Full opinion text
ROBSON, District Judge. The above captioned actions are part of the more than nineteen hundred related treble damage antitrust actions involving the electrical equipment industry which were filed throughout the country during the early 1960’s. Plaintiffs in the instant cases are seeking damages for alleged overcharges on their purchases of power switchgear assemblies. Seventeen of the twenty-one power switchgear assembly actions originally brought in this District have been dismissed. Twenty-seven additional power switchgear assembly cases have been transferred here from six other districts, one of which has been dismissed, leaving thirty suits pending. All of these actions have been consolidated for pre-trial purposes, and this Court has set one or more of them for trial on October 4, 1965. Plaintiffs have moved pursuant to Rules 11 and 12(f), F.R.Civ.P., to strike defendant I-T-E Circuit Breaker Company’s defense of economic coercion. Extensive pre-trial discovery has been completed and the cases are now entering the final pre-trial stages. Efficient handling of this complex litigation requires that the real issues in dispute be sharply delineated, and the immaterial issues eliminated. Though motions to strike are not favored by the federal courts, they provide a useful and appropriate tool where the parties disagree only on the legal implications to be drawn from uncontroverted facts, or where questions of law are involved. To this end the Court on March 2, 1965 entered Local Pre-Trial Order No. 4 which required I-T-E to file “a detailed written statement stating in separately numbered paragraphs all facts and contentions which relate to or bear on your defenses of ‘coercion, duress and compulsion * * * ’ and your inability to refrain from participating in the alleged conspiracy in this product line, or any attempts made by you to withdraw from the conspiracy in this product line.” The Court has concluded that plaintiffs’ motions so strike should be granted for three reasons. First, economic coercion is not a legal defense to treble damage actions. Second, I-T-E has failed to assert facts sufficient to meet the legal criteria of economic coercion as developed through judicial decision. Third, this sanction should be imposed on I-T-E for failure to comply with Local Pre-Trial Order No. 4 and subsequent directions of the Court. I. Legal Sufficiency of the Economic Coercion Defense in Treble Damage Actions„ I-T-E’s coercion defense attacks the heart of plaintiffs’ causes of action. For plaintiffs to recover from I-T-E in these cases they must first prove that I-T-E has violated the antitrust laws. The theory of the coercion defense is that a party who is forced to participate in an illegal conspiracy has not violated the antitrust laws. I-T-E alleges that its participation in the conspiracy resulted from economic coercion by the larger electrical equipment manufacturers, “(General Electric, Westinghouse and, from time to time, Allis-Chalmers)”, and accordingly, that it has not committed the tort necessary to create liability to plaintiffs. This result would overlook the significance of the following discussion in United States v. Paramount Pictures, Inc., et al., 334 U.S. 131, 161, 68 S.Ct. 915, 931, 92 L.Ed. 1260 (1948) (an equitable proceeding): “There is some suggestion on this as well as on other phases of the cases that large exhibitors with whom defendants dealt fathered the illegal practices and forced them onto the defendants. But as the District Court observed, that circumstance if true does not help the defendants. For acquiescence in an illegal scheme is as much a violation of the Sherman Act as the creation and promotion of one.” (Emphasis supplied.) Although it may be arguable that the economic coercion defense is less applicable in an equitable suit for remedial relief than in a punitive criminal or treble damage action, this Court has concluded that Paramount is binding precedent and, accordingly, that plaintiffs’ motions to strike should be granted. I-T-E attempts to distinguish the word “acquiescence”, used in Paramount, from the “coercion, duress, and compulsion” inflicted upon it. The defense asserted in Paramount was that “illegal practices” were “forced” upon certain of the defendants. Similarly, here it is asserted that I-T-E has been coerced into various actions. The attempt to distinguish between “forced acquiescence” and “coercion” is pure semantics. The defense of economic coercion has not barred recovery by treble damage plaintiffs in any case reported to date. The Ninth Circuit commented on the defense in two treble damage actions. The first of these, Flintkote Co. v. Lysfjord et al., 246 F.2d 368, 375 (C.A.9 1957), was a suit by an acoustical tile contractor against a tile supplier (Flintkote), a contractor’s trade association and certain of its members. The complaint charged a conspiracy to monopolize the acoustical tile industry and a threat by the Association and its members to boycott Flint-kote’s products unless it discontinued supplying plaintiff. Holding that there was sufficient evidence to support the jury’s findings of Flintkote’s participation in the conspiracy, the Ninth Circuit relied on Paramount and stated: “ * * * There was no direct evidence that Flintkote, as a seller of tile and not an installer, participated directly in that original conspiracy between the dealers, but there was evidence from which an inference might have been drawn by the trier of fact warranting the belief that the defendant Flintkote, through acting as supplier to the conspirators on some of the jobs, could have acquired knowledge of the conspiracy; and there was evidence which warranted the conclusion that Flint-kote, with such inferred knowledge, participated in the conspiracy, and aided it, by its refusal to sell to plaintiffs. If that refusal was not the result of the exercise of ordinary business judgment, but the result of threats made and pressure applied by members of the known conspiracy to and against Flintkote, the act of refusing to sell would constitute knowing participation. Because one is coerced by economic threats to participate in or aid and abet an illegal scheme does not excuse the actor.” The Ninth Circuit made no reference to Paramount in Fox West Coast Theatres Corp. et al. v. Paradise Theatre Building Corporation, 264 F.2d 602, 605 (C.A.9 1958) (treble damage suit against six motion picture producers-distributors-exhibitors) which expressed the opposite view: “ * * * Once it is found that there was substantial evidence that these three organizations combined unlawfully to discriminate against Paradise, then evidence of action by others tending to produce the unlawful result may be corroborative of the charge, even though these others may not be found eventually to have been conspirators. The jury may clear some participants in parallel action for lack of knowledge of the scheme or unlawful design or because they were coerced. Thus, although each may have been a participant in acts which tended to effectuate the result complained of, the jury may have found them innocent tools of the conspirators whom • the jury found unlawfully formulated, carried on and did overt acts charged to bring about the isolation of Paradise. The jury had a right and the duty to consider the record as a whole and determine who, if any, were participants in an unlawful combination.” The court’s discussion in both cases is dictum,. In Flintkote, supra, coercion was not advanced as a defense but was introduced by plaintiff to prove defendant’s knowledge of and knowing participation in the conspiracy. In Fox West Coast Theatres, supra, the Ninth Circuit considered the sufficiency of the evidence (i. e., inferences to be drawn from parallel behavior) to sustain the verdict finding only three of six defendants liable. The court’s language in the latter case means only that where proof of conspiracy is circumstantial, it is for the jury to decide whether a particular act resulted from participation in the conspiracy, or from coercion which made the defendants the “innocent tools of the conspirators. * * *»» II. I-T-E Has Failed to Assert Facts Sufficient to Meet the Legal Criteria of Economic Coercion. Because of the absence of authority directly on point this Court chose not to rule on the sufficiency of the economic coercion defense in a factual vacuum. The factual background was to be provided by the responses ordered to Local Pre-Trial Order No. 4. I-T-E’s response was intended to serve as an offer of proof for all the facts and contentions in support of this defense. Its response does not assert facts sufficient to meet the basic criteria of coercion as established by judicial decisions. These criteria include: (1) the coerced party was deprived of its free will; (2) it had no available alternative course of action; (3) the threatened consequences were such that the remedy at law was insufficient; (4) the threatened acts were illegal; and (5) the coercion was exercised by the party against whom the defense is asserted. (6) In addition, the party asserting the defense must have promptly disavowed the involuntary acts or acquiescence will be implied as a matter of law. (1) I — T—E has failed to show any instances where it was deprived of free will. Coercion principles which have long been applied in the criminal law have been extended to other branches of the law by modern decisions. Business compulsion is now recognized as a species of duress. There is no litmus paper test indicating when such coercion occurs. Rather, the coercive acts must be examined to determine their effect on the complaining party. Duress is present only when the individual is deprived of his free will and judgment. As stated in Winget v. Rockwood et al., 69 F.2d 326, 330 (C.A.8 1934) (suit to rescind a contract for the sale of stock): “ * * * There is no legal standard of resistance with which the victim must comply at the peril of being remediless for a wrong done, and no general rule as to the sufficiency of facts to produce duress. * * * In other words, duress is not to be tested by the character of the threats, but rather by the effect produced thereby on the mind of the victim. The means used, the age, sex, state of health and mental characteristics of the victims are all evi-dentiary, but the ultimate fact in issue is whether such person was bereft of. the free exercise of his willpower. * * *” I-T-E has not demonstrated the absence of free choice necessary to constitute coercion. On the contrary, the statement in response to Local Pre-Trial Order No. 4 repeatedly relates instances of I-T-E’s independent action. For example: “8. In subsequent meetings of competitors at about this time [1931] and during the year or two which followed, General Electric and Westinghouse continually urged Scott [I-T-E’s President] to make I-T-E’s prices and terms and conditions of sale similar to those of General Electric and Westinghouse. Uniformity was insisted upon even for the items where I-T-E’s price was higher than its competitors’. When Scott refused to lower I-T-E’s price on such items, General Electric said that it would raise its prices to achieve the desired uniformity notwithstanding the possi-~ ble substantial loss of business it was getting in that product line, a position from which Westinghouse did not dissent. * * * (Emphasis supplied.) “33. In November 1952 I-T-E submitted a quotation for the 440 volt auxiliary switchboards for CVA 60, the aircraft carrier Saratoga. General Electric had been awarded similar equipment on the first vessel of this class and I-T-E planned to get the second, if possible. When Scott instructed I-T-E’s Sales Manager, Fred Getz, to make every effort to obtain the job, Getz told him that, based upon his conversations with General Electric and Westinghouse and his past experience, there was absolutely no doubt that General Electric and Westinghouse would not permit I-T-E to take it and, if I-T-E was competitive, there would be severe commercial repercussions affecting other business. In spite of the warning, Getz was instructed to proceed and I-T-E got the job at $1,400,000 as compared with General Electric’s bid of $1,800,000 for the first vessel of this class. (Emphasis supplied.) “67.- Notwithstanding discussions among competitors at the Traymore meeting referred to in paragraph 57 and at other meetings, I-T-E personnel were instructed to run I-T-E’s business their own way. For example, when Buck reported to Scott the proposed 4% allocation of sealed-bid business, Scott told him to. forget it and Buck gave similar instructions to his subordinates.” (Emphasis supplied.) In the above instances, I-T-E acted in direct defiance of the larger manufacturers’ commands. Defendant cannot claim in one breath that it lost its will by “the threats and acts of coercion [which] are largely to be found in a mosiac of incidents stretching in time throughout virtually the entire history of the electrical manufacturing industry * * and jn the next assert that it was an aggressive competitor exercising its own business judgment. The examples cited by I-T-E lead inevitably to the conclusion that it acted freely at all times to pursue those goals which it believed were in its best interests. (2) I-T-E has failed to show that acquiescence was the only available alternative. Although coercion need not result from a single act, the threatened party to successfully urge the defense must prove that it was deprived of any opportunity for alternative action and that the threat was imminent and certain. In A/S Glittre v. Dill, 152 F.Supp. 934, 938 (S.D.N.Y.1957) (suit to recover a fine), the coerced payment was made to secure clearance papers needed for docking in U. S. ports. The court granted defendant’s motion for summary judgment, finding that duress did not exist as a matter of law where the payment was made five weeks prior to the vessel’s docking. “ * * * Hence, plaintiff’s payment was anticipatory. It was not induced by a present, immediate and urgent necessity, but by a desire to avert a prospective and contingent event which presumably might take place in five weeks.” I-T-E has failed to cite a single instance in the 1940’s or 1950’s where its independent actions- resulted in prompt retaliation against it by the major producers. This failure of proof is critical in view of the numerous examples of such actions described in its responses. Many years of participation in a conspiracy cannot be justified on grounds of coercion without a showing that harm resulted from attempts to throw off the illegal yoke. (3) I-T-E at aU times had the alternative of a meaningful legal remedy. An adequate remedy at law will defeat the defense. In Hartsville Oil Mill v. United States, 271 U.S. 43, 49, 46 S.Ct. 389, 70 L.Ed. 822 (1926) (contract suit against the Government), the Government moved to modify the contract (pursuant to its provisions) and threatened default unless the new contract was accepted within one hour. The Supreme Court held that “[b]efore the coercive effect of the threatened action can be inferred, there must be evidence of some probable consequences of it to person or property for which the remedy afforded by the courts is inadequate.” I-T-E cannot show its remedy at law was insufficient. Two legal remedies existed which it failed to pursue to fruition. The first was to bring suit for injunctive and/or treble damage relief under the Clayton Act. The second was to report the illegal activities to the Justice Department. In 1940 I-T-E, through Mr. Scott, its President, took the initial step in this direction, and reported to the Justice Department that antitrust violations were occurring in the circuit breaker industry. Thurman Arnold, then Assistant Attorney General, responded requesting that Mr. Scott «* * * communicate with me [Arnold] concerning this matter.” Mr. Scott did not communicate further. His present explanation is that he “ * * * rather expected they [the Justice Department] would approach me further, which they never did.” He decided “with the changed circumstances accompanying the war * * * not to risk the competitor retaliation which he expected might follow from pursuing such a complaint.” I-T-E has failed to establish that its two legal remedies were worthless, Although the possibility existed that retaliation might occur, the clear evidence of I-T-E’s corporate vigor since discovery of the conspiracies argues the contrary. World War II afforded I-T-E an ideal opportunity to free itself of the alleged coercion. The favorable market for electrical equipment at the time and its expansion into defense activities made I-T-E particularly invulnerable to retaliation. (4) I — T—E has failed to show any illegal threats. Unless the threatened act is illegal, it does not constitute coercion This principle was succinctly stated in Automatic Radio Mfg. Co. Inc. v. Hazeltine Research, Inc., 176 F.2d 799, 804 (C.A.1 1949) (suit for royalties under a patent license allegedly entered into under threat of an infringement suit): ■ “ * * * Not all economic pressure constitutes ‘duress’ rendering a contract voidable. * * * [T]he pressure exerted must be wrongful; * * * a threat to resort to civil litigation is not such duress as to justify rescission of a transaction induced thereby even though there is no legal right to enforce the claim, * * (Emphasis supplied.) There is no showing that the coercion allegedly exerted was illegal. I-T-E argues that General Electric’s sales policy of meeting the lowest price quoted by a competitor “went beyond the requirements of fair competition for any single sale since that policy has as a substantial purpose the establishment of a uniform price and the elimination of price competition on succeeding transactions.” The meeting of competitors’ prices may be completely legal. A major aim of the antitrust laws is an open economy in which the meeting of competitors’ prices is the rule rather than the exception. I-T-E has not established that General Electric would have violated any law by carrying out its threats. (5) The alleged coercion did not stem from plaintiffs’ acts. A further ground for striking I-T-E’s coercion defense is that the duress did not emanate from the plaintiffs in these actions. The party asserting the defense must demonstrate that duress resulted from the opposing party’s wrongful and oppressive conduct. I-T-E has neither alleged nor proved such facts. In W. R. Grimshaw Co. et al. v. Nevil C. Withrow Co., Inc., 248 F.2d 896, 904-905 (C.A.8 1957) (action by a subcontractor for extras allegedly not covered by the contract), one element of the alleged coercion consisted of defendant’s threat to cancel the subcontract for plaintiff’s non-performance, which in turn would have resulted in a cancellation charge to plaintiff by a sub-subcontractor. The court stated: “An examination of the cases in the field of duress and economic coercion makes it clear that three elements are common to all situations where actionable duress has been determined to exist: (1) that one side involuntarily accepted the terms of another; (2) that circumstances permitted no other alternative; and (3) that said circumstances were the result of coercive acts of the opposite party. * * * ****** “Withrow [the subcontractor] contended that the Ware Laboratories [the sub-subcontractor] might impose a cancellation charge if Grimshaw [the prime contractor] cancelled the contract, and that because of his financial condition, this might bankrupt him. But the contention seems to be without merit, in that the alleged danger of a cancellation charge by a third party cannot be made the basis of a claim of duress between contracting parties. * * * ” (Emphasis supplied.) Threats of third parties cannot be used by I-T-E as a defense against plaintiffs’ actions. (6) I-T-E’s failure to disavow the coercion promptly constitutes acquiescence. Failure to disclaim an involuntary act upon cessation of the coercion constitutes acquiescence which bars the defense. In Barnette v. Wells Fargo Nevada National Bank et al., 270 U.S. 438, 444, 46 S.Ct. 326, 328, 70 L.Ed. 669 (1926) (suit to cancel a deed three years after the conveyance), the Supreme Court held the contract valid based on plaintiff’s delay in asserting coercion and disavowing the contract: “ * * * Nor need we consider any of the numerous defenses interposed, except the acquiescence of appellant in her deed, and her delay in asserting her rights, which, in the circumstances, are decisive of the case. “ * * * If there was duress here, appellant, as soon as she was relieved from its operation, was in a position either to disaffirm her conveyance or to allow it to stand undisturbed as the free and formal disposition of her rights. * * * In that situation she was subject to the requirement of equity that an election to disaffirm * * * must be exercised promptly.” I-T-E was obligated to disclaim its participation in the electrical equipment conspiracies at the earliest opportunity or be foreclosed from pleading the defense. I-T-E could have repudiated the conspiracy in those instances where it defied the larger manufacturers. After the electrical equipment indictments in Philadelphia, it had ample opportunity to disavow by asserting the defense in the Government’s suits, or by cross-claiming against other defendants in the private damage actions. III. I-T-E Has Failed to Comply with Local Pre-Trial Order No. U. Additional grounds for striking I-T-E’s coercion defense is its failure to comply with Local Pre-Trial Order No. 4. Rule 16, F.R.Civ.P., authorizes pre-trial proceedings to aid in the disposition of lawsuits by simplifying and reducing the issues in dispute. Not only are the courts authorized to limit the issues, but it is their duty to do so. As stated in Brinn v. Bull Insular Lines, Inc., 28 F.R.D. 578, 579 (E.D.Pa.1961) (a maritime case in which a pre-trial order was entered limiting the issues to whether defendant or third party defendant was liable): “If the pre-trial procedure is to have any meaningful purpose whatever, it is incumbent on the Court to narrow the issues reasonably and with discretion. * * * ” Pre-trial is particularly needed in protracted antitrust litigation. In United States v. E. I. Du Pont De Nemours & Co., 11 F.R.D. 308, 310 (D.C.D.Del.1951), the court observed: “The issues pertaining to any action should be crystallized by the pleadings and by pretrial procedures. This seems specially apt to the trial of an antitrust suit involving complex facets of an industry under scrutiny. * * * ” Local Pre-Trial Order No. 4 was designed to crystallize the areas of dispute respecting I-T-E’s coercion defense. It required a detailed statement of I-T-E’s coercion evidence under nineteen separate topic headings. Defendant’s response is completely insufficient and does not meet even minimum standards of compliance. Paragraphs (3) (c) (iv) and (v) required I-T-E to describe “all understandings and agreement * * * reached at or as a result of any such [coerced] communication, conversation or meeting” and “each course of conduct undertaken by you as a result of any such communication, conversation or meeting * * /*.” As the following examples show,/ the response to these paragraphs is particularly deficient: A. Paragraph 15 of I-T-E’s Statement alleges that Tom Watts of Westinghouse told Max Scott in 1934 that I-T-E “had better conform to a uniform price policy” for circuit breakers. The statement does not indicate whether I-T-E agreed to a uniform price policy, or what practice it in fact followed. B. Paragraph 17 alleges that in 1936 R. W. Davis of Allis-Chalmers instructed Mr. Scott what price I-T-E should quote on a high tension bus job for Carnegie Steel Company. The statement does not relate I-T-E’s response to this order, or the bid I-T-E submitted. C. Paragraphs 18 and 19 allege that I-T-E received warnings in the mid-1930’s about charging lower prices and upsetting the price levels on sales to steel mills and certain utilities. The statement does not reveal I-T-E’s reaction to these warnings, or the policy followed. D. Paragraph 29 alleges that shortly after World War II Mr. Tinnerholm of General Electric instructed I-T-E to protect General Electric’s bid on a Ward’s Island New York sewerage plant job. There is no indication whether I-T-E agreed to and did bid higher than General Electric. E. Paragraph 31 alleges that in 1947 Mr. Tinnerholm told Mr. Scott that General Electric was content to leave the pricing of power switching equipment to the smaller manufacturers, but that if they failed to maintain price stability, General Electric would take over policing the product line. The statement gives no information on whether I-T-E charged stable prices and policed the prices of other manufacturers. F. Paragraphs 45 and 46 allege that in early 1958 I-T-E attended a series of competitors’ meetings concerning quoting book prices on electrical equipment (particularly switchgears). Initially, H. L. Buck of I-T-E refused to agree with competitors’ proposals, but further meetings were held. The statement fails to reveal if I-T-E maintained its original position, if it capitulated and agreed to quote book prices, and if in fact subsequent sales were made at book. G. Paragraph 49 alleges that in late 1957 or early 1958 I-T-E was told to raise its power switchgear assembly prices or face a general lowering of the price level. No information is provided on I-T-E’s reaction when the price level did in fact drop. I-T-E predicated its coercion evidence with the qualification that it did not “provide every matter and every detail referred to in Local Pre-Trial Order No. 4 * * * [but that it set] forth the substance of the facts and contentions which are at least illustrative of I-T-E’s position. * * * ” Local Pre-Trial Order No. 4 was explicit in requiring “all facts and contentions” relating to I-T-E’s defense. Illustrative examples are not sufficient to determine submissibility when a complete offer of proof has been required. I-T-E’s non-compliance in its original statement resulted in the Court’s directing the filing of an amended coercion statement within two weeks. The amendment, when filed, consisted of only three pages and was confined to specific examples of non-compliance which the plaintiffs’ statement had pointed out. Subsequently, I-T-E was allowed two weeks in which to file a reply to plaintiffs’ second statement in response to Local Pre-Trial Order No. 4. It did not avail itself of this opportunity. Thus, not only has I-T-E failed to comply with Local Pre-Trial Order No. 4, but it has made no meaningful effort to provide the Court with the information available and necessary for this decision. I-T-E has been given every opportunity to submit a complete and sufficient statement. When a party does not comply with the court’s order, there is no alternative but to apply sanctions. It is clear that courts have, as indeed they must have, authority to regulate their practice and compel compliance with their reasonable mandates. This principle is codified in Rules 37 and 41, F.R. Civ.P., which specify sanctions for failure to comply with orders. The courts also have inherent power to enforce their orders. As stated in Link v. Wabash R. R. Co., 291 F.2d 542, 546 (C.A.7 1961), aff’d. 370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed. 2d 734 (1962) (where the district court dismissed an action on its own motion for failure to prosecute): “Courts may exercise their inherent powers and invoke dismissal as a sanction in situations involving disregard by parties of orders, rules or settings. * * * ” For this Court to do otherwise would be unjust to plaintiffs in these cases and to litigants in other actions pending before it. It is apparent that this defense was without foundation and was dilatory. In view of the time and effort that has been required to reach this conclusion, the Court would consider a motion to assess attorneys’ fees and costs reasonably expended by plaintiffs. . IV. Order For the foregoing reasons, it is ordered that: 1. Plaintiffs’ motions to strike all portions of I-T-E’s defenses of economic coercion in the actions listed in the caption to this memorandum are granted. 2. The pleadings in these actions are deemed modified to conform with the rulings on these motions without need for further formal amendment. Appendix A LOCAL PRE-TRIAL ORDER NO. 4 A pre-trial conference having been held, counsel having been heard, and due deliberation having been had, it is ordered severally in the above actions that: (1) “Identify” when used as to an individual person means to state his full name and present address, if known, and his present or last known business position or affiliation. “Identify” when used with reference to a document means to state the date and author, type of document (e. g., letter, memorandum, telegram, chart, etc.) or some other means of identifying it and its present location or custodian. If any such document was, but is no longer, in the answering party’s possession or control, state what disposition was made with respect to it. (2) As used herein, the term “document” shall mean any book, pamphlet, periodical, letter, report, memorandum, record, study, working paper, paper, chart, graph, index, data sheet, data processing card or table, or any other writing, except those documents prepared solely for the purpose of this litigation. (3) (A) In this paragraph, “you” or “your” shall mean I-T-E Circuit Breaker Company, its domestically domiciled subsidiaries and its merged or acquired predecessors, its present and former officers, agents and all other persons acting on behalf of I-T-E Circuit Breaker Company, or such subsidiaries or such predecessors, including all past or present employees exercising discretion, making policy and making decisions or participating in any of the foregoing functions with respect to the sale, pricing, marketing or manufacturing of power switchgear assemblies or components thereof; (B) On or before March 9, 1965, you shall file with this Court a detailed written statement stating in separately numbered paragraphs all facts and contentions which relate to or bear on your defenses of “coercion, duress and compulsion” (First and Fourth Defenses) and your inability to refrain from participating in the alleged conspiracy in this product line, or any attempts made by you to withdraw from the conspiracy in this product line; (C) Such written statement shall state the facts in sufficient detail for the Court to determine the submissible issues, to distinguish between those facts which you contend on the basis of the complaint or otherwise are admitted, and those which are contested, to determine the admissibility of the evidence offered to prove each of such facts; (D) Such written statement shall: (i) state the location and date of all communications, conversations and meetings which relate to or bear on such defenses; (ii) identify the parties to or the participants in each such communication, conversation, or meeting; (iii) describe fully the circumstances and substance of each such communication, conversation or meeting; (iv) describe fully all understandings and agreement (whether explicit or tacit) reached at or as a result of any such communication, conversation or meeting; (v) describe fully each course of conduct undertaken by you as a result of any such communication, conversation or meeting; (vi) identify and describe fully the contents of all documents which relate to, bear on or reflect the details of any such communication, conversation or meeting; (vii) set forth all facts respecting your inability to refrain from participating in the alleged conspiracy in this product line; (viii) set forth your contentions respecting your inability to refrain from participating in the alleged conspiracy in this product line; (ix) set forth all facts respecting any attempts made by you to withdraw from participating in the alleged conspiracy in this product line; (x) set forth your contentions respecting any attempts made by you to withdraw from participating in the alleged conspiracy in this product line; (xi) identify and describe fully the contents of all documents which relate to, bear on or reflect the facts respecting your inability to refrain from participating in the alleged conspiracy in this product line; (xii) identify and describe fully the contents of all documents which relate to, bear on or reflect your contentions respecting your inability to refrain from participating in the alleged conspiracy in this product line; (xiii) identify and describe fully the contents of all documents which relate to, bear on or reflect the facts respecting any attempts made by you to withdraw from participating in the alleged conspiracy in this product line; (xiv) identify and describe fully the contents of all documents which relate to, bear on or reflect your contentions respecting any attempts made by you to withdraw from participating in the alleged conspiracy in this product line; (xv) identify the portions of all national depositions which relate to or bear on your defenses of “coercion, duress, and compulsion,” and your inability to refrain from participating in the alleged conspiracy in this product line, or any attempt made by you to withdraw from participating in such alleged conspiracy; (xvi) identify and describe fully the contents of all documents produced in a national document depository which relate to, bear on or reflect your defenses of “coercion, duress, and compulsion,” and your inability to refrain from participating in the alleged conspiracy in this product line, or any attempt made by you to withdraw from participating in such alleged conspiracy; (xvii) identify all potential trial witnesses in these actions whose testimony would relate to or bear on your defenses of “coercion, duress, and compulsion,” and your inability to refrain from participating in the alleged conspiracy in this product line, or any attempt made by you to withdraw from participating in such alleged conspiracy, and describe separately the testimony of each such potential witness; (xviii) identify and describe fully the contents of all other documents and set forth in detail all other facts which relate to, bear on or reflect your defenses of “coercion, duress, and compulsion,” and your inability to refrain from participating in the alleged conspiracy in this product line, or any attempts made by you to withdraw from participating in such alleged conspiracy; (xix) identify and describe fully the contents of all other documents and set forth in detail all other of your contentions which relate to, bear on or reflect your defenses of “coercion, duress, and compulsion,” and your inability to refrain from participating in the alleged conspiracy in this product line, or any attempts made by you to withdraw from participating in such alleged conspiracy; (4) (A) On or before March 23, 1965, plaintiffs in these actions shall file with this Court a detailed written statement in reply to the statement herein ordered to be filed by I-T-E Circuit Breaker Company. (B) Such written statement shall state in separately numbered paragraphs the contentions of such plaintiffs with respect to each fact and contention set forth in I-T-E Circuit Breaker Company’s written statement, and such additional facts and contentions which such plaintiffs believe relate to or bear on I-T-E Circuit Breaker Company’s defenses of “coercion, duress, or compulsion,” its inability to refrain from participating in the alleged conspiracy in this product line, or any attempts made by it to withdraw from participating in such alleged conspiracy. (C) Such written statement shall state the facts in sufficient detail for the Court to determine the submissible issues, to distinguish between those facts which plaintiffs contend on the basis of the answers or otherwise are admitted, and those which are contested, to determine the admissibility of the evidence offered to prove each of such facts. (D) In preparation for such written statement, plaintiffs shall have such discovery by depositions, written interrogatories or otherwise, as they shall deem necessary on any issues raised or made by the written statement of I-T-E Circuit Breaker Company. (5) Any factual issue, legal issue, contention, claim, affirmative matter, or defense not set forth in detail as provided herein in paragraphs (3) and (4) shall be deemed abandoned, uncontroverted, or withdrawn in further proceedings, the pleadings and other papers on file herein to the contrary notwithstanding, except for facts, issues, contentions, claims, affirmative matters, or defenses of which a party may not be aware at the time of filing a written statement in the exercise of reasonable diligence. Any such matters of which a party is not aware in the exercise of diligence at the time of filing a written statement may be presented by supplemental written statement upon a showing of good cause. Appendix B WRITTEN STATEMENT OF DEFENDANT I-T-E CIRCUIT BREAKER COMPANY REQUIRED BY LOCAL PRETRIAL ORDER NO. 4 Defendant I-T-E Circuit Breaker Company makes the following written statement as required to be filed on or before March 9, 1965 by Local Pretrial Order No. 4 which was entered by the Court on March 2, 1965, over I-T-E’s objection. I. Among other things, some of which are set forth at the foot of this written statement, the nature of I-T-E’s Fourth Defense and related portions of its First Defense as set forth in its answers to the plaintiffs’ complaints, the nature and extent of the information in support of it which is presently available, and the time available for the preparation of this written statement are such that it is impossible for I-T-E to provide every matter and every detail referred to in Local Pretrial Order No. 4. However, I-T-E believes that the following statement sets forth the substance of the facts and contentions which are at least illustrative of I-T-E's position with respect to its Fourth Defense and related portions of its First Defense. II. 1. The facts upon which these defenses are based are not a few sharp, isolated events susceptible of clear and precise description. On the contrary, while there are some such events, the threats and acts of coercion are largely to be found in a mosaic of incidents stretching in time throughout virtually the entire history of the electrical manufacturing industry and across many product lines. Many of the incidents, seemingly colorless to an outside observer, have significance to a person who has grown up in the industry when viewed in the context of past events and traditional patterns of action on the part of the largest companies in the industry. Every statement made or action taken by a responsible official of General Electric or Westinghouse or Allis-Chalmers must be weighed in the light of that company’s position in the industry and its past attitudes and practices. 2. In evaluating the statements or actions of General Electric, Westinghouse and, to a lesser extent, Allis-Chalmers, the officer or manager of a smaller electrical manufacturer has a background of knowledge and awareness of: (a) The gigantic size of his major competitors. General Electric and Westinghouse have had annual sales in recent years of four or more billion dollars and about two billion dollars, respectively. Since the turn of the century, they have occupied the same relative position with respect to their smaller competitors, for the most part, although, of course, their sales volume then was smaller than at present. (b) The diversification of their activities. Each of the major companies, and particularly General Electric and Westinghouse, have income from sales of products unrelated to any single product which might be the subject of competitive controyersy with the smaller, single-line or short-line manufacturer. (c) Uniform action and cooperation of the major companies. General Electric and Westinghouse, and frequently Allis-Chal-' mers, have acted uniformly and cooperated with each other to the disadvantage of their smaller competitors on innumerable occasions over many years. 3. Another overriding principle affecting an evaluation of the significance of the major companies’ statements and acts is an understanding of the respective goals of the larger and the smaller companies. One-of General Electric’s business methods has been to preserve price uniformity and to eliminate price competition in each segment of its business over the long run. It has been willing to sell at any reasonable price, whether high or low, and sometimes at unreasonably low prices, so long as that price and those of its competitors did not reflect significant variations. This approach is directly opposed to what is generally true for other smaller companies who for a variety of reasons, many of which are transient in nature, exercise some flexibility in pricing one or more of their products. Over the years, Westinghouse has shared these goals and methods with General Electric. 4. The business which is now I-T-E began in 1888. In 1891, it was incorporated as Cutter Electrical and Manufacturing Company, a New Jersey corporation. In 1927, the company’s name was changed to I-T-E Circuit Breaker Company. In 1939, the present I-T-E Circuit Breaker Company, a Pennsylvania corporation, succeeded the earlier New Jersey company. 5. In 1930, and again in 1931, E. Swift Newton, then I-T-E’s Sales Manager, who was impressed with the impending problems of competition with General Electric and Westinghouse and of the depression, negotiated with John Upp, then Manager of General Electric’s Elm-wood Avenue Switchgear Works, for the sale of I-T-E to General Electric. Such a sale was virtually completed on two occasions, once in 1930, and then again in early 1931, but was forestalled each time by other stockholder interests. 6. When General Electric’s efforts to buy I-T-E failed, Upp through E. Swift Newton drew W. M. Scott, Jr., now the President of I-T — E, into a series of conversations relating to the pricing of what were then its only products, low voltage large air circuit breakers and switchgear assemblies. Others present at one or more of these meetings included F. W. Patterson, and possibly Starbuck, of General Electric, R. A. Neal, Jack Butts, and, sometime later, Tom Watts, of Westinghouse. At these early meetings, Scott was told, principally by Upp, that I-T-E should get together with the industry to discuss uniform prices, that the electrical industry was operated that way, that many customers knew about it, and that, notwithstanding some opposition, some accepted it. Scott was specifically told that I-T-E would have to cooperate on prices and stop quoting non-uniform prices. One transaction which served as an illustration in that discussion was a bid to American Gas & Electric for a 440 volt switchboard costing about $40,000. Upp said that General Electric was not concerned as much about the gain or loss of the job as it was about the non-uniformity of the prices. Such non-uniformity on I-T-E’s part caused great embarrassment when customers compared the range of prices for such equipment with the virtually identical prices submitted by General Electric and Westinghouse in the heavier lines such as steam turbine generators and oil circuit breakers. General Electric and Westinghouse had theretofore explained such similarity on the basis that each manufacturer used about the same amounts of labor and material to produce a given item and thus the prices might reasonably be expected to be alike, but this explanation was questioned when a smaller company submitted a significantly lower bid than General Electric in another related product line. 7. With reference to the illustrative example, Upp said that, as soon as a significant deviation appeared, General Electric had quoted substantially below what it expected I-T-E’s price to be even though it believed the fair price was substantially above I-T-E’s price. He said that General Electric would uniformly take this action unless it was informed in advance of I-T-E’s price. Whether it made a profit on the sale or not, General Electric had to be virtually certain that it would equal the low bidder or it would submit a bid which almost certainly would be low. A far more important consideration to General Electric was forestalling the attack upon the uniform pricing of million dollar items which would arise from I-T-E’s refusal to cooperate on much smaller items. However, General Electric could always explain a difference in price if it was the low bidder by attributing I-T-E’s higher price to the inefficiency of a small company. 8. In subsequent meetings of competitors at about this time and during the year or two which followed, General Electric and Westinghouse continually urged Scott to make I-T-E’s prices and terms and conditions of sale similar to those of General Electric and Westinghouse. Uniformity was insisted upon even for the items where I-T-E’s price was higher than its competitors’. When Scott refused to lower I-T-E’s price on such items, General Electric said that it would raise its prices to achieve the desired uniformity notwithstanding the possible substantial loss of business it was getting in that product line, a position from which Westinghouse did not dissent. On other occasions, General Electric and Westinghouse insisted that I-T-E change its pricing policy from one which was “f. o. b., Philadelphia, customer pays the freight” to “f. o. b., Philadelphia, freight allowed”, thus looking toward a uniform price at the point of delivery. Similarly, the two major companies insisted that an I-T-E 10% discount for cash purchases of large air circuit breakers be eliminated or, alternatively, that the net price after discount be the same as the net prices of General Electric and Westinghouse. 9. In 1932, I-T-E and Westinghouse entered into negotiations looking toward the licensing of I-T-E to manufacture and sell molded case circuit breakers under certain Westinghouse patents. At the time of these negotiations, Westinghouse had substantial patent control over the manufacture and sale of this product, which was a necessary component of some switchboards and switchgear assemblies. In its dealings with the independent switchboard assemblers, Westinghouse had sometimes insisted that the assembler who wanted molded case circuit breakers buy Westinghouse large air circuit breakers as well and, at other times, it had refused to sell molded case circuit breakers at all except as components of switchboards assembled by it. Westinghouse had given licenses for the manufacture of these circuit breakers to about six important assemblers who, under the terms of those licenses, were obliged to sell complete switchboards and panel-boards at prices determined by Westinghouse. 10. During the course of the negotiations referred to in paragraph 9 which were carried on by Scott for I-T-E and Victor Beam of Westinghouse, it was stated that Westinghouse was not so much interested in receiving royalties under the patent licenses as it was in using such licenses for fixing prices. At the stage of the negotiations when it appeared that the patent licenses would be granted to I-T-E, Westinghouse made it known that it was simultaneously attempting to subject the independent switchboard and panelboard assemblers to price control through the terms of licenses based upon the Jennings patent, a significant circuit breaker panelboard patent. This move in itself constituted a grave threat to I-T-E since the sale of circuit breakers to the independent assemblers constituted I-T-E’s largest market and any limitations imposed upon the assemblers’ ability to price their product freely would undoubtedly restrict their sales and have a direct and immediate impact upon I-T-E as their supplier. 11. Initially, the Westinghouse objective in the negotiations referred to in paragraph 9 was a license which would have precluded I-T-E from selling molded case circuit breakers except as parts of completely assembled switchboards which, in turn, would be subject to Westinghouse price control. During these negotiations, Scott was told by Ray Frenger and Anderson of Westinghouse, who were Beam’s associates in the negotiations, that only companies who would cooperate with Westinghouse on prices in general would be considered for patent licenses. As granted, the license provided that IT-E might sell molded case circuit breakers separately but only at prices to be determined by Westinghouse and, further, that there should be no deviation from such prices either directly or indirectly by giving to the customer any other consideration, the eifect of which would be to sell at more favorable prices, terms and conditions of sale. The latter provision was interpreted to mean that, if molded case circuit breakers were sold with other I-T-E equipment, the price charged for the latter could not be less than prices regularly charged by I-T-E for such items. The four licenses, denominated “A”, “B”, “C” and “D”, were dated August 1, 1933. “A”, “B” and “C” were the licenses for molded case circuit breakers. “D” related to patents on large air circuit breakers but this license was never used by I-T-E. The pricing provision referred to is in Article VI. The price fixing provisions of these licenses continued in force until about 1948 when Westinghouse brought about their cancellation. 12. These Westinghouse patent licenses, which dealt with an increasingly vital element of I-T-E’s product line, were a powerful weapon for Westinghouse for a period continuing at least until the late 1940’s and early 1950’s, and, in some respects, until about 1959. The problems which could have been created for I-T-E by virtue of these licenses were significant factors in bringing I-T-E into discussions with competitors relating to prices. 13. The threat presented by the Westinghouse patent licenses was magnified by Scott’s knowledge of earlier patent litigation against I-T-E. During the years 1905 to 1909, I-T-E (then Gutter) had been the defendant in patent litigation involving the Wright-Aalborg patent, which was important in the manufacture of what are now called large air circuit breakers. The ostensible plaintiff was Westinghouse, but it later appeared that the controlling force in the litigation was the Board of Patent Control, a committee jointly established by General Electric and Westinghouse to police a cross-licensing agreement entered into by the two companies in 1896. The outcome of this disastrous litigation was its settlement in 1909 on a basis which provided for the transfer of 49% of Cutter’s stock to General Electric which, in turn, transferred 39% of its interest to Westinghouse. (This division of Cutter stock between General Electric and Westinghouse was consistent with Scott’s understanding that the 1896 agreement provided for a division of the business available to General Electric and Westinghouse on a 60-40 (or 62%-37y2) basis by providing, among other things, for an ascending schedule of royalties to be paid to the party getting less than its agreed upon share of the business.) General Electric and Westinghouse continued as shareholders until 1911 when they resold their stock to its former owners. 14. The events which followed further demonstrated to Scott the extent to which General Electric and Westinghouse, working together, dominated the electrical manufacturing industry. In October 1934, I-T-E submitted a bid and was awarded a contract for segregated phase metal-enclosed bus (the forerunner of isolated phase bus) for Boulder Dam. I-T-E’s bid was about $225,000 and the bids of the four other suppliers were grouped at about $500 intervals at about $285,000, with Westinghouse the lowest of the four. This was I-T-E’s first experience in this product line and the uniformity of the bids of the other companies tangibly reinforced Upp’s earlier statements about the extent to which the industry was controlled and the dominant position of General Electric and Westinghouse in the industry. 15. The power of General Electric and Westinghouse was further demonstrated when I-T-E made its first sale of circuit breakers to the U. S. Navy about 1934. After I-T-E got the job, Scott was told by Tom Watts of Westinghouse, in the presence of representatives of General Electric, that, now that I-T-E was in this product line, it had better conform to a uniform price policy. Watts pointed to the ability and intention of General Electric and Westinghouse to combine the sale of circuit breakers and switchgear with the auxiliary power turbine generators in a way which minimized the number of jobs which I-T-E would get. He also pointed to the degree of cooperation which existed between General Electric and Westinghouse, which went so far as agreeing not only about the price to be submitted for such turbine generators but the efficiency rating as well. The effort of General Electric and Westinghouse on this occasion was to persuade I-T-E to increase its prices for this equipment. The effect of such action at the time would have been to tend to slow I-T-E’s expansion as a newcomer in this product line since, at equal prices, the established manufacturers had greater customer acceptability. 16. Another illustration of General Electric-Westinghouse cooperation occurred in 1935 or 1936 when Scott was accused of making a low bid by Harold Winder of General Electric. When Scott demurred, Winder showed him a memorandum from Westinghouse reporting I-T-E’s price notwithstanding the absence of any publicly available information about I-T-E’s price on that job. This exchange of information about the competitive activities of smaller companies continued among General Electric, Westinghouse and, to some extent, Allis-Chalmers until at least the mid-1950’s. On numerous occasions, one of the major companies would couple with the report of its knowledge of the smaller company’s bid a statement that low quotations by the smaller company would necessarily bring lower quotations from the major companies as well. 17. About 1936, I-T-E quoted a price for high tension bus to be supplied the Duquesne Works of Carnegie Steel Company. As I-T-E was preparing to quote, Scott was called by R. W. Davis of Allis-Chalmers, who said that he had met with General Electric and Westinghouse to arrange the prices for all of the equipment to be supplied and I-T-E was to quote $36,000 (?) for the bus portion of the job. The call was not pre-arranged and was entirely unsolicited by I-T-E, although it was not surprising to Scott in view of the intense interest which the major companies demonstrated in sales to large industrial purchasers such as steel mills. When Scott suggested to Davis that Scott had planned to bid $3,000' or $4,000 more, Davis, in essence, said “No, that’s the price. If you don’t want it, then bid higher and someone else will take it.” 18. In the mid-1930’s, the principal suppliers of large steel mill motors and motor-generator sets were General Electric, Westinghouse and Allis-Chalmers. Since General Electric and Westinghouse supplied their own large air circuit breakers for the control of such equipment, Allis-Chalmers was the principal market for I-T-E. Scott was told by Davis that Allis-Chalmers would not buy I-T-E’s 600 volt circuit breakers for these applications unless I-T-E did not disturb the price agreement for steel mill electrical purchases then existing among the three major manufacturers. 19. Scott learned of the special interest of General Electric, Westinghouse and Allis-Chalmers in sales to steel mills on at least two occasions during the period 1934-1938. Scott was warned by Francis Fairman, then an important official of General Electric’s Switchgear Works, and Davis, of Allis-Chalmers, that the price levels for at least some electrical equipment sold by General Electric, Westinghouse and Allis-Chalmers to steel mills were somewhat higher than the price levels to other purchasers and that in no circumstances would I-T-E be permitted to charge lower prices to such purchasers. The major companies believed that they could obtain the higher prices from steel mills because of their large purchases of steel. A similar situation existed for purchases by utilities who employed certain consulting engineering firms. There, the additional engineering detail that was required by the outside consultants was alleged to justify the higher price. There, too, I-T-E was warned not to upset the price levels. 20. About 1937 I-T-E quoted to the Bethlehem Steel Company a price of approximately $40,000 for a 250 volt DC switchboard which was about 10% lower than that which was offered by General Electric. General Electric learned of IT-E’s bid and cut its own quotation by twice that amount. Thereafter, General Electric’s Francis Fairman told Scott that General Electric would always cut its price twice as much as any I-T-E cut if I-T-E ever ventured to underbid General Electric again. 21. In the mid-1930’s Davis, of Allis-Chalmers, told Scott that there was no alternative to uniform prices. Davis said that free quoting was absolutely impossible and any such free quoting would result in a price war with prices of 40% off book, which would be absolutely ruinous to the manufacturers, and Scott understood that this was specially applicable to I-T-E. 22. During the depression the major companies attempted to use the NRA as a tool to minimize the price competition of their smaller competitors. Among other things, the code applicable to I-T-E required filing of price lists and prohibited sales at other than the price-list prices until such time as the price lists were changed after giving appropriate notice. When these measures were adopted, Scott was told by Ray Frenger, of Westinghouse, and by others, that finally the pricing practices of the independent companies had been tied down. 23. About the middle of 1938 I-T-E introduced 5 KV metal-clad air switchgear. It was I-T-E’s desire to sell this improved product at about the same level as the corresponding equipment of General Electric and Westinghouse which employed oil circuit breakers. General Electric and Westinghouse insisted that the price level should be about 130% of switchgear embodying oil circuit breakers. Scott was told this at least once and R. E. Murphy, then I-T-E’s Sales Manager, was also probably given the same instruction. 24. By 1938 or 1939, the concept of the low voltage unit substation was becoming very rapidly accepted. In such equipment, transformers and switchgear were manufactured and sold together as a single unit, thus eliminating the necessity of their connection by the purchaser. I-T-E was at a disadvantage since it did not then make transformers for such an application. However, I-T-E redesigned its switchgear so that it could be readily bolted by means of a throat connection to transformers manufactured by others. I-T-E was summoned to attend three or four meetings with General Electric, Westinghouse and Allis-Chalmers. It was told that the sale by I-T-E of separate switchgear adapted for substation connection created a variety of non-uniform price situations and that I-T-E must stop selling switchgear with throat connections or there would be a price war. As an inducement, General Electric and Westinghouse said that Allis-Chalmers would buy from I-T-E all of its requirements for circuit breakers for installation in such substations but Allis-Chalmers informed I-T-E that it would require a substantial discount on such purchases. If I-T-E did not acquiesce, the prices to be quoted by the major manufacturers would deteriorate qu