UNITED STATES v. ARMOUR & CO.

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Argument of James Van R. Springer

Chief Justice Warren E. Burger: We’ll hear arguments next in number 759, United States against Armour.

Mr. Springer, you may proceed whenever you’re ready.

Mr. James Van R. Springer: Mr. Chief Justice, may it please the Court.

This case which comes here on direct appeal from the District Court for the Northern District of Illinois is a reincarnation of the case, United States against Armour and General Host Corporation that was here a year ago, but became moot before the Court, but decided.

Like that case, it raises a question as to the impact of the structural prohibitions of the great Meat Packers Antitrust Decree of 1920 to which Armour, one of the appellees here nominally, is one of the four meat packer parties.

The Decree prohibits Armour from having any involvement in certain forbidden food lines other than meat packing, and the question in both of these cases essentially the same has been whether there is a remedy under that Decree for a take over of Armour by a company that is itself in the forbidden food line, as there would be incontestably a remedy if Armour were to acquire such a forbidden food company.

The General Host case began in the beginning of 1969 when General Host acquired control of Armour.

Since General Host was in the forbidden food lines, the Government took the position and that the Decree was offended by General Host's takeover of Armour, just as it would have been by the converse situation.

So, we filed a petition then against General Host in the beginning of 1969 in the District Court which has had continuing jurisdiction over the Meat Packers Decree for the last 10 or 12 years, by a transfer from the District of Columbia where the Decree was initially entered.

At that time, we asked the court to enter an order supplemental to the Decree against General Host which would make General Host a party to the Decree and then prohibit its acquisition of Armour.

But Judge Hoffman, the district judge, who is also the district judge in the present, declined to entertain the petition, saying that the Decree was aimed only at affirmative action by Armour or another named defendant, and that therefore, the relationship between Armour and General Host was perfectly consistent with the Decree as long is it was created by somebody other than Armour, and as long as Armour avoided actively dealing in the forbidden food lines.

The Government appealed the case here and it was argued in March of 1970.

In mid May last year before this Court could reach a decision in the General Host case, General Host sold its controlling stock interest in Armour to Greyhound Corporation, which is the appellee in the present case.

Over our objection, this Court then held that the case had become moot and ordered that the Government’s petition against General Host be dismissed.

The papers that were filed in connection with that mootness issue are set forth in the separate supplemental appendix in this case and we’ve recited some of the related facts in our brief and I will not repeat them again here.

Following that action by this Court last June, the Government promptly filed the present petition against Greyhound, since in our view of Greyhound like General Host has food interests that the Meat Packers Decree forbids Armour to have.

Judge Hoffman promptly dismissed this petition as well at the end of June after hearing argument by the Government and off the record by counsel for Greyhound.

As in the General Host case, Judge Hoffman again held that he was powerless to issue any order against Greyhound unless and until Greyhound actually caused Armour to deal in forbidden food lines.

And so, he held that the Government’s petition failed to state a claim upon which relief could be granted.

Again, we appealed, this Court noted probable jurisdiction and here we are again.

The question in this case as in the General Host case is whether an Antitrust Decree can affectively keep a party to that Decree from becoming involved in another line of business where its involvement would, in the view of the initial Decree, create a recipe competition.

Judge Hoffman held in each case that all the court can do in entering an Antitrust Decree is to tell the party not to do anything itself that would have the effect of involving it in the forbidden business.

And incidentally to that, can punish anyone who actively aids or abets that party in doing what the Decree tells it not to do.

We say on the other hand that a structural Antitrust Decree can be somewhat more than that, but a court can affectively decree an absolute prophylactic separation between a particular named party’s business and another line of business.

And we say this Meat Packers Decree has done that, and that the court having for jurisdiction over the decree can enter a supplemental order fashioning a remedy against an outsider like Greyhound which comes in to destroy the structural separation that we say is the heart of the decree.

Just as in the school desegregation cases that we have referred to in our brief, we think an anti-trust court has the power to issue a narrow order directed at a particular third party involved in a particular situation after a hearing that will prohibit that party’s interference with the effectuation of the specific purpose at the heart of the Decree in question.

With that introduction, let me turn now to a description of the corporate relationship that Greyhound has created between Armour and Greyhound’s forbidden food operations, and then point once again as I did last year to the explicit language of the Decree that we think is designed specifically to prohibit such relationship from coming into existence.

Some of these details have developed since the hearing -- the argument, as there really was, in the District Court last June, though there has not been any drastic change that materially affects our theory of the case.

These more recent occurrences are set forth either in our brief or in Greyhound’s brief or in some instances in Greyhound’s annual report for 1970 which has just recently come out.

We think, they’re undisputed and it will be helpful to the Court to have the current corporate situation.

Greyhound at the time when General Host first became involved with Armour, Greyhound also was trying to get control of Armour in competition with the General Host, but General Host went out, winding up in early 1969 with about 57% of the stock, but leaving Greyhound with something of the order of the third of the stock.

In the May 1970 transactions that I’ve referred to, Greyhound then bought out General Host, acquiring all of the stock that General Host had had, giving it then a total of about 86% of all of the stock of Armour.

Justice Potter Stewart: Did that -- did that acquisition require approval of the Interstate Commerce Commission?

Mr. James Van R. Springer: Yes, it did Mr. Justice.

As we have set forth in our pleadings last term and refer to in one our brief, Greyhound filed an application with the Interstate Commerce Commission.

The Government was not a party there, filed a pleading in which we suggested that the Commission withhold its action of approving the issuance of the Greyhound stock involved in the General Host transaction until this Court could decide the Antitrust case which will determine whether that acquisition was legal or not.

But the Commission took the point of view that since the Court had not yet reached the decision, there was not yet anything suggesting that the transaction was illegal and then permit -- the ICC is rather narrow focused which of course did not deal -- the ICC’s order does not deal with Antitrust questions at all, and of course, it has no power to immunize this kind of transaction.

The only really question there was whether the issuance of this additional stock by Greyhound would be harmful to Greyhound’s basic business as a common carrier.

So, the Commission did approve it and would then, a couple of hours after notice was given of that approval, this transaction had been closed and Greyhound was the owner of Armour.

Greyhound has made no secret of the fact.

In fact, it’s stated again in its current annual report that it went into Armour initially in 1969 with the encouragement of Armour’s then that is pre General Host management.

As we understand that the --

Justice Thurgood Marshall: You don’t say that they did actually participate with that Armour or anybody else, do you?

Mr. James Van R. Springer: No Mr. Justice, we are not making the argument in terms of Rule 65 (d) of the Civil Rules that Greyhound is -- has been in active participation in Armour with Armour in doing something in violation of the Decree.

Justice Thurgood Marshall: Well, how do you escape that?

Mr. James Van R. Springer: I’m not sure that we might not have charged that.

The case has not been handled along those lines.

I think, it’s -- it has been perfectly open to the Government to proceed that way in a sense of course, it’s easier on Greyhound than calling Greyhound before the court and suggesting that that it itself was in contempt.

The Government has regarded this perfectly adequate remedy to have an order against Greyhound telling Greyhound to divest itself, and then and only then would the Government proceed to --

Justice Thurgood Marshall: That’s easier way you’ve done, but then going direct against Greyhound?

Mr. James Van R. Springer: Yes, and certainly there are I think fewer questions to be argued about in that approach and --

Justice Thurgood Marshall: Well --

Mr. James Van R. Springer: -- under that approach and I think it is, as I say, easier on Greyhound.

Justice Thurgood Marshall: I’m sure that’s easier for the Government, but doesn’t make it legal, does it?

Mr. James Van R. Springer: No Mr. Justice, though I think -- I think it if the Government could precede directly against Greyhound, I think it would follow that it could proceed indirectly in this way.

I think assuming the Court agreed with that, the Government could say “Even though we could seek contempt punishment against Greyhound, now, we will give Greyhound another chance and we would like the Court to make clear what Greyhound’s obligations are, and then and only then we proceed against them.”

As we understand that the Armour stock was initially owned by Greyhound’s subsidiary.

Subsequently at the end of 1970, Greyhound arranged a series of transactions which resulted first of all, in the acquisition of all of the rest of the -- all of the minority interest in Greyhound -- in Armour, giving Greyhound a 100% ownership, and then a reorganization of the corporate structure so that Armour is now a direct wholly-owned subsidiary of the Greyhound Corporation which we’re told is the holding company which owns Greyhound’s greatest interest, including its bus lines, Armour, the food businesses that we find offensive to the Decree and various other lesser interests.

And Greyhound has moved with some rapidity to integrate Armour into its corporate family.

For example, the current annual report of Greyhound states “The various activities had been coordinated, computer operations, communications, insurance and banking arrangements for instance.”

What Greyhound is deemed to be marginal or unproductive assets of Armour have been sold, and several unprofitable Armour operations have been closed.

In fact, our information is that something -- Armour facilities accounting for something like 10%, perhaps more of its annual sales have been disposed off by Greyhound during the period that its had that kind of control over Armour.

The report further says that a consolidation of headquarter staffs is planned.

A Chairman and Chief Executive Officer of Greyhound is now the Chairman and Chief Executive Officer of Armour, seven of the 11 Armour directors or officers are directors of Greyhound, including the entire executive committee of Armour.

The three top officers of Armour are in Greyhound’s Board of Directors and so on.

So obviously, Greyhound’s relationship to Armour is a good deal more than that of a mere investor or an ordinary stock holder as Greyhound suggests in its brief.

Armour is run by Greyhound people obviously for the benefit of Greyhound and its shareholders.

And of course, Greyhound has created this situation with full knowledge throughout, both of the Meat Packers Decree and of the Government’s interpretation of that Decree.

Side by side as I indicated in the Greyhound corporate complex is another wholly-owned subsidiary called Greyhound Food Management Incorporated, which manages Greyhound’s forbidden food interests as we call them.

These are basically of two kinds, one Post Houses which operates a chain of restaurants and two, the larger element of this something called Prophet Foods which is an industrial catering business which sells prepared meals in schools and industrial plants and hospitals and various others establishments.

Food management is also a very substantial part of the Greyhound complex.

Taking -- leaving Armour out, it has an averaged something of the order 15% of Greyhound’s total sales, or something like a $110 million to a $120 million a year.

Justice Potter Stewart: Is this is an auxiliary -- is any part of these activities in auxiliary service to Greyhound’s transportation service?

I mean, do their buses stop, in other words at the Post Houses?

Mr. James Van R. Springer: I think -- I think, it can be said to some extent of Post Houses --

Justice Potter Stewart: And Post Houses.

Mr. James Van R. Springer: -- which I believe of runs restaurants in bus stations.

I think it also runs other restaurants.

I don’t think that can be said in anyway of Prophet Foods which is the larger element to this, which is basically --

Justice Potter Stewart: Pre-prepared meals?

Mr. James Van R. Springer: Pre-prepared meals.

Justice Potter Stewart: Are they sold to airlines or what?

Mr. James Van R. Springer: Greyhound’s counsel could tell you a bit more about that.

I don’t believe airlines.

I haven’t seen any reference to that.

I think its plants and then institutions of various counties.

Among other things, the same person is the Chairman of food management which operates these other food businesses.

Vice Chairman of Armour and the Vice President for food of Greyhound is one individual, and food management of course sells in prepared form a great many of the commodities in very large amounts that are specified in the paragraphs of the Meat Packers Decree telling Armour what it can’t be involved in.

Now, let us look at the specific language of the Decree. Paragraph four says that the meat packer defendants, including Armour, are perpetually enjoined and restrained from either directly or indirectly, engaging in or carrying on the manufacturing, jobbing, selling, transporting, distributing or otherwise, dealing in these forbidden food products.

And that same paragraph goes on to say that the corporation defendants are further perpetually enjoined and restrained from owning either directly or indirectly any capital stock or other interest whatsoever in any corporation engaged in those forbidden businesses.

Paragraph six prohibits Armour from directly or indirectly operating retail meat markets and paragraph eight of the Decree has prohibitions on dealing in fresh milk and cream which are comparable to the other prohibitions in paragraph four.

As we show in our brief, this Meat Packers Decree, of course, is no mere historical relic.

The packers have twice asked the courts, this Court each time to lower these prophylactic structural barriers between the meat packing business and the other food businesses, and each time the courts, including this Court has rejected their arguments the changed conditions, replacement of the original officers and directors who got Armour and the other packers into this in the first place and so forth, have justified changes in the Decree.

So the Decree has remained intact through all these years and it was only 11 years ago -- 10 years ago that this Court last considered the modification question.

Armour still the second largest member of the meat packing industry?

And that is still a quite highly concentrated industry, though somewhat less so than it was in 1920.

As Justice Cardozo said in 1932 in the earlier modification attempt, such great size carries with it, an opportunity for abuse and not to be ignored when the opportunity is proved to have been utilized in the past.

And it was for that reason he said that the Decree absolutely prohibited the forbidden food lines from being added to the meat packing business.

And the underlying purpose of the structural barrier was again in Justice Cardozo’s words “to avoid the difficultly of parading out particular impeditive evils and requesting them to undiscovered.”

In other words, I think a classic case would be prophylactic kind of structural insulation of the parties to the Decree from other businesses where it was considered that their involvement would risk anti competitive effects.

I think then it’s as clear as it could be that the specific and primary purpose of the Decree, both based on its own language and on what this Court and the District Court has said over the years in interpreting it, but Armour was to be kept in perpetuity out of the food lines in which Greyhound through its sister subsidiary of Armour food management is involved.

And this specific prohibition is what we say the acquisition of Armour by Greyhound has interfered with.

As I indicated, they are now sister subsidiary of the single holding company with interlocking managements and boards of directors and common banking arrangements and so forth.

They're obviously, the common servants of a single owner, Greyhound or if you will, but the stockholders of Greyhound.

Every bit as much we think in practical terms as if Armour had acquired food management or if Greyhound now as it obviously could were to merge the two of them, and perhaps operate them as divisions of a single corporation.

I think it’s uncontested that both of those particular situations would be literally prohibited by the Decree.

Moreover, I think it’s clear that Armour could not have created a holding company itself which would own its stock and then would have acquired company such as food management.

But of course, that corporate relationship is the precise corporate relationship that now exists by virtue of Greyhound’s acquisition and rearrangement of these corporate structures.

So, the same -- again, the same economic unit, the same corporate family is in the two businesses, and we say that the Decree was plainly specifically design to prevent that exact situation as to Armour from coming into being without regard we say to who is active and who is passive in creating the situation.

In fact, we think it can be said that situation created by Greyhound with respect to Armour puts Amour in a position where it can be said to be in literal violation of the Decree.

As I indicated paragraph four of the Decree, not only prohibits Amour from directly or indirectly engaging in the business in which food management is involved, it also prohibits Armour from owning any interest whatsoever in any company that is engaged in -- in such a business as food management, we think plainly is -- we think that the situation, well, this interlocking situation, the common ownership is a situation where in realistic appreciation of modern incorporate realities it has to be said that Amour does own an interest of a kind, any interest whatsoever in the business of its sister subsidiary.

Any other approach, we think tends to confuse modern corporate realities with more traditional notions of ownership by real individual people of real individual things.

But given the power that a holding company like Greyhound has over the various corporate structures that it has chosen to put within a system, we think that realistically, this has to be regarded as a situation where --

Justice Byron R. White: Mr. Springer, what would be the major problems in the Government's Section 7 suit against Armour and Greyhound?

Mr. James Van R. Springer: Oh!

I can’t speak very authoritatively on that Mr. Justice White because I -- I’m not aware that specific analysis has been done.

I think that -- this is a conglomerate problem which of course the department has moved into another areas.

We have not contended that that this would be a Section 7 violation.

The very premise of this case is that we don’t need to show that it would be one.

I think perhaps the nature of the dealings between the two companies and the magnitude of the markets might not be sufficient to make it a very easy Section 7 case.

In any event, we say we don’t need to cross that bridge because there’s already a Decree entered specifically against Armour saying Armour can’t be in this kind of business, and that’s the very purpose of this kind of prophylactic relief in a Decree to make it unnecessary for the Government to enter the particular facts and prove a particular violation of the Antitrust laws de novo.

The only question then as we see it is one of relief for what we think is in incontestively an interference by Greyhound with the substantive structural relief that this whole Decree was designed to create or if you will, an actual situation where Greyhound has put Armour into violation of the literal terms of Decree.

Of course, it’s plain that only Greyhound and not Armour, its pawn, can remedy this situation because the title to the stock that has to be divested to give the Government the relief that it wants is in Greyhound and Armour of course in the remedial sense is the only one of these entities that’s party to the Decree.

As I indicated, we have not suggested, we’ve not proceeded on the theory that Greyhound is in active participation with Armour in making Armour violate the Decree.

What we have said is that as in the civil rights cases, which I think are quite analogous where the courts have found the power to issue a supplemental order creating a remedy against interference with school desegregation interference by a third party and not a party to the initial Decree, because of course, the basic party and the defendant -- party defendant in these cases has been the school board.

The courts have had found no trouble in creating a remedy for independent actions by third parties, not in concert with the school board and we think, this is a very analogous situation.

Of course, Section 5 of the Sherman Act gave the District Court the power to bring Greyhound in we think as a party on the theory that that was required to infatuate the ends of justice and paragraph 18 of the Decree, again, specifically provided that the court retain jurisdiction to enter appropriate supplemental orders to carry it out, and we think that the order requested in the Government’s petition would have been such a appropriate order. I’d like to reserve the rest of my time.

Chief Justice Warren E. Burger: Thank you Mr. Springer.

Mr. Foote, you may proceed.

Argument of Edward L. Foote

Mr. Edward L. Foote: Mr. Chief Justice and may it please the Court.

As Greyhound sees the issue, the question is one of application of traditional and acceptable principles that apply to injunctions under Rule 65 (d), and whether the accepted law that applies to such injunctions is going to be observed in this case under the attack of a justice department that in this case, structural Antitrust Decrees will be circumvented.

The basis question in this case starts with Rule 65 (d), and the District Court is very familiar with the packers Decree because he is the judge who handled the modification proceedings in Chicago in a 14-week trial back in 1958.

This District Court reviewed the petition and dismissed it.

Now, he’s familiar intimately with the terms of this Decree.

Judge Hoffman, the basis of Judge Hoffman’s decision is that Rule 65 (d) simply does not apply to situations unless someone is actually participating in violation of an injunction.

He observed and I think the record is unmistakably clear that Armour’s conduct in this case is not at issue.

Armour has never violated the Decree.

There’s no suggestion that Armour did.

Amour’s conduct is impeccable.

There’s no suggestion that in this instance, Greyhound is actively participating with Armour in violating the Decree.

And as the District Court says, Rule 65 (d) of the federal rules of civil procedure provides that every order, granting an injunction is binding only upon the parties to the action, their officers, etcetera, and upon those persons in active concert or participation.

There’s no part of this Decree that relates to the conduct that the Government is talking about.

I think it might be of interest to the Court.

The Court probably knows that three years after this Decree was entered back in 1925, one of the original signatories to the Decree, Morris Packing Company, was acquired by Armour.

Here, you have supposed prophylactic and structural Antitrust issues that were supposedly decided for all purposes in 1920 in this Decree, and yet three years later, one of the original signatories was acquired by Armour.

Now, the fact of the matter is that this Decree does preclude some conduct and it does not apply to other conducts.

All of the stock of Morris, all of the business of Morris was acquired by Armour.

There’s no attack on that.

As a matter of fact, the Government over the last 50 years has interpreted this Decree completely inconsistent with their current interpretation.

What you have as Greyhound sees the matter is the same situation that this Court decided in May of 1969 in the Hazeltine Zenos litigation.

Now to be sure, there are -- there’s no analogy that’s perfect, but what did the Court do in the Hazelton litigation?

Here are the similarities.

Both cases involved Antitrust Decrees.

Both cases involved an Antitrust Decree on a subsidiary. Both cases involved the parent and the parent obviously owned the subsidiary.

Now in the Hazelton litigation, this Court said and reversed the District Court that you could not apply the injunction, the injunction that was entered against the subsidiary to buying the parent, and the case was reversed on that ground.

This Court at that time again referred to Rule 65 (d).

Neither the judgment of damages nor the injunction against Hazeltine was proper.

Although injunctions issued by federal courts by and not only the parties defendant in a suit, they cannot -- the court goes on to quote Rule 65 (d) apply to the parent in that case Hazeltine, since Hazeltine was not a party to the litigation.

Now, what is the difference between that case and this?

Why does the Government not apply the traditional law that applies to normal injunctions under Rule 65 (d) to this case?

Isn’t really the issue in this case whether the injunction entered in 1920 against Armour buy-ins Armour’s stockholders, in this instance; Greyhound.

That’s really what the Government is asking for.

They want the injunction to run up stream, and isn’t that contrary to the theory of the Hazeltine litigation where in that instance, the Court refused to support the District Court that had done just that.

Over the years, the packer’s Decree has been interpreted.

The Court of course well knows Justice Cardozo’s decision back in 1932 and it was again reviewed in the 50’s by the District Judge Hoffman.

Those proceedings involved modifications of a Decree.

In those situations, parties went into Court and asked that a Decree be modified.

The same thing happened in the United Shoe case, and in that case, Justice Fortas for the Supreme Court set down the rules that govern modifications of Decrees, but I think it’s very important to observe that in this case, the Department of Justice, that the Government is not seeking a modification of the Decree.

They are not going into court under the United Shoe theory and asking for modification.

What other kind of cases then has this Court considered interpreting Decrees and trying to extend them?

Well, I suggest for the Court Justice Black’s decision in the Atlantic Refining case in 1959.

That case is very similar to this case in several respects.

Both cases started out with the complaint alleging illegal conduct.

In the Atlantic Refining case, a trial actually started and later on, a Consent Decree was entered.

The Consent Decree prohibited various shippers and owners from certain discriminatory arrangements with one exception that a 7% payment was permitted under the Consent Decree.

The Government having consented to that Decree operated under it with the parties for approximately 16 years.

And then in 1957, the Government did in that case, what they have done here.

They did not seek modification.

They went into Court and simply said the language of the Consent Decree applies to this situation, meaning a situation that was actually the subject of the original Decree, and they wanted interpretation of the language.

They didn’t want a remand.

They didn’t want any modification hearing.

They wanted the language of the Decree itself stretched to include the conduct that they quarrel about in the second proceeding in 1957.

Now in that case --

Justice Byron R. White: I gather that you think that under this Decree, if Armour went out and was in the process of purchasing the assets of a company in a forbidden line that the court would be limited to enjoining Armour from doing that.

It couldn’t issue a supplemental order against the putative seller.

It couldn’t also -- could it enjoin both Armour and the seller?

Mr. Edward L. Foote: Well in an original action --

Justice Byron R. White: I didn’t ask about an original action.

I just -- under the Decree, Amour is forbidden from acquiring some company of a -- of certain kind?

Mr. Edward L. Foote: That’s correct.

Justice Byron R. White: And if it’s in the process of acquiring one of those forbidden companies, could the court issue an order against Armour and also the possible seller?

Mr. Edward L. Foote: Well, Your Honor, I believe in terms of what would happen in that case, Judge Hoffman discussed that and he indicated that he would certainly enter an order against Armour, if Armour’s conduct ever appeared to violate the Decree.

I believe that he would also ask that the party who is being acquired be brought in, but it's -- if that answers your question, I believe he could do --

Justice Byron R. White: Well, I want know what your opinion was, whether the order could run against the seller too?

Mr. Edward L. Foote: Oh!

I don’t know whether the order would run against the seller Mr. Justice, but the court would issue an order against Armour and if the court issued a summons against the third party, presumably if the third party were -- under Rule 65 (d), if the third party were actively participating in it, it comes within Rule 65 (d).

Justice Byron R. White: So in that sense, the Decree wouldn’t be limited only to Armour?

Mr. Edward L. Foote: Mr. Justice, we have never contended that the Decree is simply limited to the packers.

We would like to apply to this case the traditional law that is applied in any injunctive case; meaning Rule 65 (d).

What has happened in this case, it seems to us is that because of the purpose that the Government sees in this Decree, they want to circumvent the normal rules that apply to injunctions.

They have cited no cases that are parallel to this.

The Forbus (ph) case is not an analogies situation --

Justice Byron R. White: But Armour, I suppose under this Decree couldn’t acquire Greyhound, could it?

Mr. Edward L. Foote: That is correct.

Justice Byron R. White: But if Armour said “Well, I can acquire you, but you can acquire me, why don’t you do that?”

Then 65 (d) would be -- would come into play, I suppose?

Mr. Edward L. Foote: That is correct.

This petition does not allege any such facts.

As a matter of fact, before the District Court in the briefs of this case, the United States has abandoned that position.

They do not want to urge that position.

They have never alleged any active concert or participation.

Justice Byron R. White: In that circumstance, though you would say that in order to grant against Greyhound --

Mr. Edward L. Foote: Yes.

Justice Byron R. White: But as far as long as Armour is passive and doesn’t take it up in the first place, an order may not run against Greyhound?

Mr. Edward L. Foote: I believe Mr. Justice, that’s what Rule 65 (d) says.

Justice Byron R. White: That’s what this case is all about?

Mr. Edward L. Foote: This case is in part about that.

There are other issues.

Under the Atlantic Refining case as Justice Black observed, the purpose of the Decree even if the purpose of the Decree would be better served by the proceeding that the Government brought, you cannot modify without a modification hearing the language of the Decree particularly since the Government in that case and in this has consistently over the years had a completely different interpretation.

It seems to us that the problem of the interpretation of the Government in this Decree over the last 50 years is not estopping the Government in this instance.

But as in the Atlantic Refining case as Justice Black said in that case, for 17 years, the Government had interpreted the Decree consistent with his interpretation in the opinion in that case, and the new interpretation, which was a new interpretation by the Government, he suggested that perhaps modification proceedings were in order.

Based upon that consistent interpretation over the 17 years, you can read into the Decree its actual purpose.

Now in this instance as the court knows, the Government has interpreted this Decree completely different from the suggestion made to this Court.

In the LTV litigation on March 10, 1970, while this case -- that is the General Host case, it was in this Court, the Department of Justice was filing papers in Pittsburgh on this very Decree in the sense that Wilson and Co., which is original signatory to the Packers Decree was a party as a subsidiary of LTV in the Pittsburgh litigation.

Now in that case, the Government suggested to the court that LTV could own 86 or some percent of Wilson and Co., and also own Jones and Laughlin. Jones and Laughlin has products which are expressly included in the Decree.

Now, what is the difference between those two situations?

In both situations, you have a form of conglomerate, a holding company LTV or the Greyhound Corporation.

In both situations, each of the holding companies had a major transportation company, the Greyhound Bus Company, contrast to the Braniff Airlines, one of LTV’s subsidiaries.

In both situations, the holding company, Greyhound or LTV had a substantial interest in a packer, Wilson & Company, or in this instance Armour and in both situations, they were alleged to be Decree products in another subsidiary.

Now --

Justice Byron R. White: Was it then appropriate as a remedy in this case if the -- for the trial court in 1920 to have said Armour shall not acquire anyone -- this forbidden lines and neither shall Armour be acquired by anybody in the -- those forbidden lines?

Mr. Edward L. Foote: Mr. Justice, it’s our view that no such order could be binding.

Justice Byron R. White: Well, it wouldn’t be binding until somebody -- but let’s assume what happen.

Somebody acquired Armour like this, like in this case, would you think that court would be entitled then to enter an order against the acquirer?

Mr. Edward L. Foote: It is our view that injunction such as that cannot run against the world.

You could perhaps enjoin the transfer of stock.

You could enter an order that the transfer agent could not transfer the stock.

You could put people on notice, but under Rule 65 (d), even after actual notice on a party, you must have active participation.

It seems to us the question here is what traditional law is as it applies to injunctions on non parties?

If that is not the proper law, and if we’re going to accept the Government’s view that injunctions once entered buy-in parents, even corporations that acquire the stock at the later time, how can we justify the court’s decision in the Hazeltine litigation, whereas 65 (d) was used very specifically to reverse the District Court for entering an injunction against Hazeltine Corporation.

This is the traditional law as we see it.

We think it’s the traditional laws this Court has seen it over the years.

Now here for some reason, the Government takes the position that this traditional law applying to an injunctions should be extended, and it should be extended according to the Government because if that is not done, Structural Antitrust Decrees will be circumvented.

But if there is any need to look to an illustration of how to circumvent Structural Antitrust Decrees; we can look at the Government’s own conduct in the LTV litigation.

There isn’t a particle of difference between what the Government did in LTV and this case, and yet in LTV, the Government suggested to a federal court in Pittsburgh that it was perfectly proper for LTV to own a company, Jones and Laughlin, the deals in prohibited products and also own 86% of Wilson and Co.

Now, the apology for that let’s call it “different point of view” was stated in the briefs filed in this Court last year in the Host litigation as follows.

A proposal of settlement, this is the LTV litigation, does not make law, especially in light of the serious anti-competitive factors involved in the underlying case; meaning this case.

Moreover, the prohibition under the Meat Packers Decree to which Greyhound points comes under the heading of miscellaneous articles.

But if we are really in this case not trying an anti-trust lawsuit, and we think this is exactly what the Government is doing, are circumventing the requirements of Section 7 and trying to extend this Decree well beyond this Court’s decisions both in the Hughes case and at Atlantic Refining.

In both those cases, this Court pointedly said, it might well serve the purpose of the Government and might well serve the prophylactic effect of the Decree to have the release entered.

But, we can’t look to those purposes because the Government over the years has interpreted the Decree inconsistent with that.

In the Hughes litigation and in both the Atlantic Refining litigation, the Government tried to do exactly what their trying to do here and this Court did not accept those arguments.

Now, it seems to us that the law is a little different in modification proceedings.

There as Justice Cardozo indicated the 1932 if someone goes into court and actually seeks a modification of a Decree, then, you have to analyze the background of the Decree.

You have to analyze its purposes in order to determine the extent and breadth of the modification, but this is not a modification proceeding.

This is a proceeding brought under the Decree to extent its terms well beyond any language in the Decree.

The Decree merely forbids Armour from doing various things.

It prohibits Armour from owning any companies that actually are in Decree products.

There isn’t a slightest suggestion in this case that Armour is violating that Decree.

We have an attempt to apply the Decree to a parent or stockholder contrary to the decisions of this Court.

As Justice Black said in the Atlantic Refining case which is a case like this, not a modification proceeding, you must look to the experience and the conduct to the parties over the years to determine the extent of the application of the Decree to this new situation and what has been the experience over the years.

In 1925, Armour was permitted to acquire a packer, Morris.

LTV in recent times is permitted to have exactly this same relationship with -- that they are now complaining about with Wilson and Co., another packer.

How can we possibly distinguish those two situations?

How can the Government on March 10, 1970 file papers in the federal court asking that that relationship be approved and at the same time, file papers in this Court asking as to another packer that that relationship be stopped.

Over the years, there has been a consistent interpretation by the Government that this does -- this Decree does not apply to upstairs activity by the packers.

Meaning for example, let’s take FH Prince and Co. Inc. FH Prince and Co. Inc. owned 100% of the stock of the USYNT, the Union Stock Yard and Transit Company in Chicago; one of the direct prophylactic provisions of this Decree was that Armour would have no relationship with a Stock Yard.

There’s a specific provision asking for divestiture and divestiture occurred, but in between 1958 and 1960, FH Prince and Co. Inc had controlling interest through a variety of Prince interests of Armour, and also own 100% of the stock of the USYNT.

The USYNT operates restaurants.

All these facts were known to the Government and acquiesced in because they were trying the modification proceeding in Chicago during the same period.

So, you have a Decree which has never been applied in 50 years to investments in a packer.

It wasn’t applied when Morris was acquired, a signatory.

It wasn’t applied when FH Prince and Co. Inc owned both USYNT and Armour.

It wasn’t applied in the LTV litigation in which LTV owns both a packer and a corporation that deals in Decree products.

With 50 years of experience, interpreting the Decree in that way, under the Atlantic Refining case, this Court’s latest decision that we know on this subject, this case should be affirmed.

As Justice Black suggested in that case, perhaps modification is appropriate, but this is not a modification proceeding.

This is a proceeding in which the Government contends that the purposes they see in this Decree, purposes that go back to 1920, control the anti-trust issues of today.

We have, not in our briefs, attempted to answer it, but many references outside of the record concerning meat and other food facts that supposedly control the anti competitive facts in the meat industry today.

We don’t think it is appropriate to put in briefs in this Court a lot of references to how much control Armour does or doesn’t have.

We would like to dispute them.

We don’t think that the meat industry has anywhere near the control that used to have, but it seems to us that that’s an irrelevant point.

What we really have in this case is a simple issue of interpreting the Decree under Rule 65 (d).

Why does the Government not proceed under Rule 65 (d)?

They admittedly have not.

They admittedly want to challenge this Court’s decision like in Atlantic Refining, and they admittedly want to take a different position in this case than they have in other cases.

What was the purpose of the Decree?

The Government seems to be able to read out of the Decree a variety of purposes which we can’t find.

The Decree itself which was entered in 1920 contains an express provision in the beginning of it that the packers, first of all, deny all the charges.

This is a settlement of a lawsuit and the settlement of the lawsuit contains in it an express provision that says that the entry of a settlement Decree is no admission on their part that they’ve ever violated the laws or have monopolies.

This Decree does not stand for the proposition of the monopoly ever existed.

As a matter of fact, if the prophylactic nature of this Decree is such that accretions of power among the packers are included in its prohibitions, then how could the Government, three years after the ink was dry on this Decree, permit Armour to acquire Morris?

And if that is so, how can the Government contend against Greyhound that we cannot through different subsidiaries own a packer and a company that has some Decree products when they permit other companies too?

What is the difference between the board of directors of LTV and the board of directors of Greyhound?

We’re not saying the Government is estopped.

If they want to let LTV conduct their affairs that way, obviously, that’s their right, but in interpreting the Decree over the years in that way, under this Court’s decided authority, those facts are material in determining the purposes of the Decree.

I have one last point.

The real issue in this case is not Armour, its Prophet Foods.

Greyhound has another subsidiary.

It operates in the food business.

It’s in the catering business.

It also has another small subsidiary that sells food as an accommodation to people who want to buy food when they stop at the bus line out in Omaha or some place.

This is a small business.

It’s part of an adjunct to their bus business.

Now, if the Court is going to except the Government’s arguments, we respectfully suggest that the real issue in this case as we stated in the relief paragraph of the appeal brief is that we divest ourselves, that is we get rid of say Prophet Foods.

This is not an antitrust case, there’s no finding here that Greyhound has violated any law.

Chief Justice Warren E. Burger: Do we have any information in, anywhere in the record that would indicate how much of Armour’s products are used by Greyhound in its food dispensing aspects?

Mr. Edward L. Foote: No, Your Honor.

We have --

Chief Justice Warren E. Burger: That’s because we have no record?

Mr. Edward L. Foote: We have no record.

I believe we have furnished such information to the Department of Justice in their investigation of this case, starting out as a Section 7 investigation, but it’s never been made a party -- part of this record, but more than that Mr. Chief Justice, the problem here is not one of an anti-trust violation.

There are references in this appeal to reciprocity, the possible control of prices by a combination between Armour and Greyhound.

All of these statements are not in the record.

At this juncture all we have is a petition filed which merely states that they want a subpoena or summons issued against Greyhound under Section 5 of the Sherman Act, and that requires a finding that the action be pending, and when a District Judge who’s had a lot of experience in this matters, repeatedly asked counsel for the Government, to give me some authority on this; they cited the Byre (ph) case.

The Byre case the only one we know off, but in that case, this third party was permitted to litigate the merits of the original Decree.

That can’t perceivably be what the Government is asking for in this case and yet, it’s the only case that could be cited and the reason is, it’s at Section 5 of the Sherman Act requires a finding that the action is pending before summon is issued.

We think this whole business of possible circumvention of Antitrust Decree is a rouse.

The Government is trying to create a noble public interest objective to get around the basic rules of injunctions that apply in case after case and a careful reading of this record in the hearings before Judge Hoffman.

Judge Hoffman is a seasoned experienced judge; one of many and all the District Judges have problems of injunctions.

And it’s just Judge Hoffman said “What am I to do in the next injunction case?

I have all kinds of injunctions over my experience on the bench.

I have many injunctions.

Are we going to apply these rules to that kind of a case?”

The Government in this case is actually seeking to have the rules that normally apply in injunctions and the rules that they have permitted to apply to the Packers Decree to be amended in this proceeding.

Thank you.

Chief Justice Warren E. Burger: Mr. Foote, thank you.

Mr. Springer?

Rebuttal of James Van R. Springer

Mr. James Van R. Springer: Thank you Mr. Chief Justice.

I think to try to put this case back in focus, perhaps I should say that this is not primarily an anti-trust case here at all.

It is an equity case.

We are not as we have said many times, seeking to modify this Decree.

We do not rely upon some general notion of what’s good for competition and what is bad for competition.

We take this Decree as we find that.

We think there are in this Decree prohibitions against a certain kind of structural situation.

We think the Decree did everything it could to try to create such a prophylactic separation.

We think Antitrust Decrees should be able to do that, and the only question here as I hope I’ve indicated is whether there is a remedy for such an interference or violation, whatever you want to call it, with a structural separation which an Antitrust Decree, whether it’s a consent Decree or litigating Decree has tried to establish.

We acknowledge of course that this is as far as we know, the case of first impression in this Court, and perhaps in any of the Courts, but that’s of course why we brought it here.

We say frankly that our case does depend upon the proposition that in a Decree, specifically in an Antitrust Decree, there are two aspects; there’s the substantive aspect and the remedial aspect.

We think a distinction can be drawn between them.

This Decree had the specific substantive aim of decreeing a separation.

That separation has been broken down.

Admittedly, the Decree as written does not provide a remedy for that, and it’s for that reason that we went to the court seeking a very limited additional remedial order which we had thought was necessary to remedy this breaking down of the substantive separation which the Decree was designed to create.

This case we think, there’s nothing like Atlantic Refining or Hughes for the simple reason again as I’ve said that we think this Decree does specifically prohibit the situation.

Justice Potter Stewart: How about LTV --?

Mr. James Van R. Springer: Several things can be said about LTV. First as this Mr. Foote is admitted, there’s no element of estoppel here.

LTV came up long after the Government had told Greyhound that it objected to this situation.

Second, and again, this is a distinction from Atlantic Refining, the Government has never approved LTV’s simultaneous ownership of Jones and Laughlin and Wilson and Company in any specific way.

The Government -- the situation is this and this is also true, the Prince case.

The Government has not taken any action against those situations of the Pittsburgh case to which Mr. Foote refers.

Of course, it’s a Section 7 case trying to initially brought to get LTV to divest itself of Jones and Laughlin.

As far as I know, Wilson and Company has never been mentioned in the proceedings of that case.

And one further point on that if I may, the prohibition of the Decree to which Mr. Foote refers is one of a number of miscellaneous articles listed in the end of the paragraph four of the Decree which includes structural steel and babbitt and a lot of incidental products which are not mentioned for one thing in this Government’s petition, and I think plainly, they’re not central to the Decree in the sense in which we think the separation between meat packing and the other food lines is central to that Decree.

So in light of that, I think it’s just perhaps appropriate for the -- and the Government should not be bound in this case by the fact that it has not taken steps against that one particular situation.

Chief Justice Warren E. Burger: Thank you Mr. Springer, thank you Mr. Foote.

The case is submitted.