United Egg Producers v. Bauer International Corp.
Decision Date | 17 March 1970 |
Docket Number | No. 70 Civ. 194.,70 Civ. 194. |
Citation | 311 F. Supp. 1375 |
Parties | UNITED EGG PRODUCERS, Midwest Egg Producers Association, National Egg Company, Northeast Egg Marketing Association, Southwestern Egg Producers, Western Egg Co., Clements Eggs, Inc. and Austin T. Moore, Jr., Plaintiffs, v. BAUER INTERNATIONAL CORPORATION and John P. Bauer, Defendants. |
Court | U.S. District Court — Southern District of New York |
Richard L. Bond, Rosenwasser & Halperin, by David Halperin, New York City, for plaintiffs.
Herzfeld & Rubin, by Herbert Rubin, Edward L. Birnbaum, Daniel Riesel, New York City, for defendants.
Plaintiffs in this action have moved for a preliminary injunction against defendants. This action was instituted on January 16, 1970, pursuant to the Commodity Exchange Act, 7 U.S.C. § 1 et seq., and plaintiffs moved by order to show cause dated January 16, 1970, for an order "preliminarily enjoining the defendants from delivering or causing to be delivered false or misleading or knowingly inaccurate reports that affect or tend to affect the price of eggs in interstate commerce."
Plaintiff United Egg Producers is an agricultural cooperative, made up of five regional agricultural cooperatives: Midwest Egg Producers Association, National Egg Company, Northeast Egg Marketing Association, Southwestern Egg Producers, and Western Egg Company, which are also plaintiffs in this action. The five regional cooperatives in turn have a membership of approximately 500 commercial egg producers in the United States, and together these regional cooperatives market approximately fifty-five percent of the eggs sold in the United States.
Plaintiff Clements Eggs, Inc. is a commercial producer of eggs and a member of Northeast Egg Marketing Association.
Plaintiff Austin T. Moore, Jr. is president of Glenco Farms, Inc. a commercial egg producer and a member of National Egg Company. Moore is a trader in egg futures on the Chicago Mercantile Exchange.
Defendant Bauer International Corporation (Bauer International) is a New York corporation engaged in the import-export business, including the importation of eggs into the United States. Defendant John P. Bauer (Bauer) is president, chief executive officer, and a principal stockholder of Bauer International.
In their complaint plaintiffs allege that defendants knowingly delivered or caused to be delivered, for transmission through the mails and in interstate commerce, a series of false, misleading, or knowingly inaccurate reports concerning the proposed importation of 425,000 cases, or 153,000,000 Spanish eggs, that affected or tended to affect the price of eggs in interstate commerce, in violation of the Commodity Exchange Act. Plaintiffs, seeking both injunctive relief against and damages for defendants' alleged violations, point specifically to Section 13(b), which provides in pertinent part:
"It shall be a felony * * * for any person * * * knowingly to deliver or cause to be delivered for transmission through the mails or in interstate commerce by telegraph, telephone, wireless, or other means of communication false or misleading or knowingly inaccurate reports concerning * * * market information or conditions that affect or tend to affect the price of any commodity in interstate commerce."
Hearings were held on the motion for a preliminary injunction on January 21, 22, 23, and 27, and February 2, 1970, which developed the following facts in addition to those hereinbefore stated.
During the months of December, 1969, and January, 1970, news of a proposed importation of a large quantity of Spanish eggs by Bauer International was carried in the Journal of Commerce, The Poultryman, the Chicago Sun-Times, the Maine Telegram, Barrons, Reuters News Service, the New York Daily News, The Wall Street Journal, and the New York Post. Also during this period, Bauer International, directly and through a news service, disseminated news releases concerning its importation of Spanish eggs to the news media.
On December 3, 1969, Bauer International transmitted a release entitled, "Re: a new development in Spanish-American trade—the shipment of shell eggs from Spain to the United States," to United Press International. Bauer testified that Bauer International sent the release out, that its contents were intended for the American reading public, and that the December 3, 1969 Journal of Commerce article was based on it. Portions of the release which appeared in the Journal of Commerce follows:
On December 17, 1969, Bauer International sent a teletype of a news release to P.R. Wire Service, a membership news agency. The release read in part:
The release was transmitted by P.R. Wire Service on its transcontinental wire, and the contents of the release served as the basis for the December 20, 1969 article in The Poultryman.
On January 7, 1970, P.R. Wire Service received a second release from Bauer International. That release, which contained instructions that it be disseminated "to all the editors of economic and commodity news throughout USA including wire services", read in pertinent part:
With no significant alteration to these portions, the release was transmitted on the transcontinental wire by P.R. Wire Service.
Bauer testified that he personally aided in the composition of the release, and that it was sent to P.R. Wire Service. However, he denied that his release was the basis for, or that he furnished the information contained in, a Reuters wire which came out on January 7. The Reuters wire read in part:
Reuters issued a further wire on January 7 which read in pertinent part:
Bauer testified that he did not speak with anyone from Reuters with respect to the Spanish eggs.
Bauer testified that on occasion he talked to the press, but that most of the time he referred them to Curtis J. Hoxter, Inc. (Hoxter), a public relations counsel employed by Bauer International during December, 1969, and January, 1970. Bauer did not know what Hoxter might have said to the press with respect to the Spanish eggs, and Hoxter was out of the country at the time of the hearings.
With respect to his arrangements for importing the Spanish eggs which were the subject of the news articles and Bauer International's releases, Bauer testified that he went to Spain and remained in that country from November 21 through November 23, 1969, and that while in Spain, he dealt through a Spanish agent, Corpique, with the Asociacion Nacional Sindical Avicola (ANSA), which was offering a large quantity of Spanish eggs for sale.
Bauer testified that he entered into a purchase agreement with ANSA whereby Bauer International would buy and ANSA would sell Spanish storage eggs in an amount originally set at 200,000 cases, then increased to 225,000 cases, and finally set at 425,000 cases towards the end of November or beginning of December. "Storage" eggs are eggs which are over thirty days old. Eggs that are thirty days or less are "fresh" eggs. There are thirty dozen eggs per case. Telexes between Bauer International and Corpique were offered as confirmation of the agreement. Bauer testified that Corpique acted as an intermediary for Bauer...
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