Harbor Banana Distributors, Inc. v. Commission

499 F.2d 395
CourtCourt of Appeals for the Fifth Circuit
DecidedAugust 22, 1974
DocketNos. 73-1640, 73-1657, 73-2079 and 73-2080
StatusPublished
Cited by1 cases

This text of 499 F.2d 395 (Harbor Banana Distributors, Inc. v. Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harbor Banana Distributors, Inc. v. Commission, 499 F.2d 395 (5th Cir. 1974).

Opinion

BELL, Circuit Judge:

These appeals, consolidated for decision, involve a Federal Trade Commission complaint charging United1 in one count with price discrimination in violation of § 2(a)2 of the Robinson-Pat-man Act, 15 U.S.C.A. § 13(a), in favor of Harbor; charging Harbor in another count with violating § 2(f)3 of the Act, 15 U.S.C.A. § 13(f), by inducing the discrimination. In an additional count Harbor was charged with violating § 74 of the Clayton Act, 15 U.S.C.A., § 18, by purchasing the assets of a competitor.

The administrative law judge ruled against the Commission on the Robinson-Patman Act contentions and in favor of the Commission on the § 7 violation. On appeal by all parties, the Commission, with one member dissenting, affirmed the § 7 holding but disagreed with the initial decision as to the Robinson-Patman Act charges. Specifically, for the purposes of these appeals, the finding that United acted to meet com[397]*397petition under § 2(b)5 of the Act, 15 U. S.C.A. § 13(b), was rejected. Having rejected this defense, the administrative iaw judge was then found to have been in error in dismissing the § 2(f) charge against Harbor as well as the § 2(a) charge against United.

We disagree with the Commission as to the Robinson-Patman charges, being of the view that United was well within the § 2(b) defense in its questioned conduct. It follows from this and from the fact that there was no charge or proof that the cooperation of Standard at Long Beach with Harbor was discriminatory, that there could be no violation of § 2(f) by Harbor. As will be seen, the § 7 violation through the acquisition of a competitor is supported and there is no merit in the petition for review as to the order in that respect.

The alleged Robinson-Patman violation involves secondary lines of commerce, i. e., banana jobbers in the Los Angeles area consisting of Harbor and its competitors. There is no primary line question in issue except by way of background in that the alleged discrimination arose out of competition between United and its major competitor, Standard.

Beginning in 1960, Standard Fruit and Steamship Company, the major competitor of United in producing and importing bananas, entered the Los Angeles market. Up until 1964, United had enjoyed one hundred per cent of Harbor’s business. Indeed, Harbor was United’s second largest customer in the United States.

Harbor and its competing jobbers6 received delivery of bananas from United [398]*398at United’s Wilmington, California terminal located about thirty miles south of downtown Los Angeles. Harbor had its processing plant at Long Beach about nine miles north of Wilmington, while its competitors had their processing plants in downtown Los Angeles.

Harbor had conceived the idea of having bananas unloaded at Long Beach direct from United’s ships to save the cost of transportation between Wilmington and Long Beach, Harbor’s processing plant being at Long Beach. The idea was for Harbor to build a facility adjacent to the docks to permit direct delivery from the ships into Harbor’s processing plant. United refused to provide this service over a period of two to three years but in 1963, Standard decided to build a new terminal at Long Beach and to relocate there from its previous location at Wilmington.

Then in early 1964, pursuant to negotiations, Harbor and Standard reached an agreement whereby Harbor arranged to construct a processing plant adjacent to Standard’s proposed new terminal at Long Beach, and Standard provided a conveyor belt between the two facilities to permit the ready transfer of bananas from Standard to Harbor. Construction of the facilities began in 1964 and was completed in 1965. Even before completion, Harbor filled approximately 15 per cent of its total banana purchases in 1964 from Standard.7 This was the first loss of Harbor’s business by United.

United was quick to take notice of Standard’s inroad with respect to its prime customer and then agreed to provide a partial service to Harbor at Long Beach. It is this service which is claimed as being discriminatory by the Commission. The service was continued for a period of some five years but was ultimately discontinued by United inter alia on account of complaints being received from its other customers.

It is undisputed that the service provided was in an effort to meet that provided by Standard to Harbor. It is also undisputed that the service provided by United did not exceed the Standard service. In fact, it fell short of that service. Standard provided a conveyor belt from its dock directly into Harbor’s plant. United continued its operation at WilmingtQn but simply agreed to stop one ship each week at Long Beach to unload advance or pre-ordered bananas. See fn. (6), supra. Harbor continued to purchase seaboard and roller priced bananas from United at Wilmington as well as some advance ordered bananas.

We assume arguendo that there was proscribed discrimination in fact from [399]*399the service to Harbor at Long Beach by United. This enables us to center on the § 2(b) defense of the good faith meeting of competition.

The § 2(b) defense is absolute if made out. The burden is on the discriminator to show that he acted in a good faith belief to meet the price or service, as the case may be, of a competitor. The test in making this determination is that the discriminator must show the existence of facts which would lead a reasonable and prudent person to believe that the granting of the lower price or service would in fact meet the equally low price or service of a competitor. Federal Trade Commission v. A. E. Staley Manufacturing Company, 1945, 324 U.S. 746, 759-760, 65 S.Ct. 971, 977, 89 L.Ed. 1338; Hanson v. Pittsburgh Plate Glass Industries, Inc., 5 Cir., 1973, 482 F.2d 220, 226, cert. denied, 414 U.S. 1136, 94 S.Ct. 880, 38 L.Ed.2d 761; Hampton v. Graff Vending Company, 5 Cir., 1973, 478 F.2d 527, 534, cert. denied, 414 U.S. 859, 94 S.Ct. 69, 38 L.Ed.2d 109; see Callaway Mills Company v. Federal Trade Commission, 5 Cir., 1966, 362 F.2d 435.

The standard we use in reviewing the order of the Commission as it relates to the § 2(b) defense is to determine whether the Commission’s findings are supported by substantial evidence, Colonial Stores, Incorporated v. Federal Trade Commission, 5 Cir., 1971, 450 F.2d 733, 739-740. Evidence is substantial if it would “. . . justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury”. National Labor Relations Board v. Columbian Enameling & Stamping Company, 1939, 306 U.S. 292, 300, 59 S.Ct. 501, 505, 83 L.Ed.

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