Petition for Writ of Certiorari — United States v. Wrightwood Dairy Co.

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) UNITED STATES OF AMERICA, -PETITIONER

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"> L.TITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES —

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“IRCUIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT

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; Specification of errors to beqirged__._/.._.......... 5. pen husesses |

Reasons for granting the writ..)..._/.:__- Yemen Pa \aldmewaute

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CITATIQNS | .- ow

Cases: .- . ‘ ean. an

Bunte Bros. v. Federal: Trade* Commission, 110 F., (ed) 412,

_ affirmed ‘sub nom. Federal Trade Commission v. page N Bros.¥

"312 U:'8. 349... _..

latte th i ne

Carter . Carter Coal Co., 298 U U. 's. 238.__. 3 SPEER NDS, Bop,

/ Chicago Board of Trade v. Olsen, 262 U. 8. 1.

' Currin v. Wallace, 306 U. 8. 1.

'. Holbrook v. Wallace, Civil Action No." 5811 (wD. D. c ), deci

March 19, 1940_ 2 __ - ; :

Labor Board v. Janes & Laughlin ‘Steel Corp., 301 U. s. 1. an

per w. ane, Ge 02 OR, obo ee ec ek”

Railroad Cammission of Wisconsin ¢. Chicago B. & Q. R or ;

257 U.-S. 563... _- woe ob vt

Schechter Corp. v. U tniled States, 295 U. S. 495__- cactindidk beim»

Shreveport Case, 234 U. 8. 342. te a Sie oe

Sunshine Anthracite Coal Co. v. Adkins, | 10 U: 8. - eee

United States y. Adler's Creamery Inc., (107 F. (2d) 987, 110 F.

(2d) 482, certiorari denied, 311 U. 8S. 657.-._..___. Reno in oa

United States v. Andrewe,26 F. Supp. 123... .- E : aa.

United States v. Darby, 312°U. 8. 100___|.-

United States v. I. P. Hood & Sons, 26 ¥. Supp. 672___.

United States v. Krechting, 26 F. Supp. ‘266-2. . -

' United States ¥. Rock Royal Co-Operative, Inc., 307-U. s. 533__

‘United States. v. + Schwarz et al., Civil Action No. 1480 (N. D.

Ill.), decitted January 8, 1941_ ' ;

Statute: «

Act’of ¥ ay 12, 1933 (48 Stat. 31), 88 amended May 9,91934 (48

Stat. 670), as further amended-August 24, 1935 (49 Stat. 750);

and as reenacted and amended in the AgrfcAlttrel Marketing

Agreement Act of 1937 approved Jime 3, 1937 (5Q Stat. 246),

’ See. 8c (7 U.S. C., Supp; V, Sec. GO8c) _.

Miscellaneous:

Federal Rules of Civil prides Rule 56 (d)_. ca

4 Fed. Reg. 1259. snewneretale eae am ie" sawete

4261417—41 * 61

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= ante rem Gourtof the United States

* Ocrowen TEgM, 1941 -

No. - ‘o

-UN@fep States .or AMERICA, PETITIONER

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Wricutweop Damy ComPany’

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' PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

CIRCUIT COURT OF APPEALS FOR-THE SEVENTH CIRCUIT :

PETITION NG

; \

The Solicitor General, on behalf of the UnitediStates, prays

that a writ of certiorari issue to review the judgment of the

United States Cireuit Court of Appeals for the Seventh Cir-_

cuit entered in the above-entitled cause on October 27, 1941.

. e)

‘ OPINIONS ‘BELOW

: “. No opinion was rendered by the United States District

Court for the Northern District of Illinois, Eastern Division.

The District Court’s findings é6f fact and conclusions of law.

appear in the record (R. 245-247). The opinion of the-Cir-

__cuit Court of Appeals (R. 420, has not yet been reported.

>.

, eat. " JURISDICTION

The judgmer ent_of the Circuit Court of Appeals was ‘eitered

con October 27, 1941 (R.*2Z2). The jurisdiction of qhis Court”

is invoked under Section 24) (a) of the Judicial Code, as

amended by the Act of February 18, 1925.

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| QUESTION PRESENTED

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Whether federal regulation of the price-of intrastate milk

sold in competition with interstate milk is permissible under

the commerce clause of the Constitution and. thé a

Marketing Agreethent Act of 1937."

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STATUTE AND ORDER INVOLVED

The statute invelved is Sec. 8c of the Act of May 12, 1933

(48 Stat: 31), as amended May 9,-1934 (48 Stat. 670); as, fur-

ther amended August24, 1935 (49 Stat. 750), and as reenacted

—. and amended in the Agricultural Marketing Agreement Act °

of 1987 approved Jun June 3, 1937 (50 Stat: 246). See7U.S.C, *

Sa egind erent ob Secretary of Agricul-

ure to issue marketing orders fixing minimum prices for milk :

and other commodities. Paragraph (1) of that section Pro-

vides that orders issued by the Secretary—

shall regulate, in the manner hereinafter in this section

’ provided, only such handling of such agricultural com-

\modity, or product thereof, as is in the current of inter-

state or foreign commerce, or which directly burdens,

obstructs, or affects, interstate or foreign comimerce in

such commodity or product thereof. |

* Pursuant to the proyisions of the Aet, the Secretary of Agri-

culture on August’28, 1939, promulgated Order No. 41 regulat-

ing the handling of milk-in the Chicago area The Order.

(printed“in- the record at R. 8-22) is of the same type as is

described in this Court’s‘opinion in the Rock Royal case, 307

U. S., at_551-555. It contaims provisions for the fixing of —

A minimum prices for milk sold by producers to ai 2 and for

* There may be other subsidiary or related quate, 3 set’ forth in the

\ Specification of Errers, infraj i pp. 45. whjch in the interest of brevity

are not spelled ont here. If certiorari js_grunted, petitioner will also urge

that the district court had ho jurisdiction to enjoin the United States and

its officials from enforcing the milk order against respondent.

* The statutory provision is the same as that which was before the Court

in United States v. Rock ba Inc., 307 T. 8. 53.

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a producer-settlement fund to equalize the payments to’ pro-

ducers. The Order was issued after a Hearing and. findings by:

the Secretary of ‘Agriculture.*

STATEMENT

On December 26, 1939, the United States, ssaitialombs herein,

filed its complaint in which*it sought to compel respondent to

-eomply with Order No. 41 (R. 2-7). | Among the numerous

defenses set up in respondent’s answer (R. 84-101) was the

contention that respondent’s business was entirely intrastate, :.

and that accordingly the statute was not, and could not consti-

tutionally be, applicable (R. 87-89). | The answer: also con-

tained a counter-claim 7m that the government officials

should “be enjoined from

- respondent (R. 99-100). . ;

Petitioner moved ia summary judgment on affidavits

(R. 105-116). The trial court denied the motion, but found

certain facts to exist without controversy (R. 157), and_unde

Rule 56 (d) of the Federal Rules of Civil Procedure the facts

' 80 specified. are to be deemed established for purposes of the

ease. The court found that respondent purchased milk from

producers within the State of Illinois, processed the milk in.

Chicago, and sold it in Ilitiois “in competition with the. milk

~ of other handlers i in the area” (R. 157-158). . None of respond-

ent’s milk was. physically intermingled with milk which had

crossed state lines.(R. 158). The court further found that

prior to the issuance of Order No. 41, 60% of the milk sold

in the Chicago marketing area was produced in Illinois and

40% in Wisconsin, Indiana and Michigan and that at the

“~Yimwe-of.the findings “over 60%” was produced in Tilinois”

(R. 158).

At-the trial the transcript of proceedings before the Secre-

tary was introduced in evidence by respondent (R. 201). _The ae

*The record before the Secretary, of: awn was’ " introduced in evi-

dence as Defendant’s Exhibits 1-4. This record has not been —e but

has been certified to the Court in its — Sore.

— Order _No. 41 vagainst |

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transcript contained evidence showing that 40% of the milk

consumed in Chicago came from ovftside the State of Illinois,

_ and also testimony. that, producers who sold to handlers com-

_ peting with ctit-rate handlers must reduce their prices in order

to permit handlers’ of . their. milk to compete successfully.*

Upon the basis of such evidence, inter alia, the Secretary - -of ©

Agriculture found as a fact (R- 10):

That all milk which was produced for sale i in the market-

ing area is handled in th ; :

_or so as directly t6 burden, obstruct, or affect interstate

oMimerce in milk or its products ; rose ee

At the ‘conclusion of the trial the District Court ventiircned

the findings previously made,’ ‘and added a findijg that ‘the

defendant's business was “not” in the current of” and —_

not directly burden, obstruct ot affect interstate commerce”

" (R. 246). The court’ thereupon dismissed the complainf filed

by petitioner and granted the respondent the injuhctive relief ”

' prayed fori the-counter-claim (R- 246-248). The Cireuit

"270 ).

Court of Appeals affirmed. (R.

SPECIFICATION OF ERRORS TO BE URGED

‘The Cireuit Court of Appeals erred: :

(1) In helding that respondent was not a handler of milk,

as defined in the Act and the Order, subject to the provisions

of the Order. - . ,?

(2) In holding that the business of. distributing ‘ail ¢ con-

ducted by the is amg in n competition with: interstate” com-,

such commerce.

(3) In _détermining the question * preserited in this. case

Without giving effect to the Secretary's finding, supported by

evidence in the record before him, that all milk ‘produced.

_ for-sale in the area directly affects interstate commerce.

4 ;

*See Def. Ex. + (Otgingh) ; ‘Transe rte of Record before ‘the Sinan

of Agric ulture, Ex. 2. pp ie- 12, 75-76. E -

”

(4)-In failing to hold that petitioner’s motion for sunimary —

judgment should have. anted-———_*

— 15) Th affirming the deeree: of the District Court enjoining

the United States and its officers. from enforcing Milk Order

No. 41 against respondent. . ans , hes

(6) In failing to order respondent to co Bech Ie

Order. a

R GRANTING THE WRIT

1. The decision below conflicts with United States v. “Rock

- Royal Co-Operative, Inc., 307 U.S. 533. In its opinion in that

case this Court stated (p. 568) :

—Nor i is any question raised:as to the pevier of the. Con-'

gress to regulate the distribution in the area of the-

wholly intrastate milk. It is recognized that the federal

authority covers the sales of this milk, as its marketing

__ + 38 inextricably intermingled with and directly—affects—

_ «the marketir gz in the area of the milk-which moves across

state lines.

Respondent urged:in the court below that none of the defend-

ants in the Rock Royal case were engaged i in intrastate busi- Ose

ness, and that accordingly the above statement was merely an

“erroneous” or “gratuitous” dictum,” ; It is true that this Court

- aleo declared in iits opinion in the Rock Royal case that (p. e.

568 yr. ; _—_

= There i is no challenge to the fact that the milk of all four Pa

‘ defendants reaches the marketing area through the

channels of interstate commerce. ;

But the record in the case shows that, although the issue..was

‘not pressed in this Court, th®réspondent\Central New York.

nN Cooperative Association, Inc., did challenge the power of

Congress to regulate it on the ground that Nts. activ ites were

entirely intrastate.”

"See respondent’ s brief in the Gireuit Court of Appeals, ps 40), 35.

*The answer of, the. Central New York Cooperative Association, Lne.,

alleged that all of the milk hanilled by it was preduced and \wold in she

state of eee and ‘that: hope of it crossed state’ lines or was mixed

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"-_ stitutional’ doctrine that the power of Congress extends to the

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2 The decision below is in direct conflict with the decision,

of the Circuit Court of Appeals for the Second Circuit in’

United States v. Adler’s Creamery, Inc., 107 F. (2d) 987, 110

F. (2d) 482, certiorari denied, 311 U.S. 657. The Adler case

involved the application of the New York Milk Order to a.

handler who: obtained and distributed all of its milk within

the State of New York. The court below Refused to accept

the Adler case as persuasive because of the Second Circuit's

reliance on “the inapposite remark/ made i in the Rock Royal

case” (R. 22%). Neither. respondent nor the court below

has denied that the Adler case - conflicts with the decision

reached here. :

.3. The decision -below conflicts with the unreversed deci-

- pions of five district judges on the same point. United States

v. Krechting, 26 F. Supp. 266 (S. D. Ohio) } United States v.

Andrews, 26 F. Supp. 123 (D. Mass., Judge Brewster) ; United

States v. H. P. Hood &| Sons, 26-F. Supp. 672 (D. Mass.,

Judge Sweeney) ; United ed States v. Schwarz et al., Civil Action—~~

No. 1480 (N. D. IIL), decided January 30, 1941 (Judge Barnes);

Holbrook v. Wallace, Civil—Actio n No. 5811 (D: D..C.),

«decided March 19, 1940. ;

4. The decision below conflicts with .the hiadimentel con-

- control of intrastate acts when necessary to the effective regula-

with other milk which had crossed state lines (October Term 1938, No

771, Transcript of Record, p. 80). The stipulation on which the case

.was tried substantiated these allegations, except that it showed" that

while the Association's. milk usumily followed a‘ route to New York City

entirely within the state of New York, prior to October 1, 1938, the tank

_ trucks often passed through the state of New Jersey en route to New

* York City, and that when tank trucks were not available the milk was ¢

shipped by rail on ralireads running threugh the state of New Jersey

(id,, pp. 265-267).

Z Sthee the statute aud maiketing order in this case apply in terms to

activities which “directly affect interstate commerce” the question of the

applicability of the statute is the shme as the question of constitutional

power. Cf. Labor Board vy. Jonca 4 @PLaughlin Steel Corp., 301 U.S. 1, 0-31.

The opinion of the court below demonstrates that the iseue was treated as

une of constitutional law. th wee

tion or protection of interstate commerce.*’ A-program for the |

ee me Beth Tage ,

establishment of minimum prices fer interstate milk cannot be

effective if intrastate milk can be sold competitively without —

"restriction. This seems to have been ‘coneeded by the court _

below when it declared (R.22¥) :

Unfortunately, if the defendant i is not. subject to a

regulations of Order No..41, the’result may well be that

the effective sanction of the order will wither before the

force of competition, the morale of the market: will

__ disintegrate, and this attempt at = of the cheep :

-_by the national government will fail.’ | .

” The court below was of opinion that the fact that the un-

regulated intrastate transactions were in competition with sim-

ilar interstate transactions was not sufficient to bring the former

within the federal commerce power.’° But i in the Shreveport

Case

was

——~" against’ ony with rates.” The ruling below is thus irtconsist-

itself the f Tegulation, of. intrastate railroad rates

precisely because of competitive discrimination

ent not only with the familiar principle for which the Shreve- -

_ port*Case stands, but also with the decision‘on its facts. Also

ao

262 U.

306_U.

CoS1

closely in point: is’ the language in the dissenting opinion of —

° ' Shreveport Case, 234 U. 8. 342: Rarped Gomuisatin of Wisconsin v. °

Chicago B. & Q. R. Co., 257 U. 8. 563; Chicago Board of Trade v. Olsen, .

8.1; Schechter Corp. v. United States, 295 U. 8.495, 544-46 ; Labor .

. Board vy. Jones & Laughlin Steel Corp., 301 U.\S. 1, 36-38; Currin v. Wallace,

S. 1; Mulford v. Smith, 307 U.S. 38; United States v. savin 312 :

121. ke

"In Bunte Bros..v. Federal Trade Commission, 110 F. (2d) 412 (C. CA

7), affirmed sub nom. Federal Trade Comm\asion v: Bunte Bros., 312 U. 8.

349, the court below and this Court held the Federal .Trade Commission Act

inapplicable to intrastate sales competing with interstate. on the ground

that t

t act applied only to transactions in interstate commerce and not

to those “affecting” such . Both opinions in the Bunte case seem

to imply that the constitu 1 power of Congress unquestionably extends

to the

transactions in question. The statute involved in the present case

‘coutains the Janguage omitted from the Federal Trade Commission Act.

“In Schechter Corp. v. United States, 295 U. 3. 495, 546, this Court stated

that “Direct effects are illustrated by the railroad cases we have cited, as

e. @.,

- * © ‘the fixing of rates for intrastate transportation which un-

justly discriminate against interstate commerce.”

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Mr. Justice Cardozo in pr oe v. Carker Cost. pve 298 U.S, -

238, 329, with respect to the fixing of. niinithum ‘prices for

coal: 11 “

Within rulings the most ‘ortilodbx, the prices for intra-

sfate sales of coal have so inescapable a relation to those

r interstate sales that 4 system of regulation for trans-

ctions of the one class is necessary to give‘adequéte pro- ;

. tection to the system of regulation ’ adopted for Bisel

other. “.. % (*

}

5. The question presented ii is one sof great public importance.

and ‘ald be settled. At’ the present .time federal ordérs

regulating:the handling of milk are in effect in twenty widely

separated marketing areas. In_every,one of these areas there

is a Substantial number of handlers whose business is wholly

intrastate in.chafacter. The inherent, nature of the regulation

embodied in each of these orders is such that unless uniformly

applied to all handlers in the marketing area, the order-cannot —

operate. Indeed, the New York Milk Order was suspended °

’ when the adverse decision below made it impossible to obtain

_ uniform compliance. See 4 Fed. Reg. 1259; United States v.

" Rock Royal Co-Operative, Inc., 307 U. S., at 555.

CONCLUSION‘

g

It indiieitili submitted that, fai thsi reasons stated, this

_petition forwrit of certiqrari should be granted. .

CHARLES Fany.

ae Acting, Solicitor General.

Novemser, 1941. .

° ° . . .

"The majority of the Court in the Carter chae did not pa the price

fixing provisions ef the » Coal Act. The views expressed in theopint n of

Mr. Justice Cardozo we bre Approved by this Cuurt in Sunshine’ Anthracite

' Coal.Co, v. Adkins, 310/U. 8. 381.

»

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US GOVERNMENT PRINTING OFFICE. teas .

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