National Dairy Products Corporation v. United States

• Decision Date: 23 September 1965
• Docket Number: No. 17734.,17734.
• Citation: 350 F.2d 321
• Parties: NATIONAL DAIRY PRODUCTS CORPORATION, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

350 F.2d 321 (1965)

NATIONAL DAIRY PRODUCTS CORPORATION, Appellant, v. UNITED STATES of America, Appellee.

No. 17734.

United States Court of Appeals Eighth Circuit.

August 27, 1965.

Rehearing Denied September 23, 1965.

COPYRIGHT MATERIAL OMITTED

John T. Chadwell, of Chadwell, Keck, Kayser, Ruggles & McLaren, Chicago, Ill., and Martin J. Purcell, of Morrison, Hecker, Cozad & Morrison, Kansas City, Mo., made argument for appellant and filed brief with John H. Lashly, of Lashly, Lashly, Rava, Hyndman & Rutherford, St. Louis, Mo.

Raymond P. Hernacki, Trial Atty., Dept. of Justice, and I. Daniel Stewart, Jr., Atty., Appellate Division, Dept. of Justice, Washington, D. C., made argument for appellee and filed brief with William H. Orrick, Jr., Asst. Atty. Gen., Antitrust Div., Dept. of Justice, and Robert B. Hummel, Atty., Antitrust Div., Dept. of Justice, Washington, D. C.

Before JOHNSEN, VOGEL and MATTHES, Circuit Judges.

MATTHES, Circuit Judge.

National Dairy Products Corporation (National or appellant) has appealed from the judgment of conviction on seven counts of an indictment charging a conspiracy to fix prices and eliminate competition in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and on six counts charging sales of milk at unreasonably low prices for the purpose of destroying competition in violation of § 3 of the Robinson-Patman Act, 15 U.S.C. § 13a.¹

The indictment alleged violations in seven different market areas. A Sherman Act violation and a Robinson-Patman Act violation were alleged to have occurred in each market area. Thus, Counts 1 and 2 related to Paola-Osawatomie, Kansas; Counts 3 and 4 to Sedalia, Missouri; 5 and 6 to Lexington, Missouri; 7 and 8 to Mexico, Missouri; 9 and 10 to Glasgow, Missouri; 11, 12 and 13 to Greater Kansas City; 14 and 15 to Butler, Missouri. Raymond J. Wise, a vice-president and director of National, was named as a defendant in Counts 11, 12 and 13.² The trial commenced on June 13, 1963, and proceeded without unnecessary interruption until August 16, 1963. Ninety-seven witnesses testified, over 7,000 pages of transcript were produced and more than 600 exhibits were introduced. The jury, after nearly three days of deliberation, returned verdicts of guilty on Counts 1 through 13 and verdicts of not guilty on Counts 14 and 15.

Post-trial motions for judgment notwithstanding the verdict and, in the alternative, for a new trial, were filed by both National and Wise. The motions were competently briefed by counsel. After oral argument the motions were denied. The court's supporting opinion is reported at 231 F.Supp. 663 (1964).

The Court (Honorable John W. Oliver) then fined National $50,000 (the maximum) for each of the seven Sherman Act violations, and $5,000 (the maximum) for each of the six Robinson-Patman Act violations, a total of $380,000. Wise was fined $25,000 on each of Counts 11 and 12 and $2,500 on Count 13, a total of $52,500. Wise also received a suspended jail sentence of three months on each of Counts 11, 12 and 13, to run concurrently.³ Both National and Wise appealed but, later, Wise filed a motion to dismiss his appeal, which we granted on November 30, 1964.

Appellant advances six basic contentions relating to (1) the procedure for handling of grand jury minutes and appellant's motion to inspect portions used; (2) the court's instructions to the jury; (3) the court's attitude; (4) rulings on evidence; (5) the court's rejection of the circumstantial evidence rule and (6) the insufficiency of the evidence to make a jury case on Counts 1 and 2, relating to the Paola-Osawatomie market, and Counts 11 and 13, relating to the Greater Kansas City area market. Numerous subsidiary claims of error are presented in support of each basic contention.

Before examining, considering and disposing of appellant's contentions, a résumé of pertinent facts, ascertained from undisputed evidence, is in order.

National, a large company, is engaged in the business of purchasing, processing, distributing and selling milk and other dairy products throughout the United States. Its products are sold under several trade names, including "Sealtest" and "Kraft." During the period of time covered by the indictment, defendant Wise had been an officer and director of National in charge of its Sealtest Central Division, which included the midwestern states.

National operates a processing plant in Kansas City, Missouri, and has been in competition with other national dairies and local small dairies, both in the Greater Kansas City area (which consists of Jackson and Clay Counties, Missouri, and Wyandotte and Johnson Counties, Kansas) and in a number of smaller outlying cities and towns in Missouri and Kansas. In the Greater Kansas City market, National, through its employees, primarily distributes its products directly to stores and home delivery customers. In the other cities and towns in Missouri and Kansas it usually sells its milk in paper cartons to independent distributors, who in turn resell the milk to their own customers.

The Government, of course, urges that the jury's verdicts on all counts were responsive to, and fully supported by, the evidence. Although appellant challenged the legal sufficiency of the evidence as to all counts by filing timely motions for judgment of acquittal and post-trial motion for judgment notwithstanding the verdict in the district court, here appellant, in effect, concedes a submissible case was made as to all counts except 1 and 2, and 11 and 13.

However, appellant does contend that the trial court applied an erroneous standard in evaluating the evidence under all thirteen counts (and particularly under Count 11) of which appellant was found guilty. Arguing that the evidence was wholly circumstantial — not direct — appellant seeks application here, as it did below, of the circumstantial evidence rule under which "unless there is substantial evidence of facts which exclude every other hypothesis but that of guilt, it is the duty of the trial judge to instruct the jury to return a verdict for the accused, and, where all the evidence is as consistent with innocence as with guilt, it is the duty of this court to reverse a judgment against the accused." Pevely Dairy Co. v. United States, 178 F.2d 363, 370 (8 Cir. 1949), citing Salinger v. United States, 23 F.2d 48, 52 (8 Cir. 1927).

In denying appellant's motion for judgment of acquittal at the close of the Government's case relating to Counts 11, 12 and 13, the trial court was of the view that this court's opinion in the Pevely Dairy case, supra, did not establish a "substantive rule of law" concerning the circumstantial evidence rule. Rather, the court determined that it should only "consider whether the evidence in its most favorable aspect to the Government is legally capable of allowing a jury to become persuaded of guilt."⁴

The so-called "circumstantial evidence" rule "is applicable only where the evidence is wholly circumstantial and if there is any direct evidence in the case for the government which would be sufficient if believed by the jury to show defendant's guilt, then the rule as to circumstantial evidence may not be invoked." Finnegan v. United States, 204 F.2d 105, at p. 114 (8 Cir. 1953). See also Pevely Dairy Co. v. United States, supra; Beatrice Foods Co. v. United States, 312 F.2d 29 (8 Cir. 1963); Sykes v. United States, 312 F.2d 232 (8 Cir. 1963); Hunt v. United States, 115 U.S. App.D.C. 1, 316 F.2d 652 (1963). Contrary to appellant's claim, the evidence was not wholly circumstantial. There was also some direct evidence. Moreover, even if we were to view the evidence as wholly circumstantial, the court would not be compelled to determine that all hypotheses flowing from the evidence were as consistent with innocence as with guilt; it would be for the jury to determine the guilt or innocence of the defendant.

In resolving the sufficiency of the evidence question we are required to view the evidence in the light most favorable to the Government, the prevailing party. "It is axiomatic by now that on appeal from a conviction it is not for us to weigh the evidence `but only to consider whether the evidence in its most favorable aspect to the Government is legally capable of allowing a jury to become persuaded of guilt.'" Beatrice Foods Co. v. United States, supra, 312 F.2d at 40, and cases there cited.

The Sufficiency of the Evidence.

Before considering the sufficiency of the evidence under Counts 1 and 2, we take note of pertinent background information relating to Counts 1 through 10, the so-called "distributor counts." These counts are concerned with situations in which small dairies had been selling gallon jugs of milk in local markets at a lower price than the price at which National was selling milk in individual paper half gallons. The price differential was necessitated by the disadvantages inherent in gallon jug milk. Gallon jugs contain more milk than many purchasers prefer to buy at one time; jugs are heavy, unwieldy, breakable and not as easily stored as paper cartons. There is usually a deposit required on a gallon jug which is only refundable after the jug has been cleaned and returned. Since small dairies can produce and sell milk in gallon jugs more inexpensively than large dairies can sell milk in paper half gallons, the small dairies were able to offer a substantial differential and still make a profit.

National and its distributors, dissatisfied with gallon jug competition, decided to force the small dairies to raise prices or National would lower its prices enough to substantially reduce or eliminate the differential between the price of a gallon jug and two paper half gallons. National was able to successfully reduce the differential to a point where the small dairies lost considerable business and some of the smaller dairies were forced to either drop the sale of milk in gallon jugs or close their businesses.

Count 1.

Count 1 of the...