United States v. United States Gypsum Co.

• Citation: 51 F. Supp. 613
• Decision Date: 10 August 1943
• Docket Number: Civil Action No. 8017.
• Parties: UNITED STATES v. UNITED STATES GYPSUM CO. et al.
• Court: United States District Courts. United States District Court (Columbia)

51 F. Supp. 613

UNITED STATES v. UNITED STATES GYPSUM CO. et al.

Civil Action No. 8017.

District Court of the United States for the District of Columbia.

August 10, 1943.

Roscoe T. Steffen and Edward Knuff, Sp. Assts. to the Atty. Gen., for plaintiff.

Lewis Ulman, of Washington, D.C., and Bruce Bromley, of New York City, for defendants United States Gypsum Co., Sewell L. Avery and Oliver M. Knode.

Nicholas J. Chase, of Washington, D. C., and Elmer E. Finck, of Buffalo, N. Y., for defendants National Gypsum Co. and Melvin H. Baker.

Harold F. McGuire and F. W. H. Adams, both of New York City, and Leonard B. Ettelson and Stephen Allie, both of Chicago, Ill., for defendants Certain-teed Products Corporation and Henry J. Hartley.

Walter G. Moyle and Ralph P. Wanlass, both of Washington, D. C., and Andrew J. Dallstream and Norman Waite, both of Chicago, Ill., for defendants The Celotex Corporation and Bror G. Dahlberg.

Joseph P. Tumulty and Joseph P. Tumulty, Jr., both of Washington, D. C., and Alfred W. Varian and Herbert M. Simon, both of New York City, for defendants Ebsary Gypsum Company, Inc., and Frederick G. Ebsary.

James O'Donnell, Jr., of Washington, D. C., and Benjamin P. DeWitt, of New York City, for defendants Newark Plaster Co. and Frederick Tomkins.

George E. H. Goodner, of Washington, D. C., and D. I. Johnston, Roy C. Lytle, James R. Keaton, and Frank Wells, all of Oklahoma City, Okl., for defendant Samuel M. Gloyd, doing business under the trade name of Texas Cement Plaster Co.

Before STEPHENS, Associate Justice, United States Court of Appeals for the District of Columbia (Presiding), and BLAND and GARRETT, Judges, United States Court of Customs and Patent Appeals, designated as Justices of the District Court of the United States for the District of Columbia.^*

BLAND, Judge, and GARRETT, Judge:

The instant equity action was instituted by the Government in the District Court of the United States for the District of Columbia by complaint on August 15, 1940. The Government seeks, among other things, to obtain a judgment against the defendants enjoining them from certain alleged monopolistic practices and relationships in connection with trade and commerce in gypsum products between the states and the District of Columbia under sections 1, 2, and 3 of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-3.

In a criminal action in said District Court, under an indictment returned June 28, 1940, the Government prosecuted the defendants under sections 1 and 3 of said Act. The pleadings in that case alleged a conspiracy to monopolize and restrain trade and commerce in certain gypsum products. On November 19, 1941, the trial judge sustained the motions of defendants for a directed verdict of not guilty. Judgment was entered accordingly.

The defendants, in this court, have moved, under Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, for summary judgment upon the ground that in said criminal action, where it is urged that the parties and issues were substantially the same as those at bar, a judgment for defendants was obtained which is res judicata of the issues in the instant case and should be held by us to be a bar against the further prosecution of the instant action.

The motions have been argued and briefed at great length by both parties on three phases of the question: first, are the parties the same or substantially the same?; second, are the issues the same?; and third, was the judgment based on the trial judge's instruction made pursuant to defendants' motions for directed verdict in the nature of a demurrer to the evidence.

It is our view that if in the criminal case there had been an acquittal by the jury and a judgment rendered thereon, that judgment would not be res judicata of the issues in the instant case. This conclusion is amply supported by the following decisions: Helvering v. Mitchell, 1938, 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917; Murphy v. United States, 1926, 272 U.S. 630, 47 S.Ct. 218, 71 L.Ed. 446; Lewis v. Frick, 1914, 233 U.S. 291, 34 S.Ct. 488, 58 L.Ed. 967; Stone v. United States, 1897, 167 U.S. 178, 17 S.Ct. 778, 42 L.Ed. 127; and United States v. Donaldson-Shultz Co., 4 Cir., 1906, 148 F. 581.

It is unnecessary, therefore, for us to express any view as to whether, for the purposes of this case, the parties and issues are the same, because even if they are, under the decisions above set out the judgment in the criminal case would not be res judicata of the issues in this civil proceeding. Nor is it necessary for us to make any holding with respect to the nature of the peremptory instruction given by the trial judge, since the question relating to whether defendants' motions for directed verdict were in the nature of a demurrer to the evidence has to do only with the question of whether or not there was an adjudication in that proceeding. As hereinbefore stated, if there had been such an adjudication as would have resulted from a judgment entered on a verdict of not guilty found by a jury on the merits, the doctrine of res judicata would not apply in the instant case.

The reasons why the doctrine does not apply in this kind of action are clearly expressed in a number of decided cases. For instance, the quantum of proof in a criminal case is wholly different from that required in a civil proceeding. Defendants may be required to testify in a civil proceeding but not in a criminal proceeding. Moreover, the most impelling reason, in our judgment, why res judicata does not apply in this case is that it is clear from the context of the Sherman Act that such a doctrine was never meant to apply. As the Supreme Court has said, it was the intention of Congress in providing for a criminal proceeding, an equity proceeding, and a suit by a damaged individual—all in one act—that concurrent remedies were to be afforded. Standard Sanitary Mfg. Co. v. United States, 1912, 226 U.S. 20, 33 S. Ct. 9, 57 L.Ed. 107. Under such circumstances it would seem clear that a judgment in one action would not be a bar to obtaining a judgment in the others.

It seems to us that it would be wholly illogical to conclude that one charged with a violation of the Sherman Act could, by reason of an acquittal in a criminal case, thereby obtain immunity from any further remedy designed to bring about the discontinuance of a continuing offense.

While there is no decided case involving facts identical with those at bar, it seems to us that the principles in the above-cited cases amply justify the conclusion that in cases like that at bar a full adjudication in a criminal action between the same parties and involving the same conspiracy would not be a bar in a subsequent civil action for injunctive relief.

In Murphy v. United States, supra, the defendant was acquitted of a charge of maintaining a nuisance and subsequently, in an equity action, was enjoined from occupying the place. The statute there, as here, contemplated both kinds of action, and the holding was that the second suit was not barred by the acquittal in the criminal action. Reasons for such conclusion were therein fully stated, and the doctrines laid down in Stone v. United States, supra, and Chantangco v. Abaroa, 1910, 218 U.S. 476, 31 S.Ct. 34, 54 L.Ed. 1116, were again relied upon and fully stated.

Defendants' said motions for summary judgment are denied.

STEPHENS, J.:

I agree that the motions for summary judgment must be denied. But I do not agree with the views according to which my brothers reach this result, and I desire to state my own views separately. The importance of the motions warrants, I think, discussion of each of the questions raised thereunder.

The instant civil action, commenced by the United States (hereinafter for convenience referred to as the Government) August 15, 1940, seeks equitable relief under Section 4 of the Sherman Act. The complaint charges that the defendants for many years were parties to contracts, including patent license agreements, and were actively engaged in a continuing combination and conspiracy, in restraint of trade and commerce, and that they have monopolized trade and commerce, in gypsum products in violation of Sections 1, 2 and 3 of the Sherman Act.¹ The relief sought is a decree that the contracts, combination, conspiracy and monopoly are illegal and that the defendants have been parties thereto; that the defendants be enjoined from continuing to carry out the contracts, combination, conspiracy and monopoly; that they be required to cancel the provisions of the license agreements and enjoined from entering into any such agreements in the future and from bringing any actions for infringement of patents, or to collect royalties or license fees or profits for the use of patents now owned or controlled by them relating to gypsum products or relating to any process or machine used in connection with the same, until it is made to appear that all improper practices have been abandoned and the consequences of all misuses of the patents have been dissipated; that the defendants be enjoined from entering into any license agreement relating to gypsum products without obtaining the consent of the court; the prayer includes also a request for general relief.

The present motions for summary judgment, made under Rule 56 of the Federal Rules of Civil Procedure providing for such a judgment if the pleadings, depositions, admissions and affidavits on file in a civil case show that (except as to the amount of damages) there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law, are based upon pleas of res judicata embodied in two separate affirmative defenses. These are set forth in supplemental answers to the Government's complaint. From these answers and from affidavits supporting the same, it appears that prior to the filing of the complaint five of the seven corporate defendants² and two of the...