In re Antibiotic Antitrust Actions

Decision Date30 July 1971
Docket NumberM 19-93A and the following actions: All Cases.
Citation333 F. Supp. 317
PartiesIn re Coordinated Pretrial Proceedings in ANTIBIOTIC ANTITRUST ACTIONS.
CourtU.S. District Court — Southern District of New York

APPLICABILITY OF SECTIONS 5(a) AND 5(b) OF THE CLAYTON ACT

MILES W. LORD, District Judge (By Assignment).

The questions now before the court concern the effect of the Government's prior proceedings against these defendants1 on the present private treble damage actions. More specifically, the questions are whether, pursuant to § 5(b) of the Clayton Act, 15 U.S.C. § 16(b),2 the prior proceedings tolled the running of the four-year statute of limitation, § 4B of the Clayton Act, 15 U.S.C. § 15b, and whether, pursuant to § 5(a) of the Clayton Act, 15 U.S.C. § 16(a),3 the judgment in one of those proceedings is entitled to prima facie effect in these actions.

The decision of these questions requires a familiarity with the facts of the prior proceedings. After initial studies of one defendant's pricing policies on a specific product and of the antibiotic industry in general,4 the Federal Trade Commission issued a complaint on July 28, 1958, charging all five of the defendants with violations of Section 5 of the Federal Trade Commission Act, 15 U.S. C. § 45, in connection with the sale of antibiotics. The Commission's initial decision finding all five defendants to have violated Section 5 was reversed on appeal. American Cyanamid Co. v. F. T. C., 363 F.2d 757 (6th Cir. 1966). On remand, the Commission found that two of the defendants, Pfizer and Cyanamid, had violated Section 5 and this result was affirmed by the Court of Appeals for the Sixth Circuit. Chas. Pfizer & Co. v. F. T. C., 401 F.2d 574 (6th Cir. 1968).

In the meantime an indictment was returned on August 17, 1961, against three of these defendants,5 naming the other two as co-conspirators, charging violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. After trial to a jury, the verdict of guilty on all counts as to all three defendants was reversed on appeal, United States v. Chas. Pfizer & Co., 426 F.2d 32, modified 437 F.2d 957 (2d Cir. 1970). Certiorari has now been granted. United States v. Chas. Pfizer & Co., 402 U.S. 942, 91 S.Ct. 1617, 29 L.Ed.2d 110 (1971).

I. Tolling of the Statute

The defendants apparently concede that in all cases but the farm cases and the foreign cases,6 which they contend are not based on the prior Government actions, the statute of limitations was tolled by the institution of the criminal action in 1961. They contend, however, that the earlier FTC proceeding could not and did not toll the statute in any case.

A. The FTC Proceedings

The defendants argue that since the prior FTC proceeding in this case was pursuant to § 5 of the FTC Act and since that section is not one of the "antitrust laws" as defined by § 1 of the Clayton Act, 15 U.S.C. § 12, Nashville Milk Co. v. Carnation Co., 355 U.S. 373, 375-376, 78 S.Ct. 352, 2 L.Ed.2d 340 (1958), the proceeding does not satisfy the requirements of § 5(b).

Defendants' argument ignores the fact that § 5(b), unlike § 5(a), does not require that the prior action be one "under the antitrust laws," only that it be one "to prevent, restrain or punish violations of any of the antitrust laws * * *." Influenced by this statutory language, two of the three courts facing this precise question have held the statute tolled by FTC proceedings under § 5 of the FTC Act where the purpose of those proceedings was "to prevent, restrain, or punish" violations of the antitrust laws. Rader v. Balfour, 440 F.2d 469 (7th Cir. 1971); Lippa's Inc. v. Lenox, Inc., 305 F.Supp. 182 (D.Vt.1969); contra, Laitram Corp. v. Deepsouth Packing Co., 279 F.Supp. 883 (E.D.La.1968).

It is well-established that § 5 of the FTC Act includes within its terms a wide variety of conduct, including conduct condemned by §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953); F. T. C. v. Cement Institute, 333 U.S. 683, 68 S.Ct. 793, 92 L.Ed. 1010 (1948). And it would be as arbitrary, in terms of the statutory policy of § 5(b), to hold that the tolling effect of a prior Government action turned on the statute under which it was initiated as it would be to hold that tolling depended upon the agency which initiated the action. Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 320-322, 85 S.Ct. 1473, 14 L.Ed.2d 405 (1965). Although the Supreme Court was not faced with this problem in 3M since the FTC action was pursuant to § 7 of the Clayton Act, 15 U.S.C. § 18, its logic in holding that FTC proceedings, as well as action initiated by the Justice Department, could toll the statute supports the result reached here.

The determinative factor in each case, then, is the type of conduct against which the proceeding is aimed. As was stated in Rader v. Balfour, supra 440 F.2d at 473, a § 5 FTC Act proceeding "suspends the running of the statute of limitations if the proceeding is directed at alleged conduct which appears to involve an existing or incipient violation of the antitrust laws." And the character of the earlier proceeding must be resolved by an examination of the FTC complaint. Turning to the earlier complaint against these defendants, a reading of its allegations clearly establishes that the defendants were charged with conduct violative of the antitrust laws7 and that the proceeding therefore met the requirements of § 5(b).

B. The Farm and Foreign Cases

As earlier stated, the defendants argue that the running of the statute was not tolled in the farm and foreign cases because they are not "based in whole or in part on any matter complained of" in the prior proceedings.8 It is settled that the proper method for determining this question, at least initially, see Rader v. Balfour, supra at 473, is to compare the allegations of the Government and private complaints. Leh v. General Petroleum Corp., 382 U.S. 54, 65, 86 S.Ct. 203, 15 L.Ed.2d 134 (1965). And for purposes of deciding this question, the court will consider the "Preliminary Pretrial Brief" submitted by the Plaintiff's National Steering Committee as a pleading amending the original complaints.

The defendants contend that the farm and foreign cases involve markets and, to some extent, products not included in the prior proceedings. For example, both the FTC complaint and the criminal indictment are said to speak only of broad spectrum antibiotics for domestic human use. And relying on later findings and opinions in the FTC action and the development of the evidence at the criminal trial, the defendants argue that the focus of those proceedings was on tetracycline, a product manufactured predominantly for human use. Defendants also note that the sale of these products in foreign commerce was investigated by a separate grand jury almost three years after the return of the initial indictment and that no action was ever taken by that grand jury.9

Accepting the defendants' characterization of the FTC complaint and the criminal indictment, the essence of their argument is that the Government alleged antitrust violations only in the domestic human consumption market while the farm and foreign plaintiffs allege conspiracies only in the farm and foreign markets respectively.

A reading of the Plaintiff's Preliminary Pretrial Brief, however, indicates that the plaintiffs' theory of liability cannot be so neatly compartmentalized into foreign and domestic, human and agricultural markets. That brief alleges conspiratorial antitrust violations broader in scope than those alleged by the Government—violations which affected both the farm and human markets and had both domestic and international implications. In fact, the brief alleges a necessary interrelationship between these different aspects of the alleged conspiracy. For example, the plaintiffs allege that one of the preconditions to the entry of Bristol, Squibb and Upjohn into the conspiracy in all other markets was their agreement to refrain from the sale of broad spectrum antibiotics in the farm market.

Each plaintiff, then, is alleging broader violations of the anti-trust laws than did the Government and the question is whether they may still claim to be basing their actions on the prior proceedings. Although a treble damage plaintiff usually chooses to incorporate only a part of the Government case into his complaint, see, e. g., Leh v. General Petroleum Corp., supra, there is no logical reason why tolling should not also follow where the plaintiff incorporates the entire Government case and alleges more in addition. In both instances the overlap between the Government case and the private allegations suggests that valuable practical benefits may flow to the private plaintiff from tolling the statute. Cf. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971). The court therefore concludes that the farm and foreign cases, like all other cases now before the court, are based in whole or part on the prior FTC and criminal action.

The conclusion reached here is in no way inconsistent with the results reached in the two cases cited by defendants. Peto v. Madison Square Garden Corp., 384 F.2d 682 (2d Cir. 1967); 2361 State Corp. v. Sealy, Inc., 263 F.Supp. 845 (N.D.Ill.1967). In Peto the plaintiff alleged monopolization of the professional hockey industry by the defendants and claimed the tolling of the statute of limitations because of a prior Government action, United States v. Int'l Boxing Club of N. Y., 150 F.Supp. 397, aff'd, 358 U.S. 242, 79 S.Ct. 245, 3 L.Ed.2d 270 (1959). The Second Circuit rejected this claim stating that a comparison of the claims asserted in the two cases showed that different conspiracies were referred to, involving different sports and covering different periods of time. In the present case the Plaintiffs' Pretrial...

To continue reading

Request your trial
9 cases
  • Donahue v. Pendleton Woolen Mills, Inc.
    • United States
    • U.S. District Court — Southern District of New York
    • March 21, 1986
    ...440 F.2d 469 (7th Cir.1971); see also Wendkos v. ABC Consolidated Corp., 379 F.Supp. 15, 22 (E.D.Pa.1974); In re Antibiotic Antitrust Actions, 333 F.Supp. 317, 320 (S.D.N.Y.1971) (look to acts underlying proceeding); Lippa's Inc. v. Lenox Inc., 305 F.Supp. 182, 185-88 (D.Vt.1969). For purpo......
  • Novell, Inc. v. Microsoft Corp., 06-1134.
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • October 15, 2007
    ...conspiracy in retail milk market based on government suit for price-fixing in wholesale milk market); In re Antibiotic Antitrust Actions, 333 F. Supp. 317, 320-21 (S.D.N.Y.1971) (finding limitations period tolled for claim for damages suffered in a foreign broad spectrum antibiotics market ......
  • New York v. Feldman
    • United States
    • U.S. District Court — Southern District of New York
    • February 15, 2002
    ...of the Sherman and Clayton Acts [is] also a violation of § 5 of the Federal Trade Commission Act"); In re Antibiotic Antitrust Actions, 333 F.Supp. 317, 320 (S.D.N.Y.1971). The antitrust violations alleged in the Complaint constitute the kind of deceptive acts and practices contemplated by ......
  • In re Refrigerant Compressors Antitrust Litig.
    • United States
    • U.S. District Court — Eastern District of Michigan
    • March 13, 2015
    ...action.” Hinds County, Miss. v. Wachovia Bank, N.A., 885 F.Supp.2d 617, 627 (S.D.N.Y.2012) (citing In re Antibiotic Antitrust Actions, 333 F.Supp. 317, 321 (S.D.N.Y.1971) ; see also Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971) and In re Sc......
  • Request a trial to view additional results
10 books & journal articles
  • Collateral Estoppel and Prima Facie Effect
    • United States
    • ABA Antitrust Library Antitrust Evidence Handbook
    • January 1, 2016
    ...258 F.3d 1024, 1031 n.4 (9th Cir. 2001) (violations of FTC Act not entitled to prima facie effect); In re Antibiotic Antitrust Actions, 333 F. Supp. 317, 322-23 (S.D.N.Y. 1971) (order under section 5 of FTC Act not accorded prima facie effect). Collateral Estoppel and Prima Facie Effect 259......
  • Table of Cases
    • United States
    • ABA Antitrust Library Proof of Conspiracy Under Federal Antitrust Laws. Second Edition
    • December 8, 2018
    ...(2d Cir. 2018), 107 Anderson News v. Am. Media, 680 F.3d 162 (2d Cir. 2012), 183 , 186 , 196 , 197 In re Antibiotic Antitrust Actions, 333 F. Supp. 317 (S.D.N.Y. 1971), 127 Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940), 5 , 7 Apex Oil Co. v. DiMauro, 822 F.2d 246 (2d Cir. 1987), 37 , 44 ,......
  • Statute of Limitations
    • United States
    • ABA Antitrust Library Proving Antitrust Damages. Legal and Economic Issues. Third Edition Part I
    • December 8, 2017
    ...(holding that FTC administrative proceedings also toll the Clayton Act’s statute of limitations); In re Antibiotic Antitrust Actions, 333 F. Supp. 317, 319 (S.D.N.Y. 1971) (finding that FTC action to enforce only the FTC Act also tolls the statute of limitations); Hinds County v. Wachovia B......
  • Table of Cases
    • United States
    • ABA Antitrust Library Antitrust Evidence Handbook
    • January 1, 2016
    ...Co., Ltd., No. 06-MD-1738 (BMC) (JO), 2012 U.S. Dist. LEXIS 142558 (E.D.N.Y. Oct. 1, 2012), 68 In re Antibiotic Antitrust Actions, 333 F. Supp. 317 (S.D.N.Y. 1971), 258 Anti–Monopoly, Inc. v. Hasbro, Inc., 958 F. Supp. 895 (S.D.N.Y. 1997), 182 In re Antitrust Grand Jury, 805 F.2d 155 (6th C......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT