Bratcher v. Akron Area Board of Realtors Brief on Behalf of All Defendants-Appellees Except First National Bank of Akron and Herberich-Hall-Harter, Inc.

    No. 17,113.

United States Court of Appeals
FOR THE SIXTH CIRCUIT.

MERCER BRATCHER, et at.,
Plaintiff s-Appellants,, 

vs. ^

THE AKRON AREA BOARD OF REALTORS, et al,

Defendants-Appellees.
. ■ ----

A ppeal From the United States District Court for 
the Northern District of Ohio, Eastern Division.

BRIEF ON BEHALF OF ALL DEFENDANTS-APPELLEES 
EXCEPT FIRST NATIONAL BANK OF AKRON AND 

HERBERICH-HALL-HARTER, INC.

Sidney D. L. Jackson, Jr., 
A lexander H. Hadden,
George Downing,
John H. Burlingame,
Baker, Hostetler & Patterson, 

1956 Union Commerce Building, 
Cleveland, Ohio 44115,

. v •- / v  a  /  ; \ ._x, ^  i ,  v  ■

Ivan L. Sm ith , ' . '
16 South Broadway,

Akron, Ohio 44308,
Attorneys for all Defendants-Appellees 

Except First National Bank of Akron 
and Herberich-Hall-Harter, Inc.

T H E  G A T E S  L E G A L  P U B L IS H IN G  C O .,  C L E V E L A N D , O H IO — P H O N E : 6 2 1 - 5 6 4 7



COUNTER STATEMENT OF QUESTIONS 
PRESENTED.

I. Are the allegations of plaintiffs’ complaint with 
regard to the impact of defendants’ conspiracy on inter­
state commerce sufficient to confer jurisdiction on the Dis- 
strict Court under Section 1 of the Sherman Act?

The District Court answered this question “No.”
Defendants-appellees contend it should be answered 

“No.”

II. Does the complaint fail to state a cause of action 
under the antitrust laws because plaintiffs either have no 
competitive stake in the area of commerce allegedly re­
strained or are outside the “target area” of defendants’ 
alleged conspiracy?

The District Court did not answer this question.
Defendants-appellees contend it should be answered 

“Yes.”

III. Is the present action properly maintainable as 
a class action?

The District Court did not answer this question.
Defendants-appellees contend it should be answered 

“No.”



Ill

TABLE OF CONTENTS.

Counter-Statement of Questions Involved______ Prefixed
Counter-Statement of Facts _____________________  1
Argument __________________    2

I. Are the allegations of plaintiffs’ complaint with 
regard to the impact of defendants’ conspiracy 
on interstate commerce sufficient to confer juris­
diction on the District Court under Section 1 of 
the Sherman A c t ? ___________________________  2
A. The applicable tests _____________________  2
B. The “In Commerce” theory_______________  4
C. No local activity which has a direct and sub­

stantial effect on interstate commerce is al­
leged; the “Affect Commerce” theory______  9

D. The Atlanta Motel and McClung cases______  16
II. Does the complaint fail to state a cause of action 

under the antitrust laws because plaintiffs either 
have no competitive stake in the area of com­
merce allegedly restrained or are outside the “tar­
get area” of defendants’ alleged conspiracy?_18
A. The plaintiffs have no standing to sue be­

cause they have not been directly injured 
as the proximate result of any alleged anti­
trust violation on the part of the defendants 19
1. The standing to sue requirements of Sec­

tions 4 and 16 of the Clayton A c t______  19
2. A  judicial “Rule of Reason” limits stand­

ing to sue in private antitrust actions to 
persons having some direct competitive 
stake in the area of the economy allegedly 
restrained ____________________ _______  22

3. Representative cases in which standing to 
sue has been denied to persons having no



IV

competitive stake in the area of the econ­
omy allegedly restrained by reason of the 
defendants’ antitrust violations------------- 28

B. Negro plaintiffs claiming the denial of the
right to buy homes in white neighborhoods 
and plaintiffs claiming denial of the right to 
sell to Negroes have no standing to sue be­
cause they have no competitive stake in the 
area of the economy allegedly restrained by 
the defendants___________________________  33

C. Plaintiffs suing on behalf of Negro brokers 
and on behalf of white persons who seek to 
sell homes to Negroes have no standing to 
sue because they are outside the “Target
Area” of the alleged conspiracy_____________ 36
The “Target Area” doctrine_______________  38

D. The legislative history of congressional en­
actments in the civil rights field discloses 
an intent by Congress not to create civil 
remedies in the field of private residential
housing___________________________________  41

III. Is the present action properly maintainable as a
class action? _________________________________ 47
A. The class purportedly made up of Negroes 

who have been denied housing in white neigh­
borhoods of the Akron area has not been ade­
quately defined in the complaint__________  47

B. The named plaintiffs in this action do not 
adequately represent the class on whose be­
half they purportedly sue  ____________  52

IV. Conclusion___________________________________  56
A. Plaintiffs have elected to stand on the original

allegations of their complaint and the omitted 
jurisdictional facts cannot be presumed — 56

B. The decision of the court below should be
affirmed __________________________________ 57



V

TABLE OF AUTHORITIES.

Cases.
Apex Hosiery Co. v. Leader, 310 U. S. 469 (1940)

------------------------------------------------------------9, 23-24, 37
Associated Orchestra Leaders v. Philadelphia Musical 

Soc’y, 203 F. Supp. 755 (E. D. Pa. 1962 )______  53
Atlanta Motel v. United States, 379 U. S. 241 __16, 17, 18
Austin Theatre, Inc. v. Warner Bros. Pictures, Inc.,

19 F. R. D. 93 (S. D. N. Y. 1956)_______________  52
Barnhart v. Western Maryland Ry. Co., 128 F. 2d 709

1962), cert, denied, 373 U. S. 933 (1963 )______  50
Bookout v. Schine Chain Theatres, Inc., 253 F. 2d 

292 (2d Cir. 1958)__________________________ 32, 37
Broadcaster’s Inc. v. Morristown Broadcasting Corp.,

185 F. Supp. 641 (N. D. N. J. 1960 )__________  22
Brunson v. Board of Trustees, 311 F. 2d 107 (4th Cir.

1962), cert denied, 373 U. S. 933 (1 9 6 3 )______  50
Centanni v. T. Smith & Son, Inc., 216 F. Supp. 330

(E. D. La. 1963) ____________________________  30
Clark v. Thompson, 206 F. Supp. 539 (S. D. Miss.

1962) ______________________________________ 48, 50
Conference of Studio Unions v. Loew’s, Inc., 193 F.

2d 51 (9th Cir. 1951), cert, denied, 342 U. S. 919 
(1 9 52 )________________________22, 23, 28, 36-37, 39

Cuevas v. Sdrales, 344 F. 2d 1019 (10th Cir. 1965),
cert, denied__________________________________ 44

D. & A. Motors v. General Motors Corp., 19 F. R. D.
365 (S. D. N. Y. 1956) _____________________  48

Darden v. Besser, 257 F. 2d 285 (6th Cir. 1958)____ 39
Eastern Railroad Presidents Conference v. Noerr

Motor Freight, Inc., 365 U. S. 127 (1 9 6 1 )____ 58



VI

Elizabeth Hospital, Inc. v. Richardson, 269 F. 2d 167
(8th Cir. 1 959 )____________________ 6, 9, 11, 13, 16

Evanston Cab Co. v. City of Chicago, 325 F. 2d 907
(7th Cir. 1 963 )______________________________  6

Fiumara v. Texaco, Inc., 204 F. Supp. 544 (E. D. Pa.
1962) ______________________________________  23

Gerli v. Silk Ass’n of America, 36 F. 2d 959 (S. D.
N. Y. 1929) ________________________________  39

Gomberg v. Midvale, 157 F. Supp. 132 (E. D. Pa. 
1955) ______________________________ 22, 23, 26, 28

Gordon v. Illinois Bell Telephone Company, 330 F.
2d 103 (7th Cir. 1 9 64 )________________________ 6

Harris v. American Legion, 162 F. Supp. 700 (S. D.
Ind. (1959), aff’d., 269 F. 2d 594 (7th Cir, 1959) 57

Harrison v. Paramount Pictures, Inc., 115 F. Supp.
312 (E. D. Pa. 1953), aff’d, 211 F. 2d 405 (3rd 
Cir. 1954); cert, denied 348 U. S. 828 (1954) __39-40

Hess v. Anderson, Clayton & Co., 20 F. R. D. 466
(S. D. Cal. 1957) ____________________________  54

Hotel Phillips, Inc. v. Journeymen Barbers etc., 195 
F. Supp. 664 (W. D. Mo. 1961), aff’d per curiam,
301 F. 2d 443 (8th Cir. 1962)_________________ 9-10

Image & Sound Service Corp. v. Altec Service Corp.,
148 F. Supp. 237 (D. Mass. 1956 )_____________ 20

Joy v. Hague, 175 F. 2d 395 (1st Cir, 1 9 49 )______  57
Karseal Corporation v. Richfield Oil Corp., 221 F. 2d 

358 (9th Cir. 1 955 )_________________________38, 40
Katzenbach v. McClung, 379 U. S. 294 ________ 16, 17, 18
LaRouche v. United Shoe Mach. Corp., 166 F. Supp.

633 (D. Mass. 1958)__________________________  22
Las Vegas Merchant Plumbers Ass’n v. United States,

210 F. 2d 732 (9th Cir. 1954), cert, denied, 348 
U. S. 817 (1954 )___________________________ 3, 9, 11



V II

Lieberthal v. North Country Lanes, Inc., 332 F. 2d 
269 (2nd Cir. 1964), affirming, 221 F. Supp. 685 
(S. D. N. Y. 1963)-----------------------6, 9, 11, 13, 20, 40

Mandeville Island Farms vs. Sugar Co., 334 U. S. 219
(1948) ______________________________________  9

Mannings v. Board of Public Instruction of Hills­
borough County, Florida, 277 F, 2d 370 (5th Cir. 
1960) ------------------------------------------------------------ 50

Northcross v. Board of Education of City of Memphis,
302 F. 2d 818 (6th Cir. 1962), cert, denied, 370 
U. S. 944 (1962 )_____________________________  50

Page v. Work, 290 F. 2d 323 (9th Cir. 1961), cert, 
denied 368 U. S. 875 (1961 )_____________6, 9, 11, 13

Pelelas v. Caterpillar Tractor Co., 113 F. 2d 629 (7th
Cir. 1940) ___________________________________  53

Peterson v. Borden Co., 50 F. 2d 644 (7th Cir. 1931) 33
Productive Inventions, Inc. v. Trico Products Corp.,

224 F. 2d 678 (2d Cir. 1955), cert, denied, 350 
U. S. 936 (1956 )____________   22

Revere Camera Co. v. Eastman Kodak Co., 81 F.
Supp. 325 (N. D. 111. 1 9 48 )__________ 21-22, 49, 52

Ring v. Spina, 84 F. Supp. 403 (S. D. N. Y. 1949)____ 33
Rio Haven, Inc. v. National Screen Service Corp., 11 

F. R. D. 509 (E. D. Pa. 1 9 5 1 )_______________  53
Robertson v. Johnson, 249 F. Supp. 618 (E. D. La.,

1966) _______________________________________  45
Rohlfing v. Cat’s Pave Rubber Co., 99 F. Supp. 886

(N. D. 111. 1951) ___________________________  55
Rossi v. McCloskey and Co., 149 F. Supp. 638 (E. D.

Pa. 1957) ______________________________ 31, 35, 37
Savon Gas Stations No. 6, Inc. v. Shell Oil Co., 203 

F. Supp. 529, 533 (D. Md. 1962), affid 309 F. 2d 
306 (4th Cir. 1962), cert, denied 372 U. S. 911 
(1963) 9



V III

Schultis v. McDougal, 225 U. S. 561 (1 9 1 2 )______
Schwabe, Herman, Inc. v. United Shoe Machinery 

Corp., 297 F. 2d 906 (2nd Cir. 1962), cert, de­
nied, 369 U. S. 865 (1 9 6 2 )___________________

Schwartz v. Broadcast Music, Inc., 180 F. Supp. 322 
(S. D. N. Y. 1959)____________________________

Snow Crest Beverages, Inc. v. Recipe Foods, Inc., 147 
F. Supp. 907 (D. Mass. 1956) __25, 28, 35, 38, 39,

Spears Free Clinic and Hospital v. Cleere, 197 F. 2d 
125 (10th Cir. 1952)_____________________ 7, 13,

Sperry Products, Inc. v. Aluminum Company of 
America, 171 F. Supp. 901 (N. D. Ohio 1959), 
aff’d on this issue, 285 F. 2d 911 (6th Cir. I960), 
cert, denied, 368 U. S. 890 (1 9 61 )_____________

Story Parchment Co. v. Peterson Parchment Paper 
Co., 282 U. S. 555 (1931)_____________________

Sunbeam Corp. v. Payless Drug Stores, 113 F. Supp.
31 (N. D. Calif. 1953 )________________________

Talon, Inc. v. Union Slide Fastener, Inc., 266 F. 2d 
731 (9th Cir. 1 9 5 9 )__________________________

Tepler v. Frick, 204 F. 2d 507 (2d Cir. 1953 )______
Tivoli Realty Inc. v. Paramount Pictures, Inc., 80 F. 

Supp. 800 (D. Del. 1948) ___________________
Toolson v. New York Yankees, 346 U. S. 356 

(1953) _____________________________________ 41-
United States v. Employing Plasterers Association, 

347 U. S. 186 (1953 )____________________ 11, 12,
United States v. South Florida Asphalt Company, 329 

F. 2d 860 (5th Cir. 1964)_____________________
United States v. Yellow Cab Company, 332 U. S. 218 

(1947) ______________________________________ 5,
Volasco Products Co. v. Lloyd A. Fry Roofing Co., 

308 F. 2d 383 (6th Cir. 1962), cert, denied, 372 
U. S. 907 (1963) ____________________________ 33,

56

20

20

40

15

20

20

33

20
23

21

-42

13

11

, 6

39



IX

Walder v. Paramount Publix Corp., 132 F. Supp. 912 
(S. D. N. Y. 1955)____________________________  39

Walker Distribution Co. v. Lucky Lager Brewing Co.,
323 F. 2d 1 (9th Cir. 1963) ___________________  39

Weeks v. Bareco Oil Co., 125 F. 2d 84 (7th Cir, 1941) 53
Youngstown Sheet and Tube Company v. Sawyer,

343 U. S. 579 (1 9 6 2 )_________________________  42
Zemel v. Rusk, 381 U. S. 1 (1965 )_________________  42

Statutes.

Sherman Act, Sec. 1 (15 U. S. C. A. § 1 ) ________  2
Clayton Act:

Sec. 4 (15 U. S. C. A. § 1 5 )____________________
-----------------------------------19, 20-21, 22, 23, 35, 38, 39

Sec. 16 (15 U. S. C. A. § 2 6 )___________________
----------------------------- 19, 21, 22, 23, 24, 35, 38, 49

Civil Rights Act of 1964 (42 U. S. C. A. §§ 2000a, 
et seq.) --------------------------------------------------42, 43, 44

28 U. S. C. A. § 1653 ____________________________ 56, 57

Miscellaneous.

BNA, The Civil Rights Act of 1964, p. 9 3 __________  43
108 Cong. Rec. 22908, 87th Cong., 2d Sess.________  42
4 Encyclopedia of Federal Procedure, § 14.133, p. 173 

(3 ed. 1951) _______________________________  56
Federal Rules of Civil Procedure:

Rule 15(a) ___________________________________  56
Rule 23(a) (3) _______________________________  47
Rule 23 as amended_____________________ 47, 51, 52

20 F. R. D. at 483, 484 ____________________________  55



H. R. 7152 ____________________________________  43

2 Moore’s Federal Practice, p. 1639 (2d ed. 1964) __ 56
3 Moore’s Federal Practice, ft 15.07 [2], pp. 853-7 [2d

ed. 1964] __________________________________ 57
3 Moore’s Federal Practice, fl 15.10, p. 957 (2d ed. 

1964) ------------------------------------------------------------  56
3 Moore’s Federal Practice, 15.10, p. 959 (2d ed

1964) ------------------------------------------------------------  57

3 Moore’s Federal Practice. j[ 23.04, p. 3418 (2d ed
1964) ---------------------------------------------------------- J 48

Note of Advisory Committee, 34 F. R. D. 387, 388 __ 51
S. 1732 ____________________________________________ 43
Senate Report No. 872 _____________________________  43
2 U. S. Code Cong, and Adm. News, 88th Cong., 2d 

Sess., 2357 ___________________________________  44

X



United States Court of Appeals
FOR THE SIXTH CIRCUIT.

MERCER BRATCHER, et al.,
Plaintiffs-Appellants,

No. 17,113.

vs.

THE AKRON AREA BOARD OF REALTORS, et al,

Defendants-Appellees.

A ppeal From the United States District Court for 
the Northern District of Ohio, Eastern Division.

BRIEF FOR DEFENDANTS-APPELLEES.

COUNTERSTATEMENT OF FACTS.

This brief is filed on behalf of all but two of the 
defendants-appellees* in this action. The defendants who 
join in this brief are (1) The Akron Area Board of Real­
tors, an Ohio corporation whose membership consists of 
numerous real estate brokerage concerns; (2) two officers 
of the Board; and (3) approximately twenty-five real 
estate brokerage firms who are members of the defendant 
Board.

* The following references and abbreviations will be used 
throughout this brief:

Plaintiffs-Appellants ______________ “Plaintiffs”
Defendants-Appellees _____________“Defendants”
Joint Appendix___________________“J.A.”
Plaintiffs-Appellants Brief in this

Court __________________________ “Plaintiffs’ Brief”
Brief of United States as Amicus 

Curiae “Government Brief”



2

At pages 1-3 of their brief, plaintiffs set forth a pur­
ported summary of the factual allegations of the complaint 
filed in the District Court in this action and a summary of 
the grounds upon which defendants moved for its dis­
missal. Although defendants do not in all respects accept 
plaintiffs’ summarization, it would serve no useful pur­
pose, in view of the undisputed nature of the record 
on which this case is appealed, to set forth a counter­
summary. Instead, defendants will refer in the “Argu­
ment” portion of this brief to the particular portions of 
the undisputed record which are pertinent to the several 
questions presented.

ARGUMENT.

I. Are the allegations of plaintiffs’ complaint with 
regard to the impact of defendants’ conspiracy on inter­
state commerce sufficient to confer jurisdiction on the 
District Court under Section 1 of the Sherman Act?

The District Court answered this question “ No.”
Defendants-appellees contend it should be answered 

“No.”

A . The Applicable Tests.

Federal jurisdiction is invoked by plaintiffs under 
Section 1 of the Sherman Antitrust Act (15 U. S. C. A. 
§ 1) which provides in pertinent part that, “Every con­
tract, combination in the form of trust or otherwise, or 
conspiracy in restraint of trade or commerce among the 
several states, or with foreign nations, is declared to be 
illegal * *

The Sherman Act does not reach every restraint of 
trade or commerce. On the contrary, it is the well-settled 
rule, applied in a host of cases, that a plaintiff seeking re­
lief under the Sherman Act must allege and prove that



3
the activities complained of constitute either (1) a re­
straint within the flow of interstate commerce or (2) a 
restraint which, though local in nature, substantially and 
directly affects commerce among the several states.

The Court below properly noted these two theories 
and, as indicated by the following excerpt from Judge 
Kalbfleisch’s opinion, adopted the description of them 
contained in the leading case of Las Vegas Merchant 
Plumbers Association, 210 F. 2d 732 (9th Cir. 1954):

“The Sherman Act therefore extends not only to 
transactions in the stream of interstate commerce, 
but also to intrastate transactions which substantially 
affect interstate commerce. Mandeville Island Farms, 
Inc. v. American Crystal Sugar Co., 334 U. S. 219, 
234 (1948); Las Vegas, supra. This rule is discussed 
in Las Vegas at page 739, note 3:

“ ‘The word “affect” is used in two different 
situations under the antitrust laws. A case under 
the antitrust laws, so far as the interstate commerce 
element is concerned may rest on one or both of 
two theories:

“ ‘ (1) That the acts complained of, occurred 
within the flow of interstate commerce. This is gen­
erally referred to as the “in commerce” theory.

“ ‘ (2) That the acts complained of, occurred 
wholly on the state or local level, in intrastate com­
merce, but substantially affected interstate com­
merce.

“ ‘Under both of these theories, the transactions 
complained of must affect or have an effect on in­
terstate commerce or the requirements of the stat­
ute are not satisfied. Under the “in commerce” 
theory, the ultimate effect on interstate commerce 
is the impact on that commerce under a qualitative 
and not a quantitative test. If there is price fixing 
or division of the market involved, there are viola­



4
tions per se, as a matter of law. Where there is in­
volved no price fixing or division of the market, the 
effect of the transactions complained of may be 
a question of law or a mixed question of law and 
fact.

“ ‘Turning to the second alternative, where acts 
wholly within intrastate commerce substantially 
affect interstate commerce, these intrastate acts 
may occur before goods enter the flow of commerce, 
or after they leave the flow of commerce. Here we 
have a question of fact as to whether the wholly 
intrastate acts substantially affect the flow of com­
merce.

“ ‘After determination of the issue as to whether 
the wholly intrastate acts substantially affect the 
flow of commerce, we then reach the same problem 
that is reached under the “ in commerce” theory, 
namely the ultimate effect or impact of the acts 
complained of on interstate commerce and again the 
test is a qualitative one and not a quantitative test, 
and again is a question of law, or a mixed question 
of law and fact.’

“See also Savon Gas Stations No. 6, Inc. v. Shell Oil 
Company, 203 F. Supp. 529, 533 (1962), aff’d. 309 
F. 2d 306 (4th Cir., 1962), cert. den. 372 U. S. 911 
(1963).” Memorandum of District Judge Dismissing 
the Complaint, J.A. 25a-27a.

B. The “In Commerce” Theory.

In their attempt to demonstrate a sufficient connection 
between defendants’ conduct and interstate commerce, 
plaintiffs alleged three different respects in which defend­
ants are associated with interstate commerce. The first 
such allegation is set forth in paragraph VI-A of the Com­
plaint, which states:



5
“A. The real estate brokers and realtors participating 
in the conspiracy act as agents for the purchase or 
rental of real property by persons moving to the 
Akron area in interstate commerce from other states 
and for persons moving from the Akron area in inter­
state commerce to other states.” J.A. 14a.
The only alleged activity of defendants— acting as 

agents—takes place in the Akron area. Stripped of its 
excess verbiage, the allegation states nothing more than 
that real estate brokers have customers or clients who 
may travel or have traveled in interstate commerce.

The mere providing of service to persons who have 
traveled or will travel in interstate commerce is not a 
basis for jurisdiction under the Sherman Act over those 
providing such service. The leading case on this subject 
is United States v. Yellow Cab Company, 332 U. S. 218 
(1947), in which the government attempted to base juris­
diction, in part, on an allegation dealing with the defend­
ants’ alleged contacts with customers traveling in inter­
state commerce. This allegation was summarized by the 
Supreme Court in the following language:

“The interstate commerce toward which this as­
pect of the conspiracy is directed is claimed to arise 
out of the following facts. Many persons are said to 
embark upon interstate journeys from their homes, 
offices and hotels in Chicago by using taxicabs to 
transport themselves and their luggage to railroad 
stations in Chicago. Conversely, in making journeys 
from other states to homes, offices and hotels in Chi­
cago, many persons are said to complete such trips 
by using taxicabs to transport themselves and their 
luggage from railroad stations in Chicago to said 
homes, offices and hotels. Such transportation of 
persons and their luggage is intermingled with the 
admittedly local operations of the Chicago taxicabs. 
But it is that allegedly interstate part of the business



6

upon which rests the validity of the complaint in this 
particular.” Id. at 230.
Under these facts, the Court found that the activity of 

defendants in this regard was not covered by the Sherman 
Act:

“ * * * we hold here * * * that when local taxicabs 
merely convey interstate train passengers between 
their homes and the railroad station in the normal 
course of their independent local service, that service 
is not an integral part of interstate transportation. 
And a restraint on or monopoly of that general local 
service, without more, is not proscribed by the Sher­
man Act.” Id. at 233.
Cases decided since the Yellow Cab case show the 

continuing vitality of its holding that the mere fact that 
some of a particular defendant’s customers have traveled 
in interstate commerce is not sufficient to establish juris­
diction under the Sherman Act. A representative selec­
tion of the more recent cases in which the courts have 
refused to base jurisdiction on such travel are the follow­
ing:

Lieberthal v. North Country Lanes, Inc., 332 F. 2d 
269 (2nd Cir. 1964), affirming, 221 F. Supp. 685 (S. D. 
N. Y. 1963) (solicitation of customers from other states 
for a bowling alley); Gordon v. Illinois Bell Telephone 
Company, 330 F. 2d 103 (7th Cir. 1964) (a few of plain­
tiff’s customers engaged in interstate commerce) ; Evanston 
Cab Co. v. City of Chicago, 325 F. 2d 907 (7th Cir. 1963) 
(carriage of persons concluding interstate flights at Chi­
cago’s O’Hare International Airport in taxicabs to down­
town Chicago); Page v. Work, 290 F. 2d 323 (9th Cir. 
1961) (newspaper carrying national advertising and hav­
ing “a few out of state subscribers” ) ; Elizabeth Hospital, 
Inc. v. Richardson, 269 F. 2d 167 (8th Cir. 1959) (rendi­



7
tion of hospital services to people from out of state); 
Spears Free Clinic and Hospital v. Cleere, 197 F. 2d 125 
(10th Cir. 1952) (treatment of out of state and foreign 
patients).

Relying on certain of these cases, Judge Kalbfleisch’s 
opinion in this case states: “ * * * the fact that some of 
the customers served by a defendant are from another 
state is not sufficient to grant jurisdiction on the basis of 
being within the flow of interstate commerce.”  (J.A. at 
27a; emphasis added.) Plaintiffs attempt to distinguish 
these cases on the ground that they did “not involve re­
straints in commerce. * * *” (Plaintiffs’ Brief, at p. 7.) 
Defendants agree that the cases cited above did not in­
volve restraints “ in commerce.” They are cited by the 
defendants for precisely that reason. Each of the cited 
cases is authority for the proposition that an allegation 
to the effect that some customers of defendants reside in 
other states is insufficient to indicate that defendants’ ac­
tivities are in the flow of commerce.

The remaining two jurisdictional allegations with re­
spect to the “ in commerce” theory are as follows:

“B. A substantial portion of all materials, supplies, 
and machinery for the building of new houses in the 
Akron area is manufactured outside the State of Ohio 
and transported in interstate commerce to the Akron 
area. Many of the component parts of prefabricated 
houses built in the Akron area, which constitute a 
substantial portion of residential housing construc­
tion, are manufactured outside the State of Ohio and 
transported in interstate commerce to the Akron area.

“C. Real estate brokers and salesmen arrange mort­
gages and insurance for clients who are purchasing 
houses in the Akron area. The mortgages on such 
homes are financed by banks and savings and loan 
associations, which are substantially engaged in inter­



8

state commerce, many of which mortgages are, in 
turn, transported in interstate commerce for discount­
ing. Insurance is secured from insurance companies, 
which are substantially engaged in interstate com­
merce, and many of which are located in states other 
than the State of Ohio.” J.A. 14a-15a. (Emphasis 
added.)
Neither of these two allegations is argued in the Plain­

tiffs’ Brief or the Government’s Brief for the purpose 
of establishing jurisdiction under the “ in commerce” 
theory and therefore will only be discussed briefly 
here. Nowhere in the Complaint is it alleged that 
defendants purchase or sell any of the building materials 
or component parts referred to in the Complaint or that 
they act as agents for anyone in any such purchases or 
sales. The only contact which the defendants are alleged 
to have with the building materials is their contact with 
the completed houses into which the building materials 
are incorporated. Obviously these remote contacts do not 
establish that defendants’ operations are within the flow of 
interstate commerce involving the building materials in 
question. This is particularly true when it is realized that 
the defendants’ first contact with these materials comes 
after the character of the materials has been completely 
transformed by their incorporation into completed build­
ings.

Plaintiffs’ allegation with respect to the fact that de­
fendants “arrange” for insurance and mortgages has the 
same essential defect. The allegation states that entities 
(other than defendants) which are substantially engaged 
in interstate commerce issue mortgages on, or insurance 
policies covering, houses purchased in the Akron area, 
and that defendants arrange in some unexplained manner 
for such mortgages and insurance. There is no assertion



9
that defendants either issue mortgages or sell insurance 
or act as agents for those who do, nor that defendants 
profit in any way from any mortgages or insurance policies 
which may be issued, Accordingly, the complaint fails to 
show that defendants’ activities are within the flow of inter­
state commerce involving such mortgages and insurance.

Fairly read, the two quoted paragraphs of the Com­
plaint cannot be construed as alleging that the challenged 
activities of the defendants take place within the flow of 
interstate commerce. At most they constitute an attempt 
to assert jurisdiction on an “affect commerce” theory, to 
which attention is now directed.

C. No Local Activity Which Has a Direct and Substantial 
Effect on Interstate Commerce Is Alleged; the “Affect 
Commerce” Theory.

While it is true that wholly local business restraints 
that affect interstate commerce are within the reach of 
the Sherman Act, it is equally well established that any 
such local restraint must be “ direct and substantial, and 
not merely inconsequential, remote or fortuitous.” Page 
v. Work, 290 F. 2d 323, 332 (9th Cir. 1961), cert, denied 
368 U. S. 875 (1961); see also, Mandeville Island Farms 
v. Sugar Co., 334 U. S. 219, 234 (1948); Apex Hosiery Co. 
v. Leader, 310 U. S. 469 (1940); Lieberthal v. North 
Country Lanes, Inc., 332 F. 2d 269, 270 (2nd Cir. 1964); 
Las Vegas Merchant Plumbers Ass’n v. United States, 210 
F. 2d 732 (9th Cir. 1954), cert, denied, 348 U. S. 817 
(1954); Elizabeth Hospital, Inc. v. Richardson, 269 F. 2d 
167 (8th Cir. 1959); Savon Gas Stations No. 6, Inc. v. Shell 
Oil Co., 203 F. Supp. 529, 533 (D. Md. 1962), aff’d 309 
F. 2d 306 (4th Cir. 1962), cert, denied 372 U. S. 911 
(1963); and Hotel Phillips, Inc. v. Journeymen Barbers



10

etc., 195 F. Supp. 664, 667 (W. D. Mo. 1961), ajj’d per 
curiam, 301 F. 2d 443 (8th Cir. 1962).

In paragraph VII of the Complaint, plaintiffs assert 
certain respects in which defendants’ conspiracy has an 
effect on interstate commerce. The first two of these 
alleged restraints are as follows:

“A. The interstate commerce in building mate­
rials, supplies, and machines is affected and restrained 
because Negroes who ordinarily would be customers 
for such building materials, supplies, and machines, 
including components of new prefabricated homes, are 
barred from becoming customers of this interstate 
commerce.

“B. The interstate commerce in mortgage financ­
ing and insurance is affected and restricted because 
Negroes who would be customers for such mortgages 
and insurance are barred from buying the houses they 
would mortgage and insure, and hence are barred 
from becoming customers of this interstate com­
merce.” J.A. 15a.

In neither of these two allegations is any direct or sub­
stantial effect set forth. If the defendants were contractors 
who built homes, insurance agents who sold insurance, or 
financial institutions which issued mortgages, the plaintiffs 
might be able to support the proposition that defendants’ 
alleged conspiracy affected interstate commerce. But it is 
not alleged that the plaintiffs are engaged in any of those 
businesses and any effect which their operations in the 
brokerage business might have on those areas of com­
merce must therefore be remote, indirect and fortuitous. 
Even in those cases where antitrust defendants have them­
selves directly purchased or sold goods travelling in inter­
state commerce the courts have frequently found that the 
effects of those purchases and sales on interstate com­
merce have been indirect and insubstantial. See, e.g.,



11

Lieberthal v. North Country Lanes, Inc., 332 F. 2d 269 
(2nd Cir. 1964); Page v. Work, 290 F. 2d 323 (9th Cir. 
1961), cert, denied 368 U. S. 875 (1961); and Elizabeth 
Hospital, Inc. v. Richardson, 269 F. 2d 167 (8th Cir. 1959); 
but see contra, e.g., United States v. South Florida Asphalt 
Company, 329 F. 2d 860 (5th Cir. 1964) and Las Vegas 
Merchant Plumbers Ass’n v. United States, 210 F. 2d 732 
(9th Cir. 1954). Therefore, it must follow a fortiori that 
the activities of the present defendants—activities which 
are only indirectly related, if at all, to the building ma­
terials or financing businesses—provide an insufficient 
basis for federal jurisdiction in the present case.

Both the plaintiffs and the United States rely heavily 
on United States v. Employing Plasterers Association, 347 
U. S. 186 (1953). See Plaintiffs’ Brief, pp. 5-6, and Gov­
ernment Brief, pp. 6-7. In that case, the Supreme Court, 
after summarizing plaintiff’s jurisdictional allegations, held 
that the defendants’ activities had a substantial and ad­
verse effect on the movement of plastering materials in 
interstate commerce:

“Defendants are (1) a Chicago trade association 
of plastering contractors; (2) a local labor union of 
plasterers and their apprentices; (3) the union’s 
president. These contractors and union members em­
ployed by them do approximately 60% of the plaster­
ing contracting business in the Chicago area of Illinois. 
Materials used in the plastering, such as gypsum, lath, 
cement, lime, etc., are furnished by the contractors. 
Substantial quantities of this material are produced in 
other states, bought by Illinois building materials 
dealers and shipped into Illinois, sometimes going di­
rectly to the place of business of the dealers and some­
times directly to job sites for use by the plastering con­
tractors under arrangements with the dealers. The 
practical effect of all this is a continuous and almost



12

uninterrupted flow of plastering materials from out- 
of-state origins to Illinois job sites for use there by 
plastering contractors. Restraint or disruption of 
plastering work in the Chicago area thus necessarily 
affects this interstate flow of plastering materials ad­
versely. Since 1938 the Chicago defendants have acted 
in concert to suppress competition among local plaster­
ing contractors, to prevent out-of-state contractors 
from doing any business in the Chicago area and to 
bar entry of new local contractors without approval 
by a private examining board set up by the union. 
The effect of all this has been an unlawful and un­
reasonable restraint of the flow in interstate com­
merce of materials used in the Chicago plastering 
industry.” Id. at 187.

The Employing Plasterers case is clearly distinguish­
able from the present case. For one thing, the defendants 
in this case have nothing to do with the building materials 
adverted to by the plaintiffs until after those materials 
have come to rest and have been incorporated into com­
pleted houses. For another thing, insofar as interstate 
commerce involving mortgages and insurance is concerned, 
it is not alleged in the complaint that defendants purchase, 
sell or issue mortgages or insurance, or act as agents for 
those who do. Finally, there are no allegations in the 
present complaint, as there were in the complaint in the 
Employing Plasterers case, with respect to the amount of 
interstate commerce in building materials, mortgages and 
insurance which has been affected by the defendants’ 
alleged conspiracy.

For the reasons just mentioned, this case falls outside 
the ambit of the Employing Plasterers decision and is gov­
erned instead by the rationale set forth in the Lieberthal 
decision, supra. In Lieberthal, the plaintiff had alleged 
that



13
“the acts on the part of the defendants were done for 
the express purpose of stopping the flow of bowling 
alley equipment and material from outside New York 
to Plattsburgh, New York in interstate commerce.” 
332 F. 2d at 272.

Because this allegation was unsupported by any facts in­
dicating the substantiality of the alleged restraints on inter­
state commerce, the court refused to find that the plaintiff 
had established federal jurisdiction under the “affect 
commerce” theory. Distinguishing Employing Plasterers, 
where there were factual allegations with respect to the 
amount of commerce affected, the court said:

“There is nothing to indicate the amount of commerce 
affected or that the alleged restraint affects any bowl­
ing alley equipment other than the equipment that 
would have gone into the building to be leased by 
Lieberthal. This is a far cry from the substantial 
effects on interstate commerce involved in United 
States v. Employing Plasterers, supra (agreement 
among 60% of contractors and union members en­
gaged in plastering contracting business in Chicago to 
suppress competition in all of such business, which 
required a continuous flow of plastering materials in 
interstate commerce); United States v. New Wrinkle, 
Inc., supra (agreement to fix prices in substantially all 
of wrinkle finish industry); United States v. Women’s 
Sportswear Ass’n, supra (agreement to control prices 
affecting a substantial portion of women’s sportswear 
manufactured in Boston.)” Id. at 272.
In dismissing the present action, Judge Kalbfleisch 

relied on the Lieberthal, Elizabeth Hospital, Spears and 
Page cases for the proposition that the alleged restraints 
must be “direct and substantial, and not merely incon­
sequential, remote or fortuitous,” (J.A. p. 30a), in order to 
provide a basis for federal jurisdiction. In this connection, 
the Judge pointed out in his memorandum opinion that



14
the plaintiffs had failed to describe or define sufficiently in 
their complaint the geographical area in which the defend­
ants’ alleged conspiracy operated, and concluded that the 
substantiality of the effects of the conspiracy on interstate 
commerce was not sufficiently indicated by the complaint. 
(J.A. 31a-32a.) In addition, the complaint fails to set 
forth any facts with respect to the amount of building 
materials or the volume of mortgages, insurance policies 
or persons the interstate movement of which has been im­
peded by the alleged conspiracy.

The Government now attempts to fill this void in the 
plaintiffs’ pleading—a void which could readily be, but 
has not been, filled by amendment—by citing Bureau of 
Census, Commodity Transportation Survey, and Census 
of Housing figures. See Government Brief, pp. 8-9, fn. 
1 and 2. If the information set forth in these footnotes re­
lated to the Akron area, instead of the country at large, 
and if it had been appropriately alleged in the Complaint 
rather than being left to a footnote in an appellate amicus 
brief, plaintiffs would perhaps have given the District 
Court some basis on which to measure the substantiality 
of the interstate commerce which the plaintiffs claim is 
involved in this case. These matters were not, however, 
presented to the District Court, either in the Complaint or 
in the briefs of the parties to this action, and should not 
in their present form be considered by this Court. More­
over, these figures do not in any way measure the sub­
stantiality of the effect on interstate commerce occasioned 
hy any alleged conspiracy among the defendants in the 
Akron area, and cannot, therefore, have any direct bear­
ing on the issue which has been presented to this Court 
for decision.

Since plaintiffs have not alleged any facts which would 
support their contention that the defendants’ conspiracy



15
has substantially affected interstate commerce in building 
materials, mortgages and insurance, they have failed to 
establish federal jurisdiction based on the alleged effects of 
the conspiracy on those avenues of interstate commerce. 
As stated in the Spears case, supra:

“A curtailment of the manufacture of articles to 
be shipped in interstate commerce or the lessening 
of the number of persons who travel in interstate 
commerce, resulting from a conspiracy to restrain or 
monopolize a wholly local activity, is ordinarily an 
incidental, indirect and remote obstruction to such 
commerce.” 197 F. 2d at 127. (Emphasis added.)
As a final jurisdictional allegation, the plaintiffs al­

lege in paragraph VII-D of their complaint that:
“D. Negro persons from without the State of Ohio 

have been discouraged from moving to the Akron 
area because they have been unable to buy or rent 
property within the Akron area.” J.A. 16a.

This allegation is subject to all of the defects previously 
outlined with respect to plaintiffs’ other allegations which 
attempt to give a jurisdictional basis to the complaint 
under the Sherman Act. An allegation that some unde­
fined number of people are “ discouraged” from moving 
in interstate commerce is not an allegation of a substan­
tial and direct effect on interstate commerce but at most 
states a possible incidental, indirect and remote obstruc­
tion to interstate commerce. In the Spears case, supra, the 
Court dealt with an alleged conspiracy to prevent the op­
eration and licensing of a chiropractic institution to which 
“numerous persons from all of the United States, and 
from many foreign countries” regularly came for treat­
ment. The Court in that case concluded that,

“The mere fact that a fortuitous and incidental 
effect of such conspiracy and acts may be to reduce



16
the number of persons who will come from other 
states and countries to the Spears Hospital for chiro­
practic treatments does not create such a relation 
between interstate and foreign commerce and such 
local activities as to make them a part of such com­
merce.

“To come within the purview of the Sherman Act 
the restraint of commerce or the obstruction of com­
merce must be direct and substantial and not merely 
incidental or remote.” Id. at 126. Quoted with ap­
proval in Elizabeth Hospital, Inc., supra, 269 F. 2d at 
171.

Jurisdiction under the Sherman Act cannot properly be 
predicated on the basis of an assertion that a purely local 
conspiracy having to do with the sale and rental of Ohio 
real estate “discourages” persons from moving into the 
Akron area.

D. The Atlanta Motel and McClung Cases.

The Government relies heavily on Atlanta Motel v. 
United States, 379 U. S. 241, and Katzenbach v. McClung, 
379 U. S. 294, in its arguments under both the “ in com­
merce” and “affect commerce” theories. With respect to 
the “ in commerce” theory, the Government’s argument 
is predicated entirely on the concurring opinion filed by 
Justice Black in both cases, which, it is claimed, supports 
the position that, “ [w jhile the house that defendants sell 
is itself located in the Akron area, the entire transaction 
may involve some local and some interstate elements.” 
Government Brief, p. 14. Defendants have already shown 
(see pp. 5-6, supra) that where the challenged activities 
themselves take place entirely within a single state, the 
mere fact that customers of an alleged conspirator may 
come from out of state is not enough of an “ interstate 
element” for purposes of establishing “ in commerce” juris­



17
diction under the Sherman Act. More important for 
present purposes, however, is the fact that the issue pre­
sented in the Atlanta Motel and McClung cases, supra, 
make them completely irrelevant to the present case.

In the Atlanta Motel case, the question presented was 
whether Congress possessed the power to legislate under 
authority provided in the interstate commerce clause of 
the Constitution. The Court concluded its discussion of 
this question as follows:

“Thus the power of Congress to promote interstate 
commerce also includes the power to regulate the local 
incidents thereof, including local activities in both 
the States of origin and destination, which might have 
a substantial and harmful effect upon that com­
merce.” Id. at 258. (Emphasis added.)

The Court then went on to say that the only questions be­
fore it were,

“ ( 1) whether Congress had a rational basis for find­
ing that racial discrimination by motels affected com­
merce, and (2) if it had such a basis, whether the 
means it selected to eliminate that evil are reasonable 
and appropriate.” Ibid.

In other words, the Court had to determine in the Atlanta 
Motel and McClung cases whether Congress had a rational 
basis for finding that the racial discrimination prohibited 
by the Civil Rights Act of 1964 might have a substantial 
and harmful effect upon commerce. In contrast, the ques­
tion presented to this Court is whether plaintiffs’ allega­
tions concerning a conspiracy among real estate brokers 
in Akron, Ohio, are sufficient to show an actual restraint 
of trade or commerce among the several states. Under the 
cases previously cited, defendants submit that the question 
with respect to the “ affect commerce” theory is whether



18
the Complaint alleges a conspiracy having a substantial 
and direct, rather than a merely potential or possible, 
effect on interstate commerce. This is a far different 
question than the question of whether another branch of 
Government has rationally concluded that certain local 
activities “might have a substantial and harmful effect” 
upon interstate commerce. (Emphasis added.) The deci­
sions in the Atlanta Motel and McClung cases have made 
no change in the established law with respect to the nature 
and extent of the impact on interstate commerce which is 
necessary to support federal jurisdiction under the Sher­
man Act.

II. Does the complaint fail to state a cause of action 
under the antitrust laws because plaintiffs either have no 
competitive stake in the area of commerce allegedly re­
strained or are outside the “ target area” of defendants’ 
alleged conspiracy?

The District Court did not answer this question.
Defendants-appellees contend it should be answered 

“Yes.”

In moving the district court to dismiss the complaint, 
the defendants argued that the complaint failed to state 
a claim upon which relief could be granted because the 
allegations of the complaint showed conclusively that the 
plaintiffs were without standing to sue under the antitrust 
laws. This issue was not reached by the district court 
because of its dismissal of the action on jurisdictional 
grounds. On this appeal, defendants join with plaintiffs 
(see Plaintiffs’ Brief, p. 12) in asking the Court to decide 
this issue in the event that it answers the first question 
here presented in favor of the plaintiffs.

In their brief, the plaintiffs state that “ [i]n their 
motion to dismiss, defendants relied heavily on the asser­



19
tion that the complaint does not allege that defendants' 
conspiracy is commercially motivated.” (Plaintiffs’ Brief, 
p. 12.) This is not true. The defendants did not argue be­
low and do not argue here that the alleged conspiracy is 
not actionable because it was not commercially motivated. 
The “motivations” of the defendants in this matter are 
totally irrelevant. What the defendants argued below and 
what they argue on this appeal is that the plaintiffs’ moti­
vation in bringing this lawsuit was to redress an alleged 
social wrong rather than a commercial wrong and that 
the plaintiffs have no standing to sue under the antitrust 
laws because they have not been injured in any competi­
tive sense as the result of the defendants’ alleged con­
spiracy. In this case the commercial or non-commercial 
“motivations” of the defendants can never be brought 
into issue because the plaintiffs have failed completely to 
meet their threshold burden of showing that they have 
a legally sufficient interest to permit them to maintain 
an action under the private relief sections of the antitrust 
laws.

A. The Plaintiffs Have No Standing to Sue Because They 
Have Not Been Directly Injured as the Proximate Re­
sult of Any Alleged Antitrust Violation on the Part 
of the Defendants.

1. The Standing to Sue Requirements of Sections 4 and 16 of 
the Clayton Act.

In a private antitrust suit such as this, it is not enough 
for a plaintiff to allege and prove a violation of the anti­
trust laws which may have caused injury to the general 
public and which may therefore be actionable by the fed­
eral government. A private antitrust litigant has the addi­
tional and very essential burden of alleging and proving



2 0

at the outset that the antitrust violation he complains of 
has been the proximate cause of a direct injury to his 
“ business or property”  or, if the suit is one for an injunc­
tion, that the violation he complains of threatens to proxi- 
mately result in direct injury to his “business or property.” 
See, e.g., Story Parchment Co, v. Peterson Parchment 
Paper Co., 282 U. S. 555, 556 (1931); Herman Schwabe, 
Inc. v. United Shoe Machinery Corp., 297 F. 2d 906, 909 
(2nd Cir. 1962), cert, denied, 369 U. S. 865 (1962); 
Sperry Products, Inc. v. Aluminum Company of America, 
171 F. Supp. 901, 938 (N. D. Ohio 1959), aff’d on this is­
sue, 285 F. 2d 911, 927 (6th Cir. 1960), cert, denied, 368 
U. S. 890 (1961); and Talon, Inc. v. Union Slide Fastener, 
Inc., 266 F. 2d 731, 737-38 (9th Cir. 1959). These stand­
ing to sue requirements are an indispensable part of a 
private litigant’s case under the antitrust laws and if he 
fails to allege facts which, if proved, would satisfy these 
requirements of “ injury” and “ causation,” his right to 
maintain the action is ended, and a motion to dismiss or a 
motion for summary judgment will be granted against 
him. See, e.g., Lieberthal v. North Country Lanes, Inc., 
221 F. Supp. 685 (S. D. N. Y. 1963), aff’d, 332 F. 2d 269 
(2nd Cir. 1964); Schwartz v. Broadcast Music, Inc., 180 
F. Supp. 322 (S. D. N. Y. 1959); and Image & Sound Serv­
ice Corp v. Altec Service Corp., 148 F. Supp. 237 (D. Mass. 
1956).

In part the standing to sue requirements in private 
antitrust cases are imposed by the specific language of 
Sections 4 and 16 of the Clayton Act, and in part they 
are imposed by judge-made rules which have been derived 
from the purposes for which the antitrust laws were en­
acted as well as from that which is implicit in the statutory 
language. Taking first the express statutory requirements, 
Section 4 of the Clayton Act provides in pertinent part 
that



2 1

“Any person who shall be injured in his business or 
property by reason of anything forbidden in the anti­
trust laws may sue therefor in any district court * * * 
and shall recover threefold the damages by him 
sustained, and the cost of suit, including a reasonable 
attorney’s fee.” 15 U. S. C. A. § 15. (Emphasis 
added.)

Section 16 of the same Act— the injunctive relief section— 
provides that

“Any person * * * shall be entitled to sue for and 
have injunctive relief, in any court of the United 
States having jurisdiction over the parties, against 
threatened loss or damage by a violation of the anti­
trust laws * * * when and under the same conditions 
and principles as injunctive relief against threatened 
conduct that will cause loss or damage is granted by 
courts of equity, under the rules governing such pro­
ceedings. * * *” 15 U. S. C. A. § 26. (Emphasis 
added.)

Although these two private relief sections are couched 
in somewhat different language, the courts have inter­
preted the phrase “threatened loss or damage” in Section 
16 to mean “threatened loss or damage to ‘business or 
property,’ ” and hence the standing to sue requirements 
in injunction suits such as the present one are the same 
as the standing to sue requirements in Section 4 treble 
damage suits: in either kind of suit, the plaintiff must 
show an “ injury” or “ threatened injury” to his “business 
or property.” See, e.g., Tivoli Realty Inc. v. Paramount 
Pictures, Inc., 80 F. Supp. 800 (D. Del. 1948) ( “It is well 
settled that a person suing under either of the two cited 
sections [§§ 4 and 16 of the Clayton Act] cannot have 
relief unless he pleads and proves a pecuniary loss or in­
jury to his business or property.”  [Emphasis added.]); 
Revere Camera Co. v. Eastman Kodak Co., 81 F. Supp.



2 2

325, 330 (N. D. 111. 1948) ( “This complaint is brought un­
der Sections 4 and 16 of the Clayton Act, 15 U. S. C. A. 
§§ 15, 26, which authorize a private person to sue in his 
own behalf for actual or threatened injury to his business 
or property * * *” [Emphasis added.]); Broadcaster’s 
Inc. v. Morristown Broadcasting Corp., 185 F. Supp. 641 
(D. N. J. 1960) (after denying treble damages to the plain­
tiff because of its failure to show an injury to its “business 
or property,” the court held that the “claim for injunctive 
relief must fail for the same reason” ) ; and Gomberg v. 
Midvale, 157 F. Supp. 132 (E. D. Pa. 1955).

2. A Judicial “Rule of Reason” Limits Standing to Sue in Private 
Antitrust Actions to Persons Having Some Direct Competi­
tive Stake in the Area of the Economy Allegedly Restrained.

Turning next to the judge-made rules on standing to 
sue in private antitrust cases, an examination of these 
rules discloses that the courts have used several different 
“rules” or tests to accomplish the same intended result. 
In some cases the courts have emphasized that only where 
the injury or threatened injury to the plaintiff’s business 
or property has been “direct” can the plaintiff bring suit 
under Section 4 or 16 of the Clayton Act, even though the 
statutes themselves do not speak in terms of a “ direct” 
injury or threatened injury. See, e.g., LaRouche v. United 
Shoe Mach. Corp., 166 F. Supp. 633, 635 (D. Mass. 1958); 
Productive Inventions, Inc. v. Trico Products Corp., 224 
F. 2d 678 (2d Cir. 1955), cert, denied, 350 U. S. 936 
(1956); and Conference of Studio Unions v. Loew’s, Inc., 
193 F. 2d 51, 54-5 (9th Cir. 1951), cert, denied, 342 U. S. 
919 (1952). In other cases, instead of speaking of the 
“directness” of the plaintiffs’ injury, the courts have em­
phasized that there must have been a “proximate causal 
relationship” between the defendant’s antitrust violations



23
and the injury to the plaintiff’s business or property, even 
though, again, the statutes themselves do not expressly 
cover the question of proximate causation. See, e.g., Fiu- 
mara v. Texaco, Inc., 204 F. Supp. 544, 547 (E. D. Pa. 
1962); Tepler v. Frick, 204 F. 2d 507 (2d Cir. 1953); and 
Gomberg v. Midvale, 157 F. Supp. 132, 141-42 (E. D. Pa. 
1955). In applying both of the tests, however, the courts 
have explicitly recognized that they have but a single ob­
jective or purpose in mind, and that that is to deny the 
extraordinary relief provided for under Sections 4 and 16 
of the Clayton Act to would-be antitrust plaintiffs who 
have not been injured in any real, competitive sense by 
the defendant’s antitrust violations. Stated in another 
way, the courts have used the directness of injury and 
proximate causal relationship tests to fulfill the basic pur­
poses of the antitrust laws by imposing upon the plaintiff 
in an antitrust suit the burden of proving that he has had 
some direct competitive stake in the “area of the econo­
my” * which has allegedly been restrained by the defend­
ant’s antitrust violations. If the plaintiff fails to demon­
strate such a competitive interest his right to maintain 
the action is at an end, even though, as a matter of ortho­
dox tort law theories of causation, his injury may have 
been “ foreseeable” by the defendant.

This judicial policy of requiring private antitrust 
litigants to have some direct competitive stake in the area 
of the economy which has been restrained by the defend­
ant’s unlawful conduct is not an arbitrary or capricious 
one. On the contrary, it is a policy wisely rooted in the 
underlying purposes for which the federal antitrust laws 
were enacted. In the case of Apex Hosiery Co. v. Leader,

* This phrase was used by the court in Conference of Studio 
Unions v. Loew’s Inc., 193 F. 2d 51, 55 (9th Cir. 1951), cert, de­
nied, 342 U. S. 919 (1952), which is discussed at pp. 28-30, infra.



24
310 U. S. 469 (1940), the Supreme Court, after reviewing 
in detail the legislative history of the Sherman Act, con­
cluded that the “end sought [by the Act] was the preven­
tion of restraints to competition in business and commer­
cial transactions” ** (310 U. S. at 493). At the same time 
the Court pointed out that

“This Court has never applied the Sherman Act 
in any case * * * unless the Court was of opinion 
that there was some form of restraint upon commer­
cial competition in the marketing of goods or services.
*  *  *  99

^  ^  sjc

“ * * * some form of restraint of commercial com­
petition has been the sine qua non to the condem­
nation of contracts, combinations, or conspiracies 
under the Sherman Act * * *.” 310 U. S. at 495, 500.

Mindful of these basic purposes which the antitrust laws, 
and in particular the Sherman Act, were designed to serve, 
the courts have correctly reasoned that only competitors 
of an antitrust law violator, or at the very least, only 
persons having some competitive stake in the area of the 
economy allegedly restrained by the antitrust law violator, 
should be permitted to bring suit under the private relief 
sections of the Clayton Act. Only such persons, the courts 
have held, can have such an interest as will justify their 
acting as private antitrust law “prosecutors” and will war­
rant their obtaining the extraordinary relief provided for 
under Sections 4 and 16 of the Clayton Act.

** In a footnote to its opinion, the Court again pointed out 
that restraints on competition were the evil against which the 
Sherman Act was directed:

“The history of the Sherman Act as contained in the legis­
lative proceedings is emphatic in its support for the con­
clusion that ‘business competition’ was the problem con­
sidered and that the act was designed to prevent restraints 
of trade which had a significant effect on such competition.” 
310 U. S. at 493, fn. 15, citing the Congressional Record.



25
Perhaps the best explanation of this “rule of reason” * 

which has been applied by the courts to limit the scope of 
private antitrust actions is that given by Judge Wyzanski 
in the frequently cited case of Snow Crest Beverages, Inc. 
v. Recipe Foods, Inc., 147 F. Supp. 907 (D. Mass. 1956). 
In that case a corporation which was not itself in competi­
tion with the defendant, but which was affiliated with and 
a supplier to a second corporation which was in competi­
tion with the defendant, brought suit under Section 4 of 
the Clayton Act for damages allegedly sustained by it when 
the business of its affiliate was ruined as a result of the 
defendant’s alleged antitrust violations. In dismissing this 
action and granting summary judgment in favor of the 
defendant, Judge Wyzanski, although recognizing that the 
losses of the plaintiff corporation might “as a matter of 
logic” have been “ foreseeable,” held that it could not be 
given standing to sue because its business was not in the 
same competitive field which had allegedly been restrained 
or monopolized by the defendant. In so holding, Judge 
Wyzanski gave this lucid exposition of the “rule of reason” 
which limits the scope of private antitrust litigation:

“It is well settled that despite its broad language § 4 of 
the Clayton Act does not give a private cause of action 
to a person whose losses result only from an interrup­
tion or diminution of profitable relationships with the 
party directly affected by alleged violations of the anti­
trust laws. Recovery under that section has been 
denied to a landlord of a competitor injured by the 
defendant although the landlord had a percentage 
rental. Melrose Realty Co. v. Loew’s Inc., 3 Cir., 1956, 
234 F. 2d 518, 519, certiorari denied 1956, 77 S. Ct. 
128. Likewise, recovery was denied to a patent lieen-

* The phrase “rule of reason” is used throughout this brief 
as a convenient, shorthand label for the judge-made rule which 
requires a private antitrust plaintiff to allege and prove that he 
has some direct competitive stake in the area of the economy al­
legedly restrained by the defendant.



2 6

sor who would have received royalties from one of the 
defendant’s competitors injured by the defendant’s 
violation of the antitrust laws. Productive Inventions, 
Inc. v. Trico Products Corp., 2 Cir., 1955, 224 F. 2d 
678, certiorari denied 1955, 350 U. S. 936, 76 S. Ct. 
301. The same attitude has precluded employees of 
an injured competitor from recovering under the anti­
trust acts. Corey v. Boston Ice Co., D. C. Mass. 1913, 
207 F. 465, 466; Gerli v. Silk Association of America, 
D. C. S. D. N. Y. 1929, 36 F. 2d 959; Walder v. Para­
mount Publix Corp., D. C. S. D. N. Y. 1955, 132 F. 
Supp. 912, 916. Without trying to spell out in detail 
the justification for these decisions, it may be noted 
that if they had gone the other way, there would as a 
result of the treble damage provisions of the antitrust 
acts have been given in each case to the plaintiff what 
has sometimes been called a ‘windfall.’ Conference of 
Studio Unions v. Loew’s, Inc., 9 Cir., 193 F. 2d 51, 55. 
In effect, businessmen would be subjected to liabilities 
of indefinable scope for conduct already subject to 
drastic private remedies. Courts aware of these con­
siderations have been reluctant to allow those who 
were not in direct competition with the defendant to 
have a private action even though as a matter of logic 
their losses were foreseeable. Congress has failed to 
amend the antitrust laws on this point in the face of 
repeated decisions. It seems to have been content for 
the judiciary to take a position narrower than that 
often applied in non-statutory tort cases and in cases 
where plaintiffs are not allowed a multiple recovery.” 
147 F. Supp. at 909. (Emphasis added.)

Another excellent statement of the judicial “rule of 
reason” is that given by the court in Gomberg v. Midvale, 
157 F. Supp. 132 (E. D. Pa. 1955). There an injunction 
under Section 16 was sought in a derivative action brought 
by certain minority shareholders who feared that a pro­
posed sale of corporate assets would result in antitrust



27
litigation against the corporate parties to the sale. The 
court, however, denied this relief on the ground that there 
could be no threatened injury to one of the corporate 
parties to the sale because that corporation would not, 
after the sale, be engaged in any “ sector of the economy” 
that might be affected by the sale. In so holding, the court 
explained that:

“Private antitrust actions are not founded upon 
the mere circumstances of a conspiracy in restraint of 
trade, but upon injuries that would directly or proxi- 
mately result from the commission of the act in viola­
tion of the antitrust laws. Story Parchment Company 
v. Peterson Parchment Paper Company, 1931, 282 
U. S. 555, 566, 51 S. Ct. 248, 75 L. Ed. 544; Chiplets, 
Inc. v. June Dairy Products Co., D. C. 1953, 1.14 F. 
Supp. 129, 142-3. ‘He must show that he is within that 
area of the economy which is endangered hy a break­
down of competitive conditions in a particular indus­
try. Otherwise he is not injured “ by reason”  of any­
thing forbidden in the antitrust laws. Such a con­
struction is in accordance with the basic and under­
lying purposes of the antitrust laws to preserve com­
petition and to protect the consumer. Recovery and 
damages under the antitrust law is available to those 
who have been directly injured by the lessening of 
competition and withheld from those who seek the 
windfall of treble damages because of incidental harm.’ 
Conference of Studio Unions v. Loew’s, Inc., 9 Cir., 
1951, 193 F. 2d 51, 54-55. Also see Beegle v. Thom­
son, 7 Cir., 1943, 138 F. 2d 875; Sunbeam Corporation 
v. Payless Drug Store, D. C. N. D. Cal. 1953, 113 F. 
Supp. 31, 42; Ring v. Spina, D. C. S. D. N. Y. 1949, 84 
F. Supp. 403, 406. In sum the injury which the laws 
envision is the injury to the economy of the plaintiff, 
by virtue of restrictions of trade or something that 
proximately flows from it, in the competitive field in 
which it is engaged when the illegal act is committed.” 
157 F. Supp. at 141-42 (Emphasis added.)



2 8

In addition to the Snow Crest Beverages and Gom- 
berg cases, there are numerous other cases in which the 
courts have denied standing to sue, in a variety of factual 
settings, to private antitrust plaintiffs who have failed to 
demonstrate that they had some direct, competitive stake 
in the area of the economy allegedly restrained by reason 
of the defendant’s antitrust violations. A review of several 
representative cases, with pertinent quotations from their 
opinions, follows in the next section of this brief.

3. Representative Cases in Which Standing to Sue Has Been De­
nied to Persons Having No Competitive Stake in the Area 
of the Economy Allegedly Restrained by Reason of the De­
fendants’ Antitrust Violations.

A leading case for the proposition that a private anti­
trust plaintiff must show a competitive business interest 
in the area of the economy allegedly restrained by reason 
of the defendant’s antitrust violations is Conference of 
Studio Unions v. Loew’s Inc., 193 F. 2d 51 (9th Cir. 1951), 
cert, denied, 342 U. S. 919 (1952). There an action for 
treble damages and injunctive relief was brought by an 
association of labor unions (the “ Conference” ) and cer­
tain union members against a number of large motion 
picture companies (the “Majors” ) and certain rival labor 
unions, on the ground that the defendants had conspired 
“ for the purpose of destroying the Conference and the 
member unions, and for the further purpose of eliminating 
as competitors the motion picture production companies 
* * * [known] as the Independents.” Various “overt 
acts” taken against the plaintiff unions in pursuance of 
this conspiracy were alleged in the plaintiffs’ complaint. 
The court, however, disregarding these alleged overt acts 
against the plaintiff unions, found that, “ so far as com­
petitive conditions [in the movie industry] were * * *



29
concerned”  (emphasis added), the only persons who had 
any direct stake in the case were the so-called Independ­
ent producers, not the plaintiff unions or their members. 
Accordingly, the court held that the unions and their 
members were without standing to sue, despite the fact 
that they were among the alleged “targets” of the con­
spiracy:

“The appellants’ connection with the alleged il­
legal conspiracy is not such as would bring them 
within the contemplation of the anti-trust law. The 
entire import of the alleged conspiracy, insofar as 
competitive conditions are concerned, is the attempt 
to destroy the Independents. Any restraint on com­
mercial competition would occur in the production 
of motion pictures and we fail to see how the appel­
lants are in a position to complain about that situa­
tion. They are not in the business of producing 
motion pictures; they do not exhibit motion pictures; 
they neither compete with the Majors nor purchase 
from them. In fact, they are not employees of the 
companies whom it is alleged the appellees intend to 
destroy. The damage alleged to have been suffered 
by appellants does not flow from any injury to the 
competitive situation of the motion picture industry, 
that is, their injury has not arisen from the acts al­
legedly perpetrated against the Independents.

“It has been held that shareholders, creditors, di­
rectors and officers of corporations injured by mo­
nopolistic practices of competitors cannot recover 
their individual losses. The reasoning of the courts 
in the cases cited in Note 1 is that the conspiracy to 
restrain competition was directed at the corporation 
and the damage suffered by the plaintiff was merely 
incidental. So, in the present case, insofar as the 
conspiracy was to restrain trade by destroying com­
petitors it was directed at the Independents, and the 
alleged damage the appellants suffered therefrom



30
was incidental to the accomplishments of the illegal 
object.

*  *  *

“ [The private antitrust plaintiff] * * * must show 
that he is within that area of the economy, which is 
endangered by a breakdown of competitive conditions 
in a particular industry. Otherwise he is not injured 
‘by reason’ of anything forbidden in the anti-trust 
laws. Such a construction is in accordance with the 
basic and underlying purposes of the anti-trust laws 
to preserve competition and to protect the consumer. 
Recovery and damages under the anti-trust law is 
available to those who have been directly injured by 
the lessening of competition and withheld from those 
who seek the windfall of treble damages because of 
incidental harm.” 193 F. 2d at 54-55. (Emphasis 
added.)

A  similar case involving the antitrust claims of non- 
competitors is Centanni v. T. Smith & Son, Inc., 216 F. 
Supp. 330 (E. D. La. 1963). In that case a private action 
under the antitrust laws was brought by various groups 
of plaintiffs against the defendant stevedoring company 
on the ground, inter alia, that it had conspired with others 
to restrain trade and monopolize the stevedoring business 
in the harbor of New Orleans. One of the plaintiff groups 
was composed of individuals who relied for their work as 
“mooring linesman” on the business given them by one 
of the plaintiff stevedoring companies. As to these in­
dividual plaintiffs the court found that they had no cause 
of action under the antitrust laws, and, in addition, had 
no standing to sue for the alleged violations. These con­
clusions were predicated on the fact that the individual 
plaintiffs were not operators of their own business or 
competitors of any of the defendants:

“Even if the individual plaintiffs in Civil Action 
No. 10144 were to be held to have a cause of action,



31
which I have found they do not, I conclude that they 
have no right of action against defendants under the 
antitrust laws. These plaintiffs are employees of 
Linesman Service and not operators of their own 
businesses or competitors of any of defendants. As 
such, they have no standing in these proceedings. 
Martens v. Barrett, 245 F. 2d 844 (5th Cir. 1957); 
Gerli v. Silk Ass’n of America, 36 F. 2d 959 (S. D. 
N. Y. 1929); Sargent v. National Broadcasting Com­
pany, 136 F. Supp. 560 (N. D. Cal. 1955); Walder v. 
Paramount Publix Corporation, 132 F. Supp. 912 
(S. D. N. Y. 1955); Corey v. Boston Ice Co., 207 F. 
465 (D. C. Mass. 1913). Whether these individual 
plaintiffs are considered employees or independent 
contractors, and even if they had in fact suffered as 
a result of antitrust violations by the defendants, their 
interest is too remote to be actionable under the 
statute. [Citing, inter alia, Snow Crest Beverages, 
Inc. v. Recipe Foods, Inc.]”  216 F. Supp. at 338. (Em­
phasis added.)
Still another case in which a failure to show a com­

petitive business interest was fatal to the plaintiffs’ private 
antitrust action was Rossi v. McCloskey and Co., 149 F. 
Supp. 638 (E. D. Pa. 1957). In that case the plaintiff 
union members alleged that their employer, defendant 
McCloskey, had conspired with the officers of plaintiffs’ 
union to enter into a collective bargaining agreement that 
would permit McCloskey and certain other contractors to 
suppress competition in the excavation business in the 
Philadelphia area. Various “direct injuries” to the plain­
tiffs’ property rights were alleged to have resulted from 
this conspiracy, and for these injuries treble damages and 
injunctive relief were sought under Sections 4 and 16. In 
rejecting these claims for relief, the district court said:

“ The plaintiffs are not competitors in the excavation 
business which is allegedly being monopolized, and 
any injury they may have suffered from the asserted



32
suppression of competition was wholly incidental 
thereto. Injury which is merely a collateral effect of 
illegal restraint upon competition is not compensable 
under the antitrust laws. Those who suffer such in­
jury are not injured ‘by reason off antitrust violations 
within the purport of the statute.” 149 F. Supp. at 
640. (Emphasis added.)
A final case which illustrates how the judicial “rule 

of reason” has been applied in a private antitrust suit 
brought for the purpose of obtaining relief for an alleged 
injury to “property” only (as distinguished from an in­
jury to a “business” ) is Bookout v. Schine Chain Theatres, 
Inc., 253 F. 2d 292 (2d Cir. 1958). In that case, the suit 
for a claimed injury to a property interest was brought by 
the administrator of a decedent who at his death had 
owned certain theatrical properties. One of the claims 
asserted by the administrator was that at a public auction 
held after the decedent’s death the defendants had stifled 
bids for the theatrical properties pursuant to a continuing 
conspiracy in violation of the antitrust laws, with the 
result that the property had sold for less than it otherwise 
would have. This injury to property, the administrator 
argued, was individual and personal to himself as adminis­
trator and not a part of or derivative from any separate 
injury to the decedent’s corporate interests, which, it was 
alleged, had also been injured as a result of the conspiracy. 
In rejecting out of hand this claimed injury to the ad­
ministrator’s “property,” and granting summary judg­
ment in favor of defendants, the Court of Appeals for the 
Second Circuit, speaking through Judge Learned Hand, 
explained that “ the antitrust acts do not cover such 
losses” because those Acts “rest upon wrongs done by the 
suppression of competition and must be initiated by a 
party whose commerce has been directly injured.”  253 F. 
2d at 295. (Emphasis added.)



33
See also, Sunbeam Corp. v. Payless Drug Stores, 113 

F. Supp. 31, 43 (N. D. Calif. 1953) ( “The complaint does 
not allege that plaintiff is a competitor of defendants in 
the retail sale of Sunbeam Products or in any other field 
of commercial endeavor; in fact it indicates that the con­
verse is true. [Accordingly] * * * there is no basis in 
the complaint for inferring that such violation caused 
damage to plaintiff” ) ; Ring v. Spina, 84 F. Supp. 403, 406 
(S. D. N. Y. 1949) (a private antitrust plaintiff is entitled 
to relief where he is threatened with “ interference with 
rights or privileges he now enjoys, not merely as a member 
of the general public, but as one engaging in the commerce 
which is being restrained” (Emphasis added)); Volasco 
Products Co. v. Lloyd A. Fry Roofing Co., 308 F. 2d 383, 
395 (6th Cir. 1962), cert, denied, 372 U. S. 907 (1963); 
Peterson v. Borden Co., 50 F. 2d 644 (7th Cir. 1931).

B. Negro Plaintiffs Claiming the Denial of the Right to 
Buy Homes in White Neighborhoods and Plaintiffs 
Claiming Denial of the Right to Sell to Negroes Have 
No Standing to Sue Because They Have No Competi­
tive Stake in the Area of the Economy Allegedly Re­
strained by the Defendants.

The complaint in this action joins three separate 
classes of plaintiffs. The first class of plaintiffs purport 
to represent all Negro persons “who have sought to pur­
chase or rent real property in the Akron area and have 
been restricted to inadequate housing and specified neigh­
borhoods as a direct result of the combination and con­
spiracy hereinafter alleged.” (J.A. 4a.) The second class 
of plaintiffs purportedly sue on behalf of all “white per­
sons who sought to sell or lease property to Negroes in the 
Akron area and who have been prevented from so doing 
as a direct result of the combination and conspiracy here­



34
inafter alleged.” (Ibid.) The third class of plaintiffs al­
lege that they sue on behalf of all “Negro real estate 
brokers and salesmen in the Akron area who, for another 
and for a fee, commission or other valuable consideration, 
have sought to sell, purchase and lease real property in 
the Akron area and who have been restricted in the op­
eration of their business as a direct result of the combina­
tion and conspiracy hereinafter alleged.” (Id. at 5a.)

Of the three classes of plaintiffs described in the com­
plaint, it is clear that only the last class— the class repre­
senting Negro brokers in the Akron area— can have any 
competitive stake in the “area of the economy” which has 
allegedly been restrained in this case, i.e., the real estate 
business in the greater Akron area. Obviously, those 
plaintiffs who purport to represent would-be Negro home- 
owners who have allegedly been denied access to white 
neighborhoods and those plaintiffs who purport to repre­
sent white persons who have allegedly been unable to sell 
their houses to prospective Negro purchasers cannot have 
any competitive stake in the Akron real estate business 
because they are not engaged as businessmen-competitors 
in that area of the economy. The latter two classes of 
plaintiffs do not represent persons who are engaged in the 
occupation or business of buying or selling homes for the 
purpose of earning a livelihood or making a profit. They 
represent persons who are interested in homes in white 
neighborhoods qua homes, not as objects for speculation 
or profit. Nowhere is it alleged in the complaint, nor could 
it be alleged, that these would-be Negro homeowners and 
white homeowners are in “competition” with the defend­
ant brokers. Whatever injuries they may have suffered 
are not such injuries as could have proximately resulted 
from any conduct which the antitrust laws condemn;



35
those laws condemn the suppression of business competi­
tion and the plaintiffs in question are not even in business, 
much less in competition with the defendants. True, the 
injuries with which these plaintiffs are allegedly threat­
ened might, if they could be proved, be regarded as “fore­
seeable” consequences of the suppression of competition 
in the real estate business under orthodox tort law theo­
ries of causation. But, as has already been pointed out, 
this is not enough to give the plaintiffs in question stand­
ing to sue under the antitrust laws, for, as stated by Judge 
Wyzanski in the Snow Crest Beverages case, the courts 
have consistently refused “ to allow those who were not 
in direct competition with the defendant to have a private 
action [under Sections 4 or 16 of the Clayton Act] even 
though as a matter of logic their losses were foreseeable

For the reasons set forth in the preceding paragraphs, 
it is clear beyond dispute that those plaintiffs who purport 
to represent would-be Negro homeowners and white 
homeowners desirous of selling to Negroes are completely 
without standing to maintain this suit for injunctive relief 
under Section 16 of the Clayton Act. Having no competi­
tive stake in the area of the economy which is allegedly 
threatened with restraints as the result of the defendants’ 
alleged conspiracy, they have failed to satisfy an essential 
standing to sue requirement imposed under the judicial 
rule of reason applicable to private antitrust suits. To 
paraphrase the language used by the court in the case of 
Rossi v. McCloskey and Co. (discussed supra at p. 31):

“ the plaintiffs are not competitors in the * * * [real 
estate] business which is allegedly being * * * [re­
strained by the defendants], and any injury they may 
have suffered from the asserted suppression of com­
petition was wholly incidental thereto. Injury which



36
is merely a collateral effect of illegal restraint upon 
competition is not compensable under the antitrust 
laws. Those who suffer such injury are not injured 
‘by reason of’ antitrust violations within the purport 
of the statute.” 149 F. Supp. at 640.

C. Plaintiffs Suing on Behalf of Negro Brokers and on 
Behalf of White Persons Who Seek to Sell Homes to 
Negroes Have No Standing to Sue Because They Are 
Outside the “Target Area” of the Alleged Conspiracy.

Considering next the standing to sue of the third and 
final class of plaintiffs, namely the Negro real estate brokers 
who have allegedly lost business as the result of the de­
fendants’ alleged conspiracy, some initial comment must 
be made with respect to the peculiar pleading strategy 
which the plaintiffs have employed in this case. In their 
complaint, plaintiffs flatly allege that Negro persons seek­
ing to buy real property in white neighborhoods in the 
Akron area are the “target” of the defendants’ alleged 
conspiracy:

“The aforesaid combination and conspiracy has con­
tinuously had as its purpose and objective the preven­
tion of Negro persons from owning real property in 
parts of the Akron area occupied solely or primarily 
by white persons.” (J.A. 9a-9b.)

This is a virtually unprecedented kind of plea in a pri­
vate antitrust suit. The reason for this lack of precedent, 
of course, is that antitrust violators conspiring to suppress 
competition— the core evil of a Section 1 violation— never 
have reason to aim their conspiracy at persons who are not 
their competitors, or, as in this case, who are not even 
engaged in business. Naturally, a conspiratorial purpose 
to suppress competition assumes that competitors are the 
intended target of the conspiracy. See, e.g., Conference of



37
Studio Unions v. Loew’s, Inc.,* 193 F, 2d 51 (9th Cir. 
1951), cert, denied, 342 U. S. 919 (1952), discussed supra 
pp. 28-30; Rossi v. McCloskey and Co., 149 F. Supp. 638 
(E. D. Pa. 1957), discussed supra pp. 31-32; Bookout v. 
Schine Chain Theatres, Inc., 253 F. 2d 292 (2nd Cir. 1958), 
discussed supra p. 32; and Apex Hosiery Co. v. Leader, 310 
U. S. 469, 500 (1940) ( “some form of restraint of com­
mercial competition has been the sine qua non to the con­
demnation of contracts, combinations or conspiracies 
under the Sherman Act” ) .

In the present case one would suppose that the logical 
target of any conspiracy on the part of the defendant real 
estate brokers to suppress competition would have been 
other brokers, including, perhaps, the Negro brokers who 
bring this action. Other brokers are the only persons 
with whom the defendant brokers could possibly be in 
direct competition, and therefore are the only persons 
against whom any conspiracy on the part of the defendants 
to suppress or control competition could have been aimed. 
The plaintiffs, however, who are surely aware of these 
facts, have deliberately refrained from alleging that Negro 
brokers were the intended target of the defendants’ alleged

* In the Conference of Studio Unions case, where there 
were specific allegations that the conspiracy of the major movie 
studios was directed, in part, at the plaintiff unions, whose mem­
bers were employed by the small independent studios, the court 
flatly disregarded these allegations as being self serving and un­
realistic. Since the alleged conspiracy involved the major Holly­
wood movie studios, the court assumed that, regardless of what 
was alleged in the plaintiffs’ complaint, the real target of the 
defendants’ conspiracy must have been the defendants’ com­
petitors, i.e., the independent movie studios. Accordingly, the 
court held that the plaintiff unions and their members were 
without standing to sue, saying:

“Any restraint of commercial competition would occur in the 
production of motion pictures and we fail to see how the ap­
pellants are in a position to complain about that situation.” 
(See quoted language at pp. 29-30, supra.)



38
conspiracy, instead, apparently hoping to broaden the base 
of their lawsuit, they have alleged that Negro persons 
seeking housing in white neighborhoods in the Akron area 
were and are the target of the so-called conspiracy. This 
allegation, however, far from broadening the base of the 
plaintiffs’ lawsuit, not only confirms that the plaintiffs’ 
purpose in bringing this suit was to vindicate a social 
wrong rather than an economic wrong, but also, for the 
reasons set forth in the following discussion, effectively 
deprives the plaintiff Negro brokers of what might other­
wise have been a legitimate claim of standing to sue on 
their part.

The “Target Area” Doctrine.

As one facet of the “rule of reason” which the courts 
have fashioned to limit the scope of the private antitrust 
cause of action, the restriction has been laid down that 
only those persons at whom an unlawful conspiracy has 
been aimed may recover damages or injunctive relief un­
der Sections 4 or 16 of the Clayton Act. As stated by the 
Court of Appeals for the Ninth Circuit in the case of Kar- 
seal Corporation v. Richfield Oil Corp., 221 F. 2d 358 (9th 
Cir. 1955):

“Turning now to the cases concerning the ‘target area’ 
or proximate causation, the rule is that one who is 
only incidentally injured by a violation of the antitrust 
laws,— the bystander who was hit hut not aimed at,— 
cannot recover against the violator.” Id, at 363. 
(Emphasis added in part.)

Another expression of the same rule or doctrine is that 
given by Judge Wyzanski in the Snow Crest Beverages 
case (discussed at pp. 25-26 supra):

‘ It is well settled that despite its broad language § 4 
of the Clayton Act does not give a private cause of



39
action to a person whose losses result only from an 
interruption or diminution of profitable relationships 
with the party directly affected by alleged violations 
of the antitrust laws.” Snow Crest Beverages, Inc. v. 
Recipe Foods, Inc., 147 F. Supp. 907, 909 (D. Mass. 
1956).
This so-called “target area” doctrine has been applied 

by the courts to deny standing to sue to injured “by­
standers” in a variety of factual settings. For example, 
employees, officers, directors or shareholders of a cor­
poration have been denied standing to sue in cases where 
the unlawful conspiracy was directed not at them but at 
the corporation in which they were interested. See, e.g., 
Walker Distribution Co. v. Lucky Lager Brewing Co., 323 
F. 2d 1 (9th Cir. 1963); Darden v. Besser, 257 F. 2d 285 
(6th Cir. 1958); Walder v. Paramount Publix Corp., 132 
F. Supp. 912 (S. D. N. Y. 1955); Gerli v. Silk Ass’n of 
America, 36 F. 2d 959 (S. D. N. Y. 1929). Similarly, sup­
pliers of raw materials or labor, who have not themselves 
been the direct target of a conspiracy, but who have never­
theless suffered injuries to their own business or property 
as a result of reduced requirements on the part of their 
directly injured customers, have been denied standing 
to sue in Section 4 or Section 16 actions. See, e.g., Con­
ference of Studio Unions v. Loew’s, Inc., 193 F. 2d 51 (9th 
Cir. 1951), cert, denied, 342 U. S. 919 (1952); Volasco 
Products Co. v. Lloyd A. Fry Roofing Co., 308 F. 2d 383 
(6th Cir. 1962), cert, denied, 372 U. S. 907 (1963); Snow 
Crest Beverages, Inc. v. Recipe Foods, Inc., 147 F. Supp. 
907 (D. Mass. 1956). Again, landlords who have lost rents 
as the result of conspiracies directed not at them but at 
their tenants have been held to be without standing to 
sue, despite the fact their losses would have been clearly 
foreseeable to the defendant conspirators. See, e.g., Earri-



40
son v. Paramount Pictures, Inc. 115 F. Supp. 312 (E. D. 
Pa. 1953), aff d, 211 F. 2d 405 (3rd Cir. 1954); cert, denied 
348 U. S. 828 (1954); Lieberthal v. North Country Lanes, 
Inc., 221 F. Supp. 685 (S. D. N. Y. 1963), aff’d, 332 F. 2d 
269 (2nd Cir. 1964).

While many other examples of the application of the 
target area doctrine might be adverted to here, the lan­
guage from the Karseal and Snow Crest Beverages opin­
ions and the cases cited above should suffice to demon­
strate that the plaintiffs have effectively deprived the 
plaintiff Negro brokers of standing to sue in this action 
by alleging that the defendants’ conspiracy was directed 
at Negroes desirous of purchasing homes in white neigh­
borhoods in the Akron area. Taking the plaintiffs’ com­
plaint at face value, as the Court and the appellees must 
do on this appeal, it can only be concluded that the Negro 
brokers (and also the plaintiff white homeowners) lack 
standing to sue because they lie outside the alleged target 
area of the defendant realtor’s supposed conspiracy. Even 
if the Negro brokers and white homeowners have suffered 
or are threatened with foreseeable injuries to “business 
or property” because of “an interruption or diminution 
of profitable relationships” with the prospective Negro 
homeowners against whom the alleged conspiracy was 
aimed, they are nevertheless without standing to sue be­
cause, according to the plaintiffs, they are not the persons 
who were intended to be the victims of the alleged 
conspiracy.



41
D. The Legislative History of Congressional Enactments 

in the Civil Rights Field Discloses an Intent by Con­
gress Not to Create Civil Remedies in the Field of 
Private Residential Housing.

It has heretofore been shown that it was the intent 
of Congress, as disclosed by the text, legislative history 
and judicial interpretation of the Sherman Act, to restrict 
that Act’s application in private antitrust suits to cases in 
which conspiracies of a competitive commercial nature
have been pleaded and proved. (See p p .____supra.) So
far as defendants are aware, no court has yet held that 
the Sherman Act should be extended to civil rights cases, 
and it is clear that any such novel decision would quickly 
become known both to lawyers and to members of Con­
gress. With this background in mind, it may now be con­
sidered whether congressional activity in the civil rights 
field has any bearing upon the issues presented on this 
appeal.

That Congress has been deeply concerned with the 
enactment of civil rights legislation is of course well 
known. Its mere failure, however, to enact legislation 
specifically prohibiting the conduct here alleged would be 
of no legal consequence in the present case in the absence 
of evidence that the omission was deliberate and consti­
tuted a clear legislative rejection of the desirability of 
federal judicial control over racial discrimination in the 
field of private housing. On the other hand, if the legisla­
tive history of recent civil rights enactments does disclose 
an express or implied rejection, that fact will strongly 
suggest that the original intent of Congress—to restrict 
the Sherman Act to competitive commercial situations— 
continues in full vigor.

Cases illustrative of this principle of statutory inter­
pretation include Toolson v. New York Yankees, 346 U. S.



42
356, 357 (1953) (failure of Congress, after consideration, 
to nullify an earlier Supreme Court decision exempting 
professional baseball from antitrust laws); Youngstown 
Sheet and Tube Company v. Sawyer, 343 U. S. 579, 585 
(1962) (refusal of Congress to authorize government 
seizures of property as a means of settling labor disputes) ; 
Zemel v. Rusk, 381 U. S. 1, 8-11 (1965) (failure of Con­
gress to repeal or revise passport statute in the face of 
settled administrative interpretation as to geographical 
travel restrictions).

A brief review of the legislative history of congres­
sional civil rights enactments serves to establish that Con­
gress has indeed unmistakably emphasized an intention 
not to exercise to the uttermost its constitutional com­
merce power so as to create a civil remedy in cases of 
racial discrimination in private housing.

First: Legislative history in the field of public hous­
ing illuminates quite dramatically the motives of Congress 
in its subsequent passage of the Civil Rights Act of 1964 
(42 U. S. C. A. §§ 2000a, et seq.), especially in view of the 
more direct and obvious interest of the federal government 
in the several housing programs, including those of the 
Federal Housing Administration, Urban Renewal Ad­
ministration and Public Housing Administration. During 
the 15 years preceding enactment of the Civil Rights Act 
of 1964, Congress expressly voted down, on no fewer than 
six occasions, amendments to the above mentioned public 
housing acts which would have required the agencies con­
cerned to adopt and enforce policies of non-discrimination. 
The legislative history of these proposals is fully described 
in a memorandum prepared by James E. Palmer, Jr., a 
member of the staff of the Subcommittee on Housing of the 
Senate’s Committee on Banking and Currency. 108 Cong. 
Rec. 22908, 87th Cong., 2d Sess.



43
Second: Further light is shed upon the intent of Con­

gress by the history of the Civil Rights Act of 1964, which 
demonstrates both the concern of Congress for the prob­
lem of discrimination in housing and the exact nature of 
the remedies which it intended to create.

In adopting Title VI of the Civil Rights Act of 1964, 
Congress in effect departed from its previous unwilling­
ness, above described, to engraft a policy of nondiscrimina­
tion into the statutes dealing with public housing. The 
operative provision of the Title prohibits discrimination 
in “ any program or activity receiving federal financial 
assistance.” 42 U. S. C. A. § 2000d. The legislative history 
of this Title makes clear that one of the principal objectives 
of this language was the prevention of discrimination in 
the public housing field (see BNA, The Civil Rights Act of 
1964, p. 93), thus conclusively demonstrating that Con­
gress had this problem in mind in adopting the Act.

Comparison of the parallel public accommodations 
provisions of the two principal civil rights bills introduced 
in Congress likewise highlights what Congress did and did 
not intend to accomplish by means of the legislation ulti­
mately adopted. The two bills in question were S. 1732 
and H. R. 7152. The latter, proposed by the Administra­
tion of President Kennedy, with amendments not here 
pertinent, was enacted into law, while the Senate bill was 
not adopted. As explained in Senate Report No. 872 dated 
February 10, 1964, subsection 3(a) of the Senate bill 
would have granted to all persons a right to be free from 
discrimination or segregation on account of race, color, 
religion or national origin in the enjoyment of the goods, 
services, facilities, privileges, advantages and accommoda­
tions of certain public establishments. The Senate Report 
states the following with regard to a subsequent subsection 
of the bill:



44
“ Subsection 3(a) (3) deals with retail establishments 
or any other public place that keeps goods for sale 
to the public, including a public place engaged in sell­
ing food for consumption on the premises, and any 
other establishments where goods, services, facilities, 
privileges, advantages, or accommodations are held 
out to the public for sale, use, rent or hire * * 
(Emphasis supplied.) 2 U. S. Code Cong, and Adm. 
News, 88th Cong., 2d Sess., 2357.
In contrast to the foregoing provision, the Public 

Accommodations section of the House bill (42 U. S. C. A. 
§ 2000a) enacted in lieu of the Senate bill, defines in much 
more restricted fashion the types of establishments sub­
ject to its sanctions, dealing only with the certain 
enumerated types of establishments such as hotels, restau­
rants, gasoline stations, theaters, and stadiums. 42 U. S. 
C. A. § 2000a(b).

It will be observed that the broad language of the 
Senate bill quite plainly would have reached the type of 
activities alleged in the present complaint. Moreover, un­
der proper circumstances, any person refused service by 
one of the defendant real estate brokers would have been 
entitled under the Senate bill to seek a court order pro­
hibiting such conduct. The statute as enacted, on the other 
hand, does not extend beyond the limited categories of the 
establishments above described, which clearly exclude 
real estate brokerage firms.

Third: That Congress sought to accomplish objectives 
of a strictly limited nature in enacting the Civil Rights Act 
of 1964 is confirmed by subsequent judicial decision. In 
Cuevas v. Sdrales, 344 F. 2d 1019 (10th Cir. 1965), cert, 
denied, it was asserted that the public accommodations 
provisions of the Act should be applied to a bar or tavern. 
The Court said:



45
“ [T] his case appears to be one of first impression 

on the specific question of the businesses covered by 
Title II of the Act. The passage of the Act followed 
extensive hearings. A study of the hearings before 
the different committees and the debates in Congress 
illustrates, we think, that Congress did not intend to 
include all establishments to which its constitutional 
powers might extend. The legislation was aimed at 
the aggravated sources of discrimination which af­
fected interstate commerce. Many business establish­
ments were not included within the scope of the Act. 
It was thought that if the most flagrant and trouble­
some areas of discrimination were eliminated by law, 
the less bothersome would disappear through vol­
untary action and public effort. * * *” Id. at 1021. 
(Emphasis added.)

The court then went on to quote at length from remarks 
of Senator Humphrey before the Senate and Attorney 
General Kennedy in committee, respectively, as to the 
“moderate nature” of the legislation and the “wisdom of 
promoting local solution * * * and decreasing the need 
for Federal regulation.” See also Robertson v. Johnston, 
249 F. Supp. 618, 621-2 (E. D. La., 1966).

In the light of the foregoing history, can there be any 
doubt whatever that if Congress had deemed it wise or 
expedient to the solution of the nation’s racial problems 
for the federal courts to intervene in cases of discrimina­
tion by business establishments other than those listed 
in the Act, it would have clearly and unequivocally said 
so? Yet instead, as noted by the Tenth Circuit Court of 
Appeals, it not only failed to do so but made plain that its 
reason for adopting the “moderate” approach was that 
discriminatory practices in other areas should be left to 
“voluntary action and public effort.”



46
It may of course be argued that what Congress did 

and did not do in its enactment of the Civil Rights Act of 
1964 has no direct bearing upon its intentions as expressed 
in the Sherman Act. But whatever the validity of such 
an argument as a matter of technical statutory construc­
tion, when the Sherman Act and the Civil Rights Act are 
viewed in historical perspective, it becomes inescapably 
clear, as heretofore shown, (1) that when the Sherman 
Act was passed, no suspicion could have crossed the mind 
of Congress that its application to the field of civil rights 
could possibly be urged; (2) that the Sherman Act, as was 
surely known to Congress in 1964, had never been applied, 
and had scarcely even been thought of as applying, to 
civil rights controversies; and (3) that in its consideration 
of the 1964 Civil Rights Act, when its specific and only 
intention was the shaping of policies to meet problems of 
racial discrimination, Congress chose to do so in a strictly 
limited fashion which it deemed adequate to accomplish 
its legislative objectives, but which specifically rejected 
a prohibition of the type of conduct alleged in the com­
plaint. When the full significance of these facts is objec­
tively weighed, there can remain no question whatever 
that the legislators who passed the Civil Rights Act would 
have vigorously rejected any contention that the Sherman 
Act could be interpreted so as to accomplish that which 
it last year expressly and deliberately left to local action.



47
III. Is the present action properly maintainable as a 

class action?
The District Court did not answer this question.
Defendants-appellees contend it should be answered 

“ No.”

This action was initially brought as a combined class 
action under the “ spurious class action” provisions of 
Rule 23(a)(3) of the Federal Rules of Civil Procedure. 
In the District Court defendants argued that the suit was 
not properly maintainable as a class action because the 
Complaint failed to adequately define the named classes 
and because no facts were pleaded in support of plaintiff’s 
conclusory allegation that they adequately represented the 
named classes. These arguments were not considered by 
the District Court because of its dismissal of the action on 
jurisdictional grounds. In the interest of avoiding multiple 
appeals, the defendants-appellees ask the Court to pass on 
the question of whether this suit is properly maintainable 
as a class action, in the event that the Court decides the 
other questions raised on this appeal in favor of the plain­
tiffs.

A . The Class Purportedly Made Up of Negroes Who Have 
Been Denied Housing in White Neighborhoods of the 
Akron Area Has Not Been Adequately Defined in the 
Complaint.

Although Rule 23 has been amended, effective July 1, 
1966, and the provisions of the former rule dealing with 
spurious class actions have been eliminated, it continues 
to be true under the new rule that plaintiffs purporting to 
bring a class action must adequately describe or define the 
class on whose behalf they sue, and must also allege facts 
showing that they will adequately represent the persons



48
making up the class. Taking first the matter of class de­
scription, Professor Moore states that “ [b]y definition, an 
essential prerequisite to a class action is the existence of a 
‘class.’ ” 3 M oore’s Federal Practice. U 23.04, p. 3418 
(2d ed. 1964). In order for there to be a class, and for the 
court and the parties to be put on proper notice with 
respect to the matters being litigated in the purported class 
action, some expression of the geographical bounds of the 
class must be given in the pleadings. See, e.g., D. & A. 
Motors v. General Motors Corp., 19 F. R. D. 365 (S. D. 
N. Y. 1956); Clark v. Thompson, 206 F. Supp. 539, 541 
(S. D. Miss. 1962). In the present suit, this requirement 
has not been met with respect to all of the named classes. 
The first group of plaintiffs named in the Complaint pur­
port to sue on behalf of themselves

“and all other Negro persons who have sought to pur­
chase or rent real property in the Akron area and 
have been restricted to inadequate housing and speci­
fied neighborhoods as a direct result of the combina­
tion and conspiracy hereinafter alleged.” J.A. 3a-4a. 
(Emphasis added.)

As the quoted language reveals, no effort has been 
made in the Complaint to define the geographical limita­
tions of the class of plaintiffs who purport to sue on behalf 
of Negroes who have allegedly sought and been denied 
housing in white neighborhoods of the Akron area. There 
is no language limiting the geographical bounds of the class 
to Negroes of the Akron area, or of the State of Ohio, or 
even of the United States. For aught that appears in the 
Complaint, plaintiffs would have this Court and the de­
fendants believe that the eight persons named as repre­
sentatives of the class sue on behalf of all of the Negro 
persons in the United States who at some unspecified time,



49
past, present, or future,* have wanted, now want, or may 
want to obtain housing in white neighborhoods of the 
Akron area. Obviously, there can be no meaningful ad­
ministration of a lawsuit involving so large, so amorphous 
and so inchoate a “ class” of plaintiffs as this. In fact, such 
language does not describe a class at all. A body of per­
sons of that size actually represents a sector of the public 
at large, and to remedy alleged antitrust injuries to a sec­
tor of the public at large, the government, not private 
parties, must initiate an antitrust action for injunctive 
relief. As stated in Revere Camera Co. v. Eastman Kodak 
Co., 81 F. Supp. 325, 331 (N. D. 111. 1948):

“The antitrust laws were enacted to prevent injury to 
the public as well as injury to individuals, but no­
where is the individual authorized to bring suit on 
behalf of the public for private injury. The Attorney 
General alone is authorized by statute to bring such 
suit.”
Furthermore, because of the plaintiffs’ failure to define 

the geographical limits of the class, their reliance on other

* Although the Complaint does say that the eight named 
plaintiffs sue on behalf of all Negroes who “have sought to pur­
chase * * * and have been restricted [in such purchases],” the 
verbs being in the past tense, the fact that only injunctive re­
lief is asked for in the Complaint makes it clear by implication 
that the eight named plaintiffs are actually suing on behalf of 
all Negro persons who at some future time may seek housing in 
white neighborhoods of the Akron area. Section 16 of the Clay­
ton Act, upon which plaintiffs predicate this action, provides 
relief only against “threatened loss or damage,” that is to say, 
against prospective losses, and therefore it can only be assumed, 
despite the references in the Complaint to the past injuries of 
the named plaintiffs, that the class is intended to include any 
Negro who in the future may be “threatened” with injury by 
reason of being denied housing in white neighborhoods of the 
Akron area. Indeed, if this assumption is not made, the whole 
framework of the lawsuit collapses, for injunctive relief cannot, 
of course, be claimed for past injuries.



50
civil rights cases in which class actions have been permitted 
is misplaced. An examination of representative cases of 
this kind reveals that the geographical bounds of the des­
ignated classes have always been carefully set forth by the 
named plaintiffs. For example, in Northcross v. Board of 
Education of City of Memphis, 302 F. 2d 818 (6th Cir. 
1962), cert, denied, 370 U. S. 94.4 (1962), a school desegre­
gation case, the class of plaintiffs was very clearly desig­
nated as Negro children of school age, and their parents, 
living in the city of Memphis, Tennessee. And in Brunson 
v. Board of Trustees, 311 F. 2d 107 (4th Cir. 1962), cert, 
denied, 373 U. S. 933 (1963), another school desegregation 
case, the class was again limited to Negroes residing in a 
particular geographical area, namely, School District No. 1 
of Clarendon County, South Carolina. See also, Mannings 
v. Board of Public Instruction of Hillsborough County, 
Florida, 277 F. 2d 370 (5th Cir. 1960). In the present case, 
no such clear delineation of the geographical limits of the 
class of Negro plaintiffs has been given, and therefore the 
civil rights cases just cited are not authority for the main­
tenance of the present class action on behalf of Negroes 
seeking housing in white neighborhoods of the Akron area. 
On the contrary, this case must be governed by the hold­
ings in such civil rights class actions as Clark v. Thompson, 
206 F. Supp. 539 (S. D. Miss. 1962). In the Clark case, a 
class action was brought to desegregate park facilities in 
the City of Jackson, Mississippi. The suit was dismissed as 
a class action, however, because the District Court found 
that “neither the identity of the purported class nor the 
right and ability of the plaintiffs to represent same has 
been established.” 206 F. Supp. at 541. This finding was 
based on the fact that one of the representative plaintiffs 
said he was suing on behalf of all Negroes in Jackson, 
while another said he was suing on behalf of all Negroes



51
in the United States, while still a third said that “she pur­
ported to represent all races of peoples in the world.” Ibid.

Another reason for holding that amended Rule 23 
should not be stretched to permit the bringing of a class 
action on behalf of the Negroes described in the first class 
of the Complaint is that the effect of any judgment ren­
dered in favor of such a broadly described and inchoate 
class would be of far more sweeping effect than the framers 
of the private relief sections of the Clayton Act could ever 
have contemplated. Under amended Rule 23, unlike the 
spurious class action doctrine which existed under for­
mer Rule 23, a judgment entered in favor of a class ac­
crues to the benefit of any person who falls within the 
description of the class, and not just to the benefit of the 
plaintiffs named as parties to the action. See Note of Ad­
visory Committee, 34 F. R. D. 387, 388. In addition, the 
judgment will normally be regarded as res judicata of the 
liability issue in any future action which a person falling 
within the class description may institute against the de­
fendants in the class action. Id. at 393-94. In view of these 
changes in the rules governing class actions, in a case such 
as this, where the membership of the described class is 
so unlimited with respect to geographic location and time, 
a judgment in favor of the class could work disastrous 
and unwarranted consequences upon the defendants. Any 
Negro person, in any state of the Union, could use the 
judgment in the class action suit as the basis for a private 
treble damage suit against the defendants for claimed dam­
ages resulting from his inability to find housing in the 
white neighborhoods of Akron. Obviously, such an ex­
treme and sweeping result was never envisioned by Con­
gress when it enacted the statutes authorizing the granting 
of relief to private antitrust litigants. In matters of such 
broad scope, the government, not private parties, was in­



52
tended by Congress to safeguard the interests of the pub­
lic. See Revere Camera Co. v. Eastman Kodak Co., supra.

For the reasons given in the foregoing paragraphs, 
defendants submit that the Negroes described in the first 
purported “ class” of the Complaint cannot maintain this 
suit as a class action under Rule 23 of the Federal Rules of 
Civil Procedure, as amended.

B. The Named Plaintiffs in This Action Do Not Adequately 
Represent the Classes on Whose Behalf They Pur­
portedly Sue.

Amended Rule 23 has continued in force the require­
ment that the named plaintiffs in a class action must 
adequately represent the class on whose behalf they sue. 
The new rule provides in pertinent part as follows:

“ (a) Prerequisites to a Class Action. One or more 
members of a class may sue or be sued as representa­
tive parties on behalf of all only if * * * (4) the 
representative parties will fairly and adequately pro­
tect the interests of the class.”

This requirement of adequacy of representation in 
class action suits has been the subject of considerable liti­
gation. Under the representation provision of former Rule 
23— a provision which is substantially identical to the 
quoted provision of the amended rule— a settled principle 
emerged from the decisions that conclusory allegations of 
adequacy of representation such as have been made in the 
Complaint in the present case will not suffice to meet the 
requirements of the rule. The named plaintiffs must go 
further and allege facts upon which they base their claim 
of adequately representing the class, or else face the con­
sequence of having their suit dismissed by the court as a 
class action. See, e.g., Austin Theatre, Inc. v. Warner Bros. 
Pictures, Inc., 19 F. R. D. 93, 96 (S. D. N. Y. 1956) (com­



53
plaint stricken for failure of plaintiff “ to allege any facts 
to show that it will, as claimed, adequately represent 
the class” ) ; Weeks v. Bareco Oil Co., 125 F. 2d 84 (7th 
Cir. 1941) (complaint dismissed as class action for failure 
of plaintiffs to allege sufficient facts in support of their 
conclusory claim of adequate representation); Associated 
Orchestra Leaders v. Philadelphia Musical Soc’y, 203 F. 
Supp. 755 (E. D. Pa. 1962); and Rio Haven, Inc. v. Na­
tional Screen Service Corp., 11 F. R. D. 509 (E. D. Pa. 
1951). On the basis of these authorities, the present suit 
should be dismissed as a combined class action because of 
the named plaintiffs’ failure to allege facts supporting 
their claim that they adequately represent the three classes 
named in the suit.

In considering the question of adequacy of representa­
tion in class actions,

“the court is at liberty to consider the number ap­
pearing on record as contrasted with the number in 
the class * * * and whether the relationship be­
tween the parties to the class is unique or one identi­
cal and common with that of all others of a class * * * 
There must he a sufficient number of persons to in­
sure a fair representation of the class.”  Pelelas v. 
Caterpillar Tractor Co., 113 F. 2d 629, 632 (7th Cir. 
1940). (Emphasis added.)

Applying this principle to the present lawsuit, it seems 
clear that the plaintiffs named in this action cannot pos­
sibly adequately represent the three classes of large 
and virtually indeterminate size that have been described 
in the complaint. Taking first those plaintiffs who pur­
port to represent Negro persons (of no specified geo­
graphical area) who may at some time desire to purchase 
or rent real property in the Akron area, it can be seen 
that three Negro couples and two Negro individuals, a



54
total of eight persons, purport to adequately represent a 
class which is necessarily comprised of many thousands 
of persons. With regard to the second described class, the 
representation is even more limited. A single couple, Mr. 
and Mrs. Thomas F. Powell, purport to represent ade­
quately “all other white persons who have sought to sell or 
lease real property to Negroes in the Akron area.” Simi­
larly, the third and final class of plaintiffs— a class which 
purports to be comprised of the many Negro real estate 
brokers and salesmen in the Akron area— is alleged to be 
“adequately represented” by one Negro broker—Idell Fer­
guson. In all of these situations, as the following authori­
ties will reveal, the representation falls far short of that 
required to insure the adequate representation of all others 
in the class.

A leading case on the use of class actions in private 
antitrust litigation is Hess v. Anderson, Clayton & Co., 
20 F. R. D. 466 (S. D. Cal. 1957). In that case 22 cotton 
growers brought a class action on behalf of themselves 
and 8,000 other growers against certain cotton oil manu­
facturers who had allegedly conspired to fix prices for 
cotton and its byproducts in violation of the antitrust 
laws. The court, in the course of a detailed analysis of 
class actions and the issue of adequacy of representation 
as it arises in such actions, concluded that the 22 named 
plaintiffs could not adequately represent the 8,000 grow­
ers on wThose behalf they were suing:

“The complaint in this case shows inadequacy in 
numbers. The 22 plaintiffs seek to recover $28,- 
800,000 on behalf of some 8,000 growers.
*  *  *

“ * * * it is quite apparent on the face of this record 
that the 22 persons before the court do not insure



55
adequate rep res en ta tio n 20 F. R. D. at 483, 484. 
(Emphasis the court’s.)

In another class action arising under the antitrust 
laws, Rohlfing v. Cat’s Paw Rubber Co., 99 F. Supp. 886 
(N. D. 111. 1951), 87 shoe repairmen brought an action 
on behalf of themselves and all other shoe repairmen in 
the City of Chicago against certain leather and rubber 
goods suppliers. The defendants objected to this class ac­
tion on the ground, inter alia, that the 87 plaintiffs could 
not “ fairly insure adequate representation of the class.” 
Agreeing with this contention, the court dismissed the 
action as a class action and ordered all references to the 
class action stricken from the pleadings:

“The court is of the opinion that the named plaintiffs 
are not [sic] and cannot adequately and fairly repre­
sent the alleged class. For this reason the defendants’ 
motion to dismiss the action as a class action is sus­
tained and all reference to this action as a class action 
on behalf of persons similarly situated should be 
stricken.” 99 F. Supp. at 894.

On the basis of the cases just discussed, it seems clear 
that the few plaintiffs named in the present lawsuit can­
not, by any stretch of the imagination, adequately repre­
sent the classes on whose behalf they sue. Accordingly, 
on the basis of this factor alone, defendants submit that 
the present suit should be dismissed as a class action with 
respect to each of the classes named in the Complaint.



IV. CONCLUSION.

A . Plaintiffs Have Elected to Stand on the Original Allega­
tions of Their Complaint and the Omitted Jurisdic­
tional Facts Cannot Be Presumed.

As has already been noted (see pp. 13-14, supra), 
Judge Kalbfleisch’s opinion below predicated the dismissal 
of plaintiffs’ action in part upon the Complaint’s failure to 
define or describe adequately the geographical portion of 
the Akron area affected by defendants’ alleged conspiracy, 
and pointed out that substantiality of effect on interstate 
commerce— a jurisdictional prerequisite— cannot be pre­
sumed. J.A. 31a-32a. Cited in support was 2 Moore’s 
Federal Practice, p. 1639 (2d ed. 1964); see also Schultis 
v. McDougal, 225 U. S. 561, 569 (1912); Barnhart v. 
Western Maryland Ry. Co., 128 F. 2d 709, 712-13 (4th Cir., 
1942); and 4 Encyclopedia of Federal Procedure, 
§ 14.133, p. 173 (3d ed. 1951).

It is clear beyond doubt, both from the language of 
Judge Kalbfleisch’s opinion and the applicable statute and 
rule, that any amendment to the complaint tendered for 
the purpose of correcting its jurisdictional defects would 
have been allowed. “ [L]eave [to amend] shall be freely 
given when justice so requires.” F. R. C. P. 15(a); see 
also 28 U. S. C. A. § 1653; 3 M oore’s Federal Practice, 

15.10, p. 957 (2d ed. 1964). An amendment which would 
have done no more than allege that the area of Akron 
which was affected by defendants’ alleged conspiracy was 
“ substantial” would seemingly have remedied the juris­
dictional defect found by Judge Kalbfleisch. The plain­
tiffs, however, despite the clear invitation to amend set 
forth in the Judge’s opinion, have filed no such amend­
ment. Defendants submit that the only permissible con­
clusion which can be drawn from this is that plaintiffs 
have elected to forego their right of amendment and to

56



57
stand instead upon the adequacy of the original, care­
fully drawn allegations of their Complaint. In view of the 
apparent deliberateness of this election, it is plainly not 
for this Court, nor for the United States as amicus, to sup­
ply by strained construction or inference that which plain­
tiffs themselves have neither asserted nor even asked 
leave to assert. On the contrary, the complaint must be 
tested on the basis of what it fairly alleges on its face. 
Hence this Court should disregard the factual data which 
the Government has cited in its brief in an attempt to 
remedy the deficient jurisdictional allegations of the Com­
plaint, and should also disregard the Government’s gratui­
tous suggestion (see Government Brief, p. 22, fn. 5) that 
in the event of remand the District Court should be in­
structed to allow an amendment pursuant to 28 U. S. C. A. 
§ 1653.* See Joy v. Hague, 175 F. 2d 395 (1st Cir., 1949); 
Harris v. American Legion, 162 F. Supp. 700 (S. D. Ind. 
(1959), a f f ’d ., 269 F. 2d 594 (7th Cir., 1959); 3 Moore’s 
Federal Practice, 15.10, p. 959 (2d ed. 1964). To per­
mit such an amendment at this late stage of the proceed­
ings, after plaintiffs have already had ample opportunity 
to do so, would be, as Professor Moore points out (see 3 
Moore Federal Practice, [} 15.07[2], pp. 853-7 [2d ed. 
1964]), to encourage frivolous and piecemeal appeals, and 
to visit extensive and unjustified expense upon litigants 
occupying the position of the present defendants.

B. The Decision of the Court Below Should Be Affirmed.

On the basis of the arguments and authorities set forth 
in the preceding sections of this brief, it is clear that each 
of the three grounds for dismissal advanced by the defend­
ants (see J.A. p. 21a) provides a complete and sufficient

* “Defective allegations of jurisdiction may be amended, 
upon terms, in the trial or appellate courts.”



58
foundation, in itself, for the District Court’s dismissal of 
this action. The correctness of the District Court’s deci­
sion is made all the more obvious, however, when the 
three grounds for dismissal are considered together, for in 
a very real sense each of the three grounds supports and 
complements each of the other grounds. When, for ex­
ample, the remoteness of the alleged effect upon interstate 
commerce is considered together with the fact that these 
plaintiffs have no competitive stake, in an antitrust sense, 
in the area of commerce which has allegedly been re­
strained, the violence which plaintiffs are attempting to 
work upon accepted antitrust concepts becomes all the 
more patent. The same thing holds true for plaintiffs’ at­
tempt to bring suit on behalf of a class whose geographical 
limits are in no way set forth in the Complaint. This at­
tempt to broaden the scope of the private relief Sections 
of the antitrust laws by bringing suit on behalf of all 
Negroes, everywhere, who may at some unspecified future 
time seek to buy or rent housing in the Akron area gives 
further support to the defendants’ contention that plain­
tiffs are attempting not to redress a commercial grievance 
by this lawsuit, but are attempting instead to rectify a 
social wrong which the antitrust laws were not designed to 
alleviate.

Perhaps, in conclusion, the best way for the defend­
ants to meet this unwarranted attempt by the plaintiffs 
to extend the antitrust laws into areas where they were 
never intended to go is to quote from the Supreme Court’s 
opinion in the case of Eastern Railroad Presidents Confer­
ence v. Noerr Motor Freight, Inc., 365 U. S. 127 (1961). 
In that case it was alleged by the plaintiff trucking com­
panies that the defendant railroads and others had con­
spired in a vicious publicity campaign to sully the “public 
image” of the trucking industry and to promote state



59
legislation of a kind discriminatory to trucking companies. 
In unanimously holding that the activities complained of 
did not fall within the intended scope of the antitrust laws, 
despite their proven success and their proven impact on 
“ commerce,” the Supreme Court laid down a rule of statu­
tory construction which provides a clear word of warning 
against expansion of the antitrust laws to cover contro­
versies of an essentially social or political nature:

“ The proscriptions of the [Sherman] Act, tailored as 
they are for the business world, are not at all ap­
propriate for application in the political arena. Con­
gress has traditionally exercised extreme caution in 
legislating with respect to problems relating to the 
conduct of political activities, a caution which has 
been reflected in the decisions of this Court interpret­
ing such legislation. All of this caution would go for 
naught if we permitted an extension of the Sherman 
Act to regulate activities of that nature simply be­
cause those activities have a commercial impact and 
involve conduct that can be termed unethical. * * *” 
365 U. S. at 141. (Emphasis added.)

If Congress has exercised “ extreme caution” in legis­
lating with respect to political activities, it need hardly 
be said that it has exercised an ultimate degree of caution 
in legislating with respect to matters of racial discrimina­
tion and civil rights. (See pp. 41-46, supra.) It therefore 
follows from the admonition in Noerr that the courts must 
not in cases such as this allow the caution of Congress to 
“go for naught” by drawing the antitrust laws into 
“ arenas” of social and political conflict where they were 
never intended to apply. To create a cause of action under 
the Sherman Act in favor of civil rights plaintiffs such as 
these would not only do violence to the whole history and 
intended scope of the federal antitrust laws but would



6 0

fly in the face of the policy of restraint which has been 
expressly declared by the Supreme Court.

Respectfully submitted,
Sidney D. L. Jackson, Jr., 
A lexander H. Hadden,
George Downing,
John H. Burlingame,
Baker, Hostetler & Patterson,

1956 Union Commerce Building, 
Cleveland, Ohio 44115,

Ivan L. Sm ith , Esq.,
O’Neil & Sm ith ,

16 South Broadway,
Akron, Ohio 44308,

Attorneys for all Appellees 
except First National Bank 
of Akron and Herberich- 
Hall-Harter, Inc.