Lyons v. Westinghouse Electric Corporation

• Decision Date: 29 March 1955
• Docket Number: 23325.,Docket 23312
• Parties: Joseph H. LYONS and Jessie H. Lyons, individually and as co-partners doing business under the name and style of Lyons Electrical Distributing Company, Plaintiffs-Appellants, v. WESTINGHOUSE ELECTRIC CORPORATION and General Electric Company, Defendants-Appellees. Joseph H. LYONS and Jessie H. Lyons, individually and as co-partners doing business under the name and style of Lyons Electrical Distributing Company, Petitioners, v. The Honorable Lawrence E. WALSH, United States District Judge, Respondent.
• Court: U.S. Court of Appeals — Second Circuit

222 F.2d 184 (1955)

Joseph H. LYONS and Jessie H. Lyons, individually and as co-partners doing business under the name and style of Lyons Electrical Distributing Company, Plaintiffs-Appellants, v. WESTINGHOUSE ELECTRIC CORPORATION and General Electric Company, Defendants-Appellees.

Joseph H. LYONS and Jessie H. Lyons, individually and as co-partners doing business under the name and style of Lyons Electrical Distributing Company, Petitioners, v. The Honorable Lawrence E. WALSH, United States District Judge, Respondent.

Docket 23312, 23325.

United States Court of Appeals Second Circuit.

Argued January 3, 1955.

Decided March 29, 1955.

Rehearing Denied April 25, 1955.

John D. Calhoun and Albert R. Connolly, New York City, for the motion, and in opposition to the petition.

Copal Mintz, New York City, opposed to the motion, and on behalf of the petition.

Before L. HAND and MEDINA, Circuit Judges, DIMOCK, District Judge.

Rehearing Denied in No. 23325 April 25, 1955.

L. HAND, Circuit Judge.

The defendant, Westinghouse Corporation, with the support of an affidavit of the General Electric Company, moves to dismiss an appeal taken by the plaintiff from an order, 16 F.R.D. 384, staying all further proceedings in the prosecution of the action at bar, pending the final determination of an action in the Supreme Court of New York brought by the Westinghouse Corporation against the plaintiffs. As an alternative, if the appeal is dismissed, the plaintiffs' petition for a writ of mandamus to direct Judge Walsh to vacate the same order. The complaint in the action at bar was in two counts, each for a separate claim. One of these was against the Westinghouse Corporation and the General Electric Company on a claim for damages arising out of a conspiracy in violation of the Anti-Trust Acts; the other was against the Westinghouse Corporation alone on a claim for damages for the violation of the Clayton, 15 U.S.C.A. § 12 et seq., and Robinson-Patman, 15 U.S.C.A. § 13 et seq., Acts. Before the plaintiffs brought the action the Westinghouse Corporation had sued them in the state court, demanding that they account for the breach of a contract made with it as its agents for the sale of electric lamps; to which as one of their defences the plaintiffs at bar pleaded that the Westinghouse and General Electric companies had entered into the same conspiracy to restrain competition in the marketing of such lamps. On October 6, 1953, the state court after a trial to a judge filed a decision, directing the plaintiffs to account as agents of the Westinghouse Corporation; in support of which among other matters it found that the "defense of illegality, based upon violation of anti-trust laws, has neither been sustained nor established." An interlocutory judgment was entered on this decision, 16 F.R.D. 384, from which the plaintiffs at bar have appealed, and the appeal is still pending.

The Westinghouse Corporation argues that the order on appeal was no more than "a mere stay of proceedings which a court of law, as well as a court of equity, may grant in a cause pending before it by virtue of its inherent power to control the progress of the cause so as to maintain the orderly processes of justice"¹; and that, therefore, even though the federal action is at law, we should not treat the order as a substitute for a decree in equity enjoining its further prosecution. Judge Medina and Judge Dimock agree with this position and the motion to dismiss the appeal will therefore be granted. Although I should be personally disposed to hold that the order falls within the doctrine of Enelow v. New York Life Insurance Co., supra, 293 U.S. 379, 55 S.Ct. 310, Shanferoke Coal & Supply Corporation v. Westchester Service Corporation, 293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583, and Ettelson v. Metropolitan Life Insurance Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176, rather than within that of City of Morgantown v. Royal Insurance Co., Ltd., 337 U.S. 254, 69 S.Ct. 1067, 93 L.Ed. 1347, Baltimore Contractors v. Bodinger, 348 U.S. 176, 75 S.Ct. 249, and Mottolese v. Preston, 2 Cir., 172 F.2d 308, it does not seem to me that it would serve any purpose to set out my reasons, especially on a question which at best is open to so much debate. Hence the question arises whether the occasion is one in which it is proper to resort to mandamus. Our decisions in Mottolese v. Kaufman, 2 Cir., 176 F.2d 301, and P. Beiersdorf & Co., Inc., v. McGohey, 2 Cir., 187 F.2d 14, are controlling as to the propriety of this method of review; and, indeed, the situation presents a stronger reason for resorting to it than existed in either of those decisions. The merits of the claim here involved have been decided, and will go to final judgment as soon as the account has been judicially settled; when that happens the Westinghouse Corporation will be in a position to plead the judgment as an estoppel, and, if it is successful, that will dispose of the action at bar without a trial. It is true that the estoppel will not, literally speaking, end the jurisdiction of the district court; but it will do so in substance, if it is an estoppel at all, for it will conclude any further consideration of the existence of the conspiracy, and on that all else depends. For this reason we hold, quite aside from the two decisions just cited, that the question whether a final judgment will be an estoppel so nearly touches the jurisdiction of the district court, as to make it proper for us to entertain the petition for mandamus. Cf. Ex parte Wagner, 249 U.S. 465, 471, 39 S.Ct. 317, 63 L.Ed. 709.

The first defence which the plaintiffs at bar pleaded to the action in the state court was in seven separately numbered paragraphs, the first of which alleged that the Westinghouse Corporation, the General Electric Companies "and others" were "engaged in a mutual conspiracy together to monopolize the manufacture, distribution and sale of electric lamps in the United States." The second paragraph alleged that, in pursuance of that conspiracy, the conspirators agreed not to "sell electric lamps in the usual course of trade, but only through alleged `agents' under their direction, control and surveillance;" and that the conspirators compelled the "alleged `agents' to observe uniform price schedules," and prevented "said alleged `agents' from competing among each other." The fourth paragraph alleged that the conspirators were successful in their purpose of establishing a monopoly; and the fifth, that "by reason of the premises the defendants * * * were unable to purchase electric lamps in the ordinary and usual course of trade, and, in order to engage in their aforesaid business, were compelled to, and did, execute whatever agreements and papers the plaintiff, from time to time, prescribed or demanded, and they were compelled to, and did, comply with all other requirements specified by the plaintiff." The sixth paragraph alleged that these "agreements and transactions * * * were exacted by the plaintiff in furtherance and in execution of the aforesaid conspiracy and as an integral part of the carrying out thereof"; and the seventh, that "by reason of the premises, the agreements and transactions alleged in the complaint were unlawful." The complaint at bar alleged the existence of a conspiracy in so nearly identical terms that we need not repeat them; and its twelfth paragraph alleged that "by reason thereof, it was impossible for plaintiffs profitably to engage in the business of selling electric lamps without having for sale and delivery electric lamps manufactured by the defendants * * * and to carry on such business most successfully and profitably, it was necessary to handle the lamps of both defendants." The thirteenth paragraph then alleged that because of this situation "the plaintiffs were compelled to enter into written contracts * * * as `agents' at prices and upon terms fixed * * * pursuant to the conspiracy and * * * were limited to * * * selling * * * to persons designated or authorized * * * all * * * in pursuance of the conspiracy." Further, that the contract, on which the Westinghouse Corporation sued in the state court, appointed the plaintiffs its "agents" to sell lamps, consigned to it at prescribed prices and on prescribed terms (though they were to acquire no title to them), to account to the Corporation for the prices received, less commissions, to keep books of account and render periodical reports "on forms provided by Westinghouse" and to remit the net proceeds of sales each month.

We think that the state court had undoubted jurisdiction, notwithstanding § 15 of Title 15, U.S.C.A., to decide the merits of the first defence, although it involved exactly the same claim as that pleaded in the first count of the action at bar. The extent to which conspiracies under the Anti-Trust Act invalidated transactions of the conspirators with third persons apparently arose for the first time in Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 550-552, 22 S.Ct. 431, 46 L.Ed. 679, where the buyer pleaded such a defence to an action for the price of goods, and the Court unanimously overruled it. Soon thereafter, however, in Continental Wall Paper Company v. Louis Voight & Sons Co., 212 U.S. 227, 29 S.Ct. 280, 53 L.Ed. 486, it held by a five to four vote what the minority thought was the exact opposite and what with deference it is indeed hard to distinguish. Next came D. R. Wilder Manufacturing Co. v. Corn Products Refining Co., 236 U.S. 165, 35 S.Ct. 398, 59 L.Ed. 520, where the seller was allowed to recover for goods sold, as in Connolly v. Union Sewer Pipe Co., supra. The opinion, 236 U.S. at page 177, 35 S.Ct. at page 402, gave as an explanation of Continental Wall Paper Company v. Louis Voight & Sons, supra, that the following "elements of illegality" had been there "inhering" in the contract of sale: "(a) the relations of the contracting parties to the goods sold, (b) the want of real ownership in the...