Citations
- 254 F. Supp. 233
Full opinion text
RYAN, Chief Judge.
There are before us two motions for partial summary judgment.
Defendant moves for partial summary judgment on the grounds that plaintiff is barred from prosecuting the antitrust counts of the complaint because it is attempting to split a cause of action (a form of res judicata), and because the statute of limitations has run on this action.
Plaintiff bases his motion for partial summary judgment on the doctrine of collateral estoppel. Plaintiff contends that the parties have previously litigated the facts in the New York State Courts, and that the findings of the New York State Courts bind the same parties in a subsequent litigation and establish defendant’s violations of the antitrust laws.
To understand the questions of law raised by these motions, it is necessary to be familiar with the past relations between the parties to this suit. Plaintiff, INTERNATIONAL RAILWAYS OF CENTRAL AMERICA, is a New Jersey corporation, hereafter referred to as IRCA; defendant, UNITED FRUIT COMPANY, is also a New Jersey corporation, hereafter referred to as UNITED. IRCA operates the principal railroad system in Guatemala; UNITED operates banana growing plantations in Guatemala and other countries and imports them into the United States and other countries. UNITED transports its bananas over IRCA’s railroad lines to the Atlantic seaboard and thence by ship to the United States and Europe. For many years defendant has directly or indirectly owned a controlling stock interest in plaintiff. In 1949 a derivative stockholders’ suit was filed in the New York State Courts by minority shareholders of IRCA against UNITED. That suit, Ripley, et al. v. International Railways of Central America and United Fruit Company, 8 A.D.2d 310, 188 N.Y.S.2d 62, 8 N.Y.2d 430, 209 N.Y.S.2d 289, 171 N.E. 2d 443, was based on the theory that UNITED, as the controlling stockholder of IRCA, had abused its fiduciary duty to IRCA by paying insufficient freight rates for the transportation of its bananas and imported materials. In 1956, after a New York Supreme Court decision for the plaintiff, IRCA joined with the stockholders as plaintiff in urging for higher damages on appeal. In 1961 after twelve years of litigation, judgment was entered, awarding an amount exceeding nine million dollars to plaintiff IRCA. That case basically involved all the contractual and other relations between IRCA and UNITED and was limited by the New York statute of limitations to the years 1943 through 1961. In deciding the Ripley case the Court considered not only the language of the agreements between IRCA and UNITED but also the entire relationship between the two companies and their role in the development of the Guatemalan economy. This thorough inquiry of all the business relations between the two parties was necessary in order to accurately assess the damages which UNITED had inflicted on IRCA. The Court in Ripley also made a comparison of the rail transportation rates paid to IRCA by independent shippers with those paid by UNITED. For example, the Referee found that “Obviously the static rate of $60.00 or even as increased after 12 years to $75., then to $85., or even to $90. for U. F. Co., as against the rates prevailing, even of $130. plus $36. wharfage for general or so-called independent shippers, was inscionable (sic), unprincipled and contrary to the public interest” (p. 175 of Referee report and decision).
In the present action before us, the amended complaint alleges six claims for relief. Both parties move for summary judgment on the first, second, fourth and sixth claims. Defendant also moves for summary judgment on so much of the third and fifth claims as relate to matters occurring before February 16, 1961 with the exception of so much of the fifth claim as is based solely on an alleged breach of contract.
Plaintiff's claims are basically as follows:
FIRST: Beginning in or about 1928 and continuing up through December, 1961, UNITED and its agents “contracted, combined and conspired in unreasonable restraint of * * * the interstate and foreign commerce of the United States with respect to bananas shipped er to be shipped to the United States from Guatemala,” and with respect thereto have combined and conspired to monopolize, all in violation of Sections 1 and 2 of the Sherman Act. UNITED has also “agreed, contracted, combined and conspired” while shipping bananas over IRCA to restrain free competition in interstate and foreign commerce and increase the market price of bananas in parts of the United States in violation of Section 73 of the Wilson Tariff Act. The first claim also alleges that UNITED, while in control of IRCA, used IRCA as an instrument for monopolizing and restraining competition in the importation of Guatemalan bananas to the United States. UNITED’s actions resulted in failure of IRCA to obtain business from independent shippers because they were generally excluded by UNITED from the banana trade. IRCA asserts that they suffered a loss of profits during ,, • j moo j, „„„ ® the period 1928-1961 of $65,000,000., and , . ., , , ’ 1 „ a loss m the permanent market value of ,, . , . , , , . . their business due to permanent impair-x j: vi-i x fl 1 . , . , ment of ability to attract independent ,. 1 i , j, a, » Ann aaa shipments after 1961 of $10,000,000. T
SECOND: That because of the wrongdoings alleged in the first claim, UNITED shipped 195,500,000 stems of bananas over IRCA at low discriminatory rates, causing IRCA damage in excess of $45,-000,000. In addition low discriminatory wharfage and shipping rates paid by UNITED for the transport of American and other imports into Guatemala caused IRCA damage in excess of $10,000,000.
THIRD (in relevant part): That Compania Agrícola de Guatemala (a wholly owned subsidiary of UNITED) beginning in or about 1949 combined and conspired with UNITED in unreasonable restraint of trade for the purpose of monopolizing the foreign commerce of the United States, and in furtherance of this ^ (“tered into agreements with *RCA for a Perlod of 20 years’ exP\rmg Member 31, 1967. Pursuant to these ^reements, CAG was required to ship all bananas grown by it m the Tiquisate arf IRCA Ruerto Barrios on the Atlantic Slde of Guatemala and, purto theu' tefms f hcld by the New York courts in the Ripley ac^loa ‘ 111 good ^aitb to maintain fu<* shipments at least at the 1948 leT^ and IRCA was squired to furnish said transportation. The freight rate was flxf h? contracts at $75. per caroad’ was later increased to $85. per caroad’ then to $90. per carload, but sub-to, a slldm^ scale based on the cost fu¿ olL -s r*rt tt t x» » -t nrt a 615-16; 63 Harv.L.Rev. at 1219; An- . ,. 10n. ’ notation 1939, 121 A.L.R. 1294. How- ’ . . . „ . , , ever, the complaint falls far short of * * *» (99.9. V9A r, «s'» ’ ‘ ' • P- L
The language relied on by the plaintiff was not essential to the holding of the case. It was merely a rough gloss on a hypothetical situation and even at that not intended to restate the entire law , , . ,. applicable to cases of adverse domination, , „ . ,. „ ,, as is clear from an examination of the authorities cited in Judge Friendly’s opinion. A reading of these authorities leads one to the conclusion that this doctrine has been applied only when the plaintiff who was precluded from bringing an action by the defendant’s undue influence or duress had been totally dominated by the defendant and for reasons of economic or physical fear had not brought suit within the required time.
Thus, in Allen v. Leflore County (supra), a wife was forced to execute a deed to land by threats from the District Attorney to imprison her husband. The Court said: “It seems to us palpably plain from this record that she did not consent, but refused, to execute the deed involving her lands, and that she never would have done so but for the threats, that if she did not, her husband would be put in the penitentiary, than which a more terrible duress could not be put on a wife; * * * ” (29 So. at p. 161).
In Aldrich v. Steen, supra, the heirs of a senile testator were granted a tolling of the statute of limitations as it appeared that the testator had deeded all his property to his housekeeper without consideration. In Alexander v. Thompson, the Court held that in an action for false imprisonment the statute of limitations must be tolled during the period of actual incarceration.
63 HARVARD LAW REVIEW, at p. 1219> dted by tbe Court of Appeals> states that in cases where a party is pre- , , , „ , . . J „ Vented fr°m bringing SUlt becauSe of undue influence or duress on the part , , ,, . j -x .. oi the defendant the period of limitations __ . ¿ commences to run after the termination - •. . m, ,, of the undue influence. The authors , +h , • bins is fjcCciUofcí T^ne pidin c 11 i, even ... , , , , ,, . . with knowledge of the wrong, is not r, , , .__,. , , likely to sue immediately. This tolling __, , , , provision is obviously not meant to apply to a corporate situation where a strong minority group of shareholders had the requisite knowledge and did in fact bring a long and successful suit against the defendant.
Txr , ,, ,, „ We hold, therefore, that if the plaintiff . .... ’ , „ .. ,, . . is entitled to a tolling of the statute of .. .... ., , , , “nitations must be under an excepÜoa to the us,ual rule other than undue in uence or uress.
Another possible exception which must be considered by us raises the question of whether the statute of limitations shouid he tolled because the defendant breached a fiduciary duty to the plaintiff. The law in this area is clear, however, that when the beneficiary of an implied fiduciary relationship has the requisite knowledge of the wrong committed and is reasonably able to bring suit for redress, the statute of limitations will not be tolled. Indeed, the landmark case in the field, Curtis v. Connly, 257 U.S. 260, 42 S.Ct. 100, 66 L.Ed. 222 (1921), has laid down the law in cases where domination of a corporation is less than complete. In that action, brought by a receiver of a national bank to recover from former directors of the bank for losses allegedly sustained because of improper loans and dividends, the defendants pleaded the Rhode Isiand statute of limitations as a bar to the claim. The statute, which was held to apply, provided for tolling in ease of fraudulent concealment by the defendant The Supreme Court hedunammouslythat the statute ^e1t°lkd (257 U‘S- at 263-264' ' • a ) •
“Three new directors came upon the board before August 3, 1910. It is alleged unmistakably in the bill that all the directors were chargeable with notice and did in fact know that the dividends were paid out of assets and not earned and that the improper loans should be recalled. Even if otherwise the statute of limitations would not have run, which we do not imply, knowledge of the facts by the new directors was knowledge by the bank, and none the less that according to the bill they in their turn were unfaithful. It is not alleged that they conspired with the defendants whose case we are considering.
“They came to the board as the eyes of the bank. Anyone of them having notice was bound to do what he could to avert or diminish the loss. Indeed the bill seeks to charge one of them for not having done his duty. Notice to an officer, in the line of his duty, was notice to the bank. A single director like a single stockholder could proceed'in the courts. Joint Stock Discount Co. v. Brown, L.R. 8 Eq. 381, 403.” (Emphasis added)
in the present suit, there can be no dispute that at least one and probably three independent directors have served on the board of directors of IRCA since 1959 In factj one of the independent directors was on a slate of directors proposed by and including several Ripley plaintiffs at the 1952 IRCA annual meet. ing of stockholders. This slate, which wag defeated in 1952 after a bitterly contested proxy fight, had the overwhelming support of the stockholders other than UNITED. The bitterness of tbe meetingj tbe publicity of the proxy fi ht the support given to the opposition glate of directors and the number of named plaintiffs in the Ripley suit are all factors which indicate that there was widespread knowledge among IRCA stockholders of UNITED’s wrongdoings, We find that IRCA had the requisite knowledge to bring suit against UNITED for antitrust violations; that they had the ability to and did in fact sue UNITED; and that at the very least the statute of limitations should not be tolled beyond the election of independent directors in 1959.
We hold that any claim for antitrust violations occurring before February 16, 1961 is barred by the statute of limitations. We grant summary judgment for the defendant on the first, second, fourth and sixth claims and so much of the third and fifth claims as relate to matters occurring before February 16, 1961 with the exception of so much of the fifth claim as is based solely on an alleged breach of contract,
A judgment in accordance with the foregoing may be settled on 5 days’ notice; the proposed judgment will provide for immediate entry under Rule 54 and contain certification by the Court for intermediate appeal under Rule 1292(b).