UNITED BANANA COMPANY v. United Fruit Company

• Decision Date: 03 June 1959
• Docket Number: No. 7141.,7141.
• Court: U.S. District Court — District of Connecticut
• Parties: UNITED BANANA COMPANY, Inc., et al., Plaintiffs, v. UNITED FRUIT COMPANY et al., Defendants.

172 F. Supp. 580

UNITED BANANA COMPANY, Inc., et al., Plaintiffs, v. UNITED FRUIT COMPANY et al., Defendants.

No. 7141.

United States District Court D. Connecticut.

February 10, 1959.

Rehearing Denied June 3, 1959.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Robert E. Nickerson, Greenwich, Conn., Ernest Leff, New York City, for plaintiffs.

Frank E. Callahan, Wiggin & Dana, New Haven, Conn., for defendants.

ANDERSON, District Judge.

This is a suit by several Connecticut banana distributors against the United Fruit Company (hereinafter called United Fruit) and its subsidiary, the Fruit Dispatch Company (hereinafter called Fruit Dispatch). Count 1 of the complaint alleges violations of the Sherman Act, 15 U.S.C.A. § 1 et seq., and Counts 2 and 3 allege violations of the Robinson-Patman Act, 15 U.S.C.A. §§ 13-13b, 21a. The answer sets up, inter alia, the defenses of the Federal four year statute of limitations and the Connecticut one year statute of limitations with the Connecticut three year statute of limitations in the alternative. The defendants also especially plead in their answer a justification of their economic position by attributing it to their superior skill and to the operation of natural forces. The plaintiffs have moved to strike the defenses of the statutes of limitations as to the defendant United Fruit on the ground that they were tolled during the pendency of a criminal anti-trust action brought against United Fruit in a United States District Court in Louisiana, and to strike the justification or so-called "thrust upon" defense because that defense does not expressly allege that the defendants acquired their economic position solely by virtue of matters beyond their control. The plaintiffs have also moved for the production of certain documents.

Prior to the passage of Section 4B of the Clayton Act, 15 U.S.C.A. § 15b, there was no federal statute of limitations governing civil anti-trust suits, and state statutes were applied by the federal courts. Section 4B became effective on January 7, 1956, and this suit, brought March 4, 1958, is governed by its provisions. LaRouche v. United Shoe Machinery Corp., D.C.Mass.1958, 166 F. Supp. 633; Goodfriend v. Kansas City Star Co., D.C.W.D.Mo.1958, 158 F.Supp. 531; Cardinal Films Inc. v. Republic Pictures Corp., D.C.S.D.N.Y.1957, 148 F. Supp. 156. Therefore, the application of the federal statute limits claims against these defendants to those claims arising after March 4, 1954. However, Section 4B contains a provision that it is not to be construed to revive rights which had expired under state law prior to the effective date of its passage, and the defendants accordingly assert that all claims accruing before January 7, 1955, (i. e. one year before the effective date of the federal statute), should be barred. It is, of course true that if prior to January 7, 1956, the effective date of the federal statute, the Connecticut one year limitation applicable to suits for forfeitures on a penal statute applied to an anti-trust suit, January 7, 1955 would be the cut-off date. The plaintiffs, on the other hand, assert that it is not this one year statute but the Connecticut three year tort statute which applied. These sections of the 1949 Revision of the Connecticut General Statutes provide:

"Sec. 8325. Suit for forfeiture on penal statute limited to one year. No suit for any forfeiture upon any penal statute shall be brought but within one year next after the commission of the offense."

"Sec. 8316. Action founded upon a tort. No action founded upon a tort shall be brought but within three years from the date of the act or omission complained of."

The applicability of state limitations on penalty suits to anti-trust litigation has caused a great deal of difficulty to courts in the past. See Report of the Attorney General's National Committee to Study the Anti-Trust Laws, March 31, 1955, p. 381, n. 71; Note, 60 Yale L.J. 553 (1951). Prior to the enactment of Section 4B, limitation was, as above stated, a matter of local law. Chattanooga Foundry & Pipe Works v. Atlanta, 1906, 203 U.S. 390, 27 S.Ct. 65, 51 L.Ed. 241; Gordon v. Loew's, Inc., 3 Cir., 1957, 247 F.2d 451; Hoskins Coal & Dock Corp. v. Truax Traer Coal Co., 7 Cir., 1951, 191 F.2d 912. And for the purpose of determining what causes of action had expired under state limitations statutes on the effective date of the federal limitation law, i. e. January 7, 1956, the federal courts must direct their inquiry to state statutes, and to local interpretations of those statutes. Bauserman v. Blunt, 1893, 147 U.S. 647, 13 S.Ct. 466, 37 L.Ed. 316; Dibble v. Bellingham Bay Land Co., 1896, 163 U.S. 63, 16 S.Ct. 939, 41 L.Ed. 72; Hoskins Coal & Dock Corp. v. Truax Traer Coal Co., supra; Greene v. Lam Amusement Co., D.C.N.D.Ga.1956, 145 F.Supp. 346.

Connecticut courts have construed Section 8325 on numerous occasions. The leading case, Plumb v. Griffin, 1901, 74 Conn. 132, 50 A. 1, was an action to recover treble damages from a defendant who had cut timber on the plaintiff's land. Holding that the action was not governed by the one year statute, the court said in 74 Conn. at pages 134-135, 50 A. at page 2:

"The present suit is not barred by the one-year limitation unless section 1345, on which it is brought, is a penal statute, one that declares a forfeiture, and one that deals with an offense. Moreover it must be a forfeiture and an offense in the sense in which these terms are used in a penal statute. A brief examination shows that section 1345 is not a penal statute, within the meaning of section 8325. Penal statutes, strictly and properly, are those imposing punishment for an offense against the state. And the expression `penal statutes' does not ordinarily include statutes which give a private action against a wrongdoer. Bouv.Law.Dict. `The words "penal" and "penalty," in their strict and primary sense, denote a punishment, whether corporal or pecuniary, imposed and enforced by the state for a crime or offense against its laws.' * * * A statute which gives no more than a right of action to the party injured to recover increased damages is not a penal statute." (emphasis added.)

An action to recover double damages for forgery was early held to be not governed by the one year statute. Ross v. Bruce, 1803, 1 Day, Conn., 100. And most recently a suit for double damages for violation of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. was held not limited by Section 8325. Hitchcock v. Union & New Haven Trust Co., 1947, 134 Conn. 246, 56 A.2d 655. In the Hitchcock case, it is true, the court said it did not have to consider whether a "penalty" was involved, because it was bound by a United States Supreme Court determination that such recoveries were "liquidated damages". 134 Conn. at page 257, 56 A.2d 655. But in the Chattanooga Foundry case, the United States Supreme Court held that an anti-trust treble damage claim was not a "penalty" within the meaning of a federal statute placing a five year limitation on suits for penalties and forfeitures. 1906, 203 U.S. 390, 398, 27 S. Ct. 65, 51 L.Ed. 241.

The cases cited by the defendants are not persuasive. The only decisions holding an action to be for a forfeiture within the meaning of Sec. 8325 are Borough of Wallingford v. Hall, 1894, 64 Conn. 426, 30 A. 47; Atwood v. Lockwood, 1904, 76 Conn. 555, 57 A. 279, and Wells v. Cooper, 1888, 57 Conn. 52, 17 A. 281. The Wallingford case involved a forfeiture of $25 to the Borough itself; Atwood concerned a forfeiture of $20 to any one who sued a delinquent administrator; and Wells dealt with a forfeiture of $5 to any one who sued a non-filing mortgagee. In none of these cases was there any relation between any actual damages and the amount recovered. Indeed, in two of them, any one who sued might have recovered. This has long been considered a key distinction between penal and remedial statutes. See Sullivan v. Associated Billposters and Distributors, 2 Cir., 1925, 6 F.2d 1000, 1009, 42 A.L.R. 503, 515-516.

It must, therefore, be concluded that Connecticut courts would not hold this action to be one for a forfeiture within the meaning of Sec. 8325. Discussions of the meaning of the word "penalty" in decisions not involving the statute of limitations have been cited by both the plaintiffs and the defendants, but they are only peripherally relevant. Compare Swanson v. Boschen, 1956, 143 Conn. 159, 120 A.2d 546; Cristilly v. Warner, 1913, 87 Conn. 461, 468-469, 88 A. 711, 51 L.R.A.,N.S., 415 with Hallenbeck v. Getz, 1893, 63 Conn. 385, 28 A. 519 and Porpora v. New Haven, 1936, 122 Conn. 80, 96, 187 A. 668.

It is argued that the characterization of an action of this kind as penal or compensatory should be determined by reference to federal, rather than state law. A few courts adopting this theory have concluded that an anti-trust action is penal under federal authorities: see, e. g., Banana Distributors, Inc., v. United Fruit Co., D.C.S.D.N.Y.1957, 158 F. Supp. 160. But the majority of courts interpreting federal law have for the purpose of avoiding a short statute of limitations, found the cause of action to be compensatory. See Fulton v. Loew's Inc., D.C.Kan.1953, 114 F.Supp. 676; Electric Theater Co. v. Twentieth Century-Fox Film Corp., D.C.W.D.Mo.1953, 113 F.Supp. 937; Wolf Sales Co. v. Rudolph Wurlitzer Co., D.C.Colo.1952, 105 F.Supp. 506; Christensen v. Paramount Pictures, D.C.Utah 1950, 95 F.Supp. 446. It is the conclusion of this court, however, as above stated, that for this purpose reference must be made to state law and that the applicable Connecticut statute is the three year, rather than the one year limitation.

Still, this finding does not entitle the plaintiffs to go back beyond March 4, 1954; it means only that the rights of action between that date and January 7, 1955 had not been lost on January 7, 1956, the effective date of the federal statute. Section 4B's proviso that no dead...