Carlson Companies, Inc. v. Sperry & Hutchinson Co.

• Decision Date: 07 February 1974
• Docket Number: No. 4-72-Civ. 327.,4-72-Civ. 327.
• Citation: 374 F. Supp. 1080
• Parties: CARLSON COMPANIES, INC., et al., Plaintiffs, v. The SPERRY AND HUTCHINSON COMPANY, Defendant.
• Court: U.S. District Court — District of Minnesota

374 F. Supp. 1080

CARLSON COMPANIES, INC., et al., Plaintiffs, v. The SPERRY AND HUTCHINSON COMPANY, Defendant.

No. 4-72-Civ. 327.

United States District Court, D. Minnesota, Fourth Division.

December 21, 1973.

Supplemental Opinion. February 7, 1974.

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Matthew J. Levitt and J. Patrick McDavitt, Levitt, Palmer, Bowen, Bearmon & Rotman, Minneapolis, Minn., Donald J. Gavin and John Bodner, Jr., Howrey, Simon, Baker & Murchison, Washington, D. C., for plaintiffs.

Edward C. Stringer, Briggs & Morgan, St. Paul, Minn., William E. Kelly, Casey, Lane & Mittendorf, New York City, for defendant.

MEMORANDUM ORDER

LARSON, District Judge.

Carlson Companies, Inc., (Carlson) and thirteen of its subsidiaries have filed suit in this Court under §§ 4 and 16 of the Clayton Act, as amended 15 U.S.C. §§ 15 and 26 (1973) for damages and injunctive relief under §§ 1 and 2 of the Sherman Act, as amended, 15 U.S.C. §§ 1 and 2 (1973) and § 7 of the Clayton Act, as amended 15 U. S.C. § 18 (1973).

In an Order dated October 5, 1973, this Court denied defendant's motion to compel discovery regarding: 1) Carlson's estimate of its share of the trading stamp business; 2) Carlson's tax payments and the tax payments of its subsidiaries; 3) Carlson's loan program; 4) Carlson's acquisition program; and 5) Carlson's subsidiaries not directly related to the trading stamp and related premium and incentive business. In a motion heard on October 19, 1973, The Sperry and Hutchinson Company (S & H) urged this Court to vacate its previous Order of October 5, 1973, or, in the alternative, to certify the matter to the Court of Appeals. In a separate hearing before this Court on November 5, 1973, the Court was asked to rule upon motions by plaintiffs for partial summary judgment and for a preliminary injunction, and a motion by defendant to strike the testimony of two experts presented by plaintiffs in support of their motion for a preliminary injunction.

This memorandum opinion will be directed toward all issues raised to date. Because the Court's Memorandum Order of October 5, 1973, must be modified in certain respects, this Court considers it simpler at this juncture to withdraw its previous opinion and to substitute a corrected opinion that will cover the most recent motions as well as the motion to vacate. In conjunction with the modified opinion, defendant's motion to certify the opinion of October 5, 1973, pursuant to 28 U.S.C. § 1292(b), is denied.

I. Discovery—Defendant's Motion to Vacate the Order of October 5, 1973.

A. Estimate of Carlson's Share of the Stamp Market.

In its amended complaint Carlson has alleged at paragraph 26 that "S & H has monopolized the national trading stamp market" and that "it currently accounts for more than 70 per cent of the non-captive trading stamp market in the United States." Defendant's interrogatory 21 asks that plaintiffs state their estimate of their share of the trading stamp market in the United States, in each State, and in various cities. Defendant argues that "defendant is entitled to know the full extent of plaintiffs' estimations and particularly plaintiffs' estimate of the extent of their own market shares." Defendant's Memorandum in support of its motion to compel answers, at 18. Plaintiffs have replied that "plaintiffs are obliged to produce facts, not guesses." Plaintiffs' Memorandum in opposition to defendant's motion pursuant to Rule 37(a), at 23. It is not clear whether plaintiff does, indeed, have an estimate of its share of the trading stamp industry. 4 J. Moore, Federal Practice Par. 26.563, at 26-160 (2d ed. 1972), indicates that at least prior to the 1970 amendments to the discovery rules, most courts rejected discovery requests for opinions. Moore indicates at 26-164 that:

"there is nothing in the language of Rule 26(b) to require a decision that matters of opinion may never be called for. The question should be, not whether as a theoretical matter the inquiry calls for an expression of opinion, but rather whether it is practicable and feasible to answer the inquiry and, if so, whether an answer might expedite the litigation by either narrowing the area of controversy or avoiding unnecessary testimony or providing a lead to evidence."

Judge Bryan in Broadway & Ninety-Sixth St. Realty Co. v. Loew's Inc., 21 F.R.D. 347 at 359-360 (S.D.N.Y.1958), recognized the need to allow opinions to be elicited during discovery procedures whenever the answers might serve some legitimate purpose such as leading to further evidence or narrowing the issues. Cases to the same effect are cited at the pages indicated. In the instant case, while it would surely be possible for plaintiffs to indicate their estimate of their share of the stamp market if known, or guess as to their share if a precise figure is unknown, defendant has given no indication of the need for or significance of the requested information. It is difficult to fathom how plaintiffs' estimate would in any way lead to possible other information that would be of use to defendant or to a narrowing of the issues in this case. Therefore, the request for plaintiffs' estimate of their share of the trading stamp market is again denied.

B. Carlson's Tax Payments.

Defendant S & H in interrogatories 3 and 6(k) has requested a list of the jurisdictions to which Carlson and its subsidiaries and affiliates have paid taxes, along with the type and amount of tax paid in each jurisdiction. The professed purpose of making this request was to "determine the extent of plaintiffs' `nationwide' trading stamp business. The payment of income taxes would be clear evidence of the geographical scope of their business and easy to produce." Defendant's Memorandum, supra, at 10. Plaintiffs reply that such production is burdensome and unnecessary because plaintiffs have already delineated the extent of their trading stamp business in response to interrogatory 6(h), (i), and (j), and in answers to questions posed at the Johnson deposition. Carlson alleges in addition that "in response to S & H's document requests, plaintiffs have produced documents listing, by geographic area, all trading stamp accounts, giving S & H a complete picture of plaintiffs' business." Plaintiffs' Memorandum, supra, at 16-17.

S & H is correct in its assertion that tax records must be made available under appropriate circumstances. Indeed, three cases from this District—Lind v. Canada Dry Corp., 283 F.Supp. 861 (D. Minn.1968); Karlsson v. Wolfson, 18 F. R.D. 474 (D.Minn.1956); and Volk v. Paramount Pictures, Inc., 19 F.R.D. 103 (D.Minn.1950)—all support that proposition. None of the cited cases, however, involved access to tax documents when other information was available that would serve the purpose of the person seeking their production. In Volk v. Paramount Pictures, Inc., supra, the defendants sought the tax documents because "verity which may be expected in income tax returns will be of indispensable value in reconciling or explaining or throwing light upon the many irregularities and inconsistencies disclosed in the books and records heretofore made available by plaintiffs." 19 F.R.D. at 104. In both Lind v. Canada Dry Corp. and Karlsson v. Wolfson, supra, the records were sought to verify a plaintiff's prior income in a personal injury claim for lost earnings.

Defendant has not made a convincing showing that the circumstances are appropriate in this case to burden the plaintiffs with the production of documents, the contents of which will possibly serve only to supplement material already revealed to S & H by Carlson. While the tax documentation may reveal with microscopic precision the areas in which plaintiffs and defendant "lock horns," the added benefit of more detail, if any, to be provided by such records is outweighed by the burden imposed upon plaintiffs were they required to make the production.

C. Carlson's Loan Program.

1. The Record in Fortner.

The focus of the briefs and arguments before the Court in the October 19, 1973, hearing on defendant's motion to vacate was this Court's interpretation of Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969). As defendant correctly points out, this Court's reasoning was based upon assumptions about the state of the record before the Supreme Court in Fortner and conclusions that could be drawn therefrom. This Court stated in its Memorandum Opinion, at 5:

"The Court was apparently dealing with a record that did not indicate that U.S. Steel had made similar deals with any buyers except Fortner. See Advance Business Systems and Supply Co. v. SCM Corp., 415 F.2d 55, 67 (4th Cir. 1969). The question was therefore raised whether U.S. Steel did command sufficient economic power to make the loan arrangement illegal. At that point, and only then, did the Court begin to use the language concerning the `uniqueness' of the loan arrangement available to Fortner. 394 U.S. at 504, 89 S.Ct. 1252. Had the record shown that U.S. Steel was engaged in a widespread program of tying arrangements whereby advantageous loan terms were offered under the condition that the borrower would have to use U.S. Steel's prefabricated homes, the Court could then have turned to the criteria of the power to impose a tie-in `with respect to any appreciable number of buyers within the market' . . . ."

In its moving papers and oral argument concerning the motion to vacate, defendant has clarified the state of the record before the Supreme Court and demonstrated that there was a program of extensive loan activity and evidence of other tying arrangements that went beyond the program involving Fortner itself. Counsel for plaintiff argues that the evidence before the Supreme Court as cited by defendant is ambiguous as to whether the loans offered "were the same type of loans that Mr. Fortner was trying to invalidate with respect to himself and the Credit...