was filed and over three months before this civil suit was filed.
At page 5 of its Memorandum in Opposition to Defendant's Motion for Summary Judgment (Document 40), the Government states that it agrees 'with the abstract proposition that the total abandonment of unlawful practices, together with a showing of no reasonable probability or expectation of resumption or continuation may make it unnecessary for a court of equity to issue an injunction.' This proposition is supported by the cases. See United States v. W. T. Grant, 345 U.S. 629, 633, 73 S. Ct. 894, 97 L. Ed. 1303 (1953); United States v. U.S. Steel, 251 U.S. 417, 445, 40 S. Ct. 293, 64 L. Ed. 343 (1919); United States v. William S. Gray & Co., 59 F.Supp. 665, 666 (S.D.N.Y.1945); United States v. Aluminum Co. of America, 44 F.Supp. 97, 215 (S.D.N.Y.1941). Cf. Standard Oil Company v. United States, 283 U.S. 163, 51 S. Ct. 421, 75 L. Ed. 926 (1931).
The Government contends the burden on the movant is a heavy one to show that there has been a complete abandonment and a lack of reasonable probability of resumption. For this proposition, the Government cites United States v. W. T. Grant, supra, and United States v. Oregon State Medical Society, 343 U.S. 326, 72 S. Ct. 690, 96 L. Ed. 978 (1952). In both of these cases, there was no question that the defendants had been violating the antitrust laws before suit was brought. Thus, they are distinguishable from the instant case on their facts, since here the defendant has been found in a criminal trial not guilty of any violation of the antitrust laws. Taking first the issue of abandonment of the unlawful practices, the defendant has been found innocent of ever participating in the unlawful practices in a four and one-half month criminal trial. Further, defendant sold its business some three months before the instant Complaint was issued. It is now a corporate shell which has had no assets since March 31, 1963, and only the final step of tax clearance from the state remains between it and complete dissolution. This record meets the burden necessary to show complete abandonment.
As to the issue of reasonable probability of resumption, the Supreme Court, in United States v. W. T. Grant, supra, 345 U.S. at page 633, 73 S. Ct. at page 898, said:
'* * * the moving party must satisfy the court that relief is needed. * * * that there exists some cognizable danger of recurrent violation, something more than the mere possibility which serves to keep the case alive.'
The Government has pointed to nothing in the instant record other than the mere possibility that K & M might be rejuvenated by T & N or that Certain-teed Products might be dominated by K & M and influenced by it to violate the antitrust law. As to the latter contention, the Government states that T & N owned 100% Of K & M and it now owns, through a subsidiary, 20% Of Certain-teed. The Government contends that this 20% Ownership in Certain-teed gives T & N the same amount of domination and influence of the asbestos-cement pipe business that it had before the sale, especially, it alleges, in view of the fact that many of the key employees were retained after the transfer.
The record does not justify assigning the significance to the ownership by a subsidiary of T & N of 20% Of the stock of Certain-teed that the Government does. Nowhere on the record is there any indication that T & N has dominated or influenced Certain-teed in the operation of its asbestos-cement pipe business through its ownership of stock or that it will dominate Certain-teed in such operation in the future. The Government apparently wishes the court to assume that T & N's beneficial ownership of 20% Of Certain-teed's stock gives it control.
The Government, during oral argument, cited United States v. E.I. duPont de Nemours & Co., 353 U.S. 586, 77 S. Ct. 872, 1 L. Ed. 2d 1057 (1957), in support of its argument that a 20% Interest is a significant feature. The Supreme Court held in duPont that the duPont Company's acquisition of 23% Of the stock of General Motors from 1917 to 1919 was an acquisition whose effect, viewed at the time of suit, might substantially lessen competition in the line of commerce consisting of automotive finishes and fabrics. This decision was based on a great many facts which the court gathered from the record, such as that the Flint Varnish and Chemical Works, a competitor in auto finishes, in 1918 came and asked to be bought out by duPont because it realized it had lost a valuable customer in General Motors, and the fact that Fisher Body, who had resisted duPont sales pressure for many years, gave up this resistance in 1948. The instant record contains no facts which evidence any control of Certainteed exercised by T & N through its subsidiary's stock ownership. This is one distinction from the duPont case. Secondly, the question answered in duPont was whether or not there was a violation of § 7 of the Clayton Act, i.e., was duPont's acquisition of General Motors' stock one which might tend to create a monopoly of a line of commerce. The Government is citing the duPont case for the proposition that 20% Ownership of Certain-teed's stock by the Canadian subsidiary of T & N gives T & N substantially the same control over Certain-teed that it had over K & M when it owned 100% Of K & M's stock, whereas the issues and facts in the duPont case are not similar to those presented by this record concerning the ownership by T & N's subsidiary of 20% Of the stock of Certain-teed.
It is noted that the managing officials of the asbestos-cement pipe business since it was transferred to Certain-teed have been the latter's personnel and not those acquired by Certain-teed in the purchase from K & M. During the initial period after the acquisition, the sale of asbestos-cement pipe was largely under the direct supervision of Malcolm Meyer, the President of Certain-teed. Then responsibility for the sales activities was placed under K.A. McCaskill, an employee of Certain-teed since 1950. On May 1, 1963, a separate division was established for the manufacture and sale of asbestos-cement pipe, and M. S. Davis, an employee of Certain-teed since 1957, was appointed as the head of the division (par. 8 of affidavit of M. Meyer, attached to Document 34).
Under these circumstances, there is not enough evidence to persuade a court to believe that there exists sufficient cognizable danger of recurrent violation.
The Government cites United States v. Standard Ultramarine Color Co., 137 F.Supp. 167 (S.D.N.Y.1955), for the proposition that private litigants must not be deprived of the benefit of prima facie showing of liability in their private actions. Congress, through § 5 of the Clayton Act, has bestowed this right upon private litigants. Although Congress has declared a public policy in favor of aiding private antitrust litigants, the Government has had one day in court already in an attempt to vindicate this public interest when it tried the criminal trial.
In United States v. William S. Gray & Co., supra, the defendant was charged with a conspiracy and combination in restraint of trade. The Government brought both a civil and a criminal action. The defendant moved for a summary judgment in the civil action. The company had dissolved completely by the time the case was decided. The court granted the defendant's motion, finding no reasonable anticipation of a wrongful act in the future, and on the point of vindication of the public interest said, 59 F.Supp. at page 667:
'* * * it does not seem to me that these defendants should be subjected to the burden of a long and expensive trial when the basis for the relief demanded in the complaint no longer exists and the sole purpose is an ulterior one. Moreover, a final judgment in the criminal action now pending * * * would be equally effective under Section 16.'
Applying the reasoning of the Gray case to the instant facts, the Government is not entitled to another day in court to vindicate the public interest.
The Government attempts to distinguish the Gray case from the instant one by saying that 'Certain-teed is a successor to K & M in the conduct of its asbestos-cement pipe and couplings business as such.'
There was no successor to the dissolved corporation in Gray. In the instant case, the Government states 'that K & M has not been dissolved, that the sale of its assets was a change in form rather than substance.'
The Government attempts to support its contention that Certain-teed is a corporate successor by an affidavit showing that T & N beneficially owns about 20% Of the stock of Certain-teed. This, plus the fact that Certain-teed acquired some of the key personnel of K & M in the transfer of the business, makes up the basis of the Government's argument that Certain-teed is a corporate successor to K & M in the pipe business. In view of the fact that neither the President of K & M nor its principal officers were employed by Certain-teed and the circumstances pointed out at pages 8-10 and 13-14 above, this record would not justify a finding that Certain-teed was a corporate successor to K & M and under the control of T & N.
The amendment to F.R.Civ.P. 56(e), which has been in effect since July 1963, reads:
'When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.'
The record, when read under the provisions of this rule, does not support the Government's charges that the sale of the asbestos-cement pipe assets of K & M was done to avoid the anti-trust laws, that the sale of assets was a change in form rather than substance, and that neither K & M nor its parent, T & N, has abandoned the offensive conduct of which it is accused. The decisions of the United States Court of Appeals for the Third Circuit, holding that summary judgment is appropriate where uncontradicted affidavits and sworn testimony are submitted in negation of the generally pleaded conspiracy claim, are applicable. Gold Fuel Service, Inc. v. Esso Standard Oil Co., 306 F.2d 61 (3rd Cir. 1962); Fiumara v. Texaco, Inc., 204 F.Supp. 544 (E.D.Pa.1962), aff'd 310 F.2d 737 (3rd Cir. 1962); cf. Delaware Valley Marine Supply Co. v. American Tobacco Co., 297 F.2d 199 (3rd Cir. 1961), cert. den. 369 U.S. 839, 82 S. Ct. 867, 7 L. Ed. 2d 843 (1962).
The condemnation of trial by affidavit in cases such as Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962), construed in the light of the subsequent amendment to Rule 56(e), is inapplicable to the instant case, where the Government relies chiefly on the allegations in its pleadings. The instant case is also distinguishable from Poller in that the record consists of testimony given by witnesses, during a criminal trial lasting over four months, who were subject to cross-examination and who had their demeanor appraised by the undersigned.
Looking at the record in this case in the light most favorable to the plaintiff, as must be done, it shows no genuine dispute as to a material fact. As pointed out in the able Reply Brief of defendant (Document 41), at pages 18 ff., the cases relied on by the Government are inapplicable to the facts in this record, particularly because the abandonment of business activity in those cases took place after its legality had been challenged by the Government, whereas the asbestos-cement pipe and coupling business of defendant was sold in April 1962, before the indictment against this defendant was returned and this civil action was instituted.
Defendant's Motion for Summary Judgment will be granted.