Glowacki v. Borden, Inc., 72 C 2995.

• Decision Date: 23 September 1976
• Docket Number: No. 72 C 2995.,72 C 2995.
• Citation: 420 F. Supp. 348
• Parties: Joseph GLOWACKI, d/b/a Distributor's Dairy Products, et al., Plaintiffs, v. BORDEN, INC., a corporation, Defendant.
• Court: U.S. District Court — Northern District of Illinois

420 F. Supp. 348

Joseph GLOWACKI, d/b/a Distributor's Dairy Products, et al., Plaintiffs, v. BORDEN, INC., a corporation, Defendant.

No. 72 C 2995.

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

September 23, 1976.

COPYRIGHT MATERIAL OMITTED

Jason E. Bellows and Ronald N. Heftman, Chicago, Ill., for plaintiffs.

H. Blair White, Stuart S. Ball and Tom W. Stonecipher of Sidley & Austin, Chicago, Ill., for defendant.

MEMORANDUM OPINION

GRADY, District Judge.

This case involves a claim for damages sustained as a result of alleged price discrimination by defendant, Borden, Inc., in the marketing of milk products in violation of Sections 2(a), (d) and (e) of the Robinson-Patman Act, 15 U.S.C. § 13(a), (d), and (e). Plaintiffs are former distributors of defendant, a manufacturer of dairy products. At issue in this case are defendant's practices in marketing the following products: Homogenized Vitamin D Milk ("H.V.D. Milk"), Gail Borden Milk (a rich milk containing a high butterfat content and fortified with certain minerals and vitamins), 2% milk (containing two per cent butterfat), Low Fat Milk (containing one per cent butterfat), Fortified Skim Milk, Buttermilk, Chocolate Low Fat Milk, Chocolate Milk, and Half and Half (containing 10½ per cent butterfat). Before the court are six motions for summary judgment. Because these motions actually comprise one motion for summary judgment on six different grounds, we will decide them together. Each of these grounds will be discussed in turn.

INTERSTATE COMMERCE

Defendant first contends that the interstate-commerce element of the statute has not been met. Under the Robinson-Patman Act, the violation must be shown to have been committed in the course of interstate commerce. Under the Supreme Court's decision in Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974), one of the transactions which, when compared, generates a discrimination, must occur in interstate commerce. Borden argues that, since its sales all took place within Illinois, this element is not met. However, much of the raw milk which was processed into the products at issue originated in Wisconsin. Plaintiffs' contention is that the local sales of the products within Illinois were part of the stream of commerce that began in Wisconsin and was completed in Illinois. Defendant, on the other hand, contends that the processing of the raw milk at its Woodstock, Illinois, plant into the finished products broke that stream of commerce and thus that the subsequent sales of the products were wholly intrastate. We agree with plaintiffs that the processing was not sufficient to break the flow of commerce, and we will therefore deny the motion in this respect.

According to an affidavit and deposition of Craig Sandusky, former general superintendent of defendant's Woodstock plant, raw milk was treated by Borden in a number of ways while being processed into the products at issue. First, the milk was tested and then "clarified" by removing dead milk cells and impurities. Next, some of the milk was "separated" into cream and skim milk. The remainder of the raw milk was "standardized" to the proper butterfat content by the addition of separated skim milk. This standardized milk was the basis for H.V.D. Milk, the largest seller among the products at issue. The milk products with low and high fat contents were produced by the mixture of separated cream and skim milk. At this point, various vitamins and minerals were added to the milk, the types and amounts varying according to the kind of milk being produced. The next step was "pasteurization," which involved killing the enzymes in the milk. Except for buttermilk and chocolate milk, all the milk was then "homogenized," by fracturing the butterfat cells into smaller portions so that they would not rise to the top of the bottle. Buttermilk was produced from pasteurized skim milk by innoculating it with a bacteria. Chocolate milk was produced from pasteurized milk by the addition of sugar, chocolate and an emulsifier. The final step was bottling the milk. Defendant argues that as a result of this processing, the finished milk products were different from raw milk and that therefore the stream of commerce must have been broken. It relies on Central Ice Cream Co. v. Golden Rod Ice Cream Co., 287 F.2d 265 (7th Cir. 1961), cert. denied, 368 U.S. 829, 82 S.Ct. 50, 7 L.Ed.2d 32 (1961), aff'g 184 F.Supp. 312 (N.D.Ill.1960), which held that the processing of milk into ice cream broke the stream of commerce.

However, not all changes that may be undergone by a commodity will break the flow of commerce. In a case similar to the one at bar, the Seventh Circuit held that processing of milk resulted in only minimal changes and that the milk retained its "essential identity" at the end of the process. Dean Milk Co. v. F. T. C., 395 F.2d 696 (7th Cir. 1968). The court accordingly held that the stream of commerce had not been broken when raw milk, which had crossed state lines, was processed. The court relied heavily on Foremost Dairies v. F. T. C., 348 F.2d 674 (5th Cir.), cert. denied, 382 U.S. 959, 86 S.Ct. 435, 15 L.Ed.2d 362 (1965), in which the court held that standardization, homogenization and bottling of milk resulted in "negligible" changes in the milk and did not break the flow of commerce.

We cannot distinguish the present case from those two. Defendant argues that the changes undergone by the raw milk in the present case must be much greater than those in Dean Milk and Foremost Dairies. It seizes on the characterization by the courts of the processing involved in those two cases as "minimal" and "negligible" to indicate that virtually no changes were made to the milk. We find several problems with this argument. Defendant has misinterpreted those two decisions. The courts clearly did not mean that the milk had not been processed, but rather that the processing that had been done was insufficient to break the chain of commerce. That the milk had been processed was clear. Although in Foremost Dairies, the F. T. C.'s order encompassed only fluid milk, and not milk by-products like buttermilk (In the Matter of Foremost Dairies, Inc., 62 F.T.C. 1344 1963), the milk had been tested, standardized, pasteurized, and in most cases homogenized. 348 F.2d at 676. In Dean Milk, although the court did not set forth the processes that the milk had undergone, an examination of the F. T. C.'s decision, 68 F.T.C. 710 (1965), reveals that the processing was nearly as extensive as that in the present case, including, at a minimum, standardization, pasteurization, homogenization, and bottling. Moreover, the range of products was as great as that here. The Commission complaint included buttermilk, half and half, whipping cream and other products, as well as fluid milk. The Commission's final opinion included in its discussion not just fluid milk, but also buttermilk, half and half, and flavored milk. Since the Commission's record and opinion were before the court, we must assume that the court was aware of this processing and considered it insufficient to break the flow of commerce.

Our decision finds support in an unpublished opinion by Judge Will of this court, Frank J. Scardino Milk Distributors, Inc. v. Sidney Wanzer & Sons, Inc., No. 71 C 693 (N.D.Ill., filed August 9, 1972), in which he held that the processing of raw milk into fluid milk and milk by-products like multi-vitamin milk, buttermilk, chocolate milk, and cottage cheese did not break the steam of commerce. Defendant argues that Judge Will was in error because he held that Congress had used its full "affecting-commerce" jurisdiction over interstate commerce in enacting the Act, rather than the limited "in-commerce" jurisdiction. We do not so interpret Judge Will's opinion. Throughout the opinion, Judge Will discussed the defendant's operations in terms of the stream-of-commerce standard applicable to Robinson-Patman cases. Furthermore, although that case was decided before Copp Paving, the Seventh Circuit had previously held in Borden Co. v. F. T. C., 339 F.2d 953 (7th Cir. 1964), that the Robinson-Patman Act is violated only where one of the transactions occurs in interstate commerce. Judge Will cited and relied on that case. Defendant, however, takes exception to the following language towards the end of the opinion:

Relative insignificant differences in processing should not determine the scope of the Act. The whole trend in antitrust and commerce cases has been to be more inclusive jurisdictionally rather than less. Finally, this argument ignores recent Supreme Court cases as to the purview of the commerce clause. Sales of products which contain some small percentage of interstate material have been found sufficient to confer federal jurisdiction. See, e. g. Katzenbach v. McClung, 379 U.S. 294 85 S.Ct. 377, 13 L.Ed.2d 290 (1964); Daniel v. Paul, 395 U.S. 298 89 S.Ct. 1697, 23 L.Ed.2d 318 (1969). If Ollie's Barbeque's sales were in interstate commerce, Wanzer's surely are.

Id. at 10-11. Although this passage is possibly susceptible to defendant's interpretation, nevertheless, in view of the opinion's previously correct application of the law, we interpret it differently. The citation of the McClung case, which involved the constitutionality of an act of Congress under the commerce clause, causes us to believe that Judge Will was holding that, as applied to the defendant's activities, the Robinson-Patman Act was within Congress' authority to enact. As so interpreted, the opinion is not erroneous.

Finally, defendant argues that its milk was treated to a greater extent than the milk in Dean Milk and Foremost Dairies. Specifically, the opinions in those cases do not reveal whether the milk was clarified or whether vitamins and minerals were added. Parenthetically, we note that one of the products involved in the Wanzer case was vitamin-fortified milk. However, for present purposes, we...