Alexander v. NATIONAL FARMERS'ORGANIZATION

• Decision Date: 05 July 1985
• Docket Number: No. 19191-A-1.,19191-A-1.
• Citation: 614 F. Supp. 745
• Parties: Robert B. ALEXANDER, et al., Plaintiffs, v. NATIONAL FARMERS' ORGANIZATION, et al., Defendants and Counterclaim Plaintiffs, v. ASSOCIATED MILK PRODUCERS, INC., et al., Counterclaim Defendants.
• Court: U.S. District Court — Western District of Missouri

614 F. Supp. 745

Robert B. ALEXANDER, et al., Plaintiffs, v. NATIONAL FARMERS' ORGANIZATION, et al., Defendants and Counterclaim Plaintiffs, v. ASSOCIATED MILK PRODUCERS, INC., et al., Counterclaim Defendants.

No. 19191-A-1.

United States District Court, W.D. Missouri, W.D.

July 5, 1985.

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David A. Donohoe, Akin, Gump, Strauss, Hauer & Feld, Washington, D.C., for National Farmers' Organization, defendant and counterclaim plaintiffs.

Donald W. Barnes, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D.C., for Associated Milk Producers, Inc., counterclaim defendants.

Colvin A. Peterson, Jr., Watson, Ess, Marshall & Enggas, Kansas City, Mo., Sydney Berde, Richard M. Hagstrom, Berde & Hagstrom, P.A., St. Paul, Minn., for Central Milk Producers Coop., counterclaim defendants.

George A. Leonard, Shughart, Thomson & Kilroy, Major W. Park, Jr., Gage & Tucker, Kansas City, Mo., for Mid-America Dairymen, Inc., counterclaim defendants.

MEMORANDUM OPINION, FINDINGS OF FACT, AND CONCLUSIONS OF LAW ON REMAND

JOHN W. OLIVER, Senior District Judge.

The parties agreed that ten major issues were presented by the various motions and voluminous briefs and appendices filed after the Court of Appeals' remand. After the Court had read and considered all the post-remand briefs that had been filed, nine of those major issues were the subject of three days of oral argument.¹ The parties waived oral argument to the tenth issue and agreed that it should be decided on the briefs that had been filed.

After oral argument the parties presented an agreed order directing further proceedings in regard to each of the ten major issues presented. The paragraphs of that post-oral argument order were designed to track with the order in which the various issues had been orally argued.

This memorandum opinion, which will serve as our findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, will track with the paragraphs of the post-oral argument order. During the course of this memorandum opinion we will frequently refer to the counterclaim plaintiff as "NFO" and to the counterclaim defendants as "defendants."

Our consideration of the arguments of the parties required that we study the entire transcript of the testimony of all the witnesses and exhibits adduced on the issue of damages. We were also required to study a substantial portion of the testimony of a substantial number of other witnesses and other exhibits adduced on questions other than damages during the trial of the entire case. In addition, we have reviewed and considered the handwritten notes we made during the trial of the case which, in accordance with our established practice in non-jury cases, included our contemporaneously recorded reaction in regard to the credibility of the various witnesses as they testified and of the various exhibits as they were adduced in evidence at trial.

It is, of course, impossible for the Court to comply with the mandate of Rule 52(a) that "judgment shall be entered pursuant to Rule 58" at this time. For, as will be apparent from our determination of the various issues, a number of those issues are not in procedural posture for the entry of a final judgment.

A number of interlocutory orders will, however, be entered during the course of this memorandum opinion in regard to particular issues. Appropriate procedures will be directed under which final judgments may be simultaneously entered in regard to the interlocutory orders entered in regard to those issues and in regard to the orders that will later be entered in regard to all ten of the issues presented after remand. We turn now to the first issue presented after remand.

ISSUE NO. 1 — STANDING — DEFENDANTS' RENEWED JOINT MOTION TO DISMISS

After remand, defendants CMPC, AMPI, and Mid-Am, filed a renewed joint motion to dismiss NFO's damage claims for lack of standing. That renewed motion was based primarily on the defendants' view of Associated General Contractors v. Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983) and their view of the Eighth Circuit's application of the principles stated in that case in McDonald v. Johnson & Johnson, 722 F.2d 1370 (8th Cir.1983).

Defendants contended at oral argument that the granting of the renewed motion to dismiss for lack of standing would end the need for further inquiry in regard to any other question that might be presented on remand in that such a ruling would constitute a determination that NFO would not be able to recover any damages in this case. (Oral Argument: p. 51-52).

The Court of Appeals accepted the defendants' argument that "NFO cannot recover its asserted `price reduction' damages." Alexander v. National Farmers Organization, 687 F.2d 1173, 1208 (8th Cir. 1982). However, that court expressly rejected "defendants attempt to bootstrap from this price reduction issue to deny NFO standing to recover any damages." Id. at 1209.

The Court of Appeals made a number of specific factual findings in the course of its discussion of the standing question. It found that NFO transacted business through the NFO Dairy Trust; that NFO cannot be considered in isolation from the NFO Dairy Trust; that NFO and the NFO Dairy Trust were not a mere conduit for monies to pass from buyers to producers; that buyers of NFO milk arranged purchases through NFO, and not through individual farmers; that buyers, terminating purchases in the face of defendants' harassment, sent notice of such termination to NFO and not to individual farmers; that buyers dealt with NFO as a single entity; that buyers viewed the trust arrangement, if at all, as a bookkeeping matter; that the trust fund was not a mechanical pass through device; that NFO reblended the proceeds of its marketing efforts through the trust; that NFO determined the actual pay price to producers; that NFO deducted marketing expenses from the trust proceeds; that NFO's marketing program was in direct competition with the defendant co-ops; that NFO, as a competitor, was a direct target of the unlawful conspiracy; that NFO was not an indirect or derivative victim of actions aimed at individual farmers; that NFO earned net revenues in the form of membership dues and check-off fees; and that NFO's losses of dues and fees represent direct injury to its business or property.

Many of the findings of fact made by the Court of Appeals are inconsistent with any number of the findings of fact proposed by defendants in the appendix attached to the defendants' pending standing motion. We are satisfied that the parties and this Court must accept the findings of fact made by the Court of Appeals. We are equally satisfied, contrary to defendants' basic contention, that the Supreme Court did not make any substantial change in antitrust law when it handed down AGC. Nor did the Eighth Circuit when it decided McDonald v. Johnson & Johnson.

We shall therefore enter an interlocutory order denying defendants' renewed motion to dismiss NFO's damage claims for lack of standing. Accordingly, it is

ORDERED (1) that defendants renewed joint motion to dismiss NFO's damage claims for lack of standing should be and the same is hereby denied.

ISSUE NO. 2 — NFO'S RULE 37 MOTION FOR MONETARY SANCTIONS AGAINST DEFENDANTS

I.

NFO's Rule 37 motion, filed solely against AMPI, prays for an order awarding NFO the following monetary sanctions:

1. NFO's costs, fees and expenses incurred in connection with uncovering AMPI's suppression and destruction of evidence in an amount to be determined;

2. NFO's costs, fees and expenses incurred in connection with pursuing relief under Rule 37, in the amount of $182,942.53;

3. NFO's costs, fees and expenses incurred in connection with defending the claims brought by AMPI in Phase III of this litigation, in an amount to be determined;

4. An additional amount equal to one percent of AMPI's 1982 gross revenues; and

5. Such other amounts as this Court may deem just and proper.

NFO's suggestions in support of that motion accurately state that this Court determined in November of 1978 that NFO's Rule 37 motion against AMPI would be granted and that the imposition of sanctions would be deferred until after the appeals in this case were resolved.

NFO argues that "this Court's determination that Rule 37 sanctions should be imposed has been emphatically endorsed and even broadened by the Court of Appeals, leaving only the question of the particular sanctions that should be imposed in order to achieve the purposes of Rule 37." NFO therefore contends that at least two considerations support its request that sanctions should be imposed in an amount not less than $26,347,780; namely "(1) AMPI's conduct was properly labeled by the Court of Appeals as `egregious' and `outrageous' and cannot be characterized as merely negligent or inadvertent; it was rather deliberate, pervasive, carried out at the highest levels of AMPI and involved not just delay but irretrievable destruction of evidence. It thus presents this Court with a record of wrongdoing which surpasses anything in the annals of Rule 37" and "(2) many of the forms of sanctions available under Rule 37 — e.g., claim preclusion, costs of pursuing the Rule 37 motion, striking of pleadings, etc. — would be futile here because NFO has already won on the merits of its claim, and on AMPI's counterclaim, and NFO is already entitled to attorneys' fees and costs, as the prevailing plaintiff in an antitrust case; accordingly, many of the customary forms of sanctions would not materially serve the compensatory and deterrent purposes of the Rule." (NFO's Sugg. in Support at 5-6).

NFO suggests that this Court (a) determine that NFO "is entitled to the fees and expenses incurred in uncovering AMPI's suppression and destruction of evidence and in pursuing this Rule 37 motion." (Id. at 6-7). Specifically, NFO requests that this Court ...