Opposition Brief — Zenith Radio Corp. v. Hazeltine Research, Inc.

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| JOHN F. DAVIS, CLERK

IN THE eet

Supreme Court of the United States

Ocroser Term, 1969

No.460= 4 d

ZENITH RADIO CORPORATION, a Corporation,

Petitioner,

vs.

HAZELTINE RESEARCH, INC., a Corporation,

Respondent.

BRIEF OF HAZELTINE RESEARCH, INC. IN OPPOSITION TO

ZENITH’S PETITION FOR A WRIT OF CERTIORARI

JoHN T. CHADWELL

Victor P. KaysER

JosEPH V. GIFFIN

Rosert F. Warp

135 South La Salle Street

Of Counsel: Chicago, Illinois

CHADWELL, Keck, Kayser & M. Hupson RaTHBURN

RUGGLES

20 North Wacker Drive

135 South La Salle Street Chicago, Illinois

Chicago, Illinois 60603

RAndolph 6-2545 LAURENCE B. Dopps

M K 160 Middle Neck Road

ASON, AOLEHMAINEN, Great Neck, New York

RaTHBURN & Wyss

20 North Wacker Drive Attorneys for

Chicago, Illinois 60606 Hazeltine Research, Inc.,

FInancial 6-1677 Respondent

AN LEAT EA ITE TEL LL ELL EAD A

TWENTIETH CENTURY PRESS, INC., CHICAGO 60606

a oN Rca ie RIS eS ol RL a i Ree Be . ayenaiz-x: -

<a ee SE ie Oe eS ete.

FOREWORD .........---eee cee ce eter ees eeeeeeees

CITATIONS TO OPINION BELOW ............--

QUESTIONS PRESENTED .............--++++-+:

STATEMENT OF THE CASE .............------

I. The Court of Appeals’ Decision of December

19, 1967 (388 F.2d 25) .........-..- eee ee eee

Il. This Court’s Decision of May 19, 1969 (395

EE i caccacaeedneadbeevesceehvesvense

III. The Court of Appeals’ Remand Decision of

October 27, 1969 (418 F.2d 21; Slip Opinion). .

SUMMARY OF ARGUMENT .............----.55

BUTTE nic ccc cece ccndssccccvevesveseseses

THE PETITION FOR A WRIT OF CERTIORARI

SHOULD BE DENIED ...............--+--00e-

I. Zenith’s Contention That This Court’s Man-

date Foreclosed the Court of Appeals on

Remand From Ruling on Undecided Issues

Is Contradicted by the Decisions of This

CE ccebavuvahbweeucnesee Cane uanacens

Il. This Court Decided Only That Zenith Had

Established the Fact of Damage as to Canada

and Did Not Rule on Other Issues Relating

to the Canadian Damage Claim ...........

Ill. The Decision of the Court of Appeals on

Remand Was Clearly Within the Authority

of This Court’s Mandate ................-.

A. The Court of Appeals Did Not Question

the Decision by This Court on the Fact

of Damage Issue but Considered Only

the Questions Left Open by its Previous

Opinion and Left Undecided by this

IV.

VI.

VIL.

Vill.

B. The Court of Appeals Had the Au-

thority to Rule on Whether the Affirma-

tive Defenses Were in the Case .......

C. The Court of Appeals Had the Av-

thority to Rule on the Effect of the

Affirmative Defenses .................

D. The Court of Appeals Had the Authority

to Order Further Hearings on the Ques-

tion of the Amount of Recoverable

wh 65. das ceécbo ba bebe deduces:

There is No Basis for Zenith’s “New Trial”

SIE ba Chi URGANied sd cahuc bucedéins dec

The Court of Appeals Did Not Make the

“Holding” as to the June 5, 1959 Letter As-

serted by Zenith ....................005..

The Question of Tolling of the Statute of

Limitations Is Not Before This Court and

Is Not Involved on This Record ...........

Zenith’s Assertion That It Should Be

Granted Recovery of Damages Even if

Barred by Release and Limitations Is

SN Sai 0 a lean chGUk iis sik incd one.

There Is No Basis for Zenith’s Insinuation

That It Is an Embattled Litigant Being De-

nied Justice by a Prejudiced Court of Ap-

SE Sa Chas be ba dekd b beater nosh oor dkces

IES od 8 Biv ces havdvtknuntedecctlddsinec:

—_ —

CITATIONS

CasES: PAGE

Bigelow v. RKO Radio Pictures, 327 U.S. 251

(1946)... cs cece cece rece eee eee eeneeeceerees 31, 39

Continental Baking Co. v. Utah Pie Co., 396 F.2d 161

(10th Cir.), cert. denied, 393 U.S. 860 (1968) ...... 15

Crumady v. The J. H. Fisser, 358 U.S. 423 (1959) ... 16

Emich Motors Corp. v. General Motors Corp., 229 F.2d

714 (7th Cir. 1956) 2.22.0... cece ee ee eee eee eees 22

Ex parte French, 91 U.S. 423 (1875) ......---+++-- 13, 15

French v. Edwards, 88 U.S. (21 Wall.) 147 (1874) .... 18

General Investment Co. v. Lake Shore & Michigan

Southern Ry., 260 U.S. 261 (1922) ............-- 14, 15

Groninger v. Davison, 364 F.2d 638 (8th Cir. 1966) ... 21

Hazeltine Research, Inc. v. Zenith Radio Corp., 388

F.2d 25 (1967) ........ cece cee e cece eee ecceeees 4, 42

Hazeltine Research, Inc. v. Zenith Radio Corp., 418

F.2d 21 (7th Cir. 1969) (Slip Opinion, Appendix A). .2, 7,

8, 9, 19, 20, 24, 28, 29, 33, 34

In re Sanford Fork & Tool Co., 160 US. 247 (1895). .14, 15

Kansas City v. Federal Pacific Electric Co., 310 F.2d

271 (8th Cir. 1962), cert. denied, 373 U.S. 914 (1963) 36

Moviecolor Limited v. Eastman K odak Co., 288 F.2d 80

(2d Cir.), cert. denied, 368 U.S. 821 (1961) ...... 36, 37

National & Transcontinental Trading Corp. v. Interna-

tional General Electric Co., 15 F.R.D. 379 (S.D.N.Y.

a cueascasacsnccv teas sbuxeateepakeces 36

Perkins v. Standard Oil Co., .... U.S. ...., 89 S. Ct.

1871 (1969) ....... cece cece cece eeeeecceeceees 16

Picoult v. Ralston Purina Co., 1969 Trade Cas. {72,681

(S.D.N.Y. 1969) ....ccceeeeeer eee e reer cere eeeees 36

Fs i Rn cL eek ana nl). oan

PAGE

Rogers v. Hill, 289 U.S. 582 (1933) ................. 16

Sprague v. Ticonic National Bank, 307 US. 161

DES KedneiaekdeeGubabokdes cade bcdcuseo uss 14, 15

Story Parchment Co.v. Paterson Parchment Paper Co.,

I ID od gee 39

Swan v. Board of Higher Education, 319 F.2d 56 (2d

I Diet cake ee Se 36

Tague v. Balaban, 1956 Trade Cas. { 68,539 (N.D. Il.

SE ah ded hipaa Mebane nics 40 bGukG aoibuais cece 36

United States v. General Electric, et al., (Civil Action

MG IE dive cides cbensceoeceeee pcos 34, 35

Utah Pie Co. v. Continental Baking Co., 386 U.S. 685

DE Seka dr aves tetenes seuaudeboreuicuoL 15

Zenith Radio Corp. v. Hazeltine Research, Ine., 395

U.S. 100 (1969)... 5, 6.7, 9, 10, 13, 17-29, 31, 37, 38, 42, 43

STATUTES

i ee ee 4, 39

_ ae

IN THE

Supreme Court of the United States

Ocroser TERM, 1969

No. 1117

ZENITH RADIO CORPORATION, a Corporation,

Petitioner,

vs.

HAZELTINE RESEARCH, INC., a Corporation,

Respondent.

BRIEF OF HAZELTINE RESEARCH, INC. IN OPPOSITION TO

ZENITH’S PETITION FOR A WRIT OF CERTIORARI

FOREWORD

The most significant thing about Zenith’s petition for a

writ of certiorari is that in both substance and form it is

substantially a verbatim copy of its petition for a writ of

mandamus (Mise. No. 1338).

The ground for certiorari which Zenith asserts is pre-

cisely the same as in Zenith’s petition for mandamus,

namely, the question of alleged violation of the mandate

of this Court by the Court of Appeals. Zenith says in its

. petition for certiorari (p. 2):

“The relief here sought is a determination of whether

or not the Court below has disregarded the mandate of

this Court and in effect reversed the decision of this

2 S

Court by vacating the judgment of the District Court

awarding damages to Petitioner, Zenith Radio Corpo.

ration, for violation of the antitrust laws by Hazeltine

Research, Inc. and the Canadian Patent Pool.’

This is the same statement as to “The relief here sought”

which appeared at page 4 of Zenith’s petition for writ of

mandamus, except that the words “and in effect reversed

the decision of this Court” have been added in the current

petition. In other words, Zenith has filed two petitions ask.

ing for the same relief.

At the beginning of our Argument, we provide a brief

comparison of the two petitions, showing their substantial

identity (note 7, infra).

CITATIONS TO OPINION BELOW

The opinion of the Court of Appeals for the Seventh Cir.

cuit has now been printed in the official Federal Reporter.

The citation is Hazeltine Research, Inc. v. Zenith Radio

Corporation, 418 F.2d 21 (7th Cir. 1969). Since we have |

previously cited this opinion as “Slip Opinion . . .” in the

briefs filed in opposition to Zenith’s mandamus petition,

we shall continue to do so in this brief. The slip opinion

has been reproduced as Appendix A to this brief.

QUESTIONS PRESENTED

Zenith petitions for a writ of certiorari. Although Zenith

sets forth nine “Questions Presented” instead of the seven

asserted on its petition for writ of mandamus, the basic

issue presented is precisely the same in both petitions (see,

p. 1, supra). This issue, as we have pointed out (HRI

' Emphasis appearing in quotations has been added by us unless

otherwise indicated.

OEP HAM OBIE LONE GER LLL TANT DEE FARMERS PRA SEES ORY TEIN IS RIN

Br. Opp. Mand. 2)* is: Whether the Court of Appeals, on

remand for further proceedings following reversal by this

Court on the single issue as to whether Zenith had proved

some injury to its Canadian business, had the authority to

rule on the affirmative defenses of Hazeltine Research, Inc.

(HRI) and to remand for further hearings on the amount

of recoverable damages, those issues having previously

been left undecided both by the Court of Appeals and by

this Court.

This basic question includes the subordinate issues:

(a) whether the Court of Appeals had authority to

determine whether the affirmative defenses of re-

lease and limitations were in the case;

(b) having decided that these defenses were in the

case and that they had been rejected by the trial

court on the merits, whether the Court of Appeals

had authority to determine that the trial court

erred in that rejection; and

Zenith’s recovery of damages resulting from the

acts of the Canadian pool prior to the release and

to the limitations period, whether the Court of

Appeals had authority to order further hearings

2 The following abbreviations are used in this brief:

Z. Pet. Mand. ...... Zenith’s Motion and Petition for Mandamus

Z. Reply Mand. .... Zenith’s Reply to Brief of HRI in Opposi-

tion to Zenith’s Petition for Mandamus

ce. > eae Zenith’s Petition for Certiorari

HRI Br. Opp. Mand. Brief of Hazeltine Research, Inc. in Opposi-

tion to Zenith’s Petition for Mandamus

; HRI Reply Br. Opp.

i aciveshadds Reply Brief of Hazeltine Research, Inc. in

Opposition to Zenith’s Petition for Man-

damus

BS ect te whine bide Citations to the printed Appendix

on the amount of recoverable damages in light of

the fact that a major portion of the original dam.

age award was based on such pre-release and pre.

damage period conduct (see HRI Br. Opp. Mand

2).

Zenith also purports to raise questions of alleged error by

asserting that the Court of Appeals made a holding with

regard to tolling of the Statute of Limitations (15 U.S.C.

§ 15b), and a holding limiting Zenith’s damages to those

flowing from a letter of June 5, 1959, when, in fact, the

Court of Appeals made no such holdings (see pp. 33-38 and

32-33, infra).

STATEMENT OF THE CASE i

Zenith’s Statement of the Case again misstates both the

decision of this Court and of the Court of Appeals on re.

mand. Zenith’s petition attempts to obscure the fact that

this Court reversed the Court of Appeals’ judgment as to |

Canada solely on the fact of damage issue, leaving the re. |

maining undecided issues for consideration by the Court

of Appeals. On remand, the Court of Appeals in no way

disturbed or questioned the decision of this Court.

In view of Zenith’s misstatements concerning these

opinions, HRI sets forth the following additional statement

of the pertinent facts (see also HRI Br. Opp. Mand. 3-9).

I. The Court of Appeals’ Decision of December 19, 1967

(388 F.2d 25). HRI appealed from the antitrust damage

judgments awarded by the trial court granting Zenith

over $34,000,000 in treble damages based on Zenith’s alleged ,

loss of sales and profits from May 22, 1959 to May 22,

1963, claimed to have been caused by patent pools in Can-

ada, England and Australia. On that appeal HRI urged

several grounds for reversal, including failure to prove the |

fact of damage, the bars of the statute of limitations and

» | the 1957 releases in the RCA-Zenith litigation,’ and the con-

tention that the damages awarded were excessive. The

Court of Appeals reversed the trial court’s treble damage

judgments as to all three countries solely on the basis of

Zenith’s failure to prove the “fact of damage,” stating that:

“We agree with HRI that Zenith failed to sustain the

burden of proving the essential fact of damage in the

| relevant period. We need pass on no other contention,

, therefore, in reversing the judgment on the counter-

| claim” (388 F.2d at 35).

Thus the Court of Appeals’ reversal was based solely on

the failure to prove the fact of damage and the other issues

were left undecided (see HRI Br. Opp. Mand. 3-4).

II. This Court’s Decision of May 19, 1969 (395 U.S. 100).

This Court, in reversing the Court of Appeals as to

Canada, did so solely on the “fact of damage” question,

carefully noting that there were several “major points”

raised by HRI which the Court of Appeals had not yet

passed on (395 US. at 113). This Court said:

“We have concluded that the Court of A ppeals erred

in setting aside the District Court’s decision with re-

spect to the fact of damage in Canada. Zenith’s evi-

dence, although by no means conclusive, was sufficient

to sustain the inference that Zenith had in fact been

injured to some extent by the Canadian pool’s re-

8 HRI urged that the releases barred recovery for all present,

past and future damages, including damages claimed to have been

suffered during the period May 1959 to May 1963, resulting from

acts of the pool taking place prior to the date of the releases on

September 27, 1957, and that, as an alleged co-conspirator, HRI

was entitled to assert this defense (see 395 U.S. at 113).

TR fee

Gettin NER ther wes once —

straints upon imports of radio and television sets”

(395 U.S. at 114) 4

Contrary tc Zenith’s representations, this Court did not

decide the other issues on the Canadian damage claim |

raised by HRI in the Court of Appeals, but did comment on

them :

(a) The Court referred to the question whether the trial

court’s failure to give effect to the defenses of release and

limitations was a ruling on the merits or was on the ground

of waiver, but pointed out that “the parties have not argued

the matter” and stated it would not pass on this issue (395

US. at 117 n. 13) (see pp. 19-21, infra).

(b) The Court referred to the question of the effect of

the 1957 releases, indicated their apparent relevance (395

U.S. at 113 n. 7), but did not rule on the effect to be given

them (see p. 23, infra).

ute of limitations barred recovery of damages resulting

from pre-damage period conduct, but pointed out that the

matter had not been argued and stated it would not “deal

with the question of whether damage period injury from

pre-damage period conduct is recoverable . . .” (395 US. at

117 n. 13) (see pp. 23-24, infra).

(d) The Court recognized the potential effect of the

defenses on the amount of recoverable damages, pointing

out that the damages awarded by the trial court as to

Canada had been on the assumption that absent the activ-

ities of the Canadian pool, Zenith “would have had 16% of

* However, this Court agreed with the Court of Appeals in set-

ting aside the judgments as to England and Australia on the ground

that the “fact of damage’”’ had not been proved (395 U.S. at 114). |

It also agreed that the judgments against Hazeltine Corporation

were properly vacated (395 U.S. at 110). }

the Canadian television market on May 22, 1959, and

throughout the damage period rather than its actual 3%

share” (395 U.S. at 116). The Court stated:

“Since the failure to have 16% of the market on the

first day of the damage period was ascribed to pool

operations, those operations must have occurred prior

to May 22, 1959. Some of the damages awarded, there-

fore, necessarily resulted from pre-damage period con-

duct” (395 U.S. at 116-17).

Thus, if held to apply, the affirmative defenses necessarily

barred a major part of the $18,892,173 award of the trial

court.

Having reversed the Court of Appeals’ ruling solely on

the fact of damage issue, this Court remanded “for further

proceedings consistent with this opinion” (395 U.S. at 141).

This “single issue” reversal left the remaining undecided

sssues for decision by the Court of Appeals (see pp. 13-16,

infra; see also HRI Br. Opp. Mand. 11-16).

III. The Court of Appeals’ Remand Decision of October

27, 1969 (418 F.2d 21; Slip Opinion). On remand the Court

of Appeals did not disturb or question this Court’s holding

on the fact of damage but recognized it was bound by that

holding. It considered only the questions which it had

originally left undecided with respect to Canada, acknow!l-

edging that this Court had “concluded we erred in our

determination that Zenith had failed to prove the ‘fact’ of

damage in Canada” (Slip Opinion 2). The Court of Appeals

concluded that the issues remaining before it on remand

were the following:

“(1) whether Zenith’s injury during the statutory

damage period resulted to any extent from HRI’s con-

duct preceding that period and, if so, what effect re-

leases given by Zenith in 1957 had on Zenith’s recovery ;

(2) what effect the statute of limitations had on HRI’s

liability; and (3) whether the award of damages was

excessive. These points had been raised before us by

HRI in the first appeal, but we saw no need of pass-

ing on them in view of our reversal of the judgment \e

for Zenith” (Slip Opinion 2).

The Court of Appeals decided:

(a) that the defenses of release and limitations had not

been waived, and that the trial court had considered and

(erroneously) denied them on their merits (Slip Opinion 3);

(b) that HRI as an alleged joint tortfeasor was entitled

to the benefit of the September 27, 1957 releases in the

RCA-Zenith litigation and that these releases barred recoy-

ery for “past, present and future damages [emphasis by

the Court] flowing from any misconduct of HRI prior to

to the dates of the releases” (Slip Opinion 4); and

PNA ne

recovery for damages resulting from conduct which oc-

curred prior to the start of the damage period (i.e., prior

to May 22. 1959) (Slip Opinion 4-5, 6-7), so that Zenith’s

recovery was limited to damages resulting from conduct

“occurring in the damage period” (Slip Opinion 5).°

The bar to recovery imposed by the releases and statute

of limitations necessarily reduced the amount of recover.

able damages and, accordingly, the Court of Appeals re-

manded the case to the District Court for further hearings

as to the amount of damages recoverable. In so doing, the

Court of Appeals pointed to this Court’s analysis which

showed that the original award of $18,892,173 granted by

5 Contrary to Zenith’s assertions, the question whether or not

the statute of limitations is tolled as against a party in a civil action

who was not a defendant in government litigation was not before

the court (see pp. 33-38, infra).

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the trial court was based on the assumption that but for

pre-damage period conduct, Zenith would have started the

four-year period with 16% of the market instead of the

3% it actually had, and that “some part of the damages

awarded, therefore, necessarily resulted from pre-damage

period conduct” (395 U.S. at 116-17; Slip Opinion 3-4).

Since Zenith started the damage period with less than one-

fifth of the market share which it claimed it should have

had (3% instead of 16%), necessarily a major portion of

the original award was for damages claimed to have re-

sulted from pre-release and pre-damage period conduct.

Thus, the Court of Appeals had the power and the duty

to remand the case to the trial court for further hearings

to determine the amount of damages resulting from dam-

age causing conduct taking place during the period, exclud-

ing damages resulting from pre-damage period and pre-

release conduct (Slip Opinion 7).°

SUMMARY OF ARGUMENT

No basis is presented for a writ of certiorari. The Court

of Appeals did not exceed its authority under the mandate

of this Court in Zenith Radio Corporation v. Hazeltine Re-

search, Inc., 395 U.S. 100 (1969), and did not make the

alleged “holdings” which Zenith asserts as constituting

error.

The Court of Appeals, in its original decision, held only

that Zenith had failed to prove the essential fact of damage.

HRI had urged a number of other grounds for reversal in

6 Contrary to Zenith’s assertion the Court of Appeals did not

hold that on remand Zenith’s recovery was limited to any damages

resulting from the June 5, 1959 letter from the pool to Zenith, but

pointed to the letter as an example of conduct taking place during

the period which could form the basis for a damage award (see

pp. 32-33, infra).

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the Court of Appeals, including the points that a recovery

of all or part of the damages was barred by the affirmative

defenses of release and limitations, and that the damage

award was excessive. However, the Court of Appeals, con-

cluding that the fact of damage had not been proved, did

not find it necessary to rule on any of these other grounds

for reversal.

This Court reversed that part of the decision of the

Court of Appeals which held that Zenith failed to prove

the fact of damage as to Canada. This Court, like the

Court of Appeals, did not pass upon the question whether

the defenses of the statute of limitations and release were

in the case, nor as to their legal effect, nor the amount of

damages recoverable in light of those defenses. However,

the Court did comment upon these defenses and their

potential effect to limit the amount of recoverable damages,

Having reversed solely on the fact of damage issue this

Court remanded the case to the Court of Appeals “for

further proceedings consistent with this opinion” (395 US.

at 141).

Under the mandate of this Court, the Court of Appeals

had the authority, and the duty, to decide those issues left

undecided by its previous decision and not passed on by

this Court. The Court of Appeals therefore had the av-

thority to determine whether the affirmative defenses of

release and of limitations were in the case, to decide their

legal effect, and to order further hearings in the trial court

on the amount of recoverable damages, in light of its deci-

sion that the defenses of release and limitations barred

recovery of damages resulting from pre-release and pre-

damage period conduct.

The further hearings will not constitute a “new trial,”

but regardless of how designated, the Court of Appeals had

the power to order the hearings. The trial court had made

erroneous rulings of law in failing to recognize that the

release and statute of limitations barred recovery based on

pre-damage and pre-release period conduct, and the hear-

ings are necessary to permit a finding as to the amount of

recoverable damage.

The Court of Appeals did not hold that Zenith’s recovery

is limited to damages resulting from the June 5, 1959 letter

from the Canadian patent pool to Zenith. Rather it held

that Zenith is entitled to recover any damages occurring

during the damage period as the result of conduct which

took place during the damage period.

The Court of Appeals did not make a holding that the

statute of limitations cannot be tolled by government liti-

gation to which a defendant in a civil suit was not a party,

but pointed out that the issue of tolling was not raised in

the trial court and was not before the Court of Appeals.

The fact is that Zenith affirmatively foreclosed itself from

asserting tolling for the purpose of claiming recovery of

damages resulting from conduct taking place prior to May

22, 1959 (the start of the damage period). To obtain leave

to file its counterclaim on May 22, 1963, over three years

after its answer, Zenith represented by its motion and sworn

affidavit of its counsel that the matters causing the damages

for which it sought recovery had occurred after the filing of

its answer, i.e., after April 7, 1960.

Zenith’s novel theory that it should be granted a treble

damage judgment of $18,892,173, even though a major part

of the alleged damages is barred by the 1957 releases and

statute of limitations, has no basis. There is also no basis

for Zenith’s attempted pose as an embattled litigant being

denied justice by a prejudiced Court of Appeals. In fact,

Zenith is attempting to obtain a recovery of millions of

dollars to which it is not legally entitled.

ARGUMENT |

THE PETITION FOR A WRIT OF CERTIORARI

SHOULD BE DENIED

Zenith seeks the same relief (on the same grounds) in

its certiorari petition as it did in its petition for mandamus,

Thus, Zenith states in both petitions that “The relief here

sought is a determination of whether or not the Court

below has disregarded the mandate of this Court .. ”

(Z. Pet. Mand. 4; Z. Pet. Cert. 2). According to Zenith, this

Court’s opinion stripped the Court of Appeals of the power

to make any ruling other than to reinstate the original

treble damage award of $18,892,173 for Canada.

For the Court’s convenience, a brief comparison appears

in the footnote, showing the substantial identity between

Zenith’s two petitions.’

As we have pointed out (HRI Br. Opp. Mand. 10-39),

there is no merit in any of Zenith’s arguments.

7 The petition for certiorari lists nine “Questions Presented” (pp.

2-4), in substance covering the same ground as the seven “Questions

Presented” in the petition for mandamus (Z. Pet. Mand. 4-6). In

several instances the questions are identical. The Statement of the

Case is identical in both petitions except in some argumentative

additions at the end (Z. Pet. Cert. 7). Both Statements are inae.

curate and misleading.

As to the Argument, Section I in the petition for certiorari

(pp. 8-15), is substantially a verbatim copy of Section I in the

petition for mandamus (pp. 9-16); the proposition of the two peti-

tions are different in language but not in substance. Sections II

III and IV of the petition for certiorari (pp. 15-17, 18-20, 20-23,

respectively), are substantially the same as Section II of the

petition for mandamus (pp. 16-23), in effect a subdivided version.

Section V of the petition for certiorari (pp. 24-25) is an abbrevi-

ated version of Section III of the petition for mandamus (pp.

23-25).

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1. Zenith’s Contention That This Court’s Mandate Fore-

closed the Court of Appeals on Remand From Ruling on

Undecided Issues is Contradicted by the Decisions of

This Court.

This contention was answered at pages 11-16 of HRI’s

brief in opposition to Zenith’s mandamus petition.

The substance of Zenith’s “lack of jurisdiction” argu-

ment is that this Court’s remand to the Court of Appeals

“for further proceedings consistent with this opinion” (395

US. at 141) did not give the Court of Appeals jurisdiction

or authority to pass on the remaining undecided issues, and

that on remand a lower court has no authority to pass on

the remaining undecided issues unless this Court has spe-

cifically listed those issues and specifically directed the

lower court to pass on them (see, ¢.9., Z. Pet. Cert. 7, 9, 17,

24).

Contrary to Zenith’s contentions, the Court of Appeals

had the power, and the duty, to rule on the issues of HRI’s

affirmative defenses and the amount of recoverable dam-

ages. The cases cited in HRI’s brief in opposition to

Zenith’s mandamus petition (pp. 12-15) demonstrate con-

clusively that a lower court has the authority to consider

undecided issues on remand following a “single isste” re-

versal by this Court. This procedure has been well estab-

lished at least since Ex parte French, 91 U.S. 423 (1875).

In that case, several defenses had initially been pleaded but

the trial court held for defendant on one defense, without

passing on the others. This Court had, in an appeal from

that decision, reversed the trial court on the ground that

the ruling was erroneous and “remanded with directions to

proceed in conformity to this opinion,” French v. Edwards,

88 U.S. (21 Wall.) 147, 151 (1874). The lower court, on

remand, set the case down for a new trial and the defend-

ant, like Zenith here, sought review in this Court, contend-

ing that the Court’s mandate required entry of judgment

in his favor. In denying review the Court held that:

“The finding brought here for review was special,

and met only a part of the issues. If the conclusion of

law to which the court came was correct, the other

issues were immaterial. The case was disposed of with-

out reaching them. We have, however, determined that

the facts found were not sufficient to justify the con-

clusion reached ; and have ordered the court to proceed

with the case, notwithstanding the finding. In eff ect,

we have decided that the court erred in not proceeding

to try the other issues. Our action only precludes that

court from adjudging in favor of the defendants upon

the special facts found and sent here for our opinion,

In all other respects, it is at liberty to proceed in such

manner as, according to its judgment, justice may re-

quire” (91 U.S. at 426).8

Zenith persists in urging that this Court’s decision in

In re Sanford Fork & Tool Co., 160 U.S. 247 (1895) sup.

ports its contention that the Court of Appeals was without

power to rule as it did in this case (Z. Pet. Cert. 8-9; see also

Z. Pet. Mand. 9-10). However, as HRI pointed out (HRI

Br. Opp. Mand. 13), that case expressly sanctions the

procedure employed by the Court of Appeals in this case.

In Sanford, during proceedings in the circuit court follow-

ing reversal by this Court on a single issue, defendants

moved for judgment in their favor, contending that the

mandate of this Court required the entry of such a judg-

ment. When the lower court denied the motion, defendants

sought a writ of mandamus. In denying the petition, this

Court held that “the Circuit Court may consider and decide

8 See Sprague v. Ticonic National Bank, 307 U.S. 161, 168

(1939) ; General Investment Co. v. Lake Shore & Michigan Southern

Ry., 260 U.S. 261, 284-85 ( 1922); see also cases cited at note 9,

infra.

- ee SONIC PPE SERIA EI OIG

LRN EY PTTL IARI LANIER TO ELI SOF LIE LE GE ENGIN:

any matters left open by the mandate of this court” (160

U.S. at 256).

When a case is reversed by this Court on one issue and

remanded, it is neither necessary nor usual to give express

instructions to the lower court to decide the remaining

issues. HRI cited numerous decisions of this Court showing

that a remand “for further proceedings consistent with

this opinion” constitutes all the instruction necessary to

the lower court to decide any remaining issues, consistent

with the opinion (HRI Br. Opp. Mand. 14). For the Court’s

convenience, those citations are set forth again in the foot-

note.®

As previously noted (HRI Br. Opp. Mand. 15), when an

appellate court intends to depart from the normal pro-

cedure in remanding a case and takes the unusual step

of foreclosing consideration of remaining issues, “it is to

Ex parte French, 91 US. 423 (1875) (discussed pp. 13-14,

supra); In re Sanford Fork & Tool Co., 160 U.S. 247, 258 (1895)

(remand by this Court for further proceedings after a single issue

reversal left the lower court free to decide the remaining issues

and did not require entry of judgment for either party) ; Sprague

y. Ticonic National Bank, 307 U.S. 161, 168 (1939) (mandate con-

trols all matters within its compass, but the lower court is free as

to all other issues on remand); General Investment Co. v. Lake

Shore & Michigan Southern Ry., 260 US. 261, 284-85 (1922)

(reversal by an appellate court on single issue does not preclude

consideration of other issues in lower court) ; Utah Pie Co. v. Con-

tinental Baking Co., 386 U.S. 685, 704 (1967), and following

remand, Continental Baking Co. v. Utah Pie Co., 396 F.2d 161, 163,

195-96 (10th Cir.), cert. denied, 393 U.S. 860 (1968) (following a

single issue reversal by this Court and remand “for further pro-

ceedings,” the court of appeals decided the remaining issues and

remanded for a new trial; Utah Pie petitioned for a writ of cer-

tiorari, contending that the action of the Tenth Circuit was in

conflict with this Court’s decision on the single issue, and this

Court denied certiorari).

Ria ras POS AIK chi Tea gtd AES cnt Diels one la

hia i gia

ite

be presumed that it would .. . [do] so unequivocally and

directly by means of language, form of decree and mandate

generally employed for that purpose” Rogers v. Hill, 289

U.S. 582, 587 (1933). That is precisely what this Court did

in Perkins v. Standard Oil Co.,... U.S. ...., 89 S.Ct. 1871

(1969), decided by this Court on June 16, 1969, less than a

month after the decision in the instant case. That was a

treble damage action in which the Court of Appeals had

set aside the verdict of the jury and judgment of the trial

court, and this Court, following its reversal of the Court

of Appeals’ ruling, stated:

“The jury’s verdict and judgment should be rein.

stated. It is so ordered.

“Verdict and judgment reinstated” (89 S.Ct. at

1875) .1°

In the instant case this Court did not foreclose the Court

of Appeals from considering undecided issues and did not

order that the trial court’s judgment as to Canada for

$18,892,173 “should be reinstated.” Instead, it remanded

“for further proceedings” so that the Court of Appeals

could proceed to pass upon the undecided issues.

II. This Court Decided Only That Zenith Had Established

the Fact of Damage as to Canada and Did Not Rule

on Other Issues Relating to the Canadian Damage

Claim.

This point was discussed at pages 16-18 of HRI’s brief

in opposition to the petition for mandamus.

In reviewing the decision of the Court of Appeals this

Court pointed out that although HRI raised a number of

“major points” in the Court of Appeals, including the de-

10 See Crumady v. The J. H. Fisser, 358 U.S. 423, 429 (1959).

————

fenses of statute of limitations and release and the issue

as to the amount of recoverable damage, the Court of

Appeals had reversed the trial court’s judgment as to Can-

ada solely on the basis of its “overriding judgment” that

Zenith had not established the fact of damage (395 US. at

113, 118).

This Court also pointed out that the Court of Appeals

had reversed the treble damage awards solely on the fact

of damage issue “without reaching any of the other issues

presented by the appeal on this phase of the case” (395

U.S. at 107) and again, that:

“Passing the other issues pressed by HRI, including

the limitations defense, the Court of Appeals held that

Zenith had failed to prove any injury to its export

business during the damage period . . .” (395 U.S. at

113).

Although this Court agreed with the decisions of the

Court of Appeals in setting aside the judgments as to Eng-

land and Australia (395 U.S. at 114), it reversed the Court

of Appeals as to Canada solely because the Court of Ap-

peals had erred in concluding that the “fact of damage”

had not been proved, stating:

“We have concluded that the Court of Appeals erred

in setting aside the District Court’s decision with

respect to the fact of damage m Canada. Zenith’s evi-

dence, although by no means conclusive, was sufficient

to sustain the inference that Zenith had im fact been

injured to some extent by the Canadian pool’s re-

straints upon imports of radio and television sets”

(395 U.S. at 114).

This Court made it clear that its decision was limited

to the issue of whether there had been proof of some injury

to Zenith’s business, i.c., fact of damage, and was not a

he Te TCR ota eRe Tne ee eT ee ee ey ee

ruling on the amount, saying that proof that Zenith had

been injured “to some extent” met Zenith’s burden of proy-

ing “the fact of damage,” and that “inquiry beyond this

minimum point goes only to the amount and not the fact

of damage” (395 U.S. at 114 & n. 9).

In reversing the Court of Appeals’ holding that no injury

during the damage period was shown resulting “from pool

activities either before or after the beginning of the damage

period” (395 U.S. at 113), this Court pointed out that the

fact of some damage was shown by the record to have re.

sulted not only from pre-damage period conduct but also

from conduct during the damage period. The Court held

that the evidence warranted “the inference that CRPL’s

past conduct interfered with and made more difficult the

distribution of Zenith products in 1959 and later years”

(395 U.S. at 118), and also held “that the record evidence

is sufficient to support a finding of damage resulting from

events occurring after the beginning of the damage period”

(395 U.S. at 119).

The effect of these conclusions was that even if Zenith’s

right to a recovery for damages based on pre-damage

period conduct was barred by limitations or by the Sep.

tember 27, 1957 releases, nevertheless Zenith could assert

a claim to recovery to the extent that the damages suffered

during the damage period were due to damage period con-

duct. Thus, it was not necessary for this Court to rule

upon the applicability or effect of the defenses of limitations

or release or the amount of damage issue. Indeed, it would

have been highly unusual for this Court to have done so

in view of its limited holding and the limited holding of the

Court of Appeals. The defenses of limitation and release

and the question of the amount of recoverable damage, had

no relevancy in the determination of the fact of damage

issue (see pp. 25-26, infra).

TETAS SR SLES ORE OO Pe Ey PSR I EIN FES

a —_ —- oe.

III. The Decision of the Court of Appeals on Remand

: Was Clearly Within the Authority of This Court’s

Mandate.

A. The Court of Appeals Did Not Question the Decision by This

Court on the Fact of Damage Issue but Considered Only the

Questions Left Open by its Previous Opinion and Left Un-

decided by This Court.

This point was discussed at page 19 of HRI’s brief

in opposition to the mandamus petition.

The Court of Appeals in its second decision recognized

that its ruling on the “fact of damage in Canada” had been

reversed, that it was bound by that decision, and then pro-

ceeded to pass on the issues of release and limitations and

their effect on the amount of recoverable damages, stating:

“These points had been raised before us by HRI in

the first appeal, but we saw no need of passing on them

in view of our reversal of the judgment for Zenith”

(Slip Opinion 2).

B. The Court of Appeals Had the Authority to Rule on Whether

the Affirmative Defenses Were in the Case.

This point was discussed at pages 19-24 of HRI’s brief

in opposition to the petition for mandamus.

This Court referred to the question whether the defenses

of release and limitations were in fact in the case, pointing

out that the trial court had over Zenith’s objection granted

“leave to file” these defenses prior to entry of judgment,

and then “without further mention of these defenses, forth-

with refused to set aside or remand the damage award as

to Canada,” leaving open the question whether the trial

conrt’s action was based on a rejection of the defenses on

the merits or on the ground of waiver (395 U.S. at 117

a RE Pe Re Te ee

20.

n, 13). Thus, this Court stated, the trial court “either

reject[ed] the statute of limitations defense or consider| ed]

it to have been waived,” but that:

“The parties have not argued the matter here, and

we make no further effort to penetrate the confusion

surrounding this issue [i.e., whether the defenses were

rejected on the merits or on the ground of waiver] or

to deal with the question of whether damage period

injury from pre-damage period conduct is recoverable

where an unwaived statute of limitations defense is

properly asserted” (395 U.S. at 117 n. 13).

The Court of Appeals ruled on this undecided question,

as it had an obligation to do, and decided that the trial

court’s failure to give effect to the defenses was on the

(erroneous) ground that they had no merit, and not on the

ground of waiver. Pointing out that the trial court per-

mitted the defenses to be filed over Zenith’s objections, and

then denied HRI’s motion to dismiss based on the defenses,

the Court of Appeals stated:

“It is our view that the court’s ruling was not on the

basis of waiver, but because the defenses on their

merits did not bar Zenith’s recovery. We turn therefore

to consideration of the correctness of the district

court’s ruling” (Slip Opinion 3).

Zenith repeats its previous argument that this Court

ruled that the defenses had been waived, because of its

reference to the affirmative defenses as “belatedly raised”

(in the sense that they had not been pleaded in the original

answer to the counterclaim), and argues that by use of the

words “unwaived” and “properly asserted,” this Court had

11 Since the Court was referring to both defenses of limitations

and release in the discussion and referred to the fact that the trial

court had granted leave to file both defenses, the statements in this

Court’s footnote 13 concerning the limitations defense obviously

applied to both defenses.

a —_ - - ESTE ARNE I A OER i RRO RR WU RAR ERS RLS NNCY

SLL ELF SE eGR RN OM AN ON Ps RENE NIN Wl EI I FARIS NONE IS Ry 2 MTGE ERAN

——=——_ -_, th h6Le.lCOlCU.!lUlCtCF

—

thereby made a “clear holding that the trial court had prop-

erly ruled that those defenses were not in the case” (Z. Pet.

Cert, 11). As pointed out in answering this same argu-

ment previously (HRI Br. Opp. Mand. 21 n. 10), these

words were used in connection with the statement of this

Court that it was not ruling on the question of waiver, or

the effect of the defenses if properly asserted (395 U.S. at

117 n. 13). Moreover, the Court was clearly aware that the

Court of Appeals had not yet ruled on these defenses (395

US. at 113).

Although Zenith attacks the Court of Appeals’ ruling on

the false ground of lack of jurisdiction to rule, it should

be pointed out again (see HRI Br. Opp. Mand. 21-24) that

the record amply supports the correctness of the Court of

Appeals’ ruling. The trial court granted leave to file these

pleas over Zenith’s objection that “TI think it is too late”

(A. 3037). The trial court clearly understood that by its

motion HRI was “seeking to file these new pleadings” (A.

3037) and granted leave to file them (A. 3037) nunc pro

tunc as of April 1, 1965, before entry of judgment (Court of

Appeals Appendix 2043). After the defenses were pleaded

(A. 3049-53), HRI’s motion to dismiss the counterclaim on

the basis of the defenses was filed (A. 3048), denied (A.

3062), and judgment thereafter entered as to Canada (A.

3078-80).

If the trial court had considered the defenses waived, it

would not have granted leave to file them over Zenith’s

objection (see, e.g., Groninger v. Davison, 364 F.2d 638,

639-40 (8th Cir. 1966) (grant of leave to file limitations

defense held to negate any contention that the trial court

considered the defense waived); see also HRI Br. Opp.

Mand. 22-23). Moreover, Zenith’s argument that failure to

file the defenses with the original answer is “final and con-

clusive” (Z. Pet. Cert. 10), completely ignores the cases

which we previously cited (HRI Br. Opp. Mand. 23), which

—_— eee

show that the trial court has discretion to permit amend.

ment when justice requires (see, €.g., Emich Motors Corp,

v. General Motors Corp., 229 F.2d 714, 717-18 (7th Cir.

1956) ).

The grant of leave to file these defenses was particularly

appropriate here because the defenses were not relevant to

the counterclaim as pleaded and became relevant only after

the trial and the findings prepared by Zenith and adopted

by the trial court, which for the first time revealed that

Zenith was claiming damages flowing from pre-damage

period conduct (see HRI Br. Opp. Mand. 24; pp. 35-37,

infra).

It is apparent that in failing to give any effect to the

defenses of limitations and releases, the trial court erron.

eously believed they could not constitute a meritorious

defense, for this Court pointed out (395 U.S. at 116), as did

the Court of Appeals ( Slip Opinion 3), that “the trial court

apparently deemed it immaterial whether the damage-caus.

ing acts occurred before or after the start of the damage

period” (see HRI Br. Opp. Mand. 24).

Indeed, as we have previously pointed out (HRI Br.

Opp. Mand. 24), Zenith has heretofore admitted that the

trial court did grant leave to file the pleas, for at page 16 of

its reply brief to this Court, Zenith said:

“The trial court permitted the filing of the pleas as of

a date a year after the trial (A. 3037), and then

promptly overruled the motion to dismiss the counter.

claim on this ground (A. 3037).”

C. The Court of Appeals Had the Authority to Rule on the

Effect of the Affirmative Defenses. ;

This point is reviewed at pages 25-28 of HRI’s brief in

opposition to the petition for mandamus.

Since the effect of the affirmative defenses on the amount

of recoverable damages was not ruled on in the original

Diet ions

rt Sar RON ERE NS . és

NPE RT SN Ra ORIEN

scan arenes

BS Gokagt) Miner aaaeetes on 6

decision by the Court of Appeals, this Court did not decide

the effect to be given to them. Rather, it left it to the Court

of Appeals to decide whether they were in the case, and

if so, what their effect might be (pp. 6-7, supra). This

Court did, however, indicate the potential significance of

those defenses on the amount of recoverable damages.

With respect to the September 27, 1957 releases in the

RCA-Zenith litigation this Court did not rule on their

effect, but it observed that “the 1957 release appears to be

relevant only to Zenith’s claim for injury to its Canadian

trade...” (395 U.S. at 113 n. 7).’* The Court of Appeals

was clearly within the authority of this Court’s mandate

when it decided the effect of the releases on recovery of

damages (Slip Opinion 4).

As concerns the limitations defense, this Court stated

that although the defense was one of HRI’s “major points”

which had not been reached in the Court of Appeals (395

U.S. at 113), “the parties have not argued the matter here,”

and that:

“we make no further effort... to deal with the

question of whether damage period injury from pre-

damage period conduct is recoverable where an un-

12 Irrespective of the application of the statute of limitations,

some substantial portion of Zenith’s damage claim was traceable

to acts occurring prior to the September 1957 releases, and was

thus barred if the releases were given effect. Indeed, in its pro-

posed findings, Zenith relied on conduct dating back to 1926 as a

basis for recovery (Findings XXV- XXX, XXXVI, A. 2903-06,

2908). Zenith entered the Canadian market in 1958 following the

release (A. 2905), and this Court pointed out that “it could also

rationally be found from the evidence that Zenith, beginning in

1958, could not have reached its maximum potential by May 22,

1959, that the pool had effectively prevented an earlier beginning

[i.e., before 1958], and that Zenith therefore suffered damage dur-

ing the damage period from having a smaller share of the market

than it would have had if the pool had never existed” (395 U.S.

at 118-19),

waived statute of limitations defense is properly ag.

serted” (395 U.S. at 117 n. 13).

The Court of Appeals was therefore clearly within its

power under this Court’s mandate when it decided this

issue on remand.

Zenith’s attack on the rulings by the Court of Appeals op

these defenses is primarily directed to the argument that

the Court of Appeals had no power to rule, rather than on

the correctness of the rulings as a matter of law (see Ques.

tions Presented 2-3, Z. Pet. Cert. 2). In any event, the Court

of Appeals was clearly correct in its rulings on the effect

of the affirmative defenses.

As to the release defense, the cases relied on by the Court

of Appeals, as well as the language of the releases them.

selves, amply support the conclusion that HRI, as an al-

leged co-conspirator, had the benefit of the releases and

that they barred recovery of “past, present and future

damages” [emphasis by the Court] resulting from acts

taking place prior to the date of the releases (Slip Opinion

4; A. 3051-52). Thus, any damages suffered by Zenith

during the 1959-1963 period as a result of pool activities

taking place prior to September 27, 1957, including any

interference with the build-up of a Canadian market from

which Zenith could have profited during the 1959-1963

period, were barred.

As concerns the limitations defense, the Court of Ap-

peals’ ruling that the statute bars recovery of damages

resulting from pre-damage period conduct (Slip Opinion

4-5, 6-7) is entirely in accord with the overwhelming weight

of authority (see cases cited Slip Opinion 4-5).

Zenith makes a variety of miscellaneous arguments to the

effect that the Court of Appeals should be considered to

have no jurisdiction to rule on HRI’s affirmative defenses or

_—

ST ae sn eine ee

| Ee i SE .

MIRE Say MAIER 58 NRRL A BEN CE

to remand for further proceedings in light of those rulings.

We have answered all these arguments previously (see

HRI Br. Opp. Mand. 10-39). However, since Zenith per-

sists in contending that this Court made various rulings

which stripped the Court of Appeals of authority to act, it

is appropriate to comment briefly here on the “holdings”

which Zenith ascribes to this Court’s decision.

At page 9 of its current petition Zenith asserts that in

order to conclude that it had authority to take action, “the

court below had to reverse this Court on three important

and controlling decisions in this case” (see also Z. Pet.

Mand. 10-11). According to Zenith these “controlling de-

cisions” were:

“First, the holding of this Court that the defenses of

limitations and release were ‘belatedly raised’ and

therefore waived. Second, that acts showing fact of

damage outside the damage period were not barred by

release or limitations; and third, that acts subsequent

to May 22, 1959 were sufficient to support the damage

findings.”

No such rulings were made by this Court:

1. As to the contention that this Court held HRI’s

affirmative defenses waived, as we have already shown (see

pp. 19-21, supra; see also HRI Br. Opp. Mand. 19-21), this

Court pointed out unequivocally that it was not ruling on

the question whether the defenses were waived (395 U.S.

at 117 n. 13).

2. Zenith’s contention that this Court held that damages

based on pre-damage period conduct were not barred by

the defenses of release and limitations (see Z. Pet. Cert.

: 13-14, 22-23; Z. Pet. Mand. 13-14, 22) is based on the argu-

; ment that “if pre-damage period conduct can be considered

on the fact of damage issue, it must he relevant and com-

RET SHES ABD CREASE PGI SEA ee RED HN REO AY EY 2 alr I

petent evidence as to the amount of damage” (Z. Pet. Cert.

12; Z. Pet. Mand. 13). This is a complete non sequitur.

As we have pointed out (HRI Br. Opp. Mand. 27-28; see

pp. 18-19, supra), in ruling on the fact of damage issue this

Court was considering only whether the Court of Appeals

was correct in its holding “that Zenith had not been dam.

aged after May 22, 1959, by any act of the pool, whether

occurring before or after that date” (395 U.S. at 118). The

issue considered was the ruling of the Court of Appeals on

the question of injury and causation (i.e., fact of damage),

and although the affirmative defenses might later be held on

remand to constitute a legal bar to recovery of a portion of

the original amount of damages awarded, that had nothing

to do with the question of whether the Canadian pool had

actually injured Zenith’s business. Therefore, it was unnec-

essary for this Court to consider these affirmative defenses

in determining the issue of fact of damage. However, it was

appropriate for this Court to consider pre-damage period

conduct (as well as damage period conduct) on the fact of

damage question, because pre-damage period conduct could

be the basis for additional recovery if the Court of Appeals

should decide either that the affirmative defenses had been

waived or that they did not bar recovery based on pre-

damage period conduct. It should be noted that in any

event, Zenith could recover damages to the extent they re-

sulted from damage period conduct.

3. In again arguing that this Court held “that acts sub-

sequent to May 22, 1959 were sufficient to support the dam-

age findings” (Z. Pet. Cert. 9, Z. Pet. Mand. 11), Zenith

seeks to obscure the fact that this Court’s ruling related

solely to the fact of damage issue (395 U.S. at 114 n. 9).

Moreover, in describing the measure of damages allowed

by the trial court, this Court made it unequivocally clear

that the $18,892,173 treble damage award could not be

sustained solely on the basis of acts of the Canadian pool

subsequent to May 22, 1959, when it stated:

PNB E NES ERM LST IIL TL IEEE LILLE TIN ALE ALTE T TEE

“Some part of the damages awarded, therefore, neces-

sarily resulted from pre-damage period conduct” (395

U.S. at 116-17).

In fact, since the damage award was based on the assump-

tion that Zenith should have started the damage period

with an established market of 16%, rather than the 3% it

actually had, it was obvious that a very large part of the

award was based on pre-damage period conduct.

Clearly, the reason that (1) the Court reviewed damage

period conduct separately from pre-damage period con-

duct—(2) the Court pointed out the extent to which the

original damage award was based on pre-damage period

conduct—(3) the Court pointed to the existence of the issue

as to whether or not the affirmative defenses had been

waived—(4) the Court pointed out that it was not deciding

the question whether or not recovery could be had on the

basis of pre-damage period conduct—and (5) the Court,

without deciding the issue, observed that the release “ap-

pears to be relevant” (395 U.S. at 113 n. 7)—was to point

out the questions remaining to be decided by the Court of

Appeals and to give the court below the benefit and guid-

ance of this Court’s comments on these undecided issues.

D. The Court of Appeals Had the Authority to Order Further

Hearings on the Question of the Amount of Recoverable

Damages.

This point was previously discussed at pages 28-31 of

HRI’s brief in opposition to the mandamus petition.

This Court pointed out the extent to which the original

damage award had been based on pre-damage period con-

duct, stating:

“Damages were awarded on the assumption that

Zenith, absent the conspiracy, would have had 16% of

A: ik CESAR AS eee aes LALOR, SEA NRCS

the Canadian television market on May 22, 1959, and

throughout the damage period rather than its actual

3% share. Since the failure to have 16% of the market

on the first day of the damage period was ascribed to

pool operations, those operations must have occurred

prior to May 22, 1959. Some part of the damages

awarded, therefore, necessarily resulted from pre-

damage period conduct” (395 U.S. at 116-17) .2°

In other words, since Zenith had only 3% of the market at

the beginning of the damage period rather than the 16%

it alleged it should have had, this Court was in effect point-

ing out that over 75% of Zenith’s asserted lack of beginning

market share (13%/16%) was, on Zenith’s own theory, as-

cribed to pre-damage period and pre-release conduct.

Under these circumstances it was obvious that a major

portion of the original $18,892,173 damage award was based

on pre-damage period conduct, recovery of which was

barred, and there was no evidence or finding as to what part

of the damage award resulted from damage period conduct.

Accordingly, the Court of Appeals was clearly within the

authority of this Court’s mandate when it remanded the

case to the trial court and stated that:

“Accordingly, we think that HRI should have—what

it was not given at the trial—an opportunity to intro-

duce testimony, in support of its defense of statute of

limitations, aimed at excluding from recovery damages

flowing from pre-period ‘damage-causing’ acts, as well

as an opportunity to introduce evidence to show that

Zenith’s damage flowing from ‘damage-causing’ acts

within the period did not amount to $6,297,391.

“The judgment for $6,297,391—before trebling— is

"8 Zenith has repeatedly attempted to dissipate the impact of this

Court’s analysis by quoting the first sentence of the statement and

omitting all reference to the last two sentences (Z. Pet. Cert. 6,

Z. Pet. Mand. 7-8, Z. Reply Mand. 3).

PEEL I ECORI IES EGET LAN RN PE SEG NE AGE T IN NESE REE AG PUI LY LIT LP ALLE REEL PI

WE a Sag

vacated and the cause is remanded for further proceed-

ings consistent with the views expressed in this

opinion” (Slip Opinion 7).

Zenith persists in attempting to create the false impres-

sion that this Court decided the amount of damage issue

without mentioning it, by asserting that “At pp. 147-149 of

the HRI main brief in this court the amount of petitioner’s

(Zenith’s] damages was argued at length” (Z. Pet. Cert.

24). This is not the fact. HRI’s brief expressly stated:

“Zenith argues the subject of the alleged amount of

damages in England, Australia, and Canada (Z. Br.

26-28, 53, 56, 76-85), but that issue is not before this

Court. Although it was raised in the Court of Appeals,

it was not decided for that court based its decision en-

tirely on the failure of Zenith to prove damaging im-

pact from pool activities.”

HRI commented briefly on Zenith’s erroneous contentions

only for the purpose of pointing out the nature and extent

of the undecided questions (pp. 147-49).

The fact that this Court was limiting its decision to the

fact of damage question and that it was not deciding any

question concerning the amount of damages is clearly shown

by the Court’s statement that the fact of damage question

required only “proof of some damage [emphasis by this

Court] flowing from the unlawful conspiracy,” and its state-

ment that any “inquiry beyond this minimum point goes

only to the amount and not the fact of damage” (395 US.

at 114 n. 9).

IV. There Is No Basis for Zenith’s “New Trial” Argu-

ment.

This point was previously answered at pages 31-32 of

HRI’s brief in opposition to the mandamus petition.

30 :

In an effort to show that the action taken on remand by

the Court of Appeals was unauthorized, Zenith again

argues that this Court did not “disturb” the trial court’s

“denial of a new trial” (Z. Pet. Cert. 24; see also Z. Pet,

Mand. 17). Zenith’s petition repeats the same “new trial”

assertions (Z. Pet. Cert. 3, 8-9, 14-15, 24-25) which appeared

in its petition for mandamus (Z. Pet. Mand. 5, 9, 16, 17, 21,

22, 23), suggesting that the issue involved here is a question

of a “new trial” as to Canada and whether there has been

a showing of “newly discovered evidence” or “abuse of dis.

cretion” by the trial court (Z. Pet. Cert. 15-16).

In view of Zenith’s persistent misstatement of the facts,

it must be pointed out again that HRI’s motion to the trial

court was not for a “new trial” but for a reopening of

proofs and for “further hearings” before entry of judg-

ment, the motion being based in part on the defenses of

release and limitations (A. 2939, 2951). The trial court

refused to order such further hearings as to Canada because

it erroneously believed that the defenses had no merit (see

pp. 19-22, supra). Thus the case does not involve questions

of “abuse of discretion” or “newly discovered evidence”

but the fact of erroneous rulings of law by the trial court

on the issue of the merit of these defenses, which, when

corrected by the Court of Appeals now require further

hearings on the amount of damages, since the original

award included alleged damages which were barred by the

defenses of release and limitations.

Even if HRIs’ motion had been for a new trial, however,

this Court’s failure to disturb the trial court’s ruling would

have been of no significance to the issue whether the Court

of Appeals had authority to order further proceedings.

This Court did not “disturb” the trial court’s denial of

HRI’s motion for the obvious reason that the only issue it

—

31.

decided was the fact of damage, and it left the other issues

for decision by the Court of Appeals on remand. The deter-

mination whether further proceedings in the trial court

were necessary could only be made after the Court of Ap-

peals had ruled on HRI’s other “major points” of appeal.

Zenith also incorrectly asserts that the remand for fur-

- ther hearings is contrary to the admonition of this Court

that “the court below not attempt to deal with questions of

fact ‘de novo’ and to follow the teaching and rationale of the

Bigelow case” (Z. Pet. Cert. 14, Z. Pet. Mand. 15). In

Bigelow v. RKO Radio Pictures, 327 U.S. 251 (1946), the

Court of Appeals had reversed a treble damage judgment

on the ground that there was not sufficient evidence to sus-

tain the verdict of the jury on the facts. In the instant

case the Court of Appeals had before it and reversed the

trial court on questions of law, namely, whether the de-

fenses of release or limitations barred recovery of damages

based on pre-release and pre-damage period conduct. Con-

trary to Zenith’s contentions (Z. Pet. Cert. 15), in remand-

ing for further proceedings to give effect to these defenses,

the Court of Appeals was not challenging the “trial court’s

damage findings in Canada.” As this Court specifically

pointed out, the trial court’s findings as to the amount of

damages included damages which “necessarily” resulted

from pre-damage period conduct (395 U.S. at 116-17). In

other words, there were no findings as to amount of dam-

ages based solely on damage period conduct, and the neces-

sity for further hearings in the light of the affirmative

defenses is clear.’*

14 Zenith’s current petition states that “Counsel for HRI now

concede that only a question of law was involved and this Court

did not in any way disturb the trial court’s decision” (Z. Pet. Cert.

16). Apparently Zenith is trying to create the mis-impression that

HRI’s counsel agreed that the issue of a “new trial” was considered

The simple facts are: (a) under this Court’s mandate the

Court of Appeals was required to determine the applica.

bility and effect of the defenses of release and limitations,

and to rule on the question of amount of recoverable dam.

ages; (b) the Court of Appeals determined that these de.

fenses apply and bar recovery of damages based on

pre-release and pre-limitations acts; and (c) since the trial

court’s award of damages as to Canada included substantial

damages recovery of which is barred by those defenses,

there was no evidence and no findings as to the amount of

damages which are recoverable, and it was thus necessary

to send the case back to the trial court for further hearings

to astertain the amount of recoverable damages.

V. The Court of Appeals Did Not Make the “Holding”

as to the June 5, 1959 Letter Asserted by Zenith.

In an attempt to create the semblance of an issue where

one does not in fact exist, Zenith has asserted that the Court

of Appeals “apparently” held (Z. Pet..Cert: 17, 20) that on

remand Zenith’s damages must be limited to damages flow-

ing from the June 5, 1959 letter. Thus having propounded

this alleged issue as Question 6 (Z. Pet. Cert. 3), Zenith

argues in Section II that the Court of Appeals limited

Zenith’s “Damage Proofs to Damages Flowing From the

June 5, 1959 Letter” (Z. Pet. Cert. heading and text pp.

15-17) and then proceeds to reiterate this same contention

in Section IV (Z. Pet. Cert. 20-21).

This argument appeared in Zenith’s earlier petition (Z.

Pet. Mand. 5, 17-18, 20) and was answered briefly (HRI

and rejected by this Court, whereas in fact HRI’s counsel was

pointing out (HRI Br. Opp. Mand. 31-32) that the issue of release 3

and limitations involved a “ruling of law” and obviously the ques- g

tion of necessity for further hearings could not be determined until

the Court of Appeals had passed on those legal questions.

i i Sn WA SA tae ea Cok aN a he Can ro SBR LAS Saar ea a EN

Br. Opp. Mand. 26 n. 14), but since Zenith now has seen fit

to make it a substantial part of both Sections II and IV of

its current petition we will deal with it here in somewhat

greater detail.

There is no basis for this attempted rewriting of the

Court of Appeals’ second opinion. Nowhere did the Court

of Appeals hold that Zenith’s recovery was limited to dam-

ages flowing from the June 5, 1959 letter. Rather, the Court

of Appeals held that recovery of damages resulting from

pre-release conduct was barred by the releases (Slip Opin-

ion 4, 6-7), that recovery of damages flowing from pre-

damage period conduct was barred by the statute of limita-

tions (Slip Opinion 4-5, 6-7), but that Zenith could recover

damages resulting from conduct which took place within

the damage period (Slip Opinion 5, 7).

Having decided that recovery was limited to the dam-

ages caused by conduct which took place during the damage

period, the Court of Appeals pointed to the June 5, 1959

letter wherein the Canadian pool wrote to Zenith charging

infringement, obviously as an illustration of conduct during

the four-year period for which it could claim the right to

recover damages (Slip Opinion 5).

Nowhere in the opinion is there any holding that Zenith’s

recovery is limited to damages resulting from that letter.

On the contrary, the Court of Appeals held that Zenith was

entitled to recover all damages suffered during the damage

period resulting from conduct which took place during the

damage period.

VI. The Question of Tolling of the Statute of Limitations

Is Not Before This Court and Is Not Involved on

This Record.

By its Questions 4 and 9 (Z. Pet. Cert. 2, 4), its State-

ment (p. 7), and Section ITI of its petition (pp. 18-20),

Zenith asserts that the question is presented whether the

four-year statute of limitations was tolled during the

pendency of United States v. General Electric, et al. (Ciyil

Action No. 140-157, S.D. N.Y.), in which Hazeltine Corpora.

tion (not Hazeltine Research, Inc.) was named as c0-

conspirator but not joined as a defendant.

Zenith made this same argument in its petition for man-

damus, although it did not seek to dignify it by a separate

section (Z. Pet. Mand. 19-20; see HRI Br. Opp. Mand.

33-35).

The question whether pendency of government litigation

tolls the statute of limitations as against a party in a civil

suit who is not a defendant in the government litigation,

was not before the Court of Appeals, since Zenith never

pleaded or asserted tolling in the trial court. Indeed.

Zenith’s actions in the trial court affirmatively show that

Zenith never intended to and could not rely on tolling.

The Court of Appeals in a footnote to its opinion (Slip

Opinion 5 n. 3) pointed out that the question of tolling was

not before the court, but commented that under the most

recent case in the circuit, tolling did not apply to a non-

defendant in the government suit (HRI Br. Opp. Mand.

33-35). This was dictum, for not only is the issue of tolling

not presented, but any claim of tolling is in direct conflict

with the sworn representations and statements of Zenith’s

counsel which formed the basis of Zenith’s counterclaim.

In our brief opposing Zenith’s mandamus petition, we set

forth briefly the background showing that the issue of toll-

ing was not presented (HRI Br. Opp. Mand. 33-34). Since

Zenith now devotes a separate section to the argument, we

believe it appropriate to point out further what the circum.

stances were in relation to Zenith’s counterclaim.

Zenith’s answer to HRI’s patent infringement complaint

was filed on April 7, 1960 (A. 1, 14-19). It alleged in para-

graphs 12 and 13, domestic patent practices and patent

pools in Canada and elsewhere, as misuse and “unclean

hands” defenses, but asserted no counterclaim (A. 14-19).

Approximately three years later on May 22, 1963, Zenith

was granted leave to file and filed its counterclaim alleging,

‘ among other things, injury to its Canadian business (A.

64-69).

i To obtain leave to file this counterclaim three years after

the answer, Zenith filed the sworn affidavit of Francis W.

Crotty, a Zenith vice president, and patent counsel, and who

was a counsel of record in this case. In the affidavit Crotty

stated that “the matters alleged in paragraphs 6-9 of de-

fendant’s counterclaim, to which this affidavit is attached,

and which are the proximate cause of damages alleged and

require the relief sought in said counterclaim, occurred

after the filing of the answer herein” (A. 63, para. 2). A

similar representation was made in Zenith’s motion for leave

to file, where Zenith counsel represented that the counter-

claim arose out of the matters set forth in defendant’s

answer, “and current related unlawful activities of plaintiff

occurring since the filing of the answer which activities are

the proximate cause of present and continuing damage to

defendant sustained after the filing of the answer” (A. 62).

Thus, although alleged matters occurring prior to the

filing of the answer would relate to the identification of the

alleged conspiracies and to the right to the injunctive relief

prayed, Zenith obtained leave to file its claim for damages

on the basis of the express representation that it was only

claiming damages resulting from matters occurring after

April 7, 1960, the date Zenith filed its answer.

Furthermore, Zenith’s counterclaim did not allege the

United States v. General Electric litigation nor assert toll-

ing, and, indeed, it could not have done so in light of the

limitations on Zenith’s damage claim asserted in its sworn

affidavit and motion.

To subsequently assert that Zenith was entitled to rely

on a tolling of the statute of limitations and thereby claim

damages based on acts taking place as early as 1954, is a

direct contradiction of Zenith’s sworn representations, and

if permitted would involve a major change in the scope of

its counterclaim for damages.

The cases establish that tolling by reason of the pendency

of government litigation should be affirmatively alleged as

a part of the cause of action if it is to be relied on. See

Tague v. Balaban, 1956 Trade Cas. 7 68,539 (N.D. Il.

1956) ; National & Transcontinental Trading Corp. v. Inter.

national General Electric Co., 15 F.R.D. 379 (S.D.N.Y.

1954) .35

Zenith’s counsel well knew that tolling should be pleaded

if it was to be relied upon. As we pointed out (HRI Br.

Opp. Mand. 34), in the amended and supplemental counter.

claim filed by Zenith in the RCA-Zenith litigation (PX 42,

A. 2743-50), Zenith expressly set forth government litiga-

tion and alleged “tolling of the statute of limitations be-

cause of said Government suit” (A. 2746).1°

15 The rule here is analogous to the requirement that “fraudulent

concealment” be pleaded if it is to be relied on as tolling the statute

of limitations. Moviecolor Ltd. v. Eastman Kodak Co., 288 F.2d 80,

88 (2d Cir.), cert. denied, 368 U.S. 821 (1961); Kansas City v.

Federal Pacific Electric Co., 310 F.2d 271, 284 (8th Cir. 1962), cert.

denied, 373 U.S. 914 (1963); Swan v. Board of Higher Education,

319 F.2d 56, 61 n. 9 (2d Cir. 1963); and Picoult v. Ralston

Purina Co., 1969 Trade Cas. § 72,681 (S.D.N.Y. 1969).

damage period conduct appeared in the Findings of Fact, prepared

by Zenith and adopted verbatim by the trial court, in which the

When Zenith not only failed to plead tolling but obtained

leave to file its damage claim on a basis totally inconsistent

with a claim of “tolling,” the Court of Appeals could reach

no other conclusion than the one that it did; namely, that

the issue of tolling was not presented.

This situation is analogous to M oviecolor Limited v.

Eastman Kodak Company, 288 F.2d 80 (2d Cir.), cert.

denied, 368 U.S. 821 (1961) where the Second Circuit held

that not only was tolling based on “fraudulent concealment”

not pleaded, but that it could not be subsequently pleaded

because “the complaint not only does not allege conceal-

ment but substantially negates it” (288 F.2d at 88). In this

case nothing could more “substantially negate” a claim of

tolling and the right to rely on pre-damage period conduct

as a basis for an award of damages than Zenith’s represen-

tation to the court in May 1963 that its claim for damages

was based on “matters ... which . . . occurred after the

filing of the answer herein” [April 7, 1960] (A. 63).

Aside from its attempt to persuade this Court that

the Court of Appeals somehow “ruled” improperly on

tolling, Zenith makes a new contention. It asserts that

“this Court in effect has ruled” that the statute of limita-

tions if applicable “would not run during the pendency of

the instant suit” and that the counterclaim would relate

back to the filing of the instant suit, citing footnote 2, 395

U.S. at 108. This newly devised contention (it was not

assertion of damages as to Canada based on alleged conduct going

all the way back to the formation of the pool in 1926 was made

(Findings XXV-XXX, XXXVI, A. 2903-06, 2908). It was subse-

quent to these findings that HRI’s new counsel obtained leave to

plead the defenses of release and limitations, which defenses were

not relevant to the counterclaim as pleaded. Zenith at no time

sought to assert tolling in the trial court, but first attempted to

raise the issue on appeal.

made in Zenith’s petition for mandamus) involves a clear

misstatement of what this Court said.

In footnote 2 this Court pointed out that Zenith, HRI

and the courts below all considered the damage period to be

the four years prior to the date of filing of the counterclaim,

t.e., May 22, 1959 to May 22, 1963, and “No argument was

made that the counterclaim, in whole or in part, related

back to an earlier pleading, thereby expanding the damage

period to include years prior to 1959” (395 U.S. at 108

n. 2). Such an argument, and the claim of damage based

on pre-damage period conduct, would, of course, have been

inconsistent with Zenith’s representations which formed the

basis of the grant of leave to file the counterclaim.

Finally, even if tolling had applied, Zenith’s recovery

would still be limited to damages resulting from conduct

occurring after September 27, 1957 since all damages re-

sulting from acts taking place during the period from 1926

(when the Canadian pool began) to September 27, 1957,

the date of the releases, would be barred. And since Zenith

claims that it should have had 16% of the Canadian market

beginning May 22, 1959 if it had been allowed to develop

the Canadian market during the period from 1926 to May

1959, it is obvious that a substantial portion of its claim

would be barred, in any event, by the releases.

VII. Zenith’s Assertion That It Should Be Granted Re-

covery of Damages Even If Barred by Release and

Limitations Is Groundless.

This argument was answered at pages 32-33 of HRI’s

brief in opposition to Zenith’s mandamus petition.

Zenith, under a new heading, Section IV (Z. Pet. Cert.

20-23), re-asserts the novel theory (Z. Pet. Mand. 23) to the

effect that even though the defenses of release and limita-

tions do apply, this fact should be ignored and Zenith

awarded the damages resulting from pre-release and pre-

damage period conduct.

The purported basis for this theory is that because the

Story Parchment and Bigelow cases have held that there

may be liberality in proof of the amount of damages under

some circumstances, particularly if the acts of the defend-

ants have made more definite proof impossible, there-

fore that part of the damage award which is barred from

recovery by release and limitations should nevertheless be

included in the award. Thus, citing Bigelow as purported

authority for its contention, Zenith asserts that it is an

“irrelevant issue... Whether or not evidence of damage

flowing from pre-damage period acts was mixed into the

damage award...” (Z. Pet. Cert. 22).%

In a word Zenith either asserts that these cases nullify

the Statute of Limitations (15 U.S.C. § 15b), and the law

as to settlement and release and their effect, or Zenith is

proposing that the legal effect of these defenses should

be ignored.

Contrary to what Zenith suggests, it will not be impossible

to determine what damage flowed from damage period con-

17 Zenith also asserts that because the Court of Appeals com-

mented that the type of evidence Zenith had offered was “compe-

tent evidence, prima facie” as a basis for determining damages and

because the court made reference to the issue of “excessiveness of

the award” (Slip Opinion 6), that the Court of Appeals had some-

how acknowledged the propriety of the original award and yet was

presuming to question it (Z. Pet. Cert. 21, 7). The fact is,

of course, that when the Court of Appeals was referring to “prima

facie” competency it was talking about the question of competency

absent the interposition of the affirmative defenses, and the refer-

ence to “excessiveness of the award” was related to the fact that

the award improperly included damages based on pre-damage

period conduct.

duct as contrasted to damage resulting from pre-damage

period conduct. The method to determine such damages

will be to start with Zenith’s actual market share at the

beginning of the damage period and determine what addi.

tional market share Zenith would have achieved and what

profits Zenith would have realized during the four-year

period, but for the damage period conduct of the Canadian

pool. Then subtracting Zenith’s actual profits during the

four-year period, the difference wil] constitute Zenith’s

damage.

It is quite apparent why Zenith asserts it should be

entitled to be awarded damages even though barred by

release and limitations. The likelihood is that the further

hearings will disclose that the award to which Zenith is

entitled is only a fraction of $18,892,173. In effect, Zenith

is arguing that it is irrelevant if the award includes mil-

lions of dollars to which it is not legally entitled.

VIII. There Is No Basis for Zenith’s Insinuation That

It Is an Embattled Litigant Being Denied Justice

by a Prejudiced Court of Appeals.

Zenith’s current petition omits the outrageous innuendo

of its petition for mandamus that “it is apparent from its

two opinions that the court below is going to find succes-

sive reasons for denying Zenith the treble damage recov-

ery in this case” (Z. Pet. Mand. 24), but continues its

basic pose as an embattled litigant being denied justice by

a prejudiced court. Thus, it again makes its charges

against Judge Cummings, a member of the hearing panel

(Z. Pet. Cert. 6-7), intersperses the brief with insinuations

of prejudice by the appellate court (Z. Pet. Cert. 7, 15, 16,

17)** and again argues that because the litigation has been

pending for a number of years, this is a reason why it ought

to be brought to an end, in Zenith’s favor (Z. Pet. Cert. 25).

We have already commented on the attacks upon Judge

Cammings and upon the entire hearing panel (HRI Br.

Opp. Mand. 35-39). In addition to the long delay in claim-

ing disqualification of Judge Cummings ( HRI Br. Opp.

Mand. 35-37), Zenith’s complete lack of good faith is

illustrated by the facts as to the charges against Judge

Cummings. After the original decision by the Court of

Appeals, Zenith filed its petition for rehearing requesting

“that the case may be reheard by the entire Court en banc”

(A. 4265), thereby specifically requesting that the entire

court (which included Judge Cummings) should partici-

pate. Zenith and its counsel then well knew all of the

alleged facts which were supposed to have disqualified

Judge Cummings, yet Zenith requested that he participate

in a rehearing.

In considering Zenith’s pose as a litigant being denied

justice there are certain additional facts which may well

be considered. .

First, Zenith originally got the trial court to enter find-

ings in January 1965 (which Zenith drafted) which,

after trebling, would call for a treble damage judgment of

almost $49 million (Finding XXXVI, A. 2908), of which

about $30 million would have been as to England and

18 For example, at page 15, Zenith asserts that the Court of Ap-

peals “limit{ed] the issues to be tried [on further hearings]

in such a way as to in effect destroy the petitioner’s right to recover

treble damages in this case.” This is sheer nonsense, for the Court

of Appeals specifically held that Zenith could recover damages

resulting from damage period conduct, and that is all it is entitled

to.

Australia and almost $19 million as to Canada. Following

only limited further hearings as to England and Australis

in late 1965, the trial judge himself recognized in part that

he had been misled and reduced his award as to those

countries by nearly $14 million, down to approximately $16

million (Amended Finding XXXVI, A. 3537, 3539). On

appeal the Court of Appeals held that Zenith in fact had

suffered no damage in those countries (388 F.2d at 36-37),

and this Covrt affirmed (395 U.S. at 114). If HRI had

been denied the epportunity to pursue its remedies, Zenith

would have been awarded almost $30 million based on

alleged “damages” which it said it had suffered, and which

in fact it had not.

Secondly, after Zenith got the trial court to enter the

findings calling for treble damages of almost $49 million,

it was apparent to Zenith that HRI could pay only a small

portion of this amount, its net worth at the end of 1964

being only about $3,184,419 (A. 3007). Accordingly, Zenith

for the first time asserted that the parent Hazeltine Cor.

poration should be bound by the judgments and the trial

court entered the judgments requested by Zenith. However,

the Court of Appeals held that the judgments against

Hazeltine Corporation were void for want of jurisdiction

(388 F.2d at 30) and this Court affirmed (395 US.

at 110). These proceedings took time, but this obviously

was no reason to deny the right of Hazeltine Corporation

to expose the mvalidity of the judgments against it.

Now, as to Zenith’s Canadian damage claim, Zenith again

suggests that the public interest requires that Zenith be

granted an award of $18,892,173 (Z. Pet. Cert. 17) and that

the litigation must be brought to an end in Zenith’s favor

(Z. Pet. Cert. 25). Let us consider that contention.

This Court agreed that Zenith’s damage claim as to Eng-

land and Australia was not valid (395 U.S. at 114). Asto_

—_— _— — — ~~]

- ener SR)

tah a

Canada, this Court concluded there was some evidence

“although by no means conclusive,” sufficient to support the

“inference” that Zenith had been injured “to some extent”

(395 U.S. at 114), but did not decide the question “how

much” Zenith could recover. Rather, it remanded the case

to the Court of Appeals so that it might consider the un-

decided issues relating to the affirmative defenses and the

amount of recoverable damage in the light of those defenses

which had not yet been ruled on by that court.

The Court of Appeals determined the question of release

and limitations, as it had the power and duty to do, and

sinee the trial court’s original damage award was based

in part on pre-release and pre-damage period conduct, it

remanded the case to the district court so that the

amount of damages to which Zenith was entitled could

be determined. Yet Zenith suggests that as a matter of

“grave public concern” (Z. Pet. Cert. 17) it should be

awarded the entire amount of $18,892,173.

We submit that the acknowledged public policy involved

in enforcing the treble damage remedy is no basis for the

award of millions of dollars of damages to which a litigant

is not legally entitled, particularly when the claimant is

one like Zenith, who has already been demonstrated to have

been ready to demand $30 million treble “damages” in

England and Australia which it did not suffer. As we

pointed out before (HRI Reply Br. Opp. Mand. 2-3), Zenith

is not some small company fighting for its life but one of

the giants of its industry asking to be awarded a sum,

which is not only legally unjustified, but which would be

totally destructive of HRI, since $18,892,173 is far in excess

of its net worth.

We submit that the ends of justice require that these

petitions of Zenith be denied so that the ease may finally go

back to the trial court for a determination of the amount

which HRI in fact owes to Zenith.

CONCLUSION

We respectfully submit that

of certiorari should be denied.

Of Counsel:

CHADWELL, KECK, Kayser &

RUGGLES

135 South La Salle Street

Chicago, Illinois 60603

RAndolph 6-2545

Mason, KOLEHMAINEN,

RaTHBURN & Wyss

20 North Wacker Drive

Chicago, Ilinois 60606

FInancia] 6-1677

Dated: February 24, 1970

Zenith’s petition for a writ

Respectfully submitted,

JoHN T. CHADWELL

Victor P. Kayser

JOSEPH V. GIFFIN

Rosert F. Warp

135 South La Salle Street

Chicago, Illinois

M. Hupson RatTHBURN

20 North Wacker Drive

Chicago, Illinois

]LAURENCE B. Dopps

160 Middle Neck Road

Great Neck, New York

Attorneys for

Hazeltine Research, Inc.,

Respondent

EET FR eas a Tete Ao,

Appendix A to the

Brief of Respondent

Hazeltine Research, Inc.

3n the

Bnited States Court of Appeals

For the Seventh Circuit

SEPTEMBER TERM, 1969 SepTeMBER Session, 1969

Nos. 15246, 15563

HazeLTINE ResEaRCH, Inc., )

Plaintiff and Counter-Defendant, Appeals from the

Appellant, nited States Dis-

v. : — sei od the

; sotriat

Zexttu Rapio CoRPORATION, — a ilinots, ney

Defendant and Counter-Clatmant, ern Division.

Appellee. 3

Ocroser 27, 1969

Before CastLr, Chief Judge, Kitey and Cummines, Cir-

cuit Judges.

Kuy, Circuit Judge. This court, on December 19,

1967, filed its decision, 388 F.2d 25 (7th Cir. 1967), in the

above causes and, so far as pertinent now, affirmed the

judgment awarding $150,000, treble damages, to Zenith

Radio Corporation for misuse by Hazeltine Research, Inc.

(HRI) of its domestic patents, but struck paragraph A of

the related injunction, issued to restrain HRI from im-

posing unlawful conditions on those patents. We reversed

the judgment in Zenith’s favor for $38,000,000, treble dam-

ages, based on HRI’s unlawful participation in the Canadi-

an, English and Australian patent pools, and ipso facto

set aside an injunction restraining HRI’s further un-

lawful antitrust activity in these foreign patent pools.

» —- PENELOPE Sar aOR NEO. yet ow ° : f

Ra SRILA TIL EE IT er Me EE EIT R WGI KM ALY bons . “i Re ES * r *% . eer

15246, 15563 2

On appeal to the Supreme Court, the treble damage

award with respect to the domestic patents was not

challenged. The Court, 395 U.S. 100 (1968), reversed our

decision striking paragraph A of the injunction and re.

manded that part to this court for further consideration,

The Court also reversed our decision setting aside the

award of damages flowing from the unlawful activity of

the Canadian pool and remanded that issue to us to con-

sider the effect of HRI’s affirmative release and statute

of limitations defenses on the award. In addition, the

Court reinstated the related injunction which this court

had set aside with that treble damage judgment for

Zenith.' The Supreme Court reversed our decision with

respect to the Canadian patent pool because it concluded

we erred in our determination that Zenith had failed to

prove the “fact” of damage in Canada.

After the Supreme Court mandate was filed in this

court, we gave leave to HRI and Zenith to file supple.

mental authorities. Zenith thereupon “abandon[ed]_ its

request” originally made in this court to reinstate para-

graph A which this court had struck. The following ques-

tions are before us: (1) whether Zenith’s injury during

the statutory damage period resulted to any extent from

HRI’s conduct preceding that period and, if so, what

effect releases given by Zenith in 1957 had on Zenith’s

recovery; (2) what effect the statute of limitations had

on HRI’s liability; and (3) whether the award of damages

was excessive. These points had’ been raised before us

by HRI in the first appeal, but we saw no need of passing

on them in view of our reversal of the judgment for

Zenith.

We have examined the issues now before us in the light

of the Supreme Court opinion and _ the supplemental

authorities cited to us. We vacate the judgment for

Zenith with respect to the Canadian pool in the amount

of $6,297,391. trebled, and remand for further proceedings

with respect to the award of damages.

——

1The Supreme Court affirmed this court ’s decision vacating judgments _

in Zenith’s favor against Hazeltine—Corporation. “ft affirmed our decision

with respect to setting aside the treble damage ‘judgment so far as it

was based on the patent pool activities in England and Australia.

PLS AR einer ao ey Are ment RC ON

. 4 Diphtle MELE so ait

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3 15246, 15563

THE AFFIRMATIVE DEFENSES

After the evidence at the trial was closed HRI moved

for leave to file the affirmative defenses in bar of Zenith’s

recovery. Zenith’s counsel objected to the filing of the

defenses on the ground that they came too late and were

waived. The district court, however, permitted the de-

fenses to be filed and thereafter denied HRI’s motion for

judgment based on the defenses. The Supreme Court

noted that the district court’s refusal to disturb the find-

ings it had already made with respect to the Canadian

pool was a rejection of the defenses either on the merits

or on the ground that the defenses had been waived under

Fen. R. Crv. P. 12(h). 395 U.S. 100, 117, n. 13. It is

our view that the court’s ruling was not on the basis of

waiver, but because the defenses on their merits did not

bar Zenith’s recovery. We turn therefore to consideration

of the correctness of the district court’s ruling.

The relevant four year damage period was measured

from May 22, 1963, when Zenith filed its counterclaim.’

The cutoff date therefore was May 22, 1959. HRI relies

upon releases given September 27, 1957, by Zenith to

RCA. General Electric, and Western Electric in settle-

ment of Zenith’s counterclaim in the case of RCA v. The

Rauland Corp. and Zenith Radio Corp., No. 48 € 1818

(N.D. Hl. 1957), in contending that Zenith’s claim is now

barred.

The Supreme Court in noting that the district court did

not date the events as occurring before or after the May

22, 1959 start of the damage period, said “[t]he damage

award was confined to injuries sustained during the

damage period, but the trial court apparently deemed it

immaterial whether the damage-causing acts occurred be-

fore or after the start of the damage period.” 395 U.S. 100,

116 (1968). Damages were awarded, the Court said, on the

assumption that were it not for the conspiracy, Zenith

would have had sixteen per cent of the Canadian market

instead of its actual three per cent on May 22, 1959 and

throughout the damage period. The Court then stated that

2 See 395 U.S. 100, 108 (1968). 15 U.S.C. § 15b reads:

Any action to enforce any cause of action under sections 15 or

15a of this title shall be forever barred unless commenced within

four years after the cause of action accrued.

PRIMI F ERY

15246, 15563 4

since the district court attributed the deficient share gp

May 22, 1959 to the conduct of the pool, that conduct

necessarily preceded the deficiency, and therefore pre.

damage period conduct necessarily resulted in some part

of the damages awarded.

Since HRI was an unnamed joint tortfeasor, as admitted

by Zenith at trial, with its co-conspirators in the Canadian

pool who were named in the Rauland case, and Zenith did

not reserve its right against HRI, the releases given by

Zenith clearly barred recovery from HRI of past, present

and future damages flowin ‘So any misconduct of HRI

prior to the dates of the releases. Twentieth Century-Foz

Film Corp v. Winchester Drive-In Theatre, 351 F.2d 935,

931 (9th Cir. 1965), cert. denied, 382 U.S. 1011 (1966);

Dura Electric Lamp Co. v. Westinghouse Electric Corp,

249 F.2d 5 (3d Cir. 1957). Our inquiry therefore is

narrowed to the question of the effect of the statute of

limitations on Zenith’s right of recovery for post-release

misconduct.

It is “well settled . . . that no civil action lies for a

conspiracy unless there be an overt act that results in

damage to the plaintiff.” Nalle v. Oyster, 230 U.S. 165,

182 (1913). Consequently, in the case before us the mere

existence of the conspiracy following the 1957 releases

does not itself give rise to Zenith’s cause of action. The

law with respect to the statute of limitations in See. 15b

of the Clayton Act is that the period commences to run

from the last overt act of the conspiracy. Crummer Co. v.

DuPont, 223 F.2d 238, 247-48 (5th Cir.), cert. denied, 350

U.S. 848 (1955); Momand v. Universal Film Exchange,

43 F. Supp. 996, 1007 (D. Mass. 1942), 2 Ae 172 F.2d 37,

47 (1948); Steiner v. Twentieth Century-Fox Film Corp.,

232 F.2d 190, 194 (9th Cir. 1956) ; Century Hardware Corp.

v. Powernatl Co., 282 F. Supp. 223, 227 (E.D. Wis. 1968).

In Century Hardware, the district court construed this

court’s decisions in Emich Motor Co. v. General Motors

Corp., 229 F.2d 714 (7th Cir. 1956), and Baldwin v. Loew’s,

fren 32 Bd 397 (ith Cir. 1963), as’ stating the law”

of this Cirenit to be in accordance with the foregoing

decisions.

In Hanover Shoe, Inc. v. United Shoe Machinery Corp.,

377 F.2d 776 (3d Cir. 1967) (supplemental opinion at 793-

95), the following rule was applied:

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RTOS Ee EE a CT NEF EL NS ER PRL NS TT

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5 15246, 15563

[W]here the repeated and measurable invasion of a

plaintiff’s rights occurs both outside the statutory

period and also within it, the fact that some of the in-

jury and damage occurred outside the statutory period

does not affect the plaintiff’s right to recover for the

separate invasion of its rights which occurred within

the period.

The rule as applied in that case was approved by _the

Supreme Court on appeal of the Hanover case. See 392 U.S.

481, 502 n. 15 (1968). Thus, even though Zenith may have

had a cause of action for overt acts of the conspiracy prior

to May 22, 1959—the beginning of the damage period—

the fact that it did not then file suit does not preclude its

present suit for damages suffered within the damage period

as a result of an overt act repetitious of the unlawful pre-

period acts occurring in the damage period.

HRI conceded at trial that the Canadian pools existed

into the damage period. The record establishes that on

June 5, 1959, the Canadian pool wrote Zenith claiming

that it was infringing pool patents by its distribution of

American-made televisions and radios in Canada. This

act was substantially similar to overt acts occurring in the

pre-damage period. Accordingly, Zenith, claiming the right

to recover for damages suffered only in the statutory

period, is entitled to recover for the damages it suffered

as a result of the June 5 injury.

We conclude therefore that the district court’s denial of

the motion to bar Zenith’s recovery completely on the

ground of the releases and the running of the statute of

limitations was not erroneous.

8 Zenith argued in its original brief that the statute of limitations was

tolled by reason of Sec. 5(b) of the Clayton Act during the pendency

of United States v. General Electric, et al. in the Southern District of

New York from November 28, 1958 to November 1, 1963. At the trial

Zenith did not raise this point in a reply to HRI’s affirmative defense,

so that, strictly speaking, the point is not properly before us. However,

in any event, the law of this cirenit is that the tolling of the limitation

a party defendant in the government suit. Sun Theatre Corp. v. RKO

Radio Pictures, 213 F.2d 284, 292 (7th Cir. 1954). HRI was not a party

defendant in that suit, although named as co-conspirator.

-jn~-a-- private—-antitrast-——suit—only with..resnect to.

15246, 15563 6

EXCESSIVENESS OF THE AWARD

We think this issue is not now ripe for decision becans

HRI had no opportunity, after the district court permitted

filing of HRI’s affirmative defenses, to introduce evideng

relevant to the affirmative defenses. We vacate the dis.

trict court’s award of $6,297,371—trebled to $18,892,173_

and remand for further proceedings.

The measure of proof is the difference between the per.

centage share that Zenith actually enjoyed during th

damage period and the percentage it would have had

as a free competitor. There was testimony for Zenith,

relied on by the district court, that in the four year

damage period, had Zenith been free from the unlawft!

activity of the Canadian pool which virtually excluded it

from the Canadian market, it would have enjoyed the same

proportion of that market as it did in the United States

market. In Canada its principal competitors were counter.

parts of its principal competitors in the United States,

Its promotion and advertising flowed back and forth be.

tween the two countries. Distributors in Canada were

available, but were frightened off by the pool’s activities

and threats. It is our view that this was competent evi-

dence, prima facie, upon which the amount of dam

could be reasonably approximated, by virtue of the Sn-

j reme Court’s decision in Bigelow v. RKO Radio Pictures,

q 327 U.S. 251, 264-65 (1946).

The district court in permitting the filing of HRI’s af.

firmative defenses of release and statute of limitations—as

| an amendment to HRI’s defense to Zenith’s counterclaim

—made it plain in doing so that the court would make no

; change in its findings and conclusions with respect to

‘ damage in the Canadian market. However, we refer again

‘ to the statement of the Supreme Court that “[s]ome part

of the damages awarded .. . necessarily resulted from

: pre-damage period conduct.” 395 U.S. 100, 116-17. The

: Court noted that although the damage award was confined

a woe __to the damage period. the trial court apparently-deemed _—

| immaterial whether the “damage-causing” acts occurred

before or after the start of the damage period.

Farlier in this opinion we held that the releases only

harred Zenith’s recovery of damages caused by injuries

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7 15246, 15563

inflicted prior to the date of the releases; that the damage

period commenced to run from the last overt act of the

conspiracy ; and that the statute of limitations did not bar

recovery of damages caused by “damage-causing” acts

within the period. Accordingly, we think that HRI should

have—what it was not given at the trial—an opportunity

to introduce testimony, In support of its defense of statute

of limitations, aimed at excluding from recovery damages

flowing from pre-period “damage-causing” acts, as well as

an opportunity to introduce evidence to show that Zenith’s

damage flowing from “damage-causing” acts within the

period did not amount to $6,297,391.

The judgment for $6,297,391—before trebling—is vacated

and the cause is remanded for further proceedings con-

sistent with the views expressed in this opinion.

A true Copy:

Teste:

iar eae rae ROE OE Se RIE RST RS SCR SS

Clerk of the United States Court of

Appeals for the Seventh Circuit.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.