National Broiler Marketing Assn. v. United States
436 U.S. 816 (1978)

Annotate this Case

U.S. Supreme Court

National Broiler Marketing Assn. v. United States, 436 U.S. 816 (1978)

National Broiler Marketing Assn. v. United States

No. 77-117

Argued February 21, 1978

Decided June 12, 1978

436 U.S. 816

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

The United States brought an antitrust suit against petitioner, a nonprofit cooperative association the members of which are integrated producers of broiler chickens. The complaint alleged that petitioner, which performs various marketing and purchasing functions for its members, had conspired with others, including its members, in violation of § 1 of the Sherman Act. Petitioner asserted that its activities with its members were sheltered from suit under § 1 of the Capper-Volstead Act, which permits "[p]ersons engaged in the production of agricultural products as farmers" to join in cooperative associations. The District Court concluded that the activities of petitioner's members justified their classification as farmers, and that the Capper-Volstead protection claimed was therefore available. The Court of Appeals reversed, holding that petitioner's members were not all "farmers" in the ordinary meaning of that word as it was used at the time the Capper-Volstead Act was passed.

Held: Because not all of petitioner's members qualify as farmers under the Capper-Volstead Act, it is not entitled to the protection from the antitrust laws afforded by that Act. Case-Swayne Co. v. Sunkist Growers, Inc.,389 U. S. 384 (1967). Pp. 436 U. S. 822-829.

(a) The language of the Capper-Volstead Act reveals that not all persons engaged in the production of agricultural products are entitled to form cooperatives protected by that Act. P. 436 U. S. 823.

(b) The legislative history of the Act reveals that Congress did not intend the protection of the Act to extend to the processors and packers to whom farmers sold their goods, even when the relationship was such that the processors and packers bore a part of the risks of a fluctuating agricultural market. Pp. 436 U. S. 824-827.

(c) Those among petitioner's members who own neither a breeder flock nor a hatchery and who maintain no "grow-out" facility at which broiler flocks are raised and whose economic roles are essentially those of packers or processors, are not "farmers" within the meaning of the Capper-Volstead Act. Pp. 436 U. S. 827-829.

550 F.2d 1380, affirmed and remanded.

Page 436 U. S. 817

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, MARSHALL, POWELL, REHNQUIST, and STEVENS, JJ., joined. BRENNAN, J., filed a concurring opinion, post, p. 436 U. S. 829. WHITE, J., filed a dissenting opinion, in which STEWART, J., joined, post, p. 436 U. S. 840.

MR. JUSTICE BLACKMUN delivered the opinion of the Court.

Once again, [Footnote 1] this time in an antitrust context, the Court is confronted with an issue concerning integrated poultry operations. Petitioner phrases the issue substantially as follows:

"Is a producer of broiler chickens precluded from qualifying as a 'farmer,' within the meaning of the Capper-Volstead

Page 436 U. S. 818

Act, when it employs an independent contractor to tend the chickens during the 'grow-out' phase from chick to mature chicken? [Footnote 2]"

The issue apparently is of importance to the broiler industry and in the administration of the antitrust laws. [Footnote 3]

I

In April, 1973, in the United States District Court for the Northern District of Georgia, the United States brought suit against petitioner National Broiler Marketing Association (NBMA). It alleged that NBMA had conspired with others not named, hut including members of NBMA, in violation of § 1 of the Sherman Act, 26 Stat. 20, as amended, 15 U.S.C. § 1 (1976 ed.). It prayed for injunctive relief and that NBMA "be ordered to make whatever changes are necessary in its organization and operation to insure compliance with the judgment" of the court. Record 10. In its answer, NBMA alleged, among other things, that its status, as a cooperative association of persons engaged in the production of agricultural products, sheltered it from antitrust liability for the acts alleged, under § 1 of the Capper-Volstead Act, also known as

Page 436 U. S. 819

the Cooperative Marketing Associations Act, 42 Stat. 388, 7 U.S.C. § 291 (1976 ed.). [Footnote 4]

On motion and cross-motion for partial summary judgment, the District Court concluded that the involvement of all the members of NBMA in the production of broiler chickens was sufficient to justify their classification as "farmers," within the meaning of the Act, and that NBMA therefore was a cooperative entitled to the limited exemption from the antitrust laws the Act afforded. 1975-2 Trade Cases 60,509.

On appeal, [Footnote 5] the United States Court of Appeals for the Fifth Circuit reversed. It held that all the NBMA members were not farmers in the ordinary, popular meaning of that word, and

Page 436 U. S. 820

as it was employed in 1922 when the Capper-Volstead Act became law. 550 F.2d 1380 (1977). Because of the importance of the issue for the agricultural community and for the administration of the antitrust laws, we granted certiorari. 434 U.S. 888 (1977).

II

NBMA is a nonprofit cooperative association organized in 1970 under Georgia law. [Footnote 6] It performs various cooperative marketing and purchasing functions on behalf of its members. App. 7. [Footnote 7] Its membership has varied somewhat during the course of this litigation, but apparently it has included as many as 75 separate entities. Id. at 172.

These members are all involved in the production and marketing of broiler chickens. [Footnote 8] Production involves a number of distinct stages: the placement, raising, and breeding of breeder flocks to produce eggs to be hatched as broiler chicks;

Page 436 U. S. 821

the hatching of the eggs and placement of those chicks; the production of feed for the chicks; the raising of the broiler chicks for a period, not to exceed, apparently, 10 weeks; the catching, cooping, and hauling of the "grown-out" broiler chickens to processing facilities; and the operation of facilities to process and prepare the broilers for market. Id. at 7.

The broiler industry has become highly efficient and departmentalized in recent years, [Footnote 9] and stages of production that in the past might all have been performed by one enterprise may now be split and divided among several, each with a highly specialized function. No longer are eggs necessarily hatched where they are laid, and chicks are not necessarily raised where they are hatched. Conversely, some stages that in the past might have been performed by different persons or enterprises are now combined and controlled by a single entity. Also, the owner of a breeder flock may own a processing plant.

All the members of NBMA are "integrated," that is, they are involved in more than one of these stages of production. Many, if not all, directly or indirectly own and operate a processing plant where the broilers are slaughtered and dressed for market. All contract with independent growers for the raising or grow-out of at least part, and usually a substantial part, of their flocks. Id. at 8. Often the chicks placed with an independent grower have been hatched in the member's hatchery from eggs produced by the member's breeder flocks.

Page 436 U. S. 822

The member then places its chicks with the independent grower for the grow-out period, provides the grower with feed, veterinary service, and necessary supplies, and, with its own employees, usually collects the mature chickens from the grower. Generally, the member retains title to the birds while they are in the care of the independent grower. Ibid.

It is established, however, ibid.; Brief for Petitioner 5 n. 2, that six NBMA members do not own or control any breeder flock whose offspring are raised as broilers, and do not own or control any hatchery where the broiler chicks are hatched. And it appears from the record that three members do not own a breeder flock or hatchery, and also do not maintain any grow-out facility. [Footnote 10] These members, who buy chicks already hatched and then place them with growers, enter the production line only at its later processing stages.

III

The Capper-Volstead Act removed from the proscription of the antitrust laws cooperatives formed by certain agricultural producers that otherwise would be directly competing with each other in efforts to bring their goods to market. [Footnote 11] But if the cooperative includes among its members those not so privileged under the statute to act collectively, it is not entitled to the protection of the Act. Case-Swayne Co v. Sunkist Growers, Inc.,389 U. S. 384 (1967). Thus, in order for NBMA to enjoy the limited exemption of the Capper-Volstead Act, and, as a consequence, to avoid liability under the antitrust laws for its collective activity, all its members must be qualified to act collectively. It is not enough that a typical

Page 436 U. S. 823

member qualify, or even that most of NBMA's members qualify. We therefore must determine not whether the typical integrated broiler producer is qualified under the Act, but whether all the integrated producers who are members of NBMA are entitled to the Act's protection.

The Act protects "[p]ersons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers" (emphasis added). A common sense reading of this language [Footnote 12] clearly leads one to conclude that not all persons engaged in the production of agricultural products are entitled to join together and to obtain ad enjoy the Act's benefits. The italicized phrase restricts and limits the broader preceding phrase "[p]ersons engaged in the production of agricultural products. . . ." [Footnote 13]

Page 436 U. S. 824

The purposes of the Act, as revealed by the legislative history, confirm the conclusion that not all those involved in bringing agricultural products to market may join cooperatives exempt under the statute, and have the cooperatives retain that exemption. The Act was passed in 1922 to remove the threat of antitrust restrictions on certain kinds of collective activity, including processing and handling, undertaken by certain persons engaged in agricultural production. Similar organizations of those engaged in farming, as well as organizations of laborers, were already entitled, since 1914, to special treatment under § 6 of the Clayton Act, 38 Stat. 731, 15 U.S.C. § 17 (1976 ed.). [Footnote 14] This treatment, however, had proved to be inadequate. Only nonstock organizations were exempt under the Clayton Act, but various agricultural groups had discovered that, in order best to serve the needs of their members, accumulation of capital was required. With capital, cooperative associations could develop and provide the handling and processing services that were needed before their members' products could be sold. The Capper-Volstead Act was passed to make it clear that the formation of an agricultural organization with capital would not result in a violation of the antitrust laws, and that the organization, without

Page 436 U. S. 825

antitrust consequences, could perform certain functions in preparing produce for market. Mr. Justice Black summarized this legislative history in his opinion for a unanimous Court in Maryland & Virginia Milk Producers Assn. v. United States,362 U. S. 458, 362 U. S. 464-468 (1960), and it is further discussed in Case-Swayne, 389 U.S. at 389 U. S. 391. [Footnote 15]

Farmers were perceived to he in a particularly harsh economic position. They were subject to the vagaries of market conditions that plague agriculture generally, and they had no means individually of responding to those conditions. Often the farmer had little choice about who his buyer would be and when he would sell. A large portion of an entire year's labor devoted to the production of a crop could be lost if the farmer were forced to bring his harvest to market at an unfavorable time. Few farmers, however, so long as they could act only individually, had sufficient economic power to wait out an unfavorable situation. Farmers were seen as being caught in the hands of processors and distributors who, because of their position in the market and their relative economic strength, were able to take from the farmer a good share of whatever

Page 436 U. S. 826

profits might be available from agricultural production. [Footnote 16] By allowing farmers to join together in cooperatives, Congress hoped to bolster their market strength and to improve their ability to weather adverse economic periods and to deal with processors and distributors.

NBMA argues that this history demonstrates that the Act was meant to protect all those that must bear the costs and risks of a fluctuating market, [Footnote 17] and that all its members, because they are exposed to those costs and risks and must make decisions affected thereby, are eligible to organize in exempt cooperative associations. [Footnote 18] The legislative history indicates, however, and does it clearly, that it is not simply exposure to those costs and risks, but the inability of the individual farmer to respond effectively, that led to the passage of the Act. The congressional debates demonstrate that the Act was meant to aid not the full spectrum of the agricultural sector but, instead, to aid only those whose economic position rendered them comparatively helpless. It was, very definitely, special interest legislation. Indeed, several attempts were made to amend the Act to include certain processors who, according to preplanting contracts, paid growers amounts based on the market price of processed goods; these attempts were roundly rejected. [Footnote 19] Clearly, Congress did not intend to extend the

Page 436 U. S. 827

benefits of the Act to the processors and packers to whom the farmers sold their goods, even when the relationship was such that the processor and packer bore a part of the risk.

Petitioner suggests that agriculture has changed since 1922, when the Act was passed, and that an adverse decision here "might simply accelerate an existing trend toward the absorption of the contract grower by the integrator," or

"might induce the integrators to rewrite their contracts with the contract growers to designate the latter as lessor-employees, rather than independent contractors."

Brief for Petitioner 13; see id. at 24, 26, and Tr. of Oral Arg. 17. We may accept the proposition that agriculture has changed in the intervening 55 years, but, as the second Mr. Justice Harlan said, when speaking for the Court in another context, a statute "is not an empty vessel into which this Court is free to pour a vintage that we think better suits present-day tastes." United States v. Sisson,399 U. S. 267, 399 U. S. 297 (1970). Considerations of this kind are for the Congress, not the courts.

IV

We, therefore, conclude that any member of NBMA that owns neither a breeder flock nor a hatchery, and that maintains no grow-out facility at which the flocks to which it holds title are raised, is not among those Congress intended to protect by the Capper-Volstead Act. The economic role of such a member in the production of broiler chickens is indistinguishable

Page 436 U. S. 828

from that of the processor that enters into a preplanting contract with its supplier, or from that of a packer that assists its supplier in the financing of his crops. [Footnote 20] Their participation involves only the kind of investment that Congress clearly did not intend to protect. [Footnote 21] We hold that such members are not "farmers," as that term is used in the Act, and that a cooperative organization that includes them -- or even one of

Page 436 U. S. 829

them -- as members is not entitled to the limited protection of the Capper-Volstead Act.

The judgment of the Court of Appeals is affirmed, and the case is remanded for further proceedings.

It is so ordered.

[Footnote 1]

See Bayside Enterprises, Inc. v. NLRB,429 U. S. 298 (1977).

[Footnote 2]

The Court of Appeals described the issue in this manner:

"We must decide whether broiler industry companies that neither own nor operate farms can be 'farmers' within the meaning of a 1922 federal statute called the Capper-Volstead Act, which gives farmers' cooperatives some measure of protection from the antitrust laws."

(Footnote omitted.) 550 F.2d 1380, 1381 (CA5 1977).

[Footnote 3]

Nineteen States have filed a brief amicus curiae and assert interests as antitrust litigants. See In re Chicken Antitrust Litigation, M.D.L. No. 237, ND Ga. No. C74-2454A. See also Brown, United States v. National Broiler Marketing Association: Will the Chicken Lickin' Stand?, 56 N.C.L.Rev. 29 (1978); Department of Agriculture, Farmer Cooperative Service, Legal Phases of Farmer Cooperatives (1976); Note, Trust Busting Down on the Farm: Narrowing the Scope of Antitrust Exemptions for Agricultural Cooperatives, 61 Va.L.Rev. 341 (1975).

[Footnote 4]

Section 1 of the Capper-Volstead Act provides in pertinent part:

"Persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes. . . ."

The statute further provides that any such association must be operated for the mutual benefit of its members; that it may not pay dividends of more than 8% annually on its stock or membership capital; and that it "shall not deal in the products of nonmembers to an amount greater in value than such as are handled by it for members." Section 2 of the Act, 7 U.S.C. § 292 (1976 ed.), provides for certain regulation of the association by the Secretary of Agriculture.

[Footnote 5]

In order to facilitate the appeal, the United States, after the District Court's decision, amended the complaint to limit its allegations of conspiracy to the members of NBMA. App. 995. This was done without prejudice to any later renewal of allegations abandoned by the amendment. Id. at 91. Noting that the United States did not dispute that, if NBMA were a qualified cooperative, the exemption afforded by the Capper-Volstead Act provided a complete defense to the amended complaint, and restating its conclusion that NBMA's members were entitled to join in a cooperative under the Act, the District Court dismissed the amended complaint with prejudice. Id. at 105-10; 1976-1 Trade Cases

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