Coors Brewing Co. v. Molson Breweries

• Decision Date: 30 March 1995
• Docket Number: No. 94-1217,94-1217
• Citation: 51 F.3d 1511
• Parties: , 1995-1 Trade Cases P 70,951 COORS BREWING COMPANY, a Colorado corporation, Plaintiff-Appellee, v. MOLSON BREWERIES, an Ontario partnership; Molson Breweries of Canada Limited, a Canadian corporation, Defendants-Appellants, and Miller Brewing Company, a Wisconsin corporation; The Molson Companies Limited, a Canadian corporation; and Molson Breweries, U.S.A., Inc., a Delaware corporation, Defendants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1511

51 F.3d 1511

63 USLW 2639, 1995-1 Trade Cases P 70,951

COORS BREWING COMPANY, a Colorado corporation, Plaintiff-Appellee, v. MOLSON BREWERIES, an Ontario partnership; Molson Breweries of Canada Limited, a Canadian corporation Defendants-Appellants and Miller Brewing Company, a Wisconsin corporation; The Molson Companies Limited, a Canadian corporation; and Molson Breweries, U.S.A., Inc., a Delaware corporation, Defendants.

No. 94-1217.

United States Court of Appeals Tenth Circuit.

March 30, 1995.

Thomas F. Cullen, Jr., Jones, Day, Reavis & Pogue, Washington, DC (Donald I. Baker, Michael P. Gurdak, Deena B. Jenab also of Jones, Day, Reavis & Pogue, Washington, DC, and Russell Carparelli, Tim L. Campbell and Matthew S. McElhiney, Bradley, Campbell, Carney & Madsen, Golden, CO, with him on the briefs), for plaintiff-appellee Coors Brewing Co.

A. Paul Victor, Weil, Gotshal & Manges, New York City (Debra J. Pearlstein, Ronald C. Wheeler and Eileen S. Simon, also of Weil, Gotshal & Manges, New York City, and Jane Michaels, Donald A. Degnan and James E. Hartley, of Holland and Hart, Denver, CO, with him on the briefs) for defendants-appellants Molson Breweries and Molson Breweries of Canada, Ltd.

Before LOGAN and HENRY, Circuit Judges, and REED ^*, District Judge.

HENRY, Circuit Judge.

Defendant Molson appeals the decision of the district court denying its motion to stay plaintiff Coors's antitrust suit pending contract arbitration. We have jurisdiction pursuant to 9 U.S.C. Sec. 16. We affirm the decision of the district court in part, and reverse in part.

I. BACKGROUND

Coors Brewing Company (Coors) ¹ is a Colorado corporation engaged in the business of brewing, marketing, and distributing beer. In 1985, Coors entered into a licensing agreement with Molson Breweries of Canada Limited (Molson), a Canadian corporation also in the beer industry. Coors and Molson agreed that Molson would brew and distribute Coors products in Canada. Under the terms of the agreement, Coors gave Molson access to Coors trademarks, brewing processes, and marketing information. Molson, in turn, agreed to use its best efforts to distribute Coors products in Canada and to keep marketing and product information confidential. The agreement further provided that either party could terminate the agreement for cause under a specified procedure, or without cause by giving the other party ten years notice of termination. The agreement also contained an arbitration clause: "Any dispute arising in connection with the implementation, interpretation or enforcement of this Agreement, except as provided in 4.02, shall be finally settled under the Rules of the American Arbitration Association....". ² License Agreement Sec. 6.10, Aplt.App. at 86.

In 1993, Miller Brewing Company (Miller), a Wisconsin corporation also in the business of brewing and marketing beer, entered into a partnership with Molson. ³ Although the Miller-Molson agreement is not part of the record in this case, Coors and Molson both represent that the agreement gave Miller one seat on Molson's board of directors and created a reciprocal licensing arrangement. Under the reciprocal licensing arrangement, Miller is the exclusive distributor of Molson products in the United States and Molson is the exclusive distributor of Miller products in Canada.

Coors filed a Notice of Arbitration with Molson, alleging that Molson breached its contract with Coors, and seeking injunctive relief, damages, and termination of the licensing agreement. Coors also filed the instant complaint in United States District Court against Molson and Miller alleging antitrust violations of the Clayton and Sherman Acts. In its exhaustive complaint, Coors makes allegations that we divide into three general categories. First, Coors alleges that the Miller-Molson alliance is a combination in restraint of trade, lessening competition in the United States and North American beer markets. ⁴ Second, Coors alleges that Miller will have access to Coors's confidential product and marketing information. Third, Coors alleges that Miller will control the distribution and marketing of Coors brands in Canada. Molson brought a motion to stay the antitrust proceedings against both Molson and Miller pending the resolution of the contract arbitration. The district court denied the motion, and Molson sought expedited appeal.

II. DISCUSSION

A. Coors v. Miller

Molson argues that the district court erred when it denied Molson's motion to stay Coors's antitrust action against Molson. In short, Molson argues that Coors has dressed up its contract claims in antitrust clothes to avoid its own agreement to arbitrate. Specifically, Molson argues that a valid arbitration agreement exists between Coors and Molson, that arbitration will settle factual issues important to the antitrust claims, and that a stay is appropriate even if the factual grounds for the contract arbitration and antitrust suit are different.

Coors, on the other hand, argues that the contract and antitrust claims are separate. It claims two distinct interests: protecting its contractual rights, which it concedes are subject to arbitration, and protecting its interest in competition in the United States and North American beer markets, which it argues is not subject to arbitration. In short, Coors argues that it should be able to pursue an antitrust suit unrelated to the contract just as any other beer manufacturer or consumer could. This court reviews the underlying arbitrability of a contract de novo. O'Connor v. R.F. Lafferty & Co., 965 F.2d 893, 901 (10th Cir.1992).

The Federal Arbitration Act (FAA), 9 U.S.C. Sec. 3, requires a district court to stay judicial proceedings where a written agreement provides for the arbitration of the dispute that is the subject of the litigation. ⁵ "There is a strong federal policy favoring arbitration for dispute resolution." Peterson v. Shearson/American Express, Inc., 849 F.2d 464, 465 (10th Cir.1988); see also Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983). The policy basis of this statute is particularly strong in the context of international transactions. Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1063 (2d Cir.1993). All "doubts are to be resolved in favor of arbitrability." Oil, Chem., & Atomic Workers Int'l Union, Local 2-124 v. American Oil Co., 528 F.2d 252, 254 (10th Cir.1976). In addition to the general policy favoring arbitration, Molson argues that Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), stands for the proposition that antitrust claims within the scope of a contract can be subject to arbitration, even if the arbitration clause does not specifically mention antitrust disputes.

In Mitsubishi, Puerto Rican car dealership Soler Chrysler-Plymouth Corporation contracted with Mitsubishi to distribute cars in Puerto Rico. During the 1981 recession, Soler could not sell its allotment of cars. In a strategy designed to avoid breaching its contract, Soler asked Mitsubishi to sell Soler certain automobile parts such as defoggers and heaters so that it could export the cars Mitsubishi manufactured for Puerto Rico's relatively gentle climate to North, Central, and South America. Citing concerns that Soler would hurt Mitsubishi's reputation because Soler could not produce factory-quality cars, had no experience in the transshipment of cars, and could not provide maintenance in other markets, Mitsubishi refused to sell Soler the parts or allow it to transship the cars. When Soler refused to accept shipment of the cars it had contracted to sell, Mitsubishi brought an action against Soler in United States District Court under the FAA. ⁶ Soler counterclaimed, alleging that Mitsubishi had violated the Sherman Act by conspiring to divide markets when it refused to cooperate with Soler. Mitsubishi next filed a motion to stay the district court proceedings pending the arbitration. The district court granted the motion and Soler appealed.

The First Circuit Court of Appeals affirmed the district court's determination that Soler's claims were within the scope of the contract and thus the arbitration agreement, Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 723 F.2d 155, 159-61 (1st Cir.1983), aff'd in part and rev'd in part, 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), but held that the agreement to arbitrate antitrust claims was void as against public policy, id. at 164-68.

The United States Supreme Court adopted the First Circuit's determination that the antitrust claims were within the scope of both the contract and the arbitration clause. However, the Supreme Court reversed the Court of Appeals on whether a clause providing for the arbitration of antitrust disputes was void as against public policy. Mitsubishi, 473 U.S. at 629, 105 S.Ct. at 3355. The Supreme Court emphasized the importance of keeping one's word and reasoned that a " 'representative of the American business community' " must honor its agreement to arbitrate contractual disputes. Id. at 640, 105 S.Ct. at 3361 (quoting Alberto-Culver Co v. Scherk, 484 F.2d 611, 620 (7th Cir.1973) (Stevens, J., dissenting), rev'd, 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974)).

Coors argues that the FAA and Mitsubishi do not control this dispute for two reasons: First, Coors argues that the arbitration clause in the Coors-Molson license agreement is a narrow arbitration clause and that it does not include antitrust disputes. Second, Coors argues that even if the arbitration clause includes antitrust disputes, its antitrust claims are outside the scope of the contract and thus not subject to the contractual arbitration clause.

1. Arbitration Clause

Coors first seeks to distinguish Mitsubishi by arguing that the Coors-Molson arbitration clause is more narrow than the Mitsubishi arbitration...