Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ARGUS INC. v. EASTMAN KODAK CO.

October 28, 1982

ARGUS INCORPORATED, et al., Plaintiffs,
v.
EASTMAN KODAK COMPANY, et al., Defendants


Gagliardi, D.J.


The opinion of the court was delivered by: GAGLIARDI

GAGLIARDI, D.J.

Plaintiffs Argus Incorporated, Interphoto Corporation, and Sugra Northeast, Incorporated (collectively referred to hereinafter as "Argus") *fn1" commenced this action for monetary and injunctive relief against Eastman Kodak Company ("Kodak"), GTE Sylvania Incorporated ("Sylvania"), General Electric Company ("G.E."), and several individual officers, directors and employees of Kodak, Sylvania and G.E. *fn2" Plaintiffs seek treble damages and injunctive relief under sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, for alleged violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Sylvania has moved for summary judgment and Kodak and G.E. have moved for partial summary judgment (1) dismissing all claims based upon products which were introduced to the public prior to August 27, 1975 on the ground that such claims are barred by the applicable statute of limitations, and (2) dismissing the claim that Kodak conspired with G.E. and Sylvania in violation of section 1 of the Sherman Act in connection with the development and introduction of the "Sensalite" camera on the ground that the undisputed facts demonstrate the absence of any conspiracy. In addition, Kodak has moved for summary judgment dismissing all of plaintiffs' monopolization claims under section 2 of the Sherman Act on the ground that, as a matter of law, plaintiffs' relevant allegations do not constitute antitrust violations under the Second Circuit's decision in Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093, 62 L. Ed. 2d 783, 100 S. Ct. 1061 (1980). Also before the court are motions by plaintiffs (1) for leave to file a supplemental complaint, and (2) for partial summary judgment precluding Kodak, under the doctrine of offensive collateral estoppel, from relitigating or denying certain facts allegedly determined in Berkey.

 Background

 Argus and Kodak are competitors in several markets within the amateur photographic equipment business. Argus contends that Kodak has dominated the industry and, in violation of section 2 of the Sherman Act, has unlawfully wielded its monopoly power in the domestic markets for film in order to monopolize the markets for 8 millimeter cameras, conventional still cameras, slide projectors and other photographic equipment. Argus also contends that Kodak engaged in a prolonged joint development conspiracy with G.E. and Sylvania, which manufactured illumination devices compatible with Kodak equipment, to restrain trade in the markets for these products to the detriment of plaintiffs. *fn3" Many of the claims that are asserted by Argus are similar or identical to claims earlier asserted by Berkey Photo, Inc. ("Berkey") and GAF Corporation ("GAF") in prior antitrust actions filed in this district. See Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093, 62 L. Ed. 2d 783, 100 S. Ct. 1061 (1980); GAF Corp. v. Eastman Kodak Co., 519 F. Supp. 1203 (S.D.N.Y. 1981). *fn4"

 Discussion

 I. Statute of Limitations

 Under 15 U.S.C. § 15b, private antitrust actions for damages pursuant to section 4 of the Clayton Act are "forever barred unless commenced within four years after the cause of action accrued." Since the complaint in the instant case was filed on August 27, 1979, any cause of action asserted therein which accrued before August 27, 1975 is barred by the statute of limitations. *fn5" Defendants assert that the following claims are time barred: (1) section 1 claims premised upon an alleged "flashcube conspiracy" in which Kodak and Sylvania conspired secretly to develop a new battery-powered flash device (the "flashcube") which was compatible only with a modified Kodak 126 instamatic camera; (2) section 1 claims premised upon an alleged "magicube conspiracy" in which Kodak and Sylvania conspired secretly to develop a percussion fired flash device requiring no batteries (the "magicube") which was compatible only with a modified Kodak 126 instamatic camera; (3) section 1 claims premised upon an alleged "flipflash conspiracy" in which Kodak and G.E. conspired secretly to develop a new flash device capable of being flashed by a piezoelectric crystal (the "flipflash") which was compatible only with modified Kodak 110 and 126 pocket instamatic cameras; and (4) all section 2 monopolization claims premised upon products introduced prior to August 27, 1975, i.e., claims regarding the 126 still photography system, the Super-8 movie system, the XL movie system, the 110 still photography system, and the Ektasound movie system. The decisive issue regarding defendants' motions for summary judgment on these claims is whether the record establishes, as a matter of law, that the causes of action underlying these claims accrued prior to August 27, 1975. Hence, the court first turns to the law governing the accrual of causes of action under the applicable statute of limitations and then applies the relevant principles to each of the above claims.

 In Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 28 L. Ed. 2d 77, 91 S. Ct. 795 (1971), the Supreme Court set forth the law governing the time at which an antitrust cause of action accrues. The Court there stated that:

 
Generally, a cause of action accrues and the statute begins to run when a defendant commits an act that injures a plaintiff's business. . . . In the context of a continuing conspiracy to violate the antitrust laws . . . this has usually been understood to mean that each time a plaintiff is injured by an act of the defendants a cause of action accrues to him to recover the damages caused by that act and that, as to those damages, the statute of limitations runs from the commission of the act.

 401 U.S. at 338. Therefore, the general rule precludes recovery for any injuries resulting from acts committed prior to the commencement of the limitations period. The Court further held, however, that the general rule does not apply where, as a result of acts committed prior to the limitations period, the plaintiff sustained damages within the limitations period that previously were unrecoverable because their accrual was speculative or their amount and nature unprovable. Under these circumstances, the cause of action accrues on the date the injuries are suffered. Id. at 339; see International Railway of Central America v. United Brands Co., 532 F.2d 231, 247 (2d Cir.), cert. denied, 429 U.S. 835, 50 L. Ed. 2d 100, 97 S. Ct. 101 (1976).

 Accordingly, plaintiffs' claims are time-barred unless the acts complained of (1) occurred within the limitations period, i.e., after August 27, 1975, or (2) occurred outside the limitations period, but caused plaintiffs to suffer damages within the limitations period and such damages were too speculative to be recoverable prior thereto. Of course, in the context of these motions for summary judgment, defendants must demonstrate the absence of any genuine issues of material fact bearing upon the asserted statute of limitations defenses. Furthermore, the court must resolve all ambiguities and draw all reasonable inferences in favor of the plaintiffs. United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962) (per curiam); American International Group, Inc. v. London American International Corp. Ltd., 664 F.2d 348, 351 (2d Cir. 1981). The court will first apply these principles to the relevant section 1 conspiracy claims and then turn to the section 2 monopolization claims.

 The Flashcube Conspiracy

 The complaint alleges that Kodak conspired with Sylvania in order to prevent the development of the flashcube from being disclosed to other camera manufacturers until Kodak had developed a compatible camera. The essential complaint is that by virtue of this conspiracy, Kodak for a significant period of time was the only camera manufacturer able to sell cameras to consumers who desired to use the highly promoted flashcubes. It is undisputed that the flashcube and the compatible Kodak cameras were introduced in July 1965, more than ten years prior to the commencement of the limitations period.

 Defendants Sylvania and Kodak argue that any wrongful acts in connection with the failure to predisclose the flashcube necessarily ended when the product was introduced to the public in 1965. They further argue that the record establishes that plaintiffs did not sustain any injury within the limitations period by virtue of the alleged flashcube conspiracy and that even if such injury were sustained, the damages were not incapable of being proven prior to August 27, 1975. Therefore, defendants argue, the flashcube conspiracy claim is time-barred under the principles set forth by the Supreme Court in Zenith. Plaintiffs counter that there are genuine issues of fact which preclude the entry of summary judgment regarding whether overt acts in furtherance of the conspiracy were committed after August 27, 1975, whether plaintiffs sustained injury during the limitations period, and whether the damages thus sustained were speculative as of August 27, 1975.

 The court holds that the flashcube conspiracy claims are barred by the statute of limitations. Plaintiffs' claim that overt acts continued beyond August 27, 1975 is based upon their assertion that the flashcube conspiracy was actually one part of a larger "joint development" conspiracy among the defendants and that subsequent conspiratorial acts by the defendants save the flashcube claim from the bar of the statute. This argument ignores the basic teaching of Zenith that each unlawful act committed by defendants gives rise to a separate cause of action which will be barred by the statute unless it accrued within the limitations period. 401 U.S. at 338. The conduct complained of in the section of the complaint detailing the "flashcube conspiracy" concerns the failure of Kodak and Sylvania to disclose the flashcube development until Kodak was ready to market a compatible camera. The court agrees with defendants that any conduct in furtherance of this unlawful enterprise could not possibly have continued beyond July 1965 when the product admittedly was disclosed to the public at large. Plaintiffs cannot avoid the bar of the statute of limitations merely by characterizing each claim as part of a broad ongoing conspiracy continuing into the limitations period. See Zenith, supra, 401 U.S. at 338.

 Since the acts complained of in the alleged flashcube conspiracy occurred more than ten years prior to the limitations period, plaintiffs cannot sustain their cause of action unless they can show both that they were injured within the limitations period and that the resulting damages were speculative prior thereto. In order to demonstrate the absence of any such injury in the limitations period, defendants point inter alia to the following evidence in the record: (1) plaintiffs' admission that Argus developed its own flashcube compatible camera approximately one year after the flashcube was introduced to the public; (2) Argus' statement in answers to interrogatories indicating that sufficient time had elapsed by the fiscal year ending March 31, 1969 to permit Argus' sales of flashcube compatible cameras in that year to be used as an estimate of what sales would have been in prior years absent the flashcube conspiracy; (3) plaintiffs' assertion that the introduction of the magicube in 1970 obsoleted existing product inventories of 126 cameras; and (4) a letter from Argus' general manager indicating that the company's flashcube compatible cameras were discontinued in 1971.

 In light of defendants' convincing presentation that no injury was suffered by Argus during the limitations period, plaintiffs are obligated to "'set forth specific facts showing that there is a genuine issue for trial.' Such an issue is not created by a mere allegation in the pleadings . . . nor by surmise or conjecture on the part of the litigants. . . ." United States v. Potamkin Cadillac Corp., 689 F.2d 379, 381 (2d Cir. 1982) (quoting Rule 56(e), Fed. R. Civ. P.). Since the voluminous affidavits submitted by plaintiffs are devoid of facts indicating that the damages to Argus from the flashcube conspiracy continued beyond August 27, 1975, defendants' motion for summary judgment as to the flashcube conspiracy claims must be granted.

 The Magicube Conspiracy

 As with the flashcube, Argus alleges that Kodak and Sylvania conspired to prevent the magicube from being disclosed to other camera manufacturers until Kodak developed a compatible camera. Since the claims regarding the magicube are essentially the same as those regarding the flashcube, much of the analysis set forth above applies with equal force here. It is undisputed that the magicube and the compatible Kodak cameras were introduced in June 1970, more than five years prior to the commencement of the limitations period.

 Since the relevant conduct pertaining to the magicube conspiracy occurred prior to the limitations period, *fn6" plaintiffs once again must establish that they were injured during the limitations period and that the resulting damages were speculative prior thereto. Defendants have attempted to establish the absence of injury in the limitations period through the following: (1) plaintiffs' admission that Argus developed its own magicube compatible camera approximately one year after the magicube was introduced to the public; and (2) statements by plaintiffs indicating that the anticompetitive effects of the flashcube conspiracy terminated within three years after Argus introduced a flashcube compatible camera. Defendants argue that plaintiffs' admissions regarding the flashcube are applicable by analogy to the anticompetitive effect of the magicube conspiracy. *fn7"

 The court finds defendants' presentation, which requires the court to infer that the duration of the injury from the flashcube conspiracy was the same as that from the magicube, is insufficient to defeat plaintiffs well-pleaded allegation that they suffered injury in the limitations period from the magicube conspiracy. Defendants are still entitled to summary judgment, however, if they can establish that the damages were not too speculative to be recoverable prior to the commencement of the limitations period.

 Defendants argue that prior to August 27, 1975, Argus had accumulated more than four years of sales data regarding its own magicube compatible cameras, and that this sales history was clearly an adequate basis for a reasonable projection of future sales and damages resulting from the magicube conspiracy. Argus argues that any projections made prior to August 27, 1975 were completely speculative due to various uncertainties in the relevant market and in the economy.

 The court finds that the facts regarding the industry, the relevant markets and the available historical data as set forth in plaintiffs' own affidavits establish beyond any doubt that plaintiffs' damages were sufficiently capable of proof to be recoverable prior to the commencement of the limitation period. These affidavits indicate that it generally takes one year for a competing manufacturer such as Argus to introduce a competitive product after Kodak has introduced a new product. Following the introduction of the competing product, consumer reactions can be evaluated after the Christmas selling and return seasons are completed. Hence, there is by plaintiffs' own admission at least a preliminary factual basis for evaluating consumer ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.