6 5, 65 8 Court Decisions Bray v. Safeway Stores, Inc. 168 3-17-75 meat prices had, in fact, been discussed. Moreover, there was an aura of secrecy surrounding the trade association's meat discussions. The meeting topics, agenda, and minutes were labelled confidential and were generally unavailable, and participants were identified, not by name or company, but by color-coded badges. Moreover, the reluctance of the chain's officials to admit their participation in the meetings was obvious throughout the trial. The association also had been utilized to coordinate a "specials" program among its members to relieve a beef oversupply, thus showing the association's active concern with prices and its potential as a device for the manipulation of prices. The fact that this evidence could be logically explained by the chain did not require that the verdict be overturned, since it was not the function of the court to usurp the function of the jury and accept the chain's interpretation of the evidence. See ¶ 735.90. Basic Rules-Proof of Conspiracy-Fixing Beef Prices-Power of Chain Food Stores -Market Shares-Centralized Buying.-There was sufficient evidence for a jury to have concluded that a retail food chain, in combination with other chains, had the ability to regulate the prices that cattlemen received for their beef. It could not be determined, as a matter of law, that the defendant's 7 to 8 percent market share of total grocery beef sales was relatively inconsequential and too small to influence prices. Furthermore, the combined market percentage of the conspirators could, at least, support the conclusion that there existed sufficient economic power to control the wholesale price of beef. The jury had sufficient information to evaluate the beef market and determine whether or not the grocery chain, along with co-conspirators, was able to regulate the market's price structure. Moreover, the chain's membership in an association of the largest food chains, its use of centralized buying, the publication of price lists, and buying beef on specified days, although not inherently illegal, could properly be considered by the jury as tools to facilitate the fixing of beef prices. This ability to fix prices, along with other evidence, was sufficient for the jury to have concluded that a price fixing conspiracy existed. See ¶ 735.69. Basic Rules-Proof of Conspiracy-Fixing Beef Prices-Evidence Showing an External Force on Supply and Demand-Price Rise After Anti-conspiracy Injunction. -The economics of the beef market were appropriate not only to the damage issue, but also to the question of whether retail food chains had conspired to fix or regulate the . prices that cattlemen received for their beef. From the cattlemen's evidence, based primarily upon the more basic principles of supply and demand, that cattle prices fell and, at the same time, retailers' gross profit margins greatly increased, during a period when consumption began to exceed production, it could logically be concluded that there existed some external factor influencing the supply-demand relationship, namely, a price fixing conspiracy. Further support for the conclusion could be drawn from the assertion that cattle prices had risen to all time highs after an injunction had terminated or at least hampered the conspiracy. The chain's assertions that prices could have been affected by any of a number of factors other than a conspiracy and that its statistics were more accurate were no grounds for overturning the jury's verdict in favor of the cattlemen, since the evidence was sufficient to sustain the verdict. See ¶ 740. Private Suits-Injury to Business or Property-Retailers' Conspiracy to Fix Beef Prices Injury to Cattlemen-Target Area of Conspiracy.-Cattlemen were not in such an incidental or remote position in relation to the activities of retail food chains that they could not assert a claim for damages for injury to their businesses caused by the retailers' conspiracy to fix or regulate beef prices. Even though the cattlemen sold their product to a packer who slaughtered, dressed, and packed the beef and then sold it to the defendant retailer, the packer's position between the cattlemen and the retailer was not critical. It was the economic area in which the cattlemen were injured that was the crucial factor, not an artificial limitation based upon the number of links in the chain of distribution. The packer, as a mere middleman, did not interrupt the direct flow of basically the same product from the cattlemen to the retailer. The economic arca affected by the chains' conspiracy was beef, and the cattlemen suffered losses that fell directly within the target beef market. See ¶ 9026. Private Suits-Proof of Injury-Retailers' Conspiracy to Fix Beef Prices-No Purchases of Cattlemen's Beef by Defendant Food Chain.-A lack of proof that any cattle sold by plaintiff cattlemen ever ended up in a food chain's stores did not preclude a damage recovery for injury caused by the chain's participation in a conspiracy to fix J.60.193 1975, Commerce Clearing House, Inc. or regulate beef prices. The result of the conspirators' influence in the meat industry was a market wide depression of beef prices; therefore, regardless of to whom a cattleman sold his beef, he was adversely affected by the conspiracy. If the retailer never bought any of the cattlemen's beef, the fact was essentially irrelevant. See 9300. Private Suits-Proof of Damages-Fixed Beef Prices-Prices After Termination of Conspiracy-Recovery of Differential Times Pounds Sold-National Average Prices. -A jury properly calculated the damages recoverable by cattlemen against a food chain that participated in a conspiracy to fix or regulate beef prices on a finding that, absent the conspiracy, the cattlemen would have received 20 cents per pound more than they actually did. The 20 cent figure was a reasonable one, a national average based on cattle price increases that occurred after the conspiracy had ended. Damages were thus calculated by multiplying the total number of pounds sold by each cattleman during the damage period by 20 cents. Furthermore, the 20 cent figure constituted an average flexible enough to account for the price fluctuations that may have been caused by factors such as differences in time, location, quality, and type. See [9302.30. Proof of Injury-Passing-On-Fixed Beef Prices Sales at Depressed Prices of Cattle Bought at Depressed Prices.-A cattleman who also operated a feed lot was allowed to recover damages against a food chain that had participated in a conspiracy to fix the prices that cattlemen received for their beef. The chain's argument that, assuming the cattleman, as a feed lot operator, was selling his livestock to packers at an artificially low price, he was also purchasing his cattle from other cattlemen at a low price, was rejected as essentially a "passing-on" defense. See ¶ 9300. Basic Rules-Proof of Conspiracy-Trade Association Membership Statements of Members-Events Occurring Before the Defendant Became Member.-Statements made by food chain trade association members at meetings not attended by the defendant chain were properly admissible to prove the chain's participation in a conspiracy to fix or regulate beef prices. There was ample evidence establishing a prima facie case of the chain's participation to allow admission of the statements of co-conspirators. Furthermore, evidence establishing the prima facie case did not have to be introduced prior to the admission of their statements. Evidence concerning events occurring before the chain joined the association and evidence covering events after the damage period were also properly admitted as being relevant to understanding the nature and extent of the conspiracy. See 745.75. Private Suits Jury Instructions-Reference to Defendant's Past Violations.-A trial court's indications to a jury that a chain store charged with participating in a conspiracy to fix or regulate beef prices had on three previous occasions used its market power to gain a financial advantage in violation of the antitrust laws were not improper. The plaintiff cattlemen were entitled to prove past abuse of buying power, and the instruction given accomplished this in a manner that minimized the prejudice to the chain. See ¶ 9195. For plaintiffs: Boccardo, Blum, Lull, Niland, Terlink & Bell, San Jose, Cal., Joseph M. Alioto, San Francisco, Cal. For defendants: Pillsbury, Madison & Sutro, San Francisco, Cal., for Safeway Stores; George A. Leonard and Arthur L. Ferguson, Cincinnati, Ohio, McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., for Kroger Co.; Dennis McInerney and Henry G. Bisgaier, New York, N. Y., Charles E. Hanger, of Brobeck, Phleger & Harrison, San Francisco, Cal., for Great Atlantic & Pacific Tea Co. Order Denying Defendant's Motion for Judgment N. O. V. or, New Trial CARTER, D. J.: This action was brought by a number of cattlemen against the three largest retail grocery chains in the United States for violation of Section 1 of the Sherman Act. The plaintiffs specifically charged that the defendants, in combination with a number of named co-conspirators, Trade Regulation Reports conspired to and in fact did regulate the price the plaintiffs received for their beef. Safeway Stores, Inc. (Safeway) and The Kroger Co. (Kroger) settled with the plaintiffs and, at the time the matter went to trial The Great Atlantic & Pacific Tea Company, Inc. (hereinafter referred to alternatively as the defendant and A & P) was the only remaining defendant. After a six week trial the jury returned a verdict against A & P and in favor of ¶ 60,193 the plaintiffs in the amount of $10,904,027; it was this amount that the Court subsequently trebled. A & P has moved the Court for a judgment n o. v. or, alternatively, a new trial. The Court will discuss each motion separately, although many of the same arguments are applicable to each. Motion for Judgment N, O. V. The defendant's motion for judgment n.o. v. is concerned with basically two areas: the alleged conspiracy and the damages. I. Conspiracy A. Sufficiency of the evidence: The defendant adamantly maintains that there exists no evidence supporting the finding that there existed a conspiracy to fix or regulate meat prices. What the defendant essentially argues, however, is not that there exists a failure of evidence, but that the jury incorrectly interpreted the evidence that was presented. This, of course, is a standard inappropriate to a motion for judgment n. o. v. It is not the province of this Court to weigh conflicting evidence or determine the credibility of witnesses. It is the defendant's burden to demonstrate the lack of factual foundation supporting the jury's verdict. Lavender v. Kurn, 327 U. S. 645, 652-3 (1946). The defendant states seven specifications in support of its contention that the plaintiffs failed to prove a conspiracy existed: (1) there was no evidence of an agreement between A & P and any alleged co-conspirators; (2) there was no evidence of contact by A & P with any competitor; (3) there was no exchange of information between competitors; (4) there was no evidence of conscious parallel action; (5) there was no evidence as to how the alleged agreement or combination to fix prices might have occurred or been implemented; (6) there was no evidence that any conduct by A & P had a detrimental effect on the plaintiffs; (7) there was no evidence as to the ability of A & P and other alleged co-conspirators to fix the price of wholesale meat products. Each of these specifications is best discussed, not in the order raised by the defendant, but as each is encountered in a general examination of the conspiracy evidence presented at the trial. This evidence will be discussed in three sections: the acts of the defendant and the co-conspiraAnd the jury was so instructed (RT: 3625). 60.193 185 7-15-75 tors that support the jury's conclusion that a conspiracy existed; the ability of the defendant and the co-conspirators to carry out the conspiracy; the economic effects of the conspiracy. Acts Trade Association Membership] The primary vehicle through which the price fixing conspiracy was developed and effectuated was the National Association of Food Chains (NAFC). There is little question that A & P was a member of the NAFC and participated in several meetings sponsored by the organization. The defendant strenuously argues that the NAFC constituted a legitimate trade association and thus no negative inferences may be drawn from the defendant's membership or participation. Although a trade association may certainly perform legitimate functions, the mere fact of membership will not automatically provide a defendant with an impenetrable cloak of respectability. The defendant's reliance upon Maple Flooring Manufacturers Association v. United States, 268 U. S. 563 (1925) is misplaced. Maple Flooring was not concerned with price fixing. The court noted that "[b]efore considering these phases of the activities of the Association (ie., those activities subsequently determined to be legal], it should be pointed out that it is neither alleged nor proved that there was any agreement among the members of the Association either affecting production, fixing prices or for price maintenance. [I]t was not seriously argued before this Court that any substantial uniformity in prices had in fact resulted from the activities of the Association." Maple Flooring Manufacturers Association v. United States, supra at 567. A case more germane to the issue is Federal Trade Commission v. Cement Institute [1948-1949 Trade Cases ¶ 62,237], 333 U. S. 683 (1948), in which the Supreme Court, confronted by an argument similar to that made by A & P, responded in the following manner: "The issues in the present Commission proceedings are quite different from those in the Old Cement case [and the Maple Flooring case] . . . In the first place, unlike the Old Cement case, the Commission does here specifically charge a combination. And here the Commission has focused attention on this issue, having introduced evidence on the issue Federal Trade Commission v. Cement Institute, supra at 708, 1 Cement Manufacturer's Protective Associa tion v. United States, 268 U. S. 588 (1925). @1975. Commerce Clearing House InceNİ And, most importantly, the invalidity of the defendant's activities was upheld. Membership in the NAFC is thus, at first, a neutral fact; the jury must examine the organization and determine to its own satisfaction whether the Association was being utilized for illegal purposes. The NAFC posscases no per se immunity against a charge of price fixing. The plaintiffs contended at the trial that the NAFC was something much more than a legitimate trade association. The Association's constituency is made up of the largest retail food chains in the United States; small grocery companies and independents are not eligible for membership. The retail chains that constitute the NAFC are the largest purchasers of carcass beef in the United States. The plaintiffs introduced evidence that supports the conclusion that the NAFC provided at least a forum for the membership to discuss meat prices and profit margins. An owner of Winn-Dixie, one of the alleged co-conspirators, testified that meat margins had been discussed at NAFC meetings since 1963. (RT: 1037-51). Topics for discussion at the NAFC Meat Committee meetings included specifics as to prices. (Exhibit 111; RT: 2038-9). Information concerning meat and meat prices was requested by the NAFC from its members. (RT: 2260). In a case such as this, where there does not exist an express price fixing agreement, the opportunity to discuss prices is of paramount importance. C-O-Two Equipment Co. v. United States [1952 TRADE CASES ¶ 67,290], 197 F. 2d 489, 493 (9th Cir. 1952). The evidence presented by the plaintiffs not only demonstrated the existence of such an opportunity, but indicated that prices had in fact been discussed. [Secrecy] One of the most significant aspects of the plaintiffs' case concerned the aura of secrecy surrounding the NAFC meat discussions. The meeting topics, agenda, and minutes were labelled confidential and were generally unavailable. Meeting participants were identified, not by name or company, but by color-coded badges; anonymity was assured by the Association. The reluctance of A & P officials to admit their participation in the meetings was obvious throughout the trial. One high A & P official in charge of meat marketing went so far as to deny even meeting representatives of other retail chains under any circumstances-a denial that Trade Regulation Reports 6 5, 6 6 1 withered when confronted by photographic evidence to the contrary. (RT: 3245). The plaintiffs attempted to paint the various representatives of A & P and the other coconspirators in hues of secrecy and deceit. To this end the plaintiffs may well have succeeded, and not without foundation. The evidence also indicated that the NAFC had operated programs that could have had a significant effect on meat prices. The Association was utilized to coordinate a "specials" program among its members to relieve a beef oversupply. Although the defendant maintained that the specials program was instituted only at the insistence of the cattlemen or farmer, the result of the program could well have been the stabilization of meat prices and higher meat profits. I At the very least, this evidence indicates the NAFC's active concern with prices and its potential as a device for the manipulation of prices. The defendant argues in some detail that all of the evidence mentioned above can be logically explained. A & P scoffs at the plaintiffs' characterization of the NAFC meetings as anonymous. The open nature of the meetings is stressed and the defendant argues that "[a] less surreptitious and unlikely setting to this plot or any other type of conspiracy could, of course, hardly be imagined." (Defendant's Reply Brief, at 7). The discussion of meat prices between officials of various retail food chains is described as "innocuous". The specials program, arranged at the behest of the producers, is characterized as a "generous act". The Court does not mean to imply that the above characterizations are untenable; the evidence could certainly have been interpreted in the manner sought by the defendant. However, the quotations are illustrative of the tenor of the defendant's argument: that the Court should usurp the function of the jury and accept the defendant's interpretation of the evidence. The defendant had an opportunity to make the above arguments to the jury and did so; the jury was apparently unpersuaded. As noted above, the defendant's interpretations of the evidence may certainly be plausible. Plausibility is not, however, to be confused with a lack of evidence. There was sufficient evidence to support the conclusion that at various secret meetings members of the NAFC-competitors in the beef market-met not only to discuss prices of meat, but to forge agreements concerning the fixing of those prices. 160,193 The primary thrust of the defendant's argument concerning A & P's alleged inability to fix prices is based upon an evaluation of the company's size. Although A & P is the single largest purchaser of carcass beef in the United States, the defendant stresses the fact that it accounted for only 7% to 8% of the total grocery beef sales and an even lower proportion in total beef sales. The defendant argues that "7% to 8% is clearly not power to fix market prices." Although it would be convenient if there existed a yardstick for courts to measure the market percentage necessary to control a particular market, the defendant's blatant assertion that 7% to 8% is "clearly" insufficient fails to account for the realities of the modern marketplace. If a market is diverse, a relatively low percentage of total sales may be able to assert sufficient influence to allow regulation of prices. The defendant additionally fails to consider the fact that what is charged in the instant case is a conspiracy between A & P, Safeway, Kroger, and several of the largest retail food chains in the United States. The combined market percentage of these conspirators could, at least, support the conclusion that there existed sufficient economic power to control the wholesale price of beef. Perhaps a consideration of equal importance to sheer size is the relationship of the large retail stores with their competitors. American Tobacco Co. v. United States [1946-1947 TRADE CASES 57,468], 328 U. S. 781, 796 (1945). Kroger, the smallest of the three defendants, is twice the size of the next largest retailer. The remainder of the retail chains named as coconspirators, all members of the NAFC, represent the largest retail grocery stores in the nation. To argue to the jury that these corporate entities could not have a collectively significant impact on beef prices is certainly proper; to insist that the Court must ignore the jury's verdict and accept the defendant's contentions is untenable. Acme Markets, Food Fair Stores, Inc., National Tea Co., First National Stores, Inc., Winn-Dixle Co., Colonial Stores Co., Stop & 160,193 168 3-17-75 The question of relative market strength is thus essentially one for the jury. The Court is not in a position to decide as a matter of law that 7% is a "relatively inconsequential market share." The evidence provided the jury with a complete picture of the beef market, both retail and wholesale; the jury had sufficient information to evaluate the beef market and determine whether or not the defendant, along with the co-conspirators, were able to regulate the market's price structure, [Relevance of Size] Although the defendant has stressed the insignificance of A & P's share of the market, it additionally argues that size is irrelevant. (Defendant's Reply Brief at 20.) As discussed above, the jury must be provided all the information necessary to make an intelligent decision regarding the roles played by the defendant and the co-conspirators. The defendant may not thus consistently argue that, on the one hand, it was too small and then, on the other, that size is irrelevant. (2) The NAFC As noted above, the NAFC was capable of being utilized for other than legitimate purposes. The plaintiffs argued that the Association was ideal for the covert exchange of price information and was a key factor in the furtherance of the conspiracy. Again, although the defendant maintains that the NAFC was not manipulated in such a manner, there was sufficient evidence to support a determination by the jury that the NAFC was playing such a role. Confronted by a similar situation where an antitrust defendant was a member of a trade association, the Ninth Circuit has stated: "It is uncontroverted that this committee held meetings at which Laswell, as well as representatives of the other defendant corporation, was present... That an opportunity was thus afforded to discuss and agree upon prices and pricing policies on an industry-wide basis cannot be denied." C-O-Two Fire Equipment Co. V. United States [1952 TRADE CASES ¶ 67,290], 197 F. 2d 489, 493 (9th Cir. 1952). As in the instant case, the C-O-Two defendant argued that there was no direct evidence of anything illegal having transpired at the meeting. However, the Court Shop, Lucky Stores, Jewels Tea, Wakefern Corp., King Soopers Stores, Millers Super Market. 1975, Commerce Clearing House, Inc. |