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

IN THE i a

ee Eee

Supreme Court of the United States

Octoser TERM, 1948

No. 513

BURNHAM CHEMICAL COMPANY,

Petitioner,

v.

BORAX CONSOLIDATED, LTD., PACIFIC COAST

BORAX COMPANY, UNITED STATES BORAX

COMPANY anp AMERICAN POTASH & CHEMI-

CAL CORPORATION,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES CourT OF APPEALS FOR THE NINTH CIRCUIT.

BRIEF FOR AMERICAN POTASH & CHEMICAL

CORPORATION IN OPPOSITION

’ JosepH W. Burns

Fulton, Walter & Halley

30 Rockefeller Plaza

New York 20, N. Y.

VY Micwaer F. McCartuy

Oliver & Donnally

110 East 42nd Street

New York 17, N. Y.

< CuHarzes A. BEARDSLEY

Central Bank Building

Oakland 12, California

Attorneys for Respondent

American Potash & Chemical

Corporation

SUBJECT INDEX

PAGES

ENO SON Sven s bile cdivwbunt soket kacaven 1

NEED ian baa sh ad ence yee hk CoA 1

CPUMIUOINE PUMORNTRE oo oon ccc cn csscancce 2

OE UNNI a6 ka 5s eda ous wkdie wAA ak eas 3

PEE hn sce idd back Cae ae eka +

A. The Issue Decided by the District Court........ 4

B. Erroneous and Unsupported Assertions in the

PO cas hohner casa ee ake boner eks 5

PRR EN cnc Ch bs OS owe ee es ee 6

NEE sis As i rags ix Ga ewa yy koe a 6

I—This Court Has No Authority to Legislate a

Federal Statute of Limitations for Private

Actions Under the Antitrust Laws.......... 7

II—The Contention That the Courts Below Failed

to Give the Petitioner the Benefit of the Rule

of Fraudulent Concealment Is Unfounded... .. 11

IN ie or ee 13

ii

TABLE OF AUTHORITIES CITED

Cases

PAGES

Abram v. San Joaquin Cotton Oil Co., 46 F. Supp. 969

(D.C. S. BD. Cane., 1962) nn cc ceca scene enenens 9

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

Fed, SB (C. A. 5, BOUS) on cc ccc ccccccecacdeuce 12

Asselta v. 149 Madison Avenue Corporation, 65 F.

Supp. 385 (D. C. S. D. N. Y., 1945) ; aff’d 156 F.

(2d) 139 (C. A. 2, 1946); aff'd 331 U. S. 199

4 2 rere Preyer ere Ter rer eT ee eT eee y. 9

Bailey v. Glover, 21 Wall. 342 (1875) ..........506- 12

Brady v. Daly, 175 U.S. 148 (1899)... 6... eee eee 10

Buckley v. Oceanic S. S. Co., 5 F. (2d) 545 (C. A. 9,

1925) (rehearing denied)......... 2... eeeeeeees 10

Campbell v. City of Haverhill, 155 U.S. 610 (1895) . .7, 10

Chattanooga Foundry & Pipe Works v. City of Atlanta,

y Bi Se. |S Ree errr rrr err Tre 6, 7

Cope v. Anderson, 331 U.S. 461 (1947) .........45. 8, 10

Holmberg v. Armbrecht, 327 U. S. 392 (1946)..... 7,8,9

Loggins v. Steel Const. Co., 129 F. (2d) 118 (C. A. 5,

PORES cna SUN Sein cab aeKks CARN D RRNA SE ARE DEK 9

McDonald v. Thompson, 184 U. S. 71 (1902)....... 10

Meeker v. Lehigh Valley R. Co., 236 U.S. 412 (1915) 11

Nichols v. Chesapeake & O. Ry. Co., 195 Fed. 913

Loe | errr rer rer iret te 10

Ratican v. Terminal R. Ass'n, 114 Fed. 666 (D.C. Mo.,

) errr Terr Tre TTT reer re

Reid v. Solar Corporation, 69 F. Supp. 626 (D. C.

N. D. Iowa, 1946)

iii

Statutes

PAGES

California Code of Civil Procedure, Sec. 335........ 3,4

California Code of Civil Procedure, Sec. 338(1)....2, 3,4

Clayton Act, Section 4 (15 U.S. C. Sec. Spee 2,3

Copyright Law (17 U.S. C. Sec. 1)...........0005 10

Fair Labor Standards Act of 1938 (29 U. S. C. Sec.

ME Mine vk x bax Soca reua Gece iuccn cs 9,11

Federal Communications Act (47 U. S. C. Sec. 415).. 11

Federal Employees’ Liability Act (45 U. S. C. Sec. 56) 11

Interstate Commerce Act (49 U.S. C. Sec. 1, et seq.). .9, 11

Merchant Marine Act (46 U. S. C. Sec. |) Deas 10

National Bank Act (12 U. S. C. Sees. = | eae 10

Safety Appliance Act (45 U. S. C. Sec. 1, et ma.).... ©

Securities Act (15 U. S.C. Sec. 77m) ........00.0.. 11

Woe ED. CO th BG i os sss a bi kc cnc 7

IN THE

Supreme Court of the United States

OctoBEer TERM, 1948

BURNHAM CHEMICAL ComMPANY,

Petitioner,

v.

Borax ConsovipaTeD, Ltp., PaciFtc Coast No. 513

Borax Company, UNITED STATES BorRAX

ComPpANy and AmeErIcAN Porasn &

CHEMICAL CorPoRATION,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATEs Court oF APPEALS FOR THE NINTH CrrculIrt.

BRIEF FOR AMERICAN POTASH & CHEMICAL

CORPORATION IN OPPOSITION

Opinions Below

The opinion of the Court of Appeals is reported at 170 F.

(2d) 569. The oral opinion of the District Court is in the

record at pages 800-806.

Jurisdiction

The judgment of the Court of Appeals was entered on

October 27, 1948. The petition for writ of certiorari was

filed on January 17, 1949. The jurisdiction of this Court

is invoked under Title 28, U. S. Code, Section 1254.

2

Questions Presented

The petition does not present any clear-cut questions for

consideration. The District Court held, and the Court of

Appeals affirmed

1. that this is an action for treble damages under

Section 4 of the Clayton Act, (15 U.S. C. Section 15) ;

2. that such an action is an action at law and not

one in equity;

3. that state statutes of limitations are applicable

to such actions ;

4. that the applicable statute of limitations in this

case is California Code of Civil Procedure Section

338(1);

5. that there was no evidence of fraudulent conceal-

ment which tolled the statute of limitations.

The first four rulings were based upon ar unbroken

line of decisions of this and other federal courts. In an ef-

fort to obtain review by this Court, petitioner alleges a non-

existent conflict in authorities. Under The Questions Pre-

sented, petitioner states two “broad questions” which it

purports to break down into two “narrower questions”

(Pet. 7). It then states a third point but does not advise

the Court whether it is seeking review of the Court’s ruling

in that regard (Pet. 8). Then again, in its brief it claims

numerous errors by the court below which it states it will

pass over (Pet. 14).

Although the petition does not make clear exactly what

rule it asks of this Court, its argument may be considered as

requesting one or all of the following:

3

(1) a ruling that treble damage actions under Sec-

tion 4 of the Clayton Act are subject to no specific

statute of limitations but are governed by the equitable

doctrine of laches;

(2) rather than have this type of action subject to

varying periods of limitations in the forty-eight states,

this Court legislate a federal statute of limitations for

private antitrust cases, or for all federally-created

rights ;

(3) that when a private action under Section 4 of

the Clayton Act has been fraudulently concealed from

the plaintiff, the period of limitation does not commence

to run on the date the damage occurred, but only after

discovery by the plaintiff of his cause of action, or of

the evidence necessary for the successful prosecution

thereof.

Statutes Involved

Section 4 of the Clayton Act (15 U.S. C. Section 15):

“$15. Suits by persons injured ; amount of recovery

“Any person who shall be injured in his business

or property by reason of anything forbidden in the

antitrust laws may sue therefor in any district court

of the United States in the district in which the de-

fendant resides or is found or has an agent, without

respect to the amount in controversy, and shall re-

cover threefold the damages by him sustained, and

the cost of suit, including a reasonable attorney's

fee.”

The California Code of Civil Procedure, Sections 335

and 338:

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 for-

feiture.”

Statement

A. The Issue Decided by the District Court

The petitioner commenced this action in July, 1945 in

the District Court for the Northern District of California.

The complaint alleged a violation of the antitrust laws by

the respondents resulting in damage to the petitioner, which

it requested be trebled. The acts of damage alleged occurred

not later than 1929, more than 16% years before the suit

was commenced.

In an effort to avoid the bar of the applicable California

three-year statute of limitations, Section 338(1) of the Cali-

fornia Code of Civil Procedure, petitioner contended in the

District Court (1) that a conspiracy to violate the antitrust

laws constitutes a “fraud” and an action for damages is not

barred until the injured party “discovers” the fraud, or (2)

that whether or not the conspiracy constitutes a “fraud” it

was “fraudulently concealed” from the petitioner, and that

the three-year statute of limitations would not begin to run

until discovery.

5

The issue of the statute of limitations was considered

by the District Court at a separate trial based upon a

special answer (R. 226, 254-257). The District Court

held that petitioner had knowledge of its cause of action

many years before it commenced action, that there was no

fraudulent concealment, and that the three-year statute of

limitations was applicable (R. 803-4).

B. Erroneous and Unsupported Assertions in the Petition

The petitioner singularly avoids record citations, which

was not an oversight but due to the lack of any basis in the

record for almost all of the statements made. It also seeks

to have this Court believe that none of the allegations of

the complaint were denied (Pet. 2, 4), while the fact is that

the issue before the Court was presented in a preliminary

proceeding. No answer on the merits was ever required.

In addition to attempting to create some legal issues

which might attract this Court’s attention, the petition con-

tains a great deal of colorful but unsupported allegations

with respect to this respondent which, petitioner hopes, will

create an atmosphere to make up for the iack of issues.

The allegation that this respondent, a corporation, was

formerly owned and controlled by citizens of the Third

Reich (Pet. 2) is entirely irrelevant. The petition also

alleges the Antitrust Division of the Department of Jus-

tice discovered evidence of the ‘“‘secret conspiracy” in the

files of this respondent only after it was brought under the

control of the Alien Property Custodian (Pet. 2). This

statement is unsupported by either the pleadings or evidence.

The brief filed by other respondents, Borax Consoli-

dated, Limited, et al., sets forth the nature of the issue

presented in the District Court, evidence presented and the

6

court’s decision. To avoid needless repetition, this respond-

ent will not repeat the statements made in that brief.

ARGUMENT

Summary

The petition requests this Court to make new law in an

area which rightfully belongs to Congress. The petition

asks this Court to legislate a federal statute of limitations

in private suits for damages under the antitrust laws in

place of the state statutes which were ruled applicable by

this Court in 1906 in Chattanooga Foundry & Pipe Works

v. City of Atlanta, 203 U. S. 390, and by a long line of deci-

sions which have followed the Chattanooga case without

deviation. The justification which the petitioner urges for

such judicial legislation is that the “rigid” enforcement of

state statutes of limitations should be modified, but the

petitioner does not point out how the statutes could con-

ceivably be applied in any other way.

Although the petition is not clear, it appears to argue

in the alternative that, in the absence of a federal statute

of limitations, the rule should be that state statutes of limita-

tions are tolled where there is a “fraudulent concealment”

of the claim for relief by the defendants (Pet. 7). On the

record in this case, however, this contention is completely

academic as the principal issue decided by the District Court

and upheld by the Court of Appeals was this very question

of “fraudulent concealment”. Upon the face of the com-

plaint the action would have been barred by a “rigid” ap-

plication of the three-year California statute of limitations

7

but the District Court granted the request of petitioner for

a special trial on the issue of fraudulent concealment. After

a full hearing, at which petitioner offered all the evidence it

could produce, the court found as a fact that there had been

no fraudulent concealment (R. 803-804).

This Court Has No Authority to Legislate a Federal Statute

of Limitations for Private Actions Under the Antitrust Laws.

The petitioner argues that federally-created rights are

not or ought not to be controlled by state statutes of limita-

tions. However, it has always been the rule that federally-

created statutory rights for which the remedy is not penal

or equitable are subject to state statutes of limitation,

unless, in the statute creating the right, there is an express

provision limiting the time during which the action may be

brought. Chattanooga Foundry & Pipe Works v. City of

Atlanta, supra, This leading authority was cited with ap-

proval by this Court in Holmberg v. Armbrecht, 327 U. S.

392, 395 (1946) the case which petitioner urges is in conflict

with the holding of the court below. Congress has recog-

nized the applicability of state statutes of limitations to

private antitrust actions by providing for their suspension

during the pendency of suits by the Government (15 U. S. C.

§ 16).

The petition concedes that the antitrust laws contain

no federal statute of limitations, either in express language

or by implication (Pet. 16). An answer to the contention

of petitioner that there should be no statute of limitations

in antitrust cases is stated in Campbell v. City of Haverhill,

8

155 U. S. 610 (1895) where a plaintiff took the position

that the application of state limitations would defeat the

policy of federally-created statutory rights:

‘“* * * In a country within which not even treason

can be prosecuted after the lapse of three years,

it can scarcely be supposed that an individual would

remain forever liable to a pecuniary forfeiture”

(p. 616-17).

a. & |= *.&

The truth is that statutes of limitations affect

the remedy only, and do not impair the right, and

that the settled policy of Congress has been to

permit rights created by its statutes to be enforced

in the manner and subject to the limitations pre-

scribed by the laws of the several states” (p. 618).

The inapplicability of the rule of Holmberg v. Armbrecht,

supra, to this type of action is demonstrated in Cope v. An-

derson, 331 U. S. 461, 463-4, (1947) in which Mr. Justice

Black said:

“There is no federal statute of limitations fixing

the period within which suits must be brought to

enforce the [federal] statutory double liability of

shareholders of insolvent national banks. For this

reason we look to Ohio and Pennsylvania law to

determine the period in which these suits may be

brought. McDonald v. Thompson, 184 U. S. 71, 46

L ed 437, 22 S Ct 297; McClaine v. Rankin, 197

US 154, 158, 49 L ed 702, 704, 25 S Ct 410, 3 Ann

Cas 500; Rawlings v. Ray, 312 US 96, 97, 85 L ed

605, 607, 61 S Ct 473. Even though these suits are

in equity, the states’ statutes of limitations apply.

For it is only the scope of the relief sought and the

multitude of parties sued which give equity concur-

9

rent jurisdiction to enforce the legal obligation here

asserted. And equity will withhold its relief in such

a case where the applicable statute of limitations

would bar the concurrent legal remedy” [ Citing,

inter alia, Holmberg v. Armbrecht, supra].

The contention of petitioner that state statutes of limita-

tions do not well serve the purpose of federal legislation

is completely refuted by recognition of the application of

such statutes to many federally-created rights, such as

Fair Labor Standards Act of 1938 {29 U. S. C. §§ 201

| et seq.]. (Prior to recent enactment by Congress of

| federal statute of limitations). Right to sue for over-

time compensation.

Reid v. Solar Corporation, 69 F. Supp. 626, 629

(D.C. N. D. Iowa 1946) ;

Abram v. San Joaquin Cotton Oil Co., 46 F.

Supp. 969, 975 (D. C. S. D. Calif. 1942) ;

Loggins v. Steel Const. Co., 129 F. (2d) 118,

121 (C. A. 5, 1942) ;

Asselta v. 149 Madison Avenue Corporation,

65 F. Supp. 385, 388 (D. C. S. D. N. Y.,

1945) aff'd 156 F. (2d) 139 (C. A. 2, 1946) ;

aff’d 331 U. S. 199 (1947).

Interstate Commerce Act [49 U.S.C. §§ 1 et seq.]. (Prior

to enactment by Congress in 1906 of federal statute of

limitations ). Right to recover in cases of discriminatory

freight cates.

Ratican v. Terminal R. Ass'n, 114 Fed. 666

(D. C. Mo. 1902);

10

Patent Infringement.

Campbell v. City of Haverhill, supra.

Merchant Marine Act [46 U. S. C. § 596]. Right of sea-

men to recover wages doubled.

Buckley v. Oceanic S. S. Co., 5 F. (2d) 545,

546 (C. A. 9, 1925) (rehearing denied) ;

National Bank Act [12 U. S. C. §§ 63, 64]. Double lia-

bility of shareholders.

McDonald v. Thompson, 184 U.S. 71 (1902) ;

Cope v. Anderson, supra.

Safety Appliance Act [45 U.S. C. § 1 et seq.]. Action for

statutory negligence.

Nichols v. Chesapeake & O. Ry. Co., 195 Fed.

913, 916 (C. A. 6, 1912).

Copyright Law [17 U.S. C. $1]. Right to recover treble

royalties.

Brady v. Daly, 175 U. S. 148, 158 (1899).

The petitioner seeks to distinguish private suits under

the antitrust laws from all of these other federally-created

rights by claiming for the former special importance in

antitrust law enforcement. There is no more basis for

holding that the public interest requires a uniform statute

of limitations in private suits under the antitrust law than

for any of these other federally-created rights. The peti-

tioner over-emphasizes the function of private suits, as the

primary responsibility for enforcing the antitrust laws is

upon the Department of Justice and the Federal Trade Com-

mission, which are vigorously prosecuting suits in every

industry in the country.

ll

F-ven if there were an argument in favor of the policy of

having a federal statute of limitations for private actions

for violations of the antitrust laws, Congress is the only

authority for determining this policy. Where Congress

intends to provide uniform limitations on the bringing of

an action created by federal statute, it does so, as in the

Securities Act (15 U.S. C. § 77m), the Federal Employees’

Liability Act (45 U. S. C. § 56) and the Federal Commu-

nications Act (47 U. S. C. § 415).

In addition to these instances where Congress has in-

cluded a statute of limitations in the original statute creat-

ing the right, Congress has enacted a federal statute of

limitations in other cases where it concluded that state

statutes of limitations should no longer apply to a federally-

created right. In 1906 the Interstate Commerce Act was

amended so as to provide for a federal statute of limitations

to take the place of the previously applicable state statutes

[34 Stat. 584, c. 359; Meeker v. Lehigh Valley R. Co., 236

U. S. 412, 423 (1915)] and in 1947 a federal statute of

limitations was enacted by Congress covering rights of

action under the Fair Labor Standards Act, which had

previously been limited by state statutes of limitations (61

Stat. 87, c. 52, 29 U. S. C. § 255).

Il

The Contention That the Courts Below Failed to Give the

Petitioner the Benefit of the Rule of Fraudulent Concealment Is

Unfounded.

The second question relates to petitioner’s argument that

fraudulent concealment of a conspiracy in restraint of trade

should toll the state statute of limitations. Whether or not

the doctrine of fraudulent concealment is applicable in gen-

eral to private antitrust actions the District Court did

12

apply the doctrine under California law in this case. Even

though the complaint did not adequately plead fraud or

fraudulent concealment, the court granted a special trial

before a jury on the question of whether petitioner knew or

had reason to know the facts which it now contends were

fraudulently concealed from it. At the trial the court

found as a fact that there had been no fraudulent conceal-

ment.

Although petitioner argues at length that the court

below ruled that this statute of limitations cannot be tolied

for “fraudulent concealment” (Pet. 7, 9, 14), it concedes

“The court below held, in effect, that the statute of limita-

tions began to run when the petitioner knew or had good

cause to believe that it had been injured by the unlawful

conduct of the respondents” (Pet. 15) (italics supplied).

It appears, therefore, that the crux of petitioner’s argument

is not that its cause of action was concealed, but only a

piece of evidence, the alleged secret agreement.

The cases cited by petitioner as in conflict with the hold-

ing of the court below, American Tobacco Co. v. People’s

Tobacco Co., 204 Fed. 58 (C. A. 5, 1913) and Bailey v.

Glover, 21 Wall. 342 (1875) do not aid petitioner. In the

People’s Tobacco Co. case the court held the question was

whether the plaintiff “knew, or ought to have known * * *

that he had suffered an actionable injury” (p. 61). The

effect of Bailey v. Glover was to toll the statute until dis-

covery of the cause of action. The court below found that

the petitioner did in fact have knowledge of its cause of

action ever since 1928. The issue as tried gave petitioner

the benefit of every principle for which it now contends

except abolition of all limitations on private antitrust ac-

tions. In 1939 petitioner gave to the Antitrust Division

information relating to the alleged violations (R. 398-401,

13

623-624) yet it continued to “sleep on its rights” until after

the Government’s suit was instituted in 1944. Private

plaintiffs are not entitled to delay commencing suit in the

hope of obtaining a free ride upon additional evidence

gathered by the Government.

CONCLUSION

It is submitted that the petition presents no question

which warrants consideration by this Court. The claimed

conflict between the judgment of the court below and deci-

sions of this Court and the Fifth Circuit is non-existent.

The only “court-made law” which this Court might consider

would be the application of the doctrine of fraudulent con-

cealment. But the necessity for reviewing this doctrine is

not presented by the record in this case as the court below

did apply it and found as a fact upon the evidence that there

was no fraudulent concealment. This finding of fact by the

District Court, specifically affirmed on appeal, is not review-

able by this Court. The further request for judicial legis-

lation creating a federal statute of limitations, or a ruling

that no statute of limitations is applicable, is not a proper

subject for judical action.

It is respectfully submitted that the petition should be

denied.

Dated: February, 1949.

JoserH W. Burns

Fulton, Walter & Halley

MICHAEL F. McCartHuy

Oliver & Donnally

CHARLES A. BEARDSLEY

Attorneys for Respondent

American Potash & Chemical

Corporation