Denver Union Stockyard Co. v. Denver Live Stock Commission Co.
Denver Union Stockyard Co. v. Denver Live Stock Commission Co.
Opinion of the Court
The issue is whether the doctrine of primary jurisdiction requires the stay of a private antitrust action relating to the industry regulated by the Packers and Stockyards Act, 7 U.S.C. § 181 et seq.
The complaint as amended charges violations of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and of § 7 of the Clayton Act, 15 U.S.C. § 18. The trial court denied a motion to dismiss for lack of jurisdiction and certified the question for an interlocutory appeal which we denied because of a late filing. The defendants answered and moved for a stay on the ground that the action raises questions of fact and law which should first be determined by the Secretary of Agriculture under the doctrine of primary jurisdiction. The trial court denied the stay and we granted an appeal from that interlocutory order.
The doctrine of primary jurisdiction is founded on the need to resolve the procedural and substantive conflicts which arise when the authority of an administrative agency over a regulated industry impinges on the jurisdiction of the courts. In the antitrust field, it represents a method of accommodating the principle of free competition with the principle that in some economic areas regulation, restriction, or elimination of competition is required in the public interest. There is no fixed formula for the application of the doctrine.
We turn from these generalities to the case before us. We are concerned with the issues made by the pleadings. The amended complaint alleges that the plaintiff is, and for a long time has been, in business as a commission merchant engaged in sales of livestock through private treaty and auction.
We do not read the complaint as charging a contract, combination, or conspiracy violative of § 1 of the Sherman Act, 15 U.S.C. § 1. Rather it charges a violation of § 2, 15 U.S.C. § 2, by the creation, or attempted creation, of a monopoly. The allegations in this regard are that the Yard Company placed its subsidiaries in a favored position through the shifting of pen assignments, the use of weigh scales, and the institution of auction sales; that the change to auction sales from private treaty sales enabled the defendants to control and dominate the sale of livestock through the yards; that the acquisition of commission houses by the Yard Company enabled it to stifle competition; and that the July 1, 1966, action terminating the tenancy of the plaintiff and denying the right of the plaintiff and other nonsubsidiary commission merchants to operate at the yards destroyed much of the plaintiff’s business. The claim under § 7 of the Clayton Act, 15 U.S.C. § 18, is that the acquisition of other corporations and the creation of subsidiaries has “substantially lessened competition in a section of the country in the business of buying and selling livestock.”
The answer of the defendants denies most of the pertinent allegations of the amended complaint and specifically denies that John Clay & Co. was acquired by any of the named defendants. It admits that “at some point in time auctions began to be held more frequently than once a year.” As an affirmative defense, the defendants say that the activities complained of are within the regulatory authority of the Secretary and, hence, the action should be dismissed.
The Yard Company is a stockyard owner by determination of the Secretary and has been posted as such.
In Crain v. Blue Grass Stockyards Company, 6 Cir., 399 F.2d 868, the court held that a complaint charging violations of the Sherman Act and of the Packers and Stockyards Act should not be dismissed because of the doctrine of primary jurisdiction and said, Id. at 874, that the plaintiff should not be deprived of resort to the courts “unless it clearly appears that the controversy is one that properly should be referred to the Secretary for determination.” There, the plaintiff claimed that he was excluded from the defendant’s stockyards without just and reasonable cause. In its answer the defendant admitted the exclusion and averred that it resulted from the violation of reasonable rules and regulations. No similar justification for exclusion appears in the case at bar. Here, the charge is that the Yard Company has monopolized the business in Denver.
The defendants assert correctly that pen assignments, use of weigh scales, and auction sales are practices, the control of which has been relegated to the Secretary. They say that this is enough to require the invocation of the doctrine of primary jurisdiction under the decision in McCleneghan v. Union Stock Yards Co. of Omaha, 8 Cir., 298 F.2d 659. In that case the complaint charged Sherman Act violations in the use of the flip system and in the cancellation of pen assignments. The court discussed primary jurisdiction at length and concluded it may be properly invoked in antitrust litigation involving the Packers and Stockyards Act but it “is not an inevitable barrier to court jurisdiction in all such cases.”
The instant case differs from Mc-Cleneghan. We are concerned with a charge of monopolization under § 2 of the Sherman Act and of corporate acquisitions which lessened competition in violation of § 7 of the Clayton Act. There was no charge of a § 7 violation in McCleneghan. We must determine whether the doctrine of primary jurisdiction requires the stay of the issues presented by the pleadings before us.
Nothing in the Packers and Stockyards Act immunizes or exempts those subject to its provisions from antitrust actions. To the contrary, it provides
We believe that the pleadings present antitrust issues which call for judicial action. We repeat that the only matter before us is the question of a stay and that our decision is based on the pleadings before us. We decide nothing except that the proceedings should not be stayed.
Affirmed.
. United States v. Western Pacific Railroad Co., 352 U.S. 59, 64, 77 S.Ct. 161, 1 L.Ed.2d 126.
. Terminal Warehouse Co. v. Pennsylvania Railroad Co., 297 U.S. 500, 513-515, 56 S.Ct. 546, 80 L.Ed. 827.
. United States Navigation Co., Inc. v. Cunard Steamship Co., Ltd., 284 U.S. 474, 482, 52 S.Ct. 247, 76 L.Ed. 408, and Far East Conference v. United States, 342 U.S. 570, 574-576, 72 S.Ct. 492, 96 L.Ed. 576.
. Pan American World Airways, Inc. v. United States, 371 U.S. 296, 312, 83 S.Ct. 476, 9 L.Ed.2d 325.
. 369 U.S. 482, 490, 82 S.Ct. 901, 906, 8 L.Ed.2d 54.
. World Airways, Inc. v. Northeast Airlines, Inc., 1 Cir., 349 F.2d 1007, 1010-1011. See also Texas and Pacific Railway Company v. Abilene Cotton Oil Company, 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553; Great Northern Railway Company v. Merchants’ Elevator Company, 259 U.S. 285, 291, 42 S.Ct. 477, 66 L.Ed. 943; and Far East Conference v. United States, 342 U.S. 570, 574, 575, 72 S.Ct. 492, 96 L.Ed. 576.
. Under the treaty method, the stockyard function is primarily to furnish the facilities, feed, and care for the producers’ livestock pending negotiations for sale. Under the auction method, livestock is consigned to the stockyard company for the purpose of sale, and prospective buyers bid at a regular public auction sale on the stock offered. Schmidt v. Old Union Stockyards Company, 58 Wash.2d 478, 364 P.2d 23, 24.
. A description of tlie objectives of the Act and of the business regulated appears in Stafford v. Wallace, 258 U.S. 495, 514-516, 42 S.Ct. 397, 66 L.Ed. 735.
. See 7 U.S.C. § 202.
. 298 F.2d 659 at 667.
. 369 U.S. 482, 82 S.Ct. 901, 8 L.Ed.2d 54.
. 371 U.S. 296, 83 S.Ct. 476, 9 L.Ed.2d 325.
. See 3 Davis Admin.Law 1965 PP. § 19.06, p. 15, and Jaffe, Primary Jurisdiction, 77 Harv.L.Rev. 1037, 1067-1070.
. 369 U.S. 482, 485, 82 S.Ct. 901, 904, 8 L.Ed.2d 54.
. 371 U.S. 296, 305, 83 S.Ct. 476, 9 L.Ed.2d 325.
. 49 U.S.C. § 1384.
. 7 U.S.C. § 225.
Reference
- Full Case Name
- The DENVER UNION STOCKYARD CO., the Denver Livestock Market, Inc., and Western Stock Center, Inc. v. The DENVER LIVE STOCK COMMISSION CO., a Colorado corporation
- Cited By
- 3 cases
- Status
- Published