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UNITED STATES v. E.I. DU PONT DE NEMOURS AND COMPANY

November 16, 1954

UNITED STATES OF AMERICA, PLAINTIFF,
v.
E.I. DU PONT DE NEMOURS AND COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: LA Buy, District Judge.

  There are forty-five exhibits which have been submitted at the close of the trial and offered in evidence subject to further ruling. Thirty-nine are government exhibits offered as rebuttal evidence and six are defense exhibits offered in surrebuttal.

The major portion of the thirty-nine exhibits offered by the government are directed to trade data. Eleven are statistical charts showing the ultimate percentage of business transacted between General Motors and du Pont and its competitors. To meet the evidence in these exhibits, the defendants have offered six surrebuttal exhibits which are also statistical charts. Twelve government exhibits consist of excerpts from Annual Competitive Reports made by the du Pont Fabrics and Finishes Department to the du Pont Executive Committee regarding trade in these products and the factors affecting increases or decreases in sales each year. The balance of the government's exhibits consist of various letters or reports written in different years relating to a variety of subjects.

Defendants' principal objections to the government's exhibits are fourfold and are asserted either separately or in combination. These objections are (1) the offered exhibits are not proper rebuttal evidence and were properly a part of the main case; (2) some of them seek to impeach testimony of certain witnesses without having laid a proper foundation for such purpose; and further to allow these exhibits introduced at the close of the trial would be prejudicial to the defendants because the witnesses have been foreclosed the opportunity of being confronted with the alleged impeaching documents; (3) some of the exhibits are inadmissible as being hearsay evidence, and (4) the statistical exhibits are inaccurate and misleading.

The principal objection to the bulk of these exhibits is that they were properly a part of the government's case in chief and pursuant to rules governing orderly presentation of evidence should have been so submitted and not reserved until rebuttal. This is one of the criteria followed by this court in its ruling with respect to the government's motion for discovery made near the close of the trial. In its memorandum this court recognized that the customary order of presenting evidence was not immutable and was subject to the permeating objective of litigation to give opportunity for full disclosure of all facts in order to render a just determination. To this end, discretion reposes in the court to admit or reject evidence proffered out of context mindful that no prejudice should be suffered by the one against whom the evidence is offered. Furthermore, in anti-trust cases, if full effect is to be given the anti-trust laws, it is necessary to develop fully the background of facts out of which the alleged conspiracy arose and in which it operated, and that broad discretion and great latitude toward the reception of evidence should be exercised.

In ruling on these exhibits the court considers them in their numerical order.

GTX 199

In 1941 W.S. Carpenter, President of du Pont, wrote to Donaldson Brown at General Motors regarding certain proposed changes in the organization of General Motors which were being considered by the Policy Committee expressing concern regarding the shortcomings of moving able personnel, specifically a Mr. Bradley, from the financial department to the operations department without providing for equal caliber to fill the vacancy. Mr. Brown replied to Carpenter, which letter has been objected to by the defendants.

In this letter Brown seeks to explain a presumed misconception of Carpenter and Lammot du Pont as "to the strength of personnel in the Finance Department of General Motors" saying:

    "In the first place I think you and Lammot have
  gained somewhat of a false impression for a
  too-literal reading of the organization chart as it
  has pictured the financial department. My name has
  appeared in blocks representing Financial Department
  and also representing the group of activities
  embracing GM AC, GEIC, and MIC giving to you the
  impression that I was to be regarded as in
  administrative charge of these branches. Such has not
  been the case, and the new chart that is being
  prepared will be corrected and thereby remove any
  possible misinterpretation in this respect. * *
    "Now, as to the central organization of General
  motors, as it may be concerned with the financial
  aspects there is no weakness existing as I can see
  it. The application of Mr. Bradley's knowledge and
  feel of the financial aspects is not lost. In fact it
  is enhanced by the new duties he has assumed. The
  financial department remains separate,
  organizational-wise from operations and is
  responsible to the Policy side of management. Effort
  will continue in training of men in the attainment of
  experience and skill in dealing with financial
  aspects and bringing in operating executives to
  greater consciousness of financial considerations and
  of the essential principle of coordinated control. *
  * *"

The basis of the defendant's objection to this exhibit is that it is not proper rebuttal evidence and that at one time plaintiff proposed to offer it as a part of its case in chief. The government maintains it is proper rebuttal of "new subordinate evidential facts" offered by the defense — that defendants introduced organizational charts GM 2-6, inclusive, designed to show that although du Pont representation may dominate the financial affairs of General Motors, there was a sharp separation of finances from operations.

The court is of the opinion this exhibit is proper rebuttal evidence. The objection of the defendants is overruled and the exhibit is received in evidence.

GTX 230

This is a letter written by Sloan on November 28, 1947 to Donaldson Brown concerning General Motors directors. Sloan at the time of this writing was Chairman of the Board and Brown was a member of the General Motors Board, a director of the du Pont Company, a member of the Financial Policy Committee of General Motors, and also a member of the Finance Committee of the du Pont Company. A copy of this letter was sent to W.S. Carpenter, who was also a member of the General Motors Financial Policy Committee, a director of General Motors and du Pont, a member of the Finance and Executive Committees of the du Pont Company and its then President.

The significant part of the letter from the government's point of view is the last paragraph:

    "I might add to this, that I think the proper group
  — to the extent that there is a group — to discuss
  candidates ought to be the members of the Financial
  Policy Committee. I do not think it is an operating
  matter, in any sense of the word. By all this I mean,
  that the recommendations

  of the Financial Policy Committee, not as a
  Committee, but as individuals, should determine the
  recommendations to the Board because I am sure we
  would feel that the Board should have a voice in
  determining who is to be added to its membership,
  aside from the fact that its favorable action is
  necessary."

The government states it is offered as rebuttal to the testimony of Sloan concerning the manner of the nomination of men to membership of the General Motors Board of Directors; that Sloan's testimony that he discussed such directors with the General Motors Board raised the subordinate factual issue that the advice and guidance of the du Pont representatives on the matter of directors was not sought out and followed any more than any other directors. (Sloan 2486-7, 2496). It is asserted that financial responsibility for General Motors being regarded as within the acknowledged sphere of the du Pont perimeter, this exhibit shows that Mr. Sloan regarded the Financial Policy Committee as the important body to determine candidacy of Board members of General Motors — ergo, the du Pont members on that committee determined the recommendations to the Board.

Objection has been made by the defendants to the receipt of this letter into evidence for the reasons (1) it is not proper rebuttal evidence and should have been introduced as part of the case in chief since the issue of du Pont influence on directors of General Motors was in the case from the beginning (Amd.Comp. par. 51, Ans. par. 51), and (2) it is not proper for impeaching Sloan's testimony since no proper foundation has been laid and furthermore it was not introduced until the end of the trial when Sloan was no longer available as a witness to be questioned regarding the letter.

The Court is of the opinion that this exhibit was properly a part of the Government's main case and should have been offered earlier. To admit it in evidence at the end of the trial, when the writer was no longer available to testify concerning its contents, would be prejudicial to the rights of the defendants. Therefore the objections of the defendants are sustained.

GTX 237, GTX 238

These two exhibits are not covered in the government's brief relating to admissibility. Both of these letters were written during July 1923 when the General Motors bonus plan was still in the proposed stage.

In GTX 237 Donaldson Brown, Vice-President of General Motors, wrote to W.S. Carpenter, President of the du Pont Company, who had expressed objection to the contemplated plan on the ground of its "rigidity", stating that he saw this feature as "advantageous provided the plan is administered in the way we have in mind". Brown's objection to Carpenter's suggestions from a tax point of view were that the sale of du Pont's General Motors stock to recipients of bonus awards whose ability to pay therefor would be largely contingent upon further enjoyment of bonuses would put the du Pont Company in an "awkward position in view of the fact, that by reason of its representation on the Finance Committee of General Motors Corporation, it would be in a position to largely control the award of bonuses." GTX 238 is Carpenter's reply to Brown and discusses the proposed plan further in line with his objections.

Defendants' objections are that these documents are irrelevant and in any event should have been introduced as a part of the case in chief. While these exhibits could properly have been introduced as part of the main case, the court is of the opinion no prejudice results in their introduction as rebuttal material. The objections of the defendants are overruled and the exhibits are received in evidence.

GTX 458

Defendants have objected to this exhibit on the ground that it is offered to impeach Sloan's testimony, and that it is not rebuttal evidence. These objections are overruled and the exhibit is received in evidence.

GTX 483-6

These four exhibits represent an exchange of correspondence between John Pratt, Vice-President of General Motors and Gordon Lefebvre, General Manager of General Motors of Canada, and a similar exchange between Pratt and William Coyne of du Pont. Pratt discusses with Lefebvre the switch by General Motors from du Pont to U.S. Industrial Alcohol Company for its thinner requirements in 1927 stating that it had been found necessary as a disciplinary measure to place some of their thinner business with U.S. Industrial Alcohol to bring down the price of Duco and thinner. Pratt wrote to Coyne concerning the problem that du Pont never voluntarily reduced its prices to General Motors on products and had done so only after outside competition had been brought in.

The government states that defendants introduced DP 224 to show that when General Motors failed to renew its six-month contract with U.S. Industrial Alcohol for thinner and purchased it from du Pont, it was because their price was lower than that of its competitor. To rebut the implication of this evidence that du Pont lost the business for six months and therefore did not occupy a preferential supplier status with General Motors, the government has introduced the aforesaid exhibits. The only objection to these exhibits is that the government had ...


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