Appendix — Knuth v. Erie-Crawford Dairy Cooperative Ass'n

Supreme Court brief1973

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APPENDIX A

(Filed June 28, 1972.)

UNITED STATES COURT OF APPEALS

For rue Turmp Circuit

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Nos. 71-1541 thru 71-1548

Rossxt M. Kxwurn, on behalf of himself and on behalf of

all other members of the class who are

similarly situated,

Exe-Crawrorp Damy CoopreRraTIvE Association, Wi11AM

Courervans & Sows, Ivc., Kuzrs Damy, LixceRLicnt

Damy Company, Scuxemwer’s Darry, Ixc., Syee Damy

Compaxy, Ente Damy Laxo, Ixc., GoLpEN Crows Darry,

Scurver’s Damy, Yarue’s Damy, Ixc., Gotpex Giow

Damy, Seautest Foops, Division oF Natrowat Damy

Provvcts Corporation, Howarp Yost, Joux Havas,

Russet Raysuck, Micron CULBERTSON, DowaLp Tris-

cvrr, Raymonp Boyp, Catvix Henry, Roy Brack, Lorex

Mireuett, Cartes Spap.

Rosext M. Kxvtn axp Rosert W. Braver and others simi-

larly situated by their attorney, Pavut A. Suumons,

Applicants in No. 71-1541.

Enre-Crawrorp Darry Cooperative AssociaTion,

Appellant in No. 71-1542.

Howanrp Yost, Appellant in No. 71-1543.

Wuuus Coureryany & Sons, Lyc. Appellant in No. 71-1544.

Lixcerticut Dairy Company, Appellant in No. 71-1545.

Exe Damy Lanp, Ixc., Appellant in No. 71-1546.

Goupex Guow Dary, Appellant in No. 71-1547.

Yarie’s Damy, Ixc., Appellant in No. 71-1548.

(D.C. Civil Action No. 65-1328.)

Appeal rrom THe Usrrep States Distaictr Cover

yor THE WesTeRN District or PeNNsYLvaNua

Argved April 17, 1972.

Before Adams, Gibbons and Rosenn, Circuit Judges,

Grssons, Circuit Judge

This case is before us for the second time. Originally it

came before us on the appeal of the class representative

(the plaintiff) from an order dismissing his complaint for

failure to state a claim. The complaint was in three counts

and the appeal challenged only the dismissal of Counts |

and III. Count I alleged violations of sections 1 and 2 of

the Sherman Antitrust Act, 15 U.S.C. §§1, 2 and sought

under section 4 of the Clayton Act, 15 USC.

§ 15. Count III alleged a conversion under Pennsylvania

law and claimed pendent jurisdiction. We held that the

allegations of Count I, though confused and obscure,

alleged a claim under § 4 of the Clayton Act sufficient to

escape dismissal under Fed. R. Civ. P. 12(b)(6). We

remanded with a direction that the court follow the proce.

dures specified in Fed. R. Civ. P. 23(c) in determining

whether a class action was properly involved, and if so, the

proper ambit of the class." We also held that the conver-

sion count was within the district court’s pendent jurisdic.

tion. Knuth v. Erie-Crawford Dairy Coop. Association,

395 F.2d 420 (3d Cir. 1968).

Following the remand the district court caused notice to

be mailed to 1200 Pennsylvania milk producers whom the

plaintiff sought to represent. Approximately 900 of the

1200 opted out. Thereafter the case proceeded to trial

before a jury on the issue of liability only. At the conelv-

sion of the plaintiff’s case the district court granted defend-

ants’ motion for a directed verdict on Count I and denied,

1 Hereinafter alternatively referred to as the plaintiffs and the

producers.

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axept for two defendants, a similar motion on Count IIT.

That count went to the jury at the end of defendants’ case

on written interrogatories which resulted in verdicts against

each remaining defendant. Thereafter the district court

granted motions for judgments notwithstanding the verdict

n favor of several individual defendants. It also granted a

notion for judgment notwithstanding the verdict in favor

of all defendants contrary to jury interrogatory Number 8

on the issue whether the Pennsylvania six year statute of

jmitations had been tolled. It ruled that damages would

ie limited to those suffered by the class members who had

skected against opting out of the class action. The district

court certified that there was a controlling question of law

the disposition of which would materially advance the ulti-

mate termination of the litigation. We granted a petition

for an interlocutory appeal. 28 U.S.C. §1292(b). The

plaintiff and those defendants against which a verdict was

allowed to stand have appealed. The several appeals pres-

ent a variety of issues.

The dispute arises out of the persistent and largely futile

efforts of the Pennsylvania Milk Control Commission (the

Commission) acting under a statutory mandate to insulate

the Pennsylvania dairy industry from price competition.”

The plaintiffs-producers are dairy farmers whose herds

produce milk in Erie and Crawford Counties in western

Pennsylvania. The defendant Erie-Crawford Dairy Coop.

Association (the Cooperative) is a non-profit agricultural

cooperative marketing association organized under Penn-

sylvania law, of which the plaintiffs are member-stock-

holders. The producers, during the relevant period, entered

into contracts with the Cooperative whereby each agreed

to consign all milk and eream produced by him to the

€

‘

™ 3] Pa. Stat. Ann. § 700j-101 et seq. See Milk Control Board v.

Eisenberg Farm Products, 306 U.S. 346 (1939); Penn Dairies v.

Wilk Control Commission, 344 Pa. 635, 26 A-2d 431 (1942), aff’d

18 U.S. 26] (1943); Colteryahn Sanitary Dairy v. Milk Control

Commission, 332 Pa. 15, 1 A-2d 775 (1938).

> aati PI |

Cooperative for sale ‘‘. . . to such parties and by such

methods as the Board of Directors shall deem to be to the

best advantage of the Producer’? (Exhibit 109, Article

Third). Under the standard contract the Cooperative has

the right to pool the proceeds of sale of milk or cream

derived from all the producers. It then must pay each

producer his share of the proceeds of sale ‘‘. . . after

making all authorized deductions hereinafter provided for

or authorized by law’’ (Exhibit 109, Article Third). The

agreement provides for deduction from the proceeds of sale

of amounts to cover statutory reserves, dividends on pre-

ferred or common stock, and ‘‘. . . all operating expenses

including transportation, selling and processing costs . . .”

(Exhibit 109, Article Fourth).

The individual defendants (the directors) are producers

who served as directors of the Cooperative between the

years 1957 and 1965. With the exception of Howard Yost

none were officers of the Cooperative during those years,

Two individual defendants made a successful motion for a

directed verdict. The jury verdict found the remaining

individual defendants liable for conversion, but with the

exception of Yost all were granted judgment notwithstand-

ing the verdict.

From 1957 through 1965 the Cooperative sold milk and

cream to various milk distributors (the handlers)? who

2 The following handlers received price adjustments and were

named as defendants in this action:

Colvins Dairy Erie, Pennsylvania

Erie Dairyland, Inc., Erie, Pennsylvania

Golden Crown Dairy, Erie, Pennsylvania

Golden Glow Dairy, Erie, Pennsylvania

Klein’s Dairy, Farrell, Pennsylvania

Lingerlight Dairy Co., New Castle, Pennsylvania

Rieck Dairy Co., Erie, Pennsylvania

Schneider’s Dairy, Inc.. Pennsylvania

Snee Dairy, Inc., Pittsburgh, Pennsylvania

William Colteryahn & Sons, Pittsburgh, Pennsylvania

Yaples Dairy, Inc., Erie, Pennsylvania

Schruer’s Dairy, Edinboro, Pennsylvania

processed the milk and sold it either as fluid milk or in

manufactured milk products. During those years a portion

of the milk industry in the Erie and Pittsburgh markets

was subject to regulation by the Commission. The Com-

mission specified minimum producer prices which handlers

were required to pay for milk received at Pennsylvania

plants from Pennsylvania producers. For purposes of

state regulation the Cooperative is deemed a producer.

Each of the handler defendants in all or part of the years

1957 through 1965 had a plant in Pennsylvania and bought

milk for that plant from the Cooperative. At the same

time, each handler defendant was at all times free under

Pennsylvania law to purchase milk for its Pennsylvania

plants from producers in adjoining states. The jurisdiction

of the Commission did not extend to such interstate sales

of milk. The only practical limitation on the ability of a

Pennsylvania milk handler to purchase milk from producers

in other states was the cost of refrigerated transportation.

Under the Commission’s regulations the price paid by

handlers to producers depended upon a system of classifi-

eation reflecting the use to which the milk was put by the

handlers, although all milk met the same standards of

quality and purity. In western Pennsylvania in the years

in question the Commission had established four use classi-

fications :

Class I Bottled Drinking Milk, Skim Milk, Butter-

milk

Class II Fluid Cream, Ice Cream Mix, Cottage

Cheese, Sour Cream

Class III Butter, Cheese, Skim Milk Powder

Class IV Evaporated Milk

Class I is called ‘‘fluid’’ milk. All other classes are called

“non fluid’’ or ‘‘manufactured”’ milk. At all relevant times

the Commission’s fixed price for Class I or ‘‘fluid’’ milk was

much higher than that for all other classes. Thus it was

Ee we one

92 SE EQN a

in the best interest of a producer to dispose of his milk to

a handler whose resale business produced a high Class |

utilization.

When the producer sent his milk to the Cooperative he

did not know for what purpose it would be used. Moreover

the proceeds of sale which he would ultimately receive were

determined only after three steps:

(1)

(2)

(3)

Calculation of the handler’s blend price. At the

end of each month the handler reported to the

Commission and to the Cooperative its utilization

in each class. The handler paid a price per hun-

dred-weight calculated by applying to the class

prices fixed by the Commission a percentage of

utilization in that class. The result was a blend

price per hundred-weight, which would vary down.

ward from the Class I price depending on the

percentage of ‘‘non fluid’’ uses to which the milk

had been put. The blend price was further ad-

justed to reflect the butterfat content of the milk

received from various sources.

Calculation of the Cooperative’s pool price. The

Cooperative collected the monthly blend price from

each handler. These receipts were all pooled.

From the pooled receipts the Cooperative de-

ducted the operating expenses and reserves re-

ferred to hereinabove. The total number of pounds

of milk received each month was then divided into

the net pool proceeds to derive the pool price per

hundred-weight for each hundred-weight sold, cal-

culated on the basis of a standard butterfat con-

tent.

Calculation of each producer’s share of the pro-

ceeds. The Cooperative would adjust each pro-

ducer’s share of the proceeds depending on the

cost of collecting his milk on the farm and the

butterfat content of the milk he shipped.

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During the years in question milk production rose sub-

stantially throughout the Northeast. At the same time the

prices fixed by the Commission for intrastate sale of Penn-

sylvania milk were substantially higher than the price of

similar milk produced in Ohio, New York, and other states.

Thus even when the cost of refrigerated transportation was

taken into account each handler with a plant in western

Pennsylvania could supply the fluid milk requirements of

that plant with out of state milk at prices substantially

jower than the Class I price fixed by the Commission. This

left the Cooperative with these choices:

1. It could sell its members’ milk to handlers outside

of Pennsylvania free of price control by the Com-

mission, at the available market price which was

lower than the Pennsylvania Class I price.

9. It could sell its members’ milk to Pennsylvania

handlers for non-fiuid uses at a price level where

the Pennsylvania non-fiuid price and the interstate

price equalized.

3. It could seek to hold as customers those handlers

whose resale business resulted in a high utilization

of fluid milk by offering to meet the interstate price.

SIAIE Re ar RARER

ny MECE SEY

The third alternative was illegal under Pennsylvania

Law: It was, however, the course in fact pursued in a

number of instances.

THE ANTITRUST CLAIM.

Plaintiff’s antitrust claim, as explicated in our earlier

decision, was that the defendants conspired to fix the

price of milk shipped into Pennsylvania, to boycott out of

state producers, and to suppress and eliminate competitors

by a concerted refusal to deal with out of state producers,

3'The defendants offered to prove that the Commission knew of

the price adjustments and approved of them. This evidence was

excluded.

all to the damage of the Pennsylvania producers. While it

was not then clear how the Pennsylvania producers would

have been injured in their business or property by such

activity, the complaint so alleged, and we held that the

plaintiff should be given an opportunity to offer evidence,

At the end of the plaintiff’s case the factual picture had

become much clearer.

First, there is no evidence of any horizontal activity

among any of the defendant handlers looking toward boy-

cotting or toward price fixing on any level. Compare, e.g,

United States v. General Motors Corp., 384 U. S. 127

(1966). The Cooperative dealt separately with each hand.

ler, and there is no evidence that any handler was aware

of the arrangement for rebating worked out with any other.

Next, there is no evidence that the Cooperative attempted

to impose upon any handler or that any handler agreed

to any vertical arrangement respecting resale milk prices.

Compare, e.g. Sanitary Milk Producers v. Bergjans Farm

Dairy, Inc., 368 F.2d 679, 689 (8th Cir. 1966) ; United States

v. Milk Drivers Local 471, 153 F. Supp. 803 (D. Minn.

1957). The handlers’ resale prices were actually fixed by

the Commission. The evidence is that the Cooperative

negotiated separately with each handler about the net price

it would receive for the milk of its producers. Various

methods or subterfuges for avoiding the Commission’s

wholesale fixed prices were resorted to. In each instance

the pricing arrangement was agreed to between the Co-

operative and the handler prior to the sale. In all cases

the handler filed his utilization report with the Com-

mission and paid the Cooperative the official blend price

calculated on the basis of that report. In the case of some

handlers the Cooperative had a prior agreement that the

official blend price would be adjusted to reflect an agreed

rather than actual utilization. Thus a handler who actually

used 80% of the Cooperative’s milk for Class I purposes

might receive an adjustment on his blend price to reflect

an agreed 60% Class I use. In other cases handlers re-

ceived agreed adjustments at a fixed rate per hundred-

weight, agreed adjustments to the price in the Youngstown

federal milk marketing order, agreed adjustments of fixed

amount per quart of milk sold at retail, a flat dollar amount

per month, or an agreed adjustment for handling milk of

jow butterfat content. In each case the method of calculat-

ing the adjustment was negotiated separately between the

Cooperative and a single handler prior to the sale. In each

case the adjustment was made in the form of a rebate from

the official blend price. The plaintiff’s own evidence sug- é

gests that the economic effect of the price adjustments was

that the Cooperative received more for its members’ milk :

than it would have received had it insisted on the official :

blend price fixed by the Commission and that it thereby &

lost as customers those handlers with high Class I utiliza- f

tion.

This evidence, the district court held, was insufficient to

go to the jury on the antitrust claim. We agree. The

plaintiff’s case establishes that the Cooperative, a sales

agent with authority to sell milk to such parties and by

such methods as its Board of Directors deemed to the

best advantage of its members, negotiated individual con-

tracts of sale with individual handlers at the best prices it

could obtain from time to time in the face of competition

from out of state producers. The handlers did not act in

concert for any purpose. The Cooperative and individual

handlers acted in concert only with respect to the price of

individual sales contracts. There is no evidence even of

conscious parallel action on the part of the handlers to

exact larger rebates, to stabilize prices at any level or to

boycott out of state producers. Indeed the evidence is that

some handlers negotiated for better prices than others.

Undoubtedly the officers and directors of the Cooperative

acted with the common purpose of obtaining the best price

they could obtain for their members’ milk. Each handler,

on the other hand, exacted the best price concession it could

obtain for itself. Such individual sales contracts, negotiated

ER IS Rie” EO I LGN ee |

10a

at arm’s length without knowledge on the part of the pur-

chasers of the prices being charged others similarly sit-

uated, cannot be regarded as contracts or combinations

in restraint of trade. While the individual contracts may

have been illegal under Pennsylvania law, they were not

illegal under the antitrust laws.

Plaintiff argues that conscious parallel action among

all of the defendants was sufficiently inferable from the

evidence that the existence of a conspiracy was a jury

question. No specific evidence is referred to, and our own

review of the record discloses no evidence tending to show

that any handler was ever aware of the price arrangement

of any other. Evidence from which a conspiracy may be

inferred is simply absent.

Having advanced a contention not supported by any

evidence plaintiff goes on to concede:

‘‘However, the Plaintiffs are willing to rest their plea

for summary judgment “) on the undisputed and ad-

mitted facts that each of the Dairy Defendants

[handlers] entered into a separate agreement with

the Defendant Erie-Crawford [the Cooperative] to

accept rebates on the price of milk sold and delivered

to them which restrained commerce between the States

in violation of Section One of the Sherman Act, there-

by making each Dairy Defendant liable for the amount

of money received by it as a rebate and making De-

fendant Erie-Crawford liable in damages for all of

the several transactions with all of the Dairy De-

fendants.’’

(Appellant’s brief in 71-1541 at 30).

Plaintiff’s ultimate contention, then, is that an individual

price rebate arrangement is, without more, a per se viola-

[4] The plaintiff made a motion for a new trial and for summary

judgment on the antitrust claim at the end of the case.

LEE PONE A I ET I EOL APE ——

lla

tion of Section One of the Sherman Act. We know of no

case which has ever so held, and the same contention has

peen rejected. Checker Motors Corporation v. Chrysler

Corporation, 405 F.2d 319 (2d Cir. 1969) cert. denied, 394

TS. 999 (1969). The district court properly granted a

directed verdict on the antitrust claim.

THE CONVERSION CLAIM.

The pendent claim for conversion under Pennsylvania

law rests upon the same facts recited above. Plaintiff’s

theory of the case is that the payment of the rebates by the

Cooperative was a conversion of money belonging to the

members and that the Cooperative and the recipients are

jointly liable for these amounts. The district court ac-

cepted plaintiff’s theory, and charged the jury:

“The property which the plaintiff contends was con-

verted in this case was money which came into the

hands of the cooperative association. The plaintiff

contends that when the co-op gave money back to the

dairymen or handlers, this deprived the plaintiff of

the possession of that money. They contend, further,

that they did not consent to this transfer of the money

to the dairies, and that the co-op had no lawful justi-

fication for the action in giving back the money to the

dairies.

Plaintiffs contend, also, that the dairies had no right

to receive this money, knowing that it was the lawful

property of the plaintiffs.

The defendants, on the other hand, contend that

because of the marketing agreement which each of the

plaintiffs had signed, that they authorized the de-

fendant to sell the milk at the best price possible, or as

the contract phrases it, ‘to the best advantage of the

farmers.’ They claim that it would not have been

possible to sell the milk had not an agreement been

made to refund part of the price to the dairies, and

Pyrerentt-

Cine Hat dee es MA eee |

SAI

12a

that by giving the milk to the co-op on a consignment,

the farmers authorized such transaction.

The contract between the farmers and the co-op

must be read in light of the existing law, that is, it is

implied in every contract, even if it is not written

there, that it must be performed in accordance with

the law. Therefore, when a contract provides that

the milk must be sold and disposed of to the best

advantage of the producer, it is understood to mean

‘in accordance with the law.’

Therefore, I instruct you that when the farmers or

producers turned over the milk to the co-op, it was

with the condition, and as part of the contract, that the

milk be sold at the legal price.’’ (919-921b)

The court then read 31 Pa. Stat. Ann. § 700j-807 and

charged:

‘‘Therefore, the term of an agreement between the

co-op and a dealer which required the co-op to refund

part of the officially set price for the milk was illegal

and could not be enforced by the dealer. There was,

therefore, no legal way in which the co-op could have

been forced to pay back to the dealer any amount which

it had agreed upon in advance as a refund or as a

discount.’’ (923b)

The only defense which the court permitted the jury to

consider was the defense that some members of the class

might knowingly have consented to the rebates. Sum-

marizing at a later point the court charged:

‘‘Now, to sum up once again the elements of a con-

version—it is the deprivation of the right of property

in, and in this case, money, or other interference with

the money without the owner’s consent, and without

lawful justification. If a conversion occurs, and the

13a

plaintiffs prove the damages, the damges recoverable

:s the actual loss to the plaintiffs.”’ (923b).

The foregoing amounted to a directed verdict that the il-

legal rebates were conversions, and it is not surprising how

the jury answered interrogatory No. 1:

“<Q, Were the plaintiffs deprived of money which

they had a right of possession by the payment of

rebates?

A. Yes.’’ (430a)

The jury also answered these interrogatories on damages:

‘5 [Q] Did the conversion of plaintiff’s property

by the defendants result in only nominal ($1.00) dam-

ages to the plaintiffs?

[A] No.

6 [Q] Are the defendants entitled to a reduction in

the damages claimed by the plaintiffs?

[A] No.’ (481a)

These interrogatories and answers must be read in light of

the court’s charge on damages. Having in effect charged

that a conversion had taken place, it then charged:

‘Tf a plaintiff proves a conversion without anything

more, he is entitled to nominal damages; that is, one

dollar. If he is to recover more than nominal damages,

he must prove the actual amount of his loss.

The plaintiffs in this case claim that the amount of

rebates is the actual amount of their loss, since they

maintain that nothing further was to be taken from

this amount of money, all authorized deductions having

previously been taken out.’’ (926-927b)

The court then referred to the fact that the amount of the

refunds had been stipulated, and continued :

‘Even though the defendants may be guilty of a

technical conversion, they are entitled to show in reduc-

ne ee eae ee aaa |

POEST I PART a i

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LD LPL LYRE ht

PAR mm oe ‘

FELLER EE ON a LY EM NS Py ADTs RY RETR I oo | bart i

court effectively ruled out consideration of any

dence by charging that “‘. . . if there was a

by the defendants which prevented the plaintiffs from tak-

ing steps to secure better prices for their milk, then a re-

duction in damages to that extent would not be proper”

in full the theory of conversion of the money, the court re-

lieved the plaintiff of the burden of establishing an essen-

tial element of tort claim—actual damage and loss.

The relationship between the Cooperative and the pro-

ducers is not in dispute. It is defined in a written agree-

ment (Exhibit 109). Under that agreement the Coopera-

tive is a consignee agent with a power of sale. It is author-

ized to blend the milk of all the members and to sell all that

pte

REE

United States, 402 F.2d 168, 170 (3d Cir. 1968) ; Stevenson

v. Economy Bank of Ambridge, 413 Pa. 442, 451, 197 A. 2d

721, 726 (1964); Gottesfeld v. Mechanics & Traders Ins.

Co., 196 Pa. Super. 109, 115, 173 A. 2d 763, 766 (1961). A ;

mission. But if any conversion of the plaintiff's property

took place it was conversion of milk, not of money.

Assuming, as did the district court, that the Coopera- }

tive’s authority to sell the milk was limited to sale at prices

—————

Restatement of Torts §927 (1939). See Guido v. Hudson

Transit Lines, Inc., 178 F.2d 740, 742 (3d Cir. 1950) ; Bum

barger v. Walker, 193 Pa. Super. 301, 164 A. 2d 144, 19

(1960); Holt v. Pariser, 161 Pa. Super. of

_ —

iva

See also Restatement of Restitution §140 comment a

(1937). Although no Pennsylvania ease has been called to

* seems clear from earlier Pennsylvania cases that Penn-

givania would treat a fully executed illegal contran af ©

matter in repose.

74, 86 A. 646 (1913) ; Blystone v. Blystone, 51 Pa. 373, 374

(1865); Ankeny v. Lohr, 99 Pa. Super. 203, 206 (1930).

Yet the court’s charge in effect voided the contract in part

vy requiring the defendants to pay more for the goods

purchased than they had agreed to pay. It did so, of course,

do parties who have acted directly. Looked at from the

tandpoint of the law of ageney the distriet court's whole-

ey $424 (1958) :

“Unless otherwise agreed, an agent employed to . . .

<ell is subject to a duty to the principal, within the

limits set by the principal's directions, . . . to use

reasonable care to obtain terms which best satisfy the

18a

the principal is entitled to recover from the agent the

difference between the amount received and the valne

of the property sold at the time of sale, or its highest

value within a reasonable time after the principal ao

quires notices of the sale, whichever is larger; or the

amount which the agent would have received if he had

obeyed the principal, with interest from the time of

sale. . .”’

See also Restatement (Second) of Agency § 424, Com.

ment h; Restatement (Second) of Torts § 222A(1), Com-

ment c, § 225, Comment d. The key element in measuring

damages for a conversion, by a sales agent or otherwise,

is the value of the product converted. The district court's

charge effectively removed this element from the jury's

consideration first by charging that money rather than milk

had been converted, next, by placing on the defendants the

burden of proof on damages, and finally, by introducing

into the determination of value of the thing converted the

element of concealment, which on the value of the thing

converted was irrelevant.

Clearly the jury verdict based upon the court’s accept-

ance of the plaintiff’s simplistic but erroneous theory of

the case cannot be allowed to stand. The defendants as-

sert that they should have been awarded judgment notwitb-

standing the verdict because the plaintiff failed completely

to prove any damage. See, e.g., Bruce Lincoln-Mercury

Inc. v. Universal C. I. T. Credit Corp., 325 F. 2d 2, 14

(3d Cir. 1963); Openbrier v. General Mills, Inc., 340 Pa.

167, 16 A. 2d 379 (1940) ; Mike v. Lian, 322 Pa. 353, 185 A.

775 (1936). In that posture, defendants urge, we should

simply reverse. If this were not a class action we would

do so. By adopting and pursuing an erroneous view of

the law of conversion, the plaintiff, a class representative,

neglected to make any attempt to prove that the prices

obtained by the Cooperative from the several handlers was

less than the price available in the market place. From

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19a

the evidence presented in the defendants’ case and from

some concessions made by plaintiff’s witnesses it seems

unlikely that any such proof is available. But in view of

the fact that some 290 class members were relying on the

plaintiff's representation we reluctantly conclude that a

new trial may be more appropriate than a reversal.

Fed. R. Civ. P. 50(d) provides that if the appellate court

reverses a judgment denying a motion for judgment not-

withstanding the verdict, nothing in the rule precludes it

from determining that the appellee is entitled to a new

trial. In Neely v. Martin K. Eby Construction Co., 386

. S. 317 (1967) and Jacurci v. Lummus Co., 387 U.S. 86

(1967) the Supreme Court has indicated that the courts

of appeal have discretion to enter judgment in favor of

the party who moved for judgment notwithstanding the

verdict, to order a new trial, or to remand to the trial

court to afford the plaintiff an opportunity to present a

motion for a new trial. The latter course is most appro-

priate here. The plaintiff as appellee in the defendants’

appeal did not as Rule 50(d) provides, brief any grounds

entitling him and the class he represents to a new trial

in the event we concluded, as we have, that the trial court

erred in denying the motion for judgment notwithstanding

the verdict. It is not at all clear that on the pleadings

before the district court the case could have been submitted

to the jury on the theory that milk rather than money had

been converted. If that theory is a complete departure

from the case pleaded through the pretrial conference a

new statute of limitations problem may be presented.

Moreover the plaintiff may not be in a position to make

an offer of proof on the issue of damage or loss from the

illegal milk sales. These matters should, we think, be ex-

plored by the district court on a motion for a new trial.

Since we are remanding for consideration by the dis-

trict court of a motion for a new trial it is appropriate to

deal with a number of other issues raised by the several

appeals.

tah eal ae EE *

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20a

THE DIRECTORS DEFENDANTS

The plaintiff appeals from the order granting judgment

notwithstanding the verdict to the individual director

defendants, Hanes, Raybuck, Culbertson, Triscuit, Boyd,

Henry, Black, Mitchell, and Spaid. This ruling left stand.

ing only the verdict against director-officer Yost, who par.

ticipated directly im the rebate negotiations. The other

director defendants, the evidence disclosed, knew about and

approved of the rebate policy. They believed, in fact, that

nothing else could be done to preserve the Cooperative’s

markets. After reviewing the Pennsylvania cases on direc-

tors’ liability the district court concluded that Pennsyl-

vania would not impose personal tort liability on the

knowledgeable, approving, but not directly participating

directors. The issue is a difficult one. There are no

Pennsylvania cases directly in point. Perhaps the closest

is Cohen v. Maus, 297 Pa. 454, 147 A. 103 (1929), which

exonerated directors from liability in conversion because:

‘There was no testimony showing that any of the de-

fendants, have Maus, knew of the sale [constituting

the conversion], and that none of them had any knowl-

edge of the sale of it . . . and it was not shown that

they had wilfully, and knowingly, participated in the

trespass ... Here persons who were directors in a

corporation are sought to be held individually liable

for a conversion of property about which they knew

nothing merely because, if they had examined the books

of the corporation, they might have ascertained that

the conversion had taken place. We cannot lend our

assent to the establishment of such a doctrine.’’ Id.

at 456-57 ; 147 A. at 103-04.

See also Chester-Cambridge Bank & Trust Co. v. Rhodes,

346 Pa. 427, 431, 31 A. 2d 128, 130 (1943); Swentzel v.

Penn Bank, 147 Pa. 140, 153, 23 A. 405, 415 (1892); com-

pare Armour and Company v. Celic, 294 F. 2d 432 (2d

2la

Cir. 1961) ; See 3 W. Fetcher, Corporations § 1137 at 782-83

(perm ed. 1965 rev.), which suggets the rule that an officer

of a corporation will not be held personally liable for a

tort ‘*. . . unless he specifically directed the particular act

to be done, or participated, or co-operated therein.’’

Our best judgment is that the Courts of Pennsylvania

would hold that directors of a sales agent corporation with

quthority from its prinipals to sell only at legal prices who

knowingly authorize sales at less than those prices have

participated in conversions and are personally liable. Thus

we will reverse the order granting judgment notwithstand-

ing the verdict to the director defendants. We recognize

that if the case is retried on the theory that milk rather than

money was converted the evidence may disclose reasons

why they should not be held liable. For example, the evi-

dence may disclose that they authorized illegal sales only at

or above the available market price, but that unknown to

some of them some sales took place below that price, and

hence caused damage.

THE STATUTE OF LIMITATIONS

The district court submitted to the jury an interrogatory

for each defendant asking if the Pennsylvania six year

statute of limitations is a defense to events which occurred

before May 31, 1960. In each case the jury answered no.

The district court granted judgment notwithstanding the

verdict as to all events prior to that date. The parties

agree that May 31, 1960 is the date beyond which recovery

would be barred by 12 Pa. Stat. Ann. § 31, unless the plain-

tiff could establish fraudulent concealment. The evidence

on the fraudulent concealment issue was not affected by

the wrong theory of conversion on which the plaintiff tried

the case, and since we have concluded that the grant of

jadgment notwithstanding the verdict with respect to events

prior to May 31, 1960 was correct, we will affirm that order.

22a

The statute of limitations may be tolled if the plaintiff

by clear, precise and convincing evidence shows fraudulent

concealment by the defendants. See, e.9., Walters v. Ditzler,

424 Pa. 445, 449-50, 227 A. 2d 833, 835 (1967); Nesbitt y,

Erie Coach Co., 416 Pa. 89, 204 A. 2d 473, 476-77 (1964).

In Overfield v. Pennroad Corp., 146 F. 2d 889 (3d Cir.

1944) this court wrote:

‘‘We are confronted at the outset . . . with the propo.

sition, laid down over and over again in the Pennsyl-

vania decisions that the concealment which tolls the

statute must be in an affirmative, independent act of

concealment; mere silence or non-disclosure, even by

corporate officials is not enough.’’ 146 F. 2d at 89%

(footnote omitted).

The district court correctly applied the governing standard

to the evidence. There was no evidence of affirmative

effort made by any defendant to conceal the pric adjust-

ments from the producers.

THE DAMAGES RECOVERABLE

Although all but 290 of the class members, after notice

pursuant to Fed. R. Civ. P. 23, opted out, plaintiff asserts

that he should be entitled to recover all of the damages

sustained by the class, even by those who had requested to

be excluded. The district court held that only the damages

sustained by members of the class as presently constituted

would be assessed. We agree. See Fed. R. Civ. P. 23(c) (3).

APPLICATION OF 46 PA. STAT. ANN. § 156

The defendants contend that the Act of March 21, 1806,

Pub. L. No. 558, 4 Sm L 326, § 13, 46 Pa. Stat. Ann. § 156

bars the suit for conversion because that statute requires

that in all cases where a statutory remedy is provided the

statutory remedy must be pursued before resort to the com-

23a

mon law. The district court rejected this contention. No

decision of a Pennsylvania court has held that the Com-

mission is the exclusive forum. The Milk Control Law, 31

Pa. Stat. Ann. § 700j-1003 provides in part:

“[A]ny person... may institute such action at law

or in equity . . . to enforce compliance with any pro-

vision of this act, or to enforce compliance with any

rule, regulation or order of the board... .’’

Possibly the Act of 1806 imposes an exhaustion of remedies

requirement if a producer does resort to the Commission

pursuant to the alternative remedy in 31 Pa. Stat. Ann.

§ 700}-1005. See Colteryahn Sanitary Dairy v. Milk Con-

trol Commission, 332 Pa. 15, 23, 1 A. 2d 775, 780 (1938).

But it seems clear from § 1003 that the Pennsylvania legis-

jature did not, in enacting the Milk Control Law, intend

any preemption. The district court concluded correctly

that the existence of an alternative remedy before the

Commission did not deprive the court of pendent jurisdic-

tion over the conversion claim.

EVIDENCE RULINGS

The district court refused to admit evidence that the

price adjustments they received were deemed to be lawful

by the Commission. These offers were rejected because

the court ruled as a matter of law that regardless of the

Commission’s position the rebates were unlawful. The

proffered evidence was deemed irrelevant on the issue of

conversion since, assuming illegality, good faith was not

a defense.

5“ Acts of assembly to be strictly pursued

In all cases where a remedy is provided, or duty enjoined, or

anything directed to be done by any act or acts of assembly

of this commonwealth, the directions of the said acts shall

be strictly pursued, and no penalty shall be inflicted, or any-

thing done agreeably to the provisions of the common law,

in such cases, further than shall be necessary for carrying

such act or acts into effect.”’

AOSD NSIS SMMC aR RE

FING ES IT SEPM) APE ge

Hy sh)

wi. dia i te tae

24a

We agree that the legality or illegality of the rebates

under the Pennsylvania Milk Control Act was a matter of

law to be decided by the court. We think, however, that

in ruling on some of the proffered evidence of the Com.

mission’s attitude about some of the rebate schemes the

district court took too narrow a view of the Commission’s

role. It is true, as the court charged, that 31 Pa. Stat. Ann.

§ 700j-807 prohibits methods or devices whereby milk is

bought at a price less than the minimum established for

the transaction, whether by discount, rebate, or otherwise.

But it is also true that the Commission has a broad dis-

cretion under 31 Pa. Stat. Ann. § 800j-801 to modify its

milk price orders, and that 31 Pa. Stat. Ann. § 700j-806

provides :

‘The board may likewise fix by official order, the terms

upon which milk dealers shall pay producers and others

for milk, may prescribe the method of computing pay-

ment therefor, and may prescribe a form of written

statement to be sent to producers with each payment.”

It would seem that much of the proffered evidence tended

to establish the Commission’s interpretations of its own

milk price orders and its approval, as methods of comput-

ing payment, of various price adjustment schemes. The

Pennsylvania Commission’s interpretations of its own reg-

ulations ought to be binding on a federal court, at least in

instances where there is no Pennsylvania court decision to

the contrary. The case of Milk Control Commission v.

McAllister Dairy Farms, 384 Pa. 459, 121 A. 2d 144 (1956)

on which the district court relied is not such a case. In

that case the Commission sought judicial enforcement of

its own interpretation of its order. In the same category

are Milk Control Commission v. Rieck Dairy Division, 193

Pa. Super. 32, 163 A. 2d 891 (1960) and Shearer’s Dairies

Inc. v. Milk Control Commission, 191 Pa. Super. 574, 159

A. 2d 268 (1960).

25a

Since the proffered evidence was not admitted we do

not know if it would have shown some of the rebate ar-

rangements to have been approved by the Commission. We

hold that if the Commission did so approve it would have

peen acting within the scope of its authority under 31 Pa.

Stat. Ann. §§ 700j, 801-806.

The order of the district court of April 15, 1971 contains

six ordering paragraphs, all of which are before us in one

or another of the consolidated appeals. Paragraph 1,

denying plaintiff’s motions for a new trial and for sum-

mary judgment on the antitrust count will be affirmed.

Paragraph 2, granting judgment notwithstanding the ver-

dict to the defendants Hanas, Raybuck, Culbertson, Tris-

cuit, Boyd, Henry, Black, Mitchell, and Spaid, will be

reversed. Paragraph 3, granting defendants’ motions to

vacate the jury’s verdict in answer to Interrogatory No. 8

on tolling the statute of limitations will be affirmed. Para-

graph 4 denying the motions of the defendants Erie-Craw-

ford Cooperative Association and Host for judgment not-

withstanding the verdict will be affirmed. Paragraph 5,

limiting assessment of damages to the extent of the pro- 3

portionate share to which members of the class who elected i

to join in the lawsuit, will be affirmed. Paragraph 6, deny- :

ing defendants’ motions for a new trial on the conversion :

count will be reversed and the cause remanded for consid- ‘

eration by the district court of a motion by the plaintiff

to be served within ten days of the date the mandate of ;

this court is filed in the district court. Each party will '

bear its own costs. ;

——

PRL TED et ed PONG

PREY

EOP NAE NE BEELER 8

pO Ses Map,

To the Clerk of the Court:

Please file the foregoing opinion.

Joun J. GIBBONS

26a

Rosert M. Knuts, on behalf of himself and on behalf of all

other members of the class who are similarly situated,

Vv.

Ernim-Crawrorp Darry CooperaTIvE AssociaTION, WILLIAM

CotreryaHn & Sons, Inc., Kuen Darry, Linceruicrr

Damy Company, ScHnemwer’s Darry, Inc., Syzz Damy

Company, Erte Dairy Lanp, Inc., GotpEN Crown Dany,

Scurver’s Darry, Yaupue’s Darry, Inc., GoLpEN Grow

Damy, Szautest Foops, Division or Nationau Damy

Propucts Corporation, Howarp Yost, JoHN Hanas,

Russett Raysuck, Mitton Cvupertson, Donat

Triscurt, RaymMonp Boyp, Carvin Henry, Roy Buack,

Loren MitcHELL, CHARLES Spar.

Nos. 71-1541 thru 71-1548.

Rosenn, Circuit Judge, Concurring and Dissenting

I fully agree with the majority that the district court

properly granted a directed verdict on the antitrust claim.

I would remand this case, however, for a new trial solely

on the issue of whether the directors of Erie Crawford

exceeded their power as agents for the producers and by

so doing caused actual loss to the plaintiff class.

I do not find that there has been any conversion, of milk

or money, in this case. While I agree with the majority

that a conversion is the deprivation of another’s right in

property, or the unlawful interference with that property,

I do not find any such improper activity amounting to a

conversion of the consigned milk on the facts before us.

A claim based on converting a chattel, the milk in this case,

would require the producers to show that they had con-

sented to the cooperative’s control over the milk for one

purpose which was then ignored when the milk was sold.

See Restatement of Torts 2d § 228. However, a new trial

could not show that the cooperative exercised any unlawful

dominion over the milk that interfered with any of the

27a

producers’ rights. There seems no way plaintiff will be

able to change the seemingly conceded and inescapable con-

clusion that the cooperative sold the milk at the prices

set by the Pennsylvania Milk Control Commission, pre-

cisely as the producers wanted. Furthermore, as Comment

(g) to Section 9298 makes clear, there is no conversion

«ynless [the control exercised] amounts to such a serious

violation of the other’s right of control as to justify requir-

ing the user to pay the full value of the chattel.’’? The plain-

tiff’s own statement of damages illustrates he cannot meet

that burden: he seeks only the difference between the Milk

Control Commission price and the amount actually received.

However, I would agree with the majority that there was

no conversion of funds because the producers did not have

a right to immediate title to the proceeds. They possessed

only a contractual right to a sum that reflected payments

to the cooperaive for its services. In addition, in Pennsyl-

vania, it has been determined that when an agent exercises

unlawful dominion over funds otherwise owing to his prin-

cipal he has not committed a conversion, and is at best

liable to pay over the sum he received plus any damages

brought about by his negligent conduct. ‘Allegheny By-

Product Coke Co. v. J. H. Hillman &é Sons Co., 275 Pa. 191,

118 A. 900, 905 (1922).

In light of Pennsylvania law and the facts of this case,

I would conclude that the only possible improper action

was that the cooperative exceeded its authority under its

contracts with the producers. Section 424 of the Restate-

ment of Agency 2d requires an agent to act within the limits

set by the principal’s directions, and Section 402 declares

that the agent shall be liable for any loss incurred because

he deviates substantially from his authority to transfer

goods to a third person inasale. Therefore, if an improper

sale at too low a price takes place, the principal can recover

his actual loss. See, Comment (g), § 424, Restatement of

Agency 2d.

¥ EE EME LISLE S EPI I NEE ELLIE REP LL DEEN BIOL ELON AE AEE

ee ee or . a |

“LRRD REET ER Sateen at peg . ;

This action cannot include within its ambit

producers. They were not required to fo duties

imposed upon Erie Crawford under the contracts between

the cooperative and the plaintiff class. In addition, they

bound their principals, the producers.

Further, I would conclude that because Erie-Crawford

is a cooperative made up of members of the plaintiff class,

it cannot be a defendant in this action. A recovery from

it would merely take money out of one pocket of a producer

and put it back in another pocket. While recovery would be

limited to those who are actual members of the class, the

class representative asserts that all of the members of the

cooperative have been equally wronged. There is then cer-

tainly no justification for the non-class members to pay

money to class members when they both are assertedly

equally innocent and injured.

As a result, that leaves the class only an action against

those directors who agreed to a policy which may have

exceeded their powers under the contracts between the

cooperative and the producers. While I doubt that the

plaintiff class will be able to prove any damages from these

actions, I agree with the majority that they should have

their day in court to present their case.

Judgment.

UNITED STATES COUBT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 71-1541/8

Rosser M. Kure, on behalf of himself and on behalf of all

wtber members of the class who are similarly situated,

Eer-Crawrorp Dairy Cooperative ASssociaTION, WruaM

Courervans & Sons, Ixc., Kuzm Darmy, LaiNGERLIGHT

Damy Company, Scuxewer’s Damy, Ixc., Swee Damy

Compaxy, Exe Dary Lawn, Ixc., Gotpex Crows Dary,

Scurver’s Darey,

Damy, Seaurest Foons, Division or Nationa Damy

Russet Raysvck, Mirox Cvuxsertsox, DonaLp

Triscurtr, Raymonp Boyp, Cauvixs Hexry, Roy Brack,

Lorex Mrrcnent, Cuarces Spain.

Robert M. Knuth and Robert W. Bryer and others

similarly situated by their attorney, Paul A.

Simons, Appellants in No. 71-1541,

Erie-Crawford Dairy Cooperative Association, Ap-

pellant in No. 71-1542,

Howard Yost, Appellant in No. 71-1543, :

William Colteryahn & Sons, Inc., Appellant in No.

71-1544,

Lingerlight Dairy Company, Appellant in No.

71-1545,

Erie Dairy Land, Inc., Appellant in No. 71-1546,

Golden Glow Dairy, Appellant in No. 71-1547,

Yaple’s Dairy, Inc., Appellant in No. 71-1548.

(D. C. Civil Action No. 65-1328.)

owe

‘ a

™P ang eae

FEN of PRR eee me ee

On Appeal From the United States District Court

For the Western District of Pennsylvania

Present: Apams, Grssows and Roses, Circuit Judges.

This cause came on to be heard on the record from the

United States District Court for the Western District of

Pennsylvania and was argued by counsel.

On consideration whereof, it is now here ordered and

adjudged by this Court that the order of the said District

Court, filed April 15, 1971, as to Paragraph 1, denying plain-

tiff’s motions for a new trial and for summary judgment on

the antitrust count be, and the same is hereby affirmed

Paragraph 2, granting judgment notwithstanding the ver.

dict to the defendants Hanas, Raybuck, Culbertson, Tris-

cuit, Boyd, Henry, Black, Mitchell, and Spaid, be, and the

same is hereby reversed. Paragraph 3, granting defend-

ants’ motion to vacate the jury’s verdict in answer to In-

terrogatory No. 8 on tolling the statute of limitations be,

and the same is hereby affirmed. Paragraph 4, denying the

motions of the defendants Erie-Crawford Cooperative As-

sociation and Host for judgment notwithstanding the ver-

dict be, and the same is hereby affirmed. Paragraph 5, limit-

ing assessment of damages to the extent of the propor-

tionate share to which members of the class who elected to

join in the lawsuit be, and the same is hereby affirmed.

Paragraph 6, denying defendants’ motions for a new trial

on the conversion count be, and the same is hereby reversed

and the cause remanded for consideration by the district

court of a motion by the plaintiff to be served within ten

days of the date the mandate of this court is filed in the

district court. Each party will bear its own costs.

Attest:

Tuomas P. Quix,

Clerk.

June 28, 1972.

3la

APPENDIX B

Nos. 71-1541 thru 71-1548

Roseat M. KsurH, on behalf of himself and on behalf of all

other members of the class who are similarly situated

Exe-Crawrorp Damy Cooperative ASSOCIATION, ET AL.

Rosert M. Kwurs, et a., Appellants

Sur Petition for Rehearing

Present: Serrz, Chief Judge, Vax Dusex, Avpisert, ApaMs,

Grssows, Rosexx, Roses axp Huwrer, Circuit Judges

The petition for rehearing filed by Appellants

in the above entitled case having been submitted to the

judges who participated in the decision of this court and to

all the other available cireuit judges of the circuit in regu-

lar active service, and no judge who concurred in the de-

cision having asked for rehearing, and a majority of the

creuit judges of the circuit in regular active service not

having voted for rehearing by the court in banc, the petition

for rehearing is denied.

By the Court

Joux J. Grspons

Judge

Dated: July 28, 1972.

32a

APPENDIX C

Rosert M. Knvuts, on behalf of himself and all others sim.

ilarly situated

Erim-Crawrorp Darry CooPperaTIVE ASSOCIATION ET AL.,

Rosert M. Kyutu, Appellant.

No. 16656.

UNITED STATES COURT OF APPEALS

THIRD CIRCUIT

Argued Dec. 8, 1967.

Decided May 3, 1968.

Rehearing Denied June 20, 1968.

Paul A. Simmons, Tempest & Simmons, Monongahela,

Pa., for appellant.

Thomas W. Pomeroy, Jr., Kirkpatrick, Pomperoy, Lock-

hart & Johnson, Pittsburgh, Pa. (W. Walter Braham, Jr.,

Harry W. Turner, Pittsburgh, Pa., on the brief), for ap-

pellees, Erie-Crawford Dairy Cooperative, Dairymen’s Co-

operative Sales Assn., and others.

Frank L. Seamans, Robert C. McCartney, Edward G.

O’Connor, Eckert, Seamans & Cherin, Pittsburgh, Pa., for

appellees, Sealtest Foods Div. of Nat. Dairy Products Corp.

and Akron Milk Producers Cooperative.

Clyde W. Armstrong, Victor P. Gottschell, Thorp, Reed

& Armstrong, Pittsburgh, Pa., for appellees, Golden Glow

Dairy, Yaple’s Dairy, Inc., Schruer’s Dairy, Golden Crown

Dairy and Erie Dairy Land, Inc.

Willis F. Daniels, Daniels & Swope, Harrisburg, Pa., for

appellee, Sterling Milk, Inc.

William W. Knox, Knox, Pearson & McLaughlin, Erie,

Pa., for appellee, H. Robert Fischer.

33a

Nathan Routman, Routman, Moore & Goldstone, Sharon,

Pa., for appellee, Klein Dairy.

Henry E. Rea, Jr., Brandt, Riester, Brandt & Malone,

pittsburgh, Pa., for appellee, Schneider’s Dairy.

Errol Fullerton, New Castle, Pa., for appellee, Linger

Light Dairy.

Before Biccs, KaLopNER, and Serrz, Cireuit Judges.

OPINION OF THE COURT

Sertz, Cireuit Judge.

This is an appeal from a judgment dismissing an amended

complaint with prejudice for failure to state a claim.’

Plaintiff’s class action claim (Count I) asserted under

Section 4 of the Clayton Act, alleged violations of Sec-

tions 1 and 2 of the Sherman Act The class represented

ge the dismissal of the Clayton Act

claim (Count II), consequently this decision does not affect the dis-

trict court’s disposition of that count. A state action claim (Count

III) based on pendent jurisdiction was dismissed below. The cor-

rectness of that action is considered later herein.

1 Plaintiff does not challen

215 U.S.C.A. § 15, reads as follows :

“Section 4. Any person who shall be injured in his business

or property by reason of anything forbidden in the antitrust

laws may * * ®* recover threefold the damages by him sus-

tained * * *.”’

345 U.S.C.A. § 1 reads in pertinent part:

“Section 1. Every contract, combination in the form of trust

or otherwise, or conspiracy, in restraint of trade or commerce

among the several States ® ** is declared to be illegal

eee”

15 U.S.C.A. §2 reads in pertinent part:

“Section 2. Every person who shall monopolize, or attempt

to monopolize, or combine or conspire with any other person

or persons, to monopolize any part of the trade or commerce

among the several States * * * shall be deemed guilty of

a misdemeanor * * _

;

34a

by appellant allegedly consisted of approximately 1,2

Pennsylvania farmer-producers (“‘producers’’) who fur.

nished milk for the period designated to one of the defend.

ants Erie-Crawford,* a Pennsylvania cooperative market.

ing organization. Erie-Crawford in turn sold the milk to

certain of the other defendants (‘‘processors’’) who proc.

essed it and sold it to retailers as bottled milk or dairy

products.

The appellant and the other Pennsylvania producers

he purports to represent furnished raw milk to their mar.

keting cooperative, Erie-Crawford, under a contract by

which the net proceeds of all money received by Erie-Craw.

ford was to be paid to them as their interests appeared.

This milk was sold to the processors at prices per hundred-

weight fixed by the Pennsylvania Milk Control Commission

under statutory authority.* Erie-Crawford also received

milk from producers outside of Pennsylvania. This milk

was shipped into Pennsylvania and sold to the processors

at prices per hundredweight which were less than the fixed

selling price of the Pennsylvania produced milk. All pro-

ceeds received by Erie-Crawford from the sale of milk

were placed in a market-wide milk price pool. From this

pool, all farmer-producers were paid an equal net amount

per hundredweight of milk supplied regardless of the

amounts received for any particular farmer-producer’s

milk.

The best analysis we can make of Count I of plaintiff’s

amended complaint reveals that three courses of conduct

involving defendants are alleged to constitute violations

* Also named as defendants were Erie-Crawfords’s officers, di-

rectors and attorney and other cooperatives.

531 Purdon’s Pa.Stat.Ann. § 700j-101 et seq. We note that the

law creating the Commission was declared constitutional in Milk

Control Board v. Eisenberg Farm Products, 306 U.S. 346, 59 S.Ct.

528, 83 L.Ed. 752 (1939).

35a

of Sections 1 and 9 of the Sherman Act. We first state

them in summary fashion and then treat them seriatim.

Plaintiff alleges a conspiracy by all appellees:

I. to fix the price of milk shipped into Pennsylvania by

granting rebates to the processors on the milk produced

in Pennsylvania and purchased by them from Erie-Craw-

ford;

II. to suppress and eliminate competition in the sale of

milk and other dairy products as evidenced by the Erie-

Crawford directors’ action in causing Pennsylvania milk

to be shipped into Ohio and other states and then reshipped

to Pennsylvania so that it can be sold to the processors at

a price below the minimum price fixed by the Pennsylvania

Milk Control Commission ;

III. to suppress and eliminate competition in the sale

of milk and other dairy products by the processors’ con-

certed refusal to deal directly with the producers, and also

by their refusal to buy milk from any source other than those

sources approved by Erie-Crawford.

The damages from the foregoing conduct are alleged to

be an amount equal to the rebates plus other specific eco-

nomic loss.

Since Count I was dismissed with prejudice for failure to

state a claim, we must take the material allegations of the

complaint to be true. Doubts should be resolved in favor of

the position which will uphold the pleading as such. De-

cisions of the United States Supreme Court indicate that

we should be extremely liberal in construing antitrust com-

plaints. See Radiant Burners, Ine. v. Peoples Gas, Light

& Coke Co., 364 U.S. 656, 660, 81 S.Ct. 365, 5 L.Ed.2d 358

(1961); Radovich v. National Football League, 352 U.S.

445, 453-54, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957); and United

States v. Employing Plasterers’ Ass’n, 347 U.S. 186, 188-

189, 74 S.Ct. 452, 98 L.Ed. 618 (1954). Indeed, in the Em- 3

POSES ALES RAB OD URN INET EH NYAS ASIN

PE REET ee trae

36a

ploying Plasterers’ case, the Supreme Court made it clear

that, ‘‘whether [the] charges be called ‘allegations of fact’

or ‘mere conclusions of the pleader,’ * * * they must be

taken into account in deciding’’ whether a claim for relief jg

stated. Above at p. 188, 74 S.Ct. at p. 454. And they further

said that,

ss# * *© [Where a bona fide complaint is filed that

charges every element necessary to recover, summary dis-

missal of a civil case for failure to set out evidential facts

can seldom be justified. If a party needs more facts, it has

a right to call for them under Rule 12(e) of the Federal

Rules of Civil Procedure. And any time a claim is frivyo-

lous an expensive full dress trial can be avoided by invok-

ing the summary judgment procedure under Rule 56.”

Above at p. 189, 74 S.Ct. at p. 454.

The ‘‘liberal’’? approach to the consideration of anti-

trust complaints is important because inherent in such an

action is the fact that all the details and specific facts re-

lied upon cannot properly be set forth as part of the plead-

ings. See Noerr Motor Freight, Inc. v. Eastern R. R. Presi-

dents Conference, 113 F.Supp. 737 (E.D.Pa.1953).° In the

use of Section 4 of the Clayton Act, the courts have attrib-

uted to a private litigant the role of an ancillary force to

supplement governmental enforcement of the antitrust laws.

See United States v. Borden Co., 347 U.S. 514, 74 S.Ct. 703,

98 L.Ed. 903 (1954). All the law requires to state a private

treble damage action claim are allegations adequate to

show a violation of the antitrust acts and that plaintiff has

been damaged thereby. Radiant Burners, Inc. v. Peoples

Gas, Light & Coke Co., above.

6 The ruling in Black and Yates v. Mahogany Ass’n, 129 F.2d

217, 148 A.L.R. 841 (3d Cir. 1942), that an anti-trust complaint

to be sufficient, must allege ‘‘some facts,’’ has no decisive perti-

nency to this amended complaint.

SEE EE NT EE PO er Se aes EST ee

37a

We also take occasion to note that Section 1 of the Capper-

Volstead Act’ does not authorize combinations or con-

spiracies between cooperatives and others in restraint of

trade. United States v. Borden Co., 308 U.S. 188, 60 S.Ct.

182, 84 L.Ed. 181 (1939). Indeed, such a cooperative may

even be liable under the Sherman Act without proof of in-

yolvement of non-cooperatives if the activity under attack

js predatory. Maryland and Virginia Milk Producers Ass’n,

Ine. v. United States, 362 U.S. 458, 80 S.Ct. 847, 4 L.Ed.2d

880 (1960).

We turn now, with the aforementioned principles in mind,

to a seriatim analysis of the three courses of conduct which

we infer from the amended complaint are the alleged vio-

lations of the Sherman Act.

I. Rebates

Plaintiff claims that the defendants conspired to fix the

price of milk shipped into Pennsylvania by the use of

rebates to the processors on milk produced in Pennsylvania

and purchased by them from Erie-Crawford. The date of

the conspiracy is alleged, plus an allegation concerning de-

fendants’ knowledge of the price set for milk by the Penn-

sylvania Milk Control Commission. Rebates given solely

on Pennsylvania milk allegedly result in the suppression

and elimination of competition by preventing the free flow

of milk in interstate commerce from sources outside the

State of Pennsylvania into the State of Pennsylvania. The

object of this alleged combination and conspiracy was to

accomplish the raising, fixing, controlling, setting, stabiliz-

ing and affecting the price of milk shipped in interstate

commerce. :

As we read the opinion of the district court it held that

the rebate allegation involved solely a question of state law,

77 US.C.A. § 291.

GI Pee AF PR eee

LOG, BE Sar!

SE ee |

38a

i. e., whether the rebate practice was contrary to the Penn.

sylvania Milk Control Act. But it does not matter whether

the practice was legal or illegal under state law if it was

prohibited action under the Sherman Act. Certainly, it is

not suggested that the rebate practice is required by state

law. Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed.

315 (1943). The issue then is whether the allegations suf-

ficiently show a violation of the Sherman Act to withstand

a motion to dismiss.

Plaintiff’s allegation of a conspiracy to fix prices in the

interstate transportation of milk by the use of rebates

states the elements necessary to show a violation of Section

1 of the Sherman Act. The payment of rebates to processors

who purchase Pennsylvania produced milk, without other

evidence, would tend to encourage such processors to pur-

chase more Pennsylvania milk in proportion to out-of-state

milk than they would purchase without such rebates. As

a consequence of such practice one would expect a reduction

in the amount of milk being shipped into Pennsylvania,

We think these are permissible inferences, at least at the

‘‘complaint’’ stage of this proceeding.

Damage to plaintiff is alleged to be an amount equal to

the rebates paid to the processors. Such rebates directly

affected plaintiff because the contract under which he fur-

nished milk to his co-operative provided that his milk was

to be disposed of by Erie-Crawford to the best possible

economic advantage and the net proceeds of all money re-

ceived by Erie-Crawford were to be paid to him as his

interest might appear. Since the rebate payments reduced

the amount Erie-Crawford had available to pay the pro-

ducers, plaintiff’s share of such amount was necessarily

reduced.

We conclude that for pleading purposes at least, plaintiff

has alleged injury in his business or property within the

meaning of Section 4 of the Clayton Act. Cf. Chattanooga

39a

Foundry and Pipe Works v. City of Atlanta, 203 U.S. 390,

995-396, 27 S.Ct. 65, 51 L.Ed. 241 (1906); and see Poller

y, Columbia Broadcasting System, 368 U.S. 464, 82 S.Ct.

496, 7 L.Ed.2d 458 (1962).

Having alleged a conspiracy which affects interstate

ecommerce and consequent damage, the plaintiff has stated

, claim under Section 1 of the Sherman Act. The claim

of a violation of Section 2 is also sufficient for pleading

purposes since the tendency of the conspiracy alleged was

to monopolize a part of the trade or commerce among the

several states. We think that plaintiff is entitled to an

appropriate opportunity to prove these charges.

II. Interstate Shipment of Pennsylvania Milk

As we read this claim asserted under Section 1 of the

Sherman Act, Erie-Crawford and the other defendants are

alleged to have conspired to suppress and eliminate com-

petition in the sale of milk and other dairy products. The

practice allegedly employed to implement the conspiracy

was to ship Pennsylvania milk into certain surrounding

states where milk assembly plants were located to receive

milk produced in those states. Such milk was then shipped

to the processors in Pennsylvania. By this roundabout

way, the milk was allegedly sold to the processors at prices

below those fixed by the Pennsylvania Milk Control law.

The district court judge felt, once again, that plaintiff

was really alleging a violation of the Pennsylvania Milk

Control Act, and was erroneously equating that charge with

a violation of the Sherman Act. As we have previously

noted herein, the decision as to the effect of state law on

the practice alleged is not dispositive of the federal claim.

Accord, Northern Securities Co. v. United States, 193 U.S.

197, 344-345, 24 S.Ct. 436, 48 L.Ed. 679 (1904).

The district court also found, despite the allegations of

the amended complaint to the contrary, that the shipment

‘$

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40a

of milk out of and then back into Pennsylvania promoted,

rather than restrained interstate commerce. First, we think

it was inappropriate to make such a finding on a motion

to dismiss. Moreover, while such activity may increase

commerce, the Sherman Act does more than prohibit the

reduction of interstate commerce. It also proscribes gop.

spiracies in ‘‘restraint of trade or commerce.’’ By use of

the term restraint of trade, the Sherman Act forbids cer.

tain restraints on competition. See William Goldman

Theatres v. Loew’s Inc., 150 F.2d 738 (3rd Cir. 1945).

Plaintiff has alleged a conspiracy which restrains com.

petition in the sale of milk. He, therefore, has alleged a

violation of Section 1 of the Sherman Act, since a restraint

of competition, as a matter of law, necessarily restrains

commerce as that term is used in the Act. Since a con.

spiracy to suppress and eliminate competition tends to

monopolize a portion of trade or commerce among the

states, plaintiff has also set forth sufficient allegations to

charge a violation of Section 2 of the Sherman Act.

Plaintiff has further alleged that the above conduct has

caused specific economic injury to his business, which in

turn, has prevented him from competing with Erie-Craw-

ford in the marketing of milk. Such allegations are, for

pleading purposes, sufficient to meet the requirements of

Section 4 of the Clayton Act. We find this claim sufficient

to withstand a motion to dismiss.

III. Boycott

Plaintiff alleges that the defendant processors have, pur-

suant to a conspiracy with Erie-Crawford and the directors,

restrained interstate commerce by refusing to purchase

milk from any source other than those approved by Erie-

Crawford. In furtherance of this conspiracy, the proc-

essors refuse to deal directly with the producers, thereby

forcing the producers to furnish their milk to Erie-Craw-

ford for disposition.

, t

4la

The district court judge, in his disposition of the com-

plaint, did not discuss this allegation. It is our opinion

that plaintiff has here stated the elements necessary to set

forth a cause of action under Section 1 of the Sherman Act.

The fact that the ‘‘boycott”’ allegations relate only to

activities of the Pennsylvania milk industry occurring

wholly within the State of Pennsylvania is immaterial. If

either the source or the application of the restraint is intra-

state, the question is still whether its necessary effect is

to stifle or restrain trade or commerce among the States.

“Tf it is interstate commerce that feels the pinch, it does

not matter how local . the operation which applies the

squeeze.”’ United States v. Women’s Sportswear Mfg.

Ass’n, 336 U.S. 460, 464, 69 S.Ct. 714, 716, 93 L.Ed. 805

(1949).

Having alleged a conspiracy to boycott certain milk pro-

duced in Pennsylvania, we believe plaintiff has stated a

claim under Section 1 of the Sherman Act. Since such

conduct may tend to monopolize a part of the trade or com-

merce among the several states, appellant has also stated

aclaim under Section 2 of the Sherman Act.

Plaintiff alleges he is directly damaged by the boycott

pecause it forces him to furnish milk to Erie-Crawford

and restricts the possibility of disposing of it directly in

the open market. Since Erie-Crawford grants rebates to

processors purchasing Pennsylvania milk, the amount

which plaintiff receives from Erie-Crawford is less than

he believes he could receive on the open market sale of

such milk. Although the evidence may ultimately show

that appellant’s damage is not a direct result of the alleged

boycott, we believe that for pleading purposes he has stated

a damage claim under Section 4 of the Clayton Act. Com-

pare, Roseland v. Phister Mfg. Co., 125 F.2d 417, 139

ALR. 1013 (7th Cir. 1942).

We therefore conclude that the district court should not

have dismissed Count I of the amended complaint with pre-

“

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judice for failure to state a claim.* We might add that if

plaintiff feels our construction of the claims asserted under

Count I does not encompass all those intended, he should

apply to the district court for leave to amend to assert

them.

We recognize that the confused and obscure quality of

many of the allegations of the complaint may understanda-

bly have influenced the district court’s decision, particularly

since it had granted leave to file an amended complaint.

But the subject matter of the lawsuit is too important to

allow such prejudicial consequences to flow from impre.

cision in pleadings. We note that the record shows that the

defendants also filed an alternative motion below for a

more definite statement. It was not reached by the district

court. We therefore are not called upon to express an opin-

ion as to the merits of that motion.

Count III of the amended complaint alleges that defend-

ants violated Pennsylvania law by fraudulent conversion

of plaintiff’s money, by tortious interference with plain-

tiff’s advantageous business relations and by violations of

the Pennsylvania Milk Control Act. Jurisdiction is alleged

to be pendent to the antitrust violations asserted in Count L

The district court dismissed Count ITI on the grounds that

the federal claims were insubstantial; that the subject mat-

ter did not bring the Count within the court’s pendent

jurisdiction and; that if it did, the Count should neverthe-

less be dismissed pursuant to an exercise of its sound dis-

cretion.

In 1966 the United States Supreme Court illuminated the

pendent jurisdiction concept by its opinion in United Mine

Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d

®* The defendant Sterling Milk, Inc. seeks to have the dismissal

upheld as to it on the ground that no specific damages are claimed

from it in the amended complaint. We think the resolution of this

contention at this stage of the proceedings would be premature.

there is power in federal courts to hear the whole.”

983 U.S. at 725, 86 S.Ct. at 1138, footnotes omitted.

Nor, at this stage, can we agree with the district court

that the subject matter of the federal and state claims do

not bring this Count within the court’s pendent jurisdiction.

The court seemed to believe that in order to invoke

pendent jurisdiction both the federal and state claims must

derive from a common nucleus of operative facts and an

invaded right which is common to both. We think this is too

PRR EE TN

narrow an approach to the issue, particularly in the light of

the discussion in the Gibbs case. A right allegedly violated

in a Sherman Act case and a right allegedly invaded under

the common law may well have a common factual basis

although the source of the “‘right”’ is different. Such a case

0 ye eee

single trial. Certainly the fact that different remedies may

be involved in disposing of the claims does not alter this

conclusion.

Since we think the district court had the power to enter.

tain Count III under its pendent jurisdiction, we next con

sider whether, in the exercise of a sound discretion as is

permitted by Gibbs, it was nevertheless justified in dis

missing the claim. We shall consider the reasons given by

the district court and our evaluations thereof.

1. The district court “‘found”’ that the federal claim, to

which the state claim was sought to be joined, was insub

stantial. We have of course now held to the contrary.

2. The court’s second ground for its decision was the fact

that the allegations of Count III were based solely on a

state claim asserted against certain non-diversity defend

ants. We fail to see how this ground is, in and of itself, suf-

ficient to justify a refusal to exercise pendent jurisdiction.

The situation mentioned is quite common in pendent juris-

diction matters and is, indeed, the reason why pendent jur-

isdietion is invoked.

3. The district court “‘determined,”’ apparently from «

reading of the amended complaint, that the state claim

actually constituted the basis of the claims in all the Counts.

The district court “‘found”’ that it was “‘clear’’ that the

supposed federal questions were ‘‘appendages or vehicles

employed to bring the state claim under the jurisdiction of

a federal court.’’ While we have no doubt that under the

Gibbs case the propriety of asserting pendent jurisdiction

remains open throughout the litigation, we think that the

‘*findings’’ here made solely on the basis of the amended

complaint were unwarrante‘.

cho filed a notice of appeal, and he appealed only as an

iedividual and not in his capacity as representative of the

follows :

“Robert M. Knuth, on behalf of himself and all others

similarly situated, Plaintiffs * * *.””

The body of the notice then recites in part:

“Take Notice that Robert M. Knuth, plaintiff above

named, does hereby appeal*** from the judgment

amended complaint. ]

We think a fair reading of the caption and body of the

Notice of Appeal conveys the information that plaintiff was

appealing all the rulings below, which included the class

action ruling. Liberality « f interpretation im such a matter

is most desirable. Cf. Foman v. Davis, 371 US. 178, 83 S.Ct.

29 F.2d 65 (3rd Cir. 1958).

46a

We come then to the correctness of the district court’;

dismissal of the class action.

In granting the motion to dismiss the amended complaint

insofar as it purported to assert a class action, the district

court relied on the following analysis:

“Of the 56 farmer-producers listed in Exhibit A, 15

subsequently filed affidavits withdrawing from the suit,

and 83 other farmer-producers filed affidavits averring

that they were members and stockholders of Erie.

Crawford and did not wish to be represented by the

plaintiff. The Ohio and New York farmer-members

seem to be totally ignored (see f.n. 3, supra). Thus,

considerable doubt is cast upon plaintiff’s claim to rep.

resent the interests of the alleged spurious class,

whether that class is 1200 or 56 Pennsylvania farmer.

producers. Since we think it appears that plaintiff

inadquately represents the class, we are constrained to

follow the ruling of this District Court in the Hayes

case and grant the motion to dismiss insofar as the

Amended Complaint purports to state a class action.”

We interpret the district court’s language to mean that

because 98 Pennsylvania farmer-producers filed affidavits

either withdrawing from the suit or indicating that they

did not want to be represented by plaintiff, sufficient doubt

was thereby thrown on plaintiff’s class claim to justify its

denial at that point, and that was so regardless of the size

of the class.

Plaintiff sought to represent a class consisting of approx-

imately 1200 Pennsylvania producers. The court therefore

had expressions from only a small percentage of the alleged

total class. To the extent the decision as to the right to

maintain this class action involved ‘‘numbers,’’ the district

court, in our view, had an inadequate factual basis for its

conclusion. We think the use of the procedure provided by

new F.R.Civ.P. 23(c) would have been more likely to have

‘id not disclose the precise basis of its decision, and thus it

is not particularly helpful here. We note further that an

from that order was dismissed by this court on

motion. An examination of the grounds of the motion

reveals that they related solely to jurisdictional ob) ions.

Thus, the merits of the class action aspect of the decision in

the Hayes case were not reached by this court. ’

We therefore reverse the class action judgment without

prejudice so that the Rule 23(c) procedure may be followed.

The determination as to whether a class action is properly

‘volved, and if so, the ambit of the class, can then be made

in light of the more fully developed facts. Compare Penn-

sa Co. for Insurances on Lives and Granting Annui-

ties v. Deckert, 123 F.2d 979 (3rd Cir. 1941). The Supreme

Court of the United States adopted this procedure with

respect to the new Intervention Rule (Rule 24). Cascade

Nat. Gas Corp. v. El Paso Nat. Gas. Co., 386 U.S. 129, 87

S.Ct. 932, 17 L.Ed.2d 814 (1967). We think the Cascade

approach is also appropriate here.

®See Order, 383 U.S. 1031 (1966).

1 Hayes v. Sealtest Foods, C.A. No. 65-1072.

8h er Oe ae) .

DOPE ROE POSE! BO? ogee

sel Biel el

The judgment of the district court as to Counts I and III

will be reversed and the matter remanded for proceedings

consistent herewith.

Katopyer, Cireuit Judge (dissenting).

I would affirm the March 30, 1967 Order of the District

Court dismissing Counts I and II of the appellants’ Com-

plaint for failure to state claims upon which relief can be

granted, and dismissing Count III of the Complaint, with-

out prejudice. I would do so for the reasons so well stated

by District Judge Marsh in the Opinion which accompanied

his stated Order.

This too must be said. Count III alleges conduct on the

parts of the defendants in violation of the ‘‘Statutory and

Common Law of Pennsylvania’’, and jurisdiction is alleged

to be pendent to the antitrust violations asserted in Counts

land IL. The District Court dismissed these two counts on

the ground that they failed to state a cause of action, and

further dismissed Count III on the grounds that pendent

jurisdiction did not exist for that reason, and that, assum-

ing the contrary, ‘‘consideration of it [Count III] should

be refused in a proper exercise of judicial discretion.” I

ean discern no basis for a holding that the District Court

abused its discretion under the existing circumstances.

ON PETITION FOR REHEARING

Before Hastie, Chief Judge, and McLaventin, Kaopner,

Freepman, Serrz and Van Dusey, Cireuit Judges.

OPINION OF THE COURT

Serrz, Cireuit Judge.

This is a petition for rehearing in bane on an opinion of

this court dated May 3, 1968.

We decided, inter alia, that the district court erred in

dismissing the class action aspects of the amended com-

plaint. We reversed without prejudice and ordered the dis-

—

49a

trict court to use the procedure provided by new F.R.Civ.P.

93(c). It was felt that this procedure was more likely to

uce trustworthy evidence for the district court to use

in deciding whether, ‘“‘numberwise at least,’’ plaintiff could

fairly and adequately protect the interest of the class.

Petitioner asserts that we erred in ordering the district

court to apply the provisions of 23(¢) to determine whether

plaintiff fulfilled the 23(a) (4) requirement that ‘‘the rep-

resentative parties will fairly and adequately protect the

interests of the class.’’ Petitioner further requests that if

rehearing is not granted, the question of whether the

inquiry into adequacy of representation is to be made under

93(¢)(2) or 23(d)(2) should be clarified. While we deny

rehearing in bane, we do agree that clarification of the class

action aspect of the opinion is appropriate.

At the outset we affirm our belief that the use of F.R.Civ.

P. 23, as amended Feb. 28, 1966, eff. July 1, 1966, is entirely

feasible and will work no injustice in this case. We wish

to make it perfectly clear that we were not finally deciding

the ‘‘class action”’ issue. Thys, we direct that the district

court’s judgment dismissing the class action aspects of this

case be vacated rather than reversed.

The district court will, at the appropriate time, decide the

issue as to whether the action may be maintained as a class

action. Consequently, our opinion reference to 23(c) should

not be taken as an implied judgment that the action is main-

tainable under 23(b) (3). Nor was that language intended to

be understood as precluding the use of some other notice

procedure (e.g., 23(d)) to assist the district court in deter-

mining whether, numberwise, the plaintiff could fairly and

adequately protect the interests of the class.

The petition for rehearing will be denied.

Geratp McLavcuurn, Circuit Judge, votes to deny the

petition for rehearing.

Katopner, Circuit Judge, would grant the petition for

rehearing.

50a

APPENDIX D

Rosert M. Knuts, on behalf of himself and all

others similarly situated, Plaintiffs

Vv.

Enre-CrawFrorp Darry Cooperative ASSOCIATION,

and others, Defendants.

Civ. A. No. 65-1328

United States District Court

W. D. Pennsylvania.

April 15, 1971.

Paul A. Simmons, Monongahela, Pa., for plaintiffs.

W. Walter Braham Jr., Frank L. Seamans, Clyde W.

Armstrong, Henry E. Rea, Jr., Pittsburgh, Pa., Errol Ful.

lerton, New Castle, Pa., for defendants.

OPINION

Wes, District Judge.

‘*Milk and honey”’ sounds of sweetness and serenity in

story and song but ‘‘milk’’, ‘‘Commission”’ and ‘*Co-Op”’ in

conjunction connote confusion, contradiction and contro-

versy in this case in court.

This is a class action brought on behalf of approximately

300 of a total of 1200 farmers who were members of the

Erie-Crawford Dairy Co-Operative Association during the

years of 1957 to 1965. The defendants are the Co-Op itself,

its individual directors who served during that period of

time, and a number of dairies or dealers to whom Erie-

Crawford made sales of milk during the period in question.

Erie-Crawford was an agricultural cooperative organized

under the laws of Pennsylvania whose members and dairy

customers, sometimes called ‘‘handlers’’, were primarily

5la

from the Western Pennsylvania area, concentrated mainly

in the Pittsburgh and Erie areas.

The plaintiffs, also designated a ‘‘producers”’, had con-

signed their milk to Erie-Crawford for sale to the various

dairies and claim that as a result of rebates or refunds

granted by the Co-Op to the various dairies, the class has

been deprived of monies rightfully belonging to it.

Suit was filed on two theories, first, that of violation of the

antitrust laws and second, that of a conversion based upon

state law.

In earlier proceedings in this case, the Court of Appeals *

determined that, at least from the standpoint of pleadings,

the plaintiffs’ allegations were adequate to set forth a claim

under the antitrust laws and that this Court could exercise

pendent jurisdiction over the count for conversion based on

state law.

During the period of time in question, each of the plain-

tiffs sent his milk to Erie-Crawford in accordance with a

form contract providing that the Association was to sell the

milk to such parties and by such methods as the Board of

Directors deemed to be to the best advantage of the farmer.

Authority was also given to ‘‘pool’’ proceeds derived from

the sale of milk consigned by other members and to autho-

rize the deduction of certain overhead expenses by the Co-

Op. The result was that each milk producer would receive

the same adjusted price for his milk regardless of the dair-

ies to whom sales were made, even if at varying prices.

In Pennsylvania the price of milk, both at retail and on

sale from the producer to the dairy, is subject to regulation

by the State Milk Control Commission.’ Free and open

competition in the industry, therefore, did not exist in

Western Pennsylvania during the period under study.

1395 F.2d 420 (3d Cir. 1968).

231 Purdon’s Statutes § 700j-101 et seq.

—

52a

However, the Commission’s authority and jurisdiction

extended only to sales made in Pennsylvania by Pennsyl-

vania farmers to Pennsylvania dairies. Milk sold by the

Co-Op or its producers to customers outside the state was

not subject to the milk control price nor was milk shipped

into the Erie or Pittsburgh area from outside Pennsylvania

subject to control by the Commission.

Western Pennsylvania milk farmers were adversely

affected by economic conditions in the early 1950’s which

developed in this area as a result of the unrealistic prices

set by the Milk Control Commission. The mandated price

for Class 1 milk (the fluid drinking milk) was higher than

that of the similar product which was available in the ad-

joining States of Ohio and New York.

During this same period, production rose substantially

and consequently there were increasing quantities of milk in

Ohio and New York which were available to Pennsylvania

dairies at prices substantially below that set for the Penn-

sylvania farmers by Commission fiat.

Although the Commission regulations specified the mini-

mum prices at which sales could be made to the dairies, the

Co-Op nevertheless during this period by various methods

lowered its prices so that they would be at a similar level to

those available to dealers who purchased out of state. This

was done by the use of ‘‘price adjustments’’, as the defend-

ants say, or ‘‘rebates’’, as the plaintiffs choose to term the

arrangements.

The method of varying the price and the amount of the

reduction was accomplished in a number of different ways.

However, in each instance the Co-Op would collect the

entire amount called for by the Milk Control Commission

schedule and then refund the amount of the agreed conces-

sion to the dairy by means of a check.

The total amount of the refunds granted by the Co-Op

during the years in question totaled more than one and a

half million dollars.

=_7_

53a

Not all of the customers of Erie-Co-Op were granted this

price relief and the testimony disclosed that only those cus-

tomers who complained of lower prices available from out

of state producers were given favorable treatment. The

reductions were not uniform and the Co-Op did not inform

any of its customers, including participants in the arrange-

ments, that some were being given financial preferences.

The refunds were terminated some time in 1965 when

minimum price schedules were reduced by the Milk Control

Commission and hearings by that body on complaints of the

rebating practice were held. Suit was filed by these plain-

tiffs on December 8, 1965.

At the conclusion of plaintiffs’ case, a motion of dismis-

sal was granted as to the counts brought under Section 1 of

the Sherman Act but the jury was permitted to pass upon

the claim of conversion. Answers to special interrogatories

were returned in favor of the plaintiffs against all of the

defendants, finding that conversions had taken place, that

actual damages had been incurred, and that the Pennsyl-

vania limitation period of six years had been tolled. The

plaintiffs have filed motions for a new trial and for sum-

mary judgment with respect to the dismissal of antitrust

claim. The defendants have filed motions for new trial and

judgment n. o. v. with respect to the count for conversion.

THE ANTITRUST COUNT

At the time the Court of Appeals considered the plain-

tiffs’ case, there were allegations of three types of conduct f

violating the antitrust laws, arranged under these headings:

I. Rebates;

II. Interstate shipping of Pennsylvania milk;

III. Boycott.

The latter two of these counts were abandoned at time

of trial and the plaintiffs proceeded only on the theory of

rebate.

“—

The Appellate Court’s analysis of the plaintiffs’ Com-

plaint was that ‘‘the defendants conspired to fix the price

of milk shipped into Pennsylvania by the use of rebates to

the processors on milk produced in Pennsylvania and pur.

chased by them from Erie-Crawford.* * * Rebates given

solely on Pennsylvania milk allegedly result in the suppres-

sion and elimination of competition by preventing the free

flow of milk in interstate commerce from sources outside

the State of Pennsylvania into the State of Pennsylvania,

The object of this alleged combination and conspiracy was

to accomplish the raising, fixing, controlling, setting,

stabilizing and affecting the price of milk shipped in inter-

state commerce.’’ (395 F.2d 420, 423-424.)

It was because the plaintiffs failed to produce the facts to

sustain these allegations that the dismissals of the antitrust

counts were granted.

Unquestionably the plaintiffs did prove that rebates were

given to various dairies, in fact this was conceded by the

defendants. It seems clear, also, that while the practice of

selling milk at prices less than those set by the Commission

was contrary to state law, the granting of rebates in and

of itself does not establish a violation of the Sherman

Act. Checker Motors Corp. v. Chrysler Corp., 405 F.2d 319

(2nd Cir. 1969), cert. den. 394 U.S. 999, 89 S.Ct. 1595, 22

L.Ed.2d 777.

The plaintiffs failed to establish that prices were “‘fixed”’

within the meaning of the antitrust laws; evidence was

lacking to prove that there was any restraint imposed upon

interstate commerce; and there was no proof that the free

flow of milk from sources outside Pennsylvania had been

hindered or impaired by the price adjustments.

What the plaintiffs’ case did develop was uncontradicted

testimony that prices outside Pennsylvania were lower than

those set by the Milk Control Commission and that as a

result of this unnatural and unfavorable economic climate,

Erie-Crawford lost two of its large customers in the early

55a

1950’s. In order to prevent the loss of all its markets and

to meet competition, Erie-Crawford did agree to lower its

prices to meet those offered by Co-Ops which sold milk

produced in Ohio and New York. In no instance was there a

showing that Erie-Crawford had undercut its rivals but

rather it seems that it was content to meet the competition

on equal grounds.

Ina fact situation like this, to hold that a seller is helpless

and must stand by watching its business being destroyed

would be a perversion of the result sought to be obtained

by the Sherman Act. The antitrust laws were designed to

encourage competition and to prevent predatory action. To

outlaw the action of the Co-Op in defending its markets by

the time-honored and legal sanctioned method * of meeting

competition would be to turn the shelter of the antitrust

legislation into a weapon which would kill free enterprise

instead of protecting and promoting it.

Plaintiffs argue vigorously that they proved ‘‘price fix-

ing’”’ but actually what they showed fell far short of what

was required, because to agree upon a price with a customer

in the absence of other circumstances is not within the legal

prohibition. Decisional law has established that ‘*price fix-

ing” within the intent of the Sherman Act is either horizon-

tal (dealing with arrangements among competitors) * or

vertical (attempting to control the resale price). Neither

was present in this case.

The Co-Op was not a competitor of the plaintiffs but was

simply their agent. It did not and could not attempt to con-

3 See Balian Ice Cream Co. v. Arden Farms Co., 231 F.2d 356

(9th Cir. 1955), cert. den. 350 U.S. 991, 76 S.Ct. 545, 100 L.Ed.

856. Jones v. Borden Co., 430 F.2d 568 (5th Cir. 1970).

4E. g. United States v. Masonite Corp., 316 U.S. 265, 62 S.Ct.

1070. 86 B.Ed. 1461 (1942).

5 Also known as resale price maintenance agreements. E. g. Al-

brecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed. 2d 998

LAER AY SET, SLRS URR A PRI 8 7 9 Re.

56a

trol the resale price of milk since that was already pre-

empted by the Milk Control Commission nor indeed was

there any evidence to indicate that any attempts were made

in this direction. There was no evidence that any of the

dairies had agreed among themselves to set prices at

which they would purchase milk from Erie-Crawford. To

the contrary, all the evidence was that each price adjust-

ment was set by Erie-Crawford individually with the partic.

ular dairy involved without the knowledge of any others.

The adjustments were not the same and obviously the Co-

Op was attempting to grant the smallest concession neces.

sary in order to retain the business of the particular hand-

ler.

There was no showing of any restraint upon interstate

commerce. The mere fact that an inference might be drawn

that because Erie-Co-Op met the price of out of state milk

and that consequently some of it was not shipped into and

sold in Pennsylvania does not establish an unlawful

restraint upon trade in the circumstances of this case. To

hold otherwise would be to legalize and sanction predatory

activity by the out of state milk suppliers who could flood

the Pennsylvania market with their product and remove

the hapless Co-Op and its members from the ranks of

effective competition.

Much of the problem in the case was brought about by the

collision of two antithetic philosophies—free and open com-

petition as espoused by the Sherman Act versus close and

rigid supervision by the state via price control as set out

in the Milk Control Law. Plaintiffs and defendants alike

seek support in the particular statute which supports their

position but both must struggle with the inconsistencies

generated by the application of the incompatible legislative

enactments.*

*For a discussion of this problem in another case involving

Pennsylvania Milk Commission imposed milk prices, see Morton

v. National Dairy Products, 287 F.Supp. 753 at 763, 764 (E.D.Pa.

1968).

57a

Although it might be thought to be implicit in the earlier

ruling of the Court of Appeals that the plaintiffs have

standing to recover damages under the antitrust laws, the

fall development of the facts which were brought about by

the trial tends to cast some doubt upon that assumption.

There is a divergence of view expressed by case law as to

the class of people which is entitled to invoke the provisions

of the Sherman Act, with the not unusual caveat that much

depends upon the factual background.’

One of the more recent cases is Billy Baxter, Inc. v. Coca-

Cola Company, 431 F.2d 183 (2nd Cir. 1970), cert. den. 401

TS. 923, 91 S.Ct. 877, 27 L.Ed.2d 826 (1971), which holds

that the plaintiff must show a link indicating that his pro-

perty loss was in the “target area’’ of the illegal conduct.

The opinion in that case reads:

"There must be a causal connection between an anti-

trust violation and an injury sufficient for the trier of

fact to establish that the violation was a ‘material

cause’ of or a ‘substantial factor’ in the occurrence of

damage. [citations]. And this connection must also

link a specific form of illegal act to a plaintiff engaged

in the sort of legitimate activities which the prohibition

of this type of violation was clearly intended to pro-

tect. While any antitrust violation disrupts the com-

petitive economy to some extent and creates entirely

forseeable ripples of injury which may be shown to

reach individual employees, stockholders or consumers,

it has long been held that not all of these have the

requisite standing to sue for treble damages * * * Con-

sequently, a plaintiff must allege a causative link to his

injury which is ‘direct’ rather than ‘incidental’ or

which indicates that his business or property was in the

1 See Standing to Sue for Treble Damages under §4 of the

Clayton Act, 64 Col.L.R. 570.

TS ND Thee

a Tad

On aeadied reek

‘target area’ of the defendant's illegal act.”” (page

187) *

As Judge Learned Hand put it in Bookout v. Schine

Chain Theatres, Inc., 253 F.2d 292, 295 (2nd Cir. 1958) :

‘The action at bar will not lie because all claims under

the Anti-Trust Acts rest upon wrongs done by the sup-

pression of competition and must be initiated by a

party whose commerce has been directly injured.”’

See also Harrison v. Paramount Pictures, inc., 211 F.2d 46

(3rd Cir. 1954).

Here the concessions granted by the Co-Op were not to

those in competition with the plaintiffs. If it be assumed,

arguendo, that the effect of price reductions was to restrict

to some extent the amount of milk flowing into Pennsyl-

vania, this would not be a cause of harm to the plaintiffs but

could only be a benefit by increasing their opportunities for

sales.

The damages claimed by the plaintiffs were the amount

of the rebates. This loss was suffered by the plaintiffs not

in an attempt by the Co-Op to restrict its markets but only

to protect their very existence.

The parties who might claim to be aggrieved because of

the lowering of prices by the Co-Op would have been the

out of state producers who were in the target area and who

were the ones who could claim loss of sales because of this

activity. Certainly the plaintiffs did not fall within this

group.

Recognition of the difficulties that are involved in prov-

ing conspiracy requires that wide latitude must be given to

* See comment on this case and a discussion of the “‘target area”

concept by Milton Handler in The Twenty-Third Annual Trust

Review, 71 Col.L.R. (1971).

supra ; Jones v. Borden Co., supra.

The granting of the motion to dismiss was required by

the posture of the case on not one, but several grounds.

CONVERSION

Conversion has been defined as ‘‘an act of willful inter-

ference with the dominion or control over a chattel, done

without lawful justification, by which any person entitled

thereto is deprived of its use and possession.’’ 37 P.L.E.

Trespass § 82. See also Cenna v. United States, 402 F.2d

168 (3rd Cir. 1968). Motive or intent, good faith or mis-

take of law or fact,’ leading to erroneous belief of right

* See Morissette v. United States, 342 U.S. 246, 270, 72 S.Ct. 240,

9% L.Ed. 288 (1952).

Se ee ee a

—

60a

of possession are not defenses. The theory of conversion

is based on the general principle that a person is entitled

to his property and if another mistakenly or otherwise

interferes with the possession of that property or disposes

of it without consent of the owner, he is entitled to have

it returned nevertheless.

Pearl Assurance Company v. National Insurance

151 Pa.Super. 146, 30 A.2d 333 held that under Pennsyl.

vania law money may be the subject of conversion. That

case dealt with an assertion by an insurance company that

its agent had converted premiums which had been collected

from various assureds. The Superior Court said:

‘The obligation resting on the defendants was to

collect the premiums and when collected to pay over

the amount so collected less an agreed percentage

to compensate defendants for their services. The

money so collected by defendants, over and above the

percentage deductible as compensation for services,

never became the property of the defendants, but at

all times was the property of the plaintiff insurance

company. The transaction totally negatives any idea

of a sale on credit of the policies to the defendants or

either of them. They never had any property in them.”

(page 156, 30 A.2d page 337).

In this case the claim is based upon the premise that the

milk was consigned to the Co-Op for sale with the under-

standing that when payment wus received from the buyers,

Erie-Crawford was to deduct the amount necessary to meet

the agreed overhead charges and pay the remainder to the

farmer. When the Co-Op did not remit all of the money

but instead rebated part of the funds to the handlers, this

constituted a conversion, according to plaintiffs, because

they had not agreed to the refund. The jury specifically

found that there had been no consent and that a conver-

sion in fact had occurred.

6la

The defense is that the milk was sold to the dairy on

the condition and with the explicit understanding that part

of the price would be returned to the buyer. It is argued,

therefore, that the plaintiffs never had any property in-

terest in the amount which was subject to refund because

this money had been entrusted to the Co-Op by the dealer

only for the purpose of compliance with the Milk Commis-

sion price schedule. Erie-Crawford says further that the

consignment contract which required sales by the Co-Op

“to the best advantage of the producer’’ was authorization

to proceed in this manner.

The jury was instructed that every contract must be

performed in accordance with the law and when the farm-

ers turned over the milk to the Co-Op, it was with the im-

plied condition that the sale be at the legal price. Further,

the Court charged that it was contrary to law for Erie-

Crawford to sell to a dairy agreeing to give a rebate, that

any agreement to refund part of the purchase price was

illegal, and could not be enforced by the dairy involved.

Defendants contend that this instruction was not only

erroneous but prejudicial as well.

The Pennsylvania courts have had occasion to pass on

various attempts to evade the price structure set by the

Milk Control Commission in Pennsylvania and have been

firm in refusing to permit any subterfuge. Thus, in Milk

Control Commission v. McAllister Farm Dairy, 384 Pa.

459, 464, 121 A.2d 144, 147, the Supreme Court of Penn-

sylvania said:

“By the cleverly conceived plan of rebates through

redemption the actions of the appellant were a plain

and simple circumvention of the Commission regula-

tions and of the court’s order that milk be not sold

below the minimum prices. To have found otherwise

than the court did here would have been deliberately

to close its eyes to the actual facts.’’

62a

In Milk Control Commission v. Rieck Dairy Division,

193 Pa.Super. 32, 37, 163 A.2d 891, 894 (1960), the Court

said:

“The motive is not important. It is the effect of the

transaction which determines whether it constitutes a

method or device to sell milk at a price less than the

minimum set by the Commission * ° °.

‘The methods and devices whereby milk can be sold

at a price less than the minimum fixed by the commis.

sion are as unlimited as the genius of man ° * °.

‘‘ Milk control is found upon price control. As soon as

dealers find a method or device to break down the

commission’s control over the price actually being

paid, milk control will become chaotic, and soon non-

existent. The legislature understood this. It is evi-

dent from reading Section 807 of the Milk Control

Law, supra, that it attemp‘ed, by every conceivable

means, to close every ‘loop hole’ which would enable

one dealer to obtain a price advantage over another.”

In Shearer’s Dairies, Inc. v. Pennsylvania Milk Control

Commission, 191 Pa. Super. 574, 577, 159 A.2d 268 (1960),

it was said:

‘‘No matter how far we follow the maze of corporative

activities and involved contractual relationships, it will

bring us back to this procedure, which, in our opinion,

constitutes a device to sell milk at a price less than

the minimum established by the commission, and is

in violation of section 807, supra, of the Milk Control

Law. Neither the ingenuity of the contract, nor the

intricacies of the corporate structure change this

transaction into anything but such a device.”

The statute is quite clear that no method is lawful by

which milk is sold at a price less than the minimum applic-

pees —_ ; aa

63a

able, whether by rebate, or otherwise.*° Consequently, the

defendants are estopped to invoke their illegal agreement

with the dairies in order to show that the plaintiffs had

no property in the amount of money which was refunded.

There is no doubt that before any specific rebate was made,

the farmer had a legally enforceable right as to the funds

in the hands of the Co-Op as contrasted with the dairy

which would have been barred by its violation of the Com-

mission regulations.

There was no question of fact to be submitted on this

issue, the interpretation of the statute being one for the

Court and not for the jury. It seemed to be desirable to

explain to the jury the basis for the ruling, particularly

in view of the fact that this trial had taken some five weeks

to try, that there had been innumerable references to the

Milk Control Act, to the prices set by the Commission, and

to rebates.

To state that the action of the Co-Op in refunding the

money was illegal was not to characterize it as criminal, as

10 § 700}-807.

“After the commission shall have fixed prices to be charged

or paid for milk * * * , it shall be unlawful for a milk dealer

or handler or producer, knowingly or unknowingly, or any

other person knowingly * * * to sell * * * deliver * * *

make available on consignment or otherwise * * * buy * lied

receive * * * offer to sell or deliver * * * purchase * * *

milk at any price below the minimum price * * * applicable

to the particular transaction.

“No method or device shall be lawful whereby milk is bought

* * * sold * * * handled on consignment or otherwise * * *

at a price less than the minimum price applicable to the par-

ticular transaction, whether by * * * discount * * * rebate

* * * extension of credit * * *

“Jt shall be unlawful for any milk dealer or handler, know-

ingly or unknowingly, or any other person knowingly * * * to

signment * * * milk at a price computed upon false or erron-

eous weight, * * * butterfat test, grade, classification, or at a

price from which have been made deductions, not authorized

by law © © 9”

a :

_— |

PELE RIEL LI LLL EI LEI SIE TD OR

Fy ACU RFE Say

64a

defendants assert, nor did the definition amount to a di-

rected verdict of conversion. Whether the plaintiffs had

knowledge of the activities of the Co-Op and whether they

consented to the price adjustments were still issues of fact

to be determined and the jury was told that there would

not be a conversion in the event of positive findings to

these questions because the element of unauthorized acts

of dominion over the property would be lacking.

The instructions containing the Court’s interpretation

of the Milk Control Act were necessary to present the

issues to the jury in unequivocal fashion, particularly since

the testimony of the defendants’ expert appeared to imply

that economic necessity might justify a violation of the

state law.

PENDENT JURISDICTION

Defendants also contend that once the antitrust matter

had been dismissed the Court should have refused to exer-

cise pendent jurisdiction over the conversion count. How-

ever after a case has been waiting for years to reach the

courtroom and then testimony had been taken for several

weeks, sound judicial administration dictates that the trial

continue to a conclusion. Furthermore, it would not simply

be a matter of remanding to the state court or to the Milk

Control Commission to proceed to a conclusion because

in those forums the statute of limitations could be raised

as an almost insurmountable defense to the plaintiffs’

cause."? Indeed, it would probably have been an abuse of

discretion not to conclude the case.

11 At oral argument on the post trial motions some of the de-

fendants agreed that if the matter were remanded to the Milk Con-

trol Comission in conformance with the Act of 1806—infra, they

would waive the Statute of Limitations. This concession was not

made during the trial, however.

—_7

65a

LIABILITY OF THE INDIVIDUAL DIRECTORS

The jury found that all of the defendants, including

the directors of the Co-Op, individually, were liable in con-

yersion. The charge to the jury permitted such a result

as to the directors if it were determined that they had

knowledge amounting to acquiescense or that they partici-

pated in the rebating operation.

The question of the personal responsibility of the direc-

tors in this case is a difficult one.

The president of the corporation during most of the

period in question, one John Barney, was a salaried em-

ployee who actually performed the negotiations with all

the dairies with the exception of a few instances when

Howard Yost, the vice president, was substituted. Barney

apparently was a forceful individual with long experience

in the field of milk marketing, including service on the

Milk Control Commission. It was obvious that he was the

dominant force in the operation of the Co-Op both in day

to day activities as well as long range policies. The idea

of rebating apparently was his—at least insofar as it was

carried out by Erie-Crawford.

It was Barney who met with the representative of the

various dairies and bargained for the price adjustments—

it was he who instructed the employees of the Co-Op to

issue the refund checks—it was he who determined the

formula to be used in calculating the price reductions and,

apparently, he also had some conversations with members

of the Milk Control Commission about the situation.

By contrast, the membership elected the directors who

were farmers not participating in the day to day operation

of the Co-op but who only met monthly to review opera-

tions generally. For this service they received a fee of

$7.00 per meeting plus an allowance for mileage. It was

uncontroverted that none of the directors profited person-

ally from any of the conversions.

EL NAO PIR YL TET Ie ND EP NAR SD

Oe eee WO;

ante

2 Bt lew dealegd Coed eat EL Sa Re SOL ae ae ace eae eet

66a

The director-defendants admitted candidly that they

knew of the price adjustments, the rebating, and that they

approved of the policy because they thought there was

nothing else that could be done to preserve Erie-Crawford’s

markets.

In considering the legal problem involved, it must be

observed at the outset that the standard of duty between

a director and the corporation is not applicable because

here the plaintiffs are in the position of third parties who

seek damages for their personal loss, rather than reim-

bursement on behalf of the corporation. There appear to

be no special circumstances in this case which would require

the individual farmers and the directors to deal other than

at arms length. Binns v. Copper Range Company, 335 Pa.

257, 6 A.2d 895 (1939); Imbrie v. Community Loan Com-

pany, 131 Pa.Super. 398, 200 A. 149 (1938).

As is not unusual, no Pennsylvania decisions clearly rule

the issue raised by the facts in this case. One basic prin-

ciple does emerge from a study of the cases, however—that

being that a director is not liable for the tort of a corpora-

tion unless he ‘‘knowingly participates in a wrongful act.”

Chester-Cambridge Bank & Trust Co. v. Rhodes, 346 Pa,

427, 31 A.2d 128 (1943).

In Martin v. Wood, 400 F.2d 310, 314 (3rd Cir. 1968),

the Court in applying Pennsylvania law held that neither

the president nor vice president of a company was individ-

ually liable for an employee’s personal injuries when

neither of the officers ‘‘were actually present at the time

of the accidents nor had they been in any way physically

connected with the operations in the*blast furnace area.”

Zubik v. Zubik, 384 F.2d 267 (3rd Cir. 1967) refused

to fasten personal liability upon a director for loss result-

ing from the collision of a barge which had been swept

from its moorings, even though it appeared that the de-

fendant had some actual knowledge of the dangerous con-

ditions on the river existing before the breakaway. The

—7>~—"

67a

Court rested its decision on the fact that others in the

corporation on whom the defendant relied had actually

done the mooring and were aware of conditions on the

parge and the river.

Apparently the leading case in this state dealing with a

director’s accountability for conversion is Cohen v. Maus,

997 Pa. 454, 147 A. 103 (1929). There the court declined to

attach legal responsibility to directors who had no actual

knowledge of the conversion but could have learned of it

by examination of the corporation’s books. An additional

problem was discussed, similar to our present case, when

the Court said:

‘“The situation would however, seem to be different

so far as the defendant Maus is concerned. He was

not only a director, but also general manager of the

corporation. He not only knew of the sale of the mer-

chandise to plaintiffs, but actually made it. While it

is earnestly argued that he did not participate in the

resale of their goods and in the conversion, we have

reached the conclusion that this question is sufficently

doubtful to warrant its fuller investigation on another

trial * * * If Maus actually converted plaintiff’s goods,

he would be personally liable to them notwithstanding

that the proceeds went to the corporation and not to

him.’’ (page 457, 147 A. page 104.)

It is significant that the Court seemed to require actual

participation in the sale and that mere knowledge of the

transaction was not enough.

Then we come to the case of Fisher v. Rose, 319 Pa.

446, 181 A. 507 (1935) which the opinion says is anomalous.

There the individual defendant was said to have converted

certain stock which had been pledged to the corporation

of which he was the president. Conceding that the defend-

aut personally had made the sale, the Court said:

‘‘Under the existing circumstances, however, no infer-

ence can be drawn that Rose [the defendant] was

SNe a ere ee ae a eee es eee,

68a

acting other than on behalf of his company; certainly

we cannot assume such to be true in the absence of

specific and direct averment that it was the fact. Rose’s

acts were therefore, in legal contemplation those of the

company, for which he is not, individually, respons.

ible.’’ (pages 447-448, 181 A. page 508)

While it is true that other jurisdictious might agree with

the jury’s finding in the case at bar,’ Pennsylvania deci-

sional law indicates that nothing short of direct participa.

tion will impose personal liability on a director in the type

of circumstance with which we are concerned here. That

essential factor was not present and therefore judgment

n.o.v. will be entered for the individual defendants.

Defendants’ brief concedes that since Yost participated

directly, he is not entitled to judgment n.o.v. Barney died

before trial commenced and his estate was not made a party

to the suit.

THE ACT OF 1806 AND ITS APPLICATION TO

THIS CASE

At the trial and in post trial motions, the defendants

contended that the Act of 1806, 46 Purdon’s Statute § 156,

denied jurisdiction to the court as to a matter encompassed

within the Pennsylvania Milk Control Law. The Act reads:

‘‘ Acts of assembly to be strictly pursued. In all cases

where a remedy is provided, or duty enjoined, or any-

thing directed to be done by any act or acts of assembly

of this commonwealth, the directions of the said acts

shall be strictly pursued, and no penalty shall be in-

flicted, or anything done agreeably to the provisions of

the common law, in such cases, further than shall be

necessary for carrying such act or acts into effect.”

12 Cf, Armour and Company v. Celic, 294 F.2d 432 (2nd Cir.

1961). See also Fletcher, Cyclopedia Corporations §§ 1140, 1142.

———

69a

Defendants claim that this statute requires the plain-

tiffs to pursue their remedies against the milk dealers and

Erie-Crawford before the Commission exclusively, citing

the broad statement of legislative policy in the Milk Control

Law, 31 Purdon’s § 700j-301 :

‘The board is hereby declared to be the instrumental-

ity of the Commonwealth for the purpose of adminis-

tering the provisions of this act and to execute the

legislative intent herein expressed, and it is hereby

vested with power to supervise, investigate and regu-

late the entire milk industry of this Commonwealth,

including the production, transportation, disposal, man-

ufacture, processing, storage, distribution, delivery,

handling, bailment, brokerage, consignment, purchase

and sale of milk and milk products in this Common-

wealth, and including the establishment of reasonable

trade practices, systems of production control and

marketing area committees in connection therewith.’’

No decision of the Pennsylvania courts has held that the

Milk Control Commission is the exclusive forum, nor in-

deed has any appellate decision been concerned with cor-

relation between these two statutes.

The Statutory Construction Act of Pennsylvania, 46 Pur-

don’s §558, provides in part, that provisions of law de-

creasing the jurisdiction of a court of record shall be

strictly construed.

The Milk Control Act itself does not contain any flat

statement purporting to vest exclusive jurisdiction in the

Commission but defendants point to § 1005, which says in

part:

‘Appropriate proceedings against any milk dealer **

violating this act * * *, may be instituted before the

;

a TiS ati) eae

18 During the period from 1957 to 1965, a cooperative was con-

sidered a producer (§ 103). After December 15, 1965, by virtue

of an amendment, a cooperative was considered a ‘‘dealer’’ when

it had milk on consignment which it sold to dealers.

SPIEL SP A AR Gh TOME PIM RE

NE 1c any

Pn ee a

70a

Board by any producer to whom the lawful price of

milk has not been paid or to whom such price has not

been fully pai * @ >

However, we think it is not without significance that the

permissive ‘‘may’’ is used rather than ‘‘shall’’ and there

is no proviso to prohibit action in the courts. Furthermore,

§ 1003 provides in part:

«<* * * any person * * * may institute such action at

law or in equity as may appear necessary to enforce

compliance with any provision of this act, or to enforce

compliance with any rule, regulation or order of the

Board * @ #9)

The defendants’ position is not supported by the word-

ing of the Milk Control Law and far more than mere infer-

ence is required to oust the jurisdiction of the common law

courts over one of its traditional forms of action. Section

1005 does not provide an exclusive remedy but merely an

additional one.

THE STATUTE OF LIMITATIONS DEFENSE

The count for conversion was filed in this Court on May

31, 1966 but some of the transactions for which the plain-

tiffs make claim antedated May of 1960, beyond the Penn-

sylvania 6 year Statute of Limitations.

While the answer to an interrogatory found that the

limitation period had been tolled, we conclude that plain-

tiffs failed to produce adequate evidence to allow submis-

sion of this matter for jury consideration and that the

defense must be sustained.

The case of Overfield v. Pennroad Corporation, 146 F.2d

889 (3rd Cir. 1944) involved a suit by stockholders against

the directors of their corporation. In discussing avoidance

of the statute of limitations, the Court of Appeals said:

‘‘The plaintiffs say, however, that there was conceal-

ment and such concealment as would toll the running of

siitiameieeniainiis ——

BLURRED COPY

EE a SE OR el Oe ae et CA DRO Od Oe eee Rea See oe

7la

the statute under Pennsylvania law. We are con-

fronted at the outset, however, with the proposition,

laid down over and over again in the Pennsylvania ;

decisions that the concealment which tolls the statute :

must be in an affirmative, independent act of conceal-

ment; mere silence or nondisclosure, even by corporate

officials is not enough. The time at which it takes place :

is immaterial whether before, contemporaneous with f

or subsequent to the act, complained of. But indepen- ;

dent act, ‘affirmative efforts to divert, mislead, or pre- :

vent discovery’ there must be.’’ (page 896) f

In a more recent opinion, Walters v. Ditzler, 424 Pa. 445,

997 A.2d 833, 835 (1967), the Supreme Court of Pennsy]l-

yania reviewed the requisites for tolling the statute:

‘*Presently pertinent are certain well settled legal

principles: (a) mere mistake, misunderstanding or lack

of knowledge do not toll the running of the statute of

limitations: [citation] * * * (c) the fraud which will

toll the statute and effect and estoppel need not be

fraud in the strictest sense, i.e., inclusive of an intent

to deceive, but may be fraud in the broad sense, i.e.,

inclusive of an unintentional deception: [citation] ;

(d) an estoppel becomes operative only in clear cases

of fraud, deception or concealment.’’

See also Iancaponi v. New Amsterdam Casualty Co., 258

F.Supp. 880 (W.D.Pa. 1966) aff’d 379 F.2d 311 (3rd Cir.

1967) cert. den. 389 U.S. 1054, 88 S.Ct. 802, 19 L.Ed.2d 849

(1968).

In this trial there was no testimony whatsoever of any

activity by the dairies which could qualify as affirmative

acts which preve ited discovery by the plaintiffs. There

had been no contact between the producers and the han-

dlers, no requests for information, no knowledge of the

dealers’ accounting procedures, indeed not even the op-

ee ee ee ee = - ——— Se

ae ey ¥ UNMET LER Py preci eure <a aes 2

PLATTEN SEL nT Om ERG HE RAPE ATR ET DLE A

72a

portunity on the part of these dairies to deceive the

farmers.

While it is contended that the jury could consider the

fact that Sealtest records for the years of 1957 and 1958

were no longer available at the time suit was filed in 1965,

nevertheless the plaintiffs did not and could not show how

this affected them. Consequently, it was error to have per-

mitted the jury to pass upon the question when there was

no evidence of affirmative acts of misleading or conceal-

ment by the dairies directed toward these plaintiffs.

With respect to the individual directors, again, a similar

lack of proof is evident.

The plaintiffs asserted that the financial statements which

were used as a basis for reports at the annual meeting

did not contain any mention of rebates or price adjust-

ments. Also Mr. Knuth testified that in June, 1965 at a

Board meeting, he requested an opportunity to view the

books of Erie-Crawford but was told that directors were too

busy at that time, although he was invited to return when

a meeting was not in progress. Knuth did not do so. This

evidence fails to meet the test of acts intended to deceive,

conceal, or misrepresent which the Pennsylvania Law re-

quires to be proved by evidence that is clear and precise.

As additional evidence against the Co-Op, the producers

point to testimony that the Erie-Crawford’s accountant

made the computation of the various price adjustments in

a special notebook which he kept in a separate drawer in

his desk and that the corporate records did not clearly re-

veal the rebates. However, there was no testimony that

any plaintiff was deprived of the opportunity to view the

corporate records or that any request for explanation or in-

terpretation was ever made.

While there was testimony that the price adjustment

problem was presented to one or more annual membership

EE ESO a IN DS IHRE TIES

73a

meetings, it was never clearly established in which year

or years this was done.

The evidence on this issue produces the impression of an

organization which was not particularly interested in mak-

ing the price arrangements known to the public or to all

of its customers and, accordingly, did not go to any pains

to draw attention to the situation. This falls short of the

requirements of Pennsylvania Law that there be affirmative

efforts at concealment. The silence or nondisclosure which

was shown by the plaintiffs is not sufficient to overcome the

policy of Pennsylvania law to enforce the limitation period

in all but severely restricted situations. The Statute of

Limitations must be considered a valid defense for all de-

fendants and not a proper matter for jury determination.

Pe PRI Dd

CONDUCT OF PLAINTIFFS’ COUNSEL

This was a lengthy trial, tenaciously contested by the

lawyers for all parties. There were numerous side com-

ments by counsel during the questioning of the witnesses,

mostly by the attorney representing the plaintiffs. Counsel

were cautioned by the Court on many occasions to desist

but after a short period of compliance, the chatter would

commence again.

The defendants have cited numerous instances of alleged

prejudicial comments by plaintiffs’ counsel and it must be

admitted that most were unnecessary and many were ob-

jectionable reflections on the credibility of witnesses or

the value of certain testimony. Nevertheless, the cold rec-

ord does not accurately reflect the atmosphere of the trial

and many of the remarks in print appear stronger than

they sounded in the courtroom. Although many of coun-

sel’s observations made in the guise of objections to evi-

dence should not have been made in the presence of the

jury, they were not actually prejudicial. We do not be-

lieve that the jury was influenced in favor of one party or

another by the exchanges between the lawyers.

— EEE LEILA EIEN SOE |

eB A SDE TRAE LEER GAEL EPCS ES —

74a

Complaint is also made that plaintiffs’ counsel exceeded

the bounds of fair comment in his summation when he spoke

of ‘‘law and order’’, the necessity for all to obey the law,

and what children were being taught in college. While

the remarks were strong, they fairly met inferences and

statements of the defendants’ expert whose testimony con-

veyed an impression of willingness to condone statutory

violation, if necessary, in the pursuit of financial profit. The

defendants are in no position to complain of the plaintiffs’

closing argument—which in this case we do not consider

prejudicial.

EVIDENTIARY RULINGS

The defendants sought to produce evidence of statements

by an accountant employed by the Milk Control Commis-

sion,expressing his views on the legality of the rebate pro-

cedures. An offer was made, also, to introduce a letter

written by the Secretary of the Milk Control Commission,

apparently giving tacit approval to the milk price adjust-

ments procedures followed by the Co-Op. This letter said

in part:

‘<* * * we believe we stated that where a milk dealer

paid a producer for milk shipped and the producer

voluntarily and without suggestion, pressure, threat

or duress, returned the portion of the money volun-

tarily, the transaction was completed as far as pay-

ment to producers was concerned and no violation of

the law existed.

‘*We still feel that this is a proper analysis in a par-

ticular situation.’’

The plaintiffs had originally asked for punitive dam-

ages but abandoned that claim as the trial got under way.

The proffered testimony might have had some relevancy on

the issue of good faith on the part of the defendants so

long as the exemplary damage count was viable but when

it was removed from the case, the reason for the introduc-

2 Sn ORB DONT cg De OE BET OF OE Ry tes SES a |

a Sa RAS RN RN Br EI SR

— 4

75a

tion of the evidence was no longer applicable. The evidence

would have had no further pertinency to the issues and

might have resulted in confusion in the juror’s mind as to

the proper interpretation of the Milk Control Act.

Furthermore, it is apparent that the secretary’s inter-

pretation of the statute was in flagrant disregard of its

plain meaning. In view of the strong language of the

Supreme Court of Pennsylvania in the McAllister case,

supra, (decided some 4 years before the letter), it is in-

eredible that an official of the Commission would believe

that return of part of the purchase price by a producer

to a dealer did not violate the spirit and intent of the Milk

Control Law. It strains credulity beyond the breaking

point to accept as a reality of life a situation where a F

farmer would voluntarily and without suggestion, pressure, ‘

threat, or duress, return part of the money which he had E

received for milk which he had sold to a dealer. The evi-

dentiary rulings on these points and others raised on post

trial motions were not error.

LETTE EO TP ETL IPM E RN ORE EE ELE AIL NG IE EN ET LOTT LT SINE LES:

MITIGATION OF DAMAGES

The jury was instructed that proof of a technical con-

version, without more, entitled the plaintiffs to only nomi-

nal damages, that if any further sums were to be awarded,

the burden was on the plaintiffs to establish actual loss,

and that the defendants were entitled to show in reduction

of damages facts or circumstances tending to reduce the

amount required to compensate the plaintiffs.* The jury

in answer to an Interrogatory found no reduction was to

be made.”®

14418 Am.Jur.2d, Conversion § 102.

89 C.J.S. Trover and Conversion § 180.

15°°6 Are the defendants entitled to a reduction in the damages

claimed by the plaintiffs?

Yes No \/”

TCR STR — . '

2 aL I a IB I a A cee a ea aa Ca a RR RL id *

EYE PB BEES LCRA BEA SINE LRAT —_—

76a

The case was to be tried on liability first, with damages

to be determined thereafter by a Master in a series of com-

putations. This arrangement was necessary because there

are several hundred claimants involved and the amount of

damage which each sustained must be determined on a num-

ber of variables including the quantity of milk sold by the

Co-Op for the individual, the percentage of butterfat ad-

justment which would be applicable, incentive arrange-

ments for sale of milk during certain seasons of the year,

ete. A corporation of this magnitude would have been im-

practicable for a jury.

On the other hand, as a class, the plaintiffs contended

that their loss amounted to the total of the rebates paid

to the dairies. The defendants contended that there was

in fact no such loss because it would have been impossible

for the plaintiffs to have sold their milk on the open market

at any better price than that which the Co-Op secured.

To buttress their position, the defendants submitted ex-

tensive marketing data, complete with charts and the testi-

mony of an expert witness. It was against this background

of the damages which might be available to the class as

a whole that the jury was permitted to determine if the

plaintiffs were entitled to nominal damages, the full amount

of the rebates as they claimed or some lesser amount which

might be determined in conjunction with the defendants’

evidence on market conditions.

‘“‘In an action conversion, although the plaintiff is

generally entitled to recover the value of the property

converted, the defendant is permitted to show the ex-

istence of facts which would make it unjust to allow the

plaintiff to recover such amount.’’ 18 Am.Jur.2d, Con-

version § 102.

‘As a general rule defendant is entitled to show in

mitigation or reduction of damages any facts or cir-

cumstances which would tend to reduce the amount re-

a ea a

7 SE PL NRE MTR SAL LEA, BAP ARIE PNAS REIL A TENSE EP EGR LIEN LLG TA ERR ASAE” Sa eenee, |

77a

quired justly to compensate plaintiff for the actual loss

he has sustained as the proximate result of defendant’s

act.’? 89 C.J.S. Trover and Conversion § 180.

RS TSN NGS: ota me:

Here the jury determined that the plaintiffs were entitled

to the full amount of their loss and this was in its province

to do so.

The defendants contend that they were misled by the

pretrial arrangements with respect to reference to a Mas-

ter and were unprepared to meet the reduction of damages

issue at the trial. However, the contention is not well

taken. The defendants were thoroughly prepared on the

issue of market conditions and produced such extensive

and exhaustive evidence that it is difficult to conceive of any

other testimony which could be found to have a bearing on

the matter.

The evidence on this point was that which would apply

to the class of the plaintiffs as a whole. It does not and

is not intended to bar testimony on other matters of de-

fense which might apply in the assessments of damages

in individual cases, although, certainly, the matter of mar-

ket conditions has been resolved by the jury’s finding.

SESE RISES GASES T IRIS A ASOT CU RRR Ay NSS iar ee

It may well be, as the plaintiffs contend that the defend-

ants were not even entitled to have this matter submitted

to the jury. However, we do think the question was fairly

raised by the evidence and was within the jury’s domain.

The charge to the jury on this point was an accurate state-

ment of the general law.

The defendants contend that it was error to submit In-

terrogatories on this point to the jury but it’s difficult to

follow this reasoning when it is noted that a favorable

answer to the question would have been beneficial, but the

failure to submit the issue would have deprived the defend-

ants of an opportunity to substantially better their position.

PE EI aE ERLE LENA ASS RES EE TE PUD IARI I #8 WT ea 2

78a

The defendants also object to the interrogatory following

which would have permitted a reduction in percentages,"

claiming there was no basis for the jury’s determination,

The market conditions testimony, however, if accepted by

the jury, could have furnished a guide and its findings

would have been no more speculative than many items of

damage which juries pass upon daily. In any event, since

it was determined that no reduction was applicable, the ob-

jection is moot.

DAMAGES RECOVERABLE BY THE CLASS

In accordance with the opinion of the Court of Appeals

suggesting consideration of the application of Rule 23, argu-

ments were held and Orders were entered by this Court on

January 22, 1969 and February 28, 1969.

The first Order determined that the matter should be

handled as a class action, and the second required that a

notice be given to each eligible member of the Co-Op, ad-

vising that he could be excluded from the class and partici-

pation in the suit if a request was submitted in writing and

sent to the Clerk of the Court. Absent such affirmative ac-

tion, those who were members of Erie-Crawford during the

years in question would be considered as part of the class,”

the notice adding, ‘‘the judgment entered, whether favor-

able or not, will be binding upon you and no other suit may

be brought by you on the claims alleged in this lawsuit.”

The potential participants were further advised, ‘‘If the

defendants are found to be liable to the class members,

in order to recover any amount from them, you will be re-

quired to prove your specific damages.’’

16«*7, Tf the answer is ‘Yes’, indicate what percentage of re-

duction the defendants are entitled to. ...... "

17 They were also given the option of retaining their own attor-

ney if that was desired.

79a

Plaintiffs now assert that they should be entitled to re-

cover all of the damages sustained by the class, even by

those who had requested exclusion from the suit.

We reject this contention and hold that only the damages

sustained by members of the class as presently constituted

may be assessed against the defendants.

Plaintiffs’ position is unsound in two respects. First, if

the present members of the class wish to collect all of the

damages sustained by all without distributing the shares

to those who chose not to continue in this suit, then there

would be unjust enrichment. The law of Pennsylvania, as

in other common law jurisdictions, is that tort actions are

brought for compensation for loss suffered. Absent punitive

damages, no other recovery should be permitted. Second,

if damages could now be awarded to those who had pre-

viously decided not to participate, the whole purpose of

giving notice under 23(d) would be thwarted and the Rule

would be in shambles.

The procedures of Rule 23 are designed to facilitate the

disposition of litigation where large numbers of litigants

are involved. It has already raised many practical prob-

lems and if the procedure is to continue to serve the pur-

pose for which it was designed, it must be carefully utilized.

Professor Charles Alan Wright in his discussion of class

actions, 47 F.R.D. 169, 181 said:

“Critical to the entire operation of the revised rule

is the effect of the judgment. It is clearly contemplated

that every judgment in every class action will bind all

of the members of the class, except for those who have

asked to be excluded in a (b) (3) action.

‘‘The absentee has an absolute right to be excluded

from a (b) (3) action. If he does, and the judgment

ultimately is favorable to the class, he should not be

AEM RMT ELAM ¢ AIMEE

an SaeegR

ARAL LLL OLED DE AEE ™

80a

entitled to rely on it as collateral estoppel, in those

jurisdictions that departed from the requirement of

mutuality for estoppel. To permit him to do this would

make a mockery of the (b) (3) procedure, and would

restore in a different form the ‘one way’ intervention

that the amended rule was expressly intended to pre-

clude. Notions of collateral estoppel are not so in-

exorable that a party who has affirmatively obtained

exclusion from a judgment need be allowed later to

claim the benefits of the judgment.’’

A fortiori, an excluded plaintiff should not be entitled to

share in the damage award nor should a defendant who

thought he was dealing with damages sustained by several

hundred suddenly be required to meet those claimed by

a thousand.

Finally, if there was any doubt, Rule 23(c) (3) provides:

‘‘The judgment in an action maintained as a class ac-

tion under subdivision * * * (b) (3), whether or not

favorable to the class, shall include and specify or de-

scribe those to whom the notice provided in subdivi-

sion (c) (2) was directed, and who have not requested

exclusion, and whom the court finds to be members of

the class.’’ (emphasis provided)

Appropriate Orders will be entered.

reer

ftp

8la

APPENDIX E

Interrogatories to the Jury.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Civil Action No. 65-1328

Rosert N. Kuru, on behalf of himself and all others

similarly situated, Plaintiffs

vs.

Erre-Crawrorp Dairy Cooperative ASSOCIATION,

and others, Defendants

Interrogatories to the Jury

1. Were the plaintiffs deprived of money to which they

had a right of possession by the payment of rebates? (Do

not consider Rieck Dairy or Sealtest in answering this

question).

YES x NO

9. Did the plaintiffs consent to the granting of rebates to

the handlers or dairies?

YES NO Xx

If the answer is ‘‘Yes’’, indicate the date.

3. Did the adjustment given to Rieck Dairy (Sealtest)

deprive the plaintiffs of money to which they had the right

of possession?

YES x NO

SNe RS Se TOF or Oe ea

4. Are the following officers and directors of Erie Craw.

ford personally liable for the conversion? (Answer as to

each individual defendant).

Charles Spaid

Howard Yost

John Hanas

Russell Raybuck

Milton Culbertson

Donald Triscut

Raymond Boyd

Calvin Henry

Roy Biack

Loran Mitchell

x pe pe fe fe pe fe fe be 1

If you answer either 1, or 3, or 4 ‘‘Yes’’, and 2 ‘“‘No”,

please answer the following interrogatory :

5. Did the conversion of plaintiff’s property by the de-

fendants result in only nominal ($1.00) damages to the

plaintiffs?

YES NO x

If your answer is ‘‘No’’, please answer the following

interrogatories :

6. Are the defendants entitled to a reduction in the dam-

ages claimed by the plaintiffs?

YES NO x

reduction the defendants are entitled to:

8. Is the Statute of Limitations a defense as to events

which occurred before May 31, 1960 as to any of the fol-

jowing defendants? (Answer ‘‘Yes’’ or ‘“‘No’”’ as to each).

YES No

83a

7. If the answer is ‘‘Yes’’, indicate what percentage of =|

William Colteryhan

& Sons

Erie Dairyland

Golden Crown

Golden Glow

A. H. Hilgendorf =

Home Dairy

Lingerlight Dairy =

Peninsula Dairy

Rieck Dairy

Schneider’s Dairy

Snee Dairy

Erie-Crawford Dairy

Co-Onerative

Charles Spaid

Howard Yost

John Hanas

Russell Raybuck

Roy Black

PRLS CATE OF Ee STS PU SS an |

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.