Armco Steel Corporation v. State of North Dakota

• Decision Date: 11 April 1967
• Docket Number: No. 18130.,18130.
• Citation: 376 F.2d 206
• Parties: ARMCO STEEL CORPORATION, Appellant, v. STATE OF NORTH DAKOTA, for the Use and Benefit of the STATE HIGHWAY FUND ex rel. Walter HJELLE, State Highway Commissioner, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

376 F.2d 206 (1967)

ARMCO STEEL CORPORATION, Appellant, v. STATE OF NORTH DAKOTA, for the Use and Benefit of the STATE HIGHWAY FUND ex rel. Walter HJELLE, State Highway Commissioner, Appellee.

No. 18130.

United States Court of Appeals Eighth Circuit.

April 11, 1967.

William R. Pearce, of Pearce, Engebretson, Anderson & Schmidt, Bismarck, N. D., for appellant and filed printed brief.

David L. Milhollan, Bismarck, N. D., and Albert A. Wolf, Bismarck, N. D., for appellee State of North Dakota, etc. and filed brief.

Before JOHNSEN, Senior Circuit Judge, BLACKMUN, Circuit Judge, and YOUNG, District Judge.

JOHNSEN, Senior Circuit Judge.

Armco Steel Corporation has appealed from a judgment of $775,065 in treble damages and an attorney's fee allowance of $72,500 in a suit brought by the State of North Dakota under 15 U.S.C.A. § 15, for injury from violation of Section 1 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 1.¹

The amount of actual damages which the jury found that the State had sustained was $258,355.00. The period of injury involved was from 1957 to June 17, 1960, the date of an indictment against Armco for antitrust offense. Armco had pleaded guilty to the charge, which was one of conspiracy to fix prices upon corrugated culverts. The complaint alleged that the conspiracy had included structural plate pipes and metal end sections as well as corrugated culverts, and sought damages as to all three products in the use made of them for state highway purposes.² The major part of the State's claim, however, had relation to corrugated culverts.

As part of its proof that a conspiracy had existed, the State was permitted to introduce in evidence the judgment of conviction against Armco based on its plea of guilty to the indictment charge. The State further produced testimony by the other conspirators, and by some contractors, from which the jury could properly find that all three of the products had been the subject of list prices made up by Armco, of whose amounts the three North Dakota suppliers were kept advised and to which they conformed; that representatives of Armco had made it clear to the three suppliers, through meetings and in conversations, that they were expected to conform to these list prices in the bids submitted by them to the State for any direct purchases by it of such products, and also in the price quotations made by them to contractors on such products for use by the latter as an element in the bids submitted on state highway-construction projects; and that the suppliers with understanding and acceptance among them had gone along together on this basis, realizing that Armco was in a position to undercut them and to disrupt the general price levels, as it had specifically told one of the suppliers it would do, if any of them engaged in a list-price departure.

On what has been set out, there is no merit in Armco's first contention for reversal that, even if the evidence was sufficient to establish a conspiracy as to corrugated culverts, which the indictment had charged and to which Armco had pleaded guilty, it was not sufficient to establish that the conspiracy also extended to structural plate pipes and metal end sections. As stated, however, these two products had been made the subject of list-price specification by Armco, similarly as corrugated culverts. And on the probative indications in the testimony of the State's witnesses, use was similarly made of the list prices as to all three products in the bids of the conspirators on direct purchases by the State, and in their price quotations to contractors for utilization as a cost basis in bidding on highway construction projects. Thus we can see no question as to the jury's right to find that all three products were within the intendment and execution of the conspiracy.

Armco's second contention here is that it was error to permit introduction of the judgment of conviction against it as prima facie evidence that the price-fixing conspiracy had existed. The argument is that a judgment of conviction based on a plea of guilty is subject to the exclusionary proviso of Section 5(a) of the Clayton Act, 15 U.S.C.A. § 16 (a), relating to "consent judgments".

That section in its pertinent part provides:

"A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceeding brought by any other party against such defendant under said laws * * as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto: Provided, That this section shall not apply to consent judgments or decrees entered before any testimony has been taken * * *".

The question whether § 5(a) must be regarded as having made a judgment of conviction for antitrust violation, based on a plea of guilty, inadmissible in a suit by a private party for injury from the violation is one which has never been conclusively settled. The Supreme Court has made no expression upon it, and oddly enough, it is only within the last four years that any decisions have occurred thereon in the Courts of Appeals. Before these recent appellate decisions, a number of the District Courts had expressed the view that such a judgment of conviction was rendered inadmissible by the proviso of § 5(a). The earliest reported and most cited of these expressions appears to be that of Judge Nordbye in Twin Ports Oil Co. v. Pure Oil Co., 26 F.Supp. 366 (D.C.Minn.1939). That case, however, involved a nolo contendere plea, so that the expression made as to a plea of guilty was of course dictum. Nevertheless, it was viewed as of such demonstrativeness that it was accepted for some time by the District Courts generally, and it has perhaps been largely responsible for the question not earlier having been carried to the Courts of Appeals.

But a lurking dissatisfaction with the construction as not being necessary and not being facilitative of the remedial purpose of the antitrust statutes finally brought the question to the Courts of Appeals, in three different circuits, within relatively rapid sequence; and the three courts all held that § 5(a) was not required to be interpreted as precluding the admission of such a criminal judgment, but only those based on pleas of nolo contendere had to be compellingly regarded as coming within the exclusion of the proviso. Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co., 323 F.2d 412, 415-417 (7 Cir. 1963), cert. den. 376 U.S. 939, 84 S.Ct. 794, 11 L.Ed.2d 659; City of Burbank v. General Electric Co., 329 F.2d 825, 834-835 (9 Cir. 1964); General Electric Co. v. City of San Antonio, 334 F.2d 480, 484-487 (5 Cir. 1964).

There has been no decision by a Court of Appeals to the contrary. We find the reasoning of the three cases of sufficient legal appeal and constructional acceptability so that we are content to follow their holding and to continue the uniformity of the appellate decisions.

Basically what the question gets down to, when consideration is related to the broad remedial purpose of the antitrust statutes, is whether, on the language of the proviso of § 5(a) or on the available legislative history thereof, it is so clear as to be compelling that Congress was intending to abolish as to antitrust violations the probative status which has traditionally been accorded to pleas of guilty in criminal cases as judicial admissions. See generally 31A C.J.S. Evidence § 300(b), p. 769; 31 A.L.R. Annotation, 261, 278; 18 A.L.R.2d, Annotation, 1287, 1307.

On this approach, the argument that the language "consent judgments or decrees" in the proviso is without room for interpretative distinction between convictions based on pleas of nolo contendere and those based on pleas of guilty is not nakedly persuasive. Also, it would seem that there could properly be rational judicial doubt whether the expressions made on the Senate floor, which have been set out in Judge Nordbye's Twin Ports opinion, 26 F.Supp. at pp. 374-376, had so permeated the entire legislative course, and been of such manifest constructional acceptance, that they must be held to be derogationally conclusive against the primary object of § 5 to make easier the remedial path for those who are victims of antitrust injury.

In another context but not without general relevance here, the Supreme Court has said that the purpose reflected by the history of § 5 was "to minimize the burdens of litigation for injured private suitors by making available to them all matters previously established by the Government in antitrust actions", and that "We think that Congress intended to confer, subject only to a defendant's enjoyment of its day in court against a new party, as large an advantage as the estoppel doctrine would afford had the Government brought suit". Emich Motors Corp. v. General Motors...