Canterbury Liquors & Pantry v. Sullivan, Civil Action No. 94-11701-MLW.

• Citation: 999 F.Supp. 144
• Decision Date: 18 March 1998
• Docket Number: Civil Action No. 94-11701-MLW.
• Parties: CANTERBURY LIQUORS & PANTRY, Plaintiff, and Whitehall Co., Ltd., Plaintiff/Intervenor, v. Walter J. SULLIVAN, Jr., et al., Defendants, and Massachusetts Wholesalers of Malt Beverages, Inc., Defendant/Intervenor.
• Court: U.S. District Court — District of Massachusetts

Page 144

999 F.Supp. 144

CANTERBURY LIQUORS & PANTRY, Plaintiff, and Whitehall Co., Ltd., Plaintiff/Intervenor, v. Walter J. SULLIVAN, Jr., et al., Defendants, and Massachusetts Wholesalers of Malt Beverages, Inc., Defendant/Intervenor.

Civil Action No. 94-11701-MLW.

United States District Court, D. Massachusetts.

March 18, 1998.

Alan L. Kovacs, Gerald J. Caruso, Ferriter, Scobbo, Sikora, Caruso & Rodophele, Boston, MA, for plaintiffs.

Jane L. Willoughby, Attorney General's Office, Boston, MA, for Defendants Stuart P. Krusell, Pamela M. Nourse, Massachusetts Alcoholic Beverages Control Com'n.

Thomas Fenerty, Eileen M. Fava, LeBoeuf, Lamb, Greene & MacRae, L.L.P., Boston, MA, H. Glenn Alberich, LeBoeuf, Lamb, Greene & MacRae, Boston, MA, for Massachusetts Wholesalers of Malt Beverages, intervenor-defendant.

Robert M. Buchanan, Jr., Robert S. Frank, Jr., Joshua Engel, Choate, Hall & Stewart, Boston, MA, for Whitehall Co., Ltd., movant.

MEMORANDUM AND ORDER

WOLF, District Judge.

I. Procedural History

The present plaintiffs in this case are Seashore Corporation, a licensed retailer of alcoholic beverages which does business as Canterbury Liquors and Pantry, and Whitehall Company, Ltd., a licensed wholesaler of alcoholic beverages. The original defendants were the Chairman and Commissioners of the Massachusetts Alcoholic Beverages Control Commission, who have been sued in their official capacities (the "ABCC" or the "State Defendants"). The Massachusetts Wholesalers of Malt Beverages, Inc. ("MWMBI"), a trade association whose members are engaged primarily in the wholesale sale of beer, subsequently intervened as a defendant.

Plaintiffs have sought a declaratory judgment that the portion of M.G.L. c. 138, § 25A, requiring that wholesale prices for liquor be established and maintained for 30 days, and the ABCC's regulations implementing the challenged statutory provisions, 204 C.M.R. §§ 6.00-6.07, violate § 1 of the Sherman Act, 15 U.S.C. § 1. Plaintiffs also originally requested injunctive relief.

As described in detail in the February 3, 1998 Memorandum and Order, plaintiffs have not challenged § M.G.L. c. 138, § 25A to the extent that it generally prohibits wholesale price discrimination. Rather, plaintiffs have focused their claims on the portion of the statute and related regulations that: require wholesalers of alcoholic beverages to post their prices by the fifth day of a month and file a schedule of such prices with the ABCC; permit amendments by the fifteenth day of a month only to meet a specific lower price filed by a competitor; and require that such posted prices remain in effect throughout the next calendar month. See M.G.L. c. 138, § 25A, lines 8-13, and 204 C.M.R. § 6.03(3).

The parties filed cross-motions for summary judgment on plaintiffs' claim that the challenged provisions of the statute and regulations constitute a per se violation of § 1 of the Sherman Act which is not shielded from invalidation by the state-action immunity doctrine enunciated in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). On June 27, 1997, the Magistrate Judge issued a Report and Recommendation suggesting that summary judgment on this issue be granted to the defendants. After de novo consideration, for the reasons stated in the February 3, 1998 Memorandum and Order, this court decided that plaintiffs are entitled to summary judgment on their claim that the regulatory scheme at issue constitutes a per se violation of § 1 of the Sherman Act which is not immunized by the state-action doctrine.¹

In response to the February 3, 1998 Memorandum and Order, the ABCC has informed the court that it does not now intend to appeal or to seek a stay of the forthcoming declaratory judgment invalidating M.G.L. c. 138, § 25A, lines 8-13, and the related regulations. As described below, in its proposed form of judgment, the ABCC for the first time has suggested that a portion of the regulations should be severed from those that are clearly invalid under this court's ruling and should be allowed to remain in effect. The ABCC has also reserved its right to utilize the 30-day period following entry of judgment provided by Fed.R.App.P. 4(a)(1) to decide finally whether to appeal. See State Defendants' Response to the Court's February 3, 1998 Order.

As confirmed and clarified at the March 12, 1998 hearing, however, the ABCC represents that it will voluntarily comply with the declaratory judgment during the pendency of any appeal, unless this court or the Court of Appeals for the First Circuit stays that judgment. As explained previously, considerations of comity make this federal court reluctant to issue an order restraining state or local officials unless that injunction is essential to attain compliance with a declaratory judgment. See, e.g., February 3, 1998 Memorandum and Order at 25 (citing South Boston Allied War Veterans Council v. City of Boston, 875 F.Supp. 891, 920 (D.Mass.1995)). Therefore, with the agreement of plaintiffs expressed at the March 12, 1998 hearing, the court finds that the requested injunctive relief is neither necessary nor appropriate.

The MWMBI, however, intends to appeal this court's decision. It has moved for a stay of the forthcoming declaratory judgment pending that appeal. Plaintiffs oppose this motion. The ABCC has declined to express a view on whether a stay should be granted.

There are, therefore, two questions which must be decided in connection with the entry of judgment. First is the recently raised question of the severability of portions of the regulations. Second is the issue of a stay. As set forth below, the court finds that the regulations are not severable and a stay is not appropriate.

II. Severability

As indicated earlier, the issue of severability was raised for the first time in the proposed form of judgment filed by the ABCC. In its brief written submission, the ABCC proposes that the court only invalidate the references in the regulations to the requirements that prices posted be maintained for a month, particularly 204 C.M.R. §§ 603(3) and 6.05, and related references in §§ 6.01 and 6.04(5)(a). At the March 12, 1998 hearing, the ABCC indicated that, as a practical matter, it has raised this issue because it hopes to retain the requirement that price schedules be filed with the ABCC. As the parties recognize, the requirement in 207 C.M.R. § 2.14 that retailers be provided a price schedule reflecting the price, and any discount, offered by the wholesaler to other customers is not affected by this court's ruling. Thus, the primary issue presented is whether the pertinent lines of the regulations should, in effect, be edited by this court to separate the requirement that a price list be filed with the ABCC from the requirement that the filed prices be maintained for a month.

The ABCC is correct in contending that the February 3, 1998 Memorandum and Order does not hold that it would be impermissible for it to require the filing of wholesale price schedules because the court noted, at 13, that "merely exchanging price information, as the Massachusetts regulatory scheme in effect requires, is [not] a per se violation" of § 1 of the Sherman Act.² It is the coupling of the exchange of price information with the requirement that the posted prices be adhered to for 30 days that this court found constitutes the per se violation of § 1. Id. at 14.

However, the fact that the ABCC arguably had the legitimate authority to adopt regulations requiring the filing of wholesale price schedules does not resolve the issue of severability. Rather, to decide the issue of severability, the court must determine whether at the time of enactment the ABCC would have promulgated the portion of the regulations requiring the filing of wholesale price schedules with the Commission if it realized that it could not legally require that the prices filed be maintained for a month. See Murphy v. Commissioner of Dep't of Indus. Accidents, 418 Mass. 165, 169, 635 N.E.2d 1180 (1994); Ackerley Communications of Mass., Inc. v. City of Cambridge, 135 F.3d 210, 1998 WL 39234, at *5 (1st Cir. Feb.5, 1998). In this case, the ABCC has offered no affidavit or any other direct evidence suggesting that it would have done so. The relevant circumstantial evidence suggests that the ABCC regarded the filing and adherence provisions of the regulations as integrated elements of one organic whole. Thus, severance of these provisions by the court is inappropriate.

More specifically, the severability of portions of a state statute or regulation is a question governed by state law. See Leavitt v. Jane L., 518 U.S. 137, 137-39, 116 S.Ct. 2068, 2069, 135 L.Ed.2d 443 (1996). Under Massachusetts law:

When a court is compelled to pass upon the constitutionality of a statute and is obliged to declare part of it unconstitutional, the court, as far as possible, will hold the remainder to be constitutional and valid, if the parts are capable of separation and are not so entwined that the Legislature could not have intended that the part otherwise valid should take effect without the invalid part.

Murphy, 418 Mass. at 169, 635 N.E.2d 1180. In deciding severability, "[i]n appropriate circumstances, individual words may be struck." Id.

The Court of Appeals for the First Circuit has recently stated that:

"Where a statutory provision is unconstitutional, if it is in its nature separable from the other parts of the statute, so that they may well stand independently of it, and if there is no such connection between the valid and the invalid parts that the (legislative body) would not be expected to enact the valid part without the other, the statute will be held good, except in that part which is in conflict with the Constitution." On the other hand, "[i]f the court is unable to know whether the Legislature would have enacted a particular bill without the unconstitutional provision, it will not sever the unconstitutional...