Source: https://supreme.justia.com/cases/federal/us/365/127/
Timestamp: 2019-04-26 01:47:59+00:00

Document:
v. Noerr Motor Freight, Inc.
A group of trucking companies and their trade association sued under §4 of the Clayton Act for treble damages and injunctive relief against a group of railroads, a railroad association and a public relations firm, charging that the defendants had conspired to restrain trade in, and monopolize, the long-distance freight business, in violation of §§ 1 and 2 of the Sherman Act. They alleged, inter alia, that the railroads had engaged the public relations firm to conduct a publicity campaign against the truckers designed to foster the adoption and retention of laws and law enforcement practices destructive of the trucking business, to create an atmosphere of distaste for the truckers among the general public, and to impair the relationships existing between the truckers and their customers. After a trial, the District Court entered a judgment awarding damages to the plaintiffs and enjoining the practices complained of.
Held: The judgment is reversed. Pp. 365 U. S. 128-145.
(a) No violation of the Sherman Act can be predicated upon mere attempts to influence the passage or enforcement of laws. Pp. 365 U. S. 135-136.
(b) The Sherman Act does not prohibit two or more persons from associating together in an attempt to persuade the legislature or the executive to take particular action with respect to a law that would produce a restraint or monopoly; and it does not apply to the activities of these railroads, at least insofar as those activities comprised mere solicitation of governmental action with respect to the passage and enforcement of laws. Pp. 365 U. S. 136-138.
(c) At least insofar as the railroads' campaign was directed toward obtaining governmental action, it was not made violative of the Sherman Act by any anticompetitive purpose it may have had, such as a purpose to destroy the truckers as competitors for the long-distance freight business. Pp. 365 U. S. 138-140.
(d) Nor was the railroads' campaign made violative of the Sherman Act by their use of the so-called third-party technique, whereby propaganda actually circulated by a party in interest is given the appearance of being the spontaneously expressed views of independent persons and civic groups. Pp. 365 U. S. 140-142.
(e) A different conclusion is not required by the finding of the District Court that the railroads' campaign was intended to, and did in fact, injure the truckers in their relationships with the public and with their customers. Pp. 365 U. S. 142-145.
273 F. 2d 218, reversed.
as one of economic life or death for their method of transportation. The present litigation is an outgrowth of one part of that struggle.
so-called third-party technique, that is, the publicity matter circulated in the campaign was made to appear as spontaneously expressed views of independent persons and civic groups when, in fact, it was largely prepared and produced by Byoir and paid for by the railroads. [Footnote 3] The complaint then went on to supplement these more or less general allegations with specific charges as to particular instances in which the railroads had attempted to influence legislation by means of their publicity campaign. One of several such charges was that the defendants had succeeded in persuading the Governor of Pennsylvania to veto a measure known as the "Fair Truck Bill," [Footnote 4] which would have permitted truckers to carry heavier loads over Pennsylvania roads.
for the purpose of combatting the railroads' publicity campaign. The prayer for injunctive relief was much broader, however, asking that the defendants be restrained from disseminating any disparaging information about the truckers without disclosing railroad participation, from attempting to exert any pressure upon the legislature or Governor of Pennsylvania through the medium of front organizations, from paying any private or public organizations to propagate the arguments of the railroads against the truckers or their business, and from doing "any other act or thing to further . . . the objects and purposes" of the conspiracy.
"to inform the public and the legislatures of the several states of the truth with regard to the enormous damage done to the roads by the operators of heavy and especially of overweight trucks, with regard to their repeated and deliberate violations of the law limiting the weight and speed of big trucks, with regard to their failure to pay their fair share of the cost of constructing, maintaining and repairing the roads, and with regard to the driving hazards they create. . . ."
Subsequently, defendants broadened the scope of the litigation by filing a counterclaim in which they charged that the truckers had themselves violated §§ 1 and 2 of the Sherman Act by conspiring to destroy the railroads' competition in the long-distance freight business and to monopolize that business for heavy trucks. The means of the conspiracy alleged in the counterclaim were much the same as those with which the truckers had charged the railroads in the original complaint, including allegations of the conduct of a malicious publicity campaign designed to destroy the railroads' business by law, to create an atmosphere hostile to the railroads among the general public, and to interfere with relationships existing between the railroads and their customers. The prayer for relief of the counterclaim, like that of the truckers' original complaint, was for treble damages and an injunction restraining continuance of the allegedly unlawful practices. In their reply to this counterclaim, the truckers denied each of the allegations that charged a violation of the Sherman Act and, in addition, interposed a number of affirmative defenses, none of which is relevant here.
governs the interpretation of §§ 1 and 2 of the Sherman Act, and consequently dismissed the counterclaim.
that are created, or attempted, by the acts of "individuals or combinations of individuals or corporations." [Footnote 14] Accordingly, it has been held that, where a restraint upon trade or monopolization is the result of valid governmental action, as opposed to private action, no violation of the Act can be made out. [Footnote 15] These decisions rest upon the fact that, under our form of government, the question whether a law of that kind should pass, or, if passed, be enforced, is the responsibility of the appropriate legislative or executive branch of government so long as the law itself does not violate some provision of the Constitution.
Act, does constitute a warning against treating the defendants' conduct as though it amounted to a common law trade restraint. And we do think that the question is conclusively settled, against the application of the Act, when this factor of essential dissimilarity is considered along with the other difficulties that would be presented by a holding that the Sherman Act forbids associations for the purpose of influencing the passage or enforcement of laws.
such a construction of the Sherman Act would raise important constitutional questions. The right of petition is one of the freedoms protected by the Bill of Rights, and we cannot, of course, lightly impute to Congress an intent to invade these freedoms. Indeed, such an imputation would be particularly unjustified in this case in view of all the countervailing considerations enumerated above. For these reasons, we think it clear that the Sherman Act does not apply to the activities of the railroads, at least insofar as those activities comprised mere solicitation of governmental action with respect to the passage and enforcement of laws. We are thus called upon to consider whether the courts below were correct in holding that, notwithstanding this principle, the Act was violated here because of the presence in the railroads' publicity campaign of additional factors sufficient to take the case out of the area in which the principle is controlling.
"If ulterior motives of corporate aggrandizement stimulated their activities, their efforts were not thereby rendered unlawful. If the Act and Order are otherwise valid, the fact that their effect would be to give cooperatives a monopoly of the market would not violate the Sherman Act. . . . [Footnote 19]"
as the railroads' campaign was directed toward obtaining governmental action, its legality was not at all affected by any anticompetitive purpose it may have had.
of political activity. The proscriptions of the Act, tailored as they are for the business world, are not at all appropriate for application in the political arena. Congress has traditionally exercised extreme caution in legislating with respect to problems relating to the conduct of political activities, a caution which has been reflected in the decisions of this Court interpreting such legislation. [Footnote 21] All of this caution would go for naught if we permitted an extension of the Sherman Act to regulate activities of that nature simply because those activities have a commercial impact and involve conduct that can be termed unethical.
it appears to have been relied upon primarily as an indication of the vicious nature of the campaign against the truckers. But, whatever its purpose, we have come to the conclusion that the reliance of the lower courts upon this factor was misplaced, and that the railroads' use of the third-party technique was, so far as the Sherman Act is concerned, legally irrelevant.
"more than merely an attempt to obtain legislation. It was the purpose and intent . . . to hurt the truckers in every way possible even though they secured no legislation."
all such campaigns. We have already discussed the reasons which have led us to the conclusion that this has not been done by anything in the Sherman Act.
There may be situations in which a publicity campaign, ostensibly directed toward influencing governmental action, is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor and the application of the Sherman Act would be justified. But this certainly is not the case here. No one denies that the railroads were making a genuine effort to influence legislation and law enforcement practices. Indeed, if the version of the facts set forth in the truckers' complaint is fully credited, as it was by the courts below, that effort was not only genuine, but also highly successful. Under these circumstances, we conclude that no attempt to interfere with business relationships in a manner proscribed by the Sherman Act is involved in this case.
In rejecting each of the grounds relied upon by the courts below to justify application of the Sherman Act to the campaign of the railroads, we have rejected the very grounds upon which those courts relied to distinguish the campaign conducted by the truckers. In doing so, we have restored what appears to be the true nature of the case -- a "no-holds-barred fight" [Footnote 24] between two industries, both of which are seeking control of a profitable source of income. [Footnote 25] Inherent in such fights, which are commonplace in the halls of legislative bodies, is the possibility, and in many instances even the probability, that one group or the other will get hurt by the arguments that are made.
In this particular instance, each group appears to have utilized all the political powers it could muster in an attempt to bring about the passage of laws that would help it or injure the other. But the contest itself appears to have been conducted along lines normally accepted in our political system, except to the extent that each group has deliberately deceived the public and public officials. And that deception, reprehensible as it is, can be of no consequence so far as the Sherman Act is concerned. That Act was not violated by either the railroads or the truckers in their respective campaigns to influence legislation and law enforcement. Since the railroads have acquiesced in the dismissal of their counterclaim by not challenging the Court of Appeals' affirmance of that order in their petition for certiorari, we are here concerned only with those parts of the judgments below holding the railroads and Byoir liable for violations of the Sherman Act. And it follows from what we have said that those parts of the judgments below are wrong. They must be and are reversed.
For a discussion of the mechanics of this technique and the purposes generally underlying its use by public relations firms, see Ross, The Image Merchants, at 118, 226-227 and 266-267.
The "Fair Truck Bill" referred to was introduced in the Pennsylvania Legislature in May 1951, as Senate bill 615.
The answer to the truckers' complaint also interposed a number of other defenses, including the contention that the activities complained of were constitutionally protected under the First Amendment and the contention that the truckers were barred from prosecuting this suit by reason of the fact that they had themselves engaged in conduct identical to that about which they were complaining with regard to the railroads, and were thus in pari delicto. Because of the view we take of the proper construction of the Sherman Act, we find it unnecessary to consider any of these other defenses.
The opinion of the District Court on the merits of the controversy is reported at 155 F.Supp. 768. An additional opinion dealing with the question of relief is reported at 166 F.Supp. 163. For reports of earlier opinions dealing with preliminary motions, see 113 F.Supp. 737; 14 F.R.D. 189, and 19 F.R.D. 146.
The District Court did not expressly find that any particular part of the railroads' publicity campaign was false in its content. Rather, it found that the technique of the railroads was "to take a dramatic fragment of truth and, by emphasis and repetition, distort it into falsehood." 155 F.Supp. at 814.
If anything, the injunction was even broader than had been requested in the complaint for it effectively enjoined the defendants from any publicity activities against the truckers whether or not the third-party technique was used. See 166 F.Supp. at 172-173.
"About the middle of the decade [the 1940's], PMTA had a tax manual prepared charging that the railroads of Pennsylvania themselves did not pay their fair share of taxes as compared with other states, and made a wide distribution of it to legislators, banks, security investment houses, etc."
"the truckers had been the target of a strong campaign directed to the public with the purpose of convincing the public that trucks did not pay their fair share of taxes,"
thus making it necessary for the truckers to "be permitted to likewise show the public that their competitors, the railroads, were actually guilty of the fault charged against the truckers." 155 F.Supp. at 803.
273 F.2d 218. Chief Judge Biggs dissented from the opinion of the majority of the Court of Appeals insofar as it upheld the District Court's conclusion that the railroads and Byoir had violated the Sherman Act. For similar reasons, he concurred in that part of the majority opinion which upheld the conclusion that the truckers had not violated the Act.
221 U. S. 221 U.S. 1, at 221 U. S. 51-62.
Id. at 221 U. S. 57.
United States v. Rock Royal Co-op., 307 U. S. 533; Parker v. Brown, 317 U. S. 341.
See Apex Hosiery Co. v. Leader, 310 U. S. 469, 310 U. S. 491-493.
"Here, the state command to the Commission and to the program committee of the California Prorate Act is not rendered unlawful by the Sherman Act, since, in view of the latter's words and history, it must be taken to be a prohibition of individual, and not state, action. It is the state which has created the machinery for establishing the prorate program. Although the organization of a prorate zone is proposed by producers, and a prorate program, approved by the Commission, must also be approved by referendum of producers, it is the state, acting through the Commission, which adopts the program and which enforces it with penal sanctions, in the execution of a governmental policy. The prerequisite approval of the program upon referendum by a prescribed number of producers is not the imposition by them of their will upon the minority by force of agreement or combination which the Sherman Act prohibits. The state itself exercises its legislative authority in making the regulation and in prescribing the conditions of its application."
A study of the record reveals that the only evidence or subsidiary findings upon which this conclusory finding could be based is the undisputed fact that the railroads did seek laws by arguments and propaganda that could have had the effect of damaging the competitive position of the truckers. There is thus an absence of evidence of intent independent of the efforts that were made to influence legislation and law enforcement. We nonetheless accept the finding of the District Court on this issue, for, in our view, the disposition of this case must be the same regardless of that fact.
307 U. S. 307 U.S. 533, 307 U. S. 560.
The extent to which the third-party technique is utilized in the public relations field is demonstrated by the fact, found by the District Court, that each of the several public relations firms interviewed by the railroads before they finally decided to hire the Byoir organization to conduct their publicity campaign included the use of this technique in its outline of proposed activities submitted for consideration by the railroads. See 155 F.Supp. at 778.
See, e.g., United States v. Harriss, 347 U. S. 612. Cf. United States v. Rumely, 345 U. S. 41.
"The record establishes that the truckers wrote to and made personal contacts with legislators in support of bills increasing the weight of trucks; that they had representatives of other industries write and make personal contacts with legislators in Harrisburg without disclosing trucker connections; and that they had such persons intentionally refrain from advising the legislators and the said officials that the letters and contacts had been solicited; that they solicited from legislators statements in support of their position and had news releases issued thereon."
Here again, the petitioners have leveled a vigorous attack upon the trial court's findings. As a part of this attack, they urge that there is no basis in reason for the finding that some shippers quit doing business with the truckers as a result of the railroads' publicity campaign. Their contention is that, since the theme of the campaign was that the truckers had an unfair competitive advantage and could consequently charge unfairly low prices, the campaign would have encouraged, rather than discouraged, shippers who availed themselves of the truckers' services. This argument has considerable appeal, but, as before, we find it unnecessary to pass upon the validity of these findings, for we think the conclusion must be the same whether they are allowed to stand or not.
We borrow this phrase from the dissenting opinion below of Chief Judge Biggs.
Since the commencement of this litigation, a new bill increasing truck weight limits has passed the Pennsylvania Legislature, and has become law by virtue of the Governor's approval. Thus, the fight goes on.

References: §4
 v. 
 v. 
 v. 
 v. 
 v.