LAKE VALLEY FARM PRODUCTS, Inc., et al. v. MILK WAGON DRIVERS' UNION, LOCAL 753, et al., 108 F.2d 436

SPARKS, Circuit Judge. This action in equity was instituted by appellants, and Josef Wagner, doing business as Wagner Dairy Products. It sought to restrain appellees from picketing, and from the commission of acts of violence and boycott alleged by appellants to be in restraint of interstate trade and in violation of the Sherman Anti-Trust Act, 15 U.S. C.A. §§ 1-7, 15 note, and the Clayton Act, 38 Stat. 730. Appellees filed a joint answer which in effect was a general denial and contained other affirmative matters.

The issue of injunction was referred to a Master in Chancery, and his report recommended the^ dismissal of the complaint for lack of jurisdiction. A hearing was had upon appellants exceptions to this report, and after making special findings of facts, and rendering its conclusions of law théreon, the District Court entered a decree confirming the report, and ordering dismissal for want of jurisdiction and for want of equity.

The findings are substantially as follows: The plaintiffs are the Lake Valley Farm Products, Inc., an Illinois corporation of Chicago, engaged in processing and distributing milk and dairy products in Chicago; Lake View Co-operative of Water-town, Wisconsin, an organization of Wisconsin farmers; Josef Wagner, doing business as Wagner Dairy Products in Cook County, Illinois; and Amalgamated Dairy Drivers, Local Industrial Union No. 819, a voluntary unincorporated association with its headquarters in Chicago. Before the findings were filed, Wagner, by leave of court, withdrew as party plaintiff.

The defendants are the Milk Wagon Drivers Union of Chicago, Local 753, a voluntary unincorporated association with headquarters in Chicago; Robert G. Fitchie, James Kennedy, Steve Sumner, F. Ray Bryant, Alvin F. Richards, Joseph L. Patterson and Fred C. Dahms, who are officers and trustees of the defendant union.

The Farm Products Company purchases its daily requirements of fluid milk from the plaintiff Co-operative, which receives its product from farmers in Wisconsin, who deliver their milk to the plant of the Cooperative where it is loaded on motor trucks and transported over the public highways to the Farm Products Company in Chicago, which pasteurizes and bottles the milk, after which it is sold by the Farm Products Company to various persons referred to as “vendors,” who severally own and operate their own automobile truck equipment.

They in turn, after purchasing the milk and cream from the pasteurizing plant, distribute it to various stores which in turn sell it to the general public on a cash and carry plan. These “vendors” are not members o'f the defendant union. The plaintiff union was organized on March 1, 1938, and maintains executive offices in Chicago. Its members are residents and citizens of Illinois. The defendant union was organized in 1902 and since that time has unionized 'the majority of drivers delivering milk and other dairy products, and its headquarters are in Chicago.

All the individual defendants are residents and citizens of Illinois. Over forty per cent of the milk and over seventy-five per cent of the cream sold in Chicago comes from points outside of Illinois. It is commingled, sold in competition with, and is indistinguishable from the milk and cream which is produced in Illinois. The pasteurization and bottling require a very short time. Nothing is added to or taken from the milk and cream by such process and only a few hours elapse from the time it leaves the point of origin in Wisconsin until it is lodged in the retail stores.

The Farm Products Company is a cut-rate dairy in that it distributes its milk through retail stores by cash and carry sale, and at prices substantially less than the generally prevailing price for milk delivered by the dairy to the home. Because of the relatively large amount of milk delivered to each retail store, the cost of such delivery is substantially less than the cost of delivering milk on a retail route to the doorstep of the ultimate consumer. The growth of the cut-rate milk business in Chicago has been accompanied by violence to the distributing stores.

They have had their windows broken, they have been bombed, set afire, they have been submitted to stench bombs and to other acts of violence. Cut-rate dairy plants have been bombed, have had machinery smashed, and their delivery trucks have been seized and destroyed, and they have been submitted to other acts of violence. Picketing by the defendant union has all taken place at and in front of stores selling the products of the plaintiff dairy, and no picketing has taken place at the plaintiff dairy plant.

In some instances deliveries of other necessary food products into stores selling plaintiffs’ dairy products have ceased. Fifteen to twenty stores distributing the products of plaintiff dairy were lost in the month preceding the filing of the bill of complaint; twenty-five to thirty stores were similarly lost since the. commencement of the action; more than one hundred of such stores have been picketed, and there is no way to ascertain the number of consumer patrons lost by the acts of the defendant. No labor dispute exists between plaintiff dairy and its workers.

The court in its last finding says that it adopts by reference the various findings of fact made by the Master in his report. This report is rather voluminous and contains much that cannot be considered as findings of fact. We find nothing additional in this report which is material to the issues passed upon by the District Court, except perhaps that all of the employees of the plaintiff dairy are members of the plaintiff union and have designated that union as their sole representative in dealing with the dairy.

The Master further found that the plaintiffs had not established the fact that they had no adequate remedy at law and had not alleged or proved that the public officers charged with the duty to protect their property were unable or unwilling to furnish adequate protection.

He further used the following language in his findings: “It also appears from the evidence before the Master that certain of the cut-rate milk stores that handled the products of the Plaintiff Dairies were picketed by members of the Defendant Union; that such picketing was usually indulged in for a number of days during which time said pickets sought to induce the offending storekeepers to discontinue the purchase of such milk from the Plaintiff Dairies; that in several instances where their efforts were unsuccessful said pickets were withdrawn and within a few days thereafter, usually during the night the store of the storekeeper (some of whom were poor women struggling to make a living) was either bombed or bricks were thrown through the plate glass windows of such stores or other acts of violence were committed.

To request the Master to conclude and find, in the absence of proof of the identity of the guilty culprits, that there was no connection between such acts of violence and the Defendant Union, or some of its members, is to overtax the credulity of the Master. “The Master cannot condone or too severely condemn the resort to such malicious and cowardly conduct in support of any cause.

Such lawless conduct has no place under our form of Government and the few lawless, radical union leaders or members who resort thereto are not only a blight upon the righteous cause of honest labor but reflect discredit upon our country and upon our American civilization as well.” The District Court concluded -that it had no jurisdiction on the ground of diversity of citizenship; that the actions of the defendants did not constitute a violation of the Sherman Anti-Trust Law and the Clayton Act; that the defendants’ actions did not constitute an unlawful conspiracy, and did not effect an unlawful monopoly as defined by the two Acts last referred to; that the activities of the defendants did not constitute an unlawful- secondary boycott or deprive plaintiffs of rights guaranteed to them under the Constitution and laws of the United States or of the State of Illinois; that under the circumstances presented a labor dispute existed as defined by the terms of the Norris-LaGuardia Act, 29 U.S.C.A. § 101 et seq.; that the court was without jurisdiction to grant the injunctive relief or any part of the relief prayed for by the plaintiffs; that the plaintiffs were not entitled to any of the relief prayed for in the bill and that the equities of the case were with the defendants.

The decree immediately followed dismissing the cause of action as to Wagner, with prejudice, and overruling the other plaintiffs’ exceptions and their application for preliminary and permanent injunction. The decree further dismissed appellants’ bill of complaint both for want of jurisdiction, and for want of equity. The language of the conclusions of law and the decree indicates without doubt that the court passed upon all the questions presented, but we have great doubt whether all should have been passed upon.

For instance, after the court found that it was without jurisdiction, it is not clear why it proceeded to pass upon the merits. Of course there was no jurisdiction on account of diversity of citizenship, but if there was a violation of the Sherman Anti-Trust Law and the Clayton Act with respect to interstate commerce, there would still be jurisdiction of the cause, and that would carry with it the right to decide rightly or wrongly all questions therein involved.

Whether or not there was a labor dispute within the purview of the Norris-LaGuardia Act, or whether there was a conspiracy or a secondary boycott, would seem to us not to be determinative of the question of jurisdiction providing interstate commerce was involved within the purview of all the acts referred to. The bill of complaint was treated as sufficient by all parties except that appellees claimed that both the bill and the evidence showed that interstate commerce was not affected.

This contention of course was denied by appellants, and it was the duty of the court to pass upon this question in order to determine whether it had jurisdiction of the subject matter. This it did, holding that it had no jurisdiction. We assume, therefore, that this ruling was based on the ground that interstate commerce was not affected. If this were true, the court was without jurisdiction to pass upon the merits of the other questions presented.

If, however, interstate commerce was involved, as alleged, the mere fact that the Sherman or the Clayton Act was not violated, or the Norris-LaGuardia Act not followed, would not defeat the court’s jurisdiction to determine those matters, for jurisdiction presupposes the right to decide a question either rightly or wrongly. Under the facts found, it is clear that there is an actual flow of milk in interstate commerce from- the farm-receiving station in Wisconsin, through the plaintiff dairy into the retail cut-rate stores in Chicago.

It is equally clear from the facts found that appellees’ activities did seriously burden and affect the distribution of this milk by the stores to their cash and carry customers. In the light of these facts it is maintained by appellants that the court erred in its conclusions of law that the actions of the defendants did not burden or affect interstate commerce, and for that reason did not violate the anti-trust laws.

The Master and counsel for appellees seem to have proceeded on the theory that the milk came to rest in the cut-rate stores and thereby ceased to flow in interstate commerce and for that reason the acts complained of did not constitute an interference with interstate commerce within the purview of the anti-trust laws. The findings and conclusions of the court do not specifically mention this reason as a basis for its conclusion, but inasmuch as it adopts the findings of the Master by reference, we assume that the bases of its conclusions are the same as those of the Master.

Both seem to have relied upon the “stream of commerce” doctrine which is quite familiar in the application of federal and state taxes. It would seem, however, that this test is not to be used in anti-trust cases, for there the point at which the stream or current of interstate commerce ceases is seldom if ever involved, but the real controversy is the effect of the acts complained of upon interstate commerce. In Local 167, I. B. T. v.

United States, 291 U.S. 293, 54 S.Ct. 396, 398, 78 L.Ed. 804, there was a combination of wholesalers of poultry in New York City to increase the price of and monopolize the wholesale trade in poultry purchased by them from commission men to whom such poultry was shipped from other states. The combination was held to be in restraint of interstate commerce in violation of the Sherman Act, although the purpose was made effective by acts committed within the state after the interstate transportation of the poultry had terminated.

The Court said: “The evidence shows that they and other defendants conspired to burden the free movement of live poultry into the metropolitan area. It may he assumed that some time after delivery of carload lots by interstate carriers to the receivers the movement of the poultry ceases to be interstate commerce. [Citing cases.] But we need not decide when interstate commerce ends and that which is intrastate begins.

The control of the handling, the sales and the prices at the place of origin before the interstate journey begins or in the state of destination where the interstate movement ends may operate directly to restrain and monopolize interstate commerce. [Citing cases.] The Sherman Act denounces every conspiracy in restraint of trade including those that are to be carried on by acts constituting intrastate transactions. [Citing cases.]” Again the Court said: “And, maintaining that interstate commerce ended with the sales by receivers to marketmen, appellants insist that the injunction should only prevent acts that restrain commerce up to that point.

But intrastate acts will be enjoined whenever necessary or appropriate for the protection of interstate commerce against any restraint denounced by the Act.” The same principle of law was followed in National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352; Santa Cruz Fruit Packing Company v. N. L. R. B., 303 U.S. 453, 58 S.Ct. 656, 82 L.Ed. 954; National Labor Relations Board v. Fainblatt, 306 U.S. 601, 59 S.Ct. 668, 83 L.Ed. 1014; and United States of America v. Rock Royal Co-operative, Inc., 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446.

All these cases followed the doctrine as set forth in W. W. Montague & Co. v. Lowry, 193 U.S. 38, 24 S.Ct. 307, 48 L.Ed. 608. In view of these decisions, and under the findings of the court and the Master, we think it is clear that interstate commerce was involved and was quite seriously affected and burdened by the picketing activities of the defendants in and about the stores that sold the milk in controversy. We find no conflicting testimony as to this fact.

We are further of the opinion that the uncontradicted evidence and findings disclose that the Sherman Anti-Trust Law and the Clayton Act were clearly violated. It is contended by appellees, however, that there is no evidence of conspiracy. To prove a conspiracy, it is not 'necessary to establish it by direct testimony that a precise agreement was entered into by the parties accused. In most cases of that character this would be impossible to do, and for this reason a conspiracy may be safely based upon circumstantial evidence if the circumstances are sufficiently convincing.

Everyone is presumed to intend the natural consequences of his acts. Here the picketing'activities of the defendants and the results thereof were admitted. The picketing occurred only at the stores, and its admitted object was to induce the storekeepers not to sell the milk. This object was successfully attained and the result was due to the united and confederated actions of these defendants. The immediate result of their accomplishments in this respect was to retard the flow of the milk in interstate commerce from Wisconsin to Illinois.

This was the natural consequence of their picketing activities and they were bound to know it. Indeed, there was no claim by the defendants that they were not fully cognizant of all these facts, and for these reasons we think their acts did constitute an unlawful conspiracy within the purview of the Sherman and the Clayton Acts. The record discloses, and it is not denied, that the defendant union controls the distribution of practically all the milk that is sold in Chicago.

Its only competitors of any consequence are these cut-rate distributors, and if they were eliminated from the field it is not denied that defendants’ union for all practical purposes would have a complete monopoly over the distribution of milk in this city. It is clear that this was the object of the defendants and this object was the sole cause of this controversy.

It is contended by appellants that no labor dispute was present in this controversy, and that the acts of the defendants, which are here sought to be restrained, constitute an unlawful secondary boycott designed to destroy the business of the plaintiff dairy. Whether there was a labor dispute is to be determined by the Norris-LaGuardia Act, 29 U.S.C.A. §§ 101-115. Subsections (a), (

b) and (

c) of

section 113 are immediately involved here. From the terms of this Act, it would seem clear that before a labor dispute can be said to exist, there must be an honest issue involved and there must be persons capable of being organized. It is appellants’ contention that neither of these elements exists in the present case. It is not denied that the “vendors” referred to in the findings are independent contractors and are not in the employ of the dairy. They buy and sell for their own profit and are not salaried workers.

It is conceded also that the owners or managers or employees of the stores which sell the milk to the ultimate consumers are not employees of the dairy or of the “vendors” and none of them are eligible to membership in the defendant union. The defendant union is a craft union for milk wagon drivers who are employees of dairies. A study of this record, including the articles of agreement used between the defendant union and its subscribing dairies, leaves no room for doubt that these “vendors” in' their present occupation, or any like occupation, would not be acceptable as members in the defendant union.

It is true that some, and perhaps all of them, have been solicited for membership in the defendant union, but such solicitation was upon the condition that they would cease handling cut-rate milk as “vendors” or as employees of the plaintiff dairy, while it was thus engaged. Under these conditions we think it cannot be fairly said that there is a good faith labor issue involved between the defendant union and either the dairies’ employees or the “vendors” or the stores.

Especially is this true when we consider the fact that the “vendors” are organized as members of a well-recognized union, which with their consent is acting as their representative in matters dealing with their employers. A study of this entire record is quite convincing of the fact that this entire controversy is over the question of the sale of cut-rate milk and the “vendor” system. There is no finding that these “vendors” are not receiving sufficient remuneration for their labor, or that their conditions of labor are not what they should be. The evidence is quite convincing to the contrary.

In any event, it would seem that the defendant union is in no position to raise those questions as to the “vendors,” who are independent contractors, and who in their present condition are not eligible for membership in the defendant union. It seems clear to us that there is no labor controversy involved here. Moreover, we think it is clear from the findings and from the undisputed evidence in this case that the appellees’ picketing activities constitute a secondary boycott, which is an unlawful activity, of which appellees could not avail themselves even though a labor dispute were involved.

See Duplex Printing Press Company v. Deering, 254 U.S. 443, 41 S.Ct. 172, 65 L.Ed. 349, 16 A.L.R. 196; Meadowmoor Dairies, Inc. v. Milk Wagon Drivers’ Union of Chicago No. 753, 371 Ill. 377, 21 N.E.2d 308. The latter case deals with the same questions here presented, except as to the federal questions, only one of which is presented, and it also involves the same defendant union. It construes the Illinois Injunction Act, Ill.Rev.Stat.1937, c. 48, § 2a, which in many respects is quite similar to the analogous federal Acts.

The opinion is very well considered, and we are in accord with the conclusions there reached in so far as they are here applicable. It is contenaed. oy appellees, however, that the prevention of peaceful picketing of the cut-rate stores would be a violation of the constitutional right of free speech [U. S.C.A.Const. Amend. 1], although such acts might be considered as a secondary boycott. We do not understand this to be the law. The same question was presented in the Meadowmoor case, supra, and it was decided adversely to appellees’ contention.

In that case certiorari was sought in the United States Supreme Court on that particular question, and certiorari was denied. This ruling-of the Illinois Supreme Court is supported by Aikens v. Wisconsin, 195 U.S. 194, 25 S.Ct. 3, 49 L.Ed. 154. The Master found that appellants had not established the fact that they had no adequate remedy at law, and that there was no proof that the public officers charged with the duty to protect appellants’ property were unable or unwilling to furnish that protection.

Aside from the procedural requirements of the Norris-LaGuardia Act, we think it is clear from the undisputed evidence that appellants had no adequate remedy at law. Inasmuch as we hold that there was no labor dispute involved, appellants were not authorized or required to proceed under that Act. With respect to the ability of the police officers to cope with the situation, we think it is clear from the number of stores involved, and the magnitude and seriousness of the activities which had continued for several years, that the police officers were unable to control the situation.

Without any intention to criticize the form of the court’s findings, it is difficult to ascertain the precise reasons for the rulings. From the Master’s report, which the court adopts by reference as a part of the findings, it is quite likely that all of these rulings were based upon the finding that interstate commerce was neither involved, burdened, nor affected. If we should accept this finding as true we could readily approve the result, for the court would have been without jurisdiction and the appellants would not be entitled to the relief they asked.

Again, if jurisdiction were conceded and there was a labor dispute involved, then it is quite doubtful if appellants could recover because they have not in every respect complied with the requirements of the Norris-LaGuardia Act.

Holding as we do that the court had jurisdiction, we must reverse the order of the court which holds there was no jurisdiction, and in view of our holding that there was no labor dispute involved, and that the acts complained of amounted to an illegal secondary boycott, we must likewise reverse for those reasons. i In view of these conclusions we think the other conclusions of law, except as to the diversity of citizenship, are erroneous. The decree is reversed and the cause is remanded for further proceedings not inconsistent with this opinion. “(

a) A case shall be held to involve or to grow out of a labor dispute when the ease involves persons who are engaged in the same industry, trade, craft, or occupation; or have direct or indireet interests therein; or who are employees of the same employer; or who are members of the same or an affiliated organization of employers or employees; whether such dispute is (1) between one or more employers or associations of employers and one or more employees or associations of employees; (2) between one or more employers or associations’ of employers and one or more employers or associations of employers; or (3) between one or more employees or associations of employees and one or more employees or associations of employees; or when the case involves any conflicting or competing interests in a ‘labor dispute’ (as hereinafter defined) of ‘persons participating or interested’ therein ,(as hereinafter defined). “(

b) A person or association shall be held to be a person participating or interested in a labor dispute if relief is sought against him or it, and if he or it is engaged in the same industry, trade, craft, or occupation in which such dispute occurs, or has a direct or indirect interest therein, or is a member, officer, or agent of any association composed in whole or in part of employers or employees engaged in such industry, trade, craft, or occupation. “(

e) The term ‘labor dispute’ includes any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employer and employee.”