Sea Shore Corp. v. MA Wholesalers

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No. 98-1317



     SEA SHORE CORPORATION D/B/A CANTERBURY LIQUORS & PANTRY

                  AND WHITEHALL CO., LIMITED,

                                

                     Plaintiffs, Appellees,

                                

                               v.

                                

WALTER J. SULLIVAN, JR., SUZANNE IANELLA AND FREDERICK W. RILEY

INDIVIDUALLY AND IN THEIR REPRESENTATIVE AND OFFICIAL CAPACITY AS

    MEMBERS OF THE MASSACHUSETTS ALCOHOLIC BEVERAGES CONTROL

                          COMMISSION,

                                

                     Defendants, Appellees.

                                

                      ____________________

                                

       MASSACHUSETTS WHOLESALERS OF MALT BEVERAGES, INC.,

                                

                     Intervenor, Appellant.


APPEAL FROM THE UNITED STATES DISTRICT COURT

                                

               FOR THE DISTRICT OF MASSACHUSETTS

                                

            [Hon. Mark L. Wolf, U.S. District Judge]


Before


Selya, Circuit Judge,

                 Bownes, Senior Circuit Judge,

                   and Stahl, Circuit Judge.


H. Glenn Alberich with whom Thomas Fenerty, Eileen M. Fava,

Molly S. Boast, and LeBoeuf, Lamb, Greene & MacRae, L.L.P., were on

brief for intervenor, appellant.

     Gerald J. Caruso, with whom Ferriter, Scobbo, Caruso, &

Rodophele, P.C., Alan L. Kovacs, and Bass, Doherty & Kovacs, were

on brief for plaintiff, appellee Sea Shore Corp.

     Robert S. Frank, Jr., with whom Robert M. Buchanan, Jr.,

Joshua A. Engel, and Choate, Hall & Stewart, were on brief for

plaintiff, appellee Whitehall Co., Ltd.

          Robert D. Paul, J. Mark Gidley, and White & Case LLP on

brief for The Stop & Shop Companies, Inc., amicus curiae.

     Thomas R. Kiley, Steven H. Goldberg, and Cosgrove, Eisenberg

& Kiley, P.C. on brief for Massachusetts Food Association, amicus

curiae.


October 20, 1998


STAHL, Circuit Judge.  The Massachusetts Wholesalers of

Malt Beverages, Inc. (the "MWMBI"), a defendant-intervenor below,

has filed a notice of appeal from the district court's ruling that

Massachusetts regulations requiring price posting in the sale of

alcoholic beverages violate the Sherman Act, 15 U.S.C.  1. 

Because the state defendants in the action below did not appeal,

there is a threshold question whether the MWMBI has independent

standing to maintain this appeal.  Because the MWMBI does not meet

standing requirements, we dismiss for lack of appellate

jurisdiction.

                         I. Background

  On August 23, 1994, plaintiff Sea Shore Corporation d/b/a 

Canterbury Liquors & Pantry, a retailer of alcoholic beverages,

brought an official-capacity action against members of the

Massachusetts Alcoholic Beverages Control Commission (the

"Commission"), the state body charged with the enforcement of

liquor pricing laws.  Whitehall Company, Limited, a wholesaler of

alcoholic beverages, intervened as a plaintiff, and the MWMBI, a

trade association of beer wholesalers, intervened as a defendant.

Plaintiffs sought: (1) a declaration that certain provisions of

Mass. Gen. Laws ch. 138,  25A and related regulations, Mass. Regs.

Code tit. 204,  6.01-6.07 (collectively, the "Price Posting

Laws"), are a per se violation of the Sherman Act and are not

shielded from invalidation by the state action doctrine; and

(2) orders permanently enjoining the Commission from enforcing the

Price Posting Laws.   

     Plaintiffs did not challenge the first subparagraph of

Mass. Gen. Laws ch. 138,  25A, which prohibits price

discrimination in the sale of alcoholic beverages (the "Price

Discrimination Law").  Rather, they contested only the provisions

of the statute and regulations that provide for a "post and hold"

scheme of pricing.  Under the challenged provisions, Massachusetts

wholesalers must post all prices that they will charge for the

following month.  See Mass. Gen. Laws ch. 138,  25A; Mass. Regs.

Code tit. 204,  6.03(3).  For ten days after the initial posting,

wholesalers are permitted to amend the price on a specific brand

product to meet, but not beat, the lowest posted price for that

product.  See Mass. Regs. Code tit. 204,  6.05(1).  They cannot

otherwise raise or lower prices during the month in question.  Seeid.  

     On July 19, 1996, plaintiffs filed motions for summary

judgment, and defendants filed cross-motions for partial summary

judgment.  On February 3, 1998, the district court granted

plaintiffs' motions for summary judgment and denied defendants'

motions.  The district court concluded that the Price Posting Laws

are a state hybrid restraint constituting a per se violation of the

Sherman Act, 15 U.S.C.  1, and that these laws are not saved by

the state action defense.  The court therefore found that the

Sherman Act preempted the Price Posting Laws, pursuant to the

Supremacy Clause of the United States Constitution.  See U.S.

Const. art. VI.

     Following this ruling, the Commission informed the

district court that it would not appeal and would comply

voluntarily with the court's decision.  The MWMBI, however, filed

a notice of appeal on March 27, 1998.  On April 27, 1998,

plaintiffs moved to dismiss the MWMBI's appeal for lack of standing

to press the appeal.  We deferred ruling on the motion until after

oral argument.         

     If a party lacks standing, we have no jurisdiction to

decide the merits of the case.  See FW/PBS, Inc. v. City of Dallas,

493 U.S. 215, 231 (1990); Valley Forge Christian College v.

Americans United for Separation of Church & State, Inc., 454 U.S.

464, 475-76 (1982).  Therefore, we first examine whether the MWMBI

has standing to appeal the district court's grant of summary

judgment.

       II. The Article III Requirements for Standing

     The burden of stating facts sufficient to support

standing rests with the party seeking to assert federal

jurisdiction.  See Warth v. Seldin, 422 U.S. 490, 518 (1975).  This

burden applies to a party seeking to assert federal jurisdiction on

appeal.  See Diamond v. Charles, 476 U.S. 54, 68 (1986) (involving

intervenor appellant); United States v. AVX Corp., 962 F.2d 108,

114 (1st Cir. 1992) (same).

     In addressing plaintiffs' motions to dismiss for lack of

jurisdiction, we accept as true all material allegations of the

MWMBI.  See AVX, 962 F.2d at 114.  We need not, however, credit

"bald assertions," "subjective characterizations, optimistic

predictions, or problematic suppositions."  Id. at 115 (citations

and internal quotation marks omitted).  "'[E]mpirically

unverifiable' conclusions, not 'logically compelled, or at least

supported, by the stated facts,' deserve no deference."  Id.(quoting Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16

(1st Cir. 1989)).  Moreover, we require heightened specificity from

an intervenor seeking to establish appellate standing.  See AVX,

962 F.2d at 115. 

     As an intervenor seeking singlehandedly to appeal a

judgment, the MWMBI must independently pass the test of Article III

standing.  See Diamond, 476 U.S. at 68 ("[A]n intervenor's right to

continue a suit in the absence of the party on whose side

intervention was permitted is contingent upon a showing by the

intervenor that he fulfills the requirements of Art. III."); AVX,

962 F.2d at 113.  We cannot assume standing to appeal merely

because the party was appropriately permitted to intervene in the

proceeding below.  See AVX, 962 F.2d at 112 (noting that when the

original state defendant does not appeal, the intervenor can no

longer "ride the state's coattails" and "derive the benefit of the

state's standing").  Thus, we review the constitutional

requirements for standing.

     We start with the basics.  The MWMBI must demonstrate:

(1) an "injury-in-fact"; (2) that is "fairly traceable" to the

proceeding below; and (3) is "likely" to be "redressed by a

favorable decision."  Lujan v. Defenders of Wildlife, 504 U.S. 555,

560 (1992); see also Allen v. Wright, 468 U.S. 737, 751 (1984). 

Although these concepts are "concededly not susceptible of precise

definition," case law has provided substantial guidance.  Allen,

468 U.S. at 751.  Most importantly, "injury-in-fact" must involve

"an invasion of a legally-protected interest which is (a) concrete

and particularized; and (b) actual or imminent, not conjectural or

hypothetical."  Defenders of Wildlife, 504 U.S. at 560 (citations

and internal quotation marks omitted).      

     Because the MWMBI is alleging injury to its constituent

members rather than to itself as an organization, additional

considerations are also relevant.  An association may assert

standing on behalf of its members if: (1) at least one of its

members possesses standing to sue in its own right (by meeting the

Article III requirements, including, inter alia, injury-in-fact);

(2) the interests that the suit seeks to vindicate are germane to

the organization's objectives; and (3) neither the claim asserted

nor the relief demanded necessitates the participation of

individual members.  See UAW v. Brock, 477 U.S. 274, 282 (1986);

Hunt v. Washington Apple Adver. Comm'n, 432 U.S. 333, 343 (1977). 

The issue upon which the parties focus is whether any MWMBI member

possesses standing in its own right.  We find that the MWMBI has

not met its burden of showing that an MWMBI member has suffered an

injury-in-fact that is "actual or imminent" or "likely" to be

redressed.

          III. The Standing of the MWMBI Members

     The MWMBI contends that its members will suffer concrete

economic injuries as a result of the decision below and that these

injuries are sufficient to meet the requirements of Article III. 

Specifically, the MWMBI argues that with the Price Posting Laws

invalidated, the Price Discrimination Law will not be adequately

enforced.  As a result, wholesalers that abide by the Price

Discrimination Law will be at a competitive disadvantage vis-a-vis

those that violate the law.  

     While injury through economic competition is certainly

possible, see e.g., Adams, 10 F.3d at 921, the MWMBI's alleged

injury is not sufficiently imminent to confer standing.  It is also

questionable whether the alleged injury is redressable.

         A. The Imminence of the Alleged Injury  

     Future injury must be imminent to qualify as injury-in-

fact.  See, e.g., Adams, 10 F.3d at 921.  The concept of imminence

"is bounded by its Article III purpose: to ensure that the alleged

injury is not too speculative."  Berner v. Delahanty, 129 F.3d 20,

24 (1st Cir. 1997) (citing Defenders of Wildlife, 504 U.S. at 564

n.2).  For this reason, almost all competitor injury cases focus on

causal connections predicted by established economic theory.  See,

e.g., Adams, 10 F.3d at 923 ("[B]asic economic theory quite

consistently transcends utter randomness by positing elemental laws

of cause and effect predicated on actual market experience and

probable market behavior.").  Outside the sphere of economic

theory, predicting future injury and the behavior of third parties

is usually suspect.  See, e.g., id. at 922-23 ("When considering

any chain of allegations for standing purposes, we may reject as

overly speculative . . . predictions of future events (especially

future actions by third parties) . . . .") (alteration in original)

(citation and internal quotation marks omitted); United Transp.

Union v. ICC, 891 F.2d 908, 912 n.7 (D.C. Cir. 1989) ("That a court

believes itself bound to credit allegations of future injury that

are firmly rooted in the basic laws of economics does not compel us

to accept allegations founded solely on the complainant's

speculation."). 

     In this case, the injury is not imminent because it

depends upon several tenuous contingencies.  The MWMBI's allegation

of injury asks us to go beyond basic economic predictions and

speculate that third-party wholesalers will violate the

unchallenged Price Discrimination Law to such an extent that the

violations will disadvantage wholesalers that obey the law.  The

allegation also assumes that neither the enforcement mechanisms

currently in place nor any conceivable mechanism that the

Commission may institute, short of the invalidated Price Posting

Laws, will prevent such violations.  For the following reasons, we

are unwilling to indulge such speculation.

  Assuming arguendo that some wholesalers will choose to

violate the Price Discrimination Law, there is no showing that the

violations will be substantial enough to disadvantage those

competitors obeying the law.  The MWMBI posits no estimations of

how extensive the Price Discrimination Law violations will be.  Nor

does it suggest how widespread such violations must be to

destabilize the market or injure law-abiding wholesalers.  Rather,

the MWMBI merely provides the affidavit of an economist who avers

that wholesalers, faced with the "difficult choice" of engaging in

price discrimination or "jeopardizing their sales to significant

clients," may violate the law.  The economist further states that

"[t]o the extent" wholesalers violate the Price Discrimination Law,

smaller retailers will be at a competitive disadvantage, a trend

that "may lead quickly" to the elimination of smaller retailers and

thereby increase the pressure on wholesalers to engage in price

discrimination.  This analysis lacks particulars about the

likelihood of market destabilization and the extent of possible

violations.  Cf. AVX, 962 F.2d at 117 (finding no particularizedshowing of injury in environmental suit because there is no

"fleshing-out" of facts such as identities of association's members

or the extent and frequency of use of the natural resources at

issue).      

     But even if wholesalers in large numbers attempted to

violate the Price Discrimination Law, the MWMBI has failed to

demonstrate that the state cannot or will not either use existing

enforcement mechanisms or create new mechanisms to halt such

violations.  The MWMBI has the burden to show not merely that the

Price Posting Laws would be more effective than other enforcement

methods, but also that the Price Posting Laws would make such a

difference to the Commission's enforcement efforts that the

invalidation of these laws would cause a substantial enough

increase in violations to disadvantage law-abiding wholesalers.  

     Under extant state law, wholesalers must still provide

retailers with the prices, including any discounts, that they

provide to other customers.  See Mass. Regs. Code tit. 204,  2.14. 

Wholesalers must also maintain detailed records of all their sales. 

See 27 C.F.R.  194.226.  Thus, if retailers inform the Commission

of suspected price discrimination, there would appear to be a

documentary record for the Commission to investigate and, if

necessary, present in an enforcement action in support of a request

for sanctions.  Furthermore, under Mass. Gen. Laws ch. 30A, the

Commission has the power to reissue portions of the regulations

that would not be illegal under the district court's analysis,

including a provision that requires wholesalers to file price

schedules with the Commission. 

     The MWMBI suggests that even with price filings, a

wholesaler could engage in price discrimination by changing its

prices at will and then claiming that its favored customer made

purchases at a time when the prices were lower.  Using the

documentary record, however, the Commission could attack such a

transaction as a sham.  Moreover, if wholesalers are intent upon

violating the law, it seems as easy to charge one price and post

another under the Price Posting Laws as it would be to change price

lists by the hour to disguise illegal discrimination.  The MWMBI

has not pointed to any facts that persuade us that the Price

Posting Laws are so superior to any other enforcement mechanisms

that the invalidation of the laws will cause the wholesalers

imminent injury.

     In sum, to credit the MWMBI's assertion of imminent

economic injury, we would have to accept not only that wholesalers

will violate existing law, but also that: (1) violations will occur

in such numbers as to cause tangible economic injury to other

wholesalers; and (2) none of the state's enforcement mechanisms,

short of the Price Posting Laws, is adequate to alleviate the

posited violations.  For the reasons set forth above, the record

before us does not permit either of these conclusions.

         B. Redressability of the Alleged Injury  

     The question whether the existing enforcement of the

Price Discrimination Law is adequate not only implicates the

imminence of the injury, but it also suggests a redressability

problem.  Even if the existing methods are less effective than the

Price Posting Laws, the MWMBI has no warrant to tell the Commission

how to enforce state laws.  Cf.  Defenders of Wildlife, 504 U.S. at

568 ("[S]uits challenging, not specifically identifiable Government

violations of law, but the particular programs agencies establish

to carry out their legal obligations . . . [are], even when

premised on allegations of several instances of violations of law,

. . . rarely if ever appropriate for federal-court adjudication.")

(citing Allen, 468 U.S. at 759-60); Diamond, 476 U.S. at 64 (noting

that appellant could not force the State to enforce a statute

against the appellees because "a private citizen lacks a judicially

cognizable interest in the prosecution or nonprosecution of

another") (citing Linda R.S. v. Richard D., 410 U.S. 614, 619

(1973)).  Because the state may choose not to enforce the Price

Posting Laws even if the lower court decision were reversed, it is

not clear that this appeal is "likely" to redress the MWMBI's

alleged injury.

     Biszko v. RIHT Fin. Corp., 758 F.2d 769 (1st Cir. 1985),

is an analogous case.  In Biszko, shareholders of a Rhode Island

bank that had agreed to merge with a Massachusetts bank challenged

the constitutionality of a Rhode Island statute that allowed

interstate acquisitions of Rhode Island banks.  See id. at 769. 

The statute limited acquisitions to New England banks during a two-

year phase-in period, and by any bank thereafter.  See id. at 770-

71.  The shareholders claimed that, absent the two-year regional

restriction, with unrestricted competition they would have received

more money for their stock in any merger.  See id. at 772.  They

also argued that the nullification of the statute would redress

their injury because the Rhode Island legislature would be moved to

pass a statute permitting unrestricted interstate acquisitions. 

See id. at 772-73.  

     We, however, determined that even if there was injury-in-

fact, the injury could not be redressed by a favorable decision:

"The 'injury' that appellants suggest they have suffered is no more

than the preclusion of a benefit that they might gain were the

Rhode Island legislature to react in a certain way to a decision by

this court.  Such injury is not merely speculative--it is

positively chimerical."  Id. at 773.  Similarly, in the present

case redress for the MWMBI's alleged injury depends not only upon

a reversal of the district court's decision, but also upon a state

agency's decision to enforce a law after declining to appeal its

invalidation.  The MWMBI has not produced anything that indicates

that the Commission would enforce the law if the district court's

decision were overturned.   

     We do not mean to suggest, as plaintiffs do, that a

private party can never appeal the determination that a state

statute is unconstitutional if the state declines the appeal.  Such

a principle embodies an overly broad interpretation of Diamond, 476

U.S. 54, that has been rejected by this circuit, see AVX, 962 F.2d

108.  Rather, we emphasize that in this case, where there is no

indication that the state will choose to enforce the challenged

regulations against a third party, and where the intervenor does

not receive a direct benefit from a reversal of the decision below,

it is not "likely, as opposed to merely speculative, that the

injury will be redressed by a favorable decision."  Defenders of

Wildlife, 504 U.S. at 561 (citation and internal quotation marks

omitted).  Therefore, even if the MWMBI could demonstrate injury-

in-fact, it would have no standing to prosecute this appeal.  

                      IV. Conclusion

     Because there is insufficient "immediacy and reality to

[the] allegations of future injury" to warrant appellate

jurisdiction,  O'Shea, 414 U.S. at 497 (citation and internal

quotation marks omitted), we grant plaintiffs' motions to dismiss

for lack of appellate standing.  

     Appeal dismissed.  Costs to appellees.