Swift & Company v. United States
| Decision Date | 11 October 1962 |
| Docket Number | No. 13584.,13584. |
| Citation | 308 F.2d 849 |
| Parties | SWIFT & COMPANY, Petitioner, v. UNITED STATES of America and Orville L. Freeman, Secretary of Agriculture, Respondents. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Arthur R. Curtis, Arthur C. O'Meara, Thomas H. Long, Walter D. Turner, Chicago, Ill., for petitioner.
Neil Brooks, Asst. Gen. Counsel, U. S. Dept. of Agriculture, Washington, D. C., Joseph D. Guilfoyle, Acting Asst. Atty. Gen., Morton Hollander, Chief, Appellate Section, Civil Division, Dept. of Justice, Washington, D. C., Jerome S. Ducrest, Robert E. Duncan, Attys., Dept. of Agriculture, Washington, D. C., for respondents.
Before DUFFY, SCHNACKENBERG and CASTLE, Circuit Judges.
This is a petition to set aside or modify an order issued by the Judicial Officer of the Department of Agriculture,1 in a proceeding under section 203 of the Packers and Stockyards Act, 7 U.S.C.A. § 193.
The Judicial Officer found and concluded that Swift & Company purchased livestock in violation of sections 202 and 401 of the Packers and Stockyards Act (7 U.S.C.A. §§ 192 and 221) and the regulations in effect pursuant to the Act.
The order directed Swift & Company to 1) cease and desist from such illegal practices; and 2) to prepare and keep for at least six months, full and complete records of the weights used in the purchase of livestock at its buying stations including computations and allocations of "shrink."
The complaint contained eleven charges involving livestock buying or record-keeping practices at petitioner's Neuhoff Division, Nashville, Tennessee, each with respect to one or more species of livestock at one or more locations in Tennessee, Alabama, Mississippi and Kentucky. Six of the charges were disposed of in petitioner's favor. As to the remaining five charges, the Judicial Officer found violations of the Act by petitioner.
The first four paragraphs of the order relate to four livestock buying practices which were found to be unfair. The fifth paragraph relates to the failure to keep certain livestock buying station records for at least six months. The entire order applies to all species of livestock and to petitioner's livestock buying and record-keeping operations at all of its plants and divisions throughout the United States.
Petitioner denies that the buying practices complained of by the Secretary were unfair or in violation of the Packers and Stockyards Act. It contends that the administrative order applying nationwide with reference to all species of livestock was unreasonable and excessively broad and should be modified. It also lays great emphasis on its contention that it was denied procedural due process in that it did not receive a fair hearing. Petitioner urges the entire order should be set aside because of the alleged failure of due process.
Under the Packers and Stockyards Act, whenever the administrative agency has reason to believe that a packer has violated or is violating the Act, the agency shall serve on the packer a complaint stating the charges and requiring the packer to attend and testify at an administrative hearing. At this hearing, the packer has a right of cross examination and also the right to be heard in person or by counsel and through witnesses.
Due process in an administrative hearing, of course, includes a fair trial, conducted in accordance with fundamental principles of fair play and applicable procedural standards established by law. In Morgan v. United States, 304 U.S. 1, 22, 58 S.Ct. 773, 82 L.Ed. 1129, the Court said: "As the hearing was fatally defective, the order of the Secretary (of Agriculture) was invalid."
Petitioner claims it was denied access to government records which it claims were necessary for a full cross examination of Paschal O. Drake, a government investigator in charge of the precomplaint investigation of livestock buying practices in the Nashville area. He was permitted to testify generally as to what was "learned and heard" during these investigations. The hearing examiner accepted this testimony as "background." The Judicial Officer held such testimony had "no probative value" and was not relied upon in support of his findings, conclusions and decision.
Petitioner further claims witnesses were heard out of order; that government investigators were permitted to testify to what subsequently heard government witnesses had told them during precomplaint interviews, and that such testimony was admitted and considered except to the extent "not otherwise corroborated." Also, that the transcript of the sworn statements of certain of petitioner's employees taken in the precomplaint investigation was admitted into evidence and was considered by the examiner and Judicial Officer.
The strict common law rules of evidence do not apply to administrative hearings. In Yiannopoulos v. Robinson, 7 Cir., 247 F.2d 655, this Court stated at page 657: "* * * The strict common law rules of evidence do not apply to an administrative hearing and that the admission of incompetent and irrelevant matter is not reversible error, if there is substantial evidence to sustain the decision of the agency."
Again, in Rhodes Pharmacal Company v. Federal Trade Commission, 7 Cir., 208 F.2d 382, this Court pointed out that evidence that would be excluded in an ordinary lawsuit may, under many circumstances, be received on hearings before an administrative agency.
Cella v. United States, 7 Cir., 208 F.2d 783, 789.
After a careful examination of the record before us and without discussing in further detail the points raised by petitioner under this heading, we conclude that Swift & Company was not denied procedural due process.
The Neuhoff Division of Swift & Company was located in Nashville, Tennessee. It served as a major outlet for an area located in the states of Tennessee, Mississippi, Kentucky and Alabama. In recent years, in this area, there has been a large increase in the percentage of livestock sold in country auction markets. Scotts Hill Auction Company market was such a market and was located in Scotts Hill, Tennessee.
David Askins was a country dealer at Scotts Hill Auction Company market. In 1955 and 1956, he regularly purchased a large number of hogs and other livestock in this market. When hogs were received at this market, they were separated into groups identified as "tops," "heavy" or "light." The top grade hogs were separated from the others and sold, all at one time. There was a substantial market for top grade hogs.
In the spring of 1955, a buyer-employee of Swift & Company started going to the Scotts Hill Auction Company market. Competition developed between Swift & Company and Askins resulting in an increase in the prices paid to farmers for top hogs. Before the competition started, Askins had been buying top grade hogs at fifty cents under the Nashville market. However, after Swift & Company began buying and bidding against Askins, the price went up to twenty-five cents or thirty cents over the Nashville market.
Askins and the buyer for Swift & Company entered into an agreement that Askins would buy all the top grade hogs at the Scotts Hill market and would furnish from such purchases to the Neuhoff Division of Swift & Company whatever quantity of top grade hogs Swift & Company wanted, at the same price at which Askins had purchased them plus trucking charges.
During the three months when this agreement was in effect, Askins purchased 1392 top grade hogs and 729 of them were delivered to the Neuhoff Division of petitioner at the same price at which they had been purchased by Askins plus a trucking charge for hauling the hogs from Scotts Hill to petitioner's plant at Nashville.
A similar buying arrangement was in effect for five months beginning March 1, 1956. In that year, Swift & Company was billed directly by the Scotts Hill market for the purchase price of the hogs turned over to it by Askins, whereas in 1955, Askins paid the market for the hogs and was later reimbursed by Swift & Company.
The prohibitory provisions of section 202 of the Act, 7 U.S.C.A. § 192, were amended on ...
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