U.S. v. Perdue Farms, Inc., 687

• Citation: 680 F.2d 277
• Decision Date: 20 May 1982
• Docket Number: No. 687,D,687
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. PERDUE FARMS, INC. and Franklin P. Perdue, Defendants-Appellants. ocket 81-6200.
• Court: U.S. Court of Appeals — Second Circuit

Page 277

680 F.2d 277

UNITED STATES of America, Plaintiff-Appellee, v. PERDUE FARMS, INC. and Franklin P. Perdue, Defendants-Appellants.

No. 687, Docket 81-6200.

United States Court of Appeals, Second Circuit.

Argued Feb. 8, 1982.

Decided May 20, 1982.

Roger A. Clark, Washington, D. C. (James V. Ryan, New York City, George C. Smith, Rogers & Wells, Washington, D. C., of counsel) for defendants-appellants.

Stephen E. Hart, U. S. Dept. of Justice, Civ. Div., Washington, D. C. (J. Paul McGrath, Asst. Atty. Gen., Washington, D. C., Edward R. Korman, U. S. Atty., E. D. N. Y., Brooklyn, N. Y., R. John Seibert, Dept. of Justice, Raymond Fullerton, Miriam Bender, Thomas C. Heinz, U. S. Dept. of Agriculture, Washington, D. C., of counsel) for plaintiff-appellee.

James F. Rill, Washington, D. C. (Kathleen E. McDermott, Gary J. Kushner, Collier, Shannon, Rill & Stott, Washington, D. C. and Weil, Gotshal & Manges, New York City, of counsel) for amicus curiae National Broiler Council.

Before OAKES, NEWMAN and PIERCE, Circuit Judges.

PIERCE, Circuit Judge:

This interlocutory appeal arises from a civil action brought by the United States under the Packers and Stockyards Act (the "Act"), 7 U.S.C. § 181 et seq., against Perdue Farms, Inc. and its chairman of the board, Franklin P. Perdue. ¹ The government seeks declaratory and injunctive relief with regard to Perdue's wholesale marketing of dressed, ready-to-cook poultry in the New York City metropolitan area. Chief Judge Jack B. Weinstein, United States District Court for the Eastern District of New York, denied Perdue's motion to dismiss or for summary judgment, ruling that Perdue is a "live poultry dealer" under the Act and that, as such, its sale of slaughtered poultry is covered by § 202 of the Act, 7 U.S.C. § 192, which proscribes certain anticompetitive trade practices. The district court certified, and we accepted, for interlocutory review pursuant to 28 U.S.C. § 1292(b) the following controlling question:

"(W)hether the provisions of § 202 of the (Act) are applicable to acts or practices relating solely to the sale of slaughtered poultry by an integrated poultry producer that also sells some live poultry ..."

Order filed July 23, 1981 at 2. Because Perdue's sale of slaughtered poultry is covered by the literal language of the Act and there is an absence of convincing proof showing that Congress did not intend the plain meaning of the statutory words it chose, we answer the certified question in the positive and affirm the ruling of the district court.

I.

The pertinent facts, stipulated for purposes of this appeal, indicate that Perdue is a vertically integrated poultry producer. Perdue owns its own breeder flocks for egg production and operates its own hatcheries. Its chickens are raised on growing farms for which Perdue provides its own feed and veterinary services. The chickens are slaughtered, processed, and ice-packed at Perdue's processing plants. Perdue sells the slaughtered and dressed poultry under its "Perdue" brand name to wholesale distributors and to large retail grocery chains.

"Because it is extremely difficult to predict accurately the market for its fresh-killed poultry six to eight weeks in advance, which is the normal growing cycle for Perdue broilers, Perdue periodically (has) excess live broilers on hand which it cannot economically process without spoilage or waste. When Perdue has excess live broilers, it sells (them) either directly or through a broker to other processors. No live broilers are sold to wholesalers, retailers or other distributors for sale to consumers." Stipulation, P 5, Joint Appendix 41. Perdue also sells live a portion of its "spent" breeder hens and cockerels to a broker that specializes in that type of poultry. During the fiscal year ending March 29, 1981, Perdue sold live poultry for approximately.$1.8 million, which amounted to approximately 0.4 percent of Perdue's total poultry sales. In the preceding fiscal year, Perdue also sold live poultry for.$1.8 million, amounting to 0.5 percent of its total poultry sales.

The government's complaint alleges that Perdue is "the dominant seller of premium-priced, advertised, branded, poultry and poultry products shipped packed in ice" in the New York City metropolitan area. The gravamen of the government's complaint is that Perdue has threatened to discontinue selling its poultry to distributors that continued to sell other branded poultry which competes with Perdue and that Perdue has carried out this threat.

The complaint alleges that Perdue's acts and practices "constitute unfair, unjustly discriminatory or deceptive practices" in violation of § 202(a) of the Act, 7 U.S.C. § 192(a), and were "engaged in for the purpose or with the effect of restraining commerce" in violation of § 202(e) of the Act, 7 U.S.C. § 192(e). The government alleges § 202 jurisdiction over Perdue by virtue of Perdue's status as a "live poultry dealer or handler" as used in the Act.

II.

Sections 202(a) and (e) of the Act, 7 U.S.C. § 192(a) & (e), state:

It shall be unlawful with respect to livestock, meats, meat food products, livestock products in unmanufactured form, poultry, or poultry products for any packer or any live poultry dealer or handler to:

(a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device; or

(e) Engage in any course of business or do any act for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce.

Section 503 of the Act, 7 U.S.C. § 218b, defines "live poultry dealer" as "any person engaged in the business of buying or selling live poultry in commerce for purposes of slaughter either on his own account or as the employee or agent of the vendor or purchaser."

If the language of § 202 irrelevant to poultry is eliminated and the pertinent portion of the "live poultry dealer" definition of § 503 is substituted for the words "live poultry dealer", the introductory language of § 202 then reads: "It shall be unlawful with respect to ... poultry, or poultry products for any person engaged in the business of ... selling live poultry in commerce for purposes of slaughter ... or any live poultry handler to (engage in specified practices)." There is no question that Perdue sells some live poultry; and the term "poultry or poultry products" clearly encompasses slaughtered, ready-to-cook poultry. Thus, under the foregoing literal interpretation of the Act, Perdue's alleged practices concerning the wholesale marketing of slaughtered, ready-to-cook poultry are covered by § 202.

The issue before us is whether we should adhere to this literal reading of the statute-as did the district court-or depart from that interpretation. Perdue and amicus curiae, National Broiler Council, urge us to depart from the literal meaning of the statute on the grounds that (1) the legislative history and administrative interpretation of the Act indicate that Congress never intended the Act to cover the sale of slaughtered poultry by live poultry dealers and (2) even if Congress did envision such coverage, Perdue is not a live poultry dealer because only a very small portion of its business concerns the sale of live poultry. These two contentions will be considered in turn.

III.

A.

In construing a statute, the language chosen by Congress is the usual starting point. Watt v. Alaska, 451 U.S. 259, 265, 101 S.Ct. 1673, 1677, 68 L.Ed.2d 80 (1981). But because the chosen words are not in all instances a reliable indicator of Congress' intent, we may look to the legislative history of the enactment to determine whether literal application of the statute would "pervert its manifest purpose." In re Adamo, 619 F.2d 216, 222 (2d Cir.), cert. denied, 449 U.S. 843, 101 S.Ct. 125, 66 L.Ed.2d 52 (1980). See, e.g., Watt v. Alaska, 451 U.S. at 266, 101 S.Ct. at 1677-78; United States v. Monia, 317 U.S. 424, 431-32, 63 S.Ct. 409, 412-13, 87 L.Ed. 376 (1943) (Frankfurter, J., dissenting); Viacom International v. FCC, 672 F.2d 1034 at 1039-40 (2d Cir. 1982); Cabell v. Markham, 148 F.2d 737, 739 (2d Cir.) (L. Hand, J.), aff'd, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165 (1945). Accordingly, we turn to the relevant legislative history of the Act.

As originally enacted in 1921, the purpose of the Packers and Stockyards Act was to combat anticompetitive and unfair practices in the highly concentrated meat packing industry. See H.R.Rep.No.77, 67th Cong. 1st Sess. (1921); Stafford v. Wallace, 258 U.S. 495, 499-501, 514-15, 42 S.Ct. 397, 399- 400, 401-02, 66 L.Ed. 735 (1922). Section 202 of the original Act made it unlawful for any "packer" to engage in any anticompetitive, monopolistic, discriminatory, or deceptive practices. ² The definition of "packer" included any person engaged in the business of marketing poultry or poultry products, but only if that person also bought livestock for slaughter or manufacture or prepared meat or meat products for sale. ³

In 1934, Senator Copeland from New York proposed an amendment to the Act aimed at certain racketeering practices concerning the sale of live poultry primarily in large urban areas such as New York City. 78 Cong.Rec. 451-52 (1934). The original proposal, S. 2246, would have attacked the problem by making a "poultry dealer" equivalent to a "packer". The bill defined "poultry dealer" as "any person engaged in the business (a) of buying or selling poultry in commerce for purposes of slaughter or (b) of manufacturing or preparing poultry or poultry products for sale or shipment in commerce." 78 Cong.Rec. 457 (1934) (text of bill).

The bill which was eventually enacted, S. 12, was much more particular in regulating only "live poultry dealers and handlers." See Pub.L.No.272, 49 Stat. 648 (1935). The amending legislation began with an introductory section, § 501, 7 U.S.C. § 218, which clearly articulated the...