United States v. Armour Co

• Citation: 91 S.Ct. 1752,29 L.Ed.2d 256,402 U.S. 673
• Decision Date: 01 June 1971
• Docket Number: No. 759,759
• Parties: UNITED STATES, Appellant, v. ARMOUR & CO. and Greyhound Corporation
• Court: United States Supreme Court

402 U.S. 673

91 S.Ct. 1752

29 L.Ed.2d 256

UNITED STATES, Appellant,

v ARMOUR & CO. and Greyhound Corporation.

No. 759.

Argued April 19, 1971.

Decided June 1, 1971.

Syllabus

The ownership of the majority of the stock of Armour & Co., a meat packer, by Greyhound Corp., which has retail food subsidiaries and accordingly engages in business that may be forbidden to Armour by the Meat Packers Consent Decree of 1920, in itself and without any evidentiary showing as to the consequences, does not violate the Decree's prohibition against Armour 'directly or indirectly * * * engaging in or carrying on' the forbidden business. Pp. 674—683.

Affirmed.

James van R. Springer, Washington, D.C., for appellant.

Edward L. Foote, Chicago, Ill., for appellee, Greyhound Corporation.

Mr. Justice MARSHALL delivered the opinion of the Court.

Here as in United States v. Armour & Co., 298 U.S. 268, 90 S.Ct. 1723, 26 L.Ed.2d 226, we have been asked to determine if the Meat Packers Consent Decree of 1920, which prohibits Armour & Co. from dealing directly or indirectly in certain specified commodities, prohibits a corporation that may deal in some of those specified commodities from acquiring a controlling interest in Armour. When this decree was here last Term the Government was seeking to prevent General Host, a company engaged in the manufacture and sale of a variety of food products, from acquiring control of Armour. While that case was pending, General Host agreed to sell its interest in Armour to Greyhound Corp., a regulated motor carrier. After the required approval was obtained from the Interstate Commerce Commission, the transaction was consummated. This Court then dismissed the action against General Host as moot. 398 U.S. 268, 90 S.Ct. 1723, 26 L.Ed.2d 226.

The Government then proceeded against Greyhound as it had against General Host and filed a petition in the District Court alleging that Greyhound's engagement in business¹ forbidden to Armour or any firm in which Armour has a direct or indirect interest, and that Greyhound's ownership of Armour create a relationship forbidden by the 1920 Consent Decree. The District Court, as it had when General Host's ownership of Armour was at issue, held that the Consent Decree did not prohibit such acquisitions. The Government appealed.

This case does not involve the question whether the acquisition of a majority of Armour stock by Greyhound is illegal under the antitrust laws. If the Government had wished to test that proposition, it could have brought an action to enjoin the acquisition under § 7 of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 18. Alternatively, if the Government believed that changed conditions warranted further relief against the acquisition, it could have sought modification of the Meat Packers Decree itself.² It took neither of those steps, but, rather, sought to enjoin the acquisition under the decree as originally written. Thus the case presents only the narrow question whether ownership of a majority of stock in Armour by a company that engages in business forbidden to Armour by the decree, in itself and without any evidentiary showing as to the consequences, violates the prohibition against Armour's 'directly or indirectly * * * engaging in or carrying on' that forbidden business.

On February 27, 1920, the United States filed a bill in equity against the Nation's five largest meatpackers, including Armour, and against their subsidiary corporations and controlling stockholders, charging conspiratorial and individual attempts to monopolize a substantial part of the Nation's food supply. The bill alleged that the packers, from their initial position of power in the slaughtering and packing business, had acquired control of the Nation's stockyards, stockyard terminal rail lines, refrigerated rolling stock, and cold storage facilities, and that they had used predatory practices to eliminate competition in the food business.

The bill further alleged that the packers, having gained monopoly power in the meat business, were attempting to destroy competition in products which might be substituted for meat. That objective was being pursued through the acquisition of nonmeat food companies and by means of exclusive output contracts with suppliers. The prayer for relief sought, along with other prohibitions against the defendants' attempts to monopolize, the divestiture of most of their nonpacking operations and the permanent exclusion of them from the substitute food business.

On the same day as the complaint was filed, defendants filed their answer, denying its essential allegations, and both sides filed a stipulation to a consent decree, granting the Government the largest part of the relief it had sought. Paragraph Fourth of the decree enjoined the corporate defendants, including Armour from 'either directly or indirectly, by themselves or through their officers, directors, agents, or servants, engaging in or carrying on, either by concert of action or otherwise * * * the manufacturing, jobbing, selling * * * distributing, or otherwise dealing in' a long list of food and other products sold by grocery stores. Paragraph Fourth further enjoined the corporate defendants from 'owning, either directly or indirectly * * * any capital stock or other interests whatsoever' in any business which dealt in these commodities.³

Paragraph Eighteenth of the decree provided that the court should retain jurisdiction of the case 'for the purpose of taking such other action or adding to the foot of this decree such other relief, if any, as may become necessary or appropriate for the carrying out and enforcement of this decree.'

Since 1920, the decree has withstood a motion to vacate it in its entirety, Swift & Co. v. United States, 276 U.S. 311, 48 S.Ct. 311, 72 L.Ed. 587 (1928), and two attempts on the part of the defendants to have it modified in light of alleged changed circumstances. United States v. Swift & Co., 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999 (1932); United States v. Swift & Co., 189 F.Supp. 885, 892 (ND Ill. 1960), aff'd, 367 U.S. 909, 81 S.Ct. 1918, 6 L.Ed.2d 1249 (1961). Thus the decree stood at the time this case arose, and still stands, as originally written.

The Government does not contend that Greyhound's acquisition of controlling interest in Armour subjects Greyhound to punishment for contempt since it was not a party to the decree. Nor does the Government contend that Greyhound has acted 'in active concert or participation with' a party.⁴ Instead, the Government argues that Greyhound should have been brought before the District Court, which retained permanent jurisdiction over the decree, pursuant to § 5 ⁵ of the Sherman Act, and be enjoined from acting to exercise control over or influence the business affairs of Armour, and be required to divest itself of the Armour stock.

The contention is that the acquisition violates the decree since it causes Armour to be engaged in activities prohibited by the decree. The claim is that Greyhound is engaged in businesses that the decree prohibits Armour from being engaged in and the decree's purported purpose of separating the meatpackers from the retail food business is thus circumvented.

But while structural separation of this kind may have been the Government's overall aim, the decree itself, carefully worked out between the parties in exchange for their right to litigate the issues, does not effect a complete separation, but, rather, prohibits particular actions and relationships not including the one here in question. The crucial provision, Paragraph Fourth, forbids the corporate defendants from 'engaging in or carrying on' commerce in the enumerated product lines. This language, taken in its natural sense, bars only active conduct on the part of the defendants. Thus Armour could not trade in these products, either under its own corporate form, or through its 'officers, directors, agents, or servants.' The entry of Armour into the grocery business through subsidiaries is clearly and Draconically prevented by the separate provision of Paragraph Fourth forbidding the defendant meatpackers from owning 'any * * * interests whatsoever'⁶ in a firm trading in the enumerated commodities. In the Government's view these prohibitions also bar Armour from having any ownership relationship with corporations like Greyhound. The Government contends that Armour has an obligation not to engage directly or indirectly in legal or ecomomic association with firms in the retail food business. It refers to the prohibited relationship between Armour and Greyhound.

But the decree does not speak in terms of relationships in general, but, rather, prohibits certain behavior, and in doing so prohibits some but not all economic interrelationship between Armour and the retail food business. Armour may not carry on or engage in that business, nor may it acquire any interest in any firm in that business, but there is no prohbibition against selling any interest to a grocery firm, or more generally against entering into an ownership relationship with such a firm.⁷ If the parties had agreed to such a prohibition, they could have chosen language that would have established the sort of prohibition that the Government now seeks.

If the parties had agreed to prohibit Greyhound or Greyhound's subsidiaries. that end could also have been accomplished through the provision of the decree running against the stockholders of the defendant meatpackers. Many of the controlling stockholders were defendants in the 1920 action, and the decree prohibits certain conduct on their part in Paragraph Fifth.⁸ That paragraph prohibits the individual defendants from own- ing a half interest or more in any firm engaged in the product lines enumerated in Paragraph Fourth. This prohibition, through its negative implications refutes the Government's argument that the decree established a complete structural separation between the defendant...