Minnesota Mining and Manufacturing Co v. New Jersey Wood Finishing Co

• Decision Date: 24 May 1965
• Docket Number: No. 291,291
• Parties: MINNESOTA MINING AND MANUFACTURING CO., Petitioner, v. NEW JERSEY WOOD FINISHING CO
• Court: U.S. Supreme Court

381 U.S. 311

85 S.Ct. 1473

14 L.Ed.2d 405

MINNESOTA MINING AND MANUFACTURING CO., Petitioner,

v NEW JERSEY WOOD FINISHING CO.

No. 291.

Argued April 29, 1965.

Decided May 24, 1965.

[Syllabus from pages 311-312 intentionally omitted]

Sidney P. Howell, Jr., New York City, for petitioner.

Albert G. Besser, Newark, N.J., for respondent.

Mr. Justice CLARK delivered the opinion of the Court.

This private treble-damage antitrust action was brought by the New Jersey Wood Finishing Company against Minnesota Mining and Manufacturing Company and the Essex Wire Corporation.¹ Respondent's original complaint was filed on November 20, 1961.² It alleged violations of § 7 of the Clayton Act,³ a conspiracy to restrain commerce in electrical insulation products in violation of § 1 of the Sherman Act and an attempt to monoplize the same as prohibited by § 2.⁴ The substance of the complaint concerned the acquisition in 1956 of all the assets of Insulation and Wires, Inc., a subsidiary of Essex, by Minnesota Mining and an alleged conspiracy to restrain trade in electrical insulation products. The latter claimed that the suit was barred by the four-year limitation provision of the Clayton Act.⁵ However, New Jersey Wood asserted that the bar of the statute had been tolled by a proceeding filed in 1960 against Minnesota Mining by the Federal Trade Commission under § 7 of the Clayton Act. That action resulted in a consent order under which Minnesota Mining was directed to divest itself of the assets acquired. Section 5(b) of the Clayton Act⁶ pro- vides that a 'civil or criminal proceeding * * * instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws' suspends the running of the statute of limitations during the pendency thereof and for one year thereafter with respect to private actions arising under those laws and based on any matter complained of in the government suit. The questions here are whether proceedings by the Federal Trade Commission toll the running of the § 4B statute of limitations to the same extent as to judicial proceedings and, if they do, whether the claim of New Jersey Wood is based on 'any matter complained of' in the Commission action. The District Court denied Minnesota Mining's motion to dismiss, holding that the four-year statute had been tolled by § 5(b) and that this suit was timely filed. 216 F.Supp. 507. The Court of Appeals affirmed. 332 F.2d 346. We granted certiorari because of a conflict between circuits⁷ and the importance of the question in the administration of the Clayton Act. 379 U.S. 877, 85 S.Ct. 146, 13 L.Ed.2d 85.

I.

New Jersey Wood is engaged in the manufacture of electrical insulation materials, some of which it sells to independent distributors who, in turn, sell to wire and cable manufacturers and fabricators. Minnesota Mining is a difversified company, with one of its divisions producing electrical insulation materials. Essex is a substantial consumer of electrical insulation material. It owned Insulation Wires which distributes that type of material.

In August 1956 Minnesota Mining bought all the assets of Insulation Wires and in 1960 the Federal Trade Commission filed a proceeding against it under § 7 of the Clayton Act which resulted in a consent order directing the divestiture by Minnesota Mining of the assets so acquired. This order was dated August 24, 1961. The Commission charged that prior to 1953 Minnesota Mining was the leading manufacturer of electrical insulation tape; that through five transactions in the years 1952 through 1956 it had also brought under its control substantial shares of other major electrical product lines; and that its subsequent acquisition of two of the three largest distributors of these products might have the effect of actually or potentially lessening competition and tending to create a monopoly in various aspects of that commerce. One of the two distributors so acquired was Insulation Wires.

Thereafter, within a year, this suit was filed. We need not detail the allegations of the complaint. It is sufficient to say that the gist of it was that prior to August 1956 Insulation Wires was the primary distributor of New Jersey Wood products throughout the United States; that in August 1956 Minnesota Mining acquired all of the assets of Insulation Wires and during the next month notified New Jersey Wood that beginning in January 1957 Insulation Wires would no longer distribute its products. The complaint also charged Minnesota Mining and Essex with conspiring to restrain trade and commerce in the manufacture, sale and distribution of electrical insulation products beginning with the acquisition of Insulation Wires and continuing until the filing of this suit. There were numerous overt acts alleged as being in furtherance of the conspiracy, the first of which was that acquisition.

II.

At the outset it is necessary to examine § 5(a) of the Clayton Act⁸ and its relationship to § 5(b). The former makes a final judgment or decree in any civil or criminal proceeding brought by or on behalf of the United States prima facie evidence in subsequent private suits 'as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto.' Several distinctions between these sections are apparent and suggest that they are not wholly interdependent. First, the words 'final judgment or decree' are used in § 5(a) and are of crucial significance in its application. However, § 5(b) tolls the statute of limitations set out in § 4B from the time suit is instituted by the United States regardless of whether a final judgment or decree is ultimately entered. Its applicability in no way turns on the success of the Government in prosecuting its case. Moreover, under § 5(a) the judgment or decree may be used only as to matters respecting which it would operate as an estoppel between the parties. No such limitation ap- pears in the tolling provision. It applies to every private right of action based in whole or in part on 'any matter' complained of in the government suit.

When we turn from the express language of these two statutory provisions to the congressional policies underlying them, it becomes even more apparent that the applicability of § 5(a) to Federal Trade Commission actions should not control the question whether such proceedings toll the statute of limitations. We have discussed these policies at greater length below. At this juncture it is sufficient to say that in framing § 5(a) Congress focused on the narrow issue of the use by private parties of judgments or decrees as prima facie evidence. This was recognized in Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 71 S.Ct. 408, 95 L.Ed. 534 (1951), where we stated that the purpose of § 5(a) was 'to minimize the burdens of litigation for injured private suitors by making available to them all matters previously established by the Government in antitrust actions' and to permit them 'as large an advantage as the estoppel doctrine would afford had the Government brought suit.' Id., at 568, 71 S.Ct. at 413. As we shall show, however, its purpose in adopting § 5(b) was not so limited, for it was not then dealing with the delicate area in which a judgment secured in an action between two parties may be used by a third. Whatever ambiguities may exist in the legislative history of these provisions as to other questions, it is plain that in § 5(b) Congress meant to assist private litigants in utilizing any benefits they might cull from government antitrust actions. See S.Rep.No.619, 84th Cong., 1st Sess., 6, U.S.Code Cong. & Admin.News 1955, p. 2328. The distinction was emphasized in Union Carbide & Carbon Corp. v. Nisley, 10 Cir., 300 F.2d 561 (1962), where the court after noting the analysis of § 5(a) set out in Emich Motors Corp., supra, stated that:

'The corollary purpose of the tolling provisions of the second paragraph of Section 5 (now § 5(b)) is to vouchsafe the intended benefits of related government proceedings by suspending the running of the statute of limitations until the termination of the government proceedings, and allowing the private suitor one year thereafter in which to prepare and file his suit. The competency of a government judgment in a private suit is necessarily restricted to the requirements of due process. But the tolling of the statute during the pendency of the government litigation is not so limited.' Id., at 569.

In our view, therefore, the two sections are not necessarily coextensive; they are governed by different considerations as well as congressional policy objectives. This makes § 5(b) readily severable from § 5(a). Even if we assumed arguendo that § 5(a) is inapplicable to Commission proceedings—a question upon which we venture no opinion—that conclusion would be immaterial in our consideration of § 5(b) and § 4B. Congress has expressed its belief that private antitrust litigation is one of the surest weapons for effective enforcement of the antitrust laws. This construction will lend considerable impetus to that policy.

III.

Section 5, later §§ 5(a) and 5(b), was passed in response to the plea of President Wilson. In a speech to the Congress on January 20, 1914, he urged that a law be enacted which would permit victims of antitrust violations to have 'redress upon the facts and judgments proved and entered in suits by the Government' and that 'the statute of limitations * * * be suffered to run against such litigants only from the date of the conclusion of the Government's action.' 51 Cong.Rec. 1964. The broad aim of this enactment was to use 'private self-interest as a means of enforcement' of the antitrust laws. Bruce's Juices, Inc. v. American Can Co., 330 U.S. 743, 751, 67 S.Ct. 1015, 1019, 91 L.Ed. 1219 (1947). The 'entire provision (was) intended to help persons of small means who are injured in their property or business by combinations or corporations violating the...