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IN RE LOWER LAKE ERIE IRON ORE ANTITRUST LITIG.

April 12, 1989

IN RE LOWER LAKE ERIE IRON ORE ANTITRUST LITIGATION; THIS DOCUMENT RELATES TO: ALL ACTIONS


The opinion of the court was delivered by: FULLAM

 MOTION OF DEFENDANT CONSOLIDATED RAIL CORPORATION FOR SUMMARY JUDGMENT AS TO PRE-CONVEYANCE ACTIVITY.

 JOHN P. FULLAM, CHIEF UNITED STATES DISTRICT JUDGE

 Plaintiffs are suing a large number of railroads to recover damages allegedly sustained as a result of a longstanding (1958 through 1980) conspiracy to monopolize the over-land transportation of iron ore arriving at Lake Erie ports. One of the defendants is Consolidated Rail Corporation ("Conrail") which was created pursuant to the Regional Rail Reorganization Act to assume ownership and operation of the rail properties of the bankrupt northeastern railroads. The mandated conveyance of these rail properties to Conrail was effective as of April 1, 1976, and Conrail has conducted rail operations since that date. In its motion for (partial) summary judgment now under consideration, Conrail contends that it cannot be held liable for damages occasioned during the pre-conveyance portion of the alleged conspiracy.

 For purposes of deciding this motion, it must be assumed that, after the April 1, 1976 conveyance, Conrail did actively participate in the alleged conspiracy. The parties have based their respective arguments upon the assumption that Conrail's post-conveyance activities amounted to its having "joined" the conspiracy. Plaintiffs point to the general rule that one who joins an existing conspiracy is equally liable with the other conspirators for all damages occasioned by the conspiracy, including damages caused before joinder. See, e.g., Chemetron Corp. v. Business Funds, Inc., 682 F.2d 1149, 1180 (5th Cir. 1982); Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d 549, 554 (7th Cir. 1980); Myzel v. Fields, 386 F.2d 718, 738 (8th Cir.1967), cert. denied, 390 U.S. 951, 19 L. Ed. 2d 1143, 88 S. Ct. 1043 (1968); Industrial Building Materials, Inc. v. Interchemical Corp., 437 F.2d 1336, 1343 (9th Cir. 1971). Conrail argues that this so-called "late joinder" rule has not been adopted in the Third Circuit, and should not be; and that, in any event, subjecting Conrail to liability for the entire period of the conspiracy would do violence to the public policies underlying, and the intent of Congress in enacting, the RRRA.

 I.

 There can be no doubt that one who joins an ongoing conspiracy is subject to the same criminal liability as those who were members of the conspiracy through its entire existence. U.S. v. American Radiator & Sanitary Corp., 433 F.2d 174, 182 (3d Cir. 1970), cert. denied, 401 U.S. 948, 28 L. Ed. 2d 231, 91 S. Ct. 928 (1971). And, as the cases cited above demonstrate, the general rule seems to be that civil liability, too, is unaffected by the duration of one's participation in the conspiracy. Whether the Third Circuit Court of Appeals would apply this "late joinder" rule is, however, not altogether clear. In Baughman v. Cooper-Jarrett, Inc., 530 F.2d 529, 533 n.4 (3d Cir.), cert. denied, 429 U.S. 825, 50 L. Ed. 2d 87, 97 S. Ct. 78 (1976), the Court stated:

 
"In criminal cases, this circuit has held that a co-conspirator is liable for all conspiratorial acts, even those committed prior to his joining the conspiracy. See U.S. v. Lester, 282 F.2d 750 (3d Cir. 1960), cert. denied, 364 U.S. 937 [5 L. Ed. 2d 368, 81 S. Ct. 385] (1961); Lefco v. U.S., 74 F.2d 66 (3d Cir. 1934). We have no occasion to consider in this case whether the same rule applies in civil cases. But see Essaness Theaters Corp. v. Balaban & Katz Corp., 1955 Trade Cases para. 68, 152 (N.D. Ill. 1955)."

 No Third Circuit case squarely addresses the issue, but, in a general review of antitrust law in Tunis Bros. Co. v. Ford Motor Co., 763 F.2d 1482 (3d Cir. 1985), vacated and remanded on other grounds, 475 U.S. 1105, 89 L. Ed. 2d 909, 106 S. Ct. 1509 (1986), reinstated, 823 F.2d 49 (3d Cir. 1987), cert. denied, 484 U.S. 1060, 98 L. Ed. 2d 979, 108 S. Ct. 1013 (1988), the Court stated:

 
"Those who, with knowledge of the conspiracy, aid or assist in carrying out the purposes of the conspiracy, make themselves parties thereto and are equally liable to [sic; for?] or guilty with the original conspirators (763 F.2d 1482, at p. 1491)."

 Conrail would have me treat this statement as mere dictum, and notes that the Tunis court was not actually confronted with a "late joinder" issue; plaintiffs cite Tunis as controlling precedent for their "late joinder" argument.

 I have concluded that, at the very least, there is nothing in the jurisprudence of the Third Circuit which would warrant rejection of the view prevailing in other circuits, namely, that the "late joinder" rule applies in civil as well as criminal cases. The Tunis language quoted above was repeated, and apparently regarded as a holding of the Tunis case, in Nanavati v. Burdette Tomlin Memorial Hospital, 857 F.2d 96, 119 (3 Cir. 1988); and it seems doubtful that Baughman's "but see" reference to a 1955 district court decision from another circuit should lead to a different conclusion.

 The more substantial issue, to which I now turn, is whether the unique circumstances of Conrail's creation and the underlying purposes of the RRRA warrant confining Conrail's potential liability to damages caused by ...


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