Riss & Company v. Association of American Railroads

• Decision Date: 06 June 1960
• Docket Number: Civ. A. No. 4056-54.
• Citation: 187 F. Supp. 306
• Parties: RISS & COMPANY, Inc., Plaintiff, v. ASSOCIATION OF AMERICAN RAILROADS et al., Defendants.
• Court: U.S. District Court — District of Columbia

187 F. Supp. 306

RISS & COMPANY, Inc., Plaintiff, v. ASSOCIATION OF AMERICAN RAILROADS et al., Defendants.

Civ. A. No. 4056-54.

United States District Court District of Columbia.

June 6, 1960.

COPYRIGHT MATERIAL OMITTED

A. Alvis Layne, Jr., Robert L. Wright, Lester M. Bridgeman, Morton A. Brody, Washington, D. C., for plaintiff Riss & Co., Inc.

William E. Miller, Stephen Ailes, Richard A. Whiting, Gregory S. Prince, Philip F. Welsh, Washington, D. C., for Assn. of American Railroads.

Stuart S. Ball, Richard J. Flynn, J. H. Hays, Amos M. Mathews, J. W. Nisbet, Chicago, Ill., Lawrence Cake, John Guandolo, Washington, D. C., for The Assn. of Western Railways.

Samuel E. Gates, New York City, Chisman Hanes, James L. Kaler, Washington, D. C., for Traffic Executive Assn. of Eastern Railroads.

C. Brewster Rhoads, Joseph W. Swain, Jr., Philadelphia, Pa., for Eastern Railroad Presidents Conference.

Francis C. Reed, Powell Pierpoint, New York City, Robert M. Gray, Washington, D. C., for Carl Byoir & Associates, Inc.

Francis M. Shea, New York City, Prime F. Osborn, Louisville, Ky., for Atlantic Coast Line R. R. Co. Stuart S. Ball, J. H. Hays, Amos M. Mathews, J. W. Nisbet, Chicago, Ill., for The Atchison, T. & S. F. Ry. Co.

Hugh B. Cox, James H. McGlothlin, James C. McKay, Washington, D. C., Edwin H. Burgess, John L. Rogers, Jr., Baltimore, Md., for The Baltimore & O. R. R. Co.

Edward K. Wheeler, Robert G. Seaks, Washington, D. C., for The Chesapeake & O. Ry. Co.

Stuart S. Ball, J. H. Hays, Amos M. Mathews, J. W. Nisbet, Chicago, Ill., for Chicago, B. & Q. R. Co., Chicago, M., St. P. & Pac. Ry. Co., Chicago & N. W. Ry. Co., and Chicago, R. I. & P. Ry. Co.

Hugh B. Cox, James H. McGlothlin, James C. McKay, W. T. Pierson, Washington, D. C., P. H. Donovan, Cleveland, Ohio, for Erie R. R. Co.

Stuart S. Ball, J. H. Hays, Amos M. Mathews, J. W. Nisbet, Chicago, Ill., for Great Northern Ry. Co.

Stuart S. Ball, J. H. Hays, Amos M. Mathews, J. W. Nisbet, Chicago, Ill., for Illinois Cent. R. R. Co., Missouri, K. & T. Ry. Co., Missouri Pac. Ry. Co.

Edward K. Wheeler, Robert G. Seaks, Washington, D. C., Gerald E. Dwyer, New York City, for New York Cent. R. Co.

Stuart S. Ball, J. H. Hays, Amos M. Mathews, J. W. Nisbet, Chicago, Ill., for Northern Pac. Ry. Co.

Hugh B. Cox, James H. McGlothlin, James C. McKay, Washington, D. C., John B. Prizer, Carl Helmetag, Jr., Lewin W. Wickes, Philadelphia, Pa., for The Pennsylvania R. Co.

Stuart S. Ball, J. H. Hays, Amos M. Mathews, J. W. Nisbet, Chicago, Ill., for St. Louis-S. F. Ry. Co., Southern Pac. Co., Union Pac. R. R. Co., Wabash R. R. Co., Minneapolis, St. P. & S. S. M. Ry. Co.

Francis M. Shea, New York City, Henry L. Walker, Washington, D. C., for Southern Ry. Co.

Francis M. Shea, Harold J. Gallagher, New York City, Charles T. Abeles, Richmond, Va., for Seaboard Air Line Ry. Co.

SIRICA, District Judge.

This is a private antitrust action for treble damages and injunction brought by Riss & Company, a Kansas City trucking concern, against twenty-three of the nation's Class I railroads, four railroad associations and a public relations firm, Carl Byoir and Associates, Inc.¹

Plaintiff's contention, as set forth on page one of its "Memorandum Summarizing Plaintiff's Conspiracy Proof against all Defendants", is that the defendants conspired to monopolize the transportation of ammunition and explosives for the United States Government in violation of Sections 1 and 2 of the Sherman Act (15 U.S.C.A. §§ 1, 2) by means which, if considered by themselves, are entirely lawful. Plaintiff claims that the purpose of this unlawful conspiracy was to obtain for the railroads, as a whole, at least 90% of the government munitions traffic, without regard to the merits of any particular railroad or group of railroads as competitors for such traffic. Plaintiff further alleges that the railroad association defendants and the public relations firm were the agents of the individual railroads in accomplishing this unlawful purpose and that the key to the participation of the individual railroads is their knowledge of the alleged unlawful design.²

The trial of this case began on January 5, 1960, and plaintiff has now completed the presentation of its evidence. The trial transcript numbers 11,158 pages, and the number of actual trial days totals 67. Plaintiff has introduced 283 exhibits, and the various defendants have had marked for identification 378 documents, of which 353 have been used on cross-examination. Now, after almost five months of trial, the Court has before it Motions to Dismiss or for a Directed Verdict, filed by all defendants pursuant to rules 41 and 50 of the Federal Rules of Civil Procedure, 28 U.S.C.A.

This opinion will first consider defendants' Motions to Dismiss the Complaint. Plaintiff has offered evidence which it contends shows that certain rate reductions by the defendant railroads in the fall of 1955 and the spring of 1956 were made for the purpose of eliminating plaintiff from the business of transporting ammunition and explosives for the United States Government; i. e., that such rate reductions were overt acts pursuant to a pre-existing conspiracy to eliminate plaintiff as a railroad competitor for this traffic. In 1958, defendants moved this Court to suspend proceedings and refer these challenged rate reductions to the Interstate Commerce Commission under the doctrine of primary jurisdiction. Defendants argued then that the intent and effect of these rate reductions, made pursuant to procedural agreements approved by the Commission, should be first considered by the Commission, so that the Court could obtain that agency's expert opinion on this issue before trial. Defendants contended that these rate reductions were immunized from the operation of the antitrust laws by virtue of 49 U.S.C.A. § 5b(9). The Court denied this motion. The Court of Appeals for the District of Columbia Circuit held that such issue should be referred to the Interstate Commerce Commission if, in the opinion of the trial court, it was "the `sole or dominant' issue in the case", (Atlantic Coast Line R. R. Co. v. Riss & Co., 1959, 105 U.S.App.D.C. 382, 267 F.2d 659, 660), and that referral was not necessarily required:

"* * * where the agreement is only one of a considerable number of overt acts alleged and where the policy favoring referral is clearly outweighed by other factors such as the probability of undue delay * * *." Atlantic Coast Line R. R. Co. v. Riss & Co., 1958, 105 U. S.App.D.C. 380, 267 F.2d 657, 658.

This Court, thereafter, in Riss & Co. v. Association of American R. R., 170 F.Supp. 354, supra, found that the challenged rate practice was not the sole or dominant issue in the case, and again denied the motion to suspend. A petition for writ of certiorari was denied by the Court of Appeals for the District of Columbia Circuit (267 F.2d 659, supra) and a motion for leave to file a petition for certiorari was denied by the Supreme Court (Atlantic Coast Line R. R. v. Riss & Co., 1959, 361 U.S. 804, 80 S.Ct. 108, 4 L.Ed.2d 57). In its earlier opinion in this matter, this Court found that the rate reduction practice was not the sole or dominant issue. The present motion to dismiss is based on defendants' contention that plaintiff's evidence makes it clear that the intent and effect of the rate reductions "in reality is the `dominant issue'" (Memorandum in Support of Motion to Dismiss or Direct Verdict for all Defendants, p. 2). The Court is not in agreement with this argument.

After almost five months of trial, the Court is convinced more than ever that the challenged rate reduction is not the "sole or dominant issue" in this case. Defendants' motions to dismiss are accordingly denied.

Defendants' Motions for Directed Verdict are based essentially on three grounds: (1) the recent decision of the Supreme Court in Talley v. State of California, 1960, 362 U.S. 60, 80 S.Ct. 536, 4 L.Ed.2d 559; (2) lack of substantial evidence of a pre-existing conspiracy in violation of the Sherman Act; and (3) lack of substantial evidence of the causation of injury or fact of damage. These grounds will be considered in order.

In the presentation of its prima facie case, plaintiff's evidence of the alleged "pre-existing conspiracy" consisted in part of documents from which a jury could find that the defendants used the so-called non-attribution or "third-party technique" in which the author or sponsor of publicity is not disclosed. It is plaintiff's contention that such publicity methods, when done for an unlawful purpose (e. g., monopoly), are not protected by the First Amendment guarantees of freedom of speech and press (Cf: Noerr Motor Freight, Inc. v. Eastern R. R. Presidents Conference, D.C.E.D.Pa.1957, 155 F.Supp. 768, affirmed 3 Cir., 1959, 273 F.2d 218, certiorari granted 1960, 362 U.S. 947, 80 S.Ct. 862, 4 L.Ed.2d 866).

In the recent Talley case, the Supreme Court had occasion to deal with the problem of anonymous speech. There the Court held invalid a broad municipal ordinance of the City of Los Angeles which provided, in substance, that no handbills should be distributed which did not bear on their face the name and address of the person who caused the same to be printed, written, compiled, manufactured or distributed. Talley was convicted of distributing pamphlets of the "National Consumers Mobilization" which urged the reader to boycott certain merchants who carried products of manufacturers who did not give equal employment opportunity to certain minority groups. His conviction was reversed by the Supreme Court which, after citing examples showing that, historically, anonymous pamphlets have played an important role in the fight for freedom, proceeded to the rationale of its holding:

"We have recently had occasion to hold * * * that there are times and circumstances where States may not compel members of groups engaged in the dissemination of ideas to be publicly identified.

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