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Lampert Dairy Farm Inc. v. Hoffman

Decided: June 29, 1962.

LAMPERT DAIRY FARM, INC., A CORPORATION OF THE STATE OF NEW JERSEY, ET AL., APPELLANTS, AND GARDEN STATE FARMS, INC., INTERVENING APPELLANT,
v.
FLOYD R. HOFFMAN, DIRECTOR, OFFICE OF MILK INDUSTRY, AND DAIRY PROCESSORS AND HANDLERS OF NEW JERSEY, INC., RESPONDENTS, AND BORDENS FARM PRODUCTS CO. OF NEW JERSEY, ET AL., AND ATZINGEN-WHITEHOUSE DAIRIES, INC., ET AL., INTERVENING RESPONDENTS



For remandment -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. Opposed -- None.

Per Curiam

[37 NJ Page 599] After a public hearing, held pursuant to N.J.S.A. 4:12A-23, the Director of the Office of Milk Industry issued Order 60-4 establishing a formula by which minimum resale fluid milk prices for the various methods of distribution and the various container sizes in effect in

Area I (the 13 northern counties in New Jersey) were tied to the monthly fluctuations in the minimum producer price set by the Secretary of Agriculture through the federal Market Administrator. The existing price differentials between the various methods of distribution, i.e., dealer to consumer, dealer to store, store to consumer, dealer to subdealer, and the existing price differentials between the various containers, i.e., quarts, half-gallons and gallons, were not altered by the order. Prior to the issuance of the order, fixed minimum resale prices were established and remained in effect until changed by the Director, notwithstanding that the federally controlled prices for raw milk paid to the producer varied from May-June lows to November highs.

In arriving at his conclusions, the Director relied on a composite profit-and-loss statement prepared by The Milk Dealers' Association of Northern New Jersey and covering the preceding year's overall operations of 12 northern New Jersey milk dealers. He recognized these companies as being representative of the industry as a whole. The Director found that when dealers sold their milk at the pre-existing minimums, they realized a reasonable profit only when they purchased raw milk at the producer prices prevailing during the May-June period in 1960, i.e., $4.88 per hundred weight; that at other periods of the year dealers were obliged to sell above the pre-existing minimums in order to operate without a loss. Therefore the Director's new schedule was geared to provide dealers with a reasonable profit each month of the year. Accordingly, he set the new minimums so that they coincided with the preexisting minimums when raw milk was priced at $4.88 per hundredweight, and fluctuated as the raw milk price changed. Because the old minimums corresponded to what was expected to be the lowest producer price, the effect of this order is to increase generally all resale minimums in force prior to its promulgation except for the months of May and June. The anticipation is that during the remaining

ten months of the year the new resale minimums will exceed the pre-existing minimums by amounts varying between one-half cent and three cents per quart.

Four milk dealers appealed from the order, alleging that it was procedurally defective and not based upon adequate findings of fact. We certified the cause on our own motion. As the case was presented to us, it appeared that the appellants differed from milk dealers generally in that the appellants were "bulk or jug-sales dealers" -- that is, the predominant part of their operations concerned the sale of fluid milk in one-half gallon and gallon containers. Their primary argument revolved around the assertion they were operating profitably at the minimum prices in effect under the existing schedule, Order 60-1. They contended that since Order 60-4 would compel them to sell at higher prices, it would adversely affect their competitive market position and force the consuming public to pay more for milk bought from them. We assumed the same argument could be advanced by dealers who primarily sell milk from vending machines. Since the Director had not investigated the cost factors in the operations of bulk sales and vending machine dealers, and since the consuming public might be adversely affected by an increase in minimums for these methods of marketing, we remanded the matter to the Director to investigate the cost factors experienced by these types of dealers. 35 N.J. 205 (1961). Because we could not foresee the problems which might arise as a result of the investigation and the effect which their solution might have upon the overall order, we stayed the operation of Order 60-4 until the record was supplemented. We retained jurisdiction pending the remand.

The Director proceeded to investigate the financial operations of the four appellants and to conduct hearings. At the conclusion of these hearings he found that the costs of two of the appellants, Cornell Dairy Farms and Maplehurst Farms, could not be satisfactorily determined; that one of the appellants, Garden State Farms, Inc., experienced

greater costs than the cross section of the industry; and that Lampert Dairy Farm, Inc. experienced costs less than the cross section of the industry. He further found that if the appellants' operations and costs were included in the composite statement of the 12 dealers the differences in the results would be insignificant because of "the foregoing findings and the very small percentage of the market supplied by the appellants." The Director concluded that no change should be made in the schedule of minimum prices contained in Order 60-4. The matter was returned to us pursuant to our remand order.

We have reviewed the record compiled by the Director at the supplemental hearings. The testimony elicited, unlike the hearing held prior to the first appeal, delved deeply into the operations of the appellants and now presents us with a much clearer picture of the nature of their operations. Before the record was supplemented, we understood that each of the appellants sold most of its milk in one-half gallon and gallon containers. The record now reveals that though these dealers do not uniformly sell most of their milk in the larger containers, they do sell proportionately more of their milk in one-half gallon and gallon containers than do dealers in the area generally. We also learned for the first time that they sell their milk almost exclusively through retail stores. On the other hand the 12 dealers, whose composite records the Director has accepted as a representative cross section of the industry, sell most of their milk in quart containers delivered to the home or wholesale to stores. It was shown that presently in Area I about 90% of all the milk sold is packaged in quart containers. The major portion of the remainder is packaged in one-half gallon containers and a lesser quantity in gallon containers.

Up until recent years the percentage of milk sold in quart containers in Area I was fairly typical of that prevailing elsewhere in the nation. At the oral argument we were told that ...


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