The opinion of the court was delivered by: BONSAL
Plaintiffs in this action have moved for a preliminary injunction against defendants. This action was instituted on January 16, 1970, pursuant to the Commodity Exchange Act, 7 U.S.C. § 1 et seq., and plaintiffs moved by order to show cause dated January 16, 1970, for an order "preliminarily enjoining the defendants from delivering or causing to be delivered false or misleading or knowingly inaccurate reports that affect or tend to affect the price of eggs in interstate commerce."
Plaintiff United Egg Producers is an agricultural cooperative, made up of five regional agricultural cooperatives: Midwest Egg Producers Association, National Egg Company, Northeast Egg Marketing Association, Southwestern Egg Producers, and Western Egg Company, which are also plaintiffs in this action. The five regional cooperatives in turn have a membership of approximately 500 commercial egg producers in the United States, and together these regional cooperatives market approximately fifty-five percent of the eggs sold in the United States.
Plaintiff Clements Eggs, Inc. is a commercial producer of eggs and a member of Northeast Egg Marketing Association.
Plaintiff Austin T. Moore, Jr. is president of Glenco Farms, Inc. a commercial egg producer and a member of National Egg Company. Moore is a trader in egg futures on the Chicago Mercantile Exchange.
Defendant Bauer International Corporation (Bauer International) is a New York corporation engaged in the import-export business, including the importation of eggs into the United States. Defendant John P. Bauer (Bauer) is president, chief executive officer, and a principal stockholder of Bauer International.
In their complaint plaintiffs allege that defendants knowingly delivered or caused to be delivered, for transmission through the mails and in interstate commerce, a series of false, misleading, or knowingly inaccurate reports concerning the proposed importation of 425,000 cases, or 153,000,000 Spanish eggs, that affected or tended to affect the price of eggs in interstate commerce, in violation of the Commodity Exchange Act. Plaintiffs, seeking both injunctive relief against and damages for defendants' alleged violations, point specifically to Section 13(b), which provides in pertinent part:
"It shall be a felony * * * for any person * * * knowingly to deliver or cause to be delivered for transmission through the mails or in interstate commerce by telegraph, telephone, wireless, or other means of communication false or misleading or knowingly inaccurate reports concerning * * * market information or conditions that affect or tend to affect the price of any commodity in interstate commerce."
Hearings were held on the motion for a preliminary injunction on January 21, 22, 23, and 27, and February 2, 1970, which developed the following facts in addition to those hereinbefore stated.
During the months of December, 1969, and January, 1970, news of a proposed importation of a large quantity of Spanish eggs by Bauer International was carried in the Journal of Commerce, The Poultryman, the Chicago Sun-Times, the Maine Telegram, Barrons, Reuters News Service, the New York Daily News, The Wall Street Journal, and the New York Post. Also during this period, Bauer International, directly and through a news service, disseminated news releases concerning its importation of Spanish eggs to the news media.
On December 3, 1969, Bauer International transmitted a release entitled, "Re: a new development in Spanish-American trade - the shipment of shell eggs from Spain to the United States," to United Press International. Bauer testified that Bauer International sent the release out, that its contents were intended for the American reading public, and that the December 3, 1969 Journal of Commerce article was based on it. Portions of the release which appeared in the Journal of Commerce follows:
"A quantity totalling 425,000 cases of 30 dozens each (which equals 12,750,000 dozens or 153,000,000 eggs) have been purchased by one American company.
"The first shipment of these shell eggs will be leaving Spain for the USA during the week of December 8, 1969.
"Three refrigerated vessels, namely the S/S PONGAL with 295,000 cubic feet, and the S/S BLUE STAR with 373,000 cubic feet, and the S/S VILLAFRIA with 410,000 cubic feet, have been made available to ship these eggs under regulated temperature from the ports of Vigo, Cadiz, Bilboa, to the USA."
On December 17, 1969, Bauer International sent a teletype of a news release to P.R. Wire Service, a membership news agency. The release read in part:
"The first shipment of Spanish shell eggs ever to be shipped to the USA from Spain is scheduled to arrive on the steamer SEA WITCH of the Sealand Container Lines on December 19, 1969 * * *.
"* * * experts from the egg industry and former ranks of the U.S. Dept. of Agriculture have completed their inspection of all the eggs which have been purchased by Bauer International Corp. New York. * * *
"The shipments to the USA will proceed rapidly from now on on regular scheduled steamers operating from Spain to New York."
The release was transmitted by P.R. Wire Service on its transcontinental wire, and the contents of the release served as the basis for the December 20, 1969 article in The Poultryman.
On January 7, 1970, P.R. Wire Service received a second release from Bauer International. That release, which contained instructions that it be disseminated "to all the editors of economic and commodity news throughout USA including wire services", read in pertinent part:
"The first shipment from a total purchase made by Bauer International Corporation, New York, of 425,000 cases, or a total of 153 million eggs has arrived on board the vessel, SEA WITCH, of the Sealand Container Line. The eggs * * * were found to be of absolutely excellent condition.
"From here on in the shipments will continue at a rapid pace and during the next ten days, over 100,000 cases amounting to 36 million eggs, will be loaded on board * * * different vessels for New York City. The entire quantity will have been shipped before the 25th of January, 1970."
With no significant alteration to these portions, the release was transmitted on the transcontinental wire by P.R. Wire Service.
Bauer testified that he personally aided in the composition of the release, and that it was sent to P.R. Wire Service. However, he denied that his release was the basis for, or that he furnished the information contained in, a Reuters wire which came out on January 7. The Reuters wire read in part:
"11:27:: first Spanish eggs ever arrive: New York, Jan. 7 - The first shipment from a total purchase of Spanish eggs made by Bauer International ...