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Loft Inc. v. Corn Products Refining Co.

March 14, 1939


Appeal from the District Court of the United States for the Southern District of Indiana, Indianapolis Division; Robert C. Baltzell, Judge.

Author: Treanor

Before EVANS, MAJOR, and TREANOR, Circuit Judges.

TREANOR, Circuit Judge.

Plaintiff-appellee filed a bill of discovery in aid of its action at law to recover damages alleged to have been caused to the plaintiff by the defendants' violation of the Sherman Anti-Trust Act;*fn1 the action at law having been brought pursuant to the authorization of the Clayton Anti-Trust Act.*fn2 After the bill of discovery had been filed the District Court ordered certain amendments to be made to the complaint in the law action. The plaintiff thereupon filed an amended complaint but did not file an amended bill of discovery. No change in substance was caused by the amendment of the original complaint in the action at law, and the decree in the equity cause of discovery was based on the amended complaint.

The bill of discovery propounded 342 interrogatories of which the first 244 were addressed to all defendants except the "Foundation," the latter being requested to answer the remaining interrogatories. Many of the interrogatories were identical except that they covered different periods of time. Defendants' objection to answering many of the interrogatories were sustained but plaintiff assigns no crosserrors.This appeal is prosecuted from the order of the District Court requiring the defendants to answer the remaining interrogatories.

The appeal raises two questions: (1) the propriety of the interrogatories allowed, and (2) the jurisdiction of the District Court. As respects the first question defendants urge the impropriety of the interrogatories on the following grounds:

(1) All interrogatories directed to the conduct of defendants between the years 1920 and 1925 are irrelevant because the complaint proceeds upon a conspiracy and combination formed in 1925 and existing through 1935.

(2) The interrogatories seek a mass of detailed information respecting matters irrelevant to the issues raised by the complaint and general denial thereto.

(3) Answers to certain of the interrogatories will involve great accounting expense and plaintiff should pay such expense before obtaining the answers.

The first two grounds involve the same test, that of relevancy. It seems clear that if conduct during the period 1920 to 1925 has a substantial bearing on the issues, then such conduct is a proper field for investigation by a fact finding body and the material facts of such conduct properly may be the subject of interrogatories.

To appraise defendants' grounds of objection to the interrogatories it is necessary to have in mind the substance of the principal issues as revealed by the pleadings. The complaint in the law action was met with a general denial which put in issue all material allegations of the complaint. The amended complaint, as stated above, was filed after the District Court had ordered the original complaint to be amended by striking out allegations that in 1916 a decree in favor of the United States was entered finding the present defendants guilty of violation of the Sherman Anti-Trust Act,*fn3 and that in 1932 a similar decree was entered by consent of parties.

The amended complaint at law alleges that the defendants had organized the Corn Industries Research Foundation, Inc. under the laws of Indiana to act as a trade association; that defendant Corn Products Refining Company is the dominant member of the Foundation and dominates the glucose industry; that the defendants at various times since 1906 had monopolized the manufacture throughout the United States of glucose and other corn products; that plaintiff is a candy manufacturer and that glucose is required in the manufacture of candy to prevent crystalization and granulation, and for use as a cheap substitute for cane sugar. Plaintiff further alleged in its amended complaint that because of its dependence on the glucose industry, and because glucose was an adulterant, plaintiff had undertaken experiments whereby it developed a process in 1934 for the manufacture of candy in commercial and competitive quantities without the use of glucose; that defendants sought to suppress the use of plaintiff's process by the candy industry; and that, to accomplish this purpose, defendants induced newspapers to refuse advertisements thereof, deceiving said newspapers by purposely confusing glucose and dextrose and falsely attributing to glucose the same health qualities found in dextrose. Also it was alleged that the foregoing deception was practiced upon the public by the defendants and that defendants conspired and combind to restrain interstate trade and commerce in glucose candy and confection products and that defendants have combined and conspired to monopolize said commerce for the purpose and with the intent of:

"(a) suppressing competition in the manufacture and sale of glucose and other corn products in commerce as aforesaid;

"(b) securing a monopoly in the manufacture and sale of glucose and other corn products;

"(c) establishing and maintaining uniform, enhanced, oppressive, and noncompetitive prices, terms, conditions, concessions, and transportation charges in connection with ...

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