Zenith Radio Corp. v. Matsushita Elec. Indus. Co.

• Decision Date: 14 September 1979
• Docket Number: Civ. A. No. 74-2451,74-3247 and M.D.L. No. 189.
• Citation: Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 478 F.Supp. 889 (E.D. Pa. 1979)
• Parties: ZENITH RADIO CORPORATION v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD., et al. NATIONAL UNION ELECTRIC CORPORATION v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD., et al. In re JAPANESE ELECTRONIC PRODUCTS ANTITRUST LITIGATION.
• Court: U.S. District Court — Eastern District of Pennsylvania

478 F. Supp. 889

ZENITH RADIO CORPORATION v.MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD., et al.

NATIONAL UNION ELECTRIC CORPORATION v.MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD., et al.

In re JAPANESE ELECTRONIC PRODUCTS ANTITRUST LITIGATION.

Civ. A. Nos. 74-2451, 74-3247 and M.D.L. No. 189.

United States District Court, E. D. Pennsylvania.

June 6, 1979.

Memorandum and Order of Certification August 21, 1979.

As Amended September 14, 1979.

COPYRIGHT MATERIAL OMITTED

Edwin P. Rome, William H. Roberts Blank, Rome, Comisky and McCauley, Philadelphia, Pa., for Zenith Radio Corp. and National Union Elec. Corp.

Philip J. Curtis, John Borst, Jr., Edward McCausland, Glenview, Ill., for Zenith Radio Corp.

Morton P. Rome, Philadelphia, Pa., for National Union Elec. Corp.

Donald J. Zoeller, John P. Hederman, Thomas P. Lynch, Mudge, Rose, Guthrie & Alexander, New York City, Patrick T. Ryan, Drinker, Biddle & Reath, Philadelphia, Pa., for Toshiba.

A. Paul Victor, Joel B. Harris, Weil, Gotshal & Manges, New York City, Miles W. Kirkpatrick, Morgan, Lewis & Bockius, Philadelphia, Pa., for Matsushita.

Charles F. Schirmeister, Robert J. Lynch, Reid & Priest, New York City, for Mitsubishi Intern. & Mitsubishi Corp.

Peter J. Gartland, Peter A. Dankin, Wender, Murase & White, New York City, for Sharp.

Asa D. Sokolow, Rosenman, Colin, Freund, Lewis & Cohen, New York City, Franklin Poul, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa., for Sony Corp. of America & Sony Corp.

E. Houston Harsha, Thomas P. Coffey, Kirkland & Ellis, Chicago, Ill., for Motorola.

OPINION

EDWARD R. BECKER, District Judge.

                                     CONTENTS
                  I. Preliminary Statement                                                       892
                 II. The Parties' Contentions Regarding the Size & Complexity of the Litigation  897
                III. Discussion                                                                  899
                     A. Introduction                                                             899
                     B. Construction of the Antitrust Statutes
                        Need We Reach the Seventh Amendment Issue?                               900
                     C. The Seventh Amendment and the Historical Test                            904
                        1. The Accounting Cases                                                  907
                           a. Complex Accounting Cases and the Concurrent Jurisdiction of
                              Law and Equity                                                     907
                           b. The Concurrent Jurisdiction of Law and Equity After Merger         911
                        2. Other Complex Litigation                                              914
                        3. The Rationale of the Complex Accounting Cases                         918
                        4. Treble Damages and Juries                                             921
                

    D. The Historical Test and Complexity After Ross v. Bernhard                 922
                       1. Ross and Recent Decisions Striking Jury Demands                        922
                       2. Construing Ross                                                        926
                          a. Jury Trial Decisions in the Supreme Court Since Ross                926
                          b. Explanations of the Ross Footnote                                   929
                       3. Problems Inherent in the Ross "Test"                                   931
                          a. The Case-by-Case Approach                                           931
                          b. The Whole-case Approach                                             933
                       4. Public Policy and the Seventh Amendment: The Role of the American
                          Jury                                                                   934
                          a. The Competence of the Jury as Finder of Fact                        934
                          b. Other Functions of the Jury                                         938
                IV. Conclusion                                                                   942
                

I.Preliminary Statement

Certain defendants in these consolidated antitrust cases, alleging that they are so "extraordinarily complex,""so massive as to make them unique in the annals of United States antitrust and trade regulation litigation," and "beyond the practical abilities and limitations of a jury," have moved for an order striking the jury demands of the plaintiffs, Zenith Radio Corporation("Zenith") and National Union Electric Corporation("NUE").¹This opinion will address ?€”and deny?€”defendants' motion.

NUE is the corporate successor to Emerson Radio Co., one of the pioneers in the radio and TV industry.NUE ceased all production of television receivers in February, 1970;² that December, it filed the first of these suits,³ alleging that the Japanese defendants and others had conspired to take over the American consumer electronic products industry and to drive NUE out of business.In 1974, after experiencing large operating losses, Zenith filed an action making similar allegations.⁴The NUE action was then transferred to this district for coordinated or consolidated pretrial proceedings with the Zenith action.SeeIn re Japanese Electronic Products Antitrust Litigation,388 F.Supp. 565(J.P.M.D.L.1975).⁵In Pretrial Order # 182, filed this date, we made the transfer of the NUE action to this district unconditional, and consolidated it for trial with the Zenith action.

The ten principal defendants are Mitsubishi Corporation, a Japanese trading company; Matsushita Electric Industrial Co., Ltd., Toshiba Corporation, Hitachi, Ltd., Sharp Corporation, Mitsubishi Electric Corporation(Melco), Sanyo Electric Co., Ltd., and Sony Corporation, all Japanese manufacturers of consumer electronic products; and two American companies, Motorola, Inc. and Sears, Roebuck & Co. Fourteen other defendants are subsidiaries of the principal Japanese defendants.Of the twenty-four defendants, fifteen are defendants in both suits, seven in the Zenith action only, and two in the NUE action only.⁶In addition to the twenty-four named defendants, the plaintiffs have identified close to 100 alleged co-conspirators whose business operations span the globe, ranging from dozens of Japanese companies, large and small, to such world industrial giants as N.V. Phillips Gloeilampenfabrieken and General Electric Co.

In capsule form, plaintiffs' complaints allege that the Japanese defendants and their co-conspirators are and have been participants in a conspiracy which, by artificially lowering export prices, has for more than twenty years sought the methodical destruction of the United States' domestic consumer electronic products industry.⁷The defendants are accused of carrying out the aims of this conspiracy by flooding the United States' market with imported goods at prices so attractive to consumers that domestic producers suffered serious losses, and were either unable to compete or able to do so only by moving some or all of their own production facilities to Mexico and the Far East.⁸

The particular offenses charged in the complaints span the laws of antitrust.The overall conspiracy is alleged to violate ?? 1 and 2 of the Sherman Act,15 U.S.C. ?? 1 and 2, and ? 73 of the Wilson Tariff Act, 15 U.S.C. ?8.⁹However, the cornerstone of the plaintiffs' case is the allegation that the Japanese defendants have violated the 1916 Revenue Act, better known as the 1916 Antidumping Act, 15 U.S.C. ? 72,¹⁰ by "commonly and systematically" selling their products in this country for substantially less than their actual market value or wholesale price in Japan, and with predatory intent.The defendants are also charged with violating the Robinson-Patman Act, 15 U.S.C. ?13(a), by discriminating in price among American purchasers.¹¹Finally, Zenith charges that Sears, Motorola, and the Matsushita and Sanyo defendants violated ? 7 of the Clayton Act,15 U.S.C. ? 18, in connection with the Japanese companies' acquisitions of interests in domestic consumer electronic products manufacturers.¹²

Plaintiffs' claims, adumbrated above, have been spelled out in greater detail in two preliminary pretrial memoranda totalling 410 pages, as well as in answers to numerous contention interrogatories.The plaintiffs' papers seek to portray a worldwide conspiracy said to have lasted over a period of some 30 years and to have involved close to 100 manufacturers, exporters, and importers of consumer electronic products of various national origins.

The defendants maintain that, notwithstanding their voluminous submissions, plaintiffs have failed to elucidate their claims with any degree of precision.They also deny both the legal and factual validity of the plaintiffs' claims.Additionally, certain of the defendants have asserted counterclaims against Zenith.

The counterclaims attack Zenith on two fronts.First, they allege that Zenith, acting alone and in combination and conspiracy with others, used territorial allocations, price discrimination, horizontal and vertical price fixing arrangements and certain "key dealer preferences" in violation of the Robinson-Patman Actand ?? 1 and 2 of the Sherman Act.Second, they accuse Zenith and its co-conspirators of seeking to interfere with its competitors, including the counterclaimants, "by every means available, including the submission of complaints, petitions, testimony and other information to various federal governmental agencies and officials, federal courts, and the United States Congress which were based upon sham, false and misleading allegations and information, without regard to the truth or merits of the claims made."The counterclaiming defendants thus invoke the "sham litigation" theory of antitrust liability recognized in Otter Tail Power Co. v. United States,410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359(1973).Defendants have likewise filed extensive preliminary pretrial memoranda detailing their counterclaims.¹³

We are now approaching the end of pretrial discovery.To say that the discovery has been massive would be a considerable understatement.To date...