Wine v. Harris, CIVIL ACTION NO. 3:16-cv-1434 (JCH).
| Court | United States District Courts. 2nd Circuit. United States District Court (Connecticut) |
| Writing for the Court | Janet C. Hall, United States District Judge |
| Citation | 255 F.Supp.3d 355 |
| Parties | CONNECTICUT FINE WINE & SPIRITS, LLC, Plaintiff, v. Jonathan A. HARRIS et al., Defendants. |
| Docket Number | CIVIL ACTION NO. 3:16-cv-1434 (JCH). |
| Decision Date | 06 June 2017 |
255 F.Supp.3d 355
CONNECTICUT FINE WINE & SPIRITS, LLC, Plaintiff,
v.
Jonathan A. HARRIS et al., Defendants.
CIVIL ACTION NO. 3:16-cv-1434 (JCH).
United States District Court, D. Connecticut.
Signed June 6, 2017
Adam B. Abelson, John J. Connolly, William J. Murphy, Zuckerman Spaeder LLP, Baltimore, MD, Edward B. Lefebvre, James T. Shearin, Pullman & Comley, Bridgeport, CT, for Plaintiff.
Gary Mann Becker, Robert William Clark, Robert J. Deichert, Office of the Attorney General, Hartford, CT, for Defendants.
Robert M. Langer, Wiggin & Dana, Hartford, CT, Benjamin Diessel, Wiggin & Dana, New Haven, CT, Deborah A. Skakel, Craig Flanders, Blank Rome LLP, New York, NY, for Wine & Spirits Wholesalers of Connecticut, Inc., Intervenor Defendant.
RULING RE: MOTIONS TO DISMISS
Janet C. Hall, United States District Judge
TABLE OF CONTENTS
I. INTRODUCTION...359
II. BACKGROUND...360
A. Connecticut's Liquor Marketplace...360
B. Total Wine...362
III. LEGAL STANDARDS...363
A. Motions to Dismiss: Rule 12(b)(6)...363
B. Sherman Act Preemption of State Statutes...363
IV. DISCUSSION...366
A. Post and Hold Provisions...367
1. Unilateral or Hybrid Restraint...367
2. Per Se Violation or Rule of Reason Analysis...369
a. Count One: Horizontal Price Fixing...370
b. Count Two: Vertical Price Fixing...373
B. Minimum Retail Price Provisions...373
1. Unilateral or Hybrid Restraint...373
2. Per Se Violation or Rule of Reason Analysis...375
a. Count One: Horizontal Price Fixing...375
b. Count Two: Vertical Price Fixing...376
C. Price Discrimination Prohibition...378
V. CONCLUSION...380
I. INTRODUCTION
Plaintiff Connecticut Fine Wine & Spirits, LLC ("Total Wine") instituted this action against defendants Jonathan A. Harris, Commissioner of the Connecticut Department of Consumer Protection, and John Suchy, Director of the Connecticut Division of Liquor Control (collectively, the "state defendants"), in their official capacities. Compl. (Doc. No. 1) at 1. Total Wine alleges that certain state statutory and regulatory provisions governing the distribution and sale of alcoholic beverages are preempted by federal antitrust
law.1 See id.¶¶ 28, 33. Total Wine seeks declaratory and injunctive relief. See id.¶ 34.
Four trade associations—the Wine & Spirit Wholesalers of Connecticut ("WSWC"), Connecticut Beer Wholesalers Association ("CBWA"), Connecticut Restaurant Association ("CRA"), and Connecticut Package Stores Association ("CPSA") (collectively, the "trade associations")—filed Motions to Intervene (Doc. Nos. 27, 30, 39, 47). The court granted the motions, see Ruling (Doc. No. 62) at 2, as well as a subsequent Motion to Intervene (Doc. No. 69) filed by Brescome Barton, Inc. ("Brescome" and, with the trade associations, "intervenors"), see Order (Doc. No. 75).
Harris and Suchy filed a joint Motion to Dismiss, see generally Mot. to Dismiss ("State Defs. Mot.") (Doc. No. 38), as did the trade associations, see generally Mot. to Dismiss by Wine & Spirits Wholesalers of Conn., Conn. Beer Wholesalers Ass'n, Conn. Rest. Ass'n, & Conn. Package Stores Ass'n ("Trade Ass'ns Mot.") (Doc. No. 66). Brescome filed an additional Motion to Dismiss. See generally Def. Brescome Barton, Inc.'s Mot. to Dismiss ("Brescome Mot.") (Doc. No. 80). Each Motion to Dismiss relies on Federal Rule of Civil Procedure 12(b)(6). See State Defs. Mot. at 1; Trade Ass'ns Mot. at 1; Brescome Mot. at 1. Total Wine filed a consolidated opposition to the Motions, see generally Pl.'s Consolidated Opp'n to Defs.' & Intervenors' Mots. to Dismiss ("Opp'n" or "Opposition") (Doc. No. 82), and the state defendants and intervenors replied in a timely manner, see generally State Defs.' Reply Mem. in Supp. of Mot. to Dismiss ("State Defs. Reply") (Doc. No. 84); Intervenors' Joint Reply in Supp. of their Mots. to Dismiss ("Intervenors Reply") (Doc. No. 85). The court heard oral argument on the pending Motions on May 18, 2017.
For the reasons set forth below, the Motions to Dismiss are GRANTED.
II. BACKGROUND2
A. Connecticut's Liquor Marketplace
The sale of alcoholic beverages in Connecticut is prohibited, except as permitted by Connecticut's Liquor Control Act. Conn. Gen. Stat. § 30–74(a). "Connecticut has what may be characterized as a tripartite pricing mechanism establishing the method by which liquor prices are set by the manufacturer, ... the wholesaler[,] and the retailer." Serlin Wine & Spirit Merchs., Inc. v. Healy, 512 F.Supp. 936, 937–38 (D. Conn. 1981). Most relevant here are three sets of requirements: the post and hold provisions, minimum retail price provisions, and price discrimination prohibition.
First, Connecticut's post and hold provisions require state-licensed manufacturers and wholesalers to post a "bottle price" and a "case price" each month with the Department of Consumer Protection. See Compl. ¶ 12. Posted prices are then made available to industry participants, who may, and often do, amend their own postings
to match competitors' lower prices. See id.¶¶ 12, 16. Once these prices are finalized, the manufacturer or wholesaler must maintain its posted prices for the following month.3 See id.¶ 12.
Second, the minimum retail price provisions require that retailers sell to customers at or above a statutorily defined "cost." See id.¶ 13. Generally, a retailer's "cost" for a given alcoholic beverage is determined by adding the posted bottle price—as set by the wholesaler—and a markup for shipping and delivery.4 See id. Wholesalers occasionally lower their posted case
prices for a given month, without lowering posted bottle prices, during what are referred to as "off-post" months. See id. Although retailers buy almost exclusively by the case, their prices remain fixed by the minimum retail price provisions, which reference posted bottle prices, rather than posted case prices. See id.
Finally, wholesalers must sell a given product to all retailers at the same price.5 See id.¶ 14. Specifically, wholesalers may not offer discounts to retailers who are high volume purchasers. See Compl. ¶ 14.
No Connecticut agency or instrumentality actively supervises the price posting and matching processes. See id.¶ 21. Rather, manufacturers and wholesalers are left to post prices as they see fit, without review by the state. See id.
B. Total Wine
Total Wine owns and operates four retail beverage stores in Connecticut. Compl. ¶ 1. It holds package store permits for its four retail locations. See id.¶ 9. Total Wine strives "to offer[ ] the nation's best selection of alcoholic beverages, and to hav[e] the lowest prices on wine, spirits, and beer." See id.¶ 7. Total Wine alleges that the challenged provisions prevent it from using its "efficiencies" to reduce the prices at which it sells to consumers. See id.¶¶ 17, 22. It has not lowered its prices below its "cost," for fear of being subject to civil and criminal penalties. See id.¶ 22; see also id.¶ 15 (discussing penalties for violations of Liquor Control Act).6 As Total Wine acknowledged at oral argument, its antitrust preemption claims are facial challenges.
III. LEGAL STANDARDS
A. Motions to Dismiss: Rule 12(b)(6)
In ruling on a Motion to Dismiss, the court "accept[s] all factual claims in the complaint as true and draw[s] all reasonable inferences in the plaintiff's favor." Simon v. KeySpan Corp., 694 F.3d 196, 201 (2d Cir. 2012) (citing Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010) ). "[T]he court, in judging the sufficiency of the complaint, must accept the facts alleged and construe ambiguities in the light most favorable to upholding the plaintiff's claim." Doe v. Columbia Univ., 831 F.3d 46, 48 (2d Cir. 2016). However, the court need not "accept conclusory allegations or legal conclusions masquerading as factual conclusions." Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011) (quoting Rolon v. Henneman, 517 F.3d 140, 149 (2d Cir. 2008) ). Instead, "[t]o survive dismissal, the plaintiff must provide the grounds upon which his claim rests through factual allegations sufficient to raise a right to relief above the speculative level." Lanier v. Bats Exch., Inc., 838 F.3d 139, 150 (2d Cir. 2016) (quoting ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) ). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions...." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation marks and citations omitted).
B. Sherman Act Preemption of State Statutes
Section 1 of the Sherman Act provides that "[e]very contract,...
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State v. Leniart, SC 19809
...jury about the critical and generally reliable role that informants play in many criminal prosecutions. United States v. Noze, supra, 255 F. Supp. 3d 355. Criminal trials would devolve into expensive and time consuming "battles of [road show] experts . . . ." Id. For these and other reasons......
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State v. Leniart, SC 19809, (SC 19811)
...about the critical and generally reliable role that informants play in many criminal prosecutions. United States v. Noze , supra, 255 F. Supp. 3d at 355. Criminal trials would devolve into expensive and time consuming "battles of [road show] experts ...." Id.For these and other reasons, alt......
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Connecticut Fine Wine & Spirits, LLC v. Seagull, Docket No. 17-2003-cv
...On June 6, 2017, the district court, following argument, granted the motion to dismiss. See Conn. Fine Wine & Spirits v. Harris, LLC , 255 F.Supp.3d 355 (D. Conn 2017). Analyzing the challenged provisions separately,8 the district court applied as to each the first step in the two-step fram......
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Conn Fine Wine & Spirits, LLC v. Seagull, Docket No. 17-2003-cv
...On June 6, 2017, the district court, following argument, granted the motion to dismiss. See Conn. Fine Wine & Spirits, LLC v. Harris , 255 F. Supp. 3d 355 (D. Conn. 2017). Analyzing the challenged provisions separately,8 the district court applied as to each the first step in the two-step f......
-
State v. Leniart, SC 19809
...jury about the critical and generally reliable role that informants play in many criminal prosecutions. United States v. Noze, supra, 255 F. Supp. 3d 355. Criminal trials would devolve into expensive and time consuming "battles of [road show] experts . . . ." Id. For these and oth......
-
State v. Leniart, SC 19809, (SC 19811)
...about the critical and generally reliable role that informants play in many criminal prosecutions. United States v. Noze , supra, 255 F. Supp. 3d at 355. Criminal trials would devolve into expensive and time consuming "battles of [road show] experts ...." Id.For these and other re......
-
Connecticut Fine Wine & Spirits, LLC v. Seagull, Docket No. 17-2003-cv
...June 6, 2017, the district court, following argument, granted the motion to dismiss. See Conn. Fine Wine & Spirits v. Harris, LLC , 255 F.Supp.3d 355 (D. Conn 2017). Analyzing the challenged provisions separately,8 the district court applied as to each the first step in the two-step fra......
-
Conn Fine Wine & Spirits, LLC v. Seagull, Docket No. 17-2003-cv
...6, 2017, the district court, following argument, granted the motion to dismiss. See Conn. Fine Wine & Spirits, LLC v. Harris , 255 F. Supp. 3d 355 (D. Conn. 2017). Analyzing the challenged provisions separately,8 the district court applied as to each the first step in the two-step frame......