Stadin v. Union Electric Company
| Decision Date | 26 December 1962 |
| Docket Number | No. 17104.,17104. |
| Citation | 309 F.2d 912 |
| Parties | Harry J. STADIN, Appellant, v. UNION ELECTRIC COMPANY et al., Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
COPYRIGHT MATERIAL OMITTED
J. Raymond Dyer, St. Louis, Mo., for appellant.
Alan C. Kohn, St. Louis, Mo., for appellees Union Electric, Missouri Power & Light Co. and Missouri Edison Co.; John A. Woodbridge, Coburn, Croft & Cook, Thomas L. Croft, Peter W. Herzog, Jr., St. Louis, Mo., on the brief.
Before SANBORN and BLACKMUN, Circuit Judges, and REGISTER, District Judge.
This is an appeal arising out of the district court's denials of Harry J. Stadin's motions to intervene as a party plaintiff in two civil antitrust cases in which Union Electric Company is an original plaintiff.1
Union is a utility engaged in the business of generating and furnishing electricity. The defendants Westinghouse Electric Corporation, General Electric Company and Sangamo Electric Company are electrical equipment manufacturers. Stadin, the applicant for intervention, is a minority shareholder of Union.
The progenitors of these cases are judgments of conviction entered in February 1961 against these defendants and others in federal criminal antitrust proceedings in the United States District Court for the Eastern District of Pennsylvania. The offenses there charged, and to which the defendants pleaded either guilty or nolo contendere, had to do with conspiracy and price rigging in the sale of electrical equipment.
On December 26, 1961, Union instituted the first of the two present actions. It is brought under § 4 of the Clayton Act, 15 U.S.C. § 15, for a claimed violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and is against Westinghouse and General Electric. By it Union seeks threefold damages allegedly resulting from overcharges in the sales of turbine-generators to Union by the respective defendants. On January 31, 1962, Union and Missouri Power & Light Company and Missouri Edison Company, which also are utilities engaged in the business of generating and furnishing electricity, instituted the second action. This is brought under the same sections of the Clayton and Sherman Acts and is against Westinghouse, General Electric and Sangamo for threefold damages allegedly resulting from overcharges in sales by the respective defendants to the plaintiffs and their predecessors of watt-hour and rate-of-demand meters.
Stadin's motions to intervene followed in February and March. His motion in the second case is directed only to Union's count in that action. Stadin rests each motion on the grounds that Union's representation of his interest is or may be inadequate and that he is or may be bound by a judgment in the action, within the meaning of Rule 24(a) (2),2 F.R. Cv.P., having to do with intervention of right, and that his claims and Union's have questions of law and fact in common, within the meaning of Rule 24(b) (2),3 having to do with permissive intervention.
As required by Rule 24(c), each of these motions is accompanied by a pleading. This is called an "Intervenor's Complaint". Each complaint incorporates by reference Union's own allegations. Each also contains certain allegations in common with Stadin's other complaint and additional allegations directed to the particular main action. The allegations are as follows:
a. Stadin owns 43 of Union's 11,402,622 common shares outstanding. There are also outstanding 533,595 voting preferred shares of Union.
b. In February 1961 Stadin submitted to Union's directors, for their action and for action by Union's shareholders at their annual meeting the following April, a proposed resolution4 that Union "take appropriate steps" against its electrical equipment suppliers who had been convicted in the federal criminal actions in Pennsylvania.
c. Union's directors refused to include this proposal among the proxy material sent to Union's shareholders for the annual meeting. The reason they assigned for this refusal was that the proposal was not a proper subject for action by the shareholders under Missouri law.
d. Stadin himself then submitted the proposed resolution at the April meeting. Members of Union's board of directors spoke out against it and they and management's proxy agents voted against it. The resolution was defeated by a share vote of 10,325,766 to 1,825.
e. Four days later Stadin advised Union's president that unless Union undertook to pursue its legal rights against the price-fixers Stadin himself would seek legal remedy, on behalf of the company and of those who voted with him, in a shareholder's derivative suit or suits.
f. Although Union, since December 1961, has filed Clayton Act suits against various defendants for damages sustained through price-fixing of electrical equipment in eight different categories, including the two involved in the main actions here, it has not yet brought suit for damages resulting from purchases of equipment in eleven other categories with respect to which the defendants were similarly indicted and convicted in the Pennsylvania federal court on pleas of guilty or nolo contendere.
It is then alleged that Union's directors, by opposing Stadin's resolution, voted against the bringing of suits against the defendants; that the later institution of suits for certain categories of equipment did not constitute a retraction of their refusal to bring suit for the other equipment categories; that the directors have condoned the sale to Union of this other equipment at rigged prices; that this was not in good faith and was a breach of trust; and that John A. Woodbridge, "Union's principal attorney in the main action", inadequately represents Stadin because he is one of the directors who "voted against bringing the main action", is "not on friendly terms with" Stadin, stands charged by Stadin with having made illegal profits in the purchase and sale of Union's stock rights in 1959, and has characterized that charge as malicious. Each complaint asserts on information and belief that Union sustained damages "running into the millions of dollars" because of the fixing of prices of electrical equipment not covered by the main actions.
The complaints conclude with prayers for judgment in favor of Union and against the defendants in amounts equal to threefold the damages sustained by Union in the sales to it of equipment in the categories other than those which Union's pending actions concern.
Union opposed Stadin's intervention by memorandum and three supporting affidavits. The latter are executed, respectively, by Union's executive vice-president; by Woodbridge, who is its vice-president and general counsel; and by one of Union's independent attorneys. These affidavits contain, among other things, statements that Union has 64,400 common shareholders and 7,000 preferred shareholders; that Union has been investigating purchases made by it from the suppliers against whom antitrust suits were instituted by the United States; that the indictments of the defendants related to twenty categories of equipment; that purchases in the categories not yet sued upon "involve literally thousands of items * * * and purchases from many corporations besides those named as defendants"; and that after the investigation has been completed Union's management, with advice of counsel, will decide whether suit should be brought as to the remaining categories. Woodbridge's affidavit also states that Stadin's proposed resolution had been submitted initially to the Securities and Exchange Commission which advised that "it would not take any action if the management should omit the proposal from the proxy statement"; that he is not on unfriendly terms with Stadin; and that their relationship is so remote that he cannot be described as either friendly or unfriendly.
Stadin thereafter also filed an affidavit. In it he states that he is an attorney; that at the 1961 meeting two shareholders expressed opposition to his resolution because bringing suit would be wasting money; that Union's president then said that suits would cut into research and developmental programs of suppliers and would be detrimental to the industry of which Union was a member; that the shareholders were not advised that the resolution was not a proper one for shareholder action under Missouri law; that he was not on friendly terms with Woodbridge; that "My feeling about him, not his about me, is what counts"; that he is not satisfied with Woodbridge; that Woodbridge represents his own interests and the interests of management and does not represent the interests of Union's shareholders; that in his opinion it would be more efficient and more effective if Union filed its suits by defendants rather than by items of equipment; that intervention would result in no confusion, complexity or delay but denial of intervention would; and that if intervention is granted he would allocate his claims among the existing suits so that there would be no duplication of claims being sued upon.
Stadin also testified at the hearing on the motions to intervene. His testimony there was simply that the recitals in his complaint and affidavit were true. No cross-examination was undertaken and there was no further testimony.
A second affidavit from Woodbridge was then filed. This incorporated those parts of the transcript of the 1961 shareholders' meeting which included the comments of the two shareholders and the responsive remarks of Union's president. Stadin then filed another affidavit asserting that the statements made at the meeting were not under oath and were hearsay.
It is in this state of the record that the appeal comes to us.
Stadin's argument here, as we read his briefs, is that the conditions for his intervention as a matter of right under Rule 24(a) (2) have been met and the denial of intervention is reversible error; that the conditions for his permissive intervention under ...
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