The opinion on the demurrer (United States v. Food and Grocery Bureau et al., D.C.Cal., 1941,
So, in stating the grounds for the verdict to be announced, we may start, both factually and legally, where we left off in those two opinions.
In a famous English prosecution for a criminal libel against Parliament, in which, although publication had been proved, the jury had found the defendant not guilty, the trial judge, at the insistence of the attorney for the Crown, asked the jury whether they had found the defendant not guilty “because publication had not been proved.” The answer of the jury has become a classic. Through the foreman, they answered: “Not guilty, not guilty. That is our verdict, my Lord, and we abide by it”. Rex v. Owen, 1752, 18 Howell, State Trials, 1203.
One familiar with the law of criminal libel as it then stood, can understand the importance of the answer and the courage of the jury in giving it. Truth was not a defense. And when publication was proved, the offense was complete. Had the jurors answered the Court’s question affirmatively, their answer could have been considered a special verdict, and the verdict of not guilty nullified. Had they answered it negatively, they would have stood impeached. For publication had been proved. By giving this courageous answer, these twelve men who, as the record of the case shows, were drapers and other tradesmen, not only saved their verdict, but wrote a glorious incident in the history of trial by jury in' the English-speaking world, and in the history of free speech. They vindicated the right *976 of the jury, as judges of both the law and the facts, to best serve the interests of the social order by using their power of acquittal to uphold freedom of expression ■ at a time when harsh judicial doctrines originating in the' Court of Star Chamber (De Libellis' Famosis, 1609, 5 Rep. 125) stood in its way by declining to allow truth from good motives as a defense in - criminal libel. See, Hudson’s Treatise on the Court of, Star Chamber, Part II,. Ch. XI in Collectanea Jurídica, Vol. 2, pp. 100-104; Cf. Yankwich, Essays in the Law of Libel, 1929, pp. 103 et seq., 267-272.
I think of this incident every time I am called upon to decide a criminal case of importance which- is tried without a jury. I bear in mind what counsel endeavor to do to the Court’s reasons when the case reaches a higher court and the rather slighting manner in which some appellate courts refer to what they call (always in quotation marks) “opinions” in criminal cases. Some state that, strictly speaking, the. “reasons” for the verdict are not “a part of the record”. People v. Grana, 1934,
I am - not a believer in this doctrine. And I have sought consistently with the newer concept of judicial ethics (see Canon 19, Canons of Professional and Judicial-Ethics, American Bar Association,' adopted August 27, 1909) in every cause, civil or criminal, to inform litigants and their., counsel of .the grounds for decision. So , this is m'y apologia for following the prac-, tice-in .this,-case.-
In any case arising under the Sherman Anti-Trust Act, 15 U.S.C.A. § 1, which punishes contracts, combinations or conspiracies “in restraint of trade or commerce among the several States”, the nature of commerce, is vital. I have always been of the view that the difficulty which sometimes confronts us in attempting to reconcile the various definitions of “commerce” in the decisions of the Supreme Court derives from the fact that the Court does not always use the same touchstone in assaying what is and what is not commerce. The Court -adopts one norm when dealing with the power of the State to tax. See Heisler v. Thomas Colliery Co., 1922,
When the governmental power to control commerce takes .the form of criminal legislation, courts hark back to the proposition declared early in our judicial history, that the constitutional grant of control of commerce between the States, Article I, Sec. 8, 'Clause 3, Constitution of the United States, gives the Congress a power which is both plenary and absolute, with the primacy of the federal government beyond challenge. See Gibbons v.
*977
Ogden, 1824,
For the purpose of delimiting the respective spheres of intrastate and interstate activities, a concept has been developed, relating to the movement of commodities between the states, which says that interstate activity ends when the commodities come to rest within the state. American Steel & Wire Co. v. Speed, 1904,
So they have taken cognizance of the fact that many strictly local activities may injuriously affect interstate commerce or restrain it so as to come under the interdict of anti-trust legislation. Coronado Coal Co. v. United Mine Workers, 1925,
Agreements stabilizing prices either at a maximum or a minimum or through a formula are illegal. See Greater New York Live Poultry Chamber of Commerce v. United States, 2 Cir., 1931,
In assaying price-fixing agreements, the test is not so much whether the effect is felt after the movement of the goods has reached the end of the interstate journey. The inquiry seeks the effect upon prices in the market. And if this effect be shown, it matters not that the movement has come to a halt within the state. The teaching of the most recent cases, to which I have just referred, and which I also discussed in the opinion on the motions to dismiss and to strike, is too clear to absolve price-fixing agreements solely because their effect may not be felt until local sales are made, in retail trade, at the end of the journey. To interpret them in this manner is not to destroy whatever distinction may exist between interstate and local activities. It is merely to recognize that the Supreme Court, realizing the inter-relation between local and interstate commerce, has declined to recognize a break in the continuity of movement of articles originating in interstate commerce, and has asserted the controlling power of the anti-trust law over the entire process. And so, when the
*978
court says specifically' that 'control of prices “in the state of destination where the interstate movement ’ends” (Local 167 v. United States, 1934,
The optative mood ,in the language of the court does not mean that in price-fixing other elements of restraint must be shown. If the language had that meaning, the teaching of the later case — that price-fixing alone is a violation — gives the' contrary answer.
The bearing of this upon th'e facts before me is obvious.
There is undisputed evidence of price-fixing .here. The best proof, perhaps, lies in the fact that counsel for the defendants have sought to eliminate a large volume of documents which clearly carry this import by referring to them as “the extra-curricular activities” of the three successive executive secretaries of the Food and ■Grocery Bureau of Southern California. We pick others from the large number of exhibits. Here is a card, dated January 3, 1937 (Exhibit ’ 894), headed “Grocers Watch Your Prices. Make a Profit in 1938”. On December 2, 1937 (Exhibit 1192), another warning, “Grocers Keep Your Prices in Line with Minimum Markup”. On April 25, 1938 (Exhibit 861), this warning, “Grocers, Observe These Prices and Other Maximum Legal Prices”. There is a striking similarity between these admonitions and the so-called “advisory” suggestions as to prices- condemned in American Column Co. v. United States, 1921,
“ ‘The theoretical proposition at the basis of the Open Competition Plan is that
“ 'Knowledge regarding prices actually made is all that is necessary to keep prices at reasonably stable and normal levels.
“ ‘The Open Competition Plan is a central clearing house for information on prices, trade statistics and practices. By keeping all members fully and quickly informed of what the others have done, the work of the' Plan results in a certain uniformity of • trade practice. There is no agreement to follow the practice of others, althotigh members do follow their most intelligent ■ competitors, if they know what these- competitors have been actually doing. * * *
“ ‘The keynote to modern business success is mutual confidence and co-operation. Co-operative competition, not cut-throat competition. Co-operation is a matter of business because it pays, because it enables you to get the best price for your product, because you come into closer personal contact with the market.
“ ‘Co-operation will only replace undesirable competition as you develop a cooperative spirit.’ ” American Column Co. v. United States, 1921,257 U.S. 377 , 392-394,42 S.Ct. 114 , 115,66 L.Ed. 284 , 21 A. L.R. 1093. (Italics are the court’s.)
The- butter and egg cards, of which hundreds are in the record, were not informative letters giving available information to guide the retailers. They were price lists, at which retail grocers were urged to sell. In the case of recalcitrants, there were appeals ter the profit motive. The oleomargarine cards repeatedly warned against selling below a minimum price. Illustrative is Exhibit 311, which reads: “Grocers of Riverside and San Bernardino Counties: This office is advised many of you are selling Oleo margarine at 12 cents per pound and while we know that some •few sales have been made at a cost that will permit this as a retail price, in justice to yourselves and other merchants, we are asking the entire trade to sell no brand of Oleomargarine at less than 12% cents per pound. Kindly observe this price at once. Food and Grocery Bureau of Southern California, 1151 S. Broadway, Los Angeles Pr. 1041”
In one letter, Exhibit 199, a dealer is warned that, despite the fact that he may be in a position to sell butter below a minimum price, he should not do so because the arrangement “has made many thousands of dollars profit for the grocers”. The entire paragraph is so revealing that it may be given here in full from the letter dated January 29, 1940: “As we stated to you in a recent communication, almost every market operator in this city *979 enjoys a cost on under-score butter which would enable him to undersell our card quotations on those grades which are based on the local market quotations as secured from the Produce Exchange, but we repeat that the mutual arrangement agreed upon some five years ago and which has been adhered to most religiously by the large majority of operators has made many thousands of dollars profit for the grocers; but if certain stores are going to arbitrarily use their own cost on out-of-state butter as a basis rather than our quotations, our price structure will quickly break down not only on the under-score grades but it will soon effect the better known advertised brands in this market and your entire profit on butter is threatened, and we will approach a condition prevalent before the Butter and Egg agreement was reached at which time both items were sold at a loss constantly by the retail trade.” In the face of language of this character, it is sheer fiction to insist that the Bureau was only interested in preventing sales below cost.
The story is the same as to other articles, clearly originating in interstate commerce. We have a postal card dated December 17, 1936 (Exhibit 1385), relating to oleomargarine which reads:
“Grocers: Oleomargarine Dec. 17, 1936.
“This is to advise you that the Minimum Retail Price on competitive brands of Oleomargarine must be, on and after Monday, December 21, 1936, not less than 2 lbs for 27 cents. Prices below that amount must be stopped, and unless this is done voluntarily the necessary steps will be taken immediately to stop them.”
A letter of December 29, 1936 (Exhibit 1386), reads:
“Beginning Monday, January 4, 1937, the minimum legal price on canned milk will be — unadv. brands, 4 tall cans 25 cents — adv. brands, 3 tall cans 19 cents.
“You are Requested to Discontinue Any Further Use of Prices Below These Amounts.”
Repeatedly, prices are set and warning given not to undersell.
In the opinion on the motion to dismiss, I referred to Exhibit 402, in which the policy behind the activity — that of controlling prices — was laid down. Repeatedly, throughout the record, the so-called “Gentlemen’s Agreement” to control prices, of which this exhibit speaks, crops out. The effect of this activity is not important. The Anti-Trust Law is aimed at the agreement to restrain, not at its success or the amount of interstate commerce it may affect. Socony-Vacuum Oil Co. v. United States, 1941,
The words of the Court in American Column Co. v. United States, 1921,
So here, the Bureau, its President during practically the entire period, Ralph R. Brubaker, its two secretaries, who are defendants, Carl M. Grayson and Clarence A. Plumridge, its first secretary, W. Ii. Loughry, and the directors are directly responsible for these acts.
It is true that Brubaker sought to exculpate himself by pleading ignorance of the activities of the Bureau carried on through the secretaries. But, of his own volition, he has pleaded nolo contendere, and the Court has accepted the plea. Whatever may have been the misimpression in the past about this plea, it is now definitely settled by the Supreme Court (Hudson v. United States, 1926,
The attempt of the directors to blame the various secretaries for the Bureau’s incursion into illegal fields does not impress me. True, the services of the directors were gratuitous. It may well be .that they thought they were rendering a public service. And if the acts of the Bureau had been sporadic, it might well be argued that they escaped the attention of the directors. But they were not of this character. They were persistent throughout the period of the conspiracy from .1935-to-1941. At one stage qr another, during the incumbency of the various directors, there came to their- attention, as the minutes and letters show, the fact that the Association was endeavoring- to establish agreed prices. Each of them was a grocer. They all received, in due course, communications of the type I have described. They knew from their wording that these cards were not statistical data to guide them in fixing .their prices. They talked, always about “prices” or “minimum prices” for the day or for the week. There were exhortations to hold them up, appeals to the profit motive, and injunctions against deviation from “the straight and narrow path” of the “Gentlemen’s Agreement”.
“It is elementary that an unlawful conspiracy may be and often is formed without simultaneous action or agreement on the part of the conspirators. United States v. Schenk, D.C.,
The evidence, to my mind, establishes clearly that, despite their denials, the directors knew of the so-called “extracurricular” activities of the secretaries and assented to them. This is enough to fasten culpability upon them. See, People v. Moore, 1927,
There is some evidence that on two or three occasions the “out-of-bounds” language of some of the cards and letters was discussed with the secretaries — especially Grayson. But there is no written evidence in the minutes of the Association of any repudiation by the directors. There are changes of wording in certain of the cards, some of which are strangely coincidental with the. period of investigation which preceded this indictment. This means little. Even the statement of policy, prepared by the Bureau’s counsel and given to Plum-ridge, after he succeeded Grayson as secretary (Exhibit J), strangely fails to condemn any of the practices which were inaugu-rated under the regime of Loughry, as *981 Executive Secretary, and continued by the second Executive Secretary, Grayson, under whom Plumridge trained before he succeeded him. Its entiré tenor is to state merely that the Bureau, rather than use coercion against the individuals, should be satisfied with resorting to the coercive power of the courts.
In sum, there is no contemporaneous written memorial, prior to the return of this indictment, of any action on the part of the Bureau, acting through its officers or directors, condemning or repudiating the policy which they now forswear in court.
It follows that their guilt is established.
As to Count 1 of the indictment, the only defendants on trial are the Bureau and Grayson. It charges conspiracy to control wholesale prices. I do not think the evidence on this Count is sufficient. There are some documents which might be interpreted as showing that the Bureau aided wholesalers in furthering an agreement to fix wholesale prices. But this was not the chief concern or object of the Bureau. Whatever aid it may have rendered along this line was collateral to its main activities. Whatever they did was more by way of accomodation. They may have helped the wholesalers get together. But they were not parties to any agreement as to policy which may have resulted from the meetings. Nor did they participate in anything which the wholesalers did. Such participation should appear clearly before guilt is found.
There is, however, as appears from what I have said, ample evidence to show that each of the remaining defendants was guilty of the charge in the second count of the indictment — of conspiring to fix retail prices.
Plence the verdict:
I find the defendants Food and Grocery Bureau of Southern California, Inc., a corporation, and Carl M. Grayson, and each of them, not guilty as charged in Count I of the indictment.
I find the defendants Food and Grocery Bureau of Southern California, Inc., a corporation, Carl M. Grayson, S. M. White, Clarence A. Plumridge, Roy J. Porter, Clayton Whiteman, Myer Pransky, Sam Seelig, Henry J. Carty, T. I. Lingo, Harry R. Zenor, George Iiagmann, Jr., and Miller Allen, and each of them, guilty as charged in Count II of the Indictment.