The Supreme Court agreed yesterday to decide whether corporations may be "farmers" exempt from antitrust laws.
At the same time, the court let stand apparently conflicting decisions about the availability of testimony given in secret criminal proceedings to civil plaintiffs seeking triple damages.
The corporate farmer question involves the National Broiler Marketing Association, the only country-wide cooperative of its kind. Its members - some of them large firms - accounted for nearly all of the industry's $3 billion in sales last year.
Association members, known as "integrators," own laying chickens whose eggs hatch into chicks. Integrators take the chicks to independent contractors, or "growers;" they supply land, buildings and labor, and give the chicks integrators' feed for seven to nine weeks. Then the integrators retrieve the birds for slaughter and sale.
In a 1973 lawsuit, the Justice Department charged the association and its members with price fixing, because the integrators routinely exchange price information to try to stabilize prices.
But the association said that it and its members fall within the antitrust exemption of the Capper-Volsead Act, a 1922 law that allows persons engaged "as farmers," such as "nut or fruit growers," to form cooperatives to engage in activities otherwise barred as restraints on trade.
A federal court agreed, saying that association members are farmers because they produce broilers from egg to market and bear most of the economic risks. But the Fifth U.S. Circuit Court of Appeals reversed the trial court.
"We cannot conceive that the ordinary, popular sense of the word 'farmers' would fit broiler integrator companies," the appellate court said. "When the common run of people wish to speak of the broader spectrum of modern agriculture, the word generally used in 'agribusiness'. 'Farmer' still means what it meant in 1922 - one who owns or operates a farm."
In its successful petition for Supreme Court review, the association warned against "a romantic view of agriculture," which "has changed greatly from the Jeffersonian conception of the self-sufficient yeoman."
The association urged the Supreme Court to reject the conclusion of the appellate court that the 1922 law's "listing of beneficiaries - farmers, planters, ranchmen, dairymen, nut or fruit growers - has a feeling, a cadence of meaning, that has no place for the NBMA's member companies." Some of the firms own processing plants, feed mills, hatcheries and breeder flocks.
The association, however, contended that an affirmance of the Fifth Circuit ruling "may lead to far-reaching changes . . . harmful to both consumer and farmer, and perhaps in other branches of agriculture" besides chickens.
Recently, about three dozen association members offered to pay more than $20 million - in cash and broilers - to settle antitrust suits brought by 19 states (including Virginia), and wholesalers, supermarkets, hotels and restaurants.
The apparently conflicting decisions that the Supreme Court left standing, without comment, were made by the Seventh and Fifth Circuit Courts of Appeal.
In the Seventh Circuit case, a federal grand jury in Chicago indicted nine highway construction firms and four of their officials for rigging bids. All entered no contest pleas and were sentenced.
Nearly a year later, in late 1973, the State of Illinois named the same firms defendants in a civil antitrust suit for treble damages.
With Justice Department consent, the state got a court order for the department to produce transcripts of testimony that officials of the defendant firms had given before a grand jury and that had been released to the companies.
The circumstances were similar in the Fifth Circuit, where a federal grand jury in Texas indicted nine major steel companies and the same number of their officials on charges of conspiring to fix prices for reinforcing materials, to monopolize and to divide markets.
The State of Texas filed a civil treble damage suit against the same parties in 1974, charging that they had engaged in the anticompetive activities since 1969.
While the criminal case was pending, some of the corporate defendants sought and obtained transcripts of grand jury testimony given by their officials. Later, the defendants pleaded no contest.