North Texas Producers Association v. Young

• Decision Date: 17 October 1962
• Docket Number: No. 19146.,19146.
• Citation: 308 F.2d 235
• Parties: NORTH TEXAS PRODUCERS ASSOCIATION, Appellant, v. Keith YOUNG, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

308 F.2d 235 (1962)

NORTH TEXAS PRODUCERS ASSOCIATION, Appellant, v. Keith YOUNG, Appellee.

No. 19146.

United States Court of Appeals Fifth Circuit.

September 13, 1962.

Rehearing Denied October 17, 1962.

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., of counsel), for appellant.

Waller M. Collie, Jr., Logan Ford, Burford, Ryburn & Ford, Dallas, Tex., for appellee.

Before RIVES, CAMERON and GEWIN, Circuit Judges.

GEWIN, Circuit Judge.

This is a suit for treble damages under the Sherman Anti-Trust Act, 15 U.S.C.A. § 1 et seq.¹ Keith Young, Plaintiff-Appellee, claims that North Texas Producers Association, Defendant-Appellant, conspired with one or more handlers and producers of milk in the Dallas-Fort Worth area to breach a certain contract with Young in violation of the Sherman Anti-Trust Act and resulting in damage to him (Young).²

The jury found in favor of Young and awarded damages in the amount of $100,000.00, which were trebled by the court, to which was added attorneys' fees and judgment with interest rendered accordingly. From this judgment North Texas has appealed, claiming substantially as follows: the complaint did not state a cause of action; there was no evidence of a violation of the Sherman Act; only the simple breach of a contract is involved; and the damages proved, if any, were speculative.

On July 13, 1956, Young and North Texas entered into a contract in Dallas, Texas, by the terms of which North Texas agreed to sell bottled milk to Young in one gallon glass containers. Young had been engaged in the business of milk production and distribution in Kansas City, Kansas, prior to 1956 when he came to Dallas. The contract provided that North Texas was to furnish Young's requirements of milk ready for distribution; and Young was to obtain the necessary permits to do business, including a permit to use a particular type label required in the area. The name of North Texas was not to be used on the label unless it consented. Actual performance of the contract was to commence when the necessary preparations were completed.

In November 1956, North Texas informed Young that it would not go through with the contract. According to Young, supported by a finding of the jury, the chief reason why North Texas refused to perform the contract was that the other milk handlers and distributors in the area objected to it; and had made an agreement with North Texas that they, the handlers and distributors, would pay North Texas an additional one cent per quart for milk for the refusal of North Texas to perform the agreement with Young. With one minor exception, the largest retail container of milk in the market area prior to the North Texas-Young contract was a half gallon paper carton which sold for approximately 50 cents. Accordingly, members of the public who wished to purchase a gallon of Class I milk in the area, were required to purchase two half gallon paper cartons at a cost of approximately 96 cents. If the contract between Young and North Texas had been performed, Young proposed to retail Class I milk in gallon jugs at 69 cents, or approximately 27 cents less than the prevailing price. After the contract was breached by North Texas, Young became part owner and general manager of Jere Dairy, Inc., and actually sold milk in Dallas at "the average out-of-store price to the consumer" at "just a shade over 69 cents".

Before the alleged arrangement was worked out between North Texas and the other milk handlers and distributors, North Texas had made preparations to fulfill its obligations under the contract with Young. North Texas had done some bottling on a small scale but prior to the contract with Young had not engaged extensively in processing and bottling milk. In making ready to perform the contract with Young, North Texas actually spent approximately $20,000.00 in the purchase of washers, fillers, separators, homogenizers, tanks, glass jugs, cases, caps and other necessary equipment and supplies.

At the time of the execution of the North Texas-Young contract, there were approximately 18 distributors of Class I milk in the Dallas-Fort Worth marketing area. North Texas furnished approximately 85% of the milk handled by such distributors. There was only one small company at that time which was engaged in the business of selling Class I milk in gallon glass containers, which amounted to approximately one-half of one percent of the business in the market area. To a very substantial degree, the consuming public was dependent upon the distributors and milk handlers mentioned for a supply of Class I milk.

For some time prior to the breach of the North Texas-Young contract, North Texas had been endeavoring to induce the distributors and milk handlers to pay it a premium for Class I milk over the federally regulated minimum price. When it became known that the distributors were anxious to upset the North Texas-Young arrangement an agreement was reached between North Texas and the handlers and distributors whereby North Texas would refuse to perform the contract with Young and the distributors would increase their price to North Texas by the sum of 40 cents per hundred weight — at least the jury so found and there was evidence to that effect. Although it is stoutly argued that there is no causal connection between the breach of the Young contract and the increase in price to North Texas, both events occurred in close proximity of time. The result of this increase of 40 cents per hundred weight to North Texas, which is approximately one cent per quart, was to raise the wholesale price of milk in Texas wherever federal marketing orders were in effect, namely, Dallas, Fort Worth, Wichita Falls, Amarillo and certain other Texas cities. The effect on the retail price to the consuming public in the Dallas-Fort Worth area was an advance of one cent per quart. There was evidence to the effect that the increase was worth approximately one and a half million dollars to North Texas over the four months period of the price increase.

On December 2, 1958, Young filed the instant suit in the United States District Court alleging that North Texas had conspired with certain named distributors and individuals to refuse to sell him processed Class I milk bottled in one gallon glass containers, and upon trial the jury found this allegation to be true. The thrust of the argument of North Texas on this appeal is not aimed at the existence vel non of a conspiracy, but strongly asserts that Young did not state a cause of action under the antitrust laws and suggests an action for simple breach of contract.

The distinguished trial judge clearly and fairly instructed the jury on the issues involved; and several special issues were submitted to the jury. No errors are specified with respect to the instructions given to the jury by the court or with respect to the refusal or the giving of any special instructions. In effect, the jury found that on November 2, 1956, Young had the intention and was prepared to enter the milk business in the Dallas-Fort Worth area pursuant to the mentioned contract, and on that date North Texas entered into a contract, combination or conspiracy with one or more of the handlers and distributors of milk in that area whereby it was agreed that if such handlers and distributors would voluntarily pay the price increase for milk they were to purchase from North Texas from November 5, 1956 to February 28, 1957, North Texas would refuse to sell Class I bottled milk in one gallon glass containers to Keith Young; that the arrangement between North Texas and such milk handlers and distributors operated as a restraint of trade or commerce among the several states as such term had been explained in the court's charge; and assessed the damage suffered by Young to the date the trial began on February 20, 1961, as the result of the conspiracy, at the sum of $100,000.00.

North Texas' motion for judgment N.O.V. was overruled and its alternative motion for a new trial was overruled. The court concluded that the jury's verdict was amply supported by the evidence; that the plaintiff was entitled to judgment on the verdict and that the damages found by the jury should be trebled. After taking testimony, the court fixed as reasonable attorneys' fees for Young's counsel the sum of $20,000.00 for services rendered in the District Court.

The Sherman Anti-Trust Act was characterized by Chief Justice Hughes in Appalachian Coals, Inc. v. United States, 288 U.S. 344, 359-360, 53 S.Ct. 471, 474, 77 L.Ed. 825 (1933), "as a charter of freedom * * * has a generality and adaptability comparable to that found to be desirable in constitutional provisions. * * * The restrictions the Act imposes are not mechanical or artificial. Its general phrases, interpreted to attain its fundamental objects, set up the essential standard of reasonableness." That case and many others since have held that the Sherman Anti-Trust Act should not be required to operate in a straitjacket or be interpreted in a narrow, technical sense.

A background of fundamentals in this field of law was established by Mr. Chief Justice White in Standard Oil Co. of N. J. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). In explaining the history of the Sherman Act and commenting extensively on the common law as it existed before the act was adopted, the court had much to say about the vast accumulation of wealth and power in the hands of corporations and individuals, the enormous development of business enterprises, the facility for combination and the widespread impression to the effect that, "* * * their power had been and would be exerted to oppress individuals and injure the public generally." The opinion asserts that "restraint of trade" and "monopolization" had their beginnings before the adoption of the act,...