Hughes Tool Co. v. Trans World Airlines, Inc.

PETITIONER: Hughes Tool Co.
RESPONDENT: Trans World Airlines, Inc.
LOCATION: Planned Parenthood Birth Control Clinic

DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 380 US 249 (1965)
ARGUED: Mar 04, 1965
DECIDED: Mar 08, 1965

Facts of the case


Media for Hughes Tool Co. v. Trans World Airlines, Inc.

Audio Transcription for Oral Argument - March 04, 1965 in Hughes Tool Co. v. Trans World Airlines, Inc.

Earl Warren:

-- Company, Petitioner, versus Trans World Airlines Incorporated.

Mr. Davis.

Chester C. Davis:

Mr. Chief Justice, may it please the Court.

Number 501 involves the basic controversy between the use -- two company and the additional defendants.

And that is whether TWA should be controlled by stockholders or by the lending institutions we claim have monopolized the supplying of senior financing to the major airlines of the United States.

In order to address myself, or for the Court to address itself to the issues which are involved in connection with the dismissal of those counterclaims with prejudice, I think it is important that I'd spend sometime to explain the nature of those counterclaims and the facts which I've described at those counterclaims in which underlie the legal theories under which they have been brought.

The counterclaims alleged that the Equitable and the Metropolitan together with another insurance company have in fact a monopoly on the supplying of senior long-term financing to major airlines.

And that they abused their dominant position in that field, if not a monopolistic position in that field, to interfere with and acquire control over the management of various airlines.

And this has been accomplished by a variety of means.

Now counterclaims described in some detail the conduct which we claimed these additional defendants have engaged in.

It involves the use of the traditional lender concept.

It involves of the use of interlocking relationships.

It involves the use of terms and conditions in connection with the financing they supply unrelated to -- in a reasonable needs of a lender and the use of negative covenants in connection of those terms and conditions so as to achieve their objectives.

We also claim in these counterclaims that these additional defendants entered into a conspiracy among themselves as to the terms and conditions of the basis upon which they would make their financing available.

More particularly insofar as TWA was concerned, one of the principle means were used was this insistence upon management clauses and voting trusts, not as means of remedies in the events of default, that we would not object to, but as conditions preceding to making any senior financing available.

Now -- well, Your Honor there's a difference between a lender who said, “If you don't pay your interest on time, if you don't pay the installments on time, I'm going to take over control of the business”.

And it's another thing for lenders to get together and say, “I'm going to take control of your business before I lend you any money”.

Hugo L. Black:

Well, let me just --

William J. Brennan, Jr.:

Are you telling us that the (Inaudible) counterclaim or are you telling us that this is part of your motion to dismiss the (Inaudible)

Chester C. Davis:

The point the -- Your Honor is that my counterclaim do allege violations of the antitrust laws and violations of the Federal Aviation Act from one single course of conduct.

William J. Brennan, Jr.:

I know, but you made a motion to dismiss without prejudice.

Chester C. Davis:

I made a motion for a stay actually Your Honor which was denied.

William J. Brennan, Jr.:

You made a motion which says (Inaudible)

Chester C. Davis:

The actual motion that I made below was a motion for a stay.

I attempted to suspend litigation when it became apparent that I was not going to be able to get complete and adequate relief.

William J. Brennan, Jr.:

But this is filing a motion to dismiss the (Inaudible)

Chester C. Davis:

That's the effect of what I've done Your Honor.

The -- my -- the additional defendants claim that I should've used those words.

The words -- what actually happened was that after they filed their reply asserting as a defense CAB approval.

I decided to suspend litigation.