With respect to the facts, plaintiffs admit that most of the specific differences between U.S. and Japanese consumer electronic products which defendants have identified do exist. Plaintiffs' affiant and expert witnesses aver, however, that these differences are insignificant technically and do not substantially affect the cost of manufacturing U.S. and Japanese products. Plaintiffs argue that because the differences are insignificant from a technical or cost standpoint, the differences do not affect the comparability of U.S. and Japanese products.
In their memorandum on the legislative, political, and social history of the 1916 Act, plaintiffs characterize the Act as an "economic statute" which has both protectionist and antitrust aspects. They argue that the Act was the product of a political compromise between the Democratic majority in Congress, which opposed tariff protectionism, and the Republican minority, which was avowedly protectionist. Any protectionist facet of the statute would, of course, help plaintiffs' cause.
Having completed our review of the parties' contentions, we turn next to an examination of the factual record before us on the motions for summary judgment.
III. THE FACTUAL RECORD ON SUMMARY JUDGMENT
In deciding the instant motions addressed to plaintiffs' 1916 Act claims, we have consulted all pertinent evidentiary sources.
These include the numerous affidavits filed in support of and opposition to the motions, testimony taken in depositions, plaintiffs' expert witness reports on product comparisons, the model-by-model matchups submitted by the plaintiffs, and the relevant portions of the plaintiffs' Final Pretrial Statement. As will be seen, these sources reveal that the facts which are material to the instant motions are not in dispute, although of course the parties disagree vigorously on the significance of the undisputed facts. The facts which we relate in the following pages are, without exception, admitted by the plaintiffs, and there is accordingly not even the slightest doubt as to their veracity. Before relating these facts it is important that we discuss their evidentiary foundation.
The various defendants have submitted the affidavits of six persons to support their motions on the 1916 Act claims: Masami Itoga (Mitsubishi Electric Corp.), Harry E. Ruther, Jr. (Sears, Roebuck & Co.), Gordon Reichard (Sears, Roebuck & Co.) (two affidavits), Nobuyuki Yamataka (Matsushita Electrical Industrial Co.), M. Yoshida (Sharp Electronics Corp.), and Akio Morita (Sony Corp.) (P 64). Defendants have also referred to the deposition testimony of Zenith executives Vito Brugliera and Karl H. Horn.
Plaintiffs' principal affiant with respect to product comparisons under the 1916 Antidumping Act is Vito Brugliera, Manager of Value Engineering for Zenith. He has submitted six affidavits responding to defendants' affiants, and one affidavit in response to our request. Plaintiffs have also submitted the affidavits of George A. Schupp and Rocco F. Mainiero, two other Zenith officials.
Plaintiffs have also submitted two expert witness reports on the technical comparability of consumer electronic products manufactured for the Japanese market with products manufactured for the U.S. market. The report of Walter Lukas on behalf of plaintiff National Union Electric Corporation concerns only television receivers, which are the only products involved in NUE's claim. The report of Karl Horn and Vito Brugliera on behalf of Zenith addresses the comparability of television receivers, radios, phonographs, and tape recorder/players. Both reports are based on voluminous and detailed model-by-model matchups, which were made independently by the authors of each report.
The reports include exposition of the technological basis for the matchups and the method of their construction, and express opinions, based on the matchups, as to the technological comparability of the products sold in the U.S. and in Japan.
The matchups constructed by the plaintiffs' expert witnesses do not take into account the categorical differences between products manufactured for the Japanese market, as a class, and those manufactured for the U.S. market, as a class, which are detailed infra. Lukas states explicitly that these differences are "general considerations" which "do not materially impact upon technological comparability." See n. 22, infra. The method of selecting comparable models which Lukas describes in his report makes no allowances for differences in tuners and power supply components to accommodate the differences we describe below. Although the Horn/Brugliera report does not include an explicit disclaimer of the sort made by Lukas, the detailed explanation in that report of the method of their construction of the model-by-model matchups makes it clear that the differences we describe were not factors in their analysis either. Plainly, the model-by-model matchups are based on the assumption that those differences are not legally significant. Since the matchups constructed by plaintiffs' experts do not address but do not contravene the differences described herein, the validity of the matchups as essential support for plaintiffs' claims under the 1916 Antidumping Act is wholly dependent on whether or not we agree with the assumption upon which the matchups are based: that the undisputed physical differences between products used in Japan and those used in the U.S. are legally insignificant.
The plaintiffs' Final Pretrial Statement ("FPS") was filed pursuant to Pretrial Order No. 154, a case management order which we entered on March 20, 1979, to govern the final pretrial phases of this gargantuan litigation. Pretrial Order No. 154 has been published as an appendix to our opinion certifying for interlocutory appeal our prior opinion and order concerning plaintiffs' Seventh Amendment right to civil trial by jury, 478 F.Supp. 889, 946-60 (E.D.Pa.1979), appeal pending, No. 79-2540 (3d Cir. filed Sept. 20, 1979). The requirements governing the FPS are set forth in Part III of Pretrial Order No. 154, 478 F.Supp. at 949-50. Plaintiffs were required to set forth in narrative form each fact which they intend to prove at trial. Id. Part III-C, 478 F.Supp. at 949. The FPS has preclusionary effect: except for good cause shown, the plaintiffs are precluded from offering at trial any facts or evidence to prove such facts which have not been disclosed to the defendants and the court in plaintiffs' FPS. Id. Part III-D, 478 F.Supp. at 949-50. The FPS which plaintiffs have filed, including appendices, errata, and addenda, contains more than 17,000 pages.
The plaintiffs' dumping claims as set forth in the FPS, vol. 17 at 8049-8273, are based on massive model-by-model price comparisons which they have submitted with the FPS as Appendices C, D, and J. The price comparisons are based on the matchups of models sold in the U.S. with models sold in Japan which were constructed by plaintiffs' experts Lukas and Horn/Brugliera. FPS vol. 17 at 8052 (television receivers); id. at 8151-64 (non-television consumer electronic products). As a result, the validity of the plaintiffs' dumping claims as set forth with preclusive effect in the FPS is dependent on the validity of the model-by-model matchups which were constructed according to the methods described in the reports of plaintiffs' expert witnesses. As we have noted, the validity of the matchups depends in turn on whether or not U.S. and Japanese consumer electronic products are comparable for purposes of the 1916 Antidumping Act despite the undisputed differences between them. Except insofar as it reveals plaintiffs' reliance on the model-by-model matchups to support their dumping claims, plaintiffs' FPS does not otherwise address the issues of product comparability which are involved in the instant motions.
We turn now to an exposition of the technical differences between consumer electronic products made for use in Japan and in the U. S., and the effects of those differences on consumer use and marketability of those products. We begin with television receivers, and then consider the same factual matters with respect to non-television products.
B. Physical Similarities and Differences Between U.S. and Japanese Television Receivers
Apart from variations between and among particular models of television receivers, which do not concern us here, there are technological differences between television receivers sold for use in the United States, as a class, and television receivers sold for use in Japan, as a class. There are also extensive similarities in the technology employed in the two classes of products. We address the similarities first, and then turn to the differences.
The function of any television receiver is to create sound and pictures by decoding information which has been encoded upon a radio signal of a particular frequency. There are three major systems in use for encoding audio and video information by altering the electrical characteristics of a radio signal:
PAL (Phase Alternating Line)
SECAM (Sequential Color and Memory); and