Legal Document

334 U.S. 219 68 Supreme Court Reporter 996 92 L.Ed. 1328 MANDEVILLE ISLAND FARMS, Inc., et al.v.AMERICAN CRYSTAL SUGAR CO. Number 75. Argued Nov. 19, 1947. Decided May 10, 1948. Rehearing Denied June 1, [Syllabus from pages 219-221 intentionally omitted] Mr. Stanley M. Arndt, of Los Angeles, Cal., for petitioners. Pierce Works, respondent. Justice RUTLEDGE delivered the opinion Court. 1 The action is treble damages incurred by virtue alleged violation Sherman Act, §§ and 2. 26 Statutes-at-Large 209, 38 731, 15 United States Code KF62 2, 7, 15, Annotated KF65 U5 15. case comes here on certiorari, 331 800, 67 1519, 91 1824, affirmance Circuit Appeals, 9 Cir., 159 Federal Reporter, 2nd Series 71, a judgment District Court, 64 F.Supp. 265. That dismissed amended complaint as insufficient to state cause arising under Act. In this posture case, legal issues are be determined upon allegations complaint.1 2 main question whether, in circumstances pleaded, California sugar refiners who sell interstate commerce may agree among themselves pay uniform price beets grown without incurring liability local beet growers Narrowly whether refiners' agreement together with made concerning its effects shows conspiracy monopolize restrain trade or one thus affecting only purely commerce. 3 material facts which stand admitted if they had been proved purposes proceeding, summarized follows: Pt itioners' farms located northern California, within area lying north thirty-sixth parallel. practical market available that was sale three refiners.2 Respondent these. Each season contract grow their entire crops refiner standard form contracts drawn it. Since prior 1939 petitioners have contracted 4 control supply seed. Both fact terms contracts, farmers required buy seed refiner. can planted land specifically covered contract. Any excess must returned good order at end planting season. 5 gives right supervise planting, cultivation, irrigation harvesting beets, including ascertain quality during growing seasons sampling polarizing. Before delivering company, make preliminary preparations processing them into raw sugar.3 has option reject conditions not complied suitable manufacture sugar. 6 Prior fixed grower's formula combining two variables, percentage refiner's net returns per hundred pounds sales content individual according test.4 7 Sometime before entered an prices beets. mechanics price-fixing arrangement were simple. adopted identical began compute basis average all rather than separate purchasing Inevitably would same quality. 8 controlled when new offered farmers, choice either signing abandoning farming. Petiioners accordingly respondent plan 1939, 1940 1941 seasons. discontinued after Because reference combined refiners, received those lower respondent, most efficient three, based returns. foregoing set forth essential features contractual arrangements between themselves. Other complete showing injury. They relate peculiarly integrated character industry, commerce, relation violations charged injuries suffered 10 With industry general, it stated 1938 1942 large acreages but also Utah, Colorado, Michigan, Idaho, Illinois other states. so grown, harvested, 'sold central markets potatoes, onions, corn, grain, fruit barries, produced manufacturers processors immediately being harvested these taken refineries where manufactured elaborate process said manufacturers, thereafter sold resulting commerce.' Then follow above note bulky semiperishable nature impossibility transporting over long distances storing cheaply safely, rapid deterioration ripe, necessity prompt marketing. These intended effective put agreements complained general setting industry's unique structure special mode operation. 11 specific allegation added region 'was, period (1938 1942), throughout States.' 12 By way well ultimate factual conclusions unlawfully conspired 'monopolize commerce5 several states fix paid * anti-trust laws *'; each no longer competed against others growers, agreed 13 There further charges 'competed performance, ability efficiency manufacturing, executive departments strove increase return decrease expenses,' result secured substantially greater 'net gross receipts sugar' refiners. turn reflected payment 29 1/2 52 cents ton more dealing growers. 14 However, 1941, prices, 'there any such competition *.' Instead information belief that, conspiracy, did conduct operations carefully efficiently previously 'as existed.' consequec e, less expenses free, 'did receive reasonable value beets.' Further 'a direct, expected planned free natural flow hindered obstructed,' instead 'producing selling became illegally associated common wherein pooled frustrated enterprise system incentive efficiency, economy disappeared; operated, 'in far concerned,' corporation owning controlling factories area, conpletely separated overheads none consolidation might bring.6 16 We concerned presently relating amounts inflicted petitioners,7 except say sufficient present questions support proof, show statute purpose. 17 our improperly dismissed. 18 Broadly regard sequence refining distributing it, forth, chain events taking place close intimate connection applying entirety part segregated remainder beyond statute's grasp. 19 Respondent, contrary, broadly severs phase phases later ones marketing initial seem intermediate stage refining, 'purely local,' since occurred entirely California; therefore wholly intrastate events; consequently Act's reach. 20 Connected severance assertion alleges monopolistic restrictive industry. 21 Much stress laid so-called interruption stage. involved, afterward commodities different affects takes restraints allegd sale, distinct local, restraint monopolization trade. Admittedly once converted starts journey tables nation, becomes involved. But then affected, nothing occurring begins rate become or, application, relevance 22 Thus transportation absolutely divorced production, delivery Manufacture breaks relationship consequences out processes statute. words, precede affect effect 23 This very nearly denies contain It certainly restrictions substantial significance interstate, take confines single begins. II 24 broad respondent's argument cannot accepted. reversion conceptions formerly held restrict Congress' power, Wickard versus Filburn, 317 111, 63 82, 87 122, scope coverage. artificial mechanical separation 'production' 'manufacturing' 'commerce,' economic continuity, former latter, varying methods organized, related carried industries indeed suffices production manufacturing reach authority 25 true first decision Act applied distinctions nullifying coverage both power E. C. Knight Co., 156 249, 39 325. Like one, involved distribution because done state, involving 'primarily' 'manufacturing,' although vast shipped interstate,8 enterprise. however, regarded 'incidentially,' 'indirectly,' 'remotely' involved; 'incidental,' 'indirect,' 'remote' be, prevailing climate, regulate, hence outside See supra, page 119 seq. U.S., 66 122. Th dead letter decade and, full force remained unmodified, today weak instrument, Congress, evils gigantic national industrial antecedent products. Indeed, succeeding decisions, embracing artificially lines, series exercise conducted scale evolving industrialism foredoomed reversal.9 27 do stop review again detail familiar story progression end, perhaps told elsewhere succinctly pertinently supra.10 Suffice coming back life Northern Securities 193 197, 436, 48 679, matters transportation, second rebirth 1911 decisions Standard Oil company States, 221 31 502, 55 619, 34 L.R.A.,N.S., 834, Ann.Cas.1912D, 734, American Tobacco 106, 632, 663. Cf. South-Eastern Underwriters Ass'n., 322 533, 553 seq., 1162, 1173, 88 1440. 28 Not could foretold assurance application labels 'manufacture,' 'incidental' throw protective covering consequences. Very soon came Shreveport Rate Cases, 234 342, 833, 58 1341, field inevitably add rulings companies lay statute, deriving immunity violative prohibitions merely engaging activity. extension influence application,11 necessary search some sharp point line ends begins, decide commands effective. For essence affectation doctrine exact location difference, forbidden flowed across injury hindrance defeat congressional policy regarding 30 formulation great turning construction clause, comparable respect landmark Cooley Board Wardens, How. 299, 996. For, while latter gave play work broke bonds confining instrument fulfilling cut Congress loose haltering rein used defy doing substituted impeding rubrics boundaries basic criterion action. transition, neither smooth nor complete, particularly old ideas persisted applications late 1930's. historic 1911, even following decision, constantly number rejected ides local' compass, simply combination restraining monopolizing course, states.12 struggle supremacy conflicting approaches continued. until climax 1930', refused asking practices, shown took total which, apart outlawed effects, activities.13 32 view evolution, inquiry occurs another, intrastate, now step, situations aspect found sum presented.14 given type though course activities, actual threatened vital sufficiently adverse paramount declared constitute consequence. If so, fall, inflicts remediable prescribed methods, damage provision. 33 contemplate burdens remain immune time Exactly contrary comprehended, moment arises, fashioned Obviously criteria us furnish reaching seeks. Only returning approach, severing restraints, sugar, we conclude there practices touching here. At day willing backwards tep. III. 35 consider posed relevant criteria. disclose types Act; acts produce commerce; create recovery authorized. 36 clear sort condemned Act,15 purchasers,16 persons specially injured claim sellers, customers consumers.17 And assumed final aim market, does business, achieved Stevens Foster & Kleiser, 311 255, 261, 61 210, 213, 85 173. object fixing retail means accomplishment state. Frankfort Distilleries, 324 293, 65 661, 89 951. 37 confine protection consumers, purchasers, competitors, sellers. Nor immunize Socony-Vacuum 310 150, 60 811, 84 1129; 328 781, 1125, 90 1575. comprehensive coverage, protecting victims whomever perpetrated. South-Fastern Ass'n, 1173 S.Ct., amount nation's relevant, exercised effectively concerned, Indiana Farmer's Guide Prairie Farmer, 293 268, 279, 182, 185, 79 356, Yellow Cab 332 218, 225, 1560, 1564, 2010, adversely policy. keep goods inimical welfare, Darby, 312 100, 115, 451, 457, 609, 132 Law Reports 1430, cases Walsh, 432, 437, 438, 1283, 1286, 1585; enough activity multiplied practice subject federal control, contains threat requires preventive regulation. Consolidated Edison Labor Board, 305 221, 222, 59 206, 83 126. Moreover, Distilleries '* obvious distinction inseparable element larger program dependent t § success states.' 297, 663, statement situation presented us, purchase. state'; 'conduct states,' source arises another program. 40 this, difficult understand allege discarded discussed Part above. contention ignores forth. rests grounding, little, any, phrasing supplanted approach. 41 change undergone makes different, objects, commodity through distribution, e.g., wheat, raisins purchased packers packing, cf. Parker Brown, 341, 350, 307, 313, 315. 42 varied amounting stages producing disposing finished product; particular unlike presented.18 mere begin, Act.19 Again, said, thing precise scheme closely knit Hence directly sever render insubstantial subsequently 43 Indeed necessarily much effected characterizing operation tightening controls understandings, projected repeatedly alleges. permeated phases, interstate. 44 deal here, say, tightly interwoven sae middle dominating seed, quantity volume planted, cultivation harvesting, rejected, local. 45 Some built up advantage opportunities afforded character, pattern habits organization;20 utilizing key positions advantages give actions;21 still ability, achieved, restrictions. 46 Even provision position one. growers' competitive outlet exists compete market. farmers' alternative plant pleasure terms. marketed, other. dominate dominant position, obstacles created capital investment productive, practically impossible. Upon allegations, A tighter all-inclusive hardly conceived. 47 When cease last vestige removed opportunity grower his product. Moreover inconceivable monopoly will lessening overall repercussions ones, flowing paying rendering devoid amount; other, nee ssary inevitable agreement, whole, reduce 49 idea stabilization consumed toward reducing product, impossible accept. acquired thereby manufactured, area. substance roughly, precisely, allocated quotas competitively established upon. likely drive away many reason shift dealings closed circle. enhanced. 50 magnified widely scattered regions accessibilities market22 regions, undoubtedly distant segment served nearest hand. 51 Finally, interdependence inextricable clearly ties factor specifies shall enter agreement's effect, deprive he deals, receives. reflect combination's sum, permeating structure. case. Those deprived immediate provision; tended interstate; finally tie-in interlaced 53 allegedly them, fall squarely prohibitions, creating designed prevent, public private individuals. 54 matter, view, contracting benefited, harmed, followed. statutory remedy afforded. test legality combination, policy, members profited violated manner forbids individuals damages. addition interest enhancing controls, itself. mean completely unified respects phases. competition. flouted, nomenclatural plan's segmentation legally unrelated constitutes whole. 56 To compare interlocked stages, organization, like producing, processing, fruits, vegetables, products, susceptible various uses affording outlets refined integration exists, ignore life. So conclusive comparisons variety materials making involves extensive change, extracting 57 us. significantly violating await day.23 IV. Little remains complaint. comprehend restate leaving summary beginning opinion. omitted confined hearing followed filing complaint, point, apparently response intimation court, eliminated words 'sugar beets' *.'24 elision express disavowal charge commodity. amendment eliminate numerous repeated forms explicitly specified sugar,25 designated affected deny disavowal, intent effect. insubstantial, clause remained, think amendment, whatever made, disclaimer waiver. specific, effects. 62 Appeals reversed, remanded proceedings conformity Reversed remanded. JACKSON whom FRANKFURTER joins, dissenting. appears me Court's assumptions petitioner disclaimed court below. permissible inferences disregard amendments about. On hearing, trial judge considered accompanying pleadings indicated ran direction. base figured. derived income rc eived open year. suggested references ambiguity Accordingly, plaintiff, suggestion purpose appeal, filed counts 'to enable herein pass sufficiency count further, possible speedy inexpensive appeal insufficient.'1 moved cost product move stated. affirmed. decides original unchanged evidence. Despite deletion assumes, evidence, builds thesis violated. N Dec. Immigration Nationality Decisions fairness litigants petitioner's should disposed pleaded courts below, affirm contained counts, alleging third charging breach respectively. expedite contention, stipulation noted, see 5, count. provided prejudice rights determination issues. 'bulky semi-perishable incapable transported stored safely extended deteriorated rapidly kept ground harvest promptly matured.' outlay, annual upkeep operating expenses, erecting equipping refinery, refinery short years best; seeds refining; profit include cutting off tops, trimming crowns way, removing foreign substances interfere factory work. Net measured applicable Monthly settlements preceding month estimated settlement deferred accurately determined. appeared stricken counsel dismissal 1. however remaining text; text IV infra. Paragraph XIX petitioners' 'By defendant conspirators, restrained, therein lessened destroyed, fixed, illegal established, plaintiffs aforesaid.' (Emphasis added.) notes 24. difference actually returns, Secretary Agriculture, pursuant Sugar 1937, 910, 1131(d), 1131(d); Fed.Reg. 5231. issue need concern now. Petitioner Mandeville Island Farms prayed $315,043.80; Zuckerman $112,192.14. noted heritage act validity statutes, 121, 87, 122; 543—545, 1168, 1169, 1440, approach reflecting Marshall's mutual exclusiveness ignoring evolution Prudential insurance Benjamin, 408, 412—427, 1142, 1145, 1153, 1342, 164 476. Compare, E.C. 325, 663; Hammer Dagenhart, 247 251, 529, 1101, 649, Ann.Cas.1918E, 724, 657, 1430; Carter Coal 298 238, 855, 80 1160, Sunshine Adkins, 381, 907, 1263; Chicago, etc., R. 282 311, 159, 75 359, Railroad Retirement Alton 295 330, 758, 1468, Lowden, 308 248, 208; Hopkins 171 578, 40, 290, Stafford Wallace, 258 495, 397, 735, 229; Employers' Liability 207 463, 498, 141, 145, Virginian Federation, 300 515, 557, 592, 604, 81 789, Weiss 321, 269, 298; New York Life Insurance Deer Lodge County, 231 167, 338, authorities cited, discussion 119, 120, 86, 476; 1440; Jones Laughlin, 301 615, 893, 108 1352; Wrightwood Dairy 315 110, 523, 86 726; Stern, Commerce Clause National Economy, 1933—1946, Harv.L.Rev. 645, 883. Filburn dealt Agricultural Adjustment enact But, referring Interstate 122 statutes 'ushered adjudication' requiring interpretation commercec lause, 'when legislation, adhered earlier pronouncements, allowed little Congress.' cited principal example. encompassed fundamentally expanding transportation. integer part. 'affectation' revival 'necessary proper' doctrine, unqualified exclusiveness, 8. Once Acts, productive regulating Time disclosing ever impact posing regulation protect preserve carry Reading 253 26, 425, 760; Keystone Watch Case D.C., 218 KF105 F3 502; Pennsylvania Refining 166 254; I. Du Pont de Nemours C.C., 188 127. Holmes dissenting 724. Montague Lowry, 38, 608; Swift 196 375, 276, 518; Patten, 226 525, 333, 325; Binderup Pathe Exchange, 263 291, 96, 308; Trade Commission Pacific Paper 273 52, 71 534; Kleiser 173; Bigelow RKO Radio Pictures, 327 574, 652. 951, said: 'It occasion insulated Anti-Trust aims insofar motivated achieve touch Industrial Association San Francisco 268 64, 403, 69 849; Levering Garrigues Morrin, 289 103, 549, 77 1062; Leather Workers Herkert Meisel Trunk 265 623, 1104, 566; Local 167 International Brotherhood Teamsters 291 396, 398, 78 804, Hutcheson, 219, 788. cited. 1575; 518. purchasers sellers consumers. 16. Compare Arkadelphia Milling St. Louis Southwestern 249 134, 237, 517, Cloverleaf Butter Patterson, 148, 491, 754. 1225, Aluminum America, 148 416. factors peculiar corp limitation primary commercially profitable use, nearby well-known adapted crop soil, climate availability water quantities Resulting limitations technical process, important individually small cooperative groups, specialized business equipment investment. All combine separately growing, establish leave mercy 20. 315, inconsistent conclusion apply sponsored State California. Contrary suggestion, assumes justify regulation, state-sponsored prorating 'organized solely contract, persons, corporate.' law, reached. 5. explaining deletion, record stipulation, 'what (original) complaint.' record, elided court. Apart text, included specifications From literal inference, withdraw trade, concede obviously war having intended, supposed deleted arose whole referred 'interstate commerce' (considered apart, do, sugar). event decided conjecture why think, immaterial made. E.g., quoted 6, note. Stipulation Order executed parties, Judge, 'Whereas, oral November 13, 1945, motion dismiss, Hon. Ben Harrison, Judge matter argued, bench felt action, supplemented copies attached defendant's tremendous saving expense (a) count, (b) eliminating what (c) parties entering pleadings, plaintiffs, causes merits insufficient; 'Now, Wherefore, stipulate, plaintiffs' waiving thereunder, follows, to-wit: '1. Plaintiffs file herein, attaching use 1938, omitting counts. '2. Said omission includible retraxit prejudice. '3. Defendant waives, hereinafter hereafter waives defense laches amendment. '4. may, six months final, amend realleging portion either, period, actions continuously date commencement '5. waiver n d permitting hereinabove continue final.'

Classification Label: 7