Guild Wineries and Distilleries v. Whitehall Co., Ltd.
Decision Date | 05 August 1988 |
Docket Number | No. 87-1609,87-1609 |
Citation | 853 F.2d 755 |
Parties | GUILD WINERIES AND DISTILLERIES, an agricultural cooperative, Plaintiff- Appellant, v. WHITEHALL CO., LTD., a Massachusetts corporation, Defendant-Appellee. |
Court | U.S. Court of Appeals — Ninth Circuit |
John J. Hollenback, Jr., Strauss, Neibauer, Anderson & Hollenback, Modesto, Cal., for plaintiff-appellant.
David Rosenberg, Diepenbrock, Wulff, Plant & Hannegan, Sacramento, Cal., for defendant-appellee.
Appeal from the United States District Court for the Eastern District of California.
Before NOONAN and THOMPSON, Circuit Judges, and TEVRIZIAN, District Judge. *
Guild is an agricultural cooperative; it produces wine and other related alcoholic beverages from grapes supplied by its member growers. Guild's main offices, production facilities, and member growers are all located in California. Whitehall Company, Ltd. is a liquor wholesaler headquartered in Massachusetts. In October 1982, Guild and Whitehall entered into a "Standard Form Distribution Agreement" prepared by Guild. This contract established Whitehall as Guild's nonexclusive distributor for Guild's alcoholic beverage products in eastern Massachusetts. The agreement, executed in California, called for orders and payments to be made to Guild's California offices and for all products to be shipped f.o.b. from Guild's California warehouses.
The provisions of the contract pertinent to this dispute are articles 5 and 16. Article 5 contains the cancellation provision:
5. CONTINUING TERM OF AGREEMENT AND RIGHTS OF CANCELLATION. This agreement shall continue in force and govern all transactions and relations between the parties hereto until terminated. Either party may terminate this agreement at any time, with or without cause, provided the party desiring to terminate the same gives unto the other a written notice (by registered mail or other means of delivery) delivered to the last known address of the other party, such termination to become effective thirty days after receipt of notice.
Article 16 states the parties' choice of law and venue:
16. LAW OF AGREEMENT. This agreement is to be governed by and construed according to the laws of the State of California and venue for any action entered under the agreement is agreed to be the State of California.
Massachusetts law requires good cause for termination of this kind of distribution contract and makes it an "unfair trade practice" and "unlawful" for a wine grower or manufacturer of alcoholic beverages "to refuse to sell, except for good cause shown, any item having a brand name to any licensed wholesaler to whom such manufacturer [or] winegrower ... has made regular sales of such brand item during a period of six months preceding any refusal to sell." Mass.Gen.L. ch. 138, Sec. 25E. In addition, Massachusetts law requires an out-of-state supplier of alcoholic beverages to obtain a certificate of compliance from the ABCC in order to do business in Massachusetts. See id. at Secs. 2, 18B. This certificate requires the holder to comply with chapter 138, including the section 25E mandate that a wholesaler, such as Whitehall, not be terminated except for good cause. At all times relevant to this decision, Guild held a certificate of compliance issued by the ABCC.
On August 19, 1985, Guild gave Whitehall notice of its intent to terminate the distribution contract. At the same time, it On August 27, 1985, Whitehall filed an Application for Relief with the ABCC in Massachusetts seeking a ruling that section 25E governed the relationship between it and Guild. Whitehall alleged that Massachusetts law prohibited Guild from terminating the contract without good cause, and it contended that any inconsistent provision in the distributorship contract was void and unenforceable. Whitehall also alleged that no good cause for termination existed. After filing its application with the ABCC, Whitehall returned to the district court in California and moved for a stay of the district court proceedings so that the ABCC hearing could go forward. The district court granted this motion and stayed proceedings in the district court pending "completion of the administrative proceedings currently before the Massachusetts Alcoholic Beverage Control Commission." 1
filed this diversity action in the district court in California. Guild claimed it was entitled to terminate the distributorship contract with Whitehall without cause. In the alternative, Guild sought a declaration that it had "good cause" for terminating the contract.
At the ABCC hearings in Massachusetts, both parties were represented by counsel. They contested the issues of whether the ABCC could or should exercise jurisdiction, which law applied, whether Guild had to show good cause to terminate the contract, and if so, whether good cause existed. On February 27, 1986, after two hearings, the ABCC exercised jurisdiction over all the issues presented and found that the parties' relationship was governed by Massachusetts law, that Guild could not terminate Whitehall's distributorship without good cause and that good cause did not exist. The ABCC ordered Guild to continue sales to Whitehall. Guild did not appeal the ABCC decision within the time permitted, and the decision became final. 2 See Mass.Gen.L. ch. 30A, Sec. 14.
On August 7, 1986, Guild renewed its motion for summary judgment in the district court in California. Guild conceded that the ABCC decision was controlling insofar as it interpreted Mass.Gen.L. ch. 138, Sec. 25E, determined that the Guild-Whitehall contract was inconsistent with this statute (and therefore unenforceable if the statute applied) and found that "good cause" for the termination under section 25E did not exist. Guild contended, however, that under California law it was entitled to terminate the contract without cause, and California law applied to this issue. Whitehall filed a cross-motion for summary judgment. It argued that the parties' dispute had been resolved by the ABCC and that the ABCC decision should be given res judicata effect by the district court. Alternatively, Whitehall contended that even if preclusive effect were not given to the ABCC decision, Massachusetts law applied, and Guild could not terminate it without good cause, which was lacking as the ABCC had determined.
The district court granted summary judgment for Whitehall. It accepted Guild's concession that the ABCC decision was controlling in some respects. The district court also determined that, based on the res judicata law of Massachusetts, the ABCC findings of fact and conclusions of law were entitled to issue preclusive effect as to the ABCC's interpretation of the good cause requirement of Mass.Gen.L. ch. 138, Sec. 25E, and as to the ABCC's finding that good cause for termination had not been shown. The district court rejected, however, Whitehall's argument that the ABCC's decision to apply Massachusetts law rather than California law to the dispute should be given res judicata effect. Instead, the district court applied California's choice of law principles. The district court concluded that Massachusetts law, which required good cause for termination, was controlling--notwithstanding the California choice of law provision in the contract.
Judgment was entered in favor of Whitehall, and this appeal followed.
Robi v. Five Platters, Inc., 838 F.2d 318, 321 (9th Cir.1988). 3
Guild argues that the decision of the ABCC should not be given preclusive effect because it is a decision by a state's administrative agency, rather than a court, and the decision has not been reviewed by a court. Guild cites 28 U.S.C. Sec. 1738 as support for this argument. 4 Although section 1738 requires federal courts to give the same preclusive effect to the judgments and records of state courts as they would be given by the state in which they were rendered, Marrese v. American Academy of Orthopedic Surgeons, 470 U.S. 373, 380, 105 S.Ct. 1327, 1331-32, 84 L.Ed.2d 274 (1985), it does not apply to administrative decisions that have not been reviewed by a court. University of Tennessee v. Elliott, 478 U.S. 788, 106 S.Ct. 3220, 3224-25, 92 L.Ed.2d 635 (1...
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