Schwegmann Bros. Giant S. Mkts. v. Louisiana Milk Com'n

• Decision Date: 26 October 1973
• Docket Number: Civ. A. No. 3166.
• Parties: SCHWEGMANN BROTHERS GIANT SUPER MARKETS v. LOUISIANA MILK COMMISSION.
• Court: U.S. District Court — Middle District of Louisiana

365 F. Supp. 1144

SCHWEGMANN BROTHERS GIANT SUPER MARKETS v. LOUISIANA MILK COMMISSION.

Civ. A. No. 3166.

United States District Court, M. D. Louisiana.

October 26, 1973.

Paul O. H. Pigman, Michael R. Fontham, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, La., for plaintiff.

Ellis C. Magee, Legal Counsel, Louisiana Milk Commission, John V. Parker, Sanders, Miller, Downing & Kean, Baton Rouge, La., for defendant.

Before INGRAHAM, Circuit Judge, and WEST and HEEBE, District Judges.

E. GORDON WEST, District Judge:

Schwegmann Brothers Giant Super Markets is a Louisiana partnership which operates several large retail food stores in the New Orleans metropolitan area. Among the food items sold by Schwegmann are frozen desserts such as ice cream, ice milk, sherbert and similar products. In 1965 Schwegmann was doing business with Pure-Vac Dairy Products Corporation, a manufacturer of frozen desserts. Pure-Vac is a corporation organized under the laws of the State of Tennessee, with its principal offices and its only processing plant located in that state. Pure-Vac maintains no offices or agents in the State of Louisiana.

Originally both Schwegmann and Pure-Vac brought suits to challenge the constitutionality of parts of the Louisiana Orderly Milk Marketing Law, as amended in 1962, which created the Louisiana Milk Commission and granted it the power to set retail prices on certain milk commodities. (LSA-R.S. 40:940.1-40:940.23). The two suits, because of their similar nature, were consolidated for hearing before this three judge court. On February 15, 1973, Pure-Vac, after a change in ownership, filed a motion to dismiss and its suit against the Louisiana Milk Commission was dismissed without prejudice, leaving this suit by Schwegmann as the only remaining litigation.

The defendant alleges that the dismissal of the Pure-Vac suit has a material effect on the status of the Schwegmann proceeding and has filed two motions which must be disposed of before reaching a decision on the merits.

The defendant filed a motion for summary judgment alleging that the issue of the constitutionality of the Louisiana Orderly Milk Marketing Law as between Schwegmann and the Louisiana Milk Commission is res judicata because of a 1963 state court decision. In March of 1963 Schwegmann instituted proceedings in Louisiana's Nineteenth Judicial District Court to enjoin the Louisiana Milk Commission from enforcing against Schwegmann Brothers the minimum prices incorporated in the Commission's price order for the New Orleans area. Schwegmann Bros. Giant Super Markets v. La. Milk Commission, No. 93,121, 19th Judicial District Court, Parish of East Baton Rouge. Schwegmann's petition alleged that the Commission's actions were invalid under both the Constitution of the United States and the Constitution of Louisiana. Schwegmann alleged particularly that the Commission's price fixing was violative of the 14th Amendment in that it deprived the plaintiff of due process and equal protection of the laws.

The state court determined that there were three points to be decided on the question of constitutionality: First, whether or not the State of Louisiana may regulate the milk industry at all; second, if it can be regulated, were adequate standards, safeguards and guidelines set up in the act creating the milk commission; and third, did the Commission act within the scope of the legislative guidelines and standards in issuing its price orders. The state court answered all of these questions in the affirmative and dismissed Schwegmann's suit at his cost. Schwegmann failed to exercise his right of appeal from this adverse decision.

The defendant now urges that this prior state court judgment acts as a bar to any further constitutional challenges by Schwegmann to the Louisiana Orderly Milk Marketing Law. The defendant recognizes that the 1963 complaint and the court's decision related mostly to Fourteenth Amendment claims and neither the Supremacy Clause nor the Commerce Clause which are now raised in the instant suit were specifically pleaded or argued to the state court. Nevertheless the defendant argues that Schwegmann had an opportunity to fully litigate all of its claims as to the unconstitutionality of the act, and that therefore the state court decision acts as a bar to all constitutional claims that were either raised or that could have been raised by Schwegmann at the time of the state court suit. The defendant urges that Schwegmann could have raised the Commerce Clause and the Supremacy Clause in 1963 but failed to do so, and therefore he should not be allowed to raise them now in this suit. They contend that the plaintiff is subjecting them to piecemeal litigation in that he raised certain federal constitutional questions in the state court and lost, and now seeks to initiate a separate suit between the same parties involving the same issues, but alleging different constitutional objections. The defendant contends that the state court decision and Schwegmann's failure to appeal now bars further litigation on the constitutional issues actually raised in the state court as well as those that could have been raised, and that therefore this instant suit should be barred either as res judicata, or by the application of the doctrine of judicial estoppel.

The plaintiff on the other hand maintains that res judicata does not apply in this case under either federal or state principles, citing the federal full faith and credit provisions of 28 U.S.C. § 1738 and maintaining that the federal court must give the Louisiana judgment exactly the same effect which it would enjoy in a Louisiana court. Article 2286 of the Louisiana Civil Code provides:

"The authority of the thing adjudged takes place only with respect to what was the object of the judgment. The thing demanded must be the same; the demand must be founded on the same cause of action; the demand must be between the same parties, and formed by them against each other in the same quality."

While the Louisiana doctrine of res judicata is much narrower than the common law doctrine of judicial estoppel, it has nevertheless been held that not only is a final judgment conclusive of every plea or defense made but also of every plea or defense which either of the parties might successfully have made at the time of trial. Quinette v. Delhommer, 165 So.2d 900 (La.App. 4th Cir. — 1964). In addition to this relaxing of the strict requirement for res judicata as set forth in La.Civil Code Article 2286, supra, some Louisiana courts have, in a limited sense, recognized the common law doctrine of judicial estoppel. For example, in California Company v. Price, 234 La. 338, 99 So.2d 743 (1957), the Louisiana Supreme Court held that "Even if res judicata cannot be strictly applied the parties * * * are bound by judicial estoppel which extends to every material allegation or statement made on one side in the prior * * * case and denied on the other which was determined in the course of the proceedings." See also Sargent Caufield v. Fidelity & Casualty Co. of N. Y., 247 F.Supp. 851 (E.D.La. — 1965), aff'd, 378 F.2d 876 (CA 5-1967). While this holding has been criticized, (see American Mannex Corp. v. Prejean, 328 F.Supp. 940, 943 (D.C. 1971), it is nevertheless an indication of an acceptance by the highest court of Louisiana of a limited application of the doctrine. But even recognizing this extension of the doctrine of res judicata, and the limited acceptance of the doctrine of judicial estoppel by the Louisiana courts, the conclusion must necessarily be reached in the instant case that neither doctrine is applicable under the circumstances of this case. While the federal court hearing the second case will give great consideration to the State's interpretation of its doctrines of res judicata and judicial estoppel, it is not necessarily bound by those interpretations.

"The extent to which a federal court must attach conclusive effect to prior state court proceedings is a federal question. * * * Section 1738 of Title 28, United States Code, directs that judicial proceedings of the court of any State `shall have the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such State . . . from which they are taken.' When the parties and the cause of action litigated are the same in state court as in federal court, the doctrine of res judicata has been held to bar federal relitigation, even if a federal constitutional question is in dispute.

"This does not necessarily mean, however, that a federal court is invariably bound to a state's own interpretation of res judicata or judicial estoppel. Other well-defined federal policies, statutory or constitutional, may compete with those policies underlying section 1738." American Mannex Corporation v. Rozands, 462 F.2d 688, 689-690 (CA 5-1972).

The simple fact is that the legal issues raised in the state court suit were not the same as the legal issues raised here, nor could they have been. When the 1963 state court action was instituted the Louisiana Milk Commission had just come into existence and its first price fixing orders had not even gone into effect. The price fixing orders had not yet had any effect on interstate commerce and only by predicting the future could the plaintiff have seriously argued the Commerce Clause claim in the state court suit. The plaintiff also asserts that in 1963 the Commission had not yet entered into areas of economic regulation which were pre-empted by federal regulations and therefore the Supremacy Clause argument would have also been premature. In State Farm Automobile Ins. Co. v. Duel, 324 U.S. 154, 65 S.Ct. 573, 89 L.Ed. 812 (1945), the court held that intervening legal developments may preclude the application of res judicata to dismiss an issue not raised in a prior proceeding. Plaintiff in Duel had failed to raise a Commerce Clause claim in state...