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MONDAY, JUNE 11, 1945


Washington, D. C.

The committee met at 10 a. m., the Honorable Michael A. Feighan, presiding.

Present also: Chairman Sumners and Representative John W. Gwynne, of Iowa, author of H. R. 2788.

Mr. FEIGHAN. The subcommittee will come to order. Today we will consider H. R. 2788, a bill introduced by our colleague, Mr. Gwynne, to amend title 28 of the United States Code in regard to the limitation of certain actions, and for other purposes.

(The bill referred to is as follows:)

[H. R. 2788, 79th Cong., 1st sess.]

A BILL To amend title 28 of the United States Code in regard to the limitations of certain actions, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title 28 of the United States Code, as amended, be further amended by adding a new section to be known as section 793, and to read as follows:

"SEC. 793. Except as otherwise provided in any action creating a right of action to recover damages, actual or exemplary, no action under the laws of the United States shall be maintained unless the same is commenced within 1 year after such cause of action accrued, unless a shorter time be fixed in any applicable State statute: Provided, however, That public actions to recover money damages may be enforced if brought within two years after the cause of action accrued except when the United States is not the real party at interest: Provided further, That the person liable for such damages shall, within the same period, be found .within the United States so that proper process thereof may be instituted and served against such person."

Mr. FEIGHAN. Mr. Gwynne, may we have a statement from you? Mr. GWYNNE. Mr. Chairman, before the subcommittee completes its hearings on this bill I would like to make a statement; I will not do it now, however, because of the fact that we have a number of witnesses who have expressed their desire to appear in support of the bill, and many of them are here now. I would rather the committee would proceed to hear them, and I will make a statement at a later time.

Mr. FEIGHAN. Very well; the first witness, then, will be Mr. Ray Smethurst.



Mr. SMETHURST. Mr. Chairman, my name is Raymond Smethurst, counsel for the National Association of Manufacturers. I am appearing here this morning on behalf of that association, an organization of about 13,500 manufacturers located throughout the United States, and I think, to reflect the interest of that group in the bill before the subcommittee, I might point out that over 70 percent of our membership is comprised of manufacturing companies of less than 500 employees.

In addition to appearing for the national association I have also a number of telegrams from some 32 State manufacturing associations. I won't take the time of the subcommittee to read these telegrams into the record, but I would like to indicate the organizations which have authorized me to appear for them:

Associated Industries of Alabama.
California Manufacturers Association.
Colorado Manufacturers Association.
Columbia Empire Industries, Inc.
Associated Industries of Florida.
Associated Industries of Georgia.
Illinois Manufacturers Association.
Iowa Manufacturers Association.
Associated Industries of Kansas.
Louisiana Manufacturers Association.
Associated Industries of Maine.
Associated Industries of Massachusetts.
Michigan Manufacturers Association.
Associated Industries of Missouri.
Associated Industries of Montana.
Associated Industries of Nebraska.

New Hampshire Manufacturers Association.
Manufacturers Association of New Jersey.
Employers Association of North Jersey.
Associated Industries of New York State, Inc.
The Ohio Manufacturers Association.
Associated Industries of Oklahoma.
Pennsylvania Manufacturers Association.
Associated Industries of Rhode Island.
Tennessee Manufacturers Association.
Texas State Manufacturers Association.
Utah Manufacturers Association.
Associated Industries of Vermont.
Virginia Manufacturers Association.
Federated Industries of Washington.
West Virginia Manufacturers Association.
Wisconsin Manufacturers Association.

Mr. CHAIRMAN. I might say at the beginning that because of the importance of this bill we have given the subject extensive study and considerable research. It is rather strange that over such a long period of time, and with so many statutes having been enacted by the Congress, that so few of them have incorporated any period of limitation during which either private or public actions can be brought.

Mr. Gwynne, in presenting his bill in the House, made a statement setting forth some 17 of these public statutes in which either private or public rights of action were permitted and in which no statute of limitations was provided, with the result that in most cases the only period of limitation could be found by resort to the available State law, and I think, as I can develop later, you will see a variety and

discrepancy in those State laws which have been held applicable to these various Federal causes of action.

I would like first to discuss the need for this legislation; then I I would like to comment on H. R. 2788, as it appears to be a partial corrective of the situation which has developed, and then I would like to make a few suggestions for possible changes in H. R. 2788.

As Mr. Gwynee pointed out, there are 17 of these statutes. I am not sure, but there may be additional ones not contained in the statement made by Mr. Gwynne on the floor. For our purpose, and the purpose of our membership, there are a number of these which are of major importance. I refer particularly to the Sherman Act, the Clayton Act, with particular reference to the Robinson-Patman amendments to the price discrimination provisions of the Clayton Act, the Fair Labor Standards Act, the Walsh Healey Act, and the Wage Stabilization Act of 1942.

Over a period of time, by judicial decision, it has been quite apparent that these laws were not as clear or as definite as we might have wished. We have recently experienced a number of new interpretations which have imposed new legal duties, and more serious than the mere change and uncertainty in the law has been the retroactive nature of these interpretations. When private individuals are given the right of action to recover substantial penalties or damages for acts which, when committed, were not unlawful, but which have become so by administrative or judicial decision, then we think the matter calls for correction. I think we have much the same situation as though Congress were to pass a law to become effective in 1935, with all private individuals injured by these retroactive violations, or violations which have been made such by the retroactive operation of the law, being given the right of action to recover these fines, damages, and penalties. Because that is the situation resulting from some of these administrative and judicial decisions.

Let me give a few outstanding examples and I understand there are witnesses here from specific trades, business, or industry groups, who have experienced some specific form of liability resulting from administrative or judicial decisions, so I don't want to make this too extended, although there are an almost unlimited number of cases.

Under the antitrust laws (and we must bear in mind the treble damage provision in the antitrust law) under which any person injured by any act forbidden can recover treble the amount of damages he can show.

Recently the Supreme Court, in June 1944, held that the business of insurance was interstate commerce, and therefore subject to the Sherman Act. I don't need to expand on that point. I understand this committee itself originated legislation to postpone the effect of that decision for a period of 3 years to permit the insurance industry and State governments to adjust their activities and their statutes to this new rule of law. But, in the report of this committee which reported out that legislation, attention was called to the confusion and uncertainty resulting from that decision of the Court.

Another recent decision by the Court under the antitrust law involved the question of the legality of basing points. For some twentyodd years, the question of basing points, both from an economic and legal standpoint, has been debated in a number of sessions of the Con

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