Court held that an agricultural marketing association composed of dairy farmers had violated the Sherman Antitrust Act in attempting to get dealers to purchase milk from the association. The dairymen employed a boycott and exerted other economic pressure on dealers to attain their goal. This activity the Court held to be outside the legitimate objects of a cooperative and to constitute a violation of the Sherman Act.
As a violation of that Act, it matters not that the means employed were those of peaceful persuasion. Paramount Pictures v. United Motion Picture Theatre Owners, 93 F.2d 714 (3 Cir. 1937). Merely because defendants' picketing involved the use of speech or was viewed by them as "telling their story" to the public, their activities are not necessarily entitled to the protection of the First Amendment. Picketing is more than speech; it is speech mixed with particular conduct. Building Service Employees International Union Local 262 v. Gazzam, 339 U.S. 532, 94 L. Ed. 1045, 70 S. Ct. 784 (1950); Cox v. Louisiana, 379 U.S. 559, 13 L. Ed. 2d 487, 85 S. Ct. 476 (1965). A picket line has potential for inducing action beyond the message the pickets convey. The very purpose of picketing is to exert influences and produce results different from the usual means of communication. Hughes v. Superior Court, 339 U.S. 460, 94 L. Ed. 985, 70 S. Ct. 718 (1950).
Indeed, the purpose of the picketing here was to induce the retail store operators to agree to stop handling Otto's products and in many instances it was successful. The pickets wanted not only to tell their story to the public, they wanted also to stop the customers from shopping at the stores and in turn stop the stores from dealing with Otto. To put it another way, the objective of the picketing was to achieve a result contrary to the provisions of the Sherman Act. The Supreme Court has made it clear that picketing employed as an integral part of conduct in violation of a valid statute is not entitled to the immunity granted other forms of expression. Giboney v. Empire Storage Co., supra. The enjoining of picketing, the sole purpose of which is in conflict with a valid statute, is not inconsistent with Constitutional guarantees of freedom of speech. Local Union No. 10, United Association of Journeymen Plumbers and Steamfitters v. Graham, 345 U.S. 192, 73 S. Ct. 585, 97 L. Ed. 946 (1953); International Brotherhood of Teamsters v. Vogt, Inc., 354 U.S. 284, 1 L. Ed. 2d 1347, 77 S. Ct. 1166 (1957).
Plaintiff has satisfactorily established that defendants were engaged in activities which constitute a boycott designed to restrain and monopolize interstate commerce in violation of the Sherman Antitrust law. For this reason, plaintiff's prayer for a permanent injunction of these activities by defendants must be granted. Therefore, counsel for plaintiff is directed to file suggested findings of fact and conclusions of law and a form of decree in accordance with this Opinion.
Findings of Fact, Conclusions of Law and Decree
Findings of Fact
1. Plaintiff, Otto Milk Company ("Otto"), a Pennsylvania corporation with its principal office and plant in Pittsburgh, Pennsylvania, is engaged in the purchasing of raw milk which it processes and bottles, and in the manufacturing of dairy products, including bottled milk, which it sells to numerous retail stores in Pennsylvania, Ohio and West Virginia.
2. Defendants are the United Dairy Farmers Cooperative Association ("Association"), an incorporated association, whose members operate dairy farms in Pennsylvania; United Dairy Farmers ("UDF"), an unincorporated association of dairy farm operators; and Ernest Hayes, J.D. Smouse, Joseph M. Piper, Stanley Yagla and Adam Babiarz, all of whom are officers of the United Dairy Farmers Cooperative Association and the United Dairy Farmers.
3. Otto purchases raw milk requirements through the Dairymen's Cooperative Sales Association ("DCSA"), a milk marketing organization, which is in competition with the Association and UDF. In such purchases Otto pays for milk the full prices required by the Pennsylvania Milk Control Commission.
4. While raw milk purchased by plaintiff is produced on farms in Western Pennsylvania, it purchases material for milk containers, dairy products containers, milk cases, and ingredients for its processed dairy products from other states, spending more than one million dollars annually for such out of state purchases.
5. Plaintiff sells products in states other than Pennsylvania, the volume of these sales at times exceeding $200,000.00 annually.
6.Beginning on or about May 26, 1966, members of the defendants, Association and UDF, marched in front of retail stores which sell Otto products in various communities in Armstrong, Butler, Fayette, Washington and Westmoreland Counties. They carried signs bearing various statements, such as "Otto Milk refuses to pay fair prices for milk"; "Otto Milk Company refuses to pay fair prices to farmers"; and "Otto Milk is unfair to the farmer".
7. These members of defendant organizations told the managers of the stores in front of which they marched that they would leave, if the stores stopped selling Otto's products. In some instances, they also asked store managers to substitute Beverly Farms' (a competitor of Otto) products for Otto's. When store managers acquiesced by discontinuing purchases of Otto's products, the pickets were removed.
8. While picketing in front of these stores, defendant organizations' members also distributed handbills signed by United Dairy Farmers Cooperative Association, and urging the consumers to purchase Beverly Farms milk.
9. The evidence establishes that these pickets were associated with, and their activities were authorized by, defendants.
10. The foregoing activities of defendants adversely affected plaintiff's good will, and resulted in a loss of business to plaintiff amounting to approximately $3600.00 per week, which losses would continue and mount if defendants' conduct were not enjoined by this Court.
11. If the said conduct of defendants continued, it would further result in the reduction of purchases by Otto of materials from other states.
12. Plaintiff has suffered and, if defendants are not enjoined, will continue to suffer, irreparable injury, for which there is no adequate remedy of law.
13. The purchases and sales of the retail food stores against which defendants' activities were directed are in interstate commerce and the activities of defendants reduced the sale of all items in the stores, in addition to sales of Otto's products.
14. The activities of defendants were designed ultimately to exclude DCSA from competition in the milk market in the area involved, and to corner that market for the Association and UDF.
15. In addition to Pennsylvania farmers, many Ohio and West Virginia farmers market their milk through DCSA.
16. Defendants' activities, if continued, would have an effect on interstate commerce which would not be insubstantial.
17. Defendants, by picketing retail grocery dealers and by asking them to remove Otto's products from their stores, have engaged in an operation amounting to a boycott of Otto and DCSA, designed to restrain and monopolize interstate commerce.
18. Such action constitutes an attempt by defendants to monopolize the sale of raw milk in the southwestern Pennsylvania market area, which constitutes a separate and distinct geographic market for such milk. There is a reasonable likelihood that this attempt, if allowed to continue, will substantially lessen competition.
19. If defendants were permitted to continue the activities complained of and were successful, they could eventually exclude DCSA from the milk market in southwestern Pennsylvania.
20. Defendants' activities constitute a conspiracy between them and the owners of the retail stores which they picketed to boycott Otto and thus restrain competition between UDF and DCSA, even though the agreement of the storekeepers was obtained by coercion.
21. The purpose of defendants' activities was to induce the retail store operators to agree to stop handling Otto's products and, in many instances, it was successful. The pickets wanted not only to tell their story to the public, but they also wanted to stop customers from shopping at the stores and, in turn, stop the stores from dealing with Otto.
22. The activities of defendants interfered with, and if not enjoined would continue to interfere with, the advantageous business relationship between Otto and its customers.
23. Plaintiff has waived its claim for damages, including treble damages, and for counsel fees, and plaintiff and defendants have stipulated that the hearings held on plaintiff's motion for a preliminary injunction shall be considered as the final hearings in this case for the purpose of determining whether a permanent injunction shall issue.
Conclusions of Law
1. This Court has jurisdiction of the matters complained of in Counts I and II of the complaint in this action under Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2).
2. This Court has pendent jurisdiction of the matters complained of in Count III of the complaint in this action.
3. The activities of defendants, and others coerced by them, constitute an unlawful conspiracy in restraint of trade in violation of Section 1 of the Sherman Act (15 U.S.C. § 1).
4. The activities of defendants constitute an attempt to monopolize in violation of Section 2 of the Sherman Act (15 U.S.C. § 2).
5. The activities of defendants constitute a tortious interference with plaintiff's advantageous business relationship with its customers.
6. The activities of defendants are not exempted from the provisions of the Sherman Act by virtue of either Section 6 of the Clayton Act (15 U.S.C. § 17), or the provisions of the Capper-Volstead Act (7 U.S.C. § 291).
7. Plaintiff is entitled to relief in the form of a permanent injunction against the actions of defendants complained of.
Based upon the evidence, the opinion of the Court heretofore filed, and the foregoing Findings of Fact and Conclusions of Law, it is hereby Ordered and Decreed that defendants, United Dairy Farmers Cooperative Association, United Dairy Farmers, Ernest Hayes, J.D. Smouse, Joseph M. Piper, Stanley Yagla and Adam Babiarz, and each of them, and any person or persons acting on their behalf, under their direction, or in concert or participation with them, are hereby permanently enjoined and restrained from inducing or attempting to induce, directly or indirectly, any present or potential customer of plaintiff to refuse to purchase products from plaintiff and, in connection therewith, from picketing or demonstrating, or threatening to picket or demonstrate, before or about any retail store in and around Western Pennsylvania, or in any other place which is, or may become, a purchaser of the bottled milk or dairy products of plaintiff.
Costs to be paid by defendants.