Baush Mach. Tool Co. v. Aluminum Co. of America, 480.
Decision Date | 16 September 1935 |
Docket Number | No. 480.,480. |
Citation | 79 F.2d 217 |
Parties | BAUSH MACH. TOOL CO. v. ALUMINUM CO. OF AMERICA. |
Court | U.S. Court of Appeals — Second Circuit |
William Watson Smith, of Pittsburgh, Pa., Edward F. McClennen, of Boston, Mass., Frederick H. Wiggin, of New Haven, Conn., Frank B. Ingersoll and Leon E. Hickman, both of Pittsburgh, Pa., and Edward Williamson, of Boston, Mass., for appellant.
Cummings & Lockwood, of Stamford, Conn., and Edward C. Park, of Boston, Mass. (Mark W. Norman, of New York City, Claude B. Cross and Edward C. Park, both of Boston, Mass., and Raymond E. Hackett, of Stamford, Conn., of counsel), for appellee.
Before MANTON, SWAN, and CHASE, Circuit Judges.
This litigation was first before this court on an appeal from an order relating to a bill of discovery. See 63 F.(2d) 778. Following that the case was tried to a jury in the District Court, where a verdict was returned in favor of the defendant and judgment entered thereon. The plaintiff's appeal to this court resulted in a reversal and remand for a new trial. See (C. C. A.) 72 F.(2d) 236. At the second trial, the plaintiff obtained a verdict for $956,300, upon which judgment for three times that amount, together with costs including an attorney's fee of $300,000, was entered. The present appeal is from this judgment.
The defendant, a Pennsylvania corporation, is the sole producer of virgin aluminum in the United States. Its business is the outgrowth of that of the Pittsburgh Reduction Company which began to manufacture aluminum at Pittsburgh, Pa., in 1888. Its predecessor and the defendant will hereinafter be treated as one and called the defendant. It acquired the rights under the United States patents to Charles M. Hall which issued in 1886 and disclosed a revolutionary process for extracting alumina (the oxide of aluminum) from the base ore bauxite by means of electrolysis and mainly because it controlled these patent rights succeeded in vastly increasing the production of aluminum at a small percentage of its former cost. Before the Hall patents expired in 1903, the defendant was firmly entrenched in the business of producing virgin aluminum in this country, and it has ever since successfully maintained its supremacy in that field. It strenuously insists that this, however, has been due solely to the momentum of its patent monopoly coupled with its business skill and financial resources which have been employed at all times without violation of the anti-trust laws.
There are producers of virgin aluminum in foreign countries who have branches in this country from whom domestic users who do not choose to deal with the defendant may buy. The only ones which need be mentioned are the British Aluminum Company, Limited; L'Aluminium Francais (French); Alumunium Industrie (Swiss); and a German company, Vereinigte Aluminum Werke Aktiengesellschaft. They will hereafter be referred to as the foreign producers.
Besides virgin aluminum, the defendant and the foreign producers also manufacture aluminum alloys which have a higher tensile strength than the pure metal and have been given various trade names. One which is perhaps most commonly known is called "duralumin" and was first developed commercially in Germany under that name. The defendant's product of similar composition and quantity is known as 17S and was first made in 1916.
Though the defendant alone produces virgin aluminum in the United States, there is a large business, which it does not control, in the reduction of aluminum scrap that yields a product not as uniform in quality but in other respects the equal of the virgin metal. The defendant's virgin aluminum and its alloys are sold in ingot form to manufacturers of aluminum sheet, wire, tubing, electric cable, foil, powder, rods, forgings, extruded and structural shapes, and many other articles. No distinction will be made herein between the pure aluminum and the alloys, but both will be called "aluminum."
Besides selling to manufacturers, the defendant has domestic subsidiaries who manufacture all kinds of aluminum products and who compete directly with independent manufacturers of such goods. Until 1928 it also had foreign subsidiaries and itself engaged in foreign business, but in that year a Canadian corporation, called "Aluminium, Limited," was organized to which were transferred all of the defendant's foreign holdings, except its Dutch Guiana bauxite mines and the Alcoa Power Company which owned a water power development in Canada, in return for all of Aluminium, Limited's, capital stock. This stock was at once distributed to the defendant's stockholders in the ratio of one share of Aluminium, Limited, to each holder of three shares of the defendant's stock. Since then changes in stock ownership have occurred, but a small group of stockholders common to both corporations have always owned more than half of the stock of each. Since the organization of Aluminium, Limited, the defendant has confined its business to the United States.
The plaintiff, a Massachusetts corporation, is a manufacturer in Springfield and Chicopee, Mass., whose business in part is the making of aluminum products from aluminum ingot. It was already well established in business when, in 1919, it entered this field. Its aluminum business led a precarious existence from the start and was never a profitable venture. On April 18th in that year, the plaintiff brought a suit similar to this against the defendant in the District Court for the District of Massachusetts which was pending, though never tried, when the present action was brought in Connecticut on July 24, 1931.
The gist of its complaint is: (1) That the defendant has monopolized interstate trade in virgin aluminum by unlawfully combining and agreeing with the foreign producers that they will all charge substantially the same prices for virgin aluminum in this country; (2) that it so combined and agreed with Aluminium, Limited, that Aluminium, Limited, would not compete with it in the United States by selling virgin aluminum here; (3) that it did itself, and with its domestic subsidiaries, monopolize and restrain interstate trade in virgin aluminum; and (4) that it did, or attempted to, in concert with its domestic subsidiaries, monopolize interstate trade in substantial part by keeping the price of virgin aluminum high and the price of products manufactured from it low so that it was impossible for the defendant to compete with it in the manufacture of aluminum products, in that the cost of defendant's raw material plus the cost of manufacture and sale exceeded the price at which its product could be sold in competition with similar products so manufactured and sold by the defendant. In this connection the domestic subsidiaries of the defendant and the defendant will be herein treated as one.
The assignments of error are needlessly numerous. They cover no less than ninety pages in the record. None of them question the sufficiency of the evidence to take the issues to the jury. The occurrences which prejudiced the defendant, so it claims, have to do with the conduct of the trial wherein it is said that the trial judge abused his discretion; ruled erroneously in excluding and in admitting certain evidence; and made errors both of omission and commission in the charge.
The evidence that the defendant had violated the anti-trust laws as charged by the defendant was largely circumstantial. The only direct evidence of any such unlawful agreement is found in the testimony of Haskell, the plaintiff's president, who testified to a conversation he had with A. V. Davis, the president of the defendant, in which he said Davis told him that the defendant and the foreign producers had an agreement fixing the price at which they would all sell aluminum in the United States, which price the plaintiff must pay to obtain its raw material. Davis denied any such conversation, and other evidence than his own testimony tended strongly to discredit Haskell. The issue of credibility thus raised had been squarely presented to the jury in the first trial of this cause in a charge which made the verdict turn on its determination as to the verity of that evidence, and the jury then found not in accordance with Haskell's testimony but in favor of the defendant. In our reversing opinion 72 F.(2d) 236, 240 we held that the issues could not be confined so closely, saying in part: ...
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