The opinion of the court was delivered by: MCGOHEY
Ten motions are here considered. One is by the plaintiffs. Nine are by various defendants. Of the latter six are to quash service and to dismiss for lack of venue under Sec. 12 of the Clayton Act;
two are to stay depositions; one is to vacate a notice of deposition. The plaintiffs' motion seeks an order regulating the taking of depositions.
The complaint alleges that the plaintiffs are respectively corporations of California and New York engaged in the production, distribution and exhibition of motion pictures. They seek treble damages of $ 7.5 million alleged to have been sustained by reason of a conspiracy in violation of the Anti-trust laws, carried on by 108 defendants consisting of corporations, partnerships, associations and individuals engaged in various branches of the motion picture industry. Of these 20 individuals and 18 corporations are designated merely as 'Doe.'
It is alleged that the defendants carried on activities in furtherance of the conspiracy in 'the County of New York' and other places throughout the United States and foreign countries and that 'each defendant (acted) in said places either in person or by and through their co-defendants and the co-conspirators as their agents in the effectuation and consummation of the conspiracy.'
The Motions to Quash and Dismiss.
General Film Laboratories, Inc. and H. Schoenstadt & Sons, Inc. move to quash service and to dismiss for lack of venue. Ryder Sound Services, Inc., Glen Glenn Sound Company, a corporation, Glen Glenn Sound Co., a partnership, and Cinema Research Corporation move to dismiss for lack of venue.
The presidents of these defendants aver in separate affidavits that their respective corporations are not incorporated in or authorized to do business in New York, have no office or agents here and transact no business here of any kind. Moreover, the presidents of General Film Laboratories, Inc. and Ryder Sound Services, Inc. aver that process was not served on any one authorized to accept service for those corporations. Glen Glenn and Harry, Eckles filed affidavits asserting that, while they conducted business as co-partners during a period of seven months in 1937 (ten years before the initiation of the alleged conspiracy), they did not and never have conducted any partnership under the name of Glen Glenn Sound Co.
These affidavits stand uncontroverted. The plaintiffs submitted only their attorney's affidavit in opposition to these six motions. This affidavit, after summarizing the allegations of the complaint, merely states: 'In the moving affidavits it is averred that movants are not engaged in the Southern District of New York in the pursuit of their ordinary commercial activities and that, for that reason, they are neither 'found' nor transacting business in this District within the meaning of Sec. 12 of the Clayton Act (15 U.S.C. § 15 (22)). For the reasons which will be urged in plaintiffs' memorandum of law, it is respectfully submitted that this premise is fallacious and that the motions to quash should, in all respects, be denied.' In the memorandum of law, it is asserted that the moving defendants' disclaimer of commercial activities within the Southern District of New York is 'irrelevant' and that, 'irrespective of the situs of their corporate residence or of their ordinary commercial activities, if movants through their co-defendants or their co-conspirators participated in the conspiracy alleged in the amended complaint, they were suable in the Southern District of New York.'
The question thus presented is whether in a private anti-trust suit, the mere allegation of conspiracy makes an alleged co-conspirator, as such, a foreign corporation's 'agent' for purposes of venue under Sec. 12 of the Clayton Act
in any district where such co-conspirator is amenable to suit and the conspiracy is alleged to have had an impact, even though such corporation concededly is not an 'inhabitant' of, or otherwise 'found' in, the district of suit and has not at any material time carried on there any commercial activity in pursuit of its corporate objectives.
For the reasons hereafter set forth, I think the question must be answered in the negative.
On the uncontroverted evidence I find that, under Sec. 12 of the Clayton Act, venue as to each of the moving defendants is lacking in this district, and also that no valid service of process was effected on General Film Laboratories, Inc. or Ryder Sound Services, Inc., or Glen Glenn Sound Co., a partnership.
The action as to these three defendants will be ordered dismissed for lack of jurisdiction of the defendants and lack of venue.
The other movants as to venue have not challenged service of process. Accordingly, the action as against H. Schoenstadt & Sons, Inc. will be ordered transferred to the Northern District of Illinois; the action against Glen Glenn Sound Company, a corporation, and Cinema Research Corporation, will be ordered transferred to the Southern District of California.
Although, by enacting Sec. 12 of the Clayton Act, Congress substantially enlarged the former venue provisions of the Anti-trust laws as to corporations, it did not thereby 'give plaintiffs free rein to haul defendants hither and you at their caprice.'
Congress has authorized prosecution by the Government of a criminal conspiracy in violation of the Anti-trust laws in any district where it was formed or effectuated or in which any overt act was performed. In civil actions, however, Congress has not given the Government similar latitude. The Government can bring parties residing outside the district into a civil action only if the Court shall determine that the ends of justice so require.
And it seems significant that Congress has made this procedure available only to the Government.
As former Chief Judge Knox of this court observed in Hansen Packing Co. v. Armour & Co.,
'the failure of Congress to make similar provisions for civil suits by private litigants implies an intent to withhold the privilege.' Judge Knox rejected Hansen's contention that the mere allegation of conspiracy was sufficient to establish venue against a New Jersey corporation not shown by the plaintiff to have transacted business in this district.
Here, nevertheless, the plaintiffs contend that, since the decision in United States v. Scophony, supra, decided in 1948, 'the rule that a conspiracy is to be likened to a copartnership in which each participant acts as the agent of the other has governed the application and interpretation of Section 12 of the Clayton Act' and that, 'it is now the settled rule in the 2nd, 4th, 5th and 9th Circuits that for the purpose of determining venue in an anti-trust conspiracy case, the situs of the acts of the conspirators and the place of impact of the conspiracy will control.' (Emphasis supplied.) The only appellate court decision cited in support of this 'rule' is Giusti v. Pyrotechnic Industries
by the Court of Appeals for the Ninth Circuit. The other five decisions cited are by District Courts in California,
Whatever may be true elsewhere, there is certainly no such 'settled rule' in the Second Circuit. The contrary decision in Hansen Packing Co. v. ...