Petition for Writ of Certiorari — United Dairymen of Arizona v. LaSalvia
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86 1702 [Siero Court, USS,
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No. : 20 1987
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CLERK
IN THE
Supreme Court of the United States
October Term, 1986
UNITED DAIRYMEN OF ARIZONA,
. Petitioner,
vs.
JEROME LaSALVIA and PEGGY LaSALVIA,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
SYDNEY BERDE
Counsel of Record
SYDNEY BERDE &
ASSOCIATES, P.A.
2206 American National
Bank Building
St. Paul, Minnesota 55101
(612) 291-8106
Counsel for Petitioner
ee nee enn nm
224-7631 - Review Publishing Ce., 287 E. 6th St., St. Paul, Minn. 55101 — 224-7631
iat
QUESTIONS PRESENTED
The trial court, on the basis of Respondents’ deposition
testimony and documentary evidence, granted Petitioner’s
motion for summary judgment dismissing Respondent’s uni-
lateral and concerted refusal to deal claims, filed in 1980, con-
cluding that there was no genuine issue of material fact as
to the finality of Petitioner’s refusal and that the cause of
action which accrued in 1975 was barred by the § 4B Clayton
Act four year statute of limitations. The questions presented
are the following:
1. Where a trial court grants defendant’s motion for sum-
mary judgment dismissing an antitrust action on statute of
limitations grounds on the basis of material facts relating to
the merits of the action affirmatively asserted by the plaintiff
in a fully developed discovery record, may an appellate court
review de novo and reverse the trial court’s finding of “no
genuine issue of material fact” as to the finality of defendant’s
refusal to deal on the basis of defendant’s denial of those
facts?
2. Whether an unlawful unilateral or concerted unequiv-
ocal refusal to deal gives rise to a cause of action when it
occurs and is not restarted by repeated requests which the
defendant refuses.
8. Whether a plaintiff who has suffered ascertainable anti-
trust damages more than four years prior to commencing an
action from a unilateral or concerted unequivocal refusal to
deal may avoid the bar of § 4B of the Clayton Act because
damages stemming from the prelimitation refusal may have
continued during the limitation period.
4. Whether Hanover Shoe Co. v. United Shoe Machinery
Corp., 392 U.S. 481 (1968) established an exception to the
settled rule that an antitrust claim accrues and the statute
of limitations begins to run each time that the defendant com-
mits an overt act that injures the plaintiff.
LIST OF PARTIES
Pursuant to Rule 21.1(b), Rules of the Supreme Court,
counsel for Petitioner certifies that the following is a complete
list of all parties to the proceedings below:
1. All parties listed in the caption of this petition.
2. Robert M. Girard, Petitioner’s manager.
38. Leonard Cheatham, Petitioner’s former president.
United Dairymen of Arizona has no parent or subsidiaries.
ii
TABLE OF CONTENTS
Page
Sa al Cl a alae ee ne el i
ee he ae Phe Se ey ii
eer en re eS Soe Ce) iii
Ee eases iv
I St ot Ye A 1
a ea ea al ae mie male als ele i ear 2
et es ae) LY 2
ee Se 3
Reasons for Granting the Writ ...-—s—s_i.............. 10
Conelusion | “ip pap aie Rey Ao SR peat whee
Appendix A.
Opinion of Court of Appeals ..................... A-1
Appendix B. ;
Order of District Court Denying Motion for
EES See ee A-14
Appendix C.
Order of District Court Granting Motion for
RS a a A Sra ~. A-19
Appendix D.
Judgment of Courtof Appeals........................ A-28
Appendix E.
Order Denying Petition for Rehearing and
Suggestions for Rehearing En Banc................ A-29
Appendix F.
Excerpts of Record in Court of Appeals .—s_—s—sadiwi.. A-30
ili
TABLE OF AUTHORITIES
Cases: Page
Akron Presform Mold Company v. McNeil
Corporation, 496 F.2d 230 (6th Cir.),
cert. denied, 419 U.S. 997 (1974) ............... 12
Anderson v. Liberty Lobby, Inc.,
USS. , 106 S.Ct. 2505 (1986) .......... 10
Ansul Co. v. Uniroyal, Inc., 306 F.Supp. 541
(S.D.N.Y. 1969), aff’d in part and rev'd in part
on other grounds, 448 F.2d 872 (2d Cir. 1971),
cert. denied, 404 U.S. 1018 (1972) .............. 14
Argus, Inc. v. Eastman Kodak Co., 801 F.2d 38
(2d Cir. 1986), cert. denied, 55 U.S.L.W. 3569
(U.S. Feb. 24, 1987) (No. 86-949) ........... a ee
Baker v. Chagrin Valley Medical Corp.,
[1985-1] Trade Cas. 166,622 ................... 13
Barnosky Oils, Inc. v. Union Oil Co. of Calif.,
Ue ee ee ee Gs PE cc ie es es 18
Catrett v. Johns-Manville Sales Corp.,
By & Be eho Y. | ieee 11,12
Celotex Corp. v. Catrett,
US. ——., 106 8.Ct. 2646 (1966) ........... 10, 11
Chapa v. Volkswagen of America, Inc.,
[1974-1] Trade Cas. 74,911 (D.D.C. 1974) ...... 14
Charlotte Telecasters, Inc. v. Jefferson-Pilot
Corp., 546 F.2d 570 (4th Cir. 1976) ............. 14
Crummer Co. v. Du Pont,
208 F.3a S88 (ite Cir. 1960) -...:........... 17, 18, 20
Electro Glass v. Dynatex Corp.,
497 F.Supp. 97 (N.D. Cal. 1980) ............... 18
Exchange National Bank of Chicago v. Touche Ross
& Co., 544 F.2d 1126 (2d Cir. 1976) ............. 12
iv
aap sroen
Fontana Aviation v. Baldinelli, 418 F.Supp. 464
(W.D. Mich. 1976), aff’d per curiam,
575 F.2d 1194 (6th Cir.), cert. denied,
Ge are ee er eee ss 19 -
Garelick v. Goerlich’s, Inc.,
323 F.2d 854 (6th Cir. 1983) ................ 13, 15, 21
Hanover Shoe Co. v. United Shoe Machinery Corp.,
See Uae eee Cees Se ASS ii, 9, 20, 21
Hanover Shoe, Inc. v. United Shoe Machinery Corp.,
way we tee cee Ore, NOE ni ek 20, 21
Heiniger v. City of Phoenix,
G25 F.2a S42 (9th Cir. 1080) ................... 11
Imperial Point Colonnades Condominium, Inc. v.
Mangurian, 549 F.2d 1029 (5th Cir.),
cert. denied, 434 U.S. 859 (1977) ............... 14, 15
Lew v. Kona Hospital,
164 F.2d 1420 (9th Cir. 1985) ................. 11n.5
Loehr v. Ventura County Community College District,
743 F.2d 1310 (9th Cir. 1984) .................. 11n.5
Manok v. Southeast District Bowling Association,
306 F.Supp. 1215 (C.D. Cal. 1969) ............. 14
Martino v. Santa Clara Valley Water District,
703 F.2d 1141 (9th Cir.), cert. denied,
oe Sea ee Ce = ee A ST 11n.5
Midwestern Waffles, Inc. v. Waffle House, Inc.,
734 F.2d 705 (11th Cir. 1982) ........... fie A 14n.8
National Souvenir Center v. Historic Figures, Inc.,
Jae Fae woe CC. CO Tie eee PEE 18
Norman Tobacco & Candy Co. v. Gillette Safety
Razor Co., 197 F.Supp. 333 (N.D. Ala. 1960),
aff’d, 295 F.2d 362 (5th Cir. 1961) __. PRE OAS. 14
Vv
Orgell v. Geary’s Stores, Inc.,
640 F.2d 936 (9th Cir.), cert. denied,
a a Si a bic bk ks 6, 8, 13
0.S.C. Corporation v. Apple Computer, Inc.,
792 F.2d 1464 (9th Cir. 1986) ................ 11n.5
Pioneer Co. v. Talon, Inc.,
462 F.2d.1108 (8th Cir. 1972) ................. 14
Poster Exchange, Inc. v. National Screen Service
Corp., 517 F.2d 117 (5th Cir.), reh’g denied,
520 F.2d 943 (5th Cir. 1975), cert. denied,
G8 TR. TS Ge 8 dcxieeeds. Hanes. 14, 15, 18, 21
Saunders v. National Basketball Ass’n.,
848 F.Supp. 649 (N.D. Ill. 1972) ............... 14
Southeastern Hose, Inc.-v. Imperial-Eastman Corp.,
[1973-1] Trade Cas. (74,479 (N.D. Ga. 1973) ..... 14
State of Utah v. Marsh,
740 F.2d 799 (10th Cir. 1984) .................. 12
Steiner v. 20th Century-Fox Film Corp.,
SOE PAS Tae Coe a ee is SS. 7,8
Suckow Borax Mines Consolidated, Inc. v. Borax
Consolidated, Limited, 185 F.2d 196 (9th Cir.),
cert. denied, 340 U.S. 943 (1950) ............. 11, 17,18
Trepel v. Pontiac Osteopathic Hospital,
599 F.Supp. 1484 (E.D. Mich. 1984) ........... 18,14
Zenith Radio Corp. v. Hazeltine Research, Inc.,
r Boe @ RS. errs ee 16, 17, 18, 19, 22
Statutes and Legislative Materials:
Clayton Act:
ee te ee 2 eer er errr ee 2
_ Section 4B, 15 U.S.C. § 15b _ $i, ii, 2, 5, 6, 9, 18, 16, 20, 22
vi
Sherman Act: Page
ee eee 3
oo A ee eee ae 3
28 U.S.C. § 1254(1) ...... EN Py on re OT Rg Pos 2
H.R. Rep. No. 422, 84th Cong. Ist eer (1955) 15
S. Rep. No. 619, 84th Cong. Ist Sess. (1955) 15
Federal Rules of Civil Procedure:
Rule 43(e) ets Se TR ast Bae ote ....12&n.6
ee esti y | 2, 3, 10, 12
Miscellaneous:
II P. Areeda & D. Turner, Antitrust Law,
1325b (1978) _.. 3 eee 14, 16, 20, 21
5 Moore’s Federal Practice, 943. 13 (1985) 12
L. Sullivan, Handbook of the Law of Antitrust,
SE ea ones Te
M. Wheeler and R. pa The Statute af
Limitations for Antitrust Damage Actions:
Four Years or Forty?, 41 U. Chi. L. Rev.
72 (19738) ee eee
10A C. Wright, A. Miller nad M. om Federal
Practice and Procedure, § 2723 (1983) 12
vii
IN THE
Supreme Court of the Cnited States
October Term, 1986
UNITED DAIRYMEN OF ARIZONA,
Petitioner,
vs.
JEROME LaSALVIA and PEGGY LaSALVIA,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
Petitioner, United Dairymen of Arizona, prays that a Writ
of Certiorari issue to review the judgment of the Ninth Circuit
Court of Appeals filed on November 21, 1986.
OPINIONS BELOW
‘The opinion of the court of appeals is reported at 804 F.2d
1118 (9th Cir. 1986) and appears herein as Appendix A. The
November 19, 1983 order of the district court denying defen-
dant’s original motion for summary judgment (App. B.) is
unreported. The December 21, 1984 order of the district court
granting defendant’s renewed motion for summary judgment
dismissing the complaint (App. C. at A-19) is unreported.
2
} JURISDICTION
The judgment of the court of appeals (App. D. at A-28)
was filed on November 21, 1986. A timely petition for rehear-
ing with suggestions for rehearing en banc was denied on
January 20, 1987. App. E. at A-29. The jurisdiction of this
Court is invoked under 28 U.S.C. § 1254(1).
STATUTES INVOLVED
Section 4 of the Clayton Act, 15 U.S.C. § 15:
[A]ny person who shall be injured in his business or
property by reason of anything forbidden in the anti-
trust laws may sue therefor . . . and shall recover three-
fold the damages by him sustained... .
Section 4B of the Clayton Act, 15 U.S.C. § 15b:
Any action to enforce any cause of action under sections
15, 15a or 15c of this title shall be forever barred unless
commenced within four years after the cause of action
accrued. ...
Rule 56, Federal Rules of Civil Procedure, Summary Judg-
ment:
(b) A party against whom a claim is asserted . . . may,
at any time, move with or without supporting affi-
davits for a summary judgment in his favor as to
all or any part thereof.
(c) .... The judgment sought shall be renvered forth-
with if the pleadings, depositions, answers to inter-
rogatories, and admissions on file . . . show that
3
there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a
matter of law. ...
(d) .... When a motion for summary judgment is
made and is supported as provided in this rule, an
adverse party may not rest upon the mere allega-
tions .. . of his pleading, but his response . . . must
set forth specific facts showing that there is a gen-
uine issue for trial. If he does not so respond, sum-
mary judgment, if appropriate, shall be entered
against him.
STATEMENT OF THE CASE
A. Introduction
Plaintiff-Respondents, Jerome and Peggy LaSalvia (La-
Salvias), filed this antitrust suit against Petitioner, United
Dairymen of Arizona (UDA) on March 31, 1980 for viola-
tions of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §$§ 1, 2
(1982). They claimed that commencing in 1974 and continu-
ing up until filing of their complaint they were damaged by
UDA’s unilateral refusal to buy their milk and a similar con-
certed refusal by Phoenix milk dealers caused by UDA’s full
supply contracts. After four years of discovery, the trial
court granted UDA’s motion for summary judgment, dis-
missing the action on statute of limitations grounds based on
its determination that there was no genuine issue of material
fact as to the finality of the refusals in May 1975.
The Court of Appeals for the Ninth Circuit reversed, hold-
ing that there was a material fact question relating to the
finality of UDA’s 1975 refusal; that the action is not barred
4
despite the finality of the refusal if Respondents suffered
harm during the damage period stemming from the 1975 re-
fusal and that Respondents’ allegation of “continuing harm”
continues the running of the statute, notwithstanding the
absence of further overt acts by UDA during the limitation
period.
B. Statement of Facts
Petitioner, United Dairymen of Arizona (UDA) is a coop-
erative association of dairy farmers. Jerome and Peggy La-
Salvia (LaSalvias) operate an independent “non-member”
dairy farm in Arizona. From 1955 until April of 1974 La-
Salvias disposed of their entire daily milk production to
Shamrock Foods, a Phoenix milk dealer, at the federally reg-
ulated “blend price” established by the United States Depart-
ment of Agriculture. App. A. at A-3 n.2. Commencing in
April 1974 and continuing thereafter, Shamrock reduced the
amount of milk it was willing to accept from LaSalvias.
LaSalvias’ offer of their excess milk production to other
Phoenix dealers and UDA was refused. App. C. at A-20-21.
As a result, LaSalvias were forced to dispose of their excess
production to other buyers outside of Arizona at a lower price.
App. A. at A-11. App. B. at A-15.
On March 31, 1980, approximately six years after UDA’s
and the Phoenix milk dealers’ initial refusal to buy their ex-
cess milk production, the LaSalvias commenced an antitrust
action against UDA alleging that (1) commencing in the
early 1960’s UDA entered into full supply agreements with
the Phoenix milk dealers except Shamrock which precluded
LaSalvias from selling milk to those dealers—a concerted
refusal to deal—and (2) unreasonably refused to purchase
LaSalvias’ excess milk—a unilateral refusal to deal in further-
5
ance of an unlawful monopolization of the market for the sale
of raw milk to the Phoenix dealers. App. A. at A-2-3, 7; App.
C. at A-20. They claimed as damages the difference between
the Order 131 monthly established “blend price” they would
have received by selling milk to a Phoenix dealer and the
price they did receive by selling their milk out of Arizona
plus “stunted growth” damages resulting from their fore-
closure from the Phoenix market. App. A. at A-10; App. F.
at A-56-59, 61-62, 66-68.
On August 22, 1983, following three years of discovery,
UDA moved for summary judgment on the grounds that the
refusals to deal of which the LaSalvias complained occurred
no later than May 1975 and were, therefore, time barred under
15 U.S.C. § 15b. On November 10, 1983 the trial court (Hon.
Carl A. Muecke, Chief Fudge) denied UDA’s motion on the
grounds that there was a question of fact as to whether UDA’s
refusal to deal in 1975 was irrevocable and final. App. B. at
A-18.
Following additional discovery, on June 24, 1984 UDA filed
a renewed motion for summary judgment on the same statute
of limitation grounds. On December 21, 1984 Judge Muecke
granted UDA’s renewed motion, noting in his Order that
“there is no material issue of fact” (App. C. at A-20) that
LaSalvias were aware in 1975 of UDA’s final and “very
emphatic” refusal and the refusal of the alleged conspiring
milk processors to deal with plaintiffs (A-20-21), that
“(p)laintiff[s] never contacted UDA between 1975 and the
time the action was filed’’ in March 1980 and that subsequent
“refusals by other processors were reaffirmations of the
original refusal(s) to deal.” App. C. at A-22-23. On the basis
of the evidence disclosed by a massive four year discovery
record, and the parties’ respective statements of undisputed
facts (A-20) the trial court found that:
6
Plaintiffs themselves knew of and believed they had a
cause of action in 1975... [and] believed that UDA’s
and the other handlers’ refusals to deal with them were
final; this finding is supported by Plaintiffs’ complaints
to the Justice Department . . . during 1975 and Plaintiffs’
own descriptions of their contacts with UDA.
App. C. at A-24.! The trial court noted further that LaSalvias’
attorney’s contemporaneous notes of a telephone conversa-
tion with UDA’s attorney in April 1975 reflected the clear
understanding that: “bottom line—won’t take milk from non-
member producer.” App. C. at A-21. Following another re-
quest by LaSalvia and refusal by UDA’s manager on May 23,
1975,2 LaSalvias “never again directly contacted UDA about
purchasing his milk until after this action was filed in 1980.”
App. C. at A-21.
Judge Muecke held that the LaSalvias’ claims were barred
by the Clayton Act’s four year statute of limitations based
upon the Ninth Circuit’s holding in Orgell v. Geary’s Stores,
Inc., 640 F.2d 936 (9th Cir.), cert. denied, 454 U.S. 816 (1981)
that the statute begins to run upon an initial unequivocal re-
fusal to deal and “that all refusals to deal subsequent to the
1 The trial court’s “finality” finding was based on record evidence
that following UDA’s refusal in 1974 to buy LaSalvias’ milk they
complained to the United States Department of Agriculture that
UDA was attempting to monopolize the raw milk market (A-20);
on UDA’s subsequent refusal in February 1975 conveyed by its
attorney to LaSalvias’ attorney (ibid.); LaSalvias’ February 1975
press release complaining that neither UDA nor any dealer would
buy his milk; Jerome LaSalvia’s deposition testimony that he
was told by UDA’s manager in February 1975 never to call again
(A-20-21), confirmed by Peggy LaSalvia as “very emphatic” (ibid.);
LaSalvias’ 1975 complaints to the Justice Department concerning
UDA’s unlawful monopoly (ibid.). See App. F. at A-30-55.
2 LaSalvia’s notes of the telephone call entered in his diary indicate:
“9:30—Girard—no-no-no—”. App. C. at A-21.
7
initial refusal [are] mere reaffirmations of the original de-
cision not to deal” (App. C. at A-22) which will not restart
the statute. He found, additionally, that “there were no uni-
lateral refusals to deal by UDA during the limitations period,
because Plaintiff never contacted UDA between 1975 and the
time the action was filed”* (App. C. at A-22) and that “Plain-
tiffs . . . allege no overt affirmative acts on the part of UDA
during the limitations period.” Jd. at A-24.
Responding to the argument based on Steiner v. 20th Cen-
tury-Fox Film Corp., 232 F.2d 190, 194 (9th Cir. 1956), that
the continuing concerted denial by UDA and the milk dealers
of Respondents’ access to the market continued the accrual of
their cause of action, the trial noted ‘“‘that.same case also
states :
‘. . » in order to start the running of the statute of lim-
itations there must be damage occasioned by an overt
act. In a continuing conspiracy causing continuing dam-
age without further overt acts, the statute of limitatione
runs, as we have noted, from the time the blow which
caused the damage was struck. Any further internal in-
jury affects the problem of how much should be claimed
in damages, not the problem of when the statute of
limitations commences to run. Otherwise, in a continuing
conspiracy, the cause of action would never fully develop,
nor would there be any limitation upon the right of action,
3 Judge Muecke did not accept as worthy of consideration alleged
“informal discussions between counsel for the parties at an un-
related legal meeting during 1977-78 as a contact between Plain-
tiffs and Defendants” (App. C. at A-22 n.1) but observed that in
any case “these refusals are reaffirmations of the initial re-
fusal(s)”. Ibid.
8
and the beneficent purpose of the statute to delimit the
right to sue would be defeated.’
Steiner, supra, 232 F.2d at 195” (emphasis by the court).
Here... there was no overt refusal to purchase Plain-
tiffs milk by UDA after 1975, because Plaintiffs never
again directly approached UDA until after this action
was filed in 1980. ...
.... While plaintiffs claim that other processors re-
fused to deal with them because of their contract with
UDA, they allege no overt affirmative acts on the part
of UDA during the limitations period.
App. C. at A-23-24.
The Court of Appeals reversed. Although it acknowledged
that “LaSalvias’ testimony suggests that the 1975 refusal was
in fact unequivocal” (App. A. at A-9), the Court found “[t]he
evidence on the finality of UDA’s refusal to deal . . . is am-
biguous” (A-8) based upon the denial of UDA’s manager that
he told “Jerome LaSalvia in 1975 that LaSalvia was not to
call again to request that UDA handle his excess milk pro-
duction.” App. A. at A-9. The Court concluded, therefore,
that the trial court had improperly “resolved a material fac-
tual question [as to the finality of UDA’s refusal] that would
ordinarily go to the jury.” Jbid. After noting that “the brief
opinion in Orgell [on which the trial court relied] does not
disclose the basis for its conclusion that the initial refusal
was both final and the source of plaintiffs’ injury” (App. A.
at A-9), the Court concluded (ibid.) :
We therefore place on defendants the burden of showing
that their initial refusal to deal was in fact final, and
that the finality of the refusal was conveyed to the
9
plaintiff. A self-serving allegation of finality made in
the course of litigation is insufficient to meet this
burden. *
The Court further held, however, that “[a] finding of
finality on remand will not... resolve the § 15b question.
oe If damage accrued during the four years preceding the
filing of the complaint, then the action is not barred despite
the finality of the refusal.” App. A. at A-10. The Ninth Cir-
cuit reversed the unilateral refusal “because plaintiffs allege
damage incurred within the statutory period.” Ibid. (Empha-
sis added.) j
Finally, the Court held that irrespective of the absence of
any overt acts on UDA’s part during the limitations period,
Respondents’ action is not barred to thé extent that they suf-
fered “continuing harm” during the limitations period from
UDA’s alleged use of long term supply contract to maintain
market dominance. The Court of Appeals relied for that con-
clusion on this Court’s holding in Hanover Shoe Co. v. United
Shoe Machinery Corp., 392 U.S. 481, 502 n.15 (1968) which,
according to the Ninth Circuit, “established a limited excep-
tion to the usual rule that an antitrust claim accrues when the
plaintiff incurs injury”. App. A. at A-11. Though the absence
of an overt act during the limitation period is uncontroverted,
the trial court’s error, according to the Court of Appeals,
was in:
refus[ing] to apply the continuing harm doctrine, look-
ing instead to the time the LaSalvias learned of the full
4If the reference to a “self serving allegation” is to the denial by
UDA’s manager of what he told LaSalvia, the “self serving allega-
tion” relates to a denial of liability, not an “allegation of finality”
of the refusal. If the “self serving allegations” are those of the
LaSalvias, they are admissions as to the finality of the refusal
and “self serving” only as to the merits of their claim.
10
supply contracts. Because the relevant inquiry is not
when they learned of the contracts but whether the harm
alleged continued into the four-year period preceding the
filing of the complaint, the summary judgment on the
concerted refusal to deal claim is reversed.
Id. at A-12. %
REASONS FOR GRANTING THE WRIT
1. THE COURT OF APPEALS “GENUINE ISSUE OF
MATERIAL FACT” STANDARD IS INCONSISTENT
WITH THE STANDARD FOR SUMMARY JUDGMENT
UNDER RULE 56(c) AS ARTICULATED BY THIS
COURT.
In Anderson v. Liberty Lobby, Inc., —— U.S. ——, 106
S.Ct. 2505, 2510 (1986) this Court noted that “the mere exis-
tence of some alleged factual dispute between the parties will
not defeat an otherwise properly supported motion for sum-
mary judgment; the requirement is that there be no genuine
issue of material fact.”” (Emphasis by the Court). In Celotez
Corp. v. Catrett, —— USS. , 106 S.Ct. 2548, 2550 (1986)
the Court held that the plain language of Rule 56(c), Fed.R.
Civ.P., mandates the entry of summary judgment, after ade-
quate time for discovery, against a party who fails to come
forward with evidence essential to that party’s case and that
there is nothing in Rule 56 that requires the moving party
to negate the opponent’s claim.
The basis of Respondents’ antitrust action is the claim that
UDA’s refusal to deal in 1975 was unlawful because it was
in furtherance of a monopoly—a claim which UDA denied.
The finality of that refusal is an issue separable from the
merits and is relevant only to the statute of limitations issue.
ER eae a PT TD
11
The Court of Appeals Opinion elides the distinction between
Petitioner’s denial addressed to the “immaterial” issue of
UDA’s unlawful conduct and the “material” fact issue of
UDA’s unequivocal refusal to deal as established by Respon-
dent’s allegations and admissions.
It defies logic and common sense to hold, as the Court of
Appeals did here, that a plaintiff who alleges as part of his
claim on the merits that the defendant has firmly, finally and
unlawfully refused to deal, may raise a “genuine” issue of
“material” fact as to that finality on the basis of the defen-
dant’s denial of the allegation. See Suckow Borax Mines Con-
solidated, Inc. v. Borax Consolidated, Limited, 185 F.2d 196,
205-206 (9th Cir.) cert. denied, 340 U.S. 943 (1950).
The Court of Appeals decision is the product of the Ninth
Circuit’s uniform rule that a grant of summary judgment is
reviewed de novo,°* irrespective of the issue or the extent of
the discovery record, and that findings by a trial judge in a
summary judgment proceeding are not entitled to deference
upon review. Heiniger v. City of Phoenix, 625 F.2d 842, 843
(9th Cir. 1980). The Ninth Circuit’s uniform and consistent
refusal to defer to a trial judge’s summary judgment findings
“ ‘undermines the traditional authority of trial judges to grant
summary judgment in meritless cases.’ ” Celotex Corp., supra,
106 S.Ct. at 2552, quoting Catrett v. Johns-Manville Sales
Corp., 756 F.2d 181, 187 (D.C. Cir. 1985) (Bork, J., dissent-
ing). Where a trial judge has granted a moving party’s Rule
56(c) motion on the basis of a fully developed discovery record
5 See, e.g. O.S.C. Corporation v. Apple Computer, Inc., 792 F.2d 1464,
1466 (9th Cir. 1986); Loehr v. Ventura County Community College
District, 743 F.2d 1310, 1313 (9th Cir. 1984); Martino v. Santa Clara
Valley Water District, 703 F.2d 1141, 1145 (9th Cir.) cert. denied,
464 U.S. 847 (1983); Lew v. Kona Hospital, 754 F.2d 1420, 1423 (9th
Cir. 1985). '
12
and the opposing party’s version of the facts, there can be “‘no
genuine issue of material fact’ because what the moving party
asserts is immaterial. Where the plaintiff’s pleadings or testi-
mony admits a material fact determinative of a legal issue
that defeats his claim, that admission simply removes from
the case any question concerning the existence of a genuine
material fact issue. Cf. Catrett, supra, 756 F.2d at 190 (Bork,
J., dissenting).
Review should be granted in this case to remind the federal
judiciary that Rule 56(c) coupled with Rule 43(e),° where
appropriate, provides an efficient, effective and fair means
of processing and disposing of affirmative defense and other
separable issues without the attendant costs in time and en-
ergy to litigants and the judicial system necessarily associated
with a jury trial. See Argus, Inc. v. Eastman Kodak Co., 801
F.2d 38, 42 n.2 (2d Cir. 1986), cert. denied, 55 U.S.L.W. 3569
(U.S. Feb. 24, 1987) (No. 86-949) ; State of Utah v. Marsh, 740
F.2d 799, 801 n.2 (10th Cir. 1984) ; 5 Moore’s Federal Practice,
143.13 (1985) ; 10A C. Wright, A. Miller and M. Kane, Federal
Practice and Procedure, § 2723, p. 61 (1983); ef. Exchange
National Bank of Chicago v. Touche Ross & Co., 544 F.2d 1126,
1130-31 (2d Cir. 1976); Akron Presform Mold Company v.
McNeil Corporation, 496 F.2d 230, 235 (6th Cir.), cert. denied,
419 U.S. 997 (1974).
6 Rule 43(e), Fed.R.Civ.P. provides: “When a motion is based on
facts not appearing of record, the court may hear the matter on
affidavits presented by the respective parties, but the court may
direct the matter be heard wholly or partly on oral testimony or
deposition.”
a ae
13
2. AN ILLEGAL UNILATERAL OR CONCERTED RE-
FUSAL TO DEAL CREATES A CAUSE OF ACTION
WHEN IT OCCURS ANP IS NOT RESTARTED BY
REPEATED REQUESTS WHICH THE DEFENDANT
REFUSES.
The Court of Appeals characterized as “ambiguous” the
trial court’s holding based on Orgell, supra, “that any refusal
to deal subsequent to an initial refusal is a mere reaffirma-
tion, and thus the Clayton Act’s statute of limitations runs
from the initial refusal.” App. A. at A-7. The Opinion appears
to hold that unless the initial refusal to deal is “ ‘irrevocable,
immutable, permanent and final,’” (App. A. at A-7) the
initial refusal which inflicts damage’ does not prevent the
later accrual of a cause of action either from the reaffirmation
of the refusal or its mere continuance.
That holding is in conflict with the general rule that a cause
of action arises upon an initial unlawful refusal to deal which
causes damage and that a subsequent refusal, or its mere con-
tinuance, does not give rise to new causes of action because
they are not “overt acts” which cause new injury. Garelick v.
Goerlich’s, Inc., 323 F.2d 854, 856 (6th Cir. 1963) (“the [sub-
sequent] incidents were simply acts that reflected that de-
fendant-appellee continued in refusing to sell its products to
plaintiffs-appellants); accord, Baker v. Chagrin Valley Med-
ical Corp., [1985-1] Trade Cas. {}66,622, p. 66,099; Trepel v.
Pontiac Osteopathic Hospital, 599 F. Supp. 1484, 1490 (E.D.
7 There is no question in this case concerning the existence of as-
certainable damages suffered by Respondents in 1974 and 1975
from the alleged unlawful refusals to deal measured by “the price
differential between the Order 131 price available if they could
have sold their total production within the CAMMA, and the
lower price they received by selling milk in other markets.” App.
A. at A-10. Those damages were computed by Respondents each
month as they occurred. See App. F. at A-66-68.
14
Mich.) (1984) ; Chapa v. Volkswagen of America, Inc., [1974-
1] Trade Cas. 974,911, p. 96,091 (D.D.C. 1974) ; Southeastern
Hose, Inc. v. Imperial-Eastman Corp., [1973-1] Trade Cas.
974,479 (N.D. Ga. 1973); Saunders v. National Basketball
Ass’n., 348 F. Supp. 649, 652-53 (N.D. Ill. 1972) ; Ansul Co. v.
Uniroyal, Inc., 306 F.Supp. 541, 569 (S.D. N.Y. 1969) aff'd in
part and rev'd in part on other grounds, 448 F.2d 872 (2d Cir.
1971), cert. denied, 404 U.S. 1018 (1972) ; Manok v. Southeast
District Bowling Association, 306 F. Supp. 1215, 1221 (C.D.
Cal. 1969); Norman Tobacco & Candy Co. v. Gillette Safety
Razor Co., 197 F. Supp. 333, 338 (N.D. Ala. 1960), aff’d, 295
F.2d 362, 363 (5th Cir. 1961). See II P. Areeda & D. Turner,
Antitrust Law, (325b at 121 (1978) (“An illegal refusal to deal
... ereates a cause of action when it occurs. But the courts
do not generally allow the plaintiff perpetually to restart the
limitations period merely by repeated requests which the
defendant refuses’’).
There is conflicting authority, however. The Fourth, Fifth
and Eighth Circuits have held that a reiterated request fol-
lowing an unlawful refusal to deal may give rise to a new
cause of action permitting the plaintiff to sue within four
years of the latest refusal. Charlotte Telecasters, Inc. v. Jef-
ferson-Pilot Corp., 546 F.2d 570, 572 (4th Cir. 1976); Poster
Exchange, Inc. v. Natural Screen Service Corp., 517 F.2d 117,
124-128 (5th Cir.), reh’g denied, 520 F.2d 943 (5th Cir. 1975),
cert. denied, 423 U.S. 1054 (1976) ; Imperial Point Colonnades
Condominium, Inc. v. Mangurian, 549 F.2d 1029, 1035 (5th
Cir.) cert. denied, 434 U.S. 859 (1977); Pioneer Co. v. Talon,
Inc., 462 F.2d 1106, 1108 (8th Cir. 1972).° For the subsequent
8 The Eleventh Circuit holds that a reiterated request following an
initial refusal is an overt act that will restart the statute of
limitations unless “plaintiffs’ subsequent requests were futile and
plaintiffs had reason to know they were futile . . .” Midwestern
Waffles, Inc. v. Waffle House, Inc., 734 F.2d 705, 715 (11th Cir.
1982).
15
refusal to constitute an “overt act” to restart the statute,
however, the Fourth and Fifth Circuits both require that the
initial refusal must not have been irrevocable and there must
have been a request and refusal during the four year period
and not “a mere absence of dealing.” Poster, supra, 517 F.2d
at 128; see also, Mangurian, supra, 549 F.2d at 1035.
In requiring a defendant to show that its initial refusal
was “irrevocable, immutable, permanent and final” (App. A.
at A-7) in order to invoke the statute of limitations bar to a
subsequent request and refusal, the decision below appears
to align the Ninth Circuit with the Fifth Circuit on the issue
of when the statute commences to run in a refusal to deal case,
except that for the Ninth Circuit, a mere continued “absence
of dealing” is enough to create a continuing cause of action.
unless the initial refusal is “irrevocable.”
A requirement that a refusal to deal be “irrevocable [and]
immutable” to commence the running of the statute “would
effectively destroy the statute of limitations as a statute of
peace.” Garelick v. Goerlich, supra, 323 F.2d at 856. No talis-
manic words or acts of “irrevocability” should be needed to
convey finality in a refusal to deal context. Businessmen who
refuse to deal are not in the habit of telling suppliers or buy-
ers: “I will not deal with you now or ever in the future.” No
such statement of “irrevocability” was required in any of the
cases cited under the Garelick rule, supra.
The division among the circuits, as disclosed by the above
cases, undermines the objectives sought by Congress in its
1955 adoption of a uniform statute of limitations for cases
arising under the antitrust laws by perpetuating the “confu-
sion” at which the law was aimed. See S. Rep. No. 619, 84th
Cong. Ist Sess. at 5 (1955); H.R. Rep. No. 422, 84th Cong. 1st
Sess. at 7 (1955); M. Wheeler and R. Jones, The Statute of
Limitations for Antitrust Damage Actions: Four Years or
16
Forty? 41 U. Chi. L. Rev. 72, 82-83. The decision below adds
further confusion to the existing conflict among the circuits as
to when a cause of action arises under § 4B of the Clayton
Act by eliminating the “request and the refusal” requirements
of the Fourth and Fifth Circuit rules.
Review of the Court of Appeals decision in this case should
be granted to resolve the conflict among the circuits by re-
versing the decision and approving the Sixth Circuit rule that
“Ta]n illegal refusal to deal . . . creates a cause of action when
it occurs ... [and is not] restart[ed] . . . merely by repeated
requests which the defendant refuses.” Areeda & Turner,
supra.
3. THE COURT OF APPEALS’ HOLDING THAT A
CAUSE OF ACTION ACCRUES FROM CONTINUING
DAMAGE WITHIN THE STATUTORY PERIOD
CAUSED BY PRELIMITATION CONDUCT WITHOUT
FURTHER OVERT ACTS WITHIN THE LIMITATION
PERIOD IS IN CONFLICT WITH THE DECISIONS OF
THIS COURT AND ALL OTHER CIRCUITS.
There is no suggestion in the decision below that the trial
court was wrong when it found that “there were no unilateral
refusals to deal by UDA during the limitation period” (App.
C. at A-22) and “no clear cut allegations or evidence of overt
acts by... UDA during the limitations period.” Jd, at A-24.
The decision holds, nonetheless, that ‘despite the finality of
the refusal” (App. A. at A-10) and the absence of an overt
act during the limitation period, reversal was required be-
cause “plaintiffs allege damage incurred within the statutory
period” (ibid.), citing Zenith Radio Corp. v. Hazeltine Re-
search, Inc., 401 U.S. 321, 338 (1971).
17
In Zenith, this Court explained that:
Generally, a cause of action accrues and the statute be-
gins to run when a defendant commits an act that injures
a plaintiff’s business. See, e.g., Suckow Borax Mines Con-
solidated, Inc. v. Borax Consolidated, Ltd., 185 F.2d 196,
208 (CA-9 1950). ... This much is plain from the treble-
damage statute itself. 15 U.S.C. § 15. In the context of a
continuing conspiracy to violate the antitrust laws, such
as the conspiracy in the instant case, this has usually
been understood to mean that each time a plaintiff is
injured by an act of the defendants a cause of action ac-
crues to him to recover the damages caused by that act
and that, as to those damages, the statute of limitations
runs from the commission of the act. See, e.g., Crummer
Co. v. Du Pont, 223 F.2d 238, 247-248 (CA-5 1955)... .
However, each separate cause of action that so accrues
entitles a plaintiff to recover not only those damages
which he has suffered at the date of accrual, but also
those which he will suffer in the future from the particu-
lar invasion, including what he has suffered during and
will predictably suffer after trial... . Thus, if a plain-
tiff feels the adverse impact of an antitrust conspiracy
on a particular date, a cause of action immediately ac-
crues to him to recover all damages incurred by that date
and all provable damages that will flow in the future
from the acts of the conspirators on that date. To recover
those damages, he must sue within the requisite number
of years from the accrual of the action.
401 U.S. at 338-39 (emphasis supplied) (citations omitted).
In Suckow, the Ninth Circuit held that in a “continuing con-
spiracy” the statute runs from the last “overt act” causing
damage; not from continuing damage stemming from the act.
18
185 F.2d at 208 (“the only actions ... not... barred .
would be those arising from damages, a, by illegal cies
acts’ which occurred within the three year period immediately
preceding [commencement of the action]”) (emphasis by the
Court).®
It is obvious not only from the plain language of Zenith,
but from the cases cited by the Court that the words “by an
act” of defendants means exactly that—i.e. by “successive un-
lawful acts and consequent damage . . . caused by such acts.”
Crummer Co. v. Du Pont, 223 F.2d at 247. Zenith stands for
the proposition that:
[C]ontinuing antitrust conduct resulting in a continued
invasion of a plaintiff’s rights may give rise to contin-
ually accruing rights of action. It remains clear nonethe-
less that a newly accruing claim for damages must be
based on some injurious act actually occurring during the
limitations period, not merely the abatable, but unabated
inertial consequences Of some pre-limitations action.
Poster Exchange, Inc. v. National Screen Serv. Corp., supra,
517 F.2d at 128. See also National Souvenir Center v. Historic
Figures, Inc., 728 F.2d 503, 509 (D.C. Cir. 1984) (“For their
action to survive, plaintiff-appellants had to show an ‘overt
act’ pursuant to the . . . tying arrangement by appellees
within the limitation period. . . .”); Barnosky Oils, Inc. v.
Union Oil Co. of Calif., 665 F.2d 74, 81 (6th Cir. 1981) (con-
tinuing damage resulting from a “mere absence of dealing”
during the limitations period does not give rise to a cause of
action) ; Electro Glass v. Dynatex Corp., 497 F. Supp. 97, 105
(N.D. Cal. 1980) (in a continuing violation causing continuing
harm, the statute runs from the last overt act causing damage,
® The statutory three year limitations period was extended by the
Federal Moratorium Act. 185 F.2d at 208.
19
not from continuing damage from prelimitation conduct) ;
Fontana Aviation v. Baldinelli, 418 F. Supp. 464, 468 (W.D.
Mich. 1976), aff'd per curiam, 575 F.2d 1194 (6th Cir.), cert.
denied, 439 U.S. 911 (1978) (“the period of limitation is not
extended merely because damages from the injury may be
continuing’’).
The Ninth Circuit’s holding that Respondents’ action was
not barred despite the absence of an overt act by UDA after
1975 because “plaintiffs allege damage incurred within the
statutory period” (App. A. at A-10) is plainly wrong. There
is no Zenith problem here concerning “speculative damages”
preventing the accrual of a cause of action (App. A. at A-7,
n.6), nor is there any question concerning Respondents’ ascer-
tainable damages in 1974 and 1975 when they were incurred
as a result of Petitioner’s and the milk dealers’ refusal to buy
Respondents’ milk. App. C. at A-25. The “source and timing”
(App. A. at A-10) of Respondents’ damages were fixed in 1975
when their milk was refused and they shipped it out at a lower
price. At that point, a cause of action “immediately accrue[d]
. . . to recover all damages incurred by that date and all
provable damages that [would] flow in the future from the
acts of the conspirators on that date. To recover those dam-
ages, [Respondents] must [have] sue[d] within the requisite
number of years from the accrual of the action.” Zenith,
supra, at 339.
Zenith holds that in a continuing violation “[i]f a plaintiff
which has begun to suffer [ascertainable] damage allows four
years to go by without suit it will be barred as to any damages
past or future—which it might have proved had it brought
suit during the four year period.” L. Sullivan, Handbook of
the Law of Antitrust (1977) at 776. Acceptance of the Ninth
Circuit’s theory that the mere incurrence of continuing dam-
age from prelimitation conduct without further overt acts
keeps the statute running “would effectively destroy the stat-
20
ute of limitations as a statute of peace.” Crummer Company
v. Du Pont, supra, 223 F.2d at 248. Review should be granted
to reverse the decision below in order to remove the conflict
and confusion in the law which it has created as to when a
cause of action under § 4B of the Clayton Act arises and the
four year statute of limitations begins to run.
4. THE NINTH CIRCUIT’S HANOVER SHOE “EXCEP-
TION” TO WHEN A CAUSE OF ACTION ACCRUES
MISAPPLIES THE HOLDING AND REASONING OF
THAT CASE.
The decision below states that Hanover Shoe Co. v. United
Shoe Machinery Corp., 392 U.S. 481 (1968):
established a limited exception to the usual rule that
an antitrust claim accrues when the plaintiff incurs
the injury. The Hanover Shoe exception applies when
the anticompetitive conduct complained of constitutes a
continuing violation and results in continuing harm. In
that case, overcharges paid by the plaintiff because of
the defendant’s lease-only policy . . . resulted from a
‘continuing violation of the Sherman Act’ which inflicted
‘continuing and accumulating harm’ on the plaintiff.
App. A. at A-11. There is nothing “exceptional” about the
holding in Hanover. Hanover’s suit in 1955 based on the “im-
pact of . . . United’s lease only policy” which began in 1912
(392 U.S. at 502 n.15) was not time-barred because each col-
lection of rents under United’s unlawful “lease only” policy
was an “overt act” causing new damages, “not a mere con-
tinuation of a refusal to sell.” See Hanover Shoe, Inc. v. United
Shoe Machinery Corp., 377 F.2d 776, 794 (3d Cir. 1967). As ex-
plained in II Areeda and Turner, supra, at 120 (citations
omitted) :
21
In the case of a continuing violation, each overt act that
is part of the violation and that injures the plaintiff
starts the statutory period running again. For example,
so long as an illegal price fixing conspiracy is alive, each
sale at the fixed price would have that effect. Similarly,
an illegal lease-only policy was held in... Hanover...
to create a cause of action every time the defendant
leased and .. . refused to sell.
The Third Circuit’s decision in Hanover, affirmed by the
Supreme Court, makes the point explicitly. Distinguishing
cases such as Garelick v. Goerlich’s, Inc., supra, the court ex-
plained:
[I]n the cited cases the continuing conduct was that of
a mere re-assertion of the refusal to deal. Here, however,
United went beyond a mere continuation of the refusal
to sell; it collected rentals on leases and entered into new
leases when old machinery was no longer in working
condition and required replacement.
377 F.2d at 794. Hanover’s suit was not barred because United
Shoe’s continued “lease only” policy which began in 1912 in-
flicted injury and damages on Hanover “in 1955 by concrete
and specific business transactions.” Jd. at 795.
Here, in contrast, there is only absence of dealing by Peti-
tioner and “mere continuation of the refusal to sell” by the
milk dealers during the limitation period. But “mere absence
of dealing” is not an overt act that will give rise to a cause of
action. Poster Exchange, supra, 517 F.2d at 128 (“Poster
. is obliged to demonstrate some act of the defendants
during the limitation period foreclosing or interfering with
its access to supplies”). The absence from this record of “the
occurrence of any specific act or word [by Petitioner] denying
22
[Respondents] ... access to [the market] during the statutory
period” (id. at 129) supported the trial court’s entry of judg-
ment against Respondents dismissing the action on statute of
limitation grounds.
The decision below is squarely at odds with this Court’s
holding in Zenith and Hanover that under § 4B of the Clayton
Act, an antitrust action is barred unless it is commenced
within four years of the illegal overt act which is alleged to
have caused plaintiff’s damage. The writ should be granted
to remove the conflict created by the decision below on an
issue of irmportance to the enforcement of the antitrust laws.
CONCLUSION
For the foregoing reasons, United Dairymen of Arizona
submits that the writ of certiorari should be granted.
Dated: April 20, 1987.
Respectfully submitted,
SYDNEY BERDE
Counsel of Record
SYDNEY BERDE &
ASSOCIATES, P.A.
2206 American National Bank
Bldg.
St. Paul, Minnesota 55101
(612) 291-8106
BLE PROTOS
APPENDIX
A-l
APPENDIX
APPENDIX A
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 85-1592
D.C. No. Cv 80-252 PHX CAM
JEROME LaSALVIA and PEGGY LaSALVIA,
husband and wife,
Plaintiffs-Appellants,
v.
UNITED DAIRYMEN OF ARIZONA, an Arizona
marketing association; ROBERT M. GIRARD; and
LEONARD F. CHEATHAM,
Defendants-A ppellees.
OPINION
Appeal from the United States District Court
for the District of Arizona
Carl A. Muecke, District Judge, Presiding
Argued and submitted February 10, 1986
Decided November 21,1986
San Francisco, California
Before: GOODWIN, HUG and REINHARDT, Circuit Judges.
GOODWIN, Circuit Judge:
Jerome and Peggy LaSalvia, operators of an independent
dairy farm in Laveen, Arizona, appeal the dismissal of their
antitrust claims against defendants United Dairymen of Ari-
zona (“UDA”), a dairy farmers’ cooperative, Robert Girard,
its general manager, and Leonard Cheatham, its president
A-2
until 1983. Both the LaSalvias and UDA produce milk within
the U.S. Department of Agriculture’s Central Arizona Milk
Marketing Area (“CAMMA”). The district court excluded
evidence of several of the LaSalvias’ allegations on the
grounds that the LaSalvias lacked standing to challenge the
conduct alleged.! The court then granted summary judgment
for the defendants on the grounds that the LaSalvias’ re-
maining claims were time-barred under 15 U.S.C. § 15b
(1982). The court also denied a motion for leave to file an
amended complaint. We reverse and remand for further pro-
ceedings.
The LaSalvias sued UDA for violation of sections 1 and 2
of the Sherman Act, 15 U.S.C. $§ 1, 2 (1982), section 2 of the
Clayton Act as amended by the Robinson-Patman Act, 15
U.S.C. § 13 (1982), and section 3 of the Clayton Act, 15 U.S.C.
§ 14 (1982). Their complaint alleged that UDA, beginning
shortly after its formation in 1959, had monopolized and at-
tempted to monopolize the marketing of Grade A raw milk
in the CAMMA, and that UDA had conspired to restrain trade
with area raw milk processors (“handlers”). Plaintiffs cite
six practices to support their claims:
1. UDA’s entering into full supply contracts with handlers
and discriminating against handlers unwilling to enter into
such contracts (the concerted refusal to deal claim) ;
2. UDA refused to purchase plaintiffs’ excess fluid milk
for processing into storable form until after this action was
1 Although the district court characterized the issue as one of
“standing.” in order to avoid confusion between “antitrust stand.
ing” and “constitutional standing,” we treat the issue as one of
whether plaintiffs were proper parties to challenge defendants’
allegedly anticompetitive conduct. Exhibitors’ Service, Inc. v.
American Multi-Cinema, Inc., 788 F.2d 574, 576 n.1 (9th Cir. 1986).
See Associated General Contractors, Inc. v. California State Coun-
cil of Carpenters, 459 U.S. 519, 535 n.31 (1983).
A-3
filed (the unilateral refusal to deal claim), and then paid them
a price below the Order 131 blend price;?
3. UDA gave rebates to handlers;
4. UDA adopted and enforced a “base plan” system for
calculating its members’ monthly milk payments that included
overly restrictive covenants not to compete ;*
5. UDA entered into reserve and pooling agreements with
out-of-state cooperatives, and;
6. UDA acquired control of raw milk transportation in the
CAMMA.
The district court granted UDA’s motion to exclude from
trial evidence of its base plan, its rebates to handlers, and its
acquisition of milk transportation facilities on the grounds
that the LaSalvias were not proper parties to challenge this
conduct. The court also excluded evidence of UDA’s marketing
agreements with other cooperatives, its purchase of other
producer-handler operations, and its refusal to process the
2 Milk is marketed in the CAMMA pursuant to Federal Milk Mar-
keting Order 131, which establishes through a statutory and reg-
ulatory scheme three classes of milk and the minimum price to be
paid to producers for each class. See 7 U.S.C. § 601 et seq. (1982);
7 C.F.R. Part 1131 (1984). Both plaintiffs and UDA are termed
“producers” under the USDA’s regulations. 7 C.F.R. § 1131.12
(1984). Their milk is sold to handlers for processing. 7 C.F.R.
§§ 1131.7, 1131.9 (1984). Producers receive a “blend price” for milk
marketed pursuant to Order 131. The blend price is a weighted
average of the prices for the three classes of milk.
8UDA’s base plan was a means of countering the incentive for over-
production provided by the combined effect of a guaranteed min-
imum price and the smal! impact an individual farmer’s produc-
tion has on the cooperative’s total output. Rather than ailocating
the blend price according to the amount shipped per month by
each member, UDA pays the Order 131 blend price only for the
amount of base allocated to the member. Amounts produced in
excess of the member's base are paid for at a lower rate. Thus,
the member's “personal blend price” falls as his or her production
over base increases. This arrangement is lawful under 7 U.S.C.
§ 608c(5)(F) (1982).
A-4
milk of other producer-handlers on the grounds that these
allegations were not included in the complaint.‘
I. The Exclusion of Evidence Under Rule 16
Section four of the Clayton Act, 15 U.S.C. § 15(a) (1982), |
affords a private action for damages to “any person who shall
be injured in his person or property by reason of anything
forbidden in antitrust laws.” Brunswick Corp. v. Pueblo Bowl-
O-Mat, Inc., 429 U.S. 477 (1977), and its progeny limit section
four’s scope to those plaintiffs who have sustained the type
of injury that the antitrust laws were meant to remedy. In
Brunswick, the Court concluded that a competitor seeking to
enjoin a potentially procompetitive merger was not a proper
party to sue under the antitrust laws. Brunswick thus requires
that the conduct alleged be harmful to the competitive process,
and not merely to a given competitor. In Blue Shield of Vir-
ginia v. McCready, 457 U.S. 465 (1982), the Court relied on a
remoteness analysis to grant a consumer standing to challenge
a conspiracy to exclude psychologists from the health care
market. McCready looked to two factors in assessing whether
the plaintiff was a proper party to challenge the defendants’
conduct. First, it cited Illinois Brick Co. v. Illinois, 431 US.
720 (1977), which required that the plaintiff be directly in-
jured by the anticompetitive conduct. 457 U.S. at 473-78.
Second, it looked to the Brunswic’t competitive harm require-
ment. Jd. at 478-79.
In Associated General Contractors, Inc. v. California State
Council of Carpenters, 459 U.S. 519 (1983), the Court set out
the factors to be considered in determining whether a plain-
tiff is the proper party to challenge given conduct. Although
a plaintiff must allege harm to himself from the defendant’s
4 Plaintiffs do not raise on appeal the allegations regarding the
purchase of other producer-handlers and the refusal to process
the milk of others.
i
A-5
anticompetitive conduct, this does not, standing alone, bring
the plaintiff within section four’s reach. Jd. at 537.
We recently summarized the Associated General Contrac-
tors’ factors as follows:
“(T]he nature of plaintiff’s injury, the directness or
indirectness of the asserted injury, the potential for
duplicative recovery or complex apportionment of dam-
ages, the speculative nature of damages asserted, and the
existence of more direct victims of the alleged violation
are factors a court must consider when making the ‘prop-
er party’ determination.”
Exhibitors’ Service, Inc. v. American Multi-Cinema, Inc., 788
F.2d 574, 578 (9th Cir. 1986).
The LaSalvias undoubtedly are proper parties to challenge
UDA’s allegedly anticompetitive conduct. As one of UDA’s
remaining competitors in the CAMMA, they meet the direct-
ness requirement, and they have an incentive vigorously to
seek redress for the harms caused by any exploitation by UDA
of its market position. Plaintiffs allege that the base plan,
the rebates to handlers, and the acquisition of the transport
facilities were employed in an unlawful quest for market
dominance. The harm alleged is thus precisely the sort that the
antitrust laws were intended to remedy.
We reject defendants’ argument that because the LaSalvias
have not alleged harm from the allegedly monopolistic prac-
tices they lack constitutional and antitrust standing. The
LaSalvias have alleged unlawful monopolization and attempted
monopolization, and are entitled to set forth the practices they
believe UDA used in an effort either to obtain monopoly
power or to exploit it. Rather than giving rise to liability
independently, the allegedly unlawful practices serve an evi-
dentiary function. See Ostrofe v. H. S. Crocker Co., 740 F.2d
739, 743 (9th Cir. 1984), cert. dismissed 105 S. Ct. 1155 (1985)
A-6
(evidence of a price-fixing conspiracy admissible as probative
of the existence of a second related conspiracy). Lastly de-
fendants’ theory that their questioned practices are lawful go
to the merits of plaintiffs’ claim, which are not before this
court.°
The district court, in excluding the evidence of the base plan,
the rebates, and the integration of milk transportation facil-
ities, confused the prudential limitations on private antitrust
actions with the requirements of damage-in-fact and causa-
tion. The court based the exclusion upon the LaSalvias’ pur-
ported failure to show injury independent of that resulting
from the alleged refusals to deal. This concern goes not to the
limitation on private antitrust suits, but to a perceived failure
of the LaSalvias’ proof to show damage from the questioned
practices. The district court’s exclusion of the evidence of the
UDA base plan, its rebates to handlers, and its acquisition of
milk transportation facilities requires reversal of the judg-
ment.
We also note that the court’s exclusion of the evidence of
UDA’s marketing agreements with other cooperatives was
error. Under the federal rules a plaintiff need nct allege every
act he or she intends to prove in support of the claim for re-
lief. A complaint need only contain “a short and plain state-
ment of the claim showing that the pleader is entitled to re-
lief.” Fed. R. Civ. P. 8(a). See also 2A J.W. Moore & J.D.
Lucas, Moore’s Federal Practice ‘ 8.03 (2d ed. 1983).
Il. The Grant of Summary Judgment on the Refusal to Deal
Claims
The district court concluded that the Clayton Act’s four-
year statute of limitations, 15 U.S.C. § 15b (1982), barred
5 We thus need not address at this stage whether the UDA’s actions
may be legal pursuant to the Capper-Volstead Act, 7 U.S.C. §§ 291-
292 (1982).
A-7
both the unilateral and concerted refusal to deal claims. Plain-
tiffs filed the complaint on March 31, 1980. The court found
that UDA did not unilaterally refuse to deal with plaintiffs
within the four preceding years. It also found that the con-
certed refusal to deal claim stemmed from contracts entered
into between UDA and other Arizona handlers as early as
1960, and that plaintiffs were aware of these contracts before
the end of 1975.
We review grants of summary judgment de novo, and like
the district court apply Federal Rule of Civil Procedure 56.
British Airways Board v. Bocing Co., 585 F.2d 946, 951 (9th
Cir. 1978), cert. denie’, 440 U.S. 981 (1979). We reverse as
to both claims. °
A. The Unilateral Refusal to Deal Claim.
The district court relied upon David Orgell, Inc. v. Geary’s
Stores, Inc., 640 F.2d 936 (9th Cir.), cert. denied, 454 U.S. 816
(1981), in granting summary judgment for defendants on the
LaSalvias’ unilateral refusal to deal claim. The court's treat-
mei.t of Orgell is ambiguous. Defendants understand the dis-
trict court’s view to be that any refusal to deal subsequent to
an initial refusal is a mere reaffirmation, and thus the Clay-
ton Act’s statute of limitations runs from the initial refusal.
Orgell, however, merely applies AMF, Inc. v. General ?* tors
Corp. (In re Multidistrict Vehicle Air Pollution), 591 F.2d 68
(9th Cir. 1979) (Air Pollution), cert. denied, 444 U.S. 900
(1980). See Hennegan v. Pacifico Creative Service, Inc., 787
F.2d 1299, 1301 (9th Cir. 1986). In Air Pollution, we held that
because the defendants’ initial refusal to deal was “irrevocable,
immutable, permanent and final,” any harm necessarily re-
“ Because we reverse on other grounds, we do not reach the
LaSalvias’ argument that the speculative damages doctrine, see
Zenith Radio Corp. v. Hazelline Research Inc., 401 U.S. 321 (1971),
applies to their refusal to deal claims.
aa aaa |
A-8
sulted from the initial refusal and not from subsequent re-
affirmations. 591 F.2d at 72. Because the plaintiff in that
case was not injured by the defendants’ subsequent conduct,
the statute of limitations ran from the initial refusal. Rather
than stating a per se rule governing repeated refusals to deal,
Air Pollution and Orgell merely apply the usual rule that anti-
trust claims accrue when the plaintiff incurs the injury.
Zenith Radio Corp. v. Hazeltine Research Corp., 401 US. 321,
338 (1971). See Western Shoe Gallery, Inc. v. Duty Free Shop-
pers, Ltd., 593 F. Supp. 348, 352 n.4 (N.D. Cal. 1984).
At issue therefore is the finality of UDA’s refusal to handle
the LaSalvias’ excess production, and the source of the harm
allegedly inflicted by defendants upon them.
Plaintiffs argue that a material question of fact exists as
to whether UDA’s refusal to accept its milk for handling in
1975 was final, and that summary disposition of the unilateral
refusal claim was thus error. They cite the deposition testi-
mony of defendant Girard, UDA’s general manager, regarding
his 1975 refusal to accept plaintiffs’ milk. They also rely upon
their allegation, supported-by affidavit and denied by UDA’s
counsel, that in 1977 and 1978 their attorney again requested
access to UDA’s manufacturing facility. Lastly, they argue
that UDA’s acceptance in 1981 of their milk for processing
cuts against any finding that the 1975 refusal was final. In
response, defendants argue that if plaintiffs’ characterization
of Girard’s statement is true, then no illegal refusal to deal
occurred and they should prevail on the merits. They also cite
deposition testimony by plaintiffs suggesting that UDA’s in-
itial refusal was unequivocal.
The evidence on the finality of UDA’s refusal to deal with
the LaSalvias is ambiguous. On the one hand, Girard’s testi-
mony can be read to give plaintiffs some hope that UDA would
A-9
relent, and thus accept their milk for processing. He expressly
denied telling Jerome LaSalvie in 1975 that LaSalvia was not
to call again to request that UDA handle his excess production.
Gerard stated that during this conversation he informed
LaSalvia that if UDA later had the capacity to handle plain-
tiffs’ milk, it would so inform him. On the other hand, the
LaSalvias’ testimony suggests that the 1975 refusal was in
fact unequivocal.
The district court, in concluding that UDA’s 1975 refusal
was final and subsequent denials were mere reaffirmations,
thus resolved a material factual question that would ordinarily
go to the jury. Because summary disposition is allowed only
if “there is no genuine issue as to any material fact and...
the moving party is entitled to judgment as a matter of law,”
Fed. R. Civ. P. 56(c), the court should not have granted sum-
mary judgment on the unilateral refusal to deal claim.
The initial refusal to deal in Aix Pollution was necessarily
final because the product, if it was to be used at all, had to be
integrated into the design of new automobiles. 591 F.2d at 72.
Therefore, finality was easily assessed because it turned upon
a peculiarity of the product market at issue and not upon the
subjective intent of the defendants. By contrast, the brief
opinion in Orgell does not disclose the basis for its conclusion
that the initial refusal was both final and the source of the
plaintiff's injury. Orgell may encourage ambiguous responses
to requests to deal coupled with later allegations that those
denials were final. We therefore place on defendants the
burden of showing that their initial refusal to deal was in fact
final, and that the finality of the refusal was conveyed to the
plaintiff. A self-serving allegation of finality made in the
course of litigation is insufficient to meet this burden.
A-10
A finding of fin: lity upon remand will not, of course, con-
clusively resolve the § 15b question. Under Air Pollution and
Orgell, the district court must also determine whether the
damage to plaintiff, if any, resulted solely from the initial
refusal. If it did not, and damage accrued during the four
years preceding the filing of the complaint, then the action
is not barred despite the finality of the refusal. Plaintiffs’
damage analysis claimed losses both from the failure of their
business to grow as projected, and the price differential be-
tween the Order 131 price available if they could have sold
their total production within the CAMMA, and the lower
price they received by selling milk in other markets. Under
this damage theory, plaintiffs claim harm from UDA’s ex-
ploitation of its market position. The losses claimed in plain-
tiffs’ damage analysis stem not from the initial refusal, but
from the unlawful monopolization of the market at issue.
Because the district court resolved a material question of
fact, and because the record suggests that plaintiffs allege
damage incurred within the statutory period, the summary
judgment on plaintiffs’ unilateral refusal to deal claim must
be reversed. Because the district court addressed only the
finality question, we cannot determine whether the parties
had an opportunity to address the source and timing of the
damage question. They should be afforded that opportunity
upon remand.
B. The Concerted Refusal to Deal Claim
Because Air Pollution involved a concerted refusal to deal,
its analysis arguably should also govern the LaSalvias’ con-
certed refusal claim. We decline to apply it, however, because
of the fundamental differences in the conduct underlying the
concerted refusal claims in Air Pollution and in this case. The
plaintiff in Air Pollution alleged a group boycott. Such con-
A-11
duct is analytically indistinguishable from a unilateral refusal
for statute of limitations purposes. In most instances the
harm incident to such refusals stems from the refusal itself.
Continuing harm is not at issue, and thus the finality of the
refusal will usually determine the triggering of the statute of
limitations. In this case plaintiffs allege use of long-term con-
tracts to achieve or to maintain market dominance. The harm
alleged stems from the exploitation of market dominance to
deprive plaintiffs of an opportunity to market their milk with-
in the CAMMA. Thus, finality is not at issue. Rather than
looking to Air Pollution, we therefore look to the Supreme
Court’s continuing harm analysis.
In Hanover Shoe Co. v. United Shoe Machinery Corp., 392
U.S. 481 (1968), the Court established a limited exception to
the usual rule that an antitrust claim accrues when the plain-
tiff incurs the injury. The Hanover Shoe exception applies
when the anticompetitive conduct complained of constitutes a
continuing violation and results in continuing harm. In that
case, overcharges paid by the nlaintiff because of the defen-
dant’s lease-only policy for its shoe manufacturing machinery
resulted from a “continuing violation of the Sherman Act”
which inflicted “continuing and accumulating harm” on the
plaintiff. Jd. at 502 n.15. The plaintiff alleged that the de-
fendant, by exploiting its monopoly power, inflicted a con-
tinuing loss on the plaintiff through the use of damaging
contracts. The LaSalvias allege that UDA has used its market
position to impose contracts on handlers within the CAMMA
that prohibited them from dealing with plaintiffs. That the
contract in Hanover Shoe was between the parties to the suit
and those here were between UDA and third parties does not
lessen the force of the continuing harm analysis. In Twin City
Sportservice, Inc. v. Charles O. Finley & Co., 512 F.2d 1264,
A-12
1270 (9th Cir. 1975), we relied upon Hanover Shoe in con-
cluding that the purchaser of a sports franchise could chal-
lenge a long-term exclusive supply contract between a former
owner of the franchise and a concessionaire even though the
contract was formed more than four years before suit was
filed.
The district court in this case refused to apply the continu-
ing harm doctrine, looking instead to the time the LaSalvias
learned of the full supply contracts. Because the relevant
inquiry is not when they learned of the contracts but whether
the harm alleged continued into the four-year period preced-
ing the filing of the complaint, the summary judgment on the
concerted refusal to deal claim is reversed. We note, how-
ever, that while plaintiffs may recover for damages they prove
were caused by anticompetitive conduct begun before the four-
year statutory period under the continuing harm doctrine,
their recovery is limited to damage incurred within the four
years preceding the filing of the complaint. See Hanover Shoe,
392 U.S. at 502 (plaintiff entitled to damages “for the entire
period permitted by the applicable statute of limitations”)
(footnote omitted) ; cf. Hanson v. Shell Oil Co., 541 F.2d 1352,
1361 (9th Cir. 1976) (limiting damages to the statutory period
under the speculative damages doctrine), cert. denied, 429 U.S.
1074 (1977).
III. The Denial of Plaintiffs’ Motion for Leave to File an
Amended Complaiit
Plaintiffs sought to amend their complaint in October 1984,
to allege post-complaint injury. The district court denied the
motion on the grounds that they had known of the conduct
alleged since 1981, that the new allegation was a disguised
challenge to UDA’s base plan, and that amendment would
require the reopening of discovery. We review the denial for
- oo
A-13
abuse of discretion. Howey v. United States, 481 F.2d 1187,
1190 (9th Cir. 1973). We conclude that the district court
abused its discretion in denying the motion for leave to amend.
Federal Rule of Civil Procedure 15(d) allows the addition
of post-complaint allegations. Motions to amend pursuant to
Rule 15(d) should be granted “[u]nless undue prejudice to
the opposing party will result.” Howey, 481 F.2d at 1190. We
see no prejudice to defendants in allowing the amendment.
Because most of the information on the added claim would be
available in UDA’s own files, little additional discovery would
be needed. Defendants rely upon Waters v. Weyerhaeuser
Mortgage Co., 582 F.2d 503, 506-07 (9th Cir. 1978), in arguing
that because plaintiffs could have sought amendment at an
earlier date and because discovery would have to be reopened
if the motion were granted, the district court did not abuse
its discretion in denying the motion. Waters, however, in-
volved “obvious prejudice” to the defendants because plain-
tiffs sought to litigate an issue that they had previously con-
ceded. Jd. at 507. It thus is not controlling under these facts.
“The purpose of [Rule 15(d)] is to promote as complete an
adjudication of the dispute between the parties as is possible.”
C.A. Wright & A.R. Miller, Federal Practice and Procedure
§ 1504, at 536 (1971). Because UDA would not be unduly
prejudiced by the minimal further discovery that may be re-
quised, the district court on remand should allow the motion.
REVERSED and REMANDED.
A-14
APPENDIX B
IN THE UNITED STATES DISTRICT COURT
: FOR THE DISTRICT OF ARIZONA
No. CIV 80-245 PHX CAM
No. CIV 80-252 PHX CAM
STATE OF ARIZONA,
Plaintiff,
vs.
UNITED DAIRYMEN OF ARIZONA, et al.,
Defendants.
and
JEROME LaSALVIA and PEGGY LaSALVIA,
husband and wife,
Plaintiffs,
vs.
UNITED DAIRYMEN OF ARIZONA, et al.,
Defendants.
ORDER
The main parties in this antitrust action are Plaintiff, who
owns and operates a dairy farm in Arizona and Defendant,
A-15
which is a non-profit Arizona organization operating as an
agricultural marketing cooperative of dairy farmers. Plain-
tiff has alleged that Defendant restrained and monopolized
the marketing of raw milk in the “Central Arizona Marketing
Area” in violation of federal and state antitrust laws. Plain-
tiff has further claimed that he has been damaged to the
extent of the difference between the Federal Milk Order
minimum “blend price’”’ he would have received by delivering
excess milk production to Arizona handlers regulated by the
Central Arizona Milk Order, and the price they actually re-
ceived by selling excess milk out of state.
Defendant has now filed a Motion for Summary Judgment,
alleging that Plaintiff’s claims are barred by the applicable
four-year statute of limitations, (15 U.S.C. § 15(b)) since
the alleged injury and cause of action accrued, if at all, in
the period from April 1974 to May 1975—more than four
years prior to the commenceme it of this action in March 1980.
Plaintiff, in response, has argued that there are disputed
fact issues concerning the irrevocability of Defendant’s re-
fusal to deal with Plaintiff, that the cause of action herein
is not based upon a single refusal to deal, but upon an ongoing
conspiracy, that the statute of limitations should be tolled by
Defendant’s alleged fraudulent concealment of certain facts,
and that in any event, there is no statute of limitations bar
to the injunctive relief which Plaintiff seeks.
The parties argued this motion before the Court on October
31, 1983.
Defendant has noted that in spite of the holding in Poller
v. Columbia Broadcasting System, Inc., 82 S.Ct. 486, 491, 368
U.S. 464, 473 (1962), which warned that summary procedures
should be used sparingly in complex antitrust litigation,
courts have not hesitated to grant summary judgment to de-
fendants in appropriate circumstances—even where a con-
spiracy is alleged to have occurred. Zenith Radio Corp. v.
A-16
Hazeltine Research, Inc., 91 S.Ct. 795, 806, 401 U.S. 321, 338
(1971). Defendant further notes that since it refused to buy
milk from Plaintiff in 1974 and 1975, Plaintiff’s cause of
action should be barred, since he brought suit in 1980, over
four years later.
The applicable statute, 15 U.S.C. § 15(b), states in perti-
nent part: “Any action to enforce any cause of action under
Section 15 or 15a of this title shall be forever barred unless
commenced within four years after the cause of action ac-
crued. No cause of action barred under existing law on the
effective date of this section . . . shall be revived by said
sections.”
Nevertheless, Plaintiff has maintained that even one of
Defendant’s employees has been equivocal as regards whether
he absolutely refused to deal with Plaintiff, since his deposi-
tion testimony indicated that the situation would be checked
out, and that Defendant would let Plaintiff know whether it
could take his milk.
In a similar action, but one brought by cattlemen, ranchers
and feeders against retail food chains, a national trade as-
sociation, and a beef industry price reporting publication,
involving alleged violations of Chapter 15 of the United States
Code, it was found that a genuine issue of fact existed as to
when plaintiffs had actual or constructive knowledge of their
cause of action, precluding summary judgment on their claim
that fraudulent concealment by the defendants of an alleged
conspiracy would toll the four-year statute of limitations. Jn re
Beef Industry Antitrust Litigation, 600 F.2d 1148 (5th Cir.
1979), reh. den., 616 F.2d 569, cert. den., 101 S.Ct. 280, 281,
449 U.S. 905, 66 L.Ed.2d 137 (1980).
Regarding the claim of fraudulent concealment, it was held,
in In re Independent Gasoline Antitrust Litigation, 79 F.R.D.
552 (D.C. Md. 1978), that to establish a claim of fraudulent
concealment in order to avoid the defense of limitations in a
A-17
private antitrust action, the plaintiff must prove fraudulent
concealment by the defendant raising the statute, together
with the plaintiff’s failure to discover facts which are the
basis of his cause of action, despite the exercise of due dili-
gence on his part.
Plaintiff herein has claimed that the refusal to deal was
not conveyed to him as an absolute, and that the statute should
therefore be tolled. Because of the issue of fact regarding the
refusal to deal, this Court is in agreement with Plaintiff.
In David Orgell, Inc. v. Geary’s Stores, Inc., 640 F.2d 936
(9th Cir. 1981), cert. den., 454 U.S. 816 (1981), a defendant’s
initial refusal to sell its line of china and dinnerware to a
plaintiff retailer was held to trigger the four-year limitations
period, and subsequent refusals to sell were not found by the
court to be separate violations, but rather mere reaffirmations
of the original decision not to deal with plaintiff. Orgell,
supra, was again cited in In re Multidistrict Vehicle Air Pollu-
tion, 591 F.2d 68, 72 (9th Cir. 1979), cert. den., 444 U.S. 900
(1980), where the court mentioned that the subsequent re-
quests to deal in Orgell were “forlorn inquiries by one, all of
whose reasonable hopes had previously been dashed.” How-
ever, Multidistrict Vehicle Air Pollution also found that noth-
ing in the record of that case indicated that the decisions not
to act “. .. were irrevocable, immutable, permanent and final.
For this reason, all injury to AMF necessarily resulted from
the 1964 rejection of the Smog Burner.”
In the case at bar, as has already been noted, there is a
question of fact as to whether the initia! refusal to deal was
“irrevocable, immutable, permanent and final.” Therefore,
this Court cannot agree with Defendant that summary judg-
ment should be granted.
Summary judgment should be precluded when there is a
fact issue about whether a defendant has refused to deal and
A-18
whether or not that refusal was motivated by an anti-com-
petitive intent. California Steel & Tube v. Kaiser Steel Corp.,
650 F.2d 1001 (9th Cir. 1981); Tillamook Cheese & Dairy
Assn. v. Tillamook County Creamery Assn., 358 F.2d 115 (9th
Cir. 1966).
Another fact at issue is whether damages in this case are
subject to an accurate estimate, or are merely speculative.
Defendant claims that Plaintiffs could easily resort to a for-
mula for figuring damages, which Plaintiffs have denied on
the basis of climate and selling factors.
An additional point brought out by Plaintiff is that the
four-year statute of limitations is not applicable to an equit-
able proceeding for injunction relief from violations of the
antitrust laws, citing International Tel. & Tel. Corp. v. Gen-
eral Tel. & Elec. Corp., 296 F.Supp. 920 (D. Haw. 1969).
However, Defendant also notes that the above case involved
a request for only injunctive relief, and that in Farbenfabrik-
en Bayer, A.G. v. Sterling Drug, Inc., 197 F.Supp. 613, 626
affd., 307 F.2d 207, cert. den., 83 S.Ct. 872, 372 U.S. 929, 9
L.Ed.2d 733 (1961), the court held that where there is both
a legal and an equitable remedy for the same wrong, if the
legal remedy is barred by the lapse of time, the equitable
remedy is also barred, and this rule is applicable to actions
in equity to enforce an implied or constructive trust.
In any event, the existence of an issue of fact as to whether
the refusal by Defendant to deal with Plaintiff was absolute
and irrevocable should preclude the granting of summary
~ judgment in Defendant’s favor.
Therefore,
IT IS ORDERED that Defendant’s Motion for Summary
Judgment, filed August 22, 1983, is denied.
Dated this 8th day of November, 1983.
C. A. MUECKE, Chief Judge
A-19
APPENDIX C
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
No. CIV 80-245 PHX CAM
No. CIV 80-252 PHX CAM
STATE OF ARIZONA,
Plaintiff,
vs.
UNITED DAIRYMEN OF ARIZONA, et al.,
Defendants.
and
JEROME LaSALVIA and PEGGY LaSALVIA,
husband and wife,
Plaintiffs,
vs.
UNITED DAIRYMEN OF ARIZONA, et al.,
Defendants.
ORDER
Having received and considered Defendants’ Renewed Mo-
tion for Summary Judgment, memorandum with appendix,
and statement of facts in support thereof, filed June 25, 1984;
Plaintiffs’ Response, memorandum, exhibits and statement of
facts in support thereof, filed July 25, 1984; Defendants’
Reply, filed October 16, 1984; Plaintiffs’ Motion for Leave
to File Supplemental Cor-plaint, filed September 6, 1984; De-
fendants’ Response, filed October 19, 1984; Plaintiffs’ Reply,
filed October 29, 1984; and Plaintiffs’ Motion for Reconsidera-
tion, filed December 4, 1984; and having heard oral argument
on Defendants’ Renewed Motion for Summary Judgment and
ee
A-20
Plaintiffs’ Motion for Leave to File Supplemental Complaint
on Tuesday, October 18, 1984, this Court finds as follows:
Defendants’ Renewed Motion for Summary Judgment
Defendants’ Renewed Motion for Summary Judgment is
based upon the four-year statute of limitations in the Clayton
Act, 15 U.S.C. § 15b. Defendants basically argue that Plain-
tiffs’ own conduct and statements prove that Plaintiffs were
aware of their antitrust claims in 1974 or 1975; but this action
was not filed until March 31, 1980 and is thus barred by the
applicable statute of limitations.
With respect to the statute of limitations argument, this
Court finds that there is no material issue of fact. The parties’
statements of fact submitted pursuant to Local Rule 11(i)
indicate that following Shamrock Foods’ refusal to continue
to purchase Plaintiffs’ raw milk in excess of the amount
specified in their contract, Plaintiffs sought to sell their ex-
cess milk to Defendant United Dairymen of Arizona (UDA)
in April 1974; UDA refused. In both June and August of
1974, Plaintiffs filed briefs with the U.S. Department of
Agriculture alleging that UDA was attempting to monopolize
the raw milk market in the Central Arizona Marketing Area
and complaining about the fact that UDA refused to buy
Plaintiffs’ milk.
In February 1975, Plaintiffs’ attorney telephoned UDA’s
attorney and inquired whether UDA would buy Plaintiffs’
milk; the request was refused. Also in February 1975, Plain-
tiff Jerome LaSalvia dumped milk on the ground and issued a
press release in which he complained about the fact that neither
UDA nor any other milk handler would purchase his milk.
Plaintiff himself called UDA Executive Director Robert
Girard in February 1975 and requested that UDA purchase
his milk. Plaintiff later testified in deposition that on that
occasion Mr. Girard told Plaintiff never to call again, i.e.,
A-21
that if UDA wanted to buy Plaintiff’s milk then UDA would
call Plaintiff, but that Plaintiff should not call again. Plaintiff
Peggy LaSalvia overheard this conversation, and testified in
deposition that Mr. Girard was “very emphatic.”
In March 1975, Mr. LaSalvia provided information to Mr.
Currin Shields, President of the Arizona Consumers Council,
so that Mr. Shields could write a letter to the Antitrust Divi-
sion of the U.S. Department of Justice complaining about
UDA’s monopoly over the milk market in Arizona. In April
1975, Plaintiffs’ attorney again contacted Defendants’ attor-
ney to discuss whether UDA would purchase Plaintiffs’ milk;
the notes of Plaintiffs’ attorney reflect that UDA’s attorney
said UDA would not purchase milk from non-members of
UDA. In fact, the notes themselves state: “bottom line—
won’t take milk from non-member producer.” Also in April
1975, Plaintiff asked a dairy in E] Paso if it would buy Plain-
tiffs’ milk; that request was refused.
On May 23, 1975, Plaintiff Jerome LaSalvia again called
Mr. Girard, and against Plaintiff’s request to sell milk to
UDA was refused. Plaintiff entered a note in his diary:
“9 :30-—Girard—no-no-no.” After this conversation, Plaintiff
never again directly contacted UDA about purchasing his
milk until after this action was filed in 1980.
In June 1975, Plaintiff asked handlers Safeway, Carnation
and Foremost to purchase his milk, but all requests were
refused.
The parameters of this case have been severely narrowed
by this Court’s Orders filed September 14, 1984 (denying
Plaintiffs’ Motion for Partial Summary Judgment) and Sep-
tember 18, 1984 (granting Defendants’ Motion to Limit Issues
To Be Tried). Those orders were carefully considered, and
based upon a complete review of the facts and case law per-
taining to Plaintiffs’ standing to challenge many of UDA’s
A-22
alleged practices. In those Orders, this Court specifically held
that Plaintiffs lack standing to challenge UDA’s base plan and
several other practices allegedly engaged in by UDA, and
found that the damages sought by Plaintiffs arise from their
conspiratorial and unilateral refusal-to-deal claims. Those al-
legations are all that properly remain in the case, and based
upon the undisputed facts recited above, it is clear that Plain-
tiffs and their counsel had notice of both the conspiratorial
and unilateral refusals to deal during 1975.
Defendants rely heavily on Orgell v. Geary’s Stores, Inc.,
640 F.2d 936 (9th Cir.), cert. denied, 454 U.S. 816, 102 S.Ct.
92 (1981). Orgell, like the case at bar, involved only conspira-
torial and unilateral refusals to deal. The Ninth Circuit af-
firmed the district court’s finding that all refusals to deal
subsequent to the initial refusal were mere reaffirmations of
the original decision not to deal. While there were refusals
made during the four-year’ period prior to the filing of the
action, the initial refusal had been made over twelve years
prior to the filing, and the Ninth Circuit agreed that the
claims were time-barred.
Here, there were no unilateral refusals to deal by UDA dur-
ing the limitations period, because Plaintiff never contacted
UDA between 1975 and the time the action was filed.’ As for
conspiratorial refusals to deal, these claims stem from full-
supply contracts entered into between UDA and other Arizona
processors as early as 1960, and from UDA’s alleged attempts
1 Even if this Court were to consider informal discussions between
counsel for the parties at an unrelated legal meeting during 1977-
78 as a contact between Plaintiffs and Defendants, UDA repeated-
ly refused to accept Plaintiffs’ milk, and these refusals are re.
affirmations of the initial refusal(s). In Orgell, there were re.
fusals during the limitations period, but this did not preclude a
finding that the initial refusal was final, the subsequent refusals
were reaffirmations of the initial refusal, and a holding that the
statute of limitations had run.
———SSaaaaaaaeaae =
A-23
to enforce those contracts by pressuring other processors not
to purchase Plaintiffs’ milk. Again, Plaintiffs were made well
aware of the contracts and of the other processors’ refusals
to purchase Plaintiffs’ milk in or before 1975; and the con-
tinuation of the contracts and of the refusals by other proces-
sors were reaffirmations of the original refusal(s) to deal.
Plaintiffs argue that in a civil conspiracy case the statute
of limitations does not run from the first overt act in further-
ance of the conspiracy, but “from the commission of the last
overt act alleged to have caused damage.” Steiner v. 20th
Century-Fox Film Corp., 232 F.2d 190, 194 (9th Cir. 1956).
However, that same case also states:
. in order to start the running of the statute of limita-
tions there must be damage occasioned by an overt act.
In a continuing conspiracy causing continuing damage
without further overt acts, the statute of limitations runs,
as we have noted, from ihe time the blow which caused
the damage was struck. Any further internal injury af-
fects the problem of how much should be claimed in dam-
ages, not the problem of when the statute of limitations
commences to run. Otherwise, in a continuing conspiracy,
the cause of action would never fully develop, nor would
there be any limitation upon the right of action, and the
beneficent purpose of the statute to delimit the right to
sue would be defeated.
Steiner, supra, 232 F.2d at 195 (emphasis added).
Here, as was pointed out above, there was no overt refusal
to purchase Plaintiffs’ milk by UDA after 1975, because
Plaintiffs never again directly approached UDA until after
this action had been filed in 1980. There were refusals by
other processors to purchase Plaintiffs’ milk during the limita-
tions period, but these refusals were made because of full-
supply contracts in existence since about 1960. Plaintiffs have
A-24
not alleged that they did not know about the contracts or that
the contracts were not enforced until the limitations period.
Western Shoe Gallery v. Duty Free Shoppers, No. C-82-0625
EFL (N.D. Cal., Sept. 7, 1984), brought to this Court’s at-
tention in a Supplemental Response filed by Plaintiffs, is not
especially helpful because there, the trial court found evidence
of many recent overt acts in furtherance of the conspiracy,
including continued rebate payments, physical steering of
tourists away from plaintiff’s shop, and enforcement of the
boycott by a trade association. The court barred plaintiff from
suing for acts prior to the four-year limitations period, but
allowed plaintiff to sue for acts occurring within the limita-
tions period which caused injury.
Here, there are no clearcut allegations or evidence of overt
acts by Defendant UDA during the limitations period. While
Plaintiffs claim that other processors refused to deal with
them because of their contract with UDA, they allege no
overt affirmative acts on the part of UDA during the limita-
tions period.
In the case at bar, it is clear to this Court that Plaintiffs’
cause of action accrued no later than 1975, and it is also clear
that Plaintiffs themselves knew of and believed they had a
cause of action in 1975. The evidence shows that Plaintiffs
believed that UDA’s and the other handlers’ refusals to deal
with them were final; this finding is supported by Plaintiffs’
complaints to both the Justice Department and the Depart-
ment of Agriculture of UDA’s acts during 1975, and Plain-
tiffs’ own descriptions of their contacts with UDA. Plaintiffs’
claims are barred by the four-year statute of limitations,
Orgell, supra; see also In Re Multidistrict Vehicle Air Pollu-
tion, 591 F.2d 68, 71-72 (9th Cir. 1979).
Plaintiffs’ argument that reconsideration of the statute of
limitations issue is barred by the doctrine of law of the case
iia ada
A-25
is without merit. “Unlike the more precise requirements of
res judicata, law of the case is an amorphous concept. As most
commonly defined, the doctrine posits that when a court de-
cides upon a rule of law, that decision should continue to
govern the same issues in subsequent stages in the same case.”
Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 1391
(1983). Rather than deciding a rule of law in denying De-
fendents’ previous motion for summary judgment, this Court
found that a material issue of fact precluded summary judg-
ment.
Similarly, Plaintiffs’ argument that fraudulent concealment
tolled the statute of limitations must be rejected. Plaintiffs
have not pled fraudulent concealment in their First Amended
Complaint at all, much less with the particularity required by
Rutledge v. Boston Woven Hose & Rubber Co., 576 F.2d 248,
250 (9th Cir. 1978). Further, the evidence indicates that
Plaintiffs were aware of the refusals to deal by both UDA
and other handlers in 1975.
Plaintiffs’ last attempt to toll the statute of limitations is
the argument that damages occurring as a result of these
refusals to deal were speculative or unprovable during the
limitations »eriod. Defendants, however, have described how
Plaintiffs could have computed both types of damages claimed
during the limitations period in the same manner as Plaintiffs’
expert has now computed them. Plaintiffs have not clearly
responded to this argument, and it does appear that Plain-
tiffs’ damages were ascertainable during the limitations
period—certainly at a time just before the four-year limita-
tions period expired and in any event at the time of trial.
Thus, based upon the absence of a material fact issue and
of any affirmative overt acts by Defendant UDA during the
limitations period other than a continued and reaffirmed re-
fusal to deal with Plaintiffs, which do not constitute overt
A-26
acts, and for all the other reasons argued by Defendants in
their pleadings, Defendants’ Renewed Motion for Summary
Judgment should be granted.
Plaintiffs’ Motion to File Supplemental Complaint
Because the rest of this action is being dismissed, this mo-
tion should be denied as moot. There are, however, other rea-
sons supporting denial of the motion. First, the Supplemental
Complaint which Plaintiffs propose to file contains a new
claim not included in Plaintiffs’ First Amended Complaint,
i.e., the allegation that “UDA has made its milk manufactur-
ing facilities available to plaintiffs only at rates that result in
payment by UDA of prices less than the Order 131 minimum
price.” {| 24, Plaintiffs’ Proposed Supplemental Complaint. In
light of the facts that (1) this allegation is one which Plain-
tiffs have known about since 1981 and could have raised long
before now; (2) it appears to be a disguised challenge to
UDA’s base plan, which was eliminated as a raisable issue in
this action in this Court’s Orders filed September 14 and 18,
1984; and (3) its addition would require re-opening of dis-
covery, Plaintiffs’ Motion should also be denied on its merits.
Plaintiffs’ Motion for Reconsideration
Plaintiffs have filed a motion to reconsider this Court’s
Order of September 18, 1984, granting Defendants’ Motion to
Limit Issues To Be Tried. The motion is partially based on a
recent case, Ostrofe v. H.S. Crocker Co., 740 F.2d 739 (9th
Cir. 1984), in which the Ninth Circuit discussed and applied
the Clayton Act standing factors articulated by the U‘S.
Supreme Court in Associated General Contractors v. Cali-
fornia State Council of Carpenters, 459 U.S. 419, 103 S.Ct. 897
(1983). Neither Ostrofe nor Plaintiffs, however, address one
of the most critical concerns expressed by this Court in its
Order of September 18, 1984: “we deal here with an agricul-
tural cooperative which is permitted to acquire and maintain
A-27
a legal monopoly. . . . Plaintiffs have challenged several of
UDA’s practices as being predatory and in furtherance of a
monopolistic scheme. Because it is legal for this Defendant
to further its monopoly, it would appear especially critical for
Plaintiffs to show an injury caused by such practices.” Order,
September 18, 1984.
This Court fully considered all the arguments made in
Plaintiffs’ Motion for Reconsideration when it issued its Or-
der of September 18, 1984, and sees no basis for overturning
its prior order.
Based upon the foregoing,
IT IS ORDERED that Defendants’ Renewed Motion for
Summary Judgment, filed June 25, 1984, is granted in its
entirety.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for
Leave to File Supplemental Complaint, filed September 6,
1984, is denied.
IT IS FINALLY ORDERED that Plaintiffs’ Motion for
Reconsideration, filed December 4, 1984, is denied.
DATED this 21st day of December, 1984.
C.A. MUECKE
U.S. District Judge
A-28
APPENDIX D
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 85-1592 DC CV 80-0252 CAM
JEROME LaSALVIA and PEGGY LaSALVIA,
husband and wife,
Plaintiffs-Appellants,
vs. 3
UNITED DAIRYMEN OF ARIZONA, an Arizona
marketing association; ROBERT M. GIRARD and
LEONARD F. CHEATHAM,
Defendants-Appellees.
APPEAL from the United States District Court for the
District of Arizona (Phoenix).
THIS CAUSE came on to be heard on the Transcript of the
Record from the United States District Court for the District
of Arizona (Phoenix) and was duly submitted.
ON CONSIDERATION WHEREOF, It is now here ordered
and adjudged by this Court, that the judgment of the said
District Court in this Cause be, and hereby is reversed and
remanded. Costs taxed. Filed November 21, 1986
A-29
APPENDIX E
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 85-1592
D.C. No. Cv 80-252 PHX CAM
JEROME LaSALVIA and PEGGY LaSALVIA,
husband and wife,
Plaintiffs-Appellants,
Vv.
UNITED DAIRYMEN OF ARIZONA, an Arizona
marketing association; ROBERT M. GIRARD; and
LEONARD F. CHEATHAM,
Defendants-Appellees.
ORDER
January 20, 1987
Before: GOODWIN, HUG and REINHARDT, Circuit Judges.
The panel has voted to deny appellees’ petition for rehear-
ing and to reject the suggestion for rehearing en banc.
The full court has been advised of the suggestion for rehear-
ing en banc and no active judge has requested a vote on
whether to rehear the matter en banc. (Fed. R. App. P. 35.)
The petition for rehearing is denied and the suggestion for
rehearing en banc is rejected.
A-30
APPENDIX F
Arizona Milk Producers
Federal Milk Marketing Order 1131
Central Arizona Marketing Area
Phoenix, Arizona
c/o Mr. Calvin G. LaSalvia
Rt. 1, Box 954
Laveen, Arizona 85339
June 10, 1974
Hearing Clerk
Room 112-A
Administration Building
United States Department of Agriculture
Washington, D. C. 20250
Re: 7 CFR Part 1131
MILK IN THE CENTRAL ARIZONA MARKETING
AREA
RESPONSE TO NOTICE OF PROPOSED SUSPEN-
SION OF CERTAIN PROVISIONS OF THE ORDER
We, the undersigned dairy farmers located in the Central
Arizona Marketing Area, 1131, protest the suspension of the
provision for June and July 1974, that not more than eight
days’ production of any producer may be diverted to a non-
pool plant from a pool plan: ‘uring the month, pending a
public hearing.
We respectfully oppose this suspension, pending such a pub-
lic hearing where upon the facts and pertinent information
concerning this subject may be fully examined and proper
determination rendered. Following is a point rebuttal of the
purported basis for such a suspension and attached hereto is
relative copies of recent inquiries as to the existing inequitable
conditions which may exist within this market. This attached
material is used only as a reference and is not intended as
A-31
evidence nor is it to be construed as being complete. At such
times as may be deemed necessary, other related and relative
information would be made available for public hearing.
The purported basis for the suspension are:
1. A temporary increase in production. Temporary
means for a short period only, not intended for permanent
use or being. During the past eighteen (18) months a
deliberate and explicit plan to increase production far
above the normal year to year average of approximately
seven (7%) per cent has been undertaken by the peti-
tioning party, a cooperative. It has been their intent to
willfully saturate the Central Arizona Market far above
rational economic judgment. According to the USDA
Milk Production Report of February 11, 1974, a full fif-
teen (15%) per cent increase in milk production was
recorded in this market at the end of 1973. The coopera-
tive producers have reached as high as nineteen and one-
half (1912%) per cent April 1974 increase over the pre-
ceding April. There appears to have been little concern
for regulating production within the range of recent
market expectations. It is provided within the framework
of said cooperative to issue base permits to increase pro-
duction at will and it is also fully within the power of
said cooperative to rescind said excess production. The
cooperative does not have the inherent right to arbitrarily
force surplus milk products into the pool when in es-
sence all producers would subsidize the pool blend price
and be paid in accordance with the Class utilization.
2. The purported decline in Class I sales is not fac-
tual nor does it represent a clear accounting as prepared
by the Federal! Market Administrator during the past
twelve months. Tota! Class I sales for the past twelve
months of record, May 1, 1973 through April 30, 1974
A-32
inclusive, were 505.6 million pounds for an average
monthly figure of 42.135 million pounds milk. Total Class
I sales for the twelve month period of May 1, 1972
through April 30, 1973 inclusive, was 499.5 million
pounds, for an monthly average of 41.625 million pounds
milk. An actual increase of one-half (14) million pounds
of Class I sales per monthly average was recorded during
the last twelve months of record over the preceding
twelve months. As of the latest Market Information Bul-
letin, May 1974, for the Central Arizona Milk Area an
increase in Class I sales of 1.3% daily was recorded.
Quoting from the Bulletin: “DAILY CLASS I SALES
INCREASE: Sales of Class I milk within the marketing
area equaled 41,531,757 pounds during April 1974. Daily
sales averaged 1,384,392 pounds, 1.8% above those re-
corded in March 1974, and 1.3% above last April’s aver-
age of 1,367,138.”
3. It is highly speculative for the cooperative to as-
sume that their plant will have to receive and manufac-
ture more milk in June & July of this year than had
reasonably been anticipated. Historically, the production
in Arizona during the summer months has dropped 10 to
15% due to severe heat stress associated with 100° plus
temperatures. And currently feed prices of grain and hay
are not conducive to excessive feeding associated with
high production. It can be pointed out that the coopera-
tive has at its sole disposal a new cheese manufacturing
plant newly built and operating sufficient to take care of
any and all surplus milk which may be associated with
this market. Furthermore, it is not compatible to argue
for a suspension of a provision to export milk of its pro-
ducers, when it is on record that as late as May 25, 1974,
A-33
milk was imported into this market by said cooperative
from a large Texas based cooperative.
4. Itis not correct to argue that substantial quantities
of milk regularly associated with the pool during the past
fall and winter would necessarily be excluded from the
pool. First, the substantial quantities of last fall and
winter were premediated increases based on decisions
initiated by said cooperative. This milk, although included
in the pool, is not anywhere near a normal or responsible
increase as associated with the market for the past ten
years. And furthermore, the milk in question only tended
to decrease the blend price by depressing Class I percent-
age of utilization. Henceforth, putting an undue burden
upon all dairymen in respect to the amount of money
received. Class I utilization fell to less than 62% in 1974
compared to 77% for 1973. Continued diversion of such
amounts of milk will not be inducive to a higher utilization
in this market. And such diversion would not be helpful
in eliminating over quota production of 5,703,065 pounds
for the month of April 1974 by cooperative members. The
official cooperative Market Report for April 1974, pro-
jects market needs June through December 1974 as 97%
of quota. This is completely inconsistent with their re-
quest to suspend the provisions in question. Why does
producer milk need to be diverted more than eight days
as established in the order if this projection is valid?
In Summation: We request that the suspension of the pro-
visions in question be denied pending a full hearing of all
producers in the Central Arizona Market Area. It would not
seem proper to grant said suspension based upon the conten-
tion of the cooperative without a public hearing to that effect.
Each contention as discussed lacks real merit in light of USDA
facts as we!l as the market information of the cooperative
A-34
itself. First; the increase in production was not intended as
temporary, but rather an effort to monopolize the production
in the market and further aggravate the problem by allowing
imports of raw milk from a large Texas based cooperative.
Second; over a yearly period as of April 30, 1974, Class I
sales have increased an average of 14 million pounds a month.
It has been uncontrolled surplus production which has caused
a depression in the blend price. Third; it is not reasonable to
import milk and ask to send out milk because of a surplus.
Nor is it equitable for the dairyman to suffer depressed prices
as a result of this type of mismanagement. Fourth; the nearly
20% increased production as of April 1974 is not a regular
increase nor a regular amount associated with the Central
Arizona Milk Area pool. Such vast increases only tend to work
an unfair disadvantage to the smaller dairyman, dependent
upon high Class I usage. It is of the utmost importance to all
Arizona dairymen to resolve the cause of the problem through
a public hearing rather than trying to alleviate the problem
through hasty, temporary suspensatory measures. This pro-
posed suspension of certain provisions of the Order 131 under-
lies a much deeper marketing problem.
A full and detailed report concerning market problems in
the Central Arizona Milk Area is being prepared. It would
be most helpful to relay such information as may be contained
therein at a formal public hearing. Since the Market Admin-
istrator of Order 131 has recently determined that said coop-
erative has received milk directly from independent dairy
farmers without proper authorizations for the handling of
such milk. It is not judicious to suspend the said provisions
should it tend to provide relief to the parties who have im-
properly handled milk in this market. Until such time as a
public hearing can determine the facts concerning the proper
A-35
administration and use of the order, it is respectively asked
that request for suspension of certain provisions be denied.
Exhibit A: UDA (United Dairymen of Arizona, a
cooperative) Market Report, April 1974
Exhibit B: Market Information Bulletin, May 1974
Exhibit C: Milk Production Report—USDA
Exhibit D: Letter dated January 25, 1974, directed to
Sun Valley Dairy, producer, from Market Administrator
Exhibit E: Letter dated February 23, 1974, directed to
Market Administrator from Sun Valley Dairy, producer
Exhibit F: Letter dated April 25, 1974, directed to Sun
Valley Dairy, producer, from Office of Minority Leader,
United States House of Representatives
Exhibit F. 1.: Letter dated April 8, 1974, directed to
Honorable John J. Rhodes, Congressman from John
C. Blum, Associate Administrator, USDA-AMS;
attachment to Exhibit F.
Exhibit G: Authorization to Compensate Handler directed
to independent milk producers from United Dairymen of
Arizona, a cooperative; authorization was requested afler
the fact.
ec: Herbert L. Forest
Director of the Dairy Division, AMS ©
Wilson M. Haverfield
Market Administrator, Order 1131
Honorable John J. Rhodes
Minority Leader, United States House of Representatives
Honora .le Sam Steiger
United States House of Representatives
Re: 7 CFR Part 1131
MILK IN THE CENTRAL ARIZONA MARKETING
AREA
RESPONSE TO NOTICE UL PROPOSED SUSPEN-
SION OF CERTAIN PROVISIONS OF THE ORDER
We, the undersigned dairy farmers located in the Central
Arizona Marketing Area, 1131, protest the suspension of the
provision for June and July 1974, that not more than eight
days’ production of any producer may be diverted to a nonpool
piant from a pool plant during the month, pending a public
hearing.
JEROME LaSALVIA
KENNETH H. CROW
MANUEL J. SILVA (Glenview Dairy)
GEORGE M. DODDS
DON RAWLINGS (Alpine Dairy)
CALVIN LaSALVIA
Arizona Milk Producers
Federal Milk Marketing Order 1131
Central Arizona Marketing Area
Phoenix, Arizona
c/o Mr. Calvin G. La Salvia
Rt. 1, Box 954
Laveen, Arizona 85339
August 10, 1974
Mr. Richard L. Feitner
Assistant Secretary or Marketing & Consumer Services
Administration Building
United States Department of Agriculture
Washington, D.C. 20250
Re: 7 CFR Part 1131 ; =
A-37
MILK IN THE CENTRAL ARIZONA MARKETING
AREA
RESPONSE TO NOTICE OF PROPOSED CONTINUA-
TION CONCERNING SUSPENSION OF CERTAIN
PROVISIONS OF THE ORDER
We, the undersigned dairy farmers located in the Central
Arizona Marketing Area, 1131, do hereby protest and object
to the continuation of the suspension of certain provisions that
provide that not more than eight days’ production of any
producer may be diverte” to a nonpool plant from a pool plant
during the month. The suspension expired July 31, 1974. We
object further the current marketing policies of the petition-
ing party through the use of this suspension and the continued
condescending attitude of the Agricultural Marketing Service
for granting further a continuing suspension of provisions of
the Order without due process and proper notice of intent.
In the original request of the petitioning party, a coopera-
tive, a number of pertinent yet questionable problems were
deemed as sufficient for asking the Agricultural Marketing
Service, hereinafter AMS, to suspend certain provisions of
the order.' Accordingly, AMS notified all concerned parties
as to the “statement of consideration” and allowed sufficient
time for interested parties to respond. At that time a group of
producers regularly associated with this market protested the
proposed suspension.”
It is to be noted that AMS duly recognized the arguments,
views, and data of the producers in the following decision as
“cogent” and as having “received very serious consideration.”
The decision went on further to say, “A hearing to consider
1 Notice of Proposed Suspension of Certain Provisions of the Order.
2 Response to Notice of Proposed Suspension of Certain Provisions
of the Order.
A-38
all aspects of current and emerging marketing conditions may
very well be appropriate’’.*
We, the undersigned pr>ducers, continue to protest the con-
tinued suspension as granted because of the four initial ob-
jections as stated previously, pending such a public hearing.
Furthermore, we do hereby protest the continuation of the
suspension of the following points. *
1. The original suspension as granted by AMS was
based on a specific period of time, June and July, 1974,
and classified as temporary.
2. At the time of the suspension it was noted that
Class I sales had not declined in the previous twelve
months of record, but had actually increased 14 million
pounds per month on an average basis.
3. The amount of milk could have been reasonably
anticipated by the petitioning party as they have complete
control of their production and the basis upon which they
allow it to fluctuate.
4. The excessive amounts of milk being produced cur-
rently and in the immediate past can by no means be con-
sidered as a regular or usual amount already associated
in the market.® ;
5. It is a gross error to assume that this market is
now or shall continue to orderly dispose of milk.®
6. It is not in the public interest to continue and abet
the current policies as are developing in this market
under the auspices of AMS.
7. The continuation of this suspension will continue
to work undue hardship on a number of producers in that
3 Order Suspending Certain Provisions.
4 Milk in the Central Arizona Marketing Area Order Suspending
Certain Provisions. i
5 Current Milk Market Report. |
6 Letter to Producers by Shamrock Foods; dated April 4, 1974.
ae er ee
A-39
it will tend to depress the blend price of milk and further
aggravate the normal production of this market.?
8. It is not necessary to assure “relatively heavy sup-
plies of reserve milk” being marketed in this area as it
only will tend to serve as an undue hardship on producers
and ultimately the consumer.
9. Since the suspension was originally approved for
the months of June and July yet continuation sought in
August (which historically is a low month in this market)
are we to assume a further continuation is to be given
through November, 1974, as paragraph 1131.13 would
indicate?* And if so does this not effectively delete the
paragraph’s intended usage on a yearly basis without the
petitioning party having given evidence through public
hearing?
10. Further, a continuing investigation by the Market
Administrator, Order 115i concerning possible improper
handling and/or classification of milk in this market by
the original petitioning party as well as others, may bear
heavily on the continued order in this market.
Should it be the intent of AMS to provide relief to the peti-
tioning party by allowing all milk produced in this market to
become pooled irregardless of real need or apparent detriment
to blend pricing, then it is only just and in the public interest
to allow all milk produced in this market to be pooled whether
or not it is received at a pool plant. Furthermore, it would
appear completely and unequivocally discriminatory to allow
only certain producers in this market to pool all milk produced
despite need or utilization. If the member of a cooperative has
the inherent right to have all his milk pooled whether or not
essential need is established then the Order must afford the
7 Market Production and Comparison Last Twelve Months.
8 Paragraph 1131.13 of the Order.
A-40
same rights to all producers. It has never been the intent of
the Agricultural Marketing Agreement Act of 1937 to dis-
criminate against certain producers and any such interpreta-
tion either by intent or prejudice is in violation of that said
Act. Although the Capper-Volsted Act of 1922 grants Agri-
cultural Marketing Cooperatives immunity from monopoly, it
appears that gross misuse of these immunities may exist. It
is a fact that the petitioning party, a cooperative, maintains
the only surplus plant within the order for pool classification.
It is a recorded fact that said cooperative refused to receive
milk at their plant from individual independent producers
during periods of surplus production. It is a fact that said co-
operative received directly unspecified quantities of milk di-
rectly from these same independent producers previously and
allowed it to enter the pool.® It is a fact that these independent
producers sought relief from: (a) the handler/s, (b) the co-
operative, (c) the Department of Agriculture, and (d) vari-
ous other interested parties.'” And it is a fact that any and
all equitable remedy has been denied to the independent pro-
ducer by the above parties in an effort to pool their so-called
excess contract milk.'!
We therefore resubmit for consideration not only the arbi-
trary administration of the Order by AMS as being discrim-
inatory and not in accordance with the Act, but vehemently
protest the continued abuse of certain producers within this
market which tends to accentuate market problems rather
than resolve them. And finally, it is hereby requested that if
9 (Two) Authorization to Compensate Handler; dated May 6, 1974,
to Independent Producers from United Dairymen and Shamrock
Foods.
10 Letters: to Arizona Milk Inc.; United Dairymen of Arizona.
Editorial: By Herbert Saal, Editor American Dairy Review.
11 Memorandum Dated August 6, 1974, from Mr. Paul P. Dew of
Shamrock Foods.
A-41
the petitioning party must seek further to suspend provisions
of the Order, that they do so only after public hearing to that
effect. As has been previously noted both the petitioning party
and the AMS recognized the need for such a hearing. We sub-
mit that adequate time has elapsed for that procedure to have
been initiated by either/or both parties. It would be gross
negligence to continue on without the appropriate detail of
this issue.
Jerome LaSalvia
268-0140
Jerome LaSalvia, probably the last independent dairy farm-
er in Arizona will be forced to dump about 100,000 lbs. of
milk Thursday night. Shamrock the creamery processor he
has shipped to for over ten years, has informed him it will
not continue taking milk over their stated contract as they
have done in the past. (Cows fluctuate their milk production
with the season, producing much more in the spring with
green hay and nice weather, and drop drastically in the heat
of Phoenix summers.)
The principle surplus milk plant in Phoenix is owned by
UDA, a cooperative; because Mr. LaSalvia is not a member
of their cooperative they will not purchase his milk.
Phoenix and most of central Arizona is under a Federal
Milk Marketing order; the government figures out the floor
of the prices of milk in a complicated computation based on
Minnesota-Wisconsin prices; they then audit the amount of
milk produced in the Arizona market and audit its usage—
fluid milk, butter, or cheese, etc.—puts it into what it defines
as a “pool” and instructs the processors to pay the independent
dairy farmer or the cooperative a “blend” price. Therefore,
the processors pay the same price per hwt. to either the in-
dependent or cooperative dairy farmer UNLESS the coopera-
A-42
tive gets a premium above this floor set by the Federal gov-
ernment as they did in August and September 1974.
Local producer-distributors (processors that have their own
dairy farms and traditionally process only their own milk)
cannot purchase LaSalvia’s milk; in order to do so they would
have to submit to the Federal Milk Marketing Order and pay
a considerable sum to the pool on all the milk their own cows
produce.
The other processors in Phoenix, Safeway, Carnation,
Bordens, and Foremost have also refused to purchase the
Grade A milk. (These same processors also refused to purchase
Grade A milk in August and September 1974 when 6 inde-
pendent dairy farmers offered it to them in full-truck loads
at 62 cents hwt. less than the cooperative demanded and re-
ceived at that time.)
Peggy LaSalvia—Dep. Exh. No. 15—10/1/82.
Files
CU 7254
CU 7255
Cornell—8313
Cohen—8417
February 27, 1975
L.A. Field
Office: Gary M. Cohen
File: 60-139-0
Chrono
Bold
Milk: Telephone Conversation with Jerome LaSalvia,
Phoenix, Arizona (602) 268-0140 or
LaSalvia called to complain about the activities of the 4
major milk processors in the Phoenix area—Carnation, Bord-
en, Shamrock, and Foremost—and the dominant cooperative—
A-43
United Dairymen of Arizona. He accused them of a variety
of things including price fixing and excluding the milk of
independent farmers. :
LaSalvia said he had complained to our Los Angeles Field
Office on a number of occasions and that one of our L.A.
lawyers had interviewed him. Yet, no action was taken. He
continued to complain to that Office but it continued to ignore
him. LaSalvia also had some contact with the San Francisco
Field Office. He said that he called Washington, not expecting
any action, but merely to “build a record.”
IN THE UNITED STATES DISTRICT COURT
IN THE DISTRICT OF ARIZONA
No. CIV 80-245-PHX-CAM
No. CIV 80-252-PHX-CAM
STATE OF ARIZONA,
Plaintiff,
vs.
UNITED DAIRYMEN OF ARIZONA, an Arizona
Cooperative Marketing Association,
ROBERT M. GIRARD and LEONARD F. CHEATHAM,
Defendants.
JEROME LaSALVIA, et ux.,
Plaintiffs,
vs.
UNITED DAIRYMEN OF ARIZONA, an Arizona
Cooperative Marketing Association,
ROBERT M. GIRARD and LEONARD F. CHEATHAM,
Defendants.
A-44
Phoenix, Arizona
July 6, 1982
9:30 o’clock a.m.
DEPOSITION OF JEROME LaSALVIA
VOLUME I
(Pages 1 through 223)
* * * were.
Q. You don’t believe there were what?
A. Any notes regarding him, that I had talked to—
Q. And why is that?
A. Well, somewhere we had a eonversation, and he made
it quite clear to me—
Q. About what?
A. About the fact that I should never call him again.
Q. When was that?
A. Way back when I was having problems with my milk.
Q. What do you mean by way back when you were having
problems with your milk?
A. Iwas calling everybody, including United Dairymen.
Q. Is that the year that you dumped the milk, you mean?
A. That’s the year that I had the milk running over the
top of the tanks and we dumped it.
Q. Yes. And he told you don’t call him again?
A. He said if he wanted to talk to me, he’d call me.
Q. And so you never called him again?
A. I—I think Mr. West made it clear to the lawyer also,
so I did »et—lI did as they asked.
And can you read the first line?
“UDA 5-27-75.”
And then what does it say?
You have a little more legible copy.
Does it say “Asked Girard to take 4 loads of milk’?
o>o>re
A-45
A. Yes.
Q. “Offered to buy back powder”?
A. Yes.
Q. Then what?
A.
“He refused.” I can’t make out the next one. Looks
like “Refused to handle milk.” ;
Q. Is that the time when he told you not to call him again?
A. Not positive. It doesn’t make that note here anywhere.
Q. Do you have the original of this document?
A. Yes.
Q. I wonder if you’d bring it with you tomorrow so that
we could get a more legible copy.
Do you have a specific recollection of this conversation that’s
referred to, on what appears to be May 27, ’75?
A. Based on what it says there, I tried to at least put it in
powder, I could have fed the calves.
* * *
(Caption)
Phoenix, Arizona
July 9, 1982
9:30 o’clock a.m.
CONTINUED DEPOSITION OF JEROME LaSALVIA
VOLUME IV
(Pages 529 through 668)
* * * which says, only, “Claude P. Cobb—John S. Pierce—
Attorney General—Special Agent—Processed—Milk Monop-
oly,” and ask you if you can recall that conversation?
A. No.
Q. Do you recall what the conversation related to with a
special agent or Attorney General?
A. I cannot recall the conversation.
A-46
MR. BERDE: Let’s take about two minutes, there’s some-
thing I’ve got to find that I overlooked.
(Whereupon a recess was taken.)
MR. BERDE: I found it.
Q. BY MR. BERDE: Turning back to May 23, 1975, and
directing your attention to the transcript portion where there’s
first an entry in handwriting up above, “9 :30—Girard—No-
No-No.”
Do you see that?
A. Yes.
Q. Was that your telephone call to Mr. Girard?
A. I believe so.
Q. That was the occasion where he said, “I'll call you if
we've got room,” or what you referred to earlier?
A. I’m not sure if this is the specific conversation, it is
possible.
Q. Is that all you remember Mr. Girard saying?
MR. GIBSON: Is what all you remember Mr. Girard * * *
(Caption)
DEPOSITION OF ROBERT GIRARD
VOLUME I
Phoenix, Arizona
July 29, 1982
10:15 o’clock a.m.
* * * knowledge even though it may be reflected elsewhere in
the records. You know that quite well.
Q. So, your best estimate is tat it would cost millions of
dollars for the ent/re manufacturing plant?
A. Oh, I think it’s probably 8 to 10 million dollars.
Q. You were here during parts of Mr. LaSalvia’s deposi-
tion. Do you recall him talking about a telephone conversation
that he had with you in May of 1975?
A. Yes.
A-47
Q. Do you have any independent recollection of that tele-
phone conversation?
A. Well, I had several conversations with—with Mr.
LaSalvia, and I don’t recall that one—
Q. When you say you had several conversations—
A. —separately.
Q. I’m sorry.
When you say you had several conversations with Mr.
LaSalvia, over what period of time do these conversations
span?
A. °74 and 75. I think—I think that, May, ’75, may have
been the last time. It was—in the middle of ’'75 was the last
time I have talked to him.
Q. Do you have any approximation as to how many times
you talked to Mr. LaSalvia during that period?
A. Four or five times.
Q. Were these conversations about various matters or al-
ways about his trying to find a place for—to get rid of his
milk?
A. Various matters.
Q. What matters do you recall being discussed during
those four or five conversations?
A. Well, he came in originally in January of '74 wanting
some information regarding joining our organization. I be-
lieve in "74 he called one time and said he had a load or two
of milk. And in '75 once or twice he called and said he had a
load, or, I think, in May there he had four loads of milk.
Q. In January of '74 when he came in and inquired about
joining UDA, would you tell me what you recall about that
conversation.
A. Well, that’s the conversation that was taped, so I—
generally, they just wanted some information. They wanted
to know if we would be willing—-there were three of them,
A-48
independent producers. They wanted to know if we would
discuss the possibility of them joining our organization.
Q. That was the tape we listened to during the last deposi-
tion?
A. Right.
Q. Except for what we’ve already gone over for quite * * *
(Caption)
DEPOSITION OF PEGGY LaSALVIA
(VOLUME I)
(Pages 1 through 159)
Pursuant to the annexed stipulation and notice of taking
deposition duly filed in the above cause, the deposition of
Peggy LaSalvia was taken by the Defendants as upon cross-
examination under the statute, before * * *
. * -
Q. What was the reason that you decided not to join UDA?
A. I didn’t think they were operating in good faith. I, in
fact, felt like they had forced what had happened in the
market.
Q. Forced it how?
A. I felt like that they had actually backed up the milk
into their plant on purpose.
Q. When did that occur?
A. When the independents were called in and asked to cut
back, when I dumped milk, et cetera, ’73, ’74.
Q. And your belief is that UDA purposely told Shamrock
they didn’t have any more room, but it was false?
No, I didn’t say that.
What then?
I think they physically filled it up.
Filled it up how?
2>o>
A-49
A. I think they put milk in the tanks so the tank was full,
filled up.
Q. Where did it get the milk?
A. From their own producers, from Shamrock probably,
from AMPI.
Q. If they got it from Shamrock, it was your * * *
(Caption)
Phoenix, Arizona
October 1, 1982
9:45 o’clock a.m.
CONTINUED DEPOSITION OF PEGGY LaSALVIA
(VOLUME II)
(Pages 160 through 378)
* * *
Q. Do you recall receiving a letter?
A. Yes, sir.
Q. Now, on April 16, 1975, do I understand you to say
that you already had milk sold to California that you antici-
pated you would not be able to deliver to Shamrock?
A. The date on this letter is April 16th. I do not know when
I received the letter. I would assume that it would be after
that date in the mail, like the 17th or 18th.
Q. Well, let’s assume you received it on the 19th. On April
19, 1975, did you already have milk sold to California that you
anticipated you could not deliver to Shamrock?
A. My recollection is that we had already made arrange-
ments with a buyer for the milk in California when we re-
ceived the letter.
Q. Were those arrangements a better outlet for you than
donating your milk to charity?
A. If I was going to receive money for it, it appears it
would be better.
A-50
Q. Go ahead and clarify anything you want to clarify.
A. At a point in February where it appeared that the
creameries that we went to would not take our milk, prior to
the dumping of the milk, Jerome did, in fact, call Mr. Girard,
and that was the conversation we spoke earlier of that Mr.
Girard told him not to call him back. We also got a tanker
in from Flagstaff Dairy that day. We fully expected to be able
to sell the milk in it, but if we could—or if we could get it to
charity, we had a tanker there to transport it.
Q. To where?
A. To wherever and whomever would accept it. The tanker
sat at our dairy all day long.
Q. You are saying that—
MR. BOUMA: You want to hear the rest of it?
Q. BY MR. BERDE: You got more?
A. The news media that cane did try and get the milk
into charity. In fact, they assured us that they thought they
could. -
MR. BOUMA: You said something with respect to the fol-
lowing month with respect to the letter from Norman. What
was that?
THE WITNESS: The following month after Mr. Girard
said that he—for us not to call him back and we proceeded to
try all the other creameries again, Jerome asked our attorney
at that time, Mr. Brophy, to contact UDA because Mr. Girard
told us not to talk to him. Mr. Brophy tried to contact UDA
to purchase the milk.
Q. BY MR. BERDE: When was that?
A. March, '75.
Q. Um-hmm.
A. Mr. West talked to Mr. Brophy, I believe. I think he—
essentially he said that he wished we would stop starting fires
that he had to put out and go away and leave him alone.
A-51
Q. Who said that?
A. I think he—essentially that’s what Mr. West replied to
Mr. Brophy.
Q. Is that what Mr. Brophy related to you?
A. Yes.
Q. I see.
A. We proceeded then to arrange with the Health Depart-
ment to get interstate shipping. We arranged for transporta-
tion at Shamrock to transport the milk over to California
because their trucks were going there anyway because they
were picking up California milk and bringing it back to
Phoenix, and after we had made our arrangements, we re-
ceived a ietter from Mr. McClelland, Exhibit 17.
Q. Soin February, it’s vour testimony that Jerome calfed
Bob Girard and it was in February thai Bob Girard said,
“Don’t call me, I'll call you’?
A. Yes, sir.
Q. And so, therefore, you didn’t call Bob Girard after that?
MR. BOUMA: For what period of time?
MR. BERDE: I don’t know.
MR. BOUMA: Well, that—we know there were communica-
tions since then, I guess.
Q. BY MR. BERDE: Well, until recently in 1981?
A. I don’t believe—Mr. Girard was very emphatic.
Q. That’s not my question.
MR. BOUMA: Peggy, he wants to know whether you had
the conversation before or after Mr. Girard made the state-
ment that he’d call you, don’t call him, essentially. Did you
have any conversation, or Jerome, between you folks and
Girard at any time after that conversation in 1981? That was
the question.
THE WITNESS: I do not believe that Jerome had any con-
versations.
A-52
MR. BOUMA: Peggy, that’s an error. You had the discus-
sion, at least, about the powdered milk.
MR. BERDE: Wait a minute. I don’t know if it’s an error.
Let’s see if the witness knows.
MR. BOUMA: That’s fine. You can play whatever game
you want.
MR. BERDE: It’s no game. I want to get her recollection
of what the facts are.
MR. BOUMA: That’s fine. You haven’t asked her about the
subject.
THE WITNESS: There was another subject that Jerome
had where he tried to sell the milk and buy it back from UDA
in powder form.
BY MR. BERDE: When did that occur?
I don’t know.
Were you in on that discussion?
Did I participate in the discussion?
Yes.
I don’t believe so.
The discussion about what you just related involving
an offer to sell milk and take back powder, was that in the
time period that we’re now discussing, that is February-
March, 1975?
A. I think so. I’m not sure.
Q. Okay. Now, while your recollection was being refreshed
during the break in your consultation with counsel, were you
also refreshed as to Mr. Brophy telling you not to call UDA
again?
A. I believe he was relaying Mr. West’s request not to
call them again. ;
Q. Did you talk to Mr. Brophy at that time when he re-
layed what you described as Mr. West’s conversation?
A. I may have.
OPorore
A-53
Q. Did you record that conversation in any kind of a
memorandum?
A. I’ve seen it in some notes, but I don’t recall.
Q. Have those notes been produced, to your knowledge?
A. I don’t recall seeing them.
Q. If such notes exist, would you have produced—have
they been produced, to your knowledge?
A. If they were in the form of a memorandum, other than
if they were in Jerome’s diaries that we don’t have.
Q. Did you make a memorandum of that conversation with
Mr. Brophy—
.A. I don’t recall specifically.
Q. —involving his conversation with Mr. West?
A. I don’t recall specifically.
oe .8 *
A. Apparently the whole market didn’t think so.
Q. Well, at least Shamrock didn’t think so because they
were bringing the milk in and didn’t want to take your milk?
A. Neither did Safeway or UDA or Foremost or—
Q. Well, you don’t know about UDA because you didn’t
call them in March of ’75, did you?
MR. BOUMA: That’s a little bit argumentative in view of
her testimony that they had been told not to call, and secondly
that Jerome had—Frank Brophy lad called and Dave West
told him forget it.
Q. BY MR. BERDE: In any case, my question is that if
you had milk that you knew Shamrock wouldn’t take and no
one else apparently wanted to buy in Phoenix, why didn’t you
try to get it moved somewhere else?
A. Mr. Berde, I want to sell my milk in Phoenix where it
belongs. I was trying to do so. I had, for two months very
definitely as this shows, tried to do that.
A-54
Q. I understand. You’ve testified to that.
A. After it became apparent that I would not be allowed
in this market with the milk my dairy produced, I eventually
went to California with it.
¥ OK 7
ARIZONA CONSUMERS COUNCIL
823 W. Adams Street Phoenix, Arizona 85007
March 27, 1975
Thomas E. Kauper, Assistant Attorney General
Antitrust Division
U. S. Department of Justice
Washington, D. C. 20503
Dear Mr. Kauper:
The Arizona Consumers Council respectfully requests that
your office immediately investigate monopoly practices in the
Arizona milk industry since the August, 1974 federal grand
jury indictments of four milk companies, Borden, Carnation,
Foremost, and Shamrock, which account for 90% of milk sales
in this State, for price-fixing in violation of federal antitrust
laws. The companies pleaded no contest to charges.
Jerome LaSalvia, independent dairy farmer of Laveen, is
unable to sell milk he produces in this market. Until recently
LaSalvia sold milk from his 1000 cow operation to Shamrock
Dairy. Shamrock notified him that they would purchase no
more milk from him this month. Last month LaSalvia dumped
20,000 pounds of milk because no creamery would buy his
milk.
Milk prices in this market were recently increased. United
Dairymen of Arizona coop commands premium prices for milk.
Milk produced by UDA coop members is sold without diffi-
culty. LaSalvia refuses to join the coop.
A-55
LaSalyia now has 100,000 pounds of milk which he has
offered to sell to every creamery in this market, including the
UDA surplus creamery. No creamery will buy his milk. He
has offered to give the milk away to charity rather than dump
it. He has been prohibited from doing that.
Jerome LaSalvia is being forced out of the dairy farming
business because he refuses to submit to monopoly domination
of the milk market in Arizona. This domination is possible
because federal antitrust laws are not now being enforced
against known violators.
We ask that your office take immediate steps to enforce the
antitrust laws against price-fixers in the Arizona milk in-
dustry and to protect independent dairy farmers who do not
want to be a part of a price-fixing conspiracy.
Sincerely,
CURRIN V. SHIELDS
President
cc: Jerome LaSalvia
A-56
John J. Bouma
Kenneth D. Nyman
SNELL & WILMER
3100 Valley Center
Phoenix, Arizona 85073
Attorneys for Plaintiffs
IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE DISTRICT OF ARIZONA
No. CIV. 80-252 PHX-CLH
JEROME LaSALVIA, et ux.,
Plaintiffs,
vs.
UNITED DAIRYMEN OF ARIZONA, et al.,
Defendants.
PLAINTIFFS’ RESPONSE TO DEFENDANTS’
MOTION TO COMPEL PRODUCTION AND REQUEST
FOR A PROTECTIVE ORDER
A. RESPONSE TO MOTION TO COMPEL
Until approximately 1974, plaintiffs were able to sell all of
their milk in the Arizona market for the so-called “blend”
price provided by the Central Arizona Milk Marketing Order.
The gravamen of this lawsuit is that defendants, by their
monopolistic practices and their concerted activities in re-
straint of trade, have forced plaintiffs to divert their milk
from the Central Arizona Milk Market and to either dump
that milk, or sell it in other markets for a price lower than
the Central Arizona “blend” price.
Defendants’ themselves summarized their First Request for
Production of Documents as a request for:
A-57
“all documents which refer or relate to Piaintiffs’ busi-
ness and property. .. .” (Defendants’ First Request for
Production of Documents, page 3, lines 28-29).
Defendants followed the above quoted language with a litany
of every conceivable record which a business could possess.
Plaintiffs’ response was to provide defendants with the
records of every one of plaintiffs’ milk sales during the rele-
vant time period, thereby providing defendants with a clear
and concise record of (1) what plaintiffs were able to get for
the milk that they were able to sell in the Central Arizona
Milk Marketing Order, (2) what they were able to get for
their milk when they were forced to sell it elsewhere, and (3)
the amounts of milk sold in the Central Arizona Market and
elsewhere. In short, plaintiffs gave defendants everything
they would need to compute plaintiffs’ damages.
Defendants want more.
_ Defendants want, for the entire “period of time during
which plaintiffs have engaged in the business of the produc-
tion of milk in Arizona’, (Defendants’ First Request for Pro-
duction of Documents, p.3, 1.31, p.4, 11.1-3.) all of plaintiffs’
(1) financial accounting documents, (2) documents evidenc-
ing income and expenses, (3) banking records, (4) documents
evidencing production and disposition of milk (these were
provided), (5) tax records, (6) financial statements, (7) docu-
ments evidencing ownership of property and indebtedness,
and (8) other documents that reflect the type of information
contained in the foregoing documents.
1. Time Period. Defendants have failed even remotely to
suggest why they are entitled to all of plaintiffs’ financial
records for the entire period that plaintiffs have been in the
dairy business. Plaintiffs are only seeking damages for not
A-58
being able to sell all of their milk in Arizona from the early
70’s on. Plaintiffs do not claim that they were damaged by
defendants’ activities until the early 70’s and plaintiffs have
given defendants the records of all of their milk sales from
1968 to 1981.
2. Financial Accounting Documents, Documents Evidenc-
ing Income and Expenses, Banking Records, Tax Records,
Financial Statements and Other Records. Again, plaintiffs
are claiming that, because of defendants’ actions, instead of
receiving the Central Arizona Milk Marketing Order blend
price for all of their milk, plaintiffs had to sell their milk
elsewhere and therefore receive something less than that
blend price. The records produced to defendants reflect the
blend price received in Central Arizona, the lower than blend
prices received elsewhere, and the quantities of plaintiffs’
milk that received each price. Extraneous expenses, banking
records and financial statements are totally irrelevant.
Defendants’ strategy is, of course, transparent. Plaintiffs
own one of the only remaining dairies in the Central Arizona
Milk Marketing Order which is not a member of UDA. If the
LaSalvias give up these critical financial documents, defen-
dants will quickly ascertain how long the LaSalvias will be
able to sustain the financial burden of this lawsuit. Of even
greater concern will be defendants’ ability to further their
monopolistic scheme by applying financial pressure on the
LaSalvias’ creditors, suppliers and customers. In short, de-
fendants will be in a position to drive the last nail in the coffin
of one of the last independent dairymen in Arizona. All of
this in spite of the fact that the measure of damages for what
really amounts to a theft should be the value of the goods
stolen—not the value of the victim.
i ee he
A-59
3. Documents Evidencing Ownership of Property and In-
debtedness. '
This total irrelevancy and immateriality of this request is
clear on its face. What possible difference will plaintiffs debt
picture have to the issues involved in this lawsuit. When a
farmer’s cow is stolen from his pasture, is it relevant that the
pasture was mortgaged? More to the point, when milk is stolen
from the cow, is it relevant that the pasture is mortgaged?
B. REQUEST FOR A PROTECTIVE ORDER
Until defendants restricted their market, plaintiffs had one
of the most successful dairies in Arizona. Plaintiffs’ ability
to survive is a testament to their tenacity and business acumen.
Defendants would like nothing more than to have full rein to
explore plaintiffs’ records and to appropriate plaintiffs’ meth-
ods of doing business for their own use.
For the foregoing reasons, plaintiffs request that a protec-
tive order be entered limiting disclosure of any documents
produced to ‘endants’ attorneys and experts retained for
this case.
C. CONCLUSION
Defendants’ Motion to Compel seems superficially attrac-
tive. After all, this is an antitrust case and antitrust cases are
supposed to involve lots of documents. Upon closer examina-
tion, however, it is apparent this is not a typical antitrust
case. Defendants and plaintiffs sell a fungible product at a
governmentally controlled price. Defendants, through their
anticompetitive activities, have restricted plaintiffs’ ability
to sell that product for that price. The measure of damages is
simply the difference between the market price and the actual
price for the amount of plaintiffs’ milk that defendants ex-
cluded from the market. In view of the number and type of
documents requested and their total irrelevance to this case,
denial of defendants’ Motion is appropriate.
A-60
If the Court should decide to order the production of some
of the documents, it is imperative that a protective order be
entered limiting disclosure of plaintiffs’ documents to attor-
neys and their experts.
RESPECTFULLY SUBMITTED the 17th day of August,
1981.
SNELL & WILMER
By JOHN J. BOUMA
KENNETH D. NYMAN
3100 Valley Center
Phoenix, Arizona 85073
Attorneys for Plaintiffs
COPY of the foregoing mailed this 24th day of August,
1981, to:
David Wm. West
Harold J. Bliss, Jr.
WEST & BLISS, P.A.
4154 North 12th Street
Phoenix, Arizona 85014
Attorneys for Defendants
Jerri P. Forsythe
A-61
Law Offices
SNELL & WILMER
3100 Valley Bank Center
Phoenix, Arizona 85073
(602) 257-7211
TELEX 165088
May 8, 1981
BY HAND
Mr. Harold J. Bliss, Jr.
West & Bliss, P.A.
4154 North 12th Street
Phoenix, AZ 85014
Re: Jerome LaSalvia, et ux. v. UDA, et al.
Dear Hal:
At the end of our meeting in your offices on May 5th, I told
you that I would get back to you on any additional documents
which we would be willing to turn over in further response to
your First Request for Production. This letter represents our
response.
As you understand by now, the gravamen of our case is
that Jerome and Peggy LaSalvia were denied the opportunity
to sell all of their milk in this market by certain activities of
UDA which we regard as being in violation of the State and
Federal antitrust laws. They had to either sell that milk else-
where—for a lower price—or dump it. In support of that
theory, we supplied you with documents evidencing prices and
quantities of milk sold elsewhere. You can compute the dam-
ages by taking the difference between the Shamrock (blend)
price and the non-Shamrock price and multiplying the re-
mainder by the volume of milk either sold outside the market
or dumped.
As your April 9, 1981 letter correctly notes, we have also
accused UDA of increasing the LaSalvia’s costs of doing busi-
A-62
ness and increasing capital requirements. Because of the
expense involved in conducting a detailed damage study, we
are only claiming the cost of the new milk tank which Jerome
recently purchased from UDA in order to hold milk for out-
of-market or distress sales. And, of course, UDA has its own
records on how much Jerome paid it for that tank.
Your Request also asked for quality control test documenta-
tion. Although Jerome does keep a few records, they are not -
well organized, and it would be much easier for you to get
those records directly from the State Dairy Commission.
Jerome does not believe that he has any health records that
are not duplicated in the State Dairy Commission files, and
he hereby gives the UDA permission to copy any quality
control test results kept by the State Dairy Commission, on
the condition that he be allowed to copy the quality control
test results for all of the members of UDA.
You have requested documents concerning sales of cattle,
on the apparent, and correct, assumption that Jerome has
been forced to sell many producing cattle for beef because of
the absence of a market for his milk. However, he has elected
not to pursue this theory of damages, and will therefore not
claim the loss associated with the forced sale of those cattle
as beef in lieu of selling their milk.
I trust that the foregoing is satisfactory. If it is not, please
give me a call. :
Very truly yours,
SNELL & WILMER
KENNETH D. NYMAN
KDN ij)
A-63
LaSALVIA DAIRY
LOST INCOME ANALYSIS
Prepared by:
Frank K. Stuart & Associates
455 South 300 East, Suite 200
Salt Lake City, Utah 84111
Pl. Tr. 326
LIST OF SCHEDULES
Page
Section 1
1.1 LaSalvia Milk Shipments To Out-of-State
Consumers, 1974-1981 1-7
1.2 Calculation of LaSalvia’s Out-of-State
Sales, 1974-1981 8-20
1.8 Comparison of Amount Received by LaSalvia
1.4
1.5
1.6
1.7
1.8
1.9
for Out-of-State Milk Shipment With Amount
Available in State Under Federal Order 131,
1974-1981 21-24
Annual Summary of Comparisons For Out-of-
State Shipments LaSalvia Dairy, 1974-1981 25
Estimated Hauling Charges Incurred By
LaSalvia Dairy If Out-of-State Milk Was
Sold Within Order 131 Market Area 26
Estimated Market Administrative Charges
Incurred by LaSalvia if Out-of-State Milk
was Sold Within Order 131 Market Area 27
Loss On Out-of-State Shipments of Milk
LaSalvia Dairy, 1974-1981 28
Comparison of Production Shipped to
Handlers Under Order 131 and LaSalvia’s
Out-of-State Milk Shipments, 1974-1981 29-36
Uniform Producer Prices Under Federal
Order 131, 1974-June 1982 837
A-64
1.10 Butterfat Differentials Under Federal
Order 131, 1974-June 1982 38
Section 2
2.1 LaSalvia’s Sales To United Dairymen of
Arizona, 1981-1982 39
2.2 Calculation of LaSalvia’s Sales to
United Dairymen of Arizona, 1981-1982 40-41
2.3. Comparison of Amount Received by LaSalvia
For Sales to United Dairymen of Arizona
With Amount Available Under Federal Order
131, 1981-1982 42
2.4 Estimated Hauling Charges And Market
Administrative Charges Incurred by
LaSalvia for Milk Sold to United Dairymen \
of Arizona 43
2.5 Loss on Milk Sales to United Dairymen of
Arizona LaSalvia Dairy, 1981 and 1982 44
Section 3
3.1 Expansion of Cow Herd Assuming No
Supplemental Cow Purchases, 1965-1981 46
3.2 Comparison-of LaSalvia’s Actual Herd
Increase and Projected Herd with no
Supplemental Cow Purchases, 1965-1981 47
3.3 Comparison of LaSalvia’s Actual Herd Size
with Projected Herd Size, 1973-1981 50
3.4 Additional Cull Cow Sales LaSalvia Dairy,
1968-1981 51
3.5 Additional Bull Calve Sales LaSalvia
Dairy, 1974-1981 52
3.6 Lost Income Resulting From Lost Sales of
Cull Cows and Bull Calves LaSalvia Dairy,
1975-1981 53
A-65
3.7 Loss of Revenue Associated with Additional
Milk Sales and Additional Cull Cow and Bull
Calve Sales LaSalvia Dairy, 1974-1981
Section 4
4.1 Loss Of Additional Cattle LaSalvia Should
Have Had In 1981
Section 5
5.1 New Investment 1,200 Milking Cows (1,436
Milking Cows) With Replacements
5.2 Lost Value Of Plant And Equipment
LaSalvia Dairy
54
55
56
57
5.3 Depreciation Schedule 1,200 Milking Cows
With Replacements ;
5.4 Cost Of Plant And Equipment For Additional
Milking Cows 1974-1981
5.5 LaSalvia Dairy Actual And Projected Net
Income And Depreciation 1970-1981
5.6 Comparison Of LaSalvia Cashflow With Cost
Of Additional Plant And Equipment
Section 6
6.1 Sunshine Swiss Out-of-State Milk Diversions,
January-March 1980
Section 7
7.1 Cost Of Extra Tank And Extra Crates
Purchased
Summary Of Losses
58
59
60
61
62
64
A-66
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A-67
SCHEDULE 1.3
Page 1 of 4
COMPARI
FO
WITH AMOUNT A
Total
Pounds
1974
January
February
March
April
May
June
July
August
September
October
November
December
Total 1974
1975
January
>
=
(Je)
&
i
al PEI dtl
rz
i)
on
g
9
5
<
| |
August —_
September os
October —
November —_—
December —
Total 1975 290,820
1974 and 1975
N OF AMOUNT RECEIVED BY LaSALVIA
OUT-OF-STATE MILK SHIPMENTS
AILABLE IN STATE UNDER FEDERAL ORDER 131
Amount Calculated
Received By Amount For Handler’s
LaSalvia LaSalvia Difference Charge
(Dollars) (3)
3)-(2)
(2) (3) (4) (5)
$ 3,161.29 $ 4,504.70 $1,343.41 a
$ 3,161.29 $ 4,504.70 $1,343.41 an
$ 9,292.96 $11,775.72 $2,482.76 $ 704.20
9,503.97 12,384.22 2,880.25 2,309.50
$18,796.93 $24,159.94 $5,363.01 $3,013.70
A-68
SCHEDULE 1.7
LOSS ON OUT-OF-STATE SHIPMENTS OF MILK
LaSALVIA DAIRY
1974-1981
Loss On
Out-Of-State
Milk Shipments
Difference Between Amount That LaSalvia __
Received And Calculated Revenue On
Out-Of-State Sales $324,379.33
Amount LaSalvia Paid To Shamrock And
Other Handlers 98,029.78
Less: Estimated Hauling And Administrative
Charges Incurred By LaSalvia If
Out-Of-State Milk Was Sold Within
Order 131 Market Area (30,300.00)
TOTAL ESTIMATED LOSS $392,109.11
— (Dollars) —
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.