Laitram Corporation v. Deepsouth Packing Company

• Decision Date: 26 January 1968
• Docket Number: Civ. A. No. 67-861.
• Citation: 279 F. Supp. 883
• Parties: The LAITRAM CORPORATION, Plaintiff, v. DEEPSOUTH PACKING COMPANY, Inc., Defendant.
• Court: U.S. District Court — Eastern District of Louisiana

279 F. Supp. 883

The LAITRAM CORPORATION, Plaintiff, v. DEEPSOUTH PACKING COMPANY, Inc., Defendant.

Civ. A. No. 67-861.

United States District Court E. D. Louisiana, New Orleans Division.

January 26, 1968.

COPYRIGHT MATERIAL OMITTED

Louis B. Claverie, New Orleans, La., for plaintiff.

C. Emmett Pugh, New Orleans, La., Paul L. O'Brien, Washington, D. C., for defendant.

RUBIN, District Judge.

Laitram sued Deepsouth claiming infringement of its patents on a shrimp deveining machine¹ and a shrimp vein remover.² Deepsouth answered that Laitram's patents were invalid. Then it counterclaimed seeking a declaration that a third Laitram patent, on a machine for peeling shrimp,³ was invalid. Laitram made a public dedication of the patent on the shrimp peeling machine.⁴ Thereafter the following motions were filed:

(1) Laitram's motion for summary judgment dismissing as moot Deepsouth's counterclaim seeking a declaration of the invalidity of the patent for the shrimp peeling machine.

(2) Deepsouth's motion for summary judgment against Laitram based on laches and estoppel.

(3) Deepsouth's motion to amend its answer and counterclaim, seeking to drop the counterclaim relating to the shrimp peeling machine, and to add a counterclaim for violation of the antitrust laws.

Deepsouth's motion to amend its proposed amended answer and counterclaim to set forth the defense of estoppel urged in its motion for summary judgment.

Laitram opposes both of Deepsouth's motions to amend. It contends that the counterclaim is barred both by the doctrine of res judicata and by the statute of limitations.

The present suit is the latest (although it may unfortunately not be the last) in a course of litigation that has not yet run as long as Jarndyce versus Jarndyce, but has undoubtedly gone far beyond anything that even Mr. Dickens imagined in scope, cost and complexity. It will serve to make the issues clearer, and perhaps to demonstrate why the United States has more lawyers per capita than any other nation,⁵ if we summarize what has gone before.

In 1947 Fernand S. Lapeyre and James M. Lapeyre obtained a patent on a machine to peel shrimp. They also obtained the issuance or control of patents on other machines that supplemented the shrimp peeler. These included a machine to clean the shrimp after they were peeled, a device to slit the shrimps' backs, one to remove the heads from raw shrimp, and a sorter to separate shrimp by sizes. By 1949, these machines had become commercially practicable and automation came to the shrimp processing industry. It was no longer necessary to rely upon hand labor to sort, peel or clean shrimp. The commercial development of these obviously valuable patents was undertaken by The Peelers Company (Peelers), a partnership. Laitram is its successor.

The better mouse trap may attract the world to its inventor's door; it also brings competitors to the neighborhood. At any rate, Peelers' machines soon had rivals. On November 25, 1957, Peelers sued Paul C. Skrmetta, other individual defendants, and Deepsouth, contending that they were infringing various patents on shrimp processing machinery (but not the ones involved here).⁶ Among the issues raised in that suit was a counterclaim for antitrust violations filed on February 17, 1958. On March 28, 1967, the parties filed an agreement of compromise and settlement in the record of that proceeding. The settlement included an agreement by Deepsouth and the other defendants to dismiss the antitrust complaint with prejudice, and such a dismissal was in fact filed.

Laitram or its predecessors were in addition involved in the following groups of suits:

1. The Kaakinen Case. This was a patent infringement suit begun in the United States District Court for the Western District of Washington in February, 1958, against Edwin A. Kaakinen and the Kaakinen Fish Company, who were users of Skrmetta machines. The suit resulted in an injunction against violation of the patents involved in the Skrmetta suit. The injunction was affirmed on appeal by the Court of Appeals for the Ninth Circuit.⁷

2. The Federal Trade Commission Litigation. In May, 1960, the Federal Trade Commission issued a complaint under the provisions of Section 5 of the Federal Trade Commission Act⁸ charging Peelers with engaging in various unfair methods of competition and unfair acts and practices. The Commission dismissed charges relative to monopolization, but found that Peelers had committed unfair acts by selling shrimp processing machines to foreign canners while maintaining a policy of leasing them to domestic canners, and by leasing machines at a substantially higher rate to canners in the Northwestern states than the rate charged lessees in the Gulf Coast area. This latter finding was affirmed by the Court of Appeals for the Fifth Circuit.⁹

3. The King Crab Case. On April 30, 1962, Peelers sued King Crab, Inc., a shrimp canner, in the United States District Court for the District of Alaska for infringement of its patents resulting from use by King Crab, Inc., of the Skrmetta machines. One of the defenses was a claim filed on May 21, 1962, that Peelers and Laitram had violated the antitrust laws. The court found no violation of the antitrust laws and issued an injunction.¹⁰

4. The Wendt Case. In October, 1958, Peelers sued various users of the Skrmetta peeling machines in the Western District of Washington for infringement of its patents resulting from use of these peeling machines. The antitrust issue was raised both as a defense to the action filed on September 27, 1960, and by a counterclaim filed on July 6, 1964. Ultimately an injunction was issued.¹¹

5. The Crown Packers Case. In November, 1960, various lessees of the Peelers machines sued Peelers for violation of the antitrust laws in the United States District Court for the Western District of Washington. The jury found that Peelers had not attempted to monopolize any line of commerce and had not combined or conspired in any manner violative of the antitrust laws but had monopolized "in excess of lawful patent monopoly" by means of the peeling machine lease rate. Damages were awarded to the plaintiffs in the amount of over $2,080,000.¹² An appeal was taken from the judgment to the United States Court of Appeals for the Ninth Circuit. This appeal was dismissed by an agreement directing dismissal pursuant to an agreement of settlement filed in the trial court in February, 1967, providing for the payment of $1,260,000, in equal payments over a period of six (6) years, without interest.

OPPOSITION TO THE MOTION

Laitram may properly oppose Deepsouth's motion to amend on the grounds that the counterclaim to be asserted is barred by the statute of limitations and res judicata. It need not wait until the amendment is filed to urge a motion to dismiss. The authorities are in conflict on this point, and some courts think it is not their function on motion for leave to amend to pass on the sufficiency of the proposed pleading. "But," as Professor Moore points out, "if a complaint or an answer, as amended, would be subject to a motion to dismiss under Rule 12(b) (6) or to a motion to strike under Rule 12(f), as the case may be, it would be an idle move for the court to allow such amendment over the objection of the opposing party who, if correct, has merely to make a formal motion to dismiss or to strike after leave to amend is granted."¹³ In pleading as in geometry the shortest distance between two points ought to be a straight line. There is no reason why the lack of merit in the proposed counterclaim cannot now be considered.¹⁴

STATUTE OF LIMITATIONS

The antitrust counterclaim is a claim for treble damages for violation of the antitrust laws.¹⁵ Laitram contends that the claim is barred by the statute of limitations, which provides that an action must be "commenced within four years after the cause of action accrued."¹⁶

The application of these deceptively simple words to the complex factual circumstances involved in antitrust litigation has occasioned many problems, and it is impossible to reconcile the results reached in all of the cases. A so-called "general rule" is stated in CCH, Trade Regulations Reporter ¶ 9141, as follows:

"A cause of action under the anti-trust laws accrues when damage is sustained. But * * * this does not mean `damages' in the sense of the measure of recovery, but rather an act or occurrence which impairs the economic position of the plaintiff. For example, if the loss of future profits or some other monetary loss is rendered inevitable by such act or occurrence, the cause of action is complete, and the statute of limitations begins to run."

Many of the cases support this so-called "general rule." For example, when a complaint is based on an illegal refusal to deal, some courts have concluded that the antitrust claim is barred by the statute of limitations if no act in violation of the antitrust laws has been shown to have occurred within the statutory period.¹⁷ The same result has been reached where a conspiracy to monopolize has been alleged.¹⁸ In the latter situation, the Court of Appeals for the Ninth Circuit concluded: "The statute of limitations runs * * * from the time the blow which caused the damage was struck. Any further internal injury affects the problem of how much should be claimed in damages, not the problem of when the statute of limitations commences to run."¹⁹ Many other cases support the proposition that the statute commences to run when a defendant commits acts in violation of the antitrust laws rather than from the time the plaintiff suffers damages resulting from those acts.²⁰

However, there are more exceptions than those necessary aphoristically to prove the "general rule." Some courts have concluded that, where the complaint alleges a monopoly or an attempt to monopolize,²¹ or a conspiracy to violate the antitrust laws,²² the cause of action accrues, and the statute of limitations begins to...