Zenith Radio Corp v. Hazeltine Research, Inc

CourtUnited States Supreme Court
Citation91 S.Ct. 795,401 U.S. 321,28 L.Ed.2d 77
Docket NumberNo. 80,80
PartiesZENITH RADIO CORP., Petitioner, v. HAZELTINE RESEARCH, INC
Decision Date24 February 1971

See 401 U.S. 1015, 91 S.Ct. 1247.

Syllabus

Respondent (HRI) brought a patent infringement suit against petitioner (Zenith) in 1959, and in 1963 Zenith counterclaimed for damages alleging violations of the Sherman and Clayton Acts by HRI's participation in patent pools in Canada, Great Britain, and Australia, restricting Zenith's operations in those countries. A year after evidence was closed, the trial judge entered preliminary findings of fact and conclusions of law favoring Zenith. HRI then moved to amend its reply to the counterclaim and to reopen the record for taking additional evidence. HRI sought to assert defenses of the statute of limitations, and release, claiming that part of the damages awarded Zenith for 19591963 were caused by pre-1959 conduct and thus barred by the statute of limitations, or were barred by a 1957 release given by Zenith to certain American companies in settlement of a civil trebledamage action. The trial judge permitted the defenses to be filed but refused to reopen the record or modify his findings and conclusions concerning the Canadian market. The Court of Appeals reversed on the ground that Zenith had failed to prove injury to its business. This Court reversed with respect to Canada, holding that there was ample evidence of damage in the Canadian market and noting that the trial judge had either rejected the limitations and release defenses on the merits or deemed them waived, 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129. On remand the Court of Appeals held that the trial judge erroneously rejected the defenses on their merits. That court, while doubting that Zenith's claim that the statute of limitations was tolled (by reason of a Government antitrust suit pending from 1958 to 1963 against various companies participating along with HRI in the Canadian patent pool), was properly before it, since no formal plea had been entered, rejected the tolling argument, concluding that tolling takes place only with respect to parties to a Government suit and HRI was not such a party. The court further ordered evidence to determine the extent of reduction of damages by virtue of the defenses it sustained. Held:

1. Under the circumstances of this case, the trial judge did not abuse his discretion if his rejection of the limitations and release defenses was based on HRI's waiver due to untimeliness of their presentation. Pp. 328—333.

2. The Court of Appeals erroneously rejected Zenith's claim that the statute of limitations was tolled during the pendency of the Government's antitrust suit against the other participants in the patent pool. Pp. 333—338.

(a) Where, as here, a plaintiff has no reason to anticipate that a claim of limitations will be raised against him, he need not set forth his claim of tolling until the limitations claim is raised. P. 334.

(b) Under 15 U.S.C. § 16(b) the statute of limitations is tolled against all participants in a conspiracy that is the object of a Government suit, whether or not they are named as defendants or conspirators therein. Pp. 335—338.

3. A plaintiff in an antitrust action may recover damages occurring within the statutory limitation period that are the result of conduct occurring prior to that period if, at the time of the conduct, those damages were speculative, uncertain, or otherwise incapable of proof. Pp. 338—342.

4. The effect of a release upon coconspirators is to be determined in accordance with the intention of the parties, and here HRI, which was neither a party to the 1957 release nor a parent or subsidiary of a party, is not entitled to the benefit of the release, as the agreement to exchange releases provided expressly that they were 'to bind or benefit' the party and 'the parent and subsidiaries of the party giving or receiving such release.' Pp. 342—348.

418 F.2d 21, reversed and remanded.

Thomas C. McConnell, Chicago, Ill., for petitioner.

Victor P. Kayser, Chicago, Ill., for respondent.

Mr. Justice WHITE delivered the opinion of the Court.

This is the second time this marathon litigation has been before us. It began in 1959 as a suit for patent infringement brought by Hazeltine Research, Inc. (hereafter HRI), against Zenith. In 1963, Zenith filed a counterclaim against HRI alleging violations of the Sherman and Clayton Acts, as amended, 26 Stat. 209, 38 Stat. 731, 737, 15 U.S.C. §§ 1, 2, 15, 26, by reason of HRI's participation in patent pools in Canada, Great Britain, and Australia. These pools, it was claimed, operated to exclude Zenith from those foreign markets by refusing to grant patent licenses to American manufacturers seeking to export American-made radio and television sets. Trial was had without a jury. Zenith submitted telling evidence as to the existence and operation of the conspiracy and HRI's participation in each of the markets. Zenith demonstrated the fact and extent of its business injury by estimating the percentage of the foreign market it would have enjoyed absent the conspiracy during the four years prior to 1963 and showing the portion it actually enjoyed during those years. The difference between the profits it actually made and the profits it would have made in a free market during the four years was the measure of the damages demanded.

A year after evidence was closed, the trial judge entered preliminary findings of fact and conclusions of law favoring Zenith. He concluded that Zenith had been damaged $6,297.371 in the Canadian market, $9,248,929 in the English, and $692,555 in the Australian, a total of $16,238,872 before trebling. HRI then moved to amend its reply to Zenith's counterclaim and to reopen the record for the taking of additional evidence. The motion sought leave to assert the defenses of limitations and release; the claim was that part or all of the dam- ages awarded to Zenith for the four years 19591963 were caused by pre-1959 conduct and to that extent were barred by the statute of limitations, 15 U.S.C. § 15b, or by a release given by Zenith to certain American companies in 1957. HRI also sought leave to prove that until specified dates Zenith's exclusion from the English and Australian markets had been due, not to the operation of the alleged patent pools, but to such matters as official embargoes, tariffs, and technical factors. The trial judge agreed to take additional evidence with respect to England and Australia but refused to reopen the record for other purposes or to modify his findings and conclusions concerning the Canadian market. He did, however, permit the limitations and release defenses to be filed and, after hearing evidence with respect to the English and Australian markets, reduced his award of damages with respect to them. 239 F.Supp. 51 (D.C., 1965).

In the Court of Appeals, HRI asserted error on various grounds. Putting aside other issues, the Court of Appeals reversed on the ground that Zenith had failed to prove injury to its business in any of the three markets. 388 F.2d 25 (7 Cir. 1967). We, in turn, affirmed the judgment denying recovery for the alleged injury in the English and Australian markets, but reversed with respect to Canada, holding that Zenith's evidence amply demonstrated the fact of damage in the Canadian market. 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969). We also noted that some portion of the damages proved and awarded resulted from conspiratorial conduct prior to 1959 and that the trial judge had either rejected on the merits the defenses of limitations and release or deemed them waived. Id., at 117 n. 13, 89 S.Ct., at 1573. We went no further, however, with respect to the issues surrounding either defense.

The Court of Appeals on remand accepted as duly proved that absent the conspiracy Zenith would have enjoyed a 16% share of the Canadian market and that the difference between 16% and the share it actually had was the measure of the total damages inflicted by the conspiracy during the four years 19591963. But recognizing that some portion of Zenith's business injury resulted from conspiratorial conduct prior to 1959, the court went on to hold that the trial judge had not rejected the defenses of limitations and release on waiver grounds but had erroneously rejected them on their merits, and further that Zenith's claim that the statute had been tolled had been waived by Zenith and was in any event unsound. Finally, the court ordered further evidence to be taken in the trial court to determine the extent to which, if any, the damages awarded by the trial court should be reduced by virtue of the defenses sustained in the Court of Appeals. 418 F.2d 21 (1969).

We granted certiorari. 397 U.S. 979, 90 S.Ct. 1105, 25 L.Ed.2d 390 (1970). Zenith's principal contentions here are that the trial judge properly deemed the limitations and release defenses to have been waived, that if not waived, the defenses were without merit, and that in any event the statute of limitations was tolled by the pendency of a Government suit against HRI's conconspirators. We need not decide whether the trial judge held the defenses waived or rejected them on the merits, since in our view, either course would have been legally sound. We therefore reverse the Court of Appeals.

I

We deal first with Zenith's claim that the defenses of limitations and release were properly held by the trial court to have been waived. To do so it is essential briefly to outline the course of the trial and evidence. Zenith's 1963 counterclaim alleged the existence of the conspiracy and the impact on its business and prayed for damages and injunctive relief, but made no allegations as to the time period as to which damages were sought. These latter matters became clear during the pretrial proceedings and during the course of the trial itself. In its pretrial brief and opening...

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