Champaign-Urbana News Agency, Inc. v. J. L. Cummins News Co., Inc.

• Decision Date: 10 December 1981
• Docket Number: No. 79-2290,CHAMPAIGN-URBANA,79-2290
• Citation: 632 F.2d 680
• Parties: 1980-2 Trade Cases 63,562 NEWS AGENCY, INC., Plaintiff-Appellant, v. J. L. CUMMINS NEWS CO., INC., Martin R. Hoffman, Secretary of the United States Army, and John L. McLucas, Secretary of the United States Air Force, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 680

632 F.2d 680

1980-2 Trade Cases 63,562

CHAMPAIGN-URBANA NEWS AGENCY, INC., Plaintiff-Appellant, v. J. L. CUMMINS NEWS CO., INC., Martin R. Hoffman, Secretary

of the United States Army, and John L. McLucas,

Secretary of the United States Air

Force, Defendants-Appellees.

No. 79-2290.

United States Court of Appeals, Seventh Circuit.

Argued May 27, 1980.

Decided Sept. 24, 1980.

As Modified on Denial of Rehearing and Rehearing En Banc

Dec. 10, 1981. ^*

Alan E. Popkin, St. Louis, Mo., James L. Capel, Jr., Champaign, Ill., for plaintiff-appellant.

Ralph J. Swanson, Danville, Ill., for defendant-appellee, J.L. Cumins News Co., Inc.

V. Rock Grundman, Jr., and Charles G. Symmonds, Army & Air Force Exchange Service, Dallas, Tex., for defendants-appellees, Martin R. Hoffman, Secretary of U.S. Army and J.L. McLucas, Secretary of U.S. Air Force.

Before SWYGERT, Circuit Judge, KILKENNY, Senior Circuit Judge, ^** and WOOD, Circuit Judge.

HARLINGTON WOOD, Jr., Circuit Judge.

We are faced with the resolution of a novel issue potentially having significant impact on the Army and Air Force. The core of the problem is whether or not the Robinson-Patman Amendments to the Clayton Act are applicable to the commercial activities of the Army and Air Force Exchange Service (AAFES).

The Parties

Plaintiff-appellant Champaign-Urbana News Agency, Inc. (CU) is a Delaware corporation in business as a wholesale distributor of paperback books, magazines, and comic books with its principal place of business in Champaign County, Illinois.

Defendant-appellee J. L. Cummins News Company, Inc. (Cummins), an Illinois corporation with its principal place of business in Indiana, is a competitor of CU in the wholesale distribution of paperback books, magazines, and comic books in the State of Illinois.

Defendants-appellees Martin R. Hoffman and John L. McLucas (Secretaries) are respectively Secretary of the United States Army and Secretary of the United States Air Force.

The AAFES is not a party, but will be identified here before beginning an examination of its operations in some detail. It is a joint military command of the Army and Air Force which operates exchanges on Army and Air Force bases in this country and overseas including the exchange directly involved in this case at Chanute Air Force Base (Chanute) in Champaign County, Illinois. An exchange is a retail store for those in or connected with our military forces. ¹ Although an exchange may appear to be comparable to the old general store selling everything from toothpaste to motor oil, an exchange actually provides only a limited range of merchandise to a limited group of customers. An exchange is a place on a military installation where military personnel and their families may conveniently purchase many of their needs at less cost than off base.

The Facts

The essential facts are brief and undisputed. Between 1953 and 1975, CU held the AAFES wholesale account at Chanute for books and magazines. In connection with a solicitation for bids for the right to supply Chanute for a year beginning in April 1976, AAFES switched wholesalers and awarded the contract to Cummins. It appears that Cummins underbid CU by offering AAFES a five percent prompt payment discount which it did not offer to any of its other customers.

The Pleadings

The pleadings were considered both by Judge Wise and Judge Baker who came to different conclusions giving rise to the first preliminary issue.

CU's complaint filed in 1976 charged in Count I that the prompt payment discount given to AAFES by Cummins constituted price discrimination prohibited by § 2(a) of the Clayton Act as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a), ² to CU's damage in the amount of $30,000. Treble damages and an order enjoining Cummins from continuing its discriminatory pricing practice were sought. Count II sought a declaratory judgment pursuant to 28 U.S.C. § 2201 to determine whether § 2(a) and (c) of the Clayton Act as amended by the Robinson-Patman Act (15 U.S.C. § 13(a), (c)) ³ applied to sales to AAFES.

Cummins and the Secretaries filed motions to dismiss claiming the Robinson-Patman Act was not applicable to sales to AAFES on the basis that the government was immune. Judge Wise denied the motions as he was not prepared, he explained, to hold "as a matter of law, that a governmental instrumentality such as AAFES cannot be in functional competition with private interests. The effect on competition, in the instant case, remains to be established by proof at trial." ⁴

Subsequently, CU amended its complaint and added Count III seeking injunctive relief and damages against the Secretaries for knowingly inducing and accepting from Cummins a discriminatory price in violation of the Robinson-Patman Act. In the meantime, Judge Wise took senior status and Judge Baker assumed responsibility for the case. Cummins and the Secretaries filed new but similar motions attacking the amended complaint. Judge Baker, however, granted defendants' motions and dismissed the amended complaint with prejudice on the basis that Congress had not waived the sovereign immunity enjoyed by AAFES as a part of the government so as to permit the application of the Robinson-Patman Act either to purchases by AAFES or sales to AAFES. 479 F.Supp. 281 (C.D.Ill.1979). This appeal followed.

The Issues

Three issues evolve:

The first arises from Judge Baker's dismissal of the action which was fundamentally the same action Judge Wise had previously declined to dismiss. We consider whether Judge Baker was precluded by the "law of the case" from coming to a different conclusion than did Judge Wise.

The principal issue to be determined, however, is whether or not the Secretaries are immune from suit under the Robinson-Patman Amendments to the Clayton Act for the activities of AAFES.

Finally, the related issue is to determine if Cummins as a seller to AAFES is likewise entitled to any immunity that may be found to exist in AAFES.

Law of the Case

Because of the divergent views expressed by Judge Wise and Judge Baker on the principal issue in the same case, we are urged by CU to apply the "law of the case" rule thereby adopting the view of Judge Wise as controlling over the subsequent and contrary view expressed by Judge Baker.

The law of the case is not entitled to the same respect as the doctrine of stare decisis. The law of the case does not demand obsequiousness right or wrong. Mr. Justice Holmes said that the phrase "law of the case" merely expressed the practice of courts generally to refuse to reopen what had been decided but was not a limit on their power. Messenger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740, 56 L.Ed. 1152 (1912). The only sensible thing for a trial court to do is to set itself right as soon as possible when convinced that the law of the case is erroneous. There is no need to await reversal. 1B Moore's Federal Practice P 0.404(1), at 407. To modify the law of the case is primarily a matter of "good sense." Uniformed Sanitation Men Association, Inc. v. Commissioner of Sanitation of City of New York, 426 F.2d 619, 628 (2d Cir. 1970), motion denied, 403 U.S. 917, 91 S.Ct. 2223, 29 L.Ed.2d 693 (1917), cert. denied, 406 U.S. 961, 92 S.Ct. 2055, 32 L.Ed.2d 349 (1972).

There is no suggestion of forum shopping in this case. That would not be sanctioned, but even that would not require us to affirm error. We held in Bowles v. Wilke, 175 F.2d 35, 37 (7th Cir.), cert. denied, 338 U.S. 861, 70 S.Ct. 104, 94 L.Ed. 528 (1949), that "(t)he only restraint upon a second judge in passing upon an interlocutory issue decided by another judge in the same case is one of comity only, which in no way infringes upon the power of the second judge to act."

There is no need for rigid adherence to the earlier law of the case. Not only did Judge Baker rule early in the proceedings before trial but in any event the issue was one of jurisdiction recognizable at any time. His action did not delay and postpone finality. It accelerated it. There was no abuse of discretion. As this court said in Parmelee Transportation Co. v. Keeshin, 292 F.2d 794, 797 (7th Cir. 1961), "(o)bviously we cannot be expected to reverse a correct decision by one district judge simply because we find it is contrary to a prior ruling by another district judge in the same case, i. e. contrary to the 'law of the case.' " The next issue is the more difficult one, and that is whether Judge Baker's change in law of the case was a change for the better.

AAFES

It is necessary to examine AAFES in more detail, bearing in mind that Judge Baker dismissed plaintiffs' suit against the Secretaries on the ground that they were immune from antitrust liability because AAFES is part of the government.

AAFES is a unique and impressive operation although to some it appears to be just another chain of department stores. In 1969 AAFES ranked third behind Sears, Roebuck & Company and J.C. Penney Company with sales that year in excess of $3.5 billion. In 1976 AAFES had over 3,000 retail outlets with over 10,000 other types of facilities including auto repair, customer service, vending facilities, and movie theatres.

In some other respects AAFES resembles a private enterprise. For instance, it has civilian employees, uses modern merchandising techniques, keeps its own financial records, pays some of the same taxes as does a private retailer and carries the usual private enterprise insurance protection. But beyond those few similar characteristics the AAFES is unique.

First, the AAFES is self supporting as Congress does not and need not appropriate tax dollars to support its operation.

The AAFES is likewise uniquely organized as the joint regulation of the Army and Air Force succinctly explains: ⁵

1-5. Organization. a. The Army and Air Force Exchange Service (AAFES) is a joint command of the US Army and US Air Force under the jurisdiction of the Chief of Staff, US Army and Chief of Staff, US Air...