Jurisdictional Statement — Gibson Distributing Co. v. Downtown Development Ass'n of El Paso

Supreme Court a

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In the Supreme Court of the United States

OCTOBER TERM, 1978

“487-974

GIBSON DISTRIBUTING COMPANY, INC., ET AL.,

Appellant,

Vs.

DOWNTOWN DEVELOPMENT ASSOCIATION

OF EL PASO, INC.,

Appellee.

On APPEAL FROM THE SUPREME CourT OF TEXAS

JURISDICTIONAL STATEMENT

RoyAL FURGESON

Kemp, SMITH, WHITE, DUNCAN

& HAMMOND

P. O. Drawer 2800

El Paso, Texas 79999

Attorney for Appellant

DATE: October 4, 1978

E. L. MENDENHALL, INc., 926 Cherry Street, Kansas City, Mo. 64106, (816) 421-3030

-_———— -—-—-- —— +

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INDEX

a | MTeoR RETO dst 1

CN sissies abcess, Oe Se ene 2

QUESTIONS PRESENTED 0000 2

SIATUTES INVOLVED 22 3

THE QUESTIONS ARE SUBSTANTIAL... 7

CERTIFICATE OF SERVICE WW. 13

APPENDIX A—

Opinion, Supreme Court of Texas 15

Judgment, 120th Judicial Court of Texas 19

APPENDIX B—

Article 9001, Texas Revised Civil Statutes _. 23

Section 1, Sherman Act oc 0.> 25

Table of Citations

CASES

Braunfeld v. Brown, 366 U.S. 599 | et EEE 4

Cantor v. Detroit Edison Company, 428 U.S. 579 (1976)

ors iieunicenysntiaspaennd onan nniipigniinsataphéanilodtinndsicsc dene 7, 8,9

Gallagher vy. Crown Kosher Super Market, 366 U.S. 617

|) ee ee REMAN Te SMG 4

Gibson Distributing Co., Inc., et al. v. Downtown De-

velopment Association of El Paso, 21 Tex. Sup. Ct.

Coe Cot UR Fe ck 1, 8,9, 10

McGowan v. Maryland, 366 U.S. 420 (1961) 4,11

Parker v. Brown, 317 U.S. 341 (1943) oo 8, 10

pat

State v. Spartan’s Industries, Inc., 447 S.W.2d 407

(Tex. Sup. 1969), appeal dismissed, 397 U.S. 590

ARO SERIES SER a Sa nee nena ARES EE 5, 10, 11

Two Guys from livia dliokiuers, Inc, v. McGinley,

he EE _. 5 VaR DRE Se +

Vornado, Inc. v. Hyland, 148 N.J. Super. 343, 372 A.2d

A Bt yy 2 a ee 12

STATUTES

BO Ur. OL COIN AGE) oon 2, 3, 6, 7, 8,9

gb 9 Rea yA a a AN ania anh Ne eccrine 2

Te, Dey. Cov, Beek, Arm, Art, GOG1 annccrccccceeceseeeeenee 1-10, 12

Tex. Pomel Code, Art, BOG ccecccirrrcccercevpecccsesseveseovvessoeses 3-4, 5

Text & TREATISES

Harper, The Texas Blue Laws (1974) -......20......00.--. 4, 5, 6,12

Comment, The State Action Antitrust Exemption: The

Confinement of the Parker Doctrine Within the

Emerging Cantor Formula, 29 Hastings L. J. 211, 231

te ONES sn Cishtstinecineetvih 0G iccecinnejasncigiiaRinteneecconionee 8,9

Comment, The State Action Antitrust Exemption:

from Parker v. Brown to Cantor v. Detroit Edison

Co., 1977 Duke L. J. 871, 877-85 (1977) 20.0.0... 10

In the Supreme Court of the United States

OCTOBER TERM, 1978

GIBSON DISTRIBUTING COMPANY, INC., ET AL.,

Appellant,

vs.

DOWNTOWN DEVELOPMENT ASSOCIATION

OF EL PASO, INC.,

Appellee.

On APPEAL FROM THE SUPREME Court oF Texas \

JURISDICTIONAL STATEMENT

Appellant appeals from the judgment of the Supreme

Court of Texas, entered on July 12, 1978, upholding the

validity of the Texas Blue Law, Article 9001 of the Texas

Revised Civil Statutes, and submits this Statement to show

that the Supreme Court of the United States has jurisdic-

tion of the appeal and that a substantial question is pre-

sented.

OPINION BELOW

The opinion of the Supreme Court of Texas is re-

ported at 21 Tex. Sup. Ct. 493 (July 12, 1978). The order

of the 120th Judicial District Court is not and will not be

reported. Copies of the opinion of the Supreme Court of

Texas and of the judgment of the 120th Judicial District

Court of Texas are attached hereto as Appendix A.

~

JURISDICTION

After Appellee brought suit in the 120th Judicial Dis-

trict Court of Texas to enforce Article 9001 of the Texas

Revised Civil Statutes, often called the Texas Blue Law,

Appellant contested the validity of Article 9001 on the

grounds that Section 4 of the statute was preempted by

Section 1 of the Sherman Act and that it violated the due

process clause of the United States Constitution. The

District Court ruled in favor of the statute’s validity on

January 23, 1978. Under the Texas statutes and rules of

civil procedure, a direct appeal was taken to the Supreme

Court of Texas, which also ruled in favor of the statute’s

validity by opinion dated July 12, 1978. The jurisdiction

of the Supreme Court to review this opinion by appeal is

conferred by 28 U.S.C. §1257(2).

QUESTIONS PRESENTED

1. When Section 4 of Article 9001 allows private

parties to join in concert to prohibit their competitors from

selling certain items one day a week, normally Sunday, and

thus allows the private parties to protect their competitive

share of the market without opening on that one day, is the

section preempted by Section 1 of the Sherman Act, which

encourages competition, as an unnecessary burden on the

regulation of interstate commerce by the U. S. Congress?

2. When the legislative history of Article 9001 and

the extensive record in the trial court show conclusively

that the article clearly fails to accomplish its stated pur-

poses of promoting the health, recreation and welfare of

the people of Texas and its interpreted purpose of granting

a common day of rest to the people of Texas, does the

article violate the due process clause of the United States

Constitution?

STATUTES INVOLVED

Article 9001 of the Texas Revised Civil Statutes and

Section 1 of the Sherman Act are set forth in Appendix B.

STATEMENT

Appellant owns and operates several retail stores in

cities in the western part of Texas, including El Paso,

Texas. Appellant’s stores are of the type often referred

to as discount stores. Appellee is an incorporated associa-

tion, many of whose members are downtown merchants in

El Paso, Texas.

Since about 1970, Appellee has shown an interest in

enforcing Article 9001 of the Texas Revised Civil Statutes,

which prohibits the sale of 42 enumerated items on con-

secutive Saturdays and Sundays. Enforcement has been

accomplished pursuant to Section 4 of the statute which

states that “any person may apply to any court of competent

jurisdiction for and may obtain an injunction restraining”

vic.ations of the statute. While pursuing the enforcement

of Article 9001, Appellee determined that Appellant had

violated the statute by selling prohibited articles on con-

secutive Saturdays and Sundays. Suit was filed and a

temporary injunction was issued against Appellant. Before

the trial on the permanent injunction, Appellant filed

amended pleadings on October 14, 1977, and raised the

due process and exemption arguments now before this

Court in this jurisdictional statement. A nonjury trial

ensued.

During the trial, Appellant cited a scholarly book to

the Court by William Harper published in 1974 and en-

titled The Texas Blue Laws. In his book Harper observed

that considerable debate surrounded the passage of Article

4

286a, the exact predecessor to Article 9001 in all important

respects. In Chapter VI of his book, Harper exaniined

the debate that occurred during a special session cf the

Fifty-seventh Legislature after the United States Supreme

Court declared constitutional Sunday closing laws in several

states. McGowan v. Maryland, 366 U.S. 420 (1961); Gal-

lagher v. Crown Kosher Super Market, 366 U.S. 617 (1961);

Two Guys from Harrison-Allentown, Inc. v. McGinley, 366

U.S. 582 (1961); Braunfeld v. Brown, 366 U.S. 599 (1961).

The Supreme Court decisions did not, however, serve

as the impetus for the enactment of Article 286a. The

impetus came from downtown merchants in Texas, repre-

sented by the Texas Retail Federation, who were faced

with new competition because of the rapid growth of dis-

count stores, These stores operated in outlying shopping

centers and did much of their business on Sunday. Harper,

The Texas Blue Laws 96 (1974). In 1961, the Federation

asked a member of the Texas Senate, William T. Moore, to

introduce the bill that was to become Article 286a, In in-

troducing the bill, he said that “this is an economic mea-

sure, not a moral issue.” Id. at 98. Moore emphasized that

“we're trying to maintain the status quo that prevailed

before these discount houses came down here from the East

and disrupted our way of business.” Id.

Another Texas Senator concurred that it was “not fair

for a bunch of Northerners to come down here and disrupt

our old, established methods of operation.” Id, Senator

Moore’s bill was also recognized as an economic measure

by a Texas Representative who observed that “all this bill

is aimed at is regulating competition. This entire matter

is an out-growth of the fight between downtown depart-

ment stores and suburban discount stores.” Id. at 100.

Senator Moore successfully pushed his bill through

the Legislature and Article 286a became effective on No-

vember 8, 1961. The goal—to regulate competition be-

tween department and discount stores—was accomplished

since the prohibited items of merchandise had been “care-

fully selected as those constituting the bulk of Sunday busi-

ness of discount houses.” Id. at 101. Article 286a and now

Article 9001 is thus a “six-day business-week law imposed

on the merchandising of forty-two specifically enumerated

types of articles.” Id. at 102. “Interestingly enough, how-

ever, this goal of economic regulation has never been of-

ficially recognized as a goal of Article 9001. Instead, the

Legislature wrote that the statute’s goals were to promote

the health, recreation and welfare of the people of Texas.

The Supreme Court of Texas has observed that this goal

is accomplished since the statute provides a single day of

rest for the people of Texas. State v. Spartan’s Industries,

Inc., 447 S.W.2d 407, 412 (Tex. Sup. 1969), appeal dismissed,

397 U.S. 590 (1970).

After giving the court the advantage of an historical

pictute of Article 9001, Appellant presented evidence bear-

ing on the statute’s infirmities. Appellant called its group

manager, Mr. James Gunn, who testified that his company

has noticed a trend toward increased customer preference

for Sunday shopping (SF 75-79). Then Appellant called

three experts, two of whom, an economist and a sociologist,

concluded that (1) Article 9001 impeded rather than pro-

moted the health, recreation and welfare of the people of

Texas and (2) Article 9001 failed to insure a single day of

rest for the people of Texas. After its witnesses testified,

Appellant placed into evidence answers by Appellee to

Appellant’s interrogatories (SF 172-87). The answers dealt

with questions surrounding the competition between the

parties.

Appellee’s rebuttal witness was Mr. Herbert Schwartz,

a member of the association. He stated that the purpose

6

of Article 9001 was to “combat” a “threat to a six day

week” (SF 203). In El Paso County, that threat has been

presented in the form of competitors like Appellant (SF

203). If these competitors were allowed to open in a

normal way seven days a week, then the members of the

association like The Popular, a store with which Mr.

Schwartz is associated, would be required to open “very

quickly” on Sunday to protect their “share of the market”

(SF 203). The only way association members can protect

their share of the market and continue with a six day week,

according to Mr. Schwartz, is to enforce Article 9001 (SF

204). Thus, the association is active in its enforcement

efforts.

In essence, the testimony of Mr. Schwartz confirmed

the history of Article 9001 as recorded in the book The

Texas Blue Laws. His testimony did more, however. It

also served to confirm the testimony of Appellant’s econ-

omist and sociologist. For example, he admitted that only

15 to 20 percent of the total work force of Texas was in-

volved in retailing (SF 207-211). The statute does not

affect all of that percentage since only portions of retailing

deal in items which would be prohibited from sale on con-

secutive Saturdays and Sundays (SF 210-11). Conse-

quently, even if the statute were repealed, less than 14 or

15 percent of the work force would be affected (SF 211).

Mr. Schwartz also admitted that, although he did not find

shopping recreational, he thought some people did (SF

215). It could be “fun”, an “amusement”, “entertaining”

(SF 215). He thought that it was “a fair statement” that

“some people find it recreational sometimes” (SF 215).

Despite this record, the trial court found that Article

9001 met due process standards and did not conflict with

the Sherman Act. The Supreme Court of Texas agreed.

An analysis of its opinion, which follows in the next section

7

of this jurisdictional statement, clearly shows why the

questions presented by this appeal are so substantial as

to require plenary consideration.

THE QUESTIONS ARE SUBSTANTIAL

Appellant contends that the State of Texas, in passing

Article 9001, has so ignored the competitive requirements

of the Sherman Act and the due process constraints of the

Constitution that this appeal must be considered. Article

9001 was enacted to appease the downtown merchants of

Texas who demanded and received competitive advantage

over their suburban discount brothers. The granting of

the advantage clearly provided no general benefit to the

Texas populace. The statute consequently could not be

justified as a legitimate state regulatic: of competition.

Realizing this, the Legislature tried to camouflage the

nature of Article 9001 by announcing that it promoted

the health, recreation and welfare of the people. The

facts developed at trial overwhelmingly belie the legis-

lative announcement. The magnitude of the problem is

exemplified by the opinion the Texas Supreme Court had

to write in an attempt to uphold the statute.

1. In recent years, the Supreme Court has addressed

related concepts which are integral parts of the federal

antitrust laws: exemption and preemption. Both often

have been either misunderstood or confused; both are still

being refined as new factual situations present new ques-

tions. This appeal raises important questions about these

two concepts which are so substantial as to require plenary

consideration.

The questions relate to the Supreme Court’s decision in

Cantor v. Detroit Edison Co., 428 U.S. 579 (1976), where

the exemption concept was in issue and where the pre-

emption concept was discussed. The concept of exemption,

which allows a party to escape federal antitrust liability

because its conduct constitutes state action, was narrowed

to apply only to state agencies, not private parties. The

concept of preemption, which invalidates state statutes and

regulations in conflict with federal antitrust laws because

the laws preempt the field, was clarified. Further, in

Cantor, according to one commentator, the concepts were

separated and differentiated in Section III of the decision.

Comment, The State Action Antitrust Exemption: The

Confinement of the Parker Doctrine Within the Emerging

Cantor Formula, 29 Hastings L. J. 211, 231, n. 73 (1977).

The same commentator observed that another writer on

the subject named Dorman intermingled the concepts. Id.

Although Cantor does not sanction intermingling, the writer

Dorman has not been the only party guilty of the offenses:

in this case the Supreme Court of Texas was also guilty.

Appellant argued in its pleadings at trial and in its

appeal to the Texas Supreme Court that Section 4 of

Articie 9001 of the Texas Revised Civil Statutes was

preempted by Section 1 of the Sherman Act because it

allowed private parties like Appellee association to join in

concert and restrict sales by competitors at least one day

a week. Appellant had not challenged all of Article 9001;

it challenged only Section 4. In its opinion the Texas

Supreme Court did not acknowledge the limited challenge

even though it did state that the issue of preemption was

the one raised by Appellant. 21 Tex. Sup. Ct. 493 (July

12, 1978). After so stating, however, the Court then cited

Parker v. Brown, 317 U.S. 341 (1943), the case first delin-

eating the exemption concept, and concluded after review-

ing more recent cases that preemption was simply not

applicable because the action of the State of Texas in

legislating Article 9001 left activities performed under the

9

statute exempted from the reach of the Sherman Act.

21 Tex. Sup. Ct. 493 (July 12, 1978).

It would be difficult to imagine a clearer example of a

court intermingling the concepts of preemption and exemp-

tion, concepts which should be separated in any analysis.

Moreover, it was especially inappropriate for the Texas

Supreme Court to reject Appellant’s preemption argu-

ment in this case by citing and relying upon exemption

decisions, when a question of antitrust liability was not

being raised. Each concept must be addressed by a sepa-

rate analysis. Finally, the Supreme Court ignored another

teaching of Cantor: exemption does not apply to private

parties, like Appellee here.

If the Texas opinion stands, the confusion surrounding

the two concepts will be intensified and the Supreme

Court’s effort in Section III of Cantor to clarify the con-

cepts will be negated. To prevent such results, this Court

is respectfully requested to find that the questions raised

here are so substantial as to require plenary consideration.

If the appeal is then given such consideration, this Court

will be able to see that the confusing analysis by the Texas

Supreme Court not only negated the clarifying effort in

Cantor, but also resulted in an incorrect holding.

Under the suggested Cantor analysis, Section 4 of

Article 9001 and the interest of Texas in regulating week-

end sales of merchants would be balanced against the

federal antitrust interest in preserving open competition.

Comment, The State Action Antitrust Exemption: The

Confinement of the Parker Doctrine Within the Emerging

Cantor Formula, supra at 238. Appellant asserts that the

balance favors the federal antitrust interest. A full

presentation to this Court will substantiate the assertion

and require that Section 4 be held preempted by Section 1

10

of the Sherman Act. Therefore, retail merchant associa-

tions in Texas will no longer be able to tell their com-

petitors that they can compete only six days, not seven.

2. The Texas Supreme Court’s inappropriate utiliza-

tion of the exemption concept in this case also destroys

’ the efficacy of its reasoning in rejecting Appellant’s due

process arguments. Most commentators and courts seem

to agree that exemption occurs and the Parker doctrine is

applicable only when it appears that the legislature has

expressed some intent to implement a state policy through

anticompetitive measures. See, e.g., Comment, The State

Action Exemption in Antitrust: from Parker v. Brown to

Cantor v. Detroit Edison Co., 1977 Duke L. J. 871, 877-85

(1977); Comment, The State Action Antitrust Exemption:

The Confinement of the Parker Doctrine Within the Emerg-

ing Cantor Formula, supra at 238. No such intent has ever

been expressed by the Texas Legislature in connection

with Article 9001. Indeed, the legislative intent expressed

in the statute is to promote the health, recreation and

welfare of the people. The legislative intent divined by

the Texas courts is that Article 9001 is to provide “a single

day of rest for all the family, and for the bulk of the com-

munity.” State v. Spartan’s Industries, Inc., 447 S.W.2d

407, 412 (Tex. Sup. 1969), appeal dismissed, 397 U.S. 590

(1970). In this case, the Texas Supreme Court again

agreed that the statute was reasonably related to the public

health and welfare. 21 Tex. Sup. Ct. 493 (July 12, 1978).

By using the exemption concept, the Court creates a

true dilemma. If Article 9001 was intended to be an anti-

competitive measure, it has no reasonable relationship to

any of its purposes, stated or interpreted. It thus violates

the precept of due process. On the other hand, if it was

intended to accomplish its stated and interpreted purposes,

it was not intended to have anticompetitive effect. Exemp-

11

tion does not apply and the Texas Supreme Court there-

fore cannot rely on the concept. Either way, the decision

is wrong.

This dilemma illustrates why the question presented

under the due process argument of this appeal is so sub-

stantial as to require plenary consideration. Unless courts

employ the concept of exemption correctly, vast confusion

resulting in faulty analysis and improper results occurs.

This appeal is a perfect vehicle which can be used by the

Supreme Court first to illustrate the pitfalls inherent in

the analysis of the exemption concept and then to clarify

once and for all the proper utilization of the concept.

Before concluding, one other word must be written

on the due process argument in this appeal. Appellant is

well aware that the Supreme Court has written extensively

on the due process problems of the state blue laws. It

should be observed, however, that those decisions were

rendered over 15 years ago apparently without a full record

of trial proceedings before the Court. For example, Mr.

Justice Frankfurter observed in one of the decisions that

though the range of exceptions in the blue laws seemed

somewhat incongruous in relation to the permissible pur-

pose of protecting the public welfare, absence in the record

of emphasis on the incongruity prevented the Court from

examining it and therefore resulted in a determination that

the blue laws were not at least per se unconstitutional.

McGowan v. Maryland, 366 U.S. 420, 463 (1961) (Frank-

furter, J., concurring). A full and complete record of in-

congruity will be before the Court in this case. Moreover,

the one time the constitutionality of the Texas Blue Law

was before the Supreme Court on appeal, no record of evi-

dence was present. State v. Spartan’s Industries, Inc., 447

S.W.2d 407, 409 (Tex. Sup. 1969), appeal dismissed, 397

U.S. 590 (1970).

12

Examples of evidence from the trial record statement

of facts are testimony from an economist that Article 9001

cannot possibly create a single day of rest in Texas since it

keeps only 3.6 percent of the Texas work force out of em-

ployment on Sunday; from a sociologist that Article 9001

does not promote but rather (based on a scientific survey}

impedes recreation and welfare; and from a vice president

of Appellee association that Article 9001 was passed in

fact to promote the welfare of retailers so that those who

chose would not have to work a seven day week. Similar

testimony led a New Jersey court recently to conclude

that a blue law like Article 9001 was in conflict with due

process requirements and thus unconstitutional. Vornado,

Inc. v. Hyland, 148 N.J. Super. 343, 372 A.2d 667 (Super.

Ct. Law Div. 1977). Appellant believes this Court will

reach the identical conclusion, especially since there is

one additional aid to any analysis of Article 9001: a learned

and scholarly review of the statute in Harper, The Texas

Blue Laws (1974). The record and the legislative history

presented by Harper show clearly that Article 9001 is not

constitutional

Respectfully submitted,

RoyAL FURGESON

Kemp, SMITH, WHITE, DUNCAN

& HAMMOND

P. O. Drawer 2800

El Paso, Texas 79999

(915) 533-4424

Attorney for Appellant

13

CERTIFICATE OF SERVICE

I hereby certify that on the 4th day of October,

1978, three copies of the Jurisdictional Statement were

mailed, postage prepaid, to Frank Feuille, IV, 1100 E] Paso

National Bank Building, El] Paso, Texas 79901, Counsel for

Appellee. I further certify that all parties required to

be served have been served.

RoyAL FURGESON

Kemp, SMITH, WHITE, DUNCAN

& HAMMOND

P. O. Drawer 2800

E] Paso, Texas 79999

Attorney for Appellant

15

APPENDIX

APPENDIX A

OPINION

GIBSON DISTRIBUTING COMPANY, INC., ET AL. v.

DOWNTOWN DEVELOPMENT ASSOCIATION

OF EL PASO, INC.

No. B-7383

Direct Appeal from El Paso County.

Cause submitted May 10, 1978.

Judgment of the District Court is affirmed. (Opinion

by Chief Justice Greenhill.)

For Appellants: Kemp, Smith, White, Duncan and

Hammond, Royal Furgeson, El Paso, Texas.

For Appellees: Scott, Huise, Marshall and Feuille,

Frank Feuille, IV, El Paso, Texas.

This is another lawsuit attacking the constitutionality

of the so-called Sunday Closing Law of Texas, Article 9001

of our civil statutes.._ Two grounds for the attack are due

process and equal protection. The third is a contention

that the Texas statute is invalid because it deals with re-

straint of trade, a field which, it is argued, has been pre-

1. Unless otherwise indicated, statutory references are to

Vernon’s Texas Statutes Annotated. Article $001 of the civil

statutes was formerly Article 286a of the Penal Code. The stat-

utory change was the subject of a major point in Gibson Products

Co., Inc. v. State, 545 S. W. 2d 128 (Tex. 1976). The standing

of Respondents to bring this suit is not a point of error in this

court.

16

empted by the Congress and its Sherman Antitrust Act.

More specifically, the point is that “Article 9001 . . . was

preempted by the Sherman Act... .”

The case reaches us as a direct appeal from a disirict

court in El] Paso. That court upheld the constitutionality

of the statute. We affirm that judgment.

Due Process and Equal Protection

The constitutional assaults of lack of due process and

equal protection were made in at least two of our previous

decisions.

In State v. Spartan’s Industries, Inc., 447 S. W. 2d 407

(Tex. 1969), in the face of a strong dissenting opinion of

three justices, this court held that the statute was a valid

exercise of the police power by the Texas Legislature;

that it was reasonably related to the public health and

welfare; that it treated all merchants alike and was not

discriminatory; and was constitutional. Due process and

equal protection were written upon at length.

Some seven years later, similar assaults were made

in Gibson Products Company, Inc. v. State, 545 S. W. 2d 128

(Tex. 1976). Again by a divided court, the decision was

that the statute was constitutional. The statute has not

been changed; and while there were differences of opinion

among us, we now regard this matter as settled. We, there-

fore, follow the two cases set out above; and the points

that the statute is unconstitutional as lacking in due process

and equal protection are overruled.

Federal Preemption

The argument that the “Sunday Closing Statute” was

intended to benefit certain merchants over other merchants

and to restrain trade is not new either. The substance

17

of these arguments was made in the above cases and in

Support of Gibson’s equal protection and due process attacks

on Article 9001. But the particular argument that the

State’s right to regulate the Saturday and Sunday sales

of merchants has been preempted by the federal antitrust

Sherman Act is new in this Court.

Article VI, section 2, of the Constitution of the United

States (the Supremacy Clause) provides that the constitu-

tion and laws of the United States made in pursuance there-

of “shall be the supreme Law of the Land.” We recognize,

as we must, the force of that provision. It is our view, how-

ever, that the Congress, by enacting the Sherman Act, did

not intend to prohibit a valid exercise of the police power

of the States,—as this Court has held the statute in ques-

tion to be.

As we read Parker v. Brown, 317 U.S. 341 (1943), and

other opinions of the Supreme Court, state action affecting

commerce is generally considered to be “exempted” from

the Sherman Act. Perhaps it is more accurate to say that

the rule of preemption is simply not applicable to such

state action. The Supreme Court, in Parker v. Brown,

stated that,

“. . « nothing in the language of the Sherman Act

or in its history [suggests] that its purpose was to re-

strain a state or its officers or agents from activities

directed by its legislature.”

Not every act of a state or local subdivision necessarily

comes within the exception to the Sherman Act. Thus,

where a city engages in the business of selling electricity,

gas, and water, its alleged acts to restrain trade from

a competing privately owned utility are not automatically

exempt. City of Lafayette, Louisiana v. Louisiana Power

& Light Co.., ........ US. ........, 46 U.S. Law Week 4265 (March

18

29, 1978). The lines of demarcation under Parker v. Brown

are discussed in that Louisiana case and in the recent law-

yer-advertising case of Bates and O’Steen v. State Bar of

Arizona, ...... US. ......, 53 L. Ed. 2d 810 (1977). In Bates and

O’Steen, it was decided that the regulation and restriction

of lawyers’ advertising by the Supreme Court of Arizona

was not preempted by the Sherman Act. Rather, the

court held, such state action fell within the exemption

announced in Parker v. Brown.* See also, Taylor Drug

Stores, Inc. v, Associated Dry Goods Corporation, 560 F. 2d

211 (6th Cir. 1977). In the light of these opinions, it is

our conclusion that Article 9001 is not preempted by

the Sherman Act.

The judgment of the district court, which upheld Arti-

cle 9001 against these attacks, is affirmed.

Joe R. Greenhill

Chief Justice

Opinion delivered July 12, 1978.

2. The Bates and O’Steen case held, however that the

blanket suppression of legal advertising violated the free speech

clause of the First Amendment.

19

IN THE DISTRICT COURT OF EL PASO COUNTY,

TEXAS

ONE HUNDRED TWENTIETH JUDICIAL DISTRICT

No. 73-5535 (Consolidated)

DOWNTOWN DEVELOPMENT ASSOCIATION

OF EL PASO, INC.,

Plaintiff,

vs.

GIBSON DISTRIBUTING CO., INC-—PERMIAN BASIN,

d/b/a GIBSON’S DISCOUNT CENTER,

Defendant,

and

DOWNTOWN DEVELOPMENT ASSOCIATION

OF EL PASO, INC.,

Plaintiff,

vs.

GIBSON DISTRIBUTING CO., INC_—PERMIAN BASIN,

d/b/a GIBSON’S DISCOUNT CENTER; and SKAGGS-

ALBERTSON’S PROPERTIES, INC., SKAGGS-ALBERT-

SON’S STORE; and FURR’S, INC., d/b/a FURR’S

SUPERMARKETS,

Defendants.

JUDGMENT

On the 25th day of October, 1977, and the 27th day

of December, 1977, in a bifurcated trial, the Court heard

Plaintiff's amended motion for contempt and request for

permanent injunction and then Defendant's special excep-

tions, pleas in abatement, pleas in bar and request for de-

claratory judgment. Plaintiff, the Downtown Develop-

ment Association of El Paso, Inc., by and through its duly

authorized representative and attorney, and Defendant,

20

Gibson Distributing Company, Inc.,—Permian Basin, d/b/a

Gibson’s Discount Center, by and through its duly autho-

rized representative and attorney, announced ready for

trial and agreed to the bifurcation of the trial. The Court

then proceeded to receive the evidence and testimony.

After both parties rested and closed and after the Court

considered the arguments of counsel and the briefs filed

by both parties, the Court decided that the motion for con-

tempt and request for permanent injunction should be

granted and that the special exceptions, pleas in abatement,

pleas in bar and request for declaratory judgment should

be denied,

IT IS THEREFORE ORDERED, ADJUDGED AND

DECREED that the Defendant, Gibson Distributing Com-

pany, Inc.—Permian Basin, d/b/a Gibson’s Discount Cen-

ter, is guilty of contempt of this Court for a willful viola-

tion of the Temporary Injunction duly issued by this Court

on December 9, 1971, and Defendant is hereby fined the

total sum of One Thousand Three Hundred and No/100

($1,300.00) Dollars,

IT IS FURTHER ORDERED, ADJUDGED AND DE-

CREED that the Clerk of this Court shall issue with a

Permanent Injunction, restraining and enjoining the De-

fendant, Gibson Distributing Company, Inc.—Permian

Basin, d/b/a Gibson’s Discount Center, its officers, agents,

servants and employees, and all persons in active concert

and participation with said Defendant, from selling and/or

offering to sell and from compelling, forcing or obliging

their, and each of their, employees to sell clothing, clothing

accessories, wearing apparel, footwear, headwear, home,

business, office or outdoor furniture, kitchenware, kitchen

utensils, china, home appliances, stoves, refrigerators, air

conditioners, electric fans, radios, television sets, washing

machines, driers, cameras, hardware, tools, excluding non-

21

power driven hand tools, jewelry, precious or semi-precious

stone, silverware, watches, clocks, luggage, motor vehicles,

musical instruments, recordings, toys, excluding items cus-

tomarily sold as novelties and souvenirs, mattresses, bed

coverings, curtains, mirrors, lawnmowers or cloth piece

goods, on both the two consecutive days of Saturday and

Sunday, unless in fact such article of merchandise is for

charitable purposes or is to be used for funeral or burial

purposes, or to be sold, or is sold as a part of or in con-

junction with the sale of real property,

IT IS FURTHER ORDERED, ADJUDGED AND DE-

CREED that the special exceptions, pleas in abatement and

pleas in bar of the Defendant, Gibson Distributing Com-

pany, Inc.,—Permian Basin, 2/b/a Gibson’s Discount Cen-

ter, which exceptions and pleas tested the constitutionality

of Article 9001 of the Texas Revised Civil Statutes as vio-

lating the principles of due process and equal protection

guaranteed by the United States Constitution and Texas

Constitution and as violating the supremacy clause of the

United States Constitution, are in all things overruled and

denied.

IT IS FURTHER ORDERED, ADJUDGED AND DE-

CREED that the request for declaratory judgment of the

Defendant, Gibson Distributing Company, Inc.,—Permian

Basin, d/b/a Gibson’s Discount Center, is in all things over-

ruled and denied.

IT IS FURTHER ORDERED that the cost of th’ pro-

ceeding be taxed against the Defendant, Gibson Distribut-

ing Company, Inc.—Permian Basin, d/b/a Gibson’s Dis-

count Center, for which let execution issue if not timely

paid.

Defendant, Gibson Distributing Company, Inc.—Perm-

ian Basin, d/b/a Gibson’s Discount Center, in open court

22

duly excepted and gave notice of direct appeal to the Su-

preme Court of Texas under the authority granted under

Article 1738a of the Texas Revised Civil Statutes.

Signed, entered and rendered on this the 23rd day

of January, 1978.

/s/ (illegible)

Judge of the 120th Judicial

District Court

Approved as to form:

/s/ Frank Feuille, IV

Frank Feuille, IV

Attorney for Plaintiff

/s/ Royal Furgeson

Royal Furgeson

/s/ Taffy D. Bagley

Taffy D. Bagley

Attorneys for Defendant

APPENDIX B

TEXAS REVISED CIVIL STATUTES

Art. 9001. Sale of goods on both the two consecutive days

of Saturday and Sunday

Prohibition of sales; items; misdemeanor

Section 1. Any person, on both the two (2) consecu-

tive days of Saturday and Sunday, who sells or offers for

sale or shall compel, force or oblige his employees to sell

any clothing; clothing accessories; wearing apparel; foot-

wear; headwear; home, business, office or outdoor furni-

ture; kitchenware; kitchen utensils; china; home appli-

ances; stoves; refrigerators; air conditioners; electric fans;

radios; television sets; washing machines; driers; cameras;

hardware; tools, excluding non-power driven hand tools;

jewelry; precious or semi-precious stones; silverware;

watches; clocks; luggage; motor vehicles; musical instru-

ments; recordings; toys, excluding items customarily sold

as novelties and souvenirs; mattresses; bed coverings;

household linens; floor coverings; lamps; draperies; blinds;

curtains; mirrors; lawn mowers or cloth piece goods shall

be guilty of a misdemeanor. Each separate sale shall con-

stitute a separate offense.

Sales for charitable and funeral or burial purposes;

real property sales

Sec, 2. Nothing herein shall apply to any sale or sales

for charitable purposes or to items used for funeral or

burial purposes or to items sold as a part of or in con-

junction with the sale of real property.

24

First offense; subsequent convictions; penalties

Sec. 3. For the first offense under this Act, the pun-

ishment shall be by fine of not more than One Hundred

Dollars ($100.00). If it is shown upon the trial of a case

involving a violation of this Act that defendant has been

once before convicted of the same offense, he shall on his

second conviction and on all subsequent convictions be

punished by imprisonment in jail not exceeding six (6)

months or by a fine of not more than Five Hundred Dol-

lars ($500.00), or both.

Purpose; public nuisances; injunction;

application and proceedings

Sec. 4. The purpose of this Act being to promote the

health, recreation and welfare of the people of this state,

the operation of any business whether by any individual,

partnership or corporation contrary to the provisions of

this Act is declared to be a public nuisance and any person

may apply to any court of competent jurisdiction for and

may obtain an injunction restraining such violation of this

Act. Such proceedings shall be guided by the rules of

other injunction proceedings.

Emergency purchases; certification

Sec. 4a. Repealed by Acts 1967, 60th Leg., p. 79, ch.

39, § 1, eff. Aug. 28, 1967.

Occasional sales

Sec. 5. Occasional sales of any item named herein

by a person not engaged in the business of selling such

item shall be exempt from this Act.

25

Legislative intent

Sec.5a. It is the intent of the Legislature that Articles

286 and 287 of the Penal Code of Texas’ are not to be cun-

sidered as repealed by this Act; provided, however, that the

provisions of said Articles shall not apply to sales of items

listed in Section 1 of this Act which are forbidden to be

sold on the day or days named in this Act. Acts 1961, 57th

Leg., Ist C.S., p. 38, ch. 15, eff. Nov. 7, 1961.

This article was transferred from Vernon’s Ann.P.C.

art. 286a by authority of § 5 of Acts 1973, 63rd Leg., p. 995,

ch, 399 enacting the new Texas Penal Code.

Section 4a, repealed by Acts 1967, 60th Leg. p. 79, ch.

39, § 1, required certification for emergency purchases.

SHERMAN ACT

§ 1. Trusts, etc., in restraint of trade illegal; penalty

Every contract, combination in the form of trust or

otherwise, or conspiracy, in restraint of trade or commerce

among the several States, or with foreign nations, is de-

clared to be illegal. Every person who shall make any

contract or engage in any combination or conspiracy hereby

declared to be illegal shall be deemed guilty of a felony,

and, on conviction thereof, shall be punished by fine not

exceeding one million dollars if a corporation, or, if any

other person, one hundred thousand dollars or by imprison-

ment not exceeding three years, or by both said punish-

ments, in the discretion of the court.

As amended Dec. 21, 1974, Pub.L. 93-528, § 3, 88 Stat.

1708; Dec. 12, 1975; Pub.L. 94-145, § 2, 89 Stat. 801.

1. Now repealed by Acts 1973, 63rd Leg., p. 991, ch. 399,

§ 3(a), enacting the new Texas Penal Code.