United States v. United Shoe Machinery Corporation

PETITIONER:United States
RESPONDENT:United Shoe Machinery Corporation
LOCATION:WAFB TV

DOCKET NO.: 597
DECIDED BY: Warren Court (1967-1969)
LOWER COURT:

CITATION: 391 US 244 (1968)
ARGUED: Apr 01, 1968
DECIDED: May 20, 1968

Facts of the case

Question

Audio Transcription for Oral Argument – April 01, 1968 in United States v. United Shoe Machinery Corporation

Earl Warren:

Versus United Shoe Machinery Corporation.

Mr. Turner?

Donald F. Turner:

Mr. Chief Justice and may it please the Court.

This is a direct appeal from an order of the District Court to the district of Massachusetts in denying the government’s petition to modify the Antitrust Decree which is entered in 1953 after an adjudication that the United Shoe Machinery Corporation had unlawfully monopolized the manufacture of shoe machinery in violation of Section 2 of the Sherman Act.

Now, in the earlier proceeding, the Court found that United was supplying over 75% and probably around 85% of the current demand in the American shoe machinery market, that this constituted monopoly power and that the position of such power violated Section 2 because it was not attributable solely to defendant’s ability, economies of scale, research or natural advantages.

The Court found that United’s monopoly power was also attributable in short to practices which though not necessarily unlawful in and of themselves were exclusionary of actual and potential competition.

Most prominent of these practices was United’s leasing system whereby it refused to sell many of its machines and required long-term leases which obligate or pressured lessees to use United’s machinery regularly and over a long period of time.

Now, in fashioning its remedies, the District Court described the purpose of an antitrust Decree in an unlawful monopolization case as follows, and I quote, “Where a defendant has monopolized commerce in violation of Section 2, the principal objects of the Decrees are to extirpate practices where that have caused or may hereafter cause monopolization and to restore workable competition in the market.”

The Court rejected the request by the Government that United be divided into three equal sized shoe machinery manufacturing firms.

United conducted all manufacturing in — of shoe machines in one plant in Beverly, Massachusetts, the Court concluded that the government had not shown that the kind of divestiture it sought was realistic or feasible in such circumstances.

The Court also declined to order a prohibition of all leasing by United which hence finally the government itself had not requested.

The Court found that in the circumstances, particularly the likelihood that many, if not, most shoe manufacturers could not afford purchase, such a restriction would be undesirable, at least until milder remedies had been tried.

Instead, the Court imposed a variety of conditions and restrictions upon — upon United’s activities designed, and I quote, “to recreate and independent market.”

These included an injunction against monopolizing and requirement that United offer for sale at comparable terms all the machines that it leases, that certain restrictive clauses be eliminated from the leases and they run for no more than five years, that the United dispose of facilities for the manufacture of various sundry items, that it charged separately for servicing, that it issues a reasonable royalty licenses to any applicant or on all patents held by it, and a few other clauses which I shall not mention.

Now, the Decree contained the usual retention of jurisdiction clause providing that jurisdiction be retained, and I quote, “for the purpose of enabling either of the parties to apply to this Court at any time for such further orders and directions as may be appropriate, or the correction, construction or carrying out of this Decree, and to set aside the Decree and take further proceedings, if future developments justified that course in the appropriate enforcement of the Antitrust Act.

That was paragraph 23 of the Decree.

In addition however, paragraph 18 of the Decree provided that ten years after its entry, and again I quote, “both parties shall report to this Court the effect of this Decree and may then petition for its modification in view of its effect in establishing workable competition.

If either party takes advantage of this paragraph by filing a petition, each such petition shall be accompanied by affidavit setting forth the then structure of the shoe machinery market and defendant’s power within that market.”

United appealed this Decree attacking both the findings and the Decree itself.

The Government did not appeal and after oral argument, this Court affirmed for corium simply stating that the District Court’s findings were justified by the evidence and support of the Decree.

There was no discussion, was there I suppose, for the opinion of the Decree as such?

Donald F. Turner:

No, sir.

Now, on January 1, 1965 acting under paragraph 18 of the Decree, which I’ve just quoted, United States reported to the District Court that in its view, United retained a dominant share of the market and that workable competition had not been established in the shoe machinery industry and accordingly petitioned for additional relief.

United cross-petitioned to be relieved from certain provisions of the Decree.

In our position — in our petition, we ask that United be required to submit a plan under which it would establish an independent full line shoe machinery manufacturing company capable of competing with the defendant in the shoe machinery market, to hold hearings, to assure that such a plan was feasible and equitable, would not result in a forfeiture to defend stockholders, and promised a fair chance of said company being able to compete with defendant, and to grant such other and further relief as might be necessary to establish workable competition in the market.

United on the other hand asked for a determination that workable competition of the shoe machinery and shoe machinery had now been established and that the Decree accordingly be revised to retain only those provisions requiring United to sell on comparable terms, as well as leases machines to charge separately for installation and servicing and to avoid in its leases certain of the restrictive clauses that the Court had earlier enjoyed.

After hearing the District Court on April 11, 1967 denied both petitions, at the outset of its opinion, the Court citing United States versus Swift & Company 286 US 106 stated that its original Decree could not be changed unless the Government made a clear showing of grievous wrong invoked by new and unforeseen conditions.

The Court found that paragraph 18 of its Decree contemplated nothing beyond that standard and conferred no broader authority on the power of the Court to honor its Decree.

When read in light of its original opinion, the Court stated and I quote, “The object of the Decree was during a ten-year period not to restore so-called workable competition but to move toward establishing it.”

Thus, the Court said it was simply inviting information as to how successful the Decree had been in gradually eroding, and that’s the Court’s phrase, United’s 1953 power to monopolize the market.

Donald F. Turner:

The Court made 16 findings of fact from which it concluded that the Decree was working as had been originally contemplated in the way I just described.

It found that United now received 62% of total machinery revenues as against probably 85% prior to the Decree.

It considered this change satisfactory.

In light of such further findings as to the growth of United’s competitors, the condition of the secondhand market, new competitive processes and the entry of new narrow line companies.

The Court found that United had no exclusionary power over the minor machines and that if the shoe machinery industry were divided into seven submarkets corresponding to the seven stages of shoe manufacturing, it was not clear that United had a dominant position in the industry.

Even if United did, the Court found this was not due to restraints of trade but to United’s large funds, white context, superior products, skill and merchandising, efficiency, conventions and know-how.

The Court also stated that all what it described as artificial barriers to entry had been terminated and it said that if competition was not flourishing in some sectors of the market, it was because no competitor with large financial resources had entered yet.

This was found to be so because the rate of return on shoe machinery is unattractive as compared with other machinery markets.

And so, the Court concluded that the Decree was still working in its long range task of freeing the market from United’s monopolization and keeping the door open for an adequately provided challenger.

Accordingly, it rejected United’s position as well as the Government’s stating that until there are competitors throughout the market, the Decree should stand unmodified.

Now, since the Court by pretrial order had decided to allow evidence on relief, only if it decided that some modification of the Decree was necessary, no evidence on the appropriateness or feasibility of further relief was introduced.

Now, I think I can summarize the Government’s position very briefly as follows.

Because the Decree after ten years has merely eroded some of United’s market power and has left most of it intact, the Government was entitled at the least to a hearing on the feasibility and effectiveness of further relief.

The Court’s refusal to make that hearing available was based in our opinion upon an erroneous conception of the government’s right to seek modifications of the Decree, particularly, although we do not necessarily rely on this in light of paragraph 18.

Now, as the Court —

Abe Fortas:

I suppose — I suppose the crutch of the problem here is that the government did not allege or claim any new or independent violations to entrust laws —

Donald F. Turner:

That is correct, Mr. Justice.

Abe Fortas:

The discussed law and what you did was to say that subsequent — that circumstances subsequent to the Decree showed that the Decree had not achieved its objective and therefore should be modified, is that correct?

Donald F. Turner:

That is correct, Mr. Justice.

That is correct.

Byron R. White:

So this is — you’re just — you say this is simply and only a matter of remedy under the old — to meet the old situation?

Donald F. Turner:

That is correct, Mr. Justice.

We are not there —

Byron R. White:

You say there is no new violation, you must say, that — you must be saying there’s no monopolization that’s necessary?

Donald F. Turner:

Let me — I think I — I would like to be very careful on answering that question.

We are not claiming that there is unlawful monopolization in the legal sense.

We are not conceded that the power that United still retains in the market is not monopoly pa — is not monopoly power.

I’m simply suggesting that —

Byron R. White:

But if you found that the company operating in the market in some industry such as United with that kind of power and doing it precisely what it’s doing now and under the same voluntarily established rules, you would not attack it as violating Section 2?

Donald F. Turner:

For all that we know, United has not violated the antitrust law since the entry of the Decree, so my answer is yes.

Byron R. White:

Okay.

Donald F. Turner:

The mere fact that they have 62% would not warrant a new antitrust — a new Sherman Act case, that is correct.

Now, we’re not — if I may continue a little on this — we are not here disputing the proposition that it was appropriate for the Court to enter the Decree that it did at the time that it did, even though as we noted in our brief on that appeal, the Decree was notable for its moderation.

But it seems plain to us that the Decree has failed to accomplish in a reasonable period of time the basic purpose adverted to by the District Court in 1953 of eradicating United’s monopoly power and restoring effective competition to the shoe machinery market.

Now, we of course agree that the Decree in the passage of time have had a non-insignificant event.

United’s market share in the aggregate has been reduced from what was estimated in 1953 to be over 75, probably 85% of the market to down around 62%, taking the measure which the district judge found and we think correctly most appropriate, that is United share of shoe machinery revenues.

There have indeed been a substantial number of new entrances into the business by small, single and limited line companies.

And generally speaking, alternatives available to shoe manufacturers have been widened by among other things that develop on a new competitive process.

Mr. Turner, in your wide experience, have you ever seen a provision on an antitrust Decree like this?

Donald F. Turner:

Like paragraph 18 —

Yes.

Donald F. Turner:

— Mr. Justice?

There have been —

I’ve seen some of them in consent Decrees that approximated this but —

Donald F. Turner:

Yes, we have —

— in a litigated case, this is a new one to me.

Donald F. Turner:

I’m afraid I have to say, Mr. Justice, that my experience is way too limited to answer that question.

We do know of one provision comparable to this which appeared in a consent Decree which was substituted for a litigated Decree in the old international Harvester case.

There may have been others.

I simply do not know.

We have as you suggest, though within recent years, included — well, actually some much more specific kinds of reopening clauses in consent Decrees.

Yes, in consent Decrees.

Donald F. Turner:

Consent Decrees, that’s correct.

Abe Fortas:

Well, Mr. Turner, do you make a distinction between the Government’s right to reopen a Decree in a consent — in Decree situations and on one hand, on the other hand, in a litigated case?

Let’s assume that there’s no provision for re — reexamination or reopening the Decree, and either one of them.

Would you make a distinction from the theory that you’re asking us to adopt between a consent Decree and a Decree after litigation?

Donald F. Turner:

Yes, Mr. Justice, I would and I would say that the entitlement of the Government to endeavor to remedy a defective Decree is clearly superior when it comes after litigation and adjudication of liability.

Abe Fortas:

Why?

Donald F. Turner:

But I would like — but let me complete my answer, let me say this, that all I’m saying is that in view of the fact that in a consent Decree there has been no litigation or determination of liability, it would be somewhat unfair to permit the Government to come in and substantially augment that Decree again without having had to establish liability which indeed as you know most consent Decrees specifically negate.

And so, there’s no finding as to liability.

Donald F. Turner:

I would add to that —

Abe Fortas:

So you —

Donald F. Turner:

— a somewhat different point that if the Government elected some ten years after having entered into a consent Decree which is proved entirely inadequate either to come in and be prepared to litigate liability in that case or to file completely a new case that it should be entitled to do so, that there would certainly be no legal bar.

Abe Fortas:

So you’re making — basing the distinction upon the absence of any finding of violation of the Act.

Donald F. Turner:

That’s correct.

Abe Fortas:

And the typical consent Decree.

And you’re saying that since that is so, the government would have to come in and allege a violation of law and prove the violation of law before it could get an amendment.

Donald F. Turner:

Well, any substantial amendment.

I have — you know, there have been some — as you know, some cases like the Automobile Financing case that’s Chrysler and Ford where the amendment requested with at least in one case deemed modest enough, enough within what would have the parties seem to have as a purpose of the Decree to get a minor modification.

Abe Fortas:

Distinguish the part of —

Donald F. Turner:

I think it’s substantial to say to add a divestiture provision on top of a consent Decree, it seems to me that the Government —

Abe Fortas:

Well, yes.

I think you would — if I may suggest that — that you would want to confine the statement that you just made to those consent Decrees in which there has been no finding of liability.

Donald F. Turner:

That’s correct.

That’s correct, sir.

Now, with regard to what the Decree has done in here, we feel it measured against the standard of eradicating monopoly power or restoring workable competition despite what the Decree has done, which I briefly summarized.

Its effect can only be described as modest and largely unsuccessful.

United remains by all odds the dominant firm in the industry as the District Court’s findings and the record plainly show.

It has 62% of the market taken as a whole and its share of so-called major machines were — was described by the District Court as far higher than its share of minor machines, so that we can assume the percentages run higher there.

The shares of its nearest competitors are approximately 9% and 7% respectively.

Together, those two competitors in other words account for barely more than one quarter of the market share of United.

United offers 115 types of machines on current terms plus 24 on application; its two leading competitors offer only 22 and 5 respectively.

Now, I think we should also note that it has taken 10 years to achieve the rather modest success the Decree has had.

And there’s no guarantee that its success to date will be continued in the future.

The past trends could well be reversed given United’s still disproportionate size and broad machine coverage as compared to that of any of its competitors and given the fact that if the District Court’s judgment is upheld, United will be finally relieved of any significant threat of more effective relief in the future.

But I would note that even if we assume that United’s market share would continue to decline that approximately the same rate as in the past, it would still hold over 40% of the market and then after 20 years from the date of the Decree with little reason for great confidence that by that time, any of its competitors would have grown to the point of offering a serious across the board challenge.

Abe Fortas:

I’m sorry to interrupt you so much, but may I ask you this, do we have before us the question of whether there is a matter of substance the Decree should be modified or whether the District Court should whether in theory, modification is available on appropriate showing by the government?

Do we have both of those or just the latter?

Donald F. Turner:

All you have, Mr. Justice, is a contention on our part that the judge should proceed to have a hearing as to what additional forms of relief there might be that would be feasible and appropriate and not more destructive than they would be beneficial that that’s our position.

Now, we would — with regard to what the Decree has done, I think this question might fairly be raised that if it had been predictable at the time the Decree was entered that in ten years, United would still occupy the dominant position that it has, could it have been persuasively contended at that time if you could have predicted that that the Decree provided for adequate relief, and we think clearly it could not.

Donald F. Turner:

Now, we then come to the question, did the District Court apply an appropriate standard in concluding that no modification of the Decree need even be considered, and we urge that the Court was clearly wrong.

As I have noted, the Court took the position that the formula of the Swift case applied to the circumstances of this case as well and required a clear showing of grievous wrong evoked by new and unforeseen conditions before modification could be Decreed.

The Court further held that paragraph 18 of its Decree could not as a matter of law, be interpreted to give it more general authority.

And finally as you know, it interpreted the Decree as merely an inviting an inquiry not whether after ten years workable competition been restored but whether it had achieved the object of moving toward establishing workable competition.

Now, for the reasons stated in detail in our brief, we believe the Court misconstrued paragraph 18 of its Decree and that it’s 1953 opinion rather than supporting its present construction cuts the other way.

That was certainly the premise on which the government defended the Decree on appeal in 1953 where we set up the Decree, and I quote, “If proceeded on the premise that relatively mild remedies should be tried as a first resort and that the possibility of more drastic measures should be held in advance.”

And we immediately thereafter cited paragraphs 18 and 23 of the Decree.

And I would like to add that if the District Court’s interpretation of paragraph 18 came as a surprise to us, which it did, it appears also to have come to — as a surprise to the defendant.

Neither its petition for modification nor its briefs at the conclusion of the hearing carry any suggestion that paragraph 18 merely contemplated and inquiry as to whether the Decree was successful in gradually eroding United’s monopoly power.

What position did United take on the original appeal here with regard to this provision?

Donald F. Turner:

With regard to this provision, Your Honor, I don’t know but I doubt very much if it made any specific attack.

United attacked the finding of liability and of course on the basis of that claim, there should be no relief whatsoever.

As I said, I don’t recall that there as any specific mention of this.

Now, even though we think the Court misinterpreted its own provision, it’s not an essential issue.

If the Swift formula is inapplicable, inapplicable to an effort by the Government to supplement a Decree that has failed as materially as this one has to eliminate a monopoly power that was adjudicated to a violated Section 2 of the Sherman Act.

And we of course urge that the Swift formula should not have been applied to this kind of a case.

Now, let me briefly summarize what Swift was all about.

The defendant Meat Packers and that monopolization case had consented to a Decree enjoining them from selling meat at retail and from manufacturing wholesaling or retailing a wide range of non-meat commodities.

Over a period of ten years beginning shortly after the Decree was entered, defendants had continuously though unsuccessfully sought to have this Decree vacated or modified by the Courts.

And this Court rejected what was then the last attempt in which defendant sought to have the injunction modified to permit their wholesaling grocery items.

Now, the Courts opinion identified two reasons for the Decree hereon from the government’s complaint.

Defendants had power to use their distribution facilities to wholesale unrelated items with substantially no increase in overhead.

And of here, the defendants would lower prices temporarily to a point that would drive out competition.

This Court said the Decree had been grown into theory that size carries with it an opportunity for abuse.

This is not to be ignored when the opportunity is proved to have been utilized in the past.

And the Court concluded that the developments in the food industry would in no way remove what was described as that ancient peril.

And the Court then followed with the language we’re familiar with that the change should be made on nothing less than a clear showing of grievous wrong evoked by new and unforeseen conditions.

If you didn’t have this provision, do you think you would be able to come as for this modification?

Donald F. Turner:

That is our position, Mr. Justice, yes, that even if paragraph 18 were not in the Decree that we would be entitled to come in under the general retention of jurisdiction clause and seek modification when, if you agree with us, a Decree has failed substantially as this one, yes.

Any time your going to talk on that?

Donald F. Turner:

That is the point that I was going to get to later and would be happy to get to now.

Now, that’s quite right.

Obviously, there must be some limitations on the government’s right to come in.

There’s no doubt that there are interest in finality continuous and indefinite and perpetual and certainty may adversely affect business decisions.

But we don’t think really that there are serious problems posed here.

We think two limitations can take care of it, which I will put rather simply in this way.

First, that the Government certainly has the burden of establishing that the failure of the Decree has been evident and substantial to affect its purposes.

And second, the Government must certainly petition for modification within a reasonable period of time.

It can’t wait forever.

Now, in this particular case —

Abe Fortas:

Within a reasonable period —

Donald F. Turner:

I beg your pardon?

Abe Fortas:

Within a reasonable period of time after what?

Donald F. Turner:

After the Decree was entered.

Abe Fortas:

Why is — why do you say that?

Donald F. Turner:

I guess I’ll have to be a little more precise.

I’m talking now about the kind of right we claim beyond the Swift standard.

Abe Fortas:

I understand what you’re talking about but I don’t see why you say in a reasonable time after the entry of the Decree.

Donald F. Turner:

Well —

Abe Fortas:

If that’s so —

Donald F. Turner:

— here’s what I have —

Abe Fortas:

— is ten years reasonable?

Donald F. Turner:

I beg your pardon?

Abe Fortas:

I said would you look just at the calendar to determine what’s reasonable?

Donald F. Turner:

No, it depends on what kind of a Decree it is.

Now, this particular Decree here, Mr. Justice, I think — you know, in fact paragraph 18 set a timetable for the second look, ten years.

Now, given the nature of the Decree, the kinds of provisions that it had, ten years would be a rather reasonable period because it was clear to everybody that these provisions would not have an immediate effect.

Abe Fortas:

Well, that may very well be, that hearing you have a determination of what is a reasonable time in the ten-year provision, but when you claim a general right and the Government comes in and asks for a modification of Decree in equity in an antitrust case, and then you say that it’s got to be exercised within a reasonable time after entry of the Decree, this seems to me that you have to go — you’d have to illuminate the your theory a little more for me because —

Donald F. Turner:

Well —

Abe Fortas:

— you can see the relationship of that to the principal for what you’re contending because what you’re in effect is saying is — I understand basically is that an antirust Decree sets out a formula for the company within a particular industry to operate in the indefinite future.

Abe Fortas:

And if the facts demonstrate that at some time the Decree has ceased to serve the purposes of the law which was intended to serve, the Court — the government can call that to the Court’s attention and seek a modification so as to bring the Decree in line with the purposes of brand new practices and not the purposes of the company.

But what time has to do with that, I don’t see at the moment maybe being held.

Donald F. Turner:

Well, I suppose it would be a little odd for me as representing the Government not to see such a suggestion but I think it does go a little too far.

Abe Fortas:

No because you might see it as a suggestion from me and find that he’s not a member of the board.

Donald F. Turner:

I think it — let me try to — it’s easier I think to indicate a situation in which it might be deemed unreasonable and whether it would be reasonable.

Let us suppose that a particular Decree was adopted to eliminate unlawful fair trading.

And it became fairly quickly apparent that the Decree was not doing that, that for one reason or another, retailers were still abiding by the manufacturers apparent which is the price.

And suppose that became apparent within six months after the Decree but the government waits for ten years to come in for a modification.

It seems to me that’s rather unreasonable.

In other words, I think there’s some obligation on the company but certainly if it follows best practice —

Abe Fortas:

You’ve now moved a little bit —

Donald F. Turner:

— to come in as soon as it does become reasonably apparent that the Decree is inadequate now.

Abe Fortas:

That’s different from taking the date of the Decree.

Donald F. Turner:

You’re right.

That’s —

Abe Fortas:

What you’re talking about now is — what you’re talking about now is lectures in an equity sentence.

Donald F. Turner:

Yes, I think your statement is indeed more accurate.

In other words, within the reasonable time after there appears to be reason for moving for modification.

I would agree.

Now, just to finish up with regard the Swift, it seems to me it can be a case that is fairly described as one in which the Court was putting — giving primary importance, paramount importance to the protection of the public interest in competition.

And to turn that around and to apply the Swift formula where the government endeavors to repair a plainly ineffective Decree, we think it makes no sense.

Clearly the paramount public interest is — in restoring competition is not served by opposing upon the government the enormous burden of making a clear showing of grievous wrong evoked by new and unforeseen conditions.

In short, by throwing all of the benefits of the doubt against the public interest.

I think the point would be clear, perfectly clear if Swift were held as a District Court rule to deprive District Courts of even the authority to include in their Decree clauses permitting reopening and further relief on standards less severe than the Swift formula would impose.

For that, we’d then force the government and we think District Courts to adopt the most drastic possible relief in each case in order to ensure that the public interest in the restoration of workable competition would be achieved.

Indeed, the imposition of such hurdles on subsequent strengthening of inadequate Decrees would destroy any basis for the approach partially reflected in the original Decree in this case that far reaching remedies should not be employed until milder remedies have been tried.

It would be impossible in our position that the public — in terms of protecting the public interest to maintain that doctrine of trying milder remedies in preference to harsh remedies, and then deprive the Government or the District Court of any power to repair the Decree whether this turned out to be substantially defective.

I think Mr. Chief Justice this is about all I have to say and if there are no further questions

Byron R. White:

Well Mr. Turner.

Donald F. Turner:

Yes?

Byron R. White:

Can I ask you this may be all theory, it may not be.

The day after the Decree was entered and it became effective in the United, it started off bringing under it, I gather you say it was not monopolizing at that point.

Donald F. Turner:

That’s a somewhat different question.

I think there’s certainly a heavy presumption that anybody who comply with a Decree designed to eliminate unlawful conduct or even questionable conduct is not violating the law I would say.

Byron R. White:

Do you think that person —

Donald F. Turner:

I — I hesitate only because it’s conceivable that a Decree may fail to prohibit certain practices, which if the defendant started following and would make a new case on unlawful monopolization.

Byron R. White:

What —

Donald F. Turner:

We’re not claiming anything of that kind.

Byron R. White:

I gather a person with monopoly power and all the purpose necessary can still operate his business then, sell his goods and —

Donald F. Turner:

That’s right.

Byron R. White:

And that isn’t monopolization?

Donald F. Turner:

That’s right.

Byron R. White:

He has to do something else.

Donald F. Turner:

That’s right.

Byron R. White:

And what is that?

Do you have anything further?

Donald F. Turner:

Well, I think it’s been variously formulated — I think one is sort of, again, in a negative way, it is — you were violating Section 2 if you have monopoly power and you got it or maintaining it by any other — by any practices or for any reasons other than that.

Skill — you have skill of foresight in industry, you’ve developed — you obtain lawful patents on new techniques and you’re just competing like people who are supposed to compete.

Byron R. White:

How about prices?

Can it be — can you — could you be — first with monopoly power, not doing anything but selling at certain prices?

Donald F. Turner:

If the price that —

Byron R. White:

— in monopolizing?

Donald F. Turner:

The price level at which he sells seems to me irrelevant.

If he has lawful monopoly power, it doesn’t become unlawful merely because he charges a high price I think.

Byron R. White:

Or a low price?

Donald F. Turner:

Or — well, a low price begins to raise question.

You have to ask how low and for what reason and what circumstances, and that gets very, very difficult.

It’s a very difficult problem.

For example, suppose he is suddenly threatened with new competition, the competitor actually comes in at prices 20% below what he’s charging.

Does he violate the Sherman Act if he drops his price to meet he competition?

Donald F. Turner:

That’s not an easy question.

Byron R. White:

Thank you.

Donald F. Turner:

Any questions?

Earl Warren:

Very well.

Mr. Carson?

Ralph M. Carson:

Mr. Chief Justice and may it please the Court.

On behalf of United Shoe Machinery Corporation, I would like not only to emphasize that that defendant has faithfully complied with the detailed Decree which this Court affirmed in 1954.

But then, the shoe machinery business with which we are here concerned is a business of heterogeneous and diverse character, very different from one treating a homogeneous product adaptable to a 62% level.

And I should like also at the outset to take advantage of the assistant attorney general’s candid — commendably candid admission that the government does not claim that there is any unlawful monopolization in the legal sense, I quoted his words, affected by the defendant after the operative date of the Decree.

In fact, Mr. Turner went further —

Byron R. White:

Well, what about — what about selling it an unreasonably high price?

Ralph M. Carson:

There’s no indication —

Byron R. White:

If that could ever be determined?

Ralph M. Carson:

That would remain to be determined on new issues and new showings of fact, Mr. Justice White.

Byron R. White:

But that — but selling at a high enough price I suppose could have knocked the monopolization if you had the power.

Ralph M. Carson:

If you had the market power sufficient to exclude, yes.

Byron R. White:

As for your customers, they might have some problem with the — with the two high prices because your competitor’s prices were too low.

It might be monopolization.

Ralph M. Carson:

That could also be examined into but none of that is in this record.

Byron R. White:

Yes.

Ralph M. Carson:

And I think that I can demonstrate by the reference to the findings as to the entry of new competition and the profitability of new competitors that the price control, which you referred to, Mr. Justice White, could not be in this record.

In fact, I also embrace the further frank statement by Mr. Turner that there is no violation in the maintenance of a mix mere 62% of the market.

But I shall at once proceed I think to try to convince Your Honors that this 62% which has been referred to so much in the argument and in the Government brief is a mere measure taken at a point of time five years ago that there are other measures showing a lower percentage of United’s occupancy and that both measures are and have been moving downward.

Conspicuously absent from both the assistant attorney general’s argument and the government’s brief is the reference to the motion in this market, which is a motion downward.

But before I proceed to that development, if I may, Mr. Chief Justice, I would further embrace if I may the statement which I think as erroneous by the assistant attorney general that the government had no hearing on relief.

Now, it’s perfectly true that on this sea day hearing, so-called, as of January 1, 1965, there was no separate hearing on relief.

But in the original case which occupied 121 trial days, both relief and liability were considered at the same time.

In our brief, we have called the Court’s attention to the fact that the district judge devoted four paragraphs at page 348 of 110 federal supplements to the request for dissolution.

That request was insistently pressed by the Government at that time. And those four paragraphs begin with a single statement which along I will need read, “The government’s proposal that the Court dissolve United into three separate manufacturing companies is unrealistic.”

There’s factual development of that finding.

Ralph M. Carson:

And in the Government’s pretrial, the proceedings on sea day, there was no effort made and no evidence adduced to indicate that that position now is in any way different from the position in 1953.

In fact, I may say that it’s identical.

The Government lost, as I say, its application to dissolve in 1953.

The Government did not appeal.

The Government let the Decree go into operation upon this Court’s affirmance after the defendant’s appeal, which was in effectual in modifying the Decree in any particular.

With reference I think to Justice Harlan’s question whether the defendant’s brief in this Court particularly adverted to the review in ten years by hasty inspection indicates that it did not so advert, that we contended throughout, that the finding of liability was erroneous and not in accordance with previous determinations of this Court and not in accordance with the evidence.

However that may be, I think the government has forgotten that it represented to this Court in 1954 that there was an adequate hearing on relief in the main trial.

And I take leave, if I might Mr. Chief Justice, to read a few words from page 141 of the government’s brief signed by Solicitor General Sobeloff.

During the case of the course of the trial which took 121 trial days, the district judge heard testimony relating to all phases of the industry.

He patiently examined and studied some thousands of aluminous exhibits which were admitted into evidence.

He had extended opportunity not only to observe what was wrong with United’s practices but to explore alternative courses of conduct.

He personally questioned witnesses at a considerable length considering the feasibility of various possible measures for relief.

Thus, Professor Dean — Joel Dean was the defendant’s economic expert — thus, Professor Dean was requested by the Court to study a series of questions relating to relief and to testify in relation to each of them.

He did so freely and exhaustively.

Then there’s a reference to the record and I conclude with a statement of the Government counsel in 1954 to this Court, “The careful consideration which underlies the provisions for relief is further demonstrated by the logic, the clarity and the meticulousness of the opinion on remedy and of the Decree itself.”

This passage was preceded by statements that the hearing on relief was conducted with a hearing on liability.

So to sum up that portion of what I have to say, I would say that the Government is proceeding on a misconception that it has not hearing on relief, that it had a hearing on relief, that partial — part of its request was denied and it failed to appeal, that the bulk of its request as to a media rating and corrective factors in the market was accepted, and that the operative clauses of the Decree which I shall now like to refer to in somewhat more detail, have been extremely affected.

I think that the government demonstrates its power in saying, as I remember the language of Mr. Turner, that the Decree has been patently ineffective.

What did the Decree attempted to do?

Your Honors, you have it before you in connection with a private trouble damage case which related to the effect of the Decree on the preceding liability and conduct of the defendant.

Now, this portion of this case deals with the effect of the Decree upon the market and the defendant’s conduct after its effective date.

And in response to questions from members of the Court as to effective date, I might remind the Court that while this Court’s affirmance occurred in June 1954, elaborate provisions for dismantling the leases required some time and the Decree began to operate in accordance with its terms.

As of June 1, 1955 retroactive January 1, 1955 when the Court approved a very complex plan for terminating all the existing leases at the option of the lessees so that if you look at the beginning of the experience period, January 1 at earliest 1955 up until the date of the statistical studying that was made in this case to measure market share and market power.

You have as a terminal date for that study the fiscal year 1963 because while the Court’s directive reports as of January 1, 1965, the course of time necessary to collect information from not only the defendant but 125 other suppliers in the field met — but the time the evidence could be tended to the Court, the fiscal year of 1963 was the last effective date.

So you had eight years, maybe nine years of effective operation.

Now, at this point, five years or four years from this last experience date, you have the government telling you that a decline from 85% of market to 62% which is 23 points in eight years is not enough.

It seems to me with all respect that is a rather curious contention, an untenable contention.

I cannot understand the impatience exhibited in the government’s approach to the now demanding and renewing this surgical treatment of divestiture.

Byron R. White:

Well, what if the market power hadn’t gone down any.

Ralph M. Carson:

I didn’t understand, Mr. Justice.

Byron R. White:

What if the — what if the power, the share of —

Ralph M. Carson:

Had not gone down at all?

Byron R. White:

Yes.

Ralph M. Carson:

I would think the Court would have to conclude the Decree had not operated as intended.

Byron R. White:

Because you would think that the aim of the Decree is not only in monopolization but monopoly power?

Ralph M. Carson:

I think I could say, Your Honor that the aim of the Decree was to extirpate the practices for in number in clause four of the Decree.

It represented monopolization.

I don’t think I’m prepared to admit that the Decree must also cut down one from one percent to another, but I would say that the free application of competitive forces would have that effect and have had that effect.

As it shown —

Byron R. White:

You don’t think the Decree necessarily — as long as someone can say that there’s no monopolization — well, if there is no monopolization after the Decree has entered, do you suggest it must do more than that?

Ralph M. Carson:

No, sir.

I did not, but I think it’s a fair question and attitude of any Court to say that if the four practices which were to be terminated were really terminated, the natural entry of competitive forces would wear down the United occupancy in the market as they did.

Byron R. White:

That if the monopoly power doesn’t decline, there really is monopolization?

Ralph M. Carson:

No, sir.

I don’t think there is in active sense monopolization.

Byron R. White:

Because otherwise — there must be something going on that’s exclusive where competition would erode this power.

Ralph M. Carson:

Well, I think that’s right.

I must admit that that does seem common sense and that has been the operation of the fact here and it may be the operation in logic.

But I call attention to the fact that the extreme measure that I think this Court has set forth in the United States against Griffith and in the Grinnell case and that Judge Wyzanski adopted in his decision was that monopolization being shown, the monopoly must be dissipated and rendered or rendered impotent.

Now, you could say that if 85% was the result of monopolization, then the effect of the Decree would be to dissipate that and it has been.

But in any event, I think I could embrace the other clause and render it impotent.

Now, I think I’m prepared to show that even if there were 85% that so much of the competition coming in, if it even were ineffective, that we have a competitive situation.

I hesitate, Mr. Justice White, to debate this principle on facts that are — not the facts of this record but on unfavorably to my contention.

Byron R. White:

Well, I know, but I suppose it’s one thing to argue that — if you assume the Decree is supposed to dissipate monopoly power —

Ralph M. Carson:

Yes, sir.

Byron R. White:

— then I suppose you make one kind of argument as to whether it’s been dissipated when you get to 70 to 62%.

It’s something else again if you say that monopoly power need be dissipated at all.

Ralph M. Carson:

Monopoly power has to be dissipated by the removal of monopolization.

And if monopolization is removed by the extirpation of these four practices — I’m just repeating myself — the natural flow of competition coming in will reduce the apparent market share.

It has in this case.

Ralph M. Carson:

Now, Your Honor, it seemed to me to put a question.

Supposing it did not, supposing it remained 85%, if some position on favor to my case and not contrary to the record, well I suppose in frankness, one could say that even if with full entry and opportunity for competitive forces, the remained 85% in the United occupancy had meant only that United or whatever was a dominant producer was competing on the basis of superior skill and efficiency.

There’s no law to the effect.

Byron R. White:

Well, at least that would be true as long as he accepted the government’s view that there wasn’t any monopolization.

Ralph M. Carson:

Yes, yes.

The Government has been very stringent.

Mr. Turner’s staff had been extremely diligent and persistent.

They’d asked as many questions as they could.

I can assure the Court that there were here in pretrial proceedings a great massive material which resulted in the conclusion that there’s been no monopolization since.

Abe Fortas:

Mr. Carson, I’m not sure that I quite understand you on one point.

Let’s assume that the Decree worked in the way that it was intended to work.

Ralph M. Carson:

Yes, Your Honor.

Abe Fortas:

And let’s assume that the government comes in and demonstrates that working in that intended fashion, the Decree did not accomplish the purpose of this that it was intended to accomplish, is that a basis for reopening the Decree at the instance of the government?

Ralph M. Carson:

I would say that if there are no new facts following Your Honor’s questions that it worked as it was intended, then there is no basis for reopening since this Decree contemplated a gradual erosion.

It’s so stated —

Abe Fortas:

Well, as I understand Judge Wyzanski’s standard, he says — as I understand it, he made a distinction between situation A in which the Decree had not worked as expected.

And by that, I assume that in this case, it would mean that you didn’t — you didn’t effectively cease the leasing practices as forbidden by the Decree.

The situation A, if the Decree did not work as expected, and situation B working as expected, it did not accomplish the intended results.

And that he says that the Government here as I understand him, he says that the Government here contends that the Decree worked as it was intended to work but it did not accomplish the desired results and therefore, Judge Wyzanski concluded relief is barred by the Swift decision.

Ralph M. Carson:

Yes, Your Honor.

The Government says that it did not accomplish desired results.

But the district Court which framed the Decree thought that it did accomplish the desired results.

Abe Fortas:

Well, suppose it did not.

Ralph M. Carson:

Oh!

Abe Fortas:

Suppose that it worked as foreseen just exactly the way we’re supposed to work.

But following my Brother White’s question, suppose it worked exactly as foreseen but for some reason or another you still had 85% of the market.

Ralph M. Carson:

Yes.

Abe Fortas:

And would an action by the government to reopen the Decree allowed?

Ralph M. Carson:

I think it would.

Abe Fortas:

In that respect, you differ from Judge Wyzanski as I understand it if you take a look at his opinion on page 82 of the record?

Ralph M. Carson:

I did not think so, sir.

Abe Fortas:

Well, I may be wrong and that’s what I’m trying to get at here.

Ralph M. Carson:

I think his opinion on page 82 —

Abe Fortas:

The last four paragraph.

Ralph M. Carson:

Yes.

It says what the Government is complaining was not the Decree did not work as expected but that in working in this way, the Decree did not accomplish what the government had prayed for.

That is dissolution as I take it, Your Honor.

In short, the government petitions the Decree be reversed because this coerced in 1953.

I think he’s there referring to dissolution.

Now, as to more direct answer to Your Honor’s question, I wanted to remind the Court that conjointly with the statement in 1966 by the district Court, the intention was a gradual erosion of the market power of United.

You have the statement in 1953 which explains the theory of the Decree.

As to the secondhand market on page — well, I have a pamphlet opinion here.

As a secondhand market, United will face a type of substitute competition which will gradually weaken the prohibited market power which had now exercised.

And then again, as to a sales market, the District Court said in 1953, the creation of a sales market together with a purging of the restrictive features of the leases will, in combination, gradually diminish the magnetic hold now exercised by United and so on.

Now, those passages are at page 350 of 110 federal supplement and there are other similar passages indicating that the judge was relying on the inevitability of gradualness.

Now, since that has worked, I do not think I need to adhere to any position that a retention of 85% would still be defensible.

In fact, the 52% that the District Court found on a measure of comparative revenues to be the share of United’s revenues, United’s occupancy in 1963 a contrast with an 85% eight years or nine years ago, possibly a 92% of revenues enjoyed by United at the time of the original violation.

I take the figure of 92% from the government’s brief in the District Court, which is repeated in the record on this hearing.

But in any event, if it were only a decline from 85% to 62% in eight or ten years, we should have a magnificent showing in an industry which is a capital goods industry with the machines enjoying a long machine life and with a complicated situation to rectify.

Let me refer a little more fully to what Decree was attempting to do in 1953 as it was then presented to this Court.

The Court pointed out that while United’s conduct had been entirely conformable with the law as laid down by this Court, new developments in the decisions effective about 1946 had made the retention of the then market share by restrictive lease clauses even though similar to those previously adjudicated here.

It made the retention of market share by those lease clauses now illegal and monopolization.

The Court directed that a plan be submitted, which as done, to terminate at the option of the lessees all the outstanding leases about a hundred thousand in number.

That plan took effect as of June 1, 1955 as I’ve said.

And over a period of time beginning in 1955, all the — all leases were terminated and potentially a large bulk of the machines then held by the lessees — purchased by the lessees under the terms of the plan which provided for the calculation of a purchase price, including the cost of capital of the shoe machinery — of the shoe manufacturers as part of the elements of that purchase price.

So that the leasing system as it then existed was cut out and regardless of whether the option to terminate was exercised by the lessees as of 55, 56, 57 and so on, the Court directed that forthwith these restrictive practices stop and they were stopped.

The Court also provided that where leasing continued, there should be in the future an opportunity for purchase at a price, which was not a disadvantageous or not especially advantageous to leasing.

Abe Fortas:

Well, I asked Mr. Turner whether he thought we have before as the issue or as to whether Judge Wyzanski applied the proper standard or whether we had before us a question of whether applying the proper standard he reached the right resolve and as I understand them.

Mr. Turner said that he thought the question was whether Judge Wyzanski did apply the proper standard.

As I read his opinion, I may be — I may be wrong.

Abe Fortas:

As I read his opinion, Judge Wyzanski said that in this case the Decree, the government is complaining that the Decree worked as intended but it did not accomplish the result, namely the dissipation of the monopoly without refining that.

Now, he said then — as I understand Judge Wyzanski, he said that is not — that is not a legally defensible basis for reopening a Decree.

And I assume that if we disagree that I’m right to this point and if we disagree with Judge Wyzanski in whole that he applied the wrong standard, then we would remand this.

The competing standard is of course that even if the Decree operated as intended but did not achieve the desired result, namely the dissipation of the monopoly, then the government is entitled to relief.

So the question I’m putting to you really is whether this is a question that before us the standard applied by Judge Wyzanski or whether we have before us a question of — that goes to the factual results accomplished under the Decree.

Ralph M. Carson:

Well, Your Honor, I do realize that the government said the proper standard was not applied.

And in addressing myself to that, I repeat that the standard adopted in the framing of the Decree was the elimination of market control in a gradual measure and that the judge has found after the full review that that gradual elimination is an accomplished and is being accomplished and will continue.

The findings as to the gradual erosion of market power, the findings as to the diminution which the Decree envisaged are not challenged here.

Abe Fortas:

Well, let me put it this way, and I won’t butt in more, Mr. Carson.

Ralph M. Carson:

I appreciate the question.

Abe Fortas:

Suppose the Decree says — the Decree requires accommodated to do A, B, and C and it’s a monopoly case, and then let’s suppose several years later, the government comes in and it says the company has done A, B and C but it’s still a monopoly.

Does that allegation in the government’s petition present a cause of action or complaint —

Ralph M. Carson:

On that —

Abe Fortas:

— upon which relief may be granted if they improve it?

I think that’s my question really, is whether that is a kind of issue we have before us.

And I had thought frankly that it was.

Ralph M. Carson:

Well, an answer to Your Honor’s question, I would think that if they show that monopoly remains even though A, B and C have been fulfilled, then the result is the Decree has not operated as contemplated.

Now, it’s —

Abe Fortas:

Now that would entitle them to relief.

Ralph M. Carson:

Yeah, it would entitle them to relief.

Now, that is radically different than on the position here.

Earl Warren:

We’ll recess now, Mr. Carson.

Ralph M. Carson:

— manner of the erosion that was intended and so stated by Judge Wyzanski in his findings.

But it’s having the effect of substantially reducing market share and market power of the United as originally held by it in 1953.

We have attached to our brief as tables A, B and C, a tabulation made from the census or rather from United’s own machinery shipment records to show the massive changes in the machine inventory and the going out of the old machines and the reduction of control of machines by United.

Table A taken from United’s records shows the 18 major types on which most emphasis was placed because they’re the more important machines and as judge said, the 12 minor types showed much less market control by United.

The 18 major types showing the number that are on lease in 1955, 54,000, the number shipped since 1955, 10,000, the number returned showing a net of returns of 16,000 machines of those pre-55 types.

Table B separates out the types or models adopted since 1955 and shows on the same basis the number shipped, the number returned, and in both tables, the number sold.

Now, the number sold both on what are called conversion or transforming leases into sales or new sales as directed by the Decree are extremely important because they tend to create the secondhand market.

And the position eight years after the Decree is that the great bulk of the machinery that were the instrument of the monopolization found is in the hands of customers or in the hands of the secondhand dealers.

Ralph M. Carson:

We have in the record the statements of two secondhand dealers and we have in the findings the bulk of dollar sales of those dealers showing they are substantial in road into the market, so United’s former means of monopolization are now a means of competition with it.

Now, in table C, we have put together on the same 18 categories a combination of the pre-55 and the post-55 models, so that you can see in combined the total that have been disposed of and how they have been disposed of.

On another table overleaf on page 52 of our brief called table D, we have a say to give the Court in terms of dollars a picture of the movement overtime.

The movement overtime of not only United’s income from leases and sales but the income of the principal competitors whose witnesses we can get on the stand.

There were received an evidence affidavits of scores of suppliers but those affidavits did not contain a picture of revenue year by year.

So as — so that to show the progress of the erosion that Judge Wyzanski directed, we endeavored to get from the records of those competitors we could get on the stand the dollar receipts year by year to compare in their total with United’s receipts.

And in Table D, you will see that United’s receipts went down in the aggregate from $32 million to $24 million, even though the latter figure probably gives some effect to inflation.

And you will see that these 12 competitors who were the only ones with whom we could get figures had gone up in the aggregate from $3.5 million to $8 and — $8.10 million.

Now, of course there’s a great deal of variety among these.

Some of them go up and down, but you will notice that a number like CIC, an English company, only entered the market in 1959, you will notice that Industrial Shoe began to — number three, began to create a substantial volume in 1959.

And you will notice that International Shoe, one of our principal competitors almost quadrupled its total revenues which are here accounted on a lease basis only, and we couldn’t get all their figures for sales for purposes of comparison.

Now, this — the judge thought and we submit to this Court, is a substantial picture of movement in time even only to the year 1963 which shows in the only way this record does show it the attrition and the eroding effect of this Decree which took away all the restrictive practices and opened up the secondhand market.

Now, in referring to International Shoe, I would like to mention I think an error in the government brief where they say that there have been — this is in the reply brief and we couldn’t deal with it in writing — they say there had been no innovations in this market and that is one indication they say of a static monopolized situation.

Of course, innovations are important and I point out that International Shoe Machinery Company itself had put into the market during this period the so-called thermolaster just as United Shoe had put into the market the Injection Molder, and I have half a dozen instances of other companies which have put into the market no machinery so as to show contrary to the government’s contention that the flexibility and the entry of new forces.

In this connection, I asked the Court to look at the brief filed as to my side of the Court by the consumers of this machinery, the National Footwear Manufacturers and the New York — New England Footwear Association, which argues from the point of view of the consumer the wisdom of the Decree as it affects them.

They say, and I won’t endeavor to paraphrase, but they say in substance that as the market stands even not withstanding United’s share larger than the others, the competition produced is not only satisfactory for their purposes but is better for their purposes, that if the supplier’s market were broken up and destroyed by the introduction of a new full line company per force because they say it’s an interesting fact based on what Professor Fox said in his testimony, a new full line company might destroy some of these small companies.

There are 125 other companies in the business, most of them relatively small, most of them as the judge says producing only one or two machines.

It’s somewhat like the grocery situation or other situations.

This Court has — had to deal with — in the Vans case, a lot of small people who nonetheless among themselves have produced effective competition as shown by the erosion of United’s share.

Attached to the – -my side of brief are the sworn statements of a number of shoe manufacturers detailing the kind of competition they enjoy.

And detailing — and that’s why I’m now referring to it — the entry of new machines.

It happens at one of them on page 14a of this amicus brief, is made by a man who’s not only a shoe manufacturer but he is also the inventor of a new machine called the Low-ready heel molder and he says, “I can foresee a development in shoe manufacture which will render obsolete United’s insole tackers, assemblers, and heel sewn lasters.

In fact, my Low-ready heel molder is doing just that now.”

Hugo L. Black:

May I ask you if —

Ralph M. Carson:

Of course, Justice Black.

Hugo L. Black:

— if the members of this National Footwear Manufacturer Associaiton is composed of all the competitors —

Ralph M. Carson:

A substantial number — a substantial number, Justice Black, a substantial majority.

Byron R. White:

This isn’t of competitors, isn’t it?

Ralph M. Carson:

These are trade associations of shoe manufacturers.

Byron R. White:

These are customers —

Ralph M. Carson:

Customers, not competitors of United.

There are two of them, one in New England represented by a council in Boston, another, the National Association.

I forgot the exact figures of the membership, which are given in the record, but they’re a substantial majority of all of them.

And they say that the existing structure of competition is better for them.

They give in many examples of the kind of competition, and I allude for the moment if I may to what Mr. Volanette’s of Brown Shoe Company, a name that’s famous in this Court, what Mr. Volanette says at pages 21 and 22a, he lists the 18 major categories of United machines which I’ve called attention to on table A, and he says that while the first five categories of this type of machines made by others and made by United are used fairly generally on the majority of shoes, such of the remainder as the machines for welt sole in seam training, rough rounding, and so on, I won’t quote them all, are adapted to dying processes and are used less and less.

The McKay machine for example has not been used in the last 15 years.

We stopped doing lose nailing ten years ago.

No stitch done to speak of have been made for the last 10 years.

Now, I adduce these facts and there are many of them on the record to show the Court not only that the United machines have passed for the majority out of our control, but that new processes and techniques have come in which have made simplified manufacture, flexible soles, and cement adhesive available in such degree that the old types of machines that which United had had such a large percentage in 1953 are no longer being put out or utilized.

I can’t say they’re no longer being utilized.

One manufacturer like Nettleton continues to make the Welt shoes using the old types.

But this record is full of evidence and these affidavits are full of the proof that the coming in of new processes as further obsoleted the United type of control through machinery invented by United.

Now, it’s these facts that make the new processes available to the manufacturers in such degree that they can dispense with the United machines in great quantity.

And there we come to the relative — one of the defects of the 62% figure because the 62% figure as a market share figure which Mr. Turner has given his sole attention to is a figure based on revenues received in the year 1963 from — not only from machine sold, how machines put out on lease in that year but from machines leased in prior years, the old machines, the Welt type for which revenues are received in ‘63 so that the ‘63 comparative revenue measure of United and I admit it’s a good measure but that ‘63 comparative revenue measure which make 62% is based largely on all transactions.

Now, another figure which Mr. Turner did not find time to mention is found in the judges findings as a 48% figure — a 48% figure.

48% represents the revenue measure of the United production shipped in the year 1963.

This was obtained and it’s a very conservative figure.

This is found on page 29 of our brief.

This was obtained by converting to sale value, the United machines which were shipped on lease in that year in order to make it comparable, we have to do that.

And then taking the sale figures of three of our largest competitors and taking all other competitor sale figures in that year and you will see that in that year, we have 48.6%.

Now even that eliminates some lease revenues of the others that we could not put into the table so that 48% is probably a little high and that was the year ’63.

The Government I think is quite wrong in saying it in its reply brief that we claim the 62% figures clearly erroneous.

We never said it was clearly erroneous.

We admit it’s a good measure if you want to take in all the revenue.

But from the point of view of what I think would be the interest of this Court as to how the Decree is working, the 48% which is the shipments in that year comparative with the others is the cutting edge of the new business.

The 48% shows how the trend is going and I would assume a 48% in 1963 might be reflected in a lower percent today.

Of course, the Court cannot take the temperature of the market every 5 or 10 years but neither the Government nor we have an information that the percentage is going up rather than down.

Byron R. White:

And if — I take it that if all the people have an option to buy machine under the Decree had bought them, I suppose there would have been less revenue in ‘63?

Ralph M. Carson:

No, I think it would have been the same Your Honor.

Byron R. White:

Is it because these are new leases in this —

Ralph M. Carson:

Yes, sir.

These are new shipments and in ‘63, the sale price of the old purchased would have to be the rough equivalent of the lease value.

Byron R. White:

Yes, but all the machines in ‘63 on which rental was being received where machines which have been leased since the Decree was entered.

Ralph M. Carson:

Yes, yes.

That is so — that is so sir, except for leases that are expired and our point had been the 63 measure which results in 62% takes into effect past transactions.

Now that maybe entirely legitimate, it shows market share in 63.

Byron R. White:

I take it, nevertheless, if people who had — everyone had a right to buy the machines —

Ralph M. Carson:

Yes, sir.

Byron R. White:

— that are on lease.

Ralph M. Carson:

Yes, sir.

Byron R. White:

And if there was transactions among those 63 in that revenues because the buyers had bought because the lessees haven’t decided to buy.

Ralph M. Carson:

That is true sir and I should have paid it that as the judge found, not withstanding the opportunity to buy on an equivalent basis.

Still, a great majority of acquisitions are initially by lease.

As the judge points out 90% of all new shipments in the whole period are on a lease basis so that the customer can try out the machine, see if he likes it and during the lease term he has an option to buy at anytime on a basis that is equivalent roughly so that we have in the other case that Your Honors have, the claim being that the inability to buy was an injury.

We have with the ability to buy fully installed, reinstated by the Decree, we have nonetheless effect that the great majority of 90% initially lease because they find it convenient.

They’re maybe new machine types, injection molding machines are coming in to obsolete all types.

That’s an expensive machine.

They would rather take it on ravel and decide later whether to buy it.

The Low-ready heel molder is being invented that might come in and throw out some United machine so it’s better to be on a lease basis and then convert later and the judges findings are quite lucent on that subject.

Hugo L. Black:

May I ask you?

Ralph M. Carson:

Of course Mr. Justice Black.

Hugo L. Black:

It’s your view that the so called erosion contemplated by the Decree has now reached the peak —

Ralph M. Carson:

No, sir.

Hugo L. Black:

— that was intended?

Ralph M. Carson:

No, sir.

Hugo L. Black:

Or if there are still more erosion to take place?

Ralph M. Carson:

There’s more to take place I think inevitably.

Hugo L. Black:

Your argument is then, as I see it your difference with the Government, is if they think it should have eroded more up to this time?

Ralph M. Carson:

Yes, sir.

Hugo L. Black:

You think it should not.

Ralph M. Carson:

Yes , sir.

Hugo L. Black:

But your view is that if it has eroded, it should have eroded more, they do have a right to challenge the Decree, is that it?

Ralph M. Carson:

Well, Your Honors could find that it should have eroded more — yes.

I don’t see how you can’t find that.

Hugo L. Black:

That’s what I gathered.

Ralph M. Carson:

Yes, and I don’t see how you can’t find that.

What bearing are you going to suppose would it find in the trial court?

Ralph M. Carson:

I cannot myself see Your Honor that it has any bearing.

I do not see.

That’s where I understood your argument.

Ralph M. Carson:

I do not see why Swift is tied into this.

The judge did and when the judge did embrace his findings in the framework of the Swift rule but since he said what has happened is what I provided for and I foresaw and I do not think the application of Swift in this case hurts the governments antitrust program as Mr. Turner seems to think it does.

Hugo L. Black:

May I ask you one other question.

Ralph M. Carson:

Of course Justice Black.

Hugo L. Black:

Did the trial judge canvassed this particular issue or was the government cut off from offering evidence to show that there had not been enough erosion.

Ralph M. Carson:

No, Your Honor.

The Government was not cut off.

The Government made strenuous efforts to show that there had not been enough erosion and the government even went so far as to incorporate in the record an exhibit which we must regard as founded misleading which I would like to call to Your Honor’s attention to at that time.

I think some of the questions from the Court may have been directed to a figure at page 11 of the Government brief which says that in 1963, United accounted for approximately 84% in 1963 he say.

84% —

Hugo L. Black:

What page in the brief?

Ralph M. Carson:

Sir?

Hugo L. Black:

What page in the brief?

Ralph M. Carson:

Page 11.

84% of the 18 major machines listed in the original Decree.

That is a very injurious statement and it’s profoundly wrong.

It is based on plaintiff’s exhibit 53 as to which we take into our brief as an Appendix, our refutation of that exhibit.

Of course, if the Court felt that after eight years, United still had 84%.

That wouldn’t make a difference but this figure as it’s shown in our analysis of the evidence of the witness is obtained by excluding from the count, all machines introduced by anybody since 1955 that do not do the same work as machines currently made by United.

In this way, through a very false analysis, the government witness struck out of our senses, 3,000 competitive machines as against the 179 of the United machines similarly excluded.

Mr. Carson, can I ask you —

Ralph M. Carson:

Of course.

— question.

I’d like to ask a questions, compared from the one I’ve just been reading, the one you answered to – is the problem self-constricted in some way by Swift?

Either that you might have reached different conclusions or that you might have brought in there other considerations.

Now assuming that you accepted in Swift that there is no real term on this problem, this case goes back to relieve that is to ask you the secondhand — is there more evidence that either you or the government is considering?

Ralph M. Carson:

No, sir.

None whatever.

Because you can —

Ralph M. Carson:

We could update it.

That government’s attorney would probably answer that.

Ralph M. Carson:

We could update it.

In other words, what you’re asking us to do is to take this case simply on the basis whether the finding of the fact of the judge are adequate that might be granted further relief?

Ralph M. Carson:

I think that’s a fair statement sir.

Is that what the issue is about?

Ralph M. Carson:

That’s what it boils down to on a full analysis of the record as against the findings.

Hugo L. Black:

Now would you mind stating where the finding of judge is for the reference to the adequacy of the erosion.

Ralph M. Carson:

It’s all over his findings sir.

Hugo L. Black:

It’s allover it.

Ralph M. Carson:

Well, let me see if I can pinpoint one.

Finding — let’s see.

I say finding 7 is one.

Finding 11, finding 10 where new entrance are described as increasing from 11 to 19 to 26 every three year period.

I would say it’s pretty well throughout his findings but I’ve named the principle ones.

Potter Stewart:

I suppose the ultimate summary finding is the first sentence of the last full paragraph on page 81 of the record.

Ralph M. Carson:

I was about to refer —

Potter Stewart:

From the foregoing findings of fact, this Court concludes that the 1953 Decree has operated in the manner and with the effect intended.

Ralph M. Carson:

Yes, Your Honor.

Thank you.

Mr. Whipple has just put that on my hand and I was about to read it.

Ralph M. Carson:

That’s a summary of a great many finding.

Earl Warren:

Mr. Carson, did I misunderstand the government counsel to say that what the government really wanted here was an opportunity to go in to some of these facts but it was denied to them because their complaint was dismissed?

Did I misunderstand that?

Ralph M. Carson:

I think you did sir.

Earl Warren:

Very well.

Ralph M. Carson:

I believe the Government intended to say.

I think they intended to say that they did not have a hearing on divestiture because on the fullest examination of the erosive power of the Decree, the Court found the erosion had proceeded to an extraordinary degree and was continuing.

I would say that was a hearing and a full hearing on the effect of the Decree.

Earl Warren:

I see.

Byron R. White:

Despite the Government never suggested that the measures of the District Court adopt to dissipate monopoly power have not produced their maximum effects and that they were producing effects.

They just said to their other – these effects are adequate and we should consider additional remedies —

Ralph M. Carson:

I think that’s right.

Byron R. White:

— and they wanted to go into the additional remedy.

Ralph M. Carson:

Yes, sir.

I don’t think they attacked the adequacy of the remedies which were taken which they recommended to this Court on the appeal as being sufficient.

They wanted more but they didn’t appeal for more.

Byron R. White:

That’s right.

Ralph M. Carson:

Now, I have my time as coming to a close and I would like to elude two other important matters dealing with the adequacy and fullness of the inquiry into erosion that I think the Mr. Chief Justice acquired about.

Since the original Decree was predicated on a machine count as you will find in the beginning of Judge Wyzanski’s findings where large percentages by count or attributed to United in the 30 categories machines.

We began the trial with an elaborate census of all machines counted in a 47 sample factories which census was then projected by statisticians to the universe of all the thousand factories in the country.

I have in front of me Exhibit d (8) which is that census which resulted in a machine count.

And the machine count shows that in 1963, the number of machines on lease out of the whole of the others, the number of machines on lease was only 15%, the number of United machines on lease as against all machines in the 47 factories and hence of the universe.

The number of machines purchased from United was 31%.

The number of United machines acquired from others and that is the secondhand market was 6%.

The competitive machines in the field in 1963 was 47%.

This is Exhibit 21.

Exhibit 60(a) has similar figures.

I will not take further time to elaborate that but I can assure you Your Honors, an elaborate machine count was debated at a great length between counsel.

A further element that I had asked that I put on Your Honors bench but there may not be time to describe is the basis for the testimony of Dr. Bertrand Fox who testified as an economist to the existence of fluidity, dynamism, full movement, new suppliers in the market and as a basis for that there was put in the evidence the most elaborate study that’s ever been made of the process of shoe manufacturing what Your Honors have before you as Exhibit D(54) and which shows — I’m now turning to Section 4 dealing with lasting which shows that in the method — in each method, each step a flow through the factory.

The shoe manufacturer has available to him in the different operations alternative machines.

Ralph M. Carson:

This illustrates what I said at the beginning, the heterogeneity of the market.

It’s not a simple monolithic market as with wheat crashed with aluminum.

These machines differ among themselves.

You do not need all the 115 United types to make machines.

As it shown with the testimony to make shoes, you can make shoes with a selection of different processes.

Now the witness, some of whose testimony I have adduced as an Appendix to the blue appellee’s brief, the witness went through this lasting table and explains what alternatives were available.

On the basis of these alternative choices and the break up in the system of machine distribution which the Decree is brought about, Dr. Fox testified in detail in under cross-examination, he is an imminent economist, a colleague known to Mr. Turner at Harvard.

He testified to the existence of full, free competition and the gradual reduction of the United share through the entry of all these competitive alternatives.

I come therefore without spending more time on that to the conclusion of what I had to say to the Court that has a great deal more in the record but I must ask myself, what is the purpose of an attempt to reverse this Decree and send us back to a new count of the erosion?

What harm is done by allowing this process of gradual liquidation which has been going on for eight years and now 13 years and will go indefinitely.

What harm is done by letting that continue.

What is the public benefit of breaking up an existing competitive system which is working satisfactorily and doing the surgical operation of divestiture which will certainly hurt investors no matter what pious phrases are used in the Decree.

It’ll certainly hurt investors, but which the customers themselves do not want.

It seems to me that we have a mere economic exercise in how Swift is to be interpreted in some cases that are not here.

It seems to me that we have gesture of the impatience which has no reason for the Attorney General to feel in this case and in some, whatever the percentage is that Mr. Turner would accept as an adequate measure after a term of year, say 40% in the case of the United occupancy.

How much time is he willing to give in the slow passage of time for that percentage to be attained?

Abe Fortas:

As I understand it Mr. Carson, your submission is that we ought to take a look at this record and arrive at the conclusion that despite what you suggest, there’s Judge Wyzanski’s error of law, we should ourselves decide that applying the correct legal standard, there’s no basis for reopening this record.

Ralph M. Carson:

I would certainly think that but I would not presume to say that he committed an error of law unless Your Honor so find.

It seems to me that while Swift does not apply in its strictness to this but for the language of Swift, the effect — there should be a change without new conditions is what we have in all litigated Decrees as well as consent Decree.

There’s really no issue to be served.

I think my time is expired.

Well if you’re right, unless your position really comes down to, as I understand it is given the findings of the district judge, really the only issue is that there should be a reconsideration of the original denial of the case?

Ralph M. Carson:

Yes, Your Honor.

That’s what it comes down to?

Ralph M. Carson:

It comes down to that.

Byron R. White:

And if you accept the trial judges statement that this Decree is producing precisely with the results it was expected to produce and then Swift becomes very relevant namely should there — should you now attempt to produce some results other than what was originally in this case?

Ralph M. Carson:

Yes, that is so and it —

Byron R. White:

And hence, the Swift standard would become relevant.

Ralph M. Carson:

And the Swift standard, apply it to that set of facts is in the interest of the order of the development and settlement of the law.

Yes, Your Honor.

Ralph M. Carson:

Thank you Mr. Chief Justice.

Earl Warren:

Mr. Turner, before you get in to your argument, would you mind discussing first the last matter that the counsel brought up about the futility of what you seek?

Donald F. Turner:

I would be happy to Mr. Chief Justice.

Mr. Carson asked what harm would be done by allowing this Decree to continue indefinitely if the pace that it is currently been carried on.

The harm is in our view, the 10 and now 13 years after the government obtained a Decree in this case which it hoped would dissipate United’s dominance of this industry.

United by any reasonable test is still dominant and this industry for a workable competition has not been restored to it, there has no prospect that it will within a reasonable period of time if the present Decree is left in tact.

We do not think this is a futile exercise.

Now, the question then may arise, are there other forms of relief including divestiture which might make this Decree more effective?

And we think there are.

We have not confined ourselves to the alternative divestiture alone although we would endeavor to show if we were given the opportunity of doing so that are feasible ways of affecting this.

There are other things that can be done.

The district judge in the original Decree determined although it was a rather difficult question that he would not prohibit United from leasing its machines all together even though it was quite clear that the whole system of leases had been an important determinant of United’s ability to maintain a big share of the market.

It gave it close and continuos connections with consumers.

It may well be at this point given what we believe the obvious failure of the Decree that that might — that option might now be taken of ending leasing all together.

United has secured new patents in the interim, some of these maybe quite important.

We could ask for again compulsory licensing of those patents.

United has a British subsidiary which is an important manufacture shoe machinery.

If that were divested, it might well become an additional competitive factor in this market.

Now of course I cannot assure this Court that anyone of those forms of relief would absolutely be feasible and appropriate.

I can assure this Court however that the government has good reason to believe that at least one of them would and we are requesting a hearing in order to have that opportunity — we think this market is by any reasonable test market where United has 62%, the nearest competitor has 9% but that is not a workably competitive market and that therefore the district judge oath to be asked to consider further forms of relief.

Abe Fortas:

Mr. Turner, you said all the time if given the opportunity, you’d show this and that and the other.

Now what about that — did you have a full hearing?

Did you tender evidence that was not received?

Was this a front patted hearing and just what is the position?

Donald F. Turner:

As Mr. Carson said, we had full opportunity to present evidence on the issue of whether there was or was not now workable competition in this market.

We did not have any opportunity to present any evidence upon the — about the feasibility of appropriateness of further forms of relief.

The judge by his pretrial order said, he would take no evidence on that issue until he had determined whether it was indeed appropriate for the Government to get any additional relief at all.

Earl Warren:

And that is what you seek in this litigation.

Donald F. Turner:

That is correct.

Earl Warren:

Because your complaint was dismissed.

Donald F. Turner:

Because our petition for modification was dismissed.

Earl Warren:

Yes.

Donald F. Turner:

That is correct.

Abe Fortas:

Well, that would really leads me confused because on your principal argument, I thought you said to me that the question before us was one of the standard to be applied to the issue as to whether the Government is entitled to reopen the Decree but now you tended all the evidence on the question of whether the Decree had failed to achieve the intended result, is that fair?

Donald F. Turner:

Yes, sir.

Abe Fortas:

And the judge decided or did the judge decide that you had failed to prove that the Decree failed to — that the Decree had not achieved its intended result?

Donald F. Turner:

Yes.

Well, you see in our view and the district judges view of what the object of this Decree was of course different.

We view the object of the Decree and he had so described it in his original opinion as being the eradication of United’s monopoly power and the restoration of workable competition.

He on this preceding, viewed the object of the Decree as simply gradually eroding to use his words United’s monopoly power and he determined that on basis of that description of the object of the Decree that it was indeed working as it had been contemplated.

Now, we of course insist that one — that was not the apparent object of the original Decree and indeed if it had been the explicit object of the Decree, there would not had been a satisfactory Decree for a monopolization case.

Now, what we’re saying here is that given what the proper purpose of that Decree was on this record and on the judges findings, it seems clear to us that that object has not been achieved and therefore, we are requesting the Court to send the case back to the judge with directions to hold a hearing as to what forms of additional release might be feasible and appropriate.

Now, at the least —

Abe Fortas:

Well are you saying — is it your position that the erosion didn’t go fast enough or that the Decree and was intended to operate like a boat from blue and eliminate the bad situation in one stroke or.

Donald F. Turner:

No.

We clearly could not have contemplated an immediate dissipation of United’s monopoly power with the Decree that had in it what everybody described is rather mild remedies.

But it is our feeling that ten years is long enough and if the end of ten years you’re still in a position that we’re now in and there is the possibility of many more years of this unsatisfactory situation that whatever the District Court might have thought the purpose of the Decree was, the proper object of a Decree on monopolization case is not been obtained.

Hugo L. Black:

Ten years is long enough to do what?

Donald F. Turner:

To dissipate on that — effectively dissipate monopoly power.

Hugo L. Black:

Now what does 62% have to do with that?

Donald F. Turner:

We would urge Mr. Justice Black that any company with 62% of the market with competitors no one of which is larger than 9% can fairly and accurately be described as a dominant company almost certainly having exclusionary power and at least some lines in this market and the judge himself said that United’s share in major machinery lines is far higher than it was in minor machines that this is a situation in which workable competition is plain enough in a store.

Hugo L. Black:

Is it your goal to get rid of the entire 62%?

Donald F. Turner:

No, sir.

Of course not.

Our goal — our goal is to endeavor by such further relief as we could establish what’s feasible and appropriate to create at least one additional substantial competitor if not immediately and this would hinge on whether we could get divestiture or not if not immediately but sometime within a reasonable future.

Hugo L. Black:

Can you say they have no competitor now?

Donald F. Turner:

No, sir.

They have competitors, a very large number of competitors.

The biggest one of which has revenue — had revenues in 1963 of $3.9 million as compared to United’s I believe 25.

In other words that largest competitor they have has only 9% of the market and produces only five machine lines as against approximately 140 by United.

Donald F. Turner:

And we — our position is that this is not the kind of market in which you can have any confidence at all that there is effective competition and indeed it indicates quite to the contrary that there is in this field no company capable of offering substantial across the board shown —

Byron R. White:

And if you would suggest — you would not suggest that the previous proceedings in this case that if you found — if in the first instance found United with 62% and its nearest competitor is 7% or 8% or 9% that you could successfully urge with United be dissolved or separated.

Donald F. Turner:

I would — that was — I’m afraid I did leave this a little unfair and I intended to come back to Mr. Justice White.

We would take the position that 62% of the market is at least prima facie monopoly power and if its creation or maintenance was equivocal in any right to factors other than skill, foresight and industry and the like and we would file a Section 2 monopoly case.

Now, in this particular case, you may say, well 62% is borderline and if we brought a case like that — heavily litigated issues but we would consider this to be inadequate showing of monopoly power which if acquired in ways that I describe would violate Section 2.

Now, here in this case —

Byron R. White:

Even though admittedly not now offering —

Donald F. Turner:

Oh, yes.

But in this particular case, what they now have —

Byron R. White:

Was acquired.

Donald F. Turner:

Is — was acquired maintained by a lot of practices and is at least in part what they now have is equivocal to that and that is why even though we could not now bring a monopolization case, even though we now assume they have an interim committed no unlawful practices that the original function of the Decree has not been achieved and surely, it is in the public interest to correct the situation like that.

Byron R. White:

Are there — are there any mergers who put in the — among the competitors of United or you take it in view of that?

Donald F. Turner:

I will — I think that I will make a safe answer, I know of none.

William J. Brennan, Jr.:

Mr. Turner, may I ask you.

Do I understand your position to be that we should examine the original Decree in what was said by Judge Wyzanski before that Decree was entered and decide for ourselves whether he properly interpreted what he then said was to be achieved by the Decree?

Donald F. Turner:

Mr. Justice Brennan, I — we have of course argued that he did not construe his original Decree accurately.

We have also taken the position however that even if he now — even the interpretation he now puts on it, you would deem to be not unreasonable that still whether there are any such paragraph 18 in the Decree or not, it ought to be opened to the Government in appropriate circumstances and we think this is clearly one to a petition for a modification and strengthening of a Decree that has failed in one of its major agenda.

William J. Brennan, Jr.:

Well now then, if we may proceed on the premise that he did or at least at his interpretation of what he made at that time was not an unreasonable one that is expressed today.

If we agree with that premise then I’d take it that the Government did have a burden to establish something before you were entitled on a hearing on suggesting alternative remedies, is that right?

Donald F. Turner:

Well, actually, the hardest case you could put to me is suppose that what he currently interprets his Decree as a meaning was perfectly obvious to everybody concerned at the time and then it may well — the Government would certainly be open to criticism if nothing else for not having appeal on the ground that that was not a Decree that would go far enough.

And I think it’s the worst posture I could put it in.

Byron R. White:

And the government — the government would then certainly be a subject to some heavier burdens of the —

Donald F. Turner:

Well —

Byron R. White:

— proceedings such as Swift.

Donald F. Turner:

— whether it would or not Mr. Justice White, I think it depends on how important you place the public interest in an effective Antitrust Decree as compared to some kinds of considerations that you ordinarily take into account — among private parties.

I mean —

William J. Brennan, Jr.:

Well, I’m trying to get back too Mr. Turner.

Donald F. Turner:

What I —

William J. Brennan, Jr.:

There’s a question from the Chief Justice earlier, you said several time, you felt the Government was improperly denied a hearing like other hearing in the sense has two kinds isn’t it.

Donald F. Turner:

Yes, sir.

William J. Brennan, Jr.:

There’s one — certainly, you had some kind of burden before you’re entitled to be heard on alternative remedies.

You have to show something.

Donald F. Turner:

Yes.

I have described that as being a burden to show and evident and substantial failure of the Decree.

William J. Brennan, Jr.:

Yes.

But now, there’s no question that in terms of the government’s opportunity to offer evidence on that issue, the Government is not suggesting that it wasn’t given a full opportunity it was, wasn’t it?

Donald F. Turner:

That’s correct sir.

William J. Brennan, Jr.:

And so that really on the merits of that issue Judge Wyzanski decided the merits against you, did he?

Donald F. Turner:

No, he did not.

Byron R. White:

No, he did not?

Donald F. Turner:

Now you see, again, his findings must be taken in the light of the test of the question that he raised.

He did not raised the question, has this Decree succeeded in restoring workable competition to this market.

The question he raised was interpreting paragraph 18 the way that he did, has it worked in the direction of restoring workable competition.

Is it gradually eroding United’s power?

Now having taken that as a standard, I think really what you get here are —

William J. Brennan, Jr.:

But where do you get that standard?

From where did that standard, I’m going to admit from what his conception of what he had intended by his original Decree?

Donald F. Turner:

Obviously so, except I can only suggest you that I would —

William J. Brennan, Jr.:

Well, I’ll come back to the question, is the government asking us now?

Donald F. Turner:

I can only suggest the possibility —

William J. Brennan, Jr.:

Now, was the Government asking us now to go back and decide whether Judge Wyzanski was right or wrong in the way that he interpreted what he intended at the end of the original Decree?

Donald F. Turner:

I don’t think that’s necessary, no.

Byron R. White:

But you just —

Abe Fortas:

Mr. Turner, I have a great difficulty with this.

I rate Judge Wyzanski’s opinion differently in a very likely wrong.

I read Judge Wyzanski is saying that the issue before him was, did the Decree work as it was intended to work as distinguished from where the results achieved to which the Decree was directed.

In other words, he said that the Decree commanded United Shoe to do A, B and C.

United Shoe did A, B and C and that finishes the matter.

Do you follow?

Donald F. Turner:

Yes.

Abe Fortas:

Now, he says that the government urges that even though United complied with the Decree and everything worked as it was intended, the result was not achieved to which the A, B and C were directed namely, the elimination or the break up of monopoly power and Judge Wyzanski said that the latter whether a Decree achieved that objective of breaking up monopoly power is not a matter upon which the government can now get relief.

You don’t open up a Decree for the purpose of seeing whether the Decree was wise but you can open up a Decree only for the purpose of seeing wether it was faithfully carried out.

Donald F. Turner:

Well, I —

Abe Fortas:

Now, you’re saying something very different and that’s what creating my difficulty and if it is something in his opinion that supports your construction of it and I’d sure like to see it.

Donald F. Turner:

Well, in the first place, this paragraph that you referred to in Appendix 82 when he says, what the government is complaining off is not that the Decree did not worked as expected.

You see, that binds up within it, one of the conflicts we have with the judge.

In our view, in our conception of what the Decree was, it clearly did not work as it was expected or at least hoped because we did not interpret the Decree and I think our brief in the Supreme Court when it was up on appeal makes this clear.

We did not interpret the Decree in the way that Judge Wyzanski now does.

Now, it seems to me that at the least, we have every reason in light of paragraphs 18 and 23 of that original Decree to assume that if the Decree had substantially fail to eradicate monopoly power we would be able to get some further relief.

At the very least, there has been no bad faith on the part of the government or no failure to take an appeal that should have taken as I indicated earlier.

Abe Fortas:

But Judge Wyzanski says very plainly and perhaps very bluntly, the Government is now coming in and saying that a Decree that was entered in 1953 was not well calculated or was not adequately calculated to break — to achieve a break up of monopoly power.

He says, that is not a subject as to which the Decree can be reopened.

Donald F. Turner:

That does —

Abe Fortas:

And you say it is a subject as to which the Decree can be —

Donald F. Turner:

Well, I would state references a little bit.

Abe Fortas:

— and if that’s that issue I can understand that.

Whether beyond that, I am having greatest —

Donald F. Turner:

Your Honor, I’m very sorry if I confused you.

Hugo L. Black:

Suppose —

Donald F. Turner:

We are indeed saying that whether the Decree was well conceived in its inception or not a material failure in the Decree makes it appropriate to at least look at other relief — that we are saying.

Hugo L. Black:

Suppose Mr. Turner, instead of having gone down to as much as you did the monopoly power had increased to 50% during the first ten years.

Would you think that under the Swift case, that would give the government the right to asked it to be reopened whatever the judge had said it meant to him?

Or can he bind the government by what he says the Decree meant to him?

Donald F. Turner:

I don’t think he can Mr. Justice Black.

Hugo L. Black:

That’s what you’re arguing here, isn’t it?

Donald F. Turner:

That’s right.

Hugo L. Black:

That you have a right to change this, ask it to be modified if there has been a failure to accomplish what the suit was about, namely to destroy the monopoly power.

Donald F. Turner:

That’s correct Mr. Justice Black.

If there are no further questions, Mr. Chief Justice, I submit.

Earl Warren:

Very well.