M. H. Gordon & Son, Inc. v. Alcoholic Beverages Control Commission

• Decision Date: 30 April 1982
• Citation: 386 Mass. 64,434 N.E.2d 986
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: , 1983-1 Trade Cases P 65,266 M. H. GORDON & SON, INC. et al. 1 v. ALCOHOLIC BEVERAGES CONTROL COMMISSION.

Page 986

434 N.E.2d 986

386 Mass. 64, 1983-1 Trade Cases P 65,266

M. H. GORDON & SON, INC. et al. ¹ v. ALCOHOLIC BEVERAGES CONTROL COMMISSION.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Feb. 5, 1982.

Decided April 30, 1982.

Michael Reilly, Boston, for plaintiffs.

Gerald J. Caruso, Asst. Atty. Gen., for defendant.

Before HENNESSEY, C. J., and WILKINS, ABRAMS, NOLAN and O'CONNOR, JJ.

NOLAN, Justice.

This is an appeal from a Superior Court summary judgment for the Alcoholic Beverages Control Commission (commission) affirming a decision of the commission. Pursuant to its decision, the commission had ordered Franklin and Robert Naifeh (doing business as Central Liquor Company, hereinafter Central) to cease and desist from selling to M. H. Gordon & Son, Inc. (Gordon), or to any other Massachusetts wholesaler, "alcoholic beverages the price of which fails to correspond exactly with the affirmed prices in effect under (G.L. c. 138, §§ 25B and 25D)." ² The commission had reached its decision after a hearing held on November 2, 1978, at which it found that Central had sold alcoholic beverages to Gordon at prices which did not conform exactly to the affirmed prices of those products. Gordon then sold these products to retail outlets in Massachusetts.

The plaintiffs commenced an action in the Superior Court for judicial review of the commission's order, pursuant to G.L. c. 30A, § 14. A Superior Court judge denied the plaintiffs' application for a preliminary injunction staying enforcement of the commission's decision and also denied a motion to remand the action to the commission for the taking of additional evidence. The plaintiffs moved for summary judgment. This motion was denied and summary judgment was entered for the commission. Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). The plaintiffs appealed, and we transferred the case to this court on our own motion.

The pertinent facts are as follows. Gordon does not buy alcoholic beverages directly from Joseph E. Seagram & Sons, Inc. (Seagram), in Indiana. Gordon instead chose to buy Seagram's products from Central, which is located in Oklahoma. Central buys the Seagram's products from a Seagram's distribution center in Oklahoma and then ships them to Gordon. The commission found that the price charged by Central to Gordon was the sum of (1) the Massachusetts affirmed price; and (2) a service, handling, and shipping charge incurred by the manufacturer of the alcoholic beverage (Seagram) in shipping its products from its distillery in Indiana to Oklahoma, and in handling the products once there. ³ This price is greater than the price charged by Seagram for identical products sold directly to Massachusetts wholesalers at the affirmed price.

The plaintiffs advance three arguments in their appeal: (1) that the difference between the Massachusetts affirmed price and that paid by Gordon to Central was merely a legitimate "laid-in-cost" and not part of the price and that, therefore, there was no violation of §§ 25B and 25D; (2) that §§ 25B and 25D, as written and as applied, are in conflict with the Sherman Act, 15 U.S.C. § 1 et seq. (1976), and are thus unconstitutional; ⁴ and (3) that §§ 25B and 25D, as applied, create a burden on interstate commerce and unconstitutionally conflict with the commerce clause of the United States Constitution, art. 1, § 8. We find no merit in the plaintiffs' first two contentions, and we do not reach the third because it is argued for the first time on appeal. See Trimmer, petitioner, 375 Mass. 588, 592, 378 N.E.2d 59 (1978). Therefore, we affirm the judgment.

The commission has raised several threshold issues which must be addressed before we can reach the substance of this case. We shall address such issues in the context of our discussions of each argument presented by the plaintiffs.

1. Violation of G.L. c. 138, §§ 25B & 25D. The commission argues, initially, that the plaintiffs waived their claim that they did not violate §§ 25B and 25D.

In his memorandum of decision, the trial judge stated that the "plaintiff does not argue in his brief that there was not a violation of General Laws Chapter 138, Sections 25B and 25D, but more appropriately bases his motion for summary judgment on the unconstitutionality of the affirmative law." The general rule is that an issue not raised in the trial court cannot be argued for the first time on appeal. See, e.g., Royal Indem. Co. v. Blakely, 372 Mass. 86, 88, 360 N.E.2d 864 (1977); Trustees of the Stigmatine Fathers, Inc. v. Secretary of Administration & Fin., 369 Mass. 562, 565, 341 N.E.2d 662 (1976); Milton v. Civil Service Comm'n, 365 Mass. 368, 379, 312 N.E.2d 188 (1974). The judge's statement, standing alone, is not enough, however, to invoke the rule. There is extensive evidence that the issue of the violation of the statute was raised below. We point to (1) the complaint, which alleged that the decision of the commission was unsupported by substantial evidence; (2) the judge's list of issues in his memorandum of decision wherein the first issue is whether "the plaintiffs have violated General Laws Chapter 138, Section 25B and Section 25D"; and (3) the judge's conclusion, based upon a review of the evidence before the commission, that the plaintiffs did, in fact, violate §§ 25B and 25D.

The record persuades us that the issue whether the plaintiffs violated the statute has not been raised for the first time on appeal, and was, in fact, ruled upon by the Superior Court judge and that the plaintiffs have a right to argue this issue on appeal. Cf. Lenari v. Kingston, 348 Mass. 355, 359, 203 N.E.2d 808 (1965), quoting from Malinoski v. D.S. McGrath, Inc., 283 Mass. 1, 11, 186 N.E. 225 (1933) ("plaintiffs must stand on the case presented by their pleadings and evidence, and upon the findings made on the issues raised").

Turning to the merits, the plaintiffs argue that the higher price paid by Gordon to Central merely represents the shipping costs incurred in transporting the products from Indiana to Oklahoma. Charging the higher price in this context, the plaintiffs continue, is expressly permitted by G.L. c. 138, § 25D(d ), wherein differentials in price are permitted if due to differences in "the actual cost of delivery." We disagree.

The plaintiffs accurately cite to the statute, but the statutory exemption for delivery costs does not apply here. Gordon bought products from Central for the affirmed price plus an added charge. That this added charge can be traced to the cost of shipping the alcoholic beverages to Central in Oklahoma is not material. Some of the costs of the products could certainly be traced to the cost of shipping grain to Seagram in Indiana, or to other costs of doing business. It is the price paid by Gordon to Central that the Legislature addressed in the statute, and we must deal with that here. That price was above the affirmed price and thus violated the language of G.L. c. 138, § 25B(d ). See M.H. Gordon & Son, Inc. v. Alcoholic Beverages Control Comm'n, 371 Mass. 584, 592, 358 N.E.2d 778 (1976). The plaintiffs violated the statute.

2. Sherman Act. The commission first argues that, since the plaintiffs failed to raise an antitrust claim before the commission, they were precluded from raising it before the Superior Court and that we should not allow them to argue it here. The general rule is that it is too late to raise a claim before a reviewing court if the point had not been raised before the administrative agency. Charron's Case, 331 Mass. 519, 523, 120 N.E.2d 754 (1954). However, for several reasons we agree with the trial judge that consideration of the plaintiffs' Sherman Act claim is appropriate in this case, notwithstanding the fact that they apparently failed to raise it before the commission.

As Justice Black stated in Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 721, 85 L.Ed. 1037 (1941), "(r)ules of practice and procedure are devised to promote the ends of justice, not to defeat them." Justice will be served by consideration of the antitrust claim for two reasons. First, both the plaintiffs and the commission cite the commission's decision in another case, wherein the commission, in discussing § 25B, stated, "We leave to the court to determine whether this runs afoul of the Sherman Act." United Liquors, Inc. v. M.H. Gordon & Son, Inc., slip op. at 3 (Alcoholic Beverages Control Commission, December 1, 1980). The commission has thus made it clear that it will not rule on this issue. The courts are, therefore, the only forum for such a judgment.

Second, it is at least arguable that the decision in California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980), modified the law with respect to the Sherman Act as it relates to the facts of the instant case. The Midcal decision was rendered after the decision of the commission and prior to the plaintiffs' motion for summary judgment. Under such circumstances, where new interpretations of law may have materially altered the result of the commission's decision, we are inclined to allow a previously unadvanced issue to be raised before the court. ⁵ See Hormel v. Helvering, supra, 312 U.S. at 558-559, 61 S.Ct. at 722.

The commission next argues that Gordon is barred from raising the Sherman Act claim by the doctrine of res judicata, more currently known as issue preclusion. Restatement (Second) of Judgments § 27 (1982). The commission points to M.H. Gordon & Son, Inc. v. Alcoholic Beverages Control Comm'n, 371 Mass. 584, 358 N.E.2d 778 (1976), as the case where Gordon could have, but failed to, litigate the Sherman Act claim. "The general rule of res judicata applies to repetitious suits involving the same cause of action. It rests upon considerations of economy of judicial time and public policy favoring the establishment of certainty in legal relations. The rule provides that when a court of competent jurisdiction has...