271 F. 2d 709 - Richfield Oil Corporation v. Karseal Corporation

Before STEPHENS, and FEE, Circuit Judges, and JAMES M. CARTER, District Judge.

JAMES M. CARTER, District Judge.

This is an appeal from a judgment entered on a jury verdict in a private treble damage action under the anti-trust laws. It presents two questions, (1) the sufficiency of the evidence to support the verdict and judgment, (2) the correctness of instructions given the jury on the effect of a prior decree in a government anti-trust case.

There was originally presented a third question, the reasonableness of an allowance of $7,500 attorney's fee based on the trebled judgment of $23,700. This point was abandoned by appellant Richfield during the oral arguments on the appeal. In any event we do not consider the allowance of such attorney's fee unreasonable.

This case has been here before. In Karseal Corporation v. Richfield Oil Corporation, 9 Cir., 1955, 221 F.2d 358, this same panel of the court held that the amended complaint stated a cause of action and reversed a district court judgment dismissing the action. Reference is made to that decision for the pertinent allegations of the amended complaint.

This action was based upon a prior decree in the government's civil anti-trust action against the Richfield Oil Corporation, United States v. Richfield Oil Corporation, D.C.S.D.Cal.1951, 99 F.Supp. 280, affirmed per curiam in Richfield Oil Corporation v. United States, 1952, 343 U.S. 922, 72 S.Ct. 665, 96 L.Ed. 1334. That case will hereafter be referred to as the Richfield case.

The Richfield case held generally that Richfield's handling of its TBA items, (tires, batteries and accessories) was illegal and in violation of the anti-trust laws because of Richfield requirements by contracts and agreements of exclusive dealing by independent service stations in the TBA items supplied by Richfield. Included within "accessories" under the terms of the Richfield decree, were "automobile waxes and polishes." Karseal's wax and polishes were not expressly named in the Richfield decree. The trial court in the Richfield case concluded and found that the exclusive dealing practices and agreements had "the necessary and intended effect of denying manufacturers and suppliers of * * * automotive accessories, competitive to those manufactured or sponsored by Richfield, access to a substantial number of outlets."1

Karseal, claiming that it was within the target area of Richfield's violation of the anti-trust laws and was proximately damaged by Richfield's illegal acts, brought the present action, seeking damages in the sum of $135,000 and praying that the damages be trebled. After the reversal of the dismissal of the action in Karseal v. Richfield (supra), the case was transferred to another judge, (Honorable Leon Yankwich) and was tried to a jury. A verdict in the sum of $7,900 was returned. The verdict was trebled and judgment entered for $23,700, attorney's fees and costs. The district court had jurisdiction of the cause, Sec. 4 of the Clayton Act. 15 U.S.C.A. § 15. This court has jurisdiction of the appeal, 28 U.S.C.A. §§ 1291, and 1294. The appeal was timely filed.

The Evidence Is Sufficient To Support the Verdict and the Judgment.

Richfield makes dual contentions —

(a) That there was not substantial evidence of an illegal restraint on Karseal's product, and (b) That there was insufficient evidence of damage.

A. Sufficiency of the evidence as to illegal restraint.

Flintkote Co. v. Lysfjord, 9 Cir., 1957, 246 F.2d 368, certiorari denied 355 U.S. 835, 78 S.Ct. 54, 2 L.Ed.2d 46, states as follows:

"We take it that the controlling rule today in seeking damages for loss of profits in antitrust cases is that the plaintiff is required to establish with reasonable probability the existence of some causal connection between defendant's wrongful act and some loss of anticipated revenue. Once that has been accomplished, the jury will be permitted to `make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly.' Bigelow v. RKO Radio Pictures, Inc., [327 U.S. 251, 66 S.Ct. 574, 90 L.Ed. 652], supra, 327 U.S. at page 264, 66 S.Ct. at page 580. The cases have drawn a distinction between the quantum of proof necessary to show the fact as distinguished from the amount of damage; the burden as to the former is the more stringent one. In other words, the fact of injury must first be shown before the jury is allowed to estimate the amount of damage."2 246 F.2d at page 392.

[Emphasis by the Court.]

The prior Richfield decree which was admissible and used in evidence against the appellant, determined that Richfield had violated the anti-trust laws by agreements and understandings, written and oral, directly affecting and unreasonably restraining the course of interstate commerce in TBA automobile accessories, including waxes and polishes. Thus, the Richfield decree itself was prima facie evidence of the restraint of commerce in connection with waxes and polishes. There was substantial evidence that this restraint was not only applied to waxes and polishes generally, but to Karseal's product, "Wax Seal."

Richfield's brief argues the evidence most favorable to its position as if the matter were now before a trial court or jury for decision.

The rule is clear that on appeal from a judgment based upon a jury's verdict, the verdict and judgment based thereon will be sustained if there is substantial evidence in the record in support thereof. We are required to view the evidence in a manner most favorable to the prevailing party, Glasser v. United States, 1942, 315 U.S. 60, 69, 62 S.Ct. 457, 86 L.Ed. 680; Woodard Laboratories v. United States, 9 Cir., 1952, 198 F.2d 995; Las Vegas Merchant Plumber Ass'n v. United States, 9 Cir., 1954, 210 F.2d 732, 742; Flintkote Co. v. Lysfjord, supra, 246 F.2d at page 375. The prevailing party is entitled to rely upon evidence most favorable to its position.

The testimony offered by Karseal consisted of distributors and salesmen for "Wax Seal," a former Richfield service station operator, a former merchandiser for Richfield, a former TBA man for Richfield and an independent service station operator and others. Without enumerating the testimony in detail, the record shows that distributors for "Wax Seal" were generally unsuccessful in their efforts to sell their product to Richfield TBA men and Richfield service stations; that a Richfield representative told the Richfield service station operator to get Wax Seal out of his window or they would both lose their jobs; that salesmen for "Wax Seal" were told not to come in when Richfield men were around; that "Wax Seal" was occasionally sold in Richfield service stations but kept under the counter and not displayed. A former merchandiser for Richfield testified that he would warn and threaten Richfield dealers who carried non-authorized TBA products. A Richfield merchandiser told a Richfield operator he did not want to see "Wax Seal" in the station.

Thus it was apparent to the jury that independent Richfield service station men were threatened and discouraged from purchasing "Wax Seal" and when occasionally they did purchase, were required to conceal this fact from Richfield and hide the product from view. The jury, looking at the evidence most favorable to Karseal, could conclude that there was a general pattern of exclusion of "Wax Seal" from Richfield service stations, for which Richfield was responsible. As the trial judge stated during discussion with counsel Richfield "had no right to tell the operators of stations, independent operators and not [Richfield] employees, not to buy other products."

In view of the prima facie effect of the prior antitrust decree, all that plaintiff was required to do, as far as proving restraint is concerned, was to show that the general restraint applicable to waxes and polishes referred to in the prior decree was actually applied to the Karseal product, "Wax Seal."

There was sufficient evidence to warrant the jury's conclusion as to restraint.

B. The evidence as to damage was sufficient to sustain the verdict and judgment.

(a) Causal connection between restraint and damage.

Richfield concedes that once Karseal had shown that the defendant had violated the anti-trust laws, and the further fact that Karseal actually suffered damage to its business or property as a result of such violation, the jury was permitted to make a just and reasonable estimate of the amount of plaintiff's damage. But Richfield insists that there must be first, proof not only of an unreasonable restraint of trade by the defendant, but also a causal connection between defendant's act and a loss of anticipated revenue to plaintiff.

Karseal concedes this general statement of the law but asserts that having shown the illegal restraint applied to its product, it had proved the causal connection between the defendant's wrongful act and the loss of revenue. We agree. It seems patent that the restraint applied would result in some loss of business.

Wolfe v. National Lead Co. (supra), is cited by Richfield for its holding that there was no proof that the plaintiffs had suffered damage. Richfield states, "In affirming the court pointed out the important distinction in the quantum of proof required as to the fact as distinguished from the amount of damages." In the case at hand there was clear causal connection between the alleged restraints applied and damage suffered.

Contrast the factual basis in Monticello Tobacco Co., Inc. v. American Tobacco Co., 2 Cir., 1952, 197 F.2d 629, with the factual situation here. In Monticello, plaintiff could not prevail because of absence of a showing of causal connection between the illegal acts of the defendants and the "jobbers' refusals to handle plaintiff's product." At page 633. Here the impact of Richfield's exclusive dealing practices on Karseal was shown by evidence the jury was entitled to and did believe.

(b) A just and reasonable estimate of damage.

How then is plaintiff to make a showing which will permit the jury to make a just and reasonable estimate of its damage? The Richfield brief concedes, "It is, of course, true that the quantum of proof required to establish the amount of damage is not and should not be as great as that required to establish the fact of damage. If there is substantial evidence that damage to the plaintiff in fact resulted from wrongful conduct of defendant, it is proper to permit the jury to make a just and reasonable estimate of the amount thereof. * * *".

"A study of the adjudicated cases in this area readily dispels any impression that this question of damages is governed by an application of the common law rule of reasonable certainty. The cases have long since departed from this rule in antitrust legislation. Story Parchment Co. v. Paterson, supra, 282 U.S. at page 565, 51 S.Ct. 248," Flintkote Co. v. Lysfjord, supra, 246 F.2d at page 391. See the general discussion following the above quotation, at pages 391-394.

There is no particular way for a plaintiff, injured by a defendant's violation of the anti-trust laws to show precisely what sales it lost. It certainly cannot prove precisely how may cases of "Wax Seal" were not sold. To assist the jury in making a "just and reasonable estimate of damage," plaintiff offered proof which the jury could believe and consider, that "Wax Seal" sold on the free market, as well or in many instances 3 to 7 times better than a product known as "Mac's," and that "Mac's" was generally a comparable product. Evidence was offered which the jury was entitled to believe that during the period of time involved in this case that Richfield purchased from Mac's Super Gloss Company, 4,707 cases of "Mac's" polish. Karseal then contended that the jury could infer that "Wax Seal" outsold "Mac's" 3 to 1, and that therefore had plaintiff not been denied access to the 3,000 Richfield service stations during the six years between 1947 and 1953, that an estimate of approximately 14,121 cases of "Wax Seal" would have been sold at Richfield stations. Karseal offered evidence which the jury were entitled to believe, that it was staffed, equipped and able to produce sufficient "Wax Seal" to meet these additional sales. It also offered evidence, which the jury was entitled to believe, that its net profit per case of "Wax Seal" for the period in question was 57¢ per case.

Had the jury based its verdict on this computation, the result of course would have exceeded the verdict rendered by about $150 but the jury could have well taken into account that some "Wax Seal" was actually sold by the Richfield stations.

We do not see much difference between the suggested formula as an assist in arriving at just and reasonable damages, and a chart placed on a blackboard in a personal injury case, where plaintiff's lawyer outlines his computations as to loss of earnings, pain and suffering, and the various other items of damage. The plaintiff is not required to prove with mathematical certainty the amount of its damage resulting from a defendant's violation of the anti-trust laws.

Story Parchment Co. v. Paterson Parchment Paper Co., supra, 282 U.S. at pages 562-563, 51 S.Ct. at page 250, states:

"* * * It is true that there was uncertainty as to the extent of the damage, but there was none as to the fact of damage; and there is a clear distinction between the measure of proof necessary to establish the fact that petitioner had sustained some damage and the measure of proof necessary to enable the jury to fix the amount. The rule which precludes the recovery of uncertain damages applies to such as are not the certain result of the wrong, not to those damages which are definitely attributable to the wrong and only uncertain in respect of their amount * * *

"Where the tort itself is of such a nature as to preclude the ascertainment of the amount of damages with certainty, it would be a perversion of fundamental principles of justice to deny all relief to the injured person, and thereby relieve the wrongdoer from making any amend for his acts. In such case, while the damages may not be determined by mere speculation or guess, it will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate. The wrongdoer is not entitled to complain that they cannot be measured with the exactness and precision that would be possible if the case which he alone is responsible for making, were otherwise. * * *" [Emphasis added].

Bordonaro Bros. Theatres, Inc. v. Paramount Pictures, Inc., 2 Cir., 1949, 176 F.2d 594, at page 597, states:

"* * * Damages in such a situation necessarily cannot be assessed with mathematical precision; but the testimony of plaintiff's expert witness, Samuelson, `while purely an estimate and introduced as such, was proof of a kind as definite and certain as the subject-matter admitted.' William H. Rankin Co. v. Associated Bill Posters of U. S. and Canada, 2 Cir., 42 F.2d 152, 155, certiorari denied Associated Bill Posters of U. S. and Canada v. William H. Rankin Co., 282 U. S. 864, 51 S.Ct. 37, 75 L.Ed. 765. Defendants must not be allowed to create their own immunity by the extent and duration of their conspiracy. * * *"3

The record showed a restraint in interstate commerce on waxes and polishes which moved in interstate commerce, and particularly a restraint upon "Wax Seal" manufactured and sold by Karseal. It is patent that damage would result. The jury could conclude from the evidence that this restraint applied to Karseal was a planned and continuous one, and that it generally affected to a greater or less degree the majority of the 3,000 Richfield service stations. The jury had evidence before it which indicated that Karseal out-sold on the free market a comparable product such as "Mac's" and had evidence as to how much of the "Mac's" product was sold in Richfield stations during the time involved.

We equate the just and reasonable estimate of damage to the just and reasonable verdict the jury must render in a personal injury case. Both are Tort actions. In neither can the plaintiff prove to any mathematical certainty, what are the damages in dollars and cents.

Story Parchment Co. v. Paterson Parchment Paper Co., supra, 282 U.S. at page 565, 51 S.Ct. at page 251, states:

"* * * There are many cases in which damages are allowed where the element of uncertainty is at least equal to that in the present case — as, for example, copyright and trade mark cases, cases of unfair competition, and many cases of personal injury * * *". [Emphasis added.]

Under all the facts in the case the damages must have a reasonable and fair relationship to the type, extent and period of the restraint applied, the number of outlets affected by the restraint and the kind of product, its price and salability, the profit made on sales, and an estimate of the amount of profit lost by reason of the illegal activities of the defendant. There was here proof of such matters.

In Flintkote Co. v. Lysfjord (supra), plaintiffs were in their first year of working for themselves with no prior record of the success of their business. In the case at hand there was proof of gross dollars sales of $130,000 in the year ending June 30, 1948 and gross dollars sales of $501,000, $675,000, $799,000, $621,000 and $686,000 in the following years. This was not proof of business activity prior to the application of the illegal restraints, but during the period thereof. We see no reason why a plaintiff who has a substantial volume of sales during a period of illegal restraints would not be damaged by such restraint even if its business started during such period of restraint. The jury might have believed such volume of business indicated no restraint and no damage, but it found to the contrary.

This case is not controlled by Flintkote Co. v. Lysfjord (supra), or Wolfe v. National Lead Co. (supra). Both are distinguishable. Here there was proof of illegal restraint, obvious causal connection between restraint and damage and proof of sufficient facts to permit the jury to make a just and reasonable estimate of damages.

Although Karseal sued for $135,000, its counsel realistically approached the problem and presented to the jury a realistic formula, not as exact proof of its damage but to assist the jury in arriving at a just and reasonable verdict. The instructions on damages, unchallenged, were fair and accurate and presented fully the applicable law on damages in this type of action.4 Looking at the entire record, we cannot say that a verdict of $7,900 as the damage suffered for restraint applied on a majority of 3,000 service stations in a six year period was unjust or unreasonable.

The Instructions On the Use To Be Made By the Jury Of the Prior Decree.

After giving the general instructions and explaining to the jury the substance of the prior equity decree, the court gave the following instructions which Richfield contends is error:

"* * * The ordinary meaning of the phrase `prima facie evidence' is this: `Prima facie evidence' of a fact is such evidence as, in the judgment of the law, is sufficient to establish the fact, and, if not rebutted, remains sufficient for that purpose.

"But in this case the phrase `prima facie' has a different meaning. This arises from the fact that the section read to you uses the word `estoppel.' An `issue of fact' as to which the judgment operates as an `estoppel' must be an issue as to an `ultimate fact' such as is required in allegations of fact in good pleadings or in findings of fact in cases tried to the court and must be the ultimate fact without which judgment would lack support in an essential particular.

"When the plaintiff uses the decree to prove that restrictions applied to waxes and polishes, the defendant cannot controvert the general proposition that such restrictions existed. For that matter is what we call res judicata. He is `estopped' to challenge the general fact. But he may still show that the restrictions were not enforced against the plaintiff's product and that, for this reason, the plaintiff suffered no damage.

"Therefore, it is still necessary in the present case, in order for the plaintiff to recover, for it to prove to your satisfaction, by the weight of the credible evidence that the defendant in an unreasonable manner prevented access of the plaintiff's product to Richfield stations."

Other instructions on the use of the prior anti-trust decree are included in the footnote,5 were not objected to by Richfield and were correct statements of law.

(a) Richfield has waived any error by failing to state the grounds for its objection.

Though not raised by Karseal, we are concerned at the outset as to whether there was sufficient compliance with Rule 51, Rules of Civil Procedure, concerning objections to instructions given. Rule 51, Rules of Civil Procedure, 28 U.S.C.A., provides in part:

"No party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection * * *". [Emphasis added.]

Counsel were given an opportunity out of the hearing of the jury to make their objections to the instructions given. Only two objections were made and both were of a most sketchy character. Counsel for Richfield stated:

"The only ones to which we have objection Your Honor, are ones with respect to the effect of `prima facie' * * * And of the others, there were two instructions in which the words `gross profits' were used."

The objections as to the use of the words "gross profits" were considered by the court and the jury were subsequently instructed, with the consent of Richfield, that the court had inadvertently used the word "gross" and the court deleted it and instructed the jury to disregard it. No error is here assigned.

As to the objection to the instruction involving the words "prima facie" and to the use to be made of the prior anti-trust decree, in addition to the objection heretofore quoted which states no ground whatsoever, the following is all that appears in the record. After the court and counsel had agreed on correcting of the words "gross profits" in the instructions, a Richfield attorney stated: "The only objection we would have then would be to give our No. 146 as to the `prima facie'." The Court: "I think you are absolutely wrong on that, I stake my entire case on that." Richfield counsel: "We will specifically except to that Your Honor." * * * "Your Honor, just one other point, if we may clear up this objection. We have excepted to the failure to give our instruction No. 14, and we, of course, except to the giving of the instruction on prima facie as given by Your Honor." This certainly is not a compliance with the rule requiring that counsel state not only the matter to which he objects, but state "distinctly * * * the grounds of his objection."

It is true that in an earlier portion of the record long before the conference on instructions and the actual instruction of the jury, there was discussion of this problem,7 and we think it is fair to say that prior to the time of the giving of the instructions, and at the time provided by statute, after the giving of instructions, for the making of objections thereto, counsel for Richfield knew the court's position and the court knew counsel's position. The court had stated: "The meaning of that word `prima facie' does not mean that the defendant in a case of this character can come in and controvert that finding in the other case * * *", and again "* * * this is a thing I have in mind, that they are prima facie to the practice, and that two things are necessary, one to relate the practice to you and then the proof of damage. * * *".8

Thus, although the court's position was well known to Richfield's counsel, when the time arrived to make objections, Rule 51 of the Rules of Civil Procedure was not complied with. The purpose of the Rule is to give the court a chance to correct an erroneous instruction on the law. Though viewed realistically, we might hazard a guess that it would have been a difficult task, even by stating distinctly the grounds of the objection, to have caused the court to change its previously announced position. Nevertheless, to preserve the question, on appeal, not only should the objection have been made but the grounds thereof should have been distinctly stated, Husky Refining Co. v. Barnes, 9 Cir., 1941, 119 F.2d 715, 717, 134 A.L.R. 1221; Shevlin-Hixon Co. v. Smith, 9 Cir., 1947, 165 F.2d 170, 179; Johnson v. Chesapeake and Ohio Ry. Co., 7 Cir., 1955, 227 F.2d 858, 860-862; Franklin v. Shelton, 10 Cir., 1957, 250 F.2d 92, 98; See, Palmer v. Hoffman, 1943, 318 U.S. 109, 119, 63 S.Ct. 477, 87 L.Ed. 645, rehearing denied 318 U.S. 800, 63 S.Ct. 757, 87 L.Ed. 1163.

Accordingly, Richfield's objection to the court's instructions is not available to it on this appeal. But we have nevertheless considered the question as to whether giving the instruction was error.

(b) It was error to so instruct but the error was not prejudicial.

Turning to the correctness of the questioned instructions, Section 5 of the Clayton Act, 15 U.S.C.A. § 16, provides as follows:

"§ 16. Judgment in favor of Government as evidence; limitation of actions

"A final judgment or decree rendered in any criminal prosecution or in any suit or proceeding in equity brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any suit or proceeding brought by any other party against such defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto: Provided, This section shall not apply to consent judgments or decrees entered before any testimony has been taken. * * *"

When the Clayton Act was originally passed by the House of Representatives it contained language which would make the government decree "conclusive evidence against the defendant of the law and facts determined in the prior equity action." However, the Bill was amended in the Senate substituting the words, "prima facie" for the word "conclusive." As so amended the Bill passed the Senate, was agreed to by the House conferees and became law. Report of the Senate Judiciary Committee set forth in the margin9 pointed out that considerations of public policy might favor the House proposition of conclusiveness, but that serious doubts existed as to the constitutionality of such a proposition, in that it would deprive one of his property without due process of law.

The reason for the concurrence by the House with the Senate amendment was expressly to the same effect.10

In Emich Motors Corp. v. General Motors Corp., 7 Cir., 1950, 181 F.2d 70, at page 76, reversed on other grounds 340 U.S. 558, 71 S.Ct. 408, 95 L.Ed. 534, the Seventh Circuit quoted the following instruction given to the jury with approval:

"Being prima facie evidence, the judgment is not conclusive in this case. It is merely sufficient evidence of a violation by these defendants of the anti-trust laws to put these defendants to their proof * * *".

In the same case in the Supreme Court, Emich Motors Corporation v. General Motors Corporation, 1951, 340 U.S. 558, at pages 568-569, 71 S.Ct. 408, at page 413, the court said:

"* * * By its terms, however, § 5 makes a prior final judgment or decree in favor of the United States available to a private suitor as prima facie evidence of `all matters respecting which' the judgment `would be an estoppel' between the defendants and the United States. We think that Congress intended to confer, subject only to a defendant's enjoyment of its day in court against a new party, as large an advantage as the estoppel doctrine would afford had the Government brought suit.

"The evidentiary use which may be made under § 5 of the prior conviction of respondents is thus to be determined by reference to the general doctrine of estoppel. * * * Accordingly, we think plaintiffs are entitled to introduce the prior judgment to establish prima facie all matters of fact and law necessarily decided by the conviction and the verdict on which it was based." [Emphasis added.]

It is this portion of the Supreme Court's decision which the trial court apparently relied upon, together with Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 1954, 346 U.S. 537, 74 S.Ct. 257, 98 L.Ed. 273. But we think the judge's reliance on these cases was misplaced. The language relied upon from the Theatre Enterprise case (supra), as shown in the record of our case during prior discussion between the court and counsel, was the following:

"* * * These instructions, petitioner argues, were `so superficial and so limited as to deprive petitioner of any of the benefits conferred upon it' by § 5.

"We cannot agree. The trial judge instructed in effect, that the Paramount decrees alone could not support a recovery by petitioner; additional evidence was required to relate the presumed Paramount conspiracy to Baltimore and to the claimed damage period. The reasons for this are clear. The Paramount decrees did not rest on findings, nor were the findings based on evidence, of a particular conspiracy concerning restrictions on runs and clearances in Baltimore theatres; yet such a conspiracy is the nub of plaintiff's claim. The Paramount case involved a conspiracy found to exist as of 1945, which was enjoined no later than June 25, 1948; but the conspiracy alleged here involves a claimed damage period running from February 1949 to March 1950. Indeed, the relevancy of Paramount to the instant case is slight. * *". 346 U.S. at pages 543-544, 74 S.Ct. at page 261.

However, the court in the Theatre Enterprises case (supra) had earlier stated:

"* * * Petitioner next contends that the trial judge, when instructing the jury, failed to give sufficient weight to the Paramount decrees. The decrees were admitted in evidence pursuant to § 5 of the Clayton Act, which provides that a final judgment or decree rendered against a defendant in an equity suit brought by the United States under the anti-trust laws `shall be prima facie evidence against such defendant in any suit or proceeding brought by any other party against such defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto * * *.' Exercising his discretion to choose the precise manner of explaining a decree to the jury, the trial judge instructed that:

"`* * * [T]hese same defendants had, at a time previous to the opening of the Crest Theatre, conspired together in restraint of trade in violation of these same Anti-Trust laws, in restricting to themselves first run and in establishing certain clearances in numerous places throughout the United States. Thus, these proven facts, I instruct you, become prima facie evidence in the present case, which the plaintiff may use in support of its claim that what the defendants have done since those decrees, in the present case in Baltimore, is within the prohibition of those earlier decrees. However, this is only prima facie evidence. There was not before the Court in the prior case the present factual situation which is before you now with respect to Baltimore theatres. Therefore, it is still necessary in the present case, in order for the plaintiff to recover, for it to prove to your satisfaction, by the weight of the credible evidence, that these defendants, or some of them, have conspired in an unreasonable manner to keep first run exhibitions from the plaintiff, or have conspired to restrict plaintiff to clearances which are unreasonable.' * * *". 346 U.S. at pages 542-543, 74 S.Ct. at page 260.

We think the holding of the Theatre Enterprises case is directly contrary to the position of the trial judge.

Richfield argues, we think correctly, as follows:

"* * * If Section 5 of the Clayton Act made the government decree conclusive evidence rather than merely prima facie evidence which the defendant could rebut, this obviously would deprive a defendant in a treble damage action of its right to a jury trial of the issue of the violation of the law."

The other reported cases confirm our view that the instruction of the trial court was erroneous. In Harrison v. Paramount Pictures, D.C.E.D.Pa.1953, 115 F.Supp. 312-315, affirmed by the Third Circuit on the opinion below 211 F.2d 405, the court said: "The [Emich] case decided what matters the prima facie case covered, but there is nothing in the opinion to support the plaintiff's argument that the presumptions arising from the decree in favor of the United States are conclusive and incontrovertible. It is hardly necessary to say that the references to estoppel in Section 5 of the Clayton Act merely define the area which the prima facie case covers." 115 F.Supp. at page 315. [Emphasis added.]

To the same effect is Zuckerman v. E. I. du Pont de Nemours Company (S.D.N.Y. 1953) 1952-53 C C H Trade cases, Sec. 68-346, otherwise unreported:

"Plaintiff in his moving papers urges that the judgment in the antitrust suit brought by the United States is conclusive as against defendant and that the misuse of patents by defendant invalidates its defense of ownership. * * *

"The purpose of Section 15 was to lighten the burden of proof of a private litigant and to facilitate the presentation of the necessarily extensive proof of such a conspiracy. However, the prior judgment is not to be accepted as conclusive proof of the conspiracy found; it is merely prima facie evidence against which defendant is entitled to his day in court for the purpose of rebuttal. * * *".

In Eagle Lion Studios, Inc. v. Loew's, Inc., 358 U.S. 100, 79 S.Ct. 218, 3 L.Ed. 2d 147, the Supreme Court had granted certiorari on the question, "Were findings in the government's prior antitrust suit prima facie evidence under Section 5 of the Clayton Act of conspiracy against the plaintiffs," but the Supreme Court affirmed the lower court (248 F.2d 438), per curiam by an evenly divided court. The Circuit had affirmed (one judge dissenting) the dismissal of the case in the trial court for failure of proof of conspiracy.

The trial court had examined the prior Paramount decree and its findings and conclusions, and had concluded that "while the findings may perhaps constitute evidence * * * that Loew's and RKO had no competition between themselves in obtaining pictures from the defendant distributors who were parties to the Paramount case and had monopolized between themselves the first neighborhood run in New York City, the findings, standing by themselves, are certainly not evidence that there was no competition between Loew's and RKO in obtaining and distributing pictures of so-called `independents' such as the plaintiffs in the present case." 248 F.2d at page 443. On appeal the appellants characterized this as a "niggardly construction" of the Paramount judgment. At page 443.

"* * * In determining, under that section, [Sec. 5, Clayton Act] the effect of a judgment in a prior anti-trust suit it is not our function to consider inferences, whether reasonable ones or not, that might be drawn from the language of the prior judgment. Under section 5 a judgment in a prior suit is prima facie evidence `as to all matters respecting which said judgment * * would be an estoppel as between the parties thereto * * *'." [Emphasis added in opinion.]

The court quoted from its decision in Monticello Tobacco Co., Inc. v. American Tobacco Co., supra, 197 F.2d 629, 631-632:

"* * * whatever is crucial to the treble-damage case and is not distinctly determined in the previous government suit must be proved by direct evidence. * * *" (Citing cases.)

The court concluded 248 F.2d (at pages 444-445),

"* * * Applying these principles to the Paramount judgment we conclude that the issue here in suit was not `distinctly determined' in the Paramount litigation * * * In short, we must look elsewhere if we are to find any evidence of the conspiracy that the plaintiffs here charge."

The Eagle Lion case (supra), is the last decision by the Supreme Court touching the effect of Sec. 5 of the Clayton Act, but the per curiam affirmance by an evenly divided court affords little help.

We have been able to find no authority supporting the instruction of the trial court on Karseal's position on this problem. We think the fallacy would be well demonstrated by the following example. Suppose that the prior anti-trust decree had not only determined generally the restraint against waxes and polishes but also had determined particularly a restraint against Karseal's "Wax Seal". Applying the trial court's logic, this would have required him to have instructed that the prior anti-trust decree was conclusive on the question of restraint against the plaintiff Karseal and its product, and the only question then left open to the jury would have been the question of Karseal's damage. Certainly this is not the law.

However, we cannot say that the error was prejudicial. Immediately following the challenged instruction, the court said:

"Therefore, it is still necessary in the present case, in order for the plaintiff to recover, for it to prove to your satisfaction, by the weight of the credible evidence that the defendant in an unreasonable manner prevented access of the plaintiff's product to Richfield stations. This for the reason that there was no special finding in the government's suit concerning plaintiff's special product Wax Seal. You have before you evidence of both the plaintiff and the defendant with respect to the issue, whether plaintiff's product was restrained. You should make your own determination on the basis of this evidence whether plaintiff's distributors and their salesmen were actually denied access to Richfield's stations."

Various other instructions given by the court correctly stated the law. They are quoted in the margin.11

In summing up the court said: "The decree in itself does not make out a case for plaintiff. The plaintiff, Karseal, has to show that the prohibition against waxes and polishes was actually exercised as to its wax and that by reason of the exercise of that policy as to it, it was damaged by losing sales it could otherwise have made."

Thus, under the instructions given, Karseal was still required to prove that an unlawful restrain was applied by Richfield to its product "Wax Seal," that it was damaged thereby, and the extent of its damage.

It cannot be argued that the jury was prejudiced by being informed of the prior decree, for it was clearly admissible. Even had the questioned instruction not been given, the jury would have had before it the prior decree and would have known that Richfield had been found to have violated the anti-trust laws by its exclusive dealing practices in TBA items, including wax and polishes.

There was left to the jury by the court's instructions all the proper elements of a treble damage case, (1) were illegal procedures applied to plaintiff and its product, (2) was the plaintiff damaged, (3) the extent and amount of such damage.

We see the problem the trial court was approaching. In a private treble damage action it is necessary to prove, (1) public injury, i. e. a violation of the anti-trust laws, and (2) private injury. In a government anti-trust case only proof of the public injury is required.

As stated in Emich Motors Corp. v. General Motors Corp., 7 Cir., 1950, 181 F.2d 70, 75, reversed on other grounds 340 U.S. 558, 71 S.Ct. 408, 95 L.Ed. 534, "And we think the judgment is available at least for the limited purpose of establishing that there had been a violation of public rights in the absence of which plaintiff would have no cause of action under the statute, and from which violation they assert their injury stemmed." [Emphasis added.]

The trial court was of the view that the public injury was conclusively established by the prior anti-trust decree. But the trial court required Karseal to prove the impact of Richfield's actions on it and its product "Wax Seal." When this was proved, then public injury was proved since Karseal was a member of that illusive body, the "public." The purpose of the anti-trust laws is to protect the interstate market from illegal restraints. If such restraints are applied to one person in the interstate market, then free competition is hurt and damaged.12

When Richfield hurt and damaged Karseal it hurt and damaged free competition, the touchstone of the anti-trust laws. This was what the trial judge's instructions required Karseal to prove.

We therefore conclude that appellant Richfield, for failure to comply with Rule 51 of the Rules of Civil Procedure, does not have available to it on this appeal, the right to challenge the instruction as given by the court and alternately, that although the instruction complained of was erroneous, in view of other instructions by the court and the scope of the issues left to the jury, the error was not prejudicial.

The judgment of the district court is affirmed.

JAMES ALGER FEE, Circuit Judge, did not participate in this decision.