The opinion of the court was delivered by: Campbell, District Judge.
1. The government charges that each of ten defendant dairy
companies has been engaged in a conspiracy to restrain and to
monopolize, and has monopolized interstate trade and commerce in
the sale of fluid milk to wholesale customers and certain public
institutions in the Chicago area, in violation of Sections 1 and
2 of the Sherman Act, 15 U.S.C.A. §§ 1 and 2. The government also
charges that each of ten defendant dairy companies has sold fluid
milk in interstate trade and commerce to different wholesale
purchasers in the Chicago area at prices which discriminate
between said purchasers of fluid milk of like grade and quality,
and that the effect of such alleged discrimination may have been
and may continue to be substantially to lessen competition or
tend to create a monopoly in the sale of fluid milk to wholesale
purchasers in the Chicago area, or to injure, destroy or prevent
competition between the aforesaid wholesale purchasers knowingly
receiving the benefit of such price discriminations and other
wholesale customers not receiving the benefit of such
discriminations, in violation of Section 2(a) of the Clayton Act,
as amended, 15 U.S.C.A. § 13(a).
Paragraph 27 of the complaint defines the alleged conspiracy to
monopolize in the following manner:
"The aforesaid combination and conspiracy has
consisted of a continuing understanding and concert
of action among the defendants, the substantial terms
of which have been:
"(a) That each defendant refrain from competing for
the fluid milk business of the wholesale customers of
"(b) That each defendant offer inducements such as
discriminatory prices, rebates, discounts, lump sum
cash payments, interest-free loans, or the furnishing
of store equipment or other gratuities to wholesale
customers of non-defendant distributors of fluid milk
to cause said customers to discontinue their
purchases of fluid milk from said non-defendant
distributors and to purchase fluid milk from the
defendant offering such inducement;
"(c) That each defendant induce its store wholesale
customers to agree to maintain the retail prices
`suggested' by the defendants;
"(d) That the defendants Bowman and Borden maintain
and enhance their dominant market position by
acquiring the businesses, including customer outlets,
of competing distributors;
"(e) That defendants Bowman and Borden organize and
operate `fighting companies' in order to suppress and
destroy the competition of non-defendant
"(f) That the defendants collusively allocate and
share among themselves the business of selling fluid
milk to public institutions;
"(g) That the defendants agree upon, fix, and
maintain prices for the sale of fluid milk to public
institutions by submitting prearranged, bogus, and
collusive bids for the sale of fluid milk to such
Paragraphs 28 through 45 of the complaint contain detailed
descriptions of some of the general charges outlined in paragraph
27; these more descriptive paragraphs will be referred to
wherever necessary in the course of this memorandum.
In its prayer for relief, the government asks that the alleged
conspiracy to monopolize interstate commerce in the sale of fluid
milk, as described above, be decreed to be in violation of
Sections 1 and 2 of the Sherman Act; that the defendants be
decreed to have monopolized interstate commerce in the sale of
fluid milk, as described above, in violation of Section 2 of the
Sherman Act; that the discriminations in price for fluid milk of
like grade and quality, which each of the defendants has
allegedly granted to certain of its wholesale customers and not
to other of its wholesale customers, be decreed to be in
violation of Section 2(a) of the Clayton Act, as amended; that
the defendants, individually and collectively, be perpetually
enjoined from continuing the alleged discriminations and from
carrying out the alleged conspiracy to monopolize and the alleged
monopolization of commerce in the sale of fluid milk, as
described above; that the defendant Borden Company be required to
dispose of its entire interest in defendant Belmont Dairy Company
to parties who are not named as defendants; that the defendant
Borden Company be required to submit a plan for the divestiture
of such of its plants, facilities and other assets, used by its
Chicago Milk Division, as is necessary to restore effective
competition in the distribution and sale of fluid milk to
wholesale customers and public institutions in the Chicago area;
that the defendant Bowman Dairy Company be required to dispose of
its entire interest in defendant Ridgeview Farms Dairy to parties
who are not named as defendants; that defendant Bowman Dairy
Company be required to submit a plan for the divestiture of such
of its plants, facilities and other assets used by it, as is
necessary to restore effective competition in the distribution
and sale of fluid milk to wholesale customers and public
institutions in the Chicago area; that the agreements,
understandings, arrangements and practices of the defendants,
alleged in the complaint, be ordered terminated and cancelled.
The government has asked for certain other injunctive relief,
particularly with reference to certain alleged violations of
Section 2(a) of the Clayton Act. I shall describe and comment
upon these particular requests for relief in another part of this
Five nonconsenting defendants — the Borden Company and its
subsidiary, Belmont Dairy Company, Bowman Dairy Company and its
subsidiary, Ridgeview Farms Dairy, Inc., and Beloit Dairy Company
— remained as participants in the pre-trial conference, and
appeared as defendants at the trial. For the purposes of this
memorandum, the court is concerned solely with those five
A lengthy pre-trial order emerged from the conference. That
order contains numerous agreements of fact, agreements on the
manner in which certain evidence would be used at the trial, and
agreements as to the issues of the case. At this time, I wish to
thank all counsel for the able and workmanlike manner in which
they participated in the conference and prepared the pre-trial
order. I shall refer to specific provisions of the order in the
course of this memorandum.
The government has presented its evidence, and the matter is
now before the court on the motion of each defendant to dismiss
the complaint, or parts thereof.
The first disputed matter which I must resolve entails a
construction of Federal Rule 41(b), 28 U.S.C.A., which provides:
"After the plaintiff has completed the presentation
of his evidence, the defendant, without waiving his
right to offer evidence in the event the motion is
not granted, may move for a dismissal on the ground
that upon the facts and the law the plaintiff has
shown no right to relief. In an action tried by the
court without a jury the court as trier of the facts
may then determine them and render judgment against
the plaintiff or may decline to render any judgment
until the close of all the evidence. If the court
renders judgment on the merits against the plaintiff,
the court shall make findings as provided in Rule
52(a). Unless the court in its order for dismissal
otherwise specifies, a dismissal under this
subdivision * * * operates as an adjudication upon
Plaintiff contends that this court, in considering the instant
motions, is precluded from weighing the evidence. Plaintiff
vigorously objects to the defendants' use of the phrase
"preponderance of the evidence." According to plaintiff's
construction of the Rule, this court must now determine whether
or not the evidence considered in a light most favorable to the
plaintiff, presents a prima facie case for relief; and, the
argument runs, if such a prima facie case is discovered,
defendants' motions must be denied. Such a construction of Rule
41(b) has been flatly rejected by the Court of Appeals for this
circuit. In Allred v. Sasser, 7 Cir., 1948, 170 F.2d 233, 235, it
was made clear that in disposing of a motion to dismiss at the
close of plaintiff's case, the court, as trier of fact, must
weigh and evaluate the evidence. The meaning of Rule 41(b) is
unmistakable after a reading of this language from the Allred
"* * * the trial court was the trier of the facts,
and in considering the evidence was not bound to view
it in a light most favorable to the plaintiff, with
all attendant favorable presumptions, but was bound
to take an unbiased view of all the evidence, direct
and circumstantial, and accord it such weight as he
believed it entitled to receive."
The Rule was similarly construed by the court in Gary Theatre Co.
v. Columbia Pictures Corp., 7 Cir., 1941, 120 F.2d 891, and, more
recently, in Chicago & N.W. Ry. Co. v. Froehling Supply Co., 7
Cir., 1950, 179 F.2d 133.
This court is, therefore, under an affirmative duty to review
all the evidence thus far presented, and, upon the basis of that
review, to determine whether or not the government's evidence
warrants the relief sought in the complaint.
I shall first consider all evidence which was introduced to
prove violations of the Sherman Act. The evidence may appear
disjointed at times; that is because the government necessarily
commingled evidence which tends to prove violations of the
Sherman Act with evidence which tends to prove Clayton Act
violations. I should also note at the outset that I shall
consider many items of doubtful relevance and materiality; in
another context, such evidence would be excluded summarily.
However, as I indicated at the trial, in a case of this nature
and scope, the government must be afforded any opportunity,
within reason, to support the charges in its complaint.
Conspiracies of the sort described in the complaint are difficult
to prove, and most often can be proved only through the use of
evidence which is circumstantial and seemingly remote. Therefore,
in my rulings on the evidence at the trial, and in my review of
the evidence at this time, I have admitted and considered any
evidence which might in some manner tend to prove the existence
of a conspiracy.
Testimony of Witnesses Tending to Prove the Existence of a
Conspiracy to Monopolize Wholesale Customers in the Chicago
A. Solicitors or "contact men" employed by the defendants.
Seven government witnesses were, at one time or another,
employed by the Borden Company or the Bowman Dairy Company to
solicit new wholesale accounts. They testified as to certain
instructions given to them in the course of their employment, as
to some practices current in the industry at the time of their
employment, and as to conversations which they had or overheard
during their employment. I have outlined this segment of the
testimony most carefully, for it is, apparently, the most direct
available evidence of the alleged conspiracy. Listing these seven
witnesses in the order of their appearance at the trial, that
part of their testimony relevant to the proof of a conspiracy is
(1) William H. Horton. In 1941 and 1942, Horton was employed by
the Bowman Dairy Company as a solicitor. He received a two-week
training period from a Mr. Morley, whom he was replacing. Morley
told him how to solicit, and what stops to solicit. Morley
explained that "open competition" was "new business, business
which was closed and reopened after a period of thirty days, and
other dairies that were what they call cut-rate dairies, such as
Meadowmoor and smaller ones." Morley further explained that
"closed competition" consisted of "Borden, Hunding, Capitol,
Western", and "one or two other stops that I forget." Horton was
told not to solicit "closed competition."
In the early part of 1942, Horton solicited and won the
business of a stop being served by the Capitol Dairy Company.
Messrs. Philippi and Moller of the Bowman Company directed the
return of this stop to the Capitol Company.
On cross examination, Horton stated that the Bowman officers
said that they desired the return of the store to Capitol because
the store owner was a relative of a Mr. Shankman, an official of
Capitol Dairy Company.
(2) Otto A. Sedlak. Sedlak was a solicitor of wholesale
accounts for the Bowman Company for three and one-half years,
beginning in 1941 or 1942. In 1942, he was told by his superior,
a Mr. Block, that he was not supposed to solicit stops like
"Borden, Capitol, Western-United." He testified of instances
wherein his superiors did not permit him to begin serving stops
which were then served by Borden or Capitol, although the
proprietors were willing to be served by Bowman. He testified
that in the latter part of 1944, he overheard Block speaking on
the telephone to a Mr. Katz of the Western-United Company. He
overheard Block state to Katz: "You know you took one of our
stores, don't you? — Do you know what this means? — We have to go
out and get one of yours."
(3) Herbert W. Horton. Horton was also a Bowman solicitor
during part of the period embraced by the complaint. Mr. Buthman,
an official of the Bowman Company, told him that he "wasn't to
solicit any stops, such as Wanzer, Hunding, Beloit,
Borden, Western-United, Capitol Dairy, and Hawthorn — all the
major large ones that was there." Mr. Kernkamp, another Bowman
official, told him that "open competition was any stops, like
these smaller dairies, like Dean * * *. After thirty days with
Dean, if the Dairy that lost them did not retain them, then that
was considered open competition, and I could go in and try to get
them for the Bowman Dairy also." Horton made clear that his
activities were directed principally, perhaps solely, toward the
Dean Milk Company. For example, a list of Dean stops was given to
him; but the names of stops served by other dairies, even those
characterized as "open competition", were not included.
In March or April of 1946, Horton solicited and "lined up" a
Dean stop which had formerly been served by Hunding Dairy. Mr.
Kernkamp, his superior, told him that Mr. Hunding of Hunding
Dairy requested that Bowman abstain from further solicitation
because Hunding still had hopes of recapturing the stop from
Dean. Nevertheless, a week or so later, Horton related, he
managed to get the business of that stop.
Horton also testified that a Mr. Spitzer, an official of
Ridgeview Farms Dairy, told him upon Spitzer's transfer from
Bowman to Ridgeview, that "he had worked at Ridgeview before, and
that that is the fighting company that Bowman used against the
(4) Lorne Snoberger. Snoberger was a Bowman solicitor in 1946.
He stated that when he was first employed as a solicitor, Mr.
Kernkamp, his superior, told him to solicit stops served by the
Dean Milk Company. He was not told to solicit stops served by
other dairies. During his employment by Bowman as a solicitor,
his activities were confined principally to the solicitation of
stops served by the Dean Milk Company.
(5) Julius Guy Johnston. Johnston was employed by the Bowman
Company as a retail route salesman from 1944 to 1946. He was
acquainted with the owner of a wholesale stop along his route,
who was then being served by the Beloit Dairy Company. He asked
a Mr. Scanlan, his manager, for permission to serve the stop.
Scanlan told him that Bowman had an "agreement" with Beloit, "but
you go ahead and serve it for awhile and see what happens."
Scanlan said that "We might have to give up another stop
equivalent to it in order to keep it." Johnston began serving the
stop, served for about a week, and was then told by Scanlan to
discontinue service. Scanlan again stated that "we would have to
quit serving or give up a stop to Beloit equivalent to that."
Johnston suggested to the owner that he take milk from another
dairy for thirty days; the owner did in fact take milk from the
Wanzer company for thirty days, and then resumed Bowman service.
In the latter part of 1945, when one of the witness' stops was
solicited by Borden, Mr. Scanlan told the witness: "We have an
agreement with Borden, if they take the stop away from us we will
get another one in return equivalent to it."
On cross examination, the witness admitted that he was accused
of having a "short book" by the Bowman Company after he left that
(6) Raymond Stephens. Stephens was a solicitor of wholesale
accounts for the Borden Company. He was told by a Mr. Creed, his
superior, not to comply with requests for service by stops then
being served by Bowman, Western-United, Hawthorn-Mellody, and
Capitol. According to Stephens, "open competition" consisted of
stops served by the Dean Milk Co., Wanzer Dairy Company, and
Meadowmoor Dairy Company.
Subsequent to Stephens' employment by Borden, he was a vendor
supplied by the Lake Valley Company. After successfully
soliciting a stop served by Bowman, he had a conversation with a
Mr. Curtin of the Bowman Company, and was told by Curtin to
return the stop. He did return the stop, so that Bowman would not
"bother" his accounts.
Each of these witnesses is a former employee of one of the
defendants, and each expressed some degree of animosity toward
his former employer. Johnston, in particular, was hostile during
cross-examination, and as I noted earlier, the Bowman Company had
once accused him of dishonesty. The testimony of each of the
witnesses is, therefore, open to some suspicion. Assuming
arguendo that all of the foregoing testimony is true, however,
just what relationship among the defendants is indicated?
There are but three instances of direct communication between
alleged conspirators. First, William Horton testified that he
returned a stop to Shankman of the Capitol Company, pursuant to
orders given by his superior at the Bowman Company. There is
testimony to indicate, however, that the owner of the stop was
related to Shankman, and that the return of the stop was
motivated by respect for that relationship. Second, Sedlak
testified that he overheard his superior at Bowman tell Katz of
Western-United that Bowman would "get" a Western stop in exchange
for a stop which Western had captured from Bowman. This testimony
is as consistent with competitive activity as it is with a
conspiracy to monopolize. Third, Herbert Horton testified that
Hunding asked Bowman not to solicit a stop formerly served by
Hunding. This testimony is rendered meaningless by Horton's later
assertion that Bowman thereafter successfully solicited the stop.
The testimony does indicate one rough similarity between the
actions of Bowman and Borden, insofar as Stephens, a Borden
solicitor, testified that he was instructed by his superior not
to comply with requests for service by stops served by Bowman,
Western-United, Hawthorn-Mellody, and Capitol. Three Bowman
solicitors testified that they were similarly instructed not to
solicit stops served by Borden and certain other dairies.
However, the court notes that the instructions which these
solicitors said they received are at variance with the terms of
the conspiracy alleged in the complaint. One Bowman solicitor and
one Borden solicitor testified that they might solicit stops
served by Meadowmoor; but Meadowmoor is alleged to be one of the
conspirators. One Bowman solicitor testified that he could not
solicit stops served by Wanzer, although Wanzer is not alleged to
be a conspirator. And I note in passing that witness Rhody, a
Hunding employe, testified that Hunding, an alleged conspirator,
did in fact capture stops served by other of the alleged
B. Wholesale customers served by the defendants.
The foregoing portion of the record should be considered
alongside the correlative testimony of wholesale customers served
by the defendants. The government introduced over two dozen
witnesses who owned food stores or restaurants in the Chicago
area. The testimony of a few of these witnesses corroborates, in
a limited way, that of the solicitors employed by the defendants.
This corroborative testimony is as follows:
(1) Richard Myers. Myers owns and operates a food store in
Chicago, and has sold milk supplied by the Capitol Dairy Co. ever
since he opened his store in 1946. A representative of the Borden
Company told him that unless he was served by Borden from the
first day he opened his store, he could not thereafter switch to
Borden's. Myers testified that since he began using the services
of Capitol, he has not been solicited by dairies other than the
Kraml Co. and the Dean Milk Co.
(2) Louis J. Pushauer. Pushauer owns and operates a grocery in
Chicago. In 1951, the Dean Milk Co. supplied some of his dairy
needs and Hunding Dairy supplied others. During the time he split
his orders between Hunding and Dean, a Hawthorn representative
came to Pushauer's store and inspected his dairy supplies. The
next day Hunding Dairy discontinued service. A similar incident
occurred while the witness was later being served by
Western-United. The witness further testified that the Borden Co.
did not respond when he called for service.
(3) Michael J. Cozzi. Cozzi owned a grocery store in Chicago
and was served by Meadowmoor Dairy. He moved his store, became
dissatisfied with Meadowmoor milk, and accepted Bowman's offer to
serve. Meadowmoor thereafter solicited Cozzi's business once
again. The Meadowmoor solicitor told Cozzi of a "gentlemen's
agreement" among the milk companies not to solicit stops within
thirty days after service has been discontinued. The witness was
not articulate when speaking of this "agreement." Meadowmoor did
begin to serve Cozzi again, although it is not clear at whose
instance the change was made.
(4) Julius Soboleski. This witness owns a grocery in Chicago,
and is served by the Borden Co. A Bowman representative told him
that Bowman could not serve "as long as I have Borden."
(5) Philip Bergman. Bergman owned a grocery in 1947, and was
served by the Borden Co. Borden refused a request for financial
assistance, and Bergman called Meadowmoor. The Meadowmoor
representative said, in the words of the witness, "That he
couldn't take the stop over because they had an association with
some of the bigger companies not to take stops from each other."
The Meadowmoor representative further stated, again in the words
of the witness, that "I had to farm out for at least thirty days
for a smaller company, and then they would take the stop over."
The Meadowmoor representative did not suggest another dairy, but
the witness called the Dean Milk Co. After a month of Dean
service, Meadowmoor consented to serve.
(6) Gerald T. Killeen. Killeen owns a delicatessen in Chicago.
At the time he purchased his store, Borden and International
Dairy were supplying his milk needs. He desired Ridgeview
service, and, after telephoning Ridgeview, a Ridgeview
representative came to his store. The Ridgeview representative
said, in the words of the witness, that "First he would have to
notify those two dairies, and give them a chance to hold the
stop." Although the witness called neither Borden nor
International, he testified that representatives of both dairies
visited him and knew of the contemplated change. The witness
switched to Ridgeview anyway, and Ridgeview has been serving him
ever since. And, according to the witness, Borden solicited his
business even after he changed to Ridgeview. On cross
examination, the witness admitted that he may have told the
Borden driver about the intended change.
(7) Louis Miller. This witness owns a restaurant in Chicago.
While he was served by Hawthorn-Mellody, a Hawthorn
representative told him that he could not change to another
dairy. A Meadowmoor representative told him that Meadowmoor could
not serve because of an "agreement." Subsequently, the witness
was served by the Wanzer Co. and the Capitol Co. Throughout his
testimony, the witness made clear that he asked each dairy for
some sort of financial assistance.
I shall now turn to testimony of other wholesale customers
served by the defendants. A small part of this testimony is
corroborative of that of solicitors employed by the defendants;
another and much larger part of this testimony flatly contradicts
that of the solicitors, and another part of this testimony is
wholly irrelevant to any of the issues in this case.
(8) Myer Freedman. Freedman operates a grocery in Chicago, and
receives his milk from the Bowman Co. Since Bowman began to
serve, only the Dean Milk Co. has bid for his business.
(9) Dorothea Wallace. This witness operates a restaurant in
Evanston, Illinois. She was served by Bowman, and became
dissatisfied with Bowman service. A representative of
Hawthorn-Mellody told her he could not serve her. Afterward,
however, the Hawthorn representative made arrangements for the
witness' employes to pick up milk from a nearby store served by
Hawthorn. This arrangement continued for two or three weeks;
afterward, Hawthorn delivered the milk directly to her
On cross examination Mrs. Wallace admitted that she made no
effort to contact another dairy.
(11) Andrew D'Alesandro. This witness formerly owned a
restaurant in Chicago. When he first opened his restaurant, he
was solicited by representatives of Western-United, Wieland,
Borden, and Beloit. He was solicited to the point of annoyance.
(12) Abraham Wittenberg. Wittenberg operates a sandwich shop in
Chicago, and was originally supplied his milk needs by
Western-United Dairy. In 1947, he closed his shop for a few
months. While his shop was closed, representatives of Borden,
Western-United, Capitol and Meadowmoor bid for his business. He
accepted Meadowmoor's offer, and has been served by Meadowmoor
(13) Karol Walczak. Walczak operates a grocery in Chicago.
During his ownership of the grocery, many dairies bid for his
business. Among the bidders were Dean, Capitol, Borden,
Western-United, and Ogden-Schmitts. Even after he accepted
Capitol's offer and began ...