Fulton v. Loew's, Inc., KC-199.

• Citation: 114 F. Supp. 676
• Decision Date: 16 September 1953
• Docket Number: No. KC-199.,KC-199.
• Parties: FULTON v. LOEW'S, Inc. et al.
• Court: U.S. District Court — District of Kansas

114 F. Supp. 676

FULTON v. LOEW'S, Inc. et al.

No. KC-199.

United States District Court D. Kansas.

September 4, 1953.

As Amended September 16, 1953.

William G. Boatright, Kansas City, Mo., Willard L. Phillips, and Thos. M. Van Cleave (of McAnany, Van Cleave & Phillips), Kansas City, Kan., and Nick C. Spanos, Beverly Hills, Cal., for plaintiff.

James C. Wilson (of Watson, Ess, Whittaker, Marshall & Enggas), Kansas City, Mo., and Louis R. Gates, Kansas City, Kan., for defendants.

MELLOTT, Chief Judge.

The present issue, tried to the court under Rule 43(b), Fed.Rules Civ.Proc., 28 U.S.C.A., and involving no factual controversy, requires determination of two basic questions: (1) May the corporate defendants, in this suit under the Sherman and Clayton Anti-Trust Acts,¹ avail themselves of the Kansas statutes of limitation, if applicable? and (2) What is the period of limitation under the facts pleaded?

It is conceded by counsel for each of the parties that there is no federal statute of limitations dealing specifically with a suit for "threefold the damages"² where, as alleged here, there has been a discrimination against the plaintiff to the injury of his business of owning and operating a motion picture theater, in Kansas City, Kansas. The present questions are important, although the court's ruling cannot extend beyond fixing the maximum period within which damages may be assessed by a jury. If the defendants are correct, the period may not exceed one year prior to the filing of this suit on February 29, 1952. If either of the alternative contentions of the plaintiff is upheld, the period may extend throughout the operation of the theater, i. e., since 1946.

In connection with the first question, plaintiff, relying upon Weishaar v. Butters Pump & Equipment Co.,³ urges that the defendants not having obtained licenses to do business in the State of Kanas in compliance with a local statute,⁴ cannot avail themselves of the provisions of its statute of limitations. In the cited case, the transactions out of which the controversy arose were intra-state in character. The court held that the statute, although pleaded, was not available to the defendant. In its opinion reference was made to the holding in Doherty v. Kansas City Star,⁵ the court saying:

"This court has held that a foreign corporation engaged in interstate commerce is entitled to plead the statute of limitations."

Plaintiff urges that the Doherty case "was obviously unsound" and attempts to spell out of some of the language used in the Weishaar case, an overruling of it. Defendants point out that the statute under which this case is brought authorizes suit only "* * * in the district in which the defendant resides or is found or has an agent * * *"; that there can be no question of the defendants' amenability to suit in this state; that they, like The Star Company in the Doherty case, "needed no grant of authority from the charter board to come into this state and prosecute the various activities which comprised and were incidental to their interstate commerce business"; and that any construction which would prohibit them from pleading the Kansas statute of limitations would amount to an unconstitutional discrimination against interstate commerce.

No extended discussion of the question seems to be necessary. It is this court's view the defendants have the better of the argument. The Doherty case has not been overruled by the Kansas Supreme Court. The citation of both it and the Weishaar case in the later case of Miller v. Commercial Credit Co.⁶ indicates that the court found no inconsistency in the rationale of the two cases; nor does this court discern any. The first question, therefore, is answered in the affirmative and it is held the defendants may avail themselves of the Kansas statutes of limitations to the extent applicable.

The other question is more difficult and the right answer is elusive. Plaintiff pleads the pendency of an action against the defendants (or most of them), brought by the United States, which was terminated at various dates (as to named defendants) between November 8, 1948 and October 16, 1950—possibly later as to some of the defendants. Speaking generally plaintiff contends the assessment of damages should cover a period of three years preceding the filing of its complaint in this case, plus the period the antitrust suit was pending. Defendants have pleaded the one, two and three-year Kansas statutes of limitation alternatively; but their argument is directed largely to the one-year statute. Their position, as stated upon brief, is: "If, as defendants contend, the one-year * * * statute * * * is applicable * * *, the date on which the Government litigation terminated with respect to the various defendants is not significant because there is no tolling provision which would permit plaintiff to recover for anything which occurred more than one year prior to the filing of this action."

The Kansas statutes are set out in the margin.⁷ The parties have filed lengthy, well-prepared briefs and have also made available to the court briefs filed in a similar case in the Western District of Missouri and the opinion recently entered by the learned Judge in that case, 113 F.Supp. 937. Here, as in the case alluded to, the parties differ sharply as to how application of the state statute of limitations is to be made. Defendants argue that the action is one to recover more than mere compensatory damages; that it under the Kansas interpretation, is penal in nature; and that this court is bound to adopt the Kansas construction of its statute. Plaintiff argues that the action, being federally created, the court should look to the federal decisions to determine its nature; that the prevailing rule is that an action to recover under the Sherman and Clayton Acts is remedial and not penal in nature; and that the three-year statute—"an action upon a liability created by statute, other than a forfeiture or penalty"—applies.

In the case pending in the Western District of Missouri, to which reference has been made, the Honorable Albert A. Ridge, Judge, recently entered an opinion⁸ in which it was said:

"Whatever may be the judicial prerogative of the state courts to construe their own statutes, we do not believe that they can ever assume the awesome role of Delphic Oracle on such a fundamental matter as to with finality characterize or classify a purely federal cause of action. It is true that a federal court will, particularly in diversity cases, apply state court construction to a state-derived cause of action. But when state court construction, even of its own statutes, invades the province of characterization in a field divorced from state regulation, then clearly such an invasion of the federal judicial province is entitled to no consideration. The line of demarcation between statutory construction and characterization is often elusive and distressingly vague. Yet, we cannot ignore the distinction. Although by federal law we are directed to the state statute of limitations in cases of this kind, we do not think that such procedural directive transforms state adjective law into a springboard from which state courts can assert a formative influence on federal substantive law. Regardless of defendants' protestations to the contrary, to allow an anti-trust action to be characterized as one for a penalty or forfeiture, depending on state court stare decisis, would involve considerably more than `statutory construction' for a limited procedural purpose."

There a Kansas corporation, operating a motion picture theater three blocks from, and in competition with, the plaintiff's theater, is suing the same defendants as here, under the antitrust statutes. The learned court held that "* * * the Kansas 3-year statute of limitation should be applied * * * the cause of action having accrued in that State and there being an applicable `borrowing statute' in the lex fori * * *." Desirable as it may be that the result be the same in the two cases, this court should not shirk its responsibility to determine the questions before it. Its task is, to say the least not made less difficult by reason of the fact that there is extant an unreported decision by a judge of this court, entered some fifteen years ago, holding the Kansas one-year statute of limitations applicable to an action brought under Section 2 of the Clayton Act. True, in that case the learned Judge wrote no opinion and his order dismissing the action could have been bottomed upon his "Declaration on Questions of Law" preceding those which he made on the statutes of limitations issue—it was held that the transactions complained of in the petition were not in the course of interstate commerce, did not involve interstate commerce, and the facts alleged did not constitute a cause of action under Section 2 of the Clayton Act—; but it cannot be gainsaid he held, as defendants here point out, that under the Kansas statute, as interpreted by its Supreme Court, the action was one upon a liability created by statute for a penalty and was barred after one year from the accruing of the alleged liability.

What has been said merely points up the dilemma in which this court finds itself, accentuated by a memorandum filed since Judge Ridge's opinion was entered in the Electric Theater case in which, it is stated, the ruling of the United States Supreme Court in Chattanooga Foundry & Pipe Works v. City of Atlanta,⁹ was "completely misapplied." It is urged that Hoskins Coal & Dock Corp. v. Truax-Traer Coal Co.,¹⁰ and Schiffman Bros., Inc. v. Texas Co.,¹¹ are the better reasoned cases and that they, rather than the cases taking essentially the approach taken by Judge Ridge, should be followed. Due consideration has been given to the argument; but, with all due deference to the Court of Appeals for the Seventh Circuit, it is felt the cases should not be followed. They take what the court later in this...