United States v. Grinnell Corporation

PETITIONER:United States
RESPONDENT:Grinnell Corporation
LOCATION:Duluth Harbor Basin

DOCKET NO.: 73
DECIDED BY: Warren Court (1965-1967)
LOWER COURT:

CITATION: 384 US 563 (1966)
ARGUED: Mar 28, 1966 / Mar 29, 1966
DECIDED: Jun 13, 1966

Facts of the case

Question

  • Oral Argument – March 28, 1966
  • Audio Transcription for Oral Argument – March 28, 1966 in United States v. Grinnell Corporation

    Audio Transcription for Oral Argument – March 29, 1966 in United States v. Grinnell Corporation

    Earl Warren:

    Appellant, versus Grinnell Corporation et al.

    Daniel M. Friedman:

    Mr. Chief Justice, and may it please the Court.

    When the Court rose at the recess yesterday, I had completed my discussion of the relevant market.

    Now, I’d like to turn to showing that the District Court correctly held defendants have monopolized that market.

    The offense of monopolization under Section 2 of the Sherman Act involves two elements.

    The first is the existence of the monopoly power and the second is the conscience or willful acquisition or maintenance of that power.

    And we think the record in this case shows that defendants possessed both of those elements.

    The monopoly power has been described as the power to fix prices or to exclude competition.

    Now when — in this case, when Grinnell acquired an 87% interest in these companies by acquiring — controlling interest of them over four-year period, it put together a combination, in one hand, of the overwhelming share of the market.

    And this kind of a share of the market under the control of one person is ordinarily enough, we think, to show the existence of monopoly power.

    I’d like to refer this Court to a passage of the opinion of Judge Learned Hand in the Alcoa case which this Court‘s specifically approved in the subsequent American Tobacco decision.

    There, Judge Hand stated, “We may start therefore with the premise that to have combined 90% of the producers of ingot would have been to “monopolize” the ingot market and so far as concerns the public interest, it can make no difference whether an existing competition is put an end to or whether prospective competition is prevented.”

    Now in the Cellophane case, this Court assumed that if Cellophane were the relevant market that du Pont’s control of 75% of that market would be enough to give du Pont monopoly power.

    In this case, the share of the market 87% is very close to the 90% that Alcoa had.

    And in addition here to the just the percentages themselves, we have other — in the issue of monopoly power, the existence of substantial price discriminations, and the further fact that within this market, after the three companies which Grinnell acquired, there’s no one else that has anywhere near this share.

    The two largest companies after that have roughly 1.5% and then it goes down very rapidly.

    Now, the combination that Grinnell put together in this case not only acquired this large share of the market but it further prevented the resumption of competition among the defendant alarm companies that was a — to be anticipated when these old restrictive agreements were about to expire.

    Shortly before the agreements were due to expire in the late 1940s, Grinnell and ADT had a series of discussions as to what the future relationships of the company should be.

    Under the old agreement, Grinnell was supplying these devices in return for 25% share of the revenues generated by the services for which the devices were provided.

    And Grinnell indicated it would like to continue this arrangement.

    But ADT’s counsel advised that in its view, this arrangement by which Grinnell had supplied the devices was an illegal exclusive dealing agreement that violated the Sherman Act.

    And during the course of these discussions between Grinnell and ADT, Mr. Fleming, the president of Grinnell stated as follows, and this is at page 1433 of the record.

    Mr. Fleming stated that Grinnell — that he did not feel that Grinnell would be prepared to go completely out of the supervisory business in 1954 even if no agreement were reached for the ADT company.

    As we very definitely had in mind in such contingency, and we’re preparing now to go into the central station business generally, including both supervisory, burglary etcetera service, if this became necessary, although, we would still much prefer to renew our arrangements with the ADT on a fair basis.

    Now at the trial, Mr. Fleming testified that there were more than — there’s more than one reason why they acquired Holmes.

    He stated as Holmes’ counsel has advised the court that it was acquired as an investment.

    He also stated that they had another reason for acquiring Holmes and this is at 676 of the record which was — so that we would know something about or have someone in the organization who knew something about the burglar alarm business, so we could compete with ADT.

    And he also testified at record 688 that after Grinnell had acquired both AFA and Holmes, and before it acquired ADT, the company considered whether we would merge Holmes and AFA, whether we would be in a better position to compete with ADT.

    So this record we think shows that prior to the time that Grinnell had acquired ADT, it was seriously considering going in to the central station business.

    Now, the effect of its acquiring ADT was to eliminate any possibility of this competition because it had now combined in one source these different companies which were potential competitors.

    Daniel M. Friedman:

    And thus in effect, the result of this acquisition and combination was to continue the very restrictive agreements that had been going on for almost half a century.

    And in the passage from Alcoa that I just referred to, Judge Hand pointed out that the combination is bad if it restricts not only actual existing competitions, but also potential competition.

    Now, the second element of illegal monopolization, the conscious or willful acquisition and maintenance of that power is also we think clearly shown by this record.

    I have referred at some length yesterday to the various restrictive and exclusionary practices which ADT engaged in.

    And it seems to us that these practices clearly show that in this case, ADT did not have the monopoly power thrust upon it, and that Grinnell, certainly, when it acquired these companies and combined them, it didn’t have the power thrust upon it.

    It went out and acquired these companies and they have this combination.

    Now, it’s true that there’s nothing in this record to show that a — that Grinnell in any way actively interfered in the management of the subsidiaries, but it had a clear control over these companies.

    It had anywhere from 80 to a 100%.

    It nominated the boards of directors, it controlled the boards of directors.

    Mr. Fleming, the president of Grinnell was also the president of ADT and we think that is clearly enough to prevent — that Grinnell is responsible for the continuation of this monopolization.

    And to sum it up, I’d like to refer to the statement at page 782 of the record.

    This is one — a passage from the opinion — I’m sorry, 762 of the record from the opinion of the District Court, in which the District Court said that describing the share of the market of these companies, that this share of the market rests not on the scale, efficiency, and fairness side of defendants, not even on their neutrally normal business matters, but on violations of per se rules governing restraints of trade and on acquisitions indicating that growth was a response to external grasp, not to internal grip.

    So that we think that on this record and on this holding by the District Court, the District — that the conclusion is that Grinnell and the defendants acquired and held this share of the market as the result of practices which make the possession of this power illegal.

    And we therefore find it unnecessary to reach the District Court’s suggestion and the statements that illegal monopolization maybe presumed merely from showing an overwhelming percentage of the market without regard to any other factors.

    This is — the court said this is a couple of questions, but we think this record and this indication by the court to which I have referred, shows that without reaching that, this judgment maybe — the finding of violation, maybe sustained.

    So that as we see the case on this aspect of it, this we think comes within the many decisions of this Court which have recognized that this percentage of the market obtained and held under these circumstances is enough to show illegal monopolization.

    Now — I would now like to turn to the next point in the case which is the question of the relief.

    On this aspect of the case, this is the subject of the Government’s appeal in number 73.

    We contend that the relief is inadequate in significant respects, contrary-wise the defendants claimed the relief is excessive in some respect.

    I’d like to give a little —

    Potter Stewart:

    Now, do you agree with that too, don’t you?

    Daniel M. Friedman:

    We do, we do.

    That’s right Mr. Justice, with respect to two items of the relief.

    Potter Stewart:

    Yes.

    Daniel M. Friedman:

    We’re not defending the ban on the employment of Mr. Fleming and we agree that the general injunction in terms of the statute should be sent back for modification in particular (Voice Overlap) —

    Potter Stewart:

    Not on the matter of not defending.

    And you think they’re both wrong, don’t you?

    Daniel M. Friedman:

    That’s correct.

    We —

    William J. Brennan, Jr.:

    (Inaudible)

    Daniel M. Friedman:

    I suppose so, yes.

    I might say Mr. Justice that neither of these two provisions which the judge included where requested by the Government below, the judge quoted this on his own.

    Now, I’d like to give a little of the background as the circumstances under which the relief was given in this case because we think this is significant.

    In the pretrial proceeding which I will discuss in more detail when I come to the discussion of a fair trial point, the judge suggested that each side should submit a draft that what relief it believed would be appropriate in the event that the Government would have prevail.

    And the Government submitted a proposed brief on the merits of the case and also a proposed draft of an opinion.

    And the defendants then submitted their suggestions.

    Now, these suggestions although phrased in the form of a consent judgment which seems to us are clearly not a consent judgment, the defendant’s document, their brief on relief at page 162 begins as follows: Pursuant to this Court’s order of December 18th, 1963, this brief presents Grinnell’s views on the relief which would be appropriate if plaintiff were to prevail on the question of liability.

    This — this isn’t these were not just discussions between the parties as to the basis on which the case should be settled.

    These were formal suggestions filed in the court in response to the court’s requests which in turn was in response to the suggestion of the defendants.

    Now in these statements that defendants brought in response to the Government’s proposal, they in substance agreed to several of the Government’s proposals which are the subject of the Government’s appeal.

    They differed as to the extent of these provisions in the form that they basically accepted our theory, and in addition two of the items in which we’re appealing, they accepted the identical language used by the Government.

    The District Court without discussing any of these proposals added a judgment which has been indicated by Mr. Sonnett, generally enjoined them from violating Act directed to Grinnell to dispose of its stock in the three alarm companies and prohibited any of these companies for making any further acquisitions.

    Now, we think this relief is inadequate and as we have set forth in our brief in at least four significant respects.

    The first one which we think is the most serious is the failure in any way to do anything to dissipate the market power of ADT.

    ADT has 73% of the market.

    This share obviously is the keystone on which the entire combinations market power depends.

    This is the foundation of this power.

    And merely to break up the combination, merely to direct Grinnell to dispose of its holdings in these three alarm companies without in any way doing anything to deal with the power of ADT itself, it’s not enough to restore competition in this business, because ADT’s share of the market is so large in itself is monopoly power.

    It gives ADT the very kind of power which Section 2 of the Sherman Act is directed against.

    And indeed the defendants themselves in the District Court recognized this fact because at page 179 of the record, in their brief discussing the Government’s proposal, they said in the third paragraph, “Moreover, defendants agree with the Government that if it were to prevail, some further divestiture of ADT would be appropriate i.e. we agree that in certain cities which can support two or more central stations, but where ADT now provides the only central station service, an effort should be made to establish a healthy competitor.”

    Now of course we realized that these statements are not binding on the court but we do point out that the defendants themselves have recognized the basic reason to most of our proposals.

    Now, there was a short disagreement between the Government and defendants in the District Court as to how extensive this divestiture should be.

    We asked the divestiture in 46 cities, the defendants suggested divestiture in 13 cities would be opposed.

    We are not asking this Court to tend to work out such details that is obviously a matter for the District Court.

    But we do urge this Court to send it back to the District Court to indicate that something should be done to break up the power of ADT.

    Now, the other provisions —

    Are you suggesting that divestiture — divestiture should be ordered up here?

    Daniel M. Friedman:

    What we are — we are suggesting Mr. Justice, yes, that this Court should direct the District Court to order divestiture of ADT on such terms as the District Court deems appropriate.

    In other words, we are saying that in the circumstances of this case, the failure of the District Court to require any divestiture of ADT was an error.

    We think that relief was inadequate to deal with the violation shown by this record.

    Byron R. White:

    Why shouldn’t Grinnell be permitted to retain one of the — at least one of these companies, even ADT if it — if it were — if it were paired down like you think it ought to be paired down?

    Daniel M. Friedman:

    Well, I think Mr. Justice for one reason, that’s the basic vice — the basic vice here, the initial vise is the combination in the hands of Grinnell of all these three companies.

    It seems appropriate to us the best combination should be broken up.

    This is traditionally —

    Byron R. White:

    Because the original matter — as the original matter, you wouldn’t say that, that if Grinnell owned the company that had 30% of the market or 40% of the market, that it was violating Section 1 or 2 of the Sherman Act?

    Daniel M. Friedman:

    Not the mere acquisition there.

    What we have here is a combination of companies.

    Byron R. White:

    I — yeah, but I’m just asking that.

    What if all that was left was Grinnell owning one company?

    Daniel M. Friedman:

    Well, if — if all of it — if we started initially with Grinnell only one company —

    Byron R. White:

    Yes.

    Daniel M. Friedman:

    — that would not be a violation.

    Byron R. White:

    Now, how about now?

    Daniel M. Friedman:

    What I — we think now, this appropriate relief does require the breaking up of this —

    Byron R. White:

    I know you did, but why?

    Daniel M. Friedman:

    Well, because the very evil here is the combination, and the appropriate thing it seems to us is to break up the combinations —

    Byron R. White:

    Yeah, but the evil was — if the evil was a combination which was violating, that you claim, Section 1 and 2, and no one would suggest that Grinnell owning — a company that owns — that had 30% of the market that was a combination of this kind of trade, wouldn’t it?

    It wouldn’t as an original matter —

    Daniel M. Friedman:

    No.

    Byron R. White:

    But why would you now?

    Daniel M. Friedman:

    Well, I think that the relief here can go beyond the violation that was — in order words, the fact that this — that Grinnell’s retention of one company would not itself be a violation the antitrust law.

    Byron R. White:

    Do you think Grinnell is the — is a major source of the growth of the combination, would you?

    Daniel M. Friedman:

    Well, Grinnell was a part — well Grinnell was the force that kept the combinations together.

    Byron R. White:

    You contend that Grinnell managed this combination since it acquired these companies?

    Daniel M. Friedman:

    Well, I think — I think it managed in the sense that it was responsible for it, that the thing continued —

    Byron R. White:

    But do you claimed that the — what’s his name, Mr. Fleming?Mr.

    Daniel M. Friedman:

    Fleming.

    Byron R. White:

    You claimed that Mr. Fleming actively participated in the operations of the subsidiary?

    Daniel M. Friedman:

    Oh, no.

    No.

    Daniel M. Friedman:

    We don’t claim that he actively —

    Byron R. White:

    You don’t claim he actively participated at all?

    Daniel M. Friedman:

    He did not actively part —

    Byron R. White:

    He’s a member of the board, wasn’t he?

    Daniel M. Friedman:

    Yes, and I’m sorry perhaps I miss —

    Byron R. White:

    Well, do you reject the findings of the District Court in this regard then?

    Daniel M. Friedman:

    No.

    I — when I say actively participated, I may have misspoken myself, and I’m afraid, I did understate it.

    He did not actively — there’s nothing to show he actively participated in the sense that going down and interfering in a particular management — in making a particular management decision.

    But he participated in the sense that he was a man who was in control all of these companies.

    He was the president of the company.

    He sat on the boards of all these companies.

    Byron R. White:

    Well, you don’t claim he wasn’t aware of what was going on, do you?

    Daniel M. Friedman:

    Oh, no.

    No.

    We don’t — we do say — we do say that the responsibility of Grinnell here rest on the fact that it had control of these companies.

    We don’t — there’s nothing in this record to show for example that Grinnell overruled the management of a particular company.

    Byron R. White:

    Yes, but nobody suggested then the shareholder company — the controlling shareholder in a corporation is liable for the antitrust violations of the corporation in which he owns the controlling interest, just by reason of the fact he’s the controlling interest.

    Daniel M. Friedman:

    Generally, that is so, Mr. Justice.But where you have the situation in which the violation is the combination, the violation is the combination, then it seems to me the controlling shareholder who’s put the combination together is responsible for the combination —

    Byron R. White:

    Well, you must have bootstrapping yourself along by calling the same thing a combination.

    Now that you — under Section 1, you might get a different answer under Section 2 in that regard.

    I think, I suppose you’re claiming monopoly in his power, that the controlling stockholder has the power to control the monopolizing empire.

    Is that the basis you go on or not?

    Daniel M. Friedman:

    Well, I think it’s a combination of factors.

    It is that, that they have control of the companies and that by exercising this control, they kept in existence the previous restrictive practice.

    Byron R. White:

    Now what if the — let’s assume that I own the controlling interest in a corporation, I’m not on the Board of Directors, I’m not an officer of the company but I had control interest in the stockholding?

    That company goes — enters into a price fixing conspiracy with another company in which I have no interest whatsoever.

    Now, do you think I could be — I could be — I have the power to control?

    Daniel M. Friedman:

    No, I —

    Byron R. White:

    I’m certainly not liable for the price fixing, am I?

    Daniel M. Friedman:

    No.

    No, I don’t think so Mr. Justice.

    But this is it seems to me is little different kind of case because here what you have is the controlling —

    Byron R. White:

    I know.

    What if I own the controlling interest in both companies and they have entered into a price fixing arrangement?

    Daniel M. Friedman:

    Well, that —

    Byron R. White:

    Is that a part of the combination you’re just trying to say?

    Daniel M. Friedman:

    I — I think that’s a harder case, Mr. Justice.

    Byron R. White:

    Well, I know it is.

    That’s the case you’ve got.

    That’s the trouble.

    Daniel M. Friedman:

    I think, Mr. Justice, I’m not sure that the mere — you’re merely participating — being the controlling stockholder of two companies which are engaged in restraint of trade, but if the consequence — if the consequence of the restraint of trade —

    Byron R. White:

    Yes.

    Daniel M. Friedman:

    — so that these two companies together had monopolization — monopoly —

    Byron R. White:

    So you do rest on Section 2, not on 1?

    Daniel M. Friedman:

    Yes.

    We rest on both I think.

    I think we —

    Byron R. White:

    But not only 1, you just say?

    Daniel M. Friedman:

    Not on 1 standing alone in — well, let me comeback in that.

    Insofar as the question of the relief against Grinnell, insofar as the — it seems to us that when we’re dealing with the combination in the hands of Grinnell, we do have evidence indicating that prior to the time that Grinnell acquired these companies, it looked as though there would be some competition between them, and when Grinnell acquired these companies, that eliminated the competition.

    Now, to that extent — to that extent, the combination in the hands of Grinnell, it seems to us was a — the illegal restraint under Section 1.

    Now, if that — in that aspect of the case, it would seem to me, the appropriate relief would be to break up the combination, to tell Grinnell to get rid of all these companies.

    Now in addition — in addition to eliminating this potential —

    Byron R. White:

    But primarily you’re saying — part of this violation is Grinnell’s acquisition, in and of itself, rather than what it did after the acquisition?

    Daniel M. Friedman:

    That’s right.

    I think there are two elements for this, there are two elements.

    It’s Grinnell’s acquisition —

    Byron R. White:

    And so you don’t — you don’t reject the District Court’s finding just to the extent to which Grinnell through its president or whatever the chief executive officer is called, in its membership on the board, you don’t reject the findings that Grinnell enacted by virtue of the actions that Mr. Fleming continued to actively participate in whatever evil things you accuse, this combination of?

    Daniel M. Friedman:

    No.

    Daniel M. Friedman:

    No, we don’t.

    We do not reject that finding.

    Byron R. White:

    But you adopt it (Voice Overlap).

    Daniel M. Friedman:

    Yes.

    We do — we do say that Grinnell has participated to the extent that it is controlling these companies, that it has continued — has continued the very thing that these companies were doing prior to the time.

    Byron R. White:

    But what would you say if I — if a corporation had a owned — had a wholly owned subsidiary and the three of the parent’s officers where a controlling — had a controlling membership on the board of the sub, and the subsidiary engaged in a price fixing conspiracy with some other companies.

    Would the parent be liable because its officers on the board of the sub were participating in the enterprise?

    Let’s assume the board of the sub back — knew and approved the —

    Daniel M. Friedman:

    The board of the subsidiary knew of these things?

    Byron R. White:

    Oh, yes, and approved it.

    Daniel M. Friedman:

    Yes, I would think the parent would be liable if it —

    Byron R. White:

    Why?

    Daniel M. Friedman:

    Because its officers, its officers were aware and actively participated in this violation by the subsidiary.

    I think it’s fair to assume that when they sat on the Board of Directors of the subsidiary, they’re acting on —

    Byron R. White:

    Well, isn’t that the case here?

    I mean, isn’t Grinnell have a controlling — or its officers, at least in one of the companies, weren’t they — didn’t they form a majority of the —

    Daniel M. Friedman:

    Yes and at least the record — and at least two of them.

    They had four of the seven Directors of ADT and they had I think three or five of Holmes.

    So I think — I think that that is the basis on which we say basically that Grinnell is responsible for what these subsidiaries did.

    On two other minor aspects of the relief, I’ll just touch in passing, I’ve dealt with them pretty thoroughly in our brief which is the Government’s request in visitation rights which this Court has held in the Gibson case in this kind of situation it is entitled to.

    The Government also asked that the defendants be required to sell their devices on nondiscriminatory terms.

    These two provisions, the defendants accepted in their proposed admission in the term — in the very language we had proposed —

    Potter Stewart:

    Are there any patents, valid live patents that —

    Daniel M. Friedman:

    I —

    Potter Stewart:

    — involved here?

    Daniel M. Friedman:

    — don’t know Mr. Justice, the original agreements back in 1960 —

    Potter Stewart:

    Those were based on patents.

    Daniel M. Friedman:

    Those were based on patents.

    The record, I don’t think shows what — well, I’m sorry.

    There is a schedule in the record giving a long list of the current patents.

    Daniel M. Friedman:

    I just don’t know whether there are any patents presently involved in this or not.

    I can tell that there are no significant patents left at this time.

    And finally, one other provision of relief is a provision giving the customers some rights to terminate these contracts before the end of five years and to give them the right to purchase them as they see fit.

    Again, the defendants agreed with us that some form of relief along these lines is appropriate, they did not agree with us in the details.

    And here again, we think this is a matter to be left to the District Court to work out.

    And now in my remaining time, I’d like to discuss the question which Mr. Sonnett devoted most of his time which is the charge of biased and prejudiced and that the defendants were denied a fair trial.

    Here again, I think a somewhat fuller statement of the facts is necessary.

    About a month after the answers in this case were filed, in the summer of 1951, the parties entered into an exhaustive deposition procedure.

    They took more than a hundred different depositions throughout the country and these depositions were completed in September 1963.

    And after the depositions were completed, the court asked counsel when they would be ready to try the case.

    And both counsels replied that they would not be ready before January of 1964.

    Following this, there were some consent decree negotiations between the parties.

    But parties were unable to agree upon a proposed judgment and a prehearing conference was then held at December 18th, 1963.

    And at this conference, counsel to defendants suggested that since discovery had been completed, the next appropriate step rather than ruling on the admissibility of evidence would be to hold a prehearing on relief.

    And the court, as I have then indicated, suggested that each could be very helpful if each side would have filed a brief setting forth — first, their views as to the merits of the case, that is the Government would briefly state what it believed the record showed as to liability and then the appropriate form of relief.

    Now after suggesting this procedure, the court pointed out at page 129, he thought of course, in such a situation, it is quite true that the defendants are running some risks.

    This caused the court necessarily in talking about such matters, will not know whether the Government’s contention in interpreting the fact is correct, or the defendants’ interpretation of the facts is correct, or some middle cause is correct.

    And presumably, if the judge makes any suggestion, they’ll have to make it on the basis of a strongest possible showing of the Government.

    And — well, he then stated two pages later, 131, he understood what was being suggested was that the defendants were trying to ascertain what kind of relief, “I would be likely to allow if the Government’s case stood virtually uncontradicted.”

    The parties filed these briefs and Government studied its proposals as to relief, and also filed a 40 or 50-page brief which is not in the printed record indicating its version of the facts and why it caused the defendants to be liable.

    At the next hearing, after a preliminary matter had been disposed of, the Court asked if there was anything left other than setting the case for trial, and when defense counsel said, “Well, we’ve felt we’re going to have a prehearing on relief,” and he said, “If Your Honor would indicate the relief that might be appropriate in this case, that would be helpful, so as to come to a better understanding.”

    The court responded as follows: “I assure you that you would not be helped by anything I would say.

    You would better — do better to get together with the Government than run risk of what I would say from what I have seen.”

    And then he went on and said — the judge said, “I have read enough to know that if I have to decide for the Government — if I have to decide for the Government from what I have seen, you will not be in a position at this stage to agree to it.”

    In other words, we think all that the court was telling the defendants here was, they had asked them to indicate what he thought would be appropriate relief.

    He had seen the defendants’ proposals.

    He had seen what the Government has asked for, asking for and as he indicated to them.

    If he had decided the case now on the basis of what the Government had said — stated the facts were and assuming those facts, he, the defendants, would not be able to agree to the kind of relief he would deem appropriate in those circumstances.

    And in view of this disposition, he decided that there was nothing left in this case to do than to set the case for trial which he did.

    Now, at the next hearing to which reference has been made six days later, June 3rd, when the defendants had asked the Court to put off the hearing two months and also to define with more particularity the issues as to relief, he once again, it seems to us, made the identical point.

    Daniel M. Friedman:

    He said at page 281 to 282 — that he said, he had looked at these documents as they had requested and, “I have told you that, forced by you to look, my views are more extreme than those of the Government.”

    Again, all he was suggesting was that if he had to decide the case on the basis of the facts which he had seen during this pretrial proceeding, his views as to relief are more extreme than the Government.

    He would give the defendants even greater relief — give the Government even greater relief than the Government had sought.

    Now, it was after this statement that the defendants filed the motion to disqualify Judge Wyzanski for biased and prejudiced, which Chief Judge Woodbury, we think, correctly objected.

    Neither of the file — of the two basis of this motion, the statement that Judge Wyzanski made as to what his views were as to liability or relief or the court’s action of setting the case on 18 days for trial, constitutes personal bias and prejudice —

    Potter Stewart:

    What’s this business from which, Mr. Friedman, about the judge saying that he had been forced to do this, he’d been forced by the defendants to look at these things, and he gives — from the test of forcing him to do this, now, that that just was contrary to the fact, wasn’t it?

    Daniel M. Friedman:

    Well, he never indicated.

    He never indicated.

    I think the later passage where he said, “over my objections,” but we don’t know.

    He apparently, at least at the time he proposed this, found it suitable.

    I think he, perhaps, is under misapprehension as to what had happened personally.

    I’m sorry, as to what had happened previously.

    I don’t think they forced him to, but the point, I think, he was making was that they were the ones who had requested him to look at this material.

    And therefore, they should not now be complaining that having looked at it, he concluded that there was no — he saw no basis on which anything he could say would leave the court — leave the parties to settle it.

    Now under the statutes, the — to be disqualified, bias and prejudice has to be personal.

    That is it has to be based on something other than what the judge learned in the course of the case.

    Now here, all the basis of this claim of personal bias and prejudice was the information that the judge had learned by studying these pretrial briefs.

    In other words, it was information that came to the judge in the course of his study of the case.

    And that is not enough to be personal bias and prejudice under the statute.

    In addition, he didn’t indicate we think very clearly any prejudgment of the case, the passage in which they saw and he said, “If I had to decide for the Government,” he made it very clear that, if he were going to decide for the Government on the basis of the submission of the Government had made, he thought it was a very strong case.

    Now, throughout this case, in numerous places, the judge made it very clear that he had not decided the case, that he still maintained an open mind.

    Immediately after the — at the close of the testimony at page 697 of the record, just after the end of the trial, the judge said as follows, this is in the middle of the page, “I notify you in advance and as firmly and clearly as possible that I intend, if I should find, and I underlined the words “if I should find” and underlined it four times in favor of the Government,” and then he went on to say he shall deal in his final decision not only with the questions of liability but also the questions of relief.

    On that same page again, he repeated the thought, “Should I deal with the problems of relief, if I should find the violation, if I file — filed forms of decree, framed in the decree.”

    And again, at the post trial hearing after the evidence was all in — post trial briefs had been filed, there was another hearing, the judge again made it very clear and stated explicitly that he had not decided the case.

    At page 729 of the record, after there had been some colloquy between the court and defense counsel, the court said, “I don’t want by any of my statements to imply that I have decided that the Government is entitled to win this case,” to which defense counsel respondent, “I appreciate that.”

    And then again, two paragraphs down, the court said, “In the event that I should decide adversely to the defendants,” and on the next page he repeated this thing, “You don’t need not worry that I’m going to think about any problem with relief unless and until it becomes necessary to do so.”

    Now, we also don’t see any basis for the claim of bias and prejudice in the fact that the court set this case for trial on a rather short notice, on 18 days.

    In the circumstances, it was not unreasonable we think, the complaint in this case had been filed more than three years before, the extensive discovery had been completed more than eight months before, the Government had served upon the defendants a 200-page trial brief which set forth its theory of the case.

    It also had filed with the defendant various documents identifying particular evidence that it was going to rely on, and tying in particular documents to particular claims.

    When the court set the case for trial in May, it was approximately eight months after both sides had indicated to the court in effect that they would be ready for trial sometime after the preceding January, that’s been the past September, and the most we think that the court’s action here in setting this case for trial in 18 days indicates, the most is that he perhaps was misinformed as to the extent of the defendant’s preparation, whether they would be able to adequately present their case.

    Daniel M. Friedman:

    There’s certainly nothing here to suggest bias and prejudice.

    Now, going to trial on this notice, undoubtedly put a great deal of pressure on the defendants.

    But the defendants make no showing or no claim here that they were, in anyway, prejudiced by being forced to go to trial in this area.

    They point in no evidence that they were unable to present because of the lack of preparation.

    And on the contrary, they presented an exhaustive case in this thing.It occupies almost one-half of the printed record.

    They’ve called 31 witnesses —

    Potter Stewart:

    Oh, because your case only took an hour?

    Daniel M. Friedman:

    Well, our case only took an hour Mr. Justice, but our case occupies roughly 3500 pages of this record, a great deal was presented in an hour.

    And let me just refer briefly to this — putting the case in an hour.

    This is not the first time this technique has been utilized in antitrust cases.

    Judge Wyzanski himself followed a similar technique in a case called United States v. Minnesota Mining, some years before where a great many documents were introduced in both at the beginning of the Government’s case.

    They have another case, United States v. American Smelting & Refining Company, these are two District Court cases.

    As this Court knows these antirust cases, our guess sometimes get out of control, the United Shoe Machinery case, there’s something like 29,000 pages of documents at the trial, it took 110 days.

    And in this case, Judge Wyzanski stressed to the parties the importance of trying to reduce this mass material into some — to some manageable proportions and that is what was done here.

    In this case, the Government reduced its case to 307 documents, excerpts from 30 to 40 depositions, and these were, with no doubt, we started in many more documents.

    We’ve reduced them.

    The defendants knew of all the documents that we had, and when it came time to offer this material in evidence, the judge just said that he was not going to pass upon each individual document before it came in.

    Potter Stewart:

    But they never did rule on the defendant’s exceptions to that — to the introduction of that evidence, did he?

    Daniel M. Friedman:

    He did not explicitly, no.

    Potter Stewart:

    Do you know of any other case where a district judge in the trial of a — to any antitrust case, who is just refraining from ruling on the defendant’s exceptions to introduction of evidence?

    Daniel M. Friedman:

    Well, I don’t know specifically Mr. Justice but it’s not a — an uncommon practice, I understand, the District Courts to reserved ruling on it —

    Potter Stewart:

    Well, yes but that’s one thing.

    He reserved but then he ruled on it.

    He never did rule on it, did he?

    Daniel M. Friedman:

    He did not rule on them and then — and then, in effect — in effect, Mr. Justice, I think he did — well, he did rule on them, he admitted them all in evidence, he admitted them all in evidence.

    And I take to whatever extent he — these documents are relevant, he has deemed to have overruled the objections and as I — and we’ve tried —

    Potter Stewart:

    But we don’t know until now — what it — what he held was admissible and what he held was not admissible.

    Daniel M. Friedman:

    But —

    Potter Stewart:

    And it is — it is true isn’t it, that in the state of the record after the — in the state of the case, in the posture of the case, after the Government, in one hour, have put in some 3500 pages of the evidence, much of which has been objected too by the defendants.

    And the Court has said the — to take care of those objections and exceptions later, the defendant at that time, didn’t know what kind of a case they have to meet because they didn’t know what evidence was in the record against them.

    Potter Stewart:

    And they don’t know until this day, do they?

    Daniel M. Friedman:

    Well, I think we have to as — we have to assume all of the material which the Government introduced is in the record.

    Now, we think that none of this material as we’ve attempted to study the case, we have not attempted to rely on any material that we think is objectionable.

    Potter Stewart:

    Well, really it’s not for you to decide, that is for the judge sitting in a courtroom to decide whether evidence is admissible or not, isn’t it?

    Daniel M. Friedman:

    That’s correct.

    Potter Stewart:

    And this judge never did decide that.

    Daniel M. Friedman:

    Well, I think by implication he decided when he wrote his findings and opinions, in other words, he did not go down the words and say, “Now having decided the case, I rule as follows: This Government exhibit is inadmissible.

    This particular one is inside.”

    If I take what he did, what he said, these are all in, and he then relied on those that he deemed pertinent.

    Potter Stewart:

    Well, that’s what you take it and that — but that really isn’t the way a trial supposed to be run, is it?

    Daniel M. Friedman:

    Well, I think — I think Mr. Justice, when you’re dealing with these big antitrust cases that — as the judge said, it’s really much more meaningful to pass upon the relevance and materiality of all these documents in the light of all the facts —

    Potter Stewart:

    But he never did pass on it insofar as — insofar as we know.

    But you take it that he probably did, but you can’t find anywhere in the record any ruling by the judge on the many and various exceptions made by the defense to the introduction of evidence, can you?

    Daniel M. Friedman:

    No, there’s nothing specifically, no I fully agree with that but I —

    Byron R. White:

    But you say — do you say that he must assume that he ruled that they all were admissible?

    Daniel M. Friedman:

    They’re all admissible, yes.

    Hugo L. Black:

    He admitted all of them in evidence —

    Daniel M. Friedman:

    He admitted all of them in evidence, that’s right.

    Hugo L. Black:

    (Inaudible)

    Daniel M. Friedman:

    And then —

    Byron R. White:

    But he reserved.

    He reserved his ruling on objections, but he admitted them with — with this reservation?

    Daniel M. Friedman:

    Yes.

    He was — he considered all admitted, right at the outset.

    Hugo L. Black:

    Before the case was over, did defendant asked him to —

    Daniel M. Friedman:

    Pardon me sir?

    Hugo L. Black:

    Before the case was over, did the defendants speak out in you and say you have — do you admit them or not?

    Daniel M. Friedman:

    No.

    What the defendants did was they filed lengthy — lengthy documents giving their — rather generalized objections to each document.

    They said, this document is hearsay, this document is immaterial, this document —

    Hugo L. Black:

    That’s when they came in or when did they do that?

    Daniel M. Friedman:

    They filed the objections to the documents themselves at the outset right after we had introduced them.

    And it was very shortly after that, that they filed the objections to the deposition.

    I believe that’s correct.

    The depositions, I understand, the objections to the depositions were filed before trial and both of those listed objections are in the record in this case.

    Now, I’d like to just say and refer to one other thing in connection with this.

    The record in this case contains many statements by Judge Wyzanski, some of which is decided, has already referred to, and some other of which he may refer to in rebuttal.

    And then a rather colorful and unusual statements, Judge Wyzanski quite obviously has some very definite views on many matters.

    He has very strong beliefs as to the antitrust laws.

    He has also some strong views as to the decisions of this Court in the antitrust field.

    He also expresses these views in rather colorful and unusual terms of it.

    I think what he does basically is he frequently speaks out and says things from the bench that others judges might not say, that they might just think.

    Potter Stewart:

    Perhaps, it’s the whole point, isn’t it?

    Daniel M. Friedman:

    But Mr. Justice, that there is — my point is that the fact that he has said these things and spoken them, it does not indicate that he was biased and prejudiced, that he had prejudged the case.

    Potter Stewart:

    I guess we’ll say, “Oh, good old Charlie,” he just like that, is that it?

    Daniel M. Friedman:

    No.

    I think the thing is Mr. Justice that when he made these remarks, he was just indicating in his particular way his views as to the irrelevancy of a lot of the evidence that defense were presenting.

    They’ve offered a lot this evidence, he in effect had said to them — at one point he said, “I don’t think it’s relevant.”

    He says, “But, I’d like to put it in the kitchen sink.”

    He even said, “Perhaps, this Court will disagree with me.

    But as far as I’m concerned I don’t think this evidence is relevant and I tell you why,” and he spoke out very clearly.

    But I don’t think these statements whatever they may indicate — indicated that he was biased and prejudiced against the defendants, that he was planning, that he had prejudged the case, that he had decided how he was going to decide it.

    He kept repeatedly saying that he would — had not decided the case.

    He also indicated at one point that as far as what he called “primary facts,” the basic operative facts of what people do and what they said — he said he wanted, “Put all of that evidence” and the evidence that he thought was irrelevant, it was what he called secondary and third level evidence of economic conditions of —

    Byron R. White:

    You don’t — you don’t think he made up his mind or not, do you?

    Daniel M. Friedman:

    Well, we think — he made up his mind but we think, perhaps, he didn’t go far enough in some respect of the case.

    But we do think that his opinion does show that he had gone through the record.

    He admittedly made some errors in some respects.

    On the other hand, most of his findings we think are sound.

    They do reflect in awareness of the record —

    Byron R. White:

    What’s the — why do you suppose there weren’t any subsidiary finding on the power over price and competition?

    Daniel M. Friedman:

    Well, I think he’s —

    Byron R. White:

    Do you think it’s enough just to have the market share?

    Daniel M. Friedman:

    I think in this kind of a case, with the combination, that it acquired 87%, it is.

    And I think this is what — what he believed.

    And of course, he did refer to some of the price discriminations.

    I — it’s true he did not, in turns, speak of power over price or power to exclude competition.

    He did — he did not find contrary to what the defendant have said that they had no power over the price —

    Byron R. White:

    But he did find all these sort of framed competitions as he followed it around the edges and he did a (Voice Overlap) —

    Daniel M. Friedman:

    Around the edges.

    He —

    Byron R. White:

    — for section —

    Daniel M. Friedman:

    He —

    Byron R. White:

    — and why wouldn’t that — why wouldn’t that call for somewhat pointed findings on the power over — over the whole —

    Daniel M. Friedman:

    Well, he made a finding — the finding he made Mr. Justice was the defendant did not have unfettered power over price.

    And I take it all that he was saying was —

    Byron R. White:

    So what did he find, that they had fettered power over price?

    Daniel M. Friedman:

    They had sufficient power over price to give them monopoly power.

    There’s always substitute but there’s always, in this area, rarely —

    Byron R. White:

    They never found that they had monopoly power.

    Daniel M. Friedman:

    We had found that they had this share of the market, which is —

    Byron R. White:

    Well, I know but you said — I don’t try — that he had any power over price.

    Where’s that finding?

    Daniel M. Friedman:

    Well, we found that they have monopolized.

    We found that they had monopolized.

    Byron R. White:

    But where is that finding over — yes, but you don’t — you’re suppose to have — you’re suppose to find the power over price, then say, “Therefore, you’ve monopolized,” not that “You monopolized, therefore you have power over price.”

    Daniel M. Friedman:

    No.

    But I think what he found was that, in effect, by virtue of this share of the market, they have monopolized in this share of the market —

    Byron R. White:

    I know that.

    You’ve said that before, but how about the finding of the price?

    Byron R. White:

    Where is the finding on monopoly power?

    I mean, I thought the issue of the monopoly was power over price or over — or to exclude competitors?

    Daniel M. Friedman:

    That is.

    That is —

    Byron R. White:

    Rather than saying that, “I’d just say there’s a monopoly and therefore somebody must have this power.”

    Daniel M. Friedman:

    Well, Mr. Justice at page 762 of his opinion he says, “To succeed in a Section 2 case, plaintiff must prove that the punitive monopolist or monopolists sought to — sought to achieve or achieved the economic power even though unexercised, to control prices or production in a relevant market, or to exclude competition therefrom.

    Proof may be direct or indirect.”

    And then he goes on says, “One indirect method is to prove the requisite powers to show defendants of —

    Byron R. White:

    Is that in his introductory remark — remarks explaining his (Voice Overlap) —

    Daniel M. Friedman:

    No.

    No, this is in his opinion on liability.

    Byron R. White:

    Yes.

    Daniel M. Friedman:

    This is after he has made his finding.

    Byron R. White:

    Yes.

    But I just — there isn’t any finding on power over price, is there?

    Hugo L. Black:

    Well, would you consider what you’ve read to these findings or not?

    Daniel M. Friedman:

    Well, it’s not —

    Hugo L. Black:

    I’m not talking about —

    Daniel M. Friedman:

    — labeled finding.

    Hugo L. Black:

    I’m not talking about labeled as a finding.

    What’s the point — what would you consider, you said there, for what purpose?

    Daniel M. Friedman:

    Well, I assume — I assume the purpose is to indicate the basis on which he decided the case.

    And I assume that he’s saying in this case is, that in these circumstances, this overwhelming share of the market does give them the power to control prices or to exclude competition.

    I assumed this is the purpose.

    In other words, this indicates to me that the court did approach this problem, did apply the right standard for determining monopoly power.

    Earl Warren:

    Very well, Mr. Friedman.

    Mr. Sonnett.

    John F. Sonnett:

    Mr. Chief Justice, may it please the Court.

    In the 17 minutes I have remaining.

    I will try to address myself to what I conceived to be the heart of matter certainly as reflected by the questions from the bench.

    John F. Sonnett:

    I don’t mean to approach this in any spirit of levity but if we’ve known that the kitchen sink was an issue on the case Grinnell, being in the plumbing business, might have found one, but that was part of our difficulty with the trial.

    We would be trying case in the dark.

    In respect to what the judge actually did on the admission of evidence, Your Honors will find at page 327 of the record.

    The court stated, “I am satisfied from my examination of the documents which were offered in bulk at his suggestion.”

    But a prima facie case has been made in the admissibility on the conspiracy theory.

    The court had to look at the documents.

    That’s evident from the record.

    So therefore I think, that what we’re confronted with this is that the court admitted them on the conspiracy theory, having found from a prima facie — from an examination of the documents which was never made.

    That there was a prima facie case with admissibility on that theory, and thereafter the court never ruled on any of the specific objections to any specific document.

    Potter Stewart:

    Mr. Sonnett, you’re saying that that it’s evident from the record that the court, at the time he said that, he had not looked at the documents, can you tell us where in the record that that’s evident?

    John F. Sonnett:

    Yes, Your Honor.

    I think if read, that this occurred, I might say, within a few minutes after the trial begun —

    Potter Stewart:

    Of course they do pretrial, they had an extensive pretrial.

    John F. Sonnett:

    These documents were never so far as we know examined by the court in pretrial.

    What the court did examined in the pretrial were briefs in connection with the pretrial procedures.

    But so far as I know and insofar as the record reflects, the court member saw the documents before.

    Potter Stewart:

    And where is it — does it show in the record that he had not seen them, at the time he stated what you’ve said.

    John F. Sonnett:

    I think the record fails to indicate that the court examined the documents and I do not think that the Government will contend that the transcript is an error by indicating that the court did and the perhaps it doesn’t reflect, and I think it’s conceded.

    Byron R. White:

    Perhaps, you won’t contend that he didn’t went through this procedure that both parties wanted in into go through in terms of giving some idea about what relief — relied he might give if the Government’s case were true?

    John F. Sonnett:

    I think he did that but he did more than we asked him too and he did something —

    Byron R. White:

    Well, I know but he had some — he — if he was to do — if he were to do what you wanted him to do, he would become familiar with the Government’s case or he would give you some idea about relief?

    John F. Sonnett:

    He would not have examined the Government’s evidence relating to substantive liability Mr. Justice White.

    And he had no occasion to look at the documentary evidence so far as we know prior to the commencement of the trial.

    He had briefs —

    Byron R. White:

    Do you mean the only — all he would have done was to assume that the allegations of the complaint were true and then you give or whether you — or whether you’ve read the — didn’t the briefs go into the evidence?

    John F. Sonnett:

    The briefs discussed evidence.

    Byron R. White:

    As they bore on relief?

    John F. Sonnett:

    Yes.

    What I’m saying is that the court’s indication, that upon examination of the documentary evidence, it was prima facie admissible, it’s not borne out by the record.

    Tom C. Clark:

    Does it say in general?

    John F. Sonnett:

    Yes, Your Honor.

    It says —

    Tom C. Clark:

    I suppose it’s 327, isn’t it?

    John F. Sonnett:

    It’s 327.

    “I am satisfied from my examination of the documents that a prima facie case has been made for the admissibility on the conspiracy theory.”

    Tom C. Clark:

    Were the documents available to him?

    John F. Sonnett:

    They have been offered by the Government in bulk pursuant to his suggestion within the first five minutes of the trial, Your Honor.

    Tom C. Clark:

    Yes, but I mean, during the pretrial?

    John F. Sonnett:

    Not so far as we know.

    Not so far as the record reflects.

    Tom C. Clark:

    What did he have during pretrial?

    John F. Sonnett:

    He had briefs discussing evidence and particularly or — and he had a — I believe, but I can’t assert this is a fact, I believe that he had a Government brief, a trial brief in addition to its brief on relief in which —

    Byron R. White:

    Does the exhibit and reference show —

    John F. Sonnett:

    — with discussion of the evidence which the Government would offer.

    Byron R. White:

    (Inaudible)

    John F. Sonnett:

    Yes, it had references, two exhibits.

    Byron R. White:

    (Inaudible)

    John F. Sonnett:

    Yes.

    But there’s no indication that the court examined the evidence itself either by way of deposition or documentary evidence prior to the trial.

    The handbook procedure which we invoked contemplated, we thought and we still think, that the court would indicate its tentative judgment on relief if the Government proved its case in full.

    We don’t think that procedure required the court or authorized the court to reach a judgment on the merits of the case, and we think the record here and I think counsel may have inadvertently misspoken some, there are two things in this record prior to the disqualification petition, two portions, which I won’t be taking time to read.

    But they can be read in no other way except as a flat indication of a conclusion on the merits of this case which was irreversible no matter what defendants did.

    I suggest that, Your Honors, yesterday that the entire transcript of those pretrial proceedings should be read.

    I don’t think it serves any purpose for Government counsel to read a portion and for me to read another portion.

    But I say to Your Honors that upon reading the transcript of May 28th and June 3rd, you will find I believe that the contemporaneous spontaneous statements of the court below indicated that the court’s mind had hardened on the conviction with respect to the liability of the defendants.

    And that from that point on, that conviction was shakable no matter what we did.

    Hugo L. Black:

    What — what did he mean would you think by the repeated statements which you’ve read to us as I understood it, when he said, “If I decide” that —

    John F. Sonnett:

    I —

    Hugo L. Black:

    — why did he keep saying “if I decide”?

    That underscored it, I think, he said?

    John F. Sonnett:

    Yes, Mr. Justice Black.

    But counsel read to you only a portion and being an experienced trial judge, at times, I think the court below used what is customary for the judge to say “if I should decide.”

    But what we rest on are portions of this transcript which was spontaneous, clear, we think, and compelled of necessary inference that he had reached a judgment on the merits.

    Hugo L. Black:

    But he — instead, he stated here he hadn’t?

    Are there any other statements that specifically say he had?

    John F. Sonnett:

    There are statements Mr. Justice Black which I think can be read in no other way and in which require that conclusion.

    I refer Your Honor to page 819 of our appendix.

    Let me just read it.

    It’s a paragraph.

    “I assure you that you would not be helped by anything I would say.

    You would do better to get together with the government rather than run the risk of what I would say from what I have seen.

    Let me just assure you of that, and I mean every word and you can underline that four times.”

    At the conference of June 3rd during the hearing of our motion for a reasonable two months adjournment which was denied, the court said at page A31 of our appendix and again, I think one paragraph or portion of a paragraph is all too eloquent of what the court’s actual state of mind was.

    I’m reading from A31, it’s the record 282, “I have told you that, forced by you to look, my views are more extreme than those of the government.

    I have also made you realize that if I am required to make findings and reach conclusions, I am opening up third-party suits that will make, in view of the size of the industry, the percentage of people involved higher than in the electrical cases, is that clear?”

    Now, if Mr. Justice Black, it were arguable, then certainly we had a reasonable basis for our invoking this old disqualification statute.

    And then, we filed a petition which reasonably raised the questions under that statute.

    That petition, as Your Honor knows, was denied.

    But, as a consequence of our invoking the very pretrial procedures recommended in the handbook, the court below having formed and unalterable conviction on the merits of the case, if there were any doubt about that, the court statements at the first day of the trial eliminate any conceivable doubt because, Your Honors, I believe, he cannot read the transcript of the first day of this trial without reaching the conclusion.

    I regret to say, that the court’s mind was absolutely flows on the merits on the substantive questions, which were involved in the case.

    I think the words of the Court which I read yesterday appearing particularly at pages C14 to C15 of the transcript in our appendix, record 336 speak all too plainly of the judges view.

    The judge basically took the position that he was forced to form an opinion, and in this context it clearly means an opinion of the merits, we put the burden on them and it was just too bad for us.

    From that point on, I think it’s evident that the court’s mind was closed on the merits.

    I would like to suggest to Your Honors that this case can and perhaps should be disposed of by a consideration of the disqualifications statute in terms of today’s rules of practice and practices in these cases.

    And that the court need not necessarily reach the fair trial issue.

    However, I don’t mean to suggest by that the slightest, but we think we — our position as to the fair trial is not well-founded.

    But this Court have in the last 60 years of this statute’s existence has squarely written on this disqualification statute only once in the Berger case.

    I think that the holding of that case is applicable here.

    I think that the reasoning of that case in the light of this old statute perhaps needs clarification in terms of the procedural problems appearing in these cases, these days of the modern rules.

    With respect to the question of findings, there were findings here by the court which affirmatively support Grinnell’s position and I speak in this context now only if Grinnell — it doesn’t appear as I think, that the basic questions before the Court is whether Grinnell was guilty of a combination to monopolize.

    John F. Sonnett:

    Your Honors will find on examining findings 45 and 46 which are at 756 of the record that the court made findings with respect to exclusion of competitors in price, control over prices which insofar as they go, tend to support or Grinnell’s position that there where certainly no monopolization in fact, that the power to control prices or exclude competitors did not exist, in fact, and that from the market percent — market percentage alone, assuming a proper market, you can infer it because there are findings so far as they go which negate what inference might otherwise be drawn.

    There were three main parts of the court’s decree.

    Each main part of the decree was wrong.

    There were findings in 715, 17, 18, 19, and 20, record 750 with respect to vertical integration.

    Vertical integration obviously entered heavily into the court’s approach to this matter.

    The court as a matter of fact was concededly wrong.

    This is not a vertical integration case.

    The Government has conceded that Grinnell supplied nothing to the alarm company defendants for some years prior to this decree.

    There was a finding with respect — a prop I should say, the second prop, was that there was domination of the management of the alarm companies.

    The Government said to you today that there was nothing to show that Grinnell actively interfered with the management.

    There’s more than that.

    It’s affirmative evidence which stands uncontradicted.

    That the president of Grinnell and Grinnell did not overrule the management of the alarm companies with respect to any matter except one and that was whether they were going to have a central station in Paris.

    Judge Wyzanski for whatever reason turned that evidence inside out and concluded just the opposite.

    Byron R. White:

    Do you think the board or the — the board or ADT member of the (Inaudible)

    John F. Sonnett:

    No.

    I mean — yeah, that’s correct sir.

    Yes.

    That the board of ADT which had a majority of the Grinnell directors, as your —

    Byron R. White:

    I suppose (Inaudible) management of ADT to support the directors.

    John F. Sonnett:

    No.

    Management, Mr. Justice White —

    Byron R. White:

    Well, what — what state was in the —

    John F. Sonnett:

    Delaware, I think.

    But in any event, the —

    Byron R. White:

    The board director’s responsibility?

    John F. Sonnett:

    No, sir.

    Byron R. White:

    (Inaudible)

    John F. Sonnett:

    No, sir.

    The officers have the responsibility to manage the corporation, the directors elect the officers, and the stockholders elect the directors.

    John F. Sonnett:

    Our —

    Byron R. White:

    What’s the board responsibility then?

    John F. Sonnett:

    The responsibility of the board is to elect the officers of the corporation.

    It has no managerial responsibility.

    Our position here is that this was an investment and for all practical purposes, this relationship consisted only of the election of the directors and participating in board meetings.

    And that in terms of the operations of the alarm companies, there isn’t anything in the record to show at anytime that Grinnell used its latent power in any way to force the management of the alarm companies to do anything or not to do it or to change any decision may ever made except the one narrow case.

    That I think is the uncontradicted state of the record Mr. Justice White.

    The third main prompt of the decree were a series of findings relating acquisitions.

    In colorful language, Judge Wyzanski talked about the lust for power and a series of acquisitions are indicating a purpose to monopolize.

    Now, the fact of the matter is that after Grinnell’s acquisition in 1953 of the majority stock of ADT, there were on — there was only one acquisition of a central station company which by definition is the relevant market according to the Government.

    One acquisition after 1953 and that acquisition was specifically cleared by a clearance letter from the Department of Justice.

    So, I say to Your Honor —

    Potter Stewart:

    I’m sorry, going back for a moment to the subject to the colloquy between you and my Brother White.

    Was Mr. Fleming — he was the president of what companies?

    John F. Sonnett:

    He was president of Grinnell.

    He was Chairman of the Board of these other companies but not an executive officer.

    The alarm companies each have there own presidents who actually run the company.

    Potter Stewart:

    He was — he was —

    John F. Sonnett:

    His duty was —

    Potter Stewart:

    — the President of Grinnell —

    John F. Sonnett:

    — and a director —

    Potter Stewart:

    — and a Chairman of ADT, Chairman of the Board?

    John F. Sonnett:

    Chairman and his only duty according to the evidence in this record which stands uncontradicted, his only duty was to preside at the meetings of the board and that incidentally was for our historical reason, that going back to the earlier days of ownership by Western Union, but the state in record is perfectly clear.

    Thank you, Your Honor.