Department of Water & Power v. Allis-Chalmers Manufacturing Co.

32 F.R.D. 204, 1963 U.S. Dist. LEXIS 9869, 1963 Trade Cas. (CCH) 70,656
CourtDistrict Court, S.D. California
DecidedJanuary 22, 1963
DocketCiv. No. 568-61
StatusPublished
Cited by2 cases

This text of 32 F.R.D. 204 (Department of Water & Power v. Allis-Chalmers Manufacturing Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Department of Water & Power v. Allis-Chalmers Manufacturing Co., 32 F.R.D. 204, 1963 U.S. Dist. LEXIS 9869, 1963 Trade Cas. (CCH) 70,656 (S.D. Cal. 1963).

Opinion

BYRNE, District Judge.

The defendants have filed motions under Rule 12(f) of the Federal Rules of Civil Procedure to strike certain allegations from the plaintiffs’ complaints.

The complaints generally contain allegations to the effect that the conspiracies involved herein are the same conspiracies which led to the indictment of manufacturers of electrical equipment in the United States District Court for the Eastern District of Pennsylvania in 1960, followed by convictions in 1961. The complaints in the cases pending before this Court contain references to those criminal proceedings. In some cases, the complaints contain references to pleas of guilty and pleas of nolo conten-dere entered by defendants in those criminal proceedings. And in a number of cases, the complaints refer to the institution of civil antitrust proceedings by the United States against some of the same defendants.

Defendants now move to strike from the complaints all references to the Government criminal and civil proceedings and all references to pleas of guilty and pleas of nolo contendere entered in the criminal proceedings upon the grounds that these allegations are immaterial, impertinent and prejudicial to defendants. In addition, the plaintiff in several of the instant cases1 has filed motions for orders granting it leave to amend certain of its complaints and amended complaints to add allegations that certain •of the defendants plead guilty to indictments filed in the criminal proceedings mentioned above and that judgments were entered on said pleas in 1961.

It is the opinion of this Court that defendants’ motions should be granted.

Section 5 of the Clayton Act was amended in 1955 and now appears as Section 5(a), 15 U.S.C.A. § 16(a), which provides as follows:

“A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceeding brought by any party against such defendant under said laws or by the United States under section 15a of this title, as to all matters respecting which said judgment or decree would be an es-toppel as between the parties thereto : Provided, That this section shall not apply to consent judgments or decrees entered before any testimony has been taken or to judgments or decrees entered in actions under section 15a of this title.”

A judgment entered on a plea of nolo contendere does not create an “estoppel as between the parties” to the Government suit, and for this reason is excluded from the prima facie effect of Section 5(a). See Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F.Supp. 308 (E.D.Wis.1940); Twin Ports Oil Co. v. Pure Oil Co., 26 F.Supp. 366 (D.Minn. 1939), affirmed 119 F.2d 747 (8th Cir., 1941), cert. denied 314 U.S. 644, 62 S.Ct. 84, 86 L.Ed. 516 (1941). Furthermore, it is well settled that a judgment based on a plea of nolo contendere is a consent judgment within the meaning of the proviso of Section 5(a), and that such a judgment is not admissible in evidence under this section as proof of the facts on which it is based. See Twin Ports Oil Co. v. Pure Oil Co., 26 F.Supp. 366 (D. [207]*207Minn.1939), affirmed 119 F.2d 747 (8th Cir., 1941), cert. denied 314 U.S. 644, 62 S.Ct. 84, 86 L.Ed. 516 (1941). For this reason, the courts have consistently struck from complaints references to judgments entered after pleas of nolo contendere. See Atlantic City Electric Co. v. General Electric Co., 207 F.Supp. 620 (S.D.N.Y.1962); Alden-Roehelle, Inc. v. American Society of Composers, Authors and Publishers, 3 F.R.D. 157 (S. D.N.Y.1942); Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F.Supp. 308 (E.D.Wis.1940); Twin Ports Oil Co. v. Pure Oil Co., 26 F.Supp. 366 (D.Minn. 1939), affirmed 119 F.2d 747 (8th Cir., 1941), cert. denied 314 U.S. 644, 62 S.Ct. 84, 86 L.Ed. 516 (1941).

As for the pleas of nolo contendere themselves, it is uniformly held that such pleas cannot be used against the defendants as an admission in any civil suit for the same act. See Twin Ports Oil Co. v. Pure Oil Co., 26 F.Supp. 366, 376 (D.Minn.1939); Caminetti v. Imperial Mutual Life Insurance Co., 59 Cal. App.2d 476, 139 P.2d 681 (1943).

This Court is of the opinion that a judgment entered on a plea of guilty is also a consent judgment within the proviso of Section 5(a). The reasons for regarding judgments rendered on pleas of nolo contendere in criminal proceedings as within the proviso are that such judgments are entered before testimony in a trial on the merits is taken, signify capitulation, and therefore constitute “consent judgments”. See Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F.Supp. 308 (E.D.Wis.1940); Twin Ports Oil Co. v. Pure Oil Co., 26 F.Supp. 366 (D.Minn.1939). These characteristics are also typical of guilty pleas in antitrust cases, and consequently it seems that Congress intended both types of pleas to be included within the proviso of Section 5(a). See Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co., 211 F.Supp. 712 (N.D.Ill.1962); Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F.Supp. 308 (E.D.Wis.1940); Twin Ports Oil Co. v. Pure Oil Co., 26 F.Supp. 366 (D.Minn.1939).

Prior to the enactment of Section 5 of the Clayton Act in 1914, private litigants in antitrust actions could not introduce into evidence government-obtained judgments as proof of the facts on which they were based. Buckeye Powder Co. v. E. I. DuPont de Nemours Powder Co., 248 U.S. 55, 39 S.Ct. 38, 63 L.Ed. 123 (1918). Section 5 of the Clayton Act was adopted in response to a recommendation by President Wilson that Congress “agree in giving private individuals * * * the right to found their [antitrust] suits for redress upon the facts and judgments proved and entered in suits by the Government where the Government has * * * sued the combinations complained of and won its suit * * *.” 51 Cong.Rec. 1964. Congressional reports and debates on the proposal which ultimately became Section 5 indicate that the primary purpose of Congress in enacting the Section was to alleviate the difficult task of proof for injured private suitors by making available to them all matters previously established by the Government in antitrust actions. See H.R.Rep. No. 627, 63d Cong., 2d Sess. 14; S.Rep. No. 698, 63d Cong., 2d Sess. 45; 51 Cong.Rec. 9270, 9490, 13851. See also Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 567-568, 71 S.Ct. 408, 95 L.Ed. 534 (1951).

It is the general rule and the California rule that a judgment in a criminal prosecution may not be received in a civil action to establish the truth of the facts on which it was rendered. See Rednall v. Thompson, 108 Cal.App.2d 662, 239 P.2d 693 (1952); Burbank v.

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32 F.R.D. 204, 1963 U.S. Dist. LEXIS 9869, 1963 Trade Cas. (CCH) 70,656, Counsel Stack Legal Research, https://law.counselstack.com/opinion/department-of-water-power-v-allis-chalmers-manufacturing-co-casd-1963.