Tcv v. Louis Latour, Inc., Record No. 052224.

• Court: Supreme Court of Virginia
• Citation: 634 S.E.2d 745
• Docket Number: Record No. 052224.
• Parties: THE COUNTRY VINTNER, INC. v. LOUIS LATOUR, INC.
• Decision Date: 15 September 2006

634 S.E.2d 745

THE COUNTRY VINTNER, INC. v. LOUIS LATOUR, INC.

Record No. 052224.

Supreme Court of Virginia.

September 15, 2006.

COPYRIGHT MATERIAL OMITTED

E. Duncan Getchell, Jr. (Stephen D. Busch; Bryan A. Fratkin; M. Stuart North, McGuireWoods, on briefs), Richmond, for appellant.

Michael J. Lockerby, Washington, DC (John Charles Thomas; Walter A. Marston, Cassandra C. Collins; M. Christine Klein: Curtis G. Manchester; Hunton Williams; Reed Smith, on brief), Richmond, for appellee.

Present: HASSELL, C.J., KEENAN, KOONTZ, KINSER, LEMONS, and AGEE, JJ., and RUSSELL, Senior Justice.

OPINION BY Justice DONALD W. LEMONS.

In this appeal, we consider whether the trial court erred in dismissing with prejudice a civil action¹ for common law conspiracy and statutory conspiracy filed by a wine wholesaler against a winery. At issue is the application of the doctrine of primary jurisdiction.

I. Facts and Proceedings Below

The conditions for the creation and continuation of all wholesale wine distributorships, including franchise agreements, are established in the Wine Franchise Act, Code §§ 4.1-400 through -418 ("the Act"). Under the Act, The Country Vintner, Inc., ("TCV") is licensed as a "wine wholesaler" as defined in Code § 4.1-401.² Louis Latour, Inc., ("Louis Latour") is a wholly owned subsidiary of Maison Louis Latour, a French winery, that imports wine into the United States. As a licensed wine importer, Louis Latour is a "winery" as defined in Code § 4.1-401.³

In 1990, TCV entered into an "agreement" with Maison Louis Latour to sell wine in Virginia pursuant to Code § 4.1-401.⁴ Two years later, Maison Louis Latour certified to the Virginia Department of Alcoholic Beverage Control ("ABC Board") in a "Designation of Authorized Distributor Form" that TCV was an authorized wine distributor in "Northern, Central and Eastern Virginia." For approximately 13 years, TCV sold Maison Louis Latour wine throughout Virginia, and for the final four years of that period TCV was the winery's sole distributor in Virginia. Throughout that period, Louis Latour facilitated the importation of the wine.

In 2003, TCV's status as the exclusive distributor of Maison Louis Latour wine changed. According to TCV's motion for judgment, Louis Latour's regional sales manager met with another wine wholesaler, Virginia Distributing Company ("Virginia Distributing"). Virginia Distributing agreed that it would "take the brand if it was `unencumbered'" for sales in central, south, and eastern Virginia. Louis Latour's regional sales manager assured Virginia Distributing that TCV "would not be able to compete" because Louis Latour would restrict TCV's supply of wine by utilizing TCV's depletion reports that tracked wine sales and inventory.

Similarly, Louis Latour's sales manager met with another wine wholesaler, Select Wines, Inc., ("Select Wines"), that indicated it would "love" to be a Maison Louis Latour distributor, but "suggested that Louis Latour should `police' its [other] distributors to insure they were not selling outside their designated territory." Louis Latour made the same assurances regarding depletion reports that were made to Virginia Distributing and explained that the reduced supply would prevent TCV from continuing to sell in northern Virginia. Thereafter, Louis Latour designated Virginia Distributing and Select Wines as Maison Louis Latour's wine wholesalers in their respective sales territories in Virginia, and provided them with TCV's depletion reports.

Louis Latour then submitted a new, written "Distribution Agreement" to TCV with modified terms seeking to restrict TCV's sales of Maison Louis Latour wine to Surry and Gloucester Counties.⁵ TCV rejected the proposed agreement and Louis Latour issued a "Requirements Announcement" to TCV that achieved essentially the same restrictions by prohibiting sales outside Surry and Gloucester Counties and restricting the supply of wine. These changes significantly curtailed TCV's sales of Maison Louis Latour wine throughout the Commonwealth.

Pursuant to the administrative procedures set forth in the Act, see Code §§ 4.1-409 and 4.1-410, TCV filed a complaint with the ABC Board asserting that Louis Latour violated multiple provisions of the Act, and that the agreements with Virginia Distributing and Select Wines were illegal and void. A hearing panel concluded that Louis Latour did violate the Act when it: (1) established a dual distributorship; (2) attempted a unilateral amendment to the franchise agreement without good cause; (3) discriminated among its wine wholesalers; and (4) acted in bad faith in its dealings with TCV.

Significantly, the hearing panel concluded that Count II, alleging that Louis Latour's contracts with Virginia Distributing and Select Wines were illegal and void, was "inappropriate for determination" because the other distributors "were not parties against which relief may be granted under the Act." Louis Latour appealed the hearing panel's decision to the ABC Board.

Prior to the Board's ruling on appeal, TCV filed a motion for judgment against Louis Latour, Virginia Distributing, and Select Wines in the Circuit Court of the City of Richmond. Counts I and II of the motion for judgment alleged common law conspiracy and statutory conspiracy against all three defendants. Counts III and IV alleged tortious interference with TCV's contract and business expectations against Virginia Distributing and Select Wines. As a result, Louis Latour's appeal to the ABC Board was pending at the same time that TCV's motion for judgment was pending before the trial court.

In response to TCV's motion for judgment, Louis Latour filed a "Motion to Dismiss or Stay on Grounds of Primary Jurisdiction." Louis Latour argued that "[t]he claims alleged in the Motion for Judgment . . . would not exist but for the provisions of [the Act]" and that "the very same issues" were pending before the ABC Board. Consequently, Louis Latour asserted that the trial court was compelled to dismiss the action because primary jurisdiction over the matter was vested by the General Assembly in the ABC Board. The trial court granted the motion and dismissed with prejudice the claims against Louis Latour; however, the trial court denied the motion with respect to Virginia Distributing and Select Wines.

In its order, the trial court stated that it "agree[d] with Plaintiff's argument that if the Act did not exist, it would still have a claim for conspiracy and tortious interference based on the alleged facts" against Louis Latour. Nevertheless, the trial court held that "action[s] for conspiracy and tortious interference involve[ ] the same legal issues as those contemplated in [the] ABC Board complaint, and the legislature has empowered the Board to adjudicate issues of this type under [the Act]." On this basis, the trial court held that the Board has "primary jurisdiction" and granted the motion to dismiss with regard to Louis Latour. With regard to Virginia Distributing and Select Wines, however, the trial court held that the Board's decision would be "irrelevant" and denied the motion to dismiss. TCV elected to nonsuit the claims against Virginia Distributing and Select Wines, and timely filed an appeal from the dismissal of its claims against Louis Latour.

On appeal, TCV argues that the trial court erred in finding that the doctrine of primary jurisdiction applies to this case. Alternatively, if the doctrine applies, TCV argues it was misapplied when the trial court dismissed TCV's common law and statutory conspiracy claims "on the basis of preemption." Acknowledging that the trial court did not state explicitly that it based its holding on the doctrine of preemption, TCV maintains that the trial court's analysis demonstrates that preemption is the implicit basis for its holding.

II. Analysis

A. Standard of review

The resolution of this appeal is determined by two distinct inquiries. The first inquiry is whether the trial court had jurisdiction to resolve claims of common law conspiracy and statutory conspiracy based upon alleged wrongful conduct arising from violations of the Act. The second inquiry is whether the trial court's application of the doctrine of primary jurisdiction was proper. Both inquiries present questions of law which we review de novo. Dowling v. Rowan, 270 Va. 510, 519, 621 S.E.2d 397, 401 (2005).

B. The Doctrine of Primary Jurisdiction

The doctrine of primary jurisdiction is a judicially created doctrine used by courts to allocate decision-making responsibility between courts and agencies when jurisdiction may overlap and potential for conflicts or inconsistent decision exists. The doctrine is recognized in the federal courts and in many states. E.g., Reiter v. Cooper, 507 U.S. 258, 268, 113 S.Ct. 1213, 1220, 122 L.Ed.2d 604 (1993); Birmingham Hockey Club, Inc. v. Nat'l Council on Comp. Ins., Inc., 827 So.2d 73, 82 (Ala.2002); Capital Tel. Co. v. Pattersonville Tel. Co., 56 N.Y.2d 11, 451 N.Y.S.2d 11, 436 N.E.2d 461, 466 (1982); Foree v. Crown Cent. Petroleum Corp., 431 S.W.2d 312, 316 (Tex.1968). The doctrine has been used to preclude court consideration of an entire claim and has also been used to separate for agency consideration issues within a claim:⁶

If a court concludes that a dispute brought before the court is within the primary jurisdiction of an agency, it will dismiss the action on the basis that it should be brought before the agency instead. Similarly, if a court concludes that an issue raised in an action before the court is within the primary jurisdiction of an agency, the court will defer any decision in the action before it until the agency has addressed the issue that is within its primary jurisdiction. The court retains jurisdiction over the dispute itself and all other issues raised by the dispute, but it cannot resolve that dispute until the agency has resolved the issue that is in its primary jurisdiction.

2 Richard J. Pierce, Jr., ...