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

Heading: Wanzer Dairy.

Text: 104 The Chicago market informally functions as a base-pricing point for many markets south and west of Chicago. See supra, at 1179-1180, 1194. The record is replete with statements by Mid-Am, AMPI and CMPC officials with respect to the importance of establishing a superpool or premium (over-minimum price) for Chicago milk. Accordingly, AMPI and CMPC aggressively sought to establish such a premium. Their efforts, however, included discriminatory pricing and coercive threats toward the Wanzer Dairy, 22 a substantial Chicago dairy whose purchases from NFO and others had undermined the CMPC premium. 105 The major trade association of proprietary milk buyers in metropolitan Chicago, AMDI, had a Producer Relations Committee which met from time to time with CMPC's Price Development Committee. AMDI dealers continually protested paying a premium for CMPC milk while another proprietary-Wanzer Dairy-was buying non-CMPC milk (including NFO milk) at lower prices. Midwest Milk, supra, 510 F.Supp. at 477-478, 482. CMPC dropped the premium in early 1970 and successfully reinstated it in January, 1971, after Wanzer entered into a committed supply contract with CMPC. It is the conduct employed in securing the Wanzer supply contract which is primarily at issue. The parties vigorously dispute whether such conduct also evidences that CMPC unlawfully conspired with the nonexempt AMDI group and what effect securing the Wanzer contract had on NFO. We first summarize the district court's affirmative factual findings. 106 Throughout the period at issue, Wanzer Dairy purchased from both independents and CMPC. It initially purchased from North Central Dairymen's Cooperative (NCDC) at prices below any CMPC premium, but by October of 1970, NCDC had joined and was marketing through CMPC. Id. at 478, 480. In April of 1970, when NCDC and others were independently selling into Chicago, CMPC issued a discriminatory price announcement which imposed a number of additional service charges, applicable in part to any buyer who accounts to and settles with CMPC for less than 100% of his Class I requirements (fluid Grade A products). 23 Id. at 478. 107 Wanzer continued to make independent Class I purchases, including major purchases of such milk from NFO which commenced in July of 1970, and reached nearly ten million pounds of such milk per month during the fall peak. Id. at 479. In October of 1970, after NCDC had begun marketing through CMPC, CMPC announced a new discriminatory price structure, elements of which again applied to any dealer who does not report to or settle with CMPC for his total Class I requirements, 24 notwithstanding questions raised at the CMPC Board meeting concerning the legality of the new pricing. Id. at 480. 108 A flurry of exchanges between Wanzer, Southland (Wanzer's parent corporation), CMPC and NFO followed in November and early December of 1970-a period in which Wanzer sought to buy all of the NFO milk that it could but, as a practical matter, was forced to buy at least some milk from CMPC in order to meet its total supply needs. Id. at 481-482. Following the October price announcement, Wanzer notified NFO that it would cease NFO purchases and notified CMPC that it would comply with one option under the new price announcement. 25 Id. at 482. NFO offered to reimburse Wanzer against additional service charges and, for one month, Wanzer continued its split NFO-CMPC purchases while negotiations with CMPC continued. Id. By early December, Wanzer notified NFO that it would make its Class I purchases on a day-to-day basis. Id. at 483. On December 2, CMPC and AMDI dealers met and discussed, inter alia, whether Wanzer would pay CMPC's market service charge. Id. AMDI dealers renewed their objection to paying more for milk than their competitors and specifically to paying any CMPC premium as long as their competitors were buying at a lower price. Id. at 482. On December 10, CMPC by letter notified Wanzer and Southland 26 that it was cutting off all supplies, effective in five days, because we have become aware that you have been engaged with others in unlawful attempts to interfere with producers whose milk is subject to effective marketing agreements with CMPC and its members. 27 Id. at 483. CMPC did not terminate shipments after this threat, but instead made shipments on a day-to-day basis while negotiations continued. Id. Within days, Wanzer entered into a one-year committed supply contract with CMPC for major Class I purchases. Id. 109 The Wanzer-CMPC negotiations were the specific subject of various AMPI and CMPC discussions with AMDI dealers concerning reinstatement of a premium. Id. at 482-483. After the Wanzer-committed supply contract was reached, CMPC met with AMDI dealers, showed them the Wanzer contract and, within a few weeks, successfully reinstated an over-order premium. Id. at 483. 110 The foregoing events and chronology are summarized from the district court's affirmative findings of fact. In our view, the conduct described in such findings is plainly predatory. Simply put, CMPC and its agent AMPI sought to establish a premium for their milk, a goal which was obstructed by AMDI dealers' objections to Wanzer's purchase of much of its Class I needs from non-CMPC sources at lower prices, including NFO milk. Facing continuing rejection of a premium under these conditions, AMPI and CMPC employed discriminatory pricing and coercive threats of supply cutoffs against Wanzer, secured a substantial committed supply agreement from Wanzer, showed this contract to the other dealers and, within weeks, successfully imposed a new premium. The attempts by CMPC and AMPI to explain away each step of the campaign against Wanzer cannot obscure this overriding factual pattern. 111 CMPC contends that the price discrimination was simply a legitimate attempt to recover costs associated with supplying less regular customers. Such a contention might be valid in some other context, but the conduct here-viewed as a whole-clearly establishes an unlawful purpose. In addition to the conduct itself, the record reveals testimony by a CMPC official that, in adopting its pricing scheme, CMPC's major concern was with the split supply sources at the Wanzer Dairy. An AMDI dealer, who was present in meetings with AMPI and CMPC regarding the price structure, also testified that the higher service charges were designed to affect plants buying lower-priced milk from NFO and directly from farmers and to make such plants realize that they would be better off if they participated (in CMPC's pool) on a weekly basis or daily basis and, moreover, confirming that the Wanzer committed supply contract was critical to restoring any CMPC premium. 28 112 CMPC also attempts to characterize its problems with Wanzer as deriving from hostility by Wanzer's local manager toward CMPC; contends its threatened supply cutoff was simply a legitimate response to AMPI's membership dispute with NFO; and implies that the committed supply contract was achieved in the ordinary course of business once Wanzer's parent company officials entered negotiations. See CMPC Br. at XXXIX-XLIV, 67-68. This version of events is contradicted by the testimony of the Southland official who negotiated the supply contract, which indicates that Southland threatened legal action against CMPC to counter the impending supply cutoff and also shows that Wanzer's decision to enter into the committed supply contract was prompted largely by the pricing scheme imposed by CMPC. Moreover, the CMPC version is simply untenable in light of the record as a whole. 113 In looking at the evidence underlying the findings, we do not contemplate a de novo review. We recognize there are some conflicts in testimony; that some witnesses deny or attempt to explain away what others admit. CMPC's conduct itself, however, is the strongest evidence of an unlawful purpose and such conduct is largely established in the district court's affirmative findings. In our view, the conduct so established is predatory on its face. Our examination of the underlying evidence only confirms that an inference of unlawful purpose must be drawn. It was clear error for the district court not to find that the pricing scheme was unlawfully discriminatory and that the threatened supply cutoff was unlawfully coercive. 29 114 We affirm, however, the district court's rejection of the claim that CMPC conspired with AMDI dealers to fix prices and to boycott NFO. In our view, the record simply does not support an inference that AMDI dealers' decisions not to buy from NFO were linked by any conspiratorial boycott agreement with CMPC. Such decisions may have been influenced by CMPC's conduct (which may go to damages issues), but that does not rise to the level of conspiracy. On the other hand, the record would support an inference of conspiracy to fix prices between AMDI and CMPC, but the evidence is not so strong as to make the district court's contrary conclusion clearly erroneous. 115