United States v. Aluminum Co. of America

• Decision Date: 15 November 1940
• Citation: 35 F. Supp. 820
• Parties: UNITED STATES v. ALUMINUM CO. OF AMERICA et al.
• Court: U.S. District Court — Southern District of New York

35 F. Supp. 820

UNITED STATES v. ALUMINUM CO. OF AMERICA et al.

District Court, S. D. New York.

November 15, 1940.

Walter L. Rice, Sp. Asst. to Atty. Gen. (Thurman Arnold, John C. Herberg, and F. Gwyn Harper, Jr., all of Washington, D. C., Norman A. Adler, of New York City, and James S. Kemper, Jr., Ralph Andresen, Creighton R. Coleman, and Gareth M. Neville, all of Washington, D. C., of counsel), for the United States.

Hughes, Richards, Hubbard & Ewing, of New York City, and Smith, Buchanan & Ingersoll, of Pittsburgh, Pa. (Charles E. Hughes, Jr., Leighton H. Surbeck, and William T. Gossett, all of New York City, and William Watson Smith, Frank B. Ingersoll, and Leon E. Hickman, all of Pittsburgh, Pa., of counsel), for Aluminum Co. of America and others.

Milbank, Tweed & Hope, of New York City (Morris Hadley, Timothy N. Pfeiffer, and Edgar P. Baker, all of New York City, of counsel), for Aluminium Limited and others.

Baldwin, Todd & Young, of New York City (Roger Sherman Baldwin and Walter W. K. Bennett, both of New York City, and A. L. Nash, of Manitowoc, Wis., of counsel), for Aluminum Goods Mfg. Co.

Hughes, Richards, Hubbard & Ewing, of New York City (Charles E. Hughes, Jr., Leighton H. Surbeck, and William T. Gossett, all of New York City, and John H. Watson, Jr., and M. B. & H. H. Johnson, all of Cleveland, Ohio, of counsel), for Aluminum Manufactures, Inc.

CAFFEY, District Judge.

One of the law questions presented has perplexed me. For that reason I have felt compelled to put considerable time on it.

I am not yet wholly confident that I am right in the conclusion I have reached. I am not in doubt as to what the law on the point should be, but my hesitation as to how I should hold has been due chiefly to the condition of the authorities. As I believe will be sufficiently brought out by the discussion which follows, the difficulties with which I have struggled are two: (1) Paucity of relevant court decisions. (2) With great deference, lack of sufficient clarity in most of those cited to enable one to make ready use of them as precedents for determining the particular question I must pass on.

At the trial rulings were reserved on Government motions to strike out 746 items of evidence. These are specified in four exhibits for identification, — 26 in Exhibit 1671, 28 in Exhibit 1681 and 692 in Exhibit 1799 (the items in 1799 consisting of 8 exhibits and 684 pieces of oral testimony). Alcoa moved to strike out one item, specified in Exhibit 1798 for identification. With respect to that also decision was reserved.

The evidence with which this memorandum will deal came in from Messrs. Lawrence Litchfield, Jr., and George C. Branner, witnesses for Alcoa. Their testimony related largely to bauxite deposits in Arkansas (owned or controlled by Alcoa and by others as of a common date and being of a certain standard). For the purpose of determining what is the controlling law it will be simpler to confine consideration to evidence concerning deposits in Arkansas. This is permissible because, in so far as pertinent here, in handling the entire 747 items, the same evidence rules can be applied to testimony about deposits wherever located.

It is agreed by both sides, and I am convinced, that the witnesses are thoroughly qualified experts on subjects relating to bauxite. There is, and there should be, no criticism of their capacity. Their testimony covers upwards of 1,900 pages of the minutes. The dispute is confined, however, to quite limited parts of it.

Moreover, it should be noted that we are not concerned solely with the sizes of deposits, irrespective of their grade or grades. On the contrary, the controversy is as to the amounts of ore of a single definite grade (which, for convenience, counsel have spoken of as aluminum grade). In the present state of the art, in order to be available commercially for making aluminum (that is, to be of aluminum grade), bauxite must contain not less than 55 per cent of alumina and not exceeding 7 per cent of silica. If not within those limits, the expense of production, if not prohibitive, at least would make use of it uneconomical. This memorandum will deal only with ore which, because it is of the standard stated, is fit for manufacturing aluminum as the industry is now conducted in the United States.

That the aid of experts is essential to the solution of the problem is manifest and is recognized by counsel. In Arkansas, and alike elsewhere throughout the world, a great part of the ore is found at varying distances below the surface of the earth. Until uncovered by digging or drilling or blasting, it is hidden from visual inspection. Save for occasional outcrops or for samples or veins which may be seen in the floor or walls of mines or samples which may be obtained by test pitting or by boring, the ore itself cannot be examined previous to extraction from underground. Its qualities are determinable only by trained and experienced persons. Its chemical composition is ascertainable only through tests by those skilled in measuring the percentage contents of alumina and silica, as well as in identifying and measuring other elements of the ore.

The questions raised by the Government motions are whether the assailed portions of what was said by or of documents prepared by, or prepared by others and used by, the experts named while on the stand are competent. The issues are whether such portions are inadmissible either because of being or relying on hearsay or because their admission would violate the best evidence rule.

In paragraph 43 of the bill it is alleged that Alcoa, through a wholly-owned subsidiary, owns or holds more than 90 per cent of the bauxite deposits in the United States commercially suitable for the production of aluminum. In its answer Alcoa denies this.

So far as I can discover, or has been called to my attention, the only testimony offered by the Government, as part of its case in chief, in support of its charge is that of Mr. Joseph E. Uihlein (minutes, pp. 5878-80, 6209). In substance, his statement was that Alcoa owned all the bauxite deposits in the United States. However, he furnished no support for his statement nor did he claim to be an expert nor did he mention any basis for his information. Accordingly, in connection with the instant problem we may properly ignore what he said.

Alcoa argues that the testimony of Mr. Uihlein was incompetent and that, for this reason, it became entitled to introduce incompetent testimony in rebuttal. Cf. Bradley v. Adams Express Co., 6 Cir., 89 F.2d 641, 642, and cases cited; 1 Wigmore on Evidence, 3rd Ed., sec. 15. This contention does not go to the merits, however, and I shall not pursue it. I prefer to base my holding on entirely different grounds.

I believe it would be impossible fairly to pass on the Government motions without scrutinizing everything in the record bearing on the 746 items to which they relate. While these roughly fall into classes, I think the differences in proof affecting them demand separate individual consideration of each.

As will appear from the minutes, much of what is objected to rests on personal observation of the witnesses or on evidence which indisputably is the best (sometimes called primary). Manifestly, items consisting of or supported by proof of that nature are unobjectionable. In so far, therefore, as that is true with respect to what is covered by individual items, the motions to strike them must fail. Disposition of them may be tedious, but will require only care in going over the record. With respect to them there is no legal difficulty. We need only to consider the facts.

There is a second class of items, however, the objections to which are claims that in their support no evidence or no sufficient evidence on personal knowledge or at first hand has been given and that, wholly or partly, they rest on hearsay or that their coming in would infringe the best evidence rule. In consequence, in order properly to apply the law to the motions in regard to the second class items, the controlling rules of evidence must be ascertained with precision.

Otherwise put, the task of the court is to decide two kinds of motions. The first group seeks elimination of evidence which, in the way above explained, mere examination of the record will demonstrate incontrovertibly is competent. The second group seeks elimination of opinion evidence which is charged to rest, wholly or partly, on hearsay or on secondary evidence (the terminology secondary evidence being sometimes herein employed to contradistinguish it from evidence which is best or primary).

For the retention of items of the first group manifestly it will be enough if, as a fact, there is support for them in the record without the use of hearsay or of secondary evidence. Only as to the second group is there occasion to apply the rules of evidence prescribing the extent, if any, to which expert testimony is admissible when based, wholly or partly, on what under the general law of evidence is hearsay or secondary. Only in connection with that group need we deal with law questions. It seems to me, therefore, that such questions in reference to that group had best be discussed before we go into the details of the 746 motions.

As has been pointed out, the two objections advanced in argument are (1) that some of the evidence is hearsay and (2) that some is secondary. To ascertain whether either objection is well founded different criterions must be employed. Hence the problems must be considered separately. Accordingly, we shall first take up the hearsay objection. When that has been disposed of, the best evidence rule objection will be dealt with.

Soon after Mr. Litchfield took the stand a dispute arose as to the exact terms of the rule under which hearsay is admissible or, as sometimes phrased, under which there is an exception to the hearsay rule. The disagreement has persisted ever since and there has been much...