Full opinion text
CLARY, District Judge. The present action involves a suit for an injunction and treble damages under the Sherman and Clayton Anti-Trust Acts, Sections 1 and 2 of the Act of July 2, 1890, 26 Stat. 209, 15 U.S.C.A. § 1 et seq., and Section 4 of the Act of October 15, 1914, 38 Stat. 731, 15 U.S.C.A. § 15, by 41 interstate long-haul truckers and the Pennsylvania Motor Truck Association, hereinafter called “PMTA”, against some 35 railroads operating in the northeastern part of the United States; the Eastern Railroad Presidents Conference, hereinafter referred to as the “Conference” or “ERPC”, and Carl Byoir & Associates, Inc., a New York public relations firm, hereinafter called “Byoir”. Opinions dealing with preliminary motions to dismiss, discovery matters, and a motion to file an amended answer and counterclaim are reported in D.C.E.D.Pa. 1953, 113 F.Supp. 737; D.C.E.D.Pa.1953, 14 F.R.D. 189, and D.C.E.D.Pa.1956, 19 F.R.D. 146. The basic allegation in both the claim and the counterclaim is that the defendants on the one hand conspired to obtain a monopoly of and to drive the plaintiffs out of the business of long-haul freight transportation in the northeastern section of the United States by various and sundry means, which will be more fully discussed later in this opinion, and on the other hand the defendants claim that the plaintiffs themselves were engaged in an illegal conspiracy for the identical purpose to obtain a monopoly of the long-haul freight industry in the same part of the United States and to force the railroads out of that segment of the transportation business in the area. The Parties The individual plaintiffs in this case are each engaged in the trucking business, as stated above, and operate regularly through Pennsylvania in intercity and interstate long distance hauling. Nearly all of the plaintiffs are members of the plaintiff, Pennsylvania Motor Truck Association, which is a corporation chartered on April 24, 1928, in the Court of Common Pleas No. 4 of Philadelphia County, having its principal office at the 7th Floor, Telegraph Building, Harrisburg, Pennsylvania. PMTA has chapters in every county of Pennsylvania and its members are primarily operators of motor trucks who operate in or through Pennsylvania, including industries which operate their own trucks as well as those operating trucks for hire. The first defendant, Eastern Railroad Presidents Conference (“Conference”), is an unincorporated association maintaining offices at 230 Park Avenue, New York 17, New York, and 143 Liberty Street, New York, New York. The membership of the Conference includes the presidents or trustees of approximately 35 railroads in 17 eastern states of the United States, operating north of the Potomac and east of the Ohio rivers. The presidents and trustees officially represent their respective railroads in the Conference, which is supported, maintained and utilized by said railroads. The Conference maintains a permanent functioning organization and a staff of paid personnel. It has regular meetings of its members and a paid executive director, presently one David I. Mackie. The Conference operates through a number of committees and subcommittees, including a subcommittee on public relations, described in detail later in the opinion, and also maintains a Bureau of Information at Grand Central Terminal, New York 17, New York. The respective railroads are regularly assessed for the cost of operating the Conference, assessments being prorated based on the size and income of the respective roads so that the Conference is in large measure supported by the big railroads, the end result being that the larger railroads contribute proportionately a much larger share for the Conference than do the smaller railroads. The individual defendants who were originally sued were the presidents or past presidents of the several railroads, members of the Conference at some of the times covered by the complained of actions, or were key members of the Public Relations Subcommittee of the Conference. The defendant railroads are all Class I railroads, most of which operate in Pennsylvania, and all are active members of the Conference. The defendant Carl Byoir & Associates, Inc. is a New York corporation, engaged in the public relations business, with its principal office at 10 East 40th Street, New York City, New York. The Contentions Plaintiffs in their complaint, after identifying the parties, summarize the respective relations of each defendant in the transportation of passengers and freight in the northeastern section of the United States. The complaint then alleges that in May of 1949 the defendants embarked upon an illegal conspiracy in violation of the antitrust laws of the United States, the purpose and objective of the conspiracy being to eliminate the plaintiffs as well as others in the same industry as competitors to the railroads in the field of long-hauling of freight, and to carve out exclusive railroad monopolistic spheres of operation in the said industry to the end that the railroads would have a monopoly on freight hauling in interstate commerce. The complaint charges that ERPC appointed a Committee on Competitive Transportation (ER-TC), charged with carrying out the details of the conspiracy, and that that committee retained defendant Byoir as its public relations agent for the express purpose of effectuating the object of the conspiracy. Further, that Byoir in conjunction with the ERPC and the railroads, acting through their presidents and/or trustee, or subcommittee of the Committee on Competitive Transportation, embarked upon a campaign designed specifically to impede the operation of the trucker-plaintiffs in every possible way, and in pursuance thereof, among other things, vilified and defamed the plaintiffs by circulating to the public generally, to public officials, and to suppliers and customers of the plaintiffs, false and malicious reports of and concerning the plaintiffs in the conduct of their business of hauling freight; formed so-called “independent” citizens groups organized to circulate false and malicious propaganda attacking the plaintiffs, which propaganda was in fact the product of Byoir and its employees issued on behalf of the railroads but made to appear to emanate from independent sources; sought to secure the passage of legislation favorable to the railroads and injurious to the truckers through the instrumentalities of the so-called “independent organizations”; attempted to and actually prevented the passage of legislation in Pennsylvania favorable to the truckers (S.B. 615) by using and duping as well as bribing public officials and officials of independent organizations; all to the end that the defendants might bring about the destruction of the plaintiffs’ business and the elimination of them as competitors. The complaint charged that the conspiracy continued from 1949 to the date of the institution of the suit on January 17, 1953; has resulted in disparaging the plaintiffs’ business in the public mind; has created great public hostility to the plaintiffs; has interfered with the legitimate conduct of their business and the furtherance of their business, resulting in increased cost to shippers and consumers, particularly in areas not served by the railroads; has increased the expense of operation by the plaintiffs, and finally has caused loss of accounts and profits and prospective profits to the plaintiffs. The defendants originally answered the complaint but did not counterclaim. In their original answers the defendants denied the existence of any conspiracy, alleged that the plaintiffs in competition with the railroads were enjoying enormous public subsidies in the “matter of the free use of public highways; that they were unfairly competing with the railroads by carrying loads substantially in excess of the legal weights permitted by the several states; that mere fines for overloading were not sufficiently high to stop the overloading; that the overloaded trucks destroyed the highways; that any effort made on behalf of the railroads to “improve their competitive position in the climate of competition in the field of long-hauling of freight” was ultimately directed to the attainment of legislative measures which involve the right of free speech and right to petition the legislature, both constitutional guarantees and therefore without the orbit of the antitrust laws; and finally that everything done by the railroads was within the “rule of reason” in free competitive enterprise. The railroads also contended that as taxpaying citizens they had the right to point up a growing public abuse in that heavy trucks ruined highways, requiring a greater and greater expenditure of public funds, and that roads and bridges, underpasses and overpasses had to be reconstructed to provide facilities for the increasing volume of traffic and size of vehicles, all of which was to the detriment of the railroads which had to pay part of the reconstruction costs of such facilities. Early in 1956, after the case had been assigned on October 1, 1956, trial date and during the pendency of discovery procedures, some of the railroads and ERPC sought permission to and were allowed to counterclaim against the truckers. The counterclaim charged that the truckers themselves were engaged in nefarious practices against the railroads and with the sole purpose and objective of themselves obtaining a monopoly of and driving the railroads out of the long-haul transportation business in the northeastern section of the United States. It averred that the truckers had engaged in identical public relations programs about which the truckers in their complaint had complained of the railroads; that they made use of the same “third party techniques” charged against the railroads; that they used bogus organizations to advance their cause as against the railroads, and, finally, that they in concert sought to so injure the railroads as to eliminate them as competitors in the long-haul transportation field. On these contentions the case went to trial solely as to the issue of liability. Each side has now concluded its testimony with respect to the question as to whether there was a conspiracy on the part of either, or both, to monopolize longhaul freight transportation in the northeastern part of the United States. The Court will in this opinion resolve that question. Historical Background The period in which the factors involved in this case developed has been generally limited in the proofs to the period from 1930 through 1955. The controversy itself involves the loss of business by the railroads to the long-haul trucks in interstate commerce during that particular period. It is candidly admitted by defendant-railroad companies that in the year 1930 the competition for long-haul freight transportation was de minimis. There were only some 28,000 of the so-called “big trucks” in the entire United States. However, in the early 1930’s with the improvement of highways and mechanical equipment, it became obvious to the railroads that the carriage of goods by trucks, instead of by railroad, was a growing business with which the railroads had to concern themselves. Accordingly, a joint committee of railroads and highway users was instituted to consider the problem. This committee was comprised of truck manufacturers, railroad officials, and officials of motor federations and associations, representing only the then organized automobile clubs. The truckers, as such, had up to that time formed few associations and those in existence were not very forceful in representing the trucker. In any event the truckers were not represented on the committee. That committee filed a report recommending that users of highways be charged for such use as they made of the highways and that a base construction rate for roads should be determined with reference to the smaller private automobile and so-called pickup truck and that any excess cost should be met in increased fees to the heavier vehicles proportional to the amount of the increased cost. The committee also jointly approved standards of road construction, known as the AASHO standards, promulgated by the American Association of State Highway Officials, which standards recommended a maximum of 18,000 pounds for axle loads for all vehicles. Significantly, however, the recommendation of the Commissioner of Public Roads of the United States of standards for gross weight and size of vehicles to make these standards uniform among the several states was, primarily at the instance of the railroads, not accepted. In the Atterbury-Swayne Report (containing the Committee’s findings) it was recommended that limitations as to these two items be left to individual state action. . That the railroads were very seriously concerned with truck competition in the latter part of the 1930’s and lobbied for antitruck legislation, both in Congress and in the Legislatures of the several states, is completely demonstrated in the report of the Committee on Interstate Commerce, pursuant to Senate Resolution 71, (74th Congress) Report No. 26, part 2, rendered on October 16, 1941 to the 1st Session of the 77th Congress, and known as the “Wheeler Report”. This report condemned the railroads for what the committee termed as being “more concerned with the selfish interests of a few rather than the needs of the transportation industry as a whole”. The report further pointed out that the method adopted by various railroads and railroad associations to combat the inroads of the trucking industry was not a method designed to meet truck competition by improvement of railroad service, nor was it a means for adjusting the railroad industry to the fact that there are certain functions for which motor vehicles are especially adapted. It concluded that the program as developed at that time planned to impede truck and bus competition by the erection and enforcement of legal barriers. The program had its beginning at least as early as 1932. It had two major aims; the enactment of laws and ordinances designed to harass the trucking industry, and the stimulation of enforcement of such laws, ordinances and regulations. The above noted report further condemned the action of the railroads in secretly subsidizing so-called independent organizations and foundations which stated publicly that they were only interested in the objective “presentation of facts” but which were actually either completely subsidized or dominated by the railroads through financial support and otherwise. Despite the combined antitruck opposition of the railroad associations of the United States, the trucking industry continued to flourish. At this point I must, for clarity in this opinion, state that hereafter when the term “trucking industry” is used, it will be used' in connection only with that small segment of the entire trucking industry called the “long-haul truckers” which has to do with vehicles of a minimum of 18,000 pounds axle load and gross weight of 30,000 pounds and upward. The number of this type of motor vehicles or so-called “big trucks”, while increasing yearly, at present constitutes only 1% of all vehicles using the public highways. The case under consideration is limited to that group. The Pennsylvania Railroad itself entered the trucking field during the decade of 1930 to 1940 and operated a fleet of long-haul trucks. In charge of this operation was one Mr. Raymond J. Littlefield, who was at that time, had been for many years before, and still is one of the experts in the railroad business in the analysis and study of the trucking industry in competition with the railroads. This operation was later ordered discontinued, and as testified to at the trial, based largely on the premise that the weight restrictions of the State of Pennsylvania prevented operation of these units at a profit. With the advent of World War II and because of government restrictions on the manufacture and operation of motor vehicles, the trucking industry as such and as a competitor to the railroads collapsed. The railroads during World War II carried 95% of all freight and 90% of all passengers. Antitruck activities during this period on the part of the railroads were completely abandoned. With the conclusion of World War II and with the truck manufacturers again in operation, bigger and better trucks appeared on the market and were put into operation by the trucking industry. From 1946 to 1949 marked inroads were made by the truckers in the competitive market of longhaul interstate freight. This was apparent to the railroads and they frankly admit in this action that the competition was obtaining business from shippers who for many years had used railroad facilities exclusively. There was a marked reduction in carloadings in many particular commodities even though the total production of that commodity in over-all manufacturing totals exceeded by far the production of previous years. It was clearly apparent to the railroads that not only the flexibility of movement but the saving of time were important elements in this erosion of railroad business, despite the uniformly much higher rates which the shippers were forced to pay to the truckers as contrasted with the railroad rates. It was clearly apparent to every railroad official concerned with the question that steps had to be taken to preserve the economic status of the railroads in the competitive market. The trucking industry in the meantime had not rested on its oars. After the Atterbury-Swayne Report the truckers banded together in a national organization, known as the American Trucking Association, and State Trucking Associations, similar to PMTA, were organized in every state. These associations became very active in their respective states, lobbying for increased weight limits so as to permit the carrying of greater “pay loads”. In general, their activities resulted in success in raising the minimum weight limits and permitting the carrying of heavy loads. In Pennsylvania the weight limit as of 1941 was 18,000 pounds for axle loads. In 1943, as a temporary war measure, they sought and obtained a limit of 20,000 pounds per axle load. In 1945 by Act of the Pennsylvania Legislature 75 P.S. § 453 the temporary war measure became a permanent measure and remained as the axle load limit throughout the period involved in the present proceeding. Again in 1947 and 1949 the truckers sought an increase of weight limits in Pennsylvania, which limitations were actively opposed by the association of railroads as well as several other organizations to be discussed later. The bills were never passed by the Legislature. During this period many unscrupulous truckers violated the weight limits rather consistently on the theory that it was cheaper to pay the nominal fine of $50 for overloading than to keep the weight of the truck at legal limits; the excess load paying far greater dividends than the charges in the nature of fines for overloading. It was in this setting that the activities hereafter related occurred. Railroad Activities As aforesaid, the use of long-haul trucks for interstate hauling of freight had increased so enormously by May of 1949 that it was a matter of immediate and vital self-interest to the railroads to do something about the erosion of what had been up to this time almost an exclusive monopoly of long-haul freight transportation. At first blush, to the ordinary person it would appear that the primary concern of the railroads might have been directed to improving service and to attempt to meet by more flexibility and speedy delivery the growing competition of the truckers. The evidence in this case has disclosed there were certain areas wherein the trucks could not compete. It was testified that the trucks could not compete with the railroads in taking the coal out of the mountains of West Virginia since one diesel engine could take a great number of cars on the downgrade of the West Virginia mines to the Norfolk breakwater. That the railroads would continue to enjoy this type of business was completely self-evident. On the other hand, the greater flexibility of the truck and the speedier delivery of goods were elements in the competitive market which the railroads might themselves have attempted to meet by the use of trucks or otherwise. The door-to-door feature of truck delivery was also important. However, the record in this case is barren of any attempt on the part of the railroads to adjust their thinking and their actions to meet this definite threat to a segment of business theretofore enjoyed by them. They engaged in what has been termed throughout the trial of this ease as a “concert of action” to “improve their position” in the long-haul freight competitive market. And here is how they did it. In May of 1949 the evidence discloses that the top executives of the Pennsylvania Railroad, before attending the May 19, 1949 meeting of the Conference, were considering a campaign for Federal and State taxes against users of highways, waterways, etc. The recommendation which came out of this consideration was that they should explore the possibility of organizing private motorists and other groups to be held out to the public as completely nonrailroad inspired for the sole purpose of restricting the truckers by making their operations so expensive that they could not operate at a profit. The obvious corollary is that the railroads would be the beneficiaries of these restrictions. On May 19, 1949, at a meeting of the Conference, there was appointed a Competitive Transportation Committee with Subcommittees designated Legal, Research, and Public Relations. David I. Mackie, then vice-president of the Delaware & Lackawanna Railroad, was made Chairman of the Legal Committee. Raymond J. Littlefield, tax agent and later general agent of the Pennsylvania Railroad, was made Chairman of the Research Committee. Thomas J. Deegan, Jr., then executive vice-president of the Chesapeake & Ohio Railroad, later staff vice-president of the Allegheny Corporation, operators of the New York Central Lines, was made Chairman of the very important Public Relations Subcommittee. While these three subcommittees maintained an effective liaison, the most active and most potent of the committees was the Committee on Public Relations. Deegan and his subcommittee determined on a plan of operation. The single objective of the campaign was harassment of the long-haul truckers. One of the objectives was the enactment of legislation, not under the sponsorship of the railroads but by others acting on their behalf, by what was called in inoffensive .and pleasing language, “The third-party technique”. The campaign was to begin in New York, New Jersey and Ohio, and other states were to be brought in later as the program developed, consistent with the degree of success of the program. It was also determined that the campaign should be handled through an independent public relations firm. A number of public relations firms were interviewed and of the four or five selected for interview, all were leaders in that particular field. It may be noted in passing that of those interviewed and who submitted proposals, about which proposals testimony was given at the trial, each and every one of the suggested programs provided for a campaign of publicity to put the truckers in a bad light with the public; to encourage normal public resentment of the motoring public to the operation of big trucks on the highways; to secure the assistance of organizations which were apparently “independent and public spirited” in the campaign against the truckers, and to create a demand for legislation penalizing the truckers either by limitation of size and weight or the imposition of user taxes which would make their operation unprofitable. A presentation was made by the defendant-Byoir firm prior to the execution of the contract on August 15, 1949. Byoir’s presentation laid great stress on the success of that firm in prior legislative campaigns, particularly its success before the Louisiana Legislature in reducing a tax on sulphur; in the Spring of 1938 before the New York Legislature in opposing a chain store tax; in connection with A & P activities which will be discussed later in the opinion; in 1948 before the Congress of the United States in connection with the distilling industry, and finally in connection with the manufacturers of floor and wall tile with regard to building code changes which Byoir claimed his firm had secured for that industry in some two thousand cities. After the contract was awarded a memorandum of agreement was executed providing for payment to Byoir of $75,000 a year, plus reimbursement of each and every expense of any sort involved in the campaign. Byoir immediately organized a staff to put the program into effect and execution. The understanding of the Byoir organization as to its duties in connection with the campaign, set forth in extenso in Exhibit P5, is entitled “The Objectives”. While the ultimate objective is shrewdly set forth as legislation affecting the truckers, the intermediate goals are also set forth, all designed and aimed at injury to the truckers. These objectives, including the crystallization of motorist resentment arising from commercial heavy truck operations over the roads, were designed to arouse the public generally of the need to obtain new methods of financing public highways and by methods which would not appear to emanate from railroad sources. The total objectives were ostensibly set forth in a memorandum to the Department Heads of Byoir by Reynolds Girdler, Account Executive of the ERPC Account, dated September 13, 1949, in which he paraphrased the National Transportation Policy of Congress to suit his own needs, interpreting it for the purposes of the campaign as a National Legislative Policy and that (1) airlines should be used for speed; (2) trucks for short hauls and (3) only railroads for long hauls. He pointed out that if this program could be made effective through public relations the railroads’ financial troubles would be at an end. He also pointed out that “our” newspaper stories, magazine articles, pictures and radio programs will be concerned with what the national transportation policy should be, dramatizing highways and heavy trucks in the following particulars: (1) highway construction costs; (2) highway safety and the part trucks play in lack of safety on the highways; (3) highway damages by trucks; (4) state revenue and expenditures; (5) general taxation stories; all geared to reflect discredit upon the heavy truck industry and all to be done without attribution to the railroads. The magazine department of Byoir was directed to “plant” stories in magazines for later use in the campaign as authoritative sources of factual information. More will be said of this later in the opinion. It was estimated that the cost for the first year would exceed $350,000. Girdler’s memorandum was circulated to the railroads and rather glowing commendations were received from several of the committee members involved, particularly from Walter Franklin, President of the Pennsylvania Railroad; Raymond J. Littlefield, who has been introduced above; and Walter Touhy, President of the Chesapeake and Ohio Railroad, Chairman of the Competitive Transportation Committee; as well as others. While it would be very interesting to outline the Byoir campaign over the period 1949 to 1953, the details of which were testified to by the many witnesses called in this proceeding, it would unduly prolong this opinion and such an outline of details is unnecessary for a complete understanding of the case. Therefore, the campaign as inaugurated and carried out by Byoir and the Committee on Competitive Transportation of the Conference and its total effectiveness will be only briefly outlined under activities embracing: (1) The State of New Jersey; (2) The State of New York; (3) The State of Ohio; (4) Magazine Activities; (5) Road Test One — Maryland and its connotations; (6) The State of Pennsylvania; and (7) The Campaign of Vilification. New Jersey Activities While the program was geared for operation throughout the 17 states in the northeastern part of the United States, the Committee on Competitive Transportation determined to center its efforts in tlfree states — New York, New Jersey and Ohio. At the outset, one C. Coleburn Hardy was selected as the Byoir representative to inaugurate the New Jersey campaign. Hardy had for many years been in the public relations business and had served several terms as a New Jersey Legislator. Liaison was effected with the President of the Associated Railroads of New Jersey, one Blackson, and his assistant, one Simpson, with David I. Mackie, vice-president and general counsel of the Delaware & Lackawanna Railroad; one Pevler, vice-president of the Pennsylvania Railroad, and one Viviano, general counsel for the Lehigh Valley Railroad. It was determined to reactivate an organization known as the New Jersey Automobile Owners, Inc. of which one St ell jes was executive vice-president, and one Fred Fox, secretary. Its offices actually were in the Byoir organization headquarters at 10 E. 40th Street, New York City, New York, with a mailing address from a small apartment in an apartment house in East Orange, New Jersey. In addition there was organized a new group, the New Jersey Citizens Tax Study Foundation, an organization whose dominant member was Hardy, its secretary. The general purposes of the campaign were: (1) to stir up as much resentment against the trucking industry as was possible among highway users, with special emphasis upon the motorists, farmers and local truckers; (2) the lowering of truck weights and the increase in truck fees; (3) a weight-distance tax whereby users of New Jersey roads would be charged a mileage fee based upon weight carried and distance traveled on the highways of New Jersey. Hardy with his knowledge of New Jersey politics was in a key position to be extremely effective in such a campaign. He had the help of Blackson, David I. Mackie, above mentioned, who was no stranger to legislative halls, and the research facilities of the Eastern Railroad Transportation Committee headed by Raymond J. Littlefield. Macwithey, president; R. J. Stelljes, vice-president, and Robert Fox, secretary, of the New Jersey Automobile Owners, Inc., were all avid publicity seekers who lost no opportunity to make speeches, give press releases of the speeches and demand of the legislative restrictions on the trucking industry. In this they were ably assisted by Hardy who paid all of their expenses, wrote practically all of the speeches, sent out thousands of publicity releases, prepared and printed in New York but mailed in New Jersey by a representative of Byoir. Copies of each release, however, were sent to the three officers in order that they be kept currently informed of Byoir’s activities on their apparent behalf. Not one word of the railroads’ part in the picture ever seeped through to the objects of their consideration — the long-haul truckers. Another suggestion which was made part of the campaign was to create by grass-root methods, through editors of weekly papers, The Grange and other organizations, a demand for more highway funds. The object of this was clearly to point up increasing costs of road building and maintenance, and after having created the demand to suggest and then campaign for the weight-distance tax. The organization of the New Jersey Citizens Tax Study Foundation in this posture of the campaign began to pay dividends. One Fred K. Goodwin was the Executive Director and he was paid by Byoir and worked very closely with Hardy. A questionnaire was prepared and circulated to obtain “independent public reactions” to possible sources of tax money. The questionnaire was so devised with the help of the Byoir organization to make certain that a weight-distance tax would be the least painful choice to the general public. With that as a statistic and from an apparently independent authoritative source, Byoir was able to step up among editors, writers and other media of communications the clamor for a weight-distance tax. It must also be remembered that all during this time a campaign of vilification against the trucking industry generally was going forward, the outline of which campaign will be later referred to in this opinion. New Jersey had two years earlier adopted a new constitution. One of the elements was a tax study commission headed by Dr. John S. Sly of Princeton Univei'sity, who also headed the Princeton Surveys. Dr. Sly was apparently, to the public at least, one of the most outstanding and disinterested persons in the State of New Jersey in connection with the tax study. It was the committee headed by him that made recommendations to the Governor and to the Legislature with respect to taxes in the State of New Jersey. However, the evidence in this case clearly indicates that Dr. Sly was working in the interest of the railroads. According to documents from Byoir files he worked in so close an association with Hardy that he was perfectly willing to accept Hardy’s recomommendation to place before his committee the virtues of the weight-distance tax, and in such a manner that the connection of the railroads therewith would be completely concealed or obscured. The results of this campaign were extremely pleasant insofar as the railroads were concerned. Without elaborating too greatly upon the details of the campaign it will be sufficient to state that because of the ostensible grass-root campaign emanating from persons apparently with no railroad ties, the maximum axle load permissible on the highways of New Jersey was reduced and a marked increase in truckers’ fees was obtained. While the campaign was not completely successful in that no weight-distance tax was imposed upon the trucking industry, the responsible officials of ERPC expressed their complete satisfaction with the results actually obtained. In connection with the campaign to persuade editors to take an antitruck position, Byoir through Hardy subsidized an apparently independent journalist who distributed a column of political news to the editors of weekly newspapers in New Jersey. Byoir provided complete coverage during the legislative season of eight weeks for all of the weekly newspapers of New Jersey, at no charge. Needless to say the columns so syndicated did nothing to advance the cause of the trucking industry and the columnist was well compensated by Byoir for his efforts on behalf of the railroads, whose connection with the activity was carefully concealed not only from the public but from the editors who used his material. Representations were made to the then Governor of New Jersey, Alfred E. Driscoll, on behalf of the New Jersey Automobile Owners, Inc., protesting against a rise in the regular gasoline taxes; a rise conceived in the mind of Byoir and one which this record fails to disclose had ever been proposed by any responsible organization. The purpose of this, of course, was to again deliver a broadside against the trucking industry and to urge the imposition of a weight-distance tax against it. Hardy himself together with Stelljes traveled the length and breadth of New Jersey speaking before civic organizations, such as, Lion, Rotary and Kiwanis Clubs, and not one of the thousands of the businessmen of New Jersey who heard these speeches and violent denunciations of the trucking industry had the faintest conception that the ERPC was paying for the very gasoline that brought the speaker to the door of the meeting hall. All in all Hardy and his railroad friends were eminently successful in their attempt to arouse the people of New Jersey to strike out at the trucking industry through the method of weight limitations and higher fees, and that work was not done to help the railroads but to injure the truckers. There was nothing of a constructive nature done by Hardy at any time to obtain better public relations for the railroads nor to secure any legislation favorable to the railroads. The truckers throughout remained the target of this subterranean campaign to place them in a light with the public which was anything but favorable and wholesome. One final observation on the State of New Jersey and the limits to which Hardy went to conceal the railroads’ participation in this campaign. One astute editor questioned the sincerity of the New Jersey Automobile Owners, Inc. and in effect called it a paper organization “fronting” for some unknown principal. Not only did Hardy answer the letter denying any connection, particularly with the railroads, but he circulated his reply to every editor of every newspaper in the State of New Jersey in words of his own choosing on letterheads and in envelopes of Automobile Owners, Inc. paid for by the railroads and with postage paid for by the railroads. The ostensible writer of the letter was Stelljes, but the thoughts and words were Byoir’s and Hardy’s. The contents of the letter were nothing but complete fabrications and falsehoods. Many other illustrations of the type of campaign engineered by Hardy, Mackie, Littlefield, and others might be given but they are not necessary to a decision in this case. New York Activities When Byoir undertook to represent the railroads in the summer of 1949, it found in New York State that the railroads had already enlisted the aid of many civic organizations and were themselves utilizing the “third-party technique”. Outstanding were two organizations: The Citizens Tax League of Rochester, New York, whose secretary A. J. Menzie apparently delighted in public controversy, and The Citizens Public Expenditure Survey, Inc., an independent public-spirited organization originally formed for the purpose of scrutinizing the budgets ' of all governmental political divisions and subdivisions from the state itself to the smallest municipality. Through agricultural agents employed by them the railroads had been able to enlist the sympathetic cooperation of many prominent Grange members to present their viewpoint against the truckers to the public. But they were in need of statistics to bolster their contentions and it was important that any review come from an apparently independent source. They decided that should a survey of highway users and the revenue derived from them for road construction and maintenance be sponsored by the railroads it would be of little, if any, value. Therefore, it was determined to have such a survey made by an independent source. Griffinhagen & Associates, consultants in public administration and finance, with offices in Chicago, New York, Boston and Los Angeles, were chosen to make the survey. The sponsor was The Citizens Public Expenditure Survey, Inc. This survey which was completed and documented in February of 1950 again had no apparent railroad relation and seemingly was what it purported to be, a completely objective independent analysis of the highways and highway use and revenue conditions in the State of New York. To put it in its proper perspective, however, the evidence in this ease discloses that during the years 1951, 1952 and 1953, substantial “subscriptions” in uneven amounts were made to the Citizens Public Expenditure Survey, Inc. by the Pennsylvania Railroad. The evidence also discloses that Mr. Littlefield, after the passage of the weight-distance tax bill on trucks in New York, sought a vote of thanks for Mr. Dugan of the New York Central for his efforts in bringing Griffinhagen to New York for the survey and the results of the survey. Over and above that, weekly reports of Kiely, Byoir’s New York representative for the ERPC, clearly indicates that Kiely directed the activities of both Walter Howe, executive director of Citizens, and one Finke, head of its so-called research department. The closely knit cooperation of these three individuals was such, together with the “subscriptions” which appear rather to be “assessments”, that the inference is inescapable, and the Court so finds, that the railroads paid for the survey and subsidized the activities of Messrs. Howe and Finke. With the Griffinhagen report as a basis, Kiely toured New York State and “sold” the railroad story to editors, the Mayors Conference, County Supervisors, Chief of Police Associations, Rural Letter Carriers, Members of the Grange, and other organizations. He also worked closely with The Citizens Tax League of Rochester, New York, and used that organization for the dissemination of literature unfavorable to the truckers. Byoir absorbed all of the costs of this distribution and paid the secretary Menzie a substantial fee of several hundred dollars for the so-called research, which the Court finds was for the use of his position. In order to obtain more extensive publicity Byoir formed the Empire State Transport League, a strictly paper organization, with its principal office at a desk in a Public Stenographer’s office in Albany, New York. Byoir induced many prominent New Yorkers to lend their names to this paper organization. The amount of antitruck literature and news releases critical of the truckers put out by this organization was prodigious. Of course, it was all at the expense of the railroads without any attribution of responsibility to the railroads. While there is naturally a scarcity of evidence as to the connection of Byoir with the Legislative Committee of the New York State Senate, which had the weight-distance tax bill before it in the year 1950, it is significant that when Senator Manning, the head of that committee, came up for election in a later year he became extremely resentful of rumors that Byoir had written the Senate report recommending the weight-distance tax and refused to let Byoir relate any further remarks to him. The inference is again inescapable, and the Court so finds, that Byoir’s representatives were working in close contact with his office during the pendency of this particular piece of legislation and were responsible for many of the news releases which came out under his authorship. As in the case of Stull in Ohio, who will be later discussed, and Hardy with Pevler and Mackie in New Jersey, Kiely did a magnificent job of grass-root selling. He persuaded the Rural Letter Carriers, the Grange, and the Mayors Conference to adopt resolutions at their state conventions, several of which were actually written by him, denouncing the truckers and urging strict enforcement of the weight-distance tax. Under the letterhead of the Empire State Transportation League he urged the Sheriffs of every county of the state to enforce the strict penal provisions of the weight-distance tax, particularly with regard to overloading. He sought out legislators, particularly members of the Highway Committee, and solicited the introduction of and urged the passage of an act giving local communities, through their local police organizations, the right to arrest the drivers of overladen trucks and impound the trucks if necessary. The bait held out was that local communities could profit from the high penalties set forth in the weight-distance tax law for overloading. He worked also with his friends in the Grange, in the Mayors Conference, and in other organizations to put pressure upon the political leaders to see that the Legislative Committees were composed of legislators favorable to the railroad point of view. In addition to the Griffinhagen report, the Byoir organization was able to obtain further statistics against the heavy trucks by so-called public opinion polls. The media for obtaining this information was Fact Finders, Inc. and the Princeton Polls, the latter headed by Dr. Robert Sly, head of the New Jersey Tax Study Commission. The questions were framed in the light of a demand carefully nurtured by Byoir, through the Grange, the Mayors Conference and others, to obtain a greater allotment of state funds for local community roads. While very astutely, and apparently innocently worded, the bold import of the questions presented to individual persons ran substantially as follows: Since more money must be obtained for roads, do you prefer: (1) increase in passenger car registration fees; (2) increase in the motor fuel tax; (3) increase in the charges made for the use of the highways by the heavy trucks? It would certainly be less than human if an overwhelming majority of the people approached would not vote for the third proposition, to wit: tax the truckers! These public opinion polls at the cost of many thousands of dollars were inaugurated by and subsidized by Byoir on behalf of and at the expense of the railroads. The results of these polls received the widest publicity that Byoir could give them both on the metropolitan level of all the larger cities of the State of New York, in National magazines, where possible, and with particular emphasis on the country weekly newspapers. In that regard it might also be noted that Kiely was also able to obtain the cooperation of a few editors of weekly newspapers who printed strong editorials against the truckers. Defendants argue that these antitruek statements contained the considered opinion of the editors and that it was merely another facet of the freedom of press and speech guaranteed by the 1st Amendment to the Constitution of the United States. This argument would certainly carry great weight were it not for the fact that Kiely, a highly placed and highly paid employee of Byoir, had written the editorials himself in furtherance of the Byoir-railroad objective. In accordance with standard operating procedures, these skillfully written diatribes against the truckers received the widest possible publicity and became part of a Byoir kit for presentation to the next editor. In this posture of the case it might be well to also note that much of the success of Kiely and the others in “planting” these ideas with editors was due to the fact that apparently independent writers of recognized stature had written articles about the damage that truckers did to roads. As will be related hereafter under the headings “Magazine Activities” and “Campaign of Vilification”, these articles in outstanding magazines of national circulation, the names of which will also be hereafter related, were based almost exclusively on data furnished by Byoir and written or edited by Byoir before appearing in these magazines. To keep the case in proper perspective we must recognize that Kiely, Stull, Hardy, et ah, were on the payroll of the ERPC through Byoir; that their entire salaries and expenses were reimbursed by ERPC to Byoir; that their job was to create public dissatisfaction with the truckers, arouse animosity against the truckers, and all to the final purpose that the railroads might at the least limit the activities of the truckers in the long-haul industry or if completely successful destroy them as a competitive factor with the railroads. Bluntly stated, all were working to accomplish injury to a business competitor within the prohibition of the Sherman and Clayton Antitrust Acts. The results of Byoir’s work in New York in conjunction with Messrs. Little-field and Deegan were extremely gratifying to the Research Subcommittee of the ERPC. In its report dated June 20, 1951 to Mr. Walter Tuohy, Chairman of the Special Transportation Committee, the following pertinent language is found: “7. Research Committee has acted more or less as liaison between State Railroad Associations and the Carl Byoir group. In June, 1949, the Policy Committee named the states of New Jersey, New York and Ohio as trial states. The Carl Byoir group, under the direction of Mr. Girdler, placed the facts before state administrations and otherwise gave the states a vast amount of help, resulting in favorable truck legislation in New Jersey and New York. “8. The Mileage Tax Bill, which passed the New York legislature in April of this year, was of outstanding importance. This is the first state east of the Mississippi to put a substantial mileage tax on trucks. Other states are watching this development. The New York authorities advise that they expect to build 50 weighing stations scattered throughout the State. “9. After the New York Bill passed, the Carl Byoir people concentrated on Ohio. A Bill was passed increasing truck license fees about 30%-. There is much more to be accomplished and the campaign will be resumed at the next session of the legislature. “10. The first of June, the railroads of Pennsylvania unanimously requested the help of the Carl Byoir people, and a man has been assigned.” Ohio Activities The State of Ohio posed one peculiar problem to the Byoir organization. Representing the Goodrich Tire & Rubber Company, which of course was vitally interested in automotive equipment and the sale of tires, Byoir found itself in the predicament of representing opposing interests. Nevertheless, following the pattern of New Jersey, Byoir threw the weight of its organization behind Donald Stull, who had charge of the Ohio activities. The success of Stull in Ohio in advancing the interests of the Byoir-ERPC plan was little less than phenomenal. T. J. Kauer was Director of the Ohio Department of Highways; Harold Cohen was the Chief of the Bureau of Public Relations for the Ohio Department of Highways. Kauer was also Chairman of the Interregional Council on Highway Transportation which had charge of the Maryland Road Test. Stull had complete access to their offices and worked closely with them. He also, through Kauer, apparently had entree to the office of Governor Lausche. Building up a grass-root campaign against the truckers through the use of “independent factual data” obtained from sources apparently independent but based completely on Byoir material, he was successful in creating a wave of indignation towards the truckers which resulted in an increase of fees to the truckers in 1951 of approximately 30 %. Again, through Kauer, he was able to “educate” the members of the Ohio Legislative Highway Investigating Committee. In 1952, according to a Byoir report, Stull had done such “an efficient job of education” that there arose a public demand for taxation on heavy trucks. There was also a gubernatorial campaign in Ohio that year. Charles Taft, the Republican candidate, adopted the proposition that trucks should pay higher taxes “based on weight carried and miles traveled”. Stull reported to Byoir that up to three weeks before Election Day, Lausche, the incumbent, had planned to campaign solely on his record and was backing away from the ton-mile tax as a too-familiar story and one already chosen by his opponent. What he needed, he told his aides, was “a dramatic story that could be told over TV”. That was all Stull needed (according to Byoir). Using newspaper clips, editorials, magazine articles, etc., which as will be demonstrated later were practically all Byoirinspired and paid for by ERPC, Stull demonstrated the apparent widespread public interest in the ton-mile tax. He also had available a Harper magazine article by Senator Neuberger of Oregon entitled, “Who Shall Pay For Our Roads ?”, for the writing of which Byoir “research” had been made available, and which will be referred to in detail under the heading “Magazine Activities”. Lausche campaigned just fifteen days. According to reports found in Byoir’s files, in all but one speech he talked only the ton-mile tax; in every TV program he centered attention on truck taxation; waving copies of the Harper magazine article before the camera; pointing to placards showing the justice of heavy taxes on trucks; displaying Public Utility Commission records of violations by explosive-hauling truckers (the results of a Byoir-inspired investigation) and repeating the results of the Maryland Road Test (a distorted Byoir interpretation) to prove how badly big trucks damage highways. Again, according to Byoir, the data and, in many cases, the words and props were supplied by Stull. The Cleveland Plain Dealer stated categorically “Lausche’s astonishing victory, against the political tide, can be construed as an endorsement of his highway program”. Stull did his job so well that the truckers were forced to abandon their early charges that the “bills were railroad inspired” — which they were. In addition and as part of his program Stull introduced into Ohio the “Save Our Highways Club”. This was an organization founded by railroad employees in Tennessee and its entry into Ohio was completely financed by Byoir for which it was reimbursed by the railroads. Literature in profusion was m'ailed to legislators, granges, farmers’ organizations and automobile clubs. All of it was critical of the trucking industry. All of it was calculated to and did bring the trucking industry into public disrepute. Again, a magnificent job was accomplished in keeping any information as to the true position of the railroads in this campaign from the general public. The rise in fees and the campaign for the weight-distance tax in Ohio were two of the outstanding accomplishments of Byoir for the railroads in the entire campaign. Two other aspects of the Byoir-Stull campaign are worthy of mention. The records of the Byoir organization introduced in this case demonstrate clearly that copies of Governor Lausche’s correspondence with protesting truckers were in the hands of Byoir before the correspondence even reached the United States mails, and to quote Stull, it “contained our poison”. This again points out that Kauer and Cohen were working diligently for the interests of the railroads. While defendants have vigorously argued that the term “poison” was nothing but public relations jargon, I find that Stull meant exactly what he said and in the ordinary context of the words used. It is clearly apparent that the political campaign against the truckers was based on slanted statistics created by Byoir for the railroads and that most of the data used in the speeches, if not the speeches themselves on both sides, Republican and Democratic, stemmed directly from the Byoir organization. While the trucking industry and its members were intellectually certain that this apparent grass-root uprising against the industry was definitely railroad inspired, so well did Stull and Byoir work that it was impossible to document and prove it. The net result was that the trucking industry faced a hostile public opinion in Ohio because of the method of distortion and over-emphasis of the admitted shortcomings of the industry on the part of Byoir. This statement will be amplified in the heading “Vilification Campaign". Magazine Activities One of the most unusual of Byoir’s employees, the head of the Magazine Department, was Patricia Lochridge Hart-well. Mrs. Hartwell, whose professional name while she was with Byoir was Patricia Lochridge, joined the Byoir organization in November of 1949 and was assigned to the ERPC account. She thereupon set out to develop magazine articles which would portray the railroads’ point of view and would be unfavorable to the trucking interests. Her method of operation was to interest an editor of a magazine in a story and if the editor thought it had sufficient merit he might assign one of his staff writers or editors to do the piece. In that event Mrs. Hartwell would furnish the writer with the data which Byoir had compiled, which data of course was always slanted against the truckers. She also made use of freelance writers. She would interest them in a particular story and pay them while they researched the proposed story at Byoir’s or at other places, which amounts in many instances ran into several hundreds of dollars. Since the ultimate aim was to hurt the truckers, any such payments were reimbursed by the railroads, and should the free-lance writer be able to sell the article to a magazine the entire fee went to the writer. In other words, Byoir paid the writer during the preparation of the article and the magazine paid him for writing it. In the extremely limited number of instances that a writer contemplated an article which would be favorable to the railroads’ point of view with respect to the truckers, Byoir extended every facility it possessed for use of the writer and at no cost to the writer. The worth of such a project in the attainment of the ERPC goal cannot be minimized. In addition to the ordinary extensive circulation which the magazines themselves possessed, it was possible, at railroad expense, to circulate reprints of the articles widely to civic organizations, state, city and government officials, as well as to legislators and other individuals who were concerned with public opinion. While it is true that her efforts in every case did not meet with complete success, she was successful in having enough magazine articles released to make an important contribution to the railroads’ antitruck campaign. Without attempting to individuate the details of each article, it will be sufficient to recount some of the articles published and Byoir’s connection with them. The first article, “The Giants Wreck Highways” with a subtitle “Heavy Trucks Are Making Their Runs On Your Tax Dollars”, appeared in the April, 1950 issue of Everybody’s Digest. It was based almost completely upon Byoir’s research and development. In the same month Byoir claimed credit for having furnished minor research and comment for an article by Senator Joseph C. O’Mahoney entitled, “What Bad Roads Are Costing Us”, which appeared in the April, 1950 issue of the American Magazine. Early in 1950 Mrs. Hartwell presented an outline of a story about truck damage to roads to the editor of Harper’s magazine. This outline was very extensive and Harpers evinced interest in it. Thereafter Mrs. Hartwell contacted Myron Stearn, an independent free-lance writer, interested him in the story, furnished him with all the Byoir data on the trucks, and the completed product appeared in the September, 1950 issue of Harper’s magazine under the caption, “Our Roads Are Going To Pot”. At approximately the same time an article entitled, “The Rape Of Our Roads”, by Frederick Brownell, a Byoir protege, appeared in the Reader’s Digest. This article was condensed from a Buffalo Evening News story. These two articles became the first authoritative sources of so-called independent public attacks upon the trucking industry. Through the good efforts of Clinton Johnson, Director of Publicity for the Maryland Roads Commission, and a close associate of the Byoir organization, David G. Wittels, an outstanding writer for the Saturday Evening Post, in the September 16, 1950 issue of that magazine wrote a very critical article entitled, “Are Trucks Destroying Our Highways?” Byoir furnished extensive national research in a five thousand word background memorandum to round out his story on the Maryland State Highway Commission Program. It was the same Clinton Johnson who persuaded Mr. Wittels to go to Maryland and actually research the story in the field; live with the highway crew, meet the highway commissioner, and find out what the problems were for himself. While the article justifiably was critical of a certain class of truckers, it must be realized that the initiative for the article stemmed from railroad-inspired sources and portrayed a particularly venal type of trucker as representative of the entire trucking industry. The distortion, however, was so skillfully done and so subtly written as to make a profound impression upon a casual reader of the article. Again, it is a variation of third-party technique approach, which technique in its application to this case will receive further attention. Hardy Burke, “a sometime employee of Byoir” and a sometime independent freelance writer,