In re Beer Distribution Antitrust Litigation

188 F.R.D. 549, 1998 WL 1093503
CourtDistrict Court, N.D. California
DecidedNovember 10, 1998
DocketNo. C 97-20644 SW
StatusPublished
Cited by5 cases

This text of 188 F.R.D. 549 (In re Beer Distribution Antitrust Litigation) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Beer Distribution Antitrust Litigation, 188 F.R.D. 549, 1998 WL 1093503 (N.D. Cal. 1998).

Opinion

ORDER DENYING WITHOUT PREJUDICE PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION

WILLIAMS, District Judge.

Plaintiffs Huntington Beach Brewing Company d/b/a El Toro Brewing Company (“El Toro”), Kenneth Allen d/b/a Anderson Valley [551]*551Brewing Company (“Anderson Valley”), Lake Tahoe Brewing Company, Inc. d/b/a Tahoe Basin Beverage Company (“Lake Tahoe”), and St. Stan’s Brewing Company (“St. Stan’s”) each filed separate class action complaints against Defendant Anheuser-Busch, Inc. (“Anheuser-Busch”) alleging claims under various federal antitrust statutes. Following consolidation of these four separate actions, Plaintiffs filed a consolidated class action complaint alleging the following five causes of action: (1) exclusive dealing in violation of § 1 of the Sherman Act (15 U.S.C. § 1); (2) exclusive dealing in violation of § 3 of the Clayton Act (15 U.S.C. § 14); (3) concerted refusal to deal and group boycott as a per se violation of § 1 of the Sherman Act (15 U.S.C. § 1); (4) concerted refusal to deal and group boycott under the rule of reason pursuant to § 1 of the Sherman Act (15 U.S.C. § 1); and (5) attempted monopolization in violation of § 2 of the Sherman Act (15 U.S.C. § 2).

Plaintiffs now move for class certification and an Order that this action may be maintained as a class action pursuant to Federal Rule of Civil Procedure 23. For the reasons set forth below the Court DENIES Plaintiffs’ motion without prejudice.

I. BACKGROUND

In certain areas of the United States, state law permits beer manufacturers to distribute their own beer to stores, restaurants, and bars. In areas where self-distribution is not permitted, beer manufacturers typically employ distributors, or wholesalers, to distribute beer for them. Distributors have a personal interest in the success of their product lines, as statutes of many states require distributors to purchase the beer they deliver. Therefore, if a particular beer does not sell well, its distributors as well as its manufacturer suffer economically. In most instances, distributors are responsible not only for beer delivery, but also for such other activities as product placement, special promotions, and rotation of overage beer.

Anheuser-Busch is the world’s largest manufacturer of beer. As a major beer manufacturer, Anheuser-Busch has an established distribution network. This distribution network includes some Anheuser-Buschowned distributors and some independent wholesalers. Plaintiffs allege that to increase its share of the beer market, Anheuser-Busch implemented an illegal “100% Share of Mind” campaign with its independent distributors. This campaign was first announced in March 1996, and, according to Plaintiffs, demonstrates anti-competitive conduct by Anheuser-Busch and an antitrust conspiracy with its distributors.

The 100% Share of Mind campaign consists of two programs: (1) an exclusivity incentive program; and (2) Amended and Restated Anheuser-Busch Wholesaler Equity Agreements.

A. The Exclusivity Incentive Program

Beginning on January 1, 1997, AnheuserBusch offered financial incentives to independent distributors which choose to exclusively distribute Anheuser-Busch products. The incentives under the Exclusivity Incentive Program include: (1) a rebate on each case of Anheuser-Busch beer sold; (2) additional days of credit in which to pay for AnheuserBusch products; and (3) reimbursement for truck painting. Under the Program, independent Anheuser-Busch wholesalers are categorized as levels “A” through “E.” A wholesaler that exclusively sells AnheuserBusch products is level “A” while a wholesaler that sells any non-Anheuser-Busch beers is an “E” level wholesaler ineligible to receive incentives.

B. The Amended Wholesaler Equity Agreements

Anheuser-Busch has an identical Equity Agreement with each of its independent wholesalers. Effective August 1997, Anheuser-Busch uniformly amended its Equity Agreements. The Equity Agreement in effect prior to the 1997 amendment granted each wholesaler an exclusive territory in return for which each wholesaler agreed to exercise its “best efforts” to promote, sell and service Anheuser-Busch products in the territory. The Amended Equity Agreements replaced the “best efforts” obligation with one to devote “primary efforts” to the sale of Anheuser-Busch products. The Amended [552]*552Equity Agreements do not require wholesalers to cease distributing all non-AnheuserBusch products.

C. Results of the 100% Share of Mind Program

Plaintiffs allege that as a result of Anheuser-Busch’s 100% Share of Mind campaign, various independent Anheuser-Busch distributors terminated distribution agreements with Plaintiffs, either outright or constructively. Plaintiffs allege that five AnheuserBusch distributors terminated their distribution agreements with St. Stan’s during the period from May to October 1996. These distributors serviced territories in the Northern California area. Plaintiffs allege that five Anheuser-Busch distributors terminated distribution agreements with Lake Tahoe during the period from July to December 1996. These distributors serviced territories in the Northern California area. Plaintiffs allege that three Anheuser-Busch distributors either terminated distribution agreements with Anderson Valley or stopped efforts to sell Anderson Valley beer to retailers “within weeks” of March 1996. Plaintiffs allege that two Anheuser-Busch distributors substantially reduced or completely stopped efforts to sell El Toro beer to retailers “within weeks” of March 1996.

D. Class Definition

Plaintiffs seek to certify this class action with the opt-out Plaintiff class defined as follows:

All craft breweries in the States of Hawaii, California, Oregon, Washington, Nevada, Utah, Idaho, Colorado, Wyoming, Montana, Alaska, and Arizona, who, between March 1, 1996 and the present, (i) had existing beer distributor/wholesaler agreements terminated by distributors who also had wholesaler agreements with Defendant Anheuser-Busch (“A-B distributors”), and/or (ii) had existing beer distributor/wholesaler agreements constructively terminated by A-B distributors, and/or (iii) were refused services by A-B distributors. Excluded from the Class are all craft breweries in which Defendant has either an equity interest or master distribution rights.

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Bluebook (online)
188 F.R.D. 549, 1998 WL 1093503, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-beer-distribution-antitrust-litigation-cand-1998.