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PHILADELPHIA HOUS. AUTH. v. AMERICAN RADIATOR & ST

June 7, 1967

Philadelphia Housing Authority
v.
American Radiator & Standard Sanitary Corp. et al. Lindy Bros. Builders, Inc. Of Philadelphia v. American Radiator & Standard Sanitary Corp. et al.


John W. Lord, Jr., J.


The opinion of the court was delivered by: LORD, JR.

John W. LORD, JR., J.

 These two suits are civil, treble damage, antitrust actions. Defendants are manufacturers of plumbing fixtures, together with their trade association. The Philadelphia Housing Authority case is a class action brought on behalf of various governmental bodies, such as school districts, cities, and states. The Lindy Bros. Builders action is a class action on behalf of builders. The complaints allege that defendants have entered into price-fixing conspiracies violating the Sherman Act.

 Defendants request a stay of all proceedings pending the termination of related criminal litigation in the United States District Court for the Western District of Pennsylvania, in Pittsburgh. All defendants join in the motion for the stay. The issues involved center around an apparent clash between the Congressional policy of encouraging enforcement of the antitrust laws by private civil litigants with the right to a fair trial afforded defendants in a criminal antitrust action. The request for a stay will be denied.

 The present procedural posture of these cases can be briefly placed into perspective. The complaints were filed on December 21, 1966, after the indictment of the corporate defendants and certain of their officers under two criminal antitrust indictments (Crim. 66-295; 66-296) returned on October 6, 1966 in the Western District of Pennsylvania. The plaintiffs have quite candidly conceded that the subject matter of the present civil complaints closely parallels the subject matter of the indictments pending in the Western District. *fn1" Prior to the request for a stay in these proceedings, the defendants in the criminal action had filed motions to dismiss the indictments and to suppress key evidence.

 The two civil actions pending before this court were designated protracted cases on April 4, 1967. Plaintiffs have already served interrogatories on defendants and have moved for the production of various documents. Numerous motions to intervene as party plaintiff have been filed. The defendants indicate that they will stipulate to these interventions, preserving their rights to plead various defenses. Defendant Crane Co. has requested the transfer of all cases from this district to the Western District, pursuant to 28 U.S.C.A. § 1404(a). See, e.g., Thomas v. Silver Creek Coal Co., 264 F. Supp. 833 (E.D. Pa. 1967). Defendants Kilgore Ceramics and Georgia Sanitary have filed motions attacking venue in this district and seek dismissal. See generally, Timberlake, FEDERAL TREBLE DAMAGE ANTITRUST ACTIONS (1965) § 5.04. All of these matters have been held in abeyance pending determination of the motion to stay. In light of the denial of defendants' request for the stay, these matters will be considered by this court at the request of all interested parties.

 Discussion

 It has not been questioned that it is within the ambit of this court's discretion to grant or refuse the request for a stay. Landis v. North American Co., 299 U.S. 248, 81 L. Ed. 153, 57 S. Ct. 163 (1936). In Landis, Mr. Justice Cardozo pointed out that the party requesting a stay " . . . must make out a clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay . . . will work damage to someone else." Id. at 255. Certainly any inequity faced by the defendants in these actions must be counter-balanced by the hardships and inequities facing plaintiffs if a broad stay of all proceedings were to be imposed.

 At the outset, it becomes critical to note that the private treble damage action was designed by Congress to serve a dual purpose. Congress intended that those injured by antitrust violations recover their damages. In addition, the treble recovery mechanism was " . . . intended to use private self-interest as a means of enforcement . . ." of the antitrust laws. Bruce's Juices v. American Can Co., 330 U.S. 743, 751, 91 L. Ed. 1219, 67 S. Ct. 1015 (1947). Accord, Minnesota Mining & Manufacturing Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 318, 85 S. Ct. 1473, 14 L. Ed. 2d 405 (1965), where the Supreme Court commented: "Congress has expressed its belief that private antitrust litigation is one of the surest weapons for effective enforcement of the antitrust laws." See, generally, REPORT OF THE ATTORNEY GENERAL'S NATIONAL COMMITTEE TO STUDY THE ANTITRUST LAWS (1956) 378, and, Timberlake, supra., § 3.01. From the specific enforcement role given the private treble damage plaintiff by Congress, it is easy to discern a Congressional interest in the expedited trials of such actions. It would be anomalous to conclude otherwise. The antitrust laws, themselves, function as the Congressional blueprint designed to keep the American economy operating within the free enterprise guidelines mapped out under these statutes. Any threat to the free enterprise footings of our national economic superstructure, constitutes, in Congress' judgment, an immediate and serious threat to our national welfare. The strong incentive of triple recovery encourages private litigants to vigorously enforce the antitrust laws. Against this backdrop, unwarranted stays of proceedings stymie and offset any incentive otherwise contained in the possibility of triple recovery. Delay tends to discourage prosecution of civil litigation. As time passes, memories of witnesses fade. The inherent value of a claim for damages, enhanced by potential triple recovery, diminishes. *fn2"

 Defendants have outlined two principal arguments in support of their motion for a stay. Initially, defendants contend that a stay of these proceedings, pending the outcome of the criminal actions in the Western District, is necessary to avoid prejudicing their right to a fair trial in the criminal action by a premature disclosure of their defense, or a possible violation of their privilege against self-incrimination. Defendants also maintain that the stay is necessary to avoid the burden of responding to the extensive discovery proposed by plaintiffs, especially when such discovery may hamper the preparation of an adequate defense in the criminal trial, and when much of the discovery may be rendered unnecessary after the trial of the criminal actions. Each of these contentions merits separate discussion.

 Defendants have strenuously argued that unless a stay were entered, it would be impossible for them to obtain a fair trial in the criminal actions underway in Pittsburgh. To bolster their argument, defendants have placed pivotal reliance on the district court decision in United States v. Simon, 262 F. Supp. 64 (S.D.N.Y. 1966). *fn3" Defendants argue that the Simon decision stands for the proposition that even if individual criminal defendants do not wish to assert their privilege against self-incrimination, the narrow discovery principles of the Federal Rules of Criminal Procedure will act as a bar to discovery, in a related civil action. Urging the soundness of such a result, the defendants argue that a stay of all proceedings will guarantee that their privileges, as outlined in Simon, will be protected. Defendants' reliance on Simon is misplaced.

 The district court judge trying the criminal action in Simon issued an injunction blocking civil depositions of the individual defendants in a related civil action, where these same defendants were also being sued. *fn4" The subject matter of both the criminal indictment and civil complaint was identical, stemming from the same alleged corporate fraud. The defendants were certified public accountants who did not want to assert their privilege against self-incrimination because of the resulting stigma upon their professional conduct. The district court enjoined the civil discovery during the pendency of the criminal litigation, summarizing the relevant authorities in the following fashion:

 
The problem is by no means novel. It has been consistently held that where both civil and criminal proceedings arise out of the same or related transactions an objecting party is generally entitled to a stay of discovery in the civil action until disposition of the criminal matter. This has been true whether the defendant in the criminal case seeks to use the civil rules to obtain disclosure of the Government's evidence, or whether the Government seeks a similar advantage to secure evidence not otherwise available to the prosecution. 262 F. Supp. at 73.

 The Second Circuit based its reversal on the fact that the two lines of cases outlined in the above excerpt were distinguishable. The Second Circuit ...


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