Earl Warren: Eastern Railroads Presidents Conference et al., Petitioners, versus Noerr Motor Freight, Incorporated, et al. Mr. Kohn, you may continue your argument.
Harold E. Kohn: Thank you, sir. With the permission of the Court, I should like this morning to refer Your Honors to several specific places in the record where I think there are contained findings of fact which pretty clearly established what this particular case is about. First in Volume 4 of the transcript of the record as you all kindly turn to page 88, you will see about two thirds of the way down a portion of the opinion of the District Court. I might say incidentally that the District Court states and that in addition to the findings of fact, which it makes specifically that the findings and the statements contained in its opinion, are to be treated as findings.
John M. Harlan II: Where is that (Voice Overlap) --
Harold E. Kohn: Page 88, sir. Beginning with the italicized portion, it was the purpose and intent of Messrs, Deegan, Littlefield and Mackie. Those are all railroad or Eastern Railroad Presidents Conference officials on the one side and Byoir on the other to hurt the truckers in every way possible even though they secured no legislation. It was their purpose to restrict the activities of the truckers in the long-haul industry to the greatest extent possible and finally, if possible, to drive them out of that segment of the entire transportation industry. Now, if you'll turn please to page 100 or just (Inaudible) before this. The Court states in the first whole paragraph on that page beginning about halfway down, it was a matter of first impression with the court upon the original reading of the complaint when this suit was instituted some four and half years ago that the charges made were rather incredible nature and that plaintiffs herein will have the most difficult test to establish their contentions by a fair preponderance of the evidence. It is now apparent that with the exception of proving by a preponderance of the evidence, actual bribery of public officials and bribery of officers of public organization, the plaintiffs approved by a great preponderance of the evidence that a conspiracy in violation of the Sherman and Clayton Antitrust Acts actually existed its formation, its purpose, and the means by which it was affected and generally in the form and manner as alleged in the complaint, and I will refer to the complaint just a moment or two. At page 101, the last paragraph beginning on that page, the Court has found as a fact that the railroads in Byoir entered into a conspiracy and unreasonable restraint of trade, the nature and purpose of which was to injure the truckers and their competitive position in the long-haul freight industry in the Northeastern section of the United States. This of course involves interstate commerce. The immediate purpose was to create public resentment to the truckers, not only in the minds of the general public, but in the minds of those who utilize the service of the trucks and in such a manner as to interfere with business relations between shippers and truckers. Then finally, at the bottom of page 102 the sentence beginning about five lines from the bottom instead, "Instead of meeting the competition in the field in giving the shippers what the shippers wanted they," that's the defendants, "determined upon another course of action to injure and/or destroy the truckers and thereby force the shippers to their detriment to continue to use the railroads." Now, if you could please turn back to page six but I want to show you one or two paragraphs of the complaint which make it quite clear that throughout this case and not only as episode at the end was the problem of our suppliers, shippers, customers and so on in this case. On page 6 of the same volume of the record to which I have previously eluded, you will see under subheading E of paragraph 16 among the things that we complained that they were doing. Vilification and defamation of the plaintiffs by the circulation to the public generally, to public officials and to suppliers and customers of the plaintiffs are false and malicious reports of and concerning the plaintiffs in their business of hauling freight. And there were one or two other places where the same thing appeared, which I don't think I referred to you in reading. And then finally, on the findings themselves, the specific findings, if you'll turn please to page 25, finding number 12, the bottom of the page, "On or about May 19, 1949, defendants other than Byoir, I may say here that there's another finding 14 which says Byoir came in to the later day, "acting through the ERPC, as Eastern Railroad Presidents Conference, combined then conspired with the intent and for the purpose and objective of eliminating truck operators including plaintiff trucking companies from the long-haul of transportation of freight and interstate commerce and the eastern territory and monopolizing that portion of interstate transportation in commerce for defendant railroads. And on page 27, number 20, the third-person technique was adopted by defendant so as the public, including governmental officials, would not be able properly to evaluate their propaganda thus disseminated and in order to achieve for it, wider distribution and more favorable reception.
Earl Warren: Where is -- where is that did you say?
Harold E. Kohn: That sir is number 20 on page 27 about the middle of the page.
Earl Warren: Oh, 27, yes.
Harold E. Kohn: Now, the next, and I have just two more of these are on -- the next is on page 28 and it also is number 28. It's not a basic finding such as those that I referred to but it does refer to one of the articles, which I think the Chief Justice may have inquired about yesterday. And it's simply (Inaudible) perhaps 10 or 15 which covers specific types of material within volume 3. Defendant has also caused to be published in national magazines and other publications, articles by our extensively independent authors, again, repeating the anti-truck propaganda line of defendants. Byoir prepared or participated substantially in the preparation of such articles and in their distribution. In connection of the railroad with such articles was concealed. These articles included. And the first one was the one referred to yesterday, "The Rape of our Roads," Frederick G. Brownell, Reader's Digest July 1950. Byoir, as the finding indicated, prepared it, got it -- gets -- prepares this article and get some place in magazines. And of course, the man whose name as I extensively signed to them gets the usual author's fee from the magazine. Now, finally on page 29, number 31, as part of their campaign, defendant's vilified long-haul truckers as Five Percenters. Now, you remember that at or about the time that this campaign was going on, there were legislative investigations with regard to so-called influence on congressional and other governmental agencies here in Washington. And the term Five Percenter had come in to popular acceptance as a term of Odium at that time. Now, they applied that term and their own interoffice memoranda indicate that this was done deliberately and for the purpose of associating with us and having carry over to the truckers who had nothing whatsoever to do with the legislative investigation, then going on underway or the practice of it -- in it. The same term of public disrepute, Five Percenters and the reason was their justification among themselves was that 5% of the trucking industry was composed of the long-haul truckers. And that Court continues which connoted fixers and characterized truck operators as evil, sinister, wrongdoers and villains and all --
Hugo L. Black: What page is that you're reading from?
Harold E. Kohn: That sir is page 29, finding number 31. Now, these findings are not only based on what you saw by way of magazine material in -- in volume 3. In addition to that, there was a tremendous amount of other written material. They were literally thousands of pages, as my recollection, of testimony by people on the stand, their people whom we called for cross-examination as a result of which a good bit of this material was developed. For example, they send people around regularly speaking to all sorts of service organizations. By that I mean the Rotary, Kiwanis and Lions and so on which are composed of businessmen who are natural customers of the truckers. And these people testified on the stand or those who sent them around testified as to the nature of a lot of other material other than these magazine articles. Everything in these magazine articles before any particular article was admitted into evidence was identified by a witness on the stand, either that he orally told what the connection was of Byoir and the railroads from the witness stand or there was a memorandum which he identified from his file which tied every one of these things in -- with the railroads and Byoir. Now, these findings were all sustained by the Court of Appeals. As a matter of fact, no issue was even raised in the Court of Appeals as to whether they were correct. And as a matter of fact too, I think, it's clear from the record here, and I've gone over the questions presented two or three times both in the brief and in the original petition for certiorari here, that they're not challenged, they're not raised in the questions involved or the questions presented to this Court. And those are the findings which are established the facts for this particular case. Now, we think that the issue is not whether the Sherman Act applies to or covers a legislative campaign, although I indicated yesterday and I will later today that I think it does. But whether a conspiracy by the defendants to drive the plaintiffs out of a very important and vital segment of interstate commerce, namely, long-haul trucking and to monopolize it for themselves utilizing what Judge Clary called the "technique of the big lie," in which they actively misrepresent and deceive people as to their role in this campaign, where they seek to destroy the plaintiff's goodwill to alienate its customers is removed from the Sherman Act merely because the defendants also sought to achieve their purpose by procuring restrictive legislation. The legislation I may say, not at the congressional level but at the state level and that is of some importance here, in order to increase the plaintiffs' expenses of doing business and the price of their service to the public. Now, the fact --
Earl Warren: Mr. Kohn, I understood -- I understood Mr. Price to say that there was absolutely no testimony here to indicate the false of any of these statements. Did I misunderstand him or --
Harold E. Kohn: Well, I think he may have so stated but I think if he did, it was incorrect then I -- I was going to come a few moments later to some of the misrepresentation.
Earl Warren: Don't disturb your (Inaudible)
Harold E. Kohn: Now, there are number of cases which we cite at page 16 and 17 of our brief. And at page 2 of our very short, supplemental brief, which hold that even if the main thrust of a conspiracy is to achieve monopoly or restriction by legislation. But that does not prevent it being a violation of the Antitrust Act. And this is what Mr. Justice Harlan mentioned I think asked about yesterday. In the Sisal Sales Corporation case at 274 US 268, practically the sole method whereby they sought to achieve their purpose was by legislation. And this Court, I think, then speaking as a matter of fact to Mr. Justice McReynolds had no trouble whatsoever in concluding that that was a violation of the Antitrust Act. There are number of other cases, many in the lower courts, which hold the same thing on page 17, the basing page of the brief to which I just referred you. There are number of cases in many circumstances, there's been one as a matter of fact, which was tried at some length and went to a great many procedure of step right here in the District of Columbia where a jury, just quite recently after the District Court and the Court of Appeals upheld that the complaint very much like our complaints stated the course of action, where the jury found for the plaintiffs and held that this was a violation of the Sherman Act. There are cases in the Seventh Circuit. There are cases, a matter of fact one instituted by the United States Government itself and the Association of American Railroad's case in the District of Nebraska, 1945. Your Honors are familiar with the Maryland and Virginia Milk Producers case where one, incidentally out of the allegation, was that the defendants in that case were doing just what was sought to be done here. That case was disposed off by a consent decree, I think approved by Judge Holtzoff, just a few weeks ago in which one of the things that the defendants were enjoined from doing was engaging or employing any person to present in his own or as any persons other than defendants, the views of defendants concerning the enactment, amendment, repeal or rescission of any legislation or regulation affecting the defendant or from remunerating any person who without disclosing, either that he is presenting the views of defendant or that he is being remunerated by the defendant, makes representations to a legislative or regulatory body or who would be expressed or implied direction or requested defendant makes representations to any organization or association without making either such disclosure. I think it was Mr. Winston for the Government the other day just before your Court sited the United States versus Borden case as a type of situation where the use of governmental or legislative regulation does constitute a violation of the antitrust laws where the purpose is to drive somebody else out of business or to monopolize a field of interstate commerce. Now, the background of the Act, I think it was to examine, indicates the same thing. I think Mr. Justice Black in the South-Eastern Underwriters case pointed out that an organization, I think which was called the "wheel" was started by the farmers and people of that day because the trust and this was an antitrust case, not only were exercising economic power but they're exercising political power. They were influencing the legislatures to the detriment of the people who had to be protected by the legislation which was enacted in 1890. I think that fact that this Court has been mindful of the prevalence of legislative attempts to achieve monopoly as further indicated by the Socony-Vacuum case in which Mr. Justice Douglas wrote the opinion. And he pointed out that merely because you achieved your purpose to legislation does not exempt you from the antitrust laws and cited three or four types of specific exemption which Congress granted when it wanted to, to particular industries to proceed to do something through legislation or through state administrative practices, which otherwise would have been prohibited by the -- by the Sherman Act. You had a somewhat similar situation. For example, in Georgia versus Pennsylvania Railroad where the railroads defended on the ground that, "Well, we're not doing anything which is in violation of the Sherman Act because we have to proceed through the Interstate Commerce Commission or the other appropriate regulatory commissions and how can a conspiracy or combination by us to get rates which those agencies must approve, and which must be reasonable because they wouldn't be approved if they weren't reasonable, how can that be a violation of the Sherman Act?" And the Court held that, while the rates maybe perfectly proper, the combination to eliminate the competition and to seek in incombination a rate free from the free play of competition which should precede the rate making process was itself a violative of the Act. And in those instances, I say where congress has seemed fit to grant exemptions to the Sherman Act, as in the Bullwinkle Act, as in the Insurance Act and so on. Congress has done so, but it's been manifested throughout, from the very beginning, in the -- in the original Trans-Missouri Railroad cases, which were among the first cases to come up under the Antitrust Acts involving the railroad. That they fully con -- contemplated, that regardless of the means if you sought to achieve the purpose of your conspiracy, if your purpose was to monopolize or to restrict that that was illegal. Mr. Justice Harlan, I think, in the Northern Securities case, very clearly went into this problem and -- and pointed out that, in that case, similar to the case that we have here where the State of New Jersey had purported to permit the creation of certain trust which were -- by trust I mean large organizations controlling other companies and so on which were illegal under the Sherman Act. It was first pointed out that the State of New Jersey, such as here, had no reason to suspect that those who are taking advantage of its liberal and corporation laws had in view the purpose of destroying commerce and then the Court continued. And I just want to read briefly a line or two stating that, "No device invasion of the provisions of the antitrust laws, however skillfully such device may have been contrived, then no combination by whomsoever form is beyond the reach of the supreme law of the land. If such device or combination by its operation directly restrains commerce, then later on while every instrumentality of domestic commerce is subject to state control, every instrumentality of interstate commerce may be reached and controlled by national authority, so far to compel it to respect the rules for such commerce lawfully established by Congress. No corporate person can excuse the departure from or violation of that rule under the plea that that which it has done or omitted to be done is permitted or not for -- forbidden by the state under whose authority had came into existence." We repeat that no state can endow any of its corporations or any combinations of its citizens with authority to restrain interstate or international commerce.
Felix Frankfurter: But this Court has held that a state court, despite the Commerce Clause, regulates the way --
Harold E. Kohn: Yes.
Felix Frankfurter: -- (Voice Overlap) et cetera, which is a very different situation from the Northern Securities situation.
Harold E. Kohn: May I say so that there is no doubt that that is true. We do not seek here to invalidate the legislation itself. We are -- although I think, as a result of your decision in Bibb versus Navajo, that if this legislation does unreasonably burden commerce, it could be declared unconstitutional. There, I think it was, you declared unconstitutional state statute which merely required the certain kind of mudguard which was held to be burden so. We say that the people who seek to combine to achieve their monopolistic purpose are restrained by the Sherman Act from doing so, just as in the Georgia Pennsylvania case or in any of the many cases, Borden case or any of the case which arise under this principle. The rate which the Interstate Commerce Commission or some other regulatory bodies fixes is perfectly valid. But the people who conspired to get it may be restrained under the Sherman Act. Just recently, you had another coming out of our Circuit. The RCA case where the Federal Communications Commission held that the transfer of a particular television station in Philadelphia was perfectly proper even though incidentally, one of the things they're supposed to consider is whether there's an antitrust violation. And this Court, now reversing the court below that that did not prevent the United States Government from proceeding under the antitrust statute to penalize the persons who may have conspired and it was their charged did conspire to get that station and that station transfer approved by the Interstate -- I mean by the Federal Communications Commission.
Felix Frankfurter: All I'm suggesting that --
Harold E. Kohn: They're two different things.
Felix Frankfurter: -- that the Northern Securities case doesn't help us from the slightest with this problem, because Jersey couldn't authorize its cooperation to enter a combination which by -- the Sherman law because that's beyond -- that was beyond the power of Jersey, with a combination or no combination, whether spontaneously generated or stimulated.
Harold E. Kohn: I certainly agree with what -- what you say about the law. Now, if I may turn briefly to some of the misrepresentations which occurred in this play -- in this case. It may say also that these people and the evidence makes it clear were old hands of this. Byoir and this was testified to as part of the evidence on the case below had been the subject of antitrust suit in the Seventh Circuit, the famous A&T case where many of the same things took placed. The testimony was and this is testimony on the case that they have very slight regard to the antitrust laws. They're sort of like traffic violation. They're not really serious. I think he said that the Government shops around until they finally get a court that's willing to convict you. The railroads themselves had been through the same problem. The Willard Committee of the United States Senate had exposed in the 1940, a very similar type of campaign in other areas and that too is in the record below, in which they had done much the same practices in other areas. Now first of all as to the misrepresentations, basically, we think -- and there's one real type of misrepresentation that they misrepresented the source of the material. Who was paying for, who was sponsoring and who was behind and then what the motives were? They actually created organizations which had no other purpose, no other function except to distribute their material on the names which were wholly misleading like they set one up called the Empire State Transportation lane. They reactivated and financed a lot of organization to which had been dormant like the New Jersey Automobile owners. And the New Jersey automobile owners was the one and who is named extensively a man was going throughout New Jersey and Pennsylvania and elsewhere making speeches to Rotary, Kiwanis and so on about the damage of the trucks we're doing. They used existing organizations like the Township Supervisors in Pennsylvania. And I think Mr. Justice Brennan referred to yesterday, where they published in the name of the Township Supervisors and ad, which have been and been paid for by the Township Superviders -- Supervisors organization would have been a plain violation of the Pennsylvania statutes which forbid this organization to use its money for any of such purpose. And the ad was placed, composed, run everything else by Byoir and paid for by The Railroads. They had a television program which they ran in the name of the grange, where once again, it was a plain violation of the Federal Communications Act which said that in a program of that type you have to put -- you have to announce who the real sponsor is, who is the advertiser, or who is the sponsor paying for the program. Nowhere that it appeared to the Railroads, in this program were the actual sponsors and this program was put out in the name of the grange. Then, there were more specific false statements. If I may epitomize the -- the subject of the dispute for just -- for just a moment, it's settled by the Maryland Road Test, I don't think that any dispute but regardless whether it's settled by the Maryland Road Test, the Maryland Road Test did prove this. That the important thing is not what the weight is in the truck altogether but how much weight is on each axle. It's like a man on snow shoes, 200 pounds, and go over snow but a 50-pound child, just wearing a child on shoes will -- will fall through. The important thing is, what it is the load on each axle and second what is the subsurface of the road, because as you've seen, sidewalks subjected only the ordinary pedestrian traffic will crack if the subsurface is not properly prepared. Now, they represented that this test had shown that the overall weight was the important thing in damaging roads. Now, this was particularly important in Pennsylvania where there was a bill pending which would have increased the weight but decrease the axle load limit to the benefit of the truckers, to the benefit of the public. In other words, the truckers could have carried more cheaply. The roads would have been subject to actually to less damage and the public would have gotten services more cheaply. They defeated that bill by misrepresentation of this Maryland Road Test saying that it had shown that the increased weight that we wanted was what would damage the road. Now actually, there was on the witness stand in this case, a former secretary of Highway of Pennsylvania who had transmitted a report to the Governor, the Governor's office upon which great reliance was placed by the Governor and be telling this measure. That man on the witness stand still at that late date did not know that the report which had come to him from one of his subordinates had been prepared and written word for word by Byoir people. We asked him several times and he said, "Well, it seems to have the style of my subordinates so I just -- I assumed, I -- I felt safe. It was prepared by -- by my people in my department." And it was admitted on the record and there's no doubt about this that that report was prepared word for word by the Byoir people containing this sort of misrepresentation. The same thing was done with a Federal Bureau of Roads film, which was shown in the courtroom. We showed the original film as it was prepared by the Bureau of Roads and then we showed the film as it was put out by some organization. I've forgotten the exact name of it which put this out. And the head of the Bureau of Roads was in the courtroom and he expressed the opinion that it was not the same or substantially the same as the film which he had originally edited. They prepared televisions scripts, radio scripts, which portrayed all truckers as -- I think their phrase was relating to evil, sinister, wrongdoers. They'd cast them as heavy and villain, that sort of thing. They've prepared accident pictures. No matter how a truck happened to be in an accident, whether it was the truck's fault or anybody else's fault, that picture was kept in a file and then circulated around as if it was the truck that was responsible for every one of these accidents. And they did this through news agencies, syndicating agencies which appeared to be independent news agencies, syndicating agencies, but they're actually owned. We find later a lock, stock empowered by Byoir. There was one called the Central States News Views. First, they started out a -- remember the text yesterday. If you look at page 559 (b) of volume 4, they have a young lady called Ms. (Inaudible) of 1949. And right below her is a road all smashed up. Then they have Ms. Plunging Neckline. They showed a truck which is bogged down on a muddy road. Then they continue that sort of thing through 561 (b) where Byoir has distributed, this time to another syndicate called SC syndicate. This horrendous series of pictures, truck terror time and one truck accident every 10 minutes and so on. And pictures of automobile -- truck accidents which nobody endeavored to prove and nobody could prove in any of instances were caused by the trucks and which gave a completely misleading picture when circulated in myth. And their office memoranda indicated that they circulated literally thousands and tens of thousands of pieces of materials of this kind. Now, if I have just a word about the scope of this injunction. I would call your attention to once again volume 4, which we had before. First, at page 164, at the bottom of that page, you will see that whatever is contained in this injunction had application only if two facts first occur. First, the only thing that's prohibited is what they do in combination or conspiracy and secondly for the purpose of driving us, as driving the truckers out of business or severely restricting truck competition, as to the bottom of 164, the top of 165 of volume 4 of the record. Then you see that the Court even went further at 166, in item number 9 in protecting the rights of the plaintiffs by pointing out that the only sponsoring instigation or support of legislation, which was prohibited, was that where -- or rather putting it the other way. It was prohibited unless their opposition be openly and publicly made in the name of the defendants or any of them. In other words, if they came out and stood up and were willing to be counted, would give their names then they could ask for this legislation. If they didn't, then it was prohibited in the context of this case and finally in Article V, Roman numeral five of the injunction on 166, the Court said that they can ask for legislative, administrative or other governmental benefits for themselves in any manner and that where the plaintiffs were asking for legislation. They could oppose such legislation by appearing before the legislative, administrative or other governmental body. So the only thing they're prohibited from doing so far as legislation is concerned, is combining to put it out of business by seeking legislation in this so-called third party technique or not for attribution or big lie manner, everything else they can do by way of seeking legislation.
Hugo L. Black: Do I understand, you read that as you named it. They are enjoined from asking Congress for past legislation, (Inaudible) past legislation, unless they put -- put their names to the request?
Harold E. Kohn: Well this, the context of this order was state legislation. I think that's of some importance sir because one of the things that they did must -- misrepresent was the National Transportation Policy of Congress but passing that for the moment. The court said that, "Yes, if they are combining to do this and if they are doing it for the purpose of putting us out of business, then they can seek the legislation provided they don't deceive the Legislature as to the source of the material which is being disseminated." If they do deceive the Legislature, then they can't do it. If they are deceiving the Legislature in combination and for the purpose of putting us out of business. In other words, the only thing prohibited is that which had three incidents. One is in combination, two to monopolize, and three by deception.
Hugo L. Black: Has there been any act of Congress in this field?
Harold E. Kohn: The only act would of course be the general lobbying acts, which in United States versus Harris, this Court has disdained. It's not they buy or maintained that it wasn't really seeking legislation, that it wasn't the lobbyist, that it -- its role was not in connection with legislation as a sort of dichotomy in their thinking I think throughout here, they were repeatedly --
Hugo L. Black: Whether true or not, I -- I was asking you about the scope of the injunction?
Harold E. Kohn: Well, I think sir the scope of the injunction is that if they seek state legislation and they satisfied those three conditions, then they're prohibited from seeking it. If they seek legislation only for themselves, perfectly alright, they can do it any way they want in combination or by deception or any other methods. But if they seek legislation to restrict us, that is to impede our business, then if it's in combination, if it's for the purpose of putting us out of business, and if it's deceptive, then they can't do it. But if any -- anyone of those three is not present, they can.
Hugo L. Black: The large part of the legislation (Inaudible) is directed -- directly at doing an injury to one group in order to benefit another group?
Harold E. Kohn: Much of it I think is sir, yes.
Hugo L. Black: And this would mean that these people enjoined from doing that as they combined with one another, both of them want to accomplish the same thing?
Harold E. Kohn: And for the purpose of achieving monopoly.
Hugo L. Black: And -- and for the purpose achieving a monopoly by reason of this passage of a law?
Harold E. Kohn: And -- that's right and deceptively.
Hugo L. Black: But supposed they were trying simply to create a monopoly to say that, "We want to get to Congress to pass a law which allows the railroads to do all the transportation business," would they be enjoined here?
Harold E. Kohn: No because if they go to Congress sir, that's perfectly alright because they're then --
Hugo L. Black: Suppose they want to the state law?
Harold E. Kohn: Well that's a different --
Hugo L. Black: -- intrastate business --
Harold E. Kohn: Intrastate business?
Hugo L. Black: Yes.
Harold E. Kohn: Oh sure they can do that because that's got nothing to do with the Sherman Act. In other words, they can seek intrastate legislation in any one of the States. They can seek interstate legislation from Congress. But the one thing they can't do is try to get the States to set up an interstate barrier which constitutes a burden on interstate commerce when they are doing it in combination, in violation of the Sherman Act, it very much --
Hugo L. Black: Well, that would --
Harold E. Kohn: -- it's very much like other legislation which other people for other improper purposes have sought to achieve and this Court declares it unconstitutional.
Hugo L. Black: What effect was the factor it was thought to create a burden on interstate commerce to have if it was created an unconstitutional burden, of course, of this Court --
Harold E. Kohn: That's right.
Hugo L. Black: -- could set aside.
Harold E. Kohn: But it -- as this Court has always pointed out, it is vital to keep alive the area of competition to avoid the initial conspiracy rather than to try thereafter when it's achieved its purpose to endeavour to -- to right the wrong which has already been done. It's the -- the area of competition, the -- the climate of competition which is sort to be preserved and actually the Sherman Act is violated when the people initially conspired. This Court has declared many times, I think most recently in the Frankfurt Seagrams (ph) case and I think there was some language that are affecting in the (Inaudible) case that every means that you may use to achieve the unlawful purpose of monopolizing --
Hugo L. Black: It doesn't say that they --
Harold E. Kohn: -- is from --
Hugo L. Black: -- they --
Harold E. Kohn: Pardon?
Hugo L. Black: I presume that there're some means that are protected by the Constitution to do things.
Harold E. Kohn: There were certain --
Hugo L. Black: And you wouldn't claim that --
Harold E. Kohn: No.
Hugo L. Black: -- any means would violate the constitutional protection?
Harold E. Kohn: No, no, I wouldn't.
Hugo L. Black: You wouldn't --
Harold E. Kohn: No, sir.
Hugo L. Black: -- if you can enjoin that even if there was conspiracy to be used in for the purpose of destroying a business, would you?
Harold E. Kohn: Well --
Hugo L. Black: Assuming -- assuming now that the means that being used if one that the Constitution protects in size shall be guaranteed.
Harold E. Kohn: Assuming that.
Hugo L. Black: Assuming it.
Harold E. Kohn: Yes, well, I think if you assume that, then of course the answer must necessarily follow.
Hugo L. Black: But then you get down to that question here, is it not?
Harold E. Kohn: But I think the Constitution --
Hugo L. Black: That's the reason I asked you at one in the beginning about (Voice Overlap) --
Harold E. Kohn: I think the Constitution -- first of all, if I may say sir, with all due deference to the Court and the counsel in the other side. This is not in the questions presented at all. There are only question as whether the Sherman Act prohibit this sort of thing but assume you'll get pass that void and decide even though it's among the question presented and was never raised throughout here that it is an issue. I think the Constitution does not protect and this is our case here, does not protect, deceptive means of communication. You've decided in the Harris case that you must reveal your source. In the Hazel Atlas Glass case where the lawyers for the parties in that case wrote a magazine article, very much as here and put it out in the name of a union instead of themselves. The Court held that that is not protected. But I think the phrase was there, truth needs no disguise so that you have that illustration of this principle. And I think you find the same thing in many other cases and types of cases. I think there was a footnote in one of the cases where there was a dissent with regard to the right of unions to make political contributions. And in that case, even the dissenting judges who opposed, who thought unconstitutional, had a footnote saying there's no question that you could require the unions to reveal the source of the publications which they put out. So that if you get into this field at all, I think you have an area where the Constitution does not protect and I say actually in the context of this case, you -- you should never really reach that issue because it has not been -- not been raised here.
Felix Frankfurter: Mr. Kohn, I would like to ask you two questions. We're in an area here where the State has power, namely the regulation of the trucking --
Harold E. Kohn: That's right.
Felix Frankfurter: -- speed, weight, length, height, etcetera.
Harold E. Kohn: That's right.
Felix Frankfurter: And the area is well define because this Court in its decision has frequently had often does not -- more often than not, I think, divided on what is still open to the States and what is not open. So that my first question is, am I right in saying that whether it is or isn't within the state power to beget such legislation, if you please from using your phrase, conspiratorium, meaning combined effort, is or is not within the state power in each case, the Court would first have to decide in connection with the Sherman law case whether the State could have passed or could pass such proposed or desired legislation, that so is true, isn't it?
Harold E. Kohn: Now, I must differ with you slightly on that sir. I think --
Felix Frankfurter: But I thought you just said to -- to Justice Black that if there is a constitutional power on the part of the State to beget -- I'm coming to your deception point a minute, but that's the one side further on.
Harold E. Kohn: No, I --
Felix Frankfurter: If there is constitutional power on the State to beget such legislation, then it may be solicited or begotten to effort as all legislation, almost all legislation is to outside effort, therefore, in each case, we have to decide whether the proposed legislation comes within the reserve, so-called reserves state power or rest impliedly, exclusively within the congressional domain.
Harold E. Kohn: Now, I might still differ with you, sir.
Felix Frankfurter: (Voice Overlap) --
Harold E. Kohn: What I thought I had said to Mr. Justice Black was that in an intrastate monopolies, the -- a State can set up intrastate monopolies because it's not prohibited by the Sherman Act. Now, there is, and this was clearly brought out in Georgia versus Pennsylvania, that even though the ultimate effect of the governmental action would not be unconstitutional or prohibited, nevertheless, the combination and this is --
Felix Frankfurter: Georgia wasn't constitutional. Georgia was the question of whether you first had to go to the Interstate Commerce Commission.
Harold E. Kohn: No, oh, no, I think it went further than that, sir, if I may --
Felix Frankfurter: Your recollection, you probably read it more recently than I. I merely participated in the case.[Laughter]
Harold E. Kohn: I realized that, sir. But I think that what they held there was that even though the ultimate rate and this is in these cases from the very beginning, the Trans-Missouri cases way back to the turn of the century. The fact that you seek to obtain, that which would be perfectly legal when obtained in conspiracy makes your conspiracy, nevertheless, if it's to restrict commerce or to monopolize illegal. And you've the Borden case, you got all these cases.
Felix Frankfurter: But the Trans-Missouri case certainly wasn't constitutional.
Harold E. Kohn: Oh --
Felix Frankfurter: (Voice Overlap) there was whether the fact that there was an Interstate Commerce Act displaced or did not make applicable the Sherman Act.
Harold E. Kohn: In those -- in those cases sir, all of the arguments were raised as to the -- to the constitutional objections which were then factual.
Felix Frankfurter: Well, I'm not talking about general talk.
Harold E. Kohn: No I'm talking about --
Felix Frankfurter: The precise issue in the Trans-Missouri and the joint traffic case clause, whether since there was a prior special regulation for railroad if the Sherman law, three years later applied.
Harold E. Kohn: They also raised a question that this law has interfered with freedom of contract. They impaired contracts. They affected the reserve powers of the States which had the right to set local railroad right. There were -- there were all those issues in it. May --
Felix Frankfurter: Not with deception, you take -- take the long run during legislation against oil and margarin. The constant route between the butter and this dairy and just the oil and margarine, is all of all claims as to the nefariousness of the unhealthy or mischievous results flowing from oil or margarine are almost plain and subject to the test of whether the deception or merely rivals talk like sellers' coffee?
Harold E. Kohn: I don't think all claims. I think you've got to examine as you sir yourself have said so many times. Each of the very delicate constitutional problems in the context of the particular situation, you said so just a couple of weeks ago the Gomillion case. It's very difficult for me standing here to answer a question about the oil and margarine butter industry. I do know that on the context here where the chief purpose was to put us out of business and one of the incidental purposes was by getting this legislation when a judge says that they wanted to put it us out of business by this material whether or not they got legislation the fact it's somewhat different problem.
Felix Frankfurter: You put all the inferences, is not putting out business, but Mr. Justice Black, not only from his experience here but try legislative experience, have then intimate knowledge like the rest of us nearly as observers that most legislation is an effort to put somebody else out of business or to enhance your own.
Harold E. Kohn: And this Court has held that in many situations, that is a violation of the Sherman act --
Felix Frankfurter: (Voice Overlap) to securing from legislation, to accomplish that end?
Harold E. Kohn: That's right. The Sisal case held that specific.
Felix Frankfurter: (Voice Overlap) the Sisal cases told me different. That had to do with Yucatan and Mexican legislation.
Harold E. Kohn: But it was still achieving a purpose by legislation which the particular legislative sovereignty had the perfect right if it wanted to -- to enact.
Felix Frankfurter: But I had no constitutional right to ask Mexico. I might on the Mexican law, but on the contrary, American Constitution, I have no constitutional right to get Yucatan and Mexico to pass favorable or discriminatory Sisal legislation.
Harold E. Kohn: In the Angle case, which this Court decided, it was held that we're in an ordinary tort. A person got a state legislation to interfere with established contractual right that that fact he -- he got it through legislation and sought legislation was completely immaterial. It was still a tort --
Hugo L. Black: (Voice Overlap) the Government --
Harold E. Kohn: The Angle case sir. It cited at page 16 of our brief Angle, it was instant a railroad too, versus Chicago, Saint Paul, 151 U.S. 1. And I may have just a moment sir on the question of damages. The -- in a sense the business of the PMTA is -- is to defend its -- its members and as you decided in the International News AP case which unfortunately I don't cite in my brief at 248 U.S. 215. In a situation like the one we had here where we went through an entire case, with literally tenths of free trial conferences with briefs really stacked -- may I have just a moment --
Earl Warren: You may finish that.
Harold E. Kohn: Almost as -- as high as I am standing here where this issue was never raised until after the question of liability had already been determined by the Court and it appears only in one passing fleeting footnote in a brief file thereafter where you have a situation like that with a stipulation entered into with all the parties understanding and we had answered interrogatory's telling, but the PMTA damage was, but we just think it's -- it comes awful light in the day and for all practical -- for all real purposes in this litigation, it was waived. Judge Clary doesn't even allude to it because that defense was never even raised before Judge Clary until out this litigation. We always understood that the cause of defending against this antitrust campaign of the defendants would be recoverable insofar as those damages are concerned by the Pennsylvania Motor Truck Association. You just the other day denied certiorari in a case coming out of our Circuit. I think with the Hanover Shoe versus another shoe company where an antitrust -- antitrust case, it was held that the mere fact that the additional costs were passed along to the customers does embark the person who initially put the money out from recovering his antitrust damages, so that we do say that that issue really hasn't been raised and with the damages awarded should be allowed.
Earl Warren: Mr. Cox.
Hugh B. Cox: May it please the Court. I should like to begin my reply by observing that since this is a Sherman Act case. The basic question here is whether the petitioners combined and conspired to restrain trade, and I should like to emphasize that the question is not whether the petitioners did something wrong or immoral or against public policy or even may perhaps have violated some statute other than the Sherman Act. The question is, whether they combined and conspired to restrain trade? Now, the Sherman Act is a statute that is directed at certain specified economic consequences. So I suggest that what we should, is the -- with the court's permission to consider it, is what the economic consequences were to which this concerted action of the petitioner was directed. Now, it is our position that these public relations campaign which the petitioners engaged in was wholly legislative or governmental in its purposes and in its effects. What they were doing was trying to get the state legislature to pass laws that would admittedly limit, cripple the competitive power of the trucks. Now, we say that that kind of a restraint, a restraint imposed by valid state actions, admittedly valid here is not an unlawful restraint or monopolization within the meaning of the Sherman Act. We also suggest that it doesn't make any difference for the purposes of that proposition what means or methods you use to get State to take that action. They maybe wrong and they maybe unlawful under other statutes but they do not violate the Sherman Act because it restraint itself which the State imposes, does not violate the Sherman Act.
Felix Frankfurter: Mr. Cox, may I ask you to comment on the portion of the District Court's finding or opinion which Mr. Kohn called attention, which is on page 27 of the petition for certiorari. That the entire campaign and subjective did not constitute a mere of pieces of legislature nor was it a large scale lobbying campaign. True, one phase of the activity was of the legislatures -- legislative nature but a rather new approach to legislations they believe. The other phase and the more important one of the campaign accepted, your doubt is familiar with it.
Hugh B. Cox: Yes. I was -- in fact that the point of dealing with the contention which is based on what the lower court and the District Court said that this campaign was not wholly legislative in its purposes and effects. Now, what the District Court held in that passage in elsewhere was that this campaign although admittedly legislative in large part was accompanied by a purpose to injure the good will of the trucking industry and that it had the effect of injury in the good will of the trucking industry. Now, I should like to submit that the District Court's own language on what it meant by good will shows what is essentially wrong with that argument. There is a passage in Volume 4 of the record at 105 where the District Court explains what it means by good will. It says when it's talking about injury of good will it means that it uses the word good will in two senses, first, in the sense of loss of business, loss of truck. Now, I like to stop and deal if I may with that aspect of the alleged impact and purpose of the conspiracy. There isn't a scrap of evidence in this record, not a scrap and the respondent's brief and in his -- respondent's argument that we refer to any evidence. There isn't a scrap of evidence that any single trucker or the trucking industry as a whole never lost a pound of traffic as a result of this public relations campaign. There is proof that they lost some traffic that they might have had if the Governor of Pennsylvania hadn't decode a bill, but there isn't any proof that the public relations campaign ever caused them to loss any traffic. They have not pointed to any piece of publicity and I -- it was all in my understanding that all of the publicities are here in which the petitioners say -- which was addressed to the shippers and which said the shippers don't ship by trucks. We mustn't ship by trucks. Stay away from the trucks. This publicity is all directed to arguments about how much taxes the truck should pay. How heavy -- what weight limit should be imposed on them? Whether they injure the roads, whether if they are on the bridges? That's what this publicity is about. So I say that you cannot predicate liability in this case where you cannot find the restrain of trade in this case or a purpose to restrain trade in this case on this first definition of good will because there simply isn't any evidence to support it. And by the way to make it perfectly clear, we raised in the -- in the first and the third questions presented the correctness of these conclusions that the District Court as to the purpose and the impact of this public relations campaign. I think there is no question about that. We -- we attacked those conclusions. They say that they are clearly wrong and one on the -- the lawsuit, a business is clearly wrong, not in the sense that -- as a preponderance of evidence against it or that there -- there is some evidence to support you. It's wrong in the sense that's just isn't any evidence at all. Now, this Court demonstrated, it was talking about good will in a second sense and this I think is particularly interesting, it's baring on what the Court was really talking about in this case. It said that it was talking about injury to good will in the sense that the petitioners brought the respondents of trucking industry into discredit, discredit that done in the eyes of the public, and thus, removing the likelihood that the truckers could gain public support and appreciation and sympathy which the Court said would be essential to avoid the imposition of crippling burdens and restrictions. It seems I think without any doubt that that last finding of conclusion of the Court expects the good will, speaking of good will in the legislative sense, it couldn't have meant anything else. The imposition of crippling burdens of restrictions was purely key to all the evidence in this case about the state legislation which the truckers were seeking or which the petitioners were seeking to get. So that -- I would say furthermore, in response to your question about these conclusions that in our brief, we have made -- it's not very long but it's a detailed analysis of the particularized findings of the District Court as opposed to its general conclusions and of the evidence. And we submit that when that is examined, it appears both from the particularized findings and from the evidence that this campaign was wholly legislative in its purposes and its effects. The evidence, the best evidence about purpose in the record is the documents which the petitioners and the public relations agent wrote at the beginning of the campaign when it was being planned. Those are the kind of documents that are always used in the antitrust case to prove purposes and they are usually very effective for that the reason that they are contemporaneous and these documents which the District Court made some particularized findings about which are consistent with what I have to say. The documents in themselves show that this campaign was a legislative campaign and that Byoir was detained because Byoir had had a great deal of experience in legislative method. The District Court himself after he finished describing what he call the campaign of vilification, in a very interesting passage which we've quoted in our brief said, "The cap of the pyramid in each State was legislation" and then it goes on in that passage to specify the various kinds of legislation which this campaign was designed to get -- which it did get. So that -- we submit that -- that this real issue in this case and I noticed by the way that the greater part of respondent's argument was devoted to that issue. The real issue in this case is whether if men act in concert to get a state government to impose restrictions on their competitors which will creepily competitive power of their competitors, that action in concert violates the antitrust law. Now, I think I have stated our basic position on that earlier when I said that since the restraint, the economic consequence which that action produces is itself lawful and lawful under the -- the Constitution of this country for all purposes if it's valid and they admit this legislation here involved and valid. If it's lawful for all purposes, then the economic consequences it produces cannot be unlawful restraints and monopolization. And if the consequence is not unlawful, surely the purpose to achieve that consequence is not an unlawful purpose. I might add to the part from that argument which I think stands on its own feet. I should like to merely observe in passing that if you hold that that kind of consorted action does violate the antitrust laws, it seems to me the Court is faced with a problem of inquiring into the reasons and motives for the legislative action by the States, because the Sherman Act is a statute that does require some causative showing as between the activities of the alleged conspirators and the economic consequence the -- the statute prohibits. And I also observe that ever since Fletcher against Peck, this Court and all the federal court, most state courts have been most reluctant in most -- most cases declined to enter into kind of inquiry about legislative reasons and legislative motive. I should now like to come back to the point, deal with it more specifically. Before I do that, may I say this, that there were brief many cases that are referred to this morning by counsel on this question of whether you violate the antitrust laws by combining to get to govern -- valid governmental action that helps you. I think I can say that I didn't seem to meet any of those cases had any bearing on this -- this question here. Those cases in my judgment all represent situations where the alleged restraint or monopolization was an -- was a restraint or monopolization that was imposed or occurred apart from governmental action. Now, of course if you have a restraint of that kind and you helped to bring it about, not by the governmental action but by something you do in relation to the Government, that is a different problem. But, in case like the Georgia case where the real question was whether consorted action not subject to regulation by the Interstate Commerce Commission was subject to the antitrust laws, that kind of a case which -- where the -- where the restraint was imposed outside of the Interstate Commerce Act. That's what this Court held. That case has nothing to do with this problem. Our counsel referred to the Borden case. I do the indictment of the Borden case. I think I know something about that. It wasn't tried on merits. The allegation in the Borden case was that certain Government officials in Chicago in willful disregard and disobedience of their statutory duties had joined the conspiracy. Well, that's a very different thing from a case in which you are alleged and that are restraint imposed by a state action in an unlawful monopoly. That was a case where people went outside their official duties and became private really they exercise their private rights joining the conspiracy. I can't -- I don't have time to talk about all of those cases but I honestly suggest that when the cases were examined, that they do not bear on his problem, they are cases which we have cited in our brief, Parker against Brown, the California case, the Rock Royal case, American Banana case, Olsen against Smith, which we think taken together, support the argument on principle that I have made this morning to the effect that state action no matter how induced, does not produce an unlawful -- if valid, does not produce an unlawful restraint or monopolization. Now, I should like to devote the rest of my time to a discussion to a -- the -- what relevance there is in this case to the fact that the Railroads did not disclose the source which is quite true in this material. Now, I submit that the argument is based on that fact. It seems to me they rest on a misapprehension about carry through the Sherman Act. I come back to my basic proposition that it's an act to deal with certain economic consequences. The economic consequences were here, were to be achieved by state action which is conceded to have been valid. Now, that's true. It doesn't make any difference if you didn't disclose the source. I think it might have been wrong not to. I'm not condoning what was done here. Judge Biggs in the Circuit Court who dissented was shocked by what -- both the truckers and the railroads had done, but that is really irrelevant to the purpose of deciding whether a third-party technique itself restraints trade. Now, our position on that is that since the technique was used to induce valid governmental action and that action doesn't restrain trade with the use of the technique is really irrelevant. I think that our position is the same with the respect to the truth or falsity of the arguments that were made by the petitioners in this case. We don't concede that the -- that these arguments were false and in the District Court, the petitioners offered to prove that what they said about trucks injuring bridges and roads and what they said about the Maryland road test and what they said about trucks not paying their fair share. The tax is needed to maintain roads. They offered to put in material -- try to put in material to prove that those facts or opinions were true and the District Court excluded it. The offer to the proof were in the record. It was excluded on the ground that it was irrelevant. But our position here --
Felix Frankfurter: I don't understand that, Mr. Cox. I don't understand how it can be claimed that the petitioners are guilty of vilification if you -- if it's not relevant to -- to allow you to prove that you weren't guilty of vilification.
Hugh B. Cox: Well, Your Honor, in view of the fact that that was not my conclusion, I should prefer not to attempt to explain it but --
Felix Frankfurter: But I mean that is -- do I correctly state what you --
Hugh B. Cox: Yes, I think -- then I want to be quite excellent about this. The District Court did allow some times that prove him -- which had some bearing on this question of truth for example. He allowed the railroads to introduce stipulated material which showed that these respondents in his case in a three or four-year period had violated the overweight regulation sustained about 3000 times, which was of course proved to justify what have been said in the publicity about trucks frequently operating over the weight limits. But when the respondent -- the petitioners tried to put in proof about how roads are built and how many -- what part of the roads in the -- in the eastern part of United States are constructed on the kind of subsoil or in the way which will enable them to stand up to heavy trucks. The judge said, "That's all irrelevant. And I'm not going to admit it into evidence." Now, I think -- I can't -- I don't I should try to explain it. But our position does not depend on the truth what was said here because it is our position again, that since what the petitioners were seeking to do in this case was to induce valid state action. Then the fact that in expressing these opinions or they are making these arguments they may -- they did not assumed that they didn't speak the truth. The fact still remains that that does not change the character of the restraint which was involved, which was a lawful restraint intended. Their actions were indirect to restraint and the restraint was imposed into a lawful restraint and the character of the restraint is not changed by the character of the methods that the petitioners may be assumed to abused in attempting to persuade the State between (Inaudible). I should -- There is one further point that I should like to make in relation to the character of this case, and that has to do with the injunction. Now, both Mr. Price and the counsel for respondents have discussed the injunction and I should prefer not to take the Court throughout in detail. But I should like to make this point to the Court that if there is any doubt that this case is about legislative effort and about the public debate and discussion of issues, the public policy, that doubt is removed by the terms of the injunction because the injunction by its terms is not in any material sense directed to commercial practices or the things that are specifically directed to the trucker's customers. Let's say the injunction which is cast in broad terms, is directed to public debate and discussion. It prohibits for example the -- Mr. Price pointed, the petitioners in concert, from saying anything that is -- that may create -- present mother hostility to the truckers, irrespective of whether it's true in those provisions of the injunction, irrespective of whether it has to do with the legislative proposed. It does enjoin the petitioners from seeking legislation, maybe beneficial to them or crippling to the truckers and I think Mr. Kohn does not misunderstand that subparagraph 9 because subparagraph 9 by its terms says that you -- the petitioners can't seek legislation which should -- is designed to impose weight limitations or taxes or anything that kind, irrespective whether they use a third-party technique. The third-party technique qualification implies to the opposing part -- clause of the -- by its terms which is the last clause in subparagraph 9, but that doesn't -- that's not the point which I'm trying to make. Now, I'm -- the point I'm making is that this is a legislative case. It is a public debate and discussion case and you can't -- you can't cure this injunction by trying to regret it because the injunction exactly and precisely mirrors the caue of action here. The things that are prohibited there in the injunction, all and with the things that the District Court, certainly the majority to the Circuit Court, found violated the statute and you can't by changing a word here or changing provisions there preserved these cause of action by trying to change the injunction. The -- the injunction is significant because of our judgment. It shows what's wrong with this case. It is a case in which an attempt has been made to apply the Sherman Act in an area, not of commercial practices, coercive, restrictive, noncompetitive. It's an attempt to apply the Sherman Act in the area of public debate, public discussion, legislative effort, an area to which the statute was never intended to apply.
John M. Harlan II: How long did this case take the trial?
Hugh B. Cox: The case, Mr. Justice Harlan, I think started the trial in -- in the fall -- fall of 1956 and there were some adjournments because they tried one part of first, another part later and went over. I think the trial was finally concluded early in the winter of 1957, February (Inaudible).There were gaps in the --
Felix Frankfurter: Mr. Cox, (Inaudible) of your last -- summarizing the comment or what the decree is about --
Hugh B. Cox: Yes.
Felix Frankfurter: -- I think that portion 5 or whatever it is, called Part V, Roman V in page 1 -- 166 of (Voice Overlap) --
Hugh B. Cox: Yes.
Felix Frankfurter: There, there is could have provided for the qualifying clause which I -- the purpose of which I take it is to take care of what you say, what you claim to be allowed, namely, the kind of approaches it may be made, the kind of representations that may be made, the kind of appearance that may be made, go through a -- to oppose legislation, I'm not sure whether they favor it, oppose legislation adverse to your inference.
Hugh B. Cox: Yes.
Felix Frankfurter: What do you say with that, as taking care of the --
Hugh B. Cox: Well --
Felix Frankfurter: -- the claim of protection in -- in regard to the public issues that are involved?
Hugh B. Cox: My -- my first comment on that is that there's nothing in this record in this case that would justify that kind of injunction on the Sherman Act. There's none. It's not an appropriate injunction in this case because there wasn't any -- there has been no showing that there was a combination of conspiracy here to restrain trade or that it had any -- it was intended to restrain trade. But, if you're speaking out merely in terms of the injunction, I would like to assert that I suppose that five does not and cannot consistently qualify the prohibitions or limit prohibitions that are made in paragraph 4 because did the injunction will be internally inconsistent. I take that the provisions in -- in Section 4 stand and that this simply says that of course you can -- you can improve your own facilities or you can seek legislative, administrative rather governmental benefits for yourself so long as you don't seek going back to board to create resentment or hostility and so forth. You have to read it that way to make it consistent of it.