Russ Togs, Inc. v. Grinnell Corporation

• Decision Date: 11 May 1970
• Docket Number: 34439,34529,No. 639-642,34541.,Dockets 34427,639-642
• Citation: 426 F.2d 850
• Parties: RUSS TOGS, INC., et al., Plaintiffs-Appellees, v. GRINNELL CORPORATION et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

426 F.2d 850 (1970)

RUSS TOGS, INC., et al., Plaintiffs-Appellees, v. GRINNELL CORPORATION et al., Defendants-Appellants.

Nos. 639-642, Dockets 34427, 34439, 34529, 34541.

United States Court of Appeals, Second Circuit.

Argued March 26, 1970.

Decided May 11, 1970.

Denis McInerney, New York City (Cahill, Gordon, Sonnett, Reindel & Ohl, New York City, of counsel), for defendant-appellant Grinnell Corp.

MacDonald Flinn, New York City (White & Case, New York City, of counsel), for defendant-appellant American District Telegraph Co.

Kelly, Drye, Warren, Clark, Carr & Ellis, New York City, for defendant-appellant Holmes Electric Protective Co.

Olwine, Connelly, Chase, O'Donnell & Weyher, New York City, for defendant-appellant Automatic Fire Alarm Co.

Joel E. Hoffman, Washington, D. C., and David Berger, Philadelphia, Pa. (Wald, Harkrader, Nicholson & Ross, Washington, D. C., Weil, Gotshal & Manges, New York City, Cohen, Shapiro, Berger, Polisher & Cohen, Philadelphia, Pa., Friedman, Koven, Shapiro, Salzman, Koenigsberg, Specks & Homer, Chicago, Ill., Liebman, Eulau, Robinson & Perlman, New York City, Parker, Chapin & Flattau, New York City, Rubin, Wachtel, Baum & Levin, New York City, of counsel), for plaintiffs-appellees Russ Togs, Inc., and others.

Before LUMBARD, Chief Judge, and HAYS, Circuit Judge, and BLUMENFELD, District Judge.^*

HAYS, Circuit Judge:

These are appeals from an order of the United States District Court for the Southern District of New York denying appellants' motion for partial summary judgment in these sixty private anti-trust treble damage actions. Permission to appeal from the interlocutory order was granted by this court pursuant to 28 U.S.C. § 1292(b) (1964). The appeals were consolidated by stipulation of the parties.

Appellants American District Telegraph Company, Holmes Electric Protective Company and Automatic Fire Alarm Company are engaged in the business of providing "central station protective services" to customers at whose establishments are automatic fire and burglary alarm systems. The majority of the stock of each of these appellants was formerly held by appellant Grinnell Corporation.

Appellees base their private antitrust treble damage actions in whole or in part on a civil action brought by the United States against appellants in the United States District Court for the District of Rhode Island seeking injunctive relief for violations of the antitrust laws. The complaint in the government's action was filed on April 13, 1961. On November 27, 1964, the district court issued its findings of fact, conclusions of law and final decree holding that appellants had violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2 (1964). United States v. Grinnell Corp., 236 F.Supp. 244 (D.R.I. 1964). All parties appealed, the United States because it deemed the relief inadequate and the appellants herein on both the merits and the relief.

On June 13, 1966, the Supreme Court affirmed the judgment of the district court "except as to the decree" and remanded "for further hearings on the nature of the relief consistent with the views expressed herein." United States v. Grinnell Corp., 384 U.S. 563, 583, 86 S.Ct. 1698, 1710, 16 L.Ed.2d 778. No petition for rehearing having been filed, the Supreme Court's mandate issued as of course on July 8, 1966, and was filed in the district court on July 11, 1966. On July 11, 1967, the district court, having held evidentiary hearings on some of the issues left open on remand as to which the parties could reach no agreement, entered a final decree detailing the relief granted.

The sole issue presented on this appeal is when the government's civil enforcement action ceased to pend, with the result that private actions filed more than one year thereafter could not benefit from the suspension of the applicable statute of limitations provided by Section 5(b) of the Clayton Act, as amended, 15 U.S.C. § 16(b) (1964).

The applicable statute of limitations, 15 U.S.C. § 15b (1964) (Section 4B of the Clayton Act, as amended), provides:

"Any action to enforce any cause of action under sections 15 or 15a of this title shall be forever barred unless commenced within four years after the cause of action accrued."

This period may be tolled, however, by the operation of Section 5(b), which provides:

"Whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws * * * the running of the statute of limitations in respect of every private right of action arising under said laws and based in whole or in part on any matter complained of in said proceeding shall be suspended during the pendency thereof and for one year thereafter: Provided, however, That whenever the running of the statute of limitations in respect of a cause of action arising under section 15 of this title is suspended hereunder, any action to enforce such cause of action shall be forever barred unless commenced either within the period of suspension or within four years after the cause of action accrued."

Appellants contend that the government enforcement action ceased to pend on June 13, 1966, the date of the Supreme Court's decision. All 60 cases involved in this appeal were instituted more than one year after this date. Alternatively, appellants argue that the government action ceased to pend on July 11, 1967, the date of the district court's final decree, from which no appeal was taken. Four of the 60 cases were instituted more than one year after this date. Appellees, on the other hand, take the position that the government enforcement action continued to pend until September 9, 1967, the date when the time to appeal from the final decree expired. All 60 cases were filed less than one year after this date.¹

The district court held that the government enforcement action continued to pend until the termination of the entire controversy and that, therefore, Section 5(b) tolled the statute of limitations until one year "from the date when the appellate process was exhausted as to a final judgment." Stating that "exhaustion of appellate process includes the expiration of the time within which to take an appeal," the district court set September 9, 1968 as the date of expiration of the tolling period. The district court accordingly denied appellants' motion for partial summary judgment in the 60 private actions involved in this appeal, all of which were filed before this date.²

We affirm the decision of the district court.

II.

The basic inquiry in this case is "whether congressional purpose is effectuated" by holding that a government enforcement action continues to pend until the expiration of the time to appeal from the final decree resolving all issues of liability and relief. Burnett v. New York Central R.R. Co., 380 U.S. 424, 427, 85 S.Ct. 1050, 13 L.Ed.2d 941 (1965).

Appellants contend that the congressional purpose behind Section 5(b) is fully effectuated if a government enforcement action is held to cease to pend as soon as all issues of liability for violation of the antitrust laws have been conclusively and finally established in a judgment, even though further proceedings relating to relief may be necessary. They argue that drawing this distinction between liability and relief permits private plaintiffs to make full use of the benefits derived from a government enforcement action, and prevents needless prolongation of the time to file private claims.

Appellants point out that the 1955 amendments to Section 5 of the Clayton Act were inspired by a concern that some state statutes of limitations, applicable under preexisting law, provided unduly long periods of time for bringing suit. Congress' solution to this problem was to replace diverse state laws with a uniform federal rule requiring that private antitrust actions be brought within four years of accrual or within one year after a government enforcement action ceased to pend. See S. Rep. No. 619, 84th Cong., 1st Sess. (1955) in 1955 U.S.Code Cong. & Admin.News, pp. 2332-2333. However, the legislative history does not support the contention that Congress also intended to meet the problem of stale claims by giving to the word "pendency" the unnatural meaning appellants seek to ascribe to it. In describing the length of the period encompassed by the word "pendency," the Senate Report accompanying the 1955 amendments to the Clayton Act consistently refers to the "duration" of the government's antitrust suit; it states that a private action must be brought within one year "after the Government's case has been concluded" or, in another instance, within one year "after the Government suit has been terminated." S. Rep. No. 619, supra. (Emphasis added.) The choice of such words to describe the pendency of a government enforcement action hardly shows an intention to limit the "pendency" of that action to the liability phase only. A better interpretation is that the term "pendency" in Section 5(b) was meant to refer to all proceedings in the government action until its termination in a final decree disposing of all issues.

In urging that we adopt their liability-remedy distinction, appellants rely upon a line of decisions in private anti-trust suits, which grew out of government proceedings against the motion picture industry.³ See Baldwin v. Loew's, Inc., 312 F.2d 387, 391-392 (7th Cir. 1963); Grengs v. Twentieth Century Fox Film Corp., 232 F.2d 325, 332 (7th Cir.) (dictum), cert. denied, 352 U.S. 871, 77 S.Ct. 96, 1 L.Ed.2d 77 (1956); Skouras Theatres Corp. v. Radio-Keith-Orpheum Corp., 193 F.Supp. 401, 404 (S.D.N.Y.1961); Tague v. Balaban, 146 F.Supp. 356, 360 (N.D.Ill. 1956). Although the cases are readily distinguishable from the instant one in terms of the practical importance to private litigants of the issues of relief left open,⁴ these decisions lend some support to appellants' position that a government enforcement action ceases...