Bruhn's Freezer Meats v. United States Dept. of Agr.

• Decision Date: 23 February 1971
• Docket Number: No. 20223.,20223.
• Citation: 438 F.2d 1332
• Parties: BRUHN'S FREEZER MEATS OF CHICAGO, INC., d/b/a Beefland Freezer Meats, Bruhn's Freezer Meats of Alexandria, Inc., d/b/a Bruhn's Freezer Meats, Beefland Freezer Meats of Denver, Inc., d/b/a Beefland Freezer Meats (Formerly Bruhn's Freezer Meats of Denver, Inc.), Bruhn's Service Company, Inc., Earl Bruhn, Jr., and Robert Bruhn, Petitioners, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Respondent.
• Court: U.S. Court of Appeals — Eighth Circuit

438 F.2d 1332 (1971)

BRUHN'S FREEZER MEATS OF CHICAGO, INC., d/b/a Beefland Freezer Meats, Bruhn's Freezer Meats of Alexandria, Inc., d/b/a Bruhn's Freezer Meats, Beefland Freezer Meats of Denver, Inc., d/b/a Beefland Freezer Meats (Formerly Bruhn's Freezer Meats of Denver, Inc.), Bruhn's Service Company, Inc., Earl Bruhn, Jr., and Robert Bruhn, Petitioners, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Respondent.

No. 20223.

United States Court of Appeals, Eighth Circuit.

February 23, 1971.

COPYRIGHT MATERIAL OMITTED

E. Riley Casey, Steven John Fellman, Washington, D. C., Charles A. Nye, Omaha, Neb., for petitioners; Counihan, Casey & Loomis, Washington, D. C., of counsel.

William D. Ruckelshaus, Asst. Atty. Gen., Morton Hollander, Daniel Joseph, Attys., Dept. of Justice, Washington, D. C., Raymond W. Fullerton, Atty., Dept. of Agriculture, Washington, D. C., for respondents.

Before MATTHES, Chief Judge, and LAY, Circuit Judge, and REGISTER, Chief District Judge.

MATTHES, Chief Judge.

This case is here on petition for review of a decision of the Judicial Officer of the United States Department of Agriculture, filed March 9, 1970, finding petitioners had engaged in practices that were in violation of § 202(a) of the Packers and Stockyards Act as amended 7 U.S.C. § 181 et seq.¹

Petitioners do not challenge the findings of fact upon which the Judicial Officer premised his conclusion that petitioners had violated the Act. They rely principally on legal issues for vacation of the decision of the Judicial Officer and for dismissal of the complaint. We nevertheless deem it appropriate to engage in a résumé of the proceedings and the pertinent facts as disclosed by the evidence and found by the Judicial Officer for the purpose of placing in proper perspective the questions we are required to resolve.

Petitioner Bruhn's Service Company, Inc., is a Nebraska corporation having its principal office and place of business at Elkhorn, Nebraska. It owns all the stock of petitioners Bruhn's Freezer Meats of Chicago, Inc., Bruhn's Freezer Meats of Alexandria, Inc., Beefland Freezer Meats of Denver, Inc., and each of 31 other corporations in the Bruhn organization.²

Petitioners Earl Bruhn, Jr. and Robert Bruhn, of Elkhorn, Nebraska, own 51% and 49%, respectively, of the stock of Bruhn's Service Company, Inc. They are president and vice president, respectively, of the four petitioning corporations and the other 31 corporations delineated in the complaint and findings.

In essence, the complaint alleged that the petitioners violated § 202(a) of the Act by (1) engaging in "bait and switch" tactics in connection with the sale of bulk quantities of meat; (2) misrepresenting United States Department of Agriculture (USDA) quality grades of meat; (3) misrepresenting the anticipated yield of bulk quantities of meat; (4) misrepresenting the part of the carcass from which meat was derived; and (5) failing to deliver the quality of meat a customer had specifically selected and purchased.

The lengthy complaint enumerated the number of unfair and deceptive practices and devices relied upon to prove violations of the Act. After the issues were joined by the filing of petitioners' answer, a series of legal maneuvers followed, including the issuance of a temporary restraining order against the Secretary by a judge of the United States District Court for the District of Columbia, who later dismissed petitioners' action and denied a temporary injunction. On appeal, the United States Court of Appeals for the District of Columbia denied a motion to stay the administrative proceedings and affirmed the action of the district court. Eventually, hearings commenced and eight separate sessions were conducted from October 1, 1966 through April 18, 1968.

On April 4, 1969, the hearing examiner filed his report containing 42 findings. We have examined the pertinent portions of the voluminous record and find ample support for the findings. As there is no assault upon the findings, we briefly paraphrase parts of the examiner's report, particularly the portion thereof dealing with the activities engaged in by the petitioners at different plants operated by them.

In 21 different transactions petitioners "baited" customers with extensive advertising of quarters, sides and other bulk quantities of meat at unrealistically low prices. When the prospective purchaser arrived at the plant, an employee of petitioner made a concerted effort to "switch" the customer to the purchase of a bulk quantity of expensive meat. In 13 of the 21 transactions, the efforts to switch were successful.

Petitioners caused customers to make the switch and purchase expensive meat in lieu of the sides and quarters that appeared inedible by purposefully preparing an unappetizing display of the inferior quality meat, representing it as the advertised product, and by discouraging the purchase of such product.

The corporate petitioners extensively advertised the sales of sides, quarters and other bulk quantities of meat at prices which were within the range of wholesale prices generally accepted in the meat packing industry for the advertised quantities and grades. These advertisements appeared in reputable newspapers having a multi-state circulation and caused numerous customers and prospective customers to cross state lines. In a number of instances, representations were made by petitioners' employees that bulk quantities of meat constituted a beef "hindquarter", whereas the meat that was delivered was not the quality the buyers had selected.

Petitioners' employees on occasion represented beef to be a specific USDA quality grade and in reliance on such representation, the customer purchased the beef, however, the product which was processed and delivered had not been USDA quality graded.

Upon the basis of his findings, the hearing examiner concluded that the petitioners had engaged in unfair or deceptive practices or devices in commerce in violation of § 202 of the Act, 7 U.S.C. § 192. The examiner recommended the issuance of a cease and desist order.

Upon request of petitioners, the cause was certified to the Judicial Officer who, in due time, filed his findings of fact, conclusions and order. The Judicial Officer made findings substantially coinciding with those of the hearing examiner.³

The petitioners present five contentions which, in essence are:

(1) the petitioners are not "packers" as that term is defined in the Act, 7 U.S.C. § 191;

(2) the acts and practices found by the Judicial Officer to be unfair or deceptive in violation of 7 U.S.C. § 192(a) were not in "commerce" as that term is defined in the Act, 7 U.S.C. § 182;

(3) the Department of Agriculture has no jurisdiction over petitioners' activities because they are retail activities and excluded by the provisions of 7 U.S.C. § 227;

(4) the Judicial Officer's finding that the Department of Agriculture had jurisdiction pursuant to 7 U.S.C. § 227(a), when this basis of jurisdiction was not set forth in the complaint, violates petitioners' right to due process; and

(5) there is no substantial evidence in the record to support a finding that the individual petitioners controlled the activities of the corporate petitioners.

These contentions will be considered seriatim.

At the outset we note that the Packers and Stockyards Act is remedial legislation and should be liberally construed to further its life and fully effectuate its public purpose. Stafford v. Wallace, 258 U.S. 495, 521, 42 S.Ct. 397, 66 L.Ed. 735 (1922); Swift & Company v. United States, 393 F.2d 247, 253 (7th Cir. 1968); Bowman v. United States Department of Agriculture, 363 F.2d 81, 85 (5th Cir. 1966). Cf. Marriot v. National Mut. Cas. Co., 195 F.2d 462, 466 (10th Cir. 1952); Binkley Mining Co. of Missouri v. Wheeler, 133 F.2d 863, 871 (8th Cir.), cert. denied, 319 U.S. 764, 63 S.Ct. 1326, 87 L.Ed. 1715 (1943); Benas v. Maher, 128 F.2d 247, 252 (8th Cir. 1942).

I

Section 201 of the Act, 7 U.S.C. § 191, in pertinent part provides:

"The term `packer\' means any person engaged in the business (a) of buying livestock in commerce for purposes of slaughter, or (b) of manufacturing or preparing meats or meat food products for sale or shipment in commerce, or (c) * * *, or (d) of marketing meats, meat food products, * * * in commerce; but no person engaged in such business of manufacturing or preparing livestock products or in such marketing business shall be considered a packer unless —

(1) Such person is also engaged in any business referred to in clause (a) or (b) of this section * * *."

This definition of packer has remained intact since the Act was originally passed in 1921 even though it has been amended in other respects. Arkansas Valley Industries v. Freeman, 415 F.2d 713, 715 (8th Cir. 1969).

The petitioners have, from the outset, contended that their activities do not constitute "manufacturing or preparing meats or meat food products" within the 1921 definitional concept. They submit that Congress could not have considered the regulation of freezer plants within the purview of the Act as freezers did not exist as a market factor in 1921. They liken their operation to that of the corner butcher shop which was not regulated because of its retail nature.⁴

The record conclusively shows, in accordance with the findings of the Judicial Officer, that petitioners cut up sides and quarters of beef into consumer cuts, boned and ground meats, and then trimmed and wrapped the individual cuts and froze the prepared meat to preserve it. Bruhn's Freezer Meats of Chicago, Inc., 29 A.D. 223 (1970).

The term "preparing" is not defined in the Act and we find nothing in the legislative history of the Act which would require an interpretation limiting its application to wholesalers or slaughterers. Rather, the purpose of the Act is to assure fair trade practices in the livestock marketing and meat-packing industry in order to safeguard farmers and...