Burlington Industries, Inc. v. Milliken & Co.

690 F.2d 380
CourtCourt of Appeals for the Fourth Circuit
DecidedSeptember 23, 1982
DocketNos. 81-1823 to 81-1825 and 82-1240
StatusPublished
Cited by21 cases

This text of 690 F.2d 380 (Burlington Industries, Inc. v. Milliken & Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Burlington Industries, Inc. v. Milliken & Co., 690 F.2d 380 (4th Cir. 1982).

Opinions

HARRISON L. WINTER, Chief Judge:

This is an antitrust case in which the district court found a continuing horizontal antitrust conspiracy to stabilize and maintain production royalties on false twist machines and to monopolize the United States market for these machines.1 The core of the conspiracy was a 1964 settlement agreement of certain patent litigation then pending between Leesona Corporation (a non-party to the present case) and defendants which had the effect, as found by the district court, of stabilizing and maintaining the royalties charged by the coconspirators. After we modified the district court’s determination of liability to include all defendants, Duplan Corp. v. Deering Milliken, Inc., 594 F.2d 979 (4 Cir. 1979), cert. denied, 444 U.S. 1015, 100 S.Ct. 666, 62 L.Ed.2d 645 (1980), the district court decided the issue of damages. Initially it awarded plaintiffs treble damages in the aggregate sum of $20,902,005.39, and all parties appealed. While the appeals were pending, we remanded the case to the district court at its request to enable it to reconsider its ruling, and the district court reduced its award to $7,462,211.67. The previous appeals from the damage award and an appeal from the order reducing damages are now before us. We vacate the award and remand the case for further proceedings.

I.

The facts of the case were extensively found by the district court prior to the previous appeal. Duplan Corp. v. Deering Milliken, Inc., 444 F.Supp. 648 (D.S.C.1977). We will repeat them only insofar as they bear on the issues before us and then only in connection with the issues to which they relate. From the several appeals, there are seven issues that we must consider:

1. Whether the district court properly applied the measure of damages and correctly excluded evidence proffered by defendants as to the price plaintiffs would have paid for false twist equipment absent the price-fixing conspiracy.
2. Whether defendants should have been permitted to prove, in the damages phase of the trial, that plaintiffs participated in the price-fixing conspiracy and are therefore barred from all recovery.
3. Whether plaintiffs are estopped from recovering royalty-based damages because of their role in other litigation which resulted in a ruling that Leesona’s patents were valid.
4. Whether the district court properly applied the statute of limitations to plaintiffs’ antitrust claims.
5. Whether plaintiff Madison Throwing Company, Inc. (Madison) may recover damages sustained by a wholly-owned subsidiary of Madison which was merged into Madison during the pendency of the litigation.
6. Whether the district court erred in calculating the value of support services provided to plaintiffs by defendant Deering Milliken Research Corporation (DMRC) and Leesona Corporation (Leesona) during the damages period, and in excluding that value from the royalty-based damages before trebling.
7. Whether the district court erred in recognizing a defense of “claim reduction,” whereby it reduced the initial award against defendants by excluding treble damages attributable to Leesona on the grounds that plaintiffs had settled with Leesona in a related case.

We address these issues seriatim.

II.

To approach the issue of whether the measure of damages recoverable by plaintiffs was properly applied and to consider [384]*384whether the district court erred in excluding evidence proffered by defendants on the matter of damages, it is necessary to describe the context in which these questions arise.2

Defendant Moulinage et Retorderie de Chavanoz (Chavanoz) owned patents covering specific features of false twist machinery and thus had the right to make, use and sell machinery incorporating the patented features. It divided up its rights by licensing defendant Ateliers Roannais de Constructions Textiles (ARCT-France) to make and sell patented machines, while licensing DMRC to use the patented machines in the United States. ARCT-France issued a sub-license to Whitin Machine Works (Whitin) enabling it to sell the machinery in the United States. Whitin fixed its own price for the machines it sold, but agreed to sell only to purchasers approved by Chavanoz or DMRC. At a later date, ARCT, Inc. (ARCT) was incorporated to be the exclusive American distributor of machines manufactured by ARCT-France. Like Whitin, ARCT sold machines only to purchasers who were licensed to use them. DMRC issued sublicenses to throwsters to enable them to operate the machines purchased from Whitin and ARCT. DMRC required its use sublicensees to pay royalties based on the amount of yarn produced on the machines, and DMRC was required by the provisions of its license from Chavanoz to pay a portion of these production royalties to Chavanoz.

Plaintiffs Burlington Industries, Inc. (Burlington) and Madison3 are throwsters who purchased ARCT machines from Whitin and obtained use sublicenses from DMRC. They thus paid Whitin a given sum for the purchase of the machines and DMRC a royalty for the use of the machines. A portion of what was collected by DMRC was remitted to Chavanoz.

At the time that Chavanoz’s patented device was introduced into the American market, Leesona was the sole established competing manufacturer and distributor of false twist equipment. It, too, charged its throwster customers a production royalty for the use of its machines. The royalties charged by Leesona were roughly comparable to those charged by DMRC. Leesona sued Whitin for patent infringement in 1960, and the suit was settled in 1964 when the competing patent owners exchanged covenants not to sue each other or their respective licensees. In the liability phase of the present case, the district court found that the effect of the settlement was to fix royalties on false twist equipment to the detriment of plaintiffs. Having been affirmed in a previous appeal, that finding and the resulting liability are no longer at issue.

Prior to the trial on damages, the district court, on motion of the plaintiffs, ruled on the scope of the damages inquiry. It held that “proof of the payment of royalties by the plaintiffs following the illegal combination found to have existed between DMRC and Leesona sufficed to establish the fact of damage, and .. . proof of the amount of such royalties ... will suffice to establish a prima facie case of actual damages subject to diminution by the value of any considerations received by the plaintiffs in return for the royalties such as ‘support services’ allegedly furnished plaintiffs by DMRC during the damages period.” In pursuance of that concept, the district court awarded Burlington and its subsidiary Madison, for the various periods of liability, treble the royalties they had paid to DMRC and Leesona, diminished only by the value of support services furnished by DMRC and Leesona and an amount received by Burlington from Leesona in settlement of separate but related litigation. In accordance with our mandate in the prior appeal, the judgment was entered against all defendants. Although Leesona is not a party to the case, [385]

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Strickland v. Jewell
562 F. Supp. 2d 661 (M.D. North Carolina, 2007)
Katherine G. Ex Rel. Cynthia G. v. Kentfield School District
261 F. Supp. 2d 1159 (N.D. California, 2003)
Planmatics, Inc. v. Showers
137 F. Supp. 2d 616 (D. Maryland, 2001)
Susan Labram Bart Labram v. James Havel
43 F.3d 918 (Fourth Circuit, 1995)
Ferris v. Haymore
967 F.2d 946 (Fourth Circuit, 1992)
State of New York v. Hendrickson Brothers, Inc.
840 F.2d 1065 (Second Circuit, 1988)
New York v. Hendrickson Bros.
840 F.2d 1065 (Second Circuit, 1988)
Employers Insurance v. United States
764 F.2d 1570 (Federal Circuit, 1985)

Cite This Page — Counsel Stack

Bluebook (online)
690 F.2d 380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/burlington-industries-inc-v-milliken-co-ca4-1982.