Legal Document

392 U.S. 481 88 Supreme Court Reporter 2224 20 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 1231 The HANOVER SHOE, INC., Petitioner,v.UNITED SHOE MACHINERY CORP. UNITED CORP., Petitioner, versus INC. Nos. 335 and 463. Argued March 5, 1968. Decided June 17, Rehearings Denied Oct. 14, See 89 64. [Syllabus from pages 481-482 intentionally omitted] James V. Hayes, Washington, D.C., for Hanover Shoe, Incorporated Ralph M. Carson, New York City, Shoe Machinery Corporation Mr. Justice WHITE delivered the opinion of Court. 1 (hereafter Hanover) is a manufacturer shoes customer United), distributor shoe machinery. In 1954 this affirmed judgment District Massachusetts, 110 F.Supp. 295 (1953), in favor civil action against under § 4 Sherman Act, 26 Statutes-at-Large 209, 15 Code KF62 4. States, 347 521, 74 699, 98 L.Ed. 910. 1955, brought present treble-damage Middle Pennsylvania. 1965 rendered awarded trebled damages, including interest, $4,239,609, as well $650,000 counsel fees. 245 258. On appeal, Appeals Third Circuit finding liability but disagreed with on certain questions relating to damage award. 377 Federal Reporter, 2nd 776 (1967). Both sought review Appeals' decision, we granted both petitions. 389 818, 86, 19 68 I. 2 Hanover's alleged that had monopolized machinery industry violation Act; United's practice leasing refusing sell its more complicated important been an instrument unlawful monopolization; therefore should recover difference between what it paid machine rentals would have willing during relevant period those machines. 3 Section 5(a) Clayton 38 731, amended, 69 283, 16(a), makes final or decree any criminal suit by antitrust laws 'prima facie evidence * all matters respecting which said be estoppel parties thereto *.' Relying provision, submitted findings, opinion, Judge Wyzanski Government's case machines was monopolization. does not contest prima weight given case. It does, however, contend Wyzanski's decision did determine This claim, rejected courts below, threshold issue Number If 1953 illegality asserted injury arose, then Hanover, having offered no other convincing illegality, recovered at all.1 concluded lease only policy held illegal suit. We find error determination. true decree2 relies condemned clauses standard nowhere aspect system expressly described characterized also arguable 5 decree, required thenceforward 'offer type, unless offers such type sale,' included merely insure effective remedy dissipate accumulated consequences are not, limited determining extent resulting reference determined actually adjudicated Government, private plaintiff can treat outcome issue. Emich Motors General Corp., 340 558, 566—569, 71 408, 412—414, 95 534 (1951). justifiable even if banned instrumental monopolization market. But our view trial court's findings put firm ground proposition involved condemnation such. respect remedy, court dealt objectionable addressed itself manner related maintenance monopoly power.3 These portions supported fact, estop Government constitute set out Appendix opinion. They themselves sufficient show played significant role Those were particular provisions leases. selling machines, advantages United, impact potential actual competition. When applicable applied these facts, must err holding major case.4 II. 6 found bought rather than leased opportunity do so.5 sold cost less rental same cost, trebled, claims, suffered legally cognizable injury, contending overcharge reflected price charged customers lower prices, made profit leasing. At very least, urges, whether contentions correct. Appeals, like Court, assertion so-called 'passing-on' defense, affirm judgment.6 7 15, provides person 'who shall injured his business property reason anything forbidden may sue therefor threefold damages him sustained think sound hold when buyer shows materials purchased use illegally high amount overcharge, he has within meaning 8 face nothing absorbs loss, entitled treble damages. much seems conceded. diminished, profits higher. clear buyer, responding price, maintains own takes steps increase volume decrease costs, right destroyed. Though manage maintain level, purchases defendant less. equally raises product. As long seller continues charge law allows. whatever sells, pays remains high, greater costs lower. 9 Fundamentally, stated Holmes Chattanooga Foundry & Pipe Works City Atlanta, 203 390, 27 65, 51 241 (1906), where Atlanta sued defendants violations connection city's pipe waterworks system. city measured market fair sellers combined, saying 'was property, furnishing water, being led pay worth pipe. A whose diminished payment money wrongfully induced property.' Id., 396, 66. approach evident Thomsen Cayser, 243 66, 37 353 (1917), another case.7 With cases arising transportation laws, similar views expressed Southern Pacific company Darnell-Taenzer Lumber Co., 531, 533, 186 (1918), Brandeis Adams Mills, 286 397, 406—408, 52 589, 591—592, 76 1184 (1932). possibility plaintiffs recouped overcharges their irrelevant assessing damages.8 10 seeks limit general principle victim damaged overcharge. rule, argues, subject defense economic circumstances overcharged could higher because argued suffers loss situation might present, said, imposed buyer's competitors demand product so inelastic prices without suffering consequent decline sales. 11 impressed argument economics require recognizing defense. wide range factors influence company's pricing policies. Normally single change conditions cannot after fact; indeed businessman unable state whether, one fact different (a supply expensive, buoyant, labor tighter, example), chosen price. Equally difficult determine, real world economist's hypothetical model, effect will total Finally, per unit sales hard estimate. Even shown raised response to, of, margin thereafter declined, there remain nearly insuperable difficulty demonstrating absent maintained discontinued. Since establishing applicability passing-on showing each virtually unascertainable figures, task normally prove insurmountable.9 hand, unlikely existence generally confirmed, frequently seek establish applicability. Treble-damage actions often additional proceedings involving massive theories. 12 addition, buyers subjected who buy them meet challenge they passed customers. ultimate consumers, today's pairs shoes, tiny stake lawsuit little interest attempting class action. consequence, violate fixing monopolizing retain fruits available bring them. actions, importance many times emphasized, substantially reduced effectiveness. 13 Our conclusion proved purposes showed overcharge; assert recognize situations—for instance, pre-existing 'cost-plus' contract, thus making easy damaged—where considerations requiring permitted present. differential unlawfully some charge, buyer.10 III. 14 commencing July 1, 1939, terminating September 21, 1955. former date represented greatest retrospective reach statute limitations, latter upon filed addition somewhat shortening forward period,11 ruled 10, 1946, marked commencement period. decided American Tobacco 328 781, 66 1125, 90 1575, endorsed Second Aluminum America, 148 416 (1945). before us decisions Alcoa-American fundamentally altered monopolization—that prior necessary predatory practices power, whereas afterwards proof essential. litigation leases escaped 1. conduct violated time 1946. F.2d, 790. challenged, reverse it. theory party significantly relied established doctrine, application newly declared doctrine upset reliance substantial justice fairness new rule apply prospectively only. Pointing recent area law, see why favored prospective area, especially There is, course, confront clearly judicial lawful, overruled according performed old unlawful. Because believe presents situation, occasion pass Appeals. 16 Neither Alcoa nor indicated novel, innovative principles resolve it, settled contrary courts. ruling exclude guilty monopolization, line stretching back 1912. 429. 'limited manoeuvres honestly industrial' premised earlier opinions particularly Swift 106, 116, 460, 999 case, noted precise question previously decided, U.S., 811, S.Ct., 1128, gave indication thought adopting radically interpretation Act. Like existing authorities.12 make accepted Act conditioned monopolist.13 neither abrupt fundamental shift entirely replaced older one. Whatever development about based great authorities extension doctrines growing developing over years. sharp break authority avulsive caused current flow banks. say justified thinking acts conducive creation monopoly, avoided direct exclusion acts.14 17 heavily three predecessors argues demonstrate deemed instruments Winslow, 227 202, 33 253, 57 (1913); Jersey, 247 32, 473, 62 968 (1918); 258 451, 42 363, 708 (1922). overreads exaggerates significance cases. groups companies merged form construed indictment pertain merger resulted merger; most significantly, excluded policies consideration. specifically '(t)he validity combination contemplating case.' 217, 254. 18 third 1922, enjoining containing clauses, terms, conditions. Nothing indicates leases, left undisturbed, adequately enterprise power. Of cases, 1918 strongly supports United. charging §§ contended license agreements used consummate violations. three-judge dismissed bill vote 3. constituted unassailable 1; reasons clear. read specifying course engaged concern charge—did power now proves once shown, way sufficiently intent exercise little, anything, illuminating Indeed, fairly all, rejecting claim corporation dominant market, said: 'This, foundation assumption dominance Company exist. element, therefore, side regarded incentives execution 60, 483. 21 Any comfort received legality employed short-lived. remaining Justices up majority except McKenna voted follows: 22 'That attacked violative true, valid binding rights holders patents.' 366. 23 references went beyond lawful monopoly. 24 One possibly disagree reading authoritative gloss. After 1922 expiration patents basis justify definitive pronouncement provided insufficient satisfactorily shown. immunized insofar originated allegedly competing perhaps help respects. either 1946 well-defined abruptly considered 25 circumstances, room decision. Having contention Aloca-American changed effect, follows entire limitations.15 IV. Two here computed below. erred remand, take account taxes paid, instead renting years question. evidently felt since after-tax reinvested distributed shareholders, failed receive. theory, overlooks Internal Revenue Service taxed recoveries tortious deprivation made, reopening Commissioner Glenshaw Glass 348 426, 75 99 483 (1955). points out, recovers diminish double deduction taxation, leaving income accounting year lost collects; shows, rates taxation today. limitations bar recomputing years, underlying limitations—the recomputations immensely impossible intervened—the rough result taking taxing recovery satisfactory outcome. question, recomputation. contends them, invest capital computing properly Hanover. able borrow 2% 2.5% annum, obtained borrowing rate. deducted component earned purchasing record convinces below determinations; determinations computed.16 28 part reversed part, remanded further consistent 29 ordered. 30 Judgment remanded. 31 MARSHALL took consideration APPENDIX TO OPINION OF THE COURT. 32 Excerpts From Opinion 295, 323—325 (D.Mass.1953). Effects Leasing System. 34 works examined viewpoints manufacturers, actual. 35 For advantages. (a) enjoyed stability annual revenues customary among manufacturers goods. due exclusively distinguished selling. attributable effects when, lessor already predominant share (b) research activities favorably outright. system, service constant access problems. promoted knowledge problems stimulated development. covered fewer factories. factories denied diminution consequence research. (c) steadiness revenues, attributable, above, alone, dominated lessor, tended promote steady appropriations declined 1929 depression. Research expenditures increased competition increased. experience faced Compo's cement pocess suggests declining expenditures. (d) kept best possible condition. (e) Under distribution relatively narrow position, provisions, give advantage competitors. 36 Upon effects. modest something superior efficiency become manufacturer. He get buying them; serviced separate charges; conveniently exchange model model; process another; pair produced closely approximate every using produce process. Largely factors, 1950, 1,300 daily production capacity 3,000 day less; 100 8,000 pairs; 40 larger manufacturers. Many collectively 40% started small flourished Moreover testimony dissatisfied absence dissatisfaction lack dissatisfaction, practical men's preference regard monopolistic, fear, inertia, reluctance testify. However, while easier enter manufacturing many, most, industries, necessarily field goals competitive economy open society. Without warrants, definitely stated. sale basis, then— Some secure credit conditional sales, chattel mortgages, devices. 39 suppose purchaser's first installment exceed deposit few comparable borrows, capital. 41 provide average supplying lessees subject, unilateral continue modify informal written committed specific future While plans policies, heretofore proceeded alter approval disapproval individual continue, example, 1935 plan return fund, waiver months charges, service. reserved gives degree psychological, control, have. 43 (f) financial psychological be, dispose acquired competitors' place. 44 looking viewpoint competition, confessed outset, will, impede outright purchase, terms whatsoever, factory impediment marketing machine. 45 Yet noted, psychologically economically impeded And observation buttressed study features special deterrent effect. separately, alone impediments, appraised appreciate full 46 term commitment. 47 perform work reluctant experiment wish. hesitate ask permission avoid clause. experimental too short. Thus competitor chance tried prefers know exact rate payments commuted. knows, fresh outlay commuted (which admittedly solely revenue protection discriminate lessee competitor's machine) plus place trade second-hand maker likely initially allowed hm 48 two prevents kind offers. Also acquiring copying parts patented, experimenting improvements disclosing 49 rendering repair almost large scale independent companies. Hence typical considering acquire machine, look readily offering prepared foreign indicates, serious stumbling block compete 50 deciding introduce (either operations replacements expired), faces Right Deduction Fund. replaces Fund care deferred cover minimum payments. enures benefit factory, maximum number applied. keeping deters, though probably mildly, opportunities STEWART, dissenting. flowing sale. attempt original matter laws. Instead, provides: 53 'A hereafter proceeding behalf 16(a). 54 award aff'd curiam, unlawfulness So follows, says, '(i)f all.' Ante, 484. 55 N Dec. Immigration Nationality Decisions broad attributes contrary, judgment, me, kinds only.1 56 precedent cited expansive 408. That jury verdict deal federal judge, thoroughly carefully decree. section 2, broadly be: 58 'Defendant Annotated KF65 U5 commerce several States. Defendant interstate tacks, nails, eyelets, grommets, hooks, concerned products *' F.Supp., 352. 59 Another 4, specified means accomplished, means: 60 'All include ten-year term, clause, life separate, segregated whereby market.' Ibid. 61 sections setting forth found, contained remedial sections. enjoined 2. prohibited types lease. commonplace 'relief, effective, go limits proven violation,' Gypsum 76, 90, 160, 170, 89; Loew's Inc., 371 38, 53, 83 97, 11; Bausch Lomb 321 707, 724, 64 805, 814, 1024. suggest lease-only practice, such, way.2 To repeatedly emphasized anticompetitive illegal, explained purpose option purchase create eventual competitors, copy 349—350. ordering offer widen choices customers.3 63 today adds opinion—like deus ex machina—Judge fact. describe key gone astray think, concluding sentence Part Court's reveals really trying 1953, how decide issues today.4 65 my reach, Following rejection construction Filed motion requesting certify Wyzanski. denying motion, need merits novel request, acted proper discretion untimely certification ruled. '4. All lief answering objection lease, plainly 'has monopolize alternative still 350. Clearly, purging contribution entry judgment. Moreover, violation, principal sources identified, pointed 'the magnetic ties inherent leasing, selling, machines' "partnership" aspects 344. assured 'closer frequent contacts exist buyers.' 343. 'deterred owned short carrying simple reasonable cancelation end term.' 340. 'aided maintaining discriminates types,' id., 344, discrimination later evidenced 'United's buttress cause perpetuation 349. brief appeal recognized (District) stressed separtae charge.' Brief Appellant 6, 699 (1954). '(e)vidently distributes basic system.' 170. disturb n. 16, infra. agree unnecessary explicit Continental Ore Union Carbide Carbon 370 690, 82 1404, 1410, 777 (1962). chronology events pretrial conference, pursuant Fed.Rule Civ.Proc. 42(b). assuming customers, legal taken issue, Goodrich, sitting designation, forced excessive injury: 'This injury.' 185 826, 829 (D.C.M.D.Pa.1960). 'that relieved customers.' burden complete "(t)he tendency step" exonerate remote consequences. 830 (quoting 186, 451 (1918). heard interlocutory 1292(b) affirmed. 281 (C.A.3d Cir. 1960). Certiorari denied. 364 901, 81 234, 194 (1960). preserved presented again appealing entered main adhered here. 'It assumed facts combination, thereof. untenable. act sustained. secured excess element injury. Texas P.R. Abilene Cotton Oil 204 436, 350, 553. unreasonableness unreasonable conclusion.' 88, 360. reparations shippers railroad. exaction unreasonably paying answer difficult: 'The step. attribute holds liable proximately loss. losses paid. Their accrued inquire into events. carrier ought profit, relation him, whom sum. Probably public compensated torts.' 533 534, 186. 589 (1932), I.C.C., rel. Campbell, 289 385, 607, 77 1273 (1933). Keogh Chicago N.W.R. 260 156, 47, 67 183 (1922), stating rule. pleadings shipper's conspiracy railroads rates. approved Interstate Commerce Commission, shipper giving ended difference; careful confirmed supra. ascribe dictum free court, speaking impossibility proving intention preclude stood came pressed regularity suits vendors violating complained overcharging services product, e.g., Wolfe National Lead 225 427 (C.A.9th Cir.), cert. denied, 350 915, 198, 802 (1955), articles resale, Miller Ford Motor 252 441 (C.A.4th 1958); Twin Ports Pure 119 747 (C.A.8th 314 644, 84, 86 516 (1941). Others, beginning Goodrich's 1960 us, Recently, electrical equipment local utilities inflated electricity consumer. E.g., Atlantic Electric 226 (D.C.S.D.N.Y.), refused, 337 844 (C.A.2d 1964). Concerning generally, Clark, Treble Damage Bonanza: Doctrines Damages Private Antitrust Suits, Mich.L.Rev. 363 (1954); Pollock, Standing Sue, Remoteness Injury, Passing-On Doctrine, A.B.A. L.J. (1966); Note, Suits: Measure Destruction Business, 80 Harv.L.Rev. 1566, 1584—1586 mere rise followed sufferer undamaged. His ripe earlier; enjoying benefits permit supplier charges statement recognizes usual possessor exercising appear treated Robinson-Patman category. See, Can Russellville Canning 191 1951); Bruce's Juices, 187 919, modified, 190 73 (C.A.5th petition dismissed, 342 875, 72 165, 96 657 outstanding converting lessee's ownership. convert failure date. determination challenged Although restrain itself, grant certiorari crime Act.' R. Reynolds 324 836, 865, 1400 noting conspiracies reciprocally distinguishable *,' 788, 1129, combined conspired monopolize, 797, 1133, 'only conjunction precedent,' 798, 1133. support material exists raise desired so,' 1139 (emphasis added), quoted Patten, KF105 F3 664, 672 (C.C.S.D.N.Y. (1911)), grounds, 525, 141, 333 (1913), '(i)t exercised. Its sufficient.' correct monopolizing, parties, combine conspire serveral states nations, able, group Socony-Vacuum 310 150, 226, 59, 846, 84 1129 cited. achieved condemns. accomplish objective unlawful.' 809, 1139. (Emphasis added.) welcomed endorse, 813—814, 1140—1141, following Chief Hand Alcoa, F.2d., 431—432: '(Alcoa) insists never competitors; progressively embrace opened, newcomer geared organization, experience, connections elite personnel. Only interpret 'exclusion' industrial, actuated desire prevent indefatigably pursued, 'exclusionary.' emasculate just consolidations designed prevent. 'In order fall monopolist monopolize. passage demanding 'specific,' intent, nonsense monopolizes unconscious doing.' attempt, erroneously requirement rely dicta Steel 251 417, 293, 299, 343 (1920) (Mr. four-to-three Court), International Harvester 274 693, 708, 748, 753, 1302 (1927) Sanford reiterating Steel). commentators dicta. event, cursory conclusory nature writings strong prevailing sort generate prospectivity argument. handed down, February 18, 1953. reject textual discussion previous advanced earliest occurred 1912, arose barred Pennsylvania limitations. correctly supplemental dealing which, occurs occur span. Cf. 229 714 (C.A.7th 1956), relies. Rather, continuing inflicted accumulating harm 1912 inflicted, says managers differently, stop begin opportunity, finding, evidence, am view. Cole Hughes Tool Cir., 215 924, 932—933; Laitram King Crab, 244 9, 18. Neither, apparently, grounds comity, willingness construe officially requested judge Sheridan. During hearing Wyzanski, government counsel: 'New you here, aware occasions contended, ruled, Sheridan supposes decided?' language ante, 486, 3, ordered sale, unfair continued 'When

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