Legal Document

389 U.S. 384 88 Supreme Court Reporter 528 19 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 621 CASE-SWAYNE COMPANY, Inc., Petitioner,v.SUNKIST GROWERS, INC. Number 66. Argued Oct. 18, 19, 1967. Decided Dec. Rehearing Denied Jan. 29, 1968. See 390 930, 846. William or Haw. Hawai‘i KFH45 A2 Henderson, Washington, D.C., for petitioner. Seth M. Hufstedler, Los Angeles, Cal., respondent. Mr. Justice MARSHALL delivered the opinion of Court. 1 This is a treble-damage action under § 4 Clayton Act, 38 Statutes-at-Large 731, 15 Code KF62 15, alleged violations both and 2 Sherman 26 209, as amended, §§ 1, 2. The District granted directed verdict, at close plaintiff's case, defendant, Sunkist Growers, Incorporated Appeals Ninth Circuit reversed to that portion complaint predicated on holding sufficient evidence was presented monopolized attempted monopolize trade in relevant market;1 it affirmed dismissal Act charge, qualified cooperative organization Capper-Volstead 42 388, 7 291,2 therefore could not be held any intraorganizational conspiracy restrain trade. In order determine scope exemption from antitrust laws, we certiorari. 387 903, 87 1686, 18 (1967). issue whether an association '(p)ersons engaged production agricultural products * fruit growers' within meaning notwithstanding certain its members are actually growers. We hold not. I. 3 organizational structure system follows. At base some 12,000 growers citrus Arizona California. organized into 'local associations,' they designated Sunkist's bylaws, numbering approximately 160, each which operates packing house preparation market. vast majority these local associations—about 80% by number 82% volume marketed system—are, stipulated, associations all growers.3 A few associations—no more than 5% fruit—are corporate whose total justify installation their own facilities. remainder (also 'agency association')—about 15% handling about 13% system—are private corporations partnerships, owning operating houses profit. Their relationship handle defined agreement but marketing contract, i.e., contract with grower his cost plus fixed fee. It membership agency gives rise here. 5 associations, including houses, 'district exchanges,' non-profit corporations. principal functions threescore district exchanges fresh member associations; negotiate sales, arrange shipment, serve conduits communication between Sunkist. Representatives select board directors 6 itself, since 1958,4 has two classes 'members': exchanges, function directors, vote other matters have proprietary ownership assets. entity owns name 'Sunkist' marketed. extensive sales organization; employs traffic specialists; performs many services through, example, research More particularly, processing facilities what known 'product' fruit, various reasons sold market, rather used processed such canned concentrated juices. 8 controls 70% oranges grown California Arizona, 67% product oranges. control manifested through contractual agreements. For agrees he will market association. Each who contracts appoints agent fruit. That generally five shipping seasons, although may canceled time 'by mutual consent' written notice during August year force. An escape clause permits sell 'mutually agreed upon' him others, if can obtain price higher, judgment house, would it. Should so released agreement, pay $2.50 per ton released. 9 exchange fruit—product fresh—in system. association, Sunkist-District Exchange-Association Agreement, reserves right decide ship willing receive fruit; however, pool export, event handled solely discretion. also determines 'the maximum amount currently,' allocates 'opportunity equitably among Local Associations.' release without notifying Sunkist, must approval releases particular variety Further, '(a)ll prices, quotations allowances shall issued distributed Sunkist.' 10 Petitioner Case-Swayne manufacturers single-strength orange juice blended complaint, insofar issues here, petitioner charged restraint violation effect limit sharply supply available period covered complaint. II. 11 Section (see n. 2, supra) privileges collective activity part farmers, planters, ranchmen, dairymen, nut *.' 291. Despite specific language, argues Congress, enacting measure, intended give sanction form benefits inured grower; that, because charging fee5 services, do participate directly gain loss involved system, privileged them.6 think argument misconceives requirements runs counter legislative history. 12 Congress enacted response urgings those felt Act's prohibition against combinations might applied imperil development endeavors, principally unions.7 section provided laws were 'construed forbid existence operation labor, agricultural, horticultural organizations, instituted purposes help, having capital stock conduted profit,' organizations deemed 'illegal conspiracies 17. From standpoint cooperatives, defect only nonstock organizations. clarify extend cooperatives stock.8 13 reports H.R. 13931, predecessor bill failed passage, 2373, became state: 14 'Section defines limits kind legislation applies. These limitations aimed exclude this actual farmers operated help producers.' (Emphasis added.) H.R.Rep. 24, 67th Cong., 1st Sess., (1921); 939, 66th (1920). producers demonstrated debates bills, e.g., following involving Senator Kellogg, sponsor measure: 16 'Mr. CUMMINS. Are words 'as others products, merely descriptive general subject? 17 KELLOGG. & N Immigration Nationality Decisions subject. 'farmers' them all. does exactly catch my point. Take flouring mills Minneapolis: They engaged, broad sense, product. packers intend confer upon grants, assume? Certainly not; proper construction grants privileges. covers people produce farm kinds, out precaution added. 20 TOWNSEND. persons things. 21 Yes; always been understanding.'9 22 To sure, concern prohibit participation collectivity predatory middleman, speculator bought crops field returned small percentage eventual worth grower. focuses expression concern, urging middlemen. focus wide mark. deal here 'special exceptions plan,' Allen Bradley company versus Union 3, 325 797, 809, 65 1533, 1540, 89 L.Ed. 1939 (1945) (§ Act), justified expanding coverage, otherwise appears quite plain. states it; enumeration limited terms products.10 23 Nor proviso 1—'(t)hat benefit thereof'—broaden earlier language. provision, conjunction prerequisites qualification Act—either one regard furnished dividends 8%, dealings nonmembers limited—was designed insure qualifying truly controlled by, for, producers. short, aware even purpose obtaining fair return members, producers, adds measure insurance benefits.11 Moreover, virtually mention history possible nonproducers occurs respect issuing stock.12 Whatever significance recognition financial stake producer organization, role being narrowly restricted voting dividend unpersuasive Capital nonproducers—and extent fairly read contemplating all13—does enlarge share already possessed themselves. precisely effect. 24 suggests 'membership' no 'economic significance,' relying provision permitting nonmembers. still free products. But implications governed entirely different standards. 'The thus unite (under Act) cannot authorize combination see fit devise.' Borden Co., 308 188, 204—205, 60 182, 191, 84 181 (1939); accord, Maryland Virginia Milk Producers Assn. States, 362 458, 466—467, 80 847, 853—854, 880 (1960). policy making though profitmaking operations.14 did allow nonproducer interests avail itself exemption.15 25 below case remanded further proceedings consistent opinion. ordered. 27 Reversed proceedings. 28 HARLAN, concurring dissenting part. 29 agree Court's should qualify conferred 291, technically properly constituted cooperative. However, like Brother WHITE, am unable ignore subjects large liability extending far beyond confines suit. 30 There nothing record indicate evade mandate when allowed privately owned association' become apparent motive provide greater range desired integral years.1 Until bringing present action, aspect had apparently gone challenge dealt Its legality never seems questioned government. argued before us, sincerity, deprive immunity long actions taken reason doubt belief years. 31 circumstances, inequitable cause lose previously assumed Act. evidently consequence holding, mitigated way appear expose very liabilities. Many activities size presumably restraints trade, rationale subject treble damage suits them. chief result windfall recoveries whom arm's length good faith. main burden ultimately fall organization. 32 liable past acts participated government virtue membership. me equitable accords better basic aid burdens heavy potential supported frequent reference congressional forerunner protect.2 Sufficient precedent type mitigation found Winckler Smith Citrus Products 370 82 1130, 305, former 'tripartite' immunity. there stated 33 'To impose grave legal consequences distinctions de minimis banded together purview Acts.' Id., S.Ct., 1136. 34 make clear condition received Therefore, assert complained resulted attempts use power distinguished 35 holds, and, future, agree, gains channeled members. excluded simply outweighed dangers admitting foxes hen roost. recognizes, ante, 394-395, evident possibility monopoly immunized prosecution Capper-Volstead3 indicates restricting rough resources avenue membership, narrower path contract: provides 'may necessary agreements' purposes. intent, agreements individual tested standard applicable 36 treated nonmembers, question 369 Federal Reporter, 2nd 449, 461—462. agree. Regarded contracts, essentially desires packed deliver entire crop year, pack fee, then year. Since want wider choice enjoy permissible looked 37 accord opinion, remand show what, any, allegedly suffered need hardly say future forfeit elect continue associations. STEWART joins, result. 39 grant efforts planters Arrangements nongrowers scrutiny laws. Under controlling decisions nongrower meet standards statutes. (1939). Making immunize grower-nongrower transactions forbidden violate 1. Indeed, which, restrains suit Hence, encompassed charge arrangements denied violated error dismiss grounds. 40 follow lost completely. bulk agencies, great account clearly exempt conspire outsider does, except transaction. where takes granting If able collect damages injury flowing violations. little basis concluding strips status exposes wholly unrelated affiliation. 41 themselves operate pick, pack, Most cooperatives. relatively number, so-called buy contract. turn unless disqualifies them, seem primarily corporation, top pyramid. Among things, ultimate authority responsibility Membership made up exchanges. have, direct voice election selection vested alone. conduct affairs charter carries influence. involve execution application binding powers over members' confine packing, processing, family. addition, execute 'Sunkist-District Agreement' contains exclusively 43 completely several follow. Those likewise exemption. nonexempt Thus practical exposed 44 Neither nor claimed examination Also, entities, reach either itself. recover flow resulting agencies business caused intercooperative intergrower entity. result, view, nearly activities. 45 trial above principles. 46 DOUGLAS, dubitante. 47 WHITE partially combine certainly argued. questions discussed HARLAN fully So tell stage litigation, problems abstract. extent, let alone nature, elements practices indeed explored. Therefore wisdom specifically reserve survive today's ruling. 449 (1966), cert. denied, 932, 2056, 994 1967). (1960); 305 (1962). reads: 'Persons act otherwise, stock, collectively preparing handling, interstate foreign commerce, engaged. Such common; purposes: Provided, thereof, conform requirements: 'First. therein, or, 'Second. excess centum annum. 'And following: 'Third. value members.' 'Limitation citrus-fruit cardinal principle Exchange (i.e., Sunkist) system.' Gardner McKay, Fruit Growers System (U.S.Dept. Agriculture, FCA Cir. C—135 (1950)). Cumberland, Cooperative Marketing—Its Advantages Exemplified (1917). prior 1952 Exchange. 1958, midpoint altered respects: first, directly, whereas old bylaws represented exchanges; second, subsidiaries Sunkist—Exchange Lemon Orange Co.—were merged parties changes affect discuss post-1958 form. obtains 'all costs every incurred connection with' 'fixed fee,' record, 'not cents box grapefruit, oranges,' etc. advised how fee determined, bargaining well dependent sense represents pay, anticipating achieve pooling stipulation, note, 'does recovery packing.' our discrepancy crucial decision resolved sub silentio favor pointed raised case; indeed, conceded respondents H.R.Rep.No. 627, 63d 14—16 (1914); (1945). object 464—468, 852—854 Hanna, Antitrust Immunities Associations, Law Contemp.Prob. 488 (1948). 62 Cong.Rec. 2052 (1922). (1920) (remarks Lenroot). significant amendment offered floor Senate bring processors grower's depended processor obtained finished product, beet sugar manufacturer. 2273 Like beneficiary (amendment) producer.' 2274. Norris opposition inclusion (id., 2275): 'They cooperators; producers; composed incorporate rejected. 2275, 2281. Hulbert, Legal Phases Farmer Cooperatives 170 FCS Bull. 10, 1958): 'This language plain cooperative, come act, Associations (U.S.DEpt. Bull.No. 1106, 1922); Mischler, Agricultural Law, Rocky Mt.L.Rev. 381, 385 (1958); Op.Atty.Gen. 326, 339 (1930); Note, Va.L.Rev. 63, 69—70, 100 (1958). Cf. Sheffield Farms F.T.C. 555 (1948); Gold Medal Farms, 356 E.g., 2271 (1922); 365 Sunkist—a corporation—points it, Exchange, favorably referred debates, see, 2052, 2267, 2271, 2277 312, 315, 360—361, show, system; reading references, likely matter, Walsh, one, doubted Exchange's federation (62 2277—2278). event, take remarks intending light recognized, organize outset, finances so, seek nonproducers. Walsh); (1922) (same); Norris). Hearings 2373 Subcommittee Judiciary Committee, Sess. (1921). As such, association's situations antithetical contracted. review Obviously, councils contracts. All entitled defense based express views merits least 1924. McKay Stevens, Organization Development Citrus-Fruit Marketing Agency 22—23 (U.S. Dept. 1237, 1924). 12, Page 394. See, 2217—2226, 2257—2280.

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