New Grant-Patten Milk Co. v. Happy Valley Farms, Inc., 222 F. Supp. 319 (E.D. Tenn. 1963)

U.S. District Court for the Eastern District of Tennessee - 222 F. Supp. 319 (E.D. Tenn. 1963)
September 28, 1963

222 F. Supp. 319 (1963)

HAPPY VALLEY FARMS, INC. and Sealtest Foods Division, National Dairy Products Corporation.

Civ. A. No. 3912.

United States District Court E. D. Tennessee, S. D.

September 28, 1963.

VanDerveer, Brown & Siener, Chattanooga, Tenn., for plaintiff.

Witt, Gaither, Abernathy, Caldwell & Wilson, Chattanooga, Tenn., for Happy Valley Farms.

Miller, Martin, Hitching, Tipton & Lenihan, Chattanooga, Tenn., for Sealtest.

FRANK W. WILSON, District Judge.

This case is before the Court upon the motion of the defendant, Sealtest, for a partial summary judgment, the said motion filed July 12, 1963. The motion for partial summary judgment is directed toward the allegations in the plaintiff's complaint charging the defendant, Sealtest, with unlawful acquisitions in violation of Section 7 of the Clayton Act, 15 U.S.C.A. ยง 18. More specifically, the motion is directed toward the allegations in paragraphs 6 and 9(f) of the amended complaint insofar as the plaintiff there seeks to assert a cause of action against Sealtest for violation of Section 7 of the Clayton Act by reason of unlawful acquisitions. By affidavit, interrogatories, and admissions the following facts appear undisputed in the record: (a) that the plaintiff's sales are limited to an area within a radius of 50 miles of Chattanooga, Tennessee, and that this constitutes the relevant market area in this suit; (b) that Sealtest has made no acquisitions, corporate or otherwise, within the relevant market area as defined above since 1926; (c) that the acquisitions made by Sealtest and relied upon by the plaintiff as the basis for a Section 7 violation are at various locations throughout the United States, but all such acquisitions are located wholly outside of the market area relevant to this lawsuit and none has ever done business within the relevant market area or been in competition with the plaintiff. Upon this state of the record, the defendant, Sealtest, contends that no genuine issue exists as to any Section 7 violation by it. The plaintiff, upon the other hand, contends that even though the dairy companies acquired by the defendant were not in competition with *320 the plaintiff and were located outside of the plaintiff's relevant market area, such acquisitions contributed to the size, wealth, influence, and resources of Sealtest, thereby enhancing its competitive advantages, tending to lessen competition and creating a monopoly, under the "deep pocket," "rich parent," "war chest," and "reciprocity" theories and doctrines as developed in the cases.

In order to maintain a private suit for damages, the plaintiff must establish not only that the defendant violated a provision of the anti-trust laws, but also that it sustained damages as a direct and proximate result of that violation. Sperry Products, Inc. v. Aluminum Company of America, D.C., 171 F. Supp. 901. It is not enough to allege something forbidden and claim damages resulting therefrom, but rather the plaintiff must show that it sustained damages as a proximate result of such violation. As stated in Toulmin's Anti-Trust Laws, Volume 2, page 93,

"An individual plaintiff is not entitled to sue by reason of violations resulting in injury to other persons or to the public. Correction of the latter evil is the function of the government alone * * *. The complaint must affirmatively show the injury; it is not enough to allege something forbidden and claim damages resulting therefrom."

See also Toulmin's Anti-Trust Laws, Vol. 6, p. 413; Duff v. Kansas City Star Company, 299 F.2d 320 (CCA 8, 1962); and "Legal Injury Requirements and Proof of Damages in Treble Damage Actions Under the Anti-Trust Laws," 30 George Washington Law Review 231 (1962). There is a total absence of either allegations or evidence as to how the acquisition of non-competing properties or companies located outside the relevant market area could be a direct and proximate cause of injury to the plaintiff. That such acquisition increased the size, resources, and ability of Sealtest to compete in the relevant market area could at most be only a remote and indirect cause of the plaintiff's damages and injuries, if not a speculative and conjectural cause. The Court is of the opinion that a private action for treble damages will not lie under Section 7 of the Clayton Act based upon the defendant's acquisition of non-competing corporate properties located and conducting business wholly outside the plaintiff's relevant market area. The motion of Sealtest for a partial summary judgment upon the issue of any violation by it of Section 7 of the Clayton Act should therefore be sustained under the undisputed facts of this case.

An order will enter accordingly.