Cheshire v. COCA-COLA BOTTLING AFFILIATED INC.

• Citation: 758 F. Supp. 1098
• Decision Date: 30 July 1990
• Docket Number: Civ. A. No. 6:89-2618-17.
• Court: U.S. District Court — District of South Carolina
• Parties: Allan CHESHIRE, d/b/a Breaktime Distributing Company, Plaintiff, v. COCA-COLA BOTTLING AFFILIATED, INC.; Beverage South, Inc., d/b/a Pepsi-Cola/7-Up Bottling Company of Greenville S.C.; Coca-Cola Bottling Company of Anderson, S.C.; Pepsi Cola Company of Anderson, S.C.; Pepsico, Inc., Bi-Lo, Inc.; Fast Fare, Inc., and The Pantry, Inc., Defendants.

758 F. Supp. 1098

Allan CHESHIRE, d/b/a Breaktime Distributing Company, Plaintiff, v. COCA-COLA BOTTLING AFFILIATED, INC.; Beverage South, Inc., d/b/a Pepsi-Cola/7-Up Bottling Company of Greenville S.C.; Coca-Cola Bottling Company of Anderson, S.C.; Pepsi Cola Company of Anderson, S.C.; Pepsico, Inc., Bi-Lo, Inc.; Fast Fare, Inc., and The Pantry, Inc., Defendants.

Civ. A. No. 6:89-2618-17.

United States District Court, D. South Carolina, Greenville Division.

July 30, 1990.

ORDER

JOE F. ANDERSON, Jr., District Judge.

In this case, plaintiff is a distributor of soft drinks including Buffalo Rock Gingerale, Snapple, Grapico, and Cajun Cola in seven South Carolina counties designed in the complaint as "plaintiff's distribution area". These counties include Anderson, Greenville, and the surrounding counties of Oconee, Pickens, Laurens, Abbeville and Greenwood. The defendants include the distributors of Coca-Cola and Pepsi-Cola in Anderson and Greenville, together with the Coca-Cola and Pepsi-Cola parent companies. Also included as defendants are three chain stores, Bi-Lo, Fast Fare and Pantry, selling Coke and Pepsi products in the Anderson-Greenville area.

Plaintiff filed his complaint in Greenville County Court of Common Pleas on October 4, 1989, stating two causes of action under state law. Included in the complaint were allegations of various anti-competitive marketing and distribution practices and agreements between and among the defendants which were allegedly undertaken by defendants pursuant to a conspiracy "(t)o eliminate competition within Plaintiff's distribution area and throughout the southeastern United States." Complaint, ¶ 15. Also included were allegations of a price-fixing conspiracy within plaintiff's distribution area as evidenced by guilty pleas entered by some defendants in federal court. Complaint, ¶ 20.

For a first cause of action, plaintiff contends that defendants' acts constitute unfair trade practices and unfair methods of competition under the South Carolina Unfair Trade Practices Act, S.C.Code Ann. § 39-5-10 et seq. (Law.Co-op.1988) ("UTPA"). The second count of plaintiff's complaint alleges a common law civil conspiracy. No federal claim was expressly pleaded. Defendants, relying on the "artful pleading doctrine," noticed removal on the basis of federal question jurisdiction, contending that the claims asserted, although pleaded under state law, were essentially federal in nature and hence removable under 28 U.S.C. §§ 1441(a) and (b). Specifically, defendants contend that the claims asserted in the complaint, if they are legally cognizable at all, should properly be brought only under the federal antitrust laws and must be judged under federal antitrust standards. The matter is now before the court on plaintiff's motion to remand for lack of federal subject matter jurisdiction.

Although plaintiff is the moving party in this request for remand, it is elementary that defendants retain the burden of establishing that the underlying action is properly removed. 14A Wright, Miller & Cooper, Federal Practice and Procedure § 3721 (1985) (hereinafter "Wright & Miller"); Baucom v. Pilot Life Ins. Co., 674 F.Supp. 1175 (M.D.N.C.1987).

The sole basis for removal in this case is federal question jurisdiction, as there is not complete diversity between the parties. The existence of a federal question sufficient to support removal normally turns on the well-pleaded allegations of the complaint. Great Northern Railway Co. v. Alexander, 246 U.S. 276, 38 S.Ct. 237, 62 L.Ed. 713 (1918). Where plaintiff alleges facts that will support claims arising under both state and federal law, plaintiff normally is free to ignore the claims arising under federal law and "pitch his claim" on state grounds, thereby precluding removal on the basis of federal question jurisdiction. Franchise Tax Board v. Constructions Laborers Vacation Trust, 463 U.S. 1, 22, 103 S.Ct. 2841, 2853, 77 L.Ed.2d 420 (1983). However, this "master of the complaint" rule must be balanced with the fact that courts must be cautious in denying defendants access to a federal forum since under 28 U.S.C. § 1447(d), remand orders are generally not reviewable. 14A Wright & Miller, § 3721. To this end, the "artful pleading" doctrine has developed as an exception to the rule limiting the court's examination to the face of the complaint when it appears the plaintiff seeks to conceal the federal nature of his claim by fraud or obfuscation. Salveson v. Western States Bankcard Ass'n., 525 F.Supp. 566, 572 (N.D.Calif.1981). In determining whether a complaint is "artfully pleaded," the court may look behind it, or "peek," to ascertain facts that would appear in a well-pleaded complaint. In re Wiring Device Antitrust Litigation, 498 F.Supp. 79 (E.D. N.Y.1980).

Application of the artful pleading doctrine is most appropriate in cases where federal law altogether preempts and supplants state law, but plaintiff seeks to avoid the effect of preemption by pleading only state causes of action. See, Avco Corp. v. Aero Ledge No. 735, International Association of Machinists, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968). In the area of antitrust and unfair trade practices, Congress has never expressed any intent to occupy the regulated area exclusively, and the courts have inferred none. On the contrary, the Fourth Circuit has clearly rejected the idea that federal antitrust law preempts application of the South Carolina UTPA. Bostick Oil Co. v. Michelin Tire Corp., Com. Div., 702 F.2d 1207, 1219 (4th Cir.) cert. denied, 464 U.S. 894, 104 S.Ct. 242, 78 L.Ed.2d 232 (1983); Itco Corporation v. Michelin Tire Corp., Com. Div., 722 F.2d 42, 48, n. 9 (4th Cir.) cert. denied, 469 U.S. 1215, 105 S.Ct. 1191, 84 L.Ed.2d 337 (1983). The court therefore rejects defendants' argument that the complaint's repeated use of antitrust conspiracy terminology and the fact that the practices at issue have traditionally been the subject of federal antitrust challenges reflect the essentially federal nature of plaintiff's claims. By the express terms of the statute, UTPA prohibits both unfair or deceptive acts or practices (consumer protection) and anticompetitive conduct (antitrust proscription).¹ The fact that antitrust elements and concepts may be involved does not necessarily make it a federal antitrust case. Federal question does not exist simply because the subject matter of the action could give rise to a federal law claims as well as a state law claim. Salveson, supra.

The artful pleading doctrine has also been applied in the antitrust area where plaintiff first files a lawsuit alleging federal claims and then, after dismissal, seeks to recast those claims under state law, Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981) and where plaintiff, by failing to seek remand, has acquiesced in defendant's characterization of its claims as federal, Three J Farms, Inc. v. Alton Box Board Co., 1979-1 CCH Trade Cas. ¶ 62,423 (D.S. C.1978), rev'd and remanded on other grounds, 609 F.2d 112 (4th Cir.1979), cert. denied, 445 U.S. 911, 100 S.Ct. 1090, 63 L.Ed.2d 327 (1980). In both of these instances, the claims were made federal by plaintiff's own conduct and the courts refused to allow plaintiff to escape the consequences of that conduct to defendant's prejudice. See, Salveson, 525 F.Supp. at 577. In the present case, plaintiff has taken no such circuitous action nor has plaintiff failed to timely move to remand his case.

More troublesome is defendants' argument that the involvement of interstate commerce in this action precludes application of the State UTPA. Defendants argue that while plaintiff's business may be intrastate in scope, the defendants' business operations are either regional or national in scope, and where a complaint challenges marketing practices and techniques which are utilized on a multi-state basis, it is important that federal antitrust concepts be applied to achieve uniformity, otherwise:

differing state regulation, although not

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