Dovberg v. Dow Chemical Company

• Decision Date: 24 June 1961
• Docket Number: Civ. A. No. 25351.
• Citation: 195 F. Supp. 337
• Parties: Ike DOVBERG and Maurice Dovberg, Individually and t/a Paste Company of America, Plaintiffs, v. DOW CHEMICAL COMPANY et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

195 F. Supp. 337

Ike DOVBERG and Maurice Dovberg, Individually and t/a Paste Company of America, Plaintiffs, v. DOW CHEMICAL COMPANY et al., Defendants.

Civ. A. No. 25351.

United States District Court E. D. Pennsylvania.

June 24, 1961.

Tom P. Monteverde, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for plaintiffs.

Philip Price and Arthur E. Newbold, III, Philadelphia, Pa., for defendant, Dow Chemical Co.

Herman J. Obert, Cushman & Obert, Philadelphia, Pa., for defendant, Pennsylvania Paste Co.

William L. Matz, Zoob, Cohan & Matz, Philadelphia, Pa., for defendant, Samuel Schultz & Co.

Jerome Lipman, Robinson, Greenberg & Lipman, Philadelphia, Pa., for defendant, Reba Spivak, i/t/a Atlas Wallpaper & Paint Co.

Judah Zelitch, Philadelphia, Pa., for defendant, Samuel Milkis, i/t/a Empire Wallpaper and Paint Co.

This is an action under Sections 1 and 2 of the Sherman Act,¹ and Sections 2, 3 and 4 of the Clayton Act² as amended by the Robinson-Patman Act. Plaintiffs, until 1957, were manufacturers of dry and cellulose based wallpaper paste and wall size eliminator. Pennsylvania Paste, a defendant, also manufactures wallpaper paste and related products. Samuel Schultz & Co., Empire Wallpaper & Paint Co., and Atlas Wallpaper & Paint Co. are all retailer defendants who, among other things, retail paste products in Philadelphia. Defendant Dow Chemical manufactures methyl-cellulose and sodium ortho-phenolphenate which it supplied to plaintiffs and which constituted the principal ingredients of plaintiffs' cellulose paste.

Plaintiffs' basic contention is the Pennsylvania Paste Co. conspired with all the other defendants to destroy plaintiffs' business and thereby preserve Pennsylvania Paste Co.'s dominant position in the wet paste manufacturing business in the Philadelphia area and Dow's control of the use of methyl-cellulose and sodium ortho-phenolphenate.

This case has a protracted history of pretrial discovery,³ and pretrial conferences.⁴ All defendants now move for summary judgment pursuant to F.R. 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A. Defendants contend (1) that taking the pleadings of the plaintiffs, their admissions, depositions, interrogatories, and Pre-Trial Statement of Contentions there is no factual basis to support the allegation of a conspiracy between the defendants; (2) that the alleged conspiracy was neither in restraint of trade nor did it affect interstate commerce within the meaning of the Sherman or Clayton Acts; (3) that plaintiffs' cause of action is barred by the applicable four-year statute of limitations.

Plaintiffs argue (1) that defendants cannot, in the face of the paper record and contentions, establish that the alleged conspiracy did not exist; (2) that such a showing is required by the apposite law upon a motion for summary judgment; (3) that plaintiffs have demonstrated an ability to prove the conspiracy, as alleged, affected interstate commerce within the meaning of the anti-trust laws; and (4) that the statute of limitations is not applicable because it was a "continuing" conspiracy, and because it was concealed from the plaintiffs until 1954, within the four year period provided by the statute.

LEAHY, Senior District Judge.

1. Courts, in this circuit, have applied the broad rule of Frederick Hart & Co., Inc. v. Recordgraph Corporation, 3 Cir., 169 F.2d 580, to summary judgment motions.⁵ The rule of the Hart

opinion severely limits the Court's discretion to grant such a motion.⁶ On at least one occasion, it would seem the Court of Appeals deviated from this approach.⁷ The extent to which the rule in Hart has been eroded by such deviations cannot be determined. However, I do not think that the Court here is now required to resolve this question, for, as will appear, determination of the issues raised by the motions for summary judgment is controlled by specific authorities.

2. Conspiracy raises a question of fact or, at least, a question of factual inference. As such, it may not be properly disposed of on summary judgment.⁸

Bragen v. Hudson County News Company, 3 Cir., 278 F.2d 615.⁹ In Bragen, the Court of Appeals, in reversing the district court's grant of summary judgment in a Sherman Anti-Trust Act Case, through Judge Kalodner, stated: "The impact of particular circumstances upon an inference arising from an admittedly existing factual situation calls for a factual determination which is the function of the trier of facts and not * * * the court in disposing of a motion for summary judgment." At page 618. "Here, in the instance cited, the District Court `found' from the deposition, that an inference of monopolistic practice existed by reason of the unchallenged `tie-in-sales' and then proceeded to make the factual finding that the existing inference was `negatived' by other `facts'.

"As we earlier stated, `Documents filed in support of a motion for summary judgment are to be used for determining whether issues of fact exist and not to decide the fact issues themselves.'" At page 618.¹⁰

In the case at bar, plaintiffs allege¹¹ and in their depositions set forth, at least, a scintilla of facts which might constitute a violative conspiracy. Defendants, by denials¹² and allegations of negativing facts¹³ move for summary judgment. In the face of the Court of Appeals' admonition in Bragen, defendants' motions cannot be granted.^13a Moreover, where, as here, a jury trial has been demanded, it is necessary to be cautious in granting summary judgment and not to decide issues which should be left to the province of the jury. Bragen v. Hudson County News Company, 3 Cir., 278 F.2d 615.

3. In support of their motions for summary judgment, defendants further argue plaintiff's cause of action, in whole or in part,¹⁴ is barred by the applicable four-year statute of limitations.¹⁵ Plaintiffs counter that under the case of United States v. Kissel, 218 U.S. 601, 31 S.Ct. 124, 54 L.Ed. 1168, a conspiracy to monopolize continues until the conspiracy succeeds; and that in the instant case the conspiracy continued until plaintiffs were forced out of business in 1957; and that, under Kissel, while the conspiracy still exists, the statute of limitations is tolled. Since plaintiffs brought their action in 1958, they argue it is timely. Further, plaintiffs contend the statutory period does not run until plaintiffs "discover" the conspiracy, which such discovery, according to their allegations, did not occur until 1954, within the statutory limit. For this second proposition, plaintiffs cite Moviecolor Limited v. Eastman Kodak Co., 2 Cir., 288 F.2d 80, which concerns the law of concealment in anti-trust litigation. Concealment is different from a failure to discover.¹⁶ Although plaintiffs assert they failed to discover the conspiracy, I shall, in the light of their reliance on Moviecolor Limited v. Eastman Kodak Co., supra, consider their failure to discover to mean it was due to concealment.

Plaintiffs are correct in their statement of the rule of United States v. Kissel, supra, but they fail to note that the court, in that instance, had reference to a criminal conspiracy under the antitrust laws. The authorities have held the Kissel rule has no application to a statute of limitations problem in a civil conspiracy.¹⁷ I held, in part, for example, in Henis v. Compania Agricola De Guatemala, D.C.Del., 116 F.Supp. 223, at page 226: "The distinction between the application of a Statute of Limitations in a criminal conspiracy case and such application in a civil case based upon a conspiracy has been clearly pointed out in Momand v. Universal Film Exchanges, 1 Cir., 172 F.2d 37, at page 49. There it is shown that in a criminal prosecution the Statute of Limitations does not begin to run until the last overt act performed in compliance with the original agreement has been accomplished. A civil case, however, is based upon the damage caused by the commission of the overt act and the applicable statute must run from the time of the commission of that act which is alleged to have caused the damage. * * *"

Thus, absent concealment, all activity which occurred before 1954 may be introduced as evidence of the existing conspiracy, but may not be the basis of a cause of action upon which plaintiffs may recover. Plaintiffs here allege conspiratorial activity by all defendants up until 1957. Defendants' denial¹⁸ of such activity raises a question of fact which, at least initially, should be put to the jury. However, at the conclusion of plaintiffs' case the court will entertain motions under FR 41b, etc.

The essential elements of concealment of a civil conspiracy under the anti-trust laws, where a motion for summary judgment had been made, were stated by Judge Clary in Philco Corporation v. Radio Corporation of America, D.C.E.D. Pa., 186 F.Supp. 155. There he said (at page 163): "First Philco says `* * * the only persons having knowledge of the facts were the conspirators themselves * * *' (Paragraph 100 of complaint). Stated affirmatively— Philco was without knowledge of the cause of action. Next they say `Philco charged R.C.A. with such action but they vigorously denied it.' (Paragraph 100 of complaint). Stated another way—R.C.A. committed an affirmative act of concealment of this cause of action. Finally, they allege that `since the only persons having knowledge of the facts were the conspirators themselves, it was apparent to Philco that further investigation would be fruitless.' (Paragraph 100 of complaint). Restated— no amount of diligence on Philco's part would have uncovered this cause of action. These allegations taken together constitute the essential elements of the defense of concealment. Had the defendants, without more, presented their present motion for summary judgment, their request would necessarily have been denied, since the pleadings alone raise a genuine issue as to a material fact, (whether or not there was concealment of the cause of action by R.C. A....