Beverage Distributors, Inc. v. Olympia Brewing Co.

• Citation: 440 F.2d 21
• Decision Date: 07 June 1971
• Docket Number: No. 25463.,25463.
• Parties: BEVERAGE DISTRIBUTORS, INC., a corporation, Plaintiff-Appellant, v. OLYMPIA BREWING CO., a corporation, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

440 F.2d 21 (1971)

BEVERAGE DISTRIBUTORS, INC., a corporation, Plaintiff-Appellant, v. OLYMPIA BREWING CO., a corporation, Defendant-Appellee.

No. 25463.

United States Court of Appeals, Ninth Circuit.

March 1, 1971.

Rehearing Denied April 6, 1971.

Certiorari Denied June 7, 1971.

Benjamin Parkinson (argued), Willard S. Johnston, of Ackerman, Johnston, Norberg & Parkinson, San Francisco, Cal., for plaintiff-appellant.

David Brice Toy (argued), John C. McHose, Pamela Ann Rymer, of Lillick, McHose, Wheat, Adams & Charles, Los Angeles, Cal., Harry M. Henke, of Skeel, McKelvy, Henke, Evenson & Betts, Seattle, Wash., for defendant-appellee.

Before: BROWNING, WRIGHT and TRASK, Circuit Judges.

Certiorari Denied June 7, 1971. See 91 S.Ct. 2209.

TRASK, Circuit Judge:

This is an action by Beverage Distributors, Inc. to recover treble damages from Olympia Brewing Company under Section 4 of the Clayton Act, 15 U.S.C. § 15, for violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and for injunctive relief. 15 U.S.C. § 26. Jurisdiction is also invoked under 28 U.S.C. § 1337. (General jurisdiction of district courts over trade restraints and monopolies).

FACTS AND CONTENTIONS

Olympia Brewing Company (Olympia) with its principal brewery in Tumwater, Washington, is a brewer of various beer products. It has been in business on the west coast and elsewhere for many years marketing its brew to the public through sales to distributors who buy in quantity and at a wholesale price. The distributor or wholesaler markets his beer to the retailer who sells to the consumer. Olympia in 1969 was the second largest selling beer in California and in 1960 was the fourth largest. Beverage Distributors, Inc. (B.D.I.), is a licensed beer wholesaler distributing beer, among other products, in California, Nevada and Arizona.

At the time B.D.I. began distributing Olympia products, B.D.I. was a wholly-owned subsidiary of Safeway Stores, Inc., and was the only entree which a brewer had to place its products with Safeway's stores as a retail outlet. Safeway did not purchase any beer for its stores other than through B.D.I. and B.D.I. did not sell any beer except to Safeway. B.D.I. also sold other brands of beer to Safeway in the same manner.

On June 28, 1953, Olympia appointed B.D.I. a distributor for its beer. Exs. S; T. The letter of appointment contains no restrictions on the territory to be served by B.D.I. or on the customers to whom B.D.I. could distribute Olympia beer. It described the relationship as one necessarily based upon mutual trust and confidence, and contains no provision for any definite term.¹

Other distributors were also appointed by Olympia from time to time. They were principally those already in the beer business and, when appointed, their appointment outlined the areas they were then serving and they were expected by Olympia to properly service every account in their own area. As distribution expanded, territories over which Olympia distributors assumed responsibility to provide full service tended to be non-overlapping. Full service required by Olympia included the duty of the distributor to have every type of Olympia package on the retailer's shelves, to support Olympia merchandising programs, to make deliveries promptly and regularly, to rotate beer and generally to promote the brewer's sales techniques and to protect the quality of the product.

Sometime in early 1958 a group of B. D.I. employees purchased the entire capital stock of that company from Safeway. There was testimony that in June of that year B.D.I. began selling beer to customers other than Safeway. As a result of the change in ownership and in policy, a number of brewers such as Hamm, Budweiser, Burgermeister, Falstaff and Schlitz ceased making deliveries of beer to B.D.I. B.D.I. contends that this constituted a boycott in which Olympia participated with other brewers and that it caused B.D.I. to enter into a written agreement with Olympia in July 1958 in which B.D.I. agreed that it would bow to the territorial and customer restrictions which Olympia imposed upon it.² B.D.I. contended these restrictions prevented it from competing for retailer customers in territories allocated to other Olympia distributors who sold at higher prices. This boycott, with its claimed continuing effect, constituted the first alleged violation of the Sherman Act. Brief for appellee at 12.

The second asserted violation of Section 1 of the Sherman Act is alleged to have occurred in 1967. In June of that year the Supreme Court decided United States v. Arnold, Schwinn & Co., 388 U. S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967). As a result of the pronouncements contained in that decision on August 7, B.D.I. notified Olympia that B. D.I. intended to compete with other Olympia distributors for the sale of Olympia beer to retailers other than Safeway. In September of 1967, Olympia adopted and put in operation a fair trade program, lawful in California, the effect of which was to prevent B.D.I. from selling below Olympia's "suggested" prices. The adoption of this fair trade program is the second alleged violation of Section 1. Thereafter B.D.I. continued to make sales of Olympia beer to retailers other than Safeway at fair trade prices. When further orders came to Olympia Brewing Company from B. D.I., Olympia refused to fill them. B. D.I. had filed this action in the meantime and the Olympia executives stated, as their reason for Olympia's refusal to deal, that they could not do business with someone in whom they no longer had confidence and who had lost confidence in them. This refusal to deal constituted the third alleged violation of the Sherman Act.

This action was filed on August 30, 1967, seeking treble-damages for violations of Section 1 as well as injunctive relief against the refusal to deal. A preliminary injunction enjoining Olympia from refusing to sell to B.D.I. is still in effect.³ The action came on for trial and a lengthy jury trial was held. The reporter's transcript contains over 2,500 pages with 210 exhibits for the plaintiff and 48 for the defendant. At the conclusion, the issues were submitted to the jury under a form of general verdict covering liability as well as damages. Most of the factual issues were in sharp disagreement. The plaintiff made no objection to the instructions given but asserts error in two refused instructions. The plaintiff also complains of the introduction of certain evidence. The jury having been instructed upon both liability and damages found for the defendant. The trial court considered a motion for judgment notwithstanding the verdict and in the alternative for a new trial and denied both.⁴ We affirm.

EFFECT OF THE VERDICT OF THE JURY

When a jury verdict has been returned and it has been considered by the trial judge in the light of a motion for judgment notwithstanding the verdict and in the alternative for a new trial, the scope of appellate review is strictly limited. It then becomes our duty to affirm if all of the evidence together with favorable inferences therefrom reasonably supports the determination of fact made by the jury, and the judgment of the court rendered thereon. Tennant v. Peoria & Pekin Union Ry., 321 U.S. 29, 35, 64 S.Ct. 409, 88 L.Ed. 520 (1944); Insurance Co. of North America v. Thompson, 381 F.2d 677, 681 (9th Cir. 1967); Sunkist Growers, Inc. v. Winckler & Smith Citrus Produce Co., 284 F. 2d 1, 17-18 (9th Cir. 1960), modified, 289 F.2d 933, reversed on other grounds, 370 U.S. 19, 82 S.Ct. 1130, 8 L.Ed.2d 305 (1962); Richfield Oil Corp. v. Karseal Corp., 271 F.2d 709, 712 (9th Cir. 1959), cert. denied, 361 U.S. 961, 80 S.Ct. 590, 4 L.Ed.2d 543 (1960). Cf. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 124, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969); A. & G. Stevedores v. Ellerman Lines, 369 U.S. 355, 364 (1962). In this posture of the case we are required to view the evidence in a manner most favorable to the prevailing party. As appellant correctly points out, however, these familiar rules of construction do not entirely foreclose appellant's rights even on factual matters, for if the undisputed facts clearly disclose that the appellee was not entitled to succeed, this court should not and would not hesitate to set aside the judgment. Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968).

Likewise, if the verdict of the jury or the judgment of the district court that Olympia did not violate the Sherman Act, was premised on an erroneous legal standard to be applied, the verdict and judgment could not stand. United States v. Parke, Davis & Co., 362 U.S. 29, 44, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960). In this instance we do not believe the verdict and judgment contain either frailty.

THE TERRITORIAL AND CUSTOMER RESTRICTION CLAIM

B.D.I. relies first of all upon activity of Olympia which it asserts amounts to an unlawful restriction upon the right of B.D.I. to compete with other distributors of Olympia beer in territories which the latter serve. This, it contends, is a per se violation of Section 1. United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967). The activity of Olympia relied upon by B.D.I. consists of Olympia's participation in an alleged boycott of B.D.I. by a number of national brewers calculated to force B.D.I. to observe territorial and customer restrictions, and an exchange of correspondence which B.D.I. asserts constituted an agreement forced on B.D.I. by Olympia to observe such restrictions. Both events occurred in 1958, but with effects asserted to continue until 1967.

With respect to the asserted boycott, it appears that in June 1958 a group of B.D.I. employees purchased all of the capital stock of B.D.I. from Safeway Stores, Inc., the prior owner. Before that date there had been no effort by Safeway to use its wholly-owned subsidiary, B.D.I., for any purpose other than to service its own stores. Upon...