LOUISIANA FARMERS'PROTECTIVE UNION v. Great A. & P. Tea Co.

• Citation: 131 F.2d 419
• Decision Date: 02 November 1942
• Docket Number: No. 12204.,12204.
• Parties: LOUISIANA FARMERS' PROTECTIVE UNION, Inc., v. GREAT ATLANTIC & PACIFIC TEA CO. OF AMERICA, Inc., et al.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

131 F.2d 419 (1942)

LOUISIANA FARMERS' PROTECTIVE UNION, Inc., v. GREAT ATLANTIC & PACIFIC TEA CO. OF AMERICA, Inc., et al.

No. 12204.

Circuit Court of Appeals, Eighth Circuit.

November 2, 1942.

Cameron C. McCann, of New Orleans, La. (Morrison & Sims and James H. Morrison, all of Hammond, La., and Edward R. Schowalter, of New Orleans, La., on the brief), for appellant.

Russell V. Rogers, Jr., of Dallas, Tex., and S. Lasker Ehrman, of Little Rock, Ark. (Grover T. Owens, E. L. McHaney, Jr., and Owens, Ehrman & McHaney, all of Little Rock, Ark., William H. Clark, Jr., and Clark, White & Rogers, all of Dallas, Tex., J. W. House, Jr., and House, Moses & Holmes, all of Little Rock, Ark., Monroe & Lehmann, of New Orleans, La., Caruthers Ewing, of New York City, and Frost & Jacobs, of Cincinnati, Ohio, on the brief), for appellees.

Before SANBORN, WOODROUGH, and RIDDICK, Circuit Judges.

RIDDICK, Circuit Judge.

This is an appeal from a judgment dismissing a complaint in an action brought under § 7 of the Sherman Act to recover threefold damages for alleged violations of the Act as amended, 15 U.S.C.A. §§ 1, 15, on the ground that the complaint fails to state a claim against the appellees upon which relief may be granted.

The complaint as amended and as amplified by bills of particulars filed in response to motions on the part of the appellees may be summarized. The appellant is a non-profit co-operative corporation organized under the laws of Louisiana, composed of all the growers of strawberries in that state, more than 8,000 in number, who ship strawberries in interstate commerce. It is the marketing agency for its members, and by its constitution and bylaws it is authorized to protect its members "by every legal means in the bringing of class actions or of individual members or by the corporation itself for and on behalf of the member * * *", and its board of directors is given "the power to protect and represent legally or in the courts every member of said organization in the bringing of class actions, or individual actions, or in the bringing of an action for or on behalf of all the members of said organization, either by assignment oral or written, assigning whatever right said members may have or otherwise."

At a meeting of the union in Hammond, Louisiana, held on March 3, 1939, each and every member of the union orally assigned to the appellant the causes of action here involved, and authorized the appellant in its name to bring the present suit to recover on the causes of action assigned. The oral assignments in question were accomplished by the unanimous passage at a meeting of the union, all members being present, of a resolution to that effect.

Of the appellees, the Great Atlantic and Pacific Tea Company of America, Inc., the Kroger Grocery and Baking Company, Inc., and Safeway Stores, Inc., are the owners and operators of chains of food stores, including more than 20,000 retail stores in more than thirty-five states. The other appellees are the buying subsidiaries of one or the other of the appellees mentioned.

The appellees in the years 1937 and 1938 purchased approximately twenty-five percent of the strawberries produced by the members of the appellant union and, in the years mentioned, entered into a conspiracy with the object and intent of stifling competition in and monopolizing retail distribution of strawberries and other food products throughout the United States. In the prosecution of this conspiracy the appellees, through their retail stores throughout the United States, sold strawberries of appellant's members as "loss leaders", that is, at prices at retail less than cost, with the intention and result of enabling them to dictate the price paid by them for Louisiana strawberries and also the price to the ultimate consumer, and to force out of business other retail dealers in competition with appellees' stores. The result of this concerted action upon the part of appellees was to drive out of appellant's strawberry market other purchasers of strawberries who were unable to meet the unfair and unlawful prices below cost at which appellees sold the strawberries in their retail stores in competition with such other purchasers; and thus to destroy competition in trade in strawberries and to create a monopoly in the strawberry market for the benefit of the appellees. This concerted action of the appellees resulted in the depreciation of prices in the Louisiana strawberry market, in the limitation of competition in Louisiana strawberries in interstate commerce, and in the establishment of a monopolistic control over interstate commerce in Louisiana strawberries in the hands of the appellees.

This illegal combination and its operation by the appellees depreciated the average price of strawberries shipped during 1937 in interstate commerce by appellant's members from $2.40 per crate to $1.57 per crate, causing a loss to the members in that year on 2,502,400 crates of strawberries shipped in interstate commerce in the sum of $2,076,992. In 1938 appellant's members shipped in interstate commerce 1,840,000 crates of strawberries for which they received an average price of $1.97 per crate, when, but for the conspiracy alleged, the appellant's members would have received an average price of $2.35 per crate, entailing a total loss to the members of the union of $699,200. Judgment was asked for three times the sum of the damages stated above, or $8,328,576, with interest, costs, and attorneys' fees.

In form the complaint was in three counts: the first charging violations by the appellees of §§ 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2; the second, violations of § 2 of the Clayton Act, 15 U.S. C.A. § 13; and the third, violations of § 3 of the Robinson-Patman Act, 15 U.S.C. A. § 13a. But this subdivision of the complaint into counts was more a matter of form than of substance, the violation of a separate section of the national anti-trust laws being charged in each count upon the same facts. Taking the complaint in its entirety, the gravamen of appellant's charge is that appellees, buyers of Louisiana strawberries, agreed with each other to control the price of berries by driving out of the market competing purchasers. This alleged conspiracy was made effective by selling to the consumer at retail prices either below cost or at prices so low as to eliminate competitors of appellees in the retail market, thus compelling other distributors of berries at wholesale who were buyers of Louisiana strawberries in interstate commerce for sale to competing retailers, to retire from the Louisiana market or to purchase only at the depreciated price fixed by the appellees; and by these actions the members of the appellant union sustained the damages claimed.

In sustaining the motion to dismiss, the district judge did not pass upon the question of whether the appellant had sufficiently alleged violations of the controlling acts of Congress nor decide whether the assignments of the members of the union to the appellant were valid under the Louisiana law. But assuming that the complaint was sufficient to charge the acts prohibited and that the assignments to appellant were valid, he was of the opinion that the complaint should be dismissed on two grounds: (1) Because appellant had not 40 F.Supp. 897, 906 "* * * alleged facts showing damage to the business or property of its assignors in an amount susceptible of expression in figures, proximately resulting from the alleged illegal acts"; and (2) because "* * * the necessary causal relationship between the alleged violations of the statutes and the alleged damage to plaintiff's assignors, does not appear." For the reasons stated the district judge was of the opinion that appellant had "failed to state a cause of action upon which relief can be granted it"; that "the defects pointed out are inherent and basic and go to the heart of the complaint"; and "that nothing would be gained by deferring longer its dismissal." Accordingly the complaint was dismissed without leave to amend, and this action of the court presents the real issue here.

To sustain the court below the appellees contend that the appellant has pleaded merely conclusions of law, setting forth in the words of the statute, a conspiracy among the appellees to establish a monopoly in interstate trade in strawberries, and that the complaint is barren of allegations concerning the acts of appellees constituting the alleged violations of law. It is conceded that more than this is required of the pleader in a civil action under the statute in question, but the complaint here is not so deficient in its allegations of ultimate facts as to justify its dismissal without leave to amend. The courts have always recognized the difficulty in actions of the character here,...