Source: https://casetext.com/case/jones-v-borden-company
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Jones v. Borden Company, 430 F.2d 568 | Casetext
Jones v. Borden Company
Jonesv.Borden Company
United States Court of Appeals, Fifth CircuitJul 15, 1970
Reserve Supply v. Owens-Corning Fiberglas
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granting summary judgment in section 2(b) context in reliance on A.E. Staley
Summary of this case from Reserve Supply v. Owens-Corning Fiberglas
noting that buyer told defendant that defendant&apos;s price was "generally five percent higher" than competitor&apos;s
W.R. Barnes, James M. O'Leary, Jr., Shafer, Gilliland, Davis, Bunton McCollum, Odessa, Tex., for appellant.
F.H. Pannill, W.B. Browder, Jr., Midland, Tex., H. Blair White, J.A. Greaves, W.N. Braun, Chicago, Ill., for appellee; Stubbeman, McRae, Sealy McLaughlin, Midland, Tex., Sidley Austin, Chicago, Ill., of counsel.
Summary judgments in antitrust cases often are unadvisable. White Motor Company v. United States, 1963, 372 U.S. 253, 259, 83 S.Ct. 696, 700, 9 L.Ed.2d 738, 744. But in this treble damage action for price discrimination and exclusive dealing arrangements under the Robinson-Patman Act, the Borden Company has established by deposition and affidavit the nonexistence of exclusive dealing arrangements and the § 2(b) defense of meeting competition in good faith to the price discrimination charge. The plaintiff has not responded with affidavits and depositions or taken other steps to create any "genuine issue as to any material fact", Rule 56(c), Fed.R.Civ.P., and the record reveals no such issues. "When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him." Rule 56(e), Fed.R.Civ.P.
Tilden A. Jones bought a milk distributing business in Odessa, Texas, September 25, 1967. In this business he purchased milk products from Metzger Dairies and distributed and sold them to retailers. During 1967-68 eight dairies sold milk products in the Odessa area. In addition, two groups of stores — Safeway and 7-Eleven — had their own plants. But Jones's main competition was Borden, serving Odessa from its Midland plant through company-owned routes rather than a distributorship. The chief products in this market were homogenized milk and low-fat or "2% milk", both sold by the half-gallon. The market was known as a "twenty percent market" — that is, the grocer generally received as his profit a twenty percent discount from the retail price.
By May 2, 1968, Jones's business was failing. He turned the distributorship over to one of its previous owners who operated it for a month longer, then finally shut it down completely. Now Jones seeks treble damages for the loss of sales and the loss of his investment in the distributorship. He accuses Borden of violating the Clayton Act as amended by the Robinson-Patman Act, 15 U.S.C. § 13 (a) (c).
Since June 1, 1968, the Metzger distributor who had operated as middle-man between Metzger and Jones after January, has operated in the Odessa area.
15 U.S.C. § 13(a) (c):
Borden responds that its discounting activities had no adverse effect on competition, did not cause Jones's injury, and, in any event, were protected by the § 2(b) defense that
In fact, Borden contends that its activities increased competition, because the Metzger distributor's discounts had driven it out of two stores and lowered its display space in others. Borden argues that uncontradicted evidence shows in every case that its space was simply increased to its proportionate share.
Borden argues that the true causes of Jones's injuries were Metzger's activities and misrepresentations by those from whom Jones purchased the distributorship. The evidence shows and Jones admitted that in 1968 Metzger raised its prices to Jones, stopped helping him on special discounts, and reduced his allowance for spoilage. There is also some evidence that Jones was not completely informed of his predecessor's business practices.
nothing herein contained shall prevent a seller rebutting the prima-facie case [of price discrimination] thus made by showing that his lower price * * * to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor.
On all these grounds, after the taking of depositions and the filing of affidavits, the district court granted Borden's motion for summary judgment. We agree with the district court that there is no "genuine issue as to any material fact" establishing the absence of exclusive dealing arrangements. Since we also find no "genuine issue as to any material fact" establishing the § 2(b) defense, we affirm the judgment without reaching the other issues whether Borden's activities had any substantial anti-competitive or monopolistic effect and whether Jones's injuries were caused by Borden or by Metzger's and his predecessor's activities.
Thus, Jones has abandoned on appeal his original contention that these were exclusive dealing arrangements in violation of 15 U.S.C. § 14. This abandonment is understandable, for the uncontested affidavits of the Borden representative and the Tradeway manager explicitly deny the existence of an exclusive dealing arrangement. The Tradeway manager stated that Tradeway handled only Borden milk because Tradeway had only limited display space and Borden had good customer acceptance. Jones himself acknowledged that the Tradeway manager had told him nothing of any such arrangement but had said only that he was happy with Borden and would talk to Jones "if the situation warranted a change". There is no other evidence.
Similarly, with regard to Gibson, the Borden representative and the Gibson owner have stated unequivocally the absence of an exclusive dealing arrangement. Again, no evidence contradicts this position. Jones admits that he was told nothing of such an arrangement. When he talked to the owner about servicing the store, the owner told him to see the grocery manager. The grocery manager told Jones to see the owner. Therefore, Jones ceased trying to sell milk to Gibson's, concluding that he "was getting the run-around".
What Jones does contend now is that Borden violated § 2(a) and (c) of the Robinson-Patman Act. Section 2(a), prohibiting price discrimination, is subject to the § 2(b) defense of meeting competition. We discuss Borden's defenses under this section in the next part of this opinion. Section 2(c) prohibits the paying or granting of "anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof". It is very difficult to see how the arrangements here could fit into the pseudo-brokerage or even commercial bribery arrangements that Congress sought to curtail through § 2(c). Rangen, Inc. v. Sterling Nelson Sons, 9 Cir. 1965, 351 F.2d 851, 856. At any rate, the uncontested affidavits that no such arrangements existed sustain the grant of summary judgment in this respect.
B. The § 2(b) Defense.
Jones argues that Borden's § 2(b) defense does not justify summary judgment because "justification by and the good faith of the appellee in its actions is but a question of fact". The statement is unobjectionable but it does not prove that summary judgment was incorrectly granted. It is true that Borden has the burden of making out its § 2(b) defense. But it succeeds in establishing the facts to make out the defense, then § 2(b) "afford[s] an absolute defense to a charge of violating § 2(a), notwithstanding the existence of the statutorily prohibited anticompetitive effect". FTC v. Sun Oil Company, 1963, 371 U.S. 505, 514, 83 S.Ct. 358, 9 L.Ed.2d 466, 475. Thus, the question we must resolve is whether there are any "genuine issue[s] as to [the] material fact[s]" which Borden must develop to sustain its defense.
FTC v. A.E. Staley Manufacturing Company, 1945, 324 U.S. 746, 759-760, 65 S.Ct. 971, 977, 89 L.Ed. 1338, 1347. We summarized that burden as follows:
[A defendant] need not show its prices were in fact equal to those of competitors, but must only show facts which would lead a "reasonable and prudent person" to believe that the granting of lower prices would in fact meet the equally low price of a competitor.
The uncontradicted evidence here shows that the Metzger distributor from whom Jones purchased the business had been granting a two-cent discount (above and beyond the twenty percent in the market) on every half-gallon of milk. One of Jones's predecessors stated by affidavit that since February 1967 the business had granted the discount to the Everybody Stores, the Bill Sears Stores, the A.L. Davis Stores, and two small independent grocers. The testimony of another partner indicates another discount originating even earlier. In return, Everybody and Davis did not handle competing brands of 2% milk. (In June 1967 the two-cent discount was changed to a discount of 1½ percent of the gross sales per month.) Everybody's owner stated by affidavit that when he received this discount he discontinued Borden's 2% milk not to restock it until six months later when Borden granted Everybody a discount. At Davis, Borden's display space was reduced and its sales fell sharply.
According to the affidavit of Charles Blythe, owner and operator of Everybody's Stores, C.W. Beasley of Borden inquired in August 1967 why he was not handling Borden's 2% milk.
The Midland Sales Manager next extended his inquiry to Furr Super Markets. There a supervisor informed him that Metzger always undersold Borden. Again, Borden granted the discount. Sears Stores were next to receive the discount. Finally in December, Borden discovered that it was not competitive in the A.L. Davis Stores, and granted the discount there.
With regard to the special rate Borden advanced on the private label it furnished Furr, the record is equally devoid of evidence to contradict Borden's defense. Furr's Senior Vice-President stated by affidavit that the Furr group decided a private label was necessary to compete with other private label milk such as Safeway's and Gibson's. In 1967 Furr Foods requested bids on supplying a private label from several companies. Borden bid for the contract, was underbid by at least two other dairies, but was selected because of its convenient location and consequent dependability.
Borden also provides lesser services for a private label than it does for milk under the Borden label. Furr must order in advance the quantity of milk it desires and receives no credit for returns or spoilage. And instead of servicing the display space on a daily schedule, the Borden drivers simply place the milk in a storage vault. Furr employees must look after stocking the display area.
On all these issues, as in Callaway Foods, we conclude that Borden did carry its burden of showing good faith in its conclusion that it must lower its prices to meet the competition. Borden goes to great mathematical lengths in its brief to work out the consequences of the various discounts to show that in no case did its price drop below those the Metzger distributorship was offering. We do not rely on that factor, however, for two reasons: In Callaway Foods, we disclaimed a requirement of exact accuracy and tested the discounts by the standard of a "reasonable and prudent person" attempting to meet his competitor's prices; Borden's failure to drop its prices below Metzger's would not amount to a § 2(b) good faith defense if in fact its motives were to undercut the competition.
It is true that "[w]e look at the record on summary judgment in the light most favorable to * * * the party opposing the motion". Poller v. Columbia Broadcasting System, 1963, 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458, 464. But in this collection of depositions and affidavits from the plaintiff Jones, his predecessors in the Metzger milk distributorship, Borden's general manager for the Midland area, and owners and management personnel from the retail outlets, we are unable to discover any refutation by Jones of Borden's defense. And Jones's brief on appeal does not point out the conflicts in the evidence.
Finally, we are cognizant of decisions in this Circuit rejecting summary judgment in cases "where motive, intent, subjective feelings and reactions, consciousness and conscience [are] to be searched, and examination and cross-examination [are] necessary instruments in obtaining the truth". Alabama Great Southern R.R. v. Louisville Nashville R.R., 5 Cir. 1955, 224 F.2d 1, 5; see NLRB v. Smith Industries, Inc., 5 Cir. 1968, 403 F.2d 889, 893; Riley-Stabler Construction Company v. Westinghouse Electric Corporation, 5 Cir. 1968, 401 F.2d 526, 527. But the best procedure "for a correct understanding of summary judgment [is to rely] on the text of the rule, rather than on quotable statements made in one or another case". 3 W. Barron A. Holtzoff, Federal Practice and Procedure § 1232.2 at p. 114 (C. Wright ed. 1958). In examining whether Borden met its burden of showing its good faith in the § 2(b) defense, we observe that Jones had full opportunity to muster all the evidence he could, that he deposed Borden's general manager for the Midland area, and that he did not file an affidavit showing why he could "not for reasons stated present by affidavit facts essential to justify his opposition" to the motion for summary judgment, Rule 56(f), Fed.R.Civ.P. In the absence of any evidence to question or contradict Borden's good faith, we conclude that the district court properly granted the motion. See Miles v. Dickson, M.D.Ala. 1966, 40 F.R.D. 386, aff'd in part, rev'd in part, 5 Cir. 1967, 387 F.2d 716; Moran v. Bench, 1 Cir. 1965, 353 F.2d 193, cert. denied, 1966, 384 U.S. 906, 86 S.Ct. 1341, 16 L.Ed.2d 359.