People v. Elmhurst Milk & Cream Co.

116 Misc. 2d 140, 455 N.Y.S.2d 473, 1982 N.Y. Misc. LEXIS 3848
CourtNew York Supreme Court
DecidedOctober 8, 1982
StatusPublished
Cited by10 cases

This text of 116 Misc. 2d 140 (People v. Elmhurst Milk & Cream Co.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People v. Elmhurst Milk & Cream Co., 116 Misc. 2d 140, 455 N.Y.S.2d 473, 1982 N.Y. Misc. LEXIS 3848 (N.Y. Super. Ct. 1982).

Opinion

OPINION OF THE COURT

Gloria Goldstein, J.

Defendants, 16 corporations and 19 individuals, are charged in a one-count indictment with the crime of combination in restraint of trade and competition in violation of sections 340 and 341 of the New York General Business Law. Defendants are alleged to have participated over a 10-year period in an agreement to fix milk prices and to allocate customers in Kings County.

Indictments alleging similar unlawful agreements among milk companies have been issued by Grand Juries in The Bronx and Queens, and the New York Attorney-General has filed a civil suit in the United States District Court for the Southern District of New York against defendants in these criminal actions seeking treble damages, civil monetary penalties, and an injunction. Defendants in the action before this court have filed a joint omnibus [144]*144motion to dismiss the indictment on numerous grounds and for discovery and bill of particulars. For the reasons that follow, the motion to dismiss the indictment is denied.

This opinion follows the organization of defendants’joint memorandum of law.

POINT i

In point I, defendants move to dismiss the indictment on the grounds (1) that New York’s antitrust law (General Business Law, § 340 et seq.), commonly known as the Donnelly Act, is inapplicable to the conduct alleged in the indictment and (2) that the New York State Department of Agriculture and Markets has primary jurisdiction over the alleged conduct.

This motion rests on the contention that the New York Legislature has given the Department of Agriculture and Markets, if not exclusive, at least primary jurisdiction over dairy and milk industry activities, including agreements allegedly in restraint of trade. Defendants claim that the unique characteristics of the milk industry — a perishable product, intense competition among distributors, limited retail outlets, and extreme price sensitivity — render the application of the antitrust laws in appropriate. They claim that the Legislature has acknowledged this inapplicability and has implicitly exempted the conduct alleged in this indictment from the proscriptions of the Donnelly Act by subjecting the milk industry to the extensive supervision and regulation of the Department of Agriculture and Markets under a body of law “wholly inconsistent” with general antitrust principles. They argue that because of this. implied exemption this court should dismiss the indictment or, alternatively, stay the prosecution of the action pending a preliminary determination by the Department of Agriculture and Markets of the legality of defendants’ conduct, under the Agriculture and Markets Law.

The Donnelly Act prohibits “[e]very contract, agreement, arrangement or combination whereby * * * [c]om-petition or the free exercise of any activity in the conduct of any business, trade or commerce or in the furnishing of any service in this state is or may be restrained” (General Business Law, § 340, subd 1). Like the Federal antitrust [145]*145laws, the Donnelly Act “represents [a] * * * public policy [of the first magnitude] in favor of free competition for New York.” (Matter of Aimcee Wholesale Corp. [Tomar Prods.], 21 NY2d 621, 626.)

Defendants contend that it is the conflict between this policy of free competition and the policy of regulated competition inherent in the Agriculture and Markets Law which invokes the doctrine of exclusive jurisdiction and exempts defendants from the operation of the Donnelly Act. Yet the same conflict exists in every regulated industry and it is manifest that the mere existence of a regulatory scheme that affects competition does not automatically exempt those regulated from the operation of State and Federal antitrust laws. (See Otter Tail Power Co. v United States, 410 US 366; Silver v New York Stock Exch., 373 US 341; California v Federal Power Comm., 369 US 482; United States v Radio Corp. of Amer., 358 US 334; Georgia v Pennsylvania R. R. Co., 324 US 439; Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d 11; Columbia Gas of N. Y. v New York State Elec. & Gas Corp., 28 NY2d 117; State of New York v McBride Transp., 56 Misc 2d 90; State of New York v New York Movers Tariff Bur., 48 Misc 2d 225; see, also, 7 Von Kalinowski, Antitrust Laws and Trade Regulation, ch 44A, Exclusive and Primary Jurisdiction: Regulated Industries and the Antitrust Laws; 54 Am Jur 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices, §§ 190-250, Federal Antitrust Laws: Application to Regulated Industries.)

A court will cede its jurisdiction over an antitrust case to the exclusive jurisdiction of a regulatory agency only when it finds that “its exercise of jurisdiction is so repugnant to the regulatory scheme that the regulatory scheme would be destroyed by virtue of the court’s adjudication.” (7 Von Kalinowski, Antitrust Laws and Trade Regulation, § 44A.01[1]; see Otter Tail Power Co. v United States, 410 US, at p 372; United States v Philadelphia Nat. Bank, 374 US 321, 350-351.) This doctrine of exclusive jurisdiction is invoked rarely, and only where an express substantive exemption in the regulatory statute immunizes the specific activities involved in the antitrust action (see Otter Tail Power Co. v United States, 410 US 366, supra; Hughes Tool [146]*146Co. v Trans World Airlines, 409 US 363; Minneapolis & St. Louis Ry. Co. v United States, 361 US 173; Georgia v Pennsylvania R.R. Co., 324 US, at p 457) or where the court must imply a legislative intent to immunize the challenged activity in order to make the regulatory scheme work (Silver v New York Stock Exch., 373 US, at p 357; Pan Amer. World Airways v United States, 371 US 296, 305). Courts are very reluctant to imply immunity from the existence of a “ ‘pervasive regulatory scheme’ ”. (See California v Federal Power Comm., 369 US, at p 485; United States v Radio Corp. of Amer., 358 US, at p 350.)

Under the doctrine of primary jurisdiction, the court does not cede its jurisdiction over the case, but merely withholds or postpones action until the regulatory agency has acted. (United States v Philadelphia Nat. Bank, 374 US, at p 353; Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d, at p 22; see, also, Ricci v Chicago Mercantile Exch., 409 US 289; Carnation Co. v Pacific Westbound Conference, 383 US 213; Federal Mar. Bd. v Isbrandtsen Co., 356 US 481.) This doctrine “requires judicial abstention in cases where protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme.” (United States v Philadelphia Nat. Bank, 374 US, at p 353; see Federal Mar. Bd. v Isbrandtsen Co., 356 US, at pp 498-499, supra; Far East Conference v United States, 342 US 570, 574-575.) It is invoked when “(1) defendants’ conduct is arguably immune from antitrust liability under the regulatory statute or (2) the agency has jurisdiction over some of the issues and its decision would help clarify and narrow the antitrust issues.” (7 Von Kalinowski, Antitrust Laws and Trade Regulation, § 44A.01 [2][b].)

A court should not invoke either doctrine if enforcement of the antitrust laws is fully compatible with the administration and enforcement of the regulatory statute. “Where there are two acts upon the same subject, the rule is to give effect to both if possible.”

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116 Misc. 2d 140, 455 N.Y.S.2d 473, 1982 N.Y. Misc. LEXIS 3848, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-v-elmhurst-milk-cream-co-nysupct-1982.