Walker Distributing Co. v. Lucky Lager Brewing Co., 18222.

• Decision Date: 06 September 1963
• Docket Number: No. 18222.,18222.
• Parties: WALKER DISTRIBUTING COMPANY et al., Appellants, v. LUCKY LAGER BREWING COMPANY, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

323 F.2d 1 (1963)

WALKER DISTRIBUTING COMPANY et al., Appellants, v. LUCKY LAGER BREWING COMPANY, Appellee.

No. 18222.

United States Court of Appeals Ninth Circuit.

September 6, 1963.

Kramer & Walker, and Lloyd J. Walker, Twin Falls, Idaho, for appellants.

McCutchen, Doyle, Brown & Enersen, and William W. Schwarzer, San Francisco, Cal., for appellee.

Before CHAMBERS, HAMLIN and DUNIWAY, Circuit Judges.

DUNIWAY, Circuit Judge.

This case presents the question of the sufficiency of counts two and three of a second amended counterclaim, i. e., does either of those counts state a claim upon which relief can be granted? (F.R.Civ. P. 12(b) (6)) The trial court ruled that they do not, having similarly ruled upon similar counts which appeared for the first time in an amended counterclaim. Thereafter, the counterclaimants, appellants here, made a motion for final judgment in which they stated:

"That the counter-defendants sic herein do not desire to and cannot further amend the second amended complaint sic. That all the facts that can now be pleaded are now before the Court and further amendment is undesirable and impossible."

The court granted this motion and entered a final judgment against appellants. In that judgment it dismissed the entire counterclaim, but the only error asserted here relates to counts two and three. Appellants rely upon sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2) and section 3 of the Clayton Act (15 U.S.C. § 14. We are reversing the judgment in part.

The action began as a diversity suit by appellee Lucky Lager Brewing Company (Lucky) against Walker Distributing Company, Inc., (Walker) and T. C. Walker and his wife, Rose, who were its stockholders and had guaranteed its obligations to Lucky. The claim was for $17,763.02 for beer purchased by Walker from Lucky. Summary judgment was entered for Lucky based upon admissions that the money was owing, so that only appellants' counterclaim remains to be disposed of.

The only question now before us is whether, on the face of the counter-claim, a claim is stated upon which relief can be granted. We must construe the pleading in the manner most favorable to appellants and must bear in mind the policy that, unless there is no doubt as to the result, cases should be disposed of upon their merits. (See White Motor Co. v. United States, 1963, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738; Sidebotham v. Robison, 9 Cir., 1954, 216 F.2d 816, 826-827, 831).

Although there are some decisions that appear to take a contrary position, we are of the opinion that there are no special rules of pleading in antitrust cases. Rule 8, F.R.Civ.P., is applicable here as in any other case. Nowhere in the Rules is there any contrary indication. The fact that Rule 9(b) requires particularity of statement of circumstances constituting fraud or mistake indicates that such particularity is not required in other cases, including antitrust cases. (See Thomason v. Hospital T.V. Rentals, Inc., 8 Cir., 1959, 272 F.2d 263; Niagara of Buffalo, Inc. v. Niagara Mfg. & Distrib. Corp., 2 Cir., 1958, 262 F.2d 106; Central Ice Cream Co. v. Golden Rod Ice Cream Co., 7 Cir., 1958, 257 F.2d 417; Sandidge v. Rogers, 7 Cir., 1958, 256 F.2d 269, 276; New Home Appliance Center, Inc. v. Thompson, 10 Cir., 1957, 250 F.2d 881; Nagler v. Admiral Corp., 2 Cir., 1957, 248 F.2d 319, 322-326; Lloyd v. United Liquors Corp., 6 Cir., 1953, 203 F.2d 789; Package Closure Corp. v. Sealright Co., 2 Cir., 1944, 141 F.2d 972; Louisiana Farmers' Protective Union v. Great Atl. & Pac. Tea Co., 8 Cir., 1942, 131 F.2d 419, 422; F. Freund, The Pleading and Pre-Trial of an Anti-trust Claim, 1961, 46 Cornell L.Q. 555, 558.)

In several cases, the Supreme Court has indicated that we should be liberal in construing antitrust complaints. (See Radiant Burners, Inc. v. Peoples Gas, Light & Coke Co., 1961, 364 U.S. 656, 659-660, 81 S.Ct. 365, 5 L.Ed. 2d 358 (per curiam); Radovich v. National Football League, 1957, 352 U.S. 445, 453-454, 77 S.Ct. 390, 1 L.Ed.2d 456; United States v. Employing Plasterers' Ass'n, 1954, 347 U.S. 186, 188-189, 74 S.Ct. 452, 98 L.Ed. 618.) In the Employing Plasterers case, the Court made it clear that, "whether these charges be called `allegations of fact' or `mere conclusions of the pleader,' * * * they must be taken into account in deciding" whether a claim for relief is stated. (Id. at 188, 74 S.Ct. at 453-454, 98 L.Ed. 618). Indeed, as we understand it, one purpose of Rule 8 was to get away from the highly technical distinction between statements of fact and conclusions of law, and other similar technicalities, that often made a party's success depend upon the skill of his counsel as a pleader rather than upon the merits of his case. The official forms, and rules 1 and 84, confirm this view. Most of the forms contain more "legal conclusions" than they do "facts."

This court is not committed to a contrary view. In Bolick-Gillman Co. v. Continental Baking Co., 9 Cir., 1960, 278 F.2d 649, we reversed a dismissal for failure to state a claim under the antitrust laws because "it cannot be said * * * that it `appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" (Id. at 650)

We think that the language of certain decisions goes too far in requiring details in an antitrust complaint, and insofar as it does, we decline to follow. Among such cases are Crummer Co. v. Du Pont, 5 Cir., 1955, 223 F.2d 238; Kinnear-Weed Corp. v. Humble Oil & Refining Co., 5 Cir., 1954, 214 F.2d 891; Nelson Radio & Supply Co. v. Motorola, Inc., 5 Cir., 1952, 200 F.2d 911; Feddersen Motors, Inc. v. Ward, 10 Cir., 1950, 180 F.2d 519; Black & Yates, Inc. v. Mahogany Ass'n, 3 Cir., 1941, 129 F.2d 227.

The sketchy and disconnected nature of appellants' allegations, when coupled with their written judicial admissions in the trial court that they cannot further amend, may make us suspect that appellants may be unable to prove their case. It may well turn out, as Lucky suggests, that the counterclaim is without merit, and is an unjustified afterthought, filed in an effort to avoid paying a wholly legitimate commercial debt. There are ways by which appellee can justify these suspicions. (See Sidebotham v. Robison, supra, at 826-827) But the existence of doubt as to a party's ability to prove his case is not a reason for dismissing for failure to state a claim.

Nor are we impressed with Lucky's suggestion that "this is not a pleading case" because appellants confess that they cannot further amend. No authority is cited for this notion, nor can we find any. It is still true that, if the counterclaim states a claim, a dismissal under Rule 12(b) (6) is improper. We do think, however, that in construing the counterclaim we are entitled to take appellants at their word, and need not conjure up ways in which they might amend if permitted to do so.

Bearing these considerations in mind, we now consider the pleading. The second amended counterclaim is by the three defendants, and the pertinent counts contain substantially the following allegations:

Count Two

Paragraphs I to IV:

Lucky is a California corporation and is engaged in brewing and selling "Lucky Lager" beer. Its beer is sold and distributed in interstate commerce in at least eleven western states, including Idaho, and it is "one of the largest manufacturers of beer products for sale throughout the said territory of eleven states." It sells through wholesale distributors who are independent contractors, operating under a standard printed contract, a copy of which is attached to the counterclaim. The contract contains a representation that Walker is adequately prepared and equipped to perform the sale and distribution of Lucky's products and an agreement by Walker that Lucky shall not be liable during its term or upon its termination for any expenditure or act done for the purpose of enabling Walker to perform. Lucky agrees to sell to Walker the latter's requirements of beer and Walker agrees to purchase, distribute and sell Lucky's products, "in accordance with the terms and conditions of this agreement and the rules and regulations and sales policies now or hereafter prescribed by Lucky for the distribution and sale of its products." The territory of Walker is described as certain named counties in Idaho, and the agreement then states: "Walker understands that said territory is not exclusive but that Lucky may sell said products to such other distributors, jobbers, wholesalers, retailers, buying associations, and/or chain organizations operating in said territory and at such prices as Lucky may from time to time deem advisable." The contract states that Walker is an independent contractor and contains other provisions relating to the operation of Walker's business not here material. It then provides for termination by either party for breach by the other "without advance notice" and also by either party without cause upon thirty days advance notice. In the event of termination, Walker agrees to sell to Lucky its entire inventory of Lucky's products. It is alleged that the contract does not require Walker to handle Lucky's products exclusively, and the contract confirms this allegation. The contract, however, does provide: "Walker shall use due diligence to secure maximum sales of the products of Lucky in said territory during the term of this agreement. The failure of Walker properly and vigorously to push the sale of products of Lucky shall be deemed a violation of this agreement, Lucky to be the sole judge as to whether this condition is being performed."

Paragraphs V and VI:

Walker became a distributor in 1952, its latest distributorship agreement being dated May 28, 1958. Beginning in 1956, Walker also distributed Coors beer. In 1958, Lucky demanded that Walker "dispose of Coors or else be terminated as the Lucky Lager distributor," and Lucky refused to permit Walker to sell any...