ADAMS DAIRY COMPANY v. ST. LOUIS DAIRY COMPANY No. 15856.
260 F.2d 46 (1958)
ADAMS DAIRY COMPANY, a Corporation, Appellant, v. ST. LOUIS DAIRY COMPANY, a Corporation, Pevely Dairy Company, a Corporation, and Milk Wagon Drivers and Inside Dairy Workers Local Union No. 603, American Federation of Labor, a Voluntary Labor Organization, Appellees.
United States Court of Appeals Eighth Circuit.
October 14, 1958.
Harry H. Craig, St. Louis, Mo. (Norman W. Armbruster, John T. Wiley, Jr., and Wiley, Craig, Armbruster, Schmidt & Wilburn, St. Louis, Mo., were with him on the brief), for appellee, Union.
Before GARDNER, Chief Judge, and VOGEL and MATTHES, Circuit Judges.
MATTHES, Circuit Judge.
In this action, based upon an alleged violation of Section 1 of the Sherman Act,
In summary, the events and circumstances pertinent to the first contention are as follows: Adams, with St. Louis Dairy and Pevely, is engaged in the fluid milk industry in the St. Louis, Missouri area, where, in 1947, St. Louis Dairy supplied approximately 27 per cent and Pevely approximately 36 per cent of the fluid milk that was marketed. The Union, a voluntary labor organization, was the bargaining agent for the employees of the St. Louis area dairies, including Adams, St. Louis Dairy and Pevely. A more detailed recitation of the relation between the Union and the individual dairies will be set out hereafter.
Adams was a newcomer in the St. Louis market, having started operations in November, 1947. The president of the company testified that he had studied the market conditions in St. Louis for sometime, observing among other things
As stated, the Union served the milk industry in St. Louis as bargaining agent for the employees of the various dairies, including the parties here involved. It negotiates what is known as an "industry-wide contract," that is, one contract which is signed by all of the dairies in the area. It also appears that there was in existence an employer association of some 27 "small" dairies known as the "St. Louis Milk Distributors' Association," the purpose of which was to enable the employer group to present a solid front, in behalf of the 27 dairies it represented, to the labor union in the negotiation of labor contracts, and it was the custom of the Union to meet with representatives of Pevely, St. Louis Dairy, and the Association and negotiate labor agreements, which were then presented to the individual dairies for signatures. Adams joined the Association in 1948 and continued its membership until the contract here in controversy was presented. Appellee dairies were never members of the Association.
A substantial element of cost to any dairy is the expense incurred in delivery of its product. Adams' complaint is based upon the allegation that the industry-wide labor contract of July 1, 1950, was entered into by appellee dairies and the Union for the purpose of adversely affecting Adams' costs of delivery, thereby compelling Adams to lose its competitive position price-wise in the St. Louis area. In order to understand Adams' position in the competitive market, it is necessary to review in some detail the delivery cost structure under which all dairies operated, pursuant to the provisions of the industry-wide union contract applicable when Adams first entered the St. Louis market, and under which Adams, and the appellee dairies operated until the new contract of July 1, 1950, was put into effect. The drivers who delivered milk, whether at retail to the home, or at wholesale to food stores, were paid on a commission basis, governed by the terms of the union contract. Under the contract, each driver was paid a base salary, then commissions were paid on a "point" system — each "point" representing a unit of dairy products, such as a quart of milk, a half-pint of cream, etc. Under the union contract in existence when Adams entered the market, no commissions were paid on the first 12,500 points per month; from 12,500 to 24,000 points, the driver was paid ½ cent per point; 24,000 to 27,000, 1 cent per point; 27,000 to 30,000, 1½ cents per point; and on all sales over 30,000 points, 2 cents per point. Because of the nature of the market supplied by Adams (twelve routes supplying large supermarkets almost exclusively), large volumes were delivered by relatively few drivers — thus at the time of the negotiations for the 1950 contract, Adams' twelve routes averaged more than 55,000 points per month, with some routes running as high as 80,000 points per month. It was testified that Adams' drivers had annual earnings as high as $15,000 to $17,500. Another cost factor
It appears that appellee dairies were in a different position. For example, on July 1, 1950, Pevely had 300 retail routes and 89 wholesale routes, the retail routes averaging something less than 10,000 points per month, and the wholesale routes a little over 21,000 points per month. St. Louis Dairy operated 173 retail routes, averaging 11,236 points, and 43 wholesale routes, averaging 26,674 points. It further appears that during the period from January 1, 1948, to June 30, 1950, Pevely had only two wholesale routes which averaged more than 30,000 points per month and no wholesale routes averaging more than 40,000 points, the two "high point" routes averaging 31,682 and 31,015 points for only 20 of the 30 months of that period. From the record it appears that St. Louis Dairy had only two routes averaging more than 30,000 and no routes averaging more than 40,000 points per month.
We now come to the 1950 contract of which Adams complains. Briefly, the offending clause provided that drivers were to be paid a commission of 4 cents per unit on all points per month above 40,000. In addition, any driver whose route was split was to receive full base pay, plus average commissions equal to his monthly earnings just prior to the split, for a period of four months following the splitting of routes. Adams charged that when faced with an increase of commissions from 2 cents to 4 cents on all units over 40,000, and as applied to its drivers whose routes averaged 55,000 units, it had a choice of closing down operations or splitting the routes, so that no one driver would have such volume as to carry sales into the prohibitive 4-cent rate. Adams prevailed on the union to delay the effective date of the new wholesale commission rate for a period of 60 days, during which period Adams purchased 10 new trucks and divided the routes, so that when the contract terminated four years later, Adams was using 34 routes to handle the deliveries. It further appears that the Adams drivers, dissatisfied with the cut in their income, organized their own labor union, signed a new contract eliminating the 4-cent rate, and that routes were then reduced in number.
Adams alleged, and here contends, that the clause increasing the commission to 4 cents served no legitimate labor purpose; that Adams was the only dairy company adversely affected by the clause, inasmuch as the other dairies did not have routes reaching into 40,000 points, and that its sole purpose was to increase Adams' distribution costs, thereby forcing it from the competitive market. The appellee dairies and the Union insist that the contract was negotiated at arm's length; that the Union was solely concerned with improved conditions in the dairy industry, and sought to ease heavy loads which were damaging the health of the drivers, and, in addition, the Union urges that it was interested in providing more jobs for union men and thus intended to encourage route splitting.
We now attend to the circumstances surrounding the negotiations and execution of the 1950 industry-wide contract. The union contract, with the maximum 2-cent rate, was to expire on June 30, 1950. In May or June, 1950, a joint industry meeting was held, attended by all parties here involved and a representative of the St. Louis Milk Distributors' Association. At that time, the Union presented its proposals for wages, hours, commissions and working conditions. No actual bargaining took place at this session, but a representative of Adams expressed its opposition to the increased commission rate. It appears that Adams became further dissatisfied and withdrew from the St. Louis Milk Distributors' Association and engaged the services of a new attorney. Two or three industry-wide bargaining sessions were held subsequently, but Adams was not represented. It appears that this lack of
Upon this evidence, the case was submitted to the jury on instructions which included the conspiracy charge, and as to which counsel for appellant, with candor, has this to say in its brief: "The trial court properly submitted the issue of an unlawful conspiracy for the jury's determination; and we have no fault to find with the instructions of the court in that regard." As observed at the outset, the jury found in favor of the appellees.
Urging that its second amended complaint tendered the issue that the 1950 contract was, in and of itself, illegal, in restraint of trade and violative of Section 1 of the Sherman Act,
Upon the record presented, and under controlling legal principles, we are convinced that this allegation of error cannot be sustained.
As we view the complaint in its entirety, consisting of twenty-four paragraphs, and in light of the circumstances attending the trial, a serious question is presented as to whether the so-called contract theory was encompassed in the complaint or was an issue actually litigated. The allegations charged appellees with formation of, and entry upon, a conspiracy to control and affect appellant's costs of distribution of fluid milk for the purpose of compelling appellant to abandon the sale of fluid milk in the St. Louis area at prices lower than the prices of such product as sold and distributed by appellee dairies, so that there was an undue and unreasonable restraint of trade or commerce in the sale and distribution of fluid milk in said area. Following the conspiracy charge and in paragraph twenty-three of the complaint this allegation appears:
In his opening statement, counsel for appellant informed the jury: "The charge in this case is a charge, broadly speaking, of conspiracy to adversely affect competition in the milk industry in the St. Louis area." (Emphasis added.) From the foregoing, and the evidence, it would appear that the contention of St. Louis Dairy that the contract theory is without pleaded or factual foundation, rests on substance; however, we refrain from disposing of the assignment on this technical ground and shall accord it full consideration on the merits.
Appellant relies upon decisions, which, it insists, announce the principle that any agreement which imposes an unreasonable restraint upon commerce is, in and of itself, an unlawful restraint within the meaning of the Sherman Act
In United States v. Socony-Vacuum Oil Co.,
Careful and studious consideration of appellant's cited "Per Se Illegality" cases, none of which bears factual resemblance to the instant situation, has convinced us that the principle has no application here.
Apart from circumstances (not here present) in which the Per Se Illegality doctrine was applied, the principle is firmly entrenched that in determining whether a restraint is unreasonable and therefore illegal and violative of the Sherman Act, resort must be had to the Rule of Reason. This rule, promulgated in 1911 in Standard Oil Co. of New Jersey v. United States,
This rule has been adhered to through the intervening years. See United States v. E. I. Du Pont de Nemours & Co.,
Since there was no basis for submission of the "Illegality Per Se" theory, the crucial issue of whether the conduct and course of action pursued by appellees resulted in an unreasonable restraint of trade within the prohibition of the Act, necessarily had to be resolved
It should also be emphasized that this controversy bears another feature vitally distinguishing it from the cases where the "Illegality Per Se" doctrine was applied, in that a labor union was a participant in the activities which culminated in the 1950 labor contract. Under decisional law, a labor organization is immune to Sherman Act liability unless it is found to have conspired with non-labor groups for purposes not connected with legitimate labor ends. Allen Bradley Co. v. Local Union No. 3,
Unions, however, do not enjoy a blanket immunity to liability under the antitrust laws. As stated, if the evidence discloses that a labor organization has acted in conjunction with other business groups for the purpose of securing ends prohibited by the Sherman Act, and was not primarily motivated by labor goals, the union may be liable to private parties, or injunctions may be issued.
Conjoined in the assignment dealing with the failure of the trial court to submit what has been designated as the "Illegality Per Se" theory, is the contention that prejudicial error resulted from the Court's charge to the jury, by inclusion therein of instructions designated for the purposes of this appeal, as P-3, U-3 and P-9. P-3 authorized a verdict for Pevely upon finding that Pevely accepted the labor contract without any understanding or agreement, tacit or expressed, with anyone at any time, to interfere with or restrain the trade or business of Adams. No claim is made that the instruction did not properly declare the law — rather appellant argues that the instruction "plainly excludes the contract theory from the jury's consideration and permits a plaintiff's verdict only on the conspiracy theory." From what we have heretofore said, Instruction P-3 was proper.
Instructions U-3 and P-9, dealing with the Union, manifestly declared the law as announced by the Supreme Court in the Allen Bradley case, supra, as applicable to the activities of the Union in negotiating the 1950 labor contract. Appellant's objections thereto are completely without merit.
This brings us to the final assignment which has for its foundation alleged misconduct on the part of the trial judge. In particular, the charge is made that the judge indulged in unwarranted and improper remarks and comments throughout the entire proceeding, and that the cumulative effect of such conduct prevented appellant from having a fair and impartial trial.
The rules designed to afford a guide to trial judges and counsel in controlling their conduct during trial have been so clearly enunciated and defined through the years, that all members of the bench and bar alike should be familiar with them and no useful purpose would be served in reannouncing them here. Those interested may review Montgomery Ward & Co. v. National Labor Relations Bd., 8 Cir.,
The zeal with which counsel for appellant present this contention on appeal contrasts sharply with their failure to demonstrate any concern at the time the challenged conduct was in progress. A painstaking and assiduous examination of the voluminous record reveals that not a single objection was made or exception taken to the conduct of the judge, said to be so prejudicial as to constitute denial of due process. Under Rule 46 of the
While we do not countenance the practice of counsel raising for the first time, after trial, allegations of procedural error, as was done in this case, nevertheless, under our duty to determine whether the parties were denied substantial justice, we have given full consideration to the contention. See Rule 61, Federal Rules of Civil Procedure and 28 U.S.C.A. § 2111. The purpose and scope of our review comes down to determining whether or not, despite technical errors in trial procedure, the party complaining was deprived of substantial justice. "The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties." Rule 61, Federal Rules of Civil Procedure.
In the instant situation counsel for appellant have directed our attention to some fifty-four separate remarks of the trial judge interspersed throughout the ten days of trial. Viewed in a collective sense, at first sight, and out of context, it might be said that some of the comments seemed unduly harsh. However, after meticulous study of the entire record of over 600 printed pages, we are convinced that they do not demonstrate an attitude of unfairness and partiality on the part of the judge, and they were not prejudicial.
In Goldstein v. United States, 8 Cir.,
The judgment is affirmed.
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