Nash County Bd. of Educ. v. Biltmore Co.

Decision Date12 January 1981
Docket NumberO-R,No. 79-1123,79-1123
Citation640 F.2d 484
Parties1980-81 Trade Cases 63,715 The NASH COUNTY BOARD OF EDUCATION, Appellant, v. The BILTMORE COMPANY; Borden, Inc.; Coble Dairy Products Cooperative, Inc.;Pet, Inc.; Pine State Creamery Co.; Kraft, Inc. and Flav-ich, Inc., foritself and as Successor in Interest of United Dairies, Inc., Appellees.
CourtU.S. Court of Appeals — Fourth Circuit

J. Nat Hamrick, Rutherfordton, N. C. (Hamrick & Hamrick, Rutherfordton, N. C., William L. Thorp, Thorp, Anderson & Slifkin, Rocky Mount, N. C., I. T. Valentine, Jr., Valentine, Adams & Lamar, Nashville, N. C., on brief), for appellant.

St. John Barrett, Washington, D. C. (William S. Glading, John F. Sherlock, III, Barnett, Alagia & Carey, Washington, D. C., Jerry W. Amos, Brooks Pierce, McLendon, Humphrey & Leonard, Greensboro, N. C., on brief), for Flav-O-Rich, Inc.

Fred D. Turnage, Washington, D. C. (Cleary, Gottlieb, Steen & Hamilton, New York City, Robert Duesenberg, St. Louis, Mo., Wright T. Dixon, Jr., Bailey, Dixon, Wooten, McDonald & Fountain, Raleigh, N. C., on brief), for Pet, Inc.

George Ward Hendon, Adams, Hendon & Carson, Asheville, N. C., Joseph R. Gladden, Jr., King & Spalding, Atlanta, Ga., on brief for Biltmore Co.

John W. Murchison, Jr., W. T. Covington, Jr., Kennedy, Covington, Lobdell & Hickman, Charlotte, N. C., Glenn S. Dennis, New York City, on brief for Borden, Inc.

Joseph H. Leonard, Leonard & Snyder, Lexington, N. C., J. Melville Broughton, Jr., Broughton, Wilkins, Ross & Crampton, Raleigh, N. C., on brief for Coble Dairy Products Cooperative, Inc.

Henry A. Mitchell, Jr., Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, Raleigh, N. C., on brief for Pine State Creamery Co.

John R. Jordan, Jordan, Morris & Hoke, Raleigh, N. C., David L. Aufderstrasse, Chadwell, Kayser, Ruggles, McGee & Hastings, Chicago, Ill., Theodore L. Banks, Glenview, Ill., on brief for Kraft, Inc.

Jean A. Benoy, Deputy Atty. Gen., Raleigh, N. C. (Rufus L. Edmisten, Atty. Gen. of N. C., Raleigh, N. C., on brief), for amicus curiae State of N. C.

Before RUSSELL and HALL, Circuit Judges, and CHARLES H. HADEN, II, United States District Judge for the Northern District of West Virginia, sitting by designation.

DONALD RUSSELL, Circuit Judge:

This is an appeal by the plaintiff-appellant The Nash County (N.C.) Board of Education, from a grant of summary judgment in favor of the defendants in an antitrust suit by the plaintiff-appellant against nine dairy companies operating in North Carolina. 1 The basis of the district court's ruling was that, under the principles of res judicata, the plaintiff Board was precluded from maintaining the action by reason of a judgment entered in an earlier state antitrust action filed by the Attorney General of North Carolina against the same defendants as are defendants in this action.

The facts on appeal are not in dispute. Following a two year investigation, the Attorney General of North Carolina filed suit in the Superior Court of Wake County, North Carolina, against the nine dairy companies, alleging certain state statutory authorizations for his representation of the claims. He identified the parties he asserted the right to represent as "each public school system in this state which received tax revenue directly or indirectly from the State of North Carolina for the conduct of educational training and programs, which purchases fluid milk to be resold, or given gratuitously, to members of the student body while in registered attendance at such school." The complaint charged that the "defendants have, at various times since February, 1970, joined in agreements, combinations, and conspiracy in restraint of trade in the sale of milk products to the public school systems of North Carolina, which conspiracy and combinations have been in continuous operation since that time to the present date." It further alleged that such conspiracy had the effect that "(p)rice competition in the sale of fluid milk to the public school systems in North Carolina has been restrained and eliminated" and "(p)rices paid for fluid milk purchased by the public schools systems in North Carolina have been at unreasonably high, artificial and non-competitive prices." This conspiracy was violative, according to the Attorney General's complaint, of the North Carolina antitrust laws, which, in the event of a violation, authorized the recovery of treble damages. N.C.Gen.Stat. § 75-16 (1975). The prayer of the complaint sought both Shortly after the consent judgment, the plaintiff Board instituted the present suit on October 23, 1975 in the United States district court. In its complaint, the plaintiff identified the subject of its action as the purchase of "fluid milk, cottage cheese and ice cream from one or all of the defendants since February 1, 1970." It brought the action in its own name as one of the North Carolina school districts purchasing such products and sought to represent the class of all such school districts. It alleged the same conspiracy as had the Attorney General in his earlier state suit. The only differences between this action and the earlier action were (1) that this suit was based on the federal antitrust act and the earlier suit had based its legal claim on the state antitrust act and (2) the plaintiff in this later suit sought only treble damages but no injunctive relief. After discovery, the defendants in this later suit moved for summary judgment on the ground of res judicata. The district court granted the motion, ruling that the consent decree in the earlier suit barred the action brought by the Board. The Board has appealed, presenting as the sole issue whether the decree in the state action barred under the doctrine of res judicata this federal suit. We affirm.

injunctive relief and treble damages. Though the complaint included a request for class certification, no class was ever certified and the case was settled with a consent decree entered by the presiding state judge and endorsed by all parties to the litigation.


The doctrine of res judicata, which provides that "a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action," 2 is not a technical rule but a rule of "fundamental and substantial justice, 'of public policy and private peace,' which should be cordially regarded and enforced by the courts to the end that rights once established by the final judgment of a court of competent jurisdiction shall be recognized by those who are bound by it in every way, wherever the judgment is entitled to respect." 3 It is more than a judicially created doctrine of repose; it is a rule mandated by the full faith and credit clause of the Constitution, Article 4 § 1, and its implementing statute, 28 U.S.C. § 1738, 4 and should be applied accordingly. As applied, the essential elements of the doctrine are generally stated to be (1) a final judgment on the merits in an earlier suit, (2) an identity of the cause of action in both the earlier and the later suit, and (3) an identity of parties or their privies in the two suits. We shall consider in that order these essential requisites for the application of the doctrine in this case.


The plaintiff argues at the outset that a consent decree of judgment such as that entered by the North Carolina court in the earlier action will not support the requirement of a final judgment under either

                res judicata or collateral estoppel.  The district court found otherwise and we agree.  As Judge Soper said in Rector v. Suncrest Lumber Co., 52 F.2d 946, 948 (4th Cir. 1931), a consent judgment "is as conclusive and final as to any matter determined as one rendered in invitum after contest and trial (citing authorities).  And such a judgment cannot be impeached collaterally in another proceeding."  To the same effect are Safe Flight Instrument Corp. v. United Control Corp., 576 F.2d 1340, 1344 (9th Cir. 1978); Wallace Clark & Co., Inc. v. Acheson Industries, Inc., 532 F.2d 846, 849 (2d Cir.), cert. denied, 425 U.S. 976, 96 S.Ct. 2177, 48 L.Ed.2d 800, reh. denied, 427 U.S. 908, 96 S.Ct. 3194, 49 L.Ed.2d 1200 (1976); Siegel v. National Periodical Publishers, Inc., 508 F.2d 909, 913 (2d Cir. 1974) ("... a consent judgment does have res judicata effect ..."); Beloit Culligan Soft Water Service, Inc. v. Culligan, Inc., 274 F.2d 29, 35 (7th Cir. 1959); Urbino v. Puerto Rico Ry. Light & Power Co., 164 F.2d 12, 15 (1st Cir. 1947); Steyer v. Westvaco Corp., 450 F.Supp. 384, 397 (D.Md.1978); Williams v. Codd, 459 F.Supp. 804, 811-12 (S.D.N.Y.1978); Vulcan, Inc. v. Fordees Corp., 450 F.Supp. 36, 41-42 (N.D.Ohio 1978); Hemphill v. Hemphill, 398 F.Supp. 1134, 1136-37 (N.D.Ga.1975); Brunswick Corporation v. Chrysler Corporation, 287 F.Supp. 776, 777 (E.D.Wis.1968); United States v. Radio Corporation of America, 46 F.Supp. 654, 655, (D.Del.1942), appeal dis., 318 U.S. 796, 63 S.Ct. 851, 87 L.Ed. 1161 (antitrust consent decree).  5 Of course, as Judge Maris pointed out in Radio Corporation, supra, consent decrees "may be set aside for lack of actual consent to the decrees, as entered, for fraud in their procurement, or for lack of federal jurisdiction."  46 F.Supp. at 656.  It was because of a "lack of actual consent" by the party in interest that the consent decree was invalidated in West v. Bank of Commerce & Trusts, 167 F.2d 664, 666 (4th Cir. 1948).  There is, however, no contention in this case that the judgment was procured by fraud or with lack of "consent" by the Attorney General, who was the party plaintiff in the state action.  We have accordingly no difficulty in concluding, as did the district court, that the consent judgment in the state court constituted, for res judicata purposes, a final judgment on the merits.  6

The second requirement for res judicata is identity of causes of action. Unfortunately, the authorities do not provide...

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