Oberweis Dairy v. Associated Milk Producers, 72 C 1404.

• Decision Date: 04 August 1983
• Docket Number: No. 72 C 1404.,72 C 1404.
• Citation: 568 F. Supp. 1096
• Parties: OBERWEIS DAIRY, INC., Plaintiff, v. ASSOCIATED MILK PRODUCERS, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

568 F. Supp. 1096

OBERWEIS DAIRY, INC., Plaintiff, v. ASSOCIATED MILK PRODUCERS, INC., et al., Defendants.

No. 72 C 1404.

United States District Court, N.D. Illinois, E.D.

August 4, 1983.

Victor M. Harding, Milwaukee, Wis., Rowley & Watts, Washington, D.C., Whyte & Hirschboeck S.C., Milwaukee, Wis., for plaintiff.

Donald M. Barnes, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D.C., Kael B. Kennedy, Katten, Muchin, Zavis, Pearl & Galler, Chicago, Ill., for defendants AMPI.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Oberweis Dairy, Inc. ("Oberweis") sued Associated Milk Producers, Inc. ("AMPI") and Central Milk Producers Cooperative ("CMPC")¹ alleging violations of the Sherman Act, 15 U.S.C. §§ 1 and 2. AMPI filed a Counterclaim asserting Oberweis' commencement of this action violated an Agreement of Settlement (the "Agreement") that terminated Oberweis' earlier antitrust action against AMPI's predecessor and others, Oberweis Dairy, Inc. v. Pure Milk Association, No. 65 C 2189 (N.D.Ill.) (the "1965 Lawsuit"). Oberweis has now moved under Fed.R.Civ.P. ("Rule") 56 for summary judgment on AMPI's Counterclaim. For the reasons stated in this memorandum opinion and order Oberweis' motion is granted.

In their briefing on Oberweis' motion both parties also addressed the legal effect on and relevance to this action of a release (the "Release") executed by Oberweis as part of the settlement of the 1965 Lawsuit. AMPI had already pleaded the Release as an affirmative defense to Oberweis' own claim. At a July 26, 1983 status hearing this Court informed the parties it was also prepared to consider the parties' arguments on the Release as arguments for and against a Rule 56 motion by AMPI for summary judgment on Oberweis' claim, if the parties had nothing more to offer on that score. In response the parties advised this Court (1) they agreed with its characterization of their briefing arguments and (2) they were prepared to stand on those arguments as already submitted. For the reasons stated in this memorandum opinion and order AMPI is denied summary judgment on Oberweis' claim on the basis of the Release.

Background

Oberweis filed the 1965 Lawsuit seeking both damages and injunctive relief for alleged antitrust violations by Pure Milk Association ("PMA") and others. In particular, Oberweis attacked the 1965 Lawsuit defendants' maintenance of "super pool agreements" in the milk industry (1965 Complaint ¶¶ 13, 28-29, Prayer ¶¶ 5 and 6).²

Oberweis, PMA and others entered into the Agreement August 26, 1969. Agreement ¶ 2 provided:

Plaintiff Oberweis will not interfere with the performance of any milk marketing agreement now or hereafter in effect between Federated Dairy Cooperatives or Pure Milk Association and any dairy farmer or any milk marketing agreement now or hereafter in effect between Federated Dairy Cooperatives or Pure Milk Association and any "cooperative association of producers," "association of producers," or "marketing agencies in common" as defined in §§ 2, 291 and 2302 of Title 7 and § 1141j of Title 12, U.S.C.A.

Contemporaneously Oberweis executed a Release that provided:

For the sum of Ten Dollars ($10.00) and other valuable consideration, receipt of which is hereby acknowledged this 26th day of August, 1969, OBERWEIS DAIRY, INC., for itself, and any successors or assigns, does hereby release and forever discharge PURE MILK ASSOCIATION, FEDERATED DAIRY COOPERATIVES and ASSOCIATED MILK DEALERS, INC., and each of their officers, directors, employees, stockholders, members, agents and representatives, and any successors or assigns thereof, from any and all manner of action or actions, cause or causes of action, damages or demands, whatsoever, be they in law or equity, which arise out of or refer or relate to, directly or indirectly, the facts, claims, or causes of action alleged in the complaint in the case entitled Oberweis Dairy, Inc. v. Pure Milk Association, Federated Dairy Cooperatives and Associated Milk Dealers, Inc., filed December 23, 1965 in the United States District Court for the Northern District of Illinois, Eastern Division, and further identifiable as Case No. 65 C 2189 in said Court.³

Oberweis filed its present action in 1972, again seeking both damages and injunctive relief against alleged antitrust violations. Count I ¶ 21 of the 1972 Complaint alleged a conspiracy beginning as early as 1957, and Oberweis again specifically attacked the super pool program (id. ¶ 23(e)-(f), Prayer (a)). In its Answer AMPI pleaded the Release as its Seventh Affirmative Defense and the Agreement as its Eleventh Affirmative Defense. AMPI's Counterclaim seeks damages for Oberweis' alleged violation of the Agreement by commencement of the present action.

Oberweis' Motion on AMPI's Counterclaim

Oberweis advances three arguments in support of its summary judgment motion (Mem. 1-3):

1. By its terms the Agreement does not expressly bind Oberweis to refrain from enforcing subsequently-arising antitrust claims.

2. If the Agreement were nonetheless construed to preclude the enforcement of antitrust claims, the Agreement would be void as contrary to public policy.

3. Because this Court has already determined AMPI is collaterally estopped from denying its violations of the antitrust laws in the period 1970-71, see 553 F.Supp. 962, 970 (N.D.Ill.1982), Oberweis was justified in commencing its present action.⁴

AMPI responds (Ans. Mem. 4-5) Oberweis' motion must be denied because there are material issues of fact as to whether Oberweis has violated the Release and the Agreement by commencing this action.

Settlement agreements are contracts subject to the ordinary rules of contract construction, including the basic rule that construction aims to arrive at the parties' intention. 11 I.L.P. Compromise and Settlement § 3, at 80-81 (1981).⁵ Again, because the Agreement is in writing the intention of the parties "is to be determined from the writing itself, read in the light of the circumstances surrounding its execution." Id. at 81.

By those lights the Agreement probably ought to be regarded as ambiguous on its face in obligating Oberweis not to "interfere" with milk marketing agreements between PMA and dairy farmers. Oberweis argues (Mem. 1) the Agreement does not expressly purport to bind it "to refrain from enforcing any subsequently arising antitrust claims." Somewhat more plausibly AMPI responds (Ans. Mem. 11-15) the present action is essentially an attempt to "interfere" with AMPI's marketing agreements, because Oberweis challenges AMPI's agreements with both its producer-members and CMPC. Indeed, in the conceivable universe of "interference" in which Oberweis could engage, such a challenge would seem one of the most likely possibilities.

In opposing Oberweis' summary judgment motion AMPI is entitled to reasonable inferences drawn in its favor, and (contrary to the notion in Oberweis' R. Mem. 5-6) the initial burden is on Oberweis, not AMPI, to demonstrate the absence of a genuine issue of material fact. See Egger v. Phillips, 710 F.2d 292 at 296 (7th Cir.1983). Ordinarily, then, Oberweis' summary judgment motion would be denied because of the ambiguity of the Agreement — in this case, read AMPI's way. But if the Agreement is construed as AMPI argues — as precluding Oberweis' bringing this action — it is void as contrary to the public policy of the antitrust laws. Ironically perhaps, viewed in the only way it could be read to support the assertion of AMPI's Counterclaim, the Agreement cannot be enforced.

True, a "general release, or a broad covenant not to sue" on antitrust claims⁶ is not contrary to public policy where the release or covenant refers to past antitrust violations or to damages caused by such past violations (even if realized only subsequently). See Richard's Lumber and Supply Co. v. United States Gypsum Co., 545 F.2d 18, 20 (7th Cir.1976), cert. denied, 430 U.S. 915, 97 S.Ct. 1326, 51 L.Ed.2d 593 (1977) and cases cited there. See also Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 342-48, 91 S.Ct. 795, 808-811, 28 L.Ed.2d 77 (1971). So the Agreement could legitimately bar Oberweis from "interfering" with AMPI's marketing activities by seeking pre-September 1969 damages. But Oberweis has foregone those damages here (R.Mem. 4).

AMPI wishes (Ans.Mem. 11-13) to construe the Agreement so it would have been violated even by the present action's attempt to "interfere" with AMPI's post-August 26, 1969 conduct. However, such a result would undermine the public policy expressed in the antitrust laws by permitting enforcement of a contract detrimental to competition and therefore the public good. That rationale was well expressed in Fox Midwest Theatres, Inc. v. Means, 221 F.2d 173, 180 (8th Cir.1955) (citation omitted):

Any contractual provision which could be argued to absolve one party from liability for future violations of the antitrust statutes against another would to that extent be void as against public policy.... This is because the effect of such a release could be to permit a restraint of trade to be engaged in, which would have impact, not simply between the parties, but upon the public as well. Such a release, if recognized as having any validity of that nature, could therefore itself operatively serve as a contract "in restraint of trade." Section 1 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 1, of course, brands all contracts in restraint of trade as "illegal."

Accord, Three Rivers Motors Co. v. Ford Motor Co., 522 F.2d 885, 895-97 & n. 27 (3d Cir.1975) (cited by our Court of Appeals in Richard's Lumber, 545 F.2d at 20), and cases cited in n. 27.

Accordingly AMPI cannot enforce the Agreement against Oberweis' commencement of the present action. There is no genuine issue of fact material to the question of Oberweis' liability to AMPI for alleged breach of the Agreement. Oberweis is therefore entitled to a judgment as a matter of law on AMPI's...