Treasure Val. Potato Bar. Ass'n v. Ore-Ida Foods, Inc.

• Decision Date: 11 April 1974
• Docket Number: No. 71-2742 to 71-2744.,71-2742 to 71-2744.
• Citation: 497 F.2d 203
• Parties: TREASURE VALLEY POTATO BARGAINING ASSOCIATION et al., Plaintiffs-Appellants, v. ORE-IDA FOODS, INC. and J. R. Simplot Company, Defendants-Appellees. TREASURE VALLEY POTATO BARGAINING ASSOCIATION, Plaintiff-Cross-Appellee, v. ORE-IDA FOODS, INC., Defendant-Cross-Appellant. TREASURE VALLEY POTATO BARGAINING ASSOCIATION, Plaintiff-Cross-Appellee, v. J. R. SIMPLOT COMPANY, Defendant-Cross-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

497 F.2d 203 (1974)

TREASURE VALLEY POTATO BARGAINING ASSOCIATION et al., Plaintiffs-Appellants, v. ORE-IDA FOODS, INC. and J. R. Simplot Company, Defendants-Appellees.

TREASURE VALLEY POTATO BARGAINING ASSOCIATION, Plaintiff-Cross-Appellee, v. ORE-IDA FOODS, INC., Defendant-Cross-Appellant.

TREASURE VALLEY POTATO BARGAINING ASSOCIATION, Plaintiff-Cross-Appellee, v. J. R. SIMPLOT COMPANY, Defendant-Cross-Appellant.

Nos. 71-2742 to 71-2744.

United States Court of Appeals, Ninth Circuit.

April 11, 1974.

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Joseph M. Alioto (argued), Peter J. Donnici, Joseph L. Alioto, Law Offices of Joseph L. Alioto, San Francisco, Cal., Howard D. Humphrey, Clemons, Cosho, Humphrey & Samuelsen, Boise, Idaho, for plaintiff-cross-appellee.

William Simon (argued), Donald J. Gavin, John Bodner, Jr., Howrey, Simon, Baker & Murchison, Washington, D. C., Eugene C. Thomas, Moffatt, Thomas, Barrett & Blanton, Boise, Idaho, for defendant-cross-appellant.

Carl J. Schuck (argued), George Christensen, Overton, Lyman & Prince, Los Angeles, Cal., Jess B. Hawley Jr., Hawley, Troxell, Ennis & Hawley, Boise, Idaho, for defendant-cross-appellant Simplot.

Before CARTER, GOODWIN and WALLACE, Circuit Judges.

JAMES M. CARTER, Circuit Judge:

This is a private action for treble damages under the antitrust laws. The plaintiffs grow potatoes and sell them to the defendants; the defendants turn these raw potatoes into frozen french fries and resell them. In 1966 the action was initiated by the plaintiffs, charging inter alia that the defendants had conspired from 1963 to 1966 to fix the prices at which they would purchase the plaintiffs' potatoes. The defendants charged by counterclaim that the plaintiffs themselves had combined in violation of the Sherman Act. The district court, after a trial without a jury decided that neither side had violated the law. We affirm.

The issues, broadly speaking, are four: (1) does the evidence compel a finding that the defendants (appellees) combined and conspired a violation of § 1 of the Sherman Act; (2) does the evidence compel a finding that the defendants monopolized or attempted to monopolize the relevant market in violation of § 2 of the Sherman Act; (3) in regard to the defendants' counterclaim, did the trial court court err in concluding that § 6 of the Clayton Act exempted the plaintiffs (cross-appellees) from the antitrust laws; and (4) did the court err in refusing an injunction on the counterclaim on the ground that the defendants (cross-appellants) established no reasonable basis for determining damages.

Facts

The plaintiffs, individual potato growers in Idaho and Oregon, bring this action in their own behalf and as representatives of all other persons and businesses in Malheur County, Oregon, and in ten southwestern counties of Idaho, who sold potatoes to the defendants by preseason contract¹ during 1963 to 1966. Essentially this class consists of members of the Treasure Valley Potato Bargaining Association and the Malheur Potato Bargaining Associations.²

These two associations, each composed of several hundred potato growers, are in the business of representing their individual members on a collective basis in negotiations with potato processors. An individual member is prohibited from selling his potatoes under a preseason contract unless the contract is approved by his association.

The defendants, Ore-Ida Foods, Inc., and J. R. Simplot Company, are potato processors. Ore-Ida has a processing plant in Ontario, Oregon, and Simplot has one in Caldwell, Idaho. Other potato processors in the area, competitors of Ore-Ida and Simplot, were not named as defendants.

During 1963 to 1966, Ore-Ida and Simplot purchased raw potatoes both by preseason contract and by purchase on the open market. They made these potato procurements from growers in Idaho and Oregon and also from growers in other states. Although they bought large amounts of potatoes from members of Treasure Valley and Malheur, they also purchased from growers who were not members.

This litigation arises from the activity leading up to the formation of preseason contracts between the defendants and the growers in the plaintiff class.

Officers and members of Treasure Valley and Malheur met with each other often during 1963 to 1966 to discuss the prices and the terms of sale that each association, during its separate negotiations with the potato processors, would seek to obtain for its members in preseason contracts. The two associations agreed to seek similar terms.

Generally, Malheur would be the first to bargain with Ore-Ida. After those two had reached an agreement, Treasure Valley would negotiate with Ore-Ida and seek to obtain the same terms for its members. In a similar fashion, Treasure Valley would be the first to bargain with Simplot, and Malheur would follow, seeking to obtain the same terms for its members selling to Simplot.

There was normally true bargaining over only the first preseason contract formed, whether it was between Malheur and Ore-Ida, or Treasure Valley and Simplot. Once the terms of that first contract were established, both processors would routinely refuse to give better terms in subsequent contracts that year, and both associations would usually refuse to accept worse terms.

The negotiations over preseason contracts were widely publicized in the agricultural community of Idaho and Oregon. Newspapers and radio frequently reported the prices and other terms being offered. The growers talked freely with each other about the status of the negotiations, and exchanged information with employees of the processors. Without doubt, the parties were "bargaining in sunshine."

The plaintiffs contended the defendants bargained illegally. In particular, the plaintiffs alleged (1) that Simplot and Ore-Ida agreed with each other to fix the prices they would offer the plaintiffs; (2) that Simplot and Ore-Ida occasionally boycotted the potatoes grown by the officers of the bargaining associations when the officers proved hardnosed at the bargaining table; and (3) that Simplot and Ore-Ida allocated growers between them.

Such alleged conduct, contended the plaintiffs, involved a combination unreasonably in restraint of trade, thus violating § 1 of the Sherman Act, and constitutes a monopolization or attempted monopolization of the relevant market, thus violating § 2 of the Act.³

Simplot and Ore-Ida, not content with merely defending against the plaintiffs' remaining claims, asserted in a counterclaim that the bargaining association had combined and conspired in restraint of trade.

After a trial without a jury, in which the court liberally received abundant quantities of documentary and oral evidence, the court made its findings of fact and conclusions of law. In brief, the court held that Simplot and Ore-Ida did not directly or indirectly, expressly or impliedly, enter into any agreement in restraint of trade, and they did not monopolize or attempt to monopolize trade. Concerning the counterclaim, the court held that the bargaining activity of the associations and their members was immunized by reason of § 6 of the Clayton Act; and that, in any event, the proffered evidence of Ore-Ida and Simplot as to measure of damages was based on speculation and conjecture and was insufficient to establish a reasonable basis for determining damages.

On appeal, we consider the four broad issues listed above, namely: whether the evidence compels a finding that the defendants violated § 1 or § 2 of the Sherman Act; whether § 6 of the Clayton Act and/or § 1 of the Capper-Volstead Act immunizes the plaintiffs on the counterclaim, and whether Simplot or Ore-Ida is entitled to an injunction when no damages or threat of damages was proved.

I Defendants' Alleged Violation of § 1 of the Sherman Act

The basic factual issue under this claim is why the preseason contracts negotiated by the bargaining associations with Simplot, on the one hand, and Ore-Ida, on the other, contain similar price terms. The plaintiffs contend that Simplot and Ore-Ida conspired to maintain similar terms. The court, however, found that the similarities in preseason contracts stemmed from the concerted bargaining activity of the two associations and from natural market forces. Since our review of the record does not disclose clear error, we necessarily affirm this finding. Rule 52, F. R.Civ.P.

The plaintiffs adduce a variety of circumstantial evidence tending to prove the alleged conspiracy. Foremost is the similarity in contracts. In addition, the plaintiffs present documentary evidence — memoranda, journal entries, meeting minutes, and so forth — which show that the defendants communicated with each other, and which tend to show that they discussed prices on preseason contracts.

Because the trial court declined to infer from this circumstantial evidence that a conspiracy existed, the plaintiffs contend that the judge was laboring under the mistaken notion that a conspiracy must be proved by direct rather than circumstantial evidence. It is well-established, of course, that circumstantial evidence may suffice. Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610 (1939). It is equally well-established, however, that circumstantial evidence does not compel an inference of conspiracy. In the Interstate Circuit case the Court acknowledged that powerful circumstantial evidence of conspiracy could be rebutted by direct testimony of the alleged conspirators.

It appears to us that the trial judge correctly understood the teachings of Interstate Circuit, for he stated that his findings were drawn "from all the evidence in the case, and from the inferences that reasonably flow therefrom." emphasis added.

Rebutting the circumstantial evidence of conspiracy, there was plentiful oral testimony by officers of Simplot and Ore-Ida categorically denying any sort of illicit combination or agreement in regard to preseason...