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Singer v. Hollander

decided: January 27, 1953.


Appeal from United States District Court for Dist. New Jersey, Forman, Judge.

Before Biggs, Chief Judge, and Goodrich and Staley, Circuit Judges.

Author: Goodrich

GOODRICH, Circuit Judge.

This suit under the federal antitrust statutes*fn1 marks another battle in a long internecine war carried on between the parties.*fn2 No doubt the fact that the litigants stem from common ancestors has added zest to the contest in their various legal jousts.

The facts which are the background of this particular piece of litigation have been stated so many times that we shall not waste good printers' ink and law library shelf space by a long recital of them. They were fully stated and considered by Judge Forman in the district court 110 F.Supp. 71, and were likewise set out in litigation between the parties in the case of A. Hollander & Son v. Imperial Fur Blending Corp., 1949, 2 N.J. 235, 66 A.2d 319. It is sufficient to say here that Singer entered Hollander's service in 1940 upon a five-year term of employment. Employer and employee executed a long, elaborate contract most of which is not important for our case here. The two provisions about which the plaintiff complains in federal court are sections 4 and 8 of the contract. One of them bound the employee not to engage in the fur-dyeing business for two years following the expiration of the five-year period. The other provided that the employer could, during the term of employment, "suspend" the employee from his position, paying him his salary during suspension, and that the employee would not, if, as and when suspended, engage in gainful occupation during the time. Singer was suspended during his term of employment, was paid, and what else he did during the time will be developed presently. Singer asserts that these two provisions are in violation of federal antitrust legislation and claims damages and injunctive relief. This the district court refused him and, on motion, entered summary judgment for the defendant.

In New Jersey state court litigation Singer claimed that the two-year provision was an unreasonable restraint of trade and that the provision for suspension was illegal because it deprived the world of his genius as a processor of rabbit skins during its operation. Both claims were denied by the Supreme Court of New Jersey and the Hollanders were awarded a sweeping victory by the decision cited above.

The plaintiff has had the benefit of ingenious counsel, no matter what his personal shortcomings may have been. It is argued here that in spite of having lost the battle in the New Jersey courts the field is open for another engagement in a federal forum. While what constitutes an unreasonable restraint of trade, it is said, is a common law matter, nevertheless a federal court, which has exclusive jurisdiction of suits under the Clayton Act,*fn3 must adopt its own test of what the common law is with regard to restraint of trade. Otherwise there might be as many tests for liability-creating conduct under antitrust statutes as there are states. Furthermore, it is argued, a state decision saying that under state law a given restraint is not unreasonable is not res judicata in a suit under the federal statutes because the subject matter is not the same. The New Jersey court in this case, the argument continues, could decide that this contract was not unreasonable under the law of New Jersey, but the legal conclusion that it is not unreasonable under the law of New Jersey is, it is urged, of no relevance in determining whether it is unreasonable under the federal statute.So, the plaintiff urges, he is entitled to have the employment contract looked at anew through federal eyes.

For the purpose of this case only we go along with this argument. The district judge did also. Assuming, then, that federal questions are to be looked into, what issues do they present? One is an interesting point of the sort lawyers like to call "nice," namely, do the antitrust statutes apply to contracts of employment? There certainly is an indication that they do from the Gardella case.*fn4 And, for the purpose of this litigation, we may assume that on a proper set of facts relief against a contract of employment which constitutes unreasonable restraint of trade, or a contract tending to monopoly and involving interstate commerce, might be had under the antitrust legislation. We assume, but we do not decide it. On the basis of that ad hoc assumption of law, there would follow the questions whether the restrictive provisions in the Singer-Hollander employment contract were such as to bring the agreement under the ban of federal antitrust law.

But before an examination of these interesting and difficult questions, there is the matter of an ubiquitous rule which cuts clear across this litigation. The district judge pointed it out.What he said was something the plaintiff obviously does not care to stress here, that is, that although the decision made by New Jersey's highest court on New Jersey law is not a decision governing either liability or immunity under federal statutes, nevertheless facts found through litigation in any form are in general conclusive upon the parties and those in privity with them in litigation thereafter. The district judge was clearly correct in this.

What he was applying is the branch of res judicata known as collateral estoppel.*fn5 It is growing law and has been the subject of very considerable development in the last decade by the Supreme Court of the United States.*fn6 A short paragraph from Stoll v. Gottlieb, 1938, 305 U.S. 165, 172, 59 S. Ct. 134, 138, 83 L. Ed. 104, states the essential reason for the rule:

"Courts to determine the rights of parties are an integral part of our system of government. It is just as important that there should be a place to end as that there should be a place to begin litigation. After a party has his day in court, with opportunity to present his evidence and his view of the law, a collateral attack upon the decision as to jurisdiction there rendered merely retries the issue previously determined. There is no reason to expect that the second decision will be more satisfactory than the first."

When the facts found in the New Jersey litigation between the parties are examined we think that the legal contentions made in the plaintiff's argument remain as interesting problems but give him no help.

In the New Jersey litigation the Supreme Court of New Jersey affirmed "the findings of fact made by the Vice Chancellor and incorporated in ...

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