Santa Clara Valley Distributing Co., Inc. v. Pabst Brewing Co.

• Decision Date: 29 June 1977
• Docket Number: No. 75-1513,75-1513
• Citation: 556 F.2d 942
• Parties: 1977-2 Trade Cases 61,537 SANTA CLARA VALLEY DISTRIBUTING CO., INC., et al., Plaintiffs-Appellants, v. PABST BREWING COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 942

556 F.2d 942

1977-2 Trade Cases 61,537

SANTA CLARA VALLEY DISTRIBUTING CO., INC., et al., Plaintiffs-Appellants, v. PABST BREWING COMPANY, Defendant-Appellee.

No. 75-1513.

United States Court of Appeals, Ninth Circuit.

June 29, 1977.

J. Albert Hutchinson (argued), San Francisco, Cal., for plaintiffs-appellants.

James R. Madison (argued), Orrick, Herrington, Rowley & Sutcliffe, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before DUNIWAY and CHOY, Circuit Judges, and BONSAL, ^* District Judge.

PER CURIAM:

Plaintiffs appeal the trial court's grant of defendant's motion for a directed verdict. Fed.R.Civ.P. 50(a). We affirm.

Plaintiffs Santa Clara Valley Distributing Co., Inc. and Bert G. Gianelli are wholesale distributors for various brands of beer in California. Defendant Pabst Brewing Company (Pabst) is a manufacturer and seller of beer. Plaintiffs have written distributorship agreements with Pabst to wholesale its products.

Of the plethora of antitrust claims raised in plaintiffs' original and amended complaints, only two theories were reserved for trial:

(1) Did defendant combine or conspire during the period before October 29, 1971 to fix the prices at which plaintiffs sell Pabst beer to retailers in violation of section 1 of the Sherman Act (15 U.S.C. § 1)?

(2) Did defendant combine or conspire during the period before October 29, 1971 to prohibit plaintiffs from selling Pabst beer to chain store retailers in violation of section 1 of the Sherman Act?

At the close of plaintiffs' case, Pabst moved for, and was granted, a directed verdict on both of these issues. In a well-reasoned exposition, the district court held that, even when viewing the evidence in the light most favorable to plaintiffs, no reasonable jury could find that Pabst had coerced them into accepting the alleged vertical price and customer/territorial restraints. See Brady v. Southern Ry., 320 U.S. 476, 479-80, 64 S.Ct. 232, 88 L.Ed. 239 (1943); Shafer v. Mountain States Telephone & Telegraph Co., 335 F.2d 932, 934 (9th Cir. 1964); 5A J. Moore, Moore's Federal Practice P 50.02(1), at 2325-27 (2d ed. 1976). This standard also governs our approach on review. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 696-97 & n.6, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962), quoting Moore, supra. See Calnetics Corp. v. Volkswagen of America, Inc., 532 F.2d 674, 684 (9th Cir.), cert. denied, 429 U.S. 940, 97 S.Ct. 355, 50 L.Ed.2d 309 (1976); Robinson v. Cupples Container Co., 513 F.2d 1274, 1277 (9th Cir. 1975); Guam Fed'n of Teachers, Local 1581, A.F.T. v. Ysrael, 492 F.2d 438, 439 (9th Cir.), cert. denied, 419 U.S. 872, 95 S.Ct. 132, 42 L.Ed.2d 111 (1974). ¹ We agree with the district court that, on the basis of plaintiffs' own pleadings and stipulations, as well as the documents and testimony offered by them, defendant Pabst was clearly entitled to a directed verdict. ²

Both here and below, plaintiffs have characterized the two antitrust theories reserved for trial as alleging vertical conspiracies between themselves and Pabst. As such, each theory required that plaintiffs show the requisite degree of enforcement coercion by Pabst. See Knutson v. Daily Review, Inc., 548 F.2d 795, 806-10 (9th Cir. 1976), cert. denied, --- U.S. ----, 97 S.Ct. 2977, 53 L.Ed.2d 1094 (1977); Hanson v. Shell Oil Co., 541 F.2d 1352, 1355-57 (9th Cir. 1976), cert. denied, 429 U.S. 1074, 97 S.Ct. 813, 50 L.Ed.2d 792 (1977). As to the vertical price fixing claim, however, plaintiffs themselves clearly testified that Pabst had never forced them to adhere to its "suggested" prices, either through direct communication of threats or by example through termination or other discipline of distributors who failed to comply. Indeed, plaintiffs testified that they at all times felt free to follow Pabst's "promotional campaigns" or not as they pleased and that, when they did choose not to "post-down" as Pabst had recommended, there was no indication of displeasure by Pabst which, by plaintiffs' own admissions, was " wonderful" to do business with. ³

Similarly, the distributorship agreements themselves clearly state that, although plaintiffs were assigned areas of "primary responsibility" by Pabst, they were free to sell wherever and to whomever they chose. Moreover, since plaintiffs admitted to never having read the agreements, they could not claim to have somehow been misled by their contents. Nor could plaintiffs point to any instance in which Pabst had threatened reprisal when one of them attempted to sell outside of its area for neither plaintiff had ever attempted to do so, admitting that such sales would not, in any event, be economically feasible. ⁴

Finally, it seems that the crux of plaintiffs' dissatisfaction is that Pabst allegedly deals with another beer distributor, Beverage Distributors, Inc. (BDI), on more favorable terms than with plaintiffs. They contend that such advantages enable BDI to compete successfully for the lucrative retail chain store business through the "central warehouse" marketing technique. Plaintiffs' briefs make numerous, vague references to claims that Pabst forced them to accept a full line of Pabst products in violation of the proscription against illegal tying arrangements while BDI was not so restricted (though plaintiffs stipulated before trial that Pabst did not require them to take a full line); that Pabst, BDI, and certain large retail chains conspired to boycott plaintiffs (though plaintiffs cite no "boycott" cases and neither BDI nor any of the chain stores was named as a defendant); and that, regardless of the presence of such a tying arrangement or such a conspiracy, Pabst violated the antitrust laws by allegedly refusing to deal with plaintiffs and BDI on nondiscriminatory terms. See generally Mutual Fund Investors, Inc. v. Putnam Management Co., 553 F.2d 620, 626-27 (9th Cir. 1977); Moore v. Jas. H. Matthews & Co., 550 F.2d 1207 (9th Cir. 1977). Since these theories were neither reserved for trial nor developed below or here, they are not now properly before us. See Knutson, supra at 804 n.8; Moore v. Great Western Savings & Loan Ass'n, 513 F.2d 688, 691 (9th Cir. 1975); Eason v. Dickson, 390 F.2d 585, 589 (9th Cir.), cert. denied, 392 U.S. 914, 88 S.Ct. 2076, 20 L.Ed.2d 1373 (1968).

AFFIRMED.

* Honorable Dudley B. Bonsal, United States District Judge for the Southern District of New York, sitting by designation.

1 It is presently unclear whether the admonition of the Supreme Court in Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962), to use summary proceedings "sparingly" in complex antitrust cases applies to Rule 50(a) motions for directed verdicts, as well as to Rule 12(b)(6) motions to dismiss for failure to state a claim and Rule 56 motions for summary judgment. While it is clear that the latter two pretrial motions are to be used cautiously in such cases, see Hospital Building Co. v. Rex Hospital Trustees, 425 U.S. 738, 746, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976); Mutual Fund Investors, Inc. v. Putnam Management Co., 553 F.2d 620, 624; (9th Cir. 1977); Timberlane Lbr. Co. v. Bank of America, N.T. & S.A., 549 F.2d 597, 602-03 (9th Cir. 1976); Javelin Corp. v. Uniroyal, Inc., 546 F.2d 276, 280 (9th Cir. 1976), a review of both the policy concerns voiced by the Court in Poller and the Court's subsequent opinion in Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962), would seem to lead to the conclusion that the same circumspection is not required in the case of directed verdicts.

In Poller, the Court gave the following reasons for its rule:

We look at the record on summary judgment in the light most favorable to Poller, the party opposing the motion, and conclude here that it should not have been granted. We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised. Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of "even handed justice."

368 U.S. at 473, 82 S.Ct. at 491 (footnote omitted). It would seem that, save for the desirability of having the jury decide the issues, none of these policy concerns applies to the granting of a directed verdict after the plaintiffs presumably have had a full opportunity for discovery and presentation of their case. And, by definition, a directed verdict is only granted when no reasonable jury could find for the nonmoving party. See Fortner Enterprises, Inc. v. United States Steel Corp., 452 F.2d 1095, 1097-98 n.3 (6th Cir. 1971) (noting distinction), cert. denied, 406 U.S. 919, 92 S.Ct. 1773, 32 L.Ed.2d 119 (1972).

Moreover, in Union Carbide, supra, a case decided just four months after Poller, the Court held that the general statement of the standard for directed verdicts also ...