Moviecolor Limited v. Eastman Kodak Company

• Citation: 288 F.2d 80
• Decision Date: 10 March 1961
• Docket Number: Docket 26470.,No. 193,193
• Parties: MOVIECOLOR LIMITED, Plaintiff-Appellant, v. EASTMAN KODAK COMPANY, Technicolor, Inc. and Technicolor Motion Picture Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

288 F.2d 80 (1961)

MOVIECOLOR LIMITED, Plaintiff-Appellant, v. EASTMAN KODAK COMPANY, Technicolor, Inc. and Technicolor Motion Picture Corporation, Defendants-Appellees.

No. 193, Docket 26470.

United States Court of Appeals Second Circuit.

Argued January 19, 1961.

Decided March 10, 1961.

COPYRIGHT MATERIAL OMITTED

Eugene N. Sosnoff of Cooper, Ostrin & De Varco, New York City. (Herman E. Cooper, Eugene N. Sosnoff, and Ronald J. Brooks, New York City, on the brief), for plaintiff-appellant.

Roy W. McDonald, New York City (Donovan, Leisure, Newton & Irvine, New York City, Nixon, Hargrave, Devans & Dey, Rochester, N. Y., Roy W. McDonald, New York City, Arthur L. Stern, Rochester, N. Y., and Theodore S. Hope, New York City, on the brief), for defendant Eastman Kodak Co.

George S. Flint, Fulton, Walter & Duncombe, New York City, for defendants-appellees Technicolor, Inc. and Technicolor Motion Picture Corp.

Before MEDINA, FRIENDLY and SMITH, Circuit Judges.

FRIENDLY, Circuit Judge.

Plaintiff brought this action under § 4 of the Clayton Act, 15 U.S.C.A. § 15, in the Southern District of New York in 1959. It sought to recover treble damages for injuries from alleged violations of the antitrust laws by defendants in suppressing competition in the manufacture and sale of color still and motion pictures. Later we shall have to analyze the complaint in some detail; for the present it is enough that the complaint charged defendants with a series of illegal acts culminating in an agreement, dated October 22, 1931, by which plaintiff consented to the cancellation of a license from Société du Film en Couleurs Keller-Dorian (hereafter French Keller-Dorian) giving plaintiff the exclusive right to exploit the Keller-Dorian color process subject to certain rights of defendant Eastman Kodak Company and others under earlier agreements.

Since § 4 of the Clayton Act contained no period of limitations in 1931, as it now does by virtue of the Act of July 7, 1955, c. 283, § 1, 69 Stat. 282, 283, 15 U.S.C.A. § 15b, reference must be made to New York law to determine the applicable period, here the six years provided by New York Civil Practice Act, § 48, subd. 2, for an "action to recover upon a liability created by statute, except a penalty or forfeiture," Bertha Building Corp. v. National Theatres Corp., 2 Cir., 1959, 269 F.2d 785, 789, certiorari denied 1960, 361 U.S. 960, 80 S.Ct. 585, 4 L.Ed.2d 542. Plaintiff sought to avoid the time bar raised by defendant's motion for judgment on the pleadings, F.R.Civ.Proc. 12(c), 28 U.S. C.A., by invoking what it contended to be an applicable federal rule that a defendant guilty of certain types of conduct which, for present purposes, we will describe as concealment of the wrong, will not be allowed to claim that a period of limitations has begun to run while the concealment continues. To this appellees countered, and the District Judge held, contrary to Winkler-Koch Engineering Co. v. Universal Oil Products Co., D.C. S.D.N.Y.1951, 100 F.Supp. 15, that the federal concealment rule applies only when either Congress has specified its own period of limitation in creating a right as in Bailey v. Glover, 1875, 21 Wall. 342, 22 L.Ed. 636, or the action is to enforce a federally created right and is "in equity" as in Holmberg v. Armbrecht, 1946, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743, and that hence the instant case is governed by the law of New York, which has no similar doctrine with respect to concealment save as specifically provided in § 48, subd. 5 of the New York Civil Practice Act for actions "to procure a judgment on the ground of fraud," see Austrian v. Williams, 2 Cir., 1952, 198 F.2d 697, 700, citing Pollack v. Warner Bros. Pictures, Inc., 1st Dept. 1943, 266 App.Div. 118, 120, 41 N.Y.S. 2d 225, 226 and other cases; Varga v. Credit-Suisse, 1st Dept. 1958, 5 A.D.2d 289, 292, 171 N.Y.S.2d 674, 677, affirmed 1958, 5 N.Y.2d 865, 182 N.Y.S.2d 17. We hold that the federal rule as to the effect of concealment on the running of a period of limitation applies to an action for treble damages under the Clayton Act even when a state statute is used to measure the period; but we affirm on the ground that the complaint does not contain allegations sufficient to bring plaintiff within this federal rule. Although we could dispose of this appeal solely on the latter ground, we think it proper to deal also with the important question of law decided by the District Court, since the issue has been fully argued, the decisions in the Southern District are in conflict, and the problem is likely to recur.

I.

Bailey v. Glover, supra, held that in an action to enforce a federally created right to recover for fraud, a federally established period of limitation does not begin to run until the fraud is discovered, whether the action was in equity, as it there was, or at law. Although that principle might have been limited to cases where the action itself sounded in fraud, it has not so been confined; Holmberg v. Armbrecht, supra, applied it to an action to collect a statutory liability imposed on stockholders of joint stock land banks, 12 U.S.C.A. § 812, where the only "fraud" was concealment of the shareholders' identity, stating at page 397 of 327 U.S., at page 585 of 66 S.Ct., "This equitable doctrine is read into every federal statute of limitation."

It has also been long established that when Congress created a federal right but did not prescribe a period for its enforcement, Federal courts will borrow the period of limitation prescribed by the state where the court sits, McCluny v. Silliman, 1830, 3 Pet. 270, 7 L.Ed. 676; Campbell v. City of Haverhill, 1895, 155 U.S. 610, 15 S.Ct. 217, 39 L.Ed. 280; O'Sullivan v. Felix, 1914, 233 U.S. 318, 34 S.Ct. 596, 58 L.Ed. 980. The basis of this was that Congress could not have intended an unlimited period for enforcement as would otherwise exist in actions at law, and that, selection of a period of years not being the kind of thing judges do, federal judges should borrow the limitation statutes of the states where they sit. Similarly, federal courts followed state statutes determining whether absence or disability should suspend the running of a statute of limitations and, if so, for how long, and the state courts' interpretations of such statutes, not only in diversity actions, Bauserman v. Blunt, 1893, 147 U.S. 647, 13 S.Ct. 466, 37 L.Ed. 316, as Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, later required, but also in actions to enforce a federally created claim, Barney v. Oelrichs, 1891, 138 U.S. 529, 11 S.Ct. 414, 34 L.Ed. 1037. In dealing with federally created claims both federal and state law must sometimes be consulted to determine whether the borrowed period has run. Thus, when a state has established different periods of limitation for different types of action, a federal court enforcing a federally created claim looks first to federal law to determine the nature of the claim and then to state court interpretations of the statutory catalogue to see where the claim fits into the state scheme. McClaine v. Rankin, 1905, 197 U.S. 154, 25 S.Ct. 410, 49 L. Ed. 702; Bertha Building Corp. v. National Theatres Corp., supra, 269 F.2d at pages 788-789. See Chattanooga Foundry & Pipe Works v. City of Atlanta, 1906, 203 U.S. 390, 27 S.Ct. 65, 51 L. Ed. 241. Similarly, a federal court will follow state decisions as to how far a cause of action must be "complete" to have "accrued" under state limitation statutes but will look to federal law to determine what needs be done to advance a federally created right to the level so required, Rawlings v. Ray, 1941, 312 U.S. 96, 61 S.Ct. 473, 85 L.Ed. 605; Cope v. Anderson, 1947, 331 U.S. 461, 67 S.Ct. 1340, 91 L.Ed. 1602; it will look also to state decisions to determine where the cause of action accrued, Cope v. Anderson, supra. State statutes and decisions of the sort described have been thus borrowed not only in actions at law but also in many types of suits in equity to enforce federally created claims, to such extent as the state law was applied in equity by the state courts, see Russell v. Todd, 1940, 309 U.S. 280, 290-294, 60 S.Ct. 527, 84 L.Ed. 754.

In sharp contrast to all this, Holmberg v. Armbrecht, supra, refused to apply the New York doctrine that concealment would not suspend the running of the statute in an action not founded on fraud, where the suit in the federal court was to enforce a federal right and was "in equity" although, unlike Bailey v. Glover, there was no federally established period of limitation. The question before us is whether the principle of Holmberg v. Armbrecht applies also in an action "at law" to enforce a federal right. Neither the parties' research, nor our own, has disclosed any decision truly determinative of that issue either by the Supreme Court or by a Court of Appeals, decisions of the latter applying a doctrine of concealment so as to extend state statutory periods in actions "at law" to enforce federally created rights without federal limitation apparently being consistent with the law of the state where the court sat, American Tobacco Co. v. People's Tobacco Co., 5 Cir., 1913, 204 F. 58; Burnham Chemical Co. v. Borax Consolidated, Ltd., 9 Cir., 1948, 170 F.2d 569, certiorari denied 1949, 336 U.S. 924, 69 S.Ct. 655, 93 L.Ed. 1086, rehearing denied 1949, 336 U.S. 955, 69 S.Ct. 878, 93 L.Ed. 1109; Suckow Borax Mines Consolidated, Inc. v. Borax Consolidated, Ltd., 9 Cir., 1950, 185 F.2d 196, certiorari denied 1951, 340 U.S. 943, 71 S.Ct. 506, 95 L.Ed. 680, rehearing denied 1951, 341 U.S. 912, 71 S.Ct. 620, 95 L.Ed. 1349; Crummer Co. v. DuPont, 5 Cir., 1955. 223 F.2d 238; 5 Cir., 1958, 255 F.2d 425; Tobacco and Allied Stocks, Inc. v. Transamerica Corp., D.C.D.Del.1956, 143 F.Supp. 323, affirmed 3 Cir., 1957, 244 F.2d 902.

In the last analysis, decision of that issue requires an attempt to divine a purpose of Congress on a subject where no...