Highland Supply Corp. v. Reynolds Metals Co. (327 F.2d 725, 1964)

RIDGE, Circuit Judge.

This is an appeal from a judgment dismissing with prejudice the complaint of appellant, based on Section 4 of the Clayton Act (15 U.S.C.A. § 15), alleging violations of Section 7 of the Clayton Act (15 U.S.C.A. § 18) and Section 2 of the Sherman Act (15 U.S.C.A. § 2). The facts giving rise to such claims are not in dispute. They may be summarized as follows:

Appellant’s complaint was filed on February 14, 1963. It alleged that ap-pellee, on August 31, 1956, acquired control of the stock and assets of Arrow Brands, Incorporated, thereby achieving vertical integration between the two companies. Prior thereto Arrow had been engaged almost exclusively in the conversion, design, styling and sale of florist foil. Reynolds, one of the three producers of primary aluminum in the United States, had been Arrow’s chief supplier of aluminum foil, which Arrow converted into florist foil. Subsequently, in November 1957, Arrow announced an across-the-board price reduction in its major brands of florist foil, effective retroactively to October 1, 1957. These prices were below the cost of production of Arrow’s non-integrated competitors. Appellant alleged that as a consequence Arrow’s competitors, of which appellant is one, “began to really feel the effects of Reynolds’ attempted monopolization” and were “caused to suffer significant loss of sales.”

On December 27, 1957, the Federal Trade Commission issued a complaint against Reynolds, alleging that its acquisition of Arrow violated Section 7 of the Clayton Act, supra. An order of divestiture was issued by the F.T.C. on January 21, 1960. That order as modified was affirmed by the United States Court of Appeals for the District of Columbia. Reynolds Metals Company v. Federal Trade Commission, 114 U.S.App.D.C. 2, 309 F.2d 223 (1962). A final decree of enforcement of the F.T.C. order was entered by that Court on October 22, 1962.

The “effects of (Reynolds’) acquisition and subsequent actions” were alleged by appellant to have permitted Reynolds:

(a) to monopolize and substantially lessen competition in the florist foil market, thereby depriving the public of the benefits of a free competitive market within this line of commerce;

(b) to allow Arrow to achieve a dominant position in the florist foil market;

(c) cause appellant to lose some customers altogether and suffer substantially lower sales to others;

(d) prevent appellant from continuing its normal increase of sales;

(e) to operate at a substantially lower level of profit;

(f) damage its prestige and reputation in the community and industry; and

(g) prevent it “from continuing in or initiating certain new ventures at substantial monetary loss”

for all of which appellant prayed treble damages.

Appellee filed no answer to appellant’s complaint, but moved to dismiss the same on the grounds (1) that it failed to state a claim upon which any relief could be granted; and (2) that appellee’s claims were barred by 15 U.S.C. § 15b. The District Court granted that motion. In so doing, it ruled that appellant’s private antitrust claims against appellee accrued more than four (4) years prior to the date on which appellant first had the right to bring an action therefor; and as a consequence all such claims were barred by Section 4B of the Clayton Act, supra. The District Court reasoned that though appellant’s:

“cause of action (did) not necessarily ripen at the time of (Reynolds’) acquisition (of Arrow), reference must be made to the violation charged, 15 U.S.C.A. § 18, to determine whether more than one subsequent action after the acquisition can give rise to successive claims by the plaintiff (appellant) under 15 U.S.C.A. §§ 15, 18. Since § 18 prohibits only the acquisition with the potential proscribed effects, it follows that there is only one event subsequent to the acquisition which marks the time plaintiff’s cause of action accrues That event is the first suffering of injury as the result of the alleged prohibited merger. Hence, «*» though plaintiff may continue to suffer damages as a re-suit of the acquisition, his (sic) failure to enforce his (sic) claim within four years after he (sic) first suffered iñjury from the prohibited merger will bar his (sic) cause of action based on a violation of 15 U.S.C.A. § 18.” (Emp. & par. added.)

From the foregoing it appears that the “acquisition” of Arrow and the latter’s “price-cutting” were the only events considered by the District Court as being related to appellant’s claim for damages, and that such damages were primarily based on appellee’s violation of Section 7 of thé Clayton Act, supra. From that vista it ruled that the applicable statute of limitation as to any damages so claimed, commenced to run from the time those two overt acts were committed by appellee; and “that neither the FTC order nor the Court of Appeals af-firmance” thereof “would be admissible in this private treble damage action” so as to toll the four-year statute of limitation as provided in Section 4B of the-Clayton Act (15 U.S.C.A. § 15b.)

As to appellant’s claims based' on appellee’s violation of Section 2 of the-Sherman Act, the District Court said:

‘