United States v. United States Gypsum Company

Decision Date06 July 1954
Docket NumberCiv. No. 8017.
Citation124 F. Supp. 573
PartiesUNITED STATES of America, Plaintiff, v. UNITED STATES GYPSUM COMPANY, et al., Defendants.
CourtU.S. District Court — District of Columbia

COPYRIGHT MATERIAL OMITTED

Edward Knuff, Sp. Asst. to the Atty. Gen., Vincent A. Gorman, Lawrence Gochberg, Washington, D. C., Stanley N. Barnes, Asst. Atty. Gen., Charles H. Weston, Sp. Asst. to the Atty. Gen., William D. Kilgore, Jr., Washington, D. C., on the briefs, for the United States.

Samuel I. Rosenman, New York City, Seymour Krieger, Elmer E. Finck and Seymour D. Lewis, New York City, Stanley M. Silverberg, Howard Weinstein, New York City, on the briefs, and Finck & Huber, Buffalo, N. Y., and Rosenman, Goldmark, Colin & Kaye, New York City, of counsel, for National Gypsum Co.

Norman A. Miller, Chicago, Ill., Herbert W. Hirsh, Chicago, Ill., C. Roger Nelson, Washington, D. C., Donald N. Clausen, Chicago, Ill., and Franklin M. Schultz, appeared, Clausen, Hirsh & Miller, Chicago, Ill., on the briefs, and Carson Purcell and Purcell & Nelson, Washington, D. C., of counsel, for Certain-Teed Products Corp.

Benjamin P. DeWitt, New York City, and Joseph S. Rippey, Rochester, N. Y., argued orally; joint briefs were filed for Newark Plaster Co. and for Ebsary Gypsum Co., Inc. by DeWitt, Pepper & Howell, New York City, for petitioners Newark Plaster Co., and Ebsary Gypsum Co., Inc.

Cranston Spray, Chicago, Ill., and Bruce Bromley, New York City, argued orally; Robert C. Keck, Chicago, Ill., Hugh Lynch, Jr., Washington, D. C., John E. MacLeish, Chicago, Ill., appeared, Cravath, Swaine & Moore, New York City, and MacLeish, Spray, Price & Underwood, Chicago, Ill., of counsel, for U. S. Gypsum Co.

Albert E. Hallett, Chicago, Ill., for Celotex Corp.

Before STONE, United States Circuit Judge, and COLE and WORLEY, Judges of the United States Court of Customs and Patent Appeals, sitting as District Judges.

STONE, Circuit Judge.

The United States brought an Anti-Trust action (Civil No. 8017) against United States Gypsum Company, et al., which were engaged in the mining of gypsum rocks and in the manufacture and sale of gypsum products. The complaint charged that a controlling unlawful combination was effectuated by means of substantially uniform patent license agreements between USG and the other manufacturing defendants as licensees. At the close of evidence for the United States, the statutory Court of three judges sustained a motion to dismiss the complaint under Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. upon the ground that on the facts and the law the Government had shown no right to relief, United States v. United States Gypsum Co., D.C., 67 F.Supp. 397.

The Government appealed and the Supreme Court reversed and remanded "for further proceedings in conformity with this opinion." 333 U.S. 364, 402, 68 S.Ct. 525, 545, 92 L.Ed. 746. This decision was on March 8, 1948 with rehearing denied on April 5, 1948, 333 U.S. 869, 68 S.Ct. 788, 92 L.Ed. 1147.

After remand, the Government moved for a summary judgment, which was entered on November 7, 1949 (one Judge dissenting). As of that date, this Court entered a decree intended to cover the matters involved. Both sides appealed. The Government contended that the decree was not adequate to cure the ill effects of the illegal conduct of the defendants. The defendants contended that the summary judgment had denied their right to present direct evidence which would have established the lawfulness of their activities.

May 29, 1950, the Supreme Court dismissed the appeal of the defendants, 339 U.S. 959, 70 S.Ct. 995, 94 L.Ed. 1370, in a memorandum, 339 U.S. 960, 70 S.Ct. 996, 94 L.Ed. 1370, wherein it affirmed Article III of the November 7, 1949, decree and stating:

"* * * Article III of the decree of the District Court of November 7, 1949, reading as follows: `The defendant companies have acted in concert in restraint of trade and commerce among the several states in the eastern territory of the United States to fix, maintain and control the prices of gypsum board and have monopolized trade and commerce in the gypsum board industry in violation of sections 1 and 2 of the Sherman Anti-trust Act 15 U.S.C.A. §§ 1, 2,' is affirmed. The corporate defendants and Samuel M. Gloyd, doing business as Texas Cement Plaster Company, are enjoined, pending further order of this Court, from (1) enforcing in any manner whatsoever the provisions of their current license agreements fixing, maintaining, or stabilizing prices of gypsum board or the terms and conditions of sale thereof, and (2) from entering into or performing any agreement or understanding in restraint of trade and commerce in gypsum board among the several states in the eastern territory of the United States by license agreements to fix, maintain, or stabilize prices of gypsum board or by license or other concerted action arranging the terms and conditions of sale thereof."

On November 27, 1950, the Supreme Court decided, 340 U.S. 76, 71 S.Ct. 160, 173, 95 L.Ed. 89, that the decree of November 7, 1949 was inadequate. The Court pointed out wherein it found such inadequacies and closed its opinion as follows: "`With these general suggestions, the details and form of the injunction can be more satisfactorily determined by the District Court.' Its procedure for the settlement of a decree is more flexible than ours." On the same day, the Supreme Court extended its injunction order of May 29, 1950, 339 U.S. 960, 70 S.Ct. 996, to be "continued in effect until the entry of a final decree in the District Court."1

On May 15, 1951, this Court modified its earlier decree in accordance with this opinion of the Supreme Court. There was no appeal therefrom. This is the present Final Decree.

In January, February or March, 1953, USG filed separate similar actions against four of the other corporate defendants in the Anti-Trust action. These suits were: against the National Gypsum Company, in the Northern District of Iowa; against Certain-Teed Products Corporation, in the same District; against Newark Plaster Company, in the District of New Jersey; and against the Ebsary Gypsum Company, in the Southern District of New York. Each of these suits was based on alternative claims for royalties or for the reasonable value of the use of certain of its patents or for damages because of infringement. The time period covered by each of these four suits was, roughly, from the first opinion by the Supreme Court (333 U.S. 364, 68 S.Ct. 525 March 8, 1948), to the date of the Final Decree (May 15, 1951), and, as to Newark and Ebsary, up to the filing of the complaint against each of them.

The Petitioner in each of the four suits here has filed, in the Anti-Trust case, its separate petition to enjoin the USG suit against it and for associated relief. Very broadly stated, these petitions are based on claimed protection of the Final Decree in the Anti-Trust case, on misuse of patents, and on prevention of a multiplicity of actions. Stay orders have been entered in the two Iowa District cases to await action here. Also, the United States has filed a petition to enjoin USG from asserting any claim or suit "in whole or in part on any of the license agreements adjudged illegal, null and void by the final decree of this Court entered on May 15, 1951, or on any provision thereof." As to any claims based on such license agreements, the United States alleges that such "are barred by, and constitute an attempt to defeat, said decree." As to any "alternative claims" set forth in such four suits, the United States "takes no position" as to whether or not they are barred by the Final Decree.

Both by briefs and oral arguments, the issues have been excellently presented by very able counsel for all of the parties.

A plan as a guide to our sequence in considering the issues before us is under four general headings as follows:

I — Jurisdiction

II — Scope of Article IV of the Decree

III — Modification of the Decree

IV — Misuse and Purge

This opinion will follow that arrangement.

I — JURISDICTION

Jurisdiction of a Court to act upon matters presented to it is purely a matter of power to act. Having such power, whether a Court should exercise it may or may not become a matter of discretion depending upon whether, under all the circumstances of the situation before the Court, the Court has a duty or has a choice.

Petitioners claim jurisdiction here on four grounds: (a) to compel obedience to the Decree, (b) to implement the Decree in order to effectuate its "basic" purposes, (c) to exercise a "paramount" jurisdiction under express reservations in Article X thereof, and (d), under broad powers of a court of equity, as the most appropriate forum to prevent possible misconstruction of the Decree, in a multiplicity of actions, by Courts unfamiliar with this Anti-Trust case litigation.

Besides countering each of these grounds, USG contends (a) that only the Government (being the sole original complainant) can move to construe or enforce the Decree, and (b) that the Government can participate in the four suits as a permitted intervener or as an amicus curiæ.

Such being the contentions as to this issue, it seems logical to consider first the contentions of USG. The main reliance of USG is Buckeye Coal & Ry. Co. v. Hocking Valley Ry. Co., 269 U.S. 42, 46 S.Ct. 61, 70 L.Ed. 155. Petitioners distinguish this case on the grounds that the Buckeye was not a party to that Anti-Trust suit (while Petitioners are defendants in such action here); and that Article X of this decree expressly reserves jurisdiction to enable "any of the parties to this decree * * * to apply to this Court, at any time for such orders" etc. They cite Missouri-Kansas Pipe Line Co. v. United States, 312 U.S. 502, 665, 61 S.Ct. 666, 85 L.Ed. 975; Local Loan Co. v. Hunt, 292 U.S. 234, 54 S.Ct. 695, 78 L. Ed. 1230 and Terminal Railroad Association v. United States, 266 U.S. 17, 45 S. Ct. 5, 69...

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