author: Mr. Justice Goldberg Mr. Justice Harlan,

text:
    HUDSON DISTRIBUTORS, INC., v. ELI LILLY & CO.
    No. 490.
    Argued April 30, 1964.
    Decided June 1, 1964

      Myron N. Krotinger argued the cause for appellant in both cases. With him on the briefs were Leonard Lane and Morton L. Stone.

      Ralph M. Carson argued the cause for appellee in No. 489. With him on the brief was Henry L. King.

      Everett I. Willis argued the cause for appellee in No. 490. With him on the brief was Louis S. Peirce.

    Briefs of. amici curiae, urging affirmance, were filed by James A. Gorrell for Corning Glass Works et al., and by R. W. Kilbourne for Ohio Hardware Association et al.

      Together with No. 489, Hudson Distributors, Inc., v. Upjohn Company, also on appeal from the same court, argued April 29, 1964.

   Mr. Justice Goldberg

delivered the opinion of the Court.

These appeals raise the question of whether the McGuire Act, 66 Stat. 631, 15 U. S. C. §§ 45 (a)(l)-(5), permits the application and enforcement of the Ohio Fair Trade Act against appellant in support of appellees’ systems of retail price maintenance. For the reasons stated below, we hold that the Ohio Act, as applied to the facts of these cases, comes within the provisions of the McGuire Act exempting certain resale price systems from the prohibitions of the Sherman Act, 26 Stat. 209, 15 U. S. C. § 1 et seg.

The two appeals, one involving The Upjohn Co. and one involving Eli Lilly & Co., were considered together in the Ohio courts. For simplicity we state only the facts of the Lilly case. Appellant, Hudson Distributors, Inc., owns and operates a retail drug chain in Cleveland, Ohio. Appellee, Eli Lilly & Co., manufactures pharmaceutical products bearing its trademarks and trade names. Lilly sells its products directly to wholesalers and makes no sales to retailers. Hudson purchases Lilly brand products from Regal D. S., Inc., a Michigan wholesaler.

In June 1959, the Ohio Legislature enacted a new Fair Trade Act, Ohio Revised Code §§ 1333.27-1333.34. Subsequently Lilly sent letters to all Ohio retailers of Lilly products, including Hudson, to notify them of Lilly’s intention to establish minimum retail resale prices for its trademarked products pursuant to the new Ohio Act and to invite the retailers to enter into written fair-trade contracts. More than 1,400 Ohio retailers of Lilly products (about 65% of all the retail pharmacists in Ohio) signed fair-trade contracts with Lilly. Hudson, however, refused to enter into a written contract with Lilly and ignored the specified minimum resale prices. Lilly formally notified Hudson that the Ohio Act required Hudson to observe the minimum retail resale prices for Lilly commodities. Hudson, nevertheless, continued to purchase and then to resell Lilly products at less than the stipulated minimum retail resale prices.

Hudson thereupon filed a petition in the Court of Common Pleas for Cuyahoga County, Ohio, for a judgment declaring the Ohio Act invalid under the State Constitution and federal law. Lilly answered and cross-petitioned for enforcement of the Ohio Act against Hudson. The Court of Common Pleas held the Ohio Act unconstitutional under the State Constitution. On appeal, the Court of Appeals for Cuyahoga County, after discussing the federal and state legislation, 117 Ohio App. 207, 176 N. E. 2d 236, reversed the trial court and entered a judgment declaring that the Ohio Act was not “in violation of the Constitution of the State of Ohio nor of the Constitution of the United States . . . The court remanded the case “for further proceedings according to law with respect to the cross-petition . ...” On further appeal, the Supreme Court of Ohio affirmed the judgment of the Court of Appeals. 174 Ohio St. 487, 190 N. E. 2d 460. This Court noted probable jurisdiction. 375 U. S.938, 939.

Hudson contends that the provisions of the Ohio Act under which Lilly established minimum resale prices are not authorized by the McGuire Act, 66 Stat. 631, 15 U. S. C. §§45 (a)(l)-(5). Section 2 of the McGuire Act provides in pertinent part as follows:

“Nothing contained in this section or in any of the Antitrust Acts shall render unlawful any contracts or agreements prescribing minimum or stipulated prices, . . . when contracts or agreements of that description are lawful as applied to intrastate transactions under any statute, law, or public policy now or hereafter in effect in any State . . .

Section 3 of the McGuire Act reads as follows:

“Nothing contained in this section or in any of the Antitrust Acts shall render unlawful the exercise or the enforcement of any right or right of action created by any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Columbia, which in substance provides that willfully and knowingly advertising, offering for sale, or selling any commodity at less than the price or prices prescribed in such contracts or agreements whether the person so advertising, offering for sale, or selling is or is not a party to such a contract or agreement, is unfair competition and is actionable at the suit of any person damaged thereby.”

Before the enactment of the McGuire Act, this Court in 1951 in Schwegmann Bros. v. Calvert Distillers Corp., 341 U. S. 384, considered whether the Miller-Tydings Act, 50 Stat. 693, 15 U. S. C. § 1, removed from the prohibition of the Sherman Act, 26 Stat. 209, 15 U. S. C. § 1 et seq., a state statute which authorized a trademark owner, by notice, to require a retailer who had not executed a written contract to observe resale price maintenance. Respondents in that case argued that since the Sherman Act outlawed “contracts” in restraint of trade and since the Miller-Tydings amendment to the Sherman Act excepted “contracts or agreements prescribing minimum prices for the resale” of a commodity where such contracts or agreements were lawful under state law, the Miller-Tydings Act therefore immunized all arrangements involving resale price maintenance authorized by state law. 341 U. S., at 387. After examining the history of the Miller-Tydings Act, the Court concluded that Congress had intended the words “contracts or agreements” as contained in that Act to be used “in their normal and customary meaning,” id., at 388, and to cover only arrangements whereby the retailer voluntarily agreed to be bound by the resale price restrictions. The Court held therefore that the state resale price maintenance law could not be applied to nonsigners — “recalcitrants . . . dragged in by the heels and compelled to submit to price fixing.” Id., at 390. The Court stated that:

“It should be remembered that it was the state laws that the federal law was designed to accommodate. Federal regulation was to give way to state regulation. When state regulation provided for resale price maintenance by both those who contracted and those who did not, and the federal regulation was relaxed only as respects 'contracts or agreements/ the inference is strong that Congress left the noncontracting group to be governed by preexisting law.” Id., at 395.

Shortly after the Schwegmann decision, Congress passed the McGuire Act, 66 Stat. 631, 15 U. S. C. §§ 45 (a) (l)-(5). The Report of the House Committee on Interstate and Foreign Commerce, which accompanied the McGuire Act, declared that:

"The primary purpose of the [McGuire] bill is to reaffirm the very same proposition which, in the committee’s opinion, the Congress intended to enact into law when it passed the Miller-Tydings Act . . . , to the effect that the application and enforcement of State fair-trade laws — including the nonsigner provisions of such laws — with regard to interstate transactions shall not constitute a violation of the Federal Trade Commission Act or the Sherman Antitrust Act. This reaffirmation is made necessary because of the decision of a divided Supreme Court in Schwegmann v. Calvert Distillers Corpora tion (341 U. S. 384, May 21, 1951). In that case, six members of the Court held that the Miller-Tydings Act did not exempt from these Federal laws enforcement of State fair trade laws with respect to nonsigners. Three members of the Court held that the Miller-Tydings Act did so apply.
“The end result of the Supreme Court decision has been seriously to undermine the effectiveness of the Miller-Tydings Act and, in turn, of the fair-trade laws enacted by 45 States. H. R. 5767, as amended, is designed to restore the effectiveness of these acts by making it abundantly clear that Congress means to let State fair-trade laws apply in their totality; that is, with respect to nonsigners as well as signers.” (Emphasis added.) H. R. Rep. No. 1437, 82d Cong., 2d Sess., at 1-2.

This authoritative report evinces the clear intention of Congress that, where sanctioned by a state fair-trade act, a trademark owner such as Lilly could be permitted to enforce, even against a nonsigning retailer such as Hudson, the stipulated minimum prices established by written contracts with other retailers.

Without disputing this interpretation of the McGuire Act, Hudson argues that the Ohio Act as interpreted by the Ohio courts reaches beyond the exemptive terms of the federal Act by permitting the maintenance of resale prices “by notice alone” where no contract has been entered into between the owner of the trademark and any retailer. Hudson emphasizes that the Ohio courts sustained the Ohio Act under the State Constitution on the theory that Hudson, simply by acquiring Lilly’s products with notice of the stipulated prices, impliedly contracted to observe the minimum prices. This implied contract theory was deemed necessary by the Ohio Legislature and by the Ohio courts to satisfy the State Constitution which had recently been held to invalidate the enforcement of resale prices against nonsigners. Union Carbide & Carbon Corp. v. Bargain Fair, Inc., 167 Ohio St. 182, 147 N. E. 2d 481 (1958). Whatever merit there may be in the argument that the logic of the Ohio implied contract theory would apply to prices set by notice alone and without any conventional or express contracts, on the facts of the present case we need not and do not consider whether a state statute so applied would involve “contracts or agreements” in the sense in which those terms are used in the McGuire Act. The undisputed facts show that Lilly had established a system of resale price maintenance involving written contracts with some 1,400 Ohio retailers. Section 1333.29 (A) of the Ohio Act authorizes the establishment of minimum prices through such contracts. Under these circumstances the fact that the Ohio law, as construed for purposes of assessing its validity under the State Constitution, regards Hudson as a “contractor” (or “implied contractor”) rather than as a nonsigner does not control the application and effect of the federal statute — the McGuire Act. Section 3 of the federal Act plainly upholds “any right or right of action created by any statute ... in effect in any State . . . which in substance” permits enforcement of resale prices prescribed in contracts whether or not the violating seller was a party to those contracts. For the purposes of § 3 of the McGuire Act, therefore, it is clear that these cases involve the requisite contracts with retailers, that, regardless of whether Hudson itself entered into “contracts” within the meaning of the McGuire Act, Hudson was at least a nonsigner, and that under such circumstances Congress plainly intended “to let State fair-trade laws apply . . . with respect to nonsigners as well as signers.” H. R. Rep. No. 1437, 82d Cong., 2d Sess., at 2. Accordingly we hold that the Ohio Act, as applied to the facts of these cases, comes within the terms of the McGuire Act.

Hudson also argues that the Ohio statute can be read to authorize fair-trade prices to be established by persons other than the owner of the trademark or trade name. This contention raises a hypothetical issue: Lilly is the owner of all trademarks affixed to its goods and the Ohio Supreme Court has not interpreted the statute as applying to persons other than owners. Hudson further argues that § 1333.29 (A) of the Ohio Act authorizes a proprietor to establish minimum resale prices for wholesale distributors with whom it competes and therefore conflicts with the McGuire Act under this Court’s decision in United States v. McKesson & Robbins, Inc., 351 U. S. 305. This argument also raises a hypothetical question for, as noted, Lilly sells only to wholesalers and does not sell to retailers.

The questions raised by Hudson in its second amended answer to the cross-petition, including the contention that Paragraph 6 of the Lilly fair-trade contracts compels retailers to enter into allegedly unlawful horizontal price-fixing agreements in violation of § 1 of the Sherman Act, are not properly before us. They are pending and unresolved in the Ohio Court of Common Pleas, Cuyahoga County. Hudson’s remaining questions are not properly presented for resolution on this appeal; they concern issues involving alleged interpretations of the Ohio Act not made or considered by the Ohio courts or not raised by the facts of the case. Asbury Hospital v. Cass County, 326 U. S. 207, 213-214; Alabama State Federation of Labor v. McAdory, 325 U. S. 450, 470-471.

The price fixing authorized by the Ohio Fair Trade Act and involving goods moving in interstate commerce would be, absent approval by Congress, clearly illegal under the Sherman Act, 26 Stat. 209,15 U. S. C. § 1 et seq. Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373. “Fixing minimum prices, like other types of price fixing, is illegal per se.” Schwegmann Bros. v. Calvert Distillers Corp., supra, at 386. Congress, however, in the McGuire Act has approved state statutes sanctioning resale price maintenance schemes such as those involved here. Whether it is good policy to permit such laws is a matter for Congress to decide. Where the statutory language and the legislative history clearly indicate the purpose of Congress that purpose must be upheld. We therefore affirm the judgments of the Supreme Court of Ohio.

Affirmed.

Mr. Justice Harlan,

dissenting.

I would dismiss these appeals for lack of jurisdiction. Under well-established principles, the judgments on review here are not “final,” as required by 28 U. S. C. § 1257, even assuming that the federal question which the Court decides can be deemed to have been passed on by the Supreme Court of Ohio.

The appellant, Hudson, filed its petitions for a declaratory judgment that the Ohio Fair Trade Act was invalid as soon as the Act went into effect. The appellees, Upjohn and Lilly, filed answers and cross-petitions alleging Hudson’s refusal to comply with the Act and seeking injunctive relief and damages. Pursuant to a stipulation of the parties and as permitted by Ohio procedure, the issue raised by the petition for a declaratory judgment — the “general” validity of the Ohio Act — was tried separately and in advance of the trial of all other factual and legal issues raised by the answers and cross-petitions and the responses thereto. In this posture, the cases, decided together at every level, proceeded through the Ohio courts. The Court of Common Pleas for Cuyahoga County decided that the Ohio Fair Trade Act was invalid under the Ohio Constitution, because it involved an unlawful delegation of legislative power. On appeal, the Court of Appeals for Cuyahoga County reversed, 117 Ohio App. 207, 176 N. E. 2d 236, and remanded the case to the Court of Common Pleas “for further proceedings according to law with respect to the cross-petition filed in this cause . .. The Supreme Court of Ohio affirmed. 174 Ohio St. 487, 190 N. E. 2d 460.

Although the distinction between final and nonfinal judgments, for purposes of this Court’s jurisdiction, has been “faint and faltering at times,” Republic Natural Gas Co. v. Oklahoma, 334 U. S. 62, 69, it has not disappeared altogether. The nature of the distinction and the reasons for maintaining it have repeatedly been stated. To be reviewed in this Court, a state court judgment must be “final as an effective determination of the litigation and not of merely interlocutory or intermediate steps therein. It must be the final word of a final court.” Market Street R. Co. v. Railroad Comm’n, 324 U. S. 548, 551. It “must end the litigation by fully determining the rights of the parties . . . .” Gospel Army v. Los Angeles, 331 U. S. 543, 546. See also, e. g., Mower v. Fletcher, 114 U. S. 127, 128; Cobbledick v. United States, 309 U. S. 323, 324—325; Department of Banking v. Pink, 317 U. S. 264, 267-268; Pope v. Atlantic Coast Line R. Co., 345 U. S. 379, 381-382.

“Since its establishment, it has been a marked characteristic of the federal judicial system not to permit an appeal until a litigation has been concluded in the court of first instance .... This requirement has the support of considerations generally applicable to good judicial administration. It avoids the mischief of economic waste and of delayed justice. Only in very few situations, where intermediate rulings may carry serious public consequences, has there been a departure from this requirement of finality for federal appellate jurisdiction. This prerequisite to review derives added force when the jurisdiction of this Court is invoked to upset the decision of a State court. Here we are in the realm of potential conflict between the courts of two different governments. . . . This requirement is not one of those technicalities to be easily scorned. It is an important factor in the smooth working of our federal system.” Radio Station WOW, Inc., v. Johnson, 326 U. S. 120, 123-124.

One would have thought that the judgments reviewed here were paradigms of the nonfinal judgment. Assuming that the federal question which the Court decides was really passed on by the Ohio Supreme Court, it is clear nonetheless that this litigation is still in its early stages. No rights have yet been established; no liabilities have been incurred. The Court acknowledges that federal questions, involving unresolved issues of fact and interpretations of the Ohio Act, must still be decided by the Ohio courts. In Upjohn, No. 489, a federal question concerning the possible application of our decision in United States v. McKesson & Robbins, Inc., 351 U. S. 305, “was reserved for future determination by the Ohio courts pursuant to a stipulation of the parties . . . Ante, p. 394, note 10. And in Lilly, No. 490, other questions, including at least one federal question, “are pending and unresolved in the Ohio Court of Common Pleas . . . Ante, p. 395. The Court can only hope that it will not prove to have wasted its time altogether in these “piecemeal proceedings,” Pope v. Atlantic Coast Line R. Co., supra, at 381, because a subsequent decision of the Ohio courts renders the decision here “unnecessary and irrelevant to a complete disposition of the litigation.” Id., at. 382 (footnote omitted). If that does not happen, there is every likelihood that the cases will be brought back to this Court for a second time, for consideration of the questions now unresolved. In Radio Station WOW, supra, at 127, this Court stated: “Of course, where the remaining litigation may raise other federal questions that may later come here, ... to allow review of an intermediate adjudication would offend the decisive objection to fragmentary reviews.” The Court ignores that “decisive objection.”

In addition to making an uneconomic use of its own time, the Court’s entertainment of these appeals has interfered with the orderly procedures of the Ohio courts. In its brief to this Court, Lilly states that proceedings in the Court of Common Pleas have been stayed “pending the outcome of this appeal.” Brief, p. 11. Upjohn states in its brief that it has not yet taken action to bring to trial the issues reserved in its case, Brief, p. 13, presumably because of the pendency of the present proceedings. So far as the litigants are concerned, this march to the well for an eye-dropper of water does them no good either, except insofar as delay may be temporarily useful to one party or the other. Now that this Court’s decision is rendered, the action will presumably go forward in the state courts; the litigants are no better informed of their ultimate rights than they were before the case came here, and the case is not a jot closer to its conclusion.

The Court gives no explanation at all for its departure from established principles. There is not the faintest suggestion of compelling public considerations requiring a determination of whatever issue it is that the Court does actually decide. Nor are there any private interests at stake which will be irremediably lost unless the Court acts, since no rights or liabilities were determined below or have been determined here. The fact that under Ohio procedure Hudson’s petition for a declaratory judgment was' separable from the cross-petition and could be determined independently of it has no bearing on whether that determination was final for purposes of this Court’s jurisdiction. E. g., Department of Banking v. Pink, supra, at 268; Market Street R. Co. v. Railroad Comm’n, supra, at 551.

Ninety percent* of this case remains submerged. I suspect that the explanation for the Court’s snipping off and deciding the 10% that has reached the surface lies in the fact that the Court failed to dismiss the appeal when it was first presented, 375 U. S. 938, 939, because the jurisdictional objections to review were not then so apparent. I am at a loss to understand why the Court chooses to compound the original error, rather than to correct it.

I would dismiss both appeals.

      The Supreme Court of Ohio stated: “The facts in both cases are similar and the law applicable is the same. The appeals will be treated together, since the assignments of errors in both cases are exactly the same.” 174 Ohio St. 487, 190 N. E. 2d 460.

       Hudson, in its second amended answer to the cross-petition, allegedly raised the following defenses:
      “(1) Hudson did not wilfully resell at less than Lilly’s fair trade prices;
      “(2) Lilly, a foreign corporation, was not properly licensed to transact business in the State of Ohio;
      “(3) paragraph 6 of Lilly’s fair trade contract [which provides that: “Retailer agrees not to knowingly sell any of Manufacturer’s ‘Identified Commodities’ to any dealer who fails to observe the minimum retail resale prices established under Paragraph 3 hereof”] compelled retailers to enter into unlawful horizontal price fixing agreements in violation of Section 1 of the Sherman Anti-Trust Act . . . ;
      “(4) Lilly was not uniformly enforcing its fair trade program on trade-marked commodities in Ohio; and
      “(5) Lilly modified its fair trade program by abandoning enforcement on its prescription products in Ohio.”
      The issues on the cross-petition are pending in the Court of Common Pleas, Cuyahoga County; further proceedings have been stayed by that court pending the outcome of this appeal.

       The decision was affirmed by a 3-to-4 vote. The Ohio Constitution, Art. IV, §2, provides: “No law shall be held unconstitutional and void by the supreme court without the concurrence of at least all but one of the judges, except in the affirmance of a judgment of the court of appeals declaring a law unconstitutional and void.”

       The fact that separate and unresolved issues are pending in the Ohio courts and subject to “further proceedings” therein on the cross-petition does not render the judgment of the Ohio Supreme Court on the issue here considered and decided nonfinal or unappealable within the meaning of 28 U. S. C. § 1257. Cf. Local No. 488 Construction & General Laborers’ Union, AFL-CIO, v. Curry, 371 U. S. 542, 548-552; Mercantile Nat. Bank v. Langdeau, 371 U. S. 555, 557-558.

       The McGuire Act amended § 5 (a) of the Federal Trade Commission Act, as amended. Section 5 (a) (2) of the latter statute as thus amended, 15 U. S. C. §45 (a)(2), is referred to herein simply as Section 2 of the McGuire Act, and §5 (a)(3), 15 U. S. C. §45 (a) (3), is referred to as Section 3 of the McGuire Act.

       The purpose o'f the McGuire Act is stated in its preamble: “Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is the purpose of this Act to protect the rights of States under the United States Constitution to regulate their internal affairs and more particularly to enact statutes and laws, and to adopt policies, which authorize contracts and agreements prescribing minimum or stipulated prices for the resale of commodities and to extend the minimum or stipulated prices prescribed by such contracts and agreements to persons who are not parties thereto. It is the further purpose of this Act to permit such statutes, laws, and public policies to apply to commodities, contracts, agreements, and activities in or affecting interstate or foreign commerce.” 66 Stat. 631-632.

       See United States v. McKesson & Robbins, Inc., 351 U. S. 305, 311, n. 14: “The McGuire Act . . . specifically exempts from the antitrust laws price fixing under 'fair trade’ agreements which bind not only retailers who are parties to the agreement but also retailers who refuse to sign the agreement.”

       See Note, 77 Harv. L. Rev. 763, 766-767 (1964).

       The Court of Appeals for Cuyahoga County expressly noted that: “These [manufacturers] have entered into many written contracts with retail pharmaceutical establishments in Ohio, determining the retail resale price for their trademarked or branded commodities and have caused notice of these contracts and the prices therein established to be served on [Hudson].” 117 Ohio App. 207, 208; 176 N. E. 2d 236, 237.

       Hudson contends that the Upjohn case is distinguishable in this regard for Upjohn allegedly does not sell only to retailers. It is clear, however, that this contention was reserved for future determination by the Ohio courts pursuant to a stipulation of the parties and was not in any event passed upon in the decision from which the present appeal is taken.

       See note 2, supra.

       “Pinal judgments or decrees rendered by the highest court of a State in which a decision could be had, may be reviewed by the Supreme Court as follows:
      “(2) By appeal, where is drawn in question the validity of a statute of any state on the ground of its being repugnant to the Constitution, treaties or laws of the United States, and the decision is in favor of its validity.”

       See note 5, infra, p. 398.

       Ohio Rev. Code §§ 1333.27-1333.34.

       The Act became effective on October 22, 1959. In the Upjohn case, No. 489, Hudson filed its original petition in August 1959, after the Act had been passed by the Ohio Legislature, and filed several amended petitions after the Act became effective. The original petition in Lilly, No. 490, was filed on October 22, 1959; it also was later amended.

       The Court of Common Pleas did not reach any federal question, since it found the Ohio Act invalid under the State Constitution. On appeal, the Court of Appeals described the eases as follows:
      “The actions seek a declaratory judgment declaring the Ohio Fair Trade Act invalid and unconstitutional. Both cases involve similar facts and, with the questions to be determined by this court the same in each case, the appeals will be considered together. The assignment of error is identical in both cases.
      “ 'For its assignment of error, the defendant-appellant asserts that the Court of Common Pleas of Cuyahoga County erred in declaring Sections 1333.27 through 1333.34 of the Ohio Revised Code to be in violation of the Constitution of the state of Ohio, and therefore void and not binding upon the plaintiff-appellee, and in granting judgment for the plaintiff-appellee on its petition and dismissing the cross-petition of the defendant-appellant.’ ” 117 Ohio App. 207-208, 176 N. E. 2d, 237.
      There followed a long discussion of the “historical background,” id., at 208, 176 N. E. 2d, 238, of the Ohio Act, which included consideration of major federal legislation and cases. It is entirely clear from the opinion that federal law was considered only as part of the demonstration “that not only the great majority of state legislatures but also the Congress of the United States have determined that there is need to provide reasonable controls in this field [of fair trade], under the police powers of the sovereign power.” Id., at 224, 176 N. E. 2d, 247. There is nothing to indicate that the court considered anything beyond the single contention that the Court of Common Pleas had erred in holding the Act invalid under the State Constitution. A dissenting opinion states: “On this appeal, the single question presented is whether the 1969 Fair Trade Act . . . has the effect of nullifying the decision of the Supreme Court [of Ohio] in Union Carbide & Carbon Corp. v. Bargain Fair, Inc., 167 Ohio St., 182.” Id., at 230, 176 N. E. 2d, 251. The Union Carbide case was concerned solely with the validity of a prior Fair Trade Act under the Ohio Constitution. In a petition for rehearing (which was denied) the appellant itself urged that the court appeared to have ignored the question whether the Ohio Act was consistent with federal law, in particular the McGuire Act. Only the formal judgment, from which the Court quotes, ante, p. 388, contains any intimation that the Court of Appeals considered any federal question.
      On review in the Supreme Court of Ohio, neither the majority opinion nor the dissenting opinion even once mentions the McGuire Act or this Court’s cases construing it. 174 Ohio St. 487, 497, 190 N. E. 2d 460, 466.

       Indeed, so far as I can tell, the Court decides nothing at all which is not already established law. In United States v. McKesson & Robbins, Inc., 351 U. S. 305, 311, note 14, this Court stated:
      “. . . [The McGuire Act] specifically exempts from the antitrust laws price fixing under ‘fair trade’ agreements which bind not only retailers who are parties to the agreement but also retailers who refuse to sign the agreement.”
      As I read the Court’s opinion in this case, its sole holding is that “where sanctioned by a state fair-trade act, a trademark owner such as Lilly could be permitted to enforce, even against a nonsigning retailer such as Hudson, the stipulated minimum prices established by written contracts with other retailers.” Ante, p. 392. This is nothing, more than a restatement of the passage quoted from McKes-son & Robbins, with the names of the parties in this case filled in. No special questions which might be raised by the facts of this case or by particular features of the Ohio Act are decided here, since the Court properly leaves all such questions for the initial decision of the Ohio courts.
      The triviality, given the established law, of the question which the Court decides makes its determination to reach the question the more puzzling.

       The fact that Hudson’s original petition was for a declaratory judgment has no bearing on the jurisdictional question present here. Such, fact does not defeat this Court’s jurisdiction, Nashville, Chattanooga & St. Louis R. Co. v. Wallace, 288 U. S. 249; but it surely does not create jurisdiction which would otherwise be lacking.

       The jurisdictional question was not called to the attention of the Court by either of the appellees at the time probable jurisdiction was noted. Upjohn filed no response to the jurisdictional statement; Lilly, then represented by other counsel, filed a motion to dismiss, but did not mention the jurisdictional question.


source: Caselaw Access Project

author: Per Curiam. Mr. Justice Douglas,

license: Public Domain

text:
    CHAMBERLIN et al. v. DADE COUNTY BOARD OF PUBLIC INSTRUCTION et al.
    No. 939.
    Decided June 1, 1964.

      Leo Pfeffer and Howard W. Dixon for appellants.

      George C. Bolles for appellees.
   Per Curiam.

The motion to use the record in No. 520, October Term 1962, is granted. The judgment of the Florida Supreme Court is reversed with respect to the issues of the constitutionality of prayer, and of devotional Bible reading pursuant to a Florida statute, Fla. Stat. (1961) § 231.09, in the public schools of Dade County. School District of Abington Township v. Schempp, 374 U. S. 203. As to the other questions raised, the appeal is dismissed for want of properly presented federal questions. Asbury Hospital v. Cass County, 326 U. S. 207, 213-214.

Mr. Justice Douglas,

with whom Mr. Justice Black agrees,

concurring in part.

I join in reversing the Supreme Court of Florida on the main issue in the case.

The “other questions raised” which the Court refuses to consider because not “properly presented” involve the constitutionality under the First and Fourteenth Amendments of baccalaureate services in the schools, a religious census among pupils, and a religious test for teachers. The Florida Supreme Court disposed of those issues on the authority of Doremus v. Board of Education, 342 U. S. 429, which held that a taxpayer lacks standing to challenge religious exercises in the public schools. Irrespective of Doremus v. Board of Education, supra, I think it is arguable that appellant-taxpayers do have standing to challenge these practices.

I think, however, that two of those “other questions”— the baccalaureate services and the religious census — do not present substantial federal questions, and so I concur in the dismissal of the appeal as to them. As to the religious test for teachers, I think a substantial question is presented. Cf. Torcaso v. Watkins, 367 U. S. 488. I would therefore put that question down for argument, postponing the question of jurisdiction to the merits.

Mr. Justice Stewart would note probable jurisdiction of this appeal and set it down for argument on the merits.

      Applicants for teaching positions are required to answer the question, “Do you believe in God?” Religious attitudes are also considered in making promotions.


author: Per Curiam.

text:
    UNION OIL CO. OF CALIFORNIA v. STATE BOARD OF EQUALIZATION OF CALIFORNIA.
    No. 968.
    Decided June 1, 1964.

      Hart H. Spiegel for appellant.

      Stanley Mosk, Attorney General of California, Dan Kaufmann, Assistant Attorney General, and Ernest P. Goodman and John J. Klee, Jr., Deputy Attorneys General, for appellee.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of a substantial federal question.

Mr. Justice Harlan took no part in the consideration or decision of this case.


text:
    WILLIAMS v. UNITED STATES et al.
    No. 1022,
    Misc.
    Decided June 1, 1964.
   Per Curiam.

The appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for a writ of certiorari, certiorari is denied.


author: Per Curiam. Mr. Justice Harlan,

text:
    MEEKS v. GEORGIA SOUTHERN & FLORIDA RAILWAY CO.
    No. 981.
    Decided June 1, 1964

      Thomas J. Lewis and Thomas J. Lewis, Jr. for petitioner in No. 981.

      W. Graham Claytor, Jr., Charles J. Bloch, Denmark Groover, Jr. and William H. Allen for respondent in No. 981.

      George R. Wolf for petitioner in No. 1004.

      Robert Broderick for respondent in No. 1004.

      Together with No. 1004, Braswell, Administratrix, v. New York, Chicago & St. Louis Railroad Co., on petition for writ of certiorari to the Supreme Court of Illinois.

   Per Curiam.

The petitions for writs of certiorari are granted and the judgments are reversed. Rogers v. Missouri Pacific R. Co., 352 U. S. 500.

Mr. Justice Harlan,

whom Mr. Justice Stewart joins,

dissenting in No. 981, and dissenting in part and concurring in part in No. 1004.

These are two more negligence cases, neither of which should have been brought here since both involve only-questions of the sufficiency of the evidence to support the jury verdicts. See, e. g., my dissenting opinion in Dennis v. Denver & Rio Grande W. R. Co., 375 U. S. 208, 212, and those in the cases therein cited; cf. my dissenting opinion in Eichel v. New York Central R. Co., 375 U. S. 253, 256.

Feeling obliged, however, to reach the merits because the cases are before us, see my opinion in Rogers v. Missouri P. R. Co., 352 U. S. 500, 559-562, I dissent from the judgment in No. 981 and concur in the judgment in No. 1004.


text:
    ZAPATA v. CALIFORNIA.
    No. 1025,
    Mise.
    Decided June 1, 1964.

      Samuel Carter McMorris for appellant.

      Stanley Mosk, Attorney General of California, Doris H. Maier, Assistant Attorney General, and Roger E. Venturi, Deputy Attorney General, for appellee.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for writ of certiorari, certiorari is denied.


author: Per Curiam. Mr. Justice Goldberg,

text:
    MARDER v. MASSACHUSETTS.
    No. 819.
    Decided June 1, 1964.
    Appellant pro se.

      Edward W. Brooke, Attorney General of Massachusetts, for appellee.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of a substantial federal question.

Mr. Justice Goldberg,

with whom Mr. Justice Douglas joins,

dissenting.

This appeal raises the question of whether a person charged with a traffic violation (or presumably any other criminal offense) may be forced by a statute, General Laws of Mass., c. 90, §§20 and 20A, to choose between foregoing a trial by pleading guilty and paying a small fine, or going to trial and thereby exposing himself to the possibility of a greater punishment if found guilty. I express no view on the merits of this question. But I would note probable jurisdiction, since the issue, in my view, presents a substantial federal question, and since I am not convinced that the generally sound advice to “pay the two dollars” necessarily reflects a constitutionally permissible requirement.

Mr. Justice White is of the opinion that probable jurisdiction should be noted.


author: Mr. Justice Black Mr. Justice Harlan,

text:
    DONOVAN et al. v. CITY OF DALLAS et al.
    No. 264.
    Argued April 22, 1964.
    Decided June 8, 1964.

      James P. Donovan argued the cause and filed a brief for petitioners.

      H. P. Kucera argued the cause for respondents. With him on the brief were Charles S. Rhyne, Brice W. Rhyne and Alfred J. Tighe, Jr.

   Mr. Justice Black

delivered the opinion of the Court.

The question presented here is whether a state court can validly enjoin a person from prosecuting an action in personam in a district or appellate court of the United States which has jurisdiction both of the parties and of the subject matter.

The City of Dallas, Texas, owns Love Field, a municipal airport. In 1961, 46 Dallas citizens who owned or had interests in property near the airport filed a class suit in a Texas court to restrain the city from building an additional runway and from issuing and selling municipal bonds for that purpose. The complaint alleged many damages that would occur to the plaintiffs if the runway should be built and charged that issuance of the bonds would be illegal for many reasons. The case was tried, summary judgment was given for. the city, the Texas Court of Civil Appeals affirmed, the Supreme Court of Texas denied review, and we denied certio-rari. Later 120 Dallas citizens, including 27 of the plaintiffs in the earlier action, filed another action in the United States District Court for the Northern District of Texas seeking similar relief. A number of new defendants were named in addition to the City of Dallas, all the defendants being charged with taking part in plans to construct the runway and to issue and sell bonds in violation of state and federal laws. The complaint sought an injunction against construction of the runway, issuance of bonds, payment on bonds already issued, and circulation of false information about the bond issue, as well as a declaration that all the bonds were illegal and void. None of the bonds would be approved, and therefore under Texas law none could be issued, so long as there was pending litigation challenging their validity. The city filed a motion to dismiss and an answer to the complaint in the federal court. But at the same time the city applied to the Texas Court of Civil Appeals for a writ of prohibition to bar all the plaintiffs in the case in the United States District Court from prosecuting their case there. The Texas Court of Civil Appeals denied relief, holding that it was without power to enjoin litigants from prosecuting an action in a federal court and that the defense of res judicata on which the city relied could be raised and adjudicated in the United States District Court. On petition for mandamus the Supreme Court of Texas took a different view, however, held it the duty of the Court of Civil Appeals to prohibit the litigants from further prosecuting the United States District Court case, and stated that a writ of mandamus would issue should the Court of Civil Appeals fail to perform this duty. The Court of Civil Appeals promptly issued a writ prohibiting all the plaintiffs in the United States District Court case from any further prosecution of that case and enjoined them “individually and as a class . . . from filing or instituting . . . any further litigation, lawsuits or actions in any court, the purpose of which is to contest the validity of the airport revenue bonds ... or from in any,manner interfering with . . . the proposed bonds . . . The United States District Court in an unreported opinion dismissed the case pending there. Counsel Donovan, who is one of the petitioners here, excepted to the dismissal and then filed an appeal from that dismissal in the United States Court of Appeals for the Fifth Circuit. The Texas Court of Civil Appeals thereupon cited Donovan and the other United States District Court claimants for contempt and convicted 87 of them on a finding that they had violated its “valid order.” Donovan was sentenced to serve 20 days in jail, and the other 86 were fined $200 each, an aggregate of $17,200. These penalties were imposed upon each contemner for having either (1) joined as a party plaintiff in the United States District Court case; (2) failed to request and contested the dismissal of that case; (3) taken exceptions to the dismissal preparatory to appealing to the Court of Appeals; or (4) filed a separate action in the Federal District Court seeking to enjoin the Supreme Court of Texas from interfering with the original federal-court suit. After the fines had been paid and he had served his jail sentence, counsel Donovan appeared in the District Court on behalf of himself and all those who had been fined and moved to dismiss the appeal to the United States Court of Appeals. His motion stated that it was made under duress and that unless the motion was made “the Attorney for Defendant City of Dallas and the Chief Judge of the Court of Civil Appeals have threatened these Appellants and their Attorney with further prosecution for contempt resulting in additional fines and imprisonment.” The United States District Court then dismissed the appeal.

We declined to grant certiorari to review the United States District Court’s dismissal of the case before it or its dismissal of the appeal brought on by the state court’s coercive contempt judgment, but we did grant certiorari to review the State Supreme Court’s judgment directing the Civil Court of Appeals to enjoin petitioners from prosecuting their action in the federal courts and also granted certiorari to review the Civil Court of Appeals’ judgment of conviction for contempt. 375 U. S. 878. We think the Texas Court of Civil Appeals was right in its first holding that it was without power to enjoin these litigants from prosecuting their federal-court action, and we therefore reverse the State Supreme Court’s judgment upsetting that of the Court of Appeals. We vacate the later contempt judgment of the Court of Civil Appeals, which rested on the mistaken belief that the writ prohibiting litigation by the federal plaintiffs was “valid.”

Early in the history of our country a general rule was established that state and federal courts would not interfere with or try to restrain each other’s proceedings. That rule has continued substantially unchanged to this time. An exception has been made in cases where a court has custody of property, that is, proceedings in rem or quasi in rem. In such cases this Court has said that the state or federal court having custody of such property has exclusive jurisdiction to proceed. Princess Lida v. Thompson, 305 U. S. 456, 465-468. In Princess Lida this Court said “where the judgment sought is strictly in personam, both the state court and the federal court, having concurrent jurisdiction, may proceed with the litigation at least until judgment is obtained in one of them which may be set up as res judicata in the other.” Id., at 466. See also Kline v. Burke Construction Co., 260 U. S. 226. It may be that a full hearing in an appropriate court would justify a finding that the state-court judgment in favor of Dallas in the first suit barred the issues raised in the second suit, a question as to which we express no opinion. But plaintiffs in the second suit chose to file that case in the federal court. They had a right to do this, a right which is theirs by reason of congressional enactments passed pursuant to congressional policy. And whether or not a plea of res judicata in the second suit would be good is a question for the federal court to decide. While Congress has seen fit to authorize courts of the United States to restrain state-court proceedings in some special circumstances, it has in no way relaxed the old and well-established judicially declared rule that state courts are completely without power to restrain federal-court proceedings in in personam actions like the one here. And it does not matter that the prohibition here was addressed to the parties rather than to the federal court itself. For the heart of the rule as declared by this Court is that:

“. . . where the jurisdiction of a court, and the right of a plaintiff to prosecute his suit in it, have once attached, that right cannot be arrested or taken away by proceedings in another court. . . . The fact, therefore, that an injunction issues only to the parties before the court, and not to the court, is no evasion of the difficulties that are the necessary result of an attempt to exercise that power over a party who is a litigant in another and independent forum.”

Petitioners being properly in the federal court had a right granted by Congress to have the court decide the issues they presented, and to appeal to the Court of Appeals from the District Court’s dismissal. They have been punished both for prosecuting their federal-court case and for appealing it. They dismissed their appeal because of threats to punish them more if they did not do so. The legal effect of such a coerced dismissal on their appeal is not now before us, but the propriety of a state court’s punishment of a federal-court litigant for pursuing his right to federal-court remedies is. That right was granted by Congress and cannot be taken away by the State. The Texas courts were without power to take away this federal right by contempt proceedings or otherwise.

It is argued here, however, that the Court of Civil Appeals’ judgment of contempt should nevertheless be upheld on the premise that it was petitioners’ duty to obey the restraining order whether that order was valid or invalid. The Court of Civil Appeals did not consider or pass upon this question, but acted on the assumption that petitioners were guilty of “wilfull disobedience of a valid order.” 368 S. W. 2d, at 244. (Emphasis supplied.) Since we hold the order restraining petitioners from prosecuting their case in the federal courts was not valid, but was invalid, petitioners have been punished for disobeying an invalid order. Whether the Texas court would have punished petitioners for contempt had it known that the restraining order petitioners violated was invalid, we do not know. However, since that question was neither considered nor decided by the Texas court, we leave it for consideration by that court on remand. We express no opinion on that question at this time.

The judgment of the Texas Supreme Court is reversed, the judgment of the Texas Court of Civil Appeals is vacated, and the case is remanded to the Court of Civil Appeals for further proceedings not inconsistent with this opinion.

It is so ordered.

Mr. Justice Harlan,

whom Mr. Justice Clark and Mr. Justice Stewart join,

dissenting.

The question presented by this case is not the general one stated by the Court at the outset of its opinion, but a much narrower one: May a state court enjoin resident state-court suitors from prosecuting in the federal courts vexatious, duplicative litigation which has the effect of thwarting a state-court judgment already rendered against them? Given the Texas Supreme Court’s finding, amply supported by the record and in no way challenged by this Court, that this controversy “has reached the point of vexatious and harassing litigation,” 365 S. W. 2d 919, 927, 1 consider both the state injunction and the ensuing contempt adjudication to have been perfectly proper.

I.

The power of a court in equity to enjoin persons subject to its jurisdiction from conducting vexatious and harassing litigation in another forum has not been doubted until now. In Cole v. Cunningham, 133 U. S. 107, 111, this Court affirmed “a decree of the Supreme Judicial Court of Massachusetts, restraining citizens of that commonwealth from the prosecution of attachment suits in New York, brought by them for the purpose of evading the laws of their domicil....” The Court stated:

“The jurisdiction of the English Court of Chancery to restrain persons within its territorial limits and under its jurisdiction from doing anything abroad, whether the thing forbidden be a conveyance or other act, in pais, or the institution or the prosecution of an action in a foreign court, is well settled.” Id., at 116-117.

The Court quoted with approval the following passage from Mr. Justice Story’s Equity Jurisprudence, Yol. II (10th ed. 1870), 89: “It is now held that whenever the parties are resident within a country, the courts of that country have full authority to act upon them personally with respect to the subject of suits in a foreign country, as the ends of justice may require; and with that view to order them to take, or to omit to take, any steps and proceedings in any other court of justice, whether in the same country, or in any foreign country.” Id., at 119. See also Simon v. Southern R. Co., 236 U. S. 115.

This Court, in 1941, expressly recognized the power of a state court to do precisely what the Texas court did here. In Baltimore & Ohio R. Co. v. Kepner, 314 U. S. 44, 51-52, the Court, although denying the state court’s power to issue an injunction in that case, said:

“The real contention of petitioner is that, despite the admitted venue, respondent is acting in a vexatious and inequitable manner in maintaining the federal court suit in a distant jurisdiction when a convenient and suitable forum is at respondent’s doorstep. Under such circumstances, petitioner asserts power, abstractly speaking, in the Ohio court to prevent a resident under its jurisdiction from doing inequity. Such power does exist.” (Footnote omitted; emphasis supplied.)

Mr. Justice Frankfurter, dissenting because of disagreement with the particular basis for the Court’s refusal to give effect to the general principle, see infra, p. 418, observed that the opinion of the Court did “not deny the historic power of courts of equity to prevent a misuse of litigation by enjoining resort to vexatious and oppressive foreign suits,” id., at 55, and that the decision did not “give new currency to the discredited notion that there is a general lack of power in the state courts to enjoin proceedings in federal courts,” id., at 56.

Apart from these express statements in both the majority and dissenting opinions, the Court’s reasoning in the Baltimore & Ohio R. Co. case clearly implies a view contrary to the one taken by the majority here. Kepner, an injured employee of the railroad, filed suit against it in the District Court for the Eastern District of New York. The accident out of which his injuries arose occurred in Ohio, which was also the State in which he resided. Jurisdiction was based on the provision of the Federal Employers’ Liability Act which permitted an employee to bring suit in a district in which the defendant was doing business. The railroad brought a proceeding in the Ohio state courts to enjoin Kepner from continuing to prosecute his suit in the federal court in New York. It argued that more appropriate state and federal courts were open and that the large cost to itself of defending the suit in a distant forum was needless. Deciding solely on the basis that the venue provisions of the Federal Employers’ Liability Act gave an injured employee a privilege which state legislative or judicial action could not override, the Court denied the power of the Ohio courts to issue an injunction. Quite evidently, this basis of decision would have been meaningless unless it was presumed that in the absence of the venue provisions of the statute the Ohio court would have had power to enjoin. Nor is it even necessary to resort to this obvious inference. For the Court made it express: “As courts of equity admittedly possessed this power [to enjoin improper resort to the courts of a foreign jurisdiction] before the enactment of § 6 [of the F. E. L. A.] . . . .” Id., at 53. See also Blanchard v. Commonwealth Oil Co., 294 F. 2d 834, 841.

In light of the foregoing, there was no impropriety in the issuance of the state court’s injunction in the present case.

II.

None of the cases on which the Court relies deals with, or in any way negatives, the power of a state court to enjoin federal litigation in circumstances such as those involved here. None of them was concerned with vexatious litigation.

The issue in McKim v. Voorhies, 7 Cranch 279 (ante, p. 412, note 9), was whether a state court could stay proceedings on a federal court’s judgment which had already-been rendered when the state court acquired jurisdiction and which, therefore, involved no element of harassment at all. Similarly, in Diggs v. Wolcott, 4 Cranch 179 (cited ibid.), in which the position of the courts was in reverse, suit was first commenced in the state court. Riggs v. Johnson County, 6 Wall. 166 (ante, p. 413, note 11), resembled McKim, supra; it involved the power of a state court to issue an injunction which had the effect of preventing a federal court from enforcing its judgment, entered before the state court ever got its hands on the case. The other two cases which the Court cites with Riggs (ibid.) are the same and were decided on the authority of Riggs. Weber v. Lee County, 6 Wall. 210, 212; United States v. Council of Keokuk, 6 Wall. 514, 517.

Kline v. Burke Construction Co., 260 U. S. 226, 230 (ante, p. 412), held, with respect to state and federal courts, that “where the action first brought is in personam and seeks only a personal judgment, another action for the same cause in another jurisdiction is not precluded.” The dictum from Princess Lida v. Thompson, 305 U. S. 456, 466, which the Court quotes (ante, p. 412), is to the same effect. In neither case is there any discussion of a court’s power in equity to .prevent persons subject to its jurisdiction from maintaining vexatious and harassing suits elsewhere. Moreover, the opinions in both cases explain the rule permitting state and federal courts to issue injunctions protective of their jurisdiction in in rem actions — a rule which the Court here does not question, see ante, p. 412 — on the ground that the rule is necessary to permit the court which first acquires jurisdiction over the subject matter of a controversy “effectively [to] exercise the jurisdiction vested in it . . . ,” Princess Lida, supra, at 467. See Kline, supra, at 229. That reasoning is fully applicable here, since maintenance of the suit in the federal court has the automatic effect of nullifying the Texas court’s decree.

The Court cites three cases for the proposition that it is immaterial, for purposes of this case, that the Texas court’s injunction runs to the parties rather than to the District Court. See ante, p. 413, note 12. None of them is apposite. In Peck v. Jenness, 7 How. 612, the question, as in Diggs, supra, was whether a federal court “was vested with any power or authority to oust” a state court of its properly established jurisdiction over a cause commenced in the state court long before any action was taken in the federal court. Id., at 624. Central National Bank v. Stevens, 169 U. S. 432, again involved a state court’s attempt to enjoin private individuals from giving effect to the final decree of a federal court rendered before the suit was begun in the state court. Baltimore & Ohio R. Co. v. Kepner, supra, has already been discussed; it is expressly and by unmistakable implication directly contrary to the result now reached by the Court.

There can be no dispute, therefore, that all the weight of authority, including that of a recent pronouncement of this Court, is contrary to the position which the Court takes in this case. It is not necessary to comment on the Court’s assertion, ante, p. 413, that the petitioners “had a right granted by Congress” to maintain their suit in the federal court, for that is the very question at issue. In any event, the statutory boundaries of federal jurisdiction are hardly to be regarded as a license to conduct litigation in the federal courts for the purpose of harassment. The exception which the Court recognizes for in rem actions demonstrates that no such view of federal juris-, diction is tenable; for in those cases, too, the federal courts have statutory jurisdiction to proceed.

In short, today’s decision rests upon confusion between two distinct lines of authority in this Court, one involving vexatious litigation and the other not.

I would affirm.

        Atkinson v. City of Dallas, 353 S. W. 2d 275 (Tex. Civ. App.).

       370 U. S. 939.

       Vernon’s Tex. Ann. Civ. Stat. Art. 1269j-5, § 3. See City of Dallas v. Dixon, 365 S. W. 2d 919, 925.

        City of Dallas v. Brown, 362 S. W. 2d 372 (Tex. Civ. App.).

        City of Dallas v. Dixon, 365 S. W. 2d 919.

        City of Dallas v. Brown, 368 S. W. 2d 240 (Tex. Civ. App.).

       While in jail counsel Donovan sought habeas corpus from both the Supreme Court of Texas and the United States Court of Appeals for the Fifth Circuit. Both courts denied relief without opinion.

       The District Court a week later dismissed as moot the action petitioners had brought in that court against the Supreme Court of Texas to enjoin the Texas court from interfering with the prosecution of the federal-court suit. Donovan v. Supreme Court of Texas, unreported. We denied certiorari sought to review that judgment. 375 U. S. 878.

       See, e. g., M‘Kim v. Voorhies, 7 Cranch 279; Diggs v. Wolcott, 4 Cranch 179.

       See 28 IT. S. C. § 2283; see also 28 U. S. C. § 1651.

       See, e. g., United States v. Council of Keokuk, 6 Wall. 514, 517; Weber v. Lee County, 6 Wall. 210; Riggs v. Johnson County, 6 Wall. 166, 194-196; M‘Kim v. Voorhies, 7 Cranch 279.

         Peck v. Jenness, 7 How. 612, 625. See also Central National Bank v. Stevens, 169 U. S. 432; cf. Baltimore & O. R. Co. v. Kepner, 314 U. S. 44, 54, n. 23.

       In Baltimore & O. R. Co. v. Kepner, 314 U. S. 44, the Court did not reach the question before us, since the decision there was rested on the special venue provisions of the Federal Employers’ Liability Act. See 36 Stat. 291, as amended, 45 U. S. C. § 56.

       Under Texas law, the mere filing of suit in the Federal District Court prevented the issuance of bonds to finance construction at Love Field, the Dallas municipal airport. The city’s right to issue such bonds had been upheld in Atkinson v. City of Dallas, 353 S. W. 2d 275, a case which both the Supreme Court of Texas and this Court (370 U. S. 939) declined to review. As found by the Supreme Court of Texas, “an analysis of the petition in Brown [the District Court case] discloses that the issues sought to be litigated are essentially the same as the issues litigated in Atkinson, and the prayer is for the same ultimate relief.” 365 S. W. 2d, at 927. In an oral opinion dismissing the action in the Federal District Court, the district judge found the same thing, stating: “In my opinion there is no justiciable issue to be presented in the Federal court case. All the issues have been decided in the Atkinson case.”

       In the next sentence, Story stated that there was an exception to this doctrine, based "upon peculiar grounds of municipal and constitutional law”; state courts could not enjoin proceedings in federal courts and vice versa. Ibid. It is apparent from the cases cited to support this exception that Story had in mind the kind of situation presented in cases like those relied on by the present majority, which, as will be shown in Part II of this opinion, infra, pp. 418-421, deal not with injunctions to prevent vexatious litigation but with injunctions issued in very different contexts. See id., at 89, notes 2-4.

       Many decisions of the state courts have recognized this equitable power. See, e. g., O’Haire v. Burns, 45 Colo. 432, 101 P. 755; Royal League v. Kavanagh, 233 Ill. 175, 84 N. E. 178; Oates v. Morningside College, 217 Iowa 1059, 252 N. W. 783; Fere Marquette Railway v. Slutz, 268 Mich. 388, 256 N. W. 458; Wilser v. Wilser, 132 Minn. 167, 156 N. W. 271.

       “Under this chapter an action may be brought in a district court of the United States, in the district of the residence of the defendant, or in which the cause of action arose, or in which the defendant shall be doing business at the time of commencing such action. The jurisdiction of the courts of the United States under this chapter shall be concurrent with that of the courts of the several States.” Act of April 5, 1910, 36 Stat. 291, as amended, 45 U. S. C. § 56.

       As the cases cited in Part II of this opinion illustrate, this Court’s power to review judgments of the state courts is available to prevent interference with the legitimate invocation of federal jurisdiction. The parallel development of the two distinct lines of cases which are now confused for the first time itself demonstrates that the possibility of abuse in some cases is no ground for denying altogether the traditional equitable power to prevent improper resort to the courts.


author: Mr. Justice Douglas

text:
    WILBUR-ELLIS CO. et al. v. KUTHER.
    No. 109.
    Argued February 20, 1964.
    Decided June 8, 1964.

      Frank A. Neal argued the cause for petitioners. With him on the brief .was James M. Naylor.

      Carlisle M. Moore argued the cause for respondent. With him on the brief was Oscar A. Mellin.

   Mr. Justice Douglas

delivered the opinion of the Court.

Respondent is the owner of a combination patent covering a fish-canning machíne. A number of machines covered by the patent were manufactured and sold under his authorization. Among them were the four machines in suit, petitioner Wilbur-Ellis Company being the second-hand purchaser. Respondent received out of the original purchase price a royalty of $1,500 per machine. As originally constructed each of these machines packed fish into “1-pound” cans: 3 inches in diameter and 4n/i6 inches high. Three of the machines when acquired by Wilbur-Ellis were corroded, rusted, and inoperative; and all required cleaning and sandblasting to make them usable. Wilbur-Ellis retained petitioner Leuschner to put the machines in condition so they would operate and to resize six of the 35 elements that made up the patented combination. The resizing was for the purpose of enabling the machines to pack fish into “5-ounce” cans: 2% inches in diameter and 3y2 inches long. One of the six elements was so corroded that it could be rendered operable only by grinding it down to a size suitable for use with the smaller “5-ounce” can.

This suit for infringement followed; and both the District Court, 200 F. Supp. 841, and the Court of Appeals, 314 F. 2d 71, held for respondent. The case is here on certiorari. 373 U. S. 921.

We put to one side the case where the discovery or invention resided in or embraced either the size or locational characteristics of the replaced elements of a combination patent or the size of the commodity on which the machine operated. The claims of the patent before us do not reach that far. We also put to one side the case where replacement was made of a patented component of a combination patent. We deal here with a patent that covered only a combination of unpatented components.

The question in terms of patent law precedents is whether what was done to these machines, the original manufacture and sale of which had been licensed by the patentee, amounted to “repair,” in which event there was no infringement, or “reconstruction,” in which event there was. The idea of “reconstruction” in this context has the special connotation of those acts which would impinge on the patentee's right “to exclude others from making,” 35 U. S. C. § 154, the article. As stated in Wilson v. Simpson, 9 How. 109, 123, . . when the material of the combination ceases to exist, in whatever way that may occur, the right to renew it depends upon the right to make the invention. If the right to make does not exist, there is no right to rebuild the combination.” On the other hand, “When the wearing or injury is partial, then repair is restoration, and not reconstruction.” Ibid. Replacing worn-out cutting knives in a planing machine was held to be “repair,” not “reconstruction,” in Wilson v. Simpson, supra. Our latest case was Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U. S. 336,.which a majority of the Court construe as holding that it was not infringement to replace the worn-out fabric of a patented convertible automobile top, whose original manufacture and sale had been licensed by the patentee. See No. 75, Aro Mfg. Co. v. Convertible Top Replacement Co., decided this day. Post, p. 476.

Whatever view may be taken of the holding in the first Aro case, the majority believe that it governs the present one. These four machines were not spent; they had years of usefulness remaining though they needed cleaning and repair. Had they been renovated and put to use on the “1-pound” cans, there could be no question but that they were “repaired,” not “reconstructed,” within the meaning of the cases. When six of the 35 elements of the combination patent were resized or relocated, no invasion of the patent resulted, for as we have said the size of cans serviced by the machine was no part of the invention; nor were characteristics of size, location, shape and construction of the six elements in question patented. Petitioners in adapting the old machines to a related use were doing more than repair in the customary sense; but what they did was kin to repair for it bore on the useful capacity of the old combination, on which the royalty had been paid. We could not call it “reconstruction” without saying that the patentee’s right “to exclude others from making” the patented machine, 35 U. S. C. § 154, had been infringed. Yet adaptation for use of the machine on a “5-ounce” can is within the patent rights purchased, since size was not an invention.

The adaptation made in the six nonpatented elements improved the usefulness of these machines. That does not, however, make the adaptation “reconstruction” within the meaning of the cases. We are asked in substance to treat the case as if petitioners had a license for use of the machines on “1-pound” cans only. But the sales here were outright, without restriction. Adams v. Burke, 17 Wall. 453, 456, therefore controls:

“. . . when the patentee, or the person having his rights, sells a machine or instrument whose sole value is in its use, he receives the consideration for its use and he parts with the right to restrict that use.”

And see United States v. Univis Lens Co., 316 U. S. 241, 250.

Reversed.

MR. Justice Harlan would affirm the judgment substantially for the reasons given in the majority opinion in the Court of Appeals, 314 F. 2d 71.

      See Cotton-Tie Co. v. Simmons, 106 U. S. 89 (reconstruction); Heyer v. Duplicator Mfg. Co., 263 U. S. 100 (repair).


author: Mr. Justice Clark

text:
    J. I. CASE CO. et al. v. BORAK.
    No. 402.
    Argued April 22-23, 1964.
    Decided June 8, 1964.

      Malcolm K. Whyte argued the cause for petitioner J. I. Case Co. With him on the briefs was Robert P. Harland. Walter S. Davis argued the cause for petitioners Barr et al. With him on the brief were Clark M. Robertson, H. Maxwell Manzer and Ray T. McCann.

      Alex Elson argued the cause for respondent. With him on the brief were Arnold I. Shure, Willard J. Lassers, Aaron S. Wolff and Bruno V. Bitker.

      Philip A. Loomis, Jr., by special leave of Court, argued the cause for the Securities and Exchange Commission, as amicus curiae, urging affirmance. With him on the brief were Solicitor General Cox, Stephen J. Poliak and David Berber.

   Mr. Justice Clark

delivered the opinion of the Court.

This is a civil action brought by respondent, a stockholder of petitioner J. I. Case Company, charging deprivation of the pre-emptive rights of respondent and other shareholders by reason of a merger between Case and the American Tractor Corporation. It is alleged that the merger was effected through the circulation of a false and misleading proxy statement by those proposing the merger. The complaint was in two counts, the first based on diversity and claiming a breach of the directors' fiduciary duty to the stockholders. The second count alleged a violation of § 14 (a) of the Securities Exchange Act of 1934 with reference to the proxy solicitation material. The trial court held that as to this count it had no power to redress the alleged violations of the Act but was limited solely to the granting of declaratory relief thereon under § 27 of the Act. The court held Wis. Stat., 1961, § 180.405 (4), which requires posting security for expenses in derivative actions, applicable to both counts, except that portion of Count 2 requesting declaratory relief. It ordered the respondent to furnish a bond in the amount of $75,000 thereunder and, upon his failure to do so, dismissed the complaint, save that part of Count 2 seeking a declaratory judgment. On interlocutory appeal the Court of Appeals reversed on both counts, holding that the District Court had the power to grant remedial relief and that the Wisconsin statute was not applicable. 317 F. 2d 838. We granted certiorari. 375 U. S. 901. We consider only the question of whether § 27 of the Act authorizes a federal cause of action for rescission or damages to a corporate stockholder with respect to a consummated merger which was authorized pursuant to the use of a proxy statement alleged to contain false and misleading statements viola-tive of § 14 (a) of the Act. This being the sole question raised by petitioners in their petition for certiorari, we will not consider other questions subsequently presented. See Supreme Court Rule 40 (1) (d)(2); Local 1976, United Brotherhood of Carpenters v. Labor Board, 357 U. S. 93, 96 (1958); Irvine v. California, 347 U. S. 128, 129-130 (1954).

I.

Respondent, the owner of 2,000 shares of common stock of Case acquired prior to the merger, brought this suit based on diversity jurisdiction seeking to enjoin a proposed merger between Case and the American Tractor Corporation (ATC) on various grounds, including breach of the fiduciary duties of the Case directors, self-dealing among the management of Case and ATC and misrepresentations contained in the material circulated to obtain proxies. The injunction was denied and the merger was thereafter consummated. Subsequently successive amended complaints were filed and the case was heard on the aforesaid two-count complaint. The claims pertinent to the asserted violation of the Securities Exchange Act were predicated on diversity jurisdiction as well as on § 27 of the Act. They alleged: that petitioners, or their predecessors, solicited or permitted their names to be used in the solicitation of proxies of Case stockholders for use at a special stockholders’ meeting at which the proposed merger with ATC was to be voted upon; that the proxy solicitation material so circulated was false and misleading in violation of § 14 (a) of the Act and Rule 14a-9 which the Commission had promulgated thereunder; that the merger was approved at the meeting by a small margin of votes and was thereafter consummated; that the merger would not have been approved but for the false and misleading statements in the proxy solicitation material; and that Case stockholders were damaged thereby. The respondent sought judgment holding the merger void and damages for himself and all other stockholders similarly situated, as well as such further relief “as equity shall require.” The District Court ruled that the Wisconsin security for expenses statute did not apply to Count 2 since it arose under federal law. However, the court found that its jurisdiction was limited to declaratory relief in a private, as opposed to a government, suit alleging violation of § 14 (a) of the Act. Since the additional equitable relief and damages prayed for by the respondent would, therefore, be available only under state law, it ruled those claims subject to the security for expenses statute. After setting the amount of security at $75,000 and upon the representation of counsel that the security would not be posted, the court dismissed the complaint, save that portion of Count 2 seeking a declaration that the proxy solicitation material was false and misleading and that the proxies and, hence, the merger were void.

II.

It appears clear that private parties have a right under § 27 to bring suit for violation of § 14 (a) of the Act. Indeed, this section specifically grants the appropriate District Courts jurisdiction over "all suits in equity and actions at law brought to enforce any liability or duty created” under the Act. The petitioners make no concessions, however, emphasizing that Congress made no specific reference to a private right of action in § 14 (a) that, in any event, the right would not extend to derivative suits and should be limited to prospective relief only. In addition, some of the petitioners argue that the merger can be dissolved only if it was fraudulent or non-beneficial, issues upon which the proxy material would not bear. But the causal relationship of the proxy material and the merger are questions of fact to be resolved at trial, not here. We therefore do not discuss this point further.

III.

While the respondent contends that his Count 2 claim is not a derivative one, we need not embrace that view, for we believe that a right of action exists as to both derivative and direct causes.

The purpose of § 14 (a) is to prevent management or others from obtaining authorization for corporate action by means of deceptive or inadequate disclosure in proxy solicitation. The section stemmed from the congressional belief that “[f]air corporate suffrage is an important right that should attach to every equity security bought on a public exchange.” H. R. Rep. No. 1383, 73d Cong., 2d Sess., 13. It was intended to “control the conditions under which proxies may be solicited with a view to preventing the recurrence of abuses which . . . [had] frustrated the free exercise of the voting rights of stockholders.” Id., at 14. “Too often proxies are solicited without explanation to the stockholder of the real nature of the questions for which authority to cast his vote is sought.” S. Rep. No. 792, 73d Cong., 2d Sess., 12. These broad remedial purposes are evidenced in the language of the section which makes it “unlawful for any person . . . to solicit or to permit the use of his name to solicit any proxy or consent or authorization in respect of any security . . . registered on any national securities exchange in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.” (Italics supplied.) While this language makes no specific reference to a private right of action, among its chief purposes is “the protection of investors,” which certainly Implies the availability of judicial relief where necessary to achieve that result.

The injury which a stockholder suffers from corporate action pursuant to a deceptive proxy solicitation ordinarily flows from the damage done the corporation, rather than from the damage inflicted directly upon the stockholder. The damage suffered results not from the deceit practiced on him alone but rather from the deceit practiced on the stockholders as a group. To hold that derivative actions are not within the sweep of the section would therefore be tantamount to a denial of private i relief. Private enforcement of the proxy rules provides a 1 necessary supplement to Commission action. As in antitrust treble damage litigation, the possibility of civil dam|ages or injunctive relief serves as a most effective weapon fin the enforcement of the proxy requirements. The Commission advises that it examines over 2,000 proxy statements annually and each of them must necessarily be expedited. Time does not permit an independent examination of the facts set out in the proxy material and this results in the Commission’s acceptance of the representations contained therein at their face value, unless contrary to other material on file with it. Indeed, on the allegations of respondent’s complaint, the proxy material failed to disclose alleged unlawful market manipulation of the stock of ATC, and this unlawful manipulation would not have been apparent to the Commission until after the merger.

We, therefore, believe that under the circumstances")'^ here it is the duty of the courts to be alert to provide | such remedies as are necessary to make effective the con-f gressional purpose. As was said in Sola Electric Co. v. Jefferson Electric Co., 317 U. S. 173, 176 (1942):

“When a federal statute condemns an act as unlawful, the extent and nature of the legal consequences of the condemnation, though left by the statute to judicial determination, are nevertheless federal questions, the answers to which are to be derived from the statute and the federal policy which it has adopted.”

See also Tunstall v. Brotherhood of Locomotive Firemen & Enginemen, 323 U. S. 210, 213 (1944); Deitrick v. Greaney, 309 U. S. 190, 201 (1940). It is for the federal courts “to adjust their remedies so as to grant the necessary relief” where federally secured rights are invaded. “And it is also well settled that where legal rights have been invaded, and a federal statute provides for a general right to sue for such invasion, federal courts may use any available remedy to make good the wrong done.” Bell v. Hood, 327 U. S. 678, 684 (1946). Section 27 grants the District Courts jurisdiction “of all suits in equity and actions at law brought to enforce any liability or duty created by this title . . . .” In passing on almost identical language found in the Securities Act of 1933, the Court found the words entirely sufficient to fashion a remedy to rescind a fraudulent sale, secure restitution and even to enforce the right to restitution against a third party holding assets of the vendor. Deckert v. Independence Shares Corp., 311 U. S. 282 (1940). This significant language was used:

“The power to enforce implies the power to make effective the right of recovery afforded by the Act. And the power to make the right of recovery effective implies the power to utilize any of the procedures or actions normally available to the litigant according to the exigencies of the particular case.” At 288.

See also Porter v. Warner Holding Co., 328 U. S. 395 (1946); Mitchell v. Robert DeMario Jewelry, Inc., 361 U. S. 288 (1960); Schine Chain Theatres, Inc., v. United States, 334 U. S. 110 (1948).

Nor do we find merit in the contention that such remedies are limited to prospective relief. This was the position taken in Dann v. Studebaker-Packard Corp., 288 F. 2d 201, where it was held that the “preponderance of questions of state law which would have to be interpreted and applied in order to grant the relief sought ... is so great that the federal question involved ... is really negligible in comparison.” At 214. But we believe that the overriding federal law applicable here would, where the facts required, control the appropriateness of redress despite the provisions of state corporation law, for it “is not uncommon for federal courts to fashion federal law where federal rights are concerned.” Textile Workers v. Lincoln Mills, 353 U. S. 448, 457 (1957). In addition, the fact that questions of state law must be decided does not change the character of the right; it remains federal. As Chief Justice Marshall .said in Osborn v. Bank of the United States, 9 Wheat. 738 (1824):

“If this were sufficient to withdraw a case from the jurisdiction of the federal Courts, almost every case, although involving the construction of a law, would be withdrawn . . . .” At 819-820.

Moreover, if federal jurisdiction were limited to the granting of declaratory relief, victims of deceptive proxy statements would be obliged to go into state courts for remedial relief. And if the law of the State happened to attach no responsibility to the use of misleading proxy I statements, the whole purpose of the section might be j frustrated. Furthermore, the hurdles that the victim might face (such as separate suits, as contemplated by Dann v. Studebaker-Packard Corp., supra, security for expenses statutes, bringing in all parties necessary for complete relief, etc.) might well prove insuperable toj effective relief.

IV.

Our finding that federal courts have the power to grant all necessary remedial relief is not to be construed as any indication of what we believe to be the necessary and appropriate relief in this case. We are concerned here only with a determination that federal jurisdiction for this purpose does exist. Whatever remedy is necessary must await the trial on the merits.

The other contentions of the petitioners are denied.

Affirmed.

       Section 14 (a) of the Securities Exchange Act of 1934, 48 Stat. 896, 15 U. S. C. § 78n (a), provides: “It shall be unlawful for any person, by the use of the mails or by any means or instrumentality of interstate commerce or of any facility of any national securities exchange or otherwise to solicit or to permit the use of his name to solicit any proxy or consent or authorization in respect of any security (other than an exempted security) registered on any national securities exchange in contravention of such rules and regulations as the [Securities and Exchange] Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”

       Section 27 of the Act, 48 Stat. 902-903, 15 U. S. C. § 78aa, provides in part: “The district courts of the United States, the Supreme Court of the District of Columbia, and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have exclusive jurisdiction of violations of tins title or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by this title or the rules and regulations thereunder. Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to ¡'enforce any liability or duty created by this title or rules and regulations thereunder, or to enjoin any violation of such title or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant jnay be found.”

       “The phrasing of the questions presented need not be identical with that set forth in the jurisdictional statement or the petition for certiorari, but the brief may not raise additional questions or change the substance of the questions already presented in those documents. Questions not presented according to this paragraph will be disregarded, save as the court, at its option, may notice a plain error not presented.”

       17 CFR §240.14a-9 provides: “False or misleading statements. No solicitation subject to §§ 240.14a-l to 240.14a-10 shall be made by means of any proxy statement, form of proxy, notice of meeting, or other communication written or oral containing any statement which at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.”