988 F.2d 414 (3rd Cir. 1993), 91-3497, Coca-Cola Bottling Co. of Shreveport, Inc. v. Coca-Cola Co.

Docket Nº:91-3497.
Citation:988 F.2d 414
Party Name:COCA-COLA BOTTLING COMPANY OF SHREVEPORT, INC.; Coca-Cola Bottling Company of Elizabethtown, Inc.; Owensboro Coca-Cola Bottling Company, Inc.; Texarkana Coca-Cola Bottling Company; Coca-Cola Bottling Company (San Angelo); Las Cruces Coca-Cola Bottling Company; The Coca-Cola Bottling Company of Tucson, Inc.; Jackson Coca-Cola Bottling Company; Wichi
Case Date:February 17, 1993
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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Page 414

988 F.2d 414 (3rd Cir. 1993)

COCA-COLA BOTTLING COMPANY OF SHREVEPORT, INC.; Coca-Cola

Bottling Company of Elizabethtown, Inc.; Owensboro

Coca-Cola Bottling Company, Inc.; Texarkana Coca-Cola

Bottling Company; Coca-Cola Bottling Company (San Angelo);

Las Cruces Coca-Cola Bottling Company; The Coca-Cola

Bottling Company of Tucson, Inc.; Jackson Coca-Cola

Bottling Company; Wichita Coca-Cola Bottling Company;

Permian Coca-Cola Bottling Company; Marshall Coca-Cola

Bottling Co. Liquidating Trust Company; Coca-Cola Bottling

Company of Tulsa, Inc.; Dixie Coca-Cola Bottling Company,

Incorporated; New Bern Coca-Cola Bottling Works, Inc.;

Magnolia Coca-Cola Bottling Company, Inc.; The Coca-Cola

Bottling Company (Fort Smith); Coca-Cola Bottling Co. of

Jamestown; Hattiesburg Coca-Cola Bottling Co.; Plymouth

Coca-Cola Bottling Company, Inc.; Sacramento Coca-Cola

Bottling Co., Inc.; Natchez Coca-Cola Bottling Co., Inc.;

Central Coca-Cola Bottling Co.; Decatur Coca-Cola Bottling

Co.; Coca-Cola Bottling Company of Williston (North

Dakota); Richmond Coca-Cola Bottling Co., Inc.; Coca-Cola

Bottling Company of Mt. Pleasant; Coca-Cola Bottling Co. of

Muskegon; Mary Louise Goodrich; Mary Louise Kay Robinson,

individually and as trustee of the Kendall family inter

vivos trust; Ann Kay Hobson Haack, individually and as

trustee of the Kendall family inter vivos trust; John K.

Hobson; Margaret Dodge Hobson, individually and as trustee

of the Kendall family inter vivos trust (Subst. for Natchez

Coca-Cola Bottling Co., Inc.) Oliver C. Hutaff, Jr., as

Trustee under Shareholders' Lawsuit Trust Agreement (Subst.

for Wilmington Coca-Cola Bottling Works, Inc. and Kelford

Coca-Cola Bottling Works, Inc.)

v.

The COCA-COLA COMPANY,

Arkansas-Georgia Company, Inc.; Central Coca-Cola Bottling

Company, Inc.; Coca-Cola Bottling Company of Dickinson;

Coca-Cola Bottling Company of Elizabethtown, Inc.;

Coca-Cola Bottling Company of Jamestown; Coca-Cola Bottling

Company of LaCrosse, Inc.; Las Cruces Coca-Cola Bottling

Company; Love Coca-Cola Bottling Company; Magnolia

Coca-Cola Bottling Company; Marshall Coca-Cola Bottling

Company; Natchez Coca-Cola Bottling Co., Inc.; Plymouth

Coca-Cola Bottling Co., Inc.; Sacramento Coca-Cola Bottling

Co., Inc.; Coca-Cola Bottling Company (San Angelo);

Coca-Cola Bottling Company of Shelbyville, Inc.; The

Coca-Cola Bottling Company of Tucson, Inc.; Coca-Cola

Bottling Company of Tulsa, Inc.; Coca-Cola Bottling Company

of Williston; Oliver C. Hutaff, Jr., as Trustee under

Shareholders' Lawsuit Trust Agreement (Subst. for Wilmington

Coca-Cola Bottling Works, Inc. and Kelford Coca-Cola

Bottling Works, Inc.), Appellants.

No. 91-3497.

United States Court of Appeals, Third Circuit

February 17, 1993

Argued March 10, 1992.

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[Copyrighted Material Omitted]

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Jesse A. Finkelstein, Richards, Layton & Finger, Wilmington, DE, Emmet J. Bondurant, II and Jane E. Fahey (argued), Jeffrey D. Horst, Bondurant, Mixson & Elmore, Atlanta, GA for appellants.

Richard D. Allen, Morris, Nichols, Arsht & Tunnell, Wilmington, DE, Michael C. Russ (argued), George S. Branch, William F. Lummus, Jr., King & Spalding, Atlanta, GA, for The Coca-Cola Co.

Before: HUTCHINSON, ALITO and HIGGINBOTHAM, Circuit Judges.

OPINION

HUTCHINSON, Circuit Judge.

This is a companion to the case that is the subject of our opinion of even date disposing of the two consolidated appeals at our Docket Nos. 91-3496 and 91-3498, 988 F.2d 386. We will refer to that case as the "Coke case" and our opinion disposing of it as Coke VIII. We will refer to this case as the "diet Coke case" and to this opinion as diet Coke VIII. In diet Coke VIII, twenty bottlers appeal from the district court's final judgment denying them relief on all of their claims. 1

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We have appellate jurisdiction over the district court's final order in this case. See 28 U.S.C.A. § 1291 (West Supp.1992). The district court had diversity jurisdiction over the bottlers' action in the diet Coke case. See 28 U.S.C.A. § 1332(a)(1) (West Supp.1992).

The diet Coke case, like the Coke case that is the subject of Coke VIII, arises out of a dispute between The Coca-Cola Company (the "Company") and some of its bottlers over the scope of the bottlers' pre-existing contracts with the Company. The twenty bottlers who are parties appellant here in the diet Coke case, like the thirty who are parties appellant in the Coke case, refused to amend their contracts with the Company. The amendment proposed to them would have given them the right to bottle diet Coke in exchange for certain concessions. Thus, the question to be resolved is whether the bottlers' original contracts and the 1921 Consent Decrees (Consent Decrees) entered into between the Company and the parent bottlers in settlement of the same 1920 lawsuit we considered in Coke VIII include the right to bottle diet Coke. The district court ultimately held that diet Coke was not within the scope of these agreements. 2 In Coke VIII, we addressed the claims of a somewhat overlapping set of bottlers 3 concerning the Company's use of alternative natural sweeteners, namely high-fructose corn syrup (HFCS), to produce Coca-Cola Bottlers' Syrup. In Coke VIII, we affirmed the district court's holding that the contracts of that set of bottlers entitled them only to Coca-Cola bottling syrup sweetened with sucrose refined from cane or beet sugar and not HFCS. The district court interpreted the bottlers' contracts on the basis of findings concerning what the parties intended the ambiguous terms "sugar" and "syrup" to mean in the Consent Decrees settling the 1920 dispute over the price and quality of syrup. The 1920 litigation involved the Company and their so-called parent bottlers. See Coca-Cola Bottling Co. v. Coca-Cola Co., 269 F. 796 (D.Del.1920) (Coke 1920 ). The bottlers who are parties to this case, like those who are parties to Coke VIII, rely on the rights of their parent bottlers in bringing suit. In Coke VIII, we held that the district court's findings on the meaning of "sugar" and Coca-Cola bottling "syrup" were not clearly erroneous. We further affirmed the district court's determination that the syrup the bottlers are entitled to under the Consent Decrees contains 5.32 pounds of cane or beet sugar per gallon of syrup. The same analysis applies to this case, and we are similarly unable to hold that the district court's findings

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in diet Coke VII were clearly erroneous. Consequently, we will affirm the judgment of the district court denying relief to the bottlers seeking a supply of diet Coke syrup.

Nevertheless, differences in the parties' arguments, the facts and the evidence, including the inferences that can be drawn from a preclusion order entered in diet Coke IV against the Company for failure to obey a discovery order and the effect of certain specific admissions the Company made that apply to the diet Coke litigation, require some separate exposition and analysis. Those differences and their effect on our legal analysis are the subject of this opinion. Otherwise, the evolution of the relationship between the Company and its bottlers is as set forth more fully in our opinion in Coke VIII, typescript at 10-23. We will not repeat those facts in any detail but will recite here only the undisputed facts specifically and additionally relevant to diet Coke. 4

I.

During the 1980's, the Company's product line proliferated. The Company intended one innovation, diet Coke, to counter the "narrow market appeal" of its existing diet product, Tab. diet Coke I, 563 F.Supp. at 1127. Because the diet soft drink market promised to expand by nearly one-hundred percent within the decade, and a ten percent gain in market share was estimated to translate into additional retail revenues of five billion dollars, "[o]n July 8, 1982, diet Coke was introduced with great fanfare." Id. With this introduction of diet Coke came a dispute over whether it was covered by the current bottling contracts.

The bottlers felt that the Company was obligated to provide diet Coke under the terms of their existing contracts. The Company, however, asserted that diet Coke was not within the scope of the existing contracts and proposed developing a new flexible pricing contract to cover it. diet Coke V, 696 F.Supp. at 103.

On October 7, 1982, the Company proposed a Temporary Amendment to the bottlers' contracts which would govern the price of diet Coke pending final agreement on a permanent contract. Id. The Temporary Amendment was intended to be an interim measure. Most of the bottlers have accepted it. About 191 have signed the Temporary Amendment and another 181 bottlers, who have not actually signed, have agreed to its terms. Id. These 372 bottlers are receiving diet Coke syrup and are marketing diet Coke within their territories. The bottlers in this case have refused either to sign or accept the terms of the Temporary Amendment. They object to its Paragraph Nine which states that "[i]t is further agreed, however, that during the period this Temporary Amendment is in effect, the price of Coca-Cola syrup and beverage base for diet Coca-Cola as between the parties hereto shall be determined solely under this Temporary Amendment." Id. (quoting diet Coke I, 563 F.Supp. at 1127-29 (footnotes and quotations omitted)). Consequently, the Company has refused to provide diet Coke syrup or beverage base to these bottlers. Id.

Shortly after its introduction of diet Coke, the Company embarked on a new project:

[I]n April, 1985, the Company announced that it would stop producing...

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