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UNITED STATES v. SIMMONDS PRECISION PRODS.

June 30, 1970

United States of America, Plaintiff,
v.
Simmonds Precision Products, Inc., Defendant


MacMahon, D.J.


The opinion of the court was delivered by: MACMAHON

Memorandum

MACMAHON, D.J.:

 Local 452, International Union of Electrical, Radio and Machine Workers, AFL-CIO, moves to intervene under Rule 24(a)(2), Fed. R. Civ. P., for the purpose of opposing the entry of a final judgment on consent submitted by the government and Simmonds Precision Products, Inc. The proposed judgment would terminate an action commenced by the government alleging that defendant's acquisition in 1965 of the Liquidometer Corporation would substantially lessen competition and, therefore, violate Section 7 of the Clayton Act. Both Simmonds and Liquidometer are engaged in the manufacture and sale of fuel gauging systems for use in aircraft.

 A preliminary injunction entered by consent of both parties on January 15, 1968 enjoined defendant from commingling the assets of Liquidometer's Long Island City (LIC) division with defendant's other assets and directed defendant to continue to operate LIC in a manner that "will permit its disposition as a going business, including its own personnel, pursuant to a final order in the event plaintiff prevails . . . and an order requiring . . . divestiture is entered."

 The proposed final judgment requires divestiture either by immediate sale of LIC as an entity or, if that is not possible, by "piecemeal" sale over a four-year period. The final judgment also vacates the preliminary injunction and, therefore, would allow Simmonds to close LIC or to remove some of its work to Simmonds' plant in Vergennes, Vermont.

 The Union represents employees at LIC and seeks intervention to protect job security.

 The Union's interest in this action is, in one respect, the same as the original objective of the government as stated in the complaint and preliminary injunction, namely, to preserve Liquidometer's position as an independent competitor in the manufacture and sale of fuel gauging systems. The Union objects to this final judgment because it would, as an alternative method of divestiture, allow Simmonds to remove Liquidometer as a competitor by piecemeal sale of its assets.

 Under the 1966 amendment to Rule 24(a) allowing intervention as of right when a party claims an interest in the transaction which is the subject matter of the action and the United States Supreme Court's liberal interpretation of that language in Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 17 L. Ed. 2d 814, 87 S. Ct. 932 (1967), the Union's interest in the subject matter of this action is sufficient to allow it to intervene.

 Oral argument on this motion was heard on June 22, 1970 and immediately thereafter, because of Simmonds' precarious financial situation, an evidentiary hearing was held on the merits of the Union's opposition to the proposed final judgment.

 After the Union concluded its examination of the witnesses called on June 22, 1970, we recessed until June 24, 1970 in order to grant the Union additional time to subpoena any other witnesses it deemed necessary for a full presentation of its claim. The Union and the other two parties stipulated, however, as to the testimony of the additional witnesses and, therefore, obviated the necessity for continuing the hearing on June 24.

 We turn to consider the merits of the Union's opposition to the proposed final judgment.

 The Union's ultimate goal quite obviously is to keep LIC functioning as a unit. It wants to prevent either a piecemeal sale or removal of the work done at LIC to Simmonds' other plant at Vergennes, Vermont. The Union argues that, in essence, this was the government's original goal and that the proposed judgment is objectionable because it does not assure Liquidometer's presence in the market as a competitor.

 This would, indeed, be a rather persuasive argument if it were not for substantial changes in the economic condition of Simmonds, LIC and the entire relevant market.

 When Simmonds acquired Liquidometer, these two corporations and Honeywell were the only three competitors in the market. Simmonds and Liquidometer were the two largest. Since then, two new competitors, Gull Airborne Instruments, Inc. and Consolidated Airborne Systems, Inc., have entered the market, a ...


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