Minnesota Mining & Manufacturing Company v. New Jersey Wood Finishing Company

PETITIONER:Minnesota Mining & Manufacturing Company
RESPONDENT:New Jersey Wood Finishing Company
LOCATION:United States Post Office and Courthouse

DOCKET NO.: 291
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 381 US 311 (1965)
ARGUED: Apr 29, 1965
DECIDED: May 24, 1965

Facts of the case

Question

Audio Transcription for Oral Argument – April 29, 1965 in Minnesota Mining & Manufacturing Company v. New Jersey Wood Finishing Company

Earl Warren:

— Manufacturing Company versus New Jersey Wood Finishing Company.

Mr. Howell.

Sidney P. Howell, Jr.:

Mr. Chief Justice, May it please the Court.

This case presents, I believe for the first time, an occasion by which this Court may construe one of the truly unique features of the Clayton Act, namely, Section 5, which has been various forms on the books since 1914.

Section 5 of the Clayton Act has two features.

The first, and we will argue the dominant concern of Congress at the time of this enactment, is that phrase now in Section 5 (a) relating and providing for the admissibility and subsequent private treble-damage litigation of the final judgment or decree secured in any civil or criminal proceeding instituted by the Government.

It is somewhat less unique feature, I used the word unique since the first feature to which I’ve just referred the admissibility is prima facie evidence, obviously works a drastic change on the prevailing common law notions of mutuality of the stock by statute.

The second feature and the one with which we are directly concerned on this appeal, is the provision of Section 5 (b) providing that during dependency of any such civil or criminal proceeding instituted by the United States, all right of action created by Section 4 of the Act for private litigants shall be suspended.

The statute of limitation, otherwise, pertaining to such private causes of action will be suspended.

Now, the specific question in this case is whether dependency of a Federal Trade Commission proceeding, the proceeding instituted to enforce the Anti-trust Laws as defined in the Clayton Act, is such a civil or criminal proceeding as by the United States as will suspend or toll the statute limitations.

The courts below have both answered this question in the affirmative and have held that the plaintiff’s complaint below was therefore not timed barred by Section 4.

Three District Courts which have considered the same problem since this problem was considered by the District Court of the New Jersey in this action.

(Inaudible)

Sidney P. Howell, Jr.:

The action was instituted five years and three months after the institution — after the single cardinal event which they say their right spring from namely, the acquisition by this petitioner, Minnesota Mining and Manufacturing Company of a distributor through whom this plaintiff below distributed his products.

The acquisition was in August of 1956.

The complaint in this action was filed in November of 1961.

The District Courts, as I say in Missouri, Tennessee, and particularly, at least I commend the opinion particularly to you of judge who knew in the District Court of Maine, all followed upon the decision of this Court as other plaintiffs raised the same question as to whether or not various aspects of their causes of action had been saved by the suspension of the limitations during dependency of commission proceedings in those cases.

The Highland Supply Case in Missouri went up to the Eighth Circuit and was there affirmed bringing it into direct conflict with the decision of the Circuit Court here.

Now, I have no explanation as real explanation as to why it is taking 50 years for this particularly narrow and almost that it would seem from the briefing I’ve read obvious question to arise in this Court.

Except and I think an obvious practical construction has been placed on Section 5 over the years.

Not only by practitioners in the field by the bench, the bar, and all commentators who have ever considered this question in any aspect.

No one, no one has ever before advanced the fly that the Federal Trade Commission proceeding was such a proceeding as is comprehended by Section 5 of the Clayton Act.

Now, the question is here now and it arose in the following manner.

Petitioner Minnesota Mining defended below, we quite often refer to as “3M”, among many other diversified facets is a manufacturer and distributor of electrical insulation materials.

Prior to 1953, its principal product line was electrical installation tape which had sold to original equipment manufacturers and to distributors for resale.

Again, original equipment manufacturers and to repair in rewind shops.

In June of 1960, the Federal Trade Commission issued a complaint under Section 7 of Clayton Act which referred to a series of acquisitions made by 3M in the years from ’53 to ’55 as some six manufacturers of other electrical insulation product lines.

It then made particular reference in this complaint to its acquisition in March of 1956 of the Prayor (ph) Company, a distributor the second largest, I believe with the allegations, second largest distributor of electrical installation products located principally in Edmund Western States and then, to its subsequent acquisition in August of 1956 of the assets of “IWI”, which we quote for the moment the actual name slips my mind.

It’s been so long since I forgot it, IWI, being a national distributor of electrical insulation products, and possessing roughly 14% of the market, and alleged to have been the third largest.

Potter Stewart:

Irvington Varnish Insulator Company.

Sidney P. Howell, Jr.:

No.

Irvington Varnish is one of the manufacturers, Mr. Justice Stewart.

It’s Installation and Wires, Inc.

Potter Stewart:

Oh, yes.

Sidney P. Howell, Jr.:

— which was the distributor.

And the acquisition was made as it happens from the co-defendant below Essex Wire Company.

Now, this complaint and I chant well of it, I think obviously it must speak for itself in the record of this case.

It was in the record below.

It seems to me quite obviously, directed toward what the commission as referred to as the “acquisitive appetite”, displayed by 3M in their judgments and that their concern was primarily to this fact that 3M had acquired — made two such acquisitions of distributors and having vertically — in an attempt to vertically integrate the market.

The allegation was of course, that those acquisitions might tend to substantially lessen competition or create a monopoly in the manufacturer — distribution of sale of electrical insulation materials and in violation of Section 7 of the Clayton Act, no other antitrust law was involved.

There was no reference to any Sherman Act theory under Section 5 of the Federal Trade Commission Act.

It was simply a Clayton Act proceeding.

Thirteen months later in July of 1961, 3M and the Commission entered to a consent order before the taking of any evidence.

This order, which also appears in the record, provided that directed 3M to divest itself of IWI.

It was permitted to retain the Prayor (ph) Company.

In fact, there was a dismissal of the Section 7 charge provided as to the Prayor (ph) Company with the single exception of assuring and requiring 3M to purchase — to permit Prayor (ph) to purchase certain electrical installation but at to a certain percentage — the electrical installation requirements from suppliers other than 3M.

On November 20, 1961, as I say Mr. Justice Stewart, some five years and three months after the acquisition of IWI, New Jersey Wood Finishing Company instituted a treble-damage action in the District Court of New Jersey.

New Jersey Wood Finishing Company is a manufacturer and distributor of a line — of electrical insulation materials for purposes of this case fully competitive with the line offered by 3M.

This complaint, and I might mention that we deal here more or less by consent of everybody in concurrence of the courts below with the amended complaint which was filed in March of 1963, it appeared from the record, states two causes of action.

First, that 3M, violation of the Sherman Act, both Sections 1 and 2, entered into an agreement with Essex Wire illustrate of trade and agreeing to purchase IWI.

And constructed a monopoly in violation of Section 2 of the Sherman Act in the sale and distribution of electrical installation materials to the damage of this particular plaintiff by foreclosing him what previously sold to his products through IWI from a substantial share of the market.

Now, this complaint specifically alleges that 3M advised New Jersey Wood in September of 1956, that after January of ’57, it would no longer purchase any electrical insulation materials from New Jersey Wood.

We took their positions in this case to assure ourselves that there would be no claim of fraudulent concealment of the cause of action and that to confirm that particular allegation of the complaint that New Jersey Wood had full knowledge of the acquisition and of the import of that acquisition upon its own business as early as September of 1956, and that that impact would be fully felt by January of 1957.

Having taken that step, we then moved in the District Court to dismiss the complaint or for summary judgment under Section 4 (b) of the Clayton Act the — then recently enacted four years statute of limitations governing all private treble-damage actions.

The judge countered — with the argument that the statute of limitations had been suspended under Section 5 (b).

I don’t mean to be pedantic but I think it will profit us if I briefly read Section 5, as we faced it in this case.

Section 5 (a) provides the final judgment or decree and I will read elliptically, “rendered in any civil or criminal proceeding brought by or on behalf of the United States under the Antitrust laws to the effect that a defendant has violated set laws shall be prima facie evidence against such defendant, in any action or proceeding brought by any party or other party against such defendant as to all matters respecting which said judgment or decree would be an estoppel as between the parties.”

Whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain or punish violations of the Antitrust laws, the statute of limitation, in respect of very private right of action arising under set laws have based in whole or in part on any matter complaint of the said proceeding shall be suspended during dependency thereof and for one year thereafter.

The District Court found briefly that these two Sections were separate and apart had no relationship necessary relationship to each other and that an FTC proceeding is and I quote, “An action by the United States”, and the Congress intended and adopting that suspension provision that prospective private treble-damage plaintiffs would get not just the benefit of the final — of the admissibility as prima facie evidence of the final judgment or decree as provided in Section 5 (a) but also of all facts adduced by the Government in the course of prosecuting that action.

The District Court held that it could not believe it logical.

Sidney P. Howell, Jr.:

That a private plaintiff’s rights would depend on what he termed the fortuitous circumstance of which government agency prosecuted the Antitrust violation.

There he had reference of course, to the fact that the Clayton Act envisions concurrent enforcement, remedies at the hands of either the Department of Justice or the Federal Trade Commission.

Now, the Third Circuit is in the unanimous opinion by Judge McLaughlin, Chief Judge Biggs, and Judge Hasting concurring agreed that Judge Gallup (ph) to a point.

First, that the FTC and their view is truly a representative of the United States specifically empowered to enforce the Clayton Act.

And that a Federal trade proceeding should not create an anomaly in the enforcement scheme constructed by Congress and its plan for effective Antitrust enforcement aided by private litigation.

Therefore as the Third Circuit, the rights created by Section 4 to bring these private treble-damage actions are preserved by any government action under Section 5 (b) whether that action by the Department of Justice or by the Trade Commission.

This led the Third Circuit to take the obvious and less logical step that since the language in Section 5 (b) is so identical, so closely identified with the language of 5 (a) that a Federal Trade Commission proceeding or rather the judgment or decree, if you will, the cease-and-desist order of the Trade Commission would indeed be admissible as prima facie evidence in subsequent private treble-damage litigation.

The Third Circuit held that they saw no reason why they shouldn’t be the result.

Since, first, after all the decree or the order would only be prima facie evidence — that the differences between an equity proceeding conducted by the Attorney General in the federal courts and a Trade Commission proceeding were only peripheral, and that any — that the defendant would have the right to argue the weight and prohibitive value of the evidence offered to the decree.

It then suggested that besides prima facie evidence only has limited value in the prosecution of private action.

Not only the Court suggested that certain amendments to Section 5 to which I shall refer, adopted by Congress in 1955, plainly intimated.

I’m not so sure how you can plainly intimate but plainly intimated that a broader purpose was indeed apprehended by Section B, the holding section, then in the Section A, the admissibility section.

That this broader purpose did indeed assure to prospective plaintiffs that they would gain not just that final order but all the evidence adduced by the agency in the process of prosecuting the case.

The court had no difficulty distinguishing the District Court cases and by this time, the Eighth Circuit opinion, which I have referred to before as direct conflict with the District Court of New Jersey holding that those — they had placed too much reliance on the 1923 District Court case, Proper again John Bene, the only case that had really considered the admissibility feature of the Act and they had overlooked the affirmative statutory distinctions between the Federal Trade Commission Act and the Clayton Act with the concurrent effect on the Sections which we’re discussing.

Finally, the verdict to — the increased power which has been granted by Congress to the Trade Commission in the recent years and then, referred to the Second Circuit’s decision in Brunswick Bark in the decision of 1946 which is discussed the great length in the briefs on both sides.

I’m not going to rehash it except that it does stand as a problem and I think a problem from both sides in this appeal.

The Second Circuit had the question of admissibility of a Federal Trade Commission order in the treble-damage action.

At first, they announced the decision, two to one decision — with the dissent by Judge Evans saying that, it would be admitted because of the finality act and removed all impediments to considering a Federal Trade Commission cease-and-desist order, a final judgment or decree.

It was later brought to the Court’s attention that the final — that the – Wheeler-Lea Act had not covered Clayton Act proceedings — Clayton Act cease-and-desist orders but only orders issued under Section 5 of the Federal Trade Commission Act.

That being so, the Second Circuit withdrew its opinion and of course, the order was not admitted in that case and to my knowledge has never come so close to being admitted in any case either before or since.

We frankly charge the Brunswick Bark case of the Second Circuit as being sporadic.

We do not believe that it represents the law as it was then or as it is now and —

(Inaudible)

Sidney P. Howell, Jr.:

1946, Your Honor.

And the Finality Act and the First Amendments that we’re going to consider came in 1955 and the Finality Act has the Clayton Act orders of the Federal Trade Commission came in 1959.

The argument, of course, is that the 1959, Finality Act revitalized the principles enunciated in the rationale of the Second Circuit in Brunswick Bark.

Now, we have here the briefs as amicus of the Solicitor General giving the views of the Government on this problem and arguing that an underlying policy which is the same policy suggested by the rationale in the courts below of warranting two prospective plaintiffs, the facts and leads to evidence developed in the course of a Trade Commission proceeding.

That this policy was so clear in Congress deliberations apparently in 1914 has to be ignored and that, therefore, that this purpose — this congressional purpose certainly must have been meant to apply the Federal Trade Commission proceedings, whether or not, and this is a direct quote ‘whether or not the language of Section 5 covers Federal Trade Commission’s proceedings or not’.

Now, I submit it still an interesting question as to whether or not this language does cover Federal Trade Commission proceedings and we do argue precisely that point.

Section 5 to us is obviously interrogation of the statute of limitations which prevailed up until the enactment of the Clayton Act’s statute of limitations namely, Each state decided — each Federal Court applied the law of the state in which it set to the treble-damage litigation until 1955 when we got our four-year federal statute.

Sidney P. Howell, Jr.:

And we say that in determining whether or not Trade Commission proceedings are within this Section and for the moment, irrespective of whether these sections can be applied separately and to different situations.

I’m not dealing with that but in reading Section 5 (b) and in understanding Section 5 (b), it is not only fair but highly warranted that we look back to 5 (a) to see if it casts any additional light on the formulation that Congress used.

Now, the formulation that’s before as here and which I read before is the statute as amended in 1955.

The original language and of the phrase ‘any civil or criminal proceeding as adopted by Congress in 1914 and modified in 1955, was any criminal prosecution or in any suit or proceeding in equity’.

Now — well, a Solicitor General tells us that there are serious obstacles to approving a results achieved below and that 5 (b) did run along under the legislative history clearly with the enactment of 5 (a).

He does rule that 5 (a), the admissibility; the prima facie evidence provision, did not — was not meant to and should not as a matter of policy be read to cover Federal Trade Commission proceedings.

I suppose technically, it is arguendo since there isn’t a question in this case as to whether or not the consent order of the Trade Commission in the 3M case would be ultimately admissible.

Since it was entered on consent, it falls under 5 (a)’s proviso that says, “You don’t admit Court’s entered on consent.”

So, I suppose a lot of the discussion as to whether or not this case can reach that question would be academic.

Byron R. White:

This consent order that I gather was entered before the evidence took place?

Sidney P. Howell, Jr.:

That the records all reached, Your Honor.

Now, the language we like to concentrate in these sections and I will deal with the post 55 Act of this analysis.

Is any civil or criminal proceeding, now, my friend for the respondent, never — I don’t believe once in his brief uses the adjective ‘civil’, although, the statute clearly does.

He concerns himself only with the word ‘proceeding’.

I think the word ‘civil proceeding’ must be read as a word of art consciously chosen by Congress to describe exactly what they’re talking about and to contrast it with criminal proceeding.

The other word, the second word, that it has been so far ignoring all briefs including our own, I’m afraid, is the word ‘any’, any civil or criminal proceedings of Section B.

Therefore, and solely as a guideline at the moment if we go back to A, we are talking about a final judgment or decree rendered in any civil proceeding, since even the Solicitor General concedes that the final judgment or decree could only be the mandate of a Court conducting as judicial proceeding.

It would appear that the only proceeding, the ‘any’ proceeding, it could be involved would have to necessarily be a judicial proceeding and could not, could not be a Federal Trade Commission proceeding.

Nor, may I say, could it be any of the other proceedings which we have built into our laws designed to lead at least to the enforcement of the antitrust laws.

It could not be a grand jury proceeding.

It could not be proceedings under the new Antitrust Civil Process Act under the issuance of the civil investigated demand nor could it be the broad call on the Federal Trade Commission under Section 6 (b) of that Act upon corporations to furnish information to the commission for the analysis and perhaps subsequent prosecution of an antitrust violation.

This it seems all clear to us, yet, if the argument on the other side seems to us to drive directly in that direction.

There’s no reason to stop at this highly monitory and assumed purpose of Congress is to be effectuated.

Why stop with the Federal Trade Commission proceeding?

It should be any proceeding by the Government and could be any proceeding of any nature by the Government designed to enforce the antitrust laws.

Now, the Trade Commission itself in its current report suggests that it’s supposed to appropriate concern should be in prevention of widespread industry practices which they need to be the violation of the Act.

That therefore they will make greater use of the trade practice conference.

Now, here we would almost have an instance in which the statute of limitations would be suspended as to an entire industry upon the issuance of the cause of a conference and who — against whom would it run, those who were called or those who responded and came forth voluntarily to that conference.

Now, we say secondly that what is overlooked at the heart by our opponent, it must necessarily include the Solicitor General as an opponent, is that what Congress was doing in 1914 that they gave them great concern and developed 90% of the legislative history of subject.

Was they were enacting or rather by statute changing a solidly established proposition of common law?

Sidney P. Howell, Jr.:

That if you are going to use as evidence, you had that – it could only be used in an action against the same parties in which the evidence had a reason — originally been established and found as a fact.

This change and the doctor of mutuality of estoppel was what concerned Congress and how best to do it?

I’m not going to belabor.

May I ask a question?

Sidney P. Howell, Jr.:

Surely sir.

(Inaudible)

Sidney P. Howell, Jr.:

That’s correct Your Honor.

It’s the only time as I say, this case was the first case in which the tolling question was ever raised, so far as we have been able to find.

That the Eighth Circuit (Inaudible)?

Sidney P. Howell, Jr.:

All other cases filed with this one, with the announcement of the District Court decision in this case, motions were tried in the Missouri, Tennessee, and Maine actions.

Judge Meredith, who ruled in the Missouri case and ruled as we contend, his decision was appealed immediately to the Eight Circuit, it was argued after our case was argued in the Third Circuit but the decision came down and was available to the Third Circuit before they announced their decision and they do take account in a Footnote toward the end of the Third Circuit opinions here of the Eight Circuit’s decision.

Now, I do want to pause for just one other point in the actual parsing out of the statute and suggest that Your Honors not only looked for that word final judgment or decree but the fact that it’s a final judgment or decree against a defendant in the words of Section 5 (a) and as we know both the parlance and the practice before the Trade Commission, the defendant is called respondent, and then universally is and I don’t thinks it’s a — it might not have been something the Congress would’ve been aware of in 1914 but certainly in 1955 when they took a general stock taking of this Section, it’s quite likely that they might reconsider the use of the word “Defendant”, if they were going to put in a reference to the Trade Commission proceeding.

I’m encouraged in this particular analysis incidentally by what Congress did in 1934 with the federal Communications Act.

There and the antitrust Section of that Act providing that all the Antitrust Laws would apply to the permit the communications commission to conduct their inquiries, said, whatever in any suit, action or proceeding, civil or criminal brought under the provisions of any of said laws, antitrust laws or and any proceedings brought to enforce or review findings and orders of the Federal Trade Commission or other governmental agency.

Now, this to me suggest that Congress had by at least 1934 elected upon the phrase, criminal or civil proceeding, vice versa, civil or criminal proceeding as truly a word of art that this meant just what they meant and that whenever they wanted to – it’s reached to go further, they would specifically refer to an agency proceeding, at least they did so in the Communications Act.

Secondly, I do invite the Court’s attention to the phrase or rather requirement of the Act that the proceeding question must be one instituted by the United States.

And to the laws we have set forth in our brief and analyzed that that again is reflective of a word of art used by Congress to mean the United States as represented by the Department of Justice and not by one of its constituent, corporate agencies if you will, which have on many occasions stood on a separate basis in many litigations from the positions developed by the Department of Justice.

We do make references to some of those in our brief and to the cases which are specifically held that action taken by the Federal Trade Commission does not act in any respect to estoppel, the Department of Justice.

And we found that in the Pfizer case back in my own District in New York and other cases which I mentioned in the brief, some of them quite recent.

It’s a problem that runs quickly into the problem of a priority, jurisdiction and the other questions that come there but necessarily it still follows that the Department of Justice is not yet, where it has taken a contrary further additional or refined position from that taken by the commission staff has ever been foreclosed from advancing the argument to my knowledge, in an antirust case.

Now, I’m not going to belabor the legislative history, we’ve preferred to it in our briefs at great length.

In fact, I might even agree with Mr. Akerman’s brief as amicus in this case in which he, citing Justice Jackson, says that, it’s only with great reluctance that we should ever go into legislative history and when we do we ought to stop really with the committee reports and not weigh through the necessitude of debate on any one issue.

This — I’m strengthened in this thought also by the fact that the Eight Circuit and its in Island Supply case and had Judge Meredith below, found no necessity to go to the legislative history.

They found the statute plain on its face, claim that it did not in any respect include Federal Trade Commission proceedings.

Now, despite this, the legislative history which we’ve presented has a number of pertinent points.

I don’t really think it was quite as necessary for my opponent to go quite as far to start those points and to argue that really — they don’t say what it seems to be obvious that various (Inaudible) were saying at that time.

I think, he and I could probably agree that while a legislative history certainly doesn’t help his argument in any respect, it doesn’t hurt mine.

The legislative history in this case does develop two or three significant things that the Solicitor General has conceded are relevant to a reading of the Act.

And I think probably what an overall reading there’s more than anything else to show that Congress was acting within a frame of reference and it was concerned with this estoppel point of view that it was concerned with extending that estoppel, that the estoppel doctored only to the final judgment and decree entered by a District Court in a proceeding instituted and prosecuted by the Department of Justice.

I find no basis for any other reading — any other frame of reference, in which any man in Congress in 1914 was operating.

Sidney P. Howell, Jr.:

This was the exclusive concern and the exclusive consideration that they manifested.

There are one or two points that stand out.

For instance, instead of prima facie evidence the proposal in the House debates at one time was that it be, conclusive evidence that the final judgment or decree be made conclusive in the subsequent litigation.

Now all of constitutional doubts as to whether Congress could do that, that amendment was withdrawn and yet, those that advance the constitutional doubts never suggested that my word how much more of a constitutional morass that we entered, if we permit of the idea that Federal Trade Commission proceedings are somehow bundled up in this proposition.

To me, that seems a certainly in the context of 1914 seems to have been potentially the most telling argument.

It could’ve been made by those who were successful and cutting back the effect of the evidence to be created from conclusive to prima facie.

Secondly, one Senator at one point in the Senate debates advance the suggestion that the words inequity be deleted as unnecessary under the formulation as it stood them before the House, any criminal prosecution or any suit or proceeding in equity.

It was immediately countered by — well, if you do that — if you take out the inequity, you’ve eliminated — we could be talking about any kind of proceeding and promptly that suggestion was withdrawn and the Act did pass with the inequity specifications in there, clearly reflection of the classical form of proceeding which we had at that time, a suit or proceeding inequity.

Finally, and with direct reference to the suggestion now that — by the Solicitor General that it was the basic, if you will, the basic purpose of Congress to provide for all prospective plaintiffs the evidence and the leads to evidence developed by the government’s fact finding resources.

In that respect, a specific amendment was offered to open the files of the Department of Justice, not the Trade Commission, but of the Department of Justice to anyone to rummage around and collect up such cases he could make.

This, after debate was rejected and referred to two or three later times in the debates as having been put to one side, and it seems to me that to ignore that development as one of the significant factors bearing particularly on the congressional policy which the Solicitor General has ascertained is unaccountable anywhere in his brief.

Now in 1955, again Congress’ concern was not primarily with Section 5.

Congress at this point was adding to the Clayton Act, Section A which, 4 (a) I’m sorry, Section 4 (a) which provides for a government actions to collect single damages.

The Courts having held that the Government could not maintain a treble-damage action under Section 4.

And secondly to add the four-year statute of limitations which comes up as 4 (b) of the Clayton Act.

Now, these amendments did require — had to be integrated and to be fit in the Section 5.

So, Congress was taking a look at Section 5 at the same time.

It declared that it was not attempting to make any substantive change in Section 5 whatsoever.

It did change the language, criminal prosecutions, suit or proceeding in equity through any civil or criminal proceeding language and did so without any particular comment in reports or otherwise other than the comment that there was to be no substantive change.

They did divide the Section into A-part and a B-part separately lettered.

And they did make the references but now appeared through Section 4 (a) concurrently adapted.

Now, it seems to us that this is — the Third Circuit has attempted to find in the legislative history of the 55 enactment, a purpose, a broader purpose and ever previously been articulated.

The Solicitor General doesn’t quite pin it down to 1955 but there is a pervasive congressional purpose, however, unarticulated to this point that at some point did draw a Trade Commission proceedings in to Section 4 (b).

This, again, the significant thing to me in the 55 debates is that what may have been vague or unsaid before is now directly said and Senator Keating says, “That the present time, the tolling of the statute with respective to private, treble-damaged suit exists during the pendency of a suit by the United States.

To me, it could not be more clear that Senator Keating did not believe that Trade Commission Act proceedings were in any way involved in the subject under discussion.

It continues, the bill provides for extension of the tolling period not only for the duration of the government suit but also for one year thereafter.

Now, we point out that this particular proposals enacted in 55 had been under debate since 1950.

They have been debated again in ‘51 that the Chairman of the FTC himself, Mr. Lowell Mason, came in and testified perfectly consistently with Senator Keating’s statement of the purpose of the amendments.

It’s very clear that Chairman Mason of the Commission had no such view as is advanced in this case.

He knew that Trade Commission proceedings were not under the Act and makes specific references to criminal or injunction cases brought by the Government.

Sidney P. Howell, Jr.:

And finally, to us it seems just incredible, that Congress would work after 40 years such an important, such a significant change in the practical construction of the law without advising Congress, advising themselves in some articulated manner that that’s precisely what they were proposing to do.

(Inaudible)

I’m passing the record to them sir.

Now, the 1959 Finality Act is difficult to argue for me in this case because it has been dealt with differently by all of various persons that have had a hand and disagreed with me up to this point.

The District Court ignored it.

The Third Circuit found the fundamental thing.

This was the Act that really counted and changed.

Going back to the original language, what did Congress mean by a proceeding inequity as to Third Circuit?

It meant the review of Trade Commission action in the Court of Appeals which sat as a Court of Equity and actually pronounced the final judgment or decree in the particular case prosecuted by the commission.

So, therefore said the Third Circuit, the Finality Act when it came in, moved that equity proceeding back into the Commission itself.

And the Commission proceeding now is something like or essentially the same as the proceeding in a court of equity.

Now, my associate, Mr. McAmis’ constantly reminds me that at least in terms of pure logic if you say that something is essentially the same or is quite like or is all but, you’re saying that it nevertheless it is something different still.

(Inaudible)

Sidney P. Howell, Jr.:

The Finality Act sir, simply provided eliminated the three step enforcement proceedings of Clayton Act — of FTC Clayton Act proceedings.

Previously, the Clayton Act would make its determination and issue a cease and desist order.

That cease-and-desist order, then to be enforced had to be carried into the Circuit Court.

And the Circuit Court issued its enforcement order and it was in contempt of that order that two prosecutions result.

And it was the order of the Circuit Court that Commission had to have before it could truly enforce the determinations it had made.

This was eliminated and now Federal Trade Commission orders become final and binding upon the respondents upon an expiration of the term to appeal that the determination made to the Circuit Court.

This brought Clayton Act enforcement and this was accomplished by an amendment to Section 11 of the Clayton Act.

This brought Clayton Act enforcement by the commission into line with the enforcement of its own Act, the Federal Trade Commission Act which had been done by an amendment made, of known as the Wheeler-Lea Amendment of 1938.

Now, the Solicitor General has rejected the entire rationale of the Third Circuit on this question.

He says that, the Third Circuit frankly erred in their analysis here.

And that the results that they find in a tribute for the Finality Act were wholly artificial in nature and certainly a result never suggested by Congress.

And finally, the Solicitor General at this point argues that it would be a very unwise policy for this Court to attribute the status of a final judgment or decree to Federal Trade Commission proceedings for purposes of creating prima facie evidence usable in subsequent treble-damage action.

I couldn’t agree with it more on that point.

Now, we really submit that just taking this aspect of the different view points that have been advanced on the Finality Act alone by the Courts, and now with respect by the Solicitor General, illustrates just what happens when you leave the clearly chartered rule the Congress laid elsewhere.

There has been unquestionably, in my mind, the judgment, an invasion of the congressional sphere here and the guides of statutory construction.

If there is an unarticulated policy of antitrust enforcement, it is for Congress.

I really submit rather than the courts to declare.

Sidney P. Howell, Jr.:

This is not a question of an ambiguous statute in my judgment where the Court certainly can fill in and ascertain the congressional purpose and tell us.

This statute is crystal clear if it’s fairly read, and that anything done in the courts can change 50 years of accepted practice necessarily is in the nature of essentially the same Act, a Legislative Act.

We submit that the Solicited General’s appeal is for outright legislation and ask this Court to declare that we have a new policy of enforcement.

I think, this raises a serious question as to the checks and balances that we like observe in our constitutional theory.

Yet he argues that the Court should correct essentially what it persists to have been a mistake by Congress.

Congress was mistaken in the way it formulated a policy which had never articulated.

I will leave those questions aside, we think that the policy offered by the Third Circuit certainly of making prima facie evidence out of Trade Commission proceedings does raise a constitutional question.

There would be an interpretation of a statute which would convert into evidence — into prima facie evidence that would establish the plaintiff’s case.

That which might well not have been evidenced in the Trade Commission proceeding and of course we have reference there, we cite Judge Powell’s article and somehow we omit it from our main brief and forgot being pick up on a replied brief, more modern article by Mr. Barton which appears in the current Columbia law review on the same problems of the differences in administrative and judicial proceeding — adjudicative proceedings by administrative agencies.

What’s the reference —

It’s in 64 Columbia 390 and of course, Your Honors, as I was waiting for this case to reached, I heard the presentations in the MCA case just the other day which regardless of the merits there, illustrates that there are certain things that do happen in administrative agencies that do not happen in judicial proceedings and cannot happen but the point remains that the anomaly which my opponents refuse to recognize is that that which could not be might not be evidenced becomes evidence by statutory file and is imposed upon me.

I have no real remedy against it the despite the argument of the Third Circuit that they are not really going hurt me too badly, by letting this in because I can always I argue the way of the others.

I can’t show however, if this is truly prima facie evidence, that the findings of the Commission were developed through opinion testimony of non-experts, statistical compilations rather than real evidence, of hearsay, of any of the other things which by their expertise at least the theory runs, agents, administrative agency can construct a record and make findings and decisions.

And finally, decisions which are designed not to punish, not to assess fault for past conduct.

But decisions that are to operate prospectively and in the future to alee practices which might burgeon into Sherman Act conspiracies or per se violations of the Act.

This is the concern of the agency rather than the corrective action, punitive action taken first by the Attorney General in a government action and secondly, through highly punitive treble-damage action.

So, we do argue that really the whole difference between the Court and the Federal Trade Commission proceedings can be summed up and the overwriting policies of prevention of wrongs — our future wrongs and in the correction and punishment of established wrongs.

And that these are fundamental policies rather ignored by the opposition.

I would like to point also that in my judgment, the Solicitor General’s view of the policy sufferers from two basic misapprehensions.

I think the first one, I’ve already averted to that Congress wanted private plaintiffs to have facts develop by Government resources as amply belied by the legislative history.

But the second assumption not stated but the unarticulated assumption of the policy position advanced by the Solicitor General and I assumed concurred in by my opponent is that every antitrust defendant, once charged, must be guilty of something.

There must be some facts of which he is so ashamed that can be used against him in future litigation.

And therefore, it’s a worthy policy to hold and assure that perspective plaintiffs will get that access to those facts even though he maybe exonerated in the government proceedings.

Now, the Solicitor General finds that there’s no reason for the point of fairness to the defendant not to establish this policy.

But I point out that in this case, the divestiture order to which 3M consented necessarily divested 3M of the very ability to defend itself against the action brought by New Jersey Wood.

We lost, we divested ourselves with the personnel, and the record, and the evidence that we need in that case.

Secondly, we now face a punitive action, a treble-damage action, not simple a remedial action solvable by divestiture not of both or all the acquisitions that the Trade Commissions is concerned of but by one.

The Trade Commission accepted something far less half-a-loaf in this case.

We face a different substantive charge, instead of Clayton Act Section 7, we now face the Sherman Act conspiracy, and we’ve lost our co-tortfeasor because he is out.

Essex Wire is not broad in this case.

Since he had not been a party with Trade Commission proceedings, Essex Wire stand outside this case, insulated from the charge that New Jersey Wood would makes against us.

And we are of course changing the ground rules and mid-stream in a particular litigation.

Suggesting as to why whether or not we would have taken this settlement.

Was it consideration on the part of 3M that the statute having run, it could settle this case and this would be the end of the entire matter of its acquisition of IWI.

We suggest that therefore there’s a policy here of government settlements, reducing settlements that ought to be protected.

And finally, the Solicitor General’s reliance on the Burnett case decided by this Court in the first week in April, as we analyzed in our brief seems to be completely an opposite to the situation.

That case found the line of cases that says, “Where the plaintiffs does not sleep on his rights, where the plaintiff acts diligently and does what he can or is foreclosed from acting through some circumstance beyond his control such as war or is induced to waive his rights by some wrong doing by the defendant.

That’s as I read Mr. Justice Goldberg’s opinion is the true meaning of the Burnett case and it cannot possibly be dragged to cover this situation.

Now my time is expiring, I will make only a reference to our final point which is that — even if this Court agrees with the decision below, you will then have to say second question.

Thus, the tolling — on account of this Clayton Act proceeding of the Trade Commission does that tolling also cover the Sherman Act claims that are now advanced against us.

And I just want to point out that, this is not semantic argument between me and my adversary.

It leads to the next argument in this case which is that if Sherman Act is out of the case under the statute of limitations, this plaintiff must proceeds solely on the Clayton Act and we question and cite some authorities to you, the District Court authorities that indicate a serious question as to whether Section 7 of Clayton Act does provide an action for treble-damages in the first instance.

Obviously, it does for injunctive relief.

There have been many cases on that but there has never been a case to our knowledge in which plaintiff is successfully prosecuted in treble-damages action under Section 7.

We ask therefore that the decisions below be reconsidered and reversed.

Thank you, Your Honor.

Earl Warren:

Mr. Besser.

Albert G. Besser:

Mr. Chief Justice and members of the Court.

On three separate occasions now, I have listened to Minnesota Mining urge vigorously for the proposition that in interpreting Section 5 of the Clayton Act, we must take a narrow straight, jacketed road to be concerned with an almost dictionary like interpretation of certain words in Section 5 upon which it is said the result in this case depends.

The words, the keywords, according to 3M’s positions of course are criminal or civil proceeding as we have in the 1955 Act or the predecessor words namely a criminal prosecution or suit inequity.

Now, this entire narrow approach, it seems to me is based upon a misconception on the part of 3M and the amicus Reynolds Aluminum Company in this case.

Namely, an assumption that the average private plaintiff in a private antitrust action is sophisticated in the field of antitrust law and is sophisticated with the respect of the various distinctions that are so important to us lawyers between the Sherman Act, and the Clayton Act, and between the Department of Justice and the Federal Trade Commission.

But it seems to me that if legislative history is important in this case and later we will, I hope have the opportunity to consider some of the legislative history, if legislative history is important in this case, it is important because it stands for one clear proposition, initially stressed by President Wilson, when he recommended adoption of the Clayton Act in 1914.

Namely that we must help the private litigant and give him every possible aid by making available to him, some of the benefits of proceedings initiated by the Federal Government unless the I be accused of finding too much comfort in the legislative history, I respectfully refer this Court’s attention to the initial committee report authored by Representative Clayton and referred to on page 15 of our brief.

Where Representative Clayton in recommending adoption of the original language of a Section, Section 5, stressed that this Act is intended to benefit and help and he used the words the person of small mean.

And it is this overrule basic policy behind the statute that was stressed by Mr. Justice Clark in the Emich case, back in 1940, when he stressed congressional intention to benefit the private litigant.

Now, my adversary as he did below, and as he did in his briefs, in his oral argument to this Court devoted most of his time to a consideration not of Section 5 (b) which is a primary issue before this Court but Section 5 (a).

There has been an intention on the part of the antitrust defendants in these cases, namely 3M and Reynolds to urge to the Court’s wrestling with the tolling provision that Section’s (a) and Section (b) must be considered together.

Now, we do not hesitate to support the conclusion of the Third Circuit below that the Federal Trade Commission can generate an order which is prima facie admissible under the meaning and policy of Section 5 (a).

But we take that position and we brief it, although, it is not necessary in this case, not because we agree with the contention that these two sections must be read together, but purely because we feel that there is substantial basis in the history of these Acts to support that proposition.

Albert G. Besser:

But in this case, it seems to me, purely on a basis of the reading of the two Sections A and B together, there isn’t the slightest support for the proposition for which 3M contends that on a last day proceeding can generate evidence prima facie admissible under Section 5 (a), it is not the kind of proceeding which will toll the statute of under 5 (b).

Now, the language itself makes it very clear.

It is true that in both Sections, the words criminal or civil proceeding are used but there the identity between the two Sections stopped.

Section 5 (a) deals with final decrees or judgments and those keywords are not mentioned at all in Section 5 (b).

Furthermore, Section 5 (a) as were stressed by Mr. Justice Clark in the Emich case, implements into a consideration of 5 (a) the key and sometimes troublesome question of estoppel.

Section 5 (a) says, that a final order or decree shall be prima facie admissible against the defendant in subsequent private litigation only in those cases whether would be an estoppel as between the parties to the original government proceedings.

Section 5 (b) does not contain any reference whatsoever to an estoppel problem when considering Section 5 (a) as the Emich case in 1940 made so plainly clear.

The Courts must not only consider what the matters were, which were complained of in the government proceeding but the courts must go further and inquire into the government proceeding in order to determine what matters were necessarily decided in the government proceeding before 5 (a) can come into play.

But the words in Section 5 (b) are dramatically different because 5 (b) says, that the statute of limitation will be told with respect to every private right of action arising under the antitrust laws based in whole or in part — in whole or in part upon any matter, not all matters, but any matter complained on — not decided but merely complained of in a proceeding instituted by the United States to enforce, restrain or a prevent a violation of the antitrust law.

And it seems to me that this dramatic difference between the two sections stands for the proposition, while Section (b) undoubtedly was created by Congress in 1914 primarily for the purpose of giving to the private litigants, the benefits that flow from Section 5 (a) and his ability to use at least prima facie, the results achieved by the Government.

There are other incidental benefits which flow merely from the initiation of a Government proceeding which benefits are discussed by us in our brief and in the Solicitor General’s brief and it was the intent of Congress to give to the person of small means, these incidental benefits.

Incidentally, Judge Muir in the Nisley case, Ninth Circuit case I believe, to which reference is made by us in our brief.

Also, commented upon the difference in the statute or the difference in the Sections and stressed these incidental benefits.

And also stressed the important fact that when dealing or wrestling with Section 5 (b), we do not have to be concerned with the question of a estoppel which necessarily is a standard in implementing 5 (a).

I don’t think that it — I have no hesitation in conceding to this Court what is obvious.

If one takes the initial complaint filed by or by New Jersey Wood in this case and lays it alongside of a Federal Trade Commission complaint.

I have no — I very humbly confess that the initial complaint was an almost an identical paraphrase of much of the language in the Federal Trade Commission initial complaint.

This is one of the benefits, in short, which can flow to a private litigation — to a private litigant aside from his use of evidence under Section 5 (a) as our brief and as a Solicitor General’s brief point out a government proceeding regardless of the result is helpful to the private litigant in analyzing the fundamental concepts which apply in his case, in assisting him and evaluating the strength of his case and pin-pointing for him certain specific evidence any events elaborated upon or brought out a highlighted by the government proceedings which are of importance to him and the presentation and ultimate development of his case.

And all of his benefits will plugged to the private litigate regardless of the outcome of the government case whether it terminates in an exoneration of the defendant which is not the case here or whether it terminates in a consent decree.

It seems to me and 3M was very frank to confess to the District Court and the Third Circuit that the logical extension of its argument through the Sections 5 (a) and 5 (b) must be construed together lead to the conclusion that in any case whether initiated by the Department of Justice or the Federal Trade Commission which finally is concluded by a consent decree, the benefits inherent in Section 5 (b), namely, the tolling benefits will not apply.

In other words, that 3M and it says so at page 64 of its brief before this Court.

The argument is made but there is conclusive evidence that Congress intended tolling to occur only in the event of an admissible final decree.

Now, that argument means this, it’s says to have private litigant, “don’t wait around until the government proceeding is terminated because you don’t know how that proceeding will wind up.

You’ll better fire away with your private suit right now because the government proceeding may drag on for a year or two, or three years, and then it will terminated by a consent decree.”

And then according to the argument of Minnesota mining at page 64 of its brief, “having terminated in the consent decree that polling provision of Section 5 (b) is no longer available to you to private litigant.”

So, we winds up with a result that completely undercuts the whole philosophy of Section 5 (b).

Not only does it undercut the philosophy of Section 5 (b) but imposes additional burdens even on defendants an antitrust case because as Judge Murrah and I believe in the Nisley case pointed out, “If you have concurrent government proceedings and private litigation going on simultaneously, the defendant maybe harassed.”

The two proceedings deal with the same basic facts and he on the one hand is trying to defend themselves against the government and on the other hand to defend themselves against the private litigant.

We feel very strongly that if there is one thing that is clear in the legislative history underlying Section 5 of the Clayton Act, it is a deliberate encouragement by Congress to the private litigant to hold off this litigation until these government proceedings have been included.

Now, it seems to me also that there is nothing inconsistent in our argument that a Federal Trade Commission proceeding is such as we have tolled statute under Section 5 (b) with all of the other matters that have been a concern to this Court.

Albert G. Besser:

For example, as the government points out in this brief to this Court tolling the statute because a proceeding is pending before the Federal Trade Commission, certainly does no injustice to the defendant because he has already been alerted by the initiation of the Federal Trade Commission proceeding.

If there are maybe some violation for the antitrust laws inherent in the fact situation which is the basis of the Federal Trade Commission proceeding, nor the government points out is there any reason so far as the courts are concerned, why we should not come up with the result for which we had.

Evidence will have been preserved by the pendency of the proceedings before the Federal Trade Commission just as effectively as it has been preserved by a proceeding initiated by the Department of Justice.

Now, there’s an interesting argument made by Minnesota Mining in his brief and also referred to by my adversary in oral argument namely that the result for which we contend will be to discourage defendants in government proceedings from entering into a consent decree because as I understand the argument.

They will hold back.

They will say, “Well, if we enter into our consent decree.

We are opening ourselves up to private suit beyond the time that ordinarily would be possible where the four years statute of limitations derived.”

Well, I submit that this really is not a sound argument.

I don’t presume to speak for Minnesota Mining in this case but it seems to me very clearly that when a defendant in a proceeding initiative by the government being the Department of Justice or the Federal Trade Commission agrees to a consent judgment.

It is motivated by perhaps two basic purposes.

First of all, it desired to avoid the obvious expense in time and difficulty of litigation, but secondly and most importantly, to avoid the implications of Section 5 (a).

This it seems to me and as far as I can read all of the commentators, this is the key reason underlying a decision, or the defendant, and antitrust case to accept that consent decree because why and he puts his name to consent decree before any testimony has been taken.

He is obviating or preventing the subsequent private litigant from using that government proceeding as evidence or prima facie evidence under Section 5 (a).

It seems to me that our argument that the Federal Trade Commission proceeding is a proceeding which will toll the statute under Section 5 (b) buying some support in current administrative interpretation, which is inherent and a proposal recently submitted by the Federal Trade Commission to Congress to amend Section 5.

But amend only Section 5 (a) by broadening it to include Federal Trade Commission orders.

And incidentally, we don’t think that that suggestion has made because I feel that this is not the law but given the conflict between the Eighth Circuit and the Third Circuit it’s perfectly legitimate suggestion by the Federal Trade Commission to at least clarify it out.

But the Federal Trade Commission has made no such suggestion to amend or change the phraseology of Section 5 (b).

So, I think we can safely assume from that present suggestion to Congress, a belief at least by the Federal Trade Commission that there is no doubt about the current construction to be applied to 5 (b) and that it necessarily must include Federal Trade Commission proceeding.

Our approach is consistent with the one case for the few cases that touch on this point as to whether (a) and (b) must be construed together.

Namely the Nisley case to which we have already refer.

And finally and it seems to me that this is the most compelling argument of all.

So far as the dichotomy between Sections 5 (a) and 5 (b) are concerned and the fundamental necessity of at least holding of 5 (b) must include Federal Trade Commission proceedings.

Namely, that if we adhere to the proposition for which Minnesota Mining depends and if we say to private litigants that your period of limitations is going to be tolled as the Department of Justice, moves in this antitrust area but it is not going to be tolled where the Federal Trade Commission, moves on precisely the same facts and under precisely the same statute.

We are introducing into a whole concept of antitrust enforcement, a matter of happenstance, a matter of pure fortuitous events as Judge Argyle on the District Court referred to it.

In other words, the rights of the litigant, the rights of New Jersey Wood in this case that bring a suit based upon the gobbling up by Minnesota Mining of its distributor throughout the country will depend or just the purely fortuitous circumstance here that the Federal Trade Commission has opposed to the department of justice initiated a complaint predicated upon Section 7 of the Clayton.

And as Solicitor General, points out in his amicus brief of this Court to wind up with that proposition would introduce a very troublesome problem in the sphere intra-governmental cooperation so far as enforcement of these laws is concern.

We are told that there are — now it is close cooperation between the Justice Department and Federal Trade Commission.

So far as enforcement of these various Antitrust Acts are concerned where they have overlapping jurisdictions and they have worked out a policy between them.

But now, if we are to be governed by the Minnesota Mining’s approach in this case. One of the factors which the Government, the Federal Trade Commission and the Department of Justice will have to consider, is whether they let the Federal Trade Commission proceed, they will not now seriously cut down the period during which a private litigant may bring a suit.

Now, much has been made of the legislative history of this case, although, I was quite happy to hear my adversary tone down the obvious emphasis upon legislative history which is apparent in Minnesota Mining’s brief and in the brief of the amicus brief of Reynolds Aluminum Company.

Albert G. Besser:

And here in coming to grips with some of the legislative history and I don’t want to get into a too much detail.

It seems to that we have to start with one aspect of the legislative history which is abundantly clear.

Namely in 1914, when Congress adopted the Clayton Act, it was dealing with two revolutionary pieces of legislation.

It was dissatisfied with the history of enforcement of the Sherman Act since 1890.

And it was considering simultaneously adoption of the Clayton Act in the Federal Trade Commission Act which were two major pieces of litigation.

And it would be extremely unlikely that Congress with if the overall problem before it would deal specifically with the very fine albeit, very important question with which we are confronted now, namely a question of the tolling of the statute of limitation and I think, we’re right in that analysis of the situation.

Because certainly with respect to the tolling issue which is a key issue before this Court as Minnesota Mining before the Third Circuit admitted in its brief there is a complete turn of any legislative history one way or the other.

In fact, the only reason why we are here now concerned with legislative history.

It seems to me, is because the Third Circuit went into it in much more depth and characterized the arguments of either of us before that Court.

Now, I think what Minnesota Mining and particularly Reynolds has done in contending tremendous volume of legislative history, is cost over $4 to send through the mail, is to go through 51 of a congressional record starting at page one.

And regardless of the context of which it finds the record, every single statement by every member of Congress where in the key word “Court, Equity, Government, or the United States” were used and then bundled it all up and submitted it to us for the proposition.

The Congress never intended to include the Federal Trade Commission within the sweep of what now is Section 5 of the Clayton Act.

Actually, as the Government in its brief makes clear and as I hope we made clear in our brief.

95% of a congressional debates to which our attention has been directed came at a time when Congress was dealing with the troublesome question of whether to make Section 5 (a) — whether to move Section 5 (a) along the road of making final decrees and order’s conclusive evidence as distinguished from the language which eventually came out of Congress, namely, that it would be only prima facie admissible against the defendant in subsequent private litigation.

And most of the debate to which our attention has been directed came up at a time when the Federal Trade Commission Act was still on the drawing boards, it had not yet been submitted to Congress.

So naturally, when we have cited to us debate by the Members of Congress with reference to the sweep of Section of 5, there could not be a consideration of the problem of whether or not it was intended to cover the Federal Trade Commission.

I think, even my adversary agrees with the reference on Mr. Justice Jackson and in the Swagman case when Mr. Justice Jackson pointed out the terrible unreliability of resorting to legislative history and particularly, the very treacherous ground by which we plead when we resort to congressional debate as distinguished from House reports or Committee report.

And I think that this analysis can be borne out by looking at one or two specific bits of legislative history that have been cited to us by Minnesota Mining or Reynolds Aluminum, or indeed the Government.

For example, the great emphasis is placed upon the debates between Mrs. Sutherland and Crawford on the floor of the Senate, referred to at page 34 of the Solicitor General’s brief, page 22 of the brief of Minnesota Mining in which — during the course of colloquy, I think it was Senator Sutherland said and I quote, “I do not think that they referring to Federal Trade Commission orders ought to be evidenced anywhere — now, this is cited to us as clear proof that those responsible for Section 5 never contemplated that Section 5 would include within its ambit Federal Trade Commission proceedings.”

But if you look at the context in which that statement was made by Senator Sutherland, you will see, first of all that, he was dealing not with the Clayton Act but with the Federal Trade Commission Act which is not by statutory definition an antitrust law.

It was never the slightest suggestion, we agree with anybody, by anybody that the action of the Federal Trade Commission under the Federal Trade Commission Act would be implemented into Section 5 of the Clayton Act.

Furthermore, Senator Sutherland was dealing with a proposed amendment again through the Federal Trade Commission Act which would specifically state that, no order for the Federal Trade Commission Act shall be evidenced in any subsequent proceeding.

This is all set forth on the page 34 of the Solicitor General’s brief and the interesting thing is that that amendment did not pass.

Now, I think one could with equal weighing, suggest to this Court that the mere fact that Congress — that Senator Sutherland and Crawford were concerned that under the Federal Trade Commission Act, you might wind up with an order which is prima facie admissible.

It shows a realization insofar as the Clayton Act is concerned and is precisely the result that would follow and a result apparently with which they did not disagree.

References are made at page 36 and 37 of the amicus brief of Reynolds through the statement by Senator Walsh who was a strong advocate of a House version.

He strongly contended that evidence under Section 5 (a) should be conclusive evidence against the defendant in subsequent private civil litigation.

And in that colloquy cited at pages 36 and 37 of the Reynolds amicus brief and 32 of the Government’s brief, he does say that, “the findings of the administrative board can not constitute conclusive evidence.”

He was attempting to a sludge, some of the other Members of Congress who had doubts as to the constitutionality of Section 5 (a) but he did go on in the language which is also reproduced at page 32 of the Solicitor General’s brief, and he did say that I think that the findings of the administrative agency can constitute prima facie evidence in subsequent civil litigation.

So, we could argue that when Section 5 (a) was changed from the house version from conclusive evidence to prima facie evidence, at least in the minds of Senator Walsh, it was now an intent to accept that change so as to make findings of administrative agencies, at least prima facie admissible.

Albert G. Besser:

Great emphasis is placed by my adversaries on certain statements who were made to I believe a House Committee in 1951 by Mr. Kenneth Royall and Mr. Johnson, who was the head of the American Bar Association Antitrust Committee, and they were dealing with the proposed amendment to Section 5 which ultimately was adopted in 1955, namely the change from the original statutory language, criminal proceeding or a suit in equity to what we now have, namely, criminal or civil proceeding.

And Mr. Royall and Mr. Johnson were worried that this chain would somehow or other bring within Section 5 findings or orders of the Federal Trade Commission.

And Mr. Royall in particular in colloquy which is set forth at pages 59 to 62 of the amicus brief from Reynolds.

They were asked, well, do you think there’s any real danger here, if I — this language we will include the Federal Trade Commission within the sweep of Section 5?

And may have proposed to Congress an amendment which would specifically negate that possibility.

And Mr. Royall said, “Well, if there is the slightest apprehension that that will be the result of the suggested amendment, I firmly believe that this amendment negating that possibility should be adopted.”

Now Minnesota Mining and Reynolds find comforts in that colloquy, I can with equal vigor say that, when Congress with the specific problem pinpointed by this colloquy did not adapt the suggested amendment, it did so knowingly and with an intension therefore that Federal Trade Commission proceedings would come and should come under Section 5 of the Clayton Act.

Finally, particularly in 3M’s required brief filed a few days ago.

Attention of this Court is directed to the facts that somehow or other the words “on the behalf of” which do appear in Section 5 (a) of the Clayton Act were eliminated from 5 (b), so that while 5 (a) referred only to criminal or civil proceedings initiated by or on behalf of 5 (b) refers only to proceedings initiated by the United States.

Legislative analysis shows that those words would drop that the time after they do came over to the Senate from a house.

Now, 3M characterizes this omission as deliberate, reading into the omission of these words from congressional intent.

There hasn’t been the slightest threats to any congressional debate or colloquy which in anyway supports the argument that Congress deliberately intended some kind of a distinction because it left out the words on behalf of in Section 5 (b).

We could just as easily assume with a complete lack of any record in this regard that some stenographer in retyping the drafts simply left it out and no one picked it up.

I would like now to touch on I think a question suggested by Mr. Justice Harland, namely, the presence or absence of any judicial help in this field and it is true that until this case was initiated, the only authority that really in anyway came to grips with the issue was the Brunswick case in 1945 and 1946, and the much earlier appropriate case of 1923.

Dealing solely with the Brunswick case, we have there.

It seems to me, a square holding in support of a proposition for which we now contend.

Namely, that a proceeding initiated by the Federal Trade Commission qualifies not only under Section 5 (b) but under Section 5 (a) because in the Brunswick case, we had an effort by a private litigant.

Validated in its initial opinion by the Second Circuit, to use as prima facie evidence in a private action, a previous order of the Federal Trade Commission dealing with the same facts, and Second Circuit in a divided opinion two to one opinion did affirm that resolved it, held that the Federal Trade Commission order was admissible under Section 5 (a).

Now on rehearing, it was pointed out through the Second Circuit that a Federal Trade Commission proceedings wherein the Federal Trade Commission was acting under the Clayton Act as distinguished from the Federal Trade Commission Act was not a final proceeding because while the statute have been changed by the — I think it’s the Wheeler–Lea Act back in 1938 with respect to proceedings under the Federal Trade Commission Act, so far as Federal Trade Commission proceedings under the Clayton Act were concerned a decree or order of the FTC was not final until it have proceeded to the Circuit Courts for enforcement.

Earl Warren:

We’ll recess.

Albert G. Besser:

Thank Your Honor.

I would like very briefly before coming back to a considerations of Pauper and Brunswick cases to pick an argument that was made by my adversary and which he suggested and as early as the Fall of 1956, New Jersey Wood was advised of the acquisition by Minnesota Mining of our distributor and we were there for put on notice as to the consequences that we would suffer as of January 1, 1957, namely, that they’re after IWI would no longer sell our good.

I suppose, the suggestion is and it paraphrases the argument threading Minnesota Mining’s briefs throughout the history of this case, namely, that New Jersey Wood select on its rights — actually, I’m thankful that he suggested the point of this Court because I think it highlights once again a proposition that we were discussing earlier this morning, namely, that there are various significant purposes to Section 5 (b), separate and apart from the prima facie evidence admissibility question under Section 5 (a).

There are —

Hugo L. Black:

Is it your belief that the two are in separately connected that you — can you maintain your position even if one should disagree with the ordinance of prima facie?

Albert G. Besser:

Well, there’s no question Mr. Justice Black, but we can maintain our position regardless of what this Court might choose to do or say with respect to the Section 5 (a) question.

We feel that there are so many basically additional purposes to Section 5 (b) that even if this Court should hold the FTC proceeding is not of the kind that and generate evidence admissible under 5 (a) that should not preclude this Court from affirming the judgment below, namely, that so far as tolling is concerned our rights would preserve by this proceeding and I think the question is that the issue was highlighted by the suggestion of my adversary because one benefit that blows from the initiation of a government proceeding regardless of how it terminates, is that it signals to the private litigant that he may or will have a claim under the antitrust laws.

We get back to the proposition with which I started this morning that, I think is clear in the legislative history.

Namely, the Congress had in mind the person of “small means” when it was drafting Section 5, and it is simply not a correct assumption to make that a private litigant such as New Jersey Woods having them told by IWI that it is no longer going to sell New Jersey woods good because it has been purchased by Minnesota Mining.

It is unwarranted to assume that New Jersey Wood is sophisticated enough to realize that it has a cause of action under the antitrust law, a practical businessman with no house counsel and no history of antitrust litigation, does not necessarily understand that when his distributor has been bought up by a competitor, he has a right to obtain redress for his injuries in the court, and it is not until all he knows is that the Federal Government is doing something about it.

Albert G. Besser:

But finally in August in 1961, he knows by a publicity release of the Federal Trade Commission that the proceedings initiated by the Federal Trade Commission have resulted in a consent decree.

And regardless of what Minnesota Mining may say as to a half or a quarter of above that the Federal Trade Commission was willing to accept in that consent decree the fact of the matter is that as the result of that consent decree Minnesota Mining agreed to divest itself of IWI which was the key acquisition that caused damage to my client according to the complaint filed in this case.

Until the unsophisticated private litigant in an antitrust case, it is this flash from the Federal Trade Commission that alerts him to the fact that he may have a cause of action under the antitrust laws.

This —

Byron R. White:

Mr. Besser, you don’t — you don’t deny –I don’t suppose that the — that one of the purposes of Section (b) was to serve Section (a)?

Albert G. Besser:

No question about it Mr. Justice White.

Byron R. White:

Otherwise — otherwise, there’s — why would they ever toll the statute until the conclusion of the case?

Albert G. Besser:

I think Your Honor is perfectly right, and I would even go so far to say that this was the major purpose as far as Congress was concerned in 1914.

But it is consistent with the overall policy of the statute to hold that the Section (b) has broader in sweep in Section 5 (a) because of these other incidental benefits that flow to a private litigant aside from the evidence question under 5 (a).

And it is consistent to make these other benefits available to him even though and I do not think that it must follow, even though or even should this Court hold or decide ultimately that a Federal Trade Commission proceeding does not come within the ambit of Section 5 (a).

We were discussing the Brunswick and the Pauper cases before the luncheon recess and it is our feeling that the Brunswick case does stand for the proposition that, a Federal Trade Commission proceeding is covered not by Section 5 (a) and Section 5 (b).

That after all was a holding of Judge Frank before the rehearing.

He had no trouble with the proposition that a Federal Trade Commission proceeding is, at that time the language, was a proceeding, or rather a suit in equity.

He was not, in fact that apparently from the opinion, the argument was not even advanced, Oh! Yes, it was and it’s pickup by the dissenting Judge Evans, but Judge Frank had no trouble with that, sir?

[Inaudible]

Albert G. Besser:

He dissented on the original Brunswick case.

[Inaudible]

Albert G. Besser:

That is Your Honor I just don’t know Mr. Justice Harlan.

He was on the Court which considered the Brunswick case and he did.

He spotlighted the issue.

He said that, he could not agree with the holding of the majority of the Court that a Federal Trade Commission proceeding was a suit in equity, as that phrase was used in Section 5 (a).

Now, it is true as we observed before that on rehearing, the Court reversed itself, it was not because it was concerned with the suit in equity language.

It reversed itself because it then realized that an order of the Federal Trade Commission was not “final” within the meaning of Section 5 (a) because at that stage of our legislative history a decree of a commission was not self-enforcing to what the Commission had to affirmatively go to the Court of Appeals for an enforcement decree.

Now, the only other case which has been cited to us throughout the judicial history of this case?

Is that District Court case, the Eastern District of New York, the Pauper case and I frankly find some amazement that this lower court case has been ballooned all out of proportion to the proposition for which stood.

Not because it’s a decision of a Federal District Court judge but because on analysis that Pauper case was dealing with a situation where an attempt was made by a private litigant to avail himself off an order by the Federal Trade Commission that that’s where we stop.

First of all, the judge in the Pauper case quite correctly pointed out that in no event could the Federal Trade Commission order the availed off as against this defendant and this private action because he wasn’t a party in the government proceedings.

So simply on basic corn book principles of res judicata, the result of the District Court of that case was correct.

And secondly and conclusively, it seems to me you read the Pauper case and you find that the order entered by the Federal Trade Commission was an order in a proceeding under the Federal Trade Commission Act, which has never been defined by Congress as an antitrust law and no order entered in any proceeding involving interpretation on a Federal Trade Commission Act can qualify as evidence prima facie admissible under Section 5 of the Clayton Act.

So limited to those two facts nobody can quarrel with the Pauper case.

Albert G. Besser:

Then the District Court went further and it is this final observation which has been ballooned and mushroomed throughout the briefing in this case, said that the District Court judge, he is inclined to doubt whether a Federal Trade Commission proceeding is “a suit in equity under Section 5 of Clayton Act.”

Well, he wasn’t inclined to doubt that, but I submit that the doubt expressed by the District Court judge in the Pauper case must yield to the lengthy description by Mr. Justice Douglas in the Mandel case, and the Pan American Airways against the United States case in which he — this Court through Mr. Justice Douglas dealt at lengthy with the powers of the Federal Trade Commission or administrative bodies to shape it’s decrees according to the facts before it.

These cases referred to in the Philadelphia banking case.

It seems to me squarely analogized, an administrative of body which is molding a decree to a Court in equity.

In fact, the very language of this Court it seems to me should dissipate completely the doubts and in appropriate case as to whether the Federal Trade Commission is a proceeding in equity for purposes of Section 5 because Mr. Justice Douglas in discussing the ability of a Federal Trade Commission to require divestiture, certainly, not a power expressly given to the commission by any enabling legislation, in Footnote 17 said, we have heretofore analogized the power of administrative agencies to fashion appropriate relief to the power of courts to fashion Sherman Act decree so, we are actuated.

The administrative agencies with the power of Courts and then further, the Court observed authority to mold administrative decrees is indeed like the authority of courts to frame injunctive decrees.

So, when you get right down to it there is very, very little difference between the actual power of a Federal Trade Commission proceeding or the Federal Trade Commission itself when proceeding under the antitrust law and the power of a Federal District Court in a proceeding initiated by the Department of Justice.

Indeed as Judge Wyzanski observed in the United Shoe Machinery case back in 1950 referred to at length by my adversary and us, he observed that there was very little difference between the treatment of a Court when sitting without a jury of antitrust problems, and antitrust cases, and the treatment which would be accorded to the same kind of case by the Federal Trade Commission.

Judge Wyzanski in the United Shoe Machinery case was wrestling with the question of whether to admit certain kinds of evidence which traditionally would fall within the Hearsay Rule and he conceded that maybe the result might be different where we had a jury but he said, so far as a District Court judge sitting in this kind of a case.

There should be no difference between my reception of evidence in such a capacity and the — undoubted acceptance of such evidence by the Federal Trade Commission in a proceeding for it based on the same substantive law.

So, we feel very strongly that whatever judicial authority does exist supports our proposition that the Federal Trade Commission at least in 1965 should be held to get — to come within the sweep of both Sections of — Section 5 and certainly Section B.

Mr. Justice Harlan and I think questioned counsel about the chronology of the events.

When was the finality act pass with respect to the Brunswick case, for example?

And that might trigger the question well when did happen, that the Federal Trade Commission came to be included within the Section 5?

Did it happen with the Finality Act as Judge McLaughlin it has been argued — says it happen or did it happen back in 1914?

Well I think our answer to that would be this.

I would frankly say of this Court that, if I were standing before this Court 40 years ago, it would be more difficult to argue that the Federal Trade Commission as then constituted could generate an order admissible under Section 5.

I don’t have that problem with Section B.

But over the years as exemplified by congressional action, the passage of the Administrative Procedure Act as exemplified by this Court’s treatment of administrative agencies and the broad scope of the decrees which they can render, we have evolved a concept of administrative agency which seems to me to make it no different from a Court sitting in equity.

So, I would say that the —

Hugo L. Black:

The Court of equity and then the Court of Federal Trade Commission.

Albert G. Besser:

Well, Your Honor that has been pointed out by my adversary as one big reason why we — at least for purposes of 5 (a), we should not hold the FTC to the included.

As I have indicated Judge Wyzanski has — at least has indicated and even with respect to the evidence question, we don’t have that distinction that sometimes we think we have.

The concepts of evidence in the traditional common word sense of a word, I feel are breaking down somewhat.

After all as the commentary has referred to in our brief suggests the ultimate objective of the Rules of Evidence is to find the facts.

Now, it is true that in an administrative proceeding, the Rules of Evidence are still much more flexible than a Court, but litigants before the Federal Trade Commission except for the evidence admissibility question is completely protected.

The Rules and procedure prescribed by the Federal Trade Commission limit the kind of evidence that maybe received to relevant evidence to non-prejudicial evidence.

He has accorded the right to take the deposition.

He has accorded the right to cross-examine.

Finally of course, the – if the Federal Trade Commission order is ultimately construed to come within Section 5 (a) of the Clayton Act, such an application or such a holding would mean nearly that it is prima facie admissible and not conclusively binding.

Albert G. Besser:

The Court in the Brunswick case was not concerned with the obvious constitutional implications and its holding.

A Federal Trade Commission which has now urged to Congress that Section 5 (a) be specifically amended in language that is referred to in our brief, to include Federal Trade Commission proceedings within Section 5 (a) apparently is not bothered by these constitutional problems, at least there is no suggestion of any concern along those lines.

And finally, —

Arthur J. Goldberg:

[Inaudible]

Albert G. Besser:

I think that’s true Mr. Justice Goldberg.

I — I think that Judge Wyzanski’s expression has been as close as we can find, indication that in an Equity case a federal judge will relax the traditional standards of evidence.

But –.

Arthur J. Goldberg:

[Inaudible]

Albert G. Besser:

That’s true Your Honor.

That’s true.

Arthur J. Goldberg:

[Inaudible]

Albert G. Besser:

Oh, no question about.

Arthur J. Goldberg:

[Inaudible]

Albert G. Besser:

That’s very true.

[Inaudible]

Albert G. Besser:

That’s very true.

That’s right and the evidence which he will received during the course of this hearing.

I think though that even with respect to Section 5 (a) would be a unwarranted to have the overall objective of the Act not considered in – just because of these admittedly different approaches by the fact finder Federal Trade Commission on a one hand and a Federal District Court on the other, incidentally with —

Did you say that the argument [Inaudible]

Albert G. Besser:

Well, that argument Mr. Justice Harlan, of course, is traditionally made I imagine in every case where a question of statutory interpretation is presented to the Court with respect to which there is no precise judicial precedents.

I do not agree with the though that our position in any way is opposed to congressional policy as enunciated in 1914 and further evolved over the years.

I would agree and nobody can again say the argument that it is not the function of the courts to change policy when it has been clearly enunciated.

Here, I think the most that can be said about congressional policy is that this precise question, namely the tolling question was never specifically considered by Congress.

Now, we feel our approach is consistent, but the overall policy of Congress which has been enunciated.

I would like very briefly to touch on an issue in this case which is of a critical importance to New Jersey Wood, namely the question, assuming that the Federal Trade Commission proceeding instituted under Section 7 of Clayton Act, it does toll the statute the limitation?

Does it toll as we contend our private rights of action under not only the Clayton Act but under the Sherman Act as well?

And here, once again, I feel that it is not necessary to go beyond the language of Section 5 (b) itself which says that the statute shall be tolled With respect to every matter complained of, shall be toll with respect to every private right of action the we have based in whole or in part on every matter complained of in the predecessor government proceeding.

In a Nisley case, Judge Murrah had this problem before him and there was an attempt by the defendant there to argue to the Court that the particular cause of action alleged by the private litigant was based on facts that was somewhat different non-theories of recovery that were somewhat different from the theories and facts advanced in the prior Department of Justice initiate a proceeding.

And then in the Twentieth Century case also cited in our brief and indeed in the Solicitor General’s brief, the same basic argument was made by a defendant.

And in each case, the Court held that all that is required is that there be in a words of a Twentieth Century case a substantial identity and then a words of a Nisley case, a substantial similarity between the facts alleged and the government proceeding and those alleged of by the private litigant.

Albert G. Besser:

But once again, we come back to the proposition that so far as the difficult private litigant is concerned he is not sophisticated in this area and when the Government initiates the proceeding under Section 7 with one objective of requiring Minnesota Mining to divest itself of IWI, all he knows is that the Government is proceeded and has as a subjective something that he would like to see accomplished.

Now, whether Sherman Act theories or Clayton Act theories are involved, we feel are not important.

The obvious result of a contention of Minnesota Mining in this case would be, once again, to require every litigant to immediately initiate a civil suit because he might find out that once he finally did get around to suing the precise causes of action upon which he bases his complaint, do not fall into the legal mode, the conceptualistic mode upon which the earlier government proceeding was based.

[Inaudible]

Albert G. Besser:

No, it does not, Your Honor.

The only way to feel the Sections I and 2 violations, of course, is when it alleges that what constitute — when it alleges unfair trade practice under Section 5 and there of course, it has been held by this Court many times that there is no reason why under the guides of Section 5, the Commission cannot proceed against practices which in themselves are a violative of the Sherman Act.

I would point out that —

Hugo L. Black:

But I think — I think, we’ve also held, have we not, that to proceed under Section 5, the proof necessary under Section 5, he will justify action differently according to whether the way they view the evidence?

Albert G. Besser:

I think Your Honor, Mr. Justice Black, so held in the —

Hugo L. Black:

Submitted any —

Albert G. Besser:

— since I believe you in which you pointed out that I think the reasoning is this that every action is — that every unfair trade practice under Section 5 need not necessarily be a violation under Section 1 and Section 2 of the Sherman Act.

Hugo L. Black:

It does raise some confusion, doesn’t it, quite confusion question about it in some cases?

Albert G. Besser:

I think if Your Honor please, that the bar has come to accept this distinction without to much difficulty.

Hugo L. Black:

I’m talking about it in applying it, treating is a — is a violation of Antitrust case?

Albert G. Besser:

Oh!

Well it has caused some difficulties so far as approach is concerned.

Hugo L. Black:

In this case as I understand it, that the direct allegation was that it violated —

Albert G. Besser:

Section 7.

Hugo L. Black:

Section 7 of the Clayton Act.

Albert G. Besser:

No question about it.

The Federal Trade Commission did not proceed in this case under Section 5 but a basic comparison of the allegations in the Federal Trade Commission complaint show that the basic facts alleged in that complaint are almost identical with the basic facts in our case.

Hugo L. Black:

[Inaudible]

Albert G. Besser:

Mr. Justice Black, I think, he’s just head on one of the most significant anomalies left by the decisions below which is that if the FTC proceeds under its own Act to readdress what is essentially a Sherman Act violation there can be no question of tolling are no question of admissibility at all.

Now, lastly I would like to leave with you one thought and that is simply that this policy, for which my adversary fights, he doesn’t need in this case.

He is trying to save a lawsuit that he forgot – his client forgot to bring in the time provided by Congress and the policy for which he fights is singularly ill designed and ill considered to be handled in this type of ad hoc administration.

If what they want are those leads to evidence, tolling is not the policy that will produce it.

Tolling will have only incidental impact in the whole policy area.

What they can get, they can get now by suing at the same time that the Trade Commission proceeding is going on.

As is the case in the Highland situation where that trade proceeding is still pending. Secondly, we have the problems inherent in administrative proceedings and confidentiality of material’s furnished to government agencies that are prosecuting antitrust violation.

There is where the policy should be attacked if it is to become a policy.