EASTERN R. CONF. v. NOERR MOTORS
Legal provision: Sherman
Argument of Philip Price
Chief Justice Earl Warren: Number 50, Eastern Railroad Presidents Conference et al., Petitioners, versus Noerr Motor Freight, Incorporated et al.
Mr. Philip Price: (Inaudible) Your Honors.
This case is here on petition for review of the decision of the Court of Appeals for the Third Circuit which affirmed a decision of the District Court of the Eastern District of Pennsylvania and a case arising under the Sherman Act which was tried by the District Court Judge without a jury, pursuant to agreement of the parties.
With Your Honors' permission, I will divide the argument, present the opening and the closing portion of the argument will be presented by Mr. Hugh Cox following that presented by the respondents.
This case was a private Sherman Act case for treble damages, brought by 40 long-haul trucking companies and their trade association, the Pennsylvania Motor Truck Association which for convenience was referred to throughout this trial as the PMTA.
Against some 23 railroads and a -- an association of their presidents, those are the Eastern Railroad Presidents Conference by its initials, the ERTC and Byoir Incorporated, a public relations firm.
It resulted in a finding for the plaintiff, trucking companies by the Court of damages in the sum of 18 cents each.
A fine being in favor of the trade association for a sum of $650,000, the allowance of counsel fee in the sum of $200,000 and the entry of a restraining order in the form of a decree which I shall describe in detail presently.
This case involves the long-haul trucking industry only.
The long-haul trucking industry operates heavy trucks, large trucks which have extra loads of an excess of 18,000 pounds, gross weights in excess of 30,000 pounds.
And I think it would be helpful if I refer briefly to the historical background which led up to this suit which was brought incidentally in January of 1953.
Beginning on -- in 1930, the number of long-haul large trucks was relatively small, only perhaps 28,000.
By 1950, that had grown to 450,000.
That represented, perhaps 1% of the total number of motor vehicles which we use in the highways of the United States in that year.
And approximately 5% of those that were classified as trucks, so that it was a relatively small number of vehicles when compared with the total number that we use in the highway.
As those trucks grew in number, they likewise grew in size over that period of 20 years.And as they grow in size, the roads had to be increased in width.
The grades have to be flattened, the foundations have to be made much more firm and sound, bridges have to strengthened and so on.
The truckers as a group were actively engaged in lobbying for legislation which would enable them to carry larger weights, larger loads in their trucks and to operate larger trucks themselves because in the early days, the limitations or the size of trucks and weight of trucks was very hampering to the carriage of large volumes of freight.
As the weights increased, the fees did not increase proportionately.
And although the roads cost pretty much more to build and to maintain, the relative value of the cost to the trucking industry of using those roads which constituted their own right of way and which gave them the flexibility, was made their business possible, did not increase proportionately.
And because of the reciprocity provisions of state laws, whereby a truck license in state A could cause all other states free of additional license fees.
There were many states which these trucks could cause cost and whose roads they could use without the payment of any fees at all.
A conspicuous illustration with the State of Oregon, which in the very early days and long before this campaign which I shall describe in a few moments, began, imposed a fee or fees on long-haul trucks which were based upon two factors, their weight, the weight that they carry and the distance that they carry.
That's variously called under weight-distance tax or a weight -- weight-distance and ton-mile tax.
But that was unusual at that time and states -- narrow states such as Indiana and New Jersey could be caused by trucks without paying anything, unless they happen to stop to buy gas or oil.
In which case, they would pay a small tax on the oil or gasoline purchase.
But a state like Indiana or Jersey, the tax increased very largely, the size and strength of its roads and its bridges was in effect providing a free right of way for these large trucks which caused it.
Unless they happened to be licensed in the State of Illinois, Indiana, Oregon, New Jersey which was obviously not very usual.
So that to the extent that the legislatures of the several states could be persuaded to refrain from levying such tax as the weight-distance tax or the ton-mile tax.
The public at large was paying a large portion of the cost of maintaining the rights of way of these trucking companies who were therefore heavily and largely at public expense.
Studies by public officials of various states and of the United States indicate that -- that that was their conclusion.
And they were urging limitations, the limitations be maintained on these hours and weight of trucks or that their fees would be increased because of the enormously increased cost of building these new roads which were required by this type of business.
Thus, the right of way cost of the trucking industry was not based primarily on use or on economics but was based upon what the legislatures could be persuaded to grab or to requote.
Whereas, the railroads during this period of time obviously had to pay the entire cost of maintaining their own rights of way and likewise pay it in many cases very large taxes on their terminal facilities.
So that in this setting, the petitioners here and brought to on a public relations campaign which had two major themes.
One was that the damage done to roads by the big trucks without of all proportion to their direct weight and that it increased in geometrical rather than arithmetical ratio when compared with the weight and size of the trucks and that those trucks do not pay their fair share of the cost of constructing or maintaining the roads.
The question to this case is whether that particular public relations campaign violates the Sherman Act.
The court below held that it did and it is my purpose to discuss the reasons why we consider that decision erroneous.
The public relations campaign was presented in the form of speeches, press releases, articles, magazine articles and others.
All of it except some films and purely technical fixes has been reproduced in two volumes of the record, this large one and volume three, the smaller.
This size volume was prompted by the desire to present to Your Honors the magazine articles in the form in which they actually appeared in the magazines and this is the size of the Saturday Evening Post.
All of these articles are contained in those two volumes.
And therefore, the material which was presented to the public in the course of this public relations campaign is all documentary.
In presenting these two themes which I have mentioned, there were only five subjects which were the subject of discussion.
And each on -- in the brief at pages 6 and 7 are listed, the various exhibits by number and by page which appear in volumes 2 and 3 of the record under the category which property describes it.
And those five categories are summarized as follows.
One is support for or opposition to a specific legislated bills dealing with truck weights or taxes on the consideration in the various states.
Two, the relationship between highway maintenance and construction costs and the increased use of heavy trucks.
Three, the need for and sources of highway funds and the apportionment of taxes among highway users and the effect of heavy trucks upon existing highways and the prevalence for -- and the reasons, four, overloading of trucks.
And five, highway dangers and congestion contributed to by heavy trucks.
Now, all of those items, all of those topics were dealt with by various of these articles, speeches, press releases and so on.
But since they are all here, all putted, there's no question in this case of the accuracy of anyone's memory.
There's no question about the -- the way of oral testimony which Your Honors may see just as if it were only one article, one speech, one book, precisely what was said and how these subjects or how these two themes were presented to the public.
Justice Hugo L. Black: Indeed.
Justice Felix Frankfurter: Were they all --
Mr. Philip Price: It was -- I beg your pardon.
Justice Felix Frankfurter: Were they all sponsored by the conference?
Mr. Philip Price: They maybe considered as all -- all having been sponsored by the -- by the conference or by -- by -- or by the railroads.
Justice Felix Frankfurter: I happen to have opened this article in purpose, all the loads we're going to part on my own understanding.
Was there a disclosure in the publication that they -- that these represented the views of the railroads rather than --
Mr. Philip Price: No, sir.
Justice Felix Frankfurter: -- become disinterested experts?
Mr. Philip Price: No, sir.
No, sir, there was not.
This -- this campaign was conducted by what was termed in two ways for the court below.
One, the third-party technique which he described in two instances, which the judge described the two instances, as what he called the big lie.
What it amounted to was this that if there was material that was asked for by Senator Neuberger, for example.
It was given to him and he wrote his argument.
There were other articles which were written entirely by representatives insofar the public relations is concerned.
Articles that appeared in the newspapers were combinations of both.
They were the use of material that was made available by -- by -- or the public relations consultant.
Justice Hugo L. Black: Were there advertisements?
Mr. Philip Price: There were two or three only.
Two, I shall mention specific --
Justice Hugo L. Black: (Voice Overlap) the editorial in the Buffalo Evening News, how does that happen to be in here?
Mr. Philip Price: May I ask the page, sir.
Justice Hugo L. Black: Page 595 (b).
I'm just turning over now and I ran up on the editorial.
Mr. Philip Price: That's an editorial in the Buffalo Evening News.
Justice Hugo L. Black: I understand that but how does it happen to be in here?
Mr. Philip Price: That was offered as an evidence or offered in evidences as plaintiffs' Exhibit 295 (b) -- plaintiffs' Exhibit 295 (b) as an illustration of the material that was being put up as a result of the public relations campaign conducted by them.
Justice Hugo L. Black: As a result, so that the railroads had anything to do with these editorial.
Mr. Philip Price: No, not directly.
This -- this particular editorial as others were of a group, some of each were -- were prompted by the editorial writer's interest in the subject.
Others were prompted by a visit from someone from Byoir asking him to discuss to this subject.
Justice Hugo L. Black: Visit from whom?
Mr. Philip Price: Someone -- representative of Byoir, the public relations --
Justice Hugo L. Black: You mean the --
Mr. Philip Price: -- agent.
Justice Hugo L. Black: -- agent of the railroad?
Mr. Philip Price: Yes, who would discuss the subject with him and ask them to make comments either by editorial or -- or other ones.
Justice Felix Frankfurter: There's a number of such --
Mr. Philip Price: A number of them --
Justice Felix Frankfurter: There's number of such -- there is a number of such editorial comments.
Mr. Philip Price: Yes, sir, a number of editorial comments.
Chief Justice Earl Warren: Is there any evidence, they paid for those editorials?
Mr. Philip Price: No, sir.
So far as -- so far as the articles were concerned --
Unknown Speaker: May I ask you what (Inaudible)
Mr. Philip Price: Senator (Inaudible)?
Unknown Speaker: Yes.
Mr. Philip Price: Yes, sir.
So far as I know, Byoir had nothing, whatever to do with that particular article.
The -- the -- there was some evidence if I recall correctly that Byoir offered some statistical data to the Senator after they learned he was writing the article but the article was practically finished and whether it was used or not, we don't know.
Justice Hugo L. Black: What is this Reader's Digest article?
How does it get in here?
Was it -- the railroad put it in?
Mr. Philip Price: The Reader's Digest is a -- may I ask the page of that, sir?
Justice Hugo L. Black: 562 (b).
Mr. Philip Price: That is a condensation of -- I don't know, I beg your pardon.
The record indicates that that was not written by or sponsored by Byoir.
Justice Hugo L. Black: It was not what?
Mr. Philip Price: Writ -- either written or sponsored by Byoir.
Justice Hugo L. Black: Byoir wasn't put in here though.
Mr. Philip Price: It was offered as an -- offered by the plaintiffs as an exhibit, as an indication of one of the consequences of this public relations campaign because the --
Justice Hugo L. Black: Condensed -- condensed from Buffalo Evening News?
Mr. Philip Price: Yes, sir.
There were a number of articles which were -- which were written spontaneously as a result of the interest that was generated by the campaign which Byoir was conducting.
Some of the -- most of the articles in these two exhibits were -- I think you'll quite probably describe them as Byoir inspired directly or a number of them were purely spontaneous.
What they were --
Justice Charles E. Whittaker: I'm interested to know if I may ask you please?
Mr. Philip Price: Please, Your Honor.
Justice Charles E. Whittaker: What was the basis upon which the trial court admitted this exhibit, this Reader's Digest condensation at 562 (b).
Mr. Philip Price: Because it was an article that was -- that was written by Mr. Brownell originally about overloaded trucks breaking up the highway.
Justice Charles E. Whittaker: Was -- was that evidence of Mr. Brownell had something to do with the railroads?
Mr. Philip Price: No, sir.
He was an independent writer.
Justice Hugo L. Black: Was it the evidence that he had any -- anybody inspired it or anything of that kind?
Mr. Philip Price: Not as to this particular article.
Justice Hugo L. Black: Well, no.
From -- by Mr. Brownell, any of them by Mr. Brownell.
Mr. Philip Price: This is the only one that I recall by Mr. Brownell.
Justice Hugo L. Black: Only one.
Justice Charles E. Whittaker: That's the only basis now for admissibility of this exhibit?
Mr. Philip Price: I beg your pardon.
Justice Charles E. Whittaker: Is that the only basis claimed in the --
Mr. Philip Price: On this particular one (Voice Overlap) but the majority, the great number of them along this line, sir, were initiated by some activity on the part of Byoir.
They were prompted by an offer by Byoir to independent writers for example of research, the opportunity to examine statistics which Byoir had collected.
In one or two instances, Byoir wrote the article or Byoir's agent wrote the article directly.
In one or two instances, Byoir's -- Byoir offered to finance the research of an independent writer to see whether he would make up his mind to write an article or not.
But in general, you may say that the bulk of the material that appears in these two exhibits, these two volumes of the record, were the result of Byoir's activity in promoting this idea that the trucks damaged the highways excessively and did not pay their fair share of maintenance.
Unknown Speaker: (Inaudible)
Mr. Philip Price: Yes, sir.
Unknown Speaker: (Inaudible)
Mr. Philip Price: Yes, sir.
That was paid for by the railroads (Inaudible)
The Pennsylvania --
Unknown Speaker: (Inaudible)
Mr. Philip Price: That's right.
The Pennsylvania State Association of Township Supervisors was an organization of supervisors in Pennsylvania which for a long time has been fighting increase weights in trucks because of the damage it did --
Justice William J. Brennan: (Inaudible)
Mr. Philip Price: Oh, yes.
It's an association of the supervisors of the townships of Pennsylvania who had a direct interest in the cost of maintaining roads and the cost of maintaining bridges.
And therefore, for a number of years, they had been imposed to increase truck weights and decrease truck fee.
Justice William J. Brennan: (Inaudible)
Mr. Philip Price: That's right.
Justice William J. Brennan: (Inaudible)
Mr. Philip Price: Oh no, no.
Justice William J. Brennan: (Inaudible)
Mr. Philip Price: Oh, no and that's all.
That had been in existence for a long time.
And if Your Honor will turn back one page, you will see another advertisement.
You can't satisfy Rhode Island.
That likewise was paid for by the railroads but put out in the name of the township supervisors which asked for the opportunity to publish that information.
Justice John M. Harlan: Is there --
Mr. Philip Price: Now, contrast it --
Justice John M. Harlan: Is there any charge and stuff that furnished Byoir was false?
Mr. Philip Price: The charge of falsity was made by the respondent's only in respect of the concealment of the source.
There was no attempt to show that (Voice Overlap) --
Justice John M. Harlan: So a permanent misrepresentation of fact?
Mr. Philip Price: Yes, sir, of the source, but not as to misinterpretation of the facts which appeared either in the articles or in the advertisement's or otherwise.
There was a considerable differences of opinion as to the extent to which roads were damaged by trucks.
And that argument went on extensively.
But so far as statistical data is concerned, there was no attempt to show by any evidence that anything contained in the petitioner's material was not accurate.
In fact, the only effort to show facts was rejected by the Court on the ground that there was no substantial dispute about the facts and that he heard enough of it and would not allow any evidence on that subject.
Justice Hugo L. Black: May I ask you -- I'm looking into your questions presented.
I do not see any question presented with reference to the violation of the freedom of the press or freedom of speech.
Mr. Philip Price: The question is raised by the first -- by the interpretation of the Sherman Act.
Our contention --
Justice Hugo L. Black: You don't refer to it.
Mr. Philip Price: No, sir.
Our contention is this, that the Sherman Act is not violated by this particular public relations campaign.
The court below held it was that it -- that the Sherman Act prohibited this kind of campaign, so that the only question that was raised there was whether the campaign itself was in violation of the terms for Sherman Act.
Now, if Your Honors conclude that it doesn't violate the terms of the Sherman Act, it isn't prohibited by that statute, there isn't any constitutional question involved.
However, if it should be considered that the statute might be extended that far, then, a constitutional question is raised.
Justice Hugo L. Black: It's not raised in your petition, in your questions presented as I see -- that I see.
I do see that you referred to it in the statutes involved.
Mr. Philip Price: Yes, sir.
It's in the statutes involved, at the bottom of the page.
We referred in the First Amendment as having been raised by this.
It comes up only if Your Honors should consider that there might have been a violation of the Sherman Act by this particular public relations campaign.
Then, if you get to that point that constitutional question would be raised but it isn't in the first instance.
Justice Felix Frankfurter: You're so confident that this wouldn't reach the constitutional question.
Mr. Philip Price: No, sir.
I can't -- I can't say that but I will say that I think that a reasonable interpretation of the Sherman Act would lead you very far and short of the constitutional questions.
Justice John M. Harlan: Well, I suppose if the -- your position is, is it not?
That in construing the reach of the Sherman Act, the so-called First Amendment question is a relevant consideration in terms we do not -- we -- whether the Sherman Act reaches this kind of things.
Mr. Philip Price: Not essentially because the Sherman Act is designed to prevent private agreements producing restraints or monopoly.
Whereas, the only --
Justice Hugo L. Black: This was a private agreement (Voice Overlap) --
Mr. Philip Price: -- thrust of this campaign.
Justice Hugo L. Black: This appears to have been a private agreement (Inaudible)
Mr. Philip Price: Oh, no.
The consequence -- oh, that undoubtedly.
The consequence of the agreement was not any restraint.
There couldn't have been any restraint in the absence of legislative action because the thrust of this public relations campaign was not to restrict the truckers in any way or to create any private restraint in the operation of the truck business.
It could only have been restrained by acts of the legislature in imposing the type of taxes which had been in existence in the State of Oregon and which the railroads urged -- should be adopted in other states.
That's the only restraint and therefore, the legislative action which might have produced a mis -- restraint or a monopoly is not the kind of restraint or monopoly which was prohibited by the Sherman Act.
That is our fundamental position and we say that the Sherman Act should be construed not as the court below did but construed not to apply to this type of public relations campaign because it was directed to legislation.
Justice Felix Frankfurter: I was going to ask, Mr. Price, whether in this long -- in this fully old decree with regards fully -- quickly (Inaudible) whether you include -- whether you imprint the decision of this Court in National (Inaudible) 294 U.S. in which this Court took a half of the burden which trucks cast upon road in passing on the validity of imposing great cost in the railroad.
Mr. Philip Price: No, sir.
We did not think --
Justice Felix Frankfurter: (Voice Overlap) I have nothing to do with that decision (Inaudible)
Mr. Philip Price: Yeah.
No, that -- that decision was not printed among the documents.
May I illustrate by references to two or three of these documents, the type of a post that was made in the course of this campaign.
For example, the first one -- the first article, (Inaudible) the first one in this document, was described by the court below as damming the truckers.
It was referred to in the section of the opinion of the court below which has headed a campaign of vilification.
It is classified by the court below as a means of providing the base of a permit arousing the resentment of the general public.
And yet, if Your Honors will look at the article, it is a discussion of the transportation industry with particular reference to the dangers of socialism which had been incurred by England in their nationalization of the railroads.
Another article was called, "history, trucks and money," which was described by the court below as skillfully designed to arouse the farmers in opposition to legis -- opposition to the trucks.
But the truly legislative thrust of that article is illustrated best by the last paragraph which reads, "So if you are interested in your roads as every farmer must be, you will demand that your state legislature pass effective legislation for limiting the weight of the big trucks from enforcing the limitations or for making them pay taxes toward upkeep of the roads based on a weight they carry and the distance they travel."
And again, in the article, "Who shall pay for our roads?"
The -- written by Senator Nuebaker -- Nueberger.
The last three lines of that was, "Wouldn't it be better to defeat the lobby wherever it appears and enact the weight-distance tax in every state, so that all of these articles, all of these materials was directed toward the achievement of legislation.
And for that reason, we say that the Sherman Act could imply to it that the Sherman Act does not purport to -- to regulate the legislation which may create restraints or which may create monopoly.
Justice Felix Frankfurter: Is lobby --
Mr. Philip Price: That's the only type --
Justice Felix Frankfurter: Is lobby a neutral term or that depend on whether theoretic as to whom it applies?
Mr. Philip Price: Lobby?
I would say no.
Justice Felix Frankfurter: Neutral.
Chief Justice Earl Warren: Mr. Price, in your various case, does it make any difference whether these statements are true or false?
Mr. Philip Price: There was no evidence that any of them were false in this case.
But I would say that the -- that the proposition of the applicability or non-applicability of the Sherman Act to this type of campaign would not be dependent upon the truth or falsity of (Inaudible).
Your Honor will remember there's a one time people went to jail for asserting that the world was round and the question of truth or falsity frequently becomes one of debate or opinion.
And particularly in a -- in a field such as this where it is a matter of great divergence of opinion, the extent to which trucks do damage roads in the extent to which they should made in favor of -- favor of and that's the only question that was raised here by this campaign.
Chief Justice Earl Warren: The only reason I asked was because you mentioned that part of judges' decision where he referred to the big lie.
He also said in that same paragraph, speaking of the -- what he found was a conspiracy to this end by or assuredly chose the obvious shortcomings of the trucking industry and by use of dramatic segments of truth, distorted them into complete falsehoods while Byoir chose the appellation of third-party technique for its act -- activities, I prefer to treat the whole procedure in its true light which is the technique of the big lie.
Now, my -- my question was directed to -- to whether in -- in your opinion if it makes any difference whether that is the fact that there isn't a fact.
Mr. Philip Price: No.
I would say not in this -- in the posture of this case.
Chief Justice Earl Warren: It makes no difference.
Mr. Philip Price: Not -- not so far as the applicability of the Sherman Act's concerned over the Constitution.
Chief Justice Earl Warren: Yes.
Mr. Philip Price: What the -- what the Court said in that particular instance must be read in the light of an examination of these documents such as the articles to which I've referred because in the Court's mind, anything that was presented from the railroad's point of view in which not -- did not at the same time present the countervailing point of view of the truckers, was slanted, was a misrepresentation, was propaganda and was a part of this big lie concept.
In other words, in the absence of complete objectivity, the presentation of both sides of the picture at the same time, there was this unfortunate atmosphere which the Court described as the big lie.
Now I should like in my remaining few minutes to refer to the decree because that illustrates more clearly the consequences which this Court gets as a visual by virtue of holding that the Sherman Act is violated by a public relations campaign of this sort.
The Court entered a decree which restrains the railroads from -- in concert, combining to do anything which would restrict to prevent the existence, growth, development or expansion of the trucking industry by any of these --
Unknown Speaker: (Inaudible)
Mr. Philip Price: That's on page 164 of volume 4 of the record.
One, seeking to create resentment or hostility to plaintiffs in the minds of the general public.
In other words, if we do anything which would the lead the public to think any less of the truckers or the trucking industry, that would violate this decree.
Two, seeking to create resentment or hostility to plaintiffs in the minds of those persons who utilize or may utilize the services of plaintiffs' trucks and in such a manner as to interfere with business relations between the shippers and the plaintiffs.
Now, there was no evidence in this case of any interference with the business relations or between the truckers, the plaintiffs and their -- and their shipment.
The only evidence that was presented was -- of damage was that by virtue of the veto of the Pennsylvania Legislature known as SB 615, The Big Truck Bill in Pennsylvania.
The plaintiffs were unable -- the respondents were unable to carry as much freight as otherwise they would have been able to do.
And the stipulation was entered into which agreed that the only damage they suffered in this case was that caused by the failure or by the veto by the government of that particular piece of legislation.
So that --
Justice John M. Harlan: Was there any opposite number to this or was there any counter -- counter advertising going on --
Mr. Philip Price: Oh, yes.
Justice John M. Harlan: -- on behalf of the trucking company?
Mr. Philip Price: Oh, yes.
And Judge Biggs refers to it at some detail in his dissenting opinion in the court below.
There was a comparable campaign going on and being conducted by the truckers.
That was the basis of the contention in the counterclaim but it is not raised in this field.
Third, seeking to create resentment or hostility to plaintiffs in the minds of legislators, law enforcement officers, or other public officials or members of any branch of government.
In other words, under the terms of this decree, it would be violated if we should go to the legislature and ask them for any of this legislation which was sought in the course of this public relations campaign.
Four, publishing or causing the publication or dissemination of false, defamatory or derogatory material with regard to the plaintiffs or their business, so that if anything that might be considered later on to be offensive or derogatory of the plaintiff is published, it violates this decree.
Chief Justice Earl Warren: Suppose that -- suppose that section had just said, "Publishing or causing what publication or dissemination of false material."
What the --
Mr. Philip Price: That would not be justified by anything in the Sherman Act.
There is nothing in the Sherman Act which purports to deal with truth or falsity and there is nothing in any other statutes that I know of that would allow a decree under the Sherman Act to prohibit the dissemination of false material.
If false material is published, it may give rise to rights or obligations under other laws or other situations but not so far as the Sherman Act is concerned.
Chief Justice Earl Warren: But even though there was a -- in your opinion, even though there was a conspiracy to publish and disseminate false material for the purpose of -- of injuring their business, truckers' business.
It would not be a violation of the Sherman Act.
Mr. Philip Price: It would not be a violation of the Sherman Act if the purpose was to injure the business through the adoption of legislation.
It might be if it were for the purpose of injuring the business through depriving them of business which they otherwise might have by defamatory statements such as -- such as those which would criticize the means or ability of truckers to do their transportation work.
But that isn't in this case.
And the only thing we have here is a legislative consequence produced by an appeal to the legislature.
Now, instead --
Chief Justice Earl Warren: Well, how would we know -- how would we know that an article passed in the Reader's Digest which reaches perhaps 30 million people, would not have some adverse effect on their business other than legislative.
Mr. Philip Price: It might have but before there could be any recovery under the Sherman Act, that would have to be shown as a fact unlike a conspiracy which is attacked with the criminal side of the Sherman Act.
You don't have to show consequences whereas under the civil side, it is necessary to show as a matter of fact that that did in -- in fact produce some damage.
Now, there was no evidence of that here, no attempt to -- no attempt to offer any such evidence and the stipulation entered into expressly stated that the only damage suffered by any of these trucking plaintiffs was due to the veto by Governor (Inaudible) of this SB 615 legislation.
This legislative approach is entirely consistent with the attitude taken by the respondents themselves during the trial.
Their proposition was very simply stated and it was stuck to and with no departure.
It was simply this.
The petitioners have combined for the purpose of inducing the legislatures of the various states to enact legislation which will be economically harmful to the truckers, ergo, the Sherman Act is violated.
Now, we say that can't be so under the American Banana case and other cases where a legislation is ipso facto, lawful and therefore the -- a conspiracy or agreement to achieve legislation can't be unlawful and not only couldn't be prohibited by the Sherman Act, what has never been attempted to be prohibited by the Sherman Act.
One more word before I close on the subject of damages.
With reference to the damage by the -- to the individual trucking companies themselves, the court below held quite properly that to the extent they were damaged by the veto, they could not be recover.
That legislative action or governmental action of that character did not give rise to the compensable damages under the Sherman Act.
Therefore, they could not recover but the court awarded them 18 cents anyhow.
I submit the that was a voluntary act which was unjustified.
Insofar as the PMTA, the train association is concerned, that didn't suffer any damage at all as a result of this activity directed against the long-haul trucking industry.
The association is not a trucker.
And obviously, under the trade association, it may not recover damages on behalf of its members.
The trucking association spent money which was given to it.
If it hadn't been given to it, it wouldn't have spent it.
And it suffered no damage whatever because the amount that was allowed on the court below was not the amount that was contributed to it by the trucking members but the amount or some of the amounts that it spent.
Now, if it had been allowed to recover for the amounts contributed by the train company members that would've violated the terms and stipulation and would have given it a reward which the stipulation excluded, but since it's only trade association and since it wasn't damaged at all in itself as a result of anything done by the petitioners in this case, we say that it was not entitled to recover any damages to fight it, and for that reason, the judgment should be reversed.
Chief Justice Earl Warren: Mr. Khon.
Argument of Harold E. Kohn
Mr. Harold E. Kohn: Mr. Chief Justice and may it please the Court.
If Your honors will turn to page 202 of the record which is in volume 4, I want to refer briefly to the way in which many of the these articles which were referred to by the Court were tied in and shown to have emanated from the defendants here even though there is nothing in the article that would give anyone the slightest inkling that that was the fact and then I want to proceed with the argument as I planned it.
For example, if you look at the first letter which appears at 202, Exhibit E148, this is a Carl Byoir interoffice memorandum.
The enclosed (Inaudible) has passed the Board of Census on ER-TC and now we are ready to decide which magazine should perpetrate it upon the defenseless public.
Cole is convinced that can be slicked into a slick mag, advertisers be damned since it really doesn't take any round housewife at the truckers.
I'm inclined to agree that it could hit a good general circulation magazine.
If you could get a nimble from some such, I could I think convert it to the appropriate style or get sex into the lead or whatever is needed.
But then you get paid to what -- you get paid to worry about these things, so I'll accept your decision then you can convince Cole, he was one of the chiefs on the Byoir account.
Let's look at the next one.
Another nomination from the magazine department that ace ghost writer, James Miller, from one slight clipping in a manner toward Wisconsin Time developed a 1500 word-story, ‘History, Trucks and Money' which appeared in the April issue of the Grange.
This article was important to the ER-TC course because it reached the group -- the account was mostly concerned about the farmer.
Then the next arti -- the next letter, Railroad Vice President Mr. Petch (ph) of the Pennsylvania, this happened to stumble across and presented to Milton Eisenhower, then the President of the Pennsylvania State College.
The article I think is --
Unknown Speaker: (Inaudible)
Mr. Harold E. Kohn: Pardon.
Unknown Speaker: (Inaudible)
Mr. Harold E. Kohn: It was the -- what -- you knew where this letter goes to.
Unknown Speaker: (Inaudible)
Mr. Harold E. Kohn: The article.
Unknown Speaker: (Inaudible)
Mr. Harold E. Kohn: That's right.
The article was ghost written for the Grange by the railroads who paid for it but it nowhere know that.
It looks like it emanated from somebody who was a member of Grange or writers Grange sympathizer actually --
Unknown Speaker: (Inaudible)
Mr. Harold E. Kohn: Oh no, no, no.
This letter was sent with a copy of this article to Milton Eisenhower, obviously to influence his opinion as if it emanated from somebody who was totally (Inaudible).
The article that one of the members of the Court referred to, I think in the Buffalo Evening News.
If you look at in the fourth paragraph of that article, you'll see that -- this is at page 595 (b) of the record.
You'll see reference to a Griffinhagen report to the citizens' public expenditure survey which shows certain things with regard to trial.
That survey was paid for by the railroads through Byoir who arranged it.
They reactivated -- this was -- was a dead organization, then the report having been made, they circulated to all the newspapers not as coming from the railroads but its coming from something which purports to be an independent research organization.
And just example, the other day when the -- the radiant heat case was being argued.
If the American Gas Association had been able to setup some organization called the consumers research -- the consumers investigation division and had paid for and made all the studies and then sent various public utilities or the Public Utility Commission under the guise of being independent citizens or independent research organization reports, you know how the situation (Voice Overlap) --
Justice John M. Harlan: Supposing -- supposing all of these had been done directly by the railroads over their own name.
What would you say to that?
Mr. Harold E. Kohn: I should say first that that would have to be a different case, an entirely different case.
Justice John M. Harlan: Well, I'm trying to see what have been that --
Mr. Harold E. Kohn: And secondly, I think that if the railroad did this all over their own name for the purpose as this Court found of putting the truckers out of business and monopolizing that business for themselves, then that would have been in our opinion, a violation of antitrust laws for two reasons.
One, this material was highly defamatory.
It obviously created a -- an adverse impression not only in the minds of the legislatures but the minds of our public, the minds of our customers, the minds of anybody else to whom it -- it came across.
So that I think for that reason, it would've been just it if they had decided to organize a boycott or just as if they'd gone to a lot of people and tell them not to do a business with it.
In a moment, I'll elude to the fact that it's a word that I struggle with.
It's one of -- one of the new word that I don't like but the corporate image is extremely important and I have a collection of essay here by people in the public relations and advertising department who point out that your public image is very important in selling your product.
The customer frequently doesn't realize why he has an adverse reaction when he sees you or when he sees your product or when he sees your service.
Also, the -- these public relations studies indicate that the public image of the industry is important with regard to every man in the industry.
So I say sir, first, I think it's just as if they set out to boycott the trucks even if they publish this in their own name.
Justice Felix Frankfurter: Does that mean --
Mr. Harold E. Kohn: Sir.
Justice Felix Frankfurter: (Voice Overlap) if I understand you on that point that the railroad -- the service credited in the legislative eyes of the state candidly did this instead of -- to Madison Avenue that the problem wouldn't be in a -- serious to you as this one, is that it?
Mr. Harold E. Kohn: I think the source is -- as this Court said, I think in the Hazel-Atlas Glass case, truth needs to disguise.
Everybody is influenced by the source of the material.
If you know that I have a frankly antagonistic competitive position, you weigh differently what I say than if it comes from an ostensible third party who has no motive whatsoever and no acts to grind.
The first thing they ask any witness in any case is who is he?
What's his bias?
What's his motive?
And the railroads themselves, I mean anybody would -- would react that way.
And time again we see throughout all of the legislator patterns of Congress and elsewhere that it's important in matters of this kind, we have economic struggle, economic content to -- to reveal who is the source of the information just yesterday.
In the New York -- I'll come back sir in a moment if I may continue to answer your question.
Just yesterday, in the New York Times, in the matter of the C&O, the Chesapeake & Ohio acquisition of the Baltimore and Ohio.
There was run an ad in which they stressed that Standard and Poor had run and a study which indicated that it was a good idea for B&O share owners to accept the C&O offer.
It starts out, Standard and Poor recommends.
Now, that's of a great deal of weight because people think that Standard and Poor, and as far as I know, they are completely independent of C&O so that you can really say that this is what an independent third party statute.
Now suppose that it were found out that C&O had been paid by stand -- or Standard and Poor had been paid by C&O.
Or suppose we found that C&O had actually written this through some public relations counsel and planted it with Standard and Poor.
Obviously, it's not worth what its worth if it really emanates from Standard and Poor.
So I think sir --
Chief Justice Earl Warren: May I ask you -- may I ask you this question.
Supposed it's all true, suppose every -- it's just a converse on what I asked Mr. Price.
Suppose everything it said in this article is true when the mere fact that it was done by indirection be a violation of the law?
Mr. Harold E. Kohn: Once again sir, I think we're now -- one removed or actually two removed from our case.In other words --
Chief Justice Earl Warren: Well, it maybe a lot removed but I just --
Mr. Harold E. Kohn: It (Voice Overlap) it's coming out as I assume, Mr. Justice Harlan says in the name of the railroad.
Secondly, it's -- it's all true.
That's obviously in my opinion, a much more difficult case but it's not this case as I show from the finding.
My own opinion is actually, that under the Sherman Act which says that every combination only subject to the rule of reason which were decided -- which was passed out incidentally in two cases which held the particular conspiracy to be unreasonable.
Justice Felix Frankfurter: That makes every, every, doesn't it?
The rule of reading makes every, every, doesn't it?
Mr. Harold E. Kohn: (Inaudible) -- every conspiracy for the purpose of monopolizing or putting somebody out of business even though it uses means which are not otherwise illegal.
As these people say themselves in their brief, the test of what is illegal under the Sherman Act is found in the Sherman Act itself and you don't need to go to another act and find if something is illegal under that other act.
So that I think even there, if the purpose was shown as it was here out of their own mouth and incidentally, this is not just a documentary case, we have thousands of pages of testimony and a lot of these came out of the mouth of witnesses called by us for cross-examination, witness after witness, each putting in his little piece that made the entire mosaic.
I'd say in that case, if they prove -- if we could prove the intent and obviously, it would be much more difficult to prove the intent in that case.
Then I think too, you would have a violation of the Sherman Act where the purpose was as it was undoubtedly proved here to make trucking more expensive.
So that people who now are willing to pay a certain additional expense for flexibility, would be unwilling to pay that additional expense and would comeback to the railroad.
I'd say that you would have had a conspiracy regardless of the means carried out for making a competitors business more costly, more expensive and thereby taking people -- compelling people really who wanted to do business with them, to stop doing business with them because it's too expensive for them to do so.
Justice Hugo L. Black: May I ask you --
Mr. Harold E. Kohn: Well, that's -- that's a rather long-winded answer to your question, sir but I think it's a difficult question as I say removed from this case.
If I wanted, I have a relevantly complete answer.
Justice Hugo L. Black: I want to ask you one that's also removed from it but not totally removed.
Suppose the railroads get together and said, we want to put these truckers out of business.
The way to put them out of business is have Congress pass a law which abolishes to appeal certain law, takes away their right to use the road.
They -- that's all they do.
They write letters and write letters and write letters and write letters to congressmen and senators.
That's all they ever do and that's what they agreed to do.
They want to put them out of business that way.
Would that violate the antitrust law?
Mr. Harold E. Kohn: No, as I say -- as you say sir, once again, it's removed.
I think that if Congress would say -- assuming for other reasons it's constitutional which I think it's not now, I'll tell you why in a moment.
If Congress should do that then I think Congress pro tanto would've amended, repealed or done something to the Sherman Act so you wouldn't have the Sherman Act problem.
In other words, Congress can say that a certain business is -- we'll assume constitutionally for the moment.
It can say that a certain business is illegal.
Now, if that's all that happen, they would be saying the trucking is no longer under the protection of the Sherman Act.
Justice Hugo L. Black: Well, they want to put them under a law that's so heavy, they just can't compete with the (Inaudible).
Mr. Harold E. Kohn: As long as --
Justice Hugo L. Black: Agreed to it and that's what they are doing.
They only means by which they proposed to accomplish it, is by writing senators and congressmen.
Mr. Harold E. Kohn: Well, I think if Congress does it as we think --
Justice Hugo L. Black: I'm not talking about Congress doing it.
Let's say Congress didn't do it.
Mr. Harold E. Kohn: Oh I see.
Justice Hugo L. Black: (Voice Overlap) to do it and they write these letters.
It only means they're going to take to put them out of business is by writing letters to Congress -- congressmen and senators.
Mr. Harold E. Kohn: And they do it openly in their own name and they only state (Voice Overlap) --
Justice Hugo L. Black: Well, I don't care what -- would -- would it make any difference whether they did it openly or not?
Mr. Harold E. Kohn: Well, I think that the matter of pressing legislation and free speech and all that sort of things, comes into this case if it comes in at -- at all, only as a constitutional right which makes a part of the Sherman Act really unconstitutional.
I say there is nothing in the Constitution which protects the right by falsification to obtain legislation anymore than there's anything in the Constitution which protects you from being prosecuted for libel which is also a speech --
Justice Hugo L. Black: Well, you would say then that --
Mr. Harold E. Kohn: -- by which protects you from obscenity, assuming it be determined that it is obscenity.
Justice Hugo L. Black: You would say then that the campaigning that we had a few years ago where people just went out and got fictitious names and sent them into Congress and so forth is not protected.
Mr. Harold E. Kohn: Just that -- well, it depends upon who is doing it and why he is doing it, sir.
Justice Hugo L. Black: He does it because he wants to get certain legislation.
Mr. Harold E. Kohn: Just the other day, I think it was Senator (Voice Overlap) --
Justice Hugo L. Black: It's a nice question but it's --
Mr. Harold E. Kohn: Senator Dodd.
Justice Hugo L. Black: -- almost related to your question here.
Mr. Harold E. Kohn: On a radio program, I -- I'll have it -- well, I guess its right in front of me.
Senator Dodd on a radio program just November 23rd said, "If we are to preserve this precious right of petition, it seems to me that any legislature were -- legislator weren't dissolved.
But I want to know who is behind the petition before it gets any weight.
To establish what's in my mind, let me cite this kind of comparison.
Suppose the petroleum industry organized a petition asking Congress to pass certain legislation which really would benefit them greatly at the expense of other elements for our society.
Don't you think it would be important to me as United States Senator to know that the big oil companies were behind this and it's their employees and people who own stock in their companies got other people to sign it?
Well I think so and I think that any petition involved in it, the obligation to any petition has involved in it.
The obligation to make people who wrote it, who's behind it, who got it signed or asked people to sign it.
So I think that is a -- a very important element which cannot be divorced from this case before we get onto a case which may sometimes come before you where you have a pure legislative campaign honestly and openly putting forth only truth to an appropriate legislative body.
But as the findings of fact in this case made clear, you do not have such a legislative campaign in this case.
You -- first of all, quite clearly have a public relations campaign which was intended to injure us in every possible and conceivable way whether or not there'd be legislation.
I'll read that finding to you tomorrow morning.
Justice Felix Frankfurter: In applying your argument, you reject the notion that public relations counsel is part of the American way of life.
Mr. Harold E. Kohn: The public relations counsel is definitely part of the American way of life but he must conduct himself like an American, open.
Argument of Harold E. Kohn
Chief Justice Earl Warren: Eastern Railroads Presidents Conference et al., Petitioners, versus Noerr Motor Freight, Incorporated, et al.
Mr. Kohn, you may continue your argument.
Mr. Harold E. Kohn: Thank you, sir.
With the permission of the Court, I should like this morning to refer Your Honors to several specific places in the record where I think there are contained findings of fact which pretty clearly established what this particular case is about.
First in Volume 4 of the transcript of the record as you all kindly turn to page 88, you will see about two thirds of the way down a portion of the opinion of the District Court.
I might say incidentally that the District Court states and that in addition to the findings of fact, which it makes specifically that the findings and the statements contained in its opinion, are to be treated as findings.
Justice John M. Harlan: Where is that (Voice Overlap) --
Mr. Harold E. Kohn: Page 88, sir.
Beginning with the italicized portion, it was the purpose and intent of Messrs, Deegan, Littlefield and Mackie.
Those are all railroad or Eastern Railroad Presidents Conference officials on the one side and Byoir on the other to hurt the truckers in every way possible even though they secured no legislation.
It was their purpose to restrict the activities of the truckers in the long-haul industry to the greatest extent possible and finally, if possible, to drive them out of that segment of the entire transportation industry.
Now, if you'll turn please to page 100 or just (Inaudible) before this.
The Court states in the first whole paragraph on that page beginning about halfway down, it was a matter of first impression with the court upon the original reading of the complaint when this suit was instituted some four and half years ago that the charges made were rather incredible nature and that plaintiffs herein will have the most difficult test to establish their contentions by a fair preponderance of the evidence.
It is now apparent that with the exception of proving by a preponderance of the evidence, actual bribery of public officials and bribery of officers of public organization, the plaintiffs approved by a great preponderance of the evidence that a conspiracy in violation of the Sherman and Clayton Antitrust Acts actually existed its formation, its purpose, and the means by which it was affected and generally in the form and manner as alleged in the complaint, and I will refer to the complaint just a moment or two.
At page 101, the last paragraph beginning on that page, the Court has found as a fact that the railroads in Byoir entered into a conspiracy and unreasonable restraint of trade, the nature and purpose of which was to injure the truckers and their competitive position in the long-haul freight industry in the Northeastern section of the United States.
This of course involves interstate commerce.
The immediate purpose was to create public resentment to the truckers, not only in the minds of the general public, but in the minds of those who utilize the service of the trucks and in such a manner as to interfere with business relations between shippers and truckers.
Then finally, at the bottom of page 102 the sentence beginning about five lines from the bottom instead, "Instead of meeting the competition in the field in giving the shippers what the shippers wanted they," that's the defendants, "determined upon another course of action to injure and/or destroy the truckers and thereby force the shippers to their detriment to continue to use the railroads."
Now, if you could please turn back to page six but I want to show you one or two paragraphs of the complaint which make it quite clear that throughout this case and not only as episode at the end was the problem of our suppliers, shippers, customers and so on in this case.
On page 6 of the same volume of the record to which I have previously eluded, you will see under subheading E of paragraph 16 among the things that we complained that they were doing.
Vilification and defamation of the plaintiffs by the circulation to the public generally, to public officials and to suppliers and customers of the plaintiffs are false and malicious reports of and concerning the plaintiffs in their business of hauling freight.
And there were one or two other places where the same thing appeared, which I don't think I referred to you in reading.
And then finally, on the findings themselves, the specific findings, if you'll turn please to page 25, finding number 12, the bottom of the page, "On or about May 19, 1949, defendants other than Byoir, I may say here that there's another finding 14 which says Byoir came in to the later day, "acting through the ERPC, as Eastern Railroad Presidents Conference, combined then conspired with the intent and for the purpose and objective of eliminating truck operators including plaintiff trucking companies from the long-haul of transportation of freight and interstate commerce and the eastern territory and monopolizing that portion of interstate transportation in commerce for defendant railroads.
And on page 27, number 20, the third-person technique was adopted by defendant so as the public, including governmental officials, would not be able properly to evaluate their propaganda thus disseminated and in order to achieve for it, wider distribution and more favorable reception.
Chief Justice Earl Warren: Where is -- where is that did you say?
Mr. Harold E. Kohn: That sir is number 20 on page 27 about the middle of the page.
Chief Justice Earl Warren: Oh, 27, yes.
Mr. Harold E. Kohn: Now, the next, and I have just two more of these are on -- the next is on page 28 and it also is number 28.
It's not a basic finding such as those that I referred to but it does refer to one of the articles, which I think the Chief Justice may have inquired about yesterday.
And it's simply (Inaudible) perhaps 10 or 15 which covers specific types of material within volume 3.
Defendant has also caused to be published in national magazines and other publications, articles by our extensively independent authors, again, repeating the anti-truck propaganda line of defendants.
Byoir prepared or participated substantially in the preparation of such articles and in their distribution.
In connection of the railroad with such articles was concealed.
These articles included.
And the first one was the one referred to yesterday, "The Rape of our Roads," Frederick G. Brownell, Reader's Digest July 1950.
Byoir, as the finding indicated, prepared it, got it -- gets -- prepares this article and get some place in magazines.
And of course, the man whose name as I extensively signed to them gets the usual author's fee from the magazine.
Now, finally on page 29, number 31, as part of their campaign, defendant's vilified long-haul truckers as Five Percenters.
Now, you remember that at or about the time that this campaign was going on, there were legislative investigations with regard to so-called influence on congressional and other governmental agencies here in Washington.
And the term Five Percenter had come in to popular acceptance as a term of Odium at that time.
Now, they applied that term and their own interoffice memoranda indicate that this was done deliberately and for the purpose of associating with us and having carry over to the truckers who had nothing whatsoever to do with the legislative investigation, then going on underway or the practice of it -- in it.
The same term of public disrepute, Five Percenters and the reason was their justification among themselves was that 5% of the trucking industry was composed of the long-haul truckers.
And that Court continues which connoted fixers and characterized truck operators as evil, sinister, wrongdoers and villains and all --
Justice Hugo L. Black: What page is that you're reading from?
Mr. Harold E. Kohn: That sir is page 29, finding number 31.
Now, these findings are not only based on what you saw by way of magazine material in -- in volume 3.
In addition to that, there was a tremendous amount of other written material.
They were literally thousands of pages, as my recollection, of testimony by people on the stand, their people whom we called for cross-examination as a result of which a good bit of this material was developed.
For example, they send people around regularly speaking to all sorts of service organizations.
By that I mean the Rotary, Kiwanis and Lions and so on which are composed of businessmen who are natural customers of the truckers.
And these people testified on the stand or those who sent them around testified as to the nature of a lot of other material other than these magazine articles.
Everything in these magazine articles before any particular article was admitted into evidence was identified by a witness on the stand, either that he orally told what the connection was of Byoir and the railroads from the witness stand or there was a memorandum which he identified from his file which tied every one of these things in -- with the railroads and Byoir.
Now, these findings were all sustained by the Court of Appeals.
As a matter of fact, no issue was even raised in the Court of Appeals as to whether they were correct.
And as a matter of fact too, I think, it's clear from the record here, and I've gone over the questions presented two or three times both in the brief and in the original petition for certiorari here, that they're not challenged, they're not raised in the questions involved or the questions presented to this Court.
And those are the findings which are established the facts for this particular case.
Now, we think that the issue is not whether the Sherman Act applies to or covers a legislative campaign, although I indicated yesterday and I will later today that I think it does.
But whether a conspiracy by the defendants to drive the plaintiffs out of a very important and vital segment of interstate commerce, namely, long-haul trucking and to monopolize it for themselves utilizing what Judge Clary called the "technique of the big lie," in which they actively misrepresent and deceive people as to their role in this campaign, where they seek to destroy the plaintiff's goodwill to alienate its customers is removed from the Sherman Act merely because the defendants also sought to achieve their purpose by procuring restrictive legislation.
The legislation I may say, not at the congressional level but at the state level and that is of some importance here, in order to increase the plaintiffs' expenses of doing business and the price of their service to the public.
Now, the fact --
Chief Justice Earl Warren: Mr. Kohn, I understood -- I understood Mr. Price to say that there was absolutely no testimony here to indicate the false of any of these statements.
Did I misunderstand him or --
Mr. Harold E. Kohn: Well, I think he may have so stated but I think if he did, it was incorrect then I -- I was going to come a few moments later to some of the misrepresentation.
Chief Justice Earl Warren: Don't disturb your (Inaudible)
Mr. Harold E. Kohn: Now, there are number of cases which we cite at page 16 and 17 of our brief.
And at page 2 of our very short, supplemental brief, which hold that even if the main thrust of a conspiracy is to achieve monopoly or restriction by legislation.
But that does not prevent it being a violation of the Antitrust Act.
And this is what Mr. Justice Harlan mentioned I think asked about yesterday.
In the Sisal Sales Corporation case at 274 US 268, practically the sole method whereby they sought to achieve their purpose was by legislation.
And this Court, I think, then speaking as a matter of fact to Mr. Justice McReynolds had no trouble whatsoever in concluding that that was a violation of the Antitrust Act.
There are number of other cases, many in the lower courts, which hold the same thing on page 17, the basing page of the brief to which I just referred you.
There are number of cases in many circumstances, there's been one as a matter of fact, which was tried at some length and went to a great many procedure of step right here in the District of Columbia where a jury, just quite recently after the District Court and the Court of Appeals upheld that the complaint very much like our complaints stated the course of action, where the jury found for the plaintiffs and held that this was a violation of the Sherman Act.
There are cases in the Seventh Circuit.
There are cases, a matter of fact one instituted by the United States Government itself and the Association of American Railroad's case in the District of Nebraska, 1945.
Your Honors are familiar with the Maryland and Virginia Milk Producers case where one, incidentally out of the allegation, was that the defendants in that case were doing just what was sought to be done here.
That case was disposed off by a consent decree, I think approved by Judge Holtzoff, just a few weeks ago in which one of the things that the defendants were enjoined from doing was engaging or employing any person to present in his own or as any persons other than defendants, the views of defendants concerning the enactment, amendment, repeal or rescission of any legislation or regulation affecting the defendant or from remunerating any person who without disclosing, either that he is presenting the views of defendant or that he is being remunerated by the defendant, makes representations to a legislative or regulatory body or who would be expressed or implied direction or requested defendant makes representations to any organization or association without making either such disclosure.
I think it was Mr. Winston for the Government the other day just before your Court sited the United States versus Borden case as a type of situation where the use of governmental or legislative regulation does constitute a violation of the antitrust laws where the purpose is to drive somebody else out of business or to monopolize a field of interstate commerce.
Now, the background of the Act, I think it was to examine, indicates the same thing.
I think Mr. Justice Black in the South-Eastern Underwriters case pointed out that an organization, I think which was called the "wheel" was started by the farmers and people of that day because the trust and this was an antitrust case, not only were exercising economic power but they're exercising political power.
They were influencing the legislatures to the detriment of the people who had to be protected by the legislation which was enacted in 1890.
I think that fact that this Court has been mindful of the prevalence of legislative attempts to achieve monopoly as further indicated by the Socony-Vacuum case in which Mr. Justice Douglas wrote the opinion.
And he pointed out that merely because you achieved your purpose to legislation does not exempt you from the antitrust laws and cited three or four types of specific exemption which Congress granted when it wanted to, to particular industries to proceed to do something through legislation or through state administrative practices, which otherwise would have been prohibited by the -- by the Sherman Act.
You had a somewhat similar situation.
For example, in Georgia versus Pennsylvania Railroad where the railroads defended on the ground that, "Well, we're not doing anything which is in violation of the Sherman Act because we have to proceed through the Interstate Commerce Commission or the other appropriate regulatory commissions and how can a conspiracy or combination by us to get rates which those agencies must approve, and which must be reasonable because they wouldn't be approved if they weren't reasonable, how can that be a violation of the Sherman Act?"
And the Court held that, while the rates maybe perfectly proper, the combination to eliminate the competition and to seek in incombination a rate free from the free play of competition which should precede the rate making process was itself a violative of the Act.
And in those instances, I say where congress has seemed fit to grant exemptions to the Sherman Act, as in the Bullwinkle Act, as in the Insurance Act and so on.
Congress has done so, but it's been manifested throughout, from the very beginning, in the -- in the original Trans-Missouri Railroad cases, which were among the first cases to come up under the Antitrust Acts involving the railroad.
That they fully con -- contemplated, that regardless of the means if you sought to achieve the purpose of your conspiracy, if your purpose was to monopolize or to restrict that that was illegal.
Mr. Justice Harlan, I think, in the Northern Securities case, very clearly went into this problem and -- and pointed out that, in that case, similar to the case that we have here where the State of New Jersey had purported to permit the creation of certain trust which were -- by trust I mean large organizations controlling other companies and so on which were illegal under the Sherman Act.
It was first pointed out that the State of New Jersey, such as here, had no reason to suspect that those who are taking advantage of its liberal and corporation laws had in view the purpose of destroying commerce and then the Court continued.
And I just want to read briefly a line or two stating that, "No device invasion of the provisions of the antitrust laws, however skillfully such device may have been contrived, then no combination by whomsoever form is beyond the reach of the supreme law of the land.
If such device or combination by its operation directly restrains commerce, then later on while every instrumentality of domestic commerce is subject to state control, every instrumentality of interstate commerce may be reached and controlled by national authority, so far to compel it to respect the rules for such commerce lawfully established by Congress.
No corporate person can excuse the departure from or violation of that rule under the plea that that which it has done or omitted to be done is permitted or not for -- forbidden by the state under whose authority had came into existence."
We repeat that no state can endow any of its corporations or any combinations of its citizens with authority to restrain interstate or international commerce.
Justice Felix Frankfurter: But this Court has held that a state court, despite the Commerce Clause, regulates the way --
Mr. Harold E. Kohn: Yes.
Justice Felix Frankfurter: -- (Voice Overlap) et cetera, which is a very different situation from the Northern Securities situation.
Mr. Harold E. Kohn: May I say so that there is no doubt that that is true.
We do not seek here to invalidate the legislation itself.
We are -- although I think, as a result of your decision in Bibb versus Navajo, that if this legislation does unreasonably burden commerce, it could be declared unconstitutional.
There, I think it was, you declared unconstitutional state statute which merely required the certain kind of mudguard which was held to be burden so.
We say that the people who seek to combine to achieve their monopolistic purpose are restrained by the Sherman Act from doing so, just as in the Georgia Pennsylvania case or in any of the many cases, Borden case or any of the case which arise under this principle.
The rate which the Interstate Commerce Commission or some other regulatory bodies fixes is perfectly valid.
But the people who conspired to get it may be restrained under the Sherman Act.
Just recently, you had another coming out of our Circuit.
The RCA case where the Federal Communications Commission held that the transfer of a particular television station in Philadelphia was perfectly proper even though incidentally, one of the things they're supposed to consider is whether there's an antitrust violation.
And this Court, now reversing the court below that that did not prevent the United States Government from proceeding under the antitrust statute to penalize the persons who may have conspired and it was their charged did conspire to get that station and that station transfer approved by the Interstate -- I mean by the Federal Communications Commission.
Justice Felix Frankfurter: All I'm suggesting that --
Mr. Harold E. Kohn: They're two different things.
Justice Felix Frankfurter: -- that the Northern Securities case doesn't help us from the slightest with this problem, because Jersey couldn't authorize its cooperation to enter a combination which by -- the Sherman law because that's beyond -- that was beyond the power of Jersey, with a combination or no combination, whether spontaneously generated or stimulated.
Mr. Harold E. Kohn: I certainly agree with what -- what you say about the law.
Now, if I may turn briefly to some of the misrepresentations which occurred in this play -- in this case.
It may say also that these people and the evidence makes it clear were old hands of this.
Byoir and this was testified to as part of the evidence on the case below had been the subject of antitrust suit in the Seventh Circuit, the famous A&T case where many of the same things took placed.
The testimony was and this is testimony on the case that they have very slight regard to the antitrust laws.
They're sort of like traffic violation.
They're not really serious.
I think he said that the Government shops around until they finally get a court that's willing to convict you.
The railroads themselves had been through the same problem.
The Willard Committee of the United States Senate had exposed in the 1940, a very similar type of campaign in other areas and that too is in the record below, in which they had done much the same practices in other areas.
Now first of all as to the misrepresentations, basically, we think -- and there's one real type of misrepresentation that they misrepresented the source of the material.
Who was paying for, who was sponsoring and who was behind and then what the motives were?
They actually created organizations which had no other purpose, no other function except to distribute their material on the names which were wholly misleading like they set one up called the Empire State Transportation lane.
They reactivated and financed a lot of organization to which had been dormant like the New Jersey Automobile owners.
And the New Jersey automobile owners was the one and who is named extensively a man was going throughout New Jersey and Pennsylvania and elsewhere making speeches to Rotary, Kiwanis and so on about the damage of the trucks we're doing.
They used existing organizations like the Township Supervisors in Pennsylvania.
And I think Mr. Justice Brennan referred to yesterday, where they published in the name of the Township Supervisors and ad, which have been and been paid for by the Township Superviders -- Supervisors organization would have been a plain violation of the Pennsylvania statutes which forbid this organization to use its money for any of such purpose.
And the ad was placed, composed, run everything else by Byoir and paid for by The Railroads.
They had a television program which they ran in the name of the grange, where once again, it was a plain violation of the Federal Communications Act which said that in a program of that type you have to put -- you have to announce who the real sponsor is, who is the advertiser, or who is the sponsor paying for the program.
Nowhere that it appeared to the Railroads, in this program were the actual sponsors and this program was put out in the name of the grange.
Then, there were more specific false statements.
If I may epitomize the -- the subject of the dispute for just -- for just a moment, it's settled by the Maryland Road Test, I don't think that any dispute but regardless whether it's settled by the Maryland Road Test, the Maryland Road Test did prove this.
That the important thing is not what the weight is in the truck altogether but how much weight is on each axle.
It's like a man on snow shoes, 200 pounds, and go over snow but a 50-pound child, just wearing a child on shoes will -- will fall through.
The important thing is, what it is the load on each axle and second what is the subsurface of the road, because as you've seen, sidewalks subjected only the ordinary pedestrian traffic will crack if the subsurface is not properly prepared.
Now, they represented that this test had shown that the overall weight was the important thing in damaging roads.
Now, this was particularly important in Pennsylvania where there was a bill pending which would have increased the weight but decrease the axle load limit to the benefit of the truckers, to the benefit of the public.
In other words, the truckers could have carried more cheaply.
The roads would have been subject to actually to less damage and the public would have gotten services more cheaply.
They defeated that bill by misrepresentation of this Maryland Road Test saying that it had shown that the increased weight that we wanted was what would damage the road.
Now actually, there was on the witness stand in this case, a former secretary of Highway of Pennsylvania who had transmitted a report to the Governor, the Governor's office upon which great reliance was placed by the Governor and be telling this measure.
That man on the witness stand still at that late date did not know that the report which had come to him from one of his subordinates had been prepared and written word for word by Byoir people.
We asked him several times and he said, "Well, it seems to have the style of my subordinates so I just -- I assumed, I -- I felt safe.
It was prepared by -- by my people in my department."
And it was admitted on the record and there's no doubt about this that that report was prepared word for word by the Byoir people containing this sort of misrepresentation.
The same thing was done with a Federal Bureau of Roads film, which was shown in the courtroom.
We showed the original film as it was prepared by the Bureau of Roads and then we showed the film as it was put out by some organization.
I've forgotten the exact name of it which put this out.
And the head of the Bureau of Roads was in the courtroom and he expressed the opinion that it was not the same or substantially the same as the film which he had originally edited.
They prepared televisions scripts, radio scripts, which portrayed all truckers as -- I think their phrase was relating to evil, sinister, wrongdoers.
They'd cast them as heavy and villain, that sort of thing.
They've prepared accident pictures.
No matter how a truck happened to be in an accident, whether it was the truck's fault or anybody else's fault, that picture was kept in a file and then circulated around as if it was the truck that was responsible for every one of these accidents.
And they did this through news agencies, syndicating agencies which appeared to be independent news agencies, syndicating agencies, but they're actually owned.
We find later a lock, stock empowered by Byoir.
There was one called the Central States News Views.
First, they started out a -- remember the text yesterday.
If you look at page 559 (b) of volume 4, they have a young lady called Ms. (Inaudible) of 1949.
And right below her is a road all smashed up.
Then they have Ms. Plunging Neckline.
They showed a truck which is bogged down on a muddy road.
Then they continue that sort of thing through 561 (b) where Byoir has distributed, this time to another syndicate called SC syndicate.
This horrendous series of pictures, truck terror time and one truck accident every 10 minutes and so on.
And pictures of automobile -- truck accidents which nobody endeavored to prove and nobody could prove in any of instances were caused by the trucks and which gave a completely misleading picture when circulated in myth.
And their office memoranda indicated that they circulated literally thousands and tens of thousands of pieces of materials of this kind.
Now, if I have just a word about the scope of this injunction.
I would call your attention to once again volume 4, which we had before.
First, at page 164, at the bottom of that page, you will see that whatever is contained in this injunction had application only if two facts first occur.
First, the only thing that's prohibited is what they do in combination or conspiracy and secondly for the purpose of driving us, as driving the truckers out of business or severely restricting truck competition, as to the bottom of 164, the top of 165 of volume 4 of the record.
Then you see that the Court even went further at 166, in item number 9 in protecting the rights of the plaintiffs by pointing out that the only sponsoring instigation or support of legislation, which was prohibited, was that where -- or rather putting it the other way.
It was prohibited unless their opposition be openly and publicly made in the name of the defendants or any of them.
In other words, if they came out and stood up and were willing to be counted, would give their names then they could ask for this legislation.
If they didn't, then it was prohibited in the context of this case and finally in Article V, Roman numeral five of the injunction on 166, the Court said that they can ask for legislative, administrative or other governmental benefits for themselves in any manner and that where the plaintiffs were asking for legislation.
They could oppose such legislation by appearing before the legislative, administrative or other governmental body.
So the only thing they're prohibited from doing so far as legislation is concerned, is combining to put it out of business by seeking legislation in this so-called third party technique or not for attribution or big lie manner, everything else they can do by way of seeking legislation.
Justice Hugo L. Black: Do I understand, you read that as you named it.
They are enjoined from asking Congress for past legislation, (Inaudible) past legislation, unless they put -- put their names to the request?
Mr. Harold E. Kohn: Well this, the context of this order was state legislation.
I think that's of some importance sir because one of the things that they did must -- misrepresent was the National Transportation Policy of Congress but passing that for the moment.
The court said that, "Yes, if they are combining to do this and if they are doing it for the purpose of putting us out of business, then they can seek the legislation provided they don't deceive the Legislature as to the source of the material which is being disseminated."
If they do deceive the Legislature, then they can't do it.
If they are deceiving the Legislature in combination and for the purpose of putting us out of business.
In other words, the only thing prohibited is that which had three incidents.
One is in combination, two to monopolize, and three by deception.
Justice Hugo L. Black: Has there been any act of Congress in this field?
Mr. Harold E. Kohn: The only act would of course be the general lobbying acts, which in United States versus Harris, this Court has disdained.
It's not they buy or maintained that it wasn't really seeking legislation, that it wasn't the lobbyist, that it -- its role was not in connection with legislation as a sort of dichotomy in their thinking I think throughout here, they were repeatedly --
Justice Hugo L. Black: Whether true or not, I -- I was asking you about the scope of the injunction?
Mr. Harold E. Kohn: Well, I think sir the scope of the injunction is that if they seek state legislation and they satisfied those three conditions, then they're prohibited from seeking it.
If they seek legislation only for themselves, perfectly alright, they can do it any way they want in combination or by deception or any other methods.
But if they seek legislation to restrict us, that is to impede our business, then if it's in combination, if it's for the purpose of putting us out of business, and if it's deceptive, then they can't do it.
But if any -- anyone of those three is not present, they can.
Justice Hugo L. Black: The large part of the legislation (Inaudible) is directed -- directly at doing an injury to one group in order to benefit another group?
Mr. Harold E. Kohn: Much of it I think is sir, yes.
Justice Hugo L. Black: And this would mean that these people enjoined from doing that as they combined with one another, both of them want to accomplish the same thing?
Mr. Harold E. Kohn: And for the purpose of achieving monopoly.
Justice Hugo L. Black: And -- and for the purpose achieving a monopoly by reason of this passage of a law?
Mr. Harold E. Kohn: And -- that's right and deceptively.
Justice Hugo L. Black: But supposed they were trying simply to create a monopoly to say that, "We want to get to Congress to pass a law which allows the railroads to do all the transportation business," would they be enjoined here?
Mr. Harold E. Kohn: No because if they go to Congress sir, that's perfectly alright because they're then --
Justice Hugo L. Black: Suppose they want to the state law?
Mr. Harold E. Kohn: Well that's a different --
Justice Hugo L. Black: -- intrastate business --
Mr. Harold E. Kohn: Intrastate business?
Justice Hugo L. Black: Yes.
Mr. Harold E. Kohn: Oh sure they can do that because that's got nothing to do with the Sherman Act.
In other words, they can seek intrastate legislation in any one of the States.
They can seek interstate legislation from Congress.
But the one thing they can't do is try to get the States to set up an interstate barrier which constitutes a burden on interstate commerce when they are doing it in combination, in violation of the Sherman Act, it very much --
Justice Hugo L. Black: Well, that would --
Mr. Harold E. Kohn: -- it's very much like other legislation which other people for other improper purposes have sought to achieve and this Court declares it unconstitutional.
Justice Hugo L. Black: What effect was the factor it was thought to create a burden on interstate commerce to have if it was created an unconstitutional burden, of course, of this Court --
Mr. Harold E. Kohn: That's right.
Justice Hugo L. Black: -- could set aside.
Mr. Harold E. Kohn: But it -- as this Court has always pointed out, it is vital to keep alive the area of competition to avoid the initial conspiracy rather than to try thereafter when it's achieved its purpose to endeavour to -- to right the wrong which has already been done.
It's the -- the area of competition, the -- the climate of competition which is sort to be preserved and actually the Sherman Act is violated when the people initially conspired.
This Court has declared many times, I think most recently in the Frankfurt Seagrams (ph) case and I think there was some language that are affecting in the (Inaudible) case that every means that you may use to achieve the unlawful purpose of monopolizing --
Justice Hugo L. Black: It doesn't say that they --
Mr. Harold E. Kohn: -- is from --
Justice Hugo L. Black: -- they --
Mr. Harold E. Kohn: Pardon?
Justice Hugo L. Black: I presume that there're some means that are protected by the Constitution to do things.
Mr. Harold E. Kohn: There were certain --
Justice Hugo L. Black: And you wouldn't claim that --
Mr. Harold E. Kohn: No.
Justice Hugo L. Black: -- any means would violate the constitutional protection?
Mr. Harold E. Kohn: No, no, I wouldn't.
Justice Hugo L. Black: You wouldn't --
Mr. Harold E. Kohn: No, sir.
Justice Hugo L. Black: -- if you can enjoin that even if there was conspiracy to be used in for the purpose of destroying a business, would you?
Mr. Harold E. Kohn: Well --
Justice Hugo L. Black: Assuming -- assuming now that the means that being used if one that the Constitution protects in size shall be guaranteed.
Mr. Harold E. Kohn: Assuming that.
Justice Hugo L. Black: Assuming it.
Mr. Harold E. Kohn: Yes, well, I think if you assume that, then of course the answer must necessarily follow.
Justice Hugo L. Black: But then you get down to that question here, is it not?
Mr. Harold E. Kohn: But I think the Constitution --
Justice Hugo L. Black: That's the reason I asked you at one in the beginning about (Voice Overlap) --
Mr. Harold E. Kohn: I think the Constitution -- first of all, if I may say sir, with all due deference to the Court and the counsel in the other side.
This is not in the questions presented at all.
There are only question as whether the Sherman Act prohibit this sort of thing but assume you'll get pass that void and decide even though it's among the question presented and was never raised throughout here that it is an issue.
I think the Constitution does not protect and this is our case here, does not protect, deceptive means of communication.
You've decided in the Harris case that you must reveal your source.
In the Hazel Atlas Glass case where the lawyers for the parties in that case wrote a magazine article, very much as here and put it out in the name of a union instead of themselves.
The Court held that that is not protected.
But I think the phrase was there, truth needs no disguise so that you have that illustration of this principle.
And I think you find the same thing in many other cases and types of cases.
I think there was a footnote in one of the cases where there was a dissent with regard to the right of unions to make political contributions.
And in that case, even the dissenting judges who opposed, who thought unconstitutional, had a footnote saying there's no question that you could require the unions to reveal the source of the publications which they put out.
So that if you get into this field at all, I think you have an area where the Constitution does not protect and I say actually in the context of this case, you -- you should never really reach that issue because it has not been -- not been raised here.
Justice Felix Frankfurter: Mr. Kohn, I would like to ask you two questions.
We're in an area here where the State has power, namely the regulation of the trucking --
Mr. Harold E. Kohn: That's right.
Justice Felix Frankfurter: -- speed, weight, length, height, etcetera.
Mr. Harold E. Kohn: That's right.
Justice Felix Frankfurter: And the area is well define because this Court in its decision has frequently had often does not -- more often than not, I think, divided on what is still open to the States and what is not open.
So that my first question is, am I right in saying that whether it is or isn't within the state power to beget such legislation, if you please from using your phrase, conspiratorium, meaning combined effort, is or is not within the state power in each case, the Court would first have to decide in connection with the Sherman law case whether the State could have passed or could pass such proposed or desired legislation, that so is true, isn't it?
Mr. Harold E. Kohn: Now, I must differ with you slightly on that sir.
I think --
Justice Felix Frankfurter: But I thought you just said to -- to Justice Black that if there is a constitutional power on the part of the State to beget -- I'm coming to your deception point a minute, but that's the one side further on.
Mr. Harold E. Kohn: No, I --
Justice Felix Frankfurter: If there is constitutional power on the State to beget such legislation, then it may be solicited or begotten to effort as all legislation, almost all legislation is to outside effort, therefore, in each case, we have to decide whether the proposed legislation comes within the reserve, so-called reserves state power or rest impliedly, exclusively within the congressional domain.
Mr. Harold E. Kohn: Now, I might still differ with you, sir.
Justice Felix Frankfurter: (Voice Overlap) --
Mr. Harold E. Kohn: What I thought I had said to Mr. Justice Black was that in an intrastate monopolies, the -- a State can set up intrastate monopolies because it's not prohibited by the Sherman Act.
Now, there is, and this was clearly brought out in Georgia versus Pennsylvania, that even though the ultimate effect of the governmental action would not be unconstitutional or prohibited, nevertheless, the combination and this is --
Justice Felix Frankfurter: Georgia wasn't constitutional.
Georgia was the question of whether you first had to go to the Interstate Commerce Commission.
Mr. Harold E. Kohn: No, oh, no, I think it went further than that, sir, if I may --
Justice Felix Frankfurter: Your recollection, you probably read it more recently than I.
I merely participated in the case.[Laughter]
Mr. Harold E. Kohn: I realized that, sir.
But I think that what they held there was that even though the ultimate rate and this is in these cases from the very beginning, the Trans-Missouri cases way back to the turn of the century.
The fact that you seek to obtain, that which would be perfectly legal when obtained in conspiracy makes your conspiracy, nevertheless, if it's to restrict commerce or to monopolize illegal.
And you've the Borden case, you got all these cases.
Justice Felix Frankfurter: But the Trans-Missouri case certainly wasn't constitutional.
Mr. Harold E. Kohn: Oh --
Justice Felix Frankfurter: (Voice Overlap) there was whether the fact that there was an Interstate Commerce Act displaced or did not make applicable the Sherman Act.
Mr. Harold E. Kohn: In those -- in those cases sir, all of the arguments were raised as to the -- to the constitutional objections which were then factual.
Justice Felix Frankfurter: Well, I'm not talking about general talk.
Mr. Harold E. Kohn: No I'm talking about --
Justice Felix Frankfurter: The precise issue in the Trans-Missouri and the joint traffic case clause, whether since there was a prior special regulation for railroad if the Sherman law, three years later applied.
Mr. Harold E. Kohn: They also raised a question that this law has interfered with freedom of contract.
They impaired contracts.
They affected the reserve powers of the States which had the right to set local railroad right.
There were -- there were all those issues in it.
Justice Felix Frankfurter: Not with deception, you take -- take the long run during legislation against oil and margarin.
The constant route between the butter and this dairy and just the oil and margarine, is all of all claims as to the nefariousness of the unhealthy or mischievous results flowing from oil or margarine are almost plain and subject to the test of whether the deception or merely rivals talk like sellers' coffee?
Mr. Harold E. Kohn: I don't think all claims.
I think you've got to examine as you sir yourself have said so many times.
Each of the very delicate constitutional problems in the context of the particular situation, you said so just a couple of weeks ago the Gomillion case.
It's very difficult for me standing here to answer a question about the oil and margarine butter industry.
I do know that on the context here where the chief purpose was to put us out of business and one of the incidental purposes was by getting this legislation when a judge says that they wanted to put it us out of business by this material whether or not they got legislation the fact it's somewhat different problem.
Justice Felix Frankfurter: You put all the inferences, is not putting out business, but Mr. Justice Black, not only from his experience here but try legislative experience, have then intimate knowledge like the rest of us nearly as observers that most legislation is an effort to put somebody else out of business or to enhance your own.
Mr. Harold E. Kohn: And this Court has held that in many situations, that is a violation of the Sherman act --
Justice Felix Frankfurter: (Voice Overlap) to securing from legislation, to accomplish that end?
Mr. Harold E. Kohn: That's right.
The Sisal case held that specific.
Justice Felix Frankfurter: (Voice Overlap) the Sisal cases told me different.
That had to do with Yucatan and Mexican legislation.
Mr. Harold E. Kohn: But it was still achieving a purpose by legislation which the particular legislative sovereignty had the perfect right if it wanted to -- to enact.
Justice Felix Frankfurter: But I had no constitutional right to ask Mexico.
I might on the Mexican law, but on the contrary, American Constitution, I have no constitutional right to get Yucatan and Mexico to pass favorable or discriminatory Sisal legislation.
Mr. Harold E. Kohn: In the Angle case, which this Court decided, it was held that we're in an ordinary tort.
A person got a state legislation to interfere with established contractual right that that fact he -- he got it through legislation and sought legislation was completely immaterial.
It was still a tort --
Justice Hugo L. Black: (Voice Overlap) the Government --
Mr. Harold E. Kohn: The Angle case sir.
It cited at page 16 of our brief Angle, it was instant a railroad too, versus Chicago, Saint Paul, 151 U.S. 1.
And I may have just a moment sir on the question of damages.
The -- in a sense the business of the PMTA is -- is to defend its -- its members and as you decided in the International News AP case which unfortunately I don't cite in my brief at 248 U.S. 215.
In a situation like the one we had here where we went through an entire case, with literally tenths of free trial conferences with briefs really stacked -- may I have just a moment --
Chief Justice Earl Warren: You may finish that.
Mr. Harold E. Kohn: Almost as -- as high as I am standing here where this issue was never raised until after the question of liability had already been determined by the Court and it appears only in one passing fleeting footnote in a brief file thereafter where you have a situation like that with a stipulation entered into with all the parties understanding and we had answered interrogatory's telling, but the PMTA damage was, but we just think it's -- it comes awful light in the day and for all practical -- for all real purposes in this litigation, it was waived.
Judge Clary doesn't even allude to it because that defense was never even raised before Judge Clary until out this litigation.
We always understood that the cause of defending against this antitrust campaign of the defendants would be recoverable insofar as those damages are concerned by the Pennsylvania Motor Truck Association.
You just the other day denied certiorari in a case coming out of our Circuit.
I think with the Hanover Shoe versus another shoe company where an antitrust -- antitrust case, it was held that the mere fact that the additional costs were passed along to the customers does embark the person who initially put the money out from recovering his antitrust damages, so that we do say that that issue really hasn't been raised and with the damages awarded should be allowed.
Chief Justice Earl Warren: Mr. Cox.
Argument of Hugh B. Cox
Mr. Hugh B. Cox: May it please the Court.
I should like to begin my reply by observing that since this is a Sherman Act case.
The basic question here is whether the petitioners combined and conspired to restrain trade, and I should like to emphasize that the question is not whether the petitioners did something wrong or immoral or against public policy or even may perhaps have violated some statute other than the Sherman Act.
The question is, whether they combined and conspired to restrain trade?
Now, the Sherman Act is a statute that is directed at certain specified economic consequences.
So I suggest that what we should, is the -- with the court's permission to consider it, is what the economic consequences were to which this concerted action of the petitioner was directed.
Now, it is our position that these public relations campaign which the petitioners engaged in was wholly legislative or governmental in its purposes and in its effects.
What they were doing was trying to get the state legislature to pass laws that would admittedly limit, cripple the competitive power of the trucks.
Now, we say that that kind of a restraint, a restraint imposed by valid state actions, admittedly valid here is not an unlawful restraint or monopolization within the meaning of the Sherman Act.
We also suggest that it doesn't make any difference for the purposes of that proposition what means or methods you use to get State to take that action.
They maybe wrong and they maybe unlawful under other statutes but they do not violate the Sherman Act because it restraint itself which the State imposes, does not violate the Sherman Act.
Justice Felix Frankfurter: Mr. Cox, may I ask you to comment on the portion of the District Court's finding or opinion which Mr. Kohn called attention, which is on page 27 of the petition for certiorari.
That the entire campaign and subjective did not constitute a mere of pieces of legislature nor was it a large scale lobbying campaign.
True, one phase of the activity was of the legislatures -- legislative nature but a rather new approach to legislations they believe.
The other phase and the more important one of the campaign accepted, your doubt is familiar with it.
Mr. Hugh B. Cox: Yes.
I was -- in fact that the point of dealing with the contention which is based on what the lower court and the District Court said that this campaign was not wholly legislative in its purposes and effects.
Now, what the District Court held in that passage in elsewhere was that this campaign although admittedly legislative in large part was accompanied by a purpose to injure the good will of the trucking industry and that it had the effect of injury in the good will of the trucking industry.
Now, I should like to submit that the District Court's own language on what it meant by good will shows what is essentially wrong with that argument.
There is a passage in Volume 4 of the record at 105 where the District Court explains what it means by good will.
It says when it's talking about injury of good will it means that it uses the word good will in two senses, first, in the sense of loss of business, loss of truck.
Now, I like to stop and deal if I may with that aspect of the alleged impact and purpose of the conspiracy.
There isn't a scrap of evidence in this record, not a scrap and the respondent's brief and in his -- respondent's argument that we refer to any evidence.
There isn't a scrap of evidence that any single trucker or the trucking industry as a whole never lost a pound of traffic as a result of this public relations campaign.
There is proof that they lost some traffic that they might have had if the Governor of Pennsylvania hadn't decode a bill, but there isn't any proof that the public relations campaign ever caused them to loss any traffic.
They have not pointed to any piece of publicity and I -- it was all in my understanding that all of the publicities are here in which the petitioners say -- which was addressed to the shippers and which said the shippers don't ship by trucks.
We mustn't ship by trucks.
Stay away from the trucks.
This publicity is all directed to arguments about how much taxes the truck should pay.
How heavy -- what weight limit should be imposed on them?
Whether they injure the roads, whether if they are on the bridges?
That's what this publicity is about.
So I say that you cannot predicate liability in this case where you cannot find the restrain of trade in this case or a purpose to restrain trade in this case on this first definition of good will because there simply isn't any evidence to support it.
And by the way to make it perfectly clear, we raised in the -- in the first and the third questions presented the correctness of these conclusions that the District Court as to the purpose and the impact of this public relations campaign.
I think there is no question about that.
We -- we attacked those conclusions.
They say that they are clearly wrong and one on the -- the lawsuit, a business is clearly wrong, not in the sense that -- as a preponderance of evidence against it or that there -- there is some evidence to support you.
It's wrong in the sense that's just isn't any evidence at all.
Now, this Court demonstrated, it was talking about good will in a second sense and this I think is particularly interesting, it's baring on what the Court was really talking about in this case.
It said that it was talking about injury to good will in the sense that the petitioners brought the respondents of trucking industry into discredit, discredit that done in the eyes of the public, and thus, removing the likelihood that the truckers could gain public support and appreciation and sympathy which the Court said would be essential to avoid the imposition of crippling burdens and restrictions.
It seems I think without any doubt that that last finding of conclusion of the Court expects the good will, speaking of good will in the legislative sense, it couldn't have meant anything else.
The imposition of crippling burdens of restrictions was purely key to all the evidence in this case about the state legislation which the truckers were seeking or which the petitioners were seeking to get.
So that -- I would say furthermore, in response to your question about these conclusions that in our brief, we have made -- it's not very long but it's a detailed analysis of the particularized findings of the District Court as opposed to its general conclusions and of the evidence.
And we submit that when that is examined, it appears both from the particularized findings and from the evidence that this campaign was wholly legislative in its purposes and its effects.
The evidence, the best evidence about purpose in the record is the documents which the petitioners and the public relations agent wrote at the beginning of the campaign when it was being planned.
Those are the kind of documents that are always used in the antitrust case to prove purposes and they are usually very effective for that the reason that they are contemporaneous and these documents which the District Court made some particularized findings about which are consistent with what I have to say.
The documents in themselves show that this campaign was a legislative campaign and that Byoir was detained because Byoir had had a great deal of experience in legislative method.
The District Court himself after he finished describing what he call the campaign of vilification, in a very interesting passage which we've quoted in our brief said, "The cap of the pyramid in each State was legislation" and then it goes on in that passage to specify the various kinds of legislation which this campaign was designed to get -- which it did get.
So that -- we submit that -- that this real issue in this case and I noticed by the way that the greater part of respondent's argument was devoted to that issue.
The real issue in this case is whether if men act in concert to get a state government to impose restrictions on their competitors which will creepily competitive power of their competitors, that action in concert violates the antitrust law.
Now, I think I have stated our basic position on that earlier when I said that since the restraint, the economic consequence which that action produces is itself lawful and lawful under the -- the Constitution of this country for all purposes if it's valid and they admit this legislation here involved and valid.
If it's lawful for all purposes, then the economic consequences it produces cannot be unlawful restraints and monopolization.
And if the consequence is not unlawful, surely the purpose to achieve that consequence is not an unlawful purpose.
I might add to the part from that argument which I think stands on its own feet.
I should like to merely observe in passing that if you hold that that kind of consorted action does violate the antitrust laws, it seems to me the Court is faced with a problem of inquiring into the reasons and motives for the legislative action by the States, because the Sherman Act is a statute that does require some causative showing as between the activities of the alleged conspirators and the economic consequence the -- the statute prohibits.
And I also observe that ever since Fletcher against Peck, this Court and all the federal court, most state courts have been most reluctant in most -- most cases declined to enter into kind of inquiry about legislative reasons and legislative motive.
I should now like to come back to the point, deal with it more specifically.
Before I do that, may I say this, that there were brief many cases that are referred to this morning by counsel on this question of whether you violate the antitrust laws by combining to get to govern -- valid governmental action that helps you.
I think I can say that I didn't seem to meet any of those cases had any bearing on this -- this question here.
Those cases in my judgment all represent situations where the alleged restraint or monopolization was an -- was a restraint or monopolization that was imposed or occurred apart from governmental action.
Now, of course if you have a restraint of that kind and you helped to bring it about, not by the governmental action but by something you do in relation to the Government, that is a different problem.
But, in case like the Georgia case where the real question was whether consorted action not subject to regulation by the Interstate Commerce Commission was subject to the antitrust laws, that kind of a case which -- where the -- where the restraint was imposed outside of the Interstate Commerce Act.
That's what this Court held.
That case has nothing to do with this problem.
Our counsel referred to the Borden case.
I do the indictment of the Borden case.
I think I know something about that.
It wasn't tried on merits.
The allegation in the Borden case was that certain Government officials in Chicago in willful disregard and disobedience of their statutory duties had joined the conspiracy.
Well, that's a very different thing from a case in which you are alleged and that are restraint imposed by a state action in an unlawful monopoly.
That was a case where people went outside their official duties and became private really they exercise their private rights joining the conspiracy.
I can't -- I don't have time to talk about all of those cases but I honestly suggest that when the cases were examined, that they do not bear on his problem, they are cases which we have cited in our brief, Parker against Brown, the California case, the Rock Royal case, American Banana case, Olsen against Smith, which we think taken together, support the argument on principle that I have made this morning to the effect that state action no matter how induced, does not produce an unlawful -- if valid, does not produce an unlawful restraint or monopolization.
Now, I should like to devote the rest of my time to a discussion to a -- the -- what relevance there is in this case to the fact that the Railroads did not disclose the source which is quite true in this material.
Now, I submit that the argument is based on that fact.
It seems to me they rest on a misapprehension about carry through the Sherman Act.
I come back to my basic proposition that it's an act to deal with certain economic consequences.
The economic consequences were here, were to be achieved by state action which is conceded to have been valid.
Now, that's true.
It doesn't make any difference if you didn't disclose the source.
I think it might have been wrong not to.
I'm not condoning what was done here.
Judge Biggs in the Circuit Court who dissented was shocked by what -- both the truckers and the railroads had done, but that is really irrelevant to the purpose of deciding whether a third-party technique itself restraints trade.
Now, our position on that is that since the technique was used to induce valid governmental action and that action doesn't restrain trade with the use of the technique is really irrelevant.
I think that our position is the same with the respect to the truth or falsity of the arguments that were made by the petitioners in this case.
We don't concede that the -- that these arguments were false and in the District Court, the petitioners offered to prove that what they said about trucks injuring bridges and roads and what they said about the Maryland road test and what they said about trucks not paying their fair share.
The tax is needed to maintain roads.
They offered to put in material -- try to put in material to prove that those facts or opinions were true and the District Court excluded it.
The offer to the proof were in the record.
It was excluded on the ground that it was irrelevant.
But our position here --
Justice Felix Frankfurter: I don't understand that, Mr. Cox.
I don't understand how it can be claimed that the petitioners are guilty of vilification if you -- if it's not relevant to -- to allow you to prove that you weren't guilty of vilification.
Mr. Hugh B. Cox: Well, Your Honor, in view of the fact that that was not my conclusion, I should prefer not to attempt to explain it but --
Justice Felix Frankfurter: But I mean that is -- do I correctly state what you --
Mr. Hugh B. Cox: Yes, I think -- then I want to be quite excellent about this.
The District Court did allow some times that prove him -- which had some bearing on this question of truth for example.
He allowed the railroads to introduce stipulated material which showed that these respondents in his case in a three or four-year period had violated the overweight regulation sustained about 3000 times, which was of course proved to justify what have been said in the publicity about trucks frequently operating over the weight limits.
But when the respondent -- the petitioners tried to put in proof about how roads are built and how many -- what part of the roads in the -- in the eastern part of United States are constructed on the kind of subsoil or in the way which will enable them to stand up to heavy trucks.
The judge said, "That's all irrelevant.
And I'm not going to admit it into evidence."
Now, I think -- I can't -- I don't I should try to explain it.
But our position does not depend on the truth what was said here because it is our position again, that since what the petitioners were seeking to do in this case was to induce valid state action.
Then the fact that in expressing these opinions or they are making these arguments they may -- they did not assumed that they didn't speak the truth.
The fact still remains that that does not change the character of the restraint which was involved, which was a lawful restraint intended.
Their actions were indirect to restraint and the restraint was imposed into a lawful restraint and the character of the restraint is not changed by the character of the methods that the petitioners may be assumed to abused in attempting to persuade the State between (Inaudible).
I should --
There is one further point that I should like to make in relation to the character of this case, and that has to do with the injunction.
Now, both Mr. Price and the counsel for respondents have discussed the injunction and I should prefer not to take the Court throughout in detail.
But I should like to make this point to the Court that if there is any doubt that this case is about legislative effort and about the public debate and discussion of issues, the public policy, that doubt is removed by the terms of the injunction because the injunction by its terms is not in any material sense directed to commercial practices or the things that are specifically directed to the trucker's customers.
Let's say the injunction which is cast in broad terms, is directed to public debate and discussion.
It prohibits for example the -- Mr. Price pointed, the petitioners in concert, from saying anything that is -- that may create -- present mother hostility to the truckers, irrespective of whether it's true in those provisions of the injunction, irrespective of whether it has to do with the legislative proposed.
It does enjoin the petitioners from seeking legislation, maybe beneficial to them or crippling to the truckers and I think Mr. Kohn does not misunderstand that subparagraph 9 because subparagraph 9 by its terms says that you -- the petitioners can't seek legislation which should -- is designed to impose weight limitations or taxes or anything that kind, irrespective whether they use a third-party technique.
The third-party technique qualification implies to the opposing part -- clause of the -- by its terms which is the last clause in subparagraph 9, but that doesn't -- that's not the point which I'm trying to make.
Now, I'm -- the point I'm making is that this is a legislative case.
It is a public debate and discussion case and you can't -- you can't cure this injunction by trying to regret it because the injunction exactly and precisely mirrors the caue of action here.
The things that are prohibited there in the injunction, all and with the things that the District Court, certainly the majority to the Circuit Court, found violated the statute and you can't by changing a word here or changing provisions there preserved these cause of action by trying to change the injunction.
The -- the injunction is significant because of our judgment.
It shows what's wrong with this case.
It is a case in which an attempt has been made to apply the Sherman Act in an area, not of commercial practices, coercive, restrictive, noncompetitive.
It's an attempt to apply the Sherman Act in the area of public debate, public discussion, legislative effort, an area to which the statute was never intended to apply.
Justice John M. Harlan: How long did this case take the trial?
Mr. Hugh B. Cox: The case, Mr. Justice Harlan, I think started the trial in -- in the fall -- fall of 1956 and there were some adjournments because they tried one part of first, another part later and went over.
I think the trial was finally concluded early in the winter of 1957, February (Inaudible).There were gaps in the --
Justice Felix Frankfurter: Mr. Cox, (Inaudible) of your last -- summarizing the comment or what the decree is about --
Mr. Hugh B. Cox: Yes.
Justice Felix Frankfurter: -- I think that portion 5 or whatever it is, called Part V, Roman V in page 1 -- 166 of (Voice Overlap) --
Mr. Hugh B. Cox: Yes.
Justice Felix Frankfurter: There, there is could have provided for the qualifying clause which I -- the purpose of which I take it is to take care of what you say, what you claim to be allowed, namely, the kind of approaches it may be made, the kind of representations that may be made, the kind of appearance that may be made, go through a -- to oppose legislation, I'm not sure whether they favor it, oppose legislation adverse to your inference.
Mr. Hugh B. Cox: Yes.
Justice Felix Frankfurter: What do you say with that, as taking care of the --
Mr. Hugh B. Cox: Well --
Justice Felix Frankfurter: -- the claim of protection in -- in regard to the public issues that are involved?
Mr. Hugh B. Cox: My -- my first comment on that is that there's nothing in this record in this case that would justify that kind of injunction on the Sherman Act.
It's not an appropriate injunction in this case because there wasn't any -- there has been no showing that there was a combination of conspiracy here to restrain trade or that it had any -- it was intended to restrain trade.
But, if you're speaking out merely in terms of the injunction, I would like to assert that I suppose that five does not and cannot consistently qualify the prohibitions or limit prohibitions that are made in paragraph 4 because did the injunction will be internally inconsistent.
I take that the provisions in -- in Section 4 stand and that this simply says that of course you can -- you can improve your own facilities or you can seek legislative, administrative rather governmental benefits for yourself so long as you don't seek going back to board to create resentment or hostility and so forth.
You have to read it that way to make it consistent of it.