F. & A. Ice Cream Co. v. Arden Farms Co.
F. & A. Ice Cream Co. v. Arden Farms Co.
Opinion of the Court
Pending before the Court in the foregoing and related cases are the following motions:
1. Motion filed March 15, 1951, by all defendants (other than Roy E. Campbell and A-l Ice Cream Company) to dismiss the 4th, 5th and 6th causes of action in Cases Nos. 12,744 — WB and 12,776-WB.
2. Motion of defendant Roy E. Campbell only, filed March 16, 1951, to dismiss the 5th and 6th causes in Cases Nos. 12,434-Y and 12,524-BH; and to dismiss the 4th and 5th causes in all the remaining cases.
The Complaints in these cases, and especially in the causes of action under the Robinson-Patman Act to which these motions relate, are outlined in the Opinion filed in Balian Ice Cream Co., Inc. v. Arden Farms Co., et al.
There we determined that the RobinsonPatman Act
The new grounds urged for a contrary ruling by some of the defendants who have not previously appeared have been considered. And we are satisfied with the correctness of the determination of these questions already made.
For the first time, however, both the defendants who have already appeared, and others, challenge the constitutionality of Section 3 of the Act.
I
The Power to Regulate Commerce
Another limitation stems from the fact that the Robinson-Patman Act was enacted under the broad power of the Congress “to prescribe the rule by which commerce is to be governed.”
In exercising this power, the Congress has few limitations. Mr. Justice Stone has stated the boundless nature of it in these words:
“The power ‘is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the Constitution.’ Gibbons
The limitations which ordinarily apply to legislative restrictions or prohibitions relating to contracts, and especially the due process clause of the Fifth Amendment, do not stand in the way of the exercise of this power. In Addyston Pipe & Steel Co. v. United States
“In Gibbons v. Ogden (supra), the power was declared to be complete in itself, and to acknowledge no limitations other than are prescribed by the Constitution.
“Under this grant of power to Congress, that body, in our judgment, may enact such legislation as shall declare void and prohibit the performance of any contract between individuals or corporations where the natural and direct effect of such a contract will be, when carried out, to directly, and not as a mere incident to other and innocent purposes, regulate to any substantial extent interstate commerce. * * * We do not assent to the correctness of the proposition that the constitutional guaranty of liberty to the individual to enter into private contracts limits the power of Congress and prevents it from legislating upon the subject of contracts of the class mentioned.”
Indeed, it has been intimated that the due process limitation of the Fifth Amendment does not apply to legislation under the commerce clause.
Certainty in Criminal Statutes
The first ground for attack on the clause under discussion is that it does not satisfy the test of definiteness required in a statute of this character. A criminal statute must he definite. The reason for this requirement has been stated by the Supreme Court:
“No one may be required at peril of life, liberty or property to speculate as to the meaning of penal statutes. All are entitled to be informed as to what the State commands or forbids. The applicable rule is stated in Connally v. General Construction Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322; ‘That the terms of a penal statute creating a new offense must be sufficiently explicit to inform those who are subject to it what conduct on their part will render them liable to its penalties is a well-recognized requirement, consonant alike with ordinary notions of fair play and the settled rules of law; and a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law.’ ”14
It is one of the requirements of due process that a statute making certain conduct criminal should designate with certainty and definiteness the act which it proscribes.
It is argued that the clause under consideration does not meet this requirement, because no objective criterion exists by which'to determine whether, in a specific instance, the price at which goods are sold is “unreasonably low.”
Ill
“Reasonableness” as a Test
The standard of reasonableness as applied to conduct is an old one and long accepted in our law. It is based on the assumption that the actions of the reasonable, average person may be used as a standard by which to measure conduct, — whether it relates to care or absence of it, skill or other similar circumstances to which the test is applied.
But whether we consider it subjective or objective,
A provision of the Federal Food and Drug Act, 21 U.S.C.A. § 1 et seq., which permitted “reasonable variations” in weights or measures to be established by departmental rule was sustained against the attack of indefiniteness and delegation of legislative power.
So it is apparent that the test of reasonableness or unreasonableness or similar tests which can be judged by reference to a common standard of conduct satisfy the requirement of definiteness.
Of necessity, any test by conduct contains a variable element which may call for different conclusions by different persons under different or even the same circumstances. But that in itself has never been considered a fatal vice. Thus, a state statute which required a hotel proprietor, in case of fire, to give notice to all the guests at once, and to “do all in their power to save such guests and inmates” Rev.St.Neb. 1913, § 3104, was sustained, the Court saying: “Rules of conduct must necessarily be expressed in general terms and depend for their application upon circumstances, and circumstances vary. It may be true, as counsel says, that ‘men are differently constituted,’ some being ‘abject cowards, and few only are real heroes;’ that the brains of some people work ‘rapidly and normally in the face of danger while other people lose all control over their actions.’ It is manifest that rules could not be prescribed to meet these varying qualities. Yet all must be brought to judgment. And what better test could be devised than the doing of ‘all in one’s power’ as determined by the circumstances ?”
It is insisted, however, that in some later cases, especially United States v. L. Cohen Grocery Company,
The chief vice of the statute considered in the Cohen case lay in the fact that it forbade no specific act whether done willfully or not. The statute was the Lever Act of 1919, which provided “That it is hereby made unlawful for any person willfully * * * to make any unjust or unreasonable rate or charge in handling or dealing in or with any necessaries”.
In subsequent cases, the Supreme Court has stated that such prohibitions are inadequate compliance with the requirement of definiteness in a criminal statute only if they are unrelated to the intent or purpose other than the doing of the act itself. But where the specific act denounced is tied to a specific intent to achieve a certain result, certainty is present.
So, when the Court was dealing with a prosecution under the Espionage Act of 1917,
In a later case, the Court, in interpreting the Civil Rights Statute,
IV
“Unreasonably Low” as a Valid Standard
The principle thus discussed calls for application with greater force to a statute like the Robinson-Patman Act because it is enacted under the almost unlimited power of the Congress to regulate commerce.
So the Congress has complied with all the recognized elements by which definiteness is gauged. And the enforcement of such statute presents no greater difficulties than those which are likely to arise under the similar statutes already alluded to. Cost accountancy has reached the exactness of a science. Courts have recognized the elements which go into establishing cost, which is one of the basic facts by which price must be determined.
It follows that the attack on the constitutionality of the Clause of Section 3 of the Robinson-Patman Act under discussion must fail. Nor is there any merit to the contention made by some of the defendants in moving for the dismissal of Counts 5 and 6 of Case No. 12744 — WB, and similar counts in the other cases, that the California anti-trust statute on which these counts are based, — the Cartwright Act, —
The motions to dismiss are, therefore, denied.
. Balian Ice Cream Co., Inc. v. Arden Farms Co., D.C.Calif., 1951, 94 F.Supp. 796.
. 15 U.S.C.A. §§ 13, 13a, 13b, 21a.
. 15 U.S.C.A. § 12.
. 15 U.S.C.A. § 15.
15 U.S.C.A. § 13a.
. White v. Johnson, 1931, 282 U.S. 367-373, 51 S.Ct. 115, 75 L.Ed. 388; Bandini Petroleum Company v. Superior Court, 1931, 284 U.S. 8, 22, 52 S.Ct. 103, 76 L.Ed. 136. Only a litigant who is injuriously affected by a statute can challenge its validity. Frank L. Young Company v. McNeal-Edwards Co., 1931, 283 U.S. 398, 400, 51 S.Ct. 538, 75 L.Ed. 1140; Voeller v. Neilston Warehouse Co., 1940, 311 U.S. 531, 537, 61 S.Ct. 376, 85 L.Ed. 322; Coffman v. Breeze Corp., Inc., 1945, 323 U.S. 316, 325-326, 65 S.Ct. 298, 89 L.Ed. 264. And the defendants here can only he injuriously affected hy the portions of the statute under which a cause of action against them is grounded.
. Gibbons v. Ogden, 1824, 9 Wheat. 1, 196, 6 L.Ed. 23.
. United States v. Carolene Products Co., 1938, 304 U.S. 144, 147, 58 S.Ct. 778, 781, 82 L.Ed. 1234. And see, North American Co. v. Securities & Exchange Commission, 1946, 327 U.S. 686, 705-706, 66 S.Ct. 785, 90 L.Ed. 945.
. Addyston Pipe & Steel Co. v. United States, 1899, 175 U.S. 211, 228, 20 S.Ct. 96, 102, 44 L.Ed. 136.
. See, Great Atlantic & Steel Co. v. Federal Trade Commission, 3 Cir., 1939, 106 F.2d 667, 678.
. United States v. Carolene Products Co., 1938, 304 U.S. 144, 147, 58 S.Ct. 778, 82 L.Ed. 1234.
. National Labor Relations Board v. Jones & Laughlin Corp., 1947, 301 U.S. 1, 36-37, 57 S.Ct. 615, 81 L.Ed. 893; United States v. South-Eastern Underwriters’ Ass’n, 1944, 322 U.S. 533, 558— 559, 64 S.Ct. 1162, 88 L.Ed. 1440.
. Mulford v. Smith, 1939, 307 U.S. 38, 48, 59 S.Ct. 648, 83 L.Ed. 1092; Prudential Insurance Co. v. Benjamin, 1946, 328 U.S. 408, 423-424, 66 S.Ct. 1142, 90 L.Ed. 1342; Cleveland v. United States, 1946, 329 U.S. 14, 19, 67 S.Ct. 13, 91 L. Ed. 12. And see the writer’s opinion in United States v. Edwards, D.C.Cal., 1926, 14 F.Supp. 384, 388-391.
. Lanzetta v. State of New Jersey, 1939, 306 U.S. 451, 454, 59 S.Ct. 618, 619, 83 L.Ed. 888. For earlier enunciations of the same principles, see, International Harvester Co. of America v. Commonwealth of Kentucky, 1914, 234 U.S. 216, 222-224, 34 S.Ct. 853, 58 L.Ed. 1284; Collins v. Commonwealth of Kentucky, 1914, 234 U.S. 634, 637-638, 34 S.Ct. 924, 58 L.Ed. 1510; Connally v. General Construction Co., 1926, 269 U.S. 385, 391, 46 S.Ct. 126, 70 L.Ed. 322. And for the latest declaration on the subject, see, Jordan v. De George, 1951, 341 U.S. 223, 71 S.Ct. 703.
. Note, Due Process Requirements of Definiteness in Statutes, 1948, 62 Harvard Law Review, p. 77. And see cases cited in Note 14, supra.
. United States v. Petrillo, 1947, 332 U.S. 1, 7, 67 S.Ct. 1538, 1542, 91 L.Ed. 1877. And see, Winters v. People of State of New York, 1948, 333 U.S. 507, 517-518, 68 S.Ct. 665, 92 L.Ed. 840; Musser v. State of Utah, 1948, 333 U.S. 95, 97, 68 S.Ct. 397, 92 L.Ed. 562.
. See the writer’s opinion in People v. Curtiss, 1931, 116 Cal.App.Supp., 771, 781, 300 P. 801.
. Benjamin N. Cardozo, The Paradoxes of Legal Science, 1928, p. 74.
. Even writers who consider the test subjective do so merely because they believe that conduct cannot be dissociated from certain attributes, — physical or mental, of the actor, as gauged by the standard knowledge and average mental quali
. Cardozo, Op.Cit., p. 73.
. Ex parte Daniels, 1920, 183 Cal. 636, 646-647, 192 P. 442, 21 A.L.R. 1172; Miller v. State of Oregon, 1927, 273 U. S. 657, 47 S.Ct. 344, 71 L.Ed. 825. The latter is only a brief memorandum opinion. Its full scope appears in the comment on it in Cline v. Frink Dairy Co., 1927, 274 U.S. 445, at pages 464-465, 47 S.Ct. 681, 71 L.Ed. 1146.
. Tagg Bros. v. United States, 1930, 280 U.S. 420, 50 S.Ct. 220, 74 L.Ed. 524; Kay v. United States, 1927, 303 U.S. 1, 8-9, 58 S.Ct. 468, 82 L.Ed. 607.
. United States v. Ragen, 1942, 314 U.S. 513, 62 S.Ct. 374, 86 L.Ed. 383.
. Waters-Pierce Oil Co. v. State of Texas, No. 1, 1909, 212 U.S. 86, 109-111, 29 S.Ct. 220, 53 L.Ed. 417.
. United States v. Shreveport Grain & Elevator Co., 1932, 287 U.S. 77, 53 S.Ct. 42, 77 L.Ed. 175. And see, Union Bridge Co. v. United States, 1907, 204 U.S. 364, 27 S.Ct. 367, 51 L.Ed. 523 (“unreasonable obstructions” to navigation); Sunshine Anthracite Coal Co. v. Adkins, 1940, 310 U.S. 381, 398-399, 60 S.Ct. 907, 84 L.Ed. 1263 (fixing reasonable price for coal).
. Omaechevarria v. State of Idaho, 1918, 246 U.S. 343, 345-348, 38 S.Ct. 323, 324, 62 L.Ed. 763.
. Kovacs v. Cooper, 1949, 336 U.S. 77, 69 S.Ct. 448, 449, 93 L.Ed. 513.
. Miller v. Strahl, 1915, 239 U.S. 426, 434, 36 S.Ct. 147, 149, 60 L.Ed. 364.
. Nash v. United States, 1913, 229 U.S. 373, 33 S.Ot. 780, 57 L.Ed. 1232.
. Nash v. United States, supra, 229 U.S. at page 377, 33 S.Ot. at page 781.
. United States v. L. Cohen Grocery Company, 1921, 255 U.S. 81, 41 S.Ot. 298, 65 L.Ed. 516.
. Cline v. Frink Dairy Company, 1927, 274 U.S. 445, 47 S.Ot. 681, 71 L.Ed. 1146.
. Fairmont Creamery Co. v. State of Minnesota, 1927, 274 U.S. 1, 47 S.Ot. 506, 71 L.Ed. 893. Unlike the Cohen case, this and the Cline case involved restrictions unrelated to purpose as an element of the offense. To illustrate: Prior to the amendment of the Minnesota Act of 1923, M.S.A. § 32.11, which the Court had under consideration in this case, the statute had prohibited discrimination in prices between localities “with the intention of creating a monopoly or destroying the business of a competitor.” A later statute forbade discrimination with “the purpose of creating a monopoly, or to restrain trade, or to prevent or limit competition, or to destroy the business of a competitor.” The Act under consideration “eliminated purpose as an element of the offense.” It was this elimination which led the Court to the con-elusion that the standard of certainty was absent, saying: “As the inhibition of the statute applies irrespective of motive, we have an obvious attempt to destroy plaintiff in error’s liberty to enter into normal contracts, long regarded, not only as essentia] to the freedom of trade and commerce, but also as beneficial to the public.” Fairmont Creamery Co. v. State of Minnesota, supra, 274 U.S. at page 8, 47 S.Ct. at page 508. (Emphasis added.)
Similarly in the Cline ease, the Colorado statute there under consideration was declared to be invalid because unreasonableness of price or rate was not tied to a purpose. The Court, in distinguishing the situation from that which obtained in the Nash case said: “This review showing what was the standard of criminality in the federal anti-trust law, indicates clearly that the decision in the Cohen Grocery Case was not inconsistent with the Nash Case, because the latter did not relate to the reasonableness or excessiveness of prices charged for necessaries toithout more as a basis for criminality, while the former plainly did.” Cline v. Frink Dairy Co., supra, 274 U.S. at page 463, 47 S.Ct. at page 687. (Emphasis added.)
. Gorin v. United States, 1941, 312 U.S. 19, 26-28, 61 S.Ct. 429, 85 L.Ed. 488; and Note 13 to text, p. 27.
. Act of October 22, 1919, c. 80, 41 Stat. 297.
. Act of June 15, 1917, c. 30, Title 1, 40 Stat. 217, 18 U.S.C.A. § 794(a).
. Gorin v. United States, 1941, 312 U.S. 19, 27, 61 S.Ct. 429, 433, 85 L.Ed. 488.
. Federal Criminal Code, Sec. 20, 18 U. S.C.A., § 242.
. Screws v. United States, 1945, 325 U.S. 91, 101-102, 65 S.Ct. 1031, 1035, 89 L.Ed. 1495. Further on in the opinion, Mr. Justice Douglas says: “The constitutional requirement that a criminal statute be definite serves a high function. It gives a person acting with reference to the statute fair warning that his conduct is within its prohibition. This requirement is met when a statute prohibits only ‘willful’ acts in the sense we have explained. One who does act with such specific intent is aware that what he does is precisely that which the statute for
Neither in the concurring opinion of Mr. Justice Rutledge nor in the dissenting opinion of Mr. Justice Murphy is there dissent expressed from these views. Indeed, Mr. Justice Rutledge disposes very briefly of the contention of vagueness by referring to the Sherman Act as an illustration of a general statute which has stood the test. See 325 U.S. at page 129 of opinion and Footnote 31, 65 S.Ct. 1031, in which many cases are referred to, including Gorin v. United States, supra. This is also implicit in the rulings in the Fairmont and Cline cases, as appears from the comments on them in Note 33, supra.
The recent decisions of the Supreme Court in United States v. Williams, 1951, 341 U.S. 70, 71 S.Ct. 581; Id., 341 U.S. 58, 71 S.Ct. 595, reaffirm this view of Section 20 of the Federal Criminal Code, 18 U.S.C.A. § 242.
. 48 Stat. 1064, 60 Stat. 89, 47 U.S.C.A. § 151 et seq.
. Section 506(a) (1), 47 U.S.C.A. § 506 (a) (1).
. United States v. Petrillo, 1947, 332 U.S. 1, 7, 67 S.Ct. 1538, 1542, 91 L.Ed. 1877.
. United States Constitution, Article I, Sec. 8, Clause 3. And see, National Labor Relations Board v. Jones & Laughlin Steel Corp., 1947, 301 U.S. 1, 36-37, 57 S.Ct. 615, 81 L.Ed. 893; United States v. South-Eastern Underwriters’ Ass’n, 1944, 322 U.S. 558-559, 64 S.Ct. 1162, 88 L. Ed. 1440. And cases cited in Notes 8-12 supra.
. United States v. South-Eastern Underwriters’ Ass’n, supra, 322 U.S. at page 559, 64 S.Ct. at page 1177. In pursuit of that object, based on the theory that a competitive economy is beneficial to the American people, it eschews practices which have come to be designated popularly as “cut-throat” when they are used as a means of achieving monopoly through destruction or elimination of competition by low prices. In fact, a study of the anti-trust and related monoply cases discloses the fact that low prices, unsound from an economic and every other standpoint, have been a means of monopolization, as have also discriminatory prices.
See, Standard Oil Co. of New Jersey v. United States, 1911, 221 U.S. 1, 70-78, 31 S.Ct. 502, 55 L.Ed. 619; United States v. American Tobacco Co., 1911, 221 U.S. 106, 181-184, 31 S.Ct. 632, 55 L.Ed. 663; Porto Rican American Tobacco Co. of Porto Rico v. American Tobacco Co., 2 Cir., 1929, 30 F.2d 234; E. B. Muller & Co. v. Federal Trade Commission, 6 Cir., 1944, 142 F.2d 511, 516-518; Standard Oil Co. v. Federal Trade Commission, 1951, 340 U.S. 231, 248-250, 71 S.Ct. 240; and see, William Simon, Price Discrimination to Meet Competition, 1950, The U. of Ill. Law Forum, No. 4, pp. 575, 577-590.
So the clause under discussion is an embodiment of this policy of opposition to this practice. It should be added that English law permits rival manufacturers to protect themselves against “cutthroat” methods of competition. See, Walter H. Hamilton, Competition, 4 Ency. Social Sciences, 1937, pp. 141-147; Myron Watkins, Price Discrimination, 12 Ency. Social Sciences, p. 350; Attorney General v. Adelaide S. S. Co., [1913] A.C. 781. Senator John Sherman, the author of the first anti-trust act, claimed that “it aimed only at unlawful combinations”, and that it did not affect “combinations in aid of production where there is free and fair competition.” See, Ida M. Tabell, The Nationalizing of Business, 1936, (A History of American Life, IX), pp. 203-215; Harold V. Faulkner, 1931, The Quest for Social Justice (A History of American Life, XI), pp. 110-129; Harold V. Faulkner, 1929, American Economic History, pp. 533-545; Arthur M. Schlesinger, 1928, Political and Social History of the United States, pp. 367— 373. Thus, the prohibition of unreasonable price-cutting serves to maintain competition “free and fair”. Or, at least, that is what those behind the anti-trust laws think. And our function is to give effect to this thought if legislatively expressed within constitutional bounds.
Greater significance attaches to the attempt to reach such practices through federal legislation because of the recent decision of the Supreme Court invalidating state fair trade acts. See, Schweg-mann Bros. v. Calvert Distillers Corp., 1951, 341 U.S. 384, 71 S.Ct. 745.
. Pacific Portland Cement Co. v. Food Machinery & Chemical Corp., 9 Cir., 1950, 178 F.2d 541, 556-558. “The fixing of prices, the proscription of unfair trade practices * * * constitute regulations within the competence of Congress wider the commerce clause.” Sunshine Anthracite Coal Co. v. Adkins, 1940, 310 U.S. 381, 393, 60 S.Ct. 907, 912, 84 L.Ed. 1263. (Emphasis added.)
. People v. Curtiss, 1931, 116 Cal.App. Supp. 771, 300 P. 801.
. United States v. Petrillo, 1947, 332 U.S. 1, 67 S.Ct. 1538, 91 L.Ed. 1877.
. United States v. Ragen, 1942, 314 U.S. 513, 62 S.Ct. 374, 86 L.Ed. 383.
. Miller v. State of Oregon, 1927, 273 U. S. 657, 47 S.Ct. 344, 71 L.Ed. 825. For comment on the import of the ruling in this case, see, Cline v. Frink Dairy Company, 1927, 274 U.S. 445, at pages 464-465, 47 S.Ct. 681, 71 L.Ed. 1146.
. Waters-Pierce Oil Co. v. State of Texas (No. 1), 1909, 212 U.S. 86, 29 S.Ct. 220, 53 L.Ed. 417.
. Union Bridge Co. v. United States, 1907, 204 U.S. 364, 27 S.Ct. 367, 51 L.Ed. 523.
. California Business & Professions Code, Sec. 16600-16758. Section 16701 provides a special separability clause for this statute.
. Blake v. Paramount Pictures, D.C.Cal., 1938, 22 F.Supp. 249.
. Speegle v. Board of Fire Underwriters of the Pacific, 1946, 29 Cal.2d 34, 46-51, 172 P.2d 867; and see, Frost v. Corporation Commissioner of Oklahoma, 1929, 278 U.S. 515, 526-527, 49 S.Ct. 235, 73 L.Ed. 483; Kay v. United States, 1938, 303 U.S. 1, 6, 58 S.Ct. 468, 82 L.Ed. 607.
. Dorchy v. State of Kansas, 1924, 264 U.S. 286, 290-291, 44 S.Ct. 323, 68 L.Ed. 686; Schneider Granite Co. v. Gast Realty & Investment Co., 1917, 245 U.S. 288, 290-291, 38 S.Ct. 125, 62 L.Ed. 292; Skinner v. State of Oklahoma ex rel. Williamson, 1941, 316 U.S. 535, 543, 62 S.Ct. 1110, 86 L.Ed. 1655.
Reference
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