State of Minnesota v. United States Steel Corporation
| Decision Date | 15 May 1969 |
| Docket Number | 3-68 Civ. 37,3-68 Civ. 34,4-68 Civ. 41,4-68 Civ. 36,4-68 Civ. 38,3-68 Civ. 39.,No. 4-68 Civ. 37,4-68 Civ. 37 |
| Citation | 299 F. Supp. 596 |
| Parties | The STATE OF MINNESOTA, The State of North Dakota, State of South Dakota, et al., State of Wisconsin, City of St. Paul, Independent School District #625 of the City of St. Paul, Minnesota, and Housing and Redevelopment Authority of the City of St. Paul, Minnesota, Plaintiffs, v. UNITED STATES STEEL CORPORATION, Paper, Calmenson & Co., St. Paul Foundry & Manufacturing Co. (now The Maxson Corporation), St. Paul Structural Steel Company, Crown Iron Works Company, The Hustad Company, Defendants. |
| Court | U.S. District Court — District of Minnesota |
Erickson, Popham, Haik & Schnobrich, by Bruce D. Willis, Minneapolis, Minn., Roger E. Montgomery, Special Asst. Atty. Gen., and Eric Miller, St. Paul, Minn., for plaintiff State of Minnesota.
Erickson, Popham, Haik & Schnobrich, by Bruce D. Willis, Minneapolis, Minn., Paul M. Sand, First Asst. Atty. Gen., Bismarck, N. D., and Robert A. Alphson, Special Asst. Atty. Gen., Grand Forks, N. D., for plaintiff State of North Dakota.
Erickson, Popham, Haik & Schnobrich, by Bruce D. Willis, Minneapolis, Minn., and David Gienapp, Pierre, S. D., for plaintiff State of South Dakota, and others.
George F. Sieker and Theodore L. Priebe, Asst. Attys. Gen., Madison, Wis., for plaintiff State of Wisconsin.
O'Connor, Green, Thomas, Walters & Kelly, by H. Robert Halper, Washington, D. C., for plaintiffs City of St. Paul, Independent School District #625 of the City of St. Paul, Minnesota, Housing and Redevelopment Authority of the City of St. Paul, Minnesota, The Housing and Redevelopment Authority in and for the City of Minneapolis, Minnesota; Lester E. McAuliffe, Asst. Staff Counsel, City of St. Paul, also appeared for the Housing and Redevelopment Authority of the City of St. Paul; Kenneth J. Fitzpatrick, Asst. Corp. Counsel, also appeared for the City of St. Paul.
Briggs & Morgan, by David W. Raudenbush, John R. Friedman, St. Paul, Minn., and D. B. King, Pittsburgh, Pa., for defendant United States Steel Corp.
Doherty, Rumble & Butler, by Frank Claybourne and Eugene M. Warlich, St. Paul, Minn., for defendant Paper, Calmenson & Co.
Moore, Costello & Hart, by Robert A. Albrecht, St. Paul, Minn., appeared for defendant St. Paul Foundry & Manufacturing (now The Maxson Corporation).
Fredrikson, Byron & Colborn, by Jerome B. Pederson, Minneapolis, Minn., for defendant St. Paul Structural Steel Co.
Oscar A. Brecke and J. Robert Nygren, Minneapolis, Minn., for defendant Crown Iron Works.
Warner, Ratelle, Hennessy, VanderVort & Stasel, by Frank J. Warner, Minneapolis, Minn., for defendant The Hustad Co.
These private antitrust actions are brought by four States and (originally) four other governmental agencies for treble damages under the Sherman and Clayton Acts against six structural steel fabricating companies. The complaint alleges that the six defendants conspired to fix prices within the States of Minnesota, Wisconsin, North Dakota and South Dakota in the structural steel fabricating industry and that the defendants allocated contracts and business among themselves. It is alleged generally that the defendants sold structural steel at unduly inflated and non-competitive prices to the plaintiffs, to governmental subdivisions of the four State plaintiffs and to various contractors who used structural steel on construction projects paid for by the various plaintiffs and claimants herein. Involved are some five to six thousand business transactions by the defendants between the years 1949 and 1964 or thereabouts. The suits are the aftermath of a criminal action brought by the United States on February 10, 1964 in which each of the defendants subsequently entered nolo contendere pleas.
Eight actions originally were commenced, most seeking to maintain a suit as a class action under Rule 23 of the Federal Rules of Civil Procedure.1 In State of Minnesota v. United States Steel Corp., 44 F.R.D. 559 (D.Minn. 1968), this court entered an order permitting the States and State agencies named therein to maintain their actions as class actions. The court also consolidated the various actions for purposes of pretrial matters, discovery, motions, and ultimately for trial. Since then numerous pretrial conferences have been held. The court has set a timetable for discovery and has ruled upon several objections to interrogatories.
The matter presently for decision relates to Interrogatory 6 of Defendants' Interrogatories to Plaintiffs—Set No. 1. Interrogatory 6 asks whether some other governmental entity paid claimants in whole or in part for the construction projects involved in these actions and inquires thereafter into the relationship between claimants and such entity, including the amount of payments and the documents relating thereto.2 Essentially defendants seek to know the amount of funds made available by grants-in-aid or loans from the United States to the States or other claimants for some portions of the various construction projects in which structural steel was used. The interrogatory would appear broad enough to include information as to the amount of money made available by the various States to their subdivisions who are claimants as members of a class.3 For purposes of this motion, discussion can be limited principally to Federal grants and funds, however.
Both sides concede that some Federal monies were made available to plaintiffs and claimants or some of them for highway construction, for public housing purposes, for construction of school or health care facilities, and for other construction projects. During the time period in question, some if not all of the States also made funds available to their governmental subdivisions for similar purposes.
It is the position of defendants that Interrogatory 6 is reasonably calculated to lead to the discovery of admissible evidence. Defendants desire to discover the extent to which the various claimants were reimbursed in whole or in part for project construction costs. Defendants contend that any damages ultimately recovered by plaintiffs must be proportionately reduced according to the amount of money reimbursed or paid to plaintiffs by the United States.4 The real issue for resolution is whether defendants may assert the so-called "passing-on" defense or something analogous thereto perhaps called the "reimbursement defense" in mitigation of damages.5
The plaintiffs state that Interrogatory 6 is irrelevant in that the facts sought by such interrogatory would not as a matter of law lead to the discovery of evidence relevant to this action. Plaintiffs state that the issue before the court is essentially a question of standing; that is, where should the court draw the line as to who is the proper party and thus has standing to sue in a situation such as presents itself in the case at bar. Excellent briefs have been filed on behalf of both sides and the court has heard oral argument on the subject.
For purposes of this motion only, the court necessarily must assume that the activities of defendants resulted in overcharges to defendants' customers, claimants herein, for structural steel and that claimants paid for some portion of the construction projects in which such structural steel was used with funds made available by grants-in-aid and loans from the United States or from one of the States.
The import of Interrogatory 6 is not necessarily to discover the infinite variety of the various Federal or State grants-in-aid or loan programs that are made available by the United States or a State for the benefit of state, county and municipal bodies. The interrogatory focuses rather on a specific dollar amount, i. e., the amount of reimbursement funds received. Defendants' purpose obviously is to limit the ultimate recovery by claimants, if any there be. The court believes that it is presented with a question of law and that resolution thereof is proper at this time.6 The legal issue involved is whether the dollar amount of reimbursement by the Federal or State government ultimately may be introduced into evidence so as to diminish any recovery on the part of plaintiffs or claimants. This legal issue cannot vary whether the answers to Interrogatory 6 show that the amount of reimbursement was 50% or 90% or some other percent of the total construction project costs, nor whether the payment was a grant or a loan. If defendants are not able to assert a "passing-on" or "reimbursement" defense in such a situation as is before the court as a matter of law, then the specific amounts of any payments made to the claimants herein or the conditions under which made by the Federal government or from which agency are immaterial. This is already a lengthy and complex case. The court feels that it is important in a case such as this to exercise some check on the scope of discovery so as to prevent the needless introduction of endless collateral matters.7 From a practical standpoint, a decision now may well materially hasten the ultimate disposition of this lawsuit.
The Clayton Act allows private antitrust actions to be brought for treble damages. The purpose of this section is both to compensate victims of illegal conduct and to aid the public enforcement of the antitrust laws. In Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 318, 85 S.Ct. 1473, 1477, 14 L.Ed.2d 405 (1965) the Supreme Court declared that "private antitrust litigation is one of the surest weapons for effective enforcement of the antitrust laws." See also, United States v. Borden Co., 347 U.S. 514, 74 S.Ct. 703, 98 L.Ed. 903 (1954). The enforcement factor adds important policy considerations which cannot be overlooked. Thus it has been observed that:
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