436 U.S. 816 (1978), 77-117, National Broiler Marketing Assn. v. United States

Docket Nº:No. 77-117
Citation:436 U.S. 816, 98 S.Ct. 2122, 56 L.Ed.2d 728
Party Name:National Broiler Marketing Assn. v. United States
Case Date:June 12, 1978
Court:United States Supreme Court
 
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Page 816

436 U.S. 816 (1978)

98 S.Ct. 2122, 56 L.Ed.2d 728

National Broiler Marketing Assn.

v.

United States

No. 77-117

United States Supreme Court

June 12, 1978

Argued February 21, 1978

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

The United States brought an antitrust suit against petitioner, a nonprofit cooperative association the members of which are integrated producers of broiler chickens. The complaint alleged that petitioner, which performs various marketing and purchasing functions for its members, had conspired with others, including its members, in violation of § 1 of the Sherman Act. Petitioner asserted that its activities with its members were sheltered from suit under § 1 of the Capper-Volstead Act, which permits "[p]ersons engaged in the production of agricultural products as farmers" to join in cooperative associations. The District Court concluded that the activities of petitioner's members justified their classification as farmers, and that the Capper-Volstead protection claimed was therefore available. The Court of Appeals reversed, holding that petitioner's members were not all "farmers" in the ordinary meaning of that word as it was used at the time the Capper-Volstead Act was passed.

Held: Because not all of petitioner's members qualify as farmers under the Capper-Volstead Act, it is not entitled to the protection from the antitrust laws afforded by that Act. Case-Swayne Co. v. Sunkist Growers Inc., 389 U.S. 384 (1967). Pp. 822-829.

(a) The language of the Capper-Volstead Act reveals that not all persons engaged in the production of agricultural products are entitled to form cooperatives protected by that Act. P. 823.

(b) The legislative history of the Act reveals that Congress did not intend the protection of the Act to extend to the processors and packers to whom farmers sold their goods, even when the relationship was such that the processors and packers bore a part of the risks of a fluctuating agricultural market. Pp. 824-827.

(c) Those among petitioner's members who own neither a breeder flock nor a hatchery and who maintain no "grow-out" facility at which broiler flocks are raised and whose economic roles are essentially those of packers or processors, are not "farmers" within the meaning of the Capper-Volstead Act. Pp. 827-829.

550 F.2d 1380, affirmed and remanded.

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BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, MARSHALL, POWELL, REHNQUIST, and STEVENS, JJ., joined. BRENNAN, J., filed a concurring opinion, post, p. 829. WHITE, J., filed a dissenting opinion, in which STEWART, J., joined, post, p. 840.

BLACKMUN, J., lead opinion

MR. JUSTICE BLACKMUN delivered the opinion of the Court.

Once again,1 this time in an antitrust context, the Court is confronted with an issue concerning integrated poultry operations. Petitioner phrases the issue substantially as follows:

Is a producer of broiler chickens precluded from qualifying as a "farmer," within the meaning of the Capper-Volstead

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Act, when it employs an independent contractor to tend the chickens during the "grow-out" phase from chick to mature chicken?2

The issue apparently is of importance to the broiler industry and in the administration of the antitrust laws.3

I

In April, 1973, in the United States District Court for the Northern District of Georgia, the United States brought suit against petitioner National Broiler Marketing Association (NBMA). It alleged that NBMA had conspired with others not named, hut including members of NBMA, in violation of § 1 of the Sherman Act, 26 Stat. 20, as amended, 15 U.S.C. § 1 (1976 ed.). It prayed for injunctive relief and that NBMA "be ordered to make whatever changes are necessary in its organization and operation to insure compliance with the judgment" of the court. Record 10. In its answer, NBMA alleged, among other things, that its status, as a cooperative association of persons engaged in the production of agricultural products, sheltered it from antitrust liability for the acts alleged, under § 1 of the Capper-Volstead Act, also known as

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the Cooperative Marketing Associations Act, 42 Stat. 388, 7 U.S.C. § 291 (1976 ed.).4

On motion and cross-motion for partial summary judgment, the District Court concluded that the involvement of all the members of NBMA in the production of broiler chickens was sufficient to justify their classification as "farmers," within the meaning of the Act, and that NBMA therefore was a cooperative entitled to the limited exemption from the antitrust laws the Act afforded. 1975-2 Trade Cases 60,509.

On [98 S.Ct. 2126] appeal,5 the United States Court of Appeals for the Fifth Circuit reversed. It held that all the NBMA members were not farmers in the ordinary, popular meaning of that word, and

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as it was employed in 1922 when the Capper-Volstead Act became law. 550 F.2d 1380 (1977). Because of the importance of the issue for the agricultural community and for the administration of the antitrust laws, we granted certiorari. 434 U.S. 888 (1977).

II

NBMA is a nonprofit cooperative association organized in 1970 under Georgia law.6 It performs various cooperative marketing and purchasing functions on behalf of its members. App. 7.7 Its membership has varied somewhat during the course of this litigation, but apparently it has included as many as 75 separate entities. Id. at 172.

These members are all involved in the production and marketing of broiler chickens.8 Production involves a number of distinct stages: the placement, raising, and breeding of breeder flocks to produce eggs to be hatched as broiler chicks;

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the hatching of the eggs and placement of those chicks; the production of feed for the chicks; the raising of the broiler chicks for a period, not to exceed, apparently, 10 weeks; the catching, cooping, and hauling of the "grown-out" broiler chickens to processing facilities; and the operation of facilities to process and prepare the broilers for market. Id. at 7.

The broiler industry has become highly efficient and departmentalized in recent years,9 and stages of production that in the past might all have been performed by one enterprise may now be split and divided among several, each with a highly specialized [98 S.Ct. 2127] function. No longer are eggs necessarily hatched where they are laid, and chicks are not necessarily raised where they are hatched. Conversely, some stages that in the past might have been performed by different persons or enterprises are now combined and controlled by a single entity. Also, the owner of a breeder flock may own a processing plant.

All the members of NBMA are "integrated," that is, they are involved in more than one of these stages of production. Many, if not all, directly or indirectly own and operate a processing plant where the broilers are slaughtered and dressed for market. All contract with independent growers for the raising or grow-out of at least part, and usually a substantial part, of their flocks. Id. at 8. Often the chicks placed with an independent grower have been hatched in the member's hatchery from eggs produced by the member's breeder flocks.

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The member then places its chicks with the independent grower for the grow-out period, provides the grower with feed, veterinary service, and necessary supplies, and, with its own employees, usually collects the mature chickens from the grower. Generally, the member retains title to the birds while they are in the care of the independent grower. Ibid.

It is established, however, ibid.; Brief for Petitioner 5 n. 2, that six NBMA members do not own or control any breeder flock whose offspring are raised as broilers, and do not own or control any hatchery where the broiler chicks are hatched. And it appears from the record that three members do not own a breeder flock or hatchery, and also do not maintain any grow-out facility.10 These members, who buy chicks already hatched and then place them with growers, enter the production line only at its later processing stages.

III

The Capper-Volstead Act removed from the proscription of the antitrust laws cooperatives formed by certain agricultural producers that otherwise would be directly competing with each other in efforts to bring their goods to market.11 But if the cooperative includes among its members those not so privileged under the statute to act collectively, it is not entitled to the protection of the Act. Case-Swayne Co v. Sunkist Growers Inc., 389 U.S. 384 (1967). Thus, in order for NBMA to enjoy the limited exemption of the Capper-Volstead Act, and, as a consequence, to avoid liability under the antitrust laws for its collective activity, all its members must be qualified to act collectively. It is not enough that a typical

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member qualify, or even that most of NBMA's members qualify. We therefore must determine not whether the typical integrated broiler producer is qualified under the Act, but whether all the integrated producers who are members of NBMA are entitled to the Act's protection.

The Act protects "[p]ersons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers" (emphasis added). A common sense reading of this language12 clearly leads one to conclude that not all persons engaged in the production of agricultural products are entitled to join together and to obtain ad enjoy the Act's benefits. The italicized phrase restricts and limits the broader preceding phrase "[p]ersons [98 S.Ct. 2128] engaged in the production of agricultural products. . . ."13

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The purposes of the Act, as revealed by the legislative history, confirm the conclusion that not all those involved in bringing agricultural products to market may join cooperatives exempt under the statute, and have the cooperatives retain that...

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