Case-Swayne Company, Inc. v. Sunkist Growers, Inc.

PETITIONER: Case-Swayne Co.
RESPONDENT: Sunkist Growers, Inc.
LOCATION: Sunkist Growers, Inc.

DOCKET NO.: 66
DECIDED BY: Warren Court (1967-1969)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 389 US 384 (1967)
ARGUED: Oct 18, 1967 / Oct 19, 1967
DECIDED: Dec 18, 1967
GRANTED: May 15, 1967

ADVOCATES:
Seth M. Hufstedler - for the respondent
William H. Henderson - for the petitioner

Facts of the case

Since 1958, Sunkist Growers, Inc. organized as an agricultural collective, and about 12,000 growers of citrus fruit belonged to this collective. Sunkist grouped these growers into local associations, each with a designated packing house for preparing fruit for market. Most of these associations were comprised entirely of fruit growers operating under a cooperative structure, but about five percent were corporate growers with their own packing houses. An additional fifteen percent of the associations were private for-profit corporations and partnerships; these associations operated by marketing contracts, not by the cooperative structure.

Sunkist controlled approximately seventy percent of all oranges produced in Southern California and Arizona. This control manifested in several ways. Each grower in a cooperative local association agreed to market all fruit through his association, to appoint the association as the marketing agent for all his fruit, and to contract with one packing house. While each association reserved the right to decide its prices and markets, Sunkist had sole discretion to pool products for exports, and could set maximum supplies for a given area.

The Capper-Volstead Act privileged collective activity in processing and marketing in the production of agricultural products. It was enacted to provide an exception to the Sherman Act’s prohibition against combinations in restraint of trade. Case-Swayne manufactured orange juice and other blended juices as an independent operator. It alleged that the Sunkist system was a conspiracy of trade in violation of the Sherman Act and sought treble-damages under the Clayton Act. The district court granted Sunkist’s motion for a directed verdict. On appeal, the United States Court of Appeals, Ninth Circuit, reversed in part. It held that there was sufficient evidence for a jury to find that Sunkist engaged in monopolistic practices, but also held that the participation of non-producers in Sunkist’s system did not destroy its exempt status under the Capper-Volstead Act.

Question

Is Sunkist Growers duly organized under the Capper-Volstead Act's agricultural collective exemption when fifteen percent of its members are for-profit processors of agricultural products?

Media for Case-Swayne Company, Inc. v. Sunkist Growers, Inc.

Audio Transcription for Oral Argument - October 19, 1967 in Case-Swayne Company, Inc. v. Sunkist Growers, Inc.

Audio Transcription for Oral Argument - October 18, 1967 in Case-Swayne Company, Inc. v. Sunkist Growers, Inc.

Earl Warren:

Number 66, Case-Swayne Company Incorporated versus Sunkist Growers.

Mr. Henderson, you may proceed with your argument.

William H. Henderson:

Thank you Your Honor.

Mr. Chief Justice, may it please the Court.

This is the treble damage action for violation of the Sherman Act.

Case-Swayne Company, a small factory of food products, including orange, juice brought the action against Sunkist Growers Inc., the dominant citrus fruit combination of California and Arizona.

The District Court directed a verdict against Case-Swayne.

The Court of Appeals reversed, holding that Case-Swayne had made a prime facie case for the jury on violation of the Sherman Act.

But the courtroom, one Judge dissenting that Sunkist had complied with Section 1 of the Capper-Volstead Act.

This is the only issue, the writ of certiorari is concerned with.

We invite the Court's attention to Judge Walter Ely dissenting opinion on this issue at page 185 of the record because this opinion states Case-Swayne's position on that issue.

Your Honors, the single question before this Court on the writ of certiorari is the interpretation of a single sentence from Section 1 of the Capper-Volstead Act.

This is the first sentence of the Section and it contains only 50 words.

Now, in substance it provides members of Capper-Volstead Association must be engaged in the production of agricultural products as farmers or as specifically pertaining to this case as fruit growers.

Nothing could appear clear than this language and we submit at least in this case the language means what it says.

For the intent of Congress was that only actual farmers, actual growers, the people who till the soil could organize a Capper-Volstead Association.

In our opening brief, we quote from the legislative history.

This history explicitly shows Congress intended that only actual farmers, the people who grow the crop could form a Capper-Volstead Association.

I call Your Honor's attention particularly to the colloquy between Senator's Cummins, Kellogg, and Townsend quoted on pages 9 and 10 of our opening brief.

These Senators wanted to make certain that the specific language of Section 1 which is under consideration in this writ would not permit the middle man such as flour mills and packers who in a broad sentence are engaged in the production of agricultural products to organize co-operations and fix the prices of their products.

Indeed the history shows further, it shows that the purpose of the act was to permit farmers to organize and market their products through an association so that they would not be at the mercy of the middleman.

The acts legislated history is crowded with preferences showing this intent.

We have found no legislative history indicated any intent to the Congress contrary and some case has referred this to them.

Now here, let's look at the stipulation.

The stipulation is very specific, it clearly shows the inclusion of the middleman in Sunkist membership.

Approximately 15% of Sunkist members are not farmers, they are not growers, they are not Capper-Volstead Associations but normally private corporations.

Now, in the Capper-Volstead stipulation these members are denominated agencies, associations and that is not a correct denomination.

They are not associations.

They are commercial packing houses and if Your Honors with bear with me, I'm going to try to use that term because that's what they are, commercial packing houses.

They perform a traditional middleman function in the citrus fruit industry.