U.S. v. Motor Vehicle Mfrs. Ass'n of U.S., Inc.

• Decision Date: 23 April 1981
• Docket Number: No. 79-3565,79-3565
• Citation: 643 F.2d 644
• Parties: 1981-1 Trade Cases 63,981 UNITED STATES of America, Plaintiff-Appellant, v. MOTOR VEHICLE MANUFACTURERS ASSOCIATION OF the UNITED STATES, INC. et al., Defendant-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 644

643 F.2d 644

1981-1 Trade Cases 63,981

UNITED STATES of America, Plaintiff-Appellant, v. MOTOR VEHICLE MANUFACTURERS ASSOCIATION OF the UNITED STATES, INC. et al., Defendant-Appellees.

No. 79-3565.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 11, 1980.

Decided April 23, 1981.

Robert B. Nicholson, Washington, D.C., for plaintiff-appellant.

John H. Pickering, Washington, D.C., argued for defendants-appellees; James M. MacNee, III, Dearborn, Mich., Carl J. Shuck, Overton, Lyman & Prince, Los Angeles, Cal., Paul A. Heinen, Otis M. Smith, Detroit, Mich., Forest A. Hainline, Jr., Southfield, Mich., John H. Pickering, Wilmer, Cutler & Pickering, Washington, D.C., William H. Crabtree, Detroit, Mich., Marcus Mattson, Lawler, Felix, Hall, Los Angeles, Cal., on brief.

Appeal from the United States District Court for the Central District of California.

Before ANDERSON, ALARCON, and POOLE, Circuit Judges.

J. BLAINE ANDERSON, Circuit Judge:

The United States appeals from the denial of its motion to extend by ten years the effect of two provisions of a consent judgment entered by the district court on October 29, 1969. The court initially granted the government's motion to extend, but reversed itself after hearing the defendants' motion to reconsider. We reverse and remand for further findings.

I. BACKGROUND

In January 1969, the Antitrust Division of the Justice Department filed a complaint in federal district court naming the Automobile Manufacturers Association, Inc. (now the Motor Vehicle Manufacturers Association of the United States, Inc.), and its component members, General Motors Corporation, Ford Motor Company, Chrysler Corporation, and American Motors Corporation, as defendants. The complaint charged that the Association, its members, and various co-conspirators not named as defendants had engaged in a combination and conspiracy to restrain competition in the development, manufacture, and installation of motor vehicle air pollution control equipment, in violation of Section One of the Sherman Act, 15 U.S.C. § 1.

In order to understand the litigation in its present phase, it is necessary to grasp in detail the nature of the conspiracy which the government was alleging in 1969. According to the complaint, the defendants, at least as early as 1953, had engaged in a combination whose dual objects were the elimination of all competition in the research, development, manufacture, and installation of air pollution control equipment and the elimination of competition in the purchase of patents and patent rights from other parties covering air pollution control equipment. Among the specific acts in furtherance of the alleged conspiracy charged in the complaint were:

(a) a general agreement that all air pollution control equipment development would be undertaken on a noncompetitive basis;

(b) an agreement to seek joint appraisal of patents and patent rights submitted to any of the defendants by persons not parties to a cross-licensing agreement entered into by the defendants on July 1, 1955, and to require "most-favored-purchaser" treatment of all parties to the cross-licensing agreement if any one were licensed by a person not a party to that agreement;

(c) an agreement to install air pollution control equipment only upon a uniform date determined by agreement, and three subsequent agreements to delay the installation date; and

(d) an agreement to restrict publicity relating to research and development efforts concerning the motor vehicle air pollution problem.

In its prayer for relief, the government sought a declaration that the defendants had engaged in a combination and conspiracy in restraint of trade, a general injunction against the maintaining of that conspiracy, and specific injunctive relief against certain of the agreements alleged in the complaint, and an injunction requiring that the defendants issue to any applicant interested in developing motor vehicle air pollution technology royalty-free licenses under all patents owned, controlled or applied for to which the 1955 cross-licensing agreement had been applicable.

After rather extensive negotiations, the Association and its members reached a settlement with the United States which was memorialized in a consent judgment entered by the district court on October 29, 1969. The judgment granted essentially all of the relief which the government had sought, with minor modifications which have no bearing on the issues involved in this appeal. The judgment also contained two provisions which occupy our immediate attention. Paragraph IV(A)(2)(a) enjoined the defendants from entering into any agreement "to exchange restricted information." The term "restricted information" was defined elsewhere in the judgment to include "trade secrets, unpublished company policy, and other unpublished technical information" relating to pollution control devices. ¹ The second pertinent provision appeared in Paragraph IV(A)(2)(g) wherein the defendants were enjoined from filing with any governmental regulatory agency authorized to issue emission standards or regulations any jointly-authored statement regarding such standards or regulations. ² Under the terms of Paragraph IX of the judgment, both Paragraphs IV(A)(2)(a) and IV(A)(2)(g) were to expire ten years after the date of entry, provided that the government could "apply" to the district court for a continuation of either or both of the provisions not later than nine years after entry. The remainder of the provisions are permanently in force.

The preamble to the judgment contained a declaration to the effect that the judgment was taken without any adjudication of fact or law, and that the judgment was not to constitute evidence or an admission by any of the parties as to any issue.

On October 30, 1978, the government moved pursuant to Paragraph IX to continue both of the provisions. ³ In its memorandum in support of the motion, the government cited the alleged effectiveness of the provisions in assuring the promulgation of workable and effective air pollution control standards and the "healthy competitive climate" which the provisions had fostered as its reasons for seeking to extend them. The defendants opposed the motion on a variety of grounds, including an alleged infringement of their first amendment right to freedom of speech.

The district court initially filed a memorandum disposition in which it extended both IV(A)(2)(a) and IV(A)(2)(g) for a period of ten years. In that memorandum, the court ruled that the defendants need not consent to the extension, that the government need not prove an antitrust violation in order to obtain the extension, and that extension of the provisions would serve the basic purpose of the decree in fostering competition in the automobile pollution control device market. The court also held that the defendants had waived their first amendment rights by entering into the decree in 1969.

Ford Motor Company subsequently filed a motion to reconsider under F.R.Civ.P. 60(b), saying that conditions had materially changed and that it was no longer equitable that the provisions should have prospective effect. The other defendants later joined in Ford's motion.

On July 16, 1979 the district court entered a memorandum and order reversing its earlier decision and denying the government's motion for extension. The court agreed with the defendants' contentions that changed circumstances rendered extension both inequitable and inconsistent with the public interest. The court found that while the problem of air pollution may have been a predominant national concern in 1969, the energy crises and attendant problems such as increasing automobile fuel efficiency had since assumed greater importance in the eyes of both the public and the federal government. The court noted what it discerned as a trend toward the encouragement of cooperation among domestic auto manufacturers by the government. The Justice Department had recently approved a technical assistance agreement between General Motors and Chrysler whereby Chrysler was to receive two prototype emission control systems and passive belt devices, along with consulting engineers, and had earlier approved a similar agreement between General Motors and American Motors. Also noting the high cost of research and development in the fields of emission control and fuel efficiency, the court observed that a satisfactory solution to these problems would likely require the "combined efforts" of experts in each field. The court further found support for its view of changed conditions from President Carter's announcement of a "basic research initiative" among domestic automobile manufacturers, the ultimate goal of which is the development of an automobile powerplant which will deliver maximum gasoline mileage with minimal toxic emission. The court agreed with the defendants' argument that participation in the President's research initiative would necessarily involve the exchange of "restricted information forbidden by Paragraph IV(A)(2)(a). The court concluded with the following passage:

"In my view, the present environment is so entirely different from that existing in 1969 that an extension of the prohibitions of the consent decree to which the present motion relates would be inappropriate, counter-productive, and unjust both in terms of the purpose of the decree itself and the broader national interest. The government's motion therefore to extend for an additional ten-year period paragraphs IV(A)(2)(a) and IV(A)(2)(g) is hereby denied."

The government's appeal followed.

II. DISCUSSION

Clearly, we are being requested to render a decision which could have far-ranging implications for the solutions to some of our nation's most serious problems. For that reason alone we would be well advised to approach our disposition with an even greater abundance of caution than normal. However, we also find ourselves...