Liquid Carbonic Corp. v. United States

PETITIONER:Liquid Carbonic Corp.
RESPONDENT:United States
LOCATION:

DOCKET NO.: 25
DECIDED BY: Warren Court (1955-1956)
LOWER COURT:

ARGUED: Oct 19, 1955 / Oct 20, 1955
DECIDED: Oct 24, 1955

Facts of the case

Question

  • Oral Argument – October 19, 1955
  • Audio Transcription for Oral Argument – October 19, 1955 in Liquid Carbonic Corp. v. United States

    Audio Transcription for Oral Argument – October 20, 1955 in Liquid Carbonic Corp. v. United States

    Earl Warren:

    Number 25, on a docket, The Liquid Carbonic Corporation versus United States of America.

    Mr. Dwyer, you may proceed.

    James F. Dwyer:

    May it please the Court.

    Yesterday, Mr. Justice Harlan asked me where in the record the Assistant Attorney General had indicated that he believe that if the judge granted an injunction of what constitute a modification of the decree, that colloquy will be found at page 6 of the record and I think that in conjunction with that, in fairness, you should read what Mr. Karsted later said at page 36.

    That was the second hearing, and while on the — at the first hearing, he felt that the — an injunction would constitute on unwarranted modification.

    After he returned home to Washington, he changed his mind and then informed the Court that he thought that an injunction would not constitute a modification, and it’s at page 36 that he so informed the Court.

    Now, before proceeding with my argument, I would also like to refer to a — a portion of the record which I think bears upon the question that Mr. Justice Frankfurter asked yesterday as to what implications could be drawn with respect to Liquid’s consent to the decree, and I said that such implications could be drawn as only we’re consistent with a limited language used in Section 9 (e).

    And I said further that I thought that the district judge had no power to resort to the philosophy of the Sherman Act or the allegations of the complaint.

    And down at — at — fully on 53, in the middle of the page, page 29, the judge asked me, “Was the purpose of that,” that is of Section 9 (e), “to furnish new competition in an area whereby agreement between the parties,” it was determined not decided, “but determined that Liquid exercised a degree of monopoly,” and I rejected that contention and said that no such inference could be drawn.

    But nevertheless, that is the inference that the judge drew that we had been found guilty of a violation of the Sherman Act and I express again that there is no basis whatever for any such deduction.

    Now —

    (Inaudible)

    James F. Dwyer:

    No findings of fact —

    (Inaudible)

    James F. Dwyer:

    Yes, with an expressed statement that they — the defendant had denied the allegations of the complaint.

    I think in large part, that followed the usual kind of decree that the Government asked the defendant to sign, except at various places where modifications occurred and Section 9 (e) is one of them, those places.

    Now, as I was saying yesterday, the — the Court rationalized its order in this way.

    It said that the purpose of the consent decree was two-fold.

    First, to divest Liquid of its plants and secondly to bring competition into the area and opposition of course was that the purpose of this Section of the decree was to bring a competitor into the area and that we can send it to sell our plants on the assumption that the Government would find a purchaser.

    Although, we had pointed out, and this appears in the record, to the district judge that we have reminded the United States and reminded the judge in the course of the — the negotiations on the consent decree, that in our opinion, these plants would not be bought by anybody who would operate them as to CO2 manufacturing plants.

    So, really, what was involved here when the decree was submitted was a contention on our side that these plants would not be sold but let — we were willing to take the risk on our judgment on that point against the Government’s insistence that they should have an opportunity to bring a competitor into the field.

    Now, —

    Felix Frankfurter:

    Does — does the record — I do not know whether it should whether it should be entitled to consider it, but does the record disclose that there were –as we see these negotiations as to discern the included in the consent decree other than the form.

    Were there any preliminary office in store, all that kind of things?

    James F. Dwyer:

    There was all of that, Mr. Justice Frankfurter, but I can’t say —

    Felix Frankfurter:

    Within the record?

    James F. Dwyer:

    No, it isn’t.

    It isn’t.

    Felix Frankfurter:

    Possibly that —

    James F. Dwyer:

    No, actually —

    Felix Frankfurter:

    — rules, what we consider it we’re in (Voice Overlap) —

    James F. Dwyer:

    No, except — except as it appears in the colloquy between the district judge and —

    Felix Frankfurter:

    How could you which you’ve just referred?

    Is this the record?

    James F. Dwyer:

    Yes, that — that is in the record.

    Felix Frankfurter:

    In which you indicated that probably, there would be no bias or compared as to what it (Inaudible)

    James F. Dwyer:

    That’s right.

    That’s in the record, and they —

    Felix Frankfurter:

    Where is that applied — if you can —

    James F. Dwyer:

    Yes, I can, page 15, at the top of the page, the principal paragraph.

    There, where I said to the district judge, Your Honor, I can say this in my own knowledge that I reiterate it to Your Honor, until the Government counsel and Mr. Stevens, who is my partner, even more than I.

    And we said the same things to Mr. Timberg and his associates.

    My recollection is that he said this to you, Mr, Stevens, that we knew from our experience that no person would buy the plant at Long Island City.

    He said it was a high-cost plant to operate and he said further —

    Felix Frankfurter:

    (Inaudible), didn’t you?

    James F. Dwyer:

    We sold it, yes.

    We sold it.

    Not a CO2 plant —

    Felix Frankfurter:

    You sold that — this property?

    James F. Dwyer:

    We sold the property and the reason, the reason for the — for the Court agreeing to the appointment of an appraiser was because he recognized our argument that the real estate value of the plants might be much more than the value of the plants if somebody had to operate them for CO2 purposes.

    Felix Frankfurter:

    All of these colloquy from which you are reading, we are in rather detailed discussion to the view within it in persuading the judge if you can’t send a decree to which he presents digits — by this — like the, the argument or to have a consent —

    James F. Dwyer:

    Oh, well, this of course was after the decree had been signed —

    Felix Frankfurter:

    Not before — is this how the — on this issue —

    James F. Dwyer:

    That’s right.

    That’s right, Your Honor, yes.

    Felix Frankfurter:

    And not to be contemporaneous?

    James F. Dwyer:

    No, it is not.

    This was after the Government brought the motion to compel us to sell the plant.

    Felix Frankfurter:

    But — but you’re — you’re recalling here a set of time?

    James F. Dwyer:

    Oh, yes.

    James F. Dwyer:

    I’m recalling here what had occurred prior to the decree.

    Felix Frankfurter:

    Before the Court?

    James F. Dwyer:

    Before the Court

    Felix Frankfurter:

    And that is not here?

    James F. Dwyer:

    No, except as I recall it.

    Felix Frankfurter:

    Okay.

    The Government doesn’t question —

    James F. Dwyer:

    I — I don’t —

    Felix Frankfurter:

    I don’t mean your — I don’t mean to judge the conviction and the right to be followed, a question of memory.

    James F. Dwyer:

    No, they certainly didn’t on this argument.

    Felix Frankfurter:

    Is there — is it — do you happen to know the consent decree of time performed by the district judge or where the — and it has to be satisfying with particularity?

    James F. Dwyer:

    Well —

    Felix Frankfurter:

    How was it to this case?

    James F. Dwyer:

    He — he signed that, I think —

    Felix Frankfurter:

    Why do you make that for each — from which you recall?

    James F. Dwyer:

    Why did I?

    Felix Frankfurter:

    Yes.

    James F. Dwyer:

    Well, because the judge was — was saying, I think of — in the manner which precedes this.

    Well, as I recall or I think, when — and then I was trying to refresh his recollection as to what —

    Felix Frankfurter:

    Do you mean, as the matter, at the time of the consent decree was under consideration by the district judge, if he have to be discreet, if he have even reach them, require as to the decree to which (Inaudible)

    James F. Dwyer:

    No.

    No, I can’t say that he did.

    He was kept informed that we were having these negotiations and some of them took place in his presence.

    And from time to time, he asked us a reason for insisting on this or refusing to do that.

    But when the decree was presented to him, so far as I can now recall, he — he signed the decree as — as a Pro Forma Act.

    Now, the judge — the judge said, “Well, since I can’t compel a sale of the plant under this decree, I’ll do the next best thing.

    I’ll stop you from using it, and in that way, we will have achieved one of the purposes of the decree.

    Then, we will put Liquid out of business.”

    And now, any — his decree has brought enough as I said yesterday to prevent us from using the plant for anything.

    We were in effect compelled to sell that plant as quickly as we can to avoid the cost of maintenance of the plant.

    James F. Dwyer:

    So, he — he then entered an order which he said, “Your enjoined from using this plant and I’ll deny the Government’s motion for an order of sale without prejudice to a renewal.”

    Now, the reasoning, it seems to me, becomes more involved on the judge’s part, because in the first place, he said, “I can’t compel a sale under this decree.

    I have no power, but I’m going to imply that — draw the inference that I can require association of use.”

    And then, I asked him why.

    He gave a Government leave to renew a motion, to put an order of sale when he’s denied it, and his reasoning run this way.

    He said, “Well, the Government has said in a brief that an injunction might involve it in a — in a difficulty of policing, see that we’re obeying it.”

    And he said, “So, I then decided that if you didn’t obey, they should have a right to come in here and ask me for an order of sale.”

    In other words, he deemed it that and within his power of punishing for a contempt, should we disobey this order which had not yet been ended, that he could compel to us sell the plant?

    The power which I think can’t be found in — in the equity powers of the Federal Court.

    Now, it is our position that no searching for sustenance of power such as he endeavor to find here, going to the pleadings, going to the philosophy of the Sherman Act is permissible.

    And we say that such an attempt is in — it — it contradicts the language of this Court in the Ford case.

    Your Honors will probably recall that in the Ford case, Ford had agreed to disaffiliate itself with a finance company, on condition that the Government should within a specified time compel General Motors likewise to disaffiliate, and a consent decree was entered on that basis by the Government and Ford.

    And for years, thereafter, the Government let lay a — an action in the federal court against General Motors, didn’t prosecute it.

    And in Ford, a mode in — in the District Court for an order releasing it from the shackles of this restraint that had been placed upon it.

    The district judge denied its motion, gave the Government more time and this Court reversed the — the District Court and required an order to be entered releasing Ford from the restraint.

    And in connection with that release, this Court said that the district judge had no power to resort to the allegations of the complaint, because there, the district judge said, “Well, Ford in effect is — is guilty of a — of a violation of the Sherman Act,” but this Court said, “No such finding is permissible, because the decree was a consent decree.” That’s the situation here.

    There’s no finding that we have violated the Sherman Act.

    Now, I would like briefly to go over the subsections of — of this Section 9 (e) to show, Your Honors, that there is no possibility of an implication of a right to issue an injunction.

    Now, that — that consent decree is in the record at — what page is that one?

    Yes —

    Page 83.

    James F. Dwyer:

    Page 83, yesterday I cited.

    Now, subsection 1 of that Section states that within one year from the entry of the decree, Liquid showed dispose of the plants, quote “pursuant to the terms and conditions of this Section 9.”

    Now, it’s not worthy that the plants includes not merely real-estate buildings and production equipment, but also production and sales records, which indicates that the plant was to be sold to somebody who would come in and operate it for purposes of competition.

    And subsection 2 provides that the plants shall be sold through a trustee forthwith.

    Now, terms of office were to be one year with the right of the Court to extend it, whenever a showing was made that there may be persons who have an interest in operating the plant.

    As I said, his time was extended and he was unable to find anybody who would operate the plant.

    Section — subdivision 3 is designed to protect us from his for sale at an adequate price and as you will see, to bring a new competitor into the area.

    It provides that the purchase price shall have a — do regard for the evaluation made by the Court appraiser and that the plant shall not be sold to anybody who is connected with this defendant or with any of the other defendants in the action and — and only to a person who will operate the plant for CO2 purposes.

    And subdivision 4 requires us to maintain the plants at our customary standards until sold by the trustee.

    James F. Dwyer:

    Now, the judge — now, the — the Government of course insisted that — that a sale of this plant would have the effect of — of precluding us from selling or from operating within this area.

    That’s the very basis upon which this order is found.

    Yet, that is a — a truly erroneous conception because if the judge has power to enjoin us, then under Section 9 (g) of this decree, we can instantly commence the construction of a new and larger plant.

    So, obviously, it wasn’t the purpose of this decree to put us out of the carbon dioxide business in these two areas.

    The main — the purpose and the real purpose was to bring a competitor into the area.

    Otherwise, why would Section 9 (g) permit us to come in and build a new plant?

    Now, the — the decree or the order of the judge in this case, also is in contradiction to this Court’s decision in the Hughes case.

    The Hughes case or the consent decree required Hughes either to sell his stock in one of the two companies.

    That is the — the distribution company or the production company or to put the stock in a voting trust.

    He put the stock in a voting trust and then the United States came into the District Court and said we want the — the stock sold because Hughes is — is — has an — has an interest in the other phase of this business.

    The — this Court refused to order Hughes to sell the stock.

    Stanley Reed:

    Where — where is it you cite the order that was entered, this last order.

    James F. Dwyer:

    The last order, yes, sir.

    The order that was entered.

    It’s at page 96, I believe.

    That’s the order appealed from.

    (Inaudible)

    James F. Dwyer:

    Starts at page 96 and runs over to page 98.

    Earl Warren:

    Thank you.

    Mr. Davis.

    John F . Davis:

    If the Court please.

    Since this case in effect turns upon the construction of the original decree, I propose to start with the terms of that decree.

    And I would call the Court’s attention first to Section 13 of the decree which appears at page 90, 9-0 of the record.

    Section 13 provides, jurisdiction is retrained for the purpose of enabling any of the parties to this final decree, to apply to this Court at anytime for such further orders and directions as may be necessary or appropriate for the construction or carrying out of this final judgement.

    Now, for the modification or amendment of any of the provisions thereof, the enforcements or compliance therewith and punishment of violations thereof.

    I call the attention to this because this is the reservation of jurisdiction in the District Court pursuant to which the Government asked for this relief.

    And it makes very clear that the parties themselves consented to appropriate modifications, appropriate constructions, appropriate orders — orders for carrying out.

    There is no — there is no doubt that both the Government and Liquid Carbonic agreed that under appropriate circumstances, the Court should have power to make modifications.

    What do you mean by appropriate circumstances?

    John F . Davis:

    That I — I presume is the question, the basic question, is this an appropriate modification, is this an appropriate construction?

    John F . Davis:

    And I would think that an appropriate modification or construction was one which fell within the initial consent of the parties, but since the decree itself is based upon the consent of the Government and the defendant in the case, the modifications must in turn the based upon that consent.

    And so, it must fall within the scope of the initial consent.

    Turning from that, I turn to the Section which is directly involved in the decree.

    That’s 9 (e) of the decree which appears at page 83.

    I may say that this is a suit which was brought against this defendant and several other defendants who are manufacturing carbon dioxide and dry ice, alleging monopoly and restraint of trade.

    And with respect to this defendant, it was specifically alleged that Liquid Carbonic, one of the — one of the actions complained of was that Liquid Carbonic had acquired a certain number of additional plants leading to monopoly.

    So, it was — it was natural that in the decree, there should be provisions for divestiture of — of some of these plants which was alleged had resulted monopoly.

    Section 9 (e) deals with that particular subject.

    It starts of by providing that within one year from the date of the entry of the final judgment, “Defendant Liquid shall,” pursuant to the terms and conditions of this subsection (e), “dispose of as complete units its existing plants at Long Island City in New York and Indianapolis, Indiana, a divestiture provision, a provision that they should get rid of these plants.”

    But not consent — not content with merely honoring divestiture as a finished twist to this particular section of the — of the consent decree which required not only that they divest themselves of these plants but that they sell them to potential competitors so that there could be active competition in these particular areas unless a reduction of the monopoly.

    And that provision contained in Section 3, subsection (3) of this 9 (e) which states that the trustee shall dispose of these plants to persons who will manufacture on carbon dioxide and dry ice or both.

    In other words, an attempt was made to force the defendant to sell to competitors.

    Now, as Mr. Dwyer has told you during the year and a half following the decree, the trustee was unable to make this decision of these plants in accordance with Section 9.

    Unfortunately, the decree couldn’t say what was going to happen when that — when that occurred.

    And so, when it became —

    Felix Frankfurter:

    Well, suppose it didn’t require much imagination to contemplate that intention?

    John F . Davis:

    I — I think it didn’t, but as the parties — whether — in any event, the parties made no provision for it and the question then was, did that mean that nothing happened or did it mean that the divestiture should be carried through in some other matters?

    And it was defined better that the Government went to the Court and said that we haven’t been able, the trustee hasn’t been able to complete the sale in — in accordance with Your Honors order is the decree to be frustrated.

    They — are we not to get — there’s nothing to happen or is something to happen and we asked that — the Government asked in that case that it be sold without being sold to competitors, that it be sold for real estate value or for any other thing, just divested.

    It seeks to be used to reduce the monopoly.

    Felix Frankfurter:

    What other things would happen apart from this — these forfeitures?

    What other strict limitation based upon petitioner by the decree?

    John F . Davis:

    Well, there were many.

    There were many restrictions about dealing with —

    Felix Frankfurter:

    Other matters.

    John F . Davis:

    — other matters.

    But as far as this divestiture, this is the only section that’s — so far as I know, which deals with divestiture as such, producing the number of plants that’s involved.

    The others deal with agreements and prices and — and competitive arrangements with — with the other —

    Are they dealing with productions?

    John F . Davis:

    With production?

    Volume production?

    John F . Davis:

    It’s all in 9.

    There is the provision in Section 9 (g) with respect to increasing the total number of production units.Such appears at page 85, Your Honor.

    That’s the same section as Section 9, but 9 (g) deals that this — that Liquid shall not increase the total number of productive units.

    Nothing about decrease in the total?

    John F . Davis:

    Not — not to my recollection, Your Honor.

    Well, these provisions of sale in the — as this continued to the plants is a method of decreasing production.

    John F . Davis:

    That is right.

    Earl Warren:

    But what is the main thrust of this Section (e) that you’d be — then reading?

    Is that for the purpose of producing production or is it for the purpose of the increasing competition?

    John F . Davis:

    It is for both purposes, Your Honor.

    The first purpose, it starts of by saying they shall dispose of these plants.

    Earl Warren:

    Well, what language in — in that indicates that it is for the purpose of decreasing their production?

    John F . Davis:

    There is no language to that effect, except the order that it — that they shall dispose of these plants in accordance which automatically results in — in a reduction of production.

    Earl Warren:

    Well, it wouldn’t — it would result in — in reduction of their production, but the Government wanted — wanted the plants to be used for the production of — of sale too, didn’t they?

    John F . Davis:

    They wanted competition in the area.

    Yes, that’s right.

    They wanted them to be sold to competitors.

    Earl Warren:

    Wouldn’t that be the main reason for (e) then?

    John F . Davis:

    Well, that’s — the — the main — that is really the question before us, Your Honor, whether there was one reason, two reasons or a combination of two reasons.

    Now, I submit that — that —

    Earl Warren:

    I wonder why the Government wouldn’t — wouldn’t have put in that decree if it intended to close them out in the event they couldn’t solve.

    Why they wouldn’t say so?

    John F . Davis:

    Well, it — it may be the matter of dropping.

    They start in by saying they shall dispose of these plants.

    And then, they spelled out a method of disposition and it may have been an oversight not to state what happened if they didn’t dispose of them in that way.

    That — that must be our assumption, my assumption.

    Earl Warren:

    But they have provided in the decree that it should only be sold for fairer value that they should have an appraiser, recognized appraiser to appraise it and there’s the aim that that contemplates a fair market value of — of these plants as a growing concern.

    That’s the said value of it if it’s closed out.

    John F . Davis:

    Well, that’s —

    Earl Warren:

    Is there any language that do indicate that they had any other intention on that?

    John F . Davis:

    No.

    The — there is no language in the decree itself.

    In order to determine, however, the — the purpose in this decree, I think we have some help because of the fact that the judge who signed this decree after what he says is months and months of conferences, hours and hours of dealing with this matter has stated that it was his understanding that the consent of the parties to this disposition was for these two purposes.

    And he states this specifically in his — in his opinion in this case that he believe there were two purposes involved in this — in this particular Section 9.

    One, to require a sale to cut down on the productive capacity of the defendant, and two, what I call that the twist that was given to it, not only that they should sell them, but that they should sell it to a potential competitor.

    Now, the Court, — naturally the parties for this consent decree, look at this — looking at this thing from hindsight will disagree as to what the — what the intent was.

    We each see it, see the intent from our present argument, but the Court who was then in an impartial position and who was passing upon this matter of a court order from the point of view of protecting the public, carrying out the purposes of the Act, the judge believed that the consent of the parties in this case was to achieve these two objectives, and that is specifically found as I say in his — in his opinion in this particular case.

    Felix Frankfurter:

    Mr. Davis, did I understand you to say that the Liquid Carbonic was one party to the original complaint —

    John F . Davis:

    That’s right.

    Felix Frankfurter:

    — original complaint as against the number of the people engaged in this industry?

    John F . Davis:

    That is right.

    Felix Frankfurter:

    That was — was the complaint set forth in a dominant position of Liquid Carbonic?

    John F . Davis:

    There were — no.

    Well, it — I don’t think it does the dominant position.

    It’s mentioned that there two companies.

    The complaint, by the way, is set forth in pulling the record starting at page 46.

    And it mentions two national companies, Liquid Carbonic and I believe the other was Pure Carbonic Incorporated who had the factories throughout the United States.

    And I don’t believe there is any allegation or any attempt to prove that Liquid Carbonic was anymore predominant in the field than Pure.

    Felix Frankfurter:

    And — and so far as Sherman law violation was charged in the complaint, was the complaint made clear the — the relation or the significance with these holdings with the holdings of these properties to the things you complained about originally?

    John F . Davis:

    It — it alleges acquisition of additional facilities for the manufacturer in an attempt to monopolize beginning and I believe the year 1932, although I’m not quite sure, I think it’s in 1932 and naming for Liquid Carbonic and Pure, the acquisition of a number of properties.

    Now, I must confess that I cannot, from this record, identify these plants for these companies which are — which are required, but I —

    Felix Frankfurter:

    Is there anything else to the — as before, to some implications of the Chief Justice’s question?

    Is there anything that indicates the importance for the Government to have — to be sure that competitors pursue of this eminence, but the lead of these commodities as against a reduced output from the point of view of the national economy, anything on that subject?

    John F . Davis:

    The — the complaint itself refers to the importance of dry ice and carbon dioxide, both gas and liquid in industry and from refrigeration.

    And there are some indication, which I refer it doesn’t — isn’t helpful — particularly helpful to me, but — that a carbon dioxide was in short supply at least at the time the action was — was commenced.

    Felix Frankfurter:

    If that so, that is relevant.

    John F . Davis:

    Yeah, that has some relevance.

    There is — the argument that is made as to the — the — I may say this to — as to the Long Island Plant that the Long Island Plant was not used for the production of either carbon dioxide or — or dry ice at the time of this decree.

    I think that’s right, it —

    Earl Warren:

    The time in —

    John F . Davis:

    — it was ceased very soon afterwards anyway.

    What’s — what’s the (Inaudible) —

    John F . Davis:

    It ceased very soon afterwards.

    It wasn’t an economic plant and there wasn’t any real reduction in the — in the supply through that plant.

    Harold Burton:

    Mr. Davis.

    John F . Davis:

    Indianapolis, I think was and still is in production of both carbon dioxide and dry ice.

    Harold Burton:

    Mr. Davis, you were to get any help from the fact that in providing for future plants or the acquisition of plants that they should not be acquired within 400 miles of the central area, thereby, indicating something about a 400-mile area that was (Inaudible)

    John F . Davis:

    That — that is right, Your Honor.

    I think that is an attempt to keep them from building up further monopoly then require not to build within 400 miles of existing plants.

    And as far as the Long Island goes, there was a plant in — in New Jersey.

    I’m not sure what the nearest plant in Indianapolis, Your Honor.

    Harold Burton:

    And therefore, you take the position, I take it from there that within the 400-mile area, there must either be a competition or else a less number of plants, is that it

    John F . Davis:

    That’s right, but I —

    Felix Frankfurter:

    How does that — how does that follow that because you don’t want an increase, therefore you should decrease?

    John F . Davis:

    Well, actually on the record that comes from us, we don’t know the business, the facts of the business life of this — of this carbon dioxide and dry ice business.

    I — I must assume in the absence of — of knowledge to the contrary that if there’s a vacuum, if there’s a reduction in production by these people and they demand parts that it will be filled by competition.

    I mean that manufacture of dry ice from carbon dioxide has been going on for many, many years and it’s a matter of —

    Harold Burton:

    Mr. Davis —

    John F . Davis:

    — supply and demand.

    Harold Burton:

    — could this decree that was last here in this modification has been entered in the first instance?

    John F . Davis:

    Yes, Your Honor.

    It could have been entered in the first instance.

    Harold Burton:

    As a part of the order in the first instance?

    John F . Davis:

    It could have been, yes.

    And then —

    Felix Frankfurter:

    What if they consented this.

    John F . Davis:

    If they — if they have consented to it, we wouldn’t have any lawsuit today.

    I mean, we have this question if whether or not this is implicit really or whether it is basic to the original order so that it is proper now to impose this obligation.

    If it’s been done specifically and there’s no question that it could have been done specifically if — if the parties have agreed to it by — we just would have no lawsuit.

    Harold Burton:

    Is it your position then that this reservation under 13 reserved that power?

    John F . Davis:

    It reserves the power to make —

    Harold Burton:

    To make where it could have done?

    John F . Davis:

    That’s right.

    What — what they could have done, what the parties in essence were in agreement — in agreement on.

    It has to have been something which was comprehended within the original agreement.

    The — the position of Carbonic is that the sale to a competitor was really a condition of the order to dispose of these plants.

    That — that I think is — is a peculiar — peculiar argument because it is — it’s unusual to — for a person against to whom an order is issued to make a condition which adds a hardship adds an additional sanction against them.

    This is, if — if you’re going to spell out what they claim the original order would have said.

    It would have said, you are ordered to sell these plants — we — no.

    We agree that these plants shall be sold, but we agree that they shall be sold only if they shall be sold to competitors.

    That would be the way they’d have to — to interpret the consent of Carbonic.

    We agree that — that these plants shall be sold, but only if they are sold to competitors.

    Well, that’s an — that’s an odd side of the condition.

    Ordinarily, if one — if one condition to his consent, he conditions it by some ameliorating factor.

    Perhaps if he had said, “We agree that these plants shall be sold, but — but not to competitors.”

    That would be a condition which would — which would have some — some reason in it.

    Stanley Reed:

    What — what do we know about the competitions around New York areas?

    John F . Davis:

    We know that there were no other plants at that time in Long Island.

    Stanley Reed:

    Yes.

    John F . Davis:

    We know that there were other plants appears from the colloquy and then in this — in this record that there were other plants in or near Indianapolis.

    Stanley Reed:

    When you say Long Island, is that —

    John F . Davis:

    Long Island City, excuse me.

    That’s where that plant is.

    Stanley Reed:

    Because that solved the whole New York area?

    John F . Davis:

    No.

    The Liquid Carbonic we know served this area from a plant in Belleville, New Jersey.

    Stanley Reed:

    I don’t think that that suggestion —

    John F . Davis:

    I don’t know that appears from the record what the competitors in the New York area are.

    I don’t know that it does.

    John F . Davis:

    The — the attempt was to build up that competition, I — I think.

    Earl Warren:

    Mr. Davis, when the Court undertook to you this implied power that — that you say was there to order close this Long Island Plant, does it give the company a hearing on the effect upon Congress, the effect upon their business or both?

    What the result of this action will be?

    John F . Davis:

    Well, this is the procedure that was followed.

    There was a motion filed by the Government.

    It was filed in December of 1953 for this modification.

    Note — a note is given to the — to the defendant.

    The defendant submitted some affidavits with respect to it and there was oral argument before the Court, in January of 1954, about a month after the — the order was — the notice — the motion was made.

    Then, the Court held it under consideration for quite a long time and came out with this — with an order for the injunction rather than disposition and Liquid Carbonic said, “We weren’t prepared for that.

    We want a re-argument.”

    And it was given a re-argument in June of 1954.

    All told that was — there were two long arguments before the Court.

    There was one deposition affidavit introduced by the — by the defendant.

    There was a period of about eight months in there.

    Liquid Carbonic did not request the opportunity to introduce other evidence, and indeed, it hardly seems that — well, I’m not sure there are any factual matters that the Court felt needed to be discussed.

    The Court had the — the Court interpreted its original author as being — as including a sensation of operation of these plants.

    It said, that’s what we intended to do in the beginning.

    We intended to stop production from these plants, but we intended to do something else.

    We can’t do anything else.

    We certainly want to do at least this.

    We want to stop the production.

    And so, the Court felt that there was no — probably felt there was no need for any further evidence.

    Earl Warren:

    And no request by the company (Inaudible)–

    John F . Davis:

    And no request by the company (Inaudible)

    Earl Warren:

    (Inaudible)

    Mr. Davis, this feature of the modified decree is something that the Government did not ask for itself, isn’t it?

    John F . Davis:

    No.

    No, the Government asked for a sale by the defendant itself without the restrictions of being sold to competitors.

    The Court felt that —

    No, but the Government didn’t ask that alternatively, the defendant should not be — should be enjoined from using his (Voice Overlap).

    John F . Davis:

    No.

    That was something that the Court came up within its own motion?

    John F . Davis:

    That’s right.

    The Court felt that that was a less stringent requirement that to require a forced sale might cause a hardship to the defendant and that the same object could be achieved by just causing a cessation of the use, which would of course lead to — presumably lead to a sale, but a sale by the defendant in his own kind and on his own terms.

    Felix Frankfurter:

    Mr. Davis, what are the differences?

    Is there any like the difference between selling this thing as a growing concern from selling as where you see judgment (Inaudible), a bit possible?

    John F . Davis:

    Well, as far as the Long Island Plant is concerned, there’s an indication that it was worth more for real estate purposes than it was for dry ice plant.

    There is no indication as to the comparison of value with respect to Indianapolis.

    Felix Frankfurter:

    That wasn’t a profitable plant?

    John F . Davis:

    That wasn’t placed and — and Mr. Dwyer told the Court that the Indianapolis Plant was also a — I think it said a high cost producer or an older plant or something.

    When he was saying that it was difficult to sell to competitors, he was implying that it would be — it would have been easier to sell without that limitation.

    Felix Frankfurter:

    The evidence is more profitable to keep it going to produce and sell it, really —

    John F . Davis:

    That is right.

    Felix Frankfurter:

    — so I can move to get off.

    Mr. Davis, wouldn’t you agree also that this type of limited divestiture sell only to competitors was an unusual type of consent decree?

    John F . Davis:

    Yes, I think so.

    It’s — it’s really — as I say, it’s a finished device.

    You will not only make the man stop using it, but you make him help somebody else to compete with him.

    It’s a — it’s a very stringent sort of thing.

    What would it indicate that there was a — it might be a purpose to work rather than an unusual form of consent that they were divestiture sought and there’s no such limitation to put in?

    John F . Davis:

    It certainly is, as an indication that it was meant to cut down on the monopoly position of — of Liquid Carbonic in these areas that it was meant to build up competition not only by making an opening for competitors but by aiding them by giving them plants in which they could produce.

    Stanley Reed:

    We know nothing about the situation in Indianopolis.

    John F . Davis:

    We know that they — that they are producing.

    They adapted the plant is — is still producing dry — carbon dioxide and dry ice there.

    Liquid Carbonic is still using the plant in that area.

    Stanley Reed:

    But what is the best storage (Inaudible)

    John F . Davis:

    Well, I — I haven’t — I think this record shows nothing about the value of this property, either is going concerned or for real estate value to anybody else whether it’s a particular value of the Liquid Carbonic.

    I — I think that we can assume that the trustee, attempting to sell the thing for a year and a half, if it had been a valuable plant to somebody else that it would have been solved because that was a —

    Stanley Reed:

    To know whether Liquid Carbonic has other plants, I mean adversary?

    John F . Davis:

    They don’t have it in — in Indianapolis, but there is some indication that they could serve the area and that they were increasing capacity of — of production in another area so that they would still be able to serve it, but —

    Stanley Reed:

    That’s the principal point.

    John F . Davis:

    That’s right.

    Then, to — to summarize where we came up, the real — the real issue in this case is whether or not the consent of the parties which presented to the — which was given to this original decree, really comprehended.

    This was large enough to include this order which has since been issued by the Court.

    Fortunately, the — the authorities in this Court appeal when they’re clear, the modifications which are proper must be modifications which are designed to carry out rather than to frustrate the initial purpose of the decree.

    That is what was specifically stated in the — in the Chrysler case and there was no statement in the Ford case that drawn away from — from that legal concept.

    The question is will this order which is now requested carry out what the parties intended at the time they consented?

    Will it carry out the purpose which the Court, and we must remember that this isn’t merely an agreement between parties, this is an order of a Court designed to carry out a public purpose expressed in the antitrust law.

    Well, the order which is required carry out the intent which the Court had in issuing the initial order.

    Stanley Reed:

    Is it the Court or the parties?

    John F . Davis:

    The parties and the Court.

    I mean, there’s a tried part arrangement.

    The party’s consent, but the party’s consent is of no effect unless the Court finds that this was an appropriate decree in the consent decree case.

    Hugo L. Black:

    In that connection, is it proper to assume that what this particular party agreement really was that he was willing to sell this company even to competitors so long as he lost that?

    John F . Davis:

    I think that’s right, as long as it was sold at a fair price.

    I don’t —

    Hugo L. Black:

    Can we assume now that in the change, he is bound to lose more than what (Inaudible)

    John F . Davis:

    No.

    We certainly can’t assume his bound to lose.

    Hugo L. Black:

    Can we assume that he won’t?

    John F . Davis:

    But I don’t think we can make any assumption one way or the other.

    We just don’t know.

    Hugo L. Black:

    Well, then, he might under this without a hearing.

    This might subject him to a law which was not concentrated by him at the time the evidence is clear.

    John F . Davis:

    Well, I — I think that from this record, it appears unlikely that that is sold since certainly with respect to Long Island —

    Hugo L. Black:

    Well, I understand that but is that the evidence that (Voice Overlap) —

    John F . Davis:

    Well even as to the other, I —

    Hugo L. Black:

    If — if it appears in the record, I’d like to see it because it seems to me that’s wrong.

    John F . Davis:

    Well — well, I refer again to the same section that Mr. Dwyer referred to on page 15, where he said, “We said that –first it speaks to the Long Island Plants and I think Mr. Dwyer was interrupted before he read the next sentence which said –we said that it was a high cost plant to operate,” and we said further that the plant at Indianapolis was not a modern plant and that it likewise would not be sold readily to a purchaser who would operate it to CO2 purposes, which would indicate to me that it is more valuable for other purposes than for CO2 purposes, to — to a purchase anyway, maybe not to Liquid Carbonic but to a purchaser.

    Felix Frankfurter:

    I must say that — that — as I assume to pick — pick that in an accurate recollection to what he said.

    Felix Frankfurter:

    May I do that?

    John F . Davis:

    I — I have no — no doubt that it was.

    There was no question raised about it.

    Felix Frankfurter:

    Well, if that was sold, I must say that it puzzles me that if the likelihood of inability to settle this problem, but before the parties and before the Court or before the Government that presents it, I’ll repeat that actual victims will file a motion which require more than we’ll suggest an imagination to say, well, let’s provide it with attachment.

    John F . Davis:

    The — apparently, the Government and the Court believed that these properties would be saleable.

    Otherwise, they wouldn’t have issued an order and spend a year and a half trying to sell them.

    Felix Frankfurter:

    Well, then —

    John F . Davis:

    As far as the defendant goes, it might have been like teaching the sultan’s pig how to fly.

    I mean, it may have been a matter of just postponing the evil day for this — for this period of time.

    Felix Frankfurter:

    Well, but what if somebody who is knowledgeable say that the likelihood of a selling to his competitor (Inaudible)

    I shouldn’t think the Government or even the Court (Inaudible) of their judgment that they bring me notice of what happened because in any event, it doesn’t happen.

    They will have to make the best picture or anything —

    John F . Davis:

    That’s right, but the —

    Felix Frankfurter:

    And that seems to be (Voce Overlap) —

    John F . Davis:

    They started the — they started the order by saying they shall sell this.

    Now, that’s the way 9 (e) starts.

    They shall sell these properties.

    Felix Frankfurter:

    And there’s a provision of health issue there.

    John F . Davis:

    And then, in order to — in order to give the additional, first, they added how they should sell it and they didn’t go back and say and if they can’t sell it this way, they shall dispose a bit in some other way.

    And our question is did they — did they intend that nothing should happen that the — whatever monopoly existed should continue if they couldn’t sell in this — in this way and that just seems to be an unreasonable construction of the — of the original consent.

    Felix Frankfurter:

    I don’t know.

    I don’t know because I don’t know enough about the interesting well down the hole.

    The Government might not at all, more than (Inaudible)

    Somebody should produce with these plants and that they could be shut down.

    John F . Davis:

    Well, in view of the nature of these plants, it doesn’t — It doesn’t seem that that is likely.

    William O. Douglas:

    In order — what’s the point (Inaudible) didn’t take care of the situation (Inaudible)

    John F . Davis:

    That is right.

    The Court felt that that was a — a less stringent requirement and that it fulfilled all the — all that the Government needed.

    The Court would have been — if — if the defendant had wanted to sell, he would have had no objection to ordering a sale, but a force sale might cause a loss and he said, “Government would get all it needs if you don’t use the plants,” so that ‘s all we’re left to do.

    Earl Warren:

    Mr. Dwyer, would you in just a minute of so to state your position on due process so far as the failure to accord your company any hearing on this modification of the party.

    James F. Dwyer:

    Yes.

    We were served merely with a notice of motion for a construction of the decree and we opposed it on the ground that the Court had no power to order a sale from the language in the decree.

    And — well, I think you will find in the argument that — and in the briefs that we submitted.

    We pointed out that any sale now would constitute a modification and the minimum that we’re entitled to was a hearing.

    The Court would have to have witnesses before it to prove how competition was going to be effective if the plants were to be sold.

    We had no such hearing.

    The Court in his opinion felt — thought that it was entirely unnecessary with just a matter of construing this language.

    We pointed out to him that carbon dioxide had been used to more industries.

    It was used in hospitals that he’d have to take into consideration what the effect on the economy around the Indianapolis area would be.

    But he seemed to think that that was not necessary.

    We think that due process requires the Court to give us an opportunity or rather to — to — an order, that such an order may be ended.

    That the Government proved that there is some relation between the wrongful act alleged in the complaint and the relief which they’re seeking.

    Earl Warren:

    Thank you.

    Could you — before you sit down, could you give me the page of the record where the discussion takes place about whether we or we’re not entitled to a hearing?

    Well, don’t hold up on it if you haven’t got any —

    James F. Dwyer:

    Well, I — I think I can’t find it.

    Never mind now.

    James F. Dwyer:

    I’m — I’m sorry, Mr. Justice Harlan.

    I can’t pick it out readily in this record.

    Earl Warren:

    Perhaps you could send a memorandum to — to Mr. Justice Harlan if you will consider.

    James F. Dwyer:

    I’ll be — all right, I would be happy to do that.