American Can Co. v. Bruce's Juices, 13037.

Decision Date30 March 1951
Docket NumberNo. 13037.,13037.
Citation187 F.2d 919
CourtU.S. Court of Appeals — Fifth Circuit

Gerhard A. Gesell, Wm. M. Aiken, Washington, D. C., John M. Allison, Tampa, Fla., for appellant.

Cody Fowler, R. W. Shackleford, Tampa, Fla., for appellee.

Before McCORD, BORAH and RUSSELL, Circuit Judges.

McCORD, Circuit Judge.

Bruce's Juices, Inc., a Florida corporation, brought this suit against American Can Company, a New Jersey corporation, to recover treble damages for injuries sustained as a resuit of defendant's alleged violations of Sections 2(a) and (e) of the Clayton Act, as amended by the Robinson-Patman Act. See Title 15 U.S. C.A. §§ 13 and 15.

The complaint, as amended, in substance charges defendant with having engaged in unlawful discriminations in the granting of: (1) unjustified quantity discounts on the sale of cans to plaintiff's larger competitors; (2) an unlawful "runway allowance" to a particular competitor of plaintiff, Morgan Packing Company; and (3) an unjustified and secret lower price on a particular type can, called the "3.12 Iscan", to another of plaintiff's competitors, Engelman Gardens of Texas, while denying such lower price, or its equivalent, to plaintiff.

Defendant, in answer, sought to justify its quantity discount pricing system as having been established in good faith and based on actual savings in the sale of cans. It attempted to justify its "runway allowance" to Morgan Packing Company on the basis of savings in the expense of delivery. Defendant affirmatively denied any price discrimination, either secret or otherwise, with respect to the "3.12 Iscan" sold to Engelman Gardens.

The case was tried by the district court without a jury. After a lengthy trial, during which voluminous record testimony as well as much documentary evidence was introduced, the court made detailed and elaborate findings of fact and conclusions of law, and filed a later opinion1 in which it found that defendant had actually engaged in the violations and unlawful discriminations charged, and had thereby caused plaintiff to suffer damages in the minimum sum of $60,000. The court thereupon awarded judgment for plaintiff in the amount of $180,000, without interest, this sum representing treble the amount of actual damages under the statute, plus stipulated attorneys' fee of $35,000, making the aggregate judgment $215,000.

The material facts, which we have carefully dredged up from the voluminous record, reveal that plaintiff, during the period here involved, was a Florida canning corporation, with office and principal place of business at Tampa, Florida. J. Adams Bruce, who incorporated the plaintiff in 1928 and became its president and principal stockholder, was a pioneer in the canning of citrus juice. When he first entered the trade in 1926 he had personally sold and delivered citrus juice to his customers in milk bottles. Largely as a result of his efforts, and the fact that canned citrus juice was well received by the public, the business prospered and grew.

Defendant is the world's largest manufacturer of cans. Its average annual volume of sales has exceeded $96,000,000 during the years here involved. For many years it has maintained and operated plants which manufacture cans in over twenty states, as well as in Alaska, Hawaii and Canada. One of its plants is located in Tampa, Florida, where plaintiff, Bruce's Juices, Inc., is also situated.

Plaintiff's average purchases of cans from defendant during the period involved amounted to about $350,000.00 per year. Defendant also sold cans under exclusive contracts, which were practically identical to the contract it had with plaintiff, to many of plaintiff's competitors in the grocery can trade, including California Packing Corporation, Stokely Brothers, Hawaiian Pineapple Company, Ltd., Libby, McNeil & Libby, Morgan Packing Company and The Great Atlantic and Pacific Tea Company. These competitors were supplied from plants of defendant located throughout the United States, and they were among defendant's largest customers, California Packing Corporation alone purchasing more than $7,000,000 worth of cans per year. Both California Packing Corporation and Stokely Brothers have plants at Tampa, Florida, and during the period under consideration they bought from defendant's Tampa plant approximately the same number of cans purchased by the plaintiff. Defendant also manufactured and sold cans to two of plaintiff's largest competitors in the "Iscan" trade, Engelman Gardens of Texas and Morgan Packing Company of Indiana.

Prior to the enactment of the Robinson-Patman Act on June 19, 1936, defendant had granted quantity price discounts to its largest customers as high as 14%, and had kept no record of the cost of selling its customers or classes of customers. Upon the passage of that Act, and after some investigation, defendant placed into force and effect a quantity price discount schedule which, in substance, allowed a 5% discount to a few of the largest customers who were able to purchase cans in excess of $7,000,000 annually, and a sliding scale of discounts ranging from 1% to 5% to those customers who could buy between $500,000 and $7,000,000 worth of cans annually, but allowed no discount whatever to the great majority of defendant's customers, who were unable to purchase more than $500,000 worth of cans annually.2 These discounts remained in effect from June 19, 1936, through 1942.

It was shown that in granting quantity discounts the defendant did not adhere to the various brackets of its quantity discount schedule. To the contrary, it began to divide and classify all of its customers into three groups designated as "A", "B" and "C". The "A" group comprised those customers whose purchases equaled or exceeded $7,000,000 annually; the "B" group included those customers whose purchases ranged from $500,000 to $7,000,000 annually; and the "C" group included the vast majority of remaining customers whose annual purchases fell below $500,000. Thus, for all practical purposes, the above grouping of defendant's customers was based almost entirely on the annual volume of their respective purchases, and was in no wise governed by the actual cost of selling customers. As a result of the above discount system, 98% of defendant's customers were not permitted to receive any discount whatever, and out of the remaining 2% who qualified for a discount only three customers received the 5% discount during any of the years in question.

It was further shown that under the system and group classification provided for in defendant's quantity discount schedule, its larger customers were permitted to pool or aggregate their purchases from their various plants all over the country, and that the price discounts granted were based upon the gross amount of pooled purchases. This privilege of the larger can purchasers seriously handicapped plaintiff, as an individual canner operating only one plant, and placed it at an economic disadvantage. It enabled them to purchase the cans they needed at a lower price than plaintiff and other small independent canners.3

With regard to the alleged unlawful "runway allowance", it was shown that the cannery of Morgan Packing Company at Austin, Indiana, was connected with a plant of the defendant by means of a runway; that this runway could effect savings in transportation sufficient to justify a lower price only if the cans so transported were manufactured at defendant's plant at Austin, Indiana; that defendant nevertheless allowed the Morgan Packing Company a discount of 45¢ per thousand on all cans carried on the runway, although the evidence reveals that a substantial number of grocery cans and all of the Iscans were manufactured in plants of the defendant located at points other than Austin, Indiana; that there was no justification for the runway allowances on cans manufactured at other places than Austin, Indiana; that the defendant allowed Morgan Packing Company quantity discounts on its aggregate purchases and thereafter deducted substantial runway allowances; and that the granting of the runway allowance to this competitor resulted in actual and substantial injury to plaintiff.

About the year 1937 plaintiff began to sell fruit juices in small cans, called "Iscans". These "Iscans" were all of the same diameter, 2.02 inches, but varied in height from 3.00 inches to 3.14 inches. Citrus juice was poured into these small Iscans and sold in competition with bottled beverages from soft drink outlets.

In the Fall of 1938 plaintiff inaugurated an extensive promotional and advertising campaign to sell citrus juices in Iscans in Alabama, Mississippi, Georgia and Florida, which states were referred to as the Southern area. The product was well received and a large volume of citrus juice was sold during that year. In the following year plaintiff instituted a similar sales promotional campaign in Texas, Louisiana and Arkansas, which states were designated as the West area, and also attempted to develop Tennessee, North Carolina, Kentucky and the trade area around St. Louis, Missouri, known as the North area. Plaintiff had no appreciable success in its efforts to develop the latter two areas, and in fact suffered substantial loss.

The evidence conclusively reveals that plaintiff's losses as a result of its attempt to develop its West and North sales areas, and the injury to its business in other areas was the result of competition from two other citrus juice canners, Engelman Gardens of Texas and Morgan Packing Company of Indiana. These two competitors had received from the...

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