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Matched Legal Cases: ['§ 16', '§ 15', '§ 15', '§ 885', '§ 885', '§ 46', '§ 885', '§ 2446']

ZENITH RADIO CORP. V. HAZELTINE RESEARCH, INC., 401 U. S. 321 - Volume 401 - 1971 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 401 > ZENITH RADIO CORP. V. HAZELTINE RESEARCH, INC., 401 U. S. 321 (1971) > Full Text
418 F.2d 21, reversed and remanded. WHITE, J., delivered the opinion of the Court, in which BURGER, C.J., and BLACK, DOUGLAS, BRENNAN, MARSHALL, and BLACKMUN, JJ., joined. HARLAN, J., filed an opinion concurring in the result, in which STEWART, J., joined, post, p. 401 U. S. 349.
Although Zenith's counterclaim, on its face, sought to recover all damages suffered in past years, without restriction, [Footnote 1] HRI pleaded neither limitations nor release in its reply to the counterclaim. Zenith instead revealed its own awareness of the statutory limitation period during the trial and expressly restricted its proof to damages suffered during the statutory four-year damage period. However, Zenith sought to recover all damages suffered during those years even though it was unmistakably clear that some of this damage had been caused by conspiratorial action prior to 1959. Yet at no time during the trial did HRI suggest that the statute barred Zenith's recovery of any part of its total damage suffered during that period. HRI did challenge Zenith's claim that it would have had a 16% share of the Canadian market on the ground that the evidence was speculative -- indeed, that it was so speculative that Zenith had failed entirely to sustain its burden of proving damage, but it interposed no objection to Zenith's demand for all damages sustained during the four-year period, no matter when the operative acts had occurred. Not until one year after trial, when it learned that the judge's findings and conclusions were unfavorable, did HRI assert that part of the post-1959 damage was the result of pre-1959 conduct and was barred either by the statute of limitations or by the
It is settled that the grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court. Foman v. Davis, 371 U. S. 178, 371 U. S. 182 (1962) (dictum). In a matter as substantial and complex as this one, where HRI claimed it had been misled or, at the very least, asked to be relieved of mistake or oversight, it might have been within the discretion of the trial judge to have permitted HRI to amend its pleadings to include therein the defenses of limitations and release. But, in deciding whether to permit such an amendment,
the trial court was required to take into account any prejudice that Zenith would have suffered as a result, see Kanelos v. Kettler, 132 U.S.App.D.C. 133, 136-137, n. 15, 406 F.2d 951, 954-955, n. 15 (1968); United States v. 7 Bottles, More or Less, 320 F.2d 564, 573-574 (CA3 1963); Caddy-Imler Creations v. Caddy, 299 F.2d 79, 84 (CA9 1962); 3 J. Moore, Federal Practice � 15.08[4] (2d ed.1968), and here the prejudice to Zenith would have been substantial. Zenith's theory that all of its damages suffered during the four-year period were legally recoverable had been made quite clear during the trial, and Zenith had proved up its damages in accordance with that theory. Meanwhile HRI had neither pleaded its defenses, objected to Zenith's evidence, nor otherwise hinted that post-1959 damages caused by pre-1959 conduct were for any reason barred until long after the record had been closed. To have then sustained HRI's defenses would have been to deny Zenith the opportunity to prove its recoverable damages -- a denial that hardly comports with the letter or the spirit of Rule 15(a). At the very minimum, if the defense of limitations or release was to be entertained and deemed to bar that part of Zenith's damages resulting from the lingering consequences of past acts, Zenith would have been entitled to perfect its proof as to damage resulting from pool operations during the four-year period, as well as to prove, if it could, what damages it might have suffered in the future from those acts. To have permitted Zenith to perfect its proof would, of course, have required reopening of the record and a virtual retrial of the issue of damages.
The trial judge here might have permitted reopening. Like a motion under Rule 15(a) to amend the pleadings, a motion to reopen to submit additional proof is addressed to his sound discretion. See, e.g., Swartz v. New York Central R. Co., 323 F.2d 713, 714 (CA7 1963);
Locklin v. Switzer Bros., 299 F.2d 160, 169-170 (CA9 1961); Gas Ridge, Inc. v. Suburban Agricultural Properties, Inc., 150 F.2d 363, 366, rehearing denied, 150 F.2d 1020 (CA5 1945); 6A J. Moore, Federal Practice � 59-04[13] (2d ed.1966). But the record is clear that he refused to reopen with respect to damages in the Canadian market or otherwise to modify the Canadian judgment, and that he thereby rejected HRI's proffered defenses. Although we are not privy to his unexpressed thinking, and although his refusal can be read as a rejection of the defenses on the merits, it can also be read as a holding that the defenses were, in effect, waived by the untimeliness of their presentation, and hence that the pleadings would not be amended, except as a matter of form, and that the trial would not be reopened.
On the assumption that the trial court did hold the defenses of limitations and release to have been waived, we cannot say that the judge abused his discretion or stressed too much the value of avoiding reopening a trial to litigate matters that HRI had had an opportunity, but neglected, to litigate. Nor is it irrelevant in this connection that HRI's central claims during trial were that there was no conspiracy, and that Zenith had suffered no damage at all. The defenses that HRI set out in the post-trial motions were, in a sense, inconsistent with these trial claims, for the defenses conceded, albeit only arguendo, that a conspiracy did exist, and that Zenith, absent the conspiracy, would have controlled a sizable share of the Canadian market. HRI's post-trial argument, in effect, was one of confession and avoidance, showing that the conspiracy had been so successful in the pre-1959 period that it could be relatively or entirely quiescent from 1959 to 1963 and nonetheless cause Zenith substantial damages in those years. It is quite possible that HRI knew exactly what it was doing in not presenting this argument during trial, and that it realized a
We turn first to Zenith's argument that, even if the statute of limitations were to be held applicable in this case, the statute was nonetheless tolled from November 24, 1958, to November 1, 1963, [Footnote 5] pursuant to 15 U.S.C. § 16(b) by reason of a Government antitrust action brought against various American companies
The Court of Appeals rejected the tolling argument. It had some doubt whether tolling was properly before it, since Zenith had never entered a formal plea of tolling, and HRI now contends that Zenith's failure to so plead in its original complaint bars it forever from raising such a claim. This contention is without merit. The cases on which HRI relies themselves establish that 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. See National & Transcontinental Trading Corp. v. International General Elec. Co., 15 F.R.D. 379, 382 (SDNY 1954). Cf. Moviecolor Ltd. v. Eastman Kodak Co., 288 F.2d 80, 88 (CA2 1961). Nor should Zenith be penalized for failing to enter a formal plea of tolling in response to HRI's belated limitations plea, for Zenith can hardly be blamed for reading the remarks of the trial judge as a rejection of the limitations defense on the ground of waiver. Zenith was never unambiguously called upon to submit a formal plea; to hold under such circumstances that want of a submission amounts to a waiver would be to treat pleading as "a game of skill in
It is true that the lower federal courts have, until recently, confined the operation of the section and held it applicable only to defendants named in the Government suit. See, e.g., Sun Theatre Corp. v. RKO Radio Pictures, Inc., 213 F.2d 284, 290-292 (CA7 1954); Momand v. Universal Film Exchanges, Inc., 172 F.2d 37,
The basic rule is that damages are recoverable under the federal antitrust acts only if suit therefor is "commenced within four years after the cause of action accrued," 15 U.S.C. § 15b, plus any additional number of years during which the statute of limitations was tolled. Generally, a cause of action accrues and the statute begins to run when a defendant commits an act that injures a plaintiff's business. See, e.g., Suckow Borax Mines Consolidated, Inc. v. Borax Consolidated, Ltd., 185 F.2d 196, 208 (CA9 1950); Bluefields S.S. Co. v. United Fruit Co., 243 F. 1, 20 (CA3 1917), appeal dismissed, 248 U.S. 595 (1919); 261 State Corp. v. Sealy, Inc., 263 F.Supp. 845, 850 (ND Ill.1967). This much is plain from the treble damage statute itself. 15 U.S.C. § 15. In the context of a continuing conspiracy to violate the antitrust laws, such as the conspiracy in the instant case, this has usually been understood to mean that each time a plaintiff is injured by an act of the defendants, a cause of action accrues to him to recover the damages caused by that act, and that, as to those damages, the statute of limitations runs from the commission of the act. See, e.g., Crummer Co. v. Du Pont, 223 F.2d 238, 247-248 (CA5 1955); Delta Theaters, Inc. v. Paramount Pictures, Inc., 158 F.Supp. 644, 648 (ED La.1958); Momand v. Universal Film Exchange, Inc., 43 F.Supp. 996, 1006 (Mass.1942), aff'd, 172 F.2d at 49. However, each separate cause of action that so accrues entitles a plaintiff to
recover not only those damages which he has suffered at the date of accrual, but also those which he will suffer in the future from the particular invasion, including what he has suffered during and will predictably suffer after trial. See, e.g., Farbenfabriken Bayer, A.G. v. Sterling Drug, Inc., 153 F.Supp. 589, 593 (NJ 1957); Momand v. Universal Film Exchange, Inc., supra, at 1006. Cf. Lawlor v. Loewe, 235 U. S. 522, 235 U. S. 536 (1915). Thus, if a plaintiff feels the adverse impact of an antitrust conspiracy on a particular date, a cause of action immediately accrues to him to recover all damages incurred by that date and all provable damages that will flow in the future from the acts of the conspirators on that date. To recover those damages, he must sue within the requisite number of years from the accrual of the action. On the other hand, it is hornbook law, in antitrust actions as in others, that, even if injury and a cause of action have accrued as of a certain date, future damages that might arise from the conduct sued on are unrecoverable if the fact of their accrual is speculative or their amount and nature unprovable. Moe Light, Inc. v. Foreman, 238 F.2d 817, 818 (CA6 1956); Chicago & N.W. R. Co. v. De Clow, 124 F. 142, 143 (CA8 1903); Culley v. Pennsylvania R. Co., 244 F.Supp. 710, 715 (Del.1965). Cf. Howard v. Stillwell & Bierce Mfg. Co., 139 U. S. 199, 139 U. S. 206 (1891).
In antitrust and treble damage actions, refusal to award future profits as too speculative is equivalent to holding that no cause of action has yet accrued for any but those damages already suffered. In these instances, the cause of action for future damages, if they ever occur, will accrue only on the date they are suffered; thereafter, the plaintiff may sue to recover them at any time within four years from the date they were inflicted. Cf. Schenley Industries v. N.J. Wine & Spirit Wholesalers Assn., 272 F.Supp. 872, 887-888 (NJ 1967);
We do not, of course, have the thinking of the district judge on this issue, and ordinarily the matter of future damages would very much depend on his informed discretion. [Footnote 8] But we are reluctant to return any issue in this litigation for another round of proceedings in the trial or appellate courts if we can fairly dispose of it
Entirely apart from its statute of limitations defense, HRI claims that whatever part of the 1959-1963 damages was caused by conspiratorial conduct prior to 1957 is unrecoverable because of a release executed in that year by Zenith in settlement of an antitrust action against other coconspirators in the Canadian patent pool. [Footnote 10] The
Three rules have developed to deal with the question whether the release of one joint tortfeasor releases other tortfeasors who are not parties to or named in the release. The ancient common law rule, which was grounded upon a formalistic doctrine that a release extinguished the cause of action to which it related, was that a release of one joint tortfeasor released all other parties jointly liable, regardless of the intent of the parties. See, e.g., Western Express Co. v. Smeltzer, 88 F.2d 94,
95 (CA6 1937); American Ry. Express Co. v. Stone, 27 F.2d 8, 10 (CA1 1928); Barrett v. Third Avenue R. Co., 45 N.Y. 628, 635 (1871); Ellis v. Esson, 50 Wis. 138, 146, 6 N.W. 518, 519 (1880). While this Court has referred to this rule in cases where the rights of the litigants were controlled by state or federal common law, see Chicago & Alton R. Co. v. Wanger, 239 U. S. 452, 239 U. S. 456-457 (1915); United States v. Price, 9 How. 83, 50 U. S. 92 (1850); Hunt v. Rhodes, 1 Pet. 1, 26 U. S. 16 (1828); we are cited to no case where we have applied the rule to a statutory cause of action created under federal law. Indeed, we have expressly repudiated the rule. See Aro Mfg. Co. v. Convertible Top Co., 377 U. S. 476, 377 U. S. 501 (1964). Cf. Birdsell v. Shaliol, 112 U. S. 485, 112 U. S. 489 (1884). Moreover, in the lower federal courts, causes of action based upon federal statutes have generally been governed by one of the other two rules. The first of these rules provides that, although a release of one coconspirator normally releases all others, it will not have such an effect if a plaintiff expressly reserves his rights against the others. This rule, which has been adopted with some variation by statute in 21 States, [Footnote 11] by judicial decision in others, see, e.g., McKenna
v. Austin, 77 U.S.App.D.C. 228, 233-234, 134 F.2d 659, 664-665 (1943) (announcing D.C. law); Riley v. Industrial Finance Service Co., 157 Tex. 306, 311, 302 S.W.2d 652, 655 (1957); and by the First Restatement, see Restatement, Torts § 885(1) (1939); has been applied in a number of antitrust cases. See, e.g., Miami Parts & Spring, Inc. v. Champion Spark Plug Co., 402 F.2d 83, 84 (CA5 1968); Twentieth Century-Fox Film Corp. v. Winchester Drive-In Theatre, Inc., 351 F.2d 925, 931 (CA9 1965); Dura Electric Lamp Co. v. Westinghouse Electric Corp., 249 F.2d 5, 6-7 (CA3 1957). It was this rule that the Court of Appeals followed in the opinion below. A final rule, which has gained support in several recent decisions and been adopted by the American Law Institute in a tentative draft of the Second Restatement of Torts, provides that the effect of a release upon coconspirators shall be determined in accordance with the intentions of the parties. See Winchester Drive-In Theatre, Inc. v. Twentieth Century-Fox Film Co., 232 F.Supp. 556, 561-563 (ND Cal.1964),
We perceive no reason to follow a different rule in antitrust litigation. Indeed, of the three available rules, the rule adopted in Aro is most consistent with the aims and purposes of the treble damage remedy under the antitrust laws. We must keep in mind the multistate and multiparty character of much private antitrust litigation; often, defendants who have conspired together must be sued in a number of different States if all are to be reached, and, while defendants in some States may
Of course, to the extent that the $10,000,000 settlement which Zenith received in return for the 1957 release was understood by the parties to provide compensation for future damages that Zenith anticipated it would suffer during 1959-1963 as a result of the pre-1957 conduct of the Canadian pool, HRI would have available to it a defense of payment, for it is being ordered by the District Court to make full payment for all the 1959-1963 damages inflicted by all the members of the pool. It is settled that, entirely apart from any release, a plaintiff who has recovered any item of damage from one coconspirator may not again recover the same item from another conspirator; the law, that is, does not permit a plaintiff to recover double payment. See Aro Mfg. Co. v. Convertible Top Co., supra, at 377 U. S. 502-503 (plurality view); McKenna v. Austin, supra, at 234, 134 F.2d at 665; Restatement, Torts § 885(3) (1939); W. Prosser, Torts § 46 (3d ed.1964). However, the record below indicates that a defense of payment could not here be sustained, for, while the 1957 release did extend to future damages, the undisputed and unimpeached testimony of Zenith's witnesses was that the $10,000,000 settlement was understood by the parties as compensation only for Zenith's damages up to the date of the release. Thus, it is not surprising that, although HRI did advance a claim of payment upon its post-trial motion in the District Court, it has made no such argument in this Court. Since the claim was untimely presented below, was not pressed here, and is not sustainable on the facts contained in the record, we see no basis for its further consideration.
Resort may be had to the contract in construing the release, since the parole evidence rule is usually understood to be operative only as to parties to a document, and HRI here was not a party to the release. See Stern v. Commissioner, 137 F.2d 43, 46 (CA2 1943); O'Shea v. New York, C. & St. L.R. Co., 105 F. 559, 562-563 (CA7 1901); Restatement (Second), Torts § 885, Comment d (Tent.Draft No. 16, 1970). See generally 9 J. Wigmore, Evidence § 2446 (3d ed.1940).
The District Judge, on at least three occasions, observed that Hazeltine hac been put on notice of Zenith's theory by the allegations of the counterclaim itself and by the pretrial briefs. [Footnote 2/1] He repeatedly commented on trial counsel's failure to raise the defenses of release and the statute of limitations, [Footnote 2/2] and, in the course of colloquy, more
directly addressed to Hazeltine's other contentions, he emphasized the necessity for trial counsel to prepare his case if the client was not to suffer. [Footnote 2/3] After counsel for
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