Highland Supply Corp. v. Reynolds Metals Co.

• Decision Date: 13 February 1964
• Docket Number: No. 17431.,17431.
• Parties: HIGHLAND SUPPLY CORPORATION, Appellant, v. REYNOLDS METALS COMPANY, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

327 F.2d 725 (1964)

HIGHLAND SUPPLY CORPORATION, Appellant, v. REYNOLDS METALS COMPANY, a Corporation, Appellee.

No. 17431.

United States Court of Appeals Eighth Circuit.

February 13, 1964.

Alex Akerman, Jr., Thomas A. Ziebarth, Washington, D. C., John C. Kappel and Robert E. Staed, for appellant, Kappel & Neill, St. Louis, Mo., and Shipley, Akerman & Pickett, Washington, D. C., of counsel.

Lewis C. Green, Alan G. Kimbrell, Green, Hennings, Henry, Evans & Arnold, St. Louis, Mo., for appellee, Gustav B. Margraf and W. Tobin Lennon, Richmond, Va., of counsel.

Before VOGEL, BLACKMUN and RIDGE, Circuit Judges.

RIDGE, Circuit Judge.

This is an appeal from a judgment dismissing with prejudice the complaint of appellant,¹ based on Section 4 of the Clayton Act (15 U.S.C.A. § 15), alleging violations of Section 7 of the Clayton Act (15 U.S.C.A. § 18) and Section 2 of the Sherman Act (15 U.S.C.A. § 2). The facts giving rise to such claims are not in dispute. They may be summarized as follows:

Appellant's complaint was filed on February 14, 1963. It alleged that appellee, on August 31, 1956, acquired control of the stock and assets of Arrow Brands, Incorporated, thereby achieving vertical integration between the two companies. Prior thereto Arrow had been engaged almost exclusively in the conversion, design, styling and sale of florist foil. Reynolds, one of the three producers of primary aluminum in the United States, had been Arrow's chief supplier of aluminum foil, which Arrow converted into florist foil. Subsequently, in November 1957, Arrow announced an across-the-board price reduction in its major brands of florist foil, effective retroactively to October 1, 1957. These prices were below the cost of production of Arrow's non-integrated competitors. Appellant alleged that as a consequence Arrow's competitors,² of which appellant is one, "began to really feel the effects of Reynolds' attempted monopolization" and were "caused to suffer significant loss of sales."

On December 27, 1957, the Federal Trade Commission issued a complaint against Reynolds, alleging that its acquisition of Arrow violated Section 7 of the Clayton Act, supra. An order of divestiture was issued by the F.T.C. on January 21, 1960. That order as modified was affirmed by the United States Court of Appeals for the District of Columbia. Reynolds Metals Company v. Federal Trade Commission, 114 U.S.App.D.C. 2, 309 F.2d 223 (1962). A final decree of enforcement of the F.T.C. order was entered by that Court on October 22, 1962.

The "effects of (Reynolds') acquisition and subsequent actions" were alleged by appellant to have permitted Reynolds:

(a) to monopolize and substantially lessen competition in the florist foil market, thereby depriving the public of the benefits of a free competitive market within this line of commerce;

(b) to allow Arrow to achieve a dominant position in the florist foil market;

(c) cause appellant to lose some customers altogether and suffer substantially lower sales to others;

(d) prevent appellant from continuing its normal increase of sales;

(e) to operate at a substantially lower level of profit;

(f) damage its prestige and reputation in the community and industry; and

(g) prevent it "from continuing in or initiating certain new ventures at substantial monetary loss"

for all of which appellant prayed treble damages.

Appellee filed no answer to appellant's complaint, but moved to dismiss the same on the grounds (1) that it failed to state a claim upon which any relief could be granted; and (2) that appellee's claims were barred by 15 U.S.C. § 15b. The District Court granted that motion. In so doing, it ruled that appellant's private antitrust claims against appellee accrued more than four (4) years prior to the date on which appellant first had the right to bring an action therefor; and as a consequence all such claims were barred by Section 4B of the Clayton Act, supra. The District Court reasoned that though appellant's:

"cause of action (did) not necessarily ripen at the time of (Reynolds\') acquisition (of Arrow), reference must be made to the violation charged, 15 U.S.C.A. § 18, to determine whether more than one subsequent action after the acquisition can give rise to successive claims by the plaintiff (appellant) under 15 U.S.C.A. §§ 15, 18. Since § 18 prohibits only the acquisition with the potential proscribed effects, it follows that there is only one event subsequent to the acquisition which marks the time plaintiff\'s cause of action accrues. That event is the first suffering of injury as the result of the alleged prohibited merger. Hence, even though plaintiff may continue to suffer damages as a result of the acquisition, his (sic) failure to enforce his (sic) claim within four years after he (sic) first suffered injury from the prohibited merger will bar his (sic) cause of action based on a violation of 15 U.S. C.A. § 18." (Emp. & par. added.)

From the foregoing it appears that the "acquisition" of Arrow and the latter's "price-cutting" were the only events considered by the District Court as being related to appellant's claim for damages, and that such damages were primarily based on appellee's violation of Section 7 of the Clayton Act, supra.³ From that vista it ruled that the applicable statute of limitation as to any damages so claimed, commenced to run from the time those two overt acts were committed by appellee; and "that neither the FTC order nor the Court of Appeals affirmance" thereof "would be admissible in this private treble damage action" so as to toll the four-year statute of limitation as provided in Section 4B of the Clayton Act (15 U.S.C.A. § 15b.)

As to appellant's claims based on appellee's violation of Section 2 of the Sherman Act, the District Court said:

"Leave conceivably could be granted plaintiff to amend his (sic) petition * * * (as to) his claim based on the violation"

thereof; but because it considered the major matter before it involved:

"* * * questions of law on which there is substantial ground for difference of opinion and determination of these will materially advance the ultimate termination of (this) lawsuit * * *."

it "determined to dismiss with prejudice the entire complaint to afford" appellant an opportunity to have this Court make decision of the following four questions, which it said it had "determined * * * adverse to (appellant)":

"1. Whether the FTC order of divestiture and review and affirmance by the Court of Appeals for the District of Columbia taken together or separately qualify under 15 U.S.C.A. § 16(b) to toll the limitation period.

"2. Whether either the FTC order of the Court of Appeals for the District of Columbia\'s decree enforcing that order taken together or separately, may be used as prima facie evidence that the defendant has violated the antitrust laws under the requirements as set forth in 15 U.S.C.A. § 16(a).

"3. Whether there is but one and only one accrual of a cause of action under 15 U.S.C.A. § 15 as based on a violation of 15 U.S.C.A. § 18.

"4. And finally whether a petition under 15 U.S.C.A. § 15 based on a violation of 15 U.S.C.A. § 2 states a claim when the last action of defendant alleged to have caused the damage is shown on the face of the petition to have occurred more than four years prior to the filing of the complaint."

The abstractness of the questions ante is made manifest when it is considered that all we have before us in the record of this appeal is a copy of appellant's complaint; the motion to dismiss; judgment entered thereon; and a copy of the District Court's memorandum opinion, supra. Apparently, no pre-trial conference procedure was resorted to by the District Court.⁴ Such disposition of pending litigation is not to be commended. This is so because only judgments, decrees and specific rulings — not opinions or reasons for final action taken by a District Court in a given case — are reviewable by us. This is not an interlocutory appeal allowed by us under 28 U.S.C.A. § 1292(b). The statements and questions ante which the District Court indicates to be the premise of its judgment cannot control any error appearing on the face of a record reviewable by us. Matters which a trial court states are the premise of its judgments but are not shown to have actual bearing upon the final judgment entered, will ordinarily be disregarded by an appellate court. It is a uniform course of appellate review procedure to decline to review questions not necessary to a decision by an appellate court. Cf. Dick v. New York Life Ins. Co., 359 U.S. 437, 445, 79 S.Ct. 921, 3 L.Ed.2d 935. Hence if, on appeal, we determine that a controlling and decisive point necessitates a reversal of a particular judgment, we ordinarily will decline to go further into the case. Sun Insurance Office v. Scott, 284 U.S. 177, 52 S.Ct. 72, 76 L.Ed. 229.

Here, the District Court dismissed, with prejudice, not only claims asserted by appellant because of appellee's violation of Section 7 of the Clayton Act, but also those based on appellee's alleged violation of Section 2 of the Sherman Act, supra. This was error, as we have nothing in the record before us revealing that appellant was ever given an opportunity to amend its complaint, and that it failed to do so before the order of dismissal was entered. Appellant, in its brief, states "the lower court suggested it could," but nowhere does it appear of record that appellant refused so to do. The right of amendment is to be freely given. Rule 15, F.R.Civ.P., 28 U.S.C.A. Only where a plaintiff fails to comply with an order to amend its complaint is dismissal with prejudice proper. Cf. Package Machinery Co. v. Hayssen Mfg. Co. (E.D.Wis.), 164 F.Supp. 904, aff'd (7 Cir.), 266 F.2d 56. As Judge Sanborn for this Court has reiterated in our most recent opinion, Burndy Corporation v. F. L. Cahill and National Connector Corporation, 301 F. 2d 448, l.c. 449 (8 Cir. 1962):

"The attitude of this Court toward

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