Continental Ore Company v. Union Carbide & Carbon Corporation

PETITIONER:Continental Ore Company
RESPONDENT:Union Carbide & Carbon Corporation
LOCATION:Vilage of Kake

DOCKET NO.: 304
DECIDED BY: Warren Court (1962)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 370 US 690 (1962)
ARGUED: Apr 16, 1962 / Apr 17, 1962
DECIDED: Jun 25, 1962

Facts of the case

Question

  • Oral Argument – April 17, 1962
  • Audio Transcription for Oral Argument – April 17, 1962 in Continental Ore Company v. Union Carbide & Carbon Corporation

    Audio Transcription for Oral Argument – April 16, 1962 in Continental Ore Company v. Union Carbide & Carbon Corporation

    Earl Warren:

    Number 304, Continental Ore Company et al., Petitioners, versus Union Carbide and Carbon Corporation et al.

    Mr. Alioto.

    Joseph L. Alioto:

    Mr. Chief Justice, may it please the Court.

    This case is here from the Court of Appeals for the Ninth Circuit.

    It is a private action under the antitrust laws, that was tried in the District Court in San Francisco before a jury.

    The jury returned a verdict in favor of the defendant and the Court ended its judgement on that verdict.

    We contended in the Court of Appeals that that verdict was the product of manifest errors that had certainly been manifested by the time the Court got to the — the time the case got to the Court of Appeals.

    Notably, the defendants in that case, the respondents here, had gambled and lost on what this Court was going to do in the Klor case.

    May I ask the Court to give the Klor instruction at time that that case was before the Ninth Circuit?

    Addition to that, when we asked the trial judge to give the Bigelow Instruction, the trial judge stated in all seriousness that somebody has to start reversing the Supreme Court and he didn’t propose to give the Bigelow instruction because he didn’t agree with.

    He thought that the — a more stringent rule should apply in antitrust cases and even in most cases with respect to the measurement of the damages.

    In addition to that, the Court held that the respondents here, acting through a Canadian subsidiary, have a right to eliminate the petitioners from their Canadian business to takeaway their Canadian business entirely because the subsidiary of the respondents was acting as a purchaser under authority of the Canadian Government, and it was felt that the American Banana doctrine in some way permitted them to do this with impunity.

    In this posture of the case, the Court of Appeals completely avoiding — avoided having to meet this problem by stating that it would consider all of the evidence even that that was excluded under the American Banana theory.

    But that taking all of the evidence in its best like, it felt that it would grant the conspiracy to monopolize had been proved and grant there was economic evidence in the case, relevant economic data to justify a measurement of damages, and grant there was a failure here of petitioners to get a foothold in this business, that with all of that the evidence didn’t establish and there was no evidence that could have gone to the jury on the issue of whether or not the respondents had caused this failure.

    And so, it said on that basis that since there was no evidence to go to the jury on the issue of legal causation that it didn’t have to consider the manifest errors that were in this record.

    This Court granted certiorari and the questions we are here to discuss is whether or not under the circumstances where a violation and a rather flagrant violation as in this case is admitted and where the respondents in this case directly said that they intended to eliminate these petitioners and to prevent them from getting a foothold in this industry, there was direct evidence on that, when that is the situation whether the Court can takeaway from a jury the question of legal causation.

    The second question we have here on certiorari is whether or not the Court was correct in the — in excluding the evidence predicated upon the American Banana case and third, whether the action of the Court of Appeals deprived these petitioners of a right to trial by jury.

    John M. Harlan II:

    The case went to the jury (Inaudible)

    Joseph L. Alioto:

    The case went to the jury and the verdict was in favor of the respondents in this Court.

    We contended it was the product of these errors that we had mentioned.

    The Court of Appeals avoided meeting these errors of all by this device that saying there was no legal causation.

    John M. Harlan II:

    What happened (Inaudible)

    Joseph L. Alioto:

    I would think under the circumstances particularly with respect to the American Banana theory that was employed by the Court of the case could be sent down to the District Court directly.

    But this I think is an unresolved question under the law.

    The closest we get to that is the Story Parchment situation where it was contended that that case should have been sent back to the Court of Appeals.

    The Supreme Court said that under the circumstances, it had enough of the record before it to see that there was error, they couldn’t be handled in that fashion, that it was simply send it — simply reverse the Court of Appeals and send it back to the District Court.

    Now, the difference between the cases is, Mr. Justice Harlan, that in the Story Parchment case, the petitioners won the jury verdict.

    In this case, they lost it.

    John M. Harlan II:

    Is it a difference?

    Joseph L. Alioto:

    It is a difference, if Your Honor please.

    Joseph L. Alioto:

    However, when you — when you analyze what has been done here, I think it’s perfectly plain that it’s not necessary to send this case back to the Court of Appeals to determine that this Court in fact overruled the Klor case and the Klor instruction was given in this case, and it got the series in this case, Mr. Justice Harlan.

    You recall the Klor doctrine as it was being handled in the Ninth Circuit held that you can deliberately eliminate a competitor.

    But that, if after you eliminate him, the public still can be served by what remains in the industry that that didn’t constitute a violation of the antitrust laws.

    In this case, in the context of this case, since two respondents had 100% of this industry, it meant that they could with impunity eliminate a competitor so long as they themselves still have enough to serve the general public.

    Now, on the context of this case, I think it will be an idle act to send this back to the Court of Appeals and go directly to the District Court.

    However, if it went to the Court of Appeals, I think it’s clear.

    They would have to say that the Klor case was error and that the trial court’s contempt of this Court in its statement that it didn’t — it proposed to start reversing the Supreme Court in refusing to give the Bigelow doc — the Bigelow instruction that in view of that situation, we respectfully submit that it would be more practical under the circumstances to send it back to the District Court.

    Now, when the Court of Appeals decided if there wasn’t enough evidence on causation to send this case to the jury, it still hadn’t closed the entire gap because it had the manifest elimination of the Canadian business, a petitioner’s Canadian business.

    And so, it said with respect to that, that since the business was eliminated and since this business was taken away from petitioners by a subsidiary of one of respondents which was acting at the time as a purchasing agent for Canada, that since that was done, this Court’s decision in the Noerr case prevented any antitrust liability from arising from that set of facts.

    So, what the Court of Appeals did, we respectfully submit, was first of all, take away the case from the jury when there was manifestly a factual conflict.

    And, secondly, it misapplied this Court’s decision in the Noerr case to hold it under no circumstances can a governmental agency be used for the purpose of furthering the objectives of a monopoly as distinct from serving the very purposes of the agency itself.

    Now, after this case came down from the Ninth Circuit, the Court of Appeals for the Tenth Circuit affirmed with modification certain judgements in companion cases.

    We bring this to the attention of the Court because I think it supports our view that manifestly, there were two inferences, that there was some resolutions of facts that had to be made by a trier of the facts because the decision of the Court of Appeals for the Tenth Circuit in affirming the judgements in the companion cases is inconsistent with the view that under no circumstances could you find antitrust liability here.

    There was in this case, and it’s admitted by the Court of Appeals for the Ninth Circuit or assumed by it for the purpose of this case, a comprehensive scheme to monopolize every facet of the Vanadium Industry.

    The commodity involved was Vanadium-bearing rock which also contained Uranium in the ratio of six to one and the locale of these things, the locale of the mining was on the Colorado Plateau.

    There were three forms of the commodity involved in the action, First, the ore itself, secondly the vanadium oxide and third, the ferrovanadium.

    There was direct evidence, indeed a confession by a former Vice President of the United States Vanadium Corporation that the corporations here intended to monopolize every face of the industry and they were instructed to fair about competition wherever it might arise or to determine what claims or determine what business might form the nucleus for a competitive operation and to remove it and pursuant to this, they did.

    It was a remarkably successful conspiracy to monopolize, resulting in 100% of the ferrovanadium industry, the respondents acquiring 90% of the domestic industry on vanadium oxide, and the respondents milling in their mills 90% of the ore from their own properties.

    There is no dispute in the evidence that the respondents, by simple agreement, fixed the price that they were to pay to the miners for the ore.

    There’s no dispute in the evidence that they fixed the price of the vanadium oxide and no dispute that they fixed the price of the ferrovanadium.

    There was a division of markets between them based on percentages and based on specific customers.

    There was an agreement not to solicit each other’s customers.

    They cooperate in connection with the exploitation of certain claims to the extent that one respondent mine the claims of the other respondent, and there was an agreement between them that they would eliminate all competitive threats.

    Now, so far as these petitioners are concerned, these petitioners or the principal petitioner involved here is a man named Henry J Leir, who came to this country in 1938 from Germany and from Europe where it had an extensive experience in connection with the purchase of raw materials for manufacturing ferroalloys.

    In that European experience, he had developed certain processes which produced a superior type vanadium.

    This all has to be admitted for the purposes of this — for the purposes of the — hearing this motion.

    His vanadium contained approximately 80% of the vanadium content of 80%.

    In addition to that, he had developed a vanadium oxide with certain other agents which could be introduced directly into the steel bath.

    The principal uses of vanadium were in the steel industry for the purpose of toughening the product.

    So, he came in 1938 and made certain contracts for the production of ferrovanadium in this Country.

    Joseph L. Alioto:

    The evidence in the case disclosed, and this was from a former Vice President of the United States Vanadium Corporation, that both Union Carbide and the Vanadium Corporation of America, the two respondents in this action, that both of them directly intended to keep these petitioners from gaining any kind of a position in the vanadium industry.

    The evidence on this was direct.

    It is the Vice President of the United States Vanadium Company admitted it and he admitted to a conversation with the President of the Vanadium Corporation of America when a certain project was being discussed to take uranium from the ore without having the vanadium milled at the same time and the President of the Vanadium Corporation of America, one of the respondents, says that that would permit this petitioner to get into business, and this is exactly what we have been trying to prevent.

    The evidence discloses, too.

    A joint refusal by these folks who have 100% of the ferrovanadium industry and 90% of the vanadium oxide industry, a joint refusal to deal to petitioner or to sell to petitioner and this, in times when burdening circumstances were being handled by both organizations.

    In addition to that, they interfered with his source of supply, one of the millers on the Colorado Plateau, named Nisley & Wilson.

    Now, since the action of the Court of Appeals for the Ninth Circuit, the Court of Appeals for the Tenth Circuit has affirmed a judgement in favor of Nisley & Wilson and that judgement had implicit in it the fact that they were eliminated by these respondents pursuant to a conspiracy to monopolize the industry.

    Nisley & Wilson, as the Court of Appeals’ opinion discloses for the chief source of supply for these petitioners.

    So, it was found by the jury in Salt Lake and affirmed by the court in Denver that they had been eliminated and there were sufficient facts to sustain that judgement.

    Potter Stewart:

    Was it a private antitrust action?

    Joseph L. Alioto:

    That was a private antitrust action by Nisley & Wilson and the private antitrust action also by the miners resulted in a judgement for the miners, which even upon modifications for something like $1.5 million, and that was affirmed by the Court of Appeals for the Tenth Circuit.

    In the government action which preceded this, the action was brought in 1946 and tried sometime in 1956.

    The delay was occasioned by the fact that it was alleged that national security was somehow involved because of the presence of uranium in the vanadium-bearing ore, and that government action resulted in the acquittal of these defendants but the government action, stayed — under the opinion of the Court of Appeals for the Tenth Circuit, stayed the statute of limitations for enough time so that we could go back to these earlier acts and the jury found for the miners in Salt Lake City, found for Nisley & Wilson and found for certain of a — certain members of the class.

    It was all those who mined on the Colorado Plateau.

    And, we say that the affirmance by the Court of Appeals for the Tenth Circuit, proves — on suspectedly the same record, proves that there is a factual conflict that candid — that ought to be resolved by a fact-finder, a trier of the fact, rather than by the Court.

    Now, in addition to all of these things, the Court of Appeals admitted some concern with the fact that where you prove an intent to eliminate a particular competitor, followed by the elimination of that competitor, that under Bigelow and Story Parchment and Eastman Kodak that that would have to be determined by a jury, that that was circumstantial evidence from which a jury could make the finding as to whether or not legal causation existed.

    It admitted some misgivings with those cases and simply went on to distinguish the Bigelow case on the theory that Bigelow involved the defection of a great number of customers and this involved a more limited number of suppliers, a more limited number of customers with whom these petitioners were working.

    And we submit that that is no distinction at all.

    But furthermore, the Court didn’t even try to distinguish the Story Parchment case and the Kodak case when it recognized that this principle existed.

    Then it went on, as I say, without being able to close the gap entirely to hold that the Canadian transaction, the elimination of these petitioners from the Canadian market was done by the respondents.

    It admitted it was done for the purpose — it assumed it was done for the purpose of entrenching the monopoly which existed but said, because of the Noerr case, it was unable to find or to predicate any antitrust liability upon that situation.

    It’s a little different than the trial court.

    The trial court had granted them impunity from this action, this total elimination from the Canadian market on the basis of the American Banana decision.

    The Court of Appeals placed it on the basis of the Noerr decision.

    Now, here’s a factual situation so far as that Canadian market is concerned.

    No Canadian official was made a defendant in this action.

    No Canadian official was being proceeded against.

    The defendants did have a Canadian subsidiary.

    It was a commercial subsidiary.

    During the war, this commercial subsidiary was appointed by the Canadian Government as an agent to purchase vanadium.

    Joseph L. Alioto:

    We alleged and we offer to prove, and the offer of proof was rejected, but the Court of Appeals said it would — and retain or regard or consider the offer of proof in connection with this decision.

    We alleged that, immediately upon being appointed the agent for the Canadian Government, that the Canadian subsidiary or the respondent, Union Carbide, joined with Union Carbide and VCA and they agreed they will cut the petitioner off.

    The petitioner, in the meantime, had developed a rather substantial business on shipments from Long Island, New York into Canada with the Atlas Steel Company and other companies.

    He was forbidden under this arrangement, except for a few shipments after he had established the business.

    He was forbidden to sell them to Canada at all.

    Instead, the agent for the Canadian Government which was a subsidiary of these respondents, that agent purchased the vanadium from the two respondents.

    In other words, they split the orders that he had in Canada, the business he had in Canada between these two respondents.

    And the Court of Appeals for the Ninth Circuit felt that the Noerr case somehow compelled this result.

    Now, that same question came before the Court of Appeals for the Tenth Circuit and it went just the other way.

    The trial court in the Tenth Circuit case — cases rather, the trial court instructed the jury that if a governmental agency were used in a commercial transaction for the purpose of assisting or furthering the objects of a conspiracy to monopolize, that no immunity was gained by the governmental agent if he joined that conspiracy in effect or used his powers to further that conspiracy.

    The Court of Appeals for the Tenth Circuit considered the question in two different categories and in two different factual situations and it analyzed it in this fashion.

    It said that if the government agent had a discretionary power to buy from any number of people or had discretionary power to engage in commercial transactions and that government agent exercised his discretion so as to assist a monopolization or a restraint of trade, then the government agency gained no immunity or the government agent gained no immunity by reason of that government agency.

    Now, here’s a factual situation they were talking about in that situa — in that case.

    Union Carbide was appointed as a procuring agency by the United States Government for vanadium and uranium at a certain period of time.

    Union Carbide was authorized — the respondent, Union Carbide, was authorized to pay the miners anything up to 50 cents a pound.

    Union Carbide and Vanadium Corporation of America have agreed among themselves in private meetings, as so far as their own purchases were concerned for their own account that they would pay the miners, first, 21 cents and then they fixed a base price of 31 cents.

    They were authorized in buying for the Government in the war program to pay up to 50 cents.

    So, the evidence proved and this was accepted the Tenth Circuit and affirmed by the Tenth Circuit, the evidence proved that they took their governmental power and fixed the price in accordance with their private agreement, with the agreement that they had made privately among themselves.

    And so, the Court of Appeals says that, by using that discretion to get into a combination to restrain trade to fix prices in this case, that the governmental agency afforded them no immunity whatever, and this is the analysis which the Court has made.

    In another action where certain claims were taken away, this again is in the Tenth Circuit, certain claims were taken away containing valuable uranium lands, the Court of Appeals said, “In that case, the Government directed Union Carbide to take those very claims and therefore the governmental agency could not be used as a basis for predicating antitrust liability.”

    Now, we when get back to the factual situation we have in this case, this is what developed.

    The petitioner was shipping a product called Van-Ex, that’s a vanadium oxide for direct introduction into the steel bath, from New York — a little factory it had in New York to Canada to the Atlas Steel Company.

    When the shipment was cut-off, the petitioner protested in Canada.

    In Canada, he was told to see a Union Carbide agent in New York City, a managing agent — admittedly a managing agent of New — of Union Carbide in New York City.

    So, he went to see this managing agent in New York or rather he was called by another man in Union Carbide who was not an officer and told to appear at an office in Union Carbide for a discussion of the matter.

    When they got there, this agent of Union Carbide told the petitioner that they had no right in the vanadium business in Canada or the United States, and he also told them he had heard they were making certain arrangements with the Climax Molybdenum Company and that he should stay away from Climax and, if he didn’t, that Union Carbide would use some of its molybdenum which it had in California and surplus supply for the purpose of visiting reprisals on Climax.

    Now, all of this was excluded by the trial judge on the theory that, somehow, Canadian sovereignty inter — intervened, and the American Banana decision compelled this exclusion of evidence.

    And the trial judge also instructed the jury that the — that no act done on behalf of the Government of Canada could possibly predict — could possibly be the basis for antitrust liability.

    Let’s say the Court of Appeals didn’t put it on this basis, but put it on the basis of the Noerr case.

    Now, another factual — we insist that what the Court of Appeals actually did here was to waive facts to appraise inferences and to make a resolution of both facts and inferences.

    Joseph L. Alioto:

    But one of the things the Court of Appeals said was this, “We will grant that 90% of this industry may have been monopolized by these two defendants and we will grant that these two defendants by agreement, jointly refused to supply the petitioners for vanadium oxide to manufacture ferrovanadium or to export as vanadium oxide or to manufacture their Van-Ex, which was a vanadium oxide for direct introduction into the steel bath.

    We will grant that.

    But if 10% was on the outside and he could have had access to that 10% and didn’t take the 10% on the outside then there can be no question of causing the damage to the petitioner.

    The petitioner caused the damage to himself by not taking that 10%.”

    The problem about that is, that part of that 10% was being supplied by Nisley & Wilson who at the very time were being proceeded against were the victims of a campaign to eliminate them and they were eliminated.

    And the evidence is in the record that they were eliminated as a result of this campaign.

    As I say in Nisley & Wilson’s private suit, the Court of Appeals for the Tenth Circuit said there was a factual foundation for this elimination.

    I think that that proves on its face that there was a factual conflict which a trier of the fact should have resolved instead of the Court of Appeals.

    In addition to that, this other portion, this other 10% was in — was an undependable supply.

    It was a supply that was supposed to come from Africa instead of the United States or a supply that was supposed to come from flue dust on ships when and if they ever arrived in port, and this was 1944 that this activity was going on.

    So, I submit to the trier or the fact has a perfect right to find from all the evidence in the case, and there was direct evidence as well as export evidence upon this matter that this 10% was not only an undependable supply.

    But in addition to that, it was being attacked by the monopolist who eliminated — who eliminated the millers of oxide about three months after the Court said it should have taken it from them.

    And that, under these circumstances, a jury could have found that the failure of petitioners was directly caused by the violations which were alleged.

    John M. Harlan II:

    The question (Inaudible)

    Joseph L. Alioto:

    Yes, it was submitted to the jury under erroneous instructions.

    One of the instructions being that they have the absolute right to eliminate this petitioner if there was still enough vanadium left in their hands to supply the general public.

    This was the Klor instruction which was reversed.

    In addition to that, the Court refused to give the Bigelow instructions.

    It said it didn’t believe in it and said that somebody has to reverse the Supreme Court.

    It went on to state exactly why it didn’t believe in it.

    So, it was submitted, Mr. Justice Harlan, but, as I say, under patently erroneous instructions.

    John M. Harlan II:

    (Inaudible) ourselves over impart of the errors and instructions contemplated (Inaudible)

    Joseph L. Alioto:

    Well, there is another matter, if Your Honor please.

    The Court of Appeals conceded that there was one element, the elimination of petitioners from the Canadian market which could not be covered by his analysis of causation — of legal causation but was covered by this Court’s decision in Noerr.

    Now, if this Court holds that the Noerr case, as you know is a combination to lobby legislation, doesn’t cover a commercial situation such as we have here, then even under the Court of Appeals’ notion, there was something that might have gone to a jury and I just wonder why it’s necessary to send it back to the Court of Appeals to act on these other things in view of the fact that we had that element that must go to a jury.

    So, it’s something more than that.

    But those are the two issues we’re asking.

    First of all, that there were the facts to justify cause and secondly, that the Noerr case can’t possibly cover a commercial arrangement such as the one that we spoken of here.

    Now, when we get down to analysis of these cases, I respectfully submit that this Court made it very clear in Noerr that it was talking only about a combination to lobby legislation and that manifestly, that has nothing to do with the situation where a petitioner or where a defendant is able to get itself appointed as a procuring officer for a Government and, in connection with that procurement, instead of exercising its discretion to buy-in the open market or to buy competitively.

    It instead joins that power to purchase with a preexisting conspiracy to monopolize and to restraint the trade of a — of another competitor.

    Joseph L. Alioto:

    All of which has the effect and the purpose of eliminating that competitor from the Canadian market.

    I submit that that has no reasonable relationship to the question of whether or not people may combine for the purpose of lobbying through legislation or having legislation pass even though that legislation does have an anticompetitive effect.

    And I would like to point on this connection that the Court of Appeals for the Tenth Circuit refused to follow the Court of Appeals for the Ninth Circuit on this matter.

    It held that the Noerr case didn’t — didn’t authorize a government agent to join a conspiracy in restraint of trade or conspiracy to monopolize trade.

    It further held that the — that the Noerr case was simply — simply held that a combination to instigate legislation, even though it might have anticompetitive effects.

    It’s certainly not a combination to persuade a government agent that he should use his agency powers for the purpose of furthering the interest of a preexisting conspiracy to monopolize.

    I submit, if Your Honor please, that those are the issues in the case that the decision of the Court of Appeals below simply overlooks, the decisions of this Court in Story Parchment, Eastman Kodak, and Bigelow.

    As a matter of fact, the evidence — the actual evidence that was adduced in the Story Parchment case by comparison to the evidence that was produced in this case and in this Court, pales almost into insignificance.

    All you have in Story Parchment, if you recall, was the fact that after the low prices by the defendants in that action, the worth of the plant which petitioner had in that case decreased in value.

    The Court of Appeals says that that petitioner would have failed anyway because he didn’t have any business knowhow and he was undercapitalized.

    The Supreme Court said that that wasn’t the question for the Court of Appeals.

    It was a question for the jury.

    As I say, the Court of Appeals recognized that the Story Parchment case presented some difficulties as in Bigelow and Eastman Kodak, but didn’t go on to distinguish those two cases.

    I submit they can’t be distinguished.

    In addition to that, we submit that the Noerr case can’t possibly cover a commercial arrangement such as we have in this case.

    Earl Warren:

    Mr. Holland.

    Josiah G. Holland:

    Mr. Chief Justice and this Honorable Court.

    I represent the respondent, Vanadium Corporation of America.

    Mr. Archer who represents the Union Carbide, respondents, will cover the question of the Canadian situation and I will cover the other questions in this case.

    First of all, I think I should call to the attention of the Court just what kind of a case this is and just why it’s here because so much of the brief of petitioner and so much of his questions has taken up with trying to show what a terrible conspiracy this was when as a matter of fact, the Court of Appeals for the Ninth Circuit in rendering its decision and for the purposes of its decision assumed that a conspiracy had been proved.

    And it’s under that assumption that we come — that the case comes here on the one question.

    Assuming a conspiracy and assuming that there was evidence or really not discussing the question as to whether there was sufficient evidence of the amount of damage, nevertheless must a plaintiff in an antitrust case prove causation?

    Must he prove that the acts of the defendants which are assumed to have been done pursuant to a conspiracy to monopolize and in violation of the Sherman Act, must those acts have caused his injury and must the plaintiff prove that either by direct evirence — or evidence from which a reasonable inference can be drawn as in the Bigelow case.

    Now, Mr. Alioto has spent considerable time arguing the cases which were decided by the Tenth Circuit Court of Appeals.

    I would assume because there, the judgment and the verdict were for the plaintiffs rather than from the defendants.

    But, on this question of causation, those cases are not in point at all.

    We have an industry here, the vanadium industry, which starts with raw ore.

    That ore is converted into oxide by mills.

    The oxide is in turn converted into ferrovanadium for introduction into the steel bath, and practically all or mostly all of it is sold to the Steel Industry.

    Now, in the — in the cases in the — in the Tenth Circuit, we were involved with the ore miners and we were involved with a mill, the Nisley & Wilson Mill, which made the oxide.

    Josiah G. Holland:

    We were involved with two other steps in this process of making vanadium, and proof of causation in those cases furnishes no analogy whatever to proof of causation in this case.

    In this case, Mr. Leir, whose name can be used interchangeably with the Continental Ore Corporation because he and his immediate family owned it, came to this country in 1938.

    He had had experience in the ferroalloy business in Europe and he determined to go into the ferroalloy business here, not as a fully integrated company and not with the expenditure of a large sum of money to set up the business, but he wanted to come in at the last step in the business.

    He wanted to buy the oxide from — mostly produced by these respondents, although varying amounts of it at least 10% and during the certain periods more than that were produced by independent producers — other producers.

    He wanted to get in at that stage, buy oxide, take it to someone such as the Apex Smelting Company, whom he did, have that company convert it into ferrovanadium and then in turn, sell the ferrovanadium.

    Now, the — Judge Magruder, sitting in the Tenth Circuit, after stating the proposition, simply said, “You still have to prove causation,” this is not the Bigelow case, and I shall discuss that later.

    “Here, I’m going to assume that this conspiracy existed and that the acts complained of were done but did those acts in anyway damage or injure this plaintiff?”

    And, the judge in that case made a very careful factual analysis.

    He took a long time to write his opinion.

    And after examining all of the evidence in the record, both the evidence that was admitted by the lower court and the evidence which was excluded by the lower court and assuming it to be admissible.

    After all that he said, “Well, now, here’s the complaint.

    This man comes into this business at the level of buying oxide and he says that the plaintiff’s had a conspiracy and they damaged him because they shut off his sources of supply.

    They wouldn’t sell to him and they shut off his sources of supply.

    He couldn’t get oxide.

    And therefore, he had to go out of the business.”

    But, the Circuit Court found after a careful examination of the record, that admitting all — everything, a careful — examination of the record clearly disclosed that at all times, the plaintiff in this case had plenty of oxide and could have had plenty of oxide and that at the time he went out of business in 1944 or at least he says he did although there’s no real proof that he went out of business then.

    At that time, there was a lot of oxide and he was offered large quantities of it but he wouldn’t take it.

    So, it’s — it boils down to a simple proposition as that.

    Now, the first venture that Continental Ore went in was with the Apex Smelting Company, and that was its more serious venture.

    Apex was a melter of secondary aluminum in Chicago and Continental Ore made a contract with Apex under which Continental Ore was to procure oxide for Apex and Apex was to procure it too.

    They were to make ferrovanadium from it, according to Mr. Leir’s process which was owned by a French company named Fred A. Coleman, and they were to deliver the ferrovanadium, the finished product to customers that Mr. Leir was to obtain and he was to get a sales commission.

    All of the money of the venture was to be put up by Apex.

    Now, Apex — that contract was in 1938.

    It was a period of about two years before Apex made its first batch of ferrovanadium, caused largely by the fact that the French company that was to instruct it from the process was unable to do so due to the oncoming of the war.

    But in any event, during that period of two years, Mr. Leir made certain applications, for example, the Vanadium Corporation of America, my client, to purchase oxide.

    But at that time, all he wanted to do is take the oxide and sell it abroad at a higher price.

    They refused to sell it to him so that during that period, certainly, his entry into the vanadium business here could not have suffered.

    Now, after Apex started, they made oxide up until the fall of 1941 for a period of about a year.

    At that time, they had a fire in their ferroalloy plant and were shutdown.

    And at that time or shortly after that, they decided that they wanted to get out of the business and they wanted to stop this contract with Mr. Leir and they wrote a letter in which they cited many reason for why — as to why they wanted to get out of it and not one of them was lack of oxide.

    Josiah G. Holland:

    There were a number of reasons set forth such as the fire that they had had, that the process had been unsatisfactory, that they couldn’t control their dust and their labor was making a fuss that they were dissatisfied with being in business with Continental anyway, and that the melting of secondary aluminum, which was a very important part of the war effort should get their full and undivided attention.

    And they went out of business.

    Now, there is no — no evidence on which a reasonable inference can be based that these companies, in any way, contributed to the Apex going out of business.

    For example, they had 50,000 pounds —

    Earl Warren:

    May I ask —

    Josiah G. Holland:

    — of oxide.

    Earl Warren:

    May ask if you’re — if you’re still arguing lack of causation or whether you’re —

    Josiah G. Holland:

    Yes, entirely lack of —

    Earl Warren:

    Whether you’re arguing if there was no conspiracy to that.

    Josiah G. Holland:

    I’m arguing lack of causation.

    Earl Warren:

    Lack of causation, still, yes.

    Josiah G. Holland:

    In other words, that these companies did not cause Apex to go out of business, Apex being Mr. Leir’s supplier.

    Earl Warren:

    Yes.

    Josiah G. Holland:

    And we’re not involved in causing that.

    After Apex went out of business, Mr. Leir started the business which comes into this Canadian situation.

    I won’t go into the Canadian part of it.

    But that was the — he tried to make what he called Van-Ex.

    Now, Van-Ex was supposed to be vanadium oxide which could be introduced directly into the steel bath and without going through the step of making ferrovanadium.

    But the undisputed fact showed that in most instances, he simply bought oxide at $1.10 and incidentally, these defendants never fixed the price of oxide during all this period.

    The price of oxide is fixed by the OPA and the ceiling price was $1.10.

    Mr. Leir bought this oxide at $1.10, ground it, repackaged it, added nothing, although in several instances, he added a little fluorspar.

    Mostly, he added nothing and resold it at $1.34 or 24 cents above the OPA ceiling price for oxide.

    That was the Van-Ex operation.

    Now, during the entire Van-Ex operation, as the court below found, the plaintiff never applied to the defendants for oxide.

    He never asked for any.

    And apparently, he had money because he carried on his operations in Van-Ex.

    Then, after he ceased making Van-Ex, he then turned to Climax Molybdenum Corporation and asked them — made a contract with them to convert 20,000 pounds of oxide into ferrovanadium for him for him to sell, and Climax did that.

    They carried out that contract and obtained the oxide, half of it from one of these respondents and half of it from another source.

    And then the last venture that he went into and remember, these ventures are specifically alleged in the complaint as being what he did in the vanadium business.

    And the — so, that he — in the last venture, he tried to interest a company called Imperial Paper & Color Corporation into producing oxide and ferrovanadium and this was in 1944.

    Josiah G. Holland:

    Early in 1944, he made this contract and he — but Imperial had the right not to go ahead with the operation unless they were satisfied that their primary sources of raw material would be sufficient.

    And about a year later, they decided that they were not.

    There’s no evidence that the plaintiffs caused any damage in that instance.

    Now, to get around to the basic legal question involved in two of the questions raised in this case.

    It seems to me that the proposition put forward by Mr. Alioto is, if you have evidence or if you prove a conspiracy under Section 2 or if you prove a violation of Sections 1 or 2 of the Sherman Act.

    And if you established that someone who is in the business got out, you have conclusively proved causation.

    You have conclusively proved that that person was put out of the business by the acts of those defendants.

    In other words, assuming a monopoly or a conspiracy to monopolize and assuming that a competitor leaves the business, that’s conclusive proof of causation.

    And I don’t believe that this Court or any court has ever gone that far.

    Hugo L. Black:

    Do they argue that?

    Josiah G. Holland:

    That’s approximately what they argue and what their questions pose, Your Honor.

    Hugo L. Black:

    I thought they argued it was a — they had enough evidence to go to a jury.

    Josiah G. Holland:

    They are arguing that they have enough evidence —

    Hugo L. Black:

    But that’s —

    Josiah G. Holland:

    — to go to a jury, but —

    Hugo L. Black:

    But differed in it this to between argument inclusiveness?

    Josiah G. Holland:

    No, I don’t think they’re arguing that they have enough evidence of causation to go to a jury, except they say where you show a 100% control or a dominating control of an industry, you show that the defendants wanted to put the — you introduce some evidence that the defendants wanted to put the plaintiffs out of the industry, and the plaintiffs go out of the industry.

    You don’t have to show that they went out because the plaintiffs put them out, because the plaintiffs caused them damage.

    I think that’s what they said.

    Hugo L. Black:

    I gather that.

    What you’re saying is that they didn’t have enough evidence to submit to the jury the question of whether what was done — what they had done entitled the jury to find that that was the reason they went out of business.

    Josiah G. Holland:

    Yes, Your Honor, that’s correct.

    The — their theory and the way they tried their case and their evidence was that they made certain ventures into the vanadium business, that all of those who were forwarded because they couldn’t get vanadium oxide.

    Now, the Circuit Court, Judge Magruder —

    Hugo L. Black:

    And what else did they say?

    Josiah G. Holland:

    Pardon me?

    Hugo L. Black:

    And what else was decided that they couldn’t get it?

    Josiah G. Holland:

    Well, they say we — said we interfered with their suppliers, for example, and they couldn’t get vanadium oxide.

    But the court below found that they didn’t prove any damage because they always had plenty of oxide or could have gotten that.

    Earl Warren:

    Well, do they conceive that there is no proof of causation, no evidence of causation?

    Josiah G. Holland:

    They say that — what I have said, that they don’t have to prove that the fact that we proved then that the only evidence and the evidence of the plaintiffs themselves was that they had or could have gotten plenty of oxide at all times, that that fact makes no difference.

    That they don’t have to prove causation.

    They simply have to prove a monopoly situation and the fact that the plaintiffs went out of the business and it will be assumed because there was this monopoly situation.

    The reasonable assumption is they went out of the business because that was the situation.

    Earl Warren:

    Well, do they claim that there is any evidence of causation in this record?

    Josiah G. Holland:

    Not as I see it, Your Honor, and not as —

    Earl Warren:

    Well, that — I’m talking as you see it, but do they claim that there is evidence in the record of causation?

    Josiah G. Holland:

    They claim that — their claim —

    Earl Warren:

    Just because of that one fact and nothing else, is that —

    Josiah G. Holland:

    They claim that there’s this evidence that we — that there is evidence that we conspired to monopolize, that one of the objects of the monopoly was to put plaintiffs and people like him out of the industry, and then they claim he went out of the industry.

    They say if you have that, that’s all you need to prove.

    You don’t have to prove that we caused him to go out of the industry.

    Earl Warren:

    Well, do they contend that there is any evidence in there to show that they were put out of business in this manner?

    Josiah G. Holland:

    They claim that — well, they — or nothing except the plaintiff’s very statement that that’s the reason he went onto it.

    Hugo L. Black:

    What theory then did the —

    Josiah G. Holland:

    And they claim, of course, that we refuse to sell them oxide.

    Hugo L. Black:

    What theory was submitted to the jury at all?

    Josiah G. Holland:

    It was submitted to the jury on the theory that, if the jury found that a violation of the Sections 1 and 2 of the Sherman Act — 1 or 2 of the Sherman Act, and if the jury found that that had an impact on the defendants, a similar instruction to Bigelow was given by the lower court, then they were to find — they could find for the plaintiffs.

    I —

    Hugo L. Black:

    If the — if what they say was that proof in page 8 of their brief is quite different to what you say they’re depending on —

    Josiah G. Holland:

    First —

    Hugo L. Black:

    — if I gather it, that they say that there was evidence from several people that Carbide said they didn’t want to sell him vanadium because they want to keep him out of business, that they refused to sell him vanadium?

    Josiah G. Holland:

    That’s correct.

    Hugo L. Black:

    Did they refuse to sell it to him?

    Josiah G. Holland:

    That’s correct.

    He —

    Hugo L. Black:

    And that they had complete control of the monopoly in the field?

    Josiah G. Holland:

    Not complete, no, Your Honor.

    Hugo L. Black:

    What 90%?

    Josiah G. Holland:

    90% is what (Voice Overlap) —

    Hugo L. Black:

    And you say that that wouldn’t be enough evidence for a jury to find that the cause of their being put out of business was the effort of the Carbide Company to put them out of business?

    Josiah G. Holland:

    The — Judge Magruder so-found after an examination of the record.

    Hugo L. Black:

    Was that the argument here?

    Josiah G. Holland:

    That is the argument here and he so-found after an examination of the record, because he found, as a matter of fact, the undisputed facts in the record show that the plaintiffs at all times had all the vanadium oxide they wanted or could have had.

    Therefore, we couldn’t have caused him to go out of business.

    Hugo L. Black:

    Why was he trying to buy it from the Carbide Company?

    Why was he trying to buy it from the Carbide Company and why did the Carbide Company refuse to sell it to him on the grounds they want to put him out of business?

    Josiah G. Holland:

    Well, that’s — that is an inference that I suppose could be drawn.

    Hugo L. Black:

    So that is the evidence.

    Josiah G. Holland:

    Yes, Your Honor.

    Hugo L. Black:

    He quotes the evidence.

    Josiah G. Holland:

    And the judge in the court below said that doesn’t make any difference because he had plenty of oxide and we didn’t cause —

    Hugo L. Black:

    (Voice Overlap) the question here is not what the judge below in the Court of Appeals, whether that’s enough evidence to go to a jury for them to find that they were put out of business because the people that said they were trying to put him out of business refused to sell him the product.

    They didn’t sell them to him.

    Josiah G. Holland:

    Well, I think perhaps the best way I can describe it as I understand it, is that if you take Bigelow where the plaintiff was refused first-run movies.

    In the first place, the first-run movie is a different thing from a tangible product like vanadium in other words, movies got from one source and maybe very different from movies gotten from someone else.

    But assuming you’d take Bigelow and assume you were dealing with a tangible product like vanadium oxide which is the same no matter where you buy it and assume that contrary to Bigelow, the plaintiff at all times had or could have had all the vanadium oxide he wanted then you have Bigelow.

    Hugo L. Black:

    Could you assume that though if he was trying to buy a vanadium and couldn’t buy it because they wouldn’t sell it to him because they want to put him out of business?

    Josiah G. Holland:

    He couldn’t buy it or he claims he couldn’t buy it for — from the defendants, but the —

    Hugo L. Black:

    But then, how can you assume —

    Josiah G. Holland:

    The evidence showed that he had all that he needed and had plenty of sources of supply.

    Hugo L. Black:

    What could was the indic — is there indication, is there argument that he was trying to buy it from Carbide although he didn’t need it and didn’t want it for his business?

    Josiah G. Holland:

    Well, I assume that he was trying to buy it anywhere he wanted to.

    But he certainly had plenty of sources of supply and plenty of them were available to him, and the — that was the finding of the Circuit Court.

    Hugo L. Black:

    Suppose a merchant in a city wanted to buy flours and he showed that someone who had 90% of the flour refused to sell to him and continued to refuse to sell to him, and that was the evidence.

    Finally, he kept on trying to buy from them and they refused to sell to him and then he went broke.

    Would you say that a jury wouldn’t have a right to infer from that?

    He couldn’t — because he couldn’t get flour that they couldn’t find that he had —

    Josiah G. Holland:

    I would say if —

    Hugo L. Black:

    That’s the cause of it?

    Josiah G. Holland:

    — if several other flour suppliers were driving up to his door and offering him flour and he was keeping his bins full or, at times, he was saying he didn’t want any and refusing to take it, that they could find that that wasn’t the reason he went out a of business.

    Hugo L. Black:

    But, suppose it showed that, during that time that he was constantly trying to buy from this company and couldn’t get it.

    Wouldn’t a jury have a right to find something from that with reference to he’s not being able to get what he wanted?

    Josiah G. Holland:

    I don’t think so, Your Honor, if he — if, as a matter of fact, he could get what he wanted.

    Hugo L. Black:

    But that would mean that the jury would have to find that he was not acting in earnest when he was trying to buy this because he didn’t need it.

    Josiah G. Holland:

    The fact showed that he had plenty of flour at all times.

    That is the point of the Tenth Circuit’s decision that the — that one element of causation is missing.

    Now, also, there was very little evidence of — offered as to his major damages but the Court doesn’t even go into that.

    Earl Warren:

    Could the petitioner admit that, at all times, he had ample supply of vanadium?

    Josiah G. Holland:

    Essentially, yes, and on —

    Hugo L. Black:

    Where is that?

    Josiah G. Holland:

    Well, I’ll have to — can I supply you with that from the record?

    Hugo L. Black:

    Yes.

    I mean, that’s very important.

    I think that —

    Earl Warren:

    Mr. Holland.

    Josiah G. Holland:

    I certainly shall.

    Yes

    Potter Stewart:

    Is there some admission in the record that the petitioner thought he had a reliable supply for the future or was it just every now and then he could buy from somebody else?

    Wasn’t — isn’t the reliability of a future supply fairly significant element in the business?

    Josiah G. Holland:

    I think the finding of the lower — of the Tenth Circuit is that the effect showed that he did have a reliable and sufficient source of supply and that, at the time he alleged he went out of business, he had offers of ample supplies.

    Earl Warren:

    Well, can you find a portion in the record where they admit that they have a reliable supply of vanadium?

    Josiah G. Holland:

    Yes, Your Honor.

    I’ll supply a memorandum after.

    Earl Warren:

    Well, I — couldn’t we have it —

    Josiah G. Holland:

    I can’t find it right now.

    Earl Warren:

    — couldn’t we have it during the argument?

    Hugo L. Black:

    It’s a very vital part of it.

    Earl Warren:

    It’s a very important thing.

    One of your associates could find it.

    Josiah G. Holland:

    If the Court will permit me to turn the argument over to Mr. Archer.

    At this point, I’ve argued about half the time.

    I will look for it while he’s arguing and try to give it to you.

    Earl Warren:

    Very well.

    Very Well.

    Josiah G. Holland:

    If that’s satisfactory.

    Earl Warren:

    Yes.

    Yes, you may.

    Mr. Archer.

    Richard J. Archer:

    May it please the Court, Mr. Chief Justice.

    Earl Warren:

    Mr. Archer.

    Richard J. Archer:

    I represent the defendants, respondents, Union Carbide Corporation and United States Vanadium Corporation.

    As a preliminary matter, I should like to point out that although in some of the papers there are several companies named as respondents which our Union Carbide subsidiaries, which are in the group, are the Electro Metallurgical Companies, these companies were never served.

    There was no judgment against them, of course, and they are not respondents here.

    I really want to discuss two things having to do with what occurred in Canada.

    First, this is question five in the petition, in the writ of certiorari which has been granted, and it’s our posi — position that this question, as it arises on the record is purely hypothetical in this case.

    Our second position is that assuming the hypothetical question which has been posed, there is — that the law is, under — on the basis of Parker against Brown, Olsen against Smith, Rock Royal and Noerr Motor Freight, that the question of law was correctly decided below.

    I would like to go, first —

    Earl Warren:

    Just why is it hypothetical?

    Richard J. Archer:

    That’s the first point I want to take.

    This arises — let me, first, state what the claim is.

    The claim is, in 1942, the plaintiff was selling vanadium oxide to Atlas Steels, a customer in Canada.

    In 1943, the Metals Controller of Canada took over all metals.

    There were chemical controllers and so forth.

    As part of this, he appointed Electro Metallurgical Company of Canada, which is not a defendant here, his agent to receive allocations of vanadium from the War Production Board in the United States and allocate them in Canada according to the orders of the Metal Controller.

    Now, this is in the plaintiff’s offer of proof.

    This isn’t anything we proved.

    This is in the offer of proof that plaintiff made below.

    Then, the claim is that after he appointed Electro Metallurgical Company of Canada, first, Electro Metallurgical Company of Canada was a Union Carbide subsidiary.

    It was a Canadian Corporation.

    Richard J. Archer:

    After Electro Metallurgical Company of Canada made its arrangements to get vanadium into Canada, then it refused to buy, after the first shipment from the plaintiff here.

    Now, the point I — the reason why I say this is hypothetical is because there’s nothing in the offer of proof that connects these respondents with the Electro Metallurgical Company of Canada.

    There is no evidence that Union Carbide exerted any domination, control, or influence other — over Electro Metallurgical Company of Canada other than the fact that it was wholly own subsidiary.

    Now, it is true that the court below assumed — it assumed — it actually made it into two assumptions before reaching this point.

    But it did assume that the defendants had control Union — Electro Metallurgical Company of Canada but it said it was making that assumption.

    And then it went on to say that assuming that to be the case, there is still no liability because of Noerr Motor Freight.

    I think —

    Earl Warren:

    But we have to assume it here then, don’t we?

    Richard J. Archer:

    Well, it seems to me that I can affirm the judgment of the court below on any ground.

    It may be that it has to be assumed.

    But the basic question is, it seems to me, was the trial court correct in excluding this evidence?

    Earl Warren:

    Yes, but the — his assumption which was the basis of his conclusion must be assumed here also, must it not?

    Richard J. Archer:

    Well, I — the — when — I objected to this evidence in the trial court under —

    Earl Warren:

    No, but that doesn’t make any difference.

    I’m talking just about the relationship of us to the assumptions of the Court of Appeals.

    Did the Court of Appeals assume something to be a fact and then based its conclusion on that assumption?

    Must we not accept that assumption also?

    Richard J. Archer:

    Well, as I understand the cases, this is not necessarily true that if and I pose this situation.

    One of my transfer to — of objecting to all these was that it was hearsay, although it’s been stated that the man who made this conversation was a managing agent, this is not admitted.

    There was no authority.

    He was not connected with Union Carbide.

    There’s no evidence that he had any authority to speak for Union Carbide.

    The only evidence was that he had an office.

    So it would seem to that if the court would say, “Well, we will make the same assumption and send it back down for trial.”

    And it turns out that all the evidence is inadmissible hearsay then it would seem to be a waste of time.

    Now, let me put it just a little bit differently.

    If the trial court, when an offer of proof is made, is able to reject it on any other traditional grounds that evidence is rejected in the court, as well as on this point, and he does reject it, it seems to me that that decision is right, and we can affirm it on the ground that the decision was right.

    We refer to Story Parchment and several cases along this line in our brief.

    In that case, this Court held that it should consider upon the merits respondents additional ground for sustaining the judgment below which was that there was no evidence of an antitrust violation.

    That’s a different kind of point.

    Richard J. Archer:

    But although we have not petitioned here, we oppose this point in our response to the petition on the ground that this point was not merely raised.

    I think it has another aspect to it because when you get to Noerr Motor Freight and that kind of case, and the record in this case is so sparse, it shows no communication, for instance, from Union Carbide to Electro Metallurgical Company of Canada.

    And unless this Court desires, for instance, to reexamine Noerr Motor Freight and Parker against Brown, it would have to have some basis in the record for distinguishing, it seems to me what happened in Canada.

    And in as much as the proof, as we say, the issue that’s here is purely hypothetical.

    The communication here is general from the — between the respondents and the Electro Metallurgical Company of Canada which was not a respondent or even with the Metals Controller of Canada, which would certainly not be binding, in any sense, upon the defendants in this case who was all inadmissible hearsay, but assuming that all to be admissible, it still does not prove the final point that these respondents communicated with Electro Metallurgical Company of Canada.

    Accordingly, it seems if the Court is going to face a difficult problem like this, it should have a more complete record.

    Something that it could reach a decision on and that’s — well, that is fundamentally our point there.

    And, as I say, we set out the cases in the brief and say, as a matter of Supreme Court procedure, it is proper to raise a defense like this.

    Hugo L. Black:

    May I ask you exactly why — what it is you claim Noerr on how it controls this question?

    Richard J. Archer:

    Yes.

    I would say it in this way, Mr. Justice Black.

    We say, first, we take the question, does the act of Elec — is the act of Electro Metallurgical Company of Canada, in Canada, a violation of the Sherman Act.

    We examine that in several other cases and then, we come to the conclusion in our brief that it does.

    Then, in replying to the —

    Hugo L. Black:

    It does not violation of the law of what now?

    Richard J. Archer:

    Pardon?

    Hugo L. Black:

    It does not violate what?

    Richard J. Archer:

    The Sherman Act.

    Hugo L. Black:

    Alright.

    Richard J. Archer:

    In other words, this just — let’s take Electro Metallurgical Company of Canada, acting as agent for the Metals Controller.

    There is no question about what they had a — a monopoly of the purest sort.

    They not only — they had the government behind them, the War Production Board.

    The only vanadium that went into Canada was allocated there by the War Production Board.

    When it got there, it was allocated according to the orders of the Metals Controller, who is a government official.

    Now, if I may say that the offer of proof in the court below was in this — I’d like to state the facts a little bit so I can answer Mr. Justice —

    Hugo L. Black:

    That’s what I wanted to hear.

    Richard J. Archer:

    In the lower court, counsel for the petitioners made this contention, “The crux of my contention is, it comes down to this, that this defendant, as an agent for the Canadian Government, used that agency for the purpose of restraining trade and participating in a conspiracy to eliminate the Continental Ore Company from the Canadian market.”

    Hugo L. Black:

    What defendant was that then?

    Richard J. Archer:

    Well, it really —

    Hugo L. Black:

    This defendant?

    Hugo L. Black:

    He says this defendant, didn’t he?

    Richard J. Archer:

    Yes, well, there was only one defendant that was an agent for the Canadian Government.

    That was Electro Metallurgical Company of Canada, and that’s why I say that the title of the court lists all these people as defendants but they really weren’t defendants, and then you’ll find some further discussion with the trial judge about this.

    The trial judge says, “Well, if the defendant wasn’t served or the company wasn’t served, you can’t call him a defendant.”

    This was Electro Metallurgical Company of Canada.

    So then, we say that this Court has decided in such cases as Parker against Brown, U.S. against Rock Royal, Olsen against Smith, that the agent itself or the private agent for the Government does not violate the antitrust laws.

    Hugo L. Black:

    Does that mean that the private company can combine with an agent of that kind and that he’s immunized from his violation to the Antitrust Act by reason of the fact that he’s combined with an agent of Canada?

    Richard J. Archer:

    We —

    Hugo L. Black:

    I’m just asking you, try to find (Voice Overlap) —

    Richard J. Archer:

    Yes.

    Yes, exactly.

    We would say, we do not claim any immunity for what happened in the United States.

    We claim no immunity for what happened in the United States.

    As Mr. Holland says, we say anything we did in United States just didn’t injure the plaintiff.

    Hugo L. Black:

    Suppose the shot came across the border?

    Richard J. Archer:

    Suppose the shot came across the border that, Your Honor, would be a case we don’t have to decide here because the contention was, in the court below in the offer of proof was that the Canadian subsidiary refused to buy vanadium form the plaintiff.

    It isn’t a question of a shot coming across the border, so then —

    Hugo L. Black:

    Canadian subsidiary of whom?

    Richard J. Archer:

    Of Union Carbide.

    Hugo L. Black:

    Is this a subsidiary of Union Carbide?

    Richard J. Archer:

    That’s right.

    Electro Metallurgical Company of Canada was a subsidiary of Union Carbide.

    It was asked by the Government to act as its agent.

    Now, when it refused, the petitioners here wrote to the Metals Controller and protested and said, “It is not the intent of this program to create a monopoly in Canada.”

    Now, in reply to that letter, I think the Metals Controller wrote to the plaintiff here and it referred, first, to Mr. Davis, I say so the letter is clear, a letter of Mr. Davis of one of the steel mills had written.

    And then, as I say, after this charge had been — monopoly had been made by the petitioners here to the Canadian Government, the me — Metals Controller of the Department of Munitions and Supply said, “In Mr. Davis’ reply to you of the 24th, it is not made evident, possibly it is not known to Mr. Davis, that Electro Metallurgical Company of Canada was requested by the Metals Controller to place its facilities at the disposal of Canada.

    By the arrangement now in being, Electro Metallurgical Company is required to finance and to purchase vanadium products allocated to Canada by the War Production Board and to store and distribute this allocation as desired by the Metals Controller.

    This is done at no cost to Canada.”

    Now, then, it is our position that the Sherman Act does not apply to this kind of activity.

    We cite, in addition, the other line of cases which involved other kinds of activity which might otherwise be torts that the rule where this Court will not sit or American courts do not sit in judgment of the acts of other governments done within their territories.

    Richard J. Archer:

    Now —

    Hugo L. Black:

    Just to find out how far this goes.Probably this is altogether different, that’s the reason I’m asking you.

    Number of companies have contract with the Federal Government to produce certain things for the Government.

    They have rather large contracts among them.

    Suppose they would combine with outside companies to violate the Sherman Act, that is to prevent competition, would — could they be prosecuted?

    Richard J. Archer:

    I would say that they probably could that it would have no application in our case.

    The only immunity we are claiming is a private company that’s acting as an agent for the Government —

    Hugo L. Black:

    (Voice Overlap)

    Richard J. Archer:

    Not for the private contractors.

    Hugo L. Black:

    Are they asking for a judgment against that company?

    Richard J. Archer:

    Well, to — the argument, as I understand it, is this.

    They say, “No, we are not seeking it.”

    Now, again, Electro — against Electro Metallurgical Company of Canada, they say that because Union Carbide and this is where I say it’s hypothetical, because Union Carbide and VCA supposedly influenced the governmental agent to do this kind of thing.

    Well, what if it did?

    What if there was evidence that Union Carbide had been (Inaudible)

    Richard J. Archer:

    This is–

    (Inaudible)

    Richard J. Archer:

    This is a position we take in our brief that, insofar as it’s the governmental act which does the injury, it’s the resulting act of the government which does that injury, and it’s — that the influencing of the Government doesn’t do the injury, and that’s not alleged here, that if we say there is no liability in that situation —

    (Inaudible)

    Richard J. Archer:

    That’s right.

    We say that if it’s a political act, in other words, we read Noerr as involving not only legislative lobbying but attempt — attempts to influence state tax commissions, road commissions, directors of highway and even the governor.

    And, the Court said that because, as I read the opinion, because this was a political matter, that when these — when the people influenced these various administrative officials, an injury there — damages would not be awarded there from because it was not covered by the Sherman Act, that it didn’t intend to create it.

    To me, it would be just exactly as though forgetting the act of state cases during World War II if several companies had come to Donald Nelson and had convinced him that they deserved perser — preserved treat — preferred treatment and received it.

    I would not think this would be a violation of the Sherman Act.

    I don’t think that the Sherman Act was intended to apply to this kind of thing.

    In the first place, I think it would be completely unworkable because particularly in a private treble-damage action, because in order to cover — recover damages, understand we claim immunity only for what results from that government’s act.

    In other words, if Donald Nelson then, thereupon, went and did something and somebody claimed injury from that, in order to recover in a treble-damage action, he would have to impugn the integrity of the particular governmental official and, in effect, invalidate the act.

    And, to me, this would result in a — in applying the Sherman Act to a kind of activity to which had historically has not been applied.

    Earl Warren:

    Well, Mr. Archer, as I understood Mr. Alioto, when he went to this Electro Metallurgical Company in Canada and tried to arrange for sales of this vanadium, that he was referred to the defendant, Union Carbide, and representative of that company called him up and said, “Now, if you want to discuss this matter, the place to do it is at the agent of the Union Carbide in New York.”

    And, that he went there and the agent of Union Carbide said, “Now, you have no business in the — this kind of business, either in the United States or Canada” and then, went on to indicate to him some reprisals that might be affected if he did continue in the business.

    Earl Warren:

    Now, do you claim immunity from that?

    Richard J. Archer:

    No, Your Honor.

    I don’t claim that that occurred.

    I do not agree that that occurred.

    Earl Warren:

    Well, I may — and I may have misstated —

    Richard J. Archer:

    That’s right.

    Earl Warren:

    I may have misstated it, but —

    Richard J. Archer:

    I think —

    Earl Warren:

    I still understood Mr. Alioto.

    Richard J. Archer:

    I think it — well, this offer of proof, Your Honor, consists of a series of correspondence and if you’ll — if the Court will look at cor– series of correspondence, the reference from Canada is a letter by the plaintiff here which says his lawyer, Mr. Edmond Cole, went to the Metals Controller, Mr. Bateman of Canada who — Mr. Bateman told Mr. Cole to tell Mr. Leir to go to Electro Metallurgical Company in New York.

    This was in January 1943 when it first started.

    So, this is double hearsay to begin with.

    In other words, this reference to Electro Metallurgical Company in Canada was made through Mr.Bateman to Mr. Cole, neither of whom I could ever cross-examine because I feel strongly about this, naturally.

    But, what the result was, the next letter from Mr. Leir then refers to the conversation he had and says, “You referred me to Welland,” which is Electro Metallurgical Company of Canada.”

    In other words, the conversation he had referred him to Welland.

    The next letter he gets from Electro Metallurgical Company in Welland says, “Electro Metallurgical Company in New York has referred to me your correspondence.”

    And then, Your Honor, there is six months correspondence on this whole subject between the plaintiff, Continental Ore and Electro Metallurgical Company in Welland for all this complaint is made.

    They have this letter from the Metals Controller saying that this is just what occurred, and it was after that the alleged conversation was offered as to this clerk in New York who had originally referred them up there, and we say this clerk in New York had no authority to speak for Electro Metal in Welland, Electro Metal in Canada, much less the respondents in the case, Union Carbide and United States Vanadium Corporation.

    Earl Warren:

    Did the Court of Appeals assume that that part of the plaintiff’s evidence was true for the — perhaps, the decision.

    Richard J. Archer:

    Yes, expressly.

    Earl Warren:

    It did?

    Richard J. Archer:

    Expressly, although we had argued in both ways and —

    Earl Warren:

    Yes.

    Richard J. Archer:

    — and to make it clear, I had objected in the trial court, too —

    Earl Warren:

    I understand that —

    Richard J. Archer:

    — on the ground, yes sir.

    Earl Warren:

    I understand that but I’m just talking about the assumption.

    Richard J. Archer:

    That’s right, but it’s — that’s why I say I think that this — of course this is — it’s a matter of Supreme Court procedure, I know, as to how these are handled.

    But it seems to me that, with this factual background, it’s a very poor case to decide something which may have so much importance.

    These act of state cases for instance, are involved here.

    Richard J. Archer:

    It goes back to American Banana.

    And, as I say, if it seems to me that the question that I pose that assuming that the communications were in existence, if two companies had gone to Donald Nelson during the time of war, the War Production Board got favored act.

    Whether this would have violated the Sherman Act, I think, is a difficult question, and maybe it’s an important question.

    I don’t think it’s difficult in view of the cases which have been decided.

    Earl Warren:

    You say it’s a Klor case to decide on, but we’ve got the case.

    It’s here, and —

    Richard J. Archer:

    Well, that’s–

    Earl Warren:

    My point is simply this.

    Unless you have another independent ground upon which it can be decided, if the judge says, “I assume that such and such is the fact in the case and basing my judgment on that assumption, I conclude that the plaintiff is entitled to no relief.”

    When it comes to us, are we not — are we not bound to take that same assumption that he took and determine whether his conclusion on that point was correct?

    Richard J. Archer:

    It was — as I read the cases, Your Honor, Mr. Chief Justice, this is — I don’t think you have to, that I think that I can sustain a ruling of a trial court or the Court of Appeals even though it was given for the wrong reason, and — in other words, there may — he — the Court of Appeals– I may have think– of course I think he was right in his conclusion.

    But I can sustain it on any ground that it’s supportable in the record.

    Earl Warren:

    Yes.

    If there’s another ground, I would think you could.

    Richard J. Archer:

    Well, as I say, I think I — that a ground in the record, not necessarily in the opinion, and I think it is in the record.

    This offer of proof is all in the record, and I think if it is raised —

    Earl Warren:

    I see.

    Richard J. Archer:

    It is both incompetent —

    Earl Warren:

    Yes.

    Richard J. Archer:

    — and does not prove what it is supposed to prove.

    Earl Warren:

    I think I understand you.

    William J. Brennan, Jr.:

    Who the officers and directors were of Union Carbide and also Electro Metallurgical Company of Canada?

    Richard J. Archer:

    Nothing of Electro Metallurgical Company of Canada.

    (Inaudible)

    Richard J. Archer:

    In 1944, I think —

    William J. Brennan, Jr.:

    Were they the same as Union Carbide or (Inaudible)

    Richard J. Archer:

    I do not know if, at that time, they still had.

    I do know that the man Mr.Brevin who handled this was not a Union Carbide employee.

    Whether there were other directors in common at the — the record doesn’t show.

    I’m sure —

    William J. Brennan, Jr.:

    Or officers?

    Richard J. Archer:

    Or officers.

    There’s no — I’m — that the only evidence on the Electro Metallurgical Company of Canada is briefly what I’ve recited here and it’s all in this offer of proof and in these letters.

    The —

    William J. Brennan, Jr.:

    You mean that it was a hold on — that if they hold or was a hold on him?

    Richard J. Archer:

    Yes, Your Honor.

    I think it — in other words, none of the traditional ways that show me domination or controller alter-ego appear in the record or even —

    Hugo L. Black:

    Let me see if I understand you.

    You start out by saying, as we held that governmental action, where the Government has a right to act in territory where it has the right to act, does not violate the Sherman Act even though it may result in the suppression of trade.

    And you say that there’s nothing in this offer or proof that has been made, nothing except something that would tend to show the Government of Canada has, by reason of persuasion of for some other cause, decided that vanadium in Canada should be sold only on certain conditions even though it suppresses somebody right to trade in Canada.

    And you say there’s nothing in the offer of proof except that.

    Richard J. Archer:

    As far as the act of injury is concerned.

    Hugo L. Black:

    As far as what?

    Richard J. Archer:

    The act of injury that the lost of the Canadian business was due solely to this, Your Honor.

    That’s what I say the record shows.

    That there was nothing else having to and — there was no other communication between any of the respondents and the petitioner with regard to Canada other than this refusal of Electro Metallurgical Company of Canada, as agent.

    I believe I quoted the crux of the offer of proof as — at the beginning of my argument.

    And that, as I understood it, was that they refused to buy as agent for the Canadian Government.

    I believe that’s all, Mr. Holland has —

    Earl Warren:

    Very well.

    Mr. Alioto.

    Joseph L. Alioto:

    Yes, do want me to report on the —

    Earl Warren:

    Oh yes, if you will, please.

    Just a moment.

    Joseph L. Alioto:

    I’ll look for more tonight.

    It’s — you asked for admissions by the plaintiffs here that —

    Earl Warren:

    That’s what we were talking about, yes.

    Joseph L. Alioto:

    The record on page 1237 shows an admission regarding the 1939 to 1940 period.

    Record page 1177 shows an admission early in 1942.

    Hugo L. Black:

    1147?

    Joseph L. Alioto:

    1177 —

    Hugo L. Black:

    1177.

    Joseph L. Alioto:

    — Mr. Justice Black, and 1196 shows the statement in — regarding 1943.

    And, in the brief of petitioner, page 56, the statement is made in November 1943, the emergency shortage of vanadium oxide was over — vanadium oxide was in oversupply.

    The —

    Hugo L. Black:

    The what?

    Joseph L. Alioto:

    Pardon me?

    Hugo L. Black:

    What was the page of that brief?

    Joseph L. Alioto:

    56.

    Earl Warren:

    Well, do these so-called admissions cover the entire period as reliable sources supply throughout?

    Joseph L. Alioto:

    No, they don’t, Your Honor, because of the entire period.

    However, the —

    Earl Warren:

    Well, just as Mr. Justice White was asking you about a reliable supply and whether there wasn’t a difference between being able to pick up some — maybe in here and some there, out of the 10% that they don’t monopolize and, on the other hand, have a reliable and permanent supply.

    And I understood you to say that they had admitted that they did have a reliable permanent supply.

    Joseph L. Alioto:

    Well, they do make a state.

    They don’t use the word “reliable.”

    They say “regular and adequate.”

    Earl Warren:

    Throughout the whole period?

    Joseph L. Alioto:

    No.

    They — these three cover the — the first one I gave you covers 39 to 40.

    The second one is in February of 1942.

    The third one is in 1943 and the fourth one in the brief is in November of 1943.

    Now, the record shows that there were no requests made of either defendant for 1942 and for about half of 1941.

    For a period of almost two years, they requested that.

    Earl Warren:

    Very well.

    Would you mind responding to that one point —

    Joseph L. Alioto:

    Yes.

    Earl Warren:

    And then I think we’ll have to recess, Mr. Alioto.

    Joseph L. Alioto:

    If Your Honor please, requests were made beginning in 1939 right down to 1943, and requests were uniformly denied.

    The one or two and jointly, and the Court of Appeals assumed that they were denied jointly as a result of the conspiracy in connection with its — its decision.

    Joseph L. Alioto:

    They were denied with the statement direct evidence on the stand if they were denied because they wanted to keep Mr. Leir out of the business.

    That’s the basis for the denial.

    In November of 1943, the last request was made to both defendants for 10,000 or 15,000 pounds a month for any term of years they would give them.

    They uniformly turn them down at the time when there was a burdensome surplus of vanadium oxide and the reasons assigned for turning them down was they wanted to keep him out of the business.

    Now, in the light of that kind of record, it’s just of course — it just isn’t so to say that there was ever any admission that we had a steady dependable supply.

    Our contention, uniformly made in all court below has been that we didn’t have that kind of a supply and that’s what we were complaining of.

    Hugo L. Black:

    Is there any evidence in all of that shows they refused to do it on the ground that would violate the rules or regulations or the laws?

    Joseph L. Alioto:

    No, if Your Honor please, not at all.

    When we asked them in 1939 for a supply, they both uniformly denied it to us and then sold a million pounds to the Germans.

    Earl Warren:

    We’ll recess now.