United States v. Gamewell Co., Cr. No. 50-178.

• Citation: 95 F. Supp. 9
• Decision Date: 01 February 1951
• Docket Number: Cr. No. 50-178.
• Parties: UNITED STATES v. GAMEWELL CO. et al.
• Court: United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts

95 F. Supp. 9

UNITED STATES v. GAMEWELL CO. et al.

Cr. No. 50-178.

United States District Court D. Massachusetts.

January 25, 1951.

As amended February 1, 1951.

John J. Donnelly, Jr., Sp. Asst. to the Atty. Gen., Vincent A. Gorman, Sp. Atty., William Amory Underhill, Acting Asst. Atty. Gen., Sigmund Timberg, Chief, Judgments and Judgment Enforcement Section, Edwin H. Pewett, Asst. Chief, Judgments and Judgment Enforcement Section, all of Washington, D. C., George F. Garrity, U. S. Atty., Boston, Mass., for plaintiff.

Henry E. Foley, Foley, Hoag & Eliot, Charles B. Rugg and Ropes, Gray, Best, Coolidge & Rugg, all of Boston, Mass., for defendants.

SWEENEY, Chief Judge.

This is a criminal and civil contempt proceeding brought by the United States against the Gamewell Company and two individuals, Philbrick and McCarthy. Philbrick is the President and General Manager of the corporation and McCarthy is the General Sales Manager. The contempt proceedings grew out of the alleged violations of a consent judgment entered in this Court on March 22, 1948, all of these defendants having been parties to that action. Much of the evidence in this case appears in the stipulations which the Court adopts as its Findings of Fact as far as they go. Additional testimony was taken at a lengthy hearing. We are concerned here with allegations of both civil and criminal contempt. Ordinarily it might be sufficient to accept one classification and dispense with the other, but in the instant case we have both a corporation and two individuals who guide the corporation. The United States is the complainant and seeks a change in the defendants' conduct so that it will comply with Section V (G) of the consent judgment. Whether we try to differentiate between the two classes of contempt by inquiring whether the relief sought is punishment or remedial, see Gompers v. Buck's Stove & R. Co., 221 U.S. 418, 31 S.Ct. 492, 55 L.Ed. 797, or attempt to differentiate between the two by looking to the form of the proceeding, whether it be a private or public contempt, we reach the same end result, and that is that there should be in this case an adjudication of both the civil and criminal contempts. The action desired by the United States on the part of this corporation is both to remedy its course of conduct to conform to the decree and to punish for the past violations.

Findings of Fact

The defendant, Gamewell Company, is a manufacturer of fire alarm equipment with a plant in Newton, Massachusetts, and field offices located in seven cities throughout the United States. It employs about thirty field representatives. The defendants, Philbrick and McCarthy, during the period covered by the alleged offenses, were actively engaged in the direction, management, policies and activities of the defendant Gamewell, and they authorized, ordered, approved, performed, or ratified the policies and acts of the defendant Gamewell Company. The field representatives were required to submit reports of their activities to Philbrick and McCarthy at the main plant, giving current and adequate information concerning their activities in the field, so that it can be fairly found as a fact that the actions of the field representatives as reported to the home office were approved and ratified by the officers personally and by them for the company.

When the consent judgment was entered it sought to prescribe a class of conduct which Gamewell and its employees might follow that would not be violative of the antitrust laws. Section V (G) which is alleged herein to have been violated in four different localities reads as follows:

(* * * enjoined and restrained from)

"Offering to furnish or sell, or furnishing or selling, apparatus or equipment appropriate for use in connection with public fire alarm systems, or installation or engineering services in connection therewith, to a prospective purchaser, without cost or below the cost of doing business. However, where the prospective purchaser does not purchase from Gamewell apparatus or equipment appropriate for use in connection with public fire alarm systems, defendant Gamewell may, at its option, consistently with this subsection, furnish such engineering services on any charge or donation basis, if lawful, provided it makes an otherwise completely unrestricted and unconditional grant of such services to such prospective purchaser. In all bids submitted by defendant Gamewell for any contract for the furnishing or selling of apparatus or equipment appropriate for use in connection with public fire alarm systems, the cost of all relevant engineering services furnished or sold, or to be furnished or sold, shall be separately and specifically stated. No installation or engineering services furnished pursuant to the provisions of this subsection shall contain any information concerning the product of any specific manufacturer or distributor (including defendant Gamewell) of apparatus or equipment appropriate for use in connection with public fire alarm systems;"

The language quoted does not seem difficult to read and understand. It starts out with a complete prohibition against offering to furnish or sell, or furnishing or selling, engineering services without cost or below the cost of doing business. The next section takes into account a situation where Gamewell is not the successful bidder or does not bid at all, and permits a gift of engineering services at the option of the company. The next sentence provides that in submitting a bid Gamewell must show the cost of all engineering services furnished or sold, and each must be separately and specifically stated. I do not think that the sentence admits of a construction that would allow the bid to be separated from the cost figures, for it states that, "In all bids * * * the cost * * * shall be separately and specifically stated." Counsel for the defendant placed a different contemporaneous construction upon this sentence than I do. I cannot agree with his construction. Certainly it would accord more with the spirit of the consent judgment to read this sentence so that the bid contains the costs. Counsel for the defendant in making suggestions for rulings of law to be made by the Court tries to interpret this third sentence of Section V (G) as meaning that they shall merely state the cost of the engineering services without collecting it. This of course is directly contrary to the opening sentence of that paragraph. In another request they seek to limit the coverage of the second, third, and fourth sentences of Section V (G) to pre-contract engineering services. With this I cannot agree, for the third sentence refers to "the cost of all relevant engineering services furnished or sold, or to be furnished or sold." The last sentence of the paragraph prohibits the inclusion in any engineering services of information concerning any specific manufacturer or distributor.

Shortly after the entry of the consent judgment, counsel for Gamewell advised it in writing as follows:

"Under Section V (G) of the Consent Decree we may make engineering surveys as part of our sales promotion and submit them to prospective customers without sending copies to competitors as provided in Section VI for certain other types of information.

"If we later submit a bid on the project covered by such a survey, we must state with our bid, in a separate letter if desired, the estimated cost of the survey prepared for that project. An engineering survey must not be used as a means to avoid the provisions of Section VI-VII and VIII but otherwise the information included in it is not restricted in any way provided it omits reference to any manufacturer's names or numbers in describing apparatus or equipment. (Pet. Ex. No. G-64; Tr. 122, 123)"

Philbrick and McCarthy embodied the above in a field memorandum, adding the following: "Attached is a typical summary list of fire alarm equipment such as may have been used prior to the decree. The listing marked "A" contains manufacturer's names and catalog references, which are not now permitted. The listing marked "B"...