United States v. Universal Milk Bottle Service

• Decision Date: 30 June 1949
• Docket Number: Cr. No. 7399.
• Citation: 85 F. Supp. 622
• Parties: UNITED STATES v. UNIVERSAL MILK BOTTLE SERVICE, Inc., et al.
• Court: U.S. District Court — Southern District of Ohio

85 F. Supp. 622

UNITED STATES v. UNIVERSAL MILK BOTTLE SERVICE, Inc., et al.

Cr. No. 7399.

United States District Court, S. D. Ohio, W. D.

June 30, 1949.

Robert H. Winn, Special Assistant to the Attorney General, Ray J. O'Donnell, United States Attorney, Cincinnati, Ohio, Robert E. Marshall, Assistant United States Attorney, Sidney, Ohio, for plaintiff United States.

Robert N. Gorman, of Gorman, Silversteen & Davis, Cincinnati, Ohio, for defendants Universal Milk Bottle Service, Inc., and others.

Nichols, Wood, Marx & Ginter, Cincinnati, Ohio (John J. Luhrman, Cincinnati, Ohio, of counsel), for defendant Matthews-Frechtling Dairy Co.

Orville A. Troy, and Kenneth D. Troy, of Basler, Strauss & Troy, Harry Kasfir, S. Arthur Spiegel, Cincinnati, Ohio, for defendant Cooperative Pure Milk Ass'n.

Michael Lacinak, Cincinnati, Ohio, for defendant J. H. Berling's Dairy Products Co.

Robert G. McIntosh, Cincinnati, Ohio, for defendant Cedar Hill Farms, Inc.

NEVIN, Chief Judge.

At the April term, 1948, the Grand Jury of the United States District Court for the Southern District of Ohio (Western Division) returned an indictment (filed September, 24, 1948) against the above-named defendants, charging them with having violated the provisions of Section 1, Title 15 U.S.C.A., commonly known as the Sherman Anti-Trust Act.

On October 12, 1948, the several defendants, each represented by its own counsel, filed motions to dismiss the indictment for the various reasons and upon the various grounds set forth in each motion respectively. Separate motions were also filed on the same date for a "Bill of Particulars."

At the same time, some of the defendants severally filed a motion "For Inspection of Documents" and on September 24, 1948, the Government filed an "Application for Order Impounding Certain Documentary Evidence." The (several) motions for inspection of documents and the Government's "Application" have heretofore been disposed of, in the one instance by agreement of counsel, and in the other by an order of the court.

The cause is now before the Court, therefore, on the motions of the respective defendants to dismiss and for a Bill of Particulars.

I. The Several Motions to Dismiss the Indictment.

Briefs in support of and contra the granting of the motions to dismiss, as well as affidavits and documentary evidence have been filed and submitted. In addition, counsel have presented their views somewhat extensively by way of oral argument.

At the outset of the oral arguments, Judge Gorman¹ stated: "Every defendant has filed a motion to dismiss and they are all practically upon the same ground, that is, that the indictment doesn't state an offense against the laws of the United States and more particularly you might say on the ground that the indictment alleges a purely intrastate conspiracy but it does not show any substantial economic effect on interstate commerce. We contend that under the Sherman Act there must be a showing of a substantial economic effect on interstate commerce where it is alleged that only an intrastate conspiracy existed."

Defendants further contend that the indictment runs counter to the Order of the Secretary of Agriculture and for that reason the Court has no jurisdiction; that there is no allegation of intent; that the indictment is contradictory and ambiguous to such an extent that trial on it would deprive defendants of their rights under the Fifth and Sixth Amendments; that it is wholly lacking in the clarity and particularity requisite to inform defendants of the nature of the cause as required by the Fifth and Sixth Amendments to the Constitution of the United States; that the motions to dismiss should be sustained because the indictment only charges a conspiracy to raise, fix and maintain the retail and wholesale price of milk in Hamilton County, Ohio, and that the indictment fails to state facts constituting a conspiracy to restrain interstate commerce in that the interstate commerce "comes to rest" and hence the continuing commerce is intrastate, and therefore, the commerce involved is purely intrastate.

The Government submits its argument and authorities based on what it terms as two "doctrines" under either one or both of which it asserts the motions to dismiss should be overruled insofar as they relate to or depend upon the premise either that "there must be a showing of a substantial economic effect on interstate commerce" or that the interstate commerce referred to in the Indictment "comes to rest." These "doctrines" are (a) The "affecting commerce" or "affectation" doctrine and (b) The "flow of commerce" or "in commerce" doctrine.

(a) The "Affecting Commerce" Doctrine.

In support of their contention that "there must be a showing of a substantial economic effect on interstate commerce where it is alleged that only an intrastate conspiracy existed" (which defendants assert is the fact here) all of the defendants rely upon the case of U. S. v. French Bauer, Inc. et al., D.C., 48 F.Supp. 260. That case arose in this District. Defendants submit that as it stands unreversed, it is binding upon, or at least, should be followed by this Court in its determination of the present motions.

With reference to the foregoing case, counsel for defendant, The Matthews-Frechtling Dairy Company, say: "There is, as Judge Ford said, no allegation of fact to indicate a direct and substantial restraint upon interstate trade. We, therefore, submit as controlling authority the case of United States v. French Bauer, Inc., et al., D.C., 48 F.Supp. 260. This decision by Judge Ford is, to our minds, unanswerable by the United States of America."

Counsel for defendant, The Co-operative Pure Milk Association, submit that the indictment does not allege any fact or any act which directly or substantially affects interstate commerce or the avowed intention, purpose or necessary effect of which was the accomplishment of that result and that the Court in the French Bauer case held that such allegations were absolutely necessary if the indictment was to stand as against a motion to dismiss, such as we have here.

Counsel for defendant, Cedar Hill Farms, Inc., after citing Industrial Association v. U. S., 268 U.S. 64, 45 S.Ct. 403, 69 L.Ed. 849, as bearing decisively upon the question of "Impact upon Interstate Commerce" or the "affecting commerce" doctrine adopts and approves (without further discussion) the arguments presented by Judge Gorman in his brief.

Counsel for defendant, The J. H. Berling's Dairy Products Company, states that in his opinion "the indictment in The United States v. French Bauer case was more far-reaching and more in particular detail than the indictment now under attack," and that upon the authority of that case "this (present) indictment should be dismissed."

In the French Bauer case, French Bauer, Inc., and others were indicted for engaging in a price-fixing conspiracy in violation of the Anti-Trust Laws. The cause came on before the Court on a motion to quash the indictment, which motion the Court sustained. In the course of the decision, the Court stated, 48 F.Supp. at page 260: "The conspiracy charged in this indictment is directed to the fixing of prices upon fluid milk which is not moving or intended to move in interstate commerce. The authorities teach that the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note, may reach such a conspiracy, but only if the acts charged are such as directly and substantially affect the commerce in the commodity between the states", and the Court held that there were no factual allegations in the indictment before it sufficient to show direct and substantial impact upon interstate commerce.

It is agreed that the indictment in the instant case is identical with the one before the Court in the French Bauer case, except that in the present indictment there has been inserted paragraph 24, which was not in the indictment in the French Bauer case. As to this, the record shows: "The Court (addressing Mr. Winn, of Counsel for the Government): I was interested first to know whether you agree with the statement that this indictment is identical, at least, to all intents and purposes, with the one before Judge Ford (in the French Bauer case), excepting the insertion of this paragraph 24.

"Mr. Winn: I think that is a fair statement. * * * I wouldn't say the indictment was identical with the prior indictment except for paragraph 24. However, the indictment is to all intents and purposes —

"The Court: Is it true it is identical so far as any application of the law is concerned?

"Mr. Winn: I think it is identical with the 1942 indictment but for the provisions of paragraph 24."

Paragraph 24 of the present indictment reads as follows: "24. Increases in prices charged by distributors in the Cincinnati Area for milk sold to consumers and other purchasers have had and have the effect of reducing the volume of milk purchased by said consumers and other purchasers, thus reducing the quantity of milk purchased by said distributors from producers in Kentucky, Indiana and Ohio."

Defendants assert that this allegation is nothing more than a legal conclusion and that in law it adds nothing to the indictment that was before the court in the French Bauer case; that even with this addition, the present indictment does not charge an offense against any of the defendants.

The Government, on the other hand, submits that it is a factual allegation, that the factual statement is that the increases charged by the distributors for milk sold to consumers have had, and have the effect of reducing the volume of milk purchased by such consumers and other purchasers "thus reducing the quantity of milk purchased by said distributors from purchasers in Kentucky, Indiana and Ohio."

Counsel for the Government point out that the indictment in the French Bauer case alleged no effect upon interstate commerce as a result of an alleged instrastate conspiracy and urge that by...