City of Burbank, City of Glendale, City of Pasadena
• Citation: 213 F. Supp. 341
• Parties: DEPARTMENT OF WATER AND POWER OF the CITY OF LOS ANGELES, a Municipal corporation, of and in the State of California, Plaintiff, v. ALLIS-CHALMERS MANUFACTURING COMPANY et al., Defendants, and 125 other cases.
• Docket Number: Civ. No. 568-61.
• Decision Date: 09 January 1963

213 F. Supp. 341

DEPARTMENT OF WATER AND POWER OF the CITY OF LOS ANGELES, a Municipal corporation, of and in the State of California, Plaintiff,
v.
ALLIS-CHALMERS MANUFACTURING COMPANY et al., Defendants, and 125 other cases.

Civ. No. 568-61.

United States District Court S. D. California, Central Division.

January 9, 1963.

213 F. Supp. 342

Robert E. Moore, Jr., Los Angeles, Cal., for Dept. of Water & Power.

William C. Dixon, Los Angeles, Cal., for City of Burbank, City of Glendale, City of Pasadena.

R. L. Knox, Jr., El Centro, Cal., for Imperial Irrigation Dist.

Marcus Mattson, Lawler, Felix & Hall, Los Angeles, Cal., for Southern Calif. Edison Co., Nevada Power Co., California Elec. Power, San Diego Gas & Elec., Pac. Gas & Elec., and Hawaiian Elec. Co.

Adams, Duque & Hazeltine, Lawrence T. Lydick, Los Angeles, Cal., for I-T-E Circuit Breaker Co.

Henry B. Ely, Los Angeles, Cal., for Foster Wheeler Corp.

Julian O. Von Kalinowski, Gibson, Dunn & Crutcher, Los Angeles, Cal., for Clark Controller Co., Ohio Brass Co.,

213 F. Supp. 343

Joslyn Mfg. Co., C. H. Wheeler Mfg. Co., Lapp Insulator Co., Inc., the Porcelain Ins. Corp., A. B. Chance Co., the Ohio Brass Co., Square D Co., and McGraw-Edison Co

William A. C. Roethke, Lillick, Geary, McHose, Roethke & Myers, Los Angeles, Cal., for Kuhlman Electric Co.

John L. Cole, Loeb & Loeb, Los Angeles, Cal., for Federal Pac. Elec. Co., Cornell-Dubilier Electric Corp.

Macdonald & Halsted, Alexander Macdonald, Los Angeles, Cal., for Hubbard and Co.

Musick, Peeler & Garrett, Ralph E. Erickson, Los Angeles, Cal., for Allen-Bradley Co., Cutler-Hammer, Inc.

McCutchen, Black, Harnagel & Shea, Los Angeles, Cal., for General Electric Co.

Newlin, Tackabury & Johnston, Frank R. Johnston, Los Angeles, Cal., for H. K. Porter Co.

Parker, Milliken, Kohlmeier & Clark, Mark Townsend, Los Angeles, Cal., for Wagner Elec. Corp.

Paul, Hastings, Janofsky & Walker, Los Angeles, Cal., for Worthington Corp. and Ingersoll Rand.

Sheppard, Mullin, Richter & Hampton, Gordon F. Hampton, Los Angeles, Cal., for Moloney Elec. Co.

Stephens, Jones, LaFever & Smith, Maurice Jones, Jr., Los Angeles, Cal., for Sangamo Electric Co.

Swerdlow, Glikberg & Nicholas, Harry B. Swerdlow, Beverly Hills, Cal., for Westinghouse Electric Corp.

Walker, Wright, Tyler & Ward, Irving M. Walker, Los Angeles, Cal., for AllisChalmers Mfg. Co.

BYRNE, District Judge.

These are numerous related antitrust actions brought under Section 4 of the Clayton Act, 15 U.S.C.A. § 15. Defendants have filed motions for partial summary judgment pursuant to Rules 54(b) and 56 of the Federal Rules of Civil Procedure, and have moved under Rule 12 (f), Fed.R.Civ.P. to strike certain allegations from plaintiffs' complaints. Plaintiffs are several municipalities, state and local governmental agencies and industrial corporations who use electrical equipment produced by the defendants. Defendants include large national manufacturers of heavy electrical equipment.

The actions forming a basis for these motions arise out of the same alleged conspiracies which led to the indictment of manufacturers of electrical equipment products in the United States District Court for the Eastern District of Pennsylvania in 1960, followed by convictions in 1961. Similar antitrust suits have been instituted throughout the nation and are now pending.

The complaints seek treble damages under Section 4 of the Clayton Act, 15 U.S.C.A. § 15, for alleged conspiracies in violation of Section 1 of the Sherman Act, 15 U.S.C.A. § 1. The complaints generally allege a conspiracy to fix prices of electrical equipment purchased by plaintiffs. Most of the complaints contain two counts, the first alleging a conspiracy at least as early as 1948 and continuing until May of 1960, and the second count alleging a conspiracy beginning at least as early as 1951 in some cases, later in others, and continuing until May of 1960. It is specifically alleged that defendants, through affirmative conduct, had concealed the existence of the conspiracies from the plaintiffs, and that plaintiffs did not learn of the illegal combinations until after the United States had commenced criminal and civil proceedings against defendants in 1960. It is also alleged that plaintiffs could not, by the exercise of reasonable diligence, have discovered the conspiracies prior to the commencement of those proceedings.

Among the measures of concealment alleged are the following: That in communications among themselves concerning the conspiracy the defendants used secret code numbers in identifying themselves or their representatives; that officers and employees of defendants met secretly in various cities where they agreed on prices and on the submission

213 F. Supp. 344

and allocation of bids to purchasers; that in some instances the defendants used a secret, complex formula, designated as a "phase of the moon" formula to allocate the submission of bids to their purchasers in such a manner that it would appear that the bids were competitive

Defendants have moved for final partial summary judgment as to all claims based on purchases occurring more than four years preceding the date of the criminal indictments, or more than four years prior to the commencement of these actions in cases in which there were no indictments. They have also moved to strike allegations relating to such purchases and to concealment of the conspiracies.

The basis of defendants' motions is that the plaintiffs' actions with respect to such purchases are barred by the applicable statute of limitations and that fraudulent concealment does not serve to toll that statute of limitations.

The applicable statute of limitations is contained in Section 4B of the Clayton Act, 15 U.S.C.A. § 15b, which provides as follows:

"Any action to enforce any cause of action under sections 15 or 15a of this title shall be forever barred unless commenced within four years after the cause of action accrued. No cause of action barred under existing law on the effective date of this section and sections 15a and 16 of this title shall be revived by said sections."

This federal statute of limitations for private antitrust suits was enacted on July 7, 1955, to take effect six months thereafter, viz., on January 7, 1956.

The related Section 5(b) of the Clayton Act, 15 U.S.C.A. § 16(b), provides as follows:

"Whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws, but not including an action under section 15a of this title, the running of the statute of limitations in respect of every private right of action arising under said laws and based in whole or in part on any matter complained of in said proceeding shall be suspended during the pendency thereof and for one year thereafter: Provided, however, That whenever the running of the statute of limitations in respect of a cause of action arising under section 15 of this title is suspended hereunder, any action to enforce such cause of action shall be forever barred unless commenced either within the period of suspension or within four years after the cause of action accrued."

The pivotal issue which is determinative of defendants' motions is one of statutory construction: i. e., is Section 4B to be construed so as to allow its four-year limitation period to be tolled by fraudulent concealment?

Since the enactment of Section 4B, this question has been considered by a number of United States District Courts and by the Courts of Appeals for the Second and Eighth Circuits in cases involving the same factual circumstances which are here present and which led to the Government's action against the electrical companies. The Courts of Appeals for two circuits have held that fraudulent concealment suspends the period of limitations of Section 4B: Atlantic City Electric Co. v. General Electric Co. (2d Cir., 1962), 312 F.2d 236; City of Kansas City Missouri v. Federal Pacific Electric Co. (8th Cir., 1962), 310 F.2d 271. Three district courts in other circuits have also held that fraudulent concealment suspends the time period: United States & Tennessee Valley Authority v. General Electric Co. (E.D.Pa.1962), 209 F.Supp. 197; Commonwealth Edison Co. v. Allis Chalmers Mfg. Co. (N.D.Ill.1962), 210 F.Supp. 557; and Public Service Co. of Colorado v. Allen-Bradley Co., Allis Chalmers Mfg. Co. (D.Colo.1962). Two have taken the opposite view: Brigham City Electric Corp. v. General Electric Co. (D.Utah 1962), 210 F.Supp. 574; Public

213 F. Supp. 345

Service Co. of New Mexico v. A. B. Chance Co. (D.N.M.1962).¹

It is the opinion of this Court that the federal doctrine of fraudulent concealment applies to Section 4B of the Clayton Act and that concealment of the conspiracies as here alleged will suspend the running of that statute of limitations.

It is well settled that the all-important and controlling factor in the interpretation or construction of a statute is the legislative intent. See United States v. Rosenblum Truck Lines, 315 U. S. 50, 53, 62 S.Ct. 445, 86 L.Ed. 671 (1941). In ascertaining the Congressional intent, it must be presumed that Congress was aware of the established doctrines of the Supreme Court applicable to the subject matter of the statute. Shapiro v. United States, 335 U.S. 1, 16, 68 S.Ct. 1375, 92 L.Ed. 1787 (1948); Exploration Co. v. United States, 247 U.S. 435, 449, 38 S.Ct. 571, 62 L.Ed. 1200 (1918). Consequently, the statute must be read in connection with, and interpreted in the light of those doctrines. See Glus v. Brooklyn Eastern District Terminal, 359 U.S. 231, 79 S.Ct. 760, 3 L.Ed.2d 770 (1959); Exploration Co. v. United States, 247 U.S. 435, 449, 38 S.Ct. 571, 62 L.Ed. 1200 (1918).

At the time of the enactment of Section 4B of the Clayton Act in 1955, the federal doctrine of fraudulent concealment had long been firmly established in Supreme Court decisions.

In the landmark case of...