Petition for Writ of Certiorari — Consolidation Coal Co. v. South-East Coal Co.

TABLE OF CONTENTS

PAGE

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. ons Chahine ee eee bee Rees 2

Questions Presented ......... FFF 2

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Reasons for Granting the Writ .................. 9

1. The Learned Courts below decided a

federal question in a way in conflict with prior

applicable decisions of this Court when they

‘eliminated the distinction between forfeiture of

the labor exemption from the antitrust laws

and a violation of those laws, thus creating a

new per se antitrust violation .............. 9

2. The Learned Courts below decided a

federal question in a way in conflict with prior

applicable decisions of this Court when they

permitted the jury to conclude that “having in

mind” or having conscious knowledge“ that a

legal agreement could harm a competitor was

the equivalent of an actual agreement which

would constitute a waiver of exemption and a

violation of the antitrust laws .............. 13

3. The Learned Courts below decided a

federal question in a way in conflict with ap-

plicable decisions of this Court when they de-

parted from the rulings of this Court in holding

that an admittedly legal agreement could be the

foundation for an antitrust violation if it was

merely entered into with an anticompetitive

eS eh rt ee re ee een eee 18

4. The Learned Courts below decided a

federal question in a way in conflict with ap-

plicable decisions of this Court when they erred

with respect to the proper application of the

“clear proof” rule recently discussed by this

kf // ²˙ T. roe 20

FC ² A

Deen R

ii

Table of Contents.

PAGE

5. The District Court’s handling of pro-

cedure and matters with respect to the impar-

tiality of the jury, and its charge, and the ap-

proval of all thereof by the Court of Appeals,

constituted such a departure from the accepted

and usual course of judicial procedures as to

call for the exercise of this Court’s supervision. 22

ee Pug tte ies Pees Gees 26

pS eee es Pee ee eee ee eT 2a

(Opinion of the United States Court of Appeals

for the Sixth Circuit at Nos. 19,622 & 19,623)

öößõöůsn ũ u! ete eee Te eT eT ree 59a

(Memorandum of the United States District

Court for the Eastern District of Kentucky,

Richmond Division)

pO RR ee eee er ee eee eee 69a

(District Court’s instructions in the case of

South-East Coal Company v. Consolidation

Coal Company and United Mine Workers of

America)

r TTT 105

(Portions of District Court's instructions in

the case of Arnold G. Pessin and Rex. C. Ells-

worth v. Keeneland Association, University of

Kentucky Research Foundation nd the Bank

of New York, No. 1800 (E. D. Ky. 1968) )

— Sons 6s 6 nis % Nh eee bar tes kes 131a

(Protective Wage Clause contained in the Na-

ey Bituminous Coal Wage Agreement of

Table of Authorities.

TABLE OF AUTHORITIES

CASES PAGE

Apex Hosiery Co. v. Leader, 310 U.S. 469, 512

11717* ess cue

Appalachian Coals, Inc. v. United States, 288 U.S.

b /

Board of Trade v. United States, 246 U.S. 231

J! ²˙ 1. eee

Coatings Corp. v. Continental Cas. Co., 393 U.S.

“ re ery ee

Coca-Cola Bottling Co. of Black Hills v. Hubbard,

203 F.2d 859, 861 (8th Cir. 1953) ............

C-O-Two Fire Equipment Co. v. United States, 197

F. 2d 489, 494 (9th Cir. 1952)................

Eastern R. R. Conference v. Noerr Motors, 365 U.S.

!.! co eeRKOD EEO

Lewis v. Pennington, 400 F.2d 806, 813-14 (1968) ;

10

cert. denied, 393 U.S. 983 (1968) ............ 12, 18

Mattox v. United States, 146 U.S. 140 (1892) .....

Meat Cutters Union v. Jewel Tea Co., 381 U.S. 676,

r rere Pe ae

Morton Salt Co. v. United States, 235 F.2d 573

c ö

New York Central Railroad v. Johnson, 279 U.S.

h cccaeloepeereedee

Pennsylvania R. R. Co. v. Chamberlain, 288 U.S.

h ² ²˙·-ꝛà. K..

Pessin, Arnold G. and Rex C. Ellsworth v. Keene-

land Association, University of Kentucky Re-

search Foundation and The Bank of New York,

Ao

Pevely Dairy Co. v. United States, 178 F.2d 363

ane 22 1949), cert. denied, 339 U.S. 942

iv

Table of Authorities.

CASES PAGE

Ramsey v. United Mine Workers, 265 F. Supp. 388,

399 (E.D. Tenn. 1967); affirmed by an equally

divided Court, 416 F.2d 655 (6th Cir. 1969) ;

reversed and remanded, 39 U.S.L.W. 4245,

t ereer eo hier os re

A 6, 10, 11, 12, 13, 15, 18, 19, 20, 21, 24

Standard Oil Co. of New Jersey v. United States,

/ ͤ—V V» dees 11

Theater Enterprises, Inc. v. Paramount Film Dis-

tributing Corp., 346 U.S. 537, 541 (1953) . . . 16, 17

Tennessee Consolidated Coal Co. and Grundy, et al.

v. United Mine Workers, 416 F.2d 1192 (6th

Cir. 1969) ; cert. denied, 397 U.S. 964 (1970) . 6, 18

Trucking Unlimited v. California Motor Transport

Co., 432 F.2d 755 (9th Cir. 1970) ............ 20

Tumey v. Ohio, 273 U.S. 510 (1926) .............. 25

United Mine Workers v. Gibbs, 383 U.S. 715, 737

C7; Sarre wre away a rari G aa 21

United Mine Workers v. Pennington, 381 U.S. 657

663, 665, 668 (1965) ...... 6, 11, 12, 13, 15, 19, 24

Whitten v. Paddock Pool Builders, Inc., 424 F. 2d

25 (Ist Cir. 1970); cert. denied, 39 U.S.L.W.

/ꝙ”’—᷑ðêe OE a A ORS 20

STATUTES:

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1970

CONSOLIDATION COAL COMPANY, Petitioner

v.

SOUTH-EAST COAL COMPANY, Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

To the Honorable, the Chief Justice and the Associate

Justices of the Supreme Court of the United States:

Petitioner, Consolidation Coal Company, prays that

a Writ of Certiorari issue to review the judgment of the

United States Court of Appeals for the Sixth Circuit,

entered November 18, 1970, affirming a judgment of

the United States District Court for the Eastern Dis-

trict of Kentucky, Richmond Division, holding Peti-

tioner and a codefendant liable in damages to Respond-

ent under Sections 1 and 2 of the Sherman Act (15

U.S.C. §§ 1 and 2).

OPINIONS BELOW

The Opinion of the Sixth Circuit is reported at 434

F. 2d 767, and is reprinted in Appendix A hereto, p. 2a.

The unreported Memorandum of the District Court is

reprinted in Appendix B hereto, p. 59a.

Jurisdiction/Questions Presented.

JURISDICTION

The judgment of the United States Court of Appeals

for the Sixth Circuit was entered on November 18, 1970,

at No. 19,622 therein, affirming the judgment of the

United States District Court for the Eastern District of

Kentucky, Richmond Division, against Petitioner and

United Mine Workers of America in the sum of

$7 ,566,356.00,.with interest and costs.

On a timely application, Mr. Justice Stewart, by

order dated January 26, 1971, ordered that the time for

filing this petition for a Writ of Certiorari be extended

to . 1 including March 18, 1971.

The jurisdiction of this Court is invoked under 28

U.S.C. Section 1254(1).

Petitioner is informed that United Mine Workers of

America — appellant in No. 19,623 in the Court

of Appeals for the Sixth Circuit—is also filing a Petition

for a Writ of Certiorari and has not therefore been made

a party hereto.

QUESTIONS PRESENTED

1. Whether, in a case involving an alleged anti-

trust conspiracy between a union and a group of em-

ployers arising out of collective bargaining, the Learned

Courts below acted in a way in conflict with applicable

decisions of this Court when they disregarded the dis-

tinction between a forfeiture of exemption from the

antitrust laws and a violation of those laws and also dis-

regarded any separate consideration of the relevant

antitrust issues, such as the rule of reason, and cre-

ated a new per se antitrust violation?

Questions Presented.

2. Whether, in light of the applicable decisions of

this Court requiring an agreement, or equivalent com-

mitment, between a union and employer to impose labor

standards on other bargaining units in order to justify

antitrust liability, parallel conscious knowledge or hav-

ing in mind” may be considered by the jury as the

equivalent of the requisite agreement or commitment

either to constitute forfeiture of antitrust exemption or

an antitrust violation?

3. Whether, in light of the applicable decisions of

this Court, an admittedly legal collective bargaining

agreement between a union and an employer can be the

foundation for an antitrust violation if it is entered

into with an anti-competitive intent or purpose?

4. Whether, in light of the applicable decisions of

this Court, it was error, with respect to the “clear proof”

rule, for the Court to instruct the jury in detail on

the preponderance of evidence, and to make only passing

reference to the “clear proof” rule and then to attempt

to correct the error by later giving a disconnected and

supplemental instruction on “clear proof” but without

differentiating the preponderance of evidence rule from

the “clear proof” rule and without differentiating the

issues to which the two diiferent standards of proof

should apply?

5. Whether the District Court’s handling of pro-

cedure and matters with respect to the impartiality of

the jury, and its charge, and the approval of all thereof

by the Court of Appeals, constituted such a departure

from the accepted and usual course of judicial procedure

as to call for this Court’s supervision?

rener

Statutes.

STATUTES

15 U.8.C.§ 1. Trusts, etc., in restraint of trade illegal;

exception of resale price agreements; penalty

Every contract, combination in the form of trust

or otherwise, or conspiracy, in restraint of trade

or commerce among the several States, or with for-

eign nations, is declared to be illegal: * * * Every

person who shall make any contract or engage

in any combination or conspiracy declared by sec-

tions 1-7 of this title to be illegal shall be deemed

guilty of a misdemeanor, and, on conviction thereof,

shall be punished by fine not exceeding fifty thous-

and dollars, or by imprisonment not exceeding one

year, or by both said punishments, in the discretion

of the court. July 2, 1890. c. 647, $1, 26 Stat. 209;

Aug. 17, 1937, c. 690, Title VIII, 50 Stat. 693; July

7, 1955, c. 281, 69 Stat. 282.

15 U.S.C. § 2. Monopolizing trade a misdemeanor;

penalty

Every person who shall monopolize, or attempt

to monopolize, or combine or conspire with any

other person or persons, to monopolize any part

of the trade or commerce among the several States,

or with foreign nations, skill be deemed guilty of

a misdemeanor, and, on conviction thereof, shall be

punished by fine not exceeding fifty thousand dol-

lars, or by imprisonment not exceeding one year,

or by both said punishments, in the discretion of

the court. July 2, 1890, c. 647, § 2, 26 Stat. 209;

July 7, 1955, c. 281, 69 Stat. 282.

Statutes.

15 U.S. C. S 17. Antitrust laws not applicable to labor

organizations

The labor of a human being is not a commodity

or article of commerce. Nothing contained in the

antitrust laws shall be construed to forbid the x-

istence and operation of labor, agricultural, or horti-

cultural organizations, instituted for the purposes

of mutual help, and not having capital stock or con-

ducted for profit, or to forbid or restrain individual

members of such organizations from lawfully carry-

ing out the legitimate objects thereof; nor shall

such organizations, or the members thereof, be held

or construed to be illegal combinations or conspira-

cies in restraint of trade, under the antitrust laws.

Oct. 15, 1914, c. 323, § 6, 38 Stat. 731.

29 U.S. O. $106. Responsibility of officers and members

of associations or their organizations for unlawful

acts of individuai officers, members, and agents

No officer or member of any association or

organization, and no association or organization

participating or interested in a labor dispute, shall

be held responsible or liable in any court of the

United States for the unlawful acts of individual

officers, members, or agents, except upon clear

proof of actual participation in, or actual authoriza-

tion of, such acts, or of ratification of such acts

after actual knowledge thereof. Mar. 23, 1932, c.

90, § 6, 47 Stat. 71.

ꝶ6)—— p ̃— m r

Statement of the Case.

STATEMENT OF THE CASE

This case began on April 26, 1966, when South-

East Coal Company (hereafter Respondent“) filed a

complaint against the United Mine Workers of America

(hereafter “UMWA”) and Consolidation Coal Com-

pany (hereafter Petitioner“) in the District Court for

the Eastern District of Kentucky, Richmond Division

(hereafter “District Court“). It claimed that UMWA

and Petitioner, which acted through the agency of a

multi-employer bargaining unit, Bituminous Coal Oper-

ators Association (hereafter “BCOA”), violated Sec-

tions 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2),

causing damage to Respondent in the amount of $3,109,-

000.00, to be trebled to $9,300,000.00. Jurisdiction was

based on the aforementioned sections of the Sherman

Act and also Section 4 of the Clayton Act (15 U.S.C. §

15) (Jt. App. p. 7). There was a jury trial and verdict.

This is one of a group of cases! originating in the

Sixth Circuit in which unsuccessful coal operators have

claimed they were driven out of business by an alleged

conspiracy between UMWA and BCOA. However, it is

the first case which has come to judgment with a BCOA

member, such as Petitioner, in the case.

1. United Mine Workers v. Pennington, 381 U.S.

657 (1965); on remand, 400 F.2d 806 (6th Cir. 1968) ;

cert. denied, 393 U.S. 983 (1968); Ramsey v. United

Mine Workers, 265 F. Supp. 388 (E.D. Tenn. 1967);

affirmed by an equally divided Court, 416 F.2d 655 (6th

Cir. 1969); reversed and remanded by Opinion of this

Honorable Court, 39 U.S. L. W. 4245 (1971); Tennessee

Consolidated Coal Co. and Grundy, et al. v. United Mine

Workers, 416 F.2d 1192 (6th Cir. 1969); cert. denied,

397 U.S. 964 (1970) (hereafter Tennessee Consol or

Consol).

1

Statement of the Case.

In the other cases, there were claims —and evidence

that there was a conspiracy to monopolize the TVA

coal market, that UMWA had invested money in West

Kentucky Coal Company which operated as a “fighting

ship” to sell coal to TVA at predatorily low prices to

drive the claimants out of that market, that UMWA by

violence impeded or prevented claimants’ operation in

effectuation of the alleged conspiracy and that the

claimants were so small that they could not mechanize

fully to increase productivity and remain competitive.

Although the facts in the instant case relate to the

alleged basic conspiracy, there was no evidence relating

to the TVA market, West Kentucky Coal Company, or

union violence. Moreover, Respondent was not a small

operator. It is fully mechanized with sophisticated “con-

tinuous mining” machines and is classified by the

United States Department of Labor in the No. 1—or lar-

gest—category of operating coal companies in the na-

tion (Jt. App. pp. 536-37, 1138-39) .2 Here the Respon-

dent’s case grew out of and relied on the Protec-

tive Wage Clause (hereafter “PWC’’)3 negotiated in

1958 as an amendment to the National Bituminous Coal

Wage Agreement of 1950 (hereafter “‘NBCWA”). All

agreements negotiated by UMWA since 1945 have been

described as National Agreements” (Jt. App. p. 1225).

2. Herein, the indication, for example, “Jt. App.

p. ....” refers to the Joint Appendix in the United

States Court of Appeals for the Sixth Circuit, which

has been certified to this Court. Reference to the Appen-

dices attached to this Petition shall be referred to, for

example, as “App. A p....a.” or “App. B p....a.” Page

references in brackets in the Appendices hereto are to

the Joint Appendix.

3. PWC is reprinted herein in Appendix E, p. 131a.

vt

Statement of the Case.

The National Bituminous Coal Wage Agreement

of 1950 ended a period of extreme labor strife in the

coal industry which necessitated five seizures by the

United States Government in order to preserve the sup-

ply of coal and created a threat of nationalization of

the coal industry (Jt. App. pp. 986-87, 1481-82).

Respondent contended that paragraph A of PWC

compelled, bound and “strait-jacketed” UMWA not to

negotiate any agreement with any non-signatory on

terms different than those contained in the 1958 amend-

ment to the NBC WA —i. e., to impose the NBCWA terms

on other bargaining units (Jt. App. pp. 1786-87). Re-

spondent also contended that paragraph B of PWC

bound and committed the operators not to purchase or

handle, i.e., to “boycott”, any coal not produced under

the contract with UMWA (Jt. App. pp. 1786-87).

That contention related to the fact that Petitioner had

been the exclusive sales agent for Respondent since Oc-

tober of 1959 (Jt. App. p. 404). This was terminated by

letter, dated December 30, 1961, by Respondent (Jt.

App. pp. 434-35).

The jury’s verdict came after a charge which dis-

regarded the difference between a forfeiture of the labor

exemption from the antitrust laws and a violation of

those laws (App. C. pp. 93a-94a), which stated that the

element of agreement or equivalent commitment requi-

site in this alleged antitrust conspiracy case could be

satisfied by the parties “having in mind” that competi-

tors could be harmed (App. C. p. 92a) that an admit-

tedly legal agreement could be an antitrust violation if

it were entered into with an anticompetitive intent or

purpose (App. C. p. 91a), and which did not explain

the difference between preponderance of evidence and

“clear proof” or the issues to which each standard ap-

9

Reasons for Granting the Writ.

plies (App. C. pp. 82a-83a). The trial involved the creation

of the atmosphere of a contest betwe2n the populace of

eastern Kentucky on the one hand and UMWA and Peti-

tioner on the other and certain events creating doubt as

to the impartiality of the jury. The Court of Appeals

affirmed.

REASONS FOR GRANTING THE WRIT

1. The Learned Courts below decided a federal

question in a way in conflict with prior applicable de-

cisions of this Court when they eliminated the distinc-

tion between forfeiture of the labor exemption from the

antitrust laws and a violation of those laws, thus creat-

ing a new per se antitrust violation.

The Clayton Act (15 U.S.C. $17) has provided an

exemption from the antitrust laws for legitimate labor

activities — even though such activities constitute a

Congressionally-sanctioned restriction on freedom of

enterprise. Because it takes at least two to conspire, it

should follow that the other party to the collective bar-

gaining process may also claim the exemption or im-

munity. It would be unjust and impractical to permit

any other conclusion.

Here, the District Court and the Court of Appeals

completely ignored the employer’s immunity correlative

to that afforded labor unions. More significantly,

those Courts also ignored the distinction between the

question whether a labor union’s activities take it out-

side the scope of the labor exemption from the antitrust

laws and the different question, whether, once it is out-

side the scope of such exemption, there has been a vio-

lation of the antitrust laws.

10

Reasons for Granting the Writ.

Here, the Court of Appeals expressly equated a for-

feiture of exemption from the antitrust laws with a

violation of the antitrust laws when it said:

when a labor union and an employer enter

into a plan or scheme of the type which results in

the union losing its exemption from liability under

the antitrust law, that pian or scheme is by defini-

tion an unreasonable restraint under the antitrust

laws.” 434 F.2d at 755. (App. A p. 11a.)

That holding by the Court of Appeals is contrary

to and in disregard of prior rulings by this Court in

which the distinction between issues relating to exemp-

tion from the antitrust laws and a violation of the anti-

trust laws has been specifically recognized. Meat Cutters

Union v. Jewel Tea Co., 381 U.S. 676, 688-89 (1965);

and Apex Hosiery Co. v. Leader, 310 U.S. 469 (1939).

In the Apex Hosiery Co. case, this Court stated as

follows:

“These cases show that activities of labor organ-

izations not immunized by the Clayton Act are not

necessarily violations of the Sherman Act.” 310

U.S. at 512.

Mr. Justice White touched upon this at the oral

argument in Ramsey v. United Mine Workers (here-

after Ramsey) on December 7, 1970. The distinction

was specifically mentioned by Mr. Justice Douglas in

his Dissenting Opinion in Ramsey, 39 U.S.L.W. at 4248.

Because of the basis on which the majority of this Court

reversed and remanded Ramsey, it was not necessary

for those Justices who concurred in Mr. Justice White’s

Opinion to comment specifically on this point.

11

Reasons for Granting the Writ.

It is respectfully noted, however, that the language

of this Court in the final sentence of the Ramsey ma-

jority opinion is open to some argument on this point:

“Where a union, by agreement with one set of

employers, insists on maintaining in other bargain-

ing units specified wage standards ruinous to the

business of those employers, it is liable under the

antitrust laws for the damages caused by its agreed

upon conduct.” 39 U.S.L.W. at 4248.

Immediately preceding the aforesaid quoted sen-

tence, this Court repeated a holding in United Mine

Workers v. Pennington, 381 U.S. 657 (1965) (hereafter

“Pennington”) that the alleged agreement was

not exempt from the antitrust laws’.”

It is submitted that this Court did not mean

to create a new per se violation when it said “* * * it is

liable under the antitrust laws Rather, it is sub-

mitted, this Court meant it is responsible under

the antitrust laws (i. e., not exempt) if circumstances

under those laws impose liability.”

If, under the decisions of this Court, the forfeiture

of the antitrust exemption is not equivalent to the find-

ing of an antitrust violation, then it is important that

the District Court here never submitted to the jury any

of the basic guidelines (e.g., the rule of reason) “ to be

utilized in determining whether or not an antitrust vio-

lation existed. Every agreement — legal or illegal —

creates scme restriction on economic freedom. Reason-

ableness, however, must be judged in the context of all

the circumstances. Appalachian Coals, Inc. v. United

4. Standard Oil Co. of New Jersey v. United

States, 221 U.S. 31 (1911).

12

Reasons for Granting the Writ.

States, 288 U.S. 344 (1933); Board of Trade v. United

States, 246 U.S. 231 (1918).

Apparently this threshold error also motivated

the Court of Appeals to ignore the District Court’s er-

roneous and prejudicial instructions with respect to

monopoly and oligopoly — although there was no evi-

dence of such in the case. (App. C pp. 85a-86a).

Actually, here the Court of Appeals did not even

conclude unequivocally that proof sufficient to warrant

a finding that UMWA had waived its exemption from

liability under the antitrust laws constituted a per se

violation of the antitrust laws. To the contrary, the

Court of Appeals stated merely that this is “[t]he con-

clusion which can be drawn from this language

(Emphasis added.) 434 F.2d at 775. (App. A p. 11a.)

Further evidence of the Court of Appeals’ lack of

conviction in its holding can also be found in its recogni-

tion of the fact that a contrary interpretation of Mr.

Justice White’s decision in Pennington was reached by

Judge Peck of the Sixth Circuit in Lewis v. Pennington,

400 F.2d 806, 813-14 (1968), cert. denied, 393 U.S. 983

(1968) (hereafter Second Pennington), and also by

District Judge Wilson in Ramsey v. United Mine Work-

ers, 265 F. Supp. 388, 399 (1967).

The future of collective bargaining and the con-

tinuing effort to reconcile the national labor policies

with the antitrust laws should not rest with the equivo-

cal holding of the Court of Appeals in the instant case,

especially when that holding is in conflict with prior

decisions of this Honorable Court, a prior holding by the

same Court of Appeals in a companion case (Second

Pennington) and a holding of a District Court in an-

other companion case (Ramsey).

13

Reasons for Granting the Writ.

If this Honorable Court did intend, in Pennington

and Ramsey, to create a new per se violation, it is re-

spectfully submitted that this should be done expressly

and not sub silentio, or by implication.

2. The Learned Courts below decided a federal

question in a way in conflict with prior applicable deci-

sions of this Court when they permitted the jury to

conclude that “having in mind” or having “conscious

knowledge” that a legal agreement could harm a com-

petitor was the equivalent of an actual agreement which

would constitute a waiver of exemption and a violation

of the antitrust laws.

Here, the District Court equated “having in mind“

that harm could come to a competitor with an actual

illegal anti-competitive agreement, and the Court of Ap-

peals affirmed on the basis that “conscious knowledge”

could be equated with an actual illegal anti-competitive

agreement. Thus, the Courts below made “having in

mind” or “conscious knowledge” of harm to a competi-

tor the only requisite for forfeiture of the exemption

and an antitrust violation.

It is believed error for the Courts below to have

equated “having in mind” or “conscious knowledge”

with agreement at all, and it is greater error to apply

it to both the forfeiture and violation aspects of the

case.

In that connection, the District Court said:

“The thing which you will have to decide and

which I will probably refer to again, there is

nothing unlawful about that contract in itself; but

if it was entered into with the intention on the part

of the signatories—the two defendants here—to

14

Reasons for Granting the Writ.

injure the plaintiff, if they had that in mind, that

‘we are going to go into this contract because we

know it will put South-East out of business; they

can’t meet the conditions; we are too big, too

strong, and they cannot compete with us, cannot

get miners to work for them, and they cannot

sell their coal on the market because they do not

have sufficient sales agency, so we will deliberately

enter into this and they can’t meet it; we will there-

by profit by putting competitors out of business or

seriously hampering his operation.’

“So, the issue is: Did these two signatories

have that thing of putting the South-East Coal

Company out of business in mind, the time they

signed the contract?”5 (Emphasis added.) (App.

C. p. 92a).

This error was ratified and confirmed by the Cir-

cuit Court when it said:

“Third, if however the employers and union en-

tered into this contract with the conscious knowl-

edge or intent that it would be used to drive com-

petitiors out of business * * *, then a violation of

the antitrust laws has occurred.” (Emphasis add-

ed). 434 F.2d at 782. (App. A. p. 27a).

It would be unrealistic not to recognize that every

employer knows, to some extent, that some of his com-

5. Respondent was a signatory to collective bar-

gaining agreements with UMWA until January of 1962,

when Respondent cancelled its agreement (Jt. App. p.

436). A question of interest posed by these facts and the

District Court’s instructions are how UMWA and this

Petitioner could have had “in mind” putting Respondent

out of business in December of 1958, at the time when

the collective bargaining agreement containing PWC was

executed (Jt. App. p. 1922).

15

Reasons for Granting the Writ.

petitors will be affected—perhaps adversely—if they

cannot meet the standards of a labor contract which it

has entered, if such employer is the “first target” of the

union’s negotiating demands. In footnote 2 of Penning-

ton, 381 U.S. at 665, this Court recognized that a union

might legally adopt and implement a uniform wage pol-

icy, even though it might “suspect that some employers

cannot effectively compete if they are required to pay

the wage scale demanded by the union.” Whether this

Court desires to equate “suspicion” with “having in

mind“ as set forth by the District Court here or with

“conscious knowledge” as set forth by the Court of

Appeals and whether any of those concepts are to be

considered the equivalent of a conspiracy to violate the

antitrust laws are important matters to be considered

by this Court.

The clear ruling to be drawn from Pennington

and Ramsey is that a forfeiture of the exemption from

the antitrust laws occurs if there is an express or im-

plicit agreement (or equivalent commitment) by the

union and coal operator employers, whereby the union

agrees to impose certain labor standards upon other

bargaining units. This Court’s observation (381 U.S.

at 668) concerning the necessity of a union’s preserv-

ing its freedom to bargain makes it clear that this re-

sult is based on the fact that the union—as a conse-

quence of such an agreement — loses its ability to

change the otherwise unilateral policy of uniformity in

its bargaining for other units.

Accordingly, it seems beyond question that the

trier of facts must, preliminarily, determine whether

there was an agreement (or equivalent commit-

ment) by the union to impose certain labor standards

ree

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16

Reasons for Granting the Writ.

on other bargaining units. Where, as was determined

and stated by the Lower Courts in this case, the collec-

tive bargaining agreement is legal, the trier of facts

should be required to determine whether some other

agreement or equivalent concert of action, either ex-

press or implied, existed.

Here the District Court did not instruct the jury to

determine whether some other agreement (or equiv-

alent commitment) existed, nor did it instruct them that

such agreement (or equivalent commitment) must

bind the union to impose certain labor standards on

other bargaining units. To the contrary, it permitted

the jury to infer an illegal anticompetitive agreement

from the legal agreement (i.e., PWC) if the parties had

“in mind” that it would have anticompetitive effects on

respondent, and, as noted, the Court of Appeals affirmed

on the basis of conscious knowledge“.

Traditional conspiracy considerations usually ne-

cessitate a finding of an agreement or concert of action

or circumstances sufficient to justify an inference of

agreement. Consciously parallel action alone will not,

under the decisions of this Court, furnish the requisite

proof of conspiratorial action.

In Theater Enterprises, Inc. v. Paramount Film Dis-

tributing Corp., 346 U.S. 537, 541 (1953), it was stated

that:

„. . . this Court has never held that proof of par-

allel business behavior conclusively establishes

agreement or, phrased differently, that such be-

havior itself constitutes a Sherman Act offense.

Circumstantial evidence of consciously parallel be-

havior may have made heavy inroads into the tra-

ditional judicial attitude toward conspiracy; but

17

Reasons for Granting the Writ.

“conscious parailelism” has not yet read conspiracy

out of the Sherman Act entirely.” [Footnote omit-

ted.] (Emphasis added.)

The decisions of the District Court and Court of

Appeals in this case would appear to be in clear conflict

with that decision of this Honorable Court.

It appears that the principles enunciated by this

Court in Theater Enterprises are being eroded by Circuit

Courts—including the Sixth Circuit here—and there is

actually a conflict among the circuits on this point.

The Eighth Circuit, in Pevely Dairy Co. v. United

States, 178 F.2d 363 (1949), cert. denied, 339 U.S. 942

(1950), held that a finding of conspiracy based on cir-

cumstantial evidence will not stand unless the finding is

wholly consistent with guilt and totally inconsistent

with innocence.® In Morton Salt Co. v. United States,

235 F.2d 573 (1956), the Tenth Circuit refused to adopt

this standard. The Ninth Circuit also rejected the Pevely

holding in C-O-Two Fire Equipment Co. v. United States,

197 F.2d 489, 494 (1952), where it is stated:

“We are not unmindful of the standard sug-

gested in Pevely Dairy Co. v. United States, 8 Cir.,

178 F.2d 363, 367, upon which appellants lay great

stress .... But that is not to say, as appellants

would have us do, that such a rule must be sepa-

rately applied to each link in the chain of circum-

stances and if one such unit does not fit the stand-

ard then the whole is likewise vulnerable.”

6. Coca-Cola Bottling Co. of Black Hills v. Hub-

bard, 203 F.2d 859, 861 (8th Cir. 1953) overruled Pevely

only to the extent that it held that “. . since no excep-

tions were made to the instructions of the Court, they

became the law of the case for determining the suffi-

ciency of the evidence.

18

Reasons for Granting the Writ.

Under the Court of Appeals’ decision here, if an

employer, having in mind that a union has such well

established and traditional policies of seeking industry-

wide labor standards, is the first unit to bargain with

the union and knows that what he does will set a stan-

dard for the industry and that some of his competitors

cannot meet the standard, then the test of an antitrust

violation will have been met, and a jury can find an anti-

trust violation.

Accordingly, the grant of certiorari is merited to

redefine the principle and to resolve that conflict.

3. The Learned Courts below decided a federal

question in a way in conflict with applicable decisions

of this Court when they departed from the rulings of

this Court in holding that an admittedly legal agree-

ment could be the foundation for an antitrust violation

if it was merely entered into with an anticompetitive

intent.

Another question is vital here with respect to the

element of “agreement” (or equivalent commitment)

mentioned by Mr. Justice White in Ramsey. As pointed

out above, the trial here was conducted by Respondent’s

counsel on the basis that PWC constituted a “strait-

jacket/boycott” agreement between UMWA and BCOA,

acting as bargaining agent for Petitioner.

In the instant case, the District Court found and

stated to the jury that PWC was legal but nevertheless

permitted the jury to conclude that the legal agreement

could constitute an antitrust violation if it were entered

into with the intent that it should have an adverse effect

upon a competitor.

7. In Tennessee Consol, the District Court charged

the jury with respect to the manner of interpreting the

19

Reasons for Granting the Writ.

That course of action was ratified and confirmed by

the Court of Appeals.

This brings into question the relationship of the

actions of the Lower Courts here to the Noerr® and

Pennington cases. It is submitted that those cases stand

for the proposition that if an action is legui, then an an-

ticompetitive intent or purpose will not make it illegal.

In Pennington, this Court reversed the same Court of

Appeals which had held that illegal purpose or intent

could vitiate conduct which would otherwise be legal.

The Noerr and Pennington doctrines are salutary.

To hold that every legal accion is subject to the ex post

facto veto of a jury if that jury concludes that such

admittedly legal action was taken for an illegal purpose

or intent could mean that every legal act could be the

springboard for a foray into psychological investiga-

tion by laymen. There would never be any assurance

that legal action is really legal.

clause, and the jury clearly found that the clause was

properly interpreted as a “strait-jacket/boycott” agree-

ment. Such was not the case here, and this Court’s

denial of certiorari in Tennessee Consol does not, there-

fore, dictate a similar result here.

In Ramsey, the District Court and the Court of

Appeals—responding to an allegation that PWC was a

per se antitrust violatioa—concluded that the clause

was capable of two opposite constructions and that the

proper interpretation to be given it was one that did not

result in a violation of law. A similar result was reached

by the same Court of Appeals in Second Pennington.

In Ramsey, this Court declined to consider a fur-

ther argument by petitioner with respect to the inter-

pretation of PWC. Presumably that question will be

reconsidered by the Court below on remand.

8. Eastern R.R. Conference v. Noerr Motors, 365

U.S. 127 (1961).

Reasons for Granting the Writ.

This is especially true in cases such as the present

one. The paradox is highlighted here by the Court of

Appeals’ reliance upon the alleged fact that Petitioner

discontinued handling Respondent’s coal under PWC as

evidence of the illegality of PWC (App. A p. 43a). Yet

that was a consequence flowing from the admittedly

legal provision—i.e., paragraph B of PWC.

If the decisions of this Court in Noerr and Penning-

ton are to remain unchallenged, it is essential to deter-

mine whether and to what extent the Court of Appeals’

decision in this case and the action of the Trial Court

erode that rule of law. It is additionally significant that

two cases, in the First and Ninth Circuits, seem to con-

flict with the Noerr-Pennington doctrine. Whitten v.

Paddock Pool Builders, Inc., 424 F.2d 25 (1st Cir. 1970),

cert. denied, 39 U.S.L.W. 3149 (1971); Trucking Un-

limited v. California Motor Transport Co., 432 F.2d

755 (9th Cir. 1970).

4. The Learned Courts below decided a federal

question in a way in conflict with applicable decisions

of this Court when they erred with respect to the pro-

per application of the “clear proof” rule recently dis-

cussed by this Court in Ramsey.

This Court’s decision in Ramsey requires a deter-

mination whether the District Court and the Court of

Appeals here properly applied the correct standard of

proof.

Here the Court of Appeals said:

“There is no basis in either the Sherman Act or the

Norris-LaGuardia Act to indicate that to impose

liability on a company named as a coconspirator

21

Reasons for Granting the Writ.

of a labor union for an antitrust violation, any-

thing more than a preponderance of the evidence

is necessary.” 434 F.2d at 773. (App. A p. 7a).

In Ramsey, this Court decided that Section 6 of

the Norris-LaGuardia Act (29 U.S.C. §106) requires

clear and convincing evidence as to the authorization,

participation in, or ratificution of the acts allegedly

performed. This Court also held that the aforementioned

“clear proof” rule applies both to employee and employ-

er organizations. 39 U.S.L.W. at 4247 note 8.

Here all parties requested a jury instruction on the

clear proof rule. The District Court gave none but

instructed in detail on the preponderance of evidence

and made only passing reference to the clear proof rule.

(App. C p. 83a). When attention was called to the

matter, the District Court attempted to correct the error

by later giving a disconnected and supplemental in-

struction on clear proof. (App. C pp. 102a-03a) However,

the Court never instructed that the clear proof rule was

different from the preponderance of the evidence rule

that had been previously given in detail and never dif-

ferentiated between issues involving substantive anti-

trust violations and issues with respect to authorization,

participation in, or ratification of acts.

Here, the District Court’s failure to instruct prop-

erly is greatly similar to the instructions condemned by

this Court in United Mine Workers v. Gibbs, 383 U.S.

715, 737 note 29 (1966), where this Court noted that

the possibility was strong that ... the jury either did

not understand the phrase [clear proof] or completely

overlooked it in the context of the lengthy charge

given.“ Here the likelihood—if not certainty—of con-

fusion is even greater.

*

NTA ee

22

Reasons for Granting the Writ.

This error is important here because there are

agency issues in this case — particularly from the Peti-

tioner’s point of view.

Whatever may have been true in other cases of this

nature where only UMWA was the defendant, it was

here contended that the alleged conspiracy was effec-

tuated by BCOA, a multi-employer bargaining unit,

which allegedly acted as agent for Petitioner.

Throughout the case, objections were made and

issues raised with respect to the authority of BCOA

personnel to speak for that association or for the Peti-

tioner and objections were made with respect to the

authority of various persons to speak for UMWA. (Jt.

App. pp. 743, 747, 756, 763, 771, 772, 773). BCOA rec-

ords demonstrate (Jt. App. pp. 861-62) there was no

authority to enter into an iliegal antitrust conspiracy.

Under Ramsey, application of the clear proof rule

to such issues is a matter of fundamental law, both as

to UMWA and Petitioner.

The foregoing demonstrates that the District Court

and the Court of Appeals contravened a rule of law laid

down by this Court in failing to recognize that the “clear

proof” rule applied to Petitioner—as well as UMWA—

and also in failing to apply said clear proof rule to

essential issues in this case.

5. The District Court’s handling of procedure and

matters with respect to the impartiality of the jury,

and its charge, and the approval of all thereof by the

Court of Appeals, constituted such a departure from

the accepted and usual course of judicial procedures as

to call for the exercise of this Court’s supervision.

23

Reasons for Granting the Writ.

Procedurally, this case was tried throughout as

though it were a contest between the populace of east-

ern Kentucky on one hand and UMWA and Petitioner

on the other (Jt. App. pp. 887, 1633-34, 1775, 1804-05,

1824-26, 1839-40, 1844). This contravened the rule in

New York Central Railroad v. Johnson, 279 U.S. 31%, 319

(1929), where the creation, at trial, of a hostile atmo-

sphere towards a corporate party from another section

of the country was roundly condemned.

Significantly, from the procedural point of view,

although the District Court refused Petitioner’s re-

quested instruction as to hearsay evidence in this alleged

conspiracy case (Jt. App. pp. 1759-60), the very same

instructions, word for word (including the there inappli-

cable “clear proof” rule), were given in the very next

case® tried by the same District Court — also an alleged

antitrust conspiracy (App. D p. 111a).

The District Court also refused to instruct the jury

as to the “equal hypothesis“ rule (Jt. App. pp. 1760-61),

the importance of which has been the subject of this

Court’s teaching: Pennsylvania R. R. Co. v. Chamber-

lain, 288 U.S. 333 (1933). The Court of Appeals affirmed

on the point. Again significantly, although the District

Judge refused to give the “equal hypothesis” charge in

this case, he gave a detailed and explicit equal hypothe-

sis“ charge in the very next case he tried (See footnote

9, supra) (App. D pp. 111a-12a).

9. Case No. 1800, styled Arnold G. Pessin and

Rex C. Ellsworth v. Keeneland Association, University

of Kentucky Research Foundation and the Bank of

New York. (Portions of the instructions in that case

were incorporated into the Joint Appendix filed in the

Court Ps Appeal and reprinted herein in Appendix

D p. 105a).

24

Reasons for Granting the Writ.

This rule is more than a negative way of stating

that a plaintiff must sustain the burden of proof. Bur-

den of proof relates to all the evidence. This rule guides

the trier of fact in the determination of the weight of

a particular inference to be accorded a particular item

of evidence.

In Ramsey, the District Judge — sitting without a

jury — applied the rule in considering the evidence. If

a District Judge, sitting as a trier of fact, properly uses

the rule, a fortiori, a jury should be instructed as to its

use where it is the trier of fact. Significantly, the jury

was instructed with respect to this rule in Tennessee

Consol.

Procedurally, the District Court here denied mo-

tions for a directed verdict and motions for judgment

n.o.v. because it believed that the decision of this Court

in Pennington required the same. However, in Penning-

ton (381 U.S. at 663) this Court relied upon the con-

tention of a collusive bidding arrangement to drive the

plaintiff from the “TVA spot market” as a basis for

the denial of such motions. There was no such evidence

here.

The last sentence in Footnote 2 of the same opinion

(381 U.S. at 665) constituted an express statement that

this Court in Pennington indicated no opinion as to the

sufficiency of the other evidence.

Voir dire examination revealed that one juror had

longstanding business relations with a son of one of

Respondent’s officers and stockholders (Jt. App. pp.

321-25). A challenge for cause was denied (Jt. App. p.

325). Later it was discovered that this same juror dis-

cussed the case with an attorney who had represented

25

Reasons for Granting the Writ.

Respondent and who was involved in antitrust litigation

for a coal company (Jt. App. pp. 238-45). A post-trial

motion to subpoena the juror for interrogation was

denied (Jt. App. p. 244).

Also, during the trial, the Respondent’s president

engaged in conversation with two jurors in a hotel

dining room, though other seats were available, and the

District Court refused a mistrial on the ground that the

Respondent’s president... didn’t do anything inten-

tionally” (Jt. App. pp. 1033-38).

The Lower Court’s handling of these matters and the

Court of Appeals’ approval violated the precepts of this

Court (Mattox v. United States, 146 U.S. 140 (1892);

Tumey v. Ohio, 273 U.S. 510 (1926) ; Coatings Corp. v.

Continental Cas. Co., 393 U.S. 145 (1968) ) that jurors

and others who sit in judgment on the rights of parties

must be free from external influences and must be com-

pletely impartial. Justice must not only be fair, but there

must be the assurance of fairness by the complete ex-

clusion of questionable influences.

A perusal of the charge by this Court (App. C pp.

69a-104a) is respectfully and urgently requested. That

charge was inadequate, misleading, confusing and preju-

dicial. It is believed that a reading of the charge leads to

the conclusion that in this complex case relating to the

interplay between two basic national policies, none of

the fundamental issues were delineated to the jury. The

charge, both as a whole and in its individual parts, con-

stituted fundamental error, making impossible the

proper administration of justice in this case and merit-

ing the supervision of this Court.

Conclusion.

CONCLUSION

For the foregoing reasons this Petition for a Writ

of Certiorari should be granted.

Respectfully submitted,

HAROLD R. SCHMIDT

919 Oliver Building

Pittsburgh, Pennsylvania 15222

Counsel for Petitioner

Of Counsel:

ANTHONY J. POLITO

919 Oliver Building

Pittsburgh, Pennsylvai.ia 15222

Amos H. EBLEN

310 Citizens-Union National

Bank Building

Lexington, Kentucky 40507