Petition — Greyhound Corp. v. Mt. Hood Stages, Inc.
Supreme Court brief1978
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Supreme Court, U. S.
FILED
7 25 1977
—————
In the Supreme Court of the 100.12. 0%
United States
OcTOBER TERM, 1977
THE GREYHOUND CORPORATION AND GREYHOUND LINES, INC.,
Petitioners,
vs.
MrT. Hoop Sraces, INC.,
doing business as PACIFIC TRAILWAYS,
Respondent.
Petition for Writ of Certiorari to the United States
Court of Appeals for the Ninth Circuit
JOHN R. REESE
RICHARD C. BRAUTIGAM
McCuTCcHEN, DoyLe, BRowN bg ponte nar agd
& ENERSEN rancisco, ornia 94111
Three Embarcadero Center (415) 393-2000
San Francisco, California 94111 Attorneys for Petitioners
JAMES H. CLARKE
DEZENDORF, SPEARS,
LUBERSKY & CAMPBELL
800 Pacific Building
Portland, Oregon 97204
KEITH A. JENKINS
| Greyhound Tower
) Phoenix, Arizona 85077
Of Counsel
———
SORG PRINTING COMPANY OF CALIFORNIA, 346 FIRST STREET, SAN FRANCISCO 94105
SUBJECT MATTER INDEX
Page
2 RR ALIN, Fel eA aed RA AD SPORT iii
8 ER ELIE or OU LE SNM Cen dere idalsdbelinia 1
FEE eT ET NO Ie RTO FS ee 2
Questions Presented .......................-......-0------ Kiaiaaimetianins 2
IE viitiiiaslintitsenicaniceenntiintinaiphlanion a 4
I I icin csisdiichinatascunediuniiinidiniiieaibnaniuenineliie 5
Reasons for Granting the Writ -...... lepine 8
I. The Court of Appeals’ Decision Is Inconsistent with
Section 5{12) of the Interstate Commerce Act and
Conflicts with Prior Decisions of This Court ............ 8
A. The Court of Appeals’ Decision Is Contrary to
Established Principles of Exclusive Regulatory
SEE. -ehsscanteemssticnninsinigpnineiiiinbipnatsiseniaentiteindaiann 9
B. The Court of Appeals’ Decision Is Contrary to
the Express Immunity Provision of 49 U.S.C.
I ciebiacciiecitiadinsdceisninsianvitienattactibioe 19
II. The Court of Appeals’ Decision Is Contrary to Sec-
tion 5(a) of the Clayton Act and Presents Important
Questions of Antitrust Law and Enforcement ........_ 22
Ili. The Court of Appeals’ Decision Presents Important
Questions of the Application and Tolling of the
Statute of Limitations in Antitrust Cases ............ 26
A. The Decision Below Is Contrary to 15 U.S.C.
DID cccteccstenienscsntinccnnctnceenenennanisnnnmsnccansaseneasennss 26
il
SUBJECT MATTER INDEX
Page
B. The Court of Appeals’ Decision Raises Serious
Questions Concerning the Application of the
Doctrine of Fraudulent Concealment to Private
NE CED cskciicissnictshiuitninccinsinsuieppitiaaictn en 32
ID scsipicscdeeciecicinctelesejucnioceneiaitecnininiseamtepuiisinbtagiainsaiiiinies 36
SII oe seitetcnnccescscsanssinininscipcngansssnatentinabnesaqsniamiiinvieetiii 37
TABLE OF AUTHORITIES
CASES
Pages
Additional Service to Latin America, 6 C.A.B. 857 (1946) .. 16
Air Freight Haulage Co., Inc. v. Ryd-Air, Inc., 408 F.Supp.
RF Es CIPI: Senitlasnicpirecincniiicdateiilperhnictnisatinnedepcaiece 14
Aloha Airlines, Inc. v. Hawaiian Airlines, Inc., 489 F.2d
203 (9th Cir. 1973), cert. denied, 417 U.S. 913 (1974) .. 19
Bausch Mach. Tool Co. v. Aluminum Co. of America, 79
F.2d 217 (2d Cir. 1935) -...cccccccocecceee00-0-- Ro ae En 25
Buckeye Powder Co. v. Du Pont Powder Co., 248 U.S. 55
(1918) PE erage le A TOO 22
Buckhead Theatre Co. v. Atlanta Enterprises, Inc., 327 F.2d
365 (Sth Cir.), cert. dented, 379 U.S. 888 (1964) ........... 22.
Buffalo Forge Co. v. United Steelworkers of America, 428
ac ec caecTacn iNadebliitienhenasitnns 18
California Parlor Car Tours Co., 93 M.C.C. 392 (1963)... 5
_City of Burbank v. General Electric Co., 329 F.2d 825 (9th
I: icnicsiniclsbleseilildsieietuiennpitecl tdciebiienetsiiinenei 24, 25
Control Data Corp. v. IBM Corp., 421 F.2d 323 (8th Cir.
1970) invisiblatpnihepideintiiidihiaiieniyineniniomnspemenvinen 25
Control Data Corp. v. IBM, 306 F.Supp. 839 (D. Minn.
1969), aff'd per curiam sub nom., Data Proc. Fin. & Gen.
Corp. v. IBM, 430 F.2d 1277 (8th Cir. 1970) 00000... = 25
County of Marin v. United States, 356 U.S. 412 (1958) .. 19
Emich Motors Corp. v. General Motors Corp., 340 US.
AT AS RTT eR ea 23
Falls Sand & Gravel Co. v. Western Concrete, Inc., 270
TS ee 34
Feak v. Marion Steam Shovel Co., 84 F.2d 670 (9th Cir.),
cert. denied, 299 U.S. G04 (1936) eee ene enen ee 34
Foster & Kleiser Co. v. Special Site Sign Co., 85 F.2d 742
(9th Cir. 1936), cert. denied, 299 US. 613 (1937) ..... 34
iv TABLE OF AUTHORITIES
Pages
Gordon v. New York Stock Exchange, Inc., 422 U.S. 659
(2GTDD <nissisisiniintteinenicialiaaigaaaaae 10, 11, 12, 13, 14, 16, 17
Greyhound Corp., 1 M.C.C. 77 (1936) -....-------.----------ce0----= 5
Greyhound Lines, Inc. v. United States, 308 F.Supp. 1033
COULD. TI, BGI) anna cescersinsesnssisstinterenrincrsttsiaitinaalecnale
Greyhound Mergers, 1 M.C.C. 342 (1936) -......---..------.-0-0---- 5
Hall v. E. 1. Du Pont De Nemours & Co., 312 F.Supp. 358
CED DLE. 29D) nnnnenninesssfusstininitnimameatsininiinnaaaiae 34
Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S.
363 (1973) ene
In re REA Express, Inc., 412 F.Supp. 1239 (E.D. Pa. 1976) 14
International Shoe Mach. Corp. v. United Shoe Mach. Corp.,
315 F.2d 449 (1st Cir.) , cert. denied, 375 U.S. 820 (1963) 22
Kunc v. ARA Services, Inc., 414 F.Supp. 809 (W.D. Okla.
UD cc cestenen ncepantenntmenieapaisaai 25
Leh v. General Petroleum Corp., 382 U.S. 54 (1965) ........ 28, 30
McLean Trucking Co. v. United States, 321 U.S. 67 (1944). 28
Minneapolis & St. L. Ry. v. United States, 361 U.S. 173
(ENTE Es mee 13, 19
Minnesota Mining & Manufacturing Co. v. New Jersey
Wood Finishing Co., 381 U.S. 311 (1965) —............. 23, 31, 32
Mt. Hood Stages, Inc., 104 M.C.C. 449 (1968), aff'd sub
nom., Greyhound Lines, Inc. v. United States, 308 F.Supp.
DODD (RCE. TER. CU nnn ncsscstteesesesiemennennnnaln 7
Mt. Hood Stages, Inc., 44 M.C.C. 535 (1945) 200. 6
Nashville Milk Co. v. Carnation Co., 355 U.S. 373 (1958). 28
National Trailways Bus System, 75 M-C.C. 179 (1958) .... 5
TABLE OF AUTHORITIES v
Pages
Pan American World Airways, Inc. v. United States, 371
ES 10, 11, 12, 15, 16
Philco Corp. v. Radio Corp. of America, 186 F.Supp. 155
EEE RE ee 34
Prather v. Neva Paperbacks, Inc., 446 F.2d 338 (Sth Cir.
a cet hndttlesecerinenacnsncninnnanceseomaetoe 34
San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236
(1959) ae
Schwabacher v. United States, 334 US. 182 (1948) ............ 10
Scroggins v. Air Cargo, Inc., 534 F.2d 1124 (Sth Cir. 1976) 14
Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118 (1948)... 10
Suckow Borax Mines Consolidated v. Borax Consolidated,
Ltd., 185 F.2d 196 (9th Cir. 1950), cert. denied, 340 US.
EG 34
The Greyhound Corp., 45 M.C.C, 821 (1947) ..................
The Greyhound Corp., 50 M.C.C. 123 (1947) -................. 6, 1
The Greyhound Corp., 55 M.C.C. 321 (1948) -.................
6
3
6
The Greyhound Corp., 55 M.C.C. 801 (1948) .............. 6
The Greyhound Corp., 58 M.C.C. 809 (1952) -................--. 6
The Greyhound Corp., 59 M.C.C. 657 (1953) -........-..--.---- 6
6
The Greyhound Corp., 60 M.C-C. 643 (1954) ............
Thill Securities Corp. v. New York Stock Exchange, Inc.,
433 F.2d 264 (7th Cir. 1970), cert. denied, 401 US. 994
a ancien OF
Trans World Airlines, Inc. v. Hughes, 214 F.Supp. 106
SE III Sidistdditenieservetentcnennsmnecescnesepececccoossvcseecs 14, 15
Trans World Airlines, Inc. v. Hughes, 332 F.2d 602 (2d
RS CI ett irteereerencnscnsnesnssnsensncnnsensnenoensnsenceneossnserer=oo== 15
Trans World Airlines, Inc. v. r. Hughes, 449 F.2d 51 (2d Cir.
SL 15
Trans World Airlines, Inc., Further Control by Hughes Tool
ee 14
vi TABLE OF AUTHORITIES
Pages
Trans World Air., Control by Hughes, 32 C.A.B. 1363
OE cctiiciiinpittneelseieasrseniticicsstaaratiatiabinatat. 14
Transcontinental Bus System, Inc., 59 M.C.C. 233 (1953) -. 5
Transcontinental & Western Air, Inc., Control by Hughes
Teak Ca, GOB, 195 CIGD anncsicecstctsesseninntittiticntcninn 14
Transcontinental & Western Air, Inc., Further Control by
Hughes Tool Co., 9 C.A.B. 381 (1948) ~....--.------------------+ 14
United States v. Greyhound Corp., 363 F.Supp. 525 (N.D.
Ill. 1973), 370 F.Supp. 881 (N.D. Ill.), aff'd 508 F.2d
SO a CN aiinsciniiiesetessviesincssiseaeiidieancattaies 7
United States v. International Building Co., 345 U.S. 502
QUID nccceissivnpesiitcaciaseinalisiiaiaialhioaaguidiain 23
United States v. National Association of Securities Dealers,
CB EC CD ruihaccicticd lcinieedtenaie 10, 12, 13, 14
United States v. Rock Royal Co-operative, Inc., 307 U.S. 533
(ROG) cane naneneterneneenenevscezeserenecensnesnsanensnesemnaneseemnasnsopenstenssne 19
Vitagraph, Inc. v. Perelman, 95 F.2d 142 (3d Cir.), cert.
Gambag, FOS BE. GOD CABG) ccreentticcstetenntensiscinimnsdeemnnig 25
Westinghouse Elec. Corp. v. City of Burlington, Vermont,
Oe 35
RULES
Pg TI GI ¢riccsinieccnisntipinnsinincicianicteheteiienanniabaiaiaeas 22
STATUTES AND REGULATIONS
15 US.C
SUT. sevscrcssennnanetapevcnlielteiitn celica leila ahaa 28
ET 5
IU niesisns sespsledanitaiaebditacinlalialiinaiaaite en
FR a TST a
I sii scspinierhstnaedaneasinmieall 3, 4, 26, 27, 28, 29, 31
TABLE OF AUTHORITIES vii
Pages
§ 73bb ...... 12
BD FF OO excenserneceecosesneneclicaniancrcsnismntapnintasheneimanneiintiiss 12
28 U.S.C. § PTE D, cccnsescnsescocnspsacintncnsniemsanciancnitansianstentectsnia 2
49 US.C.
Be OO ceccetcesencsestdernseneanseneseresncemnpenennncnmecennencpemnncenfosese 8, 13
|} aon 4
ee RmENE srerbo secur aa ets 2, 10, 11
§5(10) .. 7,9, 10, 28
SII sisi iechigseshdguldeinaiieiainentinicantedite 2,9, 10, 11, 19, 21
re 8
RE EL SR EE ec eer en ARS Ne 9, 10
eR, OE icicctecctsigctensictceccsntninectemnicienaemnienintonstanen 8
SE SI SE EN SS PE Roa BS ie ae 11
| SRE SS Eas Splat Sect Ebr eee 11, 15
28 C.F.R. Ch. 1, Part O, Subpart H, § 0.40(b) (1976) ........ 31
GD GIR, FRUIT CONG cicscccicssccicsctscnsstsntenccorsnnsicece 29
LEGISLATIVE HISTORY
Hearings on H.R. 9203, H.R. 9947 and S. 782 Before the
Subcomm. on Monopolies and Commerciai Law of the
House Comm. on the Judiciary, 93d Cong., Ist Sess.
SR SD GIG IOD ccrsniccthstreesratinrtserscsinnitndiestelainntininenncnon 24
H.R. Rep. No. 2016, 76th Cong., 3d Sess. 61 (1940) ......... 19
H.R. Rep. No. 93-1463, 93d Cong., 2d Sess. 6 (1974) -........ 24
S. Rep. No. 93-298, 93d Cong., 1st Sess. 7 (1973) -...........-.. 24
S. Rep. No. 93-298, 93d Cong., 1st Sess. 5 (1973) ................. 24
S. Rep. No. 482, 74th Cong., ist Sess. 2 (1935) .................... 12
Vili - TABLE'OF AUTHORITIES
MISCELLANEOUS
Pages
ABA, Antitrust Law Developments 237 (1975) and First
SORTING TIE TI, es ceciesessinis sincesiianingscepsjeptioainatnipliiiaieiies 24
Comment, Clayton Act Statute of Limitations and Tolling by
Fraudulent Concealment, 72 Yale L.J. 600 (1963) ............ 35
J. Flynn, Consent Decrees in Antitrust Enforcement: Some
Thoughts and Proposals, 53 lowa L.Rev. 983 (1968) ...... 24
C. Fulda, Competition in the Regulated Industries, Trans-
RTE CITI OD cstviiciecssssssscnateraihncinnincditiidianinpetatdadiiitad 5, 12, 20
Note, ATGT and the Antitrust Laws: A Strict Test for
Implied Immunity, 85 Yale L.J. 254 (1975) ...........----- 16
Note, Fraudulent Concealment and Section 4(b) of the
Clayton Act, 49 U.Va.L.Rev. 276 (1963) -.....-.---.0--+-- 35
Note, Section 5(a) of the Clayton Act and Offensive Col-
lateral Estoppel in Antitrust Damage Actions, 85 Yale
Ree PU, QOD opetinteneeinitsnisesscnsncnacienincanioonioianndareletanimedian 24
Restatement of Judgments § 68, Comments h, i (1942) ...... 23
Restatement (Second) of Judgments §68, Comment e
PE: Gee SN A TI ccenticonctiiceribintaslvetetnninesitiindadanics 23
S. Robinson, Recent Antitrust Developments: 1975, 76
Golem. 1. Bisw. 1907 C09 IG) anne 17
Symposium: Relationships Between Government Enforce-
ment Actions and Private Damage Actions, 37 Antitrust
I I ei deicticslradacgnsicaiieasihiniedesiannbilges 24
Timberlake, The Use of Government Judgments or Decrees
in Subsequent Treble Damage Actions Under the Anti-
trust Laws, 36 N.Y.U.L. Rev. 991 (1961)... 22
In the Supreme Court of the
United States
OcTOBER TERM, 1977
THE GREYHOUND CORPORATION AND GREYHOUND LINES, INC.,
Petitioners,
vs.
Mr. Hoop Sraces, INCc.,
doing business as PACIFIC TRAILWAYS,
Respondent.
Petition for Writ of Certiorari to the United States
Court of Appeals for the Ninth Circuit
Petitioners, The Greyhound Corporation and Greyhound Lines,
Inc. (“Greyhound”), respectfully pray that a writ of certiorari
issue to review the judgment and opinion of the United States
Court of Appeals for the Ninth Circuit entered in this pro-
ceeding on June 9, 1977. That judgment and opinion affirmed a
$14,400,000 judgment in favor of Respondent Mt. Hood Stages
dba Pacific Trailways (““Mt. Hood’’) entered by the United States
District Court for the District of Oregon.
OPINIONS BELOW
The opinion of the Court of Appeals is reported at 555 F.2d
687; a copy is attached hereto as Appendix A. The Court of
Appeals’ order denying Greyhound’s Petition for Rehearing with
Suggestion for Rehearing en Banc is unreported; a copy is attached
2
as Appendix B. There is no reported decision of the District
Court. Copies of its memoranda and orders denying Greyhound’s
post-trial motions and concerning attorneys’ fees are attached as
Appendix C and Appendix D, respectively.
: JURISDICTION
The Court of Appeals’ judgment was entered on June 9, 1977.
A titnely Petition for Rehearing with Suggestion for Rehearing en
Banc was denied on August 3, 1977. (App. B) This Petition is
being filed within 90 days of that date. This Court has jurisdic-
tion to review the judgment in question by writ of certiorari under
28 U.S.C. § 1254(1).
QUESTIONS PRESENTED
1. This action involves a private antitrust attack on Grey-
hound’s acquisition of bus companies and on the manner in which
Greyhound operated the acquired companies. The acquisitions
were approved by the Interstate Commerce Commission (“ICC’’)
as being in the public interest under Section 5(2) of the Inter-
state Commerce Act, and the manner of Greyhound’s subsequent
operation of the acquired companies was subject to comprehensive
ICC regulation. Paragraph (12) of Section 5 of the Interstate
Commerce Act provides that:
“The authority conferred by this section shall be exclusive
and plenary . . . any carrier . . . participating in . . . any trans-
action approved . . . shall be and they are relieved from the
operation of the antitrust laws . . . insofar as may be neces-
sary to enable them to carry into effect the transaction. . .
and to hold. maintain, and operate any properties and exer-
cise any control . . . acquired. . . .” 49 U.S.C. §5(12).
i
Do Section 5(12) and applicable principles of antitrust law
permit a treble damage award of $14,400,000 to be based upon
a jury's application of antitrust standards to acquisitions approved
3
by the ICC and to the manner of operation of the acquired com-
panies which is subject to the ICC’s “exclusive and plenary” regu-
latory authority under the Interstate Commerce Act?
2. In 1947 and 1957 Greyhound entered into consent decrees
with the Justice Department. Those decrees expressly negate any
admission that Greyhound violated the antitrust laws, and they
were entered before any testimony was taken. The Court of
Appeals affirmed the District Court's admission of those decrees
into evidence on the ultimate issues under the Sherman Act.
Section 5(a) of the Clayton Act provides that:
“A final judgment or decree . . . in any civil or criminal
proceeding brought by . . . the United States under the anti-
trust laws to the effect that a defendant has violated said
laws shall be prima facie evidence against such defendant in
any action or proceeding brought by any other party... :
Provided, That this section shall not apply to consent judg-
ments or decrees entered before any testimony has been
taken ....” 15 U.S.C. § 16(a).
One purpose of that statute is to encourage the use of consent
decrees which are crucial to the Justice Department's antitrust
enforcement program.
Does Section 5(a) of the Clayton Act permit a jury to base
a finding of violation of the Sherman Act on consent decrees
which expressly deny any antitrust violation and which were
entered before any testimony was taken?
3. On October 7, 1964, Mt. Hood petitioned the ICC to
reopen certain ICC proceedings involving Greyhound’s acquisition
of several bus companies. On December 14, 1964, the United
States filed a petition for leave to intervene in the ICC proceed-
ings. Its petition made no charges and sought no relief. The
Court of Appeals held the filing of that petition tolled the statute
of limitations from the- date it was filed and before it was
granted. The Clayton Act, 15 U.S.C. § 16(i), provides that:
4
“Whenever any civil or criminal proceeding is instituted by
the United States to prevent, restrain, or punish violations
of any of the antitrust laws . . . the running of the statute
of limitations in respect of every private . . . right of action
arising under said laws and based in whole or in part on
any matter complained of in said proceeding shall be sus-
pended... .” 15 U.S.C. § 16(i).
The Department of Justice participates and expresses its views in
a wide variety and a large number of administrative proceedings.
Does Section 16(i) toll the statute of limitations every time
the Department of Justice files a petition for leave to intervene
in an administrative proceeding instituted by another even though
the petition complains of nothing and seeks no relief ?
4. This action was commenced twenty-five years after Mt.
Hood's cause of action accrued. It was based upon conduct that
Mt. Hood knew and continuously complained about during
the entire twenty-five years. Section 4B of the Clayton Act
provides that:
“Any action to enforce any cause of action under sections 15,
15a, or 15c of this title shall be forever barred unless com-
menced within four years after the cause of action accrued.”
15 U.S.C. § 15b.
Is Section 4B tolled by fraudulent concealment? If so, did the
Court of Appeals properly hold that the statute was tolled for
alleged fraudulent concealment because Greyhound had denied
it did what Mt. Hood kept complaining it had done?
STATUTES INVOLVED
The statutes involved are 15 U.S.C. §§ 15b, 16(a), 16(i) and
49 US.C. §5. Pertinent portions are quoted in connection with
the questions presented. They are set out verbatim in Appendix E.
5
STATEMENT OF THE CASE
This is a private antitrust action brought by Mt. Hood against
Greyhound in the District Court for the District of Oregon under
Section 4 of the Clayton Act, 15 U.S.C. § 15.
Mt. Hood and Greyhound Lines, Inc., are motor common
carriers of passengers and express, operating under authority from
and regulation by the ICC. Mt. Hood's principal routes run between
Portland, Eugene and Albany, Oregon, in the West and Salt Lake
City, Utah, in the East, and between Klamath Falls, Oregon, in
the South and Biggs and The Dalles, Oregon in the North.’
Greyhound Lines, Inc., is wholly owned by The Greyhound
Corporation, a diversified holding company. See California Parlor
Car Tours Co., 93 M.C.C. 392 (1963). (R. 1937-1939) Greyhound
Lines has routes serving Portland, Eugene, Salt Lake City, Klamath
Falls, Biggs and The Dalles over which it competes with Mt. Hood.
Between 1947 and 1954, Greyhound acquired ownership and
control of eight bus lines in the western United States, every time
with ICC approval. The lines became part of Greyhound’s inte-
grated nationwide system of intercity bus transportation which the
ICC fostered. See Greyhound Corp., 1 M.C.C. 77, 80-81 (1936) ;
Greyhound Mergers, 1 M.C.C. 342, 346-347 (1936); C. Fulda,
Competition in the Regulated Industries, Transportation, § 5.36
(1961).
Mt. Hood formally protested five of the acquisitions, contending
that Greyhound refused to turn passengers over to Mt. Hood that
it could handle itself, that the acquisitions would deprive it of
connections and would impair the competitive situation and that
1. Since 1943, Mt. Hood has done business as ‘‘Pacific Trailways” and
has been a member of the National Trailways Bus System which consists
of some 50 bus companies associated together for the purpose of competin,
with Greyhound. Mt. Hood connects with Trailways companies at Portland,
Salt Lake City, Albany and Eugene and features through service over their
lines. (Tr. 3845-3849, 3912-3913, Ex. K-13; Transcontinental Bus System,
Inc., 59 M.C.C. 233, 235 (1953); National Trailways Bus System, 75
M.C.C. 179, 182 (1958) )
6
Greyhound would have the power to extinguish it. (See Tr. 3500-
3505, 3509-3511, 3513-3515) Notwithstanding these protests, the
ICC approved the acquisitions, holding that they would benefit
Greyhound and the public by producing economies, coordination
and improvement of service, and that “[e]}ven if some restraint
of competition should result, we may approve the transactions
if they are otherwise consistent with the public interest... .”
The Greyhound Corp., 50 M.C.C. 123, 140 (1947) (R. 1862) ;?
See also The Greyhound Corp., 58 M.C.C. 809 (1952) (R. 1895-
1904) ; The Greyhound Corp., 45 M.C.C. 821 (1947) ; The Grey-
hound Corp., 55 M.C.C. 801 (1948); The Greyhound Corp., 55
M.C.C. 321 (1948); The Greyhound Corp., 59 M.C.C. 657, 668-
670 (1953); The Greyhound Corp., 60 M.C.C. 643, 650-653
(1954) ®
After unsuccessfully protesting to the ICC against most of
the relevant Greyhound acquisitions, Mt. Hood continued to
complain about the manner in which Greyhound was quoting
service and routing passengers over the acquired lines. From
1955 on, Mt. Hood repeatedly complained that Greyhound was
doing precisely what it complained Greyhound had done in this
case: that it had instructed its agents in Oregon not to quote
Mt. Hood's service, that it was not routing traffic over Mt. Hood's
lines, that these practices violated assurances Greyhound had given
to the ICC in the acquisition cases and that Greyhound was
violating the antitrust laws. (Exs. 197, 215, 289, 297, 303-A,
D-12)
2. In 1943, Mt. Hood had successfully applied to the ICC for an exten-
sion of its own routes from Boise to Salt Lake City, on the ground that
it needed to reach Salt Lake City to secure ‘friendly connections” because
Greyhound-affliated carriers would not route gers over its lines.
(See Tr. 3400-3407, 3832-3834, 3836) The ICC granted the authority,
acknowledging that Mt. Hood's competitors could not be expected to
quote its service and route passengers over its lines. Mt. Hood Stages, Inc.,
44 M.C.C. 535, 542-544, 547-550 (1945).
3. The relevant opinions and orders are in the record. Tr. 2197; R.
1844, ef seq.
7
Greyhound terminated a joint through bus arrangement with
Mt. Hood effective September 8, 1964. Mt. Hood immediately
petitioned the ICC under Section 5(10) (formerly 5(9)) of the
Interstate Commerce Act, 49 U.S.C. § 5(10), to reopen the acqui-
sition cases. It sought modification of the earlier approval orders,
restoration of the joint through bus, enforcement of representa-
tions and assurances alleged to have been made by Greyhound
in the acquisition cases and relief against alleged destructive
competitive practices—again the very practices about which it
complained in this case. (R. 1402, 1419) On May 27, 1965, the
United States was given permission to intervene in the ICC pro-
ceeding. The ICC rendered its decision in 1968, finding that the
acquisitions had been approved as consistent with the public
interest and that Greyhound had been engaged in destructive
competition. The ICC did not revoke or modify its prior approval
of any of the acquisitions. The ICC held that the proper remedy
was a supplemental order with respect to the joint through serv-
ice, schedule connections and the quotation of Mt. Hood's service.
Mt. Hood Stages, Inc., 104 M.CC. 449, 450, 462-463 (1968) ;
aff'd sub nom., Greyhound Lines, Inc. v. United States, 308 F.
Supp. 1033 (N.D. Ill. 1970) “
This action commenced on July 5, 1968. It is a monopolization
case. It is based on the same acquisitions the ICC approved, and
on the same conduct that had been the subject of the ICC's
extensive regulatory proceedings. As the Court of Appeals put it:
4. Greyhound sought review of the ICC order and in February 1970,
the United States District Court in Chicago issued an injunction iri
order finding Greyhound in contempt was entered and fines
ee Oe on ee a ee ee eae
Greyhound Corp., 363 F.Supp. 525 (N_D. Ill. 1973), 370 F.Supp. 881
(NLD. Ill), aff'd, 508 F.2d 529 (7th Cir. 1974).
“The essence of Mt. Hood's antitrust claim is that Greyhound
acquired bus companies whose routes circled those of Mt.
Hood and thereafter deprived Mt. Hood of connecting or
‘bridge’ trafic with the purpose and effect of eliminating
Mt. Hood as a substantial competitor.” (App. A, p. 2)°
The jury returned a verdict for Mt. Hood, awarding it treble
damages of $13,146,090 for the twenty-year period from 1953 to
1973. The trial judge (Judge Goodwin of the Ninth Circuit
sitting by designation) then awarded Mt. Hood attorneys’ fees
of $1,250,000 and denied Greyhound’s motions for a directed
verdict, for judgment notwithstanding the verdict and for a new
trial. The Court of Appeals affirmed.
1. The Court of Appeais’ Decision Is Inconsistent With Section
5(12) of the Interstate Commerce Act and Conflicts With
Prior Decisions of This Court.
The antitrust laws represent a fundamental national economic
policy, but Congress has declared that certain regulated industries
are not to be governed solely by antitrust standards of competition
and monopoly. Instead, they are to be regulated by a federal
agency pursuant to other standards set by Congress in the appli-
cable regulatory statute. Transportation is one of those indus-
tries, and the ICC is the agency Congress has declared should
regulate it pursuant to the National Transportation Policy. The
decision below, contrary to Congress’ intent and the prior decisions
of this Court, transfers that regulation from the ICC to private
plaintiffs and federal antitrust juries. It ignores completely the
requirements of the National Transportation Policy.
5. All emphasis herein is added unless otherwise stated.
6. See, e.g., Interstate Commerce Act, Part I, 49 U.S.C. §§ 1, e seq.
(railroads); Interstate Commerce Act, Part II, 49 U.S.C. §$§ 301, ef seq.
(motor carriers); Federal Aviation Act, 49 U.S.C. §§ 1301, et seg. (com-
mercial aviation ).
ene
9
The Court of Appeals’ opinion admits that, “The essence of
Mt. Hood's antitrust claim is that Greyhound acquired bus com-
panies whose routes circled those of Mt. Hood and thereafter
deprived Mt. Hood of connecting or ‘bridge’ traffic with the pur-
pose and effect of eliminating Mt. Hood as a substantial com-
petitor.” (App. A, p. 2) But Greyhound’s acquisitions of those
bus companies were approved by the ICC, and approved acquisi-
tions are expressly immunized from antitrust attack. 49 U.S.C.
§ 5(12). Greyhound’s conduct thereafter, “made possible” by
those ICC approvals (App. A, p. 18), was subject to continuing
comprehensive ICC regulation to assure its conformity to the
public interest, and the ICC actually regulated it. 49 U.S.C.
$§ 5(10), 316; p. 7 above. Indeed, the very conduct claimed
here to violate the antitrust laws was previously the subject of
extensive regulatory proceedings and the ICC issued an appro-
priate regulatory order to remedy it. (App. A, pp. 4-7) Never-
theless, the Court of Appeals held that that same conduct may
be regulated by federal courts under antitrust standards alone and
without regard to whether that regulation is consistent with the
public interest standard.
That holding conflicts with the principles of antitrust preemp-
tion previously established by the Court and fails to give effect
even to the express antitrust exemption for approved acquisitions
mandated by 49 U.S.C. §5(12). Instead, the immunized acquisi-
tions were “[t}he essence of Mt. Hood's antitrust claim. . . .”
(App. A, p. 2) The decision below effectively destroys the express
immunity of the statute. The result is that the antitrust laws have
been permitted to preempt the Interstate Commerce Act and new
and unneeded antitrust litigation has been created.
A. THE COURT OF APPEALS’ DECISION IS CONTRARY TO ESTABLISHED
PRINCIPLES OF EXCLUSIVE REGULATORY JURISDICTION.
The prior decisions of this Court establish that the antitrust
laws are preempted whenever necessary to satisfy Congress’
10
intent or to make the regulatory scheme work. See Gordon v.
New York Stock Exchange, Inc., 422 US. 659 (1975); United
States v. National Association of Securities Dealers, 422 US. 694
(Opinion of the Court) 735, 736-737 (White, J., dissenting)
(1975); Hughes Tool Co. v. Trans World Airlines, Inc., 409 US.
363 (1973); Pan American World Airways, Inc. v. United States,
371 U.S. 296 (1963). Under Section 5 of the Interstate Commerce
Act, the ICC has authority to approve acquisitions, 49 U.S.C.
§ 5(2), and to regulate subsequent conduct thereby made possible.
49 US.C. §5(10). See also 49 US.C. § 316. There can be no
doubt that Congress intended that authority to be exclusive. It
said so:
“The authority conferred by this section [Section 5} shall be
exclusive and plenary . . . .” 49 U.S.C. § 5(12).
And this Court has made clear that Congress meant what it said:
“The jurisdiction of the Commission under both §5 and
§ 20a is made plenary and exclusive . . . of all other state or
federal authority.” Schwabacher v. United States, 334 US.
182, 197 (1948); see Seaboard Air Line R. Co. v. Daniel,
333 U.S. 118, 125 (1948).
The decision below does not discuss this language of Section
5(12), let alone explain how the ICC's Section 5 power to regu-
late Greyhound’s conduct can be “exclusive and plenary” if an
antitrust court can regulate that same conduct by basing a
$14,400,000 judgment on it.
Moreover, even apart from the failure to follow the express
language of Section 5(12), the decision of the Court of Appeals
is inconsistent with the prior decisions of this Court that have
found preemption of the antitrust laws in the context of other
regulatory schemes. United States v. National Association of
Securities Dealers, 422 US. 694 (1975); Gordon v. New York
Stock Exchange, Inc., 422 U.S. 659, 682-691 (1975); Hughes
Tool Co. v. Trans World Airlines, Inc., 409 US. 363 (1973);
even
11
Pan American W orld Airways, Inc. v. United States, 371 US. 296
(1963).
For example, in Pan American, the Court rejected an antitrust
complaint charging Pan American and W. R. Grace & Co. with
conspiring to monopolize air transportation on the West Coast of
South America, holding that the CAB’s statutory authority to regu-
late the ‘‘acts charged” placed the “problem . . . within the purview
of the Board.” 371 U.S. at 305, 312. That authority preempted
the antitrust laws, because “[i]}f the courts were to intrude inde-
pendently with their construction of the antitrust laws, two regimes
might collide.” 371 U.S. at 310.
Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363
(1973), applied the Pan American principle to private treble
damage actions. Plaintiff TWA attacked the manner in which
Toolco had exercised its control of TWA obtained through a
series of stock acquisitions. The acquisitions had been approved
by the Civil Aeronautics Board under Section 408 of the Federal
Aviation Act, 49 U.S.C. § 1378, and were immunized from anti-
trust attack by Section 414, 49 U.S.C. § 1384." 409 U.S. at 369-376.
The complaint charged that Toolco had unlawfully retained and
diverted to competitors jet aircraft which were intended for
TWA’'s use; delayed delivery of aircraft to TWA; and required
TWA to lease rather than buy the aircraft. 409 U.S. at 378-379.
This Court ordered TWA's complaint dismissed. The CAB’s
continuing jurisdiction to remedy and control Toolco’s alleged
abuses of power acquired in immunized acquisitions was exclusive
and preempted the antitrust laws. 409 U.S. at 379-385.
Gordon v. New York Stock Exchange, Inc., 422 US. 659
(1975), held the antitrust laws inapplicable to activities of stock
exchanges and their members to fix commission rates. The Court
concluded that the Securities and Exchange Commission's authority
7. Those Sections are, of course, the counterparts to Sections 5(2) and
5(12) of the Interstate Commerce Act.
12
to require the exchanges to fix “reasonable rates of commission”
as determined by the standards of the Securities Exchange Act of
1934 precluded antitrust regulation of the anticompetitive price-
fixing activities. 422 U.S. at 689-691.°
In United States v. National Association of Securities Dealers,
422 US. 694 (1975), the United States charged that the NASD
had construed and implemented its rules to impose unlawful
restrictions on the secondary market for mutual fund securities.
The SEC had the authority to disapprove the NASD rules, 422
U.S. at 732, and that authority was held to include the power to
regulate and control “the manner in which . . . [the NASD}
construes and implements them.” 422 U.S. at 733. This SEC
“oversight” was deemed “‘sufficiently pervasive to confer implied
immunity,” 422 U.S. at 730-735, because application of the anti-
trust laws “poses a substantial danger that appellees would be
subjected to duplicative and inconsistent standards.” 422 US.
at 735.
The principles of these decisions apply with equal force here.
The ICC’s power to regulate the conduct involved cannot be
doubted; in fact it exercised that power. That its power is exclu-
sive is also clear. First, the statute conferring it says so. Second,
the ICC’s power is as, if not more, pervasive than that of the CAB
in Hughes Tool and Pan American ot of the SEC in Gordon and
NASD, and the conduct involved—competition among regulated
carriers—is even more central to the regulatory scheme.® Third,
8. The SEC has no express authority to immunize such fixed rates from
antitrust attack. There is no counterpart to Section 414 of the FAA or
Section 5(12) of the ICA in the Securities Exchange Act of 1934,
15 U.S.C. §§ 78a, et seg. Quite the contrary, the statute expressly preserves
all other laws. 15 U.S.C. § 73bb.
9. See S. Rep. No. 482, 74th Cong., Ist Sess. 2 (1935); C. Fulda,
Competition in the Regulated Industries, Transportation §2.5 (1961).
This fact makes antitrust preemption more appropriate here than in
Hughes Tool. The conduct involved there was not competitive practices
among carriers but anticompetitive conduct in the aircraft supply market,
a matter of tangential concern to the CAB. See Hughes Tool Co v. Trans
World Airlines, Inc., 409 US. 363, 397-402 (1973) (Burger, C.J.,
dissenting).
ee I
13
the “danger” that Greyhound will be subjected to “duplicative and
inconsistent standards” is equally substantial because the “sole
aim of antitrust legislation is to protect competition,”** where-
as the much broader standards of the National Transporta-
tion Policy govern the ICC, and it can approve conduct that is
inconsistent with the antitrust laws. 49 U.S.C. preceding § 1;
Minneapolis & St. L. Ry. v. United States, 361 US. 173, 187
(1959); see pp. 17-19 below. Therefore, by authorizing the ICC to
adjudicate the legality of Greyhound’s conduct “in accordance with
a competitive standard inconsistent with the controlling criteria of
the antitrust laws,’’ Congress intended to “replace normal antitrust
enforcement with the administrative regime.” United States v.
National Association of Securities Dealers, 422 US. 694, 740-741
(1975) (White, J., dissenting).
Contrary to both Congress’ expressed intention and this Court's
prior decisions, the Court of Appeals denied preemption because
the ICC “did not approve such conduct when it approved the
acquisitions” and “subsequently disapproved that conduct.” (App.
A, p. 11)"* Thus the decision below makes preemption of the
antitrust laws turn on whether the regulatory agency has approved
the conduct attacked by the antitrust complaint, and not on
whether the agency has the authority to regulate and remedy that
conduct.
10. Gordon v. New York Stock Exchange, Inc., 422 U.S. 659, 689
(1975).
11. The Court of A suggests that the ICC “did not contemplate
Greyhound’s chall conduct as likely to occur.” (App. A, p. 11)
That is not so. The ICC approved the first two acquisitions over Mt. Hood's
protest based upon the same charges Mt. Hood made here, saying:
“Even if some restraint of competition should result, we may
ap the transactions if are otherwise consistent with the
ic interest." The Greyhound Corp., 50 M.C.C. 123, 140 (1947)
(R. 1845) (pp. 5-6, above).
14
The Court of Appeals relied on Hughes Tool for that proposi-
tion."* In fact that proposition is in flat conflict with the facts
and holding of Hughes Tool. In Hughes Tool the CAB had
not approved the type of conduct which underlay the antitrust
complaint. The CAB had approved a control relationship, but
not the manner in which that control would be or was exercised.
Specifically, it did not approve or authorize the conduct of which
TWA complained—the diversion, retention, delay in delivery or
lease rather than sale of aircraft. That is demonstrated by the CAB
orders, which contain no such approval, Trans World Air., Control
By Hughes, 32 C.A.B. 1363 (1960); Trans World Airlines, Inc.,
Further Control by Hughes Tool Co., 12 C.A.B. 192 (1950):
Transcontinental & Western Air, Inc., Further Control by Hughes
Tool Co., 9 C.A.B. 381 (1948); Transcontinental & Western Air,
Inc., Control by Hughes Tool Co., 6 C.A.B. 153 (1944); by the
CAB amicus brief to this Court, which disclaimed any such
approval (R. 1434, 1435); and by the opinions of each of the
lower courts which passed on TWA’s antitrust complaint. Trans
World Airlines, Inc. v. Hughes, 214 F Supp. 106, 109-110 (S.D.
12. The Court of Appeals focused solely on Hughes Tool. Gordon and
NASD were both decided after the appeal was briefed and argued. It
said Hughes Tool did not apply to this case because:
“The crux of the distinction between the two cases is that, as the
Supreme Court viewed the record in Hughes Tool, the regulatory
agency involved had considered the type of conduct which underlay
the antitrust complaint and had approved it as in the public
interest... .”” (App. A, p. 11) (footnote omitted)
The Court of Appeals relied for this distinction on In re REA Express,
Inc., 412 F.Supp. 1239, 1258-1262 (E.D. Pa. 1976); Air Freight Haul-
age Co., Inc. v. Ryd-Air, Inc., 408 F Supp. 446 (S.D.N.Y. 1976) (App.
A, p. 11, 1.15); and Scroggins v. Air Cargo, Inc., 534 F.2d 1124 (Sth
Cir. 1976) (App. A, p. 11, 0.16). But both REA Express and Scroggins
held that the antitrust laws were preempted, and Air Freight Haulage held
only that the parties involved were not “air carriers” and thus were not
subject to CAB jurisdiction.
15
N.Y. 1973) ; Trans World Airlines, Inc. v. Hughes, 332 F.2d 602,
610 (2d Cir. 1964) ; 449 F.2d 51, 56 (2d Cir. 1971).
This Court reversed and ordered the complaint dismissed, not
because the CAB had approved Toolco’s anticompetitive conduct,
but because the lower courts were wrong in holding that such
approval was necessary for preemption:
“It is said, however, that while the Board modified its
original ‘control’ order under § 408 so as to permit sale or
lease of the aircraft out of which the alleged antitrust viola-
tions occurred, the approval of the Board did not sanction
the precise way in which Toolco allegedly used the power
to the disadvantage of TWA. But that is not an answer to
the problem of exemption.” 409 US. at 379.
The answer to the problem is that
“{T }he authority of the Board to grant the power to ‘control’
and to investigate and alter the manner in which that ‘con-
trol’ is exercised leads us to conclude that this phase of CAB
jurisdiction, like the one in the Pan American case, pre-
empts the antitrust field.” 409 U.S. at 385.
Decisions of this Court both before and after Hughes Tool also
make clear that antitrust preemption does not turn on an agency’s
approval of anticompetitive conduct; instead, it turns on the
agency's authority to regulate the conduct. In Pan American W orld
Airways, Inc. v. United States, 371 U.S. 296 (1963), the CAB had
not approved the alleged anticompetitive practices; indeed it had
13. Indeed, in Hughes Tool the Second Circuit specifically rejected pre-
emption for the same reason that the Ninth Circuit did so here. It said
“the CAB orders did not constitute blanket approval of the claims in the
complaint and hence were not a defense to TWA'’s action.” Trans World
Airlines, Inc. v. Hughes, 449 F.2d 51, 56 (2d Cir. 1971); compare, App.
A, p. 11. This Court, of course, reversed and held that reasoning unsound.
409 U.S. at 379.
14. If the CAB had approved the conduct involved, the lengthy majority
and dissenting opinions of this Court would have been unnecessary, because
approved conduct is automatically immunized. 49 U.S.C. § 1384.
16
in large part disapproved them, and, as in this case, had required
corrective measures. See 371 U.S. at 300, n.5; Additional Service
to Latin America, 6 C.A.B. 857, 914 (1946). This Court’s con-
clusion that the antitrust laws were preempted was based upon the
agency's power to regulate the conduct complained of, not its
approval of them, because:
“If the courts were to intrude independently with their
construction of the antitrust laws, two regimes might collide.”
371 US. at 310.
In Gordon v. New York Stock Exchange, Inc., 422 US. 659
(1975), the Court noted that the SEC had acted to require com-
petitive commission rates. See 422 U.S. at 675-676. Nevertheless,
the disapproved fixed commission rates retained immunity from
the antitrust laws.
Whether an agency's regulatory jurisdiction is exclusive de-
pends on Congress’ intent and not on the fortuities of whether
the conduct was the subject of an actual agency proceeding and,
if so, what action the agency took with respect to it. If Congress
intended the regulatory jurisdiction to be exclusive, the agency
“need not actually have approved the conduct at issue or even
have been aware of it, so long as the agency had the power to
exercise control over the general class of conduct if it chose to
do so.” Note, AT&T and the Antitrust Laws: A Strict Test for
Implied Immunity, 85 Yale L.J. 254, 261 (1975). The decision
of the Court of Appeals in this case follows precisely the opposite
principle and thus fails to follow what Hughes Tool, Pan Ameri-
can and Gordon teach.
The root of the Court of Appeals’ error seems to be in its
reasoning that because the ICC disapproved Greyhound’s con-
duct, it is not “necessary to exempt Greyhound’s conduct from
antitrust restraints ‘to make the [Interstate Commerce Act]
work.’ (App. A, p. 9) But that misunderstands the nature
17
of the problem.”* The problem is not simply that an agency
might find conduct lawful which an antitrust court finds unlaw-
ful, although that might happen. The problem is the conflict
between competing jurisdictions, which, resting on different stat-
utes, will apply different standards and different remedies to the
same conduct.*®
Applying antitrust standards and remedies to “disapproved”
conduct interferes with the regulatory scheme just as much as does
applying them to approved conduct. It is one thing for the ICC
15. This Court has explicitly rejected the idea that exemption turns on
whether the particular conduct attacked is necessary to make the regulatory
scheme work. Gordon v. New York Stock Exchange, Inc., 422 U.S. 659,
687 (1975) (disapproving a ion of the decision in Thill Securities
Corp. v. New York Stock Exchange, Inc., 433 F.2d 264 (7th Cir. 1970),
cert. denied, 401 U.S. 994 (1971)); cf., San Diego Bldg. Trades Council
v. Garmon, 359 U.S. 236, 246-247 (1959). Like the United States in
Gordon, the Court below has confused two questions:
“We believe that the United States, as amicus, has confused two
estions. On the one hand, there is a factual question as to whether
ed commission rates are actually necessary to the ion of the
exchanges as contemplated under the Securities Act. On
the other hand, there is a legal question as to whether allowance
of an antitrust suit would conflict with the operation of the regula-
tory scheme which specifically authorizes the SEC to -oversee the
fixing of commission rates. The factual question is not before us
in this case. Rather, we are concerned with whether antitrust im-
munity, as a matter of law, must be implied in order to permit
the Exchange Act to function as envisioned by the Congress. The
issue of the wisdom of fixed rates becomes relevant only when it
is determined that there is no antitrust immunity.” 422 U.S. at
688. See S. Robinson, Recent Antitrust Developments: 1975, 76
Colum. L. Rev. 191, 222-224 (1976).
16. In this case, for example, Mt. Hood claimed that if Greyhound
complied with the law Mt. Hood would carry 95 per cent of all relevant
bus traffic. In awarding Mt. Hood damages on that basis, the jury effec-
tively imposed on Guyheund the requirement to promote Mt. Hood's serv-
ice sufficiently to ensure that at least 95 per cent of the relevant traffic uses
it. Backed up by treble damage sanctions that is an imposing standard.
But Greyhound’s promotion of Mt. Hood's service was also the subject
of intense and lengthy regulatory proceedings, and nowhere did the ICC
impose or make reference to a standard. In short, this is a case
in which Greyhound has been subjected to different requirements, and
the antitrust court both punished and required what the ICC did not.
18
to tell Greyhound to change its practices to conform to the public
interest; it is a very different thing for a federal court to assess
$14,400,000 against Greyhound for those practices with no con-
sideration by the ICC or anyone else of whether that staggering
penalty serves the National Transportation Policy. Would that
policy be served if judgments such as that drove carriers into
insolvency and thereby deprived the traveling public of needed
bus service? If “disapproval” by the ICC were to open the anti-
trust floodgates, then the ICC clearly could not perform its
duties pursuant to the standards Congress prescribed in the
regulatory statute. It could not regulate conduct by applying
Interstate Commerce Act standards and remedy conduct incon-
sistent with those standards without also considering whether
subjecting the carrier to additional attack under the antitrust
laws would further the National Transportaion Policy. The unde-
sirable consequences of antitrust litigation entailed by “‘disap-
proval” might well compel the ICC to approve conduct inconsis-
tent with the public interest.’” In those circumstances both antitrust
and public interest policies are frustrated.
Similarly, in determining whether to make acquisitions and in
operating the properties acquired, carriers would be required to
judge their conduct not only by the public interest standards of
the Interstate Commerce Act, but also by the standards of the
antitrust laws, which might or might not apply. The resulting
confusion and potential for massive liability would surely dis-
courage carriers from making acquisitions that would serve the
public interest. That is just the opposite of what Congress
17. When the antitrust jury is told that the ICC had disapproved the
conduct, as this one repeatedly was (e.g., Exs. 426, pp. 3-4, 464, 467,
468; Tr. 1298-1299, 1302-1310, 2515-2518, 6741-6743), an adverse
verdict is almost inevitable. Cf. Buffalo Forge Co. v. United Steelworkers
of America, 428 US. 397, 412 (1976) (arbitrator would be “heavily
influenced or wholly pre-empted” by preliminary judicial determination).
19
intended when it passed the Interstate Commerce Act. County
of Marin v. United States, 356 U.S. 412 (1958).
The opinion below fails adequately to consider any of this,
and the decision reached has a profound impact on the working
of the Interstate Commerce Act and the administration of the
antitrust laws in the context of a regulated industry. This Court
should review the important questions presented.
B. THE COURT OF APPEALS’ DECISION IS CONTRARY TO THE EXPRESS
IMMUNITY PROVISION OF 49 U.S.C. § 5(12).
Quite apart from the issue of antitrust preemption by virtue
of the ICC’s continuing jurisdiction, the decision below raises
important questions concerning the effect of the express immunity
mandated by 49 U.S.C. §5(12). That section provides that for
each acquisition approved by the ICC Greyhound was
“. . , relieved from the operation of the antitrust laws. . .
insofar as may be necessary to enable [it] to carry into effect
the transaction so approved . . . and to hold, maintain, and
operate any properties and exercise any control of franchises
acquired through such transaction.” 49 U.S.C. §5(12).
The purpose of Section 5 of the Interstate Commerce Act is
“to facilitate merger and consolidation” to fulfill Congress’ desire
“that the industry proceed toward an integrated national trans-
portation system.” County of Marin v. United States, 356 US.
412, 416, and authorities cited at n.7, 417-418 (1958); see, e.g.,
H.R. Rep. No. 2016, 76th Cong., 3d Sess. 61 (1940). Congress
expected that the need for a national transportation system would
require the ICC to approve acquisitions which “might other-
wise violate the antitrust laws.” Minneapolis & St. L. Ry. v. United
States, 361 U.S. 173, 187 (1959). Therefore, it is essential that
approved acquisitions be immunized from antitrust attack,
regardless of any anticompetitive purpose or effect. See United
States v. Rock Royal Co-operative, Inc., 307 U.S. 533, 560 (1939);
Aloha Airlines, Inc. v. Hawaiian Airlines, Inc., 489 F.2d 203,
206 (9th Cir. 1973), cert. denied, 417 U.S. 913 (1974). Grey-
20
hound’s acquisitions in the Pacific Northwest were not insidious
isolated efforts to “get” Mt. Hood. They were simply part of a
nationwide program of integration undertaken in accordance with
Congress’ mandate, and Section 5(12) immunizes them. See
generally C. Fulda, Competition in the Regulated Industries,
Transportation, $5.36 (1961).
Nevertheless, this case was tried (and reviewed) as if Section
5(12) never existed. It was tried as an unfettered monopolization
case—an attack on the market position that Greyhound secured
by the acquisitions, their alleged anticompetitive purpose and
effect and the anticompetitive conduct they made possible. (See
App. A, pp. 2 and 18; see also, e.g., Ex. 126; Tr. 340-343A, 439-
440, 3469-3471, 3475-3515, 6277-6280; and Appendix B to Grey-
hound’s opening brief to the Ninth Circuit.) No limitation was
placed on the use of evidence of immunized transactions, and the
court refused to instruct the jury that the acquisitions and Grey-
hound’s conduct necessary “to hold, maintain and operate” the
acquired companies were immune from antitrust attack. To the
contrary, the jury was expressly instructed that Greyhound’s
actions to “maintain” monopoly power (acquired through immu-
nized transactions) was a violation of the Sherman Act even if
they “were wholly innocent or legal acts.” (Tr. 6752-6753,
6759) How can that be squared with Section 5(12) 7°
18. The Court of Appeals says that “the jury could not base a find-
ing of monopolization on the approved itions themselves; improper
use of the ired power was required.” (App. A. p. 16) But that is only
half right. jury was told the second, it was not told the first.
(Tr. 6752-6753) It was not told that Greyhound’s acquisitions were lawful
and immune from anes eae And while the jury was the gen-
eral instruction that an “improper use’ " of power is is required (Tr. 6753),
it was specifically i that such an * ‘improper use” could be based
on “wholly innocent and legal acts” to maintain the immunized market
ition :
-_ “In showing this element of a deliberate the plaintiff is
not required to that defendants in any unlawful or
predatory or unfair acts or practices. Acts done to maintain, foster
or increase a monopoly may be wholly innocent or legal acts,
constitute evidence of a purpose to monopolize.” (Tr. 6759)
21
The Court of Appeals’ answer is that Section 5(12) does not
apply to this case because the ICC determined that Greyhound’s
conduct was not “necessary.” (App. A, p. 7) Thus, the decision
below stands for the proposition that if some of a carrier's con-
duct is “unnecessary,” then none of it is immune. But that is a
non sequitur. The fact that some of Greyhound’s conduct was
found to be “unnecessary’’ does not mean that all of it was,
and there is nothing in the statute to suggest that Congress
intended such an illogical result.’* Indeed, after consideration of
all of Mt. Hood’s charges, the ICC did not withdraw its orders
approving the acquisitions; those acquisitions, including their pur-
pose and effect, are still expressly immunized. Yet this solid core
of immunity was disregarded, and the jury was permitted to
decide the case in ignorance of it. *
What function is left to the ICC and what becomes of the
National Transportation Policy if acquisitions approved and
immunized in the public interest can be the cornerstone of an
antitrust attack?
This Court should grant certiorari to review the application of
the immunity provisions of 49 U.S.C. §5(12) to a private action
for treble damages, because the decision below effectively elim-
inates that section and Congress’ purpose in enacting it.
the court
peng athe Fp oy Mog ect. I adele all dat evidence
and tase the whee ae up fr the fury to decide, witha
that the acquisitions were immune from antitrust attack. (p. 20, above)
+
Over Greyhound’s objections the trial judge admitted in evi-
dence consent decrees into which Greyhound had entered in 1947
and 1957." The court also permitted extensive testimony and
argument concerning the decrees.” Finally, the court instructed
the jury in detail about specific acts prohibited by the decrees (Tr.
6742-6747) and then told the jury to use the decrees in deter-
mining,
“the issues of motive, intent and purpose of Greyhound and
the reasonableness of their behavior under Section 1 and 2
of the Sherman Act... .” (Tr. 6747)
The decision of the Court of Appeals upholds what the trial
court did without discussing the serious questions presented or
the consequences of its action.
Absent Section 5(a) of the Clayton Act, 15 U.S.C. § 16(a),
no judgment or decree in a prior government case would be
admissible. See Buckeye Powder Co. v. Du Pont Powder Co., 248
US. 55, 63 (1918) (Holmes, J.); Buckhead Theatre Co. v.
Atlanta Enterprises, Inc., 327 F.2d 365 (Sth Cir.), cert. denied,
379 U.S. 888 (1964); International Shoe Mach. Corp. v. United
Shoe Mach. Corp., 315 F.2d 449, 459 (Ast Cir.), cert. denied,
375 US. 820 (1963); Timberlake, The Use of Government ]udg-
ments or Decrees in Subsequent Treble Damage Actions Under
the Antitrust Laws, 36 N.Y.U.L. Rev. 991, 994 (1961).
Nor does Section 5(a) support the evidentiary use of the con-
sent decrees in this case. Section 5(a) provides:
21. Both decrees were entered before any testimony was taken, and
each of them states that it was entered without admission by any party of
any issue. (Ex. 62, p. 2; Ex. 265, p. 1)
22. See, Exs. 62, 265, 268: Tr. 257-259, 263-267, 370-371, 906, 908-
916, 1263-1264, 1401-1413, 1430-1431, 1477, 1792-1794, 2062-2065,
2071, 2243, 2246, 3463-3469, 3477, 3484, 3488, 3591-3599, 3651-3659,
3724-3727, 3772-3774, 5535-5537; Closing Argument Tr. 6660-6661.
23
“A final judgment or decree heretofore or hereafter
rendered in any civil or criminal proceeding brought by or
on behalf of the United States under the antitrust laws to the
effect that a defendant has violated said laws shall be prima
facie evidence against such defendant in any action or pro-
ceeding brought by any other party agairst such defendant
under said laws or by the United States under section 15a of
this title, as to all matters respecting which said judgment
or decree would be an estoppel as between the parties
thereto: Provided, That this section shall not apply to con-
sent judgments or decrees entered before any testimony has
been taken or to judgments or decrees entered in actions
under section 15a of this title.” 15 U.S.C. § 16(a).
By its terms, then, Section 5(a) applies only to a judgment or
decree “to the effect that a defendant has violated [the antitrust]
laws.” It is plainly not applicable to these decrees, which
expressly disclaim any admission that Greyhound violated the
antitrust laws. (Ex. 62, p. 2; Ex. 265, p. 1) Section 5(a) also
applies only as to “matters respecting which’ the judgment
“would be an estoppel” between the defendant and the govern-
ment. Emich Motors Corp. v. General Motors Corp., 340 US.
558, 568 (1951); see Minnesota Mining & Manufacturing Co. v.
New Jersey Wood Finishing Co., 381 US. 311, 316-317 (1965).
It is plainly not applicable to these decrees, which were settle-
ments deciding nothing and which therefore would have no col-
lateral estoppel effect even between Greyhound and the govern-
ment. United States v. International Building Co., 345 US. 502
(1953); Restatement of Judgments § 68, Comments h, i (1942);
Restatement (Second) of Judgments §68, Comment e (Tent.
Draft No. 4, 1977).
Moreover, the consent decrees were entered “before any testi-
mony [had] been taken,” and thus the use of them as evidence
on the ultimate issues under the Sherman Act is in square con-
flict with the proviso of Section 5(a). Congress reconfirmed that
24
that proviso means what it says when it reformed consent decree
procedures as part of the Antitrust Procedures and Penalties Act
in 1974. The Senate Report on the bill stated:
“Section 2(h) provides that neither the public impact
statements nor any proceedings utilized by the court to make
its public interest determination shall be admissible in an
action for damages, either by the government or a private
party. It is the intent of the Committee to retain the provision
presently in Section 5 of the Clayton Act which prevents the
use of a consent decree in any way in subsequent litigation
as prima facie evidence of a violation. As previously stated,
the Committee wishes to retain the consent judgment as a
substantial antitrust enforcement tool.”” S. Rep. No. 93-298,
93d Cong., ist Sess. 7 (1973). See also H.R. Rep. No. 93-
1463, 93d Cong., 2d Sess. 6 (1974).
Even if not flatly prohibited by the words of Section 5(a), the
decision below conflicts with its purpose to encourage settlement
of government antitrust cases by consent decrees. See City of Bur-
bank v. General Electric Co., 329 F.2d 825, 835 (9th Cir. 1964).
The Senate Report on antitrust and penalties also re-emphasized
that purpose. (See quotation, above.) The Justice Department's
consent decree program is of “crucial” importance to the effective
enforcement of the antitrust laws.** The decision below, if this
23.
“Approximately 80 percent of all complaints filed by the Antitrust
Division of the Department of Justice are settled prior to trial by the
entry of a consent decree . . . . Obviously, the consent decree is of
crucial importance as an enforcement tool, since it permits the allo-
cation of resources elsewhere.” S. Rep. No. 93-298, 93d Cong., Ist
Sess. 5 (1973).
See also Hearings on H.R. 9203, H.R. 9947 and S. 782 (Consent Decree
Bills) Before the Subcomm. on Monopolies and Commercial Law of
the House Comm. on the Judiciary, 93d Cong., 1st Sess., ser. 20, at 61-
63, 84-85, 87 (1973); ABA, Antitrust Law Developments 237 (1975)
and First Pocket Part Supp. at 54; Note, Section 5(a) of the Clayton Act
and Offensive Collateral Estoppel in Antitrust Damage Actions, 85 Yale
L.J. 541, 561 (1976): Symposium: Relationships Between Government
Enforcement Actions and Private Damage Actions, 37 Antitrust L.J. 823,
842-843 (1968); J. Flynn, Consent Decrees in Antitrust Enforcement:
Some Thoughts and Proposals, 53 lowa L.Rev. 983, 1003 (1968).
25
Court permits it to stand, will seriously undermine, if not kill,
that program. As the decision deprives Greyhound of the benefit
of its bargain with the government in entering into the decrees,
it requires any defendant considering a consent decree settlement
to discount entirely the supposed benefits of Section 5(a). In
other words it eliminates the incentive for defendants to settle
government Cases. F
Finally, the Ninth Circuit's decision is inconsistent with the
weight of prior decisions, including one of its own, which have
held that consent decrees within the proviso of Section 5(a) are
inadmissible in antitrust litigation.
“{A]} consent judgment whether it be in a civil case or a
nolo plea in a criminal case, or any evidence thereof, is not
admissible in a treble damage action and can have no real
except to attempt to prejudice a defendant before a
jury.” Control Data Corp. v. IBM, 306 F.Supp. 839, 844 (D.
Minn. 1969), aff'd per curiam sub nom., Data Proc. Fin. &
Gen. Corp. v. IBM, 430 F.2d 1277 (8th Cir. 1970); City of
Burbank v. General Electric Co., 329 F.2d 825, 834 (9th Cir.
1964) ; Baush Mach. Tool Co. v. Aluminum Co. of America,
79 F.2d 217, 226 (2d Cir. 1935); Kunc v. ARA Services,
Inc., 414 F.Supp. 809 (W.D. Okla. 1976).
The Court of Appeals’ unprecedented decision was reached
without considering Section 5(a), Congress’ purpose in enacting
it, or the cases which have construed it.** It raises serious ques-
24. The Court of Appeals says only that the “admissibility of a consent
decree is a matter committed to the court’s discretion” and that ‘there
was no abuse of discretion here.” (App. A, p. 19) For authority it cites
two cases. In Control Data Corp. v. IBM Corp., 421 F.2d *73 (8th Cir.
1970), two judges of the Eighth Circuit ined to allow plaintiffs to
e an i pha amen, Ser tered
plaints all allegations relating to IBM's consent decrees barring any
evidentiary use of reference to the decrees at the trial. Vitagraph, Inc. v.
Perelman, 95 F.2d 142 (3d Cir.), cert. denied, 305 U.S. 610 (1938),
upheld the admission of a consent decree im 4 non-jury case without any
discussion of the matter and only as evidence of a fact apparently admitted
in the decree. (95 F.2d at 146)
26
tions concerning the effect to be given to consent decrees “before
any testimony has been taken” under Section 5(a) of the Clayton
Act and jeopardizes the major part of the government's antitrust
enforcement program. This Court has never before considered
these questions. It ought to do so now.
lll. The Court of Appeals’ Decision Presents Important Questions
of the Application and Tolling of the Statute of Limitations
in Antitrust Cases.
The complaint in this action was filed on July 5, 1968. The
statute of limitations therefore should bar all claims prior to
July 5, 1964. 15 U.S.C. § 15b. The Court below, however, upheld
a damage award for claims spanning twenty years, from 1953 to
1973. That five-fold expansion of the statutory damage period was
based upon a combination of rulings producing a bizarre result
reminiscent of a Rube Goldberg contraption.
First, adopting an unprecedented theory, the Court of Appeals
permitted tolling for alleged fraudulent concealment from 1953
to December 14, 1960. Then it saved those twenty-year old claims
from being barred on December 14, 1964, by holding that the
statute was tolled once again, this time under the Clayton Act,
15 U.S.C. § 16(i), by the government's request on precisely that
date for leave to intervene in an ICC proceeding instituted by
Mt. Hood. Thus, the Court of Appeals extended and enlarged and
combined these exceptions to the four-year statute of limitations
until they swallowed it up. The decision presents important ques-
tions concerning the application of the statute of limitations
prescribed by the Clayton Act which this Court has never con-
sidered.
A. THE DECISION BELOW IS CONTRARY TO 15 U.S.C. § 16(i).
Tolling under Section 16(i) was essential to the award of all
damages beyond the normal four-year period—some $5,194,617
after trebling. Section 16(i) provides:
27
“Whenever any civil or criminal proceeding is imstituted
by the United States to prevent, restrain, or punish violations
of any of the antitrust laws, but not including an action under
section 15a of this title, the running of the statute of limi-
tations in respect of every private or State right of action
arising under said laws and based in whole or in part on any
matter complained of in said proceeding shall be suspended
during the pendency thereof and for one year thereafter. . . .”
15 U.S.C. § 16(i).
Not one of the statute's explicit requirements is satisfied here. The
relevant facts are as follows:
On or about October 7, 1964, Mt. Hood filed with the ICC a
“petition .. . for an order reopening [certain Greyhound acquisi-
tion cases} and attaching certain terms, conditions and limitations
to the exercise of the privileges therein granted.” (R. 1410) On
December 14, 1964, the United States petitioned for leave to
intervene. The petition did not allege that Greyhound was vio-
lating the antitrust laws (or any other law), and it sought no
relief or remedy against Greyhound. (R. 2266, et seg.) It took no
position on the merits of the dispute between Mt. Hood and
Greyhound, and expressly disclaimed any knowledge of the matters
complained of by Mt. Hood:
“We have no way of knowing whether those of Mount
Hood’s allegations which Greyhound denies are true or false;
resolution of such controversies is a typical function of a
hearing.” (R. 2268)
The United States was not permitted to intervene until May 27,
1965. It raised no new issues. Indeed, the ICC specifically limited
its patticipation to the Interstate Commerce Act issues Mt. Hood
had raised. (R. 2276)
The Court of Appeals held that these facts activated Section
16(i) and tolled the statute of limitations commencing December
14, 1964, the date on which the petition for leave to intervene
28
was first filed, and four years to the day after the date on which
Mt. Hood was later (coincidently) found by the jury to have
“discovered” its cause of action. That holding is erroneous and
contrary to Section 16(i) in every respect.
First, the holding applies Section 16(i) to a proceeding insti-
tuted by Mt. Hood, not the United States. A party who intervenes
in a proceeding previously brought by someone else has not “in-
stituted” that proceeding.
Second, since the petition for leave to intervene did not charge
Greyhound with any wrongdoing, took no position on the merits
and sought no relief, this case is not based on any matter ‘‘com-
plained of” by the government in the ICC proceeding.* See Leh
v. General Petroleum Corp., 382 U.S. 54, 65 (1965) (‘In general,
consideration of the applicability of [16(i)} must be limited to
a comparison of the two complaints on their face.’’).
Third, the Court of Appeals applied Section 16(i) to a pro-
ceeding brought under Section 5(10) of the Interstate Commerce
Act, and which concerned only the enforcement of that Act. (R.
2266, 2276) In no way could Mt. Hood's institution of that pro-
ceeding be considered an action to “prevent, restrain, or punish
violations of the antitrust laws,”** and intervention by the United
States did not change that. The United States sought no relief at
all. Even if the government ha.! attempted and been permitted
to assert antitrust violations and sought some relief in respect to
them. the ICC is without power directly to enforce the antitrust
laws. McLean Trucking Co. v. United States, 321 U.S. 67, 79
(1944).
25. The government's primary purpose in seeking to intervene was to
urge the ICC not to dispose of the case by summary action, but to hold a
full hearing for the benefit of both parties. (R. 2267-2269)
26. The “antitrust laws” as used in Section 16(i) are specifically lim-
ited to the Sherman Act, Clayton Act and the Wilson Tariff Act. 15 U.S.C.
§ 12. That list is exclusive. Nashville Milk Co. v. Carnation Co., 355 US.
373, 375-376 (1958).
29
Finally, the Court of Appeals erred in holding that Section
16(i) comes into operation on the date on which the United
States first seeks leave to intervene. Until the ICC granted its
petition, the government was not in the case. It had no right to
participate or take any action in the proceedings. See ICC Rule
72(e), 49 C.F.R. § 1100.72(e) (1976). The petition to intervene
was not granted until May 27, 1965, and that is the earliest date
on which it could be said that the government “instituted” that
proceeding, assuming that such a petition could ever be said to
have “instituted” it.?*
In sum, the ICC case involved neither a civil or criminal pro-
ceeding “instituted by the United States,” nor any proceeding
“to prevent, restrain or punish violations of any of the antitrust
laws.” And this case is not based on “any matter complained of
in said proceeding,” because the government did not complain
of anything in that case. The petition of the United States for
leave to intervene in a proceeding previously instituted by plain-
tiff to determine possible violations of the Interstate Commerce
Act, which makes no charges, seeks no relief and is restricted to
the issues framed by plaintiff, is not within either the letter or
the spirit of Section 16(i).
The Court of Appeals chose not to follow the “literal wording
of Section 16(i).”” (App. A, p. 23) Instead it relied on the per-
27. The government's petition might have been denied. Had it been,
the statute clearly would not have been tolled. No one contends that the
mere filing of a petition for leave to intervene tolled the statute of limita-
tions. The order granting intervention could not retroactively toll the
statute, because by then it had already run and there was nothing to toil.
28. That conclusion has two effects on the jud t here. First, since
the jury found that plaintiff knew or should have known of its claims on
December 14, 1960, those claims were time barred after December 14,
1964, and Section 16(i) cannot rescue them because the petitidn to inter-
vene was not granted until May 27, 1965. Second, any tolling under the
Section would extend the claim period back only to May 27, 1961. Since
there is no evidence of the amount of damage suffered in the period
May 27, 1961, to July 5, 1964, the verdict and judgment to that extent
reflect an incorrect damage period.
30
ceived purpose of the statute: to permit “private litigants to have
the benefits that may flow from governmental antitrust enforce-
ment efforts” (App. A, p. 23). because it believed that the peti-
tion for leave to intervene was the ‘functional equivalent of a
direct action. . . .” (Id., p. 24) But that purpose hardly justifies
rewriting the statute as the Court of Appeals has done. And
the reasoning on which the Court of Appeals relies does not even
fit this case. The government made no antitrust enforcement
efforts here; its petition to intervene was not the equivalent,
“functional” or otherwise, of an antitrust complaint, and the only
benefit Mt. Hood derived from the government's intervention in
the ICC proceeding is the tolling of the statute itself.2® Moreover,
the Court of Appeals’ novel ‘functional equivalent’ test would
require a detailed review of the record in each case to see whether
the position ultimately taken by the government was or was not
the “functional equivalent” of direct action. That creates more
problems than it solves. Cf. Leh v. General Petroleum Corp.,
382 U.S. 54, 65 (1965). The possibilities of government partici-
pation and the circumstances under which it might occur are
limitless.*° The government may be with one party on one issue,
with the other on a second and with neither on a third. The
uncertainty created by the decision below by itself provides a
compelling reason to grant certiorari.
29. The Court of Appeals says that the ICC “proceedings were of a
kind likely to produce benefits to . . . plaintiff in a subsequent antitrust
suit,” and that ‘‘governmental investigative and legal resources were made
available to fully develop the facts and the law favorable to the common
position of the government and Mt. Hood on these issues.” (App. A, pp.
23-24) Nothing is cited to justify those statements. The government's
petition did not endorse Mt. Hood's charges or assert any position in
“common” with Mt. Hood. (p. 27, above)
30. In some administrative proceedings, government participation may
even occur without notice to the subsequent private treble damage defend-
ant, leaving him in a position where he had no reason to preserve records
and other information necessary for his defense during the period of
the administrative proceedings.
31
Finally, the ramifications of the Court of Appeals’ extension
of Section 16(i) are truly alarming. The number and variety of
regulatory proceedings in which the Justice Department partici-
pates to express its views are legion.** No one previously has even
suggested that the statute of limitations was tolled by reason of
such participation. Unless this Court acts, the Court of Appeals’
decision will revive countless stale antitrust claims previously
believed by everyone to be long since gone.
This Court has never addressed the questions raised here con-
cerning the scope of Section 16(i). The nearest it has come was
twelve years ago in Minnesota Mining & Manufacturing Co. v.
New Jersey Wood Finishing Co., 381 U.S. 311 (1965), where
the Court held the statute was tolled by a Federal Trade Com-
mission action to enforce Section 7 of the Clayton Act. Even
that application of the tolling provision, supported by only
five members of the Court, was recognized to be tenuous. The
Court of Appeals’ application of Section 16(i) in this case goes
much further. It is plainly impossible to justify, and clearly pre-
sents a question of importance in the administration of the Clay-
31. The Assistant Attorney General in charge of the Antitrust Divi-
sion is charged with responsibility to intervene and assert antitrust consid-
erations in proceedings before “such agencies as the Civil Aeronautics
Board, Interstate Commerce Commission, Federal Communications Com-
mission, Federal Maritime Commission, Federal Power Commission, Fed-
eral Reserve Board, Federal Trade Commission, Nuclear Regulatory Com-
mission, and Securities and Exchange Commission, . . .” 28 C.F.R. Ch. 1,
Part O, Subpart H, § 0.40(b) (1976).
Any CCH Trade Regulation Report reveals that the Antitrust Division
takes its responsibilities seriously. Excerpts from just one such report are
contained in Appendix F to this petition.
32. Section 7 of the Clayton Act, unlike Section 5 of the Interstate
Commerce Act, is one of the “‘antitrust laws.”
33. The Solicitor General, arguing for the application as amicus curiae,
admitted that the “ ‘result is difficult and perhaps impossible to justify
in terms of conventional analysis of the text and legislative history. . .’”
381 U.S. at 324 (Black, J., dissenting).
32
ton Act. Minnesota Mining & Manufacturing Co. v. New Jersey
Wood Finishing Co., 381 U.S. 311, 314 (1965). The Court should
grant certiorari.
B. THE COURT OF APPEALS’ DECISION RAISES SERIOUS QUESTIONS CON-
CERNING THE APPLICATION OF THE DOCTRINE OF FRAUDULENT
CONCEALMENT TO PRIVATE ANTITRUST LITIGATION.
This Court has never considered whether the doctrine of fraud-
ulent concealment can be used to alter the basic four-year statute
of limitations in private antitrust litigation, or, if it can, what
legal principles should govern its use. This case provides an appro-
priate opportunity for the Court to do so.
The Court of Appeals said that prior to December 14, 1960:
1. Mt. Hood complained about Greyhound’s quoting and
routing practices; (App. A, p. 21)
2. Mt. Hood suspected Greyhound of unlawful conduct;
(App. A, p. 21)
3. Mt. Hood had knowledge of Greyhound’s violations
of consent decrees that prohibited practices the same as those
charged in this case; (See App. A, pp. 19, 21-22) and
4. Mt. Hood was aware of the growth of Greyhound’s
power and of the commission of predatory acts by some of
its agents. (App. A, p. 22)**
34. Even that description of the record of Mt. Hood’s knowledge of
its claims does not do it justice. The record showed that Mt. Hood com-
plained repeatedly, often under oath, from 1943 on of the very practices
that were alleged in this case to violate the antitrust laws. It also
showed repeated charges by Mt. Hood, some again under oath, that Grey-
hound’s practices were inconsistent with the assurances it had given to
Mt. Hood and the ICC. (Tr. 3599, 3814-3817, 3832, 3834, 3836, 3858-
3859; Ex. 45, pp. 227, 231, 236; Exs. 197, 215, 297, L-3, E-11-A, G-11-A,
D-12) Indeed, the record was so compelling that the trial court said it
would be “Zrresponsible”’ to submit the fraudulent concealment question to
the jury or to allow any verdict based on it to stand. (Tr. 4888-4889,
5969, 6701) But it did just that, with no explanation at all. (App. C)
33
Nevertheless, the Court of Appeals affirmed the jury's finding
of fraudulent concealment** because, in response to Mt. Hood's
complaints, Greyhound denied that the incidents occurred or rep-
resented that they were isolated and not countenanced by man-
agement. (App. A, pp. 21-22) Thus, the decision rests upon a
novel and unsound rule of law: One who suspects wrongdoing
and even has charged another with it under oath may be excused
from his duty to file his action if the other denies the charges.
Under the decision below, denial of alleged wrongdoing consti-
tutes fraudulent concealment that tolls the statute.**
But, as a matter of common sense, Greyhound’s denials and
representations could not take away the knowledge (or at least
notice) that Mt. Hood had when it made its complaints in the
first place. And the previously decided cases, including Ninth
Circuit cases, hold as a matter of law that such denials and rep-
resentations do not extend the limitations period:
“Restatements of the fraudulent representation do not of
themselves constitute concealment, and where a party is once
put upon notice of fraud he cannot avoid the consequences
35. The jury found in answers to special interrogatories that there was
fraudulent concealment from 1953 to 1964, but also that Mt. Hood knew
or should have known of the antitrust violation on December 14, 1960.
This latter finding was thus inconsistent both with the other special
verdict and with the general award of damages for the 1953-1964 period.
Contrary to Rule 49(b), Fed.R.Civ.P., the trial court did nothing to
correct the inconsistency. The Court of Appeals misstates that the jury
found fraudulent concealment only until Seeger 14, 1960 (App. A,
pp. 20-21), and thus ignores the problem of the inconsistency.
Quite a from their inconsistency, the jury's findings are plainly
irrational. Nothing relevant to Mt. Hood's discovery of its claims occurred
on or around December 14, 1960, but that just happened to be four years
to the day before the government filed its petition for leave to intervene
in Mt. Hood's ICC proceedings. Thus, a finding plainly based upon
something other than evidence was a critical part in the elaborate construct
by which the decision below extended the damage period to a full twenty
years.
36. In fact, the Court of Appeals even upheld an instruction on fraud-
ulent concealment by which the jury was told that Mt. Hood “had the
right to rely” upon such denials and representations. (Tr. 6777-6778)
34
of his constructive knowledge of the fraud nor fulfill his
duty to investigate by going to the party he suspects of the
fraud. He cannot desist from further investigation because
he is reassured of the truth of the original representations.”
Feak v. Marion Steam Shovel Co., 84 F.2d 670, 673 (9th
Cir.), cert. denied, 299 U.S. 604 (1936).
“[ Mere nondisclosure or denial of the existence of a con-
spiracy does not constitute fraud or deceit for tolling pur-
poses. If it did, the tolling exception to the statute of limita-
tion would eclipse the basic statute itself.” Ha// v. E. 1. Du
Pont De Nemours & Co., 312 F.Supp. 358, 362 (E.D.N.Y.
1970)"
The Court of Appeals’ explanation that ‘the jury weighed the
evidence” and found fraudulent concealment (see App. A, p. 21,
n.28) obviously begs the question. The question is not what a
plainly confused jury did conclude. The question is: under the
law, should it have been permitted to reach such a conclusion
given the degree of Mt. Hood’s knowledge and suspicion recog-
nized even by the Court of Appeals? (pp. 32-33, above)
The Ninth Circuit's attempt to explain away Mt. Hood’s admit-
ted knowledge of Greyhound’s violations of consent decrees is no
more satisfactory. It says Mt. Hood’s knowledge of conduct in
violation of the consent decrees is not equivalent to notice of the
alleged antitrust violations because violations of consent decrees are
37. See also Suckow Borax Mines Consolidated v. Borax Consolidated,
Lid., 185 F.2d 196, 20° .9th Cir. 1950), cert. denied, 340 U.S. 943
(1951); Foster & Kleiser Co. v. Special Site Sign Co., 85 F.2d 742, 752
(9th Cir. 1936), cert. denied, 299 U.S. 613 (1937); Prather v. Neva
Paperbacks, Inc., 446 F.2d 338, 341 (Sth Cir. 1971) (plaintiff suspected
he had a cause of action. ““The.bells do not toll the limitations statute while
one ferrets the facts.”); Falls Sand & Gravel Co. v. Western Concrete,
Inc., 270 F.Supp. 495, 504 (D. Mont. 1967); Philco Corp. v. Radio Corp.
of America, 186 F.Supp 155 (E.D. Pa. 1960).
35
not in themselves violations of the antitrust laws. (App. A, pp.
21-22) But that misses the point. The point is that in this case,
according to the Court of Appeals itself, the practices which vio-
lated the consent decrees were “. . . the same as or similar to
those charged in this suit.” (App. A, p. 19) Therefore, Mt.
Hood's knowledge of violations of the consent decrees necessarily
was knowledge of the.practices which are its antitrust claim
here, and what one knows is not concealed from him. Conversely,
if those acts in violation of the consent decrees were not viola-
tions of the antitrust laws, neither are the acts upon which this
suit is based—they are the same acts.
This Court has never considered the circumstances under which
fraudulent concealment may toll the statute of limitations in a
private antitrust case. Indeed, this Court has never even considered
whether the equitable doctrine of fraudulent concealment can
be used at all to toll the four-year limitations period prescribed
in the Clayton Act. 15 U.S.C. § 15b.** The decision below an-
nounces a theory of fraudulent concealment that could eviscerate
the statute of limitations in nearly all cases. It is time for this
Court to address the question and define the role of fraudulent
concealment in antitrust cases.
38. Chief Justice Burger, in considering that issue as a Circuit Judge,
said:
“Certainly some members of Congress thought they were accom-
Fmitatons-~the cutting of 1 Se CS a ED oF
ions—the cutting off of
“I concur in our holdin oy >
tolled by fraudulent } with considerable reservation and
0 ee eee ae eee ae ane ©
examine the problem and resolve it.” Westinghouse Elec. Corp. v
City of Burlington, Vermont, 326 F.2d 691, 692-693 (D.C. Cir.
1964) (Burger, J., concurring specially).
See generally Note, Fraudulent Concealment and Section 4(b) of the
Clayton Act, 49 U.Va.L.Rev. 276 (1963); Comment, Clayton Act Statute
of Limitations and Tolling by Fraudulent Concealment, 72 Yale L.J.
600 (1963).
36
CONCiUSION
A writ of certiorari should issue to review the judgment and
opinion of the Court of Appeals for the Ninth Circuit.
Respectfully submitted,
JOHN R. REESE
RICHARD C. BRAUTIGAM
Three Embarcadero Center
San Francisco, California 94111
(415) 393-2000
Attorneys for Petitioners
McCutTcHEN, DoyLe, BRowN
& ENERSEN
James H. CLARKE
DEZENDORF, SPEARS, LUBERSKY
& CAMPBELL
KEITH A. JENKINS
Of Counsel
October 24, 1977.
Appendix
Appendix A
Decision and Opinion of the Court of Appeals
MT. HOOD STAGES, INC., dba Pacific
Trailways, Plaintiff-Appellee,
v.
The GREYHOUND CORPORATION and
Greyhound Lines, Inc.,
Defendants-Appellants.
No. 74-1282.
United States Court of Appeals,
Ninth Circuit.
June 9, 1977.
Appeal from the United States District Court for the District
of Oregon.
Before BROWNING and WRIGHT, Circuit Judges, and
LINDBERG,* District Judge.
BROWNING, Circuit Judge:
Greyhound Corporation and Greyhound Lines, Inc., appeal
from a judgment entered on a jury verdict awarding damages to
Mt. Hood Stages, Inc., for injuries resulting from violations of
sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2.1 We affirm.
I.
Immunity
Greyhound is the largest common carrier by bus of passengers
and package express in the United States, moving more than 80
percent of this traffic in the western states and operating over
*Honorable William J. Lindberg, Senior United States District Judge,
Western District of Washington, sitting by designation.
1. The judgment was for $13,146,090 (after trebling) and attorneys’
fees of $1,250,000, plus costs.
2 Appendix A—Court of Appeals’ Opinion
routes throughout the country. Mt. Hood is one of Greyhound’s
small competitors, operating over routes in Oregon, Idaho, and
Utah. The essence of Mt. Hood’s antitrust claim is that Grey-
hound acquired bus companies whose routes circled those of Mt.
Hood and thereafter deprived Mt. Hood of connecting or
“bridge” traffic with the purpose and effect of eliminating Mt.
Hood as a substantial competitor.
Greyhound does not deny the sufficiency of the evidence to
establish a violation of sections 1 and 2 of the Sherman Act,
assuming that statute applies. Its principal contention is that Mt.
Hood bases its claim upon acquisitions approved by the Interstate
Commerce Commission and implementation by Greyhound of con-
trol over the acquired companies, and that such activities are
immune from antitrust attack by virtue of section 5(11) of the
Interstate Commerce Act, 49 U.S.C. §5(11), applied in light
of the Supreme Court’s analysis in Hughes Tool Co. v. Trans
World Airlines, Inc., 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d 577
(1973).
Section 5(2) of the Interstate Commerce Act, 49 U.S.C. § 5(2),
provides that one carrier may acquire another with Commission
approval; the Commission is required to grant such approval, sub-
ject to any-terms and conditions it deems reasonable, if the acqui-
sition “will be consistent with the public interest,” id. Section
5(11) provides that carriers participating in transactions approved
by the Commission are “relieved from the operation of the anti-
trust laws . . . insofar as may be necessary to enable them to carry
into effect the transaction so approved or provided for in accord-
ance with the terms and conditions, if any, imposed by the Com-
mission, and to hold, maintain, and operate any properties and
exercise any control or franchises acquired through such trans-
action.”
From 1947 to 1956 Greyhound acquired eight bus companies
operating in the area relevant here. Each acquisition was approved
Appendix A—Court of Appeals’ Opinion 3
by the Commission pursuant to section 5(2). Mt. Hood opposed
four of the acquisitions. It argued that if the acquisitions were
approved, Mt. Hood would be encircled and Greyhound could
route traffic around it, depriving the public of the most convenient
service and Mt. Hood of revenues necessary to its survival. Mt.
Hood's argument to the Commission thus foreshadowed its present
antitrust claim.
Greyhound responded by representing to the Commission that
the acquisitions “would not adversely affect connecting carriers;
that arrangements with such carriers, including interchange of
traffic and open gateways, would be maintained; that it was not the
policy of Greyhound to route passengers over circuitous routes;
that its agents were instructed to quote the direct route as well as
the Greyhound route and give passengers their choice; and that
Greyhound had always carried [Mt. Hood's} schedules in its
folders and cooperated in every way to acquaint the public with
its service and thus promote additional traffic and business for
their lines.’”’* Greyhound also represented to the Commission that
Greyhound would continue a joint through-bus arrangement with
Mt. Hood.’ As the Commission later found, Greyhound intended
the Commission to rely upon these representations in determining
whether the proposed acquisitions were in the public interest, and
the Commission did in fact rely upon them in approving the
acquisitions.
2. The quotation is from the Commission’s opinion in the section
5(9) proceedings, described later. Mt. Hood Stages, Inc., 104 M.C.C.
449, 452 (1968).
3. This agreement, initiated in 1949, provided for a through-bus from
San Francisco, California, to Spokane, Washington, using Mt. Hood's
bridge route between Klamath Falls and Biggs, Oregon. Revenue and
expenses were shared according to the miles traveled over each company’s
route. The arrangement shortened the San Francisco-Spokane trip by 110
miles and several hours as compared with the all-Greyhound route via
Portland. It provided better service to travelers and was profitable for
both companies.
4 Appendix A—Court of Appeals’ Opinion
In 1964 Mt. Hood filed a petition with the Commission pur-
suant to section 5(9) of the Act, 49 U.S.C. § 5(9),* asking it to
reopen the acquisition proceedings and enter a supplemental order
requiring Greyhound to live up to its representations. The allega-
tions in Mt. Hood's petition to the Commission were essentially
the same as those Mt. Hood later made in this antitrust suit—
namely, that Greyhound had cancelled the through-bus connec-
tion, had scheduled connecting service so as to preclude reasonable
connections with Mt. Hood, had directed Greyhound’s agents and
independent joint ticket agents to send traffic by longer routes
around those of Mt. Hood, and had interfered in various ways
with the distribution of Mr. Hood’s schedules and the quotation
of Mt. Hood's rates and services, all with the intent of injuring
Mt. Hood. The United States intervened in support of Mt. Hood.
After an extensive evidentiary hearing, a hearing examiner re-
solved all issues against Greyhound and recommended entry of the
order sought by Mt. Hood. In April, 1968, the Commission issued
an opinion sustaining the examiner’s findings that Greyhound had
made the representations alleged, that Greyhound had intended
the Commission to rely on them, that the Commission had relied
on them in approving the acquisitions, that Greyhound had not
fulfilled the representations, and that Greyhound’s actions “were
inspired by a desire to stifle competition” and “injure or destroy”
Mt. Hood. Mt. Hood Stages, Inc., 104 M.C.C. 449, 459-63 (1968).
The Commission concluded that Greyhound’s failure to abide by
its commitment “constitutes destructive competition in contraven-
tion of the national transportation policy, is not consistent with
the public interest, and provides good cause” for a supplemental
order under section 5(9) of the Act. The Commission deferred
4. Section 5(9) reads:
Supplemental orders by Commission.—The Commission may from
time to time, for i cause shown, make such orders, supplemental
to any order made under paragraph (1), (2), or (7) of this sec-
tion, as it may deem necessary or appropriate.
Appendix A—Court of Appeals’ Opinion 5
entry of a supplemental order to allow voluntary negotiations
between the parties. Id. at 462-63.
Two months later, in July, 1968, Mt. Hood filed this suit alleg-
ing violations of the antitrust laws and common law and statutory
unfair competition. With respect to the antitrust violations the
complaint alleged that, beginning in 1947 and continuing to the
date of the complaint, Greyhound had restrained and monopolized
commerce in the carriage of passengers and their luggage between
points in Oregon, Idaho, and Utah by means essentially the same
as those that were the subject of the Commission's proceeding;
that is, the acquisition of independent bus lines with Commission
consent obtained by the misrepresentations outlined by the Com-
mission and thereafter engaging in the destructive competitive
tactics found by the Commission. Greyhound sought, unsuccess-
fully, to eliminate these issues from the litigation on the ground
that they fell within the exclusive jurisdiction of the Commission.
In the Commission proceedings, meanwhile, the efforts of the
parties to agree upon an order failed. The Commission entered
its own order requiring Greyhound to restore the practices and
traffic patterns existing when the acquisitions at issue were author-
ized, and, specifically, to restore the joint through-bus service, to
revise Greyhound’s schedules to permit reasonable connections
with Mt. Hood, to see that through routes and fares were quoted
and quoted accurately, and to eliminate other destructive prac-
tices. Greyhound Lines, Inc. v. United States, 308 F.Supp. 1033,
1037 (N.D. Ill. 1970). A three-judge district court affirmed the
Commission and issued its own order in similar terms. Jd. at 1040-
41. Following entry of the district court order enforcing the Com-
mission decision, Mt. Hood amended the complaint in this anti-
trust proceeding to eliminate the prayer for injunctive relief.
In June, 1971, the United States and the Commission filed peti-
tions with the district court in the enforcement proceeding, asking
that Greyhound be held in contempt for failing to comply with
6 Appendix A—Court of Appeals’ Opinion
the court’s order enforcing the Commission's decision. The court
found Greyhound had willfully failed to comply with portions of
the order and held Greyhound in criminal and civil contempt.
United States v. Greyhound Corp., 363 F.Supp. 525 (N.D.IIL.
1973). The court imposed fines totaling $600,000, United States
v. Greyhound Corp., 370 F.Supp. 881, 883-85 (N.D.III.1974),
ordered Greyhound to file semiannual reports of compliance ef-
forts for five years, and granted members of the Department of
Justice staff ‘“‘visitorial and document examination rights so that
they may further monitor Greyhound’s compliance efforts,” id. at
886. Because Greyhound appeared to be attempting to comply
fully, no further injunctive relief was ordered. :
While the proceeding to enforce the Commission's order was
in progress, this antitrust case had come to trial and concluded
with the verdict in Mt. Hood’s favor. The opinion of the court in
the enforcement proceeding noted that ‘many of Greyhound’s
actions that were found to be in violation of the order, were also
found to be in violation of the antitrust laws” in this private suit.
Id. at 884 n. 2. The enforcement court denied Mt. Hood's prayer
for damages for expenses related to the contempt action and for
injury to its business as a result of the contempt, on the ground
that the damages awarded in this antitrust proceeding “will ade-
quately compensate [ Mt. Hood] for any damages it may have also
suffered as a result of Greyhound’s contempt. This is particularly
true since many of the same acts of Greyhound that were found
to be contemptuous were also involved in the private antitrust
case.” Id, at 888. The court of appeals affirmed the criminal con-
tempt convictions, stating, “the record of this case shows a flagrant
disregard of a court order” that was intended “to insure that
Greyhound would comply with representations it made at the
acquisition hearings and cease its predatory practices toward Mt.
Hood.” United States v. Greyhound Corp., 508 F.2d 529, 540-41
(7th Cir. 1974).
Appendix A—Court of Appeals Opinion 7
From. this cecital it is evident that the conduct uaderlying the
regulatory proceedings and that underlying the antitrust suit are
essentially the same. The Commission's authority to regulate this
conduct is not challenged.
Whether conduct Congress has made subject to administra-
tive regulation is exempt from the antitrust laws depends upon
Congress’ intent. No direct evidence of a congressional intent rele-
vant here has been cited.* The only applicable statutory language
dealing with the question of antitrust immunity is that found in
section 5(11), quoted above. The conduct charged in this action
is not within the express exemption afforded by sections 5(11),
particularly because provisions of this kind are strictly construed.*
Since the Commission approved the acquisition in reliance upon
Greyhound’s commitment that the conduct underlying the anti-
trust complaint would not occur if the acquisitions were approved,
it can hardly be argued that antitrust immunity for such conduct
is “necessary” to enable Greyhound “‘to carry into effect the trans-
action so approved . . . and to hold, maintain, and operate any
properties and exercise any control . . . acquired through such
transaction.”
The inclusion of this express exemption in the statute implies a
congressional intention that conduct not within the exemption re-
mains subject to the antitrust laws.’ But this conclusion does not
always follow; despite a grant of express immunity that does not
5. The subject of antitrust immunity was touched upon briefly during
the House debates. 58 Cong.Rec. 8593-94 (1919). The scope of the
immunity was not discussed. Representative Sanders assured other House
members that the antitrust laws were not being “wiped out’’—that a
merger will only be allowed if it would benefit the public. Id.
6. Federal Maritime Comm'n v. Seatrain Lines, Inc., 411 U.S. 726,
733, 93 S.Ct. 1773, 36 L.Ed.2d 620 (1973); United States v. McKesson
& Robbins, Inc., 351 US. 305, 316, 76 S.Ct. 937, 100 L.Ed, 1209
(1956).
7. Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213,
216-17, 86 S.Ct. 781, 15 L.Ed.2d 709 (1966); United States v. Borden
Co., 308 U.S. 188, 201, 60 S.Ct. 182, 84 L.Ed. 181 (1939).
8 Appendix A—Court of Appeals Opinion
cover the conduct charged, antitrust immunity may still be im-
plied.*
Because of the “fundamental national policies embodied in
the antitrust laws,” Oster Tail Power Co. v. United States, 410
US. 366, 374, 93 S.Ct. 1022, 1028, 35 L.Ed.2d 359 (1973), how-
ever, repeal of those laws is not lightly implied from congres-
sional adoption of a regulatory scheme.* Conduct is not immunized
merely because it falls within the jurisdiction of the regulatory
agency,”® as it did in this case. Immunity is not implied merely
because the applicable regulatory standard requires the agency to
give weight to antitrust policy,”’ as it did in this instance.”
8. See International Tel. & Tel. Corp. v. General Tel. & Elec. Corp.,
518 F.2d 913, 918-19 & n. 24 (9th Cir. 1975). Hughes Tool Co. v.
Trans World Airlines, Inc., 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d
577 (1973), the decision relied upon most heavily by Greyhound, in-
volved an express exclusion, and it is not entirely clear that the conduct
that case held to be immunized from the antitrust laws was within the
express exclusion, narrowly construed. The Court suggested as much
when it noted, “a statutory scheme that does not create a total exception
from antitrust laws may, nonetheless, in particular and discrete instances
by implication grant immunity from an antitrust claim.” Id. at 385 n. 14,
93 S.Ct. at 660 (emphasis added). The Supreme Court has twice cited
Hughes Tool as a case in which immunity was implied. See Gordon v.
New York Stock Exch., Inc., 422 U.S. 659, 682, 95 S.Ct. 2598, 45 L.Ed.
2d 463 (1975); United States v. National Ass'n of Sec. Dealers, Inc.,
422 U.S. 694, 734-35, 95 S.Ct. 2427, 45 L.Ed.2d 486 (1975).
9. United States v. National Ass'n of Sec. Dealers, Inc., 422 U.S. 694,
719-20, 95 S.Ct. 2427, 45 L.Ed.2d 486 (1975); United States v. Philadel-
phia Nat'l Bank, 374 US. 321, 350-51, 83 S.Ct. 1715, 10 L.Ed.2d 915
(1963).
10. Cantor v. Detroit Edison Co., 428 U.S. 579, 596-97 n. 36, 96
S.Ct. 3110, 49 L.Ed.2d 1141 (1976); Gordon v. New York Stock Exch.,
Inc., 422 U.S. 659, 692, 95 S.Ct. 2598, 45 L.Ed.2d 463 (1975) (Stewart,
J., concurring); Otter Tail Power Co. v. United States, 410 U.S. 366,
372, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973).
11. Gulf States Util. Co. v. Federal Power Comm'n, 411 U.S. 747,
758-60, 93 S.Ct. 1870, 36 L.Ed.2d 635 (1973); Otter Tail Power Co.
v. United States, 410 US. 366, 373, 93 S.Ct. 1022, 35 L.Ed.2d 359
(1973).
12. Port of Portland v. United States, 408 U.S. 811, 841, 92 S.Ct.
2513, 33 L.Ed.2d 723 (1972); Northern Lines Merger Cases, 396 US.
Appendix A—Court of Appeals’ Opinion 9
The applicable interpretative standard was restated by the Su-
preme Court in Cantor v. Deiroit Edison Co., 428 U.S. 579, 597,
96 S.Ct. 3110, 3120, 49 L.Ed.2d 1141 (1976): “The Court has
consistently refused to find that regulation gave rise to an implied
exemption without first determining that exemption was necessary
in order to make the regulatory act work, ‘and even then only to
the minimum extent necessary.’ "’** As the Court had written in
the preceding term, “Certain axioms of construction are now
clearly established. Repeal of the antitrust laws by implication is
not favored and not casually to be allowed. Only where there is
a ‘plain repugnancy between the anfitrust and regulatory provi-
sions’ will repeal be implied.” Gordon v. New York Stock Ex-
change, Inc., 422 U.S. 659, 682, 95 S.Ct. 2598, 2611, 45 L.Ed.2d
463 (1975) .™4
Applying these standards, we find no reason to imply immunity
here. No “plain repugnancy” exists between the Interstate Com-
merce Act and the Sherman Act as applied to Greyhound’s con-
duct, and it is not necessary to exempt Greyhound’s conduct from
antitrust restraints “to make the [Interstate Commerce Act]
work.” This is evident from the course taken in the administrative
and judicial proceedings under both statutes. Clearly there has
been no conflict between the regulatory and antitrust regimes. On
the contrary, they have accommodated and supplemented each
other. The policies of both have been advanced. There has been
initial resort to the Commission for an application of its expertise
to the factual issues relevant to whether application of the anti-
491, 511-16, 90 S.Ct. 708, 24 L.Ed.2d 700 (1970); McLean Trucking
Co. v. United States, 321 U.S. 67, 83-87, 64 S.Ct. 370, 88 L.Ed. 544
(1944).
13. Quoting Silver v. New York Stock Exch., 373 U.S. 341, 357,
83 S.Ct. 1246, 10 L.Ed.2d 389 (1963).
14. Quoting United States v. Philadelphia Nat'l Bank, 374 U.S. 321,
350-51, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963). See International Tel. &
Tel. Corp. v. General Tel. & Elec. Corp., 518 F.2d 913, 918-19 (9th
Cir. 1975).
10 Appendix A—Court of Appeals’ Opinion
trust laws would be incompatible with regulatory objectives, see
Ricci v. Chicago Mercantile Exchange, 409 U.S. 289, 93 S.Ct. 573,
34 L.Ed.2d 525 (1973), and the Commission has unqualifiedly
indicated that it has not approved and continues to disapprove
Greyhound’s conduct under regulatory standards applied in the
light of antitrust principles. See Mt. Hood Stages, Inc., 104
M.C.C. 449, 458, 460-63 (1968) (citing Marnell v. United Parcel
Service of America, Inc., 260 F.Supp. 391 (N.D.Cal.1966) ).
The remedies afforded under the two statutes have also meshed.
The injunction issued in enforcement of the regulatory determina-
tion was not duplicated in the antitrust proceeding. In assessing
the penalty for contempt for violation of that injunction, the court
was careful to avoid the possibility of double damages. See United
States v. Greyhound Corp., supra, 370 F.Supp. at 888. The losses
sustained by Mt. Hood during the contempt period (approximately
February 5, 1970, to March 15, 1973, see id. at 884 n.2) were only
a small part of the total damages Mt. Hood sustained from the
inception of Greyhound’s wrongful conduct in 1947. The remain-
ing damages could be and were recovered only in the antitrust
action. Trebling the damages—an effective support for the com-
petitive policy reflected in both statutes—could be and was accom-
plished only in the antitrust proceeding. Since the transactions
involved offended the policies of both statutes and those policies
were advanced and not impaired by the application of both
statutes, it is reasonable to assume Congress would have intended
both to apply.
Greyhound leans heavily upon Hughes Tool Co. v. Trans
W orld Airlines, Inc., 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d 577
(1973). From this decision Greyhound draws the general prin-
ciple that when antitrust immunity is conferred by a statute upon
participants in an acquisition approved by a regulatory agency,
the immunity extends to conduct made possible by the acquisition
whether or not the conduct itself was approved, at least where the
agency considered the possibility such conduct might occur and
retained continuing jurisdiction to regulate it in the public interest.
Appendix A—Court of Appeals’ Opinion 11
But antitrust exemption is: implied “on/y to the minimum
extent necessary” to make the regulatory scheme work (emphasis
added). Quoting this principle, and citing Hughes Too/ and Pan
American World Airways, Inc. v. United States, 371 US. 296,
83 S.Ct. 476, 9 L.Ed.2d 325 (1963), the Supreme Court recently
wrote, “[W]e have implied immunity in particular and discrete
instances to assure that the tederal agency entrusted with regula-
tion in the public interest could carry out that responsibility free
from the disruption of conflicting judgments that might be voiced
by courts exercising jurisdiction under the antitrust laws.” United
States v. National Association of Securities Dealers, Inc., 422 US.
694, 734-35, 95 S.Ct. 2427, 2450, 45 L.Ed.2d 486 (1975) (em-
phasis added).
Greyhound’s generalization may accommodate the facts of both
Hughes Tool and the present case, but it omits the distinguishing
particulars that made antitrust immunity appropriate in Hughes
Tool and would make it inappropriate here. The crux of the
distinction between the two cases is that, as the Supreme Court
viewed the record in Hughes Tool, the regulatory agency involved
had considered the type of conduct which underlay the antitrust
complaint and had approved it as in the public interest;* a suc-
cessful antitrust suit therefore necessarily would have been repug-
nant to operation of the regulatory scheme. The opposite is true
in this case; the Interstate Commerce Commission did not con-
template Greyhound’s challenged conduct as likely to occur and
thus did not approve such conduct when it approved the acquisi-
tions.’* The Commission also subsequently disapproved that con-
duct.
15. See In re REA Express. Inc., 412 F.Supp. 1239, 1261 (E.D.Pa.
1976); Air Freight Haulage Co. v. Ryd-Air, Inc., 408 F.Supp. 446
(S.D.N.Y. 1976).
16. See Scroggins v. Aw Cargo, Inc., 534 F.2d 1124, 1131 (Sth
Cir. 1976).
12 Appendix A——Court of Appeals’ Opinion
In Hughes Tool the Civil Aeronautics Board issued orders
approving acquisition of control of TWA by Hughes Tool Co.
The applicable statute relieved persons affected by such an order
from operation of the antitrust laws so far as necessary “to do
anything authorized, approved or required by such order.” Section
414, Federal Aviation Act, 49 U.S.C. § 1384. The agency-author-
ized control later ended, and an antitrust suit was brought by
TWA against Hughes Tool Co. based upon transactions between
the two during the period of Hughes Tool Co.'s control. The anti-
trust complaint alleged, in effect, that the controlling company had
exercised its control to dictate the completion of the transactions
in a way that injured the controlled company.
Hughes Tool Co.'s control of TWA was acquired in two steps
—an initial acquisition of 45.6 percent of TWA's stock, and a
later acquisition increasing Hughes Tool Co.'s holdings to 80
percent. Both acquisitions were approved by the Board. In hear-
ings relating to the second acquisition the Board examined the
manner in which Hughes Tool Co. had exercised its de facto
control over TWA in the earlier period, particularly with respect
to the acquisition of new flight equipment, which was the subject
matter of the transactions on which the antitrust suit was based.
The Board conceded allegations of abuse of the kind alleged in
the antitrust complaint. Nonetheless, the Board concluded that
continuation and enhancement of Hughes Tool Co.'s control was
in the public interest. Moreover, the Board's order required that
all substantial sales transactions between the two companies be
submitted to the Board for approval, and, pursuant to this require-
ment, the transactions upon which the antitrust complaint rested
were submitted to the Board and approved as in the public interest.
The Supreme Court noted that the subject matter of the Board's
approval had been the acquisition and exercise by Hughes Tool
Co. of control over the same kind of transactions as those at issue.
Hughes Tool, supra, 409 U.S. at 386, 93 S.Ct. 647. By its approval
ke NE Se 8 ae OU OR te
Appendix A—Court of Appeals’ Opinion 13
the Board had determined that such control was in the public
interest and consistent with the regulatory statute’s prohibitions
against monopoly and restraining competition. Sections 102(c)
and 408(b), Federal Aviation Act, 49 U.S.C. §§ 1302(c) and
1378(b).’* The Court further noted that the Board had also
approved the very transactions underlying the antitrust suit as
meeting the same standard. 409 U.S. at 379, 387, 93 S.Ct. 647.
An antitrust suit challenging these transactions, the Court said,
would seek “to negate what the Board, after full investigation,
had found consistent with § 408’s anti-monopoly provision, con-
sistent with § 102’s competition standard, and consistent with the
public interest.” Jd. at 388, 93 S.Ct. at 661. TWA’s antitrust suit
sought ‘‘to terminate a relationship the continuation of which the
Board had found essentia! to both TWA and the public interest
and to penalize the type of conduct which the Board expressly
contemplated and preferred would continue unless and until a
different order from the Board was forthcoming.” IJd.* The Court
concluded that the transactions were exempt from suit under the
Sherman Act.*
17. Acquisition of control of one company by another necessarily
contemplates exercise by the parent of control over the internal business
operations of the subsidiary, When the agency has approved acquisition
of control, exclusive agency jurisdiction over its exercise is more readily
implied. See Hughes Tool Co. v. Trans World Airlines, Inc., 409 US.
363, 385-86, 93 S.Ct. 647, 34 L.Ed.2d 577 (1973), citing Pan American
World Airways, Inc. v. United States, 371 U.S. 296, 83 S.Ct. 476, 9
L.Ed.2d 325 (1963), as such a case.
18. See also Pan American World Airways, Inc. v. United States, 371
US. 296, 309, 83 S.Ct. 476, 9 L.Ed.2d 325 (1963).
19. The Court summarized its holding in almost identical language
at two points in the opinion:
At pages 387-88, 93 S.Ct. at page 661, the Court said:
We repeat, however, what we said in the Pav American case
that the Federal Aviation Act does not letely displace the
antitrust laws. . . . But where, as here, the CAB authorizes control
of an air carrier to be acquired by another person or corporation,
and where it specifically authorizes as in the public interest specific
transactions between the parent and the subsidiary, the way in
14 Appendix A—Court of Appeals’ Opinion
In sum, in Hughes Tool, the propriety under the regulatory
statute of the activity challenged in the antitrust suit (control by
Hughes Tool Co. of the manner in which its TWA subsidiary
acquired new aircraft) was the central issue presented to the
agency for consideration in the exercise of its regulatory authority,
and the agency had resolved the issue by approving such control
as in the public interest. Exemption from the antitrust laws was
implied because a successful application of the antitrust laws to
the conduct would have negated the regulatory agency's determi-
nation and faced the regulated carrier with inconsistent govern-
mental commands. In the present case, as has been seen, the
premise of inconsistent regulatory and antitrust demands is absent.
Also unlike Hughes Tool, the instant suit is not brought by a sub-
sidiary against its parent and does not challenge the effect on the
which that control is exercised in those precise situations is under
the surveillance of the CAB, not in the hands of those who can
invoke the sanctions of the antitrust laws. As noted, the parent com-
pany which controls an air carrier is subject to pervasive control by
the CAB. The control which the CAB is authorized to grant or to
deny under § 408 involves an appraisal of the impact of that con-
trol in terms of monopoly and competition; and the on super-
vision entrusted to the CAB by § 415 is broad enough to put all
transactions between parent and subsidiary—as ori conceived
or subsequently exercised—under CAB supervision.
And again at page 389, 93 S.Ct. at page 661-662:
We by no means hold that the Federal Aviation Act
displaces the antitrust laws. Pan American, 371 US., at 305, [83
S.Ct. at 482}. But pre A So the CAB authorizes control of
an air carrier to be another person or and
where the CAB pouty authorizes as in the pablic in interest
specific transactions between the parent and the subsidiary, the way
in which that control is exercised in those precise situations is under
the surveillance of the CAB, not in the hands of those who can
invoke the sanctions of the antitrust laws. The control which the
CAB is authorized to grant or to deny under § 408 involves an
appraisal of the impact of that control in terms of monopoly and
competition; and the ongoing entrusted to the CAB by
§ 415 is broad enough to put all transactions between parent and
subsidiary —as originally mabe or subsequently exercised—under
CAB supervision.
Appendix A—Court of Appeals’ Opinion 15
acquired company of the daily intercompany control that was
integral to the acquisition. See a/so Pan American World Airways
v. United States, 371 US. 296, 83 S.Ct. 476, 9 L.Ed.2d 325
(1963). Rather, the instant suit is brought by a third party to the
approved acquisitions, challenging conduct with regard to the
third party that not only was not integral to the Commission's
acquisition approvals but was violative of specific representations
made by Greyhound at the acquisition hearings. In these circum-
stances, Greyhound’s conduct is not immune from antitrust
strictures.
II.
Jury Instructions and Admission of Evidence
Many of Greyhound’s assertions of error in evidentiary rulings
and instructions rest upon Greyhound’s theory of antitrust im-
munity and fall with it.
Greyhound complains of the district court's “failure to instruct
on Section 5(11).”” It is not clear precisely what Greyhound has
in mind. The extent to which Greyhound’s conduct was exempt
from the antitrust laws by the Interstate Commerce Act was a
legal question, not an issue of fact for the jury.” The instructions
proposed by Greyhound were properly rejected for this reason and
because they reflected Greyhound’s uncompromising position that
the acquisitions approved by the Commission and all conduct
involving exercise of control over the acquired carriers were
exempt from the antitrust laws and were not to be considered by
the jury for any purpose whatever.”"
20. See Gordon v. New York Stock Exch., Inc., 422 U.S. 659, 688,
95 S.Ct. 2598, 45 L.Ed.2d 463 (1975).
21. For example, Greyhound requested an instruction that since the
Commission had approved the acquisitions, ‘the manner in which defend-
ants have used or exercised the control of these carriers” was within the
exclusive jurisdiction of the Commission, and therefore the jury “must
exclude from [its} consideration all conduct by defendants involving
exercise of control over the acquired bus companies.” Greyhound also
requested instructions referring to the specific conduct the Commission
16 Appendix A—Court of Appeals’ Opinion
The court was required to provide the jury with standards
to apply in determining whether Greyhound was liable under the
antitrust laws, and it did so. The court defined the elements of
monopolization, attempt to monopolize and unreasonable restraint
of trade in the usual way, and Greyhound does not object to these
instructions in themselves. The court also told the jury that the
fact that Greyhound was regulated affected what activities of
Greyhound were subject to the antitrust laws; that in a regulated
industry the existence of monopoly power was not evidence of
monopolization, but “use of monopoly power even if lawfully
acquired, to foreclose or restrain competition, to gain a competi-
tive advantage or to eliminate a competitor’ was such evidence.”
Under these instructions the jury could not base a finding of
monopolization on the approved acquisitions themselves; improper
use of the acquired power was required. This was at least as favor-
able to Greyhound as the law warranted.
had condemned, and telling the jury that regulation of such conduct was
within the exclusive jurisdiction of the Commission and could not be the
basis of any findings by the jury.
In addition, Greyhound requested an instruction essentially in the
words of the statute, telling the jury that the antitrust laws did not apply
to the approved acquisitions “or to anything done by defendants which
was necessary to hold, maintain or operate the properties or operating
rights obtained in these approved transactions.” Since the scope of the
immunity conferred by the statute was a legal question for the court to
decide, this instruction was properly refused. See note 20, supra, and re-
lated text. The court’s decision as to the scope of the statutory immunity
shaped and conditioned the court’s instructions spelling out what facts
the jury must find before Greyhound could be held liable.
22. The quoted portion of the instruction is settled law. See Otter
Tail Power Co. v. United States, 410 U.S. 366, 377, 93 S.Ct. 1022, 35
L.Ed.2d 359 (1973); United States v. Griffith, 334 US. 100, 107, 68
S.Ct. 941, 92 L.Ed. 1236 (1948). Indeed, section 2 is violated if exclu-
sionary tactics are used to maintain a lawfully acquired monopoly. Indus-
trial Building Materials, Inc. v. Interchemical Corp., 437 F.2d 1336,
1344-45 (9th Cir. 1970), interpreting United States v. United Shoe
Machinery Corp., 110 F.Supp. 295, 343 (D.Mass. 1953), aff'd per curiam,
347 U.S. 521, 74 S.Ct. 699, 98 L.Ed. 910 (1954). See also TV Signal
Co. v. American Tel. & Tel. Co., 462 F.2d 1256, 1261 (8th Cir. 1972).
Appendix A—Court of Appeals’ Opinion 17
Greyhound objects to the admission of evidence regarding the
administrative and related court proceedings, and to jury instruc-
tions that this evidence could be considered “in determining the
issue of Greyhound’s motive, intent and purpose and reasonable-
ness of its behavior.” Greyhound objects on several grounds, but
primarily on the basis of Greyhound’s immunity argument, which
we have rejected. Greyhound’s other objections are also without
merit.** The evidence was properly used for the purpose stated
by the court.
The lengthy instructions contained two brief passages appar-
ently inspired by Walker Process Equipment, Inc. v. Food
Machinery & Chemical Corp., 382 U.S. 172, 177, 86 S.Ct. 347,
15 L.Ed.2d 247 (1965), and California Motor Transport Co. v.
Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642
(1972). Greyhound argues that these passages permitted imposi-
tion of liability if the jury found no more than that Greyhound
had perpetrated a fraud on the Conumission or had acted in bad
faith in the administrative and related judicial processes, rendering
those processes ineffective. Even considered alone, however, both
passages also required the jury to find, as a condition of liability,
that the fraud or abuse of process resulted in an administrative
order that conferred a monopoly or an unreasonable competitive
23. One of these additional grounds of objection warrants brief
comment. Greyhound argues that the instructions permitting use of evi-
dence of the administrative proceedings in determining Greyhound’s
intent and the reasonableness of its conduct “infringe” Greyhound’s
constitutional privilege to seek relief before administrative agencies, citing
Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365
U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961). But “{i}t is well settled
that First Amendment rights are not immunized from regulation when
they are used as an integral part of conduct which violates a valid statute.”
California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508,
514, 92 S.Ct. 609, 613, 30 L.Ed.2d 642 (1972). The antitrust laws havc
been applied in many factual contexts that included utilization of adm‘nis-
trative processes by the antitrust violator. See, e.g., Otter Tail Power
Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 4359
(1973); Aloba Airlines, Inc. v. Hawaiian Airlines, Inc., 489 F.2d 202
(9th Cir. 1973).
18 Appendix A—Court of Appeals’ Opinion
advantage upon Greyhound. At most, therefore, the only question
raised by these passages is whether the doctrine of Walker Process
applies outside the patent field.
When the passages are read in light of the parties’ contentions,
the evidence in the case, and the instructions as a whole, however,
we do not believe they present even this issue. Mt. Hood did not
contend that the acquisitions themselves or the power Greyhound
gained through them, standing alone, constituted a violation of
the antitrust laws. Mt. Hood relied instead upon Greyhound’s
exclusionary practices made possible by the acquisitions. The
instructions were generally to the same effect. The jury was not
instructed on any theory that Greyhound’s purchase of other
carriers might constitute the unlawful acquisition of monopoly
power. On the contrary, as we have seen, the jury was told that in
such a regulated industry the mere possesion of monopoly power
did not violate the Sherman Act, and that abuse of monopoly
power to eliminate competition was required. The only fraud or
abuse of process presented by the evidence was that Greyhound
represented to the Commission that it was not using and would
not use any of the acquired routes to engage in the predatory
practices we have outlined earlier, and that Greyhound nonethe-
less did so. Since these same predatory practices underlay Mt.
Hood's antitrust claim, since the instructions also conditioned
liability upon a finding of monopolization or unreasonable re-
straint of competition defined in the usual way, and since the judge
properly ruled without submitting the issue to the jury that Grey-
hound’s challenged conduct was not immunized from antitrust
attack, the passages amounted to no more than a reiteration in
another form of the general instruction that unreasonable restraint
of competition or use by Greyhound of monopoly power to fore-
close or restrain competition would violate the antitrust laws.**
24. Thus even if appellant was entitled to an instruction that “fraud”
must be proven by “clear and convincing” evidence, as Greyhound urges,
failure to give it was harmless under Fed.R.Civ.P. 61.
Appendix A—Court of Appeals’ Opinion 19
Greyhound attacks the use made at trial of two antitrust consent
decrees entered into by Greyhound and the United States. The
decrees, which were admitted in evidence, prohibited Greyhound
from refusing to establish through-routes with competitors and
from continuing other practices the same as or similar to those
charged in this suit. The jury was told it could consider the decrees
and Greyhound’s conduct with respect to obeying or disobeying
them in determining the issues of Greyhound’s intent and purpose
and the reasonableness of Greyhound’s behavior.
A trial judge must be accorded “wide latitude” in determining
the relevance of evidence in antitrust cases. Gray v. Shell Oil
Co., 469 F.2d 742, 751 (9th Cir. 1972). The admissibility of
a consent decree is a matter committed to the court’s discretion.
See Control Data Corp. v. IBM Corp., 421 F.2d 323, 326 (8th
Cir. 1970). See also Vitagraph, Inc. v. Perelman, 95 F.2d 142, 146
(3d Cir. 1938). There was no abuse of discretion here. The court
warned the jury of the limitations implicit in decrees entered into
by consent, and confined their use to a proper purpose.
Greyhound’s claim that the jury should not have been asked to
determine whether Greyhound had a dominant share of the
market because Greyhound’s market share resulted from ICC-
approved transactions is but ‘another reflection of Greyhound’s
rejected theory of immunity.
Other objections to the instructions regarding the relevant
market are without merit. While it is true that the court did not
refer to the “interchangeability of services” in those terms, the
court accomplished the same purpose by use of illustrations and
by instructing the jury that a “relevant” market must be one for
a “distinct service” with ‘peculiar characteristics,” serving “‘dis-
tinctive purposes.” with “dissimilar” price characteristics, and
relatively “insensitive to price variations,” so that an increase in
bus fares would not result in large numbers of customers switching
to other forms of intercity transportation. If these indices of dis-
tinctness were not found, the jury was told, intercity bus trans-
20 Appendix A—Court of Appeals’ Opinion
portation would not constitute a relevant market for antitrust
purposes.”
Il.
Statute of Limitations
The jury awarded Mt. Hood damages for injuries sustained
from 1953 to 1973. The applicable statute of limitations, 15 U.S.C.
§ 15b, bars all claims on which suit is not commenced within four
years after they accrue—in this case, all claims that accrued before
July 5, 1964, since Mt. Hood’s suit was filed on July 5, 1968.
However, Mt. Hood asserts that the running of the limitations
period was suspended from 1953 to 1960 by Greyhound’s fraudu-
lent concealment of its wrongdoing, and from 1964 to the date of
suit by the intervention and participation of the United States in
the section 5(9) proceedings brought by Mt. Hood before the
Commission.”*
In accordance with the universal rule, our circuit holds that
fraudulent concealment of the existence of an antitrust cause
of action tolls the four-year statute of limitations provided by
section 15b.7” The jury found Greyhound had fraudulently con-
25. Greyhound contends the jury was instructed as to several con-
tentions for which there was no evidentiary support. We have examined
the record with respect to each of these issues and conclude that either
there was sufficient evidence to justify an instruction or the instruction
was harmless under Fed.R.Civ.P. 61.
26. See note 4, supra, and related text. The iod of fraudulent
concealment and the government intervention tolling period can be
“tacked” or “bridged” to suspend the statute for the entire period since
the time between the two did not exceed four years, albeit short by only
a day. See, e.g. City of Detroit v. Grinnell Corp., 495 F.2d 448, 460-61
(2d Cir. 1974); Union Carbide & Carbon Corp. v. Nisley, 300 F.2d 561,
567-72 (10th Cir. 1962); Maricopa County v. American Pipe & Constr.
Co., 303 F.Supp. 77, 84-86 (D.Ariz.1969), aff'd, 431 F.2d 1145 (9th
Cir. 1970).
27. Westinghouse Elec. Corp. v. Pacific Gas & Elec. Co., 326 F.2d 575
(9th Cir. 1964); accord. Charlotte Telecasters, Inc. v. Jefferson-Pilot
Corp., 546 F.2d 570 (4th Cir. 1976); Dayco Corp. v. Goodyear Tire &
Rubber Co., 523 F.2d 389 (6th Cir. 1975); City of Detroit v. Grinnell
Corp., 495 F.2d 448 (2d Cir. 1974); Crummer Co. v. Du Pont, 255 F.2d
425 (Sth Cir. 1958).
Appendix A—Court of Appeals’ Opinion 21
cealed its antitrust violations from 1953 to December 14, 1960,
and that Mt. Hood neither knew nor should have known of these
violations prior to December 14, 1960.
Greyhound does not deny the sufficiency of the evidence to show
it attempted to conceal its conduct. It argues, however, that Mt.
Hood had notice of Greyhound’s activities long before December
14, 1960.
The record shows that Mt. Hood complained about quoting and
routing practices of Greyhound agents on various occasions during
the 1953-1960 period. The record also shows, however, that Grey-
hound continuously represented to Mt. Hood and to the Commis-
sion that these were isolated incidents not countenanced by Grey-
hound’s management.”
The record shows that Mt. Hood suspected Greyhound of un-
lawful conduct prior to December 14, 1960, but “{s}uspicion will
not substitute for knowledge of facts from which fraud could
reasonably be inferred.” Friedman v. Meyers, 482 F.2d 435, 439
(2d Cir. 1973).
There was evidence that Mt. Hood's president expressed con-
cern over Greyhound’s expansion by acquiring other carriers, and
that he also stated his belief that the consent decrees were being
violated. Awareness of Greyhound’s growing dominance of the
market was not equivalent to notice of monopolization, however,
for the acquisitions were approved by the Commission and pre-
sumably immunized from the antitrust laws. Nor was knowledge
28. Greyhound argues that such representations, denials, and other
attempts at concealment are immaterial citing such cases as Foster & Kleiser
Co. v. Special Site Sign Co., 85 F.2d 742, 752 (9th Cir. 1936); Feak v.
Marion Steam Shovel Co., 84 F.2d 670, 673 (9th Cir. 1936). But as these
cases demonstrate, attempts at concealment lose their relevance only when
they occur after plaintiff already knew or should have known of the unlaw-
ful conduct. In the “vain case the jury weighed the evidence and con-
cluded that, in part use of Greyhound’s attempts at concealment, Mt.
Hood neither knew or should have known of Greyhound’s antitrust
violation.
22 Appendix A—Court of Appeals’ Opinion
of violations of the consent decrees equivalent to such notice, for,
as Greyhound itself is careful to point out, violations of consent
decrees are not in themselves violations of the antitrust laws.
Greyhound asserts that Mt. Hood was charged with the duty
to investigate once it became aware of facts from which antitrust
violations should reasonably have been inferred.” But in the face
of Greyhound’s assurances and denials of responsibility, we can-
not say as a matter of law that Mt. Hood’s awareness of the
growth of Greyhound’s power through acquisitions and of the
commission of predatory acts by some of Greyhound’s agents
amounted to notice of potential antitrust claims against Grey-
hound.
We conclude, therefore, that the trial court properly refused to
set aside the jury’s determination that Greyhound fraudulently
concealed its antitrust violation, and that Mt. Hood had neither
actual nor constructive knowledge of the violation until December
14, 1960.
Four years later, on December 14, 1964, one day before
Mt. Hood's antitrust claim would have been barred, the United
States intervened in the section 5(9) proceedings Mt. Hood had
instituted before the Commission in October, 1964. The trial court
held that, under the provisions of 15 U.S.C. § 16(i), the interven-
tion and the subsequent participation by the United States in the
Commission proceedings tolled the running of the statute of limi-
tations until those proceedings terminated in 1974, well after the
filing of the present suit.
Section 16(i) provides that running of the limitations period on
a private cause of action is suspended during the pendency of “any
civil or criminal proceeding . . . instituted by the United States
to prevent, restrain, or punish violations of any of the antitrust
29. See note 28, supra, and cases cited therein.
Appendix A—Court of Appeals’ Opinion 23
laws."** Greyhound argues that section 16(i) is inapplicable be-
cause the administrative proceedings were not “instituted by the
United States’ and because they were not proceeding “‘to prevent,
restrain, or punish violations of any of the antitrust laws.”
The literal wording of section 16(i) is not controlling. Where
one possible interpretation of the language would effect the con-
gressional purpose and another defeat it, the former is to be
adopted. Minnesota Mining & Manufacturing Co. v. New Jersey
Wood Finishing Co., 381 U.S. 311, 321, 85 S.Ct. 1473, 14 L.Ed.2d
405 (1965). The clearly expressed purpose of section 16(i) is to
further effective enforcement of the antitrust laws by permitting
private litigants to have the benefits that may flow from govern-
mental antitrust enforcement efforts. Jd. at 320, 85 S.Ct. 1473. This
purpose would be served by interpreting section 16(i) to encom-
pass the government's intervention and participation in the section
5(9) proceedings before the Commission—a reading the language
readily permits.
The proceedings were of a kind likely to produce benefits to
Mt. Hood as a plaintiff in a subsequent antitrust suit.** The issues,
30. 15 U.S.C. § 16(i) reads in part:
Whenever any civil or criminal proceeding is instituted by the
United States to prevent, restrain, or punish violations of any of the
antitrust laws . . . the running of the statute of limitations in respect
of every private or State right of action arising under said laws and
based in whole or in part on any matter complained of in said pro-
ceeding shall be suspended during the pendency thereof and for
one year thereafter: Provided, however, That whenever the running
of the statute of limitations in respect of a cause of action arising
under section 15 or 15c of this title is suspended hereunder, any
action to enforce such cause of action shall be forever barred unless
commenced either within the period of suspension or within four
years after the cause of action accrued.
31. The question is not whether the government a actually
conferred benefits upon the private antitrust plaintiff, but whether the
character of the proceedings was such that they were likely to do so.
Thus in analyzing the issue the Supreme Court spoke of government
action which “may aid the private litigant.” Minnesota Mining & Manu-
facturing Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 319, 85
S.Ct. 1473, 14 L.Ed.2d 405 (1965). If actual benefit were the test, it
24 Appendix A—Court of Appeals’ Opinion
as we have seen, were largely the same. Governmental investi-
gative and legal resources were made available to fully develop the
facts and the law favorable to the common position of the govern-
ment and Mt. Hood on these issues. The successful resolution of
these issues was critical to the defeat of Greyhound’s claim of anti-
trust immunity.
It would make form controlling to hold section 16(i) inapplica-
ble merely because Mt. Hood rather than the United States insti-
tuted the proceedings. The United States intervened little more
than 60 days after the filing of Mt. Hood's petition and partici-
pated actively in all subsequent stages of proceedings that required
nearly a decade to complete. Nothing would be gained, and a good
deal of judicial and administrative time and efficiency would be
lost, if the United States were compelled to institute a separate
independent proceeding in district court under 15 U.S.C. § 26 to
assure private treble damage litigants the benefits Congress in-
tended they should have from the government's action. As the
trial court concluded, “the Congressional intent behind [16(i) }
is better served by treating intervention by Antitrust Division law-
yers as the functional equivalent of a direct action by them.”
In addition to relying on the language of the statute, Greyhound
argues that section 16(i) applies only when the United States ini-
tiates rather than intervenes in a proceeding because of the Su-
preme Court's statement in Minnesota Mining that the purpose of
section 16(i) is to permit private parties the benefit of “prior gov-
ernment actions.” 381 U.S. at 320, 85 S.Ct. 1473 (emphasis by
Greyhound). Obviously, the Court was referring only to actions
occurring before the antitrust suit was commenced. Greyhound’s
argument epitomizes the kind of “grudging interpretation” which
“would collide head-on with Congress’ basic policy objectives.” Id.
might be impossible to determine whether the government proceedings
would toll the running of limitations until those proceedings were finally
concluded. Private plaintiffs would be compelled to file their antitrust suits
although government proceedings involving the same subject matter were
still in progress.
Appendix A—Court of Appeals’ Opinion 25
When the substance of the government's intervention and par-
ticipation before the Commission is examined, it falls fairly within
the class of proceedings “to prevent, restrain, or punish violations
of any of the antitrust laws” to which section 16(i) applies. It is
not controlling that the government's action was taken in an ad-
ministrative rather than judicial setting, Minnesota Mining, supra,
381 US. at 320, 85 S.Ct. 1473, nor that the proceedings were not
brought under the antitrust laws, Luria Steel & Trading Corp. v.
Ogden Corp., 484 F.2d 1016, 1020-21 (3d Cir. 1973); Rader v.
Balfour, 440 F.2d 469, 473 (7th Cir. 1971). The government
action suspends the running of the limitation period under sec-
tion 16(i) if it “is directed at alleged conduct which appears to
involve an existing or incipient violation of the antitrust laws,”
Rader v. Balfour, supra, 440 F.2d at 473, for it is government
participation in such a proceeding that is likely to produce the
benefits that Congress intended plaintiffs in later private treble
damage actions to have.
The government's petition to intervene demonstrates that its
interest lay in the possibility of antitrust violations should Mt.
Hood's allegations prove correct. To explain its interest in the
proceedings and its desire to participate as a party, the government
stated:
The allegations of the petition of Mt. Hood Stages, Inc.
make a serious charge: that Greyhound has been permitted
through the series of acquisitions the Commission approved
in these proceedings to extend its system in all directions
around Mt. Hood; that Greyhound has now begun to route
around Mt. Hood over all Greyhound’s routes traffic which
it used to interchange with Mt. Hood or handle in through
buses over shorter and quicker routes and to engage in nu-
merous other acts and practices which as they are described
in Mt. Hood’s petition (pp. 8-9) have in the aggregate the
appearance of a studied effort to force Mt. Hood out of
business. . . .
26 Appendix A—Court of Appeals’ Opinion
The petition noted Mt. Hood’s increasing vulnerability to and
dependence on Greyhound. It referred to Greyhound’s “predatory
conduct” and to the possibility of Mt. Hood’s “extinction at the
hands of an infinitely more powerful rival.” The petition con-
cluded:
Behind the immediate issues before the Commission are
further issues of applicability of the antitrust laws. The
Commission’s approvals of the acquisitions relieved Grey-
hound and its officials from accountability under these laws
only to the extent necessary to put the acquisitions into effect.
While actions taken to give effect to the acquisitions are com-
pletely immune, exercise of economic power the acquisitions
conferred so as to isolate and destroy a competitor is not.
As Greyhound itself admitted before the district court in its
motion to dismiss the complaint, a purpose of the Justice Depart-
ment’s intervention was “to assure the adequate consideration of
antitrust issues.”
Antitrust issues were an appropriate part of the proceedings.
The Commission was required to consider the anticompetitive
effects of the section 5(2) transactions in framing, and modifying,
its order.** Early in the proceedings Greyhound was reminded
“that the antitrust laws and the national transportation policy. . .
offer certain broad guidelines to be kept in mind in determining
this proceeding.” M+. Hood Stages, Inc., supra, 104 M.CC. at
451. The Commission rested its decision upon the conclusion that
Greyhound’s conduct “constitutes destructive competition in con-
travention of the national transportation policy.” Id. at 463.** In
sustaining the Commission’s order the district court wrote:
32. Port of Portland v. United States, 408 U.S. 811, 841, 92 S.Ct. 2513,
33 L.Ed.2d 723 (1972); Northern Lines Merger Cases, 396 U.S. 491,
511-16, 90 S.Ct. 708, 24 L.Ed.2d 700 (1970); McLean Trucking Co. v.
United States, 321 U.S. 67, 83-87, 64 S.Ct. 370, 88 L.Ed. 544 (1944).
33. The Commission rejected Greyhound’s ar, t that Greyhound’s
practices were not in themselves unlawful on basis of the antitrust
rinciple that “actions which are not in themselves unlawful may be unlaw-
sh chan Gay ese pest of © stan t quanpelin or sutedn cauaueen”
Mt. Hood Stages, Inc., 104 M.C.C. 449, 458 (1968). The Commission
cited the Sherman Act case of Marnell v. United Parcel Service of Amer-
ica, Inc., 260 F.Supp. 391 (N.D.Cal.1966).
Appendix A—Court of Appeals’ Opinion 27
It is inconceivable to us that Congress intended that destruc-
tive practices made possible by acquisition approvals may not
be corrected by supplemental order under Section 5(9),
especially in light of the ICC’s duty to take the antitrust
policy of the United States into account in its decision
making.
Greyhound Lines, Inc. v. United States, supra, 308 F.Supp.
at 1038.
Because Congress’ purpose in enacting section 16(i) will be
served by this interpretation, and because the language of the
section does not bar it, we conclude that the government's inter-
vention in the section 5(9) proceedings on December 14, 1964,
tolled the running of the limitations period from that date.™
Accordingly, Mt. Hood's antitrust complaint was timely filed.
IV.
Damages and Attorneys’ Fees
Greyhound contends that Mt. Hood failed to offer adequate
proof either that Mt. Hood was injured by Greyhound’s
conduct or of the amount of the damage. With respect to the
fact of damage, Greyhound’s claim is frivolous. The jury may
infer the fact of damage if “plaintiff proves a loss, and a violation
by defendant of the antitrust laws of such a nature as to be likely
to cause that type of loss.” Continental Ore Co. v. Union Carbide
& Carbon Corp., 370 US. 690, 697, 82 S.Ct. 1404, 1409, 8 L-Ed.2d
777 (1962). Mt. Hood offered evidence that its bridge traffic
declined sharply during the relevant period.*®* Greyhound’s con-
duct found to violate the antitrust laws was directed at creating
34. We need not reach Mt. Hood’s contention that the statute was
tolled to December 14, 1960, by virtue of Mt. Hood’s commencement of
the section 5(9) proceedings.
35. Mt. Hood offered evidence, for example, that Mt. Hood’s bridge
traffic consisted of 25,258 passenger trips, or approximately 44 percent of
the total relevant bridge traffic, in 1963 and had fallen to 930 passenger
trips, or approximately three percent of the total, by 1969.
28 Appendix A—Court of Appeals’ Opinion
precisely this kind of loss.** There was no indication of an alterna-
tive source of loss sufficient to negate an inference that Grey-
hound’s violation was a material cause. Zenith Radio Corp. v.
Hazeltine Research, Inc., 395 US. 100, 114 n. 9, 89 S.Ct. 1562,
23 L.Ed2d 129 (1969).
Mt. Hood's proof of the amount of damage was less certain,
and necessarily so. What Mt. Hood's business volume and profits
would have been except for Greyhound’s antitrust violation is
inescapably uncertain. See Flintkote Co. v. Lysfjord, 246 F.2d
368, 391 (9th Cir. 1957). In such a case, the amount of damages
may be shown “as a matter of just and reasonable inference, al-
though the result be only approximate.” Story Parchment Co. v.
Paterson Parchment Paper Co., 282 U.S. 555, 563, 51 S.Ct. 248,
249, 75 L.Ed. 544 (1931).
The premise of Mt. Hood's calculation of lost profits was that
95 percent of bus passengers would have traveled Mt. Hood's
shorter bridge routes if they had had that choice. Greyhound
asserts that Mt. Hood’s premise “defies the record as well as com-
mon sense and is untenable,” and therefore the entire calculation
of damage fails. There was ample evidence from which the jury
could reasonably infer that the shortest bus route is generally
fastest, including studies comparing Greyhound’s and Mt. Hood's
schedules from 1950 to 1970 with regard to mileage and time.**
36. As described previously, Mt. Hood alleged and offered substantial
evidence to prove that Greyhound had cancelled the north-south through-
bus connection arrangement on which Mt. Hood depended for a sub-
stantial portion of its traffic, scheduled its services so as to preclude reason-
able connections with Mt. Hood, directed independent and joint ticket
agents to long-haul traffic around Mt. Hood, and interfered with distribu-
tion of Mt. Hood schedules.
37. These studies were part of a larger damage study commissioned by
Mt. Hood. The study was supplemented by the testimony of three expert
witnesses over a two-week period. The study was based on statistical
computations verified by Arthur D. Little & Co., an independent manage-
ment consulting firm. Mr. Jizmagian, Arthur D. Little & Co.'s representa-
tive who supervised the study, testified that maximum use was made of all
Appendix A—Court of Appeals’ Opinion 29
Mt. Hood also introduced evidence from which the jury could
reasonably infer that as a general rule 95 percent of bus pas-
sengers would take the fastest route when given a choice.* It is
of course true that the evidence did not demonstrate to a cer-
tainty that 95 percent of passengers would have traveled Mt.
Hood’s shorter routes absent the restraints imposed by Grey-
hound’s violation, but in the nature of the case proof to a
certainty is not possible and is not required.
Greyhound challenges virtually every other facet of Mt. Hood's
proof of damage. We have examined each of Greyhound’s objec-
tions in light of Mt. Hood's response and the evidence in the
record. No useful purpose would be served by a tedious recapitu-
lation of these materials. We are satisfied that the evidence offered
by Mt. Hood permitted the jury to make a reasonable and just
inference of the amount of Mt. Hood’s damage.*®
We also sustain the award of attorneys’ fees. Greyhound
objects that the amount of the award divided by the number of
hours devoted to the litigation by plaintiff's attorneys yields
an exorbitant hourly rate. But as the experienced trial judge
stated, “compensation at an hourly rate would be inadequate
in a case of this kin _* which “is, in many ways, unusual . . . its
available data supplied by Greyhound and where such data was not avail-
able every assumption and method “and every use of statistics and every
use of ratios was done . . . with standard statistical techniques and there
was, in my opinion, we pre agen use of numbers.” He concluded that the
study accurately refi Mt. Hood’s damages.
38. For example, Mt. Hood’s damage study, see note 37, supra, in-
cluded a comparison of passenger utilization of three available “ ‘All
Greyhound’ routes from Oregon and Washington points to Los Angeles,”
showing that more than 95 percent of the bus passengers chose the shortest
of the three available routes.
39. This holding also encompasses the damage awards for express
traffic Mt. Hood lost between 1964 and 1971, and for local traffic it lost
between 1964 and 1970.
30 Appendix A—Court of Appeals’ Opinion
complexity and difficulty set it apart from the common run of
antitrust cases, if such a category in fact exists.” The trial court
based the award upon knowledge gained in four years’ involve-
ment in all aspects of the case, the evidence presented by the
parties on this issue, and the factors prescribed in Twentieth
Century Fox Film Corp. v. Goldwyn, 328 F.2d 190 (9th Cir.
1964). The award represented an appropriate exercise of the dis-
trict court’s discretion.
Affirmed.
Appendix B—Court of Appeals’ Order Denying Rehearing 31
Appendix B
Order Denying Rehearing
United States Court of Appeals
for the Ninth Circuit
Mt. Hood Stages, Inc., dba Pacific Trailways,
Plaintiff-Appellee,
v.
No. 74-1282
The Greyhound Corporation and
Greyhound Lines, Inc.,
Defendants-Appellants.
[August 3, 1977}
ORDER
Before: BROWNING and WRIGHT, Circuit Judges, and
*LINDBERG, District Judge
The panel as constituted in the above case has voted to deny
the petition for rehearing and to reject the suggestion for a
rehearing in banc.
The full court has been advised of the suggestion for in
banc rehearing, and no judge of the court has requested a vote
on the suggestion for rehearing in banc. Fed. R. App. P. 35(b).
The petition for rehearing is denied and the suggestion for
a rehearing in banc is rejected.
*Honorable William J. Lindberg, Senior United States District Judge,
Western District of Washington, sitting by designation.
32 Appendix C—District Court’s Memorandum and Order
Appendix C
District Court’s Memorandum and Order
In the United States District Court
for the District of Oregon
Civ. No. 68-374
Mt. Hood Stages, Inc., doing business as Pacific
Trailways,
Plaintiff,
v.
The Greyhound Corporation and Greyhound
Lines, Inc.,
Defendants.
[November 29, 1973}
MEMORANDUM AND ORDER
GOODWIN, Judge:*
Greyhound has moved for a judgment notwithstanding the
verdict and for a new trial in this treble-damage antitrust action
which resulted in a verdict and judgment for Mt. Hood Stages.
The principal issue is whether Hughes Tool Co. v. Trans World
Airlines, 409 U.S. 363 (1973), compels a judgment n.o.v.
Greyhound asserts:
(1) The action is barred by Section 5(11) of the Interstate
Commerce Act, 49 U.S.C. § 5(11);
(2) There was insufficient evidence (of conspiracy and of
monopolization) to sustain the verdict;
(3) A new trial should be granted because of the numerous
errors of law in the taking of evidence and in the instructions to
the jury.
*The Honorable Alfred T. Goodwin, United States Circuit Judge,
sitting as District Judge by designation.
Appendix C—District Court's Memorandum and Order 33
All of these contentions rehearse issues which were briefed
and argued extensively at trial and in hearings before trial. Now,
as then, the law and the facts of this case are such that the issues
must be resolved against the defendants. If there was error here
or there in an evidentiary ruling, none was so prejudicial as to
warrant the abortion of a lengthy trial. See Fed. R. Civ. P. 61.
The evidence revealed long-standing, calculated, and damag-
ing conduct which, but for Section 5(11) of the Interstate
Commerce Act, plainly would have violated Sections 1 and 2
of the Sherman Act, 15 U.S.C. §§ 1, 2.
Mt. Hood proved, imter alia, that Greyhound had: (1)
directed independent and joint ticket agents to long-haul traffic
around Mt. Hood; (2) interfered with the distribution of Mt.
Hood’s schedules; (3) scheduled connecting service so as to
preclude reasonable connections with Mt. Hood; and (4) dis-
continued through bus service important to Mt. Hood's sched-
uled routes.
The IL.C.C. and reviewing courts have found that Greyhound
willfully breached earlier representations made to the Commis-
sion in acquisition proceedings and engaged in destructive com-
petition.’ The destructive practices established by the record be-
fore the Commission were enjoined by a three-judge panel of a
district court,? and Greyhound was subsequently held in criminal
contempt for violating that injunction.’ I mention these collateral
1. See, e.g., Petition for Modification—Greyhound Mergers (Western
Div.), 104 M.C.C. 449 (Div. 3, 1968); I.C.C. Affirmance of the Order of
Division 3, No. MC-F-9136 (Dec. 11, 1968; April 14, 1969); Greyhound
Lines, Inc. v. United States, 301 F.Supp. 356 (N.D. Ill. 1969) (denying
motion for temporary restraining order).
2. Greyhound Lines, Inc. v. United States, 308 F. Supp. 1033 (N.D.
Ill. 1970).
3. United States v. Greyhound Corp., No. 71-CR-924 (N.D. IIL,
June 27, 1973).
34 Appendix C—District Court's Memorandum and Order
cases, not because I relied upon them in this case, but because
they establish two points that do have some relevance to policy
considerations that bear upon this case.
In the first place, the litigation before the Commission has
proceeded for approximately a decade with no apparent impact
upon Greyhound’s conduct. If Congress intended the Interstate
Commerce Act to provide a remedy for competitors injured by
predatory behavior on the part of regulated carriers, then the
legislation is woefully inefficient. Second, if proof outside the
abundant proof in this record were needed, the collateral cases
strip away any pretense that Greyhound’s conduct toward its
competitors was simply the result of good-faith aggressive man
agement. The costs to Greyhound of the prolonged litigation
before the Commission apparently have been more than offset by
the profits Greyhound has derived by flouting the Commission's
cease-and-desist orders. If there was ever a case in which a
private action for damages is demonstrably necessary to carry out
national antitrust policy, this is it.
Section 5(11) of the Interstate Commerce Act obviously is the
key issue. That section provides, in relevant part:
“* * * [Any carriers or other corporations, and their
officers and employees and any other persons, participating
in a transaction approved or authorized under the provisions
of this section shall be and they are relieved from the
operation of the antitrust laws and of all other restraints,
limitations, and prohibitions of law, Federal, State, or muni-
cipal, insofar as may be necessary to enable them to carry
into effect the transaction so approved or provided for in
accordance with the terms and conditions, if any, imposed
by the Commission, and to hold, maintain, and operate any
properties and exercise any control or franchises acquired
through such transaction * * *.” 49 U.S.C. §5(11).
The effect of a similar statute on the antitrust liability of a
supplier of airline equipment was recently decided by the Supreme
Appendix C—District Court's Memorandum and Order 35
Court in Hughes Tool Co. v. Trans World Airlines, supra. When
an agency, with the authority to immunize transactions from the
operation of the antitrust laws, necessarily considers the public
interest and approves conduct explicitly or implicitly before the
agency as part of a proposed transaction, such conduct is thereby
made immune from antitrust liability.
Mt. Hood poses the “flip side” of the Hughes Tool question:
where a regulating agency with the authority to immunize conduct
from the operation of the antitrust laws has not approved the
conduct complained of, and indeed has ordered it stopped, does
the approval by the agency of related transactions and the exist-
ence of a pervasive regulatory scheme, including the availability
of some remedy, adequate or not, under that scheme preclude
antitrust liability, I hold that it does not. See Hughes Tool Co. v.
Trans World Airlines, 409 U.S. at 387:
“We repeat, however, what we said in the Pan American
case that the Federal Aviation Act does not completely dis-
place the antitrust laws.”
The Supreme Court has repeatedly made it clear that repeal
of the antitrust laws is not to be lightly assumed. See, e.g., Ricci
v. Chicago Mercantile Exchange, 409 U.S. 289 (1973); United
States v. Philadelphia Nat'l Bank, 374 US. 321, 350 (1963);
Georgia v. Pennsylvania R.R., 324 US. 439, 456-57 (1945). See
also Price v. Trans World Airlines, 481 F.2d 844 (9th Cir. 1973)
(post-Hughes Tool Co. antitrust action stayed pending resort to
Civil Aeronautics Board).
Mt. Hood is not here seeking the kind of relief that could be
provided by the LLC.C* That kind of relief has been sought, and
for nearly ten years has proven to be illusory. Here Mt. Hood is
4. See 49 U.S.C. §§ 9, 16. Though the I.C.C. has jurisdiction to award
damages, this power is limitéd to cases in which damages result from
activity which can be classified as a violation of the Interstate Commerce
Act. National Trucking & Storage Co. v. Pennsylvania R.R., 228 F.2d 23,
30 (D.C. Cir. 1955).
36 Appendix C—District Court's Memorandum and Order
seeking only the antitrust remedy of treble damages, relief that
can be granted only in court and which is supplemental to those
administrative remedies which could be ordered by the I-C.C.
The antitrust issues raised by Greyhound’s conduct were not
considered or passed upon by the Commission in the initial acqui-
sition proceedings. Were this court to hold that merely because
the I.C.C. has authority to approve acquisitions, routes and sched-
ules and order some relief with respect to some of the conduct
complained of Congress has thereby placed exclusive jurisdiction
in the L.C.C. over all conduct related to the approved trans-
actions, this would amount to an almost total exemption of a
carrier's conduct from the antitrust laws. Rather, all that Hughes
Tool teaches is that the substantive exemptions from the antitrust
laws created by Congress or required by the structure of the
regulatory scheme are not destroyed through by-passing or
overriding the forum chiefly entrusted with the regulation of
the industry in question. See REA Express v. Alabama Great So.
Ry., 412 U.S. 934 (1973) (affirming a three-judge court’s stay
of an antitrust suit pending I.C.C. reconsideration of a prior
financing arrangement order on the issue of possible antitrust
immunity).
A court's antitrust jurisdiction is ousted only when the specified
agency, pursuant to its statutory authority, approves the challenged
actions. If an agency thus grants an exemption from the antitrust
l
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