Case-Swayne Co. v. Sunkist Growers, Inc.

¶4JAMESON, District Judge:

¶5This is an action seeking treble damages under section 4 of the Clayton Act (15 U.S.C. § 15)1 for alleged monopoly and to monopolize · Case Law">attempt to monopolize in violation of sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2).2 The district court granted the defendant’s motion for a directed verdict at the close of the plaintiff’s case.3

¶6Plaintiff (appellant), Case-Swayne, Inc., is engaged in the manufacture of single strength juices (canned orange juice and blends of orange juice with other fruit juice) as an independent operator. Defendant (appellee), Sunkist Growers, Inc., is an association of citrus producers.4 It has as its base 12,000 citrus growers in Southern California and Arizona. The growers are organized into local associations which operate packing houses. The associations-in turn are grouped into district exchanges and representatives from the exchanges make up the governing board of Sunkist. The Sunkist organization handles its members’ fruit in effect from tree to store.

¶7Appellant contends that the district, court erred (1) in granting the defendant’s motion for a directed verdict; and (2) in ruling that Sunkist was organized in conformance with section 1 of the Capper-Yolstead Act5 and therefore could not be held in violation of section 1 of the Sherman Act for conspiracy to restrain and monopolize trade in product oranges. If Sunkist Growers, Inc.,, was in fact organized as an agricultural cooperative association pursuant to the Capper-Volstead Act, as the district court found, any interorganizational dealings among the various agricultural cooperative associations are immune from the conspiracy provisions of section *4521 of the Sherman Act;6 but Sunkist may still be found liable under section 2 of the Sherman Act for wrongful use of monopoly power and attempt to monopolize.7 The question presented under the first specification in error is whether the evidence was sufficient for the jury to find that Sunkist wrongfully used monopoly power or attempted to monopolize trade in product oranges.

¶8In ruling on a motion for a directed verdict the trial court is required to view the evidence in the light most favorable to the party against whom the motion is made. “On appeal, likewise, the appellate court must consider the evidence in its strongest light in favor of the party against whom the motion … was made, and must give him the advantage of every fair and reasonable intendment that the evidence can justify”. 5 Moore’s Federal Practice 2316 (2d ed. 1951.) This is true “even though contrary inferences might reasonably be drawn”. Continental Ore Co. v. Union Carbide, 1962, 370 U.S. 690, 696, 82 S.Ct. 1404, 1409, 8 L.Ed.2d 777.

¶9Sunkist controlled approximately 70% of all oranges produced in Southern California and Arizona, and approximately 67% of the oranges diverted to product use. Product or “excess” oranges are those not sold as fresh fruit. They are used to make various orange products and are the only kind used by plaintiff in its business. On a national basis Sunkist controlled 6 to 7% of the total production.

¶10Other small cooperatives controlled for their own use approximately 18% of the oranges grown in Southern California and Arizona. The balance of the oranges, approximately 12%, represented those grown by independent growers and available to independent manufacturers.

¶11Additional facts set forth in the order granting defendant’s motion for directed verdict include the following:8

¶12(1) Prior to the development of the citrus juice industry there was no market for fruit not required by the fresh fruit market, and the remainder of the fruit, then called “culls”, was destroyed by the packing houses. With the development of the citrus juice industry, the demand for culls, now. designated “excess fruit”, could be sold to processors to convert into juice and other byproducts.

¶13(2) At the beginning of its processing activity plaintiff had no difficulty in obtaining at a reasonable price sufficient fruit for its needs. When it was demonstrated that conversion of excess fruit into juice and other citrus by-products was profitable, Sunkist decided to process its own fruit and for that purpose organized Exchange Orange Products Company and Exchange Lemon Products Company.

¶14(3) Fruit not so processed was sold to independent processors, including plaintiff. Sunkist had excess fruit available for sale to independent processors only when it was unable to process its own fruit. For several years Sunkist sold its excess fruit to independent processors by a bid system. All independent processors, including plaintiff, were invited to present bids for fruit to be sold.

¶15(4) As time went on and as Exchange Orange and Exchange Lemon developed processing capabilities, more and more excess fruit from Sunkist packing houses was channeled to Exchange Orange and Exchange Lemon until, at the present time, practically no Sunkist fruit is sold to independent processors.

¶16*453(5) Plaintiff attempted to obtain from other mutual citrus associations its requirement of fruit to process, only to find that such associations had entered into individual contracts with other processors; hence plaintiff was able to obtain very little fruit supply from mutual associations.

¶17(6) Approximately 12,000 citrus fruit growers annually signed contracts with Sunkist agreeing to sell fruit through the Sunkist organization. The contracts provided that if a grower did not abide by his contract, sanctions might be imposed. Occasionally a grower failed to sell his fruit to Sunkist, and sanctions were imposed by the Sunkist organization.

¶18(7) Sunkist trade-mark or trade name was a valuable asset, and defendant had spent large sums in establishing its trade-mark or trade name.

¶19(8) Sunkist employees observed operations of member growers to make certain that the growers handled their crops through the Sunkist organization and if it was discovered that a member grower sold fruit contrary to his contract, a report was made to Sunkist and, in certain instances, penalties were imposed upon the violating grower.

¶20(9) The Department of Agriculture, pursuant to the school lunch program, requested bids for single strength orange juice. One year Sunkist bid but did not receive the contract and another year, Sunkist bid and was awarded the contract.

¶21(10) Sunkist made a large profit from sale of citrus fruit.

¶22(11) The great majority of citrus grown in Southern California and Arizona goes into the fresh fruit market. The greater amount of oranges grown in Florida goes into the citrus products market. Fresh fruit from California, Arizona and Florida compete on the eastern and foreign markets.

¶23(12) It was possible for processors in Florida to make single strength orange juice, can and ship it to California, and sell it at the same price as (or at a price lower than) the Southern California-Arizona produced juice. Florida processors of single strength orange juice could assimilate transportation costs from Florida to California and sell their product in competition with single strength orange juice made within the Southern California-Arizona area. This was possible because of the lower price for which Florida fruit could be purchased.

¶24(13) The price paid for Florida oranges was the dominant factor in determining the price for which single strength orange juice could be sole, to the ultimate consumer.

¶25(14) There is also competition between single strength orange juice and orange juice concentrates. Neither of the parties is a producer of concentrated or frozen juice.

¶26The alleged violations of the Sherman Act arise out of “Sunkist’s dominant control of oranges grown in Arizona and California together with its vertical integration and dual distribution with respect to oranges designated for product use … ”. More particularly, plaintiff complains that it was unable to purchase oranges for product use from Sunkist at a price that would enable it to compete with canned juice shipped in from Florida.9

¶27The district court’s granting of the directed verdict was premised upon the conclusion that the “relevant market” was national rather than limited to California-Arizona, and that in light of this plaintiff had not shown evidence of an illegal monopoly.10

¶28*454The cases uniformly hold that “a party has monopoly power if it has, over ‘any part of the trade or commerce among the several states’, a power of controlling prices or unreasonably restricting competition”. United States v. E. I. du Pont de Nemours & Co., 1956, 351 U.S. 377, 389, 76 S.Ct. 994, 1004, 100 L.Ed. 1264. In determining whether a party has monopoly power it is first essential to define the “relevant market”.

¶29This court has held that determination of the relevant market, “both as respects products and as concerns geographical area” is a “necessary step precedent to determining whether within that market there was a probability” of violation of section 7 of the Clayton Act. Crown Zellerbach Corporation v. F. T. C., 9 Cir., 1961, 296 F.2d 800, 804, (cert. denied (1962)) 370 U.S. 937, 82 S.Ct. 1581, 8 L.Ed.2d 807. While Crown Zellerbach involved a violation of the Clayton Act with respect to corporate acquisitions, it is clear that the same determination must be made regarding the relevant market in actions for violation of section 2 of the Sherman Act. United States v. du Pont & Co., supra.

¶30.In the recent case of United States v. Grinnell Corp., 1966, 384 U.S. 563, 86 S.Ct. 1698, 16 L.Ed.2d 778, a civil suit for alleged violations of section 2 of the .Sherman Act, the Court said in part:

“ … That … case arose under § 7 of the Clayton Act where the question was whether the effect of a merger ‘in any line of commerce’ may be ‘substantially to lessen competition.’ We see no reason to differentiate between ‘line’ of commerce in the context of the Clayton Act and ‘part’ of commerce for purposes of the Sherman Act.” (384 U.S. at 573, 86 S.Ct. at 1705).

¶31In determining the “relevant market” applicable in this case, it seems advisable first to analyze separately the factors involved in both the relevant product market and the relevant geographic market.

¶32Relevant Product Market

¶33United States v. E. I. du Pont de Nemours & Co., supra, relied upon by the district court in granting Sunkist’s motion for a directed verdict, promulgated the test of “reasonable interchangeability” to determine the relevant product market. The Government contended that cellophane was the relevant product market. The Court assumed that if this were true, du Pont would have'monopoly power over that market. The Court found, however, that cellophane was “reasonably interchangeable” with other flexible wrappings, and that the relevant product market accordingly was “flexible packaging materials” rather than cellophane alone.

¶34The rule of “reasonable interchangeability” has been refined and modified in subsequent cases. In particular, the courts have recognized that there may be an outer market and one or more inner submarkets within which competitive effects are to be appraised, i. e. a relevant submarket may constitute the product market for antitrust purposes.

¶35In Brown Shoe Co. v. United States, 1962, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510, involving a merger found to be in violation of section 7 of the Clayton Act, the Court said in part:

“The ‘area of effective competition’ must be determined by reference to a product market (the ‘line of commerce’) and a geographic market (the ‘section of the country’).

“The Product Market.

“The outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it. However, within this broad market, well-defined submarkets may exist which, in themselves, constitute product markets for antitrust purposes, (citation) The boundaries of such a submarket may be determined by examining such practical indicia as industry or public recognition of the submarket as a separate economic en*455tity, the product’s peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors.” (370 U.S. at 324-325, 82 S.Ct. at 1523).

¶36The rule of Brown Shoe was expressly applied to cases arising under section 2 of the Sherman Act in the recent case of United States v. Grinnell Corporation, supra, where the Court said:

“In § 2 cases under the Sherman Act, as in § 7 cases under the Clayton Act (Brown Shoe Co. v. United States, 370 U.S. 294, 325, [82 S.Ct. 1502, 8 L.Ed.2d 510]) there may be submar-kets that are separate economic entities.” (384 U.S. at 573, 86 S.Ct. at 1704).

¶37Relevant Geographic Market

¶38In Brown Shoe, supra, the Court also set forth criteria to be used in determination of the geographic market:

“The Geographic Market.

“The criteria to be used in determining the appropriate geographic market are essentially similar to those used to determine the relevant product market. See S.Rep.No.1775, 81ct Cong.2d Sess. 5-6; United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 593 [77 S.Ct. 872, 1 L.Ed.2d 1057.] Moreover, just as a product submarket may have § 7 significance as the proper ‘line of commerce,’ so may a geographic submarket be considered the appropriate ‘section of the country.’ (Citing cases). Congress prescribed a pragmatic, factual approach to the definition of the relevant market and not a formal, legalistic one. The geographic market selected must, therefore, both ‘correspond to the commercial realities’ of the industry and be economically significant. Thus, although the geographic market in some instances may encompass the entire Nation, under other circumstances it may be as small as a single metropolitan area.” (370 U.S. at 336-337, 82 S.Ct. at 1530).

¶39In the recent case of United States v. Pabst Brewing Company, et al., 1966, 384 U.S. 546, 552, 86 S.Ct. 1665, 16 L.Ed.2d 765, involving the acquisition in 1958 by Pabst Brewing Company of Blatz’s Brewing Company, the Court held that the “evidence as to the probable effect of the merger on competition in Wisconsin, in the three-state area (Wisconsin, Illinois and Michigan), and in the entire country was amply sufficient to show a violation of § 7 (of the Clayton Act as amended by the Celler-Kefauver Anti-Merger Amendment)11 in each and all of these three areas”. In 1957, prior to the merger, the two companies had combined sales which accounted for 23.95% of the beer sales in Wisconsin, 11.32% of the sales in the three-state area, and 4.49% of the sales throughout the country.

¶40The Court was unanimous in holding that the district court erred in dismissing the complaint. Mr. Justice Harlan (joined by Mr. Justice Stewart) in a concurring opinion agreed with the district court that viewing the entire continental United States as a relevant market, the evidence did not sustain the Government’s contention that the acquisition might substantially lessen competition. They agreed with the majority opinion, however, as did Mr. Justice Fortas, that the Government’s evidence was sufficient to establish prima facie that Wisconsin and the tri-state area were proper “sections of the country” in which to measure the probable effects of the acquisition.

¶41In his concurring opinion, Mr. Justice Harlan said in pertinent part:

“The appropriate geographic area in which to examine the effects of an acquisition is an area in which the parties to the merger or acquisition compete, and around which there exist economic barriers that significantly impede the entry of new competitors. *456…” (384 U.S. at 556-557, 86 S.Ct. at 1671).

¶42Whether a geographical location is or is not an “area of effective competition” is a question of fact in each case. United States v. Columbia Pictures Corporation, S.D.N.Y., 1960, 189 F.Supp. 153, 192. The area may be limited by differences in costs of production and transportation. Erie Sand & Gravel Co. v. F. T. C., 3 Cir. 1961, 291 F.2d 279, 281. “A competitive price disadvantage arising from transportation costs is an important factor in determining the scope of a relevant market.” United States v. Penn-Olin Chemical Company, D.Del., 1963, 217 F.Supp. 110, 120; American Crystal Sugar Co. v. Cuban-Ameriean Sugar Co., S.D.N.Y., 1957, 152 F.Supp. 387, 398, Aff’d, 2 Cir., 1958, 259 F.2d 524.

¶43It seems clear from the decided cases that (1) while the outer limits of the market may be determined by the competition of interchangeable products, (2) there may be a well-defined sub-market which constitutes the relevant market for antitrust purposes, which (3) must correspond to the commercial realities of the industry, (4) is affected by price disadvantages due to transportation costs, (5) is affected by availability of a buyer to supply and existence of economic areas which significantly impede competition, (6) is determined in part with relation to the parties affected in the suit, and (7) is a question of fact in the particular case.

¶44We come now to an application of the criteria for determining both relevant product market and relevant geographic market to the facts in this case. In advance of trial it was the position of the trial court, as set forth in its pretrial order, that the relevant product market was product oranges and the relevant geographic market Southern California and Arizona. At the close of plaintiff’s case, the court was persuaded that the relevant product market included orange juices and concentrates and that the relevant geographic market was national rather than limited to Southern California and Arizona.12

¶45It is clear from the evidence that orange products (single strength juice and frozen concentrates) were sold in a national market. Oranges could be processed in Florida, and the juice shipped to California and sold competitively with juice processed in California from Cali*457fornia oranges. Sunkist held a relatively small part of this national market and controlled neither quantity nor price.

¶46On the other hand, it is equally clear that it was uneconomical for producers of orange products to buy their product oranges in Florida or elsewhere than in the Southern California-Arizona area. Sunkist controlled 70% of all oranges grown in this area and 67 % of the product oranges. A substantial portion of the remaining product was unavailable to Case-Swayne.

¶47Appellee does not question these facts, but contends that the relevant geographic market for product oranges was national on the theory that the product orange supply is tied irrevocably to orange product price. Appellee argues that product oranges “have value only because they can be converted into a product which has value”, and that “the value of product oranges cannot exceed that which will permit them to be processed into products and then compete in a national products market dominated by Florida”.

¶48While product oranges may have little, if any, value per se, the same is true of many raw products. The market for raw products is among the processors rather than the ultimate consumer. We see no reason why the raw product may not be the relevant product market, even though it has little value in its raw state. Moreover, it is clear from the recent case of United States v. Pabst Brewing Company, supra, that even as to the processed product, the relevant market may at the same time be national, regional, and statewide in area.13

¶49 While Sunkist could not control the supply or price of canned juices because of competition from Florida in these products, there was substantial evidence that it did control the supply of product oranges from which juice was made in California and Arizona. In determining the relevant geographic market, a proper test is the “ ‘ * … geographic structure of supplier-customer relations.’ ” United States v. Philadelphia National Bank, et al., 1963, 374 U.S. 321, 357, 83 S.Ct. 1715, 1739, 10 L.Ed.2d 915. The relevant market is determined in part by the market area “to which the purchaser can practicably turn for supplies”. Tampa Electric Co. v. National Coal Co., 1961, 365 U.S. 320, 327, 81 S.Ct. 623, 628, 5 L.Ed.2d 580.14 There is no question that Case-Swayne and other users of product oranges could not as a practical matter obtain product oranges from suppliers outside California and Arizona.

¶50Moreover, even though the price of product oranges in Florida would influence the price of product oranges in California, there was evidence from which the jury might find that Sunkist by reason of its control of the supply also as a practical matter controlled the price.15 That is particularly true if it *458should be found that Sunkist refused to sell to plaintiff and other independent buyers at any price.

¶51As Mr. Justice Fortas said in his dissenting opinion16 in the recent case of United States v. Grinnell Corporation, supra, “The central issue is where does a potential buyer look for potential suppliers of the service. — what is the geographical area in which the buyer has, or, in the absence of monopoly, would have, a real choice as to price and alternative facilities? This depends upon the facts of the market place, taking into account such economic factors as the distance over which supplies and services may be feasibly furnished, consistently with cost and functional efficiency.” (384 U.S. at 589, 86 S.Ct. at 1713, 16 L.Ed.2d 778).

¶52We conclude that there was evidence from which the jury might properly find that the relevant product market was product oranges and the relevant geographic market Southern California-Arizona.

¶53Evidence of Wrongful Use of Monopoly Power and Attempt to Monopolize

¶54If the jury should find that Southern California and Arizona was the relevant market, there was sufficient evidence from which the jury could find further that Sunkist engaged in monopolistic practices or an attempt to monopolize proscribed by section 2 of the Sherman Act.

¶55As the Court said in United States v. Grinnell Corp., supra:

“The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”

… -X- X X

“In United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 391 [76 S.Ct. 994, 1005, 100 L.Ed. 1264,] we defined monopoly power as ‘the power to control prices or exclude competition.’ The existence of such power ordinarily may be inferred from the predominant share of the market. In American Tobacco Co. v. United States, 328 U.S. 781, 797, [66 S.Ct. 1125, 1133, 90 L.Ed. 1575,] we said that ‘over two-thirds of the entire domestic field of cigarettes and …; over 80 per cent of the field of comparable cigarettes’ constituted ‘a substantial monopoly.’ ” (384 U.S. at 570-571, 86 S.Ct. at 1704).

¶56It is clear that Sunkist had possession of monopoly power in the relevant market, if that market is found to be the Southern California-Arizona area.

¶57It is true, as appellee contends, that size alone does not constitute an offense under the Sherman Act; nor does the mere possession of monopoly power. It is the wrongful use and exercise of that power which is proscribed by section 2 of the Act.

¶58However, the ultimate consideration in determining whether an alleged monopolist violates section 2 of the Sherman Act is “whether the defendants control the price and competition in the market for such part of trade or commerce as they are charged with monopolizing.” United States v. E. I. du Pont de Nemours & Co., supra, 351 U.S. at 380, 76 S.Ct. at 999, 100 L.Ed. 1264. It is not always necessary to find a specific intent to find that an antitrust law has been violated. “It is sufficient that a restraint of trade or monopoly results as the consequence of a defendant’s conduct *459or business arrangements (citing cases). To require a greater showing would cripple the Act. As stated in United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 432, ‘no monopolist monopolizes unconscious of what he is doing.’ Specific intent in the sense in which the common law used the term is necessary only where the acts fall short of the results condemned by the Act.” United States v. Griffith, 1948, 334 U.S. 100, 105, 68 S.Ct. 941, 944, 92 L.Ed. 1236.

¶59Appellant contends that Sunkist wrongfully exercised its monopoly power through (1) boycotting appellant by refusing to sell ..appellant product oranges while selling to other processors; (2) preventing TreeSweet from delivering oranges TreeSweet had committed to appellant; (3) controlling orange prices; and (4) eliminating competitors (or as with appellant, limiting their profits) by maintaining high prices for oranges or reducing supply.

¶60The same acts are relied upon in support of appellant’s contention that Sunkist intentionally attempted to monopolize the trade in product oranges in the relevant market. Appellant relies upon additional evidence of such intent in Sunkist’s (1) admitted purpose to control all the oranges it could get and utilize all of them in its own manufacturing facilities; (2) preventing Placentia Orange Distributors from fulfilling its promise to sell appellant 5,000 tons of oranges in 1957; (3) policing the Sunkist system to punish violators of the Sunkist “restrictive tying contracts”; (4) wrongful use of dual distribution by lowering single strength juice prices after competing manufacturers had purchased product oranges at prices established by Sunkist; (5) use of consignment contracts and its low 1956 bid (compared with its 1955 bid) to the Department of Agriculture.

¶61Appellee recognizes in its brief that “the key determination by the trial court was that the appellant’s evidence … established the fact that the relevant market for product oranges is a national market”, but contends further that “under each of the tests which the courts have applied to determine whether or not a monopoly exists, the appellant’s evidence conclusively established that there was no monopoly”, and that with respect to each of the acts and incidents upon which appellant relies, Sunkist’s conduct was “legitimate, cooperative activity and not undertaken in an unlawful manner or for an unlawful purpose”. There is substantial evidence to support appellee’s denial of each of the alleged acts of monopoly.

¶62In determining the issues of monopolization and intent to monopolize, however, the evidence must be viewed as a whole. Ever though the proof as to each of the. specific acts may be insufficient in itself to establish wrongful use of monopoly power, the jury must look at the “whole picture”, weigh the contradictory evidence and inferences and draw the “ultimate conclusion as to the facts”. See Continental Ore Co. v. Union Carbide and Carbon Corp., supra, 370 U.S. at 699-701, 82 S.Ct. at 1411, 8 L.Ed.2d 777, and cases there cited.

¶63As noted supra, in ruling on the directed verdict this court must give appellant “the advantage of every fair and reasonable intendment that the evidence can justify”, and this is true “even though contrary inferences might reasonably be drawn”. From a review of the record we conclude that there was sufficient evidence to submit to the jury the question of whether Sunkist wrongfully exercised its monopoly power and intentionally attempted to monopolize the trade in product oranges. We do not find that appellant has established any of the alleged acts of monopoly — only that viewing the evidence as a whole, it has made a prima facie case for the jury.17

¶64*460Section 1 of the Capper-Volstead Act

¶65Appellant contends that Sunkist is not a person “engaged in the production of agricultural products” under Section 1 of the Capper-Volstead Act because only 80.12% of its members are associations composed of fruit growers, while 4.97% are corporate growers, and 14.91% are private profit-making corporations, individuals and partnerships which market through Sunkist the oranges they have purchased from growers.18

¶66The district court concluded, and we think correctly, that under the decision of the Supreme Court in Sunkist Growers, Inc. v. Winekler & Smith Co., supra, Sunkist Growers, Inc., is a cooperative organized in compliance with Section 1 of the Capper-Volstead Act. It is true, as appellant argues, that this issue was not specifically raised in the Winekler case, but the Court did describe the Sunkist organization in detail. This was prior to the merger with Exchange Orange and Exchange Lemon, but the Court concluded that the 12,000 growers were “in practical effect and in the contemplation of the statutes one ‘organization’ or ‘association’ even though … formally organized … into three separate legal entities”. (370 U.S. at 29, 82 S.Ct. at 1136). The Court also said in pertinent part:

“The language of the Capper-Vol-stead 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 Acts 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 a type of cooperative that would find ‘definite legalization’ under the legislation. …

“ … 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.” (370 U.S. at 28-29, 82 S.Ct. at 1136).

¶67With respect to appellant’s contention that Sunkist is not a qualified cooperative under Capper-Volstead by reason of its “corporate growers”, this *461question was raised in the district court in United States v. Maryland & Virginia Milk Producers Ass’n, D.D.C.1958, 167 F.Supp. 45, aff’d in part, reversed in part on other grounds, 362 U.S. 458, 80 S.Ct. 847, 4 L.Ed.2d 880. In that case the Government urged that the words “dairymen” and “farmers” should be restricted to natural persons. The district court held that it was immaterial “whether every member of the association is a natural person or a corporation.”19

¶68The Supreme Court did not comment on this portion of the district court’s opinion, although it considered at length the scope of the immunity granted by Capper-Volstead. It is clear from the district court’s opinion that the cooperative included corporate growers. It seems likely that this fact would have been considered by the Supreme Court if there were any question regarding the status of the association as a qualified cooperative by reason of the corporate growers. V|

¶691 U.S.C. § 1 provides that in “determining the meaning of any Act … of Congress, unless the context indicates otherwise … the words ‘person’ and ‘whoever’ includes corporations … as well as individuals … tf

¶70We find nothing in the context of the Capper-Volstead Act to indicate that a corporation would not be considered a person within the meaning of the Act.

¶71Does the fact that the so-called agency associations (comprising 14.91% by number and 12.94% by volume) constitute a “class” of membership prevent Sunkist from being a “person engaged in the production of agricultural products” under section 1 of the Act? It will be noted from the stipulation of the parties (note 18) that the agency associations furnish their facilities and services on an independent contract basis, and that they do not participate in either gain or loss involved in marketing fruit through Sunkist. In other words, the growers receive full benefit of cooperative marketing through the agencies.

¶72Associations organized under the Cap-per-Volstead Act “may make the necessary contracts and agreements to effect” the purposes of the Act, i. e., “collectively processing, preparing for market, handling, and marketing” their products. (7 U.S.C. § 291). The agency associations supply services which the growers require (packing house facilities) in handling and marketing their products. The fact that the “packing is done by local associations … and the processing by separate organizations” does not preclude the growers from being considered one association for purposes of the Capper-Volstead Act. Sunkist Growers, Inc. v. Winckler & Smith Co. supra.

¶73This is not a case where the agreement in question goes beyond the legitimate objects of processing and marketing. See e. g. United States v. Borden Co., 1939, 308 U.S. 188, 60 S.Ct. 182, 84 L.Ed. 181. The Court there recognized that agricultural producers “may unite in preparing for market and in marketing their products”, and may “make the contracts which are necessary for that collaboration”, but they are not authorized to conspire with others in restraint of trade. The Court said in part:

“In this instance, the conspiracy charged is not that of merely forming a collective association of producers to market their products but a conspiracy, or conspiracies, with major distributors and their allied groups, with labor officials, municipal officials, and others, in order to maintain artificial and non-competitive prices to be paid to all producers for all fluid milk produced in Illinois … and also to *462control ‘the supply of fluid milk permitted to be brought to Chicago’.” (308 U.S. at 205, 60 S.Ct. at 191).

¶74In Maryland & Virginia Milk Producers Association v. United States, supra, the court pointed out that the object of the conspiracy or combination was to eliminate a competitor and that the “allegations of the complaint … charge anticompetitive activities which are so far outside the ‘legitimate objects’ of a cooperative that, if proved, they would constitute clear violations of § 2 of the Sherman Act … ” (362 U.S. at 468, 80 S.Ct. at 854, 4 L.Ed.2d 880). (Emphasis added). The Court said further:

“The Embassy assets the Associatipn acquired are useful in processing and marketing milk, and we may assume, as it is contended, that their purchase simply for business use, without more, often would be permitted and would be lawful under the Capper-Volstead Act. -… phe contract of purchase here, viewed in the context of all the evidence and findings, was not one made merely to advance the Association’s own permissible processing and marketing business; it was entered into by both parties, according to the court’s findings as we understand them, because of its usefulness as a weapon to restrain and suppress competitors and competition … (362 U.S. at 471-472, 80 S.Ct. at 856). (Emphasis added).

¶75The independent contracts with the agency associations were for the legitimate objects of processing and marketing. Under the statute Sunkist could have entered into these contracts “with separate organizations”. The mere fact that the agency associations constitute a “class” of membership does not in our opinion change the effect of the agency agreements or destroy the exempt status of the entire association.

¶76Request for Leave to File Second Supplemental Complaint

¶77Appellant next contends that the district court abused its discretion in denying plaintiff’s motion to file a second supplemental complaint alleging facts occurring after the filing of the original complaint. In our opinion, upon remand of this case, appellant should be permitted to file the supplemental complaint. As the Court said in Texarkana v. Arkansas, Louisiana Gas Co., 1939, 306 U.S. 188, 59 S.Ct. 448, 83 L.Ed. 598:

“Where there is a good cause of action stated in the original bill, a supplemental bill setting up facts subsequently occurring which justifies other or further relief is proper. If the original decree in the trial court had not been entered, this supplemental petition would simplify the controversy. We think this procedure is equally applicable after remand for further proceedings.” (306 U.S. at 203, 59 S.Ct. at 455).

¶78Alleged Prejudice and Bias of Trial Judge

¶79Finally appellant contends that the trial judge showed such marked prejudice against appellant that this court should order a new trial before another judge. In our opinion, the record does not support our issuance of the requested order. We are confident that the district court, upon remand and in the proper administration of its own functions, will insure that the retrial is conducted in the necessary atmosphere of total impartiality.

¶80It is ordered that the judgment be reversed and the cause remanded to the district court for a new trial.

¶101ELY, Circuit Judge

¶102(dissenting in part):

¶103I agree with the result reached by the majority, and I concur in its opinion except for that portion in which it is held that Sunkist falls within the exemption of section 1 of the Capper-Volstead Act, 7 U.S.C. § 291.

¶104The principal reason offered by the majority in support of the view which I question is its asserted belief that the question was settled in Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 19, 82 S.Ct. 1130, 8 L.*463Ed.2d 305 (1962). I do not so interpret that decision. The particular issue was not presented to the Supreme Court, and it was not adjudicated. It was apparently conceded by the parties in Winckler, of which the appellant here was not one, that Sunkist was covered by the CapperVolstead exemption. In the prior opinion of the Court of Appeals, reported at 284 F.2d 1 (9th Cir. 1960), the only discussion of the exemption pertained to its extent, not to whether or not it was applicable. Furthermore, the Supreme Court, in granting certiorari, 368 U.S. 813, 82 S.Ct. 56, 7 L.Ed.2d 22.(1961), expressly limited its consideration to a single question, namely,

“Where a group of citrus fruit growers form a co-operative organization for the purpose of collectively processing and marketing their fruit, and carry out those functions through the agency of three co-operative agricultural associations, each of which is basically ivholly owned and governed by those groiuers, and each of which is admittedly entitled to the exemption from the antitrust laws accorded to agricultural cooperatives by the Cap-per-Volstead Act (7 U.S.C.A., see. 291) — is an unlawful conspiracy, combination or agreement established under Sections 1 and 2 of the Sherman Act [15 U.S.C.A. §§ 1, 2] upon proof only that these growers, through the agency of these three co-operatives, agreed among only themselves with respect to the extent of the division of the function of processing between them or with respect to the price they would charge in the open market for the fruit and the by-products thereof processed and marketed by them?” (Emphasis supplied.)

¶105Even if the issue had been determined by the Supreme Court in Winckler, the admitted nature of Sunkist’s present organizational make-up is such that the exemption should no longer be held properly to apply. The privilege to act together in “exempt” associations is conferred only upon “persons engaged in the production of agricultural products. … 7 U.S.C. § 291. The plain import of the statutory language is that such an association must be composed solely of agricultural producers. Regardless of whether Sunkist was thus composed at the time of the Winckler decision in 1962, as the Supreme Court’s order granting certiorari, supra, indicates, it is clear that the composition is no longer the same. In our case, it is conceded that the so-called “agency associations,” which comprise almost 15% of the membership of the Sunkist organization, are not growers or producers.1 The majority, in disregarding the significance of this factor, may have been influenced by the absence of decisions squarely holding that an association must be composed entirely of growers in order to qualify for the exemption. I point out that, while there are no decisions to that effect, there are none to the contrary. The opinions in a number of cases contain language which suggests the conclusion which I see to be plainly required by the statute’s terms. Some of this language is as follows:

“The persons to whom the Capper-Volstead Act applies are defined in § 1 as producers of agricultural products * …. They are authorized to act together ‘in collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce’ their products. …

*464“The right of these agricultural producers thus to unite … cannot be deemed to authorize any combination or conspiracy with other persons in restraint of trade that these producers may see fit to devise.” United States v. Borden Co., 308 U.S. 188, 204-205, 60 S.Ct. 182, 84 L.Ed. 181, 191 (1939) (Emphasis supplied.).

“The chief defense set up by the Association was that, because of its being a cooperative composed exclusively of dairy farmers, § 6 of the Clayton Act and §§ 1 and 2 of the Capper-Volstead Act completely exempted and immunized it …. Accordingly the court dismissed the Sherman Act § 2 monopolization charge, where the Association was not alleged to have acted in combination with others, but upheld the right of the Government to go to trial on the Sherman Act § 3 and Clayton Act § 7 charges because they involved alleged activities with the owners of Embassy and other persons who were not agricultural producers.” Maryland & Virginia Milk Producers Assn., Inc. v. United States, 362 U.S. 458, 461-462, 80 S.Ct. 847, 851, 4 L.Ed.2d 880 (1960) (Emphasis supplied.).

“Thus, the full effect of § 6 is that a group of farmers acting together … cannot be restrained ….

“The Capper-Volstead Act … extended § 6 of the Clayton Act exemption to capital stock agricultural cooperatives …. The general philosophy of both was simply that individual farmers should be given … the same unified competitive advantage … available to businessmen … ” Id.,362 U.S. at 465-466, 80 S.Ct. at 853 (Emphasis supplied.).

“[0]ur 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, [60 S.Ct. 182, 84 L.Ed. 181] … ” Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 19, 30, 82 S.Ct. 1130, 1136, 8 L.Ed.2d 305 (1962).

“The Court concludes that a combination between two or more agricultural cooperatives to fix prices of their products is exempt from the antitrust laws provided that no other person that is not such an organization or a member of such a group is a part of the combination.” United States v. Maryland Cooperative Milk Pro., 145 F.Supp. 151, 155 (D.D.C.1956) (Emphasis supplied.).

“Although the Capper-Volstead Act … and the Clayton Act … give some privileges to combinations of agricultural producers, a combination of producers and distributors to eliminate competition and fix prices at successive stages in the marketing of an agricultural product is not privileged.” United States v. Maryland & Virginia Milk Pro. Ass’n, 85 U.S.App.D.C. 180, 179 F.2d 426, 428 (1949) (Emphasis supplied.).

“The exemptions are accorded and immunities are conferred on agricultural cooperatives and their activities. When they step outside of their field and conspire with persons who are not producers of agricultural commodities, they are beyond the scope of the exemptions." United States v. Maryland & Virginia Milk Pro. Ass’n, 167 F.Supp. 45, 51-52 (D.D.C.1958), modified, 362 U.S. 458, 80 S.Ct. 847, 4 L.Ed.2d 880 (1960) (Emphasis supplied.).

¶106The persistent theme of the foregoing excerpts is that a cooperative, even though it otherwise qualifies for exemption under the Capper-Volstead Act, forfeits its exemption when it combines with non-producers. If that is so, then it is logically inconsistent to hold that a cooperative, while composed in part of non-producers, may yet qualify for the exemption.