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UNITED STATES v. AMERICAN RADIATOR & STD. SANITARY

December 29, 1967

United States
v.
American Radiator & Standard Sanitary Corp., Kohler Co.; Crane Co.; Wallace-Murray Corp.; Universal-Rundel Corp.; Rheem Mfg. Co.; Borg-Warner Corp.; Briggs Mfg. Co.; Plumbing Fixture Mfrs. Assn.; Joseph J. Decker; Daniel J. Quinn; Norman R. Held; Robert E. Casner; John B. Balmer; Stanley S. Backner; Robert J. Pierson, Jr.; and George W. Kelch


Rosenberg, District Judge.


The opinion of the court was delivered by: ROSENBERG

The matters before me here consist of four separate motions to dismiss the indictment in this case. First, Stanley S. Backner, an individual defendant and Executive Vice-President of the Plumbing Fixture Manufacturers Association, *fn1" one of the defendants in this case, and Vice-President in charge of Marketing for the Universal Rundle Corporation, another defendant, seeks dismissal on the ground that he obtained immunity from prosecution when he testified before the Federal Trade Commission in regards to the subject matter contained in the indictment. Second, Wallace-Murray Corporation, another defendant, and John B. Balmer, an individual defendant, who was an officer of the Wallace-Murray Corporation, seek dismissal on the ground that evidence submitted to the grand jury was privileged as communications between them and their attorney. Third, Robert J. Pierson, Jr., an individual defendant and Vice-President of Marketing of Rheem Manufacturing Company, seeks dismissal of the indictment first on the ground that he obtained immunity from prosecution upon his delivery of certain personal books, records and documents into the custody of the grand jury, and second, on the ground that the compelling of the production of his personal books and records before the indicting grand jury was a violation of his rights under the Fifth Amendment. All these defendants contend that by the presentation of the improper or illegal evidence to the grand jury, its proceedings were tainted or poisoned and the indictment must be dismissed as to each of them.

 On October 6, 1966, a grand jury in the United States District Court for the Western District of Pennsylvania returned an indictment naming as defendants the Plumbing Fixture Manufacturers Association, eight major plumbing fixture manufacturers and eight executives, including defendants, Stanley S. Backner, John W. Balmer and Robert J. Pierson, Jr. The indictment charges that beginning some time in September 1962 and continuing thereafter at least until some time in 1966, the defendants and co-conspirators engaged in a combination and conspiracy to raise, fix, stabilize and maintain the prices of enameled cast iron and vitreous china plumbing fixtures in violation of § 1 of the Sherman Act. It is alleged, inter alia, that the defendants and co-conspirators agreed at various times to increase the prices of enameled cast iron and vitreous china plumbing fixtures and to limit maximum discounts thereon, and agreed to discontinue the manufacture of regular enameled cast iron plumbing fixtures which were lower priced than acid-resistant cast iron plumbing fixtures.

 On October 24, 1967, I filed an opinion in this action relating to the suppression of evidence and the dismissal of indictments on joint motions of all the defendants in this case, as well as all the defendants in a companion case. I disposed of questions there raised, namely, as to whether or not evidence, if made and obtained in a manner which violated the constitutional rights of the defendants and used in the grand jury proceedings, tainted the proceedings so as to require a dismissal of the indictments.

 In my opinion of October 24, 1967, I held that although "tainted" evidence may have entered into the grand jury proceedings and brought about the indictments, it would be of no avail to the defendants for the dismissal of the indictments brought by the grand jury. United States v. Blue, 384 U.S. 251, 16 L. Ed. 2d 510, 86 S. Ct. 1416 (1966). As stated by Judge Kalodner of the Court of Appeals for the Third Circuit in a recent decision, United States ex rel. Almeida v. United States, 383 F.2d 421 (1967), "On this score, it is settled law that . . . an indictment cannot be challenged 'on the ground that there was inadequate or incompetent evidence before the grand jury', Costello v. U.S., 350 U.S. 359, 363, 100 L. Ed. 397, 76 S. Ct. 406 (1956); and (3) a prosecution is not abated, nor barred, even where 'tainted evidence had been submitted to a grand jury ', U.S. v. Blue, 384 U.S. 251, 16 L. Ed. 2d 510, 86 S. Ct. 1416 (1966)."

 For the same reasons, I cannot find here that the grand jury proceedings, in arriving at the indictment as to the defendants on the motions now before me, were tainted so as to require dismissal of the indictment. The motions for dismissal will be denied. However, since other matters have been raised which are pertinent, I deem it incumbent upon me to discuss these.

 Stanley Backner

 Defendant Stanley Backner contends that he received immunity from prosecution by virtue of the provisions contained in § 9 of the Federal Trade Commission Act, 38 Stat. 722 (1914), 15 U.S.C. § 49. *fn2"

  From the affidavit of Backner's counsel, the transcript of the hearing before the Federal Trade Commission, *fn3" and the argument and briefs in support of the motion, the following facts appear: On the 15th and 16th of October 1962, the defendant Backner testified under subpoena before the Federal Trade Commission in In The Matter of Universal-Rundle Corporation (F.T.C. Docket No. 8070). The Federal Trade Commission hearing as reflected in the transcript attached to the affidavit of Backner presents the facts upon which he relies. The Commission's concern, in the words of its hearing counsel, was " . . . to show that there are discriminations as between trade customers and also between the trade customers and Sears in price. And we have selected the Philadelphia-Camden area . . . as the area in which we propose to show these discriminations and the year 1957 has been selected." (At page 3 of the transcript)

 In 1962 Backner was called by the Federal Trade Commission. He was then Vice-President in charge of Marketing for the Universal-Rundle Company, in the same position as he had held in 1957. He testified to questions the Commission directed to him concerning the operations of Universal-Rundle Company in 1957 in the Philadelphia-Camden area. No other evidence was elicited as it may have related to Backner or Universal-Rundle as of any time other than 1957.

 I have examined the transcript of the hearing before the Federal Trade Commission of 1962 in an endeavor to find any support for Backner's claim to immunity. In his brief, at pages 3 and 4 his counsel argues that Backner testified that he was a director of Universal-Rundle; that he was and had been Vice-President of Universal-Rundle in charge of marketing for thirteen years; that Universal-Rundle manufactured cast iron and vitreous china plumbing fixtures; that he, in his official position, had several departments - the sales department, advertising, sales promotion and new product development; that he had certain responsibility for the pricing of plumbing fixtures and approving special quotations to customers going into special projects; that such quotations were usually lower than list price and were brought in for review and okay; that his duties included responsibility for being familiar with the plumbing fixture market in general; that he kept abreast of the market in general; that he knew that all plumbing manufacturers made quotations for projects; that a certain percentage of cast iron fixtures and vitreous china materials were manufactured in this country by American Radiator & Standard Corporation, a competitor of his company; and that certain of the companies, who are now corporate defendants here, were competitors of Universal-Rundle.

 Assuming that all he presents is true, as reflected in the transcript of the Federal Trade Commission, his testimony was, except for his 1962 position, directed to the circumstances as they existed in 1957. Thus, what he was compelled to say before the Commission could not have been incriminating and as such entitling him to protections either under the Act of Congress or under the Fifth Amendment of the United States Constitution. From all that he says, what could he have refused to divulge on the ground of self-incrimination? As the supporting evidence is presented, I find no such factual circumstance. The present indictment is not based upon the 1957 position or activities of either Backner or the Universal-Rundle Corporation in the 1957 market place.

 In Swift, supra, the Court stated 186 Fed. 1002 at page 1016:

 
"Immunity does not mean license. If it does, then one need only to confess his crime, and his license to violate the law becomes perpetual. Any consideration of the so-called immunity or constitutional privilege which results in the giving of the license to continue an unlawful act, or immunity from prosecution for future crime, would be intolerable."

 In Smith, supra, the defendant had been indicted in 1952 for evading income taxes for the calendar years 1945, 1946 and 1947. Appealing his conviction, the defendant argued that he had received immunity under 49 U.S.C. § 46 when he testified, pursuant to subpoena, in April 1946 before the O.P.A. The Court stated at page 907:

 
" . . . The immunity granted by the Compulsory Testimony Act is coextensive with the protection granted by the privilege against self-incrimination. Shapiro v. United States, 1948, 335 U.S. 1, 68 S. Ct. 1375, 92 L. Ed. 1787; Heike v. United States, 1913, 227 U.S. 131, 33 S. Ct. 226, 57 L. Ed. 450. Hence, the witness becomes immune only if he could have properly refused to testify because his answers would tend to incriminate him. We fail to see how any answer could tend to incriminate when the crime presently involved was ...

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