Source: https://supreme.justia.com/cases/federal/us/370/19/
Timestamp: 2019-04-21 04:23:43+00:00

Document:
A group of citrus fruit growers in California and Arizona organized local cooperative associations which joined together for the purpose of collectively marketing their fruit through the agency of an area-wide marketing cooperative and two processing cooperatives. Respondents sued petitioners, the area-wide cooperative and one of the processing cooperatives, for treble damages under § 4 of the Clayton Act, claiming that they had conspired with the other processing cooperative and two privately owned processing corporations to restrain and monopolize interstate trade in citrus fruit and by-products, and had actually monopolized the same, in violation of §§ 1 and 2 of the Sherman Act.
Held: In view of the exemption from the antitrust laws accorded to agricultural cooperatives by § 6 of the Clayton Act and §1 of the Capper-Volstead Act, 7 U.S.C. § 291, a judgment based on a general verdict against petitioners, which may have rested on a finding of an unlawful conspiracy among the three cooperatives, must be reversed. Pp. 370 U. S. 20-30.
(a) The instructions in this case left it open for the jury to base its verdict on a finding of a conspiracy among the marketing cooperative and the two processing cooperatives. Pp. 370 U. S. 25-26.
(b) On the record in this case, it cannot be said that petitioners waived their objection to these instructions. Pp. 370 U. S. 26-27.
(c) In view of the provisions of § 6 of the Clayton Act and § 1 of the Capper-Volstead Act, the three legal entities formed by these growers for the purpose of processing and marketing their agricultural products cooperatively cannot be considered independent parties for the purposes of the conspiracy provisions of §§ 1 and 2 of the Sherman Act. Pp. 370 U. S. 27-29.
(d) Where one of several theories submitted to a jury is held erroneous, a general verdict must be reversed, as it may have rested on the erroneous theory. Pp. 370 U. S. 29-30.
284 F. 2d 1 reversed and cause remanded.
reversed as to the amount of damages. 284 F.2d 1. We granted certiorari limited to the issue of the immunity of inter-organizational dealings among the three cooperatives from the conspiracy provisions of the antitrust laws. 368 U. S. 813. We have concluded that the case was submitted to the jury on the theory claimed by petitioners, and that this was erroneous. Thus, we reverse the judgment.
Sunkist Growers, Inc., has at its base 12,000 growers of citrus fruits in California and Arizona. These growers are organized into local associations which operate packing houses. The associations, in turn, are grouped into district exchanges, and representatives from these exchanges make up the governing board of Sunkist, a nonstock membership corporation. Sunkist serves the members as an organization for marketing their fresh fruit and fruit products [Footnote 1] through its field, advertising, sales, and traffic departments. All of its net revenues are distributed to the members.
In 1915, several member associations of Sunkist undertook to develop by-products for lemons in order to create a market for produce not salable as fresh fruit. Because this was a new, untried field, the entire cooperative did not participate. Rather, a separate cooperative -- Exchange Lemon, a nonprofit stock corporation -- was formed for this venture by the interested associations. Since that time, Exchange Lemon has retained its separate identity, although it is made up exclusively of lemon grower associations which are also members of Sunkist. Its function now is primarily one of processing, and the resultant products are marketed for the owners by Sunkist through its products department, which is jointly managed by directors of Exchange Lemon and Exchange Orange.
One year after the organization of Exchange Lemon, a similar association was formed to develop by-products for oranges. This organization, Exchange Orange, was comprised of a number of Sunkist member associations until 1931. At that time, the Sunkist directors decided to make the processing facilities of Exchange Orange available to all of its member associations by purchasing it and operating it as a wholly owned subsidiary.
In sum, the individual growers involved each belong to a local grower association. Fruit which is to be sold fresh is packed by the associations and marketed by Sunkist, a nonstock membership corporation comprised of district exchanges to which the associations belong. Most fruit which is to be processed into by-products is handled by Exchange Orange, a subsidiary of Sunkist, or by Exchange Lemon, a separate organization comprised of a number of Sunkist member associations. [Footnote 2] It is then marketed by the products department of Sunkist, which is managed by directors of Exchange Orange and Exchange Lemon.
alleged to have been $25.10 per ton. [Footnote 4] The contract with Silzle provided that it would process a stated amount of oranges for Exchange Orange and purchase the juice at a stated price less its processing cost alleged to have netted $17.66 per ton. [Footnote 5] The third producer, Case-Swayne Company, allegedly declined Sunkist's offer of a similar contract. Respondent Winckler & Smith Citrus Products Company, the final processor, was offered oranges only at the list price of $40 to $44 per ton, depending upon content of soluble solids, and was refused the "process and purchase" arrangements described above.
Orange and Silzle in 1951; (6) the refusal to sign a comparable contract with respondent Winckler.
"a parent corporation and its wholly owned subsidiary can be guilty of combining or conspiring together to violate the antitrust laws. The defendants Sunkist Growers, Inc., and its wholly-owned subsidiary Exchange Orange Products Company, can accordingly combine or conspire together or with others to violate Sections 1 and 2 of the Sherman Act as charged in the first and second causes of action, subject to other instructions concerning the Capper-Volstead Act, and Section 6 of the Clayton Act, and the exemptions contained therein."
"If you find that either or both of the defendants [Sunkist and Exchange Orange, petitioners here] combined with TreeSweet or Silzle to eliminate the competition of the plaintiff. . . ."
and in 1951 did one or more of the specific acts charged. . . ."
". . . Unless you find from the preponderance of the evidence that defendants Sunkist and Exchange Orange, or either of them, and one or more of the alleged co-conspirators [one of which was Exchange Lemon], combined and conspired, and pursuant to such combination or conspiracy. . . ."
"Those are summary instructions which sort of sum up what is charged and what the plaintiff must prove."
"I also am told that I spoke about how the defendants had conspired on one occasion. The charge is not that the defendants conspired. The charge is that the defendants and co-conspirators conspired."
"However, as a matter of fact, you may find that nobody conspired, or you may pick out and decide that some number less than the total conspired."
On the question now before us, the Court of Appeals held that any objection to at least one of the conspiracy instructions was waived; that, in any event, different agricultural cooperatives combining together are not entitled to claim a total immunity for acts which they might do unilaterally and individually; and that the common ownership of Sunkist, Exchange Orange, and Exchange Lemon did not prevent the finding of an illegal conspiracy among them.
the court instructed that a conspiracy could be found between Sunkist and its wholly owned subsidiary Exchange Orange. Thereafter, the charge advised the jury that a finding of conspiracy between "Sunkist or Exchange Orange or either of them . . . [and] either TreeSweet, or Silzle, or ELP" was sufficient basis for a judgment against petitioners. From this, it is entirely probable that the jury's verdict against both petitioners was based on their finding of a conspiracy among Sunkist, Exchange Orange, and Exchange Lemon. There is no question that Exchange Lemon was identified in the complaint and throughout the trial as an alleged co-conspirator. In no fewer than five instances did the trial court refer to the alleged conspiracy as being among petitioners and the "co-conspirators" or petitioners and Exchange Lemon, TreeSweet, or Silzle. The final summarization on conspiracy was in terms of finding that petitioners combined or conspired with either TreeSweet or Silzle or Exchange Lemon, and the addendum instructions emphasized that the jury could find either or both petitioners had illegally conspired with any one of the alleged co-conspirators. It is true that, in some instances, the court's conspiracy instructions mentioned only TreeSweet and Silzle as co-conspirators. Conjecture as to the reasons for this would not be fruitful. For it is clear that the court never limited the jury to a consideration of those parties as the sole co-conspirators. And other instructions, including the summarization, allowed the jury to base their verdict upon a finding of an illegal conspiracy solely among Sunkist, Exchange Orange, and Exchange Lemon.
here must be viewed in context. Prior to the general charge, conferences of counsel and the trial court were held to discuss the instructions. At each point, counsel for petitioners objected to instructions which suggested that the three cooperatives might be found to have illegally conspired among themselves, and requested instructions that would have limited a finding of an unlawful conspiracy in this case to one among petitioners and TreeSweet or Silzle. The trial court consistently ruled adversely to petitioners on this point. After the charge was delivered, counsel were told that all prior objections would be preserved, and asked if they had any additional objections. In light of this assurance and petitioners' prior objections and requests, we believe the acquiescence in the added instructions could not be considered a waiver.
"That persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes. . . . [Footnote 8]"
tripartite legal organization of the 11,000 growers, they do indicate that a cooperative of such size and general activities was contemplated by the Act.
Instead of a single cooperative, these growers, through local associations, first formed one area-wide organization (Sunkist) for marketing purposes. When it was decided to perform research and processing on a joint basis, separate organizations were formed by the interested associations for reasons outlined above. At a later date, one of these (Exchange Orange) was acquired by the Sunkist organization, and is presently held as a subsidiary. The other (Exchange Lemon) is still owned by the lemon grower associations, all of whom are also member associations of Sunkist. With due respect to the contrary opinions of the Court of Appeals and District Court, we feel that the 12,000 growers here involved are, in practical effect and in the contemplation of the statutes, one "organization" or "association," even though they have formally organized themselves into three separate legal entities. To hold otherwise would be to impose grave legal consequences upon organizational distinctions that are of de minimis meaning and effect to these growers who have banded together for processing and marketing purposes within the purview of the Clayton and Capper-Volstead Acts. There is no indication that the use of separate corporations had economic significance in itself, or that outsiders considered and dealt with the three entities as independent organizations. That the packing is done by local associations, the advertising, sales, and traffic by divisions of the area association, and the processing by separate organizations does not, in our opinion, preclude these growers from being considered one organization or association for purposes of the Clayton and Capper-Volstead Acts.
"[I]ts generality prevents us from perceiving upon which plea they found. If, therefore, upon any one issue error was committed, either in the admission of evidence or in the charge of the court, the verdict cannot be upheld. . . ."
Suffice it to say that our decision in no way detracts from earlier cases holding agricultural cooperatives liable for conspiracies with outside groups, United States v. Borden Co., 308 U. S. 188 (1939), and for monopolization, Maryland & Virginia Milk Producers Assn. v. United States, 362 U. S. 458 (1960).
These include juices, concentrates, oil, pectin, pharmaceuticals, and cattle feed.
Some by-product fruit is sold to or processed by independent processors.
Sunkist also sold by-product oranges to additional companies for processing into by-products other than canned orange juice.
The soluble solids content of the oranges processed by TreeSweet under this contract averaged 131.6 pounds per ton.
The soluble solids content of these oranges averaged 120 pounds per ton.
It could be argued that the instructions also permitted the jury to find an illegal conspiracy solely between petitioners. Our holding renders unnecessary an evaluation of this interpretation of the charge.
"Sec. 6. That the labor of a human being is not a commodity or article of commerce. 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 organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade under the antitrust laws."
The Act has certain organizational requisites which are not in issue here.
61 Cong.Rec. 1036 (1921) (remarks of Representative Black); 62 Cong.Rec. 2052 (1922) (Senator Kellogg); 62 Cong.Rec. 2061 (1922) (Senator Capper); 62 Cong.Rec. 2277 (1922) (Senator Walsh).

References: § 4
 § 6
 §1
 § 291
 § 6
 § 1
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