United States v. Lucky Lager Brewing Co. of San Francisco

• Decision Date: 03 October 1962
• Docket Number: No. C 15-58.,C 15-58.
• Citation: 209 F. Supp. 665
• Parties: UNITED STATES of America, Plaintiff, v. The LUCKY LAGER BREWING COMPANY OF SAN FRANCISCO, Defendant.
• Court: U.S. District Court — District of Utah

209 F. Supp. 665

UNITED STATES of America, Plaintiff, v. The LUCKY LAGER BREWING COMPANY OF SAN FRANCISCO, Defendant.

No. C 15-58.

United States District Court D. Utah, Central Division.

October 3, 1962.

Lyle L. Jones, Luzerne E. Hufford, Jr., San Francisco, Cal., William T. Thurman, U. S. Atty., Salt Lake City, Utah, for plaintiff.

Grant C. Aadnesen, Salt Lake City, Utah, C. Preston Allen, Murray, Utah, Gerald H. Trautman, William W. Schwarzer, Francis M. Small, San Francisco, Cal., for defendant.

CHRISTENSEN, District Judge.

The present issue is whether the court should modify the consent decree herein upon the claim of the defendant that there has been a substantial change in the competitive situation existing at the time of its entry.

The Lucky Lager Brewing Company relies upon principles set out in United States v. Swift & Co., 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999 (1932), to support, and the Government relies upon the same case to defeat, the motion for modification.

The issue was presented and argued orally on July 2, 1962, and has now been submitted for decision upon written briefs.

For the reasons and under the circumstances hereinafter explained, I am of the opinion that the motion for modification should be, and it is hereby denied, without prejudice to its renewal if and when, after a reasonable period of testing there appear substantially changed conditions the nature and extent of which cannot then be deemed reasonably to have been within the contemplation of the parties and the court at the time the original decree was entered, in the light of principles hereafter discussed.

The United States brought this action pursuant to Sections 7¹ and 15 of the Clayton Act (15 U.S.C.A. §§ 18, 25) to require the defendant, The Lucky Lager Brewing Company of San Francisco, called "Lucky Lager" hereafter, to divest itself of the business and assets of Fisher Brewing Company, hereinafter called "Fisher".

The complaint alleged that prior to the acquisition of Fisher by Lucky Lager, Fisher was the largest seller of beer in the West and the twelfth largest in the United States, and that it had the largest annual capacity for the production of beer in Utah (62% of the state's productive capacity). The defendant Lucky Lager, it was said, accounted for about 12% of the total volume of beer sold in Utah in 1956. Together, the two companies, Lucky Lager and Fisher, sold approximately 51% of the total volume of beer sold in Utah in 1956.

It was charged by the Government that on or about June 30, 1957, in connection with the settlement of a private antitrust suit which had been brought against Lucky Lager by Fisher and which had resulted in a substantial judgment for damages,² Lucky Lager acquired the assets and business of Fisher and that the effect of the acquisition may be substantially to lessen competition or to tend to create a monopoly in the production and sale of beer in the state of Utah in violation of Section 7 of the Clayton Act in the following ways, among others:

(a) Actual and potential competition between Fisher and Lucky Lager in the sale of beer in the state of Utah had been eliminated;

(b) Actual and potential competition generally in the sale of beer in Utah may be substantially lessened;

(c) Fisher had been permanently eliminated as an independent competitive factor in the sale of beer in Utah;

(d) The acquisition may enhance Lucky Lager's competitive advantage in the production and sale of beer in Utah to the detriment of actual and potential competition; and,

(e) Industry-wide concentration of the sale of beer in Utah will be increased.

Included in the relief sought by the complaint was that the court require Lucky Lager to divest itself of all the business and assets of Fisher.

The defendant answered admitting various allegations of the complaint concerning the business of Lucky Lager and Fisher including the fact that the acquisition of Fisher by Lucky Lager had occurred and that at that time Fisher had the largest annual capacity for the production of beer in Utah. Violation of the Clayton Act, however, was denied.³ On October 6, 1958, following a pre-trial conference in which the possibility of an agreed settlement was discussed, the court signed and entered a "final judgment", based upon an endorsement signed by counsel for all of the parties that "We hereby consent to the making and entry of the foregoing final judgment". The judgment recited that plaintiff and defendant had severally consented to the judgment "without trial or adjudication of any issue of fact or law herein and without any admission by plaintiff or defendant with respect to any issue".

Section V of the consent judgment ordered the defendant Lucky Lager to sell all of its interest in Fisher within nine months of the appointment by the court of a sales agent but provided that if no buyer could be found this section could be canceled upon the petition of either party.

Section VI of the judgment provided that in the event of a cancelation of Section V as a result of inability to consummate a sale, Lucky Lager should be "perpetually enjoined and restrained, beginning twelve months from the date of said cancellation, from selling for consumption in the state of Utah under any labels owned or controlled by Lucky Lager, Fisher or subsidiaries or affiliates of either of them in any calendar year more than 39 per cent of the quantity of `Total Beer Consumed' in the State of Utah, as reported by the Auditing Division of the Utah State Tax Commission for the previous calendar year."

By Section VIII of the consent judgment the court retained jurisdiction for the purpose of enabling any of the parties to apply to the court for further orders and directions for the construction or carrying out of the judgment or for the modification, termination or enforcement of any of the provisions thereof.

No sale of the defendant's interest in Fisher having been consummated by July 7, 1959, the court, pursuant to the judgment and without objection by either party, canceled Section V of the judgment requiring Lucky Lager to divest itself of its interest in Fisher, thereby making operative the 39% limitation at the close of the ensuing twelve month period, or on July 7, 1960.

The defendant's motion for modification of final judgment was filed June 13, 1962, and is based upon the alleged ground that since the entry of the consent judgment the competitive conditions in Utah and other intermountain states have so materially changed that the need for a limitation on defendant's sales in Utah no longer exists and that the continuation of said limitation is in fact restraining, rather than promoting, competition.

There is no doubt that the court upon general principles and by reason of the express reservation in the judgment for substantially changed conditions has the power to modify a consent judgment or decree. But the impropriety of merely relieving a party from the foreseeable detrimental consequences of its consent, after it has enjoyed or speculated upon its favorable consequences or possibilities by avoiding the litigation and the hazards of a less favorable outcome, is quite manifest.

Defendant morally and legally is in no position now to complain of any improvident or erroneous provision which it invited, especially if the injustice is not pronounced or disastrous; and there are sound reasons why the court should not lightly cast aside requirements which have been fashioned by agreement of the parties themselves. The standards which should guide a consideration of the motion for a modification are concisely and authoritatively summarized in United States v. Swift & Company, 286 U.S. 106, 119, 52 S.Ct. 460, 76 L.Ed. 999 (1932), supra:

"There is need to keep in mind steadily the limits of inquiry proper to the case before us. We are not framing a decree. W

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