The Supreme Court ruled 7 to 2 yesterday that a 56-year-old law exempting "farmers" from the antitrust laws does not exempt a nationwide cooperative called the National Broiler Marketing Association, whose members include numerous huge agribusiness corporations.
The ruling is a victory for the Justice Department, which accused the NBMA of price fixing in a 1973 antitrust suit. The association in 1976 accounted for nearly all of the $3 billion in sales made by the broiler industry.
Formed in 1970, the NBMA has about 75 members involved in at least one stage of proudction of broiling chickens.
The stages include placing raising, and breeder flocks to produce eggs batched as broiler chicks; producing chick feed; growing the chicks for a period of up to 10 weeks, retrievals of the chicks - by then broilers - for slaughter, and processing for the market.
All of the members contract with independent operators to grow at least some of their chicks, providing the growers with feed and veterinary and other services. But nine members neither own nor control breeder flocks or chick hatcheries; three of the nine also do not maintain a grow-out facility.
The key issue in the case was whether the Capper-Volstead Act, passed by Congress in 1922 to exempt from the antitrust laws cooperatives formed by certain agricultural producers, removed liability from the NBMA.
In the opinion for the court, Justice Harry Blackmun wrote that the NBMA is not exempt because, to avoid liability for its collective activity "ALL its members must be qualified to act collectively . . . Clearly, Congress did not intend to extend the benefits of the act to the processors and packers to whom the farmers sold their goods, even when the relationship was such that the processor and packer bore part of the risk."
The court held that any NBMA member that owns neither a breeder flock nor a hatchery and that maintains no grow-out facility is also not protected by Capper-Volstead because such a member has made "only the kind of investment that Congress clearly did not intend to protect. We hold that such members are not 'farmers' as that term is used in the act . . ."
The court took other actions:
Grand Jury Testimony
Acting in one of the largest antitrust cases of recent times, the court declined to review a decision allowing private parties seeking treble damages from 23 makers of folding paperboard cartons to inspect testimony given to the grand Jury that indicted them.
"Business of Banking"
The court let stand a decision that the "business of banking - as defined in the National Bank Act - encompasses the leasing of automobiles, an activity engaged in by at least 1,000 national banks and also by state banks in most of the country. The 9th U.S. Circuit Court of Appeals handed down the decision in November rejecting arguments against transactions that constitute the loan of money secured by the properties leased.
The court let stand an unprecedented decision by the 5th U.S. Circuit Court of Appeals allowing a Johns-Manville Products Corp. plant in New Orleans to discharge all unionized employes for disrupting production, even though not even a substantial number of the employes was found to have engaged in disruption.
The court agreed to review a decision that the government contends would "substantially undercut" its ability to regulate natural gas prices in the national market. The 5th Circut had ruled that prices in the unregulated state market could determine "just and reasonable" rates set by the Federal Energy Regulatory Comission, under the Natural Gas Act, for the interstate market.