Willmar Poultry Co. v. Morton-Norwich Products, Inc.

• Decision Date: 07 August 1975
• Docket Number: MORTON-NORWICH,No. 74-1893,74-1893
• Citation: 520 F.2d 289
• Parties: 1975-2 Trade Cases 60,410 WILLMAR POULTRY COMPANY et al., Appellants, v.PRODUCTS, INC., and Richardson-Merrell, Inc., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 289

520 F.2d 289

1975-2 Trade Cases 60,410

WILLMAR POULTRY COMPANY et al., Appellants, v. MORTON-NORWICH PRODUCTS, INC., and Richardson-Merrell, Inc. Appellees.

No. 74-1893.

United States Court of Appeals Eighth Circuit.

Submitted April 17, 1975.

Decided July 17, 1975.

Rehearing and Rehearing En Banc Aug. 7, 1975.

John E. Thomas, Cochrane & Bresnahan, St. Paul, Minn., for appellants.

John P. Ryan, Jr., Chicago, Ill., and Robert B. Fiske, Jr., New York City, for appellees.

Before JONES, ^* Senior Circuit Judge, and HEANEY and BRIGHT, Circuit Judges.

BRIGHT, Circuit Judge.

The plaintiffs in this antitrust action, Willmar Poultry Company, Peterson-Biddick Company, and Lynn Tompt, an individual, ¹ appeal from an order granting summary judgment in favor of Richardson-Merrell, Inc., (Richardson) and dismissing it as a defendant and granting partial summary judgment in favor of Morton-Norwich Products, Inc. (Norwich) and dismissing as to it all claims accruing prior to June 7, 1970. The district court entered summary judgment after determining that the plaintiffs' claims were time-barred.

On appeal, ² the plaintiffs contend that entry of summary judgment in advance of discovery is impermissible in an antitrust case such as this, alleging violations of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1970). We disagree. We hold that the court properly concluded that the four-year statute of limitations of § 4B of the Clayton Act, 15 U.S.C. § 15b (1970), ³ barred the plaintiffs' action with respect to all conduct by the defendants occurring before June 7, 1970, and properly entered summary judgment without awaiting the results of discovery.

I. Factual and Procedural Background.

Because we direct our inquiry in this case to the procedural propriety of the district court's summary disposition of a part of the plaintiffs' action, it will prove helpful to preliminarily outline the facts from which the complaint originates and the proceedings in the district court leading to summary judgment.

A. Facts.

The plaintiffs in this action either use or buy and sell, or both, furazolidone, a broad-spectrum member of the nitrofurans group of drugs effective in combating infectious diseases, primarily in poultry. According to the complaint, Willmar Poultry Company purchases furazolidone as a feed additive for the turkeys which it hatches and grows; it also sells furazolidone to other growers. Peterson-Biddick adds furazolidone to the feed used in raising the turkeys that it grows. Lynn Tompt buys furazolidone for resale to veterinarians and feed salesmen, among others.

Norwich held the patent on furazolidone, U. S. Patent No. 2,742,462, from April 17, 1956, to April 17, 1973. During this period it marketed the drug both domestically and internationally. It marketed furazolidone domestically solely through the Hess & Clark Division of Richardson. By agreement entered into January 1, 1955, between Richardson's predecessor, the Vick Chemical Company and Norwich, Hess & Clark acted as Norwich's domestic distributor of furazolidone. The agreement terminated December 31, 1969.

Hess & Clark marketed furazolidone domestically at prices far in excess of those at which it was marketed in other countries by licensees or subsidiaries of Norwich. Moreover, Norwich's Canadian subsidiary, Norwich Pharmacal Company, Ltd., sold furazolidone at prices significantly lower than those at which it was sold in other foreign countries. This pricing disparity gave rise to widespread clandestine importation of the drug into the United States, particularly from Italy, Israel, and Canada. To combat this importation and preserve its control over the domestic market, Norwich brought from 1963 through 1969 some 56 patent infringement actions against dealers and others attempting to market the imported drug.

Additionally, at Norwich's request, the United States Tariff Commission investigated this importation to determine if it constituted an unfair method of competition sufficiently injurious to Norwich's domestic business to warrant an order, pursuant to § 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337 (1970), excluding from entry into the United States all furazolidone. Following a full investigation and publication of its findings in November of 1969, the Tariff Commission recommended to the President that such an order be issued, effective through the expiration of Norwich's patent, April 17, 1973.

B. Proceedings in the district court.

The plaintiffs filed the instant antitrust action June 7, 1974. They alleged in count I of their complaint that Richardson and Norwich conspired, in violation of the Sherman Act, to prevent the importation into the United States of furazolidone for the purpose of maintaining at anticompetitive levels the price of the domestically marketed product. They alleged that they had been prevented from earlier discovering this cause of action by the defendants' fraudulent concealment of it. They further alleged, in count II, that Norwich's furazolidone patent is void and unenforceable and has been employed by Richardson and Norwich in violation of the Sherman Act.

The defendants moved to strike the claim of fraudulent concealment. They contended that they had not concealed the cause of action. On the contrary, they asserted that all the facts underlying the action were public knowledge as a result of the Tariff Commission's investigation and report. The district court agreed and struck the fraudulent concealment claim.

The defendants also moved for summary judgment as to all claims accruing prior to June 7, 1970, the date four years prior to the filing of the complaint. Having found that the defendants had not concealed the cause of action from the plaintiffs, the district court concluded that the statute of limitations had not been tolled ⁴ and therefore entered summary judgment in favor of the defendants as to all claims arising before June 7, 1970. Because Richardson had not made any sales of furazolidone to anyone after December 31, 1969, the date of expiration of Hess & Clark's distributorship agreement with Norwich, the district court dismissed the complaint entirely as to it. The court's action had the effect of leaving the complaint intact only with respect to Norwich's activities within the limitations period.

II. Applicable Law.

The plaintiffs correctly observe that the courts do not lightly enter summary judgment on the merits in antitrust cases. The Supreme Court has explained this hesitancy in the following terms: We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. * * * Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of "even handed justice." (Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962) (footnote omitted).)

Where there has been no opportunity for discovery or it has yet to be undertaken or is incomplete, the courts have applied this policy to prohibit altogether summary judgment on the merits in antitrust litigation. See Umdenstock v. American Mortgage & Investment Co., 495 F.2d 589, 592 (10th Cir. 1974); Penn Galvanizing Co. v. Lukens Steel Co., 59 F.R.D. 74, 80 (E.D.Pa.1973); First National Bank v. British Petroleum Co., 324 F.Supp. 1348, 1360 (S.D.N.Y.1971); Philco Corp. v. Radio Corp. of America, 34 F.R.D. 453, 454-55 (E.D.Pa.1964).

On the other hand, where there has been ample opportunity for discovery, summary judgment is appropriate in antitrust litigation, just as in any other litigation, upon a showing by the movant of an absence of any genuine issue of material fact. See, e. g., First National Bank v. Cities Service Co., 391 U.S. 253, 288-90, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Modern Home Institute, Inc. v. Hartford Accident & Indemnity Co., 513 F.2d 102, 109-10 (2d Cir. 1975); Kugler v. AAMCO Automatic Transmissions, Inc., 460 F.2d 1214, 1216 (8th Cir. 1972). Summary judgment may be appropriate even without opportunity for discovery, however, where, as in the instant case, the ground asserted for judgment is the statute of limitations, a defense not going to the merits of the action. See Akron Presform Mold Co. v. McNeil Corp., 496 F.2d 230, 232-33, 235 (6th Cir.), cert. denied, 419 U.S. 997, 95 S.Ct. 310, 42 L.Ed.2d 270 (1974); Suckow Borax Mines Consolidated, Inc. v. Borax Consolidated, Ltd., 185 F.2d 196 (9th Cir.), cert. denied, 340 U.S. 943, 71 S.Ct. 506, 95 L.Ed. 680 (1950); Philco Corp. v. Radio Corp. of America,186 F.Supp. 155, 158-61 (E.D.Pa.1960); Solinski v. General Electric Co.,149 F.Supp. 784 (D.N.J.1957).

Regardless of the propriety of summary judgment before discovery in an antitrust case, summary judgment is always warranted where the party resisting the motion does so by relying solely upon his pleadings and submits no evidence to rebut the moving party's conclusive demonstration of absence of a genuine issue of material fact. Fed.R.Civ.P. 56(e) ⁵ mandates affirmative action by a party opposing such a motion. Failure to take such action justifies a court in entering summary judgment, regardless of whether the case alleges a violation of the antitrust laws. See First National Bank v. Cities Service Co., supra, 391 U.S. at 289-90, 88 S.Ct. 1575; Akron Presform Mold Co. v. McNeil Corp., supra, 496 F.2d at 235; Saenz v. University Interscholastic League, 487 F.2d 1026, 1028 (5th Cir. 1973); Gasperi v. Cinemette Corp., 391 F.Supp. 826, 832-33 (W.D.Pa.1975). Judge Friendly of the Second Circuit has stated the proper procedure for an opposing party under these circumstances:

When the movant comes forward with facts showing that his adversary's case is baseless, the opponent cannot rest on the allegations of the complaint but must adduce factual material which raises a...