Windham v. American Brands, Inc.
| Decision Date | 11 October 1977 |
| Docket Number | No. 75-2315,75-2315 |
| Citation | 565 F.2d 59 |
| Parties | 1977-2 Trade Cases 61,670 Roy P. WINDHAM, Harden Evans, Joe Skipper, David Nexsen, W. A. Turner and Toby Gaskins, Appellants, v. AMERICAN BRANDS, INC., Liggett & Myers, Inc., R. J. Reynolds, Inc. (R. J. Reynolds Tobacco Co.), Brown & Williamson Tobacco Corporation, The Imperial Tobacco Company (of Great Britain and Ireland) Ltd., Mullins Leaf Tobacco Company, Inc., C. W. Walters Company, Inc., Export Leaf Tobacco Company, Loews Theaters, Inc. (d/b/a Lorillard), Philip Morris, Inc., Universal Leaf Tobacco Company, Inc., The Austin Company, Inc. (Greenville, Tenn.), J. P. Taylor Company, Inc., Dibrell Brothers, Inc., and Earl L. Butz, Secretary of Agriculture of the United States, Appellees. |
| Court | U.S. Court of Appeals — Fourth Circuit |
E. N. Ziegler, Florence, S. C. (H. Page Dees, Conway, S. C., John A. Cochrane, John E. Thomas, St. Paul, Minn., J. Nat Hamrick, Rutherfordton, N. C., Robert C. Howison, Jr., Raleigh, N. C., and Frank M. Wooten, Jr., Greenville, N. C., on brief), for appellants.
Murray Bring, Washington, D. C. (Arnold & Porter, Washington, D. C., Willcox, Hardee, Palmer, O'Farrell, McLeod & Buyck, Florence, S. C., on brief), for appellee Philip Morris, Inc.
Robinson, McFadden, Moore & Pope, Columbia, S. C. (Davis, Polk & Wardwell, New York City, on brief), for appellee R. J. Reynolds Tobacco Co.
Henry B. Smythe, Buist, Moore, Smythe & McGee, Charleston, S. C., Paul G. Pennoyer, Jr., Chester J. Hinshaw, Chadbourne, Parke, Whiteside & Wolff, New York City, on brief, for American Brands, Inc.
Richard E. Richards, Richards, Caskey & Richards, Lancaster, S. C., N. R. Coleman, Jr., Milligan, Coleman, Fletcher & Gaby, Greenville, Tenn., on brief, for The Austin Co., Inc. and Mullins Leaf Tobacco Co., Inc.
E. LeRoy Nettles, Nettles, Thomy, Floyd & Smith, Lake City, S. C., Norwood Robinson, Hudson, Petree, Stockton, Stockton & Robinson, Winston-Salem, N. C., on brief, for Brown and Williamson Tobacco Corp. and Export Leaf Tobacco Co. Jack Nettles, McGowan, Nettles, Keller & Eaton, Florence, S. C., Howard Alder, Jr. and Larry D. Sharp, Bergson, Borkland, Margolis & Adler, Washington, D. C., on brief, for Dibrell Brothers Inc. and C. W. Walters Co., Inc.
D. Laurence McIntosh, Wright, Scott, Blackwell & Powers, Florence, S. C., Tommy W. Jarrett, Dees, Dees, Smith, Powell & Jarrett, Goldsboro, N. C., William R. Glendon, Guy C. Quinlan, Rogers & Wells, New York City, on brief, for Gallaher Limited.
C. Weston Houck, Florence, S. C., Z. Hardy Rose, Lucas, Rand, Rose, Meyer, Jones & Orcutt, Wilson, N. C., Fred D. Turnage, Cleary, Gottlieb, Steen & Hamilton, Washington, D. C., on brief, for Imperial Group Limited.
John W. Thomas, Roberts, Jennings & Thomas, Columbia, S. C., George R. Humrickhouse, John O. Peters, Samuel W. Hixon, III, Williams, Mullen & Christian, Richmond, Va., on brief, for J. P. Taylor Co. Inc., Universal Leaf Tobacco Co., Inc.
Joseph O. Rogers, Jr., Rogers, Riggs & Rickenbaker, Manning, S. C., on brief, for Liggett & Myers, Inc.
Douglas McKay, Jr., McKay, Sherrill, Walker, Townsend & Wilkins, Columbia, S. C., Joseph W. Gelb and H. Adam Prussin, Weil, Gotshal & Manges, New York City, on brief, for Loews Theaters, Inc.
Raymond W. Fullerton, Atty., U. S. Dept. of Agriculture, Washington, D. C. (James D. Keast, Gen. Counsel, J. Michael Kelly, Harold Carter, Asst. Gen. Counsels, John C. Chernauskas, Director Marketing Div., Edward M. Silverstein, Atty., Marketing Div., U. S. Dept. of Agriculture, Washington, D. C., Mark W. Buyck, Jr., U. S. Atty., Wm. Reynolds Williams, Asst. U. S. Atty., Columbia, S. C., on brief), for appellee Secretary of Agriculture of the United States.
Before HAYNSWORTH, Chief Judge, BRYAN, Senior Circuit Judge, and CRAVEN, * BUTZNER, RUSSELL, WIDENER and HALL, Circuit Judges, en banc.
This is an interlocutory appeal, pursuant to Rule 54(b), Fed.R.Civ.P., from an order denying class certification under Rule 23(b)(3), Fed.R.Civ.P., in a private action brought by certain South Carolina tobacco growers, who allege that the defendant tobacco companies and the Secretary of Agriculture violated Sections 1 and 2 of the Sherman Anti-Trust Act 1 during the years 1970 through 1974. 2 When the appeal was initially heard, the majority of the panel thought that the district court should have allowed the suit to proceed as a class action, at least on the issue of "violation." 3 However, we now conclude that the denial of class certification was not an abuse of discretion on the part of the district court. We therefore affirm.
This action concerns the sale at auction of flue-cured tobacco on the South Carolina markets. Flue-cured tobacco is a non-standardized or non-fungible commodity. It is raised in the Pee Dee section of South Carolina. Under a long established pattern of marketing, it is sold, when ready for market, at auctions conducted at some 36 warehouses in 11 geographic markets distributed throughout that section. All tobacco, before being offered for sale at auction, must be graded by government inspectors for the information of both sellers and buyers. These inspectors classify the tobacco within the range of 161 grades, depending upon the location of the leaf on the tobacco stalk, beginning with the top of the plant. Every buyer, however, has his own grading system. His classifications of grades are considerably less than those used by the government inspectors and vary from 10 to 32.
All tobacco is grouped, according to government grades, in individual piles weighing approximately 200 pounds each, and is offered for sale by an auctioneer at competitive bidding. The warehouses where the tobacco is brought, graded and sold are owned by independent individuals or concerns having no connection with the defendants. The auctioneer at the sales is employed by the warehouses and likewise has no connection with the defendants. Under the established procedure for bidding, a representative of the warehouse (known as a "starter") begins the bidding as each pile is offered for sale at the warehouse and the auctioneer proceeds from that point to receive bids in the normal auction manner from the prospective buyers present at the sale.
The defendants are buyers of flue-cured tobacco. Some purchase tobacco at all of the warehouses in the several South Carolina markets; others participate in the sales at only some of such markets and warehouses. There are other buyers than the defendants who are present and bidding at some or all of the South Carolina markets.
The prices which prevail at the auctions vary from day to day and are not uniform, even for tobacco which may be graded alike by government inspectors. Normally, these prices increase as the season progresses. To some extent this is because the early marketing generally consists of the lower grades commanding lower prices. As the marketing season continues, the grades generally increase in quality and market demand. Because of short supply, the price range between the lower and higher grades, however, had narrowed in the 1970's, which is the period involved in this lawsuit. Thus, in 1970, the average price on the South Carolina markets was 71.88 cents per pound; in 1974 it was 103.96 cents.
Just as there is a variation in price from market to market, from day to day, and from governmental grade to governmental grade, and even among grades, during a season, so there may be a considerable variation in the governmental grades for which the various buyers compete and in the quantities purchased by the different buyers from day to day on the various markets. Some buyers, for instance, do not bid on certain grades, because their principals do not use such grades in their processing, or they may already have purchased as much as they wish of those grades at that particular market. In such cases, the buyers either withdraw from the bidding or sharply curtail their bidding. An illustration of this situation is the experience at the Pamplico market during the marketing season of 1973. One of the defendants did not buy any tobacco at this market in 1973; another did not buy during a quarter of the sales days at such market in this period. A further indication of the fluctuations in purchases at this market is evidenced by the record of purchases during this same 1973 season by the defendant Reynolds at this market. Its percentage of purchases, on a daily basis, fluctuated widely between 1 per cent and 27 per cent of the sales. It is interesting, too, that the largest buyer at the market during that season, is not a defendant in this action.
At the bidding, it was not infrequent that the warehouseman would intervene to bid up the price of a particular pile of tobacco. He would do this to "stabilize" the market, as one warehouseman phrased it, that is, to stimulate the bidding. Should a seller, on the other hand, feel that his tobacco was being sold too cheaply he could withdraw it from sale and later reoffer it or put it under the support loan program to the Stabilization Fund, operated under the authorization of § 1445, 7 U.S.C. From time to time, the bidding for a particular pile of tobacco, particularly if of high quality, would end with a tie-bid from two or more of the buyers. Occasionally, this tie-bid might be broken by another buyer, who would intervene with a higher bid. More often, though, the auctioneer would, in case the tie was not broken, make a choice between the bidders and award the tobacco to one of the tie-bidders. In selecting the tie-bidder to whom to assign the tobacco, the auctioneer would in many cases favor the bidder who had bid higher on the lower quality tobacco at that warehouse. The plaintiffs have disclaimed any intention of charging that the auctioneer participated in any way in any conspiracy to fix prices or to allot the tobacco according to any plan or agreement among the...
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