Marion County Co-Op. Ass'n v. Carnation Co.

• Decision Date: 18 August 1953
• Docket Number: Civ. No. 344.
• Citation: 114 F. Supp. 58
• Parties: MARION COUNTY CO-OP. ASS'N v. CARNATION CO.
• Court: U.S. District Court — Western District of Arkansas

114 F. Supp. 58

MARION COUNTY CO-OP. ASS'N v. CARNATION CO.

Civ. No. 344.

United States District Court W. D. Arkansas, Harrison Division.

August 18, 1953.

COPYRIGHT MATERIAL OMITTED

Luther Cavaness, Yellville, Ark., Gideon H. Schiller, Sievers, Reagan & Schwartz, St. Louis, Mo., for plaintiff.

Hardin, Barton, Hardin & Garner, Fort Smith, Ark., for defendant.

JOHN E. MILLER, District Judge.

On October 8, 1952, plaintiff filed its complaint against the defendant and alleged the following facts:

Plaintiff is an Arkansas corporation, defendant is a Delaware corporation, and jurisdiction is conferred upon the Court by Title 15 U.S.C.A. §§ 1-15.

"That in and about Marion County, Arkansas, there has existed for many years prior hereto and does presently exist a milk producing area or shed, which shed produced Grade `C' raw milk which is used in the manufacture of dairy products; that both the plaintiff and the defendant each maintained a dairy products plant, and in connection therewith each party engaged in buying raw milk from the producers in the shed, manufacturing products therefrom and selling the products in interstate commerce."

The defendant, Carnation Company, operates numerous dairy products plants throughout the United States and has substantial assets and a large volume of sales; plaintiff operated a small enterprise with assets and sales of less than one per cent of the amount of defendant's assets and sales.

"6. That sometime in the fall of 1951 and at other times unknown to the plaintiff, the defendant, Carnation Company, by and through its officers, managers and agents, conceived a plan and scheme for obtaining unlawful control, monopoly and corner of the aforesaid milk shed, restricting interstate commerce and trade thereby, which plan or scheme was put into effect by the defendant commencing in the fall of 1951 and consisted of the establishment and maintenance of a `fictitious price'; that the said `fictitious price' consists of payments for raw milk to producers in the said shed which (a) were in excess of the usual and normal prices paid in the said milk shed in the normal course of business; and (b) resulted in a loss to the defendant on the sale of its products manufactured from raw milk purchased in the said shed at the said price; and (c) were calculated to result in a loss to any other purchasers, including the plaintiff herein, of raw milk in the said shed, meeting the said `fictitious price' established and maintained by the defendant.

"7. That the plaintiff met the `fictitious price' of the defendant at the time of its institution thereof by the defendant but was unable to continue to meet the said price, and that by reason thereof it lost its patrons, suffered financial losses, and did thereby cause the destruction of its business.

"8. That the `fictitious price', plan and scheme of the defendant was by reason of the premises contrary to and in violation of Sections 1 and 2 of Title 15 U.S.C.A. in these respects: (a) That the plaintiff was eliminated as a competitor of the defendant; and (b) That the defendant was put in position to unlawfully control, monopolize and corner a large portion of the purchases of raw milk in and about the said shed, all in restriction of interstate trade and commerce and in unlawful interference with the plaintiff's business."

The plaintiff suffered damages as a result of the defendant's plan and scheme and prays judgment against the defendant for damages, attorney's fee, and costs.

The defendant was granted additional time in which to answer or otherwise plead, and on February 2, 1953, filed its motion to dismiss under Rule 12(b)(6), F.R.C.P., 28 U.S.C.A., or in the alternative, for summary judgment under Rule 56, F.R.C.P. The attorneys for the respective parties have filed briefs in support of and in opposition to the motion, and also a substantial number of affidavits and depositions have been filed, and the motion is now before the Court for disposition.

With regard to its motion to dismiss, defendant contends that the complaint fails to state a claim upon which relief can be granted because (1) there is no allegation of a contract, combination or conspiracy to bring the complaint within the purview of Section 1 of the Sherman Anti-Trust Act, and (2) no violation of Section 2 of the Act is alleged in that plaintiff has failed to allege that the defendant had the intent or power to monopolize, or that the consumer market was monopolized and the general public injured, or that the defendant had monopolized or was attempting to monopolize any part of interstate commerce. As to its motion for summary judgment, defendant contends that the affidavits and depositions on file show conclusively that no "fictitious price" was paid by defendant and that its prices were entirely competitive, and that no violation of the Sherman Anti-Trust Act could be shown.

On the other hand, the plaintiff contends that there may be a conspiracy among officers and agents of a corporation and the corporation itself, and that it has sufficiently alleged such a conspiracy in violation of Section 1 of the Act. The plaintiff also contends that it has sufficiently alleged the power and intent of the defendant to monopolize and that the defendant had attempted to monopolize a part of interstate commerce. Plaintiff further contends that it is unnecessary to allege a monopoly of the consumers' market or injury to the general public. As to the motion for summary judgment, the plaintiff contends that "Nowhere in the motion for summary judgment are the allegations of Paragraphs Six and Eight (of the complaint) negatived," and that a genuine issue of fact exists.

The Court will first consider the defendant's motion to dismiss. Defendant's first contention, i. e., that the complaint does not state a cause of action within the purview of Section 1 or the conspiracy portion of Section 2 of the Sherman Anti-Trust Act, is well founded.

Section 1 of the Act provides:

"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal: * * *."

Section 2 of the Act provides in part:

"Every person who shall * * * combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor * * *."

The plaintiff contends that the following allegation states a conspiracy within the coverage of the above quoted portions of the Act:

"That sometime in the fall of 1951 and at other times unknown to the plaintiff, the defendant, Carnation Company, by and through its officers, managers and agents, conceived a plan and scheme for obtaining unlawful control, monopoly and corner of the aforesaid milk shed * * *."

In its brief plaintiff argues that "Common sense dictates that a corporation acts by and through its officers and agents. The officers and agents of a corporation may be named as co-conspirators with the corporation. Kentucky-Tennessee Light & Power Co. v. Nashville Coal Co. D.C., 37 F.Supp. 728."

The case relied upon by plaintiff in no wise supports its contention. All that case holds is that the liability of a principal does not preclude the personal liability of the agent who performed the prohibited acts (In that case, the alleged payment of illegal commissions contrary to the Robinson-Patman Act). The Court, at page 783 of 37 F.Supp., said:

"It is a well-established rule of principal and agent that an agent is liable for his own tortious acts even though performed within the scope of his employment, and under conditions which impose liability upon the principal also. * * * If the payments of the commissions to Fitch by the Coal Company are illegal under the Robinson-Patman Act, such violation of the law is also charged to the defendant Potter who authorized the payments and made them as agent of the corporation. This brings Potter, as well as the Coal Company, within the civil liabilities provided by Section 4 of the Act, which gives a cause of action by reason of anything forbidden in the anti-trust law."

Not only does the above cited case fail to sustain plaintiff's contention, but, in fact, the cases uniformly hold that a conspiracy cannot exist between a corporation and its officers and agents. Perhaps the clearest holding on this point is the case of Nelson Radio & Supply Co., Inc., v. Motorola, Inc., 5 Cir., 200 F.2d 911, at page 914, certiorari denied in 345 U.S. 925, 73 S.Ct. 783, wherein the Court said:

"It is basic in the law of conspiracy that you must have two persons or entities to have a conspiracy. A corporation cannot conspire with itself any more than a private individual can, and it is the general rule that the acts of the agent are the acts of the corporation. Here it is alleged that the conspiracy existed between the defendant corporation, its president, Calvin, its sales manager, Kelly, and its officers, employees, representatives and agents who have been actively engaged in the management, direction and control of the affairs and business of defendant. This is certainly a unique group of conspirators. The officers, agents and employees are not named as defendants and no explanation is given of their non-joinder. Nor is it alleged affirmatively, expressly, or otherwise, that these officers, agents, and employees were actuated by any motives personal to themselves. Obviously, they were acing only for the defendant corporation. It is true that the acts of the corporate officers may bring a single corporation within Section 2 of the Sherman Act, which covers an attempt to monopolize, but this is not because there exists in such circumstances, a conspiracy to which the corporation is a party. * * *

"In the absence of any allegation whatever to indicate that the agents of the corporation were acting in other than their normal

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