General Electric Company v. City of San Antonio

• Decision Date: 24 June 1964
• Docket Number: No. 20279.,20279.
• Citation: 334 F.2d 480
• Parties: GENERAL ELECTRIC COMPANY et al. and Carrier Corp., Appellants, v. The CITY OF SAN ANTONIO et al., Appellees. CITY OF SAN ANTONIO et al., Appellants, v. GENERAL ELECTRIC COMPANY et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

334 F.2d 480 (1964)

GENERAL ELECTRIC COMPANY et al. and Carrier Corp., Appellants, v. The CITY OF SAN ANTONIO et al., Appellees.

CITY OF SAN ANTONIO et al., Appellants, v. GENERAL ELECTRIC COMPANY et al., Appellees.

No. 20279.

United States Court of Appeals Fifth Circuit.

June 24, 1964.

David T. Searls, Leroy Jeffers, Ross N. Sterling and Vinson, Elkins, Weems & Searls, Houston, Tex., Carl Wright Johnson, San Antonio, Tex., Jay H. Brown and Brown, Sparks & Erwin, Austin, Tex., Hilton E. Howell and Naman, Howell, Smith & Chase, Waco, Tex., for General Electric Co.

Walter P. Brenan, San Antonio, Tex., David Bland and Barrow, Bland, Rehmet & Singleton, Houston, Tex., for A. B. Chance Co., Cornell-Dubilier Electric Corp., Federal Pacific Electric Co.

B. J. Bradshaw, Fulbright, Crooker, Freeman, Bates & Jaworski and Leon Jaworski, Houston, Tex., for Allis-Chalmers Mfg. Co. and Hubbard and Co.

Josh H. Groce and Groce & Hebdon, San Antonio, Tex., for C. H. Wheeler Mfg. Co., Ohio Brass Co., H. K. Porter Co., Inc., and Lapp Insulator Co.

John H. Wood, Jr., and Beckmann, Stanard, Wood & Vance, San Antonio, Tex., W. N. Blanton, Jr., of Butler, Binion, Rice & Cook, Houston, Tex., for I-T-E Circuit Breaker Co.

John J. McKay and McKay & Avery, Austin, Tex., for McGraw-Edison Co., Maloney Electric Co., and Wagner Electric Co.

W. Pat Camp and William C. Church, Jr., San Antonio, Tex., for McGraw-Edison Co.

Bond Davis and Boyle, Wheeler, Gresham, Davis & Gregory, San Antonio, Tex., for Southern States Equipment Corp., Wagner Electric Corp., and Maloney Electric Co.

Ernest W. Clemens and Clemens, Knight, Weiss & Spencer, San Antonio, Tex., for Sangamo Electric Co.

Fred B. Werkenthin and Herring & Werkenthin, Austin, Tex., for Southern States Equipment Corp. J. Burleson Smith and Cox, Smith & Smith, San Antonio, Tex., Donald S. Thomas and Clark, Thomas, Harris, Denius & Winters, Austin, Tex., for Westinghouse Electric Co.

Thad T. Hutcheson and Hutcheson, Taliaferro & Hutcheson, Houston, Tex., for Joslyn Mfg. & Supply Co., and Porcelain Insulator Corp.

Ben G. Sewell and McGregor, Sewell & Junell, Houston, Tex., for Worthington Corp.

W. L. Matthews, James D. Baskin, Jr., Richard E. Goldsmith, Matthews, Nowlin, MacFarlane & Barrett, San Antonio, Tex., Crawford B. Reeder, City Atty., San Antonio, Tex., for City of San Antonio, Tex.

Robert E. Sher and Sher, Oppenheimer & Harris, Washington, D. C., James W. Wilson and Powell, Rauhut, McGinnis, Reavley & Lochridge, Austin, Tex., for City of Austin, Tex., Lower Colorado River Authority, City of Brady, Tex., and Brazos Electric Power Cooperative, Inc., et al.

Doren R. Eskew, City Atty., Austin, Tex., for City of Austin, Tex.

Mac Umstattd, General Counsel Lower Colorado River Authority, Austin, Tex., for Lower Colorado River Authority.

Carlton J. Smith, Waco, Tex., for Brazos Electric Power Cooperative, Inc., et al.

Before HUTCHESON and GEWIN, Circuit Judges, and CONNALLY, District Judge.

GEWIN, Circuit Judge:

This interlocutory appeal presents the following two questions arising in civil antitrust litigation in the United States District Court for the Western District of Texas: (1) whether the statute of limitations set forth in Section 4B and 5(b) of the Clayton Act, 15 U.S.C. §§ 15b, 16(b),¹ is tolled by fraudulent concealment; and (2) whether the plaintiffs in private antitrust treble damage suits may use the judgments in prior criminal antitrust proceedings entered pursuant to pleas of guilty as prima facie evidence against the same defendants under the provisions of Section 5(a) of the Clayton Act.² If such pleas of guilty are deemed to be "consent judgments" within the exclusionary terms of the proviso of Section 5(a) the plaintiffs can not have the prima facie evidentiary benefit contemplated by the first part of the section. Responsive to appropriate pleadings, the District Court answered the first question in the affirmative, the second in the negative, and made the certification that a controlling question of law was involved. Petition for leave to appeal under 28 U.S.C. § 1292(b) was granted by this court.

The defendants are some fifty-two electrical companies. The plaintiffs are various cities and other purchasers of electrical equipment manufactured by the defendants.³ As to the first question the trial court ruled against the defendants and concluded:

"* * * that the aforesaid motions to strike or to dismiss or for partial summary judgments predicated upon the statute of limitations contained in Section 4B of the Clayton Act should be and the same are hereby overruled."

As to the second question the court ruled in favor of the defendants and ordered:

"It is, therefore, ORDERED by the Court that prima facie effect will not be given by the Court to any judgments in criminal proceedings heretofore held in the United States District Court for the Eastern District of Pennsylvania and that no instruction will be given to the juries who will try these civil actions to the effect that judgments in said criminal proceedings will be given prima facie effect under Section 5a of the Clayton Act (15 U. S.C., Sec. 16a)."

As to the second question, the court's order related both to pleas of guilty and pleas of nolo contendere. No question is raised as to the ruling of the court on nolo contendere pleas. The questions will be dealt with in the order stated.

I

Prior to the adoption of Section 4B of the Clayton Act, 15 U.S.C. § 15b,⁴ effective January 7, 1956, there was no federal statute of limitations on private treble damage suits brought under 15 U.S.C.A. § 15. The federal courts looked to the state statutes and, in effect, "borrowed" state statutes and applied them in appropriate cases. State laws varied and forum shopping was evident. Section 4B was enacted to correct these practices. Long before the enactment of Section 4B the doctrine of fraudulent concealment was recognized by the federal courts. Bailey v. Glover, 88 U.S. (21 Wall.) 342, 22 L.Ed. 636 (1874), was the first case to recognize the doctrine as applied to the running of a period of limitation in federal cases, and it was there stated: "The statute does not begin to run until the fraud is discovered by, or becomes known to, the party suing * * *." The doctrine was applied to the land patent act. Exploration Co. v. United States, 247 U.S. 435, 38 S.Ct. 571, 62 L.Ed. 1200 (1918). In the famous case of Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743 (1946), the Supreme Court declined to "borrow" state law⁵ and applied the fraudulent concealment doctrine to a federally created equitable right. Mr. Justice Frankfurter, speaking for the court, declared: "This equitable doctrine is read into every federal statute of limitation." More recently, the 2nd Circuit, in a cause of action which arose in 1931, dealt with the doctrine, and Judge Friendly stated the rule as follows:

"We hold that the federal rule as to the effect of concealment on the running of a period of limitation applies to an action for treble damages under the Clayton Act even when a state statute is used to measure the period." Moviecolor Limited v. Eastman Kodak Co., 288 F.2d 80, 90 A.L.R.2d 252 (2nd Cir. 1961).⁶

The first court of appeals to deal with the question now before us was the 8th Circuit in Kansas City, Missouri v. Federal Pacific Electric Co., 310 F.2d 271 (8th Cir. 1962), wherein the court carefully reviewed the congressional history of the statute, the cases dealing with fraudulent concealment, and concluded that when the present statute was enacted, Congress was well aware of the federal fraudulent concealment doctrine announced in the Bailey case and reaffirmed in more recent cases. In Kansas City the court stated:

"* * * as we shall demonstrate in our consideration of the legislative history of § 4B, Congress had actual knowledge of and affirmatively evinced a purpose of having the principle read into the statute."

To the same effect is the conclusion reached by the 2nd Circuit in Atlantic City Electric Co. v. General Electric Co., 312 F.2d 236 (2nd Cir. 1962), in which the court concluded:

"The failure to enact bills containing provisions that would have embodied a discovery provision in the words of the statute is hardly the kind of express negative which we think would be necessary to reverse so well established a policy of the law. As we read the Supreme Court\'s opinion in Holmberg v. Armbrecht, supra, that policy is so strong that it is applicable unless Congress expressly provides to the contrary in clear and unambiguous language.

* * * * *

"It seems far more likely that when Congress enacted § 4B, it intended that the doctrine of fraudulent concealment continue to apply as it had under Holmberg and its predecessors, than that it be discarded by reference to legislative history."

Defendants strenuously urge that this Court's case of United States v. Borin, (5th Cir. 1954) 209 F.2d 145, compels a holding that the statute is not tolled. We disagree. In Borin we held that the statute of limitations found in the False Claims Act⁷ was not tolled by fraudulent concealment. We based our decision, however, on our view that the emphatic language of the statute, "Every such suit shall be commenced within six years from the commission of the act, and not afterward" (emphasis added), clearly demonstrated an intention that fraud or concealment would not toll the statute.^7a Although Borin predates Atlantic City, supra, we feel that the statute considered in Borin meets the test enunciated in Atlantic City. The courts of appeals for the 8th,⁸ 2nd,⁹ 10th,¹⁰ 7th,¹¹ 9th¹² and D.C.¹³ Circuits have ruled that the limitations period of Section 4B is tolled by the fraudulent concealment of the defendants. No court of appeals has ruled to the contrary so far as we can determine. Several district courts have ruled to the contrary, but have been overruled by the several courts of appeals.¹⁴

We are in complete...