CO-Two Fire Equipment Co. v. United States

• Decision Date: 11 August 1952
• Docket Number: No. 12964.,12964.
• Citation: 197 F.2d 489
• Parties: C-O-TWO FIRE EQUIPMENT CO. et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

197 F.2d 489 (1952)

C-O-TWO FIRE EQUIPMENT CO. et al. v. UNITED STATES.

No. 12964.

United States Court of Appeals Ninth Circuit.

May 29, 1952.

Rehearing Denied August 11, 1952.

H. Bruce Baumeister, Hollywood, Cal., Francis R. Kirkham, William E. Mussman, Richard J. MacLaury, San Francisco, Cal. (Thorn Lord, Trenton, N. J., Pillsbury, Madison & Sutro, San Francisco, Cal., of counsel), for appellants.

William C. Dixon, Sp. Asst. to the Atty. Gen., James M. McGrath, Sp. Atty., Anti-Trust Division, Department of Justice, Walter S. Binns, U. S. Atty., Los Angeles, Cal., H. G. Morison, Asst. Atty. Gen., J. Roger Wollenberg, Sp. Asst. to the Atty. Gen., for appellee.

Before HEALY, BONE and POPE, Circuit Judges.

BONE, Circuit Judge.

On June 15, 1949, an indictment was returned against four corporations and three individuals charging them with a conspiracy in violation of Section 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C.A. § 1,¹ regarding the sale of portable carbon dioxide fire extinguishers in Southern California.

Three of the indicted corporate defendants — Walter Kidde & Company (hereafter called Kidde), American-La-France-Foamite Corporation (La-France), and General Pacific Corporation (Pacific) — and two individual defendants, entered nolo contendere pleas and were fined. Defendants-appellants C-O-Two Fire Equipment Co. (C-O-Two) and Maynard A. Laswell waived a jury, proceeded to trial, and on February 26, 1951 judgments of guilty were entered as to both. C-O-Two was fined $5,000.00 and Laswell was fined $1,000.00. Both appeal.

The indictment charged that from January, 1947 to June 15, 1949 the defendants in this action combined and conspired, in restraint of interstate trade and commerce, to fix, determine, establish and maintain non-competitive prices and terms and conditions relating to the sale of portable carbon dioxide fire extinguishers to ultimate purchasers in the Southern California area.

The combination and conspiracy (extending throughout the Southern California area) allegedly consisted of an agreement: (a) to fix and maintain prices to ultimate purchasers; (b) to fix and maintain terms and conditions of sale to ultimate purchasers; (c) to publish and distribute among dealers price lists showing uniform prices at which the corporate defendants sell to ultimate purchasers; (d) to require dealers to maintain and adhere to such prices and terms and conditions of sale; (e) not to sell or deliver fire extinguishers to dealers who did not maintain and adhere to such prices and terms and conditions of sale; (f) to quote and submit identical bids to governmental and public agencies, in accordance with such prices, and to require any dealer submitting competing prices to do likewise.

The indictment further charged that for the purposes of effectuating the combination and conspiracy each of the corporate defendants by agreement and concert of action did the things they were alleged to have conspired to do, including, but not limited to the following acts: (a) the publishing periodically of lists showing prices and terms and conditions of sale to ultimate purchasers, which lists were identical with those published by the other defendants; (b) the instructing of its dealers to maintain and adhere to such lists; (c) the "policing" of its dealers to assure maintenance and adherence to such lists; (d) the submission of a bid to the County of Los Angeles for 104 fire extinguishers in strict conformance to such lists, and this bid was identical as to prices, terms, and conditions of sale with bids submitted by the other corporate defendants, and (e) the submission of a bid to the Department of Water & Power for the City of Los Angeles for 60 fire extinguishers in strict conformance to such lists, and this bid was identical as to prices, terms, and conditions of sale with bids submitted by the other corporate defendants.

All parties to this appeal agree that, substantially, none of the evidence produced at the trial was disputed. Most of the facts were either stipulated or admitted.

In accordance with the request of appellants, and pursuant to Rule 23(c) of the Rules of Criminal Procedure, 18 U.S.C.A. the District Court made findings of fact and conclusions of law. Inasmuch as appellants do not contest the competency of any of the evidence offered by appellee, but simply challenge the legal sufficiency of the evidence, we turn to a brief review of the findings. In so doing, it is well to bear in mind that it is not our function to adjudge the credibility of witnesses or weigh the evidence. In this case that duty rested upon the trial judge. Even though it might be said that this is a close case and from a consideration of all of the facts before him he might have reached a different conclusion, we are unable to conclude that his final determination is so far without support in credible and convincing evidence of guilt as to call for a reversal of his judgment.

The record reveals that there are five principal manufacturers of portable carbon dioxide fire extinguishers in the United States whose total sales constitute more than 90% of all such extinguishers sold in this country. They are the four corporate defendants below, and The General Detroit Corporation.² The factories of two corporate defendants, including appellant C-O-Two, are located in New Jersey, while that of a third is in New York, and the fourth corporate defendant manufactures in Los Angeles, California.

The evidence shows, and the trial court specifically found, that during the period from August, 1932 to about the year 1942, defendants Kidde, C-O-Two, and La-France were the only manufacturers of fire extinguishers in the United States. On August 24 and 25, 1932, Kidde entered into identical patent licensing agreements with La-France and C-O-Two, respectively, licensing the latter companies under certain patents relating to carbon dioxide fire extinguishers, including U. S. Patent No. 1760274. In or about March, 1940, Specialties Development Corporation, a wholly-owned subsidiary of Kidde, acquired all the rights of Kidde as licensor under these agreements, and the right to issue additional licenses under the patents. In December, 1944, Pacific (and its parent company, Detroit) accepted a license from Specialties under the same patents, including U. S. Patent No. 1760274. The licensing agreements terminated in the United States on or about May 27, 1947, that being the expiration date of U. S. Patent No. 1760274. The licensing agreements reserved to the licensor the right to require the licensees therein to sell, or otherwise dispose of, any fire extinguishing apparatus using any features covered by the licensed patents at prices not less than or upon terms no different from those established by the licensor.

The record shows and the trial court found that from August 24, 1932 to May, 1947, (while the license agreements were in effect), and during the period from May, 1947 to the date of the return of this indictment, "the prices, terms, and conditions of sale, under which fire extinguishers manufactured by the defendants were sold to ultimate purchasers in the Southern California area, were substantially identical except for relatively short periods of time while price changes were being put into effect." (Emphasis supplied.) The corporate defendants, at various times, during the period covered by the indictment, published and distributed price lists among their respective dealers which contained the identical and agreed-upon prices at which the corporate defendants and their dealers would sell their extinguishers in the Southern California area.

Extinguishers were sold by the corporate defendants to dealers at their established discounts from the identical net, delivered consumer prices as established by the defendants in their respective price lists. The trial court further found that "substantially all * * * were sold by said dealers to the ultimate purchaser at the published net, delivered consumer prices of * * * defendants, upon the dealer's understanding that his particular supplier defendant required such fire extinguishers to be sold at such prices. The defendants * * * agreed not to sell or deliver * * * to dealers who failed to maintain and adhere to the prices, terms, and conditions of sale agreed upon and fixed by the defendants for the sale of fire extinguishers to ultimate purchasers in the Southern California area. The corporate defendants * * * required their dealers to maintain and adhere to the prices, terms, and conditions of sale agreed upon and fixed by the defendants * * *." (Emphasis supplied.)

In addition to sales to dealers, appellant C-O-Two, and the corporate defendants below, also sold substantial quantities of their extinguishers directly to ultimate purchasers in the Southern California area at identical prices. These prices were the published net, "delivered consumer" prices of each of the corporations named in the indictment. It is significant that the trial court also found that appellant C-O-Two had no cost records or other data indicating the manner or method of computing the sale price of the fire extinguishers manufactured and sold by it.

The findings further state that the corporate defendants, or their respective dealers, submitted identical price bids for fire extinguishers to the City of Los Angeles, Department of Water and Power, in or about May, 1948, and to the Purchasing Agent for the County of Los Angeles in or about August, 1948. In those two months, respectively, appellant C-O-Two caused its selling agent in the Los Angeles area to "police" two of its dealers who had submitted bids to the City of Los Angeles and to the County of Los Angeles on terms more advantageous to the City and County than those published in the price lists of C-O-Two. Such "policing" according to the Findings of Fact, was "for the purpose of compelling said dealers, under threat of refusal to...