J. & J. Enterprises, Inc. v. Martignetti

• Decision Date: 09 January 1976
• Citation: 341 N.E.2d 645,369 Mass. 535
• Parties: J. & J. ENTERPRISES, INC., et al. v. Ferdinand MARTIGNETTI et al. (and three companion cases 1 ).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 645

341 N.E.2d 645

369 Mass. 535

J. & J. ENTERPRISES, INC., et al.

v. Ferdinand MARTIGNETTI et al. (and three companion cases

¹

).

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Nov. 6, 1975.

Decided Jan. 9, 1976.

Harold Hestnes, Boston (Joan Lukey, Brighton, with him), for J. & J. Enterprises, Inc. and others.

Howard M. Miller, Boston, for Ferdinand Martignetti and others.

Allan van Gestel, Boston, for Donald Corey and others.

Evan T. Lawson, Boston, for Ralph Kaplan and others.

James B. Krasnoo, Boston, for Arthur Siegal and others.

Kenneth H. Soble, Boston, for Beacon Liquor Corp. and others.

Before TAURO, C.J., and REARDON, QUIRICO, BRAUCHER, HENNESSEY and KAPLAN, JJ.

BRAUCHER, Justice.

The plaintiffs, licensed operators of retail liquor stores, sued the defendants, operators, officers and directors of competing retail liquor stores, under G.L. c. 93A, § 11, inserted by St.1972, c. 614, § 2, ² for damages and injunctive relief, charging unfair or deceptive acts or practices in violation of G.L. c. 93A, § 2, and Regulation XV of the Attorney General promulgated under c. 93A. They also claim that some of the acts or practices violated G.L. c. 93, §§ 2 and 9, and G.L. c. 138, §§ 15, 18, 25 and 25A. Judges of the Superior Court, following our decisions in Holyoke Water Power Co. v. Holyoke, 349 Mass. 442, 208 N.E.2d 801 (1965), and Gordon v. Hardware Mut. Cas. Co., 361 Mass. 582, 281 N.E.2d 573 (1972), dismissed the actions because the plaintiffs had failed to exhaust their administrative remedies, and the plaintiffs appeal. We hold that, while it might have been appropriate to stay the actions, they should not have been dismissed. Cf. G.L. c. 93A, § 9(6)--(8), inserted by St.1973, c. 939. We therefore reverse the judgments of dismissal.

The four complaints were filed in June, 1974, by the same plaintiffs against four different groups of defendants. We summarize their allegations, which are substantially similar. The individual defendants in each case control the stores of the defendants. The defendants have contracted, combined and conspired in unreasonable restraint of trade and commerce in the sale of bottled liquor at retail, in violation of G.L. c. 93, §§ 2 and 9. In particular, each group of defendants (a) owns or controls more than three retail package store licenses, in violation of G.L. c. 138, § 15; (b) has transferred liquor between retail licensees without a wholesaler's license, in violation of G.L. c. 138, § 18; (c) has lent alcoholic beverages to members of the group which were on the 'posted' list, in violation of G.L. c. 138, § 25; (d) has lent money to members of the group in further violation of § 25; and (e) has coerced wholesalers to give discounts in violation of G.L. c. 138, § 25A. The defendants' advertising deceives the public as to the true ownership of their stores; their stores have lost their independent identity; and the defendants have achieved monopolistic buying power, monopolized trade in various relevant markets, forced independent retail liquor stores in competition with them out of business, and used artificially high prices in markets they have nonopolized to destroy competition in new markets. The result is to require the plaintiffs to pay artificially high prices for wholesale liquor, and to force the public to pay higher prices for bottled liquor. There is no allegation that the plaintiffs have initiated any proceedings before the Alcoholic Beverages Control Commission (ABCC).

1. The powers of the ABCC. Most of the acts or practices of which the plaintiffs complain are alleged violations of G.L. c. 138, regulating the sale of alcoholic beverages. Under that chapter and G.L. c. 6, § 44, the ABCC has broad regulatory authority over the liquor industry in the Commonwealth. Universal Mach. Co. v. Alcoholic Beverages Control Comm'n, 304 Mass. 40, 43--44, 16 N.E.2d 53 (1938). The powers of the licensing authorities are not limited 'to the preservation of public safety and good order.' Boston Licensing Bd. v. Alcoholic Beverages Control Comm'n, --- Mass. ---, --- - --- ^a, 328 N.E.2d 848 (1975) and cases cited. Under G.L. c. 138, §§ 64 and 67, the ABCC has authority to investigate the conduct of licensees, to hold hearings on possible violations of c. 138, and to modify, suspend, revoke or cancel licenses. See Miller v. Alcoholic Beverages Control Comm'n, 340 Mass. 33, 35, 162 N.E.2d 656 (1959). We were informed at argument that the ABCC now has under way an investigation and hearing concerning the very activities which form the basis of the plaintiffs' complaints. Cf. Rep.A.G., Pub.Doc.No. 12, at 94 (1966) (opinion of the Attorney General issued Aug. 19, 1965); Opinion of the Justices, --- Mass. ---, ---, ---, ^b 333 N.E.2d 414 (1975).

The power of the ABCC to enforce the provisions of c. 138 is not exclusive. Violations of those provisions are punishable by fine or imprisonment, or both. § 62. Criminal prosecutions are conducted by others as well as by the ABCC, and its regulations are enforceable only against licensees. Cf. Revere v. Aucella, --- Mass. ---, ---, ^c 338 N.E.2d 816 (1975). Moreover, a suit to enjoin the illegal sale of alcoholic beverages as a common nuisance may be brought by the Attorney General, the district attorney, the board or officer having control of the police, or not less than ten voters of a town or city. G.L. c. 139, §§ 16, 16A. Jasper v. Michael A. Dolan, Inc., 355 Mass. 17, 18, 242 N.E.2d 540 (1968). Cleary v. Cardullo's, Inc., 347 Mass. 337, 351, 198 N.E.2d 281 (1964). The ABCC has no power to prosecute civil actions to recover damages on behalf of persons aggrieved by violations of c. 138, or to seek injunctive relief on their behalf. Nor does it have power to institute civil or criminal proceedings under G.L. c. 93 or 93A.

2. The exhaustion doctrine. We have often recognized the doctrine that administrative remedies should be exhausted before resort to the courts. See Gordon v. Hardware Mut. Cas. Co., 361 Mass. 582, 587--588, 281 N.E.2d 573 (1972), and cases cited; cf. McKart v. United States, 395 U.S. 185, 193--195, 89 S.Ct. 1657, 23 L.Ed.2d 194 (1969). That doctrine is commonly applied to prevent premature interference with a pending administrative proceeding. See East Chop Tennis Club v. Massachusetts Comm's against Discrimination, --- mass. ---, ---, ---, ^d 305 N.E.2d 507 (1973). In such cases it is proper to dismiss an action for injunctive or declaratory relief, and to await judicial review if and when the administrative process results in an order affecting substantial rights. The policy is similar to that precluding premature interference with a pending criminal proceeding. See Norcisa v. Selectmen of Provincetown, --- Mass. ---, ---, ^e 330 N.E.2d 830 (1975).

We have also applied the exhaustion doctrine to cases where no administrative proceeding was pending. In such cases the doctrine is often referred to as the doctrine of 'primary jurisdiction' of 'prior resort.' see 3 K. Davis, Administrative Law Treatise § 19.01 (1958); 2 F. Cooper, State Administrative Law 572 (1965); Comment, 7 Suffolk L.Rev. 124, 136 (1972). 'While the requirement of exhausting administrative remedies has a somewhat different historical background than the rule of prior resort, yet the two doctrines have developed into complementary parts of a general principle which ordinarily serves to preclude judicial consideration of a question while there remains any possibility of further administrative action.' 2 F. Cooper, supra at 572.

Where the entire controversy is within the exclusive jurisdiction of an administrative agency, the doctrine ordinarily results in dismissal of judicial proceedings begun without prior resort to the agency. Cf. Pan American Wrold Airways, Inc. v. United States, 371 U.S. 296, 313, 83 S.Ct. 476, 9 L.Ed.2d 325, n. 19 (1963). Where there are overlapping jurisdictions and the agency has jurisdiction of only part of the matter in controversy, it may be proper to dismiss judicial proceedings which seek only prospective relief, since the action can be reinstituted after administrative remedies have been exhausted. Holyoke Water Power Co. v. Holyoke, 349 Mass. 442, 443, 208 N.E.2d 801 n. 1 (1965). See 3 K. Davis, Administrative Law Treatise § 19.07 (1958). But where damages for past conduct are sought which cannot be awarded by the agency, dismissal may give rise to serious problems in the application of the statute of limitations. In such cases the proper course may be to stay the action instead of dismissing it. Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 222--223, 86 S.Ct. 781, 15 L.Ed.2d 709 (1966). Cf. United States v. Michigan Nat'l Corp, 419 U.S. 1, 5--6, 95 S.Ct. 10, 42 L.Ed.2d 1 (1974); Ricci v. Chicago Mercantile Exch., 409 U.S. 289, 302--306, 93 S.Ct. 573, 34 L.Ed.2d 525 (1973).

In Gordon v. Hardware Mut. Cas. Co., 361 Mass. 582, 281 N.E.2d 573 (1972), damages were claimed, but the action was dismissed in the Superior Court, and we affirmed. We left open the question whether the agency could require the defendant to make a rebate in the amount of damages claimed. Id. at 586--587, 281 N.E.2d 573. No one suggested the propriety of a stay instead of dismissal, and we did not consider that possibility. Since that decision the statute there applied, G.L. c. 93A, § 9, has been amended to insert paragraphs (6)--(8),...