Jones v. Metzger Dairies, Inc.

• Decision Date: 23 July 1964
• Docket Number: No. 20816.,20816.
• Parties: J. T. JONES, Appellant, v. METZGER DAIRIES, INC., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

334 F.2d 919 (1964)

J. T. JONES, Appellant, v. METZGER DAIRIES, INC., Appellee.

No. 20816.

United States Court of Appeals Fifth Circuit.

July 23, 1964.

Dee C. Blythe, Clovis, N. M., H. E. Griffith, Lubbock, Tex., for appellant, Blythe & Norvell, Clovis, N. M., of counsel.

Charles P. Storey, Paul S. Adams, Jr., Storey, Armstrong & Steger, Dallas, Tex., for appellee, Metzger Dairies, Inc.

Before TUTTLE, Chief Judge, and HUTCHESON and GEWIN, Circuit Judges.

GEWIN, Circuit Judge.

In this Robinson-Patman Act case (Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. § 13), we are called upon to review certain rulings of the district court, which, inter alia, granted motion of defendant Metzger Dairies (appellee) for summary judgment, restricted the scope of written interrogatories propounded by the plaintiff Jones (appellant) to Metzger, and failed to rule upon plaintiff's motion for leave to file an amended complaint after the order granting summary judgment.

The plaintiff Jones filed this action for treble damages and an injunction against four corporate defendants (three of which have been subsequently removed by settlement) alleging price discrimination by Metzger against Jones in the sale of certain dairy products during the period April, 1959, until June 22, 1960. Jones was formerly an independent milk distributor in Winkler County, Texas, and prior to April, 1959, he had been a sub-distributor for Metzger in the sense that he purchased dairy products from Pecos Dairy Distributing Company who had purchased the same products from Metzger. He was also a distributor for Borden Dairy Products. Diagrammatically, the relative position of Jones in the distributive chain prior to April 1959, was that of a sub-distributor, whose immediate vendor was Pecos Dairy Distributing Company.¹

The main thrust of plaintiff's attack is directed at the district court's ruling which, in effect, geographically limited the scope of the discovery process to ten counties in West Texas and a portion of eastern New Mexico. Plaintiff assiduously contends that such a restriction is improper and that the "relevant market" in this cause can be properly expanded to include "the United States or any territory thereof or the District of Columbia, or any insular possession or other place under the jurisdiction of the United States."

We readily concede that the concept of the "relevant market" as applied to antitrust cases is certainly less than static. We are prepared to venture even further and conclude that the term "relevant market" is a rather evanescent term which can be skillfully manipulated somewhat in the manner of an accordion. In the instant proceedings, however, it is our opinion that the proper determination of the relevant market should not embrace any area beyond the restrictions provided by the order of the learned trial judge. See United States v. Watchmakers of Switzerland Inf. Ctr., (U.S. D.C. S.D. N.Y. 1958) 168 F.Supp. 904, wherein the trial judge held that discovery procedures must be limited if antitrust cases are to be kept within "reasonable bounds." See also T. C. Theater Corp. v. Warner Bros. Pictures, Inc., et al., 16 F.R.D. 173, 175 (D.C.S.D. N.Y., 1954); and United Cigar-Whalen Stores Corp. v. Phillip Morris, Inc., 21 F.R.D. 107 (D.C.S.D. N.Y., 1957).

The general criteria of the Robinson-Patman Price Discrimination Act are these: (1) the transaction must be in interstate commerce; (2) it must have the effect of substantially lessening competition or tending to create a monopoly; (3) or it must have the effect of injuring, destroying or preventing competition with any person who either grants or knowingly receives the benefit of such discrimination, or with the customers of either of them. The acts complained of did not occur in interstate commerce, nor did they involve the factual circumstances outlined in our recent case of Shreveport Macaroni Manufacturing Company v. F. T. C., 321 F.2d 404 (5 Cir. 1963).² Here the alleged discrimination was based on sales made by Metzger to Pecos, an independent milk distributor, which in turn resold some of these products to Jones. Metzger's plant was located in Dallas County, Texas. Pecos and Jones were located in Winkler County, Texas. The overall activities of Metzger show that it was engaged in interstate commerce.³

It is true that the Robinson-Patman Act has been held to prohibit purely local discriminatory activities perpetrated by an interstate manufacturer when the result of these activities may be to substantially lessen competition or "to destroy local business." Moore v. Mead's Fine Bread Co., 348 U.S. 115, 75 S.Ct. 148, 99 L.Ed. 145 (1954). The instant case does not present a Mead situation. In Mead, interstate commerce was used to foster the creation of a monopoly and thereby destroy a local business. As there stated, "* * * the treasury used to finance the warfare is drawn from interstate, as well as local, sources which include not only the respondent but also a group of interlocked companies engaged in the same line of business * * *." Nor do we feel that Atlas Building Products Co. v. Diamond Block & Gravel Co., 269 F.2d 950 (10 Cir. 1959) cert. den. 363 U.S. 843, 80 S.Ct. 1608, 4 L.Ed.2d 1727, supports the plaintiff's contentions under the facts developed. In Atlas, considerable emphasis was laid on the size of the accused company and its economic power. The accused company was the largest manufacturer and supplier of the product involved; it enjoyed a virtual monopoly and possessed dominant market power in the area; and it was concluded that it utilized its dominant market power to foster predatory practices consisting of price discrimination, substantial reduction of competition, and the creation of a monopoly. Such activities and practices extended across state lines.⁴ In carefully reviewing the facts of the instant case, we are unable to determine with any degree of certainty that discrimination⁵ has ever taken place. In order for there to be discrimination between purchasers, there must be actual sales at two different prices to two different actual buyers. A. J. Goodman & Son v. United Lacquer Mfg. Corp., (D. C.Mass.) 81 F.Supp. 890, 892. See: Bruce's Juices v. American Can Co., 330 U.S. 743, 67 S.Ct. 1015, 91 L.Ed. 1219; Shaw's, Inc. v. Wilson-Jones Co., (CCA 3) 105 F.2d 331; Sorrentino v. Glen-Gery Shale Brick Corp., (D.C.Pa.) 46 F.Supp. 709.

From the facts presented in the instant case we are unable to conclude that any acts of price discrimination occurred between the plaintiff Jones and Metzger Dairies, Inc. No sales of Metzger's products were made to Jones during the period in question. Metzger sold only to its distributor, Pecos. The courts have uniformly held that the Act contemplates two purchasers. Hartley & Parker, Inc. v. Florida Beverage Corp., (5 Cir. 1962) 307 F.2d 916; Naifeh v. Ronson Art Metal Works, Inc., (10 Cir. 1954) 218 F.2d 202, affirming 117 F.Supp. 690 (D.C.W.D.Okla., 1953); Klein v. Lionel Corp., (U.S.D.C.Del., 1956) 138 F. Supp. 560, 563; Shaw's, Inc. v. Wilson-Jones Co., (3 Cir. 1939) 105 F.2d 331.⁶ A. J. Goodman & Son, Inc. v. United Lacquer Mfg. Corp., (U.S.D.C.Mass. 1949) 81 F.Supp. 890, 892. As recently stated by this Court, "The evil at which the Robinson-Patman Act is aimed is discrimination between different competing purchasers where the effect of such discrimination may be substantially to lessen competition or tend toward a monopoly in commerce." Hartley & Parker, Inc. v. Florida Beverage Corp., supra.⁷ It is not necessary that the purchasers involved must be on the same distributive level. A violation of the Act may occur when a manufacturer sells his products to a retailer at a lesser price than that charged to a wholesaler whose customers compete with the retailer. F. T. C. v. Morton Salt Co., 334 U.S. 37, 55, 68 S.Ct. 822, 92 L.Ed. 1196 (1948). We conclude that Jones has failed to establish the existence of any price discrimination, and that the district court was correct in granting the motion for summary judgment.⁸

We find no error in the action of the trial court in refusing to allow the appellant to make further inquiry into the gross sales of Metzger in the State of Texas, or elsewhere in the United States. In our judgment, the facts with regard to the activities of Metzger were fully developed and known to the court and the parties. Even though not in the exact form requested by the plaintiff Jones, information as to gross sales by Metzger was fairly well presented. Full and complete discovery should be practiced and allowed, but its processes must be kept within workable bounds on a proper and logical basis for the determination of the relevancy of that which is sought to be discovered.

The allowance of amendments is a matter within the sound discretion of the trial court, and denial of a motion to amend will not be disturbed on appeal unless there has been a clear abuse of discretion. We are not unmindful of the fact that F.R.Civ.P. 15 enjoins liberality in granting amendments and that "leave `shall be freely given when justice so requires.'" Lone Star Motor Import, Inc. v. Citroen Cars Corp., (5 Cir. 1961) 288 F.2d 69; Watson v. Employers Liability Assur. Corp., (5 Cir. 1953) 202 F.2d 407, rev. other grounds 348 U.S. 66, 75 S.Ct. 166, 99 L.Ed. 74, rehear. den. 348 U.S. 921, 75 S.Ct. 289, 99 L.Ed. 722; Hall v. National Supply Co., (5 Cir. 1959) 270 F.2d 379; Volvia v. Bennett, (5 Cir. 1953) 201 F.2d 434. In our view, the allowance of the amendment would not have saved the plaintiff's case. It is apparent to us that all the issues available to the parties were fairly and carefully presented and understood by the trial court. We can detect no abuse of discretion.⁹

On oral argument, counsel for the plaintiff Jones forthrightly stated that he had been unable to find a case in point to support his contentions in the instant case. We have carefully...