# Opposition Brief — Aluminum Co. of America v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_0665%3A6 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1965 - **Citation:** 382 U.S. 12 ## Text Office-Sucreme Count, U.S. .- JUL 16° 1965 HI V CLERK IN THE 10 1N F. DAVIS, Supreme Court of the United States “OcroBerR TERM, 1965 < No. 84 ALUMINUM Company or AMERICA and CUPPLES Propucts CorPoration, Appellants, 4 Vv. Unirep States or America, Appellee, On Appeal From the United States District Court for: the Eastern District of Missouri ' APPELLANTS’ BRIEF IN OPPOSITION TO MOTION TO AFFIRM Herpert A. Brereson Howarp AbD LER, JR. SAMUEL H. Srymour BERGson & BorkEAND . | 888 17th Street. N. W. ‘ nae Washington, D. C. 20006 WILLIAM K. UNveRzAGtT a — - 1901 Alcoa Building Pittsburgh 19, Pemsylvania. July 16, 1965 : Attorneys: for Appellants Press-or Byron S. ApaMs, Waskincion, D.C. : 8 nn OO . INTRODUCTION ........ Pat reese eee oa 1 1. The Order Under Review Oontonplates — © Divestitures of Cupples and the Corona Plant . 3 2.The District Court Has: Not Found, and the Bvi- dence Does Not Establish, That Corona Is the “‘Fruit”’ of the Cupples Acquisition es eeeceevees 6 3. An Appropriate Injunction Would Effectively Redress the Pr re errr er ere a 9 4.The District Court’s Failure to Comply With Rule 52(a) Is Reversible Error ...... jiieesawer 10 Concrusion see eeeees TTT TCT Ter Te err aeteee 11 CITATIONS Cases: oO ' Burlington-Truck Lines, Inc. v. U nited States, 371 US. Sn I hic iiss vc Rintnts aeidlebh ath edee va 3,11 « Gilbertville Trucking Co. v: United States, 371 U.S. | i i shikecec ss Shbuoun seudeesn ita’ 2, 9, 10,11 Jacob Siegel Co. v. FTC, 397 U.S. 608 (1946) ieseausa om Maryland & Virginia Milk Producers Ass’n. v. United States, 362 U.S. 458 (1960) o..5... cc ccc c cc eeees 2 Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941) . 11 Schine Chain Theatres, Ine, v. United States, 334 US. In gee aee irene aes £7, 11. United States v. E. I. duPont de Mocsuwe & Co., 366 U. 8. Se EE AG CaN owas Raab eehakaanesasdes 2,9, 10 IN THE ° Supreme Court of the United Stutes OcToBER TERM, 1965 No. 84 ALUMINUM COMPANY OF AMERICA and CUPPLES Propucts Corporation, Appellanés, ° v. ‘Unirep STATES OF America, Appellee. On Appeal From the United States District Court for the Eastern District of Missouri APPELLANTS’ BRIEF IN OPPOSITION TO MOTION’ TO AFFIRM INTRODUCTION The district court, without findings of fact, conclu- sions of law or opinion explaining the basis for its action, has ordered Alcoa to divest a'€2.8 million plant at Corona, California, which it built more than two years after the Cupples acquisition and which was not found, or even alleged, to be held in violation of . law. It was shown in the Jurisdictional Statement that the disputed order is not supported by a finding that the public interest requires divestiture of the Corona 2 plant (J.S. 12-16), and that, in fact, the record would not support any such finding’ (JS. 16-21), This is the first time an order to divest after- poe aan property has been before this Court. The Motion to Affirm portrays this sonal as pre- senting ‘‘only a single narrow issue as to the scope of divestiture’ (Motion 1), and argues that it-is too in- significant to ‘‘warrant plenary consideration by this Court’’ (Motion 7). The implicit premise of this. con- tention—that questions of relief are inherently less important than those of substantive law—is untenable, for it is well-settled that ‘‘the choice of remedy is as important a decision as the initial construction of the statute and finding of a’violation.’"' Significantly, the Government, itself, has not hesitated to present ques- tions’ regarding the scope of divestiture when it has failed to obtain the desired relief from the trial court:’ This appeal, we submit, presents substantial and un- resolved questions regarding the use of divestiture. . with respect to after-acquired or after-created prop- erties (J.S. 15-21). In this era of active Section 7 en- forcement, these are issues of great importance to the courts and antitrust enforcement agencies as well as to ~ the business community.’ In addition, fundamental questions are raised as to the trial court’s obligation to make findings of fact and conclusions of law in support 1 Gilbertville saat Co. v. United States, 371 U.S. 115, 130 (1962). 2 See, e.g., United States v. E. L. duPont de Nemours & Co., 366. U.S. 316 (1961); Maryland & Virginia Milk Producers Ass’n. V. United States, 362 U.S. 458 (1960). = 3 Nor should the alleged narrowness of the ‘issue obscure the fact that a very substantial Alcoa investment is involved. The cost of Corona, $2.8 million, is more than 40 per cent of the value of Alcoa stock used for the purchase of Cupples itself (GX 16; R. XVI 116). . of its decision on relief (J.S. 12-16). These issues merit plenary.review, and nothing i in the Government’s arguments as to the alleged correctness of the disputed order leads to a different conclusion. l. The Order Under Review a Separate Divestitures of Cupples and the Corona Plant [Motion, Point 1, 7-10] | If, as shown in the Jurisdictional Statement (J.S. 11-12, 17), the disputed order permits separate divesti- tures of Corona and Cupples, this would eliminate the . most plausible justification for divestiture of Corona, namely, that divestiture of Cupples as a going concern requires the inclusion of Corona. Recognizing this, the Government now attempts to show that the district cOnee has entered a unitary divestiture order which ‘requires Alcoa initially to offer all three plants [in- eluding Corona] for sale and to permit.a purchaser, if he wishes, to acquire as a going concern all the facilities that Cupples. had while Alcoa owned it’’ (Motion 7). Under this theory, only if there is no prospective pur- chaser of Cupples who wants the Corona plant would Aleoa be free to dispose of it separately (Motion 9). Though closely akin to the unitary divestiture theory of the Government’s Proposed Final J udgment, which the district court rejected, the Government’s theory on appeal was not presented to, or. articulated by, .the district court. It is merely one of ‘‘appellate counsel’s post hoc rationalizations’’ for the court’s action. The Government’s new theory is refuted by the - history and language of the disputed order. - On N ovember 18, 1964, the Government submitted its Pro- ‘ Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962). a i 4 posed Final Judgment calling fora unitary ‘divestiture of Cupples and Corona (R. XIV. 2907 A-B). After hearing, at which appellants stressed that Corona was sustaining heavy losses and would be a liability to the. divested Cupples (DXR 52; R. XIV 2995, 3027-32), the court rejected the Government’s proposal and in separately numbered subparagraphs of Paragraph 2 . ordered Alcoa to-divest (1) Corona; and (2) Cupples . (J.S. App. 24a-25a). At the same time, the court ~ adopted Paragraphs 3 and 4 of the Government’s Proposed Final Judgment, except for a significant - ' conforming change in the final sentence of Para- graph 3, which changed ‘‘divestiture’’ to ‘‘divesti- tures,’’ so that the sentence then read: ‘‘ Divestitures shall then be accomplished by defendants in accordance with the plan approved by the Court” (R. XIV 2907 B; J.S. App. 25a). ' _T£ the district court had meant to adopt ea Govern- ment’s unitary divestiture theory, it would have been perfectly simple to insert language requiring Alcoa to offer the’Corona plant as part of Cupples in the first instance. Not only was this not done, but, as shown, the court switched to the plural when referring to the sales Aleoa would be required to make pursuant to the Judgment. The inference is inescapable, therefore, that the unitary divestiture concept was reqpenee by the court. In view of the above, it is:indeed nn that the Government should now rely on the court’s alleged use of the term “‘the divestiture’ in the singular (Motion 8). Such usage occurs when the court is refer-_ ring generally to the two-part divstiture ordered in Paragraph 2; as shown, when referring to the sales Alcoa would be required to make, the court adopted the plural. Since the Motion to Affirm’ does not mention, D much less explain, the court’s important shift from singular to plural, it can only be assumed that the Solicitor General was unaware of it. There is little need to consider in detail other argu- ments advanced by the Government. It is particularly absurd to suggest that divestiture of Corona as part of Cupples. ‘‘may be essential’’ to the reconstitution of Cupples ‘‘as a going business’’ (Motion 8).. Before the acquisition, Cupples, without Corona, was the na- tion’s leading producer of aluminum curtain wall (J.S. App. 22a-23a). If anything, it will now be.an even - stronger ‘‘ going business”’ since its original plants have been expanded and improved at a cost to Alcoa of over $1.5 million (J.S. App. 18a; GX 53, 54, R. X VIII 423, 425). The absurdity is compounded by the fact that the Corona plant, which was shown to be a badly losing proposition at the time of the divestiture proceedings (DXR 52, R. XIV 2995, 3027-32), was later permitted to be shut down because of ‘‘substantial and continuing losses,’’ which the district court found were ‘‘adversely affecting the strength and viability of Cupples,’’ and would ‘‘continue to do so unless the Corona ‘plant is shut down” (R. XV 3190). The evident contempla- - tion of the district judge thus is that the Corona opera: tion will not be a ‘‘going business’”’ and could not be. divested as such. The motion at pages 8-10 merely offers reasons why it might have been wise for the district court to order a unitary divestiture. This free wheeling discourse is not supported by a single citation to the record, and, - in fact, is refuted by the evidence. While Cupples had considered building a West Coast plant, the undisputed evidence is that it would’ have done so on a much smaller seale, and that it would have withdrawn if the ' 4 $e 6 West Coast curtain wall market failed to materialize. (R. XIV 3015-17). Nor is there merit in the Govern- . ment contention that ‘‘a prospective purchaser might - well consider an existing [ West Coast] facility ... to . bean important asset of the Cupples businéss’’ (Motion 9), for the court has found ‘‘no reasonable grounds for believing’ that Corona’s substantial losses will not continue (R. XV 3190). Finally, the Govern-- ment’s claim that Alcoa’s retention of Corona, even if subject to an injunction against ‘‘making curtain ‘ wall and/or related products, . .. might chil! the inter-. est of prospective purchasers of Cupples’’ (Motion 10), is sheer speculation, without either evidence or reasoned argument to support it. _ In sum, the Final Judgment contemplates two sepa- rate divestitures, and, therefore, the order to divest Corona cannot be rationalized as necessary to effect the divestiture of Cupples as a going concern. 2. The District Court Has Not Found, and the Evidence Does Not Establish, That Corona Is the “Fruit” of the Cupples . Acquisition [ Motion, Points la and b, 10- 15] The Government states that ‘‘the district court’s _ findings and the supporting evidence fully establish that the Corona plant was one of the ‘fruits’ of Aleoa’s | acquisition of Cupples.’’? (Motion 10, emphasis added). _ This, again, is inaccurate and misleading. The only findings cited are those made by the district court when it entered a preliminary injunction concerning the.use of Corona.pendente lite. Those findings, how- ever, as the court made clear, were ‘‘for the exclusive purpose of this Motion for Preliminary Injunction”’ (R. V 630), and did not, and could not, reflect con- 7 sideration of the evidence adduced on this issue at the hearing on relief. In fact, there were no findings on the ‘‘fruit’’ question or on any other aspect of the Corona divestiture, and this deficiency is itself revers- ible error (J. S. 12-16).° Moreover, the ‘‘fruit’’ theory does not appear to be seriously advanced as a justification for divestiture, since the Government concedes, first, that if no pro- spective purchaser of Cupples wants Corona, it would consider a ‘‘modification of the Judgment to permit [ Aleoa] to retain the Corona plant subject to suitable restrictions on its use ...’’ (Motion 9-10) ; and, second, that such restrictions ‘“‘would, of course, prevent Alcoa from gaining certain competitive advantages from the illegal aequisition’’ (Motion 16). Thus, even the Gov- ernment acknowledges that injunctive relief could ef- fectively ons Aleoa of the alleged “fruits” of the acquisition.® In any event, Corona cannot fairly be considered the ‘‘fruit”’ of the Cupples acquisition (J.S. 17-19) : _ First. The Government’s contentions that ‘‘the plant embodies Cupples’ know-how, at least in layout 5 See Schine Chain Theatres, Inc. v. United States, 334 U.S. 110, 129-30 (1948), where this Court ‘‘set aside the divestiture provi- sions of the decree’’ and remanded the ¢ase for ‘‘findings necessary for an appropriate decree,’’ including, inter alia, findings: that would ‘‘reveal what the rewards of the conspiracy were . .. and what would be the preferable way of eausing appellants to surrender them.”’ ® Furthermore, there are as yet unresolved issues as to the ap- plicability of the ‘‘fruits’’ doctrine in Section 7°cases. The only cases cited by the Government involved_hardeore Sherman Act violations (Motion 13-14), and the ‘‘fruit’’ concept appears —a to have been invoked’ in cases arising under Section 7 of the _ Clayton Act. : ‘ : © and design’’ and that the great value of such know-how induced Alcoa to acquire Cupples (Motion 14) are re- futed by undisputed evidence that the Cupples know- how desired by Alcoa was in the design and marketing of aluminum curtain: wall, not in the design of*curtain wall plants; that Cupples had no special capability in 2 ied such plants ; and that Alcoa, with its many | yeurs’ experience in the aluminum business, could readily have designed and built Corona without assist- ance from Cupples (J.S. 18; R. XIV 2929-75, 3019-24; DXR 2-47). ‘Second. There is nothing etalon about Alcoa’s ar- rangements with’ respect to title to the Corona plant, nor do these arrangements bear on the ‘‘fruit’’ issue. Alcoa does not contend that its ownership of. Corona would immunize it from divestiture if such divestiture were really required in order to redress the violation. Alcoa retained title because this accurately reflected the true facts, namely, that Corona was not an asset of - Cupples at the time of acquisition, and hence was not part of the acquisition challenged by the Complaint. Retention of title was not intended to, and could not, assure ‘‘continued participation i in the industry” ( Mo- tion 13)., Third. There is no indication that ie court itself relied on the ‘‘fruit’”’ theory in ordering divestiture of Corona. On the contrary, insofar as the court’s mental processes are revealed at. all, its real objective seems to have been to deny Alcea use of the plant ‘‘as a means - of getting into the business’”’ (R. XIII 2881-82). This objective, as the Government now eoncedes, can be achieved by — injunctive relief (Motion 10, 16; J.S8. 19-21). ¢ ; Seen oo Gat \ Ce 9 38. An Appropriate Injunction Would Effectively Redress the Violation ri [ Motion, Point 2, 15, 16] It is argued that divestiture of Corona must be up- -held because ‘‘no injunction, however broad in scope, will or can provide as effective relief as divestiture of the Cupples’ portion of the business’’ (Motion 15). Admittedly, divestiture, the ‘‘most drastic’’ of anti- trust remedies, is also the ‘‘most effective’’;’ but it is not the necessary and inevitable remedy in every ¢ase. On the contrary, as this Court has held, it is the duty of the courts to give effect to the prohibitions of the statute ‘‘with as little injury as possible to the inter- __ ests of private parties or the general public’’ and ‘‘to tailor the remedy to the particular facts of each case so as to best effectuate the remedial objectives just described.”? Gilbertville Trucking Co. v. United en 371 US. 115, 130 (1962). ag The Government’s- an objections to injunctive relief are completely untenable. It is true that such relief would not assure to the purchaser of Cupples an opportunity to acquire the Corona plant, but such op- portunity is competitively meaningless for there is no - continuing business at Corona, the court having per- mitted it to be shut down. Nor is there any factual basis for the clajm that it would be difficult to police an injunction. Even if Alcoa were likely to disobey such a decree, which it emphatically is not, the products - affected are easily identified and could not be sold with- 7 United States v. E. 1. duPont de Nemours & Co., 366 US. 316, 326 (1961). hee 10° out the instantaneous knowledge of Alcoa’s competi- tors.* : , : Finally, the Government asserts that ‘ Aleoa cannot show how it would be injured by being required to sell the Corona plant at its market value’’ (Motion 16). This. argument hardly merits. reply. It is extremely doubtful that fair market value could be realized in _ a forced sale, especially in view of Corona’ S enormous losses; but even if it could, in a free society neither Alcoa nor anyone else should be forced to sell its prop- erty against its will in the absence of a judicial deter- mination that such sale is required by paramount public interest considerations. Cf. Gilbertville Truck- ing Co. v. United States, supra, 371 U.S. at 130-31. 4. The Distsiet \Court’s Failure to Comply —_ _» Rule 52(a) Is Reversible Error [ Motion, Point 3, 16-17] The Government, though aa that ‘‘it is the better practice for a district court to make findings explaining the basis of the relief granted,’’ argues that the lack of such findings is not reversible error (Motion © 16). This Court, however, has not tolerated failure to make such. findings, but has repeatedly set aside remedial judgnients where, as here, the court or agency failed to explain its reasons for selecting a harsh _ 8 Phere is no meaningful comparison between a straightforward injunction against the manufacture and sale of specific, easily- identified products and the type of injunction that would have been required in the duPont-General Motors case on which the Govern- ment relies (Motion 16). The injunctive provisions rejected in duPont were intended to restrain subtle forms of intercorporate favoritism and, as this Uourt observed ‘‘could hardly be detailed enough to cover in advance all the many fashions in which im- proper influence might manifest itself.’’ 366 U.S. at 334. .