Noerr Motor Freight v. Eastern Railroad Pres. Conf.

• Decision Date: 10 October 1957
• Docket Number: Civ. A. No. 14715.
• Parties: NOERR MOTOR FREIGHT, Inc., et al., Plaintiffs, D. F. Bast, et al., Intervening Plaintiffs, v. EASTERN RAILROAD PRESIDENTS CONFERENCE et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

155 F. Supp. 768

NOERR MOTOR FREIGHT, Inc., et al., Plaintiffs, D. F. Bast, et al., Intervening Plaintiffs, v. EASTERN RAILROAD PRESIDENTS CONFERENCE et al., Defendants.

Civ. A. No. 14715.

United States District Court E. D. Pennsylvania.

October 10, 1957.

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Dilworth, Paxson, Kalish & Green, Philadelphia, Pa., for plaintiffs.

Montgomery, McCracken, Walker & Rhoads, Philadelphia, Pa., for defendant Eastern R. R. Presidents Conference.

Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa., Hughes, Hubbard, Blair & Reed, New York City, for defendant Carl Byoir & Associates, Inc.

Barnes, Dechert, Price, Myers & Rhoads, Philadelphia, Pa., for defendants Pennsylvania R. Co., M. W. Clement and Walter S. Franklin.

Harold B. Bornemann, Philadelphia, Pa., for defendant Lehigh & New England R. Co.

Dennis P. Donovan, New York City, for defendant Canadian National Rys.

Drinker, Biddle & Reath, Philadelphia, Pa., for defendants, Central R. Co. of New Jersey, Central R. Co. of Pennsylvania, Norfolk & W. Ry. Co. and Western Maryland Railway.

Carl E. Glock, Pittsburgh, Pa., and James B. Anderson, Philadelphia, Pa., for defendants Fred W. Okie and Union R. Co.

Guckes, Shrader & Burtt, Philadelphia, Pa., for defendant Baltimore & O. R. Co.

Morgan, Lewis & Bockius, Philadelphia, Pa., for defendants Chesapeake & Ohio Railway Co., Delaware, L. & W. R. Co., Erie R. Co., Lehigh & H. R. Ry. Co., New York, C. & St. L. R. Co., Reading Co., R. W. Brown and Joseph A. Fisher.

Daniel Mungall, Jr., Philadelphia, Pa., Stradley, Ronon, Stevens & Young, Philadelphia, Pa., for defendants Boston & M. R. R., Canadian Pac. Ry. Co., Delaware & H. R. Corp., Maine Cent. R. Co. and New York, N. H. & H. R. Co.

Myers, McVeigh, Mansfield & O'Brien, Philadelphia, Pa., for defendant New York Cent. Railroad Co.

T. W. Pomeroy, Jr., Pittsburgh, Pa., Paul Maloney, Philadelphia, Pa., for defendants Pittsburgh & W. Va. Ry. Co. and Charles J. Graham.

Saul, Ewing, Remick & Saul, Philadelphia, Pa., for defendant Lehigh Valley R. Co.

White, Williams & Scott, Philadelphia, Pa., for defendants New York, Ontario & W. Ry. and Lewis D. Freeman.

CLARY, District Judge.

The present action involves a suit for an injunction and treble damages under the Sherman and Clayton Anti-Trust Acts, Sections 1 and 2 of the Act of July 2, 1890, 26 Stat. 209, 15 U.S.C.A. § 1 et seq., and Section 4 of the Act of October 15, 1914, 38 Stat. 731, 15 U.S.C.A. § 15, by 41 interstate long-haul truckers and the Pennsylvania Motor Truck Association, hereinafter called "PMTA", against some 35 railroads operating in the northeastern part of the United States; the Eastern Railroad Presidents Conference, hereinafter referred to as the "Conference" or "ERPC", and Carl Byoir & Associates, Inc., a New York public relations firm, hereinafter called "Byoir". Opinions dealing with preliminary motions to dismiss, discovery matters, and a motion to file an amended answer and counterclaim are reported in D.C.E.D.Pa. 1953, 113 F.Supp. 737; D.C.E.D.Pa.1953, 14 F.R.D. 189, and D.C.E.D.Pa.1956, 19 F.R.D. 146.

The basic allegation in both the claim and the counterclaim is that the defendants on the one hand conspired to obtain a monopoly of and to drive the plaintiffs out of the business of long-haul freight transportation in the northeastern section of the United States by various and sundry means, which will be more fully discussed later in this opinion, and on the other hand the defendants claim that the plaintiffs themselves were engaged in an illegal conspiracy for the identical purpose to obtain a monopoly of the long-haul freight industry in the same part of the United States and to force the railroads out of that segment of the transportation business in the area.

The Parties

The individual plaintiffs in this case are each engaged in the trucking business, as stated above, and operate regularly through Pennsylvania in intercity and interstate long distance hauling. Nearly all of the plaintiffs are members of the plaintiff, Pennsylvania Motor Truck Association, which is a corporation chartered on April 24, 1928, in the Court of Common Pleas No. 4 of Philadelphia County, having its principal office at the 7th Floor, Telegraph Building, Harrisburg, Pennsylvania. PMTA has chapters in every county of Pennsylvania and its members are primarily operators of motor trucks who operate in or through Pennsylvania, including industries which operate their own trucks as well as those operating trucks for hire.

The first defendant, Eastern Railroad Presidents Conference ("Conference"), is an unincorporated association maintaining offices at 230 Park Avenue, New York 17, New York, and 143 Liberty Street, New York, New York. The membership of the Conference includes the presidents or trustees of approximately 35 railroads in 17 eastern states of the United States, operating north of the Potomac and east of the Ohio rivers. The presidents and trustees officially represent their respective railroads in the Conference, which is supported, maintained and utilized by said railroads. The Conference maintains a permanent functioning organization and a staff of paid personnel. It has regular meetings of its members and a paid executive director, presently one David I. Mackie. The Conference operates through a number of committees and subcommittees, including a subcommittee on public relations, described in detail later in the opinion, and also maintains a Bureau of Information at Grand Central Terminal, New York 17, New York. The respective railroads are regularly assessed for the cost of operating the Conference, assessments being prorated based on the size and income of the respective roads so that the Conference is in large measure supported by the big railroads, the end result being that the larger railroads contribute proportionately a much larger share for the Conference than do the smaller railroads.

The individual defendants who were originally sued were the presidents or past presidents of the several railroads, members of the Conference at some of the times covered by the complained of actions, or were key members of the Public Relations Subcommittee of the Conference.

The defendant railroads are all Class I railroads, most of which operate in Pennsylvania, and all are active members of the Conference.

The defendant Carl Byoir & Associates, Inc. is a New York corporation, engaged in the public relations business, with its principal office at 10 East 40th Street, New York City, New York.

The Contentions

Plaintiffs in their complaint, after identifying the parties, summarize the respective relations of each defendant in the transportation of passengers and freight in the northeastern section of the United States. The complaint then alleges that in May of 1949 the defendants embarked upon an illegal conspiracy in violation of the antitrust laws of the United States, the purpose and objective of the conspiracy being to eliminate the plaintiffs as well as others in the same industry as competitors to the railroads in the field of long-hauling of freight, and to carve out exclusive railroad monopolistic spheres of operation in the said industry to the end that the railroads would have a monopoly on freight hauling in interstate commerce. The complaint charges that ERPC appointed a Committee on Competitive Transportation (ER-TC), charged with carrying out the details of the conspiracy, and that that committee retained defendant Byoir as its public relations agent for the express purpose of effectuating the object of the conspiracy. Further, that Byoir in conjunction with the ERPC and the railroads, acting through their presidents and/or trustee, or subcommittee of the Committee on Competitive Transportation, embarked upon a campaign designed specifically to impede the operation of the trucker-plaintiffs in every possible way, and in pursuance thereof, among other things, vilified and defamed the plaintiffs by circulating to the public generally, to public officials, and to suppliers and customers of the plaintiffs, false and malicious reports of and concerning the plaintiffs in the conduct of their business of hauling freight; formed so-called "independent" citizens groups organized to circulate false and malicious propaganda attacking the plaintiffs, which propaganda was in fact the product of Byoir and its employees issued on behalf of the railroads but made to appear to emanate from independent sources; sought to secure the passage of legislation favorable to the railroads and injurious to the truckers through the instrumentalities of the so-called "independent organizations"; attempted to and actually prevented the passage of legislation in Pennsylvania favorable to the truckers (S.B. 615) by using and duping as well as bribing public officials and officials of independent organizations; all to the end that the defendants might bring about the destruction of the plaintiffs' business and the elimination of them as competitors. The complaint charged that the conspiracy continued from 1949 to the date of the institution of the suit on January 17, 1953; has resulted in disparaging the plaintiffs' business in the public mind; has created great public hostility to the plaintiffs; has interfered with the legitimate conduct of their business and the furtherance of their business, resulting in increased cost to shippers and consumers, particularly in areas not served by the railroads; has increased the expense of operation by the plaintiffs, and finally has caused loss of accounts and profits and prospective profits to the plaintiffs.

The defendants originally answered the complaint but did not counterclaim. In their original answers the defendants denied the existence of any conspiracy, alleged that the plaintiffs in competition with the railroads were enjoying enormous public subsidies in the matter of the free use of...