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COMMONWEALTH EDISON CO. v. ALLIS-CHALMERS MFG. CO.

United States District Court, Northern District of Illinois, E.D


October 18, 1962

COMMONWEALTH EDISON COMPANY ET AL., PLAINTIFFS,
v.
ALLIS-CHALMERS MANUFACTURING COMPANY ET AL., DEFENDANTS. CITY OF SPRINGFIELD, A MUNICIPAL CORPORATION OF THE STATE OF ILLINOIS, PLAINTIFF, V. ALLIS-CHALMERS MANUFACTURING COMPANY, GENERAL ELECTRIC COMPANY, SANGAMO ELECTRIC COMPANY, DEFENDANTS.

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

Separate motions*fn1 have been filed to strike allegations in the respective complaints pertaining to references to the Government's prior criminal and civil proceedings.*fn2

The motion in 61 C 1277 and related cases, pursuant to Rule 12(f), is for an order striking all allegations concerning or summarizing prior criminal indictments of, and judgments against, the defendants and alleged coconspirators in the United States District Court for the Eastern District of Pennsylvania, because those allegations are highly prejudicial to the defendants and are incompetent and immaterial, and may not be pleaded because "prior criminal judgments do not constitute prima facie evidence in these causes under Section 5(a) of the Clayton Act (15 U.S.C.A. § 16(a)) for the reason that the same were consent judgments entered before testimony taken and therefore fall within the proviso to Section 5(a) of the Clayton Act." Further, the allegations contain references to pleas and judgments in prior criminal proceedings relating to alleged coconspirators who are not parties to these causes, and finally, because the allegations improperly contain purported summarizations and conclusions by plaintiffs as to the charges contained in the indictments and the issues involved in the prior criminal proceedings.

The separate motion of Sangamo Electric Company, in No. 62 C 348, is in the alternative to the above motion, and is directed against the last sentence of paragraph 18 of the complaint on the grounds that it refers to grand jury proceedings and the return of indictments in 1960, and no indictment was ever returned against Sangamo involving instrument transformers, and the allegation is immaterial, irrelevant and unfairly prejudicial to Sangamo. It further moves to strike allegations in paragraph 19 pertaining to the prior criminal and civil proceedings as immaterial, scandalous and incompetent in this civil action against Sangamo because it was not a defendant in those actions.

The disposition of these motions depends primarily upon the interpretation to be given to the phrase "consent judgments or decrees entered before any testimony has been taken" — whether it was meant to cover judgments on pleas of guilty as well as nolo contendere pleas. The section, 15 U.S.C. § 16(a) in its entirety provides:

    "A final judgment or decree heretofore or hereafter
  rendered in any civil or criminal proceeding
  brought by or on behalf of the United States under
  the antitrust laws to the effect that a defendant has
  violated said laws shall be prima facie evidence
  against such defendant in any action or proceeding
  brought by any other party against such defendant
  under said laws or by the United States under section
  15a of this title, as to all matters respecting which
  said judgment or decree would be an estoppel as
  between the parties thereto: Provided, That this
  section shall not apply to consent judgments or
  decrees entered before any testimony has been taken
  or to judgments or decrees entered in actions under
  section 15a of this title." (Italics supplied.)*fn3

Plaintiffs maintain:

(1) The proviso of the Act is inapplicable to any judgment in any criminal case, either after plea of nolo contendere, and especially after a plea of guilty. They contend the several decisions which support even the striking of references to nolo contendere pleas and judgments are wrong in that the proviso makes no reference to consent judgments in criminal cases, as does the body of the section.*fn4

(2) The legislative history is too ambiguous and conflicting to support defendants' construction of the proviso.

(3) The judgments were entered after testimony was received so that the proviso is by its very terms inapplicable.*fn5

(4) The admissibility of pleas of guilt as admissions under the general rules of evidence provides an essential and proper background to the conspiracy allegations of the complaints.*fn6

(5) The word "consent" is inappropriate to describe judgments in criminal cases. (United States v. Norris, 281 U.S. 619, 50 S.Ct. 424, 74 L.Ed. 1076 (1930); United States v. Standard Ultramarine & Color Co., 137 F. Supp. 167, 173 (D.C.N.Y., 1955); Ansaldo San Giorgio I, 73 F.2d 40, 41 (2nd Cir., 1934), aff'd 294 U.S. 494, 55 S.Ct. 483, 79 L.Ed. 1016 (1935)).

Plaintiffs point out that the only decision which had squarely faced the problem of the inclusion within the proviso of pleas of guilty and judgments based thereon, held that the guilty plea could not be deemed a "consent" judgment. (Sacramento Municipal Utility District v. Westinghouse Electric Corp., Civil No. 8380, N.D.Cal. May 2, 1962, unreported.)*fn7 It was there stated that:

    "Specific note should be made of the reference in
  paragraph 22 to defendant's plea of guilty to the
  criminal indictment. Title 15 U.S.C. § 16, by its
  terms, does not apply to `consent decrees,' but a
  plea of guilty cannot be construed as being a consent
  decree, any more than a crime can be consented to. A
  conviction of violation of the Sherman Act
  establishes `prima facie all matters of fact and law
  necessarily decided by the conviction and the verdict
  on which it was based' (Emich Motors Corp. v. General
  Motors Corp., 340 U.S. 558, 569, 71 S.Ct. 408, 95
  L.Ed. 534), and no logical distinction appears herein
  between a plea of guilty and a conviction after
  trial."

(6) Plaintiffs further maintain that the references in the complaints to the Philadelphia criminal proceedings are proper. They contend that the weight of authority holds that a judgment or decree admissible as prima facie evidence, under Section 5(a) may be pleaded in the complaint.*fn8

(7) Motions to strike are not favored and will not be granted absent a showing of prejudice.*fn9

Plaintiffs point out that Congress saw fit, in the wording of the temporary proviso (no longer in effect) to use the word "criminal," as well as civil, proceedings and its omission from the proviso now in effect is extremely indicative of a positive intent to remove criminal consent judgments from the ambit of the proviso.*fn10 They further contend that since the main body of the section makes the judgment prima facie evidence as to matters to which there might be estoppel,*fn11 or to judgments or decrees entered under section 15a actions, it is indicative of a category of litigation other than those in which judgments on guilty pleas fall. They base this on the ground that pleas of guilty are admissible under the ordinary rules of evidence as admissions, and Section 15(a) concerns civil proceedings.

Plaintiffs trace the various versions of the Act with the differing phraseology, citing the fact that the conferees offered no written explanation for adding the two provisos which neither House had approved, and stating the "unreliability of such [Congressional] debates as a source from which to discover the meaning of the language employed in an act of Congress." (Lapina v. Williams, 232 U.S. 78, 90, 34 S.Ct. 196, 199, 58 L.Ed. 515 (1914)). Further, much of the colloquy cited as favorable to defendants' construction was that of antagonists of the legislation and therefore entitled to little weight or authority. (Mastro Plastics Corp. v. N.L.R.B., 350 U.S. 270, 76 S.Ct. 349, 100 L.Ed. 309 (1956); Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035 (1951)). Plaintiffs lucidly describe the Congressional colloquy as "particularly unreliable since precision of expression was not characteristic of these debates. * * * [M]ost of the statements in the debates are, at best, ambiguous."

In support of their contention that irrespective of the controversy revolving around the interpretation of the proviso, it is inapplicable in that testimony was in fact received in the prior government proceedings. They predicate this position on the equivalence of the words "testimony" and "evidence".*fn12 In fact, some of the Congressmen used the word "evidence" in speaking of the Conference Report. Plaintiffs go on to refute the affidavit of Howard J. Aibel, an attorney in the General Electric Company, which states that "pleas were entered and judgment entered thereon by the Court before any testimony had been taken" as hearsay, and misleading, in that it fails to disclose the pleas which were entered long before the "settlement negotiations." The Transcript of Proceedings in the criminal cases indicates, plaintiffs say, that evidence was presented to the Court both to induce the acceptance of nolo contendere pleas, and to attempt to prove mitigating circumstances in connection with sentencing. Further, they state that affidavits, verified statements, and various factual memoranda were submitted to the Philadelphia court. Also, during the course of the Philadelphia proceedings, counsel for various defendants made representations in open court as to various factual aspects of the cases, and "solemn admissions of counsel are considered evidence in the trial of a case."*fn13 They point out, and stress, that the proviso uses the word "any" in describing the amount of evidence taken as making the proviso inapplicable.

Defendants maintain:

(1) The statute precludes from the prima facie effect of judgments in prior governmental civil or criminal proceedings,*fn14 judgments based on "consent" which defendants, with a great deal of plausibility, assert include not only judgments on pleas of nolo contendere*fn15 but also judgments based on pleas of guilty, in that the purpose of the statute was to prompt defendants to capitulate and save the Government the cost of prosecuting to completion these protracted cases. Both judgments are based on the only consent needed — that of the defendant. There need not be mutuality of consent; the consent of the Government is not necessary — unilateral consent is enough.*fn16

(2) The statute gives only judgments prima facie evidentiary effect, and does not extend to pleading such judgments, let alone other matters involved in such prior suits.

(3) The pleadings here refer to judgments and allegations covering coconspirators not defendants here.

(4) The proviso should be interpreted to cover criminal as well as civil proceedings although criminal proceedings are not specifically referred to therein because the same phrase "judgments or decrees" is used in the main part of the section as well as in the proviso and should be given the same meaning.*fn17

(5) The Congressional history of the Act clearly demonstrates Congress intended to cover judgments based on guilty pleas in the phrase "consent judgments."*fn18

(6) A further ground for striking the challenged allegations is that they plead evidence in a complaint,*fn19 and are not in compliance with Rule 8(a) requiring conciseness in a complaint, especially in antitrust cases.*fn20

(7) The allegations sought to be stricken are extremely prejudicial. (Alden-Rochelle, Inc. v. American Soc'y of Composers, Authors & Publishers, 3 F.R.D. 157, 159 (D.C.N.Y., 1942); DeLuxe Theatre Corp. v. Balaban & Katz Corp., 95 F. Supp. 983, 986 (D.C.Ill., 1951); Aljan Camera Co. v. Eastman Kodak Co., 1957 Trade Cases, ¶ 68,752.) They maintain, after pointing out that nolo pleas are not admissible in subsequent suits, that sometimes admission of pleas of guilty is also circumscribed. (Atlantic City Electric Co. v. General Electric Co., 207 F. Supp. 620 (1962, D.C.N.Y.))

As illustrative of the pleadings sought to be stricken defendants suggest ¶ 16 of the complaint in 61 C 1280,*fn21 and ¶ 15 of the complaint in 61 C 1285.*fn22 Defendants ask that all indictments, attached to complaints as exhibits or incorporated by reference, be stricken.

This problem has received consideration both from decisions and law reviews. In 71 Yale Law Journal, 684, the writer concluded (p. 686) that

    "Both legislative history and logical statutory
  construction indicate that a guilty plea falls
  within the proviso and is therefore outside the scope
  of the section."

  "* * * The questions and discussion on the floor of
  Congress following the introduction of the Conference
  Committee bill in both houses clearly indicate that
  the purpose of the proviso was to induce defendants
  to capitulate to government demands. As one member of
  the Committee explained:

    "`[T]he prima facie effect shall not apply to
  consent judgments * * * before any evidence is
  introduced. * * * If the Government brings a suit
  against a trust * * * and it surrenders, we eliminate
  the effect of the `prima facie' judgment. If it
  fights and loses then the prima facie effect is
  given. * * *'

    "Though the proviso speaks of `consent judgments
  or decrees,' the phrase was manifestly intended to
  cover criminal as well as civil judgments. Several
  Senators opposed the proviso precisely because it
  would include guilty pleas, thereby exempting them
  from the section's effect. * * *

    "These debates on the final bill make clear what
  was true from the beginning: that Congress had
  conceived section 5 primarily to relieve third party
  plaintiffs from the unfairness and waste which had
  resulted from the necessity of relitigating issues
  already adjudicated by an expensive trial. * * * And,
  the proviso gave the government a useful tool with
  which to induce compromise. It was hoped that
  defendants fearing future damage actions would waive
  trial on the government charges in order to deprive
  third party plaintiffs of the benefit of section 5."
  (Italics supplied.)

The 1939 decision of Judge Gunnar H. Nordbye in Twin Ports Oil Co. v. Pure Oil Co. et al., D.C., 26 F. Supp. 366, deals at great length with the statute and has many quotations from the Congressional hearings. It was there held that motions to strike reference to suits in which pleas of nolo contendere had been entered should be granted. He said (p. 378):

    "The Clayton Act does not attempt to change the
  effect or scope of a judgment entered on a plea of
  nolo contendere. Congress was presumably cognizant
  of the long line of decisions which hold that a plea
  of nolo contendere does not create an estoppel as
  between the Government and the defendant. Obviously,
  therefore, if the judgment in * * * case No. 2 is not
  an estoppel as between the Government and the
  defendant, it can have no probative value in the
  trial of this case in a third party suit. By the very
  terms of the act, it is limited in its scope to such
  matters respecting which the judgment would be an
  estoppel between the Government and the defendant.

    "These defendants have not unqualifiedly admitted
  the truth of the charge in the indictment. The effect
  of their pleas was a restricted and limited admission
  for the purpose of that case only. In light of the
  authorities, defendants are not estopped to deny in
  any other proceeding as between them and the
  Government, the truth of the allegations in the
  indictment. * * * A judgment entered on a plea of
  nolo contendere does not constitute a finding on
  any fact question * * *."

However, several statements in the opinion go beyond the applicability of the Act to pleas of nolo contendere. Thus the writer states (p. 376):

    "During the early part of the debate, Senator Walsh
  did question that a judgment based on a plea of
  guilty would be a consent judgment,

  stating that `no criminal would ever consent that a
  judgment be entered against him when he pleads
  guilty.' But in the latter part of the debate, no
  one questioned that a judgment based on a plea of
  guilty or plea of nolo contendere would be within the
  proviso." (Italics supplied.)

He quoted a Senator's statement that "The argument in favor of those provisions is that it will induce the parties to come in and plead guilty" (p. 375), and Senator Norris' statement that "The real effect of that proviso is to make the section inapplicable to cases in which consent judgments have been taken in cases where pleas of guilty have been entered by the defendant. Why should a judgment rendered upon a plea of guilty be any different from a judgment rendered upon a trial where the evidence was taken? If there is any difference, it is in favor of the plea of guilty, judgment being accepted as true, because the defendant admits it and has never contested it."

At another point he said (p. 372):

    "The prima facie feature of judgments and decrees
  entered in proceedings instituted by the Government
  was an innovation of the Clayton Act, and in
  considering the past experience with reference to the
  advantage of consent decrees and pleas of guilty, it
  was apparently assumed that the provisos would
  redound to the public good."

He also stated:

    "However anomalous the term `consent judgment' in a
  criminal proceeding may be, it must be conceded that
  Congress unmistakably intended to include judgments
  entered on pleas of guilty and pleas of nolo
  contendere in pending criminal cases as consent
  judgments if entered forthwith after the adoption of
  the act. * * *" (Italics supplied.)

At p. 371 he said:

    "If Congress intended to designate judgments
  entered on pleas of guilty or nolo contendere,
  before any testimony had been taken, as consent
  judgments, this Court must give effect to such
  intention, however unusual or inappropriate the
  expression may be. However, `consent' does not
  necessarily refer to or indicate a bilateral
  agreement; it may be unilateral. In Funk and
  Wagnalls' New Standard Dictionary, `consent' is
  defined as `a voluntary yielding of the will,
  judgment or inclination to what is proposed or
  desired by another.'"

Judge Wilfred Feinberg very recently had the instant problem presented to him in Atlantic City Electric Company, et al. v. General Electric Company, et al., 207 F. Supp. 620 (D.C.N.Y., 1962), and held, in substance, that references to guilty pleas and judgments were proper, but that references to nolo contendere pleas and judgments were improper.

Preliminarily, he noted that motions to strike are not favored and that little is accomplished by "attempting to prune complaints at this stage." The contention was made in that case, as here, that judgments on guilty pleas are "consent judgments" within the meaning of Section 5(a). He observed that a temporary proviso which had additionally previously been in Section 5(a) had included the word "criminal" in its consent judgment provision, and it might be concluded from the omission of the word "criminal" from the proviso here under consideration that the omission was advised and therefore judgments on pleas of guilty were not meant to be included. He quotes conflicting statements of Senators Reed and Walsh as to whether the proviso was meant to cover as consent judgments, those based on pleas of guilty. Judge Feinberg dismissed as dictum*fn23 the Twin Ports Oil Co. v. Pure Oil Co. case (D.C., 26 F. Supp. 366, aff'd 8 Cir., 119 F.2d 747, cert. den. 314 U.S. 644, 62 S.Ct. 84, 86 L.Ed. 516 (1941)) statements that judgments on pleas of guilty were also within the proviso. He held the argument has "weight" that an interpretation of Section 5(a) proviso to cover judgments on pleas of guilty would "erase the well established distinction between pleas of nolo and guilty." He found that the legislative history and judicial authority do not support the contention that Section 5 altogether displaced common law rules in respect to the admissibility of guilty pleas and judgments. He stated:

    "Because of this appraisal of probable materiality,
  it is unnecessary to examine defendants' contentions
  as to prejudice. Accordingly, defendants' motion to
  strike from the complaints allegations of the guilty
  pleas and the judgments thereon is denied."

The Atlantic City Electric Company, et al. decision, supra, also dealt with nolo pleas. It was stated:

  "* * * [P]laintiffs * * * have not cited a single
  case in which a court refused to strike from a
  complaint references to nolo pleas or judgments
  thereon when asked to do so. However, the courts have
  consistently held that the proviso of Section 5
  applies to judgments entered after pleas of nolo
  and for that reason have struck from complaints
  references to judgments entered after such pleas.
  [Citing cases] In comparable suits against some of
  these defendants, references to the same nolo pleas
  and judgments thereon were stricken [citing cases]. *
  * * It is true that the possibility of prejudice to
  defendants from these allegations may not be great.
  However, in view of the overwhelming authority on the
  point, defendants' motion is granted in this
  respect."

With respect to references to the Philadelphia indictments, the Court in Atlantic City Electric Company, et al., supra, stated that they contained the charges to which most defendants had pled guilty and were therefore inextricably linked with the issues of the admissibility of pleas of guilty and judgments thereon, and the motion to strike those allegations would not be allowed.

In City of Philadelphia et al. v. Westinghouse Electric Corp. et al., 1961 Trade Cases, ¶ 70,143, the Court, Judge William H. Kirkpatrick, struck reference to pleas of nolo contendere, but did not disturb the allegations of the complaint pertaining to the pendency of civil suits or of fraudulent concealment. The Court confessed to an inability to grasp the logic of the distinction between the two pleas and why the guilty plea was admissible in evidence in a civil suit and the nolo plea not, as evidence of the commission of the acts or offenses which are the subject of the civil suit. Further, the City of Philadelphia case, supra, held permissible allegations reciting the date of the termination of the criminal proceedings (with the nolo plea) as being material to the statute of limitations issue. In the Atlantic City Electric case, supra, the Court's conclusion recited that:

  "* * * [R]eferences to pleas of nolo and judgments
  entered on pleas of nolo [are stricken]; a
  complaint shall be regarded as containing instead of
  such stricken references statements of when the
  criminal action was begun and terminated, if no such
  averments appear in the complaint * * *."

In the case of Berliana Corp. v. Narragansett Industries, Inc., 1962 Trade Cases, ¶ 70,297, a New York state court struck allegations in a counterclaim that parties associated with the plaintiff had pleaded nolo contendere to a government action where the plaintiff was not a defendant in that criminal suit. It stated while the plea might be used in impeachment, yet the allegations thereof were not a proper part of the pleading.

There is some legal basis at least for holding a judgment upon a nolo contendere plea a "consent judgment" in that Rule 11 of the Federal Rules of Criminal Procedure provides that: "A defendant may plead * * * with the consent of the court, nolo contendere. * * *"

In United States v. Standard Ultramarine & Color Co., 137 F. Supp. 167 (D.C.N.Y.,1955), it was said (p. 173):

    "It is far from clear, despite judicial authority
  supporting the view, that the exception in § 5 was
  intended to apply to criminal prosecutions as well as
  to equity suits. As has been recognized, a `consent
  judgment or decree' in a criminal prosecution is an
  anomaly.

    "The use of the nolo plea came into extended use
  in antitrust suits partly because of the uncertainty
  that a guilty plea would in fact gain for the
  defendant the benefit of the exception under § 5 * *
  *. Its use for `practical purposes' to avoid the
  issues inherent in a guilty plea does not necessarily
  reflect congressional purpose to extend the exemption
  provision of § 5 to defendants in criminal antitrust
  suits. * * *"

In Federal Shoe Inc. and Federal Sport Shoe Inc. v. United Shoe Machinery Corporation, 19 F.R.D. 209 (D.C. Mass., 1956), the complaint set forth the findings and injunction in the government case. The Court said (p. 210):

    "Under § 5 * * * some or all of this material may
  be admissible at the trial as prima facie evidence
  of violation of the anti-trust laws by the defendant.
  Its inclusion in the complaint is, however, improper
  as a detailed pleading of evidentiary matter. Most of
  the cases dealing with this problem have, however,
  allowed plaintiffs to include in the complaint a
  simple allegation of the entry of the decree and of
  plaintiffs' intention to rely on it."

In Alamo Theatre Company, Inc. v. Loew's Incorporated, D.C.,
143 F. Supp. 419, a motion to strike was continued because the Court (Judge LaBuy) thought the relevance should await its use, if any during the trial.

Judge F. Ryan Duffy, in Barnsdall Refining Corporation v. Birnamwood Oil Co., 32 F. Supp. 308 (D.C. 1940),*fn24 was dealing with a motion to strike portions of a counterclaim which referred to the indictment, plea and judgment in a prior criminal case. The pleas which had been entered were nolo pleas. The opinion stated (p. 310):

    "If the judgment referred to would not be
  admissible in evidence at the trial of this action,
  then it should not be pleaded. A motion to strike is
  a proper method of raising this question. * * *

    "The indictment itself first deals with a
  description of the various defendants, none of whom
  are parties to this action except the Barnsdall * *
  *. Then about eight pages are given over to a
  description of the oil industry. None of these
  matters have anything to do with the case in
  question. About eight pages of the indictment do
  refer to allegations of conspiracy, but in a large
  measure relate to matters done by others who were
  defendants in the criminal action. * * * It is very
  apparent that incorporating a lengthy indictment in a
  pleading, as was done in this case, in no way
  satisfies the requirement of Rule 8, and therefore
  the motion of the plaintiff to strike Paragraph 38
  and Exhibit A will be granted.

    "Analyzing Section 5 of the Clayton Act: If the
  judgment offered in

  evidence is a `final judgment' to the effect that a
  defendant has violated the anti-trust laws, and it is
  such as to create an estoppel between the United
  States and the defendant as to the issues involved,
  and it is offered in a suit brought by a third person
  under the anti-trust laws, then it is to be
  considered prima facie evidence providing it is not
  a consent judgment or decree entered before any
  testimony has been taken."

The Court pointed out that the judgment itself stated it was a consent decree entered before any evidence was taken (however it was entered after a new trial, and evidence had been adduced on the former trial, with a verdict of guilt, but no judgment thereon).

Next the Court dealt with the omission of the word "criminal" in describing consent judgments in the proviso of the Act, and agreed with Judge Nordbye's decision in the Twin Ports Oil Co., case, supra. He said (p. 312):

    "I fully agree with Judge Nordbye's opinion where
  he states: `Judgments in criminal proceedings and
  decrees in equity are not treated separately, but
  are referred to together. It follows from a reading
  of this part of the act that, when Congress used the
  term "final judgment or decree", it was referring to
  both criminal and equity proceedings. The same
  language was made applicable to both types and
  classes of cases. In that the term "judgment or
  decree" in the first part of the act unmistakably
  refers to both criminal and equity proceedings, it
  is reasonable to presume that, when Congress used the
  term "judgments or decrees" in the first proviso, it
  intended to use such words in the same manner and to
  the same effect as the words that had theretofore
  been employed. A construction that the term
  "judgments or decrees" as used in the first proviso
  merely refers to civil proceedings would be
  unwarranted in view of the use of such terms
  throughout the entire context of the act. In absence
  of any limitation on the words in the first proviso,
  it would seem that there should be no real
  difficulty in determining that Congress intended to
  refer to both criminal and equity proceedings in
  excepting consent judgments or decrees.'"

    "* * * [T]aken in connection with the balance of
  the language of the Act, it is clear that reference
  was to consent judgments in criminal cases as well as
  suits in equity. * * *

    "`The only advantage in a plea of nolo contendere
  gained by the defendant is that it gives him the
  advantage of not being estopped to deny his guilt in
  civil action based upon the same facts. Upon a plea
  of guilty, entered of record, the defendant would be
  estopped to deny his guilt, if sued in a civil
  proceeding.' * * *"

    "While the plea of nolo contendere is equivalent
  to a plea of guilty in that particular case * * * a
  judgment of conviction on such a plea cannot be used
  against the defendant in any other case. * * * The
  defendant is not estopped in a subsequent civil
  proceeding to deny the facts upon which the
  prosecution was based. It cannot be used in a civil
  action for the same act. * * *

    "There is nothing to indicate that Congress
  intended by the Clayton Act any change in the
  well-established rule as to the effect of a plea of
  nolo contendere."

In United States v. Brunswick-Balke-Collender Co., D.C., 203 F. Supp. 657, the Justice Department instituted a policy of conditioning its consent*fn25 and it was held the condition was not justified under the statute. The Judge said: "The right given to antitrust defendants by the proviso to § 5 to avoid the `prima facie evidence' sanction by capitulation is an unqualified right." The Court recited the Government's position as "the right to withhold its consent and to insist upon trial, knowing full well that such trial would be costly and protracted, or, in the alternative to require an admission of guilt."

Finally, Judge Richard M. Duncan in N.W. Electric Power Cooperative, Inc. v. General Electric Company, et al., 30 F.R.D. 557 (D.C.Mo., 1961), granted defendants' motions to strike allegations in the complaint reciting the fact that the defendants, General Electric and Westinghouse, had pleaded guilty, and defendants, Federal Pacific and I-T-E, pleaded nolo contendere to the indictment, the ruling being on the basis that the averments were "immaterial and prejudicial."

It is arguable that the Congressional colloquy reveals that the term "consent judgment" was meant by Senator Reed to cover a plea of guilty, or only a judgment based on a nolo contendere plea.*fn26 At still other points in the Congressional Record the Senators use the phrase "plead guilty" in discussion of the Act.*fn27

The Court has studied the extensive references to the Congressional Record pertaining to the Act, especially the proviso in question, and perplexing problems are presented in determining the true intent of Congress as to the inclusion or exclusion of judgments on pleas of guilty within the term "consent judgment." The ordinary connotation of the phrase "consent judgment" would not include them, but in the framework of the section, the temporary proviso, and the Congressional colloquy, it is apparent to the Court that Congress meant to include judgments on pleas of guilty as "consent judgments." As indicated by the quotations above, the phrases, plea of guilty or guilty plea, are used many times, although sometimes closely followed or tied up with the phrase "nolo contendere." The latter might lead to the conclusion that the thought of the speaker was concerned with a judgment of guilty on a nolo plea.

That there is room for a difference of opinion as to Congressional intent*fn28 is demonstrated by Judge Nordbye's opinion in the Twin Ports Oil Company case, supra, and Judge Feinberg's decision in the Atlantic City Electric Company, et al. case, supra.

The most that can be said of plaintiffs' contention that the proviso is in any event inapplicable because some "testimony" or evidence was presented in connection with the pleas and sentencing, is that it is only superficially plausible. The Court believes it is clear that the intent of the drafters of the Act applied to testimony after the trial on the merits was initiated. In the light of the facts and circumstances here presented the proviso cannot be deemed inapplicable on the ground "testimony" was taken.

After a careful analysis of the factors involved, the Court is of the opinion that in the enactment of the proviso, section 5(a) (15 U.S.C. § 16 (a)), Congress meant to except from the prima facie effect provision of the statute, judgments based upon pleas of guilty, as well as upon pleas of nolo contendere in criminal proceedings. The prime purpose of the statute was, as indicated, to induce capitulation of defendants to government civil and criminal charges so as to save it the burden of protracted litigation to prove the charges, and that purpose is served equally by pleas of guilty and pleas of nolo contendere.*fn29 Congress used the phrase "consent judgments" in the temporary proviso in connection with criminal as well as civil proceedings, thus indicating the phrase should have that breadth. Why it omitted it from the present proviso is not certain. This omission, however, does not indicate to the Court with definiteness that it meant thereby to narrow its previous concept of "consent judgments." While it is unusual to call a guilty plea a "consent" to a judgment, viewed in context, it can not be said to be inappropriate.

The Court therefore concludes that the motions to strike the allegations of the prior Governmental proceedings have merit and should be granted with the exception of the dates of the Governmental proceedings which might have a relevance on the issue of the statute of limitations. References to nolo pleas, guilty pleas, judgments, sentences, and summaries of, and quotations from, the indictments, should be stricken. The Court is not at this time ruling upon questions of evidence. Defendants shall prepare and submit a draft order to effectuate this ruling, and submit the same to the plaintiffs within ten days hereof. Plaintiffs may file objections to such draft order within five days thereafter.

In view of the contrariety of decisions interpreting Congressional intent in enacting the proviso and the great importance to the orderly conduct of this multiple litigation for a definitive ruling, this Court respectfully recommends an immediate appeal for determination of the issue.


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