Source: https://www.legalcrystal.com/case/100167/eastern-r-conference-vs-noerr-motors
Timestamp: 2017-05-27 12:53:03
Document Index: 527720475

Matched Legal Cases: ['§4', '§ 1', '§4', '§ 1', '§ 1', '§ 4', '§ 1']

Eastern R Conference Vs Noerr Motors - Citation 100167 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Eastern R. Conference Vs. Noerr Motors - Court Judgment	LegalCrystal Citationlegalcrystal.com/100167CourtUS Supreme CourtDecided OnFeb-20-1961Case Number365 U.S. 127AppellantEastern R. ConferenceRespondentNoerr MotorsExcerpt:
eastern r. conference v. noerr motors - 365 u.s. 127 (1961)
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..... Judgment:
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,
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.
365 U. S. 128
(a) No violation of the Sherman Act can be predicated upon mere attempts to influence the passage or enforcement of laws. Pp.
(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.
(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
(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
(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
The case was commenced by a complaint filed in the United States District Court in Pennsylvania on behalf of 41 Pennsylvania truck operators and their trade association, the Pennsylvania Motor Truck Association. This complaint, which named as defendants 24 Eastern railroads, an association of the presidents of those railroads known as the Eastern Railroad Presidents Conference, and a public relations firm, Carl Byoir & Associates, Inc., charged 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. The gist of the conspiracy alleged was that the railroads had engaged Byoir 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. The campaign so conducted was described in the complaint as "vicious, corrupt, and fraudulent," first, in that the sole motivation behind it was the desire on the part of the railroads to injure the truckers and eventually to destroy them as competitors in the long-distance freight business, and, secondly, in that the defendants utilized the
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. [
] 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," [
] which would have permitted truckers to carry heavier loads over Pennsylvania roads.
The prayer of the complaint was for treble damages under § 4 of the Clayton Act [
] and an injunction restraining the defendants from further acts in pursuance of the conspiracy. Insofar as the prayer for damages was concerned, a stipulation was entered that the only damages suffered by the individual truck operators was the loss of business that resulted from the veto of the "Fair Truck Bill" by the Governor of Pennsylvania, and, accordingly, the claim for damages was limited to an amount based upon the loss of profits as a result of this veto plus the expenses incurred by the truckers' trade association
or to efforts of individuals to bring about the passage or enforcement of laws. [
publicity campaign had violated the Sherman Act, while that of the truckers had not. [
] In reaching this conclusion, the trial court expressly disclaimed any purpose to condemn as illegal mere efforts on the part of the railroads to influence the passage of new legislation or the enforcement of existing law. Instead, it rested its judgment upon findings, first, that the railroads' publicity campaign, insofar as it was actually directed at lawmaking and law enforcement authorities, was malicious and fraudulent -- malicious in that its only purpose was to destroy the truckers as competitors, and fraudulent in that it was predicated upon the deceiving of those authorities through the use of the third-party technique; [
] and, secondly, that the railroads' campaign also had as an important, if not overriding, purpose the destruction of the truckers' goodwill, among both the general public and the truckers' existing customers, and thus injured the truckers in ways unrelated to the passage or enforcement of law. In line with its theory that restraints of trade and monopolizations resulting from valid laws are not actionable under the Sherman Act, however, the trial court awarded only nominal damages to the individual truckers, holding that no damages were recoverable for loss of business due to the veto of the Pennsylvania "Fair Truck Bill." The judgment did, however, award substantial damages to the
truckers' trade association as well as the broad injunction asked for in the complaint. [
The conclusion that the truckers' publicity campaign had not violated the Sherman Act was reached despite findings that the truckers also had engaged in a publicity campaign designed to influence legislation, as charged in the counterclaim, and despite findings that the truckers had utilized the third-party technique in this campaign. Resting largely upon the fact that the efforts of the truckers were directed, at least for the most part, [
] at trying to get legislation passed that was beneficial to them, rather than harmful to the railroads, the trial court found that the truckers' campaign was purely defensive in purpose, and concluded that the truckers' campaign differed from that of the railroads in that the truckers were not trying to destroy a competitor. Accordingly, it held that the truckers' campaign, though technically in restraint of trade, was well within the rule of reason which
The railroads appealed from this judgment, both as to the conclusion that they had violated the Sherman Act as charged in the original complaint and as to the conclusion that the truckers had not violated the Act as charged in the counterclaim. The Court of Appeals for the Third Circuit, one judge dissenting in part, upheld the judgment of the District Court in every respect, stating that the findings amply support the judgment and that there was sufficient evidence to support all of the findings. [
] This was followed by a petition for certiorari filed on behalf of the railroads and Byoir limited to the question of the correctness of the judgment insofar as it held that they had violated the Sherman Act. Because the case presents a new and unusual application of the Sherman Act and involves severe restrictions upon the rights of these railroads and others to seek the passage or defeat of legislation when deemed desirable, we granted that petition. [
We accept, as the starting point for our consideration of the case, the same basic construction of the Sherman Act adopted by the courts below -- that no violation of the Act can be predicated upon mere attempts to influence the passage or enforcement of laws. It has been recognized, at least since the landmark decision of this Court in
] that the Sherman Act forbids only those trade restraints and monopolizations
that are created, or attempted, by the acts of "individuals or combinations of individuals or corporations." [
] 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. [
] 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.
We think it equally clear that 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 a monopoly. Although such associations could perhaps, through a process of expansive construction, be brought within the general proscription of "combination[s] . . . in restraint of trade," they bear very little if any resemblance to the combinations normally held violative of the Sherman Act, combinations ordinarily characterized by an express or implied agreement or understanding that the participants will jointly give up their trade freedom, or help one another to take away the trade freedom of others through the use of such devices as price-fixing agreements, boycotts, market-division agreements, and other similar arrangements. [
] This essential dissimilarity between an agreement jointly to seek legislation or law enforcement and the agreements traditionally condemned by § 1 of the Act, even if not itself conclusive on the question of the applicability of the
In the first place, such a holding would substantially impair the power of government to take actions through its legislature and executive that operate to restrain trade. In a representative democracy such as this, these branches of government act on behalf of the people and, to a very large extent, the whole concept of representation depends upon the ability of the people to make their wishes known to their representatives. To hold that the government retains the power to act in this representative capacity and yet hold, at the same time, that the people cannot freely inform the government of their wishes would impute to the Sherman Act a purpose to regulate, not business activity, but political activity, a purpose which would have no basis whatever in the legislative history of that Act. [
] Secondly, and of at least equal significance,
The first such factor relied upon was the fact, established by the finding of the District Court, that the railroads' sole purpose in seeking to influence the passage and enforcement of laws was to destroy the truckers as competitors for the long-distance freight business. But we do not see how this fact, even if adequately supported in the record, [
] could transform conduct otherwise lawful
into a violation of the Sherman Act. All of the considerations that have led us to the conclusion that the Act does not apply to mere group solicitation of governmental action are equally applicable in spite of the addition of this factor. The right of the people to inform their representatives in government of their desires with respect to the passage or enforcement of laws cannot properly be made to depend upon their intent in doing so. It is neither unusual nor illegal for people to seek action on laws in the hope that they may bring about an advantage to themselves and a disadvantage to their competitors. This Court has expressly recognized this fact in its opinion in
"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. . . . [
The second factor relied upon by the courts below to justify the application of the Sherman Act to the railroads' publicity campaign was the use in the campaign of the so-called third-party technique. The theory under which this factor was related to the proscriptions of the Sherman Act, though not entirely clear from any of the opinions below, was apparently that it involved unethical business conduct on the part of the railroads. As pointed out above, the third-party technique, which was aptly characterized by the District Court as involving "deception of the public, manufacture of bogus sources of reference, [and] distortion of public sources of information," depends upon giving propaganda actually circulated by a party in interest the appearance of being spontaneous declarations of independent groups. We can certainly agree with the courts below that this technique, though in widespread use among practitioners of the art of public relations, [
] is one which falls far short of the ethical standards generally approved in this country. It does not follow, however, that the use of the technique in a publicity campaign designed to influence governmental action constitutes a violation of the Sherman Act. Insofar as that Act sets up a code of ethics at all, it is a code that condemns trade restraints, not political activity, and, as we have already pointed out, a publicity campaign to influence governmental action falls clearly into the category
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. [
] 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.
Moreover, we think the courts below themselves recognized this fact to some extent, for their disposition of the case is inconsistent with the position that the use of the third-party technique alone could constitute a violation of the Sherman Act. This much is apparent from the fact that the railroads' counterclaim against the truckers was not allowed. Since it is undisputed that the truckers were as guilty as the railroads of the use of the technique, [
] this factor could not have been in any sense controlling of the holding against the railroads. Rather,
"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.
laws and create traffic hazards, and urge that truckers should be forced to pay a fair share of the costs of rebuilding the roads, that they should be compelled to obey the laws, and that limits should be placed upon the weight of the loads they are permitted to carry. In the light of this, the findings 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 can mean no more than that the truckers sustained some direct injury as an incidental effect of the railroads' campaign to influence governmental action, and that the railroads were hopeful that this might happen. [
] Thus, the issue presented by the lower courts' conclusion of a violation of the Sherman Act on the basis of this injury is no different than the issue presented by the factors already discussed. It is inevitable, whenever an attempt is made to influence legislation by a campaign of publicity, that an incidental effect of that campaign may be the infliction of some direct injury upon the interests of the party against whom the campaign is directed. And it seems equally inevitable that those conducting the campaign would be aware of, and possibly even pleased by, the prospect of such injury. To hold that the knowing infliction of such injury renders the campaign itself illegal would thus be tantamount to outlawing
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" [
] between two industries, both of which are seeking control of a profitable source of income. [
] 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.
For a discussion of the mechanics of this technique and the purposes generally underlying its use by public relations firms,
Ross, The Image Merchants, at 118, 226-227 and 266-267.
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
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,
113 F.Supp. 737; 14 F.R.D. 189, and 19 F.R.D. 146.
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.
166 F.Supp. at 172-173.
U.S. 1, at
221 U. S. 57
See Apex Hosiery Co. v. Leader,
310 U. S. 491
this Court was unanimous in the conclusion that the language and legislative history of the Sherman Act would not warrant the invalidation of a state regulatory program as an unlawful restraint upon trade. In so holding, we rejected the contention that the program's validity under the Sherman Act was affected by the nature of the political support necessary for its implementation -- a contention not unlike that rejected here. The reasoning underlying that conclusion was stated succinctly by Mr. Chief Justice Stone:
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.
155 F.Supp. at 778.
See, e.g., United States v. Harriss,