Kansas City, Missouri v. Federal Pacific Electric Co.

• Decision Date: 04 August 1962
• Docket Number: Civ. A. No. 13709-1 and 13710-2 (consolidated with Civ. A. No. 13608-4).
• Citation: 210 F. Supp. 545
• Parties: KANSAS CITY, MISSOURI, a municipal corporation, Plaintiff, v. FEDERAL PACIFIC ELECTRIC COMPANY, Defendant. KANSAS CITY, MISSOURI, a municipal corporation, Plaintiff, v. GENERAL ELECTRIC COMPANY, Defendant.
• Court: U.S. District Court — Western District of Missouri

210 F. Supp. 545

KANSAS CITY, MISSOURI, a municipal corporation, Plaintiff, v. FEDERAL PACIFIC ELECTRIC COMPANY, Defendant.

KANSAS CITY, MISSOURI, a municipal corporation, Plaintiff, v. GENERAL ELECTRIC COMPANY, Defendant.

Civ. A. Nos. 13709-1 and 13710-2 (consolidated with Civ. A. No. 13608-4).

United States District Court W. D. Missouri, W. D.

August 4, 1962.

William F. Mauer, of Krings, Whipple, Baker & Mauer, Kansas City, Mo., for plaintiff, City of Kansas City, Mo.

Joseph J. Kelly, Jr., Howard F. Sachs, of Spencer, Fane, Britt & Browne, Kansas City, Mo., for plaintiffs Kansas City Power and Light Company, Missouri Public Service Company, and St. Joseph Light and Power Company.

Alvin D. Shapiro, Dick H. Woods, of Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, Mo., for plaintiffs Kansas Power and Light Company, Kansas Gas and Electric Company, The Empire District, Western Light and Telephone, and Central Kansas Power.

Thomas O. Pickett, Russell N. Pickett, of Pickett, Andereck & Hauck, Trenton, Mo., for plaintiffs N. W. Electric Power Cooperative, Central Power, Sho-Me, City of Trenton, Missouri, City of Kennett, Pemiscot-Dunklin Electric Cooperative, Inc., M. and A. Electric Power Cooperative and Grundy Electric Cooperative.

James C. Wilson, Sheridan Morgan, Kansas City, Mo., for defendants Federal Pacific Electric Company, Joslyn Manufacturing and Supply Company, Cornell-Dubilier Electric Corporation, Southern States Electric Corporation, and Porcelain Insulator Corporation.

Jacob Imberman, New York City, for defendants Federal Pacific Electric Company and Cornell-Dubilier Electric Corporation.

Roy P. Swanson, Ralph M. Jones, Charles B. Blackmar, John J. Kitchin, of Swanson, Midgley, Jones, Blackmar & Eager, Kansas City, Mo., for defendant General Electric Company.

Henry Andrae, Jefferson City, Mo., for defendant General Electric Company.

Carl E. Enggas, Henry N. Ess, Colvin A. Peterson, Jr., of Watson, Ess, Marshall & Enggas, Kansas City, Mo., for defendants Allis-Chalmers Manufacturing Company, Allen-Bradley Company, The Clark Controller Company, Cutler-Hammer, Inc., Lapp Insulator Company, McGraw-Edison Company, and Ohio Brass Company.

William E. Kemp, Paul G. Koontz, Thomas J. Wheatley, of Kemp, Koontz, Clagett & Norquist, Kansas City, Mo., for defendants A. B. Chance Company, Moloney Electric Company, Wagner Electric Company, and Schwager-Wood Corporation.

David R. Hardy, John C. Dods, of Sebree, Shook, Hardy & Ottman, Kansas City, Mo., for defendant Carrier Corporation.

Ralph L. Alexander, Fred Dannov, Columbia, Mo., Joseph W. Burns, New York City, for defendants The Foster-Wheeler Company, Ingersoll-Rand Company, and Worthington Corporation.

Paul Van Osdol, of Terrell, Hess, Van Osdol & Magruder, Kansas City, Mo., for defendant H. K. Porter Company, Inc.

William H. Curtis, Martin J. Purcell, of Morrison, Hecker, Buck & Cozad, Kansas City, Mo., for defendants I-T-E Circuit Breaker Company and Sangamo Electric Company.

William H. Sanders, Larry L. McMullen, of Caldwell, Blackwell, Sanders & Matheny, Kansas City, Mo., for defendant Kuhlman Electric Company.

Roy Dietrich, Heywood Davis, of Dietrich, Tyler, Davis, Burrell & Dicus, Kansas City, Mo., for defendant The Square-D Company.

Richard S. Righter, William M. Stapleton, Jack W. R. Headley, of Lathrop, Righter, Gordon & Parker, Kansas City, Mo., for defendant Westinghouse Electric Corporation.

Kenneth Teasdale, Edwin S. Baldwin, of Armstrong, Teasdale, Roos, Kramer & Vaughan, St. Louis, Mo., for defendant Westinghouse Electric Corporation.

BECKER, District Judge.

These two cases are antitrust actions at law for treble damages under Section 4 of the Clayton Act (15 U.S.C.A. § 15) based upon alleged conspiracies in violation of Section 1 of the Sherman Anti-Trust Act (15 U.S.C.A. § 1). The actions arise out of the same alleged conspiracies which were the basis for indictments of manufacturers of electrical equipment products in the United States District Court for the Eastern District of Pennsylvania at Philadelphia in 1960, followed by convictions in 1961. Both actions were filed February 9, 1962.

These two cases are a part of the mass of civil antitrust cases filed in the United States District Courts following the indictments and convictions in Philadelphia. The number of such cases filed and pending in the nation presently exceeds 1700. Each of these cases is a "Big Case" and is properly classifiable as protracted litigation under the procedures for identification and processing of such cases, developed and published under the auspices of the Judicial Conference of the United States. (Report of Judicial Conference Study Group on Pretrial Procedure in Protracted Litigation (1960) 25 F.R.D. 351.)

This mass of litigation challenges the capacity and ability of the judicial system of the United States to perform its task of administering the antitrust laws of the United States in particular and to administer justice under law in general. (To meet this challenge and to assist the United States courts struggling with the adjudication of these cases, a national Coordinating Committee for Multiple Litigation has been created of which Chief Judge Alfred P. Murrah (C.A.10) is chairman. This Committee has established a principal office in Chicago. The Committee is issuing recommendations for cooperative national action by the district courts and is disseminating informative material to the courts.)

One of the legal problems demanding earliest solution in order to provide a guide to courts and litigants for pretrial proceedings, trial, and any settlement negotiations that may occur, is the construction to be given to the applicable statute of limitations, Section 4B of the Clayton Act (15 U.S.C.A. § 15b), which is dealt with in this memorandum opinion. It is imperative that this question be promptly decided at the highest judicial level at the earliest time consistent with law. Until this question is settled, the scope of discovery cannot be settled by the trial courts; the pleadings cannot be settled; the potential damages cannot be computed; and settlement negotiations cannot be fully explored in a great number of cases. Therefore, counsel in the 71 cases pending in this district were requested to take steps to expedite final determination of the construction to be given to Section 4B of the Clayton Act in light of the claim that the four-year period of limitations provided thereby does not begin to run until the plaintiff, in a particular case, knows of the existence of the alleged conspiracy, or by the exercise of reasonable diligence could have learned of the existence thereof.

Fortunately, it was discovered that, in these two actions instituted by the City of Kansas City, all purchases relied upon in the claims for relief occurred in 1954, more than four years prior to the time when the plaintiff alleges it knew, or in the exercise of reasonable diligence could have known, of the existence of the alleged conspiracy.

Counsel for the plaintiff, Kansas City, was granted leave to amend the complaints to aver all facts which might possibly be proved to avoid the limitation of these actions by Section 4B of the Clayton Act.

AVERMENTS OF THE COMPLAINTS

The First Amended Complaint, in each of these cases, charges the formation and existence of an actionable combination and conspiracy in violation of Section 1 of the Sherman Act, beginning at least as early as 1948, and consequent damage to plaintiff arising out of purchases in the year 1954 only. (The items purchased in Case No. 13709-1 were circuit breakers, and in Case No. 13710-2 were power switching equipment.)

Said complaint in each case charged the indictment of the defendants in the United States District Court for the Eastern District of Pennsylvania on May 19, 1960, and subsequent conviction because of the same alleged conspiracy on which the complaint is based.

In order to show that the actions are not barred by Section 4B of the Clayton Act, the complaint in each case contains a paragraph 13 under the subheading "Fraudulent Concealment" which reads as follows:

"From the inception of the combination and conspiracy between defendants described in paragraphs 9, 10 and 11, which was at least as early as January 1, 1948, and continuously thereafter until at least May 25, 1960, defendants resorted to and maintained in effect various procedures and means for the purpose of concealing the existence of their conspiracy. These included secret meetings of officers and employees of the defendants at various places in the country, the placing of telephone calls to and from the residences of company representatives rather than their offices, the use of public pay telephones, the use of plain envelopes addressed to the homes of such representatives without any return addresses or other means for identifying the senders, and the concealment or destruction of records respecting the conspiracy. During all of the period of time mentioned above, defendants established and used a scheme or formula designated the "phase of the moon" or "light of the moon" formula, for quoting nearly identical prices to electrical utility companies and municipal corporations, including plaintiff. Code numbers identifying the defendant corporations were used in documents effectuating said "phase of the moon" formula. Through the cyclic rotating positioning inherent in said formula, one defendant corporation would quote the low price, others would quote intermediate prices, and another would quote the high price. These positions were periodically rotated among the defendant corporations and said formula was so calculated that in submitting prices to electrical utility companies and municipal corporations, including plaintiff, the price spread between defendant corporations would be sufficiently narrow so as to eliminate actual price competition among them but sufficiently wide so as to give an

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