United States v. Maryland Cooperative Milk Pro.

• Decision Date: 16 October 1956
• Docket Number: No. 992-55.,992-55.
• Citation: 145 F. Supp. 151
• Parties: UNITED STATES of America, Plaintiff, v. MARYLAND COOPERATIVE MILK PRODUCERS, Inc., and Maryland and Virginia Milk Producers Association, Inc., Defendants.
• Court: U.S. District Court — District of Columbia

145 F. Supp. 151

UNITED STATES of America, Plaintiff, v. MARYLAND COOPERATIVE MILK PRODUCERS, Inc. and Maryland and Virginia Milk Producers Association, Inc., Defendants.

No. 992-55.

United States District Court District of Columbia.

October 16, 1956.

Joseph J. Saunders, Edna Lingreen, and Joe E. Waters, Department of Justice, Washington, D. C., for the United States.

Philip B. Perlman, Ellis Lyons, Washington, D. C., and Harry Troth Gross, Baltimore, Md., for defendant Maryland Cooperative Milk Producers, Inc.

William J. Hughes, Jr., Herbert Bergson, and Herbert Borkland, Washington, D. C., for defendant Maryland & Virginia Milk Producers Ass'n, Inc.

HOLTZOFF, District Judge.

This is the trial of an indictment charging violations of the antitrust laws. The trial is before the Court, a jury having been waived.

There are two defendants in this case, Maryland Cooperative Milk Producers, Inc., and Maryland and Virginia Milk Producers Association, Inc. Each defendant is an association of producers of milk. The Maryland Cooperative Milk Producers, Inc., is located in Baltimore, Maryland, and is composed of about 2,000 farmers who are producers of milk which they ship to distributors in the Baltimore metropolitan area. Maryland and Virginia Milk Producers Association, Inc., is located in Washington, D. C. and consists of about 1,950 members, who are producers shipping milk to distributors in the Washington metropolitan area.

The two defendants are charged with an unlawful combination and conspiracy to fix prices for milk sold to distributors which, in turn, is supplied by the purchasers to the Government at its military post at Fort Meade, Maryland.

The indictment consists of two counts. The first count charges a violation of Section 1 of the Sherman Act, 15 U.S. C.A. § 1, namely, an unlawful restraint of interstate commerce. The second count charges a violation of Section 3 of the Sherman Act, 15 U.S.C.A. § 3, namely, an unlawful restraint of commerce between the District of Columbia and several of the States.

It appears, in passing, that the prices charged for milk intended for resale to the Government at Fort Meade were actually lower than those exacted for milk destined for resale to the general public. It may be said perhaps, in a sense, that the defendants are accused of conspiring to undercharge the Government. In justice to counsel for the Government, it must be said, however, that they contend that, in a free competitive market, prices on Government sales might have been even lower than those claimed to have been fixed by the defendants. Attention is called to the fact, by Government counsel, that milk intended for use at Fort Meade was surplus milk that had to comply merely with the standards prescribed by the United States Public Health Service instead of with the more rigorous and rigid requirements established by the Government of the District of Columbia.

After the opening statements were made, the Government commenced to introduce evidence. It offered a stipulation of facts previously agreed upon by counsel. At that point, counsel for the defendants made a motion for judgment of acquittal.

A word should be said about the procedural aspects of the matter. Ordinarily, such a motion, unless based solely on the opening statement of Government counsel, may not be entertained until the Government closes its case. An exception is proper, however, if at an earlier stage basic facts appear inescapably leading to the conclusion that, irrespective of whatever other evidence may be introduced, the prosecution must fail. In that event, it is proper to stop the further introduction of evidence and entertain a motion for judgment of acquittal. Such a course is in the interest of efficiency and expedition in the administration of justice. It is on this basis that the Court entertained the defendants' motion in this instance as soon as the stipulation of facts was tendered and admitted.

The following facts appear from the stipulation that are pertinent to this discussion. Each defendant is a corporation without capital stock and is an association composed of milk producers. Each defendant is operated for the mutual benefit of its members and is not conducted for profit. In brief, the object of each association is to handle and market the milk produced by its members.

It is well established that an agreement to fix prices is, in and of itself, an unreasonable restraint of trade and is illegal, per se, and therefore violative of the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note. This was held by the Supreme Court in the leading case of United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 211 to 233, 60 S.Ct. 811, 84 L.Ed. 1129.

The question presented here, however, is whether the defendants in this case are exempt from this broad rule. Defendants claim that they are. It will be recalled that the Sherman Act became law in 1890. In 1914, its broad provisions were, in part, limited and, in part, supplemented by the Clayton Act, 15 U.S.C.A. § 12 et seq.

Section 6 of the Clayton Act is pertinent to the question involved in this case, 15 U.S.C.A. § 17. The relevant provisions of the Clayton Act read as follows:

"Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organization, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws."

Thus, farmers and farmers' cooperatives became a favorite of the law, in a sense. They were granted an express exemption and received a special dispensation from the antitrust laws. They may lawfully combine with impunity and may legally agree to fix prices on their products.

Some years ago, an attempt to prosecute an agricultural cooperative as an unlawful monopoly met with failure; United States v. Dairy Cooperative Association, D.C., 49 F.Supp. 475. In that case, Judge McColloch for the District of Oregon made the following pungent observations:

"It may be that the acts of the defendant cooperative in this case, tested without regard to the provisions of the Clayton Act, are monopolistic in character. I have not given serious thought to that question, for it seems to me when Congress said that cooperatives were not to be punished, even though they became monopolistic, it would be * * * ill-considered for me to hold to the contrary."

It must be observed that to be sure the exemption of agricultural...