A group of citrus fruit growers in California and Arizona
organized local cooperative associations which joined together for
the purpose of collectively marketing their fruit through the
agency of an area-wide marketing cooperative and two processing
cooperatives. Respondents sued petitioners, the area-wide
cooperative and one of the processing cooperatives, for treble
damages under § 4 of the Clayton Act, claiming that they had
conspired with the other processing cooperative and two privately
owned processing corporations to restrain and monopolize interstate
trade in citrus fruit and by-products, and had actually monopolized
the same, in violation of §§ 1 and 2 of the Sherman Act.
Held: In view of the exemption from the antitrust laws
accorded to agricultural cooperatives by § 6 of the Clayton Act and
§1 of the Capper-Volstead Act, 7 U.S.C. § 291, a judgment based on
a general verdict against petitioners, which may have rested on a
finding of an unlawful conspiracy among the three cooperatives,
must be reversed. Pp.
370 U. S.
20-30.
(a) The instructions in this case left it open for the jury to
base its verdict on a finding of a conspiracy among the marketing
cooperative and the two processing cooperatives. Pp.
370 U. S.
25-26.
(b) On the record in this case, it cannot be said that
petitioners waived their objection to these instructions. Pp.
370 U. S.
26-27.
(c) In view of the provisions of § 6 of the Clayton Act and § 1
of the Capper-Volstead Act, the three legal entities formed by
these growers for the purpose of processing and marketing their
agricultural products cooperatively cannot be considered
independent parties for the purposes of the conspiracy provisions
of §§ 1 and 2 of the Sherman Act. Pp.
370 U. S.
27-29.
(d) Where one of several theories submitted to a jury is held
erroneous, a general verdict must be reversed, as it may have
rested on the erroneous theory. Pp.
370 U. S.
29-30.
284 F.2d 1 reversed and cause remanded.
Page 370 U. S. 20
MR. JUSTICE CLARK delivered the opinion of the Court.
This is a treble damage suit brought under § 4 of the Clayton
Act, 38 Stat. 731, 15 U.S.C. § 15, charging petitioners, Sunkist
Growers, Incorporated, and The Exchange Orange Products Company,
with conspiracy to restrain and monopolize interstate trade and
commerce in citrus fruits and by-products and with actual
monopolization thereof in violation of §§ 1 and 2 of the Sherman
Act, 26 Stat. 209, 15 U.S.C. §§ 1, 2, as amended. The petitioners
are each agricultural cooperative organizations, Exchange Orange
being a wholly owned subsidiary of Sunkist. Petitioners contend the
case was submitted under instructions permitting the jury to find
an illegal conspiracy among them and Exchange Lemon Products
Company, a cooperative processing association owned and operated
exclusively by a number of lemon grower associations all of which
are members of Sunkist Growers, Inc. They say that, under the
exemptions from the antitrust laws granted agricultural
associations by § 6 of the Clayton Act, 38 Stat. 731, 15 U.S.C. §
17, and § 1 of the Capper-Volstead Act, 42 Stat. 388, 7 U.S.C. §
291, Sunkist, Exchange Orange, and Exchange Lemon, being made up of
the same growers and associations, cannot be charged with
conspiracy among themselves. The trial court overruled this
contention, among others, and the jury returned a verdict of
$500,000. Judgment for treble this amount and attorney fees, less
some minor offsets, was entered. The Court of Appeals, accepting
petitioners' view of the instructions, held that the exemption
claimed did not apply here and affirmed the judgment as to
liability, but
Page 370 U. S. 21
reversed as to the amount of damages. 284 F.2d 1. We granted
certiorari limited to the issue of the immunity of
inter-organizational dealings among the three cooperatives from the
conspiracy provisions of the antitrust laws.
368 U.
S. 813. We have concluded that the case was submitted to
the jury on the theory claimed by petitioners, and that this was
erroneous. Thus, we reverse the judgment.
Sunkist Growers, Inc., has at its base 12,000 growers of citrus
fruits in California and Arizona. These growers are organized into
local associations which operate packing houses. The associations,
in turn, are grouped into district exchanges, and representatives
from these exchanges make up the governing board of Sunkist, a
nonstock membership corporation. Sunkist serves the members as an
organization for marketing their fresh fruit and fruit products
[
Footnote 1] through its field,
advertising, sales, and traffic departments. All of its net
revenues are distributed to the members.
In 1915, several member associations of Sunkist undertook to
develop by-products for lemons in order to create a market for
produce not salable as fresh fruit. Because this was a new, untried
field, the entire cooperative did not participate. Rather, a
separate cooperative -- Exchange Lemon, a nonprofit stock
corporation -- was formed for this venture by the interested
associations. Since that time, Exchange Lemon has retained its
separate identity, although it is made up exclusively of lemon
grower associations which are also members of Sunkist. Its function
now is primarily one of processing, and the resultant products are
marketed for the owners by Sunkist through its products department,
which is jointly managed by directors of Exchange Lemon and
Exchange Orange.
Page 370 U. S. 22
One year after the organization of Exchange Lemon, a similar
association was formed to develop by-products for oranges. This
organization, Exchange Orange, was comprised of a number of Sunkist
member associations until 1931. At that time, the Sunkist directors
decided to make the processing facilities of Exchange Orange
available to all of its member associations by purchasing it and
operating it as a wholly owned subsidiary.
In sum, the individual growers involved each belong to a local
grower association. Fruit which is to be sold fresh is packed by
the associations and marketed by Sunkist, a nonstock membership
corporation comprised of district exchanges to which the
associations belong. Most fruit which is to be processed into
by-products is handled by Exchange Orange, a subsidiary of Sunkist,
or by Exchange Lemon, a separate organization comprised of a number
of Sunkist member associations. [
Footnote 2] It is then marketed by the products department
of Sunkist, which is managed by directors of Exchange Orange and
Exchange Lemon.
Competing with the three cooperatives in the California-Arizona
area in the business of processing and selling canned orange juice
were four independent processors, which were primarily dependent
upon Sunkist for their supply of by-product oranges. [
Footnote 3] In 1951, two of these concerns,
TreeSweet Products Company and E. A. Silzle Corporation, had
"process and purchase" contracts with Exchange Orange. Under its
contract, TreeSweet agreed to process at cost an undetermined
amount of oranges provided by Exchange Orange and to purchase the
resultant orange juice at the then current price of Sunkist. The
average net price for the oranges under this contract was
Page 370 U. S. 23
alleged to have been $25.10 per ton. [
Footnote 4] The contract with Silzle provided that it
would process a stated amount of oranges for Exchange Orange and
purchase the juice at a stated price less its processing cost
alleged to have netted $17.66 per ton. [
Footnote 5] The third producer, Case-Swayne Company,
allegedly declined Sunkist's offer of a similar contract.
Respondent Winckler & Smith Citrus Products Company, the final
processor, was offered oranges only at the list price of $40 to $44
per ton, depending upon content of soluble solids, and was refused
the "process and purchase" arrangements described above.
Respondents brought this suit on the theory that Sunkist and
Exchange Orange controlled the supply of by-product oranges
available in the California-Arizona area to independent processors;
that they combined and conspired with Exchange Lemon, TreeSweet,
and Silzle to restrain and to monopolize interstate trade and
commerce in 1951 in the processing and sale of citrus fruit juices,
particularly canned orange juice; that they in fact monopolized
such trade and commerce; and that the purpose or effect thereof was
the elimination of Winckler as a competitor in the sale of such
juices. Respondents relied on six specific acts and contracts which
allegedly furthered the conspiracy, namely: (1) the processing of
oranges at cost by Exchange Lemon for Exchange Orange during 1951;
(2) the processing of lemons at cost by Exchange Orange for
Exchange Lemon during 1951; (3) the establishment by Sunkist and
Exchange Orange of a price to independent processors alleged to be
too high to enable purchasers to compete,
i.e., the
$40-$44 per ton list price; (4) the contract between Exchange
Orange and TreeSweet in 1951; (5) the contract between Exchange
Page 370 U. S. 24
Orange and Silzle in 1951; (6) the refusal to sign a comparable
contract with respondent Winckler.
After a lengthy trial producing a 4,000-page transcript, the
case went to the jury under a necessarily complicated charge. As to
the parties the jury might find to have participated in an illegal
conspiracy, the court gave several instructions. One, given early
in the charge, was that:
"a parent corporation and its wholly owned subsidiary can be
guilty of combining or conspiring together to violate the antitrust
laws. The defendants Sunkist Growers, Inc., and its wholly-owned
subsidiary Exchange Orange Products Company, can accordingly
combine or conspire together or with others to violate Sections 1
and 2 of the Sherman Act as charged in the first and second causes
of action, subject to other instructions concerning the
Capper-Volstead Act, and Section 6 of the Clayton Act, and the
exemptions contained therein."
The instructions on the Clayton and Capper-Volstead Acts merely
stated that the cooperatives could lawfully have a monopoly of the
fruit and products in which they dealt. Later references to the
alleged conspiracy often mentioned only petitioners and the two
independent processors,
e.g.,
"If you find that either or both of the defendants [Sunkist and
Exchange Orange, petitioners here] combined with TreeSweet or
Silzle to eliminate the competition of the plaintiff. . . ."
However, the court's concluding instructions on the subject
could well have been taken by the jury as permitting them to find
an illegal conspiracy solely among the three cooperatives:
"Unless you find, therefore, from the preponderance of the
evidence, that Sunkist or Exchange Orange or either of them,
combined or conspired with either TreeSweet, or Silzle, or ELP
[Exchange Lemon Products],
Page 370 U. S. 25
and in 1951 did one or more of the specific acts charged. . .
."
". . . Unless you find from the preponderance of the evidence
that defendants Sunkist and Exchange Orange, or either of them, and
one or more of the alleged co-conspirators [one of which was
Exchange Lemon], combined and conspired, and pursuant to such
combination or conspiracy. . . ."
"Those are summary instructions which sort of sum up what is
charged and what the plaintiff must prove."
And, in a final addendum after consultation with counsel, the
court instructed that:
"I also am told that I spoke about how the defendants had
conspired on one occasion. The charge is not that the defendants
conspired. The charge is that the defendants and co-conspirators
conspired."
"However, as a matter of fact, you may find that nobody
conspired, or you may pick out and decide that some number less
than the total conspired."
On the question now before us, the Court of Appeals held that
any objection to at least one of the conspiracy instructions was
waived; that, in any event, different agricultural cooperatives
combining together are not entitled to claim a total immunity for
acts which they might do unilaterally and individually; and that
the common ownership of Sunkist, Exchange Orange, and Exchange
Lemon did not prevent the finding of an illegal conspiracy among
them.
We believe the instructions quite plainly left it open for the
jury to base their verdict upon a finding of a conspiracy among
petitioners and Exchange Lemon. [
Footnote 6] At the outset,
Page 370 U. S. 26
the court instructed that a conspiracy could be found between
Sunkist and its wholly owned subsidiary Exchange Orange.
Thereafter, the charge advised the jury that a finding of
conspiracy between "Sunkist or Exchange Orange or either of them .
. . [and] either TreeSweet, or Silzle, or ELP" was sufficient basis
for a judgment against petitioners. From this, it is entirely
probable that the jury's verdict against both petitioners was based
on their finding of a conspiracy among Sunkist, Exchange Orange,
and Exchange Lemon. There is no question that Exchange Lemon was
identified in the complaint and throughout the trial as an alleged
co-conspirator. In no fewer than five instances did the trial court
refer to the alleged conspiracy as being among petitioners and the
"co-conspirators" or petitioners and Exchange Lemon, TreeSweet, or
Silzle. The final summarization on conspiracy was in terms of
finding that petitioners combined or conspired with either
TreeSweet or Silzle or Exchange Lemon, and the addendum
instructions emphasized that the jury could find either or both
petitioners had illegally conspired with any one of the alleged
co-conspirators. It is true that, in some instances, the court's
conspiracy instructions mentioned only TreeSweet and Silzle as
co-conspirators. Conjecture as to the reasons for this would not be
fruitful. For it is clear that the court never limited the jury to
a consideration of those parties as the sole co-conspirators. And
other instructions, including the summarization, allowed the jury
to base their verdict upon a finding of an illegal conspiracy
solely among Sunkist, Exchange Orange, and Exchange Lemon.
It is suggested by respondents and the court below that
petitioners waived their objection to these instructions. This is
based on petitioners' acquiescence in the additional instructions,
including references to the conspiracy, given the jury after the
general charge. But petitioners' actions
Page 370 U. S. 27
here must be viewed in context. Prior to the general charge,
conferences of counsel and the trial court were held to discuss the
instructions. At each point, counsel for petitioners objected to
instructions which suggested that the three cooperatives might be
found to have illegally conspired among themselves, and requested
instructions that would have limited a finding of an unlawful
conspiracy in this case to one among petitioners and TreeSweet or
Silzle. The trial court consistently ruled adversely to petitioners
on this point. After the charge was delivered, counsel were told
that all prior objections would be preserved, and asked if they had
any additional objections. In light of this assurance and
petitioners' prior objections and requests, we believe the
acquiescence in the added instructions could not be considered a
waiver.
We are squarely presented, then, with the question of whether
Sunkist, Exchange Orange, and Exchange Lemon -- the three legal
entities formed by these 12,000 growers -- can be considered
independent parties for the purposes of the conspiracy provisions
of §§ 1 and 2 of the Sherman Act. We conclude not. Section 6 of the
Clayton Act provides,
inter alia, that agricultural
organizations instituted for the purposes of mutual help shall not
be held or construed to be illegal combinations or conspiracies in
restraint of trade under the antitrust laws. [
Footnote 7]
Page 370 U. S. 28
The Capper-Volstead Act sets out this immunity in greater
specificity:
"That 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. . . . [
Footnote
8]"
There can be no doubt that, under these statutes, the 12,000
California-Arizona citrus growers ultimately involved could join
together into one organization for the collective processing and
marketing of their fruit and fruit products without the business
decisions of their officers being held combinations or
conspiracies. The language of the Capper-Volstead Act is specific
in permitting concerted efforts by farmers in the processing,
preparing for market, and marketing of their products. And the
legislative history of the Act reveals several references to the
Sunkist organization -- then called the California Fruit Growers
Exchange and numbering 11,000 members -- including a suggestion by
Senator Capper that this was the type of cooperative that would
find "definite legalization" under the legislation. [
Footnote 9] Although we cannot draw from
these references a knowing approval of the
Page 370 U. S. 29
tripartite legal organization of the 11,000 growers, they do
indicate that a cooperative of such size and general activities was
contemplated by the Act.
Instead of a single cooperative, these growers, through local
associations, first formed one area-wide organization (Sunkist) for
marketing purposes. When it was decided to perform research and
processing on a joint basis, separate organizations were formed by
the interested associations for reasons outlined above. At a later
date, one of these (Exchange Orange) was acquired by the Sunkist
organization, and is presently held as a subsidiary. The other
(Exchange Lemon) is still owned by the lemon grower associations,
all of whom are also member associations of Sunkist. With due
respect to the contrary opinions of the Court of Appeals and
District Court, we feel that the 12,000 growers here involved are,
in practical effect and in the contemplation of the statutes, one
"organization" or "association," even though they have formally
organized themselves into three separate legal entities. To hold
otherwise would be to impose grave legal consequences upon
organizational distinctions that are of
de minimis meaning
and effect to these growers who have banded together for processing
and marketing purposes within the purview of the Clayton and
Capper-Volstead Acts. There is no indication that the use of
separate corporations had economic significance in itself, or that
outsiders considered and dealt with the three entities as
independent organizations. That the packing is done by local
associations, the advertising, sales, and traffic by divisions of
the area association, and the processing by separate organizations
does not, in our opinion, preclude these growers from being
considered one organization or association for purposes of the
Clayton and Capper-Volstead Acts.
Since we hold erroneous one theory of liability upon which the
general verdict may have rested -- a conspiracy
Page 370 U. S. 30
among petitioners and Exchange Lemon -- it is unnecessary for us
to explore the legality of the other theories. As was stated of a
general verdict in
Maryland v. Baldwin, 112 U.
S. 490,
112 U. S. 493
(1884),
"[I]ts generality prevents us from perceiving upon which plea
they found. If, therefore, upon any one issue error was committed,
either in the admission of evidence or in the charge of the court,
the verdict cannot be upheld. . . ."
Suffice it to say that our decision in no way detracts from
earlier cases holding agricultural cooperatives liable for
conspiracies with outside groups,
United States v. Borden
Co., 308 U. S. 188
(1939), and for monopolization,
Maryland & Virginia Milk
Producers Assn. v. United States, 362 U.
S. 458 (1960).
Reversed and remanded.
MR. JUSTICE FRANKFURTER took no part in the decision of this
case.
MR. JUSTICE WHITE took no part in the consideration or decision
of this case.
[
Footnote 1]
These include juices, concentrates, oil, pectin,
pharmaceuticals, and cattle feed.
[
Footnote 2]
Some by-product fruit is sold to or processed by independent
processors.
[
Footnote 3]
Sunkist also sold by-product oranges to additional companies for
processing into by-products other than canned orange juice.
[
Footnote 4]
The soluble solids content of the oranges processed by TreeSweet
under this contract averaged 131.6 pounds per ton.
[
Footnote 5]
The soluble solids content of these oranges averaged 120 pounds
per ton.
[
Footnote 6]
It could be argued that the instructions also permitted the jury
to find an illegal conspiracy solely between petitioners. Our
holding renders unnecessary an evaluation of this interpretation of
the charge.
[
Footnote 7]
"Sec. 6. That the labor of a human being is not a commodity or
article of commerce. Nothing contained in the antitrust laws shall
be construed to forbid the existence and operation of labor,
agricultural, or horticultural organizations, instituted for the
purposes of mutual help, and not having capital stock or conducted
for profit, or to forbid or restrain individual members of such
organizations from lawfully carrying out the legitimate objects
thereof; nor shall such organizations, or the members thereof, be
held or construed to be illegal combinations or conspiracies in
restraint of trade under the antitrust laws."
[
Footnote 8]
The Act has certain organizational requisites which are not in
issue here.
[
Footnote 9]
61 Cong.Rec. 1036 (1921) (remarks of Representative Black); 62
Cong.Rec. 2052 (1922) (Senator Kellogg); 62 Cong.Rec. 2061 (1922)
(Senator Capper); 62 Cong.Rec. 2277 (1922) (Senator Walsh).