Radiant Burners, Inc. v. American Gas Association, No. 13960.

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: HASTINGS, , and DUFFY, SCHNACKENBERG, KNOCH, CASTLE, KILEY and SWYGERT, Circuit
• Citation: 320 F.2d 314
• Parties: RADIANT BURNERS, INC., an Illinois corporation, Plaintiff-Appellee, v. AMERICAN GAS ASSOCIATION, Peoples Gas Light and Coke Company, et al., Defendants-Appellants.
• Decision Date: 28 June 1963
• Docket Number: No. 13960.

320 F.2d 314 (1963)

RADIANT BURNERS, INC., an Illinois corporation, Plaintiff-Appellee,
v.
AMERICAN GAS ASSOCIATION, Peoples Gas Light and Coke Company, et al., Defendants-Appellants.

No. 13960.

United States Court of Appeals Seventh Circuit.

June 28, 1963.

320 F.2d 315

H. Templeton Brown, Chicago, Ill., Horace R. Lamb, New York City, Miles G. Seeley, Robert L. Stern, Patrick W. O'Brien, Chicago, Ill., Mayer, Friedlich, Spiess, Tierney, Brown & Platt, Chicago, Ill., LeBoeuf, Lamb & Leiby, New York City, of counsel, for American Gas Ass'n.

Frank F. Fowle, Chicago, Ill., Aloysius F. Power, Daniel Boone, Detroit, Mich., Herbert S. Wander, Chicago, Ill., Pope, Ballard, Uriell, Kennedy, Shepard & Fowle, Chicago, Ill., of counsel, for Delco Appliance Division of General Motors Corporation.

Justin A. Stanley, Robert F. Hanley, A. Daniel Feldman, Chicago, Ill., Isham, Lincoln & Beale, Chicago, Ill., of counsel, for Northern Illinois Gas Co., Marvin Chandler and E. D. Sheehan.

Clarence H. Ross, Roland D. Whitman, William J. Winger, Bruce J. McWhirter, Chicago, Ill., Ross, McGowan, Hardies & O'Keefe, Chicago, Ill., of counsel, for Peoples Gas, Light & Coke Co., Natural Gas Pipeline of America, Texas-Illinois Natural Gas Co., and Eskil I. Bjork, Remick McDowell, Bernard H. Wittman and Daniel Collins.

James B. O'Shaughnessy, William T. Hart, Chicago, Ill., Dallstream, Schiff, Hardin, Waite & Dorschel, Chicago, Ill., of counsel, for North Shore Gas Co. and Roy E. Jones.

Edward H. Hickey, James B. Moran, Chicago, Ill., Bell, Boyd, Lloyd, Haddad & Burns, Chicago, Ill., of counsel, for General Electric Co.

Thomas A. Reynolds, Edward L. Foote, Chicago, Ill., Winston, Strawn, Smith & Patterson, Chicago, Ill., of counsel, for Heating & Air-Conditioning Division of Stewart-Warner Corporation.

Robert C. Keck, James G. Hiering, Val A. Weber, Jr., Chicago, Ill., MacLeish, Spray, Price & Underwood, Chicago, Ill., of counsel, for Bryant Mfg. Co., Division of Carrier Corporation.

Sidney Neuman, Gregory B. Beggs, Chicago, Ill., Pendleton, Neuman, Seibold & Williams, Chicago, Ill., of counsel, for Janitrol Heating & Air-Conditioning, a Division of Midland-Ross Corporation.

Brainerd Chapman, Chicago, Ill., Gallop, Climenko & Gould, Pritchard, Chapman, Pennington, Montgomery & Sloan, Chicago, Ill., of counsel, for Mueller Climatrol Division of Worthington Corporation.

James J. Gaughan, John L. Spalding, Chicago, Ill., for Autogas Co.

Irving W. Zirbel, Milwaukee, Wis., Porter, Quale, Porter & Zirbel, Milwaukee, Wis., Karl Williams, Rockford, Ill., of counsel, for Permaglass Division of A. O. Smith Corporation.

Lee A. Freeman, William J. Friedman, Victor Neumark, Richard F. Levy, Chicago, Ill., Edmund M. Morgan, Vanderbilt University Law School, Nashville, Tenn., Philip B. Kurland, Chicago, Ill., of counsel, for Radiant Burners, Inc.

Tom Arnold, Paul E. Harris, Houston, Tex., Arnold, Roylance & Harris, Houston, Tex., of counsel, for American Patent Law Ass'n.

Max Swiren, Chicago, Ill., amicus curiæ.

Bernard H. Sokol, Leo Arnstein, Chicago, Ill., for Chicago Bar Ass'n.

Peter Fitzpatrick, C. Malcolm Moss, Henry L. Pitts, Chicago, Ill., for Illinois State Bar Ass'n.

Albert E. Jenner, Jr., Philip W. Tone, Chicago, Ill., Sylvester C. Smith, Jr., Newark, N. J., President, American Bar Ass'n, William Poole, Wilmington, Del., Member, Board of Governors, American Bar Ass'n, of counsel, for American Bar Ass'n.

Before HASTINGS, Chief Judge, and DUFFY, SCHNACKENBERG, KNOCH,

320 F.2d 316

CASTLE, KILEY and SWYGERT, Circuit Judges

HASTINGS, Chief Judge.

Radiant Burners, Inc., commenced this action on July 9, 1957 in the United States District Court for the Northern District of Illinois. Plaintiff is a manufacturer of conversion gas burners and gas furnaces.

Plaintiff charged defendants with conspiracy and combination in violation of Section 1 of the Sherman Act, 15 U.S. C.A. § 1, for the purpose of controlling the market and foreclosing plaintiff from competition. It sought recovery of treble damages and injunctive relief.

On March 11, 1959, on motion of defendants, the district court, Honorable Philip L. Sullivan presiding, dismissed plaintiff's second amended complaint for failure to state a cause of action. Plaintiff appealed. On December 3, 1959, we affirmed the judgment of dismissal. Radiant Burners, Inc. v. Peoples Gas, Light & Coke Co., 7 Cir., 273 F.2d 196.

Subsequently, the Supreme Court granted plaintiff's petition for certiorari. On January 16, 1961, the Supreme Court reversed the decision of this court and remanded the cause to the district court for further proceedings. Radiant Burners, Inc. v. Peoples Gas Co., 364 U.S. 656, 81 S.Ct. 365, 5 L.Ed.2d 358.

Reference is made to the prior decisions of the Supreme Court and this court for a full statement of the nature of the cause of action and the issues on the merits of this case.

Upon remand, the cause was assigned to Honorable William J. Campbell, Chief Judge, who presided over the proceedings giving rise to the instant appeal.

Plaintiff filed a third amended complaint naming therein the present defendants in this action. The defendants now are American Gas Association (AGA), a membership corporation acting as a trade association for its members; three Chicago area utilities;¹ seven gas appliance manufacturers;² two pipeline companies;³ and seven individuals⁴ who are or have been officers or employees of the three utility defendants.

The three utilities, seven gas appliance manufacturers and two pipeline companies named as defendants are members of defendant AGA.

All defendants have filed answers denying the material allegations of the third amended complaint.

Commencing in the spring of 1961, all parties proceeded with discovery and have been participating in pretrial proceedings which are presently continuing. During the course of the discovery proceedings each party, pursuant to the direction of the district court, has made available to the opposing parties, upon request, unprivileged documents in its files.

During discovery a dispute arose between the parties concerning certain documents plaintiff wished to examine. Defendants claimed they were within the scope of the attorney-client privilege and not discoverable.

On April 27, 1962, this dispute was presented to the district court which resolved certain of the controversies, holding some of the documents to be within the privilege and others not. The court reserved its ruling on one group of documents which presented the question "with reference to officers or agents of a corporation and how far down the line

320 F.2d 317

of the chain of command it the attorney-client privilege extends." Subsequently, another document was added to the group to which the ruling had been reserved

The district court requested briefs on that issue and asked the parties to state their views on how the attorney-client privilege became applicable to corporations.

On August 3, 1962, the able district chief judge in an extended memorandum opinion, and admittedly without decisional precedent, stated that "* * * having after much study and consideration personally come to the point of questioning the application of the attorney-client privilege to a corporate client, I now suggest to the profession and adopt as the law of this case that a corporation is not entitled to make claim to the privilege * * *." Radiant Burners, Inc. v. American Gas Association, 207 F.Supp. 771, 773.

Subsequently, the district court permitted the filing of additional briefs by all parties "on the issue of a corporation's right to claim the attorney-client privilege." On October 11, 1962, Chief Judge Campbell, in a second extended memorandum opinion, reaffirmed his prior holding that the attorney-client privilege may not be claimed by a corporation and again ordered the documents in question delivered to plaintiff's attorney for inspection. Radiant Burners, Inc. v. American Gas Association, 209 F.Supp. 321.

The district court certified that his rulings of August 3 and October 11, 1962, involved "a controlling question of law as to which there is substantial ground for difference of opinion" for the purpose of permitting an interlocutory appeal pursuant to 28 U.S.C.A. § 1292(b) and urged that such appeal be granted. We granted defendants' application for leave to appeal under § 1292(b), supra.

The broad question for decision on this interlocutory appeal is whether the district court erred in holding that in a private antitrust action a corporation may not claim the attorney-client privilege to bar discovery of documents.

By leave of court, we permitted the filing of briefs as amici curiae by American Bar Association, Illinois State Bar Association, Chicago Bar Association and American Patent Law Association in support of the contentions of defendants-appellants and by Max Swiren in support of the contentions of plaintiff-appellee.

Because of widespread public interest and the importance to litigants generally in other pending litigation in the resolution of the question under consideration, the court, sua sponte, ordered this appeal heard by the court sitting en banc.

At the outset, it should be noted that this question was not raised by the parties but was brought into focus by the action of the district court itself. It appears from the record that in the initial stages of the proceedings relating to examination of documents by plaintiff's counsel, the right to claim the attorney-client privilege by the corporate defendants was not questioned by plaintiff or by the district court. The questions then presented to the court concerned the scope of the privilege.

In his opinion of August 3, 1962, Chief Judge Campbell stated with commendable frankness: "I myself and from their briefs all counsel herein, have taken for granted or presumed that a corporation is entitled to the privilege. Indeed, as previously noted herein I have granted it in...