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STATE WHOLESALE GROCERS v. GREAT ATLANTIC & PAC. TEA

May 31, 1961

STATE WHOLESALE GROCERS, A CORPORATION, ET AL., PLAINTIFFS,
v.
THE GREAT ATLANTIC AND PACIFIC TEA COMPANY, A CORPORATION ET AL., DEFENDANTS.



The opinion of the court was delivered by: Campbell, Chief Judge.

The facts of this case can be found in the reported opinions filed herein by this Court and by the Court of Appeals.*fn1 The Court of Appeals held, inter alia, that the defendant suppliers of grocery products violated Section 2(d) of the Robinson-Patman Act*fn2 in making payments of money to Woman's Day, Inc., a controlled subsidiary of the Great Atlantic and Pacific Tea Company, herein referred to as A & P, for advertising in a magazine furnished by A & P, in connection with the sale of products manufactured and sold by said suppliers, without making such payments or considerations available on proportionately equal terms to all other customers competing in the distribution of such products. Having reversed this Court on that issue, the Court of Appeals, in its opinion, expressly held that there were two specific issues remaining for determination by this Court on remand. One of these issues, the so-called "spurious class" suit issue, has been disposed of in my Memorandum and Order dated September 8, 1959. The remaining issue, the fact of damage issue, is now before the Court together with one additional issue which must necessarily be decided at this time. The latter issue poses the question whether there remains for decision by this Court any issues relative to liability other than the fact of damage issue. The defendants take the position that there are three such issues so remaining.*fn3

The two issues which unquestionably must now be decided by this Court have been submitted on briefs and the parties have argued therein the merits of the three liability issues which defendants contend remain for decision, having assumed, arguendo, for the purpose of submitting all remaining issues for determination, that I may decide that such issues are now properly before me for consideration.

At the outset it should be observed that many of the points in contention which now confront me stem, to a certain degree, from the fact that the opinion of the Court of Appeals, as amended,*fn4 has not been too clear to the parties to this suit.

Many matters, they contend, are still left open for honest, but conflicting, interpretation. Counsel for both sides have advanced their interpretation of that opinion and it now becomes my task to try to employ the correct one in proceeding in a manner not inconsistent with the views expressed in the Court of Appeals' opinion. I shall endeavor to discharge this obligation in ruling on the matters now before me.

I

With respect to the question whether any issues relative to liability, other than the fact of damage issue, remain for my determination at this time, counsel for the defendants cite Judge Schnackenberg's statement in this case to the effect that our Court of Appeals "in the exercise of its appellate jurisdiction will not pass upon any question as to which the district court, without objection of counsel for any party, failed to make a decision." 258 F.2d at page 839. After observing that this Court did not rule on the Customer Issue, the Specificity of Product and Synchronization Issue and the Wholesaler Issue prior to the appeal, and that the Court of Appeals made no mention of these issues in its opinion, defendants use Judge Schnackenberg's statement as a basis for arguing that these issues are now before me for decision.

It is, of course, true that I have not ruled on any of the three issues which the defendants now urge me to consider. The reason for this is that I had regarded a ruling on such matters unnecessary in view of the fact that I had, on other grounds, found no violation in the instant case of either Section 2(d) or Section 2(e).*fn5

It is an entirely different matter, however, to conclude that the Court of Appeals, having refrained from mentioning these issues in its opinion, did not, nevertheless, rule upon them. Each of these issues is a component part of the general issue of violation of Section 2(d). After analyzing Section 2(d) in the light of defendants' challenged transactions with Woman's Day, Inc., the Court of Appeals held that these activities were unlawful unless the defendants avoided the applicability of Section 2(d) by satisfying their burden of proving "in the district court that the payments for advertising or alternative appropriate benefits were available on proportionally equal terms to all customers competing with A & P in the distribution of their said products." 258 F.2d at page 838.

The Court of Appeals then proceeded to state that the defendants failed to meet this burden. Thus, in ruling that there was a violation of Section 2(d) on the basis of the facts contained in the record before it, the Court of Appeals must necessarily have resolved these component issues in plaintiffs' favor, in the absence of any express language on its part clearly evidencing a contrary intent. However, I find no such reservation in Judge Schnackenberg's opinion, it being my belief that his statement with respect to what issues our Court of Appeals will pass upon in the exercise of its appellate jurisdiction concerned itself with the fact of damage and class suit issues, the latter issues being separate and distinct from the issue of violation of Section 2(d).

It should also be observed that each of these component issues was thoroughly presented to the Court of Appeals both in the parties' briefs and in the documents filed with respect to defendants' petition for rehearing by that court. In abstaining from specifically referring to these issues in its process of finding that Section 2(d) had been violated, I can only conclude that the Court of Appeals must have considered each of these issues and found each lacking in sufficient merit to warrant comment on its part. In view of these factors, I feel completely justified in stating that had the Court of Appeals intended that I now rule on these matters, it would, and indeed should, have specifically remanded them for my consideration.

For the reasons stated, therefore, I hold that the Customer Issue, the Specificity of Product and Synchronization Issue, and the Wholesaler Issue were each resolved in plaintiffs' favor by the Court of Appeals in its opinion. Accordingly, such matters are not before me on remand.

II

With respect to the issue of fact of damage or injury, plaintiffs contend that an "increased cost of business" is an element constituting injury to a person's business or property within the meaning of Section 4 of the Clayton Act.*fn6 They argue that the increased cost of business in the instant case is equivalent to the amount of payments which the Court of Appeals ruled that the plaintiffs were entitled to, but did not, receive under Section 2(d) of the Robinson-Patman Act. Defendants take the position that loss of business or profits is the only element of injury under Section 4, and, in the alternative, contend that even if an increased cost of business is a valid element of injury or damage, the evidence in the instant case does not establish that any of the plaintiffs has suffered such an injury as a result of defendants' violation of Section 2(d).

For the reasons hereinafter set forth I hold that (1) an increased cost of business or out-of-pocket expense is a proper element of injury to a person's business or property within the meaning of Section 4 of the Clayton Act; (2) the fact of damage or injury has been established as to certain, but not all, of the plaintiff retailers; and (3) ...


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