General Tire & Rubber Co. v. Firestone Tire & Rubber Co.

• Decision Date: 21 July 1972
• Docket Number: C 67-206.,Civ. No. 36799
• Citation: 349 F. Supp. 333
• Parties: The GENERAL TIRE & RUBBER COMPANY, Plaintiff, v. The FIRESTONE TIRE & RUBBER COMPANY, Defendant. The FIRESTONE TIRE & RUBBER COMPANY, Plaintiff, v. The GENERAL TIRE & RUBBER COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Ohio

349 F. Supp. 333

The GENERAL TIRE & RUBBER COMPANY, Plaintiff, v. The FIRESTONE TIRE & RUBBER COMPANY, Defendant.

The FIRESTONE TIRE & RUBBER COMPANY, Plaintiff, v. The GENERAL TIRE & RUBBER COMPANY, Defendant.

Civ. Nos. 36799, C 67-206.

United States District Court, N. D. Ohio, E. D.

June 22, 1970.

Withdrawn and Refiled As Amended July 21, 1972.

COPYRIGHT MATERIAL OMITTED

William C. McCoy, Jr., McCoy, Greene & Howell, Cleveland, Ohio, Charles J. Merriam, Edward M. O'Toole, Carl E. Moore, Jr., Chicago, Ill., Edward B. Beale, Clyde V. Erwin, Beale & Jones, Washington, D. C., Cletus G. Roetzel, Richard E. Guster, Wise, Roetzel, Maxon, Kelly & Andress, Akron, Ohio, for General Tire & Rubber Co.

Jones, Day, Cockley & Reavis, Victor DeMarco, Robert W. Poore, and James E. Courtney, Patrick McCarten, Robert J. Hoerner, Cleveland, Ohio, Stanley M. Clark, David A. Thomas, Akron, Ohio, for Firestone Tire & Rubber Co.

ON MOTION TO DISMISS

MEMORANDUM OPINION AND ORDER

BATTISTI, Chief Judge.

This is a mammoth case involving patent claims which have affected virtually the entire rubber and tire industry of the United States and, indeed, the free world. For all practical purposes, every controversy involving United States companies, together with Dunlop of England, have been settled in this Court over the past several years. Two cases remain which comprise, as will be seen, essentially one controversy and are ripe for trial: (1) General Tire v. Firestone, Civil Action No. 36799, for patent infringement, filed in Cleveland, Ohio, Northern District of Ohio, on April 4, 1961; and (2) Firestone v. General Tire, Civil Action No. 67-206, for declaratory judgment of invalidity and non-infringement of General's patent, filed in Baltimore, District of Maryland, on March 30, 1961, and subsequently transferred to this district under circumstances discussed below.

Each party has filed a motion to dismiss. General has moved to dismiss, alleging fraud on the part of Firestone; and Firestone has moved to dismiss, alleging patent misuse on the part of General. Each party claims its motion to be vital and dispositive of the controversy. Thus, these motions, in the order mentioned above, will be considered and resolved in this Memorandum.

I. THE FRAUD ISSUE IN CASE NO. C 67-206

General's motion to dismiss the Baltimore case is bottomed on alleged fraud by Firestone, which raises rather delicate problems of judgment. In this circumstance, it was hoped that this motion could be deferred until the end of the trial or disposed of by way of settlement of the case. However, it appears that this is a litigious situation promising to be protracted, difficult, and replete with charges and countercharges of wrongdoing. The parties have been at loggerheads for eight years, and their intransigence shows no signs of softening. After numerous pretrial conferences, it is still difficult to predict the format that the trial will take. In this situation, the Court feels it will be most beneficial to proceed to decide this motion on the completed oral arguments and the submitted briefs and appendices. It is hoped that in ruling on this matter the litigation can be molded into a reasonably coherent posture for trial.

A. SHOULD FRAUD ISSUE BE RE-EXAMINED?

The threshold question is whether this Court ought to exercise its discretion to re-examine the findings made by the Baltimore court on October 17, 1966. General Tire brought a motion to dismiss this case or transfer the case to Cleveland on the basis of an alleged fraud on the part of Firestone in commencing the suit in Baltimore. In denying the motion to dismiss or transfer, the Baltimore court made specific findings. These findings, along with other factual findings of no wrongdoing on the part of Firestone and its co-plaintiff, McCreary, included:

"Findings of Fact.

. . . . . .

5. No fraud, serious or otherwise, has been practiced upon the Court by the plaintiffs.

6. There has been no effort by plaintiffs to practice fraud upon the Court." (264 F.Supp. 301)

These findings were made by an experienced judge who had conducted the Baltimore trial for more than two years. They were made on a motion similar to the one presently before this Court.

Normally "one judge does not consider a point previously decided by another judge of coordinate jurisdiction, and hence such pre-transfer rulings should ordinarily stand." 1A Moore, Section 0.404(8), at 4230. Nevertheless, there is compelling reason to reopen and reconsider the allegations of fraud. This is not to suggest that the doctrine of "law of the case" is ignored. The Court of Appeals for the Fourth Circuit on January 11, 1967, reversed the order of the Baltimore court denying the motion to transfer or dismiss, and issued a writ of mandamus, in the interest of judicial economy, directing the Baltimore court to dismiss or transfer the case to Cleveland. (373 F.2d 361.) The language of the opinion of the Court of Appeals essentially cancels the findings of the Baltimore Court on the fraud issue and invites a reconsideration of the allegations by this transferee court.

The opinion of the Fourth Circuit has been considered very carefully to determine what that court intended to do with the findings of the Baltimore court. There is language which is most troublesome to interpret. The Court of Appeals said:

"We do not feel it advisable at this stage in the lawsuit to pass on the district court's findings and conclusions with respect to General's contentions of bad faith and misrepresentation to the court. Without denigrating the importance of these issues in the ultimate assessment of costs between the parties, we think that their resolution in favor of Firestone should not have been determinative of the motion to transfer. Indeed we think the Court's preoccupation therewith caused it to overlook completely the factor which should have controlled the decision. That factor was the complete change of conditions which had taken place since the motion was originally denied. This failure resulted in an order which constituted an abuse of discretion." (373 F.2d 361 at 368)

Clearly, the Fourth Circuit's reason for ordering transfer was "the impelling need for efficiency in the administration of our court system. . . ." Id, at 368. It said, "We are unanimously of the opinion that the case should be transferred to the Northern District of Ohio in order to prevent an extravagantly wasteful and useless duplication of time and effort of the federal courts by the simultaneous trial of two complex and elaborate cases involving substantially the same factual issues." Id, at 362.

The Fourth Circuit, being expressly concerned with efficient administration, felt it advisable not to pass on the trial court's findings with respect to fraud. This does not mean they accepted these findings. Indeed, they criticized the Baltimore court for its preoccupation with these factors in deciding the motion to transfer or dismiss. The Court of Appeals could have passed on these findings, but it declined to do so. This avoidance was obviously intentional.

Yet the Court of Appeals saw the importance of the bad faith and misrepresentation issues and did not wish to denigrate them. What the Court of Appeals must have intended was not to nullify the findings, and also not to affirm them, but to invite the transferee court to reconsider them. Thus, it is concluded that the Fourth Circuit intended to transfer this case unbound by prior determinations.

Moreover, the intention of the Court of Appeals can be inferred from the fact that it granted an extraordinary writ of mandamus directed against the Baltimore court's order of September 16, 1966, denying the motion. The Baltimore court's findings of October 17, 1966, could only have been made to support its September 16 order. In reversing that order, there was nothing to which the findings of fact on the fraud issue could attach. It would be strange indeed for the Court of Appeals to have ordered transfer of the case with freely-floating findings coming along with it.

Firestone relies on United States v. First National Bank and Trust Co., 263 F.Supp. 268 (D.C.Ky.1967) to argue that in granting General's motion to transfer on grounds of judicial economy it must be construed that the Court of Appeals denied transfer or dismissal on the basis of fraud. In the First National case, the United States challenged a merger claiming violation of Sections 1 and 2 of the Sherman Act. The district court found for defendant on both counts. The Supreme Court reversed, holding that the merger violated Section 1, but noting that "in view of our conclusion . . . we do not reach the questions posed under § 2." 376 U.S. 665 at 673, 84 S.Ct. 1033 at 1037, 12 L. Ed.2d 1 (1964). Before the divestitude order, Congress enacted a statute which effectively nullified the Supreme Court ruling on Section 1. The United States thereupon attempted to reopen the case in the district court claiming a violation of Section 2. The Court held that since the Supreme Court did not reverse on the Section 2 claims, it was precluded by the "law of the case" doctrine from reconsidering the issue. The First National case, while being roughly similar in context, contains factors which lessen its pointed force. The ruling appealed in the First National case was a final order denying relief on the merits, whereas here the relief denied in Baltimore was interim in nature and, therefore, not entitled to the same settled respect under the "law of the case" doctrine. 1B Moore's Federal Practice, 0.404(4). Also First National dealt with violations of two separate substantive provisions of the Sherman Act. In the instant case, General's motion was in fact one motion, a motion to "transfer or dismiss." The motion was ruled on as one motion. This is not a mere detail of minor significance. The Fourth Circuit had all factors before it when it reversed the Baltimore court. The Supreme Court...