Eugene Dietzgen Co. v. FEDERAL TRADE COM'N

• Decision Date: 03 May 1944
• Docket Number: 7821,No. 7791,7820,7828.,7791
• Citation: 142 F.2d 321
• Parties: EUGENE DIETZGEN CO. v. FEDERAL TRADE COMMISSION. KEUFFEL & ESSER CO. et al. v. SAME. CHARLES BRUNING CO., Inc., et al. v. SAME. C. F. PEASE CO. et al. v. SAME.
• Court: U.S. Court of Appeals — Seventh Circuit

142 F.2d 321 (1944)

EUGENE DIETZGEN CO. v. FEDERAL TRADE COMMISSION.

KEUFFEL & ESSER CO. et al. v. SAME.

CHARLES BRUNING CO., Inc., et al. v. SAME.

C. F. PEASE CO. et al. v. SAME.

Nos. 7791, 7820, 7821, 7828.

Circuit Court of Appeals, Seventh Circuit.

February 29, 1944.

As Modified on Denial of Rehearing May 3, 1944.

COPYRIGHT MATERIAL OMITTED

Arthur M. Cox, of Chicago, Ill., and Wm. E. Lamb, of Washington, D. C. (Pam, Hurd & Reichmann, of Chicago, Ill., of counsel), for petitioner Eugene Dietzgen Co.

W. Randolph Montgomery, of New York City, for petitioners Keuffel & Esser Co., et al.

Howard P. Beckett and Richard W. Thorington, both of Philadelphia, Pa., for petitioners Charles Bruning Co., Inc., et al.

Herbert Pope, of Chicago, Ill., and Karl D. Loos and P. C. King, Jr., both of Washington, D.C., for petitioners C. F. Pease Co. et al.

Wm. T. Kelley, Chief Counsel, Joseph J. Smith, Jr., Asst. Chief Counsel, and Cyrus B. Austin and J. B. Truly, Sp. Attys., Martin A. Morrison, Edward W. Thomerson, and James W. Nichol, all of Washington, D. C., Federal Trade Commission, all of Washington, D. C., for respondent.

Before EVANS and MAJOR, Circuit Judges, and LINDLEY, District Judge.

EVANS, Circuit Judge.

Petitioners, Eugene Dietzgen Co., Keuffel & Esser Co. and Karl Keller, Charles Bruning Co., and C. F. Pease Co., and others, seek a review of an order of the Federal Trade Commission directing them and others to cease and desist from an alleged conspiracy to fix and maintain prices. Petitioners manufacture and sell scientific drafting and related instruments and materials.

The chief controversies are over: (1) The sufficiency of the evidence to support the findings of the Commission that there existed a conspiracy to fix prices; (2) The insufficiency of the evidence to support the order as entered, in view of the contention that most of the evidence had to do solely with blue print paper, whereas the order extends to many other products; (3) The jurisdiction of the Federal Trade Commission to enter a cease and desist order where the alleged illegal practice is a violation of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note, and cognizable thereunder. Such action is allegedly not cognizable under the F. T. C. Act as an "unfair practice"; (4) The failure of evidence to show any injury to any competitor, allegedly a prerequisite to F. T. C. jurisdiction.

Respondent contends that the conspiracy as charged, began in the summer of 1932 and continued thereafter, save for the period of June 16, 1933 to May 27, 1935 when the N. R. A. Codes were in force. When the N. R. A. was declared unconstitutional in part, the agreement of these competitors again became illegal. This was in 1935 and the unlawful agreement or conspiracy continued thereafter. For sake of clarity, the important dates of this case are set forth chronologically in the margin.¹

Some of the competitors engaged in this business, first associated together in a trade organization in April, 1919. This same organization incorporated in January, 1936, and was known as the Scientific Apparatus Makers of America, hereinafter referred to as SAMA. Its members manufactured or sold so many products that sub-associations, called sections, were formed, one being the Surveying-Drafting-Coaters Section, hereafter called the SDC Section, which section had forty members, among them the petitioners here involved. Most of the acts complained of were fostered and effected through this organization, with whom price lists were filed and at whose meetings the alleged agreements were reached for adherence to the prices filed.

The Federal Trade Commission filed its complaint against petitioners and many others, March 29, 1937, after which answers and motions to dismiss were filed An extended hearing was had, stipulations between three of petitioners and the F. T. C. were filed, the F. T. C. made findings and a conclusion, and entered the cease and desist order here complained of, August 25, 1941.

The Federal Trade Commission found that representatives of seven to ten manufacturers met at Detroit in June or July, 1932, and agreed on a price list to become effective July 10, 1932, which price list Dietzgen had prepared, and which was "substantially higher than the demoralized prices at which sales were being made in Detroit at the time of this meeting." It also found that petitioners complied with the N. R. A. Code prices from November, 1933, to May 27, 1935, when the Supreme Court declared the pertinent part of the Act unconstitutional. In June of that year, the petitioners' representatives again met and agreed to keep the N. R. A. Code prices in effect, and in late October, 1935, they again met at Cleveland and concluded it was unfair to sell for less than the lowest published price of any member.² A Chicago meeting of June 1, 1936 came to the same agreement.³ The Commission found that prior to the Detroit meeting all petitioners were in substantial competition with each other, but such competition then ceased. The findings cite the fact that a majority of the eleven SDC section members submitted identical governmental bids in 19 instances, in sums varying from $3,441.20 to $34,095.50, and that mere coincidence or happenstance could not account for such constant recurrances and universality of identity.

The bids (by many members of the SDC Section) were made:

(1) To the State of New York, on May 18, 1936, in the sum of $18,721.48,⁴ the members including Dietzgen, Keuffel, Bruning, and Keystone;

(2) To the Navy, in May, 1936, on nine separate lots, in which the bids were for thousands of dollars, and in which Dietzgen submitted identical bids with other members, on all nine lots; Keuffel and Pease, on eight of the nine lots; and Bruning on six of the lots;

(3) To the Navy, on July 1, 1937, there were eight lots in which identical bids of thousands of dollars were submitted by members, including Dietzgen's bid on all eight lots, Keuffel's bid on two lots, and Bruning on seven lots.

The conclusions which the F. T. C. drew from these identical bids were:

"While the illustrations above set out relate to reproduction papers only, the evidence establishes the same uniformity of prices on the other items sold by the respondents.

"Bids substantially identical in all instances and identical to the penny in most instances on various types of reproduction paper, where the quantity involved in the several lots ranges from $3,441.20 to $34,095.50, are not the result of a uniformity of the cost of production as contended by respondents but are the result of concerted action on the part of the respondents, as hereinabove found."

The F. T. C. reached the conclusion that a conspiracy was formulated (and later carried out) at the four meetings of the SDC Section and SAMA, held first in June, 1932, at Detroit, the second meeting at Atlantic City, in June, 1935, the third, in Cleveland, October, 1935, and the fourth, at Chicago, in June, 1936. Petitioners Bruning and Dietzgen attended all four of these meetings, Keuffel attended the second and fourth meetings, and Pease attended all but the first meeting.

Additional defenses to those outlined in the issues above stated are raised: i. e., the agreements as to price fixing, reached at the meetings of the Association never became effective and binding because never approved in accordance with the Association's rules. Dietzgen states it merely submitted its price list, in the first instance, somewhat like a declaration of policy that it was not participating in the then existing price war, and that it would not sell at prices which were below cost. Dietzgen also contends that since it resigned from SAMA on March 4, 1938, there was no need, as to it, for a cease and desist order, promulgated some three years after its resignation. Finally it is argued by petitioners that there was no injury to other competitors alleged or shown.

At the conclusion of the hearing before the Trial Examiner, extended and specific findings of fact were made which were assailed before the Commission and that body also made findings of fact and a conclusion which read

"Said understandings, agreements, combinations and conspiracies, and the things done thereunder and pursuant thereto and in furtherance thereof, as hereinabove found, constitute unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act."

The order which was entered directed the respondents to cease and desist from "fixing and maintaining, or agreeing to fix and maintain the prices at which said products will be sold by them." It directed Section SDC and certain members of the Executive Committee to cease and desist from "Directly or indirectly, jointly or severally, entering into or carrying out any understanding * * * to * * * suppress competition * * *" or "aiding and assisting the members of said respondent association in carrying out or engaging in any of the acts and practices hereinbefore set forth * * *."

It dismissed the complaint as to the respondents Scientific Apparatus Makers of America, its officer and directors, and respondents Carl S. Hallauer, R. E. Gillmor and John M. Roberts for want of evidence sufficient to establish the charges set forth in the complaint.

There were many respondents who were either members of the Association or particular individuals who opposed this relief, but all acquiesced in the order save only the petitioners here.

Jurisdiction of the F. T. C. to Issue Cease and Desist Order against Activity within Purview of Sherman Act. The contention most seriously pressed by some, though not by all petitioners, to avoid the cease and desist order is the lack of power in the Federal Trade Commission to control a conspiracy to fix prices and create a monopoly, which admittedly could be reached under the Sherman Act. Or, stated differently, since this is a monopolistic conspiracy and within the scope...