Maricopa County v. American Pipe and Construction Co.

• Decision Date: 01 August 1969
• Docket Number: Civ. A. No. 69-149 PHX.
• Citation: 303 F. Supp. 77
• Parties: MARICOPA COUNTY, a body politic, Plaintiff, v. AMERICAN PIPE AND CONSTRUCTION CO., American Concrete Pipe Co., Kaiser Steel Corporation, Smith-Scott, Inc., United Concrete Pipe Corporation, United States Steel Corporation, Martin-Marietta Corporation, United States Industries, Inc., Arizona Concrete Pipe Co., Six Points Lumber & Supply Co., dba O'Malley Gannaway Concrete Pipe Co., all corporations, Defendants.
• Court: U.S. District Court — District of Arizona

303 F. Supp. 77

MARICOPA COUNTY, a body politic, Plaintiff, v. AMERICAN PIPE AND CONSTRUCTION CO., American Concrete Pipe Co., Kaiser Steel Corporation, Smith-Scott, Inc., United Concrete Pipe Corporation, United States Steel Corporation, Martin-Marietta Corporation, United States Industries, Inc., Arizona Concrete Pipe Co., Six Points Lumber & Supply Co., dba O'Malley Gannaway Concrete Pipe Co., all corporations, Defendants.

Civ. A. No. 69-149 PHX.

United States District Court D. Arizona.

August 1, 1969.

COPYRIGHT MATERIAL OMITTED

Moise Berger, Maricopa County Atty., Phoenix, Ariz., for plaintiff; Albert Firestein, Ronald W. Meyer, Deputy County Attys.

George W. Jansen, Wayne M. Pitluck, James O. Sullivan, Sullivan, Jones & Mitchell, San Diego, Cal., Robert C. Hackett, Shimmel, Hill & Bishop, Phoenix, Ariz., for American Pipe and Construction Co. and American Concrete Pipe Co.

Gordon Johnson, Thelen, Marrin, Johnson & Bridges, San Francisco, Cal., for Kaiser Steel Corp.

John J. Hanson, Robert E. Cooper, Gibson, Dunn & Crutcher, Los Angeles, Cal., for Smith-Scott, Inc. and United Concrete Pipe Corp.

Jesse R. O'Malley, Musick, Peeler & Garrett, Los Angeles, Cal., for United States Steel Corp.

Gordon F. Hampton, Don T. Hibner, Pierce T. Selwood, Sheppard, Mullin, Richter & Hampton, Los Angeles, Cal., for Martin-Marietta Corp.

Oliver F. Green, Jr., Paul, Hastings, Janofsky & Walker, Los Angeles, Cal., for United States Industries, Inc.

R. E. Johnson, Johnson, Bebeau & Timbanard, Phoenix, Ariz., for Arizona Concrete Pipe Co.

Newman R. Porter, Evans, Kitchel & Jenckes, Phoenix, Ariz., for Six Points Lumber & Supply Co.

DECISION ON DEFENDANTS' MOTIONS TO DISMISS AND/OR FOR SUMMARY JUDGMENT

PENCE, District Judge.

The defendants above named have each and all filed motions to dismiss and/or for summary judgment against the plaintiff, maintaining that its Sherman 1 and 2 antitrust action is barred by the statute of limitations and laches. Some defendants have raised additional grounds, fully discussed hereafter. The chronological sequence of events preceding the filing of plaintiff's action on April 19, 1969, and its amended complaint on May 22, 1969 is therefore important.

CHRONOLOGY OF EVENTS

On March 10, 1964, the United States Grand Jury at Los Angeles returned five indictments against defendants American Pipe and Construction Co. (American), United Concrete Pipe Corporation (United), Kaiser Steel Corporation (Kaiser), United States Steel Corporation (U. S. Steel), United States Industries (USI), and Smith-Scott, Inc. (Smith-Scott), charging them (and certain of their officers) with combining and conspiring together in restraint of interstate trade in steel and concrete pipe, in violation of 15 U.S.C. § 1 (Sherman 1), in that they submitted collusive and rigged bids for the sale of such pipe, and allocated and divided business among themselves.¹ On June 19, 1964, pleas of nolo contendere were made by all defendants and judgments of guilt were entered.

On June 23, 1964 — four days later — the government filed civil actions in the United States District Court at Los Angeles against the same defendant corporations. In C.A. 64832, American and United were named defendants; in C.A. 64833, Kaiser and U. S. Steel were named defendants; in C.A. 64834, United, American, Kaiser and U. S. Steel were named defendants; in C.A. 64835, USI, Smith-Scott, U. S. Steel, American and United were named defendants; in C.A. 64836, U. S. Steel, Smith-Scott and USI were named defendants.² In these five government civil actions the United States predicated the complaints upon 31 U.S.C. §§ 231-233 (False Claims Act) and 15 U.S.C. § 15a (Clayton 4A). The complaints were based on the facts uncovered by the government in preparing its criminal indictments. On October 28, 1964, the government amended each of its five complaints by adding a new count under 15 U.S.C. § 4 seeking to restrain continuing violations by the defendants of Section 1 of the Sherman Act.

Some two years later, on December 8, 1967, with the consent of each defendant except American, a "Partial Final Judgment" was entered in each case, i. e., by December 8, 1967, all save American compromised and settled their cases with the United States. These "partial final judgments" enjoined each of the consenting defendants from engaging in enumerated violations of Sherman 1 for five years.

On May 24, 1968, a "Final Judgment" was entered against American — only — in each of the three government cases in which it had been named as a defendant. It is thus clear that although the judgments of December 8, 1967, were called "Partial Final Judgment", they were in fact final judgments as to all named defendants except American.

In 1961, a Clayton 7 divestiture action was brought by the Federal Trade Commission (FTC) against Martin-Marietta Corporation (Martin-Marietta), and on March 12, 1963, a consent decree was entered, ordering not only divestiture by Martin-Marietta of certain named concrete pipe and other plants within twenty-four months but also placing a ten-year restraint on Martin-Marietta against acquisition of similar plants.

On August 21, 1967, the cities of Phoenix, Mesa, Tucson, Tempe, Scottsdale and Flagstaff, and the towns of Goodyear and Showlow, all Arizona municipal corporations, filed a Sherman 1 and 2 violation complaint in the District of Arizona, similar to the one filed by the plaintiff herein, denominated a "class action", against American, American Concrete Pipe Co. (American Concrete),^2A Kaiser, Smith-Scott, United, USI and U. S. Steel. The State of Arizona, through its Attorney General, as a subsequent intervening party plaintiff in that action, thereafter on September 20, 1968 entered into a covenant not to sue with defendants U. S. Steel, Kaiser and USI. Due to settlement negotiations, this Arizona "class action" never moved beyond the basic initial proceedings, and no rulings were made by this court on the class action aspect of the case and no intervention was made by any possible member of the "class", except the State of Arizona. The plaintiff here, Maricopa County, never moved to intervene in that action.

On April 19, 1969, plaintiff herein filed its complaint against all of the defendants named in the heading of this case except Arizona Concrete Pipe Co. (Arizona Concrete) and Six Points Lumber & Supply Co. (O'Malley). On May 22, 1969, plaintiff filed its First Amended Complaint against the same defendants named in the original complaint and added Arizona Concrete^2B and O'Malley. The complaints charged all defendants with the same acts, as violating Sherman 1 and 2, as were delineated in both the government's criminal and civil actions.

DEFENDANTS URGE NINE THEORIES

All defendant maintain (1) that since there was at least a four-day hiatus between the termination of the criminal actions by the government and the filing of government civil actions which did not toll the statute, therefore the tolling period, under § 5(b), within which the plaintiff was privileged to file its suit, terminated on June 18, 1965, i. e., one year after the termination of the criminal actions; and (2) since the plaintiff alleged that defendants' illegal conspiracies terminated some time in 1962, ergo, the last date upon which plaintiff could have filed, to have any possible cause of action within the four-year statutory period of limitations under Clayton 4B (15 U.S.C. § 15b), would be not later than the end of 1966.³

All defendants further maintain (3) that there can be no tacking of successive tolling periods on to that invoked by the government's criminal actions, so that even though the government on October 28, 1964, amended its complaint to add an injunctive count which would normally invoke the tolling provisions of § 5(b), neither can the possible tolling aspects raised by the government's amended complaints be related back under F.R.Civ.P. 15(c) to June 24, 1964, when the government's non-tolling complaints were initially filed, nor can the amended complaints have any tolling effect whatsoever. To do so, defendants argue, would be to tack on successive tolling periods. All defendants, save American, Martin-Marietta and O'Malley, also urge (4) that since final judgments were entered in the government civil action against them on December 8, 1967, the tolling provisions of § 5(b) in any event, ended on December 8, 1968, as to them. Martin-Marietta and O'Malley urge (5) that since they were never named as defendants or co-conspirators in any government action, civil or criminal in the "pipe" cases, neither the criminal nor the civil government actions had any tolling effect upon any cause of action now alleged against them, and since the plaintiff alleges the conspiracy terminated some time in 1962, the last date upon which plaintiff could have brought the present action was not later than the end of 1966. Martin-Marietta also maintains (6) that (a) the FTC action had no tolling effect as to it, inasmuch as the Clayton 7 action before the FTC was not based in whole or in part on any matter complained of in plaintiff's complaint and § 5(b) did not apply; and (b) even if it did, any possible tolling terminated one year after the entry of the FTC order on March 12, 1963. O'Malley also urges (7) that not only was it never an alleged co-conspirator or defendant in any government action but that also it had never been namd a defendant in any end-user complaint filed in Arizona or anywhere else, therefore the tolling provisions of § 5(b) had no application to it.

U. S. Steel, Kaiser and USI also maintain (8) that inasmuch as Maricopa County is a political subdivision of the State of Arizona, and the State, by its Attorney General, entered into a Covenant Not To Sue with them on September 20, 1968, the plaintiff, as such a political subdivision, is bound by that covenant and estopped to bring this present suit.

All parties maintain (9) that the doctrine...