United States District Court, Northern District of Illinois, E.D
September 16, 1968
PREMIER ELECTRICAL CONSTRUCTION COMPANY, PLAINTIFF,
MILLER-DAVIS COMPANY AND ST. ARNAUD ELECTRIC COMPANY, DEFENDANTS.
The opinion of the court was delivered by: Marovitz, District Judge.
Motions of Defendants to Dismiss and for Judgment on the
This is a civil antitrust action in which plaintiffs seek to
recover treble damages for injuries resulting from an alleged
violation of the Sherman Anti-Trust Act, 15 U.S.C. § 1-7, 15.
Plaintiff, Premier Electrical Construction Company and
defendant St. Arnaud Electrical Company are direct corporate
competitors engaged in the electrical construction business.
Defendant Miller-Davis is in the general contracting business. On
February 3, 1966, the Atomic Energy Commission sent invitations
to various general contractors, including defendant Miller-Davis,
to submit bids for an addition to the Argonne National
Laboratory, Argonne, Illinois. The project was known as the
Accelerator Improvement ZGS, FY-65 Meson Building Addition. In
order to prepare their bids, the general contractors, including
Miller-Davis, then sent invitations to various electrical
sub-contractors, including Premier Electrical Construction
Company, requesting bids on the electrical work to be performed
on the Argonne project.
Plaintiff alleges that sometime between January 15, 1966, and
March 3, 1966, a conspiracy arose between Miller-Davis and St.
Arnaud such that Miller-Davis would induce St. Arnaud's
competitors, including plaintiff, to submit inflated bids to the
competitors of Miller-Davis, thereby insuring a successful bid by
Miller-Davis and a sub-contract for St. Arnaud. Plaintiff claims
that on March 3, 1966, it submitted its bid by telephone to
Miller-Davis, was advised that it was the low bidder and,
assuming that Miller-Davis was awarded the prime contract, that
it, Premier, would be awarded the electrical sub-contract on the
condition that it would "protect" Miller-Davis by submitting
artificially inflated bids to other general contractors.
In its complaint (¶ 12), plaintiff acknowledges that it agreed
to "protect" Miller-Davis if Miller-Davis would inform plaintiff
of its receipt of a lower bid by a third party so that plaintiff
could rebid to defendant's competitors. Miller-Davis did not
advise plaintiff of any competitive bid on the electrical
sub-contract. Plaintiff did submit high bids to general
contractors other than Miller-Davis. The Atomic Energy Commission
awarded the contract to Miller-Davis who then gave the
sub-contract to defendant St. Arnaud.
On October 13, 1966, in another District Court for the Northern
District of Illinois, Eastern Division, plaintiff filed a suit
against Miller-Davis entitled Premier Electrical Construction Co.
v. Miller-Davis Co., Civil Action No. 66 C 1850. Plaintiff's
amended complaint in that case set forth basically the same facts
alleged in the present suit, save for the purported involvement
of St. Arnaud. The language of the amended complaint in the first
suit is virtually identical to that recited in the instant issue,
especially in those paragraphs which relate to the agreement to
"protect" Miller-Davis. The original action sought $40,000 for
breach of contract. Trial ended on March 27, 1968, and the case
was taken under advisement. A decision is expected to be rendered
shortly.*fn* In the present complaint, filed March 4, 1968,
plaintiff claims deprivation of profits amounting to $65,000 as
its damages and seeks an award of treble damages under
15 U.S.C. § 15.
Defendant Miller-Davis has moved to dismiss the present suit on
the grounds of res judicata and in pari delicto. Defendant
St. Arnaud seeks a judgment on the pleadings based on the
doctrine of in pari delicto. Defendants admit plaintiff's
factual allegations regarding the contract and sub-contract
for the limited purpose of making their motions.
Because its first suit is based on contract while the present
case stems from an alleged violation of the Sherman Act,
plaintiff suggests that the respective causes of action are
"totally separate and distinct in every respect." (Brief at 3).
This argument is not well taken. It is the facts in each case,
not the theories, which are crucial in determining the
applicability of res judicata. Wolcott v. Hutchins, 245 F. Supp. 578
(S.D.N.Y. 1965), aff'd 365 F.2d 833 (2d Cir. 1966). Both of
plaintiff's suits arise out of the same operative facts and
disputed transactions the end result of which was the failure of
plaintiff to secure the electrical sub-contract from
Miller-Davis. The mere addition of a new, federal theory will not
support new litigation.
The closest case in point to the one at bar is Norman Tobacco &
Candy Co. v. Gillette Safety Razor Co., 295 F.2d 362 (5th Cir.
1961). In that case as here, plaintiff first filed a contract
action and later sought relief in a civil antitrust suit. Both
cases were based on the same refusal of defendant to deal with
the plaintiff. The Court of Appeals for the Fifth Circuit held
the former case to be res judicata of the later one. The Court
said at 363-364,
"It is settled, contrary to appellant's contention,
that a litigant may not split his claim and have two
trials on the same alleged breach of duty. Basically,
Norman claimed the same `right' in both suits — the
right to purchase Gillette products directly from
Gillette. The only wrong charged against Gillette was
its refusal to continue to deal with Norman. We held
in the contract case that Norman had not shown that
Gillette wrongfully refused to deal with it. There,
appellant relied upon the breach of Gillette's
supposed contractual relationship as the basis of its
claim. Here, appellant relies upon the breach of the
anti-trust laws as the basis for the alleged breach.
But there was but one breach and one only and
appellant has had its day in court and has lost. It
cannot litigate this same breach again. (Citing
Plaintiff relies on Engelhardt v. Bell & Howell Co.,
327 F.2d 30 (8th Cir. 1964) and Baltimore S.S. Co. v. Phillips,
274 U.S. 316, 47 S.Ct. 600, 71 L.Ed. 1069 (1927). In Engelhardt,
however, a decision in an earlier suit under Missouri antitrust
law was held to be res judicata in the later suit brought under
federal antitrust statutes despite the incorporation of more
specific allegations of interference in interstate commerce and a
prayer for a different amount of damages. A plaintiff must plead
his entire case on all theories at one time. Baltimore S.S. Co.
v. Phillips, 274 U.S. 316, 320, 47 S.Ct. 600, 71 L.Ed. 1069
(1927); Engelhardt v. Bell & Howell Co., 327 F.2d 30, 33 (8th
Cir. 1964). This plaintiff has not done. In fact, Premier filed
the present suit within a few weeks prior to the trial of its
original suit against Miller-Davis.
Nor will a change in parties necessarily affect the
applicability of res judicata. See, e.g., Baltimore S.S. Co. v.
Phillips, 274 U.S. 316, 47 S.Ct. 600, 71 L.Ed. 1069 (1927). In
Koblitz v. Baltimore and Ohio Railroad Co., 164 F. Supp. 367
(S.D.N.Y. 1958), the Court held that a new charge of conspiracy
in a second suit brought by plaintiff against defendant was not
sufficient to preclude the application of res judicata in the
second case. The Court said, at 372,
"Here the wrongs complained of, the harm to the
plaintiff and the recovery sought are substantially
identical. The same witnesses and the proof of the
same facts would be necessary to establish the
allegations of the prior complaint and would support
both actions. * * *
"To the extent, if at all, that the allegations of
the present complaint are dissimilar to those in the
prior action, all the facts now pleaded were known to
the plaintiff and could have been presented in the
As to defendant Miller-Davis, res judicata would be a good
defense if there were a final judgment in the first suit. While a
decision is expected in a few days, such a final judgment has not
yet been handed down. However, concurrent duplicate litigation is
no less undesirable than successive duplicate litigation. In
either situation, a second suit violates principles of comity
between judges, creates administrative inefficiencies in the
federal courts, and imposes an unfair burden on the defendant.
Eastern States Petroleum & Chemical Corp. v. Walker, 177 F. Supp. 328,
333 (S.D.Tex. 1959); Emerson Electric Manufacturing Co. v.
Emerson Radio and Phonograph Co., 140 F. Supp. 588, 589 (D.N.J.
1956). Thus, the public policies in favor of a single suit in a
single controversy and against contentious litigation remain
viable. Asbury v. Chesapeake & Ohio Railway Co., 264 F. Supp. 437,
438 (D.Col. 1967); Paluchowska v. United States Lines Co.,
93 F. Supp. 751, 752 (S.D.N.Y. 1950). The pendency of a prior action
in the same jurisdiction, between the same parties, and arising
out of the same transaction constitutes good grounds for abating
the subsequent suit. Commerce Oil Refining Corp. v. Miner,
303 F.2d 125
(1st Cir. 1962). Consequently, the motion to dismiss of
defendant Miller-Davis is granted.
Defendant St. Arnaud was not a party in the original action
brought by Premier and may not now plead res judicata or take
advantage of abatement. St. Arnaud's motion for judgment on the
pleadings is based on the defense of illegality. Miller-Davis has
adopted the arguments of St. Arnaud as additional support for its
motion to dismiss. The Court is faced with two questions: whether
plaintiff's agreement with Miller-Davis is illegal and, if
illegal, whether plaintiff is barred from recovery of treble
damages in a civil antitrust suit.
Defendants claim that Premier is seeking to collect on an
illegal bid-rigging agreement. Plaintiff, in his complaint,
affirmatively pleaded that, as consideration for a promise of
business, it agreed to "protect" Miller-Davis by submitting
higher bids to other general contractors, but now suggests that
such conduct is not illegal because the agreement was not between
direct competitors. Premier even asserts that its agreement
"could only promote competition between the various contractors
[because plaintiff] removed itself from competition." (Brief at
That Premier's conduct is illegal is clear. In accord with a
secret agreement with one of the defendants, plaintiff presented
artificially inflated bids to all general contractors who were
competitors of Miller-Davis. By failing to submit the same low
bid on the sub-contract to all general contractors, plaintiff
intended to insure the success of one favored party. "A bargain
not to bid at * * * any public competition for a * * * contract,
having as its primary object to stifle competition, is illegal."
Restatement, Contracts § 517 (1932). The falsification of a bid,
in itself and by effectively excluding others from competition,
stifled the unfettered operation of the market place. A restraint
on price competition and on meaningful access to the market is
illegal per se. United States v. General Motors Corp.,
384 U.S. 127, 145-147, 86 S.Ct. 1321, 16 L.Ed.2d 415 (1966); Klor's Inc.
v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3
L.Ed.2d 741 (1959); United States v. Socony-Vacuum Oil Co.,
310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). Rigging competition
on a public contract whether done directly or indirectly, is
simply a restraint of trade in violation of public policy and
void. See generally, Corbin, Contracts § 1468 (1962).
Plaintiff attempts to avoid the impact of these clear rules,
claiming that it was not a direct competitor with the other party
to the protection agreement. However, the particular form taken
by the agreement, whether price fixing or profit sharing,
horizontal or vertical, is really immaterial. Klor's Inc. v.
Broadway-Hale Stores, Inc., 359 U.S.
207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959). Thus, in Mechanical
Contractors Bid Depository v. Christiansen, 352 F.2d 817 (10th
Cir. 1965), cert. denied, 384 U.S. 918, 86 S.Ct. 1365, 16 L.Ed.2d
439 (1966), it was held that foreclosure of a subcontractor's
competitive bid to general contractor by repressive rules of a
bid depository association was illegal.
Given, then, that plaintiff's conduct is illegal, may he
nevertheless recover treble damages in a civil antitrust suit?
Plaintiff submits that the recent Supreme Court decision in Perma
Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134,
88 S.Ct. 1981, 20 L.Ed.2d (1968), precludes defendants' use of
the doctrine of in pari delicto, under which a court will not
entertain a suit brought by a party in equal fault with the
defendant(s). At first blush, plaintiff seems correct for Mr.
Justice Black, in announcing the Court's decision, held "that the
doctrine of in pari delicto, with its complex scope, contents,
and effects, is not to be recognized as a defense to an antitrust
action." 392 U.S. at 140, 88 S.Ct. at 1985.
A closer look at the opinion, however, suggests that the quoted
statement neither deserves nor was intended to have universal
application. The Court's opinion rests on two pillars: one, mere
participation in an illegal scheme is not a sufficiently serious
wrong to warrant denial to plaintiff of his chance in court and,
two, the public policy in favor of competition is furthered by
allowing private suits for treble damages. The opinion stresses
and must be read in light of, the facts. In the Court's view,
plaintiff's lack of initiative and commitment to the illegal
scheme was crucial. Thus, "their [petitioner's] participation was
not voluntary in any meaningful sense," "many of the clauses [in
the franchise agreement] were quite clearly detrimental,"
"acquiescence was necessary," and "plaintiff did not aggressively
support * * * the * * * scheme." Rather, the arrangement was
"formulated and carried out by others" and "thrust upon them" by
defendants. 392 U.S. at 139-141, 88 S.Ct. at 1985, 1986. On these
facts, Mr. Justice Black held that plaintiffs could maintain
However, the Court refused to go farther, to extend its
decision to cover cases involving a more tainted petitioner. Mr.
Justice Black, at 140, 88 S.Ct. at 1985, said:
"We need not decide, however, whether such truly
complete involvement and participation in a[n]
[illegal] scheme could ever be a basis, wholly apart
from the idea of pari delicto, for barring a
plaintiff's cause of action * * *."
That the defense of illegality is still viable in civil antitrust
actions is further supported by the other four opinions in the
case. Mr. Justice White, in his concurring opinion, stated that a
condition precedent to allowing a tainted plaintiff to proceed
with a treble damages suit was that plaintiff's participation was
coerced or thrust upon him. He cautioned, however, that a moving
force "should not be rewarded for his efforts to further an
unlawful price arrangement" and take from defendant treble
damages. 392 U.S. at 145, 88 S.Ct. at 1988. The approach of Mr.
Justice Fortas was similar for he said that a co-adventurer, one
who "originated and insisted" upon the illegal scheme could not
recover damages. 392 U.S. at 147-148, 88 S.Ct. 1981, 1989, Mr.
Justice Marshall would allow the defense of illegality against a
plaintiff who "actively participated in the formulation and
implementation" of the illegal scheme. 392 U.S. at 149, 88 S.Ct.
at 1989. Justices Harlan and Stewart agree that in pari delicto
has its place in antitrust cases. 392 U.S. at 153, 88 S.Ct. 1981.
Thus, in each of the five opinions in the case, the door was
left open for a limited application of a defense of illegality in
civil antitrust actions. The distinctions drawn throughout the
various opinions are particularly relevant here. Premier is not a
or unwilling victim of the transaction out of which this case
arose. Rather, Premier was an originating, moving, active and
aggressive party to the illegal bid-rigging scheme. There is no
indication that the Supreme Court sought to protect a plaintiff
so intensely involved in an illegal restraint on trade.
Moreover, it is difficult to see how allowing a suit for treble
damages, under the facts in this case, would be consistent with
the purposes of the antitrust laws, the second main rationale
advanced by Mr. Justice Black for his decision in Perma Life.
Discussing an example similar to the present case, Mr. Justice
White noted, at 146, 88 S.Ct. at 1988:
"To permit [plaintiff] a recovery may be a
counter-deterrent. By assuring him illegal profits if
the agreement in restraint of trade succeeds, and
treble damages if it fails, it may encourage what the
Act was designed to prevent."
Conversely, if allowing relief would be counterproductive, and
possibly add an undesirable incentive to violate the law, denial
of relief to plaintiff, as the Supreme Court has recognized for
many years will, more probably, discourage involvement in illegal
"The more plainly parties understand that when they
enter into contracts of this nature they place
themselves outside the protection of the law * * *
the less inclined will they be to enter into them. In
that way the public secures the benefit of rigid
adherence to the law." McMullen v. Hoffman,
174 U.S. 639, 670, 19 S.Ct. 839, 851, 43 L.Ed. 1117 (1899).
Plaintiff in this case initially violated the law in an attempt
to secure a public contract. Having failed, it now seeks not just
refuge, but reward in this court. We find no sanctuary in the
Perma Life decision for a plaintiff like this. If ever a party
was to be barred from recovering treble damages, it is Premier.
While we sanction the defense of illegality, call it in pari
delicto if you will, in these circumstances, it is not, of
course, because of our approval of defendants' actions, but
because the law will not enforce what is forbidden, and "will
leave the parties as it finds them." McMullen v. Hoffman,
174 U.S. 639
, 670, 19 S.Ct. 839, 851, 43 L.Ed. 1117 (1899).
Consequently, plaintiff will not be permitted, having attempted
to avoid the burdens, now to reap the benefits of the law. The
respective motions of Miller-Davis and St. Arnaud to dismiss and
for judgment on the pleadings are granted.