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MARION COUNTY CO-OP. ASS'N v. CARNATION CO.

August 18, 1953

MARION COUNTY CO-OP. ASS'N
v.
CARNATION CO.



The opinion of the court was delivered by: John E. Miller, District Judge.

  On October 8, 1952, plaintiff filed its complaint against the defendant and alleged the following facts:

Plaintiff is an Arkansas corporation, defendant is a Delaware corporation, and jurisdiction is conferred upon the Court by Title 15 U.S.C.A. §§ 1-15.

    "That in and about Marion County, Arkansas, there
  has existed for many years prior hereto and does
  presently exist a milk producing area or shed, which
  shed produced Grade `C' raw milk which is used in the
  manufacture of dairy products; that both the
  plaintiff and the defendant each maintained a dairy
  products plant, and in connection therewith each
  party engaged in buying raw milk from the producers
  in the shed, manufacturing products therefrom and
  selling the products in interstate commerce."

The defendant, Carnation Company, operates numerous dairy products plants throughout the United States and has substantial assets and a large volume of sales; plaintiff operated a small enterprise with assets and sales of less than one per cent of the amount of defendant's assets and sales.

    "6. That sometime in the fall of 1951 and at other
  times unknown to the plaintiff, the defendant,
  Carnation Company, by and through its officers,
  managers and agents, conceived a plan and scheme for
  obtaining unlawful control, monopoly and corner of
  the aforesaid milk shed, restricting interstate
  commerce and trade thereby, which plan or scheme was
  put into effect by the defendant commencing in the
  fall of 1951 and consisted of the establishment and
  maintenance of a `fictitious price'; that the said
  `fictitious price' consists of payments for raw milk
  to producers in the said shed which (a) were in
  excess of the usual and normal prices paid in the
  said milk shed in the normal course of business; and
  (b) resulted in a loss to the defendant on the sale
  of its products manufactured from raw milk purchased
  in the said shed at the said price; and (c) were
  calculated to result in a loss to any other
  purchasers, including the plaintiff herein, of raw
  milk in the said shed, meeting the said `fictitious
  price' established and maintained by the defendant.
    "7. That the plaintiff met the `fictitious price'
  of the defendant at the time of its institution
  thereof by the defendant but was unable to continue
  to meet the said price, and that by reason thereof it
  lost its patrons, suffered financial losses, and did
  thereby cause the destruction of its business.
    "8. That the `fictitious price', plan and scheme of
  the defendant was by reason of the premises contrary
  to and in violation of Sections 1 and 2 of Title 15
  U.S.C.A. in these respects: (a) That the plaintiff
  was eliminated as a competitor of the defendant; and
  (b) That the defendant was put in position to
  unlawfully control, monopolize and corner a large
  portion of the purchases of raw milk in and about the
  said shed, all in restriction of interstate trade and
  commerce and in unlawful interference with the
  plaintiff's business."

The plaintiff suffered damages as a result of the defendant's plan and scheme and prays judgment against the defendant for damages, attorney's fee, and costs.

The defendant was granted additional time in which to answer or otherwise plead, and on February 2, 1953, filed its motion to dismiss under Rule 12(b)(6), F.R.C.P., 28 U.S.C.A., or in the alternative, for summary judgment under Rule 56, F.R.C.P. The attorneys for the respective parties have filed briefs in support of and in opposition to the motion, and also a substantial number of affidavits and depositions have been filed, and the motion is now before the Court for disposition.

With regard to its motion to dismiss, defendant contends that the complaint fails to state a claim upon which relief can be granted because (1) there is no allegation of a contract, combination or conspiracy to bring the complaint within the purview of Section 1 of the Sherman Anti-Trust Act, and (2) no violation of Section 2 of the Act is alleged in that plaintiff has failed to allege that the defendant had the intent or power to monopolize, or that the consumer market was monopolized and the general public injured, or that the defendant had monopolized or was attempting to monopolize any part of interstate commerce. As to its motion for summary judgment, defendant contends that the affidavits and depositions on file show conclusively that no "fictitious price" was paid by defendant and that its prices were entirely competitive, and that no violation of the Sherman Anti-Trust Act could be shown.

On the other hand, the plaintiff contends that there may be a conspiracy among officers and agents of a corporation and the corporation itself, and that it has sufficiently alleged such a conspiracy in violation of Section 1 of the Act. The plaintiff also contends that it has sufficiently alleged the power and intent of the defendant to monopolize and that the defendant had attempted to monopolize a part of interstate commerce. Plaintiff further contends that it is unnecessary to allege a monopoly of the consumers' market or injury to the general public. As to the motion for summary judgment, the plaintiff contends that "Nowhere in the motion for summary judgment are the allegations of Paragraphs Six and Eight (of the complaint) negatived," and that a genuine issue of fact exists.

The Court will first consider the defendant's motion to dismiss. Defendant's first contention, i.e., that the complaint does not state a cause of action within the purview of Section 1 or the conspiracy portion of Section 2 of the Sherman Anti-Trust Act, is well founded.

Section 1 of the Act provides:

    "Every contract, combination in the form of trust
  or otherwise, or conspiracy, in restraint of trade or
  commerce among the several States, or with foreign
  nations, is declared to be illegal: * * *."

Section 2 of the Act provides in part:

    "Every person who shall * * * combine or conspire
  with any other person or persons, to monopolize any
  part of the trade or commerce among the several
  States, or with foreign nations, shall be deemed
  guilty of a misdemeanor * * *."

The plaintiff contends that the following allegation states a conspiracy within the coverage of the above quoted portions of the Act:

    "That sometime in the fall of 1951 and at other
  times unknown to the plaintiff, the defendant,
  Carnation Company, by and through its officers,

  managers and agents, conceived a plan and scheme for
  obtaining unlawful control, monopoly and corner of
  the aforesaid milk shed * * *."

In its brief plaintiff argues that "Common sense dictates that a corporation acts by and through its officers and agents. The officers and agents of a corporation may be named as co-conspirators with the corporation. Kentucky-Tennessee Light & Power Co. v. Nashville Coal Co. [D.C.], 37 F. Supp. 728."

The case relied upon by plaintiff in no wise supports its contention. All that case holds is that the liability of a principal does not preclude the personal liability of the agent who performed the prohibited acts (In that case, the alleged payment of illegal commissions contrary to the Robinson-Patman Act). The Court, at page 783 of 37 F. Supp., said:

    "It is a well-established rule of principal and
  agent that an agent is liable for his own tortious
  acts even though performed within the scope of his
  employment, and under conditions which impose
  liability upon the principal also. * * * If the
  payments of the commissions to Fitch by the Coal
  Company are illegal under the Robinson-Patman Act,
  such violation of the law is also charged to the
  defendant Potter who authorized the payments and made
  them as agent of the corporation. This brings Potter,
  as well as the Coal Company, within the civil
  liabilities provided by Section 4 of the Act, which
  gives a cause of action by reason of anything
  forbidden in the anti-trust law."

Not only does the above cited case fail to sustain plaintiff's contention, but, in fact, the cases uniformly hold that a conspiracy cannot exist between a corporation and its officers and agents. Perhaps the clearest holding on this point is the case of Nelson Radio & Supply Co., Inc., v. Motorola, Inc., 5 Cir., 200 F.2d 911, at page 914, certiorari denied in 345 U.S. 925, 73 S.Ct. 783, wherein the Court said:

    "It is basic in the law of conspiracy that you must
  have two persons or entities to have a conspiracy. A
  corporation cannot conspire with itself any more than
  a private individual can, and it is the general rule
  that the acts of the agent are the acts of the
  corporation. Here it is alleged that the conspiracy
  existed between the defendant corporation, its
  president, Calvin, its sales manager, Kelly, and its
  officers, employees, representatives and agents who
  have been actively engaged in the management,
  direction and control of the affairs and business of
  defendant. This is certainly a unique group of
  conspirators. The officers, agents and employees are
  not named as defendants and no explanation is given
  of their non-joinder. Nor is it alleged
  affirmatively, expressly, or otherwise, that these
  officers, agents, and employees were actuated by any
  motives personal to themselves. Obviously, they were
  acing only for the defendant corporation. It is true
  that the acts ...

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