State of Illinois v. Sperry Rand Corporation, 64 C 1549.

• Decision Date: 13 January 1965
• Docket Number: No. 64 C 1549.,64 C 1549.
• Citation: 237 F. Supp. 520
• Parties: STATE OF ILLINOIS et al., Plaintiffs, v. SPERRY RAND CORPORATION et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

237 F. Supp. 520

STATE OF ILLINOIS et al., Plaintiffs, v. SPERRY RAND CORPORATION et al., Defendants.

No. 64 C 1549.

United States District Court N. D. Illinois, E. D.

January 13, 1965.

William G. Clark, Atty. Gen. of Illinois, Lee A. Freeman, Sp. Asst. Atty. Gen., Chicago, Ill., for plaintiffs.

Richard K. Decker, Lord, Bissell & Brook, Chicago, Ill., Daniel Margolis and Donald Green, Bergson & Borkland, Washington, D. C., for defendant Sperry Rand Corp.

Harold W. Norman and Ralph Miller, Norman, Engelhardt, Zimmerman, Franke & Lauritzen, Chicago, Ill., Wayne Stichter, Eastman, Stichter, Smith & Bergman, Toledo, Ohio, for Globe-Wernicke, Inc.

Edward H. Hatton and Howard R. Barron, Raymond, Mayer, Jenner & Block, Chicago, Ill., for Hamilton Mfg. Co.

Theodore A. Groenke and Frank M. Covey, Jr., McDermott, Will & Emery, Chicago, Ill., William P. Stewart, Buffalo, N. Y., for Art-Metal, Inc.

Edward W. Rothe, Hopkins, Sutter, Owen, Mulroy, Wentz & Davis, Chicago, Ill., for W. R. Ames Co.

Robert F. Hanley and Richard E. Powell, Isham, Lincoln & Beale, Chicago, Ill., for Estey Corp.

Max E. Wildman and Stewart S. Dixon, Kirkland, Ellis, Hodson, Chaffetz & Masters, Chicago, Ill., for Virginia Metal Products, Inc.

WILL, District Judge.

The several defendants in this action have moved to strike all or part of certain paragraphs of a complaint wherein the State of Illinois and several of its agencies and public institutions seek treble damages for alleged violations by the defendant manufacturers of metal library shelving of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and sections 1, 4, 5, 12 and 16 of the Clayton Act, 15 U.S.C. §§ 12, 15, 16, 22 and 26.

1. Paragraph 14 of the complaint which defendants move to strike in its entirety recites facts regarding a criminal action brought in this court against all the defendants in the instant case, United States v. Sperry Rand Corp., et al., 63 CR 352 (N.D.Ill.1963). Included in the paragraph is a quotation from a petition filed in that case by the defendants seeking to withdraw their pleas of not guilty, originally entered at the time of arraignment, and to substitute therefor pleas of nolo contendere. The paragraph continues with excerpts from the record in the criminal case reflecting the Court's agreement to accept a plea of nolo contendere only if coupled with the defendants' consents to the entry of findings of guilty. In addition, the paragraph includes language from the judgment entered in the case. Defendants move to strike paragraph 14 and references to the criminal action in paragraphs 16 and 17, stating that the judgments in the criminal action were entered upon the defendants' pleas of nolo contendere, that these judgments therefore cannot be used as prima facie evidence under section 5(a) of the Clayton Act, and that references to the prior criminal action and the judgments therein are improper and prejudicial.

2. Paragraph 15, which defendants also seek to have stricken in its entirety, relates to a civil action instituted by the United States against four of the defendants, Sperry Rand, Art Metal, GlobeWernicke and Estey, seeking a permanent injunction to restrain these defendants from further violation of the aforementioned statutes. This action, United States v. Sperry Rand et al., 63 C 1100, filed the same day as the aforementioned criminal action, is still pending.

3. Defendants also seek to strike all or portions of paragraphs 16 and 17 both because of their reference to the civil and criminal cases mentioned above and because they raise a claim of fraudulent concealment of the alleged conspiracy for the purpose of avoiding the defense that the statute of limitations bars any of plaintiffs' claims accruing prior to June 20, 1959. In this connection defendants also ask that any allegations of the complaint with reference to damages for acts prior to June 20, 1959 be likewise stricken.

EFFECT OF THE JUDGMENT IN 63 CR 352

As stated during the colloquy in the criminal case, the Court conceives that by a plain nolo contendere plea a defendant neither admits nor denies the allegations of an indictment but waives any right to contest them. Accordingly, in the Court's judgment, such a plea neither rebuts the presumption of innocence guaranteed to a defendant in a criminal case nor does it relieve the government from its burden of establishing the guilt of the defendant beyond a reasonable doubt.

To protect a defendant in these basic rights the Court customarily has required, alternatively, (1) that subsequent to the entry of a plea of nolo contendere, the government make out a prima facie case thereby rebutting the presumption of innocence and satisfying its burden of proof, or (2) that the nolo plea be coupled with an express consent to the entry of a judgment of guilty, the defendant thereby, as on a plea of guilty, waiving his presumption of innocence and the government's burden of proving its case beyond a reasonable doubt. This procedure has been followed in all criminal cases where a nolo contendere plea has been accepted without regard to the particular crime involved.

The purpose of this procedure, as indicated, is simply to overcome what the Court perceives to be a legal and logical inconsistency between the plea of nolo contendere and the basic elements of our system of criminal justice. It is designed to serve a particular purpose in a criminal case.

The Court is fully aware of the numerous decisions holding that by a nola contendere plea a defendant "impliedly" consents to the entry of a finding or judgment of guilty in the particular case but the Court is reluctant, as a matter of principle, to imply waiver of rights so fundamental as the presumption of innocence or the burden of the government to establish guilt beyond a reasonable doubt particularly when these rights can so easily be fully respected through either of the alternative procedures in question.

We come then to the significance of a plea of nolo contendere coupled with an express consent to the entry of a finding or judgment of guilty. As the Court stated at the time of accepting such pleas in the related criminal case, they are, for the purposes of the criminal case, the equivalent of a guilty plea. The question remains — is such a plea likewise the equivalent of a guilty plea for the purposes of Section 5(a) of the Clayton Act, 15 U.S.C. § 16(a)? The Court thinks not.

In enacting Section 5(a) Congress clearly intended to exclude consent judgments entered before any testimony is taken. A judgment of guilty entered upon a plea of nolo contendere coupled with an express consent to the entry of a finding of guilty is no less a consent judgment than one entered upon a plain plea of nolo contendere with the implied consent which has historically been read into such a plea but which the Court requires to be made explicit.

That the alternative procedure, i. e., requiring the government to proceed to prove a prima facie case, would not have resulted in a consent judgment entered before any testimony was taken is not determinative. While the two procedures may be equivalent for purposes of satisfying the requirements of a criminal conviction, they obviously are different so far as Section 5(a) is concerned.

Since it has been definitively established that guilty findings or judgments entered upon plain pleas of nolo contendere are consent judgments under Section 5(a), Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co., 323 F.2d 412 (7 Cir. 1963), cert. den. 376 U.S. 939, 84 S.Ct. 794, 11 L.Ed.2d 659 (1964); City of Burbank v. General Electric Co., 329 F.2d 825 (9 Cir. 1964), it follows from the foregoing that similar judgments entered upon pleas of nolo contendere coupled with express consent to the entry of such findings or judgments are likewise. Accordingly, the defendants' motion to strike paragraph 14 of the complaint, and those portions of paragraphs 16 and 17 relating to the criminal case, will be granted.

PLEADING THE PENDING CIVIL CASE

Plaintiffs suggest that the references in their complaint to the civil case presently pending before Judge Marovitz of this court, 63 C 1100, provide background information relevant to the case at bar. As was said in International Shoe Machine Corp. v. United Shoe Machine Corp., 315 F.2d 449, 457 (1 Cir. 1963), the "cases recognize the principle that until there has been a terminus to the litigation, the judgment or decree is not final and may not be utilized as prima facie evidence."

The civil case before Judge Marovitz has not yet reached the trial stage. It is well established that for a judgment to be "final", as contemplated by section 5(a) of the Clayton Act, the time to appeal must have run or the judgment affirmed by a court of last resort. Twin Ports...