# Petition — Fairdale Farms, Inc. v. Yankee Milk, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1981%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1981 - **Citation:** 454 U.S. 818 ## Text Office-Supreme 0 FIL E b * 80-1523 No IN THE Supreme Court of the United States October Term, 1980 FAIRDALE FARMS, INC., Petitioner, vs. YANKEE MILK, INC., and REGIONAL COOPERATIVE MARKETING AGENCY, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT FRED I. PARKER, ESQ. SUSAN F. EATON, ESQ. LANGROCK SPERRY PARKER & STAHL P.O. Drawer 351 Middlebury, Vermont 05753 (802) 388-6356 KEITH I. CLEARWATERS, ESQ. DUDLEY CHAPMAN, ESQ. CHAPMAN & CLEARWATERS 1700 K Street, N.W. Washington, DC 20006 (202) 223-4201 Counsel for Petitioner | Batavia Times Publishing Co. Batavia, N.Y. (716) 344-2000 Questions Presented for Review 1. Do the Capper-Volstead and Clayton Acts im- munize agricultural cooperatives from Section 2 of the Sherman Act so that they may, unlike other business corporations, engage in willful acquisition and maintenance of monopoly power, so long as they do not engage in predatory conduct? 2. Is a “marketing agency in common”, formed by eight separate cooperatives to do nothing more than fix prices, exempted by the Capper-Volstead and Clayton Acts from the prohibitions of Section 1 of the Sherman Act? II. TABLE OF CONTENTS. Page Questions Presented for Reviẽ . i r sa ae a ie capa ee ee 6 ne eee s iii ees as e ps 0s a O09 ¢ 008 2 Reported Opinions 2 Grounds for Jurisdictio nn 2 , ̃ ͤ f , re 3 r 6 ö ͥBů!lddn · ˙ꝛäꝛ 6 „% „„%„%„%„b„b„„„b„b„„b„b„b„b„b„„„ 10 — 6 „%%„%„ „„ „„ „„ „„ „„ „„ „ „„ „ „6 6 6 6 13 I. These Questions Are Important Issues of Federal Law Which Have Not Been, But Should Be, Decided by This Court. 14 A. The Monopolization Charge.......... 14 B. The Price-Fixing Count.............. 17 II. The Court of Appeals Decision Conflicts With Prior Analysis of the Exemption by This J 21 r ˙ͤDĩĩJA . n 24 Nee Of re 25 r » e 27 Appendix Opinion and Order of the United States District Court for the District of Vermont la Appendix—Opinion of the United States Court of Appeals for the Second Circuit ................ 38a III. Page TABLE OF CITATIONS. Case Swayne Co. v. Sunkist Growers, 389 U.S. 384, 19 L.Ed.2d 621, 88 S.Ct. 528 (1967)............. 23 Maryland and Virginia Milk Producers Associa- tion v. United States, 362 U.S. 458 (1960)....... 22,23 National Broiler Marketing Association v. United States, 436 U.S. 816, 56 L.Ed.2d 728, 88 S.Ct. 528, reh. den. 390 U.S. 930, 19 L.Ed.2d 995, 88 S.Ct. 846 (1978) . 17,23 Northern California Supermarkets, Inc. v. Central California Lettuce Producers Cooperative, 413 F.Supp. 984 (N.D. Cal. 1976), aff'd per curiam, 580 F.2d 369 (9th Cir. 1978), cert. den. 439 U.S. 1090 (1979 99. 12,13,19 Standard Oil of New Jersey v. United States, 221 (/ 15 Sunkist Growers Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 8, 8 L. Ed. 2d 305, 82 S. Ct. 1130, reh. den. 370 U.S. 965 (1962) ............. 17 Treasure Valley Potato Bargaining Asso- ciation v. Ore-Ida Foods, Inc., 497 F.2d 203 (9th Cir.), cert. den. 419 U.S. 999 (1974)......... 18,19 U.S. v. Borden, 308 U.S. 190, 84 L.Ed. 186, ,,, ovsekeeecesss 17,21 United States v. Grinnell Corporation, 348 U.S. % sp o¥aus sednewi awakes 6,11,15,16,22 IV. Page STATUTES. Capper-Volstead Act of 1921, , ̃ ˙ wünIL... 000804 4 Clayton Act: r 4.10 „„ ee Vice heese ican 3,10 Cooperative Marketing Act of 1926, // te Samet De eee 5,10 Sherman Act: r we nee ce saan tie 3,10,12,15,17,18,21 r ( 3,10,11,14,15,16,22 / ̃ ˙ůàAA.... ⁰˙—èꝛ'.˙˙ꝛi¹ö ˙ hak si 6.11 RULE %]]... eed ON 0 mae 6 bose 10 MISCELLANEOUS. 1 Areeda and Turner, Antitrust Law. 180.......... 16 Hafstedler, A Prediction: The Exemption Favoring Agricultural Cooperatives Will Be Reaffirmed, 22 „„ NO” PRTC AMIE IE EOS 20 Mahaffie, Cooperative Exemptions Under the An- titrust Laws: A Prosecutor's View, 22 Ad. L. Rev. . 20 Milk Marketing, A Report of the U.S. Department of Justice to the Task Group on Antitrust Im- munities 583-85 (Jan. 19777777777ʒ eee 20 (1977) Trade Reg. Rep. (CCH) para. 21,337 at 21,234 T ͤ r ĩͤ bea eaeruaaeees 13 IN THE Supreme Court of the United States No. October Term, 1980 FAIRDALE FARMS, INC., Petitioner, vs. YANKEE MILK, INC., and REGIONAL COOPERATIVE MARKETING AGENCY, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Petitioner prays that a Writ of Certiorari issue to review the judgment of the United States Court of Ap- peals for the Second Circuit entered in the above entitled case on December 9, 1980. 2 Parties The parties are Plaintiff Fairdale Farms, Inc. (sometimes hereinafter referred to as Fairdale) and Defendants Yankee Milk, Inc. (sometimes referred to hereinafter as Vankee') and the Regional Cooperative Marketing Agency (sometimes referred to hereinafter as *RCMA"). Amicus Curiae briefs were filed at the ap- pellate level by the United States Department of Justice and the National Council of Farmer Cooperatives. Reported Opinions The District Court’s Order and Opinion has not been officially reported. It is printed in relevant part at 1980-1 CCH Trade Cases, pp. 63,029 (D.C.Vt. 1979). The Opin- ion of the Court of Appeals is reported at — F. 2d (2nd Cir. 1980). Both opinions are fully set forth in the Appendix submitted with this petition. Grounds for Jurisdiction The Order sought to be reviewed is a decision of the United States Court of Appeals for the Second Circuit, issued on December 9, 1980, in an interlocutory appeal and cross-appeal by permission of the Court under 28 U.S.C. $1292(b). This Court has jurisdiction to review the decision by a Writ of Certiorari under 28 U.S.C. §1254(1). 3 Statutes Sherman Act (15 U.S.C. I. §2) §1. Trusts, etc. in restraint of trade illegal; exception of resale price agreements; 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 declared to be illegal §2. Monopolizing trade a felony; penalty Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony Clayton Act, 57 (15 U.S.C. 518 $18. Acquisition by one corporation of stock of another No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation sub- ject to the jurisdiction of the Federal Trade Commis- sion shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be sub- stantially to lessen competition, or to tend to create a monopoly. No corporation shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of one or more cor- porations engaged in commerce, where in any line of commerce in any section of the country, the effect of 4 such acquisition, of such stocks or assets, or of the use of such stock by the voting or granting of prox- ies or otherwise, may be substantially to lessen com- petition, or to tend to create a monopoly. Clayton Act, §6 (15 U.S.C. $17) The Antitrust laws not applicable to labor organizations. — The labor of a human being is not a commodity or article of commerce. Nothing contain- ed in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the pur- poses of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain in- dividual members of such organizations from law- fully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or con- — in restraint or trade, under the antitrust aws. Capper-Volstead Act of 1921, §1 (7 U.S.C. §291) §291. Authorization of associations; powers Persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in as- sociations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes. Provided, however, that such associations are operated for the mutual benefit of the members thereof, as such pro- ducers, and conform to one or both of the following requirements: The 5 First. That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein, or, Second. That the association does not pay dividends on stock or membership capital in excess of 8 per centum per annum. And in any case to the following: Third: That the association shall not deal in the products of nonmembers to an amount greater in value than such as are handled by it for members. Cooperative Marketing Act of 1926 (7 U.S.C. §455) Exchange of crop information by associations of agricultural producers.—Persons engaged, as original producers of agricultural products, such as farmers, planters, ranchmen, dairymen, nut or fruit growers, acting together in associations, corporate or otherwise, in collectively processing, preparing for market, handling, and marketing in interstate and/or foreign commerce such products of persons so engaged, may acquire, exchange, interpret, and disseminate past, present, and prospective crop, market, statistical, economic, and other similar infor- mation by direct exchange between such persons, and/or such associations or federations thereof, and/or by and through a common agent created or selected by them. 6 Statement of the Case This Writ is sought in an antitrust action to review the December 9, 1980, decision of the United States Court of Appeals for the Second Circuit in an interlocutory appeal by permission under 28 U.S.C. §1292(b). The decision af- firmed in part and vacated and remanded in part an Order of the United States District Court for the District of Vermont, the Honorable Albert W. Coffrin, presiding. Reversing the District Court, the Court of Appeals re- fused to apply the monopolization standard of United States v. Grinnell Corporation, 348 U.S. 563, 570-1 (1966), applicable to ordinary business corporations, to agricultural cooperatives, holding that ‘‘predatory’’ prac- tices must be shown. The Court of Appeals remanded the case to the District Court for a determination as to whether the Plaintiff has shown sufficient predatory acts to escape Defendants’ summary judgment motions. Affirming the District Court’s grant of summary judg- ment for the Defendants, the Court of Appeals held that RCMA, a group of eight separate dairy farmer co- operatives, and its members were immune under the Capper-Volstead Act from liability for price-fixing under the Sherman Act, even though they engaged in no inter-cooperative activity other than setting the price at which members would sell their product. Facts Oi The Case The undisputed facts presented by the parties in sup- port of their summary judgment motions may be sum- marized as follows. Plaintiff Fairdale Farms, Inc., is an employee-owned corporation located in Bennington, Ver- mont, which processes raw milk and sells its fluid milk 7 and milk products to supermarkets and other outlets in Vermont, Massachusetts and eastern New York. Fairdale produces milk in its own dairy herd, and purchases milk from farmers in the surrounding three county area com- posed of Bennington County, Vermont; Berkshire Coun- ty, Massachusetts; and Rennselaer County, New York. Defendant Yankee Milk, Inc., is an agricultural cooperative, composed of dairy farmer members, which purchases milk from its members under contract and sells this milk to processors, such as Fairdale. Yankee has had up to approximately 6,000 producer members and between 350 to 450 employees. It operates in 7 states, and in 1974 and 1975 its members produced ap- proximately 3 billion pounds of milk per year.' During the fiscal year ending June 20, 1974, this resulted in sales of over a quarter billion dollars. Yankee was formed in June of 1972 by the union of the three largest New England dairy farmer cooperatives. Immediately after the merger, Yankee controlled the following market shares: Massachusetts 71% of milk produced Vermont - 39% Maine - 10% New Hampshire - 79% Rhode Island - 87% Connecticut -717% New York - 5% Shortly thereafter, another large cooperative (Dairylea, Inc.) pledged to Yankee control of 1,600 of its New England dairy farmers. A comparison of the relative size of the parties can be made by com- paring this figure witii the 22 million pounds processed by Fairdale in 1977. 8 Defendant Regional Cooperative Marketing Agency (*“RCMA”) is an organization of dairy farmer co- operatives (including Yankee), two federations cf dairy farmer cooperatives (one having 50 cooperatives as members) and a common marketing agency representing two of RCMA’s member cooperatives. RCMA has had up to eight members who represent some 26,000 dairy farmers in a nine state region. These farmers produce a major portion of the total milk supplies for three federal regulatory markets and two state regulatory markets. All RCMA member cooperatives are also engaged in pro- cessing dairy products and/or fluid milk. These coops have now or in the past have had the capacity to process a substantial portion of the milk their members produce. RCMA’s sole function, and the purpose for which it was formed, is to fix the price at which its members sell their milk in certain New England and New York regulatory markets. It does not itself engage in any of the collective functions its member cooperatives perform on behalf of their members, such as marketing, billing, handling and processing. Rather, RCMA members meet monthly to decide on a price they will charge milk pro- cessors, such as Fairdale, on fluid milk. When the members feel a price higher than the regulatory price is justified, the members bill and collect a premium (that portion of the price which exceeds the applicable regulatory price). The premium is in addition to the usual cooperative service charges. The member cooperatives remit the preinium to their producers in a check separate from their ordinary milk check’’. Over the three years in which the pr aium was charged, RCMA members collected over twenty million dollars in premiums. 9 Yankee and RCMA had acquired enough market power not only to raise RCMA members’ prices, but also to af- fect prices so substantially within Vermont and Main that the state regulatory agencies raised their prices to prevent disorder within the market. Also, other smaller cooperatives which were not RCMA members were able to ride along on its coattails and collect over-order prices for their producers. At the time this dispute erose, Yankee controlled at least 57 to 67 percent and RCMA controlled at least 86 percent of the volume of milk in the three county area from which Fairdale procured its milk.? Some 40 percent of Fairdale’s milk supply came from producers who where members of an RCMA member cooperative.’ The dispute between the parties arose in the fall of 1974, when Fairdale refused to pay the RCMA premium to Yankee. Yankee responded that it was “pulling” (stop- ping shipment of) all its producers’ milk that went to Fairdale, even though the premium was imposed on only some of these producers’ milk. Although, upon Fairdale’s request, Yankee agreed to discuss the matter, it at one point instructed its producers to immediately withhold their milk from Fairdale. With this threat of cut-off of its necessary daily milk supply hanging over Fairdale, negotiations to find an acceptable basis for continued shipment failed, and relations were terminated as of January 1, 1975. ? Yankee’s former general manager testified that a 65 percent share of the market is required to impose the premium. * Fairdale had relationships with most of the Yankee producers that predated their cooperative affiliation. Thus, Fairdale dealt directly with the producers, picking up their milk and paying them directly, etc. 10 As a result of these actions, Fairdale incurred damages such as the extra cost of purchasing milk at spot milk prices from distant sources to cover its needs until it was able to develop other producer sources, and its ongoing costs in purchasing milk from new producers located out- side its usual procurement area. In addition, Fairdale lost a major supermarket account because, with the abnor- mally high price it was paying, it was unable to maintain its price at competitive levels. Fairdale also seeks damages for the excess amount it has paid under the Vermont state order whose price was raised as a direct impact of inflated RCMA prices. Prior Proceedings The Amended Complaint in this action was filed on June 4, 1976, and alleged that Defendants violated Sec- tions 1 and 2 of the Sherman Act (15 U.S.C. §1 and §2) and Section 7 of the Clayton Act (15 U.S.C. §18), by price-fixing, attempting to monopolize, monopolization, and anticompetitive mergers.‘ Defendants rely on Section 6 of the Clayton Act, the Capper-Volstead Act, and Sec- tion 5 of the Cooperative Marketing Act as defenses to their acts. The case came before the District Court on motions for summary judgment. Plaintiff and both Defendants mov- ed for summary judgment on Count I (the price-fixing count) and Defendants moved for summary judgment on Count II (the monopolization count). The District Court granted the Defendants’ motion for summary judgment on the price-fixing count and denied Defendants’ motion for summary judgment on the monopolization charge. The original complaint was directed against Yankee Milk, Inc., only. Upon motion of Yankee, RCMA was added as a necessary party under F.R.C.P. 19, and an Amended Complaint was filed. 11 Pursuant to certification by the District Court and per- mission by the Second Circuit Court of Appeals, cross- appeals on these questions were taken pursuant to 28 U.S.C. §1292(b). In their motion on the monopolization count, Defen- dants argued that without a showing of predatory prac- tices (they claimed there were none), they were immune from Sherman Act Section 2 liability for willful acquisi- tion and exercise of monopoly power by virtue of the Capper-Volstead Act. However, the District Court denied the motion for summary judgment on the monopoly charge, holding that a cooperative or group of co- operatives were entitled to no greater protection than an ordinary business corporation and, under the definition of monopolization set forth in U.S. uv. Grinnell Corp., 384 U.S. 563, 570-71 (1966), could be liable for a violation of Section 2 without a specific showing of predatory con- duct. Under Grinnell, two elements were required for proof of monopolization: (1) the possession of monopoly power in the rele- vant market, and (2) the willful acquisition of maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acument, or historic acci- dent. United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). The District Court held that the precise test of Grin- nell applied in this case, and refused to agree “with Defendants’ assertion that the Capper-Volstead Act adds to the elements of a monopoly claim when it is brought against a qualified cooperative“, stating that a plaintiff claiming an agricultural cooperative has violated section 2 has no greater burden than if he sued a corporation 12 The Court of Appeals for the Second Circuit reversed and vacated the District Court’s opinion on this Count. The Court of Appeals stated: By exempting farmers from Sherman Act limita- tions on the ability to combine into cooperatives, Capper-Volstead gives farmers the right to combine into cooperative monopolies. The Court then went on to hold: We conclude that Grinneii does not apply to monopoly power that results from such acts as the formation, growth and combination of agricultural cooperatives, but applies only to the acquisition of such power by other, predatory means. It is not a violation of an agricultural cooperative to carry out the legitimate objectives of their association which follow naturally from their attempts to achieve unity of effort and the voluntary elimination of competi- tion among themselves. In this way the Court resolved what it perceived to be the conflict between the Capper-Volstead exemption and the Sherman Act principles. Under the cross-motions for summary judgment on the price-fixing count, Fairdale argued that RCMA, whose sole function was to fix the price at which its members would sell their milk, was not engaged in marketing or any other collective activity specified in the Capper- Volstead Act, and thus this inter-cooperative combina- tion solely for the purpose of price-fixing was a per se violation of Sherman Act Section 1. However, the District Court adopted the reasoning of Judge Orrick in Northern California Supermarkets, Inc. v. Central Califor nia Lettuce Producers Cooperative,’ and of the Federal 413 F.Supp. 984, 987 (N. D. Cal. 1976), aff'd per curiam, 580 F.2d 369 (9th Cir. 1978), cert. den. 439 U.S. 1090 (1979). 13 Trade Commission in Central California Lettuce Pro- ducers Cooperative.* The District Court fcllowed Judge Orrick’s dicta: Moreover, I am of the opinion that even if Central engaged in no other collective marketing activities, mere price-fixing is clearly within the ambit of the statutory protection. It would be ironic and anomalous to expose producers, who meet in a cooperative to set prices, to antitrust liability, know- ing full well that if the same producers engage in even more anticompetitive practices, such as collec- tive marketing or bargaining, they would clearly be entitled to an exemption. The Court of Appeals affirmed this portion of the District Court’s opinion using the same reasoning. ARGUMENT We respectfully submit that this Court should grant a Writ of Certiorari to determine whether the Court of Ap- peals correctly extended the Capper-Volstead and Clayton Act exemptions to immunize conduct by agricultural cooperatives which would have subjected or- dinary business corporations to liability under the anti- trust laws. This is an important question of federal law, which is especially pressing given the recent growth of some agricultural cooperatives, particularly associations of milk producers, to positions of economic dominance in their product markets. In addition, we submit that the Court of Appeals has abandoned a fundamental rule of construction laid down by this Court, requiring that anti- trust immunity conferred by act of Congress be narrowly construed in any resolution of conflict with the Sherman Act. *(1977) Trade Reg. Rep. (CCH) para. 21,337 at 21,234 F. T. C.. 14 I. These Questions Are Important Issues of Federal Law Which Have Not Been, But Should Be, Decided by This Court. The importance of the delimitation of the Capper- Volstead exemption to the agricultural sector of our economy and in the national enforcement of antitrust laws is obvious. A brief review of the few Capper- Volstead cases bearing on these issues and the parameters of the arguments presented in this case demonstrate that these issues of first impression are ripe for review by this Court. A. The Monopolization Charge Count II of the Amended Complaint alleges that Yankee and RCMA have violated Section 2 of the Sher- man Act, 15 U.S.C. §2, by monopolizing or attempting to monopolize the raw milk market from which Fairdale ob- tains its supply. RMCA and Yankee argued below that the pleadings and record failed to show that they had engaged in any predatory practices and that absent such claims the Capper-Volstead Act gives them, as agricultural organizations which qualify under that Act, an exemption from the prohibitions of Section 2 of the Sherman Act. Defendants have taken the position that willful acquisition and exercise of monopoly power are permissible as long as the cooperative does not combine with non-exempt entities in unreasonable restraint of trade or engage in competition-stifling, predatory prac- tices. The Court of Appeals adopted this argument. The District Court had rejected Defendants’ arguments, and ruled that the Capper-Volstead Act does not add a requirement to Section 2 of the Sherman Act compelling a plaintiff to allege and prove predatory acts 15 in order to prevail against an agricultural cooperative or association of cooperatives. On that basis, the District Court denied Defendants’ motion fur summary judg- ment. Fairdale maintains, as the District Court did, that United States v. Grinnell Corp., 384 U.S. 563 (1966), pro- hibits the willful acquisition and exercise of monopoly power for agricultural cooperatives, as it does for or- dinary business corporations.’ The Court of Appeals, finding that the willful acquisition and maintenance of monopoly power is inherent in the formation, growth, and operation of a powerful cooperative, held Grinnell did not apply. Neither the text of the Sherman Act, Section 2, nor the Capper-Volstead Act suggest that predatory practices are an essential element of a Section 2 case. The Sher- man Act itself makes it illegal for persons to monopolize, attempt to monopolize, or combine with others to monopolize trade or commerce. The Capper-Volstead Act, on the other hand, permits farmers, including dairy farmers, to join together in cooperative associations for the purpose of processing, handling, or marketing their product. Nothing in the language of the Capper-Volstead Act suggest a repealer of Section 2 of the Sherman Act Standard Oil of New Jersey v. United States, 221 U.S. 1 (1911), also made it clear that it is the conscious purpose to gain monopoly power that is the essence of the offense, and this does not depend on proof of predatory practices. The Standard Oil Company was notorious for its predatory practices but most of these occurred before the Sher- man Act was enacted in 1890 and the Court noted that liability could not be based on such acts. The primary fact that was held to be a violation of both Sections 1 and 2 was the combining of most of the refining industry under a single holding company—not unlike the assembly through RCMA of most of the cooperatives in the market area. 16 or an addition of elements such as predatory practices to the Sherman Act. Very few federal cases even approach the issue. The Court of Appeals referred to a series of cases in which courts have found agricultural cooperatives guilty of violating Section 2 of the Sherman Act. Since all of these cases involve farmer organizations that had engaged in blatantly predatory practices, the Defendants have argued that Plaintiffs who sue qualified entities must show at least one act of this character in addition to prov- ing the elements of monopolization as set out in the Grinnell case. None of these cases contain a holding to that effect. No previous cases have reached the issue of whether the Grinnell standard is applicable to agricultural cooper- atives. Commentators have lamented the lack of definitive rulings on the question of the permissible ex- tent of cooperative market power. Areeda and Turner note “the critical questions, on which there is sur- prisingly little authority, of whether the antitrust laws limit a cooperative’s market power. Thus, the Court of Appeals decision is a highly signifi- cant authorization of monopolistic behavior by the Defendants and other agricultural cooperatives. Not only will this ruling adversely affect processors, consumers, and unaffiliated farmers, but may also have the unfor- tunate effect of leading cooperatives “down the garden path”’ to conduct which may later be determined to be il- legal. The case has been fully briefed and argued below and is ripe for decision of this Court. "1 Areeda and Turner. Antitrust Law. 180. 17 B. The Price-Fixing Count This case is the first in any jurisdiction to present the clear issue of whether a group of cooperatives may establish a meeting ground solely to raise prices if they perform no other services and thus offer no efficiencies benefitting the individual cooperatives, their purchasers, or the consumer. The issue raises serious policy concerns, which require harmonizing the Capper-Volstead Act with the antitrust laws. One aspect of the price-fixing issue in this case is whether Capper-Volstead entities are immunized from liability under Sherman 51 for inter-cooperative activity. This Court has held that Capper-Volstead cooperatives may be liable under Section 1 of the Sherman Act for combinations with non-Capper-Volstead entities.* And, it has held that qualified Capper-Volstead cooperatives, made up of the same three members and for all practical purposes one organization, were one entity and thus could not be conspirators under Section 1.“ These cases, however, provide the two extremes—combination with a non-Capper-Volstead entity, which is not exempt, and “conspiracy” by a Capper-Volstead entity with itself, which is exempt. This case presents a different situation—a combination of several Capper-Volstead entities which are all (with the exception of the marketing agency and the two * U.S. v. Borden, 308 U.S. 190, 84 L.Ed. 186, 60 S.Ct. 182 (1939); Na- tional Broiler Marketing Association v. United States, 436 U.S. 816, 56 L.Ed.2d 728, 88 S.Ct. 528, reh. den. 390 U.S. 930, 19 L.Ed.2d 995, 88 S.Ct. 846 (1978). % Sunkist Growers Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 8, at 29, 8 L.Ed.2d 305, 82 S.Ct. 1130, reh. den. 370 U.S. 965 (1962). 18 cooperatives it markets for) entirely separate entities having separate members, who come together solely for the purpose of price-fixing. The other aspect of the issue under Section 1 of the Sherman Act is whether RCMA is a bona fide marketing agency in common”, when its sole activity is price-fixing. Fairdale maintains that, because Capper- Volstead only authorizes certain collective activity, (i.e. processing, preparing for market, handling, and market- ing), price-fixing is permissible only to the extent that it is incidental to a collective marketing program, or other collective activity specified in the Act.“ There is nothing in the Capper-Volstead Act that specifically provides for naked price-fixing as the sole activity of a group of co- operatives. Defendants have relied on two Ninth Circuit Court of Appeals cases in which the Court approved certain price fixing behavior by Capper-Volstead entities. The first case, Treasure Valley Potato Bargaining Association v. Ore-Ida Foods, Inc., 497 F.2d 203 (9th Cir.), cert. den. 419 U.S. 999 (1974), approved activities of two bargain- ing cooperatives, each composed of individual potato farmers, which bargained with buyers for the best price on behalf of their members. The two coops agreed on the prices and terms of contracts before setting out to ''The Court of Appeals stated in its opinion that Fairdale argued that Capper-Volstead gives only single cooperatives, rather than associations of cooperatives, the right to price fix. This is a misunder- standing of Fairdale’s unitary position, which is that whatever RCMA is called under the Capper-Volstead Act, it only has a right to price fix if such activity is inherent in other collective activity it performs. Because RCMA engages in no other collective activity it cannot fix prices. As a practical matter, however, the Court does not have to address the question of whether an association or producers may price-fix, since RCMA claims to be a “common marketing agen- ey and is comprised of associations, not producers. 19 bargain with the potato buyers. As a practical matter, once one coop had settled on terms with the buyer, the other coop received the same terms. The Court reasoned that if the coops could have marketing agents in com- mon, they could ect together in marketing their pro- ducts, on the theory that what an agent could legally do, so too could the principal. 497 F.2d at 214. In Northern California Supermarkets Inc. v. Central California Lettuce Producers Cooperative, et al., 413 F.Supp. 984 (N.D. Cal. 1976), aff'd per curiam 580 F. 2d 369 (9th Cir. 1978), cert. den. 439 U.S. 1090 (1979), the District Court, which was affirmed without further opi- nion by the Court of Appeals, found Treasure Valley, supra, to be controlling. The District Court, Judge Orrick presiding, approved a cooperative of lettuce growers whose most significant function was to decide price brackets for its members to charge. The Court held that the coop’s activities fell within the term marketing as broadly construed in Treasure Valley. 413 F.Supp. at 992. From this case comes the dicta relied on here that since the coop could have engaged in the much more anticompetitive conduct of collectively marketing and bargaining, it would be anomalous to hold it responsible for merely price fixing. 413 F.Supp. at 992. Both these cases involve fact situations which fall short of the instant case. In Treasure Valley, the bargaining coops, in their negotiations with the buyers, were, as a practical matter and with each other’s con- sent, actually also bargaining for the other; thus the price-fixing was incidental to the joint bargaining activi- ty. In Central Lettuce, the coop was an organization of individual producers, not cooperatives, and actually engaged in promotional and other activities on behalf of . 20 its members. The instant case, in contrast, involves an organization of cooperatives which has no joint activity except price-fixing. Fairdale maintains that to hold that bald price-fixing is marketing does violence to the intent and wording of the Capper-Volstead Act, and cannot find legalization in any way other than by falling within the express terms of the statute. There are good reasons for allowing collec- tive activities, such as marketing and processing, since they may result in cost savings through economies of scale. Price-fixing is anticompetitive activity which has no such benefits. Further, Fairdale contends that the Court's rationale, that because farmers and their coops could combine into entities that could be even more anti- competitive they should be allowed to engage in price- fixing, is a novel theory that is not applied to other business entities, and therefore not authorized by Capper-Volstead. Again, there is a lack of authority on this very crucial issue. One commentator, complaining that the law con- cerning the exception is “extraordinarily undeveloped”’, pointed particularly to the lack of authority on the ques- tion of mergers of cooperatives and agreements between cooperatives. Another notes the lack of court com- ment on the power of producers and associations of pro- ducers to merge and to have marketing agencies in com- mon.“ The Department of Justice's 1977 Study on Milk Marketing also noted that the law on marketing agen- cies in common needed to be clarified." '? Mahaffie, Cooperative Exemptions Under the Antitrust Laws: A Prosecutor's View, 22 Ad. L. Rev. 435, 441-442 (1969-1970). '? Hafstedler, A Prediction: The Exemption Favoring Agricultural Cooperatives Will Be Reaffirmed, 22 Ad.L.Rev. 455 at 463-465. „Milk Marketing, A Report of the U.S. Department of Justice to the Task Group on Antitrust Immunities 583-85 (Jan. 1977). 21 Again, in the vacuum of case law on these topics, the Second Circuit’s decision in this case has enormous im- pact. The decision, approving both price-fixing and market control, puts an extremely powerful tool into the hands of cooperatives with which to attain market con- trol and demand higher prices. II. The Court of Appeals Decision Conflicts With Prior Analysis of the Exemption by This Court. The decision of the Court of Appeals in many ways ig- nores this Court’s decisions interpreting the Capper- Volstead exemption. In its first Capper-Volstead case, U.S. v. Borden, 308 U.S. 188 (1939), this Court stated: It is a cardinal principle of statutory construction that repeals by implication are not favored. When there are two acts upon the same subject, the rule is to give effect to both if possible. 308 U.S. at 198. Borden, of course, involved price-fixing agreements by an agricultural cooperative with other entities not covered by the Capper-Volstead or Clayton Acts. These agreements were challenged under Sherman Act 51. The Court found: The right of these agricultural producers thus to unite in preparing for market and in marketing their products and to make the contracts which are necessary for the collaboration, cannot be deemed to authorize any combination or conspiracy, or con- spiracies, with other persons in restraint of trade 2 producers may see fit to devise. 308 U.S. at . In the instant case, however, rather than reconciling the exemption with the Sherman Act, the Court of Appeals 22 found that there is an inherent conflict between this provision (Sherman Act §2) and those of the Capper- Volstead ... ."’ The Court then went on to resolve this conflict in favor of broadly construing the exemption, on the theory that agricultural cooperatives were a favorite child of Congressional policy The Court of Appeals thus disregarded numerous pro- nouncements by this Court on the congressional policy favoring competition as the basis of the nation’s economic framework and barring repeals of the antitrust laws by implication”. In Maryland and Virginia Milk Producers Association v. United States, 362 U.S. 458 (1960), this Court held that the allegations against a cooperative under Section 2 of the Sherman Act, alleging anticompetitive activities “so far outside the legitimate objects of a cooperative that if proven would constitute clear violations of Section 2 were not immunized by the Capper-Volstead or Clayton Acts. 362 U.S. at 468. In its unanimous opinion, the Court stated: We believe it was reasonably clear from the very language of the Capper-Volstead Act, as it was in §6 of the Clayton Act, that the general philosophy of both was simply that individual farmers should be given through agricultural cooperatives acting as en- tities, the same unified competitive advantage—and responsibility—available to businessmen acting through corporations as entities. 362 U.S. at 466. Abandoning this clear interpretation of the extent of the exemption, the Court of Appeals chastised the District Court for “disregarding the fundamental dif- ferences between a cooperative and a corporation” by subscribing to the corporate monopolization test of Grin- nell. 23 And, in Case Swayne Co. v. Sunkist Growers, 389 U.S. 384, 19 L.Ed.2d 621, 88 S.Ct. 528 (1967), this Court again noted that Capper-Volstead was a special exemp- tion to a general legislative plan’’ and therefore the Court would not be justified in expanding its coverage. 389 U.S. at 393. The Court held that Sunkist lost its Capper-Volstead exemption when its members included those not engaged in the actual growing of agricultural products. A similar conclusion was reached by the Court in National Broiler Marketing Ass'n v. U.S., 436 U.S. 816, 56 L.Ed.2d 728, 88 S.Ct. 528, reh. den. 390 U.S. 930, 19 L.Ed.2d 995, 88 S.Ct. 846 (1978). This Court referred with approval to Justice Black’s summarization of the legislative history in Maryland and Virginia, supra. The Court held that members of the Broiler Marketing Association who did not own a breeder flock or a grow- out facility for chickens were not farmers under the Act, and thus were not entitled to the limited protec- tion of the Capper-Volstead Act . 436 U.S. at 828-829. These cases, following closely the language of the Capper-Volstead Act and limiting the scope of the ex- emption, indicate that the Court of Appeals should have been more circumspect in its delineation of the extent of the Capper-Volstead exemption. 24 Conclusion For the foregoing reasons, Petitioner respectfully re- quests that its Petition for a Writ of Certiorari be granted. Respectfully submitted, LANGROCK SPERRY PARKER & STAHL By: FRED I. PARKER, ESQ. SUSAN F. EATON, ESQ. Members of the Firm P.O. Drawer 351 Middlebury, Vermont 05753 (802) 388-6356 CHAPMAN & CLEARWATERS By: KEITH I. CLEARWATERS, ESQ. DUDLEY CHAPMAN, ESQ. 1700 K Street, N.W. Washington, D.C. 20006 (202) 223-4201 Counsel for Petitioner 25 Notice of Appearance IN THE SUPREME COURT OF THE UNITED STATES October Term, 1980 No. FAIRDALE FARMS, INC., Petitioner, vs. YANKEE MILK, INC., and REGIONAL COOPERATIVE MARKETING AGENCY, Respondents. NOW COME, Fred I. Parker, Esq. and Susan F. Eaton, Esq. of the law firm of Langrock Sperry Parker and Stahl, and Keith I. Clearwaters, Esq. of the law firm of Chapman & Clearwaters, and appear for the Peti- tioner, Fairdale Farms, Inc., in the above captioned mat- ter. 26 DATED this ___ day of March, 1981. LANGROCK SPERRY PARKER & STAHL By: FRED I. PARKER, ESQ. SUSAN F. EATON, ESQ. P.O. Drawer 351 Middlebury, Vermont 05753 (802) 388-6356 CHAPMAN & CLEARWATERS By: KEITH I. CLEARWATERS, ESQ. DUDLEY CHAPMAN, ESQ. 1700 K Street, N.W. Washington, D.C. 20006 (202) 223-4201 27 Certificate of Service WE, Fred I. Parker, Esq. and Susan F. Eaton, Esq., members of the firm of Langrock Sperry Parker and Stahl, P.O. Drawer 351, Middlebury, Vermont 05753, and Keith I. Clearwaters, Esq., of the firm of Chapman & Clearwaters, 1700 K Street, N.W., Washington, D.C. 20006, attorneys for the Petitioner in the above entitled cause, and members of the Bar of the Supreme Court of the United States, hereby certify that on the day of March, 1981, we served copies of the foregoing Petition for a Writ of Certiorari and all appendices attached thereto and our Notice of Appearance on Yankee Milk, Inc. and Regional Cooperative Marketing Agency, by mailing three copies thereof, in duly addressed envelopes with first class postage pre-paid, to the attorneys of rec- ord for said Respondents, Thomas D. Clifford, Esq., Shipman & Goodwin, 799 Main Street, Hartford, Connec- ticut 06103 and David P. O’Hara, Esq., Bond, Schoeneck & King, One Lincoln Center, Syracuse, New York 13202. FRED I. PARKER, ESQ. SUSAN F. EATON, ESQ. LANGROCK SPERRY PARKER & STAHL P.O. Drawer 351 Middlebury, Vermont 05753 (802) 388-6356 KEITH I. CLEARWATERS, ESQ. DUDLEY CHAPMAN, ESQ. CHAPMAN & CLEARWATERS 1700 K Street, N.W. Washington, D.C. 20006 (202) 223-4201 APPENDIX Opinion and Order of the United States District Court for the District of Vermont. UNITED STATES DISTRICT COURT For the District of Vermont FAIRDALE FARMS, INC., v. YANKEE MILK, INC., and REGIONAL COOPERATIVE MARKETING AGENCY, INC. YANKEE MILK, INC., v. FAIRDALE FARMS, INC. Civil Action File No. 75-140 The Capper-Volstead Act, 7 U.S.C. §291, allows farmers to organize cooperatives to strengthen their bargaining power in the markets where they sell their produce. This case raises questions about the scope of the protection this statute affords dairy cooperatives from suit under the federal antitrust laws. Plaintiff Fair- dale Farms, Inc. (Fairdale) charges in its two count Amended Complaint that the defendant cooperatives, Yankee Milk, Inc. (Yankee) and Regional Cooperative Marketing Agency, Inc. (RCMA), have fixed prices and 2a Appendix— Opinion and Order. monopolized the market in which Fairdale buys its raw milk. Defendants have moved for summary judgment on both counts; plaintiff seeks summary judgment on Count I, its price-fixing claim. We grant defendants’ motions on Count I and deny plaintiff's; we decline to give judgment on the monopoly claim and therefore deny (illegible). Facts Fairdale is what is known in the dairy industry as a handler which produces some of its own milk but primarily buys milk from local farmers, processes it and distributes it to retailers. Yankee is a cooperative incor- porated in Connecticut and composed of several thou- sand dairy farmers, or producers, from all over New England. Before this suit, many of Yankee’s members sold their milk to Fairdale. The Secretary of Agriculture has determined and the parties do not dispute that Yankee qualifies for the protection afforded by the Capper-Volstead Act. RCMA is an entity created in June, 1973, by seven northeastern dairy cooperatives, in- cluding Yankee, to fix the prices at which the cooperatives would sell their milk and to distribute among the cooperatives the additional income resulting from that price fixing. Membership in RCMA is limited to cooperatives that meet the requirements of the Capper-Volstead Act. In the northeast, both the Secretary of Agriculture and state agencies regulate the price of raw milk by imposing floors under the price handlers must pay producers. Nevertheless, in 1973 and 1974 producers faced rapidly increasing production costs that were not being met by rises in the regulatory floors. To protect their members 3a Appendix—Opinion and Order. from this cost-price squeeze, seven cooperatives formed RCMA which in September, 1973, set a price for its members’ milk above the federal floor (the production in- centive differential). Fairdale balked at paying this price and eventually stopped purchasing milk from Yankee members, because it feared that Yankee would interrupt its supply from the member-producers without adequate notice. This suit followed the breakdown in the Fairdale- Yankee relationship. Discussion 1. Count I: Price Fixing. Count I of the Amended Complaint alleges that defen- dants have violated section 1 of the Sherman Act, 15 U.S.C. 51. by fixing the price of raw milk. Since price ſix- ing is a per se violation of section 1 of the Sherman Act, see United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223 (1940), and defendants have conceded that RCMA was organized to facilitate agreement on price among the member cooperatives and has fixed prices; plaintiff asserts that it is entitled to judgment on Count I. Defendants argue that both Yankee and RCMA qualify for the protection of the Capper-Volstead Act which they claim permits agricultural cooperatives to fix prices notwithstanding the federal antitrust laws; they also seek judgment as a matter of law.“ Plaintiff does not contest that Yankee may fix the price its own members charge, but Fairdale does object to the claim that the Capper-Volstead Act also protects RCMA’s activity. Thus the resolution of the cross-motions for summary judgment on Count I turns on the application of the Capper-Volstead Act to RCMA and the functions it per- forms. 4a Appendix—Opinion and Order. The court is satisfied that Congress intended this Act to protect organizations like RCMA, which are composed of qualified cooperatives, to the same extent as the cooperatives themselves; RCMA is either an associa- tion or a marketing agen[t] in common.” 7 U.S.C. §291. See Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 19, 29 (1962) (refusal ‘‘to impose grave legal consequences upon organizational distinctions that are of de minimis meaning and effect): Treasure Valley Potato Bargaining Association v. Ore- Ida Foods, Inc., 497 F.2d 203, 213-17 (9th Cir.), cert. denied, 419 U.S. 999 (1974) (cooperation between two cooperatives in negotiating contracts with buyers pro- tected); Case-Swayne Co. v. Sunkist Growers, Inc., 355 F. Supp. 408, 415 (C.D. Cal. 1971) (cooperative of growers and smaller cooperatives protected); United Egg Pro- ducers v. Bauer International Corp., 312 F. Supp. 319, 320 (S.D.N.Y. 1970) (Capper-Volstead Act bars claim that qualified cooperatives conspired in violation of Sher- man Act section 1). This conclusion does not, however, dispose of plaintiff's principal argument—that the Capper-Volstead Act does not immunize from antitrust attack an organization that does nothing but fix prices. We recognize RCMA’s assertion that it performs more functions for its members than simply providing a vehi- cle for fixing prices, however, we decline to give any weight to this claim. Although it is apparent from the record that RCMA pools the funds its members eceive from the production incentive differential and distributes them fairly among the member cooperatives, we cannot regard this as a separate service. Rather, it is little more than a component of RCMA's price fixing. Similarly, the 5a Appendix—Opinion and Order. other activities RCMA points to, see Response of RCMA to Plaintiff’s Interrogatories (As Amended)—Third Set at 25-43 (filed Oct. 25, 1977), are necessary, or at least an- cillary, to RCMA’s satisfactory performance of its price- fixing function. Moreover, whether RCMA does anything other than fix prices is immaterial in light of our rejec- tion of plaintiff's principal argument. We now turn to the principal issue the Count I mo- tions raise—whether the Capper-Volstead Act immunizes from attack under section 1 of the Sherman Act an agricultural organization that does nothing but coor- dinate the price-fixing activities of its member cooperatives. We hold that it does. Since the legislative history of the Capper-Volstead Act is somewhat ambiguous and lacking in examples, it gives little assistance to deciding what specific functions a qualified entity can safely perform. See FTC Bureau of Competition, A Report on Agricultural Cooperatives at 28-40 (1975) [hereinafter cited as FTC Staff Study]. It is clear, however, that Congress intended the bill to put farmers organizations on an equal footing with business corporations in antitrust cases. Maryland and Virginia Milk Producers Association v. United States, 362 U.S. 458, 466 (1960). Thus a cooperative may fix the prices its members charge just as a corporation fixes the prices of its goods; it need not fear that a court will view each farmer as an individual who, by joining the cooperative and agreeing to the price, conspired to restrain trade in violation of section 1 of the Sherman Act. Id. Congress hoped that allowing farmers to act collectively as cooperatives would enhance their bargaining power against large corporate middlemen and perhaps enable 6a Appendix—Opinion and Order. the farmers to integrate vertically and take over the mid- dlemen’s functions. See, e.g., National Broiler Marketing Association v. United States, 436 U.S. 816, 824-28 (1978); Central California Lettuce Producers Cooperative, [1977] Trade Reg. Rep. (CCH) 421,337 at 21,235 (F. T. C.). But, since no ordinary business corporation exists simply to fix prices, this evidence of congressional intent pro- vides no answer to whether the Act protects a cooperative that just fixes prices. “In summary, although price-setting was clearly a contemplated activi- ty, the legislative history does not address the question whether or what kind of additional activity is required to qualify for the exemption.” [1977] Trade Reg. Rep. (CCH) 121.337 at 21,236. We have found only two decisions which address this question. Both the Federal Trade Commission (FTC) and the Northern District of California, in an opinion affirm- ed by the Ninth Circuit, have ruled that a combination which only fixes prices does not exceed the boundaries of the Capper-Volstead exemption. Both cases involved similar facts, because both arose from proceedings against the same entity, the Central California Lettuce Producers Cooperative (Central). Like RCMA, each of Central’s twenty-two individual and corporate members held a seat on the board of directors and on the cooperative’s executive committee. The committee met at least weekly to determine price policy which each member agreed to follow. Although Central advertised its own existence and at times of low sales engaged in some promotion of lettuce, generally each member handl- ed its own lettuce and conducted its own sales program. Central also provided a conduit for the exchange of infor- 7a Appendix—Opinion and Order. mation on lettuce production and on non-paying or com- plaining customers; however, “the primary activity of Central [was] to set prices or price ranges to which mem- bers [were] required to adhere in the sale of their lettuce.” Northern California Supermarkets, Inc. u. Central Califor nia Lettuce Producers Cooperative, 413 F. Supp. 984, 987 N. D. Cal. 1976), aff'd, 580 F.2d 369 (9th Cir. 1978), cert. denied, 99 S. Ct. 873 (1979). The FTC found that it was “clear that the activities of Central and its members violate[d] Sec. 1 of the Sherman Act. Central California Lettuce Producers Cooperative, [1977] Trade Reg. Rep. (CCH) 421,337 at 21,234 (F. T. C.). In both cases the question was whether Central qualified for the protections of the Capper-Volstead Act and section 6 of the Clayton Act even though its marketing! activities appeared to be limited to price fixing alone. Both the FTC and Judge Orrick acknowl- edged that neither the legislature histories of the statues nor earlier cases had addressed this specific question; nevertheless, both ruled in favor of the cooperative. Judge Orrick found support for his decision in Maryland and Virginia Milk Producers Association v. United States, 362 U.S. 458 (1960), in which Justice Black concluded from the legislative history that Con- gress intended the exemptions to make it possible for farmer-producers to organize together, set association policy, fix prices at which their cooperative will sell their produce, and otherwise carry on like a business corpora- tion without thereby violating the antitrust laws.” Jd. at 466. Since Justice Black stated that the activities set forth in section one of the Capper-Volstead Act were “among ‘the legitimate objects’ of farmer organizations,” 8a Appendix—Opinion and Order. id., Judge Orrick concluded that it is not necessary for a farmer association to engage in all of the enumerated activities to qualify for the exemption. 413 F. Supp. at 991. The Ninth Circuit’s opinion in Treasure Valley Potato Bargaining Association v. Ore-Ida Foods, Inc., 497 F.2d 203 (9th Cir.), cert. denied, 419 U.S. 999 (1974), also pointed Judge Orrick to his conclusion. The two plaintiff cooperatives in Treasure Valley bargained in behalf of their members for standard contracts with potato pro- cessors. Each cooperative would negotiate with one of the two processors to which its members sold potatoes. The cooperatives agreed that each would then seek the same terms in its negotiations with the second processor. Although this activity appears far more substantial than what Central did for its members, Judge Orrick ruled that the Ninth Circuit’s decision that the Capper- Volstead exemption protected the cooperatives from defendants’ price-fixing counterclaim was controlling in Central's case. He looked primarily at the broad defini- tion of marketing which the Ninth Circuit adopted: The aggregate of functions involved in transferring title and in moving goods from producer to consumer, in- cluding among others buying, selling, storing, trans- porting, standarizing, financing, risk bearing, and sup- plying market information. 497 F.2d at 215 (quoting Webster's New Collegiate Dictionary, 1953 Edition) (em- phasis added in Ninth Circuit opinion). Judge Orrick found: The aggregate of activities of Central constitute “collective marketing within the meaning of the phrase as defined in Treasure Valley. Here, as in 9a Appendix—Opinion and Order. Treasure Valley, Central was “supplying market in- formation and performing other acts. . involved in the transferring of title of the produce. But, even in Treasure Valley, the principal function of the cooperative was to set prices. 413 F. Supp. at 992 (emphasis in original) (citations omit- ted). He called the collective bargaining done by the Treasure Valley cooperatives but not by Central “a distinction without a difference. Id. RCMA neither bargains collectively for its members nor supplies them with market information. And, we have stated above that RCMA’s ancillary activities are of no consequence to our decision. We note, however, that RCMA acts as a clearinghouse for the equitable distribution of production incentive differential income among the seven members. Moreover, the members ap- parently exchange market information informally at their monthly price-setting meetings. See Affidavit of Arthur D. Little at 11, 440 (filed Sept. 5, 1978). These activities, together with RCMA’s price-fixing seem comparable to what Judge Orrick found adequate to entitle Central to protection. More significant than any comparison of activities, however, is Judge Orrick’s dicta: Moreover, I am of the opinion that even if Central engaged in no other collective marketing activities, mere price-fixing is clearly within the ambit of the statutory protection. It would be ironic and anomalous to expose producers, who meet in a cooperative to set prices, to antitrust liability, know- 10a Appendix—Opinion and Order. ing full well that if the same producers engage in even more anticompetitive practices, such as collec- tive marketing or bargaining, they would clearly be entitled to an exemption. Id. He based this opinion on the legislative history, but also felt that: “Protection for price-fixing follows from the effect of Section 6 fof the Clayton Act] and Capper- Volstead in equating an agricultural cooperative and its members with an individual business entity since a single business enterprise may set for itself even wholly unreasonable prices without violating Section 1. Id. at 993 (citing April v. National Cranberry Association, 168 F. Supp. 919, 921-22 (D. Mass. 1958)). This reasoning and language give strong support to defendants’ claims to summary judgment on Count I. The FTC also found Central entitled to the Capper- Volstead exemption. It first ruled that a cooperative need not engage in all the activities specified in the statute, rather Congress had simply listed functions an agricultural cooperative may perform. The Commission then faced the question presented to Judge Orrick: Whether Central was engaged in collective marketing.” The Commission found in the legislative history the congressional intent to allow farmers to organize into en- tities that would put them on a par with corporations but uncovered nothing to assist with the determination of whether Capper-Volstead protected an organization that did nothing but fix prices. Central California Lettuce Producers Cooperative, [1977] Trade Reg. Rep. (CCH) 121.337 at 21,236 (F. T. C.). Its examination of judicial in- terpretations of the statute began with Treasure Valley lla Appendix—Opinion and Order. and Judge Orrick’s decision in Northern California Super- markets. The Commission’s opinion acknowledged that latter’s view that price fixing alone was protected by the statute, but concluded simply: “Whatever ‘marketing’ activity excludes, it would surely seem to include establishing an asking price as an essential element of negotiations looking toward a sale.“ Id. at 21,237. It then turned to complaint counsel’s argument that the statute protects only agricultural organizations that resemble corporations, but the Commission found that, “the principal cases relied on by complaint counsel readi- ly accept intra-cooperative pricing agreements as a necessary incident of collective marketing. They do not establish a threshold for the cooprrative’s level of addi- tional activity below which this conduct becomes il- legitimate. Id. at 21,238. The Commission’s final conclusion rested on what it surmised Congress intended. It observed that Congress passed Capper-Volstead to confer on producer organiza- tions the same advantages enjoyed by corporations, but that when it acted Congress believed that farmer incor- poration was impossible. The Commissioner acknowl- edged that the explicit requirement: of the statute should be strictly applied, nevertheless, it rejected the notion that farmers could obtain Capper-Volstead protec- tion only by creating entities that_resembled and peform- ed many of the same functions as a corporation. Thus an organization that meets the explicit statutory require- ments and puts farmers in a position to bargain effec- tively with large buyers should be protected. How the farmers secure that position should, in the Commission's view, be largely irrelevant. “If, as in Treasure Valley, it 12a Appendix—Opinion and Order. is sufficient merely for the cooperative to unite producers in ‘collectively negotiating’ over price, legal consequences should not attach if the cooperative presents the results of its decisions through each member rather than through a single agent representing each member. Id. at 21,239. Like Judge Orrick, the Commission found the statute applied to the lettuce growers’ cooperative. The reasoning of these cases is highly persuasive; we hold that section 1 of the Capper-Volstead Act exempts from the constraints of section 1 of the Sherman Act a qualified agricultural organization that does nothing but fix prices. 2. Count 2: Monopoly Count II of the Amended Complaint alleges that defen- dants have violated section 2 of the Sherman Act, 15 U.S.C. §2, by monopolizing or attempting to monopolize the raw milk market from which plaintiff obtains its sup- ply. Defendants contend that the Capper-Volstead Act protects them from a monopoly claim like Count II unless either of them has engaged in predatory practices. Since neither the Amended Complaint nor the discovery documents reveal actions which can be characterized as predatory, they argue they are entitled to judgment. We disagree with defendants’ assertion that the Capper- Volstead Act adds to the elements of a monopoly claim Wien it is brought against a qualified cooperative; we deny their motions for summary judgment on Count II. “The offense of monopoly under §2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth 13a Appendix—Opinion and Order. or development as a consequence of a superior product, business acumen, or historic accident.’’ United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). The Supreme Court has defined monopoly power as ‘the power to con- trol prices or exclude competition.’ The existence of such power ordinarily may be inferred from the predominant share of the market. Jd. at 571 (quoting United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956)). The Sherman Act prohibition against attempts to monopolize is similar to the criminal law of attempt. Where acts are not sufficient in themselves to pro- duce a result which the law seeks to prevent—for in- stance, the monopoly—but require further acts in addition to the mere forces of nature to bring that result to pass, an intent to bring it to pass is necessary in order to produce a dangerous probabili- ty that it will happen. But when that intent and the consequent dangerous probability exist, this statute, like many others and like the common law in some cases, directs itself against the dangerous probabili- ty as well as against the completed result. Swift and Co. v. United States, 196 U.S. 375, 396 (1905) (citation omitted). Defendants argue that the Capper-Volstead Act per- mits qualified cooperatives to acquire monopoly power by legal means unless they engage in predatory prac- tices. They contend that the legislative history of, and the cases interpreting, the Capper-Volstead Act in the context of monopoly claims, require plaintiff to show the standard elements of a monopoly claim as well as at least one predatory act by one of defendants. The strongest 14a Appendix - Opinion and Order. support in the legislative history for this assertion is the rejection by Congress of an amendment offered during consideration of the Capper-Volstead Act. When it reported the bill to the full Senate, the Senate Judiciary Committee proposed to strike the present section 2 and substitute: lnlothing herein contained shall be deemed to authorize the creation of, or attempt to create, a monopoly, or to exempt any association organized hereunder from any proceedings instituted under {the Federal Trade Commission Act]. As quoted in FTC Staff Study at 37. The Senate rejected the proposal.’ But, in the words of the FTC staff, “it would not be fair to conclude from the vote that the Senate wanted agricultural cooperatives to have monopoly power. Neither side in the debate relished the thought of agricultural cooperatives holding monopoly power and in- flating consumer prices. The real issue was how monop- oly cooperative associations should be controlled. FTC Staff Study at 38. After reviewing the entire legislative history, the FTC Staff concluded: A fair distillation of Congressional sentiment as to cooperative size might then be: Cooperatives are free to attain the size necessary for efficient marketing and reduction of costs, but must not be allowed to inflate consumer—prices through monopoly power.” Id. at 40. In light of the general belief in Congress when the act was passed that the accumulation of monopoly power by agricultural cooperatives was highly unlikely, id, we cannot agree with defendants claim that Congress intended Capper- 15a Appendix - Opinion and Order. Volstead to give farmers greater freedom from the con- straints of section 2 of the Sherman Act than corpora- tions enjoy. Defendants also rely on a series of cases in which courts have found agricultural cooperatives guilty of violating section 2 of the Sherman Act. Since all of these cases involved farmer organizations that had engaged in predatory practices, defendants argue that plaintiffs who sue qualified entities must show at least one act of this character in addition to proving the Grinnel elements. We have found no decision, however, in which plaintiff's case lacked evidence of predatory practices and suffered dismissal. We do not doubt that proof of predatory prac- tices adds substantial weight to a plaintiff's monopoly claim, but we refuse to hold that it is a necessary ele- ment. The case that begins the line defendants rely on is Maryland and Virginia Milk Producers Association v. United States, 362 U.S. 458 (1960). The defendant dairy association supplied about eighty-six per cent of the milk in the relevant market. In addition to showing this market power, the government alleged that the defen- dant had engaged in predatory practices to exclude, eliminate or attempt to eliminate competition from other individual producers or cooperatives. Supporting this charge the statement of particulars listed a number of instances in which the Associa- tion attempted to interfere with truck shipments of nonmembers’ milk, and an attempt during 1939-1942 to induce a Washington dairy to switch its non- Association producers to the Baltimore market. The 16a Appendix— Opinion and Order. statement of particulars also included charges that the Association engaged in a boycott of a feed and farm supply store to compel its owner, who also owned an Alexandria dairy, to purchase milk from the Association, and that it compelled a dairy to buy its milk by using the leverage of that dairy’s in- debtedness to the Association. Id. at 468. The Court ruled that the Capper-Volstead Act did not bar this Sherman Act section 2 claim. After acknowledging that Congress intended the Capper- Volstead Act to allow agricultural cooperatives to do things that corporations were already permitted, the Court stated that this purpose, does not suggest a con- gressional desire to vest cooperatives with unrestricted power to restrain trade or to achieve monopoly by prey- ing on independent producers, processors or dealers in- tent on carrying on their own businesses in their own legitimate way. Id. at 466-67. Moreover, the Court quoted parts of the legislative history including: In the event that associations authorized by this bill shall do anything forbidden by the Sherman Antitrust Act, they will be subject to the penalties imposed by that law. Jd. at 467 (quoting H. R. Rep. No. 24, 67th Cong., Ist Sess. 3) (emphasis added). And: The Solicitor of the Department of Argiculture testified that it was his “opinion that if the farmers want to create monopolies or want to engage in un- fair practices in commerce, this bill certainly would not give them the right to do it, and they would have to get another bill. 17a Appendix—Opinion and Order. Id. at 467 n.16 (quoting Hearings before a Subcommittee of the Senate Judiciary Committee on H. R. 2373, 67th Cong., 1st Sess. 203) (emphasis added). The facts did not require the Court to distinguish between a simple monopolization that violated section 2 and a monopoliza- tion promoted by predatory practices. The Court's language and the basis of its decision—that the Capper- Volstead Act provides agricultural cooperatives no greater freedom from the antitrust laws than corpora- tions enjoy—support the inference that the Court would deny summary judgment to defendants here. Subsequent lower court cases have also involved monopolies promoted or maintained by predatory prac- tices. In North Texas Producers Association v. Metzger Dairies, Inc., 348 F.2d 189 (5th Cir. 1965), cert. denied, 382 U.S. 977 (1966), the court affirmed a jury verdict that the defendant milk cooperative had violated section 2 of the Sherman Act. The complaint charged the Association with monopolizing and attempting to monopolize the marketing of raw milk in the Dallas-Fort Worth area by (a) control of the supply, (b) control of trans- portation, (c) refusal to transport milk for non- members of the Association, (d) boycott and coer- cion against Metzger, (e covert attempt to purchase Metzger, (f) refusal to sell raw milk to Metzger unless Metzger stopped purchasing from Associa- tion’s competitors, (g) purchase of other milk plants. Id. at 191. The court’s survey of the record showed there was evidence to support these allegations as well as the verdict. In dicta the court acknowledged that Capper- 18a Appendix—Opinion and Order. Volstead allowed farmers to act together without con- travening the antitrust laws, but that otherwise, the association acts as an entity with the same responsibility under section 2 of the Sherman Act as if it were a private business corporation. Jd. at 194. This language recognizes that a plaintiff claiming an agricultural cooperative has violated section 2 has no greater burden than if he sued a corporation. The defendant milk cooperative in Bergjans Farm Dairy Co. v. Sanitary Milk Producers, 241 F. Supp. 476 (E.D. No. 1965), aff'd, 368 F.2d 679 (8th Cir. 1966), ac- quired the assets of a processor, engaged in predatory pricing and paid retail sellers secret rebates. In consider- ing whether the cooperative violated section 2, the court pointed out that Capper-Volstead was intended to in- crease farmers’ bargaining power, but the court applied the general rules of monopoly cases announced by Judge Learned Hand in United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945). The exemption from the antitrust laws is designed to enable farmers, who had previously suffered from a lack of bargaining in the sale of their products, to form cooperatives in order to get better terms and prices for their produce. Therefore, defendant Sanitary’s 55 to 60% control of raw milk in the St. Louis area was lawfully obtained. However, a lawfully-obtained power cannot be unlawfully used. Any use of monopoly power causes economic injury that the antitrust laws are designed to prevent. However, when a monopoly power, whether gained lawfully under the Capper-Volstead Act, under the patent laws, or by virtue of a natural monopoly, is 19a Appendix—Opinion and Order. used unlawfully, it gives rise to a violation of section 2 of the Sherman Act and amounts to unlawful monopolization, or attempt to monopolize. 241 F. Supp. at 483 (citation omitted). Concerning defen- dant’s secret rebates, the court noted: it is a predatory act which shows evidence of intent to monopolize under section 2 of the Sherman Act and constitutes part of a pattern of action aimed at monopolizing. Id. at 484 (em- phasis added). The court recognized that the mere possession of monopoly power did not violate the an- titrust laws, particularly in the case before it where the cooperative controlled only fifty-five to sixty per cent of the relevant market. But because the plaintiff had shown that defendant had specific intent to monopolize, it had established a section 2, attempt-to-monopolize violation. There is language in the opinion which one might con- strue to mean that Capper-Volstead protects a cooperative that holds monopoly power and avoids predatory practices, but we think the better interpreta- tion of the opinion as a whole is simply that a plaintiff can, with evidence of predatory practices, discharge its burden of showing intent to monopolize. Defendants also rely on Pacific Coast Agricultural Ex- port Association v. Sunkist Growers, Inc., 526 F.2d 1196 (9th Cir. 1975), cert. denied, 425 U.S. 959 (1976). and Ot- to Milk Co. v. United Dairy Farmers Cooperative Association, 388 F.2d 789 (3d Cir. 1967). Neither case supports their position. The Ninth Circuit in dicta did point out that the Capper-Volstead Act does not “im- munize cooperatives engaged in competition-stifling prac- tices from actions under the antimonopolization pro- 20a Appendix—Opinion and Order. visions of the Sherman Act 52,“ 526 F.2d at 1202, but this hardly means that predatory practices are a necessary element to plaintiff's claim here. Moreover, the court recited the standard elements of a monopoly claim announced in United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966), when approving the trial court’s jury instructions on that question. Even though the case in- volved monopolization of the distribution of fruit in Asia through an agreement with a non-exempt entity, not monopolization of production as in most agricultural co- operative cases, the court’s application of Grinnell to an agricultural cooperative supports plaintiff's position here. The only Sherman Act section 2 question before the Otto Milk court was whether plaintiffs had stated a suffi- ciently substantial claim under section 2 to support jurisdiction over a pendent state claim. The record show- ed that the cooperative had arrar od picketing of grocery stores that sold plaintiff's milk, because the plaintiff purchased its raw milk from non-member pro- ducers. The court found substantial plaintiff's claim that the cooperative had attempted to monopolize based on a deliberate, organized, determined maneuver to obtain a milk products monopoly in the particular market. 388 F.2d at 798. There is little in this case to comfort either party here. The strongest statement supporting defendants’ posi- tion appears in Judge Wyzanski's charge to the jury in Cape Cod Food Prooucts, Inc. v. National Cranberry Association, 119 F. Supp. 900 (D. Mass. 1954). Defen- dants make much of the statement that it is not a viola- tion of the Sherman Act or any other anti-trust act for a 21a Appendix - Opinion and Order. Capper - Volstead cooperative to acquire a large, even a 100 per cent, position in a market if it does it solely through those steps which involve cooperative purchas- ing and cooperative selling. Jd. at 907. But the context in which this assertion ‘appears reveals that Judge Wyzanski meant only to point out that monopoly power alone was insufficient to show a violation of section 2. In fact, in the next paragraph he siates: On the other hand, it would be a violation of the law, and it would be a prohibited monopolization for a person or group of persons to seek to secure a dominant share of the market through a restraint of trade which was prohibited, or through a predatory practice, or through the bad faith use of otherwise legitimate devices. In Shoenberg Farms, Inc. v. Denver Milk Producers, Inc., 231 F. Supp. 266 (D. Colo. 1964), the court made very clear that all Capper-Volstead does and all Judge Wyzanski intended was to shift the focus of antitrust analysis away from the individual members and onto the collective body as a single entity. In ruling that the cooperative alone could not be guilty of conspiracy that violated section 1 of the Sherman Act, the court stated: So far as the constituent producer-members of a Capper-Volstead cooperative are concerned, however, it appears probable, in the present state of the law, that the cooperative may lawfully acquire and exert significant market power—possibly even power con- ferred by monopoly status—so long as that power is acquired only by means of voluntary affiliation of producers with the cooperative. It is the cooperative, not its constituent members, which is the relevant entity. 22a Appendix—Opinion and Order. Id. at 268. But, after an extended quote from Judge Wyzanski's charge, the court ruled that the cooperative alone could violate section 2. In the case of the §2 allegations made in the com- plaint the provisions of §2 must be dealt with separately. Section 2 embodies, first of all, a sub- stantive prohibition, a prohibition which can be violated by a single business entity or any person acting on behalf of a business entity. .. . Id. at 269. Defendants have argued vigorously that the language of these cases indicates that courts should require plain- tiffs to show that qualified cooperatives have engaged in predatory practices. Moreover, they assert that Congress intended Capper-Volstead to afford farmers the power to bargain effectively in the markets where they sell their produce; this statutory purpose would be frustrated, they claim, if courts imposed monopoly liability in the absence of predatory practices, because cooperatives fearing antitrust lawsuits would be reluctant to recruit a sufficient number of members to acquire the market power Congress intended them to have. This fear may be real, but it does not justify affording cooperatives different treatment than corporations under section 2 of the Sherman Act. The legislative history of the Capper-Volstead Act as well as the cases that discuss it repeatedly demonstrate that Congress intend- ed the Act to put farmers on an equal footing with the corporations they faced in the marketplace, not to give them an unfair advantage. Section 2 of the Sherman Act 23a Appendix—Opinion and Order. - was intended to prevent concentration of economic power and to promote competition. Judge Learned Hand has explained the importance of these ends: Many people believe that possession of unchallenged economic power deadens initiative, discourages thrift and depresses energy; that immunity from competition is a narcotic, and rivairy is a stimulant, to industrial progress; that the spur of constant stress is necessary to counteract an inevitable disposition to let well enough alone. Such people believe that competitors, versed in the craft as no consumer can be, will be quick to detect oppor- tunities for saving and new shifts in production, and be eager to profit by them. United States v. Aluminum Co. of America, 148 F.2d 416, 427 (2d Cir. 1945). These considerations apply to agriculture and cooperatives no less than to industry and corporations; we decline to immunize agricultural cooperatives from competition. We hold that the Capper- Volstead Act does not require plaintiff to show that defendants have engaged in predatory practices; the elements of the claims plaintiff raises in Count II of its Amended Complaint are not changed because the defen- dants happen to be agricultural cooperatives. 3. Defendants Supplemental Motions for Summary Judgment. Defendants have filed supplemental motions for sum- mary judgment which address plaintiff's claim for damages. To the extent that these motions are addressed to the price-fixing claim alleged in Count I of the Amend - ed Complaint, we deny them as moot. 24a Appendix—Opinion and Order. The sole indication that these motions are addressed to Count II appears in a footnote in defendant's memoran- dum which asserts: Fairdale’s standing to claim monopolization in violation of Sherman Act §2 also is based upon Clayton Act $4, and the economic considerations of tenuous causation which apply to a claim of damage from purchases from competitors of a price-fixer in violation of Sherman 51 apply equally to a claim of damage from purchases from competitors of a monopolist in violation of Sherman §2. This is so because an analysis of proximate cause of a plain- tiff's damage for violation of Sherman §1 or Sher- man §2 each necessarily involves a determination of whether the defendants had sufficient market power to cause a competitor to raise its price following the lead of the price-fixers or monopolists. Con- sequently, the reasoning set forth in section I hereof, based upon the holding of the Mid-West Paper case, applies to exclude the damages in ques- tion whether the underlying alleged violation is grounded in section 1 or section 2 of the Sherman Act. Memorandum of the Defendant Yankee Milk, Inc. in Support of Its Supplemental Motion for Summary Judg- ment Addressed to Plaintiff's Alleged Damages at 16 n.12 (filed July 11, 1979). Defendants’ reliance on Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 573 (3d Cir. 1979), to support its claim to summary judgment on Count II is misplaced. In Mid-West Paper the Third Circuit ruled 25a Appendix—Opinion and Order. that a plaintiff who purchased bags from the competitors of alleged price fixers could not recover damages from the price fixers. The court relied primarily on Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), in which the Supreme Court held that indirect purchasers had no standing to sue price fixers. The Third Circuit pointed out that: Illinois Brick represents in effect the proposition that when defendants have fixed prices above the competitive market price, where the benefit derived by them is readily ascertainable, the objectives of the treble damage action are fulfilled when the defendants are required to pay the direct purchasers three times the overcharge. As explained in Illinois Brick, such an award not only deprives the violators of all the fruits of their illegality’’ and deters fur- ther wrongdoing, it also compensates those victims who are most likely to assume the mantle of private attorneys general for the injuries they suffered. Mid-West Paper, 596 F.2d at 585 (footnote omitted). Thus in price-fixing cases, the source and amount of defendants’ wrongful benefits are significant factors in determining who may sue and how much they may recover. The court recognized, however: A different problem is presented where prices are fixed below the competitive market price or where defendants engage in other forms of anti-competitive conduct, such as group boycotts, vertical restric- tions, or monopolization, since defendants’ benefits in those instances are not so readily ascertainable, 26a Appendix—Opinion and Order. and may not be sufficient to compensate those in- dividuals whose protection is the primary purpose of the antitrust laws. In such circumstances courts have awarded damages based upon the amount of injury suffered by the plaintiff rather than the benefits derived by the defendants. Id. at 585 n. 47. We think this difficulty in identifying the benefits of a monopoly is sufficient to distinguish price-fixing from monopoly claims in the context presented by defendants’ motions. Moreover, the elements plaintiff must show to establish a Sherman Act section two claim obviate at least part of the problem of complexity of the trial which troubled the Mid-West Paper court. “Apart from its speculative nature, any attempt to determine the effect of defendants’ overcharges upon their competitors’ prices would transform this antitrust litigation into the sort of complex economic proceeding that the Illinois Brick Court was desirous of avoiding if at all possible. Jd. at 585. At the trial in this case, plaintiff must show defen- dants have monopoly power in the relevant market. This evidence would be the first step in showing that defen- dants’ conduct caused prices to rise throughout the rele- vant market and damaged plaintiff. We do not mean to minimize the difficulty plaintiff faces in establishing the ~causal_link between defendants’ alleged monopoly and the darmages the supplemental motions address, however, we do not find this difficulty will result in sufficient com- plexity to justify summary judgment. Defendants also contend that we should limit to forty- five days the time period for which plaintiff can recover 27a Appendix—Opinion and Order. damages caused by defendants alleged termination of plaintiff's milk supply. We find no merit to this par! of defendants’ supplemental motion. Lee-Moore Oil Co. v. Union Oil Co., 599 F.2d 1299, 1302 (4th Cir. 1979). We deny defendants’ supplemental motions for sum- mary judgment. 4. Plaintiff's Motion for Summary Judgment on Defendant Yankee Milk’s First Counterclaim. Defendant Yankee Milk’s first counterclaim seeks to recover damages from the plaintiff for alleged violations of the Agricultural Fair Practices Act of 1967 (AFPA), 7 U.S.C. §§2301-2306. Plaintiff has moved for summary judgment on the counterclaim on the ground that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56. In the memorandum in support of its motion, Fair- dale first attacks the standing of Yankee to assert a claim under the AFPA and second, asserts that if Yankee does have standing, Yankee has not alleged facts that would support an AFPA cause of action. A. Standing The AFPA makes it unlawful for any handler knowing- ly to engage or permit any employee or agent to engage —_—_____—in—certain__prohibited—practices—enumerated—therein.* —____ Plaintiff is a handler by definition under the act. 7 U.S.C. §2302(a). The AFPA provides that any person injured in his business or property by reason of any violation, or combination or conspiracy to violate the pro- visions of the act by engaging in the forbidden practices may sue and recover damages therefor in an appropriate 28a Appendix—Opinion and Order. district court without respect to the amount in con- troversy. 7 U.S.C. §2305(c). The term “‘person’’ includes individuals, partnerships, corporations and associations. 7 U.S.C. 5230 2ʃd). Despite the rather clear language of the statute which seemingly permits Yankee to maintain its counterclaim plaintiff contends that defendant lacks the necessary standing to do so. The standing of a party to prosecute an action is determined by means of a two-part test as found in Sierra Club v. Morton, 405 U.S. 727 (1972) and Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150 (1970). That test provides that a plaintiff must suffer an injury in fact and that such injury must be “ ‘arguably within the zone of in- terests to be protected or regulated’ by the statutes that are claimed to be violated. Sierra Club, 405 U.S. at 773. Plaintiff argues that Yankee meets neither part of the test and Yankee asserts the contrary. Plaintiff relies on the legislative history of the AFPA to support its claim that the act was only intended to provide a remedy for individual producers against handlers who violate the act and not to provide a collec- tive remedy for a cooperative association of dairy farmers such as Yankee. In view of its interpretation of the intent of the act, Fairdale asserts that Yankee is without-standing to pursue its first counterclaim. Fair- dale points to various remarks of Congressmen at the time the act was being considered for passage’ as well as Butz v. Lawson Milk Co., 386 F. Supp. 227 (N.D. Ohio 1974) in which the Ohio district court stated after a 29a Appendix—Opinion and Order. review of the legislative history that the overriding pur- pose of Congress in enacting the Agricultural Fair Prac- tices Act of 1967 was to protect the individual producer of milk in his right.. , in effect, to unionize. Id. at 235. Yankee states that it enjoys no existence separate from its members for the purpose of determining injury and that an allegation of injury to Yankee necessarily sets forth injury to its individual members. It finds sup- port for this argument in the statement in Sierra Club that an “organization whose members are injured may represent those members in a proceeding for judicial review. 405 U.S. at 739, whereas an association which alleges injury to an abstract public interest may not. We hold that Yankee has standing to maintain its counterclaim. We agree with Butz that the principal pur- pose of the AF PA was to permit producers to unionize by forming or joining cooperatives free from coercion, in- timidation and other impermissible practices by handlers. We see no reason why the cooperative may not bring an action under the AFPA on behalf of its members alleged to have been collectively injured by activities prohibited by the act. The language of the act specifically includes among those who may sue for a violation of its pro- visions association as well as individuals and other business entities. We are satisfied that the words of the statute should be given their plain meaning, United States v. Cooper, 580 F.2d 259, 261 (7th Cir. 1978) (‘when words are free from doubt they must be taken as the final expression of the legislative intent’ (eita- tion omitted)); Sheehan v. Scott, 520 F.2d 825, 829 (7th 30a Appendix—Opinion and Order. Cir. 1975) (‘‘[wjords in statutes must be given their com- mon ordinary meanings.’’) See Yates v. United States, 354 U.S. 298, 305 (1957); Gemsco, Inc. v. Walling, 324 U.S. 244, 260 (1945); United States v. Goldenberg, 168 U.S. 95, 103 (1897). Yankee possesses the standing necessary to pursue its counterclaim. B. Genuine Issue of Material Fact We still must determine whether there is a genuine issue of material fact precluding judgment for Fairdale on the counterclaim as a matter of law. [On a motion for summary judgment the court can- not try issues of fact; it can only determine whether there are issues to be tried [citations omitted]. Moreover, when the court considers a motion for summary judgment, it must resolve all ambiguities and draw all reasonable inferences in favor of the party against whom summary judgment is sought, United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 8 L. Ed.2d 176 (1962), with the burden on the moving party to demonstrate the absence of any material factual issue genuinely in dispute, Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed.2d 142 (1970). This rule is clearly appropriate, given the nature of summary judgment. This pro- cedural weapon is a drastic device since its pro- phyilactic function, when exercised, cuts off a party's right to present his case to the jury. Donnelly v. Guion, 467 F.2d 290, 291 (2d Cir. 1972). 3la Appendix—Opinion and Order. Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317, 1319-20 (2d Cir. 1975). See First National Bank of Cincinnati v. Pepper, 454 F.2d 626, 629 (2d Cir. 1972). To determine whether Fairdale is entitled to judgment in its favor in light of the foregoing requirements, we ex- amined the depositions and other documents filed in this cause and counsel's interpretations thereof as well as the other arguments that the parties have urged upon us. The counterclaim itself merely states that Yankee “has reasonable grounds to believe that plaintiff did engage or permit its employees to engage in practices prohibited by $4 of the above-mentioned [Agricultural Fair Practices] Act, 7 U.S.C. 52303“ followed by a verbatim recitation of the prohibited practices as stated in section 2303. Plain- tiff contends that these vague allegations are insufficient to state a claim for violation of the AFPA. Yankee counters that its allegations are made sufficiently definite by its Answers to Certain Interrogatories of Fairdale, most notably number 57 of Plaintiff's Inter- rogatories addressed to the Defendant Yankee Milk, Inc.—Second Set, as well as Response 15 of Plaintiff's Response to Yankee’s First Set of Interrogatories, cer- tain deposition testimony referred to in Vankee's Memorandum in Opposition to Plaintiff's Motion for Par- tial Summary Judgment (filed October 2, 1978) and letter of Yankee’s counsel to the court dated September 28, 1979 (filed October 2, 1979). Fairdale in a letter from its counsel to the court dated October 10, 1979 (filed Oc- tober 22, 1979) in response to Yankee’s letter states that Yankee has still presented no issue in fact for the 32a Appendix—Opinion and Order. court’s determination. It buttresses this assertion by cer- tain exhibits attached to its letter including a newly filed affidavit of Robert T. Holden, president of plaintiff, dated October 10, 1979. The gist of Vankee's counterclaim centers upon the ac- tivities of Fairdale immediately preceding and following the severance of its relationship with Yankee in late 1974. But Yankee is able to point to only one specific in- stance of Fairdale’s alleged improper conduct. Such con- duct involves a meeting arranged by Fairdale on December 19, 1974, with various producers, including certain Yankee members, at which Fairdale distributed a comparative price list which purported to set forth the prices for all alternative markets to which the producers attending could ship their milk. This list omitted the Connecticut price which was also available to the pro- ducers and which was higher than the price Fairdale was then paying. Fairdale acknowledges that the Connecticut price was not on the list given out at the meeting but refers to deposition testimony of Fairdale officials that the omission was unintentional because they were unaware that there were producers in their market area who were receiving the Connecticut price. Eventually three of eleven Yankee producers’ returned to Fairdale but only after they were free to do so. Two of these producers returned only after their contracts with Yankee were properly terminated according to their terms. This was after they attended another meeting with Fairdale in January, 1975, at which Fairdale handed out a price comparison that included the Connecticut 33a Appendix—Opinion and Order. price. Fairdale also started to pay the Connecticut price to all of its producers prior to the time the Yankee pro- ducers returned to it. Regardless of whether the omission of the Connecticut price on the December 19, 1974, handout was inadver- tent or intentional, Fairdale asserts it did not violate any provisions of the AFPA. Based on the analysis contained in the October 10, 1979, letter from Fairdale’s counsel, p. 2, we agree. Whether or not plaintiff's failure to inform can be considered a significant act of deception it simply does not rise to the level of “‘coercion’’ or “refusal to deal“, 7 U.S.C. $2303(a), “discrimination”, id. §2303(b), or “intimidation”, id. §2303(c), against which the AFPA is designed to guard. Nor does it fit within the proscrip- tion of the remaining provisions of 7 U.S.C. 52303. Such conduct does not offer an inducement or reward to a pro- ducer for ceasing to belong to an association of pro- ducers, id. §$2303(d), nor is it the making of a false report about the finances, management or activities of associa- tions of producers or handlers, id. §2303(f). In their letter of September 28, 1979, counsel for Yankee described four events between December 12, 1974, and January 15, 1975, which Yankee contends “creates a strong inference that Fairdale’s acts, including the intentional omission [of the Connecticut federal order price], were calculated to induce the Yankee members supplying Fairdale to terminate the memberships with Yankee and continue as Fairdale suppliers.” There is nothing improper, however, in a handler’s dealing direct- ly with a producer even though the producer is a member of an association, Butz, 386 F. Supp. at 237, provided 34a Appendix—Opinion and Order. the handler does not act in a manner prohibited by the AFPA. The cumulative effect of the additional meetings and the fact that Yankee was not invited to participate simply does not bring Fairdale’s conduct within the am- bit of activities prohibited by the AFPA. We also do not believe that Yankee’s conclusory and general answers to number 57 of plaintiff's second set of interrogatories ade- quately present a genuine issue of material fact respec- ting a violation of the AFPA. This is particularly so in light of the October 10, 1979, affidavit of Fairdale’s president, Robert T. Holden, which expressly refutes Yankee’s claim of impermissible conduct by Fairdale in those areas described by Yankee’s answer to inter- rogatory number 57. Yankee argues that its effort to explore further factual bases for its counterclaim has been impeded by Fair- dale’s failure to comply fully with discovery requests and that such failure deprives Fairdale of the right to sum- mary judgment. Fairdale replies that it has fully re- sponded to Yankee’s discovery requests and Yankee’s “failure to come up with facts evidencing a violation is solely because such facts do not exist, not because plain- tiff has failed to respond to discovery requests. Whether or not Fairdale has responded to Yankee’s various interrogatories and requests for production as H ullx- as Yankee would like. we are persuaded that Fair- dale has responded adequately and we cannot accept Yankee’s argument that its inability to be more definite with respect to the underlying factual basis for its counterclaim results from Fairdale’s inadequate re- sponses. 35a Appendix—Opinion and Order. Nothing in the documents that have been called to our attention demonstrates a factual question concerning a violation of the AFPA by Fairdale and Fairdale has suf- ficiently demonstrated that there is none. We are satisfied that Fairdale has met its burden of persuasion on the summary judgment motion. We recognize that Yankee, as the non-moving party has no burden to establish that there is such an issue for resolution on trial and, of course, all ambiguities must be resolved and reasonable inferences must be drawn in its favor. Never- theless, the parties have engaged in extensive and inten- sive discovery proceedings since the outset of this mat- ter and there has been ample time and effort expended by each for Yankee to have developed at least some evidentiary support for its first counterclaim if there were any. We do not deem it sufficient for Yankee to simply rely on a claimed failure of Fairdale to respond to discovery. It has some obligation to point out to the court with at least a minimal degree of specificity those facts in dispute that would make summary judgment inap- propriate. For instance, there are sources other than Fairdale, such as the producers involved in the trans- action, whether they left or stayed with Yankee, who would presumably be cognizant of AFPA violations if they were any. We can, without shifting the burden of proof, consider Yankee’s failure to refer to sources other than Fairdale as having a bearing on the issue before us, especially given the length of time the action has been pending and the extensive discovery efforts in which the parties have engaged over a four year period. * 36a Appendix—Opinion and Order. Since we consider Fairdale has met its burden and we can ascertain no factual issues to be resolved at trial and none have been called to our attention with respect to Fairdale’s alleged violation of the AFPA, we grant plain- tiff's summary judgment motion to Yankee’s first counterclaim. 28 U.S.C. §1292(b) We find that our decisions on both counts of plaintiff's Amended Complaint and Yankee’s first counterclaim in- volve controlling questions of law as to which there are substantial ground for difference of opinion. Since rever- sal of our decision on Count I would render meaningless the four to six week trial which counsel anticipate, and since reversal of our denial of summary judgment on Count II would preclude such a trial, an immediate ap- peal from the order would materially advance the ultimate termination of the litigation. We note that this case is the kind of “ ‘protracted and expensive litigation, as in antitrust and similar protracted cases. Medomsley Steam Shipping Co. v. Elizabeth River Ter- minals, Inc., 317 F.2d 741, 743 (4th Cir. 1963) (quoting 1958) U.S. Code Cong. & Ad. News at 5260-61), which Congress intended the 28 U.S.C. §1292(b) procedure to expedite if either or both of the parties elect to take ad- vantage of it. 37a Appendix—Opinion and Order. Conclusion We deny plaintiff's motion for summary judgment on Count I of its complaint and grant its motion for sum- mary judgment on defendant Yankee’s first counter- claim. We grant defendants’ motions for summary judg- ment on Count I and deny their motions on Count II; we also deny defendants’ supplemental motions for sum- mary judgment. Dated at Burlington in the District of Vermont, this lst day of November, 1979. ALBERT W. COFFRIN District Judge 38a Opinio: f the United States Court of Appeals for the Second Circuit. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT * f Nos. 1128, 1412, 1413—September Term, 1979 (Argued June 16, 1980 Decided December 9, 1980) Docket Nos. 80-7028, 7034, 7036 - FAIRDALE FARMS, INC., Plaintiff-Appellant- Cross-Appellee, —vVv.— YANKEE MILK, INC. and REGIONAL COOPERATIVE MARKETING AGENCY, INC., Defendants-Appellees- Cross-Appellants. Before: VAN GRAAFEILAND and KEARSE, Circuit Judges, and NICKERSON, District Judge. * >—- Appeal from an order of the United States District Court for the District of Vermont, Coffrin, J., granting Ot the Eastern District of New Vork. sitting by designation. 6629 39a Appendix—Opinion of the United States Court of Appeals for the Second Circuit. summary judgment to defendants on plaintiff’s cause of action under section 1 of the Sherman Act, 15 U.S.C. § 1, and denying summary judgment to the defendant on plaintiff’s cause of action under section 2 of the Act, 15 U.S.C. § 2. That part of the order granting summary judgment is affirmed. That part of the order denying summary judgment is vacated, and the matter is re- manded to the district court for further consideration. * FRED I. PARKER, Middlebury, Vt. (Langrock, Sperry, Parker & Stahl, Middlebury, Vt., Susan Humphrey, and Chapman & Clearwaters, Washington, D.C., Keith I. Clearwaters and Dudley H. Chapman, on the brief), for Plaintiff-Appellant-Cross- Appellee. Davio P O'HARA, Syracuse, N.Y. (Bond, Schoeneck & King, Syracuse, N.Y., John M. Freyer and David R. Sheridan, on the brief), for Defendant-Appellee-Cross- Appellant Regional Cooperative Market- ing Agency, Inc. ANDREA LIMMER, Washington, D.C. (Attor- ——— 5 ney, Department of Justice, Washington, D.C., Sanford M. Litvack, Assistant Attorney General, and Barry Grossman, on the brief), for United States of America as amicus curiae. FREDERICK U. CONARD, IR., Hartford, Ct. (Shipman & Goodwin, Hartford, Ct., H. Martyn Owen, Theodore M. Space, 6630 40a Appendix-—Opinion of the United States Court of Appeals for the Second Circuit. Thomas D. Clifford and Peter W. Ben- ner, on the brief), for Defendant-Appel- lee-Cross-Appellant Yankee Milk, Inc. > VAN GRAAFEILAND, Circuit Judge: This is a certified appeal under 28 U.S.C. § 1292(b) from a decision and order of Judge Coffrin of the United States District Court for the District of Vermont. Plain- tiff Fairdale Farms, Inc. appeals from the summary dismissal of its claim under section 1 of the Sherman Act, 15 U.S.C. § 1, that defendants Yankee Milk, Inc. and Regional Cooperative Marketing Agency, Inc. (RCMA) illegally fixed raw milk prices. Yankee and RCMA appeal from the denial of their summary judg- ment motions to dismiss plaintiff’s claim that defen- dants monopolized and attempted to monopolize trade in raw milk in violation of section 2 of the Sherman Act, 15 U.S.C. § 2. We affirm that part of the order granting defendants summary judgment on the section 1 claim. We vacate that portion of the order dealing with the section 2 claim and remand to the district court for further proceedings consistent with this opinion. Plaintiff Fairdale is both a producer and dealer-proces- sor of milk. It is located near Bennington, Vermont and buys and sells in the Vermont, New York, and Massachu- setts area. Yankee is a milk producers cooperative with a membership of approximately 6,000 New England farmers. In 1973 minimum dairy prices for the north- eastern United States, set by the government under the Agricultural Marketing Agreements Act of 1937, 7 U.S.C. § 608c(5), were not providing an adequate return 6631 4la Appendix—Opinion of the United States Court of Appeals for the Second Circuit. to the farmers. In order to secure prices with which their members could live, Yankee and six other area cooperatives organized RCMA as an agricultural cooperative marketing corporation, whose primary func- tion was to establish prices for the member farmers’ milk. Between 1973 and 1975, these prices were usually higher than the federal order prices. Since August 1975, RCMA has not established an over-order price. Until 1974, Fairdale bought a large portion of its milk from Yankee members. However, in 1974 Fairdale ob- jected to paying the over-order price and, when negotia- tions with defendants proved fruitless, discontinued its purchases from Yankee farmers. In 1976, Fairdale brought this suit charging defendants with price fixing, monopolizing, and attempting to monopolize. Defen- dants alleged as an affirmative defense that the Capper- Volstead Act, 7 U.S.C. §§ 291-292, protected them against liability for the conduct of which Fairdale com- plained.' The adequacy of this defense is the issue on appeal. The Section 1 Count Price fixing arrangements are generally held to be per se violations of section 1 of the Sherman Act. White Motor Co. v. United States, 372 U.. 253, 260 (1963). The Capper-Volstead Act provides, however, that farmers may act together in associations in collectively marketing their goods, and the associations may make 1 Defendants also asserted a counterclaim against Fairdale for al- leged violation of the Agricultural Fair Practices Act of 1967, 7 U.S.C. §§ 2301-2306. The district court's dismissal of this counter- claim is not being considered on this appeal. 6632 42a Appendix—Opinion of the United States Court of Appeals for the Second Circuit. the necessary contracts to effect this purpose.’ Fairdale does not contest Yankee’s right under the Act to fix the prices its members charge. Confronted with Justice Black’s opinion in Maryland and Virginia Milk Pro- ducers Association v. United States, 362 U.S. 458 (1960), Fairdale does not have much choice. Examining the legislative history of Capper-Volstead, Justice Black found that Congress intended to permit farmers to organize together to “fix prices at which their coopera- tive will sell their produce.” Jd. at 466. Fairdale contends, however, that RCMA does not have the same price-fixing right as does Yankee, and advances two arguments in support of its contention. It asserts first that Capper-Volstead gives only single coopera- tives, not associations of cooperatives, the right to fix prices. Second, it contends that a cooperative association organized for the sole purpose of fixing prices is not entitled to Capper-Volstead protection. The district 2 The pertinent provisions of the Capper-Volstead Act read: Persons engaged in the production of agricultural products . may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing in interstate and foreign com- merce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations and their members may make the caer seed contracts and agreements to effect such purposes. 7 USC. § 291. Capper-Volstead was an cnlerqement of section 6 of the Clayton Act, 15 U.S.C. § 17, which provided: Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of. . . agricultural. . . organi- zations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combina- tions or conspiracies in restraint of trade, under the antitrust laws. 6633 43a Appendix—Opinion of the United States Court of Appeals for the Second Circuit. court rejected both contentions for reasons with which we agree. The Capper-Volstead Act permits the formation of “associations” which may perform marketing functions and which may have “marketing agencies in common.” The district court concluded that RCMA was one or the other of these organizations and that “grave legal conse- quences” should not be visited upon it as the result of a de minimis organizational distinction. Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 19, 29 (1962). See Treasure Valley Potato Bargaining Association v. Ore-Ida Foods, Inc., 497 F.2d 203, 213-17 (9th Cir.), cert. denied, 419 U.S. 999 (1974). Fairdale’s first argument is based upon a misreading of the Act and was properly rejected by the district court. Fairdale’s second argument is predicated upon a hy- per-technical reading of the statute. Capper-Volstead provides that farmers may act together in associations in collectively “processing, preparing for market, han- dling, and marketing” their products. Fairdale contends that RCMA must do more than just fix prices in order to get the benefit of this statute. In the only two prior proceedings in which this argument was made, it was rejected. Northern California Supermarkets, Inc. v. Cen- tral California Lettuce Producers Cooperative, 413 F. Supp. 984, 992 (N.D. Cal. 1976), aff'd, 580 F.2d 369 (9th Cir. 1978) (per curiam), cert. denied, 99 S. Ct, 873 (1979); Central California Lettuce Producers Coopera- tive, [1977] Trade Reg. Rep. (CCH) J 21,337 (FTC). The establishment of price is an integral part of marketing. Id. at 21,237. It would be strange indeed if participation in this portion of the marketing process, standing alone, would subject a cooperative to antitrust liability, when the exercise of the full range of activities covered by 6634 44a Appendix—Opinion of the United States Court of Appeals for the Second Circuit. Capper-Volstead would not. Northern California Super- markets, Inc. v. Central California Lettuce Producers Cooperative, supra, 413 F. Supp. at 992. We agree with the district court that Fairdale had no section 1 claim against the defendants. The district court did not err in granting the defendants’ motion for summary judgment on this claim. The Section 2 Count Section 2 of the Sherman Act makes it unlawful for any person to monopolize, attempt to monopolize, or conspire with another to monopolize, trade. There is an inherent conflict between this provision and those of Capper-Volstead which legitimize the collective action of farmers in the marketing of their products. By exempt- ing farmers from Sherman Act limitations on the ability to combine into cooperatives, Capper-Volstead gives farmers the right to combine into cooperative monopo- lies. The Act places no limits on combination; it does not forbid farmers from combining after their cooperative reaches a certain size. For a court to impose such limits and hold cooperatives liable for treble damages if they run afoul of a judicial standard would discourage the growth of these cooperatives. The Capper-Volstead Act recognizes that farmer cooperatives may grow into mo- nopolies and includes precautions to prevent abuse of monopoly power. Section 2 of the Act, 7 U.S.C. § 292, permits the Secretary of Agriculture to order a coopera- tive to cease and desist if it monopolizes or restrains trade “to such an extent that the price of any agri- cultural product is unduly enhanced by reason thereof. . . .” (emphasis added). 6635 45a Appendix—Opinion of the United States Court of Appeals for the Second Circuit. The district judge “[disagreed] with defendants’ asser- tion that the Capper-Volstead Act adds to the elements of a monopoly claim when it is brought against a qualified cooperative,” and stated that “a plaintiff claim- ing an agricultural cooperative has violated section 2 has no greater burden than if he sued a corporation.” Disregarding the fundamental differences between a cooperative and a corporation, the district judge sub- scribed to the corporate monopolization test of United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966), which proscribes the willful acquisition of monopoly power that is not the result of “a superior product, business acumen, or historic accident.” We believe that the district court misconstrued the congressional intent evidenced in Capper-Volstead. Although agricultural cooperatives have existed in the United States since the early 1800's, until the twentieth century they were mostly small local organizations with little power to bargain effectively on behalf of their members. Moreover, their growth was inhibited by both state and federal antitrust laws. Maryland and Virginia Milk Producers Association v. United States, supra, 362 U.S. at 464. See generally Note, Trust Busting Down on the Farm: Narrowing the Scope of Antitrust Exemp- tions for Agricultural Cooperatives, 61 Va. L. Rev. 341 (1975). When the Sherman Act was under consideration in 1890, an amendment was proposed that would have exempted agricultural cooperatives from the proscrip- tions of the Act. Although Senator Sherman did not believe that his bill applied to farmers’ associations, he apparently was willing to accept the amendment. How- ever, without explanation, it was deleted from the bill as enacted. See 1 Kintner, Federal Antitrust Law 58 4.8, 4.9, 4.12 (1980). Whatever the reason for deletion, the 6636 46a Appendix—Opinion of the United States Court of Appeals for the Second Circuit. Sherman Act, as interpreted by the Supreme Court, see Loewe v. Lawlor, 208 U.S. 274, 301 (1908), was a strong deterrent to the development of large agricultural cooperatives. The tremendous growth of the California fruit in- dustry brought about a drastic change in the merchan- dising of farm commodities. When California growers discovered the advantages of collectively processing and marketing their perishable fruit, large-scale, single com- modity cooperatives quickly assumed a dominant role in the industry. See, e.g., Sunkist Growers, Inc. v. Winck- ler & Smith Citrus Products Co., supra, 370 U.S. at 28- 29. Shortly after World War I, the concept of large-scale, cooperative commodity marketing began to spread to other parts of the country. Wheat, cotton, and tobacco growers, in particular, became involved in the regional commodity cooperative movement. Knapp, The Advance of American Cooperative Enterprise 7-12 (1973). See Liberty Warehouse Co. v. Burley Tobacco Growers’ Co- Operative Marketing Association, 276 U.S. 71 (1928). Legislatures in many states enacted enabling statutes excepting organizations of this type from the coverage of state antitrust laws. Tigner v. Texas, 310 U.S. 141, 145-47 (1940). The American Cotton Association was organized in 1919, and in 1920 a plan for the organiza- tion of state marketing cooperatives was adopted. An essential element of this plan, and one of the “‘8’ commandments of ‘commodity cooperative marketing’ ”, was that each cooperative should “control a sufficient proportion of the entire crop to be a dominant factor in the market. Knapp, supra, at 9. Congress was not unaware of what was taking place. Senator Walsh, the most vociferous opponent of Capper- Volstead’s anti-Sherman features, directed the attention 6637 47a Appendix—Opinion of the United States Court of Appeals for the Second Circuit. of his colleagues specifically to the fact that 93 per cent of California’s raisin growers were members of the Sun Maid Raisin Growers Association. See 62 Cong. Rec. 2164 (1922). Senator Capper pointed to the 1,100 mem- ber California Fruit Growers Exchange as the “type of cooperative that would find ‘definite legalization’” un- der Capper-Volstead. Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., supra, 370 U.S. at 28. Clearly, cooperatives “of such size and general activities” were contemplated by the proposed Act. Id. at 29. Proponents of Capper-Volstead, the prototype of which was introduced in 1919, see H.R. 7783 and S. 845, 66th Cong., Ist Sess. (1919), were convinced that farmers needed congressional help and, if there was any doubt on this score, it was dispelled by the severe agricultural depression of 1920. In the presidential election of 1920, both party plat- forms stressed the need for legislative protection of the cooperative movement. In 1921, Congress organized a Joint Commission of Agricultural Inquiry to investi- gate, among other things, the causes of the agricultural depression and the reason for the difference between the prices paid farmers and costs to consumers. Among the Commission’s recommendations was the enactment of legislation to strengthen the legal position of coopera- tives. Knapp, supra, at 21. A national Agricultural Conference was convened by the Secretary of Agriculture in January 1922, at which President Harding spoke. He assured the conferees that they would be afforded “ample provision of law under which they [might] carry on in cooperative fashion those business operations which lend themselves to that method. Id. at 23. The Conference’s Committee on the Marketing of Farm Products recommended “the 6638 48a Appendix—Opinion of the United States Court of Appeals for the Second Circuit. formation of strongly organized cooperative associations of farmers, preferably on a commodity basis.” Jd. at 24. It is little wonder, then, that Capper-Volstead and the major pieces of farm legislation that followed it strongly supported the cooperative movement. In Capper-Vol- stead, Congress did not simply broaden the scope of section 6 of the Clayton Act, 15 U.S.C. § 17, so as to bring cooperatives issuing capital stock within that section’s antitrust exemptions. Where section 6 spoke only in terms of cooperative purposes, i.e., “mutual help”, Capper-Volstead spelled out the broad range of activities in which the cooperative might engage, i.e., “processing, preparing for market, handling, and marketing.” See National Broiler Marketing Assn. v. United States, 436 U.S. 816, 824-25 (1978). In the Cooperative Marketing Act of 1926, 44 Stat. 802 (1926) (current version at 7 U.S.C. §§ 451-457), Congress authorized the Secretary of Agriculture to establish a division of cooperative marketi [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1981%3A1. Public record. Not legal advice.