Opposition Brief — Burnham Chemical Co. v. Borax Consolidated, Ltd.

Subject Index

Page

Sinn = Shieesivenipeiesenibimstepestoiionimestiiioanionidenttasapaieece icts.. 2

A. The complaint, the alleged acts of wrongdoing, and the al-

leged damage ................ i 2

B. The special trial on the issue of the statute of limitations and

the findings thereon of both courts below.......... 3

C. Erroneous assertions and half truths in the a 8

Res 10

Ce, La Te TE 10

I. The state statute of limitations applies to private suits under

the antitrust laws, but whether the state law be applied, or

some newly created federal rule of fraudulent concealment,

the petitioner's case is barred............... aes 11

II. A private suit for treble damages for violation of the antitrust

laws is not an action for fraud, but even under the statute

of limitations applicable to actions for fraud the petitioner's

case is barred............... 13

III. The statute of limitations begins to run, with respect to pri-

vate claims for damages for violation of the antitrust laws,

against each overt act as it occurs, but even if its running

were deferred until the last overt act causing damage, the

petitioner's case would still be barred... 18

Table of Authorities Cited

CASES

Pages

Alexander Milburn Co. v. Union Carbide & Carbon Corp., 15 F.2d

EL & Se Neen 19

American Tobacco Company v. People’s Tobacco Co., 204 Fed. 58

BD ROD cain ccrnt cine cctnncetinnnacesinciieitait tN 15, 16

American Tobacco Company v. United States, 147 F.2d 93, aff'd

SO ET Fe insta tcrcsicictntierrresinteninnnn sap santignliataiocbkanhinssiaindes 17

Apex Hosiery Co. v. Leader, 310 U.S. 469 14

Bailey v. Glover, 21 Wall. 342..............---------0-.---cse---s000+- 13, 14

Bluefields S. S. Co. v. United Fruit Co., 243 Fed. 1 (3 Cir.)...........- 11,19

Bowles v. Pure Oil Co., 5 F. R. D. 300 17

Bruce’s Juices v. American Can Co., 330 U.S. 743........---------------+++ 20

Campbell v. Haverhill, 155 U.S. 610............------------------0-++ 19

Chattanooga Foundry and Pipe Works v. City of Atlanta, 203 U. S.

390 (1906) ......n...--ceee--e--ncnnnenceererocsessernnenscccrcseesenseese 11, 12, 19

Comstock v. Group of Investors, 335 U.S. 211-.......-...-.-----+0-+0--00 10

Connecticut Importing Co. v. Frankfort Distilleries, 101 F.2d 79

RS Se lin

Cope v. Anderson, 331 U.S. 461.......... Ms 11,19

Feak v. Marion Steam Shovel Co., 84 F.2d 670 (9 Cir.), cer. den.

299 U.S. 604... 15

Fidelity & Casualty Co. of New York v. Jasper Parnitust Co., 117

N.E. 258, 186 Ind. 566. 17

Fleitmann v. Welsbach Co., 240 U.S. 27.. 1ln

Foster & Kleiser Co. v. Special Site Sign Co., 85 F.2d 742 (9 Cir.)

cer. den. 299 U.S. 613 11, 14, 19

Glenn Coal Co. v. Dickinson Fuel Co., 72 F.2d 885 (4 Cir.)........ 19

Holmberg v. Armbrecht, 327 U.S. 392........-.-------0-e+0000 11, 12

Jones v. Bankers Life Co., 131 F.2d 989 (4 Cir.) <a

Kavanagh v. Noble, 332 U.S. 535 20

Kimball v. Pacific Gas & Electric Co., 220 Cal. 203, 30 Pac.2d 39. 12, 14

Lady Washington Consolidated Co. v. Wood, 113 Cal. 482, 45 Pac.

809 14

een

| TABLE OF AUTHORITIES CITED

Pages

Lattin v. Gillette, 95 Cal. 317, 30 Pac. 545. 15n

Leonard v. Socony Vacuum Oil Co., 42 F. Supp. 369. 19

Neff v. New York Life Ins. Co., 30 Cal.2d 165, 180 Pac.2d 900..14, 15n

Rose v. Dunk-Harbison Co., 7 C.A.2d 502, 46 Pac.2d 242

Sacramento Suburban Fruit Lands Co. v. Johnson, 36 F.2d 935

(9 Cir.) »

Scafidi v. Western Loan & Building Co., 72 C.A.2d 550, 165 Pac.

2d 260 3 15n, 17

Seaboard Terminals Corp. v. Standard Oil Co., 104 F.2d 659 (2

Cir.) 11

144 F.2d 585 (10

Sseationsetsndinntnnetansieciniednesteahiiasnnnnesichnaiantiiinnatpieestbtnimstistniambumisascnananie ia 11,14

Strout v. United Shoe Machinery Co., 208 Fed. 646

‘Teall v. Schroder, 158 U.S, 172....

Texas Rice Lands Co. v. McFaddin, etc. Co., 265 S.W. 888 (Tex. ) ..

Twin Ports Oil Co. v. Pure Oil Co., 46 F. Supp. 149

Twin Ports Oil Co. v. Pure Oil Co., 119 F.2d 747 (8 Cir.), cer.

den. 314 U.S. 644 : ‘ .

United States v. Dickinson, 331 U.S. 745

Vertex Investment Co. v. Schwabacher, 57 C.A.2d 406, 134 Pac.2d

891

Williamson v. Columbia Corp., 110 F.2d 15 (3 Cir.), cer. den.

310 U.S. 639

iv TABLE OF AUTHORITIES CITED

Page

STATUTES AND RULES

California Code of Civil Procedure:

Re: RE Raat wis eh Eat Se OPE cae Rt AERC ORR, SEE EO 3

i 3, 14

Sec. 338(4) ........ wilectldiacataa ritalin dukiiiaticaliads 14

CU I NIL, Si chat ch herstpatnetieesenenniibbddanadnnanttliibiadhaandoied 12

Rules of Civil Procedure:

BNE TED csttnisihscinieclpsirntinipalintninienaciniiadidinhnnedstatanssitnaibhtianitinidenaniien 4

U. S. Code:

Title 15, Sec. 16. peraieneninanenteneniinnnesnhiannianennnutsinesecsinimensnniinnt 12

_—

In the Supreme Court of the

United States

OcTOBER TERM, 1948

No. 513

BURNHAM CHEMICAL COMPANY, a corpo-

tation a

F Petitioner,

vs.

Borax CONSOLIDATED, LtD., a corporation,

PaciFic Coast BoRAx COMPANY, a cor-

poration, UNiTep STATES Borax Com-

PANY, a corporation, and AMERICAN

POTASH & CHEMICAL CORPORATION,

Respondents.

Brief of Respondents Borax Consolidated, Ltd., Pa-

cific Coast Borax Company and United States

Borax Company in Opposition to Petition for

Writ of Certiorari.

The petition fails to state or reveal the relevant facts of the

case, much of what it does assert as fact is purely imaginative

and quite unsupported in the record, and the questions of law

which it seeks to raise are, in this case, entirely academic. Indeed,

once the facts are fairly stated, there are no issues of law what-

ever. The decision of the court below is in full conformity with

the decisions of this Court and does not conflict with any

decision of any other Court of Appeals.

2

STATEMENT

The petition seeks to review a decision of the Court of

Appeals (reported at 170 F.2d 569) unanimously affirming a

judgment of the District Court which dismissed the action as

barred by the statute of limitations. The suit was filed in July,

1945 and was an ordinary action at law to recover damages

arising from alleged violation of the antitrust laws.

A. The Complaint, the Alleged Acts of Wrongdoing, and the

Alleged Damage.

What the complaint charged was that the plaintiff had been

damaged in two respects, and two only:

1. In 1924 and 1925—20 years before this suit was filed—

respondents allegedly conspired to have the Post Office Depart-

ment issue a “fraud order,” preventing petitioner from using

the mails. The fraud order was issued in June, 1925, with the

effect of compelling petitioner to abandon the sale of packaged

borax (R. 43-45, Complaint para. 73).

2. In 1928, respondents allegedly reduced the price of borax

below petitioner's cost of production, in conspiracy, as a result

of which petitioner was driven out of business entirely (R. 44-

45, 47, Complaint paras. 73, 76). It is alleged that petitioner

shut down in January, 1929 (R. 45, 47-48), 16 years before this

suit was filed, and it was never thereafter in business (R. 400).

Its operations had been entirely on property leased from the

government under a mineral lease, and that lease was cancelled

by the government for non-payment of rent eight years before

this suit was filed (R. 610).

The petition asserts (p. 2) that after 1929 petitioner sought to

get back into business but has been prevented by respondents.

There is not a word in the record to support this assertion.

No overt act of respondents causing damage to petitioner is

alleged in the complaint to have occurred after 1929, and this

3

fact was conceded by petitioner (R. 242). The only act of peti-

tioner that might be deemed an attempt to get back into the

borax business was an effort to obtain from the government a

mineral lease on a certain ore-body (the Little Placer), a wholly

different property than its original lease. One of the respond-

ents sought to obtain a patent to the same ore-body. However,

the government denied petitioner's application for a lease so long

ago as 1933 (R. 50), it also denied a patent to the respondent,

and the ore-body still remains in the government's hands. Now

petitioner not only did not claim that as a result of the govern.

ment's denial of its application for a lease it Sustained any

damage for which respondents could be held liable, but it

expressly disavowed any such claim. As noted in the opinion

of the court below (R. 833):

“* * * at the trial the court asked appellant's counsel

what (overt) act of appellees occurring after 1929 resulted

in damage to appellant, aside from the futile attempts to

secure a Government lease on The Little Placer. Appellant's

counsel responded that nothing else had occurred; that

appellant did not allege any other incidents in its complaint

and that it could prove no damage from The Little Placer

incident.”

B. The Special Trial on the Issue of the Statute of Limitations

and the Findings Thereon of Both Courts Below.

The California Code of Civil Procedure contains the following

provisions:

Sec. 335:

“The periods prescribed for the commencement of actions

other than for the recovery of real Property, are as follows:”

Sec. 338:

“Within three years: 1. An action upon a liability created

by statute, other than a penalty or forfeiture.”

4

Since the period of the statute of limitations in California is

thus three years, respondents moved to dismiss the action on that

ground. Petitioner sought to avoid the statute by claiming

“fraudulent concealment” by respondents. Although respondents

contended that the facts alleged did not in law constitute

fraudulent concealment, the trial court preferred to hear what-

ever evidence petitioner had to offer on the subject. At peti-

tioner’s own suggestion (R. 226, 254-257), the court, under the

authority of R.C.P., Rule 42(b), ordered a separate trial of the

issue of the statute of limitations before any trial of the merits

and directed respondents to file special answers to set up the

defense of the statute of limitations without answering the

complaint generally (R. 185).

The petitioner would characterize respondents as if the charges

of the complaint on the merits were true, asserting that those

accusations were admitted because, forsooth, they were not

denied. But the on/y issue framed and tried was the statute of

limitations, so that petitioner's charges on the merits were neither

admitted nor denied (so stated by trial court, R. 329). In

~ response to the same kind of argument in the trial court, the

judge said (R. 751):

“It could be the most dastardly conspiracy that human

ingenuity could devise and it still won't change the ques-

tion here to be determined, and that is whether the plaintiff

had knowledge of it.”

After a trial of over a week, during which petitioner's presi-

dent was confronted on cross-examination with a score and a

half of writings by him throughout the years, the court decided

the issue of fact against the petitioner.

Thus the bald fact is that the issue of fraudulent concealment

was tried and was decided against petitioner on the facts. The

utterly devastating character of the finding is shown by the

following statement from the District Court's findings (R. 803)

quoted in the opinion of the court below (R. 841-842):

5

“* * © All of the evidence shows both knowledge and

00d cause to believe on the part of the plaintiff during

the period specified in the special inquiry, that its business

had been damaged by acts of the defendants in violation of

the Antitrust Laws. * * * Statements in writing and under

oath by the witness Burnham, who was the managing

president of the plaintiff, commencing in 1925 and con-

tinuing throughout the years to 1940, show without dis-

pute a continued awareness and knowledge of the plain-

tiff's cause of action set out in the complaint. Not only

that, but these writings make continuous claim as to the

responsibility of the defendants for the loss and damage

caused to the plaintiff's business.”

The court below, after reviewing the lengthy record, com-

mented (R. @44) that the appellant's case had been given a

“thorough examination at the hearing on the special issue” and

said:

“We think that this judgment of the court was rested not

only upon cases which clearly sustain it but i is also forti-

fied by substantial and convincing evidence of such per-

Suasive and controlling force as to compel its entry.”

Thus the two courts below concurred in finding that ever

since 1925 and 1928 petitioner had knowledge of its alleged

cause of action against respondents.

The petition erroneously states that respondents “held them-

selves out” as competing corporations (p. 3), or that they con-

spired to conceal their conspiracy (p. 20). There is no allega-

tion whatever in the complaint to any such effect, and on the

facts all that the claim comes to is that respondents did not

publicly cry “peccavimus” and announce that they had violated

the law. Similarly, it is said in the petition (p. 3) that officials

of respondents on inquiry by petitioner denied the existence of

the alleged conspiracy. But the fact as found by both courts

below is that the petitioner Separately accused two of the

6

respondents of having conspired to drive it out of business, they

then merely denied the accusation, and petitioner did not believe

the denials. On these matters the trial court's finding (R. 803-

804), quoted in the opinion of the Court of Appeals (R. 842-

843), is this:

‘“* * * There has been no evidence in the opinion of the

court of any fraudulent representation or concealment by

the defendants of the plaintiff's cause of action which

deterred the plaintiff from timely presentation of its claim

in this court. The so-called Zabriskie and Emlaw conversa-

tions do not by any stretch of the imagination go beyond

denials of the plaintiff's claim. In no sense do they reach

the stature of fraudulent representations or concealment of

such an affirmative nature as to in law be misleading to the

plaintiff. Moreover, the evidence without dispute shows

the plaintiff did not rely upon the statements made by

these two men and hence there is no proof of any mis-

leading character to be attributed to them.”

In view of the concurring findings of the two courts below,

no review of the evidence is necessary, but even a passing men-

tion of some of the items in the large record reveals the utter

hollowness of the petitioner's case.

In 1926 in litigation with the Postmaster in the United States

District Court for Nevada the petitioner under oath charged

that respondents had conspired in violation of the antitrust laws

to drive it out of business and to that end had caused the postal

fraud order to issue, accused respondents of constituting a

monopoly, a “borax trust” and a conspiracy in restraint of trade,

and called upon the government to prosecute respondents under

the antitrust laws (R. 409-423, e.g., 419, 420). In 1930 petitioner

reasserted these charges in the same litigation and added that

the intervening price cuts of 1928 were part of the same

scheme (R. 561-562, 567).

_ ;

Following the price cuts petitioner consulted attorneys in late

1928, and, after studying the circumstances, they advised peti-

tionsr that it had a good case against respondents under the

antitrust laws because the price cuts were designed for the

express purpose of killing off competition. They added that any

innocent explanations of the price cuts were mere “cloaks and

disguises” (R. 510, 515, 518, 519). As petitioner, in 1939, 11

years later, wrote to the Assistant Attorney General in charge

of the Antitrust Division, its attorneys had advised it in 1928

that it had “a case against the Trust for violating the Sherman

Antitrust Laws,” and at all times thereafter petitioner was “‘con-

vinced” from the circumstances in which the Price cuts occurred

that they had been designed to drive it out of business, but

petitioner had failed to sue at the time for extraneous reasons

(R. 398-401). Ten years after this advice of counsel, in 1938,

the petitioner again consulted an attorney, this time in New

York, and was again advised that it had had a good case under

the Sherman Act against respondents but that by 1938 the claim

was barred by the statute of limitations (R. 615).

In 1934 petitioner was referring to respondents as “having

established, continued and maintained an evil and strangling

monopoly in the borax business” (R. 585) and was taking

public credit for having “for six years * * * been defending the

interests of the people of the United States against the illegal

Practices of the borax trust” (R. 603). In 1937 the petitioner

was informing a Senate Committee that the respondents had

driven it out of business by illegal conspiracy in 1928 (R. 593-

594). In 1938 petitioner had prepared for its use a lengthy

monograph as a history of its business entitled “People of the

United States v. Foreign Owned Monopoly,” wherein after

summing up all the evidence, all facts and circumstances, it

concluded that no stronger evidence was needed to establish

petitioner's case against respondents: “What stronger evidence,”

8

it inquired, “would one want to show that the British Borax

Trust itself was behind the various steps that have been taken to

defeat the Burnham Chemical Co. * * *” (R. 678). In 1939

and 1940 in a series of letters to the Department of the Interior

and the Antitrust Division the petitioner reviewed the circum-

stances of the price cuts, what preceded and what followed,

pointed out why innocent explanations of the price cuts did not

ring true, and urged that the evidence clearly demonstrated

respondents’ illegal conspiracy to drive petitioner out of busi-

ness in 1928 (Cf. R. 618-621, 623-624, 633-634, 639-641). In

1940 petitioner boasted to its stockholders that ever since 1929

it had been publicly calling attention to the fact that foreign

owned borax interests were monopolizing borax deposits and

“driving out American competition” (R. 655) and expressed

gratification that the Department of Justice was about to take

action.

During all these years the reason that petitioner did not sue

was that it preferred to use the funds made available to it by its

stockholders for other purposes (Cf. R. 660-661). Meanwhile,

numerous witnesses upon whom respondents would need to rely

in meeting petitioner's charges on the merits had died (Cf. R.

537, 659).

C. Erroneous Assertions and Half Truths in the Petition.

To avoid the undisputed facts and the findings of the two

courts below concerning its knowledge of its cause of action, the

petitioner indulges in a considerable number of erroneous

assertions and half truths. In addition to some already men-

tioned, we may briefly note others. Thus petitioner asserts (p. 3)

that the evidence on which the complaint is based was not

discovered until 1944 when, on seizure of one of the respondents

by the Alien Property Custodian, a so-called master agree-

ment and other documentary evidence was found in its files.

This statement is purely imaginative, and neither allegation in

9

the complaint nor evidence in the record can be found to

support it.

The petition further asserts that in 1944 the government

instituted proceedings against respondents accusing them of

violating the antitrust laws and therein referred to an alleged

written agreement made in 1929 of which, says petitioner, it

had no previous knowledge. While the complaint in the instant

case does refer to the suits by the government in 1944, the 1929

agreement alleged by the government was one which the govern-

ment averred was first made in November, 1929, i.e., nearly one

year after the petitioner had already gone out of business; the

government made no charges about any pre-existing conspiracy or

wrongdoing. Thus, the agreement of November, 1929 was, if it

existed at all, one having no relation whatever to petitioner's

case (Cf. discussion at page 16 infra).

Furthermore, petitioner's complaint averred that the alleged

agreement of November, 1929 was a mere reduction to writing

of previous “understandings, combinations and conspiracies”

(R. 36, Complaint para. 66). And of these alleged previous

conspiracies petitioner, as we have seen, was for years convinced

that it had sufficient proof.

Moreover, it need hardly be added that the suit by the govern-

ment was a mere accusation; its allegations were no evidence of

their truth, and the assertion in the petition (p. 8) that as a

result of the government's suits an illegal agreement or con-

spiracy became a matter of public record is quite spurious. By

the mere filing of the government's suits petitioner did not dis-

cover anything more than it had known, for the allegations

are presumed to be untrue (Cf. observation of trial court,

(R. 279); indeed, they were denied and have never been put to

the test of trial.

' 7

ARGUMENT

Summary

The petition hardly claims that the Court of Appeals failed

to apply the law as it now exists. Nor does it suggest that

under the California statute of limitations its claim is not barred.

What petitioner asks this Court to do is to declare new law.

Thus the petition states (p. 14) that the issue is whether

“a private action, asserting a federal right based upon the

antitrust laws [is} to be defeated by a literal application of a

state statute of limitations.” Petitioner does not make clear

whether it asks this Court to abrogate entirely the settled rule

that state statutes of limitations apply to actions at law on

federally created rights where no federal statute of limitations

exists, or whether it would only abrogate that rule in antitrust

actions, and, if the latter, on what it would base the distinction.

Nor does it make clear whether it would have this Court sweep

away the state statutes of limitations entirely in private antitrust

actions, thereby leaving such actions, alone of all suits on federal

rights, wholly free of any statute of limitations, or whether it

would only modify the normal application of the state statutes

in some respects, and, if the latter, to what extent.

Moreover, petitioner asks this Court to declare new law in

respects that can have no possible effect on the outcome of this

particular case.

It is elementary that concurring findings of two lower courts

are final and will not be reviewed by this Court. Comstock v.

Group of Investors, 335 US. 211, 214; United States v.

Dickinson, 331 U.S. 745, 751. Petitioner is thus barred by the

finding that ever since 1928 it not only had good cause to know

but in fact knew of its alleged cause of action against respond-

ents. And petitioner therefore does not indeed assail the finding

(except by sly and covert suggestion). In view of this finding,

the issues of law that petitioner would raise are all moot.

’ u

I. The State Statute of Limitations Applies to Private Suits

Under the Antitrust Laws, but Whether the State Law Be

Applied, or Some Newly Created Federal Rule of Fraud-

ulent Concealment, the Petitioner's Case Is Barred.

For 43 years, since the decision of this Court announced by

Mr. Justice Holmes in Chattanooga Foundry and Pipe Works v.

City of Atlanta, 203 U.S. 390 (1906), it has been the law that

in suits for treble damages under the antitrust laws the state

statute of limitations applies, since Congress itself has prescribed

no period of limitations and since the action is purely one at

law for damages. This rule, that the state Statute of limitations

governs, has been applied without deviation in every circuit

where the question has arisen. Cf. Foster & Kleiser Co. v. Special

Site Sign Co., 85 F.2d 742 (9 Cir.), cer. den. 299 U.S. 613; State

of Oklahoma v. American Book Company, 144 F.2d 585 (10

Cir.); Momand v. Universal Film Exchange, 43 F. Supp. 996

(comprehensive analysis by Wyzanski, J.); Seaboard Terminals

Corp. v. Standard Oil Co., 104 F.2d 659 (2 Cir.); Blue fields

S. S. Co. v. United Fruit Co., 243 Fed. 1 (3 Cit.); Williamson

v. Columbia Corp., 110 F.2d 15 (3 Cir.), cer. den. 310 U.S. 639.

Only recently the rule has twice been recognized by this

Court, once in Holmberg v. Armbrecht, 327 US. 392 and again

in Cope v. Anderson, 331 US. 461, 466. The Holmberg case is

cited by petitioner; yet there this Court (at p. 395) reasserted

the rule that state statutes of limitations govern in actions at law

brought on federally created rights and cited the Chattanooga

case, supra, as a leading example of that very rule; and in

Cope v. Anderson this Court cited, to the same effect, the

Chattanooga case, the Seaboard case, supra, and the Blwefields

Case, supra, all antitrust cases.

1. The action in its very nature, as well as its form, is strictly at law.

Holmes, J. in Fleitmann v. Welshach Co., 240 U.S. 27, cited with

proval in Mercoid Corporation v. Mid-Continent Co., 320 U.S. 661, 671;

Meeker v. Lehigh Valley Railroad Co., 162 Fed. 354; Connecticut Import-

ing Co. v. Frankfort Distilleries, 101 F.2d 79, 87 (2 Cir.).

12

Petitioner now asks that this rule be abrogated and that this

Court prescribe its own statute of limitations to apply uniformly

throughout the country. The fact that for 43 years Congress has

contentedly accepted the Chattanooga rule makes all the more

applicable to antitrust cases the principle (Holmberg v.

Armbrecht, supra) that in actions at law the silence of Congress

is equivalent to a direct pronouncement that it is federal policy

to adopt the state statute of limitations. Indeed, the Clayton Act

in 1914 necessarily recognized the application of state statutes

of limitations, when in Section 5 (15 U.S.C., Sec. 16) it pro-

vided for suspension of the statute of limitations in certain

circumstances, there being no statute of limitations to suspend

if not the state statutes. And, if a uniform statute of limitations

is now desirable, Congress is fully capable of prescribing one,

and it is to Congress and not to the Court that the appeal should

be made.

But the utter pointlessness of petitioner's argument is made

evident by a simple inquiry. What rule of limitations would it

have this Court announce as a federal rule? Apparently the

petitioner seeks a rule that would toll the running of the statute

of limitations during any period of “fraudulent concealment.”

But petitioner's case was tested by exactly such a rule. By judi-

cial decision all California statutes of limitations are tolled by

fraudulent concealment, whatever the cause of action and what-

ever the statute and without express provision to that effect in

the statute.” Kimball v. Pacific Gas & Electric Co., 220 Cal. 203,

30 Pac.2d 39. It was for precisely this reason that the petitioner

was given a trial on this very issue, and it was found that there

was no fraudulent concealment.

Consequently, it can make no difference to the petitioner's

2. The petition (p. 14) asserts that the court below held that the

statute of limitations cannot be tolled for ‘fraudulent concealment.” How

petitioner could make so violently erroneous a statement is incomprehen-

sible.

13

case whether the California statute of limitations or some new

purported federal rule is applied. In short, the petitioner is

asking this Court to issue what could be nothing more than an

advisory opinion since it could not possibly alter the result

in the case in hand.

ll. A Private Suit for Treble Damages for Violation of the Anti-

trust Laws Is Not an Action for Fraud, but Even Under the

Statute of Limitations Applicable to Actions for Fraud the

Petitioner's Case Is Barred.

Perhaps petitioner goes further and asks not only that the

state statute of limitations be ignored and a federal rule created

but also that the federal rule should be the one applied in most

jurisdictions to actions for fraud, i.e., the rule that the period of

limitations does not begin to run until “discovery” by the plain-

tiff, even though defendant has been guilty of no acts of fraudu-

lent concealment.*

In this connection petitioner cites Bailey v. Glover, 21 Wall.

342. The case is not in point. The cause of action there, as here,

arose under a federal statute, but, unlike the Sherman Act which

does not prescribe its own period of limitations, there the federal

statute contained its own statute of limitations. This Court

merely held that every federal statute of limitations is to be

tead as including a provision that, if the cause of action is based

on fraud, it does not accrue until discovery. As noted in Bailey

v. Glover itself, the rule of that case has no application to an

action at law under a federal statute not containing its own

period of limitations and with respect to which the state statutes

therefore apply.

3. If this is petitioner's claim, it is contrary to the position taken by it

in the District Court where it conceded that an action for damages under

the Sherman Act is not an action for fraud (R. 795) and informed the

court that the statute of limitations had run unless petitioner was able to

Prove as an “excusatory fact” its claim of fraudulent concealment (R.

267, 306).

14

Moreover, resort to Bailey v. Glover is not necessary to find

the “discovery” rule for actions based on fraud. Under express

statutory provision in California (Code of Civil Procedure, Sec.

338(4)), in “an action for relief on the ground of fraud,”

“the cause of action * * * [is} not to be deemed to have accrued

until the discovery, by the aggrieved party, of the facts constitut-

ing the fraud.” But this statute applies only where fraud is the

gravamen of the action. Kimball v. Pacific Gas & Electric Co.,

220 Cal. 203, 30 Pac.2d 39. It has been universally held, without

exception, that the gravamen of an antitrust action for damages

is not fraud, and that it is not governed by the statute of

limitations applicable to suits for fraud. Foster & Kleiser Co. v.

Special Site Sign Co., 85 F.2d 742 (9 Cir.), cer. den. 299 US.

613; State of Oklahoma v. American Book Company, 144 F.2d

585 (10 Cir.) ; Strout v. United Shoe Machinery Co., 208 Fed.

646. And this is so on principle as well as on unanimous author-

ity. Obviously, not every actionable wrong is a fraud; yet the kind

of reasoning used in the petition (p. 19) would make it so. An

antitrust conspiracy is a wrong under federal law only because

the liability is created by statute (Cf. Apex Hosiery Co. v. Leader,

310 U.S. 469, 497), and thus it fits precisely into the category

described by Section 338(1) of the California Code of Civil

Procedure, which provides three years for “an action upon a

liability created by statute, other than a penalty or forfeiture.”

But apart from all this, here again petitioner's contention is,

on the facts of the present case, wholly pointless, even were it to

be assumed that the “discovery” rule applies. It is elementary

under both federal and state decisions that something less than

“knowledge” is sufficient to constitute “discovery.” Cf. Wood v.

Carpenter, 101 U.S. 135; Teall v. Schroder, 158 U.S. 172, 178;

Lady Washington Consolidated Co. v. Wood, 113 Cal. 482, 45

Pac. 809; Vertex Investment Co. v. Schwabacher, 57 C.A.2d 406,

134 Pac.2d 891; Neff v. New York Life Ins. Co., 30 Cal.2d 165,

180 Pac.2d 900; Feak v. Marion Steam Shovel Co., 84 F.2d 670

15

(9 Cir.), cer. den. 299 USS. 604; Jones v. Bankers Life Co.,

131 F.2d 989, 994 (4 Cir.) ; Sacramento Suburban Fruit Lands

Co. v. Johnson, 36 F.2d 935 (9 Cir.).

Yet here, as found by both courts below, petitioner had more

than “discovery” as far back as 1928. It not only had good

cause to know but in fact it had knowledge of its alleged cause

of action throughout all the years since that time.

Petitioner cites American Tobacco Co. v. People’s Tobacco

Co., 204 Fed. 58 (5 Cir.), a decision wholly destructive of its

case. That was an antitrust case which arose and was tried in

Louisiana. The court did not apply some federal rule of limita-

tions but the Louisiana law of “prescription,” that being the

term used in the civil law which prevails in that state. Under

that law, prescription apparently never begins to run in any

case until the plaintiff knows of his cause of action, unlike the

tule in common law jurisdictions where in suits other than for

fraud or mistake the statute begins to run regardless of

the plaintiff's knowledge, absent fraudulent concealment‘ Yet

even under the Louisiana rule as applied in the American

Tobacco case, the petitioner here would be barred. The court

there approved an instruction (at p. 60) that

“it is a question of fact for you to determine, in connection

with this case, whether or not the plaintiff knew, or ought

to have known, more than a year before this petition was

filed, that he had suffered an actionable injury.”

Here both courts below have found that petiticner not only

had good cause to know—i.e., “ought to have known”—but that

in fact it did have knowledge of its cause of action ever since

1928. And petitioner itself concedes (p. 4) that it had “good

reason to believe” that it had a cause of action.

4. Cf. Rose v. Dunk-Harbison Co., 7 C.A.2d 502, 46 Pac.2d 242;

Lattin v. Gillette, 95 Cal. 317, 30 Pac. 545; Scafidi v. Western Loan &

Building Co., 72 C.A.2d 550, 165 Pac.2d 260; Neff v. New York Life

Ins. Co., supra.

16

All that petitioner really means, when it claims that it did not

have “discovery,” is that it did not know of some hypothetical

specific item of evidence. Here again the contention is not only

without fragment of merit in law but, even were the law other-

wise, on the facts of this case the petitioner would still be

barred. The specific item of evidence referred to is an alleged

written agreement, but, as we have seen (p. 9, supra), this

hypothetical document is one alleged to have been executed in

November, 1929, nearly one year after petitioner's alleged cause

of action had already accrued. The fantastic nature of petitiower's

claim in this connection was well revealed in its brief before the

court below, where it said (p. 22):

“Furthermore, actual knowledge by a wronged party that

the acts of defendants as charged in a complaint were in

themselves performed and carried out in violation of the

Anti-Trust laws does not constitute proof of a con-

spiracy formed after the occurrence of such acts and on

which conspiracy the action is solely based.” [Italics are

petitioner's}

Thus petitioner affirmatively asserted that it always knew that

the acts which caused damage to it were in violation of the anti-

trust laws, but it sought to escape the statute of limitations on

the ground that it did not know of a /ater conspiracy formed

after those acts were committed and for which it has no right

to recover since no acts were done thereunder to its damage.

Apart from the fact just noted, the very case cited by peti-

tioner, American Tobacco Co. v. People’s Tobacco Co., 204 Fed.

58, itself disposes of the contention that one does not have

“discovery” until he knows of all items of evidence. The court

there approved an instruction that

“from the moment he knew he could bring an action

against somebody to recover his damages, although he

might not have known who the person was, or he might

not have known how he was going to prove his action,

prescription would run * * *” (p. 60).

17

It is elementary, too, that in order to prove a conspiracy a

specific agreement need not be shown (American Tobacco Com-

pany v. United States,-147 F.2d 93, aff'd 328 US. 781) and

necessarily, as the trial court said (R. 783), it has never been

held that in order to show that a person has knowledge of a

conspiracy it must be shown that he knew of a specific written

agreement. Moreover, here, the supposed agreement was alleged

to be a mere reduction to written form, after petitioner's cause

of action had accrued, of the very conspiracy of which it already

knew before the writing came into existence! (See p. 9, supra.)

“Discovery” does not mean that plaintiff must have his evi-

dence all “sewed up” before he sues. A party convinced or

believing that he has a cause of action must bring suit within

the statutory period, and he then may utilize the various dis-

covery procedures—interrogatories, depositions, subpoenaes, in-

spections, etc. Cf. Scafidi v. Western Loan & Building Co., 72

C.A.2d 550, 570, 165 Pac.2d 260, 272; Fidelity & Casualty Co.

of New York v. Jasper Furniture Co., 117 NE. 258, 186 Ind.

566; Texas Rice Lands Co. v. McFaddin, etc. Co., 265 S.W. 888,

890 (Tex.). It is a rare case indeed where a plaintiff, when he

starts suit, “knows enough about his cause of action to establish

it forthwith by competent evidence.” Bowles v. Pure Oil Co.,

5 F.R.D. 300. Yet here petitioner was convinced for years that it

had all the evidence that was necessary.

In the last analysis, the essence of the petition is really this

contention: Despite petitioner's complete conviction throughout

the years that it had a case against respondents and despite its

possession throughout all that time of both good cause to believe

and of knowledge, nevertheless it had a right to defer suit until

the government should see fit to assume the burden and expense

of breaking trail for it. Of this argument the trial court said

(R. 805) and the Court of Appeals quoted with approval

(R. 843):

18

“* * * However, the law does not excuse an untimely

presentation upon the ground that the party asserting the

claim has been unable to obtain others to aid in the

presentation of the claim. The burden of presenting an

asserted claim in a legal proceeding always rests upon the

party who has and asserts it, and he may not excuse

untimely presentation because he has been unable to enlist

the aid of others in order to bring about adjudication in the

court of his claim.”

Wl. The Statute of Limitations Begins to Run, with Respect to

Private Claims for Damages for Violation of the Antitrust

Laws, Against Each Overt Act as it Occurs, but Even if Its

Running Were Deferred Until the Last Overt Act Causing

Damage, the Petitioner's Case Would Still Be Barred.

Petitioner complains of the court below that it held that the

statute of limitations begins to run, with respect to a private

suit for damages under the Sherman Act, against each overt act

as it occurs and not from the date of the last overt act.

The Court of Appeals was entirely correct, but here again

the question is academic, in this case. As petitioner conceded

(see pp. 2, 3, supra), it was out of business by January, 1929, and

no overt acts occurred after that date that caused it any damage.

Thus the statute of limitations ran long before suit was brought,

whether it started to run against each overt act as it occurred or

only when the last act occurred.

Consequently, it suffices to note briefly that the cases cited by

petitioner are not in point because they are criminal cases. So

long as there is a conspiracy continuing to a time within the

period of limitations, there is a punishable crime, a wrong

against the public which the. government may vindicate, whether

or not any specific person is injured. But a treble damage suit is

not brought to vindicate the law; the gravamen of such an

action is not the wrong to the public but the damage suffered

by the plaintiff which can only flow from overt acts, and

19

although the oveit acts acquire the taint of illegality because of

the conspiracy, the private plaintiff's right to recover is based on

the acts done and it is for the damage to him that he recovers.

All the authorities without exception have therefore held that

the rule applicable to criminal cases has no application in a

private civil suit, and that there the continuance of a conspiracy

has no bearing on the running of the statute. Foster & Kleiser

Co. v. Special Site Sign Co., supra; Bluefields S. S. Co. v. United

Fruit Co. 243 Fed. 1; Momand v. Universal Film Exchange,

43 F. Supp. 996, 1006; Glenn Coal Co. v. Dickinson Fuel Co., 72

F.2d 885, 888, 890 (4 Cir.); Strout v. United Shoe Machinery

Co., 208 Fed. 646; Sidney Morris & Co. v. National Association

of Stationers, 40 F.2d 620 (7 Cir.); Alexander Milburn Co. v.

Union Carbide & Carbon Corp., 15 F.2d 678, 680 (4 Cir.);

Midwest Theatres Co. v. Cooperative Theatres, 43 F. Supp. 216,

220; Leonard v. Socony Vacuum Oil Co., 42 F. Supp. 369, 370;

Twin Ports Oil Co. v. Pure Oil Co., 119 F.2d 747 (8 Cir.), cer.

den. 314 US. 644; Twin Ports Oil Co. v. Pure Oil Co., 46 F.

Supp. 149, 152.

CONCLUSION

Contrary to the petitioner's assertion (p. 10), there is no

“current confusion” in the antitrust decisions on the law appli-

cable to this suit. That law is settled and clear and the authori-

ties unanimous. By incantations about the public interest peti-

tioner seeks to create new and nebulous law, and it does so in

a case where, on the facts, petitioner is barred by limitations no

matter what rule of law were to be created, unless it be a rule

that suits under the antitrust laws are wholly immune from any

tule of limitations whatever. What was said by this Court in

Campbell v. Haverhill, 155 US. 610, cited by this Court in the

Chattanooga case, supra, and cited again so recently as Cope v.

Anderson, 331 US. 461, is as applicable here as there:

“But why should the plaintiff * * * be entitled to a

privilege denied to plaintiffs in other actions of tort? * * *

20

why should Congress by its silence be assumed to have

discriminated in their favor? Why, too, should the fact

that Congress has created the right, limit the defences to

which the defendant would otherwise be entitled?

“Unless this be the law, we have the anomaly of a dis-

tinct class of actions subject to no limitation whatever, a

class of privileged plaintiffs who, in this particular, are

outside the pale of the law, and subject to no limitation

of time in which they may institute their actions.”

The Sherman Act, of course, reflects public policy, but Con-

gress has provided criminal and civil remedies by the govern-

ment to vindicate the public interest, and in permitting the

treble damage action it does so for the purpose of redressing

private injury. Bruce’s Juices v. American Can Co., 330 US. 743,

750. The treble damage claimant is entitled to no special dispen-

sations. Statutes of limitations are “established to cut off rights,

justifiable or not, that might otherwise be asserted and they

must be strictly adhered to by the judiciary” (Kavanagh v.

Noble, 332 U.S. 535) just as much in the case of the treble

damage claimant as in any other case.

We respectfully submit that the petition for writ of certiorari

should be denied.

Dated: February 11, 1949.

MAURICE E. HARRISON

Moses LASKY

PAUL SANDMEYER

Attorneys for Respondents Borax

Consolidated, Ltd., Pacific Coast

Borax Company and United

States Borax Company.

Of Counsel:

BROBECK, PHLEGER & HARRISON

NeEWLIN, HOLLEY, SANDMEYER &

TACKABURY.