Sanitary Milk Producers v. Bergjans Farm Dairy, Inc.

• Decision Date: 10 November 1966
• Docket Number: No. 18119.,18119.
• Parties: SANITARY MILK PRODUCERS, Clarence B. Palmer, Karl B. Althage, R. D. Pennewell and Russell E. Spaulding, Appellants, v. BERGJANS FARM DAIRY, INCORPORATED, Ozark Dairy Company, Incorporated, Patke Farm Dairy, Incorporated, The Dairy Maids, Incorporated, The North Hills Dairy Company, Incorporated, and Woodlawn Farm Dairy Company, Incorporated, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

368 F.2d 679 (1966)

SANITARY MILK PRODUCERS, Clarence B. Palmer, Karl B. Althage, R. D. Pennewell and Russell E. Spaulding, Appellants, v. BERGJANS FARM DAIRY, INCORPORATED, Ozark Dairy Company, Incorporated, Patke Farm Dairy, Incorporated, The Dairy Maids, Incorporated, The North Hills Dairy Company, Incorporated, and Woodlawn Farm Dairy Company, Incorporated, Appellees.

No. 18119.

United States Court of Appeals Eighth Circuit.

November 10, 1966.

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Wilburn A. Duncan and Wayne B. Wright, St. Louis, Mo., for appellants.

Veryl L. Riddle, of Riddle, O'Herin & Newberry, Malden, Mo., and Gray L. Dorsey, Chesterfield, Mo., for appellees.

Before JOHNSEN and BLACKMUN, Circuit Judges, and YOUNG, District Judge.

BLACKMUN, Circuit Judge.

In August 1962 the six plaintiffs, appellees here, which are incorporated small dairies in the Saint Louis area, instituted this private action in four counts seeking treble damages and injunctive relief against Sanitary Milk Producers, Inc., a dairy-farmer cooperative, four of Sanitary's officers and directors, and four retail organizations, for alleged violations in 1962 and 1963 of the Sherman and Clayton Acts as amended, 15 U.S.C. §§ 1, 2, 13(a), 15 and 26. Sanitary counterclaimed. Prior to trial the plaintiffs dismissed the suit as to the retailers.

The case came to trial in 1965. The damage issue was submitted to a jury and resulted in verdicts in favor of the six plaintiffs on the first, second and fourth counts of their complaint (conspiracy to fix prices of fluid milk in restraint of trade; attempt to monopolize; unlawful price discrimination) but in favor of the defendants on the third count (conspiracy to monopolize). The jury found against Sanitary on its counterclaim. Damages were awarded the several plaintiffs in the aggregate amount of $38,500. This, when trebled, resulted in a total monetary judgment of $115,500. The court allowed the plaintiffs attorneys' fees aggregating $12,850 and granted injunctive relief for a period of ten years. Judge Meredith's memorandum containing the findings and conclusions as to the court's aspect of the case is reported as Bergjans Farm Dairy Co. v. Sanitary Milk Producers, 241 F.Supp. 476 (E.D.Mo.1965). Reference is made to that memorandum for background and much of the pertinent factual material.

The defendants complain here primarily of (a) rulings on evidence; (b) the standing of two of the plaintiffs to sue; and (c) instructions and the sufficiency of the evidence.

A. The evidentiary rulings, claimed to justify a new trial, relate to (1) an inquiry made of witness Schwarz; (2) a letter written by an attorney for Adams Dairy; (3) references to Adams' bottling costs and to rumors about Sanitary; and (4) plaintiff Ozark's complaint in another antitrust action.

1. The Schwarz inquiry. William Schwarz is a member of the family which owned and operated the milk processing plant of Quality Dairy of O'Fallon, Illinois. Sanitary purchased that plant about December 1, 1961, but kept the three Schwarz sons active in its operation. William was manager and responsible to individual defendant Spaulding. At the time of the purchase, O'Fallon milk was sold through certain outlets in Saint Louis. Schwarz, however, then negotiated the introduction of O'Fallon milk under private label in additional Saint Louis outlets to begin February 27, 1962. When this became known, competitors reacted and a severe price war developed. Judge Meredith's description of the course of that conflict appears at pp. 479-480 of 241 F.Supp. In May Sanitary raised its wholesale price as billed to its outlets. Schwarz, however, then began to give the outlets cash rebates in paper envelopes. These payments were reflected as advertising expense on Sanitary's books.

Schwarz was called by the plaintiffs as an adverse witness. He was examined vigorously and in detail about this rebate practice. In the course of that examination by plaintiffs' counsel the following took place:

"Q. Mr. Schwarz, isn\'t it a fact that you knew it was a Federal crime to give cash rebates —

"Mr. Duncan: Your Honor —

"Mr. Riddle: (Continuing) — discriminatorily to certain of your customers. Didn\'t you know that at the time?

"Mr. Duncan: Your Honor, I object to the form of the question. There is no crime charged here, there is no proof that it is a crime. I think it is highly inflammatory and I ask Your Honor for a mistrial in view of that question.

"The Court: The Court will sustain the objection as to the question and I will instruct the jury to disregard it. I will deny your motion for mistrial."

The defendants argue that irreparable harm resulted from this exchange; that this was an insinuation of the commission of a federal crime; that this is guilt by accusation; that the question was unjustified and devastating; that it poisoned the minds of the jury; that it unfairly obscured the defendants' contention that the rebates were made to meet competition, were not secret and were justified; that the situation was made worse by similar inferences of crimes under state law; and that the court's refusal to grant a mistrial was error.

An unsupported inference of crime by a witness or party to a civil action is improper cross-examination. Cohen v. Checker Taxi Co., 217 F.2d 449, 452 (7 Cir. 1954); Carr v. Standard Oil Co., 181 F.2d 15, 17 (2 Cir. 1950), cert. denied 340 U.S. 821, 71 S.Ct. 52, 95 L.Ed. 603. See Sanford v. United States, 69 App.D.C. 44, 98 F.2d 325, 327 (1938). It is improper, too, as against the defendant who takes the stand in a criminal case, for only actual conviction of a felony, or the like, and not just accusation or arrest is an appropriate attack upon the witness' credibility. "What is forbidden is essential unfairness". Schwab v. United States, 327 F.2d 11, 16 (8 Cir. 1964); United States v. Yarbrough, 352 F.2d 491, 493 (6 Cir. 1965).

It is clear enough, we think, that the question asked by plaintiffs' counsel and so vigorously deplored by the defense was improper. No crime, state or federal, was formally charged or at issue. Any imputation of crime tends to be harmful. We do not regard the question, as the plaintiffs would describe it, as a mere inquiry whether the witness knew certain conduct was a crime. The question was not sympathetically or inquiringly asked. On the other hand, plaintiffs' and counsel's irritation and contempt for what they felt were concealed and reprehensible rebates are perhaps understandable.

We are not convinced that the asking of the question amounted to reversible error in this trial. There was immediate objection in the very midst of the question, and then, at some length, when it was completed. The question was not answered. The trial court sustained the objection and forthwith instructed the jury to disregard the question. The court did all it could do, short of ordering a mistrial. Of course, curative instructions to a jury usually leave a reviewing court mildly uncomfortable for they never absolutely assure that the vice at which the instructions are directed is thereby wholly eliminated. Mr. Justice Harlan noted this in his dissent in Jackson v. Denno, 378 U.S. 368, 435, 84 S.Ct. 1774, 1881, 12 L.Ed.2d 908 (1964), when he said, "The danger that a jury will be unable or unwilling to follow instructions * * * arises every time a counsel or the trial judge misspeaks himself at trial and the judge instructs the jury to disregard what it has heard".

The situation is one which calls for the exercise of discretion on the part of the trial court and for the balancing of probabilities on appellate review. Abuse of the trial court's discretion is not to be presumed. Fidelity & Cas. Co. v. Niemann, 47 F.2d 1056, 1060 (8 Cir. 1931). We have read all the testimony of witness Schwarz as it appears in the record before us. We have in mind that this was a prolonged and complicated trial; that Judge Meredith is an experienced judge; that the record reveals an apparent reluctance — perhaps an understandable one — on the part of the witness to testify as to the method of effectuating these rebates, and as to the extent thereof, among O'Fallon's customers; that the witness seems to have been less than completely candid; that this kind of thing is readily apparent to a jury; that the trial court even concluded that Schwarz' testimony "was evasive" and cast doubt on his credibility, p. 482 of 241 F.Supp.; and that the court, whose responsibility it was to grant or deny injunctive relief, resolved that issue on the same record in favor of the plaintiffs.

The question should not have been asked, but we conclude that its utterance did not "affect the substantial rights" of the defendants, within the meaning of 28 U.S.C. § 2111, and that the district court's refusal to declare a mistrial was not "inconsistent with substantial justice", under Rule 61, Fed.R. Civ.P. See Commercial Credit Corp. v. United States, 175 F.2d 905, 908 (8 Cir. 1949); Partlow v. Goldstein, 263 F.2d 169, 171-172 (8 Cir. 1959).

2. The Adams letter. Adams Dairy had been one of Sanitary's most aggressive competitors in the Saint Louis market. For some time it had imported milk from beyond the area milk shed. Any such importation, Sanitary claimed, resulted in lower aggregate return to Sanitary's farmer members, for, with the market so infiltrated, less of their own raw milk then commanded the higher fluid milk price and more was necessarily sold at the lower price for milk used for manufactured dairy products. This aspect of the market is described by the trial court at pp. 478-479 of 241 F.Supp. Further, it was Adams which took the lead in competitively meeting Sanitary's reduced prices. Sanitary finally purchased Adams' assets as of January 1, 1964. The Adams opposition was thereby removed, Sanitary was able to process and sell milk out of the Adams plant, and the price war came to an end.

E. C....