Christian Schmidt Brewing Co. v. G. Heileman Brewing Co., Inc.

• Decision Date: 17 January 1985
• Docket Number: H-P,No. 85-1008,85-1008
• Citation: 753 F.2d 1354
• Parties: 1985-1 Trade Cases 66,374 CHRISTIAN SCHMIDT BREWING COMPANY and Stroh Brewery Company, Inc., Defendants-Appellees, v. G. HEILEMAN BREWING COMPANY, INC.,Acquisition Corp., and Pabst Brewing Company, Plaintiffs-Appellants,
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1354

753 F.2d 1354

1985-1 Trade Cases 66,374

CHRISTIAN SCHMIDT BREWING COMPANY and Stroh Brewery Company Inc., Defendants-Appellees, v. G. HEILEMAN BREWING COMPANY, INC., H-P Acquisition Corp. and Pabst Brewing Company, Plaintiffs-Appellants,

No. 85-1008.

United States Court of Appeals Sixth Circuit.

Argued Jan. 16, 1985.

Decided Jan. 17, 1985.

William A. Sankbeil, Detroit, Mich., Michael L. Denger, Sutherland, Asbill & Brennan, Washington, D.C., Willis B. Snell, Grady Avant, Jr., Detroit, Mich., Michael Fischer, Washington, D.C., David E. Beckwith (argued), Milwaukee, Wis., for plaintiffs-appellants.

William M. Saxton, Richard A. Rossman, Butzel, Long, Gust, Klein, & Van Zile, Detroit, Mich., Donald T. Bucklin, Washington, D.C., George A. Avery (argued), Joseph A. Tate (argued), Philadelphia, Pa., for defendants-appellees.

Before ENGEL, KEITH and MARTIN, Circuit Judges.

ENGEL, Circuit Judge.

This case is before the court as an expedited appeal from an order entered by the United States District Court for the Eastern District of Michigan granting a preliminary injunction. For the reasons set forth below, the order of the district court is affirmed.

The facts underlying this appeal are set forth in the opinion of the district court. See Christian Schmidt Brewing Co. v. G. Heileman Brewing Company, Inc., 600 F.Supp. 1326, at 1327-28, (E.D.Mich. 1985). For the purpose of this appeal the essential facts can be briefly summarized. On December 6, 1984, appellants G. Heileman Brewing Company, Inc. and H-P Acquisition Corporation (hereinafter Heileman) entered into an agreement to acquire the common stock of appellant Pabst Brewing Company (hereinafter Pabst). Also on December 6, Heileman entered into a separate agreement with another brewing company, S & P Company, to sell certain of the Pabst assets to that company in order to avoid possible antitrust objections by the United States Department of Justice.

On December 17, 1984, the appellees, Christian Schmidt Brewing Company (hereinafter Schmidt) and Stroh Brewery Company (hereinafter Stroh), filed suit in the United States District Court for the Eastern District of Michigan alleging various antitrust violations and seeking declaratory and injunctive relief. On December 27, 1984, the district court entered a preliminary injunction and supplemented its order with a January 4, 1985 Memorandum Opinion. In granting the injunction the trial court found inter alia that there was substantial probability that the proposed merger would lessen competition for malt beverages in a twelve-state upper Midwest market. See at 1328. The trial court also found that the public interest would be served by preliminarily enjoining the proposed acquisition, since a full trial on the merits could be held expeditiously. See at 1329-30.

The appellants filed a notice of appeal on December 27, 1984, and on January 3, 1985, filed with this court emergency motions for a stay and for an expedited appeal. Hearings on the expedited appeal were held in this court on January 16, 1985.

The standard of review on appeal from the grant or denial of a preliminary injunction is limited to a determination of whether the district court abused its discretion. American Motors Sales Corp. v. Runke, 708 F.2d 202, 205 (6th Cir.1983); Friendship Materials, Inc. v. Michigan Brick, Inc., 679 F.2d 100, 102 (6th Cir.1982); Mason County Medical Association v. Knebel, 563 F.2d 256, 261 (6th Cir.1977). A district court abuses its discretion when it relies on clearly erroneous findings of fact, Brandeis Machinery & Supply Corp. v. Barber-Greene Co., 503 F.2d 503, 505 (6th Cir.1974), or when it improperly applies the law or uses an erroneous legal standard. United States v. School Dist. of Ferndale, 577 F.2d 1339, 1351 (6th Cir.1978).

There are four factors to be considered in determining whether the grant or denial of a preliminary injunction was an abuse of discretion: (a) the likelihood of success on the merits of the action, (b) the irreparable harm which could result without the relief requested, (c) the impact on the public interest, and (d) the possibility of substantial harm to others. Tate v. Frey, 735 F.2d 986, 990 (6th Cir.1984); Mason County Medical Association, supra. Although these four factors must be considered in assessing a request for a preliminary injunction, the four factors do not establish a rigid and comprehensive test for determining the appropriateness of preliminary injunctive relief. Instead, the district court must engage in a realistic appraisal of all the traditional factors weighed by a court of equity. Friendship Materials, Inc., supra; Roth v. Bank of Commonwealth, 583 F.2d 527, 537 (6th Cir.1978) cert. dismissed 442 U.S. 925, 99 S.Ct. 2852, 61 L.Ed.2d 292 (1979).

An appellate court in reviewing the propriety of a preliminary injunction should refrain from the unnecessary comment on the evidence or review of the merits of the case since the case has yet to be heard in full on the merits. Tate v. Frey, supra; Brandeis Machinery & Supply Corp., supra. This is especially true in this antitrust case where the rights of the parties can be better determined upon full proof of the facts. ¹

Heileman and Pabst contend that the district court erred in finding a substantial likelihood of success on the merits since Schmidt and Stroh lacked standing to bring this action pursuant to Section 16 of the Clayton Act, 15 U.S.C. Sec. 26, to prevent and restrain a threatened violation of Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. (hereinafter section 7). Heileman and Pabst rely upon Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977), to argue that Stroh and Schmidt lack standing to assert a claim under section 7 because they have failed to make an adequate preliminary showing of antitrust injury. Heileman and Pabst argue that section 7 was intended to protect competition and not competitors. Heileman and Pabst urge that competition in the brewing industry will remain healthy and strong notwithstanding the merger because excess production capacity exists in the industry and decreased transportation costs enable brewers to ship their beer greater distances. Appellants also suggest that competition could be enhanced by the merger because the merged corporation could compete with Stroh and the two dominant leaders in the beer industry, Anheuser-Busch, Inc. and Miller Brewing Company. In addition, appellants claim that even if the proposed merger should somehow enable the merged companies to increase prices, this would only enure to the benefit of Schmidt and Stroh who would thereby have the advantage of operating within the resultingly higher price structure.

The district judge considered Brunswick carefully and concluded that Stroh and Schmidt had alleged antitrust injury and therefore had standing to assert their claim against Heileman and Pabst.

The harm to plaintiffs, especially Schmidt, threatened by this merger is precisely an "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 489 [97 S.Ct. 690, 697, 50 L.Ed.2d 701] (1977). Schmidt has shown that there is a substantial probability that if the proposed merger is accomplished and competition...