United States v. International Telephone & Tel. Corp.

• Decision Date: 06 September 1972
• Docket Number: Civ. No. 13320.
• Citation: 349 F. Supp. 22
• Court: U.S. District Court — District of Connecticut
• Parties: UNITED STATES of America v. INTERNATIONAL TELEPHONE & TELEGRAPH CORPORATION and the Hartford Fire Insurance Company.

349 F. Supp. 22

UNITED STATES of America v. INTERNATIONAL TELEPHONE & TELEGRAPH CORPORATION and the Hartford Fire Insurance Company.

Civ. No. 13320.

United States District Court, D. Connecticut.

September 6, 1972.

COPYRIGHT MATERIAL OMITTED

Raymond M. Carlson, William H. Rowan, Samuel Karp, Department of Justice, Antitrust Division, Washington, D. C., Stewart H. Jones, U. S. Atty., New Haven, Conn., for plaintiff.

Joseph P. Cooney, Cooney & Scully, Hartford, Conn., John H. Schafer, III, Henry P. Sailer, Covington & Burling, Washington, D. C., for defendants.

Bruce Mayor, Dwight Schweitzer, Hartford, Conn., for prospective intervenors.

MEMORANDUM OF DECISION

BLUMENFELD, District Judge.

On September 24, 1971, a final judgment was entered in this case with the consent of the parties. Now Ralph Nader and Reuben B. Robertson, III, hitherto amici curiae, have moved to intervene in the instant case for the limited purpose of moving the court to set that judgment aside on the ground that it was obtained by "fraud . . ., misrepresentation, or other misconduct of an adverse party." Fed.R.Civ.P. 60(b) (3).

I. Prior Proceedings

The prior proceedings in the instant case have been complex and extensive. Although the only judgment which the prospective intervenors seek to challenge is the one entered in the instant case, this case is one of three antitrust suits instituted by the government in 1969 against ITT seeking to undo or prevent mergers of ITT with other corporations.

The first of these suits, which was brought on April 28, 1969, in the district court for the Northern District of Illinois, attacked the recently consummated merger of ITT and the Canteen Corporation (Canteen) as violative of Section 7 of the Clayton Act, 15 U.S.C. § 18.¹ Subsequently, on August 1, 1969, the government filed two separate complaints in this court, charging respectively that the then proposed merger of the Grinnell Corporation (Grinnell) and with the Hartford Fire Insurance Company (Hartford) also violated Section 7.

Following extensive evidentiary hearings, the government's motions for preliminary injunctions enjoining the Hartford and Grinnell acquisitions were denied by Judge William H. Timbers (now Circuit Court of Appeals Judge) on the ground that the government had not shown a probability of success on the merits. United States v. International Telephone & Telegraph Corp., 306 F. Supp. 766 (D.Conn.1969). Thereafter, the Grinnell and Canteen cases were tried on the merits. In both, the claims of the government were decisively rejected. United States v. International Telephone & Telegraph Corp., 324 F. Supp. 19 (D.Conn.1970); United States v. International Telephone & Telegraph Corp., 1971 Trade Cases, para. 73,619 (N.D.Ill.1971).

On August 10, 1971, before trial of the Hartford case and when the government's appeal in the Grinnell case was pending, and its time to appeal from the judgment of the district court in the Canteen case had not yet expired, the parties presented to this court proposed consent judgments in Hartford and Grinnell and presented to the Illinois district court a proposed consent judgment in Canteen. The three judgments, as counsel for the government informed this court, were "negotiated jointly," "intertwined" and "interdependent." Transcript of Hearing of August 10, 1971, at 15. On September 24, 1971, following a hearing held on September 23, this court entered the consent judgments in Grinnell and Hartford. 1971 Trade Cases, para. 73,665-6 (D.Conn.1971). On the same day, the district court for the Northern District of Illinois entered the consent judgment in Canteen.

With respect to the judgments entered in this court, the court stated:

"(T)hey are carefully tailored to eliminate the aspects of the acquisition which the original complaints alleged to be illegal. Within the limits of the existing statutory law and judicial power, the provisions of the proposed decrees constitute a commendable effort toward safeguarding the public interest." United States v. International Telephone & Telegraph Corp., Civ.Nos. 13,319, 13,320, Order on Motion for Entry of Final Judgment (D. Conn., Sept. 24, 1971).

Epitomized in that conclusion was the court's analysis of the proposed decrees.²

The court, having satisfied itself as to the adequacy of the consent decree in the Hartford case did not inquire into the Justice Department's "motives" or reasons for negotiating a settlement and accepting the proposed decree. As the United States Supreme Court has stated in Sam Fox Publishing Co. v. United States, 366 U.S. 683, 689, 81 S.Ct. 1309, 1312-1313, 6 L.Ed.2d 604 (1961):

"sound policy would strongly lead . . . (the Court) to decline . . . (an) invitation to assess the wisdom of the Government's judgment in negotiating and accepting the . . . consent decree, at least in the absence of any claim of bad faith or malfeasance on the part of the Government in so acting."

See United States v. Automobile Mfgrs. Ass'n, supra, 307 F.Supp. at 620.

II. Motion to Intervene

To support their motion, the movants invoke Fed.R.Civ.P. 24(a) (2) which permits intervention by non-parties:

"when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties."

The movants do not claim to have a property interest in the Hartford-ITT merger;³ they do not seek damages. Rather, they claim to represent the "public interest;" they state that the "interests which applicants are asserting here are those of representatives of the public who desire to see that the antitrust laws are enforced." Concomitantly, the movants claim that, although the primary responsibility for representing the public interest lies with the Justice Department, acting on behalf of the United States, in this case the Justice Department has failed to adequately carry out its responsibility.

The movants rely heavily on the holding of the Supreme Court in Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 135, 87 S.Ct. 932, 17 L.Ed.2d 814 (1967), that the State of California had a sufficient interest in competition among suppliers to raise the question of whether the district court had fully complied with a previous mandate of the Supreme Court directing divestiture. See United States v. El Paso Natural Gas Co., 376 U.S. 651, 662, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964). Cascade is inapposite.

"It seems apparent from Cascade and other cases that the interest justifying intervention as of right in an antitrust suit brought by the United States must be substantial, must lie at the center of the controversy, and must be shown clearly, in the language of the Rule, to be less than `adequately represented' by the Department of Justice. This would appear to harmonize fairly the procedural aims of the Rule and the perhaps more fundamental principles governing the role of the Attorney General of the United States in representing the `public interest' in federal antitrust proceedings." United States v. CIBA Corp., supra, 50 F.R.D. at 513.

It is unnecessary to dwell on the insubstantiality of their interest, which is only what is inherent in their self-assumed role as "representatives of the public who desire to see that the antitrust laws are enforced." That does not amount to that "personal stake in the outcome of the controversy" essential to standing. Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). Even where it was alleged that first amendment rights were being violated by the government, the Supreme Court in Laird v. Tatum, 408 U.S. 1, 92 S. Ct. 2318, 33 L.Ed.2d 154 (1972), re-affirmed the rule of Ex parte Levitt, 302 U.S. 633, 58 S.Ct. 1, 82 L.Ed. 493 (1937), that "to entitle a private individual to invoke the judicial power to determine the validity of executive or legislative action he must show that he has sustained or is immediately in danger of sustaining a direct injury as the result of that action." 408 U.S. at 13, 92 S.Ct. at 2325, 33 L.Ed.2d at 163, quoting 302 U.S. 633-634, 58 S.Ct. 1. Cf. Cascade Natural Gas Corp. v. El Paso Natural Gas Co., supra, 386 U.S. 129, 87 S.Ct. 932, 17 L.Ed.2d 814; United States v. First Nat'l Bk. & Trust Co., 280 F.Supp. 260, 263 (E.D.Ky.1967), aff'd per curiam sub nom. Central Bk. & Trust Co. v. United States, 391 U.S. 469, 88 S.Ct. 1845, 20 L.Ed.2d 749 (1968), where a competitor bank was allowed to intervene to oppose a consent judgment on a finding by the court that the United States had made "about a ninety per cent capitulation . . . ." (Notwithstanding, the court entered a consent decree.)

In addition, to justify intervention, the allegedly inadequate representation by the Justice Department must be "shown clearly."⁴ It is true that the movants' version of the public interest here differs from that held by the government officials involved in this case; but a mere showing that the Justice Department failed to agree with the movants' version of proper antitrust policy falls wide of proof that the public interest was inadequately represented.

The motion for intervention under Fed.R.Civ.P. 24(a)(2) or alternatively for permissive intervention under Fed. R.Civ.P. 24(b) is denied.

III. Fraud on the Court

While intervention is clearly inappropriate, nevertheless the allegation of the prospective intervenors that the consent judgment was procured by misrepresentation, formally presented by their invocation of Rule 60(b) (3), is a disturbing claim of fraud on the court which in this case ought not be dismissed summarily. For if delusion's victim on the one hand can be the public, it might on the other hand be the court. However, the court can consider this claim without the intervention of the movants as parties. See Root Refin. Co. v....