# Appendix — United States v. Grinnell Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0279%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1966 - **Citation:** 384 U.S. 563 ## Text SUPREME COURT OF THE UNITED STATES OcroBeR 'TeRM, 1965 No. 73 Unitep Srates, Appellant, vs. GRINNELL CORPORATION, ET AL. No. 74 GRINNELL Corporation, Appellant, vs. Unrtep STATES No. 75 AMERICAN District TELEGRAPH Company, Appellant, vs. Unitep STATES No. 76 Hotmes Exectric Protective Company, Appellant, vs. UnitTep STATES No. 77 Automatic Fire ALARM CoMPANY OF DeLawarg, Appellant, vs. UNITED STATES APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND Volume I li INDEX INDEX Original Print Record from the United States District Court for the Dis- trict of Rhode Island Docket entries, Civil Action No. 2785............... 1 1 Ce re is Be aa cee cab 26 30 Designation of District Judge for service in another District within his Circuit—Honorable George C. SN oar oe oa Wan ee ids Ocean eceus 38 Answer of Defendant, Grinnell Corporation........ 39 41 Answer of Defendant, American District Telegraph SN sree dns CASA ears each SG ew disve es Ob 51 Plaintiffs’ motion for production of documents (ad- dressed to Defendant Grinnell Corporation (ex- cerpts) ) Stipulation, dated September 28 and 29, 1961 (ex- WI os ea ioe nA os ER be nd wed ba ee en es 75 61 Plaintiff's answer to interrogatories propounded by the defendants (excerpts)....................... 79 63 Memorandum in support of plaintiff’s objections to certain interrogatories propounded by defendants American District Telegraph Company, Automatic Fire Alarm Company of Delaware and Holmes Pro- — tective Company (excerpts)..................... 94 67 Memorandum of Sweeney, Ch. J., dated January 23, ark Vis wea wend Oia fa eK ne es Kev ee 98 68 Letter from Sweeney, Ch. J., to Noel E. Story, De- partment of Justice, dated March 6, 1962, notifying that he has withdrawn from case, etc............. 108 77 Revocation of designation of District Judge for service in another District within his Cireuit............. 109 78 Designation of District Judge for service in another District within his Cireuit—Honorable Charles E. WMI hee eh Sie e eveeede dace aveapies 110 79 Transcript of hearing on motion to settle form of order for production of documents, ete., held in USDC for the District of Massachusetts, Boston, April 3, 1962 (excerpts)........................ 112 80 Transcript of hearing on plaintiff’s motion in regard to the suspension of depositions, etc., held in USDC for the District of Massachusetts, Boston, January MND oo os wee ving so ba N owe F pre 2 123 83 Order of Wyzanski, D.J., dated January 10, 1963 (ex- I i kid op hd Wie 5 05 6 ding es Se wisi vie pak e eso 140 90 Letter from Wyzanski, J. to Matthew W. Goring, dated January 23, 1963......................... 142 91 Transcript of hearing held in USDC for the District of Massachusetts, Boston, March 13, 1963 (ex- NN as cis ees hha hee cee ineeees 143 92 INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued Defendants, ADT, Holmes Electric Protective Com- pany and AFA request for admissions.......... Appendix A—Manual entitled “Physical Protec- tion, A GSA Handbook”, dated May 20, 1960 COINS io. Vn sie ciara ae ha hn ae ees Plaintiff's answers to defendants’ request for admis- OU 65 ocho ged ood ck ee eh as Letter from Wyzanski, J. to all counsel, dated Sep- SOE Dy ROP > © 4 vf nicks opine ck) Kk Eee choses Letter from Frank A. Fritz to Wyzanski, J., dated Sopstemmbor 10, TOGB . .a ain seie Gb oko wtcnnnds one . Letter from Robert L. Wright by Noel E. Story to Wyzanski, J., dated September 20, 1963.......... Letter from Wyzanski, J., to all counsel, dated Sep- ge ARES Poeun ie He eager Letter from Frank A. Fritz to Wyzanski, J., dated Movenmnet 20. MOOG & ss:c0iie esis sine dends Sapass>s Letter from William H. Orrick, Jr. (by Noel E. Story) to Wyzanski, Jr., dated November 18, 1963........ Letter from Wyzanski, J. to all counsel, dated Novem- WORE SIE iaic cee ci raseaeacdstedtetakens Transeript of pre-trial conference held in USDC for the District of Massachusetts, Boston, December 18, Es eek coisa can be Bi ae oh oe ee MONE oon Fon sk eK 5 Ks ENS SUES On Order of Wyzanski, J., dated December 18, 1963. . Plaintiff's proposed form of judgment and proposed form of judgment after trial, filed February 14, WON sisi a soc 5 Gs ORFS ES Sale oA cn Defendants’ proposed changes in plaintiff’s proposed | ee See er nani Grinnell Corporation’s brief on relief.............. Brief of Defendant Alarm Companies with respect to OU AS, a ccesus Shin op eee hea sed cadckaabainn Letter from Wyzanski, J. to all counsel, dated May 4, WO Si askc dosh Secs acs aR cas Transcript of pre-trial conference held in USDC for the District of Massachusetts, Boston, May 28, 1964 PUN a6 8G A Ba 8 din eB Tk AS Notice of motion of defendants Grinnell Corporation, ADT, Holmes Electric Protective Company and AFA re vacating order setting cause for trial, ete. Affidavit of Denis G. McInerney............... iv INDEX Record from the United States District Court for the Dis- triet of Rhode Island—Continued Notice of motion of defendants Grinnell Corporation, ADT, Holmes Electric Protective Company and AFA re vacating order setting cause for trial, ete. —Continued Original Affidavit of Frank A. Fritz................... 368 Exhibit A—Transcript of pre-trial confer- ence held in USDC for the District of Massachusetts, Boston, December 18, 1963 (copy) (omitted in printing)........... 373a Exhibit B—Order of Wyzanski, J., dated December 18, 1963 (copy) (omitted in WIE kis Coss aie cite esa 373b Exhibit C—Transcript of pre-trial confer- P ence held in USDC for the District of : Massachusetts, Boston, May 28, 1964 (copy) (omitted in printing)........... 373¢ Letter from Robert L. Wright by Noel E. Story to Wyzanski, J., dated June 2, 1964............... 375 Transcript of hearing on motions held in USDC for the District of Massachusetts, Boston, June 3, 1964 377 Ta a VS lee ay rain ai aS 377 Order denying motion of defendants to limit the relief, ete., dated June 4, 1964......................... 400 Letier from Wyzanski, J. to all counsel, dated June 4, a ea oaks poe ay CaS eee Sees 401 Notice of motion of defendants, ADT, Holmes Elec- tric Protective Company and AFA, for an order of disqualification of the Honorable Charles E. Wy- WO oes he ka ak Mika ie eters es 402 Affidavit of Ernest Kobelt, Roy W. Cooper and Lawrence W. Thomason..................... 404 Exhibit A—Order of Wyzanski, J., dated December 18, 1963 (copy) (omitted in CE ee Pe eB ee 5 Ceo lee 44S 410a Exhibit B—Transcript of pre-trial conference held in USDC for the District of Massa- chusetts, Boston, May 28, 1964 (copy) (omitted in printing) ................. 410b Exhibit C—Transeript of hearing on motions held in USDC for the District of Massa- chusetts, Boston, June 3, 1964 (copy) (omitted in printing)................... 410¢ Petition and affidavit of Clarence H. Rison......... 412 Transcript of hearing on motions held in USDC for the District of Massachusetts, Boston, June 9, 1964 420 0 ER SS Bie eo es ee 420 292 292 293 299 299 INDEX v Record from the United States District Court for the Dis- trict of Rhode Island—Continued Original Print Request to admit by Defendant Grinnell Corporation 422 300 Schedule of Patents showing filing date, issue date, number of pertinent claims and owner........ 424 302 Subpoena served on behalf of Cahill, Gordon, Reindel & Ohl, attorneys for Defendant Grinnell Corpora- Css So a i eee ee ek ea ees es 433 307 Mannie = Bi ons oie ee it ee ee hae Re 434 309 Stipulations No. 6, No. 8 and No. 9, dated June 11, WO 5 Sk Bae edhe be ls ee 435 310 Chart of “Subscribers and Revenue-Electrical Protective Service Other Than Accredited Cen- tral Station Service 1957-1962 Source—Depo- aN oe Be eee EES Ske cae ee Co a 439 313 Chart of “Central Station Burglar Alarm Service Subscribers Certificated by Underwriters’ Lab- oratories, Inc. 1957-1961 Source—Depositions” 444 315 Memorandum of Woodbury, Ch. J., dated June 11, 1964 ......... A 2100 1425 INDEX Record from the United States District Court for the Dis- trict of Rhode Island —Continued GoveRNMENT’s Exuisits—Continued - Original No. 88—Memorandum of Grinnell Secretary and Counsel R. T, Clapp entitled, Memorandum of Conference at Mr. Ward’s Office, American Dis- trict Telegraph Company, June 9, 1948, dated No. 89—Agreement dated December 29, 1952, be- tween ADT and Grinnell : No. 92—Letter from ADT President E. Gaston to Grinnell Treasurer C. H. Rison dated June 19, No. 93—Letter from ADT President E. Gaston to AFA President T. P. Drew dated January 13, No. 94—Letter from AFA President T. P. Drew to Grinnell President J. D. Fleming dated Feb- No. 95—Letter from ADT President E. Gaston to Grinnell President J. D. Fleming dated Feb- No. 96—Memorandum from ADT Controller C. G. Eicker to Vice President J. A. MacDonald, cap- tioned—Rate Development—dated June 29, 1956. No. 97—Letter from AFA Sales Manager J. J. Heavey to Davis, Dorland & Co., New York, No. 98—Letter from ADT Auditor J. A. Mae- Donald to AFA President T. P. Drew, cap- tioned—Solicitation of Industrial Process Ser- vice in Conjunction with Soles of 8.8. & W.F. Service—dated June 10, 1948 No. 104—Letter from ADT Assistant Secretary E. A. Gaston to AFA President T. P. Drew, eaptioned—Albert H. Voight, Inc., Philadelphia, Pa.—dated July 7, 1961 No. 107—Letter from Grinnell Secretary R. T. Clapp to AFA President T. P. Drew dated May. No. i111—Agreement dated ecember 24, 1953 be- tween ADT, AFA and Grinnell No. 112— Letter from T. P. Drew, President of AFA to F. J. Lehner, L. W. Thomason, F. Dur- ward Clase and A. G. Seddon, dated December 21, 1954 re transmittal of Letter Agreement dated December 15, 1954 between ADT, AFA NG SN is 10” win. oo ech ee cea 2200 xvi INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GovernMENT’s Exuisits—Continued Original No. 128—Agreement dated March 29, 1954 be- tween ADT, Grinnell and the Rhode Island Electric Protective Company 2205 No. 129—Agreement dated March 29, 1954 be- tween ADT and the Rhode Island Electric Pro- tective Company. 2212 No. 130—Memorandum from ADT Vice President J. A. MacDonald to ADT Secretary John Han- non dated December 10, 1953 2218 No. 131—Letter from ADT Vice President A. E. Smith to President H. G. Clark of the Rhode Island Electrie Protective Company dated De- No. 132—-Letter from Rhode Island Electric Pro- - tective Company President H. G. Clark to ADT, dated February 5, 1963 No. 133—Letter from Rhode Island Electric Pro- tective Counpany President H. G. Clark to Grin- nell, dated January 19, 1961 No. 139—Memorandum from ADT District Sales E. J. Heisley to ADT General Sales Manager L. J. O’Brien, captioned, Competition- Washington District, dated September 14, 1956 No. 140—Memorandum from ADT Superintend- ent of Field Service R. T. Warner to ADT General Commercial Manager A. E. Smith, captioned, Competition-Milwaukee, dated May No. 141—Memorandum from ADT District Sales Manager W. K. Francis to ADT General Sales Manager L. J. O’Brien, captioned, Competition- Paramount Pictures Corporation, Los Angeles, California, dated August 10, 1956 No. 142—Memorandum from ADT District Sales Manager W. K. Francis to ADT General Sales Manager L. J. O’Brien, captioned, Paramount Pictures Corporation, Los Angeles, California, dated May 9, 1957..... BE NTR EY No. 143—Memorandum from ADT Assistant to General Sales Manager W. W. Dooley entitled, Report on Survey of Sales Potential, San Jose Peninsula, (Not dated) No. 144—Memorandum from ADT District Man- agers to ADT General Managers, captioned, Competition-Peoria, Illinois, dated December 12, INDEX xvii Record from the United States District Court for the Dis- trict of Rhode Island—Continued GovernMENT’s Exuisits—Continued Original Print No. 145—Handwritten confidential memoranda from ADT Representative W. Rohlfing cap- tioned Call’s Police Signal, Chelsea, Massachu- setts, dated July 16, 1956................... 2238 1559 No. 146—Memorandum from ADT District Sales R. T. Warner to ADT Vice President A. E. Smith, captioned, Call’s Police Signal Corporation, Chelsea, Mass., dated September OA, BOG i BS A SE. 2242 8=61561 No. 147—Memorandum (unsigned) to ADT Dis- trict Sales Manager E. Turnbull, captioned, Competition; Merchants Police, Milwaukee, Wisconsin, dated July 30, 1955.............. 2243 4 8= 1562 No. 148—Memorandum from ADT Sales Repre- sentative R. P. Lucy to ADT District Sales Manager W. K. Francis, captioned Competition- Bay Burglar Alarm Company, dated March 28, No. 149—Memorandum from ADT District Sales Manager W. K. Francis to ADT Commercial Superintendent E. B. White, captioned General Plant Protection Company, Los Angeles, Cali- fornia, dated May 15, 1952.................. 2246 1565 No. 150—Memorandum from ADT District Man- agers to ADT General Managers, captioned Proposed Central Station-Anaheim (Orange County) California, dated July 26, 1960..... 2247 1567 No. 151—Memorandum from ADT General Su- perintendent, Operating Department to ADT Vice President J. A. MacDonald, captioned, Proposed Central Station, San Jose, California, dated March 24, 1959 . .................. 2250 1570 No. 152—Memorandum from ADT General Su- perintendent of Plant W. Hable to ADT Gen- eral Sales Manager L. J. O’Brien, captioned, Proposed Central Station-San Jose, California, dated March 20, 1959....................... 2251 1571 No. 153—Memorandum from ADT District Man- agers to ADT General Managers, captioned Pro- posed Central Station-San Diego, California, - Gated March 4 1000. 22.25. eres 2252 1572 No. 154—Memorandum from ADT Vice President A. E. Smith to ADT Vice President J. A. Mac- Donald dated August 3, 1960. . 2254 1575 XViii INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GOVERNMENT’s Exxisits—Continued No. 155—Memorandum from ADT President E. Gaston to ADT Vice President J. A. Mac- Donald, captioned, Proposed New Central Sta- tion-San Fernando Valley-Los Angeles, Cali- fornia, dated July 12,1961.................. No. 156—Memorandum from ADT Vice President A. E. Smith to ADT Vice President J.A. Mac- Donald, captioned Proposed New Central Sta- tion, Huntington Park, Los Angeles, dated June Dy I ho ky A OS ak en AS Das No. 157—Memorandum from ADT District Man- agers to ADT General Managers, captioned Pro- posed Central Station, New Brunswick, New Jersey, dated July 13, 1959 (excerpts)....... No. 158—Memorandum from ADT Exeeutive Ac- count Representative F. J. Concannon to ADT General Sales Manager L. J. O’Brien, cap- tioned, New Central Station, Nassau County, Long Island City, N.Y., dated August 17, 1955 No. 159—Memorandum from ADT Vice President J. A. MacDonald to ADT General Commercial Manager A. E. Smith, captioned, Possible Estab- lishment of Central Station at Jamaica, Long Isla:.d, dated April 14, 1952................. No. 160—Memorandum from ADT District Man- agers to ADT General Managers, captioned, Proposed New Central Station, San Fernando Valley, dated July 26,1960.................. No. 161—Memorandum from ADT District Plant Superintendent J. F. Burns to W. Hable, cap- tioned, Proposed sub-divisions of existing Cen- tral Stations-New York District, dated Decem- Wee Br eis Bik I soe oie lss.: No. 163—Memorandum from ADT Director of Diversification & Expansion J. J. Stephens to ADT Vice President A, E. Smith, captioned, Sales Potential, Westchester County, New York, dated December 20, 1957.................... No. 164—Memorandum from ADT Vice President to ADT President Gaston, captioned, Charlotte, North Carolina, dated July 6,1960.........., No. 167—Memorandum from ADT First Vice President J. A. MacDonald to ADT Controller C. G. Hicker, captioned, Rate Development, Gated duly 12, 1066: oo .u ic. cece ceeess No. 168—Memorandum by ADT Vice President J. A. MacDonald, captioned, Rate Adjustment 1959, dated November 10, 1959.............. Original 2264 2268 Print 1576 1578 1581 1583 1587 1592 1594 1599 1602 1605 INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GovERNMENT’s ExuisiTs—Continued Original Print No. 169—Memorandum from ADT First Vice President J. A. MacDonald to ADT Vice Presi- dent A. E. Smith, captioned, Minimum Basic No. 170—Memorandum from ADT President E. Gaston to ADT First Vice President J. A. Mac- Donald, captioned Rate Development, dated Jaly. 31, TG: FS BERG AAS No. 171—Memorandum H. C. Ward, entitled, Holmes Electric Protec- tive Company of Philadelphia, Proposed 1957 Electric Protective Service Rate Revision, dated February 18, 1957 (exeerpts)................ 2291 1612 No. 172—Memorandum by Holmes President H. C. Ward, entitled, Revision of Electric Pro- tective Service Rates Proposed for Adoption for Mercantile and Residence Services, May 1, 1953, and for Financial Institution Service June 1, 1953, dated February 25, 1953............. 2296 61617 No. 173—Memorandum for File (unsigned) cap- tioned, Projected Cash Resources and their Ap- plication, Five year Period ending December 31, SOD ib FREER ics BO eC i a Re Pee 2297 1619 No. 174—Memorandum from ADT District Sales Manager E. Turnbull to ADT General Sales Manager L. J. O’Brien, captioned Sales Produc- tion-Integrity of Service Charges, dated Sep- tember 17, 1957 Exhibit Volume IIT No. 175—Contract Data Reports and Competition Reports for Albany, New York (excerpts).... 2304 1629 No. 176—Contract Data Reports for Atlanta, Georgia (excerpts)...........6.606 ccc ce eee 2316 1635 No. 177—Contract Data Reports and Competition Reports for Boston, Massachusetts (excerpts)... 2323 1642 No. 178—Contract Data Reports for Buffalo, New Weegee COMI 5 oak in 0s sea oe Woes ee Goo has 2350 1665 No. 179—Contract Data Reports and Competition Reports for Chicago, Illinois (excerpts)...... 2368 1677 No. 180—Contract Data Reports and Competition Reports for Cincinnati, Ohio (excerpts) .... 2398 1700 No. 181—Contract Data Reports and Competition Reports for Cleveland, Ohio (excerpts) xx INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GOVERNMENT'S Exuisits—Continued Original = Print No. 152—Contract Data Reports and Competition Reports for Dallas, Texas (excerpts)......... 2445 1738 No. 183—Contract Data Reports and Competition Reports for Dayton, Ohio (excerpts)......... 2470 1755 No. 184—Contract Data Reports and Competition Reports for Denver, Colorado (excerpts)...... 2486 1766 No. 185—Contract Data Reports and Competition Reports for Detroit, Michigan (excerpts)... .. 2500 1780 No. 186—-Contract Data Reports and Competition Reports for Houston, Texas (excerpts)....... 2515 1790 No. 187—Contract Data Reports and Competition Reports for Indianapolis, Indiana (excerpts).. 2527 1801 No. 188—Contract Data Reports and Competition Reports for Los Angeles, California (excerpts) 2551 1813 No. 189—Contract Data Reports for Louisville, Kentucky (excerpts)........................ 2566 1823 No. 190—Contract Data Reports for Memphis, Tennessee (excerpts)....................... 2576 1831 No. 191—Contract Data Reports and Competition Reports for Milwaukee, Wisconsin (excerpts).. 2589 1839 No. 192—Contract Data Reports and Competition Reports for Minneapolis, Minnesota (excerpts) 2619 1855 No. 193—Contrect Data Reports and Competition Reports for Newark, New Jersey (excerpts)... 2632 1864 No. 194—Contract Data Reports for New Orleans, Louisiana (excerpts)............... 2644 1872 No. 195—Contract Data Reports and Competition Reports for New York, New York (excerpts).. 2653 1879 No. 196—Contract Data Reports for Omaha, Ne- braska (excerpts)...................0.040.. 2670 1895 No. 197—Contract Data Reports and Competition Reports for Peoria, Illinois (excerpts)........ 2678 1901 No. 198—Contract Data Reporis and Competition Reports for Philadelphia, Pennsylvania (ex- | BUSS A allan RRS Me El nh a Ran 2686 1906 No. 199—Contract Data Reports for Portland, Oregon (excerpts)....................0.0 00 2696 1915 No. 200—Contract Data Reports and Competition Reports for San Francisco, California (ex- OT RG TAIN 4 aE SS a a oe 2704 =61922 No. 201—Contract Data Reports for Seattle, Washington (excerpts)....................., 2710 1928 No. 202—Contract Data Reports and Competition Reports for St. Louis, Missouri (excerpts).... 2720 1935 No. 203—Contract Data Reports and Competition Reports for Washington, D. C. (excerpts)... .. _ 2781 1945 INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GovERNMENT’s Exuipits—Continued No. 206—Report on ADT General Sales Meeting April 6, 7 and 8, 1955, at the New York Athletic Club No. 208—Memorandum from ADT Vice President to ADT President E. Gaston, captioned, Service Charges—Proposed Revision, dated November Oh MG aa ieiasta. Ai Ria a8 No. 209—Memorandum for File by ADT Vice President J. A. MacDonald, captioned, Rate Development, dated November 17, 1955....... No. 210—Memorandum for File by ADT Vice President, J. A. MaeDonald, captioned, Rate Adjustments 1959, dated November 10, 1959. . No. 212—Directive issued by ADT Vice President A. E. Smith and Concurred in by ADT Presi- dent E. Gaston to ADT District Sales Managers, captioned, Delegation of Authority, with Sup- plement, issued on July 1, 1960 ............. No. 213—Memorandum from ADT President E. Gaston to ADT General Sales Manager L. J. O’Brien, captioned R. H. Macy, Paramus, N. J., dated December 29, 1955 No. 214—Memorandum from ADT Sales Repre- sentative D. M. Gates to ADT Executive Ac- counts Representative Alex Gaston, captioned, McAlpin Company, Cincinnati, Ohio, dated Age: Ta TR i A ERT eG No. 215—-Memorandum from ADT Commercial Superintendent J. B. Bodley to ADT General Sales Manager A. E. Smith, captioned, Federal Engineering Co., Inc., Washington, D. C., dated November 14,1952. .......... 00,00... 0.005. No. 216—Memorandum from ADT General Sales Manager L. J. O’Brien to ADT District Sales Manager W. J. Robinson, captioned, Competi- tion, Fidelity Electronics Protective Service, Pittsburgh, Pensylvania, dated March 14, 1961 No. 217—Memorandum from ADT District Sales Manager E. J. Heisley to ADT General Sales Manager L. J. O’Brien, captioned, National Pro- tective Corporation, Baltimore, Maryland, dated Coteber. OF, 200B 5. 60 RED os No. 218—Memorandum from ADT District Sales Manager E. Turnbull to ADT General Sales Manager L. J. O’Brien, captioned, Competi- tion—Autocall and Automatic Alarm, Minne- apolis, Minnesota, dated March 13, 1959 Original 2748 2780 2784 2785 2791 2792 2793 2794 2795 2012 2013 2021 2022 2023 2024 Xxii INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GoveRNMENT’S Exnisits—Continued Original Print No. 219—Memorandum from ADT District Sales Manager J. D. Patton to ADT General Sales Manager L. J. O’Brien, captioned, Competi- tion—Fort Worth, dated December 22, 1958... 2799 2028 No. 220—Memorandum from ADT Sales Repre- sentative R. W. Rice to ADT District Sales Manager J. D. Patton, captioned, New District Account—Letellier-Phillips Paper Co., New Orleans, La., dated January 14, 1960......... 2800 2029 No, 221—Memorandum from ADT District Sales Manager E. J. Heisley to ADT Sales Repre- sentative L. F. Lytle, Keg spores Reliable Stores Corp., Washington, D. C., dated November 22, WOR oA A aie AUIS We 2802 2031 No. 222—Comparative Summary of Percentages of Minimum Basie Charges Secured at each ADT central station in the United States for the years 1957 through 1961................. 2804 2033 No. 223—Memorandum from ADT District Sales Manager 4. S. Jacks to ADT General Sales Manager L. J. O’Brien, captioned, Competi- tion—Dayton, Ohio, Liberal Markets, Inc., dated Amgust 8, 1001». ...2:..0004..6860. 2811 2039 No. 224—Memorandum from ADT Commercial Superintendent J. B. Bodley to ADT General Commercial Manager A. E. Smith, captioned, Federal Engineering Co., Washington, D. C., Gubed: Game GIONS os ie 2813 2041 No. 225—Memorandum from ADT General Sales Manager L, J. O’Brien to ADT District Sales Manager J. K. Scott, captioned, York Profes- sional Pharmacy, Los Angeles, California, dated TORY BR ask Rive oes Hee 2814 2042 No. 227—-Memorandum from ADT District Sales Manager E. J. Heisley to ADT General Sales Manager L. J. O’Brien, captioned, Competition (rumored) Philadelphia, Pennsylvania, dated Cabeieat TR: 2000s oS ses ek ec.’ 2815 2043 No. 228—ADT central station protection service Contract Forms for Watchman’s Reporting and Manual Fire Alarm Service, Automatic Fire Alarm Service, Sprinkler Supervisory and Waterflow Alarm Service and Burglary and Holdup Protection Service... . ...... 2818 2047 No. 229—Memorandum from ADT District Sales Manager C. L. Chafee to ADT Vice President A. E. Smith, captioned, Regional Sales Confer- ences and District Sales Meeting 1955, dated WU Dy BEES vs oa oo ccs peewewk ci cys 2822 2055 INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GoverNMENT’s Exuisits—Continued Original No. 230—Memorandum from ADT Controller C. G. Eicker to ADT First Vice President J. A. MacDonald, captioned, Tampa, Florida, dated No. 231—Memorandum from ADT Vice President J. A. MacDonald to ADT Controller C. G. Eicker, captioned, Advance Service Charge for Sprinkler Supervisory and Waterflow Alarm Services, dated August 5, 1953 No. 232—Memorandum (unsigned) Charges Proposed by Commercial Department for all types of Sprinkler Supervisory and Waterflow Alarm Service and Waterflow Only Service (not dated) No. 233—Memorandum from ADT Controller C. G. Eieker to ADT First Vice President J. A. MacDonald, captioned, Rate Development, dated No. 234—Memorandum from ADT Controller C. G. Eicker to ADT First Vice President J. A. MacDonald, captioned, Rate Development, dated No. 235—ADT Tabulation (unsigned) entitled, Proposed Revision in Advance Service Charges 8/28/56 No. 236—Annual Report of the Holmes Electric Protective Company and Subsidiaries for the year 1960 (excerpts) No. 237—Memorandum from ADT Commercial Superintendent E. O. Betscher to ADT General Commercial Manager A. E. Smith, dated May No. 238—Memorandum from ADT President E. Gaston to ADT General Sales Manager R. Brechbill, captioned, Owl Protective Company, Long Island City, N.Y., dated November 7, 1962 No. 239—Memorandum for File by ADT Vice President AES, captioned, Competition, Call’s Police Signal Co., Chelsea, Massachusetts, dated July 26, 1956 No. 240—Memorandum from ADT General Sales Manager L. J. O’Brien to ADT District Sales Manager A. S. Jacks, captioned, Competition, Buffalo, New York, dated September 8, 1959.. 2850 xxiv INDEX Record from the United States District Court for the Dis- triet of Rhode Island—Continued GovERNMENT’S Exuisits—Continued Original No. 241—Memorandum from ADT District Sales Manager R. T. Warner to ADT General Sales Manager L. J. O’Brien, captioned, Cole-Hersee Company, South Boston, Massachusetts, dated No. 242—Memorandum from ADT Sales Repre- sentative G. V. Roach to ADT Assistant to General Sales Manager R. Brechbill, captioned, Quality Wool Quilting Corp., Astoria, New York, dated August 8, 1961 No. 243—Memorandum from ADT District Sales Manager E. J. Heisley to ADT Special Repre- sentative H. E. May, captioned, Bellevue Strat ford Hotel and Benjamin Franklin Hotel, Phi delphia, Pa., dated September 23, 1960 No. 244—Memorandum from ADT Sales Repre- sentative R. F. Michiel, Sr., to ADT District Sales Manager E. Turnbull, captioned, Request for Competitive Quotation to Secure Agreement for SS & WFA with a new Subscriber, Mil- waukee Forge and Machine Company, dated No. 245—Memorandum from ADT District Sales Manager R. T. Warner to ADT General Sales Manager L. J. O’Brien, captioned, Raymond’s, Inc., South Boston, Mass., dated August 9, 1958 No. 246—Memorandum from AFA Commercial Representative J. J. Way to AFA Vice Presi- dent L. W. Thomason, captioned, Morris Fish- man & Sons, Inc., Philadelphia, Pa., dated No- vember 13, 1957 No. 247—Memorandum from ADT Special Repre- sentative F. E. Miller to ADT District Sales Manager E. Turnbull, captioned, Continental Can Company, Milwaukee, Wisconsin, dated No. 248—Memorandum from ADT Sales Repre- sentative A. A. Balestrino to ADT District Sales Manager A. S. Jacks, captioned, Hyde Park Lumber Co., Cincinnati, Ohio, dated July 28, 1960 No. 250—Memorandum from ADT District Sales Manager E. J. Heisley to ADT General Man- ager L. J. O’Brien, captioned, Nationwide Safti Brake Co., Falls Church, Virginia, dated April 2863 No. 251—Memorandum from ADT Sales Repre- sentative C. J. Lawson to ADT District Sales Manager D. R. Hall, datéd January 14, 1958.. 2865 INDEX xxV Record from the United States District Court for the Dis- trict of Rhode Island—Continued GoveRNMENT’S Exuisits—Continued Original Print No. 252—Memorandum from ADT First Vice President J. A. MacDonald to ADT President E. Gaston, captioned, Maleolm Goldstone, Owl Protective Co., dated February 9, 1962........ 2866 2097 No. 253—Memorandum from ADT District Sales Manager J. K. Swanson to ADT General Sales Manager L. J. O’Brien, captioned, Wright- Bachman, Inc., Indianapolis, Indiana, dated Gaptember 13, 1008. «as CA Bs 2869 2099 No. 254—Memorandum from ADT Sales Repre- sentative W. J. King to ADT Special Repre- sentative H. E. May, captioned, Phileo Dis- tributors, Inc., Milwaukee, Wisconsin, dated Webwanny-38, 1000... 3 US 2870 =. 2100 No. 255—Memorandum from ADT Sales Repre- sentative B. W. Henke to ADT Executive Ac- counts Representative F. J. Concannon, eap- tioned, American Brass Company, Cleveland, Ohio, dated April 19, 1956.................. 2872 2101 No. 256—ADT General Instructions No. 77, en- titled, Contract Procedures, issued July 11, 1960 2874 2103 No. 257—Memorandum from ADT Special Repre- sentative J. R. Norris to ADT Commercial Su- perintendent C. L. Chafee, captioned, National Can Corp., Cleveland, Ohio, dated July 23, 1954 2878 2110 No. 258—Memorandum from ADT Sales Repre- sentative S. J. Sievers to ADT Executive Ac- counts Representative H. Schultz, captioned, Foley’s, Houston, Texas, dated September 22, OR RRS A Ss 2879 2112 © No. 259—Memorandum from ADT Sales Repre- sentative J. P. Dunn to ADT National Accounts Representative F. J. Concannon, captioned, Johns-Manviile Corp., Los Angeles, California, Gated Juné: 26, 1006: 53.62 2880 2113 No. 260—Letter from A. F. Greenwood of Gov- ernment Employees Exchange, Inc., to D. R. White, Albany Protective Service, Albany, New York, dated August 7, 1961................. 2881 2114 Exhibit Volume IV No. 261—Memorandum from ADT Manager, Field Service Division, R. Brechbill to ADT General Manager of Sales Production L. J. O’Brien, captioned, Procter & Gamble Com- pany, Cincinnati, Ohio, Cleveland District Na- tional Account, dated September 1, 1955... ... 2882 2115 XXvi INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GoverNMENT’s Exuisits—Continued Original No. 264—Memorandum from ADT Sales Repre- sentative J. D. Patton to ADT Executive Ac- eounts Representative F. J. Concannon, cap- tioned, Franklin’s, Dallas, Texas, dated Decem- No. 265—Memorandum by ADT Vice President A. E. Smith to File, captioned, Renewal Agree- ment, R.K.O. Pictures, Los Angeles, California, dated June 29, 1956 No. 266—Memorandum from ADT District Sales Manager R. T. Warner to ADT General Sales Manager L. J. O’Brien, captioned, The Van Heusen Charles Co., Albany, New York, dated No. 267—Memorandum from ADT Special Repre- sentative H. E. May to ADT Executive Ac- counts Representative F. Concannon, captioned, American Sugar Refining Company, Phila- delphia, Pennsylvania, dated December 12, 1961 No. 268—Contract agreement for Alarm Engi- neering Service of the Dayton Electronics Alarm and Signal Co., 530 West Second Street, No. 269—Memorandum from ADT Special Repre- sentative H. E. May to ADT Executive Ac- counts Representative F. J. Concannon, dated January 18, 1960 (excerpts) No. 270—Memorandum from ADT Specia!. Repre- sentative H. E. May to ADT Sales Representa- tive F. Shadell, captioned, Swern & Company- Lit Brothers, Trenton, dated January 5, 1962. . No. 271—Memorandum from ADT District Sales Manager E. J. Heisley to ADT General Sales Manager L. J. O’Brien, captioned, City Stores, Ine., Philadelphia, Pa., dated January 19, 1960 No. 275—Memorandum from ADT District Sales Manager L. M. De Shane to ADT General Sales Manager L. J. O’Brien, captioned, Ralston Purina Company, Various Locations, U.S.A., No. 276—Annual Report of the American District Telegraph Company for Fiscal Year 1953 (ex- INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GoveRNMENT’s Exxisits—Continued Original No, 277—Letter from ADT Vice President J. A. MacDonald to Grinnell Secretary and Counsel R. T. Clapp, dated July 2, 1953 2915 No. 278—ADT General Circular No. 222, entitled, Direct-Connected Fire and Burglar Alarm Ser- vice, signed by ADT Vice President A. E. Smith, dated April 27, 1955 No. 279—Memorandum from ADT General Com- mercial Manager A. E. Smith to ADT Commer- cial Superintendent C. L. Chafee, captioned, Competition—Automatic Fire Alarm Systems, Columbus, Ohio, dated March 9, 1953 No. 280—Memorandum from ADT Assistant Di- rector of Public Relations R. M. Bugbee to ADT Director of Public Relations A. W. Sulli- van, captioned, Proposed Ordinance—City of Newark, dated December 20, 1962 No. 281—Memorandam from ADT District Sales Manager E. J. Heisley to ADT General Sales Manager L. J. O’Brien, captioned, Competition, Atlanta, Georgia, dated September 15, 1955 .. No. 282—Memorandum from ADT Assistant Commercial Superintendent, W. K. Francis to ADT General Commercial Manager A. E. Smith, captioned, Regional Conferences, June 4-6 and 18-20, 1953, Competition District No. 9, dated June 9, 1953 (excerpts) No. 283—Memorandum by Holmes Sales Man- ager, C. K. Empringham to File, captioned, Maleolm Goldstone, Central Office Alarm Com- No. 284—Letter from Holmes President H. C. Ward to Grinnell Secretary and Counsel R. T. Clapp, dated September 25, 1952 No. 285—Memorandum from ADT General Com- mercial Manager A. E. Smith to ADT Com- mercial Superintendents, captioned, Proprietary Systems, dated October 5, 1963 (excerpts).... No. 286—ADT Pamphlet reporting on ADT Pro- tection Service for 1960 (excerpts) No. 287—Memorandum from ADT First Vice President J. A. MacDonald to ADT President E. Gaston, dated June 6, 1957 xxXvil INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GoveRNMENT’s Exuisits—Continued Original Print No. 288—Minutes of Meeting of the Burglary Rating Committee of the National Bureau of Casualty Underwriters, April 25, 26, 27,1950.. 2972 2181 No, 289—Letter from Holmes President H. C. Ward to Grinnell Secretary & Counsel R. T. Clapp, dated October 10, 1952............... 2974 2184 No. 291—ADT Leaflet entitled, Astute Business Executives are Constantly Proving that it Pays 2 Ways to Protect Property Automatically, Better Protection and Lower Cost........... 2977 2187 No. 292—Memorandum from ADT Associate Di- rector of Diversification & Expansion G. E. Friedli to ADT Director of Diversification & Expansion J. J. Stephens, captioned, San Jose Peninsula Survey, dated November 28, 1956... 2978 2109 No. 294—Memorandum from ADT Commercial Superintendent C. L. Chafee to ADT General Commercial Manager A. E. Smith, captioned, Competition—Cincinnati, Ohio, dated Septem- her 9 Sige OG en es 2981 2191 No. 295—Memorandum from ADT President E. Gaston to ADT Vice President A. E. Smith, captioned San Diego, California, dated October SB, WE 6 See Pek EL. 2982 2192 No. 296—ADT Acquisition Agreement of the United Electric Service Company, New York, New York, dated July 21, 1931 (excerpts).... 2983 2193 No. 297—ADT Acquisition Agreement of the Auxiliary Fire Alarm & Telegraph Co., Phila- delphia, Pennsylvania, dated March 26, 1930 (excerpts) No. 298—AFA central station protection Service Contiset Dorms is: ohio 5 EI 2B SS 2995 2199 No. 299—Memorandum from AFA Vice President F. D. Chase to AFA President T. P. Drew, cap- tioned, Competition, dated September 4, 1958.. 2998 2202 No. 300—Memorandum from ADT Sales Repre- sentative J. J. Visearde to ADT Assistant to General Sales Manager J. B. Bodley, captioned, Ivers-Lee, Newark, New Jersey, dated June 16, No. 302—Memorandum from ADT Government and Special Sales Division Manager J. O. ' Maxey to ADT General Sales Manager L. J.- O’Brien, captioned, Competition, Owl Protec- tive Company, New York, New York, dated NE Bi se SS a a ee es 3001 2206 INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GoveRNMENT’s ExHiBits—Continued Original Print No. 303—ADT Leaflet, entitled, Municipalities Served by ADT Central Stations............ 3003 2208 No. 304—List of Approved Central Station Pro- tection Service Companies which Were listed by Underwriters Laboratories, Ine., on December CR ica cca k ues cee e bac bobeaene 3007 =—s_- 2216 No. 305—Underwriters Laboratories, Ine. list of approved central station protection companies with the effective listing date................ 3011 2222 No. 306—Letter from A & P Transport, Inc., President E. G. Snow to Joseph Forman, Call’s Police Signal Corporation, Chelsea, Massachu- setts, dated July 9, 1959.................... 3018 2228 No. 307—Holmes central station protection ser- viee contract forms......................... 3019 2229 No. 308—Stipulation No. 1, Stipulation as to the authority of the documents offered into evidence Wo Pte se WW Es 3022 2235 No. 309—Stipulation No. 2, Stipulation as to the volume of commerce across State and District of Calne: Bt oh 28a 3 Os, 3058 2260 No. 310—Stipulation No. 3, Relative market posi- tion of central station protection service com- panies in Underwriters Laboratories, Inc., Cer- tificated central station burglar alarm service.. 3062 2263 No. 311—Stipulation No. 4, Relative market pcsi- tion of alarm companies in Underwriters Lab- oratories, Ine., certificated local burglar alarm Mepvidi. 165i ie a EN 3064 2264 No. 312--Stipulation No. 5, Relative market posi- tion of central station protection service com- panies in the approved station protection service business in the United States................ 3067 2266 No. 313—Designation of answers of the American Distriet Telegraph Company to interrogatories propounded by Plaintiff (excerpts).......... 3082 2279 No. 314—Designation of answers of the Holmes Electric Protective Company to interrogatories propounded by Plaintiff..................... 3110 =. 2301 No. 315—Designation of answers of the Auto- matic Fire Alarm Company of Delaware to interrogatories propounded by Plaintiff....... 3129 2318 No. 316—Designation of answers of the Grinnell Corporation to interrogatories propounded by PUM ccs eS AEDS IS, 3149 2337 No. 317—Excerpts of deposition testimony of George F. Allebach, Sr., Insurance Reiing Bu- reau of the District of Columbia xxx INDEX Record from the United States District Court for the Dis- trict of Rhode Island—Continued GOVERNMENTS Exuisits—Continued Original Print No. 318—Excerpts of deposition testimony of Emerson M. Booher, Dayton Electronics Alarm @ Biel, Tees. ek. A ee: 3238 2392 No. 319—Excerpts of deposition per ono of James H. Bray, Alarm Signal Company of IE races hs Skee ae ehee Wedea es cetastes 3284 2418 No. 320—Excerpts of deposition testimony of John D. Brosnan, Federal Engineering Com- WN, Mss aos» se.0 oe LeT ORO Rae yan 3315 2432 No. 323—Excerpts of deposition testimony of Eugene Curran, Robinson Protective Alarm NM es, Aare ae ees 3439 =: 2488 No. 324—Excerpts of deposition testimony of Clarence S. Damon, Damon Alarm Corporation 3457 2497 No. 325—Excerpts of deposition testimony of Clifford T. Davis, Protection Engineering Corp. 3498 2517 No. 326—Excerpts of deposition testimony of James W. Flotron, Potter Electric Signal Co... 3550 2545 No. 328—Excerpts of deposition testimony of Joseph Forman, Ow! Protective Company, Gen- eral Burglar Alarm Company................ 3723 2627 Exhibit Volume V No. 329—Excerpts of deposition testimony of Maleolm Goldstone, Central Office Alarm Com- WN Bi i or ekuk «iss ekg a toate descr. OLS 87.85 43.84 57.10 30.25 aI a 100.00 100.00 $48.00 $ 65.00 35,42 Subseribers % (Thousands) Non-defendants .... 12.51 17.39 11.76 19.65 67.09 Defendants ....... 87.49 82.61 82.24 93.35 13.51 De Uihe fs 3 +6 100.00 100.00 94.00 113.00 20.21 214 some conduct substantial watchman operations. For oe. ample, in 1961 Central Watch of Chicago received over $1,000,000 from watchman service and its approved central station, opened only after World War II, secured over $1,000,000 in annual service charges. Electro-Protective Corp. began approved service in 1958 in Newark and in 1961 in Baltimore. In 1961 it had local alarm revenue ip Baltimore of more than $250,000 and, in both cities, secured annual charges for central station service of over $250,000, Both of these companies operate in competition with ADT, These illustrations show financial ability of relatively new competitors to expand and also that in a brief time they have, in fact, thrived and expanded. Technological innovations now enable central stations to serve distant areas. By using telephone ‘‘carrier circuits” and ‘‘multiplexing’’, it is entirely feasible for central sta- tions to receive alarms from distant cities and to respond thereto from a guard sub-station located there. A Dallas central station' thus competes with ADT’s Fort Worth central station. In pilot projects now underway, central stations receive alarms from protected premises by radio, These developments reduce telephone wire charges, bring adjacent cities and remote suburban shopping and indus. trial areas into range of central station service, and will doubtlessly expand the market and increase its attraction for new competitors. Many new companies first furnished local or other alarm service and, having developed clientele and revenue, then furnished unapproved central station or telephone answer- ing alarm service, and thereafter became approved central station companies. Thus, companies furnishing other forms of protection, e.g., local alarms, direct connected, [fol. 309] proprietary and auxiliary systems, are potential approved central station companies.’ 1 Smith Detective Agency & Nightwatch Service. 1 Defendants actually contend that central station service is in the same market as those other forms of protection and that ADT possesses far less than 50% of such market. However, in view of the purpose of this memorandum, that contention is not pressed here. 215 In 1963, 176 organizations had U.L. approval for local alarm services; 8 including Minneapolis-Honeywell and Gamewell had Factory Mutual approval for furnishing direct connected systems; and 7 including Westinghouse and Gamewell had Factory Mutual approval for furnishing proprietary systems. Unapproved, as well as approved, non-central alarm companies are potential, if not actual, competitors. Ap- ed companies provide much unapproved service: in 1961, 38 non-defendant approved central station companies had over 13,000 burglar alarm subscribers but less than 4,000 had U.L. certificates.? The same is true of approved local alarm companies; the majority of their systems are not U.L. certified. There are scores of unapproved non- central station alarm companies throughout the country. The Nationai Burglar & Fire Alarm Association member- ship includes 240 local alarm companies and it has been estimated an equal number are not members. H. Ease of Entry: A going local alarm company can enter approved central station business with particular ease. It has know-how, trained employees, recurring revenue from existing alarm operations to sustain a central station in its infancy, and a clientele which may be converted to central station serv- ice. Equipping an approved station costs not in excess of $25,000. No heavy plant or equipment is needed. A thou- sand square feet in a fire proof building is ample for usual switchboards or consoles, batteries, wiring, other equip- ment and personnel. Equipment is readily available from [fol. 310] several sources.' Additional personnel, i.e., one "Incidentally, plaintiff, although excluding from the market unapproved companies, does include unapproved service by approved companies. ‘The few complaints about unavailability of ADT’s equipment relate almost without exception not to central office equipment but to devices installed in subscriber’s premises which are designed for unusual, infrequently en- countered protection problems. In any event, under de- fendants’ proposal, ADT will sell equipment to all comers. 216 round-the-clock switchboard operator and one runner or guard, are required but not difficult to secure. No special skill or training is required and wages are not high, often housewives operate switchboards part-time and pensioners may act as runners. ADT records and depositions show many non-central station subscribers in central station areas have similar establishments and protection problems as central station subseribers and are therefore central station prospects, Two large clothing chains, with stores having inventories up to $300,000, in recent years converted from central station to local service. IBM has two similar installations in range of ADT central stations. One uses central station service, and the other uses direct connected and telephone answering alarm service. The most common local and central station burglar alarm systems receive insurance premium discounts of 20% and 30% respectively? and in some areas auxiliary and direet connected fire alarm subscribers receive 22% discounts while central station subscribers receive 25%.* In view of the acceptance of, and similar discounts accorded to, various alarm systems by insurance experts, many central station prospects use other forms of service, but with appropriate sales effort can be converted. Also, according to an owner of a central station company which conduets a million dollar annual watchman’s business as well, hun- [fol. 311] dreds of establishments in Chicago use watchmen but are central station prospects.’ In sum, many companies now rendering non-central station protective service have clientele which will ferm strong nucleii for approved central station operations. Being in a service business, a central station company has manpower as its chief requirement—and it is readily ? Pillsbury, Tr. pp. 86-88. * While some large cities bar direct connected or auxil- iary systems or limit them to hospitals, schools, ete., such systems are allowed in other large cities in most smaller cities and in the suburbs of most, including New York and Chicago. In the Boston area there are over 1,000. 1Stackler Tr. pp. 109-112. In 1960, over $500 millions were expended in the United States for watchmen. 217 available. One can commence business on # small scale, grow gradually and compete evenly with others for almost any job since the business consists primarily of small transactions each giving rise to concurrent revenues and expenses. Sole proprietors with few employees and with- out sales or clerical forces, sophisticated corporate organi- gations, pension programs, etc., have conducted successful operations. A central station operation, because of its lim- ited service radius, is relatively small and essentially local in character. Because of these considerations and the rela- tive ease of entry above discussed, a high percentage of total national business does not have the same implication, from a monopoly power viewpoint, as would an equivalent percentage in another industry such as the production of heavy goods. Even plaintiff makes no claim that any central station companies have succumbed or been forced out of busi- ness? New and thriving entrants show ease of entry (fol. 312] and belie existence of power to exclude; the dis- cussion of pricing, infra pp. 33-44, belies power over price which might ordinarily attach to a large market share in a different industry. * Plaintiff asserts generally that ‘‘defendants’’ had a ‘policy of coercion, intimidation and persuasion’’ to dis- suade persons from commencing or continuing to furnish approved central station service. Deposition testimony of interested competitors recites perhaps a half dozen in- stances or conversations, some ambiguous, which can be assigned a coercive connotation. Most involve deceased or former ADT employees and occurred, if at all, at least sev- eral years ago, None involves Holmes. These few alleged instances, involving a handful of ADT’s many and scattered employees, surely justify no conclusion that all or any defendants had a ‘‘policy’’, such as is ascribed to them by plaintiff, approved or authorized by management. To be sure, the interested deponents’ business success, as well as market data, suggests the non-existence or at least the emptiness of the asserted ‘‘coercive policy’’. I. Plaintiff’s Divestiture Proposal: Plaintiff’s proposal, in requiring divestiture in at least 48 and possibly 107 cities, is punitive. Ignoring local cost differentials and other variables, plaintiff assumes any city, where ADT is the sole source of service and secures $250,000 in annual service charges, can support two central stations and insists, in Appen- dix A of its proposal, that ADT create a competitor in each. Divestiture is demanded even in cities where healthy competition now exists. In Appendix B, plaintiff proposes divestiture in 59 cities (in addition to the 48 Appendix A cities) if in ten years ADT cannot show effective competition in each. ADT central stations in many such cities have regularly operated at a deficit and such cities, under plaintiff’s own standards, are natural monopoly areas. Competing central stations are located in or serve 21 of the 48 Appendix A cities.. For example, plaintiff seeks divestiture in Newark although both Newark District Tele- graph Company and Electro-Protective Corporation have central stations there. From 1957 through 1961, Newark District’s annual service charges increased from $364,000 to over $450,000. Between 1958, when Electro-Protective commenced business, and 1961, its annual service charges increased from $51,000 to over $210,000. Plaintiff would require ADT to sell two of its Chicago central stations although it competes there with Central Watch (the sec- ond largest non-defendant company), Burns, and Kedzie- Kane, and applications for approval of two other com- panies are pending. Under plaintiff’s proposal ADT is to [fol. 313] create a new competitor and also sell $125,000 of its business in Long Island City. This is a part of New York City proper and is served by nearby central stations of Cen- tral Station Signals Company (the largest non-defendant company), Central Office Alarm (which operates also in ’ Baltimore; Boston; Chicago; Cincinnati; Cleveland; Dayton; Detroit; Fort Worth; Houston; Huntington Park, California; Indianapolis; Jersey City; Kansas City, Mis- souri; Long Island City, New York; Mineola, New York; Minneapolis; Newark; Paterson; Pittsburgh; San Fran- cisco and Washington. 219 Philadephia) as well as the defendants, On termination of the ADT-AFA agreement required by proposals of both plaintiff and defendants, AFA will take over the servicing of contracts now handled from ADT’s Long Island City and Manhattan central stations. ADT will thereupon lose rev- enue of $500,000 in Long Island City and $800,000 in Man- hattan.’ The situation in Boston, where divestiture also is sought, is similar to Long Island City. Trenton is included in plaintiff’s proposed Appendix A although it operated at a deficit in 1962 and had before tax rate of profit of only 1.5% in 1961, 2.1% in 1960 and 6.8% in 1959. On the assumption ADT made the divestiture sought by plaintiff, 1962 operating statements have been recon- structed on the basis of ADT’s experience with the af- fected central stations and with stations of size similar to that remaining after such divestiture. These reconstruc- tions confirm ADT’s experience and views of other industry leaders that central station break-even points vary with local conditions. In the past 12 years, ADT central sta- tions, in order to break even, have required as much annual service charge revenue as $480,000 and in one rare case as little as $74,000. Such reconstructions, without allowing for probable reduction in revenues occasioned by price com- petition, show that in at least 5 Appendix A cities, in addi- tion to Trenton, ADT would operate at a deficit.” {fol. 314] The reconstructions show also that at least 9 other ADT central stations in Appendix A cities would, upon divestiture, have after tax rates of profit of less than 4%) ADT central stations in not less than 10 Appendix B cities have regularly operated at a deficit for the past ‘Not only will ADT suffer loss of revenue, but negotia- tions with the union representing its employees, concern- ing the termination of the AFA-ADT agreement, may re- sult in the transfer of skilled ADT employees. * Akron—$7,652; Grand Rapids—$1,614; Richmond, Vir- ee 10.188; San Jose—$29,682; Winston-Salem—$17,- ‘For example, New Haven: 2%; Oklahoma City: .7%; Portland, Oregon: 1.05%. 220 several years. Many others have operated at a deficit sporadically, others at a marginal profit and none realizes annual service charges of $250,000 or more. tn short, plaintiff seeks divestiture in many cities where it is unnecessary and in others where it is impossible up. less ADT withdraws entirely. The over-all adverse effect of the Appendix A divestiture is earlier discussed (supra, pp. 7-9). In addition, the equipping of central stations by ADT for new competitors to be created under plaintiff’s pro- posal threatens to so overburden ADT’s engineering and plant departments as to make normal service and mainte. nance impossible. ADT has never opened more than three central stations in any one year and that very seldom. Clearly, plaintiff’s proposal is unrealistic. J. Defendants’ Divestiture Proposal: Wisdom dictates that divestiture by ADT be gradual and cautious lest both ADT and the vital industry in which it plays so important a role be irreparably undermined. A plan of divestiture must take account of and be subject to revision in view of the unknown but probably devastating impact on ADT’s health and market position of changed practices as to retention of title to alarm systems and con- tract duration. Note should be taken of ADT’s loss of almost $1,900,000 in annual service charges resulting from termination if the AFA-ADT contract. Additionally, AFA and Holmes will provide keen and able competition. Due regard must be given to the rapidly growing market and increasingly competitive atmosphere. Precipitous, exten- sive divestiture is not in order. While ADT has 121 central stations in 112 municipali- ties, non-defendant central stations are located in 24 of [fol. 315] those localities and, based on plaintiff’s asserted 25 mile radius service area, service of non-defendants is available in 34 of those localities.* On that basis, 78 ADT central stations in 78 cities encounter no approved central station competition. Many of those 78 central stations are in localities which can sustain but one, or not even one, central station. Plain- * Figures in this and following paragraph are as of 1962. 221 tiff states a central station usually requires $125,000 in annual service charges and a service area of 150,000 popu- lation in order to break even. If this be the standard for determining the existence of a natural monopoly, 51 of such 78 ADT central stations serve natural monopoly areas: they have never secured annual service charges of $250,000 and many serve areas with populations of 150,000 or less. If natural monopoly areas are excluded from ADT’s market share and the market as a whole, its 1961 share, in terms of subscribers, was 57.8% or, in terms of annual service charges, 70.2%. There remain 27 ADT central stations which encounter no ¢entral station competition but which, by plaintiff’s standard, can support two central stations. Dofendants propose alternative plans for ADT divesti- ture which, coupled with effects of other items of relief, are calculated to reduce its total market share to 50% in ten years. Each plan provides for specific divestiture in the interim. Under the first alternative, ADT proposes to create com- petitors in those cities which can in fact support two healthy, viable central stations. Obviously, nothing is gained and service will only deteriorate if divestiture in a particular locality results in two moribund competitors. Notwithstanding ADT annual service charges of more than $250,000 and the absence of central station competi- tion, these 27 cities include 14 which cannot support two central stations. ADT’s Trenton central station operated at a deficit in 1962, had a before tax rate of profit of 1.5% in 1961 and 2.1% in 1960. Based on the above mentioned [fol. 316] reconstruction of 1962 revenue and expenses, five additional ADT central stations would operate at deficits if $125,000 annual service charges were divested, viz., Akron; Grand Rapids; Richmond; San Jose; and Winston-Salem (Estimated deficits appear in footnote, supra, p. 17). The reconstructions show also that eight additional ADT cen- tral stations would be reduced to marginal status. viz., Bridgeport: Jacksonville; Miami; New Haven; Nashville; Oklahoma City; Portland, Oregon; and Seattle. The after tax rate of earnings of each of these cities would be less than 4%. Operating expense ratios and the nature of present and anticipated commercial development are. so 222 unfavorable es to afford no basis for belief that two central stations could survive in 14 of the 27 non-competi- tive cities wherein ADT secures annual service charges of $250,000 or more. However, in the remaining 13 cities of Atlanta, Buffalo, Columbus, Hartford, Louisville, Memphis, New Orleans, Oakland, Omaha, Rochester, Springfield (Mass.), Syracuse, and Toledo, ADT will create competition by selling snb- scriber contracts yielding $125,000 in annual service charges’ or by transferring such contracts to corporations formed by ADT, the stock of which will be sold or dis. tributed to ADT stockholders. This proposed divestiture is, of course, joined with the additional proposal that, after ten years, ADT will make further divestiture of its business, if any, in excess of 50% of the total market if the Court deems it necessary. The 13 city divestiture proposed by ADT will reduce its annual service charge revenue by $1,625,000. The AFA- ADT contract termination will reduce ADT’s revenue by about $1,900,000. This results in a reduction of its 73.24% market share, in terms of annual service charges, to about 68%. Its existing share, in terms of subscribers, is already [fol. 317] below 62%. While it is impossible to compute precisely its share of subscribers after the 13 city divesti- ture, it would be approximately 58%.’ Adding to this 13 city divestiture the unquestionably adverse effect on ADT’s market position of other injunc- The ‘‘break-even’’ point suggested by plaintiff on the assumption, apparently, that other companies have lower break-even points than those usual for ADT central sta- tions. ADT has substantial expenses, not borne by many others in the industry, for research and engineering, pen- sion and benefit plans, wages of employees with great longevity, etc. 1 Figure based on divestiture of $125,000 in 13 cities and $1,900,000 from AFA contracts; and an average $695 an- nual service charge per subscriber. Of Course, ADT’s post-divestiture market share would be lower if its existing share, exclusive of natural monopoly areas, be used as basis for the computation. See p. 19, supra. 223 tive provisions contained in its proposal and its already declining share of the market, there is no need for further divestiture other than that which the Court may decree at the end of ten years if it then appears that ADT esses an undue market share. Under the second alternative, ADT commits itself to redace its market share to 50% in 10 or fewer years and, in addition, to divest 5% of its current annual service charge revenue within two years of the date of judgment and to divest itself of a like amount of business in the two following years. A plan, including this provision for divestiture of approximately $5,000,000 in annual service charges within 4 years and specifying the method of divestiture, would be submitted to the Court for its ap- proval at such time as thé Court may designate. II Retention of Title to Equipment on Subscribers’ Premises ADT’s service contracts (like those of practically every central station company) provide as follows with respect to alarm systems in subscibers’ premises: “«* * * [ADT] will * * * maintain such system in good _ working order, with the understanding that the entire system, including all devices, * * * and other materials [fol. 318] associated therewith, is and shall be and re- main the personal property of the Contractor [ADT].’’ Plaintiff regards this provision for retention of title as a ‘‘practice employed by defendants to retain monopoly power and injure and destroy competitors’’ (brief, pp. 31-34), Notwithstanding that the complaint (Prayer, Para- graph 6) asks only that the subscriber ‘‘may have title’’, plaintiff’s proposed decree (Section VII [A]) provides that the defendants be directed: “«* * * to assign to each service customer, all right, title and interest to equipment installed or to be in- stalled on the premises of the customer, without further charge as to existing installations and, as to future installations, for such defendant’s regular in- stallation charge.’’ 224 The defendants’ decree proposes that for 10 years ADT ‘«* * * offer to each service customer upon entering into any new or renewal service contract, all right title and interest to equipment * * * at reasonable prices * * *’’ (Section VII [A]). A. Plaintiff’s Proposal Will Impair Integrity of Service; A decree which would compel defendants to sell to sub. scribers equipment on their premises would radically change the nature of the central station business and ad- versely affect the service rendered. The important fact is that the defendant companies are engaged in the busi- ness of doing but one thing, viz., furnishing service to pro- tect life and property. The retention of title is an incident to that service but a vital one because it guarantees uni- form and compatible working equipment both in the central station and on the subscribers’ premises and thus provides for the best possible service. The concept of ownership of equipment on subscribers’ premises as insurance of ade- quate service finds a paraliel in the Telephone System. The telephone in one’s home is owned, maintained, and operated by the Telephone Company, thus insuring to the [fol. 319] public the best available communication service. There is centralized responsibility for every element in- volved in the making of a telephone call. Similarly, with re- spect to electric protection service in which the stakes are high—namely, life and property—the best possible service demands centralized responsibility for the inspection, maintenance and upkeep of all elements involved, including the equipment on subscribers’ premises. This has been the basic concept behind retention of title for the entire 86 year history of ADT. That concept has been traditionally followed throughout the industry. Both Holmes and AFA, whose service also extends back almost a century, have followed this concept from their beginnings, and the depositions in this case show that others in the field do the same. Moreover, it is not the time honored judgment of alarm companies alone that retention of title is essential to the best possible protection against fire and burglary; it is also the judgment of various organizations which establish Co ev 225 minimum standards for companies engaged in the furnish- ing of protective service, ~The National Board of Fire Underwriters in its Stand- ards for the Installation, Maintenance and Use of Central Station Protective Signaling System for Watchmen, Fire Alarm and Supervisory Service (Pamphlet No. 71), pro- vides : ‘‘The word ‘shall’ indicates provisions which are considered essential for protection of life and prop- erty.”’ and defines a Central Station System as: ‘*A system or group of systems, the operations of which are signaled to, recorded in, maintained and supervised from an approved central station, in which there are competent and experienced observers and operators in attendance at all times whose duty it _ shall be, upon receipt of a signal, to take such action as shall be required under the rules established for their guidance. Such systems shall be independently {fol. 320] owned, controlled and operated by a person, firm, or corporation whose principal business is the furnishing and maintaining of supervised protective signaling service and who have no interest in the protected properties.’’ Underwriters’ Laboratories, Inc., a non-profit organiza- tion, chartered in 1894, sponsored by the National Board of Fire Underwriters, has as a basic objective the operation of laboratories for testing, among other things, alarm devices, systems and materials. One of its requirements is: ‘*A central station system is one in which the opera- tions of electrical protection circuits and devices are signaled automatically to, recorded in, maintained, and supervised from a central station having trained op- erators and guards in attendance at all times. Central station systems are independently owned, controlled, and operated by a person, firm or corporation engaged in furnishing such supervised protective signaling service and having no interest in the protected prop- a erty.”’ 226 Mr. Donald D. Pillsbury, Manager of the Burglary and Glass Division of the National Bureau of Casualty Under. writers and a member of the Burglary Protection Counei] of Underwriters’ Laboratories, testified that the whole structure of insurance coverage and premium discounts allowed to subscribers to electric protective service is de. pendent, at least in part, upon ownership and control of the signaling system by one other than the owner of the protected premises, i.e., the person furnishing the pro. tective service. The application and value of these pro. visions was testified to by other officials: George F, Allebach, Chief Engineer of the District of Columbia Rating Bureau and George W. Saunders, Managing En- gineer, Burglary Protection Division, Underwriters’ Lab- oratories. Numerous instances demonstrating the vital importance to the public interest of alarm company ownership of equipment, can be cited. For example, in the Kansas City [fol. 321] flood of June, 1951, ADT transported an emer. gency crew forthwith to the stricken area to assist local forces in emergency restoration of service and reconstrue- tion of protective installations. This flood reconstruction project cost ADT approximately $98,000. Similar emergency action was taken in flood disasters in the years 1955-1959 at Pittsburgh, Cincinnati and Louisville. During 1955-1956 alone, hurricanes ‘‘Connie’’ and ‘‘Diane’’ caused damage to equipment on subscribers’ premises in Boston, Baltimore and Waterbury requiring immediate repairs and replace- ments at a cost of $74,684.30, all of which was borne by ADT without any charge to the many affected subscribers. This prompt restoration of servic for uninterrupted protection of life and property in these disaster areas through immediate and effective replacements and repairs was possible only because of ADT’s ownership of equip- ment and ability to draw upon its inventory of stand- ardized equipment and skilled personnel experienced in such work. The public interest could not have been so served if the plaintiff’s program of vesting title in the subscribers had been in existence. It would seem that the universal practice of company ownership of equipment extant so long, and regarded as essential not only by the industry but by independent rating organizations, must have real significance and should not be summarily discarded as simply an instrument for the destruction of competition merely upon the ad- ament insistence of the Department of Justice without support for its conclusions. There is, to say the least, a balance of elements involved which bears heavily upon the public interest, which plaintiff’s proposal ignores. B. Plaintiff’s Proposal Will Impose Unnecessary Hard- ship on Subscribers: A further matter of serious import presented by plain- tiff’s proposal is the effect upon the subscriber. The mandate to abandon title runs not only to the defendants —it would operate with equal force to require the sub- scriber to purchase the equipment on his premises. That ‘burden is one which should not be imposed upon the sub- {fol. 322] scriber in absentia. As prescribed by plaintiff, a subscriber who desires a defendants’ protective service against the risk of fire or burglary may obtain it only if he buys the equipment to be installed on his premises, con- eeivably an economic burden so heavy as to be tantamount to deprivation of the service of his choice. Obviously, the initial money outlay required of the sub- seriber would be drastically increased since the vendor must recover upon sale his costs plus a reasonable profit. As will be seen (p. 35), the advance service charges on a new contract under existing arrangement do not ap- proach recoupment of costs, let alone provide profit. Buying requires the commitment of a large amount of money today whereas the extant form of service contract requires future and lesser payments. At present, the sub- seriber, in effect, has the use of alarm company capital; compulsory sale would demand use of his own. Moreover, as owner of the equipment, the subscriber would have to bear all the risks and burden of maintenance which the defendants now bear. While naturally, the present service charges are intended eventually to yield compensation for those risks, compulsory sale would no doubt place defend- ants’ service beyond the reach of many desiring protection. It would place the defendants at such a competitive dis- advantage as to jeopardize their ability to survive. More important perhaps, is the fact that in view of the ert Aaitiainiaiaei: z 84 Z Or sid 206] ‘og Edy O16I ‘oT, ysnany 606T ‘OT “42d door ‘gt oun 2061 ‘gt Aine 606T ‘6 “AON eq] ones] 0 9061, ‘8 “ed 906T ‘zz “Use G06T ‘ZT “390 F06I, ‘IZ "0 FO6T ‘9% Tudy eq Buy a ~ SR 22822 ~s ae ne i‘) ss sgeeeee 638 a3 z Qo Se] oO siniga:S > >> TTT 1957 Subscribers Revenue ae 88 ry — officers of whom in all cases have been examined by the Government and by us in the course of our discovery proceedings. Some of those depositions contain matters which those who testified at least seemed to think were of an improper—acts of an improper character on the part of at least one of my de- fendants. The depositions are before this Court. I felt that if any of those people had made prior state- ments to the Government, we ought :o be able to see those prior statements to the Government, and it is only in con- nection with possible prior inconsistent statements that I ask for the permission to see these documents to see wheth- [fol. 456] er or not they throw some light upon the truth or untruth of the allegations made. And that is really the breadth of the subpoena for which I am asking relief. The Court: Does anybody else wish to be heard? Mr. McInerney: If I may, your Honor, on behalf of the Grinnell Corporation.’ I have not received a copy of the Government’s Motion To Qwash and I am not at all clear from—— 322 The Court: Well, it was briefer than the oral argument. Me iieInerney. Thank you, your Honor. I gather from the oral argument that the Government has not segregated the grounds on which they are moving to quash Grinnell’s subpoena from the grounds on which they are moving to quash the subpoena served by the Alarm Companies. The Court: They were not aware, as they said, at the time the motion was filed that there were two subpoenaes, but they now have made clear by oral amendment that they intended to include those subpoenaes within the scope of their motion. Mr. McInerney: Well, a number of Government’s coun- sel’s remarks, your Honor, could not possibly be addressed to our subpoena because we have only asked for in effect the Government’s memoranda of meetings that were held [fol. 457] by counsel representing Grinnell with the Gov- ernment in 1953, and the memoranda are specifically de- seribed in the appendix to the subpoena, because we know that they exist as a result of Answers to Interrogatories which Judge Sweeney ordered on January 23, 1962, at which time whatever the grounds on which the Government relies, I think he ruled on them, because he said that the defendants are entitled to have all of the evidence in the hands of the Department which bear upon this issue, that is, the issue of the so-called clearances or the Government’s review of and acquiescence in Grinnell’s acquisition of ADT in 1953. The questions are relevant to the affirmative defense and should be answered. They are not within the eategory of executive privilege since the 1953 and 1955— and that, your Honor, refers to the second clearance of ADT’s acquisition of an Alarm Company in Boston— ‘*since the 1953 and 1955 dealings culminated in a disclos- ure of a decision tentative though it may have been on the question raised by the defendants.’ I won’t burden your Honor with reading further. Judge Sweeney’s decision has been reported and it has been fol- lowed by at least one District Court in Texas and I submit, your Honor, in brief that it is the law of this case. The Court: The motions, written and oral, are granted [fol. 458] in full. Neither subpoena need be compiled with. This Court adopts as separate and independent grounds each of the different reasens given by the Government in 323 support of its motions. Furthermore, this Court regards Judge Sweeney’s ruling as in no sense binding upon it. Whatever may be the merits of Judge Sweeney’s ruling no action during the period of years was taken before me after the case was assigned before me for the implementation of the ruling. The ruling has become moot, not having any force ex proprio vigore. The ruling of Judge Sweeney is only, so far as I am concerned, advisory and, if you will, a precedent. It is not the law of the case, Even if I myself had made the ruling, it is the kind of ruling which can be and should be altered if circumstances make it appropriate so to do. In this case, all discovery was to have been completed nine months ago. This Court intends rigorously to adhere to its more than timely warning to counsel. Mr. Story: Your Honor, shall the Government proceed The Court: If you are ready. Mr. Story. First, your Honor—— Mr. Fritz: May ‘it please the Court, before the Govern- ment proceeds may I with your Honor’s permission note [fal. 459] on the record in behalf of the defendants whom I represent our objection to proceeding to trial on this day of June the 15th, 1964 upon the ground that we have not been provided with an adequate opportunity to do the final preparatory work for trial within the period which your Honor has assigned to us, namely, the period between May 28th, 1964 and this date, on the first date, being the date which your Honor advised us the case would proceed to trial on this date, and I respectfully by reference incorpo- rate in support of my notation on this record—— Is your Honor addressing——? The Court: No. I was motioning to your co-counsel to sit down until you had finished. Mr. Fritz: Then I will sit down. The Court: No. I was not telling you to sit down. Mr. Fritz: I understand. I wish to incorporate in support of my statement the matters which are contained in my affidavit in which I asked the Court for two months’ post- ponement and supporting our reasons we thought to be sufficient for an extension of time for that period. I simply want to make it plain on the record that notwithstanding that we made this formal application before your Honor on 324 June 3rd, and it was denied, I wish to preserve my position 4 on this record. a {fol. 460] The Court: I have no objection to the notation. I have a strong objection to the misrepresentation. This ~ Court set the matter for November, 1963 and has from ~ time to time postponed it to meet the convenience of coun- ~ sel, You may proceed. y Mr. McInerney: Your Honor, I simply wish the record to | note that Grinnell joins in the statement of counsel for the ” defendant Alarm Companies, simply noting for the record our exception to this trial date, and I am sure from your ~ Honor’s remarks this is to be denied, but I just want it | noted for the record, if your Honor please. The Court: The notation is made. The same comment is made by me, that the case was set for November, 1963, and — that was seven months ago. [fol. 461] Reporter’s Certificate to foregoing transcript omitted in printing. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0279%3A01. Public record. Not legal advice.