Food Basket, Inc. v. Albertson's, Inc.

• Citation: 383 F.2d 785
• Decision Date: 13 October 1967
• Docket Number: No. 8623.,8623.
• Parties: FOOD BASKET, INC., Appellant, v. ALBERTSON'S, INC., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

383 F.2d 785 (1967)

FOOD BASKET, INC., Appellant, v. ALBERTSON'S, INC., Appellee.

No. 8623.

United States Court of Appeals Tenth Circuit.

October 13, 1967.

Robert W. Hughes, Salt Lake City, Utah, for appellant.

Richard W. Giauque, Salt Lake City, Utah (Dennis McCarthy, Salt Lake City, Utah, was with him on brief) for appellee.

Before MURRAH, Chief Judge and PICKETT and BREITENSTEIN, Circuit Judges.

MURRAH, Chief Judge.

The primary issue in this appeal from a summary judgment in a private antitrust suit is the applicability of Section 2(a) and (f) of the Robinson-Patman Act (49 Stat. 1526, 15 U.S.C. § 13(a)); and Section 2 of the Sherman Act (15 U.S.C. § 2, 26 Stat. 209), to a seller of merchandise who is engaged in interstate commerce but discriminates in price only as between purchasers in one county — Salt Lake County, Utah.

On the basis of the complaint, supporting discovery and statement of counsel, the court concluded that the discriminatory purchases complained of were not "in commerce" so as to come within the scope of the Robinson-Patman Act and granted summary judgment for lack of subject matter jurisdiction. It also dismissed the action insofar as it was based on Section 2 of the Sherman Act "* * * for failure to state a claim upon which relief can be granted and for failure to disclose to the court a reasonable factual basis for such claim * *."

The plaintiff-appellant, Food Basket, Inc., operated an independent supermarket at Taylorsville, a suburb of Salt Lake City, Utah. The defendant-appellee, Albertson's, Inc., is an interstate supermarket chain operating several stores in the Salt Lake City area, including one across the street and down from Food Basket's Taylorsville store. The complaint alleged that the goods sold to the public from the grocery markets which is the "subject matter of this action * * * moved in interstate commerce * * * from their various points of origin across state lines to wholesalers located in Utah or Idaho and then shipped to the respective parties in this action, who in turn sold them to customers in Utah and particularly in the Taylorsville, Utah area." It was then stated that from December 1963 to July 1964 (when Food Basket went out of business) Albertson's offered for sale at its Taylorsville store selected food products at prices lower than it charged for like food products at its other Salt Lake City area stores; that it sold certain items at its Taylorsville store at low and unprofitable levels, all for the purpose of driving Food Basket out of business; and that it succeeded in doing so by subsidizing its losses "with profits earned from other retail stores where Food Basket was not a competitor." Food Basket's discovery developed proof that Albertson's regularly sold fortynine nationally advertised grocery items at its Taylorsville store at lower prices than it charged for the same items at its other Salt Lake City area stores.

Albertson's motion for summary judgment was based upon the premise that Food Basket's case was plainly grounded upon price differentials in Albertson's stores in Salt Lake County, and that it had not identified "a single sale in interstate commerce as a part of the discriminations charged." Reference was made to the uncontroverted affidavits to the effect that all of Albertson's stores in Salt Lake County purchased their groceries and frozen food requirements from two wholesale companies in Salt Lake City; that both of the wholesale companies buy for "their own account and take title to the goods", and except for "infinitesimal" drop shipment sales, all merchandise comes to rest in the wholesaler's respective warehouses prior to any resale; and that all purchases of the forty-nine nationally advertised items identified in Food Basket's proof, took place wholly within Salt Lake County. On this factual basis, Albertson's insisted that none of the purchases involved in the alleged discriminations were in commerce as required by Section 2(a) and (f) of the Robinson-Patman Act.

On the eve of the hearing on the motion for summary judgment, Food Basket submitted an affidavit of one of its attorneys in which he stated that on the day before, he had been permitted to examine the invoices of one of the wholesale companies and that such examination revealed that "all of the food products involved were manufactured outside of the State of Utah and shipped to Utah in interstate commerce"; and that additionally his investigation had revealed that Albertson's purchased certain enumerated food items directly from manufacturers outside the State of Utah; and moreover, Albertson's proof demonstrated that it carried on its discriminatory activities by subsidizing them "through the use of its interstate treasury."

In the extensive and revealing argument on the motion for summary judgment, the trial court came quickly to the point on which its judgment is based by pressing Food Basket's counsel to demonstrate in what way the alleged discriminatory sales in the Salt Lake City area can be said to be "in commerce", hence within the interdiction of Section 2(a) and (f) of the Robinson-Patman Act.

Counsel's response was twofold. First, he took the position that under the dictum of Moore v. Meade Fine Bread Co., 348 U.S. 115, 75 S.Ct. 148, 99 L.Ed. 145, purely local discriminatory sales by a seller engaged in interstate commerce, were within the scope of Section 2(a) if it is shown that interstate profits were used to subsidize the local discriminatory sales. Second, and alternatively, he took the position that the goods sold by Albertson's in the Salt Lake area originated outside the State of Utah and were shipped to the wholesalers in contemplation of sales to Albertson's retail stores; that under the "practical continuity" theory, such sales were in commerce within the meaning of 2(a) and (f).

Justice Douglas did use language in the Meade Bread case which, considered out of context, may be susceptible to the construction urged upon us here. But, we are not persuaded that it was intended to be so construed and applied. In that case, Meade, with a bakery in New Mexico, was engaged in interstate commerce. In the course of such commerce, it sold bread interstate to merchants in Texas at prices higher than it sold the same product locally in New Mexico in a price-cutting campaign. We did not think that the purely local price-cutting war involved commerce within the meaning of 2(a). But, on appeal, we were taught that if the profits from the higher interstate sales were used to "underwrite the losses of the local price-cutting campaigns" the competitive injury was within the scope of 2(a). But, the discriminatory sales, the profits of which subsidized the local price-cutting campaign, were in commerce within the meaning of the Act, which plainly says that "It shall be unlawful for anyone engaged in commerce, in the course of such commerce * * * to discriminate in price between different purchasers of commodities of like grade and quality where either...