Aikins v. United States

• Decision Date: 11 August 1960
• Docket Number: No. 6206.,6206.
• Citation: 282 F.2d 53
• Parties: Fred S. AIKINS et al., Petitioners, v. UNITED STATES and Ezra Taft Benson, Secretary of Agriculture, Respondents.
• Court: U.S. Court of Appeals — Tenth Circuit

282 F.2d 53 (1960)

Fred S. AIKINS et al., Petitioners, v. UNITED STATES and Ezra Taft Benson, Secretary of Agriculture, Respondents.

No. 6206.

United States Court of Appeals Tenth Circuit.

August 11, 1960.

Joseph J. Kelly, Jr., Kansas City, Mo. (Howard F. Sachs and Spencer, Fane, Britt & Browne, Kansas City, Mo., of counsel, were with him on the brief), for petitioners.

Donald A. Campbell, U. S. Dept. of Agriculture, Washington, D. C. (George Cochran Doub, Asst. Atty. Gen., Samuel D. Slade, Atty., Dept. of Justice, and Neil Brooks, Asst. Gen. Counsel, Washington, D. C., were with him on the brief), for respondents.

Before BRATTON, PICKETT and LEWIS, Circuit Judges.

LEWIS, Circuit Judge.

Petitioners are thirty-eight registered dealers at the Kansas City Stockyards, Kansas City, Missouri. They seek, by joint and several petition, review of a decision and order of the Secretary of Agriculture made under the Packers and Stockyards Act of 1921, 42 Stat. 159, as amended, 7 U.S.C.A. § 181 et seq. Jurisdiction and venue lie by virtue of 5 U.S. C.A. §§ 1032, 1033.

On June 22, 1959, after a full hearing in a disciplinary proceeding instituted by the Director, Livestock Division, Agricultural Marketing Service, United States Department of Agriculture, petitioners were ordered to cease and desist from any further participation in the so-called "turn" system, a practice found violative of § 312(a) of the Act (7 U.S. C.A § 213(a)) which provides:

"(a) It shall be unlawful for any stockyard owner, market agency, or dealer to engage in or use any unfair, unjustly discriminatory, or deceptive practice or device in connection with the receiving, marketing, buying, or selling on a commission basis or otherwise, feeding, watering, holding, delivery, shipment, weighing, or handling, in commerce at a stockyard, of livestock."

The Kansas City Stockyard is a terminal yard where livestock is sold by private treaty rather than open and competitive auction. By this method of sale, one person at a time is permitted to inspect and bid upon the livestock. If the bid is accepted, the sale is consummated and the pen closed; if the bid is not accepted, another prospective purchaser is admitted and the procedure continues until a sale is made or the available number of buyers is exhausted. Most often, however, the transaction is completed with the buyer first allowed the privilege of inspection and bid and it is a recognized advantage to have the opening bid.

Dealers such as petitioners buy for their own account for resale. They are in initial competition with order buyers and farmers although the latter often become the ultimate customers of the dealers. It is recognized that dealers perform both a necessary and valuable service at the yard for frequently the needs of outside buyers are insufficient to meet the supply of livestock available for sale upon a given day.

In order to determine as between themselves who should be first admitted to the commission alleys and thereby be favored with the first opportunity to buy, the dealers have resorted for many years to the allocation of turn by chance, agreeing to abide by the flip of a coin or the drawing of lots. This agreement premises the charge of the order of inquiry that the dealers "knowingly participated in an arrangement or turn system" and that the market agencies recognized the turn system and gave preferred treatment and priority in connection with sales of consigned stocker and feeder cattle, which activity, it is charged, "made it unduly difficult for farmer-feeders, individually or through registered order buyers, to buy their replacement cattle `out of first hands' and in open competition with all other buyers."

As originally instituted, the proceeding before the hearing officer contemplated a cease and desist order against the market agencies also but those named agencies promptly entered a stipulation with the government that they would discontinue giving recognition to the turn system. Evidence was introduced showing that the turn arrangement was not in accordance with the wishes and judgment of the market agencies and that they had attempted to rid themselves of it in prior years but that the pressure from their largest, most consistent buyers, the dealers, had caused them to continue to honor the dealers' priority determination by lot. After this stipulation was entered language of the charge against the dealers was changed from the allegation that they had "caused or attempted to cause" the agencies to accept their draw and give them priority over other buyer groups to allege that "the commission firms market agencies recognized such turns, relied on and acquiesced in it" and gave the respondents priority over other buyers.

Although it would appear that the turn system would be utterly ineffective without the cooperation of the sellers, the hearing examiner held an extensive hearing on the culpability of the dealers and issued the cease and desist order against them because he evidently felt that the persistence of the dealers in their system would continue to effect the situation sought to be curtailed. He recognized the fact that changes had taken place in the market since the stipulation but stated:

"* * * since January 1958 * * * off-market buyers in some instances have been taken ahead of dealers in trading on stocker and feeder cattle. In fact, respondents contend that since the stipulation was entered into they are systematically discriminated against by the commission firms. It should be noted however, that this change in marketing conditions at the Kansas City Stockyards occurred several months after the period of violations alleged in the complaint and only after the said stipulation was entered into. It is believed that the new treatment being accorded off-market buyers is ephemeral in nature. It is altogether probable that this improved condition will continue only if the dealers are ordered by the Secretary to discontinue engaging in and using the turn system. The traders have flatly refused to cooperate with complainant in its efforts to eliminate the turn system and they have repeatedly resisted attempts in the past by commission firms to rid themselves from the operation of the turn system at the market. The commission firms have done their part by entering into the aforesaid stipulation in attempting to eliminate the turn system. However, unless respondents are ordered to cease and desist from engaging in and using the turn system practice, the same pressures and the same fears of retaliatory action by the dealers which caused the commission firms to acquiesce in the turn system practice prior to January 1958, may make it impossible for the commission firms to comply fully with the terms of and agreements in said stipulation. * * *"

The judicial officer reviewed the facts pertaining to the participation of each petitioner in the drawings at the head of the commission alleys prior to bidding and ordered the activities ceased in all instances, whether other buyers than dealers were seeking admission to the alleys or not. The judicial officer cited and relied on the language of the only case precisely in point, Berigan v. United States, 8 Cir., 257 F.2d 852:

"* * * Any practice which results in dealers themselves determining in what sales alleys or in what order in a sales alley they shall bid is an unreasonable restriction on competition and the Judicial Officer must be upheld in his determination that the

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