United States v. National Dairy Products Corporation

PETITIONER: United States
RESPONDENT: National Dairy Products Corporation
LOCATION: United States Court of Appeals District of Columbia Circuit

DOCKET NO.: 18
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: Federal district court

CITATION: 372 US 29 (1963)
ARGUED: Mar 21, 1962
REARGUED: Dec 05, 1962
DECIDED: Feb 18, 1963

ADVOCATES:
Archibald Cox - Solicitor General, Department of Justice, for the United States
Daniel M. Friedman - reargued for the United States
John T. Chadwell - argued and reargued for the appellees

Facts of the case

Question

Media for United States v. National Dairy Products Corporation

Audio Transcription for Oral Reargument - December 05, 1962 in United States v. National Dairy Products Corporation

Audio Transcription for Oral Argument - March 21, 1962 in United States v. National Dairy Products Corporation

Earl Warren:

Number 173, United States, Appellant, versus National Dairy Products Corporation et al.

Mr. Solicitor General.

Archibald Cox:

Mr. Chief Justice, this case is here on a direct appeal under the Criminal Appeals Act from the judgment of the District Court to the Western District of Missouri dismissing in its seven counts of an indictment on the ground that Section 3 of the Robinson-Patman Act is so vague as to be unconstitutional.

The provisions of Section 3 are set forth most conveniently on page 2 of our brief.

The relevant portions are the first two lines and then the last three lines in that big paragraph.

It shall be unlawful for any person engaged in commerce, in the course of such commerce, to sell or contract to sell goods at reasonably low prices for the purpose of destroying competition or eliminating a competitor.

The indictment which was based partly on that statute and partly on the Sherman Act charged National Dairy's one of its officers with a number of monopolistic activities in violation of the Sherman Act and of the Robinson-Patman Act.

National Dairy is the world's largest dairy concern.

It has assets of something over 555 million and gross annual sales of over a billion and a half dollars.

To conciliate under the Sherman Act, charged a continuing conspiracy to restrain train by fixing prices, by excluding competitors from the market and by fixing differentials on the prices for sales of various kind of milk, that is milk in containers as oppose to milk in bottles, milk in stores as imposed to home deliveries.

Those counts aren't before us, but where a part of the indictment and part of the general background.

The seven counts under the Robinson-Patman Act with which we are immediately concerned are exemplified by Count 2 on page 9 of the record.

The offense charged leaving out the introductory allegations is set forth in paragraphs 22 and 23 on page 9.

They alleged first in the general words of the statute that National sold milk to its distributor in the Paola-Osawatomie, Kansas market at unreasonably low prices for the purpose of destroying competition in the Paola-Osawatomie Kansas market in violation of Section 3 of the Robinson-Patman Act.

That paragraph 2 goes on and particularizes the event by setting forth the facts of which it consisted.

Pursuant to an effect -- an effectuation of the offense charged from paragraph 22, National utilized the advantages it posses by reason of the fact that it operates in a great many different geographical localities.

In order to finance and subsidise the price war against small dairies selling milk in competition with it -- its distributor in the Paola-Osawatomie, Kansas market, by intentionally selling its milk to its distributor market at prices below National's cost.

The latter paragraph of course limits the general charge adjust, as bill of particulars with limited indictment and it framed in the general terms of the statute.

If the Government fails to prove sales below cost then of course at the trial, the respondent must be acquitted.

So that we deal here not with the bear words of the statute as applied to abstract hypothetical situations that with the application of the statute to sell at prices below the seller's own cost made for the purpose of destroying competition.

The District Court granted a motion to dismiss upon the ground that the relevant portions of Section 3 of the Robinson-Patman Act were so vague and indefinite that they violate the constitutional provisions relating to due process.

The judge delivered no opinion.

His few oral remarks simply state that conclusion.

A contrary decision I may say was rendered by Judge Alger Fee in F & A Ice Cream Company against Arden Farms, the citation appears in our brief and that I believe is the only other reported case of the subject.

The essence of this case, as we said, is very simple indeed and can be put in very few words.

Laying the statute entirely aside for the moment, let's think of this simply as a business proposition.

Suppose that this vast concern named a manager for the Kansas City area.

And later, the officers in reviewing prices observed that he was selling milk and other milk product at prices below the cost of production.

I suggest that the officers of the concern would have no difficulty in concluding just as a business proposition that those prices were unreasonably low and that unless the manager could point to some pretty specific market condition, or business exigency that explain this that they would say that prices were unreasonably low.

Now, let's suppose he replied, “Well, unreasonably low, that's an awfully vague term, that's terribly, terribly vague.