Miller Brewing Co. v. Bartholemew County Beverage Co., Inc.

• Decision Date: 06 December 1996
• Docket Number: No. 49A02-9505-CV-247,49A02-9505-CV-247
• Citation: 674 N.E.2d 193
• Parties: MILLER BREWING COMPANY, Appellant (Cross-Claim Defendant), v. BARTHOLEMEW COUNTY BEVERAGE COMPANY, INC., (Cross-claim Plaintiff below) and State of Indiana ex rel. Indiana Alcoholic Beverage Commission (Plaintiff below), Appellees.
• Court: Indiana Appellate Court

Page 193

674 N.E.2d 193

MILLER BREWING COMPANY, Appellant (Cross-Claim Defendant), v. BARTHOLEMEW COUNTY BEVERAGE COMPANY, INC., (Cross-claim Plaintiff below) and State of Indiana ex rel Indiana Alcoholic Beverage Commission (Plaintiff below), Appellees.

No. 49A02-9505-CV-247.

Court of Appeals of Indiana.

Dec. 6, 1996.

Transfer Denied May 9, 1997.

Ronald D. Gifford, Baker & Daniels, Indianapolis, for Appellant.

Alan S. Brown, Julia Blackwell Gelinas, Sandra Boyd Williams,Locke Reynolds Boyd & Weisell, Indianapolis, for Appellees.

OPINION

SULLIVAN, Judge.

Miller Brewing Company ("Miller"), defendant below, appeals the trial court's grant of summary judgment in favor of Bartholemew County Beverage Company, Inc. ("BCB"), an authorized distributor of Miller products. BCB alleged that certain price promotions implemented by Miller for its Indiana distributors constituted unlawful efforts to restrict BCB's sales of Miller products to BCB's designated area of primary responsibility, unlawful control of BCB's business, and embodied illegal price discrimination. Finding no genuine issue of material fact regarding the implementation and operation of Miller's price promotions, and concluding that BCB was entitled to judgment as a matter of law, the trial court entered summary judgment against Miller. The issue for our review is whether BCB's motion for summary judgment was properly granted.

We affirm.

Miller is a Wisconsin corporation which produces various brands of beer. Miller's products are distributed in Indiana through a three-tier distribution system under which Miller sells its products to distributors who in turn sell those products to retail establishments. Consumers purchase Miller products at these retail locations. Miller's Indiana distributors are authorized to distribute Miller products in the state pursuant to distributor agreements between Miller and the distributors. Under these agreements, distributors are assigned areas of "primary responsibility" within which it is the distributor's primary responsibility "to promote and sell Miller products to retail locations." Record at 18.

BCB is an Indiana corporation engaged in the business of selling beer to retail outlets throughout the state. BCB is authorized to distribute certain Miller products throughout Indiana pursuant to a distributor agreement entered into between BCB and Miller on May 1, 1983. BCB's area of primary responsibility includes Bartholemew, Jackson, and Jennings counties. Other distributors of Miller products have similar arrangements and have been assigned other counties in Indiana as their respective areas of primary responsibility.

Miller has historically offered a variety of price promotions to its distributors in Indiana. When initiating a price promotion, Miller circulates promotional information describing the details of the promotion and setting forth the dates during which a particular promotion is to remain in effect. These promotional programs (hereinafter collectively referred to as "price promotions") include Miller's "price promotion reimbursement program" ("price promotion program") and its "volume account allowance program" ("VAA program"). Under the price promotion program, Miller reimburses distributors a predetermined fixed amount for each case of beer sold to retailers. Under the VAA program, Miller establishes certain volume account allowances pursuant to which Miller reimburses distributors at a predetermined fixed amount for higher volume sales of Miller products to retailers.

On December 7, 1992, Miller issued a memorandum to its Indiana distributors outlining changes in both the price promotion and VAA programs effective January 4, 1993. The memorandum noted that under the price promotion program, a distributor would be "reimbursed a predetermined, fixed allowance amount for every case sold to retailers during the promotion period." Record at 36. According to the memorandum, the allowance amount for case sales within a distributor's area of primary responsibility ("APR") was "subject to change by Miller based upon changing market conditions." Id. However, the allowance amount for case sales to retailers outside of a distributor's APR was fixed at $.10 per case. Miller's memorandum provided the following example of the mechanics of the amended price promotion program:

                    "If Miller quad brand loose cans are on price promotion at the
                      predetermined, fixed allowance amount of $.30/case from February 1
                      through February 15, 1993, and you sold 10,000 cases to retail accounts
                      within your assigned area of primary responsibility and 5,000 cases to
                      retail accounts outside of your assigned area of primary responsibility
                      you would be entitled to the following reimbursement
                    10,000 cases sold within assigned area of        $3,000
                      primary responsibility @$0.30 per case
                    5,000 cases sold outside assigned area of        $  500
                      primary responsibility @$0.10 per case
                    Total reimbursement due you from Miller          $3,500"
                

Record at 36-37. While the amount of the allowance varied by brand or by package, it appears from the record that under Miller's 1993 changes a distributor was always reimbursed $.20 more per case for cases sold within its APR than for cases sold outside its APR.¹

Miller's memorandum outlining its promotional policy for 1993 also amended the terms of its VAA program. The VAA program provided a separate schedule of reimbursement amounts for larger quantity sales to retailers. To qualify for reimbursement under the VAA program, a distributor had to sell to a retailer a minimum of from twenty-five to 100 kegs or a minimum of from 100 to 200 cases of beer. (R-391) According to Miller's memorandum, sales qualifying for the VAA reimbursement made within a distributor's APR would be entitled to the entire reimbursement amount. However, qualifying sales made outside a distributor's APR would entitle the distributor to only one-third of the intra-APR reimbursement amount.

Miller explained in its memorandum that the changes to its reimbursement policy were implemented "[i]n an effort to encourage [distributors] to concentrate [their] sales efforts on Miller brands in retail locations within [their] assigned area of primary responsibility and thereby increase [their] marketing focus, retail execution, brand penetration and improve your sales performance on Miller brands...." Record at 36. Prior to these changes in Miller's price promotion policy, Miller distributors were reimbursed the same amounts under the price promotion and VAA programs regardless of whether sales were made inside or outside of their areas of primary responsibility. While Miller's memorandum stated that its policy changes were effective January 4, 1993, the memorandum did not indicate a date upon which its price promotions would terminate. Nor did the promotions contain any internal limitation on the extent of the inter- and intra-APR reimbursement differentials.

Following Miller's announcement of the changes to its promotional policy, BCB and others complained to the Indiana Alcoholic Beverage Commission ("IABC") that Miller's policy violated state alcoholic beverage regulations and laws. The IABC subsequently voted to submit the question to then-Indiana Attorney General Linley Pearson for an opinion as to the legality of Miller's price promotions. On January 8, 1993, the Attorney General issued an opinion stating that whether Miller's programs violated Indiana law was "a question of fact within the discretion of the Indiana Alcoholic Beverage Commission" and returned the issue to the IABC for decision. Op. Atty. Gen. 93-1 (Jan. 8, 1993). The IABC, apparently finding itself constrained by what it saw as the Attorney General's failure to "state definitively what the Alcoholic Beverage Commission's ruling should be on this question," Record at 170, asked the Indiana Attorney General to file a declaratory judgment action pursuant to I.C. 7.1-2-8-3 (Burns Code Ed.1996) to resolve the question.²

The State of Indiana, on the relation of the IABC, commenced this litigation by filing a declaratory judgment action against Miller and BCB³ on August 20, 1993, to determine whether the amendments to Miller's price promotion policy violated I.C. 7.1-5-9-2 (Burns Code Ed.1996), I.C. 7.1-5-5-7 (Burns Code Ed.1996), and 905 I.A.C. 1-28-1 (1992) ("Rule 28"). BCB subsequently filed a cross-claim against Miller requesting a declaration that these programs violated I.C. 7.1-5-9-2, I.C. 7.1-5-5-7, I.C. 7.1-5-5-10 (Burns Code Ed.1996) and 905 I.A.C. 1-28-1, as well as requesting damages arising from the alleged violation. Miller answered, denying BCB's material allegations.

On August 31, 1994, BCB moved for summary judgment on its declaratory judgment claim. Pursuant to Ind. Trial Rule 56(C), Miller filed a brief in response to BCB's motion, designating evidentiary matter which, according to Miller, established the existence of genuine issues of material fact precluding the entry of summary judgment. The trial court found that "[n]o genuine issue of material fact exists regarding the implementation and operation of Miller's price promotion and volume discount allowance reimbursement programs," and found "as a matter of law" that these programs violate 905 I.A.C. 1-28-1, I.C. 7.1-5-5-7, I.C. 7.1-5-9-2 and I.C. 7.1-5-5-9. Record at 415-16. Under Trial Rule 54(B) the court found no just reason for delay and entered judgment for BCB. Miller subsequently petitioned this court for a Stay of Execution and Enforcement of Judgment. Miller's petition was denied July 13, 1995, and the price promotions which are the subject of this litigation have been suspended since that date.

When reviewing a decision upon a motion for summary judgment, this court applies the same standard as the trial court: summary judgment shall be granted if the designated evidentiary material demonstrates that there is no...