International Shoe Mach. Corp. v. United Shoe Mach. Corp., 6043.

• Decision Date: 11 March 1963
• Docket Number: No. 6043.,6043.
• Citation: 315 F.2d 449
• Parties: INTERNATIONAL SHOE MACHINE CORPORATION, Plaintiff, Appellant, v. UNITED SHOE MACHINERY CORPORATION, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

315 F.2d 449 (1963)

INTERNATIONAL SHOE MACHINE CORPORATION, Plaintiff, Appellant, v. UNITED SHOE MACHINERY CORPORATION, Defendant, Appellee.

No. 6043.

United States Court of Appeals First Circuit.

March 11, 1963.

COPYRIGHT MATERIAL OMITTED

Breck P. McAllister, New York City, with whom Morton Myerson, Boston, Mass., Roger J. Hawke, Frank G. Dawson, New York City, Malloy, Sullivan & Myerson, Boston, Mass., and Donovan, Leisure, Newton & Irvine, New York City, were on brief, for appellant.

Ralph M. Carson, New York City, with whom Robert Proctor, Boston, Mass., Theodore Kiendl, New York City, Robert D. Salinger, John B. Reigeluth, Boston, Mass., and Louis L. Stanton, Jr., New York City, were on brief, for appellee.

Before WOODBURY, Chief Judge, and HARTIGAN and ALDRICH, Circuit Judges.

HARTIGAN, Circuit Judge.

This is an appeal from a judgment of the United States District Court for the District of Massachusetts dismissing the complaint entered upon a special verdict of the jury in an action brought by plaintiff-appellant, International Shoe Machine Corporation, against defendant-appellee, United Shoe Machinery Corporation under Sections 4 and 5 of the Clayton Act (Act of October 15, 1914, c. 323, §§ 4 and 5, 38 Stat. 731, 15 U.S.C. §§ 15 and 16) to recover treble damages for violation of Section 2 of the Sherman Act (Act of July 2, 1890, c. 647, 26 Stat. 209, 15 U.S.C. § 2).

Plaintiff is a Massachusetts corporation which manufactures machinery for use in the "lasting operation" of shoe construction. Defendant, a New Jersey corporation, manufactures machinery for use in all phases of shoe construction, including that used in the lasting operation.

The complaint, which was filed on December 14, 1956, alleged that beginning some time prior to 1938¹ and continuing to the date of the filing of the complaint, defendant had monopolized trade and commerce in the shoe machinery industry and the parts thereof in violation of Section 2 of the Sherman Act and had thus prevented plaintiff from obtaining a fair competitive share of the market in such industry. The complaint alleged a substantial loss of profits to plaintiff owing to the alleged monopolization and prayed judgment for three times the damages sustained.

The complaint further alleged that on February 18, 1953, in the case of United States v. United Shoe Machinery Corp., D.C., 110 F.Supp. 295 (aff'd per curiam 347 U.S. 521, 74 S.Ct. 699, 98 L.Ed. 910 (1954)), a final decree was entered in the United States District Court for the District of Massachusetts finding that appellee had violated the antitrust laws and further stated that "Pursuant to Section 5 of the Clayton Act, plaintiff intends to use said final decree against defendant as prima facie evidence as to all matters respecting which the said final decree would be an estoppel between the parties thereto."

The defendant answered and relying upon the 1955 amendments to the Clayton Act (69 Stat. 283, 15 U.S.C. § 15 (b)), moved under Rule 56(b), 28 U.S.C., for partial summary judgment insofar as the plaintiff's complaint purported to assert any cause of action arising more than four years prior to the filing of the complaint, that is prior to December 14, 1952. The district court denied this motion and defendant appealed.

In our opinion reversing the district court, United Shoe Mach. Corp. v. International Shoe Mach. Corp., 275 F.2d 459 (1st Cir., 1960), we agreed with defendant that the statute of limitations precluded plaintiff from asserting any cause of action which might have accrued prior to December 14, 1952. The thrust of this ruling was to require plaintiff to demonstrate injury resulting from antitrust violations in the four year period immediately prior to the filing of the complaint — December 14, 1952 through December 14, 1956 — if it was to be successful in the instant action.

At a pre-trial conference on August 21, 1961 plaintiff requested an order permitting introduction, at any time during the trial, of the final decree, parts of the findings of fact and the opinion in the so-called "Government case,"² stating that said decree and findings should constitute prima facie evidence. Plaintiff also requested an order permitting introduction into evidence of the parties' background and competitive activities since 1938, and of customers' reasons for refusing to deal with plaintiff.

On October 24, 1961 the district court issued a pre-trial order which included the following:

"4. Decision on the admissibility of the decree, findings, or any portion whatever of the proceedings before Wyzanski, D. J. in the case of United States v. United Shoe Machinery Corporation, 110 F.Supp. 295, is deferred until the close of plaintiff\'s other evidence at the trial, at which time decision can be made in the light of this fully developed evidence. Until the Court decides what, if any, of said material is admissible, no reference to any aspect of the case of United States v. United Shoe Machinery Corporation, supra, shall be made in the hearing of the jury by the parties in either the opening or at any other time prior to said ruling.

"5. Either party may introduce relevant evidence as to the back-ground of the parties and of the shoe machinery industry at any time since the founding of plaintiff corporation in 1938, provided that nothing in this clause shall in any way modify or affect the provisions regarding order of proof or exclusion of evidence established by any other clause of this pretrial order."

At the close of plaintiff's evidence on monopolization and injury, the admissibility of the decree and findings in the Government case was again argued. On April 2, 1962 the court again held these to be inadmissible and amended the pretrial order as follows:

"1. No part of the decree, findings of fact, or conclusions of law from United States v. United Shoe Machinery Corporation, supra, will be admitted in evidence as evidence of violation of the Antitrust laws of the United States; * * *."

Defendant moved for a directed verdict at the close of plaintiff's case and again upon the completion of the whole case. The court reserved decision, and submitted to the jury the following five special questions posed pursuant to the provisions of Fed.Rules Civ.Proc.Rule 49, 28 U.S.C., to which neither party objected:

"Question 1. Do you find by a preponderance of the evidence that during the period from December 14, 1952 to December 14, 1956, the defendant United Shoe Machinery Corporation committed acts of monopolization so as to control and dominate interstate trade and commerce in the distribution of shoe machinery (other than Dry Thread Sewing Machines) in the United States, to such an extent as to exclude actual and potential competitors from that field of interstate commerce? Answer yes or no.

"Question 2. Do you find upon a preponderance of the evidence that during the period from December 14, 1952 to December 14, 1956, defendant United Shoe Machinery Corporation committed acts of monopolization so as to control and dominate interstate commerce in side and toe lasting machines to such an extent as to exclude actual and potential competitors from interstate commerce in side and toe lasting machines? Answer yes or no.

"Question No. 3:

"Do you find upon a preponderance of the evidence that such acts of monopolization during that period were the proximate cause of injury to the business or property of the plaintiff? Answer yes or no.

"Question No. 4:

"Do you find upon a preponderance of the evidence that such injury as you have found to the business or property of the plaintiff in the period December 14, 1952 to December 14, 1956, did proximately cause monetary damage in the form of lost profits to the plaintiff in the period beginning December 14, 1952 and ending December 31, 1959, which are capable of reasonable calculation and determination?

"Question No. 5: What is the amount, if any, measured in dollars, which you find from the preponderance of the evidence that the plaintiff was damaged? State such amount or `none\' in the following blank space to indicate your finding."

The jury answered the first question — relating to defendant's monopolization in the distribution of shoe machinery generally — in the affirmative. However, it answered question 2 — relative to defendant's monopolization in the special area of side and toe lasting machinery — in the negative. The jury also answered "no" to question 3 concerning putative injury to plaintiff by defendant during the limitations period. Thereupon, it was unnecessary for the jury to answer questions 4 and 5. Judgment for the defendant was entered upon this verdict on May 14, 1962.

Plaintiff moved to vacate judgment and for a new trial on the grounds, inter alia, that the jury's answers to questions 1 and 2 were inconsistent and against the weight of the evidence, and that the decree and findings in the Government case should have been allowed in evidence. The trial court denied this motion. International Shoe Mach. Corp. v. United Shoe Mach. Corp., 206 F.Supp. 949 (D. C.Mass.1962).

Plaintiff's argument on this appeal rests principally on the asserted error of the trial judge in excluding the final decree and certain findings of fact and conclusions in United States v. United Shoe Machinery Corporation, supra, (hereinafter the "Government case"). It is plaintiff's contention that the decree, findings and conclusions were admissible under Section 5 of the Clayton Act and were "relevant" both to plaintiff's proof of monopolization during the limitations period from December 14, 1952 to December 14, 1956³ and to plaintiff's alleged damages.

The legislative history is clear that Congress enacted Section 5 of the Clayton Act to encourage treble damage suits by lessening the plaintiff's required proof and litigation expenses in the usually complex, time consuming and expensive area of antitrust litigation. See H.R.Rep. No. 627, 63 Cong.2d Sess. 14; ...