The opinion of the court was delivered by: DIMOCK
These are motions by all defendants in a criminal antitrust case in which three associations, one labor union and five individuals are charged with violations of sections 1 and 2 of the Sherman Act, 26 Stat. 209, 15 U.S.C. §§ 1, 2, in the production of ladies' blouses in a four-state area.
Defendant Strasser moves under Rule 12, F.R.Crim.P., for dismissal of the indictment. All of the defendants, with the exception of defendant Strasser, and, under Rule 14, F.R.Crim.P., for relief from an alleged prejudicial joinder of defendant Strasser, and, under Rules 16 and 17(c), F.R.Crim.P., for inspection and production of various documents in the Government's possession. All of the defendants move under Rule 7(f), F.R.Crim.P. for extensive bills of particulars. Finally, defendants ask leave to make further motions with respect to this indictment, after the Government's compliance with any requirements of this decision concerning bills of particulars and discovery and inspection, and at any time before trial. Each motion is opposed by the Government.
The indictment, in count 1, charges that defendants, and other co-conspirators not named as defendants, engaged in an unlawful combination and conspiracy, in restraint of interstate trade and commerce, in count 2 that they engaged in an unlawful combination to monopolize interstate trade and commerce, and in count 3 that they engaged in an attempt to monopolize interstate trade and commerce.
Named as defendants are the following:
Greater Blouse, Skirt & Neckwear Contractors Association, Inc. (hereinafter Greater), a New York corporation, claimed to be 'an association whose members are contractors who produce, among other things, ladies' blouses and do business in New York, New Jersey, Pennsylvania and Connecticut;'
Slate Belt Apparel Contractors' Association, Inc. (hereinafter Slate Belt), a Pennsylvania corporation, also claimed to be 'an association whose members are contractors who produce ladies' blouses' and who do business in Pennsylvania and New York;
National Association of Blouse Manufacturers, Inc. (hereinafter National), a New York corporation, claimed to be 'an association whose members are manufacturers or jobbers of ladies' blouses doing business in New York, New York';
Blouse and Waistmakers' Union, Local 25, International Ladies' Garment Workers' Union (hereinafter Local 25), claimed to be 'a voluntary association, organized and existing under the laws of the State of New York' whose membership 'consists of workers engaged in the production of ladies' blouses';
James Clemenza, employed by Greater since 1953 and its Executive Director since 1957;
I. Lloyd Cabin, alleged to have been 'associated with either Greater or Slate Belt in an executive capacity' during the entire period of the indictment;
Charles Kreindler, alleged to have been the 'Manager of Local 25 and a vice president of the International Ladies' Garment Workers' Union' during the entire period covered by this indictment;
Abraham Rosenthal, claimed to have been president of National from in or about 1949, the beginning of the period covered by this indictment, to November 1950 and from November 1952 to September 1956;
The indictment charges the following:
In the ladies' blouse industry the term 'contractor' refers to persons, firms or corporations 'engaged in the business of producing ladies' blouses from uncut or cut material owned by the jobber or manufacturer for whom such person, firm or corporation is producing those blouses.' A contractor, it is alleged, 'owns the means of producing such blouses, hires labor and takes the risk of profit or loss in the conduct of his business.' The terms 'jobber' and 'manufacturer' refer to a person, firm or corporation 'engaged primarily in the business of selling ladies' blouses at wholesale, and who has some or all of those blouses produced by contractors.'
'33. The aforesaid combination and conspiracy has consisted of a continuing agreement and concert of action among the defendants and co-conspirators, the substantial terms of which have been and are to: fix the prices the members of National would be required to pay to members of Greater and Slate Belt for blouse contracting work; allocate the blouse contracting work of members of National among the members of Greater and Slate Belt; require members of National to use members of Greater and Slate Belt exclusively to do blouse contracting work; establish a policing and enforcing system to prevent violations of the conspiracy; impose penalties or damages for violations of the conspiracy; and require manufacturers and jobbers of ladies blouses who were not members of National either to join National or to conform to the aforesaid terms of the conspiracy.
'34. During the period covered by the indictment the said combination and conspiracy has been effectuated by various means and methods including, among others, the following:
'(1) In 1949 Slate Belt was formed by a group of contractors in Pennsylvania. Late that year, some time in October, Slate Belt affiliated with Greater. Under their affiliation agreement, Slate Belt's members became members of Greater. And Slate Belt was bound by all agreements made, or to be made, by Greater with Local 25 and National.
'(2) At about the same time, Greater, National and Local 25 evolved a plan to stabilize the blouse industry in New York, Pennsylvania, New Jersey and Connecticut. Carrying out this plan, Greater and National entered into an agreement in 1950 under the terms of which (1) prices to be paid contractors were fixed; (2) blouse contracting work of the members of National was allocated among the members of Greater and Slate Belt; (3) members of National were required to give their contracting work exclusively to members of Greater and Slate Belt; (4) members of Greater and Slate Belt were required to work exclusively for members of National; (5) an enforcement system through an industry Impartial Chairman was established.
'(3) In conjunction with the Greater-National agreement, Local 25 entered into separate agreements with National and Greater. These agreements provided that blouse contracting work of members of National was to be allocated among the members of Greater and Slate Belt; penalties were to be imposed upon members of National for violation of the allocation system; and an enforcement system was promulgated utilizing the same industry Impartial Chairman named in the Greater-National agreement.
'(4) All the above described agreements were in effect during the period 1950 through 1952. And during such period, Local 25 and National conducted a campaign to force non-member jobbers and manufacturers either to join National or to conform substantially with the terms of the Greater-National agreement. The Greater-National-Local 25-Slate Belt arrangements continued through 1952.
'(5) In 1953, however, Slate Belt, dissatisfied with its alliance with Greater, broke away from Greater. Slate Belt then entered into independent agreements with National and with locals of the ILGWU located in Pennsylvania. Slate Belt's agreement with National provided for a continuation of an allocation system, but it substantially changed the price fixing provisions of the 1950 Greater-National agreement. Greater also entered into separate contracts with National and with Local 25 providing for a continuation of an allocation scheme, but its new agreement with National also substantially changed the price fixing provisions of the 1950 Greater-National agreement. In this same period, National entered into an agreement with Local 25 continuing the allocation scheme specified in the 1950 National-Local 25 agreement. All of the 1953 agreements were to expire in late 1955 or early 1956.
(6) In 1955, some months before these agreements were to expire, co-conspirator Northeast Department, ILGWU, refused to renew Slate Belt's independent agreements with its Pennsylvania locals. Slate Belt was informed that there would be only one union contract governing the contractors in the blouse industry, namely one between Local 25 and Greater. Thereafter, in the fall of 1955, Slate Belt again entered into a contract with Greater under which Slate Belt was bound by all agreements made, or to be made, by Greater with Local 25 and National. Defendant Harry Strasser, who had no apparent connection with the ladies' blouse industry, was instrumental n arranging Slate Belt's reaffiliation with Greater.
'(7) Following the rejoining of Greater and Slate Belt, Greater and National entered into negotiations for a new contract to replace the 1953 agreements which were to expire in early 1956. However, a dispute arose between Greater and National concerning the prices members of National would pay to members of Greater and Slate Belt for blouse contracting work, and the manner of fixing such prices. Defendant Harry Strasser played a major role in the settlement of this dispute. Growing out of this settlement Greater and National entered into an agreement which, among other things, provided for an effective system of price fixing, allocation of the blouse contracting work of National's members among the members of Greater and Slate Belt, and a requirement that members of National give their blouse contracting work exclusively to members of Greater and Slate Belt. Contemporaneously, Local 25 entered into agreements with Greater and National providing, among other things, for allocation of the blouse contracting work of National's members among the members of Greater and Slate Belt.
'(8) The 1956 agreements referred to above were effective at least until December 31, 1958. During this period organized policing of the industry was carried out by Greater, Local 25 and Slate Belt to enforce the price fixing and allocation provisions of the agreements. One of the results of this policing activity was that members of National, who contracted to have blouses made by members of Greater and Slate Belt at prices below those fixed in the 1956 Greater-National agreement, and without the prior approval of Greater and National, were forced to pay additional monies to the members of Greater and Slate Belt.
'35. The combination and conspiracy hereinbefore alleged has had the following effects, among others:
'Manufacturers and jobbers of ladies blouses belonging to National have had to pay higher prices to the contractors -- members of Greater and Slate Belt.
'Manufacturers and jobbers of ladies blouses belonging to National have not been able to work with contractors of their own choosing.
'Manufacturers and jobbers of ladies blouses belonging to National have not been able to distribute their work among contractors in the manner they desired.
'Manufacturers and jobbers of ladies blouses, not members of National, have been brought into the conspiracy or made to abide by its terms.
'Contractors producing ladies blouses, not members of Greater or Slate Belt, have been deprived of an opportunity to work for members of National.
'Competition among contractors belonging to Greater and Slate Belt has been eliminated.'
Paragraph 33 is made applicable to counts 1 and 2 and paragraphs 34 and 35 are made applicable to all three counts. The following discussion will deal with these motions in the order in which they were set forth at the outset of this opinion.
'I. Defendant Strasser's Motion for Dismissal of the Indictment.
Defendant Strasser attacks the legal sufficiency of the indictment on the grounds (1) that it 'is fatally defective in that it has failed to alleged an essential ingredient of the offense, namely, 'injury to the public", (2) that 'it is too vague and uncertain to inform defendant of the charge against him', and (3) that 'all three counts are duplicitous.'
Strasser expands his first contention to say that the indictment is defective because it fails to allege that the purpose or effect of the conspiracy was to raise or fix the market price or to cause harm to the consuming public. He says that the Supreme Court has said 'in general restraints upon competition have been condemned only when their purpose or effect was to raise or fix the market price.' Apex Hosiery Co. v. Leader, 310 U.S. 469, 500, 60 S. Ct. 982, 996, 84 L. Ed. 1311. He also cites Appalachian Coals, Inc. v. United States, 288 U.S. 344, 360, 53 S. Ct. 471, 474, 77 L. Ed. 825, for the proposition that the 'mere fact that the parties to an agreement eliminate competition between themselves is not enough to condemn it.' The argument is that the Sherman Act condemns restraints upon competition only when their purpose or effect is to raise or fix the market price or result in harm to the consuming public, that proof of such purpose or effect is therefore essential to sustain a charge of violation, and that since there was no such allegation in the indictment the indictment is insufficient. Strasser's view of the elements necessary to sustain a Sherman Act violation is incorrect. The Supreme Court, in the Apex Hosiery Co. case, did indeed make the statement quoted above as to the necessity of effect on market price but that court has since limited its application in a case which also repudiated the requirement of public injury.
In the recent case of Klor's, Inc. v. Broadway-Hale Stores, 359 U.S. 207, 79 S. Ct. 705, 3 L. Ed. 2d 741, a retail seller of household appliances brought an action for treble damages and an injunction against a chain of department stores and ten national manufacturers and their distributors claiming that the defendants conspired to restrain and monopolize commerce by agreeing among themselves either not to sell to plaintiff or 'to sell to it only at discriminatory prices and highly unfavorable terms.' 359 U.S. at page 209, 79 S. Ct. at page 708. The defendants sought summary judgment and dismissal of the complaint for failure to state a cause of action, alleging that there were hundreds of other household appliance retailers selling the items which defendants refused to sell to plaintiff and arguing that the agreement of the defendants did not injure the public. The District Court dismissed the complaint and entered summary judgment for defendants on the ground that this 'purely private quarrel' did not amount to a 'public wrong proscribed by the (Sherman) Act.' The Ninth Circuit affirmed, stating that 'a violation of the Sherman Act requires conduct of defendants by which the public is or conceivably may be ultimately injured.' 255 F.2d 214, 233. On review by the Supreme Court the judgment was reversed and the case remanded for trial. The court held that a group boycott, such as was there alleged, 'is not to be tolerated merely because the victim is just one merchant whose business is so small that his destruction makes little difference to the economy.' The complaint failed to allege any effect on market prices but the court required that its pronouncement on that subject in the Apex Hosiery case 'be considered in the light of the fact that the defendant in that case was a labor union.' 359 U.S. at page 213, 79 S. Ct. at page 710, fn. 7. The complaint was therefore held to state a cause of action.
It is true that one of the defendants here is a labor union like the defendant in the Apex Hosiery case. That particular defendant has not joined in the motion to dismiss, however, so the question of its liability without an allegation of effect on market prices does not now arise. The indictment in this case alleges a group boycott like that in the Klor's case, or at least a concerted refusal by traders to deal with other traders which the Klor's opinion equates with group boycotts. Hence the ...