United States v. Armour & Company

PETITIONER:United States
RESPONDENT:Armour & Company
LOCATION:Gwinnett County Courthouse

DOCKET NO.: 103
DECIDED BY: Burger Court (1969-1970)
LOWER COURT:

CITATION: 398 US 268 (1970)
ARGUED: Mar 05, 1970
DECIDED: Jun 01, 1970

Facts of the case

Question

Audio Transcription for Oral Argument – March 05, 1970 in United States v. Armour & Company

Warren E. Burger:

Number 103, United States against Armour & Company.

Mr. Springer, you may proceed whenever you’re ready.

James Van R. Springer:

Mr. Chief Justice may it please the Court.

This case brings to this Court for the fifth time, questions under the Great Meatpackers antitrust decree of 1920.

That decree was entered on consent without a trial on the basis of a bill in equity that the Government had brought against the nation’s five largest meatpackers, Swift, Wilson, Cudahy, Armour which is involved in this case and Morris which Armour subsequently acquired.

The complaint in general charged that the packers had violated Sections 1 and 2 of the Sherman Act by obtaining control of a very great proportion of the food supply of the nation, both meat and other foods, and by abusing that control so as to restrict competition among themselves and to eliminate their other competitors.

The consent decree that the parties agreed upon in 1920 and that the Court adopted imposed sweeping and perpetual restraints both upon the future activities of the packers and upon the business relationships that the packers would be allowed to have with enterprises engaged in the production and sale of foods other than meat.

And despite the efforts of the defendants over the years to relax these restrictions, they remain in effect and this Court most recently in 1961 rejected an attempt by the packers to relax the restrictions upon them.

The decree is complex and I will take the time here only to discuss the particular paragraphs that are in issue in this case, that’s principally paragraph fourth of the decree which begins on page 30 of the appendix.

That paragraph provides that the meatpacker corporations, including of course Armour, are perpetually enjoined and restrained from either directly or indirectly by themselves or through their officers, directors, agents, or servants engaging in or carrying on the manufacturing, jobbing, selling, transporting except this common carriers, distributing or otherwise dealing in some 114 listed food products, including bakery products, most of it groceries, vegetables and fruits.

Paragraph four goes on to provide that the corporation defendants are hereby further perpetually enjoined and restrained from owning either directly or indirectly severally or jointly by themselves or through their officers, directors, agents, or servants from owning any capital stock or other interest whatsoever in any corporation, firm or association except common carriers which is in the same business as what I mentioned, of manufacturing, jobbing, selling, transporting, distributing or otherwise dealing in any of the above described products or commodities.

Paragraph six of the decree further perpetually enjoins the defendants from operating retail meat markets and paragraph eight enjoins the packers from dealing directly or indirectly in fresh milk and cream.

In short, the meatpacker’s decree perpetually excludes Armour from having any direct or indirect interest whatsoever in any firm in the baking or general grocery business and it prohibits Armour from otherwise dealing directly or indirectly in the enumerated products.

The decree as what is commonly referred to as the structural decree that is rather than simply enjoining the defendants from particular anti competitive acts.

It establishes a prophylactic separation between the defendants’ business, excluding them from other businesses where it’s felt that they’re involvement and might create a danger competition.

General Host, which is the appellee in this case is the company that’s widely involved in the baking business and the general grocery and restaurant businesses.

It was known until a couple of years ago as General Baking Company and under the brand name Bun Baking Company and others that manufactures and sells throughout the country a complete line of bread and other bakery products.

It also has a division called Little General Stores which has some 380 convenience retail food markets in various parts of the south and it also has subsidiaries that operate restaurants and other tourist facilities throughout the country.

It’s plain and undisputed in this case that General Host’s business is such that under the 1920 decree Armour could not have acquired any direct or indirect ownership interest whatsoever in General Host.

This litigation began about a year ago when General Host decided to do the reverse of that.

It would take over Armour by acquisition techniques that have become familiar in recent years.

Over the opposition of Armour’s management, General Host made a tender offer to Armour’s stockholders in which had sought to acquire a majority of Armour stock in return for package of the debentures and the stock warrants in General Host.

The tender offer was expressly conditioned upon the tender by shareholders of enough stock to give General Host an absolute majority of Armour stock and it provided that it will called off if that amount of stock were not tendered.

When the tender offer was made, the Government immediately sought to block this takeover on the theory that a corporate alliance between Armour’s meatpacking business and General Host’s bakery and retail grocery businesses would be just as inconsistent with the meatpacker’s decree if initiated by General Host as it would have been if initiated by Armour.

It was plain of course that General Host’s acquisition of Armour would not be directly punishable under the decree since the active party, General Host, was not a party to that decree.

Accordingly, the Government went to the District Court in Chicago which has had continuing jurisdiction at least in the recent years over the meatpacker’s decree and there the Government requested a supplemental order to prohibit the takeover by General Host.

It did this consistent with paragraph 18 of the decree which like most decrees expressly retains jurisdiction for the purpose of taking such other action or adding to the foot of this decree such other relief if any as it may become necessary or appropriate for the carrying out in enforcement of this decree.

Byron R. White:

Did the Government’s request to the District Court subsume a request to amend the decree?

James Van R. Springer:

Not in terms and of course this is the — I think the semantic problem that is at the heart of this case.

Of course, we’ll going back and back —

Byron R. White:

Let’s assume the Government had taken the approach that we think the decree should be amended expressly to prohibit matters like these, would any different kind of a hearing or any different kind of procedure then required?

James Van R. Springer:

I think we would contend that there would not be any requirement for different kind of procedure on the theory that I of course will elaborate that we think that in a very real sense the four corners of this decree do provide a rather clear condemnation of this kind of situation.

Byron R. White:

Well,let’s —

James Van R. Springer:

In other words, we’re not — the Government’s theory of the case to approach it in another way has not been based upon any sort of change in facts other than of course the undisputed facts it takes.

Byron R. White:

What if you — if you accepted the fact that the purpose of the decree was to prohibit an alliance of any kind between the Armour entity and any of the other described entities then it wouldn’t make much difference whether you amended it or just interpreted it, would it?

James Van R. Springer:

No I think not, and of course I could make further observation that it seems a little strange and inconsistent with traditional equitable theories for a decree to say nobody in the world shall takeover this company.

That’s an unusual form and that the least for decree and of course it doesn’t have any operative effect in the normal sense.

John M. Harlan II:

For now, as a matter of interpretation.

You say, there have been an unusual provision, that’s exactly your argument now?

James Van R. Springer:

Yes, but what we say — I was just addressing myself to the question of whether the presence or absence of such language in a decree would make any difference.

We say and I will elaborate that substantively this decree established a separation between these two businesses and the establishment of that separation as a substantive matter is frustrated by this kind of takeover.

John M. Harlan II:

Are you suggesting here that the tendered by Host stimulated or initiated or originated and collaborated in by Armour?

James Van R. Springer:

No, it’s undisputed that the opposite is the situation.

It was opposed, but I do find it hard to see why under the theory followed below and the theory that the appellees followed why that should make any difference.

Whoever does it or whatever the motives are, whatever the intentions are, precisely the same kind of situation will arise.

Warren E. Burger:

Doesn’t that overlook the fact that traditionally and ordinarily you have to have a party in order to reach them with relief?

James Van R. Springer:

Well, of course the Section 5 of the Sherman Act specifically does provide and this was relied upon by the Government below that whenever the interests of justice shall so require, the Court may bring in additional parties.

Warren E. Burger:

Did you follow that procedure that Mr. Justice White suggested?

James Van R. Springer:

Oh!

The amending with decree well I think —

Byron R. White:

[Inaudible]

James Van R. Springer:

Yes, General Host and of course Section 5 permits that to be done as a procedural matter and establishes the Court’s jurisdiction over —

Warren E. Burger:

Was General Host in existence in 1920?

James Van R. Springer:

I believe that its predecessor General Baking Company I think it was incorporated in 1911.

Of course it had no connection whatever with these packers and there was no reason for the Government even to think about bringing it in or foreseeing what might happen in a very different kind of business climate some 50 years later on.

Judge Hoffman in the District Court of Chicago of course denied the Government’s petition to add General Host as a party and to add an order to the decree prohibiting the takeover.

He relied quite simply on the proposition as I read what he said that the literal terms of the decree do not prohibit non-defendant owners of stock in meat packing companies from engaging in businesses prohibited to meatpackers themselves and by the decree.

In other words, as he explained orally, that the decisive fact in the case was that Armour will not be the controlling force whether the instrumentality of General Host is ever since villain of the peace and that’s the term he used, it was not Armour but General Host, the decree was powerless, the decree could not be used to prevent the takeover.

If Judge Hoffman’s rather scanty conclusions of law rests on the proposition that he did not have jurisdictional power to supplement the decree in this kind of way, we think he was plainly wrong, for the reasons that we set out in our brief which I believe are not basically disputed by the appellees.

Potter Stewart:

I didn’t read the District Court as saying it was without the jurisdiction of power?

James Van R. Springer:

It’s not clear that it did, if it did I think it was wrong.

I think power is not really an issue — the major issue that is here.

Potter Stewart:

That is between you and your —

James Van R. Springer:

I believe that so, yes.

There’s a certain amount of back and forth I think within General Host’s [Voice Overlap] briefs.

So, I will direct my point only to the proposition that the structural prohibitions of this decree are frustrated, in some sense violated by this takeover.

And I think General Host does, in the last analysis, agree that if that’s the case then the Court could and indeed should have granted the relief requested.

I think this perhaps the problem as I suggested in this case is a semantic one basically.

The basis for our whole case is the proposition that the decree is violated or frustrated because the takeover creates the situation that the decree was designed specifically to prevent.

General Host and the court below as I understand them say that can’t be so because nobody has disobeyed the command that the decree directed to them because, the decree does not in terms prescribed Armour’s acquisition by a grocery company.

We think that’s much too narrow reading.

Of course the decree is not — a civil decree is not punitive document and it obviously does affect people other than the particular individuals who happened to be accused of wrong doing at the time the decree was entered.

So, I think it’s not shocking or unusual the decree should affect parties in the business sense, people other than the initial parties to the case.

We think in fact the literal language of the decree condemns precisely the situation that has been created by the takeover.

Paragraph four not only prohibits Armour from indirectly engaging in General Host’s business, but even more specifically, it prohibits Armour from having directly or indirectly any capital stock or other interest whatsoever in General Host or in General Host subsidiaries that are engaged in the businesses.

It seems to me extremely literalistic to say that when Armour is the subsidiary of General Host, it has no interest whatsoever either in General Host’s business or in the business of General — its sister subsidiaries of General Host.

Certainly, as I suggested, this conclusion seems not difficult to reach if this kind of situation arose by actions in which Armour or its management joined or perhaps even instigated and equally I think it would not seem troublesome to say that the decree which prohibit a situation where Armour or its stockholders or management or dissident stockholders through proxy provider or something like that created a holding company which then had two subsidiaries, one of them being the old Armour and the other being General Host.

To put it in other way, the situation we now have is if one corporation that directly or indirectly is in both businesses, the meatpacking business and the grocery business and that corporation is General Host, directly in the grocery business and it’s indirectly in the meatpacking business through its controlled subsidiary Armour.

And we think that that is just precisely what the structural provisions of the decree prohibited and in fact the only reason why there would have been structural provisions in the decree is to prevent that kind of situation from arising.

Potter Stewart:

There were originally five corporate defendants?

James Van R. Springer:

Five, it soon became four through the merger of Morris into Armour.

Potter Stewart:

And I suppose there are other large meatpackers?

James Van R. Springer:

Armour is number two I believe.

Swift is somewhat larger.

Potter Stewart:

Cudahy —

James Van R. Springer:

Cudahy is quite a bit smaller.

Potter Stewart:

I don’t know what the other is.

What if General Host had taken over the — well what if in the mean time since 1920 another meatpacking company become the biggest in the country —

James Van R. Springer:

I think that might have been —

Potter Stewart:

— and if General Host had taken it over, would you be here saying that this decree should cover that situation?

James Van R. Springer:

No, no, I think not and whether we could have a theory that the decree ought to be modified, I think it will be very hard for them to hold, but of course, that’s the situation that arises in the case of any decree.

It’s well established that on the basis.

Potter Stewart:

It might have been —

James Van R. Springer:

[Voice Overlap]] historic violation —

Potter Stewart:

It might be an original lawsuit against that situation?

James Van R. Springer:

Yes certainly, but historic violations —

Potter Stewart:

And that certainly might be true here too?

James Van R. Springer:

Yes, but old violations do give raise to perpetual decrees and of course there is a ground for modification, if the defendant subject to the initial decree can prove that there are at some serious competitive disadvantages because of drastic changes in the market.

Hugo L. Black:

Is this that same old consent decree that’s been with us about 40 years?

James Van R. Springer:

50 years, Mr. Justice Black.

It has been twice, well three times there are some current efforts.

In the early 30s meatpackers tried to modify it to relieve them of just these restrictions on their involvement in the grocery business and they had another effort beginning in the late 50s which ended in 1961 when this Court summarily affirmed the District Court’s determination that the packers had not made the kind of showing that would be required to justify a modification of the decree.

So, the decree, though it’s old, has been in the sense revivified within relatively recent years.

We think it’s highly pertinent to the problem here what the Courts said in considering these earlier requests for modification because we think that the language the Courts used and analysis this Court and the District Court followed in those cases gives rather explicit content to the substantive prohibitions and shows what their specific purpose was.

In 1932, Justice Cardozo speaking for the Court in the second Swift case in this Court rejected, as I said, contentions that the market had changed that the wrong doers were not in the picture anymore and therefore it was not necessary to maintain this separation between the grocery business and the meatpackers business and the Court used the following language which I think is revealing here.

Whether the defendants would resume their predatory practices if they were to deal in groceries again, we do not know.

They would certainly have the temptation to reason with.

Their low overhead and their gigantic size even when they are viewed as separate units would still put them in a position to starve out weaker rivals.

Their size according to the holding in this Court is not an offense against the Sherman Act unless maybe to the point at which it amounts to monopoly, but size carries with it an opportunity for abuse.

It is not to be ignored when the opportunity is proved to be utilized in the past.

The original decree at all events was framed upon that theory and Justice Cardozo went on to say that if the grocery business is added to the meat business, there may be many instances of unfair pressure upon retailers and others with the design of forcing them to buy from the defendants and not from the rival groceries, such at any rate was the rationale of the decree of 1920.

Its restraints whether just or excessive were born of that fear.

The difficulty of fretting out these evils and repressing them when discovered supplies an additional reason why the structural restriction should be maintained.

Warren E. Burger:

Well, all those things are good arguments for proceeding against General Host perhaps in an independent proceeding, independent action?

James Van R. Springer:

I think —

Warren E. Burger:

If it’s fundamentally, fundamentally unwise, unsound to have these two branches of the food industry combined, that can be reached in other ways in this case.

James Van R. Springer:

Yes, of course there are problems and I’m told enormous problems in the traditional Section 7 action in a case like this.

The point I was driving at was not that as a general proposition the combination of a large packer and a meat company is a bad thing, but that this Court has read this very decree which has a party to it Armour as embodying a specific purpose to prevent that kind of addition of the grocery business to Armour’s meatpacking business.

And for that reason, we think that the Government should have not to start from scratch and having been specifically decreed that Armour’s business should not be combined with the grocery business.

And none of the past history, language the Court have used is there any suggestion that the importance of this separation depends upon who threatens to break it down.

James Van R. Springer:

The reason for the separation is plainly the danger of any corporate link however created between Armour’s large size and power which of course when General Host owns and controls Armour in a very real sense becomes the power that General Host has.

Certainly, there are separate corporate entities, but I find it very hard in my mind to say that when General Host wholly or in the sense of absolute control owns Armour that General Host is not Armour in some very meaningful sense.

The ultimate owners are the same.

Armour’s destiny is controlled by General Host.

So, I think that apart from the conceptual fact that there are separate corporate shells, if you will, Armour is in a very real sense or has become General Host.

General Host is — Armour has the power that the decree was specifically designed to keep Armour from using in a business which is General Host’s business.

Byron R. White:

There are some suggestions I saw I guess in the brief or that this is a transitory or impermanent situation, that Greyhound is in the picture somewhere?

James Van R. Springer:

Greyhound is in the picture, yes.

There has been a contract signed as I understand it, but Mr. Bergson will have the up-to-date information I think better than I do.

A contract was signed last fall whereby General Host would sell its interests to Greyhound, that contract has not been consummated.

It’s subject to several contingencies, one of which we don’t know what the meaning of the parties attached to this is the absence of any Government action against the consummation of the contract.

The Government has notified Greyhound that we feel that Greyhound’s ownership of Armour’s stock would present substantially the same problem as General Host because Greyhound owns a great many restaurants and also has a food distributing business.

Now, whether that fact is enough to wash out this contract to something that I don’t know that perhaps General Host comes [Voice Overlap] —

Warren E. Burger:

If General Host were to enjoined as a party, if the motions have been granted, would the scope of that litigation have been as broad as if General Host had been proceeded against independently?

James Van R. Springer:

If I have said would this the same amount, with that same kind of proceeding trial have been held?

Warren E. Burger:

[Voice Overlap]

James Van R. Springer:

We say that under these circumstances there are no undisputed facts that are pertinent to the proposition that the Government is seeking to establish that the four corners of the decree prohibit this situation.

Of course, in various situations there might well be pertinent facts that would have to be explored at an evidentiary hearing, but we say, that’s not the case here.

I’d like if I can to reserve rest of my time.

Warren E. Burger:

Very well, Mr. Springer.

Mr. Bergson.

Herbert A. Bergson:

Mr. Chief Justice and may it please the Court.

Perhaps I should answer Mr. Justice Stewart’s question first by describing the present status of the negotiations between General Host and Greyhound.

The agreement was signed some time ago, subject to three things, approval of General Host stockholders, approval of Armour’s stock — no, Greyhound stockholders, and approval of the ICC because Greyhound is a motor carrier and under the Interstate Commerce Act any acquisition of this type must be approved by the ICC.

Potter Stewart:

And the agreement provided for the sale by General Host to Greyhound of General Host’s interest in Armour, is that right?

Herbert A. Bergson:

That’s correct.

And the Greyhound stockholders have approved the agreement.

The General Host stockholders have approved the agreement, the ICC has not yet acted on the application.

And I am not prepared to prognosticate this too when the ICC might act on that application.

Now, as Mr. Springer indicated, there is also a problem as to what the department might do in attacking the General Host’s — the Greyhound acquisition in the same manner that it has attacked General Host acquisition but I don’t believe that that is a condition to the consummation of the transaction.

Herbert A. Bergson:

There is a provision —

Warren E. Burger:

That should permit — the present statute permits the Department of Justice to intervene in the Interstate Commerce Commission proceedings?

Herbert A. Bergson:

I suspect that the Department of Justice can intervene or move to be heard as amicus or make their presence felt at the ICC in a way that their views would made known at the ICC.

I don’t know, Your Honor, whether the department could intervene, I believe it could.

They intervened in railroad mergers and I don’t know why they couldn’t intervene in the case, in a situation like this, but even if they couldn’t intervene, they certainly could make their view known as amicus.

Now, I was delighted to hear Mr. Springer say that there’s no issue as to the power of the Court here to whether the Court has the power to protect its decrees from interference or obstruction.

As I read the Government’s brief in this case, I thought that this was their major point.

And that the case has now become what I think it was all along, a question as to whether or not this decree as it now stands can be interpreted to prevent this transaction and if it can be so interpreted what type of hearing is General Host entitled to before that interpretation is imposed on General Host.

What the department did in this case was merely to go to the District Court, file an affidavit and say General Host is in the baking business.

The baking business is proscribed to Armour, therefore, you must proscribe this transaction and we don’t think the only hearing that they thought was necessary was to show that General Host was in the baking business.

Now, I think it’s somewhat shocking for the Department of Justice to take the position that a person who is not a party to an equity decree was never been heard on that decree, who was not joined at the time of the decree although it was in existence at the time the action was maintained.

It’s bound by the decree without proof of anything else.

It seems to me that under any circumstances even assuming that the department’s interpretation of the decree is right, the General Host is entitled to a hearing on whether or not it should be bound by the decree because I don’t believe that two parties to a lawsuit with the imprimatur of the Court can deprive anybody obvious legal rights and one of the basic legal rights that a person seems to have is the right to due process, the right to be heard.

Byron R. White:

Mr. Bergson what would the — what would you say if the original decree had said that Armour can acquire any stock in a baking company and no baking company can acquire any stock in Armour and then this transaction took place and the United States applied to the Court for an order preventing General Host from — which had never been a party to the case —

Herbert A. Bergson:

That’s right.

Byron R. White:

— to prevent General Host from acquiring stock in Armour?

Herbert A. Bergson:

I think that under those circumstances General Host would be entitled to a hearing as to whether or not that type of order should have been entered in the first place.

Let me give you an illustration Your Honor and I think it’s terribly important especially in these days.

Byron R. White:

So you say no parties do — no parties to injunction suits can be held in contempt or even have the order amended to apply to them without re-litigating the basic factors of the injunction?

Herbert A. Bergson:

Oh!

No, General Host was not a party to the injunction suit.

Byron R. White:

I agree, I know, that’s what I say.

Your assertion is that unless you’re a party to an injunction suit, you can never be —

Herbert A. Bergson:

You can’t be held in contempt to that injunction.

Byron R. White:

And nobody has attempted to hold —

Herbert A. Bergson:

And the department concedes that.

Byron R. White:

Yes, and nobody has attempted to hold General Host in contempt.

Herbert A. Bergson:

But, I don’t think that they can be made subject to the injunctive provisions without having a hearing as to whether or not they should have been made.

Byron R. White:

You mean, without having a hearing as to whether or not on the whole basic substance of the injunction case?

Herbert A. Bergson:

Well, whether or not this case was based primarily on a proclivity by these meatpackers to violate the antitrust laws, that they had a long standing conspiracy that and it encompassed not only horizontal agreements among them, but vertical agreements.

Herbert A. Bergson:

They own food businesses, they own stockyards they own warehouses, they own transportation facilities and as a result of all, these tremendous mess they were able to affect the commerce in the substitute food business.

Now, I think that they consented to this decree.

But I don’t think it makes any difference whether it’s a consent decree or a litigated decree, but nevertheless, would seem — it seems to me and it is my position that under the circumstances that you postulate, they would have to be shown that this decree should be imposed on General Host and not merely because it was into baking business.

Byron R. White:

Let’s suppose that General Host and Armour made a contract to sell a large amount of treasury stock of General Host to Armour and the Government applied for an order against both Armour and General Host.

Herbert A. Bergson:

I don’t have any problem with that Your Honor.

Byron R. White:

But why wouldn’t you, because the the order against General Host?

Herbert A. Bergson:

Because they — I think an injunction is applicable to not only to the parties, but anybody in proclivity or acting in consent with the parties and under the circumstances that you postulated they would be acting in consent.

Byron R. White:

So there’s a non-party being subjective to the injunction without being able to re-litigate anything?

Herbert A. Bergson:

But he is doing in privity with the —

Byron R. White:

Alright, that’s the way you characterize it but nevertheless that’s a non-party being subjected to —

Herbert A. Bergson:

I think I can state my position this way.

That to the extent that any non-party is found to have been acting in concert of privity with a party whether it says so in the decree or it doesn’t say so in the decree, the rules make such a privy subject to the injunction.

But the government concedes here that there was no such concert and that there was no such privity and you’re talking, they’re trying to make the decree applicable to a company that had absolutely nothing to do and no friendly relations with any defendant and I think that this is carrying an equity decree far beyond this scope that it has ever been carried by this Court and probably ever would be carried by this Court.

Warren E. Burger:

You’re suggesting about joining all the food companies in the country, at least I took it that way, joining all the food producers in the country, grocery producers isn’t really very realistic, is it?

Herbert A. Bergson:

I don’t believe that’s the — I don’t believe you correctly characterized my suggestion.

You’re talking about something that I said or something in our brief?

Warren E. Burger:

Something that you said.

Herbert A. Bergson:

No.

Warren E. Burger:

The intimation I got at least and perhaps you better clear that up that if they wanted to take this position, they should have joined General Host and a whole lot of other people similarly situated?

Herbert A. Bergson:

Well, that’s right.

It may not be realistic, but I think that’s the only thing that they could do what —

Warren E. Burger:

Well, it’s a rhetorical position on your part then to make your point I take it?

Herbert A. Bergson:

That’s right.

But our position here Your Honor is this.

Number one, that the decree can’t be interpreted the way the Government seeks to interpret it and you just can’t turn words upside down.

If you look at the decree as in this writ, the decree was very, very carefully framed.

And it is not a structural decree per se as Mr. Springer would have you believe.

There are many behavioral, behavioral provisions in the decree.

There were three types of defendants in this case.

There were the meatpacker defendants, there were individual defendants who are the major stockholders in the meat companies and there were some 50 subsidiaries of the meat companies who were defendants.

Herbert A. Bergson:

This was a — there were quite a few defendants in this case.

Now, when the consent decree was negotiated, these various defendants were given different types of treatment, the provision that Mr. Springer referred to, two of them, four and eight specifically referred to corporate defendants.

Paragraph six which is another one that he referred to applies to all defendants and paragraph five of the decree applies to individual defendants.

Now, in paragraph five of the decree, the individual defendants, the people who were then in control of the meatpackers were permitted to own stock in the forbidden businesses, the businesses forbidden to the meatpackers and they were permitted to own up to 50% of the stock, no question to control this as this Court well knows that you can control a company with much less than 50% of the stock.

These companies were permitted to engage in these forbidden businesses and there was an injunctive provision which says, but you can’t use them in a way that would help either Armour in its business or yourself or use Armour in a way to help you in your business.

So, that this decree did not declare a complete separation as the Government says of the business of meatpacking from substitute foods.

It said only this, that the defendant meatpackers, the defendant meatpackers and that is the way that the language of the decree is, the packer defendants, corporate defendants, are enjoined from doing this.

So that it seems to me that you can’t characterize this decree as a prophylactic structural decree, but this is a decree that was arrived at by negotiation and it was some structure and some behavioral and the parties knew exactly what they were doing and they did not intend to reach the situation.

Maybe they weren’t aware of it, maybe it didn’t occur to them, but obviously they didn’t intend either sub silentio or actually to reach the situation that is covered here.

So that, in effect what the department is seeking here is a modification of the decree as Mr. Justice White indicated and I might add here that the department has construed this decree in the past the same way that we’re construing it now because they have — one of the provisions of the decree prohibits the packers from engaging in the stockyard business, but the people who controlled Armour before General Host acquired the control of Armour also controlled the Chicago stockyards, this is all set out in our briefs.

Byron R. White:

Is that the Prince Family?

Herbert A. Bergson:

That’s the Prince Family, yes Your Honor and our brief points out what the stock holdings were.

They had 10% to 15% of the stock and there was a cross privilization of management and there was no — and the Government hasn’t contested this.

And the Government has said in connection with that argument, well maybe we construed the decree erroneously before, but we’re doing it right now.

Byron R. White:

You don’t think it would make any difference if General Host acquires 100% of the stock?

Herbert A. Bergson:

Oh no.

Byron R. White:

You think the district judge thought that would have made a difference?

Herbert A. Bergson:

No, I do not believe that he thought that that would make a difference.

I think that —

Byron R. White:

You seem to emphasize the lack of the possibility immediately of General Host getting control of the board?

Herbert A. Bergson:

No, but I think what he went on to say however that he did not find that control itself would be bad and that if General Host abused its control and caused Armour to violate the decree come on back, and I’ll enjoin it quick as a flash, but mere ownership doesn’t cause Armour to violate the decree.

Byron R. White:

What — what kind of a hearing would you say that you required for the Government to [Inaudible] amendment?

Herbert A. Bergson:

Well, what happened — there are a couple of precedents in this area.

One is this Court’s decision in the Hughes case where the Government sought a construction of the decree and the Court sent it back and said that this was an attempt to modify the decree and that an appropriate hearing should be had to determine whether this type of relief is necessary.

Now, I think we’re entitled to a hearing as to whether, at least a hearing, as to whether or not this type of relief is necessary to effectuate — let us go this far, I’m just conceding this for argue —

Byron R. White:

To effectuate what Mr. Bergson?

Herbert A. Bergson:

To effectuate what the Government claims with the purposes of this decree.

Byron R. White:

Well, what do you think the purpose of —

Herbert A. Bergson:

The purpose of —

Byron R. White:

You apparently deny that one of the purposes that you effect to separate the meatpackers and other food processors?

Herbert A. Bergson:

No, I say that it was — it was — the purpose of it was to prevent proven or admitted violators who had used their power in the past from using it in the future which is done in many, many antitrust cases, but we are non-proven violator and we are a non-proven violator or non-admitted violator.

Warren E. Burger:

You don’t treat it as a blanket prohibition in the terms that Mr. Justice White has postulated that food processors, bakers, non-meat food processors should never be in combination with meatpackers?

Herbert A. Bergson:

Oh no, I don’t think anything in this decree, anything in this decree prohibits the largest beef packer in the country today, this isn’t in the record but I hope you’ll pardon, but Mr. Justice Stewart, I think asked this question.

The largest beef packer in the United States today, which the Iowa Beef Company is not subject to this decree and it can go out and acquire General Host any day it wants.

Now, all the Government can do about that is bring a Section 7 case and I think that’s what the Government should do here.

If they think, if they think that General Host control of Armour constitutes a reasonable probability of a substantial lessening of competition in any line of commerce, they have a Section 7 case.

They’re not without remedy here, even apart from the decree.

But what the Government is trying to do here, we submit Your Honor is that just short circuit this whole business probably out of fear that they can’t successfully maintain a Section 7 case or couldn’t successfully maintain the burden of modifying the decree which is a heavy burden and the rule of which had been laid it down in one of the prior decisions in this case and to avoid that burden both for modification and for proving a Section 7 violation they have adopted this arbitrary, summary procedure or seek to have you sanction this arbitrary summary procedure which deprives General Host of its day in Court and we submit Your Honor that this is not an appropriate form of action in this area, thank you.

Warren E. Burger:

Thank you, Mr. Bergson.

Mr. Springer, you have five minutes.

James Van R. Springer:

Thank you Mr. Chief Justice.

Perhaps I should correct something.

I may have slightly misstated in answer to a question.

Of course, we think what we’re asking for here is very different from any hypothetical general amendment of this decree to try to make it run against the world.

We of course agree that the decree can’t run against the world and that is precisely why we haven’t contended and wouldn’t contend that General Host has done anything that would subject it to punishment for contempt of this decree.

The Government filed a petition, gave General Host the opportunity to have a hearing and to bring in anything they wanted to bring in on the issue whether or not it’s proper that this decree should give rise to a new order directed directly to General Host which then of course would subject it to contempt punishment.

So, we don’t see that there’s any issue of due process in this case at all.

General Host has had a hearing and the only issue was what ought to be said at that hearing.

If Mr. Bergson is asserting the proposition that it is only parties who are in direct active concert with the parties to a decree who in any way can be effected by the decree, I think for one thing he is suggesting a doctrine which is inconsistent with what appears to be accepted doctrine and specifically in the civil rights area where this has come up.

The simple fact that a man who comes in and tries to frustrate the performance of a school desegregation decree is not working together with the school board against whom that decree in terms was directed has never been a barrier for a supplemental order very much like kind of supplemental order we’re asking for here against a particular individual.

Although Mr. Bergson acknowledges that decree, and we don’t disagree with him, contains both behavioral provisions and structural restrictions.

He then turns around as I understand his argument and treats the decree as if it contained nothing but behavioral prohibitions. For that reason we think it’s — we think that’s wrong and we think that that’s really beside the point to argue again and again that this decree could not possibly affect General Host because no Court has ever determined that General Host had done anything bad.

I think that argument in substance was rejected in the earlier modification proceedings in this case where a similar argument was made that that the bad people who made Armour do bad things in the past and made the other packers do bad things aren’t here anymore.

Now, we just have a new set of stockholders and the management who are totally innocent and of course they shouldn’t be bound by past wrong doings of other people.

I think that’s really beside of the point.

One other matter, I think, any suggestion that the fact that this decree contains a paragraph which relates to what might be done by particular individuals none of whom by himself was a controlling stockholder, at least in the case of Armour I believe, to say that that is the means that — nor the part of the decree has any bearing on interlocking corporate interest, I think simply doesn’t follow.

I think the problem of the individual defendants in 1920 was a relatively small, separate problem and that to say that that precludes the Government to take any action against what might be a 100% owned, 100% owning corporate stockholder, I think doesn’t follow.

Again, for that same reason, we think that any attempt to say that the Government is bound because it did not take any action against the Prince Family problem is erroneous for a number of reasons.

That was in the matter of an individual stock ownership at the most I believe by an amalgamation of people who are various members of the Prince Family, various people who are said perhaps to have some kind of relationship with them.

General Host has managed to reach a total of perhaps 13% from stock ownership in Armour.

James Van R. Springer:

Here where the dealing with absolute corporate control by another corporation and of course, also this is not a matter of past course of action between these two parties about this subject matter, but the collateral matter in those returns.

Warren E. Burger:

Thank you Mr. Springer.

Thank you for your submission and to you Mr. Bergson.

The case is submitted.