North Texas Producers Ass'n v. Metzger Dairies, Inc.

• Decision Date: 16 July 1965
• Docket Number: No. 20956.,20956.
• Citation: 348 F.2d 189
• Parties: NORTH TEXAS PRODUCERS ASSOCIATION, Appellant, v. METZGER DAIRIES, INC., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

348 F.2d 189 (1965)

NORTH TEXAS PRODUCERS ASSOCIATION, Appellant, v. METZGER DAIRIES, INC., Appellee.

No. 20956.

United States Court of Appeals Fifth Circuit.

June 21, 1965.

Rehearing Denied July 16, 1965.

Ashton Phelps, New Orleans, La., William C. Odeneal, Jr., Odeneal & Odeneal, Dallas, Tex., Phelps, Dunbar, Marks, Claverie & Sims, New Orleans, La., Charles M. Lanier, New Orleans, La., Harold S. Nelson, San Antonio, Tex., of counsel, for appellant.

Paul S. Adams, Jr., Charles P. Storey, John K. Delay, Jr., Storey, Armstrong & Steger, Dallas, Tex., for appellee.

Stuart H. Russell, Oklahoma City, Okl., for the Central Arkansas Milk Producers Ass'n, Central Oklahoma Milk Producers Ass'n, Southwest Milk Producers Ass'n, Chattanooga Area Milk Producers Ass'n, Akron Milk Producers, Inc., and Shawnee Milk Producers Ass'n, amici curiae.

Frank D. Masters, San Antonio, Tex., for Producers Ass'n of San Antonio, Mid-Texas Milk Producers Ass'n, and Coastal Bend Milk Producers Ass'n, amici curiae.

Bradbury, Tippen, Brown & Clement, Abilene, Tex., for the Central West Texas Producers Ass'n, amicus curiae.

Before MARIS,^* RIVES and BROWN, Circuit Judges.

RIVES, Circuit Judge:

Metzger Dairies, Inc. brought a civil action for treble damages¹ against North Texas Producers Association. The complaint charged violations of sections 2(e) and 3 of the Clayton Act, 15 U.S.C. §§ 13(e) and 14, and also of section 2 of the Sherman Act, 15 U.S.C. § 2. Upon the trial, Metzger abandoned any claimed violations of the Clayton Act and the case was submitted to the jury solely on the charge of violating section 2 of the Sherman Act.²

The complaint charged the Association with monopolizing and attempting to monopolize the marketing of raw milk in the Dallas-Fort Worth area by (a) control of the supply, (b) control of transportation, (c) refusal to transport milk for non-members of the Association, (d) boycott and coercion against Metzger, (e) covert attempt to purchase Metzger, (f) refusal to sell raw milk to Metzger unless Metzger stopped purchasing from Association's competitors, (g) purchase of other milk plants. The complaint claimed damages from the increased cost to Metzger of raw milk caused by the claimed predatory trade practices, and from the loss of profits from the sale of Metzger's dairy products resulting from boycotts induced by the Association in Wise and Hopkins Counties, Texas.

The Association denied the charges of monopolizing or attempting to monopolize and denied Metzger's claimed damages. It insisted that its operations were simply legitimate marketing procedures, by which it served the interest of its members, within the protection of section 6 of the Clayton Act³ and of section 1 of the Capper-Volstead Act.⁴

The original complaint was filed August 24, 1959. On May 2, 1960, the Supreme Court in the case of Maryland and Virginia Milk Producers Association v. United States, 362 U.S. 458, 80 S.Ct. 847, 4 L.Ed.2d 880 settled the basic principles of law which control the decision of this case. It was there held that section 6 of the Clayton Act and section 1 of the Capper-Volstead Act did not immunize cooperative associations from the anti-monopolization provisions of section 2 of the Sherman Act. Mr. Justice Black speaking for the Court stated the law in plain and simple language which can be understood by laymen and lawyers alike:

"* * * Thus, the full effect of § 6 of the Clayton Act is that a group of farmers acting together as a single entity in an association cannot be restrained `from lawfully carrying out the legitimate objects thereof\' (emphasis supplied), but the section cannot support the contention that it gives such an entity full freedom to engage in predatory trade practices at will. * * *

"* * * We believe it is reasonably clear from the very language of the Capper-Volstead Act, as it was in § 6 of the Clayton Act, that the general philosophy of both was simply that individual farmers should be given, through agricultural cooperatives acting as entities, the same unified competitive advantage — and responsibility — available to businessmen acting through corporations as entities."

Maryland and Virginia Milk Producers Association v. United States, 1960, 362 U.S. 458, 465, 466, 80 S.Ct. 847.

The first trial of this case was set for Monday, December 4, 1961. On the preceding Friday, December 1, 1961, the Association as plaintiff filed a separate complaint for treble damages under the antitrust laws against Metzger and its alleged co-conspirators. That complaint charged in part:

"Defendants carried their plan and conspiracy into effect beginning in October 1958 and continuing to this date by transporting raw milk from Kansas and surrounding areas to the Dallas, Texas, area in quantities in excess of Five Million (5,000,000) pounds per month, which was processed and sold in the North Texas area by Defendant, Metzger Dairies, Inc."

The transportation of raw milk from Kansas and surrounding areas to Metzger's plant in Dallas was thus involved in both suits. Nonetheless, trial of the present case commenced on the day set and the case was submitted to the jury ten days later, on December 14, 1961. The jury deliberated for approximately a day and a half and reported to the court that it was unable to reach a decision. The court then read to the jury, without objection by either party, the so-called "dynamite charge" employed in Allen v. United States, 1896, 164 U.S. 492, 501, 17 S.Ct. 154, 41 L.Ed. 528. After deliberating for another hour and twenty minutes, the jury returned a verdict for the defendant Association.

The court denied the motion of the defendant Association for the entry of judgment on that verdict and, instead ordered

"* * * that the motion of Plaintiff for new trial be granted on the grounds that, considering the evidence as a whole and weighing it, the Court is of the opinion that the verdict of the Jury is wrong and is contrary to the weight of the evidence, and for the further reason that the Court is of the opinion that error was committed in statements made by the Court to the members of the Jury after the Jury had indicated in writing that they were unable to reach a verdict, which statements by the Court had the effect of coercing the verdict.

"It further appears to the Court that Civil Action No. 8989, styled North Texas Producers Association vs. Jacob Metzger, et al, now pending in the United States District Court for the Northern District of Texas at Dallas, involves common questions of law and fact with this cause and, it is

"ORDERED that Civil Action No. 8989 be consolidated with this Civil Action No. 8271."

A year and a half later the case went to trial for the second time, along with the consolidated cross action. The Association dismissed from its cross action all defendants except Metzger Dairies, Inc. and Jacob Metzger. The court ruled as a matter of law that the cross complaint should not be submitted to the jury and that judgment be entered that the Association take nothing in its cross action. The appellant Association makes no complaint as to that ruling.

The jury returned a verdict for the plaintiff Metzger Dairies, Inc., and assessed its damages at $365,000. The court entered judgment for treble that sum or $1,095,000, plus attorney's fees in the sum of $25,000, costs, and interest.

On appeal, the first insistence is that the district court erred in granting plaintiff's motion for a new trial and in refusing to grant defendant's motion for judgment on the verdict at the conclusion of the first trial. Ordinarily an order granting a motion for new trial is not appealable. It is, however, reviewable on appeal from the final judgment following the second trial.⁵ The scope of review is extremely limited because of the very broad discretion vested in the district judge.⁶

The district judge was quite frankly of the opinion that on the first trial the verdict should have gone for the plaintiff.⁷ The jury had reported in writing that, "We the jury are unable to reach a decision." Neither party having objected, it cannot be said that the reading of the Allen charge was an abuse of discretion on the part of the district judge.⁸ When, however, under all the circumstances, the judge concluded that the giving of that charge had the effect of coercing the jury and of causing it to return an unjust verdict, it became his duty to grant a new trial. In so doing, he did not abuse the broad discretion vested in him.

We come then to consider whether the practices complained of and established by the evidence were monopolistic or attempts to monopolize proscribed by section 2 of the Sherman Act, or were no more than "lawfully carrying out the legitimate objects" of an agricultural cooperative permitted by section 6 of the Clayton Act and by the Capper-Volstead Act. As has been mentioned, the Supreme Court in Maryland and Virginia Milk Producers Association v. United States, supra, has now settled the principle that farmers may act together in a cooperative association, and the legitimate objects of mutual help may be carried out by the association without contravening the antitrust laws, but that otherwise, the association acts as an entity with the same responsibility under section 2 of the Sherman Act as if it were a private business corporation.

With that principle in mind, we briefly recapitulate the facts which the jury could reasonably believe from the evidence. During the period in controversy the Association had about 2500 dairy producer members, nearly all located in the North Texas area. About 40 members were located in Oklahoma. The Association supplied about 85 or 90 per cent of the raw milk marketed in the Dallas-Fort Worth area. Metzger Dairies, Inc. owns and operates a large milk plant in Dallas. Prior to September 1, 1958, Metzger purchased 75 per cent or more of its raw milk supply from the Association and the remainder from individual dairy farmers.

The...