U.S. Department
of Justice
Exhibit A
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| EXHIBIT A In Equity No. 9022 In the District Court of the United States United States of America, Petitioner v. Ludowici-Celadon Company Et Al., Defendants UNITED STATES OF AMERICA, William D. Mitchell, HORACE R. LAMB, U.S. GOVERNMENT PRINTING OFFICE : 1929 Filed Mar. 12, 1929 In the District Court of the United States In Equity No. United States of America, Petitioner v. Ludowici-Celadon Company, James M. Williams, R. E. Sturtevant, A. N. Sorenson, Horace White, J. W. Stephens, Arthur W. Applewhite and George J. Lawler, doing business under the firm name and style of Applewhite and Lawler Company, Geroge T. Stafford, F. W. Holcomb, A. B. Byrnes, A. B. Sandoz, George S. Mears, R. T. Cole, H. F. Beyer, Alfred Lo Cascio, and B. A. Campbell, defendants. PETITION To The Honorable Judges Of The District Court of the United States for the Northern District of Illinois, Eastern Division; Petitioner, United States of America, by its attorney for the Northern District of Illinois, Eastern Division, acting under the direction of the Attorney General of the United States, brings this proceeding in equity against: I THE DEFENDANTS The Ludowici-Celadon Company is a corporation organized and existing under and by virtue of the laws of the State of Illinois, (sometimes referred to hereinafter as the "corporate defendant"), which transacts business in this district and is found doing business therein at No. 104 South Michigan Avenue, in the city of Chicago, in this district and in this division, where its place of business is in charge of Mr. James M. Williams, its president; James M. Williams, a citizen and resident of the the State of Illinois, having a place of business at No. 104 South Michigan Avenue, in the City of Chicago, therein; R. E. Sturtevant, a citizen and resident of the State of Illinois, having a place of business at No. 104 South Michigan Avenue, in the City of Chicago, therein; A. N. Sorenson, a citizen and resident of the State of Illinois, having a place of business at No. 104 South Michigan Avenue, in the City of Chicago, therein; Horace White, a citizen and resident of the State of Louisiana, having a place of business at No. 833 Howard Avenue, in the City of New Orleans, therein; J. W. Stephens, a citizen and resident of the State of Texas, who controls, through stock ownership, J. W. Stephens Roofing Tile Corporation, and having a place of business in the City of Dallas, therein; Arthur W. Applewhite and George J. Lawler, both being citizens and residents of the State of Georgia, doing business as a co-partnership, under the firm-name and style of Applewhite and Lawler Company, and having a place of business at No. 1316 Citizens and Southern Bank Building, in the City of Atlanta, therein; George T. Stafford, a citizen and resident of the State of Alabama, having a place of business at No. 408½ North Ninteenth Street, in the City of Birmingham, therein; F. W. Holcomb, a citizen and resident of the State of Ohio, and having a place of business in the Industries Building, in the City of Cincinnati, therein; A. B. Byrnes, a citizen and resident of the State of Minnesota, having a place of business at No. 3635 South Columbus Avenue, in the City of Minneapolis, therein; A. B Sandoz, a citizen and resident of the State of Louisiana, and having a place of business at Room 200, Southern Building No. 833 Howard Avenue, in the City of New Orleans, therein; George S. Hears, a citizen and resident of the State of Florida, and having a place of business in the Florida National Bank Building (care of Interlocking Tile Co.) in the City of Jacksonville, therein; R. T. Cole, a citizen and resident of the State of Georgia, having a place of business at Room No. 1316 Citizens and Southern Bank Building (care of Applewhite and Lawler Company) in the City of Atlanta, therein; H. VF. Beyer, a citizen and resident of the State of New York, having a place of business at No. 565 Fifth Avenue, in the City of New York, therein; Alfred Lo Cascio, a citizen and resident of the State of Massachusetts, having a place of business at No. 120 Boylston Street (care of E. Stanley Wires Co.) in the City of Boston, therein; and B. A. Campbell, a citizen and resident of the State of Illinois, having a plaee of business at No. 104 South Michigan Avenue, in the City of Chicago, therein. II PURPOSE OF THE PETITION This proceeding is brought under the provisions of Section 4 of the AcT of Congress of July 2, 1890, entitled "An ACt To protect trade and commerce against unlawful restraints and monopolies" (26 Stat. 209), commonly known as the "Sherman Anti-Trust Act", to prevent and restrain defendants from further engaging in this district and elsewhere in the United States in violation of the provisions of Sections 1 and 2 of that Act, in the manner and by the means hereinafter alleged. III JURISDICTION AND DESCRIPTION OF THIS COMMERCE Roofing tile, which is the subject matter of the unlawful conspiracy hereafter alleged, is produced from shale of clay, and is extensively used throughout this district and generally throughout the United States, as a covering for pitched roofs, cornices and other exposed surfaces of buildings and structures. During many years last past, and continuing down to and including the date of the filing of this petition, a number of persons, firms and/or corporations, other than the corporate defendant, have been engaged from time to time in interstate trade and commerce in the manufacture and sale of roofing tile, and continuously during this period one or more of these persons, firms and/or corporations were respectively engaged in the manufacture and sale of roofing tile and the shipment thereof, in interstate trade and commerce, in and through this district, and throughout the United States, especially throughout those states lying east of the Rocky Mountains. These persons, firms and/or corporations sold and shipped, or shipped for sale, the greater part of the roofing tile, so manufactured, to users, dealers, contractors and to the agents of these persons, firms and/or corporations, whose several places of use and business have been situated in states other, than those in which such roofing tile has been manufactured by the said persons, firms and/or corporations respectively; and during the period referred to there has been a constant and continuous flow of shipments of roofing tile from the places of manufacture by such persons, firms and/or corporations to users, dealers, contractors and agents, in states other than those in which the roofing tile was manufactured. In and by so manufacturing, selling and shipping swell roofing tile into states other than those of manufacture, each of those persons, firms and/or corporations, to which reference has been made, have been engaged, and in some instances are still engaged, in trade and commerce among the several states of the United States within the meaning of the Act of Congress approved July 2, 1890, entitled "An Act To protect trade and commerce against unlawful restraints and monopolies." IV DEFENDANTS' RELATION TO THE COMMERCE WHICH IS AND HAS BEEN RESTRAINED AND MONOPOLIZED At all the times hereinafter mentioned, the corporate defendant was, and now is, engaged in the manufacture and sale, in interstate commerce, throughout the United States, of roofing tile. It owns and operates manufacturing plants for the production of roofing tile at New Lexington, Ohio, Coffeyville, Kansas, and Peru, Kansas. It maintains executive offices as well as a sales office at No. 104 South Michigan Avenue, in the City of Chicago, Illinois, in this district, and has branch sales offices in the City of New York, New York, Philadelphia, Pennsylvania, Pittsburgh, Pennsylvania, Washington, D. C., Cleveland, Ohio, Cincinnati, Ohio, Detroit, Michigan, Minneapolis, Minnesota, St. Louis, Missouri, Kansas City, Missouri, Coffeyville, Kansas, Dallas, Texas, Atlanta, Georgia, Jacksonville, Florida, and New Orleans, Louisiana; Defendant J. M. Williams is the president, general manager and a director of the corporate defendant, and has charge of its sales, especially in the eastern and New England territory; Defendant R. E. Sturtevant is the vice-president, and treasurer of corporate defendant; Defendant A. N. Sorenson is a sales manager of the corporate defendant for the middle-western, southwestern and southern states; Defendant Horace White is engaged in the business of buying and selling roofing tile manufactured by the corporate defendant and in installing the same. At the times hereinafter mentioned, defendant White has had, and now has, an arrangement with the corporate defendant under which defendant White is the exclusive sales agent for the corporate defendant in the City of New Orleans, Louisiana, and is a so-called "preferred roofer" (to which term reference is hereinafter made) for the territory including souther Louisiana along the Gulf coast; Defendairt J. W. Stephens is engaged in the business of buying and selling roofing tile manufactured by the corporate defendant and in installing the same. At the times hereinafter mentioned, defendant Stephens has had, and now has, an arrangement with the corporate defendant under which defendant Stephens is the exclusive sales agent for the corporate defendant in the cities of Dallas and Fort Worth, Texas, and is a so-called "preferred roofer" for the territory including the eastern part of the State of Texas, excepting the City of Houston; Defendants Arthur W. Applewhite and George J. Lawler, doing business under the firm name and style of Applewhite and Lawler Company, are engaged in the business of buying and selling roofing tile manufactured by the corporate defendant and in installing the same. At the times hereinafter mentioned, defendants Applewhite and Lawler had, and now have, an arrangement with the corporate defendant under which defendants Applewhite and Lawler are the exclusive sales agents for the corporate defendant in the City of Atlanta, Georgia, and are so-called "preferred roofers" for the territory including Georgia and seventeen counties in northwestern South Carolina; Defendant George T. Stafford is engaged in the business of selling roofing tile manufactured by the corporate defendant as its agent. At the times hereinafter mentioned, defendant Stafford has had, and now has, an arrangement with the corporate defendant under which defendant Stafford is the exclusive sales agent for the corporate defendant in the City of Birmingham, Alabama, for the territory including Alabama, Tennessee, nine counties in Florida, and Mississippi, excepting eight counties; Defendant F. W. Holcomb, at the times hereinafter mentioned, was, and now is, a salaried salesman in the employ of the corporate defendant, engaged in selling its roofing tile in the State of Ohio, especially the southern part thereof; Defendant A. B. Byrnes, at the times hereinafter mentioned, was, and now is, a salaried salesman in the employ of the corporate defendant, engaged in selling its roofing tile in tbe State of Minnesota; Defendant A. D. Sandoz, at the times hereinafter mentioned, was, and now is, a salaried salesman in the employ of the corporate defendant, engaged in selling its roofing tile in the State of Mississippi; Defendant George S. Mears, at the times hereinafter mentioned, was, and now is, a salaried salesman in the employ of the corporate defendant, engaged in selling its rooting tile in the State of Florida; Defendant R. T. Cole, at the times hereinafter mentioned, was, and now is, a salaried salesman in the employ of the corporate defendant, engaged in selling its roofing tile in the State of Georgia and surrounding territory; Defendant H. F. Beyer, at the times hereinafter mentioned, was, and now is, a district sales manager in the employ of the corporate defendant, having charge of the sales of its roofing tile, especially in the cities of New York and Philadelphia, and in the New England states; Defendant Alfred Lo Cascio, at the times hereinafter mentioned, was, and now is, manager of the E. Stanley Wires Company, having an office at No. 120 Boylston Street, in the City of Boston, Massachusetts, and, as such, was and is engaged in buying, selling and installing roofing tile manufactured by the corporate defendant for the territory including the New England states; and Defendant B. A. Campbell, at the times hereinafter mentioned, was, and now is, a stockholder in, and credit manager in the employ of, the corporate defendant, and under the direction of the late A. W. Brown, former president of the corporate defendant, conducted some of the preliminary negotiations on behalf of the corporate defendant, relative to the purchase by it of the business, property and assets of the Mid-Continent Clay Company, to which reference is hereinafter more fully made. V THE UNLAWFUL CONSPIRACY Throughout many years last past, and continuing down to and including the date of the filing of this petition, the defendants (as well as their predecessors in interest) have conspired, and are continuing to conspire, to restrain interstate trade and commerce in the manufacture and sale of roofing tile, and to monopolize, and to attempt to monopolize, such trade and commerce throughout this district and elsewhere in the United States, especially in the states lying generally east of the Rocky Mountains, all in the manner and by the means hereinafter alleged. VI EXECUTION OF THE CONSPIRACY The conspiracy hereinbefore alleged was intended to be executed, and in fact was executed, by the defendants and their predecessors in interest, within this district, and within the jurisdiction of this court, and elsewhere throughout the United States by the following means and methods: 1. Dominant Position of Corporate Defendant At the times hereinafter set forth, the corporate defendant made a series of acquisitions of the businesses, properties and assets of several corporations, the names of which are hereinafter stated, for the purpose and with the effect of eliminating competition in the manufacture and sale in interstate commerce of roofing tile, and to obtain for the corporate defendant a dominating position in this industry, especially in the states east of the Rocky Mountains, as hereinafter more fully set forth. At the date of its organization in 1893, the corporate defendant, under its then name, Ludowici Roofing Tile Company, owned and operated a single plant for the production of roofing tile at Chicago Heights, Illinois. In about the year 1902, the corporate defendant constructed an additional plant for the manufacture of roofing tile at Ludowici in the State of Georgia. On or about the twenty-third day of March, 1906, the defendant corporation, under its then name, Ludowici Roofing Tile Company, acquired the business, property and assets of the Celadon Roofing Tile Company, to which reference is hereinafter made. Concurrently with the acquisition of this latter company, the name of the defendant corporation was changed to Ludowici-Celadon Company. The Celadon Roofing Tile Company, the business, property and assets of which were acquired by the defendant corporation, as aforesaid, was a corporation organized in or about the year 1888, under the laws of the State of New York, under the name, Celadon Roofing Tile and Terra Cotta Company, engaged in the manufacture and sale in interstate commerce of roofing tile, and having its principal place of business and a manufacturing plant for the production of roofing tile at Alfred, New York. In the year 1899 this corporation acquired, by purchase, the business, property and assets of the Chicago Terra Cotta and Roofing and Siding Tile Company, a corporation of the State of Illinois, engaged in the business of manufacturing and selling in interstate commerce rooting file and haying its principal place of business and a plant for the manufacture of roofing tile at Ottawa, Illinois. In the year 1900, the name of the Celadon Roofing Tile and Terra Cotta Company was changed to the Celadon Roofing Tile Company. Prior to the acquisition of the business, property and assets of the Celadon Roofing Tile Company, as aforesaid, on or about July 11, 1905, the Celadon Roofing Tile Company purchased the business, properly and assets of the Imperial Clay Company, a corporation of the State of Ohio, engaged in the business of manufacturing and selling in interstate commerce roofing tile, and having its principal place of business and a manufacturing plant for the production of roofing tile at New Lexington, Ohio. On or about August 21, 1908, the defendant corporation purchased the business, property and assets, including manufactured tile and shale deposits, of the Western Roofing Tile Company, a coporation in the State of Kansas, engaged in the business of manufacturing and selling, in interstate commerce, roofing tile, and having its principal place of business and a manufacturing plant for the production of roofing tile at Coffeyville, Kansas. On or about July 15, 1924, after preliminary negotiations carried on in part by the defendant Campbell, the corporate defendant purchased from Mrs. Neils Esperson residing in Houston, Texas, and then doing business under the trade name and style of Mid-Continent Clay Company, the manufacturing plant and business owned by her at Peru, Kansas, for the manufacture and sale in interstate commerce of roofing tile, together with all finished product, inventories, accounts receivable, and all other assets belonging to or appurtenant to the business and the manufacturing plant as a going concern. Each of the acquisitions of the businesses and manufacturing plants, for the production and sale in interstate commerce of roofing tile, as aforesaid, were made for the purpose of excluding competitors of the corporate defendant from continuing to carry on the business of manufacturing and selling roofing tile in interstate commerce in competition with the corporate defendant; and concurrently with each of these acquisitions, as aforesaid, each of the corporations and Mrs. Esperson, whose business and property was acquired by the corporate defendant, ceased, and has not since resumed, carrying on the business of manufacturing and selling roofing tile. As a result of the acquisitions made, as aforesaid, the corporate defendant has acquired a dominant position in the industry, especially in the territory included in the states lying east of the Rocky Mountains, in which territory the corporate defendant now transacts approximately 90 per cent of the total business in the manufacture and sale of roofing tile. This dominant position of the corporate defendant has not resulted entirely from normal expansion and legitimate business enterprises, but, especially in the acquisition of the Mid-Continent Clay Company, hereinbefore alleged, it has resulted from acquisitions of competing businesses by contracts and other arrangements deliberately intended to have, and actually having, the power to control the entire roofing tile industry, especially in the territory mentioned above. 2. Acts In Furtherance of the Conspiracy The corporate defendant has entered into unlawful agreements and arrangements with defendants Horace White, J. W. Stephens, Arthur W. Applewhite and George J. Lawler, and under which these several individual defendants are designated "preferred roofers" for the purchase, resale and installation of roofing tile manufactured by the corporate defendant. Moreover, pursuant to these unlawful agreements and arrangements, the several individual defendants named above receive special discounts on the purchase and resale of roofing tile manufactured by the corporate defendant, which special discounts are not given to other purchasers of roofing tile engaged in a similar business as the several individual defendants named above, and making purchases and resales of roofing tile under substantially similar conditions. These agreements and arrangements have been entered into and carried out by the corporate defendant and the several individual defendants named above for the purpose or with the effect of (a) excluding competitors of the several individual defendants from carrying on their lawful business in competition with these individual defendants, and (b) preventing competitors of the corporate defendant from making sales of roofing tile in competition with the corporate defendant. In further extension of the unlawful conspiracy the corporate defendant, through its responsible officers, sales manager and salesmen, some of whom are defendants herein, as indicated above, has done the following: (a) Induced or attempted to induce purchasers of roofing tile from competitors of the corporate defendant to breach their contracts with such competitors, by changing and reducing bids for the sale of roofing tile below the prices originally offered by the corporate defendant and below the prices originally offered by competitors of the corporate defendant; (b) Made false and/or unfair statements relative to the quality, durability and/or workmanship of roofing tile manufactured by competitors of the corporate defendant for the purpose or with the effect of inducing, or attempting to induce, purchasers of roofing tile from competitors of the corporate defendant to breach their contracts with such competitors, and of preventing, or attempting to preevent, the sale of roofing tile manufactured by competitors of the corporate defendant; (c) Required persons engaged in the business of buying, selling and/or installing roofing tile, to purchase, use and/or install, or agree to purchase, use and/or install exclusively roofing tile manufactured by the corporate defendant as a condition to the sale, use and/or installation, or agreement to sell, use and/or install, roofing tile manufactured by the corporate defendant; (d) Induced, or attempted to induce, persons engaged in the business of buying and selling roofing tile and/or installing the same, to refuse, or to agree to refuse, to sell and/or install roofing tile manufactured by competitors of the corporate defendant for the purpose or with the effect of excluding such competitors from carrying on their lawful business; (e) Induced, or attempted to induce, persons who are selling agents for roofing tile manufactured by competitors of the corporate defendant, to enter into an agreement, arrangement or understanding, whereby such persons shall become the selling agents for the corporate defendant, and at the same time, retain the selling agency of competitors of the corporate defendant, but without intending in good faith to sell roofing tile manufactured by such competitors; (f) Adopted the policy, either generally or with respect to particular communities, of inducing, or attempting to induce, salesmen employed by, and of sales agents of, competitors of the corporate defendant to discontinue in the employment or as representatives of such competitors, and to become salesmen and/or sales agents of the corporate defendant, for the purpose or with fhe effect of preventing such competitors from selling roofing tile in competition with the corporate defendant; (g) Adopted the policy either generally or with respect to particular communities, of selling, or offering for sale, roofing tile manufactured and/or sold by the corporate defendant at unfair or discriminatory prices, terms and/or conditions of sale with the deliberate and unlawful intent to exclude competitors of the corporate defendant from carrying on the manufacture and sale of roofing tile in competition with the corporate defendant; (h) Granted preferences, priorities, rebates and discriminations in favor of certain selected, so- called "preferred roofers," as hereinbefore described, for the purpose or with the effect of excluding competitors of such selected persons or "preferred roofers" from carryitig on their lawful business. The unlawful conspiracy and all of the foregoing acts, acquisitions and transactions, in further execution of the unlawful conspiracy, have been entered into and performed by these defendants with the intent and with the direct and necessary effect of restraining interstate trade and commerce in the manufacture and sale of roofing tile, and to monopolize and to attempt to monopolize such trade and commerce. PRAYER FOR RELIEF Wherefore your petitioner prays; That writs of subpoena issue directed to each and every one of the defendants, commanding them, and each of them, to appear and answer, but not under oath (answer under oath being hereby expressly waived) the allegations contained in this petition, and to abide by and perform such orders and decrees as the court may make in the premises; That this court order, adjudge and decree as follows: 1. That the combination and conspiracy to restrain interstate trade and commerce in roofing tile, and to monopolize, and to attempt to monopolize, such commerce, as described herein, is illegal and in violation of the Act of Congress of July 2, 1890 (26 Stat. 209), commonly called the Sherman Act, and the Acts amendatory thereof and supplemental and additional thereto. 2. That the defendants, and each of them, and each and all of the respective officers and directors oi the corporate defendant, and each and all of the respective agents, servants, employees, and all persons acting, or claiming to act, on behalf of the defendants, or any of them, be perpetually enjoined and restrained from continuing to carry out, directly or indirectly, expressly or impliedly, the combination and conspiracy described herein, and from entering into, or performing, directly or indirectly, expressly or impliedly, any combination similar to that herein alleged to be illegal. 3. That the corporate defendant, its officers, agents, servants, and employees, and all persons acting, or claiming to act, on behalf of it, or them, or any of them, be enjoined from doing any or all of the following acts: (a) Inducing, or attempting to induce, purchasers of roofing tile from competitors of the corporate defendant to breach their contracts with such competitors, either by reducing bids for the sale of roofing tile below prices originally offered by the corporate defendant, or by making false and/or unfair statements relative to the quality, durability and/or workmanship of roofing tile manufactured by such competitors. (b) Preventing, or attempting to prevent, the sale of roofing tile manufactured by competitors of the corporate defendant by means of false and/or unfair statements relative to the quality, durability and/or workmanship of roofing tile manufactured by such competitors. (c) Requiring persons engaged in the business of buying and selling and/or install big roofing tile, to purchase, use, and/or install exclusively roofing tile manufactured by the corporate defendant, as a condition to the sale, use and/or installation of roofing tile manufactured by the corporate defendant (d) Inducing, or attempting to induce, persons engaged in the business of buying and selling roofing tile and/or installing the same, to agree to refuse to sell and/or install roofing tile manufactured by competitors of the corporate defendant, for the purpose, or with the effect, of excluding such competitors from carrying on their lawful business. (e) Inducing, or attempting to induce, persons who are selling agents for roofing tile manufactured by competitors of the corporate defendant, to enter info any arrangement or understanding whereby such persons shall become selling agents for the corporate defendant and at the same time retain the selling agency of competitors of the corporate defendant without intending in good faith to sell roofing tile manufactured by such competitors. (f) Adopting a policy, either generally or with respect to a particular community, of inducing, or attempting to induce, salesmen employed by, and/or sales agents of, competitors of the corporate defendant, to discontinue in the employment, or as representatives, of such competitors and to become salesmen and/or sales agents of the corporate defendant, for the purpose, or with the effeet, of preventing such competitors from selling roofing tile in competition with the corporate defendant. (g) Adopting a policy, either generally or with respect to a particular community, of selling, or offering for sate, roofing tile manufactured and/or sold by the corporate defendant at unfair or discriminatory prices, terms and/or conditions of sale with the intent to exclude competitors of the corporate defendant from carrying on the manufacture and/or sale of roofing tile in competition with the corporate defendant. (h) Giving or granting any preference, priority, rebate, or any discrimination in favor of certain selected or "preferred" persons engaged in purchasing and selling and/or installing roofing tile, either generally or with respect to a particular community, for the purpose, or with the effect, of excluding competitors of either such persons or of the corporate defendant from continuing to carry on their lawful business. 4. That the corporate defendant be enjoined, until the further order of this court, from acquiring, directly or indirectly, the ownership or control, either by acquisition of shares of capital stock or by purchase of business, property and assets, of any additional plants engaged in the manufacture and sale of roofing tile. 5. That the terms of the decree made herein shall be binding upon, and shall extend to, eaech and every one of the successors in interest of any and/or all of the defendants herein, and to any and all corporations, copartnerships, and/or individuals who may acquire the ownership or control, directly or indirectly, of the shares of the capital stock, or of the property, business and assets of the corporate defendant, whether by merger, consolidation, reorganization, or otherwise. 6. That the court retain jurisdiction of this cause for the following purposes: (a) Enforcing the decree to be made herein; (b) Enabling the petitioner to apply to this court for a modification or enlargement of any of the provisions of the decree made herein on the ground that the same is inadequate, or (c) Enabling the defendants, or any of them, to apply to this court for a modification of any of the provisions of the decree made herein on the ground that it has become inappropriate or unnecessary. 7. That the petitioner have sueh other, further and different relief as may be necessary and the court may deem proper in the premises. 8. That the petitioner recover its taxable costs.
Under the direction of William D. Mitchell, HORACE R. LAMB, RALSTONE R. IRVINE, |