298 F.2d 659 (8th Cir. 1962), 16613, McCleneghan v. Union Stock Yards Co. of Omaha

Docket Nº:16613.
Citation:298 F.2d 659
Party Name:Clifford McCLENEGHAN, Appellant, v. UNION STOCK YARDS CO. OF OMAHA, a corporation, Omaha Live Stock Exchange, an unincorporated association, Omaha Livestock Traders Exchange, an unincorporated association, Appellees.
Case Date:January 23, 1962
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 659

298 F.2d 659 (8th Cir. 1962)

Clifford McCLENEGHAN, Appellant,


UNION STOCK YARDS CO. OF OMAHA, a corporation, Omaha Live Stock Exchange, an unincorporated association, Omaha Livestock Traders Exchange, an unincorporated association, Appellees.

No. 16613.

United States Court of Appeals, Eighth Circuit.

January 23, 1962

Rehearings Denied Feb. 21, 1962.

Page 660

[Copyrighted Material Omitted]

Page 661

Martin A. Cannon, Omaha, Neb., for appellant.

G. L. DeLacy, Omaha, Neb., for appellee, Union Stock Yards Co. of Omaha, and Kennedy, Holland, DeLacy & Svoboda, Omaha, Neb., on the brief.

Alexander McKie, Jr., Omaha, Neb., for appellee, Omaha Live Stock Exchange, change, and Barton H. Kuhns, Omaha, Neb., on the brief.

Howard F. Sachs, Kansas City, Mo., for appellee, Omaha Livestock Traders Exchange, and Edward G. Garvey and Joseph J. Kelly, Jr., Kansas City, Mo., Crawford, Garvey, Comstock & Nye, Omaha, Neb., and Spencer, Fane Britt & Browne, Kansas City, Mo., on the brief.

Before VOGEL and BLACKMUN, Circuit Judges, and BECK, District Judge.

BLACKMUN, Circuit Judge.

This is a private antitrust action for treble damages. It presumably is based on §§ 1 and 2 of the Sherman Act and § 4 of the Clayton Act, 15 U.S.C.A. §§ 1, 2 and 15, respectively. The district court dismissed the action on the ground that it did not have primary jurisdiction over the subject matter. The appeal is from that dismissal.

The complaint alleges:

Plaintiff is an individual. Defendant Union Stock Yards Co. of Omaha ('Stockyards') is a corporation operating the Omaha stockyards and furnishing stockyard services and facilities in interstate commerce there. Defendant Omaha Live Stock Exchange ('Livestock') and defendant Omaha Livestock Traders Exchange ('Traders') are unincorporated associations of market agencies and dealers engaged in the buying and selling of livestock in interstate commerce at the Omaha stockyards. 1 Livestock and Traders, by rules and agreements, control and regulate the business activities of their respective members.

Plaintiff has been engaged for over 35 years as a livestock dealer at the Omaha yards buying and selling various types of livestock on his own account and for others. This has been his sole means of livelihood. On and after October 22, 1951, the defendants entered into and continued a combination and conspiracy to secure a monopoly and to restrain interstate commerce in the purchase and sale of high quality stocker and feeder cattle at the Omaha yards. Specifically, the combination and conspiracy worked as follows: Traders by a rule agreed to a scheme under which its members, by

Page 662

flipping coins, determined priority among themselves for the opportunity to bid on stocker and feeder cattle offered for sale at any particular agency alley. By this means they selected three of their number as the first three bidders. The rule allowed only members of Traders to engage in the flip. Livestock and its members knew of and cooperated with this rule of Traders and respected the flip in the selection of bidders to the exclusion of all non-participants. The three winning flippers. all members of Traders, thus obtained priority of bidding opportunity over all other interested buyers. Stockyards knew of the existence and enforcement of this scheme and that it was discriminatory against persons such as the plaintiff, acquiesced in it, failed to establish and enforce non-discriminatory practices in the furnishing of its stockyards services, and cooperated with the other defendants by discrimination in the furnishing of its services against non-complying members and non-members of Livestock and Traders. The scheme was operated by the defendants, from October 22, 1951, until August 1958 when the practice was enjoined by this court. 2 The order of the Secretary of Agriculture which this court then affirmed was one issued June 18, 1957. Three days later Stockyards, because of the plaintiff's activity in the proceedings culminating in the issuance of that order, canceled plaintiff's pen assignment at the Omaha yards. This cancellation, still in effect, was discriminatory and in furtherance of the conspiracy.

Plaintiff thus was effectively barred from the purchase in the open market of first class cattle for his own account and for others. He has been damaged by way of lost income and increased costs occasioned by the shut out and by way of increased costs occasioned by the pen cancellation. And

'All of plaintiff's aforedescribed damages were directly and proximately caused by the conspiracy, combination and agreement of the defendants to restrain trade in and to create a monopoly in a part of the commerce among the several states, contrary to the laws of the United States.'

Two separate and distinct discriminatory acts are thus alleged. The first, involving all defendants, is the purchasing shut out through the flip system from October 22, 1951, to August 1958. The second, claimed to be part of the execution of the conspiracy but primarily involving only Stockyards, is the pen cancellation since June 21, 1957.

Each defendant filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted and for lack of primary jurisdiction in the district court over the subject matter. As noted above, the court based its dismissal upon the latter ground. It also concluded that no purpose would be served by holding the action in abeyance pending any proceedings before the Secretary of Agriculture and any subsequent judicial review thereof.

In its brief here, Stockyards concedes that it operates a public livestock market at Omaha, that it is engaged in interstate commerce, and that its activities are governed by those provisions of the Packers and Stockyards Act, 1921, as amended, relating to stockyards.

For the purpose of the motions to dismiss we are to regard as admitted the well pleaded facts of the complaint. Cohen v. United States, 8 Cir., 1942, 129 F.2d 733, 735-6; Creswell-Keith, Inc. v. Willingham, 8 Cir., 1959, 264 F.2d 76, 81; Mr. Justice Clark, concurring, in Denver Union Stock Yard Co. v. Producers Livestock Ass'n, 1958, 356 U.S. 282, 290, 78 S.Ct. 738, 2 L.Ed.2d 771. This admission

Page 663

'does not, of course, embrace sweeping legal conclusions cast in the form of factual allegations'. Pauling v. McElroy, D.C.Cir., 1960, 107 U.S.App.D.C. 372, 278 F.2d 252, 254, cert. den. 364 U.S. 835, 81 S.Ct. 61, 5 L.Ed.2d 60. Furthermore, a general allegation of conspiracy, without a statement of the facts constituting that conspiracy, is only an allegation of a legal conclusion and is insufficient to constitute a cause of action. Black & Yates v. Mahogany Ass'n, 3 Cir., 1941, 129 F.2d 227, 231, cert. den. 317 U.S. 672, 63 S.Ct. 76, 87 L.Ed. 539; Nelson Radio & Supply Co. v. Motorola, 5 Cir., 1952, 200 F.2d 911, 912-914, cert. den. 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356.

Without attempting here to particularize the complaint's 'well pleaded' facts and to segregate them from its general legal conclusions, it is apparent, we think, that the gravamen of its charge is the flip system and the pen cancellation. Stripping the complaint down to these two items, we are satisfied that on its face it then contains allegations sufficient to constitute an antitrust cause of action. Compare United States Navigation Co. v. Cunard S.S. Co., 1932, 284 U.S. 474, 480, 52 S.Ct. 247, 76 L.Ed. 408.

The defendants argue, however, with no more than minor differences in their respective approaches, that the dismissal of the complaint was proper because the Secretary of Agriculture, and not the court, possessed 'primary jurisdiction' over its subject matter or, in other words, that, under the Packers and Stockyards Act, the bases of the complaint are cognizable only before the Secretary. The plaintiff disagrees with this approach and urges that the doctrine of primary jurisdiction is not applicable to these defendants; that, also, it is applicable only in situations, different from this case, where the technical knowledge of the administrative agency is involved; that the Act does not oust the federal courts of jurisdiction of suits under the antitrust laws so long as matters of uniformity and specialized administrative knowledge are not involved; and that, in any event, suspension 'while the administrative gamut is run', and not dismissal, is indicated.

We therefore look first at the statute and then at the doctrine of primary jurisdiction.

1. The Statute. Under those provisions of the Packers and Stockyards Act, 1921, as amended, relating to stockyards and stockyard dealers, namely, §§ 301-317, 7 U.S.C.A. §§ 201-203 and 205-217a, the Secretary of Agriculture is given the general duty to regulate stockyards, market agencies and dealers, as therein defined. Sioux City Stock Yards Co. v. United States, N.D.Ia., 1943, 49 F.Supp. 801, 804, and cases cited; Schmidt v. Old Union Stockyards Company, 1961, Wash., 364 P.2d 23, 28. Stockyards and market agencies are made public utilities by the Act. Denver Union Stock Yard Co. v. Livestock Ass'n, 1958, 356 U.S. 282, 286, 78 S.Ct. 738, 2 L.Ed.2d 771; Swift & Co. v. United States, 1942, 316 U.S. 216, 232, 62 S.Ct. 948, 86 L.Ed. 1391; Stafford v. Wallace, 1922, 258 U.S. 495, 516, 42 S.Ct. 397, 66 L.Ed. 735. Specifically, § 304, 7 U.S.C.A. § 205, declares, 'It shall be the duty of every stockyard owner and market agency to furnish upon reasonable request, without discrimination, reasonable stockyard services at such stockyard * * *'. 'Stockyard services' is defined by § 301(b), 7 U.S.C.A. § 201(b), to mean 'services or facilities furnished at a stockyard in connection with the receiving, buying, or selling on a commission basis or otherwise, marketing, * * * weighing, or handling in commerce, of livestock'. Rates and charges are to be reasonable and nondiscriminatory and any which is unreasonable or...

To continue reading