United States v. Diebold, Inc.

PETITIONER: United States
RESPONDENT: Diebold, Inc.
LOCATION: Cleveland, Ohio

DOCKET NO.: 286
DECIDED BY: Warren Court (1962)
LOWER COURT:

CITATION: 369 US 654 (1962)
ARGUED: Apr 23, 1962
DECIDED: May 14, 1962

Facts of the case

Question

Media for United States v. Diebold, Inc.

Audio Transcription for Oral Argument - April 23, 1962 in United States v. Diebold, Inc.

Earl Warren:

Number 286, United States, Appellant, versus Diebold, Incorporated.

Mr. Friedman.

Daniel M. Friedman:

Mr. Chief Justice, may it please the Court.

This case hereon appealed to the District Court for the Southern District of Ohio is a government civil antitrust case under Section 7 of the Clayton Act.

The compliant charged of the acquisition of the appellee Diebold of all of the assets have a firm called the Herring-Hall-Marvin Safe Company was in violation of Section 7 of the Clayton Act because the effect to the acquisition maybe substantially to lessen competition or to tend toward a monopoly in the business of manufacturing and selling bank vault equipment and related products.

The question on this appeal is the propriety of the action of the District Court in granting the appellee's motion for summary judgment and dismissing this complaint without a trial on the merits on the ground that at the time of the acquisition of the company by Diebold, the acquired company Herring-Hall-Marvin was a failing company.

And hence that under the doctrine enunciated by this Court in the International Shoe case in 280 United States such an acquisition in not subject to the probations of Section 7 of the Clayton Act.

And just by way of brief introduction, the decision of this Court in the International Shoe case enunciated the doctrine which we have set forth at page 21 of our brief.

That were a corporation is in failing circumstances with resources so depleted and the prospect of rehabilitation so remote that it face to the grave probability of a business failure with the resulting loss to its stockholders and injury to the communities were its plants were operated, the purchase of its capital stock by a competitor there being no other perspective purchaser.

Now, with the purpose to lessen competition but to facilitate the accumulated business of the purchaser and with the effect of mitigating its seriously injurious consequences otherwise probable is not in contemplation of law prejudicial to the public and does not substantially lessen competition or restrain commerce within the intent of the Clayton Act.

I think it's important at the outset to emphasize just what this failing company exception is.

It's put in terms of the failing company defense to a Section 7 case.

But what it amounts to basically is this, that there maybe circumstances where because of the condition of the company, it's acquisition by a competitor maybe lawful under Section 7 of the Clayton Act without regard to its effect upon competition.

The theory as we understand it is, that if the company is failing in the sense that without the acquisition of what have gone out of business, it would have ceased to be a competitive factor anyhow.

And therefore, the theory seems to be that in those circumstances, the acquisition by a competitor will not have be condemn adverse effect on competition.

Our position on this appeal is that the facts before the District Court affirmatively showed that this was not a failing company contrary to the District Court's conclusion and that in any event, sufficient factual issues were raised to preclude the grant of summary judgment against the Government holding that the failing company defense had been established.

John M. Harlan II:

(Inaudible) summary judgment.

Daniel M. Friedman:

Oh, that's correct.

Whereas -- were say -- we say first that on this record, the District Court should have held that the failing company defense was not applicable.

But in any event, we don't believe that on this record, the Court could've granted summary judgment in favor of the appellee.

Potter Stewart:

Well, your first point is, the Court should have been the summary judgment in your favor, is that right?

Daniel M. Friedman:

Well, not summary -- no there was only a motion for summary judgment in favor of the appellee.

We have had no trial on the merits in this case.

Potter Stewart:

Well, I don't quite understand your first point.

Daniel M. Friedman:

Well, that -- that on the showing made, the District Court should have rejected the failing company defense and going to a trial of the merits of this case.

That is to determine the effect on constitution.

Potter Stewart:

Wasn't that just one point?

Daniel M. Friedman:

Well, we put it -- we put it in two steps, we think that this record affirmatively we showed there was no failing company defense.

Potter Stewart:

But are you asking us here to render a summary judgment in your favor?

Daniel M. Friedman:

Oh no.