Farbenfabriken Bayer, AG v. Sterling Drug Inc.

• Decision Date: 27 July 1961
• Docket Number: Civ. A. No. 908-55.
• Parties: FARBENFABRIKEN BAYER, A. G., a corporation, Plaintiff, v. STERLING DRUG INC., a corporation, Defendant.
• Court: U.S. District Court — District of New Jersey

197 F. Supp. 627

FARBENFABRIKEN BAYER, A. G., a corporation, Plaintiff, v. STERLING DRUG INC., a corporation, Defendant.

Civ. A. No. 908-55.

United States District Court D. New Jersey.

July 27, 1961.

Arnold, Fortas & Porter, by Thurman Arnold, Washington, D. C., Bailey & Schenck, Newark, N. J., for plaintiff.

Cahill, Gordon, Reindel & Ohl, by John T. Cahill, New York City, O'Mara, Schumann, Davis & Lynch, Jersey City, N. J., for defendant.

WILLIAM F. SMITH, Chief Judge.

This is a civil action under the antitrust laws, and particularly Section 1 of the Sherman Act, as amended, 69 Stat. 282, 15 U.S.C.A. § 1, and Sections 4 and 16, of the Clayton Act, 38 Stat. 731 and 737, 15 U.S.C.A. §§ 15 and 26. The action is brought by the plaintiff, a corporation organized under the laws of Germany, as the "legal successor in interest" to certain rights of Farbenfabriken vorm. Friedrich Bayer and Company, et als. The essential allegations of the complaint are summarized in the earlier opinion of this Court. Farbenfabriken Bayer, A. G. v. Sterling Drug, 153 F.Supp. 589. There is no reason to repeat the summary in this opinion.

The history of the relationship between the parties and their predecessors is recited in the opinion filed in the companion case. Farbenfabriken Bayer, A. G. v. Sterling Drug Inc., 197 F.Supp. 613. The recital is based upon the Stipulation of Facts and the undisputed allegations of the complaint. It appears therefrom that the predecessors of the plaintiff and the defendant and its predecessors had been engaged in an unlawful combination and conspiracy in restraint of trade and commerce in pharmaceutical products prior to September 5, 1941. It also appears that the illegal contracts of 1920, 1923 and 1926 were in furtherance of the said conspiracy.

The action is before the Court at this time on a motion for summary judgment and a counter-motion for summary judgment, filed by the defendant and plaintiff, respectively, under Rules 56(b) and 56(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A. The motions are based upon the record thus far made, which includes the pleadings, stipulation, exhibits, and affidavits.

Earlier Proceeding

The action was heretofore before the Court on a motion for judgment on the pleadings filed by the defendant under Rule 12(c) of the Federal Rules of Civil Procedure, 28 U.S.C.A. We then treated the motion as one to dismiss the complaint. The defendant argued in support of the motion that the action was barred by Section 2A:14-1 of the New Jersey Revised Statutes, N.J.S.A. 2A:14-1, which prescribes a six year period of limitation.

The plaintiff and the defendant at that time agreed that in the absence of a federal statute of limitation the local statute of limitation was applicable. It should be noted that the present action was commenced on September 28, 1955, before the effective date of Section 4B of the Clayton Act, 15 U.S.C.A. § 15b. The parties were also in agreement as to the applicability of Section 2A:14-1 of the New Jersey Revised Statutes, supra.

The opinion of the Court was filed on July 15, 1957. The question as to when the statute of limitation commenced to run was therein decided and we held that the "statute of limitations runs from the commission of the last overt act alleged to have caused damage" and not from the time of the consequent injury. Farbenfabriken Bayer, A. G. v. Sterling Drug, supra, 153 F.Supp. 592-594, inclusive. We adhere to this view for the reasons stated in the opinion.

We held further that the provisions of Section 2A:14-1, supra, were applicable and that thereunder the claim for treble damages was barred by the six year period of limitation therein prescribed. It has since been decided by the United States Court of Appeals for this Circuit that the provisions of the said section are not applicable. Gordon v. Loew's Incorporated, 247 F.2d 451.

The precise question as to which of two local statutes was applicable was carefully considered in the case of Gordon v. Loew's, Incorporated, supra. It was therein decided that Section 2A:14-1 was not applicable to an action for treble damages under Section 4 of the Clayton Act, supra. It was held that such an action is essentially one for a penalty within the meaning of Section 2A:14-10 of the New Jersey Revised Statutes, N.J.S.A. 2A:14-10, and is barred by the two year period of limitation therein prescribed. The rule of the cited case has been followed in two later cases, to wit, Carlton Lamp Corporation v. General Electric Company, 3 Cir., 254 F.2d 815; Dean Oil Company v. American Oil Company, 254 F.2d 816, 3 Cir., certiorari denied 358 U.S. 835, 79 S.Ct. 58, 3 L.Ed.2d 72.

We are of the opinion that the claim for treble damages was properly dismissed on the earlier motion of the defendant; however, the opinion of the Court is modified to reflect the applicability of Section 2A:14-10, supra. The earlier dismissal of the claim for damages was "without prejudice to the right of the plaintiff to apply to the Court for leave to file an amended complaint." Since the plaintiff has failed to avail itself of this right, the dismissal of the action is herein made final.

Present Proceeding

The defendant's present motion for summary judgment is directed to the claim for injunctive relief under Section 16 of the Clayton Act, supra. It is argued that this claim is barred by the lapse of time under the doctrine of laches. We are of the opinion that this motion must be sustained for the reasons hereinafter discussed.

Section 4 of the Clayton Act, supra, grants to "any person * * * injured in his business or property by reason of anything forbidden in the antitrust laws" a right to maintain an action for treble damages. Section 16 of the Act, supra, grants an additional right to maintain an action for injunctive relief "against threatened loss or damage." We are of the opinion that the equitable remedy available under Section 16 is predicated upon the legal cause of action created by Section 4. It is essentially an equitable remedy in aid of a legal right created by the statute.

The statute of limitations, by its express terms, applies only to actions at law and may not be invoked as a defense against a claim exclusively equitable. However, where the equity jurisdiction is invoked in aid of a legal right, or is predicated upon a legal cause of action, equity "will withhold its remedy if the legal right is barred by the * * * statute of limitations."...