Butz v. Lawson Milk Co., Division Consol. Foods Corp., C 71-760.

• Decision Date: 21 November 1974
• Docket Number: No. C 71-760.,C 71-760.
• Citation: 386 F. Supp. 227
• Parties: Earl L. BUTZ, Secretary of the United States Department of Agriculture, Plaintiff, v. LAWSON MILK CO., DIVISION CONSOLIDATED FOODS CORP., Defendant.
• Court: U.S. District Court — Northern District of Ohio

386 F. Supp. 227

Earl L. BUTZ, Secretary of the United States Department of Agriculture, Plaintiff, v. LAWSON MILK CO., DIVISION CONSOLIDATED FOODS CORP., Defendant.

No. C 71-760.

United States District Court, N. D. Ohio, E. D.

November 21, 1974.

COPYRIGHT MATERIAL OMITTED

Donald D. Weisberger, Asst. U. S. Atty., Cleveland, Ohio, Edward M. Silverstein, Dept. of Agriculture, Washington, D. C., Peter J. Brickfield, Dept. of Justice, Washington, D. C., for plaintiff.

Paul W. Walter, Walter, Haverfield, Buescher & Chockley, Cleveland, Ohio, for defendant.

MEMORANDUM OPINION AND ORDER

LAMBROS, District Judge.

Earl L. Butz, Secretary of the United States Department of Agriculture, (the "Secretary"),¹ brought the above-captioned action in his official capacity against the Lawson Milk Company Division, Consolidated Foods Corporation ("Lawson's") for the alleged violation of the Agricultural Fair Practices Act of 1967 (the "Act"), 7 U.S.C. §§ 2301-2306. The complaint charges Lawson's with violation of the Act in two counts. In Count I, the Secretary alleges that Lawson's has interfered with the right of an individual producer of milk, John Weir, to join an association of producers in violation of 7 U.S.C. § 2303, by terminating its contract with Weir for the purchase of his milk solely because Weir signed a membership agreement with Dairymen's Cooperative Sales Association ("DC SA"). The Secretary alleges in Count II that Lawson's marketing contracts contained certain language which constitutes a per se violation of § 2303, because the effect of such language is to coerce or intimidate any producer or dairy farmer from the exercise of his right to join and belong to an association of producers. The Secretary seeks the issuance of permanent injunctive relief to restrain Lawson's from continuing to refuse to accept Weir's milk allegedly because of his membership in DCSA; to restrain Lawson's from refusing to accept the milk of any member of DCSA or any other marketing association solely for the reason that they are members of that marketing association; and to restrain Lawson's from including the fourth paragraph contained in Lawson's Marketing Agreement with Weir in any of its marketing agreements or from using similar language which would be calculated to force or coerce any producer to refrain from joining a marketing association.

In its Answer, Lawson's admits that according to 7 U.S.C. § 2301, Congress has declared it, in part, to be contrary to the public interest to interfere with the right of individual farmers to join together voluntarily in cooperative organizations as authorized by law. However, Lawson's states that all of its dealings with John Weir as well as its contracts with its producers are lawful and permitted pursuant to 7 U.S.C. §§ 2301-2306, and particularly 7 U.S.C. § 2304. Lawson's contends that it terminated its Marketing Agreement, not because Weir became a member of DCSA, but because under the DCSA Marketing Agreement, Weir surrendered full control over the sale of his milk to DCSA and in so doing made DCSA his exclusive agent. Under these circumstances, Lawson's contends that the termination of its Marketing Agreement with Weir was lawful under § 2304 which provides, in pertinent part, that "nothing in this chapter shall . . . require a handler to deal with an association of producers." Moreover, Lawson's asserted in its Answer by way of defense that the Agricultural Fair Practices Act of 1967, 7 U.S.C. §§ 2301-2306 should be declared to be unconstitutional on the grounds that the Act is so vague and ambiguous, impossible to interpret, and discriminatory as respects handlers of milk like Lawson's as to constitute a denial of due process of law and a denial of equal protection of the laws of the United States.

BACKGROUND

On December 26, 1973, this Court issued a memorandum opinion and order which particularized previous oral rulings on certain motions pending before the Court. The order denied Lawson's motion to consolidate the instant action with Lawson Milk Company Division Consolidated Foods Corporation v. Milk, Inc., et al., an antitrust suit which was filed on January 26, 1973 in the United States District Court for the Northern District of Ohio, Eastern Division, which had been temporarily transferred to the United States District Court for the Western District of Missouri, Western Division, for purposes of consolidating and coordinating pre-trial proceedings with a matter filed therein. It had been Lawson's contention that the discovery which was to be gleaned in the antitrust suit was necessary herein to bear out one defense that the allegedly restrictive marketing agreements in question were economically compelled and, therefore, legal. In denying the motion to consolidate, the Court made a finding that evidence of past and present economic conditions existing in the dairy industry in Ohio, as well as evidence of the alleged continued growth of monopolistic practices by Milk, Inc., the successor in interest to DCSA, were not relevant to the instant action. Accordingly, the Court also ruled that certain evidentiary matters relating to the antitrust suit, which Lawson's sought to present at the trial to the Court, were irrelevant and inadmissible.

This matter proceeded to trial on January 10, 1974. The parties submitted a Joint Stipulation of Facts, Lawson's presented certain evidence relating to its defense under § 2304 and made a proffer for the record of that evidence which this Court had previously ruled inadmissible. The evidentiary presentations were concluded on January 11, 1974, at which time Lawson's once again moved for the admission of the proffered testimony into evidence, which motion was overruled. A schedule for the filing of post-trial briefs was established, and the matter was submitted at that time for this Court's determination on the merits.

Since the completion of the evidentiary hearing, Lawson's has filed several motions. On January 15, 1974, Lawson's filed a set of Interrogatories to the plaintiff and a Request for Production of Documents. On January 18, 1974, Lawson's filed a Notice to Take Deposition. On February 12, 1974, the Government filed objections to the discovery notices, and on February 15, 1974, Lawson's moved for a Court order to compel the discovery and for the imposition of sanctions for the Government's failure to comply. Lawson's has also renewed its motion for acceptance of the proffered testimony into evidence.

Lawson's motion to compel discovery and for sanctions under Rule 37 of the Federal Rules of Civil Procedure is inappropriate at this time and is overruled. Lawson's renewed motion for the inclusion of the proffered testimony into evidence is again overruled for the reasons set forth in the memorandum opinion and order of December 26, 1973. The evidentiary presentations in this action having been concluded and the Court having considered the matters presented therein, the following are the Court's findings of fact and conclusions of law.

FACTUAL BACKGROUND

In making its findings, the Court has relied upon the Joint Stipulation of Facts submitted by the parties, the exhibits presented to the Court, and the additional testimony admitted at the final hearing in this matter.

On September 1, 1958, Lawson's entered into an agreement with John H. Weir, entitled the Lawson's Marketing Agreement, whereby Weir, a dairy farmer, agreed to sell to Lawson's and Lawson's agreed to purchase from Weir all of the milk produced on his farm except that consumed by Weir and his family. Relevant paragraphs in that Agreement provided:

FIRST: The Producer represents and says that he is the sole owner of the herd and that he is not now under any contract or agreement to sell or allow any person, group, firm, association or corporation to sell for him any of the milk which he produces.

SECOND: The Producer agrees to sell to the Company, and the Company agrees to purchase from the Producer, all of the milk produced on the Producer's farm, except that consumed by the Producer and his family, for a period of six (6) months from the date of this agreement, and this agreement shall continue in force and effect thereafter unless cancelled by either party in accordance with the provisions of paragraph 7 of this agreement.

FOURTH: Should the Producer, during the period covered by this agreement, enter into an agreement with any person, group, firm, association, or corporation for the sale of his milk, effective during the period covered by this contract, or should the Producer misrepresent the facts, statements and representations set forth in Paragraph One of this agreement, the Company shall be relieved thereafter from all further obligations to purchase the Producer's milk and the Company may, if it desires, give notice to the Producer that it desires forthwith to cancel this agreement, and the Company shall not be liable for any damages resulting from its refusal to thereafter accept or purchase the Producer's milk; provided that in the event that the Producer does file suit against the Company for or growing out of its refusal to thereafter continue to purchase the Producer's milk, that the Producer shall be liable for, and the Producer shall hold the Company harmless from any loss, expense, court costs, attorney's fees, or any judgment resulting from such suit.

SEVENTH: This agreement may be cancelled and terminated by either party after the first six (6) months have elapsed, by either party giving to the other a written notice of its desire to terminate thirty (30) days before such termination shall become effective.

On April 16, 1968, Congress enacted the Agricultural Fair Practices Act of 1967, 7 U.S.C. §§ 2301-2306. Under the Act, 7 U.S.C. § 2302(b), a dairy farmer such as Weir who was engaged in the production of raw milk was defined as a "producer" of milk, and Lawson's, as a concern engaged in the acquiring of agricultural products from...