The opinion of the court was delivered by: RYAN
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, 8 N.Y.2d 430, 188 N.Y.S.2d 62 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 $75.00, then to $85.00, or even to $90.00 for U.F. Co., as against the rates prevailing, even of $130.00 plus $36.00 wharfage for general or socalled 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 or 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 the 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 the period 1928-1961 of $65,000,000, and a loss in the permanent market value of their business due to permanent impairment of ability to attract independent shipments after 1961 of $10,000,000.
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 Agricola 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 policy entered into agreements with IRCA "for a period of 20 years, expiring December 31, 1967. Pursuant to these agreements, CAG was required to ship all bananas grown by it in the Tiquisate area via IRCA to Puerto Barrios, on the Atlantic side of Guatemala and, pursuant to their terms as held by the New York courts in the . . . Ripley action . . . in good faith to maintain such shipments at least at the 1948 level, and IRCA was required to furnish said transportation. The freight rate was fixed by the contracts at $75. per carload, was later increased to $85. per carload, then to $90. per carload, but subject to a sliding scale based on the cost of fuel oil." (p. 25, Am. Compl.) The New York court found this rate scale inadequate and required United as fiduciary of IRCA to pay increased rates. IRCA asks for further damages because United was acting in violation of the antitrust laws.
Fourth : During the period 1928-1961 United monopolized the water transportation of Guatemalan coffee exports to the United States and in so doing used IRCA to transport the coffee to its vessels. As a result of United's monopoly, IRCA was deprived of substantial profits which they would have received had there been other common carriers by water with rates lower than those charged by United for its ships. Plaintiff specifically alleges that "Under United's control and domination IRCA published tariffs showing rail charges for coffee exports over the east coast route at a higher rate where the shipper did not ship on United's steamers." (p. 31 amended complaint) Furthermore, United's policy of equalization of shipping charges on goods shipped from the east and west coast of Guatemala deprived IRCA of its fair share of profits on such shipments. These damages to IRCA exceeded $15,000,000.
Fifth : Plaintiff seeks damages for United's breach of contract through Compania Agricola de Guatemala which was referred to in the third claim, limited to the six years prior to commencement of this action.
Sixth : "In 1928 and again in 1936, United directly or indirectly acquired stock of IRCA, where the effect of such acquisition or of the use of such stock, by the voting or granting of proxies or dominating IRCA, might be substantially to lessen competition or to tend to create a monopoly in the line of import and export commerce aforesaid" (p. 33 amended complaint). As a result of these illegal acquisitions, IRCA was damaged. The total damages sought by IRCA for all the wrongdoings alleged in the complaint are $169,000,000 which they assert should be tripled by the Court to $507,000,000 "less however, a credit to United in the sum of principal paid for past damages on imports from and exports to the United States, pursuant to the judgment in the said State court action." (Ripley) (p. 34, amended complaint)
The Ripley case was extensively litigated. The appellate record was one of the longest ever submitted to the New York Court of Appeals. The printed report and decision of the Referee was 310 pages and according to the affidavit of one of the Ripley plaintiffs' attorneys, the trial consumed 176 trial days, pretrial depositions totalled 3,211 pages, discovery and inspection by the Ripley plaintiffs covered more than 500,000 pages of documents, the stenographic transcript covered 25,830 pages, and the parties introduced into evidence 5,900 exhibits totalling 250,000 pages in length. Briefs filed with the Referee comprised 1,588 printed pages. The Ripley plaintiffs proposed 1,190 findings of ...