United States v. National Retail Lumber Dealers Ass'n, 9337.

• Decision Date: 11 July 1941
• Docket Number: No. 9337.,9337.
• Citation: 40 F. Supp. 448
• Parties: UNITED STATES v. NATIONAL RETAIL LUMBER DEALERS ASS'N et al.
• Court: U.S. District Court — District of Colorado

40 F. Supp. 448

UNITED STATES v. NATIONAL RETAIL LUMBER DEALERS ASS'N et al.

No. 9337.

District Court, D. Colorado.

July 11, 1941.

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James McI. Henderson, Sheridan Morgan, John W. Porter, and S. L. R. McNichols, all of Denver, Colo., for the Government.

Charles M. Price, Merrill A. Russell, Robert C. Keck, and Scott, MacLeish & Falk, all of Chicago, Ill., Quigg Newton, Jr., Richard M. Davis, Terrell C. Drinkwater, Newton, Davis & Drinkwater, Clyde C. Dawson, Jr., Pershing, Bosworth, Dick & Dawson, Horace F. Phelps, Benedict & Phelps, Wm. A. Bryans, III, and Lee, Shaw & McCreery, all of Denver, Colo., William R. Kelly, of Greeley, Colo., Frank H. Hall, of Trinidad, Colo., Raymond M. Sandhouse, of Sterling, Colo., W. Richard Means, of Denver, Colo., Howard T. Fleeson and Carl G. Tebbe, both of Wichita, Kan., Brooks & Fleeson, of Wichita, Kan., John E. Gorsuch, of Denver, Colo., and Clarence A. Swainson, of Cheyenne, Wyo., for defendants.

SYMES, District Judge.

The defendants are (1), the National Lumber Dealers Association, its officers and members, numbering in all 23,000 throughout the United States, referred to hereafter as National. (2), Mountain States Lumber Dealers Association, referred to as Mountain States, its officers and members, consisting of 475 retail lumber dealers doing business in Colorado, Wyoming and New Mexico. (3), retail lumber dealers, doing business in Colorado, Wyoming and New Mexico, and members of the defendants National and Mountain States. (4), two cement manufacturers, doing business in Colorado, Wyoming and New Mexico.

The indictment charges that over 80% of the lumber and lumber products consumed in Colorado, Wyoming and New Mexico is manufactured outside those states and is shipped in in interstate commerce. The same is true as to asphalt, building paper, wire products, metal lath, plaster and lime, and 80% of the cement consumed in Colorado, Wyoming and New Mexico is produced by the two defendant cement manufacturers at plants located in Colorado and Wyoming.

In the first count defendants are charged with having conspired "to establish, maintain, and enforce an agreed upon * * * policy and program of distribution * * * restricting the channels of distribution through which said lumber, lumber products, cement, and other building materials used and consumed within the States of Colorado, Wyoming and New Mexico move and are transported in interstate commerce * * * for distribution to the consuming public, for the purpose and with the intent of * * * eliminating, restricting, and preventing competition in the trade."

It was part of the conspiracy that the defendants would eliminate the competition of the manufacturers and wholesalers for the business of contractors, builders and other consumers, with the exception of governmental agencies. That the defendants force such ultimate consumers to buy lumber and lumber products from so-called "recognized" "legitimate" retail dealers whose business entitles them to membership in the defendant Mountain States. And that they set up and establish the defendant retail lumber dealers mentioned in the indictment, and other retail lumber dealers approved by the defendant Mountain States, as a class of "recognized" dealers within Colorado, Wyoming and New Mexico, and unreasonably confine the sale of lumber and lumber products and building materials by the manufacturers and wholesalers thereof, to or through the sole medium or agency of defendant retail lumber dealers named in the indictment exclusively, and prevent ultimate consumers and purchasers in Colorado, Wyoming and New Mexico from buying, shipping and receiving lumber or lumber products and building materials from any manufacturer or wholesaler thereof, and prevent any of the described manufacturers and wholesalers from quoting prices, or selling or shipping lumber and lumber products and building materials to any ultimate consumer or purchaser in any of the states mentioned.

That the defendants would suppress and lessen competition between retail lumber dealers and prevent nonrecognized retail lumber dealers and other sellers from buying, securing or receiving lumber or lumber products, or building materials direct from said manufacturers and wholesalers, or any of the same, in order to compel said competitors to purchase their requirements from or through the defendant retailers exclusively, upon terms and conditions which afford a commission or profit to such defendant retail lumber dealers and other recognized lumber dealers, and to interfere with the business and trade in lumber and lumber products of other dealers not recognized by the defendant Mountain States, to enable or assist the defendant lumber dealers to appropriate and acquire the patronage, trade and business of such nonrecognized lumber dealers, and force the ultimate consumer to buy from the defendant retail dealers, and other dealers recognized by the defendant Mountain States, operating a retail establishment nearest to the point where such lumber products were to be used.

Count 2 charges the defendants with having conspired to monopolize, control and dominate a part of the trade and commerce among the several states of the United States in lumber, lumber products, cement and building materials, and that part of such trade and commerce located in the states of Colorado, Wyoming and New Mexico.

The means and methods by which the conspiracy was intended to be carried out are set out as follows: That the defendant National, acting in concert with the regional member associations, and other defendants, have formulated and adopted so-called "distribution statements" setting forth a plan and program of controlling the distribution of said products and materials, arbitrarily classifying consumers and purchasers, and allocating and dividing the classifications among the manufacturers, wholesalers and retailers. That agreements would be obtained from manufacturers and wholesalers to adhere to the distribution plan, and manufacturers or wholesalers not agreeing to adhere to the plan would be boycotted. That they would hold meetings of defendant members, National and Mountain States, at which ways of coercing manufacturers and wholesalers into the distribution plan were formulated. Manufacturers or wholesalers who did not adhere to the plan would be boycotted.

Appointment of committees to call upon manufacturers and wholesalers to induce them to adhere to the distribution plan, and creating of committees to complain to the manufacturers and wholesalers of violations of the plan, and to obtain from them fines to compensate for such infractions.

The defendants National and Mountain States would adopt a standard for determining whether a retail dealer was to be designated as "recognized". The standard was that the retail dealer would adhere to their policies, not cut prices, nor invade the territory of a recognized dealer, and refrain from unnecessary or excessive competition with recognized retail dealers, and the publication by Mountain States of a directory of recognized dealers.

That retail dealers would be confined in their sales and deliveries to a particular area, in which such dealer would have competition from no retail lumber dealer not in that area.

That the defendant cement manufacturers would include a condition in the bill of lading that cement shipments could not be diverted while in transit to a retail dealer consignee, thus to prevent sales and deliveries by retail dealers to areas other than his particular assigned area.

The essentials necessary to prove violation of the Sherman Anti-Trust Act are (1), the existence of concerted action to accomplish; (2), an unreasonable restraint; (3), of trade or commerce; (4), among several states. Paragraph 26 of the indictment is the charging paragraph and contains this language: That the defendants well knowing all the facts, have been and are now engaged in a wrongful and unlawful combination and conspiracy to establish, maintain and enforce an agreed upon, arbitrary, artificial and unreasonable policy and program of distribution, thereby restricting the channels of distribution through which said lumber, et al., and other building materials used within Colorado, Wyoming and New Mexico move and are transported in interstate commerce, as hereinbefore set forth, for distribution to the consuming public, "with the intent of unlawfully and unreasonably eliminating, restricting and preventing competition in the trade and commerce aforesaid." All in violation of ? 1 of the Sherman Act, 15 U.S.C.A. ? 1.

This is further elaborated in paragraph 27, charging that it has been and now is part of the said conspiracy that the defendants unreasonably eliminate all competition from manufacturers or wholesalers for the trade of contractors, builders, or other users of lumber, lumber products, cement and other building materials within the said three states. And that the defendants force the ultimate consumer, with a few exceptions, to buy from recognized, regularly established retail lumber dealers, whose business is such as to entitle them to membership in the Mountain States, and that the defendant retail lumber dealers, and other dealers approved by the Mountain States, be established as a class of "recognized" lumber dealers within the states of Colorado, Wyoming and New Mexico, and unreasonably confine and restrict the sale and distribution of lumber, lumber products, cement and other building materials by the manufacturers and wholesalers, through or to the sole medium of the retail lumber dealers named herein. And that the defendants prevent such ultimate consumers or purchasers in the three states mentioned from buying or receiving any lumber or building materials from any manufacturer or wholesaler thereof, and prevent the wholesalers or manufacturers from selling or shipping...