Standard Car Equipment Co.

Text (OCR of the scan at left; may contain errors)

FEDERAL TRADE COMMISSION v. STANDARD CAR EQUIPMENT CO. AND STANDARD CAR CONSTRUCTION CO.

Al\IENrmn COMPLAINT IN THE MATTER OF THE ALLEGED VIOLA· TION OF SECTION 5 OF THE ACT OF CONGRESS Al'PHOVED SEP· TElltnER 20, 1914, Docket No. 9.-Aprll 16, 1918.

SYLLABUS.

\Vhere two corporations engaged in the manufacture, sale, and lease of tnnk cars used for the transportation of oil, alcoi.wl, acids, and other Jiquhl Cllllllllo<lit!Ps, fot· the purpose and with the effect of unduly hantssin~ UIH! cmhm·t·assln.~ competitors, rnnllclnusly entlc<>ll nwn~· <>mplo~·pcs of such competitors; and, 'Vhere one of I'UC'h COI'poratlons, ell:,!;aged In the business of leasing such tunk eu rs, neqnlred from a person then in its employ but formerly Plllployed hy a co1np•·t it or lu a conlhlential capacity, confidt>ntlal lnformntlon of snit! conlvctltor, consisting among other things of a Jist of customers and proRpectlve customers, and datu pertaining to their leases and prospective lenses, and used the same In competition with said competitor:

llcld, That such enticement of employees and such acquisition and use of confidential Information constituted unfair methods ot competition in violation of s<.."Ctlon 5 uf the net of September 26, 1{)14. COMPLAINT.

The Federal Trade Commission having reason to believe from a preliminary investigation made by it that the Standard Car Equipment Co. anrl the Strtndard Car Construction Co., hereinafter referred to ns respondents, have been, and FEDERAL TRADE COMMISSION DECISIONS, 145 are, using unfair methods of competition in interstate com; merce in violation of the provisions of section 5 of the act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and it appearing that a proceeding by it in respect thereof would be to the interest of the public, issues this amended complaint, stating its chargrs in that respect, on information and belief as follows:

PARAGRAPH 1. That the Standard Car Equipment Co., one of the respondents, is ~ corporation organized and existing under and by virtue of the laws of the State of Delaware, having its principal office and place of business at the city of Philadelphia, State of Pennsylvania, and is now, and was at all times hereinafter mentioned, engagr-d in commerce among. the several States and Territories of the United States, in leasing tnnk cars used for the transportation of oil, alcohol, acids, etc.; that the other respondent, the Standard Car Construction Co., is a corporation organized and created under ihe laws of the State of Delaware, and is engaged, and was at all times hereinafter mentioned engaged, in commerce among the several States and Territories of the United States in the manufacture and sale of tanks and tank cars used for the transportation of oil, alcohol, acids, etc.; that the Standard Car Equipment Co. wholly owns and controls the capital stock of said Standard Car Construction Co., and by reason of such ownership and control, the same directors are elected on both boards of directors and the members thereof operate and cooperate in the management and in the operation of both concerns.

PAn. 2. That, with the effect of stifling and suppressing competition in interstate commerce in the leasing of tank cars, the Standard Car Equipment Co. is now and for more than a year last past h11.s been systematically and on a large _ scale inducing employees of one of its competitors to leave their employment by offering such employees employment with respondent, and that said employment with respondent is and has been given at times when respondent had no occasion for the sen·ice of many of such employees; that the Stn,ndard Car Construction Co., the other l'l spondent, en- 1474300--20----10 146 FEDERAL TRADE COMMISSION DECISIONS, gaged in the manufacture and sale of tank cars for the Standard Car Equipment Co. as aforesaid and for other customers, and being operated and controlled as aforesaid, has been for a long time past, and is now systematically, and on a large scale, inducing employees of its competitors to leave their employment by offering such employees employment with said respondent, many of said employees having been in the service of said competitor for many years and were highly skilled in and about the business of said competitor, with the intent and purpose of injuring the business of said competitor, and demoralizing and breaking down the organization of said competitor's employees to such an extent that the output of competitor's plant was and has been greatly and materially reduced, thereby suppressing and stifling competition .in the manufacture and sale of tanks and tank cars as aforesaid.

PAR. 3. That, with. the effect of stifling and suppressing cnmpetition in interstate commerce in the leasing of tank cars, the Standard Car Equipment Co., one of the respondents, is now, and for more than a year last past has been,. making representations to users or prospective users of tank cars, that it is closely affiliated with one of its competitors; that the respondent and this competitor have common financial connections and that it and said competitor will soon be lmder one control and management, said representations being made, at times, in connection with the submit1\l of blue-print specifications for tank cu,rs, said specifications embodying certain features theretofore generally associated in the trade with said competitor's product, when, in truth and in fact, the respondent and said competitor are now, and have, for a year last past, been independent concerns and in no way connected financially or otherwise. PAR. 4. That the Standard Car Equipment Co., one of the respondents, has acquired information of trade secrets and business confidences of a certain competitor from persons heretofore employed by said compe.'t.itor but now employed by the respondent, such information consisting, among other things, of a list of customers und dnta pertaining to such customers' leases, etc., and that the respondent is now using said information, thus acquired, in competition with said competitor.

FEDERAL TRADE COMMISSION DECISIONS, 147 REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission having issued and served its complaint herein, wherein it is alleged that it had reason to believe that the above-named respondents, Standard Car Equipment Co., and Standard Car Construction Co., have h<·en and now are using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress, approved September 26, 1914, entitled ''An act to create a Federal Trade Commission, to dt-fine its powers and duties, and for other purposes," and that a proceeding by it in that respect would be to the interest of the public, and fully stating its charge..'> in that respect, and the respondents having entered their appearance by H. B. Gill, their attorney, and the Commission having offered testimony in support of its charges in said complaint, and the respondents having offered testimony in d£·nial of said charges in said complaint, and the attorneys :for the Commission and the respondents having submitted their briefs as to the law and the facts in said proceeding, and the same having been argued before an examiner of the Commission, and the said examiner having m~tde and presented to the Commission his proposed findings Its to the facts, and the respondents having entered exceptions to said examiner's proposed findings as to the facts, and Raid exePptions having been duly argued before the Commission by counsel for the Commission and the respondents, the Commission makes this report and findings as to the facts and conclusions.

FINDINGS AS TO Tile FAC'TS.

PARAGRAPH 1. That the Standard Car Equipment Co., one of the respondents, is a corporation organized anu existing under and by virtue of the laws of the StuJe of Delaware having its principal office and place of business at the city of Philadelphia, State of Pennsylvania; that the Standard Car Construction Co. is a corporation organized and existing under Ly virtue of the laws of the State of Delaware, having its works and place of business at the city of Masury, State of Ohio; that said corporations are now and were at 148 FEDERAL TRADE COMMISSION DECISIONS, all times hereinafter mentioned, engaged in commerce among the several States and Territories of the United States, in the manufacture, sale, and leasing of tank cars, used for the transportation of oil, alcohol, acids and other liquid commodities.

PAR. 2. That within three years last past respondents, for the purpose and with the effect of unduly harassing and embarrassing a competitor in the manufac~ure, sale, and leasing of tank cars in commerce as aforesaid, maliciously entiePd away Pmployecs of said competitor. PAR. 3. That the Standard Car Equipment Co., one of the respondents, within the three years last past acquired information of trade secrets and business confidences of a competitor through and by a person formerly employed in a confidential capacity by said competitor, but now employed by the respondent, such information consisting, among other things, of a list of customers and prospective customers and data pertaining to such customers' leases and prospective leases, and that said rcsponclent has used and is now using s1tid information, thus acquired, in competition with said competitor.

CONCLUSIONS.

That the mrtho<ls of competition set forth in t.he foregoing findings as to the fads in paragraphs 2 and 3, and each and all of thrm are, umler the circumstances therein set forth, unfair methods of competition in interstate commerce, in Yiolntion of the provisions of section 5 of an act of Congress approved. September 26, 1914, entitled "An act to create a Fedcml Tmde Commission, to define its powers and duties, and for other purposes."

OIIDER TO CEASE AND m:SIST, The Federal Trade Commission, having issued and served its complaint, herein, and the respondents, Standard Cur Ecptipment Co. and Standard Car Construction Co., having entered their appearance by H. B. Gill, their attorney, and the Commission having offered testimony in support of its charges in the said complaint, and the respondents having offered testimony in the denial of said charges in said romplaint, and the attorneys for the Commission and the re- FEDERAL TRADE COMMISSION DECISIONS. 149 spondents having submitted their briefs as to the law and the facts in said proceedings, and the same having been argued before an examiner of the Commission, and said ex-· aminer having made and pre!'lented to the Commission his proposed findings as to the facts, and the respondents having entered exceptions to said examiner's proposed findings as to the facts, and said exceptions having been duly argued before the Commission by counsel for the Comlllission ancl the respondents. and the Commission on the date hereof having made and filed a report containing its findings as to the facts and conclusions that the respon<ll•nts have viola trd srction 5 of an act of Congress approved September 2<i, l!H-!, entitled, "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby ref0rred to and made a part hereof: Therefore, It is orderrd, that the responcknts, Standard Car EquipffiPnt Co. and Standard Car Construction Co., thpir offict>rs lli1d ag0nts, cease and desist from- 1. Maliciously enticing away employees of thr Prtroleum Iron vYorks Co., Pennsylvania Tnnk Line, and Pennsylvania Tank Car Co. · 2. Using information of trade secrets and bnsincss confidrnces of a competitor, such trade secrets anfl husinrss confidences consisting of 11. list of eustonH'I'S an<l prosp0ctin~ customers and data pertaining to such customers' lPaSPS nnd prospective leases, which information was ohtninecl hy a JWrson formerly employed in a confidential cnpn<·ity by said competitors but now employecl by the respondent. FEDERAL TRADE COM~USSION '~-'·CHESTER KENT & CO., INC.