Opinion ID: 408097
Heading Depth: 2
Heading Rank: 3

Heading: AMPI's Counterclaim.

Text: 55 AMPI's claims were tried in Phase III of the proceedings below. Its price-fixing claim, of course, is resolved by our holding above that NFO's activity was shielded by the Capper-Volstead Act, see supra, at 1186-1187. The gravamen of its other charges, as characterized by AMPI, is that NFO and others conspired to gain control of sufficient milk as to control the price of milk nationwide and employed the predatory practice of inducing AMPI members to breach their agreements with AMPI. The alleged conspiracy also was aimed at destroying AMPI, presumably as a competitor of NFO. 10 AMPI also contends that NFO violated the Agricultural Fair Practices Act (AFPA), 7 U.S.C. § 2303. 56 On this record, there can be no substantive claim of attempted monopolization under Section 2. A necessary element of such a claim is a showing of a dangerous probability of success, which no one asserts was ever posed by NFO. Indeed, AMPI characterizes NFO's marketing programs as grandiose but inept and incompetent and the district court found them quite unsuccessful. Midwest Milk, supra, 510 F.Supp. at 419-420. The only issue then is an alleged conspiracy under Sections 1 and 2, which AMPI asserts operated at two levels. 57 One alleged conspiracy was between NFO and certain nonexempt entities. Specifically, the alleged coconspirators were certain milk haulers, bottling plants and others that entered into various contracts with NFO in connection with its direct marketing efforts. The district court expressly found that these were normal business relationships and that such entities did not conspire with NFO in terms of any matters which might involve antitrust concerns. On appeal, AMPI has offered nothing which would show this conclusion to be erroneous. 58 The other alleged conspiracy was internal, involving various officers and employees of NFO. AMPI contends that these individuals conspired to eliminate AMPI as a competitor and employed predatory practices toward this goal. The district court did not reach the question of whether NFO is legally capable of conspiracy in this manner, and there are unsettled questions in the law of so-called intra-corporate conspiracies. Cf. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71 (9th Cir. 1969); Shoenberg Farms, Inc. v. Denver Milk Producers, Inc., 231 F.Supp. 266 (D.Colo.1964); 3 Von Kalinowski, supra, § 7.02(1). We need not reach this legal issue, however, because AMPI's claims fail as a factual matter. 59 AMPI concedes that NFO's attempt to achieve a common marketing agency, prior to its direct marketing efforts, was pursued by seeking to have the existing cooperatives join together. The record further shows that until 1969, NFO supported the concept of voluntarily merging co-ops to form stronger bargaining units. Thus, these efforts hardly reflect an intent to destroy the co-ops, as AMPI argues. 60 AMPI's more serious contention is that NFO employed unlawful, predatory practices once it commenced direct marketing-specifically, coercing farmers to leave AMPI, join NFO, or retain their membership in NFO and unlawfully inducing AMPI members to breach their marketing contracts. The coercion claim is also alleged as a violation of the AFPA, 7 U.S.C. § 2303. The district court, however, expressly found that NFO coerced no farmers, either its members or AMPI members, and nothing in the record would make this finding erroneous. See Midwest Milk, supra, 510 F.Supp. at 526-527. 61 The inducement of breach contention is closely related to AMPI's claim that NFO used fraudulent misrepresentations to induce AMPI members to switch to NFO, thereby violating the AFPA. These issues have been extensively litigated in a Wisconsin state court action initiated by AMPI, upon which NFO and AMPI now make assertions of collateral estoppel and res judicata. 62 There is no doubt that by 1971, NFO and AMPI were in full-scale competition for milk producers. NFO solicited dairy farmers, including AMPI members, to ship through NFO's direct marketing program. AMPI brought suit in Wisconsin state court to stop NFO's activity, commencing litigation which has twice reached the Wisconsin Supreme Court and recently an intermediate appellate court as well. The Wisconsin trial court has adopted AMPI's view and enjoined NFO three times and on all three occasions, it has been reversed and had its orders vacated. 63 In Pure Milk Products Cooperative v. NFO, 64 Wis.2d 241, 219 N.W.2d 564 (1974) (Pure Milk I ) 11 the Wisconsin Supreme Court reversed a temporary injunction which had been entered against NFO. It found the injunction overly broad, indicating that legitimate competition would allow inducement of AMPI members to terminate their marketing agreements in accordance with the terms of such contracts. Id. at 572, 575. It also found the record inadequate with respect to any claim of fraudulent misrepresentations. Id. On remand, the trial court found that approximately 1,200 AMPI members had been induced by NFO to switch milk shipments to NFO and that such actions breached their marketing agreements with AMPI. It further found that NFO had made fraudulent misrepresentations in the course of soliciting AMPI members. 64 On appeal, in Pure Milk Products Cooperative v. NFO, 90 Wis.2d 781, 280 N.W.2d 691 (1979) (Pure Milk II ), the Wisconsin Supreme Court again reversed. The court emphasized AMPI's practice of permitting its members to ship to plants of their choice without thereby breaching their AMPI contracts. 12 Id., 280 N.W.2d at 696-698. On this basis, the Supreme Court squarely held that the mere switching of shipments to NFO, and NFO's solicitation of such shipments, were not a breach of any contract. Id. at 697, 698. The Court also reversed the finding of fraudulent misrepresentations, directing that on remand such questions be considered only in the context of the approximately 160 AMPI members who had terminated their marketing agreement altogether. 13 Id. at 701. 65 On remand, the trial court reissued a broad injunction based on findings which were contrary to the Supreme Court's mandate in Pure Milk II. This third order was recently reversed by an intermediate appellate court in an opinion which makes clear that the issue of fraudulent representations is still open upon appellate review. Pure Milk Products Cooperative v. NFO, 105 Wis.2d 758, 317 N.W.2d 510 (1981) (Pure Milk III ). 66 AMPI argues that because of the third decision of the Wisconsin trial court, collateral estoppel bars NFO from contesting whether it made fraudulent misrepresentations. This is plainly wrong. That trial court's findings have been reversed three times and, in the last instance, its misrepresentation findings were expressly reserved for further review. Such determinations thus lack the finality required for collateral estoppel. 67 NFO, on the other hand, argues that res judicata bars AMPI's assertion of both its inducement of breach and misrepresentation claims. This too misses the mark. Res judicata involves claim preclusion, not issue preclusion. Here, AMPI's claim under the AFPA is a different cause of action from its state law claim. Thus, AMPI's assertion that NFO made knowing misrepresentations in violation of the AFPA is properly raised in the present action and must rest, not on collateral estoppel, but on the facts adduced below. 68 It appears, however, that collateral estoppel would bar AMPI's assertion that NFO's solicitation of AMPI members constituted an inducement to breach their contracts. All of the elements of the collateral estoppel doctrine are present. The parties in the Wisconsin action are identical to the parties here. The issue-whether NFO's solicitations induced a breach of contract by AMPI members-is identical to the issue here, although it is now cast as part of a predatory practice claim. The parties had a full and fair opportunity to litigate the issue, and the Wisconsin Supreme Court reached a final judgment. Its resolution of the issue was necessary to its judgment and was expressly reached. Collateral estoppel, therefore, seems applicable. See Montana v. United States, 440 U.S. 147, 153-154, 99 S.Ct. 970, 973-974, 59 L.Ed.2d 210 (1979); Oldham v. Pritchett, 599 F.2d 274 (8th Cir. 1979). Indeed, AMPI argued vigorously in its brief that judicial economy and federalism principles weigh heavily in favor of precluding relitigation of issues settled in the Wisconsin litigation. 69 The district court, however, rejected AMPI's inducement of breach claims as a factual matter on the merits. Much of the evidence adduced below consisted of the evidence adduced in the Wisconsin litigation, where AMPI also lost its contention that switching members constituted a contract breach. After reviewing the record, we cannot find the district court's conclusion clearly erroneous. 70 The only remaining claim against NFO is that it made knowing misrepresentations in violation of the AFPA, 7 U.S.C. § 2303(c), (e) & (f). Whether a knowing violation requires intentional conduct or mere negligence is not clear under the Act and has not been addressed by any court. We find it unnecessary to reach this issue, however. The district court found both that there was insufficient evidence that false representations about AMPI were made and that, in any event, there were no knowing violations of the Act. Midwest Milk, supra, 510 F.Supp. at 526-527. Even reviewing these conclusions under a negligence standard, we cannot say they were clearly erroneous. 71 For all of the foregoing reasons, we affirm the district court's judgment against Mid-Am and AMPI in their Phase I and Phase III claims against NFO.