Legal Document

362 U.S. 29 80 Supreme Court Reporter 503 4 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 505 UNITED STATES, Appellant,v.PARKE, DAVIS AND COMPANY. Number 20. Argued Nov. 10, 1959. Decided Feb. 29, 1960. Mr. Daniel M. Friedman, Washington, D.C., for appellant. Gerhard Atlantic Gesell, appellee. Justice BRENNAN delivered the opinion of Court. 1 The Government sought an injunction under § Sherman Act against appellee, Parke, Davis & Company, on a compliant alleging that Parke conspired and combined, in violation §§ 3 Act,1 with retail wholesale druggists Richmond, Virginia, to maintain prices pharmaceutical products. was alleged have occurred during summer 1956 when there no Fair Trade Law District Columbia or State Virginia.2 After completed presentation its evidence at trial, without hearing defense, dismissed complaint Fed.Rules Civ.Proc., Rule 41(b), 28 Code Annotated KF65 U5 ground upon facts law had not shown right relief. 164 F.Supp. 827. We noted probable jurisdiction Government's direct appeal 2 Expediting Act.3 359 903, 79 580, 569. makes some 600 products which it markets nationally through drug wholesalers retailers. retailers buy these from make large quantity purchases directly Davis. Sometime before announced resale price maintenance policy wholesalers' retailers' catalogues. catalogue contained Net Price Selling Schedule listing suggested minimum sold by stated Davis' continuing deal only who observed schedule authorized fill prescriptions. Davis, selling retailers, quoted same listed but granted discounts volume purchases. Wholesalers were grant similar discounts. applicalbe Laws this use also having such laws. These usually provided 50% mark up over cost Park purchased but, because discount, often excess 100% quantities There are 260 drugstores 100 Virginia. Many stores units Peoples Drug Stores, chain. five handling locality do business However, spring early two cities advertised several vitamin substantially below prices; instances apparently reflected since Schedule. Baltimore office manager charge sales district included advice his head how handle situation. attorney advised company could legally 'enforce adopted arrived unilaterally' sell customers prices. He further meant 'we can lawfully say will you so long as observe prices' cannot if agree prices,' except permitted legislations (sic) agreements invalid.' Thereafter July branch put into effect program promoting observance involved. contemplated participation wholesalers. In order insure did comply would be cut off sources supply, representatives visited told them, effect, refuse adhere catalogue, Each wholesaler interviewed individually each informed competitors being apprised this. exception indicated willingness go along. Representatives called contemporaneously involved, individually, he prices, him, furthermore unable purchase any similarly informed. 5 Several refused give assurances compliance continued after interviews advertise Their names furnished orders likewise their orders.4 This ban limited all company's products, even those necessary 6 president Dart one off, protested assistant discriminating him drugstore across street, chain, sign window advertising retailer 'would see try get them line.' testified trial thereafter talked vice-president following occurred: 7 'Q. Well, now, Downey (the Peoples) meeting, not, Powers, Davis) moticed cutting prices? Yes. 8 And been many years individuals maintained scheduled N Dec. Immigration Nationality Decisions we our catalog, anyone along policy, interested doing them. 9 * Now, occasion visit, stop abide Parke-Davis is right? That correct. 10 When went call Downey, solicited support policies, right. 11 said, your policy? right.' 12 found, basis testimony, 'The Peoples' representative Peoples.' (164 833.) 13 But less than stocks hand. Within few weeks modified program. Its officials believed discount deterred, effects minimized isolated might continue, discontinued. August again individually. interviewed, Company willing advertising, although shipments resumed. other then ready discontinue advertising. thereupon said stopped also. On reported reaction Dart. discontinued vitamins resumed suspension lasted month. One started newspaper September and, despite efforts prevent it, others quickly followed suit. trying promote adherence neither nor declined dealings them.5 A reason Department Justice, begun investigation possible antitrust 14 held proofs establish 'the actions (Parke properly unilateral sanctioned doctrine laid down case versus Colgate Co., 250 300, 39 465, 63 L.Ed. 992. *' page 829. 15 came writ error Criminal Appeals Act, 34 Statutes-at-Large 1246, judgment dismissing indictment Act. proceeded solely theory unlawful combination between dealers purpose procuring part fixed company. construed charging agreement must disregard allegations Court's interpretation binding allegation charged. said: 16 prohibit monopolies, contracts combinations probably unduly interfere free exercise rights engaged, wish engage, trade commerce—in word preserve freedom trade. absence create monopoly, act does restrict recognized trader manufacturer engaged entirely private business, freely own independent discretion parties whom deal; course, may announce advance circumstances sell.' 307, 468. 17 concedes purposes manufacturer, bring about refusing policy. contends, however, subsequent decisions compel holding what here entwining general beyond mere customer selection created conspiracies enforce 18 history best understood reference preceded decision, Dr. Miles Medical John D. Sons 220 373, 31 376, 55 502. Dr entered written obligating medicine it. void they violated both common decision distinguished obligated latter resell seller. confusion doubt vitality principles Miles. brought Schrader's Son, Inc., 252 85, 40 251, 64 471, involved prosecution components entering price-fixing jobbers manufacturers used dismissed, saying: 19 'Granting fundamental proposition case, has undoubted specify fails same, or, stated, long-recognized deal, course sell, seems me distinction difference subterfuges devices set forth (Colgate) violate Anti-Trust yet done thing form agreement, adequate effectuate purpose, guilty law. 264 Federal KF105 F3 175, 184. reversed, 20 court misapprehended meaning (Colgate). intention overrule modify where effort destroy dealers' restrictive agreements.' 99, 253. 21 explain statement earlier more conspiracy merely 'indicates wishes concerning declines fail *'; however 'enters agreements—whether express implied dealing circumstances—with undertake bind prices.' Ibid. 22 next Frey Son. Cudahy Packing 256 208, 41 451, 65 892. treble damage suit plaintiff recovered judgment. Fourth Circuit reversed authority Colgate. concluded (261 65, 67): 'There formal oral circumstance should directed verdict defendant. erred, referred Schrader 'essential circumstances,' Cudahy, 'Having regard pertinent disclosed present record, think whether existed question jury decide, erred otherwise.' 210, 451. 23 improper instruction given found find defendant 'indicated plan jobbers, (that) particular feature attention very different occasions, great majority (expressed) dissent plan, actually (cooperated) carrying out themselves named *.' 210—211, 452, condemning seriously undermined discuss. Therefore, action follow here. Less year handed down, decided Commission Beech-Nut 257 441, 42 150, 66 presented situation bearing marked resemblance 24 later implemented To detect violations utilized code numbers instituted system reporting. offender reinstated giving future. et seq. authorize forbid practices 'dangerous tendency hinder competition monopoly.' (257 454, 154.) guide constituted unfair method competition. urged conduct legal interpreted rejected contention, saying goes simple refusal goods persons Case within producer.' nonexistence covering irrelevant '(t)he specific show suppression methods secures co-operation distributors customers, quite effectual intended accomplish purpose.' Id., 455, 155. considered thus established dispositive issue taken McReynolds dissent. stipulated Relying view Colgate, asked: 'How existence essential definitely excluded?' 459, 156. read requiring contracts; rather, dispelled effected contractual arrangements, implied, finding limiting specified amounted exercised determine made out. Beech-Nut's effective producing result 'all constrained 155, securing customers' creation suppress among 25 narrowly subject liability producer clear Bausch Lomb Optical 321 707, 722, 805, 813, 88 1024: 26 recognizes first seller's lawful adds 'He seller) consistently act, right, combinations, obstruct natural flow commerce channels interstate trade.' 453, 154. agreements, coercion special agents company, reports boycotts cutters. Lomb, like instant restrain Court, relying Beech-Nut, distributor, Soft-Lite Lens when, simply induce acquiescence distributor's published list; 'accepted Soft-Lite's proffer distribution cooperating limitation approval licensees. sufficient. Whether achieved coupled assistance effectuating immaterial.' 723, 813. Thus, whatever uncertainty previously scope doctrine, plainly fashioned dimensions seller permissible words, just arises implied; organized means declination 27 cases inquiry illicit contracts, implied. assumed prevail establishing arrangement, albeit customers. Proceeding premise strenuously urges 52 Rules Civil Procedure compels affirmance arrangements 'not aside unless clearly erroneous.' application premised ultimate erroneous standard applied. fact complexes justifying inference Both teach judicial search record purely arrangements. forbids traders True, results economic accomplished prohibited customer, induced manufacturer's independently decides So overruled, tolerated consequence 'freely deal.' (250 468.) actions, here, announcement employs countervailing consideration therefore together proved judged rather words used. See Eastern Retail Lumber Dealers' Association States, 234 600, 612, 951, 954, 58 1490. Because nature reviewing law, namely, applied proper essentially undisputed facts. Interstate 306 59 467, 83 610; Masonite Corporation, 316 265, 62 1070, 86 1461; Gypsum 333 364, 68 525, 92 746; E. I. Du Pont De Nemours 353 586, 77 872, 1057; Judge Felin 334 624, 1238, 1614; Great Pacific Tea Supermarket Equipment Corp., 340 147, 71 127, 95 162. embarked exceeded limitations content itself announcing regarding relations disregarded Instead elicit deny thereby help gain promptly supplied names. 'abide' multi-unit off.6 involving inducing Although originally thereunder Schedule, entire tainted 'vice illegality,' cf. 724, 814, 1024, vehicle Moreover, 'limited dispensation confers,' Times-Picayune Pub. 345 594, 626, 73 890, 97 1277, another way, demonstrates far limits doctrine. With rest First discussed Drug. approached Dart's apparent cooperate lever Having secured acquiescences returned report accomplishment. Not until suspended manner got well itself. It actively bringing substantial unanimity able admitted tend engender confidence complies unwilling rely individual self-interest voluntary collateral eliminating competition, takes affirmative achieve uniform avoid matter choice prompted alone desirability product. product comes packaged competition-free wrapping—a valuable itself—by virtue concerted manufacturer. organizer price-maintenance Under 'competition, combination, trade,' National Cotton Oil Texas, 197 115, 129, 379, 382, 49 689, 'a formed raising, depressing, fixing, pegging, stabilizing commodity foreign iis illegal per se.' Socony-Vacuum 310 223, 60 811, 844, 84 1129. McKesson Robbins, 351 305, 76 937, 1209; Kiefer-Stewart Joseph Seagram Sons, 211, 259, 219; 30 alternatively rested dismissal '* conditions Complaint proved, longer existed, (there is) believe, surmise, acts possibly repeated 167 827, 829, 830. justify finding. compelling defendant's (ceasing efforts) forced field.' conclusion speculation. appear abandon condemned. indicates reason, investigation. talking investigators. 'they (knew) Antitrust Division investigating town,' reasons visiting him. witness occasion, discussion investigation, finally resume shipment, going on.' Moreover employees, witnesses aware time discontinuance us prompt efforts, litigation ensued. entitled relief seeks. courts obligation, once laws established, protect public continuation harmful activities. court's wide fashioning remedies altogether lightly inferring abandonment activities cessation timed anticipate Oregon Society, 343 326, 333, 72 690, 695, 96 978. 32 remanded directions enter appropriate enjoining elects submit defense refutes injunctive record. 33 ordered. Judgment directions. 35 STEWART, concurring. 36 concur amply shows question, innuendo, validity 992, ruling 210 37 HARLAN, FRANKFURTER WHITTAKER join, dissenting. 38 reaches much meet eye, justifies fuller otherwise warranted. Scrutiny reveal send demise basic concepts 1919 begin case. opinion, monopolistic setting, policy.' 'And,' (at 468), 'of complaint, seeking enjoin substance charged combined four respects: (1) fix (2) (3) wholesalers, (4) boycott Company's complained legitimate detailed findings epitomized follows: 'had well-established policies (its) type re-sell';2 'representatives notified sold, either accordance policy'; contacted notifying risk defendant'; 43 'every visit was, separate apart others'; 44 (5) valued Davis') highly acceded (6) 'there (wholesaler retailer) co-conspirators Complaint'; 45 (7) contention proof 'is implicit calling distributors' (t)he nebulous deduction it.' 46 premises concluded: 'Clearly, 992.' 47 appears recognize understood, require reversal required subsequently 'narrowly limited' rule. claim whereas prior that, fair apart, parties—which says 'contractual arrangements'—Beech-Nut, carried forward need shown. Recognizing explicitly 'contract, conspiracy,' requirement satisfied falls short terms Concluding mistakenly 'agreement' based standard, 'Rule here.'3 48 reasoning misconceives cases, mistakes actual fact. First. introducing new narrowing concept Until today supposed practitioner judge await know proscribed amount agreement. form. rule 'by implied,' pages 154, 307. obvious 'methods' 'cooperative methods' exist, expressly Commission's granting methods. 455—456, Far shown, accepted factual determination exist. 50 Similarly, 'agreements unlicensed 717, 810, 1024. support, indeed require, Soft-Lite.' 720, 812, reiterated implied.' 721, rejecting applicability none applying 'involve, does, purchaser justified sales, licensees.' 51 turned standards full sweep conspiracy.' now runs afoul bare fall outside statutory phrase, additional step removes 'countervailing consideration' favor permitting choose left wholly dark purported Second. mistaken attributing should, upheld arrangement' specifically 'combination conspiracy' areas comprising 'continuing understanding concert action' aspects already noted. 50, 515. repeatedly emphasized 'agreement kind' distributors, whole allegations. determined respect facets coercion' 'Parke, combine, conspire else. indication making anything always govern prosecutions 53 Third. Bearing heavily showed sell,' 307 (see supra, 1024), finds respects. would, did, price-cutting second least instance talks retailers; 'this them'; 'was difficulties analysis scores. As refusals lower involve action, part. itself, becomes simultaneously level. holds illegal, enforcement dependent retailer.' 'evidence acceeded policy,' 'coercion' 'agreement.' Even true, 'horizontal' level inferred, indicates, Circuit, 610. 'vertical' 54 difficulty purports do, overturning resulting conclusions. persisted cut-price retailers—conduct 448, 152, 307)—was se infraction rule, offensive cooperative group action. While inferred aggressive, widespread, organized, successful merchandising programs defensive, limited, unorganized, unsuccessful policy4 disregarding contrary case.5 light surely deciding Unless attributed overturn Court—something disclaims doing, plain definance Procedure, 52(a), past (see, e.g., Yellow Cab 338 338, 341—342, 70 177, 179, 94 150; International Boxing Club New York, Incorporated 358 242, 252, 245, 270)—I really throw discard. 56 sure, ask professes so. bench bar, treats turning notion 'countervailing' social policies. profession bow ago, become regime country commercial community lawyers advise justifiably relied. 57 If principle stands is, position something Congress. emptiest formalisms profess eviscerate application. affirm. provision Sections 1, 2, 1890, 209, amended (15 KF62 3, 4, 4), commonly known 'Sec. 1. Every contract, trust otherwise, conspiracy, restraint nations, hereby declared *. person shall contract engage deemed misdemeanor 3. Columbia, illegal. 4. invested act; duty attorneys, respective districts, direction Attorney-General, institute proceedings equity Congress adopts 'Fair Law' permits sellers certain purchasers, invalidated state grounds. H.R.Rep. 86th Cong., 1st Sess. 6—7. June 9, 1959, House Committee Commerce favorably bill which, passed, enact Practice 823, 25, 1948, 989, 29. learned wholesaler's invoice filled explained oversight. Except December 1957, intend has, receive Indeed, scale interview manager, 34, 507, express, tacit participation. 'restraint 'monopoly,' provisions Note opinion. Those 'authorized dispense prescriptions.' F.R.Civ.P. provides relevant part: 'Findings erroneous, due opportunity credibility witnesses.' things, Virginia damaging local 'deep cutting' (Fdg. 12); 5% total therein 3); counsel 'any regularized systematic machinery maintaining 10); episode 1956, 'in good faith' abandoned (Fdgs. 12, 27); 'have continuously obtain and/or itself.' 27.) militate strongly repudiates respect, nothing

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