# Appendix — Continental Baking Co. v. Federal Trade Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_0220%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1967 - **Citation:** 386 U.S. 932 ## Text il. ‘APPENDIX A UNITED STATES COURT OF APPEALS-FOR THE NINTH CIRCUIT ~ J e i 4 No. 19,325... Sareway Srorzs, [ncorporaTep, CoytiInENTAL Baxtne Co., Bucwan Baxine Co., and Gavess S. Bucwan,.LANGENDORF UNtIrep. BAKERIES, Ino, Hansen Bakine Company, Inc., - and Ricwarp.Hoyrt, Petitioners, v. ‘Frapamat. TRADE. Counusr0N, mubpeneent, [September 14, 1966] Petitions To Review an Order ‘of the 2 Federal. Trade Commission .- ) Before: MERRILL, Brown, and Exy, Circuit J udges Ezy, Circuit J udge: _ Petitioners seek review of a cease and desist order issued — by the Federal Trade Commission (FTC).. The order re- lates to unlawful price-fixing acts and practices found to _ have been committed by the petitioners and others in the sale of bread. The FTC made and entered the challenged order under the authority of section 5(b) of the Federal Trade Commission Act, 15 U.S.C. §45(b). Our power of judicial review is conferred by section 5(c) of the Act. - ‘The petitioners are Continental Baking: Company, Lang- endorf United Bakeries, Inc., Hansen Baking Co., Inc., Safeway Stores, Incorporated, and Richard Hoyt, an offi- cer of Hansén.. A number of others were involved in the proceeding, and while the order was directed against: them also, they have not sought review.’ They were held with . petitioners here, to have engaged i in a. conspiracy wrong- 1 Petitioners Buchan Baking Co. and George S. Buchan, named in the heading, filed petitions but have offered no briefs in onners of their position. 2 28 fully, to fix and regulate the price of bread 1 in the general © vicinity of Seattle, Washington. Three of the petitioning baking companies, hades with nearly all others who were charged in the Commission ~ proceeding, were members of .a voluntary organization - ealled Bakers of Washington, Inc. This corporation, of . _ which the petitioner Hoyt was vice-president, was” also - named .as a respondent. It was initially incorporated in 1936 in the State of Washington under the name of Bakers of Western Washington, Inc. In August, 1987, the cor- porate name was changed to its present name. Bakers’ members are classified by division ‘according to geograph-. ical location. In.September, 1961, fhere were fifty-nine members. More than half of these had places of business in Seattle, but divisions of the association were also located in other Washington cities, Aberdeen, Yakima,.Bellingham, and Tacoma. All dtes were paid to Bakers in Seattle. Both ©: wholesale and retail bakeries were included in the member- ship, but within the trade areas served by. the association, - great majority was engaged in ‘wholesale distributién, ‘The Commission contends that much of the wrongful ‘activity was committed through the conduct of Bakers and of two individuals who were its successive secretaries dur- ing the period in question. The purposes for which Bakers was formed, as specified by its. corporate articles, included the collection and dissemination among its members of all lawful information for the benefit of the business of its: members. . Petitioners contend that the primary pur- poses, of the association, though not specified in the ar- __,aatieles, pertained. to its negotiation of labor contracts as a collective bargaining agent for its member companies and its dealing with union labor grievances and with prob- - Jems concerned with legislative cadmas regula- tions, We meat first examine petitioners’ vigorous challenge of | the Commission’ ~ power to coms e jurisdictiom, It is em ae ee ¥% 8a claimed: that the alleged acts and practices, even if wrong-. - fully committed, were not committed “‘in commerce’? within the meaning of section 5 of the Act. Petitioners assert that the challenged activities were wholly intrastate-and are . thus not within the intendment of the statute. The FTC. insists that its jurisdiction is properly supported by three grounds, (1)-sales of bread by certain of the petitioners to Alaskan customers f.o.b, dockside at Seattle, were sales in interstate commerce, (2) bread produced and sold by integrated, multistate corporations Continental,. Langen- dorf, and Safeway is necessarily in interstate commerce, © even if all sales were made in only one state, and (3) an— unlawful conspiracy between petitioners, Bakers of Wash- ington, Inc., and others, fixing the price of breatt in the State of Washington, is an unfair-methdéd of competition in — interstate commerce regardless of whether or not peti- tioner’s bread sales in the State of: Washington, is an unfair method of competition in interstate commerce re-. gardless of whether or not petitioners’ bread sales in the State of Washington are considered to have been made in interstate commerce. We believe that the first ground _ sufficiently supports the Comimission’s jurisdiction and that it is unnecessary: to examine the other two. a Four of the petitioners, Buchan, Continental, Hansen, © and Langendorf regularly sold bread to customers in’ « Alaska, f.o.b. dockside at Seattle.2 The Alaskan sales by - each of these four amounted to less than one percent of its & ?In addition to such Alaskan sales other regular out-of-state shipments were made by Safeway and Snyder’s Bakery, Ine: - Safeway shipped bread from its Seattle plant to an adjoining state and Snyder, a wholesale baker in Yakima, sold bread to retailers _ in the State of Oregon. On Aptil 1, 1959; Trennery’s Bakery Co. - in Yakima was acquired-by Holsum Baking Company. Thereafter all bread sold by Trennery’s in Yakima was imported from Lewis- town, Idaho.. Petitioners conceded in proceedings befo the Com- . mission that this bread sold in Yakima was ‘‘in commerce.”? eT ee ee ee ee ae TN eT ST OTE ne ERD Oe ARCO NT ee See total sales. . The prices to Alaskan customers weré ‘‘regular wholesale prices’’,. determined -on the same basis as the prices for sales within Washington State. Therefore, price fixing in the State of Washington necessarily affected the sales to Alaskan customers. The sales to the Alaskan customers were sales in interstate commerce. See Dahnke- Walker Milling Co. v. Bondurant, 257 U.S. 282, 290, 66 L. Ed. 239, 42 Sup. Ct. 106 (1921) ; Addyston Pipe é Steel Co. v. United States, 175 U.S. 211, 241, 44 L. Ed. 136, 20 Sup. Ct. 96 (1899) ; California Rice Ind. v. FTC, 102 F.2d 716, 718 (9th Cir. 1939). This is sufficient to fix jurisdiction in. . the FTC. E.g., Standard Container Mfr’s Ass’n v. FTC, 119 F.2d 262, 265 (Sth Cir. 1941). Petitioners contend, how- ever, that we should ignore the Alaskan sales as a valid basis of jurisdiction by application of the doctrine of de minimis non curat lex and because the sales were unrelated to the alleged conspiratorial acts. We have recently held - that_only $3,086.31 in interstate purchases was sufficient to sustain the jurisdiction of the NLRB over a local cemetery association, NLRB v. Inglewood Park Cemetery Ass’n, . 355 F.2d 448 (9th Cir. 1966): In that case, we quoted. the Seventh Circuit’s response to an argument of de minimis, ‘‘The time has not yet arrived when $2,000 is but a trifle.”’ NIRB-v. Aurora City Iines, Inc., 299 F.2d 229, 231 (7th Cir. 1962). Here the amounts involved are substantially: greater than the amounts involved in the cited cases. The provisions of the respective statutes granting jurisdiction to the NLRB and the FTC are not identical. The labor | - statute probably i is intended to be more extensive, but the question as to what is ‘“‘de minimis’’ should not call for ° different answers. Assuming that the amounts of the. . Alaskan sales were ‘‘de minimis”’, it would not necessarily - follow that the. FTC was here without jurisdiction: In United States v: Socony-Vacuum Oil Co., 310 U.S. 150, , 225,-n.59, 84 L. Ed. 1129, 60 Sup. Ct. 811(1940), it was written, ‘‘the amount of interstate or foreign trade involved ‘is not material (Montague & Co. v. Lowry, 193 U.S. 38), 5a since §1 of the Act brands as illegal the character of the restraint not the amount of commerce affected.’’ See also Uniter States v. McKesson & Robbins, Inc., 351 U.S. 305, 310, 100 L. Ed. 1178, 76 Sup. Ct. 806 (1956), Pootnote omitted. ), wherein the Court stated, . a ie. : “Tt makes no difference whether the motives of the participants are good or evil; whether the price fixing is accomplished by express contract or by some more subtle means; whether the participants possess market ' eontrol; whether the amount of interstate commerce. affected i 1s large or small; or whether the effect of 'the agreement is to raise or decréase prices.’’. (Emphasis added.) See also Sun Oil Ca. v. FTC, 350 F.2d 624, 631-32 (7th Cir. 1965), cert. demed, 382 U.S. 982 (1966). The Alaskan sales were not wholly unrelated to the ac- ' tivities which the FTC seeks to prevent. The prices re- ceived for these sales, sales which were clearly made ‘‘in commerce’’, were determined in the same manner as sales 3 made in the State of Washington. While it may be that * the petitioners: intended that their activities. affect only those sales made within. the ‘State bd Washington, . the effect was otherwise, Langendorf and Hansen contend that since they are en- gaged in the sale of bakery products at wholesale. prices only, they could not have conspired to fix and maintain re- tail prices. Thé argument is specious. -Continental, Lang- endorf, Hansen, and Buchan all stamp the retail price on *the bread wrapper. The wholesale price paid by the re- tailer is the stamped retail price less twenty percent. This _ was established. by testimony of representatives of the - wholesale bakers. Any price-fixing activity with regard to - ‘the wholesale price would necessarily have a direct and immediate effect on retail prices. | a ee as ee ee ~ 6a All of the petitioners contend that the Ocommissjon’ S order i is not supported by substantial evidence. We do not agree. Our attention is directed at certain significant and relevant facts. | : Representatives of Continental,. Langendorf, Hansen, and Buchan regtlarly attended the meetings of Bakers of. Washington, Inci, at the Washington. Athletic Club. Meet- ings were held not less: than twenty-six times annually. During the summer of 1958 meetings were held at which prices’ were diséussed.° . : On August 11, 1958, Continental, Langendorf, Hansen, and Buchan all put into effect identical increases of two cents per.one and one-half pound loaf of white bread, from ° thirty- one, cents to thirty-three cents. The bakery super- visor of Albertson’s Stores, Inc., was informed: by. the Secretary of Bakers of a price increase.. Petitioners con- tend that prices were only casually discussed at the Bakers’ meeting in connection, with negotiation of labor contracts, but the record reveals that price discussions took place, not only .prior, but also subsequent to labor “negotiations. On September 19, 1960, Hansen and ‘Langendorf raised prices of the standard one and one-half pound loaf of white bread from thirty-three cents to ‘thirty-four cents. Buchan and Continental made a similar increase three days later. One example of a price rise after price discussions at the Bellingham division of Bakers took place in 1958. Robert -8 Albert Pettersen, a former bakery supervisor for Albertson’s ° Stores, Inc., owner ‘of a.grocery chain, a member of Bakers and a respondent below, testified, ‘‘Well we discussed the labor, we discussed our price of our material—flour, shortening, sugar. And labor had jumped SO high that they decided that we should have a raise in our bread. From there we just, took it and they said, ‘What do you think about certain prices?’ and they kicked it around and, so that is as far as it went as long as I sat there.’? (Em- phasis added.) Ta * ‘Hall, of Hall’s Bakery in Bellingham, which had been known as a ‘‘cut-rate’’ bakery, .testified that he had been asked by ‘‘the represéntatives of Bakers of Washington, Ine.’’ to join and. follow in line with other bakeries in the. prices set. One Schafer, owner of a me company, testified that a meeting of the Yakima division of Bakers was called sub- sequent to a price-cutting ‘incident in that city.. The meet-- ing was attended by representatives of both wholesale and retail bakers. Schafer’s testimony indicates that much of the discussion at the meeting was directed at the expressed: need to coordinate prices among the retailers and eliminate ‘‘thrift-store’’ competition. Lalime, who became the secre- ' tary of Bakers in November, 1957, was quite active in - maintaining prices. The. bakery products supervisor of a gretery chain testified that after having lowered his com- pany’s price on raisin bread to nineteen cents per loaf, he received a telephone éall from Lalime. Lalime informed him that a wholesale baker had complained about the nine- teen-cent price and’ Lalime told the supervisor) that he should charge the regular price. On another occasion, this _ superintendent himself made use of Bakers to combat price cutting. He called up Lalime and complained of the low price of bread in Bellingham. Lalime told him not to cut - his prices, ‘‘You just wait and let me take care of ‘thie. ie The supervisor. testified, . “Well, Mr. LaLime represents all the bakers hére in the State of Washington and he is supposed to kind of keep us all in line, to try to help us all out. That is his job, to keep the’ people that belong to the association and to keep the’ prices where they belong.’’ Robert Hall testified that *he had been solicited to join Bakers three times. He was told by Lalime that the pur- poses of the association were ‘to make better labor .rela- © SR, = tions, to ‘maintain prices and generally better baking con- ditions.’’ (Emphasis added.) 8a The Sere poipts to only some of the testimony from. which it might be reasonably inferred that price-fixing ac- - tivities occurred.. ‘‘[T]he function of this Court, is merely _to-make a-comprehensive review of the record before the ~ Commission and to determine if the findings are supported by substantial: evidence on such record considered asa whole.’’ Goodman v. FTC, 244 F.2d 584, 589-90 (9th Cir. 1957) (Emphasis in original.) (Footnote omitted.). ‘See. Se et i tS te also Sun Oil Co. v. FTC, supra. ‘The findings of the Com- mission’ as to the facts, if supported by evidence, shall be conclusive. ». 15 U.S.C. §45(c). It is not the province of our court, in reviewing FTC findings, to substitute its own appraisal of the testimony and to pick and choose among uncertain and conflicting inferences. ‘‘Statute and decision . forbid the exercise of that power.’’? FTC v. Algoma Launker Co., 291.U.S. 67, 73, 78 L. Ed. 655, 54 Sup. Ct. 315 (1934) (Citation omitted.) ; Stauffer eeperenerset, Inc. v. FTC, 343 F.2d 75, 80 (9th Cir. 1965). Here, we have a determination of: a conspiracy to fix * prices. It would be ‘‘naive’’, as Judge Barnes wrote for our court in Esco Corp. v. United States, 340 F. 2d 1000, 1006 _(9th Cir. 1965), ‘‘to believe that a formal signed-and- - sealed contract or written resolution would conceivably be adopted at a meeting of price-fixing conspirators in this — day arfd age. In fact, the typicai price-fixing agreement i is usually accomplished. in a contrary manner.”’ | Petitioners contend that the FTC erred in finding and holding that a conspiracy existed solely upon evidence of general discussions of price levels occasioned by and oc- curring during discussion of collective bargaining for labor union contracts. ‘They also contend that the FTC erred in determining, upon the sole basis of simultaneous or nearly simultaneous price increases, that.a conspiracy to set and fix prices‘existed. We do not believe that the FTC. so found and so held.. It seems anomalous that petitioners would contend that there were two ‘‘sole’’ bases for the 9a FTC's finding of a conspiracy to raise, set, and fix prices. - s It is. quite true that ‘‘even ‘pure’ conscious parallelism ot _ prices is, standing alone, not unlawful. Nor is an indi- ». «vidual competitor’ s sole decision to follow a price leader- ship, standing: alone; a violation: of law.’? Esco Corp. v.. ~ United States, 340. F. 2d at 1007. It is of some significance here that at no time was a decrease in price by one of the wholesalers or retailers joined in by all his fellows nor ' Was any such decrease of an enduring nature. The con- trary was true when prices were increased. We see more than mere conscious parallelism and the use of the Bakers’ . forum for the discussion of prices. The vigorous activity of the secretary of Bakers cannot be ignored. His acts were committed under the color of his official authority, and while all those involved apparently knew of his en- _ deavors, none. voiced objection to his attempts to keep prices in line by all-means chosen by him. In the activities which concern us, he was the agent of the association, and the association was the agent of igs members. »+—— Safeway contends that it stands apart, that there was no substantial evidence that it participated in the conspiracy. It points to the facts that it was not a member of Bakers and that it charged one cent per loaf less for its house brand of bread than was the prevailing price on the other. brands. The existenée of the price differential did not compel the Commission to find that Safeway was not:a, _conspirator. See FTC v. Sun Oil Co., 371 U.S. 505, 9 L. Ed. “2d 466, 83 Sup. Ct. 358 (1963). It-may lave been inferred % that Safeway enjoyed a position disempowering others to prevent its reducing its price or that it merely followed the common practice of many chains in charging less for items . sold ynder house labels, or both. As to its nonmembership _in Bukers, the record reveals that Safeway directly paid to Bakers’ secretary the sum of $600 per year, an amount . equivalent to the maximum annual dues charged for Bakers’ members. _ While Safeway claimed that the con- ee pore Beets ore aera 18 ft iin —_— sa ce be So 10a sideration was the secretary’s individual representation in _ its labor matters, the Commission was free to infer other- wise. . aoe \ ‘‘Once the existence of the common scheme is established, : very little is required to show that defendant became a a \s, party—‘slight evidence may be sufficient to ‘connect a de- \ . fendant to it.?~Nye & Nisser v. United States, 168 F.2d , (\ 846, 852 (9th Cir, 1948), affirmed 336 U.S. 613, 69 S.Ct. ‘ \ 766, 93°L. Ed. 919.” Hernandez v. United States, 300 F.2d 114, 121-22 (9th Cir. 1962). (Footnote omitted.) Our court - \ made the quoted pronouncement in a criminal case, wherein \ the Government’s burden of proof was greater than that — ’\ which here rested upon the Commission. As to the alleged conspiracy itself, we hold that there was evidence which, ith its inferences, was ‘sufficiently substantial to support a determination that the petitioners ‘“‘had a unity of pur- se or a common design and understanding, or a meeting the minds in an unlawful arrangement, wee ee? American © Thbacco Co. v. United ote U.S. 781, 810, 90 L. Ed. 575, 66 Sup. Ct. 1125 (1946). 0 Continental Baking Co\ v. United States, 281 F.2d. by (6th Cir. 1960). We also hold that there was substantial evidence to support find- ings that each of the petitioners, including Hoyt, a Hansen - officer and Bakers vice-president, participated. Continental alleges error in the denial of its motion to _ disq alify Commission Chairman Dixon from participating in the proceeding. Dixon became chairman of the FTC in | March, 1961. In 1959, in his then capacity as Chief Counsel - ° and taff Director of the Antitrust and Monopoly Subcom- mittee of the United States Senate, he participated in a ‘Subcommittee hearing on administered pricing in the bread industry. He friterrogated Continental’s president, and it is urged that his questions suggest such a fixed view on one aspect of the present controversy that we should over- rule the Commission’s determination that he was not’ dis- _ qualified: Continental points to one of the questions which . Be ees nant | | Dixon put to its president in 1959, which was, ‘‘You don’t want to leave the impression that your independent plant managers have the right to make a major price change without your approval, do\you?’’ It is claimed here that the question reveals Dixon’s definite opinion -that Conti- nental’s ‘‘independent’’ plant managers could not effect a major price change without the approval of the president. 3 -We do not agree that an attorney’s personal opinion on a factual controversy may be igferred from questions he puts in the performance of his professional duty. Moreover, if the existence of an opinion which Dixon would retain for , two years could be inferred from the-quoted question, the . answer given by Continental’s president reveals that he ~ himself agreed with the opinion claimed to have been enter- tained by Dixon. \ Contiffental relies on Texaco, Fh v. FTC, 336 F.2d. 754° (D.C. Cir. 1964), vacated and vemonded on other grounds, : 381 U.S. 739, 14 L, Ed. 2d 714, 85 Sup. Ct. 1798 (1965), in which it was held that Chairman Dixon was disqualified from joining in a Commission order. There, the basis was a statement made by Dixon in a speech delivered while the controversy was pending before an FTC examiner and be- fore it had been. submitted to the Commission. A disin- terested reader of his speech, wrote the D.C: Circuit, “could : hardly fail to conclude that he had in some measure decided in advance that Texaco had violated the act.”? 336 F.2d at 760. This is a different case. There is nothing here to’ indicate that Chairman Dixon has ‘“‘taken a position ap- parently inconsistent with an ability to judge “the facts ° fairly, .. 7? 336, F.2d at 764 (Washington, J., concurring in part “el dissenting in part). We refuse to hold that, on the basis of the questions asked of Continéntal’s president. by Chairman Dixon, then not a member of the Commission, — prior to the initiatiow of the present proceedings, and not * including a statement of opinion as to an ultimate contro- verted issue which he would judge, a disinterested observer would have reason to believe that he had prejudged the dis- Be atte iat eebiilisats shy Dati diceis babs a ee eee 12a. - pute. See Gilligan, Will & Co. v. SEC, 267 F.2d 461, 469 (2d Cir.), cert. denied, 361. U.S. 896, 4 L. Ed. 2d 152, 80 _ Sup. Ct. 200 (1959) ; Texaco, Inc. v. FTC, supra at 764, Dixon’s disqualification was sought under the provisions of section be of the Administrative Procedure Act. It provides, ‘‘.... Any such [presiding officer or officer par- ‘ticipating in ‘thé decision] may at any time withdraw if he deems himself disqualified ;‘and, upon the filing in good faith of a timely and sufficient affidavit of /personal bias or . disqualification of any stich officer, the agency shall de- ie termine the matter as a part of the record and decision in _ : the case.’’? 5 U.S.C. §1006(a) (Emphasis added.). The | "motion for disqualification was not ‘‘timely”’. Continental became involved in this proceeding in April, 1961. The Hearing Examiner’s decision was issued July 20, 1962. ~ Continental prosecuted its appeal, filed its: briefs, and argued orally to the Commission, with Chairman Dixon participating, on January 9, 1968. On February 28, 1964, the Commission’s decision on the merits was handed down.: Not until October 21, 1964, nine months after the Commis- ~ sion. had issued: its decision and opinion, did Continental claim for the first time that Dixon -was prejudiced and not qualified. Continental was always fully knowledgeable, of - course, as to the extent of Dixon’s participation, over five 48 years - -eatlier, in the Senate hearings. In thése circum- stances, it could not remain silent, await the decision of . the Commission, and then, doubtless because of its disap- pointment, seek for the first time to asperse the objectivity of a quasi-judicial officer: who. = in the challenged opinion. : _ In American Cyanamid Co. . FTC, Nos. 15805, 15797, 15801, 15806, and 15788, June 16, 1966 (6th Cir.), it was held that Chairman Dixon was disqualified: In that case ‘it:appears that he took a much more active part in the in- ‘vestigation of the drug industry when he had been Chief Counsel and Staff Director of the Subcommittee on ‘Anti- oe oO had “proved”? facts to the contrary, | | 18a oe trust and Monopoly of the Committee on the Judiciary of the United States Senate than he did in the hearings re- ° lated to the case at bar. Furthermore, the petitioners in American Cyanamid filed their motions for disqualification almost immediately after their noticing appeals from the Hearing Examiner’s’ initial decision. ) Petitioners ‘Langendorf, Hansen, and Hoyt contend that the Commission erred in taking official notice and incorpo- rating in the record fitdings of another Commission pro- ceeding, In re Continental Baking Co,, Dkt. 7630, October 27, 1959. These three petitioners were not parties to. that proceeding. They urge that the taking of such official notice was in violation of sections 7 (c) and 7(d) of the’ Admin- istrative’ Procedure Act, 5 U.S.C. §1006(c), (d) and the Fifth Amendment. Safeway also complains. “Continental argues that the taking of such official notice was error be. cause the issue to which that testimony was addressed was central and disputed in the present controversy and because. the Commission adhered to its reliance after Continental . The question relates to compliance with section*1006(d), which provides in pertinént part, “‘Where any agency de- cision rests on official notice of a material fact not appear- ing in the evidence in the record, any party shall on timely _ request be afforded an opportunity to show the contrary.’’ While all parties were given the “‘opportunity’’, only . Continental chose to attempt to show the contrary to the matter officially noticed. The remaining petitioners, not having followed the statutory requirement, must be held to have waived objections. . net se ° The officially noticed material camé: from a Hearing Ex- aminer’s decision involving Continental which was then, in 1959, charged with illegal price discriminations and dis- _ ; _ ¢riminatory payments in violation of 15 U.S.C. § 13(a), (d). Continental had been accused of granting discrimina- ‘ —_ * — . Daa sani ai Rasa BARE te ptt as ingen Jeet re nine Nim aig als deh hee ee tt 14a tery price. concessio d discriminatory promotional al- lowances to certain favored customers. The Examiner’s decision was that the complaint should be dismissed; and his decision was affirmed by the FTC on’ December.31, 1963. The noticed matter related to the structure and operation ‘of Continental’s butiness. It included, as is recited i in the - Commission’ S Opinion, corporate organization, territorial’ — assignments, purchasing, production, pricing, money col- . lected from sales, accounting, personnel, insurance, engi- , neering, vehicles, sales, labor relations, cacknging, and advertising. * | - . The oS included the material in its opinion as foundation for its.conclusion that, Continental’s operation in the State of Washington was ‘‘in commerce”’. Cowehing the conclusion on this ‘point i in |terms of the Supreme Court gecision in United States v. South- Eastern Underwriters Ass’n, 322 USS, 533, 88 L. Ea. 1440, 64 Sup. Ct. 1162 (1944), the Commission wrote, ~“Tts local sales agent can, easily agree to deliver on” consignment a dozen loaves of “Wonder’ bread every | Monday, ee ‘innumerable transactions,’ many of.them directly ‘in’ interstate commerce, are )~necessary to: pean, The work of Continental’s driver-sales- men is merely the peak of the iceberg; beneath it} sunk de@p into the stream of interstate“commerce, is thé om, real body: of the transaction. ~ ‘‘We find that all of Continental ’s sales i in the State of Washington were ‘in’ interstate commerce. All of Ahem involved a ‘New York seller and a Washington - buyer. Eafh of them was an indivisible part of a host . of ‘transactions * * * [that] constitute? a single con- tinuous chain of events, ey of which were multistate have been continned but for that part of them which - mbved- back and forth across _ state lines.’ South. Eastern Underwriters, supra, 332 U.S. at 537.’ oe es | sat We have already expressed our opinion that the iuriedic: tion of the Commission was properly founded upon the ‘interstate, Alaskan sales. Since the Commission’s appli- cation of the officially noticed material was obviously limited " -.to an alternative basis of jurisdiction, it is unnecessary to dwell upon the propriety of the reliance. | Petitioners. contend that Flotill Prods., Inc. v. ‘PTC, No. * 19521, decided by a panel of our court on March 15, 1966, requires a remand to the Commission. In Flotill, only two of the three participating members of | the Commission voted affirmatively for the challenged order. Our court held that a majority of the five-member * Commission* must join in issuing a valid order and re- manded the case to the Commission. ‘The case was resub- mitted to the court en banc and the Age decision sustained with four of our nine judges dissenting. . . oe In the present proceeding the Commission made two de- cisions. The first, ordering the petitioners to cease and desist from ‘fixing prices,-was issued by a three-to-one vote. It was held that an unfair act or practice was shown by the record, that all respondents below were legally ‘re- © sponsible therefor, and that the Commission had jurisdic- tion under séction 5 of the Federal Trade Commission Act to issue a cease and desist order. Thereafter, upon Conti- - , nental’s motién, the Commission stayed the issuance of its _ order and remanded the case to the _— Examiner to permit Continental to attempt to prove the contrary of the officially noticed facts.. After further hearings, and de- spite an attempted showing ‘of ‘facts contrary to those officially noticed, the Commission by a two-to-one vote affirmed its original decision and directed that the order issued by the three-to-one vote to be made effective. _ Continental: says that Fiotill ‘requires the remand to the Commission for further consideration of the question decided by less than a majority of ™ Commission—that - . . & 16a an unfair act or practice in commerce was established.’’ We disagree. Our decision as to the existence of the ‘‘in commerce’’ requirement of the Act is based upon the inter- - * state character of the activities resulting from the Alaskan sales and not upon the possible interstate nature. of Con- tinental’s overall operations. Thus, though Flotill would perhaps be applicable if we sustained the Commission’s alternate ground for its exercise of jurisdiction, the de- cision is of no present consequence. : Finally, petitioners challenge the scope “of the cease and desist order, quoted. below,* as being excessively and ‘un- . ¢ ae, . ‘ORDER Ir Is OrpEReEp that the respondent Bakers of Washington, _,. an incorporated association, and respondents George B. Buchan, Richard Hoyt, and Arthur H. LaLime, individually and as officers of respondent association, and their representatives, agents and’em- *. ployees, directly or through any corporate or other device, in-or in connection with the offering for sale, sale or distribution of bread, do forthwith cease and desist from: — +g: ' Entering into, carrying out, continuing or cooperating al any: planned commow course of action, understanding, agree- ._ _Mment,. combination. or eonspiraey between or among any two “or more of said respondents, or members of Bakers of Wash-.- ington, TInc., or between any one or more of them and.others not parties hereto, where any one or more of the parties to that planned common course of action, understanding, .agree- ment, combination or conspiracy is selling bread in intetstate commerce: in competition with bread sold by any one or more of the other parties thereto, to do or perform any of the fol- lowing things: nee : . (1) Establish, fix or maintain prices, terms or conditions of sale of bread, | : .’ ' (2) Adhere to any prices, terms or conditions of sale so _ fixed or maintained, or (3) Deter or attempt to deter’ any competitor from exercis- ing his individual-judgment as to prices, terms or con- ditions of sale of bread. — . ° «It Is ‘FURTHER Orprrep that the respondénts Buchan Baking Co., Continental Baking Company, Langendorf United Bakeries, o Bakery, 417 W. Wishkah Street, Aberdee ae" 17a reasonably broad. In our-judgment the order withstands - the challenge. We.are taught that ‘‘unless the remedy bears no reasonable relation to the existing unlawful prac- — Ine., Harisen Baking Co., Inc., Trenerry’s Bakery Co., and Snyder’s Bakery, Ine., corporations, John M. Larson, trading as Larson’s - Bakery, and: Vie H. Goethals, trading as Fortune’s Bakery, all - ‘ members of respondent association, and the following members of - said association, not named as respondents herein, Ashbrook Bak- eries Corp., 1407.11th Avenue, Seattle, Washington; Albertson’s, Ine., 17000 Aurora Avenue, Seattle; Baders’ Dutch Bakeries, 3755: University, Seattle; Baker Boy Bakery, 8050 Bothell Way, Seattle; Bake-Rite Bakery, 1414 14th Avenue, Seattle; Bellinger Bakery, North Bend; Best Pie Company, Inec., 132 Queen ‘Anne Avenue, Seattle; Big Four Donut,. Inec., 319 Nickerson Street, Seattle ; Blake’s Bakery, Inc., 4729 California Avenue, Seattle; Bookter’s Seattle Rakery, Inc., 3409 4th Avenue South, Seattle; Butter-Krisp Bakery, Inc., 2203 28rd Avenue South, Seattle; Boldt’s Western Hotels Food Service, Inc., Boeing Cafeteria, Boeing Plant 2, Seattle; Carolyn’s Cakes, 518 15th Avenue North, Seattle; Caster’s - Lake City Bakery, 12532 Bothell Way, Seattle; Frederick & Nelson (Bakery Department), 5th at Pine, Seattle; Gai’s Seattle French Baking Co., Inc., 2006 Weller Street, Seattle; Golden Rule Bakery, - Inc., 4450 Fremont Avenue, Seattle; Grandma Cookie Baking Co., Ine., 3402 Wallingford Avenue, Seattle; Karl’s Bakery, 1614 Hewitt Avenue, Everett; Kent Bakery, 213 First South, Kent; Lippman’s Bakery, Ine., 119 28rd Avenue, Seattle; Lindsay’s Thriftway Market, 11100 Roosevelt Way, Seattle; Manning’s, Inc., 621 Seaboard Building, Seattle; Richard’s Fried .Pies, Inc., 220 1st Avenue, North, Seattle; Swiss Pastry & Candy Shop, 1325 5th Avenue, Seattle; Smith & Sonnleitner Cookie Co., 1238 No. 99 W., MeMinnville, Oregon (7710 Bagley, Seattle, Washington); Van. de Kamp’s Holland Dutch Bakers, 823 Yale Avenue North, Seattle ; Grand Central Bakery, Market & H St berdeen ; Syanson’s Foods, Inc.,.1401 Simpson Avenue, Aber Idkamp’s Olympic e’s Ye Olde Heme Baking Company, ° Bakery, Riverside, Mount Vernon; Bellin 2001 State Street, Bellingham; City Bakery, 607 ‘1st Street, Mount "Vernon ; Thrifty Foods, 130 Fairhaven Avenue, Burlington; Golden © Rule Bakery, Inc., 915 Center Street, Tacoma; Jordan Baking Company, 3623 S. 54th Street, Tacoma; Eddy Bakeries Company, Inc., 232 S. Front Street, Yakima; Sigman Food Stores, P. O. Box 618, Yakima; Miss Maud Pemberton, Golden Rule Bakery, Inc., 4450 Fremont Avenue, Seattle; Henry Richards, Continéntal Bak- =. . Sa T ni ahi cA te rebar 9 Mes tains $e flo dd awn tent re Atrini oan 8 18a - ener ney 8 tices, the Commission’s discretion as to the scope of the order should not be disturbed.- Federal Trade’ Commis- sion v. National Lead. Co., 1957, 352 U.S. 419, 428-429, 77 S.Ct. 502, 1 L.Ed.2d 438.’ Gellman v. FTC, 290 F.2d 666, ing Company, P. 0. Box 3227, Seattle; Lloyd C. Mitchell, Van de Kamp’s Holland Dutch Bakers, 823 Yale Avenue North, Seattle ; : - Lou’ Blackfield, Bake-Rite Bakery, 1414 14th Avenue, Seattle; 2 ; Horace Snyder, Snyder’s Bakery, Inc., 31°North 4th Street, : Yakima; Al Moore, Langendorf United Bakeries, Inc., 2901 6th . Avenue South, Seattle; Roy Reynolds, Grandma Cookie Baking a Co., Inc., 3402 Wallingford, Seattle; LeConie Stiles, Jr., Ashbrook 4 _ ‘Ruth Bakeries Corp,, 1407 11th Avenue, Seattle; Henry Gai, Seattle -.°. ” French Baking Co., Inc., 2006 Weller Street, Seattle; Donald R. -3 Due, Best Pie Company, -Inc., A ‘Queen Anne Avenne, Seattle; | and Maurice Bybey, Baker Boy Bakery, 8050 Bothell Way, Seattle ; and their representatives, agents and employees, directly or through any corporate or other device, in or in connection with the offering for sale, sale or distribution of bread, do forthwith cease and desist from: —_- 2 fax me Entering into, carrying out, continuing or cooperating in | any planned common course of action, understanding, agree- dq - ment, combination or conspiracy between or among any two or : ‘more of said respondents, or members of Bakers of Washing i ton, Inc., or between any one or more of them and others not parties hereto where any one or more of the parties to that S.C planned common course of action, understanding, agreement, ; combination er conspiracy is selling bread in interstate com- - merce in competition with bread sold by any one or more of we the other parties thereto, to do or perform any of the following things: . ye (1) Establish, fix or maintain prices, terms or conditions of sale of bread, eee, (2) Adhere to’ any prices, terms or conditions of sale so fixed or maintained, or ~~. ° (3) Deter or attempt to deter any competitor from exercising his individual judgmént as.to prices, terms or conditions . of sale of bread. brs ‘ {I Is FurTHer ORpERED that Safeway Stores, Inc., and Holsum ‘Baking Company, corporations, respondents, but not members of the respondent association, and their representatives, agents and employees, directly or through any corporate or other device, in \ iS en aN WES en St aie Re ne nec Weer . M38 GS Delp DR ee MAL DAD oh; 19a 670-671 (8th Cir. 1961). It can hardly be denied that the . challenged order bears a ‘‘reasonable relation’? to the . _ practices found by the Commission to have been unlawful. In FTC v. Colgate-Palmolive Co., 380 U.S. 374, 392, 13 L. Ed. 2d 904, 85 Sup: Ct. 1035 (1965), the Supreme Court repeated its opinion in FTC v. Cément: Institute, 333 U.S. 683, 726, 92 L. Ed. 1010, 68 Sup. Ct. 793 (1948), that ‘‘an order’s prohibitions ‘should be clear and precise in order that they may be understood by those against whom they are directed,’ * *'* **? 380 U.S. 392. Here the Commission _ has directed that the petitioners shall not engage in a con- - spiracy to rg Ee eas te **6 (1) Establish, fix or maintain prices, terms or condi- tions of sale of bread, hee oY | (2) Adhere to any prices, terms or conditions of sale : so fixed.or maintained, or “4 (3) Deter or attempt to “deter any competitor from exercising his individual judgment as to prices, “terms or conditions of sale of bread.’’ . or in connection with the offering for sale, sale or distribution of bread, do forthwith cease and desist from: Ee Entering into, carrying out, continuing or cooperating in any planned common course of action, understanding, agree- ment, combination or conspiracy between or among any two or more of said respondents, or members of Bakers of Wash- ’ ington, Inc., or between any one or more of them\and others “not parties hereto, to ‘do or perform any of the following things: ihe Ras . - (1) Establish, fix or maintain prices, terms or conditions of sale of bread, _ | (2) Adhere to any prices, terms or conditions of sale so fixed or maintained, or (3) Deter.or attempt to deter any.competitor from exercis- - ing his individual judgment as to prices, terms or con-. ditions of sale of bread.’”” fe ' Si iar ‘nen i POE Mag sete Ea Nah i nine nt 0 et titel Sn he a RI RR at hey oe ep ae oe mS +a ee ae 20a ° To us, these injunctions seem clear, and we are unable to = accept the contention that they are so imprecise as not adequately to warn a reasonable man of the prohibited activities in which he shall not continue to engage.° -- 9 ‘‘Tt has been repeatedly held that the Commission has - eo oon wide discretion in determining the type of order that ‘ is necessary to cope with the unfair practices found, e.g., Jacob Siegel Co: v. Federal Trade Comm’n, 327 | US. 608, 611, and that Congress has placed(the pri- ' - mary responsibility for fashioning orders upon the eg - Commission, Federal Trade Comm’n v. National Lead ES Co., 352 U.S. 419, 429. For these reasons the courts | should not ‘lightly modify’ the Commission’s orders. © Federal Trade Comm’n v, Cement Institute, 333 U.S. 683, 726.” 3 re | | 5 Commissioner Elman, dissenting, believed the order to be in- : _ supportably broad. He suggested that the order should have been ; : made so specific as és mae ‘to forbid not only the conspiracy itself but also the specific acts and practices upon which the effectiveness of. the con- | _spiracy—its translation into actual anticompetitive conduct— ° depends.” eh 0 Commissioner Elman continued, _“*Tt-is immaterial that these acts and practices may be lawful in themselves ; the Commission has ample power to forbid them if necessary to ensure that the conspiracy will cease and not > be resumed. F.T.C. v. National Lead Co., 352 U.S. 419, 430.’’ We agree that the. Commission, applying its expertise, might have > properly chosen to issue an order containing prohibitions against specific acts. Obviously, however, it determined that there was no pressing need that it do so: We would not order the Commission to amend its order so as to impose upon the petitioners specific ' prohibitions more severely restrictive than the Commission, -from its review of the evidence, believed to be required., - . a oe ath Pe tin enti 2a ee \ FTC v. Colgate-Palmolive Co., supra, 380 U.S. at 392, Some of the petitioners claim that the order is overbroad _ because it would regulate their conduct throughout, the na- tion even though the activity found to be illegal took place in only one area of the country. We do not believe the complaint is justified. Since the order is sufficiently specific and since it prohibits only conduct which is per se illegal under- the Act, we do not think it is objectionable simply — because its application is made as broad as petitioners’ - business activities.. As the Commission concluded, ‘‘there is no reason to suppose that an entity showing no reluctance to fix prices in Seattle, Washington, would act differently in another city or another state’’ in which it does business. In a comparable situation the Court of. Appeals for fhe Fourth Circuit stated, ‘‘As to territorial extent, the com- ‘pany, having been found guilty of a flagrant violation of the _ _ Act, was properly required to cease and desist from such practices in all. areas in which it was doing business.’’ Maryland Baking Company v. Federal Trade Commission, _- 243 F.2d 716, 718 (4th Cir. 1957). See also Foremost — Dairies, Inc, v. Federal Trade Commission, 348 F.2d 674. (5th Cir. 1965). eee Affirmed. ncn td \ a ate A vibes ornare RO ‘ APPENDIX B UNITED: STATES OF AMERICA BEFORE FEDERAL TRADE COMMI - COMMISSIONERS: |, ; : Rand Dixon, Chairman rd. Anderson mea R. Reilly Docket No. 8300 In the Matter of Bakers or WASHINGTON, INc., an incorporated association, its officers, Board of Trustees, employees, representa- tives and agents, including but not limited to the fol- lowing: Gzorce B. Bucnan, Ricnarp Hoyt, ArrHuR H. Laue; ; the following named members of respondent association: Bucnan Baxinc Co, Continental Bakixe Company, Lancenporr Unirep Bakeries, Inc., Hansen Bakine Co., Inc., TrENNERY’s Bakery Co., Snyper’s Bakery, - Iwne., corporations © Pe Joun M. Larson, trading as Larson’s Bakery, Vic H. GorrHa.s, trading as Forrune’s Bakery, each individ- ually and as a member of the respondent association and all as representative of all of the members of re- spondent association; Sareway Stores, Inc. and Hot- .sum BaKine Company, corporations. | | \ FinalOrder hd This matter having been heard by the Commission upon - exceptions to the hearing examiner’s initial decision filed | by respondents and upon briefs. and oral arguments in _ support thereof and in opposition thereto; and 23a The Commission having rendered its decision and having determined that the initial decision should be modified in accordance with.the views expressed in the accompanying . Opinion, and, as so modified, adopted as the decision : of ‘the Commission: ent ity - Ir Is Onperep that the findings of fact in the initial de- -, cision be, and they hereby are, modified by adding to find- ing number 26, page 10 of the initial decision, the further findings set forth in the paragraphs designated ‘A’? through ‘‘O”’ beginning on page 15 and extending through the second paragraph on page 20 of the accompanying opinion” cae ; | Ir Is Furruer Orverep that in lieu of the order to cease - and desist contained in the initial decision, the following be, and it hereby is, entered as the order of the Com- mission: Ae | ; Iv Is Orperep that respondent Bakers of Washing- _ ton, Inc., an incorporated ‘association, and respondents George B. Buchan ayid Richard Hoyt, individually and as officers of respondent assvciation, and respondents — Buchan Baking Co., Continental Baking Company, ‘Langendorf United Bakeries, Inc., Hansen Baking Col, Inc., Trenerry’s Bakery Co., and Snyder’s Bakery, Inc.,. corporations, John M. Larson, trading as Larson’s » Bakery, and. Vic H. Goethals, trading as Fortune’s . Bakery, all members of respondent. association ; and the following members of said association: Ruth Ash- brook Bakeries Corp., 1407 11th Avenue, Seattle, Washington; Albertson’s, Inc., 17000 Aurora Avenue, Seattle; Baders’. Dutch. Bakeries, 3755 University, ° Seattle; Baker Boy Bakery, 8050 Bothell Way, Seattle; . Bake-Rite Bakery, 1414 14th Avenue, Seattle; Bellinger Bakery, North Bend; Best Pie Company, Inc.,. 132 Queen Anne Avenue, Seattle; Big Four Donut, Inc., 319 Nickerson Street, Seattle; Blake’s Bakery, Ine., 4729 California Avenue, Seattle;. Bookter’s ‘Seattle Bakery, ai: 3409 4th Paras South, Seattle; Butter-_ ’ Krisp Bakery, Inc., 2203 23rd Avenue, South, Seattle; - Boldt’s Western Hotels Food Service, Inc., Boeing Cafeteria, Boeing Plant #2, Seattle; Garolyn’s Cakes, 518 15th Avenue, North, Seattle; Caster’s. Lake City . Bakery, 12532 Bothell Way, Seattle; Frederick & Nel- son’ (Bakery Department), 5th at Pine, Seattle; Gai’s “Seattle French Baking Co., Inc., 2006 Weller Street, ; Seattle; Golden * Rule Bakery, “Ins, 4450 ‘Fremont i \. Avenue, Seattle ; Grandma Cookie Baking Co., Ince., , ‘. 3402 allingford Avenue, Seattle; Karl’s Bakery, : _ *1614 Hewitt Avenue, Everett; Kent Bakery, -213 First’ |. - South, Kent; Lippman’s Bakery, Inc., 119 23rd Avenue, Seattle ; Lindsay’s Thriftway Market, 11100 Roosevelt. j Way, Seattle; Manning’s, Inc., 621 Seaboard Building, - Seattle; Richard’s Fried Pies, Inc., 220 1st Avenue, j - North, Seattle; Swiss Pastry & Candy Shop, 1325 5th Avenue, Seattle: Smith & Sonnleitner Cookie Co., 1238. } No. 99 W., McMinnville, Oregon: (7710 Bagley, Seattle, Washington) 3 Van de Kamp’s Holland Dutch Bakers, | 823 Yale Avenue, North, ‘Seattle; Grand Central : - Bakery, Market\& H Streets, Aberdeen; Swanson’s q Food, Inc., 1401 Simpson: Avenue, Aberdeen; Veld- ° kamp’s Olympic Bakery, 417 W. Wishkah Street, Aber- y deen; Bame’s Ye Olde Home Bakery, Riverside, Mount Vernon; Bellingham Baking Company, 2001 State Street, Bellingham: City Bakery, 607 1st Street, Mount Vernon; Thrifty Foods, 130 Fairhaven Avenue, Bur- lington; Golden Rule Bakery,Inc., 915 Center Street, . Tacoma; Jordan Baking Company, 3623 S. 54th Street, ‘Tacoma; Eddy Bakeries Company, Inc., 232 S. Front Street, Yakima; ‘Sigman Food Stores, P. O. Box 618, Yakima; and the following officials of Bakers of Wash- ington, Inc.: Miss Maud Pemberton, Golden Rule Bakery, Inc., 4450 Fremont Avenue, Seattle; Henry ~Richards, Continental Baking Company, P. 0. Box 3227, . Seattle; Lloyd C. Mitchell, Van de Kamp’s Holland en 25a | Dutch Bakers, 823 Yale Avenue, North Seattle; Lou Blackfield, Bake-Rite Bakery, 1414 14th Avenue, Seattle; Horace Snyder,, Snyder’s Bakery, Inc, 31 North 4th Street, Yakima; Al Moore, Langendorf United Bakeries, Iné., 2901 6th Avenue, South, Seattle ; _- Roy Reynolds, Grandma Cookie Baking Co. Inc., 3402 Wallingford, Seattle; LeConie Stiles, J r.. Ruth Ash- brook Bakeries Corp., 1407 11th Avenue, Seattle ; Henry Gai, Seattle French Baking Co., Ine., 2006 Weller Street, Seattle ; Donald R. Due, Best Pie Company, Inc., 132 Queen Anne Avenue, Seattle; and Maurice Vyvey, Baker Boy Bakery, 8050 Bothell Way, Seattle, as officers of Bakers of. Washington, Inc.; and respond- ents Safeway Stores, Inc., and Holsum’ Baking Com- ‘pany, corporations; and respondents’ representatives, _ agents and employees, directly or through any corpo- rate or other device in or in connection with the offer- ing for sale, sale or distribution of bread, do forthwith cease and desist from: a : _ Entering into, carrying out, continuing or cooper- _ ating in any planned common course of action, understanding, agreement, combination or conspiracy between or among any two or more of said respond- ents, or members of Bakers ‘of Washington, Inc., or between any one or more of them and others not " parfies hereto, where any one or more of the parties to such ptanned common course of action, under- standing, agreement, combination or conspiracy is selling bread in interstate commerce in competition with bread sold by any one or more of the other - parties thereto, to do or ty sae any of the follow- | ing things: _ | au (1) Establish, fix or maintain prices, terms or _ conditions of sale of bread, Ruts (2) Adhere to any prices, terms or conditions of sale so fixed or maintained, or: | an” (3) Peter! or attempt to deter any competitor : a from; exercising his individual judgment as to prices, terms or conditions of sale of bread. ‘Ir le > Foheien ORDERED that the complaint porele be, iad | the same ces is, ar as to: Arthur H. LaLinié,- 7 deceased. ‘Ir Is ‘Pinkie Orpen that respondents shall, within “sixty (60) days after service upon them: of this order, file. - with the Commission a report, in writing, setting forth in - detail the manner and form it » which they have: complied with the order set fortle h By the Commision. mmissioner Anderson concurring ~ in the result; Commissioner Elman dissenting ; and Com- ‘missioner Reilly not participating- for’ the Feason _. oa did not hear oral argument. - pe acs : Josmpri W: SHEA Be ae - Joseph W. Shea, & .* = . Secretary. ‘Issuzp: February 98, 1964 ArtacurED Are: (1) Opinion of hi ‘Commission by ( Com- _ missioner Dixon Pe. : ce) "Dissenting opinion by Commissioner “Elman ’ . ie 7a ’ UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION _ vee ae _ Docket No, 8309 * Opinion of the Commission So By Dixon, Commissioner ; Respondents appeal from the hearing examiner’s .de- cision holding that they have fixed bread prices in violation of Section 5 of the Federal Trade Commission Act, 15 USC, 6, ° .. Bakers of-W ashington, Ine., . isa corporate trade. associ- ation organized unde: the laws of the State of Washington for the: purpose of promoting the interests of the baking industry. ‘ Its principal ‘office is located in the city of | _ Seattle, and more than half of its 49 members have their places of business there. The other members are located in the surrounding cities and towns of western Washing- ton, particularly in Bellingham, Aberdeen, Tacoma, and Yakima. The association has ‘‘divisions”? i in’ each of those towns. e ' The complaint named a as respondents the niuedliadait ite three officials, including its former secretary-manager, Arthur H. LaLime, now deceased: ; eight of its members as ,_@ representative of the entire niembership: and two other . companies, Safeway Stores and Holsum Baking: Company. The examiner found that the. wholesale and retail mem- bers of this association had attended frequent association _ meetings at the Athletic Club in downtown: Seattle; that, by means of agreements or ‘understandings’? reached at these meetings, price competition in the sale of bread at both the wholesale and retail level had been eliminated or. * lessened; and that respondent Arthur H. LaLime, then secretary-manager of the association, acting as common ' agent for the several members, had engaged ‘in various acts D> . SAOa A DOTA. Shien ee ee sys, ELE ES a ——e ’ ‘ ‘ Wa e ' of suppressing or lessening price competition among the members of the association. Respondents take exception to the examiner’s decision in. four principal particulars. They contend that there has been no price fixing; that, if such price fixing occurred, it did not occur ‘‘ini’’ interstate ec mmerce; that, if the associ- ation’s secretary did in fact cause the suppression of price competition among certain of the association’s members, - the évidence is insufficient to hold various of the other thembers legally responsible therefor: and ‘that, in ° any event, the order is i aneemnively broad.: ) ‘The members of the association ‘include: both ‘whole- sale’? and ‘‘retail’”? bakers. As we understand the trade — terminology a ‘‘wholesale’’ baker is one that produces (bakes) bread and sells it exclusively to retail establish- ments (e.g., grocery stores); it does not generally sell directly to consumers. A ‘‘retail’’ baker, on the other hand, is one that performs both the producing (baking) and re- tailing functions.. The’most familiar example is the tradi- tional retail bake shop with its baking plant in the rear of the establishment, and ‘its retail sales counter in the front of the shop. Another is,the ‘‘in-store’” bakery. This includes the grocery store owner who installs, in one sec- . Som, of his store, a baking plant and a bakery products ‘‘sales counter,’’ or who permits another party to lease a. ‘portion of his store for such an,operation. The term ‘‘re- tail’’ baker also includes the grocer that, instead of install- ing baking equipment.on its store premises, sets up a sepa- rate baking plant at some other location and then trans- _ ports the self-baked bread to its grocery stores for retail ~ sale. Safeway, a respondent here, has such a plant in ne Seattle. It bakes a ‘‘private brand’’ bread called ‘‘Mrs. Wright”’ and retails it at the various Safeway grocery stores located throughout the western Wartingios market- ing area. Ce a ee 29a . A further aspect of the relationship between the whole- sale and retail bakers should be mentioned at the outset. The grocery store that bakes its own bread also handles the major ‘‘name brand’’ breads. For example, Safeway buys ‘‘Wonder”’ bread from Continental and retails it alongside its own self-baked private brand, ‘‘Mrs. Wright.” Hence Safeway is both a competitor and a customer of Continental. The small retail bake shops, those that gen- erally deal exclusively in baked goods, are of course ’com- petitiors of both Safeway and Continehtal—all are striving for the-same consumer bread dollars. ; . -’ It is-undisputed that a number. of these bakers are not engaged in interstate commeree. Some of them are small bake shops who do no business of any kind outside the city © of Seattle. They bake the bread in Seattle, and retail it - to consumers in Seattle. Obviously, a price fixing con- spiracy exclusively among these bakers to regulate their ' prices.in Seattle would be of no concern to. the Federal -Trade Commission. On the other hand, if it appears that-~ 2 ee . . ? - they have joined in a conspiracy with one or more firms . - that are fixing prices in interstate commerce, then‘even the 4 most local of these bakers is subject to the federal law.. Pedéral Trade Commission v. Cement Institute, 333 US. _ 683, 695-696 (1948). : It is also undisputed that several of these respondents "are, in fact, ‘‘engaged in’? interstate commerce. Respond- " ent Continental Baking. Company; a Delaware corporation.. with principal offices in Rye, New York, ‘the baker of - .*€*Wonder’’ bread, owns and operates more than 70 bakeries _-in 60 cities located in 29 states and the District of Colum. bia. It had sales of bread and other bakery products of more than $350 million in 1960, and more than 27 000 em- ployees. Respondent Langendorf United Bakeries, Inc., a Delaware corporation with general offices in San Francisco, California, owns and operates 11 bakeries in California, Oregon, and Washington. It had 3,896 employees, and sales - 30a of more than $73 million in 1961. Safeway Stores, Inc., a ‘Maryland corporation with its principal offices in Oakland, ° ’ California, operates some 2,000 grocery stores in 28 states and the District of Columbia. In 1960 it had more than 63,500 employees | and sales of more than $2,468,000,000. Safeway is one of the three mage retail grocery. chains in the United States. 3 These respondents argue, however, that, ‘while they are ‘‘engaged in commerce”’ and thus subject generally to the . - jurisdiction of the Federal Trade Commission, the par- ticular ‘‘acts’’ or ‘‘practices’’. challenged in the instant * od complaint did not themselves occur ‘‘in commerce.’’ They contend that counsel supporting the complaint would have. met his burden on this point only if he had shown that | state lines had beén crossed by either (1) the price fixing conspiracy itself, or (2) overt acts committed pursuant to ~ that conspiracy, ‘i.e., sales at the fixed prices. Respondents . contend that this record shows neither. ‘ Assuming that a conspiracy has been established, and ‘assuming further, for the sake of argument, that the con- spiracy itself is ‘‘local’’ in the eyes of the law,:we do not agree that the overt .acts* committed pursuant to it—the sales subsequently made at the fixed prices—were them-. _ selves local. First of all, this record shows that several of _ these wholesale bakers sell something like 1% or less of the production of their Seattle yy in Alaska.’ Further, it ’ Langendorf’ s Seattle plant manager testified that less than 1% _ of his sales were made to buyers in Alaska. Tr. 313. According to his affidavit, n. 4, infra, this amounted to $35,789. 50 in 1960. ‘Tt is-sold FOB Dock right here [Seattle] at our regular whole- sale prices.”’ Tr. 344. Continental’s Seattle plant manager tes- tified that he sold less than ‘‘one-half of one per-cent”’ in Alaska. - ‘Tr. 399. Since his plant has annual sales of some $4.5 million, this suggests annual sales from Seattle to Alaska of about $22, 500. - Buchan, with annual sales of ‘some $4 million, sells “‘less than a fraction of one per cent’’ to Alaska buyers. Tr. 230. Hansen. - makes some shipments to Alaska also. . Answer, p. 3. Interestingly enough, respondents claim even these sales, assum- ing a Seattle conspiracy, are not actionable under the statute. 3la appears that some Seattle bread is shipped to adjoining states * and that a small amount of the bread sold im the Seattle area was in: fact baked in another State.? While these amounts are not dé i minimis, this case involves a much larger problem. We think it not only important but neces- sary that we deal with the question of whether these great interstate firms can claim immunity from the statutory pro- hibition against price fixing in regard to the remaining. 99% of the transactions involved, those that took place - within the borders of the State of Washington. ‘Bakery products, including bread, are highly perishable (bread, to be considered acceptably ‘*fresh,’’ must be sold to the ultimate consumer.within something like 48 hours after baking). And bakery products are bulky in relation to weight and value, thus making long distance transporta- tion economically impractical: The result is. that Conti- nental, for example, instead of baking all its bread in New _ York and then transporting it into 29 states for sale to local grocery stores, gathers up the men, equipment, and ingredients that it needs, transports them to ‘each of the _ 29 states, erects a baking plant in each, bakes the product inside the borders of each such state, and sells it inside those borders. ne. | They say there is no showing that prices charged to Alaska buyers “‘affect’’ Seattle prices, or that Seattle sellers are ‘‘interested’’ in Alaska prices. But this. assumes the inquiry is directed solely .to retail prices. To-be sure, the price at which an Alaska buyer regells the bread is of no interest to the Seattle conspirators. But - we are concerned here with wholesale as well as retail prices. And _ these sales to Alaska purchasers were made FOB the Seattle docks, * at the “‘regular’’ (i.e., the fixed) -wholesale price. Hence they are sales ‘‘in’’ commerée at a price inflated by a conspiratorial agreement: . Fj * Safeway (Answer, p. 2). Snyder-ships. some bread to Oregon . (Answer, p.2). ~ Ps » 3 Holsum ships bread from its Idaho plant to its Trennery sub- + sidiary in Yakima (Answer, pp. 1-2). ; 2 ’ of the Federal Trade Commissiow Act. 32a - - The fact that Continental has ‘selected this method of doing business in Seattle-is thus due to the nature of bakery products. ‘It appears that, because of the bulk and perish- ability of bread, something on the order of 150 miles is the maximum distance from the baking plant it can be. economically marketed. : Here the Seattle. marketing area (see Map of Washington,‘ p. 7) runs generally from Seattle to the Canadian border on the north; to the Pacific Ocean on the west; to Yakima (Washington) to the southeast ; and to the Cascade mountain range to the east. None of. these market boundaries are more than 150 miles from Seattle. This is the area this trade association has selected for its theater of operations. Within it, respondents’ prices are the same. When the retail price of bread goes. from 33¢ to 34¢ in Seattle, it also goes up by precisely that amount-in Bellingham (about 100 miles to the north), in Tacoma (some-25 miles south of Seattle), in Aberdeen (near the Pacific, roughly 100 miles west of Seattle), and in Yakima (over 100 miles southeast of Seattle). Yet, be- cause this marketing area is well ‘‘inland’’ from the bor- ° . ders of any adjoining state, respondents contend that, . if they fix prices in this drea, they are beyond the reach Respondents claim support for their position in Federal Trade Commission v. Bunte Bros., Inc., 312 U.S. 349 (1941). — There’ Bunte, a manufacturer of candy, made the candy in Illinois, and sold it in Illinois. The Commission, finding that Bunte was selling its candy in Illinois. by means of a ‘‘lottery’’ scheme, and that it therefore enjoyed an unfair 4 Attachment, affidavit of Al Moore, manager of Langendorf’s plant in Seattle, filed July 13, 1961. (For a deseription of the marketing area of Continental’s Seattle .plant, see attachment, affidavit of Covington, plant manager, filed July 10, 1961. The Yakima area is.served by another Continental plant, the one located in Portland, Oregon.) | _ 51t appears that these respondents do not sell their bread in Canada because of a ‘‘duty’’ Canada imposes. : pheend ra . ee a 9 CCL YM SBT A. -n4,” os ed Gss.050 wTED SAL OF AMEACA e S) wore 7 y use a °. s « e. s Hy . * a ~~ eY = ostwwene vanes AR w —— _ —— Ts ame oy 5 ; DOUGLAS ae ‘7 waTurus ! * L] ~ ' . ‘ ' 1 { COIS BA. : a Ory ' iy 4 >\ wan pie po 1 ME Penne ue { Wetta Ww ALi A “4 ‘ * 5 arre 3 t th OR ee it eaBNeres 7 Se Se ey eee eR ‘ a ~~ ”. ee —-—_ + oe —— = i a 4 £ $ LICKITAT ae . ; , . erket Area fo. We ic Ont pois re Me Gonerece oS eee | 33a advantage over out-of-state intl who could not" lawfully sell their competitive candy across the state line into Illinois by the ‘‘lottery’’ sales method, concluded that Bunte’ was adversely affecting interstate commerce and ordered it: to céase and desist.. The Supreme Court re- é' petsed, pointing out that the Federal Trade Commission ~ Act, by its express terms, reaches only ‘ifair. acts or practices ‘in’? interstate commerce, and hence does not ‘include those that merely ‘‘affect’’ interstate commerce. . _ _ The Bunte ca8e is not in point here. This complaint alleges _ that these respondents have fixed prices ‘‘in’’ interstate commerce. ‘We think the ouniesliien case ew here i is not to be found =~ in Bunte, but in Federal Trade Commission v. Cement In- stitute, 333 U.S. 683, 695-696 (1948), and in United States v. South-Eastern Underwriters Assn., 322 U.S. 5383 (1944). In the first of these cases, the Northwestern Portland Ce- ment Company engaged wholly i in intrastate commerce, en- tered into a planned, common course of action with others who were engaged ‘in interstate commerce. The planned, common course of action restrained price competition. There. the Supreme Court held that ‘‘the fact that one or two of the numerous participants in the combination hap- pened to be selling within the borders of a single state is not controlling’ in determining the scope of the Commis- sion’s jurisdiction.’ “In the second of these cases, namely South-Eastern Underwriters Assn., an association ‘of fire _Insurance companies had been indicted under Section 1 and 2 of the Sherman Act*® for fixing. fire insurance premium rates Aprices} and aempeng to monopolize the fire in- a o> # While Sherman Act cases are not applicable to Federal Trade Commission Act ‘‘commerce’’ problems when the former turned on whether commerce had been ‘‘affected’’ by the acts charged, ~~ such cases dre of course binding precedent When the issue, as in South-Easte Underwriters, was whether those atts occurred ‘‘in”’ interstate co imerce. : . gurance business, in six. a —~, ° Southeastern states. The district court, ‘relying upon Paul v. Virginia, 8 Wall. 168 (1869), ar chad sustained a demurrer on the ground that insurance ° simply was not commerce at all, either Toeal_or interstate. ° The Supreme Court reversed. — ele a ~ es One of the contentions of the defendant insurance com- > . panies (more than half of which maintained: their: home L al offices in either New York, Pennsylvania or Connecticut, employing ‘‘local’’ agents to solicit ‘‘ local’’ customers for them in the Southeastern states) was that the insurance policies sold by their agents were ‘‘local,’’ not interstate, contracts. The Court replied: ji a type of mechanical criterion which this Court has not deemed ‘controlling in the measurement of. federal power. * “* * We may grant that a contract | _ of insurance, considered as a thing apart from ne- gotiation and execution, does not itself constitute com-_ merce. * * * But it does not follow from this that e the Court is powerless to examine the entire trans- action, of which. that contract is but a part, in order to determine whether there may be a chain of events which becomes interstate commerce. Only by treating the Congressional powér over commerce among the states as a ‘‘technical legal conception’’ rather than as a ‘‘practical one, drawn from the course of business’? could such a conclusion be reached.- Swift @ Co. v. United States, 196 U.S: 375, 398. .. In short, a. nationwide business is not deprived . of its interstate character merely because it is - built wpon sales contracts which are local im na- ture. Were the rule otherwise, few businesses could be said to be engaged in interstate commerce. - * 322 U.S. at 546-547 (emphasis added). _ SS) But this reason rests upon a distinction - between | what has been called ‘local’? and what ‘‘interstate,”’ ale bs —— a abe, fp or ; 7 35a d | , ‘é eS Describing the activities of the defendant insurance companies that, were in interstate comfnerce, the Court said: =. | And in great detail the oe aan set out these total ; activities, of which the actual making: of contracts a was but a part. As recognized by the District Court, the insurance business described in the indictment — - included not only the execution of insurance contracts but also negotiations and‘events prior to execution-of — -»- the contracts and the innumerable transactions neces- * sary to performance of the contracts. All of these al- leged transactions, we shall hereafter point out, con- ; stituted a single continuos chair of events, many of . __ which werd multistate in character, and none of which * * * Gould possibly have been continued but for that " part of them which moved back and forth across state lines. 322 US. at 537 (emphasis added). ° | The sé-called ‘local’? porn of these dreiianthlens had no separate existence of their own. The feet of éach. trans- action were planted in a single, southeastern state, but the _ whole body stretched across several states to its. guiding _— member—the head—in one of the financial centers of the east, either New York, Pennsylvania, or Connecticut. This busines is not separated into. 48 distinct terri- . torial compartments which function in isolation from : each other. Interrelationship, interdependence, and in- * tegration of activities in all the states in which they einirhates are practical aspects of the insurance com- panies’ methods of doing business. A large share of © the insurance business is concentrated in a compara- _ tively few companies located, for the most part, in the financial centers of the East. 322 U.S. -at 541. “* 36a ay oa er soptinnows, life-giving stream flowed back and forth. between the head and those distant — Premiums ‘collected from ileaieles: in every part of the United States flow into these companies for investment. As policies -become payable, checks and ‘drafts flow back to the many states where the: policy : holders reside. The result is a continuous and indi- _ visible stream of intercourse among the. states com- . posed of collections of premiums, payments of policy _ ‘obligations, and the countless documénts and: commu- nications which are essential to the negotiation and exe-. © cution of policy contracts. I bid. (emphasis added). ‘The channels and. instrumentalities of interstate com- merce—telephone, telegraph, mail, and traveling agents—- were used to effect the ‘so-called **local’’ sales. Local agents solicited prospects, utilized vite forms sent from home offices, and made regular reports to. their companies by mail, telephone or telegraph. Spe- ~ ~eial travelling : agents supervised local operations. 322 U.S. at 542. | ee a The terms on which the “‘local’’.purchasers bought, and the value of what they got for their money, were deter- - mined not by the “local” salesmen, ‘but by ; wre tcaaate management: : | Individual policyholders living j in many different states. who own policies in a single company have their sepa- rate interests blended in one assembled fund of assets upon which all are equally dependent for payment of - their policies: The decisions which that company makes at its home office—the risks it insures, the premiums it charges, the investments it makes, the losses it pays— concern not just the people of the state where the home office happens to be located. They concern people liv- — ORE Rtn - ae : ; - ° y; oe a bs) ’ A : Nes : . - . | * _ ing far beyond the houndaries. of that state. 322 U.S. at 541-542° a In the instant case, at least three of the respondents do ‘business in substantially the same manner as those insur- -ance‘companies. On November 29, 1961,-Continenfal, Lan- gendorf and Safeway entered into written stipulations with counsel gupporting the complaint describing the interstates — character of their operations. The stipulation with Conti-’’ nental, set. out, in part in the footnote below,’ is substan- tially the.same as the other two. .‘‘Continental operates.on - -an integrated basis: Ingredients for the products are pur- _ chased centrally [New York] and ‘receipts from sales go. into a single.treasury [New York] * * *.. Each element. of Continental’s bread and bakery product business is part of an integrated whole.”? * ° '. The sales involved here are physically made through what ' are called “‘driver-salesmen,’’ employees that generally 74. Continental is regularly engaged in interstate commerce in. | _ the sale and distribution of bread and-other bakery products. . ° 5. Membership in Bakers of Washington; Inc. was made in Con- tinental’s name and approved at headquarters. Rae _ 6. Continental assumes legal responsibility for the acts of its ‘plant manager in Seattle as to which testimony was taken. ; 7. Continental operates on an integrated basis. . Ingrecients for the products are -purchased centrally [from central offices in New York] and receipts from sales go into, a single treasury [in New York]. 1 8. Ultimate responsibility for company affairs is vested ir. top management personnel at the company’s general offices in Rye, New York. ness is part of an integrated whole, The company is a single busi- ness entity and benefits or suffers from what is done locally by and through each plant or office. rai foe 10. The control over operations which rests in plant managers, beyond that which is peculiar to the position such as the house- keeping functions, is vested in them by delegation from top man- ' agement, — =, - 9. Each element of Conti:ental 's bread and bakery product busi- © ~ 11-21). On its appeal ‘to the Commission, Continental challenged _ the examiner’s legal conclusion that those facts evidenced inter- ' state commerce, but made no effort to dispute any of. the factual findings themselves. We could, ‘of course, remand the: instant case ' for the taking of this same evidence a second time. And on a proper- showing of the necessity therefor, we would do so. But until such a showing has been made, we are guided by the prin- ciple that ‘‘the intelligent functioning of the administrative process ' demands that the Commission [ICC] .be not required -to indulge - in lengthy evidentiary, recapitulations of matters just decided in a* companion case.’’ Crichton v. Umted — supra, 56 F. Rupp. aa Baie ‘ ‘Regional: Vehicular niutnied (5) ac “Regional ; the distance bread can be economically transported from the baking Sadegs er ebE ua its Sean's > -+ parallelism,”’ i.e., uniform prices, does not prove a con- . plant. (See Map, p. 7.) Buchan has four plants: two in Seattle, . one in Bellingham, and one in Tacoma. Tr. 179. Continental’s | Seattle plant sells all the way north to the Canadian border, east - to do so for the simple reason that none of the others, not even the big wholesale bakers, had the power to stop it.3+ The result is that respondents have two prices -in this market: (1) the high, uniform price (e.g., 34¢ in 1960 for ‘ the standard loaf) charged by the group in general—in- cluding the advertised brands produced by the big whole- sale bakers (Continental’s ‘“Wonder’’ bread, etc.) as well as the unadvertised breads produced by the smallest of the’ retail bake shops, and (2) the 1¢ lower. (33¢) price charged by Safeway for its self-baked, ‘‘private brand” bread. . : = While the association’s by-laws provide for “annua ce meetings of the entire membership, these are rarely held. Instead, ‘special’? meetings are called frequently. The .. Seattle division meets almost every week. ‘‘At times we 34 Buchan, asked why he didn "t meet Safeway’s 1¢ lower price, — replied: ‘‘Well, I am afraid that we are not financially able to ‘undercut Safeway.’’ Tr. 195. a bd S4a have a meeting ‘every week, not always every week.’? - he number of special meetings actually held each year - totals less than 52, but Yhore than 262° ‘While the meetings in Seattle are usually held on Mondays, and at the Athletic » Club in Seattle, each meeting is individually called. The record contains a list of the ‘‘regulars’’ who have requested that they be notified of all meetings.” Members of the _ association located in the towns served by the ¢ther four ie divisions® are not routinely informed of the Seattle: meet- ings, but are free to, and do, attend if they happen to be in town2* The manager of the association (then Arthur ‘LaLime) presided at the meetings. eet - “The ostensible purpose of these. meetings is to discuss such matters as contracts with labor unions, labor grievance problems, and regulatory and legislative issues. But the testimony. of several witnesses who attended these meetings - makes it clear that the discussions. frequently involved prices, particulatty the alleged “‘need”’ of the members to raise their prices in order-to recoup the costs of wage . increases. : ie 9? 85 'Tr, 36, -‘“Whenever the occasion requirés it,” a meeting is tr. 14 - CX 7, tr. 175. 23 j oy 33 As noted, the association has five, divisions; Seattle; Belling- ham (about 100. miles north of Seattle, and about 20 miles south . of-the Canadian border) ; Aberdeen (on the Pacific Coast, about 100 miles southwest of Seattle) ; Yakima (slightly over 100. miles | prior of Seattle); and Tacoma (less than 50 miles south of e). . i ‘ Tr. 35.. The other four divisions have their own meetings. ° The association’s manager, LaLime, apparently called meetings in the divisions whenever those members asked him to. He visited _ the divisions ‘‘[w]henever the occasion requires it. Any time something happens that would’ require it.’’ Tr. 38 (emphasis _ added)® He estimated that he visited each’ of the divisions about 10 or 12 times per year. Tr. 38-39. He presided (as chairman) over all meetings. .Tr. 40. rae hain al ai » © . Sepp NaS Sabot ane cas rekety te >) a Witness Schafer, Seine owner of a ‘bakery i in Belling- ham, testified. that, as a member. of . the association, he occasionally attended its meetings at the -Athletic Club. when he was in Seattle. ‘Whenever it was convenient for to be down here, I would go to their_noon luncheon © which we considered a luncheon and a meeting combined.’ He testified further: Q. Did you ever hear any discussions of prices or. price rises when you were at a meeting of the Bakers he of Washington; Inc.? Ss A. Yes, sir. Q. What would be the circumstances of such dis- cussions? Would ‘they. usually occur around labor ¢ contract periods or what? — A. That is the reason for raising ’em. * * * Some- times before and after our.contract was signed. | Q. Would you hear price discussions at other nerieds at these meetings or were they generally localized _ around the. contract periods? A. Mostly contract periods, yes, ° Q. And what would be the nature of the discussions ’ that you heard? — | * A. f** * © we're’ going to use red ink if we. don’t do something about the bread price.’’ 4 : To the same effect was the testimony of ‘lilies ‘Albert . Pettersen, formerly a supervieor for a local food store . chain: re) . Q. Now, when you were here in Seattle, Mr. _Petter- sen, did you ever attend any meetings of. the Bakers of Washington, Ince., sir? A. Yes, sir. I attended their Monday’ luncheon bcs ~ the Washington: Athletic — | "Tr, 488-489 (emphasis added), 490, . . 7 WU sailetiesgas! ne eT ee ere Mice Stiri, Pia Si . pe ee AP hs ee ~ wi tm eile . - aa eet eer ane : . a dvitlenlad Sibi ae pedo st ncaa itll Ria Abate 2 ” san i Q. [Wle have had testimony to the » effect that the 7 price of bread rose in August, August 11, 1958 here’ - in Seattle, the Seattle area. Do you recall attending any meetings at the Washington Athletic Club of the Bakers ‘of Washington, Inc. in which prices were dis- cusséd, around that period? ete A. Yes,I did. = . we Q. What would be the nature of the price discussion .—— - that you heard? | i "2 A. Well we discussed the: labor, we discussed our price of pur material—flour, shortening, sugar. And labor had jumped so high that they decided that we i : should have a raise in our bread. From there we just : ' «took it and they said, ‘‘What do you think about, | ; - certain prices?’’ and they kicked it around and, so. that 1 is as far as it went as long ‘as qT sat there.* . ean? ! ‘ 56a 4 ; ‘ “After these meetings were over, the witness was notified . 7 bythe association’s manager, Arthur LaLime, that there- "Was going to be a price’ increase: | . Did you receive information that. prices were | going up after this series of meetings? © ‘a A. Yes, sir. _ Q. And how did. ou sia that information? ; A. Well; I believe it was a form sent to us. Now L am not sure whether it was a form or he’ called me, — . Art LaLjime called‘me. I don’t know whether it was , & paper or telephone ‘call. ; Q. It was Just the one instance when he called you or sent, yOu a notice or was there more than one _ inatarice? Mee A. Well there was more than one. instance because ase we weren’t sure on. different items to go up on, like buns and specialty breads.” Ap eee i on ia —e | 41 Ty, 259-260 - (emphasis added). ia ee 57a The explanation offered by respondents for the remark- able coordination of their price increases is that the whole - thing is a matter of ‘‘price leadership.”’ First, they say, ‘one of the respondents, acting independently of his com- petitors, decides to raise his prices. Because certain of. the very large grocery chains insist on it, a written notice of all price changes is sent to them by the price leader. — several days in-advance of the effective date of the change. ‘His competitors, through salesmen calling on the notified chains, learn almost immediately (perhaps the same day the notice was received) that the price leader will increase -his prices on a certain date in the future. These com- - petitors, equally eager to increase their own ‘prices (respondents’ contend), immediately send. out similar, notices to the chains. Kor example, four of the principal respondents—Continental, Langendorf, Buchan, Hansen— all pieked August 11,.1958, for the effective date of their 1958: price increase. On August 7, 1958—four days previous—Continental had sent A & P a written announce- ae ment’ that, effective August 11, 1958, the price of the standard loaf of bread would increase from 31¢ to 33¢ o> (and similarly on. other bread items).“* The next day— August 8, 1958—two of Continental’s competitors, Langen- dorf and Hansen, sent similar announcements to A & P and their other large chain customers.* Their announce- ments, like that of Continental, stated that, effective — August 11, 1958, the price would go up from 31¢ to 33¢. _ Had these three and all of their competitors made their announcements on the same date, say, August 7, it would have been hard to explain; the only inference would have - been that each had agreed with the others to go up on that day. But where the first move is made by only one com- .pany, the others can claim they subsequently and **inde- pendently’’ learned of : that competitor’s ‘‘independent”’ 48 OX 21; tr. 402-403, (These are suggested retail prices; the “ - wholesale price to the grocer is 20% less.) . : “4 CX 15; tr. 320. CX 13; tr. 297-298. . 58a siaeniinaeivaiiniat the day before, and thus that the moves of _ all amount to nothing but ‘‘meeting competition.’’ * — But some of the baker. witnesses testified that they learned of their competitors’ impending price increases © not from the ‘‘trade’’ (grocery chain buyers) but from - the manager of the association. For example, witness Albert Pettersen was quite clear that, although his em-- ployer, Albertsons Stores, was not only a baker of bread * but.a purchaser of it,** it did not receive written notices of price increases from its suppliers, but, instead, from the -association.*7 ‘oo This was not the only baker witness that testified to the receipt of such advance. price information from the | association. Mr. Frank A. Maxeiner, Jr., former pro- prietor of ‘Model Electric Bakery in Seattle, epeanese as follows: Q. Now, during the time Mr. Alford was associated with Bakers of Washington, did he ever contact you _ with respect to impending price rises. as to bread? A. Yes, he called on the plione. Q. And did this happen on several ‘occasions! _ A. Yes, it did over the years. Q. Did he advise you as fo an impending price rise in bread when he called? A. Yes; he would usually indicate that we were to advance the price of bread.*- 4 See, e.g., x 23B, tr. 417, where Continental reported that it was er its Prices ‘ ‘in order to meet the- ‘competitive situation * * * 9 46 Albertsons bakes its own private ‘iat bread and sells it in its own grocery stores. In addition, however, its stores carry the various ‘‘brand name”’ breads, e.g., Continental ’s ‘*Wonder’’ bread. Hence Albertsons is both a customer and a competitor of Con- tinental: Tr, 265-267, -* Tr, 282 (emphasis added). x at al cdl eae — 5 ee Pe eee ee 59a -In the face of such ‘testimony, we are not ‘‘obliged to accept as true’’ the denials of the respondents. Girardi v. Gates Rubber Co. Sales Division, Inc., 325 F.2d 196, 202° (9th Cir. 1963).. Moreover, even some of the arger - respondents virtually admitted they discussed prices at . ' their Seattle meetings and knew in advance of their com- — petitors’ impending price increases. George Buchan, president of one of the larger respondents, testified as . follows: - Q. Were there any other dizenseions at the Bakers » of Washington, Inc. in connection with the aw | on labor regarding prices? A, Oh, I imagine during the ‘nagotiaiions there were. * * Q. Did you discuss then what the added costs would be of the added labor icaapnaile A. Oh, yes. On the “question of advance knowledge of competitors’ price increases, the major respondents repeatedly em- phasized that they had merely heard ‘‘rumors’’ of what thgir competitors were going to do. But much of this teStimony had a decidedly equivocal note to it. For example, a Mr. Covington, Continental’s bread plant _ manager in Seattle, testified as follows wes the 1960 . price increases: | Q. Do you know in advance one way or another _ when a competitor .is going to raise his prices? fo have some knowledge of ‘it, yes, sir. | 2 * Q. * * * Do you learn of prospective increases, "that 1 is, do you learn i in advance of the announcement © Tr, 199-190 (emphasis added). | See; e.g., tr. 186, 189, 237, 244, 247, 321-322, 335, 412, 443, 449. | of an increase that a competitor i is going to make that. increase? A. Not too far in advance, no sir. Q. Do you only learn after some announcement has been made? Which,is it? A. I only know fo sure after some announcement | has been made.*!* Representatives of the larger respondents were some- thing less than persuasive when interrogated about how they happened to have picked a particular date to raise prices and about the reasons for deciding to raise the price ‘by the particular amount chosen, Thus, the 1957 increase had been a 1¢ raise, the 1958 increase had been a 2¢ hike, | and the 1960 jump was for only 1¢ again. Why pick -2¢ one year, and 1¢ another? ‘‘Well, I just didn’t feel that I could get any more than one cent.’’*? But this doesn’t explain why he ‘‘felt’’ he could get 2¢ in 1958. In other words, there were no ‘‘false starts’? here. Each time a | ‘‘price leader’’ raised his prices, it *‘stuck.’? The others followed him up quickly; the price leader did not first try. 2¢, and then have to ‘‘back down”’ to 1¢. The figure he _ selected—whether 1¢ or 2¢—was always just the amount that his major competitors, also exercising their ‘‘in- -.dependent’’: business judgment, agreed was neither too - large nor too small for the state of the market. As to the dates selected for the increases, e.g., August 11, -1958yrather than, say, a week earlier or a week later, .Mr. - Moore, manager of Langendorf’s Seattle anit ne as follows: ; : Q. Why didn’t you do it the previous Monday be- cause you were already paying the [increased] labor _ wages? 51 Tr, 412-413 (emphasis added). 52 Tr. 303. és ; en b a we hang PERI TORE DAY Ci, BORO Need w thee Rs aang, «61a ." A..T can’t answer that right now because I can’t think why. .. . Arthur LaLime, then manager of the association, came _ ‘to the job in November of 1957.: He succeeded a Mr. Alford, who had held the post for more than 20 years, until _ his death in June: of 1957. This. predecessor had been regarded by the’ members as the, price ‘‘bellweather.’’ -Witness Harry Schafer,»a baker in Seattle until 1956, testified as follows: - 3 7 &S Q. Was there someone looked to in those meetings to be the bellweather for prices? ig hed . A. Well, usually the head of the bureau * * *, At that time it was Mr. Alford." , , 3 alee Mr. Maxeiner, as noted, testified that Alford had made . it a practice, ‘‘over the years,’’ to instruct him by tele- phone when prices were about to be raised: ‘Yes, he would usually indicate that we were to. advance the price of bread.’””™ ~ vec ee yore ; 5) Victor Goethals, proprietor of a small bakery in the Anacortes-Bellingham* area, testified that Alford had threatened him with a ‘‘price war’’. in 1957 “if I do not put it [prices] up with the rest of the bakers.’ ™ The 58 Tr, 321-322 (emphasis added). “Tr 491... . 55 Tr, 282. 56 Tr. 50. ‘‘Alford who was in charge of the [association] had called me and told me to put my pice up. I did not do it for quite a while until I had. several calls and then he threatened me to—there might be a price war if I do not put it up with the rest of the bakers.” Tr. 50. (It appears-however; that the witness — was mistaken in attributing this particular incident to. Alford. ' Since Alford had died on June 13, 1957, and since the incident would have logically followed the price increase of July 22, 1957, ¥ some five weeks after Alford’s death, this threat was probably made either by the ‘‘interim’’ association manager, one Gene Crawford, or by his successor, LaLime, who took the office in November.)° | } , 62a wenn was similarly threatened the following year. ‘In 1958 I went up because I was ‘almost—well, I was told to , go up”’ by.LaLime. ‘‘He said I should put the price of bread up.with the-rest of the~ wholesalers.’ *~ ‘This, -—~ crease was followed because ‘‘I didn’t want the same trouble I had before, that I had in 1957.’’°* Asked what. kind of pressure could be put on him, the witness replied: — ‘‘Well, they can *-* * undersell me and ciaaerd me at any time. 99 59 In 1960, however, the rae i refused to go up again. ‘‘I just felt I couldn’t afford to go up because > you lose too much business by keep yrs and raising the prices.’’ : -Another witness, Mr. Bennett Haggen, proprietor of a. supermarket (‘‘in-store’’) bakery in Bellingham, testified > that LaLime visited his place of business in the fall of -1957 to discuss the fact that three local bakers were cutting . prices. It was a substantial visit. ‘‘One hour, two ie I didn’t have too much to do.’ ® | Q. What occurred at this meeting between cumualt _...and_ Mr. LaLime? ‘A. Well, t believe that Mr. Laliime was just new in — the territory then and, of course, he came and intro- duced himself and then because ‘of the situation, we discussed the bread deal. ae . The witness did not know whether LaLime had siuilie, . bs visited the three price-cutters in 1957, but he’ knew that, “stp, 51. oe i + 58 Tr 54. . a "80M p, 55. 60 Tr 51, -@ Tr, 374. _ 2 Tr, 357. | : -~-tioned-above, LaLime invited another witness, Mr. Robert — 63a. two weeks ‘after LaLime’ 8 hci to eit the “*grlee ‘war’? ended. In 1958, prior to the price raise: of pom 11, men- Hall, proprietor of a ‘small Bellingham bakery, to attend a meeting of the local bakers. The witness teatified ‘as 7 follows : Q. And in ‘the summer of 1958, was a meeting of bakers held in Bellingham? : A. Yes, sir. * * * .Q. By whom were you invited to attend? A. The representative for the Bakers of Wachee. Q. And can. you tell us what transpired at that meeting? A. Discussion of prevailing prices, and the — rise that was about to take place and— = ©, — he . * “Go aes Q. Was there any discussion of what Hall’s Bakery intended to do with its price conduct? A. Yes. Hall’s Bakery had been known as a cut- rate bakery and they would like to have us join and follow on line with the rest of the bakeries. Q. And did you refuse to’ do that? _ A. I told them that-we still had Hall’s Bakery name on our place of business and we were maintaining our own yum of business. ‘ * * ° Q. ‘Did Mr. LaLime ever tell you to eet your prices up? % A. Mr. LaLime told me that, for instance, if Wonder Bakery. [Continental] cared to bring up:bread in 63 Tr, 366. 64a Bellingham and sell it’as an unbranded loaf of Te for 10 cents a- loaf, what would that do for your business? * * * He did not say they were be to, _ he said: ‘What if they did?” * | Mr. Albert Pettersen, former bakery supervisor for the | Albertson grocery chain, testified that LaLime, the associa- ‘ tion’s ‘manager, had.thrdatened him with a “bread war’’ unless he stopped advertising his bread at a cut price. In 1959, the ‘‘regular price’’ of raisin bread had been 26¢° . per loaf. The witness ran an ad in a Seattle paper on August 3, 1959, offering it for sale at 19¢. Asked if the ad caused any ‘‘repercussions,’’ the witness said: ‘‘ Well, the Association called me and told me that I shouldn’t run raisin bread at 19 cents. * * * Well, he thought maybe we might have a bread war if\ I keep ered around with. _ the price of bread.’ The smaller bakers in ii areas. testified to efforts of competitors and the association’s manager to persuade them to raise their prices. Mr. Ralph Hall, brother and partner of Robert Hall, mentioned above, testified that ‘‘it ; was suggested by Mr. LaLime on two different occasions that he thought: we could get more for our bread and more ° in line with what the other fellows were getting. However, » we ignored all his suggestions and in fact told him that we would not raise the price.’’* One of those occasions was in 1959. ‘‘‘ Well, in this regard, he was up there—the last time in 1959 he was there and he asked us—when this last bread war was going on, he asked the reasons. He came in one day and he asked me all about this price that © we had on the window and asked us -who had started this ’ 4 Tr, 466-468 (emphasif“added). 6 OX 12, tr. 250. 66 "Tr, 255-257, 273. De, 47T-ATB. thing and ‘all e 9; Well o.0'O i tsked me mn er these things, I mean, he was asking me about them and, of course, — the only thing that I can go on, he was the represenfative . -- for the Washington State Bakers Association and I had a talk.with him and that’s what he was there abou eee, As my memory of the conversation goes he said to me: ‘There are several of the other stores now that are getting 32 cents a loaf and we are wondering if. you couldn’t come up at least to meet those fellows at 32 cents.’ ’’ ® : ‘LaLime wasn”t the only one that ‘tri€d to persuade Hail to raise his. prices: ‘‘Now, in the spring, I believe, of 1959 I had a ‘phone call that there was a bread war going on at the time and a fellow. that represented himself, he said — he was a Safeway store man, he never gave me any name on the phone, but he’ said he thought we’d \better get the price of bread up there. And that was the only thing that’s ever been said by anybody from the Safeway store. * * * No, in no way would I know except that he told me that he was a Safeway store man and that the price should be brought up there or else we would ieee get in a bread war with them.’’ ® This occurred, ‘as neta, in Bellingham, s some 100 niiles north of Seattle. Two years earlier, in 1957, another such incident occurred in Yakima, over 200 miles away. Mr.. Wayne Atkinson, owner of a small bakery in Yakima, testified that he had run an advertisement featuring a price cut from 31¢ (the price his competitors were then -charg- ing) to 21¢. The ad ran on a Thursday night, and he sold _at the low price on Friday and Saturday. On Monday* morning, he was called on by Jim.and,Bud Snyder, owners | of a competing bakery. They told him. — had oesiit a — call from Seattle: © Tr, 481-482. © Tr, 478-479. “a . 66a oa Q. Whom did the Snyders say had called them from Seattle, did they say? | A. Yes, sir. * * * Safeway. * . * * Q. Mr. Atkinson, what happened with regard to your — prices, what’ did you do about them following this con- -yersation with the -Snyders? — oe A. I went’ back to the original price.” / ‘We conclude that,” while “some. of the respondents may | have thought these repeated price increases we in their . ‘own economic interest,’’ others did not feel that way and would not have raised their prices had it not been for’ the —— urgings, and sometimes the threats, of ‘the association’s © ; ‘manager and certain of their competitors. We think it clear that there was an actual agreement, understanding, or ‘‘meeting of the minds’’ here between some of the larger, - more powerful of these respondents, and that the weaker members acquiesced in the agreement’as & result of the promptinge and pressures put on them by the former. eee ls Respondents argue further that, even if the association’s manager had in fact suppressed competition among the Washington bakers, the evidence is insufficient to ‘‘connect”” — the various individual members of the association with that 70 Tr 381-383. Before he went back, however, ‘‘we had a meet- ing that was called. I believe it was the following Thursday or within a few days of when I had been called.’’ The meeting was held at the Chinook Hotel, in Yakima. The witness attended, along with ‘‘nearly all bakeries-in the ejty.of Yakima, including retail and wholesale.’’ Tr. 383. “well/ that were talked about, mostly coordin ing the prices & little bit. * © * (T]hey all more or less agreed that we would not shoot [cut] prices on large white and large ‘whole wheat, a pound and a half loaves, we wouldn’t shoot the prices on those.’”’ Tr. 383, 385-387 (emphasis added). there were several things . 67a official’s unlawful acts. “They argue that they hired him to handle their labor relations with the various labor unions ; that labor negotiations were ‘‘all he was good for’’; that he was given no authority to fix prices; that, in fact, - he was expressly enjoined from doing so; that, if he did in fact, fix prices, the individual members of the associa- _ tion neither knew nor should have known of it; and that, . therefore, they cannot be held responsible for it. The record, however, is - otherwise. First of all, Mr. LaLime, the man they eniployed to run their association, . had a deep personal conviction—a working ‘‘philosophy”’ ‘—that was wholly opposed to the national policy in favor of competition. He was against it, and made no bones about it. He described his “philosophy” in these words: A. No. Iam not approached with the price situa- ‘tion. However, I vehemently recommend no price » _ wars because it is economic waste and very sists to the industry. Q. How do you do that? How do you convey that recommendation? ‘ A; By every persuasion that I am capable ” ae Q. In the open mesting you use that philosophy, do you? A. No, I don't recall of open meeting discussions .on that basis. No, sir. Q.. Then how do you convey your philosophy to the membership? A. By personal contact, * Q. What is it you say to them? A. I tell them that a price war would be very dav. rg astating to thé industry. The demands that we have from labor are extremely difficult to livé with without having a sick industry on top of it.” ~® _ Respondents contend they knew nothing of Mr. LaLime’s ‘ proselytizing on behalf of his ‘‘philosophy”’ of noncompeti- -tion. They would have us believe that they were com- ~ pletely unaware of his many phone calls and visits to those members that cut prices, and those that were slow.to recog- nize their ‘economic ' interest”? in raising their prices. - They tell us. they hired him to take care of labor .problems ; ; if he fixed prices, ' ‘he was strictly on a lark of his own. We find; as noted above, that prices were discussed at _ the weekly meetings of the: association:at the Athleétic,Club._ * . in Seattle, and at meetings held in B llingham and Yakima. a _ This record establishes that af: least | 4 of the 49 members of the association*were regularly in attendance at the, Seattle meetings, inchiding Safeway and the larger whole- sale respondents in this proceeding, e.g., Continental, Langendorf, Buchan, and Hansen.” It has.also been shown by the testimony that the group was small enough, and the ' physical setting was arranged in such a ‘manner, that every © person present at those meetings was able to see and. hear - @verything that was done or said. Mr. LaLime presided. ’ over.these meetings. The smaller members of Ahe associ- ation did not "understand that labor matters Were ‘‘all he o xe was good for.’’ They thought the purpose of the sco 1 Ty 41 (emphasis added). Mr. Lal.ime elaborated upon this **philosophy.”’ of his in describing the calls he made on members who attempted to cut prices: “‘‘T did all in my power to persuade these people: not to.do 6.” Tr. 42. - ‘I asked him’ not to per- .- petuate a price war, not to become involved in one.’’ Tr? 44. “‘‘I pointed out that a price war-was very uneconomical, that it would be disastrous to the industry and it would-be particularly dis- astrous especially to a smaller operation, that any time these price wars started there was - one i that ree and that was complete. chaos. = Tr. 46. 72 CX 7, tr. 81- 94,175. - * Sciatica tsps s 2u& ow Rietetinte = Seid pt Paget WE 6 £2 CR MAO APRON ep il ean dhe cali tps dbteatibonsea fle witha eda an isos epinile @a- - @ tion he represented was ‘“‘to make better labor relations, to-.matntain prices, and generally better baking condi- tions.’ They thought the association’s manager was . the industry’ s ‘‘bellwether’’ on prices.* Théy thought he was the one to call when a competitor got out of line on prices.* When he appeared in Bellingham for the stated purpose of stopping the local price cutting, they thought ‘ .: he was there as a representative of the association; they ‘‘couldnt say that he was up there on his own, no.’’* They took him seriously when he told them he ‘‘thought maybe , we might have a bread war if J keep fooling around with the price of bread.’?’7 When they received a written notice . that, ona certain date; all the bakers were to raise their prices, they knew it had to-have come from him. ‘‘[T]hey [the association officials] would be the only logical ones to send us out the price. * * * Well, it was from him. It couldn’t be from anybody else but him.’’** ‘When he.ap- - peared at a member’s place of business, the member knew he was there as the. spokesman for the association: ‘‘He didn’t have to tell me. I know he is.’’ -He was not on a lark of his own: ‘‘How can he represent himself when he is working for the association?” ® And he did not repre- sent merely the wholesale bakers, or. just the retailers: ‘Well, sure he represents the wholesale people and the retail people.’’ * _ When he told a retail baker to raise his © _» - 3 Tp, 464 (emphasis added). Mr, LaLime himself had said this to the witness, Mr. Robert Hall of Bellingham. Tr. 464. /4 Tr, 491. "8 Tr, 258-259. 16 Tr, 480, an CC 7 Tr, 257. 78 Tr, 265. cA 79 Tr, 270. . - 60 Tr, 276. : $1 Tr. 275. 0a prices up to the level of his competitors’ prices, the baker | thought he spoke for the association: ‘‘I thought that was his job.’’ *2 When he intimated to a small baker that Conti- nental might be called in to crush him by: selling bread at his front door for 10¢ a loaf, that baker ‘‘figured he [LaLime] was speaking for the bakers’ association of Washington. ’ ro The association, therefore, and the activities of the man they jointly put in charge of it, is the cement that binds the members ‘together here. We find as a fact that each member of this association either knew or should have known that LaLime actively discouraged and suppressed price competition. throughout the area in which it operates, and that they either affirmatively approved of those activi- - ties or acquiesced i in them. All knew or should have known - of the activities of the association and of its manager, and - all adhered to the fixed prices the manager announced and _ policed. % Jt is elementary that a conspiracy creates an agency relationship among its members; every act per- formed by any member of. the conspiracy in furtherance of its purposes is, in law, the act of all members of the ‘ al Tr, 62. | | Tr, 469-470, # 4 Respondents enjoyed almost iets success in bringing price cutters into line. An exception was Mr. Vincent Noga, owner of a small-in-store bakery in a Yakima suburb, who resisted the threats and sold. beneath his competitors’ prices for over a year (i increasing _ hig sales volume from approximately 40 to 150 loaves per day, and his profits from about $9 to $30 per day) ‘until he lost his lease. _ Ty. 517, 523-525. Bread prices throughout the area are ‘‘quite _ gtandard.’’ Tr. 185. Asked jf ‘‘the small retail baker’’ stayed at ~ his dwn price level, Buchan, a wholesaler, replied: ‘‘Very much so.’ Tr.°197. See. ‘also tr. 514. ARDS RGAE S Ba itch it i PC Ny te ne 8 ee Oe om ae ee Lg = 92 pp tient sedi 71la conspiracy.” Proof of participation in m etings at which. prices have been ‘‘discussed’’ is. ‘sufficient to provide a foundation for the introduction of evidence of other acts on - the part of one conspirator, in furtherance of the con- spiracy, binding on all. American ‘Tobacco Co. v. United - States, 147 F.2d 93, 118 (O.A. 6, 1944).” ' Continental Baking Co: v. United States, 281 F.2d ‘137, 152 (6th Cir. 1960). Here, the principal respondents, ‘including Conti- nental, Langendorf, and Safeway, all participated in the Seattle price discussion meetings. ‘Continental’s Seattle’ - .plant manager testified that he not only attended those meetings generally, but that he had attended them ‘‘around September of 1960,’’ ** the month in which Continental and .its major competitors simultaneously raised their prices from 33¢ to 34¢. Langendorf’s Seattle bread plant man- ager testified that ‘‘I attended meetings quite often, yes.’? 87 He was. the witness that, when asked why he had elected to raise his prices on August 11, 1958 (the date on which his major- competitors raised their prices), rather than a week earlier or a week later, replied: “I can’t answer that right ‘now because I can’t think why.’ Jens Hansen, president of Hansen Baking Company, testified that ‘‘ Well, I have. always been quite regular [in attending the Seattle meetings] but I haven’t of late; last year or so I have been off and on.’’ 8 He was quite regular in 1958; in fact, % **[W]hen any number of persons associate themselves together in the prosecution of a common plan or enterprise, lawful or un. lawful, from the very act of association there arises a kind of partnership, each member being constituted the agent of all, so _ thas'the act or declaration of one, in: furtherance of the common object, is the act of all, and is admissible ag gmmmnary and original evidence against them.’’ Hitchman Coal Co. v. Mitchell, 245 U.S. 229, 249 (1917). Viera ; ? 86 Tr. 414, Trp, 315. 8 Tr. 322. _ 9% Tr, 294, 72a c _ of the 26 or more meetings held by the association in that year, ‘‘I attended a good proportion of them.’’ ® George Buchan, president of Buchan Baking Company, testified that he regularly attended the association’s Seattle meet-._ ings, ‘and that:he ‘‘imagined’’ prices were “‘discussed.’’ Other witnesses testified.to seeing representatives of these and other companies at the Seattle meetings.2. Tr, 304, “1 Tr, 189-190. ” 8 See, e.g., testimony: of Harry Schafer, of Schafer’s Bakery, who, saw Jim Hansen, George Buchan, Mr. Richards (of Con- ' tinental) and Al Moore (of Langendorf) gr the meetings, tr. 496, together with numerous other wholesale*and retail bakers. (The number attending varied. from perhaps 10 to 25. Tr. 493,'495.) The association’s manager, LaLime, submitted'a list (CX 7) of the ‘‘regulars’’ who had left standing instructions that they ‘be notified of all meetings (tr. 87, 94,175). There are fourteen of these regulars, including Continental, Langendorf, Buchan (rep- . resented by respondent George B. Buchan), and Hansen (repre- sented by respondent Dick Hoyt). The association’s manager also testified to the attendance at the | meetings of representatives of Safeway, Continental, Langendorf, : Hansen (represented by its président, Jens Hansen, or Richard ' Hoyt, who is also vice president of the association) (tr. 81, 176), and Buchan (president of the association) (tr. 81). Witness Wayne -Atkinson, former owner of the Old Holland Bakery in ‘Yakima, identified Jim and Bud Snyder, owners of respondent Snyder’s Bakery, in Yakima, as competitors who had pressured him to raise his prices (tr. 379). He also testified to a meeting at the Chinook Hotel, in Yakima, attended ‘‘by nearly -all bakeries in the city of Yakima, including retail and wholesale’’ (tr. 383), at. which ‘they ‘ all more or less agreed that he would. not shoot [cut] prices on large white and large whole wheat.* * *.’’ Tr. 386. The witiess _ specifically noted the presence at that meeting of the Snyders, ~ Dick Trenerry (of respondent Trenerry’s Bakery, a wholly-owned . subsidiary of respondent Holsum Baking Co.), and Jack Larson (tr. 384). Respondent Victor H: Goethals, proprietor of Fortune’s Bakery in ‘Anacortes (near Bellingham), testified to following, although apparently ‘‘unwillingly,”” Federal Trade Commission v. _ Cement Institute, 333 U.S. 683,'719 (1948), the association’s in- _ structions to raise prices (tr. 50-62). . , . £ 4 . °” o Ta And of course Safeway was represented at those meet- ings. Safeway was not ‘a ‘‘member’’ of the association. It was not carried on the rolls and did: not pay dues. But ‘it nonetheless managed to secure all the benefits of member- ship by ‘‘retaining,’’ on an annual ‘‘fee”’ basis, the associ- ation’s manager to handle its labor negotiations. Safeway 7 paid LaLime, as it had his predecessor, Alford, a ‘‘re- tainer’’ of $600 per year.* In addition, however, Safe- | way’s representatives. attended the Seattle. meetings at the Athletic Club: Canc Q. Does a representative of the Safeway organiza- tion attend meetings of the’ Bakers ‘of Washington, Ine? * av | | A. Their labor relations man would on occasion de: . . ing contract negotiations. Q. What about their divisional bread man? A. He would attend meetings. € | | Q. He does regularly attend meetings? A. Usually, not always. | ‘As noted, Safeway has its own baking plant in Seattle, , producing its ‘ private brand’? bread called. ‘Mrs. Wright.’’ It sells this bread in its various retail stores located, apparently, ‘‘all over the State of Washington.’? . In addition, Safeway’s retail stores handle the. ‘“‘name brand’’ breads produced by the wholesale bakers. It thus\. | has two prices:: first, the full, ‘“‘suggested’’ retail price for the wholesalers’ bread (e.g., 34¢ for “Wonder”? bread) ; and, second, 1¢ less (33¢) for its own self-baked brand, '. “Mrs. Wright.” % Tr, 32. : ee * Tr, 80 (emphasis added). See also tr. 81-82. 5 TP, 262. ee * ‘ se T4a In fact, Safeway is the local bread industry’s club over the smaller bakers. Witness Wayne Atkinson, proprietor of a small bakery in Yakima, testified that when he cut his _ a price, ‘a local competitor, a Mr. Snyder, immediately - showed up at his place of business’ to tell him Safeway ~had called about his price: . Q. Whom did the Snyders say had called them from Seattle, did they say? =i as wae eines A. Yes, sir. | Q. And who was it? A. Safeway.** Another price cutter testified that he had personally re- ceived a threatening phone call from Safeway: ‘‘Now, in the spring, I believe, of 1959 I had a phone call that there was a bread war going on at the time ‘and a fellow that represented himself, he said he was a Safeway store man, he never gave me any name on the phone, but he said he thought we’d better get the price of bread up there. “And that was the only thing that’s ever been said by anybody from the Safeway store. * * * No, in no way would I _ know except that he told me that he was a Safeway store man and that the price should be brought up there or else _ we would probably get in a bread war with them.’? * - _.. As to the remaining respondents, it is ttue of course that ‘‘mere membership’? in the association is not enough to warrant.an order against them. Phelps Dodge Refining Corp. v. Federal Trade: Commission, 139 F.2d 398, 396 (2d Cir. 1943). Here, however, many of these respondents’ were shown to have either attended meetings where prices were discussed, either in Seattle or in one of the divisions, or to have actively attempted to influence the prices of competitors. And they generally adhered to the prices % Tr, 381-382A. ', 7 Tr, 478-479 (emphasis added). _ + _ 8 See n. 92, supra. , 75a cS) \ fixed at those meetings. But certajnly all of them knew or should have known of the price fixing. activities of the associatién’s manager, LaLime. He was outspoken in his | hostility to price competition, openly spreading his ‘‘phi- losophy”’’ to the members by ‘‘personal contact.’? (Each of the ‘‘divisions”’ was visited by LaLime.from 10 to =. times per year.) His threats, and those of Safeway and the other powerful. bakers, could hardly have failed'to come to the attention of these respondents, and thus to have put them on notice of the fact that the association was engaged in unlawful pricing activities." Iv. ‘ : 2 ‘ Finally, respondents contend that the order entered by ' the ‘hearing examiner is improperly broad—that it should be limited to the precise geographical area in which the price fixing has been found (State of Washington), rather than extending to wherever each of the respondents do busi- ness; and that, in enjoining them from continuing to fix prices in the future, it should not prohibit them from fixing prices generally, but only from achieving that result’ by the precise means involved here, i.e., through this particular - trade association, Bakers of Washington, Inc. : The latter contention borders on the frivolous. While _ the Commission must tailor its orders to the particular % See n. 84, supra. 1 Tr, 39. et , “Thus the issue is reduced to whether a member who knows or should know that his association is engaged in an unlawful | enterprise and continues his membership without protest may be charged with complicity as a confederate. We believe he may. Granted that his mere membership does not authorize unlawful conduct by the association, once he is chargeable with knowledge that his fellows are acting unlawfully his failure to dissociate himself from them is a ratification of what they are doing. He becomes one of the principals in the enterprise and cannot dis- claim joint responsibility: for the illegal uses to which the associa- tion ig put.’’ Phelps Dodge, supra, 139 F. 2d at 396-397. s ing for an order that merely prohibits price fixin oii has Cok, ches - - ee en. ae ee ee, ae ee ne ee 760 ‘‘practice’’? found to have. existed, ‘‘price. fixingy is a single, well-defined ‘‘practice.’? Respondents, i tend- rough the instrumentality of Bakers. of Washington, Inc., mis- concéives the distinction between a generic ‘‘practice’”’ and the several techniques of effecting it. For example, an order so limited would leave these respondents free to resume their conspiracy tomorrow, holding conspiratorial meetings at high noon in the most public place in the city of Seattle, so long as they kept the association, Bakers of . - Washington, out of the matter. Such an ‘order would be _ no more effective than one limited to a prohibition of price fixing only. where it was accomplished by meetings held at a particular place, e.g., at the Athletic Club in’ Seattle. ~The order could -be avoided by using the telephone instead | : of having a meeting, or by moving‘the site of the meeting. from-the Athletic Club to other premises. In Cement Institute v. Federal Trade Commission, 333 U.S. 683 (1948), the respondents objected to the fact. that the order not only prohibited price fixing by means of the. ‘‘basing-point system,’’ but also by selling ‘‘pursuant to or in accordance with any other plan or system which results in identical price quotations or prices for cement *.* *.? The Court said: ‘‘The paragraph is merely designed. to forbid re-— spondents from acting in harmony to bring about national uniformity in whatever fashion they may seek by collective _action to achieve that result. We think that no one would find ambiguity in this language who concluded in good faith to abandon the old practices.’? (333 U.S. at 729. Respondents’ suggested ‘‘territorial’’ limitation of the order is equally unsound. The general rule is that a viola- tion of law, whether practiced in one area or in many, warrants an order covering the whole of the violator’s business. There being no reason to suppose that an entity © _ Showing no reluctance to-fix prices in Seattle, Washington, would act differently in another city or another state, the -. public interest in the cessation of such unlawful conduct 4 CRA RG AE GES IEA REA RA ATER ENG tn GAO ee AE 77a ~ , Tequires an order that protects the public in all of the states, not merely in Washington.’ 3 Finally, respondents profess the fear that the order, as drafted, might be so construed as to prohibit such lawful _ business practices as marking their loaves of bread at the baking plant with suggested retail prices, especially since. . they make ‘‘accommodation’’ sales to each other. The language that bothers them here is that’ part of the pre- amble that prohibits conspiracies and collusive understand- ings between. any two or more members of the association ‘tor between any ene or more of them and others not par- ties hereto,’’ to fix prices, adhere to such fixed prices, or deter any competitor from exercising his own independent judgment in pricing his goods. The prohibition of future ' price fixing conspiracies between one or more of the re- . ‘spondents ‘‘and others not parties hereto”? is a routine provision, one that has been expressly sanctioned by the _Supreme Court. For example, in-Cement Institute v. . Federal Trade Commission, ‘supra, the order approved by the Court prohibited future. conghirgcien not only between the parties themselves but ‘‘between any one or more of . said respondents and others not»parties hereto * * *.’?. The: ’ Court, noting that the conspirators had secured the aid of others in the past, and that the entry of new members in the industry in the future could be reasonably anticipated, '..declared that ‘‘the Commission was authorized to make its order broad enough effectively to restrain respondents | from combining with others as well as among themselves.”’ Id., at 728-729. . - ; . 102 “As to territorial extent, the company, having been found guilty of a flagrant violation of the act, was properly required . to cease and desist from such practices in all areas in which. it was doing business.’’ Maryland Baking Co. v. Federal Trade Com- _ mission, 243 F. 2d'716, 718 (1957). See also Foremost Dairies, Inc., _ Dkt. 7475 (1963), holding that an order was properly extended tc the respondent’s operations throughout the country, rather than being limited to Albuquerque, New Mexico, the city where the violation was found to have occurred. ; 78a ~The instant order, which is substantially the same as ‘the order approved in Cement Institute, supra, could not - conceivably be construed to prohibit the co n practice , of placing “‘suggested”’ retail prices on b wrappers. aR The [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_0220%3A2. Public record. Not legal advice.