Pacific Coast Agricultural Export Ass'n v. Sunkist Growers, Inc.

526 F.2d 1196, 1975 U.S. App. LEXIS 11990
CourtCourt of Appeals for the Ninth Circuit
DecidedNovember 11, 1975
DocketNos. 74-1093, 74-1128, 74-1094, 74-1129 and 74-1130
StatusPublished
Cited by133 cases

This text of 526 F.2d 1196 (Pacific Coast Agricultural Export Ass'n v. Sunkist Growers, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pacific Coast Agricultural Export Ass'n v. Sunkist Growers, Inc., 526 F.2d 1196, 1975 U.S. App. LEXIS 11990 (9th Cir. 1975).

Opinion

OPINION

Before DUNIWAY, ELY and WRIGHT, Circuit Judges.

EUGENE A. WRIGHT, Circuit Judge:

In this private antitrust action several parties appeal and cross-appeal from aspects of a judgment for treble damages, attorneys’ fees and injunctive relief. We affirm.

Plaintiff-appellant Pacific Coast Agricultural Export Association (the Association) is a Webb-Pomeraine association1 of fresh fruit exporters who among other things serve as middlemen in exporting oranges to Hong Kong and the Far East. Plaintiff-appellant M-C International, Inc. (M-C) also exports oranges to Hong Kong.

Defendant and cross-appellant Sunkist Growers, Inc. (Sunkist) is a federated agricultural cooperative comprised of several thousand Arizona and California citrus fruit growers who grow and pack citrus fruits for sale in the United States and abroad. Defendant and cross-appellant Reliance Commercial Enterprises, Inc. (Reliance) conducts business as a broker of citrus fruits in the Far East.

As assignee of the rights of seven of its members, the Association charged Sunkist with violating Section 1 of the Sherman Act [15 U.S.C. § 1], by conspiring with Reliance to restrain trade, and with violating Section 2 [15 U.S.C. § 2], by conspiring and attempting to monopolize and monopolizing exports from Arizona and California to Hong Kong. In a separate action M-C similarly charged both Sunkist and Reliance. The actions were consolidated for trial by agreement.2

The jury returned a general verdict and answered 16 special interrogatories in favor of plaintiffs, finding that Sunkist and Reliance had engaged in each alleged anticompetitive practice. The jury fixed damages at $238,704 for the Association’s assignors, and $2,363 for M-C.3

The district court thereafter awarded treble damages and attorneys’ fees of $205,250.4 It ordered the termination of defendants’ exclusive sales agreement, and enjoined Sunkist from refusing to [1201]*1201sell oranges through its domestic and export departments to qualified buyers at competitive prices. The court refused to enjoin Sunkist from selling to Hong Kong importers, either directly or through nonexclusive agents, and also denied plaintiffs’ request that Sunkist be dissolved.

Sunkist and Reliance object to any form of equitable relief and on cross-appeal urge that the verdicts be set aside for procedural irregularities, errors in the admission of evidence and insufficiency of evidence to support a verdict against either defendant. They also urge that plaintiffs failed to prove actual damages and that the attorneys’ fees are excessive.

The Association and M-C argue that the district court’s refusal to order dissolution was an abuse of discretion and urge that at the very least the court should have enjoined Sunkist from selling oranges, directly or indirectly, to Hong Kong for a period of six years (a period equal to that of the alleged violations).

I.

FACTS

Sunkist citrus growers produce about 75% of the oranges grown in Arizona and California. They process the fruit through 105 packing houses, each of which uses its own brand name as well as the Sunkist trademark. The packing houses are grouped into 20 sales exchanges.5

Domestic purchasers may request specific packing house brands, although a federal marketing order6 limits the number of brand oranges which each packing house can sell m a given time period.

Hong Kong importers purchasing from Sunkist’s export department may not specify particular brands, although they may specify a general varietal preference for central valley or southern California oranges. While no federal marketing order limits export sales, Sunkist's export department allocates sales, by means of “pooling” arrangements, largely on a pro rata basis among the several packing houses.

Until 1966, Sunkist’s export department relied upon numerous exporting companies, including members of the Association, to generate and maintain sales to Hong Kong importers. In March of that year, Sunkist terminated these arrangements and began direct sales to Hong Kong through Reliance, its new exclusive agent there. Sunkist performed all export functions, including handling, shipping and insurance. Reliance, through its Hong Kong manager Newman Wu, obtained letters of credit from Hong Kong importers, transmitted orders and price quotations to Sunkist, and generally represented Sunkist’s interests in Hong Kong.

In the six months following its agreement with Reliance, Sunkist (which had previously sold direct to Hong Kong only upon occasion) was able to capture nearly 70% of the market for American or-, anges sold there.7 The plaintiffs, who had previously been largely supplied by Sunkist’s export department, were now able to obtain Sunkist oranges only on the domestic market. Evidence was introduced from which the jury might have inferred that the plaintiffs were at [1202]*1202times prevented from purchasing even on the domestic market.

II.

SCOPE OF CAPPER-VOLSTEAD IMMUNITY

As a threshold matter we must determine the extent to which the federal antitrust laws apply to Sunkist’s activities. Sunkist claims that it presently8 qualifies as a grower cooperative under Section 1 of the Capper-Volstead Act [7 U.S.C. § 291], and that therefore its members’ joint activities enjoy a broad exemption from the antitrust laws under that act and Section 6 of the Clayton Act [15 U.S.C. § 17]. See generally Treasure Valley Potato Bargaining Association v. Ore-Ida Foods, Inc., 497 F.2d 203, 210-18 (9th Cir. 1974); Annotation, 20 A.L.R.Fed. 924 (1974).

Sunkist contends that the designation of Reliance as its exclusive agent in Hong Kong was protected conduct under the language of Capper-Volstead Act § 1 providing that:

[s]uch [cooperative] associations may have marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes .

It is well settled, however, that the rights of growers to market cooperatively cannot be deemed to authorize any combination or conspiracy with others which unreasonably restrains interstate or foreign commerce. United States v. Borden Co., 308 U.S. 188, 204-05, 60 S.Ct. 182, 84 L.Ed. 181 (1939). The court instructed the jury that to find a violation of the Sherman Act, Section 1, the jury had to find that “the purpose and effect of such an agreement is unreasonably to exclude the former distributors [plaintiffs] from engaging in the trade in question.” To this instruction no party objected. [See F.R.Civ.P. Rule 51.]

Nor does the Act immunize cooperatives engaged in competition-stifling practices from actions under the antimonopolization provisions of Sherman Act § 2.

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Bluebook (online)
526 F.2d 1196, 1975 U.S. App. LEXIS 11990, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pacific-coast-agricultural-export-assn-v-sunkist-growers-inc-ca9-1975.