Great Atlantic & Pacific Tea Co. v. Ervin

• Court: U.S. District Court — District of Minnesota
• Writing for the Court: PER CURIAM
• Citation: Great Atlantic & Pacific Tea Co. v. Ervin, 23 F. Supp. 70 (D. Minn. 1938)
• Decision Date: 29 April 1938
• Docket Number: No. 2981.,2981.
• Parties: GREAT ATLANTIC & PACIFIC TEA CO. v. ERVIN, Atty. Gen., et al.

23 F. Supp. 70

GREAT ATLANTIC & PACIFIC TEA CO. v. ERVIN, Atty. Gen., et al.

No. 2981.

District Court, D. Minnesota, Fourth Division.

April 29, 1938.

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Bergmann Richards, of Minneapolis, Minn., and George J. Feldman, of Washington, D. C., for plaintiff.

William S. Ervin, Atty. Gen., Matthias N. Orfield, Deputy Asst. Atty. Gen., Joseph H. Seeger, Sp. Asst. Atty. Gen., and Michael F. Kinkead, Co. Atty., and Richard B. Ryan, Asst. Co. Atty., both of St. Paul, Minn., for defendants Ervin, Kinkead, and Gibbons.

Edward J. Goff, Co. Atty., and William G. Compton, Asst. Co. Atty., both of Minneapolis, Minn., for defendants Goff and Wall.

Ben W. Palmer, of Minneapolis, Minn., for Minnesota Council of Retail Trade Ass'ns, amicus curiæ.

Before SANBORN, Circuit Judge, and NORDBYE and JOYCE, District Judges.

PER CURIAM.

Upon the hearing it was stipulated by the parties in open court that the entire case should be deemed submitted to the court for final determination upon the pleadings, the affidavits filed by the respective parties, the oral arguments, and the briefs.

The statute the validity of which is challenged is known as the Minnesota Unfair Trade Practices Act, and is entitled, "An act to prohibit unlawful discrimination in the production, manufacture or distribution of certain commodities, articles, goods, wares and merchandise in trade and to prohibit unfair competitive trade practices, providing for injunctive relief and damages, defining the duties of county attorneys and the attorney general, providing penalties for violations, and repealing Laws of 1921, Chapter 413, being Sections 10464-7, inclusive, of Mason's Minnesota Statutes of 1927." It was passed by the Legislature of the state of Minnesota at its regular session in 1937, as chapter 116, Laws of Minnesota 1937. Chapter 456 was passed at the same session to correct a typographical error in section 3 of part 2 of chapter 116. The full text of the statute, as amended, will be found in the footnote.¹

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The statute as an entirety is aimed at those who manufacture, produce, and distribute merchandise and commodities within the state of Minnesota. It is divided into three parts. Part 1 seems to relate exclusively to those who are engaged in manufacturing and producing goods. Part 2 relates to those engaged as wholesalers and retailers in the distribution of goods. Part 3 provides means for enforcing provisions of parts 1 and 2. While there is some doubt as to whether parts 1 and 2 do not overlap, since part 1 also relates to the distribution of goods, we shall, for the purposes of this discussion, consider first parts 2 and 3, which are clearly applicable to the plaintiff, which is neither a producer nor a manufacturer but is the owner and operator of a large number of retail grocery stores in many different localities in the state of Minnesota.

The first question to be considered is whether the subject matter of the legislation in question is within the police power of the state.

It is contended by the plaintiff that the business in which it is engaged, and which is sought to be subjected to regulation, is not a business "affected with a public interest" and is not subject to such regulation as the statute provides. The Supreme Court of the United States, in Nebbia v. New York, 291 U.S. 502, at pages 537, 538, 54 S.Ct. 505, 516, 78 L.Ed. 940, 89 A.L.R. 1469, has recently said:

"But there can be no doubt that upon proper occasion and by appropriate measures the state may regulate a business in any of its aspects, including the prices to be charged for the products or commodities it sells.

"So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio. `Whether the free operation of the normal laws of competition is a wise and wholesome rule for trade and commerce is an economic question which this court need not consider or determine.' Northern Securities Co. v. United States, 193 U.S. 197, 337, 338, 24 S.Ct. 436, 48 L.Ed. 679. And it is equally clear that if the legislative policy be to curb unrestrained and harmful competition by measures which are not arbitrary or discriminatory it does not lie with the courts to determine that the rule is unwise. With the wisdom of the policy adopted, with the adequacy or practicability of the law enacted to forward it, the courts are both incompetent and unauthorized to deal. The course of decision in this court exhibits a firm adherence to these principles. Times without number we have said that the Legislature is primarily the judge of the necessity of such an enactment, that every possible presumption is in favor of its validity, and that though the court may hold views inconsistent with the wisdom of the law, it may not be annulled unless palpably in excess of legislative power.

"The lawmaking bodies have in the past endeavored to promote free competition by laws aimed at trusts and monopolies. The consequent interference with private property and freedom of contract has not availed with the courts to set these enactments aside as denying due process. Where the public interest was deemed to require the fixing of minimum prices, that expedient has been sustained. If the lawmaking body within its sphere of government concludes that the conditions or practices in an industry make unrestricted competition an inadequate safeguard of the consumer's interests, produce waste harmful to the public, threaten ultimately to cut off the supply of a commodity needed by the public, or portend the destruction of the industry itself, appropriate statutes passed in an honest effort to correct the threatened consequences may not be set aside because the regulation adopted fixes prices reasonably deemed by the Legislature to be fair to those engaged in the industry and to the consuming public."

The words "affected with a public interest" mean nothing more than "subject to the exercise of the police power." Nebbia v. New York, supra, 291 U.S. 502, at page 533, 54 S.Ct. 505, 514, 78 L.Ed. 940, 89 A.L.R. 1469.

The Fourteenth Amendment to the Constitution of the United States does not prohibit governmental regulation by the state for the public welfare. It conditions the exertion of the admitted power of the state by insuring that the end shall be accomplished by means which are consistent with due process. The guaranty of due process demands only that the means shall not be unreasonable, arbitrary, or capricious, and that they shall have a real and substantial relation to the object sought to be attained. Nebbia v. New York, supra, 291 U.S. 502, at page 525, 54 S.Ct. 505, 510, 78 L.Ed. 940, 89 A.L.R. 1469.

The object sought to be accomplished by the legislation with which we are concerned is the prevention of the sale of goods, wares, and merchandise in the state of Minnesota at prices less than cost, with the intent and purpose on the part of the vendor of injuring his competitors and destroying or lessening competition. That the Legislature of the state of Minnesota might reasonably believe that such sales, made for such a purpose, tend to injuriously affect fair competition and to encourage monopoly and are opposed to the general public welfare and should therefore be curbed, we think is not to be seriously doubted. While we have no reason to believe that there is a dearth of grocers or other merchants in the state of Minnesota or a lack of competition among them or a present threat of monopoly in the grocery business, we are of the opinion that the state of Minnesota was free to adopt the public policy declared by the Legislature in this statute.

We shall concern ourselves only with determining whether the means provided by the statute for the enforcement of the policy adopted are consistent with the requirements of due process, or are unreasonable, arbitrary, capricious, and without a real and substantial relation to the object sought to be attained, and therefore violative of the due process clause or the equal protection clause of the Fourteenth Amendment.

The first paragraph of section 2 of part 2 of the statute provides: "Any person, partnership, firm or corporation, engaged in business within this state, which sells, offers for sale or advertises for sale any commodity, article, goods, wares or merchandise at less than the cost thereof to such vendor, or gives, offers to give or advertises the intent to give away any commodity, article, goods, wares or merchandise for the purpose of injuring competitors and destroying competition, shall be guilty of unfair discrimination, and upon conviction provided herein shall be subject to the penalties therefor."

It is contended by the plaintiff that the quoted paragraph, because of the absence of a comma after the word "merchandise" where it last appears therein, must be construed to prohibit any sale below cost, regardless of the intent of the vendor. This contention, we think, is without merit. The defendants assert that the plain intent and purpose of the Legislature was to prohibit the sale or the offering for sale of goods at less than their cost "for the purpose of injuring competitors and destroying competition"; and this, it seems to us, is reasonably apparent. Under such circumstances, a court may properly disregard punctuation, or repunctuate, if that be necessary, in order to arrive at the...