Safeway Stores, Incorporated v. FTC

• Decision Date: 25 October 1966
• Docket Number: No. 19325.,19325.
• Citation: 366 F.2d 795
• Parties: SAFEWAY STORES, INCORPORATED, Continental Baking Co., Buchan Baking Co., and George S. Buchan, Langendorf United Bakeries, Inc., Hansen Baking Company, Inc., and Richard Hoyt, Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

366 F.2d 795 (1966)

SAFEWAY STORES, INCORPORATED, Continental Baking Co., Buchan Baking Co., and George S. Buchan, Langendorf United Bakeries, Inc., Hansen Baking Company, Inc., and Richard Hoyt, Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.

No. 19325.

United States Court of Appeals Ninth Circuit.

September 14, 1966.

Rehearing Denied October 25, 1966.

Herbert S. Little, Robert L. Palmer, Little, Gandy, Stephan, Palmer & Slemmons, Seattle, Wash., for petitioners Langendorf United Bakeries, Inc., Hansen Baking Co. and Richard Hoyt.

Robert W. Graham, George Constable, Bogle, Gates, Dobrin, Wakefield & Long, Seattle, Wash., for petitioner Safeway Stores, Inc.

John H. Schafer, James V. Siena, Covington & Burling, Washington, D. C., Roy M. Anderson, Gordon A. Thomas, Rye, N. Y., for petitioner Continental Baking Co.

James McI. Henderson, Gen. Counsel, J. B. Truly, Asst. Gen. Counsel, Charles C. Moore, Jr., Daniel H. Hanscom, Attys., F. T. C., Washington, D. C., for respondent.

Before MERRILL, BROWNING and ELY, Circuit Judges.

ELY, Circuit Judge:

Petitioners seek review of a cease and desist order issued by the Federal Trade Commission (FTC). The order relates to unlawful price-fixing acts and practices found to have been committed by the petitioners and others in the sale of bread. The FTC made and entered the challenged order under the authority of section 5(b) of the Federal Trade Commission Act, 15 U.S.C. § 45(b). Our power of judicial review is conferred by section 5(c) of the Act.

The petitioners are Continental Baking Company, Langendorf United Bakeries, Inc., Hansen Baking Co., Inc., Safeway Stores, Incorporated, and Richard Hoyt, an officer of Hansen. A number of others were involved in the proceeding, and while the order was directed against them also, they have not sought review.¹ They were held, with petitioners here, to have engaged in a conspiracy wrongfully to fix and regulate the price of bread in the general vicinity of Seattle, Washington.

Three of the petitioning baking companies, together with nearly all others who were charged in the Commission proceeding, were members of a voluntary organization called Bakers of Washington, Inc. This corporation, of which the petitioner Hoyt was vice-president, was also named as a respondent. It was initially incorporated in 1936 in the State of Washington under the name of Bakers of Western Washington, Inc. In August, 1937, the corporate name was changed to its present name. Bakers' members are classified by division according to geographical location. In September, 1961, there were fifty-nine members. More than half of these had places of business in Seattle, but divisions of the association were also located in other Washington cities, Aberdeen, Yakima, Bellingham, and Tacoma. All dues were paid to Bakers in Seattle. Both wholesale and retail bakeries were included in the membership, but within the trade areas served by the association, the great majority was engaged in wholesale distribution.

The Commission contends that much of the wrongful activity was committed through the conduct of Bakers and of two individuals who were its successive secretaries during the period in question. The purposes for which Bakers was formed, as specified by its corporate articles, included the collection and dissemination among its members of all lawful information for the benefit of the business of its members. Petitioners contend that the primary purposes of the association, though not specified in the articles, pertained to its negotiation of labor contracts as a collective bargaining agent for its member companies and its dealing with union labor grievances and with problems concerned with legislative and governmental regulations.

We must first examine petitioners' vigorous challenge of the Commission's power to exercise jurisdiction. It is claimed that the alleged acts and practices, even if wrongfully committed, were not committed "in commerce" within the meaning of section 5 of the Act. Petitioners assert that the challenged activities were wholly intrastate and are thus not within the intendment of the statute. The FTC insists that its jurisdiction is properly supported by three grounds, (1) sales of bread by certain of the petitioners to Alaskan customers, f. o. b. dockside at Seattle, were sales in interstate commerce, (2) bread produced and sold by integrated, multistate corporations Continental, Langendorf, and Safeway is necessarily in interstate commerce, even if all sales were made in only one state, and (3) an unlawful conspiracy between petitioners, Bakers of Washington, Inc., and others, fixing the price of bread in the State of Washington, is an unfair method of competition in interstate commerce regardless of whether or not petitioners' bread sales in the State of Washington are considered to have been made in interstate commerce. We believe that the first ground sufficiently supports the Commission's jurisdiction and that it is unnecessary to examine the other two.

Four of the petitioners, Buchan, Continental, Hansen, and Langendorf, regularly sold bread to customers in Alaska, f. o. b. dockside at Seattle.² The Alaskan sales by each of these four amounted to less than one percent of its total sales. The prices to Alaskan customers were "regular wholesale prices," determined on the same basis as the prices for sales within Washington State. Therefore, price-fixing in the State of Washington necessarily affected the sales to Alaskan customers. The sales to the Alaskan customers were sales in interstate commerce. See Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 290, 42 S.Ct. 106, 66 L.Ed. 239 (1921); Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 241, 20 S.Ct. 96, 44 L.Ed. 136 (1899); California Rice Ind. v. FTC, 102 F.2d 716, 718 (9th Cir. 1939). This is sufficient to fix jurisdiction in the FTC. E. g., Standard Container Mfr's Ass'n v. FTC, 119 F.2d 262, 265 (5th Cir. 1941). Petitioners contend, however, that we should ignore the Alaskan sales as a valid basis of jurisdiction by application of the doctrine of de minimis non curat lex and because the sales were unrelated to the alleged conspiratorial acts. We have recently held that only $3,086.31 in interstate purchases was sufficient to sustain the jurisdiction of the NLRB over a local cemetery association. NLRB v. Inglewood Park Cemetery Ass'n, 355 F.2d 448 (9th Cir. 1966). In that case, we quoted the Seventh Circuit's response to an argument of de minimis, "The time has not yet arrived when $2,000 is but a trifle." NLRB v. Aurora City Lines, Inc., 299 F.2d 229, 231 (7th Cir. 1962). Here the amounts involved are substantially greater than the amounts involved in the cited cases. The provisions of the respective statutes granting jurisdiction to the NLRB and the FTC are not identical. The labor statute probably is intended to be more extensive, but the question as to what is "de minimis" should not call for different answers. Assuming that the amounts of the Alaskan sales were "de minimis," it would not necessarily follow that the FTC was here without jurisdiction. In United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 225 n. 59, 60 S.Ct. 811, 845, 84 L.Ed. 1129 (1940), it was written, "the amount of interstate or foreign trade involved is not material (Montague & Co. v. Lowry, 193 U.S. 38, 24 S.Ct. 307, 48 L.Ed. 608), since § 1 of the Act brands as illegal the character of the restraint not the amount of commerce affected." See also, United States v. McKesson & Robbins, Inc., 351 U.S. 305, 310, 76 S.Ct. 937, 940, 100 L.Ed. 1209 (1956) (Footnote omitted.), wherein the Court stated,

"It makes no difference whether the motives of the participants are good or evil; whether the price fixing is accomplished by express contract or by some more subtle means; whether the participants possess market control; whether the amount of interstate commerce affected is large or small; or whether the effect of the agreement is to raise or to decrease prices." (Emphasis added.)

See also, Sun Oil Co. v. FTC, 350 F.2d 624, 631-632 (7th Cir. 1965), cert. denied, 382 U.S. 982, 86 S.Ct. 559, 15 L.Ed. 2d 473 (1966).

The Alaskan sales were not wholly unrelated to the activities which the FTC seeks to prevent. The prices received for these sales, sales which were clearly made "in commerce," were determined in the same manner as sales made in the State of Washington. While it may be that the petitioners intended that their activities affect only those sales made within the State of Washington, the effect was otherwise.

Langendorf and Hansen contend that since they are engaged in the sale of bakery products at wholesale prices only, they could not have conspired to fix and maintain retail prices. The argument is specious. Continental, Langendorf, Hansen, and Buchan all stamp the retail price on the bread wrapper. The wholesale price paid by the retailer is the stamped retail price less twenty percent. This was established by testimony of representatives of the wholesale bakers. Any price-fixing activity with regard to the wholesale price would necessarily have a direct and immediate effect on retail prices.

All of the petitioners contend that the Commission's order is not supported by substantial evidence. We do not agree. Our attention is directed at certain significant and relevant facts.

Representatives of Continental, Langendorf, Hansen, and Buchan regularly attended the meetings of Bakers of Washington, Inc., at the Washington Athletic Club. Meetings were held not less than twenty-six times annually. During the summer of 1958 meetings were held at which prices were discussed.³

On August 11, 1958, Continental, Langendorf, Hansen, and Buchan all put into effect identical increases of two cents per one and one-half pound loaf of white bread, from thirty-one cents to thirty-three cents. The bakery supervisor of Albertson's Stores, Inc., was informed by the secretary of Bakers...