# Appellants Brief — United States v. Pullman Co.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0183%3A10

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appellants Brief
- **Published:** January 1, 1947
- **Citation:** 331 U.S. 865

## Text

TABLE OF CONTENTS.

Page
EE 8 5 6d bo evccceesccrseccecserserceres 1
EE acco bocce bi cdberctessdcabe teueve 2
UIE, 6 ooo secavcvcccevecevevceeceess 2
Es os rn orga pon enssedhen ehvemedawe 3
Ns ns ooo s oewdenceeeh pourieeen 4
CD OD OD. cscccccccrvvecocvcossceoneee 8
Effects of the Court’s Ruling ..................... 14
The Interest of the Several States in Expanding
en «266 ceevestbedaperesteveseteees 17
The Recommendation of the Department of Justice.. 18
: EC. MOE siverervescsrcevevsesaresese 19
ES ci ctbcddnaneesdersedvasdevderevenen 20
I. Critique of the Court’s Opinion............... 20

Il. A Decree Dissolving a Combination in Restraint
of Trade Is in Effect an Equity Reorganization
for the Purpose of Disposing of the Property to
the Persons Most Capable and Best Qualified to
Re-Establish the Competitive Market Which
Has Been Destroyed by the Former Monopoly.
Therefore, the Type of Business Judgment
Which the Court is Accustomed to Exercise in
Ordinary Reorganization Must Be Used in Se-
lecting the Transferree of the Property ....... 25

IIL The Court Erred in Giving No Weight Whatever
to fhe Recommendation of the Department of
Justice That the Bid of Otis & Co. Be Accepted.. 32

IV. The Court Erred in Delegating to the Railroad
Combine the Ultimate Responsibility for the Se-
lection of an Independent Purchaser of the
Sleeping Car Business ...................... 34

V.The Court Erred in Neglecting the Criteria
Which It Should Have Applied in the Selection
of the Successful Bidder .............ceeeee0s 38

ii Index Continued.

Appendix A Page

Excerpts from the Testimony of Wendell Berge, As-
sistant Attorney General of the United States, Be-
fore the Sub-Committee on War Mobilization,
Committee on Military Affairs of the Senate of the
United States (Kilgore Committee), Washington,

D. C., February 10, 1944, Pages 1352-1359 ....... 50
Appendix B

Government’s Evidence .... ......cccesccccccccees 58
Appendix C

The Interlocking Relationships of the Directors of
Pullman Incorporated as Shown of Record at the
Hearing on Petition for Approval of Offer to Pur-
chase The Pullman Company ................... 62

TABLE OF CASES.
Appalachian Coals Inc. v. United States, 288 U. S.
344.
Atlantic Coast Line Railroad Co. v. Florida, 295 U. S.
il <4 a bas pads veinankdeuhanbbedakedsedeeseese< 30

B. B. Chemical Co. v. Ellis, 314 U. S. 495 ...........
Continental Insurance Co. v. Reading Co., 259 U. S.

Mais a. subuvas ocuaeecsdhebindnaeudecse es 26, 31, 33
DiGiovanni v. Camden Fire Insurance Ass’n, 296 U. S.
Dis dn bkaladounhcadeaeienséeecekan vets cdaes es 30

Hartford Empire Co. v. United States, 323 U. S. 386.. 31
Hecht Company v. Chester Bowles, 321 U.S. 321..... 30, 32

Inland Steel Co. v. United States, 306 U.S. 153....... 30
Morton Salt Co. v. G. S. Suppiger Co., 314 U. S. 488... 38
North American Co. v. 8. E. C., 328 U. 8S. ——, 66 S.
ik oo Made Chri Caes aubdes ciate buds have’ 32
Pennsylvania v. Williams, 294 U. 8.176 ............. 30
Scripps-Howard Radio Ine. v. F. C. C., 316 U. S. 4 . . .30, 31
Sugar Institute v. United States, 297 U. 8.553 ....... 38

Uaited States v. American Tobacco Co., 221 U.S8.106.. 30
United States v. Bausch & Lomb Optical Co., 321 U. S.
TOT oo oe wees cee cer cnccecceccccesceecescerceess

173. Pde bec nacvesvadae Seagtastncaeedes resveesen

Index Continued. iii

Page
United States v. E. I. duPont de Nemours & Co., 188 F.
ee his tll cea he dbp seneénee 6s 31
United States v. Great Lakes Towing Co., 208 F. 733... 31
United States v. Morgan, 307 U. 8. 183 .............. 30
Virginian Railway Co. v. System Fed. No. 40, 300 U. S.
OU ees in ee eee etoesasesebebus 30

STATUTES.

Sherman Antitrust Act, Sections 1, 2 and 4, July 2,
1890, as amended, 26 Stat. 209; 36 Stat. 1167; 50

ee EP Oly SE es NED cescccscccseueses

Ee —

eee CU

ER ES APSE ee eee

IN THE

Supreme Court of the Anited States

Ocroser Term, 1946.

No. 254.

Oris & Co., Appeliant,
v.

Tue Untrep States or America, Toe PuttmMan Company,
Puttman-Stanparp Car Manuracturinc Company,
Putuman Incorporaten, et al.

On Appeal from the District Court of the United States for
the Eastern District of Pennsylvania.

BRIEF FOR OTIS & CO., APPELLANT.

OPINIONS BELOW.

The opinion of the specially constituted district court (R.
726) is reported in 50 F. Supp. 123. The supplementary
opinion sur form of judgment (R. 759) is reported in 53 F.
Supp. 908. The opinion sur judgment (R. 774) is reported

in 55 F. Supp. 985. The opinion upon application for
approval of sale of The Pullman Company (R. 1193) is
reported in 64 I’. Supp. 108.

JURISDICTION.

The final order and decree of the district court was
entered on January 4, 1946, (R. 1203). Petition for appeal
was presented and allowed on March 4, 1946 (R. 1215,
1216). The jurisdiction of this Court is invoked under
Section 2 of the Expediting Act of February 11, 1903, as
amended (32 Stat. 823; 36 Stat. 1167; 15 U. S. C. 29), and
Section 238 of the Judicial Code, as amended (36 Stat. 1157;
38 Stat. 804; 43 Stat. 936, 938; 28 U. S. C. 345). Probable
jurisdiction was noted by this Court on October 14, 1946
(R. 2639).

QUESTIONS PRESENTED.

The ultimate question is whether the decision and final
order of the court approving the sale of The Pullman Com-
pany to a combination of railroads doing 95 per cent of the
passenger-carrying business of the United States should be
reversed. The above order was entered on January 4, 1946,
in a suit instituted by the United States Government under
Sections 1 and 2 of the Sherman Antitrust Act. The over-
all questions are whether the court below erred (a) in allow-
ing Pullman Incorporated, adjudged guilty of violating the
antitrust laws, to select its own successor, and (b) in ap-
proving sale to the railroad combine without appraising
the several offers to purchase in terms of the ends the suit
was designed to serve. These questions resolve themselves
into three dominant issues:

1. Whether a combination of the principal railroads of
the United States, many of which are in competition, may
acquire control of the pool of sleeping cars and facilities
now owned and operated by The Pullman Company and
through such dominance over the entire supply in practical

A‘
7
oa
$
~
2

3

effect eliminate all competition in the business of providing
sleeping car service.

2. Whether a sale of The Pullman Company to the com-
bination of railroads will effect a complete and permanent
separation of the sleeping car business from the railroad,
banking and manufacturing interests which are shown by
the record to have combined with The Pullman Company
in suppressing production of sleeping car equipment and
in discriminating against the weaker railroads.

3. Whether a court, in selling a business pursuant to an
antitrust decree intended to destroy a monopoly, must take
into account the compara jive qualifications, intentions and
abilities of the various bidders and select from among them
that one which gives greatest promise of removing the
stifling effects of former monopoly and of expanding the
competitive market for sleeping car service.

All of these questions are equally important, the answers
to which elicit decisive reasons for reversing the trial court.
However, it is the third question involving the power and
responsibility of the court to select a purchaser of The
Pullman Company, and the criteria to be applied by it in
such a selection to which this brief will be primarily di-
rected.

STATUTES INVOLVED.

The statutes involved are Sections 1, 2 and 4 of the Sher-
man Act of July 2, 1890, as amended (26 Stat. 209; 36 Stat.
1167; 50 Stat. 693; 15 U. S. C. 1, 2 and 4), the pertinent pro-
visions of which are as follows:

Section 1. Every contract, combination in the form
of trust or otherwise, or conspiracy, in restraint of
trade or commerce among the several States, or with
foreign nations, is hereby declared to be illegal: * * *
(15 U.S.C. See. 1).

Section 2. 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

4

trade or commerce among the several States, or with
foreign nations, shall be deemed guilty of a misde.
meanor, * * * (15 U.S.C. See. 2).

Section 4. The several district courts of the United
States are invested with jurisdiction to prevent and re-
strain violations of sections 1-7 and 15 of this title; and
it shall be the duty of the several district attorneys of
the United States, in their respective districts, under
the direction of the Attorney General, to institute pro-
ceedings in equity to prevent and restrain such viola-
tions. * * * (15 U.S.C. See. 4).

STATEMENT OF THE CASE.

In its original opinion in this case the court found as
follows:

‘‘We find a complete monopolization in the business

of furnishing sleeping cars to railroads. This applies to

the servicing of the cars and the furnishing of such

cars both of which are completely controlled by the
defendants.’’ (R. 742)

As a remedy the court proposed a decree which provided
that

(1) the sleeping car business shall be separated from the
manufacturing of sleeping cars;

(2) the railroads may purchase used sleeping cars from
The Pullman Company;

(3) The Pullman Company shall operate and service
sleeping cars regardless of who manufactures them;

(4) any railroad may operate all or any portion of its
own sleeping car business;

(5) The Pullman Company is to be obligated to furnish
through-line sleeping car service;

(6) exclusive dealing contracts between The Pullman
Company and the railroads shall be eliminated. (R. 744)

Gant > Sn Ata 2

2 ROO 8 Bhi yer MN Se

5

In addition, the court in the following language recog-
nized the necessity of a pool of sleeping cars available to
all railroads alike:

‘*Even if a railroad could buy the cars it needed for
ordinary day-to-day use there is still the problem of
extra cars for peak loads. All roads have certain
periods when the demands increase sharply. But in
some, like the Missouri Pacific, Baltimore & Ohio,
Southern Pacific, and the Pennsylvania, the variation,
while perceptible, is comparatively slight throughout
the year. Others, like the Florida East Coast, Sea-
board, Boston & Maine, Burlington, and Northern Pa-
cific have a large amount of seasonal passenger travel
in extreme peaks and deep depressions. For instance,
the Florida East Coast Railway’s requirements may
vary from 319 cars in the height of the season to 28
in the dull season. Conversely, those of the Boston &
Maine go from a maximum of 173 in summer to a
minimum of 54 in winter. The pool of sleeping cars
that can be shifted from one road to another as de-
mands vary is called for by sound economic policy.
The plaintiff in this suit does not deny this fact and
this Court appreciates it fully. It is relevant to be con-
sidered in this connection when the practicability of
the operation of any railroad’s sleeping cars is to be
considered.’’ (R. 735, 736).

Pursuant to this opinion both the Government and The
Pullman Company submitted forms of a proposed judg-
ment. The Government urged that Pullman Incorporated !
should be directed to dispose of the manufacturing busi-
ness and continue to operate an equipment service pool.
On January 22, 1944, the court held that Pullman Incorpo-
rated should have the choice as to which one of its two
present businesses it would continue to operate. (R. 759)

To this opinion Judge Biggs dissented on the ground that

* Pullman Incorporated is a holding company which owns
all of the stock of Pullman-Standard Car Manufacturing
Company (manufacturer of sleeping cars) and of The Pull-
man Company (operator of sleeping cars).

6

the retention of the manufacturing units by Pullman In-
corporated would be contrary to the public interest.
Among the reasons he gave is the following:

‘*. . . the probable effect of the court’s decree will
be to compel the railroads of the United States, which
must maintain adequate through sleeping car service,
to purchase the stock of Pullman Company. The rail-
roads are keenly competitive. Their need for sleeping
ears varies widely. To what extent is each to contrib-
ute to the maintenance of the Pullman pool which we
are unanimous in believing must be maintained? Who
will police the operations of the pool in order to make
sure that those carriers who contribute to the purchase
of Pullman Company stock (contributions which must
vary in amount in accordance with needs and re
sources) will treat their partners in the joint enter-
prise or the public without discrimination. I know of
no power presently vested in the Interstate Commerce

ission or in any other government agency which
would enable it to regulate such a pool operation.”
(R. 762)

On May 8, 1944, the trial court entered an order requir-
ing the complete and perpetual separation of the manufae-
turing business and the sleeping car business of the de-
fendants. (R. 764) Defendants elected to dispose of their
sleeping car business. (R. 776)

Pursuant to this election, from September 1944 to March
1945 plans were formulated and a proposal put forward F
by Pullman Incorporated to sell the sleeping car business |
to the railroads. (R. 775) Not until May 12, 1945, how- F
ever, was a definite proposition made to sell the stock of |
The Pullman Company (the sleeping car business) to the
railroads. The price was to be about seventy-five million |
dollars. (R. 2246, 2254) Instead of taking affirmative ac-
tion on this offer, a committee representing the railroads
proposed a delay of eighteen months from March 22, 1946.
(R. 2057)

7

On August 27, 1945 this appellant, Otis & Co., intervened
in these proceedings and submitted its offer to purchase
the stock of The Pullman Company upon substantially the
same terms and for substantially the same sum as those
that Pullman Incorporated had offered to the railroads.
(R. 984, 1054) That offer conformed in every particular
to the decree of the court. It assured not only complete
separation of the sleeping car business from any manufac-
turing interest, but also complete separation of the sleep-
ing car business from those railroad and banking interests
which were shown by the record to have joined with The
Pullman Company in discriminating against smaller rail-
roads and suppressing the expansion of the sleeping car
business. It went further and offered to replace the entire
deet with modern equipment and to enter on a nationwide
promotion of sleeping car travel.

Some time later a combination of the railroads inter-
vened for the purpose of purchasing the stock of The Pull-
man Company. (R. 1141) There were several non-railroad
bids. (R. 984, 1056, 1113) A hearing was had by the court
and evidence taken with respect to all the offers before it.
(R. 2022-2402)

The court approved the offer of the combination of rail-
roads disregarding the non-railroad bids. In so doing the
three judges, as a court of equity, held that they could
not substitute a judicial judgment for the decision of the
proprietor of The Pullman Company. The court stated:

“‘Approval of the sale to the railroads does not
imply disapproval of other bidders. We are much im-
pressed with all of them. We do not approve Pullman’s
selection because it has chosen the bid that brings it
what it regards as the most favorable terms. We ap-
prove it because, following our direction to sell, it now
appears with a buyer. That buyer is, as we said above,
the most natural purchaser, because it has the legal
responsibility for providing sleeping cars and comes
m under terms which we are satisfied are in accord-
ance with the judgment of this Court.’’ (R. 1199)

Throughout its opinion the court made it clear that it con-
sidered entirely irrelevant any question as to which bid
would most effectively dissipate the consequences of the
monopoly and restore the expanding competitive market
in sleeping car transportation.

The type of considerations which the court ignored in its
judgment of approval of the railroad bid are shown in the
intervening petition of Otis & Co. and in the evidence taken
in support thereof.

The Bid of Otis & Co.

In its intervening petition Otis & Co. described in detail
the stagnation of production and service which the Pullman
monopoly had created in sleeping car transportation. It
stated that the present fleet of about 6,250 heavyweight
Pullman cars was in a deteriorated condition ; that in design
they were obsolete; that their weight was excessive causing
unnecessary expense in fuel cost and roadbed repair and
preventing speedy travel. It showed that if the railroads
were to compete effectively with air and motor transporta-
tion the entire fleet must be replaced with modern light-
weight equipment. (R. 984)

To meet this need to dissipate the effects of the past
monopoly, and through competition to restore the expan-
sion of the business which had been halted for years, Otis
& Co. proposed to place immediate orders for sleeping car
equipment to replace the entire fleet in an amount estimated
at $500,000,000. (R. 985, 999) In addition it committed
itself and the group it represented to set up a network of
agencies over the entire United States to develop, promote
and advertise recreational and educational travel. The
commitment was described in its petition as follows:

“The Modern Service for the Railroads to Which Peti-
tioner is Committed Upon Approval of Its Petition
by This Court.

‘*Petitioner will refer herein to the service proposed
by it as New Putiman Service. Its purpose will be to
furnish the railroads with equipment and provide serv-
ices which they cannot easily or economically provide
for themselves. In broad outline, New Putiman
Service will be designed to give the railroads a service
to meet the developing needs of a nationwide market
and thus supplement the separate activities of each
railroad in its own area. It will have the advantage
of mass buying power of large orders from competing
manufacturers and thereby provide at mass production
cost a pool of modern equipment to meet the through-
line requirements and the seasonal demands of every
wiiocal. It will service this equipment for the rail-
roads in accordance with modern standards and needs.
And it will do more. It will explore for the railroads
the possibilities of the new opportunities for rail pas-
senger transportation, created by the industrial de-
velopments of the postwar world. Thus New Putuman
Service will enable the railroads to meet the competi-
tion of the rapidly developing passenger transporta-
tion by air and motor. This will require nationwide
promotion and advertising, coupled with systematic
experimentation and research.

‘*T9> understand the possibilities of such a program,
it is necessary to sketch the changed character of the
railway passenger market after the war. Railway
passenger transportation has lost its position as a
natural monopoly. Air lines today predict the rapid
expansion of their passenger market to 58,000,000 pas-
sengers annually. Pullman travel, except under the
artificial conditions of the war years, never exceeded
40,000,000 passengers annually. Bus and automobile
transportation may be expected to increase enormously
with the development of better highways and more
efficient motors. But all this does not mean that the

market for rail travel is gone, or even that it has been
impaired.

10

‘*The market is there, larger and richer than ever
before. The nation today is well along into the second
industrial revolution of electronics, giant power, light
metals. Techniques are at hand to tap the resources
of undeveloped regions. An expanding production in-
sures a rising aggregate and per capita standard of
living. The sections of the country are being rapidly
brought together into a single vast metropolitan area.
The rise in purchasing power means a great growth
in the industries which cater to education, recreation
and leisure. The market, however, can no longer be
exploited by the noncompetitive philosophy of high
cost, low usage, and security for investments in obso-
lete equipment.’’ * * *

‘**Unified service permits standardization in railway
passenger car design and procurement, with resulting
obvious economies. The advantages of mass produc-
tion have been well established in the United States
but heretofore never realized in the production of
railway passenger equipment. The outstanding ex-
ample of mass production is the automobile industry,

which produces superior cars at * eng far below those

obtaining in other countries. This is made possible
by standardization of design, materials and methods,
and is stimulated by open competition. ‘!n contrast to
the practice of the automotive industry the building of
railway passenger cars has been highly individualized.
Cars have been largely custom-built, necessitated ex-
pensive engineering, cumbersome production methods
and small unit purchasing of materials, including sucli
items as seats, lighting fixtures, air-conditioning equip-
ment, trucks, ete. e result has been to increase
greatly the cost of the product. The economies to be
realized by standardization of product and purchasing
in large quantities are enormous.

‘*Modernization of sleeping cars will produce far-
reaching beneficial effects for the railroads and the
public. At the moment a dead weight of 21% to 8 tons
per passenger is carried, dependent upon occupancy.
In the airplane it is now 1,500 pounds and it may be
reduced to half that figure. ith light metals the

11

weight may be materially reduced. The width of a
car may be fixed, but the length of the train knows no
such limit. Space may be enlarged with a sharp de-
crease in the weight that has to be hauled. The effect
of dead weight can be minimized by the use of roller
bearings, instead of the old-fashioned type of friction
bearings. Moreover, in prewar days the Pullman car
carried an average of ten passengers; the average
occupancy of the car was decidedly below 50 per cent.
Thus the cost of travel was made extravagant by the
distribution of overhead costs over a small number of
passengers. Modern equipment and improved service
should keep the cars filled towards capacity, thus mate-
rially lowering cost. Another key to low cost is to
keep the cars in use, not standing idle on sidetracks.

‘Plans for Immediate Needs.

‘*‘To meet immediate needs, New Putitman Service
proposes to provide for the railroads, as soon as it can
be constructed, the most modern fleet of sleeping cars
and observation cars that competitive engineering
brains and manufacturing facilities can produce. The
great wartime increases in productive capacity in the
equipment industries insure that all types of cars will
be built in a competitive market. This fact and the
development of new metals and new alloys, new mate-
rials, new designs, and new construction techniques
further insure the manufacture of such equipment at
costs much lower than the costs of existing equipment.
This will enable New Putian Service to render serv-
ice to the railroads at lower costs. And the railroads
in turn will be able to experiment with reductions in
rates to its customers, the public. Thus the railroads
will, at an early date, be started on their way to meet-
ing the competitive challenge of the air lines and the
needs of present day travel.

‘‘New Putiman Service also proposes to provide
other types of equipment necessary to meet railroad
needs in an expanding and wy thy market for luxury
travel. For example, to meet this increasing demand

for through coast-to-coast service, New Puniman

Service will offer to furnish the railroads every type
of equipment which will make fast schedules for these
long journeys attractive to the public.’’ * * °

‘‘New Putian Service will Promote the Unexplored
Market in Passenger Travel.

‘‘There is a vast untouched market in rail passenger
travel ready to be exploited. It was not exploited in
the past because railroads considered the passenger
business unprofitable. Its cost was beyond the reach
of the great mass market composed of persons of mod-
erate means. It was the automobile industry that
seized the opportunity to exploit that mass passenger
market. Indeed, it went further and reac even the
low-income groups.’’ * * *

‘‘Railroads today have as great an opportunity to
develop passenger travel as the motor car industry had
in 1920. They need only reach down to the mass market
of persons of moderate income. The extent of this
market is limited only by the vision and energy of
those who attempt to exploit it.’’* * *

‘‘Today persons of moderate income take long un-
pleasant trips by automobile only because they cannot
procure automobile service at their destination for a
moderate cost. The possibilities of encouraging inde-
pendent local organizations to fill this need at low cost
at the end of the journey by train or at stop-overs are
unlimited. New Puriman Service should insure a
constant flow of passengers by rail to such independent
agencies so that it would no longer be necessary for
persons on a vacation to take the entire trip by auto-
mobile. By the development of this possibility, the
automobile will become a supplement to rail travel,—
a means of increasing the number of passengers car-
ried by train instead of a competitor taking away pas-
sengers from railroads.’’ * * *

‘‘The development of this market requires a network
of supplemental means of travel which will carry pas-
sengers from rail heads to outlying areas. It is not

13

suggested that New Putiman Service own or operate
these supplemental agencies. They can be independent
and still serve the railroads through New Putimay
Service because nationwide promotion of travel gives
them a mass market of passengers.’’ (R. 996-1001)

The above commitments were made by the Otis-Young-
Kirby group represented by Otis & Co. This group re-
quired no advance guarantee that any railroad accept the
service of the New Pullman Company. Each railroad was
free to take all of the service or any part of it or none as it
pleased. Some of the larger railroads had already ordered
new equipment for their own use. The Otis offer did not
propose to take over such equipment and in no way did it
set obstacles in the way of that kind of development. Its
chanve of success lay in its ability, through mass purchas-
ing, the use of up-to-date cars, the elimination of costs
incident to obsolete methods and equipment and the stimu-
lation of a nationwide demand to furnish a service that
would be cheaper than the railroads could furnish at their
own expense. There was to be no interference with the
freedom of choice of any railroad. A new independent
source of supply of equipment and service was to be pro-
vided. It was to be offered to the railroads on a competi-
tive basis. (R. 2036, 2037, 2075, 2531, 2546, 2547, 2586-2587)

The importance to weaker railroads of this new competi-
tive supply of service and equipment is also shown in the
record. The demand for sleeping cars and vacation equip-
ment is seasonal. Weaker railroads are financially unable to
build and operate sleeping cars for peak-load and through-
line service. For that reason if the railroad combine
was to become the only—or even the principal—supplier
of Pullman car service, weaker connecting lines would be
at a constant disadvantage unless they became the economic
captives of the stronger roads. Without an independently
owned and constantly expanding pool of modern sleeping
car equipment the evils of the old monopoly would persist

14

in a different form. The carrier able to build and own its
own equipment would be in a position to dictate terms to
the weaker lines. Such a situation would aggravate the
old problem of the strong and the weak road. (R. 2090-2093).
Furthermore, vast and undeveloped recreational areas of
our country are served by weak roads, which are unable to
develop them for the benefit of the public and of the state
without access to a pool of modern sleeping cars and with-
out the help of a nationwide promotional service devoted to
the expansion of passenger travel. (R. 2066)

The petition concluded that the present static condition
into which the sleeping car business had fallen—due to the
monopolistic restrictions of the past—could only be cor-
rected by the court’s selection of a bidder who was actually
willing to risk its capital in a program for the progressive
development of the sleeping car business. (R. 1002)

The court refused to weigh the evidence on these consid-
erations or even to consider the bid of Otis & Co. Nor did
the court make any inquiry into or any attempt to appraise
the willingness and capacity of the railroad combine or of
any other bidder, to end the conspiracy, dissipate the con-
sequences of monopoly, or restore free enterprise to the
sleeping car business.

Effects of the Court’s Ruling.

The offer of the railroad combine does not contemplate
an expanding pool of sleeping cars. On the contrary, its
offer, considered in the light of the evidence, makes clear
its determination to prevent the creation of a source of
supply in competition with the new equipment being con-
structed by the larger roads. These facts were recognized
by the court for, in approving sale to the railroad combine,
it stated: ‘‘. . . we do not think it likely that The Pullman
Company, itself, will purchase new sleeping cars, . . .”
(R. 1197) Thus the court failed to make effective its find-
ings that a ‘‘pool of sleeping cars that can be shifted from

15

one road to another as demands vary is called for by sound
economic policy’’ and that ‘‘through service is a modern
essential, but most railroads cannot, by themselves, provide
such through service.’’ (R. 736)

Under the court’s decree even the present pool is to be
dismembered, the lion’s share going to the Pennsylvania
and New York Central railroads. The expressed intent in
the plan of the railroad combine is that The Pullman Com-
pany shall, during the interim period, be stripped of its
equipment, reduced to a servicing company, and then sold
to a so-called ‘‘independent’’ purchaser. (R. 1165-1168)
There is no assurance that such sale will ever be made;
but, if it is made, the new company will be independent in
name only. As the nominee of the larger roads in the com-
bine, its selection will depend upon committing itself to a
policy of sleeping-car transportation which these dominant
roads believe to be ‘‘sound.’’

Thus, for at least three years there will be complete stag-
nation in the development of a nationwide pool. Mean-
while, the larger railroads are placing orders for hundreds
of sleeping cars. (R. 2531, 2546, 2547) At the end of the
period, the stronger roads will have achieved a position of
domination of the sleeping car business. The weaker roads
will be dependent on them for their seasonal needs and
through-line requirements. (R. 2092)

Under the offer of the railroad combine, the stock of The
Pullman Company would be owned in accordance with the
percent of sleeping cars operated by the several carriers.
(R. 1166, 1167) This means that the Pennsylvania and the
New York Central railroads will own in excess of 30 per cent
of the stock, the balance being scattered among at least 40
railroads. This would give effective control of The Pull-
man Company to these railroads. Combined with a few
other large railroads operating sleeping cars—the Santa Fe,
Union Pacific and Southern Pacific railroads—control of a
majority of the stock of The Pullman Company is assured.
The method of selecting directors further evidences this

16

control. The plan in the offer of the railroad combine pro-
vides for a board of directors for The Pullman Company
of 15 members, 3 from each of three regions, the East, the
Southeast, and the West, the remaining six to be chosen at
large. (R. 1163) Thus, through the stock ownership and
organizational set-up provided for in the offer of the rail-
road c«mbine as approved by the court, and through the
interlocking relationships hereinafter discussed, the major
railroads and affiliated interests would effectively control
the sleeping car business of the country.

The kind of policy which the larger railroads consider
‘*sound’’ was called to the attention of the trial court by
Otis & Co. Evidence of that policy is found in the record in
the original trial. It is also to be discovered in documents
introduced at committee hearings in Congress of which the
Court may take judicial notice. For example, the so-called
‘Western Agreement’’ was investigated by the Committee
on Military Affairs of the United States Senate in 1944.
Under that agreement the western lines by concerted action
stopped competing improvements in sleeping car trans-
portation. The western commissioner, the appointee of the
Western Association of Railroad Executives, hampered and
prevented the introduction of air conditioning in railroad
ears. We have set out in Appendix A relevant portions of
the testimony before the Congressional Committee. We
believe that this history of the railroads’ attitude towards
expanding the supply of equipment is significant and should
have been considered by the court in connection with the
plan in the offer of this railroad combine which is equally
opposed to expansion.

Further light on the meaning and intention of the rail-
road plan is found in the record of this case, excerpts of
which we set out in Appendix B. Briefly summarized, that
record shows that the Pennsylvania and New York Central
railroads conspired with The Pullman Company to obtain
more than their proportionate share in Pullman revenue. It
shows that Pennsylvania Railro~d and New York Central

17

attempted and succeeded in maintaining a strong position
in the management of The Pullman Company. It shows
that Pennsylvania Railroad and New York Central were
co-conspirators with Pullman in retarding the introduction
of lightweight equipment; that they assisted in restraining
the introduction of new sleeping car equipment.

The Interest of the Several States in Expanding
Transportation.

The States of California, Colorado and Georgia filed in-
tervening petitions. (R. 1104, 1112, 2235) California pre-
sented a recitation of facts which compelled the conclusion
that an expanding sleeping car service could not be ex-
pected from a railroad-dominated combination. The facts
presented were either contained in the record of the case
or they came from public documents of whicb this Court
could take judicial notice. California urged the approval of
the sale of the Pullman service to an independent purchaser
in order to put an end to the former monopoly. Georgia
joined in the California petition. (R. 2235-2239) Colorado
in a supplemental petition stated that it took no position for
or against the railroad acquisition of The Pullman Com-
pany. (R. 1170) However, it as well as the other inter-
vening states concluded their petitions as follows:

‘The Western States must have adequate passenger
transportation service to stimulate their future growth.
Automotive and air transportation will not suffice.

“‘The great bulk of passenger transportation must
continue to be by rail. This transportation will not
take place unless the antiquated and obsolete Pullman
Service is replaced with a modern and streamlined
service,

‘The entertainment of and caring for visitors and
vacationists to the States of Colorado and California
has become a business of first magnitude. Great ex-
nape are made in soliciting this patronage. A

ge percen of peer visitors must rely en-
tirely upon railroad facilities for their transportation.

18

In 1941 a total of 1,000,025 relied upon railroad trans-
Portation to visit the State of Colorado. The efficiency
of such transportation is a matter of vital interest to
the States of Colorado and California. Failure on the
part of the Pullman Company to plan and into
effect an energetic and attractive poem for better
equipment and service is a natural and obvious result
following the court decree. It is of vital interest to
Colorado and California that the provisions of the
decree be fulfilled without unnecessary delay.

‘*Over two million persons came to California in 1941
as visitors. Over 1,000,000 visitors in Colorado in 1941
relied upon railroad facilities for-their transporta-
tion ; visitors by train, 1,000,025 [in] 1941; by automo-
bile, 2,000,079; by bus, 263,000, and by airplane, 7,800.
From these visitors come future residents who in time
become interested in western industries. A passenger
service, adequate and modern and priced to suit the
An of the average citizen will increase this flow of

r \

‘*Pullman Service has not furnished such a service.

‘*A request for a delay of 18 months by the railroads
does not augur well for the improvement of the serv-
ice,’? (R. 1110, 1111)

Although such considerations lie at the very heart of the
problem of relief, the court put them aside as irrelevant.

The Recommendation of the Department of Justice.

After the evidence was in, the Department of Justice at
the request of the court made its recommendation. (R.
2242, 2558, 2261) It advised the court that the Otis & Co.
bid would best serve the paramount public interest in future
competition. On the negative side it advised the court
that acceptance of the bid of the railroad combine ‘‘ would
substitute a more vicious monopoly than that stricken down
by the court.’’ (R. 2561) The court did not discuss the
validity of the government’s objections. It held the con-
siderations urged by the Government were beyond its
authority to consider.

19
SPECIFICATIONS OF ERROR.

The nineteen assignments of error relied on in this
appeal may be summarized in the statement that the court
erred in failing to take the necessary precautions to insure
the sale of the stock in The Pullman Company in such a
way as to accomplish the ends for which the suit was
brought. This general statement may be broken down
into these fundamental errors:

1. The court erred in delegating to Pullman Incorpo-
rated, an adjudicated wrongdoer, its power as a court of
equity to select the successful bidder.

2. The court erred in giving no consideration whatever
to the recommendation of the Department of Justice.

3. The court erred in permitting a combination of the
principal railroads in the United States, many of which
are in competition with each other, to acquire control of
a pool of sleeping cars and facilities now owned and
operated by The Pullman Company, thus in practical effect
eliminating competition in the business of providing sleep-
ing cars and service to independent competing railroads.

4. The court erred in ignoring facts in the record which
bore on the relationship of the members of the railroad
combine with the former conspiracy and which required at
the very least a further inquiry.

5. The court erred in ignoring the public interest in
expanding transportation.

6. The court erred in refusing to evaluate the various
bidders according to their respective qualifications, inten-
tions and capacities to dissipate the effects of the former
monopoly and to expand the competitive market which
had been destroyed by it.

ARGUMENT.
L

Critique of the Court’s Opinion.

The dominant error, running through all the various
separate errors made by the court is best described in its
own words. The court dealt with the sale of the stock of
The Pullman Company as a ‘“‘by-product’’ not the ‘‘end-
product”’ of the suit. It thus regarded a mere physical
separation from Pullman Incorporated—whatever corpo-
rate ties were left uncut and whatever hazards to the pub-
lie interest were allowed to endure—as enough to satisfy
the law. It took no steps to make certain that the separa-
tion it had decreed would prove a separation in fact or to
assure itself that a sale to the railroad combine would be
a sale to a party distinct from the seller. In turning an
end-product into a by-product, the court below committed
a number of errors, because it did nothing to assure itself
that a sale to the railroad combine would serve the ends
for which the suit was brought.

(a) The court below, by allowing Pullman Incorporated
to select its own successor, delegated to the malefactor a
power inherent in the process of equity.

The sale of the stock of The Pullman Company is not
to be viewed as a thing apart. It is set within an anti-
trust proceeding; it is a step in bringing the sleeping car
business within the tolerance of the law. To insist, as
did the court below, that since Pullman Incorporated ap-
peared with a buyer, the transaction must be approved,
is to treat the sale as if it was of concern only to the con-
tracting parties and was in no way affected with a public
interest.

- It is submitted that Pullman Incorporated had no legiti-
mate interest which would give it any voice whatsoever in
the selection of a buyer. It had been ordered to divest itself
of The Pullman Company. It had been assured a reason-

able compensation for the properties with which it had been
forced to part. In respect to the price to be paid for the
stock and the terms and conditions of sale, the various
bids were substantially equivalent. There was no pecu-
niary or financial reason for the seller to find one offer
more advantageous than another. If Pullman Incorporated
was to choose, its judgment would have to turn upon cri-
teria which only a court of equity could apply.

Criteria were at hand to guide the court below in its
choice. The sale offered the conflicting possibilities of fur.
thering or preventing the restoration of effective compe-
tition to the sleeping car business. The court was under a
duty not to approve any prospective purchaser—and cer-
tainly not the elect of the wrongdoer—until it had taken
reasonable precautions to make certain that the sale gave
promise of serving the public interest by dissipating the
effects of the conspiracy. And when four distinct offers
were before it, the court committed serious error in not
bothering to evaluate them in terms of the objectives of
the antitrust law. That obligation rests squarely upon the
court below. And it is not equity for that court to delegate
its judicial duty to a party it has adjudged to be a wrong-
doer.

(b) The opinion approves without adequate inquiry, the
sale of the stock of The Pullman Company to parties shown
by the record to be co-conspirators.

If the divestment ordered was to be realized in fact and
not in word alone, the court was under a duty to make
certain that the new purchaser was alike independent of
the seller and guiltless of wrong doing. The mere separa-
tion in corporate identity is not enough. It is a matter
of common knowledge that in the railroad field, the power-
to-make policy lies with a group of banks and insurance
companies which seek security for investments rather than
returns from capital risked in progressive enterprise. The
task of the court below could not stop with looking at

appearance. In giving effect to public policy it was under
a duty to ask where the power to make decisions lay, to
probe to the actual seat of discretion. Anything short of
this would fulfill a legal ceremonial without furnishing the
information essential to the court’s remedial task.

(c) The control and management of the railroad combine
is inseparably tied in with the control and management of
the Pullman-Standard Car Manufacturing Company.

The interests which control and manage Pullman Incor-
porated are the interests which control and manage the
railroads which in combination are seeking to purchase
The Pullman Company. Indeed, at the time of the hearing
on petitions for approval of offers to purchase, out of a
board of 15 directors of Pullman Incorporated, none were
free to select a purchaser other than a purchaser deter-
mined for them by the other institutions they represented.
And these other institutions are preponderantly railroads,
members’ of the combine, and their traditional bankers.
These facts are conclusively established in the record as
set forth in Appendix hereto.

At the time of the hearing, 27 railroads were in the pur-
chasing combine. (R. 1141, 1142) Of these 4 were directly
and 14 indirectly (through various interrelationships) rep-
resented on the board of directors of Pullman Incorporated
which controls Pullman-Standard Car Manufacturing Com-
pany.

In every move he made, Mr. Crawford, president of Pull-
man Incorporated, took counsel with his directors and the
selection of the rails as the successful bidder was made by
them. Yet J. P. Morgan & Co. and the Mellon interests, as
the record discloses, dominated both Pullman Incorporated,
which was parting with its property and the buyer which it
elected to come into possession. Such facts were not con-
sidered by the court, and along these lines no inquiry was
instituted to guard the public interest.

Testimony from the record and from public documents
of which the court below agreed to take judicial notice

has been cited to the effect that actual choice of the offer
of the rails was made by representatives of the rails; that,
back of formal corporate organization, the closest and
strongest bonds of unity exist between Pullman Incorpo-
rated and the rails; and that, in terms of past performance
and current unbroken ties, the railroad combine can not
safely be entrusted with the control of The Pullman Com-
pany. But, assuming for the sake of argument, that the
testimony falls short of being conclusive, the least com-
pelling view is that it establishes a strong presumption,
against ownership and control of the sleeping car busi-
ness by the railroad combine. As the custodian of the
public interest, which it is the very purpose of the anti
trust acts to serve, the court was under an obligation to
explore all these issues. The questions could be succinctly
put, the answers were easily to be found either in testimony
before it, or in documents of which the court could take
judicial notice. The result of such an inquiry—whatever
it might yield—was a necessary antecedent to an approval
of the sale to the railroad combine.

Nor did the court explore the effect on future combina-
tion of ownership of the Pullman service by ninety-five
percent of the railroads. It must be evident to anyone that
the railroad combination will be controlled by the dominant
railroads. It follows that they will have a strong incen-
tive not to operate the pool in a way that will strengthen
their weaker competitor for passenger traffic. Yet the court
did not compare the advantages of selling to an indepen-
dent concern which offered to expand the Pullman service
on a nationwide scale for all railroads alike.

(d) At the end of an interim period the railroad combi-
nation propose to sell to an independent. Yet the court
did not consider the obvious fact that an indepenent
selected by the larger railroads would necessarily be the
captive of the combination to which it owed its power.

The net effect of the court’s decision has been to exclude
a vigorous independent competitor from the business and
to entrust The Pullman Company to the bidder who prom-
ises to do least in the development of sleeping car service.
The court has refused to consider offers intended to put
the maximum of supplies and equipment on the market.
It has sanctioned a sale which will prevent the replacement
of the obsolete worn-out equipment by a fleet of modern
light-metal cars. It has virtualy enjoined a national sales
organization to promote the progressive increase in the
volume of educational and recreational travel. It can
hardly be denied that the competition between sleeping-
car service offered by the several railroads and an inde-
pendent company would be to the advantage of the public.
It is hard to see how an independent service offered to the
various railroads on a voluntary basis could injure any
legitimate interest which is theirs. The threat of such a
service can only be to some equity in monopoly which the
combine of carriers seeks lawfully to vest.

The action of the trial court, therefore, raises the ques-
tion which will be the principal theme of this brief. This
question may be given an affirmative or a negative state-
ment. In affirmative terms it is that it is the duty of a
court, in effecting a reorganization of a business pursuant
to an antitrust decree, to take into account the compara-
tive intentions, qualifications and capacities of the several
bidders to effect the ends for which the suit was brought.
In negative terms it is that the court cannot, without rig-
orous inquiry, sanction a sale to a combination of members
of the same industry controlling 95 percent of the volume
of traffic in the face of facts warrasting the presumption
that the evil sought to be remedied will reappear in a new
form.

We shall, therefore, in the argument which follows, in-
sist that the judgment be reversed on the ground that
the court below held as a matter of law that the merits of

the several bids were not a subject for judicial scrutiny.
We also insist that the court delegated its duty to a private
party, neglected to guard the public interest in supervising
the sale, and failed to apply to the selection of a buyer all
these criteria of law enforcement which should have guided
choice.

II.

A Decree Dissolving a Combination in Restraint of Trade
Is in Effect an Equity Reorganization for the Purpose
of Disposing of the Property to the Persons Most
Capable and Best Qualified to Re-Establish the Com-
petitive Market Which Has Been Destroyed by the
Former Monopoly. Therefore, the Type of Business
Judgment Which the Court is Accustomed to Exer-
cise in Ordinary Reorganization Must Be Used in
Selecting the Transferree of the Property.

In an equity reorganization the interests to be protected
are the conflicting types of stockholders and creditors, In
approving a plan the court must and always does exercise
its judgment as to the comparative abilities of various trans-
ferees to conduct the business successfully in the future for
the benefit of those conflicting interests. No one would
suggest that the court can wash its hands of this problem
and accept the nominee either of the bankrupt or of any
particular class of creditors on the ground that a judg-
ment between bidders was beyond the authority of the
court.

The same principles apply to an equity reorganization
under the Sherman Act, though it should be neted that the
interests represented are different. The paramount inter-
est in an ordinary equity reorganization is the interest of
the creditor. The paramount interest in a government suit
to enforce the antitrust laws is the public interest in ex-
panding competition. There is no other possible purpose

in the institution of an antitrust proceeding by the gov-
ernment.

The case of Continental Insurance Co. v. Reading Co.,? is
an illustration of the kind of economic considerations and
business judgment a court of equity must exercise in an
antitrust reorganization. That case involved a separation
of interlocking interests controlling railroads and coal
mines contrary to the Sherman Act. An interim period
was necessary before certain of the properties could be
sold, but the court during the interim did not leave the
properties in the control of the culprit. Instead it put its
own trustees in charge until final disposition. The Attorney
General made a recommendation based on business facts
which the Supreme Court as a matter of course considered.
It modified that recommendation in the light of economic
considerations which had occurred subsequent to the Attor-
ney General’s opinion. The type of considerations under-
lying the Court’s judgment is illustrated by the following
passage:

‘It is asserted further by the Reading Company, and
not denied, that, when this decree was entered by the
District Court, the monetary situation was such that it
would have been impossible to secure a purchaser of
the Reading Coal Company properties at any fair
price; that, indeed, the transaction could not have been
financed at all.

‘‘The considerations influencing the District Court
and the government against a drastic readjustment of
the interests of the bondholders under the general
mortgage and the holdings of the two offending com-
panies were of manifest weight in the then business
and monetary situation. Even now this court would
hesitate to order a sale of this kind of property worth
probably $100,000,000 with confident hope of realizing
an adequate amount with the necessary restrictions as
to the purchaser. We agree with the Attorney General
in his disinclination to insist upon such a sale under the
circumstances. Since the time of settling the decree,
however, a change for the better has come in the finan-

2 259 U. S. 156.

27

cial situation. We think that this justifies us now in
making some modifications in the plan, which were not
presented to the parties or considered by the court,
possibly because they might have been unwise in the
critical conditions then existing. They involve a de-
parture from the contract provisions of the general
mortgage and the bonds it secures.’’ (p. 170)

It is true that such judgments can only be informed
guesses as to the future based upon the most reliable evi-
dence which the court can secure. Nevertheless, the duty
to make such judgments is inescapable from any type of
equity reorganization. If such considerations are ignored
in an antitrust reorganization, the result of the suit may
for the future result in the creation of a stronger monopoly
than that which existed in the past.

In this case the old monopoly had left the public and the
railroads with an obsolete fleet of sleeping cars. A com-
pelling need—both to the weaker railroads and to the public
—was replacement of that fleet by an independent in a posi-
tion to offer the service to all the railroads alike on the
same terms. It is essential that the independent shall have
no ties with the former conspiracy. It is imperative that
the reorganized company be not dominated by any group
having an interest which runs counter to that of the public
or the weaker railroads.

Yet the court below approved the transfer of the sleep-
ing-car business to a group of carriers dominated by the
New York Central and the Pennsylvania railroads and un-
der the influence of the banker group closely connected with
the major raiJroads. It put to one side the history of
. that group in failing to expand the Pullman fleet. It ignored
the positive evidence of the conspiracy between that group
and The Pullman Company to discriminate against weaker
railroads. It overlooked the obvious financial interests of
the larger passenger-carrying roads in maintaining a com-
petitive advantage over the smaller rvads. Finally, it elim-
inated from the field the only supplier of equipment and

service that affirmatively promised to replace the obsolete
fleet.
The reason it gave was as follows (R. 1199) :

‘‘A great deal of argument has been presented to us
during the hearing about the majority of the companies
which own and operate the railroads of the country.
They are said to be sleepy and unprogressive. The
roads in turn, have offered testimony to the effect that
they are industrial greyhounds, straining upon the
start. We make no finding of fact on this point, nor
confer either encomium or epithets. We are concerned
only with a small fraction of the total railroad business,
that which has to do with sleeping cars. This part wiil
probably rise little 4 oy than the general level of
railroad competence. We do not think, in any event, it
is within judicial responsibility or competence to make
it do so.

‘‘We are also told that the railroads are dominated
by a group of bankers and that the influence of the
latter, if not sinister, is at least unprogressive and
monopolistic in its tendency. When we reach this ques-
tion we are beyond the scope of issues in this lawsuit
which had Pullman, not the railroads, as defendants.
The record tells us nothing of the operations of railroad
bankers nor of the war between them, if such there is.
Surely we should be going far beyond proper judicial
process if we played, either way, any hunches we may
have, about this question.’’ (Emphasis supplied)

The error of the court may be highlighted by applying
such reasoning to the ordinary equity reorganization where
the qualifications of bidders for the property to be sold are
under consideration. A judgment based upon the reasoning
of the court below in this antitrust case would make no -
sense whatever when applied in an ordinary equity reor-
ganization proceeding. Such a summary disposition of the
ease ignoring the public interest involved constitutes re-
versible error.

A court of equity in an antitrust reorganization is con-
fronted with two closely connected, yet distinct, tasks. The

one is analytical; it must discover and lay bare the wrong.
The second is constructive; it must devise a remedy to
eliminate the evil it has found. The two tasks drive to the
same result. The analysis is of no avail unless it is fol-
lowed by the relief; the remedy is likely to miscarry unless
it is based upon the analysis. The same resources—hear-
ing, the calling of witnesses, the taking of evidence—are
alike available for both tasks. The duty upon the court to
pursue all pertinent issues, to examine all relevant testi-
mony, to avoid arbitrary decisions, to give practical effect
to the law, applies equally to the two parts of the task.
Unless relief can be made effective, the suit is of no avail.

If relief is to be made effective, the offers-to-purchase
must be reviewed by the court with the most critical
scrutiny. Pullman Incorporated, the seller, has been ad-
judged to be a law-breaker. The easy, in fact an obvious
way to escape the law, is for the malefactor to install its
own successor. The court fails in its duty if it is not at
pains to make sure that the control which it has ousted is
not perpetuated in a new form. The railroads, as the record
of the case makes clear, are co-conspirators with Pullman
Incorporated. The evidence before the court establishes a
strong presumption that they are not lawfully qualified to
take over The Pullman Company. Instead of resolving such
doubts by proper judicial inquiry, the court has acted as
if the identity of the buyer, its financial and business con-
nections, its repute is for being law-abiding, its ability in
respect to antitrust to come into court with clean hands,
are irrelevant. If the relief it decrees is to be effective—
and not merely nominal—the court is under obligaticn to
scrutinize closely the credentials of the successor which is
to be installed; to inquire thoroughly into the matter of
whether the railroads are free agents; to make certain
beyond any reasonable doubt that banking and financial
houses—which stand to gain by restraint of trade—are not
in control of any party or group seeking to buy. It is the
public interest which Congress seeks to protect through the

antitrust suit. The court must assure itself that this public
interest is not through a sale which it approves put in
future jeopardy.

The court’s conduct of the instant case does not measure
up to these standards. It has throughout acted as if the
discovery of wrong was its duty; as if relief was a matter
of minor importance. Yet the established rule of equity
affords this court adequate power to make the election and
to shape the terms of sale. It is the mark of equity that it
can carry its remedy to the very character of the wrong.
It has, as Mr. Justice Douglas has put it,’ ‘‘a wide range of
discretion . . . to mould the decree to the exigencies of the
particular case.’’ In fact, as he elaborated in Hecht Co. v.
Chester Bowles, 321 U. S. 321, 329,

‘The qualities of mercy and practicality have made
equity the instrument for nice adjustment and recon-
ciliation between the public interest and private
needs .. .”’

The demand is, as succinctly put by Mr. Justice White in
United States v. American Tobacco Co., 221 U. S. 106, 185,
‘‘to award relief coterminous with the ultimate redress of
the wrongs which we find to exist.’’ As was neatly stated
by Mr. Justice Cardozo, in Atlantic Coast Line Railroad
Co. v. Florida, 295 U. S. 301, 316, a court of equity is ‘‘to
mould its plastic remedies in adaptation to the instant
need.’”’ As was said by Mr. Justice Stone, in Virginian
Railway Co. v. System Fed. No. 40, 300 U. S. 515, 552,
‘‘Courts of equity may, and frequently do, go much farther
both to give and withhold relief in furtherance of the public
interest than they are accustomed to go when only private
interests are involved.’”*

8 United States v. Crescent Amusement Co., 323 U.S. 173, 185.

‘Noted by Mr. Justice Frankfurter, in Scripps-Howard
Radio Inc. v. Federal Communications Commission, 316 U. S. 4,
15. See also Pennsylvania v. Williams, 294 U. S. 176, 185;
United States v. Dern, 289 U. S. 352, 360; United States V.
— 307 U. S. 183, 194; Inland Steel Co. v. United States,
306 U. S. 153, 156; DiGiovanni v. Camden Fire Insurance Ass’n.,
296 U. S. 64, 73.

31

This is not to say that all parties in interest are not free
to suggest to the court plans of divestment. But all pro-
posals to purchase, all terms and conditions of sale, must
be appraised in respect to relative capacity to effectuate
the objectives of the decree. In Continental Insurance Co.
v. Reading Co., 259 U. 8. 156, 170, the Supreme Court made
“‘some modifications in the plan which were not presented
to the parties or considered”’ in the lower court. Although
this case may be viewed as lying on the frontier of judicial
control, even ordinary practice puts emphasis upon the
court’s ultimate responsibility. Note as typical, the decree
in United States v. E. I. duPont de Nemours € Co., 188 F.
127, inviting all parties to submit plans to the end that the
court may ascertain and determine upon a plan; and
United States v. Great Lakes Towing Co., 208 F. 733, 746,
which seeking to give play to every legitimate interest, pro-
vides that the combination should be so dissolved as to
neutralize the force of the unlawful power.’’

In an action like this, where the ends sought are to secure
conduct in accordance with law, there is no reasonable
place in which to lodge the power of election other than
the court. For, as it was so compellingly put by Mr.
Justice Frankfurter, in Scripps-Howard Radio Inc. v. Fed-
eral Communications Commission, 316 U. 8. 4, 15, ‘‘Courts
no less than administrative bodies are agencies of govern-
ment. Both are instruments for realizing public purposes.”’
And as stated by Mr. Justice Reed, in United States v.
Bausch & Lomb Optical Co., 321 U. S. 707, 726, the court
may ‘‘use quite drastic measures to achieve freedom from _
the influence of the unlawful restraint of trade.’”

* An illuminating, even if formally not authoritative, state-
ent of the matter has been given by Mr. Justice Rutledge,
dissenting in Hartford Empire Co. v. United States, 323 U. S.
386, te a. — injunction pone Fn in = ‘a
proceeding in ty.’ In substance, it is a public prosecution,
with civil rather than criminal sanctions, for vindication of
age, right and for redress and prevention of public injury.
© regard the fashioning of appropriate relief in such a suit

For in all such actions, as Mr. Justice Douglas has said
in Hecht Co. v. Bowles, 321 U. 8. 321, 331, ‘‘the standards
of the public interest not the requirements of private

litigation measure the propriety and need’’ of the relief
to be decreed.

Ill.

The Court Erred in Giving No Weight Whatever to the
Recommendation of the Department of Justice That the
Bid of Otis & Co. B» Accepted.

An analogy to the Holding Company Act is in point
here. That Act, in intent and design, is at once a corporate
securities and an antitrust act.’ Its purpose, within the
specific field of its operation, is to break up monopolistic
control. By its provisions the Securities and Exchange
Commission is empowered to make a judgment on the type
of organization which best effectuates the objectives of the
Act. In its decision the court is required to follow the
recommendations of the S. E. ©. if they have support in
the record. The reasons for this are quite obvious. The
S. E. ©. is an expert body, familiar with trade practices in
its field, without an interest of its own to serve, and with
an obligation to give effect to public policy. It has oppor-
tunities to make extensive investigations on which to ground

as identical with the same function in private litigation is to
disregard at once the former’s statutory origin, its public
character, and the public interest it protects. The equitable
garb of the proceeding therefore does not determine or con-
ceal its true character. Nor does it limit the required relief
merely to what will prevent repetition of the illegal conduct
by which the combination has been formed, its property
acquired, and its dominating position secured.” It is of note
that this statement is quite in accord with that just quoted in
which Mr. Justice Reed set down for the Supreme Court the
rule of equity in antitrust cases.

In North American Co. v. S. E. C., 328 U. S. ——, 66 S. Ct.
785, 797 the court stated: “In fashioning the remedy decreed
by Section 11(b) (1), Congress was following a pattern set
— years ago by decisions applying the Sherman Antitrust

Oe o's

its decisions, it has acquired a wealth of experience in
dealing with varied and unlike situations. ‘It possesses not
only facts, but an understanding of affairs in action upon
which the courts can rely. It alone, among all parties
concerned with or participating in a proceeding can give
intelligent representation to the public interest. In the
domain of antitrust the Department of Justice possesses 1
knowledge and understanding comparable with that of
S. E. C. in respect to corporate organization. In fact the
Department of Justice is the only governmental body that
makes investigations of monopolized industry from the
point of view of the public interest in expanding competi-
tion. All other parties before the court in antitrust suits
instituted by the government represent private interests.
No other agency—and certainly no single court—has the
competence gained from continuous experience with the eco-
nomic problems involved in Sherman Act enforcement.
Of course, the weight which should be given to the rec-
ommendations of the Department of Justice in an antitrust
reorganization is nowhere in the statutes precisely spelled
out. The authority to make recommendations is not con-
ferred by any express provision of the antitrust law. It is
rather a necessary consequence of that law which compels
the Department to make elaborate investigations as part
of the enforcement program, for Congress has placed the
entire responsibility for the preservation of competition
through the enforcement of the Sherman Act on the Depart-
ment of Justice. For it must decide when not to prosecute,
as well as when to prosecute; and every decision it makes
is a judgment concerned to protect the public interest. Its
studied decisions, shaped by searching inquiry and a care-
ful balancing of values, are entitled to serious considera-
tion. That this is so is shown in the opinion of this Court
in Continental Insurance Co. v. Reading Co., supra., wherein
the recommendation of the Attorney General with respect
to an antitrust reorganization was considered and discussed

at length.

In the instant case the District Court asked the Depart-
ment of Justice for its views on all bids and its recommen-
dation as to the bid which would comply with the provisions
of its judgment of May 8, 1944. (R. 2242) Pursuant thereto
the Department of Justice submitted its views in detail
and recommended the approval of the proposal submitted
by Otis & Co. as ‘‘the only offer that meets both of the
essential requirements of the Court’s order, namely, com-
petition in both the manufacturing of sleeping cars and in
the furnishing and servicing of sleeping cars... ’’ (R.
2556-2561) The court then completely ignored that ree-
ommendation. This we submit is reversible error.

IV.

The necessity for the ultimate disposition of the pool of
sleeping cars to an independent company is as obvious as
the necessity that a public utility should not be controlled
by its larger customers. It is, therefore, not a matter of
surprise that the railroad combine should propose that,
after an interim period of three years, The Pullman Com-
pany, stripped of many of its assets, should go to an inde-
pendent. It should be noted, however, that the bid of the
railroad combine offers no assurance that this disposition
to an independent even in a limited form, will be made.
It does, however, allow a railroad to withdraw from the
combine if such disposition is not made. The economic bene-
fits which the railroads might secure through such with-
drawal are negligible. The probability is that at the end
of the interim period the sleeping car pool available to all
the railroads will consist of equipment vastly inferior to
that purchased by the larger railroads. We wili not dis-
cuss that here. We simply point out that although the in-
tention to transfer the sleeping car business to an inde-
pendent is declared, there is no assurance that it would

occur.

The net effect of the decision is, therefore, as follows: a
court of equity has delegated to a group of railroads, whose
domirating influence has been linked with past discrimina-
tions against weaker railroads, the court’s power to select
the purchaser, reserving no control over the carrying out
of such a plan. Ordinarily a court faced with an interim
situation appoints its own trustees who are responsible to
the court and who must report to it. Even this protective
device is ignored in the dispositions made below.

We submit that the court had no power to delegate its
duty in the selection of a purchaser even to a disinterested
group. It could not appoint a committee of prominent bus-
inessmen and tell that committee to select an independent
purchaser, It might have used a master for this purpose
but in such a case it would have passed upon the recom-
mendations of the master. Here at the end of three years,
the railroad combine, if its expression of intent is carried
out, would act as a master in chancery to determine the
disposition of the property without any control by the court.

Only two reasons were advanced by the court for this
extraordinary delegation of power. The first was that The
Pullman Company has obeyed the former order of the court
and brought in a bidder. The court seemed to think that
this deprived it of jurisdiction to consider the matter fur-
ther. We assert the exact contrary. The least the court
could do was to ask the seller to bring in a lawfully quali-
fied bidder; and, since the seller had been adjudged a male-
factor, the burden of proof in respect to the character and
capacity of its candidates was upon it. In any event the
power of the seller should not have gone beyond nomination
and any party nominated by it to take over should before
selection by the court have had its credentials scrutinized
with utmost care. The fact that the bidder had been chosen
by the culprit should have led the court to impose upon
itself the highest degree of care. The history of the combi-
nation between The Pullman Company and the railroads
should have increased the court’s reluctance to approve

such a sale. And finally, the fact that the railroads pro-
posed affirmatively the policy of non-expansion of the Pull-
man fleet made their bid the one which gave the greatest
promise of continuing scarcity of facilities for Pullman
travel.

The second reason given by the court for delegating its
duty to select the independent, that is to operate eventually
the pool of sleeping cars, is stated as follows:

‘The railroads are the natural and obvious people
to do sleeping car business. They are the ones who
own the rails on which the cars are drawn; it is their
locomotives which pull sleeping cars as well as coaches
and freight cars. It is the railroads’ obligation to fur-
nish the sleeping car service. This we think to be a
point of highest importance in this connection. ‘Pull-
man service is like a public utility,’ we have been
told. ‘Would you allow a public utility to be run by
its chief customers?’ The analogy is almost completely
inaccurate. Sleeping car service, like dining car serv-
ice, is part of the essential business of carriage of pas-
sengers in a country where distances between points
are as they are in the United States. The carrier is
obligated to furnish the service or see that it is pro-
vided. Were it not for the historical accident of the
independent development of the sleeping car company
as a concessionaire to furnish the service, one would
expect to find it furnished by the railroad itself.’’ (R.
1195-1196)"

The court’s observation that the independent develop-
ment of the sleeping car business was ‘‘an historical acci-

TIn ing it may be stated that this reason is in conflict
with the court’s assertion that it has no authority to make a
business judgment. The above quotation is nothing more or
less than a business or an economic judgment concerning the
proper operation of the railroads. We do not complain of it
on that ground. As we have reiterated, it is the duty of the
court to make an economic judgment in an antitrust reorgani-
zation. We do say, however, that this particular economic
judgment is in conflict with the record. It is made without
consideration of the evidence; it is historically inacurrate; it
will not provide for competition in the future.

37

dent’”’ is incorrect. Independent control of this pool was
the result of an economic development. (R. 745-758, 1240-
1248, 1292-1422) In its former opinion the court found that
a pool of sleeping cars available to meet the seasonal de-
mands of all railroads was essential to adequate passenger
transportation. It follows, therefrom, that the pool must
be in independent hands if the weaker railroads are to be
served without discrimination. No sound economic judg-
ment would place an essential supply necessary to all rail-
roads in the control of a few larger competitors. If a sup-
ply of any commodity is to be divided equally between A, B,
and C, such an equitable division cannot be expected if A—
or A and B—control it. It is this obvious economic and busi-
ness principle rather than ‘‘an historical accident’’ which
led to the growth of an independent supplier of sleeping
cars to meet seasonal demands.

Nor will the court’s economic judgment that the rail-
roads ‘‘are the natural and obvious people to do the sleep-
ing car business’’ stand up under analysis. It is, of course,
true, as the court points out that the sleeping-car service is
a part of the essential business of carrying passengers and
that the railroad locomotive pulls not only the coaches and
freight, but also the Pullman cars. But the court overlooks
the fact that the sleeping car demand varies widely in dif-
ferent sections of the country from season to season; that
in every section the locomotives have more cars to pull at
some times than at others. The weaker railroads need a
pool of most modern equipment to enable them to compete.
The combination of carriers is not the ‘‘natural and obvious
people’’ to provide that pool. Indeed it is impossible for
them to provide it without outside aid. The elimination of
an independent who offers to replace the entire fleet with
modern equipment impairs rather than aids the railroads
in their function of furnishing sleeping-car service. It is a
rule of competition that the more sleeping-cars there are
for the railroads to pull the greater will be their competi-
tive opportunity. The business judgment of the court that

a combination of large railroads is the natural person to
operate a pool of sleeping-car equipment is contrary to eco-
nomic fact.

Vv.

The Court Erred in Neglecting the Criteria Which It Should
Have Applied in the Selection of the Successful Bidder.

The criteria by which the court should have judged the
several offers are as explicit as the purpose and policy of
the Sherman Act. This means that among the several offers
that one should have been selected which was best calcu-
lated to give effect to the public policy written into the
antitrust laws. As former Chief Justice Hughes has said,
it is a charter of economic freedom."

It is designed not only to remove the restraints which
have prevented competitive expansion in the past but aleo
by affirmative action to create new competitive opportuni-
ties for the future. That consideration must be the court’s
determining principle in its choice among the several offers.
This principle is illustrated by a series of recent cases,
typical of which are Morton Salt Co. v. G. 8S. Suppiger Co.,
314 U. 8S. 488, and B. B. Chemical Co. v. Ellis, et al., 314
U. 8. 495. Applying this principle the following criteria
should have been considered by the court:

(a) The most acceptable offer is the one which most
effectively dissipates the consequences of the past monop-
oly, i.e., the offer which assures the greatest amount of
modern equipment and service available to all railroads.

* Appalachian Coals, Inc. v. United States, 288 U. S. 344, 359;
in Sugar Institute v. United States, 297 U. S. 553, 600, Mr. Chief
Justice Hughes, in speaking for the Court, stated “We have said
that the Sherman Anti-trust Act, as a charter of freedom, has a
generality and adaptability comparable to that found to be
desirable in constitutional provisions.”

(b) A second and equally important test is whether the
new management is one that proposes to stimulate and ex-

pand a nationwide demand for sleeping car travel in com-
petition with air and motor travel.

(c) A third test is the competitive record of the new
management.

Too many antitrust decrees in the past have failed of
their purpose because the former noncompetitive manage-
ment continued in control and followed their traditional
attitude against competitive expanson.

(d) A fourth test is which offer provides for the most
complete separation of the sleeping car company from any
ownership or control, direct or indirect, of Pullman Incor-
porated, or its affiliates, and from all parties which share
with it a community of interest.

These are the affirmative tests, the essential requisites to
enable a court of equity to undo the harm that has been
done. Equally important are the negative tests—the tests
which safeguard competitive expansion in the sleeping car
business for the future.

(f) The acceptable proposal must preserve the right of
every railroad to provide its own equipment, if it finds it
economical to do so, without losing the necessary privilege
to use a pool of equipment or service for needs which the
individual railroad cannot economically provide.

The right of the individual railroads to provide their own
equipment must not be used as a cloak under which a domi-
nant group combines and captures control over the hotel
service, thus stifling the development of a unified national
service to meet seasonal demands. The temptation on the
part of the dominant railroads to keep smaller roads in an
inferior competitive position by this means would be very
great even if they gave lip service to expansion of the pool.
In this case the railroad group making the offer does not

leave its intentions to inference. It boldly commits itself
to a program of stifling the development of the future pool
of sleeping cars, relying on the curious argument that this
is one of the inherent ‘‘rights’’ of rail management witli
which the court must not interfere. By acquiring control
of the hotel service they propose to keep the sleeping car
pool at a low level of development and compel railroads
unable to supply equipment adequate for their peak de-
mands to use cast-off and inferior equipment.

These are the essential criteria by which an acceptable
offer must be judged. In respect to the court’s failure to
apply such criteria as these io the selection of the successful
bidder, we assert that:

1. The Court erred in not considering which offer would
produce (a) the greatest possible supply of sleeping car
equipment in the immediate future and (b) stimulate and
encourage sleeping car travel, thus dissipating the conse-
quences of the restrictive policies of the former monopoly.

The Otis & Co. offer proposed to replace the present fleet
at a cost of $500,000,000. Appellant contended at the trial
that for that reason it was the only proposal which would
establish competition in sleeping car manufacture and dis-
sipate the effects of monopoly which was maintained by
Pullman Incorporated for so many years. ;

As has been pointed out, the reestablishment of condi-
tions which lead to the greatest possible competitive expan-
sion of the sleeping car industry is the fundamental purpose
of this proceeding. The only offer which will immediately
stimulate the maximum competition in the sleeping car in-
dustry is one which provides a continuous flow of large
orders for thousands of cars instead of the driblets which
have starved this industry in the past.

The entire capacity of the industry, which today consists
of only three companies in the United States, probably does
not exceed four sleeping cars a day (R. 2063, 2064). The
Otis & Co. offer proposes to pour into that industry orders

41

for thousands of cars,—a revolutionary expansion, new in
railroad history. (R. 2064-2067) This is an advantage to
everyone, and a penalty to no one. There is no hardship
to any party which must be weighed against the obvious
public interest in favor of the offer of Otis & Co.

Not only would this new demand for sleeping cars stim-
ulate competitive expansion in manufacture; it would also
stimulate the aggressive promotion of travel, and encourage
new industries which cater to expanding travel. Air and
motor travel are on the march. They expect to carry mil-
lions of passengers where before the war they carried
thousands. That competitive threat requires planning for
an aggressive nationwide campaign to sell sleeping car
travel. No such aggressive sales promotion of travel has
ever been attempted before, in spite of the vast sums in-
vested in railroads. Advertising and sales efforts to pro-
mote passenger travel in the past have been pitifully smal!
in comparison with even a single product like Coca-Cola.
The new competition, particularly with airplanes, requires
a different program for the future.

The growth of the automobile industry was the result of
a vast network of independent sales agencies, creating a
market for the product, building new enterprise in every
city in the land. Firms in the industry were refused funds
by bankers who knew that the existing market would not
support the investment. But, for some years a price was
fixed for a car which was lower than the average cost of
production for the year before. Low prices assured profits
through exploiting a larger and larger market which the
bankers did not know existed. The plan of Otis & Co. for
expansion of the pool means that it must follow the same
kind of a program. Its efforts cannot be limited to build-
ing cars. It must in cooperation with the industry, create
the demand to fill those cars. Subsbidiary interests which
promote travel—such as cheap automobile transportation
to mountain resorts and camps from rail heads—at low
cost to take the place of dingy roadside accommoda-

tions, must be encouraged. States will be encouraged to
develop their recreational areas to meet the present un-
touched passenger market. New enterprises may be ex-
pected to spread from an expanding travel industry as rip-
ples spread over a pool.

The States of California, Georgia and Colorado, repre-
senting the paramount public interest in expanding trans-
portation, intervened in this case to no avail. The court
ignored their petitions, though the end purpose of this
action should be to serve the very interests that they rep-
resent.

Thus it appears that a host of interests, tangible and
intangible, are at stake in the court’s approval of an offer
to purchase. The several offers are to be appraised, not
in their formal terms, but by what they give reasonable
assurance of bringing about. The public here is no abstrac-
tion; it translates itself into such concretions as speedy and
comfortable travel, an increasing volume of employment,
an expanding sleeping car business, orders for all the
supply industries, a great impetus to reconversion. To
overlook such values is to forget the very office the anti-
trust laws fulfill in our national economy.

2. In approving the bid of the railroad combine, the court
erred in failing to consider the evidence and the facts of
which it should have taken judicial notice, which demon.
strates (a) the continuous non-competitive policy of the
major railroads in the combination with respect to the
sleeping car business and (b) the control of the railroad
combine is inseparably tied in with the control of the Pull-
man-Standard Car Manufacturing Company.

‘One explanation of the opposition of the major railroa4s
to an expanding sleeping car service is found in the past
history of their opposition to improvements in passenger
service.

43

(a) Anti-competitive policies of the major Western Rail-
roads.

The traditional opposition of major western roads to a
competitive expansion of sleeping car service is demon-
strated in memoranda taken from their files and published
in hearings of Congressional committees concerned with
the so-called Western Agreement. Excerpts from this tes-
timony are set forth in Appendix A hereto. For example,
the following letter from the ‘‘Western Commissioner’’,
an appointee of the Western roads is revealing:

‘* At a meeting of the Western Association of Railway
Executives held on October 20th a resolution was
adopted to the effect that air conditioning for 1934
would be restricted to observation, lounge and dining
ears. Subsequent to that time it developed that one
of the roads in Western Territory would find it neces-
sary to air-condition combination sleeping-observation
cars inasmuch as full observation cars were not oper-
ated on certain of its trains. This action on the part
of that carrier again brought the subject of air con-
ditioning before Western Roads for reconsideration
and at the meeting of the Association held on Dee. 12,
1933, the action previously taken was rescinded and
superseded by a resolution providing that no coaches,
chair cars or tourist cars will be air-conditioned during
1934, Western lines are accordingly recanvassing their
program for 1934 and will submit to me, prior to the
January meeting of the Association, revised programs,
in order that competitive situations may be met for the
1934 Summer season without imposing hardships upon
any of the carriers.’’ (Letter dated January 2, 1934).

In the same letter, the Western Commissioner (responsible
to no public authority) referred to a conference which he
had held on February 21, 1933, with the Missouri Pacific
and the Missouri Kansas & Texas lines, and stated that
the compromise there effected had ‘‘avoided the spreading
of this competitive feature for 1933 to other lines and
obviated the expenditure of a considerable sum of money by
Western carriers in meeting competitive situations.’’

(b) Anti-Competitive policies of the major Eastern Rail-
roads.

The following facts, taken from the record in the instant
case, are significant :

(1) At the time of the trial, the railroads making the
present offer took the position that a pool of sleeping cars
was necessary and that the administration of The Pullman
Company was fair and equitable.

(2) It affirmatively appears that the Pennsylvania and
the New York Central railroads were obtaining secret ad-
vantage from The Pullman Company through absorption
by Pullman of various categories of train operating ex-
penses, such as car cleaning, which other railroads were
compelled to bear. Government Exhibit 525, an historical
memorandum taken from the Pullman files, referred to this
special arrangement favoring the Pennsylvania and New
York Central railroads, as follows:

‘‘It is very definitely a part of the background of these
negotiations, though for manifest reasons not expressed
in words in the resultant contract documents, that with
increasing a of profitableness in the Pullman op-
erations on these roads, Pullman would give to the

Railroad a concealed participation therein, by Pullman
absorbing items of train operating expense that the
Railroads had previously borne.’’ (R. 1982)

These practices resulted in transferring costs of opera-
tion on the Pennsylvania and the New York Central rail-
roads to the smaller roads served by Pullman.

(3) Further evidence of this policy is set forth in Appen-
dix B hereto. For example, Mr. Crawford, President of
The Pullman Company, writes:

‘‘Mr. Carry reports that there is very definite feeling
on the part of the Pennsylvania people that if Pullman
consents to installation by the New York Central of
non-standard accommodations in the new Century

train, the result will be a ‘breakdown’ of the present
standardized system of Pullman accommodations, and
the appearance of a strongly competitive ive-away
practice in that business. From this I wo ther
that the Pennsylvania people think Pullman not
encourage the New York Central in their idea of a

mn special-type set of Century trains.”’ (R.
197

(c) The activities of the major railroads since the decree
im this case was entered show that their former policy of
concerted opposition toward competitive expansion of the
sleeping car business still prevails.

The decree was handed down on May 8, 1944. With the
approaching end of the war a crisis in sleeping car trans-
portation was imminent. The fleet was obsolete. Practi-
cally no new cars were on order. There were no plans to
meet the needs of the roads with a seasonal demand. The
larger passenger-carrying roads seemed content with their
relatively superior position to the smaller roads and did
nothing. The smaller roads whose management was con-
nected with the New York banking interests also did noth-
ing.

On May 12, 1945, Pullman Incorporated—authorized by
the court to dea! with the railroads ‘‘and others’’—made a
proposal to the railroads, the terms of which were roughly
the basis of all the offers before the court. This proposal
met with what Mr. Crawford, President of Pullman Incor-
porated, referred to as ‘‘ prolonged inactivity on the part of
the Special Pullman Committees appointed in the three
Railroad Conference regions.’’ (R. 2261).

Prior to the intervention of Otis & Co., Mr. Clement,
president of the Pennsylvania Railroad Co., had written a
letter outlining a plan for dismemberment of the pool and
its elimination as a future expanding service. (R. 2278)
There were no offers at this time. Therefore, the status
quo was being adequately preserved by the device of delay.

After Otis & Co. came forward with its offer, mere delay

no longer would do. The railroads were faced with the
necessity of taking positive steps to prevent the pool from
expanding. This is dramatically shown by the memoran-
dum of Mr. W. F. Place, vice-president of the New York
Central Company. After pointing out the ultimate advan-
tages of dismembermert of the pool, he writes:

‘While this may be the ultimate situation in the fu-
ture, the railroads appear to be faced with the necessity
of iramediate action as a result of the petition made by
the syndicate of Otis & Co.’’ (R. 2303)

Thus it is clear that it was not the crisis in sleeping car
transportation but the crisis caused by the Otis offer which
compélled the major railroads to take action for the first
time in the two and a half years which had elapsed since
the decree.

The policy of the dominant carriers, adhered to through-
out the last fifteen years, has been to discourage competi-

tive railway service or equipment that might disturb their
dominant position.

CONCLUSION.

The reasons why the decision to sell the sleeping car
business to the railroad combination must be reversed may
he consolidated into two general arguments, one positive
and the other negative.

On the positive side the court was under duty to select
the bid which offered the greatest competive expansion
of passenger transportation. The public interest in pas-
senger transportation is the very core of this proceeding.
This is not a private suit for treble damages. It is an ef-
fort on the part of the Government not only to destroy a
monopoly but to eliminate the results of that monopoly.

The two principal evils against the public interest in pas-
senger transportation which still survive as a consequence
of the former Pullman monopoly are:

47

(1) Sleeping car equipment is scarce and obsolete. There
is not enough to supply all railroads. There is not enough
to expand passenger transportation in undeveloped areas.

(2) The first-rate equipment is concentrated in the hands
of a few roads. The weaker roads can never catch up.
There is no independent agency free from the domination
of major railroads which can give the weaker railroads
the advantages of large orders and mass production.

There is only one remedy for these two surviving evils
created by the former Pullman monopoly. It is to transfer
the sleeping car business to a service which is independent
and which promises the greatest expansion of sleeping car
service available to all.

The plan of the railroad combine approved by the Court
is practically a guarantee that these evils will continue,
that abundant equipment will not be available for weaker
railroads, that the present advantage of the larger rail-
roads will increase.

An aspect of the public interest in passenger transporta-
tion is the necessity, under competitive stimulus, for an ex-
pansion and modernization of the fleet of sleeping cars.
That interest was stifled by the monopoly power of The
Pullman Company to stifle new sources of supply and to
perpetuate obsolete equipment. There is only one remedy :
—to increase the order for cars given to competing manu-
facturers. The Otis bid promises to flood the manufac-
turers with orders for seven thousand new cars. By fur-
nishing a service to the competing equipment which the
railroads may buy for themselves, it promises also to stim-
ulate railroads’ orders.

The bid of the railroad combine is a positive guarantee
that orders on a large scale will not be forthcoming. It
eliminates any independent source of orders for cars ex-
cept from the railroads themselves, most of which cannot
expand new territory with their own equipment because of
fluctuating seasonal] demands,

The court below found fault with none of these bids. It
did not even suggest that an expansion of the facilities for
over-night travel was a factor in appraising the bids. In
polite but unspecific language it commended all of them.
Its decision must be reversed because it washed its hands
of its duty to evaluate them in the light of the purpose
which the antitrust laws and this proceeding were designed
to accomplish.

On the negative side in accepting the bid of the railroad
combine the court has not met the requirements of law.

It cannot be overlooked that the reasons presented by the
court are arguments against, rather than in support of, its
choice :

1. The railroad combine is the nominee of Pullman In-
corporated—that it is named by the party which has been
convicted of monopolistic practices ;

2. The railroad combine, the bidder most closely con-
nected with the railroad and banking interests shown by the
record to have conspired with The Pullman Company, is
‘*the most natural purchaser;’’ that is, if the malefactor
is to give up the business, it must go to its co-conspirators ;

3. The control of the combination which comes into pos-
session is to be in the hands of railroads whose present
dominant position in the passenger-carrying business would
be imperiled by an independent expanding supply of sleep-
ing car equipment available to weaker railroads.

We submit that, under the decisions of this Court, the com-
bination of railroads formed to take over the sleeping car
business operated by The Pullman Company constitutes an
undue restraint upon interstate commerce and a flagrant
violation of the prohibition against monopoly in the first
and second sections of the Sherman Act. In this view, the
judgment must be reversed and the case remanded with
directions as to the criteria which shall guide the court be-
low in passing upon the bids before it. We have set forth

49

those criteria which we believe are essential to the dis-
sipation of the effects of the former monopoly and which
will insure the greatest competitive expansion in the in-
dustry. We respectfully urge their adoption by this Court.

Respectfully submitted,

Tuvurman ARNOLD,
Arne C. Wirrvup,
Attorneys for Otis & Co.,
Appellant.
February 17, 1947.

50

APPENDIX A.

Excerpts from the Testimony of Wendell Berge, Assistant
Attorney General of the United States, Before the Sub-
Committee on War Mobilization, Committee on Mili-
tary Affairs of the Senate of the United States (Kilgore
Committee), Washington, D. C., February 10, 1944,
Pages 1352-1359.

Under the western agreement, certain ‘‘changes in
practice’’ could be initiated by a member road only after
compliance with the procedure contemplated by the agree-
ment. ° * °,

There had been some experimenting with air-condition-
ing of dining cars on the Santa Fe and the Northwestern
railroads in 1931, but the first real air-conditioning west
of St. Louis came in the summer of 1932 with the air-con-
ditioning of dining cars on five trains. On December 15,
two weeks after the Western Agreement became effective,
Mr. Ralph Budd, President of the Chicago, Burlington &
Quincy Railroad, wrote to the Western commissioner that
he thought that dining and club cars would require air-con-
ditioning on his railroad, and that by arriving at an under-
standing that air-conditioning should be limited to such
equipment the railroads could avoid a repetition of what
happened between Chicago and St. Louis where all passen-
ger cars on four trains in each direction had been air-con-
ditioned.

In response to this request to use his efforts to limit air-
conditioning to dining and lounge cars, the Western com-
missioner wrote to Mr. Paul Shoup, Vice Chairman of the
Southern Pacific, on January 9, 1933:

Air conditioning appears to be an innovation which
the public is demanding and I presume the Western
roads will desire to keep abreast of other territories in
its adoption. However, it seems very probable that
if something like a uniform policy could be determined
— a very considerable sum of money might be
sav

51

To which Mr. Shoup replied on January 14, 1933, stating:

The roads in California have an understanding among
themselves that without previous conference they will
not undertake air conditioning of any cars except din-
ing cars. It would appear that this understanding will
control for the year 1933 except as it may possibly
be affected by the conclusion of President Baldwin of
Missouri-Pacific that their line, which has air con-
ditioned its dining cars, would be obliged to air con-
dition lounge cars instead for service between St. Louis
and E] Paso and St. Louis and South Texas.

It is unquestionably desirable that the Western lines
should air condition their trains to the same extent
that their connections in the East have done but in view
of the certainty of light passenger traffic during the
coming summer, which arises from causes that cannot
be substantially combatted by the improved service of
air-conditioned trains, it would seem to be best to post-
pone for another year any extension of air conditioning
except as some lines may find it necessary to air con-
dition more of their dining cars.

? > . . * * . 7 - .

At a meeting of the Executive Committee of the
Western Association of Railway Executives on February
3, 1933, the subject of air conditioning was further dis-
cussed. Following this meeting, Mr. E. Flynn, Vice-Presi-
dent of the Chicago, Burlington & Quincy, hereafter re-
ferred to as the Burlington, wrote the Western Commis-
sioner on February 6, stating that in view of the objections
expressed by practically all of the other roads, the Burling-
ton had decided to forego its plans to install air condition-
ing in the dining and lounge cars of the Burlington’s “ Aris-
tocrat,’’ operating between Chicago and Denver. This letter
continued :

There is much that can be said in support of our pro-
posal, and it is with reluctance that we defer it. \Ve
are all frequently seeing and reading that the rail-
roads must improve their methods and service if they
are to regain, or even hold their traffic as against com-
peting forms of transportation.

52

On the same day, February 6, 1933, the Missouri
Pacific advised the Western Commissioner of its intention
to air condition certain dining and lounge cars in order to
meet competition, and thereafter notified other interested
railroads.

On February 7, the Western Commissioner notified the
Missouri Pacific that its proposal would be considered in
connection with the protest of other railroads.

On February 13, the St. Louis & San Francisco, here-
after referred to as the Frisco, advised the Commissioner
of its air conditioning plans, stating ‘‘that this does not
violate the Agreement made between the executives as to
air cooling certain equipment.’’

However, in view of the protests against the program
of the Missouri Pacific, the Commissioner advised the
Frisco to hold its plans in abeyance, and the Frisco ac-
quiesced.

On February 15, the Western Commissioner had also
asked the Missouri Pacific to withhold action on its air con-
ditioning, which that road agreed to do for two weeks.

On February 21, the Western Commissioner held a meet-
ing with representatives of the Missouri Pacific, the Frisco,
the Missouri, Kansas & Texas, the latter of which was
vigorously protesting and was worried about its own pro-
gram; and a week later he rendered a formal decision, ef-
fective for the year 1933, carrying out a compromise
reached at the February 21st meeting.

The decision provided for a reduced program of air con-
ditioning. The Western Commissioner’s report was dis-
tributed to all parties to the Western Agreement.

Subsequently, the Wabash advised the Commissioner that
it assumed that it had the right to expand its air condition-
ing service, on the ground that it was in competition with a
number of the air-conditioned services permitted by the
decision, but the Commissioner took a different view,
stating:

53

Not contemplated that air conditioning would extend
beyond limits outlined in my report. Were you to in-
stall air-conditioned diners in conjunction with the
Union Pacific service now, it would jeopardize present
situation and very likely result in other lines follow-
ing suit. Union Pacific agreed would not install any
new service as result of this agreement. I hope, there-
fore, you can hold in abeyance for this year any plans
you have in this connection.

The Receiver of the Wabash refused to accede to this
request, and proceeded with some air conditioning.

The Western Commissioner reported periodically on these
matters to the Committee of Directors. In a letter of Jan-
uary 2, 1934, he advised them of the activities of the rail-
roads against the spread of air conditioning in 1934, stating:

At a meeting of the Western Association of Railway
Executives held on October 20, a resolution was adopted
to the effect that air conditioning for 1934 would be
restricted to observation, lounge and dining cars. Sub-
sequent to that time it developed that one of the roads
in Western Territory would find it necessary to air-
condition combination sleeping-observation cars, inas-
much as full observation cars were not operated on
certain of its trains. This action on the part of that
carrier again brought the subject of air conditioning
before Western Roads for reconsideration and at the
meeting of the association held on December 12, 1933,
the action previously taken was rescinded and super-
seded by a resolution providing that no coaches, chair
cars, or tourist cars will be air-conditioned during 1934.
Western lines are accordingly recanvassing their pro-
gram for 1934 and will submit to me, prior to the Jan-
uary meeting of the association, revised programs in
order that competitive situations may be met for the
1934 summer season without imposing hardships upon
any of the carriers.

In the same letter, the Western Commissioner referred
to the conference on February 21, 1933, which he had held

54

with the Missouri Pacific and the Missouri, Kansas & Texas
lines, and stated that the compromise there effected had
‘avoided the spreading of this competitive feature for 1933
to other lines and obviated the expenditure of a consider-
able sum of money by western carriers in meeting competi-
tive situations.’’

On February 1, 1934, the western commissioner reported
by letter to the committee of directors on the January
5, 1934 meeting of the Western Association of Railway
Executives, at which the railroads’ 1934 programs had been
presented, stating that about 300 cars would be air condi-
tioned and that ‘‘as a general practice air conditioning
will not be extended to sleeping-car equipment this year.’’

In April 1934, the commissioner ruled that with the ex-
ception of cars chartered on a pier diem basis, no railroad
could operate any air conditioned equipment unless it was
cleared by the Commissioner.

On May 4, 1934, the Southern Pacific complained to the
western commissioner that the Rock Island was making
ready to run an air-conditioned cafe-sleeping car from
Dallas to Houston after it had arrived from Minneapolis,
and that it was afraid the effect would be to induce other
roads to leave air-conditioning equipment functioning be-
tween Fort Worth and Houston instead of disconnecting it
upon the arrival of the cars at Fort Worth.

The western commissioner intervened in this situation,
but while he did not forbid the Rock Island to continue the
protested action, in part because of the cooling of a car on
the Southern Pacific’s ‘‘Sunbeam’’ he did advise the South-
ern Pacific, on May 19, that ‘‘other Dallas-Houston lines
will not enlarge their program.”’

. ” . . . * . . >. . *

In a special situation involving a single car, the

Western Association of Railway Executives, on May 11,
1934, granted the Union Pacific an exception from what they

;
:

55

regarded as the agreement resulting from the submission of
the 1934 programs. The spirit of the railroads in strictly

adhering to their plan to avoid competition is indicated by
the resolution adopted:

Resolved, that in view of the written commitment made
by the Union Pacific prior to the adoption of air-condi-
tioning program for Western Railroads for the year
1934, they be relieved from observance of the agree-
ment in the specific instance cited, with the understand-
ing that such action shall not establish a precedent to
be followed in the future.

On January 6, 1934, the Illinois Central, the Wabash, and
the Chicago and Eastern-Illinois protested to the Western
Commissioner against the Chicago & Alton’s plan to air-
condition sleeping cars between Chicago and St. Louis;
and on January 22, the three protesting roads sent the
Commissioner a written statement supporting the proposal
that they should not be compelled by the Alton’s competi-
tion to install air conditioning. On March 21, 1934, the
Commissioner decided against the Alton; he ruled that it
could move to St. Louis the air-conditioned cars delivered
to it by the Baltimore & Ohio, but without putting the air-
conditioning machinery into operation. On March 26 the
Alton protested the ruling, and on April 4, the Commis-
sioner announced his refusal to change his previous deci-
sion. On June 23, the Alton advised the Commissioner that
it would keep the air conditioning in operation on the Bal-
timore & Ohio trains.

After 1934, the restrictions on the installation of air-
conditioned equipment were relaxed. However, until March
29, 1937, the railroads were required to give 60 days’ notice
to the Chairman of the Western Association of Railway Ex-
ecutives before placing air-conditioned equipment in opera-
tion.

In response to a resolution adopted by the Western
Association of Railway Executives on October 4, 1934, the

Western Commissioner, acting as Chairman of the Western

Association of Railway Executives, appointed a committee

on October 24, 1934 to discuss with the Pullman Company

the creation of a pool of air-conditioned Pullman equipment.

The substance of the terms and conditions agreed upon by

the railroads as the basis for the operation of the Pullman

pool was reduced to writing by the Committee on November

30, 1934. Among other terms, it was proposed that any

air-conditioned pool cars, not required by the pool members
to which they were assigned, might be utilized by the Pull-
man Company on other Western lines which were members
of the pool, but not on the lines of non-members in the
West, although the cars might be used in the East or the
South. And carrying further the same objective, it was
proposed that air-conditioned cars assigned to Hastern
roads should not be ased by the Pullman Company on the
lines of non-member Western roads, except where the East-
ern cars were in the West to replace Western cars which
had gone Kast.

It was not difficult for the Western Association of Rail-
way Executives to persuade the Pullman Company to co-
operate in controlling the air-conditioning of Pullman cars.
The Pullman Company was prepared to make air-condi-
tioned equipment available to the railroads with which it
had contracts, provided the railroads entered into supple-
mentary agreements for the quick amortization of Pull-
man’s investment in air-conditioning Pullman’s equipment.
The ability of the Pullman Company through its monopolis-
tic power to carry out this policy of shifting most of the
cost of air-conditioning Pullman equipment in large mea-
sure to the contracting railroads undoubtedly had the effect
of deterring the railroads from asking for as much air-

conditioned equipment as they would otherwise have used.

57

Statement of Senator Wheeler, Chairman, before the
Committee on Interstate Commerce, United States Senate,
78th Cong., Ist Sess., on May 25, 1943, at p. 239 of hearings
on S, 942, Regulation of Rate Bureaus.

“I must confess that this agreement was a shock to
me because it evidences quite clearly the control the
powerful nonrailroad interests in the East have over
transportation rates in the West. We have heard a
great deal in recent months about discrimination
against the West and the South. It seems to me this
agreement, which has been in existence since 1932, may
well be the instrument of control by which these dis-
criminations have been perpetuated. ’’

Statement of W. A. Harriman before the Committee on
Interstate Commerce, United States Senate, 78th Cong., 1st
Sess., on June 23, 1943, at ~. 975, of hearings on S. 942,
Regulation of Rates.

‘Looking back over the operation of the Commissioner
plan, I am satisfied that it has served a valuable part
in preparing the western railroads for their necessary
and efficient part in the present war. The plan has
facilitated the impartial consideration of many pro-
posals, the protection of the railroads from impositions
of unscrupulous or grasping shippers, from the ex-
cesses of zeal or inexperience of their own traffic em-
ployees. If this is a conspiracy, then the railroads of
this country need bigger and better conspiracies. ”’

APPENDIX B.

The Evidence Introduced by the Government in the
Pullman Case Reveals the Following:

1. It appears that down through the years Pullman has
favored P. R. R. and N. Y. C. over smaller roads by giving
the former a larger porportionate share in Pullman revenue
and by absorbing for P. R. R. and N. Y. C. various categor-
ies of train-operating expenses, such as car cleaning, which
Pullman required all other railroads to absorb. As stated
in Ex. G. 525, ‘‘It is very definitely a part of the back-
ground of these negotiations, though for manifest reasons
not expressed in words in the resultant contract documents
that with increasing degree of profitableness in the Pull-
man operations on these roads, Pullman would give to the
railroad a concealed participation therein, by Pullman ab-
sorbing items of train-operating expenses that the railroads
had previously borne’’ and which all other railroads were
still compelled to bear. (R. 1982) In view of Pullnan’s
practice of averaging operating expenses over all cars
operated, the practice just destribed resulted in trans-
ferring costs of operation on P. R. R. and N. Y. C. to the
smaller roads in the Pullman system.

Vice-President Deasy of the P. R. R. testified for Pullman
that he believed Pullman relationships to P. R. R. to have
been fair and equitable.

II. On the question of interlocking directors, Pullman
down through the years has been solicitous to maintain a
strong position on the board of P. R. R. and N. Y. C.

It appears that this consideration alone, prompted Pull-
man in 1924 to reorganize the manufacturing department
into a separate subsidiary. Pullman wrote to Vanderbilt
(Ex. G. 501) ‘‘In regard to the question of directorship
which you raised, the New York Central is really the only
point where there would be any disadvantage because of
yourself and Mr. Baker’s being on our board and I believe

7

a way will be found; in fact, a way must be found, as it
would be very unfortunate for the Pullman Company if you
and Mr. Baker were to desert it. While the Clayton Act
would suffice as an excuse, it would not restore the senti-
ment and the vital influence that emanates from the di-
rectory.’’ (R. 1979)

Pullman wired Baker (Ex. G. 504) ‘‘Understand N. Y. C.
are buying cars. They have not asked Pullman Company
for figures. STOP. If you have chance to say good word
for us without least embarrassment to yourself will appre-
ciate it.’’ (R. 1980)

Whenever Pullman encountered contract difficulties with
P. R. R. or N. Y. C. negotiators, Crawford customarily re-
ferred deadlocks to Whitney, Mellon, and McLennan.

Whenever N. Y. C. and P. R. R. operating people were

intransigent in negotiations Crawford would appeal to
Whitney or Mellon. See Ex. G. 106, Crawford’s letter to
Whitney. (R. 1953)
F In Ex. G. 146 Crawford wires McLennan, ‘‘George tells
( me that the meeting today was harmonious and reflected
) very substantial progress toward working understanding
between the two interests concerned STOP * * * He sug-
gested that in order to close these points out without a lot
of argument through committees the three presidents in-
volved might very well meet and work out agreement on a
list of points in contention which he is preparing and will
send on to me for study in advance of meeting. * * * ’’ (R.
1956)

Im Ex. G. 110, Mellon, responding to numerous letters
from Crawford soliciting his assistance, reports, ‘I kave
had a most satisfactory conversation with Mr. Hankins and
Mr. Scheaffer in the Pennsylvania Railroad offices in Phila-
delphia.’’ (R. 1955)

In Ex. G. 115 Crawford writes, ‘‘Mr. R. K. Mellon called
me on the ’phone this morning to say that he has had an-
other talk with Mr. Clements about the Pennsylvania oper-
ating contract matter.’’ (R. 1956)

60

Pullman also had occasion to rely on Whitney and Mellon
to prevent P. R. R. or N. Y. C. buying Budd cars. In Ex.
G 416 Sturgis wires Crawford, ‘‘With no desire on our
part to mar your well-deserved holiday, Mr. Whitney and
I think you should know that we are very much worried
about the fact that Williamson seems completely sold on
Budd-built, stainless steel cars for a new Century won >
Whitney is leaving August 3rd for a holiday. Is there any
chance we could get this matter threshed out before then?”’
(R. 1975)

III. On the general proposition that P. P. R. and N. Y.C.
were really co-conspirators with Pullman in retarding the
introduction of light-weight equipment generally, and in
restraining the introduction of Budd equipment entirely,
the Government introduced much evidence showing that P.
R. R. and N. Y. C. mutually agreed to introduce as little
lightweight equipment as possible, and precisely the same
amount, and at precisely the same time.

Crawford writes Ex. G. 418, ‘‘Mr. Carry reports that
there is very definite feeling on the part of the Pennsy]l-
vania people that if Pullman consents to installation by the
New York Central of non-standard accommodations in the
new Century train, the result will be a ‘breakdown’ of
the present standardized system of Pullman accommoda-
tions, and the appearance of a strongly competitive give-
away practice in that business. From this I would gather
that the Pennsylvania people think Pullman should not en-
covrage the New York Central in their idea of tailor-made,
special-type set of Century trains.’’ (R. 1977)

In Ex. G. 419 Carry writes, ‘‘Messrs. Deasy and Hankins
were in town yesterday for Marian Newcomet’s funeral and
I had quite a chat with both of them. I saw Hankins before
I did Deasy and he seemed to be amused at the jam they
have gotten into as a result of putting the new cars into
secondary services where they do not intend to keep them.
Apparently at a recent staff meeting this subject was fully

61

aired and Mr. Clement instructed Mr. Franklin to get out
of any agreement or understanding he had with the New
York Central. As near as I can tell from their conversation,
they will refrain from putting the new equipment on
‘Broadway’ until the New York Central is ready to start
the new ‘Century,’ but they intend to go ahead with the
‘Liberty’ and the ‘American’ immediately.’’ (R. 1977)

In Ex. G. 422 Holden writes to Crawford, ‘‘I talked to
Mr. Williamson of the New York Central this afternoon
concerning the 50 new light weight sleeping cars that his
people have asked us to provide for their services and find
that he seems to have considerable question in his mind as
to the economic justification of going ahead with addi-
tional cars at this time. He stated that the only reason his
people made the request on us was because he understood
we were definitely going ahead with a somewhat similar
program for the Pennsylvania but that his opinion was the
proper thing to do is to hold up both programs.

“Mr. Williamson also stated that the joint committee of
officers and directors recently formed with the Pennsyl-
vania, including among others, himself, Mr. Clement, Mr.
Whitney and Mr. Gates were to have a meeting on either
October 4th or 5th to discuss various questions related to
competitive waste between the two roads and that he would
bring this question of new equipment up before the meeting
with definite recommendation that no additional cars be re-
quested from the Pullman Company over and above 52 cars
that have already been placed on each Road. He asked that
I come back to see him after this meeting takes place to
discuss the matter further.”’ (R. 1978, 1979)

The result was that as of March 31, 1941 (Stipulation,
page 117) P. R. R. and N. Y. C. each had precisely 142
light-weight cars. (R. 1414)

APPENDIX C.

The Interlocking Relationships of the Directors of Pull-
man Incorporated as Shown of Record at the Hearing
on Petition for Approval of Offer to Purchase The Pull-
man Company.’

Director George Whitney is president and director of
J. P. Morgan & Co., Inc. He is also a director of the New
York Centrai,

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0183%3A10. Public record. Not legal advice.