INTERLOCUTORY APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. M.D.L. No. 189)
Before Seitz, Chief Judge, and Maris and Gibbons, Circuit Judges.
This certified interlocutory appeal from a pretrial order of the district court raises an issue that currently is the subject of much debate: In an action for treble damages under the antitrust and antidumping laws, do the parties have a right to trial by jury without regard to the practical ability of a jury to decide the case properly?
This litigation began in the District of New Jersey with the complaint of National Union Electric Corp. (NUE). A corporate successor to the Emerson Radio Co., NUE was a major domestic producer of television receivers until February 1970. The following December, it filed the first complaint of this litigation, charging several of its Japanese competitors with violations of the antitrust laws and the laws governing competition in international trade. The complaint names as defendants the Mitsubishi Corp., which is a Japanese trading company, and seven Japanese television manufacturers: Matsushita Electric Industrial Co., Toshiba Corp., Hitachi, Ltd., Sharp Corp., Mitsubishi Electric Corp., Sanyo Electric Co., and Sony Corp. Nine subsidiaries of these companies also are named as defendants in NUE's action.*fn1
NUE alleges that the defendants have sought to drive American television producers out of the American market by selling televisions at artificially depressed prices. Charging that defendants have maintained lower prices for televisions sold in the United States than for comparable televisions sold in Japan, NUE asserts violations of the 1916 Antidumping Act, 15 U.S.C. § 72 (1976). NUE further alleges that these dumping practices are part of a large conspiracy in which defendants have agreed among themselves and have acted in concert with over 90 coconspirators around the world to maintain artificially low prices for Japanese televisions sold in the United States. Defendants allegedly have facilitated and financed this scheme by fixing high prices for televisions sold in Japan, a practice made possible by concerted action and protection afforded by the Japanese government. NUE asserts that this conduct violates §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1976), and § 73 of the Wilson Tariff Act, 15 U.S.C. § 8 (1976), which applies the basic proscriptions of the Sherman Act to trade in imports.
NUE seeks treble damages for injuries sustained between 1966 and 1970. The remedy of treble damages is made available for the dumping claims by the Antidumping Act itself, 15 U.S.C. § 72 (1976), and for the Sherman and Wilson Tariff Act claims by § 4 of the Clayton Act, 15 U.S.C. § 15 (1976). NUE also seeks injunctive relief.
Zenith Radio Corp., a major domestic producer of consumer electronic products, filed the second complaint of this litigation in 1974 in the Eastern District of Pennsylvania. The Zenith complaint named all of the defendants of the NUE action, a few additional subsidiaries,*fn2 and two American companies: Motorola, Inc., and Sears, Roebuck, and Co. Two of the common defendants, Sony Corp. and its American sales subsidiary, Sony Corp. of America, subsequently reached a complete settlement with Zenith. They are now defendants only in the NUE action.
The Zenith complaint repeats NUE's allegations of dumping, conspiracy, and intent to destroy domestic competition in the American market, but Zenith's allegations are broader in two respects. First, Zenith seeks damages for injuries sustained over a longer period, from 1968 through 1977, as opposed to a period of 1966 through 1970 in NUE's complaint. Second, Zenith's allegations cover not only televisions but also radios, phonographs, tape and audio equipment, and electronic components. In addition, Zenith charges defendants with discriminating in price among American purchasers, in violation of the Robinson-Patman Act, 15 U.S.C. § 13(a) (1976). Finally, Zenith asserts that the Matsushita and Sanyo defendants have violated § 7 of the Clayton Act, 15 U.S.C. § 18 (1976), by acquiring interests in domestic producers of consumer electronic products previously held by Motorola and Sears. Like NUE, Zenith prays for treble damages and injunctive relief.
A group of the Japanese defendants in the Zenith action filed two counterclaims. The first charges Zenith and its distributors throughout the United States with territorial allocations, horizontal and vertical price-fixing schemes, "key dealer preferences," and price discrimination, in violation of §§ 1 and 2 of the Sherman Act and the Robinson-Patman Act, 15 U.S.C. §§ 1, 2, 13(a) (1976). The second counterclaim charges Zenith and about 30 coconspirators with maintaining a program of sham litigation against Zenith's competitors. See Otter Tail Power Co. v. United States, 410 U.S. 366, 379-80, 93 S. Ct. 1022, 35 L. Ed. 2d 359 (1973).
Sears filed a separate counterclaim challenging Zenith's advertising claims that Zenith color televisions are manufactured in the United States. Sears claims that the advertisements create an impression that all components of Zenith's color televisions and other consumer electronic products are of American origin, when some components are manufactured abroad. Sears asserts a violation of § 43 of the Lanham Act, 15 U.S.C. § 1125 (1976), which prohibits false designations of origin, and prays for damages and injunctive relief.
Shortly after the filing of the Zenith action, the two suits were consolidated for pretrial proceedings in the Eastern District of Pennsylvania. In re Japanese Electronic Products Antitrust Litigation, 388 F. Supp. 565 (Jud.Pan.Mult.Lit.1975). Subsequently, the district court, on NUE's motion, consolidated the two suits for trial. The court denied the motion of the Sony defendants for a separate trial on NUE's claims against them. Zenith Radio Corp. v. Matsushita Electric Industrial Co., 478 F. Supp. 889 (E.D.Pa. 1979) (Pretrial Order No. 182).
Both NUE and Zenith made timely demands for jury trial. Fourteen of the defendants moved to strike the demands, arguing that the case is too large and complex for a jury.*fn3 The district court denied their motion, concluding that the seventh amendment does not recognize the complexity of a lawsuit as a valid reason for denying a jury trial. The court explained its reasoning in a thorough and scholarly opinion, Zenith Radio Corp. v. Matsushita Electric Industrial Corp., 478 F. Supp. 889 (E.D.Pa.1979), and certified its order for interlocutory appeal under 28 U.S.C. § 1292(b) (1976). See 478 F. Supp. at 942-46. We have permitted the appeal to determine whether the district court's reason for denying appellants' motion was correct.
Appellants argue that the proof of the foregoing claims will be too burdensome and complicated for a jury. They have cited several dimensions of complexity.
The district court accepted one of appellants' basic contentions: the trial will be protracted. The court predicted that the trial would last a full year. It noted that the parties are nearing the end of discovery, which after nine years has produced millions of documents and over 100,000 pages of depositions. The court did not estimate how much of this evidence will be introduced at trial.
Beyond these observations of the district court, we have only the parties' divergent predictions of the proof that appellees' claims call for. We understand their primary disagreements to concern four general sources of complexity: proof of the Antidumping Act claims, proof of the alleged conspiracy, resolution of a number of financial issues, and understanding of several conceptually difficult legal and factual issues.
Under the Antidumping Act, appellees must prove that the defendants made sales of articles in the United States at a price lower than the price of "such articles" in Japan. 15 U.S.C. § 72 (1976).*fn4 Appellants read the Act to permit price comparisons only for identical products sold in the two countries. During the relevant periods, defendants produced thousands of technically distinct models of the products covered by this litigation. They contend that to identify the products appropriate for price comparisons, the jury will have to review the technical features of thousands of different models and understand how differences between the models relate to cost of manufacture, product performance, and marketability. Appellees construe the Antidumping Act to permit price comparisons between functionally equivalent products, such as all portable color televisions with particular screen size and VHF-UHF channel selection. They contend that a jury could identify such functionally equivalent products without massive or highly technical proof.
The conspiracy charged in this suit is massive. Appellees allege that it has lasted for at least 30 years, involved almost 100 firms around the world, and affected international trade in several consumer electronic products. Appellants argue that litigation of the existence and operation of this conspiracy will produce an enormous amount of evidence for the jury to consider. They see further difficulties in the fact that the alleged conspiracy involved Japanese businessmen and that its operations included restraint of trade in Japanese markets. Appellants fear that a jury might not understand the evidence due to the difficulty of understanding business practices and market conditions in Japan. Appellees respond that proof of the conspiracy and its operations will be simple because the facts are well established in unambiguous documentation. Appellees foresee no difficulties due to allegations involving Japan. They characterize the alleged conspiracy as "classic," much like combinations ordinarily revealed in Sherman Act cases.
Some parts of the case will require the jury to resolve a series of financial issues. Appellants have highlighted three such parts. First, for the Antidumping Act claims, the jury will have to decide whether the price of an article sold in the United States is "substantially less than the actual market value or wholesale price" in Japan and whether a defendant has maintained differential pricing "commonly and systematically." 15 U.S.C. § 72 (1976). This inquiry may be complicated by several influences on prices that might have to be factored out before comparing prices, such as currency fluctuations and different marketing techniques in the two countries. Second, appellees allege that the conspirators disguised their artificially low prices in the United States by a series of complicated rebate schemes. Appellants say that the jury will be able to test this allegation only by reviewing the circumstances surrounding thousands of separate transactions. Third, appellees intend to show injury by proving that they lowered their own prices in response to defendants' artificially low prices and that they lost sales to defendants. These allegations will require evidence of appellees' transactions and may raise issues regarding appellees' pricing policies and marketing techniques and the quality of appellees' products.
Appellants contend that litigation of these three parts of the case will produce an enormous mass of financial documentation for the jury to work through. They also contend that the jury will need the assistance of substantial amounts of expert testimony on accounting, marketing, and other technical matters. Appellees reject this prediction, arguing that all the relevant financial evidence can be submitted neatly in computer printouts with accompanying summaries. They do not foresee great problems in the jury's understanding of the evidence.
Finally, appellants argue that the complexity of the suit will be compounded by the presence of some issues that conceptually are very difficult. The claims under both the Antidumping Act and § 2 of the Sherman Act will require proof of predatory intent. 15 U.S.C. § 72 (1976); United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945). On the § 2 claims and on Zenith's claims under § 7 of the Clayton Act, appellees will have to prove relevant product markets, relevant geographic markets, and market shares. See Brown Shoe Co. v. United States, 370 U.S. 294, 82 S. Ct. 1502, 8 L. Ed. 2d 510 (1962); United States v. Aluminum Co. of America, supra. Zenith's claims under the Robinson-Patman Act will raise issues of whether products sold to different customers are of a "like grade and quality" and whether any price differences are cost justified. 15 U.S.C. § 13(a) (1976).
The district court did not resolve these and other specific points of dispute between the parties, except to say, "We expect that the actual size of complexity of this litigation falls somewhere in between the two extremes portrayed by the parties." 478 F. Supp. at 899. The court added, "By any yardstick, this case is at least as large and complex as the others in which jury demands have been struck (on grounds of complexity)." Id. It then proceeded to the conclusion that the seventh amendment preserves the right to jury trial in this suit regardless of its complexity. Id. at 942. That construction of the seventh amendment is the focus of this appeal.
Appellees offer a statutory ground for affirming the district court. They assert that the Clayton Act grants a right to jury trial even if the extraordinary complexity of the suit renders the seventh amendment guarantee inapplicable. In other words, they argue for a statutory right to jury trial in suits where the seventh amendment might not guarantee the right. Because this court should avoid unnecessary issues of constitutional interpretation, we shall consider this argument first.
Appellees rely first on the language of the Clayton Act. Although the Act makes no mention of jury trials or of any trial procedures, appellees contend that the right is implicit in the language of § 4 that any person who is injured by a violation of the antitrust laws "may sue therefore . . . and shall recover threefold damages." 15 U.S.C. § 15 (1976).
We do not read this language to have the broad implications suggested by appellees. The only association between the remedy provided in the Clayton Act and jury trials is incidental: Prevailing rules of practice at the time of the enactment of the Clayton Act almost surely would have provided a jury trial in all suits for treble damages under the Act. Courts of equity considered treble damages punitive in nature and generally refused to award punitive relief.*fn5 See Decorative Stone Co. v. Building Trades Council, 23 F.2d 426 (2d Cir.), cert. denied, 277 U.S. 594, 48 S. Ct. 530, 72 L. Ed. 1005 (1928). Consequently, suits for treble damages were confined to actions at law, and the seventh amendment was read to guarantee a right to jury trial. However, nothing in the Clayton Act suggests that Congress intended to write this incident of the procedural rules of 1914 into the statute. It is more likely that Congress would allow the courts to try suits for treble damages in accordance with subsequent developments in procedural rules derived from the Constitution and from court rules. Therefore, we do not read the authorization of suits for "threefold damages" to imply a right to jury trial.
Our reasoning is consistent with Lorillard v. Pons, 434 U.S. 575, 98 S. Ct. 866, 55 L. Ed. 2d 40 (1978), in which the Supreme Court found an implicit guarantee of jury trials in the section of the Age Discrimination in Employment Act authorizing private suits to recover lost wages. § 7(c), 29 U.S.C. § 626(c) (1976). The Court found "a significant indication of Congress' intent in its directive that the ADEA be enforced in accordance with the "powers, remedies, and procedures ' of the FLSA (Fair Labor Standards Act)." 434 U.S. at 580, 98 S. Ct. at 869 (emphasis supplied by Supreme Court) (quoting § 7(b), 29 U.S.C. § 626(b)). Noting that the right to jury trial in private actions under the FLSA was well established, the Court read this directive as incorporating that right into the ADEA. Id. at 580-83, 98 S. Ct. at 869-71. The Clayton Act contains no similar directive to incorporate a specific enforcement scheme that includes jury trials. Indeed the lack of any reference to trial procedures in the Clayton Act, in contrast to the ADEA, strongly suggests that Congress never understood the provisions of the Act to prescribe any of the procedures to be followed in a private enforcement action.
As a second source of support for their statutory argument, appellees have cited several portions of the legislative histories of the antitrust laws indicating that members of the enacting congresses expected that suits for treble damages would be tried to juries. Appellees have cited passages from the debate on the Clayton Act's provisions for treble damage actions and from the debate on a similarly worded provision in the Sherman Act. Ch. 647, § 7, 26 Stat. 210 (1890).
During the discussion of the Clayton Act in the House of Representatives, some members objected to a provision that would make a court's findings in a government suit for an injunction conclusive in a subsequent private enforcement action. Cf. Clayton Act, § 5(a), 15 U.S.C. § 16(a) (1976) (enacted version established such findings as prima facie proof). The effect of this provision, they said, would be a denial of the right to jury trial in a subsequent suit for treble damages. However, the congressmen who spoke on the subject state plainly that this right to jury trial derives from the seventh amendment. Their remarks suggest no understanding of the proposed Clayton Act as establishing a statutory right to jury trial. 51 Cong.Rec. 9488-91 (1914) (remarks of Reps. Scott, Floyd, Volstead, and Green).
The Senate's debate on the earlier Sherman Act provision contains a few passages in which a senator mentions, in the course of discussing some other issue, that juries will hear treble damage actions. One senator pointed to the seventh amendment as the basis for his assumption that trials would be before juries. 21 Cong.Rec. 2643 (1890) (remarks of Sen. Gray). The others made no mention of the basis for their assumptions. Id. 1767, 3150 (remarks of Sen. George); id. 3149 (remarks of Sen. Morgen). These passing remarks in the Senate's debate do not allow an inference that Congress intended that the Sherman Act itself would guarantee jury trials where the seventh amendment would not.
In short, the legislative history indicates nothing more than the expectation of several congressmen that the seventh amendment generally would guarantee a right to jury trial in treble damage actions under the antitrust laws. We are unable to translate their expectations of the ordinary application of the seventh amendment into an intention to require jury trial by statute.
Appellees seek further support in a circuit court opinion in a treble damage action under the Sherman Act. Meeker v. Lehigh Valley R. R., 162 F. 354 (C.C.S.D.N.Y.1908). Appellees read this opinion as finding a jury trial requirement in the Sherman Act. They argue that Congress' enactment of the Sherman Act's treble damage suit provision in the Clayton Act constituted legislative approval of this interpretation. We are not persuaded. The entire discussion of the jury trial issue in the Meeker opinion consists of one sentence: "This is an action at law, and the parties are entitled to a jury trial." Id. at 357. We read this sentence not as an interpretation of the statute but as an application of the seventh amendment. See part IV infra. Even if our reading is incorrect, the status of Meeker as a case of statutory interpretation is so vague that we cannot conclude that Congress tacitly approved of it as an interpretation of the Sherman Act.
Finally, appellees argue that the Supreme Court recognized a statutory right to jury trial in Fleitmann v. Welsbach Street Lighting Co., 240 U.S. 27, 36 S. Ct. 233, 60 L. Ed. 505 (1916). A shareholder of a corporation allegedly injured by a Sherman Act violation brought a derivative suit, under the Sherman Act,*fn6 seeking treble damages for the corporation. Because the shareholder could file a derivative action only in equity, this manner of proceeding denied the defendant a right to a jury trial. The Court held that the statute did not authorize a suit in equity:
(W)e agree with the courts below that when a penalty of triple damages is sought to be inflicted, the statute should not be read as attempting to authorize liability to be enforced otherwise than through the verdict of a jury in a court of common law. On the contrary it plainly provides the latter remedy and it provides no other.
Id. at 29, 36 S. Ct. at 234. The Court affirmed the dismissal of the suit.
We do not read Fleitmann to recognize a statutory right to jury trials in suits not subject to the seventh amendment. The Court's ruling is a restriction on the scope of relief authorized by the Sherman Act: the Act did not authorize suits in equity for treble damages. The reason for this narrow construction of the statute was to preserve defendants' right to a jury trial. However, having confined suits for treble damages to actions at law, the Court did not rule that the right to jury trial in these legal suits derived from the Sherman Act rather than from the seventh amendment. The opinion of the Court of Appeals in Fleitmann states: "(A)n action to recover treble damages under section 7 of the (Sherman Act) must be an action at law, where the defendants have the constitutional right to a jury trial." Fleitmann v. United Gas Improvement Co., 211 F. 103, 105 (2d Cir. 1914) (emphasis added). The Supreme Court's opinion adds nothing on this point except to express general agreement with the Court of Appeals. 240 U.S. at 29, 36 S. Ct. at 234. Therefore, in a suit for treble damages that is not triable at law and hence not subject to the seventh amendment guarantee of jury trial, the mandate of Fleitmann is not, as appellees suggest, to try the suit to a jury on the authority of the statute. It is to dismiss the suit. Cf. United Copper Securities Co. v. Amalgamated Copper Co., 244 U.S. 261, 37 S. Ct. 509, 61 L. Ed. 1119 (1917) (Sherman Act did not authorize trial of derivative actions at law and before a jury). Fleitmann does not recognize the statutory right for which appellees argue.
Our reading of Fleitmann raises an important collateral issue: If appellants are correct in arguing that the seventh amendment permits trial of this suit without a jury because of its extraordinary complexity, must the complaints be dismissed for failing to state a cause of action? Although the broad language in Fleitmann quoted above might seem to require that result, we conclude that dismissal is not necessarily mandated.
We think it fair to say that when the Supreme Court decided Fleitmann it assumed that the seventh amendment would guarantee a right to jury trial in all treble damage actions tried at law. At that time, none of the recognized circumstances in which a court of law could deny a jury trial would arise in these actions. See, e. g., Bauman v. Ross, 167 U.S. 548, 593, 17 S. Ct. 966, 983, 42 L. Ed. 270 (1897) (suits to recover compensation for property taken for public use); McElrath v. United States, 102 U.S. 426, 26 L. Ed. 189 (1880) (suits at law against the United States). Thus, the Court did not specifically face the issue of whether the Sherman Act permitted a suit for treble damages at law without a jury if the Constitution would not require a jury.
Appellants offer two grounds for ruling that the seventh amendment does not guarantee a jury trial in this case, one of which does not depend upon characterizing the suit as equitable. That is the argument based on the due process clause. See Parts VI & VII infra. If this limitation on the seventh amendment is valid, Fleitmann's rule against suits in equity would not require dismissal. Given our conclusion that the language and legislative history of the Clayton Act do not reveal any intention to prescribe the mode of trial in private treble damage actions, we see no reason why the Clayton Act would not permit trial of such a case to the court. In fact, it would be most irrational if antitrust defendants could escape liability entirely by making their illegal activities too difficult to allow trial by jury.
In summary, we are unable to find a statutory right to jury trial that applies where the seventh amendment does not require a jury trial.*fn7 The language of the Clayton Act alone is insufficient to permit an inference that Congress intended to provide for such a right. The legislative histories of the Clayton and Sherman Acts reveal no evidence of such an intent. Finally, no judicial decision ...