Farmington Dowel Products Co. v. Forster Mfg. Co.

Decision Date12 February 1970
Docket Number7334.,No. 7324,7324
Citation421 F.2d 61
PartiesFARMINGTON DOWEL PRODUCTS CO., Plaintiff, v. FORSTER MFG. CO., Inc., et al., Defendants.
CourtU.S. Court of Appeals — First Circuit




Robert W. Meserve, Boston, Mass., with whom John R. Hally, Thomas B. Merritt, and Nutter, McClennen & Fish, Boston, Mass., were on brief, for Forster Mfg. Co., Inc., et al.

Earle C. Cooley, Boston, Mass., with whom C. Keefe Hurley and Hale & Dorr, Boston, Mass., were on brief, for Farmington Dowel Products Co.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.

COFFIN, Circuit Judge.

This case comes to us on cross-appeals from a final judgment in which the district court, on the basis of a special jury verdict, held that defendants Forster Mfg. Co. and Theodore R. Hodgkins1 violated section 2 of the Sherman Act and section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, by their use of various discriminatory pricing practices. The jury also found that these violations injured Farmington Dowel, a competing manufacturer of wooden skewers, in the amount of $109,100, which amount was trebled by the district court and awarded to Farmington. The district court refused, however, because of the particular fee arrangement which Farmington had with its counsel, to award the $85,000 found by the court to be a "reasonable attorney's fee" in this case.

During the trial in the district court, Farmington sought to introduce into evidence various opinions and orders2 of the Federal Trade Commission against Forster which had finally culminated in a finding that Forster had violated section 2(a) of the Clayton Act, as amended, by its discriminatory pricing practices,3 After thoughtful consideration, the district court concluded that the part of the final Commission order which related to wooden skewers could properly be admitted as prima facie evidence against Forster pursuant to section 5(a) of the Clayton Act.4 Forster brings this appeal to contest the propriety of that ruling by the district court. Thus, we find ourselves confronted with the difficult question specifically left open by the Supreme Court in Minnesota Mining & Manufacturing Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 318, 85 S.Ct. 1473, 14 L.Ed.2d 405 (1965) hereinafter 3M: whether a final Commission order can be admitted as prima facie evidence pursuant to section 5(a) of the Clayton Act. Farmington also challenges the court's decision as to the order, claiming that Commission findings on a variety of additional points should also have been admitted. Other issues are presented by Farmington's objections to the court's rulings excluding proffered evidence of damages; Forster's attack on the sufficiency of evidence as to damages; and Farmington's objections to the court's refusal to award counsel fees.


The Clayton Act's section 5 twins (a) and (b)5 — now determined by the Supreme Court in 3M to be fraternal, not identical — were enacted over a half century ago as part of a Congressional effort to enable the private antitrust litigant to contribute significantly to the antitrust enforcement efforts of the Justice Department while at the same time recovering the damages inflicted on him by the antitrust violator. 3M, supra at 318-319, 85 S.Ct. 1473. The treble damage recovery was offered in the Clayton Act as a major inducement to the private litigant to accomplish these dual objectives. Bruce's Juices, Inc. v. American Can Co., 330 U.S. 743, 751-752, 67 S.Ct. 1015, 91 L.Ed. 1219 (1947). As a further step against antitrust violators, the very same session of Congress created a new administrative agency — the Federal Trade Commission — to act as the third major arm of antitrust enforcement.6 Yet a question never clearly resolved by either Congress or the Supreme Court was the extent to which these two new agents of antitrust enforcement would work together to accomplish their common purpose. The prevailing view for many years was that, despite their common heritage and purpose, the private litigant could get no evidentiary assistance from the Commission pursuant to section 5(a).

The gospel was written in 1923 in Proper v. John Bene & Sons, Inc., 295 F. 729 (E.D.N.Y.), wherein the district court concluded, for many reasons,7 that a Commission order could not be admitted pursuant to section 5(a). This holding was religiously followed in the few subsequent cases concerning the admissibility of a Commission order in this context. See n. 8, infra. Only the Second Circuit — paradoxically, John Bene's circuit — in Brunswick-Balke-Collendar v. American Bowling & Billiard Co., 150 F. 2d 69 (2d Cir. 1945), rev'd in part on rehearing, 150 F.2d 74, cert. denied, 326 U.S. 757, 66 S.Ct. 99, 90 L.Ed. 455 (1945), in a divided opinion, strayed from the fold by concluding that a final Commission order fell within section 5(a), which decision necessarily rejected all of the objections of the district court in John Bene. Having discovered on rehearing, however, that amendatory legislation giving finality to certain Commission orders did not apply to the case at bar, Judge Frank was compelled to withdraw this portion of his initial opinion — solely because of a lack of the finality which section 5(a) requires. Notwithstanding this single objection to admissibility raised by the Second Circuit, which has traditionally commanded an attentive audience, most judges and commentators continued to rely on the earlier district court decision in John Bene, with its multiple objections, for the proposition that neither section 5(a) nor section 5(b) applied to Commission proceedings and orders.8

It was against this background that the Supreme Court decided 3M in 1965. The issue presented to the Court was whether the institution of a Commission proceeding satisfied section 5(b) of the Clayton Act, which section tolls the statute of limitations for private litigants "whenever any civil or criminal proceeding is instituted by the United States." The district court held that those words did include a Commission proceeding, suggesting that section 5(a) and section 5(b) did not have an identical reach.9 The Third Circuit upheld the application of section 5(b) to Commission proceedings, but in something between a dictum and an alternative ground concluded that section 5(b) and section 5(a) operated on common subject matter: the kind of proceeding that could toll the limitations period under section 5(b) could result in a "final judgment" that would be prima facie evidence under section 5(a).10 The Supreme Court, on this posture of the case,11 explicitly refrained from deciding whether a final Commission order satisfied section 5(a); it did affirm the holdings of the courts below that a Commission proceeding tolled the statute of limitations for purposes of section 5(b).

In so doing, the Court understandably attached "crucial significance" to the words "final judgment or decree" in section 5(a), 3M, supra at 316, 85 S.Ct. 1473 for a consent order entered before the taking of testimony such as the one before the Court in 3M could not be equated with a "final judgment or decree" by the very terms of section 5(a).12 Accordingly, it was necessary for the Court to stress that:

"§ 5(b) tolls the statute of limitations set out in § 4B from the time suit is instituted by the United States regardless of whether a final judgment or decree is ultimately entered. Its applicability in no way turns on the success of the Government in prosecuting its case." 3M, supra at 316, 85 S.Ct., at 1476. Emphasis added.

It seems clear that what the Court recognized here was that the Commission consent order against 3M was not a final judgment; it was not saying that an order terminating a fully litigated case could not be.

The Court did observe that Congress' purpose in adopting section 5(b) was broader than its purpose behind section 5(a), 3M,supra at 317, 85 S.Ct. 1473, but despite the greater delicacy of section 5 (a) — which we acknowledge — it seems clear that the same ultimate purpose underlies both sections. Because the assistance to the private litigant may even be greater under section 5(a), we would think that only a strong countervailing policy should limit the application of section 5(a).

Having suggested these differences in the wording and policy of the two subsections, the Court developed a three-fold rationale to explain its conclusion regarding section 5(b). It construed the early Congressional debate as supplying no "substantial evidence" that Commission action was specifically excluded from the operation of section 5(b) as a ground for tolling, 3M, supra at 320, 85 S.Ct. 1473; it gave greater weight to the "one element of congressional intention which is plain on the record — the clearly expressed desire that private parties be permitted the benefits of prior government actions", 3M, supra at 320, 85 S.Ct., at 1478; and, in minor key, it rejected an approach which "would make enjoyment of these intended benefits turn on the arbitrary allocation of enforcement responsibility between the Department of Justice and the Commission." 3M, supra at 320, 85 S.Ct., at 1478. Accordingly, the Court equated Commission proceedings and Justice Department actions so far as section 5(b) is concerned.

The latter two points apply as fully to our case as to 3M; concerning the first point, we conclude below that the 1914 Congressional debates erect no greater obstacle to applying section 5(a) to Commission proceedings. Yet we do not understand the reasoning of 3M to compel or to prevent the application of section 5(a) to final Commission orders. We focus instead on the prerequisites to admissibility to see what has been resolved and what has not. Section 5(a), in relevant part, reads:

"A final judgment or decree * * * in any

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