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Independent Grocers Alliance Distributing Co. v. Federal Trade Commission

April 29, 1953

INDEPENDENT GROCERS ALLIANCE DISTRIBUTING CO., ET AL.
v.
FEDERAL TRADE COMMISSION



Author: Finnegan

Before MAJOR, Chief Judge, and FINNEGAN and SWAIM, Circuit Judges.

FINNEGAN, Circuit Judge: This is a petition to review and set aside a cease and desist order issued by the Federal Trade Commission as the outcome of a complaint charging petitioner and others with having violated Section 2(c) of the Clayton Act, as amended by the Robinson-Patman Act.

The complaint, issued on April 18, 1946, alleged that the petitioner, Independent Grocers Alliance Distributing Company, while acting as an intermediary, had been and was accepting brokerage and commission from numerous sellers on transactions in which the Alliance was in fact acting on its own behalf and in behalf of the purchasers in such transactions in violation of Section 2(c) of the Clayton Act, as amended. The section provides as follows:

"Section 2(c). That it shall be unlawful for any person engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid." 49 Stat. 1527; 15 U.S.C.A. sec. 13(c).

The complaint identified the purchasers as wholesale grocery concerns affiliated with I.G.A. by virtue of contracts or socalled franchise agreements. The complaint charged that in addition to I.G.A. and its directors, the provisions of Sec. 2(c) were violated by The Grocers Company and its directors, who were charged with receiving and accepting for the benefit of the wholesale grocers affiliated with I.G.A., part of the brokerage fees collected by the Alliance on the purchases of such wholesalers. Stokely Brothers & Company, Inc., Jersey Cereal Company, Dean Milk Company, and Cupples Company were also charged with violations by reason of the payment of brokerage to the Alliance on purchases and sales in which the Alliance was acting for and in behalf of its affiliated wholesalers. These sellers are alleged to be typical of a large group of manufacturers, producers, and processors engaged in selling a substantial portion of their commodities to buyers who purchased through I.G.A. as an intermediary for such buyers. Franklin MacVeigh & Company, E. R. Godfrey & Sons Company, Winston & Newell Company, and Wetterau Grocer Company, Inc., are charged individually and as members of a class consisting of wholesale grocery concerns, each of which was alleged to be affiliated with and under contract with I.G.A., and each of which was a stockholder of the Grocers Company, with having received brokerage or an allowance in lieu thereof on purchases they made through I.G.A.

The Jersey Cereal Company, Dean Milk Company, and Cupples Company did not file answers to the complaint. Stokely-Van Camp, Inc. (designated in the complaint as Stokely Brothers & Company, Inc.) answered denying the charges but took no further part in the proceedings. The Grocers Company, and its directors, and E. R. Godfrey & Sons Company, Wetterau Grocer Company, Inc., and Winston & Newell filed answers admitting the material allegations of the complaint with a few minor corrections that raised no controversial issues. Winston & Newell also entered into a stipulation as to certain facts not encompassed in its answer and later successfully argued to the Commission that it should not be included in any order that might be issued. Franklin MacVeigh & Company joined in the stipulation of facts signed by petitioners herein, but took no further part in the proceedings.

The answer filed by Independent Grocers Alliance Distributing Company and its six directors denied the material allegations of the complaint. In particular it was denied that I.G.A., when acting as an intermediary in purchase and sales transactions, was acting in its own behalf and for and in behalf of the purchasers in such transactions. On the contrary, it was asserted that I.G.A. had acted for and in behalf of the sellers in all purchase and sales transactions in which it has been engaged.

The issues raised by the answer of the Alliance and its directors were disposed of by a stipulation of facts which incorporated numerous exhibits. The stipulation was signed by counsel representing the complaint, by counsel for the I.G.A., and its directors, and also by counsel for Franklin MacVeigh & Company.

The stipulation provided that with respect to the parties the Commission might without:

"* * * the adduction of other evidence, and without intervening procedure, hear this matter on the complaint, respondents' answers, this stipulation, briefs and oral arguments by counsel for the respondents and for the Commission, and proceed to make and enter its findings of fact, inferences, and conclusions based thereon and enter its order disposing of this proceeding."

At a subsequent hearing before the examiner three of the six directors of I.G.A., i.e., James D. Godfrey, Ned N. Fleming, and Robert H. Perlitz after changing attorneys, and after leave obtained, withdrew the answer previously filed in so far as it applied to them, and filed a substitute answer admitting the material allegations of the complaint with some few unimportant factual corrections. These parties took no further part in the proceedings.

Proposed findings of fact and conclusions were filed with the hearing examiner by counsel supporting the complaint and by counsel for petitioners herein, and the examiner heard oral argument on the various contentions advanced. Thereafter he filed his recommended decision and the matter was briefed and oral argument was had before the Commission on November 23, 1948. Before the Commission reached a decision, two vacancies occurred in its membership and when these were filled, the Commission, on its own motion, set the matter down for reargument, which took place on November 2, 1950.

On April 16, 1951, some five months after the second oral argument to the Commission, the petitioners herein filed a petition with the Commission for leave to adduce additional evidence. This petition was made on the ground that certain remarks of Commission counsel during the reargument before the Commission were prejudicial to petitioners, and, that consequently, they were entitled to submit evidence in contradiction.On May 17, 1951, the Commission denied the petition for the reason that the record was clearly sufficient to enable it to dispose of all issues involved and the evidence proposed to be introduced would be irrelevant and immaterial to any of the issues. On March 7, 1952, the Commission entered its findings as to the facts, concluded that petitioners and certain other parties had violated sec. 2(c) of the Robinson-Patman Act as alleged, and entered its order to cease and desist.

On April 3, 1952, petitioners filed in this Court a petition to review and set aside the Commission's order.Thereafter, on November 3, 1952, they filed a petition for leave to adduce additional evidence. This petition the Court denied without prejudice to the right ...


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