Petition — Borden, Inc. v. Bergland
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ILED
SEP 26 1978
—TICHAR. RODAK, JR. CLERK
In Tue
Supreme Court of the United States
Cctroper Term, 1978
No.7 5d 6
Borden, Inc.,
Petitioner,
vs.
Bob Bergland, Secretary of Agriculture,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Seventh Circuit
Stuart S. Batt
H. Biarr Waite
Davin T. Pritikin
One First National Plaza
Chicago, Illinois 60603
Wa ter W. Kocuer
GLENN S. DENNIS
Epwarpb A. Matto
180 East Broad Street
Columbus, Ohio 43215
Siptey & Austin Counsel for Petitioner
One First National Plaza
Chicago, Illinois 60603
Of Counsel
September 26, 1978
Table of Contents
BSE SEER ET
I.
II.
IIT.
IV.
, 4
VL.
The Opinions Delivered in the Courts Below
and the Dates of the Judgments Sought to Be
The Statutory Provision Believed to Confer Ju-
weeceotiom om Ehts Court... .:........:........
The Questions Presented for Review ....
Statutes and Regulations Involved ......
mentemnent @f the Gees .......................
Reasons Why the Writ Should Be Allowed .....
A. The Order Reversing This Case Offends
Against the Orderly and Efficient Admini-
stration of Justice by Reversing the Prior
Rulings in the Same Case on Two Major
Points, in Defiance of the Doctrine of “Law
OE ES a
. The Court of Appeals in Reversing Its Ini-
tial Decision Is in Direct Conflict with the
Court of Appeals for the District of Colum-
bia in Fairmont and the Court of Appeals for
the Third Circuit in Abbotts. ...............
1. The Court of Appeals for the District of
Columbia Held in Fairmont That, in Such
a Case As the Present, the Damages to
Be Awarded Are the Amount of the
Overpayments, Which Should Be Ascer-
tained by the District Court ......
i
li
Page
2. The Court of Appeals for the Third Cir-
cuit Held in Abbotts That Damages Were
to Be the Amount of the Overpayments
and That Remand to the Secretary for
Their Ascertainment Was Improper.....
C. In Holding That Borden’s Damages Are to
Be Determined by the Secretary Based on
an Undefined “Evaluation of Complex Eco-
nomic Relationships between Producers and
Handlers” Rather than by Simply Ascertain-
ing the Amounts of Borden’s Overpayments,
and by Holding That the Secretary Rather
Than the District Court Must Determine
Borden's Damages, the Court of Appeals
Has Decided Two Important and Recurrent
Issues under the Milk Marketing Act Erro-
neously and Contrary to Good Judicial Ad-
a A A as a ee
1. The Parties at No Time “Stipulated”
That Damages Were to Be Initially
Computed in Proceedings before the
Secretary, As the Secretary Improperly
and Incorrectly Argued to the Court of
Appeals and As the Court of Appeals
Was Misled to Believe.................
2. The Order Reversing the Earlier Holding
That Borden’s Damages Were Its Over-
payments Was Based on a Misapprehen-
sion of Basic Legal Principles ..........
3. There Was No Administrative Question
Requiring Reference to the Secretary ...
17
19
19
21
24
ill
Page
D. Eight Years After the Illegal Orders Were
First Imposed by the Secretary, the Orderly
and Efficient Administration of Justice
Demands That This Case Not Be Remanded
to the Secretary to Begin the Administrative
Process Anew, When the Only Genuine Issue
Remaining Is the Arithmetic Computation
of Borden’s Overpayments ..... .......... 27
rk perches a ee hi 29
Appendix
A. Excerpts from relevant statutes and regulations .... a-1
ee ee Eg Do oy ery co a-1
De ese es IN sds wp & dlgcicnn ck oalh'ee a-2
iy rs RL Core er oi a-2
B. Decision of the Court of Appeals on the initial ap-
peal, dated November 1, 1976 and reported at 544
ek Fre eer ee pe eee a-3
C. Transcript of oral opinion of the District Court on
remand, dated March 21, 1977
D. Minute entry of the District Court, dated March 23,
1977 and based on oral opinion................... a-23
E. Per Curiam Order of the Court of Appeals, dated
April 20, 1978, reversing the District Court ........ a-24
F. Per Curiam Order of the Court of Appeals, dated
June 30, 1978, denying Petition of Borden, Inc. for
I SON POC Soy po we SUR Gh > ced cle ves ses ase a-29
G. Excerpts from Slip Opinion in Abbotts Dairies Divi-
sion of Fairmont Foods Co. v. Bergland, Nos. 77-2245,
77-2246, and 77-2247 (3rd Cir., filed August 1, 1978). a-30
iv
. Borden’s Motion for Leave to File Instanter Re-
newed Petition for Rehearing and for Rehearing En
Banc, dated August 25, 1978 ............ eee eens a-43
Order of Court of Appeals, dated September 8, 1978,
denying Renewed Petition of Borden, Inc. for
Rehearing and for Rehearing En Banc ............ a-48
Letter dated August 10, 1973 from Lee A. Monroe,
counsel for Borden, lac., to Kdward Silverstein,
counsel for the Secretary of Agriculture ........... a-50
‘. Letter dated September 10, 1973 from Lee A. Mon-
roe, counsel for Borden, Inc., to Office of the Hear-
ing Examiners, U.S. Department of Agriculture .... a-52
_ In Re Borden, Inc., U.S. Department of Agriculture
AMA Docket No. M63-3, Respondent’s Response to
the Judicial Officer’s June 30, 1978 Decision and
Order, filed August 2, 1978 and stamped ‘Motion
Granted” by Judicial Officer ............00 ee eeeee a-53
Vv
TABLE OF AUTHORITIES
Cases
Page
Abbotts Dairies Division of Fairmont Foods Co. v.
Bergland, Nos. 77-2245, 77-2246, and 77-2247
(3rd Cir. 1977, filed August 1, 1978)........ 2, 4, 12, 17,
18, 22, 23, 24,
26, 27, 30
Abbotts Dairies Division of Fairmont Foods Co. v.
Bergland, 438 F.Supp. 629 (E.D. Pa. 1977) .. 3, 4, 9, 10, 22,
25, 27, 29
Adams v. Mills, 286 U.S. 397 (1937) .......... 21
Atlantic Coast Line v. Florida, 295 U.S. 301
ee ee 23
Baltimore & Ohio R. Co. v. Brady, 288 U.S. 448
BU ME Gel yal Se nS 26
Borden, Inc. v. Butz, 544 F.2d 312 (7th Cir.
ee 1, 5, 6, 7, 8, 9,
10, 12, 19, 22
Chattanooga Foundry & Pipe Works v. Atlanta,
203 U.S. 390 (1906) ...................... 21
Fairmont Foods Co. v. Hardin, 442 F.2d 762
I 2, 4, 6, 16, 17,
22, 27, 29, 30
Far East Conference v. United States, 342 US.
EE 25
Florida East Coast Ry. Co. v. United States,
368 F.Supp. 1009 (M.D. Fla. 1973), aff'd,
ee 24, 26
Great Western Tel. Co. v. Burnham, 162 U.S. 339
vi vii
Page . Page
Hanover Shoe, Inc. v. United Shoe Machinery, . STATUTES
392 US. 481 (1968) Peae be 6 06 e¥e 8s eee ee ee 22 Agricultural Marketing Agreement Act of
Hill v. Trustees of Indiana University, 537 F.2d 1937 (7 U.S.C. §608c)
DO Fe Ca i ag cl bb eek horeneaw se ts 20 Fs MI Sino iv cd nies socavcdes 5
Illinois Central Rd. Co. v. Mulberry Hill Coal on sgn ie iii rie ata tad ik 5
Coe Ue EPO OE ec bveds bcs ca hieg ee 26 Ae SOME O IE) oo cs bce seve viveee's 5
L & N Railroad Vv. Sloss-She ffield Co., 269 US. 28 U.S.C, §$1254(1) ‘ewe se eee 8 ee ee ee 2
EE SS ova ON sa ene ne dekae eee ta es 21
OrHer AUTHORITIES
Lewis-Simas-Jones Co. v. Southern Pacific Co.,
; Pe IE so Fa va oes bakes wee twee 5
rR Oe ae eT eee 21 7 CFR. $1063.89(d) ..... 0. ccc cceccececee. 5
Moss v. C.A.B., 521 F.2d 298 (D.C. Cir. 1975). . 23 Rule 35, Rules of United States Court of Ap-
Otten v. Stonewall Ins. Co., 538 F.2d 210 (8th peals for the Seventh Circuit.............. 8
a WP ka. Vea 14, 15 Pe
i Rule 56(e), Federal Rules of Civil Procedure.. 8, 28, 29
Pennsylvania Rd. Co. v. Puritan Coal Mining
om ei S| | ee eae 26
Pennsylvania Rd. Co. v. International Coal Min-
ing Co., 230 U.S. 184 (1913) ............... 26
Washington Gas Light Co. v. Baker, 188 F.2d 11
(ERE. Sn kd arena eeu eee enw eeans 24
White v. Murtha, 377 F.2d 428 (5th Cir. 1967) . 14
Williams v. Washington Met. Area Transit
Com'n, 415 F.2d 922 (D.C. Cir. 1968)....... 24
United States v. Dickinson, 476 F.2d 373 (5th
COE 5s ea oo Ge ah chee cies 14
United States v. Western Pacifu R. Co., 352 US.
SO RTIIE ics caviar ey sc vtulee see 25
Zdanok v. Glidden Company, 327 F.2d 944 (2d
CR FO) ei ios e cee ier 14
In THE
Supreme Court of the United States
Octoser TERM, 1978
No. 78-
Borden, Inc.,
Petitioner,
vs.
Bob Bergland, Secretary of Agriculture,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Seventh Circuit
THE OPINIONS DELIVERED IN THE COURTS BELOW
AND THE DATES OF THE JUDGMENTS SOUGHT TO BE
REVIEWED
The first decision of the Court of Appeals, dated No-
vember 1, 1976, is reported at 544 F.2d 312 and also appears
in the Appendix as Ex. B. The opinion of the district court
on remand has not been reported and appears in the Appen-
dix as Ex. C. The per curiam Order of the Court of Appeals,
reversing the district court and marked “not to be cited”’ was
dated April 20, 1978, and is not reported. It appears in the
Appendix as Ex. E. Petitioner’s petition for rehearing was
filed May 4, 1978. The Order denying Petitioner’s petition
for rehearing, dated June 30, 1978, appears in the Appendix
2
as Ex. F. The Order denying Petitioner's motion for leave to
file instanter a renewed petition for rehearing and for rehear-
ing en banc, dated September 8, 1978, appears in the Appen-
dix as Ex. I.
Il.
THE STATUTORY PROVISION BELIEVED TO CONFER
JURISDICTION ON THIS COURT
Jurisdiction of this Court is invoked under Title 28 of the
United States Code §1254(1) providing for the granting of a
writ of certiorari upon the petition of any party to a civil
case after rendition of judgment by the Court of Appeals.
Il.
THE QUESTIONS PRESENTED FOR REVIEW
A. Whether this Court should resolve the conflict that
now exists between the Court of Appeals for the Seventh Cir-
cuit in this case and the Courts of Appeals for the District of
Columbia in Fairmont Foods Co. v. Hardin, 442 F.2d 762, 766
(D.C. Cir. 1971), and for the Third Circuit in Abbotts Dair-
ies Division of Fairmont Foods Co. v. Bergland, Nos. 77-2245,
77-2246, and 77-2247 (3d Cir. 1977, filed August 1, 1978), by
reversing the decision below and directing that Borden's
damages for overcharges imposed by the illegal orders of the
Secretary of Agriculture should be the amount of the over-
payments and are to be ascertained by the district court?
(discussed infra, at pp. 15 to 18)
.
B. Whether the Court of Appeals has wrongfully decided
recurrent and important questions as to the interpretation
and administration of the Milk Marketing Act, which the
3
Secretary has admitted ‘will have wide-ranging ramifications
on the national milk market system”? (discussed infra, at pp.
3 to 4 and 19 to 29)
C. Whether it is consistent with the efficient administra-
tion of justice for the Court of Appeals, having decided on
appeal that the damages recoverable for overcharges imposed
by the illegal rulings of the Secretary of Agriculture were the
amount of the overpayments made by Borden and were to
be ascertained by the district court, then to hold on a second
appeal, in disregard of the doctrine of the “law of the case”
and without explication, that damages were to be determined
by a vague and indefinite standard of “equity and good con-
science” and were to be determined in additional hearings
before the Secretary? (discussed infra, at pp. 12 to 15)
D. Whether it is consistent with the efficient administra-
tion of justice for the Court of Appeals, on a second appeal,
to reverse two of its holdings on the prior appeal, without
any explanatory opinion and by an unpublished Order which
is not to be cited as sate: and which neither points out
any error in the holdings on the first appeal nor explains its
action in reversing them, except to cite the now-reversed dis-
trict court decision in Abbotts Dairies Division of Fairmont
Foods Co. v. Bergland, 438 F.Supp. 629 (E.D. Pa. 1977)? (dis-
cussed infra, at pp. 12 to 15)
The Importance of the Issues
The issues as to the proper administration of the statutes
and orders dealing with the marketing of milk here involved
are recurrent and important, having now been considered by
three Courts of Appeals. 7 U.S.C. §608¢ gives the Secretary
the authority to prescribe the minimum Order price for raw
4
milk which all handlers must pay and sets forth a procedure
for the review of such orders if those regulated .thereunder
are aggrieved. As the Fairmont and Abbotts cases coupled with
the present case make clear, the problem of recovering over-
payments after a Milk Market Order price is found illegal is
by no means of infrequent occurrence.’
A determination of the appropriate measure of damages
and the proper forum for ascertainment of these damages are
thus questions of great and immediate practical concern to
the industry. As the Secretary’s Brief to the Court of Ap-
peals pointed out (p. 28):
“The precedent involved in establishing the legal criteria
for a proper damage award in this case will have wide-
ranging ramifications on the national milk marketing
system,” ;
IV.
STATUTES AND REGULATIONS INVOLVED
The authority of the Secretary of Agriculture [‘Secre-
tary”] to promulgate Milk Marketing Orders derives from
the Agricultural Marketing Agreement Act of 1937, 7 U.S.C.
‘From March through August of 1974, Borden's Pekin, Illinois
plant was also subjected to an invalid and discriminatory adjust-
ment to the Order price, which the Chief Judicial Officer has
recently held to be unsupported by evidence and which is closely
parallel to those affecting the Des Moines plant held invalid in the
present case. In the Pekin proceeding, the same issues as to the de-
termination of damages are present as in this case, and the Secre-
tary has cited the unpublished Order of Reversal in the present
case as precedent for requiring “administrative hearings’ as to
damages. Jn re Borden, Inc., U.S. Department of Agriculture AMA
Docket No, M63-3, Decision and Order, filed June 30, 1978; Respon-
dent’s Response to the Judicial Officer’s June 30, 1978 Decision
and Order, filed August 2, 1978. (Appendix, Ex. L)
5
§$608c(5)(A). The proceedings before the Secretary out of
which this litigation grew were initiated in accordance with
7 U.S.C. §608c(15)(A), quoted in the Appendix (Ex. A).
Damages sought are payable under 7 C.F.R. §1063.89(d),
(Appendix, Ex. A), which was later contained in 7 C.F.R.
§1000.6. (Appendix, Ex. A) The jurisdiction of the district
court was initially invoked under 7 U.S.C. §608¢(15)(B). (Ap-
pendix, Ex. A)
V.
STATEMENT OF THE CASE
On September 1, 1970, Borden closed its obsolete milk
processing plant at Rock Island, Illinois, which had served
the Quad Cities-Dubuque Market Area (Order No. 63,
7 C.F.R. §1063), and began using its plant at Des Moines,
lowa to serve its customers in the Quad Cities Market Area
and the Des Moines Market Area (Order No. 79, 7 C.F.R.
$1079) as well as four other Market Areas.’ This resulted in
more milk from the Des Moines plant being sold in the Quad
Cities Area than in any dther Market Area, and under the
provisions of the applicable statute and Market Orders, the
prices for all raw milk used by the Des Moines plant became
subject to the price formulae prescribed by the Quad Cities
Order rather than the Des Moines Order. 544 F.2d at p. 313.
By a series of three “orders” (the first promulgated on Oc-
tober 1, 1970), the Secretary of Agriculture professing to
amend the Quad Cities Order took steps to void the effect of
’These included the Cedar Rapids-lowa City Area (Order No.
70), the North Central lowa Area (Order No. 78), the Greater Kan-
‘sas City Area (Order No. 64), and the Nebraska-Western Iowa
Area (Order No. 63). The Iowa Market Orders and the Quad Cities
Order were consolidated into a new Iowa Order on April 1, 1977.
(42 Fed. Reg. 17423)
6
these provisions, and eliminated Borden’s 19 cents per hun-
dredweight (“cwt.”) minus “location adjustment” that would
otherwise have applied to Borden under the formula set
forth ir ‘he Quad Cities Order, and in addition imposed a 15
cents per cwt. plus adjustment on all milk Borden purchased.
Neither adjustment affected any of Borden’s competitors
regulated under the Quad Cities Order, who continued to be
subject to the prior provisions and to pay the same price as
before. The Market Order was otherwise unchanged and its
lawfulness never challenged.
No claim has ever been made by anyone else regulated
under or affected by the Quad Cities Order that the Order it-
self and the general pricing formula it had promulgated were
in any way excessive, inadequate, or otherwise invalid; and
nothing in the original decision of the Court of Appeals
affected the validity of the Order in general, or its continued
applicability to Borden's competitors.
As the result of these three orders, the price which Borden
had to pay for the milk purchased for its Des Moines plant,
including that resold in the Quad Cities Area and in the
other Market Areas served by the Borden plant, was in-
creased first by 19 cents per cwt. and then by 34 cents per
cwt,
The three challenged ‘‘orders’”’ were reviewed and upheld
in extended proceedings before the Secretary, and then by
the district court. On appeal, the Court of Appeals reversed,
Borden v. Butz, 544 F.2d 312, holding that ‘the three rulings
of the Secretary at issue here are not in accordance with law
and are invalid.” 544 F.2d at 319.
Consistent with the disposition of a similar case in Fair-
mont Foods Co. v. Hardin, 442 F.2d 762, (D.C. Cir. 1971), the
Court of Appeals in its initial decision said:
—
‘
“As to damages, Borden is entitled to recover over-
payments which it made pursuant to the invalid orders.
Inasmuch as the Quad Cities-Dubuque marketing order
provides for payment by the market administrator to
handlers out of the producer-settlement fund where
claims are made pursuant to 7 U.S.C. §608e(15)(A),
7 C.F.R. §1063.89(d), we remand to the district court on
the issue of damages, with direction to enter judgment
for Borden in the amount ascertained after appropriate
proceedings. Fairmont, supra, at 773.” 544 F.2d at 319-20.
The Secretary made no effort to obtain a review of the
Court's initial decision by motion for rehearing or by writ of
certiorari. The ruling thus became “law of the case.” The man-
date clearly directed the district court “to ascertain plaintiff’s
damages” and clearly held that Borden’s damages consisted
of the overpayments which Borden had been compelled to
make.
From October 1, 1970 to July 31, 1971 (the date Borden's
plant was forced to close as the result of the three invalid
and discriminatory orders), the price Borden would other-
wise have been required to pay under the Quad Cities Order
was raised first 19 cents and then 34 cents per ewt. It is un-
disputed that in all Borden paid $249,978.38 above the other-
wise lawful Order price.
On remand, Borden moved, inter alia, for a summary judg-
ment as to the amount of the overpayments, pointing out the
evidence already in the record from which a specific and de-
tailed computation of overpayments could mathematically
be made—i.e., the handler’s reports filed by Borden with the
Milk Market Administrator, which set forth the quantity of
milk purchased by Borden during the relevant period, in-
cluding the quantity of Class I milk processed at Borden's
Des Moines plant. The illegal rulings by their very terms
fixed the excess amounts Borden had to pay above the other-
8
wise effective and valid price established under the Quad
Cities Order applicable to Borden’s plant: ie., first 19 cents
per cwt. and later 34 cents per cwt.
In answer to Borden’s motion, the Secretary was required
under Rule 56(e), Fed. R. Civ. P., to come forward with
“specific facts showing that there was a genuine issue for
trial.” The Secretary in response filed an Opposition, with
one affidavit attached. The district court correctly ruled that
the response filed by the Secretary had failed to show
“specific facts” raising a genuine issue as to any material
matter relating to the computation of overpayments, and on
the basis of the undisputed facts entered summary judgment
as to damages in the amount of $249,978.38 plus interest.
The Secretary thereupon appealed, and after briefs and
oral argument, the Court of Appeals reversed the judgment
in a three and a quarter page per curiam order, with no ac-
companying opinion. The per curiam Order stated on its face,
“not to be cited per Circuit Rule 35.””
All that the Order offered by way of explanation of its ac-
tion was that
“We now determine on this appeal that the district court
prematurely ascertained plaintiff's damages.
In view of the fact that the mandate previously issued had
directed the district court to ascertain damages “with direc-
tion to enter judgment for Borden in the amount ascertained
after appropriate proceedings” (544 F.2d at 319-20) and had
defined Borden's damages as the “overpayments which it
Circuit Rule 35 provides that “orders shall not be published and
opinions shall be published.” The rule further provides that “Un-
published orders .. . (IV) Except to support a claim of res judtcata,
collateral estoppel or law of the case, shail not be cited or used as a
precedent.”
9
made pursuant to the invalid orders” (544 F.2d at 319), just
how the carrying out of that mandate was “premature” was
nowhere explained.
The Court did state, without any further explanation, that
“we agree” with a recent district cowrt decision (Abbotts Dair-
1e8 Division of Fairmont Foods Co. v. Bergland, 438 F. Supp. 629
(E.D. Pa. 1977) ) “as to the procedure which should follow
the finding of the illegality of a milk marketing order.” Ab-
botts, however, has since been reversed by the Third Circuit,
undercutting the Court’s reliance upon the decision. (Appen-
dix, Ex. G)
Even at the time, however, reliance upon the district
court's decision in Abbotts was misplaced. The Order quoted
the following language as if it represented what the district
court had said in Abbotts:
“The determination of . . . [damages] obviously will
require evaluation of complex economic relationships
between producers and handlers during the time period
for which damages are sought. Such matters are pecu-
liarly within the special expertise of the Secretary.”
By omitting language and substituting the bracketed word
“damages”, the Court distorted the purport of this passage.
The omitted words are those italicized:
“The determination of whether Abbotts would have been
able to obtain an adequate supply of miik at the proposed
bracketed price and, if not, at what price an adequate supply
of milk would have been available to it obviously will
require evaluation of complex economic relationships
between producers, and handlers during the time period
for which damages are sought. Such matters are pecu-
liarly within the special expertise of the Secretary. .. .”
438 F. Supp. at 636.
10
The Court of Appeals’ substitution of the word “damages”
for the underscored words was wholly unwarranted and com-
pletely changed the meaning of the passage. As the passage
actually appeared in the Abbotts district court opinion, it had
no relevance to the present case, since on the initial appeal
the Court of Appeals had already demolished the argument
that Borden could not have obtained an adequate milk sup-
ply at regular Market Order prices. The initial opinion said
“It]here is no evidence in the record that Borden would
suffer in short supply.” 544 F.2d at 316. The Court went on
to point out:
“In the third place, the short supply statement is
contrary to the obvious economic factors. There could
be no general short supply at Des Moines because of
Borden’s presence inasmuch as Borden’s lower buying
price would, according to the Secretary, nqt attract
Des Moines producers and thus not divert suppliers
away from other milk handlers in Des Moines. Instead,
Borden had an assured supply from outside of the
Des Moines area, was attracting outside milk into
Des Moines and was alleviating the short supply at
Des Moines by freeing Mid-America’s supply for other
Des Moines-located handlers.” 544 F.2d at 317.
Thus the Court’s quotation from the Abbotts district court
opinion, once the distortion of it by the Court is corrected,
should have had no relevance to any issue in the present
Case,
After its misquotation, the Court of Appeals said:
‘We reverse the judgment of the district court insofar as
it fixes the amount of damages and remand the cause to
the district court with instructions to remand it to the
Secretary of Agriculture to conduct an evidentiary hear-
ing and to render an administrative decision on the
amount of the plaintiff's damages, which amount shall
11
not be less than $84,463 nor more than $249,978.33, and
in regard to which the Secretary shall determine
whether interest shall be added.”
Nothing was said as to the measure of damages to be applied
by the Secretary. Obviously, the determination of the
amount of overpayments required no “expertise”; hence the
measure laid down by the prior opinion of the Court was im-
pliedly rejected.
Borden filed a Petition for Rehearing of the Order of
Reversal, but this Petition was denied by another Order
reading as follows:
“On consideration of the petition for rehearing filed in
the above-entitled cause by plaintiff-appellee, Borden,
Inc., a majority of the judges on the original panel hav-
ing voted to deny the same,**
IT IS HEREBY ORDERED that the aforesaid peti-
tion for rehearing be, and the same is hereby DENIED.
**Circuit Judge Robert A. Sprecher has disqualified
himself from participation in the petition for rehearing.”
Judge Sprecher was the only member of this panel who
heard the first appeal; Judges Wood and Reynolds, who de-
nied the petition for rehearing, had not heard the arguments
on the first appeal and would not be expected to have been
familiar with the voluminous facts in the initial record which
provided the background for that decision.‘ Thus it was par-
ticularly inappropriate for them to sanction the overturning
of the decision on the first appeal.
“The Secretary's Briefs to the Court of Appeals were replete with
statements unsupported by. the record anu with misstatements of
what it did contain. These were pointed out with chapter and verse
in Borden's Brief. However, as is made clear by the statements in
the Order with respect to the alleged “stipulation” before the Ad-
ministrative Law Judge, discussed infra, the Court of Appeals was
obviously misled as to the actual record facts.
12
Subsequent to the denial of Borden’s petition for rehear-
ing, the Third Circuit, as noted above, reversed.the Abbotts
decision that was the sole authority relied upon by the Court
of Appeals here. Even though Borden was already preparing
this petition for writ of certiorari, it believed that the Court
of Appeals should be made aware of this important develop-
ment, and accordingly Borden promptly filed a Motion for
Leave to File Instanter a Renewed Petition -for Rehearing
and for Rehearing En Bane, along with a copy of the Third
Circuit’s opinion in Abbotts. (Appendix, Ex. H) The Motion
for Leave to File Instanter was denied by the Court of Ap-
peals on September 8, 1978. (Appendix, Ex. I) The Court
thereby implicitly reaffirmed its reliance on the reversed dis-
trict court opinion in Abbotts and consciously and deliberately
set up the conflict between the Circuits that should now be
resolved by this Court.
VI.
REASONS WHY THE WRIT SHOULD BE ALLOWED
A. The Order Reversing This Case Offends Against
the Orderly and Efficient Administration of Justice
by Reversing the Prior Rulings in the Same Case
on Two Major Points, in Defiance of the Doctrine
of ‘Law of the Case”.
The initial decision of the Court of Appeals clearly decided
three matters:
1. that the orders issued by the Secretary are “not in
accordance with law and are invalid”;
2. that Borden was entitled to recover as its damages
the “overpayments which it made pursuant to the in-
valid orders”; and
3. that the district court, not the Secretary, was to as-
certain the amount of the overpayments “after appro-
priate proceedings”. 544 F.2d at 319.
13
These decided points constituted the “law of the case,” which
sound judicial administration required the Court of Appeals
to follow on the second appeal, especially since the Secretary
neither asked for a rehearing of the first decision nor sought
certiorart. However, the Order of Reversal on the second ap-
peal rejected and in effect set aside points 2 and 3 above.
In its initial decision, the Court of Appeals ordered the
cause remanded to the district court “on the issue of
damages with direction to enter judgment for Borden in the
amount ascertained after appropriate proceedings.” This was
a clear holding that the district court and not the Secretary
was to ascertain the amount of the damages and to enter
judgment. In the Order of Reversal, however, the cause was
remanded to the district court with instructions to remand it
to the Secretary of Agriculture to conduct an “evidentiary
hearing” and to render an “administrative decision” on the
amount of the plaintiff's damages. The Court stated that the
ascertainment of damages would require “the evaluation of
complex economic relationships between producers and
handlers .. . peculiarly within the special expertise of the Se-
cretary,” even though the first decision had held that Bor-
den’s damages were to be the “overpayments which it made
pursuant to the invalid orders.”” The Order of Reversal ob-
viously repudiated the prior decision that Borden’s damages
are its Overpayments, since there was otherwise no purpose
for a remand to the Secretary.
The Court of Appeals’ departure from its prior decision
was totally unexplained. No change in facts had occurred; no
compelling contrary decision of superior or even parallel
authority had thrown doubt on the correctness of its prior
holding; and the Court did not even assert that it had a clear
conviction of error or explain of what the error consisted.
The Order simply referred to the procedure followed by a
district court in another Circuit in another case.
14
In speaking of the action of an appellate court which ap-
plied the principle of the “law of the case,” this Court once
said:
“In so doing, that court has done no more than this
court has always done, or than is necessary to enable an
appellate court to perform its duties satisfactorily and
efficiently, which would be impossible if a question, once
considered and decided by it, were to be-litigated anew
in the same case upon any and every subsequent ap-
peal.” Great Western Tel. Co. v. Burnham, 162 U.S, 389,
343-44 (1896).
Certainly there were no “unusual and compelling circum-
stances” mentioned by the Court here to justify a reversal of
its prior holding; nor do any exist. Only a “clear conviction
of error on a point of law that is certain to recur . . . will
prevail over ‘the law of the case’ whereas ‘mere doubt’ will
not.” Zdanok v. Glidden Company, 327 F.2d 944, 953 (2d Cir.
1964) The federal appellate courts agree, “Orderly judicial
procedure requires that there be an adherence to a decision
upon an earlier appeal of the same case.” United States vy.
Dickinson, 476 F.2d 373, 374 (Sth Cir. 1973). They also agree
that this rule is “salutary”. White v. Murtha, 377 F.2d 428,
431 (5th Cir. 1967). As the Eighth Circuit Court of Appeals
reiterated just two years ago:
“This court has repeatedly held that the decision on
former appeal is the ‘law of the case’ on a question pre-
sented in that former appeal, unless the evidence in-
troduced at the subsequent trial is substantially differ-
ent from that considered on the first appeal, and must
be followed in all subsequent proceedings in such case in
both district and appellate courts, unless that decision is
clearly erroneous and works manifest injustice, * * *
While this rule of practice is not a limit of power, it is
nevertheless a salutary one, and should be departed
15
from only after careful consideration on situations aris-
ing in specific cases.” Otten v. Stonewall Ins. Co., 538 F.2d
210, 212 (8th Cir. 1976).
The Court of Appeals, in reversing the district court in
this case, clearly acted contrary to two major holdings it had
made in its first opinion.’ Doing this without explanation in a
brief unpublished Order defied the sound principles of
judicial administration embodied in the doctrine of the “rule
of the case.”
B. The Court of Appeals in Reversing Its Initial Deci-
sion Is in Direct Conflict with the Court of Appeals
for the District of Columbia in Fairmont and the
Court of Appeals for the Third Circuit in Abbotts.
1. The Court of Appeals for the District of Colum-
bia Held in Fairmont That, in Such a Case as the
Present, the Damages to Be Awarded Are the
Amount of the Overpayments, Which Should
Properly Be Ascertained by the Distriet Court.
‘The Secretary's Brief on the second appeal repeatedly attacked
the rulings on the first appeal. The Secretary devoted a section to
the argument that the decision below “measured Borden's damages
on the basis of an incorrect standard” (Sec. Br. 46), although the
standard used was that prescribed by the Court of Appeals on the
first appeal. Repeatedly, the Secretary argued that the proper mea-
sure was the “entirely different measure of recovery’ employed in
“restitution” cases rather than “overcharge” cases (Sec, Br. 47-48)
Similarly, the Secretary argued that fixing damages by the district
court, as ordered on the first appeal “violates the ‘primary jurisdic-
tion’ doctrine” (Sec. Br. 19) and “that the Secretary must rule on
the scope of Borden's damages in the first instance.” (Sec. Br. 31)
In reply, Borden repeatedly pointed out that “the Secretary now
tries to relitigate the very issues decided on the prior appeal,” and
“to reargue the prior appeal’ (Borden's Br. pp. 14, 15) and that
“this attack on the decision of this Court comes too late.” (Bor-
den’s Br. p. 18). Despite the law of the case doctrine, the Court of
Appeals nevertheless accepted the Secretary's arguments.
16
In Fairmont the Secretary imposed a “differential” between
the prices paid by some dairies as opposed to others. The
differential was held unlawful as not justified on the record.
No question was raised as to the validity of the basic rates
which had been promulgated, so that the amount of the over-
payments imposed by the “differential on the disfavored
dairies could be easily computed, Over the Secretary's pro-
tests that calculation of damages was more complex, the
Court said:
“As to damages, we think that Fairmont is entitled to
recover overpayments which it made pursuant to the in-
valid Order.” 442 F.2d at 773,
The repudiation by the Court of Appeals in this case of the
measure of damages held to be appropriate in Fairmont (i.e.,
“overpayments’) creates a clear conflict between’ the two
Circuits,
The Court in Fairmont further concluded, also over the
protests of the Secretary:
“In view of the ease with which payments can be made
once determined, we remand to the District Court on
the issue of damages, with direction to enter judgment
for appellant after appropriate proceedings.” 442 F.2d at
773.
Thus the Court of Appeals for the District of Columbia Cir-
cuit held that the computation of overpayments is not an ad-
ministrative question which must first be decided by the
Secretary, The Order of Reversal here is thus diametrically
opposed to the decision of the District of Columbia Circuit
in Fairmont on each of two points: the first being the measure-
ment of damages and the second being who is to determine
the amount of damages.
17
The ruling of the Court of Appeals for the Seventh Circuit
on the first appeal in the present case—that Borden's
damages were its ‘“overpayments’—was identical to the
holding in Fairmont. The first remand to the district court to
ascertain Borden's damages “after appropriate proceedings”
was identical to the remand ordered in Fairmont. Indeed, on
the first appeal here, the Court of Appeals cited and relied
upon Fairmont.
The Order of the Court to which this Petition is directed,
however, directly conflicts with the decision in Fairmont. No
reason whatsoever was given on the second appeal to distin-
guish that case, Rather, the Fairmont case was simply ig-
nored by the Court in its Order of Reversal.
2. The Court of Appeals for the Third Circuit Held
in Abbotts That Damages Were to Be the
Amount of the Overpayments and That Remand
to the Secretary for Their Ascertainment Was
Improper.
In Abbotts, unlike both Fairmont and this case, the entire
pricing mechanism of the Secretary's Order was questioned
and held invalid. By contrast, in Fairmont and the present
case, the minimum price established each month under the
applicable Market Order was neither challenged nor in-
validated, All that was condemned was a specific and con-
stant adjustment or differential to the Order price which a
single dairy was required to pay.
Despite the need for a more complicated inquiry to deter-
mine damages in Abbotts, the Third Circuit rejected the Secre-
tary’s claims that the case be remanded to him so he could,
in prolonged administrative proceedings, engage in recon-
structing economic history for purposes of computing
damages. The Court of Appeals held simply that the dairy’s
damages were to be its “overpayments,” measured by the
18
difference between the price which it was forced to pay and
the price which it had proposed to the Secretary but which
had been rejected. (Slip Opinion, at 11-14)
Again the Order of Reversal here is in direct conflict with
Abbotts on the same two points: ie., the measurement of
damages and the forum for determining damages.
With respect to the Secretary's insistence that he, rather
than the district court, be permitted to ascertain damages in
the first instance the Third Circuit held:
“There additionally appears to be no reason for a
remand to the Secretary. Attempting to ascertain in this
case the price at which Abbotts would have been able to
purchase milk seems meaningless in light of the district
court's statement that Abbotts continued to.purchase
milk at the proposed bracket price prior to the August
20, 1970, injunction. Even without this fact an inquiry
into what the price of milk would have been would not
likely contribute anything to the evidence since the
effect of the invalid Order itself during the period in
question would naturally ke considerable, reducing the
probative quality of any attempt at reconstructing
economic history. This or related litigation has already
extended over an eight year period and has received con-
siderable judicial and administrative attention, as de-
scribed earlier. At this stage we cannot view lightly the
possibility of further complication and delay.” Slip
Opinion, at 14-15.
The Third Circuit’s opinion in Abbotts is directly in conflict
with the Court’s Order here. Indeed, it would follow a fortiori
from Abbotts that the Court was right in its mandate after the
first appeal, setting forth the measure of damages as ‘“‘over-
payments,” which were to be ascertained by the district
court.
19
C. In Holding that Borden’s Damages Are to Be De-
termined by the Secretary Based on an Undefined
“Evaluation of Complex Economic Relationships
between Producers and Handlers,” Rather than by
Simply Ascertaining the Amounts of Borden’s Over-
payments, and by Holding That the Secretary
Rather than the District Court Must Determine
Borden’s Damages, the Court of Appeals Has
Decided Two Important and Recurrent Issues
under the Milk Marketing Act Erroneously and
Contrary to Good Judicial Administration.
1. The Parties at No Time “Stipulated” That
Damages Were to Be Initially Computed in
Proceedings before the Secretary, As the Secre-
tary Improperly and Incorrectly Argued to the
Court of Appeals and As the Court of Appeals
Was Misled to Believe.
In ordering the case remanded to the Secretary to compute
damages after the second appeal, the Court of Appeals ex-
plained:
“The record before us demonstrates that the parties
had stipulated before the Administrative Law Judge the
facts which were to constitute the exclusive basis for
deciding the legal issues involved, but expressly deferred
the submission of evidence establishing the monetary
damages to which the plaintiff would be entitled, if suc-
cessful, ‘until the legal issues have been resolved.’ ”
Rarely has a single sentence contained more errors of both
fact and law. There was no such “stipulation” of the parties;
the statement relied upon by the Court was taken out of con-
text from covering letters from Borden’s counsel which were
dei.ors the record.’ They were improperly quoted in the Secre-
tary’s Appendix without leave of court. They were thus not
before the Court of Appeals and should never have been
referred to by counsel or considered by the Court under its
‘The letters are reproduced in the Appendix (Ex. J, K).
20
own precedents. Hill v. Trustees of Indiana University, 537 F.2d
248, 251 (7th Cir. 1976). In any event, counsel could not, by
agreement between themselves, outside the record, have
bound the reviewing court as to its disposition of a case
before it or dictated the forum for the computation of
damages.
More basic, however, is that a reading of these letters in-
dicates clearly that there was no agreement whatsoever as to
how the damage issue was to be determined. Borden merely
agreed that some evidence that Borden wanted to introduce
at that time be withheld “and that the question of the refund
to which Borden . . . is entitled be resolved at a later date, in-
formally or otherwise.” (App., Ex. K) Resolution of the
damages question by the district court in summary judgment
proceedings was completely consistent with the procedures
contemplated in the letter quoted and fully appropriate. Cer-
tainly, there was no agreement that the Secretary was to de-
termine damages in an evidentiary hearing.’
The procedure before the district court was completely
consistent with any understanding expressed in the letters
that the determination of Borden's damages would be made
‘The only Stipulation agreed to by counsel for the Secretary and
for Borden was the Stipulation filed August 13, 1973, which was
part of the record below. It set forth the amount of Borden’s pur-
chases at the Des Moines plant from October, 1970 through July,
1971, and provided that the record should include “the handlers
reports submitted by Borden to the Market Administrator for the
relevant area and time period at. issue.” The documents thus
agreed to by the Secretary and relied on to support Borden’s mo-
tion for summary judgment below provided the information from
which the amounts of Borden's overpayments could be and were
computed in the district court. Additional facts as to Borden’s
damages such as those resulting from the forced closing of its plant
were not introduced but were not relevant to the damage question
once the Court limited damages to “overpayments.”
21
after the liability issue had been determined. Indeed, this is
precisely what the Court of Appeals had ordered after decid-
ing the “legal issues.” The determination was made pursuant
to the Rules of Civil Procedure—on a motion for summary
judgment where the Secretary had full opportunity to show
the existence of any evidence rebutting that advanced by
Borden. Despite the opportunity, he did not. The partially
quoted letters of counsel presented absolutely no basis for
the district court to be accused of acting “prematurely”
when it followed step by step the mandate of the Court of
Appeals.
2. The Order Reversing the Earlier Holding That
Borden’s Damages Were Its Overpayments Was
Based on a Misapprehension of Basic Legal
Principles.
The decision on the first appeal holding that Borden's
damages were the amounts of its overpayments followed and
was consistent with a long line of decisions of this Court.
When a party is compelled to pay more than a lawful rate,
tariff, or price, the overpayment or overcharge “is a tort,”
Lewis-Simas-Jones Co. v. Southern Pacific Co., 283 U.S. 654,
660 (1931), and one “for which the plaintiffs were entitled, as
for other torts, to compensation from the wrongdoer.” Adams
v. Mills, 286 U.S. 397, 407 (1937). In such cases, the victim
can recover “without specific proof of pecuniary loss, and.. .
the measure of damages is the amount of the excess exact-
ed.” L & N Railroad v. Sloss-Sheffield Co., 269 U.S. 217, 236
(1925).
The principle applies in all analogous cases, such as deal-
ing with overcharges due to illegal price-fixing in antitrust
cases. Chattanooga Foundry & Pipe Works v. Atlanta, 203 U.S.
390 (1906). In these cases, also, the amount of the over-
payments constitutes the damages:
22
“Hanover proved injury and the amount of its damages
_ when it proved that United had overcharged it dur-
ing the damage period and showed the amount of the
overcharge. . . .” Hanover Shoe, Inc. v. United Shoe Ma-
chinery, 392 U.S. 481, 482 (1968).
Hence, Fairmont and the first decision in the present case
were correct in stating that the damages in this case are the
amount of the overpayments. ‘
The Court of Appeals here, however, stated, “We agree
with the conclusion of the court which recently decided the
procedure which should follow the finding of the illegality of
a milk marketing order,” citing the district court decision in
Abbotts. 438 F.Supp. at 629. Abbotts, however, was not an over-
charge case but a “restitution” case, as the Third Circuit
made clear. (Slip Opinion, at 11-14)
The Court thus confused the type of issue involved in the
present case with the different type of issue discussed by the
district court in Abbotts. The present case is one sounding in
law for unlawful “overcharges,” while Abbotts was a case for
equitable restitution.
Ordinarily, in restitution cases, the exact amount of over-
charges cannot be readily ascertained. But in Abbotts, the
Third Circuit was able to find a basis for their ascertain-
ment, and on this point overruled the district court. In so do-
ing, the Third Circuit invalidated the procedure ordered by
the district court and accepted by the Seventh Circuit here.
Restitution cases, sounding in equity rather than in law,
are primarily instituted when for some reason an action at
law for overcharges is inadequate or inappropriate. The
typical case is one where the amount of the overpayments
cannot be accurately ascertained. When an existing tariff or
prescribed lawful rate is declared invalid in its entirety, no
23
way to prove the existence or amount of an overcharge by
legal standards is normally available. The old price has been
voided; and no lawful price can be shown to have been in
effect during the period when the invalid price had been pre-
scribed. In many cases no assumption can be made that the
fixed price in effect prior to the promulgation of the invalid
price would have continued or would under changed circum-
stances have been lawful. Those who claim to have been in-
jured by an invalid and excessive general rate therefore have
only one remedy—a suit for restitution, sounding in equity,
based on proof of overall actual “pecuniary loss” or of the
“unjust enrichment” of those receiving the overpayments.
This remedy involves many factors affecting such proof
which have nothing to do with the ascertainment of the
amount of illegally compelled overpayments.”
In Abbotts, a Market Order had been invalidated in its en-
tirety along with the entire mechanism by which the Order
price was set. The dairy asked specifically for “restitution.”
Because of rapid changes in the market, it could not be as-
sumed that the Order price in effect before the invalidated
order took effect would otherwise have remained unchanged
or if so would have then been valid. What the Court of Ap-
peals therefore utilized was a price schedule that had been
proposed by the dairy but never approved by the Secretary.
The Court properly held that in such a restitution case “the
reasonableness of the rate sought to be used as a measure
must appear before restitution of an overpayment can be
decided.” (Slip Opinion, at 13) In support of the reasonable-
‘Restitution cases are exemplified by Atlantic Coast Line v. Flor-
tda, 295 U.S. 301 (1935), and Moss v. C.A.B, 521 F.2d 298 (D.C. Cir.
1975), the two cases chiefly relied on and cited by the Secretary's
Brief. See the Secretary's Brief, pp. 47 et seq Both cases were dis-
tinguished by the Third Circuit in Abbotts. (See Slip Opinion pp.
11-13)
24
ness of the dairy’s proposed price schedule, the Court
referred to the Secretary’s failure to show that an adequate
supply of milk would have been unavailable at the proposed
prices. (Slip Opinion, at 13-14)
In the present case, however, no need exists to ascertain
the lawful price. The Quad Cities minimum price that Bor-
den would have been required to pay, but for the illegal
orders, is known. The price formula under the existing Quad
Cities Order was never challenged as unreasonable, and it
applied throughout the relevant period to all Borden’s com-
pe.itors.
In recognizing the fact that the equitable remedies sup-
plied in restitution cases apply only where overpayments
cannot be computed, the Third Circuit, in accord with the
many other cases, held that even in restitution cases, when
the overcharges are capable of computation, the overcharges
become the measure of damage: Williams v. Washington Met.
Area Transit Com'n, 415 F.2d 922, 944 (D.C. Cir. 1968);
Washington Gas Light Co. v. Baker, 188 F.2d 11, 23 (D.C. Cir.,
1950); Florida East Coast Ry. Co. v. United States, 368 F.Supp.
1009, 1021 (M.D. Fla. 1973; 3-judge court), affd, 417 U.S. 901
(1974).
Reference back to the Secretary is not only an inappro-
priate remedy in an overpayment case, but, as Abbotts illus-
trates, may well be improper even in a restitution case. Its
use in the present case offends logic and is contrary to sound
principles of judicial administration.
3. There Was No Administrative Question Requir-
ing Reference to the Secretary.
The Secretary on the second appeal openly attacked the
holding on the first appeal that the district court was to as-
certain the damages by asserting that “the issuance of the
25
damage award by the district court absent an initial admin-
istrative decision . . . violates the ‘primary jurisdiction’ doc-
trine” (Sec. Br. 19). This is an issue which should properly
have been raised only on an appeal from the first decision.
Furthermore, the primary jurisdiction doctrine has no
relevance to such an issue as the mere computation of over-
payments.
The sole issue before the district court and the Court of
Appeals—what were the amounts of Borden's over-
payments?—is not one to which the assumed “expertise” of
the Secretary has any relevance. Ascertainment of over-
payments requires merely a simple arithmetic computation
based on the amounts paid by Borden compared with what it
would have paid had the illegal rulings not been made. The
facts were set forth in Borden’s official handler’s reports filed
with the Milk Market Administrator and made part of the
record below. This is purely a judicial question within the
conventional experience of judges; and requires no prior sub-
mission to an administrative agency.’ The doctrine of
primary or exclusive jurisdiction in administrative agencies
applies only where
“in cases raising issues of fact not within the conven-
tional experience of judges or cases requiring the exercise
of administrative discretion, agencies created by
Congress for regulating the subject matter should not be
passed over.” Far East Conference v. United States, 342
U.S. 570, 574 (1952); quoted with approval in United
States v. Western Pacific R. Co., 352 U.S. 59, 64 (1956).
This Court has repeatedly held that suits for damages
because of illegal agency action, where the illegality has been
"As pointed out earlier, even the lower court in Abbotts recognized
that no submission would have been required had the record before
it permitted the computation of the compelled overpayments. 438
F. Supp. at 636.
26
established, do not require submission to the administrative
agency. Pennyslvania Rd. Co. v. International Coal Mining Co.,
230 U.S. 184 (1913); Pennsylvania Rd. Co. v. Puritan Coal Min-
ing Co., 237 U.S. 121 (1915); Illinois Central Rd. Co. v. Mul-
berry Hill Coal Co., 238 U.S. 275, 282-83 (1915); Baltimore &
Ohio R. Co. v. Brady, 288 U.S. 448 (1933). In the first of these
cases, this Court said:
“The rebate being unlawful, it was a matter where the
court, without administrative ruling or reparation order,
could apply the fixed law to the established fact... .
230 U.S. at 197”
As the Third Circuit said in Abbotts:
“In any event, the issues left to be decided in this case
are not of the kind which are peculiarly within the ex-
pertise of the Secretary and which might otherwise jus-
tify resort to the administrative process.” Slip’ Opinion,
p. 14, n. 16
Not being required to refer the matter to the Secretary,
the Court’s action in doing so violates sound principles of
judicial economy and administration. Assuming, as the Sec-
retary undoubtedly will, that he is to consider all matters
which he contends are appropriate to a “restitution” case,
any hearing before the Secretary will be protracted. The Sec-
retary’s Briefs before the Court of Appeals demonstrate that,
under his interpretation of the mandate, he will consider a
multitude of issues clearly not appropriate to an over-
payments case. The failure of the Court of Appeals to deny
their relevance will obviously be treated as an open invita-
tion to pursue them all.
"In Florida East Coast Ry. Co. v. United States, 368 F. Supp. at 1021
the Court noted that referral to the I.C.C. to make the computa-
tion of overcharges “is unnecessary and would permit plaintiffs to
relitigate many of the issues which have already been disposed of
herein.” This language is directly pertinent to the present case.
27
Furthermore, as the Secretary’s Brief to the Court of Ap-
peals emphatically demonstrates, totaNy extraneous issues
will be debated at length in any hearing he conducts. The
Secretary obviously intends to burden the record in the
proposed “administrative hearing” by retrying old issues and
dragging in many totally extraneous ones.
D. Eight Years After the Illegal Orders Were First Im-
posed by the Secretary, the Orderly and Efficient
Administration of Justice Demands That This Case
Not Be Remanded to the Secretary to Begin the
Administrative Process Anew, When the Only Gen-
uine Issue Remaining Is the Arithmetic Computa-
tion of Borden’s Overpayments.
The Order of the Court of Appeals in remanding this case
to the Secretary of Agriculture for further proceedings is an
affront to the efficient administration of justice. Having
spent s¢x years simply establishing that the orders of the Sec-
retary were unlawful, Borden should not be forced again to
run the gamut of lengthy administrative proceedings and
further appeals in order to secure a resolution of the minis-
terial matter of ascertaining “overpayments.”
Three Courts of Appeals have recognized the inefficiency
and injustice of remanding to the Secretary to ascertain
damages once orders affecting milk handlers have been
found unlawful. In Fairmont, supra, the order of the Secre-
tary challenged by Fairmont was imposed on February 4,
1965. Six years later, on February 26, 1971, when a final deci-
sion was issued by the Court of Appeals striking down the
order, the Court specifically remanded to the district court to
ascertain damages. Similarly, in Abbotts, supra, the chal-
lenged order was issued on August 2), 1969, and when the
Court of Appeals finally decided the question on August 1,
1978—nine years later—the Court made clear that damages
28
were to be ascertained forthwith by the district court. In the
present case, too, on the initial appeal, the Court of Appeals
recognized that after six years of litigation, it was appro-
priate for the district court to calculate Borden’s damages.
The practical effect of not permitting the district court to
award damages after an order of the Secretary has been in-
validated is apparent: it is to render illusory the possibility
of any actual recovery. The prospect of a second, prolonged
set of proceedings devoted to the issue of damages, in which
the Secretary would again seek to offer economic justifica-
tions for his invalidated orders in order to reduce the
damages awarded, would discourage and deter all but the
most determined of litigants.
Like the fictional case of Jarndyce v. Jarndyce in Dickens’
Bleak House, the present proceeding, as a result of the Court
of Appeals’ Order on the second appeal, has no end in sight.
Eight years after the first of the illegal orders was imposed
and almost two years after the orders were invalidated by
the Court of Appeals, Borden is still confronted with the
choice of engaging in many additional years of litigation to
recover its overpayments or simply giving up.
Following the Court’s mandate after the first appeal, sum-
mary judgment was the most efficient and appropriate means
of concluding this litigation. The initial appeal established
Borden's right to recover its overpayments. The Court of
Appeals’ subsequent capricious reversal of the summary
judgment was not only inconsistent with the efficient admin-
istration of justice but also in defiance of Rule 56(e) of the
Federal Rules of Civil Procedure. That rule requires the
party opposing summary judgment to come forward with
“specific facts showing there is a genuine issue for trial.”
Nothing in the Secretary’s “Opposition” to Borden’s motion
29
for summary judgment as to damages satisfied this require-
‘ment, and on the second appeal the Court of Appeals did not
even make any pretext that the Secretary had raised any
triable issue. Indeed, the Court of Appeals avoided even
referring to Rule 56(e), neither stating what “specific facts”
the Court believed had been adduced by the Secretary nor
describing what the Court believed to be the “genuine issues
for trial” shown to exist.
Under these circumstances, the Order of the Court of Ap-
peals represented an abdication of the Court’s responsibility
to ensure that substantial rights of the parties are not effec-
tively forfeited as the result of the inefficient administration
of justice.
CONCLUSION
The Secretary's efforts to frustrate milk handlers’ chal-
lenges to his administrative rulings through endless litigation
of extraneous matters are notorious. In Fairmont, he unsuc-
cessfully sought the opportunity to apply his claimed exper-
tise in order to defeat the plaintiff's recovery of over-
payments, Again in Abbotts, the Secretary was rebuked by the
district court for having after the prior appeal “considered
matters far beyond the scope of [the court’s] order.” 438
F.Supp. at 637.
Once overcharges, like those at issue in Fairmont and here,
have been found unlawful by the courts, no room is left for
the application of administrative expertise in calculating
damages. To remand to the Secretary under such circum-
stances is to prolong the proceedings, to delay and possibly
to defeat any ultimate recovery, and to invite subsequent ap-
peals. The protracted and cumbersome procedure now man-
dated by the Court of Appeals will impose a wholly unneces-
sary burden on the parties and on the courts.
30
The proper standards and procedures for awarding
damages are set forth in Abbotts and Fairmont and in the
opinion of the Court below on the initral appeal. The conflict
between the Circuits on these important issues and the injus-
tice and inefficiency resulting from the Seventh Circuit's
unexplained reversal of its own prior mandate provide a
compelling need for review of the decision below.
For the foregoing reasons, certiorari should be granted.
Respectfully submitted,
Stuart 8. Batt
H. Brain Wuite
Davin T. Pritikin
One First National Plaza
Chicago, Illinois 60603
Warrer W. Kocuer
GLENN 8. DENNIS
Epwarp A. Marto
180 East Broad Street
Columbus, Ohio 43215
Counsel for Petitioner
Siptey & Austin
One First National Plaza
Chicago, Illinois 60603
Of Counsel
September 26, 1978
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APPENDIX
Exhibit A
Excerpts from relevant statutes and regulations
7 U.S.C. § 608 ¢(15)
Petition by handler for modification of order or exemption;
court review of ruling of Secretary
(A) Any handler subject to an order may file a written pe-
tition with the Secretary of Agriculture, stating that any
such order or any provision of any such order or any obliga-
tion iniposed in connection therewith is not in accordance
with law and praying for a modification thereof or to be
exempted therefrom. He shall thereupon be given an oppor-
tunity for a hearing upon such petition, in accordance with
regulations made by the Secretary of Agriculture, with the
approval of the President. After such hearing, the Secretary
shall make a ruling upon the prayer of such petition which
shall be final, if in accordance with law.
(B) The District Courts of the United States in any dis-
trict in which such handler is an inhabitant, or has his prin-
cipal place of business, are vested with jurisdiction in equity
to review such ruling, provided a bill in equity for that pur-
pose is filed within twenty days from the date of the entry of
such ruling. Service of process in such proceedings may be
had upon the Secretary by delivering to him a copy of the
bill of complaint. If the court determines that such ruling is
not in accordance with law, it shall remauc such proceedings
to the Secretary with directions either (1) to make such rul-
ing as the court shall determine to be in accordance with law,
or (2) to take such further proceedings as, in its opinion, the
law requires. The pendency of proceedings instituted pur-
suant to this subsection (15) shall not impede, hinder, or
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delay the United States or the Secretary of Agriculture from
obtaining relief pursuant to section 608a(6) of this title. Any
proceedings brought pursuant to section 608a(6) of this title
(except where brought by way of counterclaim in proceed-
ings instituted pursuant to this subsection) shall abate when-
ever a final decree has been rendered in proceedings between
the same parties, and covering the same subject matter, insti-
tuted pursuant to this subsection (15).
7 C.F.R. § 1063.89 (1970)
Termination of obligations.
The provisions of this section shall apply to any obligation
under this part for the payment of money.
* * +
(d) Any obligation on the part of the market administrator
to pay a handler any money which such handler claims to be
due him under the terms of this part shall terminate 2 years
after the end of the calendar month during which the skim
milk and butterfat involved in the claim were received if an
underpayment is claimed, or 2 years after the end of the cal-
endar month during which the payment (including deduction
or setoff by the market administrator) was made by the han-
dler if a refund on such payment is claimed, unless such han-
dler, within the applicable period of time, files pursuant to
section 8e(15)(A) of the Act, a petition claiming such money.
7 C.F.R. § 1000.6
Termination of obligations.
The provisions of this section shall apply to any obligation
under the order for the payment of money:
* * *
(d) Unless the handler files a petition pursuant to section
8c(15)(A) of the Act and the applicable rules and regulations
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(7 CFR 900.50 et seq.) within the applicable 2-year period in-
dicated below, the obligation to the market administrator:
(1) To pay a handler any money which such handler
claims to be due him under the terms of the order shall
terminate 2 years after the end of the month during
which the skim milk and butterfat involved in the claim
were received; or
(2) To refund any payment made by a handler (in-
cluding a deduction or offset by the market administra-
tor) shall terminate 2 years after the end of the month
during which payment was made by the handler.
Exhibit B
BORDEN, INC., Plaintiff-Appellant,
v.
Earl L. BUTZ, Secretary of Agriculture,
Defendant-Appellee.
No. 76-1478.
United States Court of Appeals,
Seventh Circuit.
Argued Sept. 24, 1976.
Decided Nov. 1, 1976.
Before SPRECHER and BAUER, Circuit Judges, and
KUNZIG, Judge.*
SPRECHER, Circuit Judge.
This appeal concerns the validity of certain amendments
to milk marketing orders by the Secretary of Agriculture
under a provision of the Agricultural Marketing Agreement
Act of 1937, 7 U.S.C. § 608e(5)(A).
*Honorable Robert L. Kunzig, Judge, United States Court of
Claims, is sitting by designation.
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I
Prior to September 1, 1970, Borden operated a milk
processing plant at Rock Island, Illinois, which served the
Quad Cities—Dubuque Market Area and which was regulat-
ed under the Quad Cities—Dubuque Milk Marketing Order
No. 63, 7 C.F.R. Part 1063 (1970). Also prior to September 1,
1970, Borden operated another milk processing plant at
Des Moines, Iowa, which was regulated under the
Des Moines Milk Marketing Order No. 79, 7 C.F.R. Part
1079 (1970). This second plant served the Des Moines area,
but also served the Cedar Rapids—Iowa City area (Order
No. 70), the North Central Iowa area (Order No. 78), the
Greater Kansas City area (Order No. 64), the Nebraska—
Western Iowa area (Order No. 65) and the Quad Cities—
Dubuque area (Order No. 63).
The Rock Island plant purchased its principal milk supply
from Mississippi Valley Milk Producers Association and the
Des Moines plant purchased its principal milk supply from
Mid-America Dairymen, Inc.
On September 1, 1970, Borden discontinued bottling opera-
tions at the Rock Island plant and its fluid milk accounts in
the Quad Cities—Dubuque area were thereafter served from
the Borden plant at Des Moines. After September 1, the
Des Moines plant’s supplies of milk were purchased from
Mississippi Valley.
Under the terms of Order Nos. 63 and 79, any particular
plant is regulated in the market where it has the greatest dis-
tribution of milk. Consequently, upon the closing of the
Rock Island plant and the assuming of its business by the
Des Moines plant, the Des Moines plant became subject to
the Quad Cities— Dubuque Order.
Borden’s Des Moines plant was subject to the Quad Cities
—Dubuque Order from September 1, 1970 through July 31,
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1971, when the Des Moines plant was shut down. During
that period the Class I price under the Quad Cities—
Dubuque Order was 15 cents per hundredweight lower than
the Class I price under the Des Moines Order.
The Quad Cities—Dubuque Order also provided that the
price for Class I milk should be reduced.
[a]t a plant located outside the marketing area and 70
miles or more, by the shortest hard-surfaced highway
distance .. . from the nearer of the City Hall, Rock Is-
land, Ill., or the Post Office, West Liberty, Iowa, by 10
cents and by an additional 1.5 cents for each 10 miles or
fraction thereof that such distance exceeds 80 miles.
7 C.F.R. § 1063.52(a)(2) (1970).
Inasmuch as Borden’s Des Moines plant was approximate-
ly 140 miles from the Quad Cities base point, it was entitled
to a “location adjustment” of 10 cents per hundredweight
plus 1.5 cents per 10 miles for the 60 miles by which 140 ex-
ceed 80 miles, or a total location adjustment of 19 cents per
hundredweight, which, when added to the 15 cents price
differential, resulted in Borden’s Des Moines plant paying 34
cents per hundredweight less than other milk handlers locat-
ed in Des Moines but subject to the Des Moines Order. How-
ever, any Des Moines plant which desired to distribute all or
the greater of its milk in the Quad Cities—Dubuque area
would have had exactly the same advantage in thereby
transferring its plant from the operation of the Des Moines
Order to the Quad Cities— Dubuque Order.
Borden had no competitive advantage over other handlers
subject to the Quad Cities Order, since those handlers also
paid 15 cents less than the Des Moines Order price for Class
I milk and the 19 cents location adjustment was offset by the
transportation costs involved in distributing milk to the Quad
Cities— Dubuque area from 140 miles away in Des Moines.
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Borden had no competitive advantage in the Des Moines
market area since it voluntarily agreed with its producers to
pay the same price paid by other Des Moines handlers for
milk purchased for resale in the Des Moines area.
Under the milk marketing orders as they then existed,
Borden's closing down of the Rock Island plant and supply-
ing its Quad Cities customers froin the Des Moines plant
was entirely lawful and proper. Borden's mistake apparently
was an economic one of deciding to purchase milk from Mis-
sissippi Valley Milk Producers Association, an independent
dairy cooperative, after the changeover, instead of from Mid-
America Dairymen, Inc., another independent dairy coopera-
tive. Mid-America promptly requested the Department of
Agriculture to suspend the 19 cents location adjustment.
There followed the issuance of three orders of the Secre-
tary of Agriculture, the validity of which form the basis for
this appeal:
1. October 1, 1970, order. On September 12, 1970, the
Department of Agriculture caused to be published in the
Federal Register a notice of proposed suspension of 7 C.F.R.
§ 1063.52(a)(2) of the Quad Cities—Dubuque Order for the
months of September and October 1970. The notice did not
provide an opportunity for a hearing, and no hearing was
held. Borden submitted its exceptions to the proposed sus-
pension, noting that it would only affect Borden and none of
its competitors. On October 1, 1970, the Secretary issued an
order suspending 7 C.F.R. § 1063.52(a)(2) for the month of
October only. The order is worded in such a manner as to
apply only to Borden.
2. October 29, 1970 order. On September 30, 1970, notice
was issued, and on October 3 it was published, of a hearing
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to be held on October 8 on five proposed amendments to
the Quad Cities—Dubuque, Cedar Rapids—Iowa City and
Des Moines marketing orders. An order was issued on Octo-
ber 29, effective November 1, 1970, amending the Quad
Cities—Dubuque Order No. 63 by permanently eliminating
the 19 cents minus location adjustment applicable to Bor-
den’s Des Moines plant and for a six-month period through
April 1971, providing for a 15 cent plus location adjustment
applicable to plants located within the Des Moines market-
ing area. The order increased Borden’s price for Class I milk
by 34 cents per hundredweight by amending 7 C.F.R.
§ 1063.52(a)(2), as follows (added language emphasized):
At a plant located outside the marketing area and out-
side the Des Moines, lowa, marketing area .. . and 70 miles
or more, by the shortest hard-surfaced highway distance
... from the nearer of the City Hall, Rock Island, IIL,
or the Post Office, West Liberty, Iowa, subtract 10 cents
and subtract an additional 1.5 cents for each 10 miles or
fraction thereof that such distance exceeds 80 miles.
The October 29, 1970 order also added a new § 1063.52(a)(3)
as follows:
During the period November 1, 1970, through April
1971 at a plant located within the Des Moines, Iowa,
marketing area, add any amount by which the price
specified .. . is less than the applicable Class I price at
the same location pursuant to . . . [Order No. 79]
regulating the handling of milk in the Des Moines,
Iowa, marketing area.
The October 29 order did not amend the Cedar Rapids—
Iowa City or the Des Moines marketing orders. Although
phrased in general terms, the order was worded so as to
apply only to Borden.
3. April 28, 1971 order. Pursuant to notices published on
April 7 and 9, 1971, hearing was held on April 13, resulting
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in the issuance on April 28, 1971 of an order removing the
April 1971 expiration date from § 1063.52(a)(3), so as to re-
tain the plus 15 cents location differential.
On July 31, 1971, Borden closed its Des Moines plant and
discontinued operations in the Des Moines area. Thereafter,
on October 8, 1971, § 1063.52(a)(2) and (3) were again
amended to change the language which had applied solely to
Borden. '
In accordance with 7 U.S.C. § 608c(15)(A), Borden filed
petitions with the Secretary of Agriculture challenging the
three orders as ‘not in accordance with law and praying for
a modification thereof.” The orders were upheld in an Initial
Decision filed by an Administrative Law Judge (ALJ) on
March 13, 1974. Borden appealed to the Judicial Officer in-
asmuch as final administrative authority to decide cases
under the Agricultural Marketing Agreement Act of 1937,
has been delegated to the Judicial Officer. 37 Fed.Reg. 18475;
38 Fed.Reg. 10795. The Judicial Officer on August 15, 1974,
' 7 C.F.R. § 1063.52(a)(2) and (3) (Jan. 1, 1972):
(2) At a plant located outside the marketing area, north of
U. S. Highway No. 80, and, except as provided in subpara-
graph (3) of this paragraph, 70 miles or more, by the shortest
hard-surfaced highway distance as determined by the market
administrator, from the nearer of the City Hall, Rock Island,
Ill., or the Post Office, West Liberty, Iowa, subtract 10 cents
and subtract an additional 1.5 cents for each 10 miles or frac-
tion thereof that such distance exceeds 80 miles; and
(3) At a plant located in that Iowa territory beyond 70 miles
from the nearer of the City Hall, Rock Island, IIl., or the Post
Office, West Liberty, Iowa, and south of U. S. Highway No.
80, or within the Des Moines, Iowa, marketing area as
specified in Part 1079, add any amount by which the price
specified in § 1063. 50(b) i is exceeded by the applicable Class I
price at the same location pursuant to Part 1079 regulating
the handling of milk in the Des Moines, Iowa, marketing area.
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adopted the Initial Decision, added some conclusions, denied
the relief requested by Borden and dismissed the petitions.
In accordance with 7 U.S.C. § 608c(15)(B), Borden sought
review in the district court, which on February 11, 1976,
entered summary judgment on behalf of the Secretary of
Agriculture. Borden has appealed that decision.
II .
The Agricultural Marketing Agreement Act of 1937 as
amended provides that the Secretary of Agriculture may fix
minimum prices for each use classification which all handlers
shall pay for milk purchased from producers or associations
of producers, but “prices shall be uniform as to all handlers,
subject only to adjustments for: (1) volume, market, and
production differentials customarily applied by the handlers
subject to such order; (2) the grade or quality of the milk
purchased; and (3) the locations at which delivery of such
milk, or any use classification thereof, is made to such han-
dlers.” 7 U.S.C. § 608e(5)(A). |
[1] “The statute before us does not contain a mandate
phrased in broad and permissive terms.” Zuber v. Allen, 396
U.S. 168, 183, 90 S.Ct. 314, 323, 24 L.Ed.2d 345 (1969). The
Second Circuit has noted in Fairmont Foods Co. v. Hardin, 143
U.S. App. D.C. 40, 442 F.2d 762, 766 (1971):
. [I]t is important to keep in mind the limited scope of
authority that Congress delegated to the Secretary in
the field of milk marketing regulations. This is not a
case where the power of an agency or officer is bounded
only by the broad Congressional mandate that it be
exercised in the “public interest.” . . [T]he Secretary was
required to operate within the narrow confines of powers
expressly granted.
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The Secretary is authorized to make only certain adjust-
ments and these are to “compensate or reward the producer
for providing an economic service of benefit to the handler.”
Zuber, supra, 396 U.S. at 184, 90 S.Ct. at 323. And “the per-
missible adjustments are limited to compensation for render-
ing an economic service.” Zuber, supra, at 188, 90 8.Ct. at 325.
Fairmont, supra, at 767. “The court must invalidate orders
resting on any basis others than such economic reasons,—
whether the orders are ascribable to whim, which seems un-
likely; or to the response of major farm interests, which may
be more likely; or merely bureaucratic error in supposing
that the wisdom of experts as to what is needed in the public
interest must be given dominance over the constraint of
Congress.” Fairmont, supra, at 766.
7 U.S.C. § 608c(4) requires that the Secretary issue a mar-
keting order based upon the evidence adduced at a hearing,
which in turn requires that an order be supported by sub-
stantial evidence. Fairmont, supra, at 767; Lewes Dairy, Inc. v.
Freeman, 401 F.2d 308, 317 (3d Cir. 1968), cert. denied, 394
U.S. 929, 89 S.Ct. 1187, 22 L.Ed.2d 455 (1969). The evidence
in the record here consists of that introduced in two hearings
on October 8, 1970 and on April 13, 1971. Borden has chal-
lenged the sufficiency of the evidence at every stage of these
proceedings (Judicial Officer’s Decision and Order, at 63; dis-
trict court complaint, paras. 35(b), 36(f) and 37(g); Borden
Brief on Appeal at 20, 26).
We proceed to examine the economic justifications ad-
vanced for the increase of Borden’s Class I milk price by 34
cents per hundredweight and the evidence adduced in sup-
port of such justifications.
The first economic justification was a “for Borden’s own
good” finding: “[I]t is not reasonable to expect producers to
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continue to deliver milk to the Borden, Inc., plant while
higher prices are available to them at most other regulated
plants in the region, including those located in the Quad
Cities— Dubuque marketing area” (October 1, 1970 order). It
can be noted at the outset that Des Moines was a “deficit
market” and that the only milk supply problem would have
been short supply rather than a glutted market or depressed
prices.
A vice president of Mid-America Dairymen, Inc., the dairy
cooperative which lost the Borden business at Des Moines
when the Borden Rock Island plant was shut down, testified
that the Des Moines area has historically been a deficit mar-
ket during the fall and winter months and that the primary
purpose of a fixed price “is to bring forth an adequate supply
of pure and wholesome milk.” Ex. E at 24.
In the thirteen months (ending September 1, 1970) prior to
the October 1, 1970 order, approximately 10% of the milk in
the Des Moines area was imported from outside that area.
Ex. E, attached Ex. 3, at 4. Milk was imported monthly to
Des Moines, primarily from the North Central Iowa, and
Cedar Rapids—Iowa City marketing areas (Ex. E at 17).
How would the presence of the Borden plant at Des Moines,
but regulated under the Quad Cities order, affect the short
supply of milk at Des Moines? The only testimony in the
record regarding Borden’s future supply of milk was that of
a Borden witness who said:
After receiving assurance from Mississippi Valley
[dairy cooperative] that it could supply Borden with an
adequate supply of milk, Borden decided to move its
bottling operation at Rock Island to its Des Moines
plant.
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Ex. E at 49.
There is no evidence in the record that Borden would
suffer in short supply. The only evidence of short supply
generally was the testimony of the Mid-America representa-
tive:
[T ]here is some doubt as to the availability of a milk supply
for a Quad Cities—Dubuque pool plant located in the
City of Des Moines if present pricing provisions of the
Quad Cities—Dubuque Order prevail.
Ex. E at 24 (emphasis added).’
In the first place this testimony (“some doubt’) is purely
speculative.’ In the second place, if it is to be given any
weight whatever, being couched in general terms it would
not support the Secretary’s equally speculative finding (‘‘not
reasonable to expect” adequate supply) of a short supply for
Borden.
In the Initial Decision of the Administrative Law Judge,
adopted by the Judicial Officer, the following appears:
Thus the Assistant Secretary concluded in his suspen-
sion and amendment actions that the Order No. 63 Class
I price, less the 19 cent location differential, would not
attract a sufficient supply of milk to the Des Moines
plant of petitioner [Borden]. The Secretary did not make
‘This testimony was given on October 8, 1970. More than six
months later the same witness testified again on April 13, 1971, and
interestingly enough, he again used the words “some doubt.” Ex. I
at 86.
‘In Fairmont Foods Co. v. Hardin, 143 U.S. App. D.C. 40, 442 F.2d
762, 772 (1971), the court said: ““‘We can find no basis for the Secre-
tary’s findings beyond mere speculation, and therefore conclude
that... his ground of decision . . . must fail.”
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or have cause to make such a finding for the other plants
which compete with petitioner in the lower priced markets.
Ex. 35 at 67 (emphasis added).
In the third place, the short supply statement is contrary
to the obvious economic factors. There could be no general
short supply at Des Moines because of Borden’s presence
inasmuch as Borden's lower buying price would, according
to the Secretary, not attract Des Moines producers and
thus not divert suppliers away from other milk handlers in
Des Moines. Instead, Borden had an assured supply from
outside of the Des Moines area, was attracting outside milk
into Des Moines and was alleviating the short supply at
Des Moines by freeing Mid-America’s supply for other
Des Moines—located handlers.
Finally, the only non-speculative testimony on the subject
of the supply of specific Des Moines handlers came from the
manager of the Beatrice Foods Company’s Des Moines
plant, who testified that “[w]hen our plant was receiving this
minus 10 cent location differential [under the Des Moines
order] we experienced no problem obtaining an adequate
supply of milk,” Ex. I at 163, and from the president of
Anderson-Erickson Dairy Company who testified:
Q. Do you feel you can get milk delivered to your
plant at Des Moines at 10 cents lower than'the price . . .
currently applicable?
A. I don't believe we would have too much problem.
Q. You believe you would continue to get milk from
your present suppliers?
A. I would feel so.
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Ex. I at 135.
The Seeretary’s decision, rendered prior to the October 29,
1970 order, actually belied the finding of inadequate supply
in the October 1 order, stating:
There is indication that additional milk supplies are
being added to the Des Moines market. The total
number of producers increased from 1,137 in August
1969 to 1,381 in August 1970. Total recefpts of milk in-
creased from 34.4 million pounds in August 1969 to 41.6
million pounds in August 1970.
Ex. G at 9-10.
The Secretary's three orders effectively shut down Bor-
den’s Des Moines plant and ultimately reduced Des Moines’
outside supply of milk. We have searched the record in vain
to find evidence supporting the first purported economic jus-
tification for the three orders—that is, inadequate supply of
milk for Borden—and find none.
The second finding intended to justify the October 1 order
and presumably also the other two orders provided:
Such price disparity as between a Quad Cities order
plant and a Des Moines order plant located in the
Des Moines marketing area would disrupt competitive
relationships among such handlers distributing milk in
that market. Moreover, it would also threaten orderly
marketing in several neighboring markets, such as Kan-
sas City, where milk is distributed from the Borden,
Inc., plant at Des Moines.
The Secretary then purported to remedy the alleged market
disruptions by dealing with the Quad Cities—Dubuque mar-
keting order instead of with the Des Moines order. In a
similar situation, the District of Columbia Circuit said:
Assuming that the Nebraska—Western Iowa Order is
a proper vehicle for remedying market disruptions in the
ee oS te eee .
i a ci GT a F
~
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Eastern Colorado market, there must be substantial
evidence of such disruption in order to justify the impo-
sition of such price differentials for this purpose. Mere
speculation is no warrant for deviating from a principle
as paramount as that of uniform price structure within a
single order, particularly where the Secretary has other
techniques available.
Fairmont, supra, at 772.
‘Some preliminary observations are in order before con-
sidering the alleged evidentiary basis for the second justifica-
tion.
[2] There was nothing unusual or improper about the fact
that Borden’s Des Moines plant was regulated under the
Quad Cities—Dubuque marketing order. The Assistant Mar-
keting Administrator for both the Des Moines and Quad Cit-
ies orders testified that “some of these plants do switch from
market to market in their regulation.” Ex. E at 19. The
ALJ's Initial Decision, adopted by the Judicial Officer, found
that:
The volume of milk distributed from the Borden, Inc.,
plant in the Quad Cities—Dubuque, Des Moines, and
Greater Kansas City markets is nearly the same for
each market... . In this circumstance, with a relatively
small change in the sales volume from the plant in the
Quad Cities—Dubuque, Des Moines, or Greater Kansas
City markets, regulation of the plant could shift from
one to another.
Ex. 35 at 23.
Also, there was nothing unusual or improper in the fact
that Borden “agreed with its producers to pay an additional
amount of 15 cents per hundredweight on all milk purchased
for resale in the Des Moines Market Area.” ALJ Initial
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Decision, adopted by the Judicial Officer, Ex. 35 at 18. The
Secretary's brief in this court states (p. 9):
It must be emphasized that the order prices set under
the Act are minimum prices only. Producers need not
sell their milk for these minimum prices; they can and
do bargain for effective prices which are above order
minimums; however, they must be paid at least the min-
imum prices under the order.
,
We now consider the evidence, if any, supporting the
second economic justification. In regard to raw milk pur-
chased for resale in Des Moines, Borden had already agreed
to pay plus 15 cents per hundredweight for such milk so that
no economic disruption or advantage could occur. Further-
more, if Borden even theoretically had a competitive advan-
tage and thereby increased its Des Moines sales, the slightest
increase in Des Moines sales would have resulted in Borden’s
selling the plurality of its Class I milk in Des Moines and
automatically transferred Borden’s plant to regulation under
the Des Moines order, thus eliminating the advantage. Nor
did Borden enjoy any competitive advantage over other milk
handlers in the Quad Cities—Dubuque market inasmuch as
they were all subject to the same Quad Cities order with the
same location adjustments. However, when the three orders
at issue here were promulgated, Borden immediately suffered
a 19 cents per hundredweight economic disadvantage. If
anything, the orders created, rather than tending to elimi-
nate, disruptive competitive relationships.
Significantly, shortly after Borden shut down its Des
Moines plant, the Secretary issued on August 6, 1971, an
order decreasing the Des Moines price by five cents and in-
creasing the Quad Cities price by three cents, thereby reduc-
ing the disparity between the two prices from 15 cents to
seven cents. 36 Fed.Reg. 14752. This left the two prices seven
a-17
cents more “disruptive” than under Borden’s voluntary 15
cent plus agreement.
In addition to the evidence adduced at the October 8, 1970
and April 13, 1971 hearings, we have examined the ALJ’s Ini-
tial Decision, the Judicial Officer’s ‘Additional Conclusions”’
and the Secretary’s brief on appeal, as well as the three
orders themselves in an attempt to find any basis upon which
to support the second purported economic justification. We
can find none. In fact, it is somewhat extraordinary that
with a record of the volume of that before us the Secretary
can point to no supportive evidence other than the expressed
desires of Mid-America and several milk handlers competing
with Borden that Borden be stripped of the 34 cents minus
price difference. The testimony of these witnesses consisted
of hortatory, conclusory and speculative opinions and predic-
tions. On the other hand, Borden was precluded from in-
troducing specific evidence of its transportation costs to the
Quad Cities in order to justify continuance of the 19 cent
minus location adjustment which was being taken from it
but from no other handlers. Ex. I at 198-201.
[3,4] We agree with the Fairmont court that “[w]hile nor-
mally the court defers to administrative expertise, the record
is so devoid of support for the Secretary’s finding[s] .. . that
the finding[s] cannot be allowed to stand,” 442 F.2d at 770,
particularly in view of the narrow construction of the Agri-
cultural Marketing Agreement Act of 1937 mandated by
Zuber, supra, 396 U.S. at 183-85, 90 S.Ct. 314°
“The case heavily relied on by the Secretary, Sunny Hill Farms
Dairy Co., Inc. v. Hardin, 446 F.2d 1124 (8th Cir. 1971), did not
address the sufficiency of evidence issue of Fatrmont inasmuch as
“Sunny Hill had not challenged the sufficiency of the evidence in
support of the Secretary’s findings that the differential was neces-
sary to ensure an adequate supply of milk... .” Sunny Hill, supra,
at 1127.
a-18
We have therefore determined that the three rulings of the
Secretary at issue here are uot in accordance with law and
are invalid inasmuch as they all ultimately rely upon the un-
supported findings of the October 1, 1970 order.’
Ill
It is unnecessary for us to consider the many procedural
issues which consumed most of the attention of the Adminis-
trative Law Judge, the Judicial Officer and the court below,
or to consider Borden’s argument that the penalties imposed
upon it by the three orders were similar to the subsidies de-
clared illegal by the Supreme Court in Lehigh Valley Coopera-
tive Farmers, Inc., v. United States, 370 U.S. 76, 82 S.Ct. 1168,
8 L.Ed.2d 345 (1962), as trade barriers prohibited by 7 U.S.C.
§ 608c(5)(G).
IV
[5] In regard to remedy, the three orders found invalid
here have since been replaced by a new order and Borden
has ceased doing business in Des Moines so there is no need
for injunctive or declaratory relief. As to damages, Borden is
entitled to recover overpayments which it made pursuant to
the invalid orders. Inasmuch as the Quad Cities—Dubuque
marketing order provides for payment by the market admin-
*The Initial Decision of the Administrative Law Judge, adopted
by the Judicial Officer, concluded that another “factor to be con-
sidered is the requisite producer approval of such an order or
amendment” in accordance with 7 U.S.C. § 608c(9) and (19). Ex. 35
at 70. In the Zuber case the Supreme Court noted that “[i]t is the
Secretary, not the farmers, who is responsible for administering the
statute and initiating orders.” 396 U.S. at 196, 90 S.Ct. at 329. In
the context of the present case, although the amending order of
October 29, 1970 was approved by two-thirds of the milk producers
in the marketing area, such approval does not constitute evidence
that the order or any of the three orders was justified.
a-19
istrator to handlers out of the producer-settlement fund
where claims are made pursuant to 7 U.SC. § 608¢(15)(A),
7 C.F.R. § 1063.89(d), we remand to the district court on the
issue of damages, with direction to enter judgment for Bor-
den in the amount ascertained after appropriate proceedings.
Fairmont, supra, at 773.
The judgment of the district court is reversed and the
cause remanded with directions to deny the defendant’s mo-
tion for summary judgment, to grant the plaintiff’s motion
for summary judgment and to ascertain plaintiff’s damages.
Reversed and remanded.
Exhibit C
Borden, Inc. v. Bergland, No. 74 C 2533, transcript of
oral opinion of Hon. James B. Parsons,
United States District Court for the
Northern District of Illinois, Eastern Division,
March 21, 1977
Pursuant to the Seventh Circuit's mandate as found in
Borden vs. Earl A. Butz, 544 F.2d 312, Seventh Circuit in
1976, I enter an order denying defendant’s motion for sum-
mary judgment and granting plaintiff's motion for summary
judgment.
The sole matter still pending is the ascertainment of
damages which plaintiff is entitled to recover and which has
been stated by the Court of Appeals to be “the over-
payments which (Borden) made pursuant to the invalid
orders,’ Borden vs. Butz, id. 319. This sum amounts to
$249,978.38 and is calculated by taking the quantity of Class
I milk purchased by plaintiff for its Des Moines plant during
each month from October 1, 1970 through July 1, 1971 and
a-20
applying the price differences effected by the three orders
found to be invalid.
The Secretary of Agriculture opposes on several grounds
the entry of judgment in the amount referred to above.
The Secretary’s first contention is that Borden is not enti-
tled to overpayments on milk sold in the Des Moines area as
it had agreed with its supplier to make these payments
voluntarily. The Secretary goes on to assert, ‘This agree-
ment is prima facie evidence that milk would not be avail-
able for less than this (higher) price.”’
Defendant’s position that only a portion of the over-
payments paid by Borden pursuant to the invalid orders
should now be calculated as Borden’s damages is patently er-
roneous.
The arrangement by Borden to pay an additional amount
on milk resold in the Des Moines area was voluntary, and as
such subject to modification at any time. It was, however,
superseded and terminated by the subject orders once they
became effective.
Whether or not the voluntary arrangement would have
been maintained by the relevant parties is totally conjectural
and cannot be considered in the ascertainment of damages,
that is to say, the overpayments made by Borden by virtue
of the three orders.
Moreover, the Seventh Circuit found the record to be bar-
ren of any economic justifications for those orders. It should
be stressed that the Court of Appeals did not find explicitly
or implicitly that the three illegal orders were somehow valid
with respect to milk purchased for resale in any of the three
areas served by the Des Moines plant.
_
a-21
The Secretary next urges that adjustments or credits
which Mississippi Valley made to Borden should be subtract-
ed from the total amount of overpayments and that further
hearings are in order in this forum to ascertain whether
credits were in fact granted, and, if so, the amount.
In support of this contention an affidavit of one U. Grant
Greyson, Market Administrator for Order 63, has been sub-
mitted. That affidavit, however, reveals that the actual price
paid by Borden for milk delivered to its Des Moines plant
exceeded the federal order price.
Moreover, there is absolutely no basis in the record of this
case indicating that Borden had not paid at least the min-
imum order price for the relevant period being challenged
herein. It is the overpayments with respect to the minimum
order price which constitutes Borden's damages.
Any credits or adjustments by Borden’s suppliers for the
over-order payments do not fall within the Secretary of
Agriculture's jurisdiction and are irrelevant to these proceed-
ings.
I should also observe that the issue of credits is now
premature, as it is collateral to the assessment of Borden's
damages. The Secretary may properly reassert this question
at the time of seeking execution, if necessary, of the judg-
ment.
Therefore, no portion of the overpayments made by Bor-
den is to be deducted from the amount of damages because
of any asserted credits.
The Secretary also contends that Borden must prove its
damages, but this contention overlooks the nature of Bor-
den’s claim. Borden is not seeking damages for any economic
injury flowing from and as a result of the invalid orders, but,
a-22
rather, is seeking the overpayments it has made and which
has been defined by the Court of Appeals as the. measure of
Borden's damages.
The cases cited by the Secretary in support of its position
are inapposite. I have the footnote Anniston Manufacturing
Company vs. Davis, 301 U.S. 337; Rivera Manufacturing vs.
U.S., 307 Fed. Supp. 916, District of Colorado in 1969 and
Epstein vs. U.S., 357 F 2d 928, U.S. Court of Claims, 1966;
Gumpert vs. United States, 296 F 2d 927, U.S. Court of
Claims in 1961.
In each of the cases taxpayers sought to recover taxes al-
leged to have been illegally collected by the federal govern-
ment. The respective courts found that the taxpayers had
not made a requisite showing as to who actually, bore the
economic burden of paying the taxes.
Here, Borden was required to make the payments to its
suppliers by virtue of what has now been determined as in-
valid orders. Nothing more remains to be shown.
Finally, there is a question of when interest is to be ap-
plied. Allowance of interest is controlled by federal law
where the claim for relief is federally created. See Milwaukee
Towne Corporation vs. Foss, Inc., 200 F 2d 17, 20, Seventh
Circuit in 1952; Perkins vs. Standard Oil Company of
California, 487 F 2d 672, 675, Ninth Circuit, 1973.
Whether or not to award prejudgment interest in cases
arising under federal law has been placed within the sound
discretion of the district court where, as here, the applicable
federal statute provides no directive. See Blau vs. Lehman,
368 U.S. 403, 414, 1962; Lodges 743 and 1746, et cetera, vs.
United Aircraft, 534 F 2d 422, 446, Second Circuit, 1975.
ss
ee ae eee ee oe
le be
i Te
a-23
Moreover, the award of such interest is to provide just
compensation and is not in the nature of a penalty. Rosa vs.
Insurance Company of the State of Pennsylvania, 421 F 2d
390, 393, Ninth Circuit, 1970; Lodges 743 and 1746 vs. Unit-
ed Aircraft, which has been cited, that citation at page 447.
In the exercise of the sound discretion that is permitted
me, it is my firm conviction that prejudgment interest is par-
ticularly applicable in this case and is the only meaningful
manner by which plaintiff can be made whole. Borden has
been deprived of the use of its money, a sum certain, for a
period of time.
In addition, the Secretary denied Borden’s application for
interim relief by which the overpayments could have been
placed in an escrow fund and retain the interest on these
payments, and thereby could have preserved the value of the
sum Borden had been compelled to pay.
In view of this, Borden is awarded damages in the amount
of $249,978.38 plus interest at a rate of 6 per cent per annum
from the dates on which its overpayments were made. The
Court in this respect is guided in part by Illinois Revised
Statutes, Chapter 74, Section 3, merely guided as to the rate
of interest because of the absence of a federal interest rate.
No. 74 C 2533, Exhibit D
Borden, Inc. v. Earl Butz,
Secretary of the Department of Agriculture,
ruling motion of summary judgment on damages
In accordance with oral opinion delivered in open court
this March 21, 1977, the court hereby enters an order deny-
a-24
ing defendant’s motion for summary judgment and grants
plaintiff's motion for summary judgment in the. amount of
$249,978.38 plus interest at a rate of 6% per annum from the
dates on which its overpayments were made. Enter Rule 58
judgment order.
Exhibit E
United States Court of Appeals -
For the Seventh Circuit
Chicago, Illinois 60604
ARGUED JANUARY 16, 1978
DECIDED APRIL 20, 1978
Before
Hon. ROBERT A. SPRECHER, Circuit Judge
Hon. HARLINGTON WOOD, JR., Circuit Judge
Hon. JOHN W. REYNOLDS, Chief District Judge*
BORDEN, INC., } Appeal from the United
Plaintiff-A ppellee, States District Court for
the Northern District
No. 77-1805 vs. of Illinois, Eastern
Division.
BOB BERGLAND, No. 74 C 2533
SECRETARY OF AGRICULTURE, James B. Parsons,
Defendant-A ppellant. } Chief Judge
ORDER
In the prior appeal of this case we held that three amend-
ments to milk marketing orders, promulgated by the Secre-
tary of Agriculture under the Agricultural Marketing
Agreement Act of 1937, 7 U.S.C. § 608c(5)(..\), were not in ac-
cordance with law and were invalid because unsupported by
*Chief District Judge John W. Reynolds, of the Eastern District
of Wisconsin, is sitting by designation.
ee, Oe ee ee ee ee
a-25
the record. We, therefore, reversed a summary judgment en-
tered by the district court upon review in favor of the Secre-
tary. We also remanded the cause with directions to deny the
defendant’s motion for summary judgment, to grant the
plaintiff’s Borden, Inc. motion for summary judgment and to
ascertain plaintiff’s damages. In other words, we directed a
summary judgment for the plaintiff as to liability but direct-
ed further proceedings “to ascertain plaintiff's damages.”
No. 77-1805
Borden, Inc. v. Butz, 544 F.2d 312, 320 (7th Cir. 1976). We ex-
plained the damage aspects in further detail by saying that:
As to damages, Borden is entitled to recover over-
payments which it made pursuant to the invalid orders.
Inasmuch as the Quad Cities—Dubuque marketing
order provides for payment by the market administrator
to handlers out of the producer-settlement fund where
claims are made pursuant to 7 U.S.C. § 608c(15)(A),
7 C.F.R. § 1063.89(d), we remand to the district court on
the issue of damages, with direction to enter judgment
for Borden in the amount ascertained after appropriate
proceedings.
Id. at 319-20.
The statute' and regulation’? to which we specifically
referred deal with the petition and hearing before the Secre-
tary of Agriculture.
'7 U.S.C. § 608c(15)(A) provides:
Any handler subject to an order may file a written petition
with the Secretary of Agriculture, stating that any such order
or any provision of any such order or any obligation imposed
in connection therewith is not in accordance with law and
praying for a modification thereof or to be exempted there-
from. He shall thereupon be given an opportunity for a hear-
ing upon such petition, in accordance with regulations made
by the Secretary of Agriculture, with the approval of the Pres-
(Footnote continued on next page)
a-26
No. 77-1808
Upon remand to the district court, the court properly en-
tered an order dated March 21, 1977, denying defendant’s
motion for summary judgment. It was also proper at that
time to grant plaintiff's motion for summary judgment as to
liability only. The court, however, also fixed damages in the
amount of $249,978.38 plus interest at a rate,of 6 per cent
per annum from the dates on which overpayments were
made. We now determine on this appeal that the district
court prematurely ascertained plaintiff's damages.
The record before us demonstrates that the parties had
stipulated before the Administrative Law Judge the facts
which were to constitute the exclusive basis for deciding the
legal issues involved, but expressly deferred the submission
of evidence establishing the monetary damages to which the
plaintiff would be entitled, if successful, “until the legal is-
sues have been resolved.”
ident. After such hearing, the Secretary shall make a ruling
upon the prayer of such petition which shall be final, if in ac-
cordance with law.
‘7 C.F.R. § 1063.89(d) provides:
Any obligation on the part of the market administrator to
pay a handler any money which such handler claims to be due
him under the terms of this part shall terminate 2 years after
the end of the calendar month during which the skim milk and
butterfat involved in the claim were received if an under-
payment is claimed, or 2 years after the end of the calendar
month during which the payment (including deduction or set-
off by the market administrator) was made by the handler if a
refund on such payment is claimed, unless such handler, with-
in the applicable period of time, files pursuant to section
8c(15)(A) of the Act, a petition claiming such money. 25 F.R.
12987, Dec. 20, 1960, as amended at 34 F.R. 18665, Nov. 22,
1969.
SS
i lat i nl. a et a tena
a-27
We agree with the conclusion of the court which recently
decided the procedure which should follow the finding of the
illegality of a milk marketing order in Abbotts Dairies Division
of Fairmont Foods Co. v. Bergland, 438 F. Supp. 629, 636 (E.D.
Pa. 1977):
The determination of . . . [damages] obviously will
require evaluation of complex economic relationships
between producers and handlers during the time period
for which damages are sought. Such matters are pecu-
liarly within the special expertise of the Secretary.
We reverse the judgment of the district court insofar as it
fixes the amount of damages and remand the cause to the
district court with instructions to remand it to the Secretary
of Agriculture to conduct an evidentiary hearing and to
render an administrative decision on the amount of the plain-
tiff’s damages, which amount shall not be less than $84,463
nor more than $249,978.33, and in regard to which the Secre-
tary shall determine whether interest shall be added. The
Secretary's decision will, of course, be subject to statutory
review by the district court.
a-28
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
April 20, 1978
Before
Hon. ROBERT A. SPRECHER, Circuit Judge
Hon. HARLINGTON WOOD, JR., Circuit Judge
Hon. JOHN W. REYNOLDS, Chief District Judge*
a-29
Exhibit F
United States Court of Appeals
For the Seventh Circuit
Chicago, Llinois 60604
June 30, 1978
Before
Hon. HARLINGTON WOOD, JR., Circuit Judge
Hon. JOHN W. REYNOLDS, Chief District Judge*
Hon.
BORDEN, INC., ) Appeal from the United
Plaintyff-A ppellee,
No. 77-1805 vs.
BOB BERGLAND, Secretary of the Department |
of Agriculture,
States Distsict Court for
Se Northern District of
Illinois, Eastern Division
No. 74-C-2533
BORDEN, INC., Appeal from the United
Plaintrff-A ppellee, States District Court for
No. 77-1805 vs the Northern District of
BOB BERGLAND,
Illinois, Eastern Division
No, 74 C 2533
Defendant-Appellant. | James B. Parsons, Judge.
This cause came on to be heard on the transcript of the
record from the United States District Court for the North-
ern District of Illinois, Eastern Division, and was argued by
counsel,
On consideration whereof, it is ordered and adjudged by
this court that the judgment of the said District Court in
this cause appealed from be, and the same is hereby,
REVERSED, with costs, and the case is REMANDED with
instructions, in accordance with the order of this court en-
tered this date.
*Chief District Judge John W. Reynolds, of the Eastern District
of Wisconsin, is sitting by designation.
SECRETARY OF AGRICULTURE, James B. P
Defendant-Appellant Chief Judge
ORDER
On consideration of the petition for rehearing filed in the
ubove-entitled cause by plaintiff-appellee, Borden, Inc., a
majority of the judges on the original panel having voted to
deny the same, **
IT IS HEREBY ORDERED that the aforesaid petition
for rehearing be, and the same is hereby, DENIED.
**Chief District Judge John W. Reynolds, of the Eastern Dis-
trict of Wisconsin, is sitting by designation.
**Circuit Judge Robert A. Sprecher has disqualified himself
from participation in the petition for rehearing.
a-30
Exhibit G
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 77-2245
77-2246
77-2247
Apports Dairies Division oF FAIRMONT
Foops, INc.
vs
Earn M. Butz, Secretary of Agriculture
U.S. DepartTMeENt OF AGRICULTURE
» PennMarva DatrRYMEN’S CooPeraTIVE
Frperation Inc.
Lenicu Vattey Cooperative Farmers and
Caprrat Mink Propucers Cooperative, INc.
Intervening defts.
PENNMARVA DAIRYMEN’s CooPpERATIVE FEDERATION, INC.,
Intervenors.
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D. C. Civil No. 71-549)
Argued
May 22, 1978
Before: ALDISERT, GIBBONS and HIGGINBOTHAM,
; Circuit Judges.
OPINION OF THE COURT
(filed Aug 1, 1978)
HIGGINBOTHAM, Circuit Judge
Under the Agricultural Adjustment Act of May 12, 1933,
48 Stat. 31, as amended, 7 U.S.C. §601 et seq., the minimum
a-31
price at which milk processors and distributors (‘handlers’)
may purchase unprocessed milk from farmers (“producers’’)
is subject to regulation by the Secretary of Agriculture. As a
result, milk prices are typically adjusted in accordance with
changing economic indices in order to assure, inter alia, “an
orderly flov cf the supply... [of milk] to market throughout
its normal marketing season to avoid unreasonable fluctua-
tions in supplies and prices.” 7 U.S.C. §602(4). This case
raises the question whether Abbotts Dairies Division of Fair-
mont Foods Company (‘Abbotts’), after succeeding ulti-
mately in invalidating a Milk Marketing Order of August
20, 1969, may now recover the difference between the invalid
order price and a lesser proposed price for the period between
September, 1969 and July, 1970.' Also before us, are the issues
whether the amount of Abbotts’ overpayment could be made
subject to reduction to the extent that Abbotts “passed on”’
any excess prices to its customers, and whether the Secretary
must in the first instance consider the restitution question.
The district court, rejecting the passing on defense deter-
mined that Abbotts could receive recompense in the amount
of the difference between the invalid order price and the
price at which Abbotts would have been able to purchase
milk during the period in question. The district court deter-
mined also that the case should be remanded to the Secre-
tary for ascertainment of that amount and the amount of in-
terest, if any, which should be awarded.’ For the reasons ex-
‘Abbotts states in its brief that the relevant period for calculat-
ing recovery extends from September, 1969 to September, 1970.
Brief for Abbotts at 12 n. 6. However, the amount Abbotts has at
oral argument indicated it seeks is calculated based on the Sep-
tember, 1969, to July, 1970 period. We will limit our consideration
to the latter period because it is the only one for which damages
were sought below and because of the assertions made on oral argu-
ment and elsewhere in Abbotts’ brief. See Brief for Abbotts at 3-4.
*We intimate no view on the merits of the interest question.
a-32
pressed below we reverse the district court’s order of remand
to the Secretary and instruct the district court to make
findings in the specified areas, as necessary, and enter judg-
ment accordingly.
The procedural history of this case cannot, unfortunately,
be stated so briefly as would be desired. Over a period of
nine years the issues in this case have been litigated, ad-
judicated, revised and reconsidered in several different ad-
ministrative and judicial proceedings. There have been three
rulings by the Secretary since the August 20, 1969, Order,
pursuant to three administrative proceedings; there has been
extensive litigation in the United States District Court, first
the Secretary's action for a preliminary injunction before
Judge Luongo and then the hearings before and adjudica-
tions by Judge Ditter on the validity of the August 20, 1969,
Order and the availability of damages; and, now, there have
been two appeals to this Court.
Decades ago scholars pressed for reform of the judicial
process; they were confident that the new administrative law
process would be above all far more expeditious, fair, and re-
sponsive than what had sometimes proven to be a slow, pro-
tracted judicial process. This case exemplifies one instance in
which those lofty expectations of expedition have not been
met, and it is difficult to imagine a case intertwined with
greater confusion and delay on a problem which, but for the
administrative process, was not extremely complex. Despite
this Abbotts is confronted with a request for yet another
remand which could extend this litigation into its second
decade.
The triggering event for this case took place on August 20,
1969, when the Secretary issued a Milk Marketing Order for
a-33
the Delaware Valley Marketing Area’ instituting what is
known as a “penny-by-penny” system for adjusting the min-
imum price which a milk handler (e.g., Abbotts) must pay to
milk producers. According to this system the minimum price
of milk would rise on a penny-by-penny basis in conformity
with rises in the price of milk in the Minnesota-Wisconsin
area. This penny-by-penny pricing constituted a departure
from the Delaware Valley Marketing Area tradition of
bracket pricing, by which the price of milk moved in steps
of twenty (20) cents when by the relevant economic formula
a different bracket became applicable. The practical effect
of the penny-by-penny system was that the price of milk
became indisputably higher during the period at issue. At a
hearing before the Secretary on October 30, 1969, to reopen
the matter of the August 20, 1969, Order, Abbotts as well as
all producers who were represented opposed the penny-by-
penny system in favor of bracket pricing.‘ Significantly, Ab-
botts’ proposal at that hearing was a bracket price different
from, and in excess of, the price under the previously valid
Marketing Order.’
After a hearing and upon finding that Abbotts had refused
to pay the August 20, 1969, Order price, Judge Luongo on
August 20, 1970, enjoined Abbotts to cease and desist viola-
‘On August 1, 1970, the Delaware Valley Marketing Area was
merged with two other marketing areas to form the Middle Atlan-
tic Marketing Area. 35 Fed. Reg. 7924, 10,273 (1970).
‘A hearing held on June 16 and 17, 1969, was found by Judge
Ditter not to have provided any evidence to sustain the Order. The
issue of the invalidation of the Order is, of course, not before us.
*The minimum price in effect just prior to the August 20, 1969,
Order was $7.17 per hundredweight. The operative Order price was
put into effect provided for bracketed pricing, although some tem-
porary emergency prices were established. Abbotts Dairies Div. of
Fairmont Foods v. Butz, 389 F.Supp. 1, 4-6 (E.D.Pa. 1975).
a-34
tions of the Marketing Order, to pay in the future the higher
minimum price provided in the Secretary’s Marketing Order
and otherwise adhere to that Order, and to pay $34,126.25
as its due share of the administrative expenses of maintain-
ing a producer-settlement fund.’ In enjoining Abbotts, Judge
Luongo rejected its request, contained in its April 22, 1970,
Answer, that if the Government’s prayer for an injunction
was granted those funds representing the difference between
the proposed bracket price Abbotts was willing to pay and
the penny-by-penny price the Secretary demanded should be
deposited with the court.’ In rejecting this request Judge
Luongo relied upon the view that the reserve in the
producer-settlement fund would stand as a ready source for
recovery of overpayments in the event the August 20, 1969,
Marketing Order was subsequently invalidated.
On November 27, 1972, Judge Ditter filed an opinion over-
turning the decision of the Secretary which upheld the
penny-by-penny August 20, 1969, Order as being based upon
no evidence whatever. 351 F. Supp. 561 (E.D. Pa. 1972). The
matter was remanded to the Secretary at his request, and
‘The producer-settlement fund provides a pool by which prices
paid to producers by handlers may be adjusted to reflect the value
of the use to which the purchased milk was ultimately put. In the
context of the complicated administrative scheme, the fund enables
producers to receive a uniform minimum price at the time of pur-
chase. See 7 C.F.R. §1004.1 ef seq; Zuber v. Aiien, 402 F.2d
660,661-62 (D.C. Cir. 1968), afd, 396 US. 168 (1969). The
$34,126.25 in administrative expenses is not at issue on this appeal.
"United States v. Abbotts Dairies Div. of Fairmont Foods, Co.,
315 F. Supp. 571 (E.D.Pa. 1970).
Judge Luongo determined that under United States v. Ruzicka,
329 U.S. 287 (1946), the issue of an Order's validity vel non could
not be raised as a defense to an injunction for compliance. Thus
the attempt to place monies on deposit with the court was meant
to preserve a fund which might later be the source of refunds
should the Order subsequently be invalidated.
a-35
later came before Judge Ditter again. In his opinion of Jan-
uary 9, 1975, he again held the August 20, 1969, Order to be
invalid, concluding: “[T]here is no substantial evidence to
support the decision and it is therefore arbitrary and ca-
pricious and must be set aside.” 389 F. Supp. 1, 12 (E.D. Pa.
1975). In 1976 Judge Ditter yet again spoke to the issue,
rejecting the Secretary’s motion for reconsideration. 421 F.
Supp. 415 (E.D. Pa. 1976), affd, 559 F.2d 1207 (3d Cir. 1977)
(judgment order).’ As detailed at the outset, the present appeal
follows Judge Ditter’s decision on monetary recovery only.
Throughout the procedural history of this case Abbotts
and the Government have been the only litigating adversar-
ial parties. A milk farmers’ cooperative, Pennmarva Dairy-
men’s Cooperative Federation, Inc. (‘“Pennmarva’’), having
been granted limited intervention for the determination of
the refund issue, is before us on this appeal asserting, inter
alia, that no in personam judgment can be filed against cur-
rent producers for receipt by producers in 1969 and 1970 of
overpayments which were required by a then operative min-
imum pricing Order.
I.
We will first consider the availability of the passing on
defénse in the present case.
* * *
II.
We turn now to the issue of the measurement of monetary
recovery and the related issue of the district court’s remand
‘Part of Judge Ditter’s decision denied a motion by some
producer cooperatives to intervene for all purposes including
review of the Order The c uurt limited intervention to the issue of
monetary recovery. This is the aspect of the case which was
affirmed by a panel of this court.
a-36
to the Secretary.’ In Fairmont Foods Co. v. Hardin, 442 F.2d
762 (D.C. Cir. 1971), the court faced a similar question aris-
ing not out of an invalid minimum price order but from an
invalid location price differential in a milk marketing order.
The location differential required some handlers to pay a
price greater than the minimum order price for milk received
from producers in designated areas. The court invalidated
the differential on the ground that the evidence was in-
sufficient to show “an economic service [by producers] of
benefit to the handler.” /d. at 767; see Zuber v. Allen, 396 U. 8.
168 (1969). The court then awarded a refund in the amount
of the invalid differential, without a remand to the Secretary:
The Secretary argues that had the invalidity of this
Order been apparent at the time, he would have chosen
to replace the differentials with a single Order price, one
which would have been higher than the 1966 Eastern
Zone price. Thus, according to the Secretary, not all, if
any, Of Fairmont’s payments above the Eastern price
can be considered overpayments subject to refund. This
argument, based as it is on mere conjecture and suppo-
sition, ignores the fact that such alternative measures
were not utilized, that the Secretary in fact assumed
that his Order was valid and imposed the price differen-
tials on the basis of that assumption. We are not
‘It is not clear from the present record or from the parties’ briefs
or arguments whether the invalid Order price for the period in is-
sue (a period preceding the August 20, 1970, injunction) was
required pursuant to a construction of the injunction’s commands
or by some other method. Abbotts maintains, and the district court
found, that Abbotts was able to obtain an adequate supply of milk
at its proposed bracket price up to the August 20, 1970, injunction.
Tr. Oral Argument, May 22, 1978, at 3 (statement by counsel for
Abbotts). Nevertheless, all parties are in agreement that as a result
of the Secretary's invalid August 20, 1969, Order, Abbotts has been
required to pay some substantial amount for milk in excess both of
the last valid marketing order price ($7.17 cwt.) and the inter-
mediary bracket price which Abbotts proposed. This matter can be
definitely determined on remand.
a-37
persuaded by the argument that had Fairmont not been
required to pay a differential, it might have been
required to pry the same price anyway as a result of
some alternative regulatory scheme.
Id. at 773; see Borden, Inc. v. Butz, 544 F.2d 312, 319-20 (7th
Cir. 1976). Were we to rely on the Fairmont analysis it would
appear that the amount of recovery in this case should be
the difference between the last valid order price and the price
paid by Abbotts. In Fairmont, the possibility that some inter-
mediary price might have been put into effect, had the Secre-
tary known immediately of the invalidity of the scheme, was
viewed as legally irrelevant. We need not, however, decide here
whether the last valid price should serve as a basis for mea-
suring a refund since Abbotts asks that its recovery be based
on the higher price which it proposed to the Secretary in 1969.
The Government and Pennmarva contend, in opposition
to the apparent simplicity of the Fairmont formula, that a
refund should be based on principle of equitable restitution
and hence should require consideration of whether the in-
valid price was nevertheless a reasonable price." For this
proposition they rely in part upon the more recent decision
of the District of Columbia Court of Appeals in Moss v. Civil
Aeronautics Board, 521 F.2d 298 (D.C. Cir. 1975), cert. denied,
424 U.S. 966 (1977). The court in Moss, applying equitable
restitution principles, declined to grant a refund to claimants
"In Atlantic Coast Line R. Co. v. Florida, 295 US. 301 (1935),
although the Court denied restitution to the party who paid, pur-
suant to an order later held invalid, freight rates in excess of the
last valid rates, the Court’s analysis rested on the view that resti-
tutionary power was “ancillary” to the power of the district court
to determine the validity of the Commission’s order. /d. at 314. It is
our view that an analogous equitable restitutionary power exists in
this case, subject of course to the equitable principles enunciated in
Atlantic Coast. See also Moss v. Civil Aeronautics Board, 521 F.2d
298, 306-07 (D.C. Cir. 1975), cert. denied, 424 U.S, 966 (1977).
a-38
who paid airline passenger rates which were ultimately held
invalid. Petitioner in Moss unsuccessfully argued that the
difference between the invalidated rate and the last lawful
rate should constitute the measure of overpayment recovery.
The court recited as findings of fact that the invalidated rate
was reasonable, that therefore there was no resulting excess
profit or enrichment, and that there existed no “fund of net
enrichment from which restitution could appropriately be
made.” /d. at 314. Nevertheless, the court rested its conclu-
sion on the view that
[t]he fares in question were charged by the carriers in
reasonable reliance on the Board’s explicit approval of
them. To the extent that the Board was mistaken about
the lawfulness of the filing, the consequences of that
mistake should not be visted upon the carriers, certainly
absent any actual unjust enrichment.
Id. at 314-15. To follow literally the quoted Moss prescription
in the instant matter might be to deny recovery to Abbotts
on the theory that the producers who received the over-
payments were not at fault. However, because the facts in
Moss indicate the reasonableness of the invalid fare and the
unreasonableness of the last valid fare and because the court
concluded that the airlines were not enriched and that there
was no fund from which restitution could be made, the hold-
ing may be narrowly circumscribed.
Atlantic Coast Line R. Co. v. Florida, 295 U.S. 301 (1935),
guides us on a path between Fairmont and Moss. The Court
there refused restitution of prices paid pursuant to an Inter-
state Commerce Commission order. In the time between the
issuance of the order replacing what was viewed by the Com-
mission as a discriminatory rate schedule, and the Court’s in-
validation of it, the claimant carrier had complied. Fourteen
months after the declaration of invalidity, the Interstate
Commerce Commission repromulgated the same order with-
a-39
out defect based upon new evidence and new findings." The
Court accepted as fact that the rate in effect prior to the in-
validated order was “less than compensatory and would re-
sult in confiscation .. .,” id. at 313, and further observed that
the claimants failed to show the unreasonableness of the rate
established by the invalid order. See id. at 318. The Court
rejected arguments for applying an intermediary rate in the
absence of a showing that the invalid one was unreasonable.
We view Atlantic Coast to instruct that the unreasonableness
of an invalid administrative agency rate and the reasonable-
ness of the rate sought to be used as a measure must appear
before restitution of an overpayment can be decided.
In the present case, unlike Atlantic Coast, Abbotts’ pro-
posed bracket price formula was also proposed at the Octo-
ber, 1969, Department of Agriculture hearing by the Inter-
state Milk Producers representing seventy-five percent of the
milk producers in the Delaware Valley area. This fact, as
determined by the district court and not urged to be clearly
erroneous, is itself persuasive of the reasonableness of the
proposed price. The area tradition of pricing at the required
minimum and availability of milk to Abbotts at the pro-
posed bracket prices up to the August 20, 1970, injunc-
tion,” although viewed insufficient by the district court, re-
affirm that conclusion. Furthermore, the Secretary’s penny-
by-penny price was itself unanimously opposed by the wit-
"The Court specifically observed: ‘During the years affected by
the claim there existed in very truth the unjust discrimination
against interstate commerce that the earlier decision had attempt-
ed to correct. If the processes of the law had been instantaneous or
adequate, the attempt at correction would not have missed the
mark.” Jd. at 311-12.
"The stated fact that Abbotts continued to obtain milk at the
proposed bracket price until the injunction seems to undermine the
district court’s decision to remand for a determination of the price
which Abbotts would have had to pay for milk for the relevant
period, since the relevant period preceded the injunction.
a-40
nesses at the October 1969 hearing. It was this total absence
of evidentiary support which led the district court to con-
clude that it was arbitrary and capricious. Indeed, we note in
passing that, unlike Atlantic Coast, the record reveals that in
six years since the invalidation of the 1969 Order there has
been no repromulgation based on evidence favoring penny-
by-penny pricing. Although Pennmarva states that a hearing
was held by the Secretary in October, 1977, that proceeding
could not reasonably be expected to affect the issue of the
fairness of the penny-by-penny Order in 1969 and 1970,
given the facts as alreedy described.
In view of these circumstances, the producers who received
overpayments did, we believe, receive enrichment in the form
of excessive and unlawful prices, though they were certainly
not at fault for the actual issuance of the Secretary’s order.
Equitable restitution to Abbotts to the extent of the monies
in the producer-settlement fund reserve is therefore appro-
priate in our view. Denial of restitution on the facts present-
ed here would virtually remove any possibility of recovery of
overpayments due to invalid milk pricing orders. We do not
believe that Atlantic Coast contemplated such a broad scale
denial.
There additionally appears to be no reason for a remand
to the Secretary." Attempting to ascertain in this case the
price at which Abbotts would have been able to purchase
milk seems meaningless in light of the district court’s state-
"The provision conferring jurisdiction to the Secretary, 7 U.S.C.
§608(c) 15(A), does not provide any specific indication that the Sec-
retary may go beyond the determination initially of the validity or
scope of a marketing order. In any event the issues left to be decid-
ed in this case are not of the kind which are peculiarly within the
expertise of the Secretary and which might otherwise justify resort
to the administrative process. See Nader v. Allegheny Airlines, 426
U.S. 290, 305-06 (1976).
ae
a-41
ment that Abbotts continued to purchase milk at the pro-
posed bracket price prior to the August 20, 1970, injunc-
tion. Even without this fact an inquiry into what the price of
milk would have been would not likely contribute anything
to the evidence since the effect of the invalid Order itself
during the period in question would naturally be consider-
able, reducing the probative quality of any attempt at recon-
structing economic history. This or related litigation has al-
ready extended over an eight year period and has received
considerable judicial and administrative attention, as de-
scribed earlier. At this stage we cannot view lightly the pos-
sibility of further complication and delay.
Ill.
The precise amounts determined by Herbert L. Forest" (as
the difference between the total price required to be paid by
“Mr. Forest calculated the difference between payment of penny-
by-penny prices and bracket prices by Abbotts for the relevant pe-
riod. Mr. Forest assumed that all Abbotts’ purchases of milk were
ultimately at the penny-by-penny rate. No party has contested the
accuracy of his calculations given the underlying assumption.
ABBOTTS’ CLASS I VALUE CHANGES WITH BRACKETED PRICE
Class I Change Change in
Months Lbs. of Milk in Price Value
PG. UE soc cacsccesvauscvsns 22,723,613 —9¢ $ —20,451.25
Ree ye eee es 24,594,803 +4¢ + 9,837.92
i OP CT ee ET ee 21,907,402 —5¢ —10,953.70
eke cb sbinck es thbveuns 22,800,526 —9¢ —20,520.47
PTR aos dic Hhbcawhes Onue 22,194,193 —10¢ —22,194.19
SOT proper ree 20,220,229 —1l4¢ —28,308.32
Drei ed brtcibeed shadk dps 21,701,959 —10¢ —21,701.96
BT in ine a ebb die aid nen wha 22,458,730 —5¢ —11,229.37
OT ccccccencvcacccensscss 21,252,311 —7¢ —14,876.62
Us dnU dic woe ce seeouns baer 19,923,017 —5¢ — 9,961.51
Milian ks kon ouwenei tenuis 20,221,225 —8¢ —16,176.98
$—166,536.45
See Affidavit of Herbert L. Forest, Director, Dairy Division,
Agricultural Marketing Service, Department of Agriculture, April
29, 1975, at 5; Abbotts Dairies Division of Fairmont Foods Com-
pany v. Bob Bergland, C.A. No. 71-549, Slip Op. at 4 (E.D. Pa.,
filed June 16, 1977).
a-42
Abbotts for milk from September, 1969, through July, 1970,
and the proposed bracket price) should serve as the basis for
an award of restitution to Abbotts unless: (1) the district
court, in addressing the matter of the amount of Abbotts’
overpayment, finds that not all of the milk purchased by Ab-
botts during the relevant period was paid for at the invalid
penny-by-penny price due to obligations stemming from the
invalid Order; or (2) the possibility of cost-plus contracts
between Abbotts and others is properly raised and the cost-
plus exception to Hanover is deemed applicable.” The reserve
in the producer-settlement fund will serve as the source for
the refund of this overpayment."
The district court’s Order remanding this case to the Sec-
retary will be vacated and the matter will be remanded to
the district court for disposition in accordance with the
above opinion. A. Leon HiIGGINBOTHAM
Circuit Judge
“The district judge must also consider the issue whether interest
is recoverable and, if so, its amount.
“At present both the Government and Pennmarva have acknowl-
edged the acceptability of employing the reserve in the producer-
settlement fund as the sole source of refund to Abbotts. Tr. of Oral
Argument, May 22, 1978, at 24-25 (statement of counsel for Penn-
marva); Government’s Brief at 7. This is so even though the over-
payments consist of money paid to producers directly in 1969 and
1970, and even though some producers presently in the market
were not direct beneficiaries of the excessive invalid order price for
the period in issue. We believe that this fluid fund, designed essen-
tially as a pool by which milk prices may be made uniform, is a
permissible source for the refunding of the overpayments at issue
here. See Borden, supra; Fairmont, supra. We emphasize that the
above decision is not based on any view that producers are liable in
personam and is intended to be applicable solely to the factual sit-
uation in which a reserve fund exists. We do not pass upon the
situation in which no fund exists or in which restitution is sought
from the producers themselves. Nor do we decide upon the avail-
ability of the passing on defense where producers are sought to be
held personally liable for overpayments.
seal Aik ie il bin an
ih
a-43
Exhibit H
IN THE UNITED STATES COURT OF APPEALS
For the Seventh Circuit
BORDEN, INC.,
Piaintiff-Appellee,
vs. q No. 77-1805
BOB BERGLAND,
SECRETARY OF AGRICULTURE,
Defendant-A ppellant.
Appeal from the United States
District Court for the
Northern District of
Illinois, Eastern Division.
No. 74 C 2533
James B. Parsons, Chief Judge
MOTION FOR LEAVE TO FILE
INSTANTER RENEWED PETITION
FOR REHEARING AND FOR
REHEARING EN BANC
Plaintiff-appellee Borden, Inc., by its attorneys hereby
moves for leave to file instanter a renewed petition for
rehearing and for rehearing en banc in order to bring to this
Court’s attention the reversal of Abbotts Dairies Division of
Fairmont Foods Co. v. Bergland, 438 F.Supp. 629 (E.D. Pa.
1977) by the United States Court of Appeals for the Third
Circuit on August 1, 1978.
DATED: August 25, 1978
By: Sruart 8. Batt
One of the attorneys for
Borden, Inc.
a-44
IN THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
No. 77-1805
BORDEN, INC., Plains ff-Appellee,
vs.
BOB BERGLAND, Secretary of Agriculture,
Defendant-A ppellant.
Appeal from the United States District
Court for the Northern District of Illinois,
Eastern Division, No. 74 C 2533
Honorable James B. Parsons Presiding
Appellee’s Renewed Petition for Rehearing
and for Rehearing En Banc
Plaintiff-appellee, Borden, Inc., hereby renews its petition
for rehearing and further petitions for a rehearing en banc on
the grounds that the sole decision relied upon by this Court
in its Order of Reversal of April 20, 1978, Abbotts Dairies
Lrvision of Fairmont Foods Co. v. Bergland, 438 F. Supp. 629
(E.D. Pa. 1977), has, subsequent to the denial of Borden’s
initial petition for rehearing, been reversed by the Court of
Appeals for the Third Circuit. A copy of the opinion of the
Third Circuit, filed August 1, 1978, is attached.* The
grounds for rehearing advanced herein are in addition to
those stated in Borden’s initial petition for rehearing, filed
May 4, 1978.
“A copy of the opinion of the Court in Abbotts Dairi
received by counsel for Borden until August 16, 1978. ia alia
””
a
a-45
I. In Its Order of Reversal, This Court, Ignoring the
Doctrine of “Law of the Case”, Reversed Its Own Man-
date on the Prior Appeal on Two Major Points, Relying
Exclusively on a District Court Decision in Abbotts Dair-
ies, Which Has Now Been Reversed.
Contrary to the law of the case doctrine, this Court’s
Order of Reversal of April 20, 1978 altered the mandate
previously issued by this Court in Borden, Inc. v. Butz, 544
F.2d 312 (7th Cir. 1976) in two important respects. First, the
Order of Reversal remanded the case to the Secretary of
Agriculture to calculate Borden’s damages, while the prior
mandate had specifically remanded to the district court for
that purpose. Secondly, the Order of Reversal stated that the
determination of damages would “require evaluation of com-
plex economic relationships”, while the prior mandate had
defined Borden's damages correctly and very simply as “over-
payments which it made pursuant to the invalid orders.” 544
F.2d at 319-20.
In reversing this Court’s own mandate on the initial ap-
peal, the Order of Reversal stated only:
“We agree with the conclusion of the court which
recently decided the procedure which should follow the
finding of the illegality of a milk marketing order in
[ Abbotts Dairies].”
The district court decision relied on was reversed by the
United States Court of Appeals for the Third Circuit on
August 1, 1978. This means that the Order of Reversal is
now not only in conflict with the decision of this Court on
the first appeal and with the decision of the Court of Appeals
for the District of Columbia in Fairmont Foods Co. v. Hardin,
442 F.2d 762 (D.C. Cir. 1971) but also with the decision of
the Court of Appeals for the Third Circuit. Since the Order
of Reversal gave no reason for its mandate other than the
now reversed district court opinion in Abbotts Dairies, this
Court should now reconsider the Order.
a-46
II. The Third Circuit’s Reversal of the Abbotts Dairies
Decision Undercuts This Court’s Order of Reversal, and
Its Opinion Sets Forth Principles That Should Also Be
Followed Here.
a-47
taining damages. (Slip Opinion, at 10-11). Fairmont, like
the present case, involved only the invalidation of
specific adjustments to an otherwise valid Order price.
Since ascertainment of damages is less complicated in
these circumstances than where, as in Abbotts Dairies, the
entire pricing mechanism has been invalidated, the rea-
soning of the Third Circuit would a fortiori dictate
against remand to the Secretary for prolonged eviden-
tiary proceedings here.
In its opinion, the Third Circuit made three points which
are directly applicable to this case and which should control
the disposition of Borden’s damage claims:
1. The Third Circuit firmly and unambiguously re-
jected the notion that the calculation of damages would
require evaluation of complex economic relationships, CONCLUSION
pointing out the futility of “any attempt at reconstruct-
ing economic history.” The Court found that the record
before it permitted the calculation of the overpayments
made by the dairy and held that this was the proper
measure of damages. Overpayments are even more
readily ascertainable in Borden’s case, and therefore
For the foregoing reasons, the Order of Reversal should be
vacated and the judgment of the district court after the ini-
tial remand affirmed. In the alternative, this case should be
set for reargument in light of the intervening Abbotts Dairies
should be the measure of damages, as this Court held on decision.
the first appeal. The Third Circuit in reversing the Dis- il bmitted
trict Court found this to be a far simpler ang more di- sans seins Oo bE
rect means of ascertaining damages than that urged by
the Secretary, both in that case and here, explaining, Stuart 8. Batt
“This or related litigation has already extended One of the attorneys for
over an eight-year period and has received consider- Borden, Inc.
able judicial and administrative attention, as de-
scribed earlier. At this stage we cannot view lightly
the possibility of further complication and delay.” [Relevant portions of the Slip Opinion of the Couri of
(Slip Opinion, at 15). Appeals in Abbotts, which opinion was appended to the above
2. The Third Circuit ruled that there was “no reason Petition for Rehearing and for Rehearing En Banc, are con-
for a remand to the Secretary” and that the damages tained in the Appendix, supra, as Ex. G.]
should be ascertained by the district court in accordance
with its opinion. (Slip Opinion, at 14-16).
3. The Third Circuit reaffirmed the correctness of
Fairmoni Foods Co. v. Hardin, 442 F.2d 762 (D.C. Cir.
1971) and cited as well the mandate of this court on the
initial appeal in this case both as to the measure of
damages and as to the procedure to be followed in ascer-
a-48
Exhibit I
UNITED STATES COURT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
September 8, 1978.
Before
Hon. HARLINGTON WOOD, JR., Circuit Judge
Hon.
a-49
STANTER RENEWED PETITION FOR REHEAR-
ING AND FOR REHEARING EN BANC” filed herein
on September 5, 1978 hy counsel for the defendant-
appellant.
On consideration thereof, this court being fully advised con-
cerning the circumstances of this matter,
IT IS ORDERED that the motion of the plaintiff-appellee
for leave to file instanter its renewed petition for rehearing
and suggestion for rehearing en banc is hereby DENIED.
IT IS FURTHER ORDERED, however, that the man-
date of this court be STAYED until September 15, 1978.
Hon.
BORDEN, INC., ) Appeal from the United
Plaintff-A ppellee, States District Court for
No. 77-1805 the Northern District of
Us. P
BOB BERGLAND, Secretary of the
Department of Agriculture,
Defendant-A ppellant.
Illinois, Eastern Division
No. 74-C-2533
James B. Parsons,
Judge
This matter comes before the court for its consideration
upon the filing herein of the following documents:
(1) The “MOTION FOR LEAVE TO FILE IN-
STANTER RENEWED PETITION FOR REHEAR-
ING AND FOR REHEARING EN BANC” filed herein
on August 28, 1978 by counsel for the plantiff-appellee.
(2) The “APPELLEE’S RENEWED PETITION
FOR REHEARING AND FOR REHEARING EN
BANC” received herein on August 28, 1978 by counsel
for the plaintiff-appellee.
(3) The “REQUEST FOR FURTHER EXTEN-
SION OF STAY OF MANDATE” filed herein on
August 29, 1978 by counsel for the plaintiff-appellee.
(4) The “APPELLANT’S OPPOSITION TO AP-
PELLEE’S MOTION FOR LEAVE TO FILE IN-
a-50
Exhibit J
SIDLEY & AUSTIN
1730 Pennsytvania Avenue, N.W. Cuicaco Orrice
Ww D.C. 20006 One First Nationat Piaza
agar Cuicaco, Ittinois 60670
TELEPHONE 202: 872-1730 TeLernone 312: 329-5400
TeLex 25-4364
Teex 89-463
AssociaTED European Orrice
27 AVENUE DE TERVUEREN
Founded in 1866 as 1040 Brussets, Betcium
Williams & Thompson Terex 346-24192
August 10, 1973
Edward Silverstein, Esquire
United States Department of
Agriculture
Office of the General Counsel
Washington, D.C. 20250
Re: In re Borden, Inc., AMA Docket M 63-2
Dear Mr. Silverstein:
With respect to the revised Stipulation accompanying Mr.
Chernauskos’ letter to me dated July 24, 1973, we were con-
cerned initially with the fact that the paragraphs contained
in our proposed stipulation relating to Borden’s Class I sales
qualifying under the Quad Cities-Dubuque Order during the
relevant time periods were eliminated.
However, after discussing this matter with you, we un-
derstand that these paragraphs were eliminated with the
thought that this proceeding be decided initiaily on the basis
a-51
of the legal issues only and that the question of the refund to
which Borden, if successful, is entitled be resolved at a later
date, informally or otherwise. This is entirely agreeable to us
and we are, accordingly, enclosing the signed Stipulation.
We also discussed the matter of a briefing schedule and
agreed that, subject to concurrence of the Administrative Law
Judge, Borden’s brief would be filed October 1, the Depart-
ment’s brief on November 1, and Borden’s reply on Novem-
ber 15, 1973.
I presume that you will advise us as to the precise briefing
schedule established by the Judge.
Very truly yours,
/s/ Lee A. Monroe
Lee A. Monroe
LAM: laf
Enclosure
a-52
Exhibit K
SIDLEY & AUSTIN
1730 Pennsyivania Avenue, N.W. Cuicaco Orrice
Wasninoton, D.C. 20006 One Finst Nationat Piaza
Cuicaco, Iitwwom 60670
Texernone 202: 872-1730 ee 312: 320-5400
Teiex 89-463 yo
Associ4teo Evrortan Orrice
27 Avenue ve Tervuener
Founded in 1866 as 1040 Baussets, Betoium
Willams & Thompson Terex 346-24192
September 10, 1973
Office of Hearing Examiners
U.S. Department of Agriculture
Washington, D.C. 20250
In re: Borden, Inc., AMA Docket M63-2
Dear Sir:
Enclosed for appropriate distribution in connection with
the above docket are four (4) copies of the Stipulation and
all of the documents which are incorporated therein. In ac-
cordance with the Stipulation, the factual recitations and at-
tached exhibits are to constitute the exclusive basis for decid-
ing the legal issues in this proceeding.
In accordance with our agreement with Mr. Silverstein,
the submission of evidence establishing the monetary refund
to which Petitioner, if successful, may be entitled has been
deferred until the legal issues have been resolved
Very truly yours,
/s/ Lee A. Monroe
Lee A. Monroe:bab
ce: John H. Sandor, w/o encls.
Edward Silverstein, w/o encls.
a-53
Exhibit L
UNITED STATES DEPARTMENT OF AGRICULTURE
BEFORE THE SECRETARY OF AGRICULTURE
In re:
Borden, Inc AMA Docket No. M63-3
Petitioner
Respondent’s Response to the Judicial Officer’s
June 30, 1978 Decision and Order
The Judicial Officer’s June 30, 1978 Decision and Order
and his July 18, 1978 denial of respondent’s ‘Motion to
Modify Remand Order” required respondent to engage in
further rulemaking. As directed, further rulemaking, by way
of analysis of the 1973 record, was conducted. Such analysis
led to the conclusion that additional findings, based on
adequate record evidence, could not be made to sustain the
Assistant Secretary's January 24, 1974 decision.
ln view of the above, respondent respectfully submits that
petitioner is entitled to a hearing to prove financial injury it
suffered as a result of the challenged decision. §8c(15) of the
Agricultural Marketing Agreement Act of 1937, as amended
(7 U.S.C. 608c(15)). Respondent respectfully requests that
this matter be remanded to the Adminstrative Law Judge
for such a hearing. See the April 20, 1978 decision of the
United States Court of Appeals for the Seventh Circuit (Bor-
den, Inc. v. Bergland, No. 77-1805), attached to respondent’s
“Motion To Modify Remand Order” filed July 14, 1978, in
a-54
which the Court ruled that damage issues in this type of
proceeding must be initially ruled upon by the Secretary who
has primary jurisdiction under the Act.
Respectfully submitted,
Epwarp M. SILVERSTEIN
EDWARD M. SILVERSTEIN
Attorney for Respondent
Motion Granted
/s/Doxatp A. CAMPBELL
Donald A. Campbell
Judicial Officer
Office of the Secretary
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